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Getting the Best Out of Your Franchise Agreement

Written by: Sebastien Page

Article Overview: You’re at that crucial point which will start your franchising career, that moment when you put your signature down on the dotted line of the franchise agreement. Signing isn’t as easy at it sounds, though. Reading the terms and clauses in the agreement may send you into a whirlwind of second thoughts. By the time you actually get to the dotted line at the bottom of the contract, you’ll be wondering what you’re getting yourself into.

Getting the Best Out of Your Franchise Agreement

You’re at that crucial point which will start your franchising career, that moment when you put your signature down on the dotted line of the franchise agreement. Signing isn’t as easy at it sounds, though. Reading the terms and clauses in the agreement may send you into a whirlwind of second thoughts. By the time you actually get to the dotted line at the bottom of the contract, you’ll be wondering what you’re getting yourself into.

This is probably something that goes through the mind of every individual going into franchising, yet it clearly hasn’t diminished the size of the business as there are about half a million franchising outlets in the United States alone.
Getting a franchise attorney to negotiate some of the terms involved may turn out to be a huge waste of time. While legal consultation is generally a good idea, you can’t depend solely on your attorney to navigate you through your agreements.

Negotiation is generally easier when dealing with a relatively small franchiser. Presenting your case wisely and stating your reasons eloquently are usually sufficient to tilt the agreement more in your favor. It’s a different matter with larger franchisers altogether. Most of their contracts are ironclad and aren’t up for negotiation. In this case, you have to convince your franchiser of what a valuable asset you will be to the company. Calmly explain how much you can help their franchising system and hope for the best.

Demonstrate your skills, talent and devotion to the franchising team and you may just sway the franchiser enough to modify their agreement clauses enough so that you won’t feel that the situation is completely unfair to you.

Don’t lose hope when you see your contract but don’t get sucked into a bad agreement either. Consider this before signing the dotted line.

Related Articles
  "Untouchables" and "Discussables"
  Franchise Agreements The Basics
  How to Negotiate Your Franchise Agreement
  Hiring a Franchise Lawyer
  Franchisee checklist - the franchise agreement

Article Tags: clauses, contracts, crucial point, devotion, dotted line, franchise agreement, franchise attorney, franchiser, franchisers, franchising system, half a million, legal consultation, negotiation, second thoughts, signature, united states, waste of time, whirlwind



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Franchising & Licensing Can Be The Same Thing - FTC Rule 436 defines franchising as anyone offering an Agreement that contains these 3 things: 1. Licensing a "Mark" - which can be a trade name, service mark, commercial symbol, slogan, etc. 2. In the body of the Agreement, there contains, significant controls and assistance. 3. The licensee is paying the licensor in excess of $500 within the first six months of the actual offering of the business. Licensing and Franchising can mean the same thing today. If you do not decide to franchise and comply with FTC Rule 436, you may be in violation of Business Opportunity Laws that exist in 24 individual States.
Re: Enticing Franchises - Top 9 List - All Franchise listed above are in millions of dollars. Do you have the list of Franchise in thousands
Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.
how much for a franchise fee? - Dear Colleague There is no easy answer to this question. Things to consider: [list=] The sizeof the Franchise Clent base Expected Turnover Intellectual Property costs (recoup) Number of Franchises Number of employees Original Set up costs Franchise admin costs An example: A franchise that I was involved in setting was to a simple "lawn mowing/home repair" franchise. The Franchise included national/local advertising - preparation of client lists - general admin - central accounting etc The Franchise involved 300-500 clients - and an annual turnover of about $300,000 . The annual franchise fee was $30,000. Hope that this gives you some idea Take care Ian[/list]
Re: Franchise Surveys - Another good tool to researching a franchise is to speak with their existing franchisees. This contact information is included in most Franchise Disclosure Documents. In order to get a Franchise Disclosure Document or FDD as it is often referred to, you will have to complete a basic franchise application. The franchisor will then usually provide you with the FDD at that time. Included in that book of information is a list of the existing franchisees, the contract, the investment information etc... This information is required by Federal Law to be disclosed to your prior to making a purchase. So be sure to do your research and start with the Franchise Documents to get the initial information.


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