Make the Most of the Franchise Agreement
Make the Most of the Franchise Agreement
The franchise agreement is the backbone of relationship between the franchisor and franchisee. It is the ‘commandments’ that will govern both of them. Hence, take your time in reading the agreement; and if needed, employ an attorney proficient in franchise agreements.
The main provisions that will be there in your franchise agreement are:
1. Training/Ongoing Support: The section will deal with the training programs the franchisor will provide the franchisee and his staffs. Both corporate and on-location training can be provided. It will also tell about the amount of on-going support the franchisor will offer.
2. The franchise fee: The amount of money the franchisee will have to pay including franchise fee and other charges.
3. Royalty: The monthly fee that you need to pay for using the company name.
4. Trademark and patent usage: Franchising is all about buying the reputation of the company and so, this clause will make sure that the franchisee rightly uses the trademarks, signage and patent of the franchisor.
5. Assigned territory: The territory under which you will operate and also, whether it is a protected territory.
6. Duration of the franchise agreement: How long the agreement is going to last.
7. Operation protocol: Guidelines on how the franchisee will run the unit on a day-to-day basis.
8. Advertising: The advertising programs the franchisor will carry out in order to promote the franchised unit and the amount the franchisee is required to pay for it.
9. Renewal rights/cancellation policy: What will happen when anyone wants to move out of the relationship? Some franchisor may add the Arbitration Clause that will take any legal action from any side to an arbitrator and not to a court.
10. Resale guidelines: When you want to resale the franchised unit, the franchisor may impose certain restrictions.
If you go through the franchise agreement, you will find that it is leaning towards the interests of the franchisor. It is a document prepared by them and you, as a franchisee, have little say on it. Most franchisors will not negotiate on the agreement, because when you are running a large and successful franchising operation, it is not feasible to have different agreement terms with each one of them. If a franchisor is ready to negotiate with most clauses except the fees, it is better to think twice before joining. The reputation of a franchise chain depends on the uniformity of services/products, so the franchisor must take necessary guards in protecting it.
Then again, it never harms in asking and hence, always clarify beforehand whether you can change even a single word of the agreement. If it is no, then you can either sign it or leave it. If the answer is yes, then sit with your attorney and try to find ways of tweaking the franchise agreement to your favor.
Make the Most of the Franchise Agreement - To learn more about this author, visit Michael Hemenway's Website.
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When you want to join the franchising business, the first thing you should do is study the market really well. Choose the field, which appeals to you the most and go through information on all the established and new players present in that segment. Then narrow down on those who fit your budget and ask for the UFOC from the franchisors. Read them well, visit them on the “Discovery Day” and then, if everything goes all right, talk about signing the agreement papers.
The franchise agreement is the backbone of relationship between the franchisor and franchisee. It is the ‘commandments’ that will govern both of them. Hence, take your time in reading the agreement; and if needed, employ an attorney proficient in franchise agreements.
The main provisions that will be there in your franchise agreement are:
1. Training/Ongoing Support: The section will deal with the training programs the franchisor will provide the franchisee and his staffs. Both corporate and on-location training can be provided. It will also tell about the amount of on-going support the franchisor will offer.
2. The franchise fee: The amount of money the franchisee will have to pay including franchise fee and other charges.
3. Royalty: The monthly fee that you need to pay for using the company name.
4. Trademark and patent usage: Franchising is all about buying the reputation of the company and so, this clause will make sure that the franchisee rightly uses the trademarks, signage and patent of the franchisor.
5. Assigned territory: The territory under which you will operate and also, whether it is a protected territory.
6. Duration of the franchise agreement: How long the agreement is going to last.
7. Operation protocol: Guidelines on how the franchisee will run the unit on a day-to-day basis.
8. Advertising: The advertising programs the franchisor will carry out in order to promote the franchised unit and the amount the franchisee is required to pay for it.
9. Renewal rights/cancellation policy: What will happen when anyone wants to move out of the relationship? Some franchisor may add the Arbitration Clause that will take any legal action from any side to an arbitrator and not to a court.
10. Resale guidelines: When you want to resale the franchised unit, the franchisor may impose certain restrictions.
If you go through the franchise agreement, you will find that it is leaning towards the interests of the franchisor. It is a document prepared by them and you, as a franchisee, have little say on it. Most franchisors will not negotiate on the agreement, because when you are running a large and successful franchising operation, it is not feasible to have different agreement terms with each one of them. If a franchisor is ready to negotiate with most clauses except the fees, it is better to think twice before joining. The reputation of a franchise chain depends on the uniformity of services/products, so the franchisor must take necessary guards in protecting it.
Then again, it never harms in asking and hence, always clarify beforehand whether you can change even a single word of the agreement. If it is no, then you can either sign it or leave it. If the answer is yes, then sit with your attorney and try to find ways of tweaking the franchise agreement to your favor.
Make the Most of the Franchise Agreement - To learn more about this author, visit Michael Hemenway's Website.
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
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Jay Kubassek(Jay's Full Bio: EvanCarmichael.com/jaykubassek) In five years, Canadian-born entrepreneur Jay Kubassek went from selling mufflers at a Midas franchise to revolutionizing Internet marketing with the 2004 launch of CarbonCopyPRO, a online marketing education company, now worth over $20 million with customers in over 160 countries.
As an independent film producer, his upstart film fund Aliquot Films is currently producing a films with Spike Lee and Abel Fererra (starring Ethan Hawke and Dennis Hopper.)
Jay's entrepreneurial spirit is irrepressible. He’s the owner of five companies, a professional speaker and trainer, international real estate developer/investor, extreme sport enthusiast and emerging philanthropist. Jay resides in NYC with his wife Jamie, son Milo and dog Cooper. Visit Jay's official website: www.JayKubassek.com - Visit Jay Kubassek's Website |
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George LudwigGeorge Ludwig is a recognized authority on sales strategy and peak performance psychology. An international speaker, trainer, and corporate consultant, he helps clients like Johnson & Johnson, Abbott Laboratories, Northwestern Mutual, CIGNA, and numerous others improve sales force effectiveness and performance. Though it's George's strategies and processes that help corporations increase productivity and performance, it's his tremendous energy and dynamism that spark the transformation. Again and again, clients remark on his amazing ability to unleash human capacity and inspire men and women to break out of their comfort zones. The result is a whole new type of salesperson. His customized presentations teach achievers to make stunning advances in their lives. From helping salespeople realize cherished dreams to helping corporations exponentially accelerate revenue streams, George Ludwig leaves audiences and individuals empowered, emboldened, and clamoring for more. George is the best-selling author of Power Selling: Seven Strategies for Cracking the Sales Code and Wise Moves: 60 Quick Tips to Improve Your Position in Life & Business. - Visit George Ludwig's Website |
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