Touchables and Untouchables

Large, established franchise companies generally offer their franchises on a non-negotiable basis. This accomplishes the dual purposes of maximizing income while developing a uniform franchise system in which all franchisees have signed the same agreement.

Smaller, and emerging franchisors frequently negotiate some of the aspects of the franchise agreement at the time of the sale by preparing an addendum to the franchise agreement. There are, however, some aspects of the franchise program that you should not negotiate, if possible.

Untouchables: Non-negotiables would include the monthly royalty, advertising contribution, franchise term, renewal and transfer fees, and conditions of violation of the franchise agreement. These should not be changed, if at all possible.

Discussables: There are other aspects of the franchise, even including the initial franchise fee (for new franchisors), which could be discussed and negotiated. The franchise territory is also a matter that is frequently discussed. You may also want to give the franchisee an option of acquire additional locations within a certain period of time.

This will vary from franchisor to franchisor, but if you think in advance about the parts of your franchise agreement that are very important to you, and about which parts you are willing to negotiate, you will be better prepared to make the sale.

Author:.

John Power, founder of AdvantaFran Franchise Consulting, has extensive experience in franchise development and sales. He has been in and around franchising for over twenty years.

In 2005 Mr. Power began working as a franchise development consultant, and developed his own boutique franchise development firm. He has worked full-time in the franchise industry since that time.

He has developed a franchise consulting company with experience in all areas of franchising, from ...

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