Making The Most Of The Franchise Agreement
Friday, July 25th, 2008 Subscribe To Our Feed
The franchise agreement is the most important piece of paper that you will sign before starting a franchise business. Hence, it’s quite necessary that you employ a competent franchise attorney to go through the franchise agreement. The process of getting this piece of crucial document is also not instantaneous. You cannot just go to a franchise opportunity and say “I am here to buy a franchise unit from you, can I have the franchise agreement please?” You need to follow certain steps before. First, when you come to the top franchises, they will offer you the UFOC and give you 10 days to review it. If you like the proposal, you can visit them on Discovery Day and if you are still interested in buying a franchise from them, you will get to see the franchise agreement.
The franchise agreement and the UFOC will have more or less the same language and fact. But, there will be no background information about the company or the list of people who have brought a franchise from them in the franchise agreement. Instead, it will lay down the guidelines that will govern the relationship between you and the company that is offering the franchise business for sale. Hence, most of the time, the agreement leans heavily towards the franchisor with the franchisee having little or no say in the matter. Some franchises may allow some changes in the clauses, but the best franchises in the business will have a franchise agreement that is totally non-negotiable. This ensures that the brand name and image remain the same at each and every franchising location.
The basic points covered by the franchise agreement will include the franchise fee and other charges that the prospective franchisee is supposed to pay. It will also place rules and regulations regarding how to franchise the business. There will be detailed instructions on how the unit will look like, what will be sold from there and from where the materials will be sourced. In addition, there will a comprehensive list of trainings and other supports the franchisor will provide. The franchise agreement may or may not guarantee a fixed territory and sometimes, can include clauses on how to terminate the franchise agreement and how to mitigate any problem that might arise. It will also make you aware of the advertisement commitments as well as the tenure of the franchise agreement. After signing, this agreement becomes the backbone of the relationship between the franchisor and franchisee. Any one of them can take the other to court, if they think that the other one has broken any clause or rule in the franchise agreement.
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