Franchise Agreement

You have to make sure that you understand all the contents of a franchise agreement before signing it. It is a legal contract the binds both parties,...


You have to make sure that you understand all the contents of a franchise agreement before signing it. It is a legal contract the binds both parties, the franchiser and franchisee, to satisfy all their obligations to each other.

Before concurring into any franchise agreement you should be comfortable with all the stipulations demanded. You must have with you a franchise attorney so that you can see what your options are and what terms can be negotiated. Before you arrive to the point where you are negotiating your franchise agreement, there are steps that need to be observed.

Be sure that the franchisor will allow negotiations with the terms of agreement. There are some franchisors who openly express they are not open to negotiations while there are some who are open to negotiations. In order to protect yourself make sure your franchise attorney reviews the agreement to identify any possible issues even though you cannot negotiate the agreement.

You must be aware that there are some non-negotiable terms in a franchise agreement. Royalty fees, territory size, termination provisions and length of the agreements are a few examples of non-negotiable terms. These are what we call the untouchable provisions. You can hardly find a franchisor who will agree to negotiate these provisions.

Ask your franchisor if you will not be held liable for any loss or damages that are not caused by any of your employees or you. You can request for a written document so that it be easily comprehend by both parties together with their lawyers.

Do not forget to review the provisions that require you to spend a set amount of money on advertising. There are some franchisors that offer discounts on first few years of operations.

Be sure to consult your lawyer if you have some questions on some sections that need to be changed or deleted. Keep in mind that the agreement is complicated and has a tendency to favor the franchisor. Now before you sign on the dotted line, make sure you fully understand your obligations and comfortable with the final agreement.

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