Franchise Agreements Problems
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by: squonk17
As a new franchisee in a network, you should look to get a side letter written to override your franchise agreement to cover the following:
- A written manual for running the business that is proven to work.
- A model that will give you profits in your work.
- Ongoing input to the business to keep your brand alive and in the market.
- Training in the franchise system and ongoing updates to it.
- Help and advice about how the company works - how to get going, where your clients come from and support with getting them
- Honesty about everything they've told you during the sales process.
- How to quickly get out of the business should the need arise because of personal issues.
- Ways of removing yourself from the business in a speedy manner should the need come up due to inability to generate required finances in a set amount of time.
- Being able to get out of the agreement in line with the franchisor's ability to get out.
If the franchisor is not willing to sign up for obligations such as these (i.e. they don't even want to have the risk of their franchise not doing a reasonable job), but wants to hold you to paying him regardless of his support, then you have to wonder exactly what your contract will offer to you should you have to seek legal recourse in a dispute.
A franchisor is looking to expand his business in the fastest way he can, with the smallest amount of the load on his shoulders. I'd prefer to see some of the risks with the franchise shared between the two parties involved. I'd rather see that the seller is willing to put his money where his mouth is too. If he is not keen on this then I would question whether you would be better to go it alone. The facts show that a franchise is no more likely to be a winner than any other business, so think carefully about where you want to be.
If you are wary about your contract, don't sign up to it. The francisor may well be a great guy, but this is your life you are talking about. It's your business and you need to be sure that you are covered if something doesn't quite go the way the franchisor says it will. Things DO happen. Plans go wrong. Make sure you are legally prepared for all eventualities.
About the Author
The Franchise Opportunity Guru is a website run by former franchisees to help people who want to buy a good franchise. You will find unbiased information about all kinds of franchise opportunities there, plus some great questions to ask when choosing a
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