The Ins and Outs on Negotiating your Franchise Agreement

Shelton Law & Associates

Date

Dec 14, 2016

Buying a franchise could be a lucrative opportunity for you. However, if you fail to take a few specific steps, it could lead to a significant risk. Potential franchisees are not experts in the legal transactions in most cases. That’s why having a bit of background information and support can help you ensure this process goes as smoothly as possible. Here’s what you need to know heading into it.

BETTER TOGETHER

Beyond all other steps that you take, before you buy a franchise, hire an attorney. You need an expert who understands franchise law very well and has a solid understanding of the intricate details of your contract. Any organization that does not want you to hire your own attorney is one you do not want to work with anyway. Specifically, you need to ensure you have a trusted professional who can provide you with insight into what you are signing and agreeing to before you do so.

Although franchise agreements seem to be straightforward and a one-size-fits-all approach, they do not have to be. Most franchise organizations will modify the terms of the agreement to meet your needs. You’ll want to work with your attorney to facilitate areas of improvement to the terms in your favor.

There are various ways you can do this, including:

  • Adding extra help for opening the business, such as additional support on opening day.
  • Asking for enhanced field support during the first few months to support your needs.
  • Asking for financing to celebrate a grand opening. Many will work with you on marketing budgets.
  • Modifying the transfer fee, which could help you if you sell the business later.
  • Ensuring the payment terms for the initial fee are in your favor.
  • Asking for a grant of the right of first refusal before they sell a new franchise in your area.

Work with your franchise attorney to ensure the contract terms are fully understood and acceptable to you.

NON-NEGOTIABLE TERMS

Not every franchise agreement detail will be flexible. Many times, non-negotiable elements do exist and franchisors will likely walk away from the opportunity to work with you if you are not willing to accept them. Keep in mind that your attorney will help point out which terms are going to be non-negotiable.

WHERE TO START

Make your first step a consultation with Shelton Law & Associates. Let our trained professionals help you make the contract you are about to agree to one that will support your needs and help drive success in your new organization.

Contact our offices today to learn more about how you can successfully negotiate your next franchise agreement to better suit your needs and outcomes.

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