May 24, 2024

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How To Negotiate Franchise Agreement To Maximize The Profit

2 min read

The franchise is a unique business model where you can replicate a sustainable and consistent copy to extend it. As the franchisors want consistency, they always prefer that all the franchisees have the same type of agreements. Not all franchisors agree for the negotiation as there are many factors like the market, size of the system and brand awareness in the area depend on it.

What is the Franchise Agreement?

The agreement that contains all the terms and conditions of the franchise business is called the Franchise Agreement. In most of the cases, the franchisors hire the Franchise Attorney and create a common agreement by which they can do contract with several franchisees.

After reviewing the contract and ensuring the factor that it is deceptive or not against any public policy then the Contracts of Adhesion is enforced. The franchisors generally don’t spare time to the franchisees to read the agreement thoroughly as specified by the Franchise Rule. In case, there is any ambiguity found in the contract the court has to interfere and does the interpretation of the clause in favor of the opposite side.

What are the changes for which you can negotiate?

In case, you want to accept the agreement without any change then it can be your drawback. It is advisable to hire an experienced Franchise Attorney to help you in the negotiation. There are certain changes that you can ask for.

  • Added Help: As the franchisor is in the business for a long time and on the contrary, you may be venturing in this domain for the first time. For this, you can ask for added assistance so that you can set up the business well. You can preach by saying that your profit is eventually their success as well. The guided suggestion and training will help you to ease the struggle of the initial days and establish your business well.
  • Finance: Many franchisors financially help the franchisor by offering money for advertising and marketing.
  • Territorial Protection: The franchise business is for a particular location only but you can negotiate to get a protected territory. You can get a greater area than stated in the agreement. However, you have to have territorial protection for that.
  • Transfer fees: In case, you want to sell the franchise in the future, you can negotiate the transfer fees.
  • Modified payment option: It is very tough to negotiate as most of the franchisors resist it.
  • Extended time frame: The franchisors always ask to maintain a certain standard that will match their level.