The Franchise Agreement:
Obtain an attorney/lawyer that is familiar with franchise law or at least corporate law. You should have him or her preview your franchise agreement and explain everything step by step as to what you are obligating yourself to. The attorney/lawyer will make certain who is legally signing the documents whether it is the corporation or other entities. There will be certain terms and terminology that are critical in any business agreement and some that may be needed that are unique to the francise that you're negotiating for. The franchise agreement should, in exact detail, outline the expectations and responsibilities of both the franchisor and the franchisee. The franchise agreement will normally be written to favor the franchisor. While you have a business interest in your franchise, they are responsible for all of the other franchisees doing business with them.
You should get financial advice from your bank or financial advisor before you sign any documents. Do not go to a meeting and sign any documents without having good legal counsel to represent your interests. Once the documents are signed they become a legal binding contract!
The franchise agreement outlines the legal obligations of you (the franchisee) and the corporation known as (the franchisor). Some corporations will use a standard contract, others may have a special contract that can be changed to meet the need or needs of both parties. The agreement should state and stipulate all of the terms. They should include but not limited to signing fees, total obligation of funds, your territory, territory restrictions, percentage that you will pay in ongoing or royalty/ franchise fees, the length of the agreement, franchisee renewal fees, operational support from the corporation, and any advertising budget that you expect from the franchisor. The contract should also have termination guidelines, closing or selling the franchise, in the event of death will your family have rights of survivorship, Will it be passed on to your heirs. Any promises from the franchisor should be put in writing and in the contract. If it is not in the standard agreement then it should be added as an addendum. It is very easy for promises to be made and many times after the agreement is signed the promises seem to disappear. Get all promises written into the contract.
Owning your own franchise has many benefits. More than likely you are getting an established, well-known name, as most franchises have been in business for many years and have spent a good deal of time and money to get the brand name recognition. The franchise has a proven track record with many very successful franchisees. You will not need to try and earn a reputation for your business. You will be trained in every step of running the business. However, when you are involved with a franchisor you will be agreeing to operate the business by their guidelines with a very limited amount of flexibility. If you buy a McDonald's franchise don`t try and convince them that having white linen tablecloths and the ability to serve wine would enhance their market share. The franchisor has had years of experience in the industry; they have tested ideas and know what will work best to make your business successful.
Franchisors that have a good reputation for helping franchisees become successful will be in contact with the franchisee on a regular basis. This may happen online through e-mails or newsletters, regular visits from corporate representatives, and should provide someone with whom you can contact with problems or questions. They will also establish regular training sessions along with conventions to keep you updated on every aspect of your business.
When you are looking for the right franchise for yourself, attend franchise seminars where multiple franchisors are in attendance seeking new franchisees. You will find opportunities with different financial commitments--from reasonable to very substantial, from house cleaning to restaurants and hotels. If you are not ready to leave your full-time job you will even find opportunities to build a business in your spare time. Be wary of franchisors that are offering a deal and are willing to bend the rules or are to eager get you involved! They may be having trouble attracting people and that could be an indication that their business may not be doing as well as they say. You will have hundreds of great companies to choose from. Pick the one with the best track record, the one that you would like to be involved with.
Do what you enjoy, build a successful business with the help of the right franchisor. They want your business to succeed as well. Once you have finally signed the franchise agreement, work
hard and enjoy your success!
For more articles of similar interest click these links:
How to choose the right business
Owning a Franchise: Is This The Right Choice For You?
Questions To Consider Before Investing in a Franchise
Four Reasons Why You Must Delegate Authority To Succeed