subject: Key Aspects of a Franchise Agreement [print this page] Key Aspects of a Franchise Agreement Key Aspects of a Franchise Agreement
Franchising is a much sought after business opportunity available for budding entrepreneurs. A franchise business can benefit from the franchisor company's success. This is an important factor, especially in a market driven by brands. While start-up companies struggle to get consumers' attention, a franchise gets associated with a well-known brand, automatically ascribing a certain value to it. Opening a franchise is not exactly a simple task- you need a fool-proof business plan and access to finances. Besides this, you should also be aware of the legalities involved in setting up a franchise and the franchise laws of your state. A qualified franchise lawyer can help you in this regard.
Franchise attorneys play a very important role in franchise deals as they assist franchisees in successfully executing their business agreement. Most often these agreements involve legalese that calls for careful scrutiny before signing the agreement. When a franchise attorney examines the terms and conditions in the agreement he can point out aspects that may not be in favor of the franchisee. This can then be negotiated or amended so that it is fair to both parties. This can help prevent agreement-related issues from cropping up in the future. Discussed below are some aspects involved in a franchise agreement: Exit policy
Committing to stay in a franchise for a long duration can be difficult owing to unstable markets and changing financial situations. This can result in franchisees having to leave a franchise prematurely. But sometimes this situation can be made difficult by franchise agreements with complicated and restrictive terms. So, at the outset, look for the terms and conditions governing the exit of a franchise. With the help of a franchise lawyer try to change restrictive terms to allow you some flexibility for exiting the franchise. Another aspect deals with sale of franchise. Look for conditions (mentioned in the agreement) under which the franchise can be sold by the franchisee. The agreement may outline the level of involvement and help the franchisor will offer in this situation.
Guidelines
When signing a franchise agreement, look for terms that appear too stringent or restrictive. The agreement may state that the deal can be severed if you fail to follow even one of these strict guidelines. These principles essentially serve the purpose of maintaining a sense of uniformity and accountability across different franchises. However, following all of them in exactitude may not be practically possible. So along with your franchise lawyer review these conditions so that you can discuss this with your franchisor to come up with guidelines you can work with.
Using suppliers
Most franchisors offer franchisees details of suppliers from whom they typically purchase products. It is best to use these recommended suppliers for two reasons. Firstly, it will save you the hassle of finding suppliers and getting them approved by the franchisor. Secondly, with recommended suppliers you will not have to test their products for quality which you would otherwise have to do.
Franchise agreements are binding as they are contracts formed between two parties, guaranteeing a certain quality and term for the relationship. These agreements are beneficial to both franchisor and franchisee as they outline their responsibilities and rights. Reaching an amicable decision on the agreement can be made easy with the assistance of a franchise lawyer.
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