Can you negotiate with a franchisor?
And you may be able to negotiate the franchisor’s agreement to grant a new term to someone who purchases your franchise if you sell it before your agreement expires. You may find other areas where you want to ask for changes, but keep your demands reasonable and limited.
Why do franchisors use the same franchise agreements for franchisees?
To keep things consistent and easy to replicate, franchisors rely on franchise agreements that are the same no matter who they enter into an agreement with. Known as “adhesion contracts,” they are designed to prevent having to negotiate each individual contract, essentially making them form contracts.
Should I negotiate the geographic territory of my franchise?
Negotiating on the geographic territory should be conducted anyway since it would work against you if you got the lease to a single franchise while the geography remained open to other franchisees who would eventually become your competitors in that geographic area.
Can the initial fee of a franchisee be reduced?
The initial fee however may be adjusted by the franchisor since it is just a one-time payment and they are not relying on it to make profits. It is simply the fee to join and thus it can be reduced if it is brought up by the negotiators on the side of the franchisee.
Is a franchise agreement negotiable?
It’s pretty easy — your franchise agreement will either be negotiable or non-negotiable. If you have a negotiable contract, the expectation is that the parties will negotiate the most important details of the partnership. In contrast, if you have a non-negotiable franchise agreement, then the terms are, in general, set beforehand. The expectation is that you will agree to the basic arrangement in full.
Can you negotiate a non-negotiable contract?
Truthfully, though, any party can negotiate changes to specific details, even in a non-negotiable contract. Always remember that special circumstances may necessitate adjusting the contractual terms. For example, perhaps you are opening up a fast food franchise and find that the standard territory exclusion is set to a two-mile radius. In your case, there is a sports facility three miles away. You may face the threat of someone opening another franchise near the popular sports facility and thus stealing potential customers on a regular basis. The parent company could offer an expectation, as an addendum to the contract, in this sort of instance.
Which is more likely to be altered by the franchisor on your request than the scope of the rights and protections?
2. The territory geography is more likely to be altered by the franchisor on your request than the scope of the rights and protections enjoyed within the territory
Should negotiations be conducted on geographic territory?
Negotiating on the geographic territory should be conducted anyway since it would work against you if you got the lease to a single franchise while the geography remained open to other franchisees who would eventually become your competitors in that geographic area.
Should franchisors negotiate termination clauses?
The termination clauses are usually concrete and inflexible since they are those aspects of the relationship which the franchisor feels strongly about.
Is a franchisor a flexible franchise?
However, there may be some instances where the franchisor may allow some flexibility.
Can a franchisor adjust the initial fee?
The initial fee however may be adjusted by the franchisor since it is just a one-time payment and they are not relying on it to make profits. It is simply the fee to join and thus it can be reduced if it is brought up by the negotiators on the side of the franchisee. 2.
Can a franchisor negotiate trademarks?
Franchisors will rarely, if ever, negotiate on the trademark provisions. Spending time on negotiating over trademark provisions is futile. Trademarks are the property of the franchisor and are probably the greatest asset to the franchise.
What is included in a franchise agreement?
A franchise agreement is an agreement that carefully outlines the terms and conditions for a franchisee to operate a location. The entity also discusses obligations and discusses what it will provide to the franchisee.
Negotiating tips and franchises
If not negotiating with a franchise attorney, you should consider adopting these negotiating tips to ensure success when negotiating terms. You have wiggle room where the upfront fee is concerned. Your rate can be reduced, and you may be able to finance some of the startup costs.
What is the initial franchise fee?
The initial franchise fee, sometimes simply referred to as “the franchise fee,” is what you usually find on websites like Entrepreneur, Business Insider, Forbes, and Franchise Times. If you read any list of “the most affordable franchises,” you will see them stacked with flat fees that you assume you can pay to buy into that particular franchise. The initial franchise fee is just the tip of the iceberg. It’s the fee you pay the franchisor for their great idea. You will be paying the franchisor for the use of their trademarks, methods of operation, marketing techniques, and other proprietary information.
Can you negotiate yourself?
Consequently, we’ve drafted over 100 FDDs and reviewed over 300 of them for franchisees like yourself. We know where to look and what to look for. Let us take care of reviewing your FDD and Franchise Agreement. We’ll provide you with a full legal opinion, any red flags, and negotiation points. We’ll even negotiate on your behalf if you’d like.
