The Franchise Agreement: 7 Points to Be Crystal Clear On

vector-man-magnifying-glass-Peter GilfillanOne of the most important documents you will sign as a new franchisee is the franchise agreement. That document defines the relationship between you—the franchisee—and the franchisor. Before you sign on the dotted line, note these seven points to be crystal clear on:

  1. Territory: Not all franchisors guarantee exclusive territory. Make sure you understand the policy of the franchisor and what level of protection you can expect.
  2. Negotiations:Many terms in the franchise agreement will be non-negotiable. Make sure you know what those are, and also know what your expectations are on points that are negotiable.
  3. Fees: The agreement will document all fees related to franchising the business. Be sure you are clear on the total investment, including franchise fees, royalties and marketing expenses.
  4. Suppliers: Many franchisors have negotiated rates with specified suppliers and require you to buy your products and supplies through them.
  5. Renewals and sale of the business: Make sure you know how long your agreement is in effect. Can the franchisor reclaim the business if you are not turning a profit by a particular deadline? What are your options if you decide to sell the business? Be clear on those answers before you commit.
  6. Proprietary statements: The agreement will outline how you as a franchisee are permitted to use the franchise logo and advertise your business. You should understand those requirements to ensure you operate your business in compliance with the agreement.
  7. Franchise attorney: It’s important to secure an attorney who specializes in the franchise industry. He will be able to walk you through the agreement step-by-step, ensuring you understand all of your obligations and rights as a franchisee.

If you’re ready to own your own franchise, contact a winning franchise consultant today to discuss the best franchise opportunities for you.


Pete Gilfillan

Pete Gilfillan

Pete Gilfillan is a passionate business leader who is driven to help people achieve their dreams of career independence through franchise ownership. With more than twenty years’ experience as a corporate executive across multiple industries and a history of small business ownership, Pete brings a wide breadth of experience to his work as a franchise consultant. His unique knowledge of franchising, energetic outlook, and determination to find the right franchise for each candidate’s lifestyle and goals set Pete apart in his field. Since 2011, Pete has been working as an independent franchise consultant with FranChoice to help potential franchisees gather information, evaluate opportunities, and make smart selections in franchise ownership. In his role of helping each candidate find his or her optimum investment and lifestyle choice, Pete has found his most fulfilling and rewarding professional calling.

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