Can you negotiate franchise agreement?
What is a franchise agreement?
Firstly before I answer can you negotiate franchise agreement you need to understand what a franchise agreement actually is. A franchise agreement is a very detailed agreement between the Franchisor ( franchise business owner ) & the Franchisee ( the person seeking to invest in the franchise ). There are many considerations a Franchisor must consider when creating a franchise opportunity including;
- Intellectual property protection
- Daily operations including changes to legislation & working practices
- Franchise territories including mapping, exclusivity & dispute handling
- Length of agreement & renewal rights & terms
These are just a few of the many considerations a Franchisor must allow for and detail in a franchise agreement. The franchise agreement should clearly explain each parties rights & obligations but is also a tool to protect Franchisor, Franchisee’s & the business as a whole.
For example, part of the agreement maybe to detail the use of the company logo including colour. If a Franchisee opened a retail outlet & the logo colour was incorrect then this could damage the franchise brand. The same could apply if a Franchisee was to breach their territory & traded outside the agreed area. This could damage a neighbouring Franchisee’s business, plus lead to problem’s within the franchise & business as a whole.
So can I ask for changes of the franchise agreement?
Buying a franchise is a business investment, in any business transaction you can attempt to negotiate anything. That said usually the Franchisor has planned the franchise well & considered all challenges & pitfalls operationally, it is then unlikely they will be willing change agreement terms. The mains reasons for this are consistency in that all Franchisee’s share the same obligations with the Franchisor. Also that the terms of the agreement should have been created to give the business, which effect’s all Franchisee’s the best chances to succeed.