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Can you negotiate your franchise agreement?

| Feb 22, 2021 | Franchise Law |

Getting started with your first purchase of a franchise can have a steep learning curve. Depending on the franchise, you could have a full spectrum of topics to learn about as you work towards buying a franchise.

One of the first steps forward to establishing a partnership with a franchisor is the franchise agreement. The franchise agreement memorializes the expectations the franchisor has for you as a franchisee and the consequences for breaking the agreement.

This is what you should know before you sign your franchise agreement.

The bigger they are, the less you can negotiate

In most cases, a franchise agreement is not negotiable, especially for larger franchises. These more extensive franchises maintain the same rules and expectations for each franchise to make it easier to maintain brand standards for themselves and their customers.

Small or newly developing businesses that are getting started selling franchise opportunities may have more willingness to negotiate. Since these newcomers are eager to sell franchises, they occasionally have more flexibility.

Do I still need an attorney?

Franchise agreements are a significant investment of your time and money. Typically, you will need to see the commitment through to the end of the contract. Before signing a franchise agreement, it is essential to understand the details of the contract. Franchise agreements typically include clauses that deal with topics, such as:

  • Schedule of fees
  • Frequency and amounts of payments
  • Permissions and restrictions for operations

As someone with your interests in mind, an experienced franchise lawyer can answer your questions about the agreement. A franchise agreement often lasts between five and 25 years and can be difficult, if not impossible, to terminate. An attorney can also help you understand the specific franchise agreement’s risks and obligations before you commit to a long contract term.