Once, I came across a franchisor, who told me that they do not negotiate their franchise agreement. I found this franchise concept totally foreign to me. Let me ask you! Have you ever entered a business transaction where the other party said they would not negotiate? Though, this might be the case; but, it does not mean that you should not try also.
What I found even more laughable was the reasoning as to why the franchisor would not negotiate. They said that it has been advised o them by their counsel to not do so. For sure, if any franchise system uses this type of logic, I would definitely stay away from them.
This initiated a question: Let us say the perfect candidate had an interest on buying many units in particular brand. Does this mean that the franchisor would turn a candidate away, who was looking to buy their franchise model? It might not happen because many people are dumb; but, they might not e always stupid.
When I first got into the somekeyword and brokerage industry, I was quickly exposed to this type of nonsense. While I admittedly lacked experience regarding the mechanisms of the franchise industry, I did have significant experience in closing on various franchise business transaction. When the franchisor told me they never negotiated their agreement, it gave me pause and I told my client not to consider the opportunity. Interestingly enough, upon further research, I quickly discovered their model had a NUMBER of legal issues and has since just gone away.
There is another thing I find bothersome regarding an unwillingness to negotiate. First and foremost, I think a willingness to negotiate is a sign of a good franchisee. They are actually thinking about what they are going to do and want to be prepared. Again, in my experience, a business transaction that is negotiated always seems to go better than one that was not. You would think a franchisor would prefer to have a smarter and more importantly better prepared franchise business owner.
When you buy a franchise, it should be a profitable business partnership. The franchisor makes money from royalties and fees, and the franchisee makes money from the system. When I hear about a concept not willing to discuss specifics of an agreement, it seems to me to be sign of red flag. What are they so concerned about? If I buy into this somekeyword model, how am I going to be treated going forward? What if there are provisions in the document that is not applicable or even worse unreasonable? Wouldn't prudent business practice dictate that said provisions be removed?
Now, when you buy a franchise; it's a significant investment. As a franchisor, I would not want to have a misinformed franchisee and I almost certainly wouldn't want to have someone in my franchise system that does not have a clear understanding of what they signed, nor, sign an agreement they are not comfortable with. It is the classic example of starting off on the wrong foot and almost certainly will lead to problems in the future.
The bottom line is this, if you are going to buy a franchise, hire a qualified franchise attorney. Make sure you thoroughly review the franchise disclosure document and eliminate terms you are simply not comfortable with. If the franchisor demonstrates a degree of inflexibility, and or seems difficult, it might be best to walk from the deal. If you have problems out of the gate; there is a good chance there will be problems in the future-
Author bio:
The author of this article has specialization in Franchise Concepts. His enormous experience is summed up in the article -Franchise Disclosure Document brings the master plans for the Franchise Opportunities'. Along with this he also provides somekeyword, franchise development and brokerage services to both individuals and franchise systems.Read more: somekeyword
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