Franchise Contract Questions

Contract Questions 

The reality of Franchise Contracts and Agreements is that they are heavily weighted in the franchisors favour, that's commercial reality.

What you need to determine, QUICKLY, is whether or not your Business Coaching Franchise Agreement is unduly weighted in the franchisors favour.   This requires a solicitor specialising in franchise law to review the agreement for you.  DO NOT skip this element of the Due Diligence process.

If the franchise agreement is heavily weighted, indeed unfairly weighted, in the franchisors favour you must ask yourself WHY.

Guarantees

Some franchises get around this by offering a "Guarantee" that "prima facie" would appear to provide comfort and act as a distraction to the other terms and conditions of the franchise agreement.  Do not be fooled by these.

Where any "Guarantees" or "Warranties" are provided your questions must focus on that element of the agreement. 

Ask the franchisor for the full details of the Guarantee, and ask how many franchisees have called on that guarantee, and how many were successful?   If NONE is the answer, proceed with caution and refer back to your previous question on how many franchisees have been more than 3 months behind on royalty payments.

Does it seem reasonable that "x" number are perhaps behind on royalties, yet the guarantee was never used?

Side Agreements

It is common in franchise agreement negotiations for "side arrangements" to be made and agreed.  Proceed with EXTREME caution here.   The company trying to SELL you the franchise and the company later trying to enforce a dispute will be two very, VERY different organisations.   You have been warned.  Get everything in writing and validated.

When any arrangements or concessions are made to the original agreement ensure that your agreement is re-worded to that effect.  Then, you'll need to ensure that no other terms and conditions have been changed. 

Make sure you get your legal representative to read and check the final document before signing.

Never accept a verbal notification for any agreed change or concession.   Known as a "gentleman's agreement" you could find that when entering a gentlemen's agreement, in the event of a dispute, there exists neither the gentleman NOR the agreement.

Never accept an email either, the validity of these can often be disputed.    

The simple fact is this - get any and every amendment or side agreement confirmed in writing, signed and have this added to the franchise agreement.  Your solicitor will guide you on this.

Accept NO Verbal Agreements

Accept NO Email Confirmations

Get EVERYTHING In Writing & Signed

Use a Franchise Solicitor

The Tips To Keep You Safe

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