Why is a franchise agreement non-negotiable?Posted 05 May 2016
BRIAN DUCKETT writes:
The reason for this is simple - it makes management of the network easier for the franchisor and makes the relationship equal for all franchisees, as to have 50 different versions for 50 different franchisees would clearly be impractical and lead to numerous problems.However, it is very unlikely that every franchisee in a network will have the same contract, simply because various amendments will have been made in the light of experience and these will have been incorporated as new franchisees join the system or existing franchisees renew their previous agreements. It should, however, be the case that any franchisees joining at the same time will all join on the same terms and there are unlikely to be any negotiations. The same applies when renewal comes around - a franchisee doesn’t simply renew the agreement they already have, they renew on the ‘then current’ franchise agreement, which will have the same terms as those for new franchisees.You may also have heard that franchisors should not do special deals for early franchisees, such as appearing to offer discounts on franchise fees, and nor should they. However, that does not mean that later franchisees may not find themselves with less favourable terms than early ones. That’s because the early ones were able to secure the ‘then’ deal, but current ones get the ‘now’ deal. The latter may cost more and have more onerous conditions, but that’s probably because the system is more proven.