How flexible are franchise fees and agreements?

Before investing in a franchise, it’s natural to wonder how much room there is for negotiation – whether that’s over fees, contract terms or the size of your trading territory.

While franchising offers the reassurance of a proven business model, it also comes with strict agreements designed to maintain fairness and consistency across the network. Here, leading franchise experts explain what is – and isn’t – open to discussion when joining a franchise…

Are franchise fees negotiable?

Franchise fees are generally not open to negotiation. Established franchisors rarely adjust their fees because doing so would create administrative headaches and potential dissatisfaction within the network.

Brian Duckett, former chairman of The Franchising Centre, explains that having the same fee for everyone “makes management of the network easier for the franchisor and makes the relationship equal for all franchisees. Having 50 different versions for 50 different franchisees would clearly be impractical and lead to numerous problems.”

Will less-established franchisors reduce fees?

Duckett notes that while fees are typically uniform, differences can exist between early franchisees and later entrants due to amendments over time.

John Pratt, senior partner at Hamilton Pratt, notes that a franchisor at an early stage of development may reduce the initial fee if they are “looking for assistance from the franchisee in developing the franchise”. The reduced fee is to “reward the franchisee for taking the additional risk.”

Can you negotiate a franchise agreement?

In most cases, no, you cannot negotiate a franchise agreement. Franchisors almost always present them on a standard, non-negotiable basis.

“It is one of the guiding principles of franchising that franchisors do not negotiate the terms of their franchise agreement”, explains Pratt.

“Franchisors usually – and indeed should – adopt an approach where they emphasise that the franchise agreement has to be in standard form. It would be an administrative nightmare for a franchisor to have franchisees all on different and separately negotiated franchise agreements.”

Vicky Wilkes, head of legal at Aston Villa Football Club, adds that uniformity protects everyone involved: “It allows the franchisor to manage the network more efficiently, but also means that every franchisee in the network has the same rights, but is also subject to the same obligations and restrictions.”

“If there are different franchise agreements in the same network, it may lead to bad feeling between franchisees.”

So can franchise agreements ever be different in the same network?

Wilkes adds, “Whilst it’s possible to have different franchise agreements in the same network, it is very unusual.”

Brian Duckett adds that when differences in franchise agreements do arise, it’s usually over time due to system updates.

“It’s very unlikely that every franchisee will have the same contract. This is simply because, if a network has been going for a number of years, it will have made various amendments. These will have been incorporated as new franchisees join the system or existing franchisees renew their previous agreements.”

Can a franchisor change a franchise agreement once I’ve signed it?

“Absolutely not,” explains Pratt. “Once you enter into a franchise agreement it is written in stone for the duration of the agreement.”

Franchisors do retain some operational flexibility through their operations manual but the franchisor cannot alter the terms of the franchise agreement by altering the operations manual.

Renewal of the franchise agreement may bring changes, but only at the franchisor’s discretion.

Why do I need a lawyer to review a non-negotiable franchise agreement?

Even if the franchisor won’t negotiate, legal review is crucial. John Pratt explains: “The real reason why you need a report from an expert franchise lawyer is that you need to know if the agreement you are being asked to sign is unusual, unfair or unworkable.

“Franchise reports can be obtained for as little as £400. In view of the size of most franchisees’ financial commitment – and commitment in time and energy – this is a small price to pay for peace of mind.”

Can I negotiate my trading territory?

Negotiating territory depends on the franchise and the franchisor’s willingness. Wilkes says: “If a franchisor is willing to consider negotiating the size of the territory, they’ll need to be convinced that you have the financial and operational capabilities to service the whole of the territory.”

John Pratt adds: “Ensure that your franchisor has allocated the territory in a way that is commercially sensible. In practice, franchisors are extremely unlikely to negotiate the size of a territory if they have carefully calculated it using sensible commercial criteria.”

Key takeaways

● Franchise fees are usually fixed.

● Franchise agreements are generally non-negotiable to maintain fairness and uniformity across the network.

● Legal advice is essential to identify unusual, unfair or unworkable provisions.

● Territory negotiations are rare and depend on both the franchisor’s assessment and the type of franchise.

● Signed agreements cannot be amended unilaterally; operational flexibility is limited to the operations manual.

Understanding these points will help you assess franchise opportunities with clarity, confidence and realistic expectations.