As a potential franchisee, are you able to negotiate a franchise agreement?

John Pratt writes:

Generally, the answer is ‘no’. 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. It would also be very expensive for both the franchisor and franchisees because lawyers would have to be involved. This means that franchisors adopt a take it or leave it approach to the franchise agreement. That does not mean that you should not obtain legal advice on the terms of the agreement because you do need to know the extent to which provisions in the agreement are unusual, unworkable, or unfair.

In exceptional situations it may be possible to negotiate preferential terms so that the first few franchisees who are taking a greater risk because there isn’t a proven track record of franchisee success, can often negotiate a reduction in payments to be made to the franchisor whether in terms of continuing fees or the initial fee, but opportunities to negotiate are extremely limited.

John Pratt is senior partner at specialist franchise firm Hamilton Pratt and has advised franchisors for over 25 years.