Who decides the length of a franchise agreement?
Louise Harris writes:
Franchise agreements should have a fixed term. That term is determined by the franchisor and will consider a number of factors, including:
• Does the franchisee have enough time to fully recoup the investment made and return a profit?
• Is there sufficient time for the franchisee to learn the business, grow it in the time frame and achieve the specific goals of the business, other than profit?
• If there is significant capital investment, it is important there is time to recoup that, unless it remains a saleable asset.
Ranging from an average of five to 20 years, the term is usually renewable with some caveats - mostly that a franchisee is in compliance with the franchise agreement.
It’s important to understand that, while the franchise term is usually non-negotiable, franchisees can exit before its end, subject to some penalties in most cases. This can be through selling, buy back or just closing in the event of distress.
Franchisees buying an existing business should seek to buy a whole new term - not what’s remaining for the outgoing franchisee.
Louise Harris is an experienced franchisor, having built and sold an award winning franchise. She is now head of strategic partnerships at easyStorage.
You might also be interested in
Shelley Nadler writes: A franchisee will be responsible for obtaining funding for and setting up their business... read more
Louise Harris writes: Most franchisors will allow a sale to take place at any point in the... read more
John Pratt writes: The answer is yes and no! The whole point of franchising is that the... read more
I’ll start with the caveat that the franchisor has been properly set up with the help... read more
Exciting Franchise Opportunities
Start your own Merry Maids franchise
Request free information
Merry Maids
One of the largest home cleaning networks in the world, Merry...
£5,999 - £ 19,995 Minimum Investment
Start your own Techclean franchise
Request free information
Techclean
Techclean is a specialist cleaning company, providing cleaning services for technological...
£6,000 Minimum Investment
Start your own Revive! franchise
Request free information
Revive!
Provides a mobile service repairing scuffed bumpers, chipped and scratched paintwork...
£14,000 - £ 32,000 Minimum Investment
Start your own Betterclean Services franchise
Request free information
Betterclean Services
Betterclean Services provides commercial cleaning services for a variety of businesses
£14,000 - £ 32,000 Minimum Investment
Start your own FASTSIGNS franchise
Request free information
FASTSIGNS
FASTSIGNS specialises in signage, graphics and visual communications solutions, and is...
£14,000 - £ 32,000 Minimum Investment
_(1)_56_59_s.png){kind=logo}
