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Would a less-established franchisor be willing to negotiate on the price of their franchise?
It is one of the guiding principles of franchising that franchisors do not negotiate the terms of their franchise agreement. The reason for this is that it is an administrative nightmare if franchisees are on different agreements and also causes ill feeling if some franchisees have better deals than others, so for an established franchisor negotiation will not take place. The same rules should also apply for a less-established franchisor. Clearly, less established franchisors have a harder job attracting new franchisees than their more established competitors. As a result, they have to offer advantageous and attractive terms. What this means is that they need to take a realistic view of what they are charging for their franchise. Of course, they can subsequently increase their charges when they have a more established network. That is what should happen but, in practice, if a franchisor is at an early stage of development and is looking for assistance from the franchisee in developing the franchise there may be an argument for reducing the initial fee to reward the franchisee taking the additional risk and participating in the development of the franchise.
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