5 Things To Look Out For In A Franchising Agreement
Congratulations! You found a franchise that you’re interested in becoming a part of.
…Or maybe you’re just looking into everything that is involved with franchising and becoming a franchisee before making the decision to do so.
Pro Tip: If you’re looking into franchising check out our latest article, Pros And Cons Of Franchising for helpful insight!
Whatever your reason for wanting to know more about franchising and the franchising agreement that you sign when becoming a franchisee, we’ve got you covered right here in this article.
What Is A Franchising Agreement?
A franchising agreement is a contract between you and the franchisor. It lays out the terms and conditions of your partnership and grants you the right to use the name and the associated trademarks to run your business.
Essentially a franchising agreement lays out all of the important information you need to know about what you are getting when you purchase the business as a franchisee.
Let’s take a look at a few of the key items you should look for in a franchising agreement.
Fees
When you decide to become a franchisee you will obviously have to pay initial start-up costs, franchise fees, marketing, and advertising fees, royalties, and more. It’s important to know what costs are associated with operating a franchise and all fees should be clearly laid out in the franchising agreement so no confusion, miscommunication, or mismanagement of funds takes place.
This also gives you a clear picture of the amount of money you will need to have to fund your investment.
Length Of Agreement
When you invest a lot of money into a business you want to ensure that it isn’t taken away from you. A franchising agreement should list the length of time the agreement is active (typically between 10-20 years) and that when this current agreement is coming to an end there should be a clause in there to extend or redo the agreement if necessary.
Ending Of Agreement
Again, you don’t want to lose all of your investment, time, and hard work for no reason so you should see a section about ending the franchising agreement.
It will state how you or the franchisor can terminate the agreement, if you are allowed to resale the franchise during the active agreement time and how to part ways after the agreement has been terminated.
Operating Rules
The entire point of owning a franchise is to be guided and supported by a successful franchisor who has gone through the trials and tribulations of opening a business.
You’ll find all the information necessary to operate the business under the guise of the franchisor and the franchise team.
You’ll find the rules you need to abide by, information on training, vendors, supplies, marketing, hours of operation, software that needs to be used, employee wages, and much more.
This might be the most important section of the franchising agreement because of all the relevant and useful information that you will consistently refer back to.
Territory
How would you feel if you opened a franchise and all of a sudden someone else opened the exact same one down the street?
Your franchising agreement will hold the information about your franchise territory and if you have exclusive or shared rights within a certain area. Make sure you have a clear understanding of what your territory is!
Want To Know More About Franchising And The Franchising Agreement You Will Sign? See MVision Franchise!
To learn more about franchising and what is involved in a franchising agreement schedule a call with MVision Franchise today!
Owner and founder of MVision Franchise, Dr. Marc Camras, has worked with countless entrepreneurs to find their perfect franchise. He has curated the largest network of franchises and start-up concepts so you’re sure to find what you’re looking for.
To learn more about Marc Camras and the MVision Franchise mission, continue reading our blogs and browsing our website!