Top 7 Secrets to Franchise Agreement Negotiations

So you are thinking about buying a franchise are you, that is until you read the onerous franchise agreement and thought to yourself; What else does this company want from me? My right arm, first born and soul? Yes, indeed it does seem like that in reading these modern franchise agreements and you think to yourself who on Earth would sign something like that? And yet there are over 500,000 franchised outlets in the United States and they account for one-third of every consumer dollar spent in our Nation.

Many franchise attorneys will attempt to negotiate certain terms out of the franchise agreement on behalf of their client and yet you may find that some of what is negotiated is indeed more of an attempt of the franchisee attorney to prove his self-worth. Look I am not down on Franchisee Attorneys, I am down on all of them. And look, I am a retired franchisor and I have negotiated a few franchise agreements in my life, generally my policy was not too. This resulted in less than 10 franchise sales over the years for our company.

If you want to negotiate a franchise agreement with a smaller franchisor, you need to have an open dialogue and talk about fairness. Larger franchising companies are liable to simply tell you “no way” non-negotiable. You need to be non-threatening in your demeanor. You need to explain your value to the franchise system and how you can also help the franchisor and franchise system.

You need to demonstrate your hard work ethic and teamwork and social skills to get along. Then and only then can you expect me, the franchisor to listen and start to consider your points of contention for possible modification of the franchise agreement. Consider this in 2006.