Will the franchisor negotiate the franchise agreement?
Looking to Buy a Franchise?
One of the main questions you might have is about whether you can negotiate at all on the agreement. The reality is that this is difficult – but that’s not a bad thing! Read on to find out more.
Why franchise owners want consistency
When you buy into a franchise, you’ll discover standardised contracts because the entire business model is based on sustainable, consistent replication of the brand across its network.
However, there are instances where you may be able to negotiate on contracts. This will depend on factors like the franchise maturity, size and brand recognition, the type of market, the number of franchises you plan to license, and what you’re asking for. We’ll give some examples of this below.
The Franchise Agreement
A standard franchise agreement allow the franchisor to contract with a large number of franchisees without needing to tailor changes each time. As a franchisee, you sign up to this knowing that every other franchisee is following the same terms and system. Remember too that if you are keen on a franchise, it’s because it works!
Should you be worried if the franchisor won’t negotiate?
It is a good sign if your franchisor won’t negotiate on the franchise agreement contract. After all, the consistent replication of a proven business system is essentially the appeal of a franchise in the first place. For consumers to receive the same brand experience, those branded standards must be enforced across the entire franchise network. When each location is consistently on-brand, customers are more likely to shop with the brand.
So don’t be afraid of standard contracts – the fact that a franchisor won’t negotiate means a level playing field and consistency for all franchisees in the network and confirms that they are confident in their model. Standard contracts are there to ensure the ongoing success of the franchise brand and to help you to grow a successful business of your brand.
Practical changes you can ask for
The key here is being reasonable. Examples of changes that may turn out to be acceptable to the franchisor include:
More money towards your launch marketing and advertising from the central pot
Additional help opening your business, such as having field personnel on hand for longer and extra training
Greater protection for your territory – you might want to put a case forward for having a larger area under protection, with scope to grow. This can be a challenging business case to make, but you may have some success with a newer and smaller franchise.
Modified payment terms for your fees
First notice on any territory being sold next to yours
In conclusion
In most cases, and especially with established franchises, the chance of contract negotiation is small, but this is for highly positive reasons and often works in your favor. A successful franchise will have built up its business by creating a standard system that works and scales. When it provides a standard, non-negotiable contract, that’s because it’s maintaining that consistency and the brand that customers know and buy from.
Essentially it helps you to fast-track your way to business success by becoming a license-holder. As ever, the key to reassuring yourself is to do your research, speak to other franchisees in the network, ask lots of questions and find out as much as you can! There has never been a better time to get into a franchise – there is a world of opportunity out there with proven models and established brands just waiting for you to apply your unique talents and build your own success story.