Her last article focussed on the key franchise agreement terms of the franchise contract that franchisees should be aware of to help ensure they sign up with their eyes fully open. You can read this here.
A foreword from amy
As I said previously, before you read any further, articles such as this should not be seen as a substitute for taking legal advice on the terms of your franchise agreement but more a tool to help you have a working knowledge of the terms of the franchise agreement before you have it reviewed and thereafter.
There are key franchise agreement terms you should look out for in your draft franchise agreement. We are often surprised to hear how many people do not take advice on the terms of their franchise agreement prior to signing it. Often we hear that this was because they were told it was non-negotiable or the fees for a review seemed high. In our experience, regardless of whether the franchise agreement is negotiable or not, being fully aware of what your franchise agreement means in order to take a considered commercial decision and enter the agreement with your eyes open is invaluable.
It is therefore very important that you have at least read the franchise agreement ahead of your solicitor carrying out a review for you. It is very rare that a franchise review (either by report or otherwise) would comment on every single clause of the agreement and, as you will be expected to abide by the terms, you need to be clear on what all the terms are however unimportant certain things may seem.
When considering whether a franchise will be suitable for your needs you need to consider what your long term business goals are. Are you looking to take a franchise as an income stream to carry you through to retirement in 5 years time? or are you looking at the franchise as a long term income stream and potentially with a view to building a business up which is capable of being re-sold?
It is important to consider your strategy in light of the renewal provisions in your franchise agreement. Your franchise agreement should contain a right of renewal i.e. the right to enter into a new franchise agreement for a further term after expiry of the first 5 (or 10) year term.