Owning a franchise is an appealing option for those who are interested in leading their own success, having large amounts of control and supporting themselves with an adequate salary. Having said this, signing a franchise agreement should not be taken lightly. Franchise agreements are often complex to navigate. Before signing a contract it is absolutely critical that you have thoroughly read and understood what is being agreed upon and what the expectations moving forward will be.
Signing a franchise agreement is usually a fairly lengthy process, often lasting as long as two months. This provides the necessary amount of time to thoroughly read through the franchise agreement, involve an attorney and work through any questions or concerns with the franchisor.
The team at Law Works can help you pay close attention to the timeline of the process to ensure that the franchisor is not rushing you. If you are feeling pressured or rushed to make a decision and sign the agreement, this could be a sign that there are issues in the contract that the franchisor is hoping you will overlook. That’s why it’s critical that you ensure you are comfortable with the timeline. Discussing and agreeing on an ideal timeline at the beginning of the process will help avoid being suddenly rushed into making a poor decision.
Do You Have The Right Information?
Do you have enough information? The main factor in your decision is the information you are provided with about the franchise, and what signing a franchise agreement will mean for your life. Ensure that you have received adequate information about the franchise business, payments, marketing, reporting, product supply, returns on investment and expectations moving ahead.
Common questions to ask yourself:
- Do you understand the history of the business and its success in the past?
- Are you aware of public opinion on the franchise?
- Have you sought out assistance reading and understanding any legal documentation?
- Have you met with a financial advisor to examine whether this is a feasible option for you?
- Are you aware of the reasons the franchise is for sale?
It’s can be an overwhelming list of questions but if you answered “no” to any of them, then it’s very possible that you do not have enough information.
Signing a franchise agreement is a big step, and you are entitled to understand the answers to these questions thoroughly. It is wise to have a professional who frequently deals with franchise agreements and will assist you in the process so you do not overlook any important details. It’s better to have these important questions answered than to not have asked them at all.
A leading motivation for purchasing a franchise is often to have the control to make the business your own and be your own boss. However, not all franchises offer the same amount of freedom to do this.
Large, highly established franchises frequently have very specific business models and systems in place which they’ve found to be very successful. These franchises require that new franchisees will continue to operate in the same way as the other chains to maintain uniformity. This can leave little room for negotiation.
While somewhat limiting, for many franchisees, this structure is desirable, as you can feel confident based on the previous proven success that the franchise you are purchasing will reliably produce a return on your investment.
Ultimately, when signing a franchise agreement it is important to do your research and seek professional legal guidance. However, do not doubt the role of your instincts. Signing a franchise is an exciting yet risky decision, so make sure you take into account these points of interest before signing.
For more information, contact the legal franchise business experts at Law Works.