How a Franchise Agreement and a Franchise Disclosure Document differ
There are two documents that are of vital importance...
You've probably heard more than once that franchise agreements just aren't negotiable. However, in some small areas, you might be able to gain some concessions that will benefit your business. At the very worst, you'll be told "No," but it's always worth a try.
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Grand opening help
You might be able to get some extra support when you first open your doors. The franchisor's personnel may agree to attend the opening and provide training and guidance. In some cases, a franchisor is willing to help with the costs of marketing and advertising for your new location.
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Franchise fee installment terms
Paying your franchise fee in installments will help you plan for your finances. It can be especially helpful if your brand has a lot of upfront costs. Some brands are reluctant to offer franchise fee payments in installments, but it is possible they will allow it if you request this type of payment plan.
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Time extension to cure defaults
Defaults are a pretty scary thing; you could lose your franchise if you don't cure a default within the time frame specified in your agreement. This is an important term for franchisors because they need to be able to ensure their locations are operating according to the set standards for the brand.
Of course, you may think you will never be in default, but you never know. Things do happen, so try to ask the franchisor for more time to cure defaults just in case.
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Personal guarantee waiver
Even if you have formed a separate business to operate your franchise, you may be asked to sign some sort of personal guarantee. This makes you personally liable for debts or monies owned by your franchise. Your franchisor might waive this or limit the liability if you can show your formed business will be able to cover losses from the failure of the franchise.
If you're not sure how to negotiate on your own, you can work with a franchise attorney. They will review your contract, identify possible areas of negotiation and work with the franchisor for you. An attorney may be able to gain more concessions than you would on your own, but keep in mind that your franchisor may not budge on anything. You'll be legally bound to the contact terms once you sign the agreement, so make sure they are terms you are comfortable with.
