How a Franchise Agreement and a Franchise Disclosure Document differ
There are two documents that are of vital importance...
What's the Deal?
Location is often a considerable factor in your success as a Canadian franchisee, especially for brands that have services and goods that are normally delivered to the public in the course of typical retail shopping. Even if you find the perfect location at the start of your business, there could come a point in time when your spot becomes unfavorable to your business or even downright untenable. In that scenario, relocation is a possibility, and here's what you need to consider when it comes to moving to a new location.
It Can Get Complicated
Regardless of why you need to move, once you decide to do so, you'll have to go back through the franchisor's process for location scouting, acquiring and development. This, however, may come with wrinkles you didn't have to deal with the first time around. Your franchisor may be able to charge you a fee related to the costs of the relocation, and it may also be able to impose more requirements, including the right to approve the relocation only if you're in compliance with all the renewal aspects of your agreement or requiring that you sign a new agreement when you relocate. If you have to sign a new agreement, speak to a franchise lawyer before doing so. The new agreement may contain different terms and provisions than the agreement you are currently under.
If you are the person who will hold the lease for your new location, you'll need to determine whether the franchise agreement term is going to closely match the new lease term. Naturally, if your agreement ends and your franchisor does not want to renew but you still have a lot of time left on your location lease, you'll find yourself in a tight spot.
Territories can also be an obstacle in some franchise systems. Your franchisor may not be able to approve your proposed new location if it would infringe on the territory rights of other franchisees. While this may not necessarily be a significant barrier in your case, you should learn more about the territories your franchisor has granted and their boundaries before you try to find a new site.
Even if your current franchise agreement doesn't specifically address relocation, the usual provisions that require franchisor approval for location and development can still come into play. Review your franchise agreement closely if you begin to feel relocation may be necessary so you're prepared for everything that must be done.
