Franchises are one of many opportunities people in the Atlanta area can use to start their own businesses. If you are thinking about purchasing a franchise, try to not focus on the potential profits and what you plan to do with them. Just like any kind of business arrangement, a little preparation and negotiation can help to protect your interests and improve your chances of success.
Most franchise contracts benefit the franchisor, which can prove problematic for first-time franchise operators. Negotiations give you the chance to make the deals more beneficial for your situation and minimize the risks you take on. While some franchisors may not be open to negotiation, you lose nothing in trying. Here is some advice to consider about franchise contract negotiations.
Determine how much leeway you have for negotiation
Not all contracts are negotiable, especially those that involve major franchise chains. No matter how interested you are in any franchise opportunity, you should find out if the contracts for those opportunities are up for negotiation. If not, consider the pros and cons and if you would be better off exploring other options.
Do not overlook the post-term details
Depending on your goals, you may want to pay special attention to the section of the contract that discusses what happens when your agreement is over. There may be a non-compete clause that limits what you can do when you are done with that business opportunity. Some contracts include unlawful noncompete terms. For example, if you purchase a restaurant franchise with the goal of using it to get firsthand knowledge and experience at managing it before you start your own, the agreement may state you must wait a certain length of time before you can start your own restaurant.
Check for renewal terms
Most franchise contracts come with specific renewal options. They are usually short-term and limited. Even if you do not plan to stay with a current business franchise for the long-term, it is best to have a contract that offers you perpetual options should you change your mind.
Make sure the contract fits your goals
One key goal of negotiations is to give you more flexibility to accommodate your circumstances, no matter how they change during and after the time you own a franchise. The other is to keep you from losing your investment, time and ending up dealing with disputes. Before you sign any contract, read it over, have an attorney review it and discuss/negotiate any questionable or unfair terms and conditions.