The Franchise King®

Should You Be Afraid of a Franchise Agreement?

should you be afraid of a franchise agreement?

Below, for your viewing pleasure, is a teeny-tiny portion of the King of Sausages* Franchise Agreement.

(This post may contain affiliate links. Please read my disclosure policy).

*Not a real franchise opportunity. The agreement, however, is real.


CONSTRUCTION; SOURCING AND DESIGN APPROVALS
5.1 Construction, Conversion, and Renovation of the Restaurant. Franchisee, at its expense, must start and complete in a timely fashion and to Franchisor’s satisfaction the construction or
renovation, as the case may be, of the Restaurant in accordance with the Standards. (See exhibits)

5.2 Signage, Supplies and Inventory
(a) Franchisee must use only such signs and Supplies that conform to the Standards and are purchased from a vendor, supplier or manufacturer designated as “approved” by Franchisor. Franchisor may designate approved vendors and suppliers, including Franchisor or any of its Affiliates, as the only approved supplier for certain items. The requirements imposed by this Section are to insure that the Supplies and Inventory, and other items used by King of Sausages Restaurants will be uniform and of high-quality, and Franchisee agrees that the restrictions imposed on Franchisee in this Section 5.2 constitute the measures necessary to maintain the identity, integrity and reputation of the System.

(b) Franchisee must display (prominently) in, on, and around the Restaurant signs using the Licensed Marks and other advertising signs of such nature, form, color, location, and size, and containing such material as Franchisor provides in the Standards. All signs will comply with all Applicable Law. Franchisee must not display in or upon the Restaurant premises or elsewhere, any sign or Marketing Materials of any kind that does not comply with Section 6 or to which Franchisor objects.

And so it begins. Should you be afraid?

Maybe you should read those paragraphs again.

 

The Franchise Agreement

Above all, the franchise agreement is a contract. It’s the thing that locks you in for years. (5-10) And to some, that can be a scary thing.

Namely, according to UpCounsel, “A franchise agreement is a legally binding settlement that outlines the franchisor’s terms and circumstances for the franchisee. The franchise agreement also outlines the obligations of the franchisor and the obligations of the franchisee. The franchise agreement is signed by the person entering the franchise system.”

That’s right; it must be signed. In ink.

signed contract

 



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Should You Be Afraid?

To be sure, purchasing a franchise is a choice. No one is forcing you to sign on the dotted line.

Nonetheless, you may be fearful about signing the agreement. The reason for your fear can usually be summed up in one word.

Reality.

Simply put, once the franchise agreement is in front of you, you start to realize that in a few month’s time you’ve gone from franchise opportunity seeker to franchise opportunity buyer. Real fear sets in.

Because you know that once you sign it-and the ink dries, life as you know it will be forever changed.

For example, instead of walking into your employer’s place of business to do your work-like you’ve been doing for years, you’ll be walking into your place of business.

And you’ll be responsible for things like:

  • Your inventory
  • Your payroll
  • Your marketing and advertising
  • Your lease
  • Your small business loan

And more.

But it’s all good.

Especially if you remember why you’re doing it.

 

Don’t Be Afraid Of The Actual Agreement

While it’s true that a 30-page franchise agreement, one that has an abundance of confusing legal mumbo-jumbo, can be scary, it doesn’t have to be.

That’s because you’ve been listening to my advice, and have hired a competent franchise attorney. One who has shown the willingness to work extra-hard on your behalf to negotiate items in the franchise agreement that will benefit you.

Suggested Read: 3 Top Franchise Attorneys Debunk a Huge Myth

To summarize, the “afraid” part doesn’t really have to do with the legal stuff that comes with buying a franchise.

On the contrary, the fear you’re going to experience will come as the direct result of seeing and touching the actual franchise agreement that the franchisor sent over. And knowing what signing it will mean.

Finally!

new franchise business grand opening

 

(Franchise Agreement image courtesy of https://alphastockimages.com/, and the original author: Nick Youngson – https://www.nyphotographic.com/)

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franchise article written by joel libava
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joel libava

I'm The Franchise King®, Joel Libava. I help prospective franchise owners avoid bank account emptying mistakes.
For 23 years, I’ve been showing people how to make smart, informed decisions on franchises to buy, and I can help you, too!
P.S. I'm not a franchise consultant/broker.

Joel is Highly Principled
There are many people in the franchise business who claim to to be experts in the field. Unfortunately many of them lack both knowledge and integrity. Joel, however, is without question one of the most qualified and principled people I know, in or out of his industry."
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