What to Expect from a Franchise Arrangement

December 16, 2021

What to Expect from a Franchise Arrangement

Are you considering investing in a franchise for the very first time? If so, you may be wondering what is involved in the process. Actually, a franchise arrangement usually has several key features that are required in most instances. Sometimes they are legal requirements per UK law and other times they are expected of the franchisor as good operating policy. Here are some of the key points you can expect.

1. Transparency and Full Disclosure

Why would you buy into a company that is failing? Many times, businesses begin offering franchise opportunities as a way to bring operating capital into their business. You have the right to request full financial disclosure in an effort to ascertain transparency.

2. Training and Support

There are sites where you can look up franchise opportunities and one very good site is called Franchise Local. Here, you can have a look for more information when seeking a ‘Franchise for Sale’ and one of the things you will find is a list of resources. Much of the information on this site will also offer training and support but it is expected of the franchisor to provide it to every franchisee.

3. Use of Trademark and Specific Intellectual Property

Not only are you granted the right as a franchisee to use trademarks, logos, designs, and all marketing themes but you are also granted the right to company training manuals. This is how you will follow the company way in literally every aspect of business operations. Consumers walk into a franchise expecting specific services and products and that training manual will prepare you to do things the right way.

4. Stated Term Duration

While many franchises are granted a 10-year term franchise, most often you will find that the stated term duration is for a 20-year contract. This is the reason why it is so important to be absolutely certain this is the company you want to invest in.

5. Territory Agreement

An important part of the franchise agreement details your territorial rights. The arrangement will detail exactly if and where you can expect exclusive territorial rights. The arrangement will also disclose the level of territorial rights you will be protected for. If you want to ‘own’ a certain market area, this is a vital element in the franchise arrangement.

6. Costs and Fees

While new franchisees know there is an initial fee (investment) when being granted a franchise, they may not understand that there are monthly fees and costs as well. These are usually in the form of any marketing associated with the brand and royalty fees as well. Any other ongoing fees will be outlined in the franchise arrangement (contract).

Finally, as always, you should expect everything in the contract to be signed and in writing. This means even though you may have a PDF file, you can require a hard copy signed and dated. Each of the above items on a franchise arrangement are of vital importance, so if any one is lacking, you have the right to demand that condition be met.

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