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Apr, 06 2012

LEGALLY MARRIED TO BUSINESS

Open and straightforward communication is the key to establishing a solid working relationship between a franchisor and a franchisee. So it's always important to sign a franchise pact before buying a franchise.

IF you are looking at buying a business, it is important to ensure that it is right for you and your own particular needs. Do not buy a business assuming 'It will be right' just because you have seen the name around or because other people have already invested in it. It is equivalent to entering into a marriage where you have to find a partner who fits into your way of living. Likewise, what you want to find is a franchise that suits your own abilities, ambitions and lifestyle.

When you buy a franchise, you will be relying upon the value of the brand and the quality of the franchise system, product or services it deals in to achieve your goals.

What is there in a contract?

Simply put, a franchise agreement is the legally binding cornerstone of a franchisor-franchisee relationship. It spells out, in carefully worded terms, how the new franchise will be run, as well as what the franchisor's role will be. It ensures that the franchise will be operated in a manner that is identical to the way in which all other franchises are being run, and it also addresses future potential speed bumps down the road, such as how a default will be remedied.

Contract obligations

Since the franchisor and his lawyer write the contract, the franchisee should be able to rely on their intention to provide the support they mention in the contract. Both the franchisor and the franchisee have an obligation to adhere to the terms of the contract they sign. Also, each side has the right to expect that the other side would do the same.

The franchisors that recognise the value of building a strong relationship with their franchisees will do their best to honour their commitments, even if they are not legally required to do so. In discussing these issues with the franchisor, it's important to remember the distinction between what kinds of support is required according to the terms of the contract, and what the franchisor has offered over and above what they are obligated to provide.

Keeping in mind

The franchisee should not forget that the franchise agreements are almost always tilted in favour of the franchisor, which is traditionally the one calling the shots on how the licensed franchisees, will market and sell the company's brand and product.

To give the franchisor the benefit of doubt, your franchisor may have been swept away by the excitement of signing franchise agreements and let time get away from them on some other issues. There is also a chance, if the promises were made to you by a franchise salesperson, the franchisor might not even be aware of what was promised.

Prioritise your needs

But for the franchisee, a business franchising agreement can be worth its weight in gold. Therefore, Francorp advises that the franchisee should take the first step in resolving the problem by sitting down with the franchisor and letting them know what support they are not providing you and how it is affecting your ability to execute the concept to system standards. Be specific in identifying what support you believe you are entitled to, what they have not provided and what impact the lack of support is having on your business. If your claims are based on statements made by the franchisor's staff, be prepared to disclose who made the statement and when it was made.

Strong brands are built when franchisors and franchisees work together for their mutual success. Open communication is the key to establish a solid relationship. So, let your franchisor know how you feel.

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