What’s in Your Franchising Contract?
Contracts are an important part of business. They outline what goes into a professional venture – on either side of the deal – and help keep everyone secure. Even when the highest level of trust is involved, having it in writing (“it” being absolutely everything) ensures you can’t get taken, but also ensures you can’t take the other party. It’s a mutual agreement that’s legally binding, and helps keep everyone’s mind at ease.
Because they’re unbreakable, however, all parties involved should know – very thoroughly – what they’re getting themselves into. Before signing on the dotted line, be sure you know exactly what’s outlined in the contract. Each section is likely to host a different part of the business – whether that be monetary, ownership percentages, what’s to take place if something goes awry, and more. Far too often folks sign without understanding what they’re agreeing to, causing unnecessary headaches and misunderstandings down the line.
The Basics
Each company will have a different contract. In fact, they’re likely to have a different contract with each franchisee. (If only slightly.) Because each setup is different, there’s no telling what exactly needs to be included until talks have been had, and logistics set into place.
It can be assumed, however, that all the necessary outlines will be in each legal agreement. From every single nook and cranny of the business, to the exact time of day you’re able to open, as well as which parties are involved and who is responsible for what. Deadlines, expectations, and what’s to happen if each side isn’t fulfilled, etc. There’s also likely to be a clause about add-ons – or at least the option for one later on – should both sides agree on the possibility.
How to Be Sure
If legal jargon isn’t your thing, seek out the help of a lawyer to look it over. They’ll be able to pick apart any inconsistencies or holes, as well as letting you know just what you’re getting yourself into. Before you sign. Find an attorney that specializes in franchising for an expert opinion. (Them having experience in this area will also allow you an informed sounding board on specifics.)
However, if you do have experience with contracts, it’s important to remember they aren’t all the same. Especially when dealing with a large corporation or in the food industry. That doesn’t mean that they’re out to “get” you, but it does mean they’ve taken each necessary precaution to protect themselves. And it’s important for you to do the same.
Of course, if there’s something that can’t be agreed upon, before signing is the time to have it changed. Have your lawyer talk to the franchising company’s attorney – or their legal liaison – about getting it changed. Oftentimes parties are able to create a compromise that better fits each sides’ expectations.
Before signing, remember to make sure you know what you’re getting yourself into. The help of a lawyer and some much-needed patience can help make this happen. While making sure there are no unhappy surprises down the road.

By FoodFanchise.com Staff | March 25, 2018 | Food Franchise Blog