Negotiating the Terms of Your Franchise Agreement

It is of course up to the franchisor to decide whether one not its franchisees can negotiate the terms of a franchise agreement. Unsurprisingly, the majority of large, established franchisors will not allow franchisees to make changes to the franchise contract, since they tend to have a history of successful, content franchisees and are aware that, given the size and success of their concept, there are always potential franchisees willing to buy into their system as is.

There are other, more specific reasons that franchisors may not care to negotiate franchise agreement conditions and terms. For example, a franchisor may be concerned by the administrative costs that might be incurred by maintaining different contracts for different franchisees as well as updating details in the UFOC/FDD. Additionally, inequality among franchisees within a system could be a result of negotiating terms individually: one franchisee may be particularly astute (or have a particularly astute lawyer) and negotiate a markedly better deal than his comrades, which would produce disgruntlement within the system as a whole.

Remember, however, that some franchisors – even large ones – are flexible in certain areas (i.e. training, signage, and territory assignments). Naturally, newer, less established franchisors are quite willing to negotiate regarding a number of terms, including the franchise fee. Should your contract be negotiable, be sure to do your research and contact existing franchisees to ensure that your deal ends up being at least as good as theirs – don’t pay more when you don’t have to!