Franchise Business - Rules of Engagement
The major goal of any franchise business should be to have long term success. That should also be the same goal of the franchisor. However, sometimes the relationship between franchisee and franchisor just doesn’t work out the way both parties expected. Egos or rules may get in the way of the relationship.
Failure, just as in a marriage ending in divorce, is real, even with franchise businesses. There are many reasons why a franchise business relationship fails. Just as in a marriage, it takes two. Sometimes the franchisee is at fault, and sometimes it's the franchisor. It doesn't matter who's at fault, the important thing is that both parties understand the "rules of engagement" that are usually spelled out in the franchise agreement. So when a dispute arises the franchisee and franchisor know what to expect.
It's imperative that both parties thoroughly address the franchise agreement, and "rules of engagement" before the franchisee invests any money. Knowing the rules even by the most optimistic and enthusiastic franchisee may save embarrassment or disappointment if not addressed at the start of the franchise relationship.
According to some lawyers who specialize in franchise law, "virtually every franchise agreement provides for termination on some or all of the following grounds: failing to pay royalties or other fees; providing false information to the franchisor; selling unauthorized products or services; abandoning the business for more than a week; attempting an unauthorized assignment; misusing the trademarks of the franchisor; and violating any law, statute or regulation, or being convicted of a felony."
The franchisee must be of the understanding that a dispute may arise over the course of the relationship. Many agreements provide for a 10-year term or even longer. Since the major goal was long term success, a dispute is likely to arise. So franchise business owners be aware of that fact.
Many attorney's for the franchisee/franchisor will add dispute resolution clauses as a regular part of most franchise agreements. The best advice I found comes from franchise lawyers. They state, "prospective franchisees should evaluate the impact any of these clauses will have on their decision to purchase a franchise."
If by some chance the relationship goes south, and both parties wind up in court, it's best to understand what the "rules of engagement" actually stated. Make sure you have your attorney look at all paperwork before signing anything. This small measure may help you with your decision whether to go with that franchise business or not.
As with any transaction, it's best to understand the rules before signing. Buying a franchise business is a large step and every precaution should be taken to avoid any type of lawsuit. Be like the boy scouts. Live by their motto, and "Be Prepared."
Jeffrey Sloe, Internet Marketing Advisor to The Ultimate Team
440-725-3729
jeff@internetmarketingadvisors.net
http://ultimate.org
No comments:
Post a Comment