The Internet is a tremendous source of information. A lot is written about franchises and franchising. Unfortunately, I am still waiting for the next gen to produce infallible Truth or Lies software.
In the meantime, it is all about Truth or Dare. You can find a franchise agreement for any type of business somewhere in Cyberspace. Anyone with a good grasp of the English language (sadly less common with our weakened education system), can change the wording a bit to fit a different business.
Sometimes they can get lucky and write a new paragraph that really says what they think it does AND it is enforceable at least in most states.
So I get to read junk agreements all the time. Some from prospective clients who used the agreement to franchisor need them fixed, and are the most fun. Others are from prospective franchisees who want to know what I think. What I think of the contract? Of the franchise? Of the deal?
Here is what I often think: This contract puts the foot of the franchisor on the throat of the franchisee. It is indentured servitude… pre-paid.
Beware of the Untrustworthy
Ironically, at least half the time the franchisor is a well-meaning entrepreneur who is determined that “his or her” franchisees will succeed.
One of the many problems with cut rate, or plagiarized, franchise agreements is that the franchisors using them often don’t understand what the cloned agreement really means, nor the consequences of using it.
I tell them, sometimes directly and sometimes through the client: “this is what your contract says you can do which makes your franchise a really bad deal. Is this really what you would do to your franchisee?”
Usually the answer from the franchisor is “of course not, but I was told by my lawyer that I need this language”.
But if you don’t mean it, why say it?!
Mean Contracts Make for a Stress Filled Life
I take the tone of the franchise agreement as the tone of the franchise system. Mean contracts make for an unpleasant, ultimately and untrusting relationship. Sticks and stones won’t hurt, but sloppy or heartless contracts will.
Do yourself a favor. If you care about your life savings, if you care about the success of your company, see an experienced franchise attorney and accountant. This applies to both sides of the deal.
Don’t Take the Risk
By the way, there is a reason for the saying, you get what you pay for. 🙂
Determined to start your own business and want the leg up a franchise can sometimes give? Here are some useful links:
Business Opportunity Fraud (Washington state but generally applicable to all)
How to Choose a Franchise or Business Opportunity (Maryland state which requires
registration but still helpful)
LOOK BEFORE YOU LEAP A Guide to Buying a Franchise (helpful California consumer
4 Reasons Why You Need to Hire a Franchise Attorney (They said it, Not me!)