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Can you negotiate your franchise?

On Behalf of | Jul 22, 2021 | Franchise Law |

If you want to take out a franchise, you need to sign a contract. Once you sign, you are bound by the terms of that contract. That does not, however, mean you cannot seek to change it.

The best time to seek alterations to a franchise deal is before you sign the paperwork, but you can also try later if you feel the situation you signed up to is not working for you. While it may feel daunting, especially if you are new to the game, you lose nothing by trying. Provided that is, you do it respectfully, and your request is reasonable.

Franchisors are unlikely to appreciate your demanding to pay half the rate of all other franchisees, yet if they see potential in you, they may agree to small allowances. Size matters here. If you are looking to open several units, you have more clout. The same applies if you can demonstrate an impressive track record.

When it comes to the franchisor, you might find that smaller ones have more leeway. The larger ones will have a strict set of rules they have found works for thousands of franchisees across the country and even the world. They are less likely to make an exception for you.

You need to be clear about who makes decisions in a franchise

One area where some franchisees have recently been seeking flexibility is wages. Some fast-food chains have raised wages for restaurants they operate directly and are applying pressure on their franchisees to do the same. Not all of them are happy about it.

It highlights the importance of being clear about what is and is not under your control when you take out a franchise. It also shows that the franchise agreement is not the only thing that can control your decisions. Many would argue the wage increases only came about due to employee protests and criticism from the public and lawmakers. Federal or state law changes could also take decisions about wages or other issues out of your hands.