Franchise Negotiation Tip: Be Willing to Walk Away

Prospective franchisees are often under the mistaken belief that franchise agreements are not negotiable. That's often true even after a franchisor says initially that it will not negotiate a franchise agreement. 

So what's one key in obtaining concessions in your franchise agreement?

Be willing to walk away.

It's true of any negotiation. If you are willing to walk away empty handed, you are often much more likely to get a better deal. You are probably in the strongest negotiating position when you don't care whether you become a franchisee or not. However, it is rare that a prospective franchisee takes this position. Usually the the prospective franchisee wants the deal and the franchisor knows it. Without the sense that you are willing to walk away, a franchisor has little incentive to concede on issues in the franchise agreement.

Franchise agreements are generally far too one-sided. Some concessions are generally in order. Don't make the mistake of going blindly into franchise ownership. Get legal representation from an experienced franchise lawyer and understand the provisions of the agreement. And if the franchisor isn't willing to work with you on language in the agreement, perhaps it isn't the right franchisor for you. Demonstrating that you're willing to walk away from the deal can be a very powerful negotiation technique under the right circumstances. Of course, you must be willing to do just that with an understanding that maybe it just wasn't the right deal. In my experience it's the rare person that can do this. But perhaps it helps illustrate why most businesses (even franchise businesses) fail.

 

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