While discussing a franchise case recently an attorney working with me observed that the franchisor really didn’t agree to do anything for the franchisee in its franchise agreement.
Unfortunately most franchisees are under the mistaken belief that franchisors will provide all kinds of support. When it doesn’t happen and the business relationship has fallen apart, the franchisee is surprised to learn that the franchisor isn’t contractually obligated to do much of anything. Which generally means that if a lawsuit occurs the franchisee may have very little recourse.
The solution: Franchisees should discuss specifically with the franchisor exactly what the franchisor is going to do to support the franchisee during the term of the agreement. If the franchisor makes promises that are not contained in the franchise agreement, ask for those promises in writing. If the franchisor won’t put those promises in writing be ready to walk. And never, I mean NEVER, believe the franchisor that tells you they won’t hold you to the terms of their written agreement. You can be assured that the franchisor’s lawyer in any lawsuit will never acknowledge that such a statement was ever made and most franchise agreements are written so that any such statement could not be used as evidence anyway.
Ulitimately there is no validity to the claim that franchise operations are less likely to fail than non-franchise operations. A franchisor that just gets you into business doesn’t offer you much. Always do your homework, ask the tough questions and demand answers.