Franchise attorney Charles Internicola busts the myth that franchise agreements are non-negotiable in his post, Myth: Is it Illegal for a Franchisor to Negotiate and Modify the Terms of its Franchise Agreement. This is one of the best posts on the subject that I have seen.
In addition to the fact that you should take your right to negotiate the franchise agreement seriously, I would encourage you to stay on the alert for other common red flags from franchisors (I have written about these previously but it bears repeating):
- You don’t need a lawyer to review the agreement.
- I would prefer you don’t talk with other franchisees. You should only talk with me.
- Trust us, we can’t (and won’t) change the agreement but we won’t really hold you to that provision anyway.
Like many people you may considering an investment of your retirement savings in a franchise. You absolutely owe it to yourself to do the best job possible investigating that franchise and performing the most due diligence possible. That includes hiring experienced franchise counsel to review the franchise agreement and disclosure document. You need to talk with as many franchisees as possible but be sure to visit with those in your area. The success of a franchisee in New York, for example, may differ significantly than the success of a franchisee of Iowa especially when franchises are more of a regional flavor.
Some franchisors won’t negotiate the terms of the agreement but that can be okay. Hopefully the franchisor can explain their reasoning for not negotiating a provision rather than hiding behind a blanket statement that they cannot negotiate because it is illegal. You definitely want to deal with a franchisor that is willing to listen and consider your needs.
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 statement was ever made and most franchise agreements are written so that any such statement could not be used as evidence in court.