Buying A Franchise: Negotiation Strategies

Franchisees all too often sign franchise agreements without understanding their options, and then wonder later whether they could have negotiated for a better deal. The answer should always be “yes,” because a franchisor unwilling to negotiate should be the first red flag. Some things prospective franchisees should consider doing include hiring a franchise attorney, eliminating personal liability conditions and the right of first refusal in the contract and avoiding deals that limit the ability to use social media in local marketing. For more on this continue reading the following article from Blue MauMau.

NuWire Investor:

Recently, I was asked: “If you could negotiate any terms up front, what would be the key ones?” Here is my general approach:

1) First, review the FDD and determine if they are using franchise brokers to sell. If so, you can knock off about 11-20k from the franchise price by asking for the broker’s rebate.

2) Now, you have a budget and money. Use it to hire a professional franchise attorney who will negotiate the terms in the agreement that make sense for your situation. (And yes, franchisors will offer addendums or side agreements – the California has a database is full of such side deals. If you accept at face value that franchisors “won’t do x”, then franchising is going to be a one sided deal for you.)

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