If the supply costs in the franchise agreement and disclosure document appear too high or unreasonable, the best course of action
for a prospective franchisee is to talk to the franchisor. Try to remember that it is in the best interests of the franchisor to see your business succeed. You should try to arrange for commercial discussions with your franchisor to ascertain if there is scope for alternative and lower cost suppliers to be used in the operation of the franchised business.
Preventing the problem
Assessing supply costs before signing a franchise agreement
The best way to minimise problems in franchising is to ensure that you are well informed and understand the franchised business from the outset. It is essential that you seek business, accounting and legal advice from specialists in the franchising sector, especially when considering supply costs and other expenses. You should consider the following points before signing a franchise agreement to reduce or eliminate the chance of surprises occurring further down the track:1. Carefully assess the supply costs and other costs presented in the disclosure document. Read on.