Negotiating With Franchisors: Pick Your Issues Wisely

Globe and Mail:

In my last column, I wrote that the negotiation of royalties and initial franchise fees by prospective franchisees trying to get a better deal in their franchise agreements was not something that franchisors readily entertain.

Negotiation of these fees isn’t likely to happen unless the franchisor is just starting out and needs those first few franchisees “on the ground” to validate future sales (not to mention get some cash); the franchisee is acquiring more than one location; the franchisee is acquiring area development or master franchise rights (so everything may well be on the table); or, the franchisee has something unique to offer, such as a prime location that it controls (such as a lease in an airport).

Given my view that there are only a finite number of issues a franchisee should raise before the franchisor thinks you’re a tire-kicker wasting his or her time and moves on to the next prospect, leaving you in the dust, anything you or your lawyer asks to “negotiate” probably prevents you from asking for other concessions. More.

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