Steven Goldman hears a lot of horror stories about the world of franchising. As one of Canada’s prominent franchise lawyers, he sees a lot of immigrants who come to Canada to “buy a job†by purchasing a franchised business.
One such client recently got into a fast-food business with the expectation of earning $1-million in revenue and $200,000 in profit in his first year. But there was a $25,000 upfront franchise fee, plus a 6% royalty, a 2% national advertising fee and a 2% local advertising fee. Ten per cent right off the top killed any chance of turning a profit.
“Immigrants … are led to believe these [franchise agreements] are standard-form agreements or that it’s non-negotiable,†says Mr. Goldman, of Goldman Hine LLP, adding that’s not always the case. Read on…