Fully Understand the Franchise Agreement?


Modern Day Franchising is definitely an excellent solution to extend your manufacturer rapidly, but there are numerous draw backs to franchising. One with the most serious considerations would be the incredible litigation between franchisees and franchisors. The cost of protecting you Franchise Company from attorneys of disgruntled and/or non-performing franchisees can be extremely expensive indeed.

It had not been long ago before my retirement that I ran a franchise company and in some cases wrote our companies franchise agreements and international franchise agreements; many over 180 to 200 pages of mandatory disclosure documents. One part of boilerplate clauses I most remember was one we always put at the conclusion of our franchise agreements, that has been titled “Questions Concerning This Franchise Agreement” along with the basic jist than it all ended up being to make sure that the franchisee cannot get out of the agreement claiming he never make out the print or wouldn’t understand a certain part of the usb ports, which indeed could easily take place in 200 pages of legal crap couldn’t it? In any case the clause went something similar to this:

“Franchisee understands the intent of each one paragraph with the franchise agreement and Franchisee has asked your concerns of anything they would not understand and have absolutely consulted competent advisors to enable them to determine the precise meaning of all things in this Franchise Agreement. Franchisee further considers themselves mentally competent and this nothing coded in this Franchise Agreement still seems ambiguous to Franchisee. There is nothing with this Franchise Agreement, which Franchisee wouldn’t understand back then Franchisee signed this Franchise Agreement. Franchisee indicates this Franchise Agreement to consultants and/or advisors who they are comfortable with and Franchisee’s advisors and Franchisor have gone over this Franchise Agreement and related and attached agreements with Franchisee. Franchisee wrote down questions and personally checked them off when Franchisee felt these people were answered adequately both by Franchisor and Franchisee’s advisors.”

Now at first glance you might think no big problem right? Well without such clauses you could potentially actually be sued and somebody that failed to fulfill their side on the agreement could cheat you of money. It seems considering the over regulation and litigation that it’s truly amazing after 200 pages of your legal document you want such a clause within the agreement. But with kangaroo courts and juries because of their heads up their butts and liberal judges, go figure? This is only one on the reasons I retired early when he was 40 in the franchising industry. Consider this in 2006.

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