This article are provided for information purposes only, and are not intended as legal advice.


Buying a franchise vs another business

November 21st, 2008

When you purchase a franchise, you are not able to negotiate many of the terms.  You may not be approved by the master franchisor.  Sometimes, if you sell the franchise, head office must approve and they receive a commission, some franchises can only be sold by the master franchisor therefore you are not able to sell to anyone, I am not sure if this impacts the selling price or not.

 

The franchisor forces you to renovate the location from time to time.  Often, head office does the renovations and charges you for the costs. 

 

Often, the franchise agreement is for a finite period of time and you may have to renew your franchise agreement and pay an additional fee.  I saw one franchisor be sold to another company.  The new franchisor, who was a small operator, tried to get all the existing franchisees to pay him an additional fee.  That did not work because the franchise fee had not expired but as soon as the franchise agreement expired, the renewal fee was 3 times the original franchise payment. 


Filed under: Franchises — Gary Landa @ 11:29 am


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