Just like any investment, buying a franchise carries risks and there will inevitably be bad apples. A genuine business format franchise must include the purchase of rights to use a comprehensive business package, which is a total system of doing business under a protected brand name in an exclusively protected territory.
The package should also include comprehensive initial training and support, through ongoing training and field backup.
Be careful of franchise clichés, generalisations, and media hype by getting the franchisor to spell it out for you: what is actually meant by ‘intensive’, ‘ongoing’ training and support; what does a ‘fully equipped’ vehicle include; what is meant by ‘exclusive territory’, how is the franchise a ‘proven system’, what does the ‘franchise package’ include etc.
The Franchise Agreement is the most important document and many are non-negotiable, allowing the franchisor to ensure continuity is maintained throughout the network. It should be win-win for both parties and cover all possible eventualities. Points to watch out for include ongoing fees territory exclusivity, and the right to renew once the contract reaches its conclusion. Ensure you have the contract checked clause by clause, by a franchised-experienced lawyer and that you understand your own and the franchisor’s obligations.
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