Follow your Franchise Agreement
A lawyer friend said to me just the other day “Most cases of mediation
could be avoided if only the parties stuck to the Franchise
Agreement.”
Your Franchise Agreement is the legal instrument that creates a
contractual relationship between you and your Franchisor. Following
its requirements is a necessity so that you hold up your end of the
bargain.
What does that actually mean? Franchise Agreements have
traditionally been (and are likely ever to be) weighted in the
Franchisor’s favour. When you sign the Franchise Agreement, you
agree to follow the business format of the franchise. That is, the
operations, training, controls, systems, procedures, advertising,
marketing, supervisory and organisational parts of your business are
likely to be governed by the Franchisor.
There’s no need to get antsy about this – while you are putting your
hard earned dollars into the franchise, the Franchisor is putting their
hard earned dollars PLUS the entire reputation of their company in
your hands. You can only expect there to be some conditions!
You, as the Franchisee, are responsible for making sure that you follow
the program. While the Franchisor may have mechanisms in place to
monitor the performance of your outlet, you are the one who needs to
set things in motion at the very beginning to make sure you are
following the business format.
Don’t ever let your Franchisor tell you not to worry about a specific
condition of your agreement. If it’s in there, worry about it. I know of
a Franchisor who never requested financial statements from their
Franchisees, then suddenly decided one day that they needed them.
Franchisees were asked to provide all financials going back to the start
of their franchises. Annoying? Yes, and all the more so because, at
the beginning of the relationship, the Franchisor told them “Oh, yeah,
don’t worry about those. We never look at them.” The relationship
between the Franchisor and Franchisees suffered harm from that