There are many key items to review in a franchise agreement, and big red flags that should cause a prospective franchisee to walk away from the table. But it doesn't always have to be a take-it-or-leave-it scenario when an entrepreneur is reviewing a franchise company's key terms for investment. There are two parties in this business deal.
In fact, Richard Rosen, a New York City-based lawyer who heads his own firm and has worked with hundreds of entrepreneurs on franchise deals, and is the current chairman of the New York State Franchise Bar Association, said it's crucial to understand that a franchise corporation is typically willing to negotiate beyond what they state in franchise documents. "The franchise agreement is universally compiled to be favorable to the franchisor," said Rosen.
That's not a surprise, as any company is going to act out of economic self-interest. "Most franchisees, for whatever reason, don't negotiate these agreements as carefully as they should. ... It's reasonable to ask for changes," he advised. The following seven items are the important ones that a franchise company is most likely to be flexible on.