Five important questions to ask when reviewing a franchising agreement

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Investing your money into a franchising business is a rewarding and exciting opportunity, as you’re buying into a brand with a proven track record that is giving you the opportunity to create business success.

While there is certainly much to be excited about, investing into a franchising model also requires extensive research and a complete understanding about what you’re signing up for. Proper research and planning is necessary before you purchase a franchise location to make sure that your money is being spent wisely.

Here are five important questions you should be asking the franchisor before signing a franchising agreement!

  1. What feels will I be charged? This is obviously a good question to ask right out of the gate, as it’s important to know want you’re buying. In franchising, some of the common fees you will see include the initial franchise fee, a transfer fee, a renewal fee, advertising fees, royalties, technology fees, and training fees. In some instances, a franchise may be required to use certain vendors with their own expenses. Make sure to go over all of these details when making your financial projections.
  2. How long does the agreement last, and what are the terms of renewal? More often than not, there are no specific time-ranges required with a franchise term, but they generally fall within the range of five to 20 years. Make sure to verify with your franchisor that the agreement is long enough to cover your initial investment.
  3. Is the agreement one-sided? Often times, franchise agreements can contain provisions which on the surface, can seem to favor the franchisor, such as the ability of the franchisor to make enforceable changes to policies at any time. By investing in a franchise, the brand is your most valuable asset. You do not want the hard work you have put into your franchise to be undermined by the actions or inactions of a fellow franchisee. Franchise agreements much be strong to protect your investment.
  4. Do I have the exclusive rights to the location I am purchasing? Make sure you know what your investment is getting you – there are a variety of ways that a company can divide franchise territories, and territories aren’t always exclusive.
  5. Is the franchise agreement negotiable? If you research and find out that your agreement is negotiable, it should raise concerns. It is important to make sure your franchise agreement is uniform because this ensures that you and your fellow franchisees are operating under the same terms. This also guarantees the brand you invest in will retain its quality and value.

Contracts are obviously a major aspect of the franchising process, but it’s important to remember that successful franchising systems are built on relationships. Finding a proven franchising system with happy franchisees will make the process easier for you, and usually signals a better chance of paying off in the long run.

At TWO MEN AND A TRUCK, we work our hardest to provide all of this and more for our franchisees, and the opportunity we provide and the success that is available speaks for itself.

“[TWO MEN AND A TRUCK] is just a great company with awesome people, plenty of resources, and endless support from Home Office,” Darnell said. “I would recommend it because it’s an opportunity to make a good living for yourself if you run it properly.”

TWO MEN AND A TRUCK® is the first and largest franchised moving company in the United States. Let us help move you forward! For more helpful tips and information on moving services subscribe to our blog and like us on Facebook.

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