Five things to consider when reviewing a franchising agreement

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Making the investment into a franchising business can be a thrilling time, as you’re buying into a brand with a proven business model and giving yourself a chance at business ownership within this framework.

Instead of starting from scratch with your own idea, you buy into an established brand where people recognize the name as you work to grow your operation in a new area. Like any business venture, it’s important to do extensive research and have a complete understanding of what your investment is going toward.

At TWO MEN AND A TRUCK, tour goal is to be as open and honest with potential franchisees about what they are buying into so there aren’t any surprises or questions after they’ve opened. Whether you are thinking of franchising with us or you’re buying into a different franchising model, there are some important questions you should ask when reviewing a franchising agreement.

1. What fees will I be charged?

This is a crucial question to ask right out of the gate, as it’s important to know what you’re getting. 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 review 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, franchise terms generally fall within the range of five to 20 year category. 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 must 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.

If you’d like to learn more about what franchising with TWO MEN AND A TRUCK is like, check out the video below!

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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