1851

While compromise and negotiation may be the cornerstones of a good business, that doesn&rsquo;t always necessarily translate to the world of franchising. 

Franchisees may walk into a deal hoping to negotiate certain items, and they just might get lucky in some cases, but they may need to tread carefully and not expect too much, especially if they are working with an established brand, according to experts. 

Scott Thompson is the chief development officer at <a href="http://www.lfivecapital.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=what-items-are-negotiable-when-buying-a-franchise-2708330" target="_blank" rel="nofollow" style="text-decoration-line:none" target="_blank">Level 5 Capital Partners</a>.

Most franchisees, he said, will try to negotiate things such as royalties and the initial franchise fee, but good franchise brands will not cave into such requests. 

&ldquo;A lot of that stuff is non-negotiable,&rdquo; he said. &ldquo;It is what it is.&rdquo; He added that franchisors &ldquo;want to keep that stuff consistent across all franchisees.&rdquo; &nbsp;

Some brands are negotiable, Thompson said. 

&ldquo;The younger the franchisor is, the more negotiable they are usually on the territory stuff,&rdquo; Thompson said. &ldquo;The more mature the franchisor is, most likely they&rsquo;re not as negotiable on the territory.&rdquo;

In terms of a development schedule, that can also depend on the age of the brand.

&ldquo;They&rsquo;re going to give you a development schedule and obviously the younger the brand is the more flexible they&rsquo;ll be on the development schedule, meaning they&rsquo;ll give you more time,&rdquo; Thompson said. &ldquo;The more mature the brand is the less likely they are to give you an extension. You&rsquo;ll probably have to buy an extension if you need an extension.&rdquo;

So why are younger brands sometimes more flexible?

&ldquo;I think a lot of young brands don&rsquo;t have all their systems down,&rdquo; Thompson said. 

Thompson noted that when younger brands are more flexible with franchisees, that flexibility will often come back to haunt them. 

&ldquo;It just always does,&rdquo; Thompson said, adding that franchisors will make an exception here and there with a franchisee and won&rsquo;t be consistent and then other franchisees find out and then the brand&rsquo;s &ldquo;got an issue on their hands.&rdquo;

This, he said, is why a new franchisor should listen to their franchise attorney - and make sure to hire a good franchise attorney. 

Nancy Williams, owner of the franchise consulting firm <a href="http://www.nvaluablefranchiseconsulting.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=what-items-are-negotiable-when-buying-a-franchise-2708330" target="_blank" rel="nofollow" style="text-decoration-line:none" target="_blank">NValuable</a>, noted that legally, the only part of the franchise disclosure document (FDD) that is negotiable is the franchise agreement. 

She also believes that franchisees should have an experienced franchise attorney on their side.

&ldquo;Candidates should always have an experienced Business Attorney, preferably one experienced in Franchise Agreements, review the document before signing,&rdquo; Williams said in an email. &ldquo;During that review, a candidate should discuss with their attorney the things that they would like to be included, excluded, or changed. I&rsquo;ve had clients request a longer period of time before Royalty payments kick in, additional local marketing dollars, larger territories that are typically granted, first right of refusal on new territories, additional equipment at discounted rates, and increased discounts on multi-territory discounts.&rdquo;

New franchisees will likely have less bargaining power and should just focus on what truly matters to them. 

&ldquo;The truth is, you can ask for just about anything, but don&rsquo;t go overboard,&rdquo; Williams said in an email. &ldquo;Focus on the things that are most important to you, and building a successful business. The Franchisor wants their owners to be successful, but giving away the farm for one new owner that is unproven, just doesn&rsquo;t make sense for the franchise network.&rdquo;

Jennifer Jackson, the vice president of development for <a href="https://franchising.hungryhowies.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=what-items-are-negotiable-when-buying-a-franchise-2708330" target="_blank" rel="nofollow" style="text-decoration-line:none" target="_blank">Hungry Howie&rsquo;s</a>, said that one item that is typically negotiable for the company&rsquo;s franchisees is the territory in which a franchisee will search for their location. 

&ldquo;We are always willing to consider concerns of our franchise candidates, however, we find that we seldom need to significantly alter the terms of our franchise agreements to address concerns,&rdquo; Jackson said in an email. &ldquo;If you are signing an area developer multiple-unit agreement and depending on the number of units you are purchasing, we may negotiate the initial franchise fee, development area, and time frame to open each unit.&rdquo;

As with anything, communication is always key. 

&ldquo;Generally, the terms of our agreements are not negotiable, however, we are always open to constructive conversation with our franchise candidates to address any specific questions or concerns,&rdquo; Jackson said in an email. &ldquo;We review and update our franchise agreement on a regular basis and strive to drafts documents within industry standards.

Negotiable Items in Franchise Purchase | 1851 Franchise

1851 Franchise

Younger brands might offer more flexibility while older, more established brands may not, according to experts. 

What Items Are Negotiable When Buying a Franchise 

what-items-are-negotiable-when-buying-a-franchise

Atomic Wings

Milwaukee Business Journal: Atomic Wings Plans To Bring the Heat to Southeast Wisconsin

milwaukee-business-journal-atomic-wings-plans-to-bring-the-heat-to-southeast-wisconsin

Melting Pot

Melting Pot Showcases Fondue Fun and Franchise Opportunity on FOX & Friends

melting-pot-showcases-fondue-fun-and-franchise-opportunity-on-fox-friends

Right at Home

Leading In-Home Care Franchise Looks to Expand in Fort Wayne, Indiana

leading-in-home-care-franchise-looks-to-expand-in-fort-wayne-indiana

Why Melting Pot Is a Next-Level Upgrade for Existing Restaurant Operators

why-melting-pot-is-a-next-level-upgrade-for-existing-restaurant-operators

Sola Salons

Sola Salons: A Prime Multi-Unit Opportunity for Driven Entrepreneurs

sola-salons-a-prime-multi-unit-opportunity-for-driven-entrepreneurs

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Resources

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

Login

facebook

instagram

twitter

linkedin

youtube

PopUp Bagels Launches National Franchise Expansion with New CEO Tory Bartlett Leading the Charge

popup-bagels-launches-national-franchise-expansion-with-new-ceo-tory-bartlett-leading-the-charge

CPK Franchising - California Pizza Kitchen - 1851 Franchise

California Pizza Kitchen Is Now Franchising in the U.S.

cpk-franchising-california-pizza-kitchen-united-states

California Voters Reject $18 Minimum Wage Increase

california-voters-reject-18-minimum-wage-increase

McDonald’s Commits $100 Million to Aid Franchisees and Rebuild Trust After E. Coli Outbreak

mcdonalds-commits-100-million-to-aid-franchisees-and-rebuild-trust-after-e-coli-outbreak

Blackstone Acquires Majority Stake in Jersey Mike's, Signaling Ambitious Growth Plans - 1851

Blackstone Acquires Majority Stake in Jersey Mike's, Signaling Ambitious Growth Plans

blackstone-acquires-majority-stake-in-jersey-mikes-signaling-ambitious-growth-plans

Globalization's Effect on Franchise Expansion

globalizations-effect-on-franchise-expansion

U.S. Navy Reservist Brings Pigtails & Crewcuts to Clarksville, Filling a Community Need

us-navy-reservist-brings-pigtails-crewcuts-to-clarksville-filling-a-community-need

What Items Are Negotiable When Buying a Franchise

MORE STORIES LIKE THIS