Reviewing the franchise agreement forms that you sign with a franchise owner makes sense because you might want to cut them a better deal or cut them out.

The franchise agreement forms that you send out to a prospective franchise owner are not “till death do us part.”  While you are selling that franchise to a small business owner and it is he or she who will run their operation, the rights to that franchise are still with the franchising company. That is why the language that you put into the franchise agreement forms should include some escape clauses so that if the franchise owner makes a mess of things, you have a way out.

Franchising your company  is a big step and there are steps you can take to make sure the partners you bring onto your roster of players as franchise owners are up to snuff.  The various franchise agreement forms shift some of the burden of proof that they can carry their weight in the franchise relationship to those starry eyed new franchise owners.  By making it a serious requirement that the franchise owner provide proof that when it comes to running a small business, they know their stuff, you avoid handing over that valuable franchise to someone who is going to run it into the ground.

There are variables in the franchise agreement forms that you can tweak based on how well this new franchise applicant gives you the warm fuzzies that they will do well.  If you have secret doubts that a particular franchise applicant might be a dud, you can hike up the initial franchise fees within the franchise agreement forms.  That way you build in some insurance in case you have to go in and clean up some messes.

You can also adjust the term of the franchise agreement forms so that an iffy franchise comes up for renewal faster than might be standard. If you set that renewal to come up in a year and make that the law of the land in the franchise agreement forms, then you have a legal way to cut and run if they do badly.  But if they turn out to be all star business managers and their franchise is knocking down serious money, you can make adjustments when you renew the franchise agreement forms.

Making some changes when franchise agreement forms are renewed gives you a window to turn a good franchise owner into a great one.

All franchise agreement forms spell out so anyone can get it that the franchise will expire at some moment in the future.  While the idea of renewing the franchise agreement seems on the surface to be at time when either franchisor or franchisee can run for the hills if they need to, it is also a chance to kick a very successful franchise owner into high gear.

If you have a franchise owner who is kicking backside and taking names when it come to profits, you can sweeten the pot in the franchise agreement forms to make his or her next tour of duty even more of a profit machine. You may wish to sweeten the pot with a nice looking franchise royalty arrangement that lets the franchise owner keep more gold in his or her bank account if they break a few sales barriers.  Or you can offer that knock-your-socks-off franchise owner a way to build an empire through a master franchise agreement.

These changes are all perfectly legal within franchise law and they are what capitalism is all about. When you can capitalize on your all stars and cycle out the dead weight leveraging those franchise agreement forms term limits, that is just smart business that will result in a dynamite team of franchise owner that you will profit from big time year after year after year.