The franchise licensing agreement is a legal document that puts the marriage of the franchise partners in motion but that doesn’t mean it has to be harsh.

It is the nature of the beast that the franchise licensing agreement must live up to expectations as a major watershed document in the franchise development process. By the time that hopeful franchise owner sits down at the table to sign that franchise licensing agreement, a great deal of water has gone under the bridge.  There will be meetings, phone calls, background checks by the franchise company and by the franchise applicant and exchange of franchise disclosure documents big enough to choke a horse.

As the franchising company, the responsibility for authoring the franchise licensing agreement falls to you. Smart companies that build a franchise empire do not farm out this chore. Put some thought and care into how that franchise licensing agreement looks, smells and feels because it is important that is works on several levels.

The obvious level that the franchise agreement must work is as a legally binding document that cements the relationship between you and that new franchise owner.  By legally binding, we are not kidding because this document will have to stand up and do its stuff if push comes to shove in a legal way. So you do have to put some teeth into the franchise licensing agreement so that it protects you.  But keep in mind that it takes two to tango when you are building a franchise relationship and work with representatives from the other end of the table so both you and the franchise owner feel that the franchise licensing agreement is fair to everyone making the deal.

Let the franchise licensing agreement kick off a productive long term business relationship.

Keep in mind also that when you get up from signing that franchise licensing agreement with a new franchise owner, you will have started a relationship that should and could result in great wealth for everyone. You want that franchise owner to charge out of that room with moxie and enthusiasm to conquer his or her market in the name of your company.

There is no reason to make the language of the franchise licensing agreement hostile, stale or unpleasant.  Keep in mind that you are in the position of selling that franchise to the franchise owner so that makes him or her a customer.  Never miss a chance to build that customer relationship.  By making the franchise licensing agreement an upbeat and encouraging document, you are even using a boring old legal document like the franchise licensing agreement part of your bold marketing plan that will result in an explosive growth in your franchising empire. That is smart use of the franchise licensing agreement to be sure.

 

 

While signing that franchise licensing agreement is one of the last steps before you are in business, don’t get in such a hurry that you don‘t look before you leap.

A document called the franchise licensing agreement will show up in the mail as one of the last steps before you write the checks to buy a lucrative franchise and launch out on your new life as a small business owner.  It is an exciting step but as you tear open the envelope to look at that franchise licensing agreement, don’t just flip to the back page and sign it.  Take some time to make sure you understand what you are signing and even negotiate about the nature of the relationship you are getting into.

If the franchise licensing agreement intimidates you a little bit, that’s good. It is a legally binding document that is crafted to comply with state and federal franchise law.  You will see plenty of statements of financial responsibility buried in there. To be fair, the franchise licensing agreement commits the company selling the franchise to legally binding commitments to you as well but they have a small army of franchise lawyers that put that thing together. They are not as nervous as you because if you are working with one of the big dogs in the franchising industry like Subway or Starbucks, they have gone through this hundreds of time before.

Don’t let the franchise licensing agreement push you around. Also do not cave to the idea that you are just a little guy and you have no say in what happens.  Even if the company selling the franchise is huge, they still see you as a customer and a potential business partner that will make them even more wealthy. They may be ready to play ball if you want to make some changes in the franchise licensing agreement.

Know where you stand and what to do if there is no wiggle room.

Just as the company selling the franchise has their surly team of lawyers, you have a right to engage your own legal eagles to make sure that any franchise agreement that you look at is a good deal for you.  It is true that when you get a franchise licensing agreement, there may be a time limitation on when it must be signed and returned to keep the franchise processing active. However, you have every right to expect and/or request a sample of the franchise licensing agreement early in the process of discussions about the franchising process.

That franchise licensing agreement sample should be a mirror copy of the one you will be signing to seal the deal and make you a franchise owner. So get that example to your high priced franchise lawyers so they have plenty of time to go over it and engage in the chess game of negotiating changes before the drop dead date comes when the franchise marriage must happen.

It is possible that some companies offering franchise will not negotiate anything that is in the franchise licensing agreement. They may be big and wealthy and feel they can’t be pushed around.  That all may be peachy if there is nothing in that franchise licensing agreement that is a problem.

But if you need some changes and the franchising company simply refuses to hash out the differences, it might be time to look for a different company to buy a franchise from.  They are not the only fish in the sea and you can find a company to buy a franchise from who wants your business and will work with you to work out a franchise licensing agreement that both parties can live happily with and get very wealthy with for many years to come. Those kinds of franchise licensing agreements and those kinds of franchising partners are worth waiting for.