WHY WE DON’T NEGOTIATE OUR AGREEMENT

In our decades of franchise experience, we’ve seen first hand the negative long-term impact of individually negotiated agreements on franchise systems. Here’s a few reasons experienced franchisors don’t negotiate terms with franchisees and why it may be a warning sign if they do:

  • Negative Impact on Relationships with Franchisees. How would you feel if you found out that we discounted franchise fees and royalties for a few franchisees, but not for you? Or you successfully negotiated a $10,000 discount on the Franchise Fee but learned later that another franchisee was given a $30,000 discount. If a franchisor is willing to negotiate with you, it means they’ve been willing to do so with everyone before you. We believe that to be a true system, every franchisee needs to be on a level playing field and treated equitably.

  • Providing Best-in-Class Franchisor Systems is Capital Intensive. We didn’t pick our franchise fee or royalty fee out of thin air. In order to fund the intensive pre-development, development, and ongoing training and operational support that we provide to franchisees, our fees need to be exactly where they are. By reducing fees, we reduce the quantity and quality of the systems we’re able to offer, and we’re not willing to sacrifice both your short-term and long-term success just to close a deal.

  • If We Have to Negotiate To Get You to Commit, We’re Selling You Something. Franchisees should never be “sold” or induced into buying a franchise. Great franchise brands are built on systems and standards. If a franchisor is inducing you into an agreement with discounted rates and modified terms, it may behoove you to consider why they’re so desperate to get you on board that they will contradict the very essence and intention of a franchise system. Perhaps it’s just that they really like you and you’re the only person they want operating a location in your market (which is a classic franchise sales tactic), but it’s worth thinking long and hard about the “why.”

RED FLAGS IN FRANCHISE SALES

We pride ourselves on conducting a transparent, pressure-free due diligence process for franchise candidates. Over the last couple of decades in franchising, we’ve witnessed the good, the bad, and the ugly, and it all starts with the franchise sales process. Here are some red flags you should look out for when evaluating a franchise:

  • Incentives for making a quicker decision (“We can expand your territory and discount your fees if you sign by the end of the week”).

  • Your city is on a short list of desired territories (“We’re actively trying to open in [Your City] because we think it’s one of the top markets for our expansion”)

  • You are the only person they want in that market (“Look, we really think you’re the best possible person to take on developing [Your City] so we want to make you a deal”)

  • Someone else is interested in your territory (This can sometimes be true, but it should not be used to apply pressure nor affect your decision making)

  • Derogatory comments about competition (“That brand? They have no idea what they’re doing.”)

  • Inability or unwillingness to answer detailed questions about site selection, architecture, construction, training, operations, and support systems (“You’ll learn all about that in training”)

  • Inability or unwillingness to answer questions directly

If you encounter any of these red flags, think twice.