Can Prospective Franchisees Negotiate Franchise Agreement Terms?

Whether or not you can negotiate the terms and conditions of your franchise agreement depends solely on the franchisor. Most large, well-known franchise companies will not allow changes to their contracts for two simple reasons: they usually have a history of successful and happy franchisees, and they know there are plenty of potential franchisees who would like to buy into their system.

Some states will not allow you to sign a contract that differs from the one they have on file for a particular franchisor. Other reasons for not negotiating franchise terms include administrative costs incurred by maintaining different contracts for each franchisee and updating the Franchise Disclosure Document (FDD) with details of special deals they grant to franchisees. Also, if one franchisee is especially astute, or if his or her lawyer is crafty enough to negotiate a better deal, it could disgruntle existing franchisees that are bound by less favorable agreements.

You may find that some franchisors, even the big ones, are flexible in certain areas, like territory assignments, signage, and training. Newer franchisors are more willing to negotiate in many cases, including the initial franchise fee. If your contract is negotiable, contact as many existing franchisees as possible and ask them what deal they got so that you do not end up paying more.