Our prior articles regarding franchises have focused mainly on franchisors. However, we often advise potential franchisees. Because of the perception that the terms of a Franchise Agreement are non-negotiable, we are sometimes asked if there is any valuable advice we can provide to franchisees. We believe that there is!
First, it isn’t entirely true that Franchise Agreements are non-negotiable. The more established the franchise, the less likely they will negotiate the terms of their agreement. However, with newer franchises or franchises that are establishing their presence in British Columbia, negotiation is often possible. The franchisor may agree to an addendum or side-letter amending or clarifying certain business terms.
Also, we believe that it is important for franchisees to understand the terms of the Franchise Agreement, even if it can’t be amended. The franchisee should understand their rights and obligations and ensure that their understanding of the business relationship is reflected in the Franchise Agreement. Franchise Agreements usually contain an “entire agreement” clause, the intent being that the only representations and warranties that the franchisee can rely upon are those set out in the Franchise Agreement. If a franchisor has promised something to the franchisee, it is important that it is included in the Franchise Agreement (or that the franchisee understands that they can’t rely on that promise).
In addition to helping with the Franchise Agreement, we can review other agreements sometimes required by franchisors, such as General Security Agreements and Personal Guarantees.
Finally, we can assist franchisees with:
- Incorporating a company to act as franchisee;
- Reviewing and negotiating the lease for the franchisee’s premises;
- Advising regarding employment law matters; and
- Reviewing bank financing documents.
If you are a potential franchisee and would like assistance with any of the above, please contact Andrew or another member of our Franchise Law Team.
Andrew Brunton is a business and real estate lawyer at Pushor Mitchell LLP who acts for both franchisors and franchisees. You can reach Andrew at 250-869-1135 or [email protected]. For more information on our Franchise Law Team, please visit http://pushormitchell.com/service/franchising.
