Franchise business is one of the hottest and proud business in the business industry. People prefer to buy a franchise business as pride and have good support from the franchisor. "When we look the industry", most of the franchise business are running successfully, as they have set a goals, products and service which are guided by the group of people to success every franchise. Franchisor or Franchiser main agent is to draw operating guideline of the business systematically, in-turn the franchisee follows the set guide lines. There are around 5 to 10% franchise businesses for sale in the market, and all most all franchisor have their own requirements. Buyers prefer to buy a franchise business for sale they are in the big management and will be successful.
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Pride To Own A Franchise Business
Many peoples are interested to buy the existing franchise business or to take a
new fresh franchise opportunity as they feel they are the part of major network
and they feel they are secured. Their unique nature of the business, viability of
business, quality of the products, get a protection from the market fluctuations,
to reduce the management risks, re sale of the business, technology and marketing
support from the franchiser etc are major factors why the buyers are interested
to buy the Franchise business.
The franchise UFOC means the Uniform Franchise Offering Circular and it is nothing
but a Full Disclosure Document of the Franchiser AND practiced in the USA by order
to Federal Trade Commission. Under the Franchise Rule the Franchiser must hand over
the copy of FDD / UFOC to the Franchise and allow the Minimum 14 days time to before
going to collect any fee or sign any contract with franchisee that is either by
franchiser or affiliates of the franchiser. The Franchiser can release the FDD /
UFOC only upon the approval or considering of Franchiser.
Many people dreams about own a pride business but majority are scared to start the
new business due lake of experience on how to start and how to run the business.
And also they have lots of fears and questions about the viability of the business,
financial support, technical assistance, licenses and permits etc. For those entrepreneurs
the franchise business model is an ideal and one of the best businesses available
in the market. The franchiser provides to individual franchisee outlets or franchise
business with a proven system and they support the franchisee to operate the business
In the franchise business model, the franchisee has to pay fees to the franchiser in order to own and run the franchise business. The franchise fees are divided in to two parts. Among those fees, one fee is called a basic fees or front end fees which are one time and the other fees called as back end fees which are in continuous in nature. Both fees structure terms and conditions will be varying from franchiser to franchiser, and even some times it varying from geographical location to geographical location.
Renewal of the Contract :
Any franchise business agreements are valid for a limited time only, and such valid time period is mention in the franchise agreement. At the end, of the current period both franchisers and franchisee has right to continue to run the business or not. The franchiser and franchises may agree to revalidate the old contract or write a new contract with modified the terms and condition etc.
Majority of franchise business agreements terms are Non Negotiable, however there are some clauses and terms where the franchisee can be easily negotiate with them, which makes more a lucrative for the franchise business owner. Before going to start your negotiation, you have to know what part of terms can be negotiable and what extent you can negotiate. Once your accountant and attorney read the entire franchise business agreements or franchise business contract and they will give the areas where you can negotiate and the possibility of the depth of negotiation. Before going to start a dialogue with franchiser you must have all the disclosures (FDD / UFOC) and the copy of contract model and other related documents plus your professional expert’s opinions.
The franchise agreements (FA), are a set of documents between the franchiser and franchisee tells about the duties, rights and obligations of both parties. Once both parties signs then it will become a Legal Binding Contract (LBC) between the parties i.e. franchiser and franchisee. At the time of initial submission of business request to the franchiser, the franchiser will give the model copy of franchise agreement to the franchise along with disclosures or can be given separately to read, understand and to approve. As it going to be a Legal Binding Contract (LBC), there are so many clauses which you may not familiar or may not have an idea. Hence it is always good to hire attorneys who are specialized in the contract law or franchise law, take their advice and opinion before going to sign any documents.
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