08 Sep, 2017

Franchise Contract

It could be quite risky for one to expand his or her business. Therefore the main aim of the franchise contract is to protect intellectual property and also place any risk of profitability and business growth into the hands of the franchisee. For businesses that want to expand, there is the need to increase sales and marketing. This can be done by taking more orders by doing them more effectively than your competitors. The fact of the matter is that the franchisors grow without ever handling more inventories or even getting more clients. This is one of the most preferred positions of the franchisor. He has no more staff, no more stock and does not have to worry about increasing the client base. It is then the work of the franchisee that takes all the risk for him. The issue is that whether you succeed or not, the franchisor would be making more money for you. With the kind of legal system in place the customer is heavily protected. Another issue with the franchise contract is the fact that you get to sign away all your consumer rights. But eventually the franchisor would be selling a business that would be dependent on the franchisee working out his part of the deal. When the franchisee does not go according to the system or cannot sell the products, it is not the fault of the franchisor if the franchise is good. However the franchise contract is such that transfer of risk is still possible to the franchisee. It is quite the opposite when it comes to the normal low of the consumer. When it comes to extreme cases, there would be a lot more transfer of risk to the franchisee than is appropriate. For instance you should just imagine paying a franchise fee that is fixed monthly no matter whether it is profitable or not. It would interest you to know that this is quite common in many franchises that are signed. It is done so as to fully protect the franchisor from any failure or success of the franchise. Therefore no matter your level of success, there would still be the receipt of income to the franchisor from you. Therefore when it comes to the franchise contract, you would have to ensure that you carry the success of the franchise. When this is not done, you could be driven into debt.