Signing a franchise agreement signals the end of one process and the beginning of another. You have completed your evaluation of competing franchise opportunities and due diligence, and now you are officially a “franchisee.”
So, what’s next? Here, franchise lawyer Jeffrey M. Goldstein explains what happens after you sign a franchise agreement:
What Does It Mean to Sign a Franchise Agreement?
A franchise agreement is a binding contract that establishes the franchisor’s and franchisee’s respective rights and obligations. Once you sign, there is no going back. You are committed to building and running your franchise, and you must now begin thinking in terms of what is and isn’t allowed under the terms of your agreement.
You will soon be required to pay your initial franchise fee (if you haven’t paid it already), and this fee is almost certainly non-refundable under the terms of your franchise agreement. You probably only have a certain number of days or months to get your franchise up and running as well; and, even if you don’t open in time, you could still be liable for making monthly royalty and marketing fund payments.
What Are Your Next Steps After Signing a Franchise Agreement?
Once you sign a franchise agreement and pay the initial franchise fee, what are your next steps? Typically, you will be required to participate in some form of training, and you will need to execute a plan for meeting all of your franchise agreement’s other pre-opening requirements. You will need to find vendors, you will need to lease retail space and one or more vehicles (if required), you will need to go through the process of getting ready to hire employees, and you will need to do all of this in accordance with the system standards established in the franchise agreement and Operations Manual.
As you prepare to open your franchise, you should have the ability to communicate directly with members of the franchisor’s operations team. If you are struggling to stay and touch and get the guidance you need already, this might be a bad sign.
What if You Run Into Issues After Signing a Franchise Agreement?
What happens if you run into issues? Remember, your franchise agreement is a binding contract, so you are in it for the long haul. Hopefully, you will be able to resolve these issues amicably; but, if not, you may need to resort to dispute resolution—subject to the terms of your franchise agreement.
While many franchisees are able to find success, many franchise relationships end unfavorably as well. As a franchisee, the key to mitigating your risk is making informed decisions based on sound advice and a clear understanding of your contractual rights and obligations.
Learn More About the Risks of Franchise Ownership From Franchise Lawyer Jeffrey M. Goldstein
Jeffrey M. Goldstein is a national franchise lawyer who has been representing prospective and active franchisees for more than 30 years. Whether you are thinking about buying a franchise or facing an issue related to your franchise agreement, Mr. Goldstein can help. For a free, no-obligation consultation, call 202-293-3947 or contact us online today.
