Seven Issues that Should Be Addressed Within Your Florida Franchise Agreement
A franchise can be an excellent business opportunity for many Floridians. Investors can replicate an already proven business model, while established companies can extend their brand recognition more quickly and efficiently. When things go well, a franchise is mutually beneficial. However, there is also the risk that a destructive dispute could arise between the franchisee and franchisor. These disputes can rapidly turn a good opportunity into a complete nightmare. Fortunately, with a well-crafted franchise agreement, the vast majority of disputes can be prevented before they even begin. If you are entering into a franchise business, you need a franchise agreement that has been carefully drafted by an experienced franchise law attorney. While each franchise agreement will certainly have it’s own unique elements, the following seven key issues should be addressed in detail within every agreement.
- Training: Both a franchisor and a franchisee can benefit from a training program. The franchisee will learn how to replicate the existing business more effectively, which in turn will produce higher sales that will benefit the franchisor. The details and extent of any training program must be outlined in the initial franchise agreement.
- Continuing support: Related to training, most franchisees receive ongoing support from the primary business. Once again, when the proper level of support is provided, both parties can benefit. Still, there needs to be clarity over how much ongoing support will be provided and what specific form that support will take.
- Territory: Franchise locations should not be forced to battle with other locations of the same franchise. This is very important for franchisees. A franchisee should have some exclusive right to operate within a particular territory. This precise boundaries of this protected territory, as well as the process by which the territory may be modified, should be clearly addressed within the initial agreement.
- Investment costs and royalties: Both parties should also have a clear picture as to what and when the franchisee is going to pay to the franchisor. Upfront investment costs should be addressed as well as any obligations for ongoing royalties. Many disputes arise because franchise agreements provide insufficient guidance on the issue of royalties.
- Operating duties: There should also be a provision that explains the extent of all of the operating duties of the franchisee. Specifically, the agreement should spell out the actions that the franchisee should take, as well any behaviors that the franchisee should refrain from engaging in.
- Duration: Franchise agreements are not indefinite. As such, the specific duration of the agreement should be addressed. In accordance with Florida law, the duration terms should be clearly specified.
- Renewal and resale: Finally, it is important to detail how the business relationship can be continued or transferred. There should be a provision that sets forth the renewal rights for both parties. Further, there should also be a provision that explains the extent of a franchisee’s right to sell their business back to the franchisor or to a third party.
Do You Need Legal Assistance?
At Pike & Lustig, LLP, our West Palm Beach franchise law attorneys have extensive experience handling all sides of Florida franchise disputes. If you are involved in a legal dispute, please call our office today at 561-291-8298 to set up a free review of your case. Our team represents businesses throughout the region, including in Miami, Coral Gables and Oakland Park.