Stay informed! Visit the SA Department of Health's website for COVID-19 updates:

Negotiating with a franchisor

Let’s say that after you have done your homework, you remain convinced that becoming a franchisee is the way to go. You have honed in on a specific franchise opportunity that really appeals to you. So, what’s the next step?

You will have to do some talking. This is inevitable because every franchisor worth his salt will want to know who you are and what you are willing to contribute to the growth of the brand. Most importantly, the franchisor will want to be sure that you fit in with the team. This team being the people in the franchisee support infrastructure, the network’s suppliers and other franchisees.

It is important to remember that a franchisee can never succeed in isolation. It’s a team effort!

Once you come to the negotiation stage, you should be prepared to accept that some issues will be non-negotiable. Ranking high among them will be the franchise agreement. Most franchisors spend a lot of time (and money) having an agreement drawn up that protects the interests of the network but is also fair to the franchisee. To re-negotiate the franchise agreement with every new franchisee is simply not practical.

    • If every franchisee would be given a different agreement, controlling the network would become a legal and logistical nightmare.
  • Franchisees are prone to talk to each other. They would soon discover differences in the respective agreements and, human nature being what it is, every franchisee would think that he or she is worse off than the others in the network. This would lead to petty squabbles and worse.

This does not mean that you should accept every clause in the agreement at face value. Good franchisors appreciate it if you ask probing questions. If a clause in the agreement bothers you, ask for an explanation, then talk it over with your attorney. Should it remain a sticking point, you always have the option to walk away from the deal. It is much better to do so at this stage than to sign on the dotted line and regret it for a very long time to come.

Among the best ways to find out whether the network you are interested in is the right one for you to join is to talk to existing franchisees. It is only natural that they will be reluctant at first to open up to an outsider. Persevere, and you will soon get a feel for the way the network really operates, and whether it is a happy place. Above all else, this calls for good listening skills.

There is one thing you should never do, no matter what the circumstances are. We are talking about giving in to pressure by a franchisor representative. If he or she tries to tell you that someone else is interested in the same territory and it’s a matter of “now or never”, wish the other person luck and step back. Fact is that responsible franchisors don’t act in this way.

In the interest of the network, franchisors are even more concerned than you to ensure the best possible fit. This takes time and patience. If you walk away from a deal, you have lost little; plenty of other opportunities will present themselves in future. The number of listings on our website is ample proof of this. By contrast, a chance to get out of an agreement you find it difficult to live with once you have signed it is unlikely to arise.