Can I negotiate a franchise agreement or is it take it or leave it?

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Miles Agmen-Smith is the Principal at ASCO Agmen-Smith Lawyers. Miles is principal of ASCO Agmen-Smith & Co, a boutique law firm specialising in franchising. He has many years’ experience in providing advice to franchisors and to franchisees both in New Zealand and overseas. He is the current chairman of the Franchise Association of New Zealand Inc. and is regularly called upon to present on franchising and to contribute to articles in New Zealand and overseas.

Can I negotiate a franchise agreement or is it take it or leave it?

Your ability to negotiate the terms of the franchise agreement depends largely on your bargaining position.

If the franchise system has been in existence for a long period, has numerous franchisees and is sought after – do not expect to be able to negotiate significant changes to standard wording. However, some areas may be able to be negotiated on a case by case basis, for example; it may be possible to negotiate some of the commercial terms including actual training requirement or costs.

If the franchise system is brand new and you are one of the first franchisees you will be in a much better bargaining position. Areas which you may be able to negotiate could include concessions to the initial franchise fee, royalty, rebates, exclusivity rights and changes to non-competition restrictions (especially to those which apply after termination).

A specialist franchise lawyer will be able to point out to you the areas which he or she believes can and should be negotiated with the franchisor. Once these have been established your desired outcomes can best be presented to the franchisor by your franchise lawyer to negotiate for a reasonable solution on your behalf.

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ASCO Agmen-Smith Lawyers News

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