nchisor. Besides the royalty fee, franchisors often require a cooperative marketing payment as well. There are other costs involved that are not financial. One example is the conformity to standard operating procedures. It is important to understand that for most franchisors, there is just one way to do things, and it is their way. Success results from proven methods of operation, so the franchisor does not want any variations. A franchisee can become frustrated when he or she believes that there is a better way to do things. The inability to make changes readily is also a problem with franchises. A franchisor may prohibit selling products or services other than those approved by the franchisor. These restrictions are difficult to follow when you believe that there is strong customer demand for a new or different product. There is often a method for making suggestions, but this can sometimes be cumbersome and time-consuming. The franchisee is subject to decisions made in the central office of the franchisor. As a franchisee, you must be willing to limit your independence as an entrepreneur.(9) The Franchise Agreement forms the foundation of the relationship between the franchisor and the franchisee. The franchise agreement incorporates all the obligations of the franchisor and franchisee, the rules governing the way the business is conducted, as well as the conditions under which either party may terminate the agreement. It must anticipate all possible difficulties that may arise during the term of the agreement. This agreement is legally binding.(10) Every line of this document should be scrutinized before any commitment is made. Indeed, it is not only advisable but also essential that professional advice is sought. An experienced franchise attorney should be consulted before any agreement is signed. A franchise sometimes involves signing two agreements, a purchase agreement and the franchise agreement itself. The purchase agreement is...
