Duration and location – the franchisee must be aware of where and for how long he can operate under the terms of the franchise. These aspects must be recorded in the contract in as much detail as possible. It is important to establish the conditions of exclusivity of the franchisee's rights to work in a certain region, otherwise the seller may open a franchise to another person in the same territory.
Methods of information transfer – this concerns the process of exchanging all relevant documents. The phrase “in any accessible form” is vague – the parties to the agreement must define specific data carriers used in exchanging the franchise package in order to provide an evidentiary basis for the process of transferring and receiving documents.
Termination Procedure . If the doctor data package franchisee wishes to terminate the franchise agreement, he may do so unilaterally, having notified the franchisor of the decision in advance. It is recommended to discuss the procedure before entering into the agreement. The contract may require that one year's notice of intent to exit the business be given. During this period, the entrepreneur is obliged to regularly pay royalties, even if the franchise is not profitable.
Responsibilities of the Parties. Before entering into a deal, the franchise seller and buyer must have a clear understanding of the selection of suppliers, pricing, employee training, and promotion methods. All obligations and responsibilities of the parties must be fully understood and agreed upon.
A franchise is not limited to simply acquiring a ready-made “formula for success”, but is a joint venture with the franchisor.
Three Mistakes Beginning Franchisees Make That Are Dooming Their Business to Failure
Below are some common mistakes that can be a costly lesson for an entrepreneur just starting out in a franchise business.
Ignoring market specifics
Any business is closely connected with the surrounding space, population and infrastructure. If the franchisee does not take into account the market conditions in which the organization will operate, then even a good offer from the seller will not help.
An example is the running school "I Love Supersport". In Yekaterinburg it has been operating profitably for four years, while in Magnitogorsk it ceased operations after a year and a half. The main factor that led to the failure was the insufficient infrastructure for running in the city, which reduced interest in this sport.
Exaggerating the role of the franchisor in support
The franchisee, lacking sufficient knowledge about the business, relies on the partner's support, sometimes placing excessive expectations on him. For example, a newcomer has no experience in marketing and does not understand the importance of investing in attracting customers during the slow season. Hoping for support, he faces the lack of necessary guidance on attracting customers, which can lead to the loss of franchise business.
Mistakes of Beginning Franchisees