COMMENT ON FRANCHISING
Franchising Realities & Remedies: Page 4
Comment on Franchising
By Harold Brown ©1999
Reprinted with Permission
A. Franchising is and can be a wonderful way to distribute products and services, with ample compensation for the franchisor and each franchisee in the roles that they perform.
B. When the parties do what is reasonably expected from the others, there are almost no limits to the benefits that each can obtain.
C. Many aspects of franchising, however, can present a marked imbalance in the relative positions of the parties. Frequently, the franchisor unilaterally drafts and provides a contract in which the franchisee has little power to negotiate its terms. The agreements universally require compliance with an undisclosed Manual of Operations. Because the franchised business operates under its name, the franchisor also reserves the power unilaterally to alter or eliminate many provisions in the Manual. Federal and state laws may help to even the playing field.
When the franchisor and each franchisee work diligently in pursuing reasonable goals, the success of the venture is often more likely.