In addition, there must be a factual description of the deductible as well as a clear indication of all the funds payable, such as the initial deductible fee. B, down payments, down payments, prepaid rent on site and purchases of equipment and inventories. The terms and times for repayment and their amount must be clear, as must the amount of recurring costs such as royalties, rents, advertising and rental costs. All restrictions imposed – such as the amount of goods or services for sale, the types of customers with whom the franchisee can trade – the geographic area and whether the franchisee is entitled to the protection of its territory by the franchisor must be discussed. The duration of the deductible must also be explained in addition to the reasons why the franchise is terminated or the franchisee`s licence cannot be renewed if it expires. Include the number of deductibles terminated or voluntarily terminated by the franchisor. The franchisor must disclose the number of franchises that made the activity at the end of the previous year as well as the number of outlets of the company. The franchisee must also be delivered with the names, addresses and telephone numbers of franchisees in the ten outlets closest to the potential franchisee`s location, so that the potential franchisee can contact them for a realistic perspective on the day-to-day operation of a franchise. Some states have also passed laws prohibiting a franchisor from terminating a franchise for no good reason, which generally means that the franchisee has breached the contract. In this case, the franchisor has the right to re-acquire the point of sale – usually by buying back the franchisee`s assets, such as inventory and equipment. Like any other agreement, franchise agreements must be thoroughly checked before signing on the points line. Remember, when you consider entering into a franchise agreement: « If you enter into a franchise agreement prematurely, you can be caught with liquidated damages, which is usually two to three years of royalty payments, and there will be a judgment that you will have to repay, » Goldman said. Many franchisors offer their franchisees different levels of education.
While you don`t want to micro-manage your franchisees, many will be business owners for the first time and will not be sure how they can start and run a business.