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Franchise Agreements: 24 Things to Watch For

24 Things to Watch For

  1. Initial Franchise Fee
  2. Build Out Costs
  3. The Royalty Fee
  4. The Marketing Fee
  5. Duration
  6. Renewal Fees
  7. FDD Changes
  8. Jurisdiction for Disputes
  9. Who holds the lease
  10. Local Marketing Terms
  11. Business Experience of the Franchisors
  12. Prior closures
  13. Compliance Programs
  14. Mandatory Products from Franchisor
  15. Franchisor Financing vs Market Rates
  16. Franchisor’s Duties
  17. Protected Territory
  18. Intellectual Property Rights
  19. Operations Manual
  20. Management Restrictions
  21. Product Restrictions
  22. Earnings Claims (Average Unit Volume)
  23. Current Financial Statements
  24. The 14-day Rule

Source:  “Buying a Franchise: 24 Items to Beware of Before Signing!!!” by Frank Caperino.