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Log In / Register | Dec 19, 2014

Being Absorbed By Another Franchisor

This is an interesting article in the recent Deacon’s Law Firm Newsletter, which will anger many franchisees that have experienced the turmoil of an acquisition. Deacons are the firm behind Australia’s FCA - the ‘peak body’ representing everyone in franchising including franchisees.

Their advice to franchisors on ensuring an easy transition;

 avoid granting exclusive territories where possible (or at least include express carve-outs to preserve any future strategic decision)

 ensure that the agreement provides an express right for the franchisor to a competitive (or complementary) franchise network

 require franchisees to consent in advance to the assignment or novation of their franchise agreements by the franchisor, and

 reserve the right of the franchisor to require remodelling of the business premises, changes in equipment and changes in trademarks and corporate image at the franchisee's expense.

I must admit that if I was a franchisor I would probably consider this advice but understanding as I do the implications for franchisees; if I was buying any franchise I would think twice ... or possibly less than once.

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