While considering franchise business, it is crucial to know that you are actually into the selling process. If you are good at sales, franchisors will definitely go to sell you on their systems, and you will work with sales executives who usually get the commission to generate lead to enter into franchise agreements. When we talk about European franchisees, several laws are to be taken care after. In fact, every small detail from the readiness of understanding to working with money-related information is to be deliberately recorded in an agreement.
In between sales process, you will always hear about the several benefits that each franchise system has to offer. But in many situations, these systems have limitations too. Let us understand this with some examples:
Benefit or Drawback of Franchise Opportunities
1. Designated Suppliers
It is highly desired for the franchisors to ask their franchisees to buy the product only from selected suppliers; this case is valid only for product-based franchises that offer products and services. The benefit of asking the franchises to make a purchase from the designated supplier is to deliver the same services and products to the customer and also to reduce the burden of sourcing the product.
On the other hand, the drawback with designated supplier option is to make delay in delivery or what if it’s provided products do not meet the client’s expectations. If you are tied in contract with the franchisor and unable to find a possible solution of this then these could create a big problem for you and your business in future. In that case, a franchise agreement lawyer can give a solution to this problem.
2. Advertising Funds
A centralized advertising fund in a franchise system can provide benefit for the right franchisees. But, wait a minute, to consider few things before contributing an amount of your income. It means, in a typical franchise agreement which is generally created by a franchise agreement lawyer, franchisees are not given any benefit on their contributions. If the franchisor thinks it can generate a good amount of revenue by concentrating its marketing efforts in a particular region even if your franchise is located somewhere else, you will hardly notice any postings that are targeting your region.
Moreover, franchisors always reserve the right to use the franchisees’ part for administrative expenses and advertising funds are never operated with transparency.
3. Franchise Territories
If in case, a franchisor is offering franchise territories, it is crucial to understand what does franchise territories mean. Usually, different franchisors give rights of different territories, based on their geographic reach with the uncertainty of exclusivity.
Mario L. Herman is an author of this article describing his views on franchise opportunities.
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