Possible pitfalls of a starting franchisee
Starting a business on the basis of “franchising” is in. This is not surprising, after all, as a starting entrepreneur, it certainly has a number of advantages to operate a company under a proven franchise concept. Below are seven points that, in my opinion, the aspiring franchisee should in any case take into account before working with a franchisor.
1. Is there a proven franchise concept? In other words, has the formula indeed proven itself in practice? If there is only a starting concept of a few months old, with a limited number of franchisees participating, the starting franchisee should be wary. In situations like this, I usually advise aspiring franchisees to have some solid conversations with potential fellow franchisees. This can be very enlightening.
2. Has proper – independent – market research been carried out from which it follows that the operation of the company is financially viable in the future? This is a very important point. If the franchisor, when asked, is not prepared to have such an investigation carried out at its expense, a healthy dose of suspicion is in order. In fact, in my view, a franchisee should not start without such an investigation. After all, the franchisee must have (some) insight into the expected results. In addition, the franchisee can hold the franchisor to account – if the results during the course of the journey are disappointing – the franchisor about the results of the market research.
3. It is also important that the franchise agreement includes the obligations of both the franchisor and the franchisee. There must be a balanced franchise agreement. Is the franchisor willing to take any suggestions from the franchisee into account, or is it “take it or leave it”? In short, the franchisee must be prevented from entering into a strangling contract, which only includes obligations for the franchisee.
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
Ludwig & Van Dam attorneys summon Sandd and PostNL on behalf of the Sandd franchisees – dated 9 January 2020 – mr. AW Dolphin
The Association of Franchisees of Sandd (VFS) has today summoned Sandd and PostNL before the court in Arnhem. The VFS believes that Sandd and PostNL are letting the franchisees down hard.
Article The National Franchise Guide: “Why joint and several liability, for example, next to private?” – dated 7 January 2020 – mr. AW Dolphin
Franchisees are often asked to co-sign the franchise agreement in addition to their franchise, for example. Sometimes franchisees refuse to do so and the franchise agreement is not signed.
Ludwig & Van Dam Advocaten assists Sandd franchisees: Franchisees Sandd challenge postal monopoly in court – dated 12 November 2019 – mr. AW Dolphin
The Association of Franchisees of Sandd (VFS) is challenging the decision of State Secretary Mona Keijzer to approve the postal merger between PostNL and Sandd before the court in Rotterdam.
Franchisee trapped by non-compete clause? – dated October 21, 2019 – mr. AW Dolphin
The District Court of East Brabant has ruled that a franchisee was still bound by the non-competition clause in the event of premature termination of the franchise agreement.
Supermarket letter – 26
Supermarket Newsletter No. 26
Link franchise agreement and rental agreement uncertain? – dated October 14, 2019 – mr K. Bastiaans
It is no exception within a franchise relationship that the parties agree that the franchise agreement and the rental agreement are inextricably linked.