At a time when succession planning has become a major issue in the world of franchising, is it possible to do better? As noted above, some States require certain conditions for termination or non-renewal, while others require written notification within a specified period of time before either of the two measures is put in place. Other states require a real possibility of remedying a default before termination. You need to know if you have any renewal/rights options and how to exercise them properly. You must also ensure that you know the data of your mandate and your actual material rights of renewal. If you do not understand this information, the end of the period may occur without your consideration and your right to extension is lost. The language of your agreement ultimately determines your protection and whether you are able to prevent termination and retain your business. Franchising is a consistent and lasting replication of a company`s brand promise, and an agreement should describe in detail the many business decisions that are considered in creating a franchise system. It is complex and, in most cases, a contract of adhesion, that is, an agreement that cannot be easily modified. According to these clauses, requests for authorization of a sale or transfer can only be submitted at the time when the franchisees wish to transfer their shares and not beforehand.
In the United States, a company becomes a franchise if it meets the definition of the Federal Trade Commission (FTC), known as the FTC Franchise Rule. Under the FTC franchise rule, there are three general requirements for a franchise agreement to be considered official: the contract of succession is not a simple term, and any entrepreneur wishing to join the franchise should know its pros and cons. There are many reasons why a franchisee may choose to terminate or not renew an agreement with a franchisee. In most cases, this measure is taken to the advantage of the franchisee, without taking into account the future of the franchisee. Here are some of the dubious reasons why a franchisee terminates a contract or refuses to renew it: it is obvious that the appointment of a successor reseller is an important matter. The candidate should be someone who is competent and experienced and who has already established a relationship with your factory representatives. The candidate must be present at manufacturer meetings with you and establish a relationship with franchise representatives. The franchisee will sometimes try to reach the end of the relationship by not extending the agreement to the end of the indicated term.
A small number of states prevent it, even without “good reason”. In these countries, the franchisee can continue to do business as long as the franchise is able to provide results. “A good reason” may include things such as non-compliance with the essential terms of the franchise agreement, non-compliance with sales quotas or non-compliance with quality standards. In Countries with strong legal protection against termination or non-renewal, if you comply with your agreement, the franchisor has no legal basis to terminate or refuse to renew your contract. But it is a very valuable and useful tool, both for a franchisee and for his franchisee, who can use it both for a real succession plan for the franchises in the network. How could you use your franchise agreement to better manage this fact of life, even safer than death (since the vast majority of franchisees retire on a network long before their death)? Normally, if a franchise is in order, there is no reason why the franchisee should not grant the continuation of the transaction….