A franchise requires a lot of hard work because you need to build a customer base, establish a reputation, and connect with the target audience to be successful. This can take years and the value of a franchise grows as over time. If there is no clear renewal plan, the franchise owner can refuse to renew your contract and lease it to another candidate for better profits. Here are some tips that can help ensure franchise renewal:

#1 Remember Renewal Isn’t Guaranteed

Most franchise contracts have fixed terms. You have the right to use the franchise property for that particular term; but after it is over, the owner can choose whether or not they want to have it extended for longer. Many contracts provide no right to renewal but some offer a fixed initial term along with one or more options to renew the contract. It’s a good idea to pay attention to these details during negotiations so you can plan for renewal accordingly. Bear in mind that even if the franchise owner offers options for renewal, it’s not guaranteed in any way so the franchise can slip through your hands.

#2 Always Negotiate Options to Renew

Even if you don’t think you want to renew a franchise, it’s a good idea to keep that option open. When you sign the initial contract, make sure there are one or more options to renew included in it. Some franchise owners might be reluctant to do this, but it’s important to stick to your guns to get that option in. If the venture proves to be successful and you want to keep the franchise for a few more years, you can take the options included in the contract and have more leverage in the negotiations.

#3 Keep the Date in Mind

Take careful note of the renegotiation date to ensure you don’t miss it. Some franchisees miss the negotiation deadline and lose power over the situation. That gives franchise owners room to negotiate with other people and find a better offer for the establishment.

#4 Start Negotiations Early

It’s a good idea to start negotiations early instead of waiting until the deadline for renewing your franchise. If you start negotiations early, you have leverage and more time to convince the franchise owner to renew the contract. It also means the franchise owner has less time to find or negotiate with other possible candidates, which reduces the chances of them renewing the contract. Be sure to include one or more options to renew in the next contract as well, even if you intend to retire. Keeping the options open is the best way to handle this problem.

#5 Be the Ideal Franchisee

Franchise owners like to work with franchisees that are willing to communicate, easy to work with, and reliable. If you stick with the terms of the initial contract, maintain a good relationship with the franchisor, and do your best to make your business successful, the franchisor will be more willing to renew.

If you want to know more about renewing a franchise business or want some advice, feel free to get in touch with us at The Franchise Institute. You can call us on 1300 855 435 or fill in this contact us form and we’ll reply as soon as we can.

Thanks for reading,
The Franchise Institute Team
1300 855 435

The post 5 Tips to Ensure Franchise Renewal appeared first on Franchise Insitute.

Some franchise agreements have a specific initial term that doesn’t include any franchise renewal rights. However, there are some with fixed initial terms as well as options/rights for renewal, but this isn’t something you can take for granted.

In case you have an agreement without any franchise renewal options, you will be at the franchisor’s mercy once the original term expires as they aren’t obligated to renew terms. But even in situations where renewal is an option, there is no guarantee that it will surely take place.

Some basic requirements

Most franchise networks have very specific requirements that the franchisees are required to meet in order for their agreement to be considered for franchise renewal, such as:

• Opting for renewal within a pre-decided timeframe (such as between 6 & 3 months before the agreement expiry date
• The potential upgrade of your business premises
• Paying the renewal fee
• Remedying any agreement breaches that have occurred

In most franchise network setups, the franchisees are required to sign a new agreement when the renewal is due to take place. It isn’t necessary that all the terms contained in the new franchise agreement are identical to the initial franchise; in fact, there may be a difference even in the financial terms too.

Some tips

Sometimes the new financial terms make the proposition less profitable and if the franchisee decides to sell, it may be worth less as well. This is why most franchisees wonder what they can do to ensure they are able to renew their agreement. Here are a few pointers that can help ensure franchise renewal:

• Try to negotiate some of the franchise agreement renewal options
• In cases where the agreement does have a renewal option, make it a point to note down the dates; this helps minimise the risk of you missing the date and missing the right to renew.
• Ensure that you toe the line when it comes to complying with all the franchise agreement terms in the first term.
• Don’t defer the agreement renewal process and start discussing the possibility of renewal early with your franchisor. When you start on these discussions early, it becomes possible to decide whether to renew or not to renew well before the agreement expiry date.

Things to keep in view

As a franchisee, you need to keep in mind that you don’t own any of the systems or the branding and that under the agreement terms you are only permitted to use these for the stipulated timeframe. Once you reach the end of the agreement period, you cannot use either the systems or the brand. There are times when a franchisee works diligently and builds up a very solid business that far exceeds the initial outlay. If the agreement isn’t renewed, all of their hard work can be washed down the drain.

In such a situation, only the equipment and the plant are the franchisee’s assets. The one way to ensure that you have all your bases covered is to get advice from an experienced franchise lawyer and an accountant; this will give you a better understanding of the terms of the franchise agreement and will help ensure that you have enough time to make a good ROI.

If you want to know anything more about franchising or want some sound and professional advice, call The Franchise Institute on 1300 855 435 or fill in this contact us form and we’ll reply as soon as we can.

Thanks for reading,
The Franchise Institute Team
1300 855 435

The post Things You Can Do to Ensure Franchise Renewal appeared first on Franchise Insitute.