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The end of the franchise agreement

At the end of the contract, two options are possible : renew or dispose of his case. One word : anticipate. here we go again ! In November 2017, the first six

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The end of the franchise agreement

At the end of the contract, two options are possible : renew or dispose of his case. One word : anticipate.

here we go again ! In November 2017, the first six franchisees of the network Vivaservices have all decided to renew their franchise agreement with this young company of services in the home. Among them, Vanessa Faggi, 39 years old, franchised Coals (78). A few months before the end of his first contract of five years, the franchisor has in effect proposed a new deal of seven years. Very satisfied with the professionalism of the head of the network, and its own results, in progression, she accepted. "I didn't need to negotiate anything. We drove back on the same contract, the entrance fee less", does she appreciate. Not unique : according to the annual survey of the franchise, 69 % of the franchisees have already renewed at least once their contract. In the majority of cases, renewals are tacitly. In other words, unless the contract is terminated six months before its term, the franchisee restarts automatically on a new contract.

A more focused reading

However, the end of a contract, must be the occasion to prepare a balance sheet, but also to define the new rules of operation between franchisor and franchisee for years to come. A young network is still more inclined to negotiate, especially on the amount of the royalties, because his ambition is to capitalise on the experience of his troops to continue to grow rapidly. With the networks established, the margin for manoeuvre is further reduced.

"Franchisors and franchisees are able to have specific requirements. A teaches renew the contract, if the franchisee undertakes to do any work in his point-of-sale. The franchisee, meanwhile, may have new requirements for the delineation of its catchment area", shows Philippe Dassié, ceo of the Franchise Connection. As the franchisee has or has not negotiated new terms and conditions, it should never make the economy a more focused reading of his new contract. The devil is always in the details.

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once the contract is completed, the franchisee may assign its case. And here, "small" specificity of the franchise, it was not entirely a free hand. "An approval clause provided for in the initial contract gives the right to the franchisor to validate or not, the choice of the buyer," says Philippe Dassié. According to the terms of the clause, the retailer will have to more or less give reasons for its refusal with objective criteria previously listed in the contract.

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Another power of the franchisor : activate its right of pre-emption. Depending on the circumstances, the contract may provide for a repurchase price predetermined, or the appointment of an expert to set the price. Seen, sell his case will not be a small... case. To avoid being cornered and having to accept a sale price less, anticipate. Before signing again, read the contract with a lawyer, notary or accountant and negotiate these two clauses (the pre-emption and approval) so that they will be the least unfavourable as possible for the kick-after !

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