Franchise - Contractual Changes

Almost every franchise agreement contains a clause that lets the franchise company change the deal, in material ways, after the fact, without any recourse by the franchise entrepreneur. This is done by incorporating other documents, as amended from time to time, into their franchise agreement by reference. To make this even more interesting, most such referenced documents are proprietary, meaning you will not receive a current copy nor can you review them prior to signing your franchise agreement contract. This is not as disreputable as it might sound, but you need to be aware of this power. The most commonly referenced document is a franchise company's operations manual, which outlines all rules and requirements in detail for operating the business. This manual also outlines the exact specifications required for office, building and maintaining the business. These specifications can be changed at any time, and if such a change is made in a referenced document, the franchise entrepreneur is required to conform under the terms of the franchise agreement.

In the real world, this could mean requirements to make more substantial investments into the physical assets of the unit: A new required application, or additional equipment in order to provide a new product or service. Be aware of these possibilities, but also consider the final point below before getting too concerned about this clause.


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