Landmines in franchise agreements

We have been writing a bit here lately about newsagent franchise agreements and the need to read the fine print very carefully. This is important and timely advice given the pitch being made by a number of groups to newsagents.

Besides the challenges of being locked in for a five year term, newsagents need to be sure to check what happens if you try and sell your business. One agreement we have seen requires the newsagent having to offer the business to the franchise group once they have an offer from another party. A prospective purchaser is likely to baulk at this and not even undertake due diligence if they risk having their offer beaten by the franchise group.

If you are considering signing a franchise agreement, get independent legal advice from someone who understands such agreements. A bit of money spent in advance could save you from costs later if you want to exit the group.