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Time Stamp
Tom Spadea Intro – 00:00:40
Segment 1 – 00:03:22
Get to know Tom Spadea
Segment 2 – 00:24:40
Topic Segment – Managing Your Franchise Agreements with the End in Mind
Bonus Segment – 00:57:15
Managing Franchisee Growth
Segment 3 – 01:02:50
Quickdraw Questions
Topics discussed in this episode:
Where do most franchisors get it wrong? Many franchisors and franchise attorneys focus mostly on the substantive issues of the and forget about procedural issues related to the process – managing latent defects
- Item 23 receipt page not being properly executed and filed
- Guarantees not properly executed
- Individual versus LLC signing FA/lease
You can have the best FDD and franchise agreement in the world, but if you don’t manage the process properly, it can cost you a lot of money in the short term with an unenforceable contract, and in the long run, upon exit.
It’s important to understand who the real audience of the Franchise Agreement is. It is the franchisee, but it is also a prospective private equity investment firm who may want to purchase your system in the future.
What is the process?
Step 1: Make sure that the franchise agreement is up-to-date
Step 2: Geographical Analysis – Ensure that the franchisor is registered in every registration state where the concept will be offered. That includes where the prospect is currently located as well as where they want to open a location. Both states must be registered if required by that state. Deliver the correct FDD for the state.
Step 3: Ensure that 14 days pass between delivery and signing of the Franchise Agreement, not including delivery day and signing day
Step 4: Spend the time to ensure that names are all spelled correctly, along with middle initials. Check the address, LLC name etc.
Step 5: Prepare a custom franchise agreement based on the specific agreements made between franchisor and franchisee – do not use the sample franchise agreement that is included in the FDD. Deliver the document to all required recipients and ensure proper signatures
Step 6: Ensure that the lease includes all of the required language as per the franchise agreement
There are many different software packages that can help you with each aspect of the transaction, but Spadea Law has the platform that hits every element. Compliance Map helps franchisors ensure that they are only offering the franchise in the proper states. The link to the Compliance Map software demonstration is below:
If you haven’t managed the steps of the process well, then it is not too late. Review your documents and get the documents in line now, before you are approached by an investor.
Books:
Exponential Organizations
By by Salim Ismail and Michael S. Malone
Seven Habits of Highly Effective People
By Stephen Covey
The E-Myth
By Michael Gerber
Khan
Conn Iggulden
Podcasts:
Dan Carlin’s Hardcore History
Tom Spadea
www.spadealaw.com
610-662-0192 (cell)
Kit Vinson
FranMan Inc.
www.franman.net
214-736-3939 x1