Brushing aside the legal jargon of an agreement, there are several important issues to explore in some depth.

The term of your franchise:
Normally, the franchisor will offer you an option to renew your franchise after an agreed period (commonly five years), subject to your satisfactory performance.  This may sound reasonable but you should insist that the term "satisfactory performance" be defined in simple, non-legalistic language so that you can assess whether the conditions are fair and achievable by you.

This is an issue that warrants careful consideration, for if the franchiso decided to exercise an option not to renew the terms you could find yourself on the losing end of a "forced" sale to a replacement franchisee. Or the agreement may simply lapse and again you could be the loser. You should clarify the terms of any renewal option.

Study the small print carefully; you may find that the renewal is to be offered on the same terms as for new franchisees. As an established franchisee with five years of hard work behind you, you may feel entitled to better terms than that. Plus, in five years time, terms for incoming franchisees may be less favorable than your initial terms.

You should also ensure that the franchise premises is for a period at least equal to the term of the Franchise Agreement.

Your territorial rights:
If the territory is defined in the agreement, you should clarify the precise boundaries of that territory and at the same time determine the franchiser's intentions for the neighboring territory. If the territory has not been assigned, there may be future expansion opportunities for which you can establish an option.  You need to be aware that present or future territories may have an impact on your territory. Check also whether either party has the right to change the territory without approval of the other. You should leave yourself in no doubt that you will have the sole and exclusive right to the territory that is being assigned to you.

Your rights to training:
Since training will be such an important factor in equiping you to build the business, you should satisfy yourself that it is going to be adequate. To be effective, training should cover sales techniques, presentation methods, instructions on how to operate equipment, as well as business operation requirements such as account keeping, recording and paying the various taxes and so on. 

Other important questions are:

• How long will the training take and who pays for the training?
• Will it include your staff, or will you be expected to train them?
• If you have to travel away from home for training, what costs will you incur beyond your franchise fee?
• Will you be paid for the time you spend in training? 
• Will you be trained on new developments? 
• It would be wise to ask other franchisees for their opinion on the quality of the training program.

Opening your franchise:
The agreement should include a provision that the franchisor will "assist" you to set up and open your franchise. But it is in your interest to confirm the details of what assistance will be give. The kind of help you will need includes advertising (and some publicity in your local media) and a special event on opening day to "put you on the map".  Any costs incurred for advertising, etc. are normally paid for by the franchisee.

Assistance from the franchisor usually includes the availability of one of its personnel, without charge, for a number of days during the first month of operation.

Your right to re-sell:
What will your position be if you want to sell the franchise or assign it to another person? 

A question you should ask is:

Will you need the franchisor's consent to sell or assign and will you be obliged to share any profit from the sale?  You  should be wary of conditions that allow the franchisor to charge transfer fees that are so high that they will squeeze your profit margin to an unreasonable level. You may find also that the franchisor requires you to pay part of all the cost of training replacement or new franchisee.  These costs should be stated in the agreement.

Your right to goodwill:
You should not assume that you will be entitled to any payment for goodwill. Unless a provision is written into the agreement specifically entitling you to goodwill, or part of it, you may lose out.  In law it is usually held that the goodwill of a franchise is attached to the trademark, trade name and distinctive presentation which serves to distinguish the franchise chain from competitors. You should not be deterred, however from seeking to have a "goodwill-sharing " clause inserted in the agreement on the basis that your personal efforts will have contributed to any success the franchise outlet achieves under your ownership.

Your right to terminate:
Within the framework of any discussions on your rights to sell, you should also determine how much it would cost you if, for some reason, you were forced to terminate the agreement. You should check that there are provisions in the agreement to ensure that you are treated fairly if poor health or family reasons leave you no alternative but to terminate.

The agreement may give the franchiser the first option to purchase the franchise.  As with your rights to re-sell, you should ensure that you are protected by a valuation system, which includes the equipment.

The franchisor's right to terminate:
The conditions under which the franchisor can terminate the agreement also should be clarified to your satisfaction, particularly if the agreement includes sales quotas.  You will need to decide whether the quotas are attainable.

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