I’ve Reviewed About 40 Franchise Agreements in the Last Year – Here Are My Top Takeaways

As a franchise lawyer, reviewing franchise agreements is something I do often (and, I hope, very well). Since launching Magnolia Legal, I’ve reviewed a broad spectrum of agreements across various industries. Some were drafted by top-tier firms, others by smaller generalist firms. One thing is clear: no two agreements are the same. But after reviewing around 40 franchise agreements in the past year, I’ve noticed some key patterns. Here are my top takeaways for anyone considering a franchise review.

1. Longer Doesn’t Always Mean Better

Some franchise agreements are incredibly long. But more pages don’t always mean higher quality. In fact, I’ve seen lengthy agreements full of inconsistencies, clauses that contradict the Code, and sections that will likely never have any real-world application. Burying critical terms in excessive detail makes it harder for franchisees to understand their rights and obligations. A well-drafted agreement should be clear, concise, and practical.

2. The Best Agreements Strike a Balance

Many franchise agreements heavily favour the franchisor. While this is somewhat expected, an overly one-sided agreement can make a franchise less attractive to potential franchisees. It can also raise issues under unfair contract terms (UCT) laws (discussed in our article here). Interestingly, the biggest and most established franchisors tend to take a more balanced approach. They understand that fair agreements benefit the entire network by fostering strong, long-term franchisee relationships. A balanced agreement makes for a healthier franchise system overall.

3. Some Franchisors Refuse to Negotiate

A franchisor’s willingness to negotiate their franchise agreement depends on several factors, including their size, time in the market, and demand for their brand. Newer franchisors are often more flexible, while larger, more established brands tend to be rigid. That said, many franchisors don’t expect franchisees to negotiate at all. We’ve certainly ruffled a few feathers by pushing for better terms for our clients. But a strong franchise review means ensuring fairness—and sometimes, that means pushing back.

4. Franchisors Often Fail to Set Out Their Role

Franchise agreements typically outline the franchisee’s obligations in great detail. But what about the franchisor’s responsibilities? Too often, agreements are vague on what the franchisor must do in practice. Phrases like “at the franchisor’s discretion” or “as determined by the franchisor” pop up frequently, making it difficult for franchisees to hold franchisors accountable. A well-drafted agreement should clearly define both parties’ roles and obligations.

5. Franchise Negotiations Can Improve Franchise Documentation

Franchise negotiations aren’t just about securing better terms for individual franchisees. They can also help improve a franchisor’s agreement for future franchisees. For example, if a negotiation highlights a clause that likely breaches UCT laws, removing it benefits the entire network and exposes the Franchisor to less risk moving forward. Similarly, spotting an ambiguity or incorrect reference can lead to necessary updates in master agreements. Franchisors should, then, carefully consider negotiation points in light of potential improvements for future use.

Final Thoughts

If you’re considering a franchise, a thorough franchise review is essential. Not all agreements are created equal, and having a franchise lawyer review the terms can help uncover hidden risks. A fair, well-structured agreement benefits both franchisors and franchisees, fostering stronger, more sustainable franchise networks.

If you need a franchise lawyer to review your agreement, don’t hesitate to reach out. Understanding the fine print can make all the difference in your franchise journey.

Disclaimer: This article contains general information only and does not constitute legal advice. Magnolia Legal disclaims any liability arising from reliance on this article. Our terms of use apply