Do Business Well

Role of the Mediator

So, we conclude that passive mediation is effective in resolving two-person conflicts. Since we recognise that the Method can produce interpersonal peace without a third party, you might be wondering, ‘Of what use, then, is a mediator?’

A mediator can perform several useful functions that help the Method achieve more satisfactory results than when it is used as self-mediation:

A reluctant disputant can be more effectively persuaded to participate if the Dialogue is proposed by a third party than if proposed by her opponent. Continue Reading »

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• Consider putting a clause in the contract that offers a discount on the cost of your product or service, or a significant and relevant free gift if the agreement is signed by a certain date. When the offer is worthwhile, this can work wonders in getting the agreement through the various levels of approval.
• Be aware that the only good negotiation is one in which both sides believe they have won a little. Think how great you feel when you come away from a discussion that led to what you wanted. It’s even better when both sides feel that way.
• Recognise that the contract you sign today may need to be altered in the future because your needs or the client’s needs may change. How you react to a client’s changed circumstances will impact on future contracts with the company and on referrals. Maintain a long-term view, be flexible and be sure that the new negotiations benefit both sides.

When a closing is not a closing

‘It is better to be a mouse in a cat’s mouth than a man in a lawyer’s hands.’

The point made in the preceding paragraph is so important that I will reiterate it: closing the sale is often not closing the sale at all; it’s just the beginning of many such interactions. Continue Reading »

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It is not at all unusual for newcomers to franchising to go into a state of shock when they first realise the complexity of a typical franchise t agreement. But whilst efforts to draft franchise agreements in plain English, thereby enhancing their user-friendliness, are laudable, attempts to keep them “short and sweet” are generally doomed to failure. The reason for this is that unlike other legal agreements that will deal with one specific transaction, a franchise agreement has to cover an entire portfolio of commercial arrangements of varying complexity that may appear to be almost unrelated, yet, by virtue of the fact that they are part of one specific franchise arrangement, they are in fact closely intertwined.

To illustrate this point, let us look at just one of the areas that are dealt with in a typical franchise agreement, namely the grant of the franchise.

The Grant

A franchise is granted, never sold. Typically, franchisees will be licensed to operate one unit of the franchise, either at a specific address or within a clearly defined territory, using the system’s brand name(s) and corporate mage, sometimes known as the get-up, as well as its know-how as described in the franchise agreement and the operations and procedures manual. Continue Reading »

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In a strictly legal sense, every franchise agreement is entered into between a franchisor and one specific franchisee. What is frequently overlooked, however, is the fact that three other parties will be affected, to a greater or lesser extent, by every such agreement. Unless the franchise agreement enables the franchisor to exercise adequate control over the way each franchisee exercises his rights and carries out his obligations, the entire network of company-owned and franchised stores, its suppliers and its customers could suffer from the actions of one errant franchisee.

• The franchisor, having invested much time and money into the creation of the franchise package, is entitled to protect the value of the brand and ensure its continued growth.
• Other franchisees within the network, in their efforts to maximise market penetration and business results, will rely on the reputation of the brand.
• The network’s suppliers, having entered into network-wide supply agreements, will expect each member of the network to meet its respective obligations arising from the supply of goods and services. Should, for example, one franchisee habitually default on payments, the credit rating of all other members of the network could be affected.

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A typical franchise agreement will, subject to the needs of a particular industry, contain provisions covering the following aspects of the arrangement:

Term of the franchise (initial period, renewal rights);

• Initial financial obligations of the franchisee (upfront fee);

The rights granted to the franchisee (the grant);

• Setting up of the business and related issues (site selection, lease, fitting-out, decor and equipping of the outlet and the necessary specifications);

Initial assistance provided by the franchisor (for example assistance with lease negotiations and negotiations for finance, initial training, fitting-out and equipping the business premises, staff selection, grand opening etc.);

Compulsory purchasing arrangements (either the franchisor acts as the supplier or he prescribes suppliers); Continue Reading »

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To keep the franchise agreement manageable and to avoid the unacceptable burden of renegotiating the agreement in response to frequent changes in day-to-day operational requirements as far as possible, it is customary to state only the principles according to which the franchise relationship will be conducted. This will be supplemented by a proviso stating that detailed operational requirements are set out in a series of written directives issued by the franchisor and delivered to the franchisee in the form of the operations and procedures manual.

Moreover, the franchisor will reserve the right to issue updates to the operations and procedures manual from time to time, which will reflect changes in operational requirements. As soon as such directives are received by the franchisee, they become binding, just as if they were contained in an amendment to the franchise agreement. Continue Reading »

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In the early days of franchising, franchise associations the world over saw themselves exclusively as franchisor representatives, and the Franchise Association of Southern Africa (FASA) was no exception. However, the widely held assumption that FASA would lave been automatically biased against franchisees was incorrect wen then. From the outset, FASA was concerned with the promotion 4 ethical franchising in the widest sense of the word and today, this organisation embraces within its membership franchisors, franchiees and service providers.

The Franchise Agreement:
Some practical pointers

The franchise agreement forms the basis of all dealings with future franchisees. Given its importance, it should cover every possible angle, and its drafting is best left to an accomplished professional in this field.

From the prospective franchisor’s viewpoint

It happens from time to time that newcomers to franchising ask us to let them copy an existing franchise agreement. This cannot be recommended. Ethics aside, to withstand possible challenges at a later stage, franchise agreements need to be drafted to reflect the realities of the business and the environment within which it operates. This is one of the rare cases where misguided action results only in cons, with the best will in the world, no pros can be found. Consider the following: Continue Reading »

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Once you have honed in on one or a few franchise opportunities, you can commence the evaluation process in earnest. Create a shortlist and visit the franchisors of your choice. Ask them to show you around and to provide you with additional information. We have already said that the main rationale for the purchase of a franchise must be your conviction that the franchise will make your business success more predictable. This requires that the franchisor offers you, firstly, a tried and tested concept linked to a respected brand and secondly, extensive initial and ongoing support.

• Please remember that every bona fide franchisor will be happy to give you as much information as you want, and more. Many franchisors will even invite you to spend a day or so at one of their units, some go as far as making it compulsory. In other words, they will not be prepared to take discussions further unless you have spent some time at a unit. This is an excellent opportunity for both of you:
• It will enable you to see the workings of the business from the inside and get a real feel for it.
• The franchisor will have an opportunity to observe you in what might well become your future environment, and give you meaningful feedback.

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By becoming a franchisor, you enter a new business environment. It is f longer hamburgers or exhaust parts you are selling, but a business system that will put others into business and help them to become successful their own right. And the mere fact that your core business runs like clockwork does not mean that you are ready to start selling franchises. significant amount of preparatory work will have to be done before you a ready to introduce the world to your franchise offer.

Revisit franchiseability

Should you wish to reassure yourself that your business is inde franchiseable, it may be a good idea, where franchiseability is discussed, with specific reference to Figure 5. At this point, the condensed description of franchising that forms part of t Consumer Code for Franchising may shed additional light on the matt We have reproduced it as the following.

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