Preparing Your FDD: Why You Must Avoid the Generic
Time and again when working on a franchise project - preparing the FDD and establishing the structure for a client's franchise system - I am always reminded of one critical fact: That when it comes to franchising, every business is different. Quite frankly, if there is nothing unique about your business, what you offer clients and how you deliver what you promise then, you should not be looking to franchise your business.
However, if you can identify the unique factors and advantages associated with your business and what you offer, it is critical that you consult and work closely with your franchise lawyer to ensure that your FDD and Franchise agreement reflect and, more importantly, protect these unique business factors. I am tired of reviewing generic agreements that, many times, leads to litigation and disruption of what could have been a great franchise system. So when working with your franchise lawyer, consider and discuss:
- What are the core business assets that your franchisees will be utilizing;
- What systems and procedures can you put in place to ensure that franchisees conform and follow your franchise system. What I am talking about here is not the typical litigation clauses contained in the franchise agreement but rather integrated business systems that force or, at least ensure, that franchisees have every possible incentive to comply with system requirements;
- What are the core assets, services and/or products that will be delivered to your clients and how can you integrate your business systems into your FDD and franchise agreement to ensure that you maintain control over the delivery of your products and services.
There are many other factors and considerations. However the key point here, I believe, is that you must identify the unique components and characteristics of your business and ensure that your FDD and franchise agreement reflects same.
