5 compelling reasons to join a franchise
Franchising offers budding entrepreneurs the...
Sometimes, despite doing all the correct legwork and choosing a franchise that you believe will suit your finances, lifestyle, area and abilities, things don't go according to plan. If you find that you are working all hours of the day and night but making no money or your personal circumstances have changed and you are no longer able to dedicate the necessary time and effort to the business, you may wonder how to go about quitting the franchise.
This is a tricky situation to be faced with, and the first step if you are feeling overwhelmed is to speak with your franchisor. Franchisors have a keen interest in helping their franchisees succeed in business, but because a franchise agreement is a fixed-term contract, there is no right to an early exit unless all parties agree.
The only exception to this is if you were not issued with a franchise disclosure document prior to signing the franchise agreement, or if there have been material changes to the franchise disclosure document during your time in business that were not communicated to you in a timely fashion. In these instances, you may exit the franchise without penalty for up to 2 years after signing the franchise agreement.
If all the paperwork is above board and you still want to exit the business, your options are to sell the franchise, ask the franchisor to buy it back, undertake dispute resolution or mediation, or negotiate an exit strategy.
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Sell The Franchise
It is important to remember that no matter how much you paid to become a part of the franchise, if the business is not profitable, it will not have the same value as you expected it to. In order to secure a buyer, you will need to be realistic and honest with potential buyers and open to sensible offers.
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Franchisor Buy Back
A franchisor may be open to buying back your business in order to maintain the brand's reputation. However, you will not get back what you paid for it. They will generally offer the current value of equipment and stock, minus any money that they are owed.
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Dispute Resolution/Mediation
If you believe that you were misled, you should raise your dispute in writing with the franchisor to try to come to an acceptable compromise or outcome. If you have any telephone or in-person discussions, ensure that a written record is maintained to avoid any conflict later. There are many different Franchise Associations that will be able to provide advice and guidance on where to turn for experienced legal support should this become necessary.
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Negotiate An Exit Strategy
Usually this happens as part of dispute resolution and is an agreed compromise between a franchisor and franchisee to terminate a franchise agreement early. It is important that all agreements are formally recorded in writing to avoid confusion or conflict later.
