Tips to Signing a Franchise Agreement

12.2.21 | Buying
Tips to Signing a Franchise Agreement

Are you thinking of buying a restaurant franchise? If you’ve always wanted to own an eatery, there are substantial benefits to becoming a franchisee. It allows you to hit the ground running with an established business. 

Choose wisely, and it could mean starting off with loyal customers, reliable service providers, and processes that work. Of course, before you begin a new branch, you need to find the right franchise—and make it official by signing an agreement.

If you’re preparing to purchase a restaurant franchise, here’s what you should know…

Do your due diligence

Before you get to the point where you’re ready to sign a franchise agreement, you’ll want to do your research. First off, make sure you know why the business you’re thinking of buying is on the market. If there are financial issues, you want to make sure you know about them.

Other questions to ask include how reputable the brand is, whether the business has a history of success, and what local demand looks like. You’ll want to know whether the franchise is still in a period of growth and how financially healthy it is.

Under Ontario law, the seller has a duty to disclose specific documents to you as a franchisee. They will include financial data and information about how the business operates.


Interested in learning more about buying and owning a restaurant franchise? Check out some of our latest resources below. 


Know your purchase options

Would you rather purchase a new franchise from the franchisor or one that already exists from another franchisee? There’s a difference, and going the latter route may require some extra work. As just one example, you’ll want to ensure that the landlord signs off on the sale—or you may find that the transaction can’t be completed. 

You’ll also want to determine whether to incorporate before you buy. Making your purchase through a corporation or partnership has its benefits under the right circumstances, but it’s going to require some advance planning.

The right terms

When it comes to the actual franchise agreement, you’ll want to carefully consider the terms that should be included. They’ll lay out your rights, as well as the actions you can take if an issue arises. 

Here are a few of the questions to consider when you’re working towards agreeing on a set of terms.

  • Can you extend or renew the term of your agreement?
  • Under what circumstances can the franchisor terminate the contract?
  • Will you have the option of selling or transferring it to someone else? 

There’s no shortage of considerations to keep in mind when you’re negotiating the terms of a franchise agreement, so be sure you work with a qualified business broker.

Looking for the right opportunity to buy a restaurant business? Check out our latest franchise listings right here!

The legal aspects

Of course, a business broker isn’t the only professional you’ll want to enlist when you’re buying a franchise. A skilled and experienced lawyer should be near the top of your list of experts.

Having someone with the right expertise to review and evaluate your agreement—and protect your best interests—is one of the keys to a successful purchase. A skilled business broker should be able to connect you with an exceptional lawyer who understands situations like yours.

Buying a restaurant franchise can come with plenty of advantages, if you make a wise purchase decision. With professional guidance and some forethought, you can help ensure that you see the best possible results!

Have questions about buying a franchise? Ready to find the right one? Either way, we are happy to help. Get in touch to learn more today.