Advisory Services Fees In Franchising
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Often in franchising companies a franchisor will spend 80 percent of their time helping 20 percent of their franchises. The allocation of the franchisors labor
Often in franchising companies a franchisor will spend 80 percent of their time helping 20 percent of their franchises. The allocation of the franchisor’s labor will be disproportionate and in effect on fair to the superstar performing franchise outlets in the franchising system. There are also times when a franchisee will have needs that our way beyond the call of duty and those requirements of the franchisor in the franchising agreement.
It is for this reason, especially with our international franchises that I decided to add a clause into our franchise agreements, which protected our cash flow and time management all of our consultants, employees and staff. Below is a copy of the clause that I put into our franchising agreements;
4.4 Advisory Services
Franchisor may provide, as and to the extent required in Franchisor’s judgement, a continuing advisory service, which may include consultation on promotional, marketing and advertising techniques and customer relations. Representatives of Franchisor may consult regularly with Franchisee at no cost to the Franchisee. At Franchisee’s request, a representative of Franchisor may visit the Franchised Business at least once each year at a time mutually agreed upon. Field representatives may be available at Franchisee’s request for extraordinary consultation and assistance on a fee basis by appointment only. Franchisor’s current fee for extraordinary assistance is U.S $250 per day, plus all related expenses and may be increased by Franchisor.
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It may be necessary for franchisors to address such issues in their franchising agreements, prior to running up against the problem or potential eventuality. It is recommended therefore that every franchising company contact their franchise attorney and discuss this issue. I hope if you are in franchising you can learn from my school hard knocks. Consider this in 2006.
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