How to Become a Business Coach

What’s a Business Coaching Franchise Agreement?

By on October 1, 2017

A business coaching franchise agreement is THE controlling document of your relationship to the Franchisor and represents the culmination of what has undoubtedly been a lengthy sales cycle. This document tells you exactly what the franchisor is providing you in exchange for your money. It explicitly lists payment terms and penalties for missing those terms.

No matter what you do, take your time to read it thoroughly.

That sounds obvious, but you’d be surprised at how many business coaches don’t. Make notes about areas of concern. Consult with an attorney who can help you learn to what extent the agreement protects your interests.

A Franchise Attorney Is Your Best Protection

Make sure that you use a reputable, experienced franchise attorney when reviewing your business coaching franchise agreement. The law is a vast and complex subject, and while your family/business attorney is probably a great person and good for general legal issues, they don’t fit here. Franchise law is very specific and complex so a decent Franchise Attorney will save you time, money, and headaches. You wouldn’t ask your podiatrist to do your brain surgery; likewise, don’t ask a generalist attorney to review your franchise due diligence documents.

Generalist attorneys are notorious for being ignorant of standard franchise boilerplate content, thus making issues out of non-issues and missing key elements that cost you big-time down the road. These due diligence disasters are all due to their lack of familiarity with franchise law. I’ve witnessed people in the franchise due-diligence process spend $5,000 – $8,000 with an unqualified attorney on what could have and should have cost no more than $1,800, had they worked with a qualified franchise attorney.

You wouldn’t ask your podiatrist to do your brain surgery; likewise, don’t ask a generalist attorney to review your franchise due diligence documents.

Measure Twice and Cut Once

Understand that most franchise agreements are “boilerplate,” which means that the standard agreement itself cannot and most likely will not be changed. Don’t waste your time trying to get the agreement itself changed. If the Franchisor changed the base documents it would immediately require them to readdress everyone operating under that current agreement… the legal costs, state registration costs, and notification costs cost infinitely more than the value of a single franchise sale.

However, you can insist that amendments or addendums be added to the end of the agreement. This happens frequently, so don’t be shy about it. If there are concessions, you MUST get them in writing. I am not necessarily implying that every franchisor will intentionally mislead you, but in general, franchisors are brilliant at knowing how to use the legal system to their advantage. They generally have no compelling reason to advantage you in any way in their agreements.

Given the chance, many franchisors will push as much of the risk on the franchisee (that’s you) as possible while mitigating their own. This can show up in the form of explicit performance requirements for franchisees while, as a contrast, applying a general, non-specific, or outright ambiguous performance requirement on the part of the franchisor. You have a responsibility to yourself, your family, and your financial future to be just as savvy and vigilant as they are. So be prepared to measure twice and cut once.

Business Coaching Franchise Buyers Guide

Eric Dombach

About Eric Dombach

Eric Dombach is the Founder of Coaches’ Coach. In 2001, he founded a business coaching firm that, by 2005, was generating more than $1 million USD in revenue, 23% operating profit, and average annual growth rate of 140% per year. In 2005, he sold the firm to 4 of his employees for $1 million U.S. dollars, generating a return on capital of more than 800%. Since then he has trained more than 1,300 independent and franchise business coaches in the United States, Canada, Mexico, Europe, and Australasian markets.

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