Jeffrey Goldstein of the Goldstein Law Group discusses evaluating franchise opportunities. In this video, he looks at restrictions placed on franchisees.
The first restriction to look at are supplier restrictions on who you can purchase products from. Sometimes, a franchisor will require franchisees to purchase strictly from them, or they may have a single supplier that they require you to purchase product through. In this situation, the franchisee is likely to be paying inflated pricing because that entity has a monopoly on the products being purchased.
There are also restrictions on the goods and services that a franchisee is able to offer for sale. Even if a franchisee has available space and stock for the expansion into additional areas of revenue, the franchisee may be restricted to only offering the core products of the franchisor.
Franchisees may be restricted to selling to only one group of people, such as institutional customers, or the consumers themselves. There can be an issue with where a franchisee sells their services. They may have an exclusive territory that you can sell in. On the beneficial side, other franchisees can not sell in your territory, however you are not able to sell outside of it either. Even if there is not another franchisee in that particular area, the franchisor may require you to pay additional fees in order to extend the reach of your market of customers.
There are many additional restrictions to look at when evaluating a franchise opportunity. To learn more about these restrictions, please watch our video. You can also visit our website: https://www.goldlawgroup.com/franchise-agreement-review/?utm_source=youtube.com&utm_content=FRAo74zj9Gs.
Lawyers for Franchisees
Jeffrey M. Goldstein
The Goldstein Law Group