Writen by Lance Winslow
It is extremely important to a franchise company to maintain consistency throughout each franchise outlet. That consistency should include all equipment and supplies, which are to be used or sold at the franchisee level. Without such consistency you will dilute your brand-name and confuse your customer, thus you will lose one of the major benefits of franchising.
It is for this reason that I had determined that our company needed to add a clause in the franchise agreement to address is very issue before the commencement or signing of the franchise or disclosure documents. Also this information was backed up in our confidential operations manuals. Below is a clause in our franchise agreement that I came up with;
3.14 Equipment and Supplies
Franchisee will display, sell and use only such equipment and supply items of independent suppliers which have been approved by Franchisor in accordance with Section 4.6 hereof. In the event Franchisee desires Franchisor approval of a particular supplier, equipment or supply item, Franchisee will provide the documentation contemplated by Section 4.6 at its sole expense and will reimburse Franchisor for costs of further testing as contemplated by Section 4.6. Franchisee may not enter into or renew any agreement with a third-party vendor of services, supplies or equipment if such agreement requires that Franchisee disclose information regarding the identity of its customers or the Services performed by Franchisee for any of its customers. If, as of the date of this Agreement, Franchisee is already a party to an agreement of the sort described in the preceding sentence, Franchisee will not be deemed to be in violation of any of the provisions of this Agreement by virtue thereof for the remainder of the current term of such agreement.
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It would behoove serious franchisors to consult a knowledgeable and experienced franchise attorney to help them strategize on ways to control the consistency of their franchise system and how best to address this issue in the franchise agreement and the confidential operations manual. I hope you will consider this in 2006.
Lance Winslow
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