It is worthwhile to think about using a Heads of Agreement Template when ironing out your business relationships prior to starting a franchise partnership.

While the Heads of Agreement Template is not always used when a franchise relationship is in the works, the format of this business tool may be valuable.  One way that you can put the Heads of Agreement Template to work is by getting it into the discussion if there are some sticking points between major potential franchise partners about how the franchise relationship will roll out once the franchises are open and big money is being made. In a similar way that the franchise agreement is meant to protect each player in the negotiation, the Heads of Agreement Template can play that same role in the drama.

It is really up to the business offering the franchise and the one that is out there to buy that franchise as to whether a Heads of Agreement Template should serve as a replacement for a standard franchise agreement or as yet another layer of franchise documentation going into the partnership. Since the Heads of Agreement Template is a format that is well known to most top dogs in the business world, it may be an agreeable format to use if things are dicey in the discussion and there is a need for a little extra punch to seal the deal.

Depending on how many areas of disagreement need to be hashed out, the Heads of Agreement Template can become complicated and lengthy.  In order for the document to be usable as a franchise agreement, however, the language used when working up a good Heads of Agreement Template for a franchise relationship must be light on the legal jargon and understandable by the average person. That is both common sense and it is part of franchise law as well.

The Heads of Agreement Template is formal but it is flexible.

 

The different areas that the Heads of Agreement try to get both parties to work together on focus on responsibilities, resolution of disputes and, of course, money.  By using the Heads of Agreement as a franchise document, you can get very picky about including the structure of both companies who are butting heads and how much cold hard cash is going into the new partnership which in this case is a franchise relationship.

Many times the Heads of Agreement helps when both the potential franchisee and franchisor are suspicious enough that they need it in writing how disputes will be settled and who is responsible for what and when.  In some applications of the Heads of Agreement, 14 different legal clauses can be included in the final document and each of those could break down into a lot of detail to get on paper.

It should be noted that the use of the Heads of Agreement does not require that the franchise negotiation get ugly and it isn’t written in stone that you have to use every clause that was ever invented to go into the Heads of Agreement. It is up to the franchisee and the franchisor to use this business tool and use some common sense as well so that it helps them shake hands and come out of the meeting room with smiles on their faces because a lot of money is about to be made. If everybody is an adult and uses the Heads of Agreement to hash out a sweet franchise deal, everybody can be a winner.

  • Advertisement

Speak Your Mind

Tell us what you're thinking...