Results 1 to 5 of 5

Thread: Franchise Agreement

  1. #1
    Gold Member Singhms's Avatar
    Join Date
    Oct 2008
    Location
    Pretoria (National)
    Posts
    976
    Thanks
    161
    Thanked 52 Times in 48 Posts

    Franchise Agreement

    Hi All,

    Is it normal for franchise agreements to contain a clause that states you cannot enter into any other frachise agreement without the approval of the franchise company you are currently signing up with?

    Additionally what would the implications of this be, is it strictly upheld ?

    Thanks in advance

  2. #2
    Bronze Member Sieg's Avatar
    Join Date
    Oct 2006
    Location
    Durban
    Posts
    126
    Thanks
    0
    Thanked 52 Times in 30 Posts

    Franchise agreement

    It would be quite normal for a franchise agreement to contain such a clause to protect the interests of the franchisor (the franchise grantor). Imagine if you are a KFC franchisee and you also obtain a Macdonalds franchise which you open up next door, in direct competition to KFC? They would not be very happy with you.

    Regards
    Sieg

  3. #3
    Gold Member Singhms's Avatar
    Join Date
    Oct 2008
    Location
    Pretoria (National)
    Posts
    976
    Thanks
    161
    Thanked 52 Times in 48 Posts
    Hi,

    I 100% agree with you.

    However i wonder how strict they are on that clause for example if i open up a franchise in a different industry all together like example i own a kfc and i want to open a Hi-Q ?

  4. #4
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    20,979
    Thanks
    3,055
    Thanked 2,462 Times in 2,067 Posts
    Blog Entries
    12
    That would be at the discretion of the franchisor/s involved. I've heard of some franchisors that allow it, and some that don't. One of the key issues is the level of reliance on the presence of the owner in the franchise.
    The trouble with opportunity is it normally comes dressed up as work.

  5. #5
    New Member
    Join Date
    Aug 2009
    Location
    Jnb
    Posts
    5
    Thanks
    0
    Thanked 0 Times in 0 Posts
    One of the most important terms of most franchises is that the owner must be the manager too. That's why they have that clause in the contracts. In my experience once the franchise is up and running and the royalty fees gets paid every month nobody is going to lift an eyebrow. One of my friends owns two branches(one is run by his wife) of a franchise and holds a full time job. My wife is also a franchise owner and it might be different from franchise to franchise but as long as she pays, no problems, she has actually appointed a manager and everything is running smoothly. I would say it depends on how well you can manage both, very important to the franchise that their name will not be getting damaged by bad or lack of management at a branch. Your choice off course but in most cases I wouldn't bother to inform them if I want to buy another (different sector) franchise.

Similar Threads

  1. Compulsory registration with bargaining councils.
    By Dave A in forum General Regulatory Compliance Forum
    Replies: 9
    Last Post: 15-Sep-17, 01:11 PM
  2. Home Affairs on signing of agreement with labour unions
    By I Robot in forum South African Politics Forum
    Replies: 5
    Last Post: 11-Sep-08, 09:34 PM
  3. Incidental credit agreements
    By Dave A in forum National Credit Act Forum
    Replies: 14
    Last Post: 25-Sep-06, 05:59 PM

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •