Franchising allows businesses to expand their branding and business concepts while sharing financial costs, risk and operational efficiencies with franchise owners. One of the first steps in beginning a franchising business relationship is to make a written proposal to a company selling franchises.
Printable Franchise Proposal
The printable Franchise Proposal provided here is a good guide to use to establish initial contact with a company selling franchises. This Franchise Proposal is easy to edit to meet your specific needs. To use the form, click on the image below to open the printable PDF template in a separate window where you can fill in the fillable fields. Remember to save the document to your hard drive. If you have issues working in the template file, please see this guide for working with Adobe printables.
Please note: This article is informative only, and is not legal advice. Always consult with a licensed attorney before entering into any franchise agreement or any other legal instrument.
Navigating the Franchise Proposal
There is quite a bit of information you will need to fill-in on the Franchise Proposal before you use it. Be sure you understand each section before adding your information.
Date, Names and Address
This Franchise Proposal is in letter form, so at the top of the printable fill in the date, name of the franchising business and the address where you will send the proposal. The company selling the franchise is called the Franchisor and the company or individual buying the franchise, for this document, is called the Proposed Franchisee. In the first paragraph of the letter, fill in the name of the Proposed Franchisee and the Franchisor where indicated.
In this section just fill in the name of the Proposed Franchisee once again.
In the Business Structure section, fill in information relating to the legal structure of the Proposed Franchisee. Next, add the name of the State where the business was organized and the date of formation.
The Franchisor will want to know details about the owners and management team of the Proposed Franchisee. This information allows the Franchisor to have confidence the Controlling Principals have the experience and education to operate the franchise business successfully. First, fill in an estimate of the combined number of years experience the Controlling Principals have in the particular business segment of the franchise business. Next, fill in the names of the Controlling Principals and then attach the resumes of each Controlling Principal to the Franchise Proposal as Attachment "A."
Proposed Franchise Location
In this section, you need to fill in the address of the proposed franchise location. Next describe the strengths of the location you proposing (ideal customer demographics, easy access, low rent, etc.)
It is common for businesses that purchase a franchise to request a certain territory be protected so the Proposed Franchisee can limit competition in that territory or build additional franchises themselves in the restricted territory. If you would like to have a Protected Territory, fill in a reasonable geographic territory you would like to protect and can negotiate with the Franchisor. Sometimes the Franchisor will request additional compensation when allowing for a Protected Territory.
The franchise agreement sets forth the Term of the Agreement; however, you can propose a Term also. A ten (10) year term with an automatic renewal for another ten (10) years, so long as certain conditions are met, is common. Fill in a proposed Term in this section, in years.
The franchise agreement sets forth the Fees to be paid by the Proposed Franchisee. You can always attempt to negotiate the Fees and pay a smaller Initial Franchise Fee or reduced royalties. Fill in the Fees that the Proposed Franchisee would like to pay and then start negotiations.
In this Section, fill in the date you would like to receive a copy of the Franchisor's FDD. That is the first step in beginning a formal process to sign a franchise agreement. Due diligence periods can vary, but you should have at least sixty (60) days to decide whether the business relationship will work on paper.
The franchise relationship will only be finalized by the execution of definitive agreements. Standard documents include the FDD and the franchise agreement with its many exhibits and schedules.
This Franchise Proposal will give you a good start on convincing a franchising company you are qualified to become a franchisee. The franchisor will also require substantial supporting documentation before approving you as a franchisee. Entering into a franchise agreement is complicated, so always consult with an attorney to guide you through the various steps in becoming a successful franchise owner.