FRANCHISE LAW SOURCE CONTRACT MANAGEMENT SOLUTION
most important source of income is the annuity of ongoing royalties
and advertising charges from franchisees. Franchise companies hope that
they will be able to collect royalties and advertisement charges during
the term of their franchise agreements and that their franchisees will
renew their agreements when they expire.
You Have Complete and Accurate Contract Files
Whether a franchise company is simply trying to enforce a franchisee’s
obligations or personal guaranty under the franchise agreement, or urging
a franchisee to renew his or her franchise agreement, the company needs
to be able to prove that it has an enforceable agreement with the franchisee.
Very often franchise companies discover too late that something is missing
from a franchisee’s contract file. Disclosure may have been untimely
or with an obsolete FDD. Signatures may be missing from agreements and
critical agreements are sometimes completely absent from the file.
Corporate Organization Records
It is not just the franchise agreement, though, that must be carefully
managed. In order to effectively exercise its control over who owns
its franchises, the franchisor must have documentation of the ownership
and capital structure of its franchisees that are corporations or limited
liability companies. Those documents such as certificates of incorporation
and operating agreements need to be accurately maintained as well.
Site Control Documents in Order
Finally, most franchises which involve retail or commercial leases of
franchise sites have a site control document under which the franchisor
has the ability to step into the lessee/franchisee’s shoes if
the franchisee fails to comply with the lease or fails to renew it.
The franchisor also has the right to take possession of the lease in
the event that the franchisee breaches the franchise agreement. In order
to effectively exercise those rights, the franchisor must have accurate
files on the lease and all amendments as well as the contingent assignment
of lease or addendum that the landlord has executed giving the franchisor
these unusual rights to control the property.
the Value of a Turn Key Solution
At Kern & Hillman, LLC, we provide an outsourced solution to this
contract management task. We will prepare and supervise the distribution
of agreements to new and renewing franchisees. We will also collect
executed documents and maintain franchise agreement files and all of
the ancillary documents as well as the corporate documents and lease
materials. We maintain original paper files and we provide electronic
image files as a backup and for day to day access by the franchisor’s
This turn key solution
provides franchisors the knowledge that their franchise contract files
are being maintained accurately without the overhead of a contract management
staff and without the need to train staff on all of the intricacies
of franchise law and regulation.
This solution is
available on a subscription basis or for a per transaction fee.
Let the Franchise
Law Source manage your contracts to reduce your overhead and increase
the accuracy and usability of your most valuable asset.
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