Every franchisor’s 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.

Make Sure 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.

Franchise 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.

Keep Your 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.

Understand 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 staff.

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.

Home | Solutions for Existing Franchisors| Solutions for the New Franchisor | Contact
Solutions for the Prospective Franchisee | About the Firm | Resources | Attorney Profiles