we don’t negotiate · synonyms with “we don’t negotiate” ... –don’t used car sell them...

We Don’t Negotiate Presented by

Eric Riess Attorney, CPA, Co-Founder, Board Member,

Franchise Broker Lathrop Gage

eriess@lathropgage.com eric@thefranchiselegacy.com

Cell 618 580 1937 Work 314 613 2504

This Is The No B.S. Zone

• If you’re not open to honesty, it’s time to hit the bricks (aka, I look good in a skirt but I’m no cheerleader)

Synonyms With “We Don’t Negotiate” • We really don’t have to • We really don’t want to • We are defensive • We are belligerent • We don’t give a crap about your concerns • Our crap doesn’t smell • We don’t really know what our FDD means • We haven’t even read our FDD • We really haven’t thought it through • This deal is not going to happen

We Don’t Negotiate

• Broker’s and Franchisor’s Shared Goal

– To make sure the deal happens / to make sure the “buy” happens

–WITHOUT negotiation

We Don’t Negotiate • How do you get the candidate to not want to negotiate

even if the FDD was prepared by a lunatic (i.e., a franchise attorney / franchise “developer”) and pushed upon the candidate by an idiot (i.e., a franchisor)?

Guiding Toward NOT Negotiating • Managing the candidate’s EXPECTATIONS

– RELAX the candidate – Make sure the candidate knows WHY franchising is one sided

(hint: it’s not “just because that’s the way we do it in franchising”)

– Explain the VALID and HONEST reasons why a franchisor would not want to negotiate (see, the first 2 synonyms above / don’t gotta / don’t wanna)

– Listen to the candidate’s legitimate concerns and LEGITIMATELY ADDRESS them – Don’t USED CAR SELL them (i.e., don’t lie)

Guiding Toward NOT Negotiating • Managing the candidate’s EXPECTATIONS (Brokers)

– Take them through the FBA PROCESS

– Manage the expectation toward EXPLANATION

– Refer them to someone who ACTUALLY DOES THIS for a living

– Ask to BE INCLUDED in the process with their professional consultant

– Ask if you CAN SHARE their concerns with the franchisor

– Prepare the franchisor to give an EXPLANATION OF WHY’S AND THE WONT’S

Guiding Toward NOT Negotiating • Put YOUR TIMETABLE AFTER everyone else’s

TOWARD Negotiation • Can you spot NON-defensible provisions in an FDD?

– You can only renew for 1 renewal period

– We can change your Territory upon renewal

– We can refuse to renew you for prior breaches even if you fully and timely cure them

– We can prevent you from leaving the value of your business to your loved ones

– We can compete directly with you within your “Protected Territory” even though we control your prices, marketing, methods and own all your customer data

Spotting Non-Defensible Provisions – You have to indemnify us for our own negligence

unless the Supreme Court of the United States finds us grossly negligent

– You have to pay a renewal fee of more than $5,000

– We can change your royalties during the term

– We can terminate you for as little as 2 breaches

– We can buy you at any time for a formula price

– You have to achieve a minimum royalty that more than 1/3 of our franchisees are not achieving

Spotting Non-Defensible Provisions – You have to wholly update your franchised

business more often than every 10 years

– You have to not compete with us or any of our franchisees within a 50 mile radius of us or any of our franchisees even though your “Protected Territory” is limited to a 1 mile radius

Get OVER Yourselves

• We had the Number 1 attorney in the world prepare our FDD.

• We spent a ton of money to have a “franchise developer” prepare our FDD.

Look In The Mirror

• Be honest about what you see . . .

Other Issues Of Negotiation

• It’s illegal (it isn’t)

• If we negotiate for one we have to change for all (you don’t)

• Negotiating the same provision over and over does not create a new offering (it does)

• The State of California (you do)

• The state of the franchisee family

The Franchisee Family • If it’s good for one, offer it to the entire family

– In exchange for mutual releases – In exchange for extended terms – In exchange for more value to the system – In exchange for good will – Then use the process as the 11th synonym:

We have gone through this with our attorney and KNOW that our offering is better than our competitors’

The Modification Agreement • The parties have entered into that certain franchise agreement

of even date herewith (the “Franchise Agreement”)

• The parties wish to modify the Franchise Agreement

• Other than as expressly provided in this Agreement, the Franchise Agreement remains fully enforceable as originally drafted

• Notwithstanding anything to the contrary contained in the Franchise Agreement: (a) . . . (b) . . . (c) . . .

• Applies to renewals and replacements

• May be signed and delivered in counterparts and via electronic mail

Discussion Eric Riess

Attorney, CPA, Co-Founder, Board Member Franchise Broker

Lathrop Gage eriess@lathropgage.com

eric@thefranchiselegacy.com Cell 618 580 1937

Work 314 613 2504