Franchise Area Developer Agreements

Franchise Area Developer Agreements

Have deep pockets and experience before entering these...

Denver Lawyers for Area Developers.

If you are being asked to become an area developer, call a Denver Franchise Lawyer at The Vasilco Law Group, P.C. to discuss the risks and rewards, and to help assist with advantageous terms and clauses which will make your life as an area developer much easier, more profitable, and less risky.

Cross-Default Clauses Can Kill Area Developers.

Area developers are normally required to open multiple franchise units in several areas or territories on a tight schedule. A misstep at any one point therefore throws off the entire schedule and plunges you into default, whereupon the franchisor can often seize all the stores you have already built. Keep in mind that cross-default clauses are very common, making a breach of any agreement tantamount to a breach of all your agreements with the franchisor. A good franchise lawyer can negotiate an addendum with your franchisor which de-couples many of these agreements and obligations from one another, so that if you cannot quite meet the development schedule, you do not lose all the stores already developed, or conversely, if a certain store gets into trouble, you can still proceed with the development of others without losing your area developer rights. These are important details. Call us today to discuss your situation.

Area Developers Need Lots of Capital and Experience.

Area developers are usually required to build many units in a short period of time. They therefore need to have plenty of prior experience with the system. A first-time franchisee would be wise to avoid an area developer agreement until they have garnered the experience needed to build out, equip, manage and profit from a single location. The build out itself is very tricky and can involve any number of delays. Getting used to POS systems, supply, and other mundane issues takes time as well. The area developer must also be well heeled, with enough excess capital to cover the inevitable negative initial cash flow situation at each new store, while shelling out construction and other costs of the subsequent stores. Money and experience are therefore a must for anyone considering an Area Developer Agreement. Talk to us. We can help.

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