In many franchise formulas, the franchisee is obliged to use the contacts put forward by the franchisor, such as a permanent supplier or permanent adviser. Because that regular supplier or consultant will often apply its own general terms and conditions, these terms and conditions are more or less imposed on the franchisee. This is not necessary.
They are often referred to as the ‘small print’: the general terms and conditions used by suppliers, banks, insurers, and so on. The conditions are often printed almost unreadably small on the back of a contract or quotation. And while everyone knows that the ‘small print’ is important, they are rarely read properly.
Nevertheless, it is very important to carefully read the general terms and conditions that the other party declares applicable when concluding a contract. Although the law offers some protection against unreasonably onerous provisions, that protection mainly applies to consumers and not to people acting in the course of a business.
The franchisee can always make agreements with any contracting party that deviate from one or more provisions of the general terms and conditions of this party. After all, freedom of contract also applies in this relationship. It is only a matter of reading the terms and conditions carefully. You can submit all provisions that you find and that you do not like to the contracting party. Ultimately, by negotiating this, you can arrive at a set of general terms and conditions that is acceptable to both parties.
An example to underline the importance of negotiation:
Suppose your supplier’s general terms and conditions state that a specified delivery date is never a deadline. In your industry, however, you regularly make agreements with your customers, which must be kept on time. If you are late, your customers will incur damage that they may be able to recover from you. It is then advisable to change the general terms and conditions with the supplier in such a way that the delivery date stated to the supplier is a strict deadline, unless it has been expressly stated that this is not the case.
Ludwig & Van Dam franchise attorneys, franchise legal advice