For companies with more than 30 franchised and/or company-owned locations, understanding what’s happening at the franchisee level is critical for strategic planning and business continuity. Accessing that information with a touch of a button from any computer or mobile devise becomes even more critical as the company grows and the stakes are higher. Below are a few key areas that can be easily monitored with a comprehensive lease management software platform.
Alignment of Franchise and Lease Agreements
When the terms of a franchise agreement don’t align with the lease dates, there’s a gap in coverage that can cause serious damage to the business and the brand. When that occurs, the franchisor generally has three options:
- Operate the location as a company-owned store
- Assign the lease to a new franchisee
- Renegotiate or extend the franchise agreement
Identifying misalignments before they occur is key. However, that can only be accomplished when the lease data is abstracted into a software program that’s easily searchable and provides automated alerts when franchise agreements and lease agreements are not parallel. With just a click of a button, this information can be monitored across all franchise agreements so franchisees can be reminded to negotiate new lease terms with their landlords.
Compliance of Area Development Agreements
Tracking franchisee compliance of area development agreements in cities around the world can be a laborious task at best. At any given time, it’s necessary to have instant access to information by franchisee like:
- Total number of stores in the portfolio
- Remaining stores to be added
- Timeframe for opening new locations
When a franchisee is not meeting the requirements of the area development agreement, the franchisor has legal recourse. He or she may renegotiate the terms of the agreement to allow the franchisee to catch up; sell the remaining stores to another franchisee; or even consider the franchisee in default and cancel the area development agreement altogether. However, this can significantly damage the brand, so it’s vital to have a fully integrated software platform that allows franchisors to track area development agreements so compliance issues can be resolved before going into default.
Tracking Franchise Renewals
Tracking upcoming franchise agreement renewal dates is a basic, but vital part of doing business. It’s important to allow enough lead time to evaluate whether the operator has maintained appropriate lease agreements, adhered to area development agreements, hit key financial targets and has been a responsible steward of the brand.
That type of tracking requires the ability to view and sort by criteria like initial fees, royalty fees, options, etc. It’s also important to have 24/7 access to the data from any computer or mobile device.
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