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Failing Training Initially in a Franchise Company and the Legal Ramifications

Training is a key consideration in the franchise company and each franchise outlet must operate the same to maintain the consistency of the brand-name. One of the reasons people by franchisees is for a strong brand-name which will drive customers to the franchise outlet. But, occasionally a new franchisee may fail their initial training and they cannot be allowed to start their franchise business until they passed training. If they never passed training they can never be allowed to start, as it would undermine the entire franchise system.

So then, at what point do you tell the franchisee in training, that things are not working out and sever the relationship? This issue is important, as it is a competitive market in you need the strongest team to maintain market share. To address this issue it is important to put a stipulation in the franchise agreements prior to the signing and taking of any funds for the franchise. Below is a copy of a clause we put into our franchise agreements for this very purpose;.3.

6.3 Failing Training Initially.If Franchisee fails the initial training course, the Franchise may be terminated. Franchisee or Franchisee's manager may retake the training program up to one additional time providing.

Franchisee gives Franchisor written notice of their intent to do so no later than one week after Franchisee or Franchisee's manager fails training. If Franchisee's general manager, whom Franchisee intends to have run Franchisee's business, fails the required initial training program, the franchise may be terminated. If Franchisee or Franchisee's manager fails the retake of the training course, the franchise will be terminated. $10,000 of the initial franchise fee will be deemed fully earned and non-refundable in consideration of administrative and other expenses incurred by Franchisor in granting the franchise and for our lost or deferred opportunity to sell the franchise to other potential Franchisees. If Franchisee or Franchisee's manager fails to satisfactorily complete the initial training course, the remaining $10,000 will be refunded to Franchisee if the full Initial Fee was paid upon signing this Franchise Agreement.

------- ------- -------.This is something that all franchisors should consider as part of their franchise agreements and to make sure it is all legal, they need to contact a competent, knowledgeable and experienced franchise attorney. If you run a franchise company or are a franchise executive perhaps you will think on this in 2006.


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