Buying a franchise: securing promises and schedules in the agreement

A franchise offer often involves more than a draft agreement. Presentations, emails, financial projections and schedules can together shape your understanding of what you are buying. But if the documents say different things, you need to know which terms actually apply. Franchising brings independent business owners together, and clear documentation helps both parties avoid misunderstandings. Here is a method for ensuring that key promises make it into the agreement.

1. Gather everything that is to form part of the agreement

Start by asking the franchisor for a complete set of contract documents. It should be clear which schedules and other documents the agreement refers to, which versions apply and whether anything is still missing. A reference to, for example, “current terms and conditions” is difficult to assess if you cannot read those terms.

Create a simple document register with four columns: the document’s name, its date or version number, what it covers and whether it expressly forms part of the agreement. Include both the main agreement and documents such as price lists, technical specifications and specific arrangements agreed between the parties.

Distinguish between three types of document:

• Contract documents: documents intended to determine the parties’ rights and obligations.
• Pre-contract information: material explaining the offer and its terms before you make your decision.
• Presentation material: descriptions and examples that may contain important information but do not necessarily constitute contractual terms.

This classification is a review tool, not a definitive statement of the documents’ legal significance. Information outside the agreement itself may also be relevant. Even so, the aim is to avoid having to rely on a later debate about what a presentation actually meant.

2. Turn key promises into clear commitments

Read through your meeting notes and emails. Highlight every statement that has influenced your decision or budget. This might be a promise that certain equipment is included, that a fee will only become payable when the business opens, or that the franchisor will provide a particular technical solution.

For each statement, ask: does the agreement say the same thing? If not, ask for it to be included in the main agreement or in a signed schedule that expressly forms part of it.

Useful wording needs to answer these questions:

• Who is responsible for fulfilling the commitment?
• What must be supplied or done?
• When must it be completed?
• What conditions or exceptions apply?
• What happens if the commitment is not met?

Suppose, for example, you have been told that “the system will be ready at launch”. That leaves several questions unanswered. Does this mean installed, tested or fully operational? Who pays for the connection? What happens if the opening is delayed because the system does not work? Ask for a specific commitment rather than a general assurance.

Also check that the person approving the addition has authority to represent the contracting party that will be responsible for it. A statement from a sales contact is not the same as clear approval from the appropriate contracting party.

3. Check the order of precedence and entire agreement clauses

The main agreement may contain a provision stating which document takes priority if the documents contradict one another. This is usually described as an order of precedence. Read it alongside any additions you have specifically negotiated.

If the main agreement always takes precedence, the status of an individually negotiated arrangement in a schedule may be unclear. Ask for the addition to specify which provisions it replaces and to take precedence on those particular matters. An explicit departure from the standard terms is better than two conflicting texts.

Look for an entire agreement clause too. This might state, for example, that the written agreement supersedes all previous verbal and written agreements. Such a clause is a clear signal to check that important promises really are included in the final version.

Do not assume either that verbal promises never matter or that a saved email automatically gives you the right you expect. The assessment depends on the circumstances and the wording of the agreement. Have a lawyer with franchise expertise review any inconsistencies and clauses that limit the significance of earlier statements.

4. Check the final version against Swedish law

Sweden has an Act on Franchisors’ Duty to Provide Information (2006:484). It requires franchisors to provide clear, comprehensible written information about the implications of the agreement and other relevant matters in good time before the agreement is entered into. This includes fees, other financial terms and certain obligations within the franchise relationship.

However, this duty to provide information does not guarantee that every promise made during the sales process becomes a binding contractual commitment. General contract law, including the Swedish Contracts Act, is also relevant to the formation and interpretation of the agreement. There is no statutory standard agreement that fills in all the gaps for the parties.

Compare the final version with both the pre-contract information and the changes you have negotiated. Ask for a version showing the changes, then check the clean version intended for signing. Make sure all schedules are included, the version references match and no blank fields remain. Keep the complete signed set of documents together with the pre-contract information.

Practical takeaway: Make a list of the promises that are crucial to your decision and note where each appears in the final agreement. If anything is missing or contradicted by another document, resolve it before you sign.