At a recent meeting of the Georgia State Bar Association’s Franchise Committee, I was shocked to learn that many franchisors have no formal long-term or, for that matter, short-term agreements with their suppliers. Is this an unhealthy move by these franchisors?
The most important relationship a franchisor can have is with its franchisees. Beyond that, in my opinion, the supplier arrangement comes next in the way of important relationships. When you read the better drafted franchise agreements, they typically state that the franchisor has developed a system that includes a network of suppliers whose products or services are one of the key ingredients for making the franchise engine run.
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