What to look for in a vendor contract

When you embark on owning your own franchise, it’s very likely that you’ll be directly interacting with outside vendors. As you navigate these waters, you’ll want to know what you are and are not responsible for.

No matter what type of franchise you purchase, you will have to secure an array of goods, supplies, inventory and other stock. While all of this will be approved by the franchisor, these are still relationships that you will need to nurture at the franchise level.

In most cases, you will work with your franchisor-approved vendor. Still, keep in mind that your contractual relationship is with you and the vendor, rather than the vendor and your franchisor.

If you look at most vendor contracts, they will be around one or two pages long and will contain purchase order and fine print information. This is where you, the franchisee, will have to pay close attention. Remember what they say about the devil being in the details.

Vendor contract fine print, absent fraud or misrepresentation, is almost always enforceable, which is why it is especially prudent to ensure you are fully aware of what the contract means, or have your attorney waiting by the phone.

Other than that, here are the basics to keep an eye out for:

• Who is the vendor?
• Who is the franchisee?
• What are the goods, services or supplies being offered?
• What is the pricing, in total and for each unit?
• What is the purchase price statement?
• Are they additional fees?
• What is the final total?

Of course, there are plenty of other considerations, from insurance and indemnities to warranty and shipping and handling terms.

The overarching theme here is to ensure you know exactly what it is you are signing. Take your time learning the terms, for this is a relationship you will count on for some time to come.