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Franchise Advice: Is an Oral Contract Enough?

Sep 6, 2008
Making agreements and deals with other people is a part of life. Everyone wants to make sure they are getting the best possible deal for themselves. This has been the case for ages now. Back to a time when people were trading goods to sustain their lives, we today do the same. However, as times have changed and we our society has become more intricate, so has the process on making deals. For a long time an oral agreement and a handshake was all that was needed to ensure each person would come through on their part of the bargain. Now, we face so many scams and untruthful people we have to question if a handshake is enough to seal any deal. This is a common dilemma in the franchise world today.

If you are becoming a franchisee you will want to upfront what is expected of you as a franchisee and what the franchisor will provide to you. This is how franchises work; it is what makes them more successful than most independent businesses. These expectations can be on a small or large scale. Regardless everyone needs to know what their part of the deal is and they need to meet it.

Your franchisor may make an agreement or deal with you orally and give you a nice firm handshake. However, they may never carry through their end of the bargain. So, in our current system, what can you really do about it? Is that oral agreement enough to get you what they promised you?

Well, it is enough if and only if you can prove it in court! The best way to do this is by having a witness as you seal the deal with a handshake. Make sure that you have someone you selected and you can trust. You wouldn't want anything to get turned around on you. If you did not have a witness for you oral contract, you should begin working on your part of the deal. This can sometimes show that some type of deal was made. However, it usually only holds relevance if the other party begins some work on their part of the deal as well. You should also keep anything that can serve as evidence of the deal. Such as receipts, thank you letters, emails, faxes or anything else relevant to the deal.

For the most part oral contracts are withheld on both ends and no one ever has to prove anything, however there is still a small chance it could. So, make sure to follow the guidelines above just in case.

The best way to avoid this completely is to have a written contract between both parties. Even though it may take more time to do it this way, it is the best way to ensure both parties hold up their end of the deal. If the deal is in writing, there is nothing to prove. It may actually end up saving you time if you did have to go to court about an issue.
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