How do I offer vendor finance?
Some Franchisors from time to time may want to offer vendor finance to help a franchise prospect join Jim's.
There is no clause in the franchise agreement for this however, you can have it inserted into the agreement or a separate document between both the parties.
If you would like the payment plan inserted into the agreement when you submitting the instruction sheet list the terms of the payment plan into the additional information section.
It will appear in the below format in the contract.
{$fse prepayment_amount} (including GST) payable upon execution of this Agreement; plus
(ii) ...... instalments of $...... (including GST) payable on the 10th of each month.
If the Purchaser defaults in any payments and these payments remain in default fourteen (14) days after the notice of breach has been forwarded to the Purchaser then this Agreement will be terminated and the Purchaser shall forfeit their right to any money paid up to the date of the breach.
If you would like to use a separate vendor finance agreement to manage the agreement. This will also need to be noted in the additional information section of the instruction sheet along with the name of the vendor finance agreement so this can be referenced in the agreement.
Feel free to use a template that was used in the past - Vendor Finance Agreement- clean.docx
Please note that we can't prepare these agreements for you. It is up to you as you are the one offering the terms.
Ultimately, the arrangement is between the Franchisor and the prospective Franchisee so it is up to both parties to decide the terms of the arrangement. There are however, a couple of rules that need to be followed when organising these terms so that the finance is in line with Jim’s Group policies and procedures:
1) The vendor finance can only be on the purchase price or part of the purchase price.
2) If the vendor finance is to be included in the agreement it can only be basic repayments and not include anything like interest or balloon repayments etc.
3) There is an option for commission to be payable upon instalments. For the payment plan to qualify for this it can only consist of equal monthly instalments. It will also need to be noted in the instruction sheet that the commission will be payable upon instalments. If this is not noted the payment plan will automatically default to a standard one with all commission payable upfront.