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    Carey Smith on Contracts and Handshakes.

    This week I have come into contact with two people who are going through the experience of committing to a business decision through the form of a contract, agreement  or handshake.  Which one has the greatest ability to be built on?

    people-meeting

    The first experience was of a friend who was looking at a franchised business opportunity that involved a significant financial committment but was a relatively new business model into the marketplace.  He met with the franchisor and was impressed with their desire and committment to the direction of the proposed business.  He took the step of a handshake to further his potential relationship with this opportunity.  From there he received a franchise contract which was then followed by an enlongated dialogue regarding various points within the agreement.  We spoke about this and how the franchisor seemingly would not give up any ground within their agreement.  The discussion continued to go back and forth to a point where he became quite disillusioned with his inability to express his insights into the future of his business plan.  When we discussed this together, what came to light was that I knew of a person who knew the franchisor.  I made contact with this person who said that it was a great business model and the guys who ran it were totally committed and very enthusiastic to have a successful business model.  I told my friend about this and consequently he has gone on to agree with the contract but more importantly to accept a handshake on the strength of their personalitites and trust that their direction is his direction. 

    Where does the value lie… in the contract or in the handshake?

    The second experience was one that I had with an existing business owner of our company.  He is due to re-sign his franchise agreement for a further 5 years.  I asked him if he had any particular questions or comments on the agreement, or the franchise partnership that we were offering and his response was one that didnt surprise me but one that got me thinking about the value of a contract.   He said, “Carey, when I sign this contract, I do so because of our relationship.  The contract goes in the filing cabinet and I have never had cause to look at it until the new one comes up again.  If I ever have to look at the contract I would suggest that our relationship is over, because when I sign up with you I sign up on the stength of the handshake, not of the agreement”. 

     The strongest contracts are not on paper, they are in handshakes.

    What symbolises your business?  Is it  a contract or a handshake? 

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