In a franchise agreement, a franchisor grants the franchisee the right to use the franchisor’s system and proprietary marks to operate a franchised business. The agreement should specify the franchise fee, which may include a fixed initial fee as well as ongoing monthly royalty payments. Franchisees should understand the term of the agreement, the provisions for renewing the agreement, as well as any restrictions on transferring the franchise.
A Franchise Agreement is a legal, binding contract between a franchisor and franchisee. The Franchise Rule requires a franchisee be supplied a Franchise Disclosure Document (FDD ) minimum 10 days prior to signing a franchise agreement. Once the ten day waiting period has passed, the Franchise Agreement becomes document.
A franchise agreement contents can vary significantly in content depending upon the franchise system, the state jurisdiction of the franchisor, franchisee, and arbitrator. It overall provides the investor with a product, a branded name and recognition, and a support system.
A typical franchise agreement contains
- Franchise Disclosure Document (FDD)
- Disclosures required by laws
- Parties defined in the agreement
- Recitals, such as Ownership of System, and Objectives of Parties
- Definitions, such as Agreement, Territory Area, Area Licensee, Authorized deductions, Gross Receipts, License Network, The System Manual, Trademarks, Start Date, Trade name, Termination, Transfer of license.
- Licensed Rights, such as Territory, Rights Reserved, Term and Renewal, Minimum Performance Standard
- Franchisors Services, such as Administration, Collections and Billing, Consultation, Marketing, Manual, Training
- Franchisee Payments, such as Initial Franchise Fee, Training Fees, Marketing Fund, Royalties, Renewal fee, and Transfer fee
- Franchisee Obligations, such as Use of Trademarks, Financial Information, Insurance, Financial and Legal responsibility
- Relationship of Parties, such as Confidentiality, Indemnification, Non-Compete clauses
- Transfer of License, such as Consent of franchisor, Termination of license, Termination by licensee
- Other provisions
- Governing law
We at Juris Logium Deal with:
- Franchise Agreement
- Franchise Purchase Agreement
- Inquiries – Franchiser about Operation Policies
- Inquiries to Franchiser about Parent Company
- Lease for Franchisor Owned Locations
- Sublease by Franchisor