A Franchise Agreement is a legally binding contract that establishes a license between a franchisor, typically an established business, and a franchisee, typically a business or entrepreneur interested in owning and operating a location of the established business.
The purpose of a Franchise Agreement is to protect the franchisor’s intellectual property and to guarantee that all of its licensees are operating in consistently with one another and with the franchisor.
Important Terms under A Franchise Agreement
The Franchise Agreement template will set out important terms and conditions including:
- The term length (which often does not exceed 10 years)
- The franchisor’s duty to provide an operational model and required support to the franchisee
- How much the franchisee will pay for the rights to own and operate the franchise
Other issues involving marketing, training, and helping the franchisee develop the brand
Substantive Legal Right & Obligations Under A Franchise Agreement
Franchisee’s Rights & Term
The object of a franchise agreement is to provide the franchisee with a franchised location from which to operate. Basic rights will include the right to use the franchisor’s trademark and implemented business systems. A standard franchise agreement template will provide a 10-year term for the franchise, but that is subject to a number of conditions (initial investment by franchisee).
Development Obligations By Franchisee
An obligation is placed on the franchisee to establish the prescribed franchise location within the timer period agreed upon with the franchisor.
Training Period For The Franchisee
The obligation to train the franchisee rests on the franchisor prior to opening the location of the franchise. This is important to ensure a seamless transference of knowledge to the franchisee, and the new staff on site
The franchise agreement will define territorial rights as it relates to where the franchisee may operate the franchised business, and certain restrictions such as: the territory within which the franchisee is restricted to conduct operations, and who the franchisee may or may not sell to.
Procedures of Operations
Under the terms set out in the franchise agreement, the franchisee will be required to adopt the systems or procedures of the franchisor.
The franchise agreement will cover important terms as it relates to fees, the most common initial fee being the initial franchise fee paid at the time of signing.
Product ID: 23922AP99
⇒ Revisions Approved
⇒ Plain English & Easy Editing
⇒ Guidance Notes Included
⇒ Money Back Guarantee
⇒ Length: 4 pages (min.)
⇒ Last Revision: 19 May 2020
⇒ Format: MS Word (.DOCX)
⇒ Rev. Number: 12772778
⇒ Product ID: 23922AP99