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What Is In An Franchise Agreement

When entering into a franchise agreement, be sure to meet the standards set by the FTC, your state, and consider including the following provisions. We also recommend seeking the help of a legal expert who has experience in franchise agreements to ensure that you do not forget the crucial aspects. Many franchisors offer their franchisees different levels of education. While you don`t want to micro-manage your franchisees, many will be business owners for the first time and will not be sure how they can start and run a business. The franchise agreement may contain instructions on which registration software the franchisee must use and what records they must keep. The franchisor may also give itself access rights to these records in the franchise agreement. If you are considering franchising your business in order to expand the reach and profit potential of your brand, then you will need a franchise agreement to enter into this business model with your franchisees legally. This document is prepared by you (the franchisor) and shared with potential franchisees to ensure that the legal requirements of both parties are clearly defined. This is the section of the franchise agreement that acts as a catch-all. All legal requirements that do not fall under their own section are dealt with here.

If both parties are satisfied with the terms of the franchise agreement, they will sign and you will be officially in business together. The franchise agreement will be part of the franchise disclosure document. In general, most franchise agreements are written by the franchisor and will focus heavily on the conditions to which the franchisee must meet. A franchise agreement is also generally non-negotiable. Since a franchise is a highly reproducible business model, the conditions should be more or less the same for each franchisee. Consistency in each of your franchise sites is essential. Key to the handle: Most (but not all) franchise agreements last 10 years. Make sure you know the penalties for breaking an agreement. A franchise agreement gives the franchisee the right to use names, trademarks, service marks, logos, slogans, designs and other brand cues. The franchisor will also grant the right to use other intellectual property rights such as instruction notices and proprietary software systems. The franchise agreement is long, detailed and is made available to potential franchisees as exposure to the FDD well in advance of signing, to ensure that they have time to review the agreement and get advice from their lawyers and other advisors. Each franchisee must sign the franchise agreement and the franchisor will also sign the document.

A word of caution, a franchise agreement is a binding legal document and you can have a franchise lawyer checked on your behalf before signing.

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