A franchise agreement is a legally binding document between a franchisor and a franchisee. The franchise agreement defines the conditions that must be met by both the franchisee and the franchisor. A franchise agreement is just one of many steps in how to launch a franchise. Now, more info on what you`ll find in the pages of the franchise agreement. Here are 10 basic provisions that are described in some form or sort in any franchise agreement: Before a franchisee signs a contract, the U.S. Federal Trade Commission regulates the disclosure of information under the control of the franchise rule.  The franchise rule requires that a Disclosure Document (FDD) franchise be made available to a franchisee (originally a uniform offer circular (UFOC) franchise prior to the signing of a franchise agreement, at least fourteen days before signing a franchise agreement.  In addition, this section of the franchise agreement can determine the type of location that franchisees can choose for the franchise. You can set the conditions of the type of market that surrounds the physical location, the amount of foot or car traffic it sees and other provisions. This section could also specify a timetable for the duration of the establishment of a site for brick and mortar by the franchisee. Most franchise agreements give the franchisor the opportunity, but not the obligation to exercise an initial denial of the rights of the franchisee`s business – in the event that the franchisee attempts to transfer the transaction or the first right to acquire the franchisee`s assets at the time of the expiry or termination of the franchise agreement.
The franchise agreement must deal with certain basic elements, including, but not limited to: under the franchisor that uses the franchisor`s brand, the franchisee will pay an upfront and current franchise fee to the franchisor. Spelling these fees in advance is important for both parties, as it will help the franchisee determine whether they can afford to enter the franchise – or whether they need to seek franchise financing to cover costs – and whether the franchisor has created a sustainable business model. One of the most valuable advantages of a business is its trademark and intellectual property. Intellectual property includes logos, trademarks and other branded materials. The franchise agreement is intended to help you protect your intellectual property. All franchise agreements contain some recitation of franchise breaches, which are treated as an offence. These offences can be subdivided into offences resulting in the immediate termination of the franchise agreement for which no cure is granted and in the event of an offence for which healing is foreseen. A problem that very often arises depends on whether franchise agreements are negotiable or not.
The answer is that they are negotiable, provided that the negotiated amendments are based on a request from the franchisee and offer the franchisee more favourable, but no less favourable, terms and rights.