The franchise agreement is the cornerstone document of the franchisee -franchisor relationship. It is this document that is legally binding on both parties, laying out the rights and obligations of each party. It is on this basis that a long term relationship grows and prospers. If both parties know what is expected of them, then working together is so much easier!
Most agreements will contain provisions covering, in considerable detail, the obligations of the franchisor (the company franchising its business) and franchisee (the individual buying a franchise) regarding the day to day operation of the business, and will include:
- Training and operational support the franchisor will provide
- The franchise territory and appropriate exclusivity
- Duration of the franchise agreement and your renewal rights
- Investment levels
- Trademarks issues
- Explains the service and management fees that are payable
- The terms under which franchisees can sell their franchise
- Terminating the franchise and the consequences
- Marketing policies
- Settlement of disputes, etc
There is no standard form of franchise agreement because the terms, conditions, and the methods of operating the various franchise businesses vary widely depending on the day to day responsibilities involved. For example, franchises for printing, employment agencies, and automotive products will differ from the franchises for fast food service, convenience stores, or clothing.
Due to its importance and complexity, it is recommended that a franchise agreement is written by an experienced franchise solicitor. However, some franchisors do use a base template and amend it themselves. Although this is usually only a short term solution, it does have its pitfalls and such an Agreement could be harder to enforce simply because the clauses don’t stand the test of legal scrutiny, and a soon as funds allow a professionally written Agreement should be completed.
The Franchise Company have been involved in franchise development for nearly 20 years and the consultants have many years franchise experience. We’ve dealt with a large number of franchise agreements, from simple business relationships, (sole trader) to large complex international franchise agreements for public companies, and we have a large number of contacts that we can use to assist clients with their agreements. For more information, simply contact Ken Rostron on 01325 251455. Or email on kr@franchisecompany.co.uk.