Common Elements of A Franchise Agreement

  1. franchise business from homeGrant of franchise, defines the nature of the franchising agreement.
  2. Use of trademark, patent and copyright, spells out how you can use the franchisors trademarks and copyrights.
  3. Defining bodies, lists the parties to the agreement and sets forth the independent relationship between the parties.
  4. Payments, spells out how you are supposed to pay the franchise fee and any others require royalties or ongoing payments.
  5. Term of agreement, enumerates the length of time that the agreement will be in effect. Most of the franchise have agreement for five years whereas many also have an agreement for ten years.
  6. Franchise renewal, details how the agreement continues in the future.
  7. Developing and opening, lists the length of time that you have to start operating your business after signing the agreement which is usually 90 to 120 days.
  8. Territory, spells out any restriction on the areas in which you can upgrade your business. Generally, the larger the territory the larger the franchise fee table.
  9. Advertising, sets forth the requirements for using the franchises logos, trademarks set up.
  10. Equipment and supplies, tells you what supplies and services must be purchased direct from the franchisor.
  11. Training and assistance., details about the training offered by the franchisor as well as any ongoing support and assistance.
  12. Assignment of franchise, these were the rules regarding transfer of ownership, the person or entity should the franchisee decided to sell the business.
  13. Termination of franchise agreement, sets forth the legal requirement for terminating the agreement.

Be sure that you understand every aspect of the franchise agreement. By understanding we do not simply mean that you have read it but understood every single line. The legal ramifications and requirements of every single point may have far reaching consequences if you do not understand them. A point that you overlook and big huge difference somewhere in the future regarding how you run your business. Which is why the help of a qualified attorney who specializes in franchise law is so important.

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