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The Standard Franchise Agreement

So you are planning to build a chain of your business in any other location i.e. opening a franchise. No doubt it is the best way to go for. Your next step should be documenting the legal rights and obligations for the franchisees certainly and for that you need to draft a Franchise Agreement.

A franchise agreement is a legal contract that outlines the rights and obligations of the franchisee and franchisor. The absence of standard franchise agreements may pose problems to the parties entering franchise business. In this agreement franchisor explains about proprietary information, the use of certain intellectual property rights such as trademarks, the business methods. It is the only agreement between franchisee and franchisor & varies from franchise to franchise. Though negotiations are possible but it is advised to take professional help in this regard.

The Standard Franchise Agreement

Also Read: Is Buying Franchise a Fruitful Venture?

Check out the factors covered in franchise agreement:

  1. Purchase Agreements
    The franchise contract should include the price and the details of what the franchisee is purchasing from the franchisor. It covers the cost of equipments, inventory, and other things in the franchise package. Though it may be considered confidential by some franchisors. Every term and condition related to payments will be mentioned in the contract.
  2. Location
    The Franchise Contract should specify geographical area, the franchisee can expect as his sole sphere. The grant of franchise is unshared within a particular territory many a times . But, if it is non-exclusive, the franchisee would have to share their target area with other franchisees.
  3. Signage
    It is a crucial part of the franchise agreement that covers the trademark, signage, copyrights and all the confidential information of the franchisor’s company. This provision also reserves the franchisor’s right to protect the infringement of his assets not just granting relevant rights to the franchisees to use the intellectual property.
  4. Business Methods
    Every Franchisee agreement will require details about the services franchisors have to provide to franchisees. Franchisors can obligate franchisees to use their business methods and meet their operational standards. The purpose of mentioning these requirements in the contract is to protect the reputation of the franchise like if the business operates in-efficaciously or provides poor customer service, the economic value of the whole franchise would suffer.
  5. Renewal and Cancellation of Agreement
    The Agreement will provide every information about the renewal, breach and cancellation of the contract. As the company may choose to renew the franchise license with the franchisee or may be it can lead to termination. The agreement will contain all the required information about termination of the operation.


Also Read: Most Favored Home-Based Franchise Businesses in India

Franchising goes lucratively if the agreement has been considered in a proper order. Indulge in the best franchise business opportunity and earn maximum profit.


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