Franchise Agreement: Format and Example

A Franchise Agreement is a legally binding contract between two parties: the franchisor (the owner of a business concept, brand, or trademark) and the franchisee (an individual or entity granted the right to operate a business using the franchisor’s brand and business model). This agreement outlines the terms and conditions under which the franchisee can operate their business and use the franchisor’s intellectual property, including trademarks, logos, business methods, and trade secrets.

Franchise Agreement Format

Franchise Agreement Example

Franchise Agreement – FAQs

How long does a Franchise Agreement last?

Franchise agreements have a specified initial term (e.g., 5 or 10 years) with the option to renew based on mutual agreement between the parties. Renewal terms and conditions are outlined in the agreement.

Can a franchise agreement be terminated?

Yes, a franchise agreement may be terminated:

• By either party for material breach of contract.
• By the franchisor if the franchisee fails to meet performance standards.
• At the end of the agreement term if not renewed by mutual consent.

How can a franchisee protect their interests in a Franchise Agreement?

A franchisee should:

• Conduct due diligence on the franchisor’s reputation and track record.
• Review and negotiate terms related to fees, territory, and termination.
• Seek clarification on support, training, and marketing commitments.
• Ensure the agreement reflects verbal promises made during negotiations.

Can a franchise agreement be negotiated or customized?

Franchise agreements are often standardized but can be negotiated to some extent. Key terms related to territory, fees, and operational requirements may be subject to negotiation based on the specific circumstances. However, certain core provisions related to brand standards and intellectual property are typically non-negotiable.

What steps should be taken if disputes arise under a Franchise Agreement?

Parties should follow the dispute resolution procedures outlined in the agreement, which may involve negotiation, mediation, or arbitration. Legal advice should be sought to resolve disputes efficiently and protect both parties’ interests.