BASIC FRANCHISE AGREEMENT SAMPLE
BASIC FRANCHISE AGREEMENT SAMPLE: For any business wishing to sell its franchise and for any businessperson willing to start a business by owning a franchise for a brand, it is very important to satisfy all legal requirements to avoid any kind of nuisance and havoc in the future. Of all the legal documents, FRANCHISE AGREEMENT is the most basic document because it is the document which states that the franchisor and the franchisee have got into a contract. It consists of all details such as the expectation of the franchisor, your operation method, etc. that are mutually agreed between the franchisor and the franchise.
A franchise agreement can be defined as: “A legal binding contract between a franchisor and a franchisee which outlines the franchisor’s terms and conditions for a franchisee.”If you want to take ownership as a franchise as a franchisee, it is necessary to sign a franchise agreement because it is a legally binding contract between the parties to a franchise relationship. In legal terms, a franchise agreement is a license provided by the franchisor to a franchisee.
Franchise agreement
It simply means that the franchisor permits the franchisee to use the franchisor’s brand name as his business’s brand name. Agreeing to the franchise agreement document means: The franchisor licenses the franchisee the right to use the franchisor’s intellectual property, systems, and brand. The franchisee acquires the right to open a business using the franchisor’s intellectual property, systems, and brand, provided it meets certain conditions. A Franchise agreement draft consists of the following points:
1. Franchisor-franchisee relationship-The relationship between the franchisor and the franchisee is the major component of a franchise agreement. These are the two parties that are bonded in the contract and the obligation to operate the brand standards is disclosed in the agreement
2.Agreement duration –The duration of the franchisor-franchisee relationship is mentioned in the franchise agreement document. In general, the tenure of the agreement of relationship between the franchisor and the franchisee is for 5 to 10 years. The tenure of the relationship is one of the most crucial aspects of the agreement. This can be extended in case the franchisor and the franchisee agree to stay and work together.
3.Scale of operations: Thee methods and scale of operations must be clearly mentioned in the franchise agreement sample before a fair draft is prepared. It is extremely important to include elaborate information about the level of support that the franchisor will provide. Various operations like procurement of goods or services, account management, etc. have to be mentioned under this agreement. The franchisee carries out its work as per the details mentioned in the franchise agreement.
4.Franchisefee-In a franchise agreement, the amount that the franchise has to pay is also mentioned. Franchisees generally have to pay an initial amount when they are joining the franchise system. Several other charges are charged by the franchisor,r and all of those have to be articulated in the agreement. The initial fees are the amount that the franchisee pays to the franchisor to take his brand name, logo, and another identity of the brand that the franchisee can use.
5.Use of intellectual property-Intellectual property includes trademarks, patents and manuals are valuable assets for every business. When one buys the franchise of a particular brand, he gets access to some of the intellectual properties of the brand. The franchise agreement clearly mentions what is licensed to a franchisee and which all intellectual properties can be used by a franchisee.
6.Training and support-Most of the franchisors provide proper training to anybody wishing to take up the franchise of their brand in order to ensure a uniform functioning of all the franchises owned by that brand. These are generally provided before the opening up of the franchise and during business setup. All the training schedules are mentioned in the franchise agreement.
7.Site selection and Development-It is very important that an analysis of the market is made before setting up a franchise store so that a location with the minimum competition can be chosen. It is one of the biggest responsibilities of the franchisee to find the perfect location and take approval from the franchisor before setting up the franchise. Each and every specification about the location needs to be penned down in the franchise agreement so that it becomes an official franchise unit of the brand.
8.Advertising and brand promotion-Franchisors invest a large part of their finances and resources in the promotion of their brand. Therefore, the franchisees must contribute to brand-building activities.
