Franchise Agreement Format in Word
KEYWORDS:
What is a Franchise Agreement?Master Franchise Agreement
Franchise Agreement Format
Master Franchise Agreement Format
Franchise Agreement Details In India:
The exposure of the Indian market to the world, numerous new brands have prospered. Franchising is the most lucrative business model that involves domestic professionals as well as foreign businesses.
There are various types of franchising systems that can be opted by the franchisees to invest in. Some of them include the dealer arrangement, marketing arrangement, trademark-usage arrangement, manufacturing arrangement, product distribution arrangement, etc.
With the advent of multiple foreign firms, franchise business has become one of the easiest and most effective ways to expand your business. This proves to be the most efficient both, strategically and financially. Rather than opening up new branches of your brand by investing your own money, it is better to sell your intellectual properties to an aspiring entrepreneur. This will enable you to expand your business without any further investment.
Although the government does not
mandatorily instruct any franchise owner to get into an agreement with the franchisor, a franchise agreement regulated by the negotiation, drafting
agreeing on the terms with mutual understanding, discussion and consideration.
What is a Franchise Agreement?
A Franchise Agreement is a legal document that is mutually agreed upon by the franchisee and franchisor, which
binds both the franchisor and franchisee into a contract. It creates the legal
obligations to be fulfilled by both the franchisor and the franchisee and also
gives a clear picture of what the franchisor expects from the franchisee for
running a mutually beneficial business.
It is a legal contract in which the franchisor consents to provide its brand, operational model, consumer engagement, and any required support to another party for them to set up and run a similar business in exchange for a fee and some share of the income generated during its operation.
The franchise agreement also lays out the
details of what duties each party needs to perform and the obligations that
need to be followed. It determines the terms and conditions for both the
parties and binds them into a legal contract built by mutual agreement.
Franchise agreements in India are subject to "THE CONTRACT ACT, 1872" in case of
general terms, and the "COPYRIGHTS ACT and TRADEMARKS ACT "govern the protection
of intellectual property rights.
Franchise Agreement Draft In India:
Master Franchise Agreement:
The Master Franchise Agreement is a
type of franchise agreement that allows the Master Franchisee to operate more
than one unit under the brand's name, the right to sub-franchise the right and
to open units to other independent businesses (called Franchises), all during a
specified time within a specific area.
The franchisor is the one who owns
the business brand, the trademarks, and knows the method of business operations.
A Master Franchise is the one that develops and expands the business by
reaching out to various potential franchisees and guide them throughout the
establishment process.
A Franchise agreement consists of the following contents:
Name and details of the parties getting into a contract.
Date of contract.Nature of the business.
Term of the franchise contract.
Cost of the franchise.
Royalty fee and terms of payment.
The remedy for the transgression of rights or regression of terms or non-compliance with the agreement.
Conditions for eliminating the franchise agreement.
Restraints of usage of trade name or trademark.
Confidentiality terms.
Disagreement or dispute Resolution.
Need for a
Franchise Agreement
Even though it is not compulsory as
per law to have a franchise agreement but it is a business need that should
undoubtedly be fulfilled by both parties.
The major needs satisfied by a Franchise agreements in the franchise business are as follows:
IMPROVES CLARITY OF THE BUSINESS'S WORKING: The agreement involves a detailed description of the nature of work and terms of conferring the trade name and business of the franchisor which retracts the scope of doubts between the parties entering into the contract.
GUARDS THE WELFARE OF THE PARTIES: The parties are free to express their will, rights, and duties that can be mutually decided and incorporated in an agreement that reduces the scope of any possible conflicts between the parties in the future.PROOF OF PARTNERSHIP TERMS: It acts as evidence that expresses the duties and rights which the parties have agreed upon.
INTELLECTUAL PROPERTY RIGHTS: The ownership rights and terms concerning the usage rights of a trademark or trade name will be clearly defined in the franchisor agreement that will establish the rights of both parties very clearly
Master Franchise Agreement Format
A franchise agreement format consists
of the following components:
Preface
This provides data on core issues and
illustrates the key components of the agreement, clearly reflecting the goals
and objectives of the parties getting into the agreement. following key
components are recommended to be incorporated:
A description of the franchise system and its past market functionalities
The ownership of the franchise system and a brief layout of the future framework improvements for changes regardless of the origin of such changes
Documentation of rights transferred from the franchisor to the master franchisee before the conclusion of the agreement and
The common goals of the parties in the contract.
Rights granted
The core objective of a master the franchise agreement is to additionally develop the franchise system in a
designated region and to make this conceivable by franchisor acknowledging the
master franchisee the right to utilize the franchise system, trademark license,
and the license for the use of any other Intellectual Property Rights provided
and to grant franchises to sub-franchisees within the specified limits and
period as mentioned in the agreement.
Territory of work
The geographical area that has been
assigned to the master franchisee should be defined unambiguously. Depending
upon the accomplishment of clearly set targets, either in terms of turnover or
the number of sub-franchise units to be opened or a combination of both, the
parties can opt for the expansion or reduction of the territory appropriately.
The master franchisee has to make
that there is a considerable advancement in the work progress of the franchise
business in the designated territory. They would want to be granted exclusivity
for that designated territory. It means that the master franchisee has the
unlimited right to franchise the business in the designated territory to the
elimination of any outsider including the Franchisor itself if no limit is set
to exclusivity.
Master franchising agreement will
incorporate a development schedule listing the advancements in the number of
franchise units to be opened in the designated territory. It is advantageous
for both of the parties involved. It makes it quite easy to approach this subject
practically to keep the disputes at the least position. The agreement should be
able to provide solutions for the circumstances where developments are not
made.
Master franchise agreements
essentially cover two kinds of franchise fees paid by master franchisees to
franchisors. The first is the initial fee paid to the franchisor for the rights
allowed. The second is an ongoing franchise fee which is also referred to as
royalty or continuing fee. It is paid by the master franchisee for the utilization
of the franchise system and the ongoing support service provided by the
franchisor. The franchise fee is a charge by the franchisor levied for
proceeding with the utilization of the rights granted and support provided.
Mostly, the master franchisee is
obligated to utilize the standard franchise agreement and to ensure that it
complies with the local (mandatory) laws. Another way would be that the master
franchisee may retain the right to compose a standard franchise agreement given
that this standard agreement which contains all the provisions deemed mandatory
by the franchisor.
Master franchising agreement will
readily terminate at the end of the franchise term, unless the conditions of
renewal if agreed upon, have been met. Termination for either party is to be
provided in the master franchise agreement. Early termination by the franchisor
in the case of a material infringement or natural termination in the event of
bankruptcy, insolvency, etc, of the master franchisee is typically added
through local bankruptcy and may decide the effectiveness of termination.
Typically, the law of the country in
which the franchisor is domiciled is relevant as the choice of law to the
master franchising agreement. Careful consideration must be provided to several
relevant factors to arrive at a well-thought conclusion. In case of any
disputes under an international master franchise agreement, international
dispute resolution will be the most favored solution. Arbitration is by and
large, less tedious and time-consuming, and less immoderate than litigation. It
has an adaptable and neutral forum and permits the parties to choose a mediator
with relevant subject-matter expertise.
Format An Franchise Agreement In Details:
Sparkleminds:
Hope the help of the above-mentioned points you to prepare a franchise agreement and a master franchise agreement
effectively. A sound franchise agreement is one with relevant points and
negotiated measures. It should be flexible and yet rock-solid.
Franchise Consultants Mantra:
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