Okay, so you are thinking to take your business on zenith via Franchising and ready to build a chain. Undoubtedly it is the best way forward. Your next step must be documenting the legal rights and obligations for the franchisees certainly and for that you need to open a Franchise Agreement.
A franchise agreement is a legal contract that outlines the rights and obligations of the franchisor and franchisee. In this agreement Franchisor licenses the proprietary information, the use of certain intellectual property rights such as trademarks, business methods to Franchisee. It is the only agreement which brings the Franchisee and Franchisor together. Opening a franchise agreement between both the parties varies depending upon the business type, state and local laws. It is possible to negotiate provisions of the franchise agreement, but it is advised not to attempt this without professional legal help. Also, the absence of standard franchise agreements may pose problems to the parties entering franchise business.
The franchise agreement usually contains provisions. The factors are covered in substantial details as follows:
Purchase Agreements
The franchise legal contract will be inclusive of the price and the details of what the franchisee is buying from the franchisor. This will include inventory, equipment and other things in the franchise package. These may be considered confidential by the franchisor sometimes. Also the terms and methods of payment will also be mentioned in the contract.
Territory
The Franchise Agreement should specify a geographical territory, the franchisee can expect as his sole sphere. The grant of franchise is exclusive within a particular territory many a times . However, if it is non-exclusive, the franchisee would have to share the territory with other franchisees.
Business Methods
Every Franchisee agreement will require details about the services franchisors have to provide to franchisees. Franchisors can obligate franchisees to meet their operational standards and use their business methods. The purpose of mentioning these requirements in the contract is to protect the repute of the franchise like if the business operates ineffectively, fails to maintain proper cleanliness standards or provides poor customer service; the economic value of the whole franchise would suffer.
Brand name and Signage
It is a crucial part of the franchise agreement that covers the signage, trademark, 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.
Renewal and Cancellation
The Franchise Agreement will provide every related information about the renewal and cancellation of the agreement. As the company may choose to renew the franchise license with the franchise or may be it can terminate. The agreement will contain all the necessary information about if & when this may occur and about termination of the operation.
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A franchise agreement is a legal contract that outlines the rights and obligations of the franchisor and franchisee. In this agreement Franchisor licenses the proprietary information, the use of certain intellectual property rights such as trademarks, business methods to Franchisee. It is the only agreement which brings the Franchisee and Franchisor together. Opening a franchise agreement between both the parties varies depending upon the business type, state and local laws. It is possible to negotiate provisions of the franchise agreement, but it is advised not to attempt this without professional legal help. Also, the absence of standard franchise agreements may pose problems to the parties entering franchise business.
The franchise agreement usually contains provisions. The factors are covered in substantial details as follows:
Purchase Agreements
The franchise legal contract will be inclusive of the price and the details of what the franchisee is buying from the franchisor. This will include inventory, equipment and other things in the franchise package. These may be considered confidential by the franchisor sometimes. Also the terms and methods of payment will also be mentioned in the contract.
Territory
The Franchise Agreement should specify a geographical territory, the franchisee can expect as his sole sphere. The grant of franchise is exclusive within a particular territory many a times . However, if it is non-exclusive, the franchisee would have to share the territory with other franchisees.
Business Methods
Every Franchisee agreement will require details about the services franchisors have to provide to franchisees. Franchisors can obligate franchisees to meet their operational standards and use their business methods. The purpose of mentioning these requirements in the contract is to protect the repute of the franchise like if the business operates ineffectively, fails to maintain proper cleanliness standards or provides poor customer service; the economic value of the whole franchise would suffer.
Brand name and Signage
It is a crucial part of the franchise agreement that covers the signage, trademark, 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.
Renewal and Cancellation
The Franchise Agreement will provide every related information about the renewal and cancellation of the agreement. As the company may choose to renew the franchise license with the franchise or may be it can terminate. The agreement will contain all the necessary information about if & when this may occur and about termination of the operation.
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