A Franchise Agreement is a document which sets out what is required by the Franchisor and Franchisee in any situation which may arise during the course of the franchise relationship. Some of the main terms that are commonly found in a Franchise Agreement include:
Rights granted to the Franchisee
The franchisee is normally granted the right to use the Franchisor’s name, trademark, and system.
Franchisor’s Obligations
These terms set out what is required by the Franchisor, for example what training is to be provided, what advertising and promotion is to be undertaken, what support is to be provided.
Franchisee’s Obligations
These terms set out what is required by the Franchisee, for example the services to be provided, the methods to be used, the manuals to be followed, the standards to be maintained, and the way that the business is to be promoted.
Payment provisions
These set out initial and ongoing fees, such as licence fees royalties, communication fees, and advertising contributions.
Term and Termination
These terms deal with how long the franchise relationship will last, how it will come to an end, whether the agreement can be renewed by the franchisee, and what happens on termination. Restrictions These restrictions include things such as restrictions on suppliers, prohibitions against operating a competing business, and restrictions on the recruitment of employees after termination.
A franchise agreement must set out a procedure for resolving disputes which complies with the dispute resolution procedure set out in the Franchising Code of Conduct (the Code).
Resale Rights
These terms set out the method by which a Franchisee may sell the franchise business. Some franchise systems allow their franchisees to sell the franchise business, while other franchise systems write in buy back or right of first refusal clauses. If you need a franchise agreement drafted or if you already have a franchise agreement which you want reviewed we can assist you to ensure that your franchise agreement is a usable and enforceable document which reflects your franchise system.
