Franchise Agreement With

A franchise agreement is part of the entire Franchise Disclosure Document (FDD). If a franchise agreement is a single document for franchising, the FDD is a state-regulated document. A franchise agreement protects both parties. It protects you as a franchisee and also protects the franchisee`s brand. If you buy a franchise, you will make a significant financial investment. A signed agreement gives you the right to protect your investment in your business. Franchise agreements transfer to a franchisee the rights to use a franchisee`s intellectual property and resources for a specified period of time. The rights and allowances assigned to a franchisee are very specific and leave little room for extensions or errors. As the name suggests, franchisees will meet the franchisee`s specific quality control requirements. This is a strong franchise and is necessary to ensure that the goods and services offered throughout the system meet the minimum requirements of the franchisee. The franchise agreement provides for the obligation for the franchisee to maintain a certain insurance coverage throughout the duration of the deductible. You can also expect indemnification clauses. For example, the franchisee will likely have an obligation to “release, defend and hold harmless” the franchisee from all claims, costs, damages and expenses arising out of the franchisee`s activities.

Apart from these three main provisions, Goldman said, the rest of the agreement may vary depending on, among other things, the type and size of the franchise. The franchise agreement is long, detailed and is made available to potential franchisees as an exposure to FDD well in advance of signing, to ensure they have time to verify the agreement and get advice from their lawyers and other advisors. Finally, there are strict rules, which makes a franchise a franchise. It is important to ensure that your franchise complies with the Federal Trade Commission`s franchise rule. The FTC franchise rule sets out the criteria that must be met for a business model to be considered a franchise. Overall, this includes: According to Goldman, three elements must be included in a franchise agreement: “A franchisor may qualify as a membership or license, but if all three conditions are met, take a franchise agreement,” Goldman said, noting that some franchise agreements may try to disguise themselves as licensing agreements. “A pure license agreement gives you permission to use the name and logo, and that`s it – you won`t get the marketing help or operating method you`d get from a franchise.” As a general rule, agreements also contain non-competition rules that come into force after termination. For example, a provision could prohibit the operation of a competing business within 5 miles of your former site for a period of three years after termination.

When developing an appropriate set of franchise agreements, each of the elements of the franchise must be evaluated. Before lawyers begin drafting contracts, it is essential for the franchisee to first develop his business plan and decide on all these important issues. For most franchisees, it is important that in addition to working with qualified franchise lawyers, they first collaborate with experienced and qualified franchise consultants to create their franchise offering. . . .