A Brief Guide To Franchise Agreements For First Time Franchisees

One of the most popular ways of starting a business is to purchase a franchise from an existing company. These so-called ‘businesses in a box’ allow the franchisee to benefit from a proven business model and the branding and marketing power of the franchise company.

Famous examples of franchise businesses include McDonald’s and Starbucks. however, not all franchises require the million-dollar franchise fees that these can incur. Many franchise opportunities can be started with fees of less than ten thousand dollars, however, whatever level you choose to start at, you must know the legalities and commercial law relating to franchise businesses.

Franchise Agreements – What They Are And What They Include

One of the legal documents you need to be aware of is the franchise agreement. This is the legal contract that exists between you, the franchisee, and the franchise company aka the franchisor. A franchise agreement will include the rights of each party and set out each of their respective obligations through the period of the franchise term.

Some of the specific terms within a franchise agreement will include:

  • Franchise fees which are payable by the franchisee
  • Rights of the franchisee as they relate to the branding and intellectual property of the franchisor
  • Obligations of the franchisee relating to their staff and staff training
  • Rights of the franchisee and franchisor upon the franchise agreement being terminated