| Some of the candidates that I work with as a | | | | commitments, and the products and services to be |
| franchise consultant are not crystal clear on the overall | | | | provided by the franchise. |
| importance of the franchise agreement and what it | | | | Term And Renewal Of Agreement. The specific |
| represents. | | | | period of time of the agreement is defined here, as |
| The UFOC (or franchise disclosure document) | | | | well as renewal details. The typical duration is |
| provides potential franchisees with specific information | | | | somewhere between 5 and 20 years. Termination |
| about the franchisor and their system during the early | | | | policy is discussed as well. |
| stages of the due diligence process. Some candidates | | | | Site Selection. This section indicates who is responsible |
| make the mistake of "speed reading" or scanning the | | | | for site selection and the level of assistance provided |
| franchise agreement because they have a good | | | | by the franchisor. Ultimately, the franchisor reserves |
| understanding of the details outlined in the FDD. This is | | | | the right of final approval of the location. |
| not a good idea. | | | | Advertising And Promotions. The franchisor must |
| The franchise agreement is the actual written contract | | | | approve the content, appearance, and frequency of |
| signed by both the franchisor and the franchisee upon | | | | advertising executed by the franchisee. |
| completion of a franchise sale. The franchise | | | | Selling And Transfer Rights. Franchisors typically |
| agreement is the heart and soul of the business | | | | reserve the right to approve the terms of any transfer |
| relationship between the two parties. It spells out in | | | | and the transferee. Also, franchisors usually specify |
| very specific detail how the franchisor expects the | | | | that they have the right of first refusal or to buy back |
| franchisee to conduct business, and outlines the | | | | a franchise. |
| obligations of both parties. | | | | Since this is the binding contract between the |
| All franchise agreements are not identical, but they do | | | | franchisor and the franchisee, I always highly |
| contain similar provisions, and I have listed seven of the | | | | recommended that you hire an experienced franchise |
| key items below, along with a brief explanation. | | | | attorney to review the agreement in its entirety so you |
| Territory Guidelines. Most franchise agreements will | | | | have a clear understanding of all of its contents. An |
| designate a very specific territory in which the | | | | attorney who is inexperienced with franchise law will |
| franchisee may do business. Sometimes exclusive | | | | not be qualified to adequately ensure your complete |
| territorial rights are granted. | | | | understanding of the details set forth in the franchise |
| Fees Payable To The Franchisor. This includes the | | | | agreement. |
| total investment, franchise fee, and ongoing royalties | | | | Register for your Free Franchise Consultation. The |
| and when the royalties are to be paid. | | | | Franchising Authority will help you find your perfect |
| Services Provided By The Franchisor. Outlined here is | | | | franchise! |
| the ongoing training and support, advertising | | | | |