Franchise Agreement (Drafting)

Franchise Agreement gives the legal right to engage and establish the Franchisee Business. As a Franchisor your Franchise Agreement will be the most important legal document. Franchise Agreement will govern and define the relationship with your Franchisee. The Franchisor can enter into foreign markets also and enhance his goodwill and his business.The franchisee’s business is substantially associated with the franchisor's brand.

FRANCHISE AGREEMENT

BASIC INFORMATION:

Franchise Agreement is the legal agreement that will help you to expand your business throughout the world. Franchise agreement creates a Franchise relationship between Franchisor and Franchisee.

Franchise Agreement gives the legal right to engage and establish the Franchisee Business. As a Franchisor your Franchise Agreement will be the most important legal document. Franchise Agreement will govern and define the relationship with your Franchisee. The Franchisor can enter into foreign markets also and enhance his goodwill and his business.

The franchisee’s business is substantially associated with the franchisor's brand. In franchising, the franchisor and each of its franchisees are sharing a common brand.

The franchisor exercises control or provides substantial assistance to the franchisee in how it uses the franchisor's brand to conduct business. Because the franchisee is an independent contractor and not a joint employer, generally those controls cover brand standards and do not extend to the human resources of the franchisee, nor do they extend to how the franchisee manages its business—aside from meeting the requirements of the brand standards—on a daily basis.

FEATURES OF FRANCHISE AGREEMENT:

1. EXPANSION OF BUSINESS: Franchise agreement will help you to expand your business, and gain wider acceptance of his trademark and brand name. The Franchisor can enter into foreign markets also and enhance his goodwill and his business.

2. LEGALLY ENFORCEABLE: Franchise agreement is legally enforceable agreement. On the breach of any terms and condition of Franchise agreement by Franchisor or franchisee they both can sue each other on the basis of Franchise agreement.

3. REGULAR INCOME: By way of royalty from the Franchisee the Franchisor receives regular income at no extra cost. 

4. ADVANTAGE OF MARKET FEEDEBACK: Through the Franchisee the franchisor gets market feedback about product and popularity preference and need of the local customers.

5. DURATION OF THE FRANCHISE AGREEMENT: This involves the length of the relationship, the franchisee’s successor rights to enter into new agreements, and the requirement to upgrade the franchisee’s location.

6. INITIAL AND CONTINUING FEES: Franchisees generally pay an initial and continuing fee to the franchisor for entering into the system and remaining a franchisee. Agreements also typically include a number of side fees. Most franchise systems provide for a payment to an advertising or brand fund that is used by the franchisor to market the brand to the public and for other contractually defined purposes.

7. ASSIGNED TERRITORY: Not every franchise agreement grants a franchisee an exclusive or even a protected territory, but specifics about the territory must be defined. Franchisors also need to deal with reservation of their rights within a franchisee’s territory, including alternative distribution sites and sales over the internet.

8. SITE SELECTION AND DEVELOPMENT: Franchisees generally find their own sites and develop them according to the franchisor’s standards. The role of the franchisor is generally to approve the location found by the franchisee and then approve, prior to opening, that the franchisee has built its location to meet design and other brand standards.