Franchise Agreement Key Provisions
Franchise Agreement Key Provisions
1) Franchise Fee and Total (Anticipated) Investment: In order to gain the right to use a franchisor's trademark and operating system, franchisees are required to pay an initial franchise fee.
2) Training and/or Ongoing Support Provided by the Franchisor: Every franchisor provides its own unique training program for franchisees and franchisee staff. These programs can include training done at corporate headquarters, a franchisee's location, or both. Franchisors frequently offer ongoing support that includes technical and administrative support.
3) Territory Assignments: The Franchise Agreement designates the territory in which you as a franchisee can operate and whether or not you have exclusively rights.
4) Franchise Agreement Duration: The length of the Franchise Agreement is stated in the Agreement.
5) Advertising: In the Franchise Agreement, the franchisor will reveal its advertising commitment and the fees franchisees are required to pay towards those costs.
6) Trademark, Patent and Signage Use: How a franchisee can use the franchisor's trademark, patent and signage is covered in this provision.
7) Royalties and Other Fees: The vast majority of franchisors require their franchisees to pay an ongoing monthly royalty of around 4-8 percent of total sales.
8) Operating Protocol: This provision explains how franchisees run their outlets.
9) Resale Rights: While some franchisors allow franchisees to sell their franchisees regardless of their reasons, many write buy back or right of first refusal clauses into their Franchise Agreements, allowing the franchisor to either buy back the franchise at a predetermined rate or match any potential buyer's offer.
10) Renewal Rights and Franchisee Termination/Cancellation Policies: How the franchise can be renewed or terminated is dealt with in these provisions. Occasionally franchisors have an Arbitration Clause in their Franchise Agreements, meaning that, in the case that legal action on either side is warranted, an arbitrator will review the case instead of going to court.
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When it comes to the Franchise Agreement – the legal document that technically governs franchisor/franchisee relations – there is no standard format. Terms and conditions of operations vary from franchise to franchise and from industry to industry. Generally, however, Franchise Agreements cover:
1) Franchise Fee and Total (Anticipated) Investment: In order to gain the right to use a franchisor's trademark and operating system, franchisees are required to pay an initial franchise fee.
2) Training and/or Ongoing Support Provided by the Franchisor: Every franchisor provides its own unique training program for franchisees and franchisee staff. These programs can include training done at corporate headquarters, a franchisee's location, or both. Franchisors frequently offer ongoing support that includes technical and administrative support.
3) Territory Assignments: The Franchise Agreement designates the territory in which you as a franchisee can operate and whether or not you have exclusively rights.
4) Franchise Agreement Duration: The length of the Franchise Agreement is stated in the Agreement.
5) Advertising: In the Franchise Agreement, the franchisor will reveal its advertising commitment and the fees franchisees are required to pay towards those costs.
6) Trademark, Patent and Signage Use: How a franchisee can use the franchisor's trademark, patent and signage is covered in this provision.
7) Royalties and Other Fees: The vast majority of franchisors require their franchisees to pay an ongoing monthly royalty of around 4-8 percent of total sales.
8) Operating Protocol: This provision explains how franchisees run their outlets.
9) Resale Rights: While some franchisors allow franchisees to sell their franchisees regardless of their reasons, many write buy back or right of first refusal clauses into their Franchise Agreements, allowing the franchisor to either buy back the franchise at a predetermined rate or match any potential buyer's offer.
10) Renewal Rights and Franchisee Termination/Cancellation Policies: How the franchise can be renewed or terminated is dealt with in these provisions. Occasionally franchisors have an Arbitration Clause in their Franchise Agreements, meaning that, in the case that legal action on either side is warranted, an arbitrator will review the case instead of going to court.
Franchise Agreement Key Provisions - To learn more about this author, visit Sebastien Page's Website.
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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Jay Kubassek(Jay's Full Bio: EvanCarmichael.com/jaykubassek) In five years, Canadian-born entrepreneur Jay Kubassek went from selling mufflers at a Midas franchise to revolutionizing Internet marketing with the 2004 launch of CarbonCopyPRO, a online marketing education company, now worth over $20 million with customers in over 160 countries.
As an independent film producer, his upstart film fund Aliquot Films is currently producing a films with Spike Lee and Abel Fererra (starring Ethan Hawke and Dennis Hopper.)
Jay's entrepreneurial spirit is irrepressible. He’s the owner of five companies, a professional speaker and trainer, international real estate developer/investor, extreme sport enthusiast and emerging philanthropist. Jay resides in NYC with his wife Jamie, son Milo and dog Cooper. Visit Jay's official website: www.JayKubassek.com - Visit Jay Kubassek's Website |
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