Module 9 – What is the legal relationship defined by the franchise agreement or franchise contract?

Module 9 – What is the legal relationship defined by the franchise agreement or franchise contract?

The Franchise agreement which has been referred to several times in our previous modules binds you to a set of legal conditions when you choose to move forward and develop you franchise business.

A franchise agreement will typically contain the following components which will form part of the legal relationship:

Start-up training and ongoing support – Any start up equipment and other start obligations of the franchisor will be listed here.
Your territory (any conditions around exclusivity) – Where you franchise gives you the right to an exclusive territory, this section will explain how this works for you.
Operations – any operational standards that you will be expected to adhere to.
Duration – The time and length of the agreement.
Franchise Fee ( investment levels)
Management Service Fees (MSF) – how this is calculated and to be paid.
Brand Protection – including intellectual property and trademarks
Advertising / marketing – Any financial commitments will be stipulated here.
Renewal rights – What happens at the point of renewal and any guarantees to renewal will be included here.
Exit strategies – termination and ‘what if’ scenarios are covered here such as ‘what happens in the event of death’

In summary, you will be expected to sign and adhere to the franchise agreement for the set term which is discussed in the next module.

Look forward to Module 10 – Why are franchise agreements time bound