Franchise agreement | Franchise agreement format | Taxolawgy | Franchise Legal

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3. Franchise Agreement

4. Franchise Agreement An established business for purposes of expansion agrees to provide its brand, goodwill and other required support to assist another party to set up and run the business in exchange for some charges and part of the revenue which is generated. In such circumstances, a legal document is required which declares all the terms and conditions acceptable to all the parties and the rights, duties and obligation of each party along with the number of profits to be shared. Such an agreement is called the Franchise Agreement.

5. What Are The Different Types Of Franchise Agreements? Development agreement:The development agreement only provides for the development of the franchise. After the development a separate agreement needs to be executed to operate the store. Basic Franchise agreement: After the development, in order to operate the business this agreement is made by parties. It is necessary to have exclusivity clauses in the franchise agreement so no other stores of the same brand are operated within a preferred distance from the store. Sub-Franchise agreement: This agreement is made in circumstances where the franchisee is unable to operate the business on a full-time basis or wants to outsource the operations of the franchisee.

6. What are the major elements of a franchise agreement? • Initial Fees • Investment • Product/Service • Finances • Obligations of Franchisor • Obligation of Franchisee • Exclusiveness • Intellectual Property Rights • Agreement Period • Franchise Fees • Termination

7. Relevant Clauses In A Franchise Agreement Franchise agreement clauses differ from business to business. There are similar aspects which these agreements address. They are: Term And Renewal Fees and royalty clause Proprietary marks Confidentiality clauses Training Duty of Franchisor Duty of Franchisee Default and Termination Advertising Dispute resolution

8. Elements In A Franchise Agreement Personal Details: The franchise agreement must contain the full details and legal authority of the parties. Consideration: The agreement must state the number by the party, the royalty, deposit, charges, mode of payment, payment date, etc. Use of intellectual property: Maximum franchise agreements have clauses that require the franchisee to notify the franchisor in case of trademark infringement.

9. Details of business operations: The details of goods and services which are to be provided by the franchise, right of franchisor to inspect at any time . • Governing law: It is another very important aspect i.e. to mention the governing law clause it helps in making sure as to which law would govern the parties under this agreement. In the case of foreign entities and Indian entities entering the agreement, it assists in understanding which country’s law would have governance.

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