Franchise agreement

A Franchise Agreement is a legal, binding contract between a franchisor and franchisee, enforced in the United States at the State level.

Prior to a franchisee signing a contract, the US Federal Trade Commission regulates information disclosures under the authority of The Franchise Rule [1]. The Franchise Rule requires a franchisee be supplied a Uniform Franchise Offering Circular (UFOC ) or Franchise Disclosure Document (FDD ) prior to signing a franchise agreement, a minimum of ten days before signing a franchise agreement. [2]

Once the Federal ten day waiting period has passed, the Franchise Agreement becomes a State level jurisdiction document. Each state has unique laws regarding franchise agreements.

A franchise agreement contents can vary in content depending upon the franchise system, the state jurisdiction of the franchisor, franchisee, and arbitrator.

A typical franchise agreement contains

Agreement, Territory Area, Area Licensee, Authorized deductions, Gross Receipts, License Network, The System Manual, Trademarks, Start Date, Trade name, Termination, Transfer of license.
Territory, Rights Reserved, Term and Renewal, Minimum Performance Standard
Administration, Collections and Billing, Consultation, Marketing, Manual, Training
Initial License Fee, Training Fees, Marketing Fund, Royalties, Renewal fee, and Transfer fee
Use of Trademarks, Financial Information, Insurance, Financial and Legal responsibility
Confidentiality, Indemnification, Non-Compete
Consent of franchisor, Termination of license, Termination by licensee, Termination by licensee

See also

References

  1. ^ http://www.ftc.gov/bcp/edu/pubs/business/franchise/bus70.pdf
  2. ^ http://business.ftc.gov/documents/inv05-buying-franchise-consumer-guide#2

External links