Definition
A franchise agreement is a binding legal document that grants the franchisee the right to operate a business associated with the franchiser’s trademark. Franchise agreements intend to protect the intellectual property of the franchisor.
Essential Characteristics
A franchise agreement should consider the following:
- The responsibility of the franchisee to comply with the business’ operation systems
- The franchisee’s duty to meet the franchisor’s training and performance standards
- Reporting requirements
- Supply arrangements and requirement
- Responsibilities to staff
- Responsibilities to personnel in the franchisee’s local area
- Promotion and marketing practises to be undertaken by the franchisee
- Performance criteria to be applied to the franchisee
- Training and support
- Marketing assistance
- Renewal clauses
- Termination clauses
- Dispute resolution process.