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Franchise Agreements



If you are planning to open your own franchise outlet, or you are preparing to allow others to open franchises and follow your model, you’ll need the appropriate agreements to ensure that your business is protected.

Before you here are some key points that you will need to know.

Generally, a franchise is a business relationship whereby the franchisor licenses another with the right to use their business model and way of doing business, to use what is usually a recognised name or branding, plus providing assistance and training, merchandising, marketing and management in return for a specified consideration from the franchise.

These types of franchise systems generally licence a proven business format which is standardised and uniform.

What if I want to start a franchise?

A franchisee (a person that wants to start a new franchise location) will be able to use the franchisor’s proven business methods, products, services, intellectual property and other related property.

The franchise is a type of pre-established business.  A new franchisee will be able to use the specified property for a certain period of time or for a certain territory depending on the terms that have been agreed upon.

Potential franchisee’s must first get permission from the franchisor and enter into the appropriate documentation.

By having a well drafted franchise agreement in place all the people involved will know the exact nature and terms of the arrangement.

What if I want to turn my business into a franchise?

Turning your business into a franchise allows you to expand your products or market presence, without a lot of capital expenditure.

If your business is expanding and you are seeking new independent owners to act as franchisees, you’ll need to make it clear what you are offering.

By drafting a comprehensive Franchise Agreement, you can clearly set out the terms and conditions of the franchise such as payment, territory, business methods, merchandising, intellectual property and trademarks and the rights and obligations of each party.

What is contained in the agreement?

Franchise Agreements by their nature usually contain many terms and uniform procedures stipulated by the franchisor in order to maintain control and uniformity of the franchisor’s product, brand and image.

It sets out;

  • what both the franchisor and franchisee can and can’t do,
  • how the sale of the goods or services must be conducted,
  • how intellectual property such as branding and logos can or can’t be used, and
  • other pertinent details relating to the franchise.

RP Emery & Associates provide professionally drafted Franchise Agreement Kits in complete with a User’s Guide and other resources.