Buying a franchise is possibly one of the least complicated ways for entrepreneurs to start running a business. When there is already a business establishment that becomes a franchiser and offers its franchise to prospective franchisees, who will then run their business under the franchiser’s brand and using strategies and standards set by the franchiser, a Franchise Agreement can be made between them to establish business relationship between them and to legalize it. A Franchise Agreement is also called a Franchise Contract or a Franchising Agreement. There is no one definite Franchise Contract Template to make the contract; however, it is strictly regulated that the contract must be in compliance with local regulations and laws. Buying a franchise is the least complicated way to start a business because it franchisees can limit the risk of starting a new business when they buy a franchise.
What should be included in Franchise Contract
Although there is no one definite and standard template for a Franchise Contract, it usually contains basic issues set by the franchiser that the franchisee must agree with, including the costs that must be paid to receive the right to use the franchiser’s brand, the conditions to use the brand, how long the term will remain in effect, fees and royalties, and various business development and execution issues.
Because there are many issues covered by the contract, franchisees usually have to comply with a great deal of requirements set by their franchiser. For example, a franchisee purchasing a license to run a fast food franchise must use a business place with specified floor plan, must hire employees with specified expertise, must provide their employees with specified training programs, and usually must require their employees to wear uniforms approved by the franchiser. This can be an advantage and a disadvantage for them. On the good side, it is advantageous for franchisers because it sets the best business strategies for them in running their business and keeps their business running on the right track, thereby ensuring that the service or product they sell is always of high quality. On the bad side, it is disadvantageous for them because it often puts a heavy burden on their shoulder when they are just starting their business. To alleviate the burden, franchisers should review the contract first to make sure that the franchiser actively provides training, management and support programs to them to make sure that their newly started business is always in compliance with the franchiser’s standards.
If you are looking a franchise contract template to be used as your reference, you can download the free sample below.
Franchise Agreement Template (137.5 KiB, 375 hits)