Franchise Agreement, when talking about Franchise, what comes to your mind? We are sure, it is the big fast-food chains all across the world, especially in our Country. McDonald’s, KFC, DOMINOS, PIZZA HUT, Burger King, Popeyes. These Franchise outlets are not expanded without any legal agreement between the parties nor can it be expanded with just verbal communication and investment of money. A Franchisor (the one who owns the main outlet) agrees to set up an outlet of its business in any part of the country or world if the Franchisee ( who agrees to operate the franchise ) meets the conditions which are set up by the Franchisor. Now, what does meeting the conditions of the Franchisor here is denoted for? It simply means that being a Franchisor to safeguard his business he would want to enter into an agreement known as the Franchise Agreement with the Franchisee.
Franchise Agreement India
A Franchise Agreement is a legal document which becomes legally binding between the Franchisor and the Franchisee. It sets out what is expected by the Franchisor, how to execute the business well, about investment and the ratio of revenue to which the Franchisor will be entitled with.
TYPES OF FRANCHISE AGREEMENT
There are four types of Franchise Agreement, which are mentioned below-
- Single-Unit Franchise, the Franchisee is allowed to only open one unit and nothing more than that.
- Multi-Unit Franchise, in this type of agreement more than one unit can be operated by the Franchisee.
- Area Development Agreement, the franchisee is given the right to open any number of units he wants over an agreed amount of time within a specified geographical location.
- Master Franchise Agreement, under this agreement the franchisee is given the same rights as under the Area Development Agreement but alongside the franchisee is given the rights to sell the franchise to a third party.
ADVANTAGES AND DISADVANTAGES OF FRANCHISING
Benefits of Franchising
- A Franchise Agreement compels the Franchisee to enforce his obligations as set out in agreement, as violation of this agreement makes it invalid and the Franchisor can terminate the agreement.
- The agreement avoids any misunderstandings which may arise between the parties.
- The agreement sets out the restriction to avoid any harm which may arise against the good will of the Company.
- The cost of filing any suit is reduced if there arises any dispute, the parties here agree to go for Alternate Dispute Resolution.
- Franchise Agreement becomes a legal evidence between the Franchisor or Franchisee.
IMPORTANT PROVISIONS IN FRANCHISE AGREEMENT
- The Franchise Agreement sets out the relationship between the parties, duties and obligations.
- This Agreement sets out the term of Franchise Agreement which includes the duration for termination of the Agreement.
- The cost for commencing the franchisee business, the fee and royalties to be paid.
- The franchisor and the franchisee rights, the franchisor can choose more than one franchisee. The Agreement avoids the Franchisee in infringing any rights of the Franchisor and harming the goodwill of the business.
- The Agreement involves the Franchisee’s rights on Marketing and Advertising strategies to enhance the brand name of the Company.
- This Agreement involves the training which shall be provided to the Franchisee to carry on the business efficiently.
- Information regarding Intellectual Property, details on trademarks, trade secrets and other relevant IP rights.
- The confidentiality which must be carried on by the parties, the governing laws, indemnification, dispute resolution.
Franchise Agreement Sample
Franchise Agreement Pdf
Click To See Franchise Agreement Word Format
How to get Franchise Agreement drafted?
A Franchise Agreement is needed and beneficial for you, if wish to expand the business you are presently engaged in. The Franchise Agreement is drafted by a Corporate Lawyer/ Contract Lawyer keeping in consideration the mutual benefits of the parties. We at VSK & CO ADVOCATES AND LEGAL CONSULTANTS, assist you in drafting this agreement in such a way that would avoid legal dispute and help you avoid unnecessary expenditure on litigation. And, there are various clauses which are added by the Advocates in our team with skilful negotiations with the parties and draft the Franchise Agreement effectively. We make sure to protect your business’s interest and give you legal protection.
Click To Consult Corporate Lawyer