Whether you’re opening your first franchise or selling your tenth, franchise agreements are an essential part of any successful business relationship. They can influence the structure of your operations, suppliers, finances, and a handful of other important considerations.
With so much at stake, it’s extremely important to understand the details of your contract before hiring a franchise lawyer to finalize the contract. To help you get started, here are a few of the key elements of a franchise agreement.
Rights and Obligations
These clauses in franchise agreements lay the groundwork for the relationship between franchisor and franchisee. They establish the necessary rights the franchisees will need to develop and operate the business effectively while outlining the support that will be given by the franchisor. It’s in the best interest of both parties to succeed, so it’s important that the rights and obligations are clear.
Marketing and IPRs
Regardless of the size of the business franchise, franchisors invest considerable time and money into building their brand, reputation, and operation. The franchisee owner will use the existing framework to further develop and grow the business, but it’s important to protect the franchisor’s hard work. Marketing and IPR provisions in franchise agreements facilitate a balance between old and new to ensure uniformity as the brand continues to grow.
Failures are an important reality of opening a business. Unfortunately, business relationships are not always successful, so it’s essential to outline how to terminate a franchise agreement and what happens next. Whether the relationship comes to an end due to poor training, inadequate financing, a weak business model, or any other factor, termination provisions are absolutely necessary.