How To Write A Franchise Agreement
A Franchise Agreement PDF example is the best way to write your own franchise agreement. The downloadable format will take you step by step through the intricate process of writing a franchise agreement in accordance with all FTC standards. There are a lot of these examples to choose from online but finding the one that is right for you will take knowing just what the document should entail.
The franchise agreement is a binding legal contract. It is made between a franchisor and a franchisee and is strictly enforced at the state level. Each state has its own laws governing franchise agreement contracts. The contents of a franchise agreement can vary from state to state and business to business. Whether you have a lawyer prepare your franchise agreement or build your own from a franchise agreement Pdf, below are a few of the things that must be present in any PDF that you are considering:
Franchisor's Obligations - the document must explain what assistance will be given by the franchise to the new franchisee. This includes operational assistance, advertising, site, marketing research, and programs.
The Franchisor, Affiliates and Predecessors -the document has to show the nature of the business and a complete history of the business. It must also disclose corporate history, and mergers or acquisitions if applicable.
Business Experience - the key personnel must be identified and all affiliates that will be an integral part of the new franchise. This disclosure must also include each individual's business experience for five years.
Bankruptcy - it must be noted if the company or its officials have filed for bankruptcy. This information must be for the previous 15 years. If so, what were the circumstances and disposition of the filing?
Initial franchise fees - an estimate of all fees to be incurred by the franchisee must be given. This is to include the initial asking price and how the money will be used. If the franchisee will be able to get a refund in the event the deal fails should also be in writing.
Litigation - any litigation whether civil or criminal must be in the disclosure agreement. This is needed for all officers, owner/operators, directors and other executives.
Other Fees - full disclosure funds the franchisee is expected to pay out, not limited to but including advertising, royalties, training, and insurance.
Initial Investment - there will be other costs aside from the initial franchise fee and this must be estimated and disclosed to give the franchisee an idea of the true cost of doing business. This includes estimates for furniture, supplies, equipment, real estate and starting capital.
Restrictions/Obligations - if the franchise has any designated sources for equipment, supplies and other services this must be included in the franchise agreement. For instance with McDonald's, Martin Brauer is the only Transport Company allowed to be used by its franchisees.
Franchisee's Obligations - specific details must be included if the franchisee has to lease or buy equipment. If you have a designated supplier for this you have to include their information as well.
Financing - what, if any, financing you as franchisor are extending to the franchisee.
Territory - describes how the territory will be divided. The franchisor must let the franchisee know if the area is to be exclusive, and if not what retention rights does each party hold to the territory.