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Franchise Agreement Document


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How important is a franchise agreement document?

In 2021, the fact that everything around is working on a franchise surprises no one. Brands open new points by selling rights to third-party entrepreneurs, and novice businessmen buy franchises, wanting to start their own business with minimal risks according to a scheme that has already been tested up and down.

What is a franchise agreement for?

Many people consider franchising as a set of business processes. And that’s all. Forgetting that the relationship between the franchisor and the franchisee also operates in the legal field. Moreover, situations when this legal field becomes more relevant than the entrepreneurial one are very frequent.

We are talking about the emerging disagreements between the participants in the franchise relationship. And the franchise agreement in this case acts as the main “field” where events first develop. Because it is well designed, it will allow you to avoid wasting time, resources and effort.

The franchise agreement is intended to legalize the relationship, but it also regulates everything that happens in the future between the franchisee and the franchisor. And if one of the parties does not cope (intentionally or not) with their responsibilities, then the contract regulates this moment.

Moreover, since both parties have rights and obligations, the contract is important both for the seller of the franchise and for its buyer. For several reasons:

  • A dissatisfied franchisee can apply to the court for the return of all funds paid by him as remuneration to the franchisor. An agreement that has clearly defined rights, obligations, as well as rules for resolving disputes can help to ensure that the case is resolved quickly and without unnecessary bloodshed.
  • Often, a new franchisee expects that immediately after paying the lump-sum contribution, he will receive a ready-made, successful, operating business with maximum profit. It is clear that there is a task to explain the principles of building a business for a specific franchise even at the stage of negotiations. However, the prescribed agreement is capable of at least protecting against those who still do not understand this.