"x x x.
Franchise Agreement Basics
Here's a general overview what most franchise agreements need to cover:
- Territory restrictions. The agreement must state if there are territory restrictionsfor the operator. Many agreements restrict how many of the same businesses can operate within a certain radius to protect the profits of the operator. Additionally, the contract should spell out if there are any state restrictions on where the business can operate.
- Fees. All fees for using the franchise name and products must be stated in the franchise agreement. Additionally, specify the percentage of the profits that must be submitted to the parent company, as well as any licensing fees, copyright fees or other fees associated with using the name of the franchise. You should also include payment due dates and financing options.
- Obligations. Be sure to spell out the purchaser's obligations in the agreement. These obligations may include insurance requirements, training fees for employees or marketing contributions. In addition, the document may also state that the business owner is required to purchase all supplies from the parent company exclusively.
- Additional considerations. You will also want to have a host of other issues covered, including non-disclosure of your trade secrets, non-compete clauses, termination and renewal provisions, assignability, and indemnification, just to name a few.
- x x x."
