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Franchise Agreement

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This Franchise Agreement template is for a Franchisor (person or organisation setting up the franchise) who wishes to appoint a Franchisee for a stated area or territory.
 
The agreement allows for the franchise to be exclusive or non-exclusive, and allows the franchisor to specify the geographical area of the franchise. The area or territory of the franchise could be as small as part of a city, to as large as a continent. The scope depends upon the nature of the franchised product and service.

Obviously most franchisors wish to have as many franchises as possible in a given territory to ensure maximum coverage and revenue.

The benefit for those taking a franchise is an existing business model, support network and brand, all of which help the franchisee to make the most of the business opportunity. 

This franchise template is essential for any Franchisor who wishes to setup a successful franchise network and needs to ensure that all franchisees follow the same rules and procedures.

The agreement also contains the following clauses:
 
  • Definitions
  • Appointment
  • Location
  • Contract Term
  • Fees & Payment Terms
  • Franchisor's Responsibilities
  • Franchisee's Responsibilities
  • Franchisee's Reporting Responsibilities
  • Intellectual Property
  • Confidentiality
  • Anti-Bribery Compliance
  • Limitation of Liability
  • Termination
  • Restrictive Covenants
  • Notices
  • Force Majeure
  • Assignment
  • General
  • Jurisdiction
  • Schedule 1 - Territory
  • Schedule 2 - Trademarks
Reasons to buy:
 
When setting up a franchise a proper written franchise agreement template is vital so that any franchisee knows exactly what is expected of them. This agreement includes a detailed section on franchisees' responsibilities and places restrictions on any former franchisees setting up in competition to the franchisor.
 
Key points in this agreement include:
 
Contract Term
The agreement should be for a sufficiently long period to offer the franchisee a potentially good return on their investment. Likewise the franchisor will want to have the stability of a strong and profitable franchise network over the longer period. This agreement also provides for renewal prior to the expiry of any franchise period.
 
Fees & Payment Terms
This is the important part - making money. Typically franchisors charge franchisees a number of one-off and recurring fees. For example, a signing-up fee, a regular management fee and marketing fees (to contribute to the cost of marketing).
 
However, for many franchisors the largest income is generated from product fees. If the franchise sells consumable products, such as coffee or food these raw materials have to be purchased solely from the franchisor. In the instance of coffee shops the large franchisors supply everything, disposable cups, napkins, even the milk used - all has to be purchased through the franchise.
 
This is where the large amounts of revenue are made. A large fast-food company only has to add a small markup to the products supplied by them to the franchisee to generate significant daily revenue. 
 
Responsibilities
For an agreement to work there must be very strict rules for running a franchise. Nearly all franchisors will have a detailed manual or manuals specifying everything from physical premises to daily operations; some down to the smallest detail.
 
This is to ensure that standards are uniformly maintained across the franchise network, and to give customers the same experience and level of service no matter which premises they enter.
 
Our franchise agreement specifies in broad terms the responsbilities of both parties to the agreement, and refers to the franchise manual that should be supplied by the franchisor to the franchisee.
 
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