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Franchise Agreement

Franchise Agreement

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This Franchise Agreement template is for a Franchisor (person or organisation creating 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 enables the franchisor to specify the geographical area of the franchise. The territory can be as small as part of a city or as large as a continent. The scope depends on the nature of the franchised product and service. Most franchisors wish to have as many franchisees 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, which help the franchisee make the most of the business opportunity.

This franchise template is essential for any Franchisor who wishes to set up a successful franchise network and 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 written franchise agreement template is vital so that any franchisee knows what is expected of them. This agreement includes a detailed section on franchisees' responsibilities and places restrictions on any former franchisees competing with the franchisor.


Key points in this agreement

Contract Term
The agreement should be for a sufficiently long period to offer the franchisee a good return on their investment. Likewise, the franchisor will want a profitable and robust franchise network over a longer period. Therefore, this agreement also provides for renewal before the expiry of any franchise period.

Fees & Payment Terms
This is the important part - revenue. Typically, franchisors charge franchisees several one-off and recurring fees - for example, a sign-up fee, a regular management fee, and marketing fees (to contribute to the cost of marketing).

However, for many franchisors, the most significant income is generated from product fees. If the franchise sells consumable products or materials, these have to be purchased solely from the franchisor. As a result, the franchisor only has to add a small markup to the products to generate significant regular and recurring revenue.

For an agreement to succeed, there must be stringent rules for running a franchise. Almost all franchisors will have a detailed operational manual specifying everything from physical premises to daily operations, some down to the smallest detail. This ensures that standards are uniformly maintained across the franchise network and that customers have the same experience and level of service. Our franchise agreement specifies in broad terms the responsibilities of both parties to the contract and refers to the operational manual that the franchisor should supply to the franchisee.

Customer Comments 

"I faced drafting a franchise agreement from scratch. No thanks. This saved me so much time, and probably a lot of money." - Ann Farrar


Business Legal Documents - CompactLaw Business Pack contains this franchise agreement and more related business documents.

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