A Franchise relationship can be termed as an arrangement in which a license is provided to conduct business under a specific brand’s name. This license is usually given to an independent business owner who has the potential of providing the owner the benefits of a big business network. Moreover, this arrangement also helps these business owners in the context of raising capital, enhancing the speed of growth, facilitating an increase in motivation of the management, and reduction in the risk. This contract is thereby, made between a franchisor and a franchisee. The terms and conditions of this agreement may vary according to the state’s jurisdiction, laws, and the franchise’s system of selecting the franchisor. Our team of professionals is well versed with all factual and legal scenarios that are primarily required to engage in drafting a sound Franchise Agreement.
1. Understanding requirement
The initial process revolves around the understanding of the requirements of both the Franchisor and of the Franchisee. Moreover, this stage also involves understanding the brand name pertaining to which the pooling of resources for the franchising is being done.
Pursuant to the detailed discussion with the parties, drafting of the contract by our professionals/lawyers is done. Accordingly, post this, the draft(s) is reviewed by the parties.
Once the parties give an approval, the agreement is thereby executed between the parties, which enables the franchisee to be granted.
- Franchisor and Franchisee details.
- Terms for the franchise fee and consideration.
- Details about business operations.
- Details about the use of trademark and Intellectual Property.
- Whether an assignment of the franchise is transferable or not.
1. What questions should I consider when evaluating a specific franchise?
A question that needs to be considered is whether the franchise owner is the true and the documented owner of the franchise or not. Moreover, it also needs to be ensured that the franchise does not infringe on any rights/ ownership etc. of another party, that the franchise is following all the applicable laws, and that policies that are specific to the business in general.
2. How long is generally a franchise agreement valid for?
From a legal standpoint, it is preferable that the term of these agreements is not extended beyond five years.