Franchise agreement

A franchise agreement is a legal, binding contract between a franchisor and franchisee. In the United States franchise agreements are enforced at the State level.

Prior to a franchisee signing a contract, the US Federal Trade Commission regulates information disclosures under the authority of The Franchise Rule.[1] The Franchise Rule requires a franchisee be supplied a Franchise Disclosure Document (FDD) (originally called Uniform Franchise Offering Circular (UFOC)) prior to signing a franchise agreement, a minimum of fourteen days before signing a franchise agreement.[2]

Once the Federal ten-day waiting period has passed, the Franchise Agreement becomes a State level jurisdiction document. Each state has unique laws regarding franchise agreements.

A franchise agreement contents can vary significantly in content depending upon the franchise system, the state jurisdiction of the franchisor, franchisee, and arbitrator.

It overall provides the investor with a product, a branded name and recognition, and a support system.

A typical franchise agreement contains

* [Franchise Disclosure Document (FDD)
* Disclosures required by state laws
* Parties defined in the agreement
* Recitals, such as Ownership of System, and Objectives of Parties
* Definitions, such as

Agreement, Territory Area, Area Licensee, Authorized deductions, Gross Receipts, License Network, The System Manual, Trademarks, Start Date, Trade name, Termination, Transfer of license.

* Licensed Rights, such as

Territory, Rights Reserved, Term and Renewal, Minimum Performance Standard

* Franchisors Services, such as

Administration, Collections and Billing, Consultation, Marketing, Manual, Training and Vendor Negotiation

* Franchisee Payments, such as

Initial Franchise Fee, Training Fees, Marketing Fund, Royalties, Renewal fee, and Transfer fee

* Franchisee Obligations, such as

Use of Trademarks, Financial Information, Insurance, Financial and Legal responsibility

* Relationship of Parties, such as

Confidentiality, Indemnification, Non-Compete clauses

* Transfer of License, such as

Consent of franchisor, Termination of license, Termination by licensee

* Other provisions
* Governing law
* Amendments
* Waivers
* Arbitration
* Severability

## See also

* American Association of Franchisees and Dealers
* Franchise consulting
* Franchise Disclosure Document
* Franchise fraud
* Franchise termination
* Franchising
* List of franchises
* The Franchise Rule
* U.S. Securities and Exchange Commission

## References

Terms and conditions of franchise agreement

1. ↑ "Consumer Information". ftc.gov. http://www.ftc.gov/bcp/edu/pubs/business/franchise/bus70.pdf. Retrieved 25 January 2015.
2. ↑ "Buying a Franchise: A Consumer Guide". ftc.gov. http://business.ftc.gov/documents/inv05-buying-franchise-consumer-guide#2. Retrieved 25 January 2015.

## External links

* International Franchise Association
* American Association of Franchisees and Dealers
* Franchise Brokers Association
* FTC Franchise FAQ Page

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