UBC Law Review

Franchise Law Review

Franchise Agreement Example Form – What to Look for in a Franchise Agreement

 

A franchise agreement is similar to any other business or corporate deal. A franchise agreement form involves two main stakeholders: the franchisee, and the franchisor. The franchisor represents a professional and well-established company, and he is responsible for selling an operating license to a reliable franchisee. The franchisee and franchisor deal with each other on the basis of certain business rules, which can be found in a franchise agreement template  for the franchise agreement form. It is signed by both parties before the trading activities are initiated.

A franchise agreement form focuses on the following parameters:

  • Most franchising companies have a very large product line. These companies sell the operating licenses of one product to each franchisee. Therefore, he can focus on his franchised product instead of promoting the entire product line.
  • The franchisee should not agree to all the terms and conditions mentioned by the franchisor. He should ensure that he is extracting a sufficient amount from the franchising activities. The legal documents should include the conditions that are favorable for both the franchisee and the franchisor. In addition to that, the franchisee should be aware of each and every point mentioned on the franchise agreement form.
  • Both the franchisor and franchisee have different priorities. Therefore, both parties try to state conditions that favor them. If you are a franchisee, you should ensure that the terms and conditions are favorable for you. Similarly, the franchisor would try to extract the maximum profit from every license.
  • A proper franchise agreement form contains all the details about the monetary terms. An example can be the profit percentage that would be awarded to the franchisee. Another example can be the minimum sales volume required.

These agreements cannot be written without proper professional experience. These documents are related to legal matters. Hence, even the smallest mistake can create huge problems. The best way to avoid this situation is to use a well-developed template. These pre-defined layouts highlight all the points related to both the franchisor and the franchisee.

A biased franchise document never results in a successful business. Therefore, the conditions should not be advantageous for one side and disadvantageous for the other. Each and every condition mentioned in the franchise document should be neutral. In the early stages, the franchisee has to think very intelligently. He has to get an upper hand on his competitors and penetrate the market as well.

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