{"id":11360,"date":"2022-09-02T08:41:47","date_gmt":"2022-09-02T08:41:47","guid":{"rendered":"https:\/\/lexforti.com\/legal-news\/?p=11360"},"modified":"2022-09-02T08:41:50","modified_gmt":"2022-09-02T08:41:50","slug":"10-things-to-know-before-considering-a-franchising-agreement","status":"publish","type":"post","link":"https:\/\/lexforti.com\/legal-news\/10-things-to-know-before-considering-a-franchising-agreement\/","title":{"rendered":"10 things to know before considering a Franchising Agreement"},"content":{"rendered":"\n<p>Disclaimer: Never rely on an online template. Get an expert to get yourself a Franchise agreement drafted!<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_47_1 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"ez-toc-toggle-icon-1\"><label for=\"item-6a2245cb30d08\" aria-label=\"Table of Content\"><span style=\"display: flex;align-items: center;width: 35px;height: 30px;justify-content: center;direction:ltr;\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/label><input  type=\"checkbox\" id=\"item-6a2245cb30d08\"><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/lexforti.com\/legal-news\/10-things-to-know-before-considering-a-franchising-agreement\/#Introduction\" title=\"Introduction\">Introduction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/lexforti.com\/legal-news\/10-things-to-know-before-considering-a-franchising-agreement\/#10_THINGS_THAT_YOU_MUST_CONSIDER_WHILE_DRAFTING_A_FRANCHISE_AGREEMENT\" title=\"10 THINGS THAT YOU MUST CONSIDER WHILE DRAFTING A FRANCHISE AGREEMENT\">10 THINGS THAT YOU MUST CONSIDER WHILE DRAFTING A FRANCHISE AGREEMENT<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/lexforti.com\/legal-news\/10-things-to-know-before-considering-a-franchising-agreement\/#Disclosure\" title=\"Disclosure\">Disclosure<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/lexforti.com\/legal-news\/10-things-to-know-before-considering-a-franchising-agreement\/#The_Obligations_of_a_Franchisee\" title=\"The Obligations of a Franchisee\">The Obligations of a Franchisee<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/lexforti.com\/legal-news\/10-things-to-know-before-considering-a-franchising-agreement\/#The_Obligations_of_the_Franchisor\" title=\"The Obligations of the Franchisor\">The Obligations of the Franchisor<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/lexforti.com\/legal-news\/10-things-to-know-before-considering-a-franchising-agreement\/#Intellectual_Property_and_Trademark_Rights\" title=\"Intellectual Property and Trademark Rights\">Intellectual Property and Trademark Rights<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/lexforti.com\/legal-news\/10-things-to-know-before-considering-a-franchising-agreement\/#Territories_and_Boundaries_of_the_Franchise\" title=\"Territories and Boundaries of the Franchise\">Territories and Boundaries of the Franchise<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/lexforti.com\/legal-news\/10-things-to-know-before-considering-a-franchising-agreement\/#The_Fees_and_Cost_of_the_Franchise\" title=\"The Fees and Cost of the Franchise\">The Fees and Cost of the Franchise<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/lexforti.com\/legal-news\/10-things-to-know-before-considering-a-franchising-agreement\/#Franchise_Renewal\" title=\"Franchise Renewal\">Franchise Renewal<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/lexforti.com\/legal-news\/10-things-to-know-before-considering-a-franchising-agreement\/#Termination_Policy\" title=\"Termination Policy\">Termination Policy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/lexforti.com\/legal-news\/10-things-to-know-before-considering-a-franchising-agreement\/#Term_of_the_Franchise\" title=\"Term of the Franchise\">Term of the Franchise<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/lexforti.com\/legal-news\/10-things-to-know-before-considering-a-franchising-agreement\/#Indemnification_and_Insurance\" title=\"Indemnification and Insurance\">Indemnification and Insurance<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Introduction\"><\/span>Introduction<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-text-align-justify\">A Franchise is a set-up or arrangement where one organisation or a company follows the business idea, and business model of the parent company whilst also using the brand name of such parent company. In simpler terms, a franchise is essentially a business operating under an existing name. <\/p>\n\n\n\n<p class=\"has-text-align-justify\">In the franchise, there are two parties namely, the Franchisor (also called the \u2018parent company) and the Franchisee (the individual owning a particular outlet of the franchise)While talking about a franchise, some of the popular names that may come to your mind are, McDonald&#8217;s, Dominos, Archies, Puma, Zara and many more. India is&nbsp;a&nbsp;&#8216; Hot&#8217; market for franchising. <\/p>\n\n\n<figure class=\"wp-block-embed-youtube wp-block-embed is-type-video is-provider-youtube\"><div class=\"lyte-wrapper fourthree\" title=\"How to draft a FRANCHISE AGREEMENT? | Contract Drafting [FRANCHISING AGREEMENT] | Rohit Pradhan\" style=\"width:420px;max-width:100%;margin:5px;\"><div class=\"lyMe\" id=\"WYL_mCl7FJzZrjY\" itemprop=\"video\" itemscope itemtype=\"https:\/\/schema.org\/VideoObject\"><div><meta itemprop=\"thumbnailUrl\" content=\"https:\/\/i.ytimg.com\/vi\/mCl7FJzZrjY\/hqdefault.jpg\" \/><meta itemprop=\"embedURL\" content=\"https:\/\/www.youtube.com\/embed\/mCl7FJzZrjY\" \/><meta itemprop=\"duration\" content=\"PT12M4S\" \/><meta itemprop=\"uploadDate\" content=\"2021-09-29T00:04:43Z\" \/><\/div><div id=\"lyte_mCl7FJzZrjY\" data-src=\"https:\/\/i.ytimg.com\/vi\/mCl7FJzZrjY\/hqdefault.jpg\" class=\"pL\"><div class=\"tC\"><div class=\"tT\" itemprop=\"name\">How to draft a FRANCHISE AGREEMENT? | Contract Drafting [FRANCHISING AGREEMENT] | Rohit Pradhan<\/div><\/div><div class=\"play\"><\/div><div class=\"ctrl\"><div class=\"Lctrl\"><\/div><div class=\"Rctrl\"><\/div><\/div><\/div><noscript><a href=\"https:\/\/youtu.be\/mCl7FJzZrjY\" rel=\"nofollow\"><img src=\"https:\/\/i.ytimg.com\/vi\/mCl7FJzZrjY\/0.jpg\" alt=\"How to draft a FRANCHISE AGREEMENT? | Contract Drafting [FRANCHISING AGREEMENT] | Rohit Pradhan\" width=\"420\" height=\"295\" \/><\/a><\/noscript><meta itemprop=\"description\" content=\"Me: Want to get yourself one drafted or reviewed? You: Why would I need to get it done, when I can have a template? Me: Template helps just for the purpose of reference. A contract could be 30-100 pages long, depending upon the requirement and your business structure. Always get it drafted or reviewed by an expert! You: How to contact you? Contact: Email: rohit@lexforti.com WhatsApp: +91-8757182705 Instagram: https:\/\/www.instagram.com\/lexforti\/ Lets learn How draft a Franchise Agreement | Franchising Agreement! If you want to learn the aspect of contract drafting. Then this is the right place. There are 100s of types of contract\/agreement and that is why it is impossible to have one video on &quot;How to draft an agreement \/ contract?&quot;. Each type of Contract will warrant a different approach. If this video gets the proper engagement; I will post more drafting videos. --------------------------------------------------------------------------------------------------------------- HOW TO TAKE PART IN THIS FREE GIVEAWAY? 1. Like and Subscribe this video! 2. Comment here, what did you learn? 3. Screenshot both and send it at my instagram handle; @lexforti. Upon completion of above three steps, I will share you this 12 pages long detailed &quot;Franchise Agreement&quot; with you asap!\"><\/div><\/div><div class=\"lL\" style=\"max-width:100%;width:420px;margin:5px;\"> <a href=\"https:\/\/youtu.be\/mCl7FJzZrjY\" target=\"_blank\">Watch this video on YouTube<\/a>.<\/div><figcaption><\/figcaption><\/figure>\n\n\n<p class=\"has-text-align-justify\">Take a stroll through any Indian metropolis, and the thriving markets will welcome you with the best top brands. A franchise operates the same through its expansions, for example, the quality of a \u2018Puma\u2019 shoe you purchase in India will be the same had you purchased it in some other country.<\/p>\n\n\n\n<p class=\"has-text-align-justify\">Further, to float the boat of a business franchise, there must be a <a href=\"https:\/\/lexforti.com\/legal-news\/what-are-franchising-agreements\/\" target=\"_blank\" rel=\"noreferrer noopener\">Franchise Agreement<\/a>. A franchise agreement is a legally-binding document that sets out the rights and duties of both the parties involved, that is, the Franchisor and the Franchisee. A franchise agreement is a legal document that grants the franchisee a licence from the franchisor. A licence simply means that one party grants another party authorization to do or use something valuable.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"10_THINGS_THAT_YOU_MUST_CONSIDER_WHILE_DRAFTING_A_FRANCHISE_AGREEMENT\"><\/span><u>10 THINGS THAT YOU MUST CONSIDER WHILE DRAFTING A FRANCHISE AGREEMENT<\/u><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Disclosure\"><\/span><strong><em><u>Disclosure<\/u><\/em><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Both the franchise agreement and the disclosure documents capture significant information that will help a potential franchisee make an informed decision. The disclosure document, in particular, will highlight important confidential and valid data about the franchisor, the arrangement being offered, and the prerequisites&nbsp;for&nbsp;both parties involved. While the disclosure document discusses the franchisor-franchisee relationship, the franchisee agreement is the legally binding arrangement that regulates&nbsp;that relationship.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Obligations_of_a_Franchisee\"><\/span><strong><em><u>The Obligations of a Franchisee<\/u><\/em><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This clause is one of the key highlights of a franchising agreement. Since the Franchisor is already established in the market there is a lot at stake for the franchisor while granting a licence to the franchisee. The obligations of a franchisee help to safeguard the interests of the franchisor in the agreement as a failure to carry out the franchisee\u2019s obligation may inevitably harm the brand name of the franchisor. This clause contains details about the commencement date, location details, business promotion, and product details while maintaining the quality of the product, the sale price of the product and so on.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Obligations_of_the_Franchisor\"><\/span><strong><em><u>The Obligations of the Franchisor<\/u><\/em><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The obligations of the Franchisor are always slightly higher than that of the franchisee owing to the fact that it is the franchisor who is lending the business model and name to the franchisee. This clause contains a permit which allows the franchisee to carry out the business under the name of the franchisor. Further, it also specifies the layout of the store, for example, the layout of the Zara store in India would be the same as in Australia. In addition to this, the franchisor must also supply a workforce to the franchisee whilst training them to work in the franchise.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Intellectual_Property_and_Trademark_Rights\"><\/span><strong><em><u>Intellectual Property and Trademark Rights<\/u><\/em><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The franchisee is granted the right to use the franchisor&#8217;s name, trademarks, service marks, logos, slogans, design concepts, and other branding indicators under the terms of the franchise agreement. Other intellectual property, such as the user guide and proprietary software systems, will also be granted by the franchisor.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Territories_and_Boundaries_of_the_Franchise\"><\/span><strong><em><u>Territories and Boundaries of the Franchise<\/u><\/em><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This particular clause in the agreement is present to define the boundaries of the franchise. It lays down certain limits within which the franchise cannot be located. This clause ensures that there isn\u2019t competition which would otherwise negatively impact the sales of the product.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Fees_and_Cost_of_the_Franchise\"><\/span><strong><em><u>The Fees and Cost of the Franchise<\/u><\/em><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Aside from the initial price, this section of the contract includes the cost of owning a franchise, such as monthly remuneration, marketing, and other expenses. Many franchise contracts also specify how much money franchisees must have on hand prior to actually purchasing the unit so that franchisors can be confident that their franchisees will be able to manage everything from salaries to equipment maintenance and property preservation.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Franchise_Renewal\"><\/span><strong><em><u>Franchise Renewal<\/u><\/em><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A franchise agreement must contain a renewal clause which would enable the Franchisor and the Franchisee to renew their contract to continue the franchise.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Termination_Policy\"><\/span><strong><em><u>Termination Policy<\/u><\/em><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Specifics about how a franchise can be terminated are included. If a dispute arises between the franchisor and the franchisee, there may be an Arbitration clause that prevents either party from going to court unless an arbitrator first evaluates the case and makes a suggestion.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Term_of_the_Franchise\"><\/span><strong><em><u>Term of the Franchise<\/u><\/em><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A franchise agreement is typically for ten or twenty years. This section of the contract will also specify the terms under which the franchise can be sold to someone else, which may be rigorous in order to ensure that any future franchisee is qualified to be an owner. There may be a right of first refusal clause that allows the franchisor to repurchase the franchise rather than selling it to someone else.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Indemnification_and_Insurance\"><\/span><strong><em><u>Indemnification and Insurance<\/u><\/em><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The franchise agreement will involve the franchisee keeping certain insurance coverage for the duration of the franchise. Expect indemnification provisions as well. For example, the franchisee is essential to &#8220;indemnify, defend, and hold harmless&#8221; the franchisor from any claims, costs, damages, or expenses arising from the franchisee&#8217;s activities. This is significant as the franchisee carries out the business under an already established business.<\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Disclaimer: Never rely on an online template. Get an expert to get yourself a Franchise agreement drafted! Introduction A Franchise is a set-up or arrangement where one organisation or a company follows the business idea, and business model of the parent company whilst also using the brand name of such parent company. In simpler terms, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":11361,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[111],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.8.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>10 things to know before considering a Franchising Agreement<\/title>\n<meta name=\"description\" content=\"10 THINGS THAT YOU MUST CONSIDER WHILE DRAFTING A FRANCHISE AGREEMENT. Disclosure. 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