What Should be in Your Franchise Agreement

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By: Bill Henry
PublishedJul 21, 2021
2 minute read

Operating a franchise business can be an exciting and lucrative opportunity. If you’re considering opening a franchise, Litigation & Business Law Attorney wants you to understand what’s in your franchise agreement before you sign it.

Get Help Understanding Your Franchise Agreement

Call 303-688-0944 to schedule a 30-minute case assessment.

Buying a Franchise Means Signing a Contract

People often ask attorneys what they should look for in a franchise agreement before they sign it.

Franchise Agreement Defines Your Relationship with the Franchisor

A franchise agreement is a document or contract that outlines the relationship between the franchisor and a franchisee.

A franchise agreement allows a franchisee to operate a business under the name of the franchisor. The franchise agreement will list everything that should be expected by the franchisee.

What to Look for in a Franchise Agreement

When it comes to the franchise agreement, there are a number of things that you should understand before signing it.

1.The Schedule.

When does the franchisor want you to have the business open? Is there a deadline to purchase a building or sign a lease?

2. The Fees.

Are you required to pay any fees upfront to open the franchise? Or, will you owe a royalty of your sales to the franchisor?

3. Your Territory.

The territory defines the region or area of the franchise. This is important because if you want to open more than one location, you could be limited to only this region that the franchisor has defined for you.

Additionally, knowing what territory you’ve been assigned can help you determine whether the franchise would actually do well in the area.

4. Training and Support

How much training and support can you expect from the franchisor? This can include training before you open, as well as ongoing training and support available to you throughout the duration of your franchise.

5. Terms of the Loan

The franchise agreement often spells out the terms of the lien or loan. Many times the term could be five years, but it could also be longer. It’s important to know how long you will be expected to abide by and follow this agreement.

There may also be details as to how you can end the agreement, or renew it and start a new franchise agreement once the terms are up.

6. Other Requirements

Are you expected to use a certain supplier? Sometimes franchise agreements require franchisees to use certain suppliers even if you can find products they need at a lower cost somewhere else.

Your agreement may also dictate how you find a new vendor to get different types of supplies.

Call Us Before You Sign a Franchise Agreement

If you’re thinking about signing a franchise agreement, call 303-688-0944 and ask to set up an assessment with one of our business law attorneys.

It’s important to analyze the details of your agreement and get clarity about any questions you may have. A quick, case assessment could very well save you time and money in the long run.

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