Franchise agreement

A franchise agreement is a contract that defines the relationship between a franchisor and a franchisee. The agreement typically includes the following topics:

  • The rights transferred between the parties

  • Territory limitations

  • The use of trademarks and other intellectual property by the franchisee

  • The services to be provided by the franchisor

  • Advertising obligations of the parties

  • Fee structure

  • The term of the agreement and how it can be renewed

  • The circumstances under which a franchise can be transferred to a third party

  • Non-compete agreement that prevents the franchisee from opening up a competing business

  • How disputes between the parties shall be settled

  • The types of insurance that the franchisee must obtain

The franchisee typically has to pay a fee to the franchisor to extend the original term of the agreement.

Related Courses

Franchise Accounting