A franchise agreement is a legal, binding

contract A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more parties. A contract typically involves consent to transfer of goods, services, money, or promise to transfer any of thos ...

between a franchisor and franchisee. In the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

franchise agreements are enforced at the State level. Prior to a franchisee signing a contract, the US

Federal Trade Commission The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) United States antitrust law, antitrust law and the promotion of consumer protection. It ...

regulates information disclosures under the authority of The Franchise Rule. 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. 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 A license (American English) or licence (Commonwealth English) is an official permission or permit to do, use, or own something (as well as the document of that permission or permit). A license is granted by a party (licensor) to another part ...

. * 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 In contract law, an indemnity is a contractual obligation of one party (the ''indemnitor'') to compensate the loss incurred by another party (the ''indemnitee'') due to the relevant acts of the indemnitor or any other party. The duty to indemni ...

, 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

References

Terms and conditions of franchise agreement

External links

{{Wiktionary, franchise
International Franchise AssociationAmerican Association of Franchisees and DealersFranchise Brokers AssociationFTC Franchise FAQ Page
Contract law

See also

References

External links