WHAT ARE THE KEY SUBJECTS IN THE FRANCHISE AGREEMENT?
USE OF TRADEMARKS
One of the main benefits you receive when purchasing a franchise is the use of well-known trademarks. This section lists the trademarks, service marks or logos the franchisee is entitled to use. • Has the trademark been in operation for a significant amount of time and is it well known? • Are there any restrictions on its use by the franchisor or franchisee?
LOCATION OF THE FRANCHISE
This section describes the exclusive area or territory granted to the franchisee. • Do you have exclusive rights in a certain territory?
TERM OF THE FRANCHISE
In this section, the duration of the agreement is specified. • How long does the agreement last? • Can the franchisor purchase the franchise before the agreement expires? • Do you have the right to renew the agreement?
FRANCHISEE’S FEES AND OTHER PAYMENTS
In this section, all the mandatory fees are described: • initial fee and what the franchisee receives for that fee • royalty payment, what it is based on and when it is due
OBLIGATIONS AND DUTIES OF THE FRANCHISOR
This section describes the franchisee’s responsibilities: • requirements for training • requirements for participation in the business • requirements for keeping and submitting adequate records
RESTRICTION ON GOODS AND SERVICES OFFERED
This section describes any restrictions placed on the goods or services offered, including: • required quality standards • approved suppliers • approved advertising • hours of operation • pricing
RENEWAL, TERMINATION AND TRANSFER OF FRANCHISE AGREEMENT
This section includes: • the rights and obligations of a franchisee upon termination • descriptions about the transfer of the franchise agreement • descriptions about the renewal of the franchise agreement
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