What Is In The Franchise Agreement?

One of the most important factors that a franchisee should keep in mind before signing a franchise deal is to read the franchise agreement carefully. A franchise agreement should basically include three fundamental elements: - terms, safeguards for intellectual property and rules.

The Terms As there is no specific legislation or regulation for franchising in UK, the franchise agreement plays a key role in determining the rights and duties of the franchisor and the franchisee, thus determining the relationship between them. In this case the franchise agreement is the bible wherein if any difficulty arises between the two parties, they can turn to the contract to see what rights and obligations (terms) have been included in the franchise agreement and act accordingly.

The Intellectual Property Intellectual property can be in any form; it can be trade name, goodwill, trademarks, confidential information or copyright.  The franchise agreement should clearly state sufficient safeguards to protect the franchisors intellectual property rights.

The Rules The franchise agreement should be in a standard form treating all franchisees in the same manner, meaning, giving all of them the same security. There should be no room for favouritism. However, if a franchise agreement is to be non-negotiable then it is vital, from the franchisees point of view, that it is well balanced in terms of rights and duties of the parties and takes into consideration the franchisees concerns as well.

Both parties have to be very careful before signing the franchise contract, because once it is signed, both parties will be bound by it.