What is the franchise agreement?

The minute you begin looking into franchise opportunities, you will begin to hear the words ‘franchise agreement’ popping up quite regularly.

Before you sign it though, you need to ensure that you fully understand exactly what this document is. This document is a legal agreement that you enter into with the franchisor and it is designed to achieve three things.

Firstly, the franchise agreement will contractually bind the franchisor and franchisee and will document the agreed terms of the contract. The franchise agreement will also protect the franchisor’s intellectual property and it should also clearly state the rules that need to be followed by both the franchisor and the franchisee.

The reason that the franchise agreement is so important is because there is no legislation or regulation in existence relating to franchising. The franchise agreement sets out all the terms of the agreement between the franchisee and the franchisor and will be the document that both parties turn to, should there be any problems.

Within the franchise agreement, the franchisee should ensure that there is information related to the training process as well as the advertising and marketing of your franchise. The agreement should also detail the help and support that the franchisor will offer throughout the process.