Is a deposit required by the franchisor refundable if I decide I do not want to proceed

It is not uncommon for a franchisor to request that, when someone shows an interest in becoming a franchisee, they should pay a deposit, often to ‘secure’ a particular territory. However, usually at the point that a deposit is paid there is no signed franchise agreement in place, as the potential franchisee is still considering whether to take on the franchise.  If a franchisor asks for a deposit while the potential franchisee is still investigating investing in the business, it is essential that the potential franchisee has written confirmation from the franchisor of all details relating to the deposit - before any money is handed over. This written confirmation should be signed by the franchisor and should confirm the amount of deposit received by the franchisor, together with details of the circumstances when the deposit will be repaid, for example, if the potential franchisee does not proceed to signing a franchise agreement.  The confirmation should also clearly set out what happens to the deposit if the franchisee signs the franchise agreement. For example, will the deposit be taken as part payment of any initial fee or amounts payable under the franchise agreement?