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What is the significance of the franchise agreement?
It’s hugely significant for any number of reasons. The first is that if you are thinking of taking a franchise you will need to analyse the franchise agreement. If it contains lots of mistakes, it will tell you a great deal about your prospective franchisor. The franchise agreement will set out your rights and obligations. It is often said that once the agreement is entered into it is put in a draw and forgotten about. That may well be right when things are going well, but you can bet your bottom dollar that when things go badly, the franchisor will ask its lawyers to have a close look at the terms of the agreement. So you need to be aware of what you are allowed to do and what you must not. Equally, you should be aware of what obligations the franchisor has accepted. Although the importance of the franchise agreement cannot be underplayed, if the franchisor or franchisee views the relationship simply as a matter of contract, then things have gone wrong. Neither party should be in any rush to quote clause references to the other, because the relationship is also a personal and commercial one.
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