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What pre-contractual documentation might I be asked to sign?
Often franchisors will provide confidential information to franchisees, and they want to be able to protect this information and prevent its disclosure, so they ask franchisees to enter into confidentiality agreements. This is perfectly normal and accepted practice. The confidentiality agreement should be a short, simple document that confirms your agreement not to disclose or use any of the information you have been given concerning the operating methods or practices of the franchisor. It is essentially a safeguard for the franchisor against a third party replicating the business without consent. You should be careful if there are other terms in the agreement not relating to confidentiality. You may also be asked to enter into some form of preliminary agreement where the franchisor agrees to find suitable premises for you. The franchisor will usually start to look for premises once a deposit is paid. If the franchisor cannot find suitable premises within this period, then the franchisee’s deposit should be returned, although the franchisor may want to offset any expenses it has incurred. You need to clarify the position regarding the return of deposits taken from you if you do not proceed.
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