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What should I expect to be outlined in the franchise contract?
Firstly, the agreement should set out the term of the franchise, which tells you how long you have been given to operate the business. There should be a grant clause that will set out the rights that you have been granted by the franchisor. In particular, it should state if you are granted an exclusive or a non-exclusive territory. The franchise agreement should give you the right to sell your business, subject to certain conditions, which should be set out in the agreement. A clause should set out your financial obligations. These are usually divided into upfront fees and ongoing fees, such as management services fees and advertising contributions. You may be required to purchase goods or services from the franchisor; in which case, the franchisor’s terms of sale or supply should be set out. The agreement will also set out the franchisor’s obligations to you. There will also be a clause setting out your obligations as a franchisee. The agreement will also set out the rights of the franchisor to terminate the franchise agreement. Finally, the agreement should set out the provisions that will apply on termination.
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