Basic Franchise Agreements
A basic franchise agreement includes information and issues suitable for all types of franchises and is provided by the franchisor to the franchisee.
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Description
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A franchise is a "method of distributing goods and services by licensing a business idea or concept to another," according to AmeriLawyer. A franchisor owns these rights, while a franchisee purchases the rights to use ideas, names and logos. A basic franchise agreement complies with all federal and state regulations regarding legal agreements.
Purpose
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A basic franchise agreement states the rights and obligations of the franchisee. It defines the responsibilities and standards expected of the franchisee and the obligations of the franchisor such as franchise fee amounts, payment terms and proprietary marks that will be licensed. It describes the training that the franchisor will provide.
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Details
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A franchise agreement protects the franchisor from defaults of the franchisee, including the consequences if the franchisee does not maintain the quality associated with the franchise name. For restaurants especially, the franchisor is protected against the franchisee changing methods of cooking and serving the food. The agreement grants rights to the franchisee, allowing him to use an established name and logo. This allows a franchisee the benefit of opening a business with an established reputation. The franchisee is required to maintain this reputation.
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