Reasons to buy
When setting up a franchise, a written franchise agreement template is vital so that any franchisee knows what is expected of them. This agreement includes a detailed section on franchisees' responsibilities and places restrictions on any former franchisees competing with the franchisor.
Key points in this agreement
Contract Term
The agreement should be for a sufficiently long period to offer the franchisee a good return on their investment. Likewise, the franchisor will want a profitable and robust franchise network over a longer period. Therefore, this agreement also provides for renewal before the expiry of any franchise period.
Fees & Payment Terms
This is the important part - revenue. Typically, franchisors charge franchisees several one-off and recurring fees - for example, a sign-up fee, a regular management fee, and marketing fees (to contribute to the cost of marketing).
However, for many franchisors, the most significant income is generated from product fees. If the franchise sells consumable products or materials, these have to be purchased solely from the franchisor. As a result, the franchisor only has to add a small markup to the products to generate significant regular and recurring revenue.
Responsibilities
For an agreement to succeed, there must be stringent rules for running a franchise. Almost all franchisors will have a detailed operational manual specifying everything from physical premises to daily operations, some down to the smallest detail. This ensures that standards are uniformly maintained across the franchise network and that customers have the same experience and level of service. Our franchise agreement specifies in broad terms the responsibilities of both parties to the contract and refers to the operational manual that the franchisor should supply to the franchisee.
Customer Comments
"I faced drafting a franchise agreement from scratch. No thanks. This saved me so much time, and probably a lot of money." - Ann Farrar
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