Franchise Business: The Relevant Clauses Of A Franchise Agreement

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Franchise agreement clauses vary from one business to another. There are not many standard regions which these agreement addresses. These are,

Term And Renewal

The term and renewal clause contains the time length for the underlying term of a franchise agreement. Under this part, a franchisee is obliged to work the franchised unit for the predefined period in the agreement. The renewal clause gives a chance to the Franchisee to proceed with the Franchise and tell inside a specified time.

Fees And Royalty Clause

This clause specifies the non-refundable franchise fees, which the Franchisee needs to, make to the Franchisor, and the one-time fees assuming any. Royalty clause is the non-refundable part of the instalment (typically in rate) that the Franchisee must make to the Franchisor. An illustration of this is royalty can be 8% of the gross deal to be paid week by week. The time of royalty can be week after week or month to month, contingent upon the idea of the agreement.

Proprietary Marks

The Franchisee is allowed to utilize Franchisor‘s Proprietary Marks just regarding the activity of the franchised unit in the Franchise Agreement at the area where such Franchise is settled. A Nike display area owner cannot utilize Nike’s Proprietary imprint at some other spot except the store.


Before you open your Franchise, a determined number of critical holders of your Franchise are needed to join in and complete the franchise-preparing program. Key holders of the Franchise may incorporate the Franchisee, an Above Store Leader, General Manager or Assistant Manager. The time length of the preparation alongside where preparing will be led is indicated in this clause. There may be a specified charge for the preparation, and the Franchisee is liable for all expenses caused, including travel and housing of the supervisory crew.

Default And Termination

The clause contains conditions, which will consequently terminate the franchise agreement. Not many instances of such conditions are,

If Franchisee records an appeal for insolvency or such a request is documented against Franchisee and not went against by Franchisee,

Franchisee is settled bankrupt or wiped out,

If procedures for a structure with leasers under the relevant law of any ward ought to be initiated by Franchisee or against Franchisee and not went against by Franchisee.

Dispute Goal

The dispute goal clause specifies which court to show up for a situation of contention between the Franchisor and the Franchisee. These days, a Franchise Agreement contains a mediation clause determining the seat of assertion and the organization to show up if there should arise an occurrence of disputes.

Post-Term Obligation

Upon the lapse or termination of the Franchise Agreement, the Franchisee owes obligations toward the Franchise. Instances of such obligations are,

Discontinuation of Trademark use. Upon the termination of the agreement, a franchisee is suspended from utilizing the trademark of the Franchise.

Purchase Option. The Franchisor maintains all authority to buy or assign an outsider that will buy all or any bit of the resources of the franchised unit, including, without limitation, the land, building, hardware, apparatuses, signage, goods, supplies, leasehold improvement.

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