What is a Franchise Agreement Drafting?
A franchise agreement is a legal document between a franchisor and franchisee, so that there are specific guidelines in place to govern their working relationship. It outlines exactly how the franchisee is allowed to use the franchisor’s business model and brand, in exchange for specific services or support.
If you need to draft a franchise agreement, you might wonder if you should write it yourself or get help from a qualified lawyer.
Read the rest of this article to explore key terms in a franchise agreement, how to draft it professionally, and how a lawyer can help you ensure it’s legally sound and balanced for both parties.
What are Key Terms in a Franchise Agreement?
A franchise agreement usually contains a range of essential terms. These include the following:
- Duration. How long the agreement will last determines for how long the franchisee can use the franchisor’s intellectual property (IP) or other brand elements.
- Payments. This specifies a payment structure for how the franchisee will pay the franchisor to use their IP.
- Duties. This outlines both parties’ responsibilities. For example, the franchisor might commit to providing support to the franchisee for a certain amount of time.
- Termination. If either party wants to end the contract, there should be provisions mentioned in the agreement for how this can be achieved.
- Fees. For clarity, the franchise agreement should specify all the fees the franchisee will have to pay the franchisor, such as regarding initial and marketing fees.
- Dispute resolution. If disputes arise, the franchise agreement should specify what dispute-resolution method should be used to resolve it, such as mediation or arbitration.
What are Tips for Drafting a Franchise Agreement?
When writing a franchise agreement, you should include some important information to protect both parties’ interests.
Specify Operational Guidelines
There should be clarity about how brand standards can be upheld by the franchisee. This should be specific so that the franchisee knows what’s expected of them.
Clarify Territory
You want to clarify in the agreement if the franchisee has exclusivity in the territory in which they’re based. The contract must clearly define where the franchisee can operate and if there are other franchisees that are allowed to work in the same location.
If the language in this section isn’t clear, it can result in issues. For example, a franchisee might be shocked to discover that other franchisees are working nearby, which can affect their sales and potentially lead to disputes.
Include Training Information
The franchise agreement should specify if the franchisor will provide training and where this will occur. The franchisor might also provide ongoing support to the franchisee, which should be detailed.
Refer to a Brand Manual
It’s common for the franchisor to provide a brand manual to the franchisee that guides their activities. Since it can be changed by the franchisor when required, the agreement should include information about how modifications can be made and how much notice the franchisee will get beforehand.
Specify Termination Details
There should be clarity about how the franchise agreement can be terminated by either party. This should include termination without the opportunity to cure, such as in the case of insolvency or filing for bankruptcy, to protect both parties’ interests.
Do You Need a Lawyer for a Franchise Agreement?
If you want to draft a franchise agreement, you should consider hiring a lawyer to draft it for you. Although a franchise agreement might seem simple and straightforward, its details need to be specified for clarity.
A qualified lawyer can help you when drafting a franchise agreement by:
- Customizing the agreement to your specific business model and brand.
- Ensuring that the agreement is compliant with all state and other laws. This includes addressing consumer protection laws and meeting all filing requirements.
- Drafting provisions that protect your brand, such as correct trademark and brand manual usage.
- Specifying fair and reasonable performance standards.
- Negotiating with the other party for more favorable terms.
- Selecting the best dispute-resolution method to reduce the cost of resolving disputes, such as arbitration or mediation.
- Explaining all legal and financial consequences so that you understand everything in the document.
- Updating the franchise agreement according to how your business grows over time.
By working with a lawyer, you’ll have peace of mind that your franchise agreement is transparent and legally sound.
Where to Find a Lawyer for Franchise Agreement Drafting
If you need to find and hire a lawyer to draft your franchise agreement, you don’t have to spend a lot of time to locate the most suitable one. You can make the process faster and easier by using an online legal platform.
ContractsCounsel is an online legal marketplace that gives you access to a network of vetted lawyers. From the comfort of your home, you can find the most suitable lawyer according to where they’re based, their experience, and other factors. All the research you need is conveniently provided on the platform, which further saves you time.
If you need to draft a franchise agreement, you don’t have to contact one of the lawyers on the platform directly. Simply follow these easy steps.
1. Go to the ContractsCounsel marketplace, where you can post your project for free. Include a few details of what you require so that you’ll be matched with the most suitable lawyer for your requirements.
2. Wait for lawyer bids. You’ll receive multiple bids from lawyers directly on the platform who can assist you.
3. Once you receive the lawyer bids, you should review the lawyers' profiles. There’s lots of info on the platform to help you choose the best lawyer, such as their location, client ratings, years of experience, and field of expertise.
4. Connect with a lawyer you think is best suited to your requirements and hire them to draft your franchise agreement.
