Review Of Franchise Agreement

Before entering any business,  a contract is signed. This is not different in the franchisor-franchisee relationship.

If you buy a franchise business, the best thing would be to conduct a franchise contact review.

You need to be aware of inconsistencies, incorrect details or clauses, and all the laws applicable to you.

Reviewing Your Franchise Agreement

You need to review your document before taking any steps to sign. The agreement contains a lot of information that you may sometimes not understand. This may include franchise fees, support fees, territory rights, or any other payment related to the investment.

One significant factor to consider before reviewing your agreement is to hire a franchise attorney.   Having a lawyer will help enforce your rights. You will also be able to understand initial fees.

There are many reasons why you need to review your agreement. You need to understand:

• The size of the franchise system and the franchise culture.
• Initial fees and renewal of the relationship.
• Territory rights:This will help you know the geographical region you are allowed to operate in. It’s not uncommon for franchisees to dwell on the territory size. Most believe that the larger the geographical region, the greater the growth opportunities. But, this doesn’t erase the fact that small territories also have chances of growth; it is all about the location.
• Operational rights and obligations as a franchisee, such as training and support, and understand what the franchisor expects.  Typically, reviewing the franchise agreement gives you a clear view of how the business is operated.
• Non-competition agreements:These are known to be enforceable if the agreement is reasonable. There are instances where the franchisor has a legitimate reason to prevent competition.

While non-competition clauses are enforceable, there are exceptions. Some exceptions include unreasonable competitive restrictions and prohibitions included in state law. Your lawyer can guide you to detect any ambiguities of such agreements. Of course, you can also negotiate such an agreement to protect your rights.

• Dispute resolution: As with all other businesses, you will deal with disputes such as the use of development rights or fees paid. You need to understand available dispute resolution methods and whether they may bring satisfactory solutions.
• Transfers:You want to be sure your business is transferable. You should be keen on your rights and or restrictions applied.
• Use of trademarks, intellectual property, or advertising
• Turn over if any of existing franchisees
• Termination:Many instances may lead to a franchise termination, including; when there is a breach and when a franchisee abandons the business. An example of a breach included non -payment franchisee bankruptcy, etc.

It’s worth noting that every provision included in the agreement will have some meaning and purpose.

You Need Legal Advice

The best way to review your contract is to have an experienced attorney review your agreement. Such a lawyer will guide you in navigating the process.

You need to identify errors or any irrelevant obligations in the franchise agreement.