[mage lang=”en|sp|en” source=”flickr”]franchise contract template[/mage]
How To Start a Franchise Business – Franchising Contracts – Franchising Code of Conduct
Going into business is often an intimidating challenge. Some people feel more at ease by using an existing business opportunity to plan their own future. This means one choice: a franchise. Whether you plan to open your own franchise outlet, or your own business is preparing to allow others to open franchises, you will need the correct contracts, forms and agreements. Before you begin a new franchise business or license your own business to franchisees, here is what you need to know:
- WHAT IS A FRANCHISE? An established business that sells ‘copies’ of itself to other owner-operators is a franchise. Whether it is fast food, a DVD rental outlet or a chain-store, a franchise is a proven and effective marketing method that can offer customers a reliable and consistent quality of goods and services. This serves potential franchise owners by allowing them access to a pre-existing customer base who are already familiar with the business name. It also serves the franchisor by allowing them to expand their business without having to do as much work.
- WHAT IF I WANT TO START A FRANCHISE? A franchisee (a person who starts a franchise in a new location) will be able to use the franchisor’s (the original owner of the business that is being franchised) products, services, intellectual property and other related property. This comes with a pre-established and existing business if they enter a Franchise Agreement with the franchisor. A new franchisee will be able to use that property for a set period of time, or for a certain region or territory, depending on the terms and conditions of the agreement. Future franchisees must first get written permission from the franchisor, and they can only do that with a proper and legal franchise agreement.
- WHAT IF I WANT TO TURN MY EXISTING BUSINESS INTO A FRANCHISE? If your business is successful, expanding and seeking new independent owners to act as franchisees, you will need to be clear of what you are offering. By drafting a Legal Franchise Agreement, you can let potential owners know what it is they will and won’t be getting. You will also be able to lay out terms and conditions for payment, territory, and the obligations of one party to another.
- CAN MY FRANCHISE BE TAKEN AWAY FROM ME? Depending on the terms and conditions which were stated in the Franchise Agreement, your right to run your franchise business may be limited. If you breach certain rules, you may be stripped of the franchise. A new franchisee must be aware of all the terms and conditions of the agreement before they enter it, or they are acting without due consideration.
- WHAT NEEDS TO BE INCLUDED IN A LEGAL FRANCHISE AGREEMENT? Both the franchisor and franchisee should understand what they can or cannot do under the terms of the Franchise Agreement. A professionally drafted agreement details the terms of the franchise grant, how the sale of the goods or services must be handled and how intellectual property can be used. Many factors must be included and clearly stated for the Franchise Agreement to be a success.
Starting a business can be a fun and exciting time in your life. Taking advantage of a franchise opportunity can not only provide you with significant advantages, but it can also act as a safety net. Knowing the product or services you are going to sell is already well known and well-received can be of great benefit. No matter if you are entering business as a Franchisee or selling to new owners, having a solid professional Legal Franchise Agreement is a necessary step, and one that lets you be confident in the foundation of your new enterprise.
About the Author
Since 1990 RP Emery & Associates have supplied the business community and individuals with solid legal information and professionally drafted, ready-made contract templates.
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