The new franchisor who is keen on developing his franchise model is constantly looking for a standard template that may also come in handy in preparing his Franchise Agreement Format. The search continues as the franchisors go through several business templates and try to build one common format which could be used for their business. The approach is tedious and before the actual franchise agreement is put to use it goes through several iterations which stretches to several weeks.
There is no standard franchise agreement format because the terms, conditions, and methods of operations of various franchises vary widely depending on the type of business. For e.g franchise agreement format India restaurant would be different to other agreement format India.
- Location/Territory: The territory in which you will operate and outline any exclusivity rights you may have.
- Operation: Details how franchisees are expected to run their units.
- Training and ongoing support: Franchisors offer training and training programs for franchisees and their staff. Training may take place at corporate offices or out in the field. All ongoing administrative and technical support will also be outlined in the agreement.
- Duration: Length of the duration of the franchise agreement.
- Franchise fee/investment: Initial franchise fee that grants the franchisee the right to use the franchisor’s trademark and operating system.
- Royalties/ongoing fees: Franchisor’s royalty structure. Usually a percentage of total sales, which is often paid on a monthly/yearly basis.
- Trademark/patent: This section will outline how a franchisee can use the franchisor’s trademark, patent, logo and signage.
- Advertising/marketing: The franchisor will reveal its advertising commitment and what fees franchisees are required to pay towards those costs.
- Renewal rights/termination policies: The franchise agreement will describe how the franchisee can be renewed or terminated.
- Exit strategies: Every franchise has its own resale policy. Some allow franchisees to sell their franchises at their discretion. Other agreements include buyback or right of first refusal clauses.
The franchise agreement will go into detail to explain more about the franchisee/franchisor relationship. It will include detailed information regarding proprietary statements and outline things like site maintenance and upgrade requirements.
On the contrary, if an experienced franchise consultant is engaged at the beginning of building a franchise model it will save time and effort in preparing the Franchise agreement format. Likewise, the Franchise consultant will bring in several years of consulting experience across industries and understands the current franchise model. this will benefit the franchisor tremendously. Furthermore, the franchise agreement will cover all the necessary covenants applicable to a particular business in the franchising industry. The franchise agreement word format will also cover specific terms such as franchisor grants, franchisee rights, use of franchise systems and Intellectual property. Therefore, the best-detailed format will go a long way in establishing a healthier and successful relationship between the franchisor and franchisee.