Important Things To Know About Franchise Agreement


Franchising is a popular business option for many people around the world.


Unlike standard business sales, franchisors and franchisees are restrained by specific conditions. Due to the complexity and risks, the purpose of the franchise agreement is to specify the rights and conditions.


Let’s find out what’s involved and what it means for you. 

What is a franchise agreement?


The franchise agreement is a legal document in a franchising relationship that establishes the terms and conditions between both sides.


A franchise agreement gives the franchisee the right to operate a business using the franchisor’s brand, systems, and more for a set amount of time. It sets out what franchisees can and can’t do and what the franchisor shall provide so they can run the business successfully. 

What do you need to know before signing a franchise agreement?




Buying a franchise is an important monetary investment. It is significant to carry out research and due diligence so you understand what you are agreeing to before you sign a franchise agreement.


You will want to do research on the success rate, similar businesses, and potential of the franchise you are considering purchasing and talk to other franchisees.


Terms & conditions:


Franchisees should carefully consider the terms and conditions of a franchise agreement, as these can determine the balance of risk and reward. Some of the most important terms and conditions in a franchise agreement are:


The use of the trademark, logo, and branding;


An initial fee, royalties set-up costs in operating the franchise;


The territory within which a franchisee may operate and the specific location of the franchise;


Standards, rights, responsibilities, and procedures of both the franchisor and the franchisee.

Training & support:


The franchise agreement will set forth the training and ongoing support services by the franchisor. It is both prior to opening and during the entire term of the franchise agreement.


Territory & exclusivity:


The franchise agreement will also include details on the territory and where you are going to operate the franchise.


Sometimes, the franchise agreement will include an exclusivity provision that will ensure that no other franchisee can open a franchise in your territory. 



The franchise agreement includes the duration of the contract. It will help franchisees decide whether they can sustain operating the business for that time period.


Also included will be conditioning for renewing, unless either side gives notice of non-renewal.




Fees of franchising ownership are outlined in a franchise agreement.


These include the initial franchise fee, the cost of using the franchisor’s logo, operating system, royalties, advertising or marketing fee, and any other fee. 

Intellectual property:


The franchisor also grants the right to use intellectual property such as the specified software systems, copyright, trademarks, design, slogans, and confidential information.


Media Contact


Phone: +86-20-666-00099