A Franchise Agreement is a legal, binding contract between a franchisor and franchisee, enforced in the United States

United States

The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 at the State level.

Prior to a franchisee signing a contract

Contract

A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...

, the US Federal Trade Commission

Federal Trade Commission

The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...

 regulates information disclosures under the authority of The Franchise Rule . The Franchise Rule requires a franchisee be supplied a Uniform Franchise Offering Circular (UFOC ) or Franchise Disclosure Document  (FDD ) prior to signing a franchise agreement, a minimum of ten days before signing a franchise agreement.

Once the Federal ten day waiting period has passed, the Franchise Agreement becomes a State level jurisdiction document. Each state has unique laws regarding franchise agreements.

A franchise agreement contents can vary in content depending upon the franchise system, the state jurisdiction of the franchisor, franchisee, and arbitrator.

A typical franchise agreement contains

• Uniform Franchise Offering Circular (UFOC)or FDD Franchise Disclosure Document (FDD)
• Disclosures required by state laws
• Parties defined in the agreement
• Recitals, such as Ownership of System, and Objectives of Parties
• Definitions, such as

Agreement, Territory Area, Area Licensee, Authorized deductions, Gross Receipts, License Network, The System Manual, Trademarks, Start Date, Trade name, Termination, Transfer of license

License

The verb license or grant licence means to give permission. The noun license or licence refers to that permission as well as to the document recording that permission.A license may be granted by a party to another party as an element of an agreement...

.

• Licensed Rights, such as

Territory, Rights Reserved, Term and Renewal, Minimum Performance Standard

• Franchisors Services, such as

Administration, Collections and Billing, Consultation, Marketing, Manual, Training

• Franchisee Payments, such as

Initial License Fee, Training Fees, Marketing Fund, Royalties, Renewal fee, and Transfer fee

• Franchisee Obligations, such as

Use of Trademarks, Financial Information, Insurance, Financial and Legal responsibility

• Relationship of Parties, such as

Confidentiality, Indemnification, Non-Compete

• Transfer of License, such as

Consent of franchisor, Termination of license, Termination by licensee, Termination by licensee

• Other provisions
• Governing law
• Amendments
• Waivers
• Arbitration
• Severability

See also

• Franchise termination
  Franchise termination
  Franchise termination is when a franchisor or a franchisee terminate a franchise business license.The United States Federal Trade Commission administrates oversight of preinvestment franchise disclusures via The Franchise Rule....
  
  
• Franchise consulting
  Franchise consulting
  'Franchise consulting' traditionally meant the same consultant-to-client relationship as any other industry wherein the consultant charges a 'fee for services'. But, as of the late 1990's the term 'consultant' was adopted by franchise salesmen and brokers that began representing themselves as...
  
  
• Franchise Disclosure Document
• Franchise fraud
  Franchise fraud
  Franchise fraud is defined by the United States Federal Bureau of Investigation as a pyramid scheme.- Franchise fraud in U.S. federal law :The FBI website states:...
  
  
• Franchising
  Franchising
  Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-French derivation - from franc- meaning free, and is used both as a noun and as a verb....
  
  
• List of franchises
• The Franchise Rule
• U.S. Securities and Exchange Commission

External links

• International Franchise Association
• American Association of Franchisees and Dealers
• Franchise Brokers Association
• FTC Franchise FAQ Page

Category:Contract law