Franchise Agreement

The franchise agreement is the binding legal contract between a franchisor and franchisee that governs the rights and obligations of both parties throughout the term of the franchise relationship. Unlike the FDD (which is informational), the franchise agreement is the enforceable contract. It typically covers: the grant of franchise rights, territorial boundaries, fee structures, operating standards and requirements, training obligations, advertising requirements, term and renewal conditions, transfer and assignment rules, termination provisions, and post-termination non-compete clauses. Franchise agreements are heavily weighted in favor of the franchisor and are typically non-negotiable for individual franchisees.