What is a franchising agreement?

by David Kaye, Harper Macleod

This is a document between the franchisor and the franchisee that regulates the relationship and is a legally binding contract between the parties setting out the rights and obligations of each party.

The agreement contains the obligations of both the franchisor and the franchisee setting out what the franchisor will provide to the franchisee and the franchisee’s obligations to the franchisor. The agreement will detail the territory, any exclusivity, the term of the franchise, renewal rights and all payments to be made (including the initial fee, the management services fee and any national marketing fees).

There are sections on selling or transferring the franchise business, debt/incapacity of the franchisee, termination of the franchise, restrictive covenants following termination and various other provisions.

Find out more about what is included in the franchise agreement.

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