Franchise Agreements

Franchise Agreements

Well, creating a successful and profitable venture is every restaurant operator’s ultimate goal. When you run a thriving business, the concept may offer opportunities to expand beyond the current locations. A restaurant becomes a franchise when its owners decide to license their branding and operational model to other entrepreneurs, who open, own, and manage their own restaurants with the brand. And when a restaurant is franchised, it means that the business model has proven sturdy enough to succeed on its own, without the hands-on guidance of its original founders.

When you franchise your restaurant, you allow an independent investor to buy into your business, selling the license to use your brand name, operations, products, and knowledge. And what makes it strong and secure is a franchise agreement. It is basically a legal agreement that is binding on the franchisor and the franchisee. Let us understand the franchise agreement in a more detailed manner with the help of this segment:

What Is a Franchise Agreement?

As mentioned above, a franchise agreement is basically a legally binding contract between the parties to a franchise relationship. It protects both sides in case of any unfavorable circumstances. A signed agreement gives you the right to help safeguard your investment if required. This document basically sets forth the rights and obligations of the two main parties to a franchise. In legal terms, it is a license from the franchisor to the franchisee. And this gives permission to another party to do something or use something of value. A franchise agreement indicates two major things namely:

  • The franchisor licenses the franchisee, the right to use the franchisor’s intellectual property systems and brand.
  • The franchisee acquires the rights to open a business using the franchisor’s intellectual property systems, and brand, under certain conditions.

A typical agreement can be complicated. It involves 25 to 30 pages and after attaching the required documents, etc., the final agreement can be twice or even thrice longer than this. It should be noted that there are certain things that a franchise agreement cannot skip. Let us have a look:

  • Overview of the Relationship
  • Duration of the Franchise Agreement
  • Initial and Continuing Fees
  • Assigned Territory
  • Site Selection and Development
  • Initial and Ongoing Training and Support
  • Use of Intellectual Property Including Trademarks, Patents, and Manuals
  • Advertising
  • Insurance Requirements
  • Record-Keeping and the Right to Audit the Franchisee’s Records
  • Termination
  • Indemnification
  • Dispute Resolution
  • Resale Rights
  • Transfer Rights
  • Rights of First Refusal
  • Sources of Supply
  • Local Advertising Requirements
  • Governing Laws
  • General Releases
  • And Much More….

Other than the above elements, there can be a lot of other components that together make a franchise agreement. If you own a restaurant business and want to franchise it, then feel free to take assistance from experts at ERC. At Enterprise Restaurant Consulting, we have a team of seasoned experts, who have been working for years and helping restaurant businesses to grow and succeed. For any queries related to your restaurant business or franchising, feel free to visit our website i.e.,, or connect with the professionals directly at 1-647-209-4153, and get answers to all your restaurant-related queries immediately.