BizBen.com
500 New & Refreshed Posts, Postings Daily
Over 8,000 Postings & 2,500 Resources
Assisting Buyers & Sellers Over 25 Years!


Franchise Agreement

Tags: franchising

Comments & Replies: 1     Views:     Post ID:     Comments About This Glossary Term

The contract between a franchisor and franchisee, detailing the particulars of their legal relationship, is the "franchise agreement". There is a document like this for every fast food operation, auto tune up, lube, tire or paint company, convenience store or other kinds of businesses that are part of a franchise system. The agreement is meant to summarize all of the responsibilities a franchisee and franchisor have to each other.



Most of the franchisee's protections are available before the franchise agreement is signed, when the prospective franchisee still is evaluating the offering. That's when entrepreneurs considering a purchase in a franchise system - either an existing franchise or a new location - are given details about the parent company's financial status, the business history of the company and its executives - including bankruptcies and business failures. Additionally, the prospective franchisee has the opportunity to talk to other franchisees or former franchisees about their experiences good and bad, with the company. Much of this information is contained in the FDD (Franchise Disclosure Document) previously called the UFOC (Uniform Franchise Offering Circular) which must be supplied to a prospective franchisee before he or she is required to sign any documents or put forth any funds.



Once satisfied with the due diligence examination of a franchise offering and then closing the deal to become a new franchisee, the individual who has bought into the system ordinarily will need to adhere to a number of rules discussed in the franchise agreement. They Include explanation of the costs to be paid by the franchisee, not only the monthly fee due to the franchisor, but also contributions to the advertising funds. The agreement might also require the franchisee to purchase all supplies and inventory from the franchisor, or from "approved" vendors. Additionally, there frequently are restrictions placed on the franchisee about methods of operating, and merchandise that can and cannot be sold.



In return, the franchisee benefits from parts of the agreement that provide the rights to a defined territory, the opportunity to receive advice and management assistance from the franchisor and the franchise campaigns designed to promote the "brand" so each franchisee can be easily recognized among similar businesses.


Other Related Blog Posts, Articles, And Discussions You May Be Interested In

Taking Back Up Offers Important Back-Up Offers: Crucial When Buying Or Selling A Small To Mid-Sized Business

An often overlooked aspect of selling (or buying) a small business is taking back-up offers during the entire process of selling (or buying) a business. Most sellers (or buyers) don't realize that over fifty percent of all deals/contracts fall out escrow or contract for one reason or another.
Latest Business Broker Survey 6 Successful Traits Of Top California Business Brokers: New BizBen Survey

The latest BizBen.com survey of California Business Brokers and Agents outlined what it takes to be a top ten percent performer in the business brokerage industry. From good communication to utilizing your resources, these traits are something to take note of and put into practice to be successful.
Unreported Income Claims By Sellers Unreported Income Claims By The Seller - What Should A Business Buyer Do?

One of the most difficult challenges when purchasing a small business is expressed by this prospective buyer of a liquor store who is told by the seller that there is more money being made than shows up on the books. Should the buyer accept that statement by the seller & go ahead with the purchase?
3 Car Wash Types To Purchase Buying A Car Wash Business: 3 Successful Types Of Car Washes To Consider

One of the most popular business searches (and eventual business purchase) on BizBen is the self serve and full service car wash. Peter Siegel, MBA (ProBuy & ProSell Programs Director) with BizBen.com reflects on three types of car wash models and what buyers should look for in a car wash purchase.
Sellers Discretionary Cash Add Backs Add Backs: Defining Sellers Discretionary Cash When Buying A Small Business

The use of add backs & sellers discretionary cash is common among sellers of businesses when showing their financial information & explaining that the buyer will actually enjoy more profit than is shown. But buyers are cautioned to review documents closely. Peter Siegel, MBA with BizBen explains.
Are Upfront Fees Worth It In Defense Of Upfront Broker Fees: Why Owners Should Pay Brokers Upfront

Are up front fees worth it? In this BizBen Blog post Brian Loring (Business Broker) discusses the pros and cons of owners of small businesses paying business brokers and agents an upfront fee for their services. There are many sides and opinions expressed on this topic by both sellers & brokers!
Chuck Post Webinar Buying A Laundry FREE Online Webinar For Laundry Buyers: Weekly Webinar For Laundry Buyers

Chuck Post hosts this live FREE online webinar on Buying A Laundry business. The next online webinar is coming soon. Have your questions ready for an open and honest discussion about both the Pro & Cons of the Vended Laundry Business. RSVP or for more info phone Chuck at 619-227-5711 direct.
Helen Yoo Escrow Bulk Sale Services Helen Yoo, New Century Escrow - Escrow Services In All Southern California

Helen Yoo at New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.
Business Buyers Biggest Mistakes What Are Buyers Biggest Mistakes? The Pro's Examine 25 Of The Most Common

A business buyer in our ProBuy Program searching to buy a small business asked me to sum up what I thought the biggest mistakes business buyers make when they search for and bought a small business. I asked ProIntermediaries on BizBen their thoughts on the matter and received a diverse response.
Disclosures Needed For Business Buyers What Do I Need To Disclose To All Prospective Buyers Of My Small Business?

When selling a small business you always run the risk of a lawsuit. They aren't as common as one may think in this litigious world in which we live in, but whenever there is money exchanging hands & attorneys involved the stage is set for a lawsuit. Various ProIntermediaries share their viewpoints.