More franchise agreement clauses franchisees should see in their franchise agreement
In the second blog in our series examining clauses franchisees should see in their franchise agreement, we cover five more clauses. Over the next few months, we will cover the rest of the usual clauses you should expect to see in your agreement, guiding you through what they mean.
Why do these clauses matter?
In a nutshell, because your franchise agreement will impact on everything to do with the business you are taking on as a franchisee.
The terms of the franchise agreement offered by the franchisor will govern the relationship between you and the franchisor going forward. Therefore, understanding what each clause means for you – what your rights and obligations will be – is vital.
Before you sign up to anything, it is crucial to get expert advice from a specialist franchise lawyer on your franchise agreement (and to make sure you fully understand everything). It is very usual to see a right to change mind clause in a franchise agreement and therefore once you have signed the agreement you are committed to it for the length of the agreement.
It’s therefore important to make sure that this clause accurately reflects what you are expecting to pay and, properly records any negotiations you may have had previously with the franchisor.
They say the devil is in the detail and you should read this clause with the relevant schedule to the agreement which will contain more detail on how fees are calculated. You need to ensure that this clause is very clearly drafted to avoid misunderstandings later.
The franchisor will tell them what appropriate processes they need to put in place, the franchisee just needs to make sure they adhere. [GU1]
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