"Franchise Agreement Template"

What Is a Franchise Agreement?

A Franchise Agreement is a legal contract that regulates the relationship between two parties: a franchisor and a franchisee. Under this contract, the franchisor is legally bound to allow the franchisee to use their brand, trademark, and operational model to establish a franchised business that will be associated with the franchisor. The franchisee, in reward, is legally bound to pay the franchisor a fee for selling products or providing services under the franchisor's name.

Alternate Names:

  • Franchise License Agreement;
  • Business Franchise Contract;
  • Franchise Contract.

A Franchise Agreement template can be downloaded below or you can make your own using our online form builder.

The purpose of the document is to set the duties and rights that each party is entitled to. It lists all of their responsibilities, including payment obligations, which can be presented by a fee and a share of the profit that the franchisee will generate. It is necessary to describe the financial obligations in detail so in the future the involved parties will avoid any questionable situations that may occur.

A Franchise Agreement is usually limited to a certain period of time. Its length can vary from five to ten years but can be shorter or longer spending on the needs of both parties. After the agreement comes to an end, the parties can renew it, otherwise, the franchisee will lose all of their franchised rights.

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How to Create a Franchise Agreement?

The terms of the Franchise Agreement have to cover the following aspects:

  1. Information About the Parties. In the first part of the document, the parties should designate their names and locations, including the zip code, state, county, street name, and building number. This information is needed for identification purposes.
  2. Description of the Franchise. The parties should describe the subject of their agreement. The franchisor must express their intention to let the franchisee create a business under the franchisor's brand name, while the franchisee must state that they agree to follow the franchisor's requirements and pay them a fee.
  3. The Franchise's Fees. In this part of the document, the parties will need to designate all of the details concerning the franchise's fees. They should specify its amount, how often it is supposed to be paid, and how it should be transferred. If the fee consists of several parts (for example, the initial fee and annual fee), the parties should describe each of them.
  4. Rights and Responsibilities. Parties should use this section to designate their primary rights and responsibilities, that they will execute over the course of the contract.
  5. Signatures. To express their consent with the contents of this document and state that the parties are entering the agreement fully lucid and under their own free will, they should sign the contract and date it.

The content of the agreement will depend on the type of franchise that the parties are interested in, the circumstances of the situation, and other aspects. In addition to the sections mentioned above, they can also include parts such as severability, representatives, amendments, jurisdiction, confidentiality, termination, etc.

How to Get Out of a Franchise Agreement?

Getting out of a Franchise License Agreement is complicated since it legally binds the involved parties to follow it for a certain period of time. Nevertheless, it is possible and there are a few steps that a party should take if they want to terminate the contract. They can include:

  • The party that wants to get out of the agreement should start with checking the applicable state law that regulates Franchise Agreements signed in the state. It can help them find common legal ways of terminating such kinds of contracts that can be used in the state;
  • Sometimes the agreement itself can contain clauses that regulate its termination, which is why the party that wants to quit the contract should read the contract carefully and look for conditions that might help them. Usually, such conditions are included in the part of the agreement called "Contract Termination," additionally they can provide information on whether there will be penalties if the party would like to terminate the contract before its term (like compensation);
  • The parties can also negotiate a mutual termination, where they will develop a set of terms that will be acceptable for both of them. This way is preferable for those parties that will lose less if they terminate the agreement (if it is not profitable for both sides).

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Franchise Agreement
This Franchise Agreement (hereinafter referred to as the “Agreement”) is entered
into as of ___________________, by and between ___________________________,
with a mailing address of ________________________________________________
__________________________________ (hereinafter referred to as the “Franchisor”)
and ___________________________, with a mailing address of _________________
_____________________________________________________________________
(hereinafter referred to as the “Franchisee”), collectively referred to as the “Parties,”
both of whom agree to be bound by this Agreement.
​ T he
1.
General
Terms.
Franchisor
owns,
operates,
and
franchises
________________
___________________________________ (hereinafter referred to as the “Business”)
throughout _____________________________________ which, among other things
rents/sells/markets/provides ______________________________________________
(hereinafter referred to as the “Product/Service”) to the:
❏ General Public; or
❏ Corporations; or
❏ the Government.
The Franchisee is interested in the following:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
Describe the Franchisee’s proposed actions in detail
The Franchisor is willing to provide various marketing, advertising and promotional
services and activities in support of the Franchisee.
2. Agreement Term. ​ T he term of this Agreement shall commence as of the date
specified above (hereinafter referred to as the “Term”). Each year of the Term, as
measured from the date of this Agreement, is a “Contract Year.”
3. Territory. ​ T he territory for purposes of this Agreement with respect to the
Franchisee’s activity shall be __________________________________ (hereinafter
referred to as the “Territory”).
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Franchise Agreement
This Franchise Agreement (hereinafter referred to as the “Agreement”) is entered
into as of ___________________, by and between ___________________________,
with a mailing address of ________________________________________________
__________________________________ (hereinafter referred to as the “Franchisor”)
and ___________________________, with a mailing address of _________________
_____________________________________________________________________
(hereinafter referred to as the “Franchisee”), collectively referred to as the “Parties,”
both of whom agree to be bound by this Agreement.
​ T he
1.
General
Terms.
Franchisor
owns,
operates,
and
franchises
________________
___________________________________ (hereinafter referred to as the “Business”)
throughout _____________________________________ which, among other things
rents/sells/markets/provides ______________________________________________
(hereinafter referred to as the “Product/Service”) to the:
❏ General Public; or
❏ Corporations; or
❏ the Government.
The Franchisee is interested in the following:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
Describe the Franchisee’s proposed actions in detail
The Franchisor is willing to provide various marketing, advertising and promotional
services and activities in support of the Franchisee.
2. Agreement Term. ​ T he term of this Agreement shall commence as of the date
specified above (hereinafter referred to as the “Term”). Each year of the Term, as
measured from the date of this Agreement, is a “Contract Year.”
3. Territory. ​ T he territory for purposes of this Agreement with respect to the
Franchisee’s activity shall be __________________________________ (hereinafter
referred to as the “Territory”).
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4. Revenue Sharing. The Franchisee shall remit to the Franchisor _______% of the
net profits of their business. Additional details are as follows:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
Describe the revenue sharing between the Franchisee and the Franchisor in detail
The distribution of profits shall be made:
❏ Every week on ______________________; or
❏ Every two weeks on ______________________; or
❏ On the _______ of every month; or
❏ Other: __________________________________________________________
5. Franchisor Commitments. The following requirements (purchasing and other)
shall apply to the Franchisee:
● _______________________________________________________________
_______________________________________________________________
_______________________________________________________________;
● _______________________________________________________________
_______________________________________________________________
_______________________________________________________________;
● _______________________________________________________________
_______________________________________________________________
_______________________________________________________________.
6. Marketing. ​ T he Franchisee agrees to consult with the Franchisor in regards to
marketing and to keep the Franchisor reasonably appraised of its marketing plans and
activities and to comply with the Franchisor's then-current customary marketing
support policies and practices to the extent they are reasonable and practicable. The
Franchisor shall have the right to approve such plans, and the Franchisee shall provide
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a timely opportunity for said approval by the Franchisor. The Franchisor shall exercise
its approval rights in a timely and reasonable manner.
7. Participating Franchises. ​ W hile the Franchisee cannot guarantee that their
Franchises will adopt this Agreement, the Franchisee will use good faith commercially
reasonable efforts to recommend adoption of the Agreement to their Franchises and
anticipates a high level of adoption thereby. The Franchisor hereby agrees that each
participating Franchisee shall execute a letter agreement, which has been approved by
the Franchisee in form and substance, in favor of the Franchisor, agreeing to be bound
by the terms and conditions of this Agreement as if it were a party hereto (hereinafter
referred to as the "Participating Franchise").
The Franchisee shall be liable for each of the Participating Franchise's performance of
its financial obligations hereunder. The Franchisor shall have the right to proceed
against the Franchisee for money only for any failure of a Participating Franchise to
fully perform the financial terms and conditions of this Agreement. Participating
Franchises shall be subject to the same terms and conditions under this Agreement
unless specifically designated otherwise.
8. Termination. ​ T his Agreement may be terminated at any time by either Party upon
____________________ written notice to the other party. Upon termination, the
Franchisee shall pay to the Franchisor all payments due and owing up to the date of
termination.
9. Governing Law. The Parties agree that this Agreement shall be governed by the
laws of the _______________ in ________________ and any applicable Federal Law.
State
County
10. Indemnity. The Parties each agree to indemnify and hold harmless the other
Party, its respective officers, agents, employees, and permitted successors and assigns
against any and all claims, losses, damages, liabilities, penalties, punitive damages,
expenses, reasonable legal fees and costs of any kind or amount whatsoever, which
result from the negligence of or breach of this Agreement by the indemnifying party,
its respective successors and assigns that occurs in connection with this Agreement.
This section remains in full force and effect even after termination of the Agreement
by its natural termination or the early termination by either party.
11. Limitation of Liability. ​ U nder no circumstances shall either Party be liable to the
other Party or any Third Party for any damages resulting from any part of this
Agreement such as, but not limited to, loss of revenue or anticipated profit or lost
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business, costs of delay or failure of delivery, which are not related to or the direct
result of a Party’s negligence or breach.
12. Severability. In the event that any provision of this Agreement is deemed invalid
or unenforceable, in whole or in part, that part shall be severed from the remainder of
the Agreement and all other provisions should continue in full force and effect as valid
and enforceable.
13. Legal Fees. ​ I n the event of a dispute resulting in legal action, the successful party
will be entitled to its legal fees, including, but not limited to its attorneys’ fees,
collection fees, and the like.
14. Legal and Binding Agreement. This Agreement is legal and binding between the
Parties as stated above. The Parties each represent that they have the authority to enter
into this Agreement.
15. Entire Agreement. The Parties acknowledge and agree that this Agreement
represents the entire agreement between the Parties. In the event that the Parties desire
to change, add, or otherwise modify any terms, they shall do so in writing to be signed
by both Parties.
The Parties agree to the terms and conditions set forth above as demonstrated by their
signatures as follows:
FRANCHISOR
FRANCHISEE
_________________________________
_________________________________
Name
Name
_________________________________
_________________________________
Signature
Signature
_________________________________
_________________________________
Date
Date
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