“Franchise agreements are the Bible of the franchise industry — they are the most important agreements to settle the relationship between franchisees and franchisees,” said Evan Goldman, a partner at New Jersey-based law firm A.Y. Strauss and chair of the firm`s franchise and hospitality practice group. [Read related article: Ultimate Guide to Business Franchising] Since a franchise agreement is supposed to reflect the uniqueness of each franchise offering and explain the dynamics of the proposed franchise relationship, copying the agreement from another franchise system is probably the biggest mistake a new franchisee can make. Just like a wedding, a franchise relationship between a franchisor and a franchisee works wonders if both parties are satisfied and happy. And an effective way to do this is to design, conclude and regulate a franchise agreement that is both fair and firm. Franchising is a consistent and lasting replication of a company`s brand promise, and an agreement should describe in detail the many business decisions that are considered in creating a franchise system. It is complex and, in most cases, a contract of adhesion, that is, an agreement that cannot be easily modified. People shop at franchises, largely because they know what to expect. As a franchisee, you rarely have to worry about the quality or consistency of your products or services. This quality assurance usually also extends to buildings and equipment. Whether it`s a restaurant, a DIY store, or a hair salon, opening a franchise of an existing business is a big part of the foundation for successfully starting a new business. For a fee, you have the right to use selected trademarks from an already known unit, which significantly reduces your efforts to increase brand awareness.
You will also receive marketing materials, an operations manual or both that give you formulas and processes that have already proven themselves in the market. In the previous issue of Law News franchise, Terrence Dunn and Michael Einbinder wrote an article about how to strengthen your franchise agreement. This article expands on this topic and focuses on the role of the franchise agreement in the franchise system. In the meantime, the writing process usually takes about or less than a month, until every detail is verified by lawyers and the agreement is definitively signed. While franchisors can establish their own legal agreement with their legal counsel, it would be better to discuss with franchised experts and consultants, as they have specialized in the matter. However, before opening your doors, you will need a franchise agreement forming your agreement with the franchisee. Before you sign on the polka dot line, you should have a clear understanding of what franchise agreements are, what they typically entail, and what you need to pay attention to before accepting anything. . .