Which Of The Following Is Not Generally Included In A Franchise Agreement
The franchise agreement governs everything about how the franchisee manages the new business and explains what they can expect from the franchisor. Learn more about what`s in the agreement and what it means when you decide to franchise your business or become a franchisee. The content of a franchise agreement can vary considerably depending on the franchise system, the jurisdiction of the State of the franchisor, the franchisee and the arbitrator. Before a franchisee signs a contract, the U.S. Federal Trade Commission regulates the disclosure of information under the franchise rule.  The franchise rule requires a franchisee to receive a Franchise Information Document (FDD) (originally Uniform Franchise Offering Circular (UFOC)) at least fourteen days prior to signing a franchise agreement.  In the United States, a company becomes a franchise if it meets the definition of the Federal Trade Commission (FTC), known as the FTC Franchise Rule. Under the FTC`s franchise rule, there are three general requirements for a franchise agreement to be considered official: Regardless of what applies, it is essential that the terms of the franchise agreement reflect the franchisee`s understanding of how the territory is supposed to operate. Territory (or lack thereof) can have a significant impact on the franchisee`s ability to perform the business as intended. „Franchise agreements are the bible of the franchise industry — they are the most important agreements to govern the relationship between franchisees and franchisors,“ said Evan Goldman, a partner at New Jersey-based law firm A.Y.
Strauss and president of the firm`s franchise and hospitality practice group. [Read related article: Ultimate Guide to Corporate Franchising] Most franchises are accompanied by a notion of territory and often exclusivity. While some franchise agreements provide for an „exclusive territory“ in which a franchisee can market and operate exclusively, other franchise agreements do not offer such exclusivity and may even allow the franchisor to set up next door. According to Goldman, franchise agreements are usually concluded over several years. They usually last between five and 25 years, with 10 years being the average duration of a franchise agreement. Agreements often also contain conditions for renewal. Some states, including New Jersey and Wisconsin, recognize perpetual franchise agreements. These are franchise agreements that are renewed every 10 years, sometimes automatically, indefinitely. „The goal is to make the agreement between the franchisor and the franchisee as balanced as possible,“ Goldman said.
Like any other agreement, franchise agreements should be carefully reviewed before signing on the dotted line. Keep these points in mind when considering entering into a franchise agreement: these provisions are enforced to ensure brand continuity and the franchisor`s standards are consistently met no matter where in the United States…