Both parties begin a franchise agreement with the highest of hopes. The franchisor wants to make money off their business idea. The franchisee believes that they can profit from the work that the franchisor has done and will do in the future. The key is the actual franchise agreement and whether each party lives up to its own obligations.
The franchisor wants to be assured that the franchisee will uphold the reputation of the business and preserve the quality of the brand. The franchise agreement should lay out standards and uniformity that the franchisee must follow. They must invest a certain minimum amount in the business to ensure financial stability.
The franchisee wants and needs support from the franchisor. Usually, the franchisor’s most valuable contributions are brand value and marketing. The franchisor must provide a certain minimum amount of support to the franchisee.
The franchise agreement must be balanced and protect the interests of both sides. The franchisor does not want to be stuck with an underperforming franchisee. On the other hand, the franchisee does not want to take significant financial risk and be tied to a franchisor that is not provided what is expected.
The franchise agreement is a binding legal document. It is a contract between the two parties that must be performed. Otherwise, one party could be in breach of contract and be ordered to pay damages. You should consult with an attorney before you sign a franchise agreement to review the terms and suggest necessary changes.
The attorneys at Naples & Spence help businesses review contracts before they are signed and assist in the event of disputes. To schedule an appointment, you can send us a message online or call us today at 904.657.7117.
