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Definition

Franchise agreement

The franchise agreement, or contract, is the document that consummates the sale of a franchise. Franchise agreements vary, but each agreement typically contains tow sections: the purchase agreement and the franchise or license agreement.

 The purchase agreement typically spells out the price, the services to be provided by the franchisor to the franchisee, and the “franchise package,” which refers to all the items the franchisee has been told to expect.

The franchise or license agreement typically stipulates the rights granted to the franchisee (including the right to use the franchisor’s trademark), the obligations and duties of the franchisor, the obligations and duties of the franchisee, trade restrictions, rights and limitations regarding the transfer or termination of the franchise agreement, and who is responsible for attorney fees if disputes arise.

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