Franchise Agreements

What is a Franchise Agreement?

A legally binding contract between the franchisor and franchisee that sets out the legal obligations and rights of both parties, the franchise agreement is a vital part of setting up or buying a franchise. 

Although franchise agreements will vary from one brand to the next, most will include information on the following:

What is included in a franchise agreement?

Fees

In addition to the start-up fee, what ongoing costs are there? Are they fixed or do they vary? Are there any other costs the franchisee may incur?
For example, at Cafe2U, our franchisees pay a fixed management fee and an on-going marketing fee in exchange for help advertising their van and its whereabouts nationwide.

Training and support

What training is provided by the franchisor and how is it delivered? Will ongoing training and support be available? How is it accessed by the franchisee?

At Cafe2U, new franchisees receive four-weeks' worth of training before launching, as well as ongoing support and coaching designed specifically to meet their needs.

Term

What is the length of the initial contract? Is there a probation period and, if so, how long is it? Can the franchisee renew the contract once it expires? Are there any costs involved with renewing the contract?

Supplies

Although the franchisee may be able to choose their own supplier/s, they are usually expected to buy supplies from the franchisor or a supplier named by the franchisor. If this is the case, is there any reduction in price?

Territory

If the franchisee has an exclusive territory, what area does it cover and how is it defined? If not, how can direct competition with any nearby franchises be avoided?

Exit

On what grounds can the agreement be terminated by either party? What is the procedure if/when the franchisee wishes to sell the franchise?

Looking to be a franchisee?

To schedule a callback to discuss the details of a Cafe2U franchise agreement, contact us here.