Fillable Form Franchise Agreement

How to Get and Edit Franchise Agreement template

Open the Franchise Agreement template

Use PDFRun's PDF Editor and start filling out the sample template

Create a Free Account on PDFRun to save your document

Export your document, Download, Print or Send your Document via Email

What is a Franchise Agreement?

A Franchise Agreement is a binding legal document between a franchisor and a franchisee. This document outlines the franchisee’s expectations, responsibilities, permissions, and limitations. A franchise agreement also lays out a fee schedule for the franchisee to pay to the franchisor, specifying amounts or percentages and payment frequency.

Franchise agreements grant a franchisee the right to use a franchisor’s intellectual property and resources for a particular time frame. They provide franchisees explicit permission to use certain trademarks, such as logos or phrases, in specific ways. Anything outside of those limitations, as well as anything not specifically addressed in the agreement, is prohibited.

If an agreement includes these following three elements, federal law automatically regards it as a franchise agreement, no matter what it may be called:

• A franchise fee. The amount of money the franchisee must pay to the franchisor.
• A trademark or trade name. The franchisee must be granted authorization to utilize the franchisor’s intellectual property, such as logos and trade names.
• A marketing system or a method of operations. The franchisee must be provided with either a marketing or an advertising strategy, such as posters and advertisements, or proprietary knowledge on how to run the franchise so it looks and feels like others with the same trade name.

Before the franchisee transfers money to the franchisor, they must give the franchisee a franchise disclosure document to review. The Federal Trade Commission requires them to disclose the following 23 points relevant to the franchising opportunity:

• The franchisor and any parents, predecessors, and affiliates – This section establishes the length of time that the franchisor has been in business.
• Business experience – This section outlines the executive team that oversees the franchise system’s operations.
• Litigation – This section covers pending actions, material actions, and prior actions against the franchise.
• Bankruptcy – This section details bankruptcies involving the franchise, its predecessors, and its affiliates.
• Initial fees – This section discloses any fees charged to the franchisee by the franchisor.
• Other fees – This section addresses any hidden or unreported fees that may become a subject of contention later on, thus the franchisor must be completely transparent in disclosing all fees.
• Estimated initial investment – This section informs the franchisee about the minimum and maximum initial investment requirements, as well as an estimate of their working capital.
• Restrictions on sources of products and services – This section outlines any needed purchases of products and services, as well as any ownership or financial relationship between the franchise and the required suppliers.
• Franchisee’s obligations – This section lays out the franchisee’s obligations in a reference table.
• Financing – This section outlines the conditions of any financing arrangements.
• Franchisor’s assistance, advertising, computer systems, and training – This section explains what the franchisee can expect from the franchisor in terms of pre-opening and continuing assistance.
• Territory – This section gives the franchisee any range or territory to do business, and it’s also where the franchisor can impose any geographical limits on the franchisee.
• Trademarks – This section discloses the trademarks registered to the franchise.
• Patents, copyrights, and proprietary information – This section discloses patents, copyrights, and other protected information not covered under the trademarks section.
• Obligation to participate in the actual operation of the franchise business – This section indicates whether the franchise can be held as a separate entity or whether direct participation is required.
• Restrictions on what the franchisee may sell – This section covers whether only franchise-approved goods and services can be sold.
• Renewal, termination, transfer, and dispute resolution – This section summarizes the provisions of the franchise and other agreements dealing with termination, renewal, transfer, dispute resolution and other important aspects of the franchise relationship.
• Public figures – This section covers any person whose name or physical appearance is associated with the franchise.
• Financial performance representations – This section gives the franchisor the option of estimating the franchise’s prospective success based on fair assumptions.
• Outlets and franchisee information – This section contains franchise statistics for the last three years, including the number of company-owned and franchised outlets in operation.
• Financial statements – This section presents the franchisee with three years of financial statements as part of the Franchise Disclosure Document (FDD). This includes balance sheets, statements of operations, owner’s equity, and cash flows.
• Contracts – This section is where the franchisor outlines the franchise agreement. Financing agreements, product supply agreements, personal guarantees, software licensing agreements, and any other contracts specific to the franchise’s situation are all included.
• Receipts – This is the final section of the Franchise Disclosure Document (FDD). Here, the franchisor will evaluate the disclosure and business decisions established between both parties and provide any additional information to the franchisee.

A franchise agreement normally lasts between five and 25 years, with 10 years being the average term. Renewal terms are frequently included in agreements. While franchisees cannot terminate a franchise agreement before its expiration date, they can sell or transfer their interest to another party who wants to fulfill the contract.

Not every franchise deal is set. Depending on the franchise, certain points may be negotiated. Older, more established franchises are less likely to be flexible, but newer franchises may be more inclined to be flexible in certain areas. The goal is to achieve the best possible balance between the franchisor and the franchisee in the agreement.

How to fill out a Franchise Agreement?

Just like any other agreement, franchise agreements should be reviewed carefully before both parties sign the document. As a franchisee, you can seek legal help before entering a franchise agreement so you fully understand your obligations, the franchisor’s obligations, and the rights you’re being awarded to.

Using our franchise agreement template, you can access and download the PDF in minutes by simply following the instructions below.

Date

Enter the date when both parties entered the agreement.

Franchiser

Enter your full name.

Franchisee

Enter your franchisee’s full name.

Franchise

Enter the trade name of your business and the city where your business was established.

Benefits

This section states that the franchisor’s established trademark of the business and his marketplace experience will be handed on to the franchisee.

Franchise Fee

Enter the amount of the franchise fee.

Proprietary Marks

This section states that the franchisor will give license to the franchisee to use the business’s trade names and service marks in connection with operating the franchise. Unless the franchisor expressly authorizes it, the franchisee is not allowed to change or dilute the content of the products provided by the franchisor.

Training And Assistance

This section states that the franchisor will offer guidance via manual, courses, and/or on-going consultation services.

Advertising

Enter the ways you want to advertise the business.

Confidential Information

This section states that the franchisee expressly warrants that they will not divulge any information about the franchise or the franchisor’s business.

Standards of Quality

This section states that unless the franchisor authorizes it, the franchisee is banned from modifying or diluting the content of the marks or products.

Independent Contractor Relationship

This section states that the franchisee acknowledges that it is his legal responsibility to pay and withhold all applicable federal and state income taxes (including estimated taxes), social security, Medicare and all applicable federal and state self-employment taxes.

Franchisor

Affix your signature.

Date

Enter the date you signed the form.

Franchisee

Affix your franchisee’s signature.

Date

Enter the date your franchisee signed the form.