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Essentially, franchising is a specific form of business partnership in which the franchisor grants the franchisee the right to use trademarks and other intellectual property rights as well as a successful method of doing business. The franchisee conducts in a defined territory the given form of business under the trademark of the franchisor and according to the rules given by the franchisor. The franchisee obtains operating systems, technical expertise, marketing systems, training systems, management methods and all relevant information for running the business. In addition the franchisor provides the franchisee help and support in organizing, training, marketing and management. In return, the franchisee pays a royalty fee to the franchisor.
Franchising can be used as a business strategy for satisfying customers and obtaining new customers. With franchising it is possible to duplicate a proven and successful business. The franchisor transfers to the franchisee his know-how so that the franchisee can run an efficient and profitable business.
For the franchisee, franchising is an easy way to start a business with a known brand, which helps in entering the market. The franchisee also benefits from the know-how, training and continuing assistance provided by the franchisor.
A franchise agreement must be drafted carefully, since it is the cornerstone of the franchise relationship and ultimately only the agreement matters. It should contain detailed provisions covering the obligations and responsibilities of both parties regarding the operation of the business. The franchise relationship is complex, but nevertheless there should not be no ambiguity in the franchise agreement.
Franchise agreements are tailored for each field of business and for each franchise network. It would be almost impossible to have the same agreement fit two different franchise networks. An attorney with franchise experience can draft an appropriate franchise agreement for any franchise network.
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