The ABC Unit Franchise Agreement is written from the perspective of the franchisor, based on the assumption that the franchisor will normally have prepared the initial draft of the franchise agreement which is included in the Offering Circular. The agreement may or may not be subject to negotiation, depending on state law and the current business practices of the franchisor.
Massachusetts Annotations for Unit Franchise Agreement
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Multi-State
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US-2-01-2-STP
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Word;
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The franchisor's business background, ethics and any past bankruptcies. Fees and financial arrangements. Any restrictions on how the franchisee can source products and services, or what they are allowed to sell.
How is a Franchise Disclosure Document Structured? Item 1: The Franchisor, and any Parents, Predecessors, and Affiliates. Item 2: Business Experience. Item 3: Litigation. Item 4: Bankruptcy. Item 5: Initial Fees. Item 6: Other Fees. Item 7: Estimated Initial Investment. Item 8: Restrictions on Sources of Products and Services.
Franchise agreements vary between different franchises, but these seven areas should be addressed in every franchise agreement. Use of Trademarks. Location of the Franchise. Term of the Franchise. Franchisee's Fees and Other Payments. Obligations and Duties of the Franchisor. Restriction on Goods and Services Offered.
Fees and Payments. The disclosure document will provide details to you regarding the requirement and specifics of any franchisee payments to the franchisor. This information must include items such as marketing fees, advertising fees or other financial obligations requiring contributions.
Most franchisors must update their disclosure document and key facts sheet each year. Franchisors must tell their franchisees about materially relevant facts. This includes if majority ownership of the franchisor or franchise system changes.
Item 7 of the Franchise Disclosure Document (FDD) provides a prospective franchisee with the type and amount of expenditures it will incur before opening its franchise unit, as well as an estimate of the type and amount of expenditures it may incur during the initial period of operating its franchise unit.
A Franchise Disclosure Document includes 23 specific pieces of information (called items), the franchisors franchise agreement, and various exhibits (like a list of current and past franchisees, and audit financials of the franchisor.
How is a Franchise Disclosure Document Structured? Item 1: The Franchisor, and any Parents, Predecessors, and Affiliates. Item 2: Business Experience. Item 3: Litigation. Item 4: Bankruptcy. Item 5: Initial Fees. Item 6: Other Fees. Item 7: Estimated Initial Investment. Item 8: Restrictions on Sources of Products and Services.