Annotations for Unit Franchise Agreement

3. Length of the Franchise Agreement. The typical duration of a franchise agreement is usually 10 or 20 years. This part of the contract will also spell out the conditions under which the franchise can be sold to someone else, which can be stringent to make sure that any future franchisee is qualified to be an owner.

It is the legal, written document that governs the relationship between the franchisor and franchisee. It specifies the terms of the franchise obligations such as rights and responsibilities of the parties, fees and payments, territory and duration of agreement.

Franchisor-Franchisee Relationship. In the first place, the relationship of the franchisor and the franchisee is outlined. Duration of the Agreement. Franchise Fee. Business Operations. Site Selection and Development. Training and Support. Use of Intellectual Property.

First of all, never sign any agreement without negotiating. Negotiate extensions. Your right to obtain waivers in the event of the franchisor's company-wide decisions. Make sure that all fees are disclosed. Have as few requested changes as possible. Fee and Royalty considerations. Assignment. Termination.

Location/territory. Operations. Training and ongoing support. Duration. Franchise fee/investment. Royalties/ongoing fees. Trademark/patent/signage. Advertising/marketing.

Franchising is a business relationship between two entities wherein one party allows another to sell its products and intellectual property. For example, several fast food chains like Dominos and McDonalds operate in India through franchising.

According to Goldman, three elements must be included in a franchise agreement: A franchise fee. Some amount of money must be paid by the franchisee to the franchisor. A trademark or trade name.

The franchise fee is recorded at its full present value amount. On the balance sheet, the franchise fee is listed under the assets section as an intangible asset. To record the initial franchise fee purchase cost, you debit Franchise Fee for $50,000 and credit Cash for $50,000.