In a franchise agreement, the entity who owns the franchise or the “franchisor” grants the other entity or the “franchisee” the right to make use of the proprietary marks and system to operate the business or franchise. In most cases, the agreement limits the franchise to a specific location so the franchisor cannot relocate to another area.

The franchise contract must also specify the amount of the fee the franchisee must pay. This may include an initial fee and ongoing royalty payments. Before signing, the franchisee must understand everything written on the document including any restrictions and provisions stated therein. Click here to read more.