{"id":40893,"date":"2022-07-19T13:45:42","date_gmt":"2022-07-19T17:45:42","guid":{"rendered":"https:\/\/www.thefranchiseking.com\/?p=40893"},"modified":"2026-04-29T13:23:10","modified_gmt":"2026-04-29T17:23:10","slug":"a-franchise-contract","status":"publish","type":"post","link":"https:\/\/www.thefranchiseking.com\/a-franchise-contract","title":{"rendered":"A Few Things You Need To Know About A Franchise Contract"},"content":{"rendered":"\n
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Reading over a franchise contract<\/strong> for the first time tends to put everything into perspective. In a big way. <\/p>\n\n\n\n

That’s because doing so can serve as quite the reality check regarding what you may be about to embark on; franchise business ownership<\/a>. <\/p>\n\n\n\n

In this post, I’m going to tell you about franchise contracts, and why they’re such a big deal.<\/p>\n\n\n

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You Think It’s Easy To Sign A Franchise Contract?<\/h2>\n\n\n\n

Signing a business contract<\/a> that puts you on the line for 10 years (on average<\/em>) can open up sweat glands you never knew existed. I’ll explain.<\/p>\n\n\n\n

Expressed simply, it’s one thing to “talk<\/em>” about becoming the owner of a franchise business; it’s quite another to become<\/a> one. <\/p>\n\n\n\n

That’s because signing a franchise contract creates liability<\/a>. <\/p>\n\n\n\n

On the flipside, signing a franchise agreement creates a huge opportunity for you to build something you can call your own. In essence, it’s the old “risk vs. rew<\/em>ard<\/a>” thing. Either way, it’s not easy to pick up your pen and sign a contract. Why?<\/p>\n\n\n\n

Because once you do it, that’s it. You’re legally bound to live up to your end of the agreement.<\/p>\n\n\n\n

Of course your franchisor has responsibilities too. The company can’t just leave you high and dry<\/a>.<\/p>\n\n\n\n

From my friend and attorney, Jack Kurant:<\/p>\n\n\n\n

“In reviewing the FDD, prospective franchisees should thoroughly examine, understand and verify, to the extent possible, the various fees, expenses, royalties and charges.\n\n\n\n

In addition, the franchise agreement, usually attached as an Exhibit to the FDD, is the most important item for the prospective franchisee<\/a>. The franchise agreement is the \u201ccontract\u201d that binds both the franchisor and franchisee. The agreement delineates both parties\u2019 rights and obligations. It should be reviewed and explained by franchisee\u2019s attorney.<\/p>\n\n\n\n

Finally, before signing the franchise agreement, the franchisee should fully understand all of the franchisee\u2019s obligations, including non-competition provisions that extend beyond the end of the franchise agreement and the extent of personal liability of the principals of the franchisee.”<\/p><\/blockquote>\n\n\n

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Note:<\/b> You’re going to need to put together a formal business plan<\/b> for your franchise business. Good thing you don’t have to do it alone.<\/p>\n

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What’s In A Franchise Contract?<\/h2>\n\n\n\n

Once signed, “The Franchise Agreement governs your relationship with the franchisor, and any disagreements or misunderstandings will be subject to the terms in the agreement<\/em>.”<\/p>\n\n\n\n

I grabbed that from my strategic partner, Franchise Direct. Their writers put together an entire article in franchise contracts that you’ll find very valuable. <\/p>\n\n\n\n

Read their article on franchise agreements<\/a>. <\/p>\n\n\n\n

Note:<\/strong> franchise agreements and franchise contracts are one in the same. <\/p>\n\n\n\n

That said, here’s what a small (miniscule<\/em>) portion of a (FASTSIGNS<\/a><\/em>) franchise contract looks like, courtesy<\/a> of the Wisconsin Department of Financial Institutions<\/strong>.<\/p>\n\n\n\n

1. PREAMBLES, ACKNOWLEDGMENTS, AND GRANT OF FRANCHISE
A. PREAMBLES.
B. CORPORATION, LIMITED LIABLITY COMPANY, OR
PARTNERSHIP.
C. GRANT OF FRANCHISE.
D. TERRITORIAL RIGHTS.
E. RIGHTS WE RESERVE.
F. MODIFICATION OF FRANCHISE SYSTEM. <\/p>\n\n\n\n

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2. SITE SELECTION, LEASE OF PREMISES, AND DEVELOPMENT AND
OPENING OF CENTER.
A. SITE SELECTION.
B. LEASE OF PREMISES.
C. CENTER DEVELOPMENT.
D. OPERATING ASSETS.
E. COMPUTER SYSTEM.
F. CENTER OPENING.<\/p>\n\n\n\n

And of course, each section has a good deal of lawyer-written copy that you won’t totally understand (unless you’re a lawyer<\/a><\/em>).<\/p>\n\n\n\n

Youre Not A Lawyer Anna Faris GIF<\/a>from Youre Not A Lawyer GIFs<\/a><\/div>