A franchising contract or franchising agreement is a contract under which the franchisor, being the owner of a business or brand, grants the franchisee the rights to operate a business, (or sell, or distribute goods or services) identified or associated with the franchisor’s trademark.
Becoming a franchisee means, an individual or business buys into the original company by purchasing the right to sell the franchisor’s goods or services under the existing business model and trademark name.
For example, an Italian shirt company, named SHIRTS owns 20 shops in the north part of Italy. They would like to expand their business in Italy and in other European countries. So, they create a business franchising model to be able to partner with other businesses to expand their number of shops named SHIRTS. In this type of contractual business model or relationship, SHIRTS, known as the franchisor, allows an independent business owner, called the franchisee, to use the branding, business model, and other intellectual property of SHIRTS, to sell such clothing in other shops in different locations and different countries, also called SHIRTS.
The franchising industry is very versatile offering different types of franchise arrangements, options, and investment ranges. The typical duration of a franchise agreement is usually 10 years, and such contract will spell out the conditions under which the franchise can be sold to someone else, which can be stringent to ensure that any future franchisee is qualified enough to run the business.
Generally, the franchisee makes a one-time initial fee payment to the franchisor upon signing of the contract, as an entry fee. Besides, the franchisee might pay royalties on sales, marketing and advertising assistance fees, or equipment and supplies for the shops. The franchise agreement will also stipulate that the franchisee may only operate the franchise in an assigned territory or country and may also limit the right of the franchisee to sell online.
It’s important to note that the franchise agreement should outline the rights and obligations of both the franchisor and the franchisee. The main purpose of this contract is to protect the intellectual property and products or services of the franchisor. It will also hold certain obligation so that each franchisee operates the franchise consistently. It’s good to know that a franchisor is responsible for the overall brand reputation management, whereas the franchisees are responsible for marketing their businesses in their assigned market areas. However, the franchisees are partners and they also play an important role in protecting and fostering the brand’s image.
If you are thinking to expand your business by creating a franchising model, or you are interested in starting a new business as a franchisee, our lawyers will be able to guide you legally and commercially on anything related to franchising. Contact Dr Adrian Sciberras on [email protected].
本文仅供参考，不应被视为法律建议。.
查琳·西贝拉斯（Charlene Sciberras）女士，文学士（荣誉），特约撰稿人，是一位营销和工商管理专家，尤其专注于公司、会计和法律事务。.
Sciberras Advocates 由 Adrian Sciberras 博士创立，是一家总部位于马耳他的律师事务所。该事务所以其多学科、创新和灵活的特点而自豪，能够应对不断变化的时代以及本地和国际法律环境中的任何挑战。无论面临何种复杂私人或公司需求，Sciberras Advocates 都能提供切合实际且具有成本效益的法律解决方案，以实现您期望的结果。您可以通过电话联系 Sciberras Advocates： +35627795222或通过电子邮件发送至 [email protected].
