When starting a franchise, one of the most important documents involved is the franchise agreement. This legal document outlines the terms and conditions that both the franchisor and the franchisee must adhere to in order to maintain a successful business relationship. However, you may be wondering who exactly is responsible for creating these franchise agreements.
First and foremost, it is the franchisor’s responsibility to create the franchise agreement. This is because the franchisor is the owner of the business model and brand, and therefore has the authority to grant others the right to use and operate under that brand. Franchisors will often hire lawyers or legal teams to assist in drafting the franchise agreement, as it is a complex document that requires careful consideration and attention to detail.
The franchisor’s legal team will work closely with the franchisor to ensure that all aspects of the franchise agreement align with the goals and objectives of the franchisor. This includes outlining the franchise fees and royalty payments, intellectual property rights, training and support, operational guidelines, and more.
While it is not the franchisee’s responsibility to create the franchise agreement, they should thoroughly review and understand the terms and conditions outlined in the document before signing it. In fact, it is highly recommended that franchisees seek legal advice from a lawyer experienced in franchising before signing any agreements.
By doing so, franchisees can ensure that they fully understand their rights and obligations as a franchisee, as well as any potential risks or limitations that may come with the franchise agreement. Franchisees should also make note of any provisions that are particularly important to them, such as termination or renewal clauses, and address any concerns with the franchisor before signing the agreement.
In short, franchisors are responsible for creating franchise agreements. However, franchisees should take an active role in reviewing and understanding the terms and conditions in the agreement before signing it. By doing so, both parties can ensure a successful and mutually beneficial business relationship.