The Importance of a Well Drafted Franchise Agreement

Rules and obligations should be adhered to in order to become a franchisee.

The objectives of a franchise agreement are to achieve the following:

To contractually bind the franchisor and franchisee by both parties agreeing to the relevant terms and conditions set out in the contract.

To provide protection to the franchisor and franchisee that can be relied on under relevant circumstances.

There is no legislation that governs the rules for franchising in the United Kingdom therefore the franchisor has the power to set out terms of the agreement that must be strictly adhered to by the franchisor and franchisee. If any disputes were to arise, both parties would to turn to look at the agreement and determine which party has done wrong and how to correct it. It is therefore important that before committing to any terms and conditions the franchisee must either take time to thoroughly read through the agreement or seek advice from a legal professional or ensure that the agreement sets out clearly:

* Specific details of both parties.

* The duties of both parties.

* The grounds on which one party can terminate the agreement.

* The obligations of each party and when they should be met and in any case if they are not met how they should be enforced.

* The consequences of breaching any term or condition in the agreement.

A franchise agreement can cause problems between the franchisee and franchisor if it is drafted badly therefore it is important to use the services of a legal professional for advice.

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