This checklist basic franchise agreement terms template has 4 pages and is a MS Word file type listed under our business plan kit documents.
Sample of our checklist basic franchise agreement terms template:
CHECKLIST Basic Franchise Agreement Terms One of the most popular way to start your own company is through a franchise; a business organization in which a well-known firm with a successful product or service - the franchisor - enters into a contractual relationship with another business - the franchisee - that operates under the franchisor's name in exchange for a fee. Franchise agreements vary from franchise to franchise so it would be impossible to identify every term and issue that should be considered in all situations. The checklist should be used in conjunction with the franchise agreement - the document that will set out all the terms and conditions that will govern your ownership of the franchise - which will be drafted by the franchisor. In any event, you shouldn't sign it until you've discussed your options with your attorney. Issues relating to the franchise cost terms What is the initial franchise fee? Is any part or the entire initial fee refundable? Does it include an ''opening'' inventory of products and supplies? What are the payment terms: amount, time of payment, lump sum or installment, financing arrangements, etc.? Does the franchisor offer any financing, or offer help in finding financing? Are there any deferred balances? If so, who finances and at what interest rate? Does the contract clearly distinguish between ``total cost'' and ``initial fee,'' ``initial cash required,'' or ``initial costs,'' etc.? Are there periodic royalties? If so, how much are they and how are they determined? How and when are sales and royalties reported, and how are royalties paid? If royalty payments are in whole or part payment for services by the franchisor, what services will be provided? Are accounting/bookkeeping services included or available? How are advertising and promotion costs divided? Is a specified amount of working capital required of the franchisee to cover operating costs until profits can be made? Must premises be purchased or rented, and are there further conditions on either of these (from franchisor, selected site, etc.)? How and by whom will the building be financed, if purchased? Does the franchisee have to make a down payment for construction and/or equipment? Issues relating to the franchise location terms Does the franchise apply to a specific geographical area? If so, are the boundaries clearly defined? Who has the right to select the site? Will other franchisees be permitted to compete in the same area, now or later? Is the territory an exclusive one, and is it permanent or subject to reduction or modification under certain conditions? Does the franchisee have a first refusal option as to any additional franchises in the original territory if it is not exclusive? Does the franchisee have a contractual right to the franchisor's latest products or innovations? If so, at what cost? Will the franchisee have the right to use his own property and/or buildings? If not, will the franchisor sell or lease his property to the franchisee? Who is responsible for obtaining zoning variances, if required? Issues relating to the buildings, equipment and supplies terms Are plans and specifications of the building determined by the franchisor? If so, does this control extend to selection of contractor and supervision of construction? Are there any restrictions on remodeling or redecorating? Must equipment or supplies be purchased from the franchisor or approved supplier, or is the franchisee free to make his own purchases? When the franchisee must buy from the franchisor, are sales considered on consignment? Or will they be financed and, if so, under what terms? Does the agreement provide for continuing supply and payment of inventory (by whom, under what terms, etc.)? Does the franchise agreement bind the franchisee to a minimum purchase quota? What controls are spelled out concerning facility appearance, equipment, fixture and furnishings, and maintenance or replacement of the same? Is there any limitation on expenditures involved in any of these?
