The franchise agreement
Produced in partnership with Fieldfisher LLP
The franchise agreement

The following Commercial guidance note Produced in partnership with Fieldfisher LLP provides comprehensive and up to date legal information covering:

  • The franchise agreement
  • Grant of rights
  • Exclusivity
  • Territory
  • Term and renewal
  • Development plan and sales targets
  • Method and intellectual property rights licence
  • Fees
  • Trade marks and domain names
  • The parties' obligations
  • more

This Practice Note considers the principal matters a franchise agreement should address including clarity over the rights to be granted to the franchisee and the relevant territory, whether the franchise can be granted on an exclusive basis, ensuring full consideration is given to the sales targets and development plans, the licensing of intellectual property rights and availability of trade names and domain names. The Practice Note also highlights the importance of a well drafted manual and the key areas a manual should cover.

The structure and content of a franchise agreement are similar to those of a distribution (reseller) agreement. The principal matters a franchise agreement should address are set out below.

Grant of rights

The rights to be granted to the franchisee should be clearly set out in the agreement; each party should be clear what it hopes to achieve. How far these, as the other terms of the agreement, can be negotiated by the franchisee depends on the nature and strength of the franchise and what the franchisee has to offer in its development in the territory concerned. It is relatively unusual for a domestic franchisor to accept material changes to its standard franchise agreement. The franchisee will normally be in a stronger position in international arrangements.

Exclusivity

The franchisee will normally ask for exclusivity, so that there