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Yvonne Holden, Esq has been featured across industry publications, podcasts, and digital platforms. Explore articles, interviews, and features where her insights into franchise law, business litigation, and commercial agreements have provided guidance to entrepreneurs and business owners.
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What is a franchise?
What is a franchise agreement?
A franchise agreement is a contract between the franchisor and the franchisee that sets forth the terms, conditions, rights, and responsibilities of the relationship between both parties. The franchise agreement will usually include terms regarding the license rights that the franchisee has in the franchisor’s trademarks and intellectual property.
What is a franchisor?
A franchisor is the company selling the right to other individuals or entities to use its trademark and system to sell products or services.
What is a franchisee?
A franchisee is an individual or entity that buys the right to use the trademark and system of a franchisor to sell certain products or services.
What is a franchise disclosure document ("FDD")?
The Federal Trade Commission requires that a franchisor give its franchise disclosure document to potential franchisees. The document contains 23 disclosures, including information about initial fees, ongoing fees, and territory details. A franchisee must receive the FDD within 14 days before signing the franchise agreement or writing a check to the franchisor.
What is the difference between the franchise agreement and the FDD?
The franchise agreement is the binding contract between the franchisor and the franchisee. It contains the terms and conditions that bind the parties. The FDD includes extra information that the franchisor must provide to potential franchisees about the franchisor and the franchise system. Still, it is not a binding contract and does not contain the terms and conditions that bind the parties. Note, however, that a template franchise agreement is incorporated as an exhibit within the FDD.
Why do I need an attorney to review my franchise documents?
Franchise documents are unlike most other contracts in that they are not very negotiable. An experienced franchise attorney will know what terms in your franchise documents can be negotiated, if any, and what cannot be negotiated. Even if your franchise attorney cannot negotiate any changes to the documents, your attorney has another critical job to do on your behalf: educate you on the content of those documents.
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