Discuss the terms of a franchise agreement

Question

What will be an ideal response?

Answer 1

Generally, a franchise agreement is a standard form contract prepared by the franchisor. Franchise agreements cover the following topics:
a. Quality-control standards. The franchisor's most important assets are its name and reputation. The quality-control standards set out in the franchise agreement—such as the franchisor's right to make periodic inspections of the franchisee's premises and operations—are intended to protect these asset. Failure to meet the proper standards can result in loss of the franchise.
b. Training requirements. Franchisees and their personnel usually are required to attend training programs either on-site or at the franchisor's training facilities.
c. Covenant not to compete. Covenants not to compete prohibit franchisees from competing with the franchisor during a specific time and in a specified area after termination of the franchise. Unreasonable (over-extensive) covenants not to compete are void.
d. Arbitration clause. Most franchise agreements contain an arbitration clause providing that any claim or controversy arising from the franchise agreement or an alleged breach thereof is subject to arbitration. The U.S. Supreme Court has held such clauses to be enforceable.
e. Other terms. Capital requirements include restrictions on the use of the franchisor's trade name, trademarks, and logo; standards of operation; duration of the franchise; recordkeeping requirements; sign requirements; hours of operation; prohibition on sale or assignment of the franchise; conditions for termination of the franchise; and other specific terms pertinent to the operation of the franchise and the protection of the parties' rights.