The Federal Trade Commission (FTC) has received numerous complaints about unequal and dishonest practices in the sale of these franchises. In late 1978, it passed regulations, effective October 21, 1979, requiring franchisors and their representatives to disclose facts essential to an informed decision on the proposed acquisition of a franchise and defining certain practices to be followed in the franchisor-franchise relationship. These rules are collectively referred to as obligations and disclosure prohibitions for franchises and business opportunity companies, or more simply as a franchise rule. In addition, there must be a factual description of the deductible as well as a clear indication of all the funds payable, such as the initial deductible fee. B, down payments, down payments, prepaid rent on site and purchases of equipment and inventories. The terms and times for repayment and their amount must be clear, as must the amount of recurring costs such as royalties, rents, advertising and rental costs. All restrictions imposed – such as the amount of goods or services for sale, the types of customers with whom the franchisee can trade – the geographic area and whether the franchisee is entitled to the protection of its territory by the franchisor must be discussed. The duration of the deductible must also be explained in addition to the reasons why the franchise is terminated or the franchisee`s licence cannot be renewed if it expires. Include the number of deductibles terminated or voluntarily terminated by the franchisor. The franchisor must disclose the number of franchises that made the activity at the end of the previous year as well as the number of outlets of the company. The franchisee must also be delivered with the names, addresses and telephone numbers of franchisees in the ten outlets closest to the potential franchisee`s location, so that the potential franchisee can contact them for a realistic perspective on the day-to-day operation of a franchise. In the U.S., a company becomes a franchise- According to the RULE of the FTC franchise, there are three general requirements for a franchise contract to be considered official: While each franchise is independent and operated, it will always bear the name of your brand and is the same company in the eyes of the customer.
Therefore, your brand will play a big role in the customer experience and you should make sure that the experience is always consistent. Establishing quality control rules in the franchise agreement will help ensure a consistent brand experience across all franchises. As a franchisor, you lend your brand to your franchisee. This is a great risk if you do not protect yourself properly and your brand. That`s why it`s important to set rules on the shape and sound of your brand, when you should use protected intellectual property, what advertising can be done and what the franchisee needs to know about using your brand. This sounds simple in theory, but there are several elements that should be included. In this manual, we will include you in the definition of franchise agreements and what you should include in this important document. Start. Each franchise agreement is unique to the franchise.
While these sections may be a policy for creating your franchise agreement, there is a lot of legal language that needs to be included in a franchise agreement, and you will probably need the help of a franchise lawyer to conclude it.