Franchisee is now becoming a popular way to start a business. Taking a franchisee of an already established business cuts off much of the groundwork needed to establish a business venture. By paying a certain fee, an establishing business venture can use a trademark name of an already known entity, cutting off all the burden of brand recognition.
Franchisee means that a company is willing to let other entity use its name and services and other rights. The entity or person giving its name or company system is called a franchisor and the entity being provided the name or company system is called as franchisee. To form this kind of relationship, both the franchisor and the franchisee must consent to form an agreement to avoid further disputes about the terms and usage of the rights provided by the franchisor. A franchise agreement is a legally binding document considered as contract where a business person consents to grant its enterprise’s name or company system to the entity or an individual known as the franchisee. Franchise agreement is also known as the Bible of the Franchisee industry. The said agreement outlines the terms and conditions of a franchisor for a franchisee. The said agreement characterizes the foundation of the terms and conditions that both the parties consent to. It would include all the remunerations for the franchisee like relating to use of business trademark, payment in the way of royalty etc. It would also include the conditions specifying the extent of the agreement, regarding usage of brand name, terms of disciplinary provisions, financial penalties, allowances regarding withdrawal of the contract and the franchise etc.
A franchise agreement, to conclude, is a contract binding the franchisor and the franchisee to the terms and conditions mentioned herein. A set of rules defining how the franchisor can use the name and other rights offered by the franchisor. A franchisee agreement is beneficial to both the franchisor as well as the franchisee.