franchise-agreement
Drafts FTC-compliant U.S. Franchise Agreements covering rights grants, territory, fees, operational standards, IP protection, transfer restrictions, default/termination, and post-term obligations. Flags state relationship and registration law issues. Use when drafting initial or renewal franchise...
Full skill instructions
Drafts a litigation-hardened, FTC-compliant U.S. Franchise Agreement that protects franchisor IP and system standards while defining franchisee rights and obligations.
Collect before drafting:
| Section | Key Points |
|---|---|
| Parties & Recitals | Franchisor IP ownership; franchisee license desire |
| Grant of Rights | Marks licensed; format; territory type and boundaries |
| Term & Renewal | Initial term; renewal conditions (good standing, upgrade, current-form FA, fee); lapse consequences |
| Financial Obligations | Per fee schedule below |
| Franchisor Obligations | Training; ongoing support; Operations Manual; site/pre-opening assistance |
| Franchisee Obligations | System conformity; hours/staffing/service standards; owner involvement; insurance; reporting |
| Site Development | Approval process; deadlines (site selection, lease, construction, opening); failure-to-open remedy |
| IP Protection | Limited license only; goodwill flows to franchisor; mark non-contestation; confidentiality survives termination |
| Transfer & Assignment | Prior written consent; transfer fee; transferee training; ROFR; death/disability provisions |
| Default & Termination | Per default matrix below |
| Post-Termination | De-identification; return of materials; amounts due; non-compete |
| Relationship of Parties | Independent contractor; franchisee liable for employment, taxes, liabilities |
| Dispute Resolution | Governing law (franchisor home state, subject to franchise law limits); venue; mediation/arbitration; fee-shifting |
| General Provisions | Entire agreement; written amendments; waiver; severability; force majeure; notice addresses |
| Fee | Requirements |
|---|---|
| Initial franchise fee | Fixed amount; due on signing |
| Royalty | % of Gross Sales; weekly/monthly; ACH/wire mechanics |
| Ad fund contribution | % of Gross Sales; administration description |
| Technology fee | Fixed or variable; escalation terms |
| Transfer fee | Fixed amount or % of sale price |
| Renewal fee | Fixed amount; due at renewal exercise |
Define Gross Sales with specificity — enumerate exclusions (sales tax, refunds, employee meals, etc.) to prevent disputes.
| Event | Notice | Cure Period |
|---|---|---|
| Abandonment / conviction / unauthorized transfer / lease loss | None | Immediate |
| Failure to pay fees or submit reports | Written | 10–15 days |
| System standards non-compliance | Written | 30 days |
Draft as 1–2 years from termination/expiration, within specified radius of former location and all system locations. Include blue-pencil clause. [VERIFY applicable state non-compete statutes]
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