Matters Needing Attention When Signing A Contract

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It is all about the right and obligation of joining the headquarters and the franchisees. This is not true. We should pay attention to the following points when signing the contract.

1. the right to use trademarks, trade names, etc.

In the vast majority of franchise chain systems, the affiliate headquarters owns the following intangible assets: when signing the contract, it should clearly and clearly explain the intangible assets owned by the headquarters and the types and scope of the authorized franchisees to use these intangible assets.

2. contract period

The duration of the contract is the duration of the relationship between the two parties.

This time is long and short, short is 3 - 5 years, longer than 10 years, there is no specific standard.

In the contract, it should also indicate the right to allow franchisees to have extended period.

If the contract does not indicate the extension period, and the headquarters does not want to sign a longer term contract, it is likely to show that when the franchisee renew the contract, it will have to pay a high franchise fee.

3. types of services provided by headquarters

The contract will explain in detail what services the headquarters will provide to the franchisees. These services include the initial service before the opening and subsequent services after the opening.

Initial services: location selection, franchisee decoration, training, equipment purchase and financing.

Follow up services: including headquarters.

The activities are implemented effectively to help maintain standardization and business profits; headquarters continues to improve and innovate the operation methods and teach them to the franchisees; headquarters conducts market research and sends market information to franchisees; headquarters carries out centralized and unified promotion and advertising activities; the general department provides preferential purchase sources to centralized stores for the franchisees; and provides management consulting services to the franchisees by headquarters experts.

The detailed list of these service items in the contract is a legal protection for the interests of franchisees.

4. obligations of franchisees

The franchisee obtains the right to use all kinds of intangible assets of headquarters, and gets the support from various services of headquarters, so that its business can quickly establish a firm foothold and get on the right track, but it must pay a certain price and bear corresponding responsibilities.

In order to make the franchiser clear their responsibilities and obligations, and in order to restrict the franchisee to perform their duties, these matters must be included in the contract.

Although there are only headquarters and franchisees in the contract as contractors, the headquarters set up a comprehensive business system to ensure that the interests of other franchisees and the public can be guaranteed by adding some provisions, because any franchisee can not maintain its due standard, which is more or less damaging to the reputation of the franchise system, and then affects the profits of other franchisees. Therefore, the obligations of both parties should be listed in the contract to maintain the interests of all parties.

Generally speaking, there are some contents in the operation manual, which relate to the obligations that the franchisee should fulfill.

With the development of the franchise system, the operation manual will continue to be updated and improved.

5. operation and control of franchised stores

The most important feature of franchising is the high degree of unity in business and mode of operation, so that independent affiliates can form an external image of capital unified operation under the provisions of the contract.

If one of the franchisees does not operate according to the unified requirements of the headquarters, it will destroy the overall external image and damage the reputation of the whole franchise system.

Therefore, headquarters must effectively control the franchisees to ensure that the standards and norms of operation can be implemented in a meticulous manner.

What way does headquarters take control of franchised stores?

It should be included in the contract in detail so as to get the understanding and acceptance of the franchisees.