Franchise Agreement Structures

A franchise agreement is a contract between a franchisor (the brand owner) and a franchisee (the business operator). It outlines the rights and responsibilities of both parties. Key components include the franchise fee (initial payment), royalties (ongoing payments based on sales), duration of the agreement, territory (exclusive area for business), and operational guidelines (how to run the franchise). It ensures consistency across locations while allowing franchisees to leverage an established brand. Essentially, the agreement balances franchisor support with franchisee independence in running a business.