- Does the franchise agreement necessitate revisions to your operating agreement? For example, it may require your limited liability company to have a certain number of officers or restrict the type of name.
- What initial fees are required? What recurring royalty fees will have to be paid?
- Typically, the agreement will require that the franchisee carry a minimum level of liability insurance. Does your LLC carry this amount of coverage?
- Franchise agreements frequently include noncompete clauses to discourage franchisees from operating a similar business nearby. For example, the contract might prevent a coffee franchisee from operating another coffeehouse within the same city during the term of the agreement and for 2 years thereafter. Are these time and geographic restrictions reasonable?
- Which employees are bound by confidentiality or nondisclosure agreements?
- When can the agreement be terminated? And if the agreement is breached, what are the required damages?
Tuesday, October 29, 2013
Franchise Agreements, Part 1
According to the International Franchise Association, more than 700,000 Ohio jobs are directly or indirectly related to franchised businesses. When our clients consider whether to launch or expand a franchise, our attorneys carefully review these and other provisions in franchise agreements: