What are the main contents of a franchise contract
The main contents of the franchise chain operation contract are as follows:
1. Definition of specialized terms
Franchise contracts involve many legal, business management, technical and other professional issues. Some specialized terms appear, such as management system, trademark licensing, regional protection, franchise fees, franchise royalties, product and service content, etc. Disputes often arise between franchise parties due to different understandings of the above-mentioned technical terms. In order to avoid this situation, it is of great significance to clearly define the connotation and denotation of these specialized terms. If the franchise contract stipulates: "The management system refers to the valuable special trade names, trademarks, architectural styles, training systems, financial systems, business know-how and proprietary technologies owned by the franchisor. Its core content is a certain trademark and its Operational management standards and technical quality standards”.2. Content and scope of franchise authorization , term, region
Usually the content of a franchise contract generally includes: licensed trademarks, trade names, patents, know-how and business know-how, etc. The contract should clearly stipulate their names, registration numbers and Other registration status, validity period, permitted use content, method and area, etc. When signing a contract, the franchisee should review the original copy of the relevant ownership certificate. The scope of the license should clearly stipulate the time, place, method, use authority, etc. The contract period can be as short as one year, as long as ten years, or as long as twenty years, usually three to five years. The length of the contract is related to factors such as industry characteristics, investment size, investment payback period, etc. Usually it should also be stipulated Under what circumstances can the contract be terminated early, and under what circumstances can the contract be extended or renewed. For example, a franchise contract stipulates: "After the expiration of the contract, if Party B (the franchisee) requests to continue the franchise, the contract shall be extended or renewed within the period of this contract." Months before the expiration date, a written application is submitted to Party A (franchisor). If Party A agrees to the extension, the contract shall be renewed; if Party A does not agree or Party B does not apply, the contract shall be terminated. ”
The territory used by the franchise usually refers to the The franchisor has the right to use the geographical scope of the franchise. It is usually used to limit the spatial scope of the franchisee's use of the franchise. At the same time, it can also be used to limit the number of franchisees that the franchisor can develop in a specific area to prevent The greedy and unrestrained development of franchise stores by franchisees avoids vicious competition within the franchise system and jeopardizes the healthy operation of the entire franchise system, thereby safeguarding the interests of franchisees. For example, a franchise contract stipulates that "the franchisor promises not to Develop other franchise stores within a certain district of a certain city in a certain province. ”
3. Franchise Basic rights and obligations of the parties
According to the original domestic trade "Commercial Franchise Management Measures (Interim)" of the Ministry of FinanceThe eight articles stipulate that the basic rights of the franchisor are:
First, in order to ensure the unity of the franchise system and the consistency of product and service quality, the franchisor has the right to supervise the business activities of the franchisee. This is one of the most basic rights of the franchisor. Supervision power is the most basic and important means to maintain the unity of the franchise system. Supervision power is usually achieved through the implementation of supervision procedures and systems. The supervision procedures and systems are not exactly the same in each enterprise, but their functions and purposes are consistent. For example, Mai*Lao adopts the method of "mysterious consumers" to inspect and supervise the product and service quality of franchise stores, and the results are very good.
Second, the right to collect from the franchisee Franchise fees and various other service fees. Franchise fees refer to franchise fees and royalties, and some companies also charge a certain amount of deposit. These fees are agreed upon in the franchise contract. Other various service fees usually include advertising fees, store design fees, special guidance service fees, agency fees, etc. This fee is usually agreed separately from the franchise contract. The collection of relevant fees not only reflects the value of the franchise, but also serves as a guarantee and source for the franchisor to provide various services to the franchisee.
Third, for violations of the provisions of the franchise contract, Any act that infringes upon the legitimate rights and interests of the franchisor and damages the franchise system shall entitle the franchisor to terminate the franchise contract and cancel the franchisee's franchise qualifications. This is the franchisor's right of termination. Because the form of the right to terminate the contract has a great impact on both parties to the franchise, the relevant clauses should be designed very carefully. On the other hand, since the franchise system is a community of interests, the franchisor should fully estimate the negative impact of terminating the contract on the entire franchise system and should not use the right to terminate the contract unless it is a last resort.
According to the "Commercial Franchise Management" of the former Ministry of Domestic Trade Article 9 of the Measures (Interim) stipulates that the basic obligations of the franchisor are:
First, grant the franchise right to the franchisee and provide a business symbol and operating manual representing the franchise system. Franchise The basis for the granting of operating rights is a franchise contract. In form, a symbolic authorization ceremony is usually held or an authorization certificate is issued. The business symbol is usually the unified store design, unified signboard, promotional supplies, work clothes, and business license of the franchise system. Methods, etc. The operation manual refers to the "Single Store Business Manual", "VI Manual", etc.
Second, provide pre-opening education and training. Education and training are usually arranged uniformly by the franchisor. If the franchisee has special requirements, both parties will negotiate separately.
Third, guide the franchisee to prepare for opening a store. Usually the franchisor is Franchisees provide services such as store location selection, store design, advertising planning, opening ceremony planning, equipment installation height, item procurement, employee recruitment, etc. Fourth, provide long-term business guidance, training and supply of items specified in the contract .
4. Basic rights of franchisees and Obligations
According to the "Commercial Franchise" of the former Ministry of Domestic Trade Article 10 of the Management Measures (Interim) stipulates that the basic rights of franchisees are:
First, exercise the rights granted by the franchisor within the scope of the contract. This mainly refers to the training and guidance of the franchisor, and the use of the franchisor's trademarks, trade names, patents, and management experience etc. to engage in business activities.
Second, the business technology and business secrets provided by the franchisor. This is an important purpose for the franchisee to purchase the franchise, but both parties should make clear agreements on how to correctly use business technology and trade secrets.
Third, provided by the person entitled to obtain the license training and guidance. Franchisors should arrange for personnel to receive training and make full use of training opportunities to improve their business and management levels. In addition, the franchisee's acceptance of the franchisor's guidance is an important condition for maintaining the entire franchise system, and the franchisee should have a correct understanding of this. In this sense, accepting guidance from the franchisor is not only the right but also the obligation of the franchisee.
According to the "Commercial Franchise Management" of the former Ministry of Domestic Trade Article 11 of the Measures (Interim) stipulates that the basic obligations of the franchisee are:
First, we are obliged to carry out business activities in strict accordance with the standards stipulated in the contract. Franchise contracts usually stipulate that the franchisee must conduct business activities in the manner specified in the "Single Store Operation Manual" to maintain the standards and uniformity of the franchise system.
Second, the obligation to strictly require payment as stipulated in the contract Royalties and various other fees. Currently, franchisees have some problems when paying royalties, mainly in not paying fees on time and providing false financial statements to reduce the amount payable. The franchisor's response to this is: collect a security deposit. If the franchisor delays paying royalties, the franchisor can use the security deposit to offset it; then improve the financial system and strengthen financial supervision of the franchisee; if financial supervision is difficult, a fixed amount can be adopted Payment of franchise royalties instead of proportional payments.
Third, we have the obligation to maintain the reputation and unified image of the franchise system. Maintaining the reputation and unified image of the franchise system is not only a requirement of the franchisor, but also related to the self-interests of the franchisee. In the franchise system, if there is a problem in one franchise store, it will affect the entire franchise system. For example, a "finger-chopping incident" occurred in a franchise store in Shenzhen, which quickly affected the entire system, causing a sharp decline in the turnover of all franchise stores in the system.
If you still have any questions, the Legal Savior Network is also Lawyer online consultation services are provided, and you are welcome to make legal consultations.
The above is the relevant content summarized by the editor. If If you have relevant legal consultation or other matters that you don’t understand, you can call the online lawyer on the Legal Savior Network for answers. The lawyer’s professional knowledge can help you.
No comments yet. Say something...