Franchise Agreement Template
All states
A franchise agreement is a legal contract that defines the relationship between a Franchisor (owner of a brand or business model) and a Franchisee (individual or entity granted rights to operate a franchise). This franchise agreement sample lays out licensing terms, fee structures, insurance requirements, and any conditions related to the sale or reassignment of the franchise.
When Is a Franchise Agreement Used?
Franchise agreements play a key role in several business situations:
Starting a new franchise location — New franchisees must sign a franchise agreement PDF before opening under an established brand.
Transferring ownership — When a franchise is sold, the new owner signs new or updated franchise templates with the franchisor.
Renewing an agreement — Once the contract term ends, a renewal is usually required to continue operations.
Expanding rights — To open more locations, a franchisee may need a revised or new franchise agreement template for added territory.
Resolving disputes — The agreement helps resolve problems if conflicts or breaches occur between the parties.
How To Fill Out a Franchise Agreement?
Step 1: Enter party information and effective date
- Enter the Effective Date of the contract;
- Fill in the Franchisor’s name and full address;
- Fill in the Franchisee’s name and full address.
This franchise agreement is entered into on April 25, 2024 (the "Effective Date") by and between
Daniel Richards, an individual having their usual place of living at 450 Meadow Brook Lane, Kansas City, MO 64152 (the "Franchisor"), and
Elena Morales, an individual having their usual place of living at 1227 Ashwood Circle, Springfield, MO 65804 (the "Franchisee"),
collectively referred to as the "Parties".
Step 2: Describe the franchise business
- Enter the name of the Franchisor's business;
- Type and name of the franchise being granted.
Franchisor’s business: Green Glow Fitness Studio (the "Business").
Type and name of the franchise: The Franchisor grants the Franchisee a limited license to operate Green Glow Express Springfield (the "Franchise").
Step 3: Fill in insurance requirements
- Enter the general liability insurance minimum;
- Enter automobile liability insurance coverage if applicable.
Comprehensive general liability insurance with a minimum limit of $1,000,000.
Automobile liability insurance covering all employees of the Franchised Location with a minimum coverage of $500,000.
Step 4: Enter payment terms
- Input the initial up-front fee and due date;
- Specify the monthly franchise fee and its due date;
- Add royalty percentage and annual due date.
Initial fee: The Franchisee agrees to pay the Franchisor an initial fee of $25,000 within 10 days from the Effective Date.
Franchise fee: The Franchisee shall pay the Franchisor a franchise fee of $1,200 per month. The payment(s) should be made monthly no later than the 10th day of each month.
Royalties: The Franchisee shall pay the Franchisor 5% of the Franchise’s gross profits ("Royalties") per year. These payments shall be made every year no later than January 15 of each year.
Step 5: Specify the right-to-purchase terms
- Enter the notice period required for transfer offers;
- Enter days the Franchisor has to respond and exercise purchase rights;
- Enter the final deadline before the Franchisee is free to sell elsewhere.
If the Franchisee proposes to assign the Franchise to another party, they shall deliver a written Offer to the Franchisor at least 60 days before the assignment date.
The Franchisor shall have the right, exercisable by written notice to the Franchisee, for 15 days from the date of receiving the Offer, to purchase the offered interest under the terms outlined in the Offer.
If the Franchisor does not exercise this right within 30 days, the Franchisee shall have the right to complete the transfer to a third party under those same terms.
Once all five steps are completed:
- Have both the Franchisor and Franchisee sign and date the sample franchise agreement;
- Each Party should keep a signed copy for legal and business records.
Related Documents
Frequently Asked Questions
There are many conditions of a franchise agreement, but primarily they stipulate:
- That the franchisee has the right to use the trademark at a location agreed upon ahead of time for the duration of the agreement.
- That the franchisee will pay certain fees and payments to the franchisor and perform other specific duties.
- That the franchisor owes certain responsibilities and obligations, such as training and support, to the franchisee.
A franchise term can be whatever you specify in your legal documents. Most of the time, a business relationship is set for ten years. However, you are completely free to decide on a longer or shorter franchise term, as long as it's agreed upon by all parties involved.
A good franchise lawyer will look over a franchise agreement template to check on things like governing law or competitive business rules in the area. If you are using franchise agreement templates, you might specify different sections that weren't included in the franchise agreement sample, in which case an attorney or law firm can review what you wrote and ensure it covers your needs. If there has been a material breach, and the franchisee has violated business operations, reasonable attorneys fees might cover an inspection of your franchise agreement draft and litigation to pursue compensation for the violation.