Franchise Agreement Questionnaire

If you`re considering buying a franchise, the franchise agreement is a crucial document that outlines the terms and conditions of your relationship with the franchisor. Before signing on the dotted line, it`s essential to understand the terms of the agreement fully. To do so, you need to ask the right questions. A franchise agreement questionnaire can help you better understand this document and make an informed decision.

Here are five questions to ask when reviewing a franchise agreement:

1. What are the initial franchise fees and ongoing royalties or fees?

The initial franchise fee is the amount of money you`ll pay to purchase the franchise rights. Ongoing royalties or fees are the payments you`ll make to the franchisor for continued support and backing. It`s essential to understand the cost structure and how it will impact your bottom line.

2. What are the renewal and termination terms?

Renewal and termination terms dictate the conditions under which the franchise relationship can be renewed or terminated. Make sure you understand these provisions, as they can have a significant impact on your business`s longevity.

3. What are the territory restrictions?

Territory restrictions define the geographical area in which you can operate your franchise. Make sure you know if there are limitations and whether or not they will hinder your business`s growth potential.

4. What type of training and support does the franchisor offer?

Franchisors often provide training and support to franchisees to help them succeed. Make sure you understand what kind of support will be provided and how it will be delivered.

5. What are the advertising and marketing requirements?

Franchisors typically require franchisees to adhere to specific advertising and marketing rules, including contributing to a national advertising fund. Make sure you understand what these requirements are and how they will be enforced.

In conclusion, a franchise agreement questionnaire can help you assess the potential franchise`s viability by asking the right questions. By understanding the initial costs, renewal and termination terms, territory restrictions, training and support, and advertising and marketing requirements, you can make an informed decision about whether or not to proceed with the franchise purchase. As always, consult with legal and financial advisors to ensure that you understand the implications fully.