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Duties, Obligations & Promises

The relationship between franchisor and franchisee is controlled by a contract which defines a series of duties, obligations, and promises.

The franchisor usually does the following: The franchisee usually agrees to do the following:
  • grants a license to use and display proprietary marks;
  • provides a marketing plan;
  • grants the right to utilize all of its know-how related to operation of the franchise;
  • provides a manual that details operational systems and procedures;
  • grants the right to operate the franchise system for a fixed period of time; and
  • furnishes specifications, standards, or duties for:
    • accounting and reporting procedures;
    • advertising;
    • personnel requirements;
    • construction and design;
    • site selection;
    • furniture;
    • fixtures and equipment;
    • product or service; and
    • maintenance.
  • pay the franchisor an initial franchisee fee, not for any product, service or specific assistance, but merely for the privilege of obtaining the franchise and the associated rights, and for the right to obtain the franchisor's know-how to enable the franchisee to operate that business in the most profitable fashion;
  • pay the franchisor a continuing royalty in return for the franchisor's continuing assistance and for the on-going privilege of using the franchisor's know-how, systems and methods;
  • at all times conduct the franchised business in strict compliance with the franchisor's standards, procedures, policies and specifications, and to adhere to all such requirements throughout the life of the franchise relationship;
  • use the franchisor's name, trademark and service mark;
  • adhere to the franchisor's standard bookkeeping specifications and to submit to the franchisor required reports;
  • undergo and successfully complete the franchisor's training program;
  • not divulge to a third party any confidential information, knowledge or know-how conveyed to the franchisee by the franchisor;
  • purchase all required products, supplies, and materials only from suppliers designated or approved in writing by the franchisor, or from the franchisor itself;
  • not relocate the franchise without first informing the franchisor and, perhaps, procuring the franchisor's approval.;
  • comply with all employee hiring and training requirements;
  • consent to inspections by franchisor to determine compliance with franchisor's policies and procedures; and
  • discontinue, upon termination or expiration of the franchise, use of the franchisor's name, trademark and service mark; cease operating or doing business under any name or in any manner which might cause the public to believe that a franchise relationship with the franchisor still exists; and immediately and forever cease using, in any manner, franchisor's trade secrets, procedures, techniques, systems, standards, specifications, and services.