Franchise Glossary
Franchise Agreement
What is Franchise Agreement in franchising?
The legal contract between a franchisor and franchisee governing the operating relationship for the term of the franchise (typically 10 years with renewal options). It covers territory rights, royalty obligations, operating standards, transfer rules, and termination conditions. Unlike the FDD, the franchise agreement is the binding document. What is in it governs, not what was said in conversation.