What are the main elements of a franchise agreement?

A franchise agreement is the contractual agreement between a franchisor (the owner of the franchise) and a franchisee (the individual or entity who purchases the franchise). In Ohio, franchise agreements generally have five main elements: 1. Territorial Rights – This section of the agreement determines the territory in which the franchisee may operate and the exclusive rights to sell the franchisor’s products and services. 2. Trademark Protection - This section explains the franchisor’s ownership of the trademarks associated with the franchise and the franchisee’s obligation to comply with the franchisor’s usage rules. 3. Initial Fees – This section explains the fees that must be paid by the franchisee before the start up of the franchise. These fees may include an initial fee, ongoing franchise fees, advertising fees and training fees. 4. Ongoing Fees – This section outlines the fees the franchisee must pay to the franchisor on an ongoing basis. These fees may include royalties, advertising fees, and other fees. 5. Renewal – This section explains the process for renewing the franchise agreement and the criteria necessary for renewal. In addition to these main elements, the franchise agreement may contain additional sections, such as a termination clause, a dispute resolution clause, and a non-compete clause. It is important for franchisees to read and fully understand the franchise agreement prior to signing, as it will be legally binding.

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What are the main elements of a franchise agreement?

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