What is the procedure for negotiating a franchise agreement?

Negotiating a franchise agreement involves a complex process of discussions and negotiations between the franchisor and the potential franchisee. In Wisconsin, the process begins with the parties first evaluating the other’s interests to make sure they are a good fit. Once the parties have decided to move forward with negotiations, the franchisor must provide the potential franchisee with a Franchise Disclosure Document (FDD). This document discloses important information about the franchise, such as the fees associated with entering the franchise, the representations and warranties the franchisor has made, the terms of the franchise, and the obligations of both parties. The potential franchisee must then carefully review the FDD and seek advice, such as from an attorney, accountant, or other advisor, before signing any agreement. Once the potential franchisee has accepted the FDD, the franchisor and the potential franchisee will negotiate the terms of the franchise. Negotiations may include discussing the initial franchise fee, royalty fees, location, advertising fees, and other aspects of the franchise. After the parties have finalized their agreement, they must draft the final version of the franchise agreement. The agreement must reflect the parties’ negotiations and be approved by the franchisor and the potential franchisee. Once the agreement is signed, the franchisor and franchisee will enter into a contractual relationship and the franchisee can then begin operating under the franchise agreement.

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What is the procedure for negotiating a franchise agreement?

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