ContractsCounsel Logo

Restaurant Franchise Agreement

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 9,832 reviews
No Upfront Payment Required, Pay Only If You Hire.
Home Types of Contracts Restaurant Franchise Agreement

Jump to Section

A restaurant franchise agreement is a statutory contract between a franchisee and a franchisor. The franchisor owns the brand associated with the restaurant. At the same time, the franchisee is the person or entity that has been granted the privilege to run a restaurant using the franchisor's recipes, trademark, and business practices.

Advantages of a Restaurant Franchise Agreement

Here are some benefits of executing a restaurant franchise agreement.

  • Brand Recognition: By joining a franchise agreement, franchisees can benefit from the established brand recognition of the franchisor, which can help to attract customers and develop a loyal customer base.
  • Training and Support: Franchisees receive training and support from the franchisor, which can help ensure the success of their business.
  • Proven Business Model: The franchisor has already developed a successful business model that franchisees can use in their location, saving them time and resources in developing their business plan.
  • National Advertising and Marketing: The franchisor creates and implements national marketing and advertising campaigns, which can help attract customers and build brand recognition.
  • Economies of Scale: Restaurant Franchisees benefit from the franchisor's size and purchasing power, which allows them to negotiate better prices on supplies and equipment.

Disadvantages of a Restaurant Franchise Agreement

Below are some key drawbacks of a restaurant franchise agreement.

  • Loss of Control: The franchisee must adhere to the franchisor's standards and procedures, which can limit their ability to make independent decisions about their business operations.
  • Fees and Royalties: Franchisees must pay fees and royalties to the franchisor, which can increase their overhead costs and reduce their profitability.
  • Limited Flexibility: The franchisee may be required to use specific suppliers, equipment, and products specified by the franchisor, limiting their ability to make changes based on local market conditions.
  • Territorial Restrictions: Franchisees are limited to a specific geographic territory, which can limit their ability to expand their business.
Meet some lawyers on our platform

Elexius E.

8 projects on CC
View Profile

Chris D.

9 projects on CC
View Profile

Darryl S.

30 projects on CC
View Profile

Ryenne S.

556 projects on CC
View Profile

How to Draft a Restaurant Franchise Agreement

Below are the steps to follow when drafting a restaurant franchise agreement.

  1. Identifying Parties Involved: The initial stage of drafting a restaurant franchise agreement involves identifying the parties involved. The franchisor owns the restaurant concept and grants the franchisee the right to operate a franchise, while the franchisee will operate the franchise and pay a fee to the franchisor for using the brand name and system.
  2. Defining the Terms of the Agreement: Next, the agreement's terms must be defined, which includes specifying the duration of the agreement, the franchisee's operating territory, and any exclusivity clauses.
  3. Defining the Franchise Fee: The fee that the franchisee pays the franchisor for using the brand name and system is known as the franchise fee. This fee should be explicitly stated in the agreement and any additional royalties or fees the franchisee must pay.
  4. Outlining the Franchisee’s Obligations: The franchisee's responsibilities for operating the franchise, maintaining brand standards, and paying all required fees should be explicitly stated in the agreement.
  5. Defining the Franchisor’s Obligations: The franchisor's duties for providing support and training to the franchisee, maintaining brand standards, and protecting the brand's intellectual property should be explicitly stated in the agreement.
  6. Specifying the Intellectual Property Rights: The agreement should explicitly define the franchisor's intellectual property rights, including the use of brand name, logos, and proprietary systems or processes.
  7. Outlining Termination Provisions: The agreement should also contain termination provisions specifying the circumstances under which the agreement can be terminated, notice requirements, and the parties' obligations upon termination.
  8. Including Relevant Provisions: Depending on the franchise's particular needs, the agreement may require additional provisions, such as advertising, marketing, or other crucial aspects of franchise operation.
  9. Consulting with Legal Counsel: Legal counsel should be consulted when drafting a restaurant franchise agreement to ensure that the agreement complies with all applicable laws and regulations and provides adequate protection for both parties.

Primary Parties in a Restaurant Franchise Agreement

The franchisor and franchisee are the two main parties involved in a franchise agreement, although third parties such as franchising lawyers and insurance companies may also be involved. Below are the primary principles that apply to the core of a franchise agreement.

  • The Franchisor

    Entities or individuals who license and sell their franchise rights to a franchisee are known as franchisors. They sell the franchisee's branding, licensing, and intellectual property rights. The franchise being sold can be a physical or online business or both.

  • The Franchisee

    Franchisees purchase franchise rights from franchisors and are usually small business owners with entrepreneurial experience in the industry. As a franchisor, selecting franchisees who can adhere to the standards and procedures you have established is important.

Why Hire a Lawyer for a Restaurant Franchise Agreement

Below are a few compelling reasons why seeking legal assistance with a franchise agreement is crucial:

  • Cost-Effective: Franchise lawyers typically charge a flat fee or an hourly rate agreed upon beforehand. This payment plan allows franchisors to anticipate their legal expenses instead of paying a large upfront fee. Engaging an attorney's services is always a wise investment since they provide high protection.
  • Worthwhile Investment: If you are serious about franchising your business, it is essential to have a legally binding agreement that reflects your values. Experienced businesspeople can easily detect incomplete or inadequate contracts, harming your chances of attracting the right individuals. Investing in a professional and well-crafted franchise agreement can increase your chances of securing aligned individuals.
  • Building Relationships: Many people only contact an attorney when a problem arises. Unfortunately, it is often too late to address the issue by this point. By retaining an attorney to create your franchise agreements, you establish a professional relationship with a legal expert who understands your business and whom you can contact at any time.
  • Protecting Your Rights: Your franchise attorney can also review new and existing contracts as you draft and receive them. Busy managers can find legal reviews and document management to be time-consuming tasks. You can delegate these responsibilities to your legal team, allowing you to focus on other aspects of your business.
  • Assistance with Negotiations: Negotiating is not something franchisees and franchisors frequently do. Although some familiarity with the process is necessary, having an experienced professional can improve your results. Consider involving an intellectual property or franchising lawyer in your negotiation discussions.

Key Terms for Restaurant Franchise Agreements

  • Territory: The franchisee is given the sole geographic area to operate the franchise. It safeguards the franchisee from competition from other franchisees of the same brand.
  • Franchise Fees: The franchisor charges a fee to the franchisee for the right to use the brand name, trademarks, and business model. These include an initial fee, ongoing royalty payments, and advertising fees.
  • Training and Support: The franchisor is responsible for providing initial and ongoing training and support to the franchisee. It can include training on the operation of the restaurant, marketing and advertising, and accounting practices.

Final Thoughts on Restaurant Franchise Agreements

A restaurant franchise agreement is a complicated legal document establishing the terms and conditions of an association between a franchisor and a franchisee. The contract covers everything from using the franchisor's trademark and branding to running and managing the franchise.

The franchisor offers the franchisee support, training, and a proven enterprise model, while the franchisee is responsible for following the franchisor's rules and guidelines. While franchise agreements offer several benefits to both parties, such as increased brand recognition, profitability, and a lower risk of failure, they also come with certain risks and limitations. In addition, franchisees should carefully review the terms of the agreement and seek professional advice before signing any contract to ensure they fully understand their rights and obligations.

If you want free pricing proposals from vetted lawyers that are 60% less than typical law firms, Click here to get started. By comparing multiple proposals for free, you can save the time and stress of finding a quality lawyer for your business needs.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Restaurant Franchise Agreement Lawyers

Briana C. on ContractsCounsel
View Briana
5.0 (54)
Member Since:
February 15, 2021

Briana C.

Founder, Branch Legal LLC
Free Consultation
Boston, MA
12 Yrs Experience
Licensed in CA, MA, NY
Columbia University School of Law

Legal services cost too much, and are often of low quality. I have devoted my law practice to providing the best work at the most affordable price—in everything from defending small businesses against patent trolls to advising multinational corporations on regulatory compliance to steering couples through a divorce.

Jo Ann J. on ContractsCounsel
View Jo Ann
5.0 (6)
Member Since:
February 23, 2021

Jo Ann J.

Partner
Free Consultation
Boston, MA
28 Yrs Experience
Licensed in MA
Suffolk Universtiy Law School

Jo Ann has been practicing for over 20 years, working primarily with high growth companies from inception through exit and all points in between. She is skilled in Mergers & Acquisitions, Contractual Agreements (including founders agreements, voting agreements, licensing agreements, terms of service, privacy policies, stockholder agreements, operating agreements, equity incentive plans, employment agreements, vendor agreements and other commercial agreements), Corporate Governance and Due Diligence.

Don G. on ContractsCounsel
View Don
4.9 (21)
Member Since:
March 1, 2021

Don G.

Attorney at law
Free Consultation
Oklahoma City, OK
23 Yrs Experience
Licensed in TX
Texas Tech School of Law

Texas licensed attorney specializing for 22 years in Business and Contract law with a focus on construction law and business operations. My services include General Business Law Advisement; Contract Review and Drafting; Legal Research and Writing; Business Formation; Articles or Instructive Writing; and more. I am able to draft and review contracts, and have experience with, contract law and business formation in any state. For more insight into my skills and experience, please feel free to visit my LinkedIn profile or contact me with any questions.

Jeremiah C. on ContractsCounsel
View Jeremiah
4.9 (36)
Member Since:
March 5, 2021

Jeremiah C.

Partner/Attorney at Law
Free Consultation
Houston
16 Yrs Experience
Licensed in NV, TX
Thomas Jefferson

Creative, results driven business & technology executive with 24 years of experience (15+ as a business/corporate lawyer). A problem solver with a passion for business, technology, and law. I bring a thorough understanding of the intersection of the law and business needs to any endeavor, having founded multiple startups myself with successful exits. I provide professional business and legal consulting. Throughout my career I've represented a number large corporations (including some of the top Fortune 500 companies) but the vast majority of my clients these days are startups and small businesses. Having represented hundreds of successful crowdfunded startups, I'm one of the most well known attorneys for startups seeking CF funds. I hold a Juris Doctor degree with a focus on Business/Corporate Law, a Master of Business Administration degree in Entrepreneurship, A Master of Education degree and dual Bachelor of Science degrees. I look forward to working with any parties that have a need for my skill sets.

Meghan P. on ContractsCounsel
View Meghan
4.8 (6)
Member Since:
February 15, 2021

Meghan P.

Attorney
Free Consultation
Denver
6 Yrs Experience
Licensed in CA
University of Dayton

I am a licensed attorney and a member of the California Bar. I graduated from the University of Dayton School of Law's Program in Law and Technology. I love IP, tech transfers, licensing, and how the internet and developing technology is changing the legal landscape. I've interned at both corporations and boutique firms, and I've taken extensive specialized classes in intellectual property and technology law.

Charlotte L. on ContractsCounsel
View Charlotte
4.6 (2)
Member Since:
February 25, 2021

Charlotte L.

Self-Employed Legal Consultant
Free Consultation
Arlington, VA
10 Yrs Experience
Licensed in DC, VA
University of Virginia School of Law

I hold a B.S. in Accounting and a B.A. in Philosophy from Virginia Tech (2009). I received my J.D. from the University of Virginia School of Law in 2012. I am an associate member of the Virginia Bar and an active member of the DC bar. Currently, I am working as a self-employed legal consultant and attorney. Primarily my clients are start-up companies for which I perform various types of legal work, including negotiating and drafting settlement, preparing operating agreements and partnership agreements, assisting in moving companies to incorporate in new states and setting up companies to become registered in a state, assisting with employment matters, drafting non-disclosure agreements, assisting with private placement offerings, and researching issues on intellectual property, local regulations, privacy laws, corporate governance, and many other facets of the law, as the need arises. I have previously practiced as an attorney at a small DC securities law firm and worked at Deloitte Financial Advisory Services LLC. My work experience is dynamic and includes many short-term and long term experience that span across areas such as maintaining my own blog, freelance writing, and dog walking. My diverse background has provided me with a stong skill set that can be easily adapted for new areas of work and indicates my ability to quickly learn for a wide array of clients.

Adam B. on ContractsCounsel
View Adam
Member Since:
March 5, 2021

Adam B.

Managing Partner
Free Consultation
San Mateo, California
26 Yrs Experience
Licensed in CA
McGeorge School of Law

Seasoned technology lawyer with 22+ years of experience working with the hottest start-ups through IPO and Fortune 50. My focus is primarily technology transactions with an emphasis on SaaS and Privacy, but I also provide GC services for more active clients.

Find the best lawyer for your project

Browse Lawyers Now

How It Works

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer

Business lawyers by top cities
See All Business Lawyers
Restaurant Franchise Agreement lawyers by city
See All Restaurant Franchise Agreement Lawyers
related contracts
See More Contracts
other helpful articles

Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.

View Trustpilot Review

Contracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.

View Trustpilot Review

I never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.

View Trustpilot Review

I got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.

View Trustpilot Review

How It Works

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call

Find lawyers and attorneys by city