Overview of franchising agreements

One way a Portland entrepreneur may wish to start a business by purchasing a franchise. While the popularity of franchising began with the dawn of fast food restaurants, a number of industries here in Oregon and throughout the Pacific Northwest now rely on this model for distributing their products and services.

Basically, a local businessowner, or franchisee, will buy the rights to use the name, goods and services of a business. In exchange, the franchisee must agree to adhere to the standards of the franchisor, that is, the business which is allowing the local owner to use the larger operation's brand and products.

These standards can be very detailed and can pertain to a wide range of topics, including market conduct, advertising, financial performance and even the physical look of one's commercial property. In some cases, the franchisor may have a very hands-on approach and be involved with the day-to-day operation of the business, as well as the business's overall strategy.

Given the nature of the relationship, it is almost inevitable that the franchisee will be expected to negotiate and then abide by a detailed franchising agreement. The agreement will cover all kinds of topics and will also describe the parties' rights and obligations. The agreement should also discuss how either side can get out of the agreement and what will happen in the event that there is a legal dispute.

These contracts and agreements can make or break a franchisee's business opportunity. If the agreement is lopsided or unrealistic, it could mean that what started as a dream to own one's own business ends up as a financial nightmare. The bankruptcy of the franchisee can even be the end result of a bad agreement. This is why a franchisee should review any proposed deal with an experienced business law attorney.

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