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ARTICLE · 17 APRIL 2022

Understanding the franchise agreement

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The franchise agreement formalises the franchisor-franchisee relationship and creates legal obligations on both parties.

AustraliaCorporate/Commercial Law
Ling Hsu
Ling Hsu
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The franchise agreement is the legally binding contract entered into between a franchisee and franchisor. Thus, it formalises the franchisor-franchisee relationship and creates legal obligations on both parties. However, it differs from other commercial contracts. For example, franchise agreements must comply with the Franchising Code of Conduct (the Code). Furthermore, many elements of a franchise agreement are common across most franchise networks. Therefore, it is possible to anticipate which 'standard terms' your franchise agreement should include. This article will outline the standard terms in more depth. Additionally, it will also explain the role of the franchisee and guarantor, and how to execute a franchise agreement correctly.

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