Are your franchise agreements valid?

Posted 18/04/2016  By: Tracy Williamson

A properly signed franchise agreement is of fundamental importance but something that is easily overlooked by many franchisors.

One of the most common errors that can be made by franchisors is ensuring that the parties enter into the correct version of the franchise agreement.For example a franchisee who intends to run the franchise via a limited company should be signing a limited company version of the franchise agreement which provides for a personal guarantee.A franchisee who intends to operate the franchise as a sole trader or in partnership should sign this version of the franchise agreement.

Even if the correct version of the franchise agreement is entered into the specific information relating to the franchisee which is inserted within the franchise agreement may often be incorrect or possibly out of date.This can then lead to problems if a franchisor needs to serve notice on a franchisee in the event of a breach of the franchise agreement.

Another very common oversight is not having the franchise agreement properly signed.Franchisees who operate via a limited company will need a director to sign on behalf of the company in addition to the guarantor signing personally.Franchisees who operate as sole traders sign in their personally capacity and franchisees who operate in partnership will require both partners to sign the agreement.

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