A franchise agreement sets the rules for how you run your franchise every day, not only on the day you sign. It can decide what you pay each month, where you can trade, which suppliers you use, how the business must look and what happens if you want to sell or leave. Because the franchisor usually writes it, it makes sense to understand each part before you commit.
This guide walks through the parts of a typical franchise agreement in everyday words, so you know what to look for and what to ask.
In This Article
Who writes a franchise agreement, and can I change it?
In most cases the franchisor writes the agreement and offers the same version to every franchisee. That keeps the brand consistent, but it also means the document was written with the franchisor’s interests in mind.
Some franchisors will discuss changes. Others will not. Either way, it is worth knowing what each clause means before you sign, so any questions are raised at the right time.
There is no single franchise law in England and Wales. A franchise agreement is a contract, so what it says matters. The British Franchise Association is a voluntary body that some franchisors join. Membership is a choice, not a legal requirement.
What will I pay, and when?
Most agreements set out more than one type of payment. Look for:
- The initial fee you pay to join
- Any ongoing fee, often worked out as a share of your sales
- Any marketing or advertising fund you must pay into
- Whether fees can go up during the agreement, and how
Read how and when each payment is worked out. This affects your cash flow every month, not only at the start.
Where can I trade?
Many agreements give you a territory, an area where you can run the business. Check:
- Exactly where the boundaries are
- Whether the territory is yours alone, or whether the franchisor can open other outlets or sell online into it
- Whether you must hit any sales targets to keep the territory
Our article on territories in a franchise agreement goes into this in more detail.
How much say will I have in running the business?
This is where a franchise agreement most affects your day to day life. It often links to an operations manual, a separate document with the franchisor’s rules. The manual can cover:
- How the premises must look
- Which suppliers and products you must use
- Opening hours
- How you report your sales and figures
Ask to see the operations manual, or at least a summary, before you sign. Check whether the franchisor can change the manual later, and whether changes could cost you money.
How long does the agreement last, and what happens at renewal?
Check the length of the agreement and whether you have a right to renew. Some agreements renew only if you meet set conditions, or ask you to pay a renewal fee or refit the premises.
If the business trades from rented premises, there may be a lease too. The lease and the franchise agreement can have different end dates. It helps to check that the two fit together.
What if I want to sell or leave?
Plans change. Look at:
- Whether you can sell the franchise, and whether the franchisor must agree to the buyer
- Any fees the franchisor charges when you sell
- What happens if you want to end the agreement early
- Any restrictions on running a similar business after you leave
Our guide on how to exit a franchise agreement safely in England and Wales covers this in more depth.
What should I do before I sign?
A simple order helps:
- Read the agreement once from start to finish.
- Note every part you are unsure about.
- Ask the franchisor for the operations manual and any figures they share with new franchisees.
- Get your questions answered before you commit.
If you are still choosing a franchise, our article on what to check before buying a franchise in the UK is a good place to start.
Frequently asked questions
Is a franchise agreement the same as a lease?
No. The franchise agreement is between you and the franchisor. A lease is between you and the landlord of your premises. You may need both.
Can I ask the franchisor to change the agreement?
You can ask. Some franchisors will discuss changes and some will not. Knowing what each part means helps you decide what to ask about.
Do I need a solicitor to look at a franchise agreement?
It is your choice. A solicitor can explain what the agreement means for you and point out anything to ask the franchisor before you sign.
Talk it through before you commit
Thinking about a franchise in Birmingham or nearby? Book your free consultation with Onyx Solicitors and understand your franchise agreement before you sign.
Read what our clients say about us on our testimonials page.
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Not ready to talk yet? Read our article on the key documents every franchise agreement should include.