連鎖加盟,加盟契約

Legal issues related to the franchise contract: store lease contract, risks to be considered in the franchise contract and termination clauses of the franchise contract

連鎖加盟,加盟契約
Legal issues related to the franchise contract: store lease contract, risks to be considered in the franchise contract and termination clauses of the franchise contract 3

Table of contents

1. Term of franchise contract and store lease contract

The term of the franchise contract refers to the time the franchise owner authorizes the franchise store to use the trademark or business technology, while the lease period refers to the time the franchise store rents the store. The terms of the two should cooperate with each other to ensure the franchise store's operating rights and reduce legal risks.

Generally speaking, the term of the franchise contract should not exceed twenty years, and if it exceeds, it should be shortened to twenty years. The term of the lease is freely agreed upon by both parties, but it must not violate public order and good customs.

2. Possible problems caused by inconsistent deadlines

a. The franchise contract period is shorter than the lease period

  • risk: After the lease expires, you cannot continue to operate at the original location unless the franchise contract has renewal conditions and the requirements are met. Otherwise, the franchise store may lose the authorization of the franchise headquarters and cannot continue to use trademarks or business technologies.

b. The franchise contract period is longer than the lease period

  • risk: The lease period had not expired, but the landlord asked him to return the store. If a franchise store violates the lease and continues to operate at the original location, the landlord may be held legally responsible; if it abides by the lease and ceases operations, the franchise headquarters may be held legally responsible for violating the franchise contract.

3. Precautions

a. Things to note in the franchise contract

  • Contract review period: The franchise contract should have a five-day review period, and a complete contract should be provided for retention within thirty days after signing.
  • The contract content is clear: The contract should clearly stipulate the authorization period, renewal conditions, non-compete clauses, etc., and coordinate with the lease term.

b. Things to note about the lease

  • Reasonable agreement: The lease should clearly stipulate the rent, deposit, lease period, renewal conditions, liability for breach of contract, etc., and be coordinated with the term of the franchise contract.

4. Franchise risks and how to avoid them

a. Franchise risks

  • High franchise fee: Franchise fee is too high.
  • Unfair contract: The franchise contract is unfair.
  • Too many franchise stores: There are too many franchise stores.
  • Poor management of the headquarters: The franchise headquarters is poorly run.

b. Avoidance methods

  • Evaluate the franchise headquarters: Evaluate the strength, credibility, operating conditions and policies of the franchise headquarters.
  • Read the contract carefully: Read the franchise contract carefully and pay attention to payment methods and refund conditions, as well as deadlines, non-compete, termination clauses and other matters.
  • Choose the appropriate store: When opening a franchise store, choose an appropriate store location and evaluate the consumer demand, competition and rental costs in the business district.
  • Comply with management regulations: When operating a franchise store, comply with the management regulations and operating procedures of the headquarters while maintaining the quality of products and services.
  • Maintain good communication: Maintain a good cooperative relationship with the headquarters, report problems and suggestions in a timely manner, and make good use of the training, consultation and support resources provided.

5. Termination clauses of the franchise contract

a. Contents of the termination clause

  • Reason for termination: Be specific, clear and reasonable.
  • Notice of termination: Notify in writing, stating the reasons and basis.
  • Termination effect: It takes effect according to the time specified in the contract.
  • Consequences of termination: Reasonably share the rights and obligations of both parties, including payment, cessation of use of the trademark, etc.

b. Suggestions when terminating the contract

  • Read carefully: Read and understand the termination clause carefully and seek professional legal advice if necessary.
  • Reasonable negotiation: When terminating a contract, resolve disputes through negotiation or arbitration to avoid legal proceedings.
連鎖加盟,加盟契約

1. Overview of franchise risks

a. Franchise fee is too high

risk: High franchise fees may affect franchisees' return on investment and increase operating pressure.

b. Unfair franchise contract

risk: Unequal contracts may put franchisees at a disadvantage and limit their operating flexibility.

c. Too many franchise stores

risk: Too many stores may lead to fierce competition in the market, making it difficult for franchisees to gain sufficient market share.

d. Poor management of the franchise headquarters

risk: Poor management of the headquarters may have a negative impact on the support and assistance provided to franchisees, affecting overall business operations.

2. Key strategies on how to avoid franchise risks

a. Evaluation when choosing a franchise brand

  • Strength, reputation, operating status: Evaluate the overall strength and credibility of the franchise headquarters, as well as the stability of its operations.
  • Franchise policy: Research the franchise policy to see if it is in line with your own business philosophy.
  • Consider the experiences of other franchisees: Network with other franchisees to learn about actual business experiences to gain a more comprehensive perspective.

b. Be cautious when signing a franchise contract

  • Read the contract carefully: Review the contract to ensure the content is clear and the rights of both parties are protected.
  • Fee payment methods and refund conditions: Pay attention to the payment methods and return conditions for franchise fees, royalties, deposits and other fees.
  • Important matters clearly stated: Matters such as the franchise period, business area protection, non-competition, and termination clauses should be clearly agreed upon.

c. Careful selection procedures when opening a franchise store

  • Choose the right store location: Evaluate consumer demand, competition, and rental costs in the business district to ensure reasonable location selection.
  • Assistance provided by headquarters: Confirm whether the headquarters provides assistance with site selection, decoration, equipment, etc. to reduce the risk of opening a store.

d. Strategy and execution when operating a franchise store

  • Comply with management regulations and operating procedures: Follow the management standards of the headquarters to ensure quality and service levels.
  • In response to market changes: Flexibly adjust business strategies to respond to market changes and improve competitiveness.

e. Good communication with headquarters

  • Maintain a partnership: Actively cooperate with the headquarters to maintain good communication and feedback mechanisms.
  • Make good use of headquarters resources: Make full use of the training, consulting, support and other resources provided by the headquarters to improve business capabilities.

3. Conclusion

Franchise does have certain risks, but through careful evaluation, careful reading of the contract, and effective cooperation with the headquarters, the risk can be reduced and the franchise store's chance of success can be improved. Successful franchisees not only need to choose the right brand, but also need to make continuous efforts during the business process and adapt to market changes to ensure long-term business stability.

1. Reasons for termination of contract

The termination clause should clearly list specific, clear and reasonable reasons for termination, including:

breach of contract

  • The franchisee or the headquarters violates the contract, such as failure to pay fees, violation of business regulations, etc.

force majeure

  • Force majeure events, such as natural disasters, wars, etc., make it impossible to perform the contract.

Agreement terminated

  • Circumstances in which both parties agree to terminate the contract.

2. Notice of termination of contract

The termination clause should determine how long in advance the terminating party should notify the other party. The notification should be in writing and should explain the reasons and legal basis for the termination. The notice period should be reasonable to ensure that both parties have sufficient time to respond.

3. Effect of termination of contract

The effectiveness of the termination should clearly specify the effective time after the notice of termination is served, or take effect at other times agreed by the parties. This helps determine the rights and obligations of the parties upon termination.

4. Consequences of termination of contract

The termination clause should specify in detail the consequences after termination, including but not limited to:

Cost-sharing

  • Whether the franchise fee, security deposit, royalties, etc. need to be returned after the contract is terminated.

Trademark and Technology Use

  • Whether the trademark and technology can still be used after the contract is terminated, or whether the use needs to be stopped.

Liability for breach of contract

  • If the terminating party breaches the contract, it shall bear legal liability.

5. Summary

When signing a franchise contract, franchisees should read the termination clause carefully to ensure they fully understand the provisions contained therein. When terminating a contract, it is key to comply with the provisions of the contract and try to resolve disputes through negotiation or arbitration to avoid cumbersome legal procedures. If necessary, seeking professional legal advice can help protect your rights.

Fuda Law FirmSpecializing in the field of legal counsel, the team's lawyer members all have rich practical experience and long-term experience in serving listed companies and small and medium-sized enterprises, and can provide assistance. If you have any needs, you can contact our firm at any time.

Fuda Law Firm
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