It is good to know what is in a typical franchise agreement so that you know what to expect when the time comes to seal the deal.

There are elements of a typical franchise agreement that pop up in every franchise document that becomes part of a franchise relationship.  What shows up in a franchise agreement can vary widely because of the market niche of the business.  After all, how a fast food franchise will run is going to be outrageously different than a franchise of tax preparation specialists.  Differences can also spring up based on the goals and quirks of the franchising company.  While most deviations from a typical franchise agreement based on “culture” issues or how a much a company pampers their customers are spelled out in the disclosure document or the operations manual, there still can be some huge differences from one franchise document to the other.

Still in all, there are elements that will always pop up in a typical franchise agreement that you can look for. When it gets down to brass tacks, a financial agreement is a legal document that is binding on both the franchising company and the small business person sinking his or her life savings into an exciting new franchise.  The real binding part, naturally, is the money.  The costs of what you will have to ante up to be a proud owner of that franchise will be laid out so that when you put your autograph on the last page of a typical franchise agreement, the next documents you sign may be a series of checks to the franchising company.

The boundaries of time and space are always important in any typical franchise agreement. In fact, if there is not language in the document you are about to commit to that spells out the territory and term of the franchise agreement, send that dish back to the kitchen because it isn’t cooked enough.  When you sign a deal to build a franchise or several franchise outlets, you cannot just pop them up anywhere in the world.  You don’t need that kind of headache.  The zip codes that are yours and yours alone from the franchising company’s point of view must be in a typical franchise document.

You don’t work for the franchising company but you do answer to them.

The typical franchise agreement will also be able tell you to the month and the day when the franchise agreement will expire.  Don’t see that as termination date.  See that as your chance to decide if you want to move on or for the franchise company to do a gut check to see if they want to have you run their franchise some more.  Unlike a marriage license, a franchise agreement has an exit plan so make sure that termination drop dead date is there.

A third big time category of agreement that should be in any typical franchise agreement has to do with when, who and how you must salute the flag of the franchising company.  Franchise operations from one unit to the next are almost always conspicuously identical.  You don’t go to one McDonald’s that has Ronald outside and another that has a giant beaver for a mascot just because the franchise owner likes beavers. No, it is Ronald in every McDonald’s from Peoria to Paris.

As the new kid on the block in the company’s franchising empire, be sure you understand how you must manage the franchise. Understand the standards of quality and customer service and all of the other controls that the franchise company insists upon to make sure that when you put their name on your building, they will like what happens inside.

You do not work for the franchise company but to be a member in good standing, you must live up to the controls that are in any typical franchise agreement. When you understand those rules for living and you can run a successful franchise of a very successful chain, the wealth and fun of running a hot small business will make you glad you checked out what you were signing up for when you sealed the deal in that franchise agreement and started your new and exciting life running the show.