For starting a new franchise, franchisor should be in business from a long time, and his business should be in profit. Franchisor should own the business and should have all the legal rights such as, trade mark, trade name and other individual identifications.
Franchisor is liable to provide training to all its franchisees in the beginning, and also should keep providing its support to its franchise throughout the agreement.
Legal Obligation for Franchise
Franchise should try to do his best to grow the business. He is liable to increase the reputation of business in his particular territory, and should be completely devoted towards his work. Franchise requires to provide the franchisor all the financial statements, and keep him updated about his performance as a franchise.
Franchise is not supposed to let others know about the various strategies followed by the franchisor. He cannot do this even if the agreement is over. Disclosing the unique selling proposition of franchisor in front of others is strongly against the ethics of franchising.
Legal Obligation for Both the Parties
Both franchisor and franchise are legally obligated to keep good communication with each other. They should support each other, and should try to sort out the conflicts through mutual cooperation and understanding.
Franchisor is obligated to inform his franchise in advance, if he wants to breach the agreement. He should provide a valid reason to the franchise for breaking the agreement. When two different parties work together, chances of conflicts are natural, so it’s vital for both the parties to have complete faith in each other.
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