What is a franchise agreement?

A franchise agreement is the agreement between the franchisor and the franchisee which sets out the rights and obligations of each party in relation to the franchise. It is typically weighted heavily in favour of the franchisor. The reason for this is to protect the franchisor's intellectual property and to promote consistency amongst all franchisees. Often the obligations of the franchisee are guaranteed by the franchisee's directors and/or shareholders.

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