The FDD - Items 9-17
Item 9: Franchisee’s obligations – Item 9 provides a reference table that
indicates where in the franchise agreement franchisees can find certain obligations
they agree to. The details of the obligations are not discussed in Item 9
Item 10: Financing available - Item 10 describes the terms and conditions
of any financing arrangements offered directly or indirectly by the franchisor.
Not all franchise systems provide financing assistance to their franchisees.
Item 11: Franchisor’s obligations – This item explains what will be the obligations
of the franchisor; which services, assistance, goods, etc. Every franchise system
provides different types and levels of service to its franchisees.
Item 12: Territory – this item will explain how the franchisor determines
territory and whether it is exclusive or not, and what variables effect the distribution
of territories. This varies from franchisor to franchisor.
Item 13: Trademarks - This section provides the franchisor with information
about the franchisor’s trademarks, service marks, and trade names that will be used.
Item 14: Patents, copyrights, and proprietary information - This section
provides franchisees with information concerning any patents or copyrights the franchisor
may have and how they may be used by the franchisee.
Item 15: Obligations to participate in the actual operation of the franchise business
– Franchisors different is what is expected by the franchisee. Some may require
the franchisees to be devoted full time to the operations of the business, whereas
other may allow absentee or passive ownership. This section will lay out obligations
and what factors contribute to expectations.
Item 16: Restrictions on what the franchisee may sell - Item 8 discussed
any restrictions by franchisors on the suppliers and specification of the products
used by the franchisee. This section deals with any restrictions on the goods and
services that the franchisee may offer to its customers.
Item 17: Renewal, termination, transfers, and dispute resolution - This section
provides the franchisee with information, in a table format, concerning the terms
of the agreement. Included in this section is information on: length of the initial
term of the agreement; the number and duration of the renewal periods; reasons that
the franchisor or franchisee may terminate the agreement, causes, and any cure period;
the obligations of the parties after the termination of the agreement; the rights
of the franchisor or the franchisee to transfer or assign the agreement to another
person or company; the rights of the franchisor to purchase the franchisee’s business;
the in-term and post-term restrictions on competition with the franchise system;
how the franchise agreement can be modified; what methods are provided for resolving
disputes between the franchisor – litigation, arbitration, and mediation; and what
states or country’s law govern the contract.
Information obtained from the FBA - for additional information go to
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