Franchise Purchase Agreement Template

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Free Franchise Purchase Agreement Rocket Lawyer
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Franchise Purchase Agreement Template

Table of Contents

What is a Franchise Purchase Agreement?

A franchise purchase agreement is a legal contract between a franchisor (the owner of a franchise business) and a franchisee (the individual or entity purchasing the franchise). This agreement outlines the terms and conditions of the purchase, including the rights and obligations of both parties.

Key Elements of a Franchise Purchase Agreement

A franchise purchase agreement typically includes the following key elements:

  • Franchise fee: The amount the franchisee must pay to the franchisor for the right to operate the franchise.
  • Term and renewal: The length of the agreement and any provisions for renewal.
  • Territory: The geographic area in which the franchisee is allowed to operate.
  • Training and support: The franchisor’s obligations to provide training and ongoing support to the franchisee.
  • Intellectual property: The rights and restrictions regarding the use of the franchisor’s trademarks, logos, and other intellectual property.
  • Operational guidelines: The rules and standards the franchisee must follow in operating the franchise.
  • Termination and default: The conditions under which either party can terminate the agreement.
  • Dispute resolution: The process for resolving any disputes that may arise between the franchisor and franchisee.
  • Confidentiality and non-compete: The obligations of the franchisee to keep certain information confidential and not compete with the franchisor.
  • Insurance and indemnification: The insurance requirements and indemnification obligations of both parties.

Benefits of Using a Franchise Purchase Agreement Template

Using a franchise purchase agreement template can offer several benefits, including:

  • Time-saving: Templates provide a pre-designed structure and language, saving you time in creating the agreement from scratch.
  • Legal compliance: Templates are often drafted by legal professionals and include commonly required provisions, ensuring legal compliance.
  • Customizability: Templates can be customized to fit the specific needs of your franchise purchase agreement.
  • Clarity: Templates provide clear and concise language, reducing the risk of misunderstandings or disputes.
  • Consistency: Using a template ensures consistency in your franchise purchase agreements, making it easier to manage multiple agreements.

How to Create a Franchise Purchase Agreement

To create a franchise purchase agreement, follow these steps:

  1. Gather necessary information: Collect all relevant details about the franchise, including fees, territory, and operational guidelines.
  2. Consult a legal professional: It’s advisable to seek legal advice to ensure your agreement complies with local laws and protects your interests.
  3. Use a template: Utilize a franchise purchase agreement template as a starting point and customize it to fit your specific requirements.
  4. Review and revise: Carefully review the agreement, making any necessary revisions or additions to accurately reflect the terms agreed upon.
  5. Sign and execute: Once both parties are satisfied with the agreement, sign the document and ensure all required parties execute it.
  6. Keep copies: Make copies of the signed agreement for both parties to retain for their records.

Important Considerations in a Franchise Purchase Agreement

When creating a franchise purchase agreement, consider the following:

  • Clear and specific terms: Ensure that the agreement clearly outlines the rights and obligations of both parties in a specific and detailed manner.
  • Compliance with local laws: Familiarize yourself with the relevant laws and regulations governing franchise agreements in your jurisdiction.
  • Protection of intellectual property: Clearly define the permitted use of the franchisor’s intellectual property and any related restrictions.
  • Termination and default provisions: Include provisions that define the conditions under which either party can terminate the agreement and the consequences of default.
  • Dispute resolution mechanism: Determine the process for resolving any potential disputes, such as through mediation, arbitration, or litigation.

Franchise Purchase Agreement vs. Franchise Agreement

While both a franchise purchase agreement and a franchise agreement are legal contracts related to franchising, they serve different purposes:

  • A franchise purchase agreement focuses specifically on the purchase of an existing franchise, outlining the terms and conditions of the purchase.
  • A franchise agreement, on the other hand, is a broader contract that governs the ongoing relationship between the franchisor and franchisee, covering areas such as operational guidelines, training, support, and fees.

Common Mistakes to Avoid in a Franchise Purchase Agreement

When drafting a franchise purchase agreement, be mindful of the following common mistakes:

  • Inadequate due diligence: Failing to thoroughly research and investigate the franchise opportunity before entering into the agreement.
  • Unclear terms and obligations: Using vague or ambiguous language that may lead to misunderstandings or disputes.
  • Omission of key provisions: Neglecting to include important clauses that protect both parties’ interests, such as termination and default provisions.
  • Failure to seek legal advice: Not consulting with a legal professional to ensure the agreement complies with applicable laws and regulations.

Franchise Purchase Agreement Template Download

For a downloadable franchise purchase agreement template, you can visit reputable legal websites or consult with a business attorney who specializes in franchising.


A franchise purchase agreement is a crucial document that outlines the terms and conditions of purchasing a franchise. By using a franchise purchase agreement template, you can save time, ensure legal compliance, and create a clear and consistent agreement. Remember to consult with a legal professional to customize the template according to your specific needs and protect your interests.