Franchise Agreements: What to Look Out For
1. Definition
A franchise agreement is a legally binding contract between the franchisor (the brand owner) and the franchisee (the independent operator).
It outlines the rights, responsibilities, and restrictions of each party, including fees, operational rules, territory rights, and termination provisions. Franchise agreements are typically long-term (10–20 years) and heavily favor the franchisor.
2. Florida Legal Context
Franchise agreements in Florida are governed by contract law, federal franchise regulations, and state consumer protection laws:
- FTC Franchise Rule (16 C.F.R. §436): Requires franchisors to disclose the agreement terms in the Franchise Disclosure Document (FDD) before signing.
- Florida Law: While Florida does not regulate franchise agreements specifically, the Florida Deceptive and Unfair Trade Practices Act (FDUTPA, Fla. Stat. §501.201) protects franchisees from unfair or deceptive conduct in franchise sales.
- Enforceability: Courts in Florida generally enforce franchise agreements as written unless terms are unconscionable or violate public policy.
3. Real-World Application
Examples of franchise agreements in Florida:
- A Tampa restaurant franchisee signs a 10-year agreement requiring 6% royalty payments and 2% advertising contributions.
- A Miami fitness franchisor grants a protected territory to a franchisee, preventing other franchises from opening nearby.
- An Orlando retail franchise agreement includes mandatory training and strict brand standards to maintain consistency.
4. Why It Matters for Business Owners
Franchise agreements can determine the success or failure of your investment.
Why it matters:
- For franchisees: You may be locked into fees, restrictions, and operational rules for decades.
- For franchisors: Clear agreements protect your brand and revenue.
- For both parties: The agreement governs dispute resolution, renewals, and exit strategies.
Common mistakes Florida franchisees make:
- Signing without a lawyer reviewing the agreement.
- Overlooking renewal terms, which may require new fees.
- Ignoring non-compete clauses that restrict future business options.
- Underestimating required advertising and technology fees.
5. Real-World Florida Examples
- A Sarasota franchisee was shocked by ongoing technology fees buried in the franchise agreement.
- A Jacksonville gym franchisee successfully negotiated broader territory rights before signing.
- A Fort Lauderdale franchisee lost renewal rights by missing a deadline spelled out in the agreement.
6. How Our Law Firm Can Help
At Black Rock Trial Lawyers, we review and negotiate franchise agreements to protect our clients. Our services include:
- Reviewing franchise agreements for risks, hidden fees, and restrictions
- Negotiating terms like territory rights, renewal options, and fee structures
- Advising on exit strategies, termination clauses, and resale rights
- Representing clients in franchise disputes and breach of contract claims
- Protecting franchisors by drafting strong, enforceable agreements
We make sure you know exactly what you’re agreeing to — before you sign.
7. FAQs (Frequently Asked Questions)
Q: Can I negotiate a franchise agreement?
A: Some terms may be negotiable, especially with smaller or emerging franchisors. Larger brands may be less flexible.
Q: How long do franchise agreements last?
A: Typically 10–20 years, with renewal options that may require new fees.
Q: What fees are usually included?
A: Franchise fee (upfront), royalties (ongoing), marketing contributions, and sometimes technology or training fees.
Q: What if I want to sell my franchise?
A: Most agreements include resale provisions, often requiring franchisor approval and fees.
Q: Why hire a lawyer for franchise agreements?
A: These contracts are long, complex, and favor the franchisor. A lawyer ensures your rights are protected and helps negotiate better terms.