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Have No Fear

The thought of reading a franchise agreement got you shaking in your boots? Knowing what to expect can make it less intimidating.

A franchise agreement isn't exactly light reading, but buying a franchise without poring over the agreement first could spell disaster. Fortunately, while the size, shape and style of franchise agreements vary according to each system, many of their basic features are universal.

A franchise agreement grants you the right to operate a business in the franchisor's system. It's a complex commercial contract designed to create a business relationship that could span 20 years or more. It grants a panoply of intellectual property rights, describes product and service standards, and sets the ground rules for the transfer, renewal and termination of the business relationship.

Since franchise agreements aren't easy to understand, it makes sense to have an attorney help you decipher what your prospective franchisor expects of franchisees--and what you can expect in return. Here are some of the basics:

Andrew A. Caffey is a practicing franchise attorney in the Washington, DC, area; a former general counsel of the International Franchise Association; and an internationally recognized specialist in franchise and business opportunity law. E-mail him at

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This article was originally published in the December 1998 print edition of Entrepreneur with the headline: Have No Fear.

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