obligations of franchisor and franchisee

The obligations of the franchisor and the franchisee

Posted on 28/04/2020

As in any company, relationship or contract, each of the parties has rights and duties.

This also applies to franchises, because if both, franchisor and franchisee, meet their obligations, the business is most likely to be a success.

If you are interested in buying a franchise or you are going to franchise your business, keep in mind that these are your obligations:

Franchisor's obligations

  • Having a brand, product, service or company duly constituted, registered and operating successfully for a long time.
  • Grant the franchisee the right to operate the business in the form of a franchise.
  • Transmit the know-how to the franchisees, that is, all the knowledge, techniques, processes, systems and the rest necessary for the business to function.
  • If it is a master franchise, ensure territorial exclusivity.
  • Deliver the necessary licenses for the use of the brand.
  • Provide franchise operation manuals. 
  • Guarantee a permanent support and monitoring service, as well as constant research, marketing and innovation.
  • Inform the guidelines for customer relations, advertising, customer service, among others.
  • Supply products and services to ensure their quality.
  • Set prices to ensure profitability.
  • Make clear the grounds for termination of the contract.

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Duties of the franchisee

  • Pay the entrance fee to acquire the franchise right.
  • Having a suitable location and following the brand operating guidelines.
  • Make periodic payments to the franchisor.
  • Follow the marketing rules, processes, techniques, care and other rules of the franchise.
  • Comply with the training scheduled by the franchisor.
  • Work with dedication to maintain the reputation of the company.
  • Keep the reservation of the franchise operating information, during the contract and afterwards.
  • Manage an accounting system that facilitates supervision by the franchisor.
  • Refrain from sub-franchising or using the brand once the contract ends.


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