The franchise agreement is a fundamental instrument for establishing the relationship between the franchisor and franchisee. According to Brazilian legislation, especially Law No. 8,955, of December 15, 1994 (Franchise Law), there are crucial points to consider when drafting a franchise agreement.
Franchise Offering Circular (COC): Before entering into the franchise contract or pre-contract, the franchisor must provide the prospective franchisee with the Franchise Offering Circular. The COC must be delivered at least 10 days before signing the contract or pre-contract, or before any type of fee payment.
Clear and Precise Information: The COC must provide clear and detailed information about
Brief history, legal form, and full name or corporate name of the franchisor and all directly related companies.
Balance sheets and financial statements of the franchisor company.
Detailed description of the franchise, general business description, and activities.
Profile of the ideal franchisee, including prior experience, educational level, among others.
Requirements for the franchisee’s direct involvement in the operation.
Estimate of the initial investment required.
Rights and Obligations of the Franchisor and Franchisee: The following should be clearly established:
Support and training.
Pricing policy.
Transfer, succession, and termination of the franchise.
Limitations regarding territorial exclusivity.
Financial Aspects: It should include all fee payments:
Initial membership or franchise fee.
Initial purchase amount.
Estimate of the initial investment.
Royalty fees.
Advertising fees or other types of fees.
Term of Duration: The contract must clearly define the duration, which can be determined or undetermined.
Renewal, Transfer, and Termination: Conditions under which the contract can be renewed, transferred, or terminated.
Intellectual Property: If the franchise involves intellectual property rights (such as trademarks), the contract must establish the terms of their use by the franchisee.
Non-Compete Conditions: The contract may include non-compete clauses during the contract term and after its termination.
Conflict Resolution: Methods of conflict resolution, such as mediation or arbitration, should be included in the contract.
Applicable Laws and Jurisdiction: Indication of the applicable laws and the chosen jurisdiction to resolve any disputes.
Recommendation: It is essential that the contract be prepared with the assistance of a lawyer specialized in business law, especially in franchise matters. This ensures that all points are addressed clearly and in compliance with current legislation.