Day: July 30, 2022

What is franchising? The definition for franchising given by the International Franchise Association (IFA) states that a franchise is “A contractual relationship between the franchisor and the franchisee in which the franchisor offers or is required to maintain a continuing interest in the franchisee’s business in areas such as know-how and training; the franchisee operates under a common trade name, format, or procedure owned or controlled by the franchisor; and the franchisee has made or will make a substantial capital investment in his business from his own resources.” So, basically, Franchising means where the business owner of a company gives a license to another individual to carry out their own business under the title or brand name of that company. A franchise consists of two parties that are “franchisor” and “franchisee”. A franchisor is the owner of a business that provides its brand, trade name, product, service or any other form of intellectual property laws along with the value chain. whereas, franchisee is a person who receives the right to use franchisor’s business in exchange for a royalty and an initial fee. The franchise aims to profit both the franchisor and the franchisee. A business that is seen in different cities and known because of their brand sign and colors is the same all around the places where the franchise operates. For example, the quality and taste of domino’s pizza is the same no matter from where you buy it. Some other examples of a franchise are  KFC, McDonald’s, Pizza Hut, Subway, etc. It is important for anyone deciding to start a business by becoming a franchisee to keep in mind that for franchising the franchisee is legally bound to a franchise agreement with the franchisor for a specified period of time. What is a Franchise Agreement? A franchise agreement is the base of a franchise. A franchise Agreement is a legally binding contract between two parties that are franchisor and the franchisee. It binds both the parties to carry out legal obligations for each other. The contract includes details of the franchisor’s expectations from the franchisee that how the business must be operated. It is an agreement where the franchisor consents to grant the company’s name or system to the franchisee. Essential elements of Franchise Agreement Details of both the Franchisor and Franchisee – The franchise Agreement should include all the details and information of both the parties entering into the agreement. Business operations – The franchise agreement should consist of information regarding the roles and responsibilities of the franchisee and how the franchisor expects the franchisee to run their business. The information should include details of the goods or services franchised, proper maintenance of accounts and other registers, standards of operations, and inspection of the said unit at regular intervals etc. Monetary Details to Be Included-  Franchise Fee – Every franchise has its own fee structure. These fees include the original franchise fee, regular franchise fees, royalty fees, and other fees. Late fees and interest are also included in the agreement. Any mandatory expenses should also be covered under the agreement. For example, the franchisee may be responsible for travel expenditures, training, and other costs. Royalty – This is a fixed percentage that the franchisee has to pay to the franchisor on a monthly basis for the benefit to use his brand’s name. Also, mention the specific format in which it needs to be paid, the mode of payment, details of the concerned bank account, and the intervals of making payment (monthly, quarterly or annual payment). Location of the franchise’s operation – The Franchise agreement should clearly mention the location and the territory under which the said franchisee can conduct its business operation. This is an important step as the franchisor may franchise its business to several franchises in different locations.  Duration of franchisee – The agreement should include the duration for which the franchise is lent or licensed to the franchisee. Also, it is important to mention that the franchise agreement is subject to renewal or termination post this period.  Training support – The Franchisor provides training assistance to each Franchisee. It ensures that franchise businesses run smoothly and to make sure that uniformity is maintained among all franchised businesses. Intellectual Property Rights – The franchise agreement should include the way and the method in which the said franchisee can use the Copyright, Trademark, and Trade Secrets of the franchisor. It is important to note that this clause specifies the Intellectual Property Rights that the franchisee gets to use, manufacture, sell, and distribute the goods or services in the name of the franchisor and use the Copyrighted creation of the franchisor. Renewal clause – Agreement must mention whether the franchisor wants to renew the agreement after the completion of the tenure of a franchise or terminate it. It should also state the terms and conditions for the renewal. Termination Clauses – It includes the terms that mention detailed provisions related to the termination of the franchise agreement along with the grounds on which such a franchise may be declared canceled by the franchisor during the period of the agreement. It is done where either party fails to perform as per the terms mentioned in the agreement. It also clearly mentions penalties in cases where a franchise agreement is terminated.  Resale of the franchise – The terms and conditions stated in the agreement must also specify whether any rights regarding the reselling the franchise is given to the franchisee or not. Non-Disclosure/ Confidentiality- A franchisee is aware of various trade secrets during the franchise agreement, including proprietary formulas and recipes and how the franchisor conducts the business. This information should not be disclosed and kept private ,the franchisor always states the confidentiality terms, deeds, and restraints in the franchise agreement. Advertising– This clause of the agreement gives the responsibility to the franchisee to market, advertise and other activities for the promotion. Applicable laws – the Franchise Agreement must also prescribe the laws applicable over both the franchisor and franchisee together with the legal action that can be taken by either of the..

What is Master Service agreement? A Master Service Agreement (MSA) is a contract between two parties that outlines the terms and conditions of a long-term business relationship. It is a foundational document that sets the framework for any work or services that may be provided in the future. An MSA is typically used in industries where ongoing services are required, such as technology, consulting, or construction. The agreement sets out the expectations of both parties and lays the groundwork for how they will work together over the course of the relationship. It is a more complex with extremely technical language and more complicated terms and conditions. Because of the careful consideration given to legal issues during the drafting process, these contracts serve as the foundation for all succeeding transactions and agreements.  However, it is important to note that an MSA is a legally binding contract and should be carefully reviewed and negotiated by both parties. It is important to ensure that the terms and conditions are fair and reasonable and that they accurately reflect the needs of both parties. In addition, an MSA should be periodically reviewed and updated as needed to ensure that it remains relevant and effective. As the business relationship evolves, it may be necessary to revise the terms and conditions of the MSA to reflect any changes. Types of agreements governed by a Master Service Agreement can include: Statement of Work (SOW) – an SOW is a specific document that outlines the details of a particular project or service. It typically includes project timelines, deliverables, and pricing. The MSA will often reference the SOW, and the terms of the MSA will govern the SOW. Service Level Agreement (SLA) – an SLA is a document that outlines the performance expectations for a particular service. It typically includes metrics such as uptime, response time, and resolution time. The MSA may reference the SLA, and the terms of the MSA will govern the SLA. Non-Disclosure Agreement (NDA) – an NDA is a legal agreement that prohibits the disclosure of confidential information. The MSA may include an NDA, which will govern the handling of confidential information throughout the relationship. Master Consulting Agreement (MCA) – an MCA is a type of MSA that is specifically tailored to consulting services. It typically includes clauses related to intellectual property, warranties, and indemnification. The MCA will govern any consulting services provided under the agreement. Master Purchase Agreement (MPA) – an MPA is a type of MSA that is specifically tailored to purchasing goods or services. It typically includes clauses related to delivery, pricing, and warranties. The MPA will govern any purchases made  What is the purpose of Master Service Agreement? There are two main reasons for using MSA: The primary purpose of an MSA is to save time and resources by eliminating the need to renegotiate terms and conditions for each new project or service provided. Instead, the parties can simply refer back to the MSA for guidance. This can help to rationalize the contracting process and make it more efficient. Another purpose of an MSA is to build trust between the parties. By establishing clear expectations up front, both parties can be confident in their roles and responsibilities throughout the relationship. This can help to reduce misunderstandings and disputes and raise a more positive working relationship. WHAT IS INCLUDED IN MASTER SERVICE AGREEMENT? Product and Project Management: In the event of a problem who is responsible for delivering & installing the products or services? Employee Management: Both parties should list requirements for potential employees and background checks and other employment screening activities.  Income and Expense: Determining how a cost will be projected and how payments will be obtained and processed. Insurance Coverage: Who will be in charge of insurance acquisition and what penalties will be imposed if the responsible party fails to acquire and maintain the agreed-upon insurance coverage?  Escrow and Security: Who provides backup funding and payment for project or product protection? Government Requirements and Liabilities: Where will the work be done? Who will be in charge of ensuring compliance with local, state, and federal regulations, as well as risk mitigation? Tax Responsibility: Who will track taxes and how will tax obligations be distributed and reconciled?  Third-party Coverage and Concerns: How will actions involving a third party be handled and who will be responsible to resolve these problems or disputes? Term & Termination: MSA should specify the term of the agreement and the conditions under which the agreement can be terminated. It may specify the notice requirements, and any obligations or liabilities that may remain after termination. It should include provisions for renewals or extensions of the agreement, as well as any notice requirements for termination. What are the essential elements of Master service Agreement? Scope of work – The MSA should clearly define the scope of work or services to be provided under the agreement. This may include a description of the services, the deliverables, and the timeline for completion. Confidentiality -The MSA should include provisions to protect the confidentiality of any information exchanged between the parties. This may include requirements for non-disclosure agreements, confidentiality agreements, or other provisions to ensure that sensitive information is protected. Both the Parties further agree that any business secrets or confidential information shall not be disclosed to any third parties without written consent. This will include any form of trade secrets and intellectual property which belong to the company. Dispute Resolution -The MSA may include provisions related to dispute resolution. It may specify the method to resolve the disputes, whether through negotiation, mediation, or arbitration, and any other relevant procedures. Jurisdiction – A jurisdiction clause specifies the jurisdiction or legal venue in which any disputes arising under the agreement will be resolved. This clause will specify a particular court or arbitration forum that will have exclusive jurisdiction over any disputes arising under the MSA. The jurisdiction may be based on the physical location of one or both parties or on a neutral location that..