Is anyone available to help draft a franchise contract?

Hello. This is a fair trade-specialized attorney from Daeryun Law Firm.

One of the most important documents when preparing a franchise business is the 'franchise contract.'

The franchise contract is a key document that governs the legal relationship between the franchisor and franchisee, and serves as the legal basis that clearly defines the rights, obligations, and responsibilities of franchise business transactions.

Therefore, when drafting a contract, the Fair Trade Commission's "Fair Transactions in Franchise Business Act (Franchise Business Act)" must be observed, and detailed provisions should be specifically described to prevent future disputes.

The following matters generally need to be included in the franchise contract:

First, matters concerning the basic structure of the franchise business.

The trade name and business identifier usage rights, scope of business area, presence of exclusive rights, franchise opening procedures and business commencement conditions must be clearly stated.

Since know-how, menus, trademarks, etc. provided by the franchisor are protected as 'franchisor's intellectual property rights,' provisions prohibiting unauthorized use and modification are also essential.

Second, regulations on monetary transaction relationships.

The calculation criteria, payment timing, and refund possibilities of various costs such as franchise fees, training fees, royalties, and advertising fees must be specifically stated.

In particular, the difference between the initial franchise fee and ongoing royalties should be distinguished so that franchisees can clearly know the amount they will bear.

Third, franchisor's support and management obligations.

Items the franchisor must provide such as interior guides, menu training, and promotion/marketing support must be listed in detail, and if there are regular inspections or evaluations, the procedures and standards must also be specified.

Fourth, provisions on contract termination and breach.

Conditions under which the franchisor can terminate when the franchisee damages the brand image or violates the contract, and conversely, procedures by which the franchisee can terminate the contract due to the franchisor's fault must be balanced in the contract documents.

Provisions on key money, facility investment costs, and inventory disposal upon termination must also be specifically prescribed to reduce disputes.

Fifth, business area protection and contract renewal conditions.

Restrictions on opening new franchises in the same area, contract renewal procedures, and disposition of business rights after contract expiration are sensitive matters from the franchisee's perspective, so they should be carefully drafted in accordance with the Fair Trade Commission's standard franchise contract criteria.

Lastly, it is also important to specify dispute resolution procedures.

The court of jurisdiction in case of disputes, mediation or arbitration procedures, and penalty calculation criteria must be clearly defined to prepare for unexpected legal disputes.

The franchise contract is a legal device that protects the franchisor's brand value and secures the franchisee's trust.

If you consult with a fair trade-specialized attorney from the initial design stage, you can prevent unfair trade disputes or contract termination issues.

Daeryun, the 9th largest law firm in Korea (based on 25-year National Tax Service VAT filings), is a legal partner that provides one-team legal services led by highly experienced specialized attorneys.