Terms that shape the relationship
Franchise agreements are drafted by the franchisor and usually presented as non-negotiable, although some terms can be adjusted, particularly for operators taking several units. They typically incorporate an operations manual that the franchisor can revise, so obligations may grow over the term. Termination provisions often let the franchisor end the relationship for a default after notice, and for certain defaults without an opportunity to cure. Renewal is usually conditional, and selling the business generally requires the franchisor's approval. Covenants restricting competition after the franchise ends are common, and courts test their reasonableness under the governing law.
Records worth keeping from day one
Keep the signed agreement, the version of the operations manual in force when you signed, and every later update. Save notices of default, inspection reports, and correspondence with field representatives, along with records showing how and when you resolved each issue. Track royalty and advertising fund payments, and ask for information about how the fund is spent if the agreement gives you that right. If you are thinking about selling, organize financial records early, because the franchisor's approval process and the buyer's review will both rely on them. Keep any lease for the location with the franchise documents, since the two often contain linked obligations.
Default notices and leaving the system
A notice of default usually starts a cure period, and the response should be timely and documented, so bring the notice to counsel promptly rather than negotiating it informally with a field representative. We review whether the claimed default is supported by the agreement, whether the cure demanded is achievable, and whether cross-default terms could reach other locations or the lease. Some states have relationship laws that limit termination without good cause, while New York's franchise statute focuses mainly on registration and disclosure, so in New York the contract terms carry more of the weight. Before you sign, we concentrate on the provisions that would matter most if the business struggled or you wanted to leave.
