7 4. Protection from equal or similar competition from brandsThe good: franchisees benefit from exclusive territory in which neither the franchisor nor a franchisor`s franchisee will exploit the same or similar concept. The bad news: franchisees enjoy limited protection against the same trademark competition, with the franchisor reserving extended rights to compete with similar brands and/or other channels. What is ugly is that the franchisor finds that there is no protection against the same competition of trademarks or other similar brands and explicitly claims the right to participate in such a competition. 5 2. The termination rights of the franchiseeThe good: only for the good cause and only after a targeted denunciation of supposed defects and a reasonable possibility of healing. The bad is just for the good cause, but without the possibility of healing. What`s ugly: If the franchisee is considered to be late with the franchise agreement, all franchise agreements of the franchise can be terminated. According to the FTC, franchisors are required to make the FDD available to the franchisee at least 14 days before signing or exchanging initial funds. The franchisor is entitled to a copy of the FDD after the franchisor has received the request and agreed to review it. The franchisor can help the franchisee find a site, training and advice on management, marketing or staff. The relationship does not necessarily end after the first commissioning. The franchisor can also offer support by newsletter, a free telephone number, a website or planned workshops or seminars.
Since franchises can be so different in their approach, the role of the DDF is to explicitly define what is available to the franchisee and what is not and how the relationship will work in the future. The FDD contains essential information for potential franchisees who are willing to invest significantly. Each document must contain the following sections in the following order: 10 7. Restrictions on the franchisee`s right to transfer the Good franchise: the franchisee has the right to transfer ownership of the franchise, subject to the franchisor`s reasonable requirements regarding the purchaser`s financial and operational capabilities. The bad: the franchisor has a right of retention on any transfer of all or part of the ownership of the franchise and claims the explicit right to cede this right of first refusal, which must be ceded freely; and the purchaser must sign the form of the franchise agreement then in force, which may be limited to the remaining clause of the ceding franchise agreement. What is ugly is that the franchise agreement has no broadcasting rights and expressly states that the franchise agreement ends with the death or obstruction of the principal owner.