An economics of franchise contract is a contract drafted to have a better understanding of the economic factors that make a franchise work. The contract helps to understand the economic tension that can lead to conflict between the franchisor and the franchisee. The details mentioned in the contract include the franchise fees, percentage of royalty fees, profit and loss sharing ratio between the franchisor and the franchisee.

Sample Economics of franchise contract

Economics of franchise contract number: EC 34

Effective date of contract: 10th of November, 2011

This economics of franchise contract is being drafted and entered into between Jane Austen referred to as the franchisee and Dine Group referred to as the franchisor.

Details of the franchisee:

Principal business address: 56 Tango Charlie Street

Kansas, California.

Telephone number: 678934

Details of the franchisor:

Principal business address: 56 John Woo Street

Kansas, California.

Telephone number: 678923

Fax number: 45637

The contract has been drafted to highlight the economic understanding of the franchise business that the franchisee is supposed to start with approval of the franchisor.

The various terms and conditions that the franchisee has to accept are:

a)   The franchisee will pay in advance an amount of $30000 as franchise license fee.

b)   The royalty fee to be incurred by the franchisee is ten percent of the franchise license fee.

c)   The equipment and the construction cost will be shared equally by both the franchisee and the franchisor. The franchisee has to present valid bills in order to get the contribution of the franchisor.

Signature of franchisee:                                                              Signature of franchisor:

Jane Asuten                                                                        Mike Myers

(CEO, Dine Group)

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