Ten Key Provisions of Franchise Agreements

4. Franchise fee and total anticipated investment. Franchisees are required to pay an initial franchise fee that grants them the right to use the franchisor's trademark and operating system.

5. Trademark, patent, and signage use.

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6. Royalties and other fees you are expected to pay. Most franchisors require franchisees to pay an ongoing royalty, usually 4-8 percent of total sales, typically on a monthly basis.

7. Advertising. The franchisor will reveal its advertising commitment and what fees franchisees are required to pay towards those costs.

8. Operating protocol. This section details how franchisees run their outlets.

9. Renewal rights and franchisee termination/cancellation policies. These provisions deal with how the franchise can be renewed or terminated. Some franchisors have an Arbitration Clause in the Franchise Agreement, which means that if legal action on either side is warranted, an arbitrator will review the case instead of going to court.