Why does the agreement have a Term?

Every franchise agreement has what is most commonly referred to as a “Term”.  This is essentially because the Franchisor owns the Intellectual Property and licences that to the franchisee for a period of time.

Depending on the Franchise System this can vary but in most mobile operations, where there isn’t a property lease involved, the term is usually around 10 years.

Most of us don’t plan that far ahead so what we do is split this into two periods of five years – with the first five years often referred to as the “Initial Term”.  This then allows for a break should circumstances change.