A franchise agreement is a contractual relationship, just like another contract. Similar to any other contract, a franchise agreement has two parties, namely, the franchisor and the franchisee. The franchisor leads his Intellectual Property Rights and the business system to the franchisee, who pays a royalty and a fee for conducting the business with the brand name of the franchisor. Once the franchisee commences the business, the franchisor aids the franchisee in conducting the business. Franchise agreements serve two purposes –
a) Promotes a product.
b) Promote a business system/format.