Module 5 - Understanding the Franchise Agreement

Question 1

What is a franchise agreement?

Answer 1

• a contract under which the franchisor grants the franchisee the right to operate a business, offer, or sell or distribute goods or services with the franchisors trademark.
• Legal binding agreement or binding contract between a franchisor and franchisee.

Question 2

Legal Framework about Franchise agreement

Answer 2

(1) There is currently no specific law on franchising.

(2) Contract Law thus applies since franchising is essentially an agreement.

(3) Intellectual Property Law (IPO) applies to provisions on
technology transfer
arrangements.

Question 3

Key principles in Contracts

Answer 3

• Principle of Autonomy
• Principle of Relativity
• Principle of Adhesion
• Principle of Mutuality

Question 4

What is Principle of Autonomy?

Answer 4

allows the parties to freely stipulate to whatever terms and conditions, PROVIDED they are not contrary to law, morals, good customs, public policy, or public order.

Question 5

What is Principle of Relativity?

Answer 5

binds ONLY those who entered into the agreement and cannot favor or prejudice a third person, even if he is aware of such contract and has acted with knowledge thereof.

can generate rights and obligations ONLY in favor of the contracting parties.

Question 6

What is Principle of Adhesion?

Answer 6

legal agreement that is drafted by one party, but not the other.

Question 7

What is Principle of Mutuality?

Answer 7

reciprocal understanding or agreement of the parties under the terms of the contract.

binds both contracting parties with its validity or compliance.