Letter of Intent for Franchise Template

Letter of Intent for Franchise Template

[Franchisor Legal Name]
[Street Address]
[City, State/Province, ZIP/Postal Code, Country]
Phone: [Franchisor Phone Number]
Email: [Franchisor Email Address]
Website: [Brand / Franchise Website]

[Date]

[Prospective Franchisee Legal Name or Individual Name]
[Street Address]
[City, State/Province, ZIP/Postal Code, Country]

Re: Letter of Intent for Franchise – [Brand Name] Franchise Opportunity

Dear [Franchisee Contact Name or “Sir/Madam”],

This Letter of Intent (“LOI”) sets forth certain preliminary terms and conditions under which [Franchisor Legal Name] (“Franchisor”) and [Franchisee Legal Name] (“Franchisee,” and together with Franchisor, the “Parties”) propose to negotiate a franchise relationship for the operation of a [Brand Name] franchise business (the “Franchised Business”). Except as expressly stated in Section 11 (Binding and Non-Binding Provisions), this LOI is intended as a non-binding outline of key business terms and a basis for preparing a definitive franchise agreement (the “Franchise Agreement”).

1. Parties and Brand

1.1 Franchisor
Franchisor Name: [Franchisor Legal Name]
Entity Type: [Corporation / LLC / Other]
Jurisdiction of Organization: [Jurisdiction]
Principal Address: [Franchisor Address]

1.2 Prospective Franchisee
Franchisee Name: [Franchisee Legal Name or Individual Name]
Entity Type (if applicable): [Corporation / LLC / Individual / Other]
Principal Address: [Franchisee Address]

1.3 Brand and Concept
Franchised Brand: [Brand Name]
Business Concept: [Short description of concept, e.g., “quick-service restaurant,” “fitness studio,” “retail store,” “service-based business”]

2. Territory and Location

2.1 Territory
Franchisee is expected to operate the Franchised Business in the following territory (the “Territory”), subject to Franchisor’s approval and the Franchise Agreement:

Territory Description: [City / Region / Defined area / Radius around specific location]

2.2 Site Selection
The Parties anticipate that:

• Franchisee will be responsible for identifying potential sites within the Territory;

• Franchisor will have the right to approve or reject any proposed site based on system criteria;

• Site selection criteria and procedures will be detailed in the Franchise Agreement and any related manuals.

3. Unit Type and Development Plan

3.1 Unit Type
The Franchised Business is expected to be:

Unit Type: [Single-unit / Multi-unit / Area development / Master franchise]
Business Format: [Inline store / Standalone building / Kiosk / Mobile unit / Other]

3.2 Development Schedule (If Applicable)
If Franchisee is granted rights to develop multiple units, a non-binding development schedule may include:

• Unit 1: Open by [Target Opening Date] in [Location/Area]

• Unit 2: Open by [Target Opening Date] in [Location/Area]

• Unit 3: Open by [Target Opening Date] in [Location/Area]

Final development obligations and penalties (if any) will be defined in a development agreement and/or the Franchise Agreement.

4. Franchise Fees and Royalties

4.1 Initial Franchise Fee
Franchisee is expected to pay an initial franchise fee (the “Initial Franchise Fee”) in the amount of:

Initial Franchise Fee: [Currency and Amount]

Timing and refundability (if any) will be set out in the Franchise Agreement and applicable disclosure documents.

4.2 Ongoing Royalties
Franchisee is expected to pay ongoing royalties as follows:

Royalty Rate: [Percentage]% of [gross sales / net sales / other definition], payable [weekly / monthly]

The exact calculation, minimums, and reporting requirements will be defined in the Franchise Agreement.

5. Marketing and Other Fees

5.1 National / System Marketing Fund
Franchisee may be required to contribute to a marketing or brand fund as follows:

Marketing Fund Contribution: [Percentage]% of [gross sales / net sales]

5.2 Local Marketing
Franchisee may be required to spend a minimum amount on local marketing:

Local Marketing Minimum: [Percentage]% of gross sales or [Currency and Amount] per [month/quarter/year], as specified in the Franchise Agreement.

5.3 Other Fees (Indicative)
Additional recurring or one-time fees (for example, technology fees, training fees, renewal fees, transfer fees) will be described in the Franchise Agreement and any disclosure documents.

6. Training and Support

6.1 Initial Training
Franchisor expects to provide initial training to Franchisee and/or key personnel, which may include:

• Classroom or online training covering operations, systems, and brand standards;

• On-site training at an existing or new location around opening;

• Training duration estimated at [Number] days or weeks.

Details of training content, location, duration, and who must attend will be specified in the Franchise Agreement and manuals.

6.2 Ongoing Support
Franchisor expects to provide ongoing support which may include:

• Operational guidance and periodic field visits;

• System updates and best practice sharing;

• Marketing materials and campaigns;

• Access to approved suppliers and technology platforms.

7. Term and Renewal (Indicative)

7.1 Initial Term
The initial term of the Franchise Agreement is expected to be:

Initial Term: [Number] years from the date of opening or from the effective date of the Franchise Agreement.

7.2 Renewal
Franchisee may be granted renewal rights subject to conditions, which may include:

• Compliance with system standards and the Franchise Agreement;

• Payment of a renewal fee (if any);

• Signing the then-current form of franchise agreement (which may differ from the original).

The length and conditions of any renewal terms will be set forth in the Franchise Agreement.

8. Key Conditions and Approvals

The establishment of the franchise relationship is expected to be subject to conditions that may include:

• Completion of Franchisor’s franchise application process and approval of Franchisee;

• Review and acknowledgment of any required franchise disclosure documents, where applicable;

• Franchisee’s ability to obtain sufficient financing on acceptable terms;

• Franchisor’s approval of the final site and lease terms;

• Execution of the Franchise Agreement and any related agreements (for example, development agreement, guarantee, or lease rider).

9. Confidentiality and Brand Protection

9.1 Confidential Information
In connection with this LOI and any discussions or evaluations, Franchisor may share non-public information about the brand, systems, and business model.

• Franchisee agrees to keep such information confidential;

• Information will be used only for evaluating and implementing the potential franchise relationship;

• Disclosure will be limited to advisors and team members who need to know and are subject to similar confidentiality obligations.

If the Parties have already entered into a separate confidentiality or non-disclosure agreement, that agreement will govern confidential information.

9.2 Intellectual Property and Brand Usage
Franchisee acknowledges that all trademarks, trade names, logos, and system methods associated with [Brand Name] are owned or controlled by Franchisor. Franchisee will receive only limited license rights under the Franchise Agreement and will not claim any ownership in such intellectual property.

10. Process, Timeline, and Good-Faith Discussions

10.1 Indicative Timeline
The Parties currently anticipate the following non-binding timeline:

• Execution of this LOI: on or about [Date];

• Completion of application and initial due diligence: by [Date];

• Delivery and review of disclosure documents (if required): by [Date];

• Site selection and approval: by [Date];

• Signing of the Franchise Agreement: on or about [Date];

• Target opening date for the Franchised Business: on or about [Date].

10.2 Good-Faith Discussions
The Parties intend to negotiate in good faith to finalize the Franchise Agreement and related documents, recognizing that either Party may decide not to proceed consistent with the non-binding nature of the commercial terms in this LOI.

11. Binding and Non-Binding Provisions

11.1 Non-Binding Business Terms
Except as expressly set out in Section 11.2, the Parties acknowledge that this LOI is non-binding and does not create any obligation to:

• Enter into a Franchise Agreement;

• Grant or accept a franchise;

• Proceed with the Franchised Business; or

• Complete any transaction described in this LOI.

The commercial and operational terms summarized above are subject to further due diligence, legal requirements, and final negotiation of the Franchise Agreement.

11.2 Binding Provisions
The Parties intend that the following provisions of this LOI will be legally binding once this LOI is signed and delivered by both Parties:

• Section 9 (Confidentiality and Brand Protection);

• This Section 11.2 (Binding Provisions);

• Section 12 (Governing Law and Dispute Resolution); and

• Any additional clauses expressly identified here as binding: [Additional binding clauses, if any, such as a short exclusivity or fee reimbursement provision].

All other provisions of this LOI are non-binding statements of current intent only.

12. Governing Law and Dispute Resolution

Governing Law: [State/Province, Country]

Any dispute arising out of or relating to the binding provisions of this LOI will be resolved in:

Dispute Resolution Forum: [Court or Arbitration Forum and Location]

13. Expiration

If this LOI is not signed by both Franchisor and Franchisee on or before:

Expiration Date: [Expiration Date]

it will be of no further force or effect unless extended or renewed in writing signed by both Parties.

14. Signatures

If the terms of this LOI are acceptable as a basis for preparing the Franchise Agreement, please sign below to indicate your agreement to the binding provisions in Sections 9, 11, and 12 and your agreement in principle to the non-binding business terms described above.

Franchisor

[Franchisor Legal Name]

By: _______________________________
Name: [Authorized Signatory Name]
Title: [Title]
Date: [Date]

Prospective Franchisee

[Franchisee Legal Name or Individual Name]

By: _______________________________
Name: [Authorized Signatory Name]
Title (if applicable): [Title]
Date: [Date]