Long-term relationship contracts seem to be the center of attention in the franchise community nowadays. As distinguished from typical distributorship agreements, which often last only one or two years and require not-too-substantial investments in the brand, product or service subject to such an agreement, franchise agreements usually have a greater sense of permanence. They often run up to 20 years in duration and are often renewable for similar lengths of time, or have perpetual renewal rights. It is frequently the case that the distributor will carry more than one brand, in contrast to a franchise that handles only one.
Because of their length and the changing nature of markets, franchise agreements customarily require that the franchisor be granted greater latitude in deciding how the business model may be adjusted as the world changes. Therefore, while franchise agreements may be specific with respect to obligations of the franchisor when addressing steps necessary to assist in making a franchise business operational, they are more fluid about what the franchisor can do in future situations. Thus, these agreements will use the word “may” rather than “shall” when addressing the franchisor’s future obligations.
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