Related agreement
What it means
Buying a franchise rarely involves a single document. Related (or collateral) agreements, a premises lease or sub-lease, supply contracts, equipment finance, sit beside the franchise agreement and can be just as important to your costs and obligations.
The Code requires franchisors to disclose related agreements and give you the documents early, because terms buried in a lease or supply contract can materially change the economics of the franchise.
In practice
Read the lease as carefully as the franchise agreement. Watch for a lease term shorter than the franchise term, personal guarantees, make-good obligations, and whether you or the franchisor holds the head lease, all of which affect your risk and exit.
A real example
A food-court franchisee discovers the franchisor holds the head lease and sub-leases to her on a term one year shorter than her franchise agreement, meaning her right to trade depends on the franchisor renewing the head lease.
Related agreement, FAQs
What are related agreements in franchising?
Contracts you sign alongside the franchise agreement that are essential to the business, typically the premises lease and supply agreements. The Code requires them to be disclosed.
Why does the lease matter so much in a franchise?
The lease governs your premises, term, rent and exit. A lease shorter than your franchise term, or held by the franchisor, can undermine your security of tenure, review it with a lawyer.
See the full franchise glossary, the Fee Index or our buyer guides.