When signing a franchise agreement, your attention will usually go straight to the commercial terms – the fees, the territory, the branding. But towards the end of the agreement, there’s a group of clauses that often gets overlooked: the boilerplate. While they may seem standard or routine, these clauses can have serious legal consequences if things go wrong.
As franchise lawyers, we often help clients understand these boilerplate clauses and what they actually mean in practice. Below is a breakdown of some of the key boilerplate terms you’ll typically see in a franchise agreement and why they matter.
Governing Law and Jurisdiction
This clause sets out which state or territory’s law will apply if there’s a dispute, and where any court proceedings must be brought. For example:
“This agreement is governed by the law applying in New South Wales. Each party irrevocably submits to the exclusive jurisdiction of the courts of New South Wales…”
What this means: Even if you live and operate your franchise in Victoria or Queensland, you might have to travel to NSW to resolve a dispute. This clause can significantly increase your legal costs and time if a dispute arises, so it’s worth discussing with a franchise lawyer before signing.
Form of Notice
This clause outlines how the parties are to give formal written notices – for example, termination, breach notices, or renewal elections.
Notices may be required to be sent to a specific email or physical address, and may only be valid if done a certain way (e.g. not by text message or verbal communication).
It’s a small clause, but can become important very quickly. If you don’t comply with the required method of notice, your message may not be legally effective.
Force Majeure
This clause excuses a party from performing its obligations if certain extraordinary events occur, like natural disasters or pandemics.
It may suspend obligations (like fee payments or supply arrangements) if performance becomes impossible due to events beyond a party’s control.
But the exact wording is critical. Not all “force majeure” events are included in every clause. A franchise lawyer can help assess whether the wording is fair and balanced.
Business Days
“If the day on which any act is to be done under this agreement is a day other than a Business Day, that act must be done on or by the immediately following Business Day.”
This clause affects timelines under the agreement. If a due date falls on a weekend or public holiday, the next business day applies. Seems minor, but it can impact notices, renewals, or payment obligations.
Amendments
“This agreement may only be amended in accordance with a written agreement between the parties.”
In short: handshake deals or verbal changes won’t count. Any change needs to be in writing and signed by both parties. This protects both sides from future confusion.
Waiver
“No waiver is effective unless it is in writing.”
Just because the franchisor lets something slide once – like a late payment – doesn’t mean they’ve permanently waived that right. The waiver clause ensures rights can’t be lost just because they weren’t enforced once or twice.
Severance
If one clause of the agreement is found to be invalid or unenforceable (say, due to changes in the law), this clause allows the rest of the agreement to still stand.
Assignment
“A party cannot assign… any of its rights or obligations without prior written consent.”
This stops either party from transferring the agreement to someone else without approval. If you’re looking to sell your franchise down the track, this clause will come into play.
Counterparts
This allows the parties to sign in separate copies (including digitally), which together form one valid agreement.
It’s what makes e-signatures work legally in most cases.
Further Assurances
This clause means that even if something isn’t expressly stated in the agreement, each party must still do what’s reasonably necessary to give effect to the deal.
A helpful clause to prevent a party from refusing to cooperate after signing.
Non-Merger
“Any obligations intended to survive the termination or expiry of this agreement will continue.”
This means that obligations like confidentiality, restraint of trade, or unpaid fees don’t disappear just because the franchise agreement ends.
Authority to Date and Complete
Often, franchise agreements are sent out in draft form. This clause lets the franchisor or their lawyers fill in final dates and missing details once both sides have signed.
Binding Effect
This clause confirms that the agreement binds not just the signing parties but also their successors and permitted assigns.
It ensures continuity if, for example, the business structure changes hands.
Interpretation
Typically this clause includes rules about how to read the agreement – such as plural vs singular, headings, and definitions. It supports consistency in legal interpretation.
Definitions and Dictionary of Terms
Most franchise agreements will also include a section – usually at the start or end – setting out a dictionary of defined terms. This helps remove any ambiguity by clearly stating what certain words mean in the context of the agreement (e.g. “Commencement Date”, “Gross Sales”, “Franchise Territory”).
This section is often overlooked but can be critical to understanding your actual obligations.
Final Thoughts from a Franchise Lawyer
Boilerplate clauses might look dull – but they’re not pointless. Each one helps make the agreement legally enforceable and predictable. While they may seem standard, they should still be reviewed carefully.
At Magnolia Legal, our franchise lawyers regularly advise both franchisors and franchisees on what these clauses mean in practice. A standard clause might have non-standard consequences depending on how it’s written.
Need help reviewing a franchise agreement? Speak with a franchise lawyer at Magnolia Legal before you sign.