Franchise agreements and schedules: avoiding conflicting terms

When you turn an existing business into a franchise network, promises and requirements can easily end up scattered across several documents. The agreement says one thing, the fee schedule another and the presentation something else again. Reviewing all the documents together before signing reduces the risk of misunderstandings. The aim is for both parties to find the same answers about what the relationship involves, without having to guess which document takes precedence.

1. Map out the documents that describe the relationship

Start by gathering all the material a prospective franchisee receives or is referred to. Do not limit the review to the document called the franchise agreement. Presentations, proposals and emails may also contain information that shapes expectations of the relationship.

Create a document register covering, for example:

• the franchise agreement and all its schedules,
• the fee list and a description of mandatory services,
• the territory map and any restrictions on rights,
• the operations manual and technical requirements,
• descriptions of training and ongoing support,
• pre-contract information and franchisee recruitment materials.

Record each document’s name, version, date and the person responsible for it. Also identify its purpose: does it set out contractual terms, provide practical instructions or offer descriptive information? That distinction needs to be clear to the recipient too.

The key question is simple: Can the franchisee identify exactly which documents form part of the agreement? References such as “in accordance with the applicable schedules” are difficult to work with unless those schedules can also be identified. Use clear names and version references in both the agreement and the document pack.

2. Decide what belongs where

There is no single standard agreement that automatically suits every Swedish franchise network. The agreement needs to make each party’s rights and obligations clear. Your document structure should therefore reflect the actual relationship, rather than the layout of a borrowed template.

A practical starting point is to use the main agreement to set out fundamental rights, obligations and decision-making rules. Schedules can specify details such as fees, geographical boundaries and included services. The operations manual can describe how day-to-day work is carried out. This is a recommended structure, not a statutory requirement.

Pay particular attention to instructions that effectively introduce a new financial commitment. If the manual requires a subscription to a particular system, the cost and obligation to purchase it must be consistent with the other parts of the agreement. A practical instruction should not turn into an unexpected bill.

Ask a lawyer to draft a clear rule establishing which document takes precedence if information conflicts. The rule may need to distinguish between different issues. A dedicated territory schedule, for example, may be intended to add detail to a general description in the main agreement.

However, a precedence clause is a safety net, not a way to leave known contradictions unresolved. Correct inaccurate information in every affected document before using it.

3. Check the same terms across the entire document pack

Create a comparison table with a row for each important term and a column for each document. Briefly record what each document actually says. Empty cells show where information is missing; differences in wording show what needs closer review.

Prioritise matters that affect the franchisee’s costs and freedom to act:

• What do the fees cover, and what is charged separately?
• Which purchases or subscriptions are mandatory?
• What support is promised, by whom and on what conditions?
• What rights apply within the allocated territory?
• When does each obligation take effect?

Suppose the presentation says “initial training included”, while a schedule specifies a training fee and the manual requires several staff members to attend. You then need to clarify which participants are covered, the scope of the training and any additional costs. Simply deleting a phrase from the presentation does not resolve the issue if the recipient has already been told something different.

Ask someone who did not write the documents to read them from the franchisee’s perspective. Have them explain what must be paid and what must be provided. If their answer differs from what you intended, the wording needs to be improved.

4. Get disclosure, legal review and the final version right

Sweden has no comprehensive franchise-specific legislation. However, the Act (2006:484) on the Duty of Franchisors to Provide Information applies. It requires franchisors to provide clear, written information about the implications of the agreement and other relevant circumstances in good time before the agreement is entered into.

The information must cover matters including financial terms, intellectual property rights, mandatory purchases, non-compete restrictions, the contract term and dispute resolution. Reviewing the documents helps you ensure that this information is consistent with the agreement. A precedence clause does not replace the disclosure obligation.

General rules also apply, including the Swedish Contracts Act and relevant competition and intellectual property law. The fact that two documents say the same thing does not automatically mean that a term is legally sound. The legal review should cover both the content and how the documents work together.

Once the review is complete, finalise a single, consolidated document pack. Keep records of which versions were supplied, when they were sent and what clarifications were made. If significant terms change before signing, the information needs to be updated and the recipient given a reasonable time to assess the change.

Practical takeaway: Create a document register, compare key terms and resolve contradictions before signing. A well-defined franchise network starts with both parties being able to read the documents and reach the same understanding of their agreement.