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The Franchise Letter of Intent (LOI) is a crucial preliminary document used in the German franchise sector when parties are seriously considering entering into a franchise relationship but need to formalize their intentions and establish a framework for negotiations. This document typically comes into play after initial discussions but before detailed due diligence and final contract negotiations. It outlines key commercial terms, confidentiality obligations, and the proposed structure of the relationship while maintaining flexibility for further negotiations. Under German law, while the LOI is largely non-binding, certain provisions (particularly regarding confidentiality and exclusivity) can create legally binding obligations. The document serves as a roadmap for the franchise development process and helps protect both parties' interests during the negotiation phase. It's particularly important in the German business context where clear documentation of pre-contractual discussions and intentions is valued for legal certainty.

1. Opening and Date: Formal business letter opening with date and addresses of both parties

2. Subject Line: Clear identification of the document as a Letter of Intent for Franchise Opportunity

3. Introduction: Brief introduction identifying the parties and their intent to explore a franchise relationship

4. Business Overview: Description of the franchisor's business and the franchise concept being discussed

5. Proposed Terms: Outline of key commercial terms including territory, fees, and general obligations

6. Due Diligence: Process and timeline for information exchange and evaluation

7. Timeline: Proposed schedule for negotiations and target date for definitive agreements

8. Confidentiality: Binding provisions regarding confidentiality of shared information

9. Exclusivity: Any exclusive negotiation periods and terms

10. Costs and Expenses: Statement regarding who bears the costs of negotiations and due diligence

11. Non-Binding Nature: Clear statement about which provisions are non-binding vs. binding

12. Governing Law: Specification of German law as governing law

13. Signature Block: Space for signatures of authorized representatives