The Franchise Letter of Intent serves as a crucial first step in franchise negotiations under English and Welsh law. It is typically used when parties have progressed beyond initial discussions but before committing to a full franchise agreement. The document outlines key commercial terms, demonstrates serious intent, and provides a structure for further negotiations. While primarily non-binding, it often includes certain binding provisions such as confidentiality obligations. The LOI helps parties align their expectations and provides a roadmap for due diligence and subsequent negotiations.
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1. Identification of Parties: Full legal names and addresses of the proposed franchisor and franchisee
2. Business Description: Brief description of the franchise business and proposed arrangement
3. Territory: Proposed geographic area or territory for the franchise
4. Financial Terms: Preliminary discussion of fees, royalties, and initial investment
5. Timeline: Proposed schedule for negotiations and due diligence
6. Confidentiality: Statement regarding confidentiality of discussions and information shared
7. Non-Binding Nature: Clear statement that the LOI is non-binding except for specific provisions
1. Exclusivity Period: Period during which parties agree not to negotiate with others - use when protecting against competitive negotiations is important
2. Due Diligence Requirements: Specific information and documents required for review - use when detailed investigation is needed before proceeding
3. Deposit Terms: Any initial deposits or payments required - use when early financial commitment is desired
4. Break Fee: Compensation if either party withdraws - use when significant resources will be committed to negotiations
1. Initial Business Plan Overview: High-level business plan showing proposed structure and financials
2. Timeline Schedule: Detailed timeline for negotiations and implementation
3. Territory Map: Visual representation of proposed territory
4. Initial Fee Structure: Preliminary breakdown of fees and financial obligations
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