Reservation

contract

Before the signing of the distribution contract, it is in the interest of both parties that they are bound by a reservation contract also referred to as a “pre-franchise contract”.

It is generally used to reserve the territory for the franchisee until the franchisee has a bank financing agreement.

The obligations stipulated in this type of contract are often as follows:

• the franchisor undertakes not to grant rights in the territory, subject of the contract, to another candidate for the franchise,
• the franchisee undertakes to keep confidential the information to which it has had access during the pre-contractual phase,
• the franchisee takes steps to find a premises, a bank loan, etc., he pays part of the entry fee to the franchisor.