In business format franchising agreements, Franchisee, while dependent to other party of the contract (Franchisor), follows the method of business belonging to Franchisor. Franchisee use of the system leads to many obligations such as payment of franchise fees, secrecy of Know how, non competition and making available all necessary factors to use the system. Irrespective of the Law which governs the contract, franchisor always focuses on laws governing franchise agreement in hosting country. Because of different laws affecting the franchise contract and particular nature of some contractual terms pertaining to Franchisee obligations, in some cases contract clauses related to Franchisee obligations are in contradiction with local laws of Franchisee country. This conflict can amount to either invalidity of the contractual term or posing a limitation on its way of performance.
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