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The contract between the franchisor and the franchisee lays down certain
rules for the business relationship. The franchisor will teach the new
owner the format of the business. In return, the franchisee agrees to pay
an initial fee and a continuing royalty, which is a percentage of gross
receipts. Sometimes the franchisee buys materials or products from the
franchisor, but this is some times not required. You should have an attorney review the contract before signing.
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