Since the franchisor allows the franchisee to use its intellectual property, the definitions should also include the precise use of the intellectual property in which territory and for what period. The indemnification clause of the franchise agreement must stipulate that the franchisee will reimburse the franchisor for any loss suffered as a result of negligence or misconduct. Since a franchise agreement is designed to reflect the uniqueness of each franchise offering and explain the dynamics of the intended franchise relationship, copying the agreement from another franchise system is probably the biggest mistake a new franchisor can make. A franchise agreement is the document governing how a franchisee will operate their franchise. This franchise agreement is important for the success of the franchisor and franchisee and the preparation of the contract must be done with care. .