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What Are Collective Action Clauses In Franchise Agreements?

Collective action clauses allow a franchisor to implement unanticipated marketing programs and fees. The marketing initiative is put to a vote by franchisees where majority approval is obtained. Once this is approved, all franchisees are bound to the new measure (this includes the franchisees who voted against the action). When Collective Action Clauses are structured and implemented in the proper way they add flexibility to franchise agreements and the development of a franchise system.

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