Contract terms for live diligence.

An arbitration clause requires disputes to be resolved through a private arbitration process instead of going to court.

An assignment clause controls whether either party can transfer their rights or obligations under the contract to a third party.

An automatic renewal clause (also called an evergreen clause) causes a contract to renew for another term unless one party...

The exclusive right to develop multiple franchise units in a defined territory under a defined development schedule.

Mandatory contributions to a franchisor-controlled marketing fund, typically 1% to 3% of gross revenue.

Franchise agreement language requiring the franchisee to purchase supplies, equipment, or inventory from franchisor-approved sources.

Lease provisions controlling whether the tenant can transfer the lease to another party or sublet space.

An Assignment of Rents is a clause or separate document in commercial real estate financing that grants the landlord's mortgage...

A breach of contract occurs when one party fails to fulfill their obligations as defined in the agreement.

A bring-down certificate is a closing-day document signed by the seller (and sometimes the buyer) confirming that all of the...

A break-up fee is a payment the seller owes the buyer (or vice versa) if a signed deal falls apart...

A choice of law clause specifies which state's or country's legal framework governs the interpretation and enforcement of the contract.

A confidentiality clause requires you to keep certain information secret and not share it with third parties.

Consequential damages are losses that go beyond the direct, immediate harm of a breach: lost profits, missed business opportunities, reputational...

A counterparts clause states that the contract can be executed in multiple separate copies, each of which is treated as...

Language addressing the percentage of revenue from top customers and the indemnification consequences if a concentrated customer leaves.

Requirements that must be met before either party is obligated to close the deal.

Commercial lease cost pass-through for maintaining common areas (parking, landscaping, lobby, security).

A co-tenancy clause is a commercial-lease provision that lets the tenant reduce rent, switch to percentage-rent only, or terminate the...

A Change-of-Control Clause is a contractual provision triggered when a party undergoes a change in ownership, typically defined as transfer...

A cross-default provision says a default under one agreement automatically triggers a default under this one, even if the borrower...

A cross-acceleration provision is a narrower cousin of cross-default: this agreement defaults only if another lender actually accelerates (calls due)...

An indemnification structure where the seller only pays losses above the threshold, similar to insurance deductibles.

Discovery Day is the in-person validation meeting that most franchise systems require before approving a franchise application.

Disclosure Schedules are the seller's structured exceptions to the representations and warranties (R&W) made in the Asset Purchase Agreement (APA).

A drag-along right lets majority owners force minority owners to join in a sale of the company on the same...

An entire agreement clause (also called an integration clause or merger clause) states that the written contract represents the complete...

A portion of purchase price (typically 8% to 15%) held by a neutral third party for 12 to 24 months...

A portion of purchase price paid contingent on the target hitting performance metrics post-close, typically 10% to 30% over 1...

An exclusive use clause is a commercial-lease provision that prohibits the landlord from leasing other space in the same shopping...

An Estoppel Certificate is a written statement signed by a commercial tenant confirming the current status of their lease: rent...

An exculpation clause limits or eliminates one party's liability for certain conduct, often excusing everything short of gross negligence or...

A force majeure clause excuses one or both parties from performing their contractual obligations when extraordinary events beyond their control...

The foundational seller representations (title to assets, due authorization, capitalization, taxes) that survive longer and are capped at 100% of...

The franchise agreement section that controls when the franchisor can terminate the franchise relationship, what cure periods apply, and what...

Voluntary financial performance representations in the FDD.

Restriction on the franchisee's ability to operate a similar business during and after the franchise term.

FDD Item 20 is the franchise-buyer's most underused diligence weapon.

FDD Item 7 is the franchise-buyer's first reality check.

FDD Item 12 is the franchise disclosure section that defines the franchisee's territorial rights, including geographic boundaries, exclusivity provisions, and...

A further assurances clause requires the parties to take additional reasonable steps and sign additional documents after closing to give...

A financing out is a condition that lets the buyer walk away from an acquisition without penalty if it cannot...

A fraudulent conveyance (or fraudulent transfer) is a transfer of assets made to hinder creditors or for less than reasonably...

Garden leave is a contractual provision requiring you to remain employed (and paid) during your notice period while being barred...

A governing law clause specifies which state's or country's legal framework applies when interpreting the contract and resolving disputes.

Lease structures that include some or all operating costs in base rent.

A golden parachute is a contractual provision giving senior executives large severance payments, accelerated equity vesting, or other benefits if...

The rent rate that applies if the tenant remains in the space after lease expiration without a renewal agreement.

Holdback and escrow are both purchase-price-retention mechanisms in M&A, but they differ in WHO holds the funds, WHO controls release,...

A holdover tenancy is the legal status of a commercial tenant who remains in possession of leased premises after the...

A hell-or-high-water clause requires a party to perform its obligations (typically payment) unconditionally, regardless of any defense, setoff, or problem...

A hold-harmless provision is a promise by one party to absorb the other's losses, expenses, or liabilities arising from defined...

An indemnification clause requires one party to compensate the other for specified losses, damages, legal fees, and related costs.

An intellectual property assignment clause transfers ownership of IP you create during the engagement to the other party.

IP assignment is short for Intellectual Property Assignment.

An indemnification basket is the threshold the buyer must cross before recovering from the seller for breaches of reps and...

The maximum dollar amount the seller has to pay for breaches of reps and warranties.

An ipso facto clause lets a party terminate or modify a contract solely because the other party files for bankruptcy...

A jurisdiction clause specifies which courts have the authority to hear disputes arising from the contract.

A limitation of liability clause caps the maximum amount one party can recover from the other in a dispute.

A liquidated damages clause sets a pre-specified dollar amount that one party must pay if they breach the contract.

The landlord's required approval for actions like lease assignment, subletting, alterations, or change of use.

A Letter of Intent (LOI) is a non-binding document signed early in an acquisition that outlines the proposed deal terms...

A mutual termination provision gives both parties the right to end the contract under specified conditions, creating a balanced exit...

A clause defining what counts as a sufficient deterioration in the target's business between signing and closing to give the...

A franchise contract under which a franchisee commits to develop multiple units, often with reduced franchise fees, royalty rates, or...

A make-whole provision requires a borrower who prepays fixed-rate debt early to pay an additional amount compensating the lender for...

A non-disclosure agreement (NDA) is a contract requiring one or both parties to keep specified information confidential and not share...

A non-compete agreement restricts you from working for competitors or starting a competing business for a specified time period within...

A non-solicitation clause prohibits you from actively reaching out to the other party's clients, customers, or employees after the contract...

A notice provision specifies how formal communications between the parties must be delivered and when those communications are considered officially...

A restriction on the seller's ability to compete with the sold business after close, typically 3 to 5 years and...

A non-recourse loan is a loan where the lender's only remedy in default is the underlying collateral.

A negative pledge is a covenant in which a borrower promises not to grant liens or security interests on its...

A no-shop clause prohibits the seller from soliciting, negotiating, or accepting competing offers for a set period after signing a...

A no-raid clause (also called a non-solicitation of employees clause) prohibits a party from hiring away the other party's employees...

Payment terms specify when payment is due, how it must be made, and what happens when payment is late.

An obligation that makes the buyer personally liable for the obligation of the buying entity.

How the purchase price gets divided across asset categories (inventory, equipment, customer lists, goodwill, non-compete) for tax purposes on IRS...

Additional rent calculated as a percent of tenant's gross sales above a defined breakpoint.

A poison pill (shareholder rights plan) is a defensive measure that makes a hostile takeover prohibitively expensive, typically by letting...

Pari passu is a Latin term meaning on equal footing.

A Quality of Earnings (QoE) report is an independent financial-diligence analysis that adjusts the seller's reported earnings to reflect the...

Representations and warranties are factual statements each party makes about themselves, their business, their authority to enter the contract, and...

A right of first refusal (ROFR) gives one party the right to match any offer made by a third party...

Purchase price paid to the seller in shares of the buyer entity instead of cash, typically 5% to 25%.

Ongoing fees the franchisee pays to the franchisor, typically 4% to 8% of gross revenue (not net profit).

The tenant's right to match a third-party offer to lease additional space in the building.

Landlord's right to move the tenant to a different space in the building during the lease term.

A severability clause states that if any provision of the contract is found to be invalid, illegal, or unenforceable by...

A promissory note from the buyer to the seller for part of the purchase price, typically 10% to 25% on...

How long after close the seller's reps and warranties remain enforceable.

The right of a buyer to recover for breaches of reps even if the buyer knew about the breach before...

A Subordination, Non-Disturbance, and Attornment Agreement (SNDA) is a three-party agreement between the commercial tenant, the landlord, and the landlord's...

Successor liability is the legal doctrine that allows a buyer of a business to be held responsible for the seller's...

A standstill agreement restricts one party (often a potential acquirer or an activist) from buying more shares, launching a tender...

A setoff provision lets one party reduce what it owes by amounts the other party owes it, netting the two...

Structural subordination describes how a creditor of a parent company ranks behind the creditors of the parent's subsidiaries with respect...

Termination for cause allows one or both parties to end the contract when the other party breaches a specific, defined...

Termination for convenience allows one or both parties to end the contract at any time, without needing to provide a...

A standalone contract under which the seller provides defined services (IT, accounting, customer relations) to the buyer for a defined...

An indemnification structure where, once total losses cross a threshold (often 1% of purchase price), the seller pays from dollar...

Franchisee's protected geographic area where the franchisor will not place another franchisee.

A commercial lease structure passing three categories of costs to the tenant: property taxes, building insurance, and maintenance.

The dollar amount the landlord contributes toward tenant build-out, typically $20 to $80 per square foot.

A term sheet is a non-binding outline of the proposed deal terms, typically 2-4 pages, exchanged before counsel drafts a...

A Tenant Improvement Allowance (TIA) is the dollar amount a commercial landlord agrees to contribute toward the tenant's build-out costs...

A tag-along right (co-sale right) lets minority owners join a sale initiated by majority owners, selling their shares on the...

An upstream guarantee is a guarantee given by a subsidiary to support the debt of its parent.

A warranty is a promise that something is true or will remain true for a specified period.

Work for hire is a legal doctrine under US copyright law where work created by an employee within the scope...

A post-close true-up that adjusts purchase price based on the target's actual working capital at closing versus a pre-agreed target.