THIS FRANCHISE AGREEMENT (hereinafter referred to as “Agreement”) is entered into on this _____ day of _______, 20 (the “Effective Date”).
BETWEEN:
[FRANCHISOR NAME], a corporation duly organised and existing under the laws of [State/Country], having its principal place of business at [Complete Address] (hereinafter referred to as the “Franchisor”);
AND
[FRANCHISEE NAME], an individual/corporation duly organised and existing under the laws of [State/Country], having its principal place of business at [Complete Address] (hereinafter referred to as the “Franchisee”).
The Franchisor and Franchisee shall be collectively referred to as the “Parties” and individually as a “Party.”
RECITALS
WHEREAS, the Franchisor has developed and owns a distinctive business system for the operation of [type of business] establishments under the trademark and service mark [Brand Name] (the “System”);
WHEREAS, the Franchisor possesses valuable proprietary information, operational methodologies, marketing strategies, and business techniques related to the establishment and operation of franchised units;
WHEREAS, the Franchisee desires to obtain a franchise license to establish and operate a franchised business utilising the Franchisor’s System, trademarks, and proprietary methods;
WHEREAS, the Franchisor is willing to grant such franchise rights subject to the terms and conditions outlined in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. GRANT OF FRANCHISE
1.1 The Franchisor hereby grants to the Franchisee, and the Franchisee hereby accepts, a non-exclusive license to own and operate one franchised business (the “Franchised Business”) at the location specified in Schedule A attached hereto (the “Approved Location”), utilising the Franchisor’s System, proprietary marks, trade names, and business methods.
1.2 This franchise grant is personal to the Franchisee and shall not be transferable except in accordance with the provisions explicitly outlined in this Agreement.
1.3 The Franchisee shall have no territorial exclusivity unless specifically granted in writing by the Franchisor, and the Franchisor reserves all rights not expressly granted herein.
2. TERM AND RENEWAL
2.1 The initial term of this Agreement shall commence on the Effective Date and shall continue for a period of [number] years (the “Initial Term”), unless earlier terminated in accordance with the provisions of this Agreement.
2.2 Upon expiration of the Initial Term, the Franchisee may renew this Agreement for successive renewal terms of [number] years each, provided that: (a) The Franchisee has substantially complied with all provisions of this Agreement; (b) The Franchisee is not in default of any obligations; (c) The Franchisee executes the then-current form of franchise agreement; (d) The Franchisee pays the then-current renewal fee; (e) The Franchisee upgrades the Franchised Business to conform to the then-current System standards.
3. FEES AND PAYMENTS
3.1 Initial Franchise Fee: The Franchisee shall pay to the Franchisor an initial franchise fee of [amount] (the “Initial Franchise Fee”), which shall be due and payable upon execution of this Agreement. This fee is non-refundable and constitutes consideration for the franchise rights granted herein.
3.2 Royalty Fees: The Franchisee shall pay to the Franchisor continuing royalty fees equal to [percentage]% of Gross Revenues, payable [weekly/monthly] on or before the [day] of each period. “Gross Revenues” shall mean all revenues derived from the operation of the Franchised Business, whether in cash, credit, or otherwise, without any deductions.
3.3 Marketing Contribution: The Franchisee shall contribute [percentage]% of Gross Revenues to the Franchisor’s Marketing Fund, payable concurrently with the Royalty Fees.
3.4 All payments shall be made via electronic funds transfer from the Franchisee’s designated operating account, and the Franchisee hereby authorises the Franchisor to debit such account for all amounts due.
4. TRAINING AND ASSISTANCE
4.1 The Franchisor shall provide an initial training program for the Franchisee and designated managers at the Franchisor’s training facilities or such other location as the Franchisor designates. The Franchisee shall bear all costs and expenses associated with attendance, including travel, lodging, and meals.
4.2 The Franchisor shall provide reasonable ongoing support and guidance regarding operational procedures, marketing initiatives, and System standards throughout the term of this Agreement.
4.3 The Franchisee acknowledges that the Franchisor’s training and assistance do not constitute a guarantee of success, and the Franchisee assumes all risks associated with the operation of the Franchised Business.
5. OPERATIONAL REQUIREMENTS
5.1 The Franchisee shall operate the Franchised Business in strict accordance with the Franchisor’s Operations Manual and all other standards, specifications, and procedures prescribed by the Franchisor from time to time.
5.2 The Franchisee shall maintain the highest standards of quality, service, and cleanliness in all aspects of the Franchised Business operations.
5.3 The Franchisee shall purchase all products, supplies, equipment, and services exclusively from suppliers approved by the Franchisor or meeting the Franchisor’s specifications.
5.4 The Franchisee shall participate in all marketing programs, promotional campaigns, and special offerings as designated by the Franchisor.
5.5 The Franchisee shall maintain adequate insurance coverage as specified by the Franchisor, naming the Franchisor as an additional insured party.
6. PROPRIETARY MARKS AND INTELLECTUAL PROPERTY
6.1 The Franchisee acknowledges the Franchisor’s exclusive ownership of all proprietary marks, trademarks, service marks, logos, trade names, and other intellectual property associated with the System.
6.2 The Franchisee shall use the proprietary marks only in the manner authorised by the Franchisor and shall not contest the Franchisor’s ownership or validity of such marks.
6.3 The Franchisee shall immediately notify the Franchisor of any infringement or challenge to the proprietary marks and shall cooperate fully in their protection.
6.4 Upon termination or expiration of this Agreement, the Franchisee shall immediately cease all use of the proprietary marks and shall take such actions as necessary to cancel any assumed name registrations.
7. CONFIDENTIALITY
7.1 The Franchisee acknowledges that during the term of this Agreement, the Franchisor will disclose confidential and proprietary information, including but not limited to operational methods, business strategies, supplier relationships, customer data, financial information, and marketing techniques.
7.2 The Franchisee shall maintain the strictest confidence regarding all confidential information and shall not disclose, duplicate, or utilise such information except as necessary for the operation of the Franchised Business.
7.3 This confidentiality obligation shall survive the termination or expiration of this Agreement indefinitely.
8. NON-COMPETITION AND NON-SOLICITATION
8.1 During the term of this Agreement and for a period of [number] years following termination or expiration, the Franchisee shall not, directly or indirectly, own, operate, engage in, or have any interest in any business that is similar to or competitive with the Franchisor’s System within a radius of [number] miles from the Approved Location or any other franchised or company-owned location.
8.2 The Franchisee shall not solicit or hire any employees of the Franchisor or other franchisees during the restricted period.
9. TERMINATION
9.1 The Franchisor may terminate this Agreement immediately upon written notice if the Franchisee: (a) Becomes insolvent or files for bankruptcy; (b) Abandons or fails to operate the Franchised Business; (c) Commits fraud or makes material misrepresentations; (d) Repeatedly fails to comply with System standards; (e) Breaches confidentiality obligations; (f) Loses possession of the Approved Location.
9.2 For curable defaults, the Franchisor shall provide written notice and thirty (30) days to cure before terminating this Agreement.
10. GENERAL PROVISIONS
10.1 This Agreement shall be governed by the laws of [State/Country], without regard to conflict of law principles.
10.2 This Agreement constitutes the entire understanding between the Parties and supersedes all prior negotiations and agreements.
10.3 Any amendments must be in writing and executed by both Parties.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.
FRANCHISOR:
______________________
Signature
______________________
Name and Title
FRANCHISEE:
______________________
Signature
______________________
Name and Title