Franchise Agreement Format Sample
THIS AGREEMENT made this———-day of —————————————
(Hereinafter referred to as �First party�)
OF THE FIRST PART
M/s.—————————————————————————————— including all its branch offices.
(Hereinafter referred to as FRANCHISEE�)
OF THE SECOND PART
Whereas this franchise agreement is entered between the parties as the party on the First part has developed a unique marketing plan and system (hereinafter-called the System) for the development, opening and operating of distinctive business;
AND WHEREAS the distinguishing features of the System include, but are not limited to, unique methods and procedures, identification schemes, products, management programs, standards, specifications and proprietary marks and information;
AND WHEREAS by reason of a uniform business format or system and high standards of quality and service, First party has established an excellent business reputation, created a substantial demand for its products and services and build up valuable goodwill;
AND WHEREAS the FRANCHISEE is desirous of acquiring from First party the right and license to operate a franchised business utilizing the business format, methods, specification, standards, operating procedures, trade marks and upon the terms and conditions hereafter set forth.
NOW THEREFORE this Franchise Agreement witnesseth that in consideration of the mutual covenants and agreements herein contained the parties hereto do hereby covenant and agree with each other as follows:
1.1. The terms of this Franchise Agreement shall be for a period of———————-years commencing with effect from —————————————-(hereinafter to be referred as the �Effective Date�) and ending on——— (the �Term�). FIRST PARTY and the FRANCHISEE amicably shall have the option to renew this Franchise Agreement and shall be exercisable at least Two months prior to the expiry of the Term. In the event, this Franchise Agreement shall be renewed on term and consideration as decided by the parties to this Franchise Agreement so as to include the incentive and increased percentage of share of the Franchisee depending upon its growth of the business.
1.2. Either party shall have the right to terminate this Franchise Agreement, upon providing written notice of their intention of termination at least One month prior to termination without bearing any liability so assigning any reason whatsoever.
In consideration of FIRST PATY granting to the FRANCHISEE a non exclusive right to operate a Business, and a non-exclusive licence to use the System and Marks solely and exclusively in the operation thereof for a period of �� years in accordance with the terms and conditions stated in this Franchise Agreement, the FRANCHISEE shall pay ———————- The consideration will be payable with effect from ————————–
3. TRAINING AND OPERATING ASSISTANCE:
3.1. The FIRST PARTY shall provide to the FRANCHISEE, prior to the opening of the Franchised Business, for itself and other key employees designated by the FRANCHISEE, a training course of such duration and at such location, as it may deem necessary, covering all phases of its System. The FRANCHISEE shall be responsible for all travel and living expenses and all wages payable to any trainees and no wages shall be payable by FIRST PARTY to any such for any service rendered at any outlet during the course of such training. The FRANCHISEE shall also be responsible for the cost of the training manual for any trainees. FIRST PARTY further aggress to furnish a person, experienced in the its System, to assist the FRANCHISEE at the Premises for such period immediately preceding or following the opening as in its sole discretion deems reasonable. Additional start-up assistance or retraining or refresher courses may be provided by it, at its discretion, and at a cost to the FRANCHISEE based on then current daily for the FIRST PARTY personnel performing such assistance, plus other reasonable expenses, including all travel, meal and accommodation expenses.
3.2. Operating Assistance:
During the term of this Franchise Agreement, FIRST PARTY shall furnish to the FRANCHISEE such continuing advice and guidance as is from time to time reasonably required by the FRANCHISEE in the sole judgment of FIRST PARTY with respect to the planning, opening and operation of the Franchised Business, including consultation and advice regarding:
(a) selection, purchasing, stocking and display of Products and supplies;
(b) hiring and training of employees;
(c) formulation and implementation of advertising and promotional programs;
(d) establishment and maintenance of administrative, bookkeeping, accounting, inventory control and general operating procedures; and
(e) Improvements to the system, including new product development; and financial advice and consultation.
4. OPERATION OF FRANCHISED BUSINESS
4.1. The FRANCHISEE agrees to operate the Franchised Business strictly in accordance with System, whether contained in the Manual, or otherwise. Without limiting the generality of the foregoing, the FRANCHISEE agrees as follows:
(a) to operate the Franchised Business with due diligence and efficiency in an up-to-date, quality and reputable manner during such days, nights and hours as may be designated by the landlord;
(b) the FRANCHISEE shall ensure that at all times prompt, courteous and efficient service is accorded to its customers. The FRANCHISEE shall in all dealings with its customers, suppliers and the public adhere to the highest standards of honesty, integrity, fair dealings and ethical conduct;
(c) The FRANCHISEE shall sell such Products and items and only such Products and items as meet the uniform standards of quality and quantity, as have been expressly approved for sale in writing and as have been prepared in accordance with its methods and techniques for product preparation. The FRANCHISEE shall sell all approved items pursuant to a list approved and the FRANCHISEE shall not offer for sale any other products or services from the Premises. The FRANCHISEE shall discontinue the sale of any items or any other merchandise of any kind whatsoever if the FIRST PARTY in sole discretion, prohibits in writing;
(d) The FRANCHISEE agrees to maintain the condition and appearance of the Franchised Business and the equipment used therein consistent with then image, as it may be from time to time, of franchised businesses as an attractive, modern, clean, convenient and efficiently operated business offering high quality products served promptly and courteously. The FRANCHISEE agrees to effect such maintenance of, and repairs to the Premises and the equipment installed therein as in reasonably required on a regular and frequent basis and maintain such condition, appearance;
(e) The FRANCHISEE shall not make or cause to be made any alterations to the interior or exterior of the Premises so as to modify the appearance thereof or any alterations or replacements of any of the leasehold improvements, fixtures or equipment at the Premises without first having obtained the written approval. Which approval may be given or withheld in the sole discretion.
(f) The FRANCHISEE shall participate fully in all national, regional and local promotions initiated by FIRST PARTY;
(g) The FRANCHISEE shall, upon request by FIRST PARTY, at the option, make available for a reasonable period of time each of his staff and manager for training or retraining by at its head office or other locality designated. Such training or retraining shall be conducted at no cost to the FRANCHISEE, provided however, that the FRANCHISEE shall be responsible for all travel, food and lodging costs;
(h) The FRANCHISEE shall comply with all municipal, provincial and federal laws and regulations and shall obtain and at all times maintain any and all permits, certificates or licenses, necessary for the proper conduct of the Franchised Business pursuant to the terms of this Agreement;
(i) The FRANCHISEE and the Guarantor shall devote their full time and attention to the establishment, development and operation of the Franchised Business; and
(1) The FRANCHISEE agrees to render services or otherwise deal in only such products, as FIRST PARTY shall first approve of in writing, which approval may be given or withheld in the sole discretion of FIRST PARTY.
(2) So long as the FRANCHISEE is not in default hereunder, FIRST PARTY will Endeavour to use its reasonable best efforts to process all applications and render all services for clients referred to FIRST PARTY by the FRANCHISEE as promptly as possible. However, FIRST PARTY will not be liable for loss or damage due to delay in service resulting from any cause beyond its reasonable control, including, but not limited to, compliance with any regulations, orders or instructions of any federal, provincial or municipal government or any department or agency thereof, acts or omissions of the FRANCHISEE, acts of civil or military authority, fires, strikes, lockouts, embargoes, and delays in transportation. In no event shall FIRST PARTY be liable for financial loss, including consequential or special damages on account of delay due to any cause.
(3) The FRANCHISEE acknowledges and agrees that FIRST PARTY may from time to time hereafter add to, subtract from, modify or otherwise change the system, including, without limitation, the adoption and use of new or modified trade-marks or trade names, new products or services and new techniques in connection therewith, and the FRANCHISEE agrees, at its own cost, to promptly accept, implement, use and display all such alterations, modifications and changes.
Transfer of Funds
(4) The FRANCHISEE covenants and agrees to cooperate fully and comply with any System implemented by FIRST PARTY for the transfer of funds directly from the bank account of the FRANCHISEE to the bank account of FIRST PARTY, including the execution of any preauthorized payment forms required by the FRANCHISEE�S bankers.
(1) The FRANCHISEE agrees to maintain the confidentially of all such information during the currency of this Franchise Agreement or at any time thereafter any information whatsoever with respect to the FRANCHISEE�S business affairs or the System other than as may be required to enable the FRANCHISEE to conduct its business, and the FRANCHISEE further agrees not to use any such information in any other business or in any manner not specifically approved in writing.
(1) The FRANCHISEE agrees to during the Initial Term and any renewal thereof;
(a) Expenses for corporate advertisements with out names of FRANCHISEE will be born by FIRST PARTY.
(b) Expenses for corporate Advertisements with FRANCHISEE name will be borne by the FRANCHISEE on the basis of the percentage of circulation in the newspaper in which the advertisement is placed.
(c) The cost of the local advertising will be borne by the FRANCHISEE.
(1) The FRANCHISEE shall have the right to conduct such advertising and promotions in respect of the Franchised Business as the FRANCHISEE shall, in its reasonable discretion desire, provided that:
(a) the FRANCHISEE shall advertise and promote only in a manner that will reflect favourably on FIRST PARTY, the FRANCHISEE, the Products and the good name, goodwill and reputation thereof;
(b) the FRANCHISEE shall submit to FIRST PARTY for its approval, which approval shall not be unreasonably and promotions to be utilized by the FRANCHISEE and until such time as FIRST PARTY shall give its prior written approval to the use of such advertising and promotions, the FRANCHISEE shall not utilize same in any advertising or promotion;
(c) the FRANCHISEE shall prominently display, at its expense, in and upon the Premises signs of such nature, form, colour, number, location and size and containing such matters as FIRST PARTY may direst or approve in writing from time to time and such signs shall be purchased from FIRST PARTY or, at its option, from suppliers approved by it;
(d) the FRANCHISEE hereby acknowledges that FIRST PARTY is the sole and exclusive owner of all copyrights that any and all advertising and promotional material prepared by or on behalf of FIRST PARTY and shall at all times remain the property of FIRST PARTY; and
(e) the FRANCHISEE agrees to advertise the Franchised Business (at the FRANCHISEE�S expense) in the white pages and classified section (yellow pages) of all local telephone directories, using only such matters as maybe approved by FIRST PARTY. If other FRANCHISEES are served by the same white pages or classified section, FIRST PARTY shall have the right to require group listings therein, to make direct arrangements with the telephone company and to allocate an equitable part of the cost thereof of the FRANCHISEE.
No Permanent Interest
(1) Neither this Franchise Agreement nor the operation of the Franchised Business shall in any way give to be deemed to give to the FRANCHISEE any interest in the Marks except for the right to use the Marks solely at the on and the Premises and in accordance with the terms and conditions of this Franchise Agreement. The FRANCHISEE shall not use the Marks in any manner calculated to represent that it is the owner of the Marks. Neither during the term of this Franchise Agreement nor at any time after expiration or termination hereof, shall the FRANCHISEE, either directly or indirectly, dispute or contest the validity or enforceability of the Marks, attempt any registration thereof, or attempt to dilute the value of any goodwill attaching to the Marks. Any goodwill associated with the Marks shall ensure exclusively to the benefit of FIRST PARTY.
FRANCHISEE�S Obligations With Respect to Marks
(1) Without in any way restricting or limiting subsection 11(1) hereof, the FRANCHISEE covenants and agrees as follows:
(a) that contemporaneously with the execution of this Franchise Agreement or forthwith upon any request by FIRST PARTY, the FRANCHISEE will execute such agreements or other instruments in such form and with such parties, as First party in its sole discretion shall specify, for the purpose of protecting the interests and rights of FIRST PARTY in such Marks, or complying with any applicable trade name, trade-mark or other similar legislation;
(b) that the FRANCHISEE will not use either the Marks or any variations thereof as any part of its corporate, firm or business name or for any other purposes, save and except in accordance with the terms and conditions of this Franchise Agreement or as may otherwise be specifically authorized by FIRST PARTY in writing;
(c) that if the business, partnership or corporate statutes of any jurisdiction require that the FRANCHISEE make application of the FRANCHISEE shall specify that the FRANCHISEE�S use of such Marks is subject to and limited by the terms and conditions of this Franchise Agreement; and
(d) forthwith upon the expiration or termination for any reason whatsoever of this Franchise Agreement, the FRANCHISEE shall cease all use of the Marks (including any colorable imitations thereof) for any purposes whatsoever and the FRANCHISEE shall not make known, either directly or indirectly, following such expiration or termination, that the FRANCHISEE previously conducted business under the Marks.
Affixing of Notice
(1) The FRANCHISEE hereby covenants and agrees that it will affix in a conspicuous location in or upon the Premises, a sign containing the Following notice
�This business is owned and operated independently by (name of FRANCHISEE)
who is an authorized licensed user of the trade-mark of FIRST PARTY, which trade mark is owned by FIRST PARTY�
Infringement or Change of Marks
(1) The FRANCHISEE shall immediately notify any infringement of or challenge to the FRANCHISEE�S use of any of the Marks and FIRST PARTY shall have the sole have the sole discretion to take such action as it deems appropriate.
8. RIGHT TO INSPECTION
(1) FIRST PARTY and/or its representatives shall have the rights at all times to inspect the Premises and the furnishings, equipment and fixtures thereon and the Products, to take inventory of such Products, and otherwise to examine the manner in which the FRANCHISEE is conducting its business; in the event of any such inspection, the FRANCHISEE and its staff shall co-operate fully.
9. RESTRICTIVE COVENANTS AND TRADE SECRETS
(1) The FRANCHISEE covenants and agrees that, during the term of this Franchise Agreement and any renewal period thereof, the FRANCHISEE shall not, without prior written consent of FIRST PARTY, either individually or in partnership or jointly or in conjunction with any person firm, association, syndicate or corporation, as principal, agent, shareholder or in any manner whatsoever, carry on or be engaged in or be concerned with or interested in or advise, lend money to, guarantee the debts or obligations of or permit their names or any part thereof to be used or employed in any business operating in competition with or similar to the Franchised Business or franchising businesses similar to the Franchised Business.
Competition after Termination
(2) In the event of the expiration or termination of this Franchise Agreement for any reason whatsoever, each of the FRANCHISEE shall not , without the prior written consent of FIRST PARTY , at any time during the period of five (5) years from the date of such expiration or termination either individually or in partnership or jointly or in conjunction with any person or persons , firm , association , syndicate , company or syndication as principal , agent , shareholder or in any other manner whatsoever carry on, be engaged in or be concerned with or interested in or advise , lend money to , guarantee the debts or obligations of or permit its name or any part thereof to be used or employed by any person or persons , firm , associations, syndicate , company or corporation engaged in or concerned with or interested in any business competitive with or similar to the Franchised Business or Franchising Business similar to the Franchised Business within the territory or anywhere else.
Acknowledgement of Corporate FRANCHISEE
(3) In the event the FRANCHISEE is a corporation, the FRANCHISEE covenants and agrees to deliver to FIRST PARTY at any time FIRST PARTY may request, the written acknowledgement of such directors, officers, shareholders or employees of the FRANCHISEE, as FIRST PARTY shall in its discretion determine, acknowledging that they have reviewed the provisions of this Article 10 and that they agree to abide by and be bound by all such provisions.
10. SALE, ASSIGNMENT, TRANSFER
The FRANCHISEE shall not sell, assign or transfer this grant and/or the rights and interest under this Agreement.
Events of Termination
FIRST PARTY shall have the right to terminate this Franchise Agreement and the rights granted without prejudice to the enforcement of any other legal right or remedy, immediately upon giving written notice of such termination upon the happening of any of the following events:
(a) if in FIRST PARTIES opinion , acting reasonably , the FRANCHISEE�S participation in FIRST PARTY�S initial training program hereof discloses the FRANCHISEE�S or the FRANCHISEE�S key employees� inability to adequately manage and operate the business. In the event of such termination, FIRST PARTY shall refund to the FRANCHISEE, within seven (7) days after the effective date of termination, all money received by it from the FRANCHISEE, less reasonable costs including without limitations costs for expenses reasonably incurred by it in connection with the granting of this Franchise, the negotiation and execution of this Franchise Agreement and any premises and any other lease negotiations;
(b) if default shall be made in the due and punctual payment of any amount payable under this Franchise Agreement, when and as same shall become due and payable, and such default shall continue for a period of two (2) days after written notice thereof has been given to the FRANCHISEE;
(c) if the FRANCHISEE shall breach any other of the terms or conditions of this Franchise Agreement or any other agreement or undertaking entered into and the FRANCHISEE and such breach shall continue for a period of ten (10) days after written notice thereof has been given to the FRANCHISEE;
(d) if the FRANCHISEE shall fail to observe or perform any of the rules , bulletins directives or other notices set forth in the Manual and any such failure to observe or perform same shall continue for a period of ten (10) days after notice thereof has been given to the FRANCHISEE;
(e) if the FRANCHISEE fails to conduct business in, at or from the premises for a period of five (5) consecutive business days without the prior written consent of FIRST PARTY or if the premises are used by any party other than such as are properly entitled to use same;
(f) if the FRANCHISEE ceases or threatens to cease to carry on business , or takes or threatens to take any action to liquidate its assets , or stops making payments in the usual course of business;
(g) if the FRANCHISEE makes or purports to make a general assignment for the benefit of creditors;
(h) if the FRANCHISEE makes or purports to make a bulk sale of their assets;
(i) if FRANCHISEE shall institute any proceeding under any statute or otherwise relating to insolvency or bankruptcy , or should any proceeding under any such statute or otherwise be instituted against the FRANCHISEE;
(j) if the custodian , receiver , manager or any other person with like powers shall be appointed to take charge of all or any part of the FRANCHISEE�S undertaking, business , property or assets;
(j) if any lessor or encumbrancer or any other person, corporation or entity lawfully entitled, shall take possession of any of the undertaking, business, property or assets of either the FRANCHISEE;
(k) if the FRANCHISEE shall commit or suffer any default under any contract of conditional sale, mortgage or other security instrument;
(l) if a distress or execution against any of the undertaking, business, property or assets of either the FRANCHISEE shall not be discharged, varied or stayed within twenty (20) days after the entry thereof or within such time period as action must be taken in order to discharge, vary or stay the distress or execution , whichever shall be the earlier;
(m) if final judgment for the payment of money in any amount in excess of Rs.—————————– shall be rendered by any court of competent jurisdiction against either the FRANCHISEE and such judgment shall not be discharged, varied or execution thereof stayed within twenty (20) days after entry thereof or within such time period as action must be taken in order to discharge, vary or stay the execution of the judgment, whichever shall be the earlier;
(n) if the FRANCHISEE or any agent or representative of the FRANCHISEE:-
(i) fails to submit any report required to be furnished to FIRST PARTY pursuant hereto within three (3) days of the date such report is due or,
(ii) understates Gross Sales by more than three (3%) percent on such report; or
(iii) if the FRANCHISEE materially distorts any other material information, pertaining to the Franchised Business, or fails to maintain its records in a manner which permits a determination of Gross Sales, unless the FRANCHISEE proves to the satisfaction of FIRST PARTY that it had no knowledge of such distortion.
(iv) If the franchise fails to generate adequate business as per the targets fixed by FIRST PARTY for 3 months: and,
(a) upon the death or incapacitation of the FRANCHISEE.
Effect of Termination
Upon the expiration or termination of this Franchise Agreement for any reason whatsoever, the following shall apply:
(a) the FRANCHISEE shall, immediately upon request permit FIRST PARTY�S representative to enter the premises and, at its option, to cure any default by the FRANCHISEE, to operate the Franchised Business for account or to secure the FRANCHISEE�S complete and timely compliance with the other obligations set forth in this section;
(b) the FRANCHISEE shall pay to FIRST PARTY, within seven (7) days after the effective date of termination or expiration, all royalties, advertising fees and other charges then due and unpaid by the FRANCHISEE including, but not limited to FIRST PARTY�S costs and expenses in re-entering the Premises and in completing the acts specified in this section;
(c) the FRANCHISEE shall immediately discontinue the operation of the Franchised Business, system and the use of the Marks and other proprietary rights licensed under this Agreement, and similar names and marks, or any other designations or marks associating the FRANCHISEE with system. The FRANCHISEE shall cease displaying and using all signs, stationery, letterheads, packaging, forms, marks, manuals, bulletins, instruction sheets, printed matter, advertising and other physical objects used from time to time in connection with the its system or containing or bearing any of the marks and other names, marks or designation, and shall not thereafter operate or do business under any name or in nay manner in violation of subsection 11(2) above or that might tend to give the general public the impression that it is associated with FIRST PARTY or that it is operating a business similar to the business or that it previously conducted its business under the Marks;
(d) if the FRANCHISEE retains possession of the Premises, the FRANCHISEE shall promptly and, at its expense, make such modifications to the interior and / or exterior d�cor of the Premises shall require to remove all identification as its business;
(e) the FRANCHISEE shall promptly execute such documents or take such actions as may be necessary to abandon the FRANCHISEE�S use of any fictitious business name containing any of the proprietary marks adopted by the FRANCHISEE and to remove (in respect to the next publication), at its request, the FRANCHISEE�S listing as a FRANCHISEE from the yellow pages, all other telephone directories and all other trade or business directories and to assign (if the business if the FRANCHISEE is being continued by FIRS PARTY or its nominee) to FIRST PARTY or any other party designated by him all of the FRANCHISEE�S telephone numbers and listings in connection with the Franchised Business; and
(f) within seven (7) days after the effective date of expiration or termination, the FRANCHISEE shall return to FIRST PARTY all copies of the manual, all other confidential material provided to the FRANCHISEE by FIRST PARTY and all other materials required to be returned in accordance with this Franchise Agreement or the Manual.
Survival of Covenants
(1) Notwithstanding the expiration or termination of this Franchise Agreement for any reason whatsoever, all covenants and agreements to be performed and/or observed by the FRANCHISEE and/or the Guarantor under this Franchise Agreement or which by their nature survive the expiration or termination of this Franchise Agreement shall survive any such expiration or termination.
Failure to act not to affect rights
(2) the failure of FIRST PARTY to exercise any rights or remedies to which it is entitled upon the happening of any of any of the events hereof, shall not be deemed to be a waiver of or otherwise affect, impair or prevent FIRST PARTY from exercising any rights or remedies to which it may be entitled, arising either from the happening of any such event, or as a result of the subsequent happening of the same or any other event or events provided for above. The acceptance by FIRST PARTY of any amount payable by or for the account of the FRANCHISEE under this Franchise Agreement after the happening of any event provided for above, shall not be deemed to be a waiver by FIRST PARTY of any rights and remedies to which it may be entitled, regardless of FIRST PARTY�S knowledge of the happening of such preceding event at the time of acceptance of such payment. No waiver of the happening of any event shall be deemed to be waived unless such waiver shall be in writing.
Any notice required to be served upon the FRANCHISEE shall be sufficiently served and given if delivered by Registered AD Post or delivered personally, at the address first given above, duly acknowledged by the FRANCHISEE. Any notice that may be required to be served upon FIRST PARTY shall be sufficiently served and given if delivered by Registered AD Post or delivered personally at the address first given above and duly acknowledged by THE FIRST PARTY.
13. FORCE MAJEURE
In the event that any party hereto is delayed or hindered in the performance of any act required herein by reason of strike, lock-outs, labour troubles, inability to procure materials, failure of power, restrictive governmental laws or regulations, riots, insurrection, war or other reasons of a like nature not the fault of such party, then performance of such act shall be excused for the period of the delay and the period for performance of such act shall be extended for the period equivalent to the period of such delay, up to a maximum of three(3) months. The provisions of this section shall not operate to excuse the FRANCHISEE from the prompt payment of any fee or other payment due to FIRST PARTY pursuant to the provisions of this Agreement.
14. JURISDICTION OF THE COURTS
All disputes arising under or out of this Franchise Agreement or in any way connected with this Franchise Agreement shall be subject to the jurisdiction of the courts of ————————–.
IN WITNESS WHEREOF, the parties have this first day of ———————- caused their respective seals to be affixed on this Agreement.
SIGNED, SEALED AND DELIVERED
FIRST PARTY SECOND PARTY
(Authorized Signatory) (Authorized Signatory)
IN PRESENCE OF