Franchise Agreement Template

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Franchising Agreement

 

This Franchising Agreement (the “Agreement”) is made and entered into as of the date of the last signature below (the “Effective Date”) by and between:

 

Company A, a corporation organized and existing under the laws of the State of [Insert State of Incorporation], with its principal place of business located at [Insert Address] (“Company A”); and

 

Company B, a corporation organized and existing under the laws of the State of [Insert State of Incorporation], with its principal place of business located at [Insert Address] (“Company B”).

 

In consideration of the mutual promises and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

  1. DEFINITIONS

 

1.1 “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, is controlled by, or is under common control with, such first Person. For purposes of this definition, “control” when used with respect to any Person, means the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

1.2 “Authorized Personnel” means the individuals designated by Company A from time to time to represent and bind Company A in its dealings with Company B, its Affiliates and/or its designees, as applicable.

 

1.3 “Business” means the business of operating [DESCRIBE BUSINESS], as the same may be conducted by Company A from time to time.

 

1.4 “Business Day” means any day that is not a Saturday, Sunday or other day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

1.5 “Claim” means any and all claims, attacks, charges, suits, actions, causes of action, debts, liens, contracts, agreements, promises, damages, losses, liabilities, costs and expenses, whether liquidated or unliquidated, known or unknown, suspected or unsuspected, contingent or absolute, and whether or not arising out of a tortious act, including reasonable attorneys’ fees, that arise out of or relate to this Agreement, any breach of this Agreement, or any actual or alleged infringement or misappropriation of any Intellectual Property Rights.

 

1.6 “Confidential Information” means any and all information and material that is proprietary to Company A and/or its Affiliates and is not generally known to the public, including without limitation, any and all information and material that relates to the Business, the System, the Intellectual Property Rights, Company A’s and/or its Affiliates’ customers, vendors, marketing strategies, business plans, financial information and trade secrets.

 

1.7 “Designated Territory” means the geographic area within which Company B is granted the right to offer and sell the Products and/or Services, as such area may be amended from time to time by the parties in accordance with Section 6.3.

 

1.8 “Effective Date” has the meaning set forth in the introductory paragraph.

 

1.9 “Franchise Fee” means the initial franchise fee and any renewal franchise fees payable by Company B to Company A in accordance with Section 4.1.

 

1.10 “Governmental Authority” means any federal, state, local, municipal or other governmental authority, agency, department, commission, court or instrumentality, domestic or foreign.

 

1.11 “Intellectual Property Rights” means all right, title and interest in and to any and all patents, patent applications, patent rights, invention rights, copyrights, copyright applications, copyright registrations, trade secrets, know-how, and all other intellectual property rights, whether registered or unregistered and including all applications, renewals, extensions and restorations thereof.

 

1.12 “Laws” means all applicable federal, state and local laws, ordinances, rules, regulations, orders, licenses, permits, judgments, decisions and other requirements of any Governmental Authority.

 

1.13 “Losses” means any and all losses, liabilities, deficiencies, costs, claims, actions, judgments, settlements, interest, awards, penalties, fines, taxes or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers.

 

1.14 “Products” means the products that Company A and/or its Affiliates manufactures, produces, supplies, distributes and/or sells from time to time, which may include without limitation, [DESCRIBE PRODUCTS].

 

1.15 “Person” means any individual, partnership, joint venture, limited liability company, corporation, association, trust, unincorporated organization or other entity.

 

1.16 “System” means the methods and procedures utilized by Company A in connection with the operation of the Business, as the same may be modified or supplemented by Company A from time to time in its sole discretion. The System includes, without limitation, the following elements: [DESCRIBE SYSTEM].

 

1.17 “Term” has the meaning set forth in Section 5.1.

 

1.18 “Trademarks” means any and all trademarks, service marks, logos, trade names, Internet domain names and other brand designations used by Company A and/or its Affiliates in connection with the Business, the Products and/or the System, including without limitation, the following: [DESCRIBE TRADEMARKS].

 

1.19 “Trade Secrets” means any and all unpatented, confidential and proprietary information and material that relates to the Business, the System, the Intellectual Property Rights, Company A’s and/or its Affiliates’ customers, vendors, marketing strategies, business plans, financial information and trade secrets.

 

1.20 “Web Site” means the Internet website located at [INSERT URL], and any successor website(s) designated by Company A from time to time.

 

  1. APPOINTMENT

 

2.1 Appointment . Subject to the terms and conditions set forth in this Agreement, Company A hereby grants to Company B, and Company B hereby accepts, during the Term, a non-exclusive, non-transferable, revocable right and license to offer and sell the Products and/or Services within the Designated Territory in accordance with the terms of this Agreement and the System.

 

2.2 Reservation of Rights . This Agreement does not grant to Company B any right, title or interest in or to the Business, the System, the Intellectual Property Rights or any Confidential Information. Company A and/or its Affiliates reserve all right, title and interest in and to the Business, the System, the Intellectual Property Rights and the Confidential Information. Nothing contained in this Agreement shall be construed as conferring by implication, estoppel or otherwise any license or right under any patent, trademark, copyright or other proprietary right of Company A and/or its Affiliates.

 

  1. FRANCHISE OBLIGATIONS

 

3.1 Training . Company A will provide Company B with training in the System (the “Training”). The Training will be conducted at Company A’s headquarters or such other location(s) as Company A may designate from time to time. Company B will be responsible for its own travel and living expenses in connection with the Training. The training is merely for the purpose of familiarising Company B and its employees and agents with the business. This does not imply any responsibility or any degree of control on the part of Company A on the functionings of Company B’s franchise.

 

3.2 Manuals . Company A will provide Company B with copies of any and all operating and training manuals and other materials utilized by Company A and/or its Affiliates in connection with the Business (the “Manuals”). The Manuals will contain, without limitation, the following: [DESCRIBE MANUALS]. Company A may modify the Manuals from time to time in its sole discretion, and Company B will be responsible for implementing and complying with any such modifications within a reasonable period of time after receipt of notice thereof from Company A.

 

3.3 Site Selection . Company B will be solely responsible for the selection of the location of its franchise outlet(s). Company A will not be required to approve or disapprove any such location, but Company B acknowledges and agrees that Company A may, in its sole discretion, refuse to provide the Training and/or the Manuals if Company B selects a location that Company A, in its sole discretion, determines is unsuitable.

 

3.4 Construction and Equipment . Company B will be solely responsible for the construction of its franchise outlet(s) and the purchase, installation and maintenance of all equipment and fixtures necessary for the operation thereof in accordance with the System. Company A will not be required to approve or disapprove any such construction, equipment or fixtures, but Company B acknowledges and agrees that Company A may, in its sole discretion, refuse to provide the Training and/or the Manuals if Company B constructs its franchise outlet(s), purchases, installs or maintains any equipment or fixtures that Company A, in its sole discretion, determines are unsuitable.

 

3.5 Opening for Business . Company B will use its best efforts to open its franchise outlet(s) and commence offering and selling the Products and/or Services within [NUMBER] months after the Effective Date (the “Opening Date”). Company B acknowledges and agrees that Company A may, in its sole discretion, refuse to provide the Training and/or the Manuals if Company B fails to open its franchise outlet(s) and commence offering and selling the Products and/or Services within such time period. This is merely a measure to ensure quality of service on the part of Company A and does not imply any degree of control by Company A on the Franchise’s workings.

 

3.6 Franchisee’s Personnel . Company B will be solely responsible for hiring, training, supervising and, if necessary, firing its employees, independent contractors and/or other personnel. Company A will not be required to approve or disapprove any such employees, independent contractors and/or other personnel,

 

3.7 Compliance with Laws . Company B will obtain and maintain, at its sole cost and expense, all licenses, permits and other approvals that may be required by any Governmental Authority in connection with the operation of its franchise outlet(s) and the offering and sale of the Products and/or Services. Company B will comply with all Laws applicable to the operation of its franchise outlet(s) and the offering and sale of the Products and/or Services. Company B also agrees to indemnify Company A against all claims in the event of any breach in compliance. Company A reserves the right to terminate the Agreement immediately if Company B is found to be in breach of any applicable Law.

 

3.8 Compliance with the System. Company B will operate its franchise outlet(s) and offer and sell the Products and/or Services strictly in accordance with the System. Without limiting the generality of the foregoing, Company B. Company A is at liberty to unconditionally revoke the license from Company B in the event of a breach of their operating standards and instructions:
[INSERT CUSTOM STANDARDS OF OPERATIONS]

 

  1. Company A is entitled to ___% of Company B’s revenues from operation as consideration. The share of Company A’s entitled profits shall be reviewed every _______ and shall be decided in mutual agreement.

 

  1. 5. In the event of Company B looking to exit the market, the sale of franchise must be approved and overseen by Company A.

 

  1. 6. All advertising and marketing schemes must be in consultation with Party A.

 

Signature of the parties:

 

Party A:

Signature: ____________________________

Typed or Printed Name: ___________________

Title: _______________________________

 

Party B:

Signature: ____________________________

Typed or Printed Name: ___________________

Title: _______________________________