The Franchise Agreement template is an agreement made between a Franchisor, a corporation who has the right to grant franchises, and a Franchisee, a corporation who desires to obtain a franchise to operate a business utilizing the system created by the Franchisor. The agreement specifies details such as grant of franchise, term, territory, fees, training, operating standards, intellectual property, confidentiality, default and termination, and miscellaneous provisions.
THIS FRANCHISE AGREEMENT (the "Agreement") is made and entered into as of the ____ day of ________, 20__, by and between [Franchisor] ("Franchisor"), a [State] corporation with its principal place of business at _____________________, and [Franchisee] ("Franchisee"), a [State] corporation with its principal place of business at _____________________.
A. Franchisor has developed a system for the operation of a [type of business] business (the "System").
B. Franchisor has the right to grant franchises utilizing the System.
C. Franchisee desires to obtain a franchise to operate a [type of business] business utilizing the System.
D. Franchisor is willing to grant to Franchisee a franchise to operate a [type of business] business utilizing the System on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. GRANT OF FRANCHISE
Franchisor hereby grants to Franchisee, and Franchisee hereby accepts from Franchisor, a franchise to operate a [type of business] business utilizing the System at the location set forth in Exhibit A (the "Location").
The initial term of this Agreement shall be for a period of _______ (__) years, commencing on the date hereof, unless sooner terminated as provided for in this Agreement. Upon expiration of the initial term, Franchisee may renew this Agreement for additional terms, each of _______ (__) years, provided that Franchisee has complied with all of the terms and conditions of this Agreement.
Franchisor hereby grants to Franchisee the exclusive right to use the System and to operate a [type of business] business at the Location. Franchisee shall not establish or operate any [type of business] business or use the System outside of the Territory, except with the prior written consent of Franchisor.
(a) Initial Franchise Fee. Franchisee shall pay to Franchisor an initial franchise fee of $_________ (the "Initial Franchise Fee"), which is fully earned upon the execution of this Agreement and is non-refundable.
(b) Royalty Fee. Franchisee shall pay to Franchisor a royalty fee equal to _______ (%) of the gross sales of the [type of business] business, which shall be due and payable on a weekly basis.
(c) Advertising Fee. Franchisee shall pay to Franchisor an advertising fee equal to _______ (%) of the gross sales of the [type of business] business, which shall be due and payable on a weekly basis.
(a) Initial Training. Franchisee and its employees shall attend and successfully complete Franchisor's initial training program, which shall be provided at Franchisor's headquarters or at such other location as Franchisor may designate. Franchisee shall be responsible for all travel, lodging, and other expenses incurred in connection with its attendance at the initial training program.
(b) Ongoing Training. Franchisee and its employees shall attend and successfully complete such ongoing training programs as Franchisor may require from time to time.
6. OPERATING STANDARDS
(a) Franchisee shall operate the [type of business] business in accordance with the System, the operating manuals, and other instructions provided by Franchisor.
(b) Franchisee shall use only such products, supplies, equipment, and fixtures as are approved by Franchisor.
(c) Franchisee shall maintain the [type of business] business and the premises in a clean, orderly, and safe condition, and shall comply with all applicable laws, rules, and regulations.
(d) Franchisee shall maintain such records and submit such reports to Franchisor as Franchisor may require from time to time.
7. INTELLECTUAL PROPERTY
(a) Franchisee acknowledges that Franchisor is the owner of all right, title, and interest in and to the System, the trademarks, service marks, trade names, logos, and other intellectual property associated with the [type of business] business, and all modifications and improvements thereto (collectively, the "Intellectual Property").
(b) Franchisee shall not use any Intellectual Property except in accordance with the terms and conditions of this Agreement.
(c) Franchisee shall not contest or challenge the validity or ownership of any Intellectual Property.
(a) Franchisee acknowledges that it shall have access to confidential information and trade secrets of Franchisor, including without limitation, the System, the operating manuals, and other proprietary information (collectively, the "Confidential Information").
(b) Franchisee shall not use or disclose any Confidential Information except as necessary to operate the [type of business] business in accordance with this Agreement.
(c) Franchisee shall take all reasonable measures to protect the Confidential Information from unauthorized use or disclosure.
9. DEFAULT AND TERMINATION
(a) Franchisee shall be in default under this Agreement if it fails to comply with any material term or condition of this Agreement.
(b) Upon any default by Franchisee, Franchisor may terminate this Agreement upon notice to Franchisee and may, in its discretion, take any other action available to it under applicable law.
(c) Upon termination of this Agreement, Franchisee shall immediately cease operating the [type of business] business and shall immediately cease using the Intellectual Property.
(a) This Agreement constitutes the entire agreement between the parties and supersedes all prior negotiations, representations, and agreements, whether written or oral.
(b) This Agreement may not be amended or modified except in writing signed by both parties.
(c) This Agreement shall be governed by and construed in accordance with the laws of the State of ________, without giving effect to any choice of law or conflict of law provision.
(d) Any dispute arising under or in connection with this Agreement shall be resolved exclusively by arbitration in accordance with the rules of the American Arbitration Association.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.