FRANCHISE AGREEMENT
This Franchise Agreement ("Agreement") is made and effective this [DATE],
BETWEEN: [YOUR COMPANY NAME] (the "Franchisor"), a company organized and existing under the laws of [STATE/PROVINCE], with its head office located at:
[YOUR COMPLETE ADDRESS]
AND: [FRANCHISEE NAME] (the "Franchisee"), an individual with his main address located at OR a company organized and existing under the laws of [STATE/PROVINCE], with its head office located at:
[COMPLETE ADDRESS]
WHEREAS, Franchisor and certain of its Affiliates own, operate and franchise [DESCRIPTION] throughout [COUNTRY] which, among other things, rent, sell and market [PRODUCT/SERVICE] to the [GENERAL PUBLIC OR COPORATIONS OR GOVERNMENT]; and
WHEREAS, Franchisor and certain of its Affiliates acquire, produce, license market and sell [PRODUCT/SERVICE]; and
WHEREAS, Franchisee is willing to purchase on a per Location (the terms initially capitalized in this Agreement and not otherwise defined herein shall have the respective meanings set forth in Paragraph 18 of this Agreement) basis a specified number of [PRODUCT/SERVICE]; and
WHEREAS, Franchisor is willing to provide various marketing, advertising and promotional services and activities in support of Franchisee;
NOW, THEREFORE, based on the above premises and in consideration of the covenants and agreements contained herein, and intending to be legally bound, the parties agree hereto as follows:
The term of this Agreement shall be for the period (the "Term"), commencing as of the date of this Agreement. Each year of the Term, as measured from the date of this Agreement, is a "Contract Year."
The territory for purposes of this Agreement with respect to [PRODUCT/SERVICE] shall be [COUNTRY], their territories and possessions (the "Territory"), except with respect to those [PRODUCT/SERVICE] for which Franchisee has only [COUNTRY] Distribution Rights, in which case, the Territory with respect to such [PRODUCT/SERVICE] shall be limited to [COUNTRY] and, if and to the extent Franchisor owns or controls such rights, to territories and possessions of [COUNTRY]).
Franchisee shall remit to Franchisor [%] of the net profits of its business in the form of [ROYALTIES,
ETC]. [DESCRIBE IN DETAILS REVENUE SHARING BETWEEN FRANCHISOR AND FRANCHISEE].
Distribution of profits shall be made on the [DAY] of [MONTHS].
Beginning as of the date of this Agreement for [NUMBER OF LOCATIONS] located in [COUNTRY] within [NUMBER] calendar months hereafter, and for Participating Franchises within [NUMBER] calendar months hereafter, Franchisee agrees as follows:
4.1 Purchasing
The following purchasing requirements shall apply to all Locations and Participating Franchises
A. [FRANCHISEE REQUIREMENT]
B. [FRANCHISEE REQUIREMENT]
C. [FRANCHISEE REQUIREMENT]
4.2 Missing Products
For each [PRODUCT TYPE] that is lost, stolen or otherwise not reasonably accounted for, for more than [SPECIFY] calendar days during the period commencing upon delivery to Franchisor's distribution center and ending on the last day of the relevant Revenue Sharing Period, Franchisee shall pay [AMOUNT] to Franchisor. For any such [PRODUCT TYPE] Franchisee will reimburse Franchisor the applicable distribution wholesale price less the applicable average Purchase Price received by Franchisee.
4.3 Payment
The parties acknowledge and agree that if Franchisee fails to order [NUMBER OF UNITS] required under Paragraph 3.1, Franchisee shall pay [AMOUNT] to Franchisor, as liquidated damages, an amount equal to [AMOUNT] for each unit which Franchisee failed to order. If Franchisor fails to deliver the number or units ordered by Franchisee under Paragraph 3.1, Franchisor shall pay to Franchisee, as liquidated damages, an amount equal to [AMOUNT] for each unit which Franchisor failed to deliver. The parties hereto expressly agree and acknowledge that actual damages for purposes of this Subparagraph would be difficult to ascertain and that the amount set forth above represents the parties' reasonable estimate of such damages.
4.4 Marketing
With respect to advertising of [PRODUCT/SERVICE], Franchisee agrees to consult with Franchisor and to keep Franchisor reasonably appraised of its marketing plans and activities and to comply with Franchisor's then-current customary marketing support policies and practices to the extent they are reasonable and practicable. Franchisor shall have the right to approve such plans, and Franchisee shall provide a timely opportunity for said approval by Franchisor. Franchisor shall exercise its approval rights in a timely and reasonable manner.
Should Franchisee fail to comply in good faith with its obligations under Paragraph 3.4, Franchisor shall be entitled to give written notice to Franchisee of such failure. In no event shall Franchisor be obligated to provide such advertising which it would otherwise have been obligated to provide during such time as Franchisor's obligations hereunder were suspended because of Franchisee's failure to fulfill its obligations under this Paragraph 3.4.
4.5 Participating Franchises
While Franchisee cannot guarantee that its Franchises will adopt the Agreement, Franchisee will use good faith commercially reasonable efforts to recommend adoption of the Agreement to its Franchises and anticipates a high level of adoption thereby. Franchisor hereby agrees that each Participating Franchise shall execute a letter agreement, which has been approved by Franchisee in form and substance, in favor of Franchisor, agreeing to be bound by the terms and conditions of this Agreement as if it were a party hereto (the "Participating Franchise"). Franchisee shall be liable for each Participating Franchise's performance of its financial obligations hereunder as if such Participating Franchise were a Location. Franchisor shall have the right to proceed against Franchisee for money only for any failure of a Participating Franchise to fully perform the financial terms and conditions of this Agreement. Participating Franchises shall be subject to the same terms and conditions under the Agreement as Locations, unless specifically designated otherwise. Implementation of the Agreement at the Franchise level and Franchise payments there under will be administered by Franchisor.
4.6 Placement
Franchisee shall exercise good faith commercially reasonable efforts to maximize revenue on the [SALE OR RENTAL] of [PRODUCT/SERVICE]. At all times during the entire Revenue Sharing Period, Franchisee shall make available for [SALE OR RENTAL] at each Location all of the [PRODUCT/SERVICE] purchased for such Location.
4.7 Packing and Shipping
Franchisor will be solely responsible for making [PRODUCT/SERVICE] ready for consumer [PURCHASE/RENTAL] and for shipping the [PRODUCT/SERVICE] from its distribution center to Franchisee’s Locations.
4.8 Returns/Exchanges
The purchase requirements set forth in Paragraph 3.1 shall not be subject to any returns by Franchisee. Franchisor will exchange defective or damaged products. Defective products shall mean those that are mechanically defective, mispackaged, physically blemished or contain extraneous material. Franchisee shall report defective or damaged products to Franchisor promptly following discovery of such defect or damage.
4.9 Location Count
Franchisee will report to Franchisor on a calendar month basis the number of currently operating Locations, including Participating Franchises, non-participating Franchises, New Franchisor Locations and recently closed Locations.
4.10 Demographic Information
Franchisee will provide to Franchisor, on an ongoing basis, information regarding the demographic make-up generally of Franchisee customers.
5.1 Marketing Support
In lieu of specific marketing support programs such as rebate, co-op and MDF programs, and as payment for services and in consideration for the various other services and activities which Franchisee has agreed to perform hereunder for the benefit of Franchisor, such as sales and rental reporting functions, Franchisor agrees to credit on a per [PRODUCT/SERVICE] basis (on the relevant invoice) Franchisee with marketing support funds ("Marketing Support Funds") in the amount of [SPECIFY] OR of in the amount of [SPECIFY PERCENTAGE] of the Purchase Price generated by [PRODUCT/SERVICE]. Marketing Support Funds shall not be used to advertise, promote or otherwise market product not distributed by Franchisor. In addition to Marketing Support Funds, Franchisor shall continue to provide Franchisee with standard [IN-STORE/ON-LOCATION] point of purchase marketing materials as customarily utilized by Franchisor.
At no cost or expense to Franchisor, Franchisee will provide to Franchisor, electronically, daily access to all Franchisee [PRODUCT/SERVICE] information along with weekly summaries, in such form as may be reasonably specified by Franchisor from time to time, of all performance information as to Franchisee's [SALE OR RENTAL] of [PRODUCT/SERVICE], including, but not limited to, daily [SALES OR RENTAL] data, daily inventory and daily Revenue from each Location on a Location by Location, [PRODUCT/SERVICE] by [LOCATION] basis.
Within [SPECIFY NUMBER OF DAYS] calendar days following the end of each Contract Year, the parties shall meet and in good faith review the terms of this Agreement. Should no agreement be reached between the parties with respect to adjusting or amending the terms of the Agreement, the then current terms of the Agreement shall remain in full force and effect. Within the [SPECIFY NUMBER OF DAYS] calendar days following the end of the [SPECIFY] month of the Term, either party may give [NUMBER] months notice to terminate the Agreement. If such notice is given by either party, from such notification forward, Franchisee shall have no right or obligation to purchase additional [PRODUCT/SERVICE] under this Agreement and Franchisor shall be relieved of any right or obligation to sell [PRODUCT/SERVICE] to Franchisee under this Agreement.
The following transactions or occurrences shall constitute material events of default (each an "Event of Default") by the applicable party (the "defaulting party") hereunder such that, in addition to and without prejudice to or limiting any other rights and remedies available to the non-defaulting party at law or in equity the non-defaulting party may elect to immediately and prospectively terminate this Agreement at the sole discretion of the non-defaulting party by giving written notice thereof to the other party at any time after the occurrence of an Event of Default setting forth sufficient facts to establish the existence of such Event of Default.
8.1 Material Breach
A material breach by a party of any material covenant, material warranty, or material representation contained herein, where such defaulting party fails to cure such breach within [NUMBER] calendar days after receipt of written notice thereof, or within such specific cure period as is expressly provided for elsewhere in this Agreement; or
8.2 Insolvency and/or Bankruptcy
A party makes an attempt to make any arrangement for the benefit of creditors, or a voluntary or involuntary bankruptcy, insolvency or assignment for the benefit of creditors of a party or in the event any action or proceeding is instituted relating to any of the foregoing and the same is not dismissed within [NUMBER] calendar days after such institution; or
8.3 Failure to Make Payment
A failure by either party to make payment of any monies payable pursuant to this Agreement, as and when payment is due. Except as otherwise provided herein, no termination of this Agreement for any reason shall relieve or discharge any party hereto from any duty, obligation or liability hereunder which was accrued as of the date of such termination.
9. PUBLIC DISCLOSURE AND CONFIDENTIALITY
9.1 Public Disclosure
Each party agrees that no press release or public announcement relating to the existence or terms of this Agreement (including within the context of a trade press or other interview or advertisement in any media) shall be issued without the express prior written approval of the other party hereto.
9.2 Confidential Information
During the Term and for a period of [SPECIFY YEARS/MONTHS] thereafter, Franchisee and Franchisor shall hold, and shall cause each of their directors, officers, employees and agents to hold in confidence the terms of this Agreement (including the financial terms and provisions hereof and all information received pursuant to, or developed in accordance with, this Agreement) specifically including but not limited to the Franchisor. Franchisee and Franchisor hereby acknowledge and agree that all information contained in, relating to or furnished pursuant to this Agreement, not otherwise known to the public, is confidential and proprietary and is not to be disclosed to third parties without the prior written consent of both Franchisee and Franchisor. Neither Franchisee nor Franchisor shall disclose such information to any third party (other than to officers, directors, employees, attorneys, accountants and agents of Franchisee and Franchisor or the affiliates of either, who have a business reason to know or have access to such information, and only after each of whom agrees to being bound by this paragraph) except:
This Agreement and the rights and licenses granted hereunder are personal and neither party shall have the right to sell, assign, transfer, mortgage, pledge nor hypothecate (each an "Assignment") any such rights or licenses in whole or in part without the prior written consent of the non-assigning party, nor will any of said rights or licenses be assigned or transferred to any third party by operation of law, including, without limitation, by merger or consolidation or otherwise; provided, however, that an Assignment pursuant to or resulting from a sale of all or substantially all of the assets or all or a majority of the equity of Franchisee to any Person or Persons or any other form of business combination, such that the Franchisee business as currently existing remains substantially intact, including, without limitation, a sale to the public, shall not require such consent so long as such Assignment is not to [SPECIFY]; and provided further that any Assignment by (i) Franchisee, to [SPECIFY] or (ii) Franchisor to any Affiliate of Franchisor. In the event that Franchisee or Franchisor assigns its rights or interest in or to this Agreement in whole or in part, the assigning party will nevertheless continue to remain fully and primarily responsible and liable to the other party for prompt, full, complete and faithful performance of all terms and conditions of this Agreement.
Franchisor represents and warrants that:
Franchisee represents and warrants that:
The duties and obligations of the parties hereunder may be suspended upon the occurrence and continuation of any "Event of Force Majeure" which inhibits or prevents performance hereunder, and for a reasonable start-up period thereafter. An "Event of Force Majeure" shall mean any act, cause, contingency or circumstance beyond the reasonable control of such party (whether or not reasonably foreseeable), including, without limitation, to the extent beyond the reasonable control of such party, any governmental action, nationalization, expropriation, confiscation, seizure, allocation, embargo, prohibition of import or export of goods or products, regulation, order or restriction (whether foreign, federal or state), war (whether or not declared), civil commotion, disobedience or unrest, insurrection, public strike, riot or revolution, lack or shortage of, or inability to obtain, any labor, machinery, materials, fuel, supplies or equipment from normal sources of supply, strike, work stoppage or slowdown, lockout or other labor dispute, fire, flood, earthquake, drought or other natural calamity, weather or damage or destruction to plants and/or equipment, commandeering of vessels or other carriers resulting from acts of God, or any other accident, condition, cause, contingency or circumstances including (without limitation, acts of God) within or without [COUNTRY]. Neither party shall, in any manner whatsoever, be liable or otherwise responsible for any delay or default in, or failure of, performance resulting from or arising out of or in connection with any Event of Force Majeure and no such delay, default in, or failure of, performance shall constitute a breach by either party hereunder. As soon as reasonably possible following the occurrence of an Event of Force Majeure, the affected party shall notify the other party, in writing, as to the date and nature of such Event of Force Majeure and the effects of same. If any Event of Force Majeure shall prevent the performance of a material obligation of either party hereunder, and if the same shall have continued for a period of longer than [SPECIFY] days, then either party hereto shall have the right to terminate this Agreement by written notice to the other party hereto.
Each party (the "Indemnifying Party") shall indemnify and hold the other party and its affiliates and their respective employees, officers, agents, attorneys, stockholders and directors, and their respective permitted successors, licensees and assigns (the "Indemnified Party(ies)") harmless from and against (and shall pay as incurred) any and all claims, proceedings, actions, damages, costs, expenses and other liabilities and losses (whether under a theory of strict liability, or otherwise) of whatsoever kind or nature
("Claim(s)") incurred by, or threatened, imposed or filed against, any Indemnified Party (including, without limitation, (a) actual and reasonable costs of defense, which shall include without limitation court costs and reasonable attorney and other reasonable expert and reasonable third party fees; and (b) to the extent permitted by Law, any fines, penalties and forfeitures) in connection with any proceedings against an Indemnified Party caused by any breach (or, with respect to third party claims only, alleged breach) by the Indemnifying Party of any representation, term, warranty or agreement hereunder. Neither party shall settle, compromise or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened Claim in respect of which the Indemnified Party is entitled to indemnification hereunder (whether or not the Indemnified Party is a party thereto), without the prior written consent of the other party hereto; provided, however, that the Indemnifying Party shall be entitled to settle any claim without the written consent of the Indemnified Party so long as such settlement only involves the payment of money by the Indemnifying Party and in no way affects any rights of the Indemnified Party.
No remedy conferred by any of the specific provisions of this Agreement is intended to be exclusive of any other remedy which is otherwise available at law, in equity, by statute or otherwise, and except as otherwise expressly provided for herein, each and every other remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity, by statute or otherwise and no provision hereof shall be construed so as to limit any party's available remedies in the event of a breach by the other party hereto. The election of any one or more of such remedies by any of the parties hereto shall not constitute a waiver by such party of the right to pursue any other available remedies.
Franchisor Address:
[YOUR COMPLETE ADDRESS]
Franchisee Address:
[SPECIFY]
This Agreement shall be governed by, and construed under, the laws of [STATE/PROVINCE].
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
FRANCHISOR FRANCHISEE
Authorized Signature Authorized Signature
Print Name and Title Print Name and Title