agreement is made, as of _____________________________ by and between
______________________________________________________, a corporation duly
existing under the laws in the State of __________________________, with its
place of business at ___________________________________________________________
hereinafter referred to as Franchiser, and
_____________________________________ hereinafter referred to as Franchisee.
Franchiser is the originator and creator of a _________________________ (Type of franchise)
known as _____________________________________________________ (Franchise name). Such includes special design of a building, specifically designed
equipment and signs, equipment layout plans inventory and bookkeeping system,
and a schedule of business policies and practices, and is herein referred to as
the Franchise system. The Franchise is currently used and advertised throughout
the United States.
Franchiser has developed and used, and continues to use and control the usage
of, in connection with the Franchise and the business of its Franchises,
proprietary interest, trademarks, service marks, and trade names, including
__________________________ (Name of
Trademark and Trade name), which is registered as a trademark on the
Principal Register of the United States Patent Office.
Franchisee desires to acquire a license to adopt and use the Franchise, and the
service marks, and trade names, in the conduct of a business at a specified
location, under the supervision of and in accordance with the service standards
approved by Franchiser.
Franchisee understands the importance of Franchiser's high and uniform
quality, cleanliness, appearance, and service to the value of the franchise and
of opening and conducting franchise operations in conformity with the franchise
and in accordance with Franchiser's standards and specifications.
consideration of the mutual covenants set forth below, Franchiser and
Franchisee agree as follows:
GRANT OF FRANCHISE
1.1 Franchiser grants to franchise a license to
use, during the term and on the conditions set forth in this agreement, the
names, symbols, and trademark associated with Franchiser's name, and the
franchise system, from premises the location of which is to be determined
according to the procedure specified herein below.
Franchiser shall not, while this agreement is in force, conduct a similar
operation, or grant a similar franchise to any other Franchisee, within
(Describe a territorial limitation).
1.3 Franchisee shall use the name of Franchiser
and the trademarks associated with the name of Franchiser in the _________________________________
(Type of franchise), and
Franchisee‘s place of business for such sales shall be known only as __________
________________________________________________________ (set forth name).
1.4 The name of any corporation operating this
franchise may include the words ______________________________________ (set forth words) or any other trademark
owned by or licensed to Franchiser, but only with the prior, express, and
written consent of Franchiser. On
termination of this agreement for any reason, the name of any such corporation
shall be duly amended to delete such words.
2.1 This agreement shall continue for a period
of __________ years from the effective date of this agreement, and shall be
automatically renewed for __________ additional year terms, unless at least
__________ months before the expiration of any year term, Franchisee gives to
Franchiser notice in writing of termination at the end of such term.
3. LOCATION AND CONSTRUCTION
3.1 Franchiser shall obtain for Franchisee a
location for the construction and establishment of the franchise operation
within the City of _______________, in the State of __________. Such location shall be secured by Franchiser
signing as prime tenant on a lease with the landowner of such location. In the event Franchiser fails to execute
such a lease within the area herein designated within one year from the
effective date of this agreement, Franchisee may terminate this agreement and
receive a refund of any of Franchisee‘s payments plus __________ percent
3.2 Franchiser agrees to construct on the chosen
location, a standard franchise system building, such building to be built in
accordance with the plans and specifications furnished by Franchiser. Franchiser shall also provide periodic
inspections of the construction at the franchise site to determine if there has
been compliance with the franchise system plans and specifications.
3.3 Franchiser shall sublet the above-described
realty and improvements to Franchisee for the same rental cost and on the same
terms and conditions as Franchiser is obligated on the prime lease. Franchiser
specifically agrees that it shall not charge any override to Franchisee, so
that the basic terms of the lease on which Franchiser is obligated shall be
those terms and conditions upon which Franchisee shall be obligated.
4.1 Franchise Fee. Franchisee shall make payment to Franchiser of __________ Dollars
payable as follows: __________ Dollars on execution of this agreement, receipt
of which is hereby acknowledged; ____________ Dollars on execution of any lease
for the franchise location; and any remaining unpaid balances prior to
attendance by Franchisee, or Franchisee’s designated representative, at
Franchiser's training course, or __________ days prior to the scheduled opening
of the franchise operation, whichever date is earlier. In return for this payment, Franchisee shall
receive the right to do business as a licensed Franchisee under the terms of
this agreement, and to receive the services and assistance set forth in this
agreement. At any time prior to the time when the second payment required under
the terms of this paragraph becomes due, Franchisee may, by written notice,
terminate this agreement. Upon such termination, Franchiser will return the
____________ Dollars payable on
execution of this agreement, less a charge of ______________ Dollars to
compensate Franchiser for assistance rendered Franchisee to the date of
4.2 Promotional Advertising Fee. Franchisee shall pay ___________ Dollars to
Franchiser's Franchise Owner Advertising and Sales Promotion Fund for a grand
opening promotional advertising program. This fee shall be nonrefundable after
the opening of the operation and shall be paid prior to attendance by
Franchisee, or Franchisee‘s designated representative, at Franchiser's training
course or __________ days prior to the
scheduled opening of the franchise operation, whichever date is earlier.
4.3 Service Charge. For the first __________ months that Franchisee‘s business is in
operation, Franchisee shall, on ________________ (set forth time period, such as: the __________ day of each month), pay to Franchiser the
sum equal to __________ percent of the
gross sales of Franchisee for the preceding month. Payments shall be sent to
Franchiser at the address set forth above.
Thereafter, so long as this agreement is in effect, Franchisee shall
pay, in the same manner, the sum equal to __________ percent of gross sales. As used in this agreement,
the term “gross sales” shall include all sales made by Franchisee under and
pursuant to this agreement, but shall not include any sums collected and paid
out for any sales or excise tax imposed by any duly constituted governmental
4.4 Advertising and Sales Promotion
Allowance. Franchisee shall pay to
Franchiser as an advertising and sales promotion allowance, the sum equal to
__________ percent of Franchisee’s monthly
gross sales. The sum shall be paid on or before __________ (set forth the day
of the month) and shall be based on the gross sales of the preceding such date
of payment. The amount of Franchisee‘s gross sales shall be determined in the
same manner as that specified in subsection C of this section, above.
4.5 Payment Defaults. If, as the result of the
failure of Franchisee to remit the payments required under subsections 4.1
through 4.4 of this section, above, Franchiser places the unpaid accounts in
the hands of an attorney for collection, Franchisee shall pay all collection
costs, reasonable attorney’s fees, and interest on the unpaid amounts at the
highest permissible rate, in addition to the unpaid amounts.
5. FINANCIAL INSPECTION
5.1 Within __________ days after the close of Franchisee‘s fiscal year, Franchisee will
furnish to Franchiser a full and complete statement in writing of income and
expenses for the franchise operation during the preceding year. The statement shall be prepared in
accordance with accepted accounting standards and practices by an independent
accountant or auditor and certified by the accountant or auditor to be correct.
5.2 Franchisee agrees to open its books and
records to the inspection of Franchiser; however, Franchisee shall have been
given reasonable advance notice, and such inspection shall not interfere with
the operation of Franchisee’s business.
5.3 Franchisee agrees to furnish Franchiser with
a weekly report of each week‘s business no later than _______________ (set forth the day of the following week).
6. FOOD PRODUCTS, SUPPLIES, AND EQUIPMENT
understands and acknowledges that every detail of the franchise system is
important to Franchiser, to Franchisee, and to other Franchisees to develop,
maintain, and insure high and uniform standards of quality, cleanliness,
appearance, services, facilities, products, and techniques, and to increase
demand for the franchise products, and to protect and enhance the reputation
and good will of the franchise system. Accordingly, Franchisee agrees:
6.1 To use all materials, ingredients, supplies,
paper goods, uniforms, fixtures, furnishings, signs, equipment, methods of
exterior and interior design and construction, and methods of production and
preparation prescribed by, or that conform with, Franchiser's standards and
6.2 To refrain from using or selling any
products, materials, ingredients, supplies, paper goods, uniforms, fixtures,
furnishings, signs, equipment, and methods of product preparation that do not
meet with Franchiser's standards and specifications.
6.3 To offer for sale only such products as
shall be expressly approved for sale in writing by Franchiser, and to offer for
sale all products that have been designated as approved by Franchiser.
6.4 To maintain at all times a sufficient supply
of approved products.
6.5 To purchase all food products, supplies,
equipment, and materials required for conduct of the franchise operation from
suppliers who demonstrate, to the reasonable satisfaction of Franchiser, the
ability to meet all of Franchiser's standards and specifications for such
items; who possess adequate capacity and facilities to supply Franchisee‘s
needs in the quantities, at the times, and with the reliability requisite to an
efficient operation; and who have been approved, in writing, by
Franchiser. Prior to purchasing any
items from any supplier not previously approved by Franchiser, Franchisee shall
submit to Franchiser a written request for approval of such supplier.
Franchiser may require that samples from the supplier be delivered to
Franchiser or to a designated independent testing laboratory for testing prior
to approval and use. A charge not to exceed the actual cost of the test shall
be made by Franchiser and shall be paid by Franchisee; however, the cost of the
first test requested by the Franchisee in any calendar year shall be borne by
7. INSTRUCTION AND SUPERVISION
7.1 Franchiser agrees to make personal training
facilities available to Franchisee, to furnish an operations manual, to make
promotional and other recommendations, and to furnish Franchisee at
Franchisee’s place of business, a trained supervisor for not less than
__________ days during the initial __________ period of Franchisee‘s operation.
7.2 Franchiser shall disclose to and instruct
Franchisee as to special preparations, packaging, and methods and systems of
operation in the preparation and sale of _________________________ (Specific Information) Franchisee
acknowledges that such information constitutes trade secrets, and Franchisee
agrees not to disclose such information to anyone except Franchisee’s store
employees, the use of such information to be restricted to operation of the
7.3 Franchisee will not divulge any business information,
whether written or oral, received from Franchiser or from any meetings of
Franchiser's other Franchisees, nor use such information in Franchisee’s
business, until such time as disclosure to the public may be required by the
nature of the information. Such
information may include, but is not limited to, promotional material or plans,
expansion plans, new products, marketing information, costs or other financial
data, development of cooking or packaging procedures.
8. HEALTH STANDARDS AND INSPECTION
8.1 Franchisee shall maintain the business
premises and all equipment, fixtures, and facilities in such manner as required
by law, and conform with Franchiser's standards of health, cleanliness, and
8.2 Franchisee agrees to allow Franchiser, at
any reasonable time, the privilege of complete inspection of Franchisee’s
9. FRANCHISER'S DUTIES
9.1 Initial Services. Franchiser shall:
9.1.1 Make available to Franchisee any assistance
that may be required, based on the experience and judgment of Franchiser, in
the pre-opening, opening, and initial conduct of the franchise operation and in
conforming to the requirements of the franchise system.
9.1.2 Prepare and coordinate the grand opening
promotional advertising program for Franchisee.
9.1.3 Provide operating procedures to assist
Franchisee in developing financial records and controls, personnel policies,
production methods, and approved sources of supply.
9.2 Continuing Services. Franchiser shall:
Maintain a continuing advisory relationship with Franchisee, including
consultation in the areas of marketing, merchandising, and general business
9.2.2 Provide Franchisee with operating manuals
containing the standards, specifications, procedures, and techniques of the
franchise system, and revise, from time to time, the content of the manuals
incorporating new developments regarding standards, specifications, procedures,
9.2.3 Continue its efforts to maintain high and
uniform standards of quality, cleanliness, appearance, and service at all
franchise locations, thus protecting and enhancing the reputation of the
franchise system and the demand for the products of the franchise system. To
that end, Franchiser shall make every reasonable effort to disseminate its
standards and specifications to potential suppliers of Franchisee upon written
request of Franchisee.
9.2.4 Review all proposed advertising and
promotional materials prepared by Franchisee for use in local advertising.
9.2.5 Administer the Franchise Owner Advertising
and Sales Promotion Fund, and direct the development of all advertising and
promotional programs. Franchiser will utilize __________ (set forth quantity, such as: one-half) of
Franchisee’s advertising and sales promotion contributions for advertising in
the advertising area in which Franchisee‘s business is located. The content of
the advertising, as well as the media in which the advertising is to be placed
and the defined advertising area, shall be at the discretion of
Franchiser. The remaining __________ (set forth amount) of Franchisee’s
advertising and sales promotion contributions will be utilized, at the
discretion of Franchiser, to provide for the administrative expenses of the
fund, merchandising materials, advertising production and distribution costs,
and for programs designed to increase sales and enhance and further develop
public reputation and image of Franchiser and the franchise system. Franchiser
will provide Franchisee with a statement of receipts and disbursements of the
fund, prepared by an independent certified public accountant, for each fiscal
year of the fund.
10. MANAGEMENT AND PERSONNEL STANDARDS
10.1 Management Method. Franchisee shall adopt and use Franchiser's management system, as
well as Franchiser's standards with respect to product preparation,
merchandising, employee recruitment, training, equipment, and facility
maintenance and sanitation. From time
to time Franchiser will revise these programs to meet changing conditions of
retail operation in the general best interest of the franchise system.
Franchisee shall, at Franchisee‘s expense, attend Franchiser's store
management training at a place to be designated by Franchiser prior to the
opening of Franchisee‘s business. If,
during the term of this agreement, Franchisee conducts the business with a
manager other than __________ (himself or
herself), Franchisee shall, at Franchisee’s expense, send such
manager through the same program.
10.3 Personnel. Franchisee shall hire and
supervise efficient, competent, sober, and courteous operators and employees
for conduct of the business, and shall pay their wages, commissions, and other
compensation with no liability for such wages, commissions, and other compensation
on the part of Franchiser. Franchisee shall require all of Franchisee‘s
employees to work in clean uniforms approved by Franchiser but furnished at the
cost of either Franchisee or the employees as Franchisee may determine.
10.4 Personnel Training Program. Franchiser shall provide or make available
through Franchisee an in-store training program for all store employees. Franchisee shall train and periodically
retrain all store employees using the training aids made available by
Franchiser. From time to time training materials will be updated and added to
as required by Franchiser, and such training materials and aids shall be made
available by Franchiser for purchase by Franchisee.
10.5 Regional Meetings. Franchisee, or the
manager of Franchisee, shall, at Franchisee’s expense, attend at least one
national or regional meeting each year, originated by Franchiser for and on
behalf of franchise operators, with the purpose of setting forth new methods
and programs in store operation, training, management, sales, and sales
11.1 Franchisee shall, at Franchisee‘s expense,
procure before the commencement of business, and maintain in full force and
effect during the entire term of this agreement, an insurance policy or policies
protecting Franchisee and Franchiser, and their directors and employees,
against any loss, liability, or expense whatsoever from fire, personal injury,
theft, death, property damage or otherwise, arising or occurring upon or in
connection with the franchise operation or by reason of Franchisee’s occupancy
of the business premises.
11.2 The insurance required by this section shall
expressly cover claims based on product liability.
11.3 Franchiser shall be named as an additional
insured in such policy or policies of insurance, statutory policies excepted.
11.4 Such policy or policies of insurance shall
be written by an insurance company acceptable to Franchiser and shall include
general liability coverage of _____________ Dollars per person and __________
Dollars per incident; property damage
coverage of ____________ Dollars; and such statutory insurance as may be
required in the State of ______________________.
11.5 The insurance afforded by the policy or
policies respecting liability shall not be limited in any way by reason of any
insurance that may be maintained by Franchiser.
11.6 No later than the day before the date on
which the business premises are equipped, evidence showing compliance with the
requirements of this section shall be furnished by Franchisee to Franchiser.
Evidence of insurance shall include a statement that the policy or policies may
not be canceled or altered without at least __________ days‘ prior notice to
11.6 Maintenance of insurance and the performance
by Franchisee of the obligations under this section shall not relieve
Franchisee of liability under the default provisions set forth in this
12.1 Bankruptcy. Franchisee shall be deemed to be
in default under this agreement, and all rights granted to Franchisee shall
terminate without any need for notice to Franchisee, and this agreement shall
be terminated if
12.1.1 Franchisee becomes insolvent or makes an
assignment for the benefit of creditors;
12.1.2 A petition in bankruptcy is filed by
Franchisee, or such a petition is filed against and consented to by Franchisee
and is not dismissed within __________ days;
12.1.3 Franchisee is adjudicated a bankrupt;
12.1.4 A bill in equity or other proceeding for the
appointment of a receiver of Franchisee or other custodian for Franchisee’s
business or assets is filed and is consented to by Franchisee and is not
dismissed within __________ days, or a receiver or other custodian of the
business or assets of Franchisee is appointed;
12.1.5 Proceedings for composition with creditors
under any state or federal law are instituted by or against Franchisee; or
12.1.6 The real or personal property of Franchisee
shall be sold after levy on such property by any sheriff, marshal, or
duly-constituted public authority.
12.2 Failure to Comply with Agreement. Except as
otherwise expressly provided in this agreement, if Franchisee defaults under
the terms of this agreement and such default is not cured within __________
days after receipt of written notice to cure from Franchiser, then, in addition
to all other remedies at law or in equity, Franchiser may immediately terminate
this agreement. Termination under such circumstances shall become effective
immediately on the date of receipt by Franchisee of a written notice of
termination. Franchisee shall be in default under this agreement if
12.2.1 Franchisee fails, refuses, or neglects to
pay when due any moneys owing to Franchiser or to the Franchise Owners
Advertising and Sales Promotion Fund.
12.2.2 Franchisee fails to submit when due reports
or financial data that Franchiser requires under this agreement.
12.2.3 Franchisee fails to carry out in all
respects its obligations under any lease for the business premises and the
lease is terminated, or under any equipment agreement, promissory note,
conditional sales contract or other contract materially affecting the franchise
operation, to which Franchisee is a party or by which Franchisee is bound.
12.2.4 Franchisee fails to comply substantially
with any of the requirements imposed upon Franchisee by this agreement.
12.3 Duties Upon Termination or Expiration of
Agreement. On termination or expiration of this agreement
12.3.1 Franchisee shall promptly pay all sums owing
or accrued under this agreement prior to termination or expiration, payments to
be made to Franchiser or to the Franchise Owners Advertising and Sales
Promotion Fund, as appropriate. Such
sums shall include any damages, costs, and expenses, including reasonable
attorneys‘ fees, incurred by Franchiser by reason of default on the part of
12.3.2 Franchisee shall immediately thereafter
cease to use, by advertising or in any manner whatsoever, any methods
associated with the name of the franchise any or all of the proprietary marks
and names, and any other trade secrets, confidential information, operating
manuals, slogans, signs, symbols, or devices forming part of the franchise
system or otherwise used in connection with conduct of the franchise operation.
12.3.3 Franchisee shall immediately thereafter
return to Franchiser all operating manuals, plans, specifications, and other
materials containing information prepared by Franchiser and relative to the
12.3.4 All Rights to be Cumulative. No right or remedy conferred in this
agreement upon or reserved to Franchiser is exclusive of any other right or
remedy in this agreement, or provided or permitted by law or in equity, but
each shall be cumulative of every other right or remedy given under this
13. TRANSFER OF FRANCHISE
rights in the franchise are transferable only as follows:
13.1 Upon Franchisee‘s death, the rights of
Franchisee in the franchise may pass to Franchisee’s next of kin or legatees,
provided such next of kin or legatees agree in a written instrument
satisfactory to Franchiser to assume Franchisee‘s obligations under this
13.2 Franchisee may sell the franchise to a
natural person and be relieved of further obligations under this agreement,
provided that (1) the purchaser has a satisfactory credit rating, is of good moral
character, has business qualifications satisfactory to Franchiser, will comply
with Franchiser's training requirements, and enters into any and all direct
agreements with Franchiser that Franchiser is then requiring of
newly-franchised persons; (2) all money obligations of Franchisee under this
agreement are fully paid, Franchisee is not in default under this agreement,
and Franchisee executes a general release of all claims against Franchiser; (3)
Franchisee pays Franchiser __________ Dollars
for its legal fees and other expenses in connection with the transfer;
and (4) Franchisee has first offered to sell Franchisee‘s franchise to
Franchiser upon the same terms as the purchaser has offered Franchisee in
writing, and Franchiser has refused the offer or failed to accept it for a
period of __________ days.
13.3 The name of the franchise shall not be used
in any advertisement for the sale of Franchisee’s franchise or equipment.
13.4 Franchisee may assign and transfer
Franchisee‘s rights under and pursuant to this agreement to a corporation
without, however, being relieved of any personal liability, provided (1) the
corporation is newly organized and its activities are confined exclusively to
operating Franchisee’s franchise; (2) Franchisee is the owner of the
controlling stock interest in the corporation and is the principal executive
officer of such corporation; (3) all money obligations of Franchisee to
Franchiser are fully paid; (4) the corporation agrees, in a written instrument
satisfactory to Franchiser, to assume all Franchisee‘s obligations under this
agreement; and (5) all stockholders of the corporation guarantee, in a written
instrument satisfactory to Franchiser, the full and prompt payment and
performance by the corporation of all of its obligations to Franchiser.
14. FRANCHISEE AS INDEPENDENT CONTRACTOR
14.1 This agreement does not constitute
Franchisee an agent, legal representative, joint venturer, partner, employee,
or employee of Franchiser for any purpose.
14.2 Franchisee shall be an independent
contractor and is in no way authorized to make a contract, agreement, warranty,
or representation on behalf of Franchiser or to create any obligation, express
or implied, on behalf of Franchiser.
14.3 The parties agree that this agreement does
not create a fiduciary relationship between Franchiser and Franchisee.
failure of Franchiser to exercise any power reserved under this agreement, or
to insist upon strict compliance by Franchisee with any obligation or condition
under this agreement, and no custom or practice of the parties in variance with
the terms of this agreement, shall constitute a waiver of Franchiser's right to
demand strict compliance with the terms of this agreement. Waiver by Franchiser of any particular
default by Franchisee shall not affect or impair Franchiser‘s right in respect
to any subsequent default of the same or of a different nature. No delay, waiver, forbearance, or omission
of Franchiser to exercise any power or rights arising out of any breach or
default by Franchisee of any of the terms, provisions, or covenants of this
agreement shall affect or impair Franchiser's rights; nor shall such failure
constitute a waiver by Franchiser of any rights under this agreement or of the
right to declare any subsequent breach or default. Subsequent acceptance by
Franchiser of the payments due it hereunder shall not be deemed to be a waiver
by Franchiser of any preceding breach by Franchisee of any terms, covenants, or
conditions of this agreement.
notices required or permitted by this agreement shall be in writing and shall
be deemed sufficient where sent by certified mail to the receiving party at the
address set forth above or at such other address as that party may have
designated in writing.
17. LIABILITY FOR BREACH
17.1 In the event of any defaults on the part of
Franchisee that remain uncured for a period of __________ days from the date of
a written notice to cure specifying the nature of such default, Franchisee
shall pay to Franchiser all damages, costs, and expenses, including reasonable
attorneys‘ fees, incurred by Franchiser as a result of any such default.
17.2 All damages, costs, and expenses, including
reasonable attorneys’ fees, may be included in and form a part of the judgment
entered in any proceedings brought by Franchiser against Franchisee.
18. ENTIRE AGREEMENT
agreement shall constitute the entire agreement between the parties and any
prior understanding or representation of any kind preceding the date of this
agreement shall not be binding upon either party except to the extent
incorporated in this agreement.
19. MODIFICATION OF AGREEMENT
modification of this agreement or additional obligation assumed by either party
in connection with this agreement shall be binding only if placed in writing
and signed by each party or an authorized representative of each party.
section, part, term, and provision of this agreement shall be considered
severable. If, for any reason, any section, part, term, or provision of this
agreement is determined to be invalid and contrary to, or in conflict with, any
existing or future law or regulation of a court or agency having valid
jurisdiction, such determination shall not impair the operation or affect the
remaining portions, sections, parts, terms, or provisions of this agreement,
and the latter will continue to be given full force and effect and bind the
parties to this agreement. The invalid section, part, term, or provision shall
be deemed not to be a part of this agreement.
is agreed that this agreement shall be governed by, construed, and enforced in
accordance with the laws of the State of ________________________________.
22. ARBITRATION OF DISPUTES
disputes, claims, and questions regarding the rights and obligations of the
parties under the terms of this agreement are subject to arbitration. Either party
may make a demand for arbitration by filing such demand in writing with the
other party within __________ days after the dispute first arises. Thereafter,
arbitration shall be conducted by __________ (set
forth terms of arbitration, such as: three arbitrators acting under the
rules of commercial arbitration of the
American Arbitration Association).
witness whereof, each party to this agreement has caused it to be executed at
__________ (Place of Execution)
on the date indicated below.
and Title Date
and Title Date
and Title Date