Franchise Agreement - Template, Sample Form to Fill out

FRANCHISE AGREEMENT

This Franchise Agreement is made this ________ (the "Effective Date").

BETWEEN

________, a company registered under the laws of the Federal Republic of Nigeria, with the following business address:

________

hereinafter referred to as (the "Franchisor" which expression shall where the context so admits include its successors-in-title and assigns) of the one part.

AND

________, an individual of the following address:

________

hereinafter referred to as (the "Franchisee" which expression shall where the context so admits include its successors-in-title and assigns) of the other part.

The Franchisor and Franchisee may be individually referred to as the "Party" and collectively referred to as the "Parties".

BACKGROUND

A. The Franchisor has developed all the Proprietary Marks and the Business Operating Methods to which the Franchisor utilizes in managing the following business (the "Business"):

________

B. Subject to the terms and conditions of this Agreement, the Franchisor grants the Franchisee the licence to operate its business under the Franchisor's brand: ________.

C. The Franchisor is willing to sell the Products particularly described in this Agreement to the Franchisee.

D. The Franchisee has agreed to use the Franchisor's Proprietary Marks, Business Operating Methods to operate its business according to the terms of this Agreement.

In consideration of the payment of the Franchising Fee and Royalties payable under this Agreement for the use of the Franchisor's Proprietary Marks, Business Operating Methods, Products and the covenants contained herein, the receipt of which is hereby acknowledged, the Parties hereby agree as follows:

1. DEFINITIONS

Franchise Business refers to the business which the Franchisee operates under a licence granted by the Franchisor to use the Franchisor's Operating Methods and Proprietary Marks.

Location refers to the particular place the Franchisee is licensed to operate the Franchise Business.

Operating Methods means the Franchisor's proprietary system, methods, technique, process, style, format, mechanism, process of doing business, which includes, but not limited to the Franchisor's design, specifications, marketing techniques, advertising materials, business operations and other processes involved in the Franchisor's business.

Products refers to the following branded products which the Franchisor shall sell to the Franchisee and which the Franchisee is required to sell in the Franchised Business:

________

Proprietary Marks means trade marks, trade name, logos, symbols, service marks, marks, pattern, sign, designs, or other commercial marks and symbols relating to the Business of the Franchisor.

Transaction refers to this Franchise Agreement.

2. GRANT OF FRANCHISE

The Franchisor grants and the Franchisee accepts an exclusive and non-transferable licence to the use of the Franchisor's Proprietary Marks, Business Operating Methods in connection with the establishment of the ________ franchise within the Location described in this Agreement. The Franchisee agrees to use the Proprietary Marks and the Operating Methods only according to the terms and conditions of this Agreement.

3. LOCATION OF OPERATION

The Franchisee shall operate the Franchise Business at the following territory:

________

The Franchise Business shall not be transferred to a new territory without the express consent of the Franchisor given in writing. If the Franchisee wishes to transfer to a new territory, the following shall apply:

________

4. FRANCHISE FEE

The Franchisee shall pay an initial fee of ₦________ (________) (the "Initial Franchise Fee") as consideration for the new Franchise Business. Payment shall be made on ________.

The Franchisee shall also pay royalties to the Franchisor. The royalty payment shall be shall be ₦________ (________), payable weekly.

5. ADVERTISING

The Franchisee shall obtain the prior express consent of the Franchisor of any advertising, marketing, promotional programmes or materials published by any promotional method including, but not limited to, print, media, and broadcast to advertise the Franchise Business.

The Franchisee also agrees to follow the following advertising rules and guidelines in relation to the Franchise Business:

________

6. COMMENCEMENT OF OPERATIONS

The commencement date for the Franchise Business shall be ________ (the "Opening Date"). Notwithstanding this, the Franchise Business shall not open on the Opening Date except the Franchisor confirms that the blueprints of the business comply with the terms of this Agreement.

If the Franchisee fails to commence operations in the new Franchise Business on the Opening Date, the Franchisor may, at its sole discretion, extend the time for the opening of operations, or the Parties may execute a new agreement containing the new opening date and expiration date.

7. PRODUCTS

The Franchisee shall offer and sell the Products produced by the Franchisor and shall not engage in the sale, manufacture or distribution of goods and services not previously approved by the Franchisor.

8. COMPLIANCE WITH OPERATING METHODS

The Franchisor shall provide the Operating Manual to the Franchisee, specifying the Franchisor's Operating Methods and standards of business operations. The Franchise hereby agrees to use the Operating Methods and Products as specified in the Operating Manual. The Franchisee acknowledges that the Franchisor retains all rights and ownership to the Operating Methods and agrees to operate the Franchise Business in compliance with the Operating Methods.

Failure to adhere to the operating standards may constitute a ground for termination of this Agreement.

9. QUALITY CONTROL

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10. BUILD-OUT COSTS AND SCHEDULE

The Franchisee shall be responsible for all build-out costs for the new Franchise, including, but not limited to furniture, design, equipment, fixtures and fittings.

The Parties agree to the following build-out schedule for the Franchise Business:

Date of submission of plan or design: ________

Date of commencement of build-out plan: ________

Date of completion of the build-out: ________

11. PROPRIETARY MARKS

The Franchisee acknowledges that the Franchisor is the owner and originator of the Proprietary Marks. Subject to the terms and conditions of this Agreement, the Franchisor hereby grants the Franchisee an exclusive and non transferable licence to use, display, reproduce and the Proprietary Marks according to the terms of this Agreement.

The Franchisee shall use the Franchisor's Proprietary Marks for the following purpose (the "Purpose"):

________

The Franchisee may not use the Proprietary Marks for any other purpose other than the Purpose described above except with the prior written consent of the Franchisor and shall not modify, alter or otherwise change any part of the Proprietary Marks.

The Franchisee acknowledges that it has no ownership or title in the Proprietary Marks or any other intellectual property belonging to the Franchisor. The Franchisee hereby agree that it shall not sublease, licence, transfer or assign the Proprietary Marks to any party. The Franchisee shall not at anytime, during or after the termination of this Agreement, do anything to challenge, contest or invalidate the Franchisor's rights to the Proprietary Marks.

The Franchisor retains the right to modify, alter, delete or otherwise change the Proprietary Marks and if the Franchisor makes any alteration to the Proprietary Marks, the Franchisee shall accept the new proprietary marks and incur any cost arising from the change of the proprietary marks.

12. OBLIGATIONS OF THE FRANCHISEE

The Franchisee agrees to utilize the Franchisor's Proprietary Marks, Business Operating Methods and operate its business in accordance with the methods developed from time to time by the Franchisor. The Franchisee shall have the following obligations:

(I) to pay the Licensing Fee and all other fees payable under this Licence timeously;

(II) to utilize the Franchisor's Proprietary Marks, Business Operating Methods and operate its business in accordance with the methods developed from time to time by the Franchisor.

(III) to use the Proprietary Marks only in accordance with the Purpose for which this Agreement was created;

(IV) to comply with the provisions of this Agreement and all relevant laws relating to this Agreement.

13. OBLIGATIONS OF THE FRANCHISOR

In addition to any obligation provided under this Agreement, the Franchisor shall have the following obligations:

(I) The Franchisor shall, before the Commencement Date, deliver a copy of the Operating Manual to the Franchisee.

(II) the Franchisor shall provide specific pre-opening and opening guidance, support and advisory assistance to the Franchisee, as the Franchisor deems necessary;

(III) the Franchisor shall provide specific guidance, additional support and advisory assistance, including, but not limited to manuals, techniques and materials for the smooth operation of the Franchise Business;

(IV) the Franchisor may train the staff of the new Franchise Business. The Franchisor, in its sole discretion train any staff as it sees fit. The essence of the training is to educate the staff on the operating standards of the Franchisor's Business;

(V) the Franchisor shall inspect the Franchise Business to ensure that it complies with the Franchisor's standard of operation and the terms of this Agreement;

(VI) the Franchisor shall continue to supply the Products to the Franchisee to ensure the proper operation of the Franchise Business;

(VII) before the Opening Date, the Franchisor shall provide the standard guidelines for the layout for the Franchise Business, including the interior and exterior parts of the building, such as fixtures, fittings, equipment, and furniture.

14. INSURANCE

The Franchisee shall obtain and maintain an insurance policy from a reputable insurance company acceptable to the Franchisor. The insurance coverage shall be as follows:

________

15. TERM AND TERMINATION

This Agreement shall commence on the Effective Date and shall terminate on ________ (the "Expiration Date").

Notwithstanding the above, the Franchisor shall have the right to terminate this Agreement before the Expiration Date if one or more of the following circumstances occur:

(I) if the Franchisee abandons the Franchise Business or fails to operate the business for a period of: ________;

(II) if the Franchisee misuses or fails to use the Franchisor's Proprietary Marks or Operating Methods according to the prescribed standards and guidelines;

(III) if the Franchisor discovers any fraud or misrepresentation in relation to the Franchise Business;

(IV) if the Franchisee is declared bankrupt;

(V) if the Franchisee conducts its business in a manner that will damage the Franchisor's reputation and image;

(VI) if all the fees, costs, and dues the Franchisee is required to pay under this Agreement remain unpaid;

(VII) if the Franchisee does not fulfill its obligations under this Agreement;

(VIII) if the Franchisee shares the Franchisor's trade secret, Operating Methods or other confidential information with unauthorized persons;

(IX) if the Franchisee does any act or omission that would cause any damage to the Franchisor's Proprietary Marks or business reputation;

(X) if the Franchisee violates any fundamental term of this Agreement.

The Franchisee shall be given a written notice of: ________ prior to the termination and the notice shall state the reasons for the termination.

Immediately upon termination of this Agreement, the Franchisee shall do the following:

(I) cease to use all Proprietary Marks and the Operating Methods of the Franchisor;

(II) pay any outstanding Licensing Fees and all other fees that have accrued on the date of termination;

(III) return manuals, documents, procedures, operating manuals, Products, guides, guidelines, training manuals, and other all materials bearing the Proprietary Marks to the Franchisor;

(IV) remove any symbol, post, advert, or other material that associate the Franchisor with the Franchisee or the Franchise Business.

The Franchisor shall retain all rights and remedies after termination. The Franchisor shall also elect to purchase the Franchise Business upon termination and the Franchisee may sell at a fair market value.

The Franchisee shall not be discharged from any outstanding obligations and duties including the payment of all outstanding fees and taxes at the date of termination and all other obligations required by this Agreement.

16. RENEWAL OF AGREEMENT

The Parties may agree to renew this Agreement for another term. If the Franchisee intends to renew this Agreement, a written request for renewal shall be delivered to the Franchisor, who at its discretion, may grant an additional term. The Parties agree that the terms of the renewal may be fundamentally different from this Agreement.

To renew this Agreement, the following conditions shall apply:

________

The Parties agree that the Franchisor has no legal obligation to continue its relationship with the Franchisee and may, at its sole discretion, refuse any request for renewal.

17. INDEMNITY

The Franchisee agrees to indemnify and hold the Franchisor harmless against all actions, damages, liabilities, expenses, damages, settlements, legal fees and any kind of loss reasonably incurred by the Franchisor as a result of:

(I) the Franchisee's use, operation, construction of the Franchise Business;

(II) the Franchisee's use of the Operating Methods and Proprietary Marks;

(III) any breach committed by the Franchisee or Franchisee's directors, officers, partners, employee's or agent of any law or regulation relating to the use of the Operating Methods and Proprietary Marks;

(IV) any harm or injury suffered by any third party due to the Franchisee's fault;

(V) any cost incurred by the Franchisor in enforcing its rights under this Agreement, including all reasonable attorney fees.

18. NON-COMPETITION

The Franchisee hereby agrees that during the course of this Agreement and for: ________ thereafter, the Franchisee, any of the Franchisee's directors, partners, officers, shareholders, or any of the Franchisee's member or affiliate shall not directly or indirectly have a controlling interest or engage in any business that is in competition with the Franchisor's business, including but not limited to marketing, sale and distribution, investing in any business in competition with the Franchisor's business. Specifically, the Franchisee agrees not to:

(I) engage in a competitive business as an owner, partner, or agent;

(II) become an employee, director, adviser, independent contractor, or work directly or indirectly for any third party that is engaged in the business similar to that of the Franchisor;

(III) use any business information, confidential or trade secret information belonging to the Franchisor to obtain competitive advantage over the Franchisor's business.

The Franchisee shall not solicit, attempt to solicit or procure any business with any client or customer of Franchisor; or hire any party contracted to work as employees, independent contractors, service providers or other paid work for the Franchisor.

19 . CONFIDENTIALITY

The Franchisee acknowledges that in the course of operating the Franchise Business, it will have access to the Franchisor's confidential information, including but not limited to the Operating Methods, Operating Manual, trade secrets, business processes, customer lists, marketing strategies, financial information and other proprietary information belonging to the Franchisor (the "Confidential Information").

The Franchisee agrees to keep all Confidential Information strictly confidential and shall not disclose, reveal, publish or otherwise make available the Confidential Information to any third party without the prior written consent of the Franchisor.

The Franchisee shall use the Confidential Information solely for the purpose of operating the Franchise Business in accordance with the terms of this Agreement and shall not use the Confidential Information for any other purpose whatsoever.

The Franchisee shall ensure that its directors, officers, partners, employees and agents who have access to the Confidential Information are bound by confidentiality obligations no less restrictive than those contained in this Agreement.

The obligations of confidentiality contained in this clause shall survive the termination or expiration of this Agreement and shall continue to bind the Franchisee thereafter.

The Franchisee agrees that upon the termination or expiration of this Agreement, it shall immediately return to the Franchisor all documents, materials and records containing the Confidential Information in its possession or control.

The following information shall not be regarded as Confidential Information for the purposes of this Agreement:

(I) information which is or becomes publicly available other than through a breach of this Agreement by the Franchisee;

(II) information which was lawfully in the possession of the Franchisee before its disclosure by the Franchisor;

(III) information which is lawfully received from a third party who is not under any obligation of confidentiality to the Franchisor; or

(IV) information which is required to be disclosed by law, regulation or order of a court of competent jurisdiction or any regulatory authority.

The Franchisee acknowledges that any breach of the confidentiality obligations contained in this clause may cause irreparable harm to the Franchisor for which monetary damages may not be an adequate remedy.

Accordingly, the Franchisor shall be entitled to seek injunctive relief or any other equitable remedy in addition to any other remedies available to it under this Agreement or at law.

The Franchisee shall be liable to indemnify the Franchisor for any loss, damage, cost or expense suffered or incurred by the Franchisor as a result of any breach of the confidentiality obligations contained in this clause.20. FORCE MAJEURE

Neither party shall before the Completion Date be liable for any failure to fulfill any term of this Agreement if the fulfillment has been delayed, hindered, interfered with or prevented by force majeure which for the purposes of this Agreement shall mean any circumstances:

(I) which is beyond a party's control;

(II) which such party could not have reasonably avoided or overcome; and

(III) which is not attributable to the other party.

Without prejudice to the generality of the foregoing, force majeure shall include the following events and circumstances:

(I) war, hostilities, or invasion;

(II) rebellion, terrorism, revolution, insurrection, military or usurped power; or

(III) riot, civil disorder or other acts which may reasonably affect the ability of the party to fulfill its obligations under this Agreement.

21. GENERAL PROVISIONS

a. Applicable law: This Agreement may be governed and construed in accordance with the laws, regulations or guidelines of the Federal Republic of Nigeria and other treaties, or regulations which is applicable in Nigeria.

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The tribunal shall consist of ________ arbitrators who shall be elected in the following manner:

________

The arbitration proceedings shall be held in: ________ and conducted in English language. Each Party shall bear their own cost and expenses in relation to the arbitration proceedings except where an award has been made by the arbitrators for cost to be borne by a particular Party.

The decision of the arbitrators shall be final and binding on all the Parties and shall be enforced by any competent court.

c. Jurisdiction: The Parties agree that the Nigerian courts shall have the exclusive jurisdiction to settle any dispute or claim in connection with this Agreement.

d. Notices: All notices or communication given or made under this Agreement shall be in writing. The notices shall be delivered either personally or mailed by a certified mail to the other Party's address. Any of such notice or communication shall be deemed to have been given if:

(I) sent by personal delivery, upon delivery at the address of the relevant Party;

(II) sent by courier service, upon receipt of confirmation of delivery;

(III) sent by facsimile, upon receipt of a confirmation of transmission.

Any Party may designate a different address by providing a written notice to the other Party.

e. Entire Agreement: This Agreement constitutes the entire agreement between the Parties and shall supersede any prior written or oral agreement made between the parties.

f. Variation: This Agreement may be amended or varied by either of the Parties and such variation must be agreed and signed by both Parties to this Agreement.

g. Waiver: Any term or provision of this Agreement may be waived in writing at any time by the Party entitled to such benefit. No delay, omission, or failure to exercise or enforce any right shall be construed as a waiver or subsequently compel the strict compliance of the provisions of the Agreement.

h. Severability: If any part of this Agreement is invalid and unenforceable for any reason whatsoever, such invalidity shall not affect the validity of other clauses in this Agreement. The remaining parts of this Agreement shall continue to be in force and have effect.

i. Assignment: This Agreement shall be binding on successors of the Parties. The rights granted under this Agreement shall not be transferred, sold, assigned, sub-leased to any party without the consent of the other Party.

j. Cumulative Rights: The rights of the Parties in this Agreement are cumulative and shall not be construed as exclusive except as otherwise stated by the law.

k. Further Assurance: The Parties shall execute and deliver all such documents and take all such actions and all steps to procure the performance of all such acts as may be necessary or incidental to give effect to the provisions of this Agreement.

l. Counterparts: This Agreement may be executed in several counterparts, all of which constitutes a single agreement between the Parties.

IN WITNESS WHEREOF the Parties hereto have executed this Agreement this day and year first written above.

The common seal of the within named Franchisor is hereunto affixed in the presence of:

__________________________
DIRECTOR

__________________________
DIRECTOR/SECRETARY

SIGNED by the within named Franchisee

____________________
________