Franchise Agreement II
Sample Franchise Agreement
Date
Parties:
1 ‘The Franchisor’: «Franchisor’s name» (registered no «Franchisor’s registered number») whose registered office is at «Franchisor’s registered office».
2 ‘The Franchisee’: «Franchisee’s name» (registered no «Franchisee’s registered number») whose registered office is at «Franchisee’s registered office».
3 ‘The Principal’: «Principal’s name» whose address is «Principal’s address».
Recitals:
(A) The Franchisor is engaged in the business of «[the Business]» which is operated in accordance with a distinctive system and plan utilising and comprising certain proprietary marks, confidential information, standards, specifications, techniques, identifying schemes and materials, insignia, management methods and standard operational procedures and has expended substantial time, effort and money in the development and implementation of the same.
(B) The Franchisee desires to obtain the benefit of the knowledge, skill and experience of the Franchisor and the right and franchise to operate the business system of the Franchisor upon the terms and subject to the conditions set out below.
(C) The Franchisor has established substantial reputation and goodwill in the said business and the Franchisee recognises the benefit to be derived therefrom and acknowledges the necessity of conforming to the high standards and uniform specifications of the said business.
Operative provisions:
1 Interpretation
1.1 In this Agreement the following expressions shall have the following meanings unless the context otherwise requires:
‘BUSINESS’ means the franchise business of «[the Business]» operated and conducted under the Proprietary Marks using the System more particularly described in the Operating Manual as those terms are defined respectively below
‘OPERATING MANUAL’ means the written specification of the methods, processes, techniques, systems and schemes devised and compiled by the Franchisor to be observed and implemented by the Franchisee in operating the Business and any amendment or variation thereof at any time hereafter notified in writing by the Franchisor to the Franchisee
PROPRIETARY MARKS’ means the patents, trade marks, trade names, logos and registered designs details of which are set out in Schedule 1 to this Agreement and all other patents, trade marks, trade names, logos, designs, symbols, emblems, insignia, fascia, slogans, copyrights, know‑how, information, drawings, plans and other identifying materials whether or not registered or capable of registration and all other proprietary rights whatsoever owned by or available to the Franchisor adopted or designated now or at any time hereafter by the Franchisor for use in connection with the System
‘SYSTEM’ means the distinctive business format and method developed and implemented by the Franchisor in connection with the operation of the Business utilising and comprising the Proprietary Marks, and certain standard operational procedures, plans, directions, specifications, methods, management and advertising techniques and identification schemes, part of which are contained in the Operating Manual
TERRITORY’ means the territory more particularly described in Schedule 2 in which the Franchisee may operate the Business ‘«Nature of business::A AND B»’ means the «Nature of business::a and b» identified by the Proprietary Marks sold or provided in the course of the Business
‘PREMISES’ means the premises approved by the Franchisor in accordance with the terms of this Agreement at which the Franchisee may operate the Business
‘EXPIRY DATE’ means the date of expiry of the initial term granted pursuant to clause 0
‘PAYMENT DATE’ means the «Payment date:» day of each calendar month during the continuance of this Agreement.
2 Appointment and grant
2.1 The Franchisor hereby grants to the Franchisee during the continuance of this Agreement and any further period for which it may be renewed or extended and upon the terms and conditions herein contained the «IF Exclusive franchise»
sole and exclusive «END IF»
right and licence to operate the Business in the Territory under the Proprietary Marks in accordance with the System.
2.2 The Franchisee shall display subject to any necessary planning or byelaw consent in such manner and upon such part or parts of the Premises as the Franchisor may direct a sign or signs bearing the following words (or such other similar words as may from time to time be specified by the Franchisor): ‘«Description of franchise» Franchise owned and operated under Licence by’ followed by the name of the Franchisee.
2.3 The Franchisee shall place upon all letter headings, bills, invoices and all other documents and literature used in connection with the Business in such manner and place as the Franchisor may direct the following words (or such other words to similar effect as may from time to time be specified by the Franchisor): ‘«Description of franchise» Franchise owned and operated under Licence by’ followed by the name of the Franchisee.
3 Commencement and term
3.1 This Agreement shall commence on the execution hereof and shall continue in force thereafter unless and until determined in accordance with its terms for an initial term of «Initial term» years subject to the Franchisee’s right of renewal contained in the next following clause.
4 Renewal
4.1 Subject to the provisions of clause 0below, the Franchisee may at its option renew the franchise herein granted at the expiration of the said initial term for a further term of «Renewal term» years by giving notice in writing to the Franchisor exercising the said option not more than «Earliest notice time» months nor less than «Latest notice time» months before the Expiry Date.
4.2 Notwithstanding the giving of due notice pursuant to clause 0above, the renewal shall only be effective provided that:
4.2.1 the Franchisee has throughout the initial term properly observed and performed all its obligations under this Agreement and is not at the Expiry Date in default under any such obligations; and
4.2.2 no later than twenty‑eight days prior to the Expiry Date the Franchisee has executed a new franchise agreement in the form then used by the Franchisor which new agreement may differ from the terms of this Agreement; and
4.2.3 no later than twenty‑eight days prior to the Expiry Date the Franchisee has paid to the Franchisor without set‑off or deduction a renewal fee of «Renewal fee» per cent of the gross sales (as defined in clause 0) of the Business during the twelve month period ending on the first day of the month in which notice was given pursuant to clause 0above or «IF Percentage of current initial fee < 100»
«Percentage of current initial fee» per cent of «END IF»
the then current initial fee whichever is less together with value added tax thereon; and
4.2.4 prior to the Expiry Date the Franchisee has as the Franchisor may request completed or agreed in writing to perform at its own expense such maintenance, renovation, repairs and refurbishment of the Premises and the equipment, fixtures and fittings used in the Business as the Franchisor may require within the time prescribed by the Franchisor; and
4.2.5 prior to the Expiry Date the Franchisee has executed a Deed of Release in such form as the Franchisor may require relinquishing any and all claims of whatsoever nature against the Franchisor any subsidiary or associated company of the Franchisor or any shareholder, director, agent or employee of the Franchisor, or any other franchisee of the Franchisor; and
4.2.6 prior to the Expiry Date, the Franchisee and any person employed by or concerned with the Franchisee specified by the Franchisor shall have completed such re‑training or refresher training at such time and at such place as the Franchisor may request.
5 Territory
5.1 The right and licence granted to the Franchisee to operate the Business shall extend only to «Extent of franchise»«IF Exclusive franchise»
and the Franchisee agrees that it will not make any use nor will it permit or authorise any use directly or indirectly of the System or the Proprietary Marks nor «Nature of business:sell the Products/make available the Services:a or b» outside the Territory nor will it knowingly offer or provide any information or assistance concerning the System or the Proprietary Marks «Nature of business:sell the Products/make available the Services:a or b» to any person, firm or undertaking who intends or may seek to use or resell them outside the Territory«END IF»
.
5.2 The Franchisor will not itself operate or make use of nor license any person other than the Franchisee to operate or make use of the System under the Proprietary Marks in the Territory.
6 Initial obligations of franchisor
In connection with the commencement of the Business by the Franchisee the Franchisor agrees and undertakes as follows:
6.1 To provide the Franchisee with consultation and advice concerning site selection criteria, and the location, suitability and acquisition of the Premises.
6.2 To provide the Franchisee with standard construction and conversion plans and specifications for internal layout, signs, fixtures and fittings and consultation and advice relating to the construction, conversion and refurbishment of the Premises and to review the Franchisee’s construction and conversion plans to ensure compliance with the standards of the System.
6.3 To provide such general supervision of the construction or conversion works as the Franchisor shall consider appropriate.
6.4 To provide to the key employees and personnel of the Franchisee initial training in the standards, procedures, techniques and methods comprising the System during a period of not less than «Training days» days at such times and at such place as shall be specified by the Franchisor, the cost of travel and subsistence in connection therewith being borne by the Franchisee.
6.5 To deliver to the Franchisee at the commencement of the initial training period one copy of the Operating Manual and any other training materials deemed appropriate by the Franchisor.
6.6 To undertake such advertising activities prior to the commencement of the Business by the Franchisee as the Franchisor shall consider necessary to promote the opening of the Premises and to devote to this purpose a sum of not less than £«Initial promotional budget».
6.7 To provide such assistance as the Franchisor shall deem appropriate in connection with the opening of the Premises including on‑site supervision thereof and consultation and advice concerning pre‑opening and launch activities.
6.8 To supply the Franchisee in due time for the commencement of the Business with the equipment and other materials specified in the Operating Manual at the prices and charges therein set out.
7 Continuing obligations of franchisor
The Franchisor agrees at all times during the continuance of this Agreement:
7.1 To permit the Franchisee to operate and promote the Business under the trade name ‘«Trade name»’ in accordance with the terms of this Agreement.
7.2 To provide the Franchisee with advice, know‑how and guidance relating to the management, finance, promotion and methods of operation to be employed in connection with the System and to provide reasonable facilities for consultation with the Franchisee in connection with any problems relating to the System from time to time arising with a view to assisting and enabling the Franchisee to operate and maintain the System.
7.3 To make available to the Franchisee with reasonable promptness members of the Franchisor’s staff competent to provide any requisite on‑site assistance and advice in connection with the System or recommend to the Franchisee such independent experts as may appear necessary.
7.4 To provide the Franchisee with assistance in negotiating contracts and train the Franchisee in techniques to be employed in securing contracts.
7.5 To provide the Franchisee at the Franchisee’s expense with standard forms of contract for use by the Franchisee in dealings with its customers.
7.6 To make available to the Franchisee its staff engagement service for the provision and selection of trained and qualified staff for engagement in the Business.
7.7 To improve and develop the System and to make available to the Franchisee and its employees at cost, such further training as may from time to time appear necessary in the light of such improvements or developments, the Franchisee bearing the cost of any travel and subsistence involved in such further training and the salaries of any employees.
7.8 To provide to the Franchisee the products, services and equipment described in the Operating Manual on the terms from time to time therein specified and to assist the Franchisee in procuring such additional supplies of products, services and equipment as may be required by the Franchisee to commence and operate the Business and to use reasonable endeavours to negotiate and obtain from such suppliers favourable discount rates for furnishing such supplies to the Franchisee.
7.9 To make available to the Franchisee all services and facilities which the Franchisor makes available to its other franchisees and company‑owned outlets including improvements in and additions to the System.
7.10 In addition to the initial training pursuant to clause 0above to provide at cost a course of training to any person hereunder required to undergo such training who becomes employed by the Franchisee. The Franchisee shall bear the cost of any travel and subsistence involved in connection with such training.
7.11 To organise and convene by written notice to each of the franchisees an annual conference, the agenda for which shall include discussion of any improvements to the System and the Franchisor’s proposals for promotional activities and the general operation of the System, the Franchisee bearing the cost of any travel and subsistence expenses incurred in attending such meetings.
8 Obligations of franchisee
The Franchisee agrees as follows:
8.1 Upon the execution of this Agreement and prior to the commencement of the Business permit the Franchisor to register the particulars of this agreement at the Trade Marks Registry in respect of each of the trade marks of the Franchisor set out in Schedule 1 and to execute such other agreements during the continuance hereof in relation to such trade marks as the Franchisor may require.
8.2 To acquire the Premises in accordance with the terms of this Agreement and to ensure that the Premises are without delay following such acquisition altered, refurbished, equipped and fitted out in accordance with the requirements of the Franchisor.
8.3 To ensure that adequate financial resources are available to the Franchisee by way of working capital and otherwise to ensure that the Franchisee is able to fulfil all the obligations herein contained.
8.4 To operate the Business strictly in accordance with the provisions of the Operating Manual and to conform in all respects and at all times with the System as modified from time to time and not at any time to use any additional trade name or symbol nor do or permit to be done anything which is additional to or not in accordance with the System without the prior consent in writing of the Franchisor.
8.5 To ensure that the Business conforms with other businesses operated in accordance with the System with regard to quality, service and cleanliness, the Franchisee acknowledging that such conformity is of the utmost importance to the successful operation of the Business and the protection of the goodwill attaching to the Proprietary Marks.
8.6 To comply with all advice and instructions given by the Franchisor with regard to the operation of the System.
8.7 Forthwith on commencement of the Business to engage all staff and other persons required for the successful operation of the Business and to ensure that all such staff and replacements for such staff who are required under the terms of this Agreement to undergo training in the System, are trained in the System and any improvements thereto and if and when required by the Franchisor to procure their attendance at a time and place specified by the Franchisor for such purpose, the Franchisee bearing the cost of any travel and subsistence incurred in connection therewith and the salaries of such persons.
8.8 To procure that the persons responsible for managing the Business shall attend such further periods of training as may from time to time be required by the Franchisor and to bear any travel and subsistence expenses incurred in connection therewith and the salaries of such persons.
8.9 To use only such letter headings, invoices, signs, display materials, promotional literature, equipment and other items in connection with the Business as shall be approved in writing by the Franchisor and immediately to desist from the use or display of any signs, materials or objects as the Franchisor directs.
8.10 At all times to maintain the interior and exterior of the Premises and all parts thereof to the highest standard of decoration, repair and cleanliness and promptly to ensure that any requirements of the Franchisor in this regard are fulfilled.
8.11 Diligently to carry on the Business and to use best endeavours to promote and increase the Business and to co‑operate with the Franchisor and the other franchisees of the Franchisor in this regard.
8.12 Continuously to operate the Business upon such days and between such hours as the Franchisor shall specify.
8.13 To maintain sufficient stocks and employ sufficient staff to meet demand from the customers of the Business and to permit the efficient operation of the Business.
8.14 Promptly to pay all suppliers of goods and services sold or provided to the Franchisee for the purposes of the Business.
8.15 To promote and preserve the goodwill and reputation associated with the Proprietary Marks by promptly replacing or refunding the cost of any goods or services supplied by the Franchisee which do not conform with the high standards required by the System.
8.16 To ensure that all personnel employed in the Business shall at all times present a neat and clean appearance and render competent sober and courteous service to customers and comply with any and all directions of the Franchisor in this respect relating to dress, appearance and demeanour.
8.17 To consult with the Franchisor as to the scale and level of prices and charges to be levied in the course of the Business.
8.18 To permit the Franchisor and its representatives without any further authority save that hereby irrevocably given at reasonable times and upon reasonable notice to enter upon the Premises for the purposes of ascertaining whether the provisions of this Agreement are being complied with.
8.19 To permit the Franchisor without any further authority save that hereby irrevocably given to speak or write to customers of the Business concerning the standard of any products or services being provided to such customers by the Franchisee.
8.20 To comply with all statutes, byelaws, regulations and requirements of any government or other competent authority relating to the Franchisee and the conduct of the Business.
8.21 To sell only such products or services as may be described from time to time in the Operating Manual upon the terms and conditions therein set out.
8.22 To procure from its manager for the time being and from such other staff as the Franchisor shall require, an undertaking in a form specified by the Franchisor not to disclose to any third party any confidential information or knowledge concerning the Business, the Proprietary Marks or the System which may be communicated to such manager or employee or which such manager or employee may otherwise acquire, and the Franchisee shall at its own expense take such steps as the Franchisor may direct in order to enforce or restrain any breach of the terms of any such undertaking.
9 Restrictions on franchisee
9.1 During the continuance of this Agreement, the Franchisee agrees as follows:
9.1.1 not to commence operating the Business until the persons responsible for its operation have undergone a proper course of training to the satisfaction of the Franchisor and have been approved as competent by the Franchisor, nor at any time thereafter to employ any such person who has not undergone such training or been so approved;
9.1.2 not to commence operating the Business until the Franchisor has approved the Premises and the construction and conversion thereof;
9.1.3 not to permit or suffer any person to act or assist in the operation of the Business until such person has signed a non‑competition and confidentiality undertaking in the form from time to time specified by the Franchisor;
9.1.4 not to operate the Business or any part of the System at any location other than the Premises without the prior approval in writing of the Franchisor;
9.1.5 not to sell, assign, transfer, charge or sub‑license the Business, the System, or Proprietary Marks nor any part thereof without the prior consent of the Franchisor in accordance with the other terms of this Agreement;
9.1.6 not to exceed any prices stated in the Operating Manual from time to time to be maximum prices provided that the Franchisee shall be free to sell at prices less than such maximum prices at any time during the term hereof;
9.1.7 not to cause or permit to subsist any circumstance which may constitute a breach of any insurance policy maintained pursuant to this Agreement;
9.1.8 not to sell any product or render any service which does not conform to or conflicts with the standards associated with the Proprietary Marks or of which the Franchisor does not approve;
9.1.9 not to alter or convert the Premises or the internal layout thereof or the fixtures and fittings therein nor install any equipment nor alter, erect or display any sign or other medium of advertisement whether inside or outside the Premises without in every case seeking and obtaining the prior consent in writing of the Franchisor, and each such alteration, conversion, erection or installation shall be carried out only in accordance with plans and specifications previously submitted to and approved by the Franchisor;
9.1.10 not to do or omit to do any act or thing which may in the sole opinion of the Franchisor bring the System or the Proprietary Marks into disrepute or which may in the sole opinion of the Franchisor damage or conflict with the interests of the Business or the other franchisees of the Franchisor.
9.1.11 not to use or publish any advertisements, signs, directory entries or other forms of publicity whether or not relating in whole or not to the Business or display the same on or at the Premises unless the same shall have first been submitted to and approved by the Franchisor;
9.1.12 not without the Franchisor’s prior written consent in any capacity whatsoever be directly or indirectly engaged in any business or undertaking other than the Business;
9.1.13 not to purchase those products, materials and equipment required by the terms of the Operating Manual to be purchased from the Franchisor from any person other than the Franchisor;
9.1.14 not to use any of the Proprietary Marks as part of its corporate name.
9.2 The Franchisee covenants during the term of this Agreement and for a period of one year after the expiration or termination for any reason of this Agreement whether itself or together with any other person, firm or company in any capacity whatsoever save as authorised hereunder directly or indirectly:
9.2.1 not to be engaged, or interested, or concerned in the «Nature of business:sale of the Products/provision of the Services:a or b» or any like «Nature of business::a or b» or in any business which is in the sole opinion of the Franchisor similar to or competitive or in conflict with the Business; and
9.2.2 not to employ or seek to employ any person who is at that time or has at any time in the previous two years been employed by the Franchisor or any other franchisee of the Franchisor or any business carried on under the Proprietary Marks using the System nor otherwise directly or indirectly induce or seek to induce any such person to leave his or her employment; and
9.2.3 not to solicit customers or former customers of the Business nor divert or seek to divert any custom from the Franchisor or any other franchisee of the Franchisor.
9.3 The Franchisee hereby acknowledges that the Operating Manual and all other information and knowledge relating to the System is of a strictly confidential nature and accordingly, the Franchisee covenants that it will not and it will procure that no other person shall at any time without the prior written consent of the Franchisor whether before or after termination of this Agreement divulge or use whether directly or indirectly for its own benefit or that of any other person, firm or company any of such information or knowledge relating to the System which may be communicated to or otherwise acquired by the Franchisee, its directors, agents or employees.
10 Advertising
10.1 In consideration of the Franchisor accepting responsibility for national advertising to ensure general public recognition and acceptance of the Proprietary Marks and the System, the Franchisee shall pay to the Franchisor within ten days after the expiration of each «Advertising contribution period» period throughout the term a sum by way of advertising contribution equal to «Advertising contribution» per cent of gross sales (as defined in clause 0below) achieved during each said period.
10.2 The Franchisor shall pay such amounts as it shall receive from the Franchisee and its other franchisees operating the System into a separate fund which will be held in trust for all of the franchisees and shall expend such funds in maintaining, administering, directing and preparing local regional and national advertising including television, radio, magazine and newspaper campaigns, representation at trade exhibitions and the publication and dissemination of leaflets, brochures and other marketing materials to franchisees utilising the System. Expenditure of the said funds by the Franchisor shall be deemed satisfactory compliance with its promotional obligations hereunder, provided that if at any time the Franchisor expends monies in excess of those standing to the credit of the fund such excess expenditure may be set off as a first charge against subsequent monies received by the fund.
10.3 The advertising fund shall be audited annually and the Franchisor shall provide to the Franchisee an audited account of the income and expenditure of the fund.
10.4 In addition to the contributions referred to in clause 0above, the Franchisee will expend in aggregate, not less than «Local advertising» per cent of its annual gross sales (as defined in clause 0below) on local advertising including maintaining in local telephone and trade directories advertisements in the form and style prescribed by the Franchisor. The Franchisee will not publish any other advertising material unless and until samples thereof have been submitted to the Franchisor and the Franchisee has obtained the prior written approval of the Franchisor to the use of such advertising materials. The Franchisee will immediately cease the use or display of any advertising material deemed inappropriate by the Franchisor, upon receipt of a request from the Franchisor so to do.
10.5 The Franchisor will make available to the Franchisee point of sale and advertising materials including posters, leaflets, displays, flyers, stickers, signs, cards and notices and the Franchisee shall at its own expense prominently display, maintain and distribute the same as the case may be.
10.6 The Franchisee will co‑operate with the Franchisor and the other franchisees of the Franchisor in any special advertising or sales promotion or other special activity and will contribute such sums for this purpose and purchase from the Franchisor and utilise in the Business point of sale and other advertising material and will engage in other promotional advertising activities as the Franchisor may direct.
11 Insurance
11.1 The Franchisee shall at its own expense obtain and maintain with an insurance company acceptable to the Franchisor, public liability and such other insurance specified in the Operating Manual in such minimum sums and conforming to such policy limits and provisions as the Franchisor may from time to time require.
11.2 The Franchisee shall from time to time furnish to the Franchisor on demand copies of all such insurance policies and evidence that all premiums due have been paid. The Franchisee will procure the entry of a note on all such policies that the insurer shall notify the Franchisor in the event of late payment of any premium in respect thereof by the Franchisee.
12 Trade marks
12.1 The Franchisor warrants that it is entitled to license the Proprietary Marks to be utilised in the System throughout the term of this Agreement and that subject to registration pursuant to the Trade Marks Act 1994 of the trade mark licence hereby granted the use of the Proprietary Marks by the Franchisee in the Territory will not constitute an infringement of the rights of any third party and will fully and effectively indemnify the Franchisee for and against all loss, damage, costs, claims and expenses arising out of any such infringement.
12.2 The Franchisee shall render to the Franchisor all reasonable assistance to enable the Franchisor to obtain registration in any part of the world of any of the Proprietary Marks. In no circumstances will the Franchisee apply for registration as proprietor of any of the Proprietary Marks in any part of the world but if at the time the Franchisor desires to apply for registration and has so applied, the Franchisee is deemed in law also to be the proprietor of any trade mark or if for any other reason the Franchisor shall so request, the Franchisee shall at the Franchisor’s expense make in its own name or jointly with the Franchisor and proceed with such application as the Franchisor may direct and do all such acts and things and execute all such documents necessary for obtaining such registration and thereupon the Franchisee shall assign such registration and all other rights in such trade mark to the Franchisor.
12.3 The Franchisee acknowledges that the goodwill and all other rights in and associated with the Proprietary Marks vest absolutely in the Franchisor and that it is the intention of the parties that all such rights will at all times hereafter and for all purposes remain vested in the Franchisor and in the event that any such rights at any time accrue to the Franchisee by operation of law or howsoever otherwise the Franchisee will at its own expense forthwith on demand do all such acts and things and execute all such documents as the Franchisor shall deem necessary to vest such rights absolutely in the Franchisor.
12.4 In the event that a registration is obtained for any of the Proprietary Marks subsequent to the date hereof, the Franchisee shall subject to registration of particulars of this agreement at the Trade Marks registry in respect of such other marks be entitled to such like rights under such registration as are granted by this Agreement in respect of the other registered trade marks comprised at the date hereof in the Proprietary Marks, and hereby authorise the Franchisor to register such particulars in respect thereof.
12.5 The Franchisee will notify the Franchisor forthwith of any and all circumstances coming to the attention of the Franchisee, its directors, agents and employees which may constitute an infringement of any of the Proprietary Marks or any suspected passing off by any unauthorised person and shall take such reasonable action in connection therewith as the Franchisor may direct at the expense of the Franchisor.
12.6 The Franchisee shall take such action in relation to the use of any of the Proprietary Marks in the Business as the Franchisor may from time to time direct in order to make clear that the Proprietary Marks are the subject of patent copyright or trade mark protection.
13 Improvements and innovations
13.1 The Franchisor agrees to make any such improvements, additions or modifications of or to the System devised or developed in accordance with its obligations under clause 0above available to the Franchisee without delay, who shall when required to by the Franchisor but not before introduce any such improvement, addition or modification into the Business at the time and in the manner specified by the Franchisor in writing and the System shall thereupon be deemed to have been so varied.
13.2 The Franchisee will notify the Franchisor of any improvements, additions or modifications of or to the System which may assist in the operation of the Business and the Franchisor may introduce such improvements additions or modifications without any obligation to make any payment therefor.
13.3 The Franchisee will not itself introduce any improvement, addition or modification of or to the System into the Business without the prior written consent of the Franchisor so to do.
14 Operating manual
14.1 Throughout the continuance of this Agreement, the Franchisor will provide the Franchisee with full written details of any alterations or variations to the form of the Operating Manual to enable the Franchisee to keep the copy thereof in its possession up‑to‑date.
14.2 The Franchisor shall keep at its head office a definitive copy of the Operating Manual as revised and modified from time to time which in the event of any dispute as to the contents or import thereof shall be the authentic text.
14.3 The Franchisee shall conduct the Business strictly in accordance with the Operating Manual, the terms of which shall be deemed incorporated into and shall form part of this Agreement as if set forth fully herein. In the event of any conflict between the terms of this Agreement and the terms of the Operating Manual the former shall prevail.
14.4 The Operating Manual shall at all times remain the sole and exclusive property of the Franchisor and the Franchisee hereby acknowledges that the copyright therein vests in the Franchisor and will not take and will procure that no other person will take any copies thereof without the prior written consent of the Franchisor.
15 Fees and payment
15.1 In consideration of the grant of the right and licence to operate the Business, the Franchisee shall pay to the Franchisor or such other person as the Franchisor may direct:
15.1.1 upon the execution of this Agreement the sum of £«Initial fee» together with value added tax at the prevailing rate by way of initial fee which shall include the cost of initial training and advertising and the other matters specified in the Operating Manual as included in the initial fee but shall not include equipment, delivery and installation charges or any other matter not so specified as included which shall be invoiced separately to the Franchisee and paid promptly by the Franchisee in accordance with the Franchisor’s standard terms and conditions of supply;
15.1.2 in respect of each calendar month during the continuance of this Agreement, a continuing franchise fee equal to «Continuing franchise fee» per cent of the gross sales of the Franchisee during each such calendar month shall be paid without deduction or set off to the Franchisor on or before each Payment Date together with value added tax thereon at the prevailing rate;
15.1.3 a further management services fee of £«Further management services fee» plus value added tax thereon at the prevailing rate by standing order on such dates as the Franchisor shall specify which fee may be increased from time to time by such percentage as the Franchisor shall reasonably consider appropriate having regard to such factors as the level of service being offered and any rise in the Retail Price Index during the continuance of this Agreement.
15.2 For the purpose of this Agreement the expression ‘gross sales’ shall include all sums invoiced by the Franchisee whether or not received, and all cash and credit transactions including the value of all goods and services sold or rendered in the relevant trading period whether or not invoiced, and all other sums received in or about the conduct of the Business from whatever source including any loss of profits insurance claims paid to the Franchisee, but shall not include value added tax, customer refunds or allowances.
15.3 In the event that any sums due to the Franchisor are not paid by the Franchisee on the due date, such sums shall bear interest from day to day at an annual rate of 4 per cent above the base rate from time to time of the «Bank» subject to a minimum of 12 per cent per annum as well after as before judgment in respect thereof.
16 Accounts and records
16.1 The Franchisee shall:
16.1.1 maintain an accurate account and record of all gross sales and purchases made by the Business in each month up to the close of business on the last working day of each month, and shall prepare in a form approved by the Franchisor a monthly financial statement thereof and shall remit the same to the Franchisor on or before each Payment Date;
16.1.2 maintain at the Premises in a form approved by the Franchisor full and accurate books of account and shall keep detailed management and accounting records including all supporting vouchers, invoices and delivery notes and shall permit the Franchisor or its duly authorised agent during business hours to inspect any such accounts and records and to take copies thereof at the expense of the Franchisor;
16.1.3 prepare and promptly furnish to the Franchisor all such other accounting and management information set out in the Operating Manual in the form therein specified and any other information as the Franchisor may from time to time require;
16.1.4 at the Franchisee’s expense in each accounting year during the continuance of this Agreement have all such accounts and records audited by a qualified Chartered Accountant and supply a full set of such audited accounts which shall include a balance sheet and profit and loss account to the Franchisor within three months after the close of each such accounting year;
16.1.5 procure that the accounting reference date of the Franchisee shall be «Accounting reference date:3 June»;
16.1.6 preserve all such accounts and records for not less than three years notwithstanding the expiry or termination of this Agreement;
16.1.7 permit auditors nominated by the Franchisor at the expense of the Franchisee to undertake such audits as the Franchisor may consider on reasonable notice during normal business hours.
17 Sale of the business
17.1 All the rights and licences granted to the Franchisee hereunder are personal to the Franchisee who shall have the right to assign and sell the Business only subject to the following conditions and with the prior written consent of the Franchisor.
17.2 Subject as hereinafter provided the Franchisor hereby undertakes to grant to a purchaser of the Business acceptable to it a franchise for a period equal to the unexpired term granted by this Agreement or for not less than «New franchise on sale» years whichever shall be the greater commencing on the date of the sale of the Business on similar terms and conditions to those contained in the Franchisor’s then current standard franchise agreement.
17.3 The conditions required to obtain the written consent of the Franchisee to the sale of the Business by the Franchisee shall be:
17.3.1 any proposed purchaser shall submit a detailed offer in writing which shall be a bona fide offer at arm’s length and such purchaser shall fulfil all the standards and criteria deemed necessary by the Franchisor with respect to such matters as business experience, financial status and ability, and shall complete a programme of initial training to the satisfaction of the Franchisor; and
17.3.2 the Franchisee or the proposed purchaser shall pay to the Franchisor the sum of £«Costs of consent and training» to cover the costs to the Franchisor of dealing with the application for consent and the training of the proposed purchaser and its manager and staff, and if the Franchisor has been instrumental in introducing the proposed purchaser a further sum equal to «Introduction fee» per cent of the sale price together in each case with any value added tax thereon at the prevailing rate; and
17.3.3 the Franchisee must not at the time of the application for consent be in breach of any of its obligations hereunder; and
17.3.4 the shareholders and directors of any company intending to purchase the Business must be acceptable to the Franchisor according to the criteria set out in clause 0above and shall undertake to the Franchisor in writing in such form as the Franchisor shall require to observe and perform all the obligations on the part of the Principal contained in the then current form of franchise agreement used by the Franchisor for corporate franchisees; and
17.3.5 the payment by the Franchisee of all monies due to the Franchisor pursuant to this clause 0or otherwise howsoever, but without any deduction or set off and the discharge of all other obligations owed by the Franchisee to the Franchisor.
17.4 The Franchisee shall forthwith on receipt thereof submit to the Franchisor a copy of any proposed purchaser’s written offer to purchase the Business together with:
17.4.1 a detailed financial statement of affairs and business history of the proposed purchaser;
17.4.2 full written details of any other terms which have been agreed between the Franchisee and the proposed purchaser.
17.5 On receipt of the information specified in clause 0the Franchisor shall have an option to purchase the Business for the same amount and upon the same terms as the proposed purchaser has offered save that the Franchisee shall not be obliged to purchase or take an assignment of any lease of the Premises. The Franchisor shall have a period of thirty days after receipt of such information to exercise its option to purchase by notice in writing to the Franchisee. The Franchisee shall notify the Franchisor of any variation in the terms offered by any prospective purchaser which variation shall forthwith be submitted in writing to the Franchisor and the said period of thirty days shall recommence as from the date of notification to the Franchisor of such variation. If the Franchisor serves notice exercising its option the sale and purchase shall be completed within twenty‑eight days following due service of such notice. If the Franchisor does not serve notice exercising its option the Franchisee shall thereafter be free to sell, transfer or assign the Business upon the terms of the said written offer.
17.6 The Franchisee agrees not to disclose any of the contents of the Operating Manual to any prospective purchaser and shall procure that no such prospective purchaser shall use any of the Proprietary Marks nor operate the System or any part thereof without the prior written consent of the Franchisor.
17.7 Upon the sale or transfer by the Franchisee of any part of the Business or the Premises, the rights of the Franchisee in respect thereof shall terminate but without prejudice to the existing obligations of the Franchisee.
18 Death or incapacity of the principal
18.1 If the Principal shall die during the currency of this Agreement, the personal representatives of the Principal shall within a period of three months from the date of the death notify the Franchisor in writing of their decision whether the Business should be continued by a relative or beneficiary of the Principal. If the personal representatives shall together give such written notice within the said period of three months to the Franchisor giving the name of such relative or beneficiary, then on the Franchisor being satisfied that such individual would be an assignee acceptable according to the criteria specified in clause 0above, the Franchisor will not exercise its option referred to in clause 0and will consent to an assignment of this Agreement to such individual subject to the conditions contained in clause 0hereof.
18.2 If the personal representatives of the Principal indicate that they wish to sell the Business to a third party or shall not within the said period of three months assign this Agreement in accordance with and subject to the conditions of clause 0above, then the personal representatives will use best endeavours to find a purchaser for the Business and the provisions of clause 0will apply.
18.3 If the personal representatives fail to arrange an assignment of the Business within the said period of three months in accordance with clause 0above or a sale of the Business within a period of six months from the date of the death of the Principal, the Franchisor shall be entitled but not obliged:
18.3.1 to withdraw the services of any manager appointed pursuant to clause 0below;
18.3.2 to terminate this Agreement without liability by giving to the personal representatives notice in writing to that effect; and
18.3.3 to purchase the Business at its agreed market value less «Franchisor’s discount» per cent by serving notice in writing upon the personal representatives of its intention so to purchase the Business which notice will constitute a binding contract. The Franchisor shall not be obliged to purchase or take an assignment of any lease of the Premises or otherwise owned or used for the purpose of the Business.
18.4 If the Franchisor and the personal representatives shall fail to agree a price pursuant to a notice served by the Franchisor pursuant to clause 0above within twenty‑eight days of the date of such notice, the price shall be determined by an independent Chartered Accountant agreed between the parties or in default of agreement within seven days after the expiration of such twenty‑eight day period appointed by the President for the time being of the Institute of Chartered Accountants in England and Wales on the basis of the net market value of the Business without taking account of goodwill or any additional value arising from the sale of the Business as a going concern who shall act as an expert and not an arbitrator and whose decision shall be final and binding upon both parties. The costs of such independent valuation shall be borne equally by the Franchisor and the personal representatives.
18.5 In the event of the death or incapacity for any reason of the Principal the Franchisor shall have the right to appoint a manager of the Business who shall have full powers to run the Business at the expense of the Business and take all steps necessary to preserve the goodwill associated with the Proprietary Marks and the System, and operate the Business in a satisfactory manner pending the recovery of the Principal to the satisfaction of the Franchisor or the assignment of this Agreement in accordance with its terms.
18.6 If the Principal is at any time during the continuance hereof incapacitated or in the opinion of the Franchisor unable responsibly to operate the Business for a continuous period of «Continuous months’ incapacity» months or a total period of «Aggregate days’ incapacity» working days in any period of «Total months» months, the Franchisor may by notice to that effect require the Franchisee to dispose of the Business whereupon the provisions of clause 0above shall apply.
18.7 If so requested by the Franchisee or the personal representatives of the Principal, the Franchisor may act as a non‑exclusive agent for the sale of the Business and in such event will be paid a reasonable fee and its expenses for this service.
18.8 The Franchisee or the personal representatives of the Principal shall if requested by the Franchisor do all such acts and things and execute all such documents as may be necessary to give effect to the provisions of this clause.
19 Termination
19.1 The Franchisor may terminate this Agreement forthwith by giving notice in writing to the Franchisee in any of the following events:
19.1.1 if the Franchisee fails to acquire the Premises and commence the Business within a period of three months from the date hereof;
19.1.2 if the Franchisee shall at any time fail to pay any amounts due and payable to the Franchisor hereunder;
19.1.3 if the Franchisee shall fail to submit to the Franchisor in a timely manner any of the accounting or management information required to be so submitted;
19.1.4 if the Franchisee shall fail to operate the Business in accordance with the System;
19.1.5 if the Franchisee shall in the opinion of the Franchisor misuse or in any way impair the goodwill associated with any of the Proprietary Marks or takes any action to contest the validity or ownership thereof;
19.1.6 if the Franchisee shall purport to effect any assignment of any of the rights or licences herein granted other than in accordance with the terms hereof;
19.1.7 if the Franchisee fails to obtain any prior written approval or consent of the Franchisor expressly required by this Agreement;
19.1.8 if the Franchisee discloses or permits or suffers the disclosure of any part of the Operating Manual or other confidential information contrary to the terms hereof;
19.1.9 if the Franchisee or any officer, director or employee of the Franchisee gives to the Franchisor any false or misleading information or makes any misrepresentation in connection with obtaining this Agreement or at any time during the continuance of this Agreement in connection with the Business;
19.1.10if any material change shall occur in the management, ownership or control of the Franchisee or the Business otherwise than in accordance with the provisions of this Agreement;
19.1.11if the Franchisee fails to ensure that the Business conforms with the other businesses operated in accordance with the System, in particular with regard to quality, service and cleanliness;
19.1.12if the Franchisee or the Principal shall be convicted of any criminal offence or is in the opinion of the Franchisor guilty of gross moral turpitude;
19.1.13if the Franchisee otherwise neglects or fails to perform or observe any of the provisions of this Agreement or commits any breach of its obligations hereunder, which breach if remediable is not remedied to the satisfaction of the Franchisor within thirty days of a notice in writing to the Franchisee requesting its remedy, provided that the Franchisor shall not be obliged to give such notice in the case of a persistent breach which shall be one which has occurred more than twice in any twelve month period.
19.2 This Agreement shall automatically terminate without notice being given to the Franchisee in any of the following events:
19.2.1 if the Franchisee shall become insolvent by reason of its inability to pay its debts as they fall due or shall enter into liquidation whether voluntarily or compulsorily other than for the purposes of a reconstruction or amalgamation or shall make any arrangement or composition with its creditors or shall suffer the making of an administration order in respect of all or any part of its assets or takes or suffers any similar action in consequence of a debt;
19.2.2 if the Principal shall become insolvent or suffer the filing of a petition in bankruptcy or shall propose any voluntary arrangement or make any arrangement or composition with creditors or take or suffer any similar action in consequence of a debt;
19.2.3 if any party takes or threatens any action including but without limitation the commencement of legal proceedings to enforce or foreclose any lien or mortgage over or in respect of any property of the Franchisee or the Principal or to forfeit any estate or interest of the Franchisee or the Principal in the Premises or enters or seeks to enter into possession thereof.
20 Consequences of termination
20.1 Upon the termination or expiration of this Agreement for any reason, the Franchisee shall:
20.1.1 immediately pay to the Franchisor the full amount of all monies then or thereafter due together with any interest thereon up until the date of payment;
20.1.2 immediately cease to operate the Business and to use the System and shall not thereafter hold itself out in any way as a franchisee of the Franchisor and refrain from any action that would or may indicate any relationship between it and the Franchisor;
20.1.3 immediately cease to use in any way whatsoever any and all of the Proprietary Marks and any other trade names, logos, devices, insignia, procedures or methods which are or may be associated with the Proprietary Marks or the System;
20.1.4 return to the Franchisor or otherwise dispose of or destroy as the Franchisor shall direct all signs, advertising materials, stationery, invoices, forms, specifications, designs, records, data, samples, models, programmes and drawings pertaining to or concerning the Business or the System or bearing any of the Proprietary Marks;
20.1.5 remove or permanently cover all signs or advertisements identifiable in any way with the Franchisor and in the event of failure promptly so to do, to permit the authorised agents of the Franchisor to enter on the Premises for such purpose;
20.1.6 return to the Franchisor all copies of the Operating Manual in its possession and under its control;
20.1.7 return all items of equipment held on loan or hire from the Franchisor under the terms of this Agreement;
20.1.8 do all such acts and things and execute all such documents as the Franchisor shall require, in particular but without limitation such notification of cessation of use of the Proprietary Marks as is necessary for the purpose for recording the same at the Trade Marks Registry;
20.1.9 procure the transfer of all telephone lines and numbers used in the Business to such person as the Franchisor may direct;
20.1.10otherwise perform its obligations and observe the covenants set out in clauses 0and 0hereof.
20.2 The expiration or termination of this Agreement shall be without prejudice to the accrued rights of the parties and any provision hereof which relates to or governs the acts of the parties hereto subsequent to such expiry or termination hereof shall remain in full force and effect and shall be enforceable notwithstanding such expiry or termination.
21 Acknowledgments by franchisee
21.1 The Franchisee hereby acknowledges the exclusive rights of the Franchisor to own the System and the Proprietary Marks and all matters comprised therein and itself to utilise the same and to grant to any other person a licence to use the System and the Proprietary Marks and to amend and modify the same by variation, addition, renewal, substitution or howsoever otherwise and to revise the Operating Manual accordingly.
21.2 The Franchisee acknowledges that in giving advice to the Franchisee, assisting the Franchisee to establish the Business, recommending equipment and materials and assessing the suitability of the Franchisee and the Premises, the Franchisor has based its recommendations on experience actually obtained in practice but that the Franchisor does not give any guarantee or warranty with regard to such matters or generally in connection with the sales volume profitability or any other aspect of the Business. The Franchisee acknowledges that he has been advised by the Franchisor to discuss his intention to enter into this Agreement with other franchisees of the Franchisor and to seek other appropriate independent advice, and that the decision to enter into this Agreement has been taken solely on the basis of the personal judgment and experience of the Franchisee having taken such independent advice. Accordingly, the Franchisee acknowledges that no representation, warranty, inducement or promise express or implied had been made by the Franchisor or relied upon by the Franchisee in entering into this Agreement save such as may have been notified by the Franchisee to the Franchisor in writing and are annexed to and incorporated in this Agreement.
21.3 It is hereby expressly agreed between the parties that each of the restrictions contained in this Agreement is reasonably necessary for the protection of the Franchisor and its other franchisees and of the System and the Proprietary Marks and does not unreasonably interfere with the freedom of action of the Franchisee who enters into this Agreement with the benefit of legal advice in full knowledge of all the provisions hereof and the Franchisee acknowledges that all such provisions are fair and reasonable and that in entering into this Agreement the Franchisee accepts no more onerous restrictions than those to which the Franchisee would otherwise have been subject prior to entering into this Agreement.
22 No partnership or agency
22.1 The Franchisee shall not pledge the credit of the Franchisor nor represent itself as being the Franchisor nor an agent, partner, employee or representative of the Franchisor and shall not hold itself out as such nor as having any power or authority to incur any obligation of any nature express or implied on behalf of the Franchisor and nothing in this Agreement shall operate so to constitute the Franchisee an agent, partner, employee or representative of the Franchisor.
23 No warranties without authority
23.1 The Franchisee shall make no statement, representation or claim and shall give no warranty to any person in respect of the Business, the «Nature of business::a or b» or the System save such as are specifically authorised in the Operating Manual in its form current at the time of the making by the Franchisee of any such statement, representation, claim or warranty.
24 Indemnity by franchisee
24.1 The Franchisee hereby agrees and undertakes fully and effectively to indemnify and keep indemnified the Franchisor as well after as before the expiry or termination hereof for and against all damages, loss, claims, demands, expenses (including legal and professional expenses), costs and liabilities which the Franchisor may at any time incur as a result of any and all breaches by the Franchisee of the obligations specified in clauses 0and 0above or any other provisions of this Agreement.
25 Principal’s covenant
25.1 The Principal hereby covenants and agrees with the Franchisor as follows:
25.1.1 to use best endeavours to procure that the Franchisee, its shareholders, directors, agents and employees will duly observe and perform all the obligations on the part of the Franchisee to be observed and performed. The liability of the Principal hereunder shall not in any way be affected or impaired by the Franchisor giving time or showing any indulgence whatsoever to the Franchisee;
25.1.2 to devote his full time attention and effort to the Business except to the extent and in the manner expressly and previously agreed in writing by the Franchisor;
25.1.3 to observe and perform as principal all the restrictions and obligations on the part of the Franchisee to be observed and performed under the terms of this Agreement.
25.2 If there are two or more persons as Principal all covenants and agreements on the part of the Principal shall be deemed to be joint and several covenants.
26 Assignment by franchisor
26.1 This Agreement and all the rights of the Franchisor hereunder may be assigned, transferred or otherwise dealt with by the Franchisor and shall inure to the benefit of the successors and assigns of the Franchisor.
Boilelplate Clauses and Schedules
27 Reservation of rights
27.1 All rights and licences not specifically and expressly granted to and conferred upon the Franchisee by this Agreement are for all purposes reserved to the Franchisor.
28 Severability
28.1 Each of the restrictions and provisions contained in this Agreement and in each clause and sub‑clause hereof shall be construed as independent of every other such restriction and provision to the effect that if any provision of this Agreement or the application of any provision to any person, firm or company or to any circumstances shall be determined to be invalid and unenforceable then save as provided in clause 0below such determination shall not affect any other provision of the Agreement or the application of such provision to any person, firm, company or circumstance all of which other provisions shall remain in full force and effect.
28.2 In the event that any provision of this Agreement shall be held to be invalid or unenforceable by a court of law or other competent authority in a way which in the sole opinion of the Franchisor materially adversely affects the right of the Franchisor to receive payment of fees or other remuneration or the terms on which the Franchisor supplies goods or services to the Franchisee or any territorial exclusivity conferred hereunder or the System or Proprietary Marks, then and in any such case the Franchisor may without liability terminate this Agreement by notice in writing to the Franchisee to that effect and in such circumstances the provisions of clause 0above will apply.
29 Force majeure
29.1 None of the parties to this Agreement shall be responsible to any other party for any delay in performance or non‑performance due to any causes beyond the reasonable control of the parties hereto, but the affected party shall promptly upon the occurrence of any such cause so inform the other parties in writing, stating that such cause has delayed or prevented its performance hereunder and thereafter such parties shall take all action within its power to comply with the terms of this Agreement as fully and promptly as possible.
30 Waiver
30.1 No failure of the Franchisor to exercise any power given to it hereunder or to insist upon strict compliance by the Franchisee or the Principal with any obligation or condition hereof and no custom or practice of the parties at variance with the terms hereof shall constitute a waiver of any of the Franchisor’s rights hereunder.
30.2 No waiver by the Franchisor of any particular default by the Franchisee shall affect or impair the Franchisor’s rights in respect of any subsequent default of any kind by the Franchisee, nor shall any delay or omission of the Franchisor to exercise any rights arising from any default affect or impair the Franchisor’s rights in respect of the said default or any other default of the Franchisee hereunder. Subsequent acceptance by the Franchisor of any payments by the Franchisee shall not be deemed a waiver of any preceding breach by the Franchisee of any of the terms covenants or conditions of this Agreement.
31 Notices
31.1 Any notice required to be given hereunder by any party hereto shall be in writing sent by prepaid recorded delivery or registered post or by telex and shall be deemed effective if sent by post at the expiration of seventy‑two hours after the same was posted whether or not received or if by telex, twenty‑four hours after dispatch to the correct telex number of the addressee. Each of the parties hereto shall notify the others of any change of address within forty‑eight hours of such change.
32 Entire agreement
32.1 This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements in connection with the subject matter hereof. No director, employee or agent of the Franchisor is authorised to make any representation or warranty not contained in this Agreement and the Franchisee acknowledges that he has not relied on any such oral or written representations. No variation or waiver of any of the provisions of this Agreement shall be binding unless in writing and signed by a duly authorised director or employee of the Franchisor and the Franchisee.
33 Applicable law
33.1 This Agreement and all rights and obligations of the parties hereto shall be governed and construed in accordance with the Law of [] and the parties hereto hereby submit to the jurisdiction of the [ ]Courts.
34 Headings
34.1 Any marginal notes and headings contained in this Agreement are for reference purposes only and do not form part of this Agreement and shall not be deemed to alter or affect the meaning of any of the provisions hereof.
SCHEDULE 1
Trade Marks
«Trade marks»
SCHEDULE 2
Territory
«Territory»