FRANCHISE AGREEMENT
This 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.
WITNESSETH:
A. 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.
B. 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.
C. Franchisee desires to acquire a license to adopt and use the Franchise, and the trademarks, 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.
D. Franchisee understands the importance of Franchiser's high and uniform standards
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of quality, cleanliness, appearance, and service to the value of the franchise and the necessity of opening and conducting franchise operations in conformity with the franchise and in accordance with Franchiser's standards and specifications.
In consideration of the mutual covenants set forth below, Franchiser and Franchisee agree as follows:
1. 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.
1.2. 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 the corporation shall be amended to delete such words.
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2. TERM
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 interest.
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 the same which the Franchisee shall be obligated.
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4. PAYMENTS
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 __________ days prior to the scheduled opening of the franchise operation, whichever date is earlier. In return, 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 termination. 4.2 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 authority.
4.3 Advertising and Sales Promotion Allowance. Franchisee shall pay to Franchiser as an advertising and sales promotion allowance, the sum equal to __________
Franchise Agreement (Cont.) 5 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.
4.4 Payment Defaults. If, as the result of the failure of Franchisee to remit the payments required under subsections 4.1 through 4.3 of this section, 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 Wit