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Sub Franchise Agreement Template for Australia

A Sub Franchise Agreement is a comprehensive legal document used in the Australian jurisdiction that establishes and governs the relationship between a master franchisor, master franchisee (acting as sub-franchisor), and sub-franchisee. The agreement must comply with the Australian Franchising Code of Conduct and related legislation, detailing the rights, obligations, and operational requirements for running a franchised business. It covers crucial aspects including territory rights, fees, intellectual property usage, operational standards, training requirements, and termination provisions, while ensuring compliance with Australian competition and consumer protection laws.

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What is a Sub Franchise Agreement?

The Sub Franchise Agreement is a critical document used in multi-tiered franchise systems operating within the Australian jurisdiction. It's implemented when a master franchisee, who holds rights to a broader territory or region, grants individual franchise rights to sub-franchisees. The agreement must strictly comply with the Australian Franchising Code of Conduct and related legislation, including the Competition and Consumer Act 2010. This document outlines all essential aspects of the franchise relationship, including operational requirements, territory rights, fee structures, intellectual property usage, and performance standards. It's particularly important as it needs to balance the interests of three parties - the master franchisor, master franchisee (sub-franchisor), and sub-franchisee - while maintaining consistency with the master franchise agreement and protecting the overall franchise system's integrity.

What sections should be included in a Sub Franchise Agreement?

1. Parties: Identifies the master franchisor, master franchisee (sub-franchisor), and sub-franchisee

2. Background: Explains the franchise system, master franchise arrangement, and context for the sub-franchise agreement

3. Definitions and Interpretation: Defines key terms and establishes interpretation principles

4. Grant of Sub-Franchise: Details the rights granted to the sub-franchisee and territory allocation

5. Term and Renewal: Specifies initial term, renewal conditions, and processes

6. Fees and Payments: Outlines all fees, royalties, and payment terms

7. Obligations of the Sub-Franchisee: Lists all operational, financial, and compliance obligations

8. Training and Support: Details initial and ongoing training requirements and support services

9. Intellectual Property: Covers usage rights and restrictions for trademarks, systems, and materials

10. Operations Manual: References the manual and compliance requirements

11. Marketing and Advertising: Specifies marketing obligations, fees, and approval processes

12. Records and Reporting: Details required business records, reports, and audit rights

13. Insurance: Specifies required insurance coverage and limits

14. Transfer Provisions: Outlines conditions and processes for transfer of the business

15. Termination: Details grounds and processes for termination

16. Post-Termination Obligations: Specifies obligations after agreement ends

17. Restraint of Trade: Non-compete and confidentiality provisions

18. Dispute Resolution: Processes for handling disputes as per Code requirements

19. Warranties and Representations: States warranties given by all parties

20. General Provisions: Includes standard boilerplate clauses

What sections are optional to include in a Sub Franchise Agreement?

1. Premises: Required if the franchise operates from specific premises - includes lease terms and requirements

2. Equipment and Fitout: Required if specific equipment or store fitout is necessary

3. Supply Arrangements: Include if there are mandatory supplier relationships or product requirements

4. Online Operations: Required if the franchise includes online business components

5. Multiple Unit Rights: Include if sub-franchisee has rights to operate multiple units

6. Development Schedule: Required if the sub-franchisee must open multiple units over time

7. Employee Requirements: Include if there are specific staffing requirements or restrictions

8. Local Area Marketing: Required if specific local marketing obligations exist

9. Master Franchisor Direct Rights: Include specific provisions for master franchisor to act directly with sub-franchisee

What schedules should be included in a Sub Franchise Agreement?

1. Schedule 1 - Business Details: Key business information, territory definition, commencement date

2. Schedule 2 - Fees and Payments: Detailed fee structure, calculation methods, payment terms

3. Schedule 3 - Intellectual Property: List of trademarks, copyrights, and other IP rights

4. Schedule 4 - Initial Training Program: Training requirements, duration, and content

5. Schedule 5 - Equipment and Inventory Requirements: Required equipment, specifications, approved suppliers

6. Schedule 6 - Key Performance Indicators: Performance standards and metrics

7. Schedule 7 - Approved Products and Services: List of authorized products/services and specifications

8. Schedule 8 - Reporting Requirements: Forms, frequency, and content of required reports

9. Appendix A - Guarantee and Indemnity: Personal guarantees from sub-franchisee principals

10. Appendix B - Deed of Restraint: Detailed non-compete provisions

11. Appendix C - Direct Debit Authority: Banking and payment authorization forms

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Australia

Publisher

Ƶ

Document Type

Franchise Agreement

Cost

Free to use

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