The Franchise Contract is a fundamental document used when establishing a franchise business relationship in Hong Kong. While Hong Kong doesn't have specific franchise legislation, this agreement is structured to comply with Hong Kong's common law system and relevant ordinances including the Trade Marks Ordinance, Competition Ordinance, and Contract Law principles. The document is essential when a business (franchisor) grants another party (franchisee) the right to operate under their business system and brand. It covers critical elements including intellectual property rights, operational requirements, financial terms, quality standards, and territory rights. This comprehensive agreement is particularly important in Hong Kong's dynamic business environment, where franchising continues to be a popular business expansion model across various sectors.
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1. Parties: Identification of franchisor and franchisee, including full legal names and registered addresses
2. Background: Context of the agreement, description of the franchise system, and business concept
3. Definitions and Interpretation: Detailed definitions of key terms and interpretation rules for the agreement
4. Grant of Franchise: Scope of franchise rights, territory, and exclusivity provisions
5. Term and Renewal: Duration of the franchise agreement and conditions for renewal
6. Franchise Fees and Payment Terms: Initial franchise fee, ongoing royalties, advertising contributions, and payment mechanisms
7. Franchisor Obligations: Support, training, and assistance to be provided by the franchisor
8. Franchisee Obligations: Operational requirements, compliance with system standards, and reporting obligations
9. Intellectual Property Rights: Use of trademarks, copyright materials, and protection of system know-how
10. Operations Manual: Status and requirements regarding the operations manual
11. Quality Control: Standards, inspections, and compliance requirements
12. Marketing and Advertising: Marketing obligations, approval processes, and advertising fund management
13. Records and Reporting: Financial records, reporting requirements, and audit rights
14. Transfer and Assignment: Conditions for transfer of franchise rights and change of control
15. Termination: Grounds for termination and termination procedures
16. Post-Termination Obligations: Obligations after agreement ends, including non-compete and confidentiality
17. Confidentiality: Protection of confidential information and trade secrets
18. Dispute Resolution: Process for resolving disputes, including jurisdiction and governing law
19. General Provisions: Standard contractual provisions including notices, amendments, and severability
1. Development Rights: Used when granting rights to develop multiple franchise units or sub-franchising rights
2. E-commerce Rights: Include when online sales or digital platforms are part of the franchise system
3. Equipment and Fit-out Requirements: Needed for franchises requiring specific physical premises setup
4. Import/Export Provisions: Required when franchise involves cross-border trade of products
5. Data Protection: Detailed section needed when franchise involves significant personal data processing
6. Force Majeure: Detailed provisions for business interruption, particularly relevant post-COVID
7. Environmental Compliance: Required for franchises with significant environmental impact
8. Training Requirements: Detailed section needed for complex operational requirements
1. Schedule 1 - Territory Description: Detailed description and/or maps of the franchised territory
2. Schedule 2 - Products and Services: Comprehensive list of approved products and services
3. Schedule 3 - Initial Fee and Ongoing Payments: Detailed fee structure and calculation methods
4. Schedule 4 - Initial Training Program: Details of required initial training
5. Schedule 5 - Equipment and Inventory Requirements: Specifications for required equipment and initial inventory
6. Schedule 6 - Marks and Intellectual Property: List of licensed trademarks and intellectual property
7. Schedule 7 - Standard Operating Procedures: Key operational requirements and standards
8. Schedule 8 - Reporting Requirements: Forms and templates for required reports
9. Schedule 9 - Insurance Requirements: Required insurance types and coverage levels
10. Appendix A - Form of Confidentiality Agreement: Standard form for confidentiality agreements
11. Appendix B - Personal Guarantee: Form of personal guarantee if required
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