The Franchise Agreement Draft is a crucial document used when establishing a franchise business relationship in Malaysia. It serves as the foundational contract between a franchisor granting rights to use their business system and a franchisee acquiring those rights. The document must comply with the Malaysian Franchise Act 1998 and the Registration of Franchises Regulations 1999, which require specific provisions and disclosures. This agreement typically includes detailed sections covering intellectual property rights, operational standards, financial obligations, and territory rights, while incorporating Malaysian-specific requirements such as Halal certification (where applicable) and local business practices. It's essential for both domestic and international franchise operations in Malaysia and requires registration with the Franchise Registry before implementation.
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1. Parties: Identification of the franchisor and franchisee with full legal names and registration details
2. Background: Introduction to the franchise system, brand history, and purpose of the agreement
3. Definitions and Interpretation: Detailed definitions of terms used throughout the agreement and rules of interpretation
4. Grant of Franchise: Scope of franchise rights granted, territory definitions, and exclusivity provisions
5. Term and Renewal: Duration of the franchise agreement and conditions for renewal
6. Franchise Fees and Payments: Initial franchise fee, ongoing royalties, advertising contributions, and payment terms
7. Franchisor's Obligations: Support, training, operations manual provision, and ongoing assistance obligations
8. Franchisee's Obligations: Operational standards, compliance requirements, and performance obligations
9. Intellectual Property Rights: Usage of trademarks, trade secrets, and other intellectual property
10. Training and Support: Initial and ongoing training requirements and support services
11. Marketing and Advertising: Marketing obligations, advertising fund contributions, and local marketing requirements
12. Quality Control: Quality standards, inspection rights, and compliance requirements
13. Records and Reporting: Financial reporting requirements, record-keeping obligations, and audit rights
14. Confidentiality: Protection of confidential information and trade secrets
15. Non-Competition: Restrictions during and after the franchise term
16. Transfer and Assignment: Conditions for transfer of franchise rights or business ownership
17. Termination: Grounds for termination, procedures, and consequences
18. Post-Termination Obligations: Obligations and restrictions after agreement ends
19. Governing Law and Dispute Resolution: Applicable law and methods for resolving disputes
20. General Provisions: Standard boilerplate clauses including notices, amendments, and severability
1. Sub-Franchising Rights: Include when the franchisee is granted rights to sub-franchise the business
2. Multiple Unit Development: Include for agreements granting rights to develop multiple franchise units
3. E-commerce Rights: Include when online sales or digital platforms are part of the franchise system
4. Equipment Leasing: Include when the franchisor provides equipment on lease to the franchisee
5. Halal Certification: Include for food and beverage franchises requiring Halal compliance in Malaysia
6. International Operations: Include for franchises with international components or cross-border operations
7. Special Market Conditions: Include provisions specific to local market requirements or conditions
1. Schedule 1 - Franchise Territory: Detailed description and/or maps of the granted territory
2. Schedule 2 - Approved Products and Services: List of authorized products and services under the franchise
3. Schedule 3 - Fee Structure: Detailed breakdown of all fees, royalties, and payment schedules
4. Schedule 4 - Initial Training Program: Details of mandatory initial training requirements and curriculum
5. Schedule 5 - Operations Manual Table of Contents: Overview of the operations manual content (full manual provided separately)
6. Schedule 6 - Brand Standards: Specifications for use of trademarks, logos, and brand elements
7. Schedule 7 - Initial Inventory Requirements: List of required starting inventory and equipment
8. Schedule 8 - Approved Suppliers: List of authorized suppliers and purchasing requirements
9. Schedule 9 - Reporting Forms: Standard forms for financial and operational reporting
10. Appendix A - Confidentiality Agreement: Detailed confidentiality terms for employees and stakeholders
11. Appendix B - Personal Guarantee: Guarantee form for franchisee's principals or directors
Relevant legal definitions
Clauses
Relevant Industries
Food & Beverage
Retail
Education & Training
Healthcare & Wellness
Automotive Services
Professional Services
Beauty & Personal Care
Fashion & Apparel
Technology & Electronics
Hospitality
Fitness & Recreation
Home Services
Child Care & Education
Relevant Teams
Legal
Operations
Finance
Business Development
Compliance
Brand Management
Training
Quality Assurance
Risk Management
Commercial
Relevant Roles
Franchise Development Manager
Legal Counsel
Business Development Director
Operations Manager
Compliance Officer
Chief Executive Officer
Chief Financial Officer
Commercial Director
Brand Manager
Training Manager
Quality Assurance Manager
Franchise Relations Manager
Regional Development Manager
Contract Administrator
Risk Management Officer
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