The Sub Franchise Agreement is utilized in situations where a master franchisee, having obtained rights from a franchisor to develop a territory or region in New Zealand, grants operating rights to individual sub-franchisees. This document is essential for maintaining consistency and quality across the franchise network while establishing clear hierarchical relationships and responsibilities. The agreement typically includes detailed provisions for operational standards, financial obligations, territory rights, intellectual property usage, and compliance requirements specific to New Zealand law. It serves as a crucial tool for expanding franchise networks through a multi-tiered structure, ensuring proper control and support mechanisms are in place. The Sub Franchise Agreement must align with both the master franchise agreement and New Zealand's regulatory framework, including fair trading, competition, and consumer protection laws.
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1. Parties: Identification of the master franchisee and sub-franchisee, including full legal names and addresses
2. Background: Context of the agreement, including reference to the master franchise agreement and authority to grant sub-franchises
3. Definitions: Comprehensive list of defined terms used throughout the agreement
4. Grant of Sub-Franchise: Specific rights granted to the sub-franchisee, including territory and scope of operations
5. Term and Renewal: Duration of the agreement and conditions for renewal
6. Fees and Payments: Initial franchise fee, ongoing royalties, marketing contributions, and payment terms
7. Training and Support: Training requirements and ongoing support provisions from the master franchisee
8. Intellectual Property: Use of trademarks, copyright materials, and other IP owned by the franchisor
9. Operations Manual: Reference to and compliance with the franchise system's operations manual
10. Quality Control: Standards and requirements for maintaining quality and consistency
11. Marketing and Advertising: Marketing obligations and restrictions, including local area marketing
12. Reporting Requirements: Financial and operational reporting obligations
13. Sub-Franchisee Obligations: Detailed responsibilities and commitments of the sub-franchisee
14. Master Franchisee Obligations: Ongoing support and obligations of the master franchisee
15. Insurance: Required insurance coverage and minimum limits
16. Default and Termination: Events of default, remedies, and termination procedures
17. Post-Termination Obligations: Obligations and restrictions after agreement termination
18. Dispute Resolution: Process for resolving disputes, including mediation and arbitration
19. Confidentiality: Protection of confidential information and trade secrets
20. Assignment: Restrictions and conditions for transferring the sub-franchise
21. General Provisions: Standard legal provisions including notices, governing law, and entire agreement
1. Multi-Unit Rights: Used when granting rights to operate multiple units or territories
2. Development Schedule: Include when there are specific timeline requirements for opening multiple units
3. Equipment and Suppliers: Required when specific equipment or approved suppliers are mandatory
4. Employee Requirements: Include when there are specific staffing or training requirements
5. Computer Systems: Used when specific POS or management systems are required
6. E-commerce Rights: Include when online sales or digital presence needs regulation
7. Guarantee: Used when personal guarantees from directors/shareholders are required
8. Right of First Refusal: Include when granting rights to acquire additional territories
9. Change of Control: Used when specific provisions for ownership changes are needed
10. Covid-19 or Force Majeure Provisions: Include specific provisions for managing operations during extraordinary circumstances
1. Territory Description: Detailed description and/or maps of the granted territory
2. Initial Fee Schedule: Breakdown of initial fees and payment structure
3. Ongoing Fees Schedule: Details of recurring fees, royalties, and marketing contributions
4. Initial Training Program: Overview of required initial training and support
5. Approved Products and Services: List of authorized products/services for the sub-franchise
6. Equipment and Fit-out Specifications: Required equipment, furniture, and premises specifications
7. KPIs and Performance Criteria: Measurable performance standards and targets
8. Insurance Requirements: Detailed insurance requirements and minimum coverage
9. Form of Guarantee: Standard form of personal/corporate guarantee if required
10. Intellectual Property Schedule: List of trademarks, copyrights, and other IP included in the grant
11. Required Reports and Forms: Ƶ for required operational and financial reporting
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