Fillable Printable Sub-Franchise Agreement

Sub-Franchise Agreement

SUB-FRANCHISE AGREEMENT

THIS AGREEMENT made as of the _____ day _________, _____ by and between

Franchisor Corp Name, a [jurisdiction] corporation, located at

[address in full]

(hereinafter the "Franchisor")

and

Sub-franchise Corp Name located at

[address in full]

(hereinafter referred to as the "Sub-franchisor").

WITNESSETH:

WHEREAS, Franchisor, its subsidiaries and its affiliates have acquired, developed and innovated unique

methods of merchandising, promotion, production, quality control and distribution of food products and

clothing for the franchised operation of [name of franchised operation] under the trademark and trade

name of “___” (the "Trademarks") as described in Franchisor's Sub-franchise Uniform Franchise Offering

Circular ("Sub-franchise UFOC") which has been previously received by Sub-franchisor; and

WHEREAS, Sub-franchisor acknowledges receipt on [Insert Date] (the "Disclosure Date") of the Sub-

franchise UFOC and Franchise UFOC; and

WHEREAS, Franchisor is authorized to issue [trademark name] Sub-franchise agreements and [name of

franchised operation] franchise agreements in the State of [State] including the Counties of [Counties]

(approximate population xxxx); and

WHEREAS, Franchisor awards [name of franchised operation] franchise agreements for traditional and

nontraditional [name of franchised operation]. Nontraditional [name of franchised operation] shall be

deemed to be [name of franchised operation] installed within another primary business such as colleges,

universities, convenience stores, supermarkets, hospitals, department stores, etc. Traditional [name of

franchised operation] are generally developed via the execution of a lease for the [name of franchised

operation] premises by a subsidiary leasing corporation of the Franchisor which is subleased to the

approved [name of franchised operation] franchisee. Nontraditional [name of franchised operation] are

developed by the execution of a standard [name of franchised operation] nontraditional franchise

agreement without the execution of a lease for the [name of franchised operation] premises, except in

certain circumstances when a lease is obtained; and

WHEREAS, pursuant to this Agreement and as described in the UFOC, Sub-franchisor is obligated to

provide to [name of franchised operation] support services on behalf of Franchisor including, but not

limited to, assistance in the nature of consultation, advice and guidance regarding location selection, lease

negotiations, construction coordination, "Grand Openings", store training, marketing advice and

implementation, promotions, point of sale purchases or any other administrative tasks designated by

Franchisor as support programs that need to be implemented for proper management of the Territory

(collectively the "Support Services"); and

WHEREAS, it is the desire of Sub-franchisor to become a regional support entity to provide the Support

Services in the Territory required by Franchisor in order to receive a portion of the initial and continuing

franchise fees received from each franchisee in the Territory as hereinafter described and in the UFOC;

and

WHEREAS, Franchisor is willing to sell and grant to Sub-franchisor, a Sub-franchise agreement, under

the terms and conditions set forth herein for the Counties of [Counties], State of [State] (hereinafter the

"Territory"); and

WHEREAS, after consultation with independent counsel and a diligent investigation of all available

information, Sub-franchisor is willing to purchase and receive a grant by Franchisor of a Sub-franchise

agreement, under the terms and conditions set forth herein for the Territory.

NOW, THEREFORE, in consideration of the mutual promises and covenants, it is mutually agreed as

follows:

1. CONSIDERATION:

In consideration of Franchisor's execution of this Agreement, Sub-franchisor agrees to pay to Franchisor

the non-refundable sum of $FEE (the "Sub-franchise Fee") on the date first above written.

2. GRANT OF EXCLUSIVE SUB-FRANCHISE RIGHTS; TERRITORY; TERM:

2.1 The area subject to this Agreement shall be the Territory defined above.

2.2

The term of this Agreement shall commence simultaneously with the execution of this

Agreement by all relevant parties. The term of this Agreement shall continue for a term of

[number] years (the "Term") unless terminated as provided for herein.

2.3 Subject to compliance with the obligations of Sub-franchisor as contained herein and in the

UFOC, Franchisor hereby grants and conveys to Sub-franchisor the exclusive right to be a Sub-

franchisor of Franchisor in the Territory in connection with the sale of [trademark name]

franchises or branded products in the Territory or with respect to Sub-franchise rights to receive

Sub-franchisor's portion of the receipts obtained from [trademark name] franchisees and branded

product sales for the sale of authorized products under the trademark of “trademark name” and

such other associated names, tag lines and slogans as Franchisor may own or use as described

herein and in the UFOC. Notwithstanding the expiration of the Term, whether by termination,

expiration or otherwise, Sub-franchisor shall retain all rights to receive continuing franchise fees

from [name of franchised operation] developed prior to the termination or expiration of the

Term, including any and all franchise agreement renewals or the relocation of [name of

franchised operation] arising from the expiration of their respective leases (but not for branded

products). Nothing contained in this paragraph shall be deemed to limit or modify the right of

Franchisor (i) to terminate this Agreement for any of the defaults set forth herein subject to any

and all applicable notice and cure rights granted to Sub-franchisor; (ii) to issue [trademark name]

franchise agreements to [trademark name] franchisees in the Territory; or (iii) to require the

leasing corporations to execute master leases and thereafter grant subleases to franchisees in the

Territory. Franchisor agrees that so long as this Agreement is in full force and effect, Franchisor

shall not directly or indirectly issue another [trademark name] Sub-franchise in the Territory or

issue a grant to a third party of any part of Sub-franchisor's rights thereof.

3. OBLIGATIONS OF THE FRANCHISOR:

Franchisor promises and covenants as follows:

3.1

To permit Sub-franchisor to use the Trademarks, its logotypes and any other trademarks or

service marks which Franchisor may authorize and designate for use by Sub-franchisor,

including tag lines and slogans. Sub-franchisor upon Franchisor's request agrees to use the

newest trademarks developed by Franchisor upon the minimum of at least 30 days prior written

notice to Sub-franchisor;

3.2

To furnish by lending Sub-franchisor a copy of the [trademark name] Sub-franchise, Operations,

Local Restaurant Marketing and Construction Manuals (hereinafter collectively the "Manual(s)"),

together with any subsequent changes or amendments thereto. Sub-franchisor agrees not to copy,

publish or duplicate the contents of said Manual except when needed to supply each [trademark

name] franchisee or for dissemination to the officers and key employees of Sub-franchisor;

3.3

To supply Sub-franchisor, free of charge, one complete sample set of all sales materials and

forms, including the standard franchise agreement and applicable UFOC to be delivered to each

prospective franchisee at the first meeting or 10 business days (excluding holidays and

weekends) prior to the execution of a franchise agreement and to be used by Sub-franchisor in

connection with the sale of each individual franchise unit. UFOCs, brochures and sales materials

are generally purchased from printers hired for such purposes;

3.4

To make available to Sub-franchisor the right to consult in person at the office of Franchisor or by

telephone with Franchisor's officials and staff in its [city] office or at such other location

designated by Franchisor about problems relating to design, construction and operation of

franchise units at the office of Franchisor so that Sub-franchisor will have available to it the

experience and expertise of Franchisor. Currently, Franchisor has executive/legal department

offices in [city, state], accounting, operations and sales offices in [city, state] and construction and

equipment offices in [city, state]. Additional or replacement offices may be developed in the

future and the advice and consultation will be provided from the respective offices of Franchisor;

3.5

To provide a training program for 10 days (72 hours) (or such lesser or greater periods as

established by Franchisor) of classroom instruction and for 120 hours of on-the-job training in an

existing [name of franchised operation] in [city, state] or, in Franchisor's sole discretion, in

another area. The training program covers the operational and statistical methods of operating a

[name of franchised operation] and [trademark name] Sub-franchise business, franchise sales,

real estate procurement and marketing. Training shall be attended by the controlling

stockholders of Sub-franchisor if a corporation, all partners if a partnership, all individual

proprietors if a sole proprietorship, and all managing executives and operational supervisors, in

[city, state]. If the ownership, management or operational supervisor is changed, the new

management or executive(s) must also be trained prior to the commencement of their

responsibilities. Payment of all expenses of training, except for salaries of Franchisor's staff and

operating expenses of Franchisor, are the obligation of Sub-franchisor. All travel, lodging,

entertainment and other expenses are solely that of Sub-franchisor. Franchisor shall be

responsible for all costs of actual training including training staff, training facility and the cost of

store operational training;

3.6

As changes in applicable laws occur, to attempt to inform Sub-franchisor of any applicable

federal or state franchise laws. Sub-franchisor acknowledges that such information is generally

provided at the semi-annual Sub-franchisor meetings sponsored by Franchisor and at the annual

convention of Franchisor. This provision shall in no way release Sub-franchisor from its

obligation to comply with all applicable laws;

3.7

To pay all bills, invoices, fees and other obligations that may be owed to Sub-franchisor by

Franchisor, provided Sub-franchisor is in full compliance with this Agreement;

3.8

To coordinate a franchise sales program by providing trained salesperson(s), satisfactory to

Franchisor, to process and sell franchises to franchisee prospects interested in locating in the

Territory obtained by Sub-franchisor or Franchisor. There are no representations, warranties,

commitments or assurances of success by said salesperson(s) and Sub-franchisor agrees to make

no claims whatsoever with respect to the success or failure of Franchisor's salesperson(s) during

the Term;

3.9

To protect and defend Sub-franchisor's right to use, and the validity of, Franchisor's trademarks;

and

3.10

To direct duplicates of sales leads to Sub-franchisor so that Sub-franchisor can work with

Franchisor's salesmen or process sales if Franchisor's salesmen are not involved.

4. FRANCHISOR'S REPRESENTATIONS, ETC.:

Franchisor warrants and represents as follows:

4.1

That Franchisor has the right, title and interest to grant the within agreement and that all rights

granted herein to Sub-franchisor are free and clear of any and all liens, claims or encumbrances;

4.2

That Franchisor has the full power and authority to enter into this Agreement and that the within

agreement and the obligations of Franchisor hereunder does not conflict with nor result in a

breach of any agreement to which Franchisor is a party of or by which Franchisor is otherwise

bound; and

4.3

That Franchisor will protect and defend the rights of Sub-franchisor against third parties claiming

a violation of Articles 4.1 and 4.2 and the validity of the Trademarks at its sole expense.

5. OBLIGATIONS OF THE SUB-FRANCHISOR:

Sub-franchisor promises and covenants as follows:

5.1

To devote its best efforts to develop and manage the Territory, including the provision of sales

assistance to Franchisor's salesmen, opening and servicing of all [name of franchised operation]

and distribution points in the Territory, in accordance with the requirements of Franchisor which

(except for the development requirements in Article 8) may change and vary. To advertise on a

regular basis for franchise prospects in the Territory and to seek to obtain sales prospects by

networking and franchise sales promotional activities, to promptly provide to Franchisor all

pertinent information about responses to such advertising or networking/promotions, and to

thereafter assist Franchisor's sales staff in processing and selling each respective franchise;

5.2

To abide by and strictly comply with the terms, rules and requirements set forth in the UFOC,

Manuals and this Agreement;

5.3

To make no unauthorized promises, representations or commitments in connection with the sale

of franchises other than as furnished or authorized in writing by Franchisor. To attend all

regional and national meetings and the annual [trademark name] conventions when instituted;

5.4

In accordance with the schedules established by Franchisor with respect to policing and

operational/marketing support, to regularly inspect all franchise units within the Territory for

quality operations, appearance and cleanliness and, to use best efforts to assure that franchisees

in the Territory use only Franchisor-approved and authorized foods, supplies, equipment,

furnishings and fixtures. Construction and equipment specifications are set forth in the

Construction Manual and authorized raw materials are set forth in the Operations Manual as

revised from time to time;