The Direct Franchise Agreement is the primary legal instrument used to establish and govern a direct franchising relationship in Nigeria. This document is essential when a franchisor wishes to expand their business through franchising directly to individual franchisees in the Nigerian market, rather than through master franchising or area development arrangements. The agreement must comply with Nigerian legal requirements, including the Companies and Allied Matters Act (CAMA) 2020, relevant intellectual property laws, and the Nigerian Investment Promotion Commission Act for foreign franchisors. It covers all crucial aspects of the franchise relationship, including grant of rights, operational standards, financial obligations, training requirements, and territory restrictions. The document is particularly important in the Nigerian context as it must address specific local business practices, cultural considerations, and regulatory compliance while protecting the franchisor's intellectual property rights and maintaining brand consistency.
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1. Parties: Identification of the franchisor and franchisee, including full legal names and addresses
2. Background: Context of the agreement, brief description of the franchise system and business
3. Definitions: Detailed definitions of terms used throughout the agreement
4. Grant of Franchise: Specific rights being granted to the franchisee, including territory and exclusivity terms
5. Term and Renewal: Duration of the agreement and conditions for renewal
6. Franchise Fees: Initial franchise fee, ongoing royalties, and other financial obligations
7. Franchisor Obligations: Detailed responsibilities of the franchisor including training, support, and guidance
8. Franchisee Obligations: Comprehensive obligations of the franchisee including compliance with system standards
9. Intellectual Property Rights: Usage terms for trademarks, patents, copyright materials, and trade secrets
10. Quality Control: Standards maintenance requirements and inspection rights
11. Training Requirements: Initial and ongoing training obligations and procedures
12. Marketing and Advertising: Marketing obligations, advertising fees, and promotional requirements
13. Reporting Requirements: Financial reporting obligations and record-keeping requirements
14. Transfer and Assignment: Conditions for transferring franchise rights
15. Non-Competition and Confidentiality: Restrictions during and after the agreement term
16. Default and Termination: Circumstances for termination and consequences
17. Post-Termination Obligations: Duties and restrictions after agreement ends
18. Dispute Resolution: Procedures for handling disputes, including arbitration provisions
19. Governing Law: Specification of Nigerian law as governing law and jurisdiction
20. General Provisions: Standard boilerplate clauses including force majeure, notices, and amendments
1. International Operations: Required for franchises with international components, covering import/export requirements and currency considerations
2. E-commerce Rights: Needed for franchises with online sales components, defining online territory and operations
3. Equipment Leasing: Include when franchisor leases equipment to franchisee
4. Real Estate Requirements: Necessary when franchise includes specific location requirements or real estate arrangements
5. Supply Chain Obligations: Required when franchise involves specific supplier relationships or exclusive supply arrangements
6. Sub-Franchising Rights: Include if franchisee is granted rights to sub-franchise
7. Multiple Unit Development: Needed for agreements involving development of multiple franchise units
8. Religious/Cultural Compliance: Important for businesses operating in regions with specific religious or cultural requirements
9. Environmental Compliance: Necessary for franchises with significant environmental impact
10. Data Protection: Required for franchises handling significant customer data
1. Schedule 1: Property Details: Specifications of approved premises and location requirements
2. Schedule 2: Initial Fee Structure: Detailed breakdown of all initial fees and payment terms
3. Schedule 3: Operations Manual Table of Contents: Overview of the operations manual contents (not full manual)
4. Schedule 4: Training Program: Detailed initial and ongoing training requirements and schedules
5. Schedule 5: Brand Standards: Specific requirements for maintaining brand standards and quality
6. Schedule 6: Approved Products and Services: List of authorized products and services
7. Schedule 7: Approved Suppliers: List of approved suppliers and purchasing requirements
8. Schedule 8: Territory Map: Detailed description and/or map of granted territory
9. Schedule 9: Marketing Guidelines: Specific marketing and advertising requirements and guidelines
10. Schedule 10: Equipment and Inventory Requirements: Required equipment, inventory levels, and specifications
11. Appendix A: Trademark Usage Guidelines: Specific rules for using franchisor's trademarks and branding
12. Appendix B: Financial Reporting Forms: Templates for required financial reports and statements
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