The Franchise Disclosure Agreement serves as a crucial pre-contractual document in the New Zealand franchise industry, required before finalizing any franchise agreement. This document is essential for compliance with New Zealand's commercial laws, particularly the Fair Trading Act 1986, which mandates transparent and accurate business disclosures. The agreement typically precedes the main franchise agreement and must be provided to potential franchisees with sufficient time for review and due diligence. It contains comprehensive information about the franchise system, including financial details, operational requirements, intellectual property rights, territory restrictions, and support services. The document helps protect both franchisors and franchisees by ensuring full disclosure of material information and reducing the risk of future disputes.
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1. Parties: Identification of the franchisor and potential franchisee
2. Background: Context of the disclosure, including brief description of the franchise system and purpose of the document
3. Definitions: Detailed definitions of terms used throughout the document
4. Franchisor Details: Complete business information, history, and corporate structure of the franchisor
5. Business System Description: Detailed description of the franchise system, business model, and operational methods
6. Intellectual Property Rights: Details of trademarks, patents, copyright, and other intellectual property involved in the franchise
7. Financial Information: Financial disclosures including setup costs, ongoing fees, and financial obligations
8. Territory Rights: Definition and details of territorial rights and restrictions
9. Operating Requirements: Overview of operational standards and requirements
10. Training and Support: Details of initial and ongoing training and support provided
11. Obligations: Respective obligations of franchisor and franchisee
12. Term and Renewal: Duration of franchise agreement and renewal conditions
13. Termination: Circumstances and procedures for termination
14. Post-Termination Obligations: Obligations and restrictions following termination
15. Acknowledgment: Franchisee acknowledgment of receipt and understanding of disclosures
1. International Operations: Required if the franchise operates internationally or has plans for international expansion
2. Multi-Unit Rights: Include when offering rights to operate multiple franchise units
3. Supply Chain Requirements: Needed when there are specific supplier relationships or requirements
4. E-commerce Provisions: Required for franchises with online operations or restrictions
5. Social Media Policy: Include for franchises with significant social media presence or requirements
6. Crisis Management: Important for food service or high-risk business models
7. Alternative Dispute Resolution: Optional section for specific dispute resolution procedures
1. Schedule 1 - Financial Statements: Detailed financial statements and projections
2. Schedule 2 - Current Franchisees: List of current franchisees and their contact information
3. Schedule 3 - Intellectual Property Details: Comprehensive list of trademarks, patents, and other IP
4. Schedule 4 - Initial Setup Costs: Detailed breakdown of all startup costs and expenses
5. Schedule 5 - Equipment Requirements: Specifications for required equipment and suppliers
6. Schedule 6 - Training Program: Detailed training schedule and requirements
7. Schedule 7 - Operations Manual Summary: Overview of the operations manual contents
8. Schedule 8 - Territory Map: Detailed mapping of territorial rights and exclusions
9. Schedule 9 - Form of Franchise Agreement: Draft or template of the actual franchise agreement
10. Appendix A - Disclosure Statement Receipt: Acknowledgment form for receipt of disclosure document
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