The Franchise Purchase Agreement is a crucial legal document used when establishing a franchise business relationship in the Philippines. It serves as the foundational contract between a franchisor granting business rights and a franchisee purchasing those rights. This agreement must comply with specific Philippine regulations, including the DTI Administrative Order No. 8, Series of 1998, the Intellectual Property Code, and the Securities Regulation Code. The document comprehensively covers all aspects of the franchise relationship, including initial fees, ongoing royalties, operational requirements, training obligations, quality control standards, and termination conditions. It includes mandatory disclosures required by Philippine law and typically incorporates various schedules and appendices detailing specific operational requirements and standards. The agreement is essential for protecting both parties' interests and ensuring clear understanding of rights, obligations, and performance expectations in the franchise relationship.
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1. Parties: Identification of the franchisor and franchisee with complete legal names and addresses
2. Background: Context of the agreement, brief description of the franchise system, and business concept
3. Definitions: Detailed definitions of key terms used throughout the agreement
4. Grant of Franchise: Specific rights being granted, territory limitations, 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: Training, support, operations manual, ongoing assistance, and other franchisor commitments
8. Franchisee's Obligations: Operational requirements, compliance with standards, reporting obligations, and performance metrics
9. Intellectual Property Rights: Use of trademarks, trade secrets, and other intellectual property
10. Training and Support: Initial and ongoing training requirements, support services provided
11. Marketing and Advertising: Marketing obligations, advertising fund contributions, and local marketing requirements
12. Quality Control: Standards maintenance, inspection rights, and compliance requirements
13. Records and Reporting: Financial record-keeping requirements and reporting obligations
14. Transfer and Assignment: Conditions for transfer of franchise rights and change of ownership
15. Termination: Grounds for termination, notice requirements, and consequences
16. Post-Termination Obligations: Obligations after agreement ends, including non-compete and confidentiality
17. Dispute Resolution: Process for resolving disputes, including mediation and arbitration procedures
18. Governing Law: Specification of Philippine law as governing law and jurisdiction
1. Multi-Unit Development: Used when granting rights to develop multiple franchise units
2. E-commerce Rights: Included when online sales channels are part of the franchise system
3. International Operations: Required for franchises with international components or cross-border operations
4. Equipment Leasing: Included when the franchisor provides equipment leasing arrangements
5. Guarantee: Used when personal guarantees from franchisee's principals are required
6. Site Selection and Development: Included when the franchisor is involved in location selection and development
7. Supply Chain Requirements: Required when specific supplier relationships or procurement processes are mandatory
1. Schedule A - Territory Description: Detailed description of the granted territory with maps and boundaries
2. Schedule B - Initial Franchise Fee and Other Charges: Comprehensive breakdown of all fees and payment structures
3. Schedule C - Approved Products and Services: List of authorized products and services to be offered
4. Schedule D - Brand Standards Manual Summary: Key operational standards and brand requirements
5. Schedule E - Initial Training Program: Details of required initial training and support
6. Schedule F - Approved Suppliers: List of approved suppliers and procurement requirements
7. Schedule G - Required Equipment and Inventory: Specifications for required equipment and initial inventory
8. Schedule H - Form of Confidentiality Agreement: Standard confidentiality agreement for employees
9. Schedule I - Marketing Guidelines: Detailed marketing and advertising requirements
10. Appendix 1 - Financial Disclosure Document: Required financial disclosures under Philippine regulations
11. Appendix 2 - Personal Guarantee Form: Standard form for personal guarantees if required
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