The Franchise Sale Agreement is a crucial legal document used in the Philippine business environment when a business owner (franchisor) grants another party (franchisee) the right to operate under their established business system and brand. This agreement is particularly important in the Philippine context, where franchising has become a popular business expansion model and is regulated by specific legislation including DTI Administrative Order No. 8 and the Intellectual Property Code. The document must include mandatory disclosures, specify operational standards, outline financial obligations, and protect intellectual property rights while ensuring compliance with local laws. It serves as the foundational document governing the entire franchise relationship, typically used when establishing new franchise locations or transferring existing franchise rights. The agreement must be carefully structured to address both the unique aspects of Philippine business law and the practical requirements of operating a franchise in the local market.
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1. Parties: Identifies and provides full details of the franchisor and franchisee
2. Background: Describes the franchise system, business concept, and franchisor's ownership of intellectual property
3. Definitions: Defines key terms used throughout the agreement
4. Grant of Franchise: Specifies the rights being granted, territory, and exclusivity terms
5. Term and Renewal: States the initial term of the agreement and conditions for renewal
6. Fees and Payments: Details initial franchise fee, ongoing royalties, advertising contributions, and payment terms
7. Franchisor's Obligations: Lists all obligations including training, support, and operational assistance
8. Franchisee's Obligations: Details franchisee's operational requirements, standards compliance, and reporting duties
9. Training Requirements: Specifies initial and ongoing training requirements
10. Intellectual Property: Covers usage of trademarks, trade secrets, and other IP rights
11. Marketing and Advertising: Details marketing requirements, advertising fund contributions, and local marketing obligations
12. Operations Standards: Sets forth required operational procedures and quality standards
13. Records and Reporting: Specifies record-keeping requirements and reporting obligations
14. Insurance and Indemnification: Details required insurance coverage and indemnification obligations
15. Transfer and Assignment: States conditions for transfer of franchise rights
16. Termination: Lists grounds for termination and procedures
17. Post-Termination Obligations: Details obligations after agreement ends
18. Dispute Resolution: Specifies procedures for resolving disputes
19. Governing Law: Establishes Philippine law as governing law and jurisdiction
20. General Provisions: Includes standard boilerplate clauses
1. Non-Competition: Restrictions on competing businesses during and after the franchise term - include when protecting market territory is crucial
2. E-commerce Rights: Online sales and digital presence requirements - include for franchises with digital components
3. Multi-Unit Development: Terms for operating multiple franchise units - include for area development agreements
4. Supply Chain Requirements: Specific supplier relationships and requirements - include for franchises with specialized supply needs
5. Real Estate Requirements: Location selection and approval process - include for brick-and-mortar operations
6. International Operations: Special provisions for international aspects - include for franchises with cross-border elements
7. Guarantees: Personal guarantees from franchisee principals - include for additional security
8. Change of Control: Procedures for ownership changes - include for corporate franchisees
1. Schedule A - Franchise Territory: Detailed description and/or maps of the authorized territory
2. Schedule B - Initial Franchise Fee and Royalties: Comprehensive breakdown of all fees and payment structures
3. Schedule C - Mandatory Equipment and Supplies: List of required equipment, supplies, and approved suppliers
4. Schedule D - Initial Training Program: Details of training requirements, duration, and content
5. Schedule E - Operations Manual Table of Contents: Overview of operations manual contents (manual itself remains confidential)
6. Schedule F - Intellectual Property: List of trademarks, patents, and other IP being licensed
7. Schedule G - Standard Operating Procedures: Key operational requirements and standards
8. Schedule H - Form of Confidentiality Agreement: Standard confidentiality agreement for employees
9. Schedule I - Insurance Requirements: Detailed insurance coverage requirements
10. Appendix 1 - Disclosure Statement: Mandatory franchise disclosure document per Philippine regulations
11. Appendix 2 - Financial Projections: Sample financial projections and assumptions
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