FRANCHISE AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This Franchise Agreement (The "Agreement") is made and executed into this ________ day of _____________________, 20______ at City/Municipality of ___________________________, Province of ___________________________, by and between:
________, a stock corporation duly organized and validly existing under and by virtue of the laws of the Philippines, with principal address at ________, represented in this act by ________, who holds the following position: ________, hereinafter referred to as the "Franchisor".
- and -
________, a stock corporation duly organized and validly existing under and by virtue of the laws of the Philippines, with principal address at ________, represented in this act by ________, who holds the following position: ________, hereinafter referred to as the "Franchisee".
The Franchisor and the Franchisee shall be referred to collectively as the "Parties".
WITNESSETH THAT:
WHEREAS, the Franchisor is a duly organized business entity under the laws of the Republic of the Philippines and is engaged in the following business:
________;
WHEREAS, the Franchisor has developed, obtained, and spent time, effort, and money to create the above business which the Franchisor wishes to expand.
WHEREAS, the Franchisor hereby agrees to enter into a Franchise Agreement with the Franchisee, under the name of ________, which is the Franchisor's branded mark.
WHEREAS, the Franchisor is willing to allow Franchisee to be part of Franchisor's chain business based on Franchisee's agreement to the terms and conditions stated herein.
NOW THEREFORE, for and in consideration of the promises and covenants contained herein, as well as other good and valuable consideration, the Parties hereto, do hereby agree as follows;
I. DEFINITIONS
1. Marks: The marks are those owned by the Franchisor, including but not limited to, Franchisor's brand mark, ________, as well as any and all other names, trademarks, logos, designs, or other commercial symbols or copyrighted materials as are now designated or referred to by the Franchisor, by which the franchisor refers or identifies to the system. To be specific, the following are the Marks referred to by the Franchisor:
________;
2. System: The system shall mean the trade knowledge, skills, experience, techniques, goodwill, and intellectual property rights in the specifications, design, marketing, licensing, operation, and franchising of the business of the Franchisor as identified by the marks as well as the development, operation, promotion, and utilization of the Franchise Business. The system also includes the products to be sold and the procedures for producing the same.
3. License: License shall refer to the rights of the Franchisee to make use of the Marks and the System within the Location and within the Term referred to in this agreement.
4. Term: The Term of this agreement shall refer to the period of time within which this agreement and the rights granted hereunder will last.
5. Gross Sales: Gross sales shall refer to the total revenue from products sold according to this agreement.
6. Location: Location shall be referred to as the particular geographic location where the Franchisee is allowed to operate the franchise business and use the License. The approved location shall be at: ________.
7. Business: The business shall refer to the ownership of the Franchisee of the License and the right to operate under the same pursuant to the provisions of this Agreement.
8. Products: The following are the products that will be sold through the Business:
________;
9. Commencement Date: The commencement of this agreement shall be on: ________.
10. Opening Date: The estimated date of the opening of the physical premises shall be on: ________.
II. LICENSE GRANTED
The Franchisor hereby grants to the Franchisee the rights to carry on the Business in accordance with this Agreement from the Premises, to utilize the System, and to use the Marks during the period of this Agreement and subject to the terms and conditions hereof.
The Franchisor together with its subsidiaries, affiliates, and related businesses reserves the right to develop, operate, promote, and use the Business including the System and the Marks. In connection therewith, the Franchisee is in no way entitled to the exclusive right to engage in the Business, and the Franchisor's rights in this Agreement shall not be limited to the Business pertaining thereunder, however, the Franchisee shall be entitled to exclusively operate within the approved location.
III. TERM
The Term of this Agreement shall commence on the date listed elsewhere in this agreement and shall expire at the lapse of the period herein stated unless terminated sooner in accordance with the grounds or causes for termination as provided elsewhere in this Agreement. In case of ambiguity in the dates listed in this agreement as to its commencement, the date of the signing by the Parties shall be deemed as the date of commencement which may be different from the listed dates.
The Term shall be effective for the following period: ________, which shall be reckoned from the commencement date as listed elsewhere this agreement or in accordance with the provisions of the preceding paragraph.
IV. RENEWAL
Should the Franchisee provide written notice of their intent to renew the Agreement and should the Agreement be valid and in effect with no breaches of obligations by the Franchisee at the time of notice, then both the Franchisor and Franchisee shall enter into a new standard Agreement. The New Standard Agreement shall be in the form currently offered to new Franchisees and shall commence upon the expiration of this Agreement, and shall be executed within a reasonable time after the approval of the written notice of renewal.
The written notice of renewal shall be given within the following period: ________, prior to the Expiration of this agreement and the approval of which is subject to the sole and exclusive discretion of the Franchisor.
Any and all rights of the Franchisee relating to the physical premises used by the Franchisee, including real rights under a lease contract that extends beyond the term of this agreement shall not cause the automatic renewal and this risk shall be borne by the Franchisee. The Parties further agree that this agreement confers no right to the Franchisee to renew the same nor shall it impose any obligation on the part of the Franchisor to accept or approve the Franchisee's application for renewal.
V. TERMINATION
Should the Franchisee fail to commence operations on the Opening Date, the Franchisor may exercise the following rights at its sole and exclusive discretion:
A. Allow the Franchisee to have reasonable time to make the necessary preparations to properly commence operations prior to the Opening Date.
B. Require the Franchisee to execute a new agreement with a different Opening and Commencement Date.
The Material Breach of this Agreement shall also give rise to its immediate termination by the Franchisor, which shall constitute the following:
A. Fraudulent acts or material misrepresentation on the part of the Franchisee prior, during, or after the execution and in connection with this Agreement.
B. Franchisee is convicted by final judgment of a crime involving moral turpitude or an offense in connection with the conduct of the Business.
C. Franchisee commits any act that infringes or tends to infringe any Intellectual Property Rights owned by the Franchisor related to the Business.
D. Franchisee has lost the right to operate within the approved Location as provided in this agreement.
E. Franchisee has absconded or has abandoned the Business, or when the Franchisor reasonably believes that the Franchisee will abscond, or abandon the Business.
F. Franchisee becomes bankrupt or insolvent.
G. A claim or levy has been made against the Business of the Franchisee, including rights and properties appurtenant thereto.
H. Failure by the Franchisee to pay dues, fees, or other amounts that are due and demandable under this Agreement.
I. Franchisee commits any act that tends to damage or disparage the reputation and the goodwill of the Franchisor.
The enumeration above is not an exhaustive list and any similar acts may constitute a material breach and shall be a cause for the immediate termination of this Agreement.
The Franchisee shall receive a written notice that this agreement is terminated stating clearly and explicitly the grounds constituting the material breach caused by the Franchisee, which shall be given by the Franchisor prior to the termination. For good cause shown, if the Franchisee may be given opportunity to explain and remedy the above-mentioned grounds within a reasonable time subject to the discretion of the Franchisor.
The Termination of this agreement shall give rise to the following rights on the part of the Franchisor:
A. The Franchisor shall retain any fees or amounts paid by the Franchisee under this Agreement.
B. The Franchisor may purchase the interest or rights of the Franchisee over the tangible assets acquired pursuant to this Agreement including but not limited to equipment, products, furniture, fixtures as well as the real property rights obtained by the Franchisor during the course of this Agreement such as commercial rent, or the premises of the Franchise Outlet. The valuation or assessment of such assets shall be made by an independent appraiser.
C. The Franchisor shall retain all rights granted after the termination of this Agreement including the remedies herein provided.
The Termination of this agreement shall not release the Franchisee of those obligations which survive the termination of this Agreement whether by Material Breach or Expiration. Furthermore, the termination shall give rise to the following obligations on the part of the Franchisee:
A. The Franchisee shall cease and desist from using the Marks and the System or any conduct that tends to use the Marks and the System.
B. The Franchisee shall surrender all the materials provided by the Franchisor which contains or may contain any intellectual property belonging to the Franchisor including but not limited to manuals, advertising materials, marketing materials, data sheets, memoranda, or written instructions provided by the Franchisor.
C. The Franchisee shall cause the removal of fixtures, signs, displays or advertisements which show the Marks or identifying or distinguishing marks pertaining to the Franchisor.
D. The Franchisee shall pay the fees that remain due and demandable to the Franchisor in accordance with this Agreement including costs, expenses, and damages incurred by the Franchisor.
VI. OBLIGATIONS OF THE FRANCHISOR
The Franchisor shall see to it that the Franchisee's conduct of the Business is in accordance with the standards imposed and agrees:
A. That it shall provide information in the form of a Manual containing the System of the Franchisor which shall serve as the guide for the Franchisee in the conduct of the Business.
B. That the Manual shall be maintained and updated from time to time and any change or modifications thereon shall be duly communicated and notified to the Franchisor.
C. That the Franchisee shall be assisted in the pre-opening of the Business in the physical premises, and shall be guided by the Franchisor in the establishment and efficient operation of the Business during the initial stages. The assistance of the Franchisor shall be provided at its own and exclusive discretion, as it deems appropriate under the circumstances.
D. That the Franchisor shall indemnify and hold Franchisee harmless against any claims arising from the use of the Franchisee of the Marks which constitutes infringement on the rights of any third party. In case such an infringement is alleged to exist, the Franchisee must immediately notify the Franchisor in writing of an action or claim involving such infringement and shall assist the Franchisor in the defense of such action or claim including the settlement of the same if any.
E. That the Franchisor shall provide training to Franchisee's personnel before the Opening Date including the hiring and selection of such personnel. The Franchisor shall not be obligated to train or hire more than is reasonably necessary, and such hiring and training of manpower by the Franchisor shall be done according to its own and exclusive discretion.
F. That the Franchisor shall provide guidance and assistance as it may deem appropriate under its own and exclusive discretion before and during the opening date.
G. That the Franchisor shall provide instruction to the Franchisee regarding the standards for the establishment of layouts, design, or configurations whether interior or exterior, including the furniture, fixtures, brand materials, and equipment.
H. That the Franchisor shall conduct inspections to ensure that the Franchisee is compliant with the standards imposed and the instructions given by the Franchisor.
I. That the Franchisor shall provide continuous assistance to the Franchisee by giving advisory opinions, instructions, and information in the form of updated memoranda, data sheets, and other relevant business materials.
J. That the Franchisee shall be duly informed of all the developments and changes to the products of the Business.
VII. OBLIGATIONS OF THE FRANCHISEE
1. Fees
1.1. Initial Fee: The Franchisee shall pay the Initial Fee of ₱________ (________) to the Franchisor in exchange for the rights granted hereunder and in consideration of the commencement and opening of a new Business as defined in this Agreement. The payment of the Initial Fee shall be made in the following manner:
The above stated amount shall be paid immediately upon signing this agreement.
The Franchisee agrees that the Initial Fee shall be non-refundable.
The failure on the part of the Franchisee to pay the Initial Fee shall give rise to the right on the part of the Franchisor to declare this agreement void ab initio and shall entitle the Franchisor to keep the portion of such fee that has already been paid. Such failure shall also cause the cessation of any obligations on the part of the Franchisor as agreed upon by the Parties prior and succeeding to the declaration of this agreement as void ab initio subject to provisions of this agreement.
1.2. Franchise Fees: The Franchise Fee shall be paid on a fixed single payment of the amount of ₱________ (________ ) immediately upon signing this agreement.
1.3. Royalty Fees: The use of the Brand Marks or the Marks as defined in this agreement by the Franchisee shall be subject to the payment of Royalty Fees:
The payment of the Royalty Fees shall be in a fixed amount of ₱________ (________ ) which shall be made using the frequency stated in the succeeding paragraph.
The Royalty Fee shall be paid monthly, which shall begin immediately upon signing this agreement.
1.4. Penalty: The Franchisee shall be liable for penalties by reason of failure to pay on the date when fees, as stated herein, becomes due and demandable. The penalties shall be equivalent to ________ Percent (________%) of the amount of fees which are due and demandable.
1.5. Payment: The abovementioned fees shall be deposited in the following account:
Account number: ________
Account name: ________
Bank/E-wallet: ________
2. Reporting:
The Franchisee agrees to submit a detailed report of the performance of the operations of the Franchise Business including its gross sales, on a periodic basis subject to the instructions of the Franchisor. In case of absence of instruction by the Franchisor, the Franchisee agrees that it must submit such detailed report on a monthly basis.
3.General Obligations
The Franchisee agrees to comply with and maintain the high standards imposed by the Franchisor in the conduct of the Business including the protection of the intellectual property rights such as the Marks and the diligence to exert the highest care and vigilance to protect the goodwill of the Business. The Franchisee agrees:
A. That the Marks shall be carried out in accordance with the instruction of the Franchisor, and no other mark shall be used by the Franchisee other than the Marks as are owned, used, developed, or exploited by the Franchisor.
B. That the instructions and the written Manual provided by the Franchisor shall be followed and adhered to by the Franchisee in the conduct of the Business.
C. That the Franchisee shall only operate the Business within the specified Location according to the operation standards imposed by the Franchisor.
D. That the recommendations of the Franchisor as to the improvement, change, modification, replacement, maintenance, and upkeep of the physical premises shall be followed by the Franchisee. And that the Franchisee shall see to it that this responsibility is maintained in all stages of the operations of the Business.
E. That the Business shall be carried out in the designated Location and shall not be changed without the prior written approval and explicit instructions of the Franchisor.
F. That the commencement of the Business shall begin on the date listed elsewhere this agreement.
G. That the requirements of the Franchisor for the operations of the Business as are updated from time to time with due notification to the Franchisor shall be complied with diligently by the Franchisee.
4.Obligations to the Franchisor's Intellectual Property Rights
In general, the Franchisee agrees that the Franchisor is the owner of the Intellectual Property Rights referred to in this agreement and that the Franchisee has no ownership over the Marks and other Intellectual Property Rights of the Franchisor. The intellectual property rights of the Franchisor shall be protected by the Franchisee and the Franchisee shall adhere to the standards and provisions provided in this Agreement. The Franchisee agrees:
A. That the Marks of the Franchisor shall be used only, solely and exclusively for the purposes of making known the same, advertising and promoting the brand, and that the utilization of the Marks shall adhere to the instructions, standards, or directions of the Franchisor and shall always be done in connection with the Business.
B. That the Franchisee shall not in any manner prejudice, or damage the goodwill of the brand nor use the Marks and other intellectual property rights of the Franchisor that will result in the disparagement or detraction from the Franchisor's reputation.
C. That the advertisement of any marketing materials shall be subject to the Franchisor's approval. In case such marketing materials have been advertised without the prior written approval of the Franchisor, the Franchisee agrees to submit the same for approval which shall be granted by the Franchisor within a reasonable period of time.
D. That the Franchisee shall comply with the instruction of the Franchisor as to any modification, alteration, or change of the Marks. In connection therewith, the Franchisee agrees that the cost for adhering to such modification shall be borne by it.
E. That the Franchisor may provide guidelines from time to time as to the utilization and presentation of the Marks. In connection therewith, the Franchisee must ensure that the Marks are presented or carried out in devices, equipment, or product presentations as to the color, specifications, and design in accordance with the instructions and directions of the Franchisor.
F. That the Franchisee shall not sublicense, assign, transfer, sell, or in any manner allow a third party to use the Marks.
G. That Franchisee shall not hold itself out as an agent of the Franchisor notwithstanding any dependence on the part of a third-party that such agency exists. In any case, the Franchisee must adhere to the instruction of the Franchisor in such manner as it deems appropriate to state or to make a designation or identification that the Franchisee is a licensee or franchisee of the Franchisor.
H. That the selection of equipment and the utilization of the Marks on the same shall comply with the specifications and instruction that may be provided by the Franchisor.
I. That the Franchisee shall immediately notify the Franchisor in writing if it becomes aware of any form of infringement of the Marks and other intellectual property rights of the Franchisor, committed by any person or entity not in any way connected or affiliated with the Franchisor.
VIII. CONSTRUCTION
The Parties agree that the construction of the physical premises shall be made in the following manner:
________;
IX. NON-COMPETITION
During the Term of this agreement and for the following period: ________, which shall be reckoned from the date of termination of this agreement whether by expiration of the Term, declaration of nullity, or by reason of any material breach of this agreement. The Franchisee shall be prohibited from engaging in a business that is in competition with the Franchisor's Business whether directly or indirectly. In particular, the Franchisee agrees:
A. That it shall not poach nor solicit customers and clients of the Franchisor for the purposes of obtaining business, supplying, selling, or offering products and services, or other similar activities during the period of time as stated in this Article.
B. That it shall not employ or attempt to employ the personnel, employees, staff, officers, affiliates, or any person employed by the Franchisor within the same period.
C. That it shall not make use of the trade secrets or any business information of confidential value that are obtained by the Franchisee during, prior, or after the course of the agreement and within the same period.
The above enumeration is not an exhaustive list and any act committed by the Franchisee that competes with the Franchisor or any act that gives Franchisee competitive and commercial advantage over the Franchisor, shall be dealt with according to the available remedies provided by law.
X. INSURANCE
The Franchisee shall be obliged to obtain and maintain an insurance coverage that is amenable to the Franchisor pursuant to the Franchisor's directives. This coverage shall be coterminous with the term of this agreement.
The insurance coverage shall be subject to the following requirements:
________;
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XIII. SUPPORTING DOCUMENTS AND ADDITIONAL ACTS
The Parties agree to execute such other documents as are reasonable and necessary for the proper implementation of this Agreement.
XIV. APPLICABLE LAW
This Agreement shall be governed by and construed in accordance with the laws of the Republic of the Philippines.
XV. WAIVER
Failure of either party to insist, in one or more instances, the strict performance of any of the terms of this Agreement, or to exercise any portion herein contained, shall thereafter not be construed as abandonment or cancellation or waiver of such term. No waiver shall be deemed to have been made unless expressed in writing and signed by Franchisor or Franchisee. No waiver of any term or provision of this Agreement shall constitute a waiver of any other term or provision or of the same provision on a future date.
XVI. COUNTERPARTS
This Agreement may be executed in counterparts, all of which constitute a single agreement. If the dates set forth at the signatures of this document are different, the Agreement shall be considered effective as of the date that both Franchisor and Franchisee signed the Agreement.
XVII. SEVERABILITY
The invalidity of any portion of this Agreement will not and shall not be deemed to affect the validity of any other provision. In the event that any provision of this Agreement is held to be invalid, Franchisor and Franchisee agree that the remaining provisions shall be deemed to be in full force and effect as if they had been executed subsequent to the expungement of the invalid provision.
XVIII. CUMULATIVE RIGHTS
The rights of the Parties under this Agreement and the law are cumulative and shall not be construed as exclusive unless otherwise required by law.
XIX. HEADINGS
Headings are for convenience only and do not affect the interpretation of this Agreement.
XX. SUCCESSORS AND ASSIGNS
This Contract shall be binding on the successors and assigns of both Parties.
XXI. ENTIRETY OF AGREEMENT
This Agreement represents the entire agreement between Franchisor and Franchisee and supersedes all prior negotiations, representations, and agreements, either oral or written.
XXII. AMENDMENTS AND MODIFICATIONS
This Agreement may be amended only by a written instrument signed and agreed upon by both Parties.
XXIII. FORCE MAJEURE
Neither party shall be liable to the other for failure to perform due to causes beyond its reasonable control including, but not limited to, acts of God, acts of civil authorities, acts of military authorities, riots, embargoes, acts of nature and natural disasters, and other acts which may be due to unforeseen events or though foreseen could not be reasonably avoided.
XXIV. LISTED DATES:
The Franchisee agrees that the commencement of the operations of the Business shall be subject to the prior approval of the Franchisor after reasonable determination that the Franchisee has already adhered to the instructions and specifications provided by the Franchisor according to the terms and conditions under this Agreement. Further, the opening date may be postponed to a later date if the Franchisor reasonably believes that there are other necessary preparations or matters that must be settled as to the commencement of the operations of the Business.
IN WITNESS WHEREOF, the Parties have hereunto affixed their signatures on the date and place first stated above.
________
Franchisor
By:
________
________
________
Franchisee
By:
________
________
ACKNOWLEDGEMENT
REPUBLIC OF THE PHILIPPINES )
PROVINCE OF ________________________ )
CITY OR MUNICIPALITY OF ________________________ )S.S.
BEFORE ME, a Notary Public, for and in the CITY OR MUNICIPALITY OF ________________________, ________________________, this _______ day of ________________________, 20______, personally appeared the following persons:
1. ________, the duly-authorized representative of ________, with the following competent proof of identification: Driver's License with number ________ which expires on ________
2. ________, the duly authorized representative of ________, with the following competent proof of identification: Driver's License with number ________ which expires on ________
known to me and to me known to be the same persons who executed the foregoing Franchise Agreement constituting of _________ pages, including this page where the Acknowledgement is written, and they acknowledged to me that the same is their free and voluntary act and deed.
WITNESS MY HAND AND SEAL on the day and place first written above.
Doc No. ________;
Page No. ________;
Book No. ________;
Series of ________.
FRANCHISE AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This Franchise Agreement (The "Agreement") is made and executed into this ________ day of _____________________, 20______ at City/Municipality of ___________________________, Province of ___________________________, by and between:
________, a stock corporation duly organized and validly existing under and by virtue of the laws of the Philippines, with principal address at ________, represented in this act by ________, who holds the following position: ________, hereinafter referred to as the "Franchisor".
- and -
________, a stock corporation duly organized and validly existing under and by virtue of the laws of the Philippines, with principal address at ________, represented in this act by ________, who holds the following position: ________, hereinafter referred to as the "Franchisee".
The Franchisor and the Franchisee shall be referred to collectively as the "Parties".
WITNESSETH THAT:
WHEREAS, the Franchisor is a duly organized business entity under the laws of the Republic of the Philippines and is engaged in the following business:
________;
WHEREAS, the Franchisor has developed, obtained, and spent time, effort, and money to create the above business which the Franchisor wishes to expand.
WHEREAS, the Franchisor hereby agrees to enter into a Franchise Agreement with the Franchisee, under the name of ________, which is the Franchisor's branded mark.
WHEREAS, the Franchisor is willing to allow Franchisee to be part of Franchisor's chain business based on Franchisee's agreement to the terms and conditions stated herein.
NOW THEREFORE, for and in consideration of the promises and covenants contained herein, as well as other good and valuable consideration, the Parties hereto, do hereby agree as follows;
I. DEFINITIONS
1. Marks: The marks are those owned by the Franchisor, including but not limited to, Franchisor's brand mark, ________, as well as any and all other names, trademarks, logos, designs, or other commercial symbols or copyrighted materials as are now designated or referred to by the Franchisor, by which the franchisor refers or identifies to the system. To be specific, the following are the Marks referred to by the Franchisor:
________;
2. System: The system shall mean the trade knowledge, skills, experience, techniques, goodwill, and intellectual property rights in the specifications, design, marketing, licensing, operation, and franchising of the business of the Franchisor as identified by the marks as well as the development, operation, promotion, and utilization of the Franchise Business. The system also includes the products to be sold and the procedures for producing the same.
3. License: License shall refer to the rights of the Franchisee to make use of the Marks and the System within the Location and within the Term referred to in this agreement.
4. Term: The Term of this agreement shall refer to the period of time within which this agreement and the rights granted hereunder will last.
5. Gross Sales: Gross sales shall refer to the total revenue from products sold according to this agreement.
6. Location: Location shall be referred to as the particular geographic location where the Franchisee is allowed to operate the franchise business and use the License. The approved location shall be at: ________.
7. Business: The business shall refer to the ownership of the Franchisee of the License and the right to operate under the same pursuant to the provisions of this Agreement.
8. Products: The following are the products that will be sold through the Business:
________;
9. Commencement Date: The commencement of this agreement shall be on: ________.
10. Opening Date: The estimated date of the opening of the physical premises shall be on: ________.
II. LICENSE GRANTED
The Franchisor hereby grants to the Franchisee the rights to carry on the Business in accordance with this Agreement from the Premises, to utilize the System, and to use the Marks during the period of this Agreement and subject to the terms and conditions hereof.
The Franchisor together with its subsidiaries, affiliates, and related businesses reserves the right to develop, operate, promote, and use the Business including the System and the Marks. In connection therewith, the Franchisee is in no way entitled to the exclusive right to engage in the Business, and the Franchisor's rights in this Agreement shall not be limited to the Business pertaining thereunder, however, the Franchisee shall be entitled to exclusively operate within the approved location.
III. TERM
The Term of this Agreement shall commence on the date listed elsewhere in this agreement and shall expire at the lapse of the period herein stated unless terminated sooner in accordance with the grounds or causes for termination as provided elsewhere in this Agreement. In case of ambiguity in the dates listed in this agreement as to its commencement, the date of the signing by the Parties shall be deemed as the date of commencement which may be different from the listed dates.
The Term shall be effective for the following period: ________, which shall be reckoned from the commencement date as listed elsewhere this agreement or in accordance with the provisions of the preceding paragraph.
IV. RENEWAL
Should the Franchisee provide written notice of their intent to renew the Agreement and should the Agreement be valid and in effect with no breaches of obligations by the Franchisee at the time of notice, then both the Franchisor and Franchisee shall enter into a new standard Agreement. The New Standard Agreement shall be in the form currently offered to new Franchisees and shall commence upon the expiration of this Agreement, and shall be executed within a reasonable time after the approval of the written notice of renewal.
The written notice of renewal shall be given within the following period: ________, prior to the Expiration of this agreement and the approval of which is subject to the sole and exclusive discretion of the Franchisor.
Any and all rights of the Franchisee relating to the physical premises used by the Franchisee, including real rights under a lease contract that extends beyond the term of this agreement shall not cause the automatic renewal and this risk shall be borne by the Franchisee. The Parties further agree that this agreement confers no right to the Franchisee to renew the same nor shall it impose any obligation on the part of the Franchisor to accept or approve the Franchisee's application for renewal.
V. TERMINATION
Should the Franchisee fail to commence operations on the Opening Date, the Franchisor may exercise the following rights at its sole and exclusive discretion:
A. Allow the Franchisee to have reasonable time to make the necessary preparations to properly commence operations prior to the Opening Date.
B. Require the Franchisee to execute a new agreement with a different Opening and Commencement Date.
The Material Breach of this Agreement shall also give rise to its immediate termination by the Franchisor, which shall constitute the following:
A. Fraudulent acts or material misrepresentation on the part of the Franchisee prior, during, or after the execution and in connection with this Agreement.
B. Franchisee is convicted by final judgment of a crime involving moral turpitude or an offense in connection with the conduct of the Business.
C. Franchisee commits any act that infringes or tends to infringe any Intellectual Property Rights owned by the Franchisor related to the Business.
D. Franchisee has lost the right to operate within the approved Location as provided in this agreement.
E. Franchisee has absconded or has abandoned the Business, or when the Franchisor reasonably believes that the Franchisee will abscond, or abandon the Business.
F. Franchisee becomes bankrupt or insolvent.
G. A claim or levy has been made against the Business of the Franchisee, including rights and properties appurtenant thereto.
H. Failure by the Franchisee to pay dues, fees, or other amounts that are due and demandable under this Agreement.
I. Franchisee commits any act that tends to damage or disparage the reputation and the goodwill of the Franchisor.
The enumeration above is not an exhaustive list and any similar acts may constitute a material breach and shall be a cause for the immediate termination of this Agreement.
The Franchisee shall receive a written notice that this agreement is terminated stating clearly and explicitly the grounds constituting the material breach caused by the Franchisee, which shall be given by the Franchisor prior to the termination. For good cause shown, if the Franchisee may be given opportunity to explain and remedy the above-mentioned grounds within a reasonable time subject to the discretion of the Franchisor.
The Termination of this agreement shall give rise to the following rights on the part of the Franchisor:
A. The Franchisor shall retain any fees or amounts paid by the Franchisee under this Agreement.
B. The Franchisor may purchase the interest or rights of the Franchisee over the tangible assets acquired pursuant to this Agreement including but not limited to equipment, products, furniture, fixtures as well as the real property rights obtained by the Franchisor during the course of this Agreement such as commercial rent, or the premises of the Franchise Outlet. The valuation or assessment of such assets shall be made by an independent appraiser.
C. The Franchisor shall retain all rights granted after the termination of this Agreement including the remedies herein provided.
The Termination of this agreement shall not release the Franchisee of those obligations which survive the termination of this Agreement whether by Material Breach or Expiration. Furthermore, the termination shall give rise to the following obligations on the part of the Franchisee:
A. The Franchisee shall cease and desist from using the Marks and the System or any conduct that tends to use the Marks and the System.
B. The Franchisee shall surrender all the materials provided by the Franchisor which contains or may contain any intellectual property belonging to the Franchisor including but not limited to manuals, advertising materials, marketing materials, data sheets, memoranda, or written instructions provided by the Franchisor.
C. The Franchisee shall cause the removal of fixtures, signs, displays or advertisements which show the Marks or identifying or distinguishing marks pertaining to the Franchisor.
D. The Franchisee shall pay the fees that remain due and demandable to the Franchisor in accordance with this Agreement including costs, expenses, and damages incurred by the Franchisor.
VI. OBLIGATIONS OF THE FRANCHISOR
The Franchisor shall see to it that the Franchisee's conduct of the Business is in accordance with the standards imposed and agrees:
A. That it shall provide information in the form of a Manual containing the System of the Franchisor which shall serve as the guide for the Franchisee in the conduct of the Business.
B. That the Manual shall be maintained and updated from time to time and any change or modifications thereon shall be duly communicated and notified to the Franchisor.
C. That the Franchisee shall be assisted in the pre-opening of the Business in the physical premises, and shall be guided by the Franchisor in the establishment and efficient operation of the Business during the initial stages. The assistance of the Franchisor shall be provided at its own and exclusive discretion, as it deems appropriate under the circumstances.
D. That the Franchisor shall indemnify and hold Franchisee harmless against any claims arising from the use of the Franchisee of the Marks which constitutes infringement on the rights of any third party. In case such an infringement is alleged to exist, the Franchisee must immediately notify the Franchisor in writing of an action or claim involving such infringement and shall assist the Franchisor in the defense of such action or claim including the settlement of the same if any.
E. That the Franchisor shall provide training to Franchisee's personnel before the Opening Date including the hiring and selection of such personnel. The Franchisor shall not be obligated to train or hire more than is reasonably necessary, and such hiring and training of manpower by the Franchisor shall be done according to its own and exclusive discretion.
F. That the Franchisor shall provide guidance and assistance as it may deem appropriate under its own and exclusive discretion before and during the opening date.
G. That the Franchisor shall provide instruction to the Franchisee regarding the standards for the establishment of layouts, design, or configurations whether interior or exterior, including the furniture, fixtures, brand materials, and equipment.
H. That the Franchisor shall conduct inspections to ensure that the Franchisee is compliant with the standards imposed and the instructions given by the Franchisor.
I. That the Franchisor shall provide continuous assistance to the Franchisee by giving advisory opinions, instructions, and information in the form of updated memoranda, data sheets, and other relevant business materials.
J. That the Franchisee shall be duly informed of all the developments and changes to the products of the Business.
VII. OBLIGATIONS OF THE FRANCHISEE
1. Fees
1.1. Initial Fee: The Franchisee shall pay the Initial Fee of ₱________ (________) to the Franchisor in exchange for the rights granted hereunder and in consideration of the commencement and opening of a new Business as defined in this Agreement. The payment of the Initial Fee shall be made in the following manner:
The above stated amount shall be paid immediately upon signing this agreement.
The Franchisee agrees that the Initial Fee shall be non-refundable.
The failure on the part of the Franchisee to pay the Initial Fee shall give rise to the right on the part of the Franchisor to declare this agreement void ab initio and shall entitle the Franchisor to keep the portion of such fee that has already been paid. Such failure shall also cause the cessation of any obligations on the part of the Franchisor as agreed upon by the Parties prior and succeeding to the declaration of this agreement as void ab initio subject to provisions of this agreement.
1.2. Franchise Fees: The Franchise Fee shall be paid on a fixed single payment of the amount of ₱________ (________ ) immediately upon signing this agreement.
1.3. Royalty Fees: The use of the Brand Marks or the Marks as defined in this agreement by the Franchisee shall be subject to the payment of Royalty Fees:
The payment of the Royalty Fees shall be in a fixed amount of ₱________ (________ ) which shall be made using the frequency stated in the succeeding paragraph.
The Royalty Fee shall be paid monthly, which shall begin immediately upon signing this agreement.
1.4. Penalty: The Franchisee shall be liable for penalties by reason of failure to pay on the date when fees, as stated herein, becomes due and demandable. The penalties shall be equivalent to ________ Percent (________%) of the amount of fees which are due and demandable.
1.5. Payment: The abovementioned fees shall be deposited in the following account:
Account number: ________
Account name: ________
Bank/E-wallet: ________
2. Reporting:
The Franchisee agrees to submit a detailed report of the performance of the operations of the Franchise Business including its gross sales, on a periodic basis subject to the instructions of the Franchisor. In case of absence of instruction by the Franchisor, the Franchisee agrees that it must submit such detailed report on a monthly basis.
3.General Obligations
The Franchisee agrees to comply with and maintain the high standards imposed by the Franchisor in the conduct of the Business including the protection of the intellectual property rights such as the Marks and the diligence to exert the highest care and vigilance to protect the goodwill of the Business. The Franchisee agrees:
A. That the Marks shall be carried out in accordance with the instruction of the Franchisor, and no other mark shall be used by the Franchisee other than the Marks as are owned, used, developed, or exploited by the Franchisor.
B. That the instructions and the written Manual provided by the Franchisor shall be followed and adhered to by the Franchisee in the conduct of the Business.
C. That the Franchisee shall only operate the Business within the specified Location according to the operation standards imposed by the Franchisor.
D. That the recommendations of the Franchisor as to the improvement, change, modification, replacement, maintenance, and upkeep of the physical premises shall be followed by the Franchisee. And that the Franchisee shall see to it that this responsibility is maintained in all stages of the operations of the Business.
E. That the Business shall be carried out in the designated Location and shall not be changed without the prior written approval and explicit instructions of the Franchisor.
F. That the commencement of the Business shall begin on the date listed elsewhere this agreement.
G. That the requirements of the Franchisor for the operations of the Business as are updated from time to time with due notification to the Franchisor shall be complied with diligently by the Franchisee.
4.Obligations to the Franchisor's Intellectual Property Rights
In general, the Franchisee agrees that the Franchisor is the owner of the Intellectual Property Rights referred to in this agreement and that the Franchisee has no ownership over the Marks and other Intellectual Property Rights of the Franchisor. The intellectual property rights of the Franchisor shall be protected by the Franchisee and the Franchisee shall adhere to the standards and provisions provided in this Agreement. The Franchisee agrees:
A. That the Marks of the Franchisor shall be used only, solely and exclusively for the purposes of making known the same, advertising and promoting the brand, and that the utilization of the Marks shall adhere to the instructions, standards, or directions of the Franchisor and shall always be done in connection with the Business.
B. That the Franchisee shall not in any manner prejudice, or damage the goodwill of the brand nor use the Marks and other intellectual property rights of the Franchisor that will result in the disparagement or detraction from the Franchisor's reputation.
C. That the advertisement of any marketing materials shall be subject to the Franchisor's approval. In case such marketing materials have been advertised without the prior written approval of the Franchisor, the Franchisee agrees to submit the same for approval which shall be granted by the Franchisor within a reasonable period of time.
D. That the Franchisee shall comply with the instruction of the Franchisor as to any modification, alteration, or change of the Marks. In connection therewith, the Franchisee agrees that the cost for adhering to such modification shall be borne by it.
E. That the Franchisor may provide guidelines from time to time as to the utilization and presentation of the Marks. In connection therewith, the Franchisee must ensure that the Marks are presented or carried out in devices, equipment, or product presentations as to the color, specifications, and design in accordance with the instructions and directions of the Franchisor.
F. That the Franchisee shall not sublicense, assign, transfer, sell, or in any manner allow a third party to use the Marks.
G. That Franchisee shall not hold itself out as an agent of the Franchisor notwithstanding any dependence on the part of a third-party that such agency exists. In any case, the Franchisee must adhere to the instruction of the Franchisor in such manner as it deems appropriate to state or to make a designation or identification that the Franchisee is a licensee or franchisee of the Franchisor.
H. That the selection of equipment and the utilization of the Marks on the same shall comply with the specifications and instruction that may be provided by the Franchisor.
I. That the Franchisee shall immediately notify the Franchisor in writing if it becomes aware of any form of infringement of the Marks and other intellectual property rights of the Franchisor, committed by any person or entity not in any way connected or affiliated with the Franchisor.
VIII. CONSTRUCTION
The Parties agree that the construction of the physical premises shall be made in the following manner:
________;
IX. NON-COMPETITION
During the Term of this agreement and for the following period: ________, which shall be reckoned from the date of termination of this agreement whether by expiration of the Term, declaration of nullity, or by reason of any material breach of this agreement. The Franchisee shall be prohibited from engaging in a business that is in competition with the Franchisor's Business whether directly or indirectly. In particular, the Franchisee agrees:
A. That it shall not poach nor solicit customers and clients of the Franchisor for the purposes of obtaining business, supplying, selling, or offering products and services, or other similar activities during the period of time as stated in this Article.
B. That it shall not employ or attempt to employ the personnel, employees, staff, officers, affiliates, or any person employed by the Franchisor within the same period.
C. That it shall not make use of the trade secrets or any business information of confidential value that are obtained by the Franchisee during, prior, or after the course of the agreement and within the same period.
The above enumeration is not an exhaustive list and any act committed by the Franchisee that competes with the Franchisor or any act that gives Franchisee competitive and commercial advantage over the Franchisor, shall be dealt with according to the available remedies provided by law.
X. INSURANCE
The Franchisee shall be obliged to obtain and maintain an insurance coverage that is amenable to the Franchisor pursuant to the Franchisor's directives. This coverage shall be coterminous with the term of this agreement.
The insurance coverage shall be subject to the following requirements:
________;
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XIII. SUPPORTING DOCUMENTS AND ADDITIONAL ACTS
The Parties agree to execute such other documents as are reasonable and necessary for the proper implementation of this Agreement.
XIV. APPLICABLE LAW
This Agreement shall be governed by and construed in accordance with the laws of the Republic of the Philippines.
XV. WAIVER
Failure of either party to insist, in one or more instances, the strict performance of any of the terms of this Agreement, or to exercise any portion herein contained, shall thereafter not be construed as abandonment or cancellation or waiver of such term. No waiver shall be deemed to have been made unless expressed in writing and signed by Franchisor or Franchisee. No waiver of any term or provision of this Agreement shall constitute a waiver of any other term or provision or of the same provision on a future date.
XVI. COUNTERPARTS
This Agreement may be executed in counterparts, all of which constitute a single agreement. If the dates set forth at the signatures of this document are different, the Agreement shall be considered effective as of the date that both Franchisor and Franchisee signed the Agreement.
XVII. SEVERABILITY
The invalidity of any portion of this Agreement will not and shall not be deemed to affect the validity of any other provision. In the event that any provision of this Agreement is held to be invalid, Franchisor and Franchisee agree that the remaining provisions shall be deemed to be in full force and effect as if they had been executed subsequent to the expungement of the invalid provision.
XVIII. CUMULATIVE RIGHTS
The rights of the Parties under this Agreement and the law are cumulative and shall not be construed as exclusive unless otherwise required by law.
XIX. HEADINGS
Headings are for convenience only and do not affect the interpretation of this Agreement.
XX. SUCCESSORS AND ASSIGNS
This Contract shall be binding on the successors and assigns of both Parties.
XXI. ENTIRETY OF AGREEMENT
This Agreement represents the entire agreement between Franchisor and Franchisee and supersedes all prior negotiations, representations, and agreements, either oral or written.
XXII. AMENDMENTS AND MODIFICATIONS
This Agreement may be amended only by a written instrument signed and agreed upon by both Parties.
XXIII. FORCE MAJEURE
Neither party shall be liable to the other for failure to perform due to causes beyond its reasonable control including, but not limited to, acts of God, acts of civil authorities, acts of military authorities, riots, embargoes, acts of nature and natural disasters, and other acts which may be due to unforeseen events or though foreseen could not be reasonably avoided.
XXIV. LISTED DATES:
The Franchisee agrees that the commencement of the operations of the Business shall be subject to the prior approval of the Franchisor after reasonable determination that the Franchisee has already adhered to the instructions and specifications provided by the Franchisor according to the terms and conditions under this Agreement. Further, the opening date may be postponed to a later date if the Franchisor reasonably believes that there are other necessary preparations or matters that must be settled as to the commencement of the operations of the Business.
IN WITNESS WHEREOF, the Parties have hereunto affixed their signatures on the date and place first stated above.
________
Franchisor
By:
________
________
________
Franchisee
By:
________
________
ACKNOWLEDGEMENT
REPUBLIC OF THE PHILIPPINES )
PROVINCE OF ________________________ )
CITY OR MUNICIPALITY OF ________________________ )S.S.
BEFORE ME, a Notary Public, for and in the CITY OR MUNICIPALITY OF ________________________, ________________________, this _______ day of ________________________, 20______, personally appeared the following persons:
1. ________, the duly-authorized representative of ________, with the following competent proof of identification: Driver's License with number ________ which expires on ________
2. ________, the duly authorized representative of ________, with the following competent proof of identification: Driver's License with number ________ which expires on ________
known to me and to me known to be the same persons who executed the foregoing Franchise Agreement constituting of _________ pages, including this page where the Acknowledgement is written, and they acknowledged to me that the same is their free and voluntary act and deed.
WITNESS MY HAND AND SEAL on the day and place first written above.
Doc No. ________;
Page No. ________;
Book No. ________;
Series of ________.
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