DIY Legal Forms

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Franchise Agreement

1. Introduction.Agreement made [date] between [name], with offices at [address] (Franchisor), and [name], residing at [address] (Franchisee).

2. Purpose of Agreement. Franchisor is engaged in the business of manufacturing and distributing [product], similar products, and products used in conjunction with Franchisor's principal products (Products), all under the trade name and mark of "[name]." Franchisee wishes to distribute the products and operate a business under the trade name and trademark.

3. Grant of Franchise. Franchisor grants to Franchisee an exclusive franchise during the term of this Agreement to sell the Products and use Franchisor's trade name in the territory bounded as follows: [description of territory] (Territory). Franchisor also grants to Franchisee a nontransferable license to use the trademark in connection with the franchise granted, but only in the Territory and during the term of this Agreement.

4. Term of Agreement--Extensions. The term of this Agreement shall be [number] years commencing with [date]. The term will be automatically extended for an additional [number] years unless either party notifies the other of its intention not to continue the Agreement in force for the extended term. This notice must be in writing, addressed to the address given above for the party to be notified, mailed by certified or registered mail in U.S. Mail, and posted no later than [number] months before the end of the original term of this Agreement.

5. Early Termination of Agreement. If Franchisee breaches or violates any provision of this Agreement or of the Franchisor's Manual, described in Paragraph 9, and fails to remedy the breach or violation within [number] days following notice by Franchisor, Franchisor may terminate this Agreement at once and without any further notice to Franchisee.

6. Sale of Franchisor's Products to Franchisee. Franchisor will sell to Franchisee all of the Products ordered by Franchisee and that are listed in Franchisor's current catalog. Franchisor may discontinue any of the Products without notice to Franchisee. The purchase price for any of the Products shall be the wholesale price then current as established by the wholesale price lists furnished by Franchisor to all of its franchisees from time to time, exclusive of shipping charges and insurance, if any.

7. Franchisee to Deal in Franchisor's Products Exclusively--No Sales Outside of Territory. Franchisee shall not sell or distribute or offer for sale in the Territory any products, goods, or services that are not manufactured or distributed by Franchisor or that Franchisee has not purchased from Franchisor. Franchisee shall not sell or distribute the Products outside of the Territory.

8. Royalty for Use of Trade Name and Trademark. Franchisee acknowledges that Franchisor, by long usage of its trade name and mark, by continual advertising in all media at great expense to Franchisor, and by the maintenance of quality standards of the highest order for the Products sold under the trade name and mark, has created great demand for the Products and has developed substantial value in the trade name and mark. Franchisee will pay Franchisor a royalty of ........ percent (........%) of Franchisee's gross sales as compensation for the license to use Franchisor's trade name and mark. The royalty is payable quarterly, no later than [number] days following the end of each calendar quarter, and shall be accompanied by an accounting on the form furnished by Franchisor.

9. Franchisee to Comply With Franchisor's Standards. The standards to which Franchisee must conform in the sale and distribution of Franchisor's Products are set out in Franchisor's Manual for Franchisees (Manual), which is made a part of this Agreement by reference. Franchisee acknowledges receipt of a copy of the Manual and acknowledges that Franchisee has read it and is familiar with its provisions. Franchisor reserves the right to amend or revise the Manual from time to time. Any amendment or revision shall be deemed a part of this Agreement upon a receipt of a copy of the amendment or revision by Franchisee. Franchisee acknowledges that adherence to the standards set out in the Manual is essential for the maintenance of Franchisor's trade name and mark, the demand for the Products, and the continued success of Franchisor and all of Franchisor's franchisees. Therefore, any breach of any provision of the Manual can result in the early termination of this Agreement in accordance with Paragraph 5 of this Agreement.

10. Prohibited Use of Trademark.Franchisor's trade name and trademark will be used only in the manner provided in the Manual. It will not be used by Franchisee in any form of advertising unless Franchisee has first obtained Franchisor's written consent to the specific use.

11. Franchisee's Maintenance of Inventory and Service Facilities. Franchisee will maintain an inventory of Franchisor's Products and one or more service facilities in the Territory sufficient to exploit properly the franchise. Franchisor's determination of the sufficiency of Franchisee's inventory and service facilities shall be conclusive on Franchisee.

12. Insurance. Franchisee will obtain and keep in force insurance protecting Franchisee and Franchisor from loss resulting from any third party's death, injury, property damage, or loss, regardless of where the transaction or occurrence giving rise to the loss occurs, or whether it is the result of Franchisee's or Franchisor's acts. The insurance in force at any time shall not be less than ........ dollars ($........) for personal injury per person, ........ dollars ($........) for any accident, and ........ dollars ($........) for property damage for any accident. Franchisee shall not be relieved of this obligation even if Franchisor maintains overlapping insurance.

13. Franchisor May Inspect Franchisee's Records and Premises. Franchisor or Franchisor's representatives may inspect Franchisee's books of account and business records during business hours and upon [number] days written notice to confirm the accuracy of the accountings furnished by Franchisee in accordance with Paragraph 8 and to determine whether Franchisor is in compliance with the provisions of this Agreement and the Manual. Franchisor or Franchisor's representatives may visit and inspect any premises maintained by Franchisee in connection with the franchise to determine whether Franchisee is in compliance with the provisions of this Agreement and the Manual.

14. Effect of Termination of Agreement--Repurchase of Franchisee's Inventory by Franchisor. Upon the termination of this Agreement for any reason, Franchisee will immediately stop the sale and distribution of Franchisor's Products. Within [number] days following the termination of this Agreement, Franchisor and Franchisee or their representatives will take an inventory of Franchisor's Products on hand on Franchisee's premises. Franchisor will repurchase these Products from Franchisee at the price paid for them by Franchisee, less ........ percent (........%). From the total purchase price, Franchisor may deduct any sums owed to Franchisor by Franchisee. Upon delivery to Franchisee of Franchisor's check for the net sum due, Franchisee will deliver to Franchisor a fully executed bill of sale for the Products resold together with all documents that may be required to comply with Local/State/Federal law requirements.

15. Effect of Termination of Agreement--Franchisee's License and Grant Ends. Upon the termination of this Agreement for any reason, Franchisee's right and license to sell or distribute Franchisor's products and to use and exploit Franchisor's trade name and trademark shall cease at once. Any such sale, distribution, use, or exploitation following the termination of this Agreement shall be deemed an infringement of Franchisor's trade name and trademark for which Franchisor may seek relief in equity and law.

16. Restrictive Covenant. For a period of [number] years from the date of termination of this Agreement, Franchisee will not engage in any business in the territory similar to or competitive with Franchisor's business, directly or indirectly, either as principal, partner, agent, manager, employee, stockholder, director, officer, or in any other capacity.

17. Parties Not Partners, Joint Venturers, Etc. This Agreement shall not be construed to constitute a partnership, joint venture, or agency between the parties not to create an employer-employee relationship between Franchisor and Franchisee. Franchisee acknowledges that Franchisee is an independent contractor; the business is Franchisee's own and entirely separate from that of Franchisor; Franchisee will not deal with the public in any other way; or Franchisee will not represent to the public that Franchisee is anything other than that stated in this Paragraph 17.

18. Agreement Not Assignable by Franchisee--Assignable by Franchisor. This Agreement shall inure to the benefit of Franchisor, Franchisor's successors and assigns. The franchise granted by this Agreement is personal to Franchisee and cannot be assigned or transferred by Franchisee through Franchisee's act or by operation of law without Franchisor's written consent. Upon Franchisee's death, insolvency, or bankruptcy, this Agreement shall terminate.

[Name]

By: [Signature]

Franchisor

[Signature]

Franchisee

Witnessed by:

[Signature]

[Address]

*** If Required By State Law ***

This Section for Notary:

ACKNOWLEDGMENT

State of _________

County of ________ [COUNTY]

On [DATE] before me, [NAME OF NOTARY], notary, personally appeared [NAME OF PERSON(S) INVOLVED], personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

Witness my hand and official seal.

Signature ________
Notary

My commission expires: _____

(Seal)