A Franchise Broker Agreement is essential when a franchisor wishes to engage professional intermediaries to expand their franchise network in Canada. This document is typically used when a franchisor needs to establish a formal relationship with experienced brokers who will identify, qualify, and introduce potential franchisees. The agreement must comply with various Canadian regulations, including provincial franchise laws (such as Ontario's Arthur Wishart Act), business brokerage regulations, and federal privacy laws. It outlines crucial elements such as territorial rights, commission structures, compliance requirements, and the scope of the broker's authority. The document is particularly important for maintaining regulatory compliance while protecting both the franchisor's interests and the broker's rights in the franchise sales process.
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1. Parties: Identification of the franchisor and broker, including full legal names and addresses
2. Background: Context of the agreement, brief description of the franchise system, and purpose of engaging a broker
3. Definitions: Key terms used throughout the agreement, including 'Franchise', 'Territory', 'Prospect', 'Qualified Lead', etc.
4. Appointment and Scope: Terms of broker's appointment, exclusivity/non-exclusivity, and detailed scope of services
5. Territory: Definition of geographical area where broker is authorized to operate
6. Broker's Obligations: Detailed responsibilities including lead generation, prospect screening, and compliance requirements
7. Franchisor's Obligations: Support, materials, and information to be provided by the franchisor
8. Commission Structure: Detailed compensation terms, payment triggers, and calculation methods
9. Regulatory Compliance: Requirements for compliance with franchise laws and broker regulations
10. Confidentiality: Protection of confidential information and trade secrets
11. Term and Termination: Duration of agreement, renewal terms, and termination provisions
12. Post-Termination Obligations: Duties and restrictions after agreement ends
13. Representations and Warranties: Standard representations by both parties
14. Indemnification: Mutual indemnification provisions and liability allocation
15. General Provisions: Standard boilerplate clauses including notices, assignment, and governing law
1. Training Requirements: Include when broker needs specific training on franchise system - details training programs and certification requirements
2. Marketing Obligations: Include when broker is responsible for marketing activities - specifies approved methods and cost sharing
3. International Provisions: Include for cross-border activities - addresses international compliance and currency issues
4. Sub-Broker Relationships: Include if broker is permitted to engage sub-brokers - defines terms for such arrangements
5. Non-Compete Provisions: Include when restricting broker from representing competing franchise systems
6. Performance Targets: Include when setting specific sales or lead generation targets - defines minimum performance requirements
7. Dispute Resolution: Include when parties want specific arbitration or mediation procedures
1. Schedule A - Commission Structure: Detailed breakdown of commission rates, bonus structures, and payment terms
2. Schedule B - Territory Map: Detailed map and description of broker's authorized territory
3. Schedule C - Required Documentation: Forms, checklists, and templates broker must use in operations
4. Schedule D - Compliance Procedures: Step-by-step procedures for regulatory compliance
5. Schedule E - Approved Marketing Materials: List and samples of authorized marketing materials and usage guidelines
6. Appendix 1 - Broker Qualification Requirements: Required licenses, certifications, and qualifications
7. Appendix 2 - Reporting Templates: Standard forms for activity reporting and lead tracking
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