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Franchise Agreement Template for New Zealand

A comprehensive legal agreement governed by New Zealand law that establishes and regulates the relationship between a franchisor and franchisee. This document outlines the terms and conditions under which the franchisee is granted the right to operate a business using the franchisor's established business system, intellectual property, and brand. The agreement incorporates provisions compliant with New Zealand's commercial law framework, including the Fair Trading Act 1986 and Contract and Commercial Law Act 2017, while addressing crucial aspects such as operational requirements, fees, territory rights, quality standards, and termination conditions.

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What is a Franchise Agreement?

The Franchise Agreement serves as the foundational legal document for establishing a franchise relationship in New Zealand. It is used when a business (franchisor) wishes to expand its operations by granting rights to another party (franchisee) to operate under its established business system and brand. The agreement comprehensively covers all aspects of the franchise relationship, including initial and ongoing fees, territorial rights, operational requirements, quality standards, and intellectual property usage. This document must comply with New Zealand's commercial law framework, including the Fair Trading Act 1986 and Contract and Commercial Law Act 2017, while also incorporating industry best practices and protecting both parties' interests. The Franchise Agreement is particularly crucial as New Zealand lacks specific franchise legislation, making it essential that all key aspects of the relationship are thoroughly documented.

What sections should be included in a Franchise Agreement?

1. Parties: Identification of the franchisor and franchisee with full legal details

2. Background: Context of the franchise system, brief history, and purpose of the agreement

3. Definitions: Comprehensive list of defined terms used throughout the agreement

4. Grant of Franchise: Specific rights being granted, territory details, and exclusivity provisions

5. Term and Renewal: Initial term of the agreement and conditions for renewal

6. Franchise Fees: Initial franchise fee, ongoing royalties, and payment terms

7. Franchisor Obligations: Support, training, and assistance to be provided by the franchisor

8. Franchisee Obligations: Operating standards, compliance requirements, and performance obligations

9. Intellectual Property: Use of trademarks, patents, copyright, and trade secrets

10. Operations Manual: Reference to and compliance with the operations manual

11. Training Requirements: Initial and ongoing training obligations

12. Marketing and Advertising: Marketing contributions, requirements, and restrictions

13. Records and Reporting: Financial records, reporting requirements, and audit rights

14. Transfer and Assignment: Conditions for selling or transferring the franchise

15. Termination: Grounds for termination and procedures

16. Post-Termination Obligations: Requirements after agreement ends, including non-compete provisions

17. Dispute Resolution: Process for handling disputes and mediation requirements

18. General Provisions: Standard boilerplate clauses including governing law, notices, and amendments

What sections are optional to include in a Franchise Agreement?

1. Multi-Unit Rights: Include when franchisee has rights to develop multiple units

2. International Operations: Include for franchises with international expansion potential

3. E-commerce Rights: Include when online sales are part of the business model

4. Equipment Leasing: Include when franchisor provides equipment to franchisee

5. Property Leasing: Include when franchisor is involved in property leasing arrangements

6. Supply Chain Requirements: Include when specific supplier relationships are mandatory

7. In-Term Non-Competition: Include when additional competition restrictions are needed during the term

8. Guarantee and Indemnity: Include when personal guarantees from franchisee directors are required

What schedules should be included in a Franchise Agreement?

1. Schedule 1 - Territory Description: Detailed description and/or maps of the granted territory

2. Schedule 2 - Initial Fee and Ongoing Payments: Comprehensive breakdown of all fees and payment structures

3. Schedule 3 - Initial Training Program: Details of required initial training and support

4. Schedule 4 - Approved Products and Services: List of authorized products and services

5. Schedule 5 - Brand Standards: Specifications for use of intellectual property and brand elements

6. Schedule 6 - Minimum Performance Requirements: Required sales targets and performance metrics

7. Schedule 7 - Required Equipment and Fixtures: Specifications for required business equipment and setup

8. Schedule 8 - Insurance Requirements: Details of required insurance coverage

9. Appendix A - Personal Guarantee: Form of personal guarantee for franchisee principals

10. Appendix B - Confidentiality Agreement: Form of confidentiality agreement for staff

11. Appendix C - Deed of Termination: Template for termination documentation

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

New Zealand

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use

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