Free Restaurant Sub Franchise Agreement

This Restaurant Sub Franchise Agreement (the "Agreement") is entered into as of [Effective Date] by and between [Your Company Name], located at [Your Company Address] ("Franchisor"), [Franchisee Name], located at [Franchisee Address] ("Franchisee"), and [Sub-Franchisee Name], located at [Sub-Franchisee Address] ("Sub-Franchisee").

WHEREAS, Franchisor is the owner of the proprietary rights and trademarks associated with [Restaurant Brand] and operates a successful franchise system;

WHEREAS, Franchisee has entered into a franchise agreement with Franchisor and has been granted the rights to operate and sub-franchise [Restaurant Brand] within a specified territory;

WHEREAS, Sub-Franchisee desires to obtain the right to operate a [Restaurant Brand] franchise under the terms and conditions set forth in this Agreement;

WHEREAS, the parties desire to clearly define their respective rights, responsibilities, and obligations in connection with the operation of the sub-franchise;

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

I. Grant of Sub-Franchise

A. Scope of the Sub-Franchise: Franchisee grants Sub-Franchisee the right to operate a [Restaurant Brand] franchise within the designated Territory as specified in Appendix A. This grant includes the use of Franchisor's trademarks, trade names, service marks, logos, and proprietary systems.

B. Rights Granted: Sub-Franchisee is authorized to use the Franchise System and associated intellectual property solely for the operation of the [Restaurant Brand] franchise within the Territory. Sub-Franchisee shall not use these rights for any other purpose or outside the designated Territory.

II. Term and Renewal

A. Initial Term: The initial term of this Agreement shall be [number] years, commencing on the Effective Date and ending on [End Date].

B. Conditions for Renewal: Sub-Franchisee may renew the Agreement for an additional term of [number] years, provided that Sub-Franchisee has complied with all terms and conditions of this Agreement, and gives written notice of intent to renew at least 180 days prior to the expiration of the initial term.

C. Renewal Process: Renewal of the Agreement is subject to the approval of both Franchisee and Franchisor, and may require Sub-Franchisee to sign the then-current form of sub-franchise agreement, which may include modifications to terms and conditions.

III. Franchise Fees

A. Initial Franchise Fee: Sub-Franchisee shall pay Franchisee an initial franchise fee of $[Amount] upon execution of this Agreement. This fee is non-refundable and covers the grant of the sub-franchise rights and initial training.

B. Ongoing Royalties: Sub-Franchisee shall pay Franchisee ongoing royalties of [percentage]% of gross sales, payable monthly within 10 days of the end of each month. Gross sales shall be calculated in accordance with the reporting guidelines provided by Franchisor.

C. Payment Schedule: All payments, including the initial franchise fee and ongoing royalties, shall be made to Franchisee in accordance with the payment schedule and guidelines outlined in Appendix E.

IV. Training and Support

A. Initial Training Program: Sub-Franchisee shall complete an initial training program provided by Franchisor, consisting of [number] days of training at Franchisor's designated training facility. The training program covers operational procedures, customer service, food safety, and brand standards.

B. Ongoing Support Services: Franchisee shall provide ongoing support to Sub-Franchisee, including [frequency] visits to the Sub-Franchisee’s location and regular communication to ensure compliance with operational standards. Support services include marketing assistance, operational advice, and access to Franchisor's proprietary resources.

C. Training Fees: Any additional training requested by Sub-Franchisee beyond the initial training program may be subject to additional fees, which shall be mutually agreed upon by Franchisee and Sub-Franchisee.

V. Operational Standards

A. Compliance with Brand Standards: Sub-Franchisee agrees to comply with all brand standards and operational procedures established by Franchisor. This includes maintaining the quality and consistency of products and services offered at the franchise location.

B. Quality Control Measures: Sub-Franchisee shall adhere to all quality control measures implemented by Franchisor, including regular inspections and audits conducted by Franchisee or Franchisor to ensure compliance with brand standards and operational procedures.

C. Operational Procedures: Sub-Franchisee shall follow the operational procedures outlined in the Operational Standards Manual provided by Franchisor. This includes procedures for inventory management, customer service, food safety, and marketing practices.

VI. Marketing and Advertising

A. Local Advertising Requirements: Sub-Franchisee agrees to spend a minimum of [percentage]% of gross sales on local advertising efforts within the Territory each month. Sub-Franchisee shall provide Franchisee with a detailed report of advertising expenditures on a monthly basis.

B. National Advertising Contributions: Sub-Franchisee shall contribute [percentage]% of gross sales to the national advertising fund managed by Franchisor. Payments shall be made monthly, within 10 days of the end of each month, and are in addition to the local advertising requirements.

C. Marketing Guidelines: All marketing and advertising materials used by Sub-Franchisee must comply with Franchisor's branding and marketing guidelines. Sub-Franchisee must obtain prior written approval from Franchisor before using any marketing materials not provided by Franchisor.

VII. Intellectual Property

A. Use of Trademarks and Logos: Sub-Franchisee is granted the right to use Franchisor's trademarks, logos, and other proprietary marks in connection with the operation of the franchise. This right is limited to the duration of this Agreement and is subject to compliance with Franchisor's branding guidelines.

B. Protection of Intellectual Property: Sub-Franchisee agrees to take all necessary measures to protect Franchisor's intellectual property rights. This includes reporting any unauthorized use or infringement of Franchisor's trademarks and logos to Franchisee immediately.

C. Restrictions on Use: Sub-Franchisee shall not use Franchisor's intellectual property for any purpose other than the operation of the franchise. Any unauthorized use of Franchisor's intellectual property shall be considered a material breach of this Agreement.

VIII. Confidentiality

A. Confidential Information: Sub-Franchisee acknowledges that during the term of this Agreement, they will have access to confidential information belonging to Franchisor. This includes proprietary business methods, operational procedures, marketing strategies, and other sensitive information.

B. Non-Disclosure Obligations: Sub-Franchisee agrees to maintain the confidentiality of all proprietary information and not to disclose it to any third party without the prior written consent of Franchisor. This obligation shall survive the termination of this Agreement.

IX. Sub-Franchisee Obligations

A. Reporting Requirements: Sub-Franchisee shall provide Franchisee with regular reports on the performance of the franchise, including sales figures, financial statements, and other relevant data. Reports shall be submitted monthly within 10 days of the end of each month.

B. Record-Keeping: Sub-Franchisee agrees to maintain accurate and complete records of all business operations, including financial transactions, employee records, and inventory. These records shall be available for inspection by Franchisee or Franchisor upon request.

C. Compliance with Laws: Sub-Franchisee shall comply with all applicable federal, state, and local laws and regulations governing the operation of the franchise. This includes obtaining and maintaining all necessary licenses and permits.

X. Franchisor's Rights and Obligations

A. Inspection and Audit Rights: Franchisor and Franchisee shall have the right to inspect and audit Sub-Franchisee's business operations and records at any time during normal business hours. Sub-Franchisee agrees to cooperate fully with any inspections or audits conducted by Franchisor or Franchisee.

B. Support Obligations: Franchisor shall provide ongoing support to Sub-Franchisee, including updates to operational procedures, marketing assistance, and access to proprietary resources. Franchisee shall ensure that Sub-Franchisee receives the necessary support to maintain compliance with brand standards.

C. Enforcement of Standards: Franchisor and Franchisee have the right to enforce compliance with all brand standards and operational procedures. This includes taking corrective action in the event of non-compliance, up to and including termination of this Agreement.

XI. Transfer and Assignment

A. Conditions for Transfer: Sub-Franchisee may not transfer or assign any rights or obligations under this Agreement without the prior written consent of Franchisee and Franchisor. Any proposed transfer must meet Franchisor's then-current criteria for new franchisees.

B. Approval Process: To request approval for a transfer, Sub-Franchisee must provide Franchisee and Franchisor with written notice of the proposed transfer at least 60 days in advance. The notice must include the name and qualifications of the proposed transferee and any other information reasonably requested by Franchisor.

C. Assignment Fees: Sub-Franchisee shall pay an assignment fee of $[Amount] to Franchisee upon approval of the transfer. This fee is intended to cover the administrative costs associated with processing the transfer request.

XII. Termination

A. Grounds for Termination: This Agreement may be terminated by Franchisee or Franchisor for any of the following reasons:

1. Sub-Franchisee's failure to comply with any material term or condition of this Agreement.

2. Sub-Franchisee's failure to pay any amounts due under this Agreement within 10 days of the due date.

3. Sub-Franchisee's involvement in any activity that could harm the reputation or goodwill of the Franchise System.

B. Notice Requirements: In the event of a breach, the non-breaching party shall provide written notice to the breaching party specifying the nature of the breach. The breaching party shall have 30 days to cure the breach. If the breach is not cured within this period, the Agreement may be terminated immediately.

C. Post-Termination Obligations: Upon termination of this Agreement, Sub-Franchisee shall immediately cease all use of Franchisor's trademarks and proprietary systems, return all materials and confidential information, and pay any outstanding fees owed to Franchisee or Franchisor.

XIII. Dispute Resolution

A. Mediation and Arbitration: Any disputes arising out of or relating to this Agreement shall first be subject to mediation. If mediation fails, the dispute shall be resolved through binding arbitration in accordance with the rules of the American Arbitration Association. The arbitration shall take place in [City, State].

B. Governing Law: This Agreement shall be governed by and construed in accordance with the laws of the State of [State]. Any legal action arising from this Agreement shall be brought in the appropriate court within the state.

XIV. Indemnification

A. Indemnity by Sub-Franchisee: Sub-Franchisee agrees to indemnify, defend, and hold harmless Franchisee and Franchisor, their officers, directors, employees, and agents from any and all claims, liabilities, damages, and expenses, including reasonable attorney’s fees, arising out of or in connection with the operation of the sub-franchise.

B. Indemnity by Franchisee: Franchisee agrees to indemnify, defend, and hold harmless Sub-Franchisee from any claims, liabilities, damages, and expenses, including reasonable attorney’s fees, arising out of or in connection with Franchisee's breach of this Agreement or any wrongful acts or omissions by Franchisee.

XV. Insurance

A. Required Insurance Coverage: Sub-Franchisee shall maintain comprehensive general liability insurance, property insurance, and any other insurance required by Franchisor. The minimum coverage amounts shall be as specified by Franchisor.

B. Proof of Insurance: Sub-Franchisee shall provide Franchisee and Franchisor with certificates of insurance evidencing the required coverage within 30 days of the Effective Date and annually thereafter. Sub-Franchisee shall notify Franchisee and Franchisor of any changes to the insurance coverage.

XVI. Miscellaneous Provisions

A. Entire Agreement: This Agreement constitutes the entire agreement between the parties and supersedes all prior discussions, agreements, or understandings of any kind. Any amendments to this Agreement must be made in writing and signed by all parties.

B. Amendments: This Agreement may be amended only by a written document signed by all parties. Any proposed amendments shall be discussed and agreed upon within 30 days of the proposal.

C. Severability: If any provision of this Agreement is found to be invalid or unenforceable, the remaining provisions shall continue in full force and effect.

D. Waiver: The failure of either party to enforce any provision of this Agreement shall not be construed as a waiver of that provision or any other provision.

E. Notices: All notices required or permitted under this Agreement shall be in writing and delivered to the addresses specified above. Notices shall be deemed given when received by the other party.

Signatures

IN WITNESS WHEREOF, the parties hereto have executed this Restaurant Sub Franchise Agreement as of the day and year first above written.

Franchisor

[Name]

[Date]

Franchisee

[Name]

[Date]

Sub-Franchisee

[Name]

[Date]

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