Franchise License Agreement for Malaysia

Franchise License Agreement Template for Malaysia

A comprehensive legal agreement governed by Malaysian law, specifically the Franchise Act 1998, that establishes the terms and conditions under which a franchisor grants a franchisee the right to operate a business using the franchisor's proven business system, trademarks, and intellectual property. The agreement details all operational requirements, financial obligations, training provisions, quality control measures, and territory rights while ensuring compliance with Malaysian franchise regulations, including mandatory registration with the Franchise Registry under the Ministry of Domestic Trade and Consumer Affairs.

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What is a Franchise License Agreement?

This Franchise License Agreement template is designed for use in Malaysia when a business owner (franchisor) wishes to grant rights to another party (franchisee) to operate under their established business system and brand. The document is structured to comply with Malaysian legislation, particularly the Franchise Act 1998 and related regulations, which require mandatory registration with the Franchise Registry. It includes comprehensive provisions covering intellectual property rights, operational standards, financial terms, training requirements, and territory rights. This agreement is essential for businesses expanding through franchising in Malaysia and must be registered with authorities before any franchise sales can commence. The document serves as the foundational legal framework governing the franchise relationship and should be customized based on the specific business model while maintaining compliance with Malaysian franchise laws.

What sections should be included in a Franchise License Agreement?

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

2. Background: Context of the agreement, brief description of the franchise system and business

3. Definitions: Detailed definitions of terms used throughout the agreement

4. Grant of Franchise: Specific rights granted to the franchisee including territory and exclusivity terms

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

6. Franchise Fees and Payments: Initial fees, royalties, and other financial obligations

7. Franchisor's Obligations: Training, support, and ongoing assistance provided by franchisor

8. Franchisee's Obligations: Operational requirements, compliance with system standards, and reporting duties

9. Intellectual Property Rights: Usage terms for trademarks, patents, and other IP

10. Training and Support: Initial and ongoing training requirements and support systems

11. Marketing and Advertising: Marketing requirements, advertising fees, and promotional guidelines

12. Quality Control: Standards maintenance and inspection rights

13. Confidentiality: Protection of trade secrets and confidential information

14. Non-Competition: Restrictions during and after the agreement term

15. Termination: Grounds for termination and procedures

16. Post-Termination Obligations: Duties and restrictions after agreement ends

17. Governing Law and Dispute Resolution: Applicable law and dispute resolution mechanisms

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

What sections are optional to include in a Franchise License Agreement?

1. Guarantee: Personal or corporate guarantees for franchisee obligations, used when additional security is required

2. Development Rights: Rights to develop additional franchise units, included for multi-unit franchising

3. E-commerce Rights: Online sales and digital presence regulations, needed for businesses with online components

4. Supply Chain Requirements: Specific supplier relationships and requirements, used when the franchise has mandatory suppliers

5. Halal Certification: Requirements for maintaining Halal certification, necessary for food-based franchises in Malaysia

6. Transfer Rights: Detailed provisions for transferring the franchise, included when transfer is contemplated

7. Force Majeure: Extended provisions for unforeseen circumstances, important in volatile markets

What schedules should be included in a Franchise License Agreement?

1. Schedule 1: Franchise System Description: Detailed description of the franchise system and business model

2. Schedule 2: Territory Description: Detailed mapping and description of the granted territory

3. Schedule 3: Initial Fee and Recurring Payments: Comprehensive breakdown of all financial obligations

4. Schedule 4: Operations Manual Table of Contents: Overview of the operations manual content

5. Schedule 5: Brand Standards: Detailed specifications for brand usage and standards

6. Schedule 6: Training Program: Details of initial and ongoing training requirements

7. Schedule 7: Equipment and Inventory Requirements: Specifications for required equipment and inventory

8. Schedule 8: Approved Suppliers: List of approved suppliers and purchasing requirements

9. Schedule 9: Marketing Guidelines: Detailed marketing and advertising requirements

10. Appendix A: Form of Guarantee: Standard form of guarantee if required

11. Appendix B: Confidentiality Agreement: Detailed confidentiality terms for employees and stakeholders

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 | Serial Founder & Legal AI Author

Jurisdiction

Malaysia

Publisher

Genie AI

Document Type

License Agreement

Sector

IP

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Retail

Food & Beverage

Education & Training

Healthcare Services

Automotive Services

Professional Services

Beauty & Wellness

Hospitality

Technology Services

Real Estate Services

Entertainment & Recreation

Relevant Teams

Legal

Operations

Finance

Compliance

Business Development

Brand Management

Training & Development

Quality Assurance

Commercial

Franchise Relations

Relevant Roles

CEO

Managing Director

Franchise Development Manager

Legal Counsel

Operations Director

Business Development Manager

Compliance Officer

Brand Manager

Training Manager

Finance Director

Commercial Director

Franchise Relations Manager

Quality Assurance Manager

Territory Manager

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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