Sub Franchise Agreement Template for Malaysia

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Key Requirements PROMPT example:

Sub Franchise Agreement

"I need a Sub Franchise Agreement for a Malaysian food and beverage business, where we're granting rights to operate three outlets in Penang to an experienced restaurateur, with operations planned to commence in March 2025."

Document background
The Sub Franchise Agreement is a crucial document used in Malaysian franchise businesses where a master franchise holder (sub-franchisor) grants rights to another party (sub-franchisee) to operate the franchise business. This arrangement must comply with the Malaysian Franchise Act 1998 and requires registration with the Franchise Registry. The document is essential when expanding franchise operations through a tiered structure, typically used by international franchises entering the Malaysian market or large domestic franchises scaling their operations. It contains detailed provisions for operational standards, territory rights, intellectual property usage, financial obligations, and compliance requirements specific to the Malaysian business environment.
Suggested Sections

1. Parties: Identification of the sub-franchisor and sub-franchisee, including full legal names and registration details

2. Background: Context of the agreement, including reference to the master franchise agreement and authority to grant sub-franchises

3. Definitions: Key terms used throughout the agreement, including specific franchise-related terminology

4. Grant of Sub-Franchise: Specific rights granted to the sub-franchisee, including territorial limits and scope of operations

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

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

7. Intellectual Property Rights: Usage rights and restrictions regarding trademarks, trade secrets, and other IP

8. Training and Support: Sub-franchisor's obligations regarding initial and ongoing training and support

9. Operating Standards: Required operational procedures, quality standards, and compliance requirements

10. Marketing and Advertising: Marketing obligations, advertising fees, and promotional requirements

11. Reporting and Audits: Financial reporting requirements and audit rights

12. Confidentiality: Protection of confidential information and trade secrets

13. Transfer and Assignment: Conditions for transfer of the sub-franchise rights

14. Termination: Grounds for termination and termination procedures

15. Post-Termination Obligations: Obligations and restrictions after agreement termination

Optional Sections

1. Insurance Requirements: Specific insurance coverage requirements - include if the business type has particular liability risks

2. Supply Chain Obligations: Requirements for purchasing from approved suppliers - include if there are mandatory supply arrangements

3. Employee Training Standards: Detailed employee training requirements - include for service-based franchises

4. Property Requirements: Specific requirements for premises - include for location-based businesses

5. Environmental Compliance: Environmental standards and compliance - include for businesses with environmental impact

6. Digital Presence: Online presence and e-commerce requirements - include for businesses with significant digital operations

Suggested Schedules

1. Schedule 1 - Territory Description: Detailed description of the granted territory including maps and boundaries

2. Schedule 2 - Initial Fees and Ongoing Payments: Detailed breakdown of all financial obligations

3. Schedule 3 - Operating Manual Summary: Key provisions of the operating manual and compliance requirements

4. Schedule 4 - Trademark Usage Guidelines: Specific rules for using the franchise's trademarks and branding

5. Schedule 5 - Initial Training Program: Details of required initial training for the sub-franchisee

6. Schedule 6 - Approved Suppliers: List of approved suppliers and purchasing requirements

7. Schedule 7 - Required Equipment and Inventory: Specifications for required equipment and initial inventory

8. Appendix A - Form of Confidentiality Agreement: Template confidentiality agreement for employees

9. Appendix B - Compliance Checklist: Checklist of operational and regulatory compliance requirements

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

Relevant legal definitions
Relevant Industries

Food & Beverage

Retail

Education & Training

Healthcare Services

Hospitality

Personal Services

Automotive Services

Professional Services

Beauty & Wellness

Property Maintenance

Relevant Teams

Legal

Operations

Finance

Compliance

Business Development

Brand Management

Training & Development

Commercial

Risk Management

Relevant Roles

Franchise Development Manager

Legal Counsel

Business Development Director

Operations Manager

Compliance Officer

Commercial Director

Chief Executive Officer

Chief Operating Officer

Franchise Relations Manager

Territory Manager

Brand Manager

Training Manager

Finance Director

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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