The Master Franchise Contract is a sophisticated legal instrument used when a franchisor wishes to expand their business through a master franchisee who will both operate and sub-franchise the business concept within New Zealand or a specified territory. This document, governed by New Zealand law, serves as the foundation for creating a multi-tiered franchise network, incorporating provisions that comply with New Zealand's commercial law framework, including the Fair Trading Act 1986 and Contract and Commercial Law Act 2017. It details the master franchisee's rights to develop the territory, grant sub-franchises, and maintain the franchise system's standards, while also outlining the franchisor's ongoing support obligations and control mechanisms. The agreement is particularly crucial for international franchisors entering the New Zealand market, as it must balance global brand consistency with local market requirements and legal compliance.
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1. Parties: Identification of the franchisor and master franchisee, including full legal names and registered addresses
2. Background: Context of the agreement, description of the franchise system, and purpose of the master franchise arrangement
3. Definitions and Interpretation: Comprehensive definitions of terms used throughout the agreement and rules for interpretation
4. Grant of Master Franchise: Scope of rights granted, territory definition, and exclusivity provisions
5. Term and Renewal: Initial term of the agreement and conditions for renewal
6. Master Franchisee Obligations: Core obligations including development schedule, maintenance of standards, and support to sub-franchisees
7. Sub-Franchising Rights and Obligations: Rights and procedures for granting sub-franchises, including approval processes and restrictions
8. Intellectual Property: Usage rights and restrictions regarding trademarks, copyright, and other IP
9. Training and Support: Training obligations of franchisor to master franchisee and master franchisee to sub-franchisees
10. Fees and Financial Obligations: All financial terms including initial fees, ongoing royalties, and revenue sharing from sub-franchises
11. Reporting and Audit Rights: Financial and operational reporting requirements and audit provisions
12. Marketing and Advertising: Marketing obligations, advertising fund contributions, and local marketing requirements
13. Confidentiality: Protection of confidential information and trade secrets
14. Non-Competition and Restraint of Trade: Restrictions during and after the term of the agreement
15. Default and Termination: Events of default, termination rights, and consequences of termination
16. Post-Termination Obligations: Obligations and restrictions following termination
17. Dispute Resolution: Procedures for resolving disputes, including mediation and arbitration provisions
18. General Provisions: Standard boilerplate clauses including notices, assignment, and governing law
1. Development Schedule Obligations: Used when the master franchisee must meet specific development targets for opening sub-franchised units
2. International Operations: Required when the master franchise territory covers multiple countries or involves cross-border operations
3. Supply Chain Requirements: Included when there are specific supplier relationships or product sourcing requirements
4. Technology and Systems: Required when proprietary software or technology systems are crucial to the franchise operation
5. Sub-Franchisor Training Program: Detailed when specific training programs must be established for sub-franchisees
6. Alternative Dispute Resolution: Additional detailed ADR procedures for complex international arrangements
7. Local Adaptation Rights: Used when the master franchisee needs rights to adapt the system for local market conditions
8. Currency and Exchange Provisions: Required for international arrangements involving multiple currencies
1. Territory Definition: Detailed description and/or maps of the master franchise territory
2. Initial Fee and Ongoing Payments: Comprehensive breakdown of all fees, royalties, and payment structures
3. Brand Standards Manual: Operating standards and brand requirements to be maintained
4. Development Schedule: Timeline and targets for sub-franchise development
5. Training Requirements: Detailed training programs and requirements for master franchisee and sub-franchisees
6. Approved Suppliers: List of approved suppliers and supply chain requirements
7. Sub-Franchise Agreement Template: Standard form agreement to be used with sub-franchisees
8. Intellectual Property Register: List of all trademarks, copyrights, and other IP included in the franchise
9. Required Insurance: Details of mandatory insurance coverage
10. Reporting Templates: Standard forms for financial and operational reporting
11. Initial Training Program: Details of initial training provided by franchisor
12. Marketing Guidelines: Standards and requirements for marketing and advertising
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