Franchise Owned Company Operated Agreement Template for Philippines

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Key Requirements PROMPT example:

Franchise Owned Company Operated Agreement

"I need a Franchise Owned Company Operated Agreement for a nationwide coffee shop chain in the Philippines, with specific provisions for halal certification and local sourcing requirements, planned to commence operations in March 2025."

Document background
The Franchise Owned Company Operated Agreement (FOCO) is a specialized franchise arrangement used in the Philippines when a franchisee wishes to invest in a franchise but prefers the franchisor to handle daily operations. This document is particularly relevant when investors seek passive involvement while ensuring professional management of the business. It complies with Philippine franchise regulations, including DTI Administrative Order No. 08-2002 and the Intellectual Property Code. The agreement covers crucial elements such as franchise rights, operational responsibilities, profit-sharing mechanisms, performance standards, and compliance requirements. It's distinct from traditional franchise agreements as it includes specific provisions for company operations, management staffing, operational control, and detailed financial reporting structures, while maintaining the franchisee's ownership rights and investment protection.
Suggested Sections

1. Parties: Identification of the Franchisor and Franchisee, including complete legal names and addresses

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

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

4. Grant of Franchise: Scope of franchise rights, territory, and exclusivity provisions

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

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

7. Intellectual Property Rights: Usage rights for trademarks, patents, copyright materials, and trade secrets

8. Training and Support: Franchisor's obligations for initial and ongoing training and operational 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 Audit Rights: Financial reporting requirements and franchisor's audit rights

12. Insurance and Indemnification: Required insurance coverage and mutual indemnification provisions

13. Default and Termination: Events of default, cure periods, and termination procedures

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

15. Confidentiality: Protection of confidential information and trade secrets

16. Assignment and Transfer: Conditions for transfer of franchise rights or business ownership

17. Dispute Resolution: Procedures for resolving disputes, including mediation and arbitration

18. Governing Law: Application of Philippine law and jurisdiction

Optional Sections

1. E-commerce Rights: Used when the franchise includes online sales or digital platforms

2. Development Schedule: Include when the agreement involves multiple unit development rights

3. Environmental Compliance: Required for businesses with significant environmental impact

4. Data Protection: Needed when the business involves significant customer data handling

5. Import/Export Provisions: Include when the franchise involves international trade

6. Halal Certification: Required for food businesses seeking to maintain Halal certification

7. Force Majeure: Detailed provisions for unforeseen circumstances affecting operations

8. Employee Transfer: Include when existing employees may transfer between franchise locations

Suggested Schedules

1. Schedule 1 - Operations Manual Table of Contents: List of contents of the confidential operations manual

2. Schedule 2 - Initial Investment and Fees: Detailed breakdown of all initial investments and ongoing fees

3. Schedule 3 - Approved Suppliers: List of approved suppliers and purchasing requirements

4. Schedule 4 - Training Program: Detailed description of initial and ongoing training programs

5. Schedule 5 - Territory Map: Detailed description and map of the granted territory

6. Schedule 6 - Brand Standards: Specifications for use of trademarks, logos, and brand elements

7. Schedule 7 - Required Equipment and Inventory: List of required equipment, fixtures, and initial inventory

8. Schedule 8 - Form of Confidentiality Agreement: Standard form for employee confidentiality agreements

9. Schedule 9 - Insurance Requirements: Detailed insurance coverage requirements and limits

10. Schedule 10 - Financial Reporting Forms: Standard forms for required financial reporting

11. Appendix A - Philippine Regulatory Compliance: Specific requirements for compliance with Philippine regulations

12. Appendix B - Local Operating Requirements: Location-specific requirements and regulations

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
Clauses
Relevant Industries

Food and Beverage

Retail

Hospitality

Education and Training

Healthcare Services

Automotive Services

Personal Care and Beauty

Entertainment and Recreation

Technology and Electronics

Fashion and Apparel

Professional Services

Fitness and Wellness

Relevant Teams

Legal

Operations

Finance

Commercial

Business Development

Compliance

Brand Management

Risk Management

Franchise Relations

Investment

Contract Administration

Relevant Roles

Chief Executive Officer

Chief Operating Officer

Franchise Development Director

Legal Counsel

Operations Manager

Finance Director

Commercial Director

Business Development Manager

Compliance Officer

Brand Manager

Regional Operations Director

Investment Manager

Contract Administrator

Risk Management Officer

Franchise Relations Manager

Industries
Republic Act No. 8293 (Intellectual Property Code of the Philippines): Governs intellectual property rights, including trademarks and trade secrets, which are essential components of franchise agreements
Republic Act No. 7394 (Consumer Act of the Philippines): Ensures protection of consumer interests and establishes standards for business practices that franchises must comply with
DTI Administrative Order No. 08-2002: Provides the implementing rules and regulations for franchise agreements in the Philippines, including disclosure requirements
Republic Act No. 386 (Civil Code of the Philippines): Provides the fundamental principles of contract law and obligations that apply to franchise agreements
Republic Act No. 10667 (Philippine Competition Act): Regulates anti-competitive behavior and ensures fair market competition, particularly relevant for territorial restrictions in franchise agreements
Republic Act No. 8799 (Securities Regulation Code): Relevant if the franchise arrangement involves the sale of securities or investment contracts
Republic Act No. 8424 (National Internal Revenue Code): Governs taxation aspects of franchise operations, including VAT, income tax, and other applicable taxes
Republic Act No. 7160 (Local Government Code): Regulates local business permits, licenses, and other local government requirements for franchise operations
Republic Act No. 11232 (Revised Corporation Code): Governs corporate structure, operations, and responsibilities, particularly relevant for company-operated franchises
Republic Act No. 5487 (Private Security Agency Law): May be relevant if the franchise operation requires security services for its premises
Republic Act No. 11058 (Occupational Safety and Health Standards): Ensures workplace safety and health standards in franchise operations
Republic Act No. 10918 (Food Safety Act): Applicable if the franchise involves food service or handling, establishing safety and hygiene standards
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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