Auerbach Franchise

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    1

    Franchise

    Agreement

    Checklist

    May 2006

    Prepared By:

    Robert Auerbach

    Email: robert@auerbach.co.nz

    Website: www.marketnewzealand.com/auerbach

    Franchise Agreementchecklist

    Disclaimer:These checklists are provided for information purposes only and are no

    substitute for professional advice, which should be sought prior to

    entering into any transaction. New Zealand Trade and Enterprise

    (NZTE) has not verified these checklists and makes no representations

    as to the completeness, correctness, currency, accuracy or fitness for

    purpose of the information, or the person that prepared the information.

    Accordingly, NZTE will not be responsible for any damage or loss

    suffered by any person arising from the information whether that damage

    or loss arises from negligence or otherwise.

    This document is one of a series of free information tools for exporters to assist businesses

    through every stage of the export process.

    For the protection of Robert Auerbach's clients, all names in this document are fictitious. Any

    resemblance to actual people or companies is purely coincidental.

    For information or advice, visit www.marketnewzealand.com, ring NZTE on 0800 555 888 or

    contact your Client Manager.

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    contents

    synopsis........................................................................................................................ 31. the contracting parties ............................................................................................ 32. the franchised products .......................................................................................... 43. The franchised services .......................................................................................... 44. franchised territory .................................................................................................. 45. is the franchise exclusive? ..................................................................................... 46. is the franchise limited as to the class of customers to whom Company A

    Malaysia may sell? ....................................................................................................... 57. describe Company A New Zealands obligations as the franchisor................... 58. describe Company A Malaysias obligations as the franchisee ......................... 69. the franchise fee.......................................................................................................710. payment terms of franchise fee............................................................................711. term of agreement.................................................................................................. 712. minimum requirements to maintain the franchise..............................................813. use of company a new zealands tech-nology and know-how.......................... 814. use of the Company A brand............................................................................. 815. manufacturing competitive products...................................................................816. confidentiality and non-disclosure.......................................................................917. sale of franchise..................................................................................................... 918. sub-franchising ...................................................................................................... 919. design modifications and improvements ............................................................920. plant access............................................................................................................921. audit and inspection rights ................................................................................... 922. furnishing financial and management reports.................................................. 1023. sole supply status................................................................................................ 1024. amendments to the articles of incorporation of Company A Malaysia .......... 1025. subjects to be included in a separate memorandum of understanding......... 1226. compliance with laws and regulations ..............................................................1227. mediation .............................................................................................................. 1228. arbitration..............................................................................................................1229. governing law ....................................................................................................... 1330. personal guarantee.............................................................................................. 1331. any other considerations ....................................................................................13

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    Checklist

    May 2006

    synopsis

    Company A New Zealand proposes to grant Company A Malaysia a franchise to operate a

    business in Malaysia involving the assembly and sale of popcorn machines.

    As part of the franchise, Company A New Zealand would undertake to:

    Transfer to Company A Malaysia all operating procedures, quality control procedures and

    know-how concerning the assembly of popcorn machines.

    Sell to Company A Malaysia the key components of popcorn machines.

    Provide marketing assistance, power system design assistance and technical support to

    Company A Malaysia.

    Company A Malaysia, in turn, would undertake to:

    Conduct the business subject to specific franchise operating rules.

    Pay a franchise fee calculated as a percentage of its pre-tax profit.

    Amend its articles of incorporation to provide various safeguards to minority shareholders.

    The purpose of this checklist is to highlight for the parties consideration these and other issues

    upon which they would need to reflect the preparation of a franchise agreement.

    1. the contracting parties

    1.1. The Franchisor:

    Company A full name

    Contact: name

    1.2. The Franchisee: Company A full name

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    Contact: name

    2. the franchised products

    2.1. The Franchised Products are popcorn machines designed and manufactured by Company A

    New Zealand.

    2.1.1. Thats a general description of the Franchised Products. Describe, more

    specifically, the various types of Franchised Products.

    2.2. Are there any other products that Company A Malaysia will sell?

    2.2.1. Will Company A Malaysia ever sell components, separately, in other words, not

    as part of a complete popcorn machine?

    3. The franchised services

    3.1. Will Company A Malaysia ever sell consulting services?

    3.1.1. If so, describe.

    4. franchised territory

    4.1. What is the territory in which Company A Malaysia will operate?

    4.1.1. Are sales limited to that territory?

    4.1.2. May Company A Malaysia set up operations anywhere in its territory?

    5. is the franchise exclusive?

    5.1. Can Company A New Zealand grant franchises to other companies within the same

    territory?

    5.1.1. Consider nominating an exclusive territory and a non-exclusive territory.

    5.2. Can Company A New Zealand export popcorn machines, or components thereof, to

    customers within Company A Malaysias territory?

    5.2.1. Again, this may depend upon whether Company A Malaysias territory is

    exclusive, non-exclusive, or part exclusive and part non-exclusive.

    5.3. Can Company A Malaysia sell products, or provide services, to customers outside its

    territory?

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    6. is the franchise limited as to the class of customers to

    whom Company A Malaysia may sell?

    6.1. May Company A Malaysia sell to all customers within its territory or just to a specific class of

    customers?

    7. describe Company A New Zealands obligations as the

    franchisor

    Provide more detailed information concerning each item below:

    7.1. Transfer the Build Package.

    7.1.1. This should be the detailed package containing instructions, quality control

    procedures, operating procedures and know-how for the assembly of popcorn

    machines.

    7.2. Provide operational support.

    7.2.1. This refers to support on the factory floor, staffing, and other types of

    operational support.

    7.3. Provide quality control support.

    7.3.1. The Franchise Agreement should establish appropriate quality control

    safeguards.

    7.4. Supply components.

    7.4.1. Specify the types of components.

    7.4.2. Specify the terms of supply.

    7.5. Provide design support.

    7.5.1. This refers to the use of Company As Design Department.

    7.6. Provide technical support, know-how and expertise.

    7.6.1. Specify what type and how much.

    7.7. Provide procurement assistance.

    7.8. Provide new product launch and implementation support.

    7.9. Transmit drawings.

    7.9.1. Specify what types of drawings.

    7.10. Provide marketing support.

    7.10.1. Specify what type and how much.

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