Sub Franchise Agreement Template for Canada

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Key Requirements PROMPT example:

Sub Franchise Agreement

"I need a Sub Franchise Agreement for my Canadian coffee shop chain, where I'll be granting sub-franchise rights to a master franchisee in British Columbia who will develop 15 locations by March 2025, with strong provisions for maintaining our premium brand standards and quality control."

Document background
The Sub Franchise Agreement is a sophisticated legal instrument used in Canadian franchise operations when a master franchisee wishes to grant franchise rights to third parties (sub-franchisees) within their designated territory. This document is essential when implementing a multi-tiered franchise structure and must comply with provincial franchise legislation, including disclosure requirements in provinces like Ontario, Alberta, and British Columbia. The agreement comprehensively addresses the complex three-way relationship between the original franchisor, master franchisee (acting as sub-franchisor), and sub-franchisee, detailing rights, obligations, territorial restrictions, fee structures, operational standards, and support systems. It is particularly crucial for businesses expanding through a master franchise model, requiring careful consideration of brand protection, quality control, and the delegation of franchisor responsibilities while maintaining the integrity of the franchise system.
Suggested Sections

1. Parties: Identification of the franchisor, franchisee (as sub-franchisor), and sub-franchisee

2. Background: Context of the agreement, including reference to the master franchise agreement and the sub-franchising structure

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

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

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. Training and Support: Training requirements and ongoing support provisions

8. Intellectual Property: Use of trademarks, copyrights, and other intellectual property

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

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

11. Records and Reporting: Financial reporting requirements and record-keeping obligations

12. Transfer and Assignment: Conditions and restrictions on transfer of the sub-franchise

13. Termination: Grounds for termination and procedures

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

15. Confidentiality: Protection of confidential information and trade secrets

16. Non-Competition: Restrictions on competitive activities

17. Dispute Resolution: Procedures for resolving disputes

18. General Provisions: Standard legal provisions including notices, governing law, etc.

Optional Sections

1. Development Schedule: Used when the sub-franchisee has obligations to develop multiple units within a specific timeframe

2. E-Commerce Rights: Include when online sales are relevant to the business model

3. Equipment and Inventory Requirements: Detailed section needed for businesses with specific equipment or inventory needs

4. Multi-Unit Rights: Include when granting rights to operate multiple units

5. International Operations: Required for cross-border operations or international territories

6. Social Media Policy: Include for businesses with significant social media presence requirements

7. Crisis Management: Important for food service or high-risk businesses

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

Suggested Schedules

1. Schedule A - Territory Description: Detailed description of the granted territory

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

3. Schedule C - Operating Manual Table of Contents: Overview of the operating manual contents

4. Schedule D - Approved Suppliers: List of approved suppliers and products

5. Schedule E - Initial Training Program: Details of required initial training

6. Schedule F - Intellectual Property: List of trademarks, copyrights, and other IP

7. Schedule G - Form of Confidentiality Agreement: Standard confidentiality agreement for employees

8. Schedule H - Required Equipment and Inventory: Specifications for required equipment and inventory

9. Schedule I - Reporting Forms: Standard forms for required reporting

10. Appendix 1 - Personal Guaranty: Form of personal guarantee required from sub-franchisee principals

11. Appendix 2 - Disclosure Document Receipt: Acknowledgment of receipt of franchise disclosure document

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

Personal Services

Business Services

Education and Training

Healthcare Services

Automotive Services

Real Estate Services

Fitness and Recreation

Home Services

Technology Services

Child Care Services

Pet Care Services

Professional Services

Relevant Teams

Legal

Operations

Business Development

Franchise Development

Compliance

Finance

Brand Management

Training and Development

Sales

Contract Administration

Risk Management

Strategic Planning

Relevant Roles

Franchise Development Director

Legal Counsel

Chief Executive Officer

Chief Operating Officer

Franchise Operations Manager

Business Development Manager

Compliance Officer

Brand Manager

Training Manager

Territory Development Manager

Contract Administrator

Franchise Support Specialist

General Counsel

Chief Financial Officer

Franchise Sales Director

Regional Operations Director

Industries
Arthur Wishart Act (Franchise Disclosure): Ontario's franchise law requiring disclosure documents and regulating the franchise relationship, including sub-franchising arrangements
Franchises Act (British Columbia): BC's franchise legislation governing disclosure requirements and franchise relationships
Franchises Act (Alberta): Alberta's franchise legislation covering disclosure requirements and relationship laws
Competition Act: Federal legislation governing competition and anti-trust matters, including territorial restrictions and pricing practices in franchise systems
Trade-marks Act: Federal law protecting trademarks and governing their licensing and use in franchise systems
Personal Information Protection and Electronic Documents Act (PIPEDA): Federal privacy legislation governing the collection, use, and disclosure of personal information in commercial activities
Provincial Personal Information Protection Acts: Provincial privacy laws in BC, Alberta, and Quebec governing personal information handling
Canada Business Corporations Act: Federal legislation governing corporate structure and operations
Provincial Business Corporations Acts: Provincial laws governing corporate operations and structure in respective provinces
Employment Standards Acts (Provincial): Provincial legislation governing employment relationships and standards that may affect franchise operations
Income Tax Act: Federal tax legislation affecting business operations and franchise relationships
Provincial Consumer Protection Acts: Provincial legislation protecting consumer rights and affecting business operations
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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