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Direct Franchise Agreement

Direct Franchise Agreement Template for Germany

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Key Requirements PROMPT example:

Direct Franchise Agreement

"I need a Direct Franchise Agreement under German law for my high-end restaurant chain, granting exclusive territorial rights in Bavaria, with strict quality control provisions and the option for the franchisee to open three locations by March 2025."

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Document background
This Direct Franchise Agreement template is designed for use in the German market when establishing a direct franchise relationship between a franchisor and a single-unit franchisee. It incorporates essential elements required under German law, including comprehensive pre-contractual disclosure requirements, competition law compliance, and data protection provisions aligned with GDPR. The document is particularly relevant for businesses expanding through franchising in Germany or German companies establishing domestic franchise systems. It includes detailed provisions for system standards, operational requirements, quality control, and protection of intellectual property rights, while ensuring compliance with German commercial law principles. The agreement should be used when establishing a new franchise relationship or updating existing franchise arrangements to ensure compliance with current German legal requirements.
Suggested Sections

1. Parties: Identification of franchisor and franchisee with full legal details

2. Background: Description of the franchise system, business concept, and purpose of the agreement

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: Initial franchise fee, ongoing royalties, and payment terms

7. Franchisor's Obligations: Support, training, and ongoing assistance obligations

8. Franchisee's Obligations: Operational requirements, compliance with system standards

9. Intellectual Property Rights: Usage of trademarks, patents, copyright, and know-how

10. Quality Control: Standards, inspections, and compliance requirements

11. Marketing and Advertising: Marketing obligations, fees, and approval processes

12. Confidentiality: Protection of confidential information and trade secrets

13. Data Protection: GDPR compliance and data processing obligations

14. Non-Competition: During-term and post-term competition restrictions

15. Transfer and Assignment: Rules for selling or transferring the franchise

16. Termination: Termination grounds and procedures

17. Post-Termination Obligations: Obligations after agreement ends

18. Governing Law and Jurisdiction: Choice of German law and jurisdiction provisions

Optional Sections

1. Multi-Unit Development Rights: Include when franchisee has rights to develop multiple units

2. E-Commerce Rights: Include when online sales are permitted or restricted

3. Equipment and Inventory Requirements: Include when specific supplier relationships exist

4. Minimum Performance Requirements: Include when setting specific performance targets

5. Training Fee Structure: Include when training fees are separate from franchise fees

6. Sub-Franchising Rights: Include if sub-franchising is permitted

7. Force Majeure: Include detailed force majeure provisions if desired

8. Alternative Dispute Resolution: Include if mediation/arbitration is preferred

9. Guarantee: Include when personal guarantees are required

Suggested Schedules

1. Schedule 1 - The Manual: Reference to confidential operations manual contents

2. Schedule 2 - Initial Training Program: Details of required initial training

3. Schedule 3 - Products and Services: Approved products and services specification

4. Schedule 4 - Territory Description: Detailed description of granted territory

5. Schedule 5 - Intellectual Property: List of trademarks and other IP rights

6. Schedule 6 - Initial Investment: Breakdown of required initial investment

7. Schedule 7 - Technical Requirements: IT systems and technical specifications

8. Schedule 8 - Design Standards: Store design and corporate identity requirements

9. Appendix A - Pre-Contractual Disclosure: Mandatory disclosure information under German law

10. Appendix B - Data Processing Agreement: GDPR-compliant data processing terms

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Affiliate
Approved Products
Approved Suppliers
Business Day
Business System
Commencement Date
Competent Authority
Confidential Information
Contract Year
Customer Data
Data Protection Laws
Effective Date
Force Majeure Event
Franchise
Franchise Location
Franchise Manual
Franchise System
Franchise Territory
Gross Revenue
Group
Initial Fee
Initial Term
Initial Training
Intellectual Property Rights
Know-How
Management Services Fee
Marketing Fee
Marketing Fund
Marks
Minimum Performance Requirements
Net Revenue
Operating Standards
Operations Manual
Personal Data
Processing
Products
Proprietary Marks
Quality Standards
Renewal Term
Royalty Fee
Services
System Standards
Term
Trade Secrets
Training Program
Working Day
Clauses
Definitions
Grant of Rights
Term and Renewal
Territory Rights
Fees and Payments
Intellectual Property
Confidentiality
Non-Competition
Training
Quality Control
Operations Standards
Supply Chain
Marketing and Advertising
Reporting Requirements
Audit Rights
Data Protection
Assignment and Transfer
Change of Control
Force Majeure
Termination
Post-Termination Obligations
Governing Law
Dispute Resolution
Entire Agreement
Severability
Notices
Compliance with Laws
Anti-Corruption
Insurance
Indemnification
Initial Investment
Site Selection
Staff Training
System Standards
Customer Service
Record Keeping
Brand Standards
Equipment Requirements
Maintenance Standards
Relevant Industries

Food & Beverage

Retail

Hospitality

Personal Services

Business Services

Automotive

Education & Training

Health & Fitness

Real Estate

Technology Services

Relevant Teams

Legal

Operations

Commercial

Business Development

Compliance

Brand Management

Training

Quality Assurance

Finance

Marketing

Relevant Roles

Legal Counsel

Franchise Development Manager

Business Development Director

Operations Director

Commercial Director

Chief Executive Officer

Chief Legal Officer

Franchise Operations Manager

Compliance Officer

Brand Manager

Territory Manager

Training Manager

Quality Assurance Manager

Contract Manager

Industries
German Civil Code (Bürgerliches Gesetzbuch - BGB): Primary source for contract law principles, including formation, performance, and termination of contracts, good faith principles (§242 BGB), and general terms and conditions regulations
German Commercial Code (Handelsgesetzbuch - HGB): Governs commercial relationships and transactions between businesses, including commercial agency provisions which may be applied analogously to franchise relationships
Act Against Unfair Competition (Gesetz gegen den unlauteren Wettbewerb - UWG): Regulates fair competition practices and protects against unfair business practices, particularly relevant for territorial restrictions and non-compete clauses
EU General Data Protection Regulation (GDPR) and German Federal Data Protection Act (BDSG): Govern the collection, processing, and transfer of personal data between franchisor and franchisee
German Trademark Act (Markengesetz - MarkenG): Regulates the protection and licensing of trademarks, which is essential for franchise agreements
EU Block Exemption Regulation for Vertical Agreements (Vertical BER): Provides framework for vertical agreements including franchise agreements, particularly regarding territorial restrictions and competition aspects
German Act on the Implementation of the EU General Data Protection Regulation: National implementation of GDPR requirements, specific to German context
Pre-Contractual Disclosure Requirements: While not a specific law, German case law has established requirements for pre-contractual information disclosure in franchise relationships
German Trade Secret Act (Geschäftsgeheimnisgesetz - GeschGehG): Protects confidential business information and know-how transferred in franchise relationships
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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