Legal FDD Template

LEGAL FDD TEMPLATE

This Franchise Disclosure Document is made effective as of by and between Franchisor Name: , a business entity organized under the laws of , with principal place of business at , and Prospective Franchisee Name: (each a "Party" and collectively the "Parties").

RECITALS

WHEREAS, Franchisor owns and licenses certain trademarks, service marks, trade names, trade dress and other proprietary marks used in connection with a system for operating a business that offers ; and

WHEREAS, Franchisor has established certain standards, specifications and operating methods for franchisees that use the system and the Marks; and

WHEREAS, Franchisee seeks to obtain a franchise to operate a franchised business under Franchisor’s system and Franchisor is willing to grant a franchise to Franchisee under the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Franchise Disclosure Document, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. DEFINITIONS

For purposes of this Document, the following terms shall have the meanings set forth below. "Franchise Agreement" means the definitive franchise license, operations and services agreement executed by the Parties. "Marks" means all trademarks, service marks, trade names, logos and trade dress owned or licensed by Franchisor and used in the System. Additional capitalized terms used but not defined herein shall have the meanings assigned in the Franchise Agreement.

2. FRANCHISOR INFORMATION

Corporation Limited Liability Company Partnership Other (specify):

3. BUSINESS EXPERIENCE AND MANAGEMENT

Franchisor shall disclose the material business experience of the individuals who exercise direct management or control over the Franchisor in relation to the System, including positions held, dates of service and duties. A summary of such experience follows; additional detailed résumés are available upon request and are incorporated into the Franchise Agreement.

4. LITIGATION AND BANKRUPTCY

Franchisor discloses material litigation and bankruptcy events involving the Franchisor or any of its principal officers, whether pending, threatened or concluded, that are relevant to the potential franchise relationship. The Franchisor certifies that the following summary is complete and accurate to the best of its knowledge.

5. FEES AND INITIAL INVESTMENT

Franchisee shall pay the fees set forth below. All amounts are stated in lawful currency and are exclusive of applicable taxes unless otherwise indicated.

6. TERRITORY

Franchisor will grant Franchisee a territory as defined in the Franchise Agreement. The Parties acknowledge that territorial protections, if any, shall be defined by express geographic or customer-based restrictions and may be subject to Franchisor’s right to open or license additional locations in unprotected areas.

7. TRADEMARKS, PROPRIETARY INFORMATION AND SYSTEM

Franchisor grants a limited license to use the Marks and requires Franchisee to maintain the confidentiality of proprietary information. Franchisee acknowledges that all goodwill associated with the Marks inures to the benefit of Franchisor.

8. TRAINING AND ASSISTANCE

Franchisor shall provide initial training and continuing assistance as described below. The scope, duration and location of training shall be specified in the Franchise Agreement and may be modified in Franchisor’s reasonable discretion.

9. ADVERTISING, MARKETING AND REQUIRED CONTRIBUTIONS

Franchisee shall contribute to advertising and marketing programs as required. Franchisor shall describe required contributions, permitted uses and any national or cooperative advertising funds established.

10. RENEWAL, TRANSFER, TERMINATION

The terms for renewal, transfer and termination of the Franchise Agreement are material to the franchise relationship. The Franchise Agreement shall set forth conditions precedent for renewal, transferability of rights and grounds for termination for cause.

11. FINANCIAL PERFORMANCE REPRESENTATIONS

If Franchisor provides any financial performance representations, they shall be provided in writing and accompanied by the factual basis for such representations. Franchisee should evaluate the assumptions and methodology used to prepare any such representations prior to relying upon them.

Yes No

12. RECORDS, INSPECTION AND AUDITS

Franchisor and Franchisee shall each maintain books and records required by applicable law and the Franchise Agreement. Franchisor shall have audit rights as set forth in the Franchise Agreement to verify compliance with financial obligations and reporting requirements.

13. CONFIDENTIALITY; NON-COMPETE

Franchisee agrees to maintain the confidentiality of Franchisor’s proprietary information and, during the term and for a reasonable period thereafter, not to compete with the System as specified in the Franchise Agreement. Reasonableness of duration and scope shall be determined under governing law.

14. INDEMNIFICATION AND INSURANCE

Franchisee shall indemnify and hold harmless Franchisor against claims arising from the operation of the franchised business, except to the extent caused by Franchisor’s gross negligence or willful misconduct. Franchisee must maintain insurance coverages as described in the Franchise Agreement.

15. DISPUTE RESOLUTION

Any dispute arising out of or relating to this Document or the Franchise Agreement shall be resolved in accordance with the dispute resolution procedures set forth in the Franchise Agreement, which may include mediation and binding arbitration. Such provisions may limit the right to bring a class or representative action.

16. NOTICES

All notices required or permitted under this Document shall be in writing and delivered to the addresses set forth below, or to such other address as either Party may designate in writing in accordance with this provision.

17. AMENDMENTS; WAIVER

This Document may be amended only by a written instrument signed by both Parties. No waiver of any provision shall be effective unless in writing and signed by the Party granted the waiver; a waiver of one breach shall not constitute a waiver of subsequent breaches.

18. GOVERNING LAW

This Document and any Franchise Agreement arising hereunder shall be governed by and construed in accordance with the laws of the State of , without regard to its conflicts of law principles, except where preempted by applicable federal law.

19. ENTIRE AGREEMENT

This Document, together with the Franchise Agreement and any written appendices or attachments expressly incorporated herein, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, whether written or oral.

20. SEVERABILITY

If any provision of this Document is held to be invalid, illegal or unenforceable in any respect, such provision shall be reformed to the extent necessary to make it valid and enforceable, or if reformation is not possible, such provision shall be severed without affecting the validity or enforceability of the remaining provisions.

21. COUNTERPARTS; ELECTRONIC SIGNATURES

This Document may be executed in counterparts, each of which shall be an original, and all of which together shall constitute one and the same instrument. Signatures provided by electronic means or in facsimile shall be deemed original signatures for all purposes.

22. CERTIFICATION

Each Party represents and warrants that it has the full power and authority to enter into this Document, that the individual signing below is authorized to bind the Party, and that the information contained in this Document is true, complete and accurate to the best of such Party's knowledge as of the Effective Date.

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