Travel Agency Franchise Agreement
Travel Agency Franchise Agreement
This Travel Agency Franchise Agreement ("Agreement") is made effective as of [Date], by and between [Your Company Name], a [Type of Entity] duly organized and existing under the laws of [State/Country of Incorporation], with its principal office located at [Your Company Address] ("Franchisor"), and [Franchisee Name], a [Type of Entity] duly organized and existing under the laws of [State/Country of Incorporation], with its principal office located at [Franchisee Address] ("Franchisee").
WHEREAS, the Franchisor owns and operates [Franchise Brand Name], a recognized brand in the travel agency industry, and has developed a unique system for the marketing and sale of travel services ("System");
WHEREAS, the Franchisee desires to obtain a franchise to use the System within a specified territory and to operate under the Franchisor’s brand name, benefitting from the Franchisor's expertise, marketing strategies, operational procedures, and continuous support;
WHEREAS, the Franchisor is willing to grant a franchise to the Franchisee under the terms and conditions set forth herein, allowing the use of its trademarks, service marks, business methods, operating manuals, and other intellectual property in connection with the operation of a [Franchise Brand Name] franchise;
NOW, THEREFORE, in consideration of the mutual promises, covenants, and considerations set forth herein, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: The Franchisor shall grant the Franchisee the rights to operate a franchise pursuant to the System and brand as outlined in this Agreement, and the Franchisee agrees to operate the franchise in strict compliance with the Franchisor’s established standards and guidelines.
I. Grant of Franchise
A. Franchise Rights: The Franchisor hereby grants to the Franchisee the non-exclusive right to operate a travel agency under the [Franchise Brand Name] system and trademarks within the designated territory of [Territory]. The Franchisee shall not operate or grant sub-franchises outside of this territory without prior written consent from the Franchisor.
B. Territory Protection: The Franchisor agrees not to establish another [Franchise Brand Name] franchise or operate a company-owned outlet within the specified territory during the term of this Agreement. This territory protection is contingent upon the Franchisee maintaining the minimum performance standards as defined in Section VIII.
II. Fees and Payments
A. Initial Franchise Fee: The Franchisee shall pay the Franchisor an initial franchise fee of $50,000 upon execution of this Agreement. This fee is non-refundable and grants the Franchisee the license to use the [Franchise Brand Name] trademarks, access to the System, and the right to operate under the [Franchise Brand Name] business format.
B. Royalty Payments: The Franchisee is required to pay royalties amounting to 5% of the monthly gross revenue. These payments are due monthly and must be paid by the 10th day of the following month. The royalties contribute to the ongoing support provided by the Franchisor and the use of the System.
C. Advertising Fee: In addition to the royalty payments, the Franchisee must contribute 2% of the monthly gross revenue to the national marketing fund. These payments are due simultaneously with the royalty payments and are used to fund national and regional advertising campaigns that benefit all franchisees.
D. Local Advertising Commitment: The Franchisee must spend a minimum of 1% of monthly gross revenue on local advertising and promotional activities. This spending is to be directed by the Franchisee but must adhere to the branding guidelines provided by the Franchisor. Proof of such spending must be submitted to the Franchisor quarterly.
III. Franchisee Obligations
A. Operational Compliance: The Franchisee must operate the franchise in strict compliance with the operational guidelines, standards, and procedures as specified in the Franchisor’s operations manual. This includes adherence to all local and national regulations pertaining to travel agency operations. Regular audits will be conducted by the Franchisor twice a year to ensure compliance.
B. Equipment and Supplies: The Franchisee is required to purchase or lease all necessary equipment, software, and supplies exclusively from suppliers approved by the Franchisor. A list of approved suppliers and required equipment will be provided to the Franchisee upon signing this Agreement.
C. Staff Training: The Franchisee must ensure that all staff undergo the mandatory initial training provided by the Franchisor and participate in ongoing training sessions as scheduled, typically annually. The Franchisee is responsible for covering the travel and accommodation costs for their staff attending these trainings.
IV. Training and Support
A. Initial Training: The Franchisor will provide an initial training program for the Franchisee and their key staff over a period of four weeks at the Franchisor’s headquarters. This training is designed to cover all aspects of operating a [Franchise Brand Name] franchise, including sales techniques, customer service, software use, and compliance. The cost of this training is included in the initial franchise fee.
B. Ongoing Support: The Franchisor will provide ongoing support including regular updates to the operations manual, access to Franchisor’s customer service team for troubleshooting, and quarterly webinars on industry developments and marketing strategies. This support is covered by the royalty payments.
V. Marketing and Advertising
A. National Advertising Fund: The Franchisee’s contribution to the national advertising fund (2% of monthly gross revenue) will be used to fund broad marketing campaigns, including digital advertising, national print campaigns, and public relations efforts to benefit the entire franchise network.
B. Local Advertising: The Franchisee is required to spend at least 1% of monthly gross revenue on local advertising. This includes local print media, online advertising, and community event sponsorships. All local advertising materials must be submitted to the Franchisor for approval prior to use to ensure consistency with the national brand image.
C. Promotional Activities: The Franchisee is encouraged to engage in local promotional activities such as travel fairs and local tourism events. The Franchisor will provide promotional materials and support for such activities. Planning for these events should be communicated to the Franchisor at least 60 days in advance to ensure appropriate support and material availability.
VI. Term and Renewal
A. Initial Term: The initial term of this Agreement shall commence on the date of execution and continue for a period of ten years. This term is conditional upon the Franchisee's compliance with all the terms and conditions specified in this Agreement.
B. Renewal: The Franchisee has the option to renew this Agreement for an additional term of ten years, provided that they have not breached any terms of the Agreement and have met all the performance standards required by the Franchisor. The Franchisee must give written notice of their intention to renew at least 180 days before the expiration of the current term.
VII. Performance and Sales Targets
A. Minimum Sales Targets: The Franchisee is required to achieve minimum annual sales targets set by the Franchisor. For the first year, the target is set at $500,000 in gross revenue, with a 5% increase each subsequent year. Failure to meet these targets for two consecutive years may result in termination of the Agreement or non-renewal.
B. Performance Reviews: Performance will be reviewed annually by the Franchisor. These reviews will focus on sales achievements, customer service ratings, and adherence to franchise standards. The Franchisee must maintain a customer satisfaction rating of at least 90% to meet the performance criteria.
VIII. Intellectual Property
A. Trademarks and Branding: The Franchisor grants the Franchisee a non-exclusive, non-transferable license to use the [Franchise Brand Name] trademarks and related branding materials in accordance with the guidelines prescribed in the operations manual. This license is only valid within the designated territory and during the term of this Agreement.
B. Proprietary Information: The Franchisee shall have access to proprietary information, including trade secrets, business methods, and marketing strategies. The Franchisee agrees to use this information solely for the operation of the Franchise and not to disclose any such information to third parties.
C. Intellectual Property Protection: The Franchisee is responsible for protecting the Franchisor's intellectual property rights within their territory and must report any infringement or misuse immediately to the Franchisor. Legal action, if necessary, will be taken by the Franchisor, with the cooperation of the Franchisee.
IX. Confidentiality
A. Confidential Information Protection: The Franchisee must maintain strict confidentiality regarding all proprietary information, business processes, client data, and operational practices received from the Franchisor. This obligation shall persist during the term of the Agreement and for five years following its expiration or termination.
B. Non-Disclosure: The Franchisee shall not disclose any confidential information to third parties without the prior written consent of the Franchisor, except as required by law. In such cases, the Franchisee must notify the Franchisor immediately and provide full cooperation in maintaining confidentiality to the extent possible.
X. Termination and Transfer
A. Termination by Franchisor: The Franchisor may terminate this Agreement immediately upon written notice if the Franchisee fails to meet the performance standards, breaches any term of the Agreement, or fails to make required payments within 60 days of their due date.
B. Termination by Franchisee: The Franchisee may terminate this Agreement by providing at least 90 days written notice to the Franchisor, along with a detailed explanation of the reasons for termination.
C. Transfer of Franchise: The Franchisee may not sell, transfer, or assign the franchise or any rights under this Agreement without the prior written consent of the Franchisor. Any potential transferee must meet the Franchisor’s qualifications and agree to adhere to the terms of the existing Agreement.
XI. Dispute Resolution
A. Mediation: In the event of a dispute, both parties agree to first seek resolution through mediation, to be conducted by a mutually agreed-upon mediator, within 30 days of the dispute arising.
B. Arbitration: If mediation is unsuccessful, the dispute will be resolved through binding arbitration in accordance with the rules of the American Arbitration Association, conducted in the state where the Franchisor’s headquarters are located.
XII. Miscellaneous Provisions
A. Governing Law: This Agreement shall be governed by and construed in accordance with the laws of the state in which the Franchisor’s headquarters are located, without regard to its conflict of laws principles.
B. Entire Agreement: This Agreement constitutes the entire agreement between the parties and supersedes all prior communications, agreements, or representations, whether oral or written.
C. Amendments: Any amendments to this Agreement must be made in writing and signed by authorized representatives of both parties.
Signatures
This Agreement is executed by the duly authorized representatives of the Franchisor and the Franchisee as of the date first above written.
Franchisor
[Name]
[Date]
Franchisee
[Name]
[Date]
