A franchise is a form of business in which a company that has developed a product or service (the franchisor) enters into a contractual relationship with other companies (franchisees), which usually operate under the trade name and directives of the franchisor in exchange for consideration. The parties involved enter into a legally binding franchise agreement that describes the franchisor`s terms and conditions for a franchisee. It sets out the conditions under which a franchisee must carry on its activities, as well as the rules to be followed. The business in which new entrepreneurs or franchisees invest money must be properly planned or conform to a mode that generates a good return on investment. Newspapers, direct response materials, direct mail, brochures, accompanying promotional material, implementation of websites for franchisors and/or its franchises, surveys on the effectiveness of advertising and other media programs and activities, employment of advertising agencies to support and provide promotional brochures, stickers and other marketing materials. The rights and obligations of the parties to the termination of the contract must be well negotiated between the parties. The clauses relating to the amounts to be paid to one of the parties upon termination of the contract, use of intellectual property, etc. must be clearly stated in the agreement so that the termination between the parties proceeds smoothly. The franchise agreement must clearly specify the fees, which are usually double, first, are the initial one-time franchise fee that the franchisee claims for the franchise, and second, are the recurring fees to be paid based on the monthly sale of the product/service. However, consideration and payment terms may vary depending on the type of franchise model in which the parties conclude. The method of payment and the payment terms should be clearly defined in the agreement. In addition, the effects of non-payment of fees should also be clearly mentioned in the agreement.
11.4 Advertising Cooperatives. With respect to the Restaurant and any other Mama Fu`s Restaurant owned or operated by the Franchisee, the Franchisee must, at the request of the Franchisor, participate in a local, regional or national cooperative advertising group composed of other Franchisees of Mama Fu`s Restaurants if and when these groups are formed (each, a “Promotional Cooperative”). The respective advertising cooperative(s) in which the franchisee is required to participate will be designated by the franchisor in its sole discretion (designations may be based, but not limited to, on the respective designated market area or area of dominant influence, as these terms are used in the advertising industry in which the Mama Fu restaurants operated by the franchisee are located). The franchisee`s payments to an advertising cooperative are determined by the franchisee and other franchisees of the mama fu system and/or the franchisor who participate in such an advertising cooperative as set out in the articles of that advertising or membership, contributions, participation or other payment agreements of that advertising cooperative. However, the franchisee may not have to spend more than 2% of gross sales per year in an advertising cooperative. Amounts paid to an advertising cooperative will be taken into account in payments that the franchisee is otherwise required to make for local advertising in accordance with section 11.3 above. All payments to an advertising co-operative are in addition to the amounts that must be paid or spent in accordance with sections 11.1 and 11.2 of this Agreement. The Franchisee enters into such formal agreements with other franchisees of the Mama Fu System and/or the Franchisor to the extent necessary or appropriate to perform the foregoing. If the franchisee fails to make contributions or other payments to the advertising cooperative, this failure will be considered a failure to participate in the advertising cooperative and a material breach of this contract. The franchisor may suspend or terminate the program or operation of an advertising cooperative in writing with 30 days` notice. (vii) Use only those ingredients, products, consumables, furniture and equipment that comply with the standards and specifications specified by the franchisor in the user manual or otherwise. From time to time, the franchisor may designate approved suppliers, including it or its affiliates, whose listed products or services meet the franchisor`s standards.
Unless the franchisor requests otherwise, or designates an exclusively designated supplier, the franchisee may purchase all products, supplies, furniture and equipment from any available source, provided that such products, supplies, furniture and equipment comply with the standards and specifications established by the franchisor. If the franchisor identifies itself as a supplier, it has the right to profit from the items it supplies. The franchisor and its affiliates may receive payments, discounts or other consideration from the suppliers in exchange for the activity of such suppliers with the franchisee and/or the Mama Fu franchisee system and may use all amounts received from it without restriction. The franchisor has no obligation to provide the franchisee with a statement of the supplier`s payments or to share the benefit of the supplier`s payments with the franchisee or other Mama Fu franchisees. (Company Owned Company Operated) – COCO stands for Company Owned and Company Operated, where the brand owns the franchised store unit and operates the store itself. It basically has nothing to do with franchising. Advertising costs will be spent on behalf of the franchisor, franchisee and any other franchisee or user of the Mama Fu system for the production or purchase of radio, television, print and/or other promotional materials or services that the franchisor deems necessary or appropriate in its sole discretion at the national, regional or local level (the “Advertising Fund”). .