As part of the franchise, Company A New Zealand would:
- transfer operating and quality control procedures and know-how to Company A Malaysia
- sell key components of popcorn machines to Company A Malaysia
- give Company A Malaysia help with marketing, power system design and technical support
Company A Malaysia would:
- run the business under specific franchise operating rules
- pay a franchise fee calculated as a percentage of its pre-tax profit
- amend its rules to provide safeguards to minority shareholders
Other issues to be considered when drawing up a franchise agreement include:
- Territory and exclusivity – any sales limitations and restrictions on Company A New Zealand granting other franchises in the same territory
- Payment terms
- Term of Agreement
- Minimum sales or production volumes
- Use of Company A New Zealand brand
- Manufacture of competitive products by Company A Malaysia
- Sale of franchise or sub-franchise
- Plant access, audit and inspection rights
- Reporting
- Dispute resolution
