Document background
The Area Franchise Agreement is a sophisticated commercial contract used when a franchisor wishes to expand their franchise system in Malaysia through an intermediary (area franchisee) who will develop a specified territory. This document is essential for businesses seeking to establish a multi-unit franchise presence in Malaysia while complying with the Franchise Act 1998 and related regulations. The agreement covers crucial aspects such as territory rights, development obligations, sub-franchising authority, fee structures, and quality control measures. It must be registered with the Malaysian Franchise Registry and typically requires careful consideration of local business practices, cultural factors, and regulatory requirements. The document serves as the foundation for creating a network of sub-franchises while maintaining brand consistency and operational standards across the designated territory.
