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The Sub Franchise Agreement is a crucial document used in multi-tiered franchise structures in South Africa, where a master franchisee has been granted rights to sub-franchise the business concept within a specific territory. This agreement is essential when expanding franchise networks through local partners while maintaining brand consistency and operational standards. The document must comply with South African legislation, particularly the Consumer Protection Act, which provides specific requirements for franchise agreements. It typically includes detailed provisions for operational standards, financial obligations, territory rights, intellectual property usage, and support services. The agreement ensures that the sub-franchisee's operations align with both the master franchise agreement and local regulatory requirements while protecting the interests of all parties involved in the franchise structure.

1. Parties: Identification of the master franchisee (sub-franchisor) and sub-franchisee, including full legal names and registration details

2. Background: Context of the agreement, including reference to the master franchise agreement and authority to grant sub-franchises

3. Definitions and Interpretation: Detailed definitions of terms used throughout the agreement and rules of interpretation

4. Grant of Sub-Franchise: Terms of the sub-franchise grant, including territory, exclusivity, and term of agreement

5. Franchise System: Description of the franchise system, including use of trademarks, know-how, and operating procedures

6. Fees and Payments: Details of initial fees, ongoing royalties, marketing contributions, and payment terms

7. Sub-Franchisor Obligations: Obligations of the master franchisee including training, support, and oversight

8. Sub-Franchisee Obligations: Detailed responsibilities and commitments of the sub-franchisee

9. Training Requirements: Initial and ongoing training requirements and procedures

10. Operating Standards: Required operational standards, quality control, and compliance requirements

11. Intellectual Property: Use and protection of trademarks, copyright, and other intellectual property

12. Marketing and Advertising: Marketing requirements, restrictions, and cooperative advertising programs

13. Records and Reporting: Required financial records, reports, and inspection rights

14. Transfer and Assignment: Conditions and restrictions on transfer of the sub-franchise rights

15. Termination: Grounds for termination, procedures, and consequences

16. Post-Termination Obligations: Obligations and restrictions after agreement ends

17. Dispute Resolution: Procedures for handling disputes, including mediation and arbitration

18. General Provisions: Standard legal provisions including notices, governing law, and entire agreement