Requirement of Minimum Period for Providing a Draft Franchise Agreement

One of the new requirements to be observed by any prospective Franchisor and prospective Franchisee is the minimum period that a draft franchise agreement shall be provided before such draft agreement could be signed, as stipulated in the Regulation of the Minister of Trade No. 31 Year 2008 concerning the Organization of Franchise.
Pursuant to Article 5 paragraph (3) of this Ministerial Regulation No. 31, a draft franchise agreement must be provided to a prospective Franchisee at least 2 (two) weeks before the target date of signing the agreement.

With the requirement of minimum period for providing a draft franchise agreement, a Franchisor could be more attentive in the process of preparation of a draft franchise agreement. A draft franchise agreement should not be standardized for any prospective Franchisee. Preparation of each draft franchise agreement requires careful thought and consideration, taking into account the proposed place of the franchise business, term of the agreement, rights that the Franchisee would enjoy under the agreement, obligations to be fulfilled by the Franchisee, and other factors that may affect the course of the franchise business .

Likewise, the requirement of minimum period for providing a draft franchise agreement under this Ministerial Regulation No. 31 shall mean a positive support to a prospective Franchisee. With this minimum period requirement, a prospective Franchisee would have sufficient time and opportunity to analyze the prospect of the concerned franchise business, discuss and negotiate with the Franchisor, so any potential disputes might be mitigated.



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