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The Franchise Operating Agreement serves as the foundational legal document for franchise businesses operating in Malaysia. This agreement is essential when a business owner (franchisor) grants another party (franchisee) the right to operate under their established business system and brand. The document must comply with the Malaysian Franchise Act 1998 and other relevant local regulations, making it suitable for both domestic and international franchise operations in Malaysia. It comprehensively covers all aspects of the franchise relationship, including initial setup, ongoing operations, quality control, financial obligations, and termination procedures. The agreement is particularly important as it needs to be registered with the Franchise Registry of Malaysia and must include specific mandatory provisions required by Malaysian law.

1. Parties: Identification of the franchisor and franchisee, including full legal names, registration numbers, and registered addresses

2. Background: Context of the agreement, brief description of the franchise system, and acknowledgment of franchisor's rights

3. Definitions: Detailed definitions of key terms used throughout the agreement

4. Grant of Franchise: Scope of franchise rights, territory, and exclusivity provisions

5. Term and Renewal: Duration of the agreement and conditions for renewal

6. Franchise Fees: Initial franchise fee, ongoing royalties, and other financial obligations

7. Franchisor's Obligations: Support, training, operations manual, and other services provided by franchisor

8. Franchisee's Obligations: Operational standards, compliance requirements, and performance obligations

9. Intellectual Property: Use of trademarks, trade secrets, and other intellectual property

10. Training and Support: Initial and ongoing training requirements and support services

11. Marketing and Advertising: Marketing obligations, advertising fees, and promotional requirements

12. Quality Control: Standards, inspections, and compliance requirements

13. Records and Reporting: Financial reporting, audit rights, and record-keeping requirements

14. Transfer and Assignment: Conditions for transfer of franchise rights

15. Termination: Grounds for termination and procedures

16. Post-Termination Obligations: Obligations after agreement ends, including non-compete and confidentiality

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

18. Governing Law: Application of Malaysian law and jurisdiction