Franchise Agreement, version 7. Please read it in full at least 7 days before you accept it. This text is subject to final review by a licensed Philippine lawyer.
ARNOKS FRANCHISE AGREEMENT
Arnoks Universal Franchise Starter
«Program»
This FRANCHISE AGREEMENT (the "Agreement") is made as of «EffectiveDate» (the "Effective Date"), as provided in Clause 22.5, by and between:
ARNOKS FOOD CORPORATION, a corporation duly organized and existing under the laws of the Republic of the Philippines, with principal office at Arnoks Business Hub, McArthur Highway, Block 1, Sta. Cruz, Tarlac City, Tarlac 2300, Philippines, represented herein by its Founder, President and Chief Executive Officer, JONATHAN DC. TAGUINES, duly authorized for this purpose by a resolution of its Board of Directors, as evidenced by the Secretary's Certificate attached to the notarized copies (the "Franchisor");
-- and --
«FranchiseeName», of legal age, «Citizenship», «CivilStatus», residing at «FranchiseeAddress» (the "Franchisee").
The Franchisor and the Franchisee are each a "Party" and together the "Parties".
RECITALS
WHEREAS, the Franchisor has developed and operates a quick-service food business under the name ARNOKS, including Arnoks Special Fried Chicken, together with a business system made up of recipes, product formulations, standard operating procedures, training, branding and product supply arrangements;
WHEREAS, the Franchisor owns or has the right to license the Marks and the System (each as defined below);
WHEREAS, the Franchisee wishes to obtain, and the Franchisor is willing to grant, a franchise to operate the Franchised Business in the Approved Format and at the Approved Location, on the terms of this Agreement;
NOW, THEREFORE, for and in consideration of the foregoing and the mutual covenants below, the Parties agree as follows:
ARTICLE 1 — DEFINITIONS AND INTERPRETATION
1.1 In this Agreement, the following terms have these meanings:
"Acceptance Date" has the meaning given in Clause 22.5(a).
"Additional Items" has the meaning given in Clause 8.4.
"Approved Format" means the one (1) business format stated in Schedule 1, chosen from Home-based, Menu Collaboration, Kiosk, Mobile Cart, Prime-X, Take-away, Dine-in (Open), Dine-in (Air-conditioned) and Stand-alone Restaurant.
"Approved Location" means the address approved in writing by the Franchisor and stated in Schedule 1 or, for the Mobile Cart and Prime-X formats, the base site and operating spots so approved and stated.
"Brand Standards" means the Franchisor's written brand guide, logo-usage rules, menu templates, signage and layout guides, store theme and color palette, and uniform requirements, as updated from time to time.
"Buffer Zone" means the band extending one hundred (100) meters beyond the outer edge of a Territory, measured in a straight line.
"Business Day" means a day other than a Saturday, a Sunday or a public holiday in the Philippines.
"Commissary" means the Franchisor's commissary and product supply system, including any facility or distributor the Franchisor designates in writing.
"Core Products" means the products listed as Core Products in Schedule 1, being Arnoks Special Fried Chicken (Original and Spicy), Arnoks Poppers, Arnoks Pastil, and Arnoks gravy and signature sauces, as the Franchisor may update by at least thirty (30) days' written notice.
"Directly Competing Item" means any food item that is of the same kind as a Core Product and is offered as a substitute for it, such as fried chicken (whole, bone-in or boneless), chicken poppers or bites, pastil, or a gravy or sauce of the same kind as the Arnoks gravy and signature sauces, that is not an Arnoks product obtained from the Commissary.
"Effective Date" means the Acceptance Date, as provided in Clause 22.5(b).
"First Operating Day" means the first day on which a Mobile Cart or Prime-X unit moves to a selling spot and sells to the public, as reported to the Franchisor in writing.
"Franchise Certificate" means the certificate the Franchisor issues to the Franchisee to evidence the franchise granted, as listed in Part B of Schedule 1.
"Franchised Business" means the ARNOKS outlet operated by the Franchisee under this Agreement (for the Prime-X format, all Prime-X units the Franchisee deploys under Clause 2.2).
"Gross Sales" means all revenue from the sale of any food, beverage, product or service made at, from or in connection with the Franchised Business, whether for cash, on credit, or through online, mobile-app, social media or third-party delivery channels, measured at the amount charged to the customer after senior citizen, PWD and other discounts required by law and promotional discounts approved by the Franchisor, and before any deduction for expenses, costs, taxes, commissions, platform or payment-processing fees or other charges.
"Manual" means the Franchisor's operations manual, standard operating procedures (SOPs), recipes, product specifications, training materials and tutorials, in any form, as updated from time to time.
"Marks" means the name ARNOKS, the ARNOKS logo (a cartoon chicken on a red circle with a blue ribbon banner), the tagline "Lasang Pang World Class", and any other trade name, trademark, logo or slogan the Franchisor designates in writing for use in the System.
"Open Location" means a place that is outside every other franchisee's Territory and Buffer Zone, as shown in the Territory Register.
"Opening Date" means the date on which the Franchised Business first opens to the public, as confirmed in writing by the Franchisor.
"Origin Point" means the commissary from which a Prime-X operator prepares, stores and dispatches its units, stated in Schedule 1. It need not be inside the city or municipality; a home-based commissary is preferred.
"Proprietary Products" means the Arnoks Original and Spicy premixes, flour coating (breading mix), pastil premix, gravy powder, signature sauces (Yangnyeom, Honey Butter and Teriyaki), special chili powder, and any other product made with the Franchisor's secret formulation that the Franchisor adds by thirty (30) days' written notice.
"Protected Area" means a Territory together with its Buffer Zone.
"Reservation Fee" means the non-refundable reservation fee of Nine Hundred Ninety-Nine Pesos (₱999.00) that the Franchisee paid to the Franchisor's official corporate bank account (by bank transfer or e-wallet transfer into that account) or through the Franchisor's online payment link.
"Reservation Terms" means the terms the Franchisee accepted by ticking the boxes on the Website when paying the Reservation Fee, as repeated in the Franchisor's payment emails.
"Reserved Territory" means a Territory reserved by a Mobile Cart or Prime-X franchisee under Clause 2.6 or 2.7.
"Scouting Period" means the thirty (30) days starting on the First Operating Day.
"Starter Package" means the items listed in Parts B and C of Schedule 1.
"System" means the Franchisor's method of establishing and operating ARNOKS outlets, including the Marks, recipes, product formulations, the Manual, training, the Brand Standards, the supply system and the related know-how.
"Territory" has the meaning given in Clause 2.3(a).
"Territory Register" means the record of Approved Locations, Territories and Reserved Territories kept by the Franchisor under Clause 2.8.
"VAT" means value-added tax under Philippine law.
"Website" means the Franchisor's website and its seminar, reservation and promotional pages, forms, calculators and materials.
1.2 Headings are for convenience only. "Including" means "including without limitation". A reference to a law includes that law as amended or replaced. The Schedules form part of this Agreement. If a Schedule states a term specific to the Franchisee (such as format, location, dates or contact details), that term prevails over the general text of this Agreement.
ARTICLE 2 — GRANT, FORMAT, LOCATION AND TERRITORY
2.1 Grant. Subject to this Agreement, the Franchisor grants the Franchisee, for the Term, a personal and non-transferable right and license to use the System and the Marks to operate one (1) ARNOKS outlet in the Approved Format at the Approved Location (or, for the Prime-X format, the Prime-X units permitted by Clause 2.2). Within the Territory, the grant is exclusive to the extent of the Territorial Protection in Clause 2.3; elsewhere it is non-exclusive.
2.2 Approved Format. The Franchisee shall operate only in the Approved Format. A change of format requires the Franchisor's prior written consent and may require a new location assessment and additional costs. For the Mobile Cart and Prime-X formats, the Franchisee shall operate only from the base site and operating spots approved in writing. Where Prime-X is the Approved Format, the fabrication of the unit and its equipment are arranged separately and at the Franchisee's cost; the Franchisor shall not appoint another Prime-X operator in the same city or municipality, but the Franchisee may deploy more than one Prime-X unit within it, in each case subject to the permits required by the local government. For the Menu Collaboration format, any additional terms for offering the Arnoks products within the Franchisee's existing food business are stated in Schedule 1.
2.3 Territory and Territorial Protection.
(a) The "Territory" is the circular area with a radius of one hundred fifty (150) meters, equivalent to a diameter of three hundred (300) meters, measured in a straight line from the measuring point stated in Schedule 1. The measuring point is: (i) for an outlet inside the premises of a school, the main gate of that school; (ii) for an outlet serving a school but located outside its premises, the main entrance of the stall; (iii) for a Reserved Territory, the centre point stated for it in the Territory Register; and (iv) in every other case, the main entrance of the Approved Location. Schedule 1 states the name of the school, if any, and the exact address of the Approved Location.
(b) During the Term, and for as long as the Franchisee is not in default beyond any applicable cure period, the Franchisor shall not itself operate, and shall not grant any other person the right to operate, another ARNOKS outlet with a fixed place of business inside the Territory (the "Territorial Protection"). For this purpose an ARNOKS outlet includes any food house, kiosk, take-away or dine-in outlet, and any home-based setup that sells prepared Arnoks products to the public from a fixed address.
(c) The Territorial Protection does not restrict the Franchisor or others from: (i) accepting orders through online, mobile-app or delivery channels that are fulfilled from outlets outside the Territory; (ii) selling Arnoks Essentials and other packaged Arnoks products through wholesale or retail channels; (iii) operating at temporary events, bazaars or catering functions; or (iv) continuing the outlets and home-based resellers that already operate inside the Territory on the Effective Date and are listed in Schedule 1.
(d) The Territorial Protection applies only after the Franchisor has approved the Approved Location in writing following a location and territory assessment, and only to the Approved Location. It is not a guarantee of sales and gives the Franchisee no other right in the Territory.
(e) "One School, One Arnoks" and "One City or Municipality, One Prime-X Operator" are program names. The only protection they give is the Territorial Protection in this Clause 2.3 and, for Prime-X, the commitment in Clause 2.2. They give no other exclusivity, and the Franchisor may operate or license outlets anywhere else.
2.4 Location approval and relocation. The Franchisor's approval of a location is not a representation that the location will be successful. The Franchisee may relocate only with the Franchisor's prior written approval, and the Territory will be reassessed for the new location. Relocation costs are for the Franchisee's account.
2.5 Opening Deadline. The Franchisee shall open for business within the number of days stated in Schedule 1, counted from the later of the Effective Date and the date the Franchisor approves the Approved Location in writing (the "Opening Deadline"). The Opening Deadline is extended by any delay caused by the Franchisor, by force majeure under Article 19, or by a government authority's delay in issuing a permit that the Franchisee applied for on time, and the Franchisor may extend it for other good reason on written request. The Franchisee shall not open until the Franchisor confirms in writing that training, permits and Brand Standards requirements have been completed. If the Franchisee does not open by the Opening Deadline (as extended), the Franchisor may terminate this Agreement by written notice and release the Territory, and Clause 15.5 applies without refund of the Franchise Fee.
2.6 Mobile Cart.
(a) During the Scouting Period, the Franchisee may move the Mobile Cart and sell at any Open Location within its own city or municipality, subject to local government permits, to find its best selling areas.
(b) No later than the last day of the Scouting Period, the Franchisee shall submit to the Franchisor, in writing or through the Website, up to two (2) proposed Reserved Territories, each with the address and map location of its centre point.
(c) A proposed Reserved Territory is approved only if its Protected Area is an Open Location when it is recorded in the Territory Register. If two franchisees propose overlapping areas, the earlier submission, by the date and time recorded in the Territory Register, prevails.
(d) After approval, the Territorial Protection in Clause 2.3(b) applies to each Reserved Territory, and subject to Clause 2.3(c), the Franchisor shall not operate or approve, and shall take reasonable steps (including enforcing its other franchise agreements) to stop, any other ARNOKS outlet of any format, including another Mobile Cart or a Prime-X unit, to sell within its Protected Area.
(e) After the Scouting Period, the Franchisee shall sell only within its Reserved Territories or at other Open Locations, and never within another franchisee's Protected Area.
(f) The Franchisee may move a Reserved Territory by written notice to the Franchisor (email or the Website is enough; no signed amendment is needed). The Franchisee shall not sell at the new spot until the Franchisor confirms in writing that it is an Open Location. The Franchisor then records the change in the Territory Register, and the old Reserved Territory is released.
(g) A change made under Clause 2.6(f), and a release under Clause 2.6(i), is an administrative change permitted by this Agreement and is not an amendment under Clause 22.2. No such change may reduce the Territorial Protection of any other franchisee.
(h) If the Franchisee does not submit its Reserved Territories by the end of the Scouting Period, it may keep selling at Open Locations, but it has no Reserved Territory until it submits one, and any area recorded by another franchisee in the meantime is no longer available to it.
(i) A Reserved Territory stays reserved for the Franchisee even if it is not used, for any length of time. Another franchisee who wishes to sell there shall first coordinate with the Franchisor. The Franchisor shall contact the Franchisee about the status of that Reserved Territory. The Franchisor may approve another franchisee to sell there only if the Franchisee releases that Reserved Territory in writing; the Franchisor then records the release in the Territory Register and tells the interested franchisee in writing whether it may sell there. The interested franchisee shall not sell there unless and until it receives the Franchisor's written approval. All of the Franchisee's Reserved Territories are released automatically when this Agreement ends.
(j) A release under Clause 2.6(i) takes effect only when the Franchisor records it in the Territory Register. The released area becomes an Open Location from the date and time of that record, and the Franchisor shall send the record to the releasing Franchisee and to the interested franchisee.
2.7 Prime-X.
(a) The Prime-X operator's Origin Point is stated in Schedule 1.
(b) The Franchisee may move its Prime-X units and sell at any Open Location within its city or municipality, at any time, subject to local government permits.
(c) The Franchisee may reserve up to three (3) Reserved Territories within its city or municipality, under the same rules as Clause 2.6(b), (c), (d), (f), (g), (h), (i) and (j).
(d) The Franchisee shall not sell within the Protected Area of any other franchisee, including a Mobile Cart Reserved Territory recorded before the Prime-X unit sells there. The same protection applies to the Prime-X Reserved Territories against other franchisees.
2.8 Territory Register.
(a) The Franchisor keeps a Territory Register recording every Approved Location, Territory and Reserved Territory, with the date and time each was submitted and approved.
(b) Before selling at a new spot, a Mobile Cart or Prime-X franchisee shall confirm with the Franchisor (or through the Website, once available) that the spot is an Open Location.
(c) Selling within another franchisee's Protected Area is a breach under Clause 15.1. Three such breaches within twelve (12) months are an incurable default under Clause 15.2(i).
(d) The Franchisor shall not approve a new Approved Location of any format whose measuring point lies within another franchisee's Protected Area (its Territory or the 100-meter Buffer Zone around it).
(e) The Territory Register records automatically the date and time of every submission, approval, change, release and correction. No entry is ever deleted. A mistake is corrected only by a new entry stating the reason, and the Franchisor shall notify each affected franchisee of the correction in writing. Only authorized officers of the Franchisor may approve, change or correct entries.
(f) The approval of a Reserved Territory, or a confirmation that a spot is an Open Location, concerns only the territory rules of this Agreement. It is not a government permit and not permission from the owner or manager of the property; the Franchisee must still obtain both under Clause 10.2.
ARTICLE 3 — FRANCHISE FEE, VAT AND PAYMENTS
3.1 Franchise Fee. The Franchisee shall pay the Franchisor a one-time franchise fee of Forty-Nine Thousand Five Hundred Pesos (₱49,500.00), inclusive of VAT, if applicable (the "Franchise Fee"). The Franchise Fee pays for access to the System and the Starter Package described in Schedule 1 (franchise rights, training, starter products and tools, branding and support). It does not include the costs of setting up the Franchised Business described in Clause 10.1.
3.2 VAT on the Franchise Fee. The Franchise Fee already includes any VAT that applies. No VAT is added to it. The Franchisor shall issue the official receipt or invoice required by law.
3.3 Payment. The Franchise Fee is due in full on or before the Acceptance Date (Clause 22.5), by deposit or transfer to the Franchisor's official corporate bank account named in the Franchisor's payment email, as described in Schedule 1, or to another corporate account that an authorized officer of the Franchisor designates in a signed writing. Payment to any other account, including any personal account or e-wallet, is not payment under this Agreement unless the Franchisor has confirmed that account in writing. The Reservation Fee already paid is credited under Clause 3.5.
3.4 Refund. The Franchise Fee is fully earned when the Franchisor confirms the acceptance under Clause 22.5(b) and is non-refundable, except that if the Franchisor, after a location and territory assessment, cannot approve the Approved Location or any alternative location the Franchisee proposes within thirty (30) days after the Effective Date, the Franchisor shall refund the Franchise Fee, including the Reservation Fee credited to it, less the cost of any Starter Package items already delivered. Clause 22.5(f) states two other cases in which a refund is due.
3.5 Reservation Fee. The Reservation Fee of ₱999.00 is credited in full against the Franchise Fee, so the balance to pay is ₱48,501.00, provided the Franchisee completes payment of the Franchise Fee within the credit period stated in the Reservation Terms (through the thirtieth (30th) day, the day of payment being Day 1, ending 11:59 PM Philippine Time). If it does not, the credit expires and can no longer be applied. The location is held for the Franchisee for seven (7) days (Day 1 to Day 7), as stated in the Reservation Terms. The Reservation Fee is non-refundable, except as stated in Clause 3.4 and Clause 22.5(f), and except that the Franchisor shall refund it if the Franchisor cannot honor the reservation. Any other reservation or seminar amount that the Franchisor has agreed in writing to be creditable shall also be credited.
3.6 Royalty and other charges. The Royalty rate in Article 5 is inclusive of VAT: no VAT is added to the Royalty, and any VAT due on the Royalty is for the Franchisor's account. Prices for Proprietary Products and other goods or services are as stated in the Commissary price list or the Franchisor's invoice.
3.7 Taxes. The Franchisor bears the Philippine taxes on all payments made to it under this Agreement, including the Franchise Fee and the Royalty. If the law requires the Franchisee to withhold tax from a payment to the Franchisor, the Franchisee shall withhold and remit it and give the Franchisor the withholding tax certificate (BIR Form 2307 or its replacement) within twenty (20) days after the end of the quarter in which the tax was withheld, or sooner if the Franchisor asks; the amount withheld counts as paid once the certificate is given. Each Party bears its own income taxes. The Franchisee bears all other taxes, permits and government charges relating to the Franchised Business, and the costs stated in Clause 22.7.
3.8 No set-off. The Franchisee shall not withhold or set off any amount due to the Franchisor.
ARTICLE 4 — TERM AND RENEWAL
4.1 Term. This Agreement takes effect on the Effective Date. The franchise term begins on the Opening Date and continues for two (2) years (the "Term"), unless terminated earlier. All provisions of this Agreement apply from the Effective Date, except those that by their nature apply only after the Opening Date, such as the Royalty.
4.2 Renewal. The Franchisee may apply to renew for one additional term of two (2) years if: (a) it has no outstanding financial obligation to the Franchisor; (b) its government permits are valid and up to date; (c) it satisfactorily completes an operational audit; (d) it completes any required retraining; (e) it delivers a written Letter of Intent to renew at least sixty (60) days before the Term expires; and (f) it is not in default.
4.3 No renewal fee. No renewal fee is payable. The renewal term is on the Franchisor's then-current standard franchise terms and Brand Standards, except that the Royalty rate for the renewal term shall remain 3.5%.
4.4 Decision. The Franchisor shall notify its decision in writing within thirty (30) days after receiving the Letter of Intent and shall not unreasonably refuse renewal if the conditions in Clause 4.2 are met. If it refuses, it shall state the conditions that were not met.
4.5 No holding over. The Franchisee has no right to continue operating after the Term expires without a signed renewal. The Franchisor may require it to stop on seven (7) days' written notice, and Royalty continues to accrue on any sales made in the meantime.
ARTICLE 5 — ROYALTY AND SALES REPORTING
5.1 Rate. The Franchisee shall pay the Franchisor a royalty of three and a half percent (3.5%) of Gross Sales, inclusive of VAT (the "Royalty"). The same rate applies in every Approved Format and to all Gross Sales, including sales of Additional Items.
5.2 Allocation. For the Franchisor's accounting, the Royalty is allocated as follows: 1.5% for franchise rights; 1.0% for administrative support; and 1.0% for marketing and brand development. The whole 3.5% is payable regardless of this allocation. The Franchisor shall apply the marketing portion to marketing initiatives for the ARNOKS brand and franchise network; the Franchisee cannot require that it be spent in any particular area.
5.3 Commencement. The Royalty accrues on Gross Sales made on and after the date that is one (1) month after the Opening Date (the "Royalty Commencement Date"). No Royalty is payable on Gross Sales made before that date.
5.4 Royalty Periods and remittance. The Royalty is computed and remitted twice a month, as follows (see the calendar in Schedule 2):
(a) First Period: Gross Sales from the 26th day of the preceding month up to and including the 10th day of the current month (cut-off: the 10th), remitted on or before the 15th day of the current month; and
(b) Second Period: Gross Sales from the 11th day up to and including the 25th day of the current month (cut-off: the 25th), remitted on or before the 30th day of the current month (or the last day of February).
If a due date is not a Business Day, payment is due on the next Business Day.
5.5 Statement and proof of payment. With each remittance the Franchisee shall send the Franchisor a royalty statement showing the Royalty Period, the daily Gross Sales and the Royalty computed, together with proof of payment (deposit slip or transfer reference). Payment is made on the date it is credited to the Franchisor's account.
5.6 Sales reporting. The Franchisee shall submit daily sales reports as the Franchisor requires and, once the Franchisor makes a point-of-sale or reporting platform available, shall record all sales through it and shall not disable or manipulate it. The Franchisee shall issue the receipts and invoices required by law.
5.7 Records and audit. The Franchisee shall keep complete and accurate sales and accounting records for at least three (3) years, or longer if the law requires. The Franchisor or its designee may inspect and audit those records during business hours, with or without prior notice. If an audit shows that Gross Sales were under-reported, the Franchisee shall pay the shortfall with interest under Clause 6.1 and, if the under-reporting is more than three percent (3%) for the audited period, shall also reimburse the reasonable cost of the audit. Deliberate under-reporting is a default under Clause 15.2.
ARTICLE 6 — LATE PAYMENT
6.1 Interest. Any amount not paid when due bears interest at one percent (1%) per month, computed daily, from the due date until it is paid in full.
6.2 Escalation. If a Royalty remittance or any other amount is overdue:
(a) after written notice and five (5) Business Days without payment, the Franchisor may suspend the processing of commissary orders for as long as any amount remains unpaid;
(b) after fifteen (15) days from the notice without payment, the Franchisor may temporarily suspend the Franchisee's right to use the System and the Marks until payment is made; and
(c) after thirty (30) days from the notice without payment, or after three (3) remittances in any period of twelve (12) months that were each paid more than seven (7) days late, the Franchisor may terminate this Agreement under Article 15.
6.3 Application of payments. Payments are applied first to costs, then to interest, then to the oldest outstanding amount.
ARTICLE 7 — COMMISSARY AND PRODUCT SUPPLY
7.1 Proprietary Products. The Franchisee shall buy all Proprietary Products only from the Commissary, or from another source the Franchisor designates in writing. The Proprietary Products carry the Franchisor's trade secrets and are essential to the consistent taste and quality that the Marks stand for. The Franchisee shall not make, copy, reverse-engineer, repackage or source Proprietary Products or substitutes for them for use in, or sale as, ARNOKS products.
7.2 Other items. The Franchisee may buy raw chicken, rice, cooking oil, LPG, non-branded packaging, beverages and other non-proprietary items from local suppliers of its choice, provided they meet the specifications in the Manual and the law.
7.3 Prices and orders. Proprietary Products are sold at the prices in the Commissary price list or invoice, which may vary with location, supply conditions, and shipping and processing fees. The Franchisor may change prices on fifteen (15) days' written or electronic notice, and price changes shall reflect changes in the Franchisor's costs, such as raw materials, packaging and shipping. Orders follow the ordering procedure in the Manual and are paid for before shipment unless the Franchisor agrees credit terms in writing.
7.4 Defects. The Franchisor shall replace or credit any Proprietary Product that is defective, non-conforming or spoiled on delivery, if the Franchisee reports it with photographs within forty-eight (48) hours of delivery. The Franchisee shall store and handle all Proprietary Products as instructed.
7.5 Availability. The Franchisor shall use reasonable efforts to keep the Commissary supplied. If the Franchisor cannot supply a Proprietary Product within fifteen (15) days after a complete order and payment, the Parties shall agree a temporary solution in good faith, and the Franchisee is not in breach of Clause 7.1 for suspending the sale of the affected items in the meantime.
ARTICLE 8 — OPERATING STANDARDS, MENU AND PRICING
8.1 Standards. The Franchisee shall follow the Manual and the Brand Standards, use only the latest approved recipes and SOPs, and maintain consistent product quality, presentation and portioning, cleanliness of the premises, equipment, uniforms and cart or stall, approved signage, customer service and food safety. The Franchisee shall handle customer complaints promptly and cooperate with any product recall.
8.2 Core Products. The Franchisee shall offer the Core Products, prepared according to the Manual.
8.3 Deviations. Any deviation from the approved recipes, procedures or standards requires the Franchisor's prior written consent. The Franchisor shall not unreasonably withhold consent to a change that keeps the Brand Standards and food safety, such as an adjustment to local conditions. Additional Items under Clause 8.4 are not deviations.
8.4 Additional Items. The Franchisee may add other food and beverage items to its menu ("Additional Items"), provided that they: (a) are not Directly Competing Items; (b) comply with the law and food-safety requirements; and (c) are not sold under the Marks or presented as Arnoks products unless the Franchisor approves in writing. The Franchisee shall tell the Franchisor in writing (a message or email is enough) before first offering an Additional Item. The Franchisor may, by written notice giving its reason, require the withdrawal of any Additional Item that is a Directly Competing Item or that creates a food-safety or brand risk. Gross Sales from Additional Items are included in Gross Sales for the Royalty.
8.5 Pricing. The Franchisee sets its own selling prices. The Franchisor may recommend prices, but they are not binding. The Franchisee shall display prices as the law requires.
8.6 Inspections. The Franchisor may inspect the Franchised Business, take product samples and conduct customer-experience audits, with or without prior notice during business hours. After an inspection the Franchisor shall give written findings, and the Franchisee shall correct them within fifteen (15) days, or immediately where a food-safety hazard exists. The Franchisor may require retraining where needed. Failure to cooperate is a breach of this Agreement. For a Home-based outlet, inspections are limited to the food-preparation and selling areas, during business hours, and on at least twenty-four (24) hours' notice except in response to a food-safety complaint.
8.7 Online presence. The Franchisee shall not create a website, social media page, delivery-platform listing or business name using the Marks without the Franchisor's prior written approval of its form, and shall follow the Brand Standards in using them.
8.8 Daily promotion. Each morning the Franchisor shares the day's promotional post through the franchisee portal, where it appears before the dashboard. The Franchisee is encouraged to share it on the outlet's Facebook Page and personal social media; one share a day helps grow sales and the brand you are building.
ARTICLE 9 — TRAINING AND FRANCHISOR SUPPORT
9.1 Initial training. The Franchisor shall provide initial operational training, including access to Arnoks Academy learning resources and online tutorials, a food-safety orientation and a brand-standards orientation, as described in Schedule 1. The Franchisee (or its designated manager) shall complete the required training before opening.
9.2 Training costs. The Franchisee is responsible for the salaries, transportation and personal expenses of its personnel during training. Optional on-site training is available for two (2) days, scheduled one (1) week before the soft opening, at ₱7,000.00 for Luzon outlets and ₱25,000.00 for Visayas and Mindanao outlets, inclusive of VAT, if applicable, and payable before the training date. The on-site training fee covers the trainer's accommodation, airfare (or gas, fare and tolls) and food. The Franchisee remains responsible for the costs of its own personnel under this Clause.
9.3 Starter Package. After the Franchise Fee is paid and the location is approved, the Franchisor shall deliver the Starter Package items listed in Schedule 1. The Franchisor may substitute items of equal or better quality. The 200-piece launch chicken is a voucher governed by the redemption terms stated on it.
9.4 Ongoing support. The Franchisor shall provide the support listed in Schedule 1, including access to the Commissary, operations assistance, marketing support, business consultation and system updates. The Franchisor may give layout, signage and setup guidance for the Franchisee's contractor or fabricator, but it does not construct the outlet and its guidance is not an architectural or engineering plan.
9.5 No guaranteed results. The Franchisor shall provide support in good faith, but does not guarantee any particular result.
9.6 Access to improvements. During the Term the Franchisee shall have continued access to improvements in the techniques and processes of the System that the Franchisor adopts for the franchise network, through updates to the Manual and training materials.
ARTICLE 10 — FRANCHISEE RESPONSIBILITIES
10.1 Setup at the Franchisee's cost. Unless a written quotation signed by the Franchisor expressly provides otherwise, the Franchisee shall provide and pay for: the premises (rent, advances and deposits); construction, renovation and fabrication of the stall, kiosk, cart or Prime-X unit; equipment (including fryers, refrigeration and cooking equipment); utilities and connectivity; production of signage; permits and registrations; salaries; packaging and replenishment of supplies; delivery charges; and working capital.
10.2 Permits and compliance. The Franchisee shall obtain and keep valid all permits and registrations (including barangay, mayor's or business permit, BIR registration, and sanitary, health and fire-safety permits as applicable) and shall comply with all laws. The Franchise Certificate does not replace any government permit.
10.3 Personnel. The Franchisee is the sole employer of its personnel and shall comply with labor and social legislation. The Franchisor has no control over, or liability for, the Franchisee's employment matters. The Franchisee shall have its personnel trained and in uniform as the Manual requires.
10.4 Insurance. The Franchisee shall maintain public liability insurance of the type and amount the Franchisor reasonably requires for the Approved Format, where available at reasonable cost.
10.5 Conduct and notification. The Franchisee shall operate only at the Approved Location and within the approved hours, act with integrity, and avoid any conduct that harms the Marks. It shall notify the Franchisor promptly of any customer injury or food-poisoning complaint, claim, government investigation, inspection finding or closure order.
ARTICLE 11 — INTELLECTUAL PROPERTY
11.1 Franchisor's rights. The Franchisor represents that it owns or has the right to license the Marks and the System for the purposes of this Agreement. The registration status of the Marks is stated in Schedule 1. The Franchisor does not represent that any pending application will be granted, and the Franchisee shall not describe the Marks as registered unless Schedule 1 says so.
11.2 Ownership and goodwill. All rights in the Marks, the System, the Manual and the recipes remain with the Franchisor (or its licensor). All goodwill from the Franchisee's use of the Marks belongs to the Franchisor. The Franchisee acknowledges the Franchisor's rights in the Marks, and shall not register or use any trademark, trade name, domain name or social media handle that includes or is confusingly similar to ARNOKS.
11.3 Brand use. The Franchisee shall use the Marks only as the Brand Standards allow. The official ARNOKS logo must be used exactly as supplied by the Franchisor and must not be redrawn, recolored, distorted or recreated.
11.4 Improvements. If the Franchisee develops any improvement, recipe variation or idea relating to the System or to Arnoks products, it shall tell the Franchisor and grants the Franchisor a perpetual, non-exclusive license to use it, in exchange for the Franchisor's continuing duty under Clause 9.6 to share the improvements it adopts with the Franchisee. The Franchisee keeps ownership of its improvement and is not required to transfer or assign it. Additional Items that do not use the System's intellectual property remain the Franchisee's own.
11.5 Infringement. The Franchisee shall promptly tell the Franchisor of any suspected infringement of the Marks. The Franchisor decides what action to take, and the Franchisee shall cooperate at the Franchisor's cost.
11.6 Online accounts. Any page, account or listing that uses the Marks is held for the benefit of the Franchisor and shall be transferred to it on termination or expiry.
ARTICLE 12 — CONFIDENTIALITY AND DATA PRIVACY
12.1 Confidential Information. "Confidential Information" means the Manual, recipes, formulations and ratios, supplier and pricing information, and other non-public information that the Franchisor marks or that is reasonably understood to be confidential. The Franchisee shall use it only for the Franchised Business, disclose it only to personnel who need it and are bound to keep it confidential, and protect it from the Effective Date until five (5) years after this Agreement ends (and for as long as a trade secret remains a trade secret). This does not apply to information that is public other than through the Franchisee's breach, that the Franchisee developed independently, or that the law requires it to disclose (after notice to the Franchisor where permitted).
12.2 Data privacy. Each Party shall comply with the Data Privacy Act of 2012 (Republic Act No. 10173), its implementing rules and the issuances of the National Privacy Commission. The Franchisee is responsible, as personal information controller, for the personal data of its own customers and employees, and shall give the required privacy notices and obtain the required consents. The Franchisor may access and use sales and operational data from the point-of-sale or reporting platform for royalty verification, supply planning and support, and may use sales data for marketing analysis only in a form that does not identify any customer. The Franchisor processes the personal data of the Franchisee and its personnel as needed to administer this Agreement. Each Party shall protect the data it holds and notify the other promptly, and in any event within seventy-two (72) hours, of any breach affecting data shared under this Agreement.
ARTICLE 13 — NON-COMPETITION
13.1 During the Term. During the Term, the Franchisee shall not, directly or indirectly, own, operate, manage or hold a financial interest in a Competing Business within the Protected Area of its Territory or of any of its Reserved Territories. A "Competing Business" is a food business whose principal products include Directly Competing Items.
13.2 After the Term. If this Agreement ends before the Term expires for reasons attributable to the Franchisee (including termination by the Franchisor under Article 15 or by the Franchisee under Clause 15.3(b)), the restriction in Clause 13.1 continues to apply for one (1) year after it ends, within five hundred (500) meters of the former Approved Location. This Clause does not limit Clause 13.3 or Article 12, which continue after the Term in every case.
13.3 No replication. During the Term, and after this Agreement ends early for reasons attributable to the Franchisee, the Franchisee shall not replicate Arnoks products or Proprietary Products, or offer them or products made with the Franchisor's recipes or Confidential Information under any other brand or name. In every case, after this Agreement ends the Franchisee shall never use the Marks or present any product as an Arnoks product, and Article 12 continues to apply.
13.4 Reasonableness. The Franchisee acknowledges that these restrictions are reasonable and needed to protect the Franchisor's trade secrets, goodwill and franchise network. If a court finds any restriction too broad, it may reduce its scope or duration to what is enforceable. Clause 8.4 is not restricted by this Article.
ARTICLE 14 — REPRESENTATIONS AND NO INCOME GUARANTEE
14.1 Franchisor. The Franchisor represents that it is duly organized and validly existing, has authority to sign this Agreement, and has the rights described in Clause 11.1.
14.2 Franchisee. The Franchisee represents and acknowledges that: (a) it received a complete copy of this Agreement and its Schedules at least seven (7) days before its acceptance under Clause 22.5 (or a shorter period that the Franchisee confirms in writing is enough for it), and had the chance to ask questions and to consult its own lawyer and accountant; (b) it has the legal capacity and financial means to perform this Agreement and, if it is a corporation, partnership or other entity, the person accepting and signing for it is duly authorized and attaches proof of that authority to the notarized copies; (c) it understands that the Franchise Fee does not include the setup costs described in Clause 10.1; (d) it has completed the Acknowledgment in Schedule 3 (signed, or confirmed electronically with its acceptance under Clause 22.5); and (e) it is a Filipino citizen, or is otherwise allowed by law to engage in retail trade in the Philippines.
14.3 No guarantee. Neither the Franchisor nor any of its officers, employees, agents, virtual assistants or representatives has promised or guaranteed any level of sales, income, profit, return on investment or break-even period. Any figures, examples, illustrations, projections or calculator outputs shared with the Franchisee are illustrations based on assumptions. They are not a promise or a prediction of the Franchisee's results, which depend on location, management, competition, market conditions and many other factors.
ARTICLE 15 — DEFAULT AND TERMINATION
15.1 Curable defaults. If the Franchisee breaches this Agreement in a way that is not listed in Clause 15.2, the Franchisor may give written notice describing the breach and requiring it to be cured within fifteen (15) days. If the breach is not cured, the Franchisor may terminate this Agreement by further written notice effective on the date stated in it. Payment defaults follow Article 6.
15.2 Incurable defaults. The Franchisor may terminate this Agreement immediately by written notice if the Franchisee:
(a) submits fraudulent or deliberately inaccurate sales reports or deliberately under-reports Gross Sales;
(b) sources Proprietary Products from an unauthorized source, or sells products that are not genuine Proprietary Products as ARNOKS products;
(c) stops operating for thirty (30) consecutive days without the Franchisor's approval, excluding scheduled school breaks for an outlet inside or serving a school, and closures caused by force majeure;
(d) becomes insolvent or bankrupt, makes an assignment for the benefit of creditors, or has a receiver appointed;
(e) is convicted of a crime involving fraud, dishonesty or moral turpitude;
(f) seriously breaches food-safety requirements, endangers public health, or is ordered closed by a government authority;
(g) transfers this Agreement without consent, uses the Marks outside the scope of this Agreement, discloses Confidential Information, or breaches Article 13;
(h) is found by a court or government authority to have committed, or publicly commits, an act that materially damages the reputation of the ARNOKS brand; or
(i) commits three (3) or more curable breaches within any twelve (12) months, even if each was cured.
15.3 Termination by the Franchisee. The Franchisee may terminate this Agreement: (a) by written notice if the Franchisor materially breaches it and does not cure the breach within thirty (30) days after written notice; or (b) for convenience, on at least sixty (60) days' written notice, provided that all amounts due are paid first. The Franchise Fee is not refundable on termination under this Clause.
15.4 Suspension for safety. Where there is a food-safety risk, the Franchisor may suspend commissary supply and the use of the Marks until the risk is resolved.
15.5 Effect of termination or expiry. When this Agreement ends for any reason, the Franchisee shall:
(a) immediately stop operating as ARNOKS, stop using the Marks, stop selling Arnoks products and, where Clause 13.3 applies, stop using the System;
(b) within seven (7) days remove all signage, branding and trade dress and remove the Arnoks identity from the premises, uniforms and packaging;
(c) return the Manual, Confidential Information and other Franchisor property, and transfer the online accounts and listings described in Clause 11.6;
(d) within seven (7) days pay all Royalty accrued up to the end date, all unpaid commissary invoices and any interest; and
(e) not use or sell any remaining Proprietary Products, which the Franchisor may, at its option, buy back (if unopened and unexpired) at the invoiced price. Pending commissary orders are cancelled.
15.6 Remedies and survival. The Franchisor's remedies are cumulative. The Franchisee acknowledges that a breach of Articles 11, 12 or 13 would cause harm that money cannot fully repair, and the Franchisor may seek an injunction to the extent the law allows. Accrued rights, Articles 5 and 6 (as to accrued amounts), Clauses 3.4 and 22.5(f) (as to refunds due), Articles 11, 12, 13, 18, 21 and 22, and Clauses 15.5 and 15.6 survive termination or expiry.
ARTICLE 16 — TRANSFER
16.1 By the Franchisee. The Franchisee shall not sell, assign, sublicense, lease or encumber this Agreement or any interest in the Franchised Business, or (if the Franchisee is a corporation) change its control, without the Franchisor's prior written consent. The Franchisor shall not unreasonably withhold consent if the transferee meets the then-current criteria and completes training, the Franchisee has paid all amounts due and is not in default, and the transferee signs the Franchisor's then-current agreement. The Franchisee shall bear the Franchisor's reasonable administrative costs of the transfer.
16.2 By the Franchisor. The Franchisor may assign this Agreement to an affiliate or a successor to the ARNOKS business on written notice, if the assignee assumes the Franchisor's obligations.
16.3 Death or incapacity. If the Franchisee dies or becomes incapacitated, its heirs or representatives may continue the Franchised Business for up to ninety (90) days, during which they shall qualify and complete training to the Franchisor's reasonable satisfaction or transfer the franchise under Clause 16.1. Otherwise the Franchisor may terminate this Agreement.
ARTICLE 17 — RELATIONSHIP OF THE PARTIES
17.1 The Franchisee is an independent contractor. Nothing in this Agreement makes either Party the agent, partner, joint venturer or employee of the other, and neither may bind the other. The Franchisee shall display a notice, in the form the Franchisor reasonably requires, that the outlet is independently owned and operated. The Franchisee alone is responsible for its own debts, taxes, contracts and obligations.
ARTICLE 18 — INDEMNITY AND LIMITATION OF LIABILITY
18.1 By the Franchisee. The Franchisee shall indemnify and hold harmless the Franchisor, its officers, directors, employees and affiliates against claims, losses, penalties and reasonable costs (including attorney's fees) arising from the Franchisee's operation of the Franchised Business, its personnel, its breach of this Agreement or the law, or food prepared or served by it, except to the extent caused by the Franchisor's negligence or by a defect in a Proprietary Product as supplied and handled as instructed.
18.2 By the Franchisor. The Franchisor shall indemnify the Franchisee against third-party claims to the extent they arise from a defect in a Proprietary Product as supplied by the Commissary and stored and handled as instructed. The Franchisor shall also defend and indemnify the Franchisee against third-party claims that the Franchisee's use of the Marks or the System, as permitted by this Agreement, infringes the third party's rights.
18.3 Limitation. Neither Party is liable to the other for indirect, consequential, special or punitive damages or for loss of profit. The Franchisor's total liability to the Franchisee under this Agreement is limited to the amounts the Franchisee paid the Franchisor in the twelve (12) months before the claim arose. This Clause does not limit liability for fraud, bad faith or gross negligence, the Franchisee's payment obligations, a breach of Articles 11 to 13, or the indemnities in this Article.
18.4 Claims procedure. A Party seeking indemnity shall give prompt written notice of the claim and reasonable cooperation, and shall not settle it without the indemnifying Party's consent.
ARTICLE 19 — FORCE MAJEURE
19.1 Neither Party is liable for delay or failure to perform caused by events beyond its reasonable control, including natural disasters, war, government restrictions and pandemics, if it promptly notifies the other in writing and uses reasonable efforts to resume performance. Force majeure does not excuse payment of amounts already due. If it continues for more than ninety (90) days, either Party may terminate this Agreement by written notice, without liability other than for obligations already accrued.
ARTICLE 20 — NOTICES
20.1 Notices shall be in writing and delivered personally, by courier or by email to the addresses in Schedule 1, or to another address a Party notifies. A notice is received: if delivered personally, on delivery; if sent by courier, three (3) Business Days after dispatch; and if sent by email, on the next Business Day after sending, unless the sender receives a delivery-failure message. Operational messages (such as payment reminders and inspection scheduling) may also be sent through the messaging accounts stated in Schedule 1. Notices of default or termination shall be sent by courier or personal delivery, with a copy by email.
ARTICLE 21 — GOVERNING LAW AND DISPUTES
21.1 This Agreement is governed by the laws of the Republic of the Philippines.
21.2 A Party with a dispute shall give written notice describing it, and the Parties shall try in good faith to settle it by discussion for thirty (30) days, and then by mediation before a mediator they agree on or, failing agreement within fifteen (15) days, a mediator accredited under the Alternative Dispute Resolution Act (Republic Act No. 9285) chosen by the Party giving notice. This Clause does not prevent either Party from seeking urgent injunctive relief or from collecting undisputed amounts.
21.3 Any action arising from this Agreement shall be brought in the proper court in the place where the Franchisee has its principal office (or, for an individual, its residence), to the exclusion of all other venues.
21.4 In any such action the prevailing Party is entitled to recover reasonable attorney's fees and costs, as the court determines.
ARTICLE 22 — GENERAL PROVISIONS
22.1 Entire agreement. This Agreement, with its Schedules, is the entire agreement of the Parties on its subject. It replaces all earlier proposals, discussions, seminar content, scripts, chat and Messenger conversations, brochures, price lists, Website content, social media posts and marketing materials. The only exception is the Reservation Terms, which continue to apply to the Reservation Fee (its credit, hold period and expiry) as stated in Clause 3.5; if they conflict with this Agreement on anything else, this Agreement prevails. No statement by any officer, employee, virtual assistant, agent or representative of the Franchisor binds it unless it is in this Agreement or in a written amendment signed by an authorized officer.
22.2 Amendments. This Agreement may be amended only in writing signed by both Parties, except that the Franchisor may update the Manual, the Brand Standards, the Commissary price list and the Core Products list on thirty (30) days' notice. No such update may increase the Franchise Fee or the Royalty rate, or reduce the Territorial Protection. No such update may require the Franchisee to spend more than ₱10,000 in any twelve (12) months on new equipment or fit-out without its consent, or widen Article 13 or the list of Proprietary Products except as Clause 1.1 allows.
22.3 Severability. If any provision is held invalid or unenforceable, the rest of this Agreement remains in effect and the provision shall be enforced to the fullest extent permitted.
22.4 No waiver. A failure or delay in exercising a right is not a waiver of it. A waiver is effective only if it is in writing.
22.5 Electronic acceptance, counterparts and notarization. This Agreement may be signed in counterparts and by electronic signature, which the Parties agree are valid under the Electronic Commerce Act (Republic Act No. 8792). The Parties shall complete this Agreement as follows:
(a) Acceptance by the Franchisee. After paying the Franchise Fee in full, the Franchisee accepts this Agreement by ticking the acceptance box on the Website, entering its full name and email address, and submitting the form. The date and time of submission is the "Acceptance Date". The Franchisor's system keeps a record of the Acceptance Date, the Franchisee's name and email address, the version of this Agreement shown, and the technical details needed to verify the acceptance. The Franchisee consents to these records being kept for as long as needed to prove this Agreement.
(b) Confirmation by the Franchisor. Within five (5) Business Days after the Acceptance Date, the Franchisor shall confirm in writing (email is enough) that it received the Franchise Fee and the acceptance. The Effective Date is the Acceptance Date, and this Agreement binds both Parties from the Franchisor's confirmation. If the Franchisee pays the Franchise Fee but does not accept this Agreement within fourteen (14) days after paying, or the Franchisor does not confirm within the five (5) Business Days, either Party may withdraw by written notice, and the Franchisor shall refund the amounts paid within fifteen (15) days, less the Reservation Fee if the Franchisee is the one who did not accept.
(c) Notarized copies. No later than twenty-one (21) days before the Opening Deadline, the Franchisor shall send the Franchisee printed copies of this Agreement for signing (or an electronic copy, if the Franchisee chooses electronic notarization). The Franchisee shall sign every page, have its witnesses sign, have its signature acknowledged before a notary public, and return the notarized copies to the Franchisor before the Opening Date and in any case no later than the Opening Deadline. The Franchisor shall then sign, have its own signature acknowledged, and send one notarized original back to the Franchisee within thirty (30) days after it receives the Franchisee's copies.
(d) Method of notarization. Notarization may be done on paper under the Rules on Notarial Practice or, where the law allows, electronically under the Rules on Electronic Notarization before a duly commissioned notary. Each Party may sign and have its signature acknowledged separately, on a different date, at a different place and before a different notary.
(e) Before the notarized copies are returned. The Franchisee's slot and Territory stay secured, and this Agreement binds both Parties. The Franchisor may withhold its written confirmation to open under Clause 2.5 until it receives the Franchisee's notarized copies. Time lost while they are outstanding does not extend the Opening Deadline.
(f) If a Party does not return its copies. If the Franchisee does not return its notarized copies by the Opening Deadline, the Franchisor may send a written reminder. If they are not returned within fifteen (15) days after the reminder, the Franchisor may terminate this Agreement by written notice and shall refund the Franchise Fee, less the Reservation Fee (which is not refundable) and the cost of any Starter Package items already delivered. If the Franchisor does not send its signed and notarized original in time, the Franchisee may send a written reminder, and if it is not sent within fifteen (15) days after the reminder, the Franchisee may terminate this Agreement by written notice and receive a full refund of the Franchise Fee, including the Reservation Fee, less the cost of any Starter Package items already delivered, if the Opening Date has not occurred. After the Opening Date, the Franchisee's remedy is to require the Franchisor to send the original.
(g) One agreement. The electronic and printed versions are the same Agreement. The printed copies must be identical to the version the Franchisee accepted. If they differ, the version recorded in the Franchisor's system on the Acceptance Date prevails, to the extent the law allows.
22.6 Language and time. This Agreement is in English. Time is of the essence for all payments.
22.7 Costs of this Agreement. Each Party bears its own costs of preparing this Agreement. The Franchisee bears the notarial fees, any documentary stamp tax on this Agreement, and the cost of returning its copies to the Franchisor. The Franchisor bears the cost of sending the printed copies to the Franchisee and of sending the Franchisee's notarized original back.
22.8 Married Franchisee. If the Franchisee is married, the Franchisee confirms that its spouse knows of this Agreement and consents to it, to the extent the law or the couple's property regime requires. If the Franchisor asks, the spouse shall sign the marital consent line at the end of this Agreement.
22.9 Intellectual Property Code. To the extent Chapter IX of the Intellectual Property Code (Republic Act No. 8293) applies to this Agreement, the Parties intend it to comply, including with Sections 87 and 88. A provision that is found to be prohibited shall be limited or removed under Clause 22.3, and the rest of this Agreement remains in effect.
IN WITNESS WHEREOF, the Parties have signed this Agreement, each on the date and at the place stated in its own acknowledgment below.
| ARNOKS FOOD CORPORATION (Franchisor) | FRANCHISEE |
|---|---|
| By: ______________________________ | ______________________________ |
| JONATHAN DC. TAGUINES, Founder, President and Chief Executive Officer | «FranchiseeName» |
SIGNED IN THE PRESENCE OF (witnesses to the Franchisor's signature):
| Witness 1 | Witness 2 |
|---|---|
| ______________________________ | ______________________________ |
| Name: ____________________ | Name: ____________________ |
SIGNED IN THE PRESENCE OF (witnesses to the Franchisee's signature):
| Witness 1 | Witness 2 |
|---|---|
| ______________________________ | ______________________________ |
| «Witness1» | «Witness2» |
MARITAL CONSENT (Clause 22.8; only if the Franchisor asks): I am the spouse of the Franchisee and I consent to this Agreement.
| Spouse's signature | Printed name and date |
|---|---|
| ______________________________ | ______________________________ |
ACKNOWLEDGMENT (FRANCHISOR)
REPUBLIC OF THE PHILIPPINES )
[CITY / MUNICIPALITY] ) S.S.
BEFORE ME, a Notary Public for and in [__________], Philippines, this [____] day of [______________] 20[__], personally appeared:
| Name | Competent evidence of identity | Date and place of issue |
|---|---|---|
| JONATHAN DC. TAGUINES (for ARNOKS FOOD CORPORATION) | [ID type and number] | [date / place] |
known to me and to me known to be the same person who executed the foregoing instrument, and who acknowledged to me that the same is his free and voluntary act and deed and the free and voluntary act and deed of the corporation that he is duly authorized to represent.
This instrument, consisting of [____] pages including the page on which this acknowledgment is written, and including Schedules 1 to 3, has been signed by the Franchisor and its instrumental witnesses on each and every page, and sealed with my notarial seal.
WITNESS MY HAND AND SEAL on the date and at the place stated above.
______________________________ NOTARY PUBLIC
Doc. No. _____;
Page No. _____;
Book No. _____;
Series of 20__.
ACKNOWLEDGMENT (FRANCHISEE)
REPUBLIC OF THE PHILIPPINES )
[CITY / MUNICIPALITY] ) S.S.
BEFORE ME, a Notary Public for and in [__________], Philippines, this [____] day of [______________] 20[__], personally appeared:
| Name | Competent evidence of identity | Date and place of issue |
|---|---|---|
| «FranchiseeName» | [ID type and number] | [date / place] |
known to me and to me known to be the same person who executed the foregoing instrument, and who acknowledged to me that the same is his or her free and voluntary act and deed.
This instrument, consisting of [____] pages including the page on which this acknowledgment is written, and including Schedules 1 to 3, has been signed by the Franchisee and the Franchisee's instrumental witnesses on each and every page, and sealed with my notarial seal.
WITNESS MY HAND AND SEAL on the date and at the place stated above.
______________________________ NOTARY PUBLIC
Doc. No. _____;
Page No. _____;
Book No. _____;
Series of 20__.
SCHEDULE 1 — KEY TERMS
| Item | Term |
|---|---|
| Franchisee | «FranchiseeName» |
| Program | «Program» |
| Approved Format (Clause 2.2) | «ApprovedFormat» |
| Additional terms for the Approved Format (Clause 2.2) | «FormatTerms» |
| Approved Location (Clause 1.1) | «ApprovedLocation» |
| School (One School, One Arnoks) | «SchoolName» |
| Exact address of the Approved Location | «ExactAddress» |
| Inside the school premises? | «InsidePremises» |
| Territory (Clause 2.3) | A radius of 150 meters (a diameter of 300 meters), measured in a straight line from «MeasuringPoint» (Clause 2.3(a)) |
| First Operating Day (Mobile Cart or Prime-X, Clauses 2.6 and 2.7) | «FirstOperatingDay» |
| Reserved Territories (Mobile Cart, up to 2; Prime-X, up to 3) | Recorded in the Territory Register (Clause 2.8); centre points listed there when approved |
| Origin Point (Prime-X, Clause 2.7) | «OriginPoint» |
| Existing outlets or resellers inside the Territory (Clause 2.3(c)(iv)) | «ExistingOutlets» |
| Opening Deadline (Clause 2.5) | «OpeningDeadlineDays» days after the later of the Effective Date and the Franchisor's written approval of the Approved Location |
| Term (Article 4) | Two (2) years from the Opening Date, renewable under Article 4. No renewal fee. |
| Franchise Fee (Article 3) | ₱49,500.00, inclusive of VAT, if applicable. The ₱999.00 Reservation Fee is credited in full (balance ₱48,501.00). |
| Reservation Fee (Clause 3.5) | ₱999.00, non-refundable, credited in full against the Franchise Fee if the Franchise Fee is completed through Day 30, the day of payment being Day 1, ending 11:59 PM Philippine Time (see the Reservation Terms) |
| Payment due (Clause 3.3) | In full on or before the Acceptance Date (Clause 22.5). The Reservation Fee already paid is credited under Clause 3.5. |
| Official payment account (Clause 3.3) | The account named in the payment email from arnoksph@gmail.com. Before paying, confirm it with Arnoks through the contacts on arnoks.com. |
| Royalty (Article 5) | 3.5% of Gross Sales, inclusive of VAT (1.5% franchise rights, 1.0% administrative support, 1.0% marketing and brand development) |
| Royalty Commencement Date (Clause 5.3) | One (1) month after the Opening Date |
| Royalty remittance (Clause 5.4) | Twice a month: by the 15th (cut-off the 10th) and by the 30th (cut-off the 25th). See Schedule 2. |
| Optional on-site training (Clause 9.2) | 2 days, 1 week before soft opening. ₱7,000.00 (Luzon) or ₱25,000.00 (Visayas and Mindanao), inclusive of VAT, if applicable. Covers the trainer's accommodation, airfare (or gas, fare and tolls) and food. |
| Status of the Marks (Clause 11.1) | Application for the ARNOKS logo filed with the Intellectual Property Office of the Philippines on 29 August 2022; not yet registered. The Franchisor does not represent that the application will be granted (Clause 11.1) and will tell the Franchisee in writing when the status changes. |
| Core Products (Clause 1.1) | Arnoks Special Fried Chicken (Original and Spicy); Arnoks Poppers; Arnoks Pastil; Arnoks gravy and signature sauces (Yangnyeom, Honey Butter, Teriyaki) |
| Notices: Franchisor (Article 20) | Arnoks Business Hub, McArthur Highway, Block 1, Sta. Cruz, Tarlac City, Tarlac 2300. Email: arnoksph@gmail.com. Mobile: (+63) 943 042 7024. Official messaging account: Facebook Messenger, Arnoks Philippines (m.me/arnoksphilippines). |
| Notices: Franchisee (Article 20) | «FranchiseeAddress» / «FranchiseeEmail» / «FranchiseeMobile» / «FranchiseeMessaging» |
Part B — Starter Package (tangible items)
2 packs Arnoks Original Premix
2 packs Arnoks Spicy Premix
Yangnyeom Sauce, 2 liters; Honey Butter Sauce, 2 liters; Teriyaki Sauce, 2 liters
5 packs Arnoks Gravy Powder
5 kg digital weighing scale; timers; thermal scanner (temperature gun); measuring spoons
Uniform set (apron, cap and shirt)
Franchise Certificate and Arnoks branding kit materials
200-piece launch chicken voucher
Part C — Rights, training and support (intangible items)
Franchise rights under Article 2; two-year renewable term with no renewal fee; Territorial Protection under Clause 2.3
Private online training access; Science of Frying training; basic commissary procedures; portioning and marination training; store operations and management; customer service training; sales and inventory basics
Access to the Commissary and supply system; operations assistance; marketing support; business consultation; product development and system updates; continuing franchise support
Customized Arnoks business signage guide; official menu templates; logo-usage rights subject to the Brand Standards; promotional material templates; Arnoks blueprint and setup guide; Arnoks jingle and audio materials; store theme, color palette and branding guidelines
SCHEDULE 2 — ROYALTY CALENDAR AND SAMPLE COMPUTATIONS
Part A — Royalty Periods (Clause 5.4)
| Royalty Period | Gross Sales covered | Cut-off | Remit on or before |
|---|---|---|---|
| First Period | 26th of the preceding month to the 10th of the current month | 10th | 15th of the current month |
| Second Period | 11th to the 25th of the current month | 25th | 30th of the current month (last day of February) |
Part B — Sample computations (illustrations only)
| Example | Gross Sales | Royalty at 3.5% (VAT included) | Due |
|---|---|---|---|
| First Period, 26 May to 10 June | ₱140,000 | ₱4,900 | On or before 15 June |
| Second Period, 11 to 25 June | ₱70,000 | ₱2,450 | On or before 30 June |
| One day of Gross Sales | ₱7,000 | ₱245 | Included in the Royalty Period that covers that day |
| One month of Gross Sales | ₱100,000 | ₱3,500 | Remitted across the Royalty Periods in that month |
Part C — Royalty Commencement (Clause 5.3)
[If the Opening Date is 12 March 2027, the Royalty Commencement Date is 12 April 2027. Gross Sales from 12 March to 11 April 2027 are not subject to Royalty. Royalty applies to Gross Sales from 12 April 2027, starting with the Royalty Period that covers that day.]
These figures show how the computation works. They are not forecasts of the Franchisee's sales, income or profit (see Clause 14.3).
SCHEDULE 3 — FRANCHISEE ACKNOWLEDGMENT AND RECEIPT
I confirm each of the following by writing my initials beside it or, if I accept electronically, by ticking the box beside it:
______ I received a complete copy of the Franchise Agreement and its Schedules on «DocumentsReceivedDate», at least seven (7) days before my acceptance under Clause 22.5 (or a shorter period that I confirm in writing is enough for me), and I had the chance to ask questions and to consult my own lawyer and accountant.
______ I understand that the ₱49,500 Franchise Fee is inclusive of VAT, if applicable, and pays only for the franchise system and the Starter Package. The cost of building and equipping my outlet (construction, kiosk, cart or Prime-X fabrication, equipment, rent, permits, utilities, labor and working capital) is separate and is mine to pay.
______ I understand that the ₱999 Reservation Fee is non-refundable and is credited against the Franchise Fee only as stated in Clause 3.5 and the Reservation Terms.
______ I understand that I accept this Agreement electronically after paying the Franchise Fee in full, and that I must return notarized copies before my Opening Date, as stated in Clause 22.5.
______ I understand that the Royalty is 3.5% of Gross Sales, inclusive of VAT, remitted twice a month as described in Schedule 2, starting on the Royalty Commencement Date.
______ I understand that my Territory is a 150-meter radius (300-meter diameter), is subject to Clause 2.3, and applies only after the Franchisor approves my location in writing.
______ I understand that no one has promised or guaranteed any sales, income, profit, return on investment or break-even period, and that any figures I was shown are illustrations only.
______ I understand that I must buy Proprietary Products only from the Commissary, and that I may add menu items that do not directly compete with the Core Products.
______ I understand the non-competition terms in Article 13 (within my Protected Area during the Term and, if this Agreement ends early for reasons attributable to me, within 500 meters for one year afterwards).
______ I am not relying on any statement that is not written in the Franchise Agreement.
______ I understand that, as a Mobile Cart or Prime-X franchisee, I may sell only at Open Locations and within my Reserved Territories, never inside another franchisee's Territory or the 100-meter Buffer Zone around it, and that territories are recorded first come, first served in the Territory Register.
| «FranchiseeName» | For ARNOKS FOOD CORPORATION |
|---|---|
| ______________________________ | ______________________________ |
| Date: ______________ | Date: ______________ |