DubaiStar is one of the small hotels in Dubai. Over the past five years, the hotel has been performing dismally and continued to incur any losses. To maintain its operations in the hotel industry in Dubai, DubaiStar hotel sought a Franchise relation with SunRoll America. SunRoll America is a chain of hotels whose operations are mainly based in North America.
SunRoll America is expected to allow DubaiStar to use its logo, trademark, and training to boost the operations of DubaiStar. Therefore, DubaiStar hotel will adopt the name SunRoll Dubai. Below are the major provisions of the Franchise Agreement between DubaiStar and SunRoll America.
Provisions of the Franchise Agreement between DubaiStar and SunRoll America
The Franchise agreement between DubaiStar and SunRoll America shall be based on the following agreements and understandings:
Duration of Franchise Agreement
The Franchise agreement between SunRoll America and DubaiStar shall be valid for seven years from the execution date of this agreement. Upon its expiry, the agreement shall be renewed based on the prevailing market value.
Use of Name, Logo, and Trademark
SunRoll America has developed various methods to enable it to establish, operate, and promote other small businesses in the hotel industry. Therefore, SunRoll America has agreed to grant DubaiStar hotel the right to use its logo and trademark. Therefore, DubaiStar will adopt the logo and trademark of SunRoll America. DubaiStar shall also change its name to SunRoll Dubai.
Location of the Franchise
DubaiStar hotel shall continue to undertake its operations in Dubai. SunRoll America will be required not to set-up a similar Franchise within a radius of 800 meters from the location of DubaiStar. However, this provision excludes other outlets that are located within buildings, malls, and schools.
Franchise Fee and Royalties
A non-refundable Franchise fee of 500 US dollars shall be charged upon the effect of this agreement. The Franchise fee shall be paid to SunRoll America by the DubaiStar hotel. In addition to the Franchise Fee, the DubaiStar hotel shall pay a monthly Royalty fee to SunRoll America.
The Royalty fee will be an amount that is equal to 5 percent of DubaiStar’s total monthly sales. In case of a renewal of the Franchise Agreement, new rates shall be negotiated between the Franchisor and the Franchisee.
SunRoll America will mainly offer training to the employees of DubaiStar. The purpose of the trainings will be to ensure that employees at DubaiStar hotel are equipped with relevant skills and knowledge on how to undertake their roles.
On the other hand, the management of DubaiStar shall have the sole responsibility of managing the day-to-day operations of the Franchise. The management of DubaiStar shall also perform the task of staffing and recruitment of new employees. All employees will be under the full supervision of DubaiStar management.
DubaiStar shall be required to replicate some of the products of SunRoll America such as refreshments, meals, and entertainment. DubaiStar shall also receive supplies from suppliers contracted by SunRoll America.
Any dispute arising between SunRoll America and DubaiStar about the Franchise Agreement shall be resolved through court arbitration.
The above Franchise Agreement shall guide the relations between SunRoll America and DubaiStar hotel during the Franchise period. Both parties shall abide by the Franchise Agreement until its termination.