If the franchisee is an entity, it would be subject to 30 per cent income tax and 2 per cent tertiary income tax on its profits. Royalties paid under a franchise agreement are generally deducted when the franchisee`s profit is calculated to be taxable. 1.10 Is membership in a national franchising association mandatory or commercial? Mediation is a recognized form of out-of-court dispute resolution (ADR) in Nigeria. Mediation and other forms of out-of-court dispute resolution are not mandatory in Nigeria, but are strongly encouraged. If the parties to a franchise agreement have imposed mediation as a dispute resolution forum as part of the agreement, the court would generally maintain that agreement. In the event that a party addresses the court in violation of the agreement, the court is entitled to assert the procedure on the applicant. 16.2 Is a step-in right recognized in the franchise agreement (where the franchisor can take over the ownership and management of the franchised activity) under local law, and are there registration requirements or other formalities that must be met to ensure that such a right is enforceable? 7.2 Is the concept of a conditional option/rental through the lease agreement (under which a franchisor has the right to enter the franchisee`s shoe under the lease agreement or directly that a third party (often a replacement franchisee) can do so in the event of non-compliance with the original tenant or termination of the franchise agreement understood and applicable? 10.2 Is there a risk that a franchisor could be held liable for the actions or omissions of a franchisee`s employees in the performance of the franchisee`s franchisee? If so, can something be done to reduce that risk? A franchise agreement governs the relationship between the franchisor and the franchisee and generally documents not only the obligations, responsibilities and rights of the parties, but also the granting of intellectual property licenses to the franchisee. In Nigeria, although there is no specific government agency with sole responsibility for franchise management, however, the National Office of Technology Acquisition and Promotion (NOTAP) has a mandate to register technology transfer agreements that are generally a form of franchise business model. Among the important terms of a franchise agreement are: Yes, all transactions between a Nigerian franchisor and franchisee are denominated on Naira, the official currency in Nigeria. This does not apply to payments made by a local franchisee to a foreign franchisee or other foreign company. If the franchisee is supposed to retain the lease, the franchisor can help the franchisee find suitable real estate and negotiate with the owner to ensure competitive rent; rent-free period; and other incentives for the franchisee. This could be critical to improving the franchise`s profitability prospects, particularly during the start-up phase.
Many franchisors offer this service and even charge the franchise for additional fees as part of their deductible. Depending on the circumstances, it may be premonitory for the franchisor to obtain confirmation from the franchisee, indicating that the franchisee has performed its own due diligence with respect to the premises, (2) has ensured that the site is suitable; (3) entered into the lease on the basis of the assessment of the premises; and (4) do not refer to the franchisor`s statements or statements regarding the adequacy of the premises. This reduces the franchisor`s potential liability. In accordance with the provisions of the NOTAP Act, all technology transfer agreements between a foreign transferor and a Nigerian buyer must be registered with the National Office for Technology Acquisition and Promotion (“NOTAP”).