AGREEMENT BETWEEN A FRANCHISEE AND
SUB-FRANCHISEE GRANTING FRANCHISE RIGHTS FOR A TERRITORY[CD1]
THIS
AGREEMENT made at……………….on ths.................. day of 2000 between XYZ registered office
at……………….Mumbai, hereinafter called Company Ltd., a company incorporated under
the Companies Act, 1956 and having its"the Franchisee" (which expression
unless it be repugnant to the context or meaning thereof be deemed to mean and
includes its successors and assigns) of the ONE PART and ABC Company Ltd., a
company incorporated under the Companies Act, 1956 and having its registered
office at………………. Hereinafter called "the Sub Franchisee" (which expression
unless it be repugnant to the context or meaning thereof be deemed to mean and
includes its successors and assigns) of the OTHER PART.
WHEREAS
M/s……………….Plc,
which is a company incorporated under the……………….Act of USA and having its
registered office at ................USA is a well-established and reputed
multinational company operating in 35 countries of the world, doing the
business of "Mc International" brand high quality food products of
various countries.
The
said M/s……………….Plc has, through its experience and extensive research,
developed many famous food products which have been very popular in different
countries of the world.
By a
Franchise Agreement made at……………….on ……………….day of………………. 2000 between M/s
……………….Franchiser of the one part and M/s XYZ Co. Ltd. of the other part and
referred to as the Franchisee herein, the Franchiser has granted the right to
undertake franchise business throughout the territory of India with the right
to appoint sub-franchisees within the territory to exploit the same on the
terms and conditions laid down in the said agreement dated ……………….The said
agreement dated is annexed to this
agreement and marked as Annexure
I
The
Franchisee is desirous to appoint sub-franchisees for the sale of food products of the Franchiser in
various parts of the country. It has negotiated with various Entrepreneurs, who
were interested to undertake Franchise business of the Franchiser in the
territory of Delhi. After negotiations, the Franchisee has decided to appoint
the Sub Franchisee as Franchisee for undertaking Franchise business in
territory of Delhi.
(5)The
Franchisee declares that it has not appointed any Franchisee to undertake the
franchise business in Mc International food products in the said territory,
hereinafter called "the Business"
The
Franchiser has intimated to the Franchisee that the market of Mc International
food products in Delhi will be developed by hard work, prompt and efficient,
satisfactory and courteous service of the Sub-Franchisee, as there are variety
of food products of different systems in India and there are various outlets of
fast food in the said territory.
The
Sub-franchisee has no experience in dealing with food products, but he has the
experience of business of different products and has sufficient finance for
undertaking the franchise business in India and it has also assured the
Franchiser to develop the Franchise business in India.
(8) The Sub-franchisee has acquired the
ownership of Shop No. ……………….in………………. Marketing Complex, Connaught Place, New
Delhi hereinafter called the said premises, where the Sub Franchisee has to
open outlet for the franchise business.
NOW
IT IS HEREBY AGREED BETWEEN THE PARTIES AS FOLLOWS:
(1)The
Franchisee hereby grants to the Sub-Franchisee the right to carry on the
Franchise Business, subject to the terms and conditions of this Agreement in
the Premises.
Subject
to clause……………….of this agreement relating to termination, this Agreement will
subsist for a period of 5 years commencing on the……………….day of……………….2000.
The
Franchise with the authorization of proprietor of the Trade Mark, authorizes
the sub-franchisee to use the trade marks solely for the purpose of the Business in the territory
in accordance with the instructions and directions of the Franchiser and the
Franchisee. The Sub-Franchisee will not do anything which may damage or
prejudice the goodwill or reputation of the Trade Mark. The Sub-Franchisee will
also ensure that no third party infringes the Trade Mark of the Franchiser in
the territory and if he comes to know about the infringement of the Trade Mark,
the Sub-Franchisee shall promptly inform the Franchisee and the Franchiser
about the same in writing.
Arrange
comprehensive training through the trainers of the Franchiser in the
commencement and operation of the Business. The said training will be for a
period of 2 weeks and at the place of the Franchisee and the sub-franchisee has
to depute its Manager to the Franchisee place for training at its own expenses.
The sub franchisee will have to pay Rs.50,000 towards his contribution for the
training expenses to be paid to the
Franchiser;
To
provide the copy of the Manual published by the Franchiser containing the lay
out of the outlet, staffing requirement of outlet, Staff job description,
Service standards, Standard of quality
of the products to be sold at outlet, staff uniform, cleaning routines, Menu of
the outlet, system of the business,
technical know-how and other relevant information relating to conduct of the said Business;
To
provide help and guidance in establishment, and efficient operation of the
Business;
To
give update information received from the Franchiser containing the improvement
or alterations in the Manual and Business system or the products to be serviced
at the outlet; (e) To furnish all material for advertising and promotion of the
Business received from the
Franchiser
and prepared by the Franchisee himself in India for use;
To
furnish newsletters received from the Franchiser containing the development of
the Business, position of the Franchise business in International market and
other information useful for the
franchise business;
To
provide guidance or help on the written request in the matters of management,
f inance
and promotion of the Business;
To
provide such continuing assistance, advice and guidance to the sub-franchisee
as the franchisee considers reasonable
and necessary for the efficient functioning of the
Business.
(i) A sum of Rs. 10,00,000 on the execution of
these presents;
Monthly
Franchisee fee at the rate of 12% of the total value of all invoices rendered
by the
sub-franchisee without deduction of any taxes, expenses, commissions, or
other charges
or debits whatsoever will be payable monthly before the 7th day of the
month following
the month to which the fee relates;
Sum
@ 2% of the previous month's gross turnover towards contribution to Fund
for Advertising
and Promotion.
|
Commented
[P14]: |
|
Sub |
|
- |
|
Franchisee's |
|
|
|
Obligations |
|
|
To
ensure that there are sufficient funds for the operation of the Business under
this
Agreement;
To
commence the Business within one month of these presents;
(ii)
To use the Marks in the Business and to
maintain the high standards associated with the
Marks;
To
keep confidential the manual, methods and system of the Business and
information relating to method of operation, advertisement, present or policies
of the Franchiser or any other
information relating to the operation of the Franchiser;
To
obtain a signed confidentiality undertaking from all its employees at the time
of their joining service of the sub-franchisee in the form set out in Annexure
II enclosed herewith;
To
obtain licences, permissions from the State Government, local or statutory
authority to commence and operate the Business and to keep the said licences
and permissions in force;
To
comply with all statutes, bye laws and other regulations prescribed by the
Government of India, State Government,
local or statutory authority from time to time relating to the conduct of the Business;
To
refer the enquiry received about the Business to the Franchisee or the
concerned sub-franchisee regarding the supply of franchise products to
locations out of the Territory;
To
use the stationery and forms as prescribed by the Franchisee in connection with
the Business for external use;
Not
to be engaged directly or indirectly in any similar business which may compete
with the Business or any part of it in
the Territory or in any other area where it may compete with any other franchisee or sub-franchisee;
Not
to solicit customers from outside the Territory
To
carry on the Business from the Premises only;
To
obtain insurance policy in the joint names of the Franchisee and the
Sub-Franchisee against loss or damages by fire, earthquake, flood, cyclone,
etc. with an insurance. The Sub-Franchisee shall also take insurance policy
against all liability (including product liability) of the Sub-Franchisee and
the Franchisee and to the SubFranchisee's employees or to the members of the public. The
Franchisee shall keep the insurance policies in force during the term of the business and will not
do or omit to do or be done or permit or suffer
any act, deed or thing which might or could prejudicially vitiate or
affect any such insurance;
The
Sub-Franchisee will indemnify and keep the Franchiser and Franchisee
indemnified against all claims, demands, actions, proceedings, losses, damages,
recoveries, judgments, costs, charges
and expenses which may be made, or brought or commenced against the Franchiser or the Franchisee or which the
Franchiser or the Franchisee may or may have
to bear, pay or suffer, directly or indirectly due to any act, default
or omission by the Sub-Franchisee in
conducting the said Business;
To
state in all correspondence and literature the fact that the SubFranchisee is
an Independent Sub-Franchisee of the
Franchiser or the Franchisee and in no other way connected with it;
To
use his best endeavours and hard work in the conduct of the Business and to
carry on the Business diligently and in a manner in all material respects to
the satisfaction of the Franchisee and in accordance with the requirements and
standards of the Franchiser
The
Auditors, inspectors or authorized representatives of the Franchisee and
Franchiser will be authorized to inspect and audit the books of account and all
supporting vouchers, bills, documents of the sub-franchisee relating to the
Franchise business at any time and for that purpose the sub-franchisee will permit
the auditors and authorized representatives of Franchisee and Franchiser to
enter its premises and co-operate with them and furnish to them all documents,
accounts, vouchers, etc. as required by them. If after the audit or inspection
of the accounts, it is pointed out by the Auditor of the Franchisee or
Franchiser that the accounting of the sub-franchisee relating to the
calculation of the franchise fee and/or any other financial matter is not
correct, the Sub-Franchisee will rectify the said defect in the accounts and if
any amount towards franchise fee has been sent less earlier, the balance amount
will be sent to the Franchisee within a period of fifteen days from the receipt
of audit report along with interest @ 2% per month or part of the month.
The
authorized representatives of the Franchisee and Franchiser will be authorized
to visit the Premises at all reasonable times for the purpose of checking the
quality of the products supplied by the Business and the manner in which the
Business is being carried on and of inspecting the material and equipment being
used in connection with the Business. If after the inspection, the said
authorized representatives point out some shortcoming or defect in the quality
or standard of the products supplied and the system, etc., the Sub Franchisee
shall promptly rectify the same and report the compliance to the Franchisee or
Franchiser as the case may be.
The
Sub-Franchisee shall maintain proper books of account relating to the Business
with supporting vouchers, invoices and documents and preserve the same for a
period of three months after the end of financial year to which it relates. The
Sub-Franchisee shall also furnish the annual Balance Sheet and Profit &
Loss Account within thirty days after the end of each financial year with a
certificate from the Auditor as to the turnover during such period calculated
in accordance with this Agreement.
The
Sub-Franchisee hereby agrees that it shall not have the right to assign or
transfer its rights and obligations under this Agreement to any third party
without the written consent of the Franchisee in writing. In case the
Sub-Franchisee proposes to assign or transfer its rights and obligations under
this agreement, it shall make a proposal for such assignment or transfer along
with the details of the business history and experience of the proposed
transferee or assignee, copy of the proposed transferee's written offer to
purchase the said business from the Sub-Franchisee and any further information
which the Franchisee may reasonably require. The Franchisee will give its
consent for the transfer or assignment, provided the following conditions are
fulfilled:
(i)The
proposed transferee or assignee meets the standards as required by the
Franchisee and Franchiser about business experience, financial status and
ability. The proposed transferee or assignee should be able to undertake the
franchise business efficiently and diligently and willing to execute an
agreement with the Franchisee for a period of not less than five years
commencing on the date of the transfer or assignment of the said business.
(ii)The
Franchisee may instead of giving its consent for transfer or assignment of the
said business, may opt to purchase the said business or get the said business
transferred in favour of its nominee for the same amount and on the same terms
as those set out in the offer of the transferee. The Franchisee may exercise
such option by giving a notice in writing to the Sub-Franchisee within one
month from the date of receipt of the proposal from the Sub-Franchisee.
(iii)If
the Franchisee does not opt for purchase the said business or get the said
business transferred in favour of its nominee, it will give its consent for
transfer of the said business in favour of proposed transferee and on such
consent being given, the proposed transferee shall deposit thirty per cent of
the consideration amount with the Franchisee and shall pay the balance 70% of
consideration amount to the Franchisee upon completion of the transfer. Thereafter
the Franchisee shall pay the consideration amount received from the transferee
after deducting the amount of any unpaid obligations of the Sub-Franchisee to
the Franchisee within ten days from the date of completion of the transfer of
the business.
The
Franchisee shall be entitled to terminate this Agreement upon occurrence of any
event Commented
[P19]: Termination of Agreement of default specified below:
If
the Sub-Franchisee fails to commence the business within the period of one month from the date of these presents;
If
the Sub-Franchisee fails to observe and perform any covenants, stipulations
or obligations hereunder or commits a
breach of any of the terms, conditions or
provisions
of this Agreement or its part to be observed or performed; (iii) If the information or representations made
by the Sub-Franchisee in the application form or supporting details
proves to be incorrect in any material
respect
(iv)
If the Sub-Franchisee passed any resolution for winding up or allows a petition
for winding up presented before a Court against it or if a receiver or
liquidator is appointed of the whole or part of the assets, properties or
undertakings of the Sub-Franchisee or compounds, with or makes any composition
with its creditors; (v) If the Sub-Franchisee suffers any adverse material
change affecting the financial position
of the Sub-Franchisee or by any act or omission of the Sub-Franchisee, the Franchisee has reasonable grounds to
apprehend breach of the terms and
conditions of this agreement in future or that its right may be
prejudiced or be in jeopardy.
If
the Sub-Franchisee fails to pay, to submit any document or information
required under this Agreement within 10
days following its due date;
If
the Sub-Franchisee ceases or take any steps to cease the business;
If
by the, act, omission or commission of the Sub-Franchisee, it is suspected by
the Franchisee that any secret
information, knowhow relating to the business has been disclosed by the SubFranchisee to the third
parties and Sub-Franchisee cannot
satisfy the Franchisee that his apprehension is untrue;
If
the Sub-Franchisee challenges the validity of the Trade Marks of the
Franchiser or Franchisee.
(x)
If the Sub-Franchisee commits default or neglect in maintaining the quality and
standard of the products sold by it:
Provided
that in the case of default or neglect affecting the quality or standard of the
food products to be sold in outlet of SubFranchisee, the Franchisee shall serve
a notice to the SubFranchisee for rectification of the default or neglect, and
if default continues beyond 48 hours from the time of the written notice, the
Franchisee may terminate this Agreement:
Provided
further that in the case of default or neglect of any other nature, the
Franchisee shall have the right to terminate this agreement if default
continues beyond ten days from the time of the written notice.
|
rights
and obligations shall take following actions: (i)The
Sub-Franchisee shall stop doing the said franchise business and to make use
of the Trade Marks of the Franchisee and will return the copy of the Manual
along with translated copies thereof, service specifications, book of
instructions regarding book keeping and accounting procedure and all documents,
stationery, material for advertisement
and promotion, signs and other items owned by the Franchisee and in the
possession of the Sub-Franchisee and in case of default by the
Sub-Franchisee, the Franchisee shall be entitled to enter upon the premises
of the Sub-Franchisee to take
possession of the manual, stationery, and other material and goods
from the Sub-Franchisee. (ii)
The Sub-Franchisee shall pay all sums due at or after the date of termination
to the Franchisee
without any deduction or set off, within a period of seven days of the
termination and if any sum is found to be payable to the Franchisee, the
Sub-Franchisee shall pay the said sum to the Franchiser without any deduction
or set off. (iii)The
Sub-Franchisee shall assign all his rights under this Agreement to the
Franchisee or his nominee (iv)After
termination of this agreement, the Sub-Franchisee shall not for one year,
directly or indirectly do the business similar to the franchise business or
otherwise compete or assist anybody to compete with the Franchisee or any
other Sub-Franchisee appointed in the territory. The Sub-Franchisee shall not
solicit the customers of the Franchiser or of any sub-Franchisee appointed by
the Franchisee in the territory. (v)In
accordance with section 10 of the Power of Attorney Act, 1971, the
Sub-Franchisee hereby appoints, nominates, constitutes and appoints the
Franchisee its Attorney to take necessary action to ensure the compliance of
the actions to be taken by the Sub Franchisee under this clause of this
Agreement. |
|
|
Any
relaxation, forbearance, delay or indulgence on the part of the Franchisee in
enforcing any of the terms and conditions of this agreement or the granting
of time by the Franchisee to the Sub Franchisee shall not prejudice, affect
or restrict the rights of the Franchisee hereunder nor shall any waiver by
the Franchisee of any breach hereof operate as a waiver of any subsequent or
any continuing breach hereof. The
Sub-Franchisee shall within one week from the date of commencement of
business, take insurance policy in the joint names of the Franchisee and the
Sub-Franchisee against loss or damages by fire, earthquake, flood, cyclone,
etc., with an insurance. The Sub Franchisee shall also take insurance policy
against all liability (including
product liability) of the Sub-Franchisee and the Franchisee and to the
Sub-Franchisee's employees or to the members of the public. The Sub
Franchisee shall keep the insurance policies in force during the term of the
business and will not do or omit to do or be done or permit or suffer any
act, deed or thing which might or could |
Commented
[P21]: Waiver Commented
[P22]: Insurance |
Upon
termination of this agreement on the occurrence of any default as provided
Commented [P20]: Post hereinabove, the Sub-Franchisee and Franchisee without
prejudice to and in addition to their Termination provisions
prejudicially
vitiate or affect any such insurance. The Sub-Franchisee shall deposit the
insurance policies and receipts for the premia paid with the Franchisee within
fourteen days from the commencement of the business. In case the Sub-Franchisee
fails to insure as provided above, the Franchisee may take insurance policies
and may recover the premium paid from the Sub-Franchisee without prejudice to
the other rights of the Franchiser in respect of such default.
In
the event of any claim arising under such insurance, the Sub-Franchisee shall
intimate the Franchisee about the same and comply with all instructions of the
Franchisee in connection therewith and to take steps, actions and proceedings
as may be necessary and if so required by the Franchisee receive any monies,
payable in respect thereof for and on behalf of and in trust for the Franchisee
and deliver the same to the Franchisee upon receipt thereof without claiming
any part thereof on any account whatsoever. Notwithstanding anything contained
hereinabove, the Franchisee may at its option agree that any insurance proceeds
received under the insurance policy may be applied in making good the damages
or in replacing the goods or equipments or any item thereof by other similar
goods or equipments to which the terms of this agreement shall apply.
This
agreement shall be governed and construed in all respects in accordance with
the laws of India and any dispute or question regarding the interpretation of
any clause or the rights, duties or liabilities of either party under this
Agreement or otherwise in connection with this agreement, the matter in
difference shall be referred to an
arbitrator appointed by the Indian Council of Arbitration, New Delhi and the
provisions of Arbitration and Conciliation Act, 1996 or any statutory
modification thereof shall be applicable to such reference. The award of
Arbitrator shall be final and binding on both the parties.
The
validity and interpretation of and the legal effect to be accorded to all
provisions of this agreement shall be determined and applied according to the
laws of India.
This
agreement may be amended only by a writing signed by the duly authorized
representatives of both parties and specifically the referring to itself as
amendment to this agreement.
Notices
and other communications under this agreement shall be in writing addressed as
indicated in the description of the parties herein or as either party may
request in writing and the effective date of each is the date of its prepaid
deposit in the mail for dispatch by air or such service properly addressed. Any
notice sent by cable, telex or facsimile shall be deemed to have been served on
the next day following the date of dispatch thereof.
It
is hereby agreed by and between the parties hereto that this Agreement is
subject to the provisions of the Agreement dated executed between M/s
……………….plc, Franchiser of the One part and M/s……………….Co Ltd., the Franchisee of
the other part and referred to as the Franchisee herein. The Sub-Franchisee
undertakes that it will comply with the terms and conditions of the said
agreement and will not do anything which will be violation of the terms and
conditions of the said agreement.
The
parties hereto agree that they shall not be responsible for failure to perform
their obligations under these presents due to force majeure, which shall
include but not be limited to fire, flood, strike, labour strikes and disputes,
embargo put by the government of the country of any party, shortage of labour,
raw-material, or any other reason of such party. If the circumstances leading
to force majeure occur, the affected party shall give notice thereof to the
other party. If the circumstances or event of force majeure continue for a
period exceeding six months, either party may terminate this agreement.
This
agreement shall be executed in triplicate. The original shall be retained by
the Franchisee, duplicate by the Sub-Franchisee and triplicate by the
Franchiser.
The
stamp duty and all other expenses in respect of this agreement, duplicate and
triplicate thereof shall be borne and paid by the Sub-Franchisee.
All
prior agreements or arrangements whether oral or written between the parties or
relating to the conduct of franchise business shall be deemed to be cancelled
and superseded by this agreement.
The
headings of the clauses of this agreement are meant only for convenience of
reference and shall not in any way be taken into account in the interpretation
of these presents
If
any clause contained in this Agreement or any part thereof is declared or
become unenforceable, invalid or illegal due to any reason whatsoever, the
other terms, conditions and provisions of this Agreement shall remain in full
force and effect as if this Agreement has been executed without the offending
clause appearing herein. In such case if the sub-Franchisee is of the opinion
that exclusion of such clause adversely affects either his right to receive the payment of fees to the franchisee or the
franchisee's marks and know-how methods of the Business, then the Franchisee
may terminate this agreement by giving a notice of thirty days to the
sub-franchisee.
IN
WITNESS WHEREOF the parties hereto have executed these presents and duplicate
copy thereof on the day and year hereinabove written
Signed
and delivered by the within named XYZ Co. Ltd., the Franchisee by the hands of
Shri ………………. Managing
Director
thereof in the presence of
1 .
2.
Signed
and delivered by the within named ABC Co. Ltd. the Sub-Franchisee by the hands
of
Shri
………………. Managing Director Thereof in
the presence of
1
2
0 Comments
Thank you for your response. It will help us to improve in the future.