THIS
AGREEMENT made at……………..on this.................. day of 2000 between XYZ Company PIc, a company
incorporated under the ……………..Act and having its registered office
at……………..USA, hereinafter called “the Franchiser" (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 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
(1)The
Franchiser 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;
(2)
The Franchiser has, through its experience and extensive research, developed
many famous food products which have become very popular in different countries
of the world;
(3)As
the Franchiser has not been able to operate itself from various countries of
the world and appointed franchisees in various countries of the world to run
the retail outlets to sell the famous food products of Mc International brand,
so that the products of the Franchiser may be sold throughout the world;
(4)The
Franchiser has prepared a manual named "Mc International Business Systems
and
Operations
Manual" which contains the details of know-how and business system of the
Franchiser, hereinafter called the "Manual", which is the sole
property of the Franchiser. The said manual, inter alia contains the details of
outlet lay out, staff uniform, requirement of staff of the outlet, job description
of the staff of the outlet, training requirement of staff, standard of food
products to be served in outlet, cleaning requirements, Menu of outlet,
guidelines for fixing rates of items, complaints, grievance procedure,
Equipments to be used in manufacturing products, opening hours, minimum stock
requirements, etc.;
(5)The
Franchiser is desirous to extend the sale of its food products to various other
countries and it has negotiated with various Indian Entrepreneurs, who were
interested to undertake Franchise business of the Franchiser. After
negotiations, the Franchiser has decided to appoint the Franchisee as
Franchisee for undertaking Franchise business in India;
(6)The
Franchiser declares that it owns the registered and unregistered trade and
service marks in U.S.A. and various other countries of the world and has not
appointed any Franchisee to undertake the franchise business in Mc
International food products in India;
(7)The
Franchiser has intimated to the Franchisee that the market of Mc International
food products in India will be developed by hard work, prompt and efficient,
satisfactory and courteous service of the Franchisee, as there are variety of
food products of different systems in India; (8)The Franchiser has also advised
the Franchisee that it has to exploit the big territory of India, and for that
purpose has to appoint 50 franchisees within a period of 2 years from the date
of execution of this agreement and it has to attain the target fixed for the
franchise business in India within a period of 5 years;
(9)The
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.
NOW
IT IS HEREBY AGREED BETWEEN THE PARTIES AS FOLLOWS:
In
consideration of the Franchise and Management Service Fees hereinafter reserved and of the Franchisee's
agreement hereinafter contained, the Franchiser hereby GRANTS to the Franchisee
the exclusive right to carry on the business of Mc International Food Products
with the trade mark of the franchiser (hereinafter called the "said
business") with the right to use in the said Business the designs, plans,
systems, specifications, know-how in the territory of India, (hereinafter
called the "the territory").
This
agreement shall subject to the provisions of clause....………below relating to
termination of agreement, subsist for a period of 15 years commencing on
the……………..day of…………….. 2000. If the Franchisee regularly pays Franchise and
Management Service Fees hereby reserved and observe and perform all the
covenants and conditions of this agreement, the Franchiser shall on the written
request of the Franchisee made three calendar months before the expiration of
the term of this agreement grant to the Franchisee a renewed right to do the
said franchise business for further term as may be desired by the Franchisee
but not exceeding years from the expiration of the terms of this agreement on
the terms and conditions mutually agreed to between the parties at the time of
renewal
The
Franchisee shall pay to the Franchiser the lump sum of$ 1,00,000 as Franchise
and Management Service fees as follows:
$
50,000 on the execution of these presents;
$
25,000 after three months from the date of these presents; (iii)$ 25,000 after
six months from the date of these presents.
The
Franchisee shall also pay a Franchisee fee at the rate of 10% of the total
value of all invoices rendered by all the Franchisees during any accounting
year. The Franchisee fee shall be paid monthly by the Franchisee to the
Franchiser on or before the 10th day of the month following the month to which
the fee relates. The Franchisee shall not deduct or set off against any fee
payable to the Franchiser any sums which the Franchisee considers to be due to
him from the Franchiser entitled. In case of default in the payment of any sum
in time, the Franchisee shall, without prejudice to any other remedy that the
Franchiser may have under this agreement, or in law, pay interest @ 2% per
month or part of the month on the amount of any sums due but not paid.
The
Franchisee hereby agrees and confirms that it will furnish to the Franchiser
not later than 7 days after the end of each monthly accounting period, written
detailed summary showing the aggregate and gross invoice value of all products
sold by all the Franchisees during the accounting period with calculations of
the fees. payable by the Franchisee in respect thereof together with a copy of
each invoice rendered during the accounting period. The Franchisee will keep
the accounts of all franchisees for a period of three years from the completion
of the accounting year, for audit and inspection by the representatives of the
Franchiser.
The
Franchisee hereby agrees that it shall, within four months after the end of the
each financial year, furnish to the Franchiser a consolidated balance sheet and
Profit and Loss account of all
franchisees
in the territory certified by a Chartered Accountant relating to the franchise
business.
The
Franchiser hereby undertakes that it will give training to the General Manager
and other employees of the Franchisee in the operation of the said business.
The training will be for a duration of 3 weeks and will be conducted at the
place of the Franchisee. The Franchiser will also
appointed
by the Franchisee. The training to General Managers and employees of the
sub-franchisees will be conducted at the Franchisee's place. The Franchisee
will pay to the Franchiser (J) full salary of three weeks of the General
Manager, Manager and Supervisor who will be deputed for imparting training for
3 weeks (h) return economy class air fares and
all other travel expenses to and from and within the place of training
(iii) Hotel expenses for stay of the
Franchiser's trainers in three star hotel (iv) Fixed allowance @ $ 250
as halting allowance per day payable to all the trainers.
To
provide the copy of the Manual with English translation thereof, the copyright
of the same shall remain with the
Franchiser;
To
render advice relating to establishment and efficient operation of the said
Business;
To
render advice to the adaptation of the Business to the requirements of India;
To
provide operational support for a period of 6 weeks from the commencement of
the business by the Franchisee by
deputing well qualified staff viz. One General Manager, One Supervisor and One Assistant Manager to
assist the launching and efficient operation of the said business by the Franchisee:
Provided
that the Franchisee shall pay the following amounts for the operational support
(a) $ 10,00, as the pay roll costs
of the staff deputed attributable to the period of their visit to the
Franchisee place,
(b) Return Economy class air fares
and other travel expenses to and from and within the said territory,
(c) Payment of hotel bills for the
staff deputed in 3 star Hotel,
$
300 as fixed halting allowance to each employee deputed per day;
To
supply the material for updating the Manual from time to time so that the
Franchisee may get the benefit of
improvements in the systems of the said business. However the copyright and ownership of the said Manual
will continue to vest in the Franchiser (vi) To supply the copies of all
advertising materials of the products and business to be used in the said territory.
To
depute General Manager two times in a year for a period of 15 days each time
for the purpose of guiding and
monitoring the standards of the Franchisee and sub-franchisees Provided that
the Franchisee shall pay the following amounts to the Franchiser for the visit
to be made by the General Manager
(a) $ 5,000 as the pay roll cost of the General Manager deputed
attributable to the period of his visit to the Franchisee place,
(b) Return Economy class air fares
and other travel expenses to and from and within the said territory,
(c) Payment of hotel bills for
-the General Manager deputed in 3 star Hotel,
(d) $ 300 as fixed halting
allowance to General Manager deputed per day.
On
the written request and query, to give written advice about know-how, business
system, standard of raw material to be
used, any equipment to be employed in the said business and any other matter relating to the said
business;
To
inform the Franchisee about the convening of seminars and meetings of
Franchisees, well in advance, so that
the franchisee may attend the said seminar and meetings at his
own expenses without any payment of any charges
or expenses to the Franchiser towards the
expenses incurred by him for holding such seminars and meetings;
To
provide sufficient number of newsletters published in English/ Hindi language
so that the same may be distributed to
all the Franchisees;
Not
to sell the equipment or material manufactured by it for use in the manufacture
of food products to third parties in the
territory;
Not
to exploit the territory itself by opening its own outlets to do the franchise
business to sell food products of Mc
International brand or appoint any other Franchisee in the territory;
(8)
The Franchisee hereby covenants with the Franchiser as follows:
(i)To
invest sufficient money for the commencement and operation of the said
business;
(ii)
To obtain permissions from the Government of India, Reserve Bank of India and
other statutory authorities for
commencement of the said business in India immediately and in any event within a period of three months from
the date of execution of this agreement; (iii) To commence the said business
within three months from the execution of these presents or within fifteen days from the date of
receipt of all permissions from the Government and other statutory authorities, whichever is later;
(iv)
To appoint 20 franchisees to undertake the said business diligently in the
territory within a period of one year
and 30 more franchisees in the second year of the business; (v) To keep the
know-how, systems of the said business, provisions of the manual and any other secret and confidential information
relating to the said business, which has come to its knowledge, confidential and secret and not to
divulge the said information to any third party;
(vi)
To obtain undertakings from all employees to keep the information of
Franchisees business confidential at the
time of joining service of franchise business and keep the said undertakings in record for the inspection of
the Franchiser's representatives; (vii)
To comply with all statutory requirements applicable to the franchise business
and to obtain proper licences required
for the operation of the business;
To
use the Trade marks in the said business and maintain the standards of the
products of the business as prescribed
by the Franchiser;
Not
to bring the trade mark, the said business or business system into disrepute by
its actions;
To
deal with the customers of the franchisees fairly, honestly and with courtesy
and to redress the customers complaints,
if any, urgently;
To
use the stationery and forms prescribed by the Franchiser for external use in
connection with the said business;
Not
to engage or involve directly or indirectly in any other business other than
the said business without the written
consent of the Franchiser;
Not
to use the know-how or systems of the said business or any other information
provided
by
the Franchiser for any purpose other than the Franchise business;
To
train its staff and sub-franchisees in the operation of the said business in
all its aspects so that the said
business may be conducted satisfactorily and in accordance with the standards and specifications of the
Franchiser;
Not
to solicit customers from outside the Territory.
The
Franchisee will indemnify and keep the Franchiser indemnified against all
claims, Commented [P8]: Indemnification by Franchisee demands, actions,
proceedings, losses, damages, recoveries, judgments, costs, charges and
expenses which may be made, or brought or commenced against the Franchiser or
which the
Franchiser
may or may have to bear, pay or suffer, directly or indirectly due to any act,
default or omission by the Franchisee or any sub-franchisee in conducting the
said business.
The
Franchisee undertakes that it shall use its best endeavours in conduct of the
said business and will appoint 20 sub franchisees within one year of execution
of these presents and 30 further
sub-franchisees within the second year of the business in the said territory.
The yearly target amount of invoice of each sub
franchisee is Rs. 25,00,000 and the target amount for the second year of
franchisee and the sub-franchisees will be Rs. 15,00,00,000. If the franchisee
will not be able to achieve its target in the second year, the Franchiser may
within 90 day from the end of the second year, serve a notice in writing to the
Franchisee terminating its right to open any future outlet other than ones in
respect of which sub-franchisee agreement has already been granted. In such a
case, the Franchiser will be entitled to appoint Franchisee to operate outlets
within the territory. However such action of the Franchiser will not affect the
Franchisee's rights and obligations with respect to those outlets already
opened or in the process of opening
The
Franchisee agrees that to maintain the identity and reputation of trade mark of
the Franchiser, the Franchisee will establish and maintain a fund for
advertising and promotion of the said business by crediting 1.5% of its gross
turn over and of the sub-franchisees to that account. The said fund shall be
kept into a separate bank account in the name of ABC Franchisee's Advertising
and Promotion Fund. The fund will be used for the advertisement of the
franchise business including its trade mark through the medium of Television,
Magazines, Journals, Newspapers and holding public meetings to make the
products of the business popular. The Franchiser may give directions about the
manner in which the said advertising and promotion fund will be utilized. The
Franchisee shall keep proper record of the fund. The material used for
advertisement and promotion of the business and trade mark will be in accord
with the style and form as directed by the Franchiser.
The
Franchiser and Franchisee agree that they will be registered as Registered User
under the Trade Marks Act, 1999. The Franchisee confirms that it will hold the
use of the Trade Mark for the benefit and as an agent of the Franchiser and
will assign to the Franchiser any such rights therein which may accrue on the
request of the Franchiser in this regard. The Franchisee undertakes that it
will ensure that there is no infringement of trade mark of the Franchiser in
the said territory and if infringement of the trade mark comes to its notice,
it shall take necessary steps to defend the trade marks. The franchisee shall
inform the Franchiser about any suspected
infringement of Trade Mark and steps taken by it in this regard. make an
application to the Registrar of Trade Marks so that the Franchisee may
The
Franchiser's Auditors, inspectors or authorized representatives will be
authorized to inspect and audit the books of account and all supporting
vouchers, bills, documents of the Franchisee and sub-franchisees relating to
the Franchise business at any time and for that purpose the Franchisee and all
sub-franchisees will permit the Franchiser's auditors and authorised
representatives to enter its or their 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
Franchiser's Auditor that the accounting of the franchisee or sub-franchisees
relating to the calculation of the franchise fee and/or any other financial
matter is not correct, the 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 Franchiser within a period of fifteen
days from the receipt of audit report along with interest @ 2% per month or
part of the month.
(14) The 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 consent of the Franchiser in
writing. In case the 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 Franchisee and any further
information which the Franchiser may reasonably require. The Franchiser will give
its consent for the transfer or assignment, provided the following conditions
are fulfilled:
(i)The
proposed transferee or assignee meet the standards as required by the
Franchiser about business experience, financial status and ability.
(ii)The
proposed transferee or assignee should be able to undertake the franchise
business efficiently and diligently and willing to execute an agreement with
the Franchiser for a period of not less than five years commencing on the date
of the transfer or assignment of the said business.
(iii)The
Franchiser 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 Franchiser may exercise
such option by giving a notice in writing to the Franchisee within one month
from the date of receipt of the proposal from the Franchisee.
(iv)If
the Franchiser 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 Franchiser and shall pay the balance 70% of
consideration amount to the Franchiser upon completion of the transfer.
Thereafter the Franchiser shall pay the consideration amount received from the
transferee after deducting the amount of any unpaid obligations of the
Franchisee to the Franchiser within ten days from the date of completion of the
transfer of the business.
On
the completion of the transfer or assignment of the said business by the
Franchisee in favour of the transferee, the Franchisee shall assign all of its
rights over all Sub-Franchisee agreements within the territory.
(15)
The Franchiser shall be entitled to terminate this Agreement upon occurrence of
any event of default specified below:
(i)If
the Franchisee fails to commence the business within the period of three months
from the date of these presents;
(ii)If
the 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 Franchisee in the application
form or
supporting
details proves to be incorrect in any material respect;
(iv)If
the 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 Franchisee or compounds, with or makes any composition with its creditors;
(v)If
the Franchisee suffers any adverse material change affecting the financial
position of the Franchisee or by any act or omission of the Franchisee, the
Franchiser 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;
(vi)If the Franchisee fails to pay, to submit
any document or information required under this
Agreement
within 10 days following its due date;
(vii)If
the Franchisee ceases or takes any steps to cease the business;
(vii)If
by the act, omission or commission of the Franchisee, it is suspected by the
Franchiser that any secret information, know-how relating to the business has
been disclosed by the Franchisee to the third parties and Franchisee cannot
satisfy the Franchiser that his apprehension is untrue; (viii)If the Franchisee
challenges the validity of the Trade Marks of the Franchiser.
(ix)If
the 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 Franchisee, the Franchiser shall serve a
notice to the Franchisee for rectification of the default or neglect, and if
default continues beyond 48 hours from the time of the written notice, the
Franchiser may terminate this Agreement:
Provided
further that in the case of default or neglect of any other nature, the
Franchiser shall have the right to terminate this agreement if default continues
beyond ten days from the time of the written notice.
(16)
Upon termination of this agreement on the occurrence of any default as provided
hereinabove, the Franchisee and Franchiser without prejudice to and in addition
to their rights and obligations shall take following actions:
(i)The
Franchisee shall stop doing the said franchise business and to make use of the
Trade Marks of the Franchiser 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
Franchiser and in the possession of the Franchisee and in case of default by
the Franchisee, the Franchiser shall be entitled to enter upon the premises of
the Franchisee to take possession of the manual, stationery, and other material
and goods from the Franchisee.
(ii)The
Franchisee shall pay all sums due at or after the date of termination to the
Franchiser 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 Franchiser, the
Franchisee shall pay the said sum to the Franchiser without any deduction or
set off.
(iii)The
Franchisee shall make application to the Registrar of Trade Marks for removal
of his name as registered user of the Franchiser's trade mark in the Register
of Trade Marks.
(iv)The
Franchisee shall assign all his rights under this Agreement to the Franchiser
or his nominee.
(v)After
termination of this agreement, the 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 Franchiser or any other
Franchisee appointed in the territory. The Franchisee shall not solicit the
customers of the Franchiser or of any Franchisee appointed by the Franchiser in
the territory.
(17)
In accordance with section 10 of the Power of Attorney Act, 1971, the
Franchisee hereby appoints, nominates, constitutes and appoints the Franchiser
its Attorney to take necessary action to ensure the compliance of the actions
to be taken by the Franchisee under clause 15 of this Agreement.
Any
relaxation, forbearance, delay or indulgence on the part of the Franchiser in
enforcing any of the terms and conditions of this agreement or the granting of
time by the Franchiser to the Franchisee shall not prejudice, affect or
restrict the rights of the Franchiser hereunder nor shall any waiver by the
Franchiser of any breach hereof operate as a waiver of any subsequent or any
continuing breach hereof.
The
Franchisee shall within one week from the date of commencement of business,
take insurance policy in the joint names of the Franchiser and the Franchisee
against loss or damages by fire, earthquake, flood, cyclone, etc. with an
insurance. The Franchisee shall also take insurance policy against all liabilities (including
product liability) of the Franchisee and the Franchiser and to the Franchisee'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 Franchisee shall deposit the insurance policies and
receipts for the premia paid with the Franchiser within fourteen days from the
commencement of the business. In case the
franchisee fails to insure as provided above, the Franchiser may take
insurance policies and may recover the premium paid from the 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 Franchisee shall
intimate the Franchiser about the same and comply with all instructions of the
Franchiser in connection therewith and to take steps, actions and proceedings
as may be necessary and if so required by the Franchiser receive any monies,
payable in respect thereof for and on behalf of and in trust for the Franchiser
and deliver the same to the Franchiser upon receipt thereof without claiming
any part thereof on any account whatsoever.
Notwithstanding anything contained hereinabove, the Franchiser 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 arbitration to the International Chamber of
Commerce whose decision 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.
The
parties will obtain necessary permissions from the Governments of their
countries or any authority for the execution of this agreement, operation of
the business and the payment of Franchise and Management Service Fees or any
payments payable in respect of this agreement and performance and observance of
covenants and liabilities under 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.
All
correspondence and notices under this agreement shall in English and if there
is any discrepancy between any document and any English version, the English
version of the same shall be taken as final.
The
parties hereto agree that they shall not be responsible for failure to perform
of 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 duplicate. The original shall be retained by the
Franchiser
and the duplicate by the Franchisee
The
stamp duty and all other expenses in respect of this agreement and duplicate
thereof shall be borne and paid by the 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.
(29)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.
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. PIc, the Franchiser 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 Franchisee by the hands of
Shri……………….Managing
Director
Thereof
in the presence of
1.
2.
[CD1]AGREEMENT
BETWEEN A FRANCHISER AND FRANCHISEE GRANTING FRANCHISE RIGHTS WITH RIGHT TO
APPOINT SUBFRANCHISEES IN THE TERRITORY ALLOTTED
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