+91.85.86.97.26.36 www.thelawoffice.co.in
THE LAW OFFICE The Law Office “TLO” is a professionally managed Full Service Law Firm providing innovative legal solutions to its domestic as well as international clients. We combine experience and dynamism of young and talented lawyers, and subject matter specialists who have years of experience behind them. Through sound legal judgment, from good common sense and outstanding client service, our firm has grown through referrals from clients, the community, and business leaders. TLO combines global experience local expertise and a commitment to providing quality legal services responsive to the needs of its local, regional, national and international clients. To complement its prominent litigation practice, the Firm has emerged as a leader in the areas of complex litigation both civil and criminal, Corporate law, Finance & Banking law, Taxation law, Mergers and Acquisitions, Regulatory and Statutory compliances, and Intellectual property disciplines. We are expert in Setting up Business Units in India and Shut down of Business Units Formalities, Government Approvals, Process and Procedure Establishments, Statutory Compliances, Risk Analysis, joint ventures, and Business Restructuring for enhancing the business efficiency.
“We are committed to provide our client with a personal, high quality and comprehensive legal advice at a most competitive price, based on integrity, reliability, innovation and an extensive range of professional skills” Naveen Kumar Shelar Founder TLO
PRACTICE AREAS
Civil Law Criminal Law Contract Law Arbitration Competition/Antitrust Law Banking, Financing and Loan Corporate & Commercial Laws Intellectual Property & Cyber Law
Taxation Family Law Risk Analysis Business Restructuring Labor & Industrial Law Real estate & Infrastructure law Business Mergers & Acquisitions Statutory & Regulatory Compliances
TLO Confidential - Version- I- of 2014 Page 1 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
Effective Date: ________________ Reference# __________________
ABC Name of the Document: Agreement for Business Franchise Revision History: Sr. No 1. 2. 3
Preliminary
Description
Version Name of the parties who singing this Agreement Name of the Partner or Administrator , Legal hairs
4
Documents attached to this Agreement
5
Schedules in the Documents
6. 7.
Enforcement Drafted by and Date
Remark / Details
I 1. 2.
Director/ Partner/Proprietor
1. 2. 3. 4. 5. 1.Cheques# Date___ 2.Payment Receipt# 3.Outlate Plan 4.List of Equipment 5.List of Employee
Partner/Administrator/ Legal hairs.
Two
I & II mark as L-1 and L-2 From_____________ To_______________________ The law Office “TLO� April,2014
For Office Use Only
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AGREEMENT FOR BUSINESS FRANCHISE THIS AGREEMENT made this----------day of --------------------------------------2014 BY and BETWEEN: XYZ Pvt Ltd, a company registered under company act, 1956, having its registered office at _________________________ (for short “ABC”) and know with its Brand name “TLO” as a “FIRST PART” AND M/s.-----------------------------------------------------------------------------------------including all its branch offices, (for short “________”)(hereinafter referred to as “FRANCHISE”) as “SECOND PARTY” and collectively or jointly as a “Parties” RECITALS–CAVEAT I.
ABC over the course of years has developed a unique method for preparing and marketing food products pursuant to trade secrets, standards and specifications designed to maintain a consistent high class of product, service and national image. ABC has also developed and owns certain trademarks and service marks which have a national reputation. FRANCHISE voluntarily recognizes the value of the system, the trademarks and continued uniformity of image to himself, to ABC and to other FRANCHISEs of ABC outlets. In order to enhance the value
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of the method and trademarks and goodwill associated therewith, this Agreement
places
detailed
and
substantial
obligations
on
the
FRANCHISE including strict adherence to ABC ’s reasonable present and future
requirements
regarding
menu
items,
advertising,
physical
facilities, etc. Future improvements may be required in the Outlet, and certain provisions apply to other ABC outlets under common control with the Outlet. The rights granted to the FRANCHISE are for a limited time. Their value derives principally from certain ABC trademarks and associated goodwill, designs, systems and processes developed at considerable expense and effort II.
It is a contractual relationship between ABC and a franchisee whereby ABC may permit a franchisee to make use of its Brand name, trademark, good will, designs, systems ,processes,
standards
and commercial
know-how in return for a franchisee fee along with other applicable charges attached to a license, initially or revised, or communicated to the FRANCHISEE time to time, III.
That the ABC not intended to sale the good will i.e. “Briyani Gully” to the Franchisee but intended to grant the limited use for a specific period of the goodwill as per terms and conditions stipulated in this agreement.
The FRANCHISE ACKNOWLEDGES THAT: 1. THE SUCCESS OF THE BUSINESS VENTURE CONTEMPLATED HEREIN INVOLVES SUBSTANTIAL RISKS AND DEPENDS UPON THE ABILITY OF THE FRANCHISE AS AN INDEPENDENT BUSINESSMAN AND HIS TLO Confidential - Version- I- of 2014 Page 4 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
ACTIVE PARTICIPATION IN THE DAILY AFFAIRS OF THE BUSINESS, AND 2. NO ASSURANCE OR WARRANTY, EXPRESS OR IMPLIED, HAS BEEN GIVEN AS TO THE POTENTIAL SUCCESS OF SUCH BUSINESS VENTURE OR THE GROSS REVENUES, VOLUME OR EARNINGS LIKELY TO BE ACHIEVED, AND 3. NO STATEMENT, REPRESENTATION OR OTHER ACT, EVENT OR COMMUNICATION, EXCEPT AS SET FORTH HEREIN, IS BINDING ON ABC IN CONNECTION WITH THE SUBJECT MATTER OF THIS AGREEMENT.
OPERATING PART
1. Definitions :- In this Act unless the context otherwise requires:-
(a) Effective Date means the date of this Agreement when this Agreement has been signed by both the Parties hereto or _________ 2014, which ever is earlier.
(b) “Food” means any substance, whether processed, partially processed or unprocessed, which is proposed for human consumption,
(c) “food additive” means any substance not normally consumed as a food by itself or used as a typical ingredient of the food,
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(d) “adulterant” means any material which is or could be
used for
making the food unsafe or sub-standard or mis-branded or containing extraneous matter;
(e) “food safety” means assurance that food is acceptable for human consumption according to its intended use;
(f) “advertisement” means any audio or visual publicity, representation or pronouncement made by means of any light, sound, smoke, gas, print, electronic media, internet or website and includes through any notice, circular, label, wrapper, invoice or other documents;
(g) “consumer” means persons and families purchasing and receiving food in order to meet their personal needs;
(h) “extraneous matter” means any matter contained in an article of food which may be carried from the raw materials, packaging materials or process systems used for its manufacture or which is added to it, but such matter does not render such article of food unsafe;
(i) “Outlet” means a store that sells product of “ABC”, under the brand name TLO, under FRANCHISE agreement, to the consumer,
(j) “Original Recipe” means set of directions with a list of ingredients for making or preparing food,
(k) Optional Products means and includes soft drink, chips, wafer, chocolates which are not required to be sold without prior express written approval from ABC,
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(l) “Best before” means the date which signifies the end of the period under any stated storage conditions during which the food shall remain fully marketable and shall retain any specific qualities for which tacit or express claims have been made and beyond that date, the food may still be perfectly safe to consume, though its quality may have diminished.
(m)
“Date of manufacture” means the date on which the food becomes
the product
(n) “Date of packaging” means the date on which the food is placed in the immediate container in which it will be ultimately sold;
(o) . “Non- Vegetarian Food” means an article of food which contains whole or part of any animal including birds, fresh water or marine animals or eggs or products of any animal origin, but excluding milk or milk products, as an ingredient;
(p) “Vegetarian Food” means any article of Food other than NonVegetarian Food as defined in(n) of clause 1
(q) “label” means any written, marked, stamped, printed or graphic matter affixed to or appearing upon, any container containing food item related to ABC;
(r) . “Prepackaged” or “Pre-packed food”, means food, which is placed in a package of any nature, in such a manner that the contents cannot be changed without tampering it and which is ready for sale to the consumer TLO Confidential - Version- I- of 2014 Page 7 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
(s) “Use – by date” or “Expiry date” means the date which signifies the end of the estimated period under any stated storage conditions, after which the food probably will not have the quality and safety attributes normally expected by the consumers and the food shall not be sold;
(t) “MRP” means the maximum retail price of any product, no product shall be sell beyond the MRP,
(u) "goodwill" shall mean the goodwill of the business; (v) GROSS SALES means: 1) all revenue derived from the sale, at regular selling prices before any discounts or allowances, of any food, merchandise, and services, from the ABC ; 2) all income of every kind and nature related to the , FRANCHISE, and/or MARKS, even if derived from sales or activities not permitted by this AGREEMENT; 3) the fair value of any non-monetary consideration received by FRANCHISE for any food, merchandise, and services, from the Outlet, which are bartered, traded or otherwise exchanged by FRANCHISE for valuable goods or services; and 4) all proceeds of any business interruption insurance policies related to the FRANCHISE. i. Specifically excluded from "GROSS SALES" are:
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a) the incidental sale of gift cards or coupons (or any similar redemption device), if authorized by ABC ; provided however that goods and services purchased with gift cards or coupons (or any similar redemption device) shall be included in GROSS SALES, to the same extent as if paid for with cash; b) sales taxes, excise taxes, or other taxes added to the selling price of any item or service, if actually
collected
from
customers
and
transmitted to a governmental taxing authority; provided however any tax rebate, allowance, of discount shall be part of GROSS SALES to the extent
received,
taken,
or
realized
by
FRANCHISE; c) Any extraordinary sale of equipment or fixtures used in the FRANCHISE outlet. d) Charge Sales Each charge sale or credit sale shall be included in "GROSS SALES" at the time the sale is made, without regard to whether payment is actually collected. 2. SALES AWAY FROM THE OUTLET
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This AGREEMENT does not permit FRANCHISE to sell any food, merchandise or services away from the Outlet. If FRANCHISE is authorized by ABC , or without such authorization, sells food, merchandise or services associated with the MARKS away from the Outlet, then the revenues from those sales will be part of FRANCHISE'S GROSS SALES, and FRANCHISE shall comply with the procedures established by ABC to ensure that any such GROSS SALES are properly captured, or otherwise reported to the ABC 3. REPORTING GROSS SALES FRANCHISE shall accurately report its GROSS SALES and such other information as ABC requires, on a weekly basis, or some other periodic basis specified from time to time by ABC , using a form prescribed by ABC , supported by whatever documentation FRANCHISE reasonable requires. Unless ABC
specifies otherwise, FRANCHISE will report its
GROSS SALES every Monday, reflecting sales for the preceding week. In lieu of requiring FRANCHISE to report GROSS SALES, ABC
may
determine FRANCHISE'S GROSS SALES based on data. 4.
ESTIMATING GROSS SALES
(a) If FRANCHISE at any time fails to timely report its GROSS SALES, then in addition to any other remedies that ABC may have under this AGREEMENT, ABC will have the right to in good faith estimate
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FRANCHISE'S GROSS SALES, multiply the good faith estimate of GROSS SALES by _______50% to arrive at an adjusted estimate of GROSS
SALES,
and
invoice
and
collect
amounts
due
from
FRANCHISE on the basis of the adjusted estimate of GROSS SALES. If FRANCHISE, within 30 days following Outlet invoicing or otherwise notifying FRANCHISE that ABC has estimated FRANCHISE'S GROSS SALES , reports its GROSS SALES for the period that had not been timely reported, then the parties will reconcile any difference between the amount reported and the adjusted estimate of GROSS SALES; otherwise the adjusted estimate of GROSS SALES will become final and binding. FRANCHISE agrees that this provision is reasonable, and that the adjusted estimate of GROSS SALES shall be deemed liquidated damages, and not a penalty, based on the difficulty of accurately estimating GROSS SALES based on prior reporting period 5. EFFECTIVE DATE 5.1The terms of this agreement shall be for a period of five years (5 years) commencing
with
effect
from
----------------------------------------
(hereinafter to be referred as the “Effective Date”) and ending on-------- (the “Term”). FIRST PARTY and the FRANCHISE amicably shall have the option to renew this agreement and shall be exercisable at least Six Months (6 Months) prior to the expiry of the Term. In the event, this Agreement shall be renewed on term and consideration as decided by the parties to this agreement so as to include the incentive TLO Confidential - Version- I- of 2014 Page 11 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
and increased percentage of share of the FRANCHISE depending upon its growth of the business 6. CONSIDERATION: 6.1 In consideration of SECOND PARTY granting to the FRANCHISE a non exclusive right to operate a
Business, and a non-exclusive
license to use the System and Marks solely and exclusively in the operation thereof for a period of mentioned above in accordance with the terms and conditions stated in this agreement, the FRANCHISE shall pay ---------------------- The consideration will be payable with effect from -------------6.2 That ABC, will provide the agreed listed food products or substance, ( incorporated in the Briyani Gully Menu or otherwise), at a discounted rate of __________%, and the Franchise, shall sale the same at the Menu price, only, subject to applicable discounts, scheme, expressly written and communicated to the franchise, time to time 6.3That the Franchise, shall not sale any of the food stuff under the brand name of Briyani Gully, less then Menu price, provided applicable discount and scheme, expressly communicated in writing by ABC to franchise and not more than Maximum Retail Price, as pr Briyani Gully Menu
7. LICENSE
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7.1Subject to the limitations elsewhere in this Agreement, ABC hereby grants to the FRANCHISE during the License Term the right and license (the “License”) to use at the Outlet certain trade names, trademarks and service marks owned by ABC and to prepare and market Approved Products at the Outlet (and only at the Outlet) only in connection with products and services meeting ABC’s quality standards
through
the
use
of
processes
and
trade
secrets
communicated by ABC
7.2The FRANCHISEE shall sell such Products and items and only such Products and items as meet the uniform standards of quality and quantity of ABC, as have been expressly approved for sale in writing by ABC. The FRANCHISEE shall sell all approved Products pursuant to a list approved (AnnexureL-1) and the FRANCHISEE shall not offer for sale any other products, or item from the Premises. The FRANCHISEE shall discontinue the sale of any items or any other merchandise of any kind whatsoever if ABC in sole discretion, prohibits in writing or communicate oral; Annexed as “AnnexureL-1”
7.3That the Franchise, shall maintained the require ABC product
standard
and other products introduced into the system in
accordance with ABC Menu;
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7.4The FRANCHISE shall take prior express written approval to sale the optional products from the outlet, ABC may withhold such approval at any time without disclosing any reason to the FRANCHISE, 7.5 Optional Products shall introduce by ABC at sole discretion, to the FRANCHISE and ABC reserved exclusive right to provide list of any brand of product which shall be sold from the outlet by the FRANCHISE, and all the promotional \ marketing \ collaborative revenue, benefits, discount, scheme etc, shall be received by the ABC, and FRANCHISE can not claim any benefits arising out of it, 8. LIMITED OFF-SITE SALES 8.1The License does not include the right to sell any product for resale, the right to sell any product at or from any place except the Outlet, or the right to prepare or deliver any product at any place other than the Outlet except for catering and special event sales made in strict accordance with ABC’s catering and special event procedures, which procedures are subject to reasonable changes from time to time by ABC on at least 30 days’ notice. FRANCHISE shall give ABC at least 60 days’ (or such shorter period as may be reasonable under the circumstances) advance notice of any special event sale (such as fairs, athletic events and conventions) 8.2Except as provided above, during the License Term ABC shall not use or license others to use any of the trademarks licensed hereunder, in
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connection with the sale of any food products at any location within a radius of one and one half miles of the Outlet, unless: 8.3 That the sales are made at locations which (at the time ABC or any of its affiliates commits to buy, Agreement or franchise any such location or locations) are outside of a circular area having the Outlet as its center and within which __________ people reside or, in case of a metropolitan area containing more than ____________ people, within which _______ people reside or work, or both reside and work, or 8.4 That the sales are made in connection with special events, the occurrence of which ABC notifies FRANCHISE with sufficient time for FRANCHISE to meet the requirements mentioned above, and FRANCHISE chooses not to make such sales. If FRANCHISE does not notify ABC of its intention to make sales at a special event as provided above, then ABC may make such sales itself or license others to make them.
9. USE OF TRADE MARK AND GOODWILL 9.1FRANCHISE
will
instructions of
strictly
comply
with
the
requirements
and
ABC regarding the use of the trademarks, trade
names and service marks in connection with the Approved Products and the Outlet. The FRANCHISE acknowledges that the goodwill associated with ABC’s trademarks, service marks and trade names is TLO Confidential - Version- I- of 2014 Page 15 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
and will remain the exclusive property of ABC and that the FRANCHISE will derive no benefit from such goodwill except through profit received from the operation or possible sale of the Outlet during the License Term, which is subject to early termination as set forth herein. Any enhancement of the goodwill associated with ABC’s trademarks, service marks and trade names during the License Term will inure to the benefit of ABC except to the extent of such profits, if any, realized by the FRANCHISE during the License Term, following which no value shall be attributable to any goodwill of ABC’s trademarks, service marks and trade names acquired or enjoyed by the FRANCHISE pursuant to this Agreement and all right to use ABC’s trademarks, etc. shall revert automatically to ABC at no cost to ABC.
10.
TERMINATION AND CONSEQUENCES OF TERMINATION:
10.1 In principle the agreement has been executed for a period of five year (5) years, 10.2 Provided that the ABC reserved the right to terminate the present agreement on the following events when: (a) the FRANCHISE failed to adhere any of the terms and conditions stipulated in this agreement, or, (b) the FRANCHISE act against the interest of ABC, including but not limited to financial, reputation, quality stander of ABC, TLO Confidential - Version- I- of 2014 Page 16 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
dissatisfaction of customer, stipulated rules and guidelines issue to FRANCHISE time to time, or like genesis, (c) Violation of any license terms in accordance with this Agreement, by the FRANCHISEE 10.3 ABC shall have the right to terminate this Agreement immediately for any fraud, gross negligence or willful misconduct by the FRANCHISEE, and the rights granted without prejudice to the enforcement of any other legal right or remedy, immediately upon giving written notice of such termination, in the event of such immediate termination, the FRANCHISEE Fee, or any other deposited amount by FRANCHISEE to ABC
in any nature whatsoever; shall
forfeited by ABC, 10.4 Except for any fraud, gross negligence or willful misconduct by a Party, in which case the Agreement shall be terminated immediately by the other Party, 10.5 This Agreement may also be terminated by either Party in case of force majeure. Termination of this Agreement shall be without prejudice to any claim or rights of action previously accrued to a Party against the other Party before such termination 10.6 In the event of termination, ABC will cease the distribution of the Products from the date of termination 10.7 In the event of termination both Parties shall immediately discontinue any usage of each other's intellectual property TLO Confidential - Version- I- of 2014 Page 17 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
10.8 The FRANCHISE amount shall stand forfeited and it shall have no right on the date of termination to further use. The FRANCHISE on termination shall return the above material provided to it by ABC and also provide the reports / information as mentioned in the obligations / deliverables. 11.
Default and Termination 11.1
ABC may terminate this Agreement and all rights granted to
FRANCHISE under this Agreement without affording FRANCHISE any opportunity to cure the default, effective immediately upon notice to FRANCHISE (or upon such notice period or cure period given by ABC in its sole discretion or required by Applicable Law), upon the occurrence of any of the following events: a.
Insolvency. If FRANCHISE files a voluntary petition under
any bankruptcy, insolvency, or similar law, or consents to an involuntary petition under any bankruptcy, insolvency, or similar law filed against it, or an order approving an involuntary petition in bankruptcy,
insolvency,
or
similar
declaration
filed
against
FRANCHISE. b.
Criminal Conviction. If the Franchise is convicted of a felony,
a crime involving moral turpitude, or any crime or offense that is reasonably likely, in the sole opinion of ABC , to materially and
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unfavorably
affect
the
License
Methods,
Marks,
goodwill
or
reputation thereof: c.
Failure to Make Payments. If the FRANCHISE fails to pay
any amounts due the ABC
or affiliates, within ten days after
receiving notice that such fees or amounts are overdue; d.
Misuse of Marks. If the Franchise misuses or fails to follow
the ABC ’s directions and guidelines concerning use of the ABC ’s Marks and fails to correct the misuse or failure within ten days after notification from the ABC ; e. Repeated Non-Compliance. If the FRANCHISE has received two previous notices for default by ABC
and again in default of this
Agreement at any time during the terse of this Agreement, regardless of whether the previous defaults were cured by the FRANCHISE. f. Others. Any other covenant that the parties feel is sufficient cause to terminate this Agreement. 12.
NEW AGREEMENT UPON EXPIRATION
12.1 At the expiration of the term hereof, FRANCHISE may extend this Agreement for successive five year (5 years) periods, provided that at the time of expiration of the term hereof or the then curamount extended term
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12.2 FRANCHISE shall not have failed to remedy any breach specified by ABC in any notice then outstanding under this agreement 12.3 FRANCHISE shall agree to make such capital expenditures as may be reasonably required to renovate and modernize the Outlet and its signs and equipment so as to reflect the image of Briyani Gully outlets 12.4 If renovation and modernization of the Outlet is not possible or feasible, FRANCHISE shall relocate the Outlet within the area described in this agreement thereto, or such other area as may be approved by ABC in writing in accordance with ABC’s relocation procedures. 12.5 All monetary obligations owed to ABC and its subsidiaries and affiliates must be curamount at the time of renewal.
13.
COMPLIANCE WITH STANDARDS, ETC.
13.1 The FRANCHISE represents that the Outlet has in all respects been constructed, established and prepared to conduct business in strict compliance with all plans, specifications and requirements prescribed by ABC, and that any material deviations from ABC’s standard plans, specifications, and requirements have been approved in writing by ABC. At ABC’s request made at any time within one year of the date of this Agreement, the FRANCHISE will promptly correct any unapproved deviations TLO Confidential - Version- I- of 2014 Page 20 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
13.2 The
FRANCHISE
shall,
consistent
with
the
terms
of
this
Agreement, diligently develop the business of the Outlet and use his best efforts to market and promote the Required Products and the Optional Products which are offered for sale at the Outlet. 13.3 During the License Term, the FRANCHISE will strictly comply with all reasonable standards, specifications, processes, procedures, requirements, and instructions of ABC regarding the operation of the business which now exist or may be established from time to time, and FRANCHISE will take such action and precautions as necessary to assure that:
(a) That the FRANCHISE or a fully trained and qualified staff devotes his full time to the supervision, management and operation of the Outlet
(b) That the FRANCHISE and employees at the Outlet attend and complete such courses, programs and seminars at such locations, as ABC may from time to time reasonably require, in order that such persons may be fully trained and instructed on a continuing basis in various aspects of operating a ABC outlet, provided that ABC shall not bear the salary, travel, hotel, meal, or other expenses of persons attending
(c) That all Approved Products offered for sale at the Outlet are prepared at the Outlet for sale to customers at the Outlet, TLO Confidential - Version- I- of 2014 Page 21 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
except that beverages, “side items” or _______________as authorized by ABC, may be prepared elsewhere, but any such
authorization
shall
be
subject
to
change
or
termination by ABC, in exercise of its reasonable business judgment, if it is found by ABC that preparation elsewhere results in a lessening of the high quality of food products required by ABC’s specifications
(d) That each additional Required Product introduced into the franchised system as provided in this agreement, is offered for sale on a continuing basis at the Outlet at the time and in the manner required by ABC
(e) That no sale of any product except Approved Products is solicited, accepted or made at or from the Outlet, and that no products except Approved Products are prepared at the Outlet, except when specifically authorized in writing by ABC
(f) if requested by ABC on at least ninety ______________ days’ notice as part of a general program or standardization effort by ABC, the marketing of any Optional Product is discontinued, whereupon the discontinued product shall cease to be an Approved Product, but FRANCHISE may continue to sell such discontinued product with written approval of ABC, which approval shall not be unreasonably TLO Confidential - Version- I- of 2014 Page 22 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
withheld
taking
into
consideration
such
factors
as
FRANCHISE’s investment in equipment used to prepare the Optional Product and the potential loss in revenues to the FRANCHISE from discontinuing the sale of such product
(g) only signs and menu boards, advertising and promotional material, equipment, supplies, uniforms, paper goods, packaging,
furnishings,
fixtures,
recipes,
and
food
ingredients which meet ABC’s standards and specifications (as established from time to time) are used at the Outlet or in connection with its business
(h) all equipment, signs, menu boards, supplies, and other items necessary in connection with adding new Approved Products are acquired, installed and utilized (and that the marketing of such new Approved Products begins) at the Outlet as soon as possible consistent with the reasonable requirements of ABC
(i) equipment, signs, menu boards, supplies, and other items are added, eliminated, substituted, and modified at the Outlet
as
soon
reasonable
as
changes
practicable in
ABC’s
in
accordance
with
specifications
and
requirements
(j) the Outlet and everything located at the Outlet are maintained in first class condition and repair and are kept TLO Confidential - Version- I- of 2014 Page 23 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
clean, neat and sanitary; the Outlet is adequately lighted and is operated in a clean, wholesome and sanitary manner
consistent
maintenance,
repairs
with
ABC’s
and
requirements;
replacements
all
reasonably
requested by ABC or needed in connection with the Outlet are promptly made; and all employees are clean and neat in appearance
(k)
no alterations of the Outlet affecting the image are
made except at ABC’s request or with ABC’s approval, and that any such alterations strictly inform to specifications and requirements established or approved by ABC
(l)
the Outlet and its business will comply with applicable
laws and compliances, ordinances and governmental rules, regulations and other requirements, which subsist at the time of executing this agreement, and will be applicable after executing this agreement, including but not limited to local authorities approvals related to operations such as, shop & Establishment,
commercial
approval,
premises
related
approvals health and sanitation requirements FSSAI, and that ABC is advised promptly in the event of a conflict between this requirement and any other requirement in or pursuant to this Agreement
TLO Confidential - Version- I- of 2014 Page 24 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
(m)
the ABC shall remain immune from any violation of
any law, rule, or any other statutory compliances, require to run the outlet legally by the FRANCHISE, the sole liability to comply
all
the
statutory
and
legal
compliance
with
FRANCHISE
(n)
the Outlet is open for business every day during the
License Term during the hours reasonably specified by ABC, except
government holidays, or any other unwanted event
with FRANCHISE, or any such days as the Outlet is closed for repairs,
(o)
the employees, and the supplies and other items on
hand at the Outlet, are at all times sufficient to meet the anticipated volume of business
(p)
all debts and taxes in connection with the Outlet and
its business, except those duly contested in a bona fide dispute, are paid when due, including but not limited to debts payable to ABC and its affiliates
(q)
all necessary and appropriate measures are taken to
avoid an unsatisfactory or equivalent safety, sanitation or health rating at any time from any governmental agency or authority, and that conditions or practices disapproved by any such agency or authority are promptly corrected except that, after consultation with ABC by FRANCHISE, FRANCHISE may TLO Confidential - Version- I- of 2014 Page 25 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
contest the action by such agency or authority as being arbitrary, capricious, unfair, and unwise. NOW THEREFORE this Agreement witnessed that in consideration of the mutual covenants and agreements herein contained the parties hereto do hereby covenant and agree with each other as follows: Both parties as above have expressed a desire of entering in to a franchise agreement to meet their respective objectives, which are set out here in belowI. The ABC
on its part has entered into the business of operating
quick-service restaurants usually have one priority: getting food to the customer fast and with limited or no table-service. To operate from multiple locations/outlets on national basis maintaining a uniform standard facilities and offer consistent quality service using highly regulated production systems, food suppliers and menu development, including uniformity in the charges levied from the customers for rendering the specified services. II. “Franchise” on his part is interested in entering into the business of operating as a service provider through their Food outlet and thus carrying out the business of providing services to the customers as quick-service restaurants III. ABC is desirous of appointing “Franchise” to conduct, manage and operate the services through their outlet at …………… as per the
TLO Confidential - Version- I- of 2014 Page 26 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
uniform norms set up by ABC in respect of nature of services and cost of services to the customer IV. “Franchise” is desirous of taking over the services offered by ABC for the purpose of its operations and management to carry out business on the terms and conductions contained herein V. The purpose of this Agreement is to set forth the terms and conditions under which the parties to the Agreement shall conduct themselves during the substances of Agreement VI. The aforesaid Franchise arrangement would include payments such as a franchise fee, royalty for use of trademarks and the system, training expenses, advertisement contributions, etc, which needs to be remitted to the ABC well on time as per guidelines set out, in the event of delayed in remitting the said, shall attract the penalties by__________% monthly, and during the period ABC may suspend the operation (supply of approved product)of the FRANCHISE (use penalties according to your need) NOW,
THEREFORE,
the
parties,
in
considerations
of
the
convents,
undertakings and commitments set forth therein here by mutually agree as follows, 14.
SECTION 2: GRANT OF THE FRANCHISE
14.1 The “Franchise” warrants and represents that it is a company / firm, validly existing and a good standing under the laws of India and TLO Confidential - Version- I- of 2014 Page 27 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
has all requisite power and authority to enter into this agreement with ABC. 14.2
All the obligations of the “Franchise” under this agreement are
legal, valid and binding obligations enforceable in accordance with its terms. There are no proceedings pending against the franchise, which may have an advice effect on the ability of the franchise to perform and meet its obligations under this agreement 14.3 On consideration of the “Franchise’s” applications and relying on such assurances and representations that “Franchise” has made to it. The ABC
appoints the franchise as a franchise on the terms and
conditions set forth in this agreement 14.4 There is no product and/or service and/or territorial exclusivity granted to the “Franchise” as part of this Agreement The FRANCHISE cannot give such right or a similar right to persons other than with the prior written consent of the “ABC” to sell products and services anywhere including geographic area surrounding the premises 14.5 SERVICES, TERMS & CONDITIONS (a) ABC would provide their entire range of Biryani by own or through the service providers which includes logistics support, promotional activity through online ads, offline ads, value added services and premium services to the “Franchise” (b) “Franchise” will act as a single point e-hub for all the services provided by ABC falling within the purview of this agreement TLO Confidential - Version- I- of 2014 Page 28 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
(c) The entire business being on pre-payment basis ABC will supply all the services based upon requests from “Franchise” up to limits available for “Franchise”. Such limits will be equivalent to the funds available from “Franchise” with the ABC
at any point in
time and will keep reducing with every transaction corresponding to the value of transaction. The ABC
will enhance the limit of
FRANCHISE by amounts received by it from “Franchise” from time to time (d) All the services falling within the purview of this agreement will be made to “Franchise” based upon standard conditions of sales as set by. ABC for all its “Franchise” outlets from time to time. Such conditions will generally be in line with conditions that are placed upon ABC by various service providers and also as a result of business decisions, legal and contractual requirements (e) ”Franchise” will keep providing the services within the purview of this agreement through their outlets exclusive with the ABC . The ”Franchise” will not enter into direct agreements with any other services providers, aggregators, distributors or any similar entity in India for this purpose, for the duration of this agreement. All the items to be provided as combo meal will have to be procured from the ABC itself with no exception (f) The Intellectual Property rights including the concept of delivery of services will rest with ABC or its suppliers or service providers TLO Confidential - Version- I- of 2014 Page 29 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
(g) ABC and �Franchise� shall conduct their business at all times, in accordance with the applicable statutes, regulations, notification etc., Issued by the Government or any other statutory authority.
14.6
FRANCHISEE Negative Covenants: FRANCHISEE Shall NotI.
Received any amount (cash or credit), from any person or group of persons by offering higher discounts than ABC, approved rates at any point in time or provided subsidies, which may have the effect of doing so,
II.
Engage in any unfair or unethical trade practice or any other unhealthy trade competition practice which ABC prohibits,
III.
Modify any product, item provided by ABC without the written permission of ABC,
IV.
Do or cause to be done any such act or omission that has the effect of breaching or violating the terms and conditions of the Agreement or any other approval or clearance or permission obtained by AI or that has the effect of causing ABC to breach or violate the terms and conditions of the Agreement or such approval,
14.7 Right of Inspection. ABC and ABC's agents shall have the right at all reasonable times during the term of this Agreement and any renewal of this TLO Confidential - Version- I- of 2014 Page 30 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
Agreement to enter the Franchisee’s outlet
for the purpose of
inspecting the premises and/or checking any food items or other item(s) as required under this agreement, or otherwise
14.8 Forfeiture of Security Deposit - Default It is understood and agreed that Franchisee shall not attempt to apply or deduct any portion of any security deposit or Franchisee Fee, or like nature amount, If Franchisee fails to comply, the terms and conditions of this Agreement. Furthermore, any deposit shall be held as a guarantee that Franchisee shall perform the obligations of the Agreement. 15 QUALITY CONTROL: The ABC shall have the right to conduct quality check of with respect to FRANCHISE Operations from time to time at its
and discretion and
shall be allowed reasonable access to FRANCHISE premises throughout the Term of this Agreement subject to serving of a prior written notice of 24 hours to FRANCHISE for this purpose at its own costs. The ABC reserves the right to reject the products in the event case of inappropriate the quality practices adopted if the Quality arrangements Portal is found to be of substandard quality and not conforming to the specifications at its own costs. The Franchise shall make all reasonable endeavors to procure the right desired quality of Products upon any such advice TLO Confidential - Version- I- of 2014 Page 31 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
received from ABC upon quality due diligence carried outperformed by ABC at its own costs.
16.
FORCE MAJEURE: Neither Party shall be liable for damages or for any delay or failure to perform its obligations hereunder, if such delay or failure is due to causes beyond its reasonable control including, without limitation, acts of God or State or of any Sovereign authority. On happening of a force majeure event, the period of time during which any Party is prevented or delayed in the performance or fulfilling any obligation shall be added to such Party's time for performance thereof and such Party shall have no liability by reason thereof, provided that a prompt notice is given by the party affected by force majeure to the other along with cogent proof about the occurrence of the event affecting its performance. The Party so affected shall also give a notice in writing to the other Party within 15 (fifteen) days of the cessation of the condition of force majeure. If the condition of force majeure continues for more than two months from the date of its occurrence, the Party not affected may terminate the Agreement by giving one month’s notice in writing to the other.
17.
INDEMNITY:
TLO Confidential - Version- I- of 2014 Page 32 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
17.1 The Franchise shall indemnify, defend and hold harmless and keep fully indemnified, at all times, ABC and all other Affiliates of ABC /Parties from and against all actions, proceedings, claims, demands, costs including legal costs, awards, damages arising directly or indirectly as a result of any third party claims that may arise on account of the negligence, act of commission or omission or default under this Agreement including but not limited to breach of any representation or warranty made by
any Party herein, and/or
breach of its obligations and/or any or all actions for infringement or violation of any patents, copyrights, or trade secrets of such third parties arising out of or relating to this Agreement 17.2 FRANCHISE agrees to indemnify and to hold ABC , its officers, directors, employees, successors, and assigns harmless against all losses, damages, or expenses of whatever form or nature that they, or any of them, may sustain or incur as a result of any customer complaint, deficiency in service or any kind of defect in the item supplied pursuant to this Agreement or otherwise due to any negligent or intentionally wrongful act or omission by ABC
in
connection with the manufacturing of the Product or any intellectual property infringement claims that arise out of the packaging, labeling of the Product or faulty transportation, distribution, storage or sale of the Product
supplied by the ABC
or sale of any Product not
conforming with quality parameters provided by ABC TLO Confidential - Version- I- of 2014 Page 33 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
18.
INTELLECTUAL PROPERTY RIGHTS:
The ABC shall continue to remain the sole and exclusive owner of TLO, with all rights reserved, in and of the service and trademark "BiryaniGully". For the removal of doubts, both Parties shall continue to be the sole and exclusive owners of their respective trademarks and service names and any other intellectual property rights, and neither Party shall have the right to use the other's intellectual property beyond what is mandated under this Agreement It is hereby specifically provided herein that the use of any intellectual property rights of TLO by the FRANCHISE is only for limited purposes of this Agreement and does not amount to grant of any license to sub license or assign any such right
19.
CONFIDENTIALITY:
Each Party agrees to keep secure and treat confidential any and all written and/or oral information of any kind received by it (“Confidential Information�) under this Agreement through any conversation, meeting, discussion, and/or negotiation with the other Parties, and undertakes to disclose the same only to its affiliates, officers, employees or agents on a need-to-know basis and only to the extent necessary for each of them to perform its obligations under this Agreement and who are bound by the obligations of confidentiality at least as stringent as contemplated herein. The Parties have agreed that all information disclosed under this TLO Confidential - Version- I- of 2014 Page 34 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
Agreement including the terms of this MOU Agreement shall be considered and treated as Confidential Information. Each Party agrees that it will not disclose to any third party or use any Confidential Information disclosed to it by the other Parties except as expressly permitted in this Agreement. 20.
DISPUTE RESOLUTION AND JURISDICTION
20.1 This agreement is governed by and constructed in accordance with the laws of India 20.2 Any dispute, controversy or claims arising out of or relating to this Agreement or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the provisions of the [Indian] Arbitration and Conciliation Act, 1996. 20.3 The arbitral tribunal shall be composed of three arbitrators, one arbitrator appointed by ABC, a second arbitrator appointed by “Franchise� and a third arbitrator to be appointed by such arbitrators 20.4 The place of arbitration shall be at
New Delhi and any award
whether interim or final, shall be made, and shall be deemed for all purposes between the Parties to be made in disputes 20.5 The arbitral procedure shall be conducted in the English language and any award or awards shall be rendered in English. The procedural law of the arbitration shall be Indian law
TLO Confidential - Version- I- of 2014 Page 35 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
20.6 The award of the arbitral tribunal shall be final, conclusive and binding upon the Parties, and the provisions of the [Indian] Arbitration and Conciliation Act, 1996 shall apply 20.7 The rights and obligations of the Parties under, or pursuant to, this Clause, including the arbitration agreement in this Clause, shall be governed by and be subject to Indian law, and the agreement shall be subject to the exclusive jurisdiction of the courts at New Delhi. 21.
GOVERNING LAW AND JURISDICTION: This Agreement shall be governed by the laws of India and courts in New Delhi alone shall have exclusive Jurisdiction.
22.
LIMITATION OF LIABILITY:
The liability of FRANCHISE to ABC
for all damages and other losses
arising out of or related to this Agreement for all claims, actions and causes of action of every kind and nature that arise or accrue, regardless of the type of action that imposes liability, whether in contract, equity, negligence, intentional conduct, tort or otherwise, will be limited to and will not exceed, in the aggregate, for all the events that occur during any calendar year that give rise to a claim for such damages or other losses It is also clarified that the liability of ABC under this Agreement shall only be for direct losses and shall not include, and ABC shall not be liable for, any amounts for loss of income, profit or savings, business interruption, or indirect, incidental, consequential, exemplary, punitive TLO Confidential - Version- I- of 2014 Page 36 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
or special damage to FRANCHISE even if ABC has been advised of the possibility of such damages in advance and all such indirect claims and damages are expressly waived and disclaimed by Franchise arising in course of normal operations in Food industry 23.
REPRESENTATIONS AND WARRANTIES-:
Each Party represents and warrants to the other Party that the following statements are true as on the date of signing this Agreement: 23.1 Each Party has the power and authority to enter into and perform all of such Party’s obligations under this Agreement. The execution, delivery and performance of this Agreement by such Party will not violate any agreement to which such Party is a party. This Agreement has been duly and validly executed and delivered by such Party and constitutes a valid and binding agreement of such Party, enforceable against such Party in accordance with its terms 23.2 No consent or approval of any governmental entity is required for the execution of this Agreement by such Party. None of the execution and delivery of this Agreement by such Party, the consummation by such Party of the transactions contemplated hereby or compliance by such Party with any of the provisions hereof shall (ii)
conflict with or result in any breach of any organizational documents of such Party;
TLO Confidential - Version- I- of 2014 Page 37 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
(ii)
result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or given rise to any third party right of termination, cancellation, material modification or acceleration) under any of the terms, conditions or provisions of any note, loan agreement, bond, mortgage, indenture, license,
contract,
commitment,
arrangement,
understanding,
agreement or other instrument or obligation of any kind to which such Party is a party or
by which such Party or any of such
Party’s properties or assets may be bound or (iii)
violate any order, writ, injunction, decree, judgment, order,
statute, arbitration award, rule or regulation applicable to such Party of any of such Party’s properties or assets 23.3 Each of the Parties acknowledges that the other Party has relied upon the various representations and covenants given by the said Party under this Agreement to the other while entering into this Agreement
24.
MISCELLANEOUS:
24.1 All provisions which are intended to survive to give effect to this Agreement shall survive;
TLO Confidential - Version- I- of 2014 Page 38 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
24.2 This Agreement constitutes the entire agreement and any addition or modification to this Agreement must be in writing and signed by both the Parties; 24.3 No failure or delay by either Party in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise of any right hereunder; 24.4 Neither Party shall transfer or assign its rights or interests in this Agreement in whole or in part without the prior written consent of the other Party; 24.5 The relationship between Parties to this Agreement shall be on principal to principal basis and this Agreement shall always be construed accordingly; 24.6 ABC and FRANCHISE agrees that on the expiry of the Term of this Agreement, ABC has the right of first refusal and in case the Parties wish to extend the Term., The Parties shall re-negotiate the terms of the Agreement including the Fees; 24.7 This Agreement may be executed in two or more counterparts, each of which shall be deemed as original, but all of which together shall constitute one and the same instrument; 24.8 Any stamp duty and other charges related to the payable at the time of execution of this Agreement or in future shall be borne by FRANCHISE; TLO Confidential - Version- I- of 2014 Page 39 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
24.9 Any Notice required to be sent under this Agreement shall be sent or delivered to the other Party at the address set forth at the beginning of the Agreement, or at such other address as the Parties may from time to time designate in writing. Any notice or other communication shall be sent by certified or registered mail, email, facsimile or by hand delivery; 24.10 Nothing in this Agreement shall constitute to be construed to be any kind of partnership, agency, collaboration between the Parties, implicitly or explicitly and the transaction contemplated herein is on a principal to principal basis 24.11 Any part of the provision of this Agreement which is held for any reason to be illegal, invalid unenforceable or in conflict with the applicable laws or regulations of any jurisdiction shall be ineffective only to the extent of such illegality, invalidity, enforceability or conflict, and only in such jurisdiction, without affecting impairing or invalidating the remaining provisions or the offending provision in any other jurisdiction 24.12 No right or remedy of a party under this Agreement is intended to be exclusive or constitute a waiver of any other right or remedy. Failure to exercise a right shall not constitute a waiver of such right except upon the express written waiver of the party having such right 24.13 FRANCHISE agrees that during the Term of this Agreement, and for a period of 2 (two) years after expiry or termination of this TLO Confidential - Version- I- of 2014 Page 40 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
Agreement, FRANCHISE shall not, without the prior written consent of ABC , employ or contract the services of the person(s), who was employed by ABC , at any time, during a period of 12 (twelve) months immediately preceding the date on which the offer of employment is made by ABC ,except when mutually agreed to between the parties 24.14 FRANCHISE agrees that during the Term of this Agreement, and for a period of 2 (Two) years after expiry or termination of this Agreement, Franchise shall not, directly or indirectly engage, participate, or make any financial investment in, or become employed by or render services to or for any person, firm, corporation or other business enterprise, wherever located, which is engaged, directly or indirectly, in competition with the business of TLO. EXCEPT WHEN MUTUALLY AGREED TO BETWEEN THE PARTIES 24.15 “Franchise” shall keep all information of confidential nature received from the ABC in whatever form as strictly confidential and shall not disclose it to third Parties without the prior written consent of ABC during the term of this Agreement 24.16 “Franchise” agrees not to disclose revenue Information
without
ABC prior written consent.
25.
LIMITATION OF LIABILITY
TLO Confidential - Version- I- of 2014 Page 41 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
The Parties shall not be liable for any incidental, special, indirect or consequential damages arising out of or relating to this Agreement. 26.
TENURE This Agreement comes into force on the date of signing this Agreement and shall continue for Five (5) years after this date. This agreement may be extended on the mutual agreement of both parties,
unless
earlier
terminated
in
accordance
with
the
agreement by paying renewal fee to ABC by “Franchise”.
27.
SITE SELECTION, OUTLET CONSTRUCTION, AND EXCLUSIVE
TERRITORY 27.1 FRANCHISE will adhere to ABC ’s procedures and requirements for the design and construction of the OUTLET, as more particularly described by the ABC 27.2 In the case of
an outlet, FRANCHISE will diligently construct the
Outlet as per specifications defined by the ABC 28.
EXCLUSIVE TERRITORY
The parties acknowledge and agree that the EXCLUSIVE TERRITORY, if any, will be determined by the ABC TLO Confidential - Version- I- of 2014 Page 42 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
29.
WRITTEN REQUEST FOR GRANT OF RENEWAL TERM
If FRANCHISE desires to continue to operate the Outlet for the RENEWAL TERM, then FRANCHISE must in writing, at least _____ days before the EXPIRATION DATE, but no more than ________ days before the EXPIRATION DATE, request that ABC can reissue its then curamount standard form franchise agreement for renewal terms (a "RENEWAL AGREEMENT"), contemplating a single five-year franchise term for the same. The FRANCHISE acknowledges and agrees that terms of a RENEWAL AGREEMENT, including the amount of the ROYALTY payable during the RENEWAL TERM, may be substantially diffeamount from the terms of this AGREEMENT, and may be substantially diffeamount from the terms of the standard form franchise agreement that is originally entered into.
30.
THE CONTRACT ACT:
The contractual relationship between the ABC and the FRANCHISE is governed by the Indian Contract Act, 1872 (the Contract Act). There is no
TLO Confidential - Version- I- of 2014 Page 43 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
specific requirement under Indian law as regards a particular language; however, English is customarily accepted as the standard language. Under the Contract Act, a "contract" is an agreement enforceable by law. A franchise agreement would be enforceable under Indian law since it would meet the criteria of a valid contract. However, care needs to be taken to ensure that the agreement does not contain any provisions that render the contract void or voidable
31.
CONSUMER PROTECTION AND PRODUCT LIABILITY
The Consumer Protection Act, 1986 seeks to provide remedies to consumers in case of defective products or deficiency in services and holding the manufacturers and service providers liable .Despite the fact that under franchise goods would be manufactured and likewise services provided by the FRANCHISE, it is quite likely that the consumers could file an action against both the ABC and the FRANCHISE, since the goods are sold and the services are rendered under the brand name of the ABC . While consumers may seek remedy against both, it is common for the franchise
agreement
to
provide
that
all
product
liabilities
and
responsibilities for consumer claims lie with the FRANCHISE. 32.
MONOPOLIES
AND
RESTRICTIVE
PRACTICES
LAW
AND
COMPETITION LAW TLO Confidential - Version- I- of 2014 Page 44 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
The Monopolies & Restrictive Trade Practices Act, 1969 (MRTP Act) prohibits the imposition of restrictions in respect of sources of supply and pricing of products. It must be ensured that the terms of the franchise agreement are not construed as monopolistic or restrictive. If found to be otherwise the MRTP Commission could grant an injunction preventing such trade practices and may also award compensation to the complainant for any losses or damages suffered.
33.
RESTRICTIVE TRADE PRACTICES
The MRTP Act orders the registration of agreements considered to contain restrictive trade practices. Those that are relevant in the context of a franchise include: exclusive supply provisions; exclusivity in product dealing; restrictions on methods used; and resale price-fixing conditions. Irrespective of whether the agreement has been registered or not, the MRTP Commission has the right to investigate if it is of the opinion that the agreement is prejudicial to the public interest. 34.
ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties and supersedes any and all prior agreements concerning the subject matter hereof. The FRANCHISE agrees and understands that the ABC shall not be liable or obligated for any oral representations or commitments made prior to the execution hereof or for claims of negligent misinterpretation TLO Confidential - Version- I- of 2014 Page 45 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
based on any such oral representations. The FRANCHISE acknowledges that the ABC may modify its Terms & Conditions to protect, promote or improve the Marks & the quality of the Licensed Methods. BEFORE SIGNING THIS AGREEMENT, THE FRANCHISE SHOULD READ IT
CAREFULLY.
THE
FRANCHISE
ACKNOWLEDGES
THAT
THE
SUCCESS OF THE BUSINESS VENTURE CONTEMPLATED HEREIN INVOLVES
SUBSTANTIAL
RISKS
AND
DEPENDS
UPON
THE
FRANCHISE’S ABILITY AS AN INDEPENDENT BUSINESS PERSON AND ITS ACTIVE PARTICIPATION IN THE DAILY AFFAIRS OF THE BUSINESS
INTENDING TO BE BOUND, the parties have executed this Agreement as of the date first above set forth. 35.
OBLIGATIONS & DELIVERABLES OF PARTIES
35.1 Franchised Location and Designated Area a) The FRANCHISE is granted the right and franchise to own and operate one TLO franchise at__________ (“Franchised Location”) b) The rights that are granted to the FRANCHISE under this Agreement are for the specific Franchised Location and cannot be transferred to any other location without the prior written approval of the ABC
TLO Confidential - Version- I- of 2014 Page 46 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
36.
INITIAL FRANCHISE FEE In consideration for the right to develop and operate one TLO franchise, the FRANCHISE agrees to pay to the ABC
an
initial franchise fee, which is due and payable as of the date of execution of this Agreement. The initial franchise fee represents payment for the initial grant of the rights to use Marks and Licensed Methods, that the ABC has earned the initial franchise fee upon receipt thereof and that the fee is non-refundable. 37.
DEVELOPMENT ASSISTANCE
37.1 That ABC may ,not obligatory ; to provide, ABC ’s initial training, equipment lists, design services, operations manual and other preopening services, or prior to opening with a list of approved and designated suppliers and an advertising plan and advertising copy for FRANCHISE’s grand opening 38.
Operation Support FRANCHISE will operate the TLO franchise outlet using the systems and in compliance with the standards in such a manner as to provide high quality food and beverage and other services to public
39.
Advertising
39.1 The FRANCHISE shall communicate to ABC for all advertising or other marketing or promotional programs published by any method, TLO Confidential - Version- I- of 2014 Page 47 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
including print, broadcast and electronic media, regarding the TLO franchise 39.2 Local Advertising Programs will be at FRANCHISE’s expense and will be conducted to the extent that FRANCHISE deems necessary, but in a respectable and dignified manner that will not detract from the reputation of ABC
40.
Quality Control
40.1 The FRANCHISE agrees to maintain and operate TLO franchise strictly in compliance with this Agreement 40.2 The FRANCHISE is prohibited from offering or selling any products or services not authorized by ABC. If the FRANCHISE proposes to offer, conduct or utilize any products or services, which are not previously approved by the ABC, the FRANCHISE shall first notify the ABC in writing requesting approval. The ABC may, in its sole discretion, for any reason whatsoever, elect to withhold such approval. In order to make such determination, the ABC may require samples of such products or services. The ABC
will advise the
FRANCHISE within a reasonable time whether such products or services meet its specification
41.
NOTICES
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All notices required to be given under this Agreement shall be given in writing, by certified mail or by courier service at the address set forth. 41.1 ABC Address: Automated Indian Kitchen Pvt. Ltd., House No. 34, Sector 9, Chandigarh, Punjab, India
41.2 FRANCHISE Address:
42.
NO RIGHTS OF SET-OFF.
42.1 FRANCHISE may not reduce any payment required to be made to ABC
on account of any money owes or liability to pay by
FRANCHISE under this AGREEMENT, or otherwise 42.2 In order to safeguard the MARKS and the SYSTEM STANDARDS, FRANCHISE shall at all times employ an adequately trained staff to properly operate the Outlet in accordance with the SYSTEM STANDARDS
TLO Confidential - Version- I- of 2014 Page 49 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
43.
TRAINING
43.1 After the FRANCHISE executes a Agreement for the Franchised Location,
the
FRANCHISE
or
the
person
designated
by
the
FRANCHISE to assume primary responsibility for the management of the TLO franchise (“Concern officer of Franchise”) is required to attend and successfully complete the initial training program which is offered by the ABC at one of the ABC’s designated training facilities. 43.2 From time to time, the ABC may present seminars, development programs or conduct meetings for the benefit of the FRANCHISE 43.3 The ABC shall at the same time provide training for the first DESIGNATED Outlet designated staff and, if desired by FRANCHISE, or necessary in order for FRANCHISE to satisfy the best efforts requirements, one other person selected by FRANCHISE and reasonably acceptable to Outlet, in the principal aspects of establishing and operating a Outlet, handling of food items, and the preparation
and
sale
of
TLO
menu
items.
Specific
training
procedures and requirements are set forth in the agreement. This AGREEMENT
is
issued
on
the
condition
that
the
initial
DESIGNATED Outlet Staff, and any person FRANCHISE later desires to make the DESIGNATED Outlet Staff, completes training to the satisfaction Of Outlet COMPANY. 44.2
Successive Term FRANCHISE Refresher Training.
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In the case of a Successive Term FRANCHISE, this AGREEMENT is issued on the additional condition that, if required by ABC , then the curamount DESIGNATED Franchise STAFF or another person selected by FRANCHISE and acceptable to Franchise shall successfully complete training by a date determined by ABC , notwithstanding any prior training and experience 44.3
Ongoing Training. If required by Outlet , then the DESIGNATED Outlet STAFF shall attend and complete mid-TERM training, to the satisfaction of Outlet at a time after the fifth year of the TERM reasonably determined by Outlet COMPANY
44.4
Remedial Training. In lieu of declaring a default under this AGREEMENT, or terminating this AGREEMENT for material breach, or at the same time as declaring a default under this AGREEMENT, ABC shall have the absolute right to direct FRANCHISE by NOTICE to have the DESIGNATED Outlet STAFF attend training directed toward curing specific operational deficiencies. ABC shall have no obligation to offer training as an alternative to declaring a default or terminating this AGREEMENT. FRANCHISE may be required to reimburse ABC for the reasonable costs of remedial training provided by ABC
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44.5
Expenses of Attendance at Training. FRANCHISE is solely responsible for travel and living expenses in connection with any training provided by ABC
under this
AGREEMENT, as well as any wages and salaries payable to FRANCHISE'S employees while attending training. 45 BEST EFFORTS. The DESIGNATED STAFF shall furnish personal full time and attention and best efforts to the day to day management and operation of the Outlet in accordance with the requirements of this AGREEMENT. Without limiting the foregoing, the DESIGNATED STAFF must maintain a physical presence at the Outlet which is reasonable to generate revenue in each week of operation, provided however that this requirement may be satisfied by the combined time spent at the Outlet during hours of operation by the DESIGNATED STAFF and one or more other
individuals,
satisfactory
to
Outlet
COMPANY,
who
have
successfully completed Outlet COMPANY'S training program 46 OUTLET EMPLOYEES The Outlet shall be staffed with qualified, competent employees trained by the DESIGNATED STAFF, and who are employed solely by FRANCHISE and not by ABC. FRANCHISE is solely responsible for hiring and discharging employees of the Outlet, and setting their wages TLO Confidential - Version- I- of 2014 Page 52 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
and terms of employment. FRANCHISE shall comply with all applicable laws
and
regulations,
including,
but
not
limited
to,
workers'
compensation laws. FRANCHISE shall require employees to wear such uniforms or attire as ABC prescribes periodically, and otherwise comply with the ongoing SYSTEM STANDARDS. All employment related documents, including, without limitation, employment applications, schedules, job descriptions, and pay checks, must clearly identify FRANCHISE, and not ABC as the employer, and shall not contain any of the MARKS. 47.
OPERATIONS AND PRODUCT STANDARDS. Unless ABC specifically permits otherwise, in writing, FRANCHISE shall offer for sale from the Outlet the entire menu prescribed periodically by ABC for the SYSTEM. FRANCHISE may prepare and sell from the Outlet only the products and services that ABC approves periodically for sale by SYSTEM FRANCHISEs, and no other products, services, or business may be offered or conducted at or from the Outlet. FRANCHISE will at all times maintain an inventory of food and drink products and other supplies adequate to satisfy customer demand for products and services required to be sold at the Outlet. FRANCHISE will employ only such supplies, ingredients, recipes, formulas and products, and shall offer products for sale only in such portions, appearance and packaging, as ABC periodically designates. FRANCHISE will adhere to the requirements
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for food storage, handling, preparation, merchandising, presentation, display and sale, and daily Outlet operations, described in the Outlet OPERATIONS MANUAL or otherwise communicated by ABC . If FRANCHISE fails to conduct its business in accordance with the requirements of this Section 11.6, then, without limiting the rights of ABC under this AGREEMENT. ABC may, without terminating this AGREEMENT, temporarily suspend FRANCHISE'S right to operate under this AGREEMENT, or temporarily or permanently suspend FRANCHISE'S right to sell certain products under this AGREEMENT, so long as such suspension is reasonably related to FRANCHISE'S failure to comply with the requirements of this in bringing FRANCHISE into compliance with this for the health or safety of the public. 48.
DISCOUNT TO CONSUMER
(a) In order to ensure uniformity in the selling of goods, and avoiding any unhealthy competition or unfair trade practice between the FRANCHISEE in the same vicinity subject to the prior provisions of this agreement, ABC shall sole discretion to decide the “OFFER OF DISCOUNT TO THE CONSUMER” (b) No FRANCHISEE shall offer or provide in any manner whatsoever the discount to the consumer beyond the prescribed or approved discount by the ABC, in any circumstances
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(c) The rate of discount may be at variable rate to diffeamount FRANCHISEE in the same vicinity, (d) The FRANCHISEE shall not offer or give any discount if ABC not communicate to the FRANCHISEE in writing, prior to offering the discount, (e) Any claim or objection, or termination of this agreement from FRANCHISEE site shall specifically barred by this Agreement, 49
Assignment. (a) That the FRANCHISEE shall not assign or transfer this agreement or any right, duties, obligations, benefits hereunder wholly or in part to any person, without the prior written consent of ABC. ABC, shall at its sole discretion refused to such request without providing any reason thereto. (b) Any Material change in management or control of FRANCHISEE shall be deemed to be an assignment requiring the prior written consent of ABC. Notwithstanding the foregoing, ABC may assign this Agreement to its associates, Affiliates or any Third Party without require any permission from FRANCHISEE (c) Any purported assignment made or enter into by the FRANCHISEE shall terminate this Agreement, and such termination shall be effective as of the date of the purported assignment on the instance of ABC, and such termination resultant in the forfeited of FRANCHISEE fee, and other
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deposited of FRANCHISEE by the ABC, without prejudice the right of exercising other applicable civil and criminal remedy.
50
Entire Agreement
This agreement constitutes the entire agreement between the parties with respect to its subject matter. It supersedes all previous agreements and understandings between the parties and each party acknowledges that, in entering into this agreement, it does not do so on the basis of or in reliance upon any representations, promises, undertakings, warranties or other statements (whether written or oral) of any nature whatsoever except as expressly provided in this agreement. 51. Specific Right & Remedies FRANCHISEE agrees that ABC shall have the specific rights and remedies set forth in this Agreement.
These rights and remedies are in addition to and
cumulative with any and all other rights and remedies, existing or implied, now or hereafter available to ABC at law or in equity in order to enforce the provisions of this Agreement. Such rights and remedies may be exercised from time to time and as often and in such order as may be deemed expedient by ABC. The exercise of one or more rights or remedies shall not be deemed a waiver of the right to exercise at the same time or thereafter any other right or remedy nor shall any such delay or omission be construed to be a waiver of or TLO Confidential - Version- I- of 2014 Page 56 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36
acquiescence to any default. The exercise of any such right or remedy by ABC shall not reAgreement FRANCHISEE from its obligations or any liability under this Agreement, except as expressly provided for in this agreement. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as on the day and year first mentioned above. 52.
Voluntary Agreement:
The Parties acknowledge and agreed; that each has read the Agreement and understands its terms, and that each executes it knowingly, voluntarily, and without coercion, after having had the opportunity to consult with counsel. Each of the Parties acknowledges that in executing this Agreement they rely solely on their own judgment, belief and knowledge and on such advice they may have received from their own counsel. Each of the Parties further acknowledges that they have not been influenced by any representation or statement made by the other party or its counsel, but after reading , and understood and on their fee will and choice, voluntarily singing this agreement, any claim with relation to any of the provision of this agreement , on the basis of understood or misconceived ,shall be barred to terminate this agreement. 53.
Severability
In the event any provision of this Agreement shall be held to be void, avoidable, and unlawful or, for any reason, unenforceable, the remaining portions shall remain in full force and effect. 54.
Binding Effect:
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This Agreement is binding upon, and shall inure to the benefit of, the parties and their respective heirs, executors, administrators, successors and assigns. 55.
Counterparts
This Agreement may be executed in multiple counterparts, each bearing the signature of one or more Parties. Any copy bearing the signature of the Party to be charged may be deemed an original
INTENDING TO BE BOUND, the parties have executed this Agreement as of the date IN WITNESS WHEREOF both the parties have put their hands and signed the above Memorandum of Understanding without there being any coercion, pressure of undue influence in the presence of the witnesses. WITNESSES 1. 2.
FIRST PARTY SECOND PARTY
Delhi Date:
SCHEDULES
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This Agreement may be executed in multiple counterparts, and Schedules, which is bearing the numerical as Annexure –I, followings: 1. Annexure – L-1- List of Approved Products by ABC 2. Franchise Economics - Annexure –L-2
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Annexure – L-1 List of Approved Products by ABC The following products are deemed to be considered as Approved Products from ABC for sate at the Franchisee Outlet: 1 2 3 4 Provided that ABC, has the sole discretions to modify, add, delete, any of the products mentioned in the list (Annexure –L-1), at any time after the approval of above mentioned approved product list. The details mentioned above shall be read as part and parcel of the AGREEMENT FOR BUSINESS FRANCHISE.
1. The above costs may be changed with suitable notice The details mentioned above shall be read as part and parcel of the AGREEMENT FOR BUSINESS FRANCHISE. Date: Place:
First party:_________________________________
Second Party_________________________________
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Annexure –L-2
Franchise Economics S. No. A
Description of Activity One Time Costs
Cost in INR
1
Initial Franchise Fee
______________________
2
Site Identification Fee Site Readiness and Approval Fee Training Expenses
______________________
3 4 B.
1
2 3 4 C. 1 2
On going Costs Biryani purchase price (as %age of customer price) Purchase price of associated products (as %age of customer price) Purchase price of consumables Central Marketing Contribution Optional Costs Transfer Fee – Franchise Agreement Audit and Quality Control
Remarks
______________________ Rs. 3,000/- per person trained
______________________
______________________ ______________________ % of gross sales
Rs. % of sales or whichever is higher
Note 1. Taxes extra, as applicable 2. The above costs may be changed with suitable notice The details mentioned above shall be read as part and parcel of the AGREEMENT FOR BUSINESS FRANCHISE.
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Date: Place:
First party:_________________________________
Second Party_________________________________
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Contact Us 4214 A, No.1, Ansari Road,
www.thelawoffice.co.in
replyshelar@yahoo.com
Darya Ganj,
+ 91. 85.86.97.26.36
info@thelawoffice.co.in
New Delhi-110002 https://www.facebook.com/profile.php?id=100008325699804 http://www.linkedin.com/company/the-law-office?trk=top_nav_home https://twitter.com/TheLawOffice5 http://thelawofficemagazine.blogspot.in/ http://issuu.com/thelawoffice
TLO Confidential - Version- I- of 2014 Page 63 of 63 Drafted by TLO www.thelawoffice.co.in Naveen Kumar Shelar Advocate 85.86.97.26.36