1. business and industrial

FRANCHISE AGREEMENT
THIS FRANCHISE AGREEMENT (the “Agreement”) is made and entered at Delhi on this
_____ day of _____, 2013 between Star Innovations & Services Private Limited, a Private
Limited Company incorporated under the Company Act 1956, having its registered office at 56
H-12, Udyog Nagar Industrial Area, Peeragarhi, Delhi -110063, India, hereinafter called the
“Franchisor” (which expression shall unless excluded by or repugnant to the context mean and
include its heirs, administrators, successors in interest, assignees etc), acting through its Vice
President/ Authorized Signatory Shri. Amarnath, duly authorized vide Board Resolution dated
__/___ in this regard. Party of the FIRST PART
AND
________________________ an Individual/Partnership/Corporation/Limited Liability Company
incorporated under the provisions of Companies Act 1956, having its Registered Office at
____________ (hereinafter called the “Franchisee”) and which term shall unless excluded by or
repugnant to the context mean and include its heirs, successors, administrators and assignees etc.
acting through its Director/ Authorized Signatory ________________, duly authorized vide
board resolution dated ___/___ in this regard. Therey called the Party of the SECOND PART
In this Franchise Agreement, unless the context clearly indicates a contrary intention, a word or
an expression which denotes a natural person shall include an artificial person (and vice versa),
any one gender shall include the other genders, the singular shall include the plural (and vice
versa).
The “Franchisor” and the “Franchisee” are also referred to individually as “Party” and
collectively as “Parties”
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PREAMBLE
The Franchisor is looking out for business expansion through a Franchise model by opening a
chain of Centers all over India for specializing in preparing Food and Beverage Retail business
under its brand name “Shawarma Point”. The Franchisee desires to operate a Franchise center
under this Franchise model. The Franchisor and the Franchisee have mutually decided to enter
into a business arrangement set out in detail by the terms and conditions of this agreement as set
out herein by this document.
RECITALS
A. WHEREAS, the Franchisor prepares and serving food and bervage products under the
brand name “Shawarma Point”. The Franchisor is known for its quality of food served
and has a high brand value. The Franchisor is looking for expansion through Franchise
model. The Franchisor has exclusive Intellectual Property rights for the brand name
“Shawarma Point” (hereinafter referred to as “Brand”) and certain other marks.
B.
WHEREAS, the Franchisor has developed and is in the process of further developing the
brand name “Shawarma Point” alongwith the logo, the designs and its exclusive business
model.
C.
WHEREAS, the Franchisor shall retain the ownership and all rights relating to its brand,
logo, copyrights, designs and other intellectual property.
D.
WHEREAS, the Franchisor has uniform standards and procedures for the efficient
business operations, the manual of procedures and strategies for marketing, advertising and
promotional activities, customer service and development techniques, distinctive interior
and exterior designs, layout and décor under the brand name “Shawarma Point”.
E.
WHEREAS the Franchisor has developed and is in the process of further developing, a
system of Franchise Store, (hereinafter referred to as the “store”) under its Brand name
“Shawarma Point”. The store is a one stop point for food products with highest quality
standards (hereinafter referred to as the “Franchise Business”)
F.
WHEREAS the Franchisee understands and acknowledges the importance of Franchisor’s
high and uniform standards of quality, operations and service and the necessity of operating
its Franchise Business in strict conformity with the Franchisor’s system;
G.
WHEREAS, the Franchisee desires to operate the Franchise Business through such a
store and has made an application for the Franchise Business on certain Terms and
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Conditions which are part of this Agreement and the same has been approved by the
Franchisor in reliance upon all of the representations made by the Franchisee.
H.
WHEREAS, the Franchisee shall arrange for itself the necessary capital required to
establish and to operate the Franchisee Business and shall also arrange for all the
infrastructure required for the running of the store and same by arranging the Site,
installing the equipment, fittings, etc as per the guidance of the Franchisor.
I.
WHEREAS, the confidentiality and secrecy of the Franchise business is the exclusive
Property of the Franchisor and the Franchisee shall not divulge any secrets relating to the
Franchise business to any third party.
J.
NOTWITHSTANDING the Terms and Conditions contained herein, the relation between
the Franchisor and the Franchisee will be that of independent entities and not as Principal
and Agent. Hence, for any act of omission or commission by the Franchisee, arising from
its own obligations under this Agreement or otherwise, the Franchisor shall not be
responsible in any manner whatsoever.
NOW THEREFORE, the parties hereto intending to be legally bound in
consideration of mutual agreements and covenants contained herein do hereby agree
as follows:
ARTICLE 1
DEFINITIONS
1.
Assets: means all fittings and fixtures, equipments etc used in the business and the
goodwill.
2.
Accounting Standards: means the accounting standards as defined by the Institute of
Chartered Accountants of India (ICAI).
3.
Affiliate: means the person and or entities which directly or indirectly are controlled by or
are under the common control of the Franchisor and in this regard, “Control” means the
power to direct or cause direction of the management and policies of an entity.
4.
Applicable Law: shall mean and include all applicable Statutes, Enactments and Acts of
Legislature or Parliament, Ordinances, Rules, Bye laws, Regulations, Notifications,
Policies, Directives and orders of any Governmental Authority, Tribunal or Court of Justice
of India.
5.
Commencement Date: shall be the date of commencement of the Franchise Business.
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6.
Confidential Information: means any and all confidential, commercially sensitive,
valuable data and technical information belonging to the Franchisor or any Affiliate of the
Franchisor relating to:
a. the development, design, modification, improvements, construction, assembly,
use, processing and quality control of the Business, including, without limitation,
technical and other data, operation methods, guidelines, quality control
procedures or other reports, known or communicated in any form whatsoever, and
whether now existing or hereafter developed;
b. The Proprietary Marks;
c. Any financial information concerning the Franchisor or any Affiliate of the
Franchisor;
d. The mode of operation, methods, advertising, publicity, trade secrets, technical
information; and
e. Any other document which has been marked „Confidential‟.
7.
Defect Cure Notice: a written notice served by the Franchisor setting out the nature of the
defect and giving the Franchisee a period of Seven (7) Days to rectify the defect in the case
of a default relating to a failure to promptly make payment of any sums due by the
Franchisee to the Franchisor, and also such period as the Franchisor may specify.
PROVIDED that in the case of Two (2) consecutive defaults made by the Franchisee, the
Franchisor shall not grant any further period of grace within which to remedy any such
defect, neglect or failure and will terminate this Agreement without serving any notice of
any kind whatsoever.
8.
Franchise: means the initial authorization, or renewal thereof (including Renewal of an
authorization in case granted subsequently, after the expired term of the Agreement), which
authorizes the franchisee to continue the Franchise.
9.
Franchise Agreement: means a legally binding Agreement which shall govern the
relationship between the parties; define their rights and obligations and may not be sold,
transferred or otherwise assigned without the written approval of the Franchisor.
10.
Franchise Business: shall be the business of establishing and operating the store of food
products, prepared in the central kitchen operated by the Franchisor, under the brand name
“Shawarma Point”, which shall include but not be limited to the use of the Intellectual
Property of the Franchisor.
11.
Intellectual Property: shall comprise of any or all of the following:
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a. The Trade Marks;
b. The Trade Name;
c. copyright and design right including (but not limited to) design, décor, color scheme
equipment, furniture held by the Franchisor and or any Affiliate in any material in
writing or in source or object code form (including but not limited to the Operations
Manual) or other work relating to the business system;
d. The knowhow and methods used in or in connection with the business or in the
System.
12.
Persons: means an Individual, Partnership, Association, Joint Stock Company, Trust,
Corporation, Limited Liability Company or Governmental Entity.
13.
Products: food and beverage items as specified in the Operations Manual from time to
time.
14.
Renewal Term: shall be the term, if any, upon expiration of the initial term of this
Agreement, and shall be determined by the mutual consent of the parties upon redrafted
Terms and Conditions as may be agreed by the parties.
15.
System: All of the following which are more particularly described in the Operations
Manual
a. The recognized design, color scheme, equipment and layout of premises occupied by
the store.
b.
The service format and standards of quality and uniformity of services offered by the
store.
c. The procedures for accounting inventory and management control to be used in the
store.
16.
Term: shall mean a period of Five (5) Years from the commencement date.
17.
Territory: shall mean ________________
18.
Trade Mark: shall be all those unregistered and or registered trade mark details as
specified in this Agreement and or any such other marks in addition thereto, or in
substitution of them as may be specified by the Franchisor from time to time.
19.
Trade Name: shall be “Shawarma Point” and/ or such other name or names in addition to
or in substitution of it as may be specified by the Franchisor from time to time.
20.
Working Day: The working days of operation for the Franchise Business, exclusding
public holidays.
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ARTICLE 2
APPOINTMENT AND GRANT OF LICENCE
1.
The Franchisor hereby grants to the Franchisee, an exclusive right to establish and to
operate within the defined Territory the Franchise Business under the Brand Name
“Shawarma Point” under the specific conditions hereinafter.
2.
The Franchisor may provide the Franchisee with necessary adminstrative advice and
assistance to develop the Franchise Business.
ARTICLE 3
LOCATION OF THE FRANCHISE BUSINESS
1.
Selection of Location: The Franchisee from the date of signing of this Agreement, select a
location of area not lesser than 250 Sq. Feet for store, for the Franchise Business and shall
notify the Franchisor of such selection in writing. If the Franchisor approves of such
selection, the location will be designated as the approved location. If the Franchisor does
not approve of such selection, the Franchisee shall select a new location. The Franchisor
shall provide the Franchisee with general guidelines to assist the Franchisee in selecting a
location suitable for the Franchise Business. The Franchisor has the right to approve or
disapprove a proposed location based on such factors as it deems appropriate, including the
condition of the premises, demographics of the surrounding area, proximity to potential
clients, lease requirements, proximity to major roads and overall suitability. The Franchisee
shall not locate the Franchise Business on a selected location without the prior written
approval of the Franchisor. Neither is the Franchisor’s assistance nor approval is intended
to indicate or indicates that the Franchise Business will be profitable or successful at the
approved location. The Franchisee is solely responsible for finding and selecting the
approved location.
2.
Lease of Approved Location: After the selection of the approved location, the Franchisee
shall execute a lease for, or a binding Agreement to purchase, the approved location, the
terms of which must have been previously approved by the Franchisor. The Franchisor
shall not unreasonably withhold its approval to the Franchisee’s review of a lease or
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purchase agreement or any advice or recommendation offered by the Franchisor shall not
constitute a representation or guarantee that the Franchisee will succeed at the approved
location nor constitute an expression of the Franchisor's opinion regarding the terms of
such lease or purchase agreement. The Franchisor shall be entitled to require that nothing
therein contained is contradictory to or likely to interfere with the Franchisor's rights or the
Franchisee's duties under this Agreement. Any default for which the lease may be
terminated shall also be deemed a default hereunder and the time to cure the same shall
expire when the lease is terminated. At the Franchisors option, the lease shall contain such
provisions as the Franchisor may reasonably require, including, but not limited to:
a. A provision reserving to the Franchisor the right at the Franchisor's election to receive
an assignment of the leasehold interest upon termination or expiration of the Franchise
grant:
b. A provision requiring the Lessor to provide the Franchisor with a copy of any written
notice of deficiency sent by the Lessor to the Franchisee and granting to the Franchisor
in its sole discretion and sole option the right (but not the obligation) to cure any
deficiency under the lease should the Franchisee fail to do so within Fifteen (15) Days
after the expiration of the period in which the Franchisee may cure the default;
c. A provision prohibiting the premises from being used for any purpose other than the
operation of the Franchise Business;
d. A provision stating that any default under the lease shall constitute a default under this
Agreement;
e. A provision stating that upon default of this Agreement, the Franchisor or its nominee
has the right to take possession of the premises and operate the Franchise Business: and
f. A provision allowing the Franchisor upon expiration or termination of the lease, to
enter the premises and remove any signs containing the Trade Marks.
3.
Development of the Approved Location: The Franchisor shall make available to the
Franchisee, at no charge to the Franchisee, copies of standard plans and specifications (but
not construction drawings or blueprints) for the development of store, including
specifications for exterior and interior design and layout, fixtures, equipment, decor and
signs. Such plans and specifications are subject to alteration as may be necessary in the
Franchisor's sole discretion. The Franchisee shall cause the approved location to be
developed, equipped and improved in accordance with such plans and specifications.
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4.
Use of the Approved Location: The Franchisee shall not use the approved location for
any purpose other than for the operation of the Franchise Business in full compliance with
this Agreement and the Operational Guidelines, unless approved in writing by the
Franchisor.
5.
Relocation: The Franchisee shall not relocate the Franchised Business without the prior
written consent of the Franchisor, which may be withheld at the Franchisor's sole
discretion. If the lease for the approved location expires or is terminated without the fault
of the Franchisee or if the Franchised Business premises is destroyed, condemned or
otherwise rendered unusable or as otherwise may be agreed upon in writing by the
Franchisor and the Franchisee, the Franchisor may in its reasonable discretion, allow the
Franchisee to relocate the Franchise Business. Any such relocation shall be at Franchisee's
sole expense, and shall proceed in accordance with the requirements set forth in this
agreement. The Franchisor shall provide the Franchisee with general guidelines to assist the
Franchisee in selecting a location suitable for the Franchise Business. The Franchisor has
the right to approve or disapprove a proposed location based on such factors as it deems
appropriate, including the condition of the premises, demographics of the surrounding area,
proximity to potential clients, lease requirements, proximity to major roads and overall
suitability. The Franchisee shall not relocate the Franchise Business on a selected location
without the prior written approval of the Franchisor. The Franchisor has no obligation to
provide relocation assistance. If the Franchisor and the Franchisee do not agree upon a
substitute location within Ninety (90) Days after the lease expires or is terminated or the
approved location is rendered unusable, this Agreement will terminate.
6.
Maintenance and upkeep: Franchisee agrees to affect such refurbishing of the store (in
addition to regular maintenance and repair), after Five (5) Years from the date of
commencement of business or as and when directed by the Franchisor, so as to maintain or
improve the appearance and efficient operation of the Store and/or increase its customer
footfall or to comply with Franchisor's standards and identity.
a. Refurbishing may include:
b. Replacement of worn out or obsolete fixtures, furniture and sign boards;
c. Substitution or addition of new or improved equipment, fixtures, furniture and sign
boards;
d. Decor,
e. Repair of the interior and exterior of the premises; and
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f. Structural modifications and remodeling of the premises. The cost of such refurbishing
and repairs shall be borne solely by the Franchisee.
ARTICLE 4
PROPRIETARY MARKS
1.
The Franchisee acknowledges that the Brand name “Shawarma Point” is a valid
trademark owned by the Franchisor, and that only the Franchisor or its designated
Franchisees have the right to use such trademark and such other trademarks, service marks
and trade names as may exist or be acquired by the Franchisor. The Franchisee further
acknowledges that valuable goodwill & reputation is attached to such trademarks, service
marks and trade names, and that the Franchisee will use the same only in the manner and to
the extent specifically licensed under this Agreement. The Franchisee shall not use any
other mark/s unless approved by the Franchisor in writing.
2.
The Franchisee understands and agrees that his license under the said proprietary marks is
non-exclusive and that the Franchisor, in its sole discretion, has the right to operate
businesses under said marks and to grant other licenses in, and under such proprietary
marks on any terms and conditions the Franchisor deems fit; Provided, however, that the
Franchisee agrees to abide by its obligations herein set forth under the terms of this
Agreement.
3.
The Franchisee expressly covenants that during the term of this Agreement and after the
expiration or termination thereof, the Franchisee shall not directly or indirectly contest or
aid in contesting the validity or ownership of proprietary marks and copyrights of the
Franchisor.
4.
The Franchisee agrees to promptly notify the Franchisor of any claim, demand, or suit
based upon or arising from, or of any attempt by any other person, firm, or corporation, to
use the service and/or trademarks licensed hereunder, or any trademark, service mark,
symbol, trade name, copyright, or colorable variation thereof, in which the Franchisor has a
proprietary interest. The Franchisee agrees also to promptly notify the Franchisor of any
litigation instituted by the Franchisee or by any person, firm, corporation or governmental
agency against the Franchisee. In the event the Franchisor pursuant to the terms of the
Agreement, undertakes the defense or prosecution of any litigation, the Franchisee agrees
to execute any and all documents and do such acts and things as may, in the opinion of
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counsel for the Franchisor, be necessary to carry out such defense or prosecution, either in
the name of the Franchisor or in the name of the Franchisee, as the Franchisor shall elect.
5.
The Franchisee shall not use the Franchise Business, its repute and the goodwill attached to
it as part of its corporate or other business ventures. The Franchisee shall not license,
register or purchase vehicles, fixtures, products, equipment, or performs any other activity
or incur any obligation or indebtedness except in his individual, corporate or other business
name.
6.
The Franchisee understands and acknowledges that each and every detail of the Franchise
Business is important to the Franchisor, to the Franchisee, and to other licensed Franchisees
in order to develop and maintain uniformity of services, and therefore, to enhance the
reputation, trade, demand and goodwill of the Franchise Business, the Franchisee
accordingly covenants:
a. To operate, advertise and promote his franchise under the name “Shawarma Point”
without prefix or suffix; and
b. To adopt and use the proprietary marks licensed hereunder solely in the manner
prescribed by Franchisor and no other; in case it is found out that Franchisee has
misused or tried to use the Brand name which is not in accordance with the guidelines
laid under this Agreement, the Franchisor will impose a penalty of Rs. 20, 00, 000/(Rupees Twenty Lac Only) only in addition to other remedies available to it under the
Law.
c. To carry out his business under said Proprietary marks in accordance with operational
standards established by the Franchisor and as set forth in the Operational Manual
and/or other documents, if such Operational Manual or other documents are provided to
the Franchisee.
7.
In order to preserve the validity and integrity of the Proprietary Marks licensed herein, and
to assure that the Franchisee is properly employing the same in the operation of its
franchise, the Franchisor or its agents shall at all reasonable times have the right to entry
and inspect the Franchisee's premises, and, additionally, shall have the right to observe the
manner in which the Franchisee is rendering its services.
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ARTICLE 5
LICENSES/ PERMISSIONS
1.
All legal formalities such as obtaining the trade license, all or any permission under any
statutory or by law or rules of government or local bodies etc, compliance with the local
municipal laws, obtaining the insurance etc. shall be complied with and carried out by the
Franchisee at its own cost and responsibility before starting the Franchise Business and the
Franchisor shall be fully absolved of any non-compliance of the same.
2.
The Franchisee shall keep all licenses, permissions etc. renewed periodically at its own
costs and responsibility.
ARTICLE 6
OPERATIONAL MANUAL
1.
The Franchisor shall provide to the Franchisee, concurrently with the commencement of
the Franchisee's training program, One (1) Copy of the Franchisor's Operational Manual
(Hereinafter referred to as the "Manual"). "Manual" containing the introduction, Product
List, application methods, process descriptions, complete layout plan for the Store’s quality
standards.
2.
The Guidelines are the exclusive property of the Franchisor and may not be duplicated,
copied, disclosed or disseminated in whole or in part in any manner except with the
Franchisor's express prior written consent.
3.
In order to protect the reputation and goodwill associated with the Trade Mark “Shawarma
Point”, and to maintain uniform standards of operation, the Franchisee shall conduct its
Franchisee Business and all operations and procedures in strict conformity with the
Franchisor's Operational Manual.
4.
Franchisee shall at all times treat the Manuals created for or approved for use in the
operation of the store and the information contained therein, as confidential, and shall use
all reasonable efforts to maintain such information as secret and confidential. Except for
those portions of the Manuals that Franchisor designates, in writing, as appropriate for
copying and use at the store, Franchisee shall not at any time copy, duplicate, record, or
otherwise reproduce the foregoing materials, in whole or in part, nor otherwise make the
same available to any unauthorized person.
5.
The Manuals shall at all times remain the sole property of Franchisor and shall at all times
be kept in a secure place on the store premises.
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6.
Franchisor has the right to revise the contents of the Manuals from time to time, to reflect
changes in the specifications, standards, operating procedures and rules prescribed by
Franchisor; provided, however, that no such addition or modification shall materially alter
Franchisee’s fundamental status and rights under this Agreement. Franchisor may make
such additions or modifications without prior notice to Franchisee and Franchisee expressly
agrees to make corresponding revisions to its copy of the Manuals and to comply with each
new or changed standard.
7.
Franchisee shall at all times maintain the Manuals at the store and ensure that the Manuals
are kept current and up to date; and, in the event of any dispute as to the contents of the
Manuals, the terms of the master copy of the Manuals maintained by Franchisor at
Franchisor’s head office shall be binding on the Franchisee.
8.
As used herein, the term “Manuals” shall be deemed to include the Manuals so delivered to
the Franchisee, all amendments thereto, and all supplemental bulletins, notices and
memoranda which prescribe standard methods or techniques of operation, and which the
Franchisor may from time to time deliver to the Franchisee.
ARTICLE 7
QUALITY CONTROL
1.
Franchisor may designate or authorize any person(s) to carry out the quality control
functions and inspection of the Franchise store, and the operations carried on at the
Franchise store.
2.
Franchisor shall have the right and be entitled to exercise quality control over the
operations of the Franchise store to ensure that the operations in the Franchise store meet
the quality standards specified by Franchisor.
3.
Franchisor is entitled to inspect the store at least twice a year and as and when required in
emergency situation. Such inspection will be carried out during business hours and in
emergency situations outside business hours. Franchisor shall also have the right, on
reasonable notice to Franchisee to conduct an assessment of the store and its quality
management system to determine the level of compliance with the Business System,
Operational Manuals and Standards and Franchisor’s direction and guidelines.
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ARTICLE 8
TRAINING AND ASSISTANCE
1.
The initial setting up of the Franchise Business will be coordinated and assisted by the
professional team of the Franchisor. The Franchisee shall recruit required number of
qualified and experienced technical and administrative staff for the efficient operation of
the Franchise Business.
2.
An initial training program for One (1) Week shall be provided by the Franchisor to the
Franchisee at the head office of the Franchisor. The Franchisee has to bear the training cost
of Rs. 30, 000/- (Rupees Thirty Thousand Only). This training fee shall be paid by the
Franchisee to the Franchisor on receipt of the completion of the training. The Franchisee
has to bear the initial training fee towards the Franchisor for conducting the various
training schedules and making sure that they are well equipped with the basic knowledge of
the operation of the Franchise Business. All boarding, lodging and travelling charges for
the training shall be borne by the Franchisee.
3.
Franchisor will monitor the store’s business on day to day basis by guiding the Franchisee
and coordinating with the team.
4.
Sourcing of the manpower shall be entire responsibility of the Franchisee.
5.
No employee shall be taken on the Franchisee’s rolls unless he/she has completed the
mandatory initial training of the Franchisor. Even after successful completion of training,
the employee shall be taken on rolls only after the Franchisor’s prior written approval.
6.
All the statutory provisions regarding employment like E.S.I., P.F. Act etc. must be
followed by the Franchisee. In case any employee of the Franchise meets with any
unfortunate circumstance like accident during his/her course of employment, the liability
will only lie with the Franchise and the Franchisor will always be free from any liability of
any kind whatsoever.
7.
Besides this all Boarding and Lodging Charges will be paid by the Franchisee to the
Franchisor as actual.
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ARTICLE 9
CONSIDERATION AND OTHER REMUNERATIONS
1.
Franchise Fees: Upon the signing of this Agreement and in return for having to use the
Franchisor’s name, logo, trademark and business system, the Franchisee agrees to pay to
the Franchisor a Franchise Fee of Rs. 4, 00, 000/- (Rupees Four Lac Only) plus service
tax as applicable and other taxes if any levied by the Statutory Authorities at the time of
signing this Agreement. The same shall be deemed as fully earned and shall be nonrefundable except under the conditions specified under this Agreement.
2.
Royalty: The Franchisee shall pay to the Franchisor, so long as this Agreement is in force,
a royalty of 3% of Net Sales for initial Eighteen (18) Months from the date of signing of
this Agreement; and after which the royalty shall be 8% of the Net Sales, on monthly basis.
This royalty shall be paid by direct debit and without deduction or set off to such bank
account as the Franchisor may from time to time specify on or before the 7th of the next
month together with Service Tax.
3.
The Franchisee shall be entitled to get the products on outright basis from the Franchisor on
the cost price of the products for as specified in the Operations Manual from time to time.
4.
Central Marketing Fund: The Franchisee shall monthly contribute 2% of the gross
revenues towards the Central Marketing Fund managed by the Franchisor and it should be
deposited in the Franchisor’s Account.
5.
Local Marketing: The Franchisee shall monthly spend 2% of the gross revenues in the
local marketing and advertisement of the Franchise Business. All the local marketing and
advertising shall be carried out by the Franchisee as per the guidelines of the Franchisor.
The Franchisee shall keep a record of all the receipts of all the local marketing expenses
and furnish them to the Franchisor as and when required by the Franchisor.
6.
Launch and Pre Opening Expenses: The Franchisee shall tender to the Franchisor, an
amount of Rs. 60, 000/- (Rupees Sixty Thousand Only) for launch and pre opening
expense for the Franchise Business.
7.
Penalty: Should there be a defect in the payment schedule specified above, the Franchisor
is entitled to serve a written notice (hereinafter referred to as the “Defect Cure Notice”)
setting out the nature of the defect and allowing a period of Seven (7) Days to make good
the payment of any sums due by the Franchisee to the Franchisor. On efflux of the period
of Seven (7) Days, an interest @18 % per annum shall be charged per day up to the date of
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payment. Provided, that in case of Two (2) persistent defaults made by the Franchisee, the
Franchisor shall not grant any period of grace to remedy the defaults and will terminate the
Agreement without any further notice.
ARTICLE 10
ADVERTISING AND MARKETING
1.
Franchisee shall not advertise or use in advertising or any other form of promotion, the
brand name “Shawarma Point” without the appropriate Trademarks and copyright notice,
specifying the Franchisor’s claim for registrations of the marks.
2.
Franchisor may but shall not be obligated to provide PR Coverage of stores in print as well
as electronic media to the Franchisee from time to time.
3.
Franchisee shall conduct and contribute for various advertising campaign through print
media and electronic media for promotion of the Franchise store.
4.
Franchisee agrees to submit to Franchisor or its designated agency, for its prior written
approval, for all sales promotion materials and advertising to be used by Franchisee,
including, but not limited to, newspapers, radio and television advertising, specialty and
novelty items.
5.
The Franchisee can propose to the Franchisor with marketing and advertising initiatives or
any other initiative for the promotion of the Franchise Business. However, it will be the
sole discretion and prerogative of the Franchisor to either approve or reject such proposals.
ARTICLE 11
SUPPLIES, PRODUCTS AND UNIFORMS
1.
The Franchisor shall transfer all the products on placement of order placed by the store
Franchisee.
2.
Franchisee shall serve, sell or offer for sale all and only such items that are listed as
standard menu items from time to time in the operating manual provided by the Franchisor.
3.
Franchisee shall not sell or serve any other item else than that specified by the Franchisor
through the Franchise store.
4.
Franchisee shall maintain all such products in sufficient supply at all times and shall not
deviate from the Franchisor's standards and specifications for serving or selling such
15
products without the Franchisor's prior written consent. Franchisee shall immediately
discontinue serving, selling or offering for sale any of such products as the Franchisor may,
in its sole discretion, disapprove in writing at any time.
5.
All products will be supplied by the Franchisor. Franchisee shall not purchase such
products from any other source or use any other product in substitution thereof.
6.
The Franchisee shall purchase equipments from the Franchisor or sources designated by the
Franchisor.
7.
Franchisee shall purchase for its employees use, uniforms which conform strictly to the
current specification, design and style of the Franchisor as set forth from time to time in the
Manual or otherwise in writing.
ARTICLE 12
FRANCHISEE‟S OBLIGATIONS
The Franchisee covenants and agrees in Principal with the Franchisor that it will perform
and observe the following covenants and conditions:
1.
The Franchisee shall commence the business from the commencement date.
2.
The Franchisee shall do and maintain the fit outs of the store as per the specifications of the
Franchisor.
3.
Franchisee shall purchase the products from the Franchisor for the store and shall not
purchase the same from any other source or use any other product in substitution thereof.
4.
Franchisee shall purchase all items or material from the Franchisor or the vendor approved
by the Franchisor, for operating the business in the store.
5.
The Franchisee shall be responsible for all expenses for setting up including equipments of
the outlet and its décor, designing and furnishing, rent, operational expenses, maintenance,
emoluments of the employees, training expenses, and any other expenses related to the
Franchise Business.
6.
The Franchisee shall not return to the Franchisor any unsold food of the franchise outlet for
disposal.
7.
The Franchisee shall bear all the delivery cost of the products for the franchise outlet.
8.
The Franchisee shall maintain at all times the interior and exterior of the outlet in a good
state of repair and decoration subject to wear and tear of normal use. If, at any time, the
Franchisor is reasonably of the opinion that the Franchisee is not complying with such
16
obligations, the Franchisor shall notify to the Franchisee, the action it requires from the
Franchisee in order to ensure compliance with such obligations. In such event, the
Franchisee shall, at its own expense, comply with such requirements forthwith within
Thirty (30) Days of receipt of such notice.
9.
The Franchisee shall at all times during the subsistence of the present agreement, keep
required number of qualified and experienced technical and administrative staff at the
approved location for the Franchise Business.
10.
The Franchisee shall ensure that all staff members attend the Initial Training provided by
the Franchisor before the commencement of the Franchise Business.
11.
The Franchisee shall purchase all the equipment such as refrigerators, oven, utensils,
crockery etc, to be used in the Franchise Business from the vendors specified/approved by
the Franchisor.
12.
The Franchisee shall purchase all the equipments, machinery and products including the
raw material required for the operation of the Franchise Business in the shop from the
vendors/ dealers specified by the Franchisor.
13.
The Franchisee shall at all times maintain the outlet in the highest degree of sanitation,
hygine,
repair and cleanliness. The Franchisee hereby agrees to make any additions,
alterations, repairs and replacements that the Franchisor may reasonably require including,
but not limited to such periodic repainting, equipment repairs and replacement of obsolete
signs, furniture, fixtures, equipment, and floor coverings (including carpet and tile) as the
Franchisor may reasonably direct.
14.
The Franchisee shall serve, sell, or offer for sale, only such food items as are listed as
standard menu items in the Operational Manual and in the same recipes as specified by the
Franchisor.
15.
The Franchisee shall only sell the products of the Franchisor, from the outlet and shall
under no circumstances sell products under any other brand(s).
16.
The Franchisee shall not offer for sale any item or product at a price more than that fixed
by the Franchisor.
17.
The Franchisee shall not sell any item not Authorized by the Franchisor and shall not sell
portions larger or smaller in quantity than what is specified by the Franchisor in the
Operational Manual. The Franchisee shall maintain all the raw materials in sufficient
supply at all times. The Franchisee shall immediately discontinue serving, selling or
17
offering for sale any product as the Franchisor may, in its sole discretion, disapprove in
writing at any time.
18.
In case of any Customer Complaints received regarding the quality of food or beverages
sold at the outlet, the Franchisee shall offer a quick Grievance Redressal Mechanism and in
case of the customer approaching the court, the liability for any penalty imposed or any
other action will solely rest with the Franchisee and no obligation shall pass on to the
Franchisor.
19.
The Franchisee shall not sell any stale or expired products from the store.
20.
The Franchisee covenants with the Franchisor that all the promotional/advertising schemes
like loyalty card etc. which will be introduced by the Franchisor will have to be duly
honored by the Franchisee and all the financial burden by giving discounts if any will be
borne by the Franchisee and no other.
21.
The Franchisee shall offer discount schemes on the Franchise Business, on the written
approval/ instruction of the Franchisor.
22.
The Franchisee shall always provide electronic bills to the customers. If due to any reason,
the Unit Franchisee has to provide manual bills, the Franchisee shall inform the Franchisor
in advance.
23.
The Franchisee shall ensure that the visual merchandise, signages and graphics, etc. are
kept in working order at all times during the operation timelines at the approved location.
24.
The Franchisee shall ensure full compliance by itself and its staff of the standards and
policies of the Franchisor, including compliance with Operational Manual.
25.
The Franchisee shall maintain a strict rule of norms for the working of the Franchise
Business in terms of timings, customer service, etc.
26.
The Franchisee shall maintain a monthly report of the operation of the Franchise Business,
the business generated, revenues collected and marketing activities undertaken by the
Franchisee, in the format specified by the Franchisor.
27.
The Franchisee shall place upon all letter heads, stationery, bills, invoices and all other
documents and literature used in connection with the Business, in such manner and place as
the Franchisor may direct, the following words (or such other words to similar effect as
may from time to time be specified by the Franchisor): “A Franchise Owned and
Operated by [Name of the Franchisee] under License from [Name of the
Franchisor]”.
28.
Insurance: The Franchisee agrees to maintain all insurance as is necessary to maintain
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general liability insurance against claims for bodily and personal injury, death and property
damage caused by or occurring in connection with the conduct of the Franchisee's duties
hereunder. The Franchisee will provide Thirty (30) Days' prior written notice to the
Franchisor of any material modification, cancellation, or expiration of such policy and will
furnish to the Franchisor annually a copy of the certificates of insurance or other evidence
requested by the Franchisor that such insurance coverage is in force.
29.
Non-Compete: The Franchisee shall perform its part of the Agreement in the best interests
of the business and will not directly or indirectly, during the subsistence of this Agreement,
carry on or otherwise take interest in, any trade, business or commission venture, same as
or similar to that of the Franchisor or any other such business which may prove prejudicial
to the interest of the business of the Franchisor. The Franchisee shall be bound by this NonCompete clause and shall incur personal liability in case of its violation.
30.
Confidentiality: The Franchisee undertakes that it shall strictly maintain secrecy and
confidentiality and shall not disclose, divulge or reveal during the continuance of this
Agreement or any time thereafter the confidential information or any part thereof
disclosed, communicated or given relating to the running of the Franchise Business to any
person, firm, body corporate or any authority and shall ensure that the same is kept strictly
confidential; provided however, that nothing contained in this clause shall prevent the
Franchisee from disclosing or imparting the same to its Manager and its other responsible
employees or staff members but only so far as may be necessary for the satisfactory and
proper performance and discharge of their duties and obligations hereunder.
ARTICLE 13
FRANCHISOR‟S OBLIGATIONS
The Franchisor’s obligations during the tenure of this Agreement include the initial as well
as the on-going obligations:
1.
To permit the Franchisee to carry on the Business of setting up, operating and promoting
the Franchise Business under the name and style of “Shawarma Point”.
2.
To supervise and assist the Franchisee in developing the store, and in completing the
Interiors, Exterior, and designing in accordance with the layouts and recommendations
from the Franchisor.
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3.
To provide training and support to the Franchisee or his appointed personnel for enabling
them to effectively carry out the Franchise business.
8.
To provide the Franchisee with products for sale in the Franchise store. The Franchisor
shall transfer to the Franchisee the product within Twenty Four (24) Hours, from the time
of such order.
9.
The Franchisor shall keep the Franchise updated on any discounts schemes or offers from
time to time.
4.
To provide the Franchisee, as the Franchisor considers appropriate from time to time, with
technical and administrative advice in the conduct of the Franchise Business and such other
advice as the Franchisor considers appropriate to promote the mutual business interests of
the Franchisor and the Franchisee.
5.
The Franchisor shall provide the Franchisee with the brochures, pamphlets and flex banners
for the advertisement purposes. The cost for the same shall be borne by the Franchisee.
6.
The Franchisor shall ensure timely supply of sufficient stock/ products in the store outlet to
the Franchisee.
7.
To provide at cost to Franchisee, the design of the ordering forms, bills format and
stationery at cost including reasonable handling charges to the Franchisee.
8.
The Operational software will be provided by the Franchisor at the cost of the Franchisee
for maintaining the uniformity of data of customers.
9.
The Franchisor may assist in monitoring and managing the Franchise Business to make
sure that the best business practices get implemented at the Franchisee end to run it on
profit.
10.
The Franchisor may also provide regular advice on inventory control and other
administrative issues as the Franchisor may deem fit.
11.
The Franchisor shall operate and maintain the central kitchen for the manufacturing of the
products sold in the Franchise store.
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ARTICLE 14
TERM, TERMINATION AND RENEWAL
1.
Effective Date and Term: The effective date of this Agreement is __ day of _________,
2013 and the initial term of this Agreement shall be for a period of Five (5) Years from the
date of its execution.
2.
This Agreement shall terminate:
A. On the expiry of the Term;
B. On serving Thirty (30) Days prior notice by either party;
C. On the occurrence of any of the following events which shall be treated as
fundamental breach of this Agreement terminating it forthwith:
i. In the event of a breach by the Franchisee of any provisions of this Agreement and
subsequent failure to remedy the breach within Thirty (30) Days of having been
notified by the Franchisor;
ii. Failure to make any payments and royalties under this Agreement;
iii. Any assignment or disposal of the Franchise Business or the Location by the
Franchisee;
iv. Any challenge by the Franchisee to the validity of any part of the Intellectual
Property Rights of the Franchisor provided that the Franchisor may waive any
breach of this Agreement by the Franchisee.
v. Any deviation from the Operational Manual
vi. If the Franchisee engages in any conduct prejudicial to the Franchise Business.
D. If the Franchisee goes into either compulsory or voluntary liquidation (except for the
purpose of reconstruction or amalgamation) or if a receiver is appointed in respect of
the whole or any part of its assets or if the Franchisee makes assignment for the benefit
of its creditors generally or threatens to do any of these things or any judgment is made
against the Franchisee or any similar occurrence in any jurisdiction that affects the
Franchisee in any manner mentioned above.
E. If any material change occurs in the management or control of the Franchisee
particularly any change of directors or shareholders.
F. If Franchisee becomes bankrupt, insolvent, ceases transaction of business, commits any
act of bankruptcy, re-organization, composition, or arrangement, or dissolves its
business, this agreement may be immediately terminated by the Franchisor.
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3.
Right of Renewal: At the end of the term, this Agreement may be renewed on payment of
a renewal fee of 40% of the Franchise Fee (as mention above in Article 9), to be paid by
the Franchisee towards the Franchisor. The renewal for a further period shall be based on
such Terms and Conditions as may be mutually agreed between the parties to this
Agreement.
ARTICLE 15
EFFECT OF TERMINATION
Upon termination of this Agreement for any of the reasons mentioned above the Franchisee
shall:
1.
Immediately cease to operate and conduct the Franchise Business and provide services at
the approved location of the Franchise Business, however it shall not be relieved of the
obligation to pay any monetary dues to the Franchisor as per the terms of this
Agreement;
2.
Cease to exploit brand name owned by the Franchisor or any company related to it and
licensed to the Franchisee in respect of the Franchise Business and desist from using any
mark confusingly or deceptively similar to the trade mark, service mark or logo and style
of the Franchisor in any manner.
3.
Unless otherwise authorized in writing by the Franchisor, remove or permanently cover
all signs or advertisements identifiable in any way with the Franchisor and in the event of
failure promptly so to do, to permit the authorized agents of the Franchisor to enter on
the Premises for such purpose.
4.
Deliver to the Franchisor all documents including without limitation Operational
Guidelines, catalogues, instructions, notes, publicity promotional and advertising
material, samples, letterheads, business cards relating to the business.
5.
The Franchisee shall at first offer for sale to the Franchisor the fittings and fixtures,
equipments, machinery etc owned and used by the Franchisee in the Franchise Business.
However, in case the Franchisor refuses to buy back the same, then the Franchisee shall
dispose the same to anybody else within Thirty (30) Days of such refusal by the
Franchisor.
6.
Penalty: The Franchisee shall not conduct any business similar, identical or
supplemental to as enumerated in this agreement for a minimum period of Two (2)
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Years after ceasing to remain a Franchisee and/or termination of the franchise by the
Franchisor.
Any
involvement,
directly
or
indirectly
of
any
directors/partners/proprietor/employee of the Franchisee in any such venture or under a
pseudo name during the period mentioned above would be considered a violation and
would attract penalty of Rs. 20, 00, 000/- (Rupees Twenty Lac Only) with other
applicable criminal prosecution under the laws including on account of breach of trust
etc. This covenant shall be valid and binding upon the Franchisee irrespective of the
nature or ground of termination or closure. In case the Franchisee violates this clause, the
Franchisee agrees (without any prejudice bearing/hindrance to the Franchisor taking all
the possible legal action against the Franchisee) to pay a penalty @ 18% per annum to
the Franchisor for the duration that the Franchisee continues to be in infringement.
7.
The expiration or termination of this Agreement shall be without prejudice to the accrued
rights of the parties and any provision hereof which relates to or governs the acts of the
parties hereto subsequent to such expiry or termination hereof shall remain in full force
and effect and shall be enforceable notwithstanding such expiry or termination.
8.
The Franchisor shall be entitled to immediately obtain an order of injunction in case the
Franchisee despite termination continues to use or display the name, trademark, trade
name, logo, goodwill or its past association with the Franchisee in any way or manner.
The Franchisee understands that no amount of money can compensate the Franchisor in
this regard and the usage of the same shall cause irreparable loss and injury to the
Franchisor.
ARTICLE 16
ACCOUNTING AND RECORDS
1.
To enable the Franchisee and the Franchisor to best ascertain their expenses and maintain
an economical method of operation, the Franchisee agrees to keep and preserve at its cost
during the term of the Franchise granted hereunder, full, complete, and accurate books of
accounts in an accounting manner as prescribed by in the Operating Manual.
2.
The Franchisee shall submit to the Franchisor such periodic reports, forms and records, at
its sole cost and in the manner and at the time as specified by the Franchisor.
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3.
The Franchisor's representatives shall have the right at any time to inspect and verify the
Franchisee's books, records, and cash control devices.
4.
The Franchisee shall preserve all such accounts and records for not less than Three (3)
Years notwithstanding the expiry or termination of this Agreement.
ARTICLE 17
EXIT AND CONSEQUENCES
In case of termination of this Agreement by the Franchisee prior to the expiry of the term for any
reason whatsoever or in the event of termination by the Franchisor for breach of contract or
default by the Franchisee, the Franchisee shall pay 40% of the Franchise Fee as liquidated
damages to compensate the Franchisor for the various losses and damages suffered including the
loss of reputation and business opportunity. This is without prejudice to any other remedy
available to the Franchisor. The Franchisee agrees to abide by this exit clause in accordance with
his acknowledgment that the Franchisor has incurred huge investment and expenditure on behalf
of the Franchise store.
ARTICLE 18
INSPECTION
1.
The Franchisee shall permit officers, personnel and agents of the Franchisor during normal
hours of business to inspect and observe the Franchise Business location and the services
provided at the approved location.
2.
The Franchisor and its personnel and agents shall have the right to inspect the approved
location, the books of accounts, records, finance and accounting systems at the store.
3.
The Franchisee shall neither use any other products not supplied by the Franchisor nor
prepare or sell any other items /products not mentioned in the menu list, provided by the
Franchisor. The Franchisor shall have the right to do mystery shopping as well as to inspect
the stock items any time during the working hours of the store.
4.
That the Franchisor reserves the right to do stock audits in the store as and when deemed
appropriate by the Franchisor. The Franchisor will similarly have the rights to check the
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operational aspects and to see whether the store is being run according to this Agreement or
not.
ARTICLE 19
ASSIGNMENT OF RIGHTS
The Franchisor may assign its rights and obligations under this Agreement to an affiliate at any
time. Provided however, this Agreement shall not be assigned by the Franchisee without the
prior written consent of the Franchisor.
ARTICLE 20
MODIFICATION OF THE SYSTEM
The Franchisee recognizes and agrees that from time to time hereafter the Franchisor may
change or modify the system and its marketing strategy presently identified by the mark
“Shawarma Point”, including the adoption and use of new or modified trade names,
trademarks, service marks or copyrighted material, new products, new equipment or new
techniques, and that the Franchisee shall accept, use and display for the purpose of this
Agreement any such changes in system, including new or modified trade names, trademarks,
service marks or copyrighted materials, new products, new equipment or new techniques, as if
they were part of this Agreement at the time of execution hereof and may make such
expenditures as to the changes or modifications in the system, as may reasonably require, and do
so within a reasonable time.
ARTICLE 21
INDEMNITY BY THE FRANCHISEE
The Franchisee covenants and agrees with the Franchisor that the Franchisee shall assume sole
and entire responsibility for and indemnify and keep harmless the Franchisor from any and all
claims, liabilities, losses, expenses, responsibility and damages, demands or actions by reason of
any claim, proceedings action, liability or injury arising out of the Franchisee or on behalf of any
25
of his/her employees, staff, or persons connected in any manner with the Business of the
Franchisee.
ARTICLE 22
ENTIRE AGREEMENT
This Agreement sets forth the entire Agreement and understanding between the parties as to the
subject-matter of this Agreement and amalgamates all prior discussions between them and
neither of the parties shall be bound by any conditions, definitions, warranties or representations
with respect to the subject matter of this Agreement other than as expressly provided in this
Agreement as duly set forth.
ARTICLE 23
FORCE MAJEURE
The Franchisor shall not be liable to the Franchisee for any loss to the Franchisee caused by the
failure of the Franchisor to observe the terms and conditions of this Agreement and on his part to
be observed and performed where such failure is occasioned by any cause beyond the
Franchisor’s reasonable control including the failure of the Franchisor to supply or delay in
supplying any goods to be supplied by the Franchisor to the Franchisee, whether on account of
inter alia war, insurrection, fire, flood, earthquake, strikes, lock-outs, the unavailability of raw
materials or similar cause.
ARTICLE 24
WAIVER
Any waiver by the Franchisor of a breach of this Agreement or any other subsequent Agreement
to which it may be a party in consequence of this Agreement shall not be deemed to be a waiver
of any subsequent breach.
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ARTICLE 25
SEVERABILITY
If any provision of this Agreement is invalid or unenforceable or prohibited by the applicable
law of the land, this Agreement shall be considered divisible and its remainder/balance shall
remain in effect, be valid, binding and of the like effect as if such invalid provision had not been
included herein in the first place.
ARTICLE 26
NOTICES
1.
Any notice, request or other communication required to be given under this Agreement
must be in writing and be served personally or mailed to the other party by registered post,
addressed to the parties at their respective addresses that each party shall provide to the
other in writing.
2.
Any notice or other communication as above shall be deemed given and received on the
date of delivery or on the 5th Business day following the day of mailing of the same by
prepaid registered mail or by courier delivery service with return receipt requested to the
party to be notified at the addresses set forth:
If to the FRANCHISOR:
Address: H-12, Udyog Nagar Industrial Area, Peeragarhi, Delhi -110063, India
If to FRANCHISEE:
Address: ____________________
ARTICLE 27
ACKNOWEDGEMENT BY FRANCHISEE
The Franchisee specifically acknowledges that:
1.
The Franchisee has sought its independent Legal Advice prior to the signing of this
Agreement and has not relied only on promises, representations or Agreements about the
Franchisor or the system not expressly contained in this Agreement or the Franchise kit in
making its decision to sign this Agreement. The Franchisor and its representatives have not
27
made any promises, representations or Agreements, oral or written, except as expressly
contained in this Agreement and the Franchise kit.
2.
The Franchisee has conducted an independent investigation of the Business being
Franchised hereunder, and recognizes that the Business venture contemplated under this
Agreement involves Business risk and that its success will be largely dependent upon the
ability of the Franchisee as an independent Business. The Franchisor disclaims the making
of and the Franchisee acknowledges that the Franchisee has not received any warranty or
guarantee, express or implied as to the potential volume, profits or success of the Business
venture contemplated by this Agreement.
3.
The Franchisee has received a copy this Agreement Seven (7) Days prior to the signing of
this Agreement.
4.
The Franchisee has read and clearly understood this Agreement and had ample opportunity
to consult with an attorney and other Business advisors of the Franchisee’s own choosing
about the potential benefits and risks of entering into this Agreement.
ARTICLE 28
APPLICABLE LAW AND SETTLEMENT OF DISPUTES
1.
This Agreement and the rights and obligations of the parties hereunder shall be construed
and interpreted in accordance with Indian Substantive and Procedural law, applicable to
Agreements made and to be performed entirely therein.
2.
The Parties shall attempt in good faith to resolve any dispute, difference or claim arising
out of or in relation to this Agreement through mutual discussion. In case it is not resolved
within Thirty (30) Days from receipt of the written notice (setting out the dispute or claim)
by the other party, the complaining party may issue a notice of reference, invoking
settlement of such dispute through Arbitration.
3.
Arbitration: All disputes and differences arising between the parties hereto, including any
dispute or difference in regard to the interpretation of any provision or term or the meaning
thereof, or in regard to any claim of one party against the other or in regard to the rights
and obligations of any party or parties under this agreement shall be governed by the
provisions of the Arbitration and Conciliation Act, 1996 and its amendments thereof
absolutely and fully. The Arbitrator in such situations will be solely appointed by the
Franchisor and his amend regarding the matter in consideration will be final and binding on
28
the parties. The place for Arbitral Proceedings will be Delhi. The Arbitral proceedings shall
be held in English language.
ARTICLE 29
JURISDICTION
All disputes between the parties shall be subject to jurisdiction of the Hon'ble High Court of
Judicature at Delhi and Subordinate Court in Delhi only.
IN WITNESS WHEREOF the parties hereto have set and subscribed their respective hands and
seals on the day, month and year first written above.
FOR FRANCHISOR
FOR FRANCHISEE
_____________
Shri. Amarnath
Vice President
________________
(Authorized Signatory)
Date:__________
Date:__________
Witness:
Witness:
_______________
__________________
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