FRANCHISE AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

© Copyright Envision SBS Inc. 2007. All rights reserved. Protected by the copyright laws of the United States & Canada and by international treaties. IT IS ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR DISCLOSE TO ANY OTHER PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.

© Copyright Envision SBS. 2006. All rights reserved. Protected by the copyright laws of the United States & Canada and by international treaties. IT IS ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR DISCLOSE TO ANY OTHER PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.

FRANCHISE AGREEMENT

 

 

THIS FRANCHISE AGREEMENT (hereinafter the "Agreement") is made and entered into on ____ of _____ _____, by and between ______ (hereinafter the "Franchisor"), and ____ (hereinafter the "Franchisee"), for the multinational hotel chain ______ according to the rules of Indian Contract Act, 1872 (“Contract Act”).

In consideration of the covenants and agreements contained herein, and intending to be legally bound, the parties agree hereto as follows:

1)      Agreement

The term of this Agreement shall be for the period of 3 years, commencing as of the date of this Agreement. Each year of the Term, as measured from the date of this Agreement, is a "Contract Year."

2)      Revenue Sharing

Franchisee shall remit to Franchisor 25% of the net profits of its business in the form of Royalties.

3)      Liability

 

In the event the franchising agreement creates an agency, the franchisor (the principal) could be liable for acts performed by the franchisee (the agent) in the ordinary course of business. The franchisee would be liable to compensate the franchisor for liabilities arising due to acts performed outside the course of the business or contrary to the franchisor’s directions.

 

4)      Protection of Intellectual Property Rights

 

The franchisor needs to ensure that the franchisee does not use the franchisor’s trademark for purposes outside the purview of the franchise agreement. The franchisor and franchisee should ensure that the brand and goodwill associated with the trademark is not diluted in any manner due to any actions or inactions of the franchisee. Moreover, the franchisee must also take adequate precautions to protect the franchisor’s confidential information from third parties. The franchisee could also be restricted by a negative covenant from competing with the franchisor during the franchise agreement 32 and prevented from divulging any confidential information, trade secrets and know-how during and even post-termination of the agreement.

 

5)      Consumer protection

 

In case of a franchise, the franchiser and the franchisee could be held liable for any defective goods or services supplied by the franchisee.

 

6)      Tortious Liability

 

A tort is a civil wrong independent of contract for which the appropriate remedy is an action for unliquidated damages. Tortious liability could arise in a franchise relationship in the following situations: (a) Negligence: Negligence is a breach of duty caused by an act or omission, which results in damage. In a franchising arrangement, the breach of any duty by the franchisor or franchisee, which causes a loss or damage to the franchisee or franchisor, respectively or to any third party, could lead to a civil action for negligence. (b) Vicarious Liability: In the event there is a principal-agent relationship, or an employer-employee relationship between the franchisor and the franchisee, the franchisor could be held liable for any torts committed by the franchisee during the course of the business. However, if the franchisee has acted outside his capacity or contrary to the instructions of the franchisor, the franchisor may be able to recover any damages from the franchisee. If the franchisee is an independent contractor, the franchisor may not be liable for the tortious acts of the franchisee.

 

 

7)      Labour law

 

The franchisors are independent contractors and hence the franchisor doesn’t have any discretion of on the franchisee’s level of insurance, uniform and the fare structure.

 

8)      Insurance Law

 

Necessary insurance risks would need to be assessed and appropriate policies would have to be obtained by the concerned party.

 

9)      Management and Control

 

The franchisor may want the franchisee to personally participate in the direct operation of the franchise or designate some person as a full-time Manager or Supervisor to look into and control the activities of the business.

 

10)  Force majeure

 

The duties and obligations of the parties hereunder may be suspended upon the occurrence and continuation of any "Event of Force Majeure" which prevents performance hereunder, and for a reasonable start-up period thereafter. An "Event of Force Majeure" shall mean any act, cause, contingency or circumstance beyond the reasonable control of such party. If any Event of Force Majeure shall prevent the performance of a material obligation of either party hereunder, and if the same shall have continued for a period of longer than 15 days, then either party hereto shall have the right to terminate this Agreement by written notice to the other party hereto.

 

 

11)  Location

 

The franchisor may be obligated in assisting the franchisee in locating and negotiating a place to start the franchise outlet, based upon the needs of the franchisor.

 

 

 

 

 

 

12)  Termination

 

Grounds for termination includes a material breach of the agreement, legal incapacity of any party to perform the agreement and changes in the legal and regulatory framework in the country. As a consequence of the termination, the franchisee is constrained from using the intellectual property rights and the business format of the franchisor. The franchisee must return all confidential information obtained during the term of the agreement and completely de-identify itself with the franchisor. The franchisor may also covenant that the franchisee should not open a competing business within the same location.

 

13)  Notice

 

Either party before making any changes to the agreement or before rescinding or terminating the agreement should give a one-week prior notice.

 

14)  Governing law

 

This Agreement shall be governed by, and construed under, the laws of India.

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

 

 

    FRANCHISOR                                                                       FRANCHISEE

 

_____                                                                                       _____

Authorized Signature                                                              Authorized Signature

 

            _____                                                                                      _____

Print Name and Title                                                               Print Name and Title