Franchise Agreement for sale of Motor Cars
This agreement is made at………… this……………. day of………….. between M/s. ABC & Co. Inc. a Company registered under the Company law in the U. S. A. and having its registered office at………………. hereafter referred to as the Principal Company of the one part and Messers XY and Co. Ltd. a public limited Co. registered under the Indian Companies Act. 1956 and having its registered office at…………. hereinafter referred to as the Representative Company of the other part as follows;
1. The Principal Company is manufacturing motor cars of different types or models and sizes in U. S. A. for the last several years and has acquired a reputation in the said trade.
2. The Principal Company has recently manufactured a new super car with modern gadgets sophisticated parts and other advantages and which has become popular in U. S. A.
3. The said car is also very convenient and suitable to Indian condition and the Principal Company intends to extend its area of operation by entering into Indian market.
4. The present policy of the Government of India is also favourable to make investment in Indian business and to keep the country in the expansion of its trade and manufacture.
5. The Representative Company is also manufacturing motor cars or other vehicles in India and has its factory at…………………………………
6. The   Representative   Company  having  learnt  that  the  Principal Company intends to enter into Indian market for the manufacture and sale of the said motorcar known as……………….approached the Principal Company with a proposal to act as the representative of the Principal Company for the assembling and sale of the said motor car in India.
7. After prolonged negotiations and discussions the Principal Company has now agreed to appoint the Representative Company to assemble and/ or sale the cars of the said model in India on the terms and conditions hereinafter recorded.
Now it is agreed between the parties hereto as follows :
1. The Principal Company hereby grants licence or permission to sell the motor cars of the model and particulars more described in the schedule hereunder (and which is hereafter referred to for the sake of brevity as the said motor car) throughout the territory of India being the territory referred to in Article 1(3) and defined in Schedule 1 in the Constitution of India.
2. The Principal Company shall export to the Representative Company in India either all the parts of the said motor car or the complete cars and in the former case the Representative Company will assemble the parts in their factory to enable them to sell the ready motor car exported in ready condition.
3. The Principal Company shall also grant licence to the Representative Company to use the trade marks of the Principal Company and which are duly registered under the laws in U. S. A. and under which the said motor car is being sold and on the basis of the licence the Representative Company will sell the motor cars on the strength of such trade marks. The Representative Company will be entitled to get the trade marks registered under the Indian Trade Mark Act in the name of the Principal Company or as in the name of Representative Company as licensee of the Principal Company. 
4. The Principal Company will export to India on account of the Representative Company such number of motor cars in assembled or unassembled conditions as the Representative Company may require from lime to time.
5. The Principal Company undertakes to give training and information regarding to the whole process in the manufacture of the motor car to not more than there technically qualified employees of the Representative Company at a time in the factory of the Principal Company at…..for a period of	months and to the satisfaction of the Principal Company. All
the travelling expenses and boarding and lodging expenses during the slay of the employees of the Representative Company in U.S.A., the salaries and other emoluments payable  to the employees  according  to  the service conditions of the Representative Company will be paid by the Representative Company in such manner as the Company may think fit and proper. The Principal Company will not be responsible for the said expenses.
6. The Representative Company will obtain a bond duly signed from such employees of the Representative Company with a condition that they will serve the Representative Company atleast for a period of	years and they will not disclose the techniques, know-how and other secrets adopted in the manufacture of the said motor car and its spare parts and failing which the employees will be liable to pay to the Representative Company the damages as may be fixed by the Representative Company in consultation with the Principal Company.
7. The Principal Company will also make available to the Representative Company the know-how and other information, technical knowledge, policy and methods adopted by the Principal Company in effecting manufacture and sales and shall also supply all literature written and/or published by the Principal Company requiring such matters as aforesaid including training, display and operation involved in the manufacture of the motor
car. The Principal Company also agrees to supply such information and knowledge as may be required by the Representative Company for assembling the motor car and selling motors cars.
8. The Representative Company assures and guarantees that it will not disclose to any other person the know-how, information, literature and matters communicated to the Representative Company direct or through its employees.
9. The Representative Company guarantees sale of………………….motor cars every month failing which the Principal Company will have an option to terminate this agreement.
FRANCHISE AGREEMENT	1715
10. The Principal Company will export to India the motor cars in ready conditions or in unassembled condition and in such quantities as the Representative Company will require in accordance with the import and export laws of the U. S. A. and India. The Representative Company will make arrangement with its banker in India to honour the letter of credit issued by the Principal Company's bankers for the price of the cars Imported by the Representative Company and all other expenses incidental thereto. The Representative Company shall also furnish a Bank guarantee in favour of Principal Company for payment of the price of the cars supplied to Representative Company which guarantee will be limited to such amount as may be agreed upon between the parlies hereto. The guarantee will be a continuing guarantee and the draft thereof will be approved by the Principal Company.
11. The price of the motor car at which the same will be supplied by the Principal Company to Representative Company will be fixed from time to time at an intervals of every 3 months. In cases where the motor car is sent in unassembled condition the price will be less by the assembling charges which will be fixed by the Principal Company in consultation with Representative Company from time to time.
12. The Representative Company shall not sell the motor car with or under any trade mark of its own or otherwise and will sell the same only under the trade mark of the Principal Company. 
13. The Representative Company will sell the motor ears in the Indian market  at  such  price  as  may be  agreed   upon between  the  Principal Company and Representative Company provided the price will be such as will leave a margin of profit atleast to the extent	 percent of the price charged by the Principal Company to Representative Company for each car.
The Principal Company undertakes not to sell the said motor car in India directly or through any other agency.  
14. The Representative Company also undertakes not to sell in India the motor cars manufactured by any other manufacturer. Indian or foreign, during the subsistence of this agreement. But the Representative Company will be entitled to sell motor cars and other vehicles manufactured by Representative Company in India and outside and will also be entitled to accept agency of any other manufacturer Indian or foreign for sale of motor
cars outside India.
15. All payments to be made by Representative Company to Principal Company will be in Indian currency but at the exchange rate then prevailing and the Representative Company shall give all assistance to Principal Company in making remittance to Principal Company from India from time to time.
16. All licences or permissions required for the export of motor cars from U. S. A. will be obtained by Principal Company at its own expense and all licences or permissions required for the Import of motor cars by the Representative Company will be obtained by the Representative Company at its own cost.
17. All import customs and other duties or taxes payable at the port of discharge in India including clearing charges, wharfage, demurrage will be paid by the Representative Company.
18. All permissions required to obtain from the Government of India or any State in India and other authorities for assembling and sale of the motor cars will be obtained by Representative Company at its own cost.
19. The Principal Company will be entitled to send its one or more Representatives at its own expenses from time to time to India and visit Representative Company's factory and office premises and will be entitled to receive the Representative Company and will be bound to furnish all such information and material as may be required by him or them regarding the
sale of the motor cars and matters incidental thereto. The Representative Company will however be responsible to make arrangement for their travel in India and boarding and lodging in India, and the expenses in respect thereof will be borne by the Principal Company.
20. This agreement may be terminated by the Principal Company by giving one month's notice to Representative Company in writing in any of the following events:
(i) If the Principal Company stops manufacture of motor cars for any reason:
(ii) If the Representative Company commits breach of any term of this agreement;
(iii) If Representative Company fails to make payment of any amount due and payable by the Representative Company to Principal Company under or by virtue of this agreement for one month after it becomes due and payable;
(iv) If due to any restriction imposed by the Government of U.S.A. or Government of India the import and sale of motor cars in India becomes difficult or non-profitable;
(v) If the Representative Company is ordered to be bound up by Court or goes into voluntary liquidation;
(vi) If the Principal Company is not satisfied with the performance by the Representative Company of this agreement;
(vii) If by reason of any force majeur, the performance of this agreement becomes impossible.
22. The agreement may be terminated by the Representative Company
by giving one month's notice to the Principal Company in any of the following events:
(i) If the Principal Company commits breach of any term or condition of this agreement;
(ii) If the Representative Company does not find it profitable to perform the agreement;
(iii) If performance of this agreement, becomes difficult or impossible due to any restrictions imposed by the Government of India or any Indian State.
23. Subject to what is provided in clauses 21  and 22 above this agreement will remain in force for a period of 2 years from the date this agreement becomes effective as provided in clause 36 hereof. The termination of this agreement by any party shall not absolve
that party from any liability incurred by the other party till the date of termination.
24. On termination of this agreement as aforesaid the Representative Company will not be entitled to make use of any trademarks of the Principal Company and if the trade marks or any of them is registered under the Indian law the Representative Company will get the same cancelled according to law.
25. Notwithstanding the termination of this agreement for any reason aforesaid the Representative Company will be entitled to purchase or take delivery of the motorcars dispatched by the Principal Company on or before the date of such termination and the Representative Company will also be entitled to sell the motor cars in its possession till the whole stock is sold off and to that extent the agreement shall be deemed to be subsisting.
26. On the termination of this agreement as expressed, the Principal Company will not dispatch any motor car or any spares thereof to Representative Company.
27. The Representative Company   shall not be entitled to assign any right or benefit, under this agreement to any other party without the consent in writing of the Representative Company and which consent may be given on such terras as the Principal Company, may think fit To impose. 
28. This agreement will not be construed as a partnership between the two Companies and each party will be deemed to carry on its business independently but subject to the terms hereof. 
29. The Representative Company will be entitled to advertise the sale of the motor cars in newspaper, T. V. or through other media in such manner as it thinks fit but at its own cost provided that in every such advertisement the name of Principal Company will be mentioned as the manufacturer of the motor car.
30. No party hereto shall be entitled to disclose in any manner to any third party anywhere or make unauthorised use of the know-how or other secrets of manufacture and business of Principal Company except to such persons who are supposed to work for the Company in confidence like the auditors, legal advisers, bankers or the Company's responsible employees
like technicians.
31. This agreement shall be governed by the law as in force in India.
32. Any dispute arising on any question arising out of or in connection with this agreement shall be referred to Arbitrator of a single Arbitrator or failing appointment of such Arbitrator by consent to two Arbitrators each to be appointed by each party hereto with power to the two Arbitrator to appoint a third Arbitrator and the arbitration will be governed by the
Arbitration and Conciliation Act, 1996.
33. If on the sale of any motor car, a complaint is received from any customer regarding any defect, the same will be rectified by the Representative Company at its own cost but if the defect is in manufacturing the car or its parts the same will be rectified by Representative Company or by Principal Company and the cost of removing the defects will be borne and paid by Principal Company
34. Any notice required to be given by any party hereto to the other under (his agreement or in law will be sent by registered post or electronic transmission at the address herein mentioned
Principal Company…………….at…………
Representative Company  ………………at…………………
36. This agreement is subject to approval of the Government of India and other authorities under the FEMA Act, 1999 or any other Act and shall be effective and binding on the party only on the grant of all such approvals. 
If any approval is refused the agreement shall be treated as non-existing.
.In witness whereof the parties have put their hands and seal the day and
year first hereinabove written.
THE SCHEDULE ABOVE REFERRED TO
x	xx
Signed for and on behalf of ABC and Company Ltd. the
Principal Company by Mr		)
Managing Director duly authorised by its	)
Board of Directors in the presence of		)
Signed for and on behalf of XY and	)
Company Limited the Representative	)
Company by Mr	 Managing Director
duly authorised by its Board of
Director in the presence of....	)