AGREEMENT OF FRANCHISE—GOLD AND JEWELLERY
This agreement is made
on this 5th day of May 2000
between
AB Limited,
a company registered under the applicable laws of South Africa having its
office at 5 S.F. Road, Transvaal (hereinafter called the
franchisor
which
term shall include its successors and assigns) of the first part and Ashok Jewellers Limited, a company registered under the Companies Act 1956
and carrying on business at 56 Ganesh Chandra Avenue, Calcutta
(hereinafter called the
franchisee
which term shall include its successors
and permitted assigns) of the second part.
Whereas
the
franchisor
is engaged in mining and manufacturing Gold
Jewellery and trading in gold and gold jewellery in Transvaal, South Africa
and has acquired a reputation for supplying high quality ingots and jewellery
under the registered Trade Marks in Transvaal for the last 10 years and
having all the requisite licences and permission from the appropriate
authorities for export and sale thereof through
inter alia
franchisees
in
other countries.
And whereas
the
franchisor
has a paid up capital equivalent to
Rs. 99,000 crores and has assets worth Rs. 10,00,000 crores and has been
making regular profits commensurate to its investment.
And whereas
the
franchisor
has acquired a reputation for its brand
names
transvaal
and
rand
and goodwill for quality of its gold and jewellery.
And whereas
the
franchisee
is a company registered under the Companies
Act 1956 with a paid-up capital of Rs. 10 crores carrying on business as a
Jeweller having the requisite technical and administrative personnel and
turnover of Rs. 20 crores per year with a profit of Rs. 2 crores per year.
And whereas
the
franchisee
has several buildings in good localities
where existing outlets are situate and where other outlets can be obtained
for sale of jewellery.
And whereas
the
franchisee
has inspected the relevant Title Deeds,
Licences, Balance Sheets and other documents of the Franchisor and
satisfied itself about the goodwill, credit-worthiness and ability to keep its commitments, render technical services and maintain good trade relations for mutual benefit.
And whereas
the
franchisor
has made local enquiries about the
franchisee,
inspected its Title Deeds, Licences, Balance Sheets and other
relevant documents and inspected the Works site and had discussions with
the technical personnel and satisfied itself about the competence and ability
of the
franchisee
to promote the sales of the
franchisor's
gold, gold products
and jewellery from the
franchisee's
present outlets and its ability to honour
its commitments as to the payment of Royalty and other obligations including
the improvement and development of the FRANCHISEE company.
And whereas
the
franchisor
has given the lists of
franchisee
in other
countries and in India of the said
franchisor.
And whereas
the
franchisor
has been given list of companies of other
franchisors
for which the
franchisee
is acting in India and the Trade
Marks and service marks under which the
franchisee
is carrying on
business.
And whereas
the
franchisor
has agreed to give the
franchisee
the right
to use the
franchisor's
Trade Marks, service marks, business systems,
operation manual and to impart initial and ongoing training to the standard
necessary to operate the proposed unit successfully and to give access to
the
franchisor's
know-how, technology, development and improvement in
relation to the manufacture and sale of jewellery.
And whereas
the parties have agreed to act in good faith towards each
other and prevent any damage to the interests of the
franchisor
or
franchisee
and continuously work to develop and improve the system of
manufacture and sale of jewellery under the existing Trade Marks or new
Trade Marks or service marks and to protect the reputation and business of
the parties herein.
And whereas
the parties on enquiries made by themselves are satisfied
about the information obtained from each other and nothing has been
suppressed or concealed by any of the parties and they have agreed to enter
into a Franchise Agreement for mutual benefit.
Now THESE
presents
WITNESSETH and the parties hereby agree as follows:
1. This Agreement will remain in force till either party by giving three
month's notice in writing terminates the same.
2.
In consideration of the
franchisee
paying a lump sum of Rs. 2 crores
and agreeing to pay 10% of the
franchisee's
gross turn over of "Rand" gold,
gold products and jewellery the
franchisor
hereby gives to the
franchisee
the licence to manufacture and sell the gold and gold jewellery and other
ornaments under the
franchisor's
Trade name
rand
which Trade Mark is
registered in South Africa. All necessary steps shall be taken by parties herein
to get protection of and protect the said Trade Mark under the Indian law.
3.
The
franchisor
agrees to give practical and theoretical training for six
weeks in South Africa to the staff of the
franchisee
every year. The costs of
travel and accommodation shall be shared equally by the parties herein.
4.
The
franchisor
shall from time to time make available to the
franchisee
technical, administrative and operational know-how free of cost.
The Copyrights in all the manuals and other materials shall remain vested
in the
franchisor.
Such Trade Marks and know-how should be used
exclusively for carrying on the business under the Trade Name
rand
at the
franchisee's
stores and shops and should not be allowed to be used by any
other person.
5.
The
franchisor
shall take necessary steps to protect its trade name
rand
in India by complying with the applicable laws as also of any other
territory where the products may be sold. In the event the
franchisee
comes
to know of any infringement of the Trade Mark or any right of the
franchisor,
the
franchisee
should immediately inform the
franchisor
of the same and
take immediate steps to prevent the continuance of such infringement. In
any legal proceedings the parties herein shall cooperate and should be
agreeable to being impleaded as parties therein.
6.
The
franchisor
shall obtain necessary permission from South African
Governmental authorities for export of gold and jewellery to India on account
of
franchisee
and get the present agreement duly approved by the concerned
authorities.
7.
The
franchisor
shall have the right to send its representatives to
inspect the shops and manufacturing processes of the
franchisee
and suggest
improvements thereon with a view to maximise the sale of gold, gold products
and jewellery under the Trade name
rand.
8.
The
franchisee
shall sell the products of the
franchisor
from the
Franchisee's shops and stores and the
franchisor
shall send its
representatives to make proper arrangement in such shops, stores and
arrange for proper display of the products and the Trade Name.
9.
The
franchisee
should sell the product under the trade name in the
whole of territory in India and will export to any other countries the gold
jewellery and other products under the trade name
rand
as it may think
suitable under the market conditions.
10.
In the event of termination of this agreement howsoever occurring
the licence of the
franchisee
shall immediately cease and the
franchisee
shall perform such acts and execute such documents as would be required
in order to ensure that the sole and exclusive right to use the Trade Marks
remain vested in the
franchisor.
11.
The
franchisee
shall get the present agreement approved by the
Indian Governmental authorities including the Reserve Bank of India for
importation of gold and gold products including jewellery, sale thereof in
India and export outside India.
12.
The
franchisee
shall get necessary permission and approval of the
authorities concerned for import of gold, gold products and jewellery from
South Africa and to use the gold for manufacture of jewellery and other
items under the trade mark
rand
in the local market and also to export the
same to other countries and to remit moneys in terms of the present
agreement to the
franchisor.
13.
The
franchisee
shall have the right to carry on its existing business in
the usual manner as also to import gold, gold products and jewellery from the
Franchisor and manufacture articles and jewellery from the imported gold
under the trade name
rand
and sell the same in India and abroad.
14.
The
franchisee
shall by the first week of every month place an order
for gold, gold products and jewellery on the
franchisor
and the
franchisor
shall arrange to deliver the ordered goods through its representative
personally at the shop of the
franchisee
at the costs and expenses of the
FRANCHISOR.
15.
The FRANCHISEE will sell the gold, gold products and jewellery under
the trade mark
rand
at a price which will get for the
franchisee
a gross
margin of 30% and out of which the Franchisee will pay one-third to the
Franchisor as the fee for the licence. Such payment is in addition to the
costs of the goods sold and delivered to the Franchisee.
16.
To ascertain the exact entitlement of the
franchisor,
namely, 10% of
the total turnover of the goods sold under the brand name
rand
the
franchisor's
representative will have the right to inspect and take copies
of the accounts maintained by the Franchisee.
17.
The
franchisee
shall make payment of the price of the goods delivered
within 24 hours and will make payment of licence fee up to 10% of the
turnover by the first week of a month in respect of sales during the preceding
month. The
franchisee
shall pay and bear all expenses incurred in India in
connection with the present agreement entered into and the
franchisor
will pay and bear all the expenses that may be incurred in South Africa.
18.
The
franchisee
shall not do anything which will cause injury to the
trade name or reputation of the
franchisor
and that the
franchisee
agrees
to indemnify and keep the
franchisor
indemnified against all liabilities,
claims, damages or injury of every description which may occur or affect
the
franchisor
from any failure by the
franchisee
to perform its obligations
under this agreement or from any act or omission whatsoever on the part of
the
franchisee
or its servants or agents.
19.
In the event the
franchisee
finds the goods delivered are not according
to the standard specifications the
franchisee
shall immediately report the
same with particulars of defects and the
franchisor
shall give appropriate
credit to the
franchisee
for such defective goods.
20.
Upon termination of this agreement, the
franchisee
will be entitled
to sell the existing stocks under the brand name
rand
or otherwise and that
the
franchisor
shall take no responsibility of taking back the goods or pay
for it.
It is agreed and declared that both the
franchisor
and the
franchisee
shall comply with all laws rules and regulations governing the transactions
covered by the present agreement and that this agreement is entered into
subject to obtaining the necessary approval of the authorities concerned.
21.
If any term or any provision of the present agreement is declared by
the court or by any governmental authority to be in conflict with the laws or
any term is unenforceable that will not affect the validity and enforceability
of the remainder of this agreement and in that event the offending part shall
be deemed not to be part of this agreement and the resulting consequential
amendment shall be deemed to have been incorporated therein.
22.
This agreement shall not constitute the
franchisee
as the agent of
the FRANCHISOR or a Partner or a representative or
vice versa
and that no
act of the
franchisor
will affect the
franchisee
and no act of
franchisee
shall affect the
franchisor.
23.
No forbearance, delay or indulgence by either party in confirming
any of the terms and conditions of this agreement shall prejudice its rights
and remedies under this agreement or under the laws of their respective
countries nor shall any waiver or any breach of any of the terms hereof
shall operate as a waiver of any subsequent breach of the agreement. Any
waiver or variation of any of the terms or conditions of the agreement shall
not be valid unless the same is in writing and signed by the
authorized
officer of the
franchisor
and/or the
franchisee,
as the case may be.
24.
Neither party shall disclose to any third party any information as to
the methods of manufacture, operation, publicity, financial plans, present
or future plans or the policy of the other which information is not in public
domain and is not compulsorily disclosable under any Statute.
25.
The
franchisor
and the
franchisee
shall take necessary steps for
registration of the agreement in their respective countries for continuance
and validity of the agreement and each one will bear the costs therefor as
also all rates, taxes, cesses, levies and other impositions in their respective
countries.
26.
Both the
franchisor
and the
franchisee
shall jointly act whenever
necessary to obtain any permission from the governmental or other
authorities in connection with the business under the agreement including
payment of the licence fees, registration charges and expenses to be incurred
by the representatives of the
franchisor
residing in India or the
franchisee
residing in South Africa.
27.
No liability would lie on any of the parties for any breach of the
agreement if caused by force majeure circumstances beyond its control.
28.
his agreement is not assignable either by the
franchisor
or the
franchisee
without prior written approval.
29.
All notices and reports are to be sent at the addresses given herein
either by speed post or by telex or by courier service.
30.
This agreement shall be governed by and construed in accordance
with the Indian law and both parties agree to submit to the jurisdiction of
Indian Courts.
31.
All payments and transactions are to be expressed in Indian Rupees
having no connection with the exchange rate of South Africa or any other
Currency.
In witness whereof
the parties herein have executed
these presents
on
the day, month and year first above-written.
Signed, sealed and delivered by
Mr.
Director
pursuant to Board Resolution
dated
of AB Ltd. in
Calcutta in presence of:
Signature
Signed, sealed and delivered by
Mr.
Director
pursuant to the Board Resolution
dated
of Ashok
Jewellers Ltd. in presence of:
Signature