IDdesigns franchisekontrakt mv

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The Trade Mark and logo(s): As described in Schedule III.

The Method: The IDdesign operational systems and methods derived from IDEmøbler; Denmark.

The Permitted Name: The name under which the Franchisee is permitted to operate the

"Business" in the Territory, which is "IDdesign".

The Manual: Any manual that the Franchisor may at any time produce as a standard operating manual as updated from time to time.

The Term: Five (5) years starting on the Commencement Date and ending on the Expiry Date, 15

^th

September 2013, renewable for an additional 5 year period under the same terms unless defaulted by either party.

The Royalty Fees: Franchise fees to be paid by the Franchisee in accordance with Schedule II to this Agreement

2. Recitals

2.1 The Franchisor operates through franchised outlets under the Trade Name a business of 800 Concept and 2000 Concept retail stores sales of furniture and accessories according to the Method.

2.2 The Franchisor is a licensee of the Trade Mark and the Trade Name, and also the licensee of the Copyright and Designs comprised in the Intellectual property.

2.3 The Franchisor is the proprietor of the Copyright and Design copyright in the plans and designs for the buildings, fixtures, fittings, including colour schemes pattern of furnishing and the like, used in the Method.

2.4 The Franchisee wishes to operate the Business within the Territory.

IN WITNESS WHEREOF, the Franchisee and the Franchisor in consideration of the mutual covenants set forth herein, the parties hereby agree to the following terms and conditions:

3. Definitions.

The definitons of certain terms included in this Agreement are all included in Schedule I to this Agreement.

4. Grant.

4.1 In consideration of the payment of the Initial Fee and the Royalty Fees by the Franchisee

to the Franchisor on the Payment Dates and of and subject to the agreements on the part

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of the Franchisee in this Agreement, the Franchisor grants to the Franchisee the exclusive right to carry on the Business;

4.1:1 at and from the Locations, 4.1:2 within the Territory, 4.1:3 for the Term,

4.1:4 under the Permitted Name, 4.1:5 in accordance with the Method, 4.1:6 and through the Operating Company.

4.2 The Franchisor reserves power:

4.2:1 to decline to accept any order from or through the Franchisee if Default Notice has been served in accordance with clause 9.3 in this Agreement, or the terms for such orders as expressed in the Manual are not met,

4.2:2 to vary the specification and the price of the Products,

4.2:3 to vary the range of Products either by the withdrawal of Products which the Franchisor proposes to withdraw from its product range or by the addition to that product range by the Franchisor of further Products.

5. No competition.

5.1 In the consideration of the grant of the franchise under clause 4., the Franchisee confirms that:

5.1:1 Neither during the Term nor for 12 months following the termination or expiration of this Agreement shall Franchisee engage in a business which directly competes with the Business in the Territory.

5.1:2 Not during the Term, to be engaged, directly or indirectly in any business, which competes directly with the business of a duly licensed franchisee of Franchisor.

5.1:3 During the Term nor for a period of 12 months following the termination or expiration of this Agreement the Franchisee shall not employ or offer to employ or induce a person to leave the employ of Franchisor or a duly licensed franchisee of Franchisor, without the written consent of either of the latter parties.

6. Franchisor's obligations.

The Franchisor agrees with the Franchisee throughout the Term:

6.1 To permit the Franchisee to carry on the Business.

To permit the Franchisee to :

6.1:1 operate the Business under the Permitted Name or such other names or styles as may be specified or approved in writing by the Franchisor,

6.1:2 promote the Business in accordance with the terms of this Agreement at the expense

of the Franchisee.

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6.2 Not to derogate.

Not to derogate from the Grant and in particular not itself to operate nor to grant any other person the right to operate a business using any part of the Intellectual Property and other insignia and identifying materials, methods of advertising and publicity forming part of the Method in the Territory and not itself to supply the Products to third parties operating under the Method during the term of this agreement and any future extensions of the term of this agreement.

6.3 Manual and update.

6.3:1 The franchisor may sometime in the future, at the sole option of the Franchisor, introduce an operating manual for the Business and the running thereof, the Manual, containing mandatory and suggested specifications, standards, and operating procedures prescribed from time to time by the Franchisor for the Business, the Method and the running thereof, and information relative to other obligations of the Franchisee hereunder and the operation of the franchise business. The Franchisor may lend to the Franchisee for the Term of the Franchise one or more copies of such operating manual, the Manual,

6.3:2 The Franchisor shall have the right to add to and otherwise modify such operating manual, the Manual, from time to time to reflect changes in authorized Products and Services, standards of product quality, or service or the operation of the franchise business, provided that no such addition or modification shall alter the Franchisees fundamental status or rights under this agreement nor impose additional substantial burdensome obligations or costs on the Franchisee. The operating manual, the Manual, contains Proprietary information of the Franchisor and the Franchisee agrees to keep the operating manual confidential at all times during and after the term of the Franchise from any Third Party.

6.3:3 All the provisions of the Manual (as amended or revised from time to time) or any new edition of it are incorporated into and form part of this Agreement as though fully set forth in it, but in the event of any conflict between a term of this Agreement and a provision in the Manual, this Agreement shall prevail.

6.3:4 The Franchisee agrees with the Franchisor throughout the Term: To conform in all respects and at all times with the Method (as modified from time to time by alteration of such Manual).

6.4 Initial training.

6.4:1 To provide , if so requested by the Franchisee, within 60 days prior to the Opening Date at a place chosen by the Franchisor training in the Method during a period of not less than 14 days for the Franchisee, costs in connection herewith to be borne by the franchisee.

6.4:2 To discuss with the Franchisee the performance of all such persons during such training.

6.5 Improvements to the Method.

6.5:1 To improve and develop the Method and

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6.5:2 to provide such further training at the request and expense of the Franchisee to the Franchisor and other persons engaged in the conduct of the Business as may from time to time appear to the Franchisor to be necessary in the light of such improvements or developments at reasonable fees based upon the length of and the number of employees of the Franchisor engaged in such further training.

6.6 Equipment.

To supply to the Franchisee in due time for the commencement of the Business any equipment and other items offered by the Franchisor.

6.7 Annual conference for franchisees.

At the sole option of Franchisor to organise and hold at its own cost once annually at the office of the Franchisor or at a place convenient to the majority of the franchisees a conference of franchisees to discuss the Method (including possible improvements in the Method) and the Business.

6.8 Consultation

6.8:1 In accordance with any request by the Franchisee, at costs to be borne by the Franchisee, to consult with the Franchisee, and to give to the Franchisee the benefit of its knowledge and experience in connection with any problems relating to the Method,

6.8:2 to make available (as promptly as is reasonably practicable) members of the Franchisor's staff competent to give such advice or assistance as may be possible or necessary to give at the request of or in response to the incapacity or death of the franchisee or the key director of the franchisee, the Franchisee paying the standard per diem charge of the Franchisor for such staff.

6.9 Procuring supplies etc.

6.9:1 To assist the Franchisee in procuring such supplies, services and equipment in addition to those supplied by the Franchisor as may be required by the Franchisee to commence and operate the Business and,

6.9:2 as far as possible to negotiate and obtain from suppliers discount rates for furnishing such supplies for the benefit of the Franchisee as regards its own purchases.

6.10 Support and information.

To support the Franchisee in its efforts to promote the Business, at the expense of the Franchisee, 6.10:1 to supply samples of the Products at listed cost prices

6.10:2 to provide and promptly update information about the Products.

6.11 Delivery of Products

Subject to availability to supply to the Franchisee in the Territory the Products which:

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6.11:1 are of merchantable quality, but without quarantee for sole-distribution or marketing rights

in the Territory 6.11:2 conform to sample

6.11:3 are at prices notified to the Franchisee by the Franchisor at regular intervals of time and at the same terms as those offered Franchisor’s other franchisees.

6.11:4 are delivered with all reasonable dispatch

6.11:5 are in accordance with the actual business terms of the Franchisor in force provided that the franchisee shall remain within the Credit Limit as comprised by the terms of payment or other payment terms hereof, or in accordance with 7.12:2.

6.12 Maintenance of Intellectual Prope rty

To maintain the Intellectual Property during the Term and not to cause or permit anything which may damage or endanger it or the Franchisor's title to it or assist or suffer others to do so.

6.13 Extension of Term

To extend the Term at the option of the Franchisee for one further period of five (5) years commencing on the day following the expiration of the Term provided that the Fra nchisee:

6.13:1 has achieved the Minimum Performance throughout the Term,

6.13:2 has properly observed and performed his obligations under this Agreement and the lease of the Location throughout the Term,

6.13:3 accepts that the terms of this Agreement shall apply to any extension of the Term under this clause or as mutually agreed between the Franchisee and the Franchisor, executing a new agreement at the expiry of the Term,

6.13:4 re-equips the Business with such new or improved equipment as forms part of the Minimum Package at the expiry of the Term.

6.14 Credit Limit.

Subject to the performance by the Franchisee of all its obligations to allow the Franchisee credit up to and in accordance with the provisions of the Credit Limit and the Terms of payment, as included in clause 7.12 of this Agreement and Schedule V.

6.15 Supply of services

To supply the Services stipulated in this Agreement.

6.16 Exclusive territory

Not itself to operate nor to grant any other person the right to operate a business using any part of

the Intellectual Property and other insignia and identifying materials, methods of advertising and

publicity-forming part of the Method in the Territory during the Term of this agreement and any

future extensions of the Term of this agreement.

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7. Franchisee's obligations.

The Franchisee agrees with the Franchisor throughout the Term:

7.1 Commence ment conditional on training

Not to commence the Business until the Franchisee or Show Room Manager of the Franchisee who will be responsible for the management of the Business has undergone the course of training provided by the Franchisor under clause 6.5 and been approved as competent by the Franchisor.

7.2 No untrained personnel.

Not to permit any person to act, manage or assist in the Business in the place of persons trained in accordance with clause 7.1 unless and until such person has undergone a course of training by the Franchisor and been approved as competent by the Franchisor.

7.3 Further training.

To procure that the Franchisee

or

the senior director of the Franchisee and the other persons mentioned in clause 7.1 and 7.2 shall attend such further periods of training as may from time to time reasonably be required by the Franchisor at the expense of the Franchisee.

7.4 Training expenses.

To pay the travel and subsistence expenses of the Franchisee

or

the senior director and of its employees and the salaries of any of those employees incurred during such training together with the Fees charged by the Franchisor for such training from time to time.

7.5 Engagement of staff.

Not later than 60 days prior to the commencement of the Business at the Location to engage all staff and other persons required for the commencement and operation of the Business in accordance with the recruitment criteria set out in the Manual.

7.6 Training of staff

7.6:1 To ensure that its staff and their replacements and all persons required under the terms of this Agreement to undergo training in the Method and modifications to and improvements in the Method, do so, and

7.6:2 If and whenever required by the Franchisor to procure that they attend for the specified period at the place selected by the Franchisor for such purpose.

7.6:3 To pay the travel and subsistence expenses involved of the Franchisee or the senior director

and of its employees and the salaries of any of its employees incurred during such training

together with fees charged by the Franchisor for such training from time to time.

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7.6:4 To hold regular training and assessment sessions at the Location for all the employees of the

Franchisee to ensure their competence in their allotted duties.

7.7 Conformity with the Method and other businesses.

7.7:1 To conform in all respects and at all times with the Method (as modified from time to time by alteration of the Manual).

7.7:2 Not to do or suffer to be done anything additional to or not in accordance with the Method without the previous consent in writing of the Franchisor.

7.7:3 To ensure that the Business substantially conforms with other comparable ID Design businesses operated in accordance with the Method in particular with regard to quality service. Franchisor will keep Franchisee informed of new developments from time to time.

(The Franchisee acknowledges that such conformity is of the utmost importance to the successful operation of the Business and other businesses operated in accordance with the Method and the protection of the goodwill attaching to the Trade Name and Method).

7.7:4 To adopt all changes in the Method as soon as required by the Franchisor or as soon as within 90 days after receipt of notification of such changes.

7.8 Minimum opening hours.

To open for the conduct of the Business for the hours and at the times in accordance with good business practices and trade customs in the territory.

7.9 Promotion of the Business.

7.9:1 Diligently to promote and make every effort steadily to increase the Business by such advertisements, signs, entries in telephone or trade directories, or other forms of publicity as may be approved by the Franchisor as provided by this Agreement and by distributing to customers and potential customers in the most effective manner point-of-service advertising material provided by the Franchisor.

7.9:2 To expend not less than 5% of the Gross Turnover of the Business between each Accounting Reference Date in such promotion for the first year of operation and not less than 3% in the following 4 years of the Term. The results of the first Term will be reviewed and the expenditure will be adjusted in accordance to the sales results of the first Term, including the cost of catalogues and brochures.

7.10 Promotion of the Method.

To use every reasonable means in the conduct of the Business to promote the Method and to co-operate with the Franchisor and other franchisees of the Franchisor in promoting and developing it.

7.11 Diligence.

At all times to work diligently to protect and promote the interests of the Franchisor.

7.12 Payments.

7.12:1 To pay to the Franchisor without demand, deduction or set-off on the relevant Payment

Dates;

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7.12:1.1 The Initial Fee, which fee shall cover:

7.12:1.1.1 Initial training.

7.12:1.1.2 Supply of services, supervision and other matters of this nature specified in Schedule V.

7.12:1.2 The Royalty Fees.

7.12:1.3 All invoices from Franchisor at due date.

7.12:2 Regarding the counter value of the ordered goods will be paid six ( 6 ) days in advance into the Franchisor´s account – calculated from the agreed shipping date, on the basis of a proforma-invoice. The Franchisee will send a copy of the transfer order to the Franchisor by fax or by email.

7.13 No competing products and purchasing of Products.

7.13:1 Not to manufacture, sell or use, in the course of the provision of services, goods directly competing with the Products of IDdesign except to supply other business operated by Franchisee and approved by Franchisor as non competitive as decribed in Clause 5.1, but nothing in this Clause shall be construed as extending this restriction to spare parts and accessories;

7.13:2 to purchase from Franchisor the Products and any other products subsequently manufactured or sold by Franchisor or related company and listed from time to time in the computer product list;.

7.13:3 To sell or use in the course of the provision of the Services only the Products or such products, which by written statement from the Franchisor have been approved to be purchased from other sources.

7.14 Restriction on active sales.

Not to seek Customers for the Products in the Territories of Franchisors other franchisees regarding the Method.

7.15 No change of location.

Not without the Franchisor's consent to change the location of the Business.

7.16 Inte rests in competitors.

Not to acquire any financial interest in the capital of a directly competing undertaking as described in Clause 5.1, which would give the Franchisee power to influence the economic conduct of such undertaking.

7.17 Custome r restrictions.

To sell the Products only to end-users, to other Franchisees of the Franchisor and to resellers within

other channels of distribution supplied by the Franchisor or by others with its consent. Wholesales

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are not allowed, whereas project and/or projectsales through resellers are allowed. The Franchisor allowes the Franchisee, to sell withdrawm products and claim items, outsides the Business territory.

Defenition of this outside business is restricted to the Vivax showroom in Debrecen and Miskolc.

7.18 Good faith.

In all matters to act loyally and faithfully toward the Franchisor.

7.19 Compliance.

7.19:1 To follow the Franchisor's instructions and in the absence of any such instructions in relation to any particular matter, to act in such a manner as the Franchisee judge reasonably to be within the Method and any Manual.

7.19:2 To conduct the Business in an orderly and businesslike manner.

7.20 Disclosure.

On entering into this or any other agreement or transaction with the Franchisor during the Term or any continuation of it to make full disclosure of all material circumstanc es and of everything known to in respect of the subject matter of the contract.

7.21 Pass on information.

7.21:1 Without prejudice to the Franchisee's right to supply such customers promptly to refer to the Franchisors other franchisees regarding the Method any inquiries from prospective customers or other leads in said other franchisees Territory.

7.21:2 To supply to the Franchisors other franchisees regarding the Method information which may come into its possession which may assist said franchisees to effect sales or other dealings for the Business or in the Products in said other franchisees Territory.

7.22 Registered user.

Where required by the Franchisee to join with the Franchisor in making application to become the registered user of any part of the Intellectual Property.

7.23 Protection of Intellectual Property.

7.23:1

7.23:1.1 Not to cause or permit anything, which may damage or endanger the Intellectual Property or other intellectual property of the Franchisor or the Franchisor's title to it or assist or consent others to do so.

7.23:1.2 To notify the Franchisor of any suspected infringement of the Intellectual

Property or other intellectual property of the Franchisor.

In document Franchising in the Middle East (Sider 82-118)