Agreement of Franchise—Gold and Jewellery

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.

21. 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.

22. 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.

23. 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.

24. 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 authorised officer of the FRANCHISOR and/or the franchisee, as the case may be.

25. 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.

26. 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.

27. 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.

28. No liability would lie on any of the parties for any breach of the agreement if caused by force majeure circumstances beyond its control.

29. This agreement is not assignable either by the FRANCHISOR or the franchisee without prior written approval.

30. All notices and reports are to be sent at the addresses given herein either by speed post or by telex or by courier service.

31. 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.

32. 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