POST GRADUATE PROGRAM IN MANAGEMENT

(PGPM BATCH 2020-22)

Course: Legal aspect of Business

                                            Group assignment by A5

Faculty- Prof. Parul V. Gupta

   Members:

           A Mohan Sai(20PGPM001)

           Prashant Purohit (20PGPM029)

           Ravi Singh (20PGPM036)

           Riya Sharma (20PGPM041)

           Sagyanrth Mahapatra (20PGPM044)

           Saptarshi Dutta (20PGPM046)

           Sayantani Boral (20PGPM047)

           Sourav Singh (20PGPM054)

           Tosar Hardip Bharatbhai (20PGPM061)

           Vishal Kumar Singh (20PGPM066)

           Vinay Kumar Gupta(20PGPM067)

DRAFT OF FRANCHISE AGREEMENT

BETWEEN:

XYZ Limited a Company incorporated under the Companies Act, 2013, having its

Registered Office at Kolkata, West Bengal, represented herein by its Head of

Business Development, Shri PQR (hereinafter referred to as the ''XYZ Limited '',

which expression shall, whenever the context so requires or admits mean and

include its successors and assigns) of the ONE PART;

AND

M/s ABC Ltd. a Private Firm, having its place of Business at NCR represented

herein by its Owner Shri ABC (hereinafter referred to as the ''AGENT'', which

expression shall, unless the context so requires or admits mean and include its

Owners for the time being, their heirs, legal representatives, executors and permitted

assigns) of the OTHER PART;

WHEREAS XYZ Limited is engaged in the business of marketing Office Furniture

and are the owners of the trade name and trade mark ''XYZ'';

WHEREAS XYZ Limited is desirous of promoting Office Furniture products under

its trade name and trade mark by setting up chain or retail outlets all over the country
on its own a also by appointing franchises for the purpose of setting up of retail

outlets;

WHEREAS the ABC ltd. has offered to set up one such Retail Outlet in the City of

NCR (National Capital Region) and has represented to XYZ Limited that it is in a

position to invest necessary capital and is also possessed of a suitable premise to

set up and carry on the Retail Outlet and XYZ Limited has accepted the said offer;

NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:

That in consideration of the foregoing, the Company hereby appoint M/s ABC Ltd.

as its Agent in the City of NCR upon the following terms and conditions:

1.     The retail outlet for marketing Office Furniture products under the name and

style of ''XYZ'' shall be set up and run in the Premises made available by the Agent,

whose premises is more fully described in the Schedule Premises. The cost of the

premises will be borne by the Agent during the subsistence of this Agreement.

2.     The Agent will meet and bear the entire cost of furnishing and decorating the

interior and exterior of the Schedule-Premises in accordance with the specifications

and requirements of XYZ Limited, particularly touching upon the following aspects --

elevation, décor and interior design, selection and display of furniture, fitting,

counters and stands, lighting system, illumination, window display, air conditioning,

fire fighting equipment, flooring, etc. the cost of which is estimated to be of the order
of Rs 5,00,000/- (Rupees Five Lakh only) He shall also provide necessary

warehousing facilities.

3.     The name of the Shop shall be promptly and clearly displayed as XYZ Ltd;

4.     XYZ Limited will make available from time to time to the Agent Office Furniture

products and  shall be manufactured, sold or dealt in by XYZ Limited (hereinafter

collectively referred to as ''Agent'') and the Agent will take the Stocks on

consignment and sell the same in retail at prices fixed from time to time by the XYZ

Limited. The stocks shall at all times be the property of the XYZ Limited and the

Agent shall only be entrusted the Stocks for the purpose of enabling their retail sale.

5. The Agent at his cost will employ necessary personnel who will follow a uniform

dress code (as per all their outlets) who will man and manage the Retail Outlet to the

entire satisfaction of XYZ Limited.

6. The agent will be required to work full-time selling and promoting XYZ’ products

and fulfilling the present and future needs of XYZ’ customers in his territory, and

expanding XYZ’ client base.

THE AGENT COVENANTS WITH THE COMPANY AS FOLLOWS:

 
1. It shall duly and promptly pay the owner of the Schedule Premises rents and other

charges and keep the lease subsisting and valid and ensure that the Schedule

Premises is always available for running of the Retail Outlet.

2. The agent will have to make a minimum quote of 5% above the previous year’s

sales in his territory and a goal of 15% above that amount.

3. The agent shall perform its operating activities exclusively in the region of NCR.

4. XYZ company will reserve the right to service its two major clients, PQR Printing

Company and EFG Accounting Firm and the agent will not be entitled to get any

commission on those two clients. 

5. That it shall not directly or indirectly or in Partnership or Association, with friends

or relatives, or Companies engaged itself in business, which is same or similar to the

one being carried on by XYZ Limited.

6. That it shall not sell, display or otherwise deal in any goods which are in any way

similar to the goods sold or dealt in by XYZ Limited neither the agent shall involve

itself in any goods which are of XYZ Ltd.’s competitors.

7. That it shall not use the Company’s trade name and/or trademark in any manner

other than that which is permitted by XYZ Limited.

8.  XYZ will reserve the right to bill all of the agent’s customers directly.
9.  XYZ will set the credit limits and the approval terms of credit of the agent’s

customers.

10. That it shall furnish to XYZ Limited at such intervals as they may require certified

stocks statement of the stock of all goods held by the Agent giving full and correct

particulars thereof.

11. That it shall agree to forward all customer leads in the territory to its agent. If XYZ

feels that the agent is not pursuing the leads aggressively enough, XYZ will give

three days’ notice, and, if the agent still doesn’t pursue it aggressively enough, XYZ

will then deal directly with the customer.

12. That it shall not draw, accept or endorse any Bill on behalf of the XYZ Limited or

in any way pledge the credit of XYZ Limited except with the previous written

authorization of XYZ Limited.

13. That it shall be at all times responsible to XYZ Limited for any damage

occasioned to the Stock either on account of the improper or negligent conduct on

the part of the Agent, its servants or agents or for any reason whatsoever and shall

make goods such loss to the XYZ Limited as and when demanded without demur.

14. That it shall furnish an irrevocable Bank Guarantee for a sum of Rs2,50,000

(Rupees Two lakhs Fifty thousand) in favour of XYZ Limited covering the value of the

Stocks held by it on consignment and that the said Bank Guarantee shall be
enhanced from time to time as may be required by XYZ Limited to bring it in

conformity with the value of the Stocks held by the Agent.

15.  That it shall keep proper accounts of all Stocks received, sold, damaged and

furnish to XYZ Limited each week full particulars of the Stocks and shall permit XYZ

Limited, its agents and servants to inspect all Books of Account, Records and

vouchers maintained in the Retail Outlet by it all reasonable times.

16.  That it shall be responsible for any loss or damage sustained to the Stock while

in the custody of the Agent. 

17. That it shall be required to obtain insurance to cover its business operations.

DURATION: The duration of this Agreement shall be for a period of 1 year

commencing from 1st January 2021. On the expiry of this period, the Agreement

may become automatically renewable unless either party gives notice of an election

not to renew at least 30 days prior to termination. On termination of the agreement,

the agent should return all catalogues, price lists, and samples to XYZ Ltd.

This Agreement is however terminable as follows:

a.     by either party giving the other 60 days’ notice in writing 

b.    by XYZ Limited unilaterally without assigning any reasons

                     i.        if the agent is found guilty of misconduct, or

                     ii.        commits a breach of any of the provisions of the Agreement, or

                  iv.        any suit or other proceedings are instituted for its dissolution or 

winding up, or

                     v.        commits any act of bankruptcy,

                    vi.        suffers any execution or distress.

Vii  conviction of a crime

Viii violation of any of the company’s rules or procedures

Ix  failure to meet his quota

  x Acts in infringement of any  intellectual proprietary rights

CONSIDERATION: In consideration of the foregoing, the Agent shall be entitled to a

commission at the rate of 10% of the net sale price realized by it in the Retail Outlet

by sale of the Stocks. The expression net sale price shall mean the selling price of

the Stocks excluding Sales Tax, local taxes and other levies imposed upon the sale

or purchase of the Stocks and/or on the total turnover, packing and forwarding

charges and gift wrapping charges.

The commission shall be payable by XYZ Limited on or before the 10th Day of the

succeeding month for which it is due upon receipt of the monthly statement of sales

and realization of the sale proceeds.

ASSIGNMENT: This Agreement or the benefit there from shall not be

assignable or transferable by the Agent in favour of anyone without prior

written consent of the company.

 
SECURITY DEPOSIT: In order to ensure XYZ Limited the due performance of its

obligations under this Agreement, the Agent has this day deposited a sum of

Rs.2,00,000 (Rupees Twenty Lakhs ) by Pay Order bearing No 1234xxxx dated

19th October 2020 drawn on SBI Bank, Salt Lake Branch, West Bengal, in favour

of XYZ Limited as Security Deposit. The said amount will be refundable upon the

termination of this Agreement, free of interest, in the event of there being no

outstanding claim against the Agent by XYZ Limited. XYZ Limited will however be

entitled to appropriate and adjust and amounts which may be due to it from the

Agent from out of the Security Deposit. If the agent terminates the agreement within

the first 180 days of the contract the security deposit will not be refunded.

JURISDICTION: This Agreement is executed at Delhi and it is hereby agreed that

Court situated in Karkardooma alone will have exclusive jurisdiction over any matter

arising under this Agreement to the execution of Courts situated in any part of the

country.

SCHEDULE

Premises bearing No 52A situated at Plot 201 Karkardooma, measuring and

bounded as follows:

MEASUREMENTS

East to West: 400 ft

 
North to South: 300 ft

Boundaries on all sides of the Premises: 8 ft

IN WITNESS WHEREOF the parties above named have executed these presents in

the presence of the Witnesses attesting hereunder on the dates and place

mentioned herein below:

Place: Delhi

Dated: 20th October 2020

For XYZ Limited,

WITNESSES

1.

2.