Exhibit 10-J
ACE HARDWARE CORPORATION INTERNATIONAL FRANCHISE AGREEMENT
This Agreement is made and entered into by and between ACE HARDWARE
CORPORATION, a Delaware corporation, having its general offices at
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇. (hereinafter
referred to as "Company"), and:
___________________________________________________________________________
[Corporate or Partnership Name]
an independent merchant having its general offices at:
___________________________________________________________________________
[Corporate or Partnership Address]
(hereinafter referred to as "Franchisee") which operates a retail business
outside the United States of America, its territories or possessions, at
the location(s) set forth in the attached Exhibit A;
WITNESSETH:
In consideration of the respective undertakings and covenants herein
contained, Company and Franchisee agree as follows:
1. In consideration of the franchise granted herein, Franchisee shall
pay to Company a non-refundable license fee in United States Dollars
of $25,000.00 upon execution of this Agreement for the first
franchised store opened by Franchisee and $15,000 upon the opening of
each additional franchised store opened by Franchisee. Company
agrees to: (i) waive its store planning fees for Franchisee's first
store; (ii) waive Ace Retail Management Institute fees for the two
(2) of Franchisee's employees; (iii) provide the assistance of a
Company representative to write the opening stock order for
Franchisee's first store (iv) provide one (1) set of plan-o-gram
manuals; and (v) assist in the preparation of a paint maket study and
conduct ACE paint marketing training.
2. As of the date of acceptance by Company hereof, Company grants to
Franchisee, upon and subject to the terms and conditions set forth
herein, the right to purchase from Company for resale at retail only
from Franchisee retail location(s) set forth on Exhibit A, such
merchandise as Company regularly offers for sale, including merchandise
under private labels containing the name "ACE" or "ACE Hardware". The
minimum volume of merchandise that must be purchased by Franchisee from
Company hereunder shall be, exclusive of all handling charges, U.S.
$200,000 during the first year of this Agreement, $350,000 during the
second year of this Agreement, and $500,000 during the third year of
this Agreement and each year thereafter, based upon the anniversary date
of this Agreement.
3. Franchisee shall pay to Company a Royalty Fee (" Royalty Fee") in an
amount equal to one and one-half percent (1.5%) of the Gross Retail
Revenues generated from the sale of home improvement products, tools,
hardware, paint and related merchandise and products, from whatever
source, provided to customers of the ACE Stores operated by
Franchisee in the Territory ("Gross Retail Revenues"). For the
purposes of this paragraph, the term "Gross Retail Revenues" shall
exclude all sales and value added taxes actually collected by
Franchisee from customers and paid to any government authority in
the Territory, which shall be the sole responsibility of Franchisee,
and any customer refund and credits. All Royalty Fees shall be due
and payable to Company, in United States Dollars, thirty (30) days
after the end of each calendar quarter for the calendar quarter just
ended. In the event that payment of the above fees in United States
Dollars is not possible by application of law, Franchisee shall be
entitled to make payment in its local currency at the currency
exchange rate reported in the Wall Street Journal, on the date the
payment is transmitted, provided, however, that if the payment is
transmitted after the date on which payment is due, the currency
exchange rate used shall be the rate as of the day payment is
transmitted or the date payment was due, whichever rate produces the
larger amount in United States Dollars.
4. Franchisee agrees to pay all amounts shown as currently due on
Company's billing statements for purchases of merchandise, supplies
and services made by Franchisee with such promptness as shall enable
Company to receive payment no later than the 10th day following the
date of the statement (it being understood that all invoices for
merchandise purchased on extended payment terms become currently due
when other items billed are not paid when due), and pay a service
charge per bi-weekly billing statement on any past due balance in
such amount as Company may, from time to time, impose on its dealers
generally. All amounts becoming payable by Franchisee pursuant to
Company's billing statements shall be payable in United States
currency. Licensee also agrees to reimburse Company for any and all
reasonable out-of-pocket expenses including, travel (at the business
class rate), lodging and tax, meals, and laundry costs incurred by
Company's employees in the performance of Company's obligations
hereunder.
5. Franchisee shall provide Company with a standby irrevocable letter of
credit, issued or confirmed by a United States bank approved by
Company, or with such other instruments or collateral as Company
shall deem to be appropriate in order to secure the prompt payment of
the indebtedness to it incurred by Franchisee from time to time.
6. All orders for merchandise, supplies and services placed by
Franchisee shall be subject to acceptance or nonacceptance by Company
at its corporate headquarters, now located in Oak Brook, Illinois,
U.S.A. Company shall cause all items ordered by Franchisee to be
shipped to International Retail Merchant's designated receiving
terminal in the United States for shipment by Franchisee only to
Franchisee location listed hereinabove. Title to all such
merchandise and supplies shipped to Franchisee shall pass to
Franchisee upon delivery to such receiving terminal. Franchisee
shall be responsible for and agrees to pay to Company all costs and
charges related to the delivery of such items to said terminal.
7. Franchisee shall be solely responsible for and shall pay when due all
import or export permit fees, customs duties and taxes of any nature
imposed upon the sales made by Company to Franchisee by the United
States Government or the government of the Country in which
International Retail Merchant's place of business is located.
Franchisee shall fully indemnify Company for the amount of any such
fees, duties and taxes, together with any interest or penalties
thereon, which Company may be required to pay as a result of
International Retail Merchant's failure to do so.
8. At its sole discretion and notwithstanding the provisions of
Paragraph 2 above, Company may limit, or restrict the quantities or
types of merchandise sold to Franchisee hereunder.
9. International Retail Merchant's rights hereunder shall be non-
exclusive, and Company reserves the right to sell in International
Retail Merchant's Country and elsewhere such products as Company may,
in its sole discretion, elect to sell, either directly or through any
other distributors or dealers selected or appointed at any time by
Company. Franchisee shall not be entitled to any compensation from
Company by reason of, or with respect to sales made directly by
Company or through any other distributor or dealer of Company.
10. Nothing herein shall be deemed in any way to limit the right of
Franchisee to determine the prices or terms at which products
purchased through Company shall be resold by Franchisee. It is
expressly understood that Franchisee may resell such products at any
prices determined by Franchisee, whether greater or lesser than any
prices listed or suggested by Company.
11. Franchisee hereby agrees to comply with any and all laws, regulations
and governmental orders of the United States of America, the several
States, or the Country in which International Retail Merchant's
business is located, which may be applicable to the sale and
distribution of the products purchased by Franchisee from Company, or
to the conduct of International Retail Merchant's business
operations, as the case may be. Franchisee agrees to order only such
merchandise as may lawfully be resold without alterations in labeling
or otherwise in the Country in which International Retail Merchant's
business is located, and agrees to indemnify Company and hold it
harmless from and against any and all claims, suits, proceedings,
demands, actions, judgments, orders, fines or penalties arising in
connection with the actual or alleged failure of such merchandise to
comply with any laws, regulations or governmental requirements
applicable to the sale or resale thereof.
12. Company shall supply Franchisee with such quantities of sales aids as
Company, in its sole discretion, deems necessary or desirable. All
such sales aids shall be in the English language. All copyrights
which may be issued or applied for with respect to such sales aids,
or any translations thereof, shall be issued or applied for in the
name of Company, and shall be the sole property of Company.
13. Franchisee shall not have authority to represent Company in
International Retail Merchant's Country or elsewhere as an agent, nor
to bind Company to any contract, representation, understanding, act
or deed concerning Company or any products sold by it. Neither the
making of this Agreement, nor the performance of any part of the
provisions hereof shall be construed to constitute Franchisee as an
agent or representative of Company for any purpose, nor shall this
Agreement be deemed to establish a joint venture or partnership
between the parties. All sales of merchandise by Franchisee shall be
for its own account, it being understood that Franchisee is an
independent business reselling products which are purchased from
Company.
14. Franchisee agrees to return no merchandise to Company without the
written consent of Company first being obtained.
15. (a) Company hereby grants to Franchisee a non-exclusive
license to use the service marks "ACE" and "ACE HARDWARE"
(hereinafter "the ▇▇▇▇") in connection with the retail hardware
services offered and performed by Franchisee at the location(s)
set forth on Exhibit A only, and in connection with private
label merchandise purchased from Company for resale from the
said location(s). Such use of the ▇▇▇▇ by Franchisee shall
commence within one (1) year of the effective date of this
Agreement by displaying a Company exterior store identification
sign in compliance with the requirements set forth in the
Company Identity Standards Manual.
(b) Company does not guarantee, warrant or offer any patent or
trademark protection to Franchisee on any of the products
purchased by Franchisee from Company, and Company shall not be
obligated or liable in any way to indemnify Franchisee for any
actual or alleged violations of patent or patent rights, or
trademark, service ▇▇▇▇, trade name or other intellectual
property rights arising from or in connection with the sale or
use of any products, programs or services purchased from
Company by Franchisee or the exercise of any rights granted
hereunder.
(c) Franchisee agrees to use the ▇▇▇▇ only in the form, manner, and
logotype previously approved by Company in writing and to
comply with all guidelines and instructions from time to time
issued by Company with respect thereto. All use of the ▇▇▇▇
shall clearly and conspicuously disclose that the ▇▇▇▇ is owned
by, or used under license from Company.
(d) The quality of the services in connection with which the ▇▇▇▇
is used shall be of high quality as determined by Company, and
otherwise in accordance with such specifications as Company
may, from time to time, prescribe.
(e) In no event shall the license herein granted be construed as
authorizing Franchisee to use any marks, trade names, slogans
or logos of Company other than as specifically licensed
hereunder. Franchisee agrees that it shall not place or cause
to be placed the names "ACE" or "ACE Hardware" on any
merchandise without the Company's prior written consent.
(f) Franchisee agrees not to adapt or vary the ▇▇▇▇ or create or
use any trademark, service marks, trade names, symbols or logos
that are confusingly similar to those owned by Company, whether
or not licensed hereunder. Franchisee also agrees to at no
time use the ▇▇▇▇ in association or conjunction with any trade
name, trademark or service ▇▇▇▇ owned or registered by a
competitor of Company.
(g) Company expressly disclaims any and all liability to Franchisee
or to any third party and Franchisee agrees to indemnify and to
hold Company harmless from and against any claims, suits,
losses, damages or expenses with respect to any actual or
alleged invalidity of the ▇▇▇▇ or in connection with
International Retail Merchant's use of the ▇▇▇▇, or the use of
the services furnished by Franchisee in connection therewith.
(h) Franchisee acknowledges Company's ownership of the ▇▇▇▇, and
agrees that it will not do or permit any act to be done which
may impair such ownership. Franchisee agrees that all use of
the ▇▇▇▇ by it shall inure to the benefit of, and be on behalf
of, Company. Franchisee agrees that it will never in any
manner represent that it has an ownership interest in the ▇▇▇▇,
or contest the ownership of the ▇▇▇▇ by Company, or attack the
validity of the license herein granted. Franchisee agrees to
execute, upon request, such documents as Company may deem
necessary or desirable to acknowledge Company's ownership of
the ▇▇▇▇, or to register, retain, enforce or defend the ▇▇▇▇.
(i) Franchisee agrees to notify Company of any unauthorized use of
the ▇▇▇▇ by others, as promptly as such use may come to
International Retail Merchant's attention. Company shall have
the sole and exclusive right, but not the obligation, to
register or renew the ▇▇▇▇ or to commence infringement,
opposition or other proceedings with respect thereto.
(j) Franchisee agrees at no time to adopt or use, or authorize,
permit or condone the use by any other person or firm, of any
name, word or ▇▇▇▇ which is similar to or likely to be confused
with, any trade name, trademark or service ▇▇▇▇ belonging to or
registered by Company, whether or not licensed hereunder, (it
being understood and agreed that all variations or adaptations
of any trademarks or service marks owned or registered by
Company shall be the exclusive property of Company and that
Company shall have the exclusive right to register the same and
to license the use thereof).
16. Franchisee agrees to keep in strict confidence all checklists,
microfiche films, videograms, bulletins, catalogs, price lists, order
forms and other documents and information furnished by Company with
respect to the merchandise, programs and services which are available
from Company, and at no time to divulge or display any of the
foregoing, other than in connection with International Retail
Merchant's transactions with Company or for the purpose of promoting
International Retail Merchant's business. Franchisee agrees to
comply with all policy statements and guidelines communicated from
time to time by Company with respect to any confidential information
belonging to Company and at no time to authorize, permit or condone
the use of any of the foregoing by any other person or firm.
17. Upon the termination hereof, Franchisee agrees to immediately return
to Company at International Retail Merchant's sole expense, all such
documents and items and any equipment related thereto which have been
provided by Company. Franchisee further agrees, upon the termination
hereof, to immediately cease and desist from all use of the ▇▇▇▇ in
any way, to apply to the appropriate governmental authorities in the
Country to cancel the recording, if any, of this Agreement, to remove
all signage bearing the ▇▇▇▇, and to destroy all printed or visual
materials of any sort bearing the ▇▇▇▇.
18. Franchisee agrees to refrain from making any representation that a
product purchased from Company can be used for a purpose or in a
manner not intended by its manufacturer, and Franchisee assumes full
responsibility for, and hereby indemnifies Company and holds it
harmless from and against any and all claims asserted against Company
(a) which are based upon or arise out of any such representation or
(b) which are based upon or arise out of any act performed by
Franchisee to assist International Retail Merchant's customer in
using a product purchased from Company, or to alter, install, repair
or service any product purchased by Franchisee from Company.
19. Franchisee further agrees to indemnify Company and hold it harmless
from and against any and all claims for (a) charges asserted against
Company by another party for services provided by such party to
Franchisee or for merchandise shipped by another party at
International Retail Merchant's request and (b) damages demanded from
Company in connection with any occurrence concerning which it is
alleged that Franchisee functioned as an agent of the Company.
20. Franchisee further agrees to indemnify Company and hold it harmless
for the amount of all attorneys' fees and expenses reasonably
incurred by it in:
(a) enforcing compliance by Franchisee with the provisions of this
Agreement or enforcing collection of any past due balances
owing by Franchisee on Company's billing statements,
(b) defending any claims asserted against Company which are based
upon or arise out of any occurrence of the types described in
Paragraphs 13, 18, 19, 20 and 21 hereof or in attempting to
avoid or mitigate any losses to Company in connection
therewith, and
(c) in protecting any security interest of Company granted in any
property of Franchisee in the event that Franchisee becomes a
debtor in bankruptcy or insolvency proceedings.
21. Franchisee agrees to notify Company in writing:
(a) prior to or concurrently with the effective date thereof, as to
any change in the legal form of ownership of Franchisee (such
as, for example, a change from individual or partnership form
to corporate form, or vice versa), it being understood that no
such change will operate to release from liability to Company
any party previously responsible for International Retail
Merchant's obligations hereunder without the written consent of
Company,
(b) as promptly as feasible, as to the death of any partner having
an interest in any partnership by which Franchisee is owned or
the death of any stockholder owning 50% or more of the voting
stock of Franchisee if Franchisee is incorporated, or
(c) not less then 30 days prior to the closing of the transaction,
as to the name and address of each proposed buyer or transferee
in any proposed sale, assignment or transfer of 50% or more of
the ownership interest(s) of Franchisee or of the business
operated at the location of International Retail Merchant's
business indicated hereinabove or of all of the capital stock
(both voting and non-voting) owned by the holder(s) in a
corporation owning the business operated at such location if
50% or more of the outstanding voting stock of such corporation
is owned by such holder(s).
22. Franchisee agrees to furnish Company with annual financial statement
of its year end and such current financial statements and related
information, including purchase and sales figures, concerning
International Retail Merchant's business on a quarterly basis or as
shall reasonably be requested from time to time by Company in order
to confirm Franchisee's compliance with the terms of this Agreement.
23. If requested at any time by Company, Franchisee shall maintain at
International Retail Merchant's sole expense with an insurance
carrier or carriers approved by Company a policy or policies of
liability insurance with a coverage limit of not less than
U.S.$5,000,000.00 per occurrence with respect to any claims for
damages to property, personal injuries or wrongful death which are
based upon or arise out of any occurrence concerning which it is
alleged that Franchisee functioned as an agent of Company, or that
Franchisee, Company, or either of them is otherwise liable therefor,
except for claims based on or arising out of the sole negligence of
Company. Company shall be named as an additional insured party in
each such policy and Company shall be furnished with a certificate of
insurance evidencing such coverages as are required herein.
24. Franchisee shall, at International Retail Merchant's sole expense,
take such steps as may be required in International Retail Merchant's
Country to satisfy any laws or requirements with respect to
declaring, notarizing, filing, recording, or otherwise rendering this
Agreement valid.
25. This Agreement shall be for an initial term of three (3) year,
commencing with the date of acceptance hereof by Company, and shall
thereafter be automatically renewed for successive one (1) year
periods unless written notice of termination is given by either party
no later than thirty (30) days prior to the expiration of the then
current term; provided, however, that if a longer period of advance
notice is required by any applicable statute, rule, or regulation,
then such notice shall comply with such requirement. Notwithstanding
the foregoing, Company reserves the right to terminate this Agreement
upon three (3) days' advance written notice to Franchisee in the
event that any payment owing to Company for merchandise or services
supplied to Franchisee is not received within fifteen (l5) days after
the date on which such payment is due. Further, notwithstanding the
foregoing, the closing down of the business operated at International
Retail Merchant's location set forth hereinabove shall automatically
cause this Agreement to be terminated unless such business is moved
to another location to which Company consents. This Agreement shall
also immediately terminate upon the giving of written notice by
Company to Franchisee at any time after Franchisee becomes bankrupt,
insolvent or makes an assignment for the benefit of creditors. This
Agreement shall also immediately terminate upon written notice of
termination by Company in the event that Franchisee is in breach of
any provision hereof and fails to cure such breach following written
notice of breach by Company and a reasonable period, which need not
exceed thirty (30) days from the date of mailing of such notice, to
cure such breach.
26. Notwithstanding anything herein to the contrary, if Franchisee is an
individual sole proprietor, this Agreement shall automatically
terminate upon the death of such individual. If Franchisee is a
partnership, this Agreement shall automatically terminate upon the
death of a member of such partnership. However, with Company's
approval (which approval shall not be unreasonably withheld), such
business may continue to be operated under this Agreement by the
estate of such deceased individual sole proprietor or by the
person(s) to whom ownership of said business is to be distributed by
such deceased individual's estate or by the person(s) or partnership
succeeding to the interest of such deceased member of a partnership
owning the business.
27. If Franchisee is a corporation, this Agreement shall automatically
terminate upon the consummation of any sale or transfer of all of the
shares of capital stock (both voting and non-voting) of such
corporation held by the holder or holders of 50% or more of its
outstanding voting stock.
28. Any provision of this Agreement, with regard to which the right of
Company to change the terms thereof has been reserved, shall be
deemed to have been modified as of the effective date set forth in an
advance written notice of such change given by Company to Franchisee.
29. If any amendment hereto is proposed by Company during the term
hereof, then this Agreement shall be deemed to have been modified
effective as of the date specified in a sixty (60) day advance
written notice thereof given by Company to Franchisee in order to
place the Agreement in conformity with such amendment. International
Retail Merchant's act of continuing to do business with Company after
the effective date of such amendment shall be deemed to constitute
International Retail Merchant's consent to be bound thereby. If
Franchisee does not consent to be bound by such amendment, then
Franchisee may terminate this Agreement by written notice thereof to
Company, which notice must be received by Company on or prior to the
effective date of the proposed amendment.
30. The signing of this Agreement by Franchisee constitutes an
application only, and this Agreement shall not be effective unless
and until it has been duly accepted and countersigned by Company at
its principal office in Illinois. All orders for merchandise,
supplies and services placed by Franchisee pursuant to this Agreement
shall be transmitted to Company at said office, and Franchisee shall
be deemed to have consented and agreed that:
(a) all provisions of this Agreement shall be interpreted and
construed in accordance with the substantive laws of the State
of Illinois, U.S.A.; and
(b) any suit brought by Company against Franchisee to enforce any
provision of this Agreement or seeking any relief in connection
with or arising out of the relationship between Company and
Franchisee may be instituted in an appropriate state or federal
court in the State of Illinois and Franchisee hereby expressly
submits to the jurisdiction of said court for purposes of the
enforcement of this Agreement and all matters related to this
Agreement.
31. Neither this Agreement nor any interest of Franchisee herein shall be
assignable or subject to transfer or encumbrance by Franchisee at any
time without Company's prior written consent.
32. Except as otherwise specifically provided, all notices required or
permitted to be given hereunder by one party to the other party shall
be effective if personally delivered or airmailed or sent by telex or
telefax to the addresses set forth hereinabove or to such other
address as either party designates to the other in writing for the
receipt of notices hereunder, with receipt deemed within fourteen
(14) days after airmailing or within two (2) days after sending by
telex or telefax.
33. The English version of this Agreement shall govern in the event of
any variations between the English version and any translation
hereof, and shall be used exclusively in any arbitration, legal
proceeding or suit hereunder.
34. The failure of either party to enforce its rights under any provision
hereof shall not be deemed a waiver of such rights for purposes of
future enforcement. No modification of this Agreement or any waiver
of rights hereunder shall be of any force and effect unless in
writing and signed by the party against whom enforcement of such
waiver or modification is sought.
35. The terms and conditions set forth in any purchase order or other
document shall be effective only to the extent that the same shall
not be inconsistent with the terms and conditions hereof.
36. Any provision or provisions hereof, which contravene the law of any
state or country in which this Agreement is effective, shall, in such
state or country, to the extent of such contravention of law, be
deemed separable, and shall not impair the validity of any other
term, condition, or provision hereof.
IN WITNESS WHEREOF, this Agreement has been executed on this _________ day
of _________________________, 19_____, by the person(s) signing it for
Franchisee, whose authority to sign shall be deemed to have been duly
authorized by Franchisee.
Franchisee:
_______________________________________
[Corporate or Partnership Name]
By:____________________________________
Printed Name:__________________________
Title:_________________________________
(If Franchisee is a corporation, the
corporate name should be written hereon
followed by the signature and title of
an appropriate officer. If Franchisee
is a partnership, the partnership name
should be written hereon followed by
the signatures of all partners.)
ACCEPTED for Ace Hardware
Corporation at Oak Brook,
Illinois this _____ day
of ________________, 19____.
By:________________________
________________________
(Title of Officer)
ACE HARDWARE CORPORATION FRANCHISEE AGREEMENT
EXHIBIT A
The following is(are) the retail business location(s) applicable to the
Franchisee Agreement:
DATE OF
NAME OF BUSINESS ADDRESS (LOCATION) AFFILIATION
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Franchisee:
_________________________________
[Corporate or Partnership Name]
By:______________________________
Printed
Name:____________________________
Title:___________________________
(If Franchisee is a corporation,
the corporate name should be
written hereon followed by the
signature and title of an
appropriate officer. If
Franchisee is a partnership, the
partnership name should be
written hereon followed by the
signatures of all partners.)
ACCEPTED for Ace Hardware Corporation
at Oak Brook, Illinois this ____ day
of __________________, 19____.
By:___________________________________
___________________________________
(Title of Officer)