Exhibit 10.2(c)
BANDAG DEALER FRANCHISE AGREEMENT
BANDAG DEALER FRANCHISE AGREEMENT dated , (the "Agreement") between BANDAG,
INCORPORATED, an Iowa corporation, located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇ ("BANDAG," "we," "our," or "us"), and
__________________________________________________________________ located at
__________________________________________________("Dealer," "Franchisee,"
"you," or "your").
1. BACKGROUND
Bandag manufactures tread, equipment, and other materials that our Dealers use
in our proprietary process to manufacture retreaded tires for sale. We also
provide proprietary business process consulting related to the commercial tire
business and contract directly with fleet customers who desire access to Bandag
products and services. Bandag identifies customers and invests in technical,
marketing, and sales research for its franchisees. Bandag also advertises Bandag
products and services on behalf of the Bandag Alliance. These are some of the
investments that create demand for Bandag products and services and that ▇▇▇▇▇▇
our franchisees' ability to compete with other retreading systems. Our Dealers
provide wheel and tire products and services to commercial customers using one
or more lines of new tires as well as Bandag retreaded tires and related
products and services.
This Agreement establishes and governs the relationship between us, as
franchisor and supplier of proprietary materials, equipment and services, and
you, as a franchised Bandag Dealer.
To make this Agreement shorter and easier to understand, the word:
"Process" means our proprietary method of retreading commercial vehicle tires
using our materials and methods (certain of which may be the subject of one or
more patents);
"Materials" means Bandag tread, cushion gum, repair gum, repairs (patches), and
certain other proprietary materials we make or distribute, including certain
equipment used in the Process;
"Products" means retreaded tires produced using the Materials and the Process;
"Marks" means all BANDAG trademarks, service marks and logos;
"Licensed Marks" means those Marks you are authorized to use under this
Agreement;
"Bandag Facility" means any permanent or temporary facility or structure, owned
or operated by Bandag or its Dealer, at which Bandag Products are manufactured,
stored, offered for sale, or serviced;
"PSIP" means Bandag programs, services, information and products;
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"System" means the Process and the PSIP, together, as used and offered by Bandag
Dealers;
"Dealer" means a business or business entity that has established and operates a
Bandag Dealership;
"Dealership" means the Bandag Dealership you establish and operate under this
Agreement;
"Effective Date" means the date on which we signed this Agreement.
Certain other terms which are capitalized in this Agreement are defined in a
glossary at the end of the Agreement.
2. FRANCHISE RELATIONSHIP
2.1. Bandag Dealership Business. You wish to establish and operate a Bandag
Dealership, using the System and the Licensed Marks, in one or more
trade areas defined in Exhibit A (the "Area of Opportunity" or "AOO").
You commit to meet or exceed Performance Expectations as outlined in
the Manual(s), provide sales and service coverage and manufacturing
capability to support these efforts, and fulfill all Dealer
obligations specified in the Manual(s). This may include an obligation
to support and service our fleet customers according to this
Agreement, the terms of any other agreement between us relating to a
fleet, and the Manual(s).
2.2. Mutual Commitment. This Agreement imposes responsibilities on both
parties to do their best to promote and strengthen the Bandag System
and brand. We will support and assist the Bandag System; you will
continue to invest in your Dealership and remain committed to the
Bandag System; and you and we commit to a high degree of mutual
cooperation toward Bandag System objectives. Our and your respective
obligations and responsibilities are also described in the Manual(s).
3. GRANT AND ACCEPTANCE OF FRANCHISE
3.1. Franchise and Territory. We grant you a non-exclusive franchise to use
the System and the Licensed Marks to operate a Dealership, at a
location to which we consent within the AOO, which (i) sells Products
to commercial and fleet customers in the AOO ("Sales Facility"), and
(ii) if and where designated in Exhibit B, uses the System and
Materials you purchase from us to produce Products which you sell to
commercial and fleet customers in the AOO ("Production Facility").
Under this Agreement, you may use certain patents we or our affiliates
or subsidiaries own, and periodically designate (entirely or by
individual claim) as part of the System, but you may use them only to
use the System to operate your Dealership under this Agreement, and
only for so long as this Agreement remains in effect and the
designated patent(s) both remain in effect and are designated by us as
part of the System.
o You may respond to specific requests from your customers for Bandag
products or services at any location, but outside the AOO to which
you are assigned, you may not use the Marks to identify any facility
and we are not obligated to provide Dealer support services. AOOs
are not exclusive territories, may overlap one another, and
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do not preclude us from establishing or relocating any Dealership
facility in or into an AOO.
o You may produce Products only at the Production Facility (or
Facilities) listed on Exhibit B.
o You may relocate a Production Facility only with our written
consent, to a suitable site within the AOO that does not in our
opinion infringe upon another Bandag business. The replacement
Production Facility must open within 10 days after the prior
Production Facility closes, and must conform to all requirements of
this Agreement and to then current System standards.
o You agree to communicate promptly to us each improvement to the
Bandag Process or Bandag Products that you conceive or develop, and
transfer to us, without remuneration, record ownership of all right,
title and interest to the improvement and all associated
intellectual property rights.
o We will license you to use in your Dealership, any improvements in
the System that we choose to license to the Bandag System,
generally.
o We reserve all rights not expressly granted to you in this
Agreement.
3.2. Term. This Agreement is for five years, beginning on the Effective
Date and expiring at midnight Central Time (U.S. and Canada) on the
fifth anniversary of the Effective Date. We will send you a letter at
least 12 months before your term expires and again at 8 months before
your term expires notifying you that your term is expiring and giving
you the option to renew the franchise and providing you a copy of the
standard form of Bandag franchise agreement (which may differ from
this Agreement) we are then offering new franchisees in the state
where your principal place of business is located. If you notify us in
writing not less than six months before the then-current term expires
that you intend to renew the franchise for a successor term, we will
grant you a successor franchise, for five years, on the standard form
of Bandag franchise agreement as described above for the type of
Dealership you operate, if you satisfy all of the following
requirements:
o You or your designated manager(s) achieve and maintain, to our
satisfaction, the skills and capabilities prescribed in the
Manual(s);
o You pay us a successor franchise fee of $1,000.00;
o You complete renovation and upgrading of your Dealership (including
all Production Facilities and all Sales Facilities) to meet
standards prescribed in the Manual(s) at that time; and
o At least six months before the then-current term expires, you sign a
Bandag franchise agreement for the successor term, to take effect
immediately following the expiration of the then-current term.
If you do not notify us that you wish to obtain a successor franchise
six months in advance of your expiration date, or if you do not
qualify for a successor franchise, we may take any actions we deem
appropriate, prior to expiration, to replace your Dealership or you,
as Dealer.
3.3. Initial Fee. At least 15 days before initial training is scheduled to
begin, you agree to pay us an initial franchise fee of $ 2,500.00. The
initial franchise fee is non-refundable.
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3.4. Initial Training. You agree to complete our initial training program
to our satisfaction. Each manager of each Production Facility and
Sales Facility you operate must also successfully complete all
required training programs listed in the Manual(s) and the UFOC.
3.5. Acknowledgments.
o You understand that your Dealership includes a combination of all or
some sales, service and manufacturing opportunities, and of the
System, that in our opinion best suits the AOO and the commercial
fleet needs therein.
o We may establish, and periodically modify, one or more categories of
Dealers, with different features and benefits based on specified
types and levels of Dealer investment and performance.
o Your Dealership will use only those elements of the System, produce
and sell only those Products, and be identified by and use only
those Marks, which we authorize periodically.
o We developed the System at considerable expense and investment. Your
disclosure or unauthorized or improper use of all or any part of the
System or of our trade secrets or proprietary or Confidential
Information would cause us and other Bandag Dealers irreparable
harm, and you will not engage in such practices.
o Dealer Performance and Dealership Standards as prescribed in
Sections 6 and 7 of this Agreement, are vital to the success and
integrity of the System and the Bandag Alliance, and you will
conform strictly to these requirements.
o You will not directly or indirectly sublicense, delegate or transfer
any of the rights licensed by this Agreement, except in accordance
with Section 8, and subject to Section 4.3.
o We and our affiliates and licensees may conduct various business
activities including various tire and retreading businesses. You may
be subject to competitive impact from these and other activities.
o You understand that other Bandag Dealers operate under forms of
agreement which differ materially from this one and that standards
for these Dealerships may vary from those required of you.
3.6. Acceptance. You represent that you have fully and truthfully completed
our franchise application. You accept this Agreement and agree to
begin operating your Dealership hereunder within 90 days, unless we
agree in writing to an extension. If you (or your designated manager)
fail to complete our initial training program to our satisfaction, or
to begin operating your Dealership on time, you will thereby
voluntarily cancel this Agreement. You agree to operate your
Dealership in accordance with the System, this Agreement, and the
Manual(s) at all times.
4. FRANCHISE MANAGEMENT, EQUITY, AND SUCCESSION PLANNING
4.1. Dealership Management. You, or your qualified manager, must manage the
day-to-day operations of your Dealership on a continuous, full-time
basis.
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4.2. Business Equity. We recognize that you are an independent business
owner with a desire to build, protect, and pass on business equity.
Although we will use our commercially reasonable best efforts to
support you in accordance with this agreement (see Section 5.1), you
are ultimately responsible for your performance and for building
equity in your Dealership business.
4.3. Succession Planning. We believe that continuity of Dealer management
and preservation of Dealer equity from one generation to the next
benefits individual Dealers and the Bandag Alliance. Therefore,
subject to a succession plan that you develop conforming to the
guidelines prescribed in the Manual(s), and which we approve in
advance, we will waive the other transfer provisions in Section 8 of
this Agreement to allow you to carry out that plan. If you deviate
from a succession plan we approved, we may reinstate all of the
transfer requirements in Section 8.
5. BANDAG SUPPORT SERVICES
5.1 Best Efforts. We will use our commercially reasonable best efforts to
keep the Process up-to-date and competitive, to support the System in
cooperation with Dealers through research, marketing, advanced
training, communication and participation in the Bandag Alliance
Council (see Section 5.5), and to act fairly in our dealings with our
Dealers. We will use our commercially reasonable best efforts to:
o Develop and deliver quality equipment, information, products,
programs, and services that support Dealers in promoting and
increasing sales of PSIP;
o Provide Dealers with opportunities for growth and development
through the Dealer Development Process described in the Manual(s);
o Provide personnel as we deem appropriate to support Dealer sales,
service, and manufacturing efforts; o Protect and enhance the value
of the Bandag system, generally; and o Maintain the value and
integrity of the System for the benefit of Bandag Dealers, Bandag
customers, and Bandag.
5.2. Bandag System Manual(s). We will supply you with one copy of our
proprietary and confidential Manual(s) for your Dealership. We may
change the contents of the Manual(s) periodically, including adding or
deleting material. It is your responsibility to place all updates in
the Manual(s) provided. Manual(s) may differ for different categories
of Bandag Dealers.
5.3. Training. We will develop and deliver quality training to support
Dealers in using Bandag equipment, and PSIP.
o We will provide training at the Bandag Incorporated Learning Center,
or at your Dealership or another location we designate.
o At your request, we may provide optional supplemental training for
you and/or your key personnel at a mutually convenient time and
location.
o We may, at our reasonable discretion, require periodic retraining of
you and any of your managers.
o We may charge you a reasonable fee for training.
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5.4. Sales and Technical Support. We will use our commercially reasonable
best efforts to hire capable sales and technical support personnel,
set appropriate performance expectations, and provide them with
training and necessary resources and tools, so they can assist and
support Bandag Dealers. We will advise you on the management of your
Dealership, including the proper display of the Marks; procurement,
maintenance, and operation of equipment; Product production; customer
service; advertising, sales and local marketing; and cost control
techniques.
5.5. Bandag Alliance Council. We have established and work with the Bandag
Alliance Council, comprised of representatives of Bandag and selected
representatives of Bandag Dealers in the United States and Canada. The
Bandag Alliance Council, whose members change periodically according
to its By-laws, advises us on issues affecting the Bandag business and
the network of Dealers in the United States and Canada, and assists in
developing strategies and tactics for the success of the Bandag
System. The Bandag Alliance Council serves as a forum for sharing and
acting upon concerns of the Bandag Alliance. The operating guidelines
of the Bandag Alliance Council are described in the Manual(s).
5.6. Additional Support. We may make available to you any additional
services, facilities, rights and privileges relating to the operation
of your Dealership which we make available periodically to Dealers in
the type of Dealership you currently operate.
6. DEALER PERFORMANCE.
In addition to your obligations prescribed in the Manual(s), you agree to
the following:
6.1. Best Efforts. You will use your best efforts to support and promote
the System, be the best tire support service provider and maximize
Bandag market share in the AOO, reinvest appropriately in your
Dealership, meet the tire needs of Bandag customers in the AOO, and
hire, train, develop and reward the best possible employees in your
Dealership. You will use your best efforts to:
o Promote and increase the sales of PSIP in the AOO;
o Achieve and maintain strategic, operational, and financial health
through active participation in the Dealer Development Process as
defined in this Agreement and described in the Manual(s); and
o Protect and enhance the value of your Bandag Dealership, and conduct
the business at your Dealership such that you enhance (and in no way
adversely affect) the reputation and goodwill of Bandag, the Marks,
the System, the Bandag System and members of the Bandag Alliance.
6.2. Confidentiality. During and after the term of this Agreement, neither
you nor your employees or agents shall disclose to a third party or
the public or use, except to operate the Dealership, any Confidential
Information or proprietary information, or
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trade secret, which we own or disclose to you, or which relates to the
System, the Products or Bandag's business. This includes the entire
contents of the Manual(s) and the Agreement. You shall inform your
employees and anyone permitted access to Confidential Information of
their obligations under this Agreement, and shall take such steps as
may be reasonable under the circumstances to prevent any unauthorized
disclosure, copying or use of Confidential Information.
6.3. Conflicts of Interest. During the term of this Agreement, you will not
directly or indirectly sell or produce retread products that compete
with the Bandag System or with the Process, with the exception of
those described in Exhibit C. You will not have any interest in the
production or sale of retread products by or to any form of tire
retreading business that competes with Bandag or with the Process,
with the exception of those described in Exhibit C. This restriction
applies everywhere in the United States, Mexico and Canada. You waive
any restrictions on our ability to hold you to these obligations. You
agree not to contest our enforcement of this Section 6.3
You agree that your compliance with this Section 6.3 will not prevent
you from earning a living in other pursuits for which you are
qualified, including other aspects of the commercial tire business.
You further agree that the covenants contained in this Section 6.3 are
reasonable and benefit you and other Bandag Dealers and the Bandag
System, as well as us, and you understand that your agreement to these
covenants is an important consideration for our entering into this
Agreement.
It is your responsibility to demonstrate your compliance with this
Section 6.3. This Section 6.3 also applies to guarantors of this
Agreement, your spouse and children who are stakeholders in your
Dealership, and if Dealer is a corporation or other entity, your
officers, directors, LLC governors, employees, partners, and each
controlling person or owner. For purposes of this Section,
"controlling person" means a person or entity who owns 5% or more of
the stock, assets or shares of the corporation or other entity.
6.4. Warranties. WE MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF (i) MATERIALS
OR EQUIPMENT WE SUPPLY, OR (ii) PRODUCTS YOU MAKE AND FURNISH TO
CUSTOMERS. The only warranty we make on Materials or Bandag equipment
is expressed in our written warranty policy in the Manual(s) and in
descriptions on shipping containers and labels. Our only warranty on
Products is expressed in written warranties we negotiate with
customers. You are not authorized to, and you shall not, create or
offer any warranty, express or implied, in our name or which obligates
us to a customer with respect to any goods or services. WE DISCLAIM
LIABILITY FOR INCIDENTAL AND CONSEQUENTIAL LOSSES AND DAMAGES. YOUR
SOLE REMEDY FOR BREACH OF ANY WARRANTY, EXPRESS OR IMPLIED, IS
REPLACEMENT OR REFUND OF THE PRICE PAID PLUS SHIPPING. YOU AGREE THAT
OUR PRICES ARE BASED ON THIS LIMITATION.
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You agree to participate in the Bandag Dealer National Warranty
Program and in other applicable warranty programs, described in detail
in the Manual(s).
7. DEALERSHIP STANDARDS
7.1. Operating Standards. You agree to operate your Dealership continuously
in strict accordance with the Manual(s) and satisfy all "Minimum
Requirements of Bandag Dealers" described therein. In performing the
Process, you will use only equipment, Materials and repair materials
that we designate by brand or by specification. All products produced
by your Dealership must meet specifications as outlined in the
Manual(s). You agree to:
o Comply within a reasonable time with changes we make in the
Manual(s), System and standards even if additional investment or
expenditures are required;
o Equip and furnish your Dealership strictly in accordance with System
requirements set forth in the Manual(s); o Maintain the Dealership
and all equipment used in the Process in proper operating condition
as depicted in the Product Specifications and Manufacturing
Requirements prescribed in the Manual(s) and/or equipment manuals,
and in accordance with all applicable laws, regulations, codes;
o Not dispose of Bandag equipment or Materials in any way other than
as prescribed in the Manual(s); and o Not manufacture retreaded
tires for use on aircraft.
7.2. Inspection. Your entire Dealership premises (including Production
Facilities and Sales Facilities) and all machinery, Products,
Materials, and inventory items associated with or used in the System,
shall be open to us for inspection and sampling without notice during
the business day.
7.3. Intellectual Property. You acknowledge that Bandag has valuable
Intellectual Property rights associated with the Process, Products,
System and documentation and that such Intellectual Property rights
shall remain at all times the sole property of Bandag. Any employees,
agents, or representatives of your Dealership, who should have access
to the Process, Products, System and documentation hereby assign to
Bandag any and all rights to any intellectual property developed or
suggested based upon such access.
7.4. Trademark Ownership. Bandag has valuable property rights in the Marks
and the Marks designate to customers the origin of Bandag PSIP. You
have no right, ownership or other interest in or to any of the Marks
except the non-exclusive license to use them in strict conformity with
this Agreement. You may not use the Marks as part of your corporate or
business name without our permission. Your use of the Marks inures
solely to our benefit. We, (or our affiliates) own all goodwill now or
hereafter associated with each of the Marks we (respectively) own. You
will not contest our rights or registration of the Marks or do
anything likely to impair the goodwill associated with the Marks.
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7.5. Trademark Usage. You agree to reproduce and use the Licensed Marks
only in the precise manner, colors, forms, and media we prescribe, and
only in association with goods and services we authorize. You must
conform to our Bandag(R)Logo and Trademark Usage Requirements and
Policy, as described periodically in the Manual(s).
7.6. Product Purchase Requirements. If certain tire retreading equipment or
machinery is a specific requirement for use in the Process, as
specified in the Manual(s) for the Dealership, then you agree to
purchase or lease it from us. We will sell to you, and you agree to
purchase from us, your entire requirements of Materials for use in the
Process. Prices are subject to change. All other supplies, equipment,
inventory and fixtures purchased for use in the Process must comply
with requirements prescribed periodically in the Manual(s).
7.7. Purchase Orders. You agree to use our forms and follow our procedures
prescribed periodically in the Manual(s) to order Materials (including
equipment) from us. This Agreement governs any inconsistency with any
purchase order, acceptance or confirmation, act, practice or course of
dealing.
7.8. Security Interest. You agree to execute and deliver to us our
then-current standard form(s) of security agreement to secure all of
your obligations to us. Any other person or entity who owns equipment
used in the Process must execute and deliver a similar security
agreement to secure your and their respective obligations to us. We
may enter into other agreements with your bank or other lending
institutions to secure our rights and options under this agreement.
7.9. Payment. You agree to pay in full for all goods and services you buy
from us within the time period and on the basis we prescribe in the
Terms and Conditions of Sales as set forth in the Manual(s). We may
establish and modify credit availability, credit availability limits
and credit or other payment terms for your Dealership at any time
without notice. We may charge interest on any amounts you owe us
(except interest on unpaid amounts due) that are not paid when due,
from the date due until paid, at the highest contract rate of interest
allowed by the law of the state where the Dealership is located, or at
the rate of 18% in those states where no such limit is specified. You
must also pay costs, including reasonable attorneys' fees, we incur in
collecting past due amounts from you.
7.10. Financial Records, Reports and Dealership Records. You agree to keep,
and make available upon request, financial statements, reports, books
and any records concerning the Dealership, including forms or in media
prescribed from time to time in the Manual(s). You will allow us, or
our representative, to inspect, copy and audit such records without
notice at the Dealership during the business day. You will install and
use such electronic or other data storage, retrieval and transmission
hardware and software as we periodically designate to serve the needs
of specific customers. We will treat your confidential information as
confidential, but we may
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use it in compiling reports, analyses and disclosures provided that
the aggregations we use do not reveal your individual data.
7.11.Indemnification. You must report to us immediately any claim
involving the Dealership or Products. You will defend, indemnify and
hold harmless Bandag, its affiliates and their respective officers,
agents, and employees from all suits, claims, demands, liabilities and
costs, including attorneys' fees, in tort, contract, or otherwise,
arising out of or in connection with your operation of the Dealership,
except to the extent directly caused by our negligence. You waive and
release all claims against us, our affiliates, and their respective
officers, agents, and employees for damages to property or injuries to
persons arising out of or in connection with operation of the
Dealership, except to the extent directly caused by our negligence.
▇.▇▇.▇▇▇▇▇▇▇▇▇. You agree to maintain (i) insurance coverage required by
law, (ii) commercial general liability insurance including products
liability, completed operations, contractual liability, and (iii)
motor vehicle liability insurance. The required limits for commercial
general liability and motor vehicle liability shall each be a minimum
of $2,000,000.00 combined single-limit coverage for bodily injury and
property damage, or such higher limit we may set periodically.
Insurance shall be with insurers and on forms acceptable to us, shall
name us as an additional insured, and waive subrogation. You will give
us a certificate of current insurance coverage upon execution of this
agreement, and annually thereafter. You will reimburse us promptly if
we buy such insurance because you fail to do so.
7.13.Accounts. We may credit or debit your account(s) with us, or any of
our affiliates, to effect adjustments for warranty service, offsets,
collection or adjustment of delinquencies or errors, or other
reconciliations. We will give you periodic statements of account and,
upon request, document any credits, debits or offsets we make.
8. FRANCHISE TRANSFER.
8.1. Transfer Standards. Subject to Section 4.3, you will not change or
allow a change in five percent (5%) or more of the ownership or
control of (i) this Agreement, (ii) the Dealership, (iii) the assets
of the Dealership or, (iv) the business entity that owns or controls
the Dealership (a "transfer"), without our consent.
8.2. Other Conditions to Transfer. Subject to Section 4.3, you must apply
for our consent by submitting notice of the pending transfer, with a
complete application, signed by you and by the proposed transferee, at
least 60 days before the proposed transfer date. We may withhold
consent unless (i) you pay all amounts you owe to us or our affiliates
or to your suppliers; (ii) you (or the transferee) repair or upgrade
the Dealership's facility, fixtures, equipment and signage to then
current System standards; (iii) you pay us a transfer fee of
$1,500.00; and (iv) the transferee (and manager(s)) successfully meet
our qualification requirements and the requirements for training as
specified in the Manual(s).
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8.3. Dealer Death or Disability. Your death, disability or incapacity (or
that of a principal officer, director or partner of a Dealer that is
an entity) is also a "transfer". Your executor, heir or legal
representative (or the corporation or partnership if an entity) must
apply within 60 days of the death or incapacity for our consent to
transfer this Agreement and, subject to Section 4 of this Agreement,
satisfy the other conditions of this Section 8.
8.4. Transfer by Franchisor. We may transfer our interest in this Agreement
at our discretion.
9. RESOLUTION OF DISPUTES.
Subject to Section 9.3, all disputes or claims arising out of or related to
this Agreement and/or to the parties' relationship pursuant to this
Agreement shall be resolved in accordance with the process described in
this Section 9.
9.1. Notice and Mediation. Each party must first give the other notice, in
writing, of any dispute or claim, before taking any steps to arbitrate
or litigate. The written notice shall specify, to the fullest extent
possible, the notifying party's version of the facts and any legal
points relevant to the dispute or claim. The written notice shall be
sent, by facsimile transmission or express mail, no later than ninety
(90) days after the dispute or claim arises. The parties shall then
use their mutual best efforts to resolve the dispute or claim
amicably. If that effort is unsuccessful, the dispute or claim will be
submitted to non-binding mediation. The mediation shall be conducted
under the auspices of the American Arbitration Association (AAA) by a
mediator selected from a panel of mediators or another mediator who is
mutually agreeable to the parties. The parties will share the cost of
the mediation equally. Any and all discussions, negotiations, findings
or other statements by the mediator and/or the parties in connection
with the mediation, whether oral or written, shall be privileged and
confidential and shall not be admissible in evidence in any
arbitration or litigation. If the parties do not resolve the dispute
or claim by mediation within ninety (90) days after notification, the
party asserting the dispute or claim shall proceed in accordance with
the remaining process described in the balance of this Section 9.
COMPLIANCE WITH THE REQUIREMENTS OF THIS SECTION 9.1 IS A PREREQUISITE
TO ASSERTING ANY DISPUTE OR CLAIM IN ARBITRATION OR LITIGATION.
FAILURE TO COMPLY WILL CONSTITUTE A WAIVER OF THE DISPUTE OR CLAIM AND
AN ABSOLUTE BAR TO ASSERTING THE DISPUTE OR CLAIM IN ARBITRATION OR
LITIGATION. This paragraph does not apply to any disputes arising out
of past due amounts you owe to Bandag.
9.2. Arbitration. Except as provided below, any dispute arising under or in
relation to this Agreement involving a claim for damages, in the
aggregate, of less than $100,000.00 shall be resolved by binding
arbitration by the American Arbitration Association (AAA) under its
rules for expedited commercial arbitration and the Federal Arbitration
Act, at the AAA office nearest the party who is the respondent in the
arbitration. Each claim or controversy will be arbitrated by you on an
individual basis, and will not be consolidated with the claim of any
other person. The award of
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the arbitrators is final and binding on all parties. The arbitrators
may issue appropriate orders as well as award monetary (but not
exemplary or punitive) damages. This Section 9.2 does not apply to
claims or disputes arising out of past due amounts you owe to Bandag,
the enforcement of our or our subsidiaries' rights in the Marks, or
our right to compel inspections or audits. Any claim(s) for damages
that total more than $100,000.00 shall not be subject to arbitration,
but shall be resolved through litigation. If you elect to file a
lawsuit against us, it shall be brought in the Federal District Court
for the Southern District of Iowa. If we elect to file a lawsuit
against you, it shall be brought in the Federal District Court in the
state where your principal place of business is located. The
prevailing party in any arbitration or lawsuit is also entitled to
recover its costs of the proceeding, including its reasonable
attorneys' fees.
9.3. Injunctive Relief. Your breach of this Agreement could cause
irreparable damage to us or to other Bandag Dealers. Therefore, upon a
breach or threatened breach of any of the terms of this Agreement, we
are entitled to an immediate injunction restraining such breach and/or
a decree of specific performance, pending arbitration or adjudication,
without bond, or having to show or prove any actual or irreparable
harm or damage, and without regard to the availability of an adequate
remedy at law. You agree that preservation of the integrity of the
System and network of Bandag Dealers is a compelling business interest
of ours that justifies injunctive relief on that basis.
9.4. WAIVER OF JURY TRIAL.
EACH PARTY HEREBY WAIVES, WITHOUT LIMITATION, ANY RIGHT IT MIGHT
OTHERWISE HAVE TO TRIAL BY JURY ON ANY AND ALL CLAIMS ASSERTED AGAINST
THE OTHER. EACH PARTY ACKNOWLEDGES THAT IT HAS HAD A FULL OPPORTUNITY
TO CONSULT WITH COUNSEL CONCERNING THIS WAIVER, AND THAT THIS WAIVER
IS INFORMED, VOLUNTARY, INTENTIONAL, AND NOT THE RESULT OF UNEQUAL
BARGAINING POWER.
9.5. LIMITATION OF REMEDIES
(A) EACH PARTY HEREBY WAIVES, WITHOUT LIMITATION, ANY RIGHT IT MIGHT
OTHERWISE HAVE TO ASSERT A CLAIM FOR AND/OR TO RECOVER PUNITIVE,
MULTIPLE OR EXEMPLARY DAMAGES FROM THE OTHER. EACH PARTY ACKNOWLEDGES
THAT IT HAS HAD A FULL OPPORTUNITY TO CONSULT WITH COUNSEL CONCERNING
THIS WAIVER, AND THAT THIS WAIVER IS INFORMED, VOLUNTARY, INTENTIONAL,
AND NOT THE RESULT OF UNEQUAL BARGAINING POWER.
(B) EACH PARTY HEREBY WAIVES, WITHOUT LIMITATION, ANY RIGHT IT MIGHT
OTHERWISE HAVE TO ASSERT A CLAIM FOR AND/OR TO
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RECOVER CONSEQUENTIAL, INCIDENTAL AND CONTINGENT DAMAGES FROM THE
OTHER. EACH PARTY ACKNOWLEDGES THAT IT HAS HAD A FULL OPPORTUNITY TO
CONSULT WITH COUNSEL CONCERNING THIS WAIVER, AND THAT THIS WAIVER IS
INFORMED, VOLUNTARY, INTENTIONAL, AND NOT THE RESULT OF UNEQUAL
BARGAINING POWER. IN ADDITION, EACH PARTY ACKNOWLEDGES THAT THIS
WAIVER IS NOT UNCONSCIONABLE UNDER THE STANDARDS OF THE UNIFORM
COMMERCIAL CODE ("UCC"), AND IS CONSISTENT WITH THE STANDARD TERMS AND
CONDITIONS OF SALES OF GOODS BETWEEN THE PARTIES.
(C) ANY ARBITRATION OR ACTION PURSUANT TO SECTION 9.2 OR 9.3 MUST BE
FILED WITHIN ONE (1) YEAR FROM THE TIME OF THE EVENTS GIVING RISE TO
THE SUBJECT CLAIMS, OR THOSE CLAIMS WILL BE FOREVER BARRED. EACH PARTY
ACKNOWLEDGES THAT IT HAS HAD A FULL OPPORTUNITY TO CONSULT WITH
COUNSEL CONCERNING THIS TIME LIMIT, AND THAT ITS AGREEMENT TO THIS
TIME LIMIT IS INFORMED, VOLUNTARY, INTENTIONAL, AND NOT THE RESULT OF
UNEQUAL BARGAINING POWER.
(D) IF ONE OR MORE OF SUBSECTIONS (A) - (C) OF THIS SECTION 9.5 IS
HELD TO BE VOID, UNLAWFUL, OR OTHERWISE UNENFORCEABLE (BECAUSE IT
VIOLATES A STATE STATUTE OR OTHERWISE), THAT SHALL HAVE NO EFFECT ON
THE VALIDITY AND ENFORCEABILITY OF THE REMAINING SUBSECTIONS. EACH
SUBSECTION OF THIS SECTION 9.5 SHALL BE CONSTRUED AS A SEPARATE
PROVISION OF THIS AGREEMENT, WITHIN THE MEANING OF SECTION 11.4 OF
THIS AGREEMENT (ENTITLED "SEVERABILITY").
10. TERMINATION.
10.1. Grounds. Either party may terminate this Agreement but only for "good
cause". Good cause means intentional, material, repeated or continuous
breach of this Agreement by either party, including but not limited
to, your:
o Misrepresentation or omission of material information in the
application for a franchise;
o Failure to open the Dealership within 90 days after execution of
this Agreement;
o Failure to successfully complete required training or provide
required training;
o Non-payment of sums due, bankruptcy, or insolvency by any
definition;
o Failure to comply with the mutual commitments as outlined in
Sections 2.2 and the System Manual(s);
o Transfer or attempted transfer without our consent;
o Abandonment of this Agreement or the Dealership;
o Conviction of or plea of guilty or no contest (or by a principal
officer, director or partner of Dealer) to any charge of violation
of any law relating to the Dealership,
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or of any felony that impairs or is reasonably likely to impair the
goodwill and/or reputation associated with Bandag or the Marks;
o Failure to comply with Section 6.1 of this Agreement;
o Failure to comply with Section 6.3 of this Agreement;
o Actions or practices that impair or are reasonably likely to impair
the goodwill and/or reputation associated with Bandag or the Marks;
o Failure to meet Product Specifications & Manufacturing Requirements
or similar requirements as prescribed in the Manual(s); or
o Unauthorized use of Bandag's Confidential Information.
Good cause which relates solely to a particular Bandag Facility is
grounds for termination of your rights with respect to that Bandag
Facility only.
Good cause which relates to our business relationship generally (for
example, a material misrepresentation in a report, or failure to
service a fleet account properly) is grounds for terminating this
Agreement entirely.
10.2.Notice. The party intending to terminate shall give the other notice
specifying the cause for termination. Unless the stated cause includes
a repeated or continuous breach of this Agreement, or your insolvency,
or your breach of 6.1 and/or 6.3, the recipient may cure the breach
within: 24 hours of notice if the breach is impairment or threatened
impairment of the goodwill or reputation associated with Bandag or the
Marks; seven days for nonpayment of sums due; and 30 days in all other
cases. If the stated cause includes a repeated or continuous breach of
this Agreement, or your insolvency, the recipient does not have the
right to cure the breach.
For purposes of Sections 10.1 and 10.2, "repeated or continuous
breach" means a breach of any one provision of this Agreement more
than once or a breach of more than any one provision of this Agreement
during the initial and any successor terms of the franchise.
10.3.Consequences. Upon termination or expiration of this Agreement, all
rights licensed herein, and your interest herein, revert to us
automatically, and you must immediately:
o Stop selling, delivering, servicing or promoting Products at any
location;
o Stop using the Marks and System, any materials containing or
depicting the Marks or System, and any other name or ▇▇▇▇
confusingly similar to the Marks;
o Settle all accounts and pay all sums due to us or our affiliates or
which we have guaranteed;
o Stop using and return the Manual(s) and all other confidential or
trade secret information, distinctive, proprietary or confidential
Materials and information, production methods or other techniques,
systems, software we furnished to you or know-how we disclosed
to you;
o Remove all Bandag inventory, trade dress, and leasehold improvements
from all Bandag Facilities operated by the Dealership to eliminate
any similarity in design,
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structure, signage, trade dress, inventory, decor, color or layout to
the distinctive appearance and functions of other Bandag Dealerships;
o At our request, by item, resell each item of Bandag equipment to us
at an 8 year straight line depreciated value (with no residual)
calculated from the date of original shipment, FOB your Dealership.
If the equipment is older than 8 years, we may repurchase that
equipment at a fair market value assessed by an independent
equipment broker selected by us;
o At our request, by type and description, resell to us for an amount
equal to the actual amount paid by you, to us, any of the Materials
and/or Products then in your possession, less any charges we incur
for shipping, freight, packaging, restocking, and the like;
o Provide appropriate skilled workers to properly disconnect and
remove any leased and/or repurchased equipment from your facility
for packaging and pickup by a freight company consigned by Bandag;
o Assign to us each telephone, facsimile or similar number, electronic
address, World Wide Web URL, or any similar access code used by you
exclusively for your Bandag Dealership; and
o Remove the Marks from all letterhead, signs, directory listings,
URLs, e-mail addresses, catalogs, vehicles and all other places you
have used them.
11. MISCELLANEOUS PROVISIONS
11.1.Interpretation. This Agreement, which includes your application and
the Manual(s), is the entire and final agreement between you and us on
its subject. This Agreement supersedes any other agreement or
understanding previously made between you and us for the Dealership
covered by this Agreement, except for (i) accrued obligations
thereunder and/or (ii) a Right of First Refusal dated________________
which is incorporated herein by reference. You have not received or
relied upon any representation, understanding, agreement or assurance
not set forth herein or in our Uniform Franchise Offering Circular
("UFOC"). All rights and remedies provided herein or by law are
cumulative. Section headings are for convenience of reference only and
do not limit the meaning of this Agreement. Declaratory sentences
herein constitute obligations of one or both parties as appropriate in
the context.
11.2. Survival. Upon termination of this Agreement, all rights and
obligations of the parties shall cease, except for your obligations
under Sections 6.2, 7.3, 7.4, 7.11, 9, 11.3 and this Section 11.2,
which obligations shall survive the termination of this Agreement.
11.3.Governing Law. This Agreement is made in Iowa and, except as provided
in Section 6.3 and 7.8, shall be governed by Iowa law (except that the
Iowa Franchise law, I.C. Ch. 523H, shall not apply to Dealerships to
which that law does not apply
90
by its own terms). This Agreement may be waived, modified or varied
only by a written document prepared by us and signed by the parties
(or by our changes to the Manual(s)). Acquiescence in, or waiver of,
any breach is not a waiver of another or subsequent breach. No custom,
practice or course of dealing constitutes a waiver of any provision of
this Agreement. Performance is suspended or deferred to the extent
required by forces beyond a party's control, such as fire, storm,
flood, war, civil unrest, or labor disputes.
11.4.Severability. If any provision of this Agreement (except Section
6.3), is held unenforceable, it shall be severed from the balance of
this Agreement. If Section 6.3 is or becomes illegal or unenforceable,
it shall be reformed to the least extent necessary to be lawful and
enforceable in the opinion of the arbitrator or court.
11.5.Notice. Notices or other communications must be in writing and are
given when delivered personally or one business day after being sent
by certified mail, to us at our principal office in Muscatine, Iowa,
or to you at the Dealership or at the office address shown in this
Agreement. Notice also may be given electronically or by facsimile or
overnight express. If transmitted electronically, such as by e-mail or
by facsimile, such communication shall be deemed delivered the next
business day after transmission (and the sender shall bear the burden
of proof of delivery).
11.6.Relationships. You are an independent contractor, not the employee,
agent, partner or joint venturer of Bandag. This Agreement does not
create a fiduciary relationship. No person may acquire any interest in
or under this Agreement except in accordance with Section 8 or Section
4.3. No other person, except our affiliate, is intended to be a
beneficiary of this Agreement. If Dealer is more than one person, all
are jointly and severally liable hereunder.
▇▇.▇.▇▇▇▇▇▇. You have reviewed this Agreement, our UFOC and other relevant
information with legal counsel or a professional business advisor of
your choosing before entering into this Agreement.
11.8.Responsibility. Our responsibilities to you are only those described
in this Agreement. You acknowledge that your Dealership will operate
in a highly competitive marketplace and that its financial results,
including its ultimate success or failure, depend upon your personal
management and resources, the competitive environment, and supply and
market conditions. You acknowledge, therefore, that we did not, cannot
and do not guarantee or represent that your Dealership will achieve
any particular level of sales or profit, or be profitable or
successful, and you have not relied upon any promise, assurance,
understanding or agreement not expressly set forth herein or in our
UFOC.
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BANDAG, INCORPORATED DEALER:
Print Name of Person Signing: Print Dealer Business Name:
-------------------------------------- ---------------------------------------
If Dealer is an entity:
Sign Name:____________________________
Its_______________________ Type of entity:________________________
Organized under laws of:_______________
Print Office Address:
---------------------------------------
---------------------------------------
---------------------------------------
Print Name of Person Signing:
---------------------------------------
Sign Name:_____________________________
Its_________________________
Date:__________________________________
Print Name of Person Signing:
---------------------------------------
Sign Name:_____________________________
Its________________________
Date:__________________________________
Effective Date:______________________
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Glossary of Selected Terms
"Agreement" means this Bandag Dealer Franchise Agreement, which defines the
general terms and conditions of the relationship between Bandag and its
franchised Dealers.
"Area of Opportunity" or "AOO" is a trading area to which a Dealer, or Dealers,
is/are assigned. The AOO to which you are assigned appears in Exhibit A.
"Bandag Facility" means any permanent or temporary facility or structure, owned
or operated by Bandag or its Dealer, at which Bandag Products are manufactured,
stored, offered for sale, or serviced.
"Bandag Alliance" means Bandag and Bandag Dealers working cooperatively to serve
the tire management needs of commercial vehicle fleets.
"Bandag Alliance Council" means a council, comprised of representatives of
Bandag and selected representatives of Bandag Dealers in the United States and
Canada, which advises Bandag on issues affecting the Bandag business and network
of Dealers in the United States and Canada, as they relate to Bandag
franchisees, and develops strategies and tactics for the mutual success of
Bandag and Bandag Dealers and franchisees.
"Confidential Information" means the (i) Process, Products and System; (ii)
documentation in print or electronic form furnished at any time by Bandag to
Dealer; (iii) terms and conditions of this Agreement; (iv) and other
confidential information about Bandag, its business activities and operations,
its technical information and trade secrets.
"Dealer" means a business or business entity that has established and operates a
Bandag Dealership.
"Dealership Development Process" means engaging and working with Dealers to
develop their capabilities to serve fleet customers following a defined process,
and measuring performance against the Bandag Franchise Model.
"Dealership" means the Bandag Dealership you establish and operate under this
Agreement.
"Effective Date" means the date on which we signed this Agreement.
"Intellectual Property" means all intellectual property worldwide arising under
statutory or common law, whether or not perfected, including all (i)
developments, inventions, modifications, derivative works, patches, bridges,
etc.; (ii) patents, patent applications and potential patent applications; (iii)
rights associated with works of authorship, including copyrights, copyright
applications and copyright registrations; (iv) rights associated with
trademarks, service marks, trade dress, slogans and logos, trademark
applications, and trademark registrations; (v) rights relating to the protection
of trade secrets and Confidential Information; (vi) any other proprietary rights
relating to intangible property (e.g. trade dress, or service ▇▇▇▇ rights); and
(vii) divisions, continuations, renewals, reissues and extensions of the
foregoing (as and to the extent applicable) now existing, hereafter filed,
issued or acquired.
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"Licensed Marks" means those Marks you are authorized to use under this
Agreement.
"Manual(s)" means the Franchise System Manual and the Product Specifications &
Manufacturing Requirements Manual. These two manuals are part of the franchise
documents and are up-to-date source books that define how a franchise is to
operate within the Bandag Alliance and in accordance with the Bandag Dealer
Franchise Agreement. Additional Guidelines and Programs are listed in the
Franchise System Manual and are found in the Franchise Reference Manual.
"Marks" means all BANDAG trademarks, service marks and logos.
"Materials" means Bandag tread, cushion gum, repair gum, repair units, and
certain other proprietary materials we make or distribute, including certain
equipment used in the Process.
"Performance Expectations" means the mutually agreed upon Dealer performance in
a defined Bandag AOO, for a specific time period.
"Process" means our proprietary method of retreading commercial vehicle tires
using our materials and methods (certain of which may be the subject of one or
more patents).
"Production Facility" means a Bandag Facility which produces Bandag Products
under authority from Bandag, using the System and Materials purchased from
Bandag.
"Products" means retreaded tires produced using the Materials and the Process
"PSIP" means Bandag programs, services, information and products.
"Sales Facility" means a Bandag Facility which sells, but does not produce,
Bandag Products.
"System means the Process and the PSIP, together, as used and offered by Bandag
Dealers.
"UFOC" means the Bandag, Incorporated Uniform Franchise Offering Circular.
"We" (or "our", etc.) means Bandag, Incorporated.
"You" (or "your", etc.) means the Dealer named at the beginning of this
Agreement.
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EXHIBIT A
Area of Opportunity
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EXHIBIT B
Production Facilities
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EXHIBIT C
Exception to Section 6.3 Conflicts of Interest Provision
1. Tire retreading pursuant to the AMF Flexcure System.
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