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8/97
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 market 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 in United States
Dollars that must be purchased by Franchisee from Company
hereunder shall be, exclusive of all handling charges, $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 two percent (2%) 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 Franchisee's country ("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 Franchisee's country, 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 Franchisee'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
Franchisee'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 Franchisee'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. Franchisee's rights hereunder shall be non-exclusive, and Company
reserves the right to sell in Franchisee'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. Notwithstanding the
foregoing, Company agrees that, if at any time during the first
eighteen (18) months of the term of this Agreement, Company
receives an offer from a third party to enter into a license
agreement for the Franchisee's country, then Company shall provide
Franchisee with written notice of the material terms of such offer
and Franchisee shall have thirty (30) days thereafter to notify
Company in writing of its intent to enter into a license agreement
with Company for the Franchisee's country on substantially the
same terms and conditions as those contained in the offer. If the
Franchisee does not notify Company of its intent to enter into a
license agreement as set forth above, or if the Franchisee does
notify Company but Company and Franchisee do not negotiate and
enter into a license agreement within thirty (30) days after
Franchisee's notice to Company, then the right set forth in this
Section 9 shall terminate and the Company may enter into a license
agreement with any other party.
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 Franchisee'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 Franchisee'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 Franchisee'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
Franchisee'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", "ACE HARDWARE" and
"ACE HOME CENTER" (hereinafter "the Marks") 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 Marks 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 Marks 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 Marks
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
Marks 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 Marks 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 Marks 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 with respect to any actual
or alleged invalidity of the Marks or in connection with
Franchisee's use of the Marks, or the use of the services
furnished by Franchisee in connection therewith.
(h) Franchisee acknowledges Company's ownership of the Marks, 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 Marks 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
Marks, or contest the ownership of the Marks 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 Marks, or to register, retain,
enforce or defend the Marks.
(i) Franchisee agrees to notify Company of any unauthorized use
of the Marks by others, as promptly as such use may come to
Franchisee's attention. Company shall have the sole and
exclusive right, but not the obligation, to register or renew
the Marks 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 marks 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 warehouse
catalogs, videotapes, 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 Franchisee's
transactions with Company or for the purpose of promoting
Franchisee'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 Franchisee'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 Marks 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 Marks, and to destroy all printed or visual materials of
any sort bearing the Marks.
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 Franchisee'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 Franchisee'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
Franchisee'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
Franchisee'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 Franchisee'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
Franchisee'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.$1,000,000.00 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 Franchisee's sole expense, take such steps as
may be required in Franchisee'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 Franchisee'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.
Franchisee's act of continuing to do business with Company after
the effective date of such amendment shall be deemed to constitute
Franchisee'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. All written notices
hereunder shall be sent by a internationally recognized courier
service (e.g. Federal Express, DHL).
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 _________________________, 2000, 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 ________________, 2000.
By:___________________________
____________________________
(Title of Officer)
ACE HARDWARE CORPORATION FRANCHISE 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._________________________________________________________________
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 __________________, 2000.
By:___________________________________
___________________________________
(Title of Officer)