Exhibit 10.2(e)
BANDAG, INCORPORATED
BANDAG DEALER FRANCHISE AGREEMENT
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| Franchisee Business
Name: |
____________________________________ |
Business Address: |
____________________________________ |
Effective Date: |
____________________________________ |
DO NOT REPRODUCE OR DISTRIBUTE
TABLE OF CONTENTS
Section
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Page
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| 1 |
BACKGROUND |
1 |
2 |
FRANCHISE
RELATIONSHIP |
2 |
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2.1. |
Bandag Dealership Business |
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2.2. |
Mutual Commitment |
3 |
GRANT AND ACCEPTANCE OF
FRANCHISE |
2 |
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3.1. |
Franchise and Territory |
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3.2. |
Term and Renewal |
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3.3. |
Initial Fee |
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3.4. |
Initial Training |
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3.5. |
Acknowledgments |
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3.6. |
Acceptance |
4 |
FRANCHISE MANAGEMENT,
EQUITY, AND SUCCESSION PLANNING |
4 |
|
4.1. |
Dealership Management |
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4.2. |
Business Equity |
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4.3. |
Succession Planning |
5 |
BANDAG SUPPORT
SERVICES |
5 |
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5.1. |
Best Efforts |
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5.2. |
Bandag System Manual(s) |
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5.3. |
Training |
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5.4. |
Sales and Technical Support |
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5.5. |
Bandag Alliance Council |
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5.6. |
Additional Support |
6 |
DEALER
PERFORMANCE |
6 |
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6.1. |
Best Efforts |
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6.2. |
Confidentiality |
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6.3. |
Conflicts of Interest |
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6.4. |
Warranties |
7 |
DEALERSHIP
STANDARDS |
8 |
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7.1. |
Operating Standards |
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7.2. |
Inspection |
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7.3. |
Intellectual Property |
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7.4. |
Trademark Ownership |
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Section
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Page
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| 7 |
DEALERSHIP STANDARDS
(Cont'd) |
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7.5. |
Trademark Usage |
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7.6. |
Product Purchase Requirements |
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7.7. |
Purchase Orders |
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7.8. |
Security Interest |
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7.9. |
Payment |
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7.10. |
Financial Records, Reports and Dealership Records |
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7.11. |
Indemnification |
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7.12. |
Insurance |
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7.13. |
Accounts |
8 |
FRANCHISE
TRANSFER |
11 |
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8.1. |
Transfer Standards |
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8.2. |
Other Conditions to Transfer |
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8.3. |
Dealer Death or Disability |
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8.4. |
Transfer by Franchisor |
9 |
RESOLUTION OF
DISPUTES |
11 |
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9.1. |
Notice and Mediation |
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9.2. |
Arbitration |
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9.3. |
Injunctive Relief |
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9.4. |
WAIVER OF JURY TRIAL |
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9.5. |
LIMITATION OF REMEDIES |
10 |
TERMINATION |
13 |
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10.1. |
Grounds |
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10.2. |
Notice |
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10.3. |
Consequences |
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10.4. |
Operation After Termination or Expiration |
11 |
MISCELLANEOUS
PROVISIONS |
16 |
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11.1. |
Interpretation |
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11.2. |
Survival |
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11.3. |
Governing Law |
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11.4. |
Severability |
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11.5. |
Notice |
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11.6. |
Relationships |
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11.7. |
Review |
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11.8. |
Responsibility |
Signatures |
18 |
| Glossary of Selected
Terms |
19 |
| EXHIBIT A:Area of
Opportunity |
21 |
| EXHIBIT B:Production
Facilities |
22 |
| EXHIBIT C:Exception to
Section 6.3 Conflicts of Interest Provision |
23 |
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BANDAG DEALER FRANCHISE AGREEMENT
BANDAG DEALER
FRANCHISE AGREEMENT dated ________________________, (the
“Agreement”) between BANDAG, INCORPORATED, an Iowa
corporation, located at 2905 North Highway 61, Muscatine, Iowa
52761 (“BANDAG,” “we,” “our,”
or “us”), and
__________________________________________________________ located
at _______________________________ (“Dealer,”
“Franchisee,” “you,” or
“your”).
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 foster 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;
“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.
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Certain
other terms which are capitalized in this Agreement are defined in
a glossary at the end of the Agreement.
| 2. |
FRANCHISE RELATIONSHIP |
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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). |
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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 |
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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. |
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• |
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 do not preclude us from establishing or relocating any
Dealership facility in or into an AOO. |
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• |
You may produce Products only at the Production Facility (or
Facilities) listed on Exhibit B. |
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• |
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. |
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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. |
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• |
We will license you to use in your Dealership, any improvements
in the System that we choose to license to the Bandag System,
generally. |
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• |
We reserve all rights not expressly granted to you in this
Agreement. |
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3.2. |
Term and Renewal . 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: |
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• |
You or your designated manager(s) achieve and maintain, to our
satisfaction, the skills and capabilities prescribed in the
Manual(s); |
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• |
You pay us a successor franchise fee of $1,000.00; |
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• |
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 |
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• |
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. |
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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. |
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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. |
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• |
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. |
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• |
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. |
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• |
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. |
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• |
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. |
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• |
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. |
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• |
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. |
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• |
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. |
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• |
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. |
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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 |
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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. |
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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 |
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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: |
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• |
Develop and deliver quality equipment, information, products,
programs, and services that support Dealers in promoting and
increasing sales of PSIP; |
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• |
Provide Dealers with opportunities for growth and development
through the Dealer Development Process described in the
Manual(s); |
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• |
Provide personnel as we deem appropriate to support Dealer
sales, service, and manufacturing efforts; |
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• |
Protect and enhance the value of the Bandag system, generally;
and |
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• |
Maintain the value and integrity of the System for the benefit
of Bandag Dealers, Bandag customers, and Bandag. |
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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. |
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5.3. |
Training . We will develop and deliver quality training
to support Dealers in using Bandag equipment, and PSIP. |
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• |
We will provide training at the Bandag Incorporated Learning
Center, or at your Dealership or another location we
designate. |
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• |
At your request, we may provide optional supplemental training
for you and/or your key personnel at a mutually convenient time and
location. |
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• |
We may, at our reasonable discretion, require periodic
retraining of you and any of your managers. |
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• |
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. |
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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). |
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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. |
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In addition to your obligations prescribed in the Manual(s),
you agree to the following: |
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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: |
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• |
Promote and increase the sales of PSIP in the AOO; |
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• |
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 |
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• |
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. |
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Notwithstanding your obligations under this Section 6.1, you
will be permitted to: |
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• |
Perform certain services on competitive retread products for
national fleet accounts (that is, accounts for whom the terms and
conditions of supply agreements are negotiated between a
competitive retread manufacturer and/or new tire manufacturer and
the end user) outside the Dealership. Such services shall be
performed only at fleet accounts’ terminals, shared fleet
terminals, truck stops, trucking service centers and/or similar
types of trucking servicing locations and the competitive retread
products must be delivered to those locations by the competitive
retread manufacturer, the competitive retread manufacturer’s
franchisees or its agents. Such services shall include mounting and
dismounting products, removal/installation of tire wheel
assemblies, balancing, air pressure maintenance, rotation, and
fleet inspections. However, fleet terminals or other sites as
referenced above may not be created to undermine the intent of this
section; |
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• |
Perform certain services on competitive retread products for
national fleet accounts at or outside the Dealership, which
services shall include (1) repairs that do not require the tire to
go through the retread process; (2) emergency road service; (3)
wheel refurbishing/ inspection; and (4) vehicle alignment;
and |
| |
• |
Bill for any of the above services on competitive retread
products directly to the fleet or through any of the competitive
retread manufacturer’s then-current national accounts
program. |
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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 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. |
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6.3. |
Conflicts of Interest . Consistent with the terms of
Section 6.1, during the term of this Agreement, you will not
directly or indirectly sell, produce or deliver 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 |
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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. |
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