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International Distribution Developer Agreement

THIS INTERNATIONAL DISTRIBUTION DEVELOPER AGREEMENT is made the (...) day of (...) 20.. BETWEEN ABC Limited whose registered office is at (...), City, Country ("the Franchisor") AND XYZ International whose registered office is situated at (...), ............... ("the Developer")

WHEREAS:

(A) The Franchisor operates a chain of retail stores in the (Country) and has established a reputation for providing high quality products to the public under the name (Name).

(B) The Developer desires to sell toys to the public in ................ under the said name in accordance with the Franchisor's business formats.

(C) The Franchisor has agreed on the terms hereinafter contained to permit and assist the Developer to operate stores in ............... as aforesaid.

NOW IT IS HEREBY AGREED as follows:

Definitions

1. In this Agreement the following expression shall where the context permits have the following meanings:

(a) "at cost" means the price paid by the Franchisor for the relevant item including all carriage insurance and other direct costs incurred by the Franchisor in connection with acquiring the relevant item and delivering it to the Freight Forwarders and "cost price" shall have a corresponding meaning.

(b) "the Freight Forwarders" means [ABC Limited] or such other reputable freight forwarders in the (Country) as the Developer may from time to time nominate by notice in writing to the Franchisor;

(c) "the Marks" means the (Name) mark and such other trade or service marks, names, logos, symbols and emblems used by the Franchisor in the (Country) as may be necessary to enable the Developer to reap the full benefit of this Agreement excluding any which are not available for use within the Territory (as hereinafter defined);

(d) "Stores" means all stores opened by the Developer in the Territory under this Agreement;

(e) "the Territory" means .................;

(f) "(Product)s" means all toys, games, and sports and recreational equipment for children included in the Franchisor's (Country) catalogue during the period of this Agreement

License/Duration

2. (1) The Franchisor hereby licenses the Developer during the continuance of this Agreement to sell (Product)s under the Marks in accordance with the provisions of this Agreement provided always that any particular (Product) shall only be sold under such mark or marks as it is sold under by the Franchisor in the (Country).

(2) This Agreement shall come into force immediately and subject to earlier termination as hereinafter provided shall remain in force until 31 December (...).

(3) [N.B. RENEWAL PROVISIONS TO BE INCLUDED HERE IF CONSIDERED APPROPRIATE].

Opening of Stores

3. The Developer shall open a Store at (...), ............... within (--) days from the date of this Agreement and thereafter shall open at least one new Store in the Territory in 20.. and each succeeding year during the period of this Agreement except for the last year.

4. In relation to any proposed new Store the Franchisor shall within sixty days following receipt of appropriate final plans of it submitted by the Developer prepare for the Developer free of cost a suitable design which shall include all necessary shop drawings, specifications of materials and shop fittings.

5. The Franchisor shall at the Developer's request introduce the Developer to shop fitting companies with whom the Franchisor has previously dealt and advise the Developer regarding shop fitting materials.

6. Each Store opened by the Developer shall be in a prime location with a minimum street footage of (...) feet and a minimum ground floor footage of (...) square feet.

7. The Developer shall supply the Franchisor with quality photographs of any building (and its surrounds) which the Developer is contemplating acquiring for the purpose of a new Store and shall not proceed with such acquisition if within thirty days the Franchisor raises reasonable objections to the proposed new Store.

8. The Franchisor shall if requested to do so in writing by the Developer supply the Developer at cost (inclusive of delivery to the Freight Forwarders) with all or any of the shop fittings required for a new Store. The Franchisor shall use all reasonable endeavours to deliver any shop fittings ordered by the Developer to the Freight Forwarders within sixty days of the placing of the relevant order.

9. The Franchisor shall for a period of ten days before the opening of each of the first two Stores under this Agreement provide three managers with experience of opening new stores to train the Developer's staff and assist in preparing the relevant Store for trading.

Training

10. Within 90 days from the date of this Agreement the Franchisor shall provide the Developer's General Manager with three weeks training in the (Country) in the operation of a (Name) Store. The General Manager's travel and accommodation expenses shall be paid for by the Developer.

11. (1) The Developer agrees that its General Manager shall from time to time attend such further training and instructional courses as the Developer may reasonably specify in order to ensure that the Developer continues to provide the high standards of expertise and service associated with the Marks. All transport, accommodation and subsistence costs of the General Manager relating to such training shall be borne by the Developer.

(2) The Franchisor agrees that the Developer may at its own expense arrange for not more than two of its employees at any one time to visit the Franchisor in the (Country) in order to study the Franchisor's method and to make notes and schedules relating thereto PROVIDED ALWAYS THAT no such visit shall last for more than five days and the total number of employees involved in such visits in any year shall not exceed six.

Manual and Know-how

12. The Franchisor shall from time to time make available to the Developer free of cost all technical administrative and operational know-how made available to its stores in the (Country). In particular but not by way of limitation the Franchisor shall provide the Developer with the Franchisors Training Manual, Display Manual and Operations Manual and all updating and replacement material and manuals prepared by the Franchisor during the period of this Agreement. The copyright in all such manuals and any translations thereof, together with any other material shall remain vested in the Franchisor.

13. The Developer shall not make use of any manuals, know-how, designs or other trade secrets of the Franchisor other than for the purpose of opening Stores and carrying on business at them.

The Franchisor's Right to Withdraw (Product)s

14. The Franchisor shall be under no obligation to continue to supply (Product)s which it withdraws from or discontinues supplying to its own stores in the (Country). In addition the Franchisor shall have the right for good cause to refuse to supply any (Product) which it considers to be unsuitable for delivery to or sale in the Territory.

15. The Franchisor shall be entitled by notice in writing to require the Developer to cease selling any (Product)s held in stock by the Developer of a kind which the Franchisor has withdrawn from its UK Stores in which event the relevant provisions of Clause 44 (Defective (Product)s) shall apply.

Trade Marks

16. The Franchisor hereby undertakes to procure that so far as may be permitted by any applicable laws and regulations of the Territory the Developer shall be granted licenses for the sole and exclusive use in the Territory of the Marks.

17. In the event that:-

(a) any infringement or threatened infringement of any of the Marks by a third party in the Territory shall at any time come to the knowledge of the Developer, or

(b) any claim or potential claim shall be made against the Developer in the Territory alleging that the Developer's use of any of the Marks in the Territory infringes any trade mark or other industrial property belonging to such third party, the Developer shall forthwith notify the Franchisor in writing specifying all relevant particulars.

Thereafter Developer shall take such steps as Franchisor may reasonably request to prevent any such infringement or threatened infringement or to defend or protect against any such claim or potential claim including but not by way of limitation commencing or defending court proceedings in accordance with Franchisor's reasonable instructions. Franchisor shall itself be entitled to have to take the conduct of any such court proceedings (whether in its own name or that of Developer). Any costs incurred by Developer or Franchisor pursuant to this clause shall, unless otherwise agreed, be shared equally between them.

18. The Developer shall use the Marks only in relation to the sale of (Product)s and in such forms, styles, designs, sizes and colours as may from time to time be authorised by the Franchisor in writing. The Franchisor undertakes not to use any name or mark other than the Marks in connection with the sale of (Product)s. In addition the Franchisor shall not either during or after termination of this Agreement use in connection with the sale of any other goods any name or mark liable to be confused with any of the Marks.

19. The Developer hereby agrees that it shall not at any time whether during or after termination of this Agreement change its name or its corporate name to a name which includes any of the Marks.

20. In the event of the termination or expiry of this Agreement howsoever occurring the Developer's license to use the Marks hall immediately cease and the Developer shall perform such acts and execute such documents as shall be required in order to ensure that the sole and exclusive right to use the marks in the Territory is vested in the Franchisor.

Conduct of Business

21. The Stores shall be used exclusively for the sale of (Product)s supplied by the Franchisor, other Developers and suppliers approved by the Franchisor in writing.

22. The Developer shall ensure that the retail business conducted at the Stores conforms with the high standards associated with the Franchisor and shall comply with all reasonable instructions and requests by the Franchisor regarding the operation of the said business. The said business shall be conducted exclusively under the Marks and in accordance with business formats laid down by the Franchisor. The Developer's staff at the Stores shall wear uniforms stipulated by the Franchisor after consultation with the Developer which shall be supplied by the Franchisor to the Developer at cost.

23. The Developer shall use in the Stores only such signs, packaging materials display items and other presentational items as are consistent with the Franchisor's standard store image. The Developer may order from the Franchisor supplies of any such items which are used in the Franchisor's Stores in the (Country) and the Franchisor shall supply them at cost price.

24. The Developer shall on [its stationery] [on all letters to persons other than customers] [and by notice in each Store] indicate in a manner approved by the Franchisor that the Developer is carrying on business as a developer of the Franchisor.

25. The Developer shall carry on business at each Store for its own account and at its own risk in an efficient and courteous manner and shall not do anything which will or may bring the name or reputation of the Franchisor into disrepute. The Developer shall perform all its contractual and other legal obligations to customers of the Developer and shall indemnify the Franchisor against all liabilities arising from any failure to do so. Any complaints or claims made by customers shall be dealt with by the Developer in a fair and reasonable manner.

26. The Developer shall use its best endeavours to arrange for customers who hold (...) or (...) credit cards to be able to use them in the Stores.

27. The Developer shall keep each Store open and fully staffed during normal shopping hours in its vicinity. Executives of the Franchisor shall be entitled to visit and inspect all parts of each Store at any time during normal working hours. Twice a year the Franchisor shall send one of its Managers to conduct a formal pre-arranged inspection of each Store to monitor trading standards.

28. The Developer shall sell (Product)s at competitive prices provided always that the Developer shall not be under an obligation to sell any (Product) at a price less than ten per cent higher than the price at which the Developer buys it.

29. The Developer shall effect any necessary registration of this Agreement in the Territory and shall comply with all relevant laws and regulations in the Territory relating to the conduct of the Developer's business. The Developer shall at all times keep the Franchisor informed of all relevant import or other regulations of the Territory relating to the (Product)s.

Ordering Procedures

30. Not later than sixty days before the planned opening of a Store the Developer shall place with the Franchisor an order for such amounts of the (Product)s as will ensure that on the opening day the Store is fully stocked with a credible range of the (Product)s.

31. For ordering and reporting purposes each Stores shall operate trading periods of four weeks ("Trading Periods"). In the fourth week of each Trading Period and at such other times as the Developer may think fit the Developer shall submit to the Franchisor by facsimile transmission such orders as may be required in order to ensure that each Store remains fully stocked with a credible range of (Product)s. If any order or part thereof is expressed in general or ambiguous terms the Franchisor shall be entitled to allocate such (Product)s to it as the Franchisor may reasonably think fit.

32. The Developer shall comply with such reasonable administrative systems and procedures relating to the ordering and supply of (Product)s as may from time to time be specified in writing by the Franchisor. In addition the Franchisor and the Freight Forwarders shall follow such reasonable instructions regarding taking and checking deliveries and related matters as the Franchisor may from time to time notify in writing.

33. The Franchisor shall respond to orders from the Developer no less favourably than it responds to orders from its own Stores in the (Country). Save for any breach of this obligation the Franchisor shall have no liability to the Developer for any delay in supplying (Product)s or other items ordered by the Developer.

Price

34. The price payable by the Developer for (Product)s supplied by the Franchisor shall be [the Franchisor's then current UK retail price for the relevant (Product) less a (...)% discount] [the cost price of the relevant (Product) together with a mark up of (...)%]. Such price is inclusive of carriage and insurance costs incurred in delivering (Product)s to premises of the Freight Forwarder in the South East of England.

Delivery and Risk

35. (Product)s ordered by the Developer shall be delivered by the Franchisor to the Freight Forwarders at premises in the South East of England as specified in the relevant order. The Developer shall bear all charges of the Freight Forwarders. The Freight Forwarders shall act as the Developer's agent and shall be responsible for the preparation and processing of all necessary export documentation.

36. The risk in all (Product)s and other items supplied by the Franchisor under this Agreement shall pass to the Developer at the time of their delivery to the Freight Forwarders. The Franchisor shall in no circumstances be liable to the Developer in respect of any loss, theft or damage occurring after risk has passed. Nor shall it be liable for any earlier loss or damage in transit unless; (a) if the loss or damage is apparent at the time of the delivery to the Freight Forwarders it is notified by them to the Franchisor by facsimile, email or telex within (--) hours of such delivery; or (b) if not so apparent, it is notified by the Developer as aforesaid within (--) hours of delivery to the Developer in ..................

Payment

37. Payment for all supplies of (Product)s and other items supplied by the Franchisor under this Agreement shall be made by the Developer in respect of each delivery to the Freight Forwarders by an irrevocable letter of credit ("the Letter") providing for immediate payment on production of the specified documents Such Letter shall be in a form approved by the Franchisor and shall be opened or unconditionally confirmed by (...) Bank, London, or by the London branch of any other major bank approved by the Franchisor in writing, at the same time as the order to which it relates is forwarded to the Franchisor. 38. All payments to the Developer under this Agreement shall be made in (Currency) in the (Country) and shall be made clear of any withholding tax, duty, impost, charge or cost whatsoever and of any set off or other deduction not previously agreed by the Franchisor in writing.

39. The Franchisor reserves title to all (Product)s and other items supplied under this Agreement until such time as payment for the relevant delivery has been received in full by the Franchisor. Until that time the relevant (Product)s or other items shall remain the sole and absolute property of the Franchisor as both legal and equitable owner.

Minimum Purchase Requirements

40. [N.B. IF ANY MINIMUM PURCHASE OBLIGATIONS ARE TO BE IMPOSED ON THE DEVELOPER, THEY SHOULD BE INSERTED HERE. IN AN AGREEMENT SUCH AS THIS WHERE AN OBLIGATION TO OPEN NEW STORES IS IMPOSED ON THE DEVELOPER, IT MAY BE CONSIDERED THAT NO INIMUM PURCHASE REQUIREMENTS ARE CALLED FOR.]

Restrictions

41. (1) The Developer shall not actively market (Product)s outside the Territory but shall be entitled to accept orders for delivery outside the Territory from:-

(a) members of the public; and

(b) other developers of the Franchisor.

(2) The Developer shall not market any toys other than the (Product)s [in the Territory] [within a radius of ten miles from any Store]. [N.B. Appropriate competition law advice should be obtained]

42. The Franchisor shall not itself actively market (Product)s in the Territory nor permit any other developer or distributor of the Franchisor to do so but such other developers or distributors may accept orders from members of the public for delivery within the Territory.

Indemnity

43. The Developer agrees to indemnify and keep the Franchisor indemnified against all liabilities, claims, damages, or injury of every description which may occur to or affect the Franchisor from any failure by the Developer to perform its obligations under this Agreement or from any act or omission whatsoever on the part of the Developer or any servant or agent of the Developer.

Defective Goods

44. (1) In this Clause the expression defective goods means goods which were defective or potentially defective immediately after they were manufactured. It does not include goods damaged in transit which are dealt with in Clause 36.

(2) Any defects which would be apparent on reasonable inspection must be notified to the Franchisor in writing within 72 hours of delivery of (Product)s to the Developer in ............... failing which no claim in respect of them may be made by the Developer.

(3) Under no circumstances shall the Franchisor be liable for any defects which are not common to other goods in the same batch supplied by the manufacturer to the Developer.

(4) If the Franchisor withdraws any (Product)s from its own stores in the UK for health and safety reasons it shall be entitled to require the Developer to withdraw them and if such withdrawal is not countermanded within 180 days the Franchisor shall reimburse the cost of said (Product)s to the Developer. The Developer shall not sell or otherwise dispose of any such goods and shall destroy them on receipt of a written request to do so from the Franchisor.

(5) In the event that the Franchisor withdraws any (Product)s from its stores in the UK other than for health and safety reasons it shall be entitled to require the Developer to withdraw them likewise. If such withdrawal is not countermanded within 180 days the Franchisor shall use all reasonable endeavours to obtain reimbursement of the cost price from the relevant supplier and shall account to the Developer for whatever it recovers in respect of said withdrawn goods. The Developer shall be entitled to sell any such goods as seconds and may retain the proceeds of any such sales.

(6) Save as expressly accepted in this Clause the Franchisor shall have no liability or responsibility to the Developer in respect of defective goods and all warranties (whether common law statutory or otherwise) regarding the quality, condition, durability, fitness for purpose, conformity whit specification or sample, or otherwise, relating to the Franchisor Goods supplied to the Developer under this Agreement are hereby expressly excluded.

Termination

45. In addition to any right which the Franchisor may have to terminate this Agreement under common law the Franchisor shall be entitled to terminate it summarily by notice in writing to the Developer;

(a) in the event of the Developer being dissolved or going into liquidation (other than voluntarily for the purposes of amalgamation or reconstruction) or being unable to pay its debts or suffering a distress or execution to be levied on or a receiver to be appointed of any of its property;

(b) in the event of the Developer ceasing or threatening to cease to trade;

(c) if the Developer shall be in breach of any of its obligations under this Agreement and the Franchisor shall notify the Developer in writing of such breach and, the breach being one which is capable of being remedied, the Developer fails to remedy it within thirty days from the date of such notification;

(d) in the event of the Developer repeating any material breach of this Agreement after receiving written notice from the Franchisor warning that repetition of the breach will or may lead to termination of this Agreement.

46. Upon the termination of this Agreement howsoever occurring the Developer shall cease to make any use of the Marks and of the Design and Shopfittings, all its rights hereunder shall cease and the Franchisor shall be entitled to request the Registrar of Trade Marks to cancel registration of the Developer as a registered user of any Mark. The Developer shall upon reasonable demand by the Franchisor co-operate and do all such acts or things and execute all such documents as may be necessary to procure such cancellations. The costs and expenses of cancelling registration shall be borne in equal proportions by the Franchisor and the Developer.

47. The termination of this Agreement shall not prejudice any right or claim of either party accrued prior to termination.

Post Termination

48. (1) Upon termination of this Agreement howsoever occurring the Developer shall forthwith-

(a) unless otherwise agreed by the Franchisor in writing return forthwith to the Franchisor's (Country) distribution depot at the Developer's expense all (Product)s and other property in the Developer's or its agent's possession for which payment in full has not been received by the Franchisor;

(b) unless otherwise agreed in writing by the Franchisor pay to the Franchisor at the date of such termination all outstanding fees and other sums owing to the Franchisor under this Agreement notwithstanding that such fees and other sums owing would normally have been due for payment at a later date;

(c) comply with such other reasonable requirements as may be notified in writing by the Franchisor.

(2) Subject to Sub-Clause (1) (a) of this Clause the Developer shall be entitled after termination to retain and sell in the normal course of business any (Product)s in its possession but shall do nothing in relation to them which may bring the name of the Franchisor into disrepute.

49. The obligations contained in this Agreement which expressly or by implication apply after the termination of this Agreement shall, after such termination, constitute a separate Agreement and be enforceable notwithstanding the termination of this Agreement.

The Developer's Agents

50. The Developer will use its best endeavours to ensure that its agents comply totally with all clauses contained within this Agreement. Any loss suffered by the Franchisor as a result of the failure by the Developer's agents to comply with this Agreement shall be borne by the Developer.

Partial Invalidity

51. Should any part term or provision of this Agreement be declared by any Court to be or be accepted by the parties as being in conflict with the law or unenforceable the validity and enforceability of the remainder of this Agreement shall not be affected thereby. In such a case the offending part term or provision shall be deemed not to be part of this Agreement and any resulting necessary consequential amendments shall be deemed to be incorporated herein. [N.B. It may be considered desirable to provide for an alternative turnover related fee in the event that the Developer becomes entitled to buy (Product)s from somebody other than the Franchisor (Clause 35 would not give the Franchisor any income in respect of (Product)s purchased from a third party. Also the Franchisor may wish to say that if he is deprived of the exclusive right to supply the Developer the Developer should not have any exclusive territory]. No Agency etc

52. This Agreement does not constitute the Developer as an agent legal representative or partner of the Franchisor for any purpose whatsoever or vice versa and save as expressly provided herein or otherwise agreed in writing neither party is in any way authorised to make any contract agreement warranty or representation on behalf of the other nor to create any obligation express or implied on behalf of the other and each party undertakes not to do so.

Forbearance etc

53. No forbearance delay or indulgence by either party in enforcing any of the terms and conditions of this Agreement shall prejudice or affect its right and remedies hereunder or at English common law nor shall any waiver of any breach hereof operate as a waiver of any subsequent breach. No waiver or variation of any of the terms and conditions of this Agreement shall be valid or have any effect unless the same shall be made in writing and signed in the case of the Franchisor by a Director or the Company Secretary and in the case of the Developer by (...).

Confidentiality

54. Neither party shall disclose to third parties (excepting its auditors professional advisors and bankers) or itself make any unauthorised use of any information as to the methods of operation, publicity, financial affairs, present or future plans or policies of the other or any other information which at the time of disclosure is not in the public domain.

Registration and Compliance

55. The Developer shall take any steps that may be necessary to ensure registration of this Agreement if appropriate in the Territory and to ensure compliance including without limitation compliance of the (Product)s throughout the duration of this Agreement with all applicable laws and regulations in the Territory. The Developer shall pay all costs incurred in connection with such compliance.

Work permits etc

56. The Developer shall be responsible for obtaining all necessary work permits and permissions in respect of all representatives of the Franchisor sent to the Territory for the purposes of this Agreement.

Force Majeure

57. Neither party shall be liable for any breach of this Agreement to the extent that it is caused by force majeure circumstances for which it is not responsible.

No Assignments

58. The benefit of this Agreement may not be assigned by the Developer [or by the Franchisor] and no part of the Developer's obligations may be carried on by any person other than the Developer without prior written approval of the Franchisor which the Franchisor may withhold in its own absolute discretion.

Consents by the Franchisor

59. Any approval consent or agreement required to be given by the Franchisor under this Agreement shall be given by telex or in writing and shall not be regarded as validly given unless signed by a Director, the Company Secretary of the Franchisor or a head office employee of the Franchisor authorised by a Director or the Company Secretary.

Notices

60. Any notice or report under this Agreement shall be given to the other party at the address given at the commencement of the Agreement. Any such notice may be given by Recorded Delivery Post in which event it shall be deemed to be given on the date on which it is recorded by the U.S. Postal Service as having been delivered. Alternatively it may be given by email, telex or facsimile in which event it shall be deemed to have been given on the next day following the date of despatch thereof which is a business day in the country of the recipient.

English Law

61. Save for matters relating to the use of the Marks in the Territory which shall be governed by the Law of ............. this Agreement shall be governed by and construed in accordance with English Law and both parties hereby submit to the non exclusive jurisdiction of the English Courts.

AS WITNESS the hands of duly authorised officers on behalf of the parties hereto the day and year first before written

............Director

For and on behalf of

[(...)]

............Director

For and on behalf of

[(...)]

*** If Required By Federal Or State Law ***

This Section for Notary:

ACKNOWLEDGMENT

State of _________

County of ________ [COUNTY]

On [DATE] before me, [NAME OF NOTARY], notary, personally appeared [NAME OF PERSON(S) INVOLVED], personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

Witness my hand and official seal.

Signature ________
Notary

My commission expires: _____

(Seal)