Franchise Agreement

http://howtofranchiseyourbusiness.blogspot.com FRANCHISE AGREEMENT between [YOUR COMPANY] and [_____________________] No.: This Franchise Agreement (together with any schedules or annexures, as may be amended, modified or varied from time to time hereinafter referred to as “Agreement”) is entered into this ------- of -----2007 by and between -------PT. [YOUR COMPANY] INDONESIA, a limited liability company, duly incorporated and existing under the laws of the [YOUR COUNTRY], having its principal office at XXXXXXX, [YOUR CITY] (hereinafter referred to as the “Franchisor”). And ___________________________, a limited liability company duly incorporated and existing under the laws of the [YOUR COUNTRY], having its principal office at _______________ (hereinafter referred to as the “Franchisee”). The Franchisor and the Franchisee are hereinafter collectively referred to as the “Parties” and individually as a “Party”. WHEREAS 1. The Franchisor is (i) a holder of “[YOUR COMPANY]” trademark license (“Trademark”) and the owner/legal holder of the Franchisor’s Intellectual Property Rights (as defined below) which all would be utilized by the Franchisor for the purpose of the implementation of this Agreement; and 2. The Franchisee owns and or controls the Establishment (as defined below) as set out in the franchise business address which will be utilized by the Franchisee to perform the Operational Activities (as defined

below) pursuant to the terms of this Agreement. 3. According to the assessment as conducted by the Franchisor, The Franchisor agrees to grant the Franchisee certain rights to, within the scope as set out in this Agreement, utilize the Trademark and the Franchisor’s Intellectual Property Rights, and the Franchisee desires to obtain from the Franchisor such rights and conducts Operational Activities pursuant to the terms of this Agreement. NOW THEREFORE, based on good faith and mutual trust, the Parties in consideration of the undertakings and commitments set forth herein, agree as follows: Article 1 DEFINITIONS “Workshop” means an establishment where the Franchisee conducts its production of the Franchise Product. ““Marketing and Sales Services Fee” means fee which must be paid by the Franchisee to the Franchisor for the marketing and sales services provided by the Franchisor as stipulated in Article 13 of this Agreement. ““Training Fee” means fee which must be paid by the Franchisee to the Franchisor for providing training program pursuant to Article 13 of this Agreement. ““Audit and Quality Control Fee” means fee which must be paid by the Franchisee to the Franchisor for conducting audit and quality control pursuant to Article 13 of this Agreement. “Royalty Fee” means monthly fee payable by the Franchisee to the Franchisor as set forth in Article 13 of This Agreement. ““Franchise Fee” means fee which must be paid by the Franchisee to the Franchisor before the date of the signing of this Agreement, as set out in Article 13 of this Agreement. “Intellectual Property Rights” means all patent rights, copyrights, industrial designs, and trademarks, either registered or unregistered, trade secrets, and other intellectual property rights, as defined and regulated by the prevailing laws pertaining to intellectual property rights including implementing regulations and amendments thereto. “Franchisor’s Intellectual Property Rights” means any Intellectual Property Rights owned or controlled by the Franchisor in any form.

“Operational Activities” means the business activities conducted by the Franchisee in implementing the Agreement, including but not limited to the productions, marketing and/or sale of the Franchise Products. . “Franchise Object” means Franchise Product, Trademark and the Franchisor’s Intellectual Property Rights used by Franchisor in connection with the implementation of this Agreement. “Minister of Trade Regulation” means the Minister of Trade of the [YOUR COUNTRY] Regulation Number [NUMBER REGULATION] on the Provisions and Procedures of the Issuance of a Franchise Business Registration Letter and any of its amendments from time to time. “[YOUR COMPANY] Identity Directives” means the directives and guidance provided to the Franchisee to use the Trademark for the purpose of implementation of this Agreement. “Franchise Product” means (i) any products produced by the Franchisee in connection with the implementation of this Agreement and pursuant to the Production Manual and/or Franchisor’s Product to be purchased, marketed and sold by the Franchisee as may be amended from time to time by the Franchisor. “Franchisor Product” means any products produced or sourced by the Franchisor which types and prices may be changed and amended from time to time based on the sole discretion of the Franchisor. “Shop” means an establishment where the Franchisee stores, displays, and sells the Franchise Product as well as sells and manages the marketing and distribution of the Franchise Product. “Establishment” means any Shop(s) and Workshop(s) owned or controlled by the Franchisee for the duration of this Agreement which will be used by the Franchisee to perform the Operational Activities. “Manuals” means the directions, technical guidelines and specifications issued by the Franchisor for the purpose of carrying out the Operational Activities among others and any of their respective amendments, supplements or variations. “Production Manual” means the directions, technical guidelines and spesifications for the purpose of production of the Franchise Product set out by the Franchisor as may be amended, supplemented and varied by the Franchisor from time to time. .

“Reporting Manual” means the directions, specifications and technical guidelines issued by the Franchisor for the purpose of preparing activities and financial reports as well as other administrative processes during the implementation of this Agreement as may be amended, supplemented and varied by the Franchisor from time to time “Area” means the geographical area where the Franchisee may conduct the marketing and distribution activities of the Franchise Product as stipulated in Article 3.3 of the Agreement. Article 2 GRANTING OF RIGHTS 2.1 Granting Of Rights The Franchisor hereby grants to the Franchisee the right to perform Operational Activities, and use the Trademark and Franchisor’s Intelectual Property Rights at the agreed Establishment and Area strictly in accordance with the terms and conditions of this Agreement. 2.2 Limitation of Rights For the duration of this Agreement, without the prior written consent of the Franchisor, the Franchisee shall not: a. sign a franchise agreement or any other agreement with any other party, or execute or implement any such rights or activities similar to those set out in this Agreement;

b. give permission to any other party to benefit, take advantage of and/or utilize any rights obtained from the Franchisor under this Agreement in any manner whatsoever; c. use, duplicate, or disseminate either in part or as a whole any documents, information, and other materials provided to the Franchisee by the Franchisor in any form or manner for any purposes other than those specifically set out in this Agreement.

d. Purchase, use, market, distribute and/or sell products other than: (i) the Franchisor’s Product; (ii) the Franchise Product; and/or (iii) any

other product agreed by the Franchisor from time to time. e. directly or indirectly produce any products which will used for the purpose of implementations of this Agreement which are not in accordance with the Production Manual and other relevant terms as set out in this Agreement. f. Maintain the Establishment at a location other than the location as set out in this agreement and conduct marketing and distribution activities outside of the Area. 2.3 The Use of the [YOUR COMPANY] Trademark

In using the Trademark, the Franchisee is obliged to comply with the provisions of the [YOUR COMPANY] Identity Directives and other relevant terms of this Agreement.

Article 3 BUSINESS SITE AND AREA 3.1 The Franchisee own and/or control the Establishment at the addresse(s) as set out franchising business address from where it will conduct the Operational Activities. 3.2 The Franchisee shall not change the location of its Establishment without the Franchisor’s prior written consent 3.3 In relation to its Operational Activities, The Franchisee may only conduct marketing and distribution of the Franchise Product within [please insert the exact area] 3.4 For the purpose of implementing this Agreement, the Franchisee shall within 30 days after signing the agreement complete the modifications of the Establishment to conform with [YOUR COMPANY] Identity Guidelines, directions provided by the Franchisor and relevant terms of this Agreement.

3.5 Any costs incurred in performing such modifications set out in Article 3.4 above shall be borne by the Franchisee.

3.6 The requirement set out in Article 3.4 above is an essential part of this arrangement therefore should the Franchisee fails to complete such modification during the time period set out above or other period as agreed by the Franchisor in writing, the Franchisor may immediately terminate this Agreement and any fees paid by the Franchisee to the Franchisor in accordance with the trems of this Agreement will not be paid back to the Franchisee. Termination of this Agreement may resulted in penalty as listed in Article 16 of this Agreement. Article 4 QUALITY STANDARD 4.1 In performing the Operational Activities, the Franchisee shall follow the quality standard such as production, after sales service, reporting, bookkeeping, accounting, and/or management as provided in the relevant Manuals. 4.2 The Franchisor evaluates periodically the implementation of franchisee’s quality standard as stipulated on exhibit 6.2. Franchisee has to attend technical and / or non-technical training if evaluation score was less or equal 80%. Training fee, which ammount is stipulated in article 13.1.1.b, would be borne by franchisee. This training would be conducted the latest 30 days after evaluation result was announced to Fanchisee. 4.3 Franchisee is not allowed to sell franchise product which would not comply with quality standard. Franchise product which would not comply with quality standard should immediately be demolished. Sales of the products that do not pass Franchise quality control might resulted in termination of this contract and its consequences according to Article 16. 4.4 The Franchisor will immediately notify the Franchisee in the event of any amendments, supplements or variation to any of the Manuals. Article 5 REGISTRATION OF AGREEMENT 5.1 The Franchisee shall register this Agreement with all related information to the appropriate authority no later than 30 (thirty) business days after the date of this Agreement 5.1 The Franchisee shall take all necessary action to obtain a Franchise Business Registration Letter (FBRL) and apply for an extension of the FBRL in the event that it expires prior the the expiration of this Agreement. Any expense incurred in this regard shall be borne by the

Franchisee. 5.2 Franchisee shall provide a copy of the FBRL to the Franchisor as soon as the Franchisee obtains the FBRL from the relevant authority. Article 6 TRAINING & TECHNICAL ASSISTANCE 6.1 The Franchisor will execute training programs concerning particular matters as required for the implementation of this Agreement, and the Franchisee shall ensure the participation of its employees in these training programs. The Franchisee will be responsible for details on the training programs including type, timing, location, and fee.

6.2 The Franchisor reserve the rights to terminate or postpone trainings if all the required training items are not available or Franchisee does not have a proper human resources to participate in the training. In relation to the implementation of the Agreement, The Franchisor will also provide consultation and technical assistance to the Franchisee based on the terms and conditions. Article 7 FRANCHISE PRODUCTS 7.1 The Franchisor shall sell the Franchisor’s Products to the Franchisee to be: used as material for the production of the Franchise Product; 7.2 The Franchisee shall sell the Franchisor Product at the lowest price as will be determined by the Franchisor from time to time after taking into account among other production and distribution costs, market conditions as well as margin for the Franchisee. 7.3 The Franchisee may determine the sale price of the Franchise Product with due consideration to the Franchisor’s lowest selling price. 7.4 In order to maintain the sustainability of the Operational Activities, the Franchisor will perform reasonable effort to make a punctual delivery of the Franchisor’s products to the Franchisee. 7.5 Franchisee makes sure the availability of franchise product as stipulated in Exhibit 13.

Article 8 FRANCHISE FINANCING 8.1 In order to ensure the sustainability of the Operational Activities, the Franchisee has to manage to provide initial investment of the franchise operation by its own effort before signing this franchise agreement. 8.2 If the franchisee obtained credit facility from third party, the Franchisee shall fulfill all of its obligations, including punctual payment of the installments in accordance with the terms and conditions of the credit facility. In the event the Franchisee fails to fulfill these obligations, the Franchisor shall have the right to unilaterally terminate this Agreement pursuant to Article 15 of this Agreement. Articles 9 EQUIPMENTS AND MACHINERIES 9.1 The Franchisee must use equipments and machineries that must be purchased and/or leased by the Franchisee from the Franchisor. 9.2 The Franchisee must paid all the machines and supporting equipments used to produce the Franchisor products in advance before the signing of this agreement.

Article 10 REPORTING, CONTROLLING AND INSPECTION 10.1The Franchisee is obliged to furnish to the Franchisor: a. a comprehensive monthly report, including sales report of the Franchise Products, in the format and the time set out by the Franchisor; b. Operational Activities report, prepared in the format and period as stipulated in the Reporting Manual. c. full access at any time to conduct an inspection of the Operational Activities at the business site of the Franchisee, of documents and machinery or equipment used by the Franchisee in conducting the Operational Activities. Such access includes, but is not limited to, the

right for the Franchisor to take pictures and film and interview the employees of the Franchisee and its customers.

10.2Franchisor is entitled to conduct quality control on the Operational Activities performed by the Franchisee pursuant to the provisions provided by the Franchisor, 10.3The Franchisee shall provide an annual report to the issuing authority of the FBRL on the progress of its business on 31 January of each year by using the standard form as stipulated in the Minister of Trade Regulation 10.4Franchisee shall also provide a written report to the issuing authority of the FBRL on changes concerning: a. addition or reduction of the place of business b. assignment of business ownership c.

address changes of the main office or franchise business place

d. name of directors, owner and type of the business entity of the Franchisee or the Franchisor; and e. extension/changes of the Franchisor and Franchisee.

period of the

agreement

between

10.5Franchisee shall provide a copy of each report as stipulated under Article 10.3 and 10.4 above, together with all of the receipts from respective authorities, to the Franchisor. Article 11 INTELLLECTUAL PROPERTY RIGHTS 11.1 The Franchisee hereby acknowledges that the Franchisor is the authorized license holder of Trademark and owner and legal holder of Franchisor’s Intellectual Property Rights used in the implementation of the Agreement. 11.2 The Franchisee hereby acknowledges and agrees that this Agreement is not intended to transfer Trademark and Franchisor’s Intellectual Property Rights to the Franchisee. Therefore, the Franchisee is prohibited from

conducting any action which can result in the loss or nullification of the rights of the Franchisor to Franchisor’s Intellectual Property Right, including but not limited to registering Franchisor’s Intellectual Property Right under the Franchisee’s or any other name.

11.3 The utilization of the Franchisor’s Intellectual Property Rights by the Franchisee is limited to activities related to the implementation of this Agreement strictly based on the relevant Manuals. Any utilization of the Franchisor’s Intellectual Property Rights by the Franchisee beyond the purposes and intention of this Agreement constitutes a serious violation of this Agreement and shall grant the right to the Franchisor to claim for compensation from the Franchisee and to unilaterally terminate this Agreement pursuant to Article 15 of this Agreement.

11.4 The Franchisee acknowledges that any Intellectual Property Rights to any invention, works or design, invented intentionally or not, made for the implementation of this Agreement, are the property of the Franchisor. Therefore, the Franchisee has no right to request or obtain any compensation in any form with regard to any invention. 11.5 The Franchisee shall immediately notify the Franchisor in the event that the Franchisee discovers unlawful use of the Franchisor’s Intellectual Property Rights. The Franchisee shall assist the Franchisor in addressing the unlawful and/or unauthorized use of the Franchisor’s Intellectual Property Rights. Article 12 REPRESENTATIONS AND WARRANTIES 12.1 The Franchisee represents and warrants to the Franchisor that: 12.1.1 The Franchisee has full legal authority and has obtained all permits necessary to perform its business activities, to sign the Agreement and perform its obligations under this Agreement, so that the Franchisee does not default, contradict, or violate any laws, regulations or other contracts under which the Franchisee is a party.

12.1.2 The Franchisee is not involved in any court dispute which may materially affect the Franchisee’s business activity, is not subject to any petition for bankruptcy, petitioning for the suspension of any payments, or declaring itself bankrupt. 12.1.3 The Franchisee guarantees the availability of human resources which meet the qualification standards determined by the Franchisor, thus enabling the Franchisee to implement this Agreement with optimum results; 12.1.4 Franchisee gives guarantee to implement Occupational Hazard and Safety Standard in all area of production, curing and stacking as it is guided in Production Manual. 12.1.5 The Franchisee is the legal owner or otherwise has full legal rights and control to the Establishment for the full term of this Agreement. 12.1.6 The Franchisee warrants the truthfulness of all information given by the Franchisee to the Franchisor under this Agreement.

Article 13 FEES AND PAYMENT METHOD 13.1 Franchise Fee 13.1.1 The Franchisee shall pay a Franchise Fee to the Franchisor, which comprise of: a. Franchise Fee in amount of [AMOUNT] for the usage of franchisor’s trademark, intellectual property rights, and technology as described in article 1 and 2 in this agreement. b. Training Fee for the first year training program as set out in Article 6 of this Agreement, in the amount of: (i) (ii)

[AMOUNT] for technical training; and [AMOUNT]- for yearly non-technical assistance .

c. Audit and Quality Control Fee in the amount of [AMOUNT] per

annum as long as this agreement still valid.

The Fees are inclusive of the 10% Value Added Tax 13.1.2 The Franchisee shall pay the Franchise Fee prior to the signing of this agreement and valid for five years. Franchise Fee cannot be redeemed when this Agreement is terminated for any reasons. 13.1.3 In the following year, the Training Fee (technical and non technical) will be charged depending on the performance of the Franchisee in the first year. If the performance does not meet satisfactorily level determined by the Franchisor, the Franchisee shall pay the training fees that will be stipulated by the Franchisor no later than [1 month] before the anniversary of this Agreement.

13.2 Royalty Fee 13.2.1 Commencing from the date of this Agreement is signed, on the 10th day of every month, the franchisee shall pay the Franchisor a Royalty Fee in the amount of 5% from the total monthly sales of the Franchise Product. 13.2.2 The Franchisee shall pay the Royalty Fee on monthly basis, and such payment must be received no later than the 3rd business days after the 10th day the relevant month. 13.3 Marketing and Sales Service Fee 13.3.1 In the event of third party brings a customer to the Franchisee, and the customer eventually purchased Franchise Product, the Franchisee agrees to pay the third party Marketing and Sales Services Fee in the sum of 5% of the transaction value on the Franchise Product between the Franchisee and such customer. 13.3.2 Franchisee shall pay the Marketing and Sales Services Fee after the Franchisee has received payment from the relevant

customer as stipulated in Article 13.3.1 above. 13.3.3 The Franchisee shall pay the Marketing and Sales fee on monthly basis, and such payment must be received no latter than the 3rd business day after the 10th day of the relevant month.

13.4 Payment Method 13.4.1 Any payment obligations of the Franchisee to the Franchisor shall be made within the time period as stipulated in the relevant terms of this Agreement and conducted by way of wire transfer to the Franchisor’s account as follow: [YOUR COMPANY] Bank Name Account No. : or any other account as may be notified in writing by the Franchisor to the Franchisee from time to time. 13.4.2 Immediately after each payment, the Franchisee shall provide the Franchisor evidence of payment, by fax to the number as set out in Article 22 of this Agreement or to any other number or means of communications notified in writing by the Franchisor. 13.5 Late Payment Any payment that is required to be made by The Franchisee to the Franchisor pursuant to the terms of this Agreement which is not received by the Franchisor at the time when such payment is due, the Franchisee shall pay a penalty to the Franchisor in the amount of [1.5%] per month of the overdue payment and such is calculated from the date when the payment is due until the time such payment obligation plus penalty is paid in full. 13.6 Upon the late payment as stipulated in Article 13.5 above, The Franchisor is entitled, at any time, not to deliver Franchisor’s Product and/or not to perform any of its obligations pursuant to the terms of Agreement,(if this Agreement is not already been terminated by the Franchisor) until such time when all overdue payments have been discharged by the Franchisee. Article 14 TERM AND EXTENSION OF AGREEMENT

14.1 Term of Agreement Unless the Agreement is terminated according to Article 15 of this Agreement, this Agreement shall be valid for 5 (five) years from the date this Agreement is signed. 14.2 Extension of Agreement This Agreement may be extended upon the agreement of the Parties, for additional period of 5 (five) years, with the condition that the Franchisee has notified the Franchisor in writing of its desire to extend this Agreement, at least 6 (six) months prior to the expiration of this Agreement. Article 15 TERMINATION OF AGREEMENT 15.1 Each Party is entitled to terminate this Agreement in the event of the occurrence of the following: a. the occurrence of an event of default under Article 17 of this Agreement; b. Violations of Representation and Warranties under this Agreement by a Party which then has a material impact on the other Party, unless those violations have been excused by the other Party by giving prior notice no later than 14 (fourteen) calendar days prior;

c. Based on mutual consent between the Parties by giving prior notice no later than 14 (fourteen) calendar days prior; d. Stipulated by Government Regulation which is enacted after the execution of this Agreement; e. At any time during the life of this Agreement, if the Franchisee loses support from the related authorities, its business licenses have been revoked or cancelled, or it is involved in an incident with its clients or any other incidents which can ruin the reputation of the Franchisor and/or reduce its ability to perform the business or Operational Activities by giving prior notice no later than 14 (fourteen) calendar days prior.

f.

The Franchise Agreement has expired or been terminated by giving prior notice no later than 14 (fourteen) calendar days prior.

15.2 In the event that the Parties must terminate this Agreement under Article 15.1 of this Agreement, the Party intending to terminate this Agreement must provide prior written notice on the other Party indicating its intention to terminate this Agreement. 15.3 The Franchisee agrees not to commence any proceedings to demand compensation and/or any other form of recovery to the Franchisor in relation to the termination of this Agreement. 15.4 The Parties hereby waive Article 1266 of the Indonesian Civil Code to the extent that prior judicial approval is required as a precondition to the termination of this Agreement. Article 16 CONSEQUENCES OF TERMINATION In the event that this Agreement is terminated for any reason whatsoever, the Franchisor and Franchisee agree to the following: a. The Franchisee shall pay Royalty Fee for the month when the Agreement is terminated b. In relation to machineries and equipments purchased by the Franchisee from the Franchisor, the Franchisee is obligated to return all the machine’s molds (Annex 5) to the Franchisor within three calendar days without expecting any monetary rewards. c. In relation of the machines and other production equipment, the Franchisee should first offer the Franchisor three business days after the termination to purchase any or all of such machineries and equipments at the acquisition price minus any applicable depreciation which shall be calculated in accordance with the prevailing accounting principles; d. The Franchisee shall return all machineries or equipments borrowed from the Franchisor in a condition no worse than when it was borrowed from the Franchisor, except for normal wear and tear. a. Franchisee should first offer to the Franchisor to purchase any or all of the Franchisor Product and the Franchise Product owned by the Franchisee at market price.

b.

All documents given by the Franchisor to the Franchisee must be returned to the Franchisor including all copies, and if such documents are in the form of softawre installed on computers of the Franchisee, the Franchisee shall delete the software and its copies from the computer, the deletion of which shall be witnessed by Franchisor;

c.

The Franchisor and/or parties appointed by the Franchisor are entitled to and must be granted access by the Franchisee to remove any and all the attributes, symbols and/or logos, owned by the Franchisor at any place and time which shows any relation between the Franchisor and the Franchisee.

d.

The Franchisee shall immediately cease using the Trademark and Franchisor’s Intellectual Property Rights or other Intellectual Property Rights contemplated in this Agreement at least 7 calendar day after this Agreement is formally terminated.. Article 17 EVENTS OF DEFAULT

17.1 The events below are referred to as “Event of Default”, and are as follow: a.

In the event that one Party fails to fulfill its obligations as set out in this Agreement, provisions, consents, or provisions stipulated in this Agreement or related documents without any written agreement or notice.;

b.

In the event a Party is declared bankrupt, whether voluntarily or otherwise;

c.

In the event that any representations or warranties of a Party in this Agreement, or the warranties stated in other related documents, are proven to be untrue;

d.

If Franchises perform or involve in any malicious act or make unkind remarks that prejudice toward Franchisor;

17.2 In the event that the event of default as set out in Article 17.1 has not been remedied within 14 (fourteen) calendar days after the delivery of written notice, the Parties shall meet and review in good faith to find ways to remedy the event of default. 17.3 30 (thirty) calendar days after the meeting stated in Article 17.2 above the event of default has not be remedied, the non defaulting party shall be entitled to terminate this Agreement and upon the termination the Parties agree that the actions stipulated in Article 17 shall immediately be taken. Article 18 FORCE MAJEURE 18.1 The Parties shall not be held liable for delays or failure to fulfill their respective obligations due to matters beyond the control of the respective Parties (Force Majeure), such as: a.

natural disasters, fire, earthquakes, floods, landslides;

b.

outbreak of diseases;

c.

War, civil war, riots, mass looting, sabotage, bomb explosions, or blockades; and

d.

enactment of new laws or amendments of prevailing laws, which directly affects the implementation of this Agreement.

18.2 The Party affected by Force Majeur shall serve a written notice to the other Party within 14 (fourteen) calendar days from the date the Force Majeur occured, and shall use its best efforts to fulfill its obligations under this Agreement. 18.3 In the event that the Party affected by the Force Majeure, after using its best efforts, fails to fulfil its obligations under this Agreement, the Parties shall convene a discussion to overcome the problem and reach a mutually beneficial solution.

19.1

Article 19 CONFIDENTIALITY The Franchisee, its affilates, executives, directors, employees, and

agents shall keep confidential all information and Manual obtained from the Franchisor, and the Franchisee is prohibited from using such information for purposes other than as stipulated in this Agreement, except for information which is already known by the public, and information that has become public information after its disclosure. 19.2 The Franchisee acknowledges that all information related to the Franchise Objects received by the Franchisee from the Franchisor is a trade secret owned by the Franchisor as stipulated in Law No. 30 of 2000 on Trade Secrets, and therefore the Franchisee shall keep the confidentiality of these trade secrets by taking the appropriate measures. Article 20 GOVERNING LAW This Agreement and the rights and obligations of Parties shall be executed and interpreted in accordance with the laws of the [YOUR COUNTRY]. Article 21 DISPUTE RESOLUTIONS 21.1 All disputes arising between the Parties shall be settled through mutual discussions within 14 (fourteen) calendar days of a Party serving written notice to the other Party concerning a dispute pertaining to the implementation of or differences of interpretation to this Agreement. 21.2 In the event that a mutual agreement can be reached, the agreement shall be set out in a in final and binding written agreement (“Mutual Agreement”), and each Party has the right to register the agreement in the District Court of South Jakarta no later than 30 (thirty) calendar days from the date of its execution (“Registration”). The Parties agree that the Registration does not influence the validity of the Mutual Agreement.

21.3 In the event that a dispute cannot be settled by mutual discussion, the Parties agree to resolve the dispute through arbitration under the arbitration Rules of the Indonesian National Arbitration Board (“BANI”) in Jakarta, Indonesia, and the Parties hereby agree to waive their respective rights to submit any claim to any District Court. The arbitration process by BANI shall be conducted in Bahasa Indonesia and its decisions shall be final and binding.

21.4 The Parties agree that Article 21 shall remain valid and effective even after this Agreement is terminated. Article 22 NOTICES Any notice shall be in writing and shall either be personally delivered or transmitted by prepaid registered mail or transmitted by facsimile (with receipt) to the party at the addresses that follow; 1.

[YOUR COMPANY] XXXXXXX [YOUR CITY] xxxxx Telephone : (62-21) Fax : (62-21)

2.

[Franchisee] [address] Telephone : (62-21) Fax : (62-21) Attention. : ___________

Any Party may change its address by giving notice to the other Party, and the change of address shall be effective upon receipt of the notice by the other Party.

23.1

Article 23 ASSIGNMENT Assignment by the Franchisee

This Agreement, including the rights and obligations contained herein, may not be assigned by the Franchisee to any other third party without prior written approval from the Franchisor. 23.2

Assignment by the Franchisor

The Franchisor may assign any right and obligation as stipulated in the Agreement to the affiliated third party. Article 24 INDEMNITY 24.1 The Franchisor shall not be responsible for any losses or damages which may be suffered, directly or indirectly, by the Franchisee whether or not arising from the implementation of this Agreement.

24.2 The performance of the Operational Activities and any action taken by the Franchisee, its agent and Contractor which are directly or indirectly related to this Agreement shall be the sole responsibility of the Franchisee and the Franchisee shall indemnify and hold the Franchisor, any of its subsidiaries, affiliates. agents, directors, commissioners, consultants (“Idemnified Persons”) from any losses, damages, costs (including advocate fees) arising out of any legal actions, suits, demand, claims, made by any party (whether private or government) arising out of the performance of the Operational Activities by the Franchisee or actions taken by the Conractor (whether or not pursuant to the Construction Agreement).

Article 25 MISCELLANEOUS 26.1

Final Agreement

This Agreement shall constitute the final and comprehensive agreement between the Parties and cover the mutual and entire understanding between the Parties on the matters covered in this Agreement and shall therefore supersede all mutual understandings which may have been reached by the Parties prior to the date of this Agreement, whether written or otherwise. 26.2

Severability

In the event any provision in this Agreement shall be declared invalid, illegal and otherwise unenforceable by the enactment of new laws or regulations or a final and binding decision of a competent court or arbitration tribunal, the remaining provisions contained herein shall remain valid. The Parties shall then replace the invalid, illegal or unenforceable provisions with valid, legal and enforceable provisions.

26.3

Amendment and Modification

This Agreement may not be altered, modified, or amended, except upon

mutual written agreement between the Parties.

IN WITNESS WHEREOF, the Parties or their authorized proxies have duly executed and signed this Agreement in two counterparts, each having same legal effect, on the date written above. Add clause no guarantee of success