Exhibit 99.1
[BANDAG OR MICHELIN LETTERHEAD]
Dear _______________:
Bandag and Michelin recently settled all litigation between our companies.
Each company believes that its conduct was lawful. From and after the date of
this Settlement Agreement until the May 21, 2014, the following shall apply with
respect to Michelin's and Bandag's United States truck and bus tire retread
franchisees:
(1) Neither Bandag nor Michelin will enforce post-term non-compete
obligations in any existing retreading franchise agreement, and neither
company will use post-term non-competes in future agreements entered into
after the date of the Settlement Agreement.
(2) Bandag and Michelin will permit (but not require)
multiple-location franchisees whose franchise agreements have different
expiration dates to choose at any time whether to unify the expiration
dates in their franchise agreements, and to convert to a competitive
process at the expiration of the agreements if the franchisee wishes.
Specifically, such franchisees will have the right to have all their
franchise agreements commonly expire as of the date on which any of their
franchise agreements are currently set to expire or a date three years from
the date of this Settlement Agreement.
(3) In addition to the provisions set forth in paragraph 2 hereof and
in their existing contracts, all Bandag and Michelin franchisees with
single or multiple locations also shall be permitted to terminate their
existing franchise agreements upon three months notice at any time after
three years from the date of this Settlement Agreement. All future
franchise agreements entered into by Bandag or Michelin after the date of
this Settlement Agreement shall include a provision giving the franchisee
the right to terminate after three years at any time upon three months
notice. When a franchise agreement expires or is terminated, the franchisee
may adopt a competitive retreading process at that location, or at all of
its franchise locations if a franchisor chooses to apply its exclusivity
policy. In either case, the franchisor will allow a reasonable transition
period of not less than 90 days and not more than 180 days.
(4) Under both current and future franchise agreements, Bandag and
Michelin franchisees shall be permitted to 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 the competitive retread manufacturer and/or new tire manufacturer
and the end user) at fleet accounts' terminals, shared fleet terminals,
truck stops, trucking service centers and/or similar types of trucking
servicing locations (delivered to those locations by the competitive
retread manufacturer, the competitive retread manufacturer's franchisees or
its agents). Such services include mounting and dismounting products,
removal/installation of tire wheel assemblies, balancing, air pressure
maintenance, rotation, and fleet inspections. Fleet terminals or other
sites as referenced above may not be created to undermine the intent of
this agreement.
(5) Under both current and future franchise agreements, Bandag and
Michelin franchisees will be permitted to perform certain services on
competitive retread products for national fleet accounts at or outside
their franchise location, specifically: repairs that do not require the
tire to go through the retread process, emergency road service, wheel
refurbishing/inspection, and vehicle alignment.
(6) The services provided under paragraphs 4 and 5 may be billed to
the fleet directly by the dealer or through any of the competitive retread
manufacturers then current national accounts programs.
These provisions are not intended to, and will not be interpreted to,
otherwise eliminate or modify the terms of any franchise agreement, including
the conflict of interest, in-term non-compete or best efforts provisions;
provided, however, that no provisions of any franchise agreement or related
agreement will be interpreted or applied in a manner inconsistent with the terms
of the Settlement Agreement, and will not be interpreted or applied to interfere
with the providing of the services set forth in paragraphs 4 and 5.
Michelin is sending an identical letter to its franchisees.
We appreciate your business and look forward to a long and continued
prosperous relationship with you.
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