EX-10
Exhibit 10.10.1 Saturn Retailer Agmt
EXHIBIT 10.10.1
PART ONE
MISSION, PHILOSOPHY, VALUES AND FRAMEWORK
OF RETAILER-FRANCHISOR RELATIONSHIP
Saturn Distribution Corporation Retailer Agreement
This Agreement, effective the _____ day of _________________, 199___,
is entered into by Saturn Distribution Corporation (the Franchisor), a wholly
owned subsidiary of Saturn Corporation (Saturn), and
_______________________________________________.
(__________) a proprietorship;
(__________) a partnership;
(__________) a limited liability company
(__________) a corporation, incorporated in the State of
___________________ on __________________________, located
in ___________________, __________________________ (the Retailer).
Purposes of the Agreement
The principal purposes of this Agreement are to:
A. affirm the commitment of the Retailer and the Franchisor to
adhere to the Saturn Philosophy and Values, and achieve the Saturn Mission;
B. identify the framework within which the Retailer and the
Franchisor will jointly act to fulfill their commitments to each other;
C authorize the Retailer to sell and service Saturn Products and to
represent itself as a Saturn Retailer, and
D. identify other commitments, rights and responsibilities of the
Retailer and the Franchiser.
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1. Retailer Commitment to the Saturn Mission, Philosophy and Values
Retailers represent Saturn's products and brand to the public.
Therefore, it is essential to the success of Saturn, the Franchisor and the
Retailers that each Retailer understand, embrace and promote both the letter
and the spirit of the Saturn Mission, Philosophy and Values as set forth
below.
The Retailer and the Franchisor can conduct their relationship
with trust and respect only if both the Retailer and the Franchisor work in
an open, fair and cooperative manner. Both the Retailer and the Franchisor
are dependent upon each other for maintaining this unique working
relationship.
The Retailer therefore agrees to adhere to the Saturn Philosophy
and Values in conducting its franchised business, and to work jointly with
the Franchisor and Saturn, within the framework identified in this Agreement,
to accomplish the Saturn Mission. The Retailer acknowledges that the success
of Saturn, the Franchisor, other Retailers and its suppliers is dependent on
the Retailer fulfilling this commitment. Consistent with the Saturn
Philosophy, the Retailer pledges to maintain the highest ethical standards in
all activities.
2. Saturn Mission
Saturn's Mission is to market vehicles developed and manufactured
in the United States that are world leaders in quality, cost and customer
enthusiasm through the integration of people, technology and business systems
and to exchange knowledge, technology and experience throughout General
Motors. Achieving this Mission is dependent in part upon the development and
maintenance of a network of authorized Retailers working together with the
Franchisor to build and maintain customer confidence in the Retailer and
Saturn.
3. Saturn Philosophy
We, the Saturn team, in concert with the UAW and General Motors,
believe that meeting the needs of customers, Saturn members, suppliers,
Retailers and neighbors is fundamental to fulfilling our Mission. To meet
the needs of Retailers, the Franchisor will conduct business in an open and
fair manner, and will share responsibility and decision making with Retailers
in the manner specified in this Agreement to further the spirit of trust and
respect that is critical to the relationship.
4. Values
The Saturn Values direct the way the Retailer and the Franchiser
can reach their shared goals. The Saturn Values, as set forth below, focus
on exceeding customer expectations and on establishing a positive work
environment for Saturn team members.
A. Commitment to Customer Enthusiasm
We continually exceed the expectations of internal and
external customers for products and services that are world leaders in cost,
quality and customer enthusiasm. Our customers know that we really care
about them.
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B. Commitment to Excel
There is no place for mediocrity and halfhearted efforts at
Saturn. We accept responsibility, accountability and authority for
overcoming obstacles and reaching beyond the best. We choose to excel in
every aspect of our business, including return on investment.
C. Teamwork
We are dedicated to singleness of purpose through the
effective involvement of team members, suppliers, Retailers, neighbors and
other stakeholders. A fundamental xxxxx of our philosophy is the belief that
effective teams engage the talents of individual members while encouraging
team growth.
D. Trust and Respect for the Individual
We have nothing of greater value than our people. We
believe that demonstrating respect for the uniqueness of every individual
builds a team of confident, creative members possessing a high degree of
initiative, self-respect and self-discipline.
F. Continuous Improvement
We know that sustained success depends on our ability to
continually improve the quality, cost and timeliness of our products and
services. We are providing opportunity for personal, professional, and
organizational growth and innovation for all Saturn stakeholders.
5. Shared Responsibility
In consideration of the Retailers' commitments, and to ensure
that the relationship between the Retailers and the Franchisor remains
mutually satisfactory, the Franchisor has put into place mechanisms that
allow Retailers to contribute collectively to decisions that significantly
affect Retailers' business. Retailer involvement is provided through two
principal mechanisms: the Franchise Operations Team and the Franchise Task
Forces.
A. Franchise Operations Team
The Franchise Operations Team (FOT) is made up of an equal
number of Saturn Retailer Operators and Franchiser representatives. The FOT
shall exercise the responsibilities specified in this Agreement. The
selection of FOT members, their terms of service and the manner in which the
FOT carries out its responsibilities are pursuant to procedures adopted by
the FOT.
The FOT uses a consensus decision-making process, described
in the FOT New Member Training Manual. The Retailer Operators serving on the
FOT will be trained in this process.
B. Franchise Task Forces
The FOT may establish Franchise Task Forces to assist in
the performance of its responsibilities if it concludes the input of
additional Retailer Operators, Retail team members and Saturn representatives
would be helpful. Franchise Task Forces make recommendations to the FOT
unless the Franchise Task Force is empowered by the FOT to make a decision.
FOT shall retain authority to modify or change Franchise Task Force
decisions. The FOT will determine the membership of each Franchise Task
Force, as well as the scope and duration of its assignment. A representative
from the FOT will serve as a champion of each Franchise Task Force.
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6. Dispute Resolution Process
A. Exclusive Remedy
The Retailer and the Franchiser believe their mutual
commitments to the Saturn Mission, Philosophy and Values, together with the
mechanisms for sharing responsibility described in Article 5, should minimize
the potential for disputes. Nonetheless, some disputes may occur that cannot
be resolved in the normal course of business.
The Retailer and the Franchisor acknowledge that, at the
state and federal levels, various courts and agencies would, in the absence
of this Article 6, be available to them to resolve claims or controversies
that might arise between them. The Retailer and the Franchisor agree that it
is inconsistent with the Saturn Mission and Philosophy for either the
Retailer or the Franchiser to use courts or governmental agencies to resolve
such claims or controversies.
THEREFORE, CONSISTENT WITH THE PROVISIONS OF THE UNITED
STATES ARBITRATION ACT (9 U.S.C Section I et seq.), THE RETAILER AND THE
FRANCHISOR AGREE THAT THE DISPUTE RESOLUTION PROCESS OUTLINED IN THIS
ARTICLE, WHICH INCLUDES BINDING ARBITRATION, SHALL BE THE EXCLUSIVE MECHANISM
FOR RESOLVING ANY CONTROVERSY OR CLAIM BETWEEN THEM ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ITS CREATION OR TERMINATION.
There are two steps in the Dispute Resolution Process:
Mediation and Binding Arbitration. All controversies or claims must be
submitted to Mediation, unless that step is waived by written agreement of
the parties. If Mediation does not resolve the dispute to their mutual
satisfaction, then the Retailer or the Franchiser may submit the dispute to
Binding Arbitration.
Mediation and Arbitration are each conducted by a panel
consisting of two Franchiser Representatives and two Retailer Operators
selected from a pool of volunteers approved by the FOT and trained to serve
in the Dispute Resolution Process. The Retailer and the Franchisor agree
that the procedures contained in the Retailer/Saturn Dispute Resolution
Guide, as may be modified from time to time by the FOT, shall govern
Mediation and Arbitration under this Article.
B. Mediation
Either the Retailer or the Franchiser can submit to
Mediation a claim or controversy between them that arises out of or relates
to the Retailer Agreement. The Mediation Panel will evaluate each position
and recommend a solution. The recommended solution is not binding.
C. Binding Arbitration
If a claim or controversy arising out of or relating to
this Agreement has not been resolved after Mediation or if the Retailer and
the Franchisor have agreed in writing to waive Mediation, then the claim or
controversy will be settled by Binding Arbitration in accordance with the
procedures in the Retailer/Saturn Dispute Resolution Guide. All awards of
the arbitration are binding and non-appealable except as otherwise provided
in the United States Arbitration Act. Judgment upon any award rendered by
the arbitrators may be entered and enforced in any court having jurisdiction.
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PART TWO
RIGHTS GRANTED
7. Authorized Retailer
The Retailer has presented the Franchisor with information
regarding its qualifications to be appointed a Saturn Retailer. The
Retailer, its Retailer Operator and Investors have been evaluated and found
to satisfy the Franchisor's standards.
The Retailer has also presented to the Franchiser a Marketing
Area Plan ("MAP"), stating the Retailer's proposal to develop and operate
facilities in a specified Marketing Area to promote, sell and service
Products. The Franchiser has accepted this MAP.
In reliance upon the Retailer's representations, and on its
expressed commitment to the Mission, Philosophy and Values, the Franchisor
grants the Retailer a nonexclusive right to:
a) buy new Motor Vehicles distributed for resale by
Saturn and identified in any Saturn Motor Vehicle Addendum and related Parts
and Accessories; and
b) identify itself as an authorized Saturn Retailer in
the manner
and at the location(s) approved by the Franchisor.
The Retailer accepts the rights granted and agrees to fulfill its
obligations under this Agreement.
8. Retailer Operator
A. Personal Qualifications
The Franchisor is entering into this Agreement in reliance
on the qualifications and capabilities of the person identified in Article 25
as "Retailer Operator," on that person's commitment to the Mission,
Philosophy and Values, and on the Retailer's assurance that the personal
services of the Retailer Operator will be provided in the overall management
of the franchised business.
B. Management Responsibility
Both the Retailer and the Franchiser agree that the
Retailer Operator must have the sole authority to exercise management control
of the Retailer.
The Retailer's MAP describes the ownership of the Retailer
and any arrangements necessary to comply with this Article.
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C. Ownership Requirement
The Retailer Operator will have and maintain an
unencumbered ownership interest in the Retailer of at least 10 percent at all
times.
9. Retailer Investor
The Franchisor is entering into this Agreement in reliance on the
qualifications of the person(s) identified in Article 25 as "Retailer
Investor(s)." Retailer investor candidates with previous retail automotive
operating or management experience must participate in a selection process to
demonstrate qualification under the Franchisor's Retailer Selection
Criteria. Retailer investor candidates without previous automotive or
management experience must complete an investor questionnaire for review and
approval by the Franchisor.
10. Term
If the Retailer continues to meet all conditions and fulfill its
obligations and responsibilities under this Agreement, this Agreement will
not expire until the first to occur of the following:
a) a superseding form of Retailer Agreement, recommended
by FOT pursuant to Article 24L, is executed;
b) 90 days after such superseding form of Retailer
Agreement is presented to the Retailer for execution; or
c) 90 days following the death or incapacity of the
Retailer Operator, whichever occurs first.
If this Agreement is to expire because of the death or incapacity
of the Retailer Operator, the Retailer may request a deferral of the
effective date of expiration to assist in winding up its franchised business
or to provide for a transfer of assets or ownership previously approved under
Article 20.
The request must be made at least 30 days prior to the effective
date of expiration, and the Franchiser will not unreasonably refuse to grant
any necessary extension.
11. Authorized Locations and Marketing Area Rights
A. Retailer's Marketing Area
The Retailer has been furnished with a "Notice of
Retailer's Marketing Area." The Retailer is responsible for effectively
selling, servicing and otherwise representing Saturn Products in its
Marketing Area. The Retailer agrees to conduct Saturn Retail Facility
Operations only from approved locations within its Marketing Area. The
Retailer's Marketing Area Plan as described in Article 15 specifies
Retailer's approved location(s) and facility(ies). Where applicable, the
Retailer will establish additional facilities in the time and manner agreed
to by the Retailer and the Franchiser in the MAP.
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1) Facility Design and Appearance
Saturn's Mission to exceed customers'
expectations can be furthered if Retailers' facilities are instantly
identifiable and share a consistent architectural design and environment.
Accordingly, the Retailer agrees to purchase Franchiser's Retail
Environmental Design Package and to provide retail facilities consistent with
that Package. The Retailer also agrees to review all proposed facility plans
with the Franchisor and to obtain the Franchisor's approval before committing
to any construction or purchase.
Additionally, the Retailer pledges to properly
maintain its facilities so that they promote and reinforce the unique Saturn
image. The Retailer agrees to make any facility modifications approved by
the FOT. The Retailer agrees not to make any facility modifications that
affect the appearance or function of its facilities without the Franchiser's
prior written authorization.
2) Exclusive Use
The Retailer agrees to use all Saturn
facilities (including the individual sites approved by Saturn) exclusively
for conducting Saturn Retail Facilities Operations. The Retailer agrees to
conduct from each location only those Retail Facility Operations authorized
in the MAP for such location.
B. Marketing Area Rights
The Retailer will devote its full efforts to developing its
Marketing Area. Consequently, the Retailer agrees not to engage, either
directly or indirectly, in any of the activities contemplated by this
Agreement from any locations outside of its Marketing Area.
If the Retailer meets its obligations under the MAP and
this Agreement, then the Franchiser will not authorize any other Retailer to
establish a Saturn retail facility in the Retailer's Marketing Area. If the
Retailer fails to develop its Marketing Area according to its MAP, then the
Franchisor may terminate this Agreement for failure of performance under
Article 21 or restructure the Retailer's Marketing Area and reassign any
areas necessary to achieve the maximum potential development of the Marketing
Area.
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PART THREE
PRODUCT AND PERFORMANCE STANDARDS RESPONSIBILITIES
12. Retailer's Responsibility to Promote, Sell and Service Saturn
Products and Adhere to Brand Critical Standards
A. Responsibility to Promote and Sell
1) The Retailer agrees to effectively promote and sell both
the purchase and the use (including rental and leasing) of Saturn Products to
customers located in its marketing Area. The Franchiser will review annually
the Retailer's performance of this obligation, in conjunction with the
Marketing Area Plan as described in Article 15.
2) The Retailer is authorized to sell new and unused Motor
Vehicles only to:
a) customers who purchase for personal use or for a
primary business use other than resale,
b) other Saturn Retailers, and
c) Saturn.
3) The Retailer agrees to offer for sale Saturn Service Plan
Products to all customers who purchase or lease new Saturn vehicles, and used
Saturn vehicles if they are eligible for a Saturn Service Plan. The Retailer
may, in addition, offer customers the option of choosing a non-Saturn service
contract (or insurance coverage) provided:
a) the non-Saturn service contract or insurance meets or
exceeds quality standards adopted by FOT, and
b) the Retailer discloses to the customer in writing
that the non-Saturn service contract (or insurance) is not marketed or
warranted by Saturn, and the coverage is not provided by Saturn or an
affiliate and may not be honored by other Saturn Retailers. The form of the
disclosure will be approved by FOT.
4) The Retailer is authorized to sell Saturn Products only to
customers located in the United States. The Retailer agrees not to sell
Saturn Products for resale or use outside the continental United States,
Alaska and Hawaii.
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B. Responsibility to Service
The manner in which Retailers service Saturn Motor Vehicles
is important to maintaining the Saturn brand image, and to securing and
growing a loyal customer base.
Therefore, the Retailer agrees to provide quality,
courteous, convenient, prompt, efficient, respectful and professional service
to owners of Motor Vehicles, regardless of where the vehicles were purchased.
All service will be performed in accordance with this
Agreement and the Saturn Service Policies and Procedures Manual, as modified
from time to time, which is incorporated into this Agreement by reference.
C. Responsibility to Adhere to Brand Critical Standards
Saturn's brand image has been achieved through a
consistent, outstanding customer experience. Protecting the Saturn brand and
achieving Saturn's goal to be the industry leader in customer enthusiasm
requires that all Retailers adhere to consistent standards in conducting
their operations.
FOT may designate a particular standard as a Brand Critical
Standard when it pertains to matters deemed by FOT to be particularly vital
to the strength of the Saturn brand, or protecting the reputation and
goodwill of the Franchisor, Saturn and other Saturn Retailers.
The Retailer agrees to adhere to Brand Critical Standards
approved by FOT. The Retailer Standards Manual, which is incorporated into
this Agreement by reference, defines these Brand Critical Standards and will
be reviewed annually, or more often if deemed necessary by FOT, for potential
modifications.
13. Sale of Products to Retailer
A. Sale of Saturn Motor Vehicles to Retailers
The Franchisor has provided the Retailer with a Saturn
Motor Vehicle Addendum specifying the current model types or series of new
Motor Vehicles that the Retailer may purchase. The Franchisor may change the
Saturn Motor Vehicle Addendum at any time by furnishing the Retailer with a
superseding Saturn Motor Vehicle Addendum.
The Franchisor will make every effort to allocate new Motor
Vehicles among Retailers in a fair and equitable manner. The allocation
method used will be reviewed by the FOT and will provide the Franchisor
discretion in exercising business judgment to achieve fairness and equity.
B. Sale of Parts and Accessories to Retailers
Parts and Accessories are any new or remanufactured
automotive parts and accessories that are marketed by Saturn and listed
either in the current "Retailer Parts and Accessories Price Schedules" or in
supplements furnished to the Retailer.
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Parts and Accessories will be sold to Retailers by the
Franchisor, Saturn or other suppliers designated by the Franchiser. All
orders for Saturn Parts and Accessories will be submitted and processed
according to the written procedures established by the Franchisor, Saturn or
other designated suppliers.
To support the focus of marketing Parts and Accessories
primarily within a Retailer's Marketing Area, Saturn reserves the right to
exercise its best business judgment in allocating Parts and Accessories to
Retailers.
C. Prices and Other Terms of Sale
1) For Motor Vehicles:
a) Prices, destination charges and other terms of
sale applicable to purchases of new Motor Vehicles will be those established
according to the "Vehicle Terms of Sale Bulletin" furnished to the Retailer.
b) Prices, destination charges and other terms of
sale may be changed at any time. Changes will apply only to Motor Vehicles
not shipped at the time changes are effective.
c) If there is an increase in the price charged to
the Retailer for a Motor Vehicle or for any optional equipment or
transportation charge during a model year; such increase will not apply to
bona fide sold orders that were submitted before the Franchisor notifies the
Retailer of the price increase.
d) The Retailer will receive written notice of any
price increase before any Motor Vehicle to which such increase applies is
shipped except for initial prices for a new model year or for any new model
or body type.
2) For Saturn Parts and Accessories:
a) Prices and other terms of sale applicable to
Parts and Accessories will be those established according to the "Parts and
Accessories Terms of Sale Bulletin" furnished to the Retailer.
b) These prices and other terms of sale may be
changed at any time. Sales to Retailers will be made at the Retailer price
in effect at the order commitment date.
c) Such changes apply to Parts and Accessories not
shipped at the time the changes are effective.
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D. Inventory
1) Motor Vehicle Inventory.
The Retailer recognizes that customers expect to have
a reasonable quantity and variety of current model Motor Vehicles in
inventory. Accordingly, the Retailer agrees to stock and sell, subject to
any supply restrictions, all models and series of current Motor Vehicles
identified in the Motor Vehicle Addendum.
2) Parts and Accessories:
The Retailer also agrees to stock sufficient Parts
and Accessories to:
a) perform warranty repairs and policy adjustments,
b) meet the demands of its customers primarily
within its Marketing Area, and
c) meet the "same day" availability standards
approved by the FOT.
E. Warranties on Products
Saturn warrants the new Motor Vehicles and Parts and
Accessories (Products) that it produces. The warranties are explained in
documents provided with these Products and in the Saturn Service Policies and
Procedures Manual. Franchisor (Saturn Distribution Corporation) does not
warrant products.
EXCEPT AS OTHERWISE PROVIDED BY LAW, THE WRITTEN SATURN
WARRANTIES ARE THE ONLY WARRANTIES APPLICABLE TO NEW PRODUCTS. WITH RESPECT
TO RETAILERS, SUCH WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES OR
LIABILITIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY LIABILITY FOR
COMMERCIAL LOSSES BASED UPON NEGLIGENCE OR MANUFACTURER'S STRICT LIABILITY.
EXCEPT AS MAY BE PROVIDED UNDER AN ESTABLISHED SATURN PROGRAM OR PROCEDURE,
SATURN NEITHER ASSUMES NOR AUTHORIZES ANYONE TO ASSUME FOR IT ANY OTHER
OBLIGATION OR LIABILITY IN CONNECTION WITH PRODUCTS, AND SATURN'S MAXIMUM
LIABILITY IS TO REPAIR OR REPLACE THE PRODUCT.
Any Parts and Accessories sold by to the Retailer by a
designated supplier are not warranted by Saturn or the Franchisor and are
warranted only as specified by the supplier.
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14. Service of Products
A. Service for Which Franchisor Pays
1) New Saturn Vehicle Predelivery Inspections and
Adjustments
The delivery condition of a new vehicle is
important to customer enthusiasm. Therefore, the Retailer agrees to perform
all predelivery inspections and adjustments on each new Motor Vehicle and to
verify the completion of these inspections and adjustments according to the
procedures established in the Saturn Service Policies and Procedures Manual.
2) Warranty Repairs and Special Policy Adjustments
The Retailer agrees to:
a) perform all required warranty repairs on each
qualified Motor Vehicle both at the time of predelivery service and when
requested by owner,
b) perform any special policy adjustments approved
by Franchisor, and
c) give the owner a copy and explanation of the
repair document reflecting all services performed and an explanation of those
services when the vehicle is returned to the owner.
3) Campaign Inspections and Corrections
The Retailer agrees to find and correct
suspected factory conditions on Products that the Franchisor has identified.
The Retailer will also ensure that, prior to sale, all campaign actions and
corrections have been made on all new and used Saturn Motor Vehicles in its
inventory, and will follow up on Products on which campaigns are outstanding.
4) Payment for Predelivery Adjustments, Warranty and
Campaign Work
For the Retailer's performance of services,
predelivery adjustments, warranty repairs, special policy adjustments, and
campaign inspections and corrections, the Franchisor will provide or pay the
Retailer for the Parts and other materials required and will pay the Retailer
a fair amount for Labor. Payment will be made according to policies in the
Saturn Service Policies and Procedures Manual. The Retailer will not impose
any charge for such service on owners or users except where a deductible or
pro rata charge applies.
B. Parts, Accessories and Body Repairs
1) Warranty Repairs and Policy Adjustments
The Retailer agrees to use only genuine Saturn
or Franchisor approved parts in performing all warranty repairs and policy
adjustments, including special policies.
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2) Representations and Disclosures as to Modifications,
Parts and Accessories
Both the Retailer and the Franchisor recognize
and appreciate that people who drive and own Motor Vehicles reasonably expect
that vehicles sold by Retailers as well as parts and accessories sold or used
by Retailers in servicing vehicles are marketed by Saturn or the Franchisor.
If the Retailer sells or uses parts or
accessories that are not marketed by Saturn or the Franchisor in lieu of
Saturn Parts and Accessories, the Retailer is required to give customers
written notice on the purchase order or xxxx of sale that such parts or
accessories are not marketed or warranted by Saturn or the Franchisor.
If the Retailer adds non-Saturn aftermarket
items to customers' vehicles, the Retailer agrees not to represent that these
vehicle modifications are warranted or approved by Saturn or the Franchisor.
Furthermore, the Retailer agrees not to
represent that any vehicle modifications performed by the retail facility or
authorized sublet shop that are not specifically authorized by Saturn are
warranted or approved by Saturn or the Franchiser
3) Body Repairs
The Retailer must provide body repair service
for all Saturn vehicles. The Retailer can provide this service through its
own body shop, or in cases where the Franchiser agrees, by arrangement with
an independent repair establishment that is acceptable to the Franchiser.
PART FOUR
THE BUSINESS PLANNING PROCESS
15. Business Planning
A. Marketing Area Plan
The Retailer and the Franchiser have executed a Marketing
Area Plan (MAP), which is an essential part of this Agreement and which may
be updated annually. The MAP describes how the Retailer will develop its
Marketing Area and fill its sales and service commitments.
1) Initial Marketing Area Plan
The Retailer agrees to develop its assigned
Marketing Area according to the MAP. Its commitments for such development
include:
a) a detailed description of the number, location,
type, size and opening date of the Saturn facilities to be provided,
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b) a detailed implementation schedule for each
facility, and
c) a statement of the Retailer's legal and
financial structure, including capitalization, line of credit and equity
ownership. The Retailer agrees to update this statement whenever necessary
to ensure it is accurate.
2) Annual Marketing Area Plan
The Retailer also agrees to fill the sales and
service commitments described in the MAP as updated annually. These
operational commitments include but are not limited to:
a) Customer enthusiasm
b) Team member enthusiasm
c) Training
d) Financial performance
e) Market development
f) Retail image
g) Partnership
B. Annual Plan Review
In order to maintain an effective working relationship, the
Retailer agrees to update its MAP annually, or more often if requested by
either party, and submit it to the Franchisor for joint review. Updated MAPs
will include a performance evaluation and any proposed modifications to the
prior year's MAP. If the Retailer and the Franchisor agree that changes to
the proposed MAP are necessary, then the Retailer will make these changes and
then resubmit the MAP.
The Retailer's performance of its obligations is essential
to effectively and consistently representing Saturn Products and to building
and main the reputation of Saturn, the Franchisor and other Retailers.
Therefore, the Retailer agrees to review with the
Franchisor its performance against the prior year's MAP in its updated MAP.
The Retailer's performance will be evaluated based on a number of factors
including its attainment of applicable Performance Benchmarks in areas which
may include but are not limited to the following Critical Success Factors:
Customer Enthusiasm, Team Member Enthusiasm, Training, Financial Performance,
Market Development, Retail Image and Partnership. The Retailer and the
Franchisor will use this evaluation to identify areas in which improvements
are necessary so that Retailer can take prompt action to achieve acceptable
performance, and to set goals for continuous improvement. Performance
Benchmarks are approved by FOT and may be modified from time to time with FOT
approval. Periodic facility evaluations will also be conducted, including an
evaluation of the Retailer's compliance with current requirements and
standards for the retail facility under the Marketing Area Plan.
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PART FIVE
OTHER OPERATING RESPONSIBILITIES
16. Saturn Systems and Processes
A major element of the Saturn Mission is to lead the industry in
customer enthusiasm. Maintaining this level of enthusiasm requires consistent
application by all Retailers of all designated sales, service, marketing,
facilities and other systems. The Retailer agrees to purchase, implement and
maintain the required systems that are identified in this Agreement, set
forth in the Retail Facilities Guide, the Architects Guide, other Franchise
Systems Manuals, or approved by the Franchise Operations Team. Additionally,
the Retailer agrees to fully utilize Saturn processes in order to ensure that
customers experience the Saturn Difference.
A. Systems for Which Retailer Rays
1) Sales and Service Systems
The Retailer agrees to pay Saturn, the
Franchisor or approved sources for the systems necessary to develop and
implement Saturn sales and service in the Retailer's Marketing Area. These
systems include materials and initiatives designed to promote the consistent
display, sales and service of Saturn Products.
Periodically, the FOT will determine that new
or updated information, materials or initiatives are necessary. The Retailer
agrees to accept and utilize such designated new or updated information,
materials or initiatives and pay any applicable charges. Any such charges
will be established by the FOT and will be based on anticipated costs.
2) Computer Systems
Saturn's Mission involves the integration of
people, technology and business systems. This integration is possible only
if the Retailer has computer systems that meet customers' needs and the
retail facility's internal business needs; permit direct communication
between the Retailer, the Franchisor and Saturn; and give the Franchisor and
Saturn ready access to the Retailer's accounts and records.
Accordingly, the Retailer agrees to purchase
and use all FOT-approved computer system hardware and software packages and
to diligently update these hardware and software packages whenever changes
are approved by the Franchise Operations Team.
3) Signs
To promote a consistent image among Retailers,
the Retailer agrees to purchase, maintain and use only signs approved by the
Franchisor as designated in the Retail Facilities Guide and the Critical
Image Element Guide, and to make and pay for any changes in signage approved
by the FOT.
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4) Tools and Equipment
The Retailer also agrees to provide all the
service tools and equipment necessary to fulfill its service obligations, and
to purchase and maintain any specified special tools and equipment to service
Saturn Products.
B Other Systems
1) Accounts and Records
a) Uniform Accounting System
Both the Retailer and the Franchiser will
benefit by using Retailer operating information to develop composite
operating statistics, to analyze the Retailer's business management
practices, and to assess the impact of the Franchiser's policies and
practices.
To assure maximum benefit, the Retailer
agrees to maintain a uniform accounting system and to furnish reports and
records as provided in the GM Dealer's Standard Accounting Manual and the FOT
approved Saturn Retailer Systems business accounting applications.
b) Examination of Accounts and Records
The Franchisor and Saturn will have
access, through computer systems, to the Retailer's accounts and records.
In addition, any designated
representative of the Franchisor is authorized to examine, audit, reproduce
and take copies of any of the accounts and records the Retailer maintains
under this Agreement. The Retailer agrees to make such accounts and records
readily available in an organized manner at its retail facilities during
business hours. The Franchisor agrees to furnish the Retailer with a copy of
any reproduced records.
c) Confidentiality of Retailer Data
The Franchiser will not furnish to any
nonaffiliated entity any personal or financial data submitted to it by the
Retailer in a format that permits identification of the Retailer, unless it
is either authorized by the Retailer, required by law, pertinent to
proceedings under the Dispute Resolution Process or to court or
administrative proceedings.
2) Additional Systems
The Retailer is free to use any additional
systems to help manage the business, so long as they are consistent with all
the required Saturn systems and with Saturn's Mission, Philosophy and
Values. The Retailer agrees to discontinue use of any systems deemed
inconsistent by the Franchisor.
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C Consistent Processes
An integral part of the Franchiser's plan to develop
industry leading customer enthusiasm is to promote Saturn Retailers as the
unsurpassed leaders of convenient and consistent automotive sales and
service. The Retailer agrees it will conduct its Retail Facility Operations
to support this concept, including utilizing processes approved by the FOT.
These processes include but are not limited to the Saturn Consultative Sales
Process, the Saturn Consultative Service Process, the Saturn Financial
Services Consultative Process and, if used vehicles are sold at any approved
locations specified in the Retailer's MAP, the Saturn Used Car Process.
17. Marketing Association
Both the Retailer and the Franchisor acknowledge the mutual
benefits of comprehensive joint Retailer advertising and merchandising to
promote the sale and service of Saturn Products.
Accordingly, the Regional Unincorporated Marketing
Association (Association) has been established through the joint effort of
Retailers and the Franchisor to produce such joint merchandising and
advertising. The Retailer agrees to participate in the Association. The
Association is governed by the Regional Marketing Council (RMC), which is
self-governing according to its bylaws. The Retailer and the Franchisor
agree to support the merchandising and advertising initiatives of the RMC.
The Association will, from time to time, assess a minimum
amount for each new Motor Vehicle purchased by Retailers to fund
merchandising and advertising initiatives. The FOT will review annually the
minimum assessment, and may recommend changes based on marketing conditions.
18. Training
The training of all Retailer team members is critical to
the success of the Retailer and the Franchisor in conducting business based
on the Saturn Mission, Philosophy, Values and designated processes.
The Retailer therefore agrees that all team members will
participate in both the initial and ongoing programs identified in the Saturn
Retail Training Catalogue of Programs and Services, and in any others
approved by the FOT, within the time frames specified. The MAP will measure
the completion of training required compared to FOT approved Performance
Benchmarks. The Retailer agrees to pay any specified training charges.
19. Capitalization
To ensure that the Retailer is financially capable of
fulfilling its commitments, the Retailer will maintain the levels of
capitalization mutually agreed upon in the Marketing Area Plan. To avoid the
erosion of Saturn's goodwill, which could result if the Retailer is
financially unable to fulfill its commitments, the Retailer agrees to have
and maintain a separate line of credit from a financial institution available
for the Retailer to draw upon to finance the purchase of new vehicles. The
amount of the line of credit and the identity of the financial institution
will be included in the Retailer's Marketing Area Plan, which is reviewed
annually.
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PART SIX
REPLACEMENT RETAILERS
20. Changes in Ownership
Both the Retailer and the Franchisor recognize it is
essential to the success of all associated with Saturn that each Saturn
retail facility be owned and operated by people who are committed to
upholding and promoting the Saturn Mission, Philosophy, Values and way of
doing business.
It is equally important that the Retailer Operators are
highly qualified and consistently meet the same high personal standards as
the original Retailer Operators.
Because the Franchisor has entered into this Agreement
based on the personal qualifications of the Retailer Operator and the
qualifications of any Investor(s), the Retailer agrees that it cannot assign
its rights under this Agreement.
A. Succession Rights upon Death or Disability
1) Successor Addendum
The Retailer can apply for a Successor
Addendum, which designates a proposed retailer operator and/or investor(s) of
a successor retailer to be established if this Agreement expires because of
the death or incapacity of the Retailer Operator. The Franchisor will
execute the Successor Addendum if the proposed retailer operator successfully
completes the Retailer Selection Process and if any proposed investors
satisfy applicable Retailer Selection Criteria.
However, the proposed retailer operator and
investors will not be required to meet the usual capital requirements, nor to
demonstrate an ability to implement the Retailer's Marketing Area Plan until
the Successor Addendum is implemented.
At the time of application, the Retailer will
pay the Franchisor a nonrefundable fee to defray costs associated with review
of the proposal.
2) Rights of Remaining Investors
If this Agreement is due to expire because of
the death or incapacity of the Retailer Operator, and the Retailer and the
Franchisor have not executed a Successor Addendum, the remaining Investors
may propose a successor retailer to continue the operations identified in
this Agreement.
The proposal must be made in writing to the
Franchisor at least 30 days prior to the expiration of this Agreement,
including any deferrals granted under Article 10. At the time of
application, the Retailer will pay the Franchisor a nonrefundable fee to
defray costs associated with review of the proposal.
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The proposal will be accepted if it meets the
requirements of Articles 2OA(3), if the proposed retailer operator
successfully completes the Retailer Selection Process and if all proposed
investors satisfy applicable Retailer Selection Criteria.
If the proposed successor retailer includes a
retailer operator and/or investors who are not remaining Investors, and who
will collectively acquire a majority ownership or voting control in the
proposed retailer, then Franchisor's right of first refusal or option to
purchase under Article 20C shall apply.
3) Successor Retailer Requirements
The Franchisor will accept a proposal to
establish a successor retailer that is submitted by a proposed retailer
operator under Article 20A if
a) the proposed successor retailer and the
proposed retailer operator are ready, willing and able to comply with the
requirements of a new retailer agreement and agree to adhere to and implement
the Marketing Area Plan formally agreed to by the Retailer, and
b) all outstanding monetary obligations of the
Retailer to Saturn and the Franchisor have been paid.
4) Limitation on Offers
The Retailer will be notified in writing of the
Franchisor's decision on a proposal under Article 2OA(3) within 60 days after
the Retailer has submitted all applications and information reasonably
requested by the Franchisor and the proposed retailer operator has
successfully completed the Retailer Selection Process. The Franchisor's
offer of a new Retailer Agreement under Article 20A will automatically expire
if it is not accepted by the proposed successor retailer within 60 days after
it receives the offer.
5) New Successor Addendum
The Retailer may cancel an executed Successor
Addendum at any time prior to the death or incapacity of the Retailer
Operator. However, the Franchisor may cancel an executed Successor Addendum
only if the proposed retailer operator or proposed investor(s) no longer meet
the Retailer Selection Criteria applicable to each. The parties may execute
a superseding Successor Addendum by agreement.
B. Other Changes in Ownership or Management
If the Retailer proposes a change in Retailer
Operator, a change in ownership, or a transfer of its Saturn franchised
business or principal assets to any person, the Franchisor will consider the
Retailer's proposal subject to the following:
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1) The Retailer agrees to give the Franchisor prior
written notice of any such proposed change or transfer. The Retailer
understands that if any such change is made prior to the Franchisor's
approval of the proposal, termination of this Agreement will be warranted and
the Franchisor will have no other obligation to consider the Retailer's
proposal.
2) To maintain the high standard and integrity of the
Retailer network, the Retailer agrees to give the Franchisor prior written
notice of any proposed disposition of its principal assets or of any proposed
change of ownership in which a party:
a) first acquires equity ownership or beneficial
interest in the franchised business, or
b) acquires a majority ownership or voting control
in the franchised business.
3) If the proposal involves a change of Retailer
Operator, the Retailer will pay the Franchiser a fee to defray the costs of
reviewing the proposal and completing the Retailer Selection Process. The
Franchiser has no obligation to consider the proposal until it has received a
nonrefundable payment.
4) The Retailer will be notified in writing of the
decision on its proposal within 60 days after the Retailer has furnished all
applications and information reasonably requested by the Franchiser and after
the proposed retailer operator has successfully completed the Retailer
Selection Process. If the Franchiser disagrees with the proposal, it will
specify its reasons.
5) Any material change in the Retailer's proposal,
including a change in price, proposed investors or proposed retailer
operator, will be considered a new proposal and the time period for the
Franchisor to respond shall recommence. In the event a new proposal is
submitted and the proposal includes a new retailer operator or investor
candidate, an additional fee may be imposed.
6) Prior written approval is not required where the
transfer of equity ownership or beneficial interest to an individual is
between Investors of the Retailer previously approved by the Franchisor where
there is no change in majority ownership or voting control. The Retailer
agrees to notify the Franchisor within 30 days of the date of the change and
to execute a new Form C: Investor Summary to Retailer's Marketing Area Plan.
7) The Franchisor is not obligated to execute a new
Retailer Agreement under this Article unless the Retailer makes acceptable
arrangements to the Franchisor to satisfy any indebtedness to Saturn or the
Franchisor.
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C. Right of First Refusal or Option to Purchase
1) Creation and Coverage
If a proposal is submitted by the Retailer under
Article 20B, then the Franchisor has a right of first refusal or option to
purchase as described under this Article 20C.
If the Franchisor exercises its right or option, it
will do so in the written decision on the Retailer's proposal. The
Franchisor's right or option may be assigned to any party and the Franchisor
will guarantee the full payment of the purchase price by the assignee. The
Franchisor has the right to disclose the terms of the buy/sell agreement to
any potential assignee.
If the Retailer has entered into a bona fide written
buy/sell agreement for its franchised business or principal assets, the
Franchisor's right under this Article 20 is a right of first refusal,
enabling the Franchisor to assume the buyer's rights and obligations under
such buy/sell agreement, and to cancel this Agreement and all rights granted
to the Retailer.
In the absence of a bona fide written buy/sell
agreement, the Franchisor has the option to purchase the Retail Facility
Assets of the Retailer and to cancel this Agreement and all rights granted to
the Retailer. Real property will be included only if the Retailer and the
Franchisor agree.
If the Franchisor exercises its right or option, the
fee described in Article 2OB(3) will be refunded if the person proposed by
the Retailer as a replacement retailer operator or investor satisfies the
Retailer Selection Criteria.
The Franchisor's rights under Article 20C will be
binding and enforceable against any assignee or successor in interest of the
Retailer or purchaser of the Retailer's assets.
2) Purchase Price and Other Terms of Sale
a) Bona Fide Agreement
If the Retailer has entered into a bona
fide written buy/sell agreement, the purchase price and other terms of the
sale will be those set forth in such agreement and any related documents
unless the Retailer and the Franchisor agree to other terms.
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Upon the Franchisor's request, the
Retailer will provide all other documents relating to the proposed transfer,
including, but not limited to, those reflecting any other agreements or
understandings between the parties to the buy/sell agreement. If the
Retailer does not provide such documentation or state in writing that such
documents do not exist, the agreement will be presumed not to be bona fide.
b) Absence of Bona Fide Agreement
In the absence of a bona fide written
buy/sell agreement, the purchase price of the Retail Facility Assets,
excluding new and undamaged Parts and Accessories, will be determined by good
faith negotiations between the parties.
If agreement cannot be reached, the
purchase price will be determined through the Dispute Resolution Process.
Repurchase prices for new and undamaged Parts and Accessories will be the
prices last indicated in the parts price listing established by the
Franchisor.
The Franchisor will not be responsible
for the repurchase of non-Saturn Parts or accessories in the Retailer's
inventory, or for Saturn Parts and Accessories that are not resaleable as
new, as specified in the Saturn Service Policies and Procedures Manual.
3) Consummation
The Retailer agrees to transfer the property by
Warranty Deed conveying marketable title free and clear. The Warranty Deed
will be in proper form for recording and the Retailer will deliver complete
possession of the property when the Deed is delivered. The Retailer will
also furnish the Franchisor with copies of any easements, licenses or other
documents affecting the property, and will assign to the Franchisor any
permits or licenses necessary to conduct the franchised business.
4) Transfers Involving Family Members
When the proposed change of ownership involves
a transfer by a Retailer Investor to a member or members of his or her
immediate family, the Franchisor's right of first refusal will not apply. An
"immediate family member" shall be the spouse, child, grandchild, spouse of a
child or grandchild, brother, sister, or parent of the Retailer Investor.
All other requirements of Article 20B shall apply.
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PART SEVEN
TERMINATION AND TERMINATION ASSISTANCE
21. Termination
A. Termination of Agreement
1) By Retailer
The Retailer may terminate this Agreement by
giving written notice to the Franchisor. The Termination will be effective
30 days after the Franchisor receives the notice, unless otherwise mutually
agreed upon in writing.
2) By Agreement
This agreement may be terminated at any time by
written agreement between the Retailer and the Franchisor. Termination
assistance will be applicable only as specified in the written termination
agreement.
3) Failure to Be Licensed
If the Retailer or the Franchisor fails to
secure or maintain any license that is required to perform their obligations
under this Agreement, or if such license is suspended or revoked, then either
party may immediately terminate this Agreement by giving the other party
written notice.
4) Misrepresentation, Failure to Conduct Operations, or
Disqualification or Change of Retailer Operator or Investor
If any of the following occurs, the Franchisor
will notify the Retailer and provide 30 days for the Retailer to respond.
Thereafter, the Franchisor may notify the Retailer that the Agreement will be
terminated not less than 30 days after receipt of notice.
a) If the Retailer submits any false information
to Saturn or to the Franchisor,
b) The Retailer fails to conduct customary Saturn
Retail Facility Operations for seven consecutive business days,
c) The Retailer Operator or Investor(s) fail to
continue to meet the Retailer Selection Criteria applicable to each,
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d) The Retailer Operator is changed or withdraws
without prior written approval of the Franchisor, or
e) if, without the prior written notice to and
approval of the Franchiser, a person:
i. first acquires an equity ownership or
beneficial interest in the Retailer, or
ii. acquires majority ownership or voting
control.
If the Retailer chooses to use the Dispute
Resolution Process, the Agreement will continue pending a final resolution of
the dispute.
5) Failure of Performance
If the Retailer fails to perform any other
obligations specified in this Agreement, including those listed as part of
the Marketing Area Plan, the Franchiser will review the failure with the
Retailer.
If the Franchisor determines that corrective
action is not forthcoming, then the Franchisor will notify the Retailer in
writing and designate a period of time during which the Retailer is expected
to remedy the failure.
If the failure is not remedied within that
period, the Franchiser may invoke the Dispute Resolution Process immediately
or at any time, or terminate this Agreement by giving the Retailer three
months' advance written notice.
6) Conviction of a Felony
a) The Franchiser may terminate this Agreement by
giving written notice to the Retailer if it learns that the Retailer, or a
predecessor of the Retailer owned or controlled by the same person, or the
Retailer Operator is convicted in a court of original jurisdiction of any
felony. Termination will be effective on the date specified in the notice.
b) If a Retailer Investor is convicted in a court
of original jurisdiction of any felony, the Retailer Investor must divest its
ownership interest in the Retailer within 60 days after the Franchiser
notifies the Retailer or the Retailer becomes aware of the conviction,
whichever occurs first. If the Retailer Investor fails to divest its
interest in the Retailer within that period, the Franchisor may terminate
this Agreement Termination will be effective on the date specified in the
notice.
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7) Reliance on Any Applicable Termination Provision
The terminating party may select the
termination provision under which it elects to terminate without reference in
its notice of termination to any other provision that may also be
applicable. Subsequently, the terminating party may also assert other
grounds for termination.
8) Option to Purchase
If this Retailer Agreement is set to expire or
to terminate for any reason, the Franchisor has the option to purchase the
Retail Facility Assets, and to cancel this Agreement and all rights granted
to the Retailer. Real property will be included only if the Retailer and the
Franchisor agree. The purchase price of the Retail Facility Assets and other
terms will be determined under Article 2OC(2)b. The Franchiser must advise
the Retailer of its intent to exercise this option within 60 days after it
notifies the Retailer that an event has occurred that would cause expiration
or warrant termination.
B. Transaction after Termination
1) Orders
If, when this Agreement expires or is
terminated, the Retailer and the Franchisor do not enter into a new Retailer
Agreement, the Retailer's designated supply of Products will automatically be
canceled except as provided in this Article.
The termination or expiration of this Agreement
will not release the Retailer or the Franchisor from the obligation to pay
any amounts owing to the other when such amounts become due.
2) Deliveries
If this Agreement is voluntarily terminated by
the Retailer or if it expires because of the death or incapacity of a
Retailer Operator, the Franchisor will make its best efforts consistent with
distribution procedures to furnish the Retailer with Motor Vehicles to fill
the Retailer's bona fide retail orders on hand on the effective date of
termination or expiration. Franchiser's obligation under this Article 21B(2)
shall not exceed the total number of Motor Vehicles invoiced to the Retailer
for retail sale during the average of any three-month period during the year
preceding the effective date of termination.
3) Effect of Transactions after Termination
Neither the sale of Products to the Retailer,
nor any other act by Saturn, the Retailer or the Franchisor after the
termination or expiration of this Agreement, will waive the termination or
expiration.
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22. Termination Assistance
If this Agreement expires or is terminated and the Franchiser
does not offer either the Retailer or a replacement retailer with
substantially the same ownership (more than 50%, including total family
ownership) a new Retailer Agreement, then the Franchisor will provide
assistance as specified in the Termination Assistance Manual. The
Franchisor's obligations under this Article 22 are subject to the Retailer
fulfilling its responsibilities relating to termination assistance, which are
described in the Termination Assistance Manual.
PART EIGHT
GENERAL PROVISIONS
23. Acknowledgment of Franchise Law Compliance
A. Retailer's Investigation
The Retailer acknowledges that it has conducted an
independent investigation of the business venture contemplated by this
Agreement, and recognizes that it involves business risks and that its
success will be largely dependent upon the ability of the Retailer.
The Franchisor expressly disclaims the making of, and
the Retailer acknowledges that it has not received, a warranty or guarantee,
express or implied, as to the potential volume, profits or success of the
business venture contemplated by this Agreement.
B. Disclosure
The Retailer also acknowledges having received a copy
of this Agreement (together with attachments and related documents) at least
five business days prior to the date on which this Agreement was executed.
The Retailer further acknowledges having received the
disclosure document, which is required by the Trade Regulation Rule of the
Federal Trade Commission entitled the "Franchise Offering Circular," which
contains a copy of this Agreement, at least 10 business days prior to the
date on which this Agreement was executed.
C. Review
The Retailer acknowledges that it has read and
understands this Agreement (and its attachments and related agreements) and
that the Franchiser has afforded the Retailer ample time and opportunity to
consult with advisors of the Retailer's own choosing, about the potential
benefits and risks of its entering into this Agreement.
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24. General Provisions
A. No Agent or Legal Representative Status
This Agreement does not make either party or Saturn the
agent or legal representative of the others for any purpose, nor does it
grant either party or Saturn authority to assume or create any obligation on
behalf of or in the name of the others. No fiduciary obligations are created
by this Agreement.
B. Retailer's Responsibility for Its Operations
Except as provided in this Agreement, the Retailer is
solely responsible for all expenditures, liabilities and obligations incurred
or assumed by the Retailer to establish and conduct its operations.
C. Taxes
The Retailer is responsible for all local, state, federal,
or other applicable taxes and tax returns related to its franchised business
and agrees to hold the Franchisor and Saturn harmless from any related claims
or demands made by any taxing authority.
D. Indemnification by Saturn
Saturn has agreed with the Franchisor that Saturn will
assume the defense of the Retailer and indemnify the Retailer against any
judgment for monetary or rescission of contract in any lawsuit that names the
Retailer as a defendant when the lawsuit concerns:
1) Breach of the Saturn warranty related to a product or
bodily injury or property damage that is claimed to be caused solely by a
defect in the design, manufacture or assembly of a Product by Saturn. Saturn
may withhold indemnification where a defect should have been detected during
the predelivery inspection of the Product;
2) Failure of a Product to conform to the description
set forth in advertisements or product brochures distributed by Saturn,
because of changes in either standard equipment or material component parts,
unless the Retailer received notice of the changes prior to retail delivery
of the affected Product by Retailer;
3) Any substantial damage to a Product purchased by
Retailer from Saturn that has been repaired by Saturn unless the Retailer
accepted the Product with knowledge of the repair. Saturn has no obligation
under its agreement with Franchisor if the product involved has been
altered. Any indemnification provided by Saturn will be net of any offset
recovered by the Retailer. Procedures for requesting indemnification,
administrative details and limitations are contained in the Saturn Service
Policies and Procedures Manual.
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E. Trademarks and Services Marks
Saturn, the Franchisor or affiliated companies are the
exclusive owners of the various trademarks, service marks, names and designs
(Marks) used in connection with any Products.
The Retailer is granted the nonexclusive right to display
Marks in the form and manner approved by the Franchisor in the conduct of its
franchised business. Marks may be used as part of the Retailer's name with
the written approval of the Franchiser. The Retailer agrees to change or
discontinue the use of any Marks upon the Franchisor's request.
The Retailer agrees that no company owned by or affiliated
with the Retailer or any of its Investors may use any Xxxx to identify a
business without the Franchisor's written permission.
Upon termination of this Agreement, the Retailer agrees to
immediately discontinue, at its expense, all use of Marks. Thereafter, the
Retailer will not use, either directly or indirectly, any Marks or any other
confusingly similar marks in a manner that the Franchisor determines is
likely to cause confusion or mistake or to deceive the public.
The Retailer will reimburse the Franchisor for all legal
fees and other expenses incurred in connection with any action that is taken
to require the Retailer to comply with this Article 24E.
F. Notices
Any notice that is required to be given by either party to
the other in connection with this Agreement will be in writing and delivered
personally or by mail. Notices to the Retailer will be directed to either
the Retailer or its representatives at the Retailer's principal place of
business. Notices by the Retailer will be directed to:
Retail Network Planning
Saturn Distribution Corporation
000 Xxxxxx Xxxxxxx, X.X. Xxx 0000
Xxxxxx Xxxx, XX 00000-0000
Mailed notices will be deemed received on the date deposited in U.S. or
express mail.
G. No Implied Waiver
The delay or failure of the Retailer or the Franchisor to
require performance by the other party or the waiver by Retailer or
Franchisor of a breach of any provision of this Agreement will not affect the
right subsequently to require such performance.
H. Assignment of Rights or Delegation of Duties
The Franchisor may assign this Agreement and any rights, or
delegate any obligations to any affiliated or successor company. The
Franchisor will provide the Retailer with written notice of such assignment
or delegation. Such an assignment or delegation will not relieve the
Franchisor of liability for the performance of its obligations.
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I. Accounts Payable
All monies or accounts due to the Retailer will be
considered net of the Retailer's indebtedness to the Franchisor and Saturn.
The Franchisor and Saturn may deduct any amounts due, or to become due from
the Retailer to the Franchisor or Saturn, or any amounts held by the
Franchisor or Saturn, from any sums or accounts due, or to become due, from
Saturn or the Franchisor to the Retailer.
J. Sole Agreement of Parties
Except as provided in this Agreement, the Franchisor has
made no promises to the Retailer, the Retailer Operator or the Retailer
Investor(s). There are no other agreements or understandings, either oral or
written, between the parties affecting this Agreement or relating to any of
the subject matter covered by this Agreement.
Except as otherwise provided in this Agreement, this
Agreement cancels and supersedes all previous agreements between the parties
that relate to any matters covered herein.
No agreement between the Retailer and the Franchisor that
relates to matters covered herein, and no change in, addition to (except the
filling in of blank lines) or erasure of any printed portion of this
Agreement, will be binding unless it is approved in a written agreement
executed under Article 25.
K. Severability
If any provision of this Agreement is determined to be
unenforceable under a valid and applicable law in effect as of the effective
date of this Agreement, then the Agreement will be modified to the minimum
extent necessary to comply with such law.
L. Review and Modification of Agreement Terms
To demonstrate its commitment to the Saturn Philosophy,
Mission, Values and way of doing business, the Franchisor has entered into
indefinite term Agreement.
However, neither the Retailer nor the Franchisor want to
prevent the modification of their contractual relationship as necessary to
respond to changes in marketing conditions. Therefore, the Franchise
Operations Team will review this Agreement every five years or at such other
time as the FOT decides is appropriate.
In the event the FOT recommends a superseding form of
Retailer Agreement, the Retailer and the Franchisor agree to terminate this
Agreement and execute the new Agreement. Unless otherwise agreed in writing,
the rights and obligations of the Retailer that may otherwise become
applicable upon termination or expiration of this Agreement will not be
applicable.
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25. Execution on Behalf of Retailer and Franchisor
This Agreement and related agreements are valid only if
signed:
A. On behalf of the Retailer by a duly authorized
representative and, in the case of this Agreement, by the Chief Executive
Officer, Retailer Operator and Retailer Investor(s); and
B. On behalf of the Franchisor by either its President
or a Vice President, Sales.
SATURN OF SOUTHWEST OREGON, INC. SATURN DISTRIBUTION CORPORATION
Retailer Name
By: /s/Xxxxxx X. XxXxxx 6-16-97 By: /s/Xxx Xxxxxxx 6-5-97
--------------------------------- ----------------------------------
Retailer Operator Date President Date
By: /s/Xxxxxx X. XxXxxx 6-16-97 By: /s/Xxxxxx X. Xxxxx 6-9-97
--------------------------------- ----------------------------------
Retailer Investor Date Vice President, Sales Date
LITHIA MOTORS, INC.
Xxxxxx X. XxXxxx, President
By: /s/Xxxxxx X XxXxxx 6-16-97
---------------------------------
Retailer Investor Date
LITHIA HOLDING, LLC
Xxxxxx X. XxXxxx, Managing Member
By: /s/Xxxxxx X XxXxxx 6-16-97
---------------------------------
Retailer Investor Date
LITHIA HOLDING, LLC
Xxxxxxx X. Xxxxxxx, Member
By: /s/Xxxxxxx X. Xxxxxxx
---------------------------------
Retailer Operator Date
LITHIA HOLDING, LLC
R. Xxxxxxxx Xxxx, Member
By: /s/R. Xxxxxxxx Xxxx
---------------------------------
Retailer Operator Date
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Glossary of Terms
Critical Success Factors: Areas of performance that are critical
to the Retailer's success and success and that are evaluated in the MAP.
Financial Services Process: The four-step process that allows
customers to make informed financial decisions by providing an educational,
customer focused consultation by the financial services manager. The steps
are introduction, interview, selective presentation, and summary and
disclosure. By adhering to this process, customers receive a quality
experience that creates customer enthusiasm.
Franchise Systems Manuals: Manuals that contain the policies,
procedures, systems and guidelines for the conduct of Saturn Retail Facility
Operations under the Retailer Agreement.
Marketing Area: The geographic area assigned to the Retailer and
identified in a Notice of Retailer's Marketing Area.
Marketing Area Plan (MAP): An essential part of the Retailer
Agreement that describes how the Retailer will develop its designated area
and fulfill all the corresponding sales and service commitments.
Marks: The various trademarks, service marks, names and designs
used by Saturn, the Franchisor and its affiliated companies in connection
with Products.
Motor Vehicles: All current Saturn branded model types or series
of new motor vehicles specified in any Motor Vehicle Addendum and all past
motor vehicles marketed through Retailers.
Nonaffiliated Entity: An entity that is not incorporated into or
associated with either the Saturn Distribution Corporation, Saturn
Corporation, General Motors or any of its subsidiaries.
Parts and Accessories: New or remanufactured automotive parts
and accessories that are marketed or approved by Saturn or the Franchisor and
listed in the current Retailer Parts and Accessories Price Schedules and
supplements.
Performance Benchmarks: Minimum acceptable level of performance
for a Critical Success Factor, which may be modified from time to time by the
FOT, that will be evaluated in the MAP process.
Products: Motor Vehicles, Parts and Accessories, and Saturn
Service Plan Products.
Retail Environment Design Package: A comprehensive design
package to provides a design guide and access to a portfolio of Saturn retail
facility design control drawings (interior and exterior).
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Retail Facility Assets: The principal assets of the Retailer
used in the franchised business, other than real property.
Retail Facility Premises: The approved site(s) and facility(ies)
provided by the Retailer for Saturn Retail Facility Operations.
Retailer: The corporation, partnership, limited liability
company or proprietorship that signs the Retailer Agreement.
Retailer Agreement. The Retailer Agreement that is executed
including the Marketing Area Plan, the Retailer Standards Manual, the Saturn
Service Policies and Procedures Manual, other related Addenda and the Terms
of the Sale Bulletins.
Retailer Operator. The principal manager of the Retailer upon
whose personal service the Franchisor relies in entering into the Retailer
Agreement.
Retailer Investor. A person having equity ownership or a
beneficial interest in the Retailer upon whose qualifications the Franchisor
relies in entering into the Retailer Agreement.
Retailer Selection Criteria: The qualifications and standards
that prospective Retailer Operators and certain Retailer Investors must
satisfy in order to be approved by the Franchisor.
Retailer Selection Process: The process that an applicant must
successfully complete before becoming a Saturn Retailer Operator. This
process includes the application, the questionnaires, the assessment at the
applicant's place of business, an orientation and interview, and the
development and agreement on a Marketing Area Plan.
Retailer Standards Manual: The manual that contains Saturn Brand
Critical Standards and Fundamental Principles.
Sales Consultative Process. The seven-step process that delivers
a sales experience focused on the wants and needs of the customer. It
includes reception, interview, selective presentation, and demonstration,
purchase consultation, delivery and follow-up. By adhering to this process,
customers receive a quality experience that creates customer enthusiasm.
Saturn Brand Critical Standards. Retailer Standards that pertain
to matters deemed by the FOT to be particularly vital to the strength of the
Franchisor and other Retailers. These Brand Critical Standards must be
executed consistently across the retail network.
Saturn Retail Facility Operations: All operations contemplated
by the Retailer Agreement. These include the sales and service of Products,
the sale or promotion of products marketed or distributed by Saturn
Corporation, and any other activities undertaken by the Retailer related to
Products, including rental and leasing operations, used vehicle sales
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(including non-Saturns) using the Saturn Used Car Process, body shop
operations, and finance and insurance operations, whether conducted or
indirectly by the Retailer. "Saturn Retail Facility Operations" does not
include the sale of used vehicles (Saturn or non-Saturn) when the Saturn Used
Car Process is not used.
Saturn Service Policies and Procedures Manual: The manual, as
may be modified from time to time by the Franchiser, that details certain
policies and procedures for Retailer service under the Retailer Agreement.
Saturn Used Car Process: Procedures designed to bring the
"Saturn Difference" to the retail used car business through a consistent
approach as defined in the Administrative Guidelines for the Saturn Used Car
Process, which may be modified from time to time, with approval of FOT as
appropriate.
Service Consultative Process: The seven-step process that
provides service teams with a guide to exceed the customer's expectations
during a service visit. The process includes service reservation, customer
reception, interview, CSO development, customer and shop communication,
active service delivery, and customer follow-up. By involving the customer
in the service process and focusing on their wants and needs, service teams
are better able to customer enthusiasm that leads to customer retention,
referrals and repeat vehicle sales.
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EXHIBIT B
PROCEDURE FOR DETERMINATION OF
FAIR MARKET VALUE
For purposes of the Agreement to which this is an attachment, the term
"Fair Market Value" shall mean the fair market value of the businesses,
properties and assets of the Saturn Retailer. Fair Market Value shall be
calculated: (a) as the value of a Saturn automobile sales and service
facility that is not part of any other system or entity and not necessarily
the value of the Retailer, (b) based on comparable sales of automobile sales
and service facilities similar to the Saturn retail facility in the market
area in which Saturn retail facility is located, and (c) based on facility in
"AS IS, WHERE IS" condition. Fair Market Value shall be determined in
following manner:
1. The parties shall attempt, in good faith to agree on Fair
Market Value of the Saturn Retailer. If the parties fail, refuse, or are
unable for any reason to agree on Fair Market Value within thirty (30) days
following notice by SDC of an event giving rise to a determination of Fair
Market Value, Saturn of Southwest Oregon, Inc. ("Retailer"), shall within ten
(10) days thereafter select both a nationally recognized investment banker
and an appraiser and notify SDC in writing of the names, addresses and
qualifications. Within ten (10) days following its receipt of such notice,
SDC shall also select a nationally recognized investment banker and an
appraiser and notify Retailer of their names, addresses and qualifications.
The investment bankers and appraisers selected by Retailer and SDC are
sometimes referred to herein as the "Advisers."
2. The Advisers shall advise Retailer and SDC of their
respective determinations of Fair Market Value within 30 days of SDC's
selection of its investment banker and appraiser. If the greatest of the
four determinations of Fair Market Value is less than or equal to one hundred
five percent (105%) of the average of the four determinations of Fair Market
Value, the Fair Market Value shall equal the average of such determinations
of Fair Market Value, and that determination shall be binding and conclusive
upon all parties. If the greatest of the four determinations is greater than
105% of the average of the four determinations, the two investment bankers
shall select a third nationally recognized investment banker and the two
appraisers shall select a third appraiser to each make an additional
determination of Fair Market Value. If the average of the third set of
appraisals is higher than the highest of the original appraisals, then the
highest original appraisal will be used. If the average of the third set of
appraisals is lower than the lowest of the original appraisals, then the
lowest original appraisal will be used. If the average of the third set of
appraisals falls between the highest and lowest of the original appraisals,
then the average of the third set of appraisals will be used and shall be
binding and conclusive upon all parties.
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3. If the investment bankers selected by SDC and Retailer
respectively are unable to agree upon the designation of a third investment
banker within ten (10) days after the expiration of the thirty (30) day
period referred to above, or if such third investment banker has not advised
the investment bankers selected by Retailer and SDC of his/her determination
of Fair Market Value within thirty (30) days after his/her selection, either
party may request the United States District Court for the District in which
the premises are located to appoint a nationally recognized investment
banker. If the appraisers selected by SDC and Retailer respectively are
unable to agree upon the designation of a third appraiser within ten (10)
days after the expiration of the thirty (30) day period referred to above, or
if the third appraiser has not advised the appraisers selected by SDC and
Retailer of his/her determination of Fair Market Value within thirty (30)
days after his/her selection, either party may request the United States
District Court for the District in which the Premises are located to appoint
an appraiser. The determination of Fair Market Value made by the third
investment banker and by the third appraiser appointed pursuant hereto shall
be made within thirty (30) days after such appointment. If the average of
the third set of appraisals is higher than the highest of the original
appraisals, then the highest original appraisal will be used. If the average
of the third set of appraisals is lower than the lowest of the original
appraisal, then the lowest original appraisal will be used. If the average
of the third set of appraisals falls between the highest and lowest of the
original appraisals, then the average of the third set of appraisals will be
used and shall be binding and conclusive upon all parties.
4. All appraisers selected or appointed as provided above
shall (i) be independent qualified MAI appraisers active in the market in
which the premises are located, with experience in appraising automobile
sales and service facilities, (ii) use the definition of fair market value
set forth above, and (iii) be registered in the state in which the Premises
are located ("State") if the State provides for or required such
registrations. The costs and expenses of any investment banker and appraiser
selected by a party shall be borne solely by such party, and the costs and
expenses of a third investment banker and appraiser shall be shared equally
between Retailer and SDC.
If SDC elects to purchase the Saturn retail facility premises, then
within thirty (30) days following initiation of the Fair Market Value
process, Retailer shall supply SDC with commitment for title insurance and a
title report showing good and marketable title in Retailer. At closing,
Retailer shall cause a policy of title insurance to be issued to SDC insuring
good marketable title.
The parties shall close the purchase and sale of the Saturn retail
facility, within thirty (30) days after the determination of the Fair Market
Value. The parties shall prepare, execute and deliver all appropriate and
customary documents and make such closing adjustments as may be normal for
transactions of this type in the State.
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