Dealership Agreement
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Introduction
A company wishing to market its products in a territory can use several methods. When setting up a marketing strategy, the manufacturer must consider the available resources to achieve maximum exposure of its product on the market. To speed up the distribution process, the product manufacturer may wish to call on local merchants to handle customer service while it handles the design and manufacture of its product. By focusing on these two aspects, the manufacturer can keep abreast of the competition. The dealership agreement covers this type of relationship.
This document establishes the main components of the legal and financial framework of the grant of a dealership.
Description
The Dealership Agreement is the legal instrument by which a person, called the MANUFACTURER, grants the exclusive right to sell its products on a territory to another person, called the DEALER, who already operates a retail outlet, and who agrees to resell the goods in its name and offer after sales services to its customers.
Use
We recommend the use of this document to govern the relationship between a manufacturer of consumer products, who does not wish to handle the sale of its products directly, and an exclusive distributor of these products operating a retail outlet . The dealership differs from the franchise (see document K05.400 of the Business Precedents) and the lease management agreement in that the dealership enjoys greater autonomy in the operation of its business than the other two operators. The classic example of dealerships is the automotive industry, where every major manufacturer sells its products through a network of dealers.
Table of Contents
0.00 INTERPRETATION
0.01 Definitions
0.01.01 Activities
0.01.02 Agreement
0.01.03 Breach
0.01.04 Change in Control
0.01.05 Competing Product
0.01.06 Confidential Information
0.01.07 Control
0.01.08 Dealership
0.01.09 Encumber or Encumbrance
0.01.10 Establishment
0.01.11 Force Majeure
0.01.12 Fundamental Provisions
0.01.13 Industrial Property
0.01.14 Intellectual Property
0.01.15 Legal Representatives
0.01.16 PARTY
0.01.17 Person
0.01.18 Prime Rate
0.01.19 Product(s)
0.01.20 Related Person
0.01.21 Subsidiary
0.01.22 Territory
0.02 Precedence
0.03 Jurisdiction
0.03.01 Governing Law
0.03.02 Non-compliance
0.04 Miscellaneous
0.04.01 Cumulative Rights
0.04.02 Time and Dates
0.04.03 Financial References
0.04.04 References within Agreement
0.04.05 Gender and Number
0.04.06 Headings
0.04.07 Presumptions
0.04.08 Knowledge
0.04.09 Approval
0.04.10 GAAP
1.00 PURPOSE
1.01 Grant of Dealership
1.02 Conditions
1.02.01 Requisered by MANUFACTURER
1.02.02 Required by DEALER
1.02.03 Choice
2.00 CONSIDERATION
2.01 Sale Price
2.02 Adjustment
3.00 TERMS OF PAYMENT
3.01 Compliance with Terms
3.01.01 Payment
3.01.02 Orders
3.01.03 Suspension of Delivery
3.01.04 Surcharge
3.01.05 Certified Cheque
3.02 Allocation
3.03 Waiver of Compensation
3.04 Interest
4.00 SECURITY
4.01 In favour of MANUFACTURER
4.02 In favour of DEALER
4.03 Suretyship
4.04 Right of Ownership
4.05 Subordination
4.05.01 Shareholders
4.05.02 Sole Proprietorship or Partnership
4.06 Reimbursement of Loans
4.07 Capital Reduction
5.00 MUTUAL REPRESENTATIONS AND WARRANTIES
5.01 Status
5.02 Authority
5.03 Binding Agreement
5.04 Canadian Resident
5.05 Commission
5.06 Insurance
5.07 Nominee
5.08 Fundamental Provisions
5.09 Disclosure
6.00 REPRESENTATIONS AND WARRANTIES OF THE MANUFACTURER
6.01 Status
6.02 Authority
6.03 Binding Agreement
6.04 Insurance
6.05 Nominee
6.06 Fundamental Provisions
6.07 Disclosure
6.08 Compliance with Legislation
6.09 Quality
6.10 Products Supply
6.11 Intellectual Property
6.12 Trade-mark
6.13 Granted Rights
7.00 REPRESENTATIONS AND WARRANTIES OF THE DEALER
7.01 Status
7.02 Authority
7.03 Binding Agreement
7.04 Insurance
7.05 Nominee
7.06 Fundamental Provisions
7.07 Disclosure
7.08 Operating Permits
7.09 Legal Proceedings
7.10 Fiscal Position
7.10.01 Default
7.10.02 Charges
7.10.03 Deductions
7.11 Management of the Dealership
7.12 Solvency
8.00 MUTUAL DUTIES AND OBLIGATIONS
8.01 Confidential Information
8.01.01 Undertaking
8.01.02 End of Agreement
8.02 Insurance
8.02.01 Insured Risks
8.02.02 Amount of Coverage
8.02.03 Issuer
8.02.04 Co-insured
8.02.05 No Limitation
8.03 Indemnification
8.03.01 “Loss”
8.03.02 Scope
8.03.03 Procedure
8.03.04 Deductible
8.03.05 Limitation on Claims
8.04 Disclosure of Agreement
9.00 DUTIES AND OBLIGATIONS OF THE MANUFACTURER
9.01 Ongoing Training
9.01.01 Marketing
9.01.02 Maintenance
9.01.03 Traveling Staff
9.02 Publicity and Promotional Means
9.02.01 Programs and Materials
9.02.02 Duty to Purchase
9.03 Technical Documentation
9.03.01 Supply
9.03.02 Ownership
9.04 Supply
9.04.01 Exclusivity
9.04.02 Allocation
9.04.03 Delay or Default in Delivery
9.04.04 Manufacturing Interruption
9.04.05 Claims
9.05 After Sale Service
9.05.01 Warranty
9.05.02 Product Maintenance
9.05.03 Inspection Campaign
10.00 DUTIES AND OBLIGATIONS OF THE DEALER
10.01 Supplies
10.01.01 Exclusivity
10.01.02 Orders
10.01.03 Inventory
10.01.04 Planning
10.01.05 Delivery
10.01.06 Diversion
10.01.07 Acknowledgement
10.02 Management of the Dealership
10.02.01 Installations
10.02.02 Business Hours
10.02.03 Means of Operation
10.02.04 Operating Permits
10.02.05 Control
10.03 Marketing of the Products
10.03.01 Sale Service
10.03.02 Promotion
10.03.03 Local Publicity
10.03.04 Pricing Policy
10.03.05 Other Products
10.03.06 Additional Warranties
10.03.07 Sale Objectives
10.04 After Sale Service
10.04.01 Products Maintenance
10.04.02 Use of Parts
10.04.03 Inspection Campaign
10.04.04 Service Organization
10.04.05 Service Equipment
10.04.06 Parts Inventory
10.04.07 Complaints
10.05 Trade-Marks
10.05.01 Acknowledgement
10.05.02 Restriction
10.05.03 Pre-authorized Use
10.05.04 No Transfer
10.05.05 Denunciation
10.06 Financing of Operations
10.06.01 Approved Financial Institutions
10.06.02 Other Financial Institution
10.07 Accounting
10.07.01 Financial Statements
10.07.02 Reports
10.07.03 Registers
10.07.04 Examination
10.08 Taxes
11.00 SPECIAL PROVISIONS
11.01 Assignment
11.01.01 Prohibition
11.01.02 Effect of Breach
11.01.03 Exception
11.02 Force Majeure
11.02.01 No Default
11.02.02 Duty
11.02.03 Rights of Other PARTY
11.03 Relationship
11.03.01 Independent Contractors
11.03.02 No Control over Performance
11.03.03 No Authority to Bind
11.04 Further Assurances
11.05 Other Remedies
11.05.01 Choices
11.05.02 No Limitations
11.06 Prescription
11.07 Intellectual Property
11.08 Ownership of the Dealership
11.08.01 Percentage
11.08.02 Change
11.09 Pre-authorized Transfers
11.09.01 Transfer by MANUFACTURER
11.09.02 Transfer by DEALER
12.00 GENERAL PROVISIONS
12.01 Notice
12.02 Dispute Resolution
12.02.01 Good Faith Negotiations
12.02.02 Mediation
12.02.03 Arbitration
12.03 Election
12.04 Counterparts
12.05 Amendment
12.06 Waiver of Rights
12.07 Electronic Transmission
12.08 Language
13.00 TERMINATION
13.01 Mutual Consent
13.02 Unilateral Termination
13.03 By MANUFACTURER
13.03.01 Immediate
13.03.02 Upon FIVE (5) days’ written notice
13.03.03 Upon THIRTY (30) days’ written notice
13.03.04 Upon NINETY (90) days written notice
13.03.05 Termination Notice
13.03.06 By DEALER
13.04 Cessation of Trade-mark Use
13.04.01 Undertaking
13.04.02 Default
13.05 Transition
13.05.01 Cancellation
13.05.02 Purchase
13.05.03 Inventory
13.05.04 Products
13.05.05 Documentation
14.00 EFFECTIVE DATE
14.01 Retroactivity
14.02 Execution
14.03 Deferral
15.00 DURATION
15.01 Probationary or Trial Period
15.02 Initial Term
15.03 Renewal
15.03.01 First Renewal
15.03.02 Subsequent Renewal
15.03.03 No Renewal
15.04 Survival
15.05 Non renewal
16.00 SCOPE
SCHEDULE A – EXCERPT OF A RESOLUTION OF THE MANUFACTURER
SCHEDULE B – EXCERPT FROM A RESOLUTION OF THE DEALER
SCHEDULE 4.03 – SURETYSHIP
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