EXHIBIT 10.9.1
SATURN
DEALER
AGREEMENT
SATURN DISTRIBUTION CORPORATION
-23-
SATURN DISTRIBUTION CORPORATION
DEALER AGREEMENT
TABLE OF CONTENTS
ARTICLE PAGE
PART ONE:
MISSION, PHILOSOPHY AND FRAMEWORK
OF FRANCHISOR-DEALER RELATIONSHIP
1. SATURN MISSION............................................................1
2. SATURN PHILOSOPHY.........................................................2
3. DEALER COMMITMENT TO MISSION AND PHILOSOPHY...............................2
4. SHARED RESPONSIBILITY.....................................................2
A. Customer Action Council..............................................2
B. Franchise Development Team...........................................3
C. Franchise Task Forces................................................3
5. DISPUTE RESOLUTION PROCESS................................................3
A. Exclusive Remedy.....................................................3
B. Mediation............................................................4
C. Binding Arbitration..................................................4
PART TWO:
RIGHTS GRANTED
6. AUTHORIZED DEALER.........................................................5
7. DEALER OPERATOR...........................................................5
A. Personal Qualifications..............................................5
B. Management Responsibility............................................5
8. TERM......................................................................6
9. AUTHORIZED LOCATIONS AND TERRITORIAL RIGHTS...............................6
A. Dealer's Marketing Area..............................................6
(1) Facility Design and Appearance..................................6
(2) Exclusive Use...................................................7
B. Territorial Rights...................................................7
PART THREE:
PRODUCT RESPONSIBILITIES
10. DEALER'S RESPONSIBILITY TO PROMOTE, SELL AND SERVICE
SATURN PRODUCTS...........................................................8
A. Responsibility to Promote and Sell...................................8
B. Responsibility to Service............................................8
11. SALE OF PRODUCTS TO DEALERS...............................................8
A. Sale of Motor Vehicles to Dealer.....................................8
B. Sale of Parts and Accessories to Dealer..............................9
C. Prices and Other Terms of Sale.......................................9
(1) Motor Vehicles..................................................9
(2) Parts and Accessories...........................................9
D. Inventory...........................................................10
(1) Motor Vehicle Inventory........................................10
(2) Parts and Accessories..........................................10
E. Warranties on Products..............................................10
12. SERVICE OF PRODUCTS......................................................11
A. Service for Which Franchisor Pays...................................11
(1) New Motor Vehicle Pre-Delivery Inspections
and Adjustments................................................11
(2) Warranty Repairs and Special Policy
Adjustments....................................................11
(3) Campaign Inspections and Corrections...........................11
(4) Payment for Pre-Delivery Adjustments,
Warranty and Campaign Work.....................................11
B. Parts, Accessories, Service Contracts and Body
Repairs.............................................................12
(1) Warranty Repairs and Policy Adjustments........................12
(2) Representations and Disclosures as to Modifications, Parts,
Accessories and
Service Contracts..............................................12
(3) Body Repair....................................................12
PART FOUR:
THE BUSINESS PLANNING PROCESS
13. BUSINESS PLANNING........................................................12
A. Marketing Area Plan.................................................12
(1) Marketing Area Development.....................................13
(2) Operations.....................................................13
B. Annual Plan Review..................................................13
(1) Performance Evaluation.........................................14
(2) Plan Modifications.............................................14
PART FIVE:
OTHER OPERATING RESPONSIBILITIES
14. SATURN SYSTEMS...........................................................15
A. Systems for Which Dealer Pays.......................................15
(1) Sales and Service Systems......................................15
(2) Computer System................................................15
(3) Signs..........................................................16
(4) Tools and Equipment............................................16
B. Other Systems.......................................................16
(1) Convenience Systems............................................16
(2) Accounts and Records...........................................16
a. Uniform Accounting System.................................16
b. Examination of Accounts and Records.......................17
-ii-
c. Confidentiality of Dealer Data............................17
(3) Additional Systems.............................................17
15. MARKETING ASSOCIATIONS...................................................17
16. TRAINING.................................................................17
17. CAPITALIZATION...........................................................18
PART SIX:
REPLACEMENT DEALERS
18. CHANGES IN OWNERSHIP.....................................................18
A. Succession Rights upon Death or Incapacity..........................18
(1) Successor Addendum.............................................18
(2) Rights of Remaining Owners.....................................19
(3) Successor Dealer Requirements..................................19
(4) Limitation on Offers...........................................19
(5) New Successor Addendum.........................................20
B. Changes of Ownership or Dealer Operator.............................20
C. Right of First Refusal or Option to Purchase........................21
(1) Creation and Coverage..........................................21
(2) Purchase Price and Other Terms of Sale.........................22
(a) Bona Fide Agreement.......................................22
(b) Absence of Bona Fide Agreement............................22
PART SEVEN:
TERMINATION AND TERMINATION ASSISTANCE
19. TERMINATION..............................................................23
A. Termination of Agreement............................................23
(1) By Dealer......................................................23
(2) By Agreement...................................................23
(3) Failure to be Licensed.........................................23
(4) Misrepresentation, Failure to Conduct
Operations, or Disqualification or Change
of Dealer Operator or Owner....................................24
(5) Failure of Performance.........................................24
(6) Reliance on Any Applicable Termination
Provision......................................................24
(7) Option to Purchase.............................................25
B. Transactions after Termination......................................25
(1) Orders.........................................................25
(2) Deliveries.....................................................25
(3) Effect of Transactions after Termination.......................26
20. TERMINATION ASSISTANCE...................................................26
PART EIGHT:
GENERAL PROVISIONS
21. ACKNOWLEDGEMENT OF FRANCHISE LAW COMPLIANCE..............................26
A. Dealer's Investigation..............................................26
-iii-
B. Disclosure..........................................................26
C. Review..............................................................27
22. GENERAL PROVISIONS.......................................................27
A. No Agent or Legal Representative Status.............................27
B. Dealer's Responsibility for its Operations..........................27
C. Taxes...............................................................27
D. Indemnification by Saturn...........................................27
E. Trademarks and Service Marks........................................28
F. Notices.............................................................29
G. No Implied Waivers..................................................29
H. Assignment of Rights or Delegation of Duties........................29
I. Accounts Payable....................................................29
J. Sole Agreement of Parties...........................................29
K. Review and Modifications of Agreement Terms.........................30
23. EXECUTION ON BEHALF OF DEALER AND FRANCHISOR.............................30
GLOSSARY.................................................................32
-iv-
SATURN DISTRIBUTION CORPORATION
DEALER AGREEMENT
This Agreement, effective the [25th] day of [October], 19[91], is entered into
by Saturn Distribution Corporation (Franchisor), a wholly-owned subsidiary of
Saturn Corporation (Saturn), and [MEDFORD DODGE D/B/A SATURN OF MEDFORD].
( ) a proprietorship;
( ) a partnership;
( ) a corporation, [formed] in the State of [OREGON] on
[12/31/88], located in [MEDFORD], [OREGON] (Dealer).
PURPOSE OF THE AGREEMENT
The principal purposes of this Agreement are to:
A. affirm the commitment of Franchisor and Dealer to adhere to the Saturn
Philosophy and achieve the Saturn Mission;
B. identify the framework within which Franchisor and Dealer will jointly act
to fulfill their commitments to each other;
C. authorize Dealer to sell and service Saturn Products and to represent
itself as a Saturn Dealer; and
D. identify other commitments, rights and responsibilities of Franchisor and
Dealer.
PART ONE:
MISSION, PHILOSOPHY AND FRAMEWORK
OF FRANCHISOR-DEALER RELATIONSHIP
1. SATURN MISSION
The Mission of Saturn is to market vehicles developed and manufactured in
the United States that are world leaders in quality, cost and customer
satisfaction through the integration of people, technology and business
systems.
Achieving this Mission is dependent in part upon the development and
maintenance of a network of authorized Dealers working together with
Franchisor to build and maintain customer confidence in Dealer and Saturn.
2. SATURN PHILOSOPHY
Meeting the needs of customers, Dealers, Saturn, Franchisor, suppliers and
the community is fundamental to the Saturn Mission. To meet the needs of
customers, Saturn Products and services must be world leaders in
satisfaction and value. To meet the needs of Dealers, Franchisor will
conduct business in an open and fair manner, and will share responsibility
and decision-making with Dealers in the manner specified in this Agreement
to further the spirit of trust and respect which is critical to the
relationship.
-1-
3. DEALER COMMITMENT TO MISSION AND PHILOSOPHY
Because Dealers represent Saturn's products to the public, it is essential
to the success of Saturn, Franchisor and Dealers that each Dealer embrace
Saturn's Mission and Philosophy as its own. Dealer understands that its
relationship with Franchisor can be conducted in a spirit of trust and
respect only if both Dealer and Franchisor act in an open, fair and
cooperative manner. Dealer therefore commits to adhere to the Saturn
Philosophy in the conduct of its business and to work jointly with
Franchisor and Saturn, in the framework identified in this Agreement, to
accomplish the Saturn Mission. Dealer acknowledges that the success of
Saturn, Franchisor, other Dealers and suppliers is dependent upon Dealer
fulfilling this commitment.
Consistent with the Saturn Philosophy, Dealer pledges to maintain the
highest ethical standard in all activities.
4. SHARED RESPONSIBILITY
In consideration for Dealers' commitments and to ensure that the
relationship between Franchisor and its Dealers remains mutually
satisfactory, Franchisor has established mechanisms for collective Dealer
input to the decision-making process on all matters significantly affecting
Dealers' business. Dealer involvement is provided through three principal
mechanisms: the Customer Action Council, the Franchise Development Team,
and the Franchise Task Forces.
A. CUSTOMER ACTION COUNCIL
The Customer Action Council (CAC) is a Saturn policy team whose
primary focus is customer satisfaction. Its scope includes market
research, product planning, promotional planning, customer
satisfaction systems, and other strategies affecting Saturn customers
and Dealers.
Three Dealer Operators participate along with Franchisor and Saturn
representatives from various disciplines including sales, service,
marketing, engineering, manufacturing and finance. The Dealer
Operators must be members of the Franchise Development Team, are
selected by that Team, and serve on the CAC for staggered two-year
terms.
B. FRANCHISE DEVELOPMENT TEAM
The Franchise Development Team (FDT) is comprised of an equal number
of Saturn Dealer Operators and Franchisor representatives. The FDT
has authority to make decisions on proposed modifications to specific
areas of the business covered in Parts Four and Five of this
Agreement. These areas are key to the successful operation of the
Saturn dealer network, and proposed changes can only be made through
the FDT.
The FDT uses a consensus decision-making process, described in the
Franchise System Manuals. Dealer Operator will be trained in the
process following the execution of this Agreement.
-2-
The FDT is self-governing according to its by-laws. Franchisor
representatives are chosen by Franchisor. Dealer Operators are chosen
according to the by-laws.
C. FRANCHISE TASK FORCES
As necessary, the FDT may establish Franchise Task Forces and delegate
certain of its functions if it concludes the input of additional
Dealer Operators and Franchisor representatives is required. However,
the FDT cannot delegate its decision-making responsibilities. The FDT
will determine the membership of each Task Force and the scope of its
assignment. A representative from the FDT will serve as coordinator
of each Task Force.
5. DISPUTE RESOLUTION PROCESS
A. EXCLUSIVE REMEDY
Franchisor and Dealer believe that their mutual commitment to the
Mission and Philosophy, together with the mechanisms for sharing
responsibility described in Article 4, should minimize the potential
for disputes between them. Nevertheless, disputes may occur which
cannot be resolved in the normal course of business.
Franchisor and Dealer acknowledge that, at the state and federal
levels, various courts and agencies would, in the absence of this
Article 5, be available to them to resolve claims or controversies
which might arise between them. Franchisor and Dealer agree that it
is inconsistent with the Mission and Philosophy for either 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 1 et seq.), DEALER AND 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 first 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 Dealer or Franchisor can submit the
dispute to Binding Arbitration.
B. MEDIATION
Dealer or Franchisor can submit to Mediation a claim or controversy
between them which arises out of or relates to the Dealer Agreement.
Mediation is conducted by a panel consisting of an equal number of
Franchisor representatives and Dealer Operators selected by the
Franchise Development Team. The Mediation Panel will evaluate each
position and recommend a solution. This recommended solution is not
binding.
Franchisor and Dealer agree that the procedures contained in the
Dealer Dispute Resolution Guide govern Mediation under this Article.
-3-
C. BINDING ARBITRATION
If a claim or controversy arising out of or relating to this Agreement
has not been resolved after Mediation, or if Dealer and Franchisor
have agreed in writing to waive Mediation, the claim or controversy
will be settled by Binding Arbitration in accordance with the
procedures in the Dealer 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 arbitrator(s) may be entered and enforced in any
court having jurisdiction.
PART TWO:
RIGHTS GRANTED
6. AUTHORIZED DEALER
Dealer has presented to Franchisor information regarding its qualifications
to be appointed a Saturn Dealer, and its Dealer Operator and Owners have
been evaluated and found to satisfy Franchisor's standards. Dealer has
also presented to Franchisor a Marketing Area Plan, stating Dealer's
proposal to develop and operate facilities in its Marketing Area to
promote, sell and service Saturn Products and Franchisor has accepted the
Plan.
In reliance upon these representations made by Dealer and Dealer's
commitment to the Mission and Philosophy, Franchisor grants Dealer a non-
exclusive right to:
A. buy new Saturn motor vehicles identified in any Motor Vehicle Addendum
and related Parts and Accessories; and
B. identify itself as an authorized Saturn Dealer at the locations
approved by the Franchisor.
Dealer accepts the rights granted and agrees to fulfill its obligations
under this Agreement.
7. DEALER OPERATOR
A. PERSONAL QUALIFICATIONS
Franchisor is entering into this Agreement in reliance on the
qualifications and capabilities of the person identified in Article 23
as Dealer Operator, on that person's commitment to the Mission and
Philosophy, and on Dealer's assurance that the personal services of
the Dealer Operator will be provided in the overall management of the
dealership business.
B. MANAGEMENT RESPONSIBILITY
Franchisor and Dealer agree that the Dealer Operator must have the
authority to exercise management control of the Dealer.
Dealer's Marketing Area Plan describes the ownership of Dealer and any
arrangements necessary to comply with this Article.
-4-
8. TERM
If Dealer continues to meet all conditions and fulfill its obligations and
responsibilities under this Agreement, the Agreement will not expire until
90 days following the death or incapacity of Dealer Operator. If this
Agreement is to expire because of the death or incapacity of Dealer
Operator, Dealer may request a deferral of the effective date of expiration
to assist Dealer in winding up its dealership business or to provide for a
transfer of assets or ownership previously approved under Article 18. The
request must be made at least 30 days prior to the effective date of
expiration, and Franchisor will not unreasonably refuse to grant any
necessary extension.
9. AUTHORIZED LOCATIONS AND TERRITORIAL RIGHTS
A. DEALER'S MARKETING AREA
Dealer has been furnished a Notice of Dealer's Marketing Area. Dealer
is responsible for effectively selling, servicing, and otherwise
representing Saturn Products in the territory designated. Dealer
agrees to conduct dealership operations only from approved locations
within its Marketing Area. The locations are specified in Dealers
Marketing Area Plan as described in Article 13. Where applicable,
Dealer will establish additional facilities in the time and manner
agreed to by Dealer and Franchisor in that Plan.
(1) Facility Design and Appearance
Saturn's Mission to be the industry leader in customer
satisfaction can be furthered if Dealers' facilities share a
consistent architectural design and retail environment and are
readily identifiable as Saturn dealership locations.
Accordingly, Dealer agrees to purchase Franchisor's Retail
Environmental Design Package and to provide dealership facilities
consistent with that Package. Dealer agrees to review all
proposed facility plans with Franchisor and obtain Franchisors
approval before committing to construction.
Dealer pledges that its facilities will be properly maintained
and satisfactory in appearance to promote and preserve the image
of Saturn and Dealers. Dealer further agrees to make any future
modifications to facilities which may be approved by the
Franchise Development Team. Dealer agrees that it will not make
modifications to its facilities without Franchisor's prior
written authorization.
(2) Exclusive Use
To ensure that Saturn, Franchisor and Dealer benefit from the
common dealership facility design and retail environment and to
ensure that Dealer can effect properly any required future
modifications, Dealer agrees that its facilities will be used
exclusively for the conduct of Saturn dealership operations.
B. TERRITORIAL RIGHTS
It is the intention of Franchisor and Dealer that Dealer devote its
full efforts to developing its Marketing Area. Consequently, Dealer
-5-
agrees that it will not engage, either directly or indirectly, in any
of the activities contemplated by this Agreement from locations
outside of its Marketing Area.
Franchisor will not authorize any other dealer to establish a Saturn
dealer facility in Dealer's Marketing Area if Dealer meets its
obligations under the Marketing Area Plan and this Agreement. If
Dealer fails to develop its territory according to its Marketing Area
Plan, then Franchisor may terminate this Agreement for failure of
performance under Article 19 or restructure Dealer's Marketing Area
and reassign any areas necessary to achieve the maximum potential
development of the territory.
PART THREE:
PRODUCT RESPONSIBILITIES
10. DEALER'S RESPONSIBILITY TO PROMOTE, SELL AND SERVICE SATURN PRODUCTS
A. RESPONSIBILITY TO PROMOTE AND SELL
(1) Dealer agrees to effectively sell and promote the purchase and
use (including rental and leasing) of Saturn Products to customers
located in its Marketing Area. Dealers performance of this obligation
will be reviewed annually in conjunction with the Marketing Area Plan,
as described in Article 13.
(2) Dealer is authorized to sell new and unused Motor Vehicles only
(a) to customers who purchase for personal use or for a primary
business use other than resale and (b) to other Saturn Dealers.
(3) Dealer is authorized to sell Motor Vehicles only to customers
located in the United States. Dealer agrees that it will not sell
Motor Vehicles for resale or use outside the continental United
States, Alaska and Hawaii.
B. RESPONSIBILITY TO SERVICE
Dealer agrees to provide courteous, convenient, prompt, efficient and
quality service to owners of Motor Vehicles, regardless of where the
vehicles were purchased. All service will be performed in a
professional manner and in accordance with the systems in the
Franchise System Manuals.
11. SALE OF PRODUCTS TO DEALERS
A. SALE OF MOTOR VEHICLES TO DEALER
Dealer has a Motor Vehicle Addendum specifying the current model types
or series of new motor vehicles which Dealer may purchase. Franchisor
may change the Motor Vehicle Addendum by furnishing Dealer a
superseding Motor Vehicle Addendum.
Franchisor will endeavor to allocate new Motor Vehicles among its
dealers in a fair and equitable manner. The method used to allocate
-6-
Motor Vehicles will give Franchisor discretion in exercising business
judgment to achieve fairness and equity.
B. SALE OF PARTS AND ACCESSORIES TO DEALER
New or remanufactured automotive parts and accessories marketed by
Saturn and listed in current Dealer Parts and Accessories Price
Schedules or supplements furnished to Dealer are called Parts and
Accessories. Sales of Parts and Accessories to Dealer will be made by
Franchisor, Saturn or other suppliers designated by Franchisor.
Orders for Parts and Accessories will be submitted and processed
according to written procedures established by Franchisor, Saturn or
other designated suppliers.
C. PRICES AND OTHER TERMS OF SALE
(1) Motor Vehicles
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
Dealer.
Prices, destination charges and other terms of sale applicable to
any Motor Vehicle may be changed at any time. Changes apply to
Motor Vehicles not shipped at the time the changes are made
effective.
If there is an increase in the price charged to Dealer for a
Motor Vehicle or any optional equipment during a model year, such
increase does not apply to bona fide sold orders submitted prior
to the effective date of the price increase.
Dealer 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) Parts and Accessories
Prices and other terms of sale applicable to Parts and
Accessories are established according to the Parts and
Accessories Terms of Sale Bulletin furnished to Dealer.
Prices and other terms of sale applicable to Parts and
Accessories may be changed at any time. Such changes apply to
Parts and Accessories not shipped at the time changes become
effective.
D. INVENTORY
(1) Motor Vehicle Inventory
Dealer recognizes that customers expect Dealer to have a
reasonable quantity and variety of current model Motor Vehicles
in inventory. Accordingly, Dealer agrees to stock and sell,
subject to any supply restrictions, all models and
-7-
series of Motor Vehicles identified in the Motor Vehicle
Addendum.
(2) Parts and Accessories
Dealer agrees to stock sufficient Parts and Accessories to
perform warranty repairs and policy adjustments and meet the
demands of its customers. Dealer will use the Saturn Parts
Inventory Control System to provide on-line computer access to
Dealers parts inventory and parts sales.
E. WARRANTIES ON PRODUCTS
Saturn warrants the new Motor Vehicles and Parts Accessories
(Products) it produces. The warranties are explained in documents
provided with the Products or explained in the Franchise System
Manuals. Franchisor 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
DEALERS, 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 to Dealer by a designated supplier are
not warranted by Saturn or Franchisor and are warranted only as
specified by the supplier.
12. SERVICE OF PRODUCTS
A. SERVICE FOR WHICH FRANCHISOR PAYS
(1) New Motor Vehicle Pre-Delivery Inspections and Adjustments
Because new vehicle delivery condition is critical to customer
satisfaction, Dealer agrees to perform pre-delivery inspections
and adjustments on each new Motor Vehicle and verify completion
according to procedures.
(2) Warranty Repairs and Special Policy Adjustments
Dealer agrees to perform (i) required warranty repairs on each
qualified Motor Vehicle at the time of pre-delivery service and
when requested by owner, and (ii) special policy adjustments
approved by Franchisor. When the vehicle is returned to the
owner, Dealer will provide owner a copy and explanation of the
repair document reflecting all services performed.
(3) Campaign Inspections and Corrections
-8-
Dealer agrees to find and correct suspected unsatisfactory
conditions on Products identified by Franchisor. Dealer will
also determine that campaign inspections and corrections have
been made on new and used Saturn motor vehicles in its inventory
prior to sale and follow-up on Products on which campaigns are
outstanding.
(4) Payment for Pre-Delivery Adjustments, Warranty and Campaign Work
For Dealer's performance of services, pre-delivery adjustments,
warranty repairs, special policy adjustments, and campaign
inspections and corrections, Franchisor will provide or pay
Dealer for the Parts and other materials required and will pay
Dealer a fair amount for labor. Payment will be made according
to policies in the Franchise System Manuals. Dealer will not
impose any charge for such service on owners or users except
where a deductible or pro-rata charge applies.
B. PARTS, ACCESSORIES, SERVICE CONTRACTS AND BODY REPAIRS
(1) Warranty Repairs and Policy Adjustments
Dealer agrees to use only genuine Saturn or Franchisor approved
parts in performing warranty repairs and special policy
adjustments.
(2) Representations and Disclosures as to Modifications, Parts,
Accessories and Service Contracts
Dealer and Franchisor recognize that owners and users of Motor
Vehicles reasonably expect that the vehicles sold by Dealer and
the parts, accessories and service contracts sold or used by
Dealer in servicing vehicles are marketed by Saturn or
Franchisor. If Dealer sells or uses parts, accessories or
service contracts not marketed by Saturn or Franchisor, it will
give customers written notice, prior to the sale or service, that
such parts, accessories or service contracts are not marketed or
warranted by Saturn or Franchisor. Dealer also agrees not to
represent that vehicle modifications not specifically authorized
by Saturn are warranted or approved by Saturn or Franchisor.
(3) Body Repairs
Dealer must provide body repair service for Saturn Motor
Vehicles. Dealer can provide this service through its own body
shop, or in cases where Franchisor agrees that unusual
circumstances make it impractical for Dealer to own and operate
its own body shop, by arrangement with an independent repair
establishment acceptable to Franchisor.
PART FOUR:
THE BUSINESS PLANNING PROCESS
13. BUSINESS PLANNING
-9-
A. MARKETING AREA PLAN
Dealer and Franchisor have executed a Marketing Area Plan (Plan) which
describes how Dealer will develop its Marketing Area and fulfill its
sales and service commitments. The Plan is an essential part of the
Agreement.
(1) Marketing Area Development
Dealer agrees to develop its assigned Marketing Area according to
the Marketing Area Plan. Its commitments for development
include:
(a) detailed description of the number, location, type, size and
opening date of facilities to be provided;
(b) detailed implementation schedules for each facility; and
(c) statement of Dealer's legal and financial structure,
including capitalization, line of credit and equity ownership.
(2) Operations
Dealer agrees to fulfill the sales and service commitments
described in the Marketing Area Plan. Its commitments for
operations include:
(a) performance standards;
(b) detailed organizational structure and staffing plans;
(c) plans for personnel development;
(d) specific plans for maximizing customer satisfaction,
including hours of operation and customer convenience systems;
(e) advertising, merchandising, and community relations plans;
and
(f) other items as agreed by Franchisor and Dealer or as
required by the Franchise Development Team.
B. ANNUAL PLAN REVIEW
Dealer agrees to update its Plan annually, or more often if needed,
and submit it to Franchisor for joint review. Updated Plans will
include a performance evaluation and any proposed modifications to the
prior year's Plan. If Franchisor and Dealer agree that changes to the
proposed Plan are necessary, Dealer will make such changes and
resubmit its Plan.
(1) Performance Evaluation
Dealer's performance of its obligations is essential to the
effective representation of Saturn Products, and to the
reputation and goodwill of Franchisor, Saturn, and other Saturn
Dealers. Therefore, Dealer agrees to review its performance
against the prior year's Plan in its updated Plan.
-10-
Franchisor and Dealer will use this analysis as the basis for
jointly evaluating Dealers performance so that any necessary
improvements can be made.
Factors considered in evaluating Dealer's performance will
include its attainment of the prior year's objectives, Dealer's
performance trends, Dealer's financial performance and the manner
in which Dealer has conducted its operations. Periodic facility
evaluations will be conducted, including an evaluation of
Dealer's compliance with then-current requirements and standards
for dealership under the Marketing Area Plan. Other factors
considered in the evaluation will include product availability
and an assessment of whether actual market conditions adversely
affected Dealer's ability to attain the prior year's objectives.
(2) Plan Modifications
While Dealer's plan for Marketing Area development is subject to
update, modifications to facility plans will occur only if
Franchisor believes that a material change in marketing
conditions warrants a proposed modification.
Plans for operations are subject to update, but modifications can
be implemented only if Franchisor and Dealer reach consensus that
the proposed modifications are consistent with the Saturn
Mission, Philosophy, and systems.
PART FIVE:
OTHER OPERATING RESPONSIBILITIES
14. SATURN SYSTEMS
Dealer recognizes that achieving industry-leading customer satisfaction is
a major objective of the Saturn Mission. This level of satisfaction cannot
be attained without consistent application by all Dealers of designated
sales, service, marketing, facilities and other systems. Dealer agrees to
purchase, implement and maintain required systems identified in this
Agreement set forth in the Franchise System Manuals, or approved by the
Franchise Development Team.
A. SYSTEMS FOR WHICH DEALER PAYS
(1) Sales and Service Systems
Dealer agrees to pay Saturn, Franchisor, or approved sources for
initial systems necessary to develop and implement Saturn sales
and service in Dealer's Marketing Area. These systems include
materials and programs which will promote proper, consistent and
competitive display, sales and service of Saturn Products.
Periodically, the Franchise Development Team will determine that
new updated materials, information or programs are necessary.
Dealer agrees to accept and utilize such designated new or
updated materials, information or programs and pay any applicable
charges. Any such charges
-11-
will be established by the Franchise Development Team and will be
based upon anticipated costs.
(2) Computer System
Saturn's Mission involves the integration of people, technology
and business systems. This integration is possible only if all
Dealers have computer systems which meet the dealership's
internal business needs, permit direct communication between
Dealers, Franchisor and Saturn, and give Franchisor and Saturn
ready access to Dealer's accounts and records. Accordingly,
Dealer agrees to purchase and use the approved computer system
packages.
To maintain this integration, Dealer agrees to update its
computer system packages when changes are approved by the
Franchise Development Team.
(3) Signs
To promote consistency of image, Dealer agrees to purchase and
use only signs approved by Franchisor. Dealer agrees to make and
pay for any changes in signage approved by the Franchise
Development Team.
(4) Tools and Equipment
Dealer agrees to provide adequate service tools and equipment as
required to fulfill its responsibilities for service. Dealer
also agrees to purchase and maintain specified special tools and
equipment to service Saturn Products.
B. OTHER SYSTEMS
(1) Convenience Systems
An integral part of Franchisor's plan to develop industry-leading
customer satisfaction is to promote Saturn Dealers as the
unsurpassed source of convenient automobile sales and service.
Dealer agrees it will conduct dealership operations to support
this concept.
Dealers proposed operating hours and customer convenience systems
will be elements of its Marketing Area Plan.
(2) Accounts and Records
a. Uniform Accounting System
Both Franchisor and Dealers can benefit by using Dealer
operating information to develop composite operating
statistics, analyze Dealers' business management practices,
and assess the impact of Franchisor's policies and
practices. To assure maximum benefit, Dealer agrees to
maintain a uniform accounting system and furnish reports and
records as provided in the Franchise System Manuals.
-12-
b. Examination of Accounts and Records
In addition to the access which Franchisor and Saturn have
to Dealers accounts and records through computer systems,
any designated representative of Franchisor is authorized to
examine, audit, reproduce and take copies of any of the
accounts and records Dealer maintains under this Agreement.
Dealer agrees to make such accounts and records readily
available at its facilities during business hours.
Franchisor agrees to furnish Dealer with a copy of any
reproduced records.
c. Confidentiality of Dealer Data
Franchisor will not furnish any personal or financial data
submitted to it by Dealer to any non-affiliated entity
unless authorized by Dealer, required by law, pertinent to
proceedings under the Dispute Resolution Process, or to
court or administrative proceedings.
(3) Additional Systems
Dealer can use additional systems that are compatible with
Saturn's Mission, Philosophy, and systems. Dealer agrees to
discontinue use of systems deemed incompatible by Franchisor.
15. MARKETING ASSOCIATIONS
Franchisor and Dealer acknowledge the mutual benefits of comprehensive
joint advertising and merchandising by Dealers to promote the sale and
service of Saturn Products, including Parts and Accessories. Accordingly,
Franchisor will assist Dealers in establishing marketing associations and
in developing their by-laws. Dealer agrees to cooperate in forming the
associations and to participate actively in them.
The marketing associations will assess a fixed amount for each new Saturn
Motor Vehicle purchased by Dealers to fund advertising and merchandising
programs. As a service to the associations, Franchisor will collect the
assessed amount.
16. TRAINING
Training of all Dealer employees is critical to the success of Dealer and
Franchisor in conducting business based on the Mission, Philosophy and
designated systems. Therefore, Dealer agrees that all its employees will
participate in initial and ongoing training programs identified in the
Franchise System Manuals, and any others approved by the Franchise
Development Team, within the time frames specified. Dealer agrees to pay
any specified training charges.
17. CAPITALIZATION
Dealer will maintain the levels of capitalization mutually agreed upon with
Franchisor in the Marketing Area Plan to ensure Dealer's financial
capability to fulfill its commitments. To avoid erosion of Saturn's
goodwill which could result if Dealer is financially unable to fulfill its
commitments, Dealer agrees to have and maintain a separate line of credit
from a financial institution available for Dealer to draw upon to finance
-13-
new vehicles. The amount of the line of credit and the identity of the
financial institution shall be included in Dealer's Marketing Area Plan.
PART SIX:
REPLACEMENT DEALERS
18. CHANGES IN OWNERSHIP
Dealer and Franchisor recognize that it is essential to the success of all
associated with Saturn that each Dealer be owned and operated by parties
committed to the Mission and Philosophy. It is equally important that
Dealer Operators remain highly qualified and continue to meet the same high
personal standards of the initial Saturn Dealer Operators. Because
Franchisor has entered into this Agreement based on the personal
qualifications of Dealer Operator and the qualifications of any Owner(s),
Dealer agrees that it cannot assign its rights under this Agreement.
A. SUCCESSION RIGHTS UPON DEATH OR INCAPACITY
(1) Successor Addendum
Dealer can apply for a Successor Addendum designating a proposed
dealer operator and/or owners of a successor dealer to be
established if this Agreement expires because of death or
incapacity. Franchisor will execute the Successor Addendum if
the proposed dealer operator successfully completes the Dealer
Selection Process then used by Franchisor to evaluate proposed
new dealers, and any proposed owners satisfy applicable Dealer
Selection Criteria. However, the proposed dealer operator and
owners will not be required to meet the usual capital
requirements nor demonstrate an ability to implement Dealer's
Marketing Area Plan until the Successor Addendum is implemented.
At the time of application, Dealer will pay Franchisor a non-
refundable fee to defray costs associated with review of the
proposal.
(2) Rights of Remaining Owners
If this Agreement expires because of the death or incapacity of
the Dealer Operator, and Dealer and Franchisor have not executed
a Successor Addendum, the remaining owners may propose a
successor dealer to continue the operations identified in this
Agreement. The proposal must be made in writing to Franchisor at
least 30 days prior to the expiration of this Agreement,
including any deferrals granted under Article 8. At the time of
application, Dealer will pay Franchisor a non-refundable fee to
defray costs associated with review of the proposal.
The proposal will be accepted if it meets the requirements of
Article 18A(3), if the proposed dealer operator successfully
completes the Dealer Selection Process, and any proposed owners
satisfy applicable Dealer Selection Criteria.
(3) Successor Dealer Requirements
-14-
Franchisor will accept a proposal to establish a successor dealer
submitted by a proposed dealer operator under Article 18A
provided:
(a) the proposed successor dealer and the proposed dealer
operator are ready, willing and able to comply with the
requirements of a new dealer agreement and agree to adhere to and
implement the Marketing Area Plan agreed to by Dealer;
(b) all outstanding monetary obligations of Dealer to Saturn and
Franchisor have been paid.
(4) Limitation on Offers
Dealer will be notified in writing of the decision on a proposal
under Article 18A(3) within 60 days after Dealer has submitted
all applications and information reasonably requested by
Franchisor and the proposed dealer operator has successfully
completed the Dealer Selection Process. Franchisors offer of a
new dealer agreement under this Article 18A will automatically
expire if not accepted by the proposed successor dealer within
60 days after it receives the offer.
(5) New Successor Addendum
Dealer may cancel an executed Successor Addendum at any time
prior to the death or incapacity of the Dealer Operator.
Franchisor may cancel an executed Successor Addendum only if the
proposed dealer operator or proposed owner(s) no longer meet the
Dealer Selection Criteria applicable to each. The parties may
execute a superseding Successor Addendum by agreement.
B. CHANGES OF OWNERSHIP OR DEALER OPERATOR
If Dealer proposes a change in Dealer Operator or a transfer of its
Saturn dealership business to any person conditioned upon Franchisors
entering into a Dealer Agreement with that person, Franchisor will
consider Dealer's proposal subject to the following:
(1) To maintain the high standard and quality of the Dealer network,
Dealer agrees to give Franchisor prior written notice of any proposed
disposition of its principal assets or of any proposed change of
ownership in which a party (i) first acquires a five percent equity
ownership or beneficial interest in the franchised business, (ii)
acquires an additional five percent equity ownership or beneficial
interest in the franchised business in a calendar year, or (iii)
acquires majority ownership or voting control in the franchised
business. Dealer understands if any such change is made prior to
Franchisor's approval of the proposal, termination of this Agreement
will be warranted and Franchisor will have no further obligation to
consider Dealer's proposal.
(2) If the proposal involves a change of Dealer Operator, Dealer will
pay Franchisor a fee to defray the costs of review of the proposal and
completion of the Dealer Selection Process. Franchisor has no
obligation to consider the proposal until it has received this non-
refundable payment.
-15-
(3) Dealer will be notified in writing of the decision on its
proposal within 60 days after Dealer has furnished all applications
and information reasonably requested by Franchisor and the proposed
dealer operator has successfully completed the Dealer Selection
Process. If Franchisor disagrees with the proposal, it will specify
its reasons.
(4) Any material change in Dealers proposal, including change in
price, proposed owners, or Dealer Operator, will be considered a new
proposal, and the time period for Franchisor to respond shall
recommence.
(5) Prior written approval is not required where the transfer of
equity ownership or beneficial interest to an individual is (a) less
than five percent in a calendar year; or (b) between existing owners
of Dealer previously approved by Franchisor where there is no change
in majority ownership or voting control. Dealer agrees to notify
Franchisor within 30 days of the date of the change and to execute a
new Dealer statement of ownership.
(6) Franchisor is not obligated to execute a new Dealer Agreement
under this Article unless Dealer makes arrangements acceptable to
Franchisor to satisfy any indebtedness to Saturn or Franchisor.
C. RIGHT OF FIRST REFUSAL OR OPTION TO PURCHASE
(1) Creation and Coverage
If a proposal is submitted by Dealer under Article 00X,
Xxxxxxxxxx has a right of first refusal or option to purchase the
dealership assets under this Article 18C. If Franchisor
exercises its right or option, it will do so in the written
decision on Dealer's proposal. Franchisor's right or option may
be assigned to any party and Franchisor will guarantee the full
payment of the purchase price by the assignee. Franchisor has
the right to disclose the terms of the buy/sell agreement to any
potential assignee.
If Dealer has entered into a bona fide written buy/sell agreement
for its dealership business or assets, Franchisor's right under
this Section is a right of first refusal, enabling Franchisor to
assume the buyer's rights and obligations under such buy/sell
agreement and cancel this Agreement and all rights granted
Dealer. In the absence of a bona fide written buy/sell
agreement, Franchisor has the option to purchase the principal
assets of Dealer utilized in the dealership business, other than
real property, and cancel this agreement and all rights granted
Dealer. Real property will be included only if the Franchisor
and Dealer agree.
If Franchisor exercises its right or option, the fee described in
Article 18B(2) will be refunded if the person proposed by Dealer
as replacement dealer operator or owner satisfies the Dealer
Selection Criteria.
Franchisor's rights under this Article 18C will be binding on and
enforceable against any assignee or successor in interest of
Dealer or purchaser of Dealer's assets.
-16-
(2) Purchase Price and Other Terms of Sale
(a) Bona Fide Agreement
If Dealer has entered into a bona fide written buy/sell
agreement, the purchase price and other terms of sale will be
those set forth in such agreement and any related documents,
unless Dealer and Franchisor agree to other terms.
Upon Franchisor's request, Dealer agrees to 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
Dealer does not provide such documentation or state in writing
that such documents do not exist, it will be presumed that the
agreement is not bona fide.
(b) Absence of Bona Fide Agreement
In the absence of a bona fide written buy/sell agreement, the
purchase price of the dealership 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. The repurchase prices for such new
and undamaged parts and accessories will be the prices last
indicated in the parts price listing established by the
Franchisor. Franchisor will not be responsible for repurchase of
non-Saturn parts or accessories in the Franchisee's inventory, or
of Saturn parts and accessories that are not resaleable as new,
as specified in the Franchise System Manual. Dealer 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 Dealer will deliver complete of the Warranty Deed.
Dealer will also furnish Franchisor copies of any easements,
licenses or other documents affecting the property and assign any
permits or licenses necessary for the conduct of the dealership
business to Franchisor.
PART SEVEN:
TERMINATION AND TERMINATION ASSISTANCE
19. TERMINATION
A. TERMINATION OF AGREEMENT
(1) By Dealer
Dealer may terminate this Agreement by written notice to
Franchisor. Termination will be effective 30 days after
Franchisor's receipt of the notice, unless otherwise mutually
agreed in writing.
(2) By Agreement
-17-
This Agreement may be terminated at any time by written agreement
between Franchisor and Dealer.
Termination assistance will be applicable only as specified in
the written termination agreement.
(3) Failure to be Licensed
If Franchisor or Dealer fails to secure or maintain any license
required for the performance of obligations under this Agreement
or such license is suspended or revoked, 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 Dealer Operator or Owner
If Dealer submits any false information to Saturn or Franchisor;
fails to conduct customary dealership operations for seven
consecutive business days; or Dealer Operator or Owner fails to
continue to meet the Dealer Selection Criteria applicable to
each; or Dealer Operator is changed or withdraws without prior
written approval of Franchisor; or a party i) first acquires a
five percent equity ownership or beneficial interest in dealer,
ii) acquires an additional five percent equity ownership or
beneficial interest in a calendar year, or iii) acquires majority
ownership or voting control, without the prior written approval
of Franchisor; Franchisor will notify Dealer and provide 30 days
for Dealer to respond. Thereafter, Franchisor may notify Dealer
that the Agreement will be terminated not less than 30 days after
receipt of notice. If Dealer chooses to use the Dispute
Resolution Process, the Agreement will continue pending a final
resolution of the dispute.
(5) Failure of Performance
If Dealer fails to perform any other obligations it has under
this Agreement, including those in the Marketing Area Plan,
Franchisor will review the failure with Dealer.
If Franchisor determines that corrective action by Dealer is not
forthcoming, it will notify Dealer of the failure in writing and
of the period of time during which Dealer is expected to remedy
the failure.
If the failure is not remedied within that period, Franchisor may
terminate this Agreement by giving Dealer three months advance
written notice.
(6) 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.
The terminating party subsequently also may avert other grounds
for termination.
-18-
(7) Option to Purchase
If this Dealer Agreement is to expire or terminate for any
reason, Franchisor has the option to purchase the principal
assets of Dealer utilized in the dealership business, other than
real property, and cancel this Agreement and all rights granted
Dealer. Real property will be included only if the Franchisor
and Dealer agrees.
The purchase price of the dealership assets and other terms will
be determined under Article 18C(2)(b). Franchisor must advise
Dealer of its intent to exercise this option within 60 days after
it notifies Dealer that an event has occurred which would cause
expiration or warrant termination.
B. TRANSACTIONS AFTER TERMINATION
(1) Orders
If Dealer and Franchisor do not enter into a new Dealer Agreement
when this Agreement expires or is terminated, Dealers designated
supply of Products will be automatically cancelled except as
provided in this Article.
Termination or expiration of this Agreement will not release
Dealer or Franchisor from the obligation to pay any amounts owing
the other when due.
(2) Deliveries
If this Agreement is voluntarily terminated by Dealer or expires
because of the death or incapacity of a Dealer Operator,
Franchisor will use its best efforts consistent with distribution
procedures to furnish Dealer with Motor Vehicles to fill Dealer's
bona fide retail orders on hand on the effective date of
termination or expiration, not to exceed, however, the total
number of Motor Vehicles invoiced to Dealer for retail sale
during the average of any three month period from the year
preceding the effective date of termination.
(3) Effect of Transactions after Termination
Neither the sale of Products to Dealer nor any other act by
Saturn, Franchisor, or Dealer after termination or expiration of
this Agreement will be a waiver of the termination or expiration.
20. TERMINATION ASSISTANCE
If this Agreement expires or is terminated and Franchisor does not offer
Dealer or a replacement dealer that has substantially the same ownership
(more than 50 percent including total family ownership) a new Dealer
Agreement, Franchisor will offer to purchase certain items of personal
property from Dealer and will provide assistance on Dealership Premises, as
specified in the Franchise System Manuals. Franchisor's obligations under
this Article 20 are subject to Dealer fulfilling its responsibilities
relating to termination assistance, described in the Franchise System
Manuals.
-19-
PART EIGHT:
GENERAL PROVISIONS
21. ACKNOWLEDGEMENT OF FRANCHISE LAW COMPLIANCE
A. DEALER'S INVESTIGATION
Dealer 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 Dealer. Franchisor expressly disclaims
the making of, and Dealer acknowledges that it has not received, and
warranty or guarantee, express or implied, as to the potential volume,
profits, or success of the business venture contemplated by this
Agreement.
B. DISCLOSURE
Dealer 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. Dealer
further acknowledges having received the disclosure document which is
required by the Trade Regulation Rule of the Federal Trade Commission
entitled "Disclosure Requirements and Prohibitions Concerning
Franchising and Business Opportunity Ventures," and which contains a
copy of this Agreement, at least ten business days prior to the date
on which this Agreement was executed.
C. REVIEW
Dealer acknowledges that it has read and understood this Agreement
(and its attachments and related agreements) and that Franchisor has
afforded Dealer ample time and opportunity to consult with advisors of
Dealer's own choosing about the potential benefits and risks of its
entering into this Agreement.
22. 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. DEALER'S RESPONSIBILITY FOR ITS OPERATIONS
Except as provided in this Agreement, Dealer is solely responsible for
all expenditures, liabilities and obligations incurred or assumed by
Dealer for the establishment and conduct of its operations.
C. TAXES
-20-
Dealer is responsible for all local, state, federal or other
applicable taxes and tax returns related to its dealership business
and will hold Franchisor and Saturn harmless from any related claims
or demands made by any taxing authority.
D. INDEMNIFICATION BY SATURN
Saturn has agreed with Franchisor that Saturn will assume the defense
of Dealer and indemnify Dealer against any judgment for monetary
damages or rescission of contract in any lawsuit naming Dealer as a
defendant when the lawsuit concerns:
(1) Breach of the Saturn warranty related to a Product or bodily
injury or property damage claimed to have been 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 standard equipment or material component parts unless
Dealer received notice of the changes prior to retail delivery of the
affected Product by Dealer; or
(3) Any substantial damage to a Product purchased by Dealer from
Saturn which has been repaired by Saturn unless Dealer has 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 Dealer.
Procedures for requesting indemnification, administrative details, and
limitations are contained in the Franchise System Manuals.
E. TRADEMARKS AND SERVICE MARKS
Saturn, Franchisor, or affiliated companies are the exclusive owners
of the various trademarks, service marks, names, and designs (Marks)
used in connection with Products.
Dealer is granted the non-exclusive right to display Marks in the form
and manner approved by Franchisor in the conduct of its dealership
business.
Marks may be used as part of the Dealer's name with the written
approval of Franchisor.
Dealer agrees to change or discontinue the use of any Marks upon
request by Franchisor.
Dealer agrees that no company owned by or affiliated with Dealer or
any of its owners may use any Xxxx to identify a business without
Franchisor's written permission.
Upon termination of this Agreement, Dealer agrees to immediately
discontinue, at its expense, all use of Marks. Thereafter, Dealer
will not use, either directly or indirectly, any Marks or any other
-21-
confusingly similar marks in a manner that Franchisor determines is
likely to cause confusion or mistake or deceive the public.
Dealer will reimburse Franchisor for all legal fees and other expenses
incurred in connection with action to require Dealer to comply with
this Article 22E.
F. NOTICES
Any notice 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 Dealer will be directed to Dealer
or its representatives at Dealer's principal place of business and
notices by Dealer will be directed to: Dealer Development, Saturn
Distribution Corporation, 0000 Xxxxxxxxxx Xxxxxxx, Xxxx, Xxxxxxxx
00000-0000. Mailed notices will be deemed received on the date
deposited in U.S. or express mail.
G. NO IMPLIED WAIVERS
The delay or failure of Franchisor or Dealer to require performance by
the other party or the waiver by Franchisor or Dealer of a breach of
any provision of this Agreement will not affect the right to
subsequently require such performance.
H. ASSIGNMENT OF RIGHTS OR DELEGATION OF DUTIES
Franchisor may assign this Agreement and any rights or delegate any
obligations to any affiliated or successor company, and will provide
Dealer written notice of such assignment or delegation. Such
assignment or delegation by Franchisor will not relieve Franchisor of
liability for the performance of its obligations.
I. ACCOUNTS PAYABLE
All monies or accounts due Dealer will be considered net of Dealer's
indebtedness to Franchisor and Saturn. Franchisor and Saturn may
deduct any amounts due or to become due from Dealer to Franchisor or
Saturn, or any amounts held by Franchisor or Saturn, from any sums or
accounts due or to become due from Saturn or Franchisor to Dealer.
J. SOLE AGREEMENT OF PARTIES
Except as provided in this Agreement, Franchisor has made no promises
to Dealer, Dealer Operator, or Dealer Owner and there are no other
agreements or understandings, either oral or written, between the
parties affecting this Agreement or relating to any of the subject
matters covered by this Agreement.
Except as otherwise provided herein, this Agreement cancels and
supersedes all previous agreements between the parties that relate to
any matters covered herein.
No agreement between Franchisor and Dealer which 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,
-22-
will be binding unless it is approved in a written agreement executed
under Article 23.
K. REVIEW AND MODIFICATIONS OF AGREEMENT TERMS
To demonstrate its commitment to the Saturn Philosophy, Franchisor has
entered into this indefinite term Agreement. However, neither
Franchisor nor Dealer want to prevent the modification of their
contractual relationship as necessary to respond to changes in
marketing conditions. Therefore, the Franchise Development Team will
review the Agreement every five years, unless it determines an earlier
review is necessary.
In the event the FDT recommends a superseding form of Dealer
Agreement, Franchisor and Dealer agree to terminate this Agreement and
execute the new Agreement. Unless otherwise agreed in writing, the
rights and obligations of Dealer that may otherwise become applicable
upon termination or expiration of this Agreement will not be
applicable.
23. EXECUTION ON BEHALF OF DEALER AND FRANCHISOR
This Agreement and related agreements are valid only if signed:
(a) on behalf of Dealer by its duly authorized representative and, in
the case of this Agreement, by its chief executive officer,
Dealer Operator and Dealer Owner(s); and
(b) on behalf of Franchisor by either its President or the Vice-
President, Sales.
[MEDFORD DODGE D/B/A SATURN
OF MEDFORD] Saturn Distribution Corporation
------------------------------ -------------------------------
Dealer Name
By By
--------------------------- ----------------------------
Dealer Operator Date President Date
By By
--------------------------- ----------------------------
Dealer Owner Date Vice-President Date
Sales
By
---------------------------
Dealer Owner Date
By
---------------------------
Dealer Owner Date
-23-
By
---------------------------
Dealer Owner Date
-24-
GLOSSARY
As used in this Dealer Agreement, the following terms shall have the following
definitions:
1. Dealer - The corporation, partnership or proprietorship that signs the
Dealer Agreement.
2. Dealer Agreement - The Dealer Agreement that is executed including the
Marketing Area Plan and other related Addenda, the Franchise System
Manuals, and the Terms of Sale Bulletins.
3. Dealer Operator - Principal manager of Dealer upon whose personal service
Franchisor relies in entering into the Dealer Agreement.
4. Dealer Owner - Owner of five percent or more equity ownership or beneficial
interest of Dealer upon whom Franchisor relies in entering into the Dealer
Agreement.
5. Dealer Selection Criteria - The qualifications and standards which
prospective Dealer Operators and Dealer Owners must satisfy to be approved
by Franchisor.
6. Dealer Selection Process - The process which an applicant must successfully
complete prior to becoming a Saturn Dealer Operator. This process
includes: the application, questionnaires, assessment at the applicant's
place of business, an orientation and interview, and agreement upon a
Marketing Area Plan.
7. Dealership Premises - Approved facilities provided by Dealer for dealership
operations.
8. Franchise System Manuals - The Manual which contains the policies,
procedures, systems, and guidelines for the conduct of Saturn dealership
operations under the Dealer Agreement.
9. Marketing Area - The geographic area assigned to Dealer and identified in a
Notice of Dealer's Marketing Area.
10. Marks - The various trademarks, service marks, names and designs used by
Saturn, Franchisor, and its affiliated companies in connection with
Products.
11. Motor Vehicles - All current model types or series of new motor vehicles
specified in any Motor Vehicle Addendum and all past motor vehicles
marketed through Dealers.
12. Parts and Accessories - New or remanufactured automotive parts and
accessories marketed or approved by Saturn or Franchisor and listed in
current Dealer Parts and Accessories Price Schedules and supplements.
13. Products - Motor Vehicles, Parts and Accessories.
14. Retail Environmental Design Package - A comprehensive design package that
provides a design guide and access to a portfolio of Saturn dealership
facility design control drawings (interior and exterior).
-25-
