Form€¦ · Luxottica Retail Franchising Australia Pty Limited ACN 13 1 764 068 ... (0 Business management systems, website, communication systems and computerised point of sale

Form G Commonwealth of Australia

Trade Practices Act 1974 - subsection 93 (1)

NOTIFICATION OF EXCLUSIVE DEALING

To the Australian Competition and Consumer Commission:

Notice is hereby given, in accordance with subsection 93 (1) of the Trade Practices Act 1974, of particulars of conduct or of proposed conduct of a kind referred to subsections 47 (2), (3), (4), (9, (6), (7), (8) or (9) of that Act in which the person giving notice engages or proposes to engage.

1. (a) Name of person giving notice: Nq354-4- Luxottica Retail Franchising Australia Pty Limited ACN 13 1 764 068 ("Luxottica Franchising").

(b) Short description of business carried on by that person:

Luxottica Franchising will grant franchises to conduct retail optical outlets under the brands "OPSM", "Laubman & Pank", "Budget Eyewear" and "Vision Plus" ("Luxottica Brands").

(c) Address in Australia for service of documents on that person:

C/O Ben Martin Norton White Level 4 66 Hunter Street SYDNEY NSW 2000.

2. (a) Description of the goods or services in relation to the supply or acquisition of which this notice relates:

(9 Franchises to operate Luxottica Brand optical retail outlets including licences to use intellectual property and systems;

(ii) Services and equipment necessary to set up and conduct a retail optical outlet;

(iii) Products to be offered for sale by the retail optical outlet.

(b) Description of the conduct or proposed conduct:

Luxottica Franchising will grant franchises on the condition that:

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(0 Business management systems, website, communication systems and computerised point of sale and information retrieval systems are acquired from suppliers approved by Luxottica Franchising pursuant to clauses 4.10 and 9A of the Franchise Agreement;

(ii) Retail outlets are fitted out by a builder approved by Lwottica Franchising unless otherwise agreed with the Franchisee pursuant to clause 9B.3;

(iii) Optometric equipment must be leased from Luxottica Retail Australia Pty Limited (Luxottica Retail) or acquired from approved suppliers pursuant to clause 9B.3;

(iv) Optical appliances including frames, lenses and contact lenses are acquired from Luxottica Retail or suppliers approved by Luxottica Franchising pursuant to clause 9C;

(v) Laboratory services such as the fitting of lenses to frames must be acquired by approved service providers pursuant to clause 9C;

(vi) Staff training services are acquired from organisations approved by Luxottica Franchising pursuant to clauses 9H and 10C; and

(vii) Marketing services and directory listings are acquired from organisations approved by Luxottica Franchising using a marketing fund pursuant to clauses 9A. 1 (d) and 9J.

Relevant clauses from the proposed franchise agreement are annexed to this application.

3. (a) Class or classes of persons to which the conduct relates:

Luxottica Brand franchisees.

@) Number of those persons:

6) At the present time:

NIL.

(ii) Estimated within the next year:

Fifty company-owned outlets are planned to be offered for conversion to franchises and fifty new franchises are also planned to be offered in the next year.

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(iii) Where number of persons stated in item 3(b)(i) is less than 50, their names and addresses:

Not applicable.

4. (a) + (b) Arguments in support of notification and facts and evidence relied upon in report of these claims:

The Luxottica Group manufactures optical appliances, distributes optical appliances and in Australia retails optical appliances under the retail brands OPSM , Laubman & Pank, Budget Eyewear and Vision Plus. Currently, all OPSM and Laubman & Pank outlets are owned and operated by the Group. There are 484 Group owned OPSM, Laubman & Pank, Budget Eyewear and Vision Plus branded outlets in Australia.

Competition in the retail optical market has been very strong for a considerable period of time. In 2007, a new competitor, Specsavers Optical Group, one of the largest privately-owned optical chain in the world which operates over 1,000 stores worldwide, entered the Australian market and has established 100 outlets in 12 months with a stated goal of having 150 outlets in Australia by December 2008.

Luxottica believes the market is very competitive in part because of:

(0 Low barriers to entry - an imported cost-competitive product is available with the internet providing improved access by retailers to international wholesale markets; and

(ii) Luxottica's current retail model of company-owned outlets does not provide adequate career development opportunities for commercially minded employed optometrists.

Consequently, Luxottica proposes to franchise Luxottica Brand optical retail outlets as well as continue to operate company-owned retail outlets under those brands. The franchised outlets will include certain existing company-owned outlets as well as new outlets.

The conditions on acquisition of goods and services that are imposed as part of the franchise model are not for the purpose of lessening competition but to ensure maintenance of the key elements of the Luxottica retail brands, the franchise image and system and to ensure:

6) the franchise model provides, in a sustainable way, career development opportunities to commercially-minded optometrists currently employed by Luxottica;

(ii) the franchise model provides, in a sustainable way, independent optometrists with access to strong retail brands and ongoing marketing investment;

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(iii) access by Franchisees to Luxottica's supply chain for products and laboratory services and consequent economies of scale to allow better services to consumers. Franchisees will be able to:

(A) purchase high quality products at lower than average prices;

(B) access laboratory services at an average unit cost less than such services could be acquired if practising as an independent optometrist; and

(c) reduce transaction costs and increase efficiency by taking advantage of Luxotttica and its supplier's research and development of computer software and other business systems.

(iv) the expectations and requirements of consumers are satisfied irrespective of whether a Luxottica brand outlet is company- owned or franchised;

(v) franchisees and company-owned outlets are able to provide a consistent range of products and services;

(vi) appropriate standards of professionalism and quality in the provision of eye care services by use of appropriate training are provided irrespective of whether the outlet is a company- owned or franchised outlet. Luxottica has a national optometric panel headed by a leading academic to provide continuing professional training and to maintain high standards for optometry and optical dispensing for the ultimate benefit of consumers. This and other training services will be acquired by franchisees to ensure consistent and high quality services are provided to consumers;

(vii) consistency of quality and style of the layout and look of Luxottica brand outlets to give customers comfort and to maintain brand trust, standards and awareness;

(viii) the franchise model can give consumers the benefit of product trials and other marketing campaigns such as contact lens and progressive lens trials where Luxottica is able to negotiate with suppliers to allow consumers to trial at a reduced cost or with a right of return at no cost, contact lenses, photochromatic lenses, multifocal lenses or other product developments.

Third party suppliers are selected on the basis of quality and pricing. In some cases Luxottica receives a rebate based on volume of product acquired by its company owned outlets and this will also apply to franchised outlets. The rebate will be retained by Luxottica but it has been Luxottica's experience that irrespective of any rebate, the overall cost savings from the rates that Luxottica negotiates due to the volume

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acquired for company owned outlets are greater than an individual trader could achieve buying independently.

5. Provide a description of the market(s) in which the goods or services described at 2(a) are supplied or acquired and other affected markets including: significant suppliers and acquirers; substitutes available for the relevant goods or services; any restriction on the supply or acquisition of the relevant goods or services (for example geographic or legal restrictions):

There are two relevant markets:

Retail Optical Market

The retail optical market has a significant number of vibrant independent competitors as well as domestic and international competitors and suppliers, low barriers to entry and strong countervailing power by external parties such as health funds. The independents in the market are united by a strong professional association, the Optometrist Association of Australia, and the independents provide vigorous competition at a local level.

The speed and scale of entry of Specsavers highlights the low barriers to entry and competitiveness of the market.

Products are highly substitutable and can be acquired from large international suppliers such as Luxottica, Essilor and Safilo, wholesale distributors in Australia and overseas and more recently, directly from manufacturers in emerging markets in Asia.

Whilst optometrists must be registered under State legislation to prescribe optical appliances, registration is only required in New South Wales to supply an optical appliance. In all other States and Territories anyone can supply an optical appliance to the prescription of an optometrist or medical practitioner.

Medicare requirements -include that all optometrists must give patients a written copy of prescriptions on request, allowing patients to shop around for optical appliances. Contact lenses, for health care reasons, must be fitted by an optometrist but once fitted can be supplied by third parties and are now commonly available over the internet.

Wholesale Market

The wholesale optical market is international and save for meeting Australian product safety standards (for sunglasses) there are no real barriers to entry. It is a highly competitive market and the proposal will not lessen competition in this market.

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The Luxottica Group operates a wholesale distribution company in Australia that carries on business separately from Luxottica's retail operation. The

wholesale company independently imports Luxottica product and makes it available to competitors of the retail operation. The wholesale operation will continue to make product available to retailers.

6. (a) + (b) Detriments to the public resulting or likely to result from the notification, in particular the likely effect of the notified conduct on the prices of the goods or services described at 2(a) above and the prices of goods or services in other affected markets and facts and evidence relevant to these detriments:

It is not envisaged that there will be any material detriment to the public due to the vibrant and competitive nature of the markets involved.

7. (a) Name, postal address and contact telephone details of the person authorised to provide additional information in relation to this notification:

C/O Ben Martin Norton White Level 4 66 Hunter Street SYDNEY NSW 2000 Ph: (02)923 0943 5 Facs: (02)92309499 Email: [email protected]

Dated: August 2008

Signed bylon behalf of the applicant

...... K ..................................................................... (Signature)

Benjamin Geoffrey Martin (Full Name)

Norton White, Lawyers (Organisation)

Partner (Position in Organisation)

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DIRECTIONS

1. In lodging this form, applicants must include all information, including supporting evidence that they wish the Commission to take into account in assessing their notification.

Where there is insufficient space on this form to furnish the required information, the information is to be shown on separate sheets, numbered consecutively and signed by or on behalf of the applicant.

2. If the notice is given by or on behalf of a corporation, the name of the corporation is to be inserted in item 1 (a), not the name of the person signing the notice, and the notice is to be signed by a person authorised by the corporation to do so.

3. Describe that part of the business of the person giving the notice in the course of which the conduct is engaged in.

4. If particulars of a condition or of a reason of the type referred to in section 47 of the Trade Practices Act 1974 have been reduced in whole or in part to writing, a copy of the writing is to be provided with the notice.

5. Describe the business or consumers likely to be affected by the conduct.

6. State an estimate of the highest number of persons .with whom the entity giving the notice is likely to deal in the course of engaging in the conduct at any time during the next year.

7. Provide details of those public benefits claimed to result or to be likely to result from the proposed conduct including quantification of those benefits where possible.

8. Provide details of the market(s) likely to be affected by the notified conduct, in particular having regard to goods or services that may be substitutes for the good or service that is the subject matter of the notification.

9. Provide details of the detriments to the public which may result from the proposed conduct including quantification of those detriments where possible.

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Extracts from Franchise Agreement

4.10 Business Management Systems

The Franchisor may develop concepts and systems for computer equipment and software for use in theBusiness. If developed, the Franchisor may install computer equipment in the Premises and the Franchisee must:

(a) implement and use exclusively any computer hardware and software supplied by the Franchisor in accordance with the Operations Manual; and

(b) pay for any upfront and ongoing licence and support fees in accordance with the Franchisor's requirements.

9. FRANCHISEE'S OBLIGATIONS

9A. TELEPHONE, FACSIMILE AND COMPUTER USE

9A.1 Telephone, facsimile and e-mail

(a) The Franchisee must seek prior written approval from the Franchisor to arrange for the installation of, pay for and maintain dedicated telephone and facsimile numbers (the Numbers), e-mail address (the E-Mail Address) and such eftpos and internet phone lines or connections (the Connections) as required by the Franchisor in the Operations Manual. The Franchisee must only use and promote these Numbers and E-mail Address, and use the Connections, in relation to the Business.

Upon termination or expiration of this Agreement th'e Franchisee must if required by the Franchisor cease to use, and transfer or cancel as directed by the Franchisor, the Numbers, the E-mail Address and the Connections. In such circumstances the Franchisee will not have any rights to, and must not, use the Numbers, the E-mail Address and the Connections in relation to any other business.

(b) The Franchisee must, at its Cost:

(i) train its employees in the use of the Numbers, the E-mail Address and the Connections;

(ii) ensure that the Numbers, the E-mail Address and the Connections are secure from unauthorised access or use; and

(iii) change or upgrade the Numbers, the E-mail Address and the Connections as and when directed by the Franchisor from time to time.

(c) Subject to sub-clause (d) below, the Franchisee must lodge,.and pay all Costs associated with, for entries in any local directory in accordance with the direction of the Franchisor.

(d) White and Yellow Pages listings will be organised and lodged under the direction of the Franchisor. The cost of placing these advertisements will, at the discretion of the Franchisor, be apportioned between all Luxottica Group franchisees in the area which is covered by the listing and the Franchisee agrees to pay a proportionate share upon invoice by the Franchisor or the costs may be paid directly from the Marketing Fund.

(a) The Franchisor maintains the Luxottica Web Site on ,a dedicated Internet Service Provider (ISP).

(b) The Franchisee must put the address of the Luxottica Web Site on the shopfront of the Premises, within the Premises, and any on stationery used by the Franchisee as directed by the Franchisor. The Franchisee must promote access and use the Luxottica Web Site as directed by the Franchisor and as set out in the Operations Manual.

(c) The Franchisee acknowledges that the Luxottica Web Site remains the property of the

Luxottica Retail Franchising Australia Pty Ltd Full Format Franchise Agreement

Luxottica Group or its Related Entities and any goodwill in relation to the Luxottica Web Site does not accrue to the Franchisee.

(d) The Franchisee must not:

(i) alter or allow others to alter, interfere, create, set up, facilitate the creation or setting up of an Internet web site for the Business or using the Names or otherwise associated with the Franchisor System and Business as permitted by this Agreement;

(ii) register any domain name associated with the Business or including the Name or any derivative of it; and

(iii) advertise for business or conduct business on the Luxottica Web Site without the prior written consent of the Franchisor.

(e) The Franchisee acknowledges and agrees that the Franchisor has the right to conduct business, advertise for business, and generate sales of products and services from the Luxottica Website, and that any sales of products or services generated via the Luxottica Website shall be the property of the Franchisor and the Franchisor is in no way liable to the Franchisee in respect of such sales.

(f) The Franchisee shall co-operate with the Franchisor in its conduct of business via the Luxottica Website in such manner required by the Franchisor, including by:

(i) ensuring it complies with its obligations under clause 9A.2(b);

(ii) accepting for redemption gift vouchers, returns, and exchanges from customers who have made purchases from the Website;

(iii) fulfilling orders of products that have been purchased from the Website;

(iv) dealing with all customers from the Website with a high degree of professionalism and courtesy.

The Franchisor shall compensate the Franchisee for the Franchisee's compliance with clauses 9A.2(f)(ii) and (iii) in such a manner as the Franchisor regards as fair and reasonable.

(g) The Franchisee must access the lntranet on a daily basis.

9A.3 Computerised Point of Salennformation Retrieval System

(a) The Franchisee shall participate in the Luxottica Group's computerised stock control, ordering, information removal andlor point of sales system, software or computer hardware as required by it from time to time for the purpose of processing sales and other transactions effected by the Franchisee in respect of Authorised Products or Authorised Services sold at, from or in relation to the Premises:

(b) The Franchisee must, at its cost, purchase or licence all items required to operate such systems as specified by the Franchisor or pay the required licence fees. The Franchisor must consult with the Franchisee prior to introducing such system and reasonably consider its benefit;

(c) The Franchisee must not refuse or decline to process a sale or a customer service transaction or a customer request because the customer has not made a purchase at, from or in relation to the Premises;

(dj The Franchisee must ensure that all forms of payment received from customers, including cash, cheques, debit card payments and credit card payments, are made to the credit of the Franchisor and are processed entirely through the Franchisor' IT Systems, cash registers and other devices.

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9B. PREMISES

9B.1 Premises suitability and use

(a) The Business must be operated from the Premises. The Premises must be approved by the Franchisor prior to their use. The Premises must only be used to operate the Business and must not be used for any other business purpose.

(b) In deciding upon the Premises and assessing its suitability for the conduct of the Business, the Franchisee acknowledges that:

(i) it has made all necessary enquiries and has conducted its own due diligence in relation to the Premises;

(ii) absolutely and unconditionally satisfied him I herself, as a result of these enquiries and its due diligence, as to the suitability of the Premises and the location of the Premises for the conduct of the Business; and

(iii) to the extent that any representation has been made by the Franchisor, the Franchisee has made no reliance on such representation and has entered into this Agreement as a result of the Franchisee's own assessment of all these matters.

9B.2 Occupation of Premises

(a) The Franchisor will procure a lease of the Premises for the establishment and conduct of the Business in its own name or in the name of its nominee.

(b) Upon the procurement of the lease then:

(0 the Franchisor will provide to the Franchisee a copy of the lease at or prior to the commencement of this Agreement and on any renewal of the lease;

(ii) the Franchisor will use its best endeavours to provide the Franchisee the right to occupy and use the Premises for the establishment and conduct of the Business and the Franchisee agrees to enter into a Licence Deed to occupy the Premises with the Franchisor or its nominee in the form nominated by the Franchisor;

(iii) the Franchisee must observe and perform all its obligations under the Licence Deed;

(iv) the Franchisee will observe and perform all of the terms and conditions of the lease as if it was the lessee named in the lease and the Franchisee's Guarantors will provide a guarantee of the lease and observe and perform all of the obligations of the Guarantors named in the lease as if they were the Guarantors named in the lease;

(v) any breach or non-observance of the lease or Licence Deed by the Franchisee will constitute a breach or non observance of this Agreement;

(vi) the Franchisee indemnifies the Franchisor from any loss, harm or liability which might be suffered or incurred by the other by reason of its failure to observe or perform any of their obligations under the lease or Licence Deed;

(vii) the Franchisee shall, subject to the express terms of this Agreement retain title to all fixtures and fittings installed and paid for by the Franchisee in the Premises in so far as the lease acknowledges the right of the lessee to sever the same as lessee's fixtures;

(viii) subject to obtaining the consent of the lessor and clause 98.11 below, the Franchisor will use its best efforts to ensure that the Franchisee is granted a licence to occupy the Premises to conduct the Business in accordance with this Agreement for so long as the Franchisor or its nominee is the lessee of the Premises, this Agreement is in force and the Franchisee complies with conditions of this Agreement and the terms of the licence to occupy;

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(ix) the Franchisee must pay to, or reimburse, the Franchisor or its nominee, upon demand, for all amounts due under or incurred in relation to the lease including all rent and other outgoings payable by the lessee, and any other Costs such as legal costs (of the lessor or lessee) (if payment is permitted under the relevant retail lease legislation), strictly in accordance with the lease terms together with any GST payable;

(x) the Franchisee must provide any security deposits, and pay any rental in advance, if required under the lease to the Franchisor; and

(xi) the Franchisor must not, and will take steps to ensure that the lessee must not, assign, surrender or otherwise transfer the lease in a manner which may affect the Franchisee's right to occupy the Premises for so long as the Franchisee has the right to occupy the Premises in accordance with this clause.

98.3 Fit Out of Premises

(a) This clause does not apply to a sale of an existing Optical Eyewear & Eyecare business.

(bj The Premises must be fitted out for the operation of the Business in accordance with the Franchisor's Fit Out specifications. The fit out of the Premises will be arranged by the Franchisor, unless otherwise agreed. The Franchisee must pay the Fit Out Costs directly to the Franchisor unless otherwise directed. All Fit Out Costs must be paid by the Franchisee to the Franchisor prior to the Commencement Date or as otherwise directed by the Franchisor.

(c) The Franchisee must obtain the approval of all relevant authorities to the Fit Out and provide evidence of the necessary approvals to the Franchisee.

(d) Notwithstanding any other terms of this Agreement, the Franchisee must not under any circumstances commence trading until the Fit Out has been completed to the satisfaction of the Franchisor and all initial Fit Out Costs and all other amounts due under this Agreement have been paid in full.

(e) The Franchisee must only install or use any equipment that has been approved by the Franchisor as meeting the Franchisor's specifications and requirements.

(a) The Franchisee must maintain and service the Fit Out and equipment in good working and safe condition, in accordance with any manufacturer's requirements, and in accordance with good engineering and public health standards.

(g) Any equipment which in the Franchisee's or the Franchisor's reasonable opinion is not operating efficiently or which is no longer capable of meeting the Franchisor's requirements must be replaced by the Franchisee with equipment which complies with the Franchisor's requirements.

(h) The Franchisee must refurbish the Premises, at the cost of the Franchisee, to the reasonable requirement of the lessor of the Premises.

(i) The Franchisee acknowledges that this Agreement does not impose any obligation on the Franchisor to perform duties of a technical nature, the Franchisor is not responsible for any act or omissions of any persons involved in the Fit Out.

9B.4 Changes to Fit Out or image

(a) The Franchisee cannot make any changes to the appearance of the Premises without approval by the Franchisor. The Franchisee acknowledges that the appearance of the location 1s an integral part of the brand identity and marketing strategy of the Franchisor. Minor changes may be made in accordance with the Operations Manual and directions from time to time from the Franchisor.

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(b) From time to time the Franchisor may update or change the Name or Trade marks andlor image and Fit Out and equipment requirements. In such circumstances the Franchisee must at its own cost update the Premises as directed by the Franchisor. The Franchisee must modify the Premises and purchase new equipment as required by the Franchisor within the time period reasonably specified by it. The Franchisee is required to purchase and install only Fit Out and equipment which adheres to the Franchisor's specifications.

98.5 Condition of Premises

The Franchisee must ensure that the Premises are at all times maintained in a clean, safe and orderly condition and a good and substantial state of repair. The Franchisee must at least once every 5 years (or in a shorter period if reasonably directed by the Franchisor or required by the lease of the Premises) refurbish the Premises as directed by the Franchisor.

9B.6 Inspection of Premises

The Franchisee must allow the Franchisor or its agent or representative to enter upon the Premises (and grants an irrevocable licence to the Franchisor to facilitate this) to assess the standard of the Premises. If the Premises does not comply with the Franchisor's requirements then the Franchisee must promptly comply with the Franchisor's directions to remedy the defects or deficiencies within 2 months of the notice from the Franchisor to remedy the defects or deficiencies, or another timeframe otherwise reasonably specified by the Franchisor.

98.7 Use of Premises

The Franchisee must use only the Premises approved by the Franchisor in carrying on the Business and must not conduct any similar business at any other location. The Franchisee shall obtain and use only such fittings as are agreed with by the Franchisor. The Franchisee shall not alter the final approved layout and wlour schemes without the prior written approval of the Franchisor which shall not be unreasonably withheld.

98.8 Compliance with regulations

The Franchisee shall ensure that the Premises comply with' all local authority regulations and to immediately rectify any breaches of any such regulations as are prescribed from time to time.

9B.9 Display items & equipment

All display items and equipment must comply with the Franchisor's specifications and manufacturers installation guidelines and be clean and in undamaged condition and full working order.

9B.10 Professional Conduct & Temporary Operation

(a) The Franchisee must ensure that the Authorised Services carried out are provided efficiently and promptly and must be of a professional standard necessary to attract patients and customers as their first choice.

(b) In addition and without prejudice to any and all other rights of the Franchisor in this Agreement including the right of termination, if the Franchisee stops providing the Authorised Services, abandons the franchise, or in the opinion of the Franchisor the Franchisee or Registered Optometrist is unable to operate the Business through accident,, ill health, inability or for any other reason, nowithstanding any other provisions in this Agreement, the Franchisor may, but does not have to, in its own right or by a nominee operate and manage the Business until:

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0) the end of the Franchise; or

(ii) until a sale is effected; or

(iii) the Nominated Manager andlor the Registered Optometrist is replaced.

If the Franchisor manages the Business:

(iv) the Franchisor is not liable to the Franchisee for any loss or damage suffered by the Franchisee arising out of the management;

(v) the Franchisee must indemnify the Franchisor and its employees and agents against all damages, sums of money, Costs, charges, expenses, actions, claims, liabilities, injuries and demands made against or suffered by the Franchisor, its employees or agents which arise out of the management; and

(vi) the Franchisee must pay to the Franchisor reasonable fees prescribed by the Franchisor for managing the Business and any travelling, accommodation, employment of optometrists or other expenses in relation to the management and provision of the Authorised Services.

9B. 1 1 Lease of equipment etc

The Franchisee shall at all times perform and observe the terms, conditions and covenants of any lease pertaining to any equipment, furniture, and other items from which the Business is conducted.

9B. 12 Renewal

(aj This clause applies only if clause 9B.2(c) applies.

(bj Subject to:

(i) the Franchisee being in compliance with its obligations under this Agreement;

(ii) there being a continuing term under this Agreement of more than 12 months; and

(iii) the Franchisor determining in its reasonable discretion that it is viable to continue the lease;

the Franchisor must use its best endeavours to renew the lease for the renewal term(s) of this Agreement. The Franchisor must consult with and promptly notify the Franchisee as to the terms and conditions negotiated. by the Franchisor with respect to such lease. If the renewal term of the lease offered by the lessor is less than any renewal term of this Agreement then such renewal term of this Agreement will be reduced to reflect that of the lease. In such circumstances the Franchisee may either elect to continue on the shorter term or terminate this Agreement. In the latter event no compensation is payable by the Franchisor to the Franchisee for such termination.

98.13 Trading hours

The Franchisee must keep the Premises open for trading during the core business hours of the shopping centre or shopping area, as the case may be, where the Premises are located, or otherwise as directed by the Franchisor, and the Nominated Manager shall attend the Premises each day and conduct the Business on a full time basis from the Premises.

98.14 Alternative Premises

(a) In the event that the Franchisee's tenancy or lease rights in respect of the Premises expire or are terminated for any reason other than default on the part of the Franchisee then subject to the Franchisor's consent under clause 9B. 13(c):

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(i) the Franchisee will use its best endeavours to secure a Lease of other premises within l km from the previous premises for the balance of the Term of this Agreement (referred to as the "Alternative Premises") which are acceptable to the Franchisee and which satisfies the reasonable requirements of the Franchisor and the provisions of this Agreement shall thereafter apply to the Alternative Premises; and

(ii) if an Alternative Premises is found, the Franchisee shall Fit Out the Alternative Premises at its cost and in accordance with the Franchisor's requirements and will meet and pay all Costs incurred in relocating to the Alternative Premises including the Lessor's solicitor's reasonable costs and disbursements, stamp duty, the Franchisor's solicitor's costs and disbursements and its own solicitor's costs and disbursements.

(b) In the event that the parties are unable to procure a tenancy or Lease rights in respect of an Alternative Premises in accordance with the above clause within 6 months of the Franchisee ceasing trading in the Premises either party may terminate this Agreement by notice in writing to the other. Such termination shall:

(0 not entitle either party to compensation from the other;

(ii) not affect any rights or obligations which have accrued up to the date of termination; and

(iii) not entitle the Franchisee to a refund of the Initial Fee or the Fit Out Costs or any part of them or any other monies paid to the Franchisor or its related body corporate.

(c) The Franchisee may relocate to alternative premises under clause 9B.I3(a) subject to the following conditions being satisfied:

(0 the Franchisor being satisfied that the relocation to alternative premises does not adversely effect any existing Business;

(ii) the Franchisee being in compliance with its obligations under this Agreement and there being a continuing term under this Agreement of more than 12 months; and

(iii) the Franchisor and Franchisee are released by the owner or lessor of the previous premises from all of their obligations to the owner of the previous premises and the owner of the previous premises releases any security given by the Franchisor or Franchisee.

(d) The Franchisee may not carry on the Business in' any premises which have not been approved by the Franchisor as premises for the operation of the Business.

9C. SUPPLY OF AUTHORISED PRODUCTS & AUTHORISED SERVICES

9C.1 Supply of Authorised Products & Authorised Services

The Franchisee:

(i) must sell the Core Products and provide the Authorised Services;

(ii) may sell the Optional Products depending on the demand for such products from the Premises;

(iii) must purchase Authorised Products from the Nominated Supplier(s);

(iv) must prior to the Commencement Date purchase the initial stock requirement from the Nominated Suppliers as directed by the Franchisor;

(v] must ensure that all the Authorised Products and Authorised Services it displays for sale, delivers, or otherwise sells or offers meets the Franchisor's standards of quality, which

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standards are contained within the Operations Manual or as may otherwise be communicated by the Franchisor to the Franchisee from time to time; and

(vi) must only operate the Business at the Premises and must not sell any Authorised Products or provide the Authorised Services outside of the Premises without the Franchisor's written consent.

9C.2 Optional Products

The Franchisee acknowledges and agrees that the Franchisor may in its discretion require the Franchisee to mandatorily sell or use all or any of the Optional Products at any time, by notice in writing which stipulates a reasonable time within which the Franchisee must commence selling or using such products. The Optional Products must not exceed the maximum quantity and be displayed in the Premises in accordance with the Operations Manual as specified from time to time.

9C.3 Maintenance of Proper Inventory

The Franchisee must adhere to the Franchisor's stock control policy. It must promptly replace stock and must maintain an adequate and balanced inventory at all'times to ensure that the Business will efficiently and profitably operate to meet customer demand, using the methods and procedures specified from time to time, by the Franchisor and as specified in the Operations Manual.

9C.4 Non- Availability o r Delay Out of Franchisor Control

The Nominated Supplier, if part of the Luxottica Group, shail not be liable to the Franchisee for the delay or failure on its part, to supply any product or goods, to the Franchisee, where such delay or failure shall have been due to unavailability of such items, or by any cause beyond the control of such Nominated Suppliers.

9C.5 Extended Shortages

In the event that a Nominated Supplier continues to be unable to supply any supplies to the Franchisee for an extended period, the Franchisee may, subject to the prior written approval of the Franchisor which approval in such circumstances will not ,be unreasonably withheld, continue to purchase the same branded products from other independent suppliers provided that the products meet the Franchisor's standards of quality contained in the Operations Manual until such time as the Franchisor notifies the Franchisee that it can again purchase such items from the Nominated Suppliers.

9C.6 Alternative Supply

(a) If the Franchisee wishes to sell in its Business products that are not Authorised Products or products from a supplier other than the Nominated Supplier, the Franchisee must foward a written request along with a sample of the product to the Franchisor for the Franchisor to permit the Franchisee to purchase from an alternative supplier. The following information must be provided in the written request:

(i) details of the supplier;

(ii) nature of the product to be supplied;

(iii) the price per unit for the product and quantity available; and

(iv) the terms and conditions of supply and the period the price will be fixed for the product.

(bj The Franchisor shall, in the circumstances referred to in clause 9C.6(a), not unreasonably withhold its permission for the Franchisee to purchase the specified products so long as the Franchisor is satisfied that:

(a) the supplier can supply the quantity of stock required for the Franchise Network;

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Luxonica Retail Franchising Australia Pty Ltd Full Format Franchise Agreement

(ii) the product is of a standard and quality equal to the product it substitutes or reasonably expected of the Franchise Network; and

(iii) the product is suitable for the purpose it is intended,

the Franchisor will then provide written notice of its decision to the Franchisee within a reasonable time after the information has been made to the Franchisor.

(a) If the product and alternative supplier is approved by the Franchisor, the product and alternative supplier will be listed in the Operations Manual as an Authorised Product and Nominated Supplier unless otherwise withdrawn by the Franchisor.

9C.7. Payment

The Franchisee must pay for all supplies in accordance with the terms and conditions of the Nominated Supplier(s) from time to time. Failure to comply with this clause is a fundamental breach of this Agreement and the Nominated Supplier(s) may be entitled to withhold further supplies from the Franchisee if all payments have not been received by the end of the week in which they were due for payment. Payment shall be by the method stipulated by the Franchisor or Nominated Supplier(s) from time to time.

9C.8 Ordering

Orders must be placed at a reasonable time before the required date of delivery considering the time frame for delivery as advised by the Nominated Supplier(s) from time to time.

9C.9 Delivery

Unless otherwise agreed with the Nominated Supplier(s), risk in relation to supplies passes to the Franchisee when the supplies arrive at the Franchisee's Premises or other agreed address (as appropriate).

9C. 10 Licence to Inspect Authorised Products

The Franchisee grants an irrevocable licence to the Luxottica Group, its agent or representative, upon reasonable notice being given by the Franchisor to the Franchisee, to enter the Franchisee's Premises where the Business is being conducted or the Authorised Products are being stored, during usual business hours, to enable the Luxottica Group to check the supplies, Authorised Products and other products held by the Franchisee.

9H. TRAINING 8 MEETINGS

9H. 1 Requirement to attend training

(a;! The Franchisee, or if the Franchisee is not an individual, the Nominated Manager(s) of the Franchisee, and. any other persons required by the Franchisor, must participate in, and complete, the initial training provided by the Franchisor to the satisfaction of the Franchisor. The cost of training the Franchisee or Nominated Manager forms part of the Initial Fee. The Franchisee must pay the Costs of any other persons attending the training.

(bt As it is important that the Franchiseel the Nominated Manager and any relevant staff keep abreast of changes and may benefit from additional training, such persons must attend any other training courses reasonably required by the Franchisor and necessary to the efficient and proper operation of the Business including in relation to any new Authorised Products and Authorised Services introduced at any time and place nominated by the Franchisor. The Franchisee must pay the Costs of such training.

9H.2 Meetings & Conferences

(a) The Franchisee (or its Nominated Manager) must; at its expense, attend any meeting :

scheduled by the Franchisor or representatives of the Franchisor. The Franchisor will not schedule more than four meetings per year and will schedule such meetings within the State

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in which the franchise is located. The venue, agenda, duration and formatting of the meetings shall be determined by the Franchisor..

(b) The Franchisee (or its Nominated Manager) must also attend, at the Franchisee's expense, any conferences run by the Franchisor. The Franchisee acknowledges that the conferences are a great opportunity to re-focus and network with other Franchisees in the Franchisor System and the Franchisor's staff. For these reasons, attendance at such conferences by the Franchisee is compulsory.

(c) During the Term of the Agreement, the Franchisor may deem it necessary to call an extraordinary meeting and the Franchisee undertakes that during the Term, the Franchisee or the Nominated Manager must, at the Franchisee's expense, attend the extraordinary meeting, the notice period for which shall be not less than seven (7) working days, from the proposed date of such a meeting.

9J. REQUIREMENT TO CONDUCT LOCAL MARKETING

9J.1 Initial Marketing Campaign

The Franchisee must conduct an initial marketing campaign in its local area within the first three months of the start of trading. In conducting the campaign the Franchisee must comply with the directions of the Franchisor and must spend at least an amount equivalent to the Opening Promotion Amount.

9J.2 Local Marketing

The Franchisee shall:

(a) promote the sale and marketing of the Authorised Products and Authorised Services, so as to maximise the sales thereof, the Franchisee must use its best endeavours to maximise the consultations and turnover of the Optometry Practice and the sales of the Business;

(b) give the Franchisor access to inspect and audit the records to determine whether the Franchisee has satisfied it's obligation hereto from time to time;

(c) promote and provide the Authorised Products and Authorised Services in a manner which is consistent and in conjunction with the marketing strategies and campaigns of the Franchisor (which may include the provision of free or discounted Authorised Products and Authorised Services);

(d) not proceed with any marketing or promotions unless first approved in writing by the Franchisor;

(e) contribute to, and participate in, any promotional and marketing activities reasonably determined to be of benefit by the Franchisor including:

(i) complying with any customer service procedure issued by the Franchisor from time to time;

(ii) participating in advertising and marketing of the Business provided that it complies with relevant Optometric Legislation and Health Insurance Commission Guidelines; and

(iii) notifying, immediately and in writing, the Franchisor of any matter of complaint in the provision of Authorised Services or the Authorised Products respectively.

( f ) do all such things as are reasonably necessary (including providing appropriate terms in employment contracts) to ensure that optometrists working in the Optometry Practice:

(i) participate in marketing and the maintenance of customer and patient service standards in accordance with the terms of this Agreement;

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(ii) regularly attend team meetings for the Business and, on at least one occasion each year nominated by the Franchisor, attend a marketing meeting at a place nominated by the Franchisor; and

(g) share management information such as appointment fill rates that will assist in the development of the Optometry Practice and the Business.

If a dispute arises regarding whether or not any marketing or advertising material complies with the relevant Optometric Legislation and Health Insurance Commission Guidelines, the Franchisor and Franchisee will accept the opinion of an agreed senior counsel or, failing agreement, accept the opinion of senior counsel nominated by the Bar Association in New South Wales. The party whose contention is not supported by the advice from senior counsel must pay the costs of the opinion.

IOC. TRAINING AND MEETINGS

10C.l Training

The Franchisor will provide the following forms of training and assistance to the Franchisee:

(a) initial training for the Franchisee, or, if the Franchisee is a company, the Nominated Manager, at the Franchisor's own facilities or a Luxottica Group store, selected by the Franchisor;

(b) ongoing training and assistance to the Franchisee, which the Franchisor considers reasonably necessary, in relation to:

(i) methods and procedures for the sale of Authorised Products and Authorised Services; and

(ii) introduction of new products, services, marketing, sales promotion initiatives.

(c) ongoing information, whether oral or written, on all matters of direct relevance to the Business.

10C.2 Meetings

The Franchisor may convene a meeting of all Franchisees on a state-by-state or national basis, from time to time, for the purposes of discussing the operations of the Franchisor System.

10C.3 Fees and Costs

The Franchisee must pay the Franchisor in advance the fees required by the Franchisor for any training, seminars or meetings it provides (including training requested by the Franchisee or required to be taken by the Franchisee, the Nominated Manager or its employees) and associated expenses including travel, accommodation and meal expenses.

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Documents

Form€¦ · Luxottica Retail Franchising Australia Pty Limited ACN 13 1 764 068 ... (0 Business management systems, website, communication systems and computerised point of sale