Current Form Dealer Franchise Agreement

Exhibit 10.2(c)


BANDAG DEALER FRANCHISE AGREEMENT


BANDAG DEALER FRANCHISE AGREEMENT dated , (the "Agreement") between BANDAG, INCORPORATED, an Iowa corporation, located at 2905 North Highway 61, Muscatine, Iowa 52761 ("BANDAG," "we," "our," or "us"), and __________________________________________________________________ located at __________________________________________________("Dealer," "Franchisee," "you," or "your").


1. BACKGROUND


Bandag manufactures tread, equipment, and other materials that our Dealers use in our proprietary process to manufacture retreaded tires for sale. We also provide proprietary business process consulting related to the commercial tire business and contract directly with fleet customers who desire access to Bandag products and services. Bandag identifies customers and invests in technical, marketing, and sales research for its franchisees. Bandag also advertises Bandag products and services on behalf of the Bandag Alliance. These are some of the investments that create demand for Bandag products and services and that foster our franchisees' ability to compete with other retreading systems. Our Dealers provide wheel and tire products and services to commercial customers using one or more lines of new tires as well as Bandag retreaded tires and related products and services.


This Agreement establishes and governs the relationship between us, as franchisor and supplier of proprietary materials, equipment and services, and you, as a franchised Bandag Dealer.


To make this Agreement shorter and easier to understand, the word:


"Process" means our proprietary method of retreading commercial vehicle tires using our materials and methods (certain of which may be the subject of one or more patents);


"Materials" means Bandag tread, cushion gum, repair gum, repairs (patches), and certain other proprietary materials we make or distribute, including certain equipment used in the Process;


"Products" means retreaded tires produced using the Materials and the Process;


"Marks" means all BANDAG trademarks, service marks and logos;


"Licensed Marks" means those Marks you are authorized to use under this Agreement;


"Bandag Facility" means any permanent or temporary facility or structure, owned or operated by Bandag or its Dealer, at which Bandag Products are manufactured, stored, offered for sale, or serviced;


"PSIP" means Bandag programs, services, information and products;


76 "System" means the Process and the PSIP, together, as used and offered by Bandag Dealers;


"Dealer" means a business or business entity that has established and operates a Bandag Dealership;


"Dealership" means the Bandag Dealership you establish and operate under this Agreement;


"Effective Date" means the date on which we signed this Agreement.


Certain other terms which are capitalized in this Agreement are defined in a glossary at the end of the Agreement.


2. FRANCHISE RELATIONSHIP


2.1. Bandag Dealership Business. You wish to establish and operate a Bandag
Dealership, using the System and the Licensed Marks, in one or more
trade areas defined in Exhibit A (the "Area of Opportunity" or "AOO").
You commit to meet or exceed Performance Expectations as outlined in
the Manual(s), provide sales and service coverage and manufacturing
capability to support these efforts, and fulfill all Dealer
obligations specified in the Manual(s). This may include an obligation
to support and service our fleet customers according to this
Agreement, the terms of any other agreement between us relating to a
fleet, and the Manual(s).


2.2. Mutual Commitment. This Agreement imposes responsibilities on both
parties to do their best to promote and strengthen the Bandag System
and brand. We will support and assist the Bandag System; you will
continue to invest in your Dealership and remain committed to the
Bandag System; and you and we commit to a high degree of mutual
cooperation toward Bandag System objectives. Our and your respective
obligations and responsibilities are also described in the Manual(s).


3. GRANT AND ACCEPTANCE OF FRANCHISE


3.1. Franchise and Territory. We grant you a non-exclusive franchise to use
the System and the Licensed Marks to operate a Dealership, at a
location to which we consent within the AOO, which (i) sells Products
to commercial and fleet customers in the AOO ("Sales Facility"), and
(ii) if and where designated in Exhibit B, uses the System and
Materials you purchase from us to produce Products which you sell to
commercial and fleet customers in the AOO ("Production Facility").
Under this Agreement, you may use certain patents we or our affiliates
or subsidiaries own, and periodically designate (entirely or by
individual claim) as part of the System, but you may use them only to
use the System to operate your Dealership under this Agreement, and
only for so long as this Agreement remains in effect and the
designated patent(s) both remain in effect and are designated by us as
part of the System.
o You may respond to specific requests from your customers for Bandag
products or services at any location, but outside the AOO to which
you are assigned, you may not use the Marks to identify any facility
and we are not obligated to provide Dealer support services. AOOs
are not exclusive territories, may overlap one another, and


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do not preclude us from establishing or relocating any Dealership
facility in or into an AOO.
o You may produce Products only at the Production Facility (or
Facilities) listed on Exhibit B.
o You may relocate a Production Facility only with our written
consent, to a suitable site within the AOO that does not in our
opinion infringe upon another Bandag business. The replacement
Production Facility must open within 10 days after the prior
Production Facility closes, and must conform to all requirements of
this Agreement and to then current System standards.
o You agree to communicate promptly to us each improvement to the
Bandag Process or Bandag Products that you conceive or develop, and
transfer to us, without remuneration, record ownership of all right,
title and interest to the improvement and all associated
intellectual property rights.
o We will license you to use in your Dealership, any improvements in
the System that we choose to license to the Bandag System,
generally.
o We reserve all rights not expressly granted to you in this
Agreement.


3.2. Term. This Agreement is for five years, beginning on the Effective
Date and expiring at midnight Central Time (U.S. and Canada) on the
fifth anniversary of the Effective Date. We will send you a letter at
least 12 months before your term expires and again at 8 months before
your term expires notifying you that your term is expiring and giving
you the option to renew the franchise and providing you a copy of the
standard form of Bandag franchise agreement (which may differ from
this Agreement) we are then offering new franchisees in the state
where your principal place of business is located. If you notify us in
writing not less than six months before the then-current term expires
that you intend to renew the franchise for a successor term, we will
grant you a successor franchise, for five years, on the standard form
of Bandag franchise agreement as described above for the type of
Dealership you operate, if you satisfy all of the following
requirements:
o You or your designated manager(s) achieve and maintain, to our
satisfaction, the skills and capabilities prescribed in the
Manual(s);
o You pay us a successor franchise fee of $1,000.00;
o You complete renovation and upgrading of your Dealership (including
all Production Facilities and all Sales Facilities) to meet
standards prescribed in the Manual(s) at that time; and
o At least six months before the then-current term expires, you sign a
Bandag franchise agreement for the successor term, to take effect
immediately following the expiration of the then-current term.


If you do not notify us that you wish to obtain a successor franchise
six months in advance of your expiration date, or if you do not
qualify for a successor franchise, we may take any actions we deem
appropriate, prior to expiration, to replace your Dealership or you,
as Dealer.


3.3. Initial Fee. At least 15 days before initial training is scheduled to
begin, you agree to pay us an initial franchise fee of $ 2,500.00. The
initial franchise fee is non-refundable.


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3.4. Initial Training. You agree to complete our initial training program
to our satisfaction. Each manager of each Production Facility and
Sales Facility you operate must also successfully complete all
required training programs listed in the Manual(s) and the UFOC.


3.5. Acknowledgments.
o You understand that your Dealership includes a combination of all or
some sales, service and manufacturing opportunities, and of the
System, that in our opinion best suits the AOO and the commercial
fleet needs therein.
o We may establish, and periodically modify, one or more categories of
Dealers, with different features and benefits based on specified
types and levels of Dealer investment and performance.
o Your Dealership will use only those elements of the System, produce
and sell only those Products, and be identified by and use only
those Marks, which we authorize periodically.
o We developed the System at considerable expense and investment. Your
disclosure or unauthorized or improper use of all or any part of the
System or of our trade secrets or proprietary or Confidential
Information would cause us and other Bandag Dealers irreparable
harm, and you will not engage in such practices.
o Dealer Performance and Dealership Standards as prescribed in
Sections 6 and 7 of this Agreement, are vital to the success and
integrity of the System and the Bandag Alliance, and you will
conform strictly to these requirements.
o You will not directly or indirectly sublicense, delegate or transfer
any of the rights licensed by this Agreement, except in accordance
with Section 8, and subject to Section 4.3.
o We and our affiliates and licensees may conduct various business
activities including various tire and retreading businesses. You may
be subject to competitive impact from these and other activities.
o You understand that other Bandag Dealers operate under forms of
agreement which differ materially from this one and that standards
for these Dealerships may vary from those required of you.


3.6. Acceptance. You represent that you have fully and truthfully completed
our franchise application. You accept this Agreement and agree to
begin operating your Dealership hereunder within 90 days, unless we
agree in writing to an extension. If you (or your designated manager)
fail to complete our initial training program to our satisfaction, or
to begin operating your Dealership on time, you will thereby
voluntarily cancel this Agreement. You agree to operate your
Dealership in accordance with the System, this Agreement, and the
Manual(s) at all times.


4. FRANCHISE MANAGEMENT, EQUITY, AND SUCCESSION PLANNING


4.1. Dealership Management. You, or your qualified manager, must manage the
day-to-day operations of your Dealership on a continuous, full-time
basis.


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4.2. Business Equity. We recognize that you are an independent business
owner with a desire to build, protect, and pass on business equity.
Although we will use our commercially reasonable best efforts to
support you in accordance with this agreement (see Section 5.1), you
are ultimately responsible for your performance and for building
equity in your Dealership business.


4.3. Succession Planning. We believe that continuity of Dealer management
and preservation of Dealer equity from one generation to the next
benefits individual Dealers and the Bandag Alliance. Therefore,
subject to a succession plan that you develop conforming to the
guidelines prescribed in the Manual(s), and which we approve in
advance, we will waive the other transfer provisions in Section 8 of
this Agreement to allow you to carry out that plan. If you deviate
from a succession plan we approved, we may reinstate all of the
transfer requirements in Section 8.


5. BANDAG SUPPORT SERVICES


5.1 Best Efforts. We will use our commercially reasonable best efforts to
keep the Process up-to-date and competitive, to support the System in
cooperation with Dealers through research, marketing, advanced
training, communication and participation in the Bandag Alliance
Council (see Section 5.5), and to act fairly in our dealings with our
Dealers. We will use our commercially reasonable best efforts to:
o Develop and deliver quality equipment, information, products,
programs, and services that support Dealers in promoting and
increasing sales of PSIP;
o Provide Dealers with opportunities for growth and development
through the Dealer Development Process described in the Manual(s);
o Provide personnel as we deem appropriate to support Dealer sales,
service, and manufacturing efforts; o Protect and enhance the value
of the Bandag system, generally; and o Maintain the value and
integrity of the System for the benefit of Bandag Dealers, Bandag
customers, and Bandag.


5.2. Bandag System Manual(s). We will supply you with one copy of our
proprietary and confidential Manual(s) for your Dealership. We may
change the contents of the Manual(s) periodically, including adding or
deleting material. It is your responsibility to place all updates in
the Manual(s) provided. Manual(s) may differ for different categories
of Bandag Dealers.


5.3. Training. We will develop and deliver quality training to support
Dealers in using Bandag equipment, and PSIP.
o We will provide training at the Bandag Incorporated Learning Center,
or at your Dealership or another location we designate.
o At your request, we may provide optional supplemental training for
you and/or your key personnel at a mutually convenient time and
location.
o We may, at our reasonable discretion, require periodic retraining of
you and any of your managers.
o We may charge you a reasonable fee for training.


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5.4. Sales and Technical Support. We will use our commercially reasonable
best efforts to hire capable sales and technical support personnel,
set appropriate performance expectations, and provide them with
training and necessary resources and tools, so they can assist and
support Bandag Dealers. We will advise you on the management of your
Dealership, including the proper display of the Marks; procurement,
maintenance, and operation of equipment; Product production; customer
service; advertising, sales and local marketing; and cost control
techniques.


5.5. Bandag Alliance Council. We have established and work with the Bandag
Alliance Council, comprised of representatives of Bandag and selected
representatives of Bandag Dealers in the United States and Canada. The
Bandag Alliance Council, whose members change periodically according
to its By-laws, advises us on issues affecting the Bandag business and
the network of Dealers in the United States and Canada, and assists in
developing strategies and tactics for the success of the Bandag
System. The Bandag Alliance Council serves as a forum for sharing and
acting upon concerns of the Bandag Alliance. The operating guidelines
of the Bandag Alliance Council are described in the Manual(s).


5.6. Additional Support. We may make available to you any additional
services, facilities, rights and privileges relating to the operation
of your Dealership which we make available periodically to Dealers in
the type of Dealership you currently operate.


6. DEALER PERFORMANCE.


In addition to your obligations prescribed in the Manual(s), you agree to
the following:


6.1. Best Efforts. You will use your best efforts to support and promote
the System, be the best tire support service provider and maximize
Bandag market share in the AOO, reinvest appropriately in your
Dealership, meet the tire needs of Bandag customers in the AOO, and
hire, train, develop and reward the best possible employees in your
Dealership. You will use your best efforts to:
o Promote and increase the sales of PSIP in the AOO;
o Achieve and maintain strategic, operational, and financial health
through active participation in the Dealer Development Process as
defined in this Agreement and described in the Manual(s); and
o Protect and enhance the value of your Bandag Dealership, and conduct
the business at your Dealership such that you enhance (and in no way
adversely affect) the reputation and goodwill of Bandag, the Marks,
the System, the Bandag System and members of the Bandag Alliance.


6.2. Confidentiality. During and after the term of this Agreement, neither
you nor your employees or agents shall disclose to a third party or
the public or use, except to operate the Dealership, any Confidential
Information or proprietary information, or


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trade secret, which we own or disclose to you, or which relates to the
System, the Products or Bandag's business. This includes the entire
contents of the Manual(s) and the Agreement. You shall inform your
employees and anyone permitted access to Confidential Information of
their obligations under this Agreement, and shall take such steps as
may be reasonable under the circumstances to prevent any unauthorized
disclosure, copying or use of Confidential Information.


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