Detailed terms & conditions for Franchisee (LPG)

  1. Eligibility criteria

An aspiring individual, who is financially sound and have good understanding of the designated ‘Zone’, including but not limited to the market environment, LPG usage, competitors in the market, type of customers, regulations etc.

An individual will be expected to establish strong network of distributors, dealers and/or retailers& Dealer (Auto LPG) within the ‘zone’ and grow the market for LPG cylinders (mini, domestic, commercial & industrial) and Auto LPG.

  1. Infrastructure
  1. Office: The Franchisee must maintain an office at the headquarters within the designated zone. The office must have an area of 93 (1000 sq.ft.) approximately consisting of office hall, visitor lounge, conference hall and cabin for the senior stakeholders. It must be well equipped with telephone, internet, computer facilities etc. At the front of the premises the sign board of the company (minimum size 8`x3`) must be displayed.
  2. Land Requirement: – Minimum 3 acre (12041 Sq. meters) for bottling plant of 100 MT storage capacities, covering up to maximum 250 kms. radius. (In case the company already has an operational bottling plant in the zone, then land is not required.)
  3. Staff: The Franchisee will appoint marketing and administrative staff of the cadre and number as per requirement in the office. All staff members will be direct employees of the Franchisee and managed by an individual directly and the company shall have no liability of them. However, the company will support by issuing appropriate literature for training of the staff, along with functional guidelines to discharge their duties.
  1. Investment

Total investment of 5.00 crore for the business will be based on the infrastructure and resources required such as bottling plant, office, stock, working capital etc. in LPG business. Investment in Auto LPG will be made by the company itself.

  1. Business Model

An individual will start as Business Organizer for a period of one year or until the franchisee fee has been fully paid, whichever is earlier. After the payment, an individual is free to select either to form a partnership or they choose to work individually.

  • In case of partnership, a joint venture (LLP) will be formed with SO Gas Products Pvt. Ltd., MSME of 1984 with equal partnership. The royalty will only be 10% to be paid directly to Premier LPG Ltd.
  • In case an individual choose to work individually, they will have full ownership of following the company guidelines and the royalty will be 25% to be paid directly to Premier LPG Ltd.

In any case, all securities and investments taken from the associates will remain with the Franchisee. All other associates in the state will be appointed under tripartite agreement after appointment of Franchisee.

  1. Franchisee Fee

To be paid solely by the Franchisee as per the mutually agreed amount depending on the jurisdiction with mutual understanding within one year from the date of signing the agreement.₹25.00 lacs (Rupees Twenty Lacs) only as a Security Deposit to be paid upfront at the time of signing the agreement.

  1. Terms of appointment

Ten years, lock in period three years with the provision for further renewal by mutual consent. The renewal will be at the sole discretion of the company. The company will have a right to terminate the agreement earlier, if violation of any of the contractual terms is brought to its notice, and in that case, the franchisee fee will be forfeited. If LLP has been formed, the shares of Franchisee shall not be transferable to anyone without the written consent of the company.

  1. Jurisdiction/area

At least 250 km. radius from the bottling plant.

  1. Statutory provisions
  1. No formal approval/permission is required for the trade. The company has complied with all statutory requirements/provisions relating to LPG and Auto LPG business.
  2. Franchisee will comply with the incidental matters/local compliances applicable to designated state and ensure due compliance of such provisions by all the associates to be appointed.
  3. Franchisee will be responsible for renewal of licenses, service contracts, insurances and bank guarantee of associates etc. of the designated zone.
  4. Franchisee will be required to execute an agreement with the company and tripartite agreements with all associates will be executed to be appointed in the area after his appointment.
  1. Rate list

The rate of LPG/Auto LPG changes every month as per international market. The circular will be issued by the company by 1st of every month. The other items will also be sold as per rates fixed by the company from time to time. Changes, if any, in rates will be communicated by the company in advance. Issue of circular at the address or email given by the associates will be sufficient to implement the rates of supply. The rates will be charged applicable on the date of supply from plants/distributor/dealer’s godown. Refer customer price list on website.

  1. Responsibilities
  1. To establish and run an office in the geographical area of jurisdiction for intensive business, promotion and sale of company’s products.
  2. To set up and run the bottling plant and maintain stock of cylinders, LPG, spares, seals, caps etc. along with full stationary, publicity items etc. in accordance with the company’s guidelines and requirements.
  3. To conduct survey of the area and identify potential centers for appointing associates etc.
  4. To select and recommend suitable persons for appointment of associates in accordance with the terms & conditions of the company in the area.
  5. To help in getting all formalities completed by the associates for quick commencement of their business with the company as well as the local authorities.
  6. To help the associates in appointment of their staff and train them in all respect.
  7. To correspond with the associates and convey them instructions issued by the company from time to time.
  8. To collect orders from the associates and submit them to the bottling plant for supply and other jobs incidental to the above, as per guidelines of the company issued from time to time.
  9. To conduct various publicity/advertisement programs in the designated area as per guidelines and policies of the company mentioned at the website. An individual will also acquire an approval from the head office of the company for any publicity program that they would like to run or if required by any of their associates. An individual will make related arrangements for refund of expenses incurred by the associates as per policy of the company. An individual will be keeping the custody of the publicity material entrusted to them by the company and issue the same to their associates.
  10. To safeguard and promote the business interests of the company at the highest level, attend the liaison/legal work of the company with different government departments and perform all necessary or incidental functions for all purposes, being the representative of the company in the zone.
  11. To renew the agreement of associates/bank guarantee/security/insurance/licenses etc. in time, before expiry of each.
  12. To maintain any/all vehicles provided at site for service and the machineries installed at the dispensing stations, including any minor/major repairs needed from time to time.
  13. To attend the complaints of customers and keep a vigilant watch on the working of the associates.
  14. In case of discontinuance of association by any associate within the company either on completion of tenure or premature, the Franchisee will finalize the accounts, take the material issued by the company and make alternate arrangement ofthe associates in their place, as the case may be.
  15. To keep information of competitors in/around the zone and advise the company from time to time, to protect and build the image of the company and maintain the same.
  16. To watch and submit details of any illegal activity in the zone, to the company, to catch people who either sell duplicate products or use subsidized gas for commercial/industrial purpose or fill small cylinders in an illegal manner etc.
  17. Franchisee will collect reports from the associates periodically and submit to the company as required from time to time after compilation at their own level and other reports mentioned above in the sub-heading of “responsibilities”
  18. To submit daily/monthly reports to the company.
  19. To do any other work assigned by the company from time to time.
  1. Return on investment

The investment & profitability will be transparent and Franchisee can earn as per their own capability to develop business in the zone. The expenses of the business will be covered if they generate only 10% business. However, if the expenses are not covered, the company takes the responsibility of shortfall expenses subject to condition that guidelines of the company is followed and reports as mentioned are submitted in time and correctly.

1. Area to be Covered : 250 Km. radios of plant
2. No. of Distributors (District) about : 10
3. No. of Dealers (sub-district) : 20
4. No. of Retailers (colonies) : 50
5. No. of Mini Retailers (shops) : 150
6. ALDS : 15

Until they become a Franchisee, they will only be entitled to earn 5% commission on the investment made by the associates, Rs. 1/- per Kg. on LPG & Rs.0.50 for Auto LPG. For details, refer projected profitability.

Once they have become a Franchisee, one of the following conditions will apply, depending on which business model they have selected:-

  1. In case of Partnership with SO Gas, Franchisee will be entitled for 50% profit after deducting 10% royalty to PLL on the profits of the LPG business of the zone except partner remuneration.
  2. In case a Franchisee chooses to work individually, they will be entitled for 100% profit after deducting 25% royalty to PLL on the profits of the full business of the zone.

Note:- For the running expenses for office and bottling plant, projected profitability of Business Associates and Bottler may be taken into account. The full margin of the company will be shared after the signing of agreement. However the company guarantees 18% minimum return on the total investment made by the Franchisee except the Franchisee fee which shall definitely be recovered over a period of time.

  1. Support from the company:-
  1. Company is already providing its associate S.O. Gas Products Pvt. Ltd. as its partner from 1st day who has all the expertise required to run the business independently.
  2. Company has all the literature/guidelines to help the Franchisee for running the business smoothly.
  3. Training to sales representative, accountant, clerk and any other staff to be appointed by the Company at Franchisee office either digitally or in person.
  4. Provide printed stationery at reasonable rates, if desired by the Franchisee.
  5. Reimbursement of short-fall expenses (risk-protection) if any, subject to submission of proper reports and documents after the bottling plant is established.
  6. Company’s 27 year experience in all fields like Marketing, Finance, Accounts, etc. will always be available with the Franchisee as per the requirement.
  1. Publicity
  1. The Franchisee will share the publicity campaign with the company and the company’s logo/name/brand will obviously be allowed but with prior written consent of the company.
  2. The company has framed plans for all types of publicity that can be executed in the region and this is readily available at the website for Franchisee to review and follow.
  3. However, Franchisee cannot compel the company for any type of publicity. Even at their cost, they cannot make any publicity without written permission of the company.
  1. Submission of report/returns

They will submit periodical reports/returns required by the company from time to time.

  1. Surrender of association ship

Either party shall give at least 3 months’ notice in writing in case it wants to dissolve the agreement before maturity but not before the period of three years from the date of agreement. The notice to be given to either party shall be deemed to have been served if sent by registered post at the address entered in this agreement or the changed address duly communicated. Franchisee fee is non-refundable after 1st year.

If the Franchisee wishes to exit in the 1st year, the company shall refund Rs. 15 Lacs without interest out of Rs.25 lacs of security deposit taken at the time of signing the agreement and amount invested by them if any, without any interest.

  1. Arbitration clause

In case, any differences or dispute arises between the parties, it will be referred to the sole arbitrator to be appointed by the managing director of the company. The arbitration proceedings shall be governed by the provisions of arbitration and conciliation act as applicable at the prevailing time. Language of the proceedings shall be in English and venue for arbitration shall be in Delhi. The decision of the arbitrator will be binding on both the parties. Courts of Delhi only shall have jurisdiction to adjudicate upon the findings of sole arbitrator.

  1. Competition and Non-Disclosure

Franchisee will never share any trade secrets and business know-how including but not limited to information of a commercial nature (e.g. Selling strategies, market research, product research and plans, client list, customer list, advertising or marketing strategy, financial figures, profit figures etc.) with any 3rdparty without written consent of the company.

  1. Franchisee may not be directly or indirectly engaged, concerned or interested in any other business or activity which could reasonably be considered as conflicting with their contractual responsibilities or the interest of the company. Therefore, before taking any part-time employment, or becoming involved in additional business or related activity, they must ask the company for their written permission.
  2. During the period of this agreement and for a period of two year immediately following the termination of this agreement for any reason, LPG Franchisee on their own or through someone or on behalf of any other firm, directly or indirectly :-
    1. Solicit the clients of Premier LPG Ltd.
    2. Be engaged or concerned with any businesses which is in direct competition of Premier LPG Ltd.
  1. Miscellaneous provisions
  1. All terms and conditions have been framed in English language and translation options are for understanding purposes and facilitate the visitors only. In case any difference is found in translation, English version shall be final and binding.
  2. These are general terms and conditions; the contract/agreement executed between the parties after negotiations shall be final and have an overriding effect on these general terms and conditions.
  3. These terms and conditions may be changed, altered, modified depending upon the change in governing rules and regulations issued by the Government of India from time to time.
  4. The acceptance or rejection of the application is at the sole discretion of the company. After rejection, no correspondence will be entertained in this regard.
  5. The company reserves the right to change, amend, add or delete any/all clauses at any time without prior notice.
  6. All disputes are subject to jurisdiction of Delhi courts only.

The Franchisee will return the duplicate copy of these detailed terms and conditions duly signed in token of acknowledgement and acceptance to the company.

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