TOURISM - Tamilnadu Tourism Development Corporation Limited-Hotels-Uneconomical / Cash loss units-Leasing / Franchise of 15 Hotel units-permission-accorded.

From the Managing Director, Tamilnadu Tourism Development Corporation Limited, D.O.Letter No.672/H3/98, dated: 24-1-97,23-10-97, 24-11-97, 3-12-97, 30-12-97 amd 23-3-98.

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ORDER :

The Managing Director, Tamilnadu Tourism Development Corporation Limited has informed that a proposal was placed before the 168^th Board Meeting of Tamilnadu Tourism Development Corporation Limited to Lease / Franchise some of the Units on "as is where is" condition to avoid further cash loss and to improve the existing units significantly and make all hotels / units more viable.

2. The Board of the Tamilnadu Tourism Development Corporation has resolved to lease out the following fifteen existing uneconomic units after obtaining concurrence from the Government.

1. Kothagiri
2. Coonoor
3. Vaigai
4. Mettupalayam
5. Pitchavaram
6. Kodai Road
7. Vedanthangal
8. Thirukkazhukundram
9. Sriperumbudur
10. Mettur
11. Uthirakosamangai
12. Sathanur
13. Mandapam
14. Namakkal Tourist Complex
15. Virudhunagar Tourist Complex

3. The above proposal of the Managing Director, Tamilnadu Tourism Development Corporation has been examined carefully. The proposal of the Managing Director, Tamilnadu Tourism Development Corporation Limited to franchise the hotel units is approved, subject to the following terms and conditions :-

1. TTDC shall lease the units through Open Tender System.
2. The annual lease rent shall be 10% of the value of the property as the upset price and these annual lease rent payable by the successful bidder shall be called as Franchise Fees since the Franchisee will operate the unit under the banner of TTDC.
3. The Guideline value obtained from the Sub-Registrar shall be adopted for fixing the land value.
4. The book value, shall be adopted for buildings equipment, furniture and fittings.
5. The period of Franchise shall be restricted to 3 years initially.
6. Annual escalation of 10% shall be fixed on the Franchise fee payable by the franchisee.
7. Prior permission of Government of India shall be obtained by the Managing Director, TTDC Ltd., before Franchising the units, which are constructed with the assistance of Government of India.

4.   Draft agreement for franchising the hotel units is annexed to this G.O.

5.  This order issues with the concurrence of Finance Department, vide its U.O.No. 1164 /BPE /98, dated 2-6-1998.

S. RAJARETHINAM,

This AGREEMENT is entered into at Chennai on this ...... the day of .......................................................

2000 between ..................................................................................................................................................

Tamilnadu Tourism Development Corporation Limited, a Company incorporated under the Companies Act, 1956 (Central Act 1 of 1956) having its Registered Office at No.25, Dr. Radhakrishnan Salai, Mylapore, Chennai-600 004, represented by its Managing Director, hereinafter known as "FRANCHISOR" (which expression wherever applicable shall mean and include its successors, inheritors, assigns and administers) of the one part

AND

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hereafter known as "FRANCHISEE" which expression wherever applicable shall mean and include its successors, inheritors, assigns and administers of the other part)

WHEREAS the Franchiser decided to let out 15 hotel units on franchise basis and the proposal was approved by the Government of Tamil Nadu, vide G.O.Ms.No.101, Information & Tourism (Tourism-I) Department, Dated : 3-6-1998.

AND WHEREAS the Government while approving the draft terms and conditions in Letter No.3177/P1/97-9, Information & Tourism (T1) Department, dated 17-2-98, prescribed that the value of the properties franchised be valued in the manner indicated hereunder :-

1. Guideline value obtained from the Sub-Registrar may be adopted for fixing the land value;
2. The value of the building shall be certified by the Competent Authority of the Public Works Department;
3. Movables like furniture and fittings, electrical installations and other equipments etc. be valued at book value;
4. Ten percent of the total value of the properties reckoned as above shall be the franchise fee; and
5. The gross sales value shall be certified by a Chartered Accountant maintained by the Franchisor.

AND WHEREAS the Franchiser has called for open tenders through newspaper advertisements to let out Hotel Tamil Nadu in ....... on Franchise basis.

AND WHEREAS .................................................................................................................................................... successful tenderer offered a Royalty amount of Rs. ........ per annum with annual escalation of 10% thereon; AND WHEREAS the Franchiser accepted the offer of .................................................................................. and agreed to let on franchise basis the hotel unit and other properties more fully described in the Scheduled annexed to this agreement, to the Franchisee for a period of three years from ............................. ......;

NOW the parties have mutually agreed upon the following terms :-

1. The Hotel Unit shall be run in the name of "HOTEL TAMIL NADU" on Franchise basis.
2. No additions, alterations, modifications to the existing building shall be made in any manner without the written consent of the Franchisor and the Franchisee shall maintain the building in good order.
3. The Franchisee Fee fixed by the Franchiser initially will carry annual escalation of ten percent every year.
4. The franchisee fee shall be paid in advance every year and the Franchisee shall also furnish a bank guarantee to secure the franchise fee for every subsequent year.
5. All rates, taxes, assessments, charges, claims, consent fee levied by the Pollution Control Board, demands and outgoing (save and except the ground rent payable to the State Government) shall be borne by the Franchisee.
6. The Franchisee shall maintain the building and movable properties like furniture, electrical installations, vehicle, etc. in good condition and shall compensate the Franchiser for any damages to such properties with replacement value.
7. All employees except the regular staff of Tamilnadu Tourism Development Corporation will be absorbed by the Franchisee and the Franchiser will not be liable for any claim in respect of such employees.
8. After the expiration of franchise period, the Franchisee shall surrender possession of all movable and immovable properties franchised, including super structure now exists and also to be constructed by the Franchisee with due consent of the Franchiser.
9. The Franchisee shall not claim any title to the super structure already put up and to be put up by him or claim any compensation at the time of surrendering possession after the expiration of the franchise.
10. All sanctions, permissions, no objections, letters of intent, consent, licences, clearance, approvals etc. shall be obtained by the Franchisee at his cost in the name of "HOTEL TAMILNADU" and such document shall be kept effective and in force at all material times.
11. The building, furniture and other properties franchised shall be insured against fire, rioting and other possible losses and the insurance policy be taken in the joint names of the Franchiser and the Franchisee and the insurance premiums be borne by the Franchisee.
12. The Franchiser shall have the right to inspect the premises and also the books of account etc. at any time.
13. (a) Franchisee shall maintain proper accounts and all financial

statements in accordance with the standard accounting principle and practice.

(b) The Franchisee shall submit accounts on quarterly basis not later than thirty days of the expiry of each quarter.

1. The Franchise shall submit verified statements, reports, accounts, documents and any other particulars as required by the Franchiser from time to time.
2. The Franchiser shall have a right to appoint one Director on the Board of the Franchise.
3. The Franchisee shall not encumber the franchised properties by way of pledge, hypothecation, martgage, charge, lien, lease, leave and licence or in any other manner.
4. The Franchisee should cover his establishment under the Employees Provident Fund and Miscellaneous Provision Act, 1952 (Central Act XIX of 1952) and the Employees State Insurance Act, 1948 (Central Act of XXXIV of 1948).
5. The Franchisee should not engage any person without issuing letter of appointment as per the draft enclosed to this agreement.
6. The Franchiser shall have the right to utilise with prior written intimation of a fortnight the Conference Hall, if any, and two suites for 15 days every year for any Very Important Person (VIP) nominated by the Franchiser and such VIP will pay for Food and Boarding and other facilities as per the applicable tariff.
7. The Franchiser shall have the right to re-enter premises and terminate the franchise agreement, in case of default or any type of malpractice noticed on the part of the Franchisee.
8. In the event of the franchise being cancelled by the Pollution Control Board’s directives, the Franchiser will not be liable for refund of Franchise Fee.
9. The Franchiser will not be vicariously liable for any act of the Franchisee and the Franchisee shall alone be liable for violation of any law and the Franchisee agrees to indemnify the Franchiser from all claims.
10. All costs, charges including stamp duty and registration charges etc. shall be borne by the Franchisee.
11. The Franchisee may at any time terminate the agreement by giving three months notice and in such event shall not be entitled to any refund of franchise fee.
12. On the expiry of the franchise, the Franchisee shall hand over all articles which were entrusted as per the schedule annexed.
13. In case of any dispute, the parties will refer the dispute to an Arbitrator appointed at the discretion of the Franchiser and the parties agree to abide by the decision of the Arbitrator.

IN WITNESS WHEREOF the parties hereby have set their hands and seal this day of ...... 2000 in the presence of .............. ............... ........... ............... ............. .......................... ................ .............. ................. ............

1. First Witness
2. Second Witness FRANCHISER.

1. First Witness
2. Second Witness FRANCHISEE.

S. RAJARETHINAM,

Secretary to Government.

F O R M A T

TAMIL NADU TOURISM DEVELOPMENT CORPORATION - 2000-2001

The Tamil Nadu Tourism Development Corporation Limited has awarded to us a Franchise to run a Hotel in the premises of Tamil Nadu Hotel for a period of We are pleased to offer you temporary employment as for the period of the Franchise on the following terms and conditions.