Draft franchise agreement

505 Pages·2015·8.6 MB·English

Dated 2015
(1) The Secretary of State for Transport
(2) [FRANCHISEE]

FRANCHISE AGREEMENT – TRANSPENNINE EXPRESS

Eversheds LLP Tel [phone]
One Wood Street Fax [phone]
London Int [phone]
EC2V 7WS DX 154280 Cheapside 8
www.eversheds.com
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CONTENTS
Clause Page
1 INTERPRETATION ........................................................................... 6
2 DEFINITIONS ............................................................................... 10
3 COMMENCEMENT .......................................................................... 94
4 TERM .......................................................................................... 95
5 GENERAL OBLIGATIONS ................................................................ 95
6 COMPLIANCE WITH LAWS .............................................................. 95
7 ENTIRE AGREEMENT ..................................................................... 95
8 GOVERNING LAW ......................................................................... 96
Schedules
1 Passenger Service Obligations ........................................................ 98
SCHEDULE 1.1 ............................................................................. 99
Service Development .................................................................... 99
SCHEDULE 1.2 ........................................................................... 113
Operating Obligations .................................................................. 113
SCHEDULE 1.3 ........................................................................... 120
Not Used ................................................................................... 120
SCHEDULE 1.4 ........................................................................... 121
Passenger Facing Obligations ....................................................... 121
SCHEDULE 1.5 ........................................................................... 129
Information about Passengers ...................................................... 129
SCHEDULE 1.6 ........................................................................... 139
Franchise Services ...................................................................... 139
SCHEDULE 1.7 ........................................................................... 145
The Train Fleet ........................................................................... 145
2 Assets, Leases, Third Parties, Other Franchise Operations and
Schemes ................................................................................... 148
SCHEDULE 2.1 ........................................................................... 149
Asset Vesting and Transfer .......................................................... 149
SCHEDULE 2.2 ........................................................................... 151
Security of Access Agreements, Rolling Stock Leases, Station and Depot
Leases ....................................................................................... 151
SCHEDULE 2.3 ........................................................................... 158
Third Party Delivery of Passenger Services and Other Franchisees .... 158
SCHEDULE 2.4 ........................................................................... 160
Other Franchise Operations .......................................................... 160
SCHEDULE 2.5 ........................................................................... 162
Transport, Travel and Other Schemes ........................................... 162
APPENDIX TO SCHEDULE 2.5 ....................................................... 166
List of Transport, Travel and Other Schemes .................................. 166
3 Not Used ................................................................................... 168
4 Persons with Disabilities and Disability Discrimination ..................... 169
APPENDIX 1 TO SCHEDULE 4 ....................................................... 176
Minor Works ............................................................................... 176
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APPENDIX 2 TO SCHEDULE 4 ....................................................... 177
Alternative Transport .................................................................. 177
5 Fares ........................................................................................ 178
SCHEDULE 5.1 ........................................................................... 179
Purpose, Structure and Construction ............................................. 179
SCHEDULE 5.2 ........................................................................... 183
Franchisee's Obligation to Create Fares ......................................... 183
SCHEDULE 5.3 ........................................................................... 184
Allocation of Fares to the Protected Fares Basket ............................ 184
SCHEDULE 5.4 ........................................................................... 185
Regulation of Protected Fares Basket Values .................................. 185
SCHEDULE 5.5 ........................................................................... 188
Regulation of Individual Fares ...................................................... 188
SCHEDULE 5.6 ........................................................................... 190
Exceeding the Regulated Value, Regulated Price or Regulated Child
Price ......................................................................................... 190
SCHEDULE 5.7 ........................................................................... 192
Changes to Fares and Fares Regulation ......................................... 192
SCHEDULE 5.8 ........................................................................... 196
Fares Regulation Information and Monitoring ................................. 196
SCHEDULE 5.9 ........................................................................... 197
Smart Ticketing .......................................................................... 197
6 Committed Obligations and Franchise Specific Obligations ............... 199
PART 1 TO SCHEDULE 6.1............................................................ 200
List of Committed Obligations ....................................................... 200
PART 2 TO SCHEDULE 6.1............................................................ 204
Miscellaneous Provisions .............................................................. 204
SCHEDULE 6.2 ........................................................................... 209
TransPennine Express Franchise Specific Provisions ........................ 209
7 Performance Benchmarks ............................................................ 231
SCHEDULE 7.1 ........................................................................... 232
Performance Benchmarks ............................................................ 232
APPENDIX 1 TO SCHEDULE 7.1 .................................................... 260
Cancellations Benchmarks and Annual Cancellations Benchmarks ..... 260
Part 1 – Cancellations Benchmark Table ........................................ 260
Part 2 – Annual Cancellations Benchmark Table .............................. 263
Part 3 – Annual Cancellations Payment Table ................................. 264
APPENDIX 2 TO SCHEDULE 7.1 .................................................... 265
TOC Minute Delay Benchmarks and Annual TOC Minute Delay Benchmarks
................................................................................................ 265
Part 1 – TOC Minute Delay Benchmark Table .................................. 265
Part 2 – Annual TOC Minute Delay Benchmark Table ....................... 268
Part 3 – Annual TOC Minute Delay Payment Table ........................... 269
APPENDIX 3 TO SCHEDULE 7.1 .................................................... 270
Short Formation Benchmark and Annual Short Formation Benchmark
Table ........................................................................................ 270
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Part 1 – Short Formation Benchmark Table .................................... 270
Part 2 – Annual Short Formation Benchmark Table ......................... 273
Part 3 – Annual Short Formation Payment Table ............................. 274
SCHEDULE 7.2 ........................................................................... 275
National Rail Passenger Surveys and Customer and Communities
Improvement Fund ..................................................................... 275
APPENDIX 1 TO SCHEDULE 7.2 .................................................... 283
NRPS Benchmark Table ............................................................... 283
8 Payments .................................................................................. 284
SCHEDULE 8.1 ........................................................................... 285
Franchise Payments .................................................................... 285
APPENDIX 1 TO SCHEDULE 8.1 .................................................... 294
Profit Share Thresholds ............................................................... 294
APPENDIX 2 TO SCHEDULE 8.1 .................................................... 296
Components of AFA and DFR ........................................................ 296
SCHEDULE 8.2 ........................................................................... 298
Annual Franchise Payments ......................................................... 298
APPENDIX TO SCHEDULE 8.2 ....................................................... 299
Figures for Calculation of Annual Franchise Payments ...................... 299
SCHEDULE 8.3 ........................................................................... 300
Miscellaneous Payment Provisions ................................................. 300
SCHEDULE 8.4 ........................................................................... 301
Track Access Adjustments and Station Charge Adjustments ............. 301
9 Changes .................................................................................... 304
SCHEDULE 9.1 ........................................................................... 305
Financial and Other Consequences of Change ................................. 305
APPENDIX 1 TO SCHEDULE 9.1 .................................................... 315
Summary Flow Chart................................................................... 315
APPENDIX 2 TO SCHEDULE 9.1 .................................................... 317
Agreement or Determination of Revised Inputs ............................... 317
SCHEDULE 9.2 ........................................................................... 323
Identity of the Financial Model etc. ............................................... 323
SCHEDULE 9.3 ........................................................................... 326
Secretary of State Risk Assumptions ............................................. 326
SCHEDULE 9.4 ........................................................................... 329
Specified Infrastructure Related Change ........................................ 329
SCHEDULE 9.5 ........................................................................... 337
Variations to the Franchise Agreement and Incentivising Beneficial
Changes .................................................................................... 337
10 Remedies, Termination and Expiry ................................................ 341
SCHEDULE 10.1 .......................................................................... 342
Remedial Plans and Remedial Agreements ..................................... 342
SCHEDULE 10.2 .......................................................................... 344
Termination and Expiry ............................................................... 344
SCHEDULE 10.3 .......................................................................... 345
Events of Default and Termination Events ...................................... 345
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SCHEDULE 10.4 .......................................................................... 352
Force Majeure ............................................................................ 352
SCHEDULE 10.5 .......................................................................... 357
Liability ..................................................................................... 357
11 Agreement Management Provisions ............................................... 359
12 Financial Obligations and Covenants ............................................. 362
APPENDIX 1 TO SCHEDULE 12 ..................................................... 373
Form of Performance Bond ........................................................... 373
APPENDIX 2 TO SCHEDULE 12 ..................................................... 379
Form of Season Ticket Bond ......................................................... 379
13 Information and Industry Initiatives .............................................. 385
APPENDIX 1 TO SCHEDULE 13 ..................................................... 412
Environmental Impact Monitoring Dataset...................................... 412
APPENDIX 2 TO SCHEDULE 13 ..................................................... 413
Key Assets ................................................................................. 413
APPENDIX 3 TO SCHEDULE 13 ..................................................... 414
Operational Information .............................................................. 414
APPENDIX 4 TO SCHEDULE 13 ..................................................... 418
Estimated Turnover..................................................................... 418
14 Preservation of Assets ................................................................. 419
SCHEDULE 14.1 .......................................................................... 420
Maintenance of Franchise............................................................. 420
SCHEDULE 14.2 .......................................................................... 422
Maintenance of Operating Assets .................................................. 422
SCHEDULE 14.3 .......................................................................... 425
Key Contracts ............................................................................ 425
APPENDIX TO SCHEDULE 14.3 ..................................................... 428
List of Key Contracts ................................................................... 428
SCHEDULE 14.4 .......................................................................... 430
Designation of Franchise Assets .................................................... 430
APPENDIX TO SCHEDULE 14.4 ..................................................... 440
Part 1 ........................................................................................ 440
List of Primary Franchise Assets ................................................... 440
Part 2 ........................................................................................ 441
List of the RV Assets ................................................................... 441
SCHEDULE 14.5 .......................................................................... 442
Dealing with Franchise Assets ...................................................... 442
15 Obligations Associated with Termination ........................................ 444
SCHEDULE 15.1 .......................................................................... 445
Reletting Provisions..................................................................... 445
SCHEDULE 15.2 .......................................................................... 451
Last 12 or 13 Months of Franchise Period and other conduct of business
provisions .................................................................................. 451
SCHEDULE 15.3 .......................................................................... 457
Handover Package ...................................................................... 457
APPENDIX TO SCHEDULE 15.3 ..................................................... 458
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Form of Handover Package .......................................................... 458
SCHEDULE 15.4 .......................................................................... 459
Provisions Applying on and after Termination ................................. 459
APPENDIX 1 TO SCHEDULE 15.4 ................................................... 467
Form of Transfer Scheme............................................................. 467
APPENDIX 2 TO SCHEDULE 15.4 ................................................... 471
Form of Supplemental Agreement ................................................. 471
16 Pensions .................................................................................... 487
17 Confidentiality and Freedom of Information .................................... 491
18 Additional Reporting Periods ........................................................ 498
19 Other Provisions ......................................................................... 499
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THIS AGREEMENT is dated 2015
BETWEEN
(1) THE SECRETARY OF STATE FOR TRANSPORT, whose principal address is at 33
Horseferry Road, London SW1P 4DR (the “Secretary of State”); and

(2) [FRANCHISEE] (Company Number [●]), whose registered office is at [registered
address] (the “Franchisee”).

WHEREAS

(A) The Secretary of State wishes to appoint a franchisee to provide railway passenger
services within the Franchise and expects his franchisee, on the terms of the
Franchise Agreement, actively to seek, in all reasonable business ways, greatly
improved performance over the Franchise Term from its employees, its Train Fleet
and other assets, and from Network Rail and its other suppliers, so as to deliver
to the passenger the best railway passenger service that can be obtained from the
resources that are available to it.

(B) The Franchisee wishes to be appointed as the Secretary of State’s franchisee for
the Franchise and intends, on the terms of this Agreement, actively to seek, in all
reasonable business ways, greatly improved performance over the Franchise Term
from its employees, its Train Fleet and other assets, and from Network Rail and
its other suppliers, so as to deliver to the passenger the best railway passenger
service that can be obtained from the resources that are available to it.

(C) The following provisions of this Agreement are intended to reflect and give effect
to the matters referred to in Recitals (A) and (B) inclusive.

1. INTERPRETATION
1.1 In the Franchise Agreement, except to the extent the context otherwise requires:
(a) words and expressions defined in Part I of the Act have the same
meanings when used therein provided that, except to the extent
expressly stated, "railway" shall not have the wider meaning attributed
to it by Section 81(2) of the Act;
(b) words and expressions defined in the Interpretation Act 1978 have the
same meanings when used in the Franchise Agreement;
(c) the words "include", "including" and "in particular" are to be construed
without limitation;
(d) references to any person include its successors, transferees or
assignees;
(e) the words "subsidiary", "subsidiary undertaking" and "parent
undertaking" each have the same meaning in the Franchise Agreement
as in Section 1162 of the Companies Act 2006;
(f) references to documents "in the agreed terms" are references to
documents initialled by or on behalf of the Secretary of State and the
Franchisee. As at the date of this Agreement the documents “in the
agreed terms” are as follows:
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1ABD Actual Benchmark Data;
2CSES Customer & Stakeholder Engagement
Strategy;
3DL Depot Lease;
4ERTMS Proposed ERTMS Implementation Plan;
P
5FF Financial Formats;
6FM Financial Model;
7IAC Innovation Account Charge;
8IAD Infrastructure Assumptions Document
9ISDP Initial Sustainable Development Plan;
10IS Innovation Strategy;
11OM Operational Model;
12PC Passenger’s Charter;
13PSM Passenger Survey Methodology;
14PFD Protected Fares Document;
15POA Power of Attorney;
16ROA Record of Assumptions;

1 To be supplied by the DfT.
2 To be supplied by Bidders as part of Delivery Plan 4.1.
3 To be supplied by the DfT.
4 To be supplied by the DfT.
5 To be provided by the DfT only to the winning bidder.
6 To be supplied by Bidders as required by Section 6 of the ITT.
7 To be supplied by the DfT.
8 To be supplied by the DfT.
9 To be supplied by Bidders as part of Delivery Plan 1.4.
10 To be supplied by Bidders as part of Delivery Plan 1.5.
11 To be supplied by Bidders as required by Section 6 of the ITT
12 To be supplied by Bidders as part of Delivery Plan 4.1.
13 To be supplied by the DfT.
14 To be supplied by the DfT.
15 To be supplied by the DfT.
16 To be supplied by Bidders as required by Section 6 of the ITT.
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17SCDP Social and Commercial Development
Plan;
18SDS Sustainable Development Strategy;
19SL Station Lease;
20TCTSA Train Crew Trading Services
Agreement; and
21TSR1, Train Service Requirements.
TSR2
and
TSR3
(g) references in any of the agreements comprising the Franchise
Agreement to Recitals, clauses, Schedules, Parts, paragraphs and
Appendices are to Recitals, clauses, Schedules, Parts of Schedules,
paragraphs of Schedules and Appendices of Schedules of that
agreement, unless expressly specified to the contrary, and the
Schedules and Appendices form part of the agreement in which they
appear;
(h) references in any Schedule in any of the agreements comprising the
Franchise Agreement to a Part, paragraph or Appendix are references to
a Part, paragraph or Appendix of that Schedule (or the relevant Part of
a Schedule), unless expressly specified to the contrary;
(i) headings and references to headings shall be disregarded in construing
the Franchise Agreement;
(j) references to any enactment include any subordinate legislation made
from time to time under such enactment and are to be construed as
references to that enactment as for the time being amended or modified
or to any enactment for the time being replacing or amending it and
references to any subordinate legislation are to be construed as
references to that legislation as for the time being amended or modified
or to any legislation for the time being replacing or amending it;
(k) references to an agreement or any other document shall be construed
as referring to that agreement or document as from time to time
supplemented, varied, replaced, amended, assigned or novated;
(l) references to any particular provisions of any agreement or any other
document shall be construed to include any other provisions of, or
incorporated in, that agreement or other document which the Secretary
of State reasonably considers have an equivalent effect or are intended
to fulfil the same function;

17 To be supplied by Bidders as part of Delivery Plan 4.2.
18 To be supplied by Bidders as part of Delivery Plan 1.4
19 To be supplied by the DfT.
20 To be supplied by the DfT.
21 To be supplied by the DfT.
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(m) words importing the masculine gender include the feminine and vice-
versa, and words in the singular include the plural and vice-versa;
(n) wherever provision is made for the giving or issuing of any notice,
endorsement, consent, approval, waiver, certificate or determination by
any person, unless otherwise specified, such notice, endorsement,
consent, approval, waiver, certificate or determination shall be in writing
and the words "notify", "endorse", "consent", "approve", "waive",
"certify" or "determine" and other cognate expressions shall be
construed accordingly;
(o) references to materials, information, data and other records shall be to
materials, information, data and other records whether stored in
electronic, written or other form;
(p) references to the Franchisee bidding for Train Slots or a Timetable shall
mean the final action incumbent on the Franchisee under the Network
Code to confirm to Network Rail its interests in the Train Slots to which
that confirmation relates, and "bid" shall be construed accordingly;
(q) references to the period of validity of any Fare are references to its
period of validity excluding any rights of any purchaser thereof to extend
such period under the Passenger's Charter, any equivalent document, or
the terms and conditions attaching to such Fare (including any applicable
conditions of carriage) in the event of the cancellation or delay of any of
the railway passenger services for which such Fare is valid;
(r) references to stations at which any train calls include stations at which
such train commences or terminates its journey;
(s) references to "railway passenger services" are to be construed subject
to Section 40 of the Railways Act 2005;
(t) references to the provision of railway passenger services include the
organisation of the relevant train movements and making the necessary
arrangements with Network Rail or any other relevant Facility Owner;
(u) references in lower case letters to terms defined in clause 2 shall be
construed, where relevant, as being references to the terms defined as
such in the franchise agreement or relevant agreement made under
Section 30 of the Act or Section 6 of the Railways Act 2005 with any
other Train Operator;
(v) amendments to or variations of contracts or arrangements include
assignments, novations or other transfers of rights and/or obligations
(in whole or in part) under such contracts or arrangements;
(w) references to sums of money being expended by the Franchisee shall be
to such sums exclusive of Value Added Tax;
(x) the words "shall not be liable" are to be construed as meaning that no
contravention of the Franchise Agreement and no Event of Default shall
arise as a result of the occurrence of the matter to which such words
relate;
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