Franchise Matters. (a) Except as set forth in Schedule 4.21(a) of the Company Disclosure Letter, no Group Company has received any written notice, nor, to the Knowledge of the Company, has any reason to believe, based upon oral or written communications from its current Franchisees, that any Franchisee intends to terminate, its Franchise Agreement or to otherwise terminate or materially reduce its relationship with the Group Companies other than, in each case, with respect to any scheduled expiration or termination date expressly set forth in such Franchise Agreement. (b) The Franchise System is the only franchise system that the Group Companies have operated. No Group Company has offered or sold or otherwise granted rights to any Person conferring upon that Person area development, multi-unit development, area representative, master franchise, sub-franchise or other multi-unit or multilevel rights with respect to the “F45 Training” brand. The Franchise System has been operated by the Group Companies at all times since inception. (c) Each Franchise Agreement is similar in all material respects to the form of Franchise Agreement contained in the Franchise Disclosure Document (if applicable) for that particular jurisdiction that was issued to the applicable Franchisee, except for any negotiated changes that the parties to such agreements may have agreed to. There are no oral modifications of any Franchise Agreement or oral agreements between any Franchisee and any Group Company relating to matters pertaining to material obligations of such Franchisee thereunder. (d) Except as set forth in Schedule 4.21(d) of the Company Disclosure Letter, none of the Franchise Agreements contains any grant of exclusive rights to a territory designated therein, or other exclusive right, which in either case conflicts with any grant of exclusive rights to a territory or other exclusive right granted under any other Franchise Agreement. (e) Since January 1, 2017, each Group Company has been at all times in compliance in all material respects with all applicable Franchise Laws in connection with the solicitation, offer, grant or sale of Franchises, relationships with Franchisees, the operation of the Franchise System and the termination, non-renewal and transfer of Franchises and, to the Knowledge of the Company, no current or former Franchisee or any Governmental Entity has alleged that any Group Company has failed to comply in all material respects with any applicable Franchise Laws during its operation of the Franchise System. (f) All Franchise Disclosure Documents that any Group Company has used to offer or sell Franchises at any time since January 1, 2017 or that are currently in effect were prepared and delivered to prospective Franchisees in compliance in all material respects with Franchise Laws at the time they were furnished to prospective Franchisees and throughout the period preceding the execution and delivery of a Franchise Agreement. The information in the Franchise Disclosure Documents at the time they were used by a Group Company in connection with the solicitation, offer, grant or sale of Franchises was true and complete in all material respects and did not contain any untrue or misleading statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and included all information required by all applicable Franchise Laws. The Franchise Disclosure Documents have been amended or supplemented from time to time as required by applicable Franchise Law and such amendments and supplements were timely and properly furnished to each applicable Governmental Entity and Franchisees or prospective Franchisees as required by applicable Franchise Law. (g) A true and correct copy of all Franchise Disclosure Documents used by any Group Company since January 1, 2017 has been delivered to Parent. Since the date of the most recent Franchise Disclosure Documents used by any Group Company, other than the transactions contemplated by this Agreement, there has been no material change in the business, financial condition, or affairs of the Group Companies, the Franchise System, or, to the Knowledge of the Company, the Franchisees that would, taken as a whole, require an amendment or supplement to such Franchise Disclosure Documents prior to the date hereof. (h) Each Franchisee who left the Franchise System since January 1, 2017 has executed agreements with a Group Company which released the Company and its Subsidiaries and Affiliates from any and all liabilities (whether direct or indirect, absolute, accrued, contingent or otherwise) and claims that such Franchisee had, has or may have against the Company and its Affiliates which relate in any way to the Franchisee’s Franchise Agreement. (i) Since January 1, 2017, all rebates, allowances, discounts or other payments or remunerations received by any Group Company from vendors, suppliers or other third parties, on account of any Franchisee’s direct or indirect purchases from those vendors, suppliers or third parties, have been received, administered, disclosed and spent in accordance with the operation manuals utilized by the Franchise System, all Franchise Laws, the Franchise Disclosure Documents delivered to such Franchisees, the applicable Franchise Agreement, and other applicable Contracts associated with the Franchise System, in each case, in all material respects. Except as set forth in the Franchise Agreements, there are no material restrictions on any Group Company’s use of any such rebates, allowances, discounts or other payments or remuneration for any purpose. (j) Prior to the Closing Date, the Group Companies have at all times collected, maintained, administered, managed, directed, spent and utilized all advertising and marketing funds (including any advertising cooperative funds) contributed by or received from Franchisees in compliance with the Franchise Agreements and applicable Franchise Law. No Franchisee has delivered to the Company a written claim of any Group Company’s breach of any Franchise Agreements with respect to such advertising or marketing funds and, to the Knowledge of the Company, no facts exist that would reasonably be expected to form the basis for any such a claim of breach of any Franchise Agreement. (k) No Group Company is (i) a guarantor or party to an agreement pursuant to which any Group Company is directly or contingently liable (as a co-▇▇▇▇▇▇ or otherwise) for any obligation of any Franchisee, (ii) a lessor or sublessor of any real or personal property to any Franchisee, or (iii) a party to any financing arrangement with any Franchisee. (l) No Group Company has engaged or hired an agent, broker, third party, Franchisee or licensee to provide material services, assistance or support to any Franchisee or to identify, offer or sell to potential Franchisees other than in connection with negotiations with vendors on behalf of the Company or its Subsidiaries. (m) To the Knowledge of the Company, no franchise association or other organization is acting as a representative of any group of two or more Franchisees. Any franchise council or advisory group presently in place (whether independently formed or sponsored by the Company or its Subsidiaries) is purely advisory in nature. No Group Company has granted any enforceable right of first refusal, option or other right or arrangement to sign any Franchise Agreement or acquire any Franchise Agreement.
Appears in 1 contract
Franchise Matters. (a) Except as set forth in on Schedule 4.21(a) of 4.23(a), Seller does not have, and has not had, any Subsidiary or Affiliate offering or selling Franchises domestically or internationally. Seller and international master Franchisees duly appointed under Franchise Agreements are the Company Disclosure Letter, no Group Company only Persons that Seller has received any written notice, nor, authorized to offer or sell Franchises for the Knowledge of the Company, has any reason to believe, based upon oral or written communications from its current Franchisees, that any Franchisee intends to terminate, its Franchise Agreement or to otherwise terminate or materially reduce its relationship with the Group Companies other than, in each case, with respect to any scheduled expiration or termination date expressly set forth in such Franchise AgreementM▇▇▇.
(b) The Franchise System is Schedule 4.23(b) sets forth a listing of, and Seller has provided Buyer with a true and complete copy of, Seller's currently effective Seller UFOCs, together with true and complete copies of all Seller UFOCs used by Seller since April 1, 2002 in connection with the only franchise system that the Group Companies have operated. No Group Company has offered or sold or otherwise granted rights to any Person conferring upon that Person area development, multi-unit development, area representative, master franchise, sub-franchise or other multi-unit or multilevel rights with respect to the “F45 Training” brand. The Franchise System has been operated by the Group Companies at all times since inceptionoffer and sale of Franchises.
(c) Each Schedule 4.16 contains a true and complete list of all Franchise Agreements to which Seller is a party, and there are no other currently effective Franchise Agreements relating to the M▇▇▇. Except as noted as Schedule 4.16 and except for negotiated Franchise Agreements for international Franchises, each Franchise Agreement entered is substantially similar in all material respects to the form of Franchise Agreement contained in attached as an exhibit to the Franchise Disclosure Document (if applicable) for that particular jurisdiction Seller UFOC that was issued to the applicable Franchisee, except for any negotiated changes that Franchisee contemporaneously with the parties to such agreements may have agreed to. There are no oral modifications of any Franchise Agreement or oral agreements between any Franchisee and any Group Company relating to matters pertaining to material obligations sale of such Franchisee thereunderFranchise by Seller. Seller has made available to Buyer true, complete and correct copies of all Franchise Agreements listed or required to be listed on Schedule 4.16, including all amendments and addenda thereto.
(d) Except as set forth in Schedule 4.21(d) Seller has, at all relevant times, the corporate power and authority and legal right to enter into and carry out the terms of the Company Disclosure Letter, none each Franchise Agreement. All of the Franchise Agreements contains are valid, binding and enforceable in all material respects against the Franchisee thereunder in accordance with their terms, subject to any grant such Franchisee's bankruptcy, insolvency, receivership or similar proceeding under state or federal law and subject to any equitable doctrines and Legal Requirements which may affect the enforceability of exclusive rights to a territory designated therein, or other exclusive right, which in either case conflicts with any grant of exclusive rights to a territory or other exclusive right granted under any other the Franchise AgreementAgreements against Franchisees.
(e) Since January 1, 2017, Schedule 4.23(e) identifies each Group Company has been at all times in compliance in all material respects with all applicable Franchise Laws in connection with the solicitation, offer, grant or sale of Franchises, relationships with Franchisees, the operation of the Franchise System and the termination, non-renewal and transfer of Franchises andexisting Franchisee that (i) is, to Seller's Knowledge, currently in material default under any Franchise Agreement, whether or not Seller has notified the Knowledge Franchisee about the default; (ii) has received within the twelve (12) month period prior to the date of this Agreement notice from Seller that such Franchisee has incurred a default under such Franchise Agreement; or (iii) has on three or more occasions within the Companytwelve (12) month period prior to the date of this Agreement received written notices of events of default under a Franchise Agreement. Except as described in Schedule 4.23(e), no current or former notices of default issued by Seller with respect to any Franchise Agreement remain outstanding because the defaults identified in such notices have not been cured, and Seller has not waived any default by a Franchisee or which could be adverse in any Governmental Entity has alleged that any Group Company has failed material respect to comply in all material respects with any applicable Franchise Laws during its operation of the Franchise SystemSeller.
(f) All Except as set forth on Schedule 4.23(f), or except as set forth in Seller’s standard forms of domestic and international Franchise Disclosure Documents that Agreement as in use from time to time, or except as may be granted by operation of law, Seller has not granted any Group Company Franchisee any Territorial Rights pursuant to which (i) Seller is restricted in any way in its right to own or operate, or license others to own or operate, any business or line of business; or (ii) the Franchisee is granted rights for the acquisition of additional franchises or expansion of the Franchisee's territory. Except as described in Schedule 4.23(f), no Franchisee's Territorial Rights conflict with the Territorial Rights of any other Franchisee. Except as set forth on Schedule 4.23(f), to the extent Seller granted any such Territorial Rights (whether or not disclosed or required to be disclosed herein), Seller has used to offer complied with such Territorial Rights and in the course of offering or sell Franchises at selling franchises, Seller has not violated the Territorial Rights of any time since January Franchisee.
(g) Since April 1, 2017 or that are currently in effect were 2002, and except as set forth on Schedule 4.23(g), Seller has: (i) prepared and delivered to prospective Franchisees in compliance maintained in all material respects each of the Seller UFOCs in accordance with Franchise Laws at all Legal Requirements; (ii) filed and obtained registration of the time they were furnished offer and sale of the Franchises in all jurisdictions requiring such registration prior to any offers or sales of Franchises in such states and has filed all material changes, amendments, renewals thereto on a timely basis as required by Legal Requirements in such jurisdictions; (iii) filed all notice filings (including the filing of the Seller UFOC, as applicable) in all jurisdictions in which a notice filing is required to be filed prior to the offer and sale of franchises in such jurisdictions; (iv) filed all notices of exemption in all jurisdictions in which a notice filing is required in order to obtain an exemption from regulation as a "business opportunity" or to otherwise be subject to regulation under Legal Requirements in such jurisdictions absent such notice filing; and (v) sold no franchises during periods after the need for amendment arose (based on advice of Seller’s legal counsel) and before the prospective Franchisees and throughout Franchisee had been in receipt of an amended Seller UFOC for the required period preceding for redisclosure in the execution and delivery of a Franchise Agreementjurisdiction. The information in the Franchise Disclosure Documents at the time they Seller UFOCs were used by a Group Company in connection with the solicitation, offer, grant or sale of Franchises was true and complete prepared in all material respects in compliance with the UFOC Guidelines and/or other Legal Requirements and did not contain any untrue there were no material misrepresentations or misleading statement misstatements of a material fact or omit omissions to state a material fact required to be stated therein or information in any Seller UFOC necessary to make the statements therein, in light of made therein not misleading under the circumstances under which they were made, not misleading and included all information required by all applicable Franchise Laws. The Franchise Disclosure Documents have been amended or supplemented from time to time as required by applicable Franchise Law and such amendments and supplements were timely and properly furnished to each applicable Governmental Entity and Franchisees or prospective Franchisees as required by applicable Franchise Law.
(g) A true and correct copy of all Franchise Disclosure Documents used by any Group Company since January 1, 2017 has been delivered to Parent. Since at the date of the most recent Franchise Disclosure Documents used by any Group Company, other than the transactions contemplated by this Agreement, there has been no material change in the business, financial condition, or affairs of the Group Companies, the Franchise System, or, to the Knowledge of the Company, the Franchisees that would, taken as a whole, require an amendment or supplement to such Franchise Disclosure Documents prior to the date hereof.
(h) Each Franchisee who left the Franchise System since January 1, 2017 has executed agreements with a Group Company which released the Company and its Subsidiaries and Affiliates from any and all liabilities (whether direct or indirect, absolute, accrued, contingent or otherwise) and claims that such Franchisee had, has or may have against the Company and its Affiliates which relate in any way to the Franchisee’s Franchise Agreement.
(i) Since January 1, 2017, all rebates, allowances, discounts or other payments or remunerations received by any Group Company from vendors, suppliers or other third parties, on account of any Franchisee’s direct or indirect purchases from those vendors, suppliers or third parties, have been received, administered, disclosed and spent in accordance with the operation manuals utilized by the Franchise System, all Franchise Laws, the Franchise Disclosure Documents delivered to such Franchisees, the applicable Franchise Agreement, and other applicable Contracts associated with the Franchise System, in each case, in all material respects. Except as set forth in the Franchise Agreements, there are no material restrictions on any Group Company’s use of any such rebates, allowances, discounts or other payments or remuneration for any purpose.
(j) Prior to the Closing Date, the Group Companies have at all times collected, maintained, administered, managed, directed, spent and utilized all advertising and marketing funds (including any advertising cooperative funds) contributed by or received from Franchisees in compliance with the Franchise Agreements and applicable Franchise Law. No Franchisee has delivered to the Company a written claim of any Group Company’s breach of any Franchise Agreements with respect to such advertising or marketing funds and, to the Knowledge of the Company, no facts exist that would reasonably be expected to form the basis for any such a claim of breach of any Franchise Agreement.
(k) No Group Company is (i) a guarantor or party to an agreement pursuant to which any Group Company is directly or contingently liable (as a co-t▇▇▇ ▇▇▇▇▇▇ was using such Seller UFOC. Except as set forth on Schedule 4.23(g), Seller has never withdrawn its application or otherwiseregistration to offer and sell franchises from any jurisdiction.
(h) Except as disclosed in Schedule 4.23(h), the offer, sale, and administration of each Franchise Agreement complied in all material respects at the time such offer and sale was made and at all times since such Franchise Agreement became effective with all Legal Requirements.
(i) Except as listed or described in Schedule 4.23(i), Seller’s rights to receive payments from the Franchisee under each Franchise Agreement to which Seller is a party have not been subordinated by Seller and no provision regarding the calculation and payment of royalty fees in any Franchise Agreement has been waived, altered or modified in any material respect adverse to Seller.
(j) No Franchisee Organization exists among the Franchisees of Seller, except for the five-member Franchise Advisory Council that Seller appoints to advise Seller with respect to advertising matters.
(k) Except as set forth on Schedule 4.23(k), Seller has not offered or sold Franchises in any obligation jurisdiction where the sale of any Franchiseesuch Franchise violated any Legal Requirements of such jurisdiction. To Seller’s Knowledge, (ii) no Franchisee paid any consideration or signed any Franchise Agreement before the expiration of all applicable waiting periods. Except as set forth on Schedule 4.23(k), Seller has not offered rescission as would be required under any Legal Requirements arising from a lessor or sublessor possible violation of any real Legal Requirements, and no Franchisee has asserted or personal property exercised any statutory right of rescission arising from a violation of the Legal Requirements. Except as set forth on Schedule 4.23(k) and with the exception of routine comment letters from regulators, Seller has never received a stop order, revocation or withdrawal of approval or a license or exemption to offer and sell Franchises in any Franchiseejurisdiction. Seller has never received an official notice, complaint, subpoena, request for information, or (iii) a party to any financing arrangement with form of formal or informal inquiry from any FranchiseeGovernmental Authority regarding the offer or sale of Franchises. Seller has not participated in any remedial program directed towards its franchise selling practices administered by the National Franchise Council, the International Franchise Association, the Federal Trade Commission, any state or provincial authority, or any other public or private organization.
(l) No Group Company Seller's Books and Records include all written communications and written memorialization of all material oral communications with franchise regulatory authorities regarding the Franchises that Seller has engaged received or hired an agentsubmitted since January 1, broker2002, third partyincluding without limitation all applications for initial registration, Franchisee or licensee to provide material servicesrenewal applications, assistance or support to any Franchisee or to identifyamendments, offer or sell to potential Franchisees other than comment letters, approvals, licenses, consents, exemption filings, withdrawals, and undertakings regarding future changes in connection with negotiations with vendors on behalf of the Company or its SubsidiariesSeller's offering materials.
(m) Seller has delivered or made available to Buyer correct and complete copies of (i) all registrations, material advertising or promotional materials used by Seller subsequent to April 1, 2002, and (ii) the Seller UFOCs or agreements used by Seller or filed with any foreign or domestic administrative or regulatory agency or otherwise used by Seller in connection with the offer, sale and operation of Franchises in any jurisdiction (domestic or international) since April 1, 2002. To the Knowledge Seller’s Knowledge, Seller has not published any franchise recruitment advertising in violation of the Company, no franchise association or other organization is acting as a representative Legal Requirements of any group jurisdiction. Seller has effected timely filing of two franchise recruitment advertising with the applicable governmental authority before publication and obtained any approvals or more Franchisees. Any franchise council clearances, or advisory group presently received no comments requiring changes to the advertising materials that were not incorporated in place (whether independently formed or sponsored by the Company or its Subsidiaries) is purely advisory in nature. No Group Company has granted any enforceable right of first refusal, option or other right or arrangement to sign any Franchise Agreement or acquire any Franchise Agreementfinal copy.
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Franchise Matters. (a) SCHEDULE 4.13(a) accurately identifies all franchise agreements, licenses and area development agreements to which any Acquired Entity is a party (collectively, "FRANCHISE AGREEMENTS") which are currently valid and enforceable, by name of franchisee, licensee or area developer ("FRANCHISEE"), date of agreement, expiration date, location of restaurant(s), and exclusive territory or development area, and no other Contracts exist between any Acquired Entity and any third party granting the right, or any option or right of first refusal, to conduct business under the name "Baja Fresh" or any other Marks owned or used by any Acquired Entity. The consummation of the Merger and the Transactions will not require the Consent of any Franchisee. Except as set forth in SCHEDULE 4.13(a), to the Company's Knowledge, the restaurants which are the subject of Franchise Agreements with Franchisees are presently open to the public and operating. The Company has made available to Parent a correct and complete copy of each Franchise Agreement (as amended to date) listed on SCHEDULE 4.13(a). With respect to each such Franchise Agreement:
(i) the Franchise Agreement is Enforceable in all material respects, except as Enforceability may be subject to the effects of Franchise Laws (and judicial decisions interpreting such Franchise Laws) and Laws (and judicial decisions interpreting such Laws) of general applicability relating to covenants not to compete and public policy considerations of Governmental Bodies;
(ii) the Franchise Agreement will continue to be Enforceable in all material respects following the consummation of the Transactions, except as Enforceability may be subject to the effects of Franchise Laws (and judicial decisions interpreting such Franchise Laws), Laws (and judicial decisions interpreting such Laws) of general applicability relating to covenants not to compete, and public policy considerations of Governmental Bodies;
(iii) Except as set forth on SCHEDULE 4.13(a)(iii), no Acquired Entity (and to the Company's Knowledge, no counter-party) is in Breach of such Franchise Agreement, and to the Company's Knowledge no event has occurred that with notice or lapse of time would constitute a Breach under the Franchise Agreement; and
(iv) Except as set forth on SCHEDULE 4.13(a)(iv), no party to a Franchise Agreement has delivered a written demand for early termination thereof.
(b) Except as set forth in Schedule 4.21(aSCHEDULE 4.13(b), each Franchisee is current (consistent with ordinary course of business practices for such Franchisee) of the Company Disclosure Letterin its financial obligations to each Acquired Entity, no Group Company has received any written noticeincluding without limitation, nor, to the Knowledge of the Company, has any reason to believe, based upon oral or written communications from its current Franchisees, that any Franchisee intends to terminate, its Franchise Agreement or to otherwise terminate or materially reduce its relationship with the Group Companies other than, in each case, with respect to any scheduled expiration or termination date expressly set forth in such Franchise Agreement.
(b) The Franchise System is the only franchise system that the Group Companies have operated. No Group Company has offered or sold or otherwise granted rights to any Person conferring upon that Person area development, multi-unit development, area representative, master payments due for franchise, sub-franchise development or other multi-unit or multilevel rights with respect to the “F45 Training” brand. The Franchise System has been operated by the Group Companies at all times since inceptionlicense fees, royalties, advertising contributions and product purchases.
(c) Each Franchise Agreement is similar in all material respects to the form of Franchise Agreement contained in the Franchise Disclosure Document (if applicable) for that particular jurisdiction that was issued to the applicable Franchisee, except for any negotiated changes that the parties to such agreements may have agreed to. There are no oral modifications of any Franchise Agreement or oral agreements between any Franchisee and any Group Company relating to matters pertaining to material obligations of such Franchisee thereunder.
(d) Except as set forth in Schedule 4.21(d) SCHEDULE 4.13(c), there are no unresolved written or, to the Company's Knowledge, verbal assertions or claims by any Franchisee of the Company Disclosure Letter, none any material Breach of any of the Franchise Agreements contains by any grant Acquired Entity which remain uncured. Except as set forth in SCHEDULE 4.13(c), there has been no written demand or, to the Company's Knowledge, verbal demand by any Franchisee for rescission of exclusive rights any Franchise Agreement, and, other than in accordance with the terms of the Franchise Agreements, no Franchisee is entitled to a territory designated thereinany credit, set off or reduction in any payment required to be made pursuant to the terms of any Franchise Agreement, or other exclusive right, which in either case conflicts with any grant of exclusive rights to a territory or other exclusive right granted under any other payment(s) owed to any Acquired Entity, and to the Company's Knowledge no event has occurred which would give any Franchisee a defense to its obligations to pay fees, or to perform its other obligations under its Franchise Agreement, and to the Company's Knowledge no Franchisee has asserted any claims or counterclaims against any Acquired Entity.
(d) There are no Contract limitations prohibiting any Acquired Entity from operating any restaurants or selling franchises to do so in any geographic area or location, except as expressly set forth in the Franchise Agreements.
(e) Since January 1Schedule 4.13(e) accurately sets forth each state or other jurisdiction in which any Acquired Entity is currently registered or with whom any Acquired Entity has filed an application for registration or an exemption from registration, 2017to sell franchises, the effective date and expiration date of each Group Company such registration and a listing of the Order(s) issued by each such state relating to the current registration or exemption period, whether relating to renewal or amendment applications.
(f) Except as set forth in SCHEDULE 4.13(f), no Acquired Entity or any Affiliate thereof has been at all times in compliance in all committed any material respects with all applicable Franchise Laws in connection with violation of any law, rule or regulation of the solicitationFederal Trade Commission or of any state or other jurisdiction relating to the relationship between franchisors and franchisees, or the offer, grant sale, assignment, renewal, termination or rights of succession, of franchises, business opportunities or seller-assisted marketing plans (collectively, "FRANCHISE LAWS"). Except as set forth in SCHEDULE 4.13(f), there currently exist no escrow or impound conditions or requirements imposed upon any Acquired Entity's sale of Franchisesfranchises in any jurisdiction. There is no pending, relationships with Franchiseesunresolved written or, to the operation Company's Knowledge, verbal claim or assertion by any Franchisee of any violation by any Acquired Entity of any of the Franchise System and the terminationLaws, non-renewal and transfer of Franchises andno Acquired Entity has received written or, to the Knowledge of the Company's Knowledge, no current or former Franchisee or verbal notice from any Governmental Body or third party alleging any such violation.
(g) SCHEDULE 4.13(g) identifies by jurisdiction and effective date all currently effective offering circulars used by any Acquired Entity has alleged that any Group Company has failed relating to the sale of franchises ("OFFERING CIRCULARS"), true, accurate and complete copies of which have been made available to Parent. All Offering Circulars comply in all material respects with any applicable the Franchise Laws during its operation of the Franchise System.
(f) All Franchise Disclosure Documents that any Group Company has jurisdiction for which they have been used to offer or sell Franchises at any time since January 1, 2017 or that are currently in effect were prepared contemplated for use and delivered to prospective Franchisees in compliance in all material respects with Franchise Laws at the time they were furnished to prospective Franchisees and throughout the period preceding the execution and delivery of a Franchise Agreement. The information in the Franchise Disclosure Documents at the time they were used by a Group Company in connection with the solicitation, offer, grant or sale of Franchises was true and complete in all material respects and did therein does not contain any untrue or misleading statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, made not misleading and included all information required by all applicable Franchise Laws. The Franchise Disclosure Documents have been amended or supplemented from time to time as required by applicable Franchise Law and such amendments and supplements were timely and properly furnished to each applicable Governmental Entity and Franchisees or prospective Franchisees as required by applicable Franchise Lawmisleading.
(g) A true and correct copy of all Franchise Disclosure Documents used by any Group Company since January 1, 2017 has been delivered to Parent. Since the date of the most recent Franchise Disclosure Documents used by any Group Company, other than the transactions contemplated by this Agreement, there has been no material change in the business, financial condition, or affairs of the Group Companies, the Franchise System, or, to the Knowledge of the Company, the Franchisees that would, taken as a whole, require an amendment or supplement to such Franchise Disclosure Documents prior to the date hereof.
(h) Each Franchisee who left the Franchise System since January 1, 2017 has executed agreements with a Group Company which released the Company and its Subsidiaries and Affiliates from any and all liabilities (whether direct or indirect, absolute, accrued, contingent or otherwise) and claims that such Franchisee had, has or may have against the Company and its Affiliates which relate in any way to the Franchisee’s Franchise Agreement.
(i) Since January 1, 2017, all rebates, allowances, discounts or other payments or remunerations received by any Group Company from vendors, suppliers or other third parties, on account of any Franchisee’s direct or indirect purchases from those vendors, suppliers or third parties, have been received, administered, disclosed and spent in accordance with the operation manuals utilized by the Franchise System, all Franchise Laws, the Franchise Disclosure Documents delivered to such Franchisees, the applicable Franchise Agreement, and other applicable Contracts associated with the Franchise System, in each case, in all material respects. Except as set forth in the Franchise Agreements, there are no material restrictions on any Group Company’s use of any such rebates, allowances, discounts or other payments or remuneration for any purpose.
(j) Prior to the Closing Date, the Group Companies have at all times collected, maintained, administered, managed, directed, spent and utilized all advertising and marketing funds (including any advertising cooperative funds) contributed by or received from Franchisees in compliance with the Franchise Agreements and applicable Franchise Law. No Franchisee has delivered to the Company a written claim of any Group Company’s breach of any Franchise Agreements with respect to such advertising or marketing funds and, to the Knowledge of the Company, no facts exist that would reasonably be expected to form the basis for any such a claim of breach of any Franchise Agreement.
(k) No Group Company is (i) a guarantor or party to an agreement pursuant to which any Group Company is directly or contingently liable (as a co-▇▇▇▇▇▇ or otherwise) for any obligation of any Franchisee, (ii) a lessor or sublessor of any real or personal property to any Franchisee, or (iii) a party to any financing arrangement with any Franchisee.
(l) No Group Company has engaged or hired an agent, broker, third party, Franchisee or licensee to provide material services, assistance or support to any Franchisee or to identify, offer or sell to potential Franchisees other than in connection with negotiations with vendors on behalf of the Company or its Subsidiaries.
(m) To the Knowledge of the Company, no franchise association or other organization is acting as a representative of any group of two or more Franchisees. Any franchise council or advisory group presently in place (whether independently formed or sponsored by the Company or its Subsidiaries) is purely advisory in nature. No Group Company has granted any enforceable right of first refusal, option or other right or arrangement to sign any Franchise Agreement or acquire any Franchise Agreement.
Appears in 1 contract
Franchise Matters. (a) Schedule 4.13(a) accurately identifies all franchise agreements and area development agreements to which any Acquired Entity is a party (collectively, “Franchise Agreements”) that are currently in effect, by name of franchisee, licensee or area developer (“Franchisee”), date of agreement, and location of restaurant(s) or development area, and no other Contracts exist between any Acquired Entity and any third party granting any such third party the right, or any option or right of first refusal, to conduct business under the name “Baja Fresh” or any other Marks owned or used by any Acquired Entity. The consummation of the Transactions will not require the consent of any Franchisee. Except as set forth on Schedule 4.13(a), to Seller’s Knowledge, the restaurants that are the subject of Franchise Agreements with Franchisees are presently open to the public and operating. Seller has made available to Buyer a correct and complete copy of each Franchise Agreement (as amended to date) listed on Schedule 4.13(a). With respect to each such Franchise Agreement:
(i) such Franchise Agreement is the legal, valid, and binding obligation of the applicable Acquired Entity, enforceable against such Person in accordance with its terms, except as such enforceability may be subject to (x) the effects of bankruptcy, insolvency, reorganization, moratorium, or other Laws relating to or affecting the rights of creditors, and general principles of equity; (y) the effects of franchise Laws (and judicial decisions interpreting such franchise Laws) and other Laws of general applicability including those relating to covenants not to compete and public policy considerations; and (z) the qualification that certain provisions of the Franchise Agreement may not be enforceable in whole or in part, but such provisions do not render such Franchise Agreement invalid as a whole and such Franchise Agreement contains adequate provisions for enforcing the performance by the Franchisee of its obligations thereunder and for the practical realization of the rights and benefits afforded each Acquired Entity thereby, except for the economic consequences resulting from, and delay imposed by, or any procedure required by, applicable federal or state laws, rules, regulations and court decisions;
(ii) except as set forth on Schedule 4.13(a)(ii), no Acquired Entity nor, to Seller’s Knowledge, any counter-party is in Breach of such Franchise Agreement, and to Seller’s Knowledge no event has occurred that with notice or lapse of time would constitute a Breach under the Franchise Agreement;
(iii) except as set forth on Schedule 4.13(a)(iii), no party to such Franchise Agreement has delivered a formal written demand for early termination pursuant to the terms thereof since June 19, 2002; and
(iv) except as set forth on Schedule 4.13(a)(iv), no Acquired Entity has granted a waiver or consent with respect to a provision of such Franchise Agreement regarding a counter-party’s obligation to make payments of royalty fees, contributions to any marketing development fund, or expenditures for advertising purposes; and
(v) the Company has in its possession an original executed copy of each Franchise Agreement. Except as set forth on Schedule 4.13(a)(v), there are no written amendments to the Franchise Agreements or other agreements between any Acquired Entity and the Franchisees reflecting the understandings between any Acquired Entity and the Franchisees under the Franchise Agreements which have not heretofore been delivered to the Buyer by the Company. Except as set forth on Schedule 4.13(a)(v), there are no oral amendments to the Franchise Agreements or other agreements between the Acquired Entities and the Franchisees which have not been memorialized in a written instrument and expressly agreed to by the Acquired Entities and the Franchisees.
(b) Except as set forth in on Schedule 4.21(a) of the Company Disclosure Letter, no Group Company has received any written notice, nor4.13(b), to the Seller’s Knowledge of the Companyeach Franchisee is current in its financial obligations to each Acquired Entity, has any reason to believeincluding without limitation, based upon oral or written communications from its current Franchiseesfor payments due for franchise, that any Franchisee intends to terminate, its Franchise Agreement or to otherwise terminate or materially reduce its relationship with the Group Companies other than, in each case, with respect to any scheduled expiration or termination date expressly set forth in such Franchise Agreement.
(b) The Franchise System is the only franchise system that the Group Companies have operated. No Group Company has offered or sold or otherwise granted rights to any Person conferring upon that Person area development, multi-unit developmentor license fees, area representativeroyalties, master franchiseadvertising contributions, sub-franchise or other multi-unit or multilevel rights with respect to the “F45 Training” brand. The Franchise System has been operated by the Group Companies at all times since inceptionand product purchases.
(c) Each Franchise Agreement Except as set forth on Schedule 4.13(c), to Seller’s Knowledge each Franchisee is similar current in all material respects its development obligations with respect to the form of Franchise Agreement contained in the Franchise Disclosure Document (if applicable) for that particular jurisdiction that was issued each restaurant to the applicable Franchisee, except for any negotiated changes that the parties to such agreements may have agreed to. There are no oral modifications of any Franchise Agreement or oral agreements between any Franchisee and any Group Company relating to matters pertaining to material obligations of be developed by such Franchisee thereunderin such Franchisee’s development area.
(d) Except as set forth on Schedule 4.13(d), to Seller’s Knowledge, since June 1, 2005, no Acquired Entity has received any formal written notice, claim or demand pursuant to the terms of a Franchise Agreement from any Franchisee of any Breach by any Acquired Entity of any material term or provision of such Franchise Agreement and, to Seller’s Knowledge, no Acquired Entity is in Schedule 4.21(d) Breach of the Company Disclosure Letter, none any material term or provision of the Franchise Agreements contains any grant as of exclusive rights to a territory designated therein, or other exclusive right, which in either case conflicts with any grant the date of exclusive rights to a territory or other exclusive right granted under any other Franchise this Agreement.
(e) Since January 1Except as set forth on Schedule 4.13(e), 2017, each Group Company has been at all times in compliance in all material respects with all applicable Franchise Laws in connection with the solicitation, offer, grant or sale to Seller’s Knowledge there are no asserted Breaches of Franchises, relationships with Franchisees, the operation any of the Franchise System and Agreements by any Acquired Entity that were the terminationsubject of a formal written notice, non-renewal and transfer of Franchises and, claim or demand from a Franchisee pursuant to the Knowledge terms of such Franchise Agreement that remain uncured and otherwise unresolved. Except as set forth on Schedule 4.13(e), since June 1, 2005 there has been no formal written demand by any Franchisee pursuant to the Company, no current or former Franchisee or any Governmental Entity has alleged that any Group Company has failed to comply in all material respects with any applicable terms of a Franchise Laws during its operation Agreement for rescission of the such Franchise SystemAgreement.
(f) All Franchise Disclosure Documents Schedule 4.13(f) sets forth each state or other jurisdiction in which any Acquired Entity is currently registered to sell its franchises or with which any Acquired Entity has filed an application for registration to sell its franchises that is currently pending as of the date of this Agreement, or has filed (where such filing is required) an application for exemption from registration, to sell franchises, and the effective date and expiration date of each such registration and exemption.
(g) Schedule 4.13(g) sets forth each state or other jurisdiction in which any Group Acquired Entity has filed, or caused to be filed, applications for registration of the sale of the Company’s franchises and/or applications or notices of exemption from such registration during the period commencing on June 19, 2002 and continuing through the date of this Agreement.
(h) To Seller’s Knowledge, other than matters for which the Acquired Entities have obtained releases, during the period commencing on June 19, 2002 and continuing through the date of this Agreement, the Company has used in all material respects made all disclosures in its Franchise Offering Circular required by all applicable federal and state laws and regulations which govern the sale of franchises, and neither an Acquired Entity nor any “Franchise Sales Person” (as defined in Section 4.13(l) herein) has offered for sale, accepted an offer, or sold a Franchise except in compliance with all applicable federal and state laws and regulations which govern the sale of franchises.
(i) Except as disclosed in any Franchise Offering Circular, during the period commencing on June 19, 2002 and continuing through the date of this Agreement, the Company has received no written notice of any violation by any Acquired Entity of any franchise law from any federal, Canadian or state regulatory agency and, to Seller’s Knowledge, no allegations of violations by any Acquired Entity of any state franchise registration, disclosure, relationship or termination law have been made by any federal, Canadian or state regulatory agency.
(j) Except as disclosed in any Franchise Offering Circular, to Seller’s Knowledge, no director, general partner, officer or other executive of an Acquired Entity that has offered or sold franchises, and who has had management responsibilities relating to the Franchisees offered by such Acquired Entity, has, since June 19, 2002:
(i) had any administrative, criminal or material civil action pending against that person alleging a violation of a franchise, antitrust or securities law, fraud, unfair or deceptive practices or comparable allegations.
(ii) been subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities and Exchange Act of 1934, 15 U.S.C.A. 78a et seq., suspending or expelling such person from membership in such association or exchange;
(iii) been convicted of a felony or pleaded nolo contendere to a felony charge; or been held liable in a civil action by final judgment or been the subject of a material action involving violation of a franchise, antitrust or securities law, fraud, unfair or deceptive practices or comparable allegations; and
(iv) been subject to a currently effective injunctive or restrictive order or decree relating to the franchise offered by the applicable Acquired Entity, or under a federal, state or Canadian franchise, securities, antitrust, trade regulation or trade practice law resulting from a concluded or pending action or proceeding brought by a public agency.
(k) Except as disclosed in any Franchise Offering Circular, to Seller’s Knowledge, no officer or general partner of an Acquired Entity that has offered or sold franchises has, since June 19, 2002:
(i) has filed as a debtor (or had filed against it) a petition to start an action under the U.S. Bankruptcy Code;
(ii) has obtained a discharge of its debts under the U.S. Bankruptcy Code; and
(iii) except as otherwise provided in Schedule 4.13(k)(iii), was a principal officer of a company or a general partner of a partnership that either filed as a debtor (or had filed against it) a petition to start an action under the U.S. Bankruptcy Code or that obtained a discharge of its debts under the U.S. Bankruptcy Code during or within one year after the officer or general partner of such Acquired Entity held this position in the company or partnership.
(l) Schedule 4.13(l) sets forth a complete and accurate list of all independent sales representatives, area developers, agents, employees, contractors, brokers or consultants authorized by the Company to offer or sell franchises during the period commencing on June 19, 2002 and continuing through the date of this Agreement (collectively, “Franchise Sales Persons”). Schedule 4.13(l) is a complete and correct list of all written or oral agreements or arrangements (and with respect to oral agreements a description thereof) with such Franchise Sales Persons under which an Acquired Entity has authorized any Franchise Sales Persons to offer or sell Franchises at on behalf of an Acquired Entity or agreed to rebate or share amounts receivable under any time since January 1, 2017 or that Franchise Agreement and indicating which of such agreements are currently in effect were prepared default and may be terminated by an Acquired Entity by notice to the other party. Seller has delivered to prospective Franchisees Buyer true, complete and correct copies of all written agreements described in compliance Schedule 4.13(l). Seller has delivered to Buyer complete and correct copies of all written correspondence and memoranda evidencing such oral agreements described in all material respects with Franchise Laws at the time they were furnished to prospective Franchisees and throughout the period preceding the execution and delivery of a Franchise Agreement. The information in the Franchise Disclosure Documents at the time they were used by a Group Company in connection with the solicitation, offer, grant or sale of Franchises was true and complete in all material respects and did not contain any untrue or misleading statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and included all information required by all applicable Franchise Laws. The Franchise Disclosure Documents have been amended or supplemented from time to time as required by applicable Franchise Law and such amendments and supplements were timely and properly furnished to each applicable Governmental Entity and Franchisees or prospective Franchisees as required by applicable Franchise LawSchedule 4.13(l).
(gm) A true Except as disclosed in any Franchise Offering Circular, during the period commencing on June 19, 2002 and correct copy of all Franchise Disclosure Documents used by any Group Company since January 1, 2017 has been delivered to Parent. Since continuing through the date of the most recent Franchise Disclosure Documents used by any Group Company, other than the transactions contemplated by this Agreement, there has been no material change to Seller’s Knowledge, except as disclosed in the businessapplicable Franchise Offering Circular used during such period, financial condition, or affairs of the Group Companies, the no Franchise System, or, to the Knowledge of the Company, the Franchisees that would, taken as a whole, require an amendment or supplement to such Franchise Disclosure Documents prior to the date hereof.
(h) Each Franchisee who left the Franchise System since January 1, 2017 has executed agreements with a Group Company which released the Company and its Subsidiaries and Affiliates from any and all liabilities (whether direct or indirect, absolute, accrued, contingent or otherwise) and claims that such Franchisee had, has or may have against the Company and its Affiliates which relate in any way to the Franchisee’s Franchise Agreement.Sales Person:
(i) Since January 1has had any administrative, 2017criminal or material civil action pending against that person alleging a violation of a franchise, all rebatesantitrust or securities law, allowancesfraud, discounts unfair or other payments deceptive practices or remunerations received by comparable allegations;
(ii) has been subject to any Group Company from vendors, suppliers or other third parties, on account currently effective order of any Franchisee’s direct national securities association or indirect purchases national securities exchange, as defined in the Securities and Exchange Act of 1934, 15 U.S.C.A. 78a et seq., suspending or expelling such person from those vendorsmembership in such association or exchange;
(iii) has been convicted of a felony or pleaded nolo contendere to a felony charge; or been held liable in a civil action by final judgment or been the subject of a material action involving violation of a franchise, suppliers antitrust or third partiessecurities law, have fraud, unfair or deceptive practices or comparable allegations; and
(iv) has been received, administered, disclosed and spent in accordance with subject to a currently effective injunctive or restrictive order or decree relating to the operation manuals utilized franchise offered by the Franchise Systemapplicable Acquired Entity, all Franchise Lawsor under a federal, the Franchise Disclosure Documents delivered to such Franchiseesstate or Canadian franchise, the applicable Franchise Agreementsecurities, and other applicable Contracts associated with the Franchise Systemantitrust, in each case, in all material respects. trade regulation or trade practice law resulting from a concluded or pending action or proceeding brought by a public agency.
(n) Except as set forth in the Franchise Agreements, there are no material restrictions on any Group Company’s use of any such rebates, allowances, discounts or other payments or remuneration for any purpose.
(j) Prior to the Closing Date, the Group Companies have at all times collected, maintained, administered, managed, directed, spent and utilized all advertising and marketing funds (including any advertising cooperative funds) contributed by or received from Franchisees in compliance with the Franchise Agreements and applicable Franchise Law. No Franchisee has delivered a protected territory, exclusive territory, covenant not to the Company a written claim of any Group Company’s breach of any Franchise Agreements with respect to such advertising or marketing funds andcompete, to the Knowledge of the Company, no facts exist that would reasonably be expected to form the basis for any such a claim of breach of any Franchise Agreement.
(k) No Group Company is (i) a guarantor or party to an agreement pursuant to which any Group Company is directly or contingently liable (as a co-▇▇▇▇▇▇ or otherwise) for any obligation of any Franchisee, (ii) a lessor or sublessor of any real or personal property to any Franchisee, or (iii) a party to any financing arrangement with any Franchisee.
(l) No Group Company has engaged or hired an agent, broker, third party, Franchisee or licensee to provide material services, assistance or support to any Franchisee or to identify, offer or sell to potential Franchisees other than in connection with negotiations with vendors on behalf of the Company or its Subsidiaries.
(m) To the Knowledge of the Company, no franchise association or other organization is acting as a representative of any group of two or more Franchisees. Any franchise council or advisory group presently in place (whether independently formed or sponsored by the Company or its Subsidiaries) is purely advisory in nature. No Group Company has granted any enforceable right of first refusal, option or other arrangement (collectively, the “Territorial Rights”) with Acquired Entity pursuant to which (A) an Acquired Entity is restricted in any way in its right to own or arrangement operate, or license others to sign own or operate, any business or line of business; or (B) the Franchisee is granted rights for the acquisition of additional franchises or expansion of the Franchisee’s territory. No Franchisee’s Territorial Rights conflict with the Territorial Rights of any other Franchisee. To the extent an Acquired Entity granted any such Territorial Rights (whether disclosed or required to be disclosed herein), the Acquired Entity has complied with such Territorial Rights and, in the course of offering or selling franchises, the Acquired Entity has not violated the Territorial Rights of any Franchisee.
(o) Schedule 4.13(o) sets forth a complete and accurate list of the name, last known address and telephone number of all Franchisees whose franchise agreements were terminated, cancelled, not renewed, reacquired by the Company or who have otherwise ceased to do business during the period commencing on June 19, 2002 and continuing through the date of this Agreement.
(p) Schedule 4.13(p) sets forth a complete and accurate list of all Franchisees whose Franchise Agreements were transferred or sold to a new or existing Franchisee during the period commencing on June 19, 2002 and continuing through the date of this Agreement.
(q) Except as set forth on Schedule 4.13(q), there are no sales by any Acquired Entity of Franchise Agreements which are pending or in progress as of the date of this Agreement.
(r) Except as set forth on Schedule 4.13(r), to Seller’s Knowledge, there are no transfers of Franchise Agreements by any Franchisee which are pending or in progress as of the date of this Agreement.
(s) Except as set forth on Schedule 4.13(s), and except in cases where delivery is otherwise evidenced in writing, the Company has in its possession an original executed copy of an Acknowledgment of Receipt from each Franchisee who received a Franchise Offering Circular from the Company during the period commencing on June 19, 2002 and continuing through the date of this Agreement.
(t) Except as set forth on Schedule 4.13(t), there are no signed forbearance agreements, settlement agreements, general releases, cancellation agreements, termination agreements or purchase agreements for the reacquisition of restaurants between the Company and any of its Franchisees since June 1, 2005.
(u) Except as set forth on Schedule 4.13(u), there are no arbitrations, mediations or civil actions pending between the Company and any of the Franchisees as of the date of this Agreement.
(v) Except as set forth on Schedule 4.13(v), there have been no formal written notices of Breach or termination of any Franchise Agreement issued by the Company to any Franchisee pursuant to the terms of such Franchise Agreement since June 1, 2005 with respect to any material term or acquire provision of any of the Franchise Agreements. Except as set forth on Schedule 4.13(v), to Seller’s Knowledge there are no Breaches by any Franchisee of any Franchise AgreementAgreement which were the subject of a formal written notice of Breach issued by the Company pursuant to the terms of a Franchise Agreement that remain uncured and otherwise unresolved.
(w) Except as set forth on Schedule 4.13(w), since June 19, 2002, there have been no consent orders or settlement agreements entered into by the Company with any federal, Canadian or state regulatory agency with respect to the sale of the Franchises.
(x) Except as set forth on Schedule 4.13(x), since June 19, 2002, there have been no applications for material modi
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Sources: Stock Purchase Agreement (Wendys International Inc)
Franchise Matters. (a) Except as set forth in Schedule 4.21(awould not have a Company Material Adverse Effect, (i) of the Company Disclosure Letter, no Group Company has received any written notice, nor, to the Knowledge of the Company, has any reason to believe, based upon oral or written communications from its current Franchisees, that any Franchisee intends to terminate, its each Franchise Agreement or to otherwise terminate or materially reduce its relationship with the Group Companies other than, in each case, with respect to any scheduled expiration or termination date expressly set forth in such Franchise Agreement.
(b) The Franchise System is the only franchise system that the Group Companies have operated. No Group Company has offered or sold or otherwise granted rights to any Person conferring upon that Person area development, multi-unit development, area representative, master franchise, sub-franchise or other multi-unit or multilevel rights with respect to the “F45 Training” brand. The Franchise System has been operated by the Group Companies at all times since inception.
(c) Each Franchise Agreement is similar complies in all material respects to respects, and the form administration and relationship of such Franchise Agreement contained in the Franchise Disclosure Document (if applicable) for that particular jurisdiction that was issued to the applicable Franchisee, except for any negotiated changes that the parties to such agreements may have agreed to. There are no oral modifications of any Franchise Agreement or oral agreements between any Franchisee and any Group Company relating to matters pertaining to material obligations of such Franchisee thereunder.
(d) Except as set forth in Schedule 4.21(d) of the Company Disclosure Letter, none of the Franchise Agreements contains any grant of exclusive rights to a territory designated therein, or other exclusive right, which in either case conflicts with any grant of exclusive rights to a territory or other exclusive right granted under any other Franchise Agreement.
(e) Since January 1, 2017, each Group Company has been at all times in compliance complies in all material respects with all applicable Laws, (ii) each Franchise Laws in connection with the solicitation, offer, grant or sale of Franchises, relationships with Franchisees, the operation Disclosure Document of the Franchise System and that the termination, non-renewal and transfer of Franchises and, to the Knowledge of the Company, no current or former Franchisee Company or any Governmental Entity has alleged that any Group Company has failed to comply in all material respects with any applicable Franchise Laws during of its operation of the Franchise System.
(f) All Franchise Disclosure Documents that any Group Company Subsidiaries has used to offer or sell Franchises at any time since January 1, 2017 or that are currently in effect were 2022 have contained all material information required by Franchise Laws and have otherwise been prepared and delivered to prospective Franchisees in compliance in all material respects with Franchise Laws at the time they were furnished to prospective Franchisees and throughout the period preceding the execution and delivery of a Franchise Agreement. The information in the Franchise Disclosure Documents at the time they were used by a Group Company in connection with the solicitation, offer, grant or sale of Franchises was true and complete in all material respects and did not contain any untrue or misleading statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and included all information required by all applicable Franchise Laws. The Franchise Disclosure Documents have been amended or supplemented from time to time as required by applicable Franchise Law and such amendments and supplements were timely and properly furnished to each applicable Governmental Entity and Franchisees or prospective Franchisees as required by applicable Franchise Law.
(g) A true and correct copy of all Franchise Disclosure Documents used by any Group Company since January 1, 2017 has been delivered to Parent. Since the date of the most recent Franchise Disclosure Documents used by any Group Company, other than the transactions contemplated by this Agreement, there has been no material change in the business, financial condition, or affairs of the Group Companies, the Franchise System, or, to the Knowledge of the Company, the Franchisees that would, taken as a whole, require an amendment or supplement to such Franchise Disclosure Documents prior to the date hereof.
(h) Each Franchisee who left the Franchise System since January 1, 2017 has executed agreements with a Group Company which released the Company and its Subsidiaries and Affiliates from any and all liabilities (whether direct or indirect, absolute, accrued, contingent or otherwise) and claims that such Franchisee had, has or may have against the Company and its Affiliates which relate in any way to the Franchisee’s Franchise Agreement.
(i) Since January 1, 2017, all rebates, allowances, discounts or other payments or remunerations received by any Group Company from vendors, suppliers or other third parties, on account of any Franchisee’s direct or indirect purchases from those vendors, suppliers or third parties, have been received, administered, disclosed and spent in accordance with the operation manuals utilized by the Franchise System, all Franchise Laws, the Franchise Disclosure Documents delivered to such Franchisees, the applicable Franchise Agreement, and other applicable Contracts associated with the Franchise System, in each case, in all material respects. Except (iii) except as specifically set forth in the a Franchise AgreementsAgreement for a Franchised Location, there are no material restrictions on any Group Company’s use of any such rebates, allowances, discounts or other payments or remuneration for any purpose.
(j) Prior to the Closing Date, the Group Companies have at all times collected, maintained, administered, managed, directed, spent and utilized all advertising and marketing funds (including any advertising cooperative funds) contributed by or received from Franchisees in compliance with the Franchise Agreements and applicable Franchise Law. No Franchisee has delivered to neither the Company a written claim nor any of any Group Company’s breach of any Franchise Agreements with respect to such advertising or marketing funds and, to the Knowledge of the Company, no facts exist that would reasonably be expected to form the basis for any such a claim of breach of any Franchise Agreement.
(k) No Group Company is (i) a guarantor or party to an agreement pursuant to which any Group Company is directly or contingently liable (as a co-▇▇▇▇▇▇ or otherwise) for any obligation of any Franchisee, (ii) a lessor or sublessor of any real or personal property to any Franchisee, or (iii) a party to any financing arrangement with any Franchisee.
(l) No Group Company has engaged or hired an agent, broker, third party, Franchisee or licensee to provide material services, assistance or support to any Franchisee or to identify, offer or sell to potential Franchisees other than in connection with negotiations with vendors on behalf of the Company or its Subsidiaries.
(m) To the Knowledge of the Company, no franchise association or other organization is acting as a representative of any group of two or more Franchisees. Any franchise council or advisory group presently in place (whether independently formed or sponsored by the Company or its Subsidiaries) is purely advisory in nature. No Group Company Subsidiaries has granted any enforceable right of first refusal, option or other similar right or arrangement to a Franchisee or other Person to sign any Franchise Agreement, acquire any Franchise or obtain the right to operate in additional territories, (iv) there are no stop orders or other Actions in effect or, to the Knowledge of the Company, threatened, that would prohibit or impede the Company’s or any of its Subsidiaries’ ability to offer or sell Franchises or enter into Franchise Agreements in any jurisdiction immediately following the Closing (except for any applications for registration in jurisdictions that require registration and where the Company or any of its Subsidiaries is not registered, and amendment filings and changes to any Franchise Disclosure Document of the Franchise System that might be required as a result of the Transactions), and (v) the Company and its Subsidiaries are (and have been at all times since January 1, 2022) in compliance in all material respects with Franchise Laws in connection with the offer or sale of Franchises, the ongoing relationships with Franchisees, and the termination, non-renewal and transfers of Franchises, including by retaining properly-signed Franchise Disclosure Documents of the Franchise System and receipts required by applicable Franchise Laws evidencing compliance in all material respects with disclosure waiting periods under the applicable Franchise Laws.
(b) Section 3.25(b) of the Company Disclosure Letter sets forth a true and complete list of the currently existing store locations operated by Franchisees pursuant to Franchise Agreements that are part of the Franchise System (each, a “Franchised Location”), indicating with respect to each Franchised Location, the name of the Franchisee, the address of the Franchised Location and the scheduled expiration date of the Franchise Agreement evidencing such Franchised Location. Each Franchise Agreement is in substantially the same form as the form of Franchise Agreement attached to the Franchise Disclosure Document of the Franchise System issued at the time such Franchise Agreement was signed. The Company has made available to Parent all Franchise Agreements that are in effect as of the date of this Agreement.
(c) The execution, delivery and performance of this Agreement by the Company do not and will not result in any breach or violation of or constitute a default (or an event that with notice or lapse of time or both would constitute a default) or result in the loss of a benefit under, or give rise to any right of termination, cancellation, amendment or acceleration of, any Franchise Agreement or acquire related document to which the Company or any Franchise Agreementof its Subsidiaries is a party or by which the Company or any of its Subsidiaries or its or any of their respective properties are bound, except, for any such breach, violation, default, loss, right, termination, cancellation, amendment, acceleration or other occurrence that would not have a Company Material Adverse Effect.
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