Common use of Franchisees Clause in Contracts

Franchisees. Schedule 7.3 sets forth a listing of each Person (each, a “Franchisee” or “Licensee”) with which the TARGET or any of its Subsidiaries has entered into a franchise agreement (each, a “Franchise Agreement” or a “License Agreement”) and the date and the parties to each Franchise Agreement. Each Franchise Agreement is in full force and effect. True, correct and complete copies of all Franchise Agreements have heretofore been made available by the Sellers to the Buyer Company. Except as Schedule 7.3 sets forth, there are no existing or, to the knowledge of the Sellers, asserted defaults, events of default or events, occurrences, acts or omissions that, with the giving of notice or lapse of time or both, would constitute material defaults or events of default of the TARGET or any of its Subsidiaries under any Franchise Agreement or, to the knowledge of the Sellers and the TARGET, of any Franchisee. No amendments are pending with respect to any Franchise Agreement. Each Franchise Agreement is the valid and enforceable obligation of the TARGET or its Subsidiaries, as the case may be, and, to the knowledge of the Sellers and the TARGET, the Franchisee party thereto in accordance with its terms, except as enforceability may be limited by (i) any applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether that enforceability is considered in a proceeding in equity or at law), and no defenses, off-sets or counterclaims have been asserted by any party thereto, nor has the TARGET or any of its Subsidiaries waived any rights thereunder, except as Schedule 7.3 sets forth. Except as Schedule 7.3 sets forth or as this Agreement contemplates, the Sellers and the TARGET have no knowledge of any plan or intention of any Franchisee to exercise any right to cancel or terminate any Franchise Agreement.

Franchisees. Schedule 7.3 (a) Section 4.12(a) of the Disclosure Schedules sets forth a listing with respect to the Sellers each of each Person the current franchisees of any Seller (each, a “Franchisee” or “Licensee”) along with which (i) the TARGET or name, address, and contact information of each owner of any franchisee; (ii) the company and boutique name of its Subsidiaries has entered into a franchise agreement each Franchisee; (each, a “Franchise Agreement” or a “License Agreement”iii) and the principal operator of each Franchisee; (iv) the effective date and expiration date of each Franchisee; (v) territorial rights of each Franchisee including exclusivity, options, and rights of first refusal; (vi) the parties royalty and advertising fund rates for each Franchisee; and (vii) the amount of royalties paid by each Franchisee to any Seller each year for the past three (3) years, in each respect, as the terms of each Franchise Agreement, as amended, currently stand. Each Franchise Agreement is in full force and effect. True, correct True and complete copies of all Franchise Agreements have heretofore been made available provided to Buyer by the Sellers Sellers. Other than as provided to the Buyer Company. Except as Schedule 7.3 sets forthby Sellers, there are no existing oramending agreements, side letters, or other arrangements that affect the terms of the Franchise Agreements. (b) Other than as set forth on Section 4.12(b)(i) of the Disclosure Schedules, no Seller has received notice, and no Seller has reason to believe that any of the Franchisees has ceased, or intends to cease after Closing, to the knowledge be a franchisee of Sellers or of Buyer or to otherwise rescind, terminate, abandon, improperly transfer, or not renew its Franchise Agreement. (c) All of the Sellers, asserted defaults, events of default or events, occurrences, acts or omissions that, with the giving of notice or lapse of time or both, would constitute material defaults or events of default Franchise Agreements are freely assignable by Sellers to Buyer except as set forth in Section 4.12(c) of the TARGET or Disclosure Schedules. (d) There are no Encumbrances on any of its Subsidiaries under the Franchise Agreements, and Sellers have not pledged or assigned any Franchise Agreement orright, title, or interest in or to the knowledge Franchise Agreements. (e) All of the Sellers Franchise Agreements are valid, binding, and the TARGETenforceable, of any Franchisee. No amendments are pending with respect to any Franchise Agreement. Each Franchise Agreement is the valid and enforceable obligation of the TARGET or its Subsidiaries, as the case may be, and, except to the knowledge of the Sellers and the TARGET, the Franchisee party thereto in accordance with its terms, except as extent that enforceability may be limited by (i) any applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium bankruptcy or similar laws Laws affecting the enforcement of creditors’ rights generally and (ii) by general principles of equity (regardless equity, and, to the Knowledge of whether that enforceability is considered in a proceeding in equity or at law), and no defenses, off-sets or counterclaims have been asserted by any party thereto, nor has the TARGET or any of its Subsidiaries waived any rights thereunderSellers, except as Schedule 7.3 sets forthset forth on Section 4.12(e) of the Disclosure Schedules, there are no existing breaches by any party. Except as Schedule 7.3 sets set forth on Section 4.12(e) of the Disclosure Schedules, with respect to each Franchisee, no Seller has sent, received, or as this entered into any notice of default, royalty or advertising fund forbearance offer or arrangement, workout plan, or other similar arrangement. To the Knowledge of Sellers, no grounds currently exist for any party to a Franchise Agreement contemplates, the Sellers and the TARGET have no knowledge of any plan to terminate or intention of any Franchisee to exercise any right to cancel or terminate rescind any Franchise Agreement. (f) To the Knowledge of Sellers, all Franchisees are currently in compliance with all system requirements imposed by any Seller including, without limitation, the terms of the Franchise Agreements, any operations manual, training materials, franchisor directives, and other similar standards imposed by the franchisor (collectively, the “System Requirements”). Sellers have consistently and appropriately maintained and enforced the System Requirements. There are no material inconsistencies between the System Requirements and the terms of any Franchise Agreement. (g) The Franchise Agreements, and all grants made thereunder, comply with applicable Laws including, without limitation, those Laws regulating the offering and sale of franchises. Sellers have complied in all material respects with all applicable Laws, including without limitation, all franchise and business relationship Laws, regarding the expiration, termination, and other non-renewal of prior franchise agreements to which any Seller was a party. (h) The execution and delivery of this Agreement and the transactions contemplated hereby and in the Ancillary Documents are not inconsistent with any provision of the Franchise Agreements and, other than as set forth in Section 4.12(h) of the Disclosure Schedules, will not give rise to any right of recission or termination of any of the Franchise Agreements. (i) Except as set forth in Section 4.12(i) there are no discrete or exclusive territories granted to Franchisees, and no Seller has, and to Sellers’ Knowledge, no third party has, sold, transferred, or conveyed any interest or franchise that infringes on the exclusive territory of any Franchisees including in relation to options to purchase and rights of first refusal. To Sellers’ Knowledge, no Franchisee is currently encroaching on the exclusive territory of any other Franchisee. (j) Sellers have no arrangements with any master franchisee, area developer, or similar Person.

Franchisees. Schedule 7.3 a. Seller has made available to the Purchaser true and complete copies of all currently effective Franchise Agreements (including all written amendments, addenda and modifications thereto), and except as set forth in the Disclosure Letter, there are no other material amendments, modifications or waivers of any material rights or benefits of the Company, or material obligations of any Franchisee, under any such Franchise Agreements. b. The Disclosure Letter sets forth the Franchise Agreements currently in effect which are or were due to expire during the period between January 1, 2017 and the Effective Dates, and whether or not such Franchisee has extended or renewed the Franchisee’s Franchise Agreement. c. A list of the top 25 Franchisees ranked in order based on gross sales reported by each Franchisee for the 12 months ended on the Audited Accounts Date is included in Schedule 8. d. Except as set forth in the Disclosure Letter, each Franchise Agreement is a listing legal, valid and binding obligation of the Company, except as such may be limited by bankruptcy, insolvency, reorganization or other Laws affecting creditors’ rights generally and by general equitable principles, and, to the Seller’s knowledge, of each Person Franchisee thereto (eachas may be limited by bankruptcy, a “Franchisee” insolvency, reorganization or “Licensee”) with which the TARGET or any of its Subsidiaries has entered into a franchise agreement (eachother Laws affecting creditors’ rights generally and by general equitable principles), a “Franchise Agreement” or a “License Agreement”) and the date and the parties to each Franchise Agreement. Each Franchise Agreement is in full force and effect. True. e. No Franchise Agreement obligates the Company to buy back or otherwise acquire the stock of the Franchisee or substantially all of the assets of the Franchisee’s Business, correct and complete copies except for any state addendum to a Franchise Agreement that imposes, applies or references the state’s statutory requirements. f. Except as set forth in the Disclosure Letter, the Company: (i) has not sold, assigned, transferred, conveyed, pledged, or granted a security interest in, any interest in any of all the Franchise Agreements have heretofore or the Company’s rights thereunder, (ii) is the sole beneficiary of the Franchise Agreements (other than the Franchisees and any other counterparties thereto) and (iii) owns the rights of the Company as the franchisor thereunder, free and clear of any liens. g. Except as set forth in the Disclosure Letter, since October 1, 2016 (i) the Company is not in receipt of a written demand or written request from any Franchisee with respect to Franchisee’s Franchise Agreement, for amendment or early termination, cancellation, rescission or other cessation thereof or (ii) to Seller’s knowledge no Franchisee has asserted to the Company an intention to cease operating its franchised Business or not renew its Franchise Agreement. h. Except as set forth in the Disclosure Letter , to Seller’s knowledge, since July 1, 2012, no Franchisee or employee of a Franchisee is or has been made available classified by any Governmental Body as an employee of the Company. i. Except as set forth in the Disclosure Letter, since July 1, 2012, no Franchisee has been terminated due to a conviction of a crime by Franchisee or Franchisee’s owners. j. No Franchisee will be entitled under any Franchise Agreement to terminate, suspend or cancel the Franchisee’s Franchise Agreement as a result of this Agreement or the transactions contemplated hereby, and no Franchisee is required under any Franchise Agreement to acknowledge or consent to the change of control of the Company contemplated hereby. k. Except as set forth in the Disclosure Letter, and excluding (i) defaults in the Franchisee’s payment obligation of less than $25,000 (ii) defaults relating to the Franchisee’s failure to comply with the Company’s system standards, as such system standards are set forth in the following System Standards files located in the Data Room: 35_04.28_ag_System Standards 2017.pdf and 35_09.23_ag_Operations Manual 2015.pdf, (iii) the failure of any Franchisees to pay any minimum royalties pursuant to the applicable Franchise Agreement, and (iv) failure of the Franchisees to maintain required insurance policies or name Company or any of its Affiliates as an additional insured, to Seller’s knowledge, no Franchisee is currently in material default under the terms of its Franchise Agreement, which in the ordinary course of business would warrant the issuance of a formal notice of default by the Sellers Company to the Buyer Franchisee nor has the Company knowingly waived in writing any material default of any Franchisee. As used in the previous sentence, “material default” means any material act or material omission by a Franchisee that would entitle the Company to terminate the Franchise Agreement or to notify the Franchisee of the Company. ’s intention to terminate the Franchise Agreement if the Franchisee does not cure such material breach or material default within the applicable cure period. l. Except as Schedule 7.3 sets forthset forth in the Disclosure Letter, since July 1, 2012, to Seller’s knowledge, all former Franchisees are in material compliance with their obligations that survive the termination or other cessation of their Franchise Agreements, except to the extent permitted by any mutual termination agreement or settlement agreement. m. To Seller’s knowledge, since July 1, 2012, no event has occurred that, with or without notice or lapse of time, would constitute a material breach or material default by the Company under a Franchise Agreement, nor is the Company in receipt of a written communication from a Franchisee alleging that the Company is in material default under, or in material breach of, any Franchise Agreement, which the Company believes presents a high risk of resulting in the issuance of a formal notice of default by such Franchisee. n. The Company’s AIM Funds are held by the Company in separate bank account. Since July 1, 2012, except as set forth in the Disclosure Letter, (i) the Company has not used any money in the AIM Funds except as permitted by the Franchise Agreements, by any Historic FDDs or by Law and (ii) the Company has not been in receipt of any written claim or demand for damages from or on behalf of a Franchisee with respect to the expenditure or management of any AIM funds collected by the Company from a Franchisee. o. Except as set forth in the Disclosure Letter, to the Seller’s knowledge, no Franchisee is currently in breach of any payment due under its lease of the premises of the franchised Business. p. Except as set forth in the Franchise Agreements or as set forth in the Disclosure Letter, there are no existing orcontractual limitations prohibiting the Company or its Affiliates from developing or operating any ALPHAGRAPHICS® Businesses, or selling franchises or licensing others to do so in any geographic area or location. q. Since July 1, 2012, the Company has properly accounted for all Universal Service Credits earned, but not yet used, by any Franchisee. r. During the past 12 months, all discounts, rebates and other concessions paid to the Company from Suppliers whose goods or services are used by Franchisees have been accurately and appropriately credited to each Franchisee using such good or service. Except as set forth in the Disclosure Letter, the Company does not participate in any purchasing or distribution cooperative. s. Seller has made available to Purchaser all organizational and operational documents and material correspondence between the Company and any franchisee advisory boards/councils during the past 12 months, as well as the current membership and officers/executives of any such boards/councils, and a list of any current advertising, marketing or cooperative funds or accounts to which Franchisees contribute, and financial statements for said funds. t. Except only for the Network Leadership Council, which is an advisory council consisting of Franchisees and members of Company management, to Seller’s knowledge, except as set forth in the knowledge of Disclosure Letter, there is no union, council, organization or consortium representing or purporting to represent the Sellers, asserted defaults, events of default or events, occurrences, acts or omissions that, with the giving of notice or lapse of time or both, would constitute material defaults or events of default of the TARGET Franchisees or any of its Subsidiaries under any Franchise Agreement or, to them in their relationship with the knowledge of the Sellers and the TARGET, of any Franchisee. No amendments are pending with respect to any Franchise Agreement. Each Franchise Agreement is the valid and enforceable obligation of the TARGET or its Subsidiaries, as the case may be, and, to the knowledge of the Sellers and the TARGET, the Franchisee party thereto in accordance with its terms, except as enforceability may be limited by (i) any applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether that enforceability is considered in a proceeding in equity or at law), and no defenses, off-sets or counterclaims have been asserted by any party thereto, nor has the TARGET or any of its Subsidiaries waived any rights thereunder, except as Schedule 7.3 sets forth. Except as Schedule 7.3 sets forth or as this Agreement contemplates, the Sellers and the TARGET have no knowledge of any plan or intention of any Franchisee to exercise any right to cancel or terminate any Franchise AgreementCompany.