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EXHIBIT 10.11
▇▇▇▇▇.▇▇▇, INC.
BUSINESS PROGRAM FRANCHISE AGREEMENT
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1. PARTIES
This ▇▇▇▇▇.▇▇▇, INC. BUSINESS PROGRAM FRANCHISE AGREEMENT (the
"Agreement") is dated as of ________________________, 20____, and is between
▇▇▇▇▇.▇▇▇, Inc. ("▇▇▇▇▇.▇▇▇"), a Delaware corporation whose principal office is
located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and
______________________________________ ("Franchisee"), with an
address for purposes of this Agreement, at ____________________________________.
2. NATURE AND SCOPE OF FRANCHISE
a. ▇▇▇▇▇.▇▇▇ and its affiliates have devised and continue to develop
strategic Internet products and services including ▇▇▇▇▇.▇▇▇ business
applications, business methods, technical knowledge, commercial ideas,
advertising material, marketing strategies, administrative procedures, business
forms, employee training techniques, which, taken together, provide the basis
for the operation of a proprietary business offering customers the ability to
conduct commerce and other business activities on the Internet with minimal
investment and low monthly costs. These products, ▇▇▇▇▇.▇▇▇'s sales methods and
other such information comprise the ▇▇▇▇▇.▇▇▇ System. ▇▇▇▇▇.▇▇▇ is the licensee
under a royalty free license from its wholly owned subsidiary ZLand (Cayman)
Limited of certain intellectual property rights in certain valuable (i) trade
names, service marks and trademarks, including, without limitation, the names
and phrases "▇▇▇▇▇.▇▇▇", "e-business for everyone", and
"▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇", and (ii) proprietary rights in software and
proprietary rights to information relating to methods of doing business.
▇▇▇▇▇.▇▇▇ has the right to authorize others to adopt and use the ▇▇▇▇▇.▇▇▇
System in the territory or territories described in Attachment 1 (the
"Territory"). ▇▇▇▇▇.▇▇▇'s franchise territory strategy is designed to match the
appropriately qualified franchise operator to each market.
b. The rights granted to the Franchisee to operate the Territory are set
forth in this Agreement and the accompanying attachments.
c. The foundation of the ▇▇▇▇▇.▇▇▇ System and the essence of this
Agreement is adherence by Franchisee to ▇▇▇▇▇.▇▇▇'s standards and policies which
provide for uniform operation and service of all ▇▇▇▇▇.▇▇▇ franchisees through
the ▇▇▇▇▇.▇▇▇ System including, but not limited to, selling only approved
products and services; the use of only prescribed or approved advertising; and
strict compliance with established customer service policies. Compliance by
Franchisee with the foregoing standards and policies, set forth herein and in
the ▇▇▇▇▇.▇▇▇ business manuals, in conjunction with the ▇▇▇▇▇.▇▇▇ trademarks and
service marks provides the basis for the valuable good will of the ▇▇▇▇▇.▇▇▇
System. Other material elements of this Agreement include the establishment and
maintenance of a close personal working relationship with ▇▇▇▇▇.▇▇▇ in the
conduct of Franchisee's ▇▇▇▇▇.▇▇▇ Business, Franchisee's accountability for
performance of the obligations contained in this Agreement, and Franchisee's
adherence to the tenets of the ▇▇▇▇▇.▇▇▇ System.
d. The provisions of this Agreement shall be interpreted to give effect
to the intent of the parties stated in this paragraph 2 so that the Territory
shall be operated in conformity to the ▇▇▇▇▇.▇▇▇ System through strict adherence
to ▇▇▇▇▇.▇▇▇'s standards and policies as they exist now and as they may be from
time to time modified.
e. Franchisee acknowledges its understanding of ▇▇▇▇▇.▇▇▇'s basic
business policy that ▇▇▇▇▇.▇▇▇ will grant franchises only to those individuals
who will work full-time (or hire an acceptable full-time manager) in the
operation of their franchised ▇▇▇▇▇.▇▇▇ Business.
3. FRANCHISE GRANT AND TERM.
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a. BASIC GRANT. ▇▇▇▇▇.▇▇▇ grants to Franchisee, for a stated term, the
right, license and privilege to operate as a ▇▇▇▇▇.▇▇▇ franchisee. This includes
the following rights, licenses and privileges:
(i) to adopt and use the ▇▇▇▇▇.▇▇▇ System in the Territory;
(ii) to advertise to the public that Franchisee is a ▇▇▇▇▇.▇▇▇
franchisee;
(iii) to adopt and use, but only in connection with the sale of
those products and services which have been designated by
▇▇▇▇▇.▇▇▇ for use in the Territory, the trade names, trademarks
and service marks which ▇▇▇▇▇.▇▇▇ shall designate, from time to
time, to be part of the ▇▇▇▇▇.▇▇▇ System (the "▇▇▇▇▇.▇▇▇ Marks";
and
(iv) to operate the ▇▇▇▇▇.▇▇▇ System in the Territory. Except as
otherwise specifically authorized in this Agreement (for example
with respect to the ▇▇▇▇▇.▇▇▇ Reseller Program described in
paragraph 9 hereof), ▇▇▇▇▇.▇▇▇ shall not (A) operate, nor
authorize any other ▇▇▇▇▇.▇▇▇ franchisee to operate within the
Territory, nor (B) sell, nor authorize any other ▇▇▇▇▇.▇▇▇
franchisee to sell, to accounts physically situated within the
Territory. ▇▇▇▇▇.▇▇▇ shall give all leads pertaining to
▇▇▇▇▇.▇▇▇ business in the Territory only to Franchisee.
▇▇▇▇▇.▇▇▇ authorizes Franchisee to call on all accounts, except
those that qualify as a major account as described in paragraph
9 (which sets forth the rules relating to those particular
accounts) within the Territory. Franchisee shall be responsible
for such account contracts and also have the right to the Gross
Profits from such account contracts for the term of said
contracts. Franchisee shall not operate from any premises
physically situated outside the Territory whether a main office
or satellite office. Franchisee shall not call on or market
directly to, no matter what the method, accounts that are in
another ▇▇▇▇▇.▇▇▇ franchisee's territories or which Franchisee
or Franchisee's sales people cannot 1) reasonably drive to from
the Territory and 2) reasonably provide quality service from the
Territory.
b. TERM. The term of this Agreement shall begin on the date of execution
of this Agreement and continue for seven years unless terminated prior thereto
pursuant to the provisions hereof.
c. ▇▇▇▇▇.▇▇▇ MARKS. ▇▇▇▇▇.▇▇▇ hereby grants to Franchisee the right
during the term hereof to use and display the ▇▇▇▇▇.▇▇▇ Marks in accordance with
the provisions contained herein and in the confidential Operations Manual,
solely in connection with the operation of the Franchised Business. Franchisee
acknowledges that ▇▇▇▇▇.▇▇▇ prescribes minimum standards respecting the nature
and quality of the goods and services used by Franchisee in connection with
which the ▇▇▇▇▇.▇▇▇ Marks are used. Franchisee agrees that as between ▇▇▇▇▇.▇▇▇
and Franchisee, the ▇▇▇▇▇.▇▇▇ Marks are the exclusive property of ▇▇▇▇▇.▇▇▇.
Franchisee now asserts no claim and will hereafter assert no claim to any
goodwill, reputation or ownership thereof by virtue of Franchisee's franchised
or licensed use thereof or otherwise. It is expressly understood and agreed that
ownership and title of the ▇▇▇▇▇.▇▇▇ Marks and ▇▇▇▇▇.▇▇▇'s manuals, bulletins,
instruction sheets, forms, methods of operation and goodwill are and, as between
▇▇▇▇▇.▇▇▇ and Franchisee, shall remain vested solely in ▇▇▇▇▇.▇▇▇, and the use
thereof is only co-extensive with the term of this Agreement. Franchisee
acknowledges that the material and information now and hereafter provided and/or
revealed to Franchisee pursuant to this Agreement (including in particular, but
without limitation, the contents of the Confidential Operations Manual) are
confidential trade secrets of ▇▇▇▇▇.▇▇▇ and are revealed in confidence, and
Franchisee expressly agrees to keep and respect the confidences so reposed, both
during the term of this Agreement and thereafter. Franchisee agrees to be
responsible for and supervise all of its principals, officers, directors,
partners, employees and agents in order to insure the proper use of the
▇▇▇▇▇.▇▇▇ Marks in compliance with this Agreement. Franchisee shall use the
▇▇▇▇▇.▇▇▇ Marks solely in connection with the Franchised Business and shall not
use or display the ▇▇▇▇▇.▇▇▇ Marks in connection with the operation of any
business, the performance of any other service or the conduct of any activity
outside the scope of the Franchised Business. Franchisee shall use the ▇▇▇▇▇.▇▇▇
Marks only in connection with the Franchised Business and agrees that all of
Franchisee's use under this Agreement inures to the benefit of ▇▇▇▇▇.▇▇▇.
Nothing herein shall give Franchisee any right, title or interest in or to any
of the ▇▇▇▇▇.▇▇▇ Marks, except a mere privilege and license during the term
hereof to display and use the same strictly according to the limitations
provided in this Agreement and the Confidential Operations Manual.
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If required by applicable law, Franchisee agrees to join with ▇▇▇▇▇.▇▇▇ in any
application to enter Franchisee as a registered or permitted user, or the like,
of the ▇▇▇▇▇.▇▇▇ Marks with any appropriate governmental agency or entity. Upon
termination of this Agreement for any reason whatsoever, ▇▇▇▇▇.▇▇▇ may
immediately apply to cancel Franchisee's status as a registered or permitted
user and Franchisee shall consent in writing to the cancellation and shall join
in any cancellation petition. The expense of any of the foregoing recording
activities shall be borne by Franchisee.
d. USE AND MODIFICATION OF ▇▇▇▇▇.▇▇▇ MARKS. In connection with the
operation of the Franchised Business, Franchisee agrees that at all times and in
all advertising, promotions, signs and other display materials, on its
letterheads, business forms, and at the Premises and other authorized business
sites, in all of its business dealings related thereto and to the general
public, it will identify the Franchised Business in such form, size and style as
prescribed in the Confidential Operations Manual using a business name approved
by ▇▇▇▇▇.▇▇▇. Franchisee shall file and keep current a "Fictitious Business Name
Statement" (or similar document) with respect to its business name in the county
or other jurisdiction in which Franchisee is conducting business and at such
other places as may be required by law. Prior to commencing business under the
▇▇▇▇▇.▇▇▇ Marks, Franchisee shall supply evidence satisfactory to ▇▇▇▇▇.▇▇▇ that
Franchisee has complied with relevant laws regarding the use of fictitious or
assumed names. Franchisee further agrees that it will not identify itself as (i)
▇▇▇▇▇.▇▇▇, (ii) the owner of the ▇▇▇▇▇.▇▇▇ Marks, (iii) a subsidiary, parent,
division, shareholder, partner, consultant, joint venturer, agent or employee of
▇▇▇▇▇.▇▇▇ or the owner of the ▇▇▇▇▇.▇▇▇ Marks, (iv) a licensee of ▇▇▇▇▇.▇▇▇ for
a geographical area greater than the Territory licensed hereunder, or (v) any of
▇▇▇▇▇.▇▇▇'s other franchisees. If Franchisee is a corporation, Franchisee shall
not use the ▇▇▇▇▇.▇▇▇ Marks in its corporate name. ▇▇▇▇▇.▇▇▇ may add to,
substitute or modify any or all of the ▇▇▇▇▇.▇▇▇ Marks from time to time, by
directive in the Confidential Operations Manual. Franchisee shall accept, use,
display, or cease using, as may be applicable, the ▇▇▇▇▇.▇▇▇ Marks, including
but not limited to, any such modified or additional trade names, trademarks,
service marks, logo types and commercial symbols, and shall within 30 days of
receiving notification, commence to implement such changes and use its best
efforts to complete such changes as soon as practicable.
e. USE OF OTHER TRADEMARKS. Franchisee shall not use or display or
permit the use or display of trademarks, trade names, service marks, insignias
or logo types other than the Assumed Name and other trademarks and service marks
approved for use by ▇▇▇▇▇.▇▇▇ (i) in any advertisement that contains the words
"▇▇▇▇▇.▇▇▇" or any other ▇▇▇▇▇.▇▇▇ Marks, (ii) in or on any Premises or place of
business of Franchisee in any manner that is reasonably visible from outside
such Premises or place of business, (iii) in any computer system used at any
Premises or place of business of Franchisee, (iv) in answering telephones at the
Premises or otherwise in connection with the Franchised Business, in any manner
that could lead any person to believe that such other trademarks, trade names,
service marks, insignias or logo types or the products or services with which
they are associated are owned or offered by ▇▇▇▇▇.▇▇▇ or its affiliates, except
as otherwise expressly permitted herein or in the Confidential Operations
Manual.
f. INFRINGEMENT CLAIMS AND DEFENSE OF ▇▇▇▇▇.▇▇▇ MARKS. If Franchisee
receives notice or otherwise becomes aware of any claim, suit or demand against
it by any party other than ▇▇▇▇▇.▇▇▇ on account of any alleged infringement,
unfair competition or similar matter arising from its use of the ▇▇▇▇▇.▇▇▇ Marks
in accordance with the terms of this Agreement, Franchisee shall promptly notify
▇▇▇▇▇.▇▇▇ of any such claim, suit or demand. Franchisee shall have no power,
right or authority to settle or compromise any such claim, suit or demand by a
third party without the prior written consent of ▇▇▇▇▇.▇▇▇. ▇▇▇▇▇.▇▇▇ is
obligated to protect and defend the integrity of the ▇▇▇▇▇.▇▇▇ Marks, including
the right of Franchisee to conduct the Franchise Business under the ▇▇▇▇▇.▇▇▇
Marks. In its sole discretion, ▇▇▇▇▇.▇▇▇ shall determine whether to defend,
compromise or settle in its discretion any such claim, suit or demand at
▇▇▇▇▇.▇▇▇'s cost and expense, using attorneys selected by ▇▇▇▇▇.▇▇▇ or the owner
of the ▇▇▇▇▇.▇▇▇ Marks, and Franchisee agrees to cooperate fully in such matter,
at no cost or expense to Franchisee (except if the claim, suit or demand arises
as a result of action or inaction or gross negligence of Franchisee). ▇▇▇▇▇.▇▇▇
shall have the sole discretion to determine whether a similar trademark or
service ▇▇▇▇ being used by a third party is confusingly similar to the ▇▇▇▇▇.▇▇▇
Marks being used by Franchisee and whether and what subsequent action, if any,
should be undertaken with respect to such similar trademark or service ▇▇▇▇.
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4. SUCCESSOR FRANCHISE. Franchisee shall have the right to a successor
franchise for the Territory as described in this Agreement provided Franchisee
meets all the requirements set forth in this section below. Franchisee
understands and acknowledges that any such successor franchise shall be on the
then-current terms set forth in the then-current standard ▇▇▇▇▇.▇▇▇ franchise
agreement, which may be substantially different from the terms contained herein.
Franchisee must give written notice that it wishes to apply for a successor
▇▇▇▇▇.▇▇▇ franchise not less than six months, but not more than 12 months, prior
to the expiration of this Agreement.
a. A successor franchise shall be granted to Franchise if Franchisee
meets all of the conditions and requirements set forth below:
1) Pay a fee equal to the greater of (i) 25% of the then-current
License Fee and Market Premium Fee applicable to the Territory
or (ii) $7,500, along with the notice and application for the
successor franchise. In the event that the successor franchise
is not granted, this fee will be returned, less any costs
associated with processing the application;
2) Bring the Premises and Territory into full compliance with
this Agreement and all other agreements with ▇▇▇▇▇.▇▇▇;
3) Bring the Premises and Territory and Franchisee's operations
into full compliance with the specifications and standards then
applicable for new ▇▇▇▇▇.▇▇▇ franchisees and present evidence
satisfactory to ▇▇▇▇▇.▇▇▇ thereof;
4) Satisfy all monetary obligations owed to ▇▇▇▇▇.▇▇▇;
5) Execute a mutual release with ▇▇▇▇▇.▇▇▇ as to all claims,
liabilities and/or obligations, of any nature whatsoever,
however arising, known or unknown, relating to the Territory or
any other franchise territory or contract with ▇▇▇▇▇.▇▇▇;
6) Comply with ▇▇▇▇▇.▇▇▇'s then-current qualification and
training requirements for which Franchisee shall be responsible
for all retraining costs, travel, meals, lodging and other
expenses of Franchisee's personnel; and
7) Upon approval of Franchisee's application for successor
franchise, sign the then current ▇▇▇▇▇.▇▇▇ Franchise Agreement.
5. COMMENCEMENT DATE. The Commencement Date will be the earlier of 90 days
after the signing of this Agreement or the date when Franchisee satisfactorily
completes the initial training session. Franchisee shall not begin operation of
the Territory until satisfactory completion of the initial training session.
6. GENERAL SERVICES OF ▇▇▇▇▇.▇▇▇. ▇▇▇▇▇.▇▇▇ shall advise and consult with
Franchisee periodically in connection with the operation of the Territory and
also, upon Franchisee's request, at other reasonable times. ▇▇▇▇▇.▇▇▇ shall
communicate to Franchisee its know-how, new developments, techniques and
improvements in areas of sales, product development and services that are
pertinent to the operation of a Territory using the ▇▇▇▇▇.▇▇▇ System. The
communications shall be accomplished via online, telephonic or face-to-face
discussions, online reports, seminars or mailings, and training sessions.
▇▇▇▇▇.▇▇▇ shall also make available to Franchisee all additional services,
facilities, rights and privileges relating to the operation of the Territory,
which ▇▇▇▇▇.▇▇▇ makes generally available, from time to time, to all its
franchisees operating territories.
7. CUSTOMER BILLING AND COLLECTION PROCEDURE. ▇▇▇▇▇.▇▇▇ provides a
centralized billing and collection service. All products and services, whether
or not obtained from ▇▇▇▇▇.▇▇▇ or ▇▇▇▇▇.▇▇▇ affiliates, offered or otherwise
provided in the Territory by Franchisee and/or any similar businesses will be
billed to the customer through our centralized billing service. ▇▇▇▇▇.▇▇▇ will
pay to Franchisee a percentage (minimum 40%, or higher as set forth in the
business manuals described in paragraph 12
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below) of the Gross Sales proceeds from products and services billed to and
collected from customers in the Territory.
8. SALES OUTSIDE OF YOUR TERRITORY. Franchisee shall not sell to any
accounts physically located within the territory of another ▇▇▇▇▇.▇▇▇
franchisee. However, Franchisee may sell to accounts not physically located
within the territory of another ▇▇▇▇▇.▇▇▇ franchisee for so long as the
territory remains unoccupied under the following restrictions:
a. ACCOUNT OWNERSHIP. In the event that a previously unoccupied
territory is sold, the new territory owner shall own the right to receive Gross
Sales percentage payments from all new account contracts and or renewed existing
contracts in that territory. Such right to receive Gross Sales percentage
payments from pre-existing contracts in the territory shall remain with the
selling franchise owner for the term (not renewal terms) of the existing
contract with that customer up to a maximum of 12 months after the new territory
owner begins operating.
b. RIGHT TO PURCHASE CONTIGUOUS TERRITORY. If and when the Gross Sales
outside the Territory reach an aggregate of $300,000 (including one time and
recurring fees), Franchisee shall have 60 days to decide to purchase ▇▇▇▇▇.▇▇▇
franchise rights to another territory contiguous to the Territory, if one is
available. If Franchisee does not purchase an available additional territory
within the 60-day period, all accounts outside the Territory (including
pre-existing contracted accounts) shall automatically switch to a
ZLand.com-owned ("company owned") account status.
9. SOLICITATION AND SERVICE OF MAJOR ACCOUNTS. Major Accounts are defined
as accounts in which the customer employs more than 500 employees, more than 50%
of whom are employed outside of Franchisee's Territory. Due to the nature of
these accounts, the involvement of more than one franchisee or ▇▇▇▇▇.▇▇▇ may be
needed to provide the customer with quality service. In order to ensure that
such quality service is provided, Franchisee must apply to ▇▇▇▇▇.▇▇▇ to get
authorization to call on such an account at which time ▇▇▇▇▇.▇▇▇ will inform
Franchisee of any existing account history of which ▇▇▇▇▇.▇▇▇ is aware. In order
to proceed with the sale or service of such an account, Franchisee must submit a
marketing plan, the format of which is detailed in the business manuals, which
will set forth the terms and conditions under which Franchisee propose to
provide customer with service. ▇▇▇▇▇.▇▇▇ will review the marketing plan and
determine whether to approve, modify or disapprove it. ▇▇▇▇▇.▇▇▇ will make its
determination based on the quality of service Franchisee can reasonably provide
the customer, the effect such services would have on the franchise channel, and
the history of Franchisee's previously submitted plans. In the event that
▇▇▇▇▇.▇▇▇ does not approve Franchisee's marketing plan and Franchisee wish to
contest such a decision, the matter will be brought before the ▇▇▇▇▇.▇▇▇
Franchise Advisory Council (described in paragraph 22 below) for final
determination.
10. GROSS SALES. For the purposes of this Agreement, the term "Gross Sales"
shall be defined as the total dollar amount of all sales (including but not
limited to one time, recurring or any other types of fees) by Franchisee or any
similar business.
11. REQUIRED SOFTWARE. Franchisee is required to use Actionware CRM
software, which is provide to Franchisee by ▇▇▇▇▇.▇▇▇ at no additional charge.
▇▇▇▇▇.▇▇▇ will make available to Franchisee, at ▇▇▇▇▇.▇▇▇'s cost, the ▇▇▇▇▇.▇▇▇
Central Accounting Software Package. Franchisee may use the ▇▇▇▇▇.▇▇▇ Central
Accounting Software Package or other accounting software reasonably acceptable
to ▇▇▇▇▇.▇▇▇.
12. BUSINESS MANUALS. Franchisee shall use a standard chart of accounts as
provided in the business manuals. ▇▇▇▇▇.▇▇▇ shall provide Franchisee with the
business manuals prepared by ▇▇▇▇▇.▇▇▇ for use by franchisees of ▇▇▇▇▇.▇▇▇
territories similar to the Territory. Such manuals may be provided via hard
copies or on-line files, at ▇▇▇▇▇.▇▇▇'s discretion. The business manuals contain
detailed information including: 1) required operational procedures; 2) sales
methods; 3) bookkeeping and accounting procedures and required reports; 4)
business practices and policies; 5) Gross Sales proceeds percentage payments to
Franchisee under paragraph 7 above; and 6) other management and advertising
policies. Franchisee agrees to promptly adopt and use exclusively the practices,
methods and policies contained in the business manuals, now and as they may be
modified by ▇▇▇▇▇.▇▇▇ from time to time. Franchisee acknowledges that ▇▇▇▇▇.▇▇▇
is the owner of all proprietary rights in and to the ▇▇▇▇▇.▇▇▇
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System and that information revealed in the business manuals, in their entirety,
constitutes confidential trade secrets. Without the prior written consent of
▇▇▇▇▇.▇▇▇, Franchisee shall not disclose the contents of the business manuals to
any person, except employees of Franchisee, who have signed a nondisclosure
agreement regarding such information, for purposes related solely to the
operation of the Territory, nor shall Franchisee reprint or reproduce the
manuals in whole or in part for any purpose except in connection with
instruction of employees in the operation of the Territory. Such manuals, as
modified by ▇▇▇▇▇.▇▇▇ from time to time, and the policies contained therein, are
incorporated in this Agreement by reference.
13. IMPROVEMENTS. Any improvements to the ▇▇▇▇▇.▇▇▇ System or the ▇▇▇▇▇.▇▇▇
products or services conceived, developed, or acquired by Franchisee shall be
promptly disclosed in writing to ▇▇▇▇▇.▇▇▇, and Franchisee agrees to immediately
thereon assign, and hereby does assign, its entire right, title, and interest
in, to, and under such improvements including, without limitation, all
intellectual property rights therein, to ▇▇▇▇▇.▇▇▇. Franchisee shall not
implement or use any such improvements unless and until authorized to do so in
writing by ▇▇▇▇▇.▇▇▇. Additionally, until such authorization to implement and
use is given by ▇▇▇▇▇.▇▇▇ Franchisee shall maintain the Improvements in strict
confidence.
14. ADVERTISING. Franchisee shall use only advertising and promotional
materials and programs provided by ▇▇▇▇▇.▇▇▇ or approved in advance, in writing,
by ▇▇▇▇▇.▇▇▇. All such materials must be submitted to ▇▇▇▇▇.▇▇▇ at least two
weeks prior to their intended publication or use. The approval by ▇▇▇▇▇.▇▇▇ of
Franchisee's advertising and promotional material or the providing of such
material by ▇▇▇▇▇.▇▇▇ to Franchisee shall not, directly or indirectly, require
▇▇▇▇▇.▇▇▇ to pay for such advertising or promotion.
a. For local and regional advertising, Franchisee shall expend a minimum
of $2,500, subject to inflation adjustment, each month on local advertising
during their first year of operation of the Territory. For each annual period
thereafter, Franchisee shall spend each month at least the greater of (i) 3% of
Franchisee's monthly Gross Sales or (ii) $1,000, subject to "inflation
adjustment" as provided in paragraph 39 hereof. Amounts paid out in excess of
the minimum requirement in one month may be applied to the subsequent month's
minimum requirement. Franchisee shall submit quarterly reports on the
expenditure of such funds although the funds must be expended as required
monthly. ▇▇▇▇▇.▇▇▇ may in the future institute a regional advertising, publicity
and marketing coop (the "Regional Marketing Coop") in which each ▇▇▇▇▇.▇▇▇
member franchisee shall have votes equal to the number of Market Points in their
respective territory. The Regional Marketing Coop shall create its own by-laws
with ▇▇▇▇▇.▇▇▇'s approval. Until such Regional Marketing Coop is instituted,
Franchisee's expenditures of a regional nature shall be counted against their
local advertising requirements.
b. ▇▇▇▇▇.▇▇▇ may in the future institute a national advertising,
publicity and marketing fund (the "National Marketing Fund") for such
advertising, advertising-related, marketing and/or public relations programs,
services and/or materials as ▇▇▇▇▇.▇▇▇, in its sole discretion, deem necessary
or appropriate. When instituted, the National Marketing Fund may be combined
with any marketing fund otherwise established for ▇▇▇▇▇.▇▇▇ franchisees and the
funds merged for use in accordance with this Agreement. ▇▇▇▇▇.▇▇▇ shall be have
the right to use funds for regional advertising if, in its sole discretion,
▇▇▇▇▇.▇▇▇ determines that such funds will be more effectively used in this
manner. Any funds so diverted to regional advertising shall be diverted to
regional advertising in the region from which they were received. For national
advertising, Franchisee shall contribute each month the greater of (i) 1% of
Gross Sales or (ii) $500, subject to inflation adjustment. Until such time as
▇▇▇▇▇.▇▇▇ institutes a National Marketing Fund, in addition to and under the
same terms as the amounts required by subparagraph a above, Franchisee shall be
required to spend each month on local advertising the greater of (i) 1% of Gross
Sales or (ii) $500, subject to inflation adjustment. By the 15th day of the
month following the quarter end, Franchisee shall submit reports on the monthly
expenditure of such funds during the prior three months.
15. TRAINING. Franchisee acknowledges the importance of uniform quality of
business operations among all territories in the ▇▇▇▇▇.▇▇▇ System and agrees to
enroll Franchisee (or the general manager), Franchisee's sales staff, and
Franchisee's production staff, present and future, in ▇▇▇▇▇.▇▇▇ "Basic
Training", which consists of the basic training required to establish such
persons as qualified for their
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respective positions. ▇▇▇▇▇.▇▇▇ shall make available to Franchisee the services
of its training staff for Basic Training at no charge for the first year
Franchisee operates the Territory. ▇▇▇▇▇.▇▇▇ shall bear the cost of maintaining
the training center, including the overhead costs of training, staff salaries,
and training materials and agrees to provide to Franchisee both basic and
advanced instruction for the operation of a ▇▇▇▇▇.▇▇▇ System territory.
Franchisee shall pay all traveling, living, compensation or other expenses
incurred by Franchisee and Franchisee's employees in connection with attendance
to such training. If Franchisee, or Franchisee's designated general manager, has
not successfully completed ▇▇▇▇▇.▇▇▇'s Basic Training within 120 days after this
Agreement is signed, (i) Franchisee will be refunded the License Fee and Market
Premium Fee described in paragraph 17, minus ▇▇▇▇▇.▇▇▇'s costs for such training
and (ii) this Agreement will terminate, with no further obligation by either
party.
16. PERFORMANCE STANDARD. On a semi-annual basis, ▇▇▇▇▇.▇▇▇ computes the
"Applicable Standard", by dividing (i) total Gross Sales in the ▇▇▇▇▇.▇▇▇ system
in the United States during the previous six months by (ii) the total number of
"Market Points" (as defined in paragraph 17.a. below) in the ▇▇▇▇▇.▇▇▇ system in
the United States at the date of computation. Every six months, beginning 12
months after the Commencement Date, ▇▇▇▇▇.▇▇▇ will compare (i) Franchisee's
Gross Sales (as recorded in the centralized ▇▇▇▇▇.▇▇▇ billing system) made to
accounts whose primary office is located in Franchisee's Territory with (ii) the
most recent Applicable Standard. If Franchisee's Gross Sales do not equal at
least 50% of the Applicable Standard at the end of any six-month period,
Franchise shall be notified that it has not met the Applicable Standard and it
shall have six months in which to correct the situation and meet the next
Applicable Standard as determined six months later. If Franchisee does not meet
the next Applicable Standard, Franchisee shall have five days to indicate in
writing whether or not Franchisee wishes to sell Franchisee's Territory to a
third party. If Franchisee indicates that it wishes to sell its Territory,
Franchisee will have 120 days after the date of such notice to complete such
sale, subject to all requirements of this Agreement. Franchisee will, at the
time of sale, sign a general release, in a form prescribed by ▇▇▇▇▇.▇▇▇, of any
and all claims, liabilities and/or obligations, of any nature whatsoever,
however arising, known or unknown, against ▇▇▇▇▇.▇▇▇. If Franchisee does not,
within such five days, so advise ▇▇▇▇▇.▇▇▇ of its wish to sell the Territory to
a third party, or if no sale meeting the requirements of this Agreement takes
place within such 120 days, or Franchisee wishes not to sign a general release,
Franchisee's rights, and ▇▇▇▇▇.▇▇▇'s obligations, under this Agreement will
terminate immediately on mailing of written notice of termination.
17. INITIAL FEES.
a. MARKET POINTS. To develop and identify each ▇▇▇▇▇.▇▇▇ territory,
▇▇▇▇▇.▇▇▇ has assigned a "Market Point" value based on the number of employees
in every business in each zip code throughout the U.S., ranging from .5 point
for businesses with fewer than 20 employees to up to 50 points for businesses
with 500 or more employees. Each territory consists of at least 5,000 Market
Points, but may contain considerably more Market Points. The number of Market
Points in the Territory is specified in Attachment 1 hereto.
b. LICENSE FEE. For each increment of 5,000 Market Points in the
Territory (as specified in Attachment 1), Franchisee will pay ▇▇▇▇▇.▇▇▇ a
License Fee of $30,000.
c. MARKET PREMIUM FEE. In addition to the License Fee, Franchisee will
pay to ▇▇▇▇▇.▇▇▇ a Market Premium Fee of $6 per Market Point in excess of the
last 5,000-Market Point increment applicable to the Territory (see Attachment
1).
d. FRANCHISEE ACKNOWLEDGMENT. Franchisee acknowledges that (i) the
initial grant of this Territory and Agreement constitutes the sole consideration
for the payment by Franchisee to ▇▇▇▇▇.▇▇▇ of the License Fee and Market Premium
Fee, and (ii) ▇▇▇▇▇.▇▇▇ has fully earned the License Fee and Market Premium Fee
(except where Franchisee, or Franchisee's designated general manager, has not
successfully completed ▇▇▇▇▇.▇▇▇'s Basic Training).
18. REPORTS. By the close of business every Friday, Franchisee shall
coordinate/replicate those databases described in the business manuals with the
▇▇▇▇▇.▇▇▇ System master databases, in the manner specified by ▇▇▇▇▇.▇▇▇ in the
business manuals. Franchisee shall submit the reports relating to the above
databases specified by ▇▇▇▇▇.▇▇▇ in the business manuals. On or before the 15th
day of the month following the quarter end, Franchisee shall submit, in such
form as ▇▇▇▇▇.▇▇▇ shall reasonably
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require from time to time and as described in the business manuals, the
financial reports showing the income and expenses of the Territory. Franchisee
shall keep and preserve full and complete records of Gross Sales for at least
three years in a manner and form satisfactory to ▇▇▇▇▇.▇▇▇ and shall also
deliver such additional financial, operating and other information and reports
as ▇▇▇▇▇.▇▇▇ may reasonably request on the forms and in the manner prescribed by
▇▇▇▇▇.▇▇▇. Franchisee further agrees to submit within 90 days following the
close of each fiscal year of the Territory operation, a profit and loss
statement covering operations during such fiscal year and a balance sheet taken
as of the close of such fiscal year, all prepared in accordance with generally
accepted accounting principles and ▇▇▇▇▇.▇▇▇ requirements as described in the
business manuals. If ▇▇▇▇▇.▇▇▇ shall request certification, a public accountant
shall certify the profit and loss statement and the balance sheet, if any, and
consult with ▇▇▇▇▇.▇▇▇ concerning such statement and balance sheet. The original
of each such report required by this paragraph 18 shall be mailed to ▇▇▇▇▇.▇▇▇
at the address indicated in paragraph 33 herein.
▇▇▇▇▇.▇▇▇ shall have the right, at its expense, to inspect and/or audit
Franchisee's accounts, books, database data, records and tax returns at all
times to insure that Franchisee is complying with the terms of this Agreement.
Franchisee shall have the right, at its expense and at any time, to inspect or
cause to be inspected any and all records of their Territory, which are stored
on-line. Franchisee shall also have the right, at its expense and at any time
during business hours, to inspect and audit, or cause to be inspected and
audited, accounting and sales records which relate to the operation of their
Territory. If such inspection discloses that Franchisee has been materially
false in its reports to ▇▇▇▇▇.▇▇▇, Franchisee shall bear the cost of such
inspection and audit. Otherwise, ▇▇▇▇▇.▇▇▇ shall bear the cost of such
inspection and audit.
19. RESTRICTIONS. Franchisee agrees and covenants as follows:
a. During the term of this Agreement, Franchisee shall not, without the
prior written consent of ▇▇▇▇▇.▇▇▇, directly or indirectly, engage in, acquire
any financial or beneficial interest (including interests in corporations,
partnerships or trusts, unincorporated associations and joint ventures) in, or
become a part of any business which is similar to the franchise granted in this
Agreement.
b. For a period of 18 months after termination of this Agreement for any
reason or the sale of the Territory, Franchisee shall not directly or
indirectly, engage in or acquire any financial or beneficial interest (including
interests in corporations, partnerships or trusts, unincorporated associations
and joint ventures) in, or become a part of any business which is similar to the
franchise granted under this Agreement.
c. Franchisee shall not appropriate, use, or duplicate the ▇▇▇▇▇.▇▇▇
System, or any portion thereof, for use in any other business or other similar
business.
d. Franchisee shall not disclose or reveal any portion of the ▇▇▇▇▇.▇▇▇
System to a non-franchisee other than to Franchisee's employees as an incident
of their training.
e. Franchisee shall acquire no right to use, or to license the use of,
any name, ▇▇▇▇ or other intellectual property right granted or to be granted
herein, except in connection with the operation of the Territory and then only
so long as Franchisee is compliance with this Agreement.
f. Franchisee shall not use any name, ▇▇▇▇ or other intellectual
property granted or to be granted herein, except in connection with the
operation of the Territory and as specified in the business manuals;
The restrictions contained in subsections (a) and (b) of this paragraph
19 shall not apply to persons who own less than 2% of the shares of a company
whose shares are listed and traded on a national or regional securities
exchange.
20. COMPLIANCE WITH ENTIRE SYSTEM. Franchisee acknowledges that every
component of the ▇▇▇▇▇.▇▇▇ System is important to ▇▇▇▇▇.▇▇▇ and to the operation
of the Territory as a ▇▇▇▇▇.▇▇▇ franchise, including a designated product list,
uniformity of service, sales methods, and quality of service.
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▇▇▇▇▇.▇▇▇ shall have the right to inspect the Territory at all
reasonable times to ensure that Franchisee's operation thereof is in compliance
with the standards and policies of the ▇▇▇▇▇.▇▇▇ System.
Franchisee shall comply with the entire ▇▇▇▇▇.▇▇▇ System, including, but
not limited to, the following:
a. Operate the Territory in a professional manner; comply with all
business policies, practices and procedures established by ▇▇▇▇▇.▇▇▇; sell
through the Territory only the products and services now and hereafter
designated by ▇▇▇▇▇.▇▇▇; and maintain the quality of service in compliance with
designated standards as may be prescribed from time to time by ▇▇▇▇▇.▇▇▇.
b. Purchase computer hardware and software in accordance with the
equipment specifications designated by ▇▇▇▇▇.▇▇▇, and, promptly after notice
from ▇▇▇▇▇.▇▇▇ that the Territory needs such equipment, cause the installation
thereof;
c. Operate the Territory from the Premises, which must conform to site
requirements contained in the business manuals;
d. Have an answer on Franchisee's ▇▇▇▇▇.▇▇▇ business telephone lines
during all hours, business or non-business hours, as described in the business
manuals; and
e. Obtain a signed Non-Disclosure and Non-Competition Agreement for each
of their affiliates, paid employees or non-paid workers within ten days after
the affiliate or employee assumes that status with Franchisee;
21. BEST EFFORTS. Franchisee shall diligently and fully exploit the rights
granted in this Agreement by personally devoting full time and best efforts. In
the event that Franchisee hires a general manager to operate the Territory or
more than one individual, a corporation, or a partnership has executed this
Agreement as Franchisee, then
_______________________________________________________ shall personally devote
full time and best efforts to the operation of the Territory. Franchisee shall
keep from conflicting enterprises or any other activities that would be
detrimental to or interfere with the business of the Territory.
22. FRANCHISEE ADVISORY COUNCIL. ▇▇▇▇▇.▇▇▇ Franchisees have established the
▇▇▇▇▇.▇▇▇ Franchise Advisory Council ("ZFAC"). The ZFAC is adopting its own
rules, regulations and procedures, provided they do not conflict with any
provision of this Agreement.
23. INTERFERENCE WITH EMPLOYMENT RELATIONS OF OTHERS. During the term of
this Agreement, Franchisee shall not employ or seek to employ any person who is
at the time employed by ▇▇▇▇▇.▇▇▇, any of its subsidiaries, or by any person who
is at the time operating a ▇▇▇▇▇.▇▇▇ franchise or otherwise induce, directly or
indirectly, such person to leave such employment. This paragraph 23 shall not be
violated if such person has left the employ of any of the foregoing parties for
a period in excess of six months.
24. ASSIGNMENT. Franchisee shall not assign or otherwise transfer in whole
or in part (whether voluntarily or by operation of law) directly, indirectly, or
contingently Franchisee's interest in this Agreement without the prior written
consent of ▇▇▇▇▇.▇▇▇, which consent shall not be withheld unreasonably. In the
event that ▇▇▇▇▇.▇▇▇ grants such written consent, any such assignment or
transfer shall comply with the terms set forth below in this paragraph 24 and
shall require payment to ▇▇▇▇▇.▇▇▇ of a transfer fee of $4,000 plus 25% of the
initial fee specified in paragraph 17 unless otherwise noted below.
a. DEATH OR PERMANENT INCAPACITY OF FRANCHISEE. Upon the death or
permanent incapacity of Franchisee, the interest of Franchisee in this Territory
may be assigned either pursuant to the terms of sub-paragraph (d) herein or to
one or more of the following persons: Franchisee's spouse, heirs, or nearest
relatives by blood or marriage, subject to the following conditions: (i) such
person shall meet the then current requirements and pass the then current
testing and interviewing process for new franchise applicants, and (ii) such
person shall also execute an agreement by which the person personally assumes
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full and unconditional liability for and agrees to perform all the terms and
conditions of this Agreement to the same extent as the original Franchisee. If
such person cannot meet the above conditions, ▇▇▇▇▇.▇▇▇ shall have the option to
operate and/or manage the Territory on behalf of Franchisee or of Franchisee's
estate until the deceased or incapacitated Franchisee's interest is transferred
to another party acceptable to ▇▇▇▇▇.▇▇▇ in accordance with the terms and
conditions of this Agreement. However, in no event shall ▇▇▇▇▇.▇▇▇ operate and
manage the Territory for a period in excess of 12 full calendar months without
the consent of Franchisee or Franchisee's estate. In the event that ▇▇▇▇▇.▇▇▇ so
operates and/or manages the Territory, ▇▇▇▇▇.▇▇▇ shall make a complete account
to and return the net income from such operation to the Franchisee or to the
Franchisee's estate, less a reasonable management fee and expenses. If the
disposition of the Territory to a party acceptable to ▇▇▇▇▇.▇▇▇ has not taken
place within 12 months from the date that ▇▇▇▇▇.▇▇▇ has commenced the operation
or management of the Territory on behalf of the deceased or incapacitated
Franchisee, then ▇▇▇▇▇.▇▇▇ shall have the option to purchase the Territory at
fair market value for cash or its common stock at its option.
b. ASSIGNMENT TO FRANCHISEE'S CORPORATION. ▇▇▇▇▇.▇▇▇ shall, upon
Franchisee's compliance with such requirements as may from time to time be
prescribed by ▇▇▇▇▇.▇▇▇, including a Stockholders Agreement in the form
prescribed by ▇▇▇▇▇.▇▇▇, consent to an assignment to a corporation whose shares
are wholly owned and controlled by Franchisee. The corporate name of the
corporation shall not include any of the names or trademarks granted by this
Agreement. In the event of such a transfer, the transfer fee shall be waived.
Any subsequent assignment or transfer, either voluntarily or by operation of
law, of all or any part of said shares shall be made in compliance with the
terms and conditions set forth in sub-paragraph (a) and (b) herein.
c. OTHER ASSIGNMENT. In addition to any assignments or contingent
assignments contemplated by the terms of sub-paragraphs (a) and (b) of this
paragraph 24, Franchisee shall not sell, transfer or assign this Territory or
Agreement to any person or persons without ▇▇▇▇▇.▇▇▇'s prior written consent.
Such consent shall not be unreasonably withheld. In the event that any transfer
under this section is made to an existing ▇▇▇▇▇.▇▇▇ franchisee, the transfer fee
shall be waived. In determining whether to grant or withhold such consent,
▇▇▇▇▇.▇▇▇ shall consider for each prospective transferee, by way of
illustration, the following: (i) work experience and aptitude, (ii) financial
background, (iii) character, (iv) ability to personally devote full time and
best efforts to managing the Territory, (v) residence in the locality of the
Territory, (vi) equity interest in the Territory, (vii) conflicting interests,
(viii) willingness to sign the then current Agreement, and (ix) such other
criteria and conditions as ▇▇▇▇▇.▇▇▇ shall then apply in the case of an
application for a new franchise to operate a ▇▇▇▇▇.▇▇▇ franchise. ▇▇▇▇▇.▇▇▇'s
consent shall also be conditioned upon each transferee's execution of an
agreement by which transferee personally assumes full and unconditional
liability for and agrees to perform from the date of such transfer all
obligations, covenants and agreements contained in this Agreement to the same
extent as if transferee had been an original party to this Agreement.
Franchisee-transferor shall continue to remain personally liable for all
affirmative obligations, covenants and agreements contained herein for the full
term of this Agreement unless Franchisee-transferor executes a mutual release of
all claims known and unknown with ▇▇▇▇▇.▇▇▇, in a form satisfactory to
▇▇▇▇▇.▇▇▇, at the time of the transfer.
d. FIRST OPTION TO PURCHASE. At least 20 days prior to the proposed
effective date, Franchisee or Franchisee's representative shall give ▇▇▇▇▇.▇▇▇
written notice of intent to sell or otherwise transfer this Territory or
Agreement pursuant to sub-paragraph (d) of this paragraph 24. The notice shall
set forth the name and address of the proposed purchaser and all the terms and
conditions of any offer. ▇▇▇▇▇.▇▇▇ shall have the first option to purchase the
Territory by giving written notice to Franchisee of its intention to purchase on
the same terms as the offer within ten days following ▇▇▇▇▇.▇▇▇'s receipt of
such notice. However, if ▇▇▇▇▇.▇▇▇ fails to exercise its option and the
Territory is not subsequently sold to the proposed purchaser for any reason,
▇▇▇▇▇.▇▇▇ shall continue to have, upon the same conditions, a first option to
purchase the Territory upon the terms and conditions of any subsequent offer.
25. FRANCHISEE NOT AN AGENT OF ▇▇▇▇▇.▇▇▇. Franchisee shall have no
authority, express or implied, to act as agent of ▇▇▇▇▇.▇▇▇ or any of its
affiliates for any purpose. Franchisee is, and shall remain, an independent
contractor responsible for all obligations and liabilities of, and for all loss
or damage to, the Territory and its business and for all claims or demands based
on damage or destruction
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of property or based on injury, illness or death of any person or persons,
directly or indirectly, resulting from the operation of the Territory. Further,
Franchisee and ▇▇▇▇▇.▇▇▇ are not and do not intend to be partners, associates,
or joint employers in any way and ▇▇▇▇▇.▇▇▇ shall not be construed to be jointly
liable for any acts or omissions of Franchisee under any circumstances.
26. INSURANCE. Franchisee shall, at all times during the term of this
Agreement, and for a period of three years thereafter, maintain insurance to
protect ▇▇▇▇▇.▇▇▇ and its successors from the claims, losses and liabilities for
which Franchisee is obligated to protect, defend, hold harmless, and indemnify
▇▇▇▇▇.▇▇▇ and its successors pursuant to this Agreement including, but not
limited to, (i) claims under Worker's Compensation and State Disability Acts;
(ii) claims for damages because of bodily injury, sickness, disease or death of
any of Franchisee's employees or of any other person which arises out of any act
or omission by Franchisee, Franchisee's employees or agents; (iii) claims for
damages because of injury to or destruction of tangible property, including loss
of use resulting therefrom, which arise out of any act or omission of
Franchisee, Franchisee's employees or agents; and (iv) product liability claims
arising out of Franchisee's manufacture, marketing, use, distribution or sale of
any products or services. The insurance maintained by Franchisee shall include a
general liability insurance policy in an amount of at least $1,000,000 or in
such greater amounts as ▇▇▇▇▇.▇▇▇ may from time to time reasonably require. Such
policies shall name ▇▇▇▇▇.▇▇▇ as an additional insured. Such policies shall
provide that the same may not be canceled or modified without 30 days prior
notice to ▇▇▇▇▇.▇▇▇. Each time any such policy is issued or renewed, Franchisee
shall furnish ▇▇▇▇▇.▇▇▇ with a certificate of insurance showing ▇▇▇▇▇.▇▇▇ as an
additional insured and indicating that such policy may not be canceled or
modified without 30 days prior notice to ▇▇▇▇▇.▇▇▇. In addition, if requested by
▇▇▇▇▇.▇▇▇, Franchisee shall furnish ▇▇▇▇▇.▇▇▇ with a complete copy of each such
policy. If such a policy is not obtained, Franchisee authorize ▇▇▇▇▇.▇▇▇ to
obtain such a policy and charge any and all amounts incurred to Franchisee and
deduct said amount from any amounts then due from ▇▇▇▇▇.▇▇▇ to Franchisee.
▇▇▇▇▇.▇▇▇ shall, for the duration of this Agreement, maintain a general business
liability insurance policy in the amount of at least $1,000,000 or in such
greater amount that ▇▇▇▇▇.▇▇▇ may from time to time consider necessary.
27. TERMINATION BY FRANCHISEE. Franchisee may terminate this Agreement by
giving ▇▇▇▇▇.▇▇▇ 90 days written notice and sign a general release, in form
prescribed by ▇▇▇▇▇.▇▇▇, of any and all claims, liabilities and/or obligations,
of any nature whatsoever, however arising, known or unknown, against ▇▇▇▇▇.▇▇▇.
28. IMMEDIATE TERMINATION BY ▇▇▇▇▇.▇▇▇. The parties agree that the
occurrence of any of the following events shall constitute a material breach of
this Agreement and violate the essence of Franchisee's obligations. In the event
that any of the following events occur, ▇▇▇▇▇.▇▇▇ may, at its election and
without prejudice to any of its other rights or remedies at law or in equity,
immediately terminate this Agreement upon written notice of such election to
Franchisee:
a. Except as otherwise required by the United States Bankruptcy Code, if
Franchisee becomes insolvent, is adjudicated a bankrupt or files or has filed
against them a petition in bankruptcy, reorganization or similar proceeding;
b. If Franchisee is convicted of a felony or any criminal misconduct;
c. If Franchisee or any affiliates bills any customer directly for any
▇▇▇▇▇.▇▇▇ products and services;
d. If Franchisee begins operation of its Territory without
satisfactorily completing the initial training;
e. If Franchisee has been in default (even if cured and whether or not
for the same reason) more than three times in any one year period; or
f. If Franchisee files any legal action (including arbitration) against
▇▇▇▇▇.▇▇▇ and/or any related entities and does not receive a final judgment or
award substantially in their favor on the merits.
29. NOTICED TERMINATION BY ▇▇▇▇▇.▇▇▇. The parties agree that the occurrence
of any of the following events shall constitute a material breach of this
Agreement and, without prejudice to any of its other rights or remedies at law
or in equity, ▇▇▇▇▇.▇▇▇ at its election, may terminate this Agreement upon
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the occurrence of any of the following events with 30 days written notice if the
notified breach has not been cured within the 30 day notice period:
a. If Franchisee fails to submit to ▇▇▇▇▇.▇▇▇ in a timely manner any
information Franchisee is required to submit under this Agreement and/or the
business manuals;
b. If Franchisee fails to begin operation of the Territory within 90
days of the Commencement Date of this Agreement, or if Franchisee fails to
operate their Territory in accordance with the business manuals;
c. If Franchisee owns or operates any unauthorized Territory or sells,
distributes or offers for sale outside of their Territory any other products or
services without ▇▇▇▇▇.▇▇▇'s written approval;
d. If Franchisee fails to make any payment when due under this
Agreement, the business manuals or any other agreement between Franchisee and
▇▇▇▇▇.▇▇▇ or any affiliate;
e. If Franchisee fails to make advertising expenditures when required
under this Agreement, the business manuals or any other agreement between
Franchisee and ▇▇▇▇▇.▇▇▇ or any affiliate;
f. If Franchisee misuses the trade name, trademarks or service marks, or
the ▇▇▇▇▇.▇▇▇ System or engages in conduct which reflects materially and
unfavorably upon the goodwill associated with them or if Franchisee uses in a
▇▇▇▇▇.▇▇▇ Territory business any names, marks, systems, logotypes or symbols
that ▇▇▇▇▇.▇▇▇ has not authorized Franchisee to use;
g. If Franchisee or any affiliates have any direct or indirect interest
in the ownership or operation of any business that is confusingly similar to a
▇▇▇▇▇.▇▇▇ Territory business or uses the ▇▇▇▇▇.▇▇▇ System or any trade names,
trademarks or service marks associated therewith;
h. If Franchisee fails to obtain a signed Non-Disclosure and
Non-Competition Agreement for each of their affiliates, paid employees or
non-paid workers within ten days after the affiliate or employee assumes that
status with Franchisee;
i. If Franchisee attempts to assign their rights under this Agreement in
any manner not authorized by this Agreement;
j. If Franchisee or any affiliates have made any material
misrepresentation in connection with the acquisition of the Territory to induce
▇▇▇▇▇.▇▇▇ to enter into this Agreement;
k. If Franchisee acts without ▇▇▇▇▇.▇▇▇'s prior approval or consent in
regard to a matter for which ▇▇▇▇▇.▇▇▇'s prior approval or consent is expressly
required by this Agreement and/or the business manuals;
l. If Franchisee, their general manager or their employees fail to
answer the Territory's business telephone line for a period of three consecutive
business days, exclusive of weekends and Federal or State holidays;
m. If Franchisee fails to permanently correct a breach of this Agreement
or to meet the standards set out in the business manuals after being twice
requested in writing by ▇▇▇▇▇.▇▇▇ to correct the problem in any 12-month period;
n. If Franchisee lists or places any unauthorized copyrighted or
trademarked material or any material legally judged to be obscene, threatening,
libelous or classified by the United States government on ▇▇▇▇▇.▇▇▇'s servers;
or
o. If Franchisee fails to meet the performance criteria set out in
paragraph 16.
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30. WITHHOLDING CONSENT TO TRANSFER. Any uncured breach of the terms of this
Agreement shall be sufficient reason for ▇▇▇▇▇.▇▇▇ to withhold approval of its
consent to any assignment or transfer of Franchisee's interest in this Territory
provided for herein.
31. EFFECT OF TERMINATION BY ▇▇▇▇▇.▇▇▇.
a. In the event of any termination of this Agreement by ▇▇▇▇▇.▇▇▇,
▇▇▇▇▇.▇▇▇ shall have an immediate right to enter and take possession of the
Premises and Territory in order to maintain continuous operation of the
Territory, to provide customers with an acceptable level of customer service, to
provide for orderly change of management and disposition of personal property,
and to otherwise protect ▇▇▇▇▇.▇▇▇'s interests.
b. Upon termination or expiration of this Agreement, Franchisee shall
forthwith return to ▇▇▇▇▇.▇▇▇ any copies of the business manuals in Franchisee's
possession, together with all other material containing trade secrets, operating
instructions or business practices; discontinue the use of the ▇▇▇▇▇.▇▇▇ System
and its associated trade names, service marks and trademarks or the use of any
and all signs, printed or online advertising bearing the name and marks, or any
reference to them; not disclose, reveal or publish all or any portion of the
▇▇▇▇▇.▇▇▇ System; and Franchisee shall not thereafter use any trade name,
service ▇▇▇▇ or trademark similar to or likely to be confused with those of
▇▇▇▇▇.▇▇▇.
32. EFFECT OF WAIVERS. No waiver by ▇▇▇▇▇.▇▇▇ or any breach or a series of
breaches of this Agreement shall constitute a waiver of any subsequent breach or
waiver of the terms of this Agreement.
33. NOTICES. Any notice hereunder shall be in writing and shall be delivered
by personal service or by United States certified or registered mail, with
postage prepaid, addressed to Franchisee at the Premises or to ▇▇▇▇▇.▇▇▇ at
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Either party, by a
similar written notice, may change the address to which notices shall be sent.
34. DISPUTE RESOLUTION. Both parties agree to resolve any and all claims,
disputes and disagreements if the following manner:
a. First, the matter will be discussed in a face-to-face meeting between
the parties. This meeting will be held at a location reasonably convenient to
Franchisee and within 30 days after either party gives written notice to the
other proposing such a meeting.
b. If the matter is not successfully resolved, it will be resolved by
submission for binding arbitration in Orange County, California before and in
accordance with the arbitration rules of Franchise Arbitration and Mediation
Services ("FAM"); provided that if such arbitration is unable to be heard by FAM
for any reason, the arbitration will be conducted before and in accordance with
the Commercial Arbitration Rules of the American Arbitration Association. The
parties shall share equally the fees and expenses of the arbitrator(s) and/or
arbitration organization. In each case, the parties to any mediation/arbitration
will execute appropriate confidentiality agreements, excepting only such public
disclosures and filings required by law. Each participant must submit or file
any claim that would constitute a compulsory counterclaim (as defined by the
applicable rule under the Federal Rules of Civil Procedure) within the same
proceeding as the claim to which it relates. Any such claim that is not
submitted or filed in such proceeding will be forever barred.
c. The obligation herein to mediate and/or arbitrate will not be binding
on ▇▇▇▇▇.▇▇▇ with respect to claims or issues relating primarily to (i) the
validity of any trade-marks, service marks or other intellectual property of
▇▇▇▇▇.▇▇▇'s, (ii) ▇▇▇▇▇.▇▇▇'s rights to obtain possession of any real and/or
personal property (including any action in unlawful detainer, ejectment or
otherwise) and/or (iii) ▇▇▇▇▇.▇▇▇'s rights to receive and enforce a temporary
restraining order, preliminary injunction, permanent injunction or other
equitable relief.
d. If any party to an arbitration wishes to appeal any final award by an
arbitrator (there will be no appeal of interim awards or other interim relief),
that party can appeal, within 30 days of such final award, to a three arbitrator
panel to be appointed by the same organization as conducted the arbitration. The
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issues on appeal will be limited to the proper application of the law to the
facts found at the arbitration and will not include any trial de novo or other
fact-finding function. The party requesting such appeal must pay all costs and
fees charged by such arbitration appeal panel and/or arbitration organization in
connection with such appeal, as well as posting any bond deemed appropriate by
such arbitration organization or arbitration appeal panel. In addition, a party
requesting appeal, and who does not prevail on appeal, will pay the other
party's (or parties') attorneys' fees and other costs of responding to such
appeal.
e. Each party knowingly waives all rights to trial by a court or jury,
understanding that arbitration may be less formal than a court or jury trial,
may use different rules of procedure and evidence and that appeal is generally
less available, still strongly preferring arbitration to resolve any disputes,
except as provided in subsection (d) above. Unless specifically required by
applicable statute, each party also waives all rights to any claims for (whether
by claim, counter-claim, offset, way of defense or otherwise), punitive,
exemplary, multiple, pain-and-suffering, mental distress, incidental,
consequential, special, lost income and/or profits and/or similar damages under
any theory whatsoever, both parties agreeing that such claims are inherently
speculative and subject to abuse.
f. If either party institutes any action against the other party to
secure or protect their rights under the terms of this Agreement, in addition to
any judgment entered in its favor, that party shall be entitled to recover such
reasonable attorneys' fees as may be allowed by the arbitrator together with
arbitration costs and expenses of such action.
35. INDEMNIFICATION. If ▇▇▇▇▇.▇▇▇ shall be subject to any claim, demand or
penalty or become a party to any suit or other judicial or administrative
proceeding by reason of any claimed act or omission by Franchisee, Franchisee's
employees or agents, or by reason of any act occurring on the Premises, or by
reason of an omission with respect to the business or operation of the
Territory, Franchisee shall indemnify and hold ▇▇▇▇▇.▇▇▇ harmless against all
judgments, settlements, penalties, and expenses, including attorneys' fees,
court costs and other expenses or litigation or administrative proceeding,
incurred by or imposed on ▇▇▇▇▇.▇▇▇ in connection with the investigation or
defense relating to such claim or litigation or administrative proceeding and,
at the election of ▇▇▇▇▇.▇▇▇.
▇▇▇▇▇.▇▇▇ shall indemnify and hold Franchisee harmless from all fines,
suits, proceedings, claims, demands, actions, loss, damages, costs, fees
(including attorney's fees and related expenses) and/or any other expense,
obligation and/or liability of any kind or nature, however arising, growing out
of or otherwise connected with the sale of any products and services to
Franchisee by ▇▇▇▇▇.▇▇▇ to the extent that those products and services are in
violation of ▇▇▇▇▇.▇▇▇'s warranty of such items to the customer. Additionally,
▇▇▇▇▇.▇▇▇ will indemnify and hold Franchisee harmless from all fines, suits,
proceedings, claims, demands, actions, loss, damages, costs, fees (including
attorney's fees and related expenses) and/or any other expense, obligation
and/or liability of any kind or nature, however arising, growing out of or
otherwise connected with and/or related to the use of ▇▇▇▇▇.▇▇▇'s patents,
trademarks, trade name, and service marks, provided Franchisee is and has been
at all relevant times in compliance with ▇▇▇▇▇.▇▇▇'s standards regarding the use
of such items
36. LIMITED WARRANTY. With respect to any products and services provided,
approved or otherwise by ▇▇▇▇▇.▇▇▇, other than specific written warranties
expressly provided by ▇▇▇▇▇.▇▇▇ in connection with such items, such items are
provided without any warranties, express or implied, the warranties of
merchantability and fitness for a particular purpose being expressly disclaimed,
nor do there exist any express or implied warranties on the part of ▇▇▇▇▇.▇▇▇,
as to the design, condition, capacity, performance or any other aspect of such
items or their material or workmanship. Any warranty or other responsibility
with respect to any products and/or services or otherwise will be those of the
manufacturers or service providers only.
With respect to the products and services provided by ▇▇▇▇▇.▇▇▇,
▇▇▇▇▇.▇▇▇ warrants these items only to the extent expressly set forth in the
▇▇▇▇▇.▇▇▇ Sales Agreement or other standard sales agreements, provided to
Franchisee for use with its customers, and under the condition that such
standard sales agreements were used in connection with the sale of the products
and services for which Franchisee wishes to exercise this warranty.
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37. CONSTRUCTION AND SEVERABILITY. All references in this Agreement to the
singular shall include the plural where applicable. If any part of this
Agreement for any reason shall be declared invalid, such decision shall not
affect the validity of any remaining portion, which shall remain in full force
and effect. In the event that any material provision of this Agreement shall be
stricken or declared invalid, ▇▇▇▇▇.▇▇▇ shall have the right to terminate this
Agreement.
38. SCOPE AND MODIFICATION OF AGREEMENT. This Agreement (including
Attachment 1 and any riders hereto) constitutes the entire agreement between the
parties and supersedes all prior and contemporaneous oral or written agreements
or understandings of the parties. No interpretation, change, termination or
waiver of any of the provisions hereof shall be binding upon ▇▇▇▇▇.▇▇▇ unless in
writing signed by the President or Director of Franchise Licensing for
▇▇▇▇▇.▇▇▇, and which is specifically identified as an amendment hereto. No
modification, waiver, termination, rescission, discharge or cancellation of this
Agreement shall affect the right of any party hereto to enforce any claim or
right hereunder, whether or not liquidated, which occurred prior to the date of
such modification, waiver, termination, rescission, discharge or cancellation.
39. INFLATION ADJUSTMENT. "Inflation adjustment" is determined by changes in
the annual average of the Consumer Price Index for All Urban Consumers, Service
Group Only, 1982-1984 = 100, published by the Bureau of Labor Statistics of the
United States Department of Labor (or the highest similar future index if these
figures become unavailable).
40. GOVERNING LAW. The United States Arbitration Act (9 U.S.C. Section 1 et
seq.) governs procedural and jurisdictional issues respecting arbitration of
disputes under this Agreement. The ▇▇▇▇▇▇ Act (15 U.S.C. Section 1051 et seq.)
governs any issue involving the ▇▇▇▇▇.▇▇▇ Marks. The applicable laws of the
state where Franchisee is domiciled govern any issues arising from (i) the
modification of this Agreement during its term, (ii) the maximum rate of
interest payable by Franchisee under this Agreement, and (iii) post termination
non-competition covenants or obligations of either ▇▇▇▇▇.▇▇▇ or Franchisee.
Otherwise, this Agreement and the totality of the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws of
the State of California.
41. ACKNOWLEDGMENT. Franchisee acknowledges that:
a. The term of this Franchisee is set forth in paragraph 3(b) hereof and
a successor franchise shall only be granted pursuant to strict compliance with
conditions set forth in paragraph 4(a);
b. Franchisee hereby represents that Franchisee has received a copy of
this Agreement, has read and understands all obligations being undertaken and
has had an opportunity to consult with Franchisee's attorney with respect
thereto at least five business days prior to execution;
c. ▇▇▇▇▇.▇▇▇ has made no representation as to the future profitability
of the Territory;
d. Prior to the execution of this Agreement, Franchisee has had ample
opportunity to contact existing franchisees of ▇▇▇▇▇.▇▇▇ and to investigate all
representations made by ▇▇▇▇▇.▇▇▇ relating to the ▇▇▇▇▇.▇▇▇ System;
e. This Agreement establishes the Territory at the location specified on
page 1 hereof only and that no "exclusive", "protected" or other territorial
rights in the contiguous market area of such Territory is hereby granted or
inferred;
f. This Agreement supersedes any and all other agreements,
representations, respecting the Territory and contains all the terms,
conditions, and obligations of the parties with respect to the grant of this
Territory;
g. Neither ▇▇▇▇▇.▇▇▇ nor anyone acting on its behalf has made any
representations, inducement, promises, or agreements, orally or otherwise,
respecting the subject matter of this Territory or Agreement, which is not
embodied herein or set forth in the Uniform Franchise Offering Circular for
Prospective Franchisees; and
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h. This Territory is offered to Franchisee personally and to no other,
and may not be accepted by any other person, partnership or corporation, or
transferred by assignment, will or operation of law.
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IN WITNESS WHEREOF, each of the undersigned has here unto affixed his or
her signature on the day and year in this instrument first above written.
▇▇▇▇▇.▇▇▇, INC.
By:
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▇▇▇▇▇ ▇. ▇▇▇▇▇, President and Chief Operating Officer
Franchisee ( )
-------------------------------
By:
-------------------------------------------------
Print Name:
-------------------------------------------
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ATTACHMENT 1
TERRITORY
Your Territory is the county of _________________________, __________________
(or portion thereof as depicted in the map below), defined by the present United
States Postal Service Zip codes listed below.
The Territory consists of a total of _______ Market Points. There is (are) ____
increment(s) of 5,000 Market Points in the Territory, each requiring payment of
a License Fee of $30,000. In addition, Franchisee will pay to ▇▇▇▇▇.▇▇▇ a Market
Premium Fee of $6 per Market Point in excess of the last 5,000-Market Point
increment in the Territory. The total Initial Fee (aggregate of License Fee and
Market Premium Fee) due is $ ________________.
