EXHIBIT 10.2
▇▇▇▇▇▇▇.▇▇▇
REZcity Plus
A Division of Rezconnect Technologies, Inc.
FRANCHISE AGREEMENT
EXHIBIT B TO THE OFFERING CIRCULAR
THIS CONTRACT IS SUBJECT TO ARBITRATION
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TABLE OF CONTENTS
▇. ▇▇▇▇▇.................................................................2
II. TERRITORY.............................................................2
III. TERM AND RENEWAL......................................................3
IV. BUSINESS LOCATION.....................................................4
V. TRAINING AND ASSISTANCE...............................................5
VI. USE OF SYSTEM AND MARKS...............................................6
VII. OPERATIONS MANUAL.....................................................7
VIII. CONFIDENTIAL INFORMATION..............................................7
IX. MODIFICATION OF THE SYSTEM............................................8
X. ADVERTISING...........................................................8
XI. PAYMENTS TO FRANCHISEE................................................9
XII. BILLING, ACCOUNTING AND RECORDS.......................................9
XIII. STANDARDS OF QUALITY AND PERFORMANCE.................................10
XIV. FRANCHISOR'S OPERATIONS ASSISTANCE...................................11
XV. INSURANCE............................................................12
XVI. COVENANTS............................................................14
XVII. DEFAULT AND TERMINATION..............................................15
XVIII. RIGHTS AND DUTIES OF PARTIES UPON EXPIRATION OR TERMINATION..........17
XIX. TRANSFERABILITY OF INTEREST..........................................18
XX. DEATH OR INCAPACITY OF FRANCHISEE....................................20
XXI. RIGHT OF FIRST REFUSAL...............................................21
XXII. INDEPENDENT CONTRACTOR AND INDEMNIFICATION...........................21
XXIII. NON-WAIVER...........................................................22
XXIV. NOTICES..............................................................22
XXV. COST OF ENFORCEMENT OR DEFENSE.......................................23
XXVI. APPROVALS............................................................23
XXVII. ENTIRE AGREEMENT.....................................................23
XXVIII.SEVERABILITY AND CONSTRUCTION........................................24
XXIX. APPLICABLE LAW.......................................................24
XXX. ARBITRATION..........................................................25
XXXI. FORCE MAJEURE........................................................26
XXXII. FRANCHISEE DEFINED; GUARANTY.........................................26
XXXIII.CAVEAT...............................................................26
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XXXIV. ACKNOWLEDGMENTS......................................................26
EXHIBITS
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A. MAP OF TERRITORY B. COMMISSION SCHEDULE
C. GUARANTY AND ASSUMPTION OF OBLIGATIONS D. PROMISSORY NOTE
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RezConnect Technologies, Inc.
FRANCHISE AGREEMENT
This Franchise Agreement (this "Agreement"), made this ____ day of
___________, 20___ by and between RezConnect Technologies, Inc., a company
operating under the laws of the State of New York, and having its principal
place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter referred to as "▇▇▇▇▇▇▇.▇▇▇" or "Franchisor"), and
__________________________ an individual/partnership/corporation/limited
liability company established in the State of ____________, whose principal
address is __________________________________________________ (hereinafter
referred to as "Franchisee").
W I T N E S S E T H:
WHEREAS, Franchisor has developed a system ("System"), identified by
the ▇▇▇▇ "▇▇▇▇▇▇▇.▇▇▇" relating to the establishment, development and operation
of a business specializing in the sale of Internet based marketing tools such as
banner advertisements on the home page and calendar pages of the ▇▇▇▇▇▇▇.▇▇▇
website, content licensing, creating websites with unlimited pages featuring a
shopping cart order system and other forms of Internet Advertising. In addition
to the services described, the franchisee can elect to operate a consignment
business online and provide an auction model through the eBAY Marketplace
(Hereby described as REZcity Plus). We all provide tools such as real-time
reservations, confirmations and appointment scheduling, business-to-consumer
negotiating of retail products and services. Other services include search
engine submission and domain name site registration. All of these services are
designed for small to medium sized businesses and local community organizations.
Our travel services feature online 24/7 reservations/bookings for Airlines,
Hotels, Cars, Limos, Tours and Cruises products with over 55 bookable engines
("Services")
WHEREAS, the distinguishing characteristics of the System include,
without limitation, the ▇▇▇▇▇▇▇.▇▇▇ home page located at ▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇.▇▇▇
featuring "city guides" for over fifty three thousand (53,000) cities and
communities; the proprietary Internet marketing package which includes the
Services, the ▇▇▇▇▇▇▇.▇▇▇ Confidential Operations Manual ("Manual"); methods for
recruiting, hiring and training employees; inventory, cost controls, record
keeping, all of which may be changed, improved and further developed by
Franchisor from time to time; and
WHEREAS, Franchisor is the owner of the right, title and interest,
together with all the goodwill connected thereto, in and to the trademarks
"▇▇▇▇▇▇▇▇▇▇.▇▇▇" and "▇▇▇▇▇▇▇.▇▇▇" and other trademarks, domain names, service
marks and trade dress, associated logos, commercial symbols, trade names,
trademarks, service marks and trade dress as are now, or in the future,
designated as an integral part of the System (the "▇▇▇▇[s]"); and
WHEREAS, Franchisee understands and acknowledges the importance of
Franchisor's high and uniform standards of quality, operations and service and
the necessity of operating the Franchised Business in strict conformity with
Franchisor's standards and specifications; and
WHEREAS, Franchisor is the licensee of certain proprietary software
from ▇▇▇▇▇▇.▇▇▇, Inc., with the right to sub-license the software to its
franchisees; and
WHEREAS, Franchisor expressly disclaims the making of and Franchisee
acknowledges that it has not received nor relied upon any warranty or guarantee,
express or implied, as to the revenues, profits or success of the business
venture contemplated by this Agreement. Franchisee acknowledges that it has read
this Agreement and Franchisor's Uniform Franchise Offering Circular and that it
has no knowledge of any representation by Franchisor or its officers, directors,
shareholders, employees or agents that are contrary to the statements made in
Franchisor's Uniform Franchise Offering Circular or to the terms hereof.
NOW, THEREFORE, the parties, in consideration of the undertakings and
commitments of each party to the other set forth in this Agreement, hereby agree
as follows:
▇. ▇▇▇▇▇
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A Franchisor hereby grants to Franchisee, subject to the terms
and conditions hereof, the right and license to operate a business offering the
Services to local businesses, community organizations, not-for-profit's,
merchants and professionals within their franchised territory.
B In consideration of the payments received and the mutual
covenants contained in this Agreement, Franchisor hereby grants to Franchisee,
and Franchisee hereby accepts, a license for the territory hereinafter
described. Franchisor hereby grants to Franchisee, and Franchisee hereby
accepts, the right, license and privilege of using "▇▇▇▇▇▇▇.▇▇▇" and
"▇▇▇▇▇▇▇▇▇▇.▇▇▇" and other Marks of Franchisor solely and only upon and in
connection with activities authorized under this Agreement. Franchisee agrees
not to make or authorize any use, direct or indirect, of the Marks for any other
purpose or in any other way. Franchisee acknowledges that Franchisor may grant
other licenses for the use of the Marks or utilize the Marks in any manner
whatsoever subject to the provisions of this Agreement.
II. TERRITORY
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A The territory granted shall be as described on Exhibit A
("Territory"). During this Agreement term, Franchisor will not establish or
license any other person or entity to provide Internet advertising services or
other related services operating under the ▇▇▇▇▇▇▇.▇▇▇ trademark and utilizing
the System within the Territory; provided, however, that Franchisor shall retain
the right:
1. to establish other Franchises at any location outside of
Franchisee's Territory, as Franchisor, in its sole discretion, deems
appropriate;
2. to establish, and license others to establish businesses
under other systems using other proprietary marks, which businesses may offer or
sell services and products which are competitive with or different from those
services and products offered by the Franchised Business, and which businesses
may be located within or outside the Territory; Rezconnect Technology which
consists of a Net-to-Phone-to-Net application and WEB 2 Web applications are and
will be used by various companies and websites which may compete directly with
the franchisee in his market or on the Internet. We are not providing exclusive
use of the applications to Franchisees but will not offer our technology using
REZcity platform other than thru the Franchisee.
3. to contract with sales organizations and other Sales
Consultant(s) to allow the Sales Consultants and its sales force to engage in
the sale of Internet advertising including the Services; provided, however, that
Sales Consultants shall not be licensed to utilize the ▇▇▇▇▇▇▇.▇▇▇ trademark as
its principal trade name under which it operates, but may be permitted to
identify itself as a "RezCity.com-Authorized Dealer"; provided further, that the
Franchisee shall receive a commission based upon the sale of Services and other
Internet advertising by each Sales Consultant occurring in Franchisee's
Territory in accordance with Section V of this Agreement. Sales organization is
optional and not required for franchisee to accept, unless already in
marketplace and all deals will continue.
B Upon execution of this Agreement , Franchisee shall pay a
franchise fee ("Franchise Fee") to Franchisor of
___________________________________ DOLLARS ($_________). Said Franchise Fee
shall be deemed fully earned and non-refundable upon execution of this Agreement
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as consideration for expenses incurred by Franchisor in furnishing assistance
and services to Franchisee and for Franchisor's lost or deferred opportunity to
grant this franchise to other third parties, except as may be specifically
provided in this Agreement and/or any exhibit attached hereto.
The initial franchise fee is based on a per unit sale. A unit can be
defined as a town or city with a population of 25,000 or less. For a town or
city with 25,000 or less in population, the franchise fee is $1,500. For towns
or cities greater than 25,000 in population, a surcharge of $0.06 per person in
population is charged. For example, if a town or city has 15,000 in population,
the franchise fee would be $1,500; For a town with 30,000 in population, the
franchise fee would be $1,800. The franchise fee is due and payable immediately
upon execution of the Franchise Agreement. The population is based on the most
current U.S. Census Bureau statistics. In the event a Franchisee selects REZcity
Plus, they are required to purchase a minimum of three (3) contiguous units at a
minimum cost of $4,500.
Upon the commencement of Franchisee's Franchised Business, Franchisee
shall pay to Franchisor a "Web Hosting Fee" totaling One Hundred Fifty Dollars
($150.00) for each franchised unit. The Web Hosting Fee is an annual fee, due
from Franchisee to Franchisor on each anniversary year of the signed franchise
Agreement. The Web Hosting Fee will increase each year (5%), to reimburse
Franchisor for its costs, including labor, maintenance and communications,
related to web hosting. If Franchisee does not pay re-occurring hosting fee,
franchisee will be in default of the Franchise Agreement.
C Franchisee acknowledges that because complete and detailed
uniformity under many varying conditions may not be possible or practical,
Franchisor specifically reserves the right and privilege, at its sole discretion
and as it may deem in the best interests of all concerned in any specific
instance, to vary standards for any System franchisee based upon the
peculiarities of the particular site or circumstance, population of trade area,
density of population, business potential, existing business practices or any
other condition which Franchisor deems to be of importance to the successful
operation of such franchisee's business. Franchisee shall not be entitled to
require Franchisor to disclose or grant to Franchisee a like or similar
variation hereunder.
III. TERM AND RENEWAL
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A This Agreement shall be effective and binding for an initial
term of five (5) years from the date of its execution.
B Franchisee shall have the right to renew this franchise at the
expiration of the initial term of the franchise for two (2) additional
successive terms of five (5) years each, provided that all of the following
conditions have been fulfilled:
1. Franchisee has, during the entire term of this Agreement,
substantially complied with all its provisions;
2. Franchisee has given notice of renewal to Franchisor as
provided below;
3. Franchisee has satisfied all monetary obligations owed by
Franchisee to Franchisor, or any affiliate of Franchisor, and has timely met
these obligations throughout the term of this Agreement;
4. Upon renewal, Franchisee has executed Franchisor's
then-current form of the Franchise Agreement or has executed renewal documents
at Franchisor's election (with appropriate modifications to reflect the fact
that the Franchise Agreement relates to the grant of a renewal franchise), which
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Franchise Agreement shall supersede this Agreement in all respects, and the
terms of which may differ from the terms of this Agreement including, without
limitation, a different percentage Sales Commission; provided, however,
Franchisee shall not be required to pay the then-current initial Franchise Fee
or its equivalent; and
5. Franchisee has complied with Franchisor's then-current
qualifications and training requirements.
C If Franchisee desires to renew this franchise at the
expiration of this Agreement, Franchisee shall give Franchisor written notice of
its desire to renew at least six (6) months, but not more than twelve (12)
months, prior to the expiration of the initial term of this Agreement. Within
thirty (30) days after its receipt of such timely notice, Franchisor shall
furnish Franchisee with written notice of Franchisee's right to obtain a renewal
franchise. If the notice indicates that Franchisor will permit Franchisee to
obtain a renewal franchise, Franchisee's right to obtain a renewal franchise
will be contingent on continued full compliance with this Agreement and any
other agreement between Franchisee and Franchisor and/or Franchisor's
affiliates. If, during the term of this Agreement, Franchisee has failed to
substantially comply with this Agreement, Franchisor may refuse to grant
Franchisee a renewal agreement. Franchisor will provide notice which states the
reasons for Franchisor's decision. If Franchisor determines that Franchisee is
not eligible to obtain a renewal franchise, but that the nature of the
noncompliance may be cured so that Franchisor is willing to consider granting
Franchisee a renewal franchise, Franchisor will notify Franchisee accordingly.
Franchisee will be eligible for a renewal franchise if Franchisee has cured the
noncompliance within thirty (30) days of Franchisor's notice of noncompliance to
Franchisee.
IV. BUSINESS LOCATION
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A Franchisee must locate the business office for the Franchised
Business from a premises which is located within the Territory ("Premises").
Franchisee's acceptance of a franchise for the operation of a Franchised
Business at the location of the Premises is based on Franchisee's own
independent investigation of its suitability for a Franchised Business.
Franchisee may establish the office for the Franchised Business within the
majority owner's residence (subject to local zoning laws). Franchisor does not
evaluate the location. If a Franchisee selects REZcity Plus, Franchisee is
required to lease a storage facility that is located within the same territory
as the Franchised Business.
B Franchisee agrees, at its expense, to do or cause to be done
the following within ninety (90) days after the date of this Agreement:
1. obtain all required building, utility, sign, health, and
business permits and licenses and any other required permits and licenses, if
any;
2. construct all required improvements to the Premises, and
decorate Franchisee's Premises in compliance with layouts and specifications
approved by Franchisor, if any;
3. purchase and install all required computer equipment,
furniture, furnishings and signs;
4. purchase the opening inventory of office supplies; and
5. hire personnel required for Franchisee's Franchised Business,
if any.
C Franchisee must not open the Franchised Business and commence
business until:
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1. all of the obligations pursuant to the other provisions of
Section IV. of this Agreement have been fulfilled;
2. Franchisor has received a fully executed form of collateral
assignment of telephone numbers and listings, if required;
3. Franchisee and its personnel have satisfactorily completed
initial training;
.........4. Franchisee has furnished Franchisor with certification that
all required building, utility, sign, health, sanitation, business and other
permits and licenses have been obtained from any applicable governmental
authority, including any certificate of occupancy and approvals necessary to
operate a business (if any); and
.........5. Franchisor has been furnished with copies of all insurance
policies required by this Agreement, or such other evidence of insurance
coverage and payment of premiums as Franchisor may request.
D........Franchisee must comply with these conditions and be prepared
to open the Franchised Business within one hundred twenty (120) days after
signing this Agreement and only after having satisfactorily completed the
initial training program as specified in Section V.
V. TRAINING AND ASSISTANCE
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A Franchisor shall make training available to Franchisee and its
manager, who shall successfully complete each required training and
familiarization course conducted. Initial training shall cover aspects of the
operation of a Franchised Business, and shall be conducted in three (3) phases
("Phase[s] I - III"):
Phase I This Phase is a self-study course lasting several
days depending upon Franchisee's technical background
and time spent each day reviewing the materials.
Franchisee must pass a proficiency examination over
the Internet via an online tutorial program to
successfully complete Phase I.
Phase II For REZcity: This Phase lasts twelve (12) hours over
several weeks online. Franchisee may elect to visit
▇▇▇▇▇▇▇.▇▇▇ Corporate Headquarters, or any other
location that the Franchisor operates from including a
location selected by the Area Representative, if one
exits in franchisee's market for in-class training.
In-class training is recommended but not mandatory.
This Phase is designed to provide Franchisee with an
understanding of products and services as well as
sales and public relations skills.
For REZcity Plus: This Phase lasts eighteen (18) hours
over several weeks online. Franchisee may elect to
visit ▇▇▇▇▇▇▇.▇▇▇ Corporate Headquarters, or any other
location that the Franchisor operates from including a
location selected by the Area Representative, if one
exists in franchisee's market for in-class training.
In-Class training is recommended but not mandatory.
This Phase begins with twelve (12) hours of
▇▇▇▇▇▇▇.▇▇▇ training and is followed by an additional
six (6) hours of training on the auction program.
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Phase III Prior to beginning operation, Franchisor or its Area
Representative shall provide Franchisee with
counseling and offer its experience and knowledge on
pertinent issues Franchisee has in establishing the
Franchised Business. Franchisor shall be available
during normal business hours and can be reached by
fax, telephone and/or the Internet.
If Franchisee selects in-house training, all expenses of attendance at
the initial training by Franchisee and its employees including, without
limitation, travel, and room and board expenses, shall be the sole
responsibility of Franchisee. If Franchisee selects online training, the only
expense associated is a long distance telephone call into the conference line.
B As part of ongoing assistance, Franchisor will make available
a telephone line which Franchisee may use to communicate with Franchisor during
normal business hours to request advice regarding sales matters, business or
technical issues.
C Franchisor may provide and may require that previously trained
and experienced Franchisees or their managers or employees
attend and successfully complete refresher training programs
or seminars; provided online or in-house.
VI. USE OF SYSTEM AND MARKS
-----------------------
A Franchisee acknowledges that the name "▇▇▇▇▇▇▇.▇▇▇" and
"▇▇▇▇▇▇▇▇▇▇.▇▇▇"" and the Marks licensed hereunder are owned by Franchisor and
Franchisee further acknowledges that valuable goodwill is attached to such trade
names, trademarks and service marks and that Franchisee will use same only in
the manner and to the extent specified by this Agreement.
B Franchisee acknowledges, and will not c ontest, Franchisor's or
any affiliate's exclusive ownership and rights to each and every aspect of the
System. Franchisee's right to market the System and establish the Franchised
Businesses is specifically limited to the Territory, and is subject to the
supervision and control of Franchisor as provided herein. Said right shall
terminate upon the expiration or termination of this Agreement.
C Franchisee acknowledges that Franchisor's Marks constitute a
significant aspect of the System. Without Franchisor's written approval,
Franchisee agrees that such Marks will not be used as the name, or part of any
name, of any corporation, partnership or any entity of proprietorship under
which Franchisee transacts business. Franchisee's use of the Marks are subject
to the control and approval of Franchisor in every other respect.
D If a claim is asserted by others of a prior use of the Marks
with respect to a similar business within the Territory, Franchisor may require
Franchisee to participate in the defense of such claims, at Franchisor's
expense. Franchisee shall give written notice to Franchisor within five (5) days
of acquiring knowledge concerning the use by others within the Territory of the
same or confusingly similar names and Marks.
E If Franchisor at any time, in its sole discretion, determines
that it is advisable for Franchisee to modify or discontinue use of any Marks,
and/or use one or more additional or substantive trade names, trademarks,
service marks or other commercial symbols, Franchisee agrees to comply therewith
within a reasonable time after notice thereof by Franchisor.
F Franchisee shall not establish a Website on the Internet using
any domain name containing the words "▇▇▇▇▇▇▇▇▇▇.▇▇▇," "▇▇▇▇▇▇▇.▇▇▇,"
"▇▇▇▇▇▇▇▇▇.▇▇▇" or any variation thereof without prior written consent from
Franchisor. Franchisor retains the sole right to advertise on the Internet and
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create a Website using the RezCity domain names (Including: ▇▇▇▇▇▇▇.▇▇▇,
▇▇▇▇▇▇.▇▇▇, ▇▇▇▇▇▇▇.▇▇▇, ▇▇▇▇▇▇▇.▇▇). Franchisee acknowledges that Franchisor is
the owner of all right, title and interest in and to such domain names as
Franchisor shall designate in the Manual. Franchisor retains the right to
pre-approve Franchisee's use of linking and framing between Franchisee's Web
pages and all other Websites. If requested by Franchisor, Franchisee shall,
within five (5) days, dismantle any frames and links between Franchisee's Web
pages and any other Websites.
G If you are a REZcity Plus Franchisee, you cannot own an
auction site from eBAY or any other provider or sell goods on behalf of a third
party under any condition. Violation of this prohibition will be grounds for
immediate termination of the Franchise Agreement.
VII. OPERATIONS MANUAL
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A While this Agreement is in effect, Franchisor will loan to
Franchisee one (1) copy of the Manual containing mandatory and suggested
specifications, standards, operating procedures and rules prescribed from time
to time by Franchisor for a Franchised Business and information relative to
other obligations of Franchisee. Franchisor shall have the right to add to and
otherwise modify the Manual from time to time to reflect changes in the
specifications, standards, operating procedures and rules prescribed by
Franchisor for a Franchised Business, provided that no such addition or
modification shall alter Franchisee's fundamental status and rights under this
Agreement. Franchisor may make such additions or modifications without prior
notice to Franchisee. Franchisee shall immediately, upon notice, adopt any such
changes.
B The Manual shall, at all times, remain the sole property of
Franchisor and shall promptly be returned upon the expiration or termination of
this Agreement. Franchisee shall not make any disclosure, duplication or other
unauthorized use of manner any portion of the Manual.
C The Manual contains proprietary information of Franchisor and
shall be kept confidential by Franchisee both during the term of the franchise
and subsequent to the expiration or termination of this Agreement. Franchisee
shall at all times ensure that its copy of the Manual be available on the
Premises in a current and up-to-date manner. At all times that the Manual is not
in use by authorized personnel, Franchisee shall maintain the Manual in a locked
receptacle on the Premises, and shall only grant authorized personnel, as
defined in the Manual, access to the key or combination of such receptacle. In
the event of any dispute as to the contents of the Manual, the terms of the
master copy of the Manual maintained by Franchisor at Franchisor's headquarters
shall be controlling.
VIII. CONFIDENTIAL INFORMATION
------------------------
A Franchisor possesses certain proprietary confidential
information consisting of methods, techniques, formats, specifications,
procedures, information, systems, methods of business management, sales and
promotion techniques, and knowledge of and experience in operating a Franchised
Business (the "Confidential Information"). Franchisor shall disclose the
Confidential Information in the training program, the Manual, and in guidance
furnished to Franchisee during this Agreement's term. Franchisee shall not
acquire any interest in the Confidential Information, other than the right to
utilize it in performing its duties during the term of this Agreement, and
Franchisee acknowledges that the use or duplication of the Confidential
Information in any other business venture would constitute an unfair method of
competition. Franchisee acknowledges and agrees that the Confidential
Information is proprietary, includes Franchisor's trade secrets, and is
disclosed to Franchisee solely on the condition that Franchisee (and its
shareholders, partners, members and managers, if Franchisee is a corporation,
partnership or limited liability company) does hereby agree that it: (a) shall
not use the Confidential Information in any other business or capacity; (b)
shall maintain the absolute confidentiality of the Confidential Information
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during and after the term of this Agreement; (c) shall not make unauthorized
copies of any portion of the Confidential Information disclosed in written or
other tangible form; and (d) shall adopt and implement all reasonable procedures
prescribed from time to time by Franchisor to prevent unauthorized use or
disclosure of the Confidential Information. All ideas, concepts, techniques or
materials concerning the Franchised Business, whether or not protectable
intellectual property and whether created by or for Franchisee or its owners or
employees, must be promptly disclosed to Franchisor and will be deemed
Franchisor's sole and exclusive property, part of the System and works
made-for-hire for Franchisor. To the extent any item does not qualify as a "work
made-for-hire" for Franchisor, Franchisee shall assign ownership of that item,
and all related rights to that item, to Franchisor and must sign whatever
assignment or other documents Franchisor requests to show ownership or to help
Franchisor obtain intellectual property rights in the item.
B Franchisor reserves the right to require Franchisee to have
each of its shareholders, officers, directors, partners, employees, members, and
managers, and, if Franchisee is an individual, Franchisee's spouse, execute a
non-disclosure and non-competition agreement in a form approved by Franchisor.
IX. MODIFICATION OF THE SYSTEM
--------------------------
Franchisee recognizes that from time to time hereafter, Franchisor may
change or modify the System including, without limitation, the adoption and use
of new or modified Marks or copyrighted materials, new computer hardware and
software, equipment or new techniques and that Franchisee will accept and use
for the purpose of this Agreement any such changes in the System as if they were
part of this Agreement at the time of execution hereof. Franchisee will make
such expenditures as such changes or modifications in the System may reasonably
require. Franchisee shall not change the System in any way without written
permission of Franchisor.
X. ADVERTISING
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A If you are an individual Franchisee, you have the option to
make expenditures on advertising within your territory. You may use your own
advertising materials subject to the approval of the Franchisor. Franchisor may
provide guidelines for conducting local advertising and promotional programs,
and any deviations from such guidelines shall be approved by Franchisor in
writing prior to use.
B As a REZcity Plus Franchisee, you must contribute 1% of your
gross revenue to the ▇▇▇▇▇▇▇.▇▇▇ National Advertising Fund. There are no REZcity
Plus Franchisees in the network that do not contribute to this Fund. We estimate
that during the coming fiscal year, about 35% of the Funds money will be spent
on media, 20% on the production of advertising materials, 20% on public
relations, 10% on sponsorships and 15% on administration. REZcity Corporate
Headquarters does not have to spend a specified amount of Advertising Fund money
on advertising in your geographic area. We will prepare an annual accounting for
the Fund. You may review upon request once a year. The report will not be
audited. Most of the money in the Advertising Fund will be spent during the year
in which it is contributed. Any unspent money will be retained in the account
for use during the following year. This goes into the OC at Item 11 not here.
C Franchisee is required to advertise continuously in the
classified or Yellow Pages of the local telephone directory. Franchisee shall do
so under the listings "Internet Services" or such other listings as deemed
appropriate by Franchisor. When more than one (1) Franchised Business serves a
metropolitan area, classified advertisements shall list all Franchised
Businesses operating within the distribution area of such classified
directories. Each franchisee shall contribute its equal share in the cost of
such advertisement. If required, Franchisee agrees to execute an agreement
8
assigning such directory listing to Franchisor, utilizing a form prescribed by
Franchisor, which shall become effective upon termination or expiration of this
Agreement.
D With respect to any promotional materials or advertising
permitted hereunder, Franchisee shall not use in advertising or any other form
of promotion, the copyrighted materials, trademarks, copyrights, service marks
or commercial symbols of Franchisor without appropriate (C) or (R) registration
marks or the designations TM or SM where applicable.
XI. PAYMENTS TO FRANCHISEE
----------------------
A Unless Franchisor and Franchisee agree in writing otherwise
for a specific account, Franchisor shall pay to Franchisee, within fifteen (15)
days after the end of each calendar month and according to the schedule as
contained in Exhibit B to this Agreement, fees for the sale of each Service or
other Internet advertising services which are actually received by Franchisor
from each franchisee, Sales Consultant or directly from the end user based upon
sales within Franchisee's Territory (as delineated in Exhibit A) ("Sales
Commissions").
Notwithstanding the foregoing:
1. If Franchisee has failed to perform in any material respect
any material requirements under the terms of this Agreement, Franchisee shall
not be entitled to receive Sales Commissions until such deficiencies have been
corrected to Franchisor's reasonable satisfaction.
2. Franchisee shall not be entitled to share in or receive any
Sales Commissions based upon fees paid to Franchisor in the Territory prior to
the time Franchisee completes the initial training program and commences full
operations of the Franchised Business.
B All payments under this Paragraph shall immediately and
permanently cease after the expiration or termination of this Agreement,
although Franchisee shall receive all amounts which have accrued to Franchisee
as of the effective date of expiration or termination.
C Franchisor's payments to Franchisee shall be based on amounts
actually collected, not on payments accrued, due or owing. Franchisor shall
apply any payments received from to any past due indebtedness owed to Franchisor
or its affiliates.
D. Franchisee shall not be allowed to set off amounts owed to
Franchisor for fees or other amounts due under this Agreement
against any monies owed to Franchisee by Franchisor, which right
of set off is hereby expressly waived by Franchisee. Franchisor
shall be allowed to set off against amounts owed to Franchisee
for Sales Commissions or other amounts due under this Agreement
any monies owed to Franchisor.
E. All Merchant fees and any third party charges to handle billing
are deductible from monies owed franchisee based on reasonable
industry standards.
XII. BILLING, ACCOUNTING AND RECORDS
-------------------------------
A During the term of this Agreement, Franchisor or its agent,
will handle all of the billing and invoicing for the advertising services and
sales of Services through the Franchised Business. Franchisor will exercise all
reasonable efforts as it considers appropriate to collect amounts due for the
Services or sales of other products or services performed in conducting the
Franchised Business. Franchisor may, in its discretion, compromise, settle,
discount, factor, write-off, assign to collection agencies or pursue through
9
legal action, all amounts due for Services provided through the Franchised
Business. After applying amounts owed by Franchisee to Franchisor, Franchisor
will pay to Franchisee the commissions as specified in this Agreement and any
other agreement between Franchisee and Franchisor on a monthly basis. Franchisor
will withhold amounts due it under this Agreement (or any other agreement).
Franchisor will pay such amount to Franchisee by the fifteenth (15th) day of
each month based on the collections Franchisee has received for the immediately
preceding month. The date shall automatically be extended until the next
business day if the fifteenth (15th) day of the month is a holiday, Saturday or
Sunday. Franchisor will simultaneously send Franchisee financial reports
(electronically or otherwise) detailing the revenues billed and the amounts that
are applied as a setoff. Although Franchisor will try to collect all
receivables, there is no assurance or guarantee as to the timing of collection
or the ultimate success of collection. Franchisor shall have no obligation other
than to exercise its standard procedures for collection of amounts due. Some
accounts are more reputable and creditworthy than others. Franchisor does not
warrant the timing or collectability of any amounts owed by anyone even if
Franchisor originally offered the account to Franchisee.
B During the term of this Agreement, Franchisee shall maintain
and preserve for the time period specified in the Manual, full, complete and
accurate books, records and accounts in accordance with the standard accounting
system prescribed by Franchisor in the Manual or otherwise in writing.
Franchisee shall retain during the term of this Agreement and for three (3)
years thereafter all books and records related to the Franchised Business
including, without limitation, invoices, payroll records, check stubs, sales tax
records and returns, cash receipts and disbursement journals, general ledgers,
state and federal income tax returns, and any other financial records designated
by Franchisor or as required by law.
C Franchisee shall supply to Franchisor, or its designated
agent, on or before the fifteenth (15th) day of the following calendar
month/quarter, in a form approved by Franchisor, a balance sheet as of the end
of the last preceding calendar month/quarter and an income statement for such
calendar month/quarter and Franchisee's fiscal year-to-date. Additionally,
Franchisee shall, at its expense, submit to Franchisor within forty-five (45)
days of the end of each fiscal year during the term of this Agreement, a profit
and loss statement for such fiscal year and a balance sheet as of the last day
of such fiscal year, prepared on a accrual basis including all adjustments
necessary for fair presentation of the financial statements.
D Franchisor or its designated agent(s) shall have the right, at
all reasonable times, to examine and copy, at its expense, the books, records
and tax returns of Franchisee. In addition, Franchisor shall have the right to
interview clients, employees, vendors and/or suppliers. Franchisor shall also
have the right, at any time, to have an independent audit made of Franchisee's
books, at Franchisor's expense.
XIII. STANDARDS OF QUALITY AND PERFORMANCE
------------------------------------
A Franchisee understands every detail of the operation of the
Franchised Business is important, not only to Franchisee, but to Franchisor and
other franchisees in order to (i) develop and maintain high and uniform
operating standards; (ii) increase the demand for the Services, other services
and products offered by Franchised Businesses; and (iii) increase the viewership
and consumer awareness of local sites within the ▇▇▇▇▇▇▇.▇▇▇ home page.
B Franchisee agrees to comply with all requirements set forth in
this Agreement, the Manual and other written policies supplied to Franchisee by
Franchisor. Mandatory specifications, standards, operating procedures and rules
prescribed from time to time by Franchisor in the Manual or otherwise
communicated to Franchisee in writing shall constitute provisions of this
Agreement as if fully set forth herein. All references herein to this Agreement
10
shall include all such mandatory specifications, standards and operating
procedures and rules. Franchisee shall comply with the entire System including,
but not limited to, the provisions of this Paragraph XIII.
C Franchisee recognizes that the operation of a ▇▇▇▇▇▇▇.▇▇▇
business involves heavy emphasis on sales soliciting and marketing. In addition,
if Franchisee is a franchisee operating in a metropolitan market, Franchisee
understands there is additional emphasis on developing, managing and soliciting
Sales Consultants.
D Franchisee shall offer for sale and use at the Franchised
Business all types of advertising and Internet products and related services
that Franchisor from time to time authorizes and shall not offer for sale or
sell or provide through the Franchised Business or the Premises which it
occupies any other category of services, supplies, merchandise, products or
accessories or use such Franchised Business for any purpose other than the
operation of a ▇▇▇▇▇▇▇.▇▇▇ Franchised Business in full compliance with this
Agreement and the Manual.
E The Franchised Business shall, at all times, be under the
direct supervision of Franchisee. Franchisee understands that the Franchised
Business may be operated on a part-time or full-time basis. Full-time means the
expenditure of at least thirty-five (35) hours per week, excluding vacation,
sick leave, etc. I
F Franchisee shall secure and maintain in force all required
licenses, permits and certificates relating to the operation of the Franchised
Business and shall operate the Franchised Business in full compliance with all
applicable laws, ordinances and regulations including, without limitation, all
government regulations.
G All advertising and promotional activities by Franchisee in
any medium shall be conducted in a dignified manner and shall accurately
promote, describe and otherwise represent the type, quality and other features
of the services and related support activities.
H Franchisee shall use only such client forms, invoices and
standardized contracts, as are approved by Franchisor. Franchisee shall obtain
such forms from Franchisor or from suppliers Franchisor has approved. Copies of
all client contracts and invoices issued by Franchisee shall be submitted to
Franchisor on a daily basis.
I Franchisee shall notify Franchisor in writing within five (5)
days of the commencement of any action, suit or proceeding, and of the issuance
of any order, writ, injunction, award or decree of any court, agency or other
governmental instrumentality, including action against professional
services/credentials of any employee associated with Franchisee, which may
adversely affect the operation or financial condition of the Franchised
Business.
XIV. FRANCHISOR'S OPERATIONS ASSISTANCE
----------------------------------
A Franchisor or Franchisor's representative shall make periodic
visits to the Franchised Business for the purposes of consultation, assistance
and guidance of Franchisee in various aspects of the operation and management of
the Franchised Business at the request of the Franchisee. The fee associated
with Franchisor visiting Franchisee is $150 per day plus all travel expenses.
Franchisor and Franchisor's representatives who visit the Franchised Business
may prepare, for the benefit of both Franchisor and Franchisee, written reports
with respect to such visits outlining any suggested changes or improvements in
the operations of the Franchised Business and detailing any defaults in such
operations which become evident as a result of any such visit. A copy of any
such written report may be provided to Franchisee.
11
B Franchisor may conduct research and testing to determine the
feasibility of new programs, market trends and the marketability of new
programs. Franchisee agrees to cooperate and participate in such research and
testing programs by test marketing new programs and/or services at Franchisee's
Franchised Business and by providing Franchisor with timely reports and other
relevant information regarding research and testing programs. Franchisee agrees
to make reasonable efforts to sell any products and services comprising the new
program.
XV. INSURANCE
---------
A Franchisee shall procure, at its sole expense, and maintain in
full force and effect during the term of this Agreement, an insurance policy or
policies protecting Franchisee, Franchisor, their officers, directors, partners
and employees against any loss, liability, personal injury, death or property
damage or expense whatsoever arising or occurring upon or in connection with the
Franchised Business, as Franchisor may reasonably require for its own and
Franchisee's protection. Franchisor shall be named an additional insured in such
policy or policies.
B Such policy or policies shall be written by an insurance
company licensed in the state in which Franchisee operates and having at least
an "A" Rating Classification as indicated in A.M. Best's Key Rating Guide in
accordance with standards and specifications set forth in the Manual or
otherwise in writing, and shall include, at a minimum (except as different
coverages and policy limits may reasonably be specified for all franchisees from
time to time by Franchisor in the Manual or otherwise in writing), the
following:
1. All "Risks" or "Special" form coverage insurance on all
furniture, fixtures, equipment, supplies and other property used in the
operation of the Franchised Business, (which coverage may include flood and/or
earthquake coverage, where there are known exposures to either peril or theft )
for full repair as well as replacement value of the equipment, Improvements and
betterments, except that an appropriate deductible clause shall be permitted,
not to exceed ONE THOUSAND DOLLARS ($1,000.00).
2. Workers' Compensation and Employer's Liability insurance as
well as such other insurance as may be required by statute or rule of the state
or county in which the Franchised Business is located and operated.
3. Individual Franchisees excluding REZcity Plus Franchisees
may not need the full coverage of insurance outlined below unless they operate
outside their home with the exception of Errors and Omissions insurance which is
provided by Franchisor as a rider policy with a cost of $75 per year, which
amount could increase in future years based on the cost of Franchisor's master
policy with its carrier.
4. For REZcity Plus: Franchisee shall purchase insurance
according to the specifications that Franchisor designates in the current
version of its manual. Franchisee is required to purchase and maintain a policy
or policies of comprehensive public liability insurance, including products
liability coverage, covering all assets , personnel and activities on an
occurrence basis with a combined single limit for bodily injury, death or
property damage of not less than $1,000,000. Franchisor may increase the minimum
coverage requirement annually if necessary to reflect inflation or other changes
in circumstances. Franchisee must carry Bailee's Insurance sufficient to cover
the total loss or destruction of all seller's items in Franchisee's possession.
In addition, Franchisee must maintain policies of workers compensation
insurance, disability insurance and any other types of insurance required by
applicable law. Each insurance policy that Franchisor requires under this
Agreement must contain a provision that the policy cannot be cancelled without
12
thirty (30) days' written notice to Franchisor. It must be issued by an
insurance company of recognized responsibility, designate Franchisor an
additional named insured and be satisfactory to Franchisor in form, substance
and coverage. Franchisee shall deliver a certificate of the issuing insurance
company evidencing each policy to Franchisor within ten (10) days after the
policy is renewed.
5. Commercial General Liability insurance, including a per
premises aggregate with the following coverage's: broad from contractual
liability; personal injury; medical payments and fire damage liability; insuring
Franchisor and Franchisee against all claims, suits, obligations, liabilities
and damages, including attorneys' fees, based upon or arising out of actual or
alleged personal injuries or property damage resulting from or occurring in the
course of, or on about or otherwise concerning the Franchise Business, including
General Aggregate coverage in the following minimum limits:
Minimum Limits
Recommended Coverage of Coverage
-------------------- -----------
General Aggregate.........................................$500,000
Personal Injury...........................................$500,000
Each Occurrence...........................................$500,000
Fire Damage (any one fire).................................$50,000
Medical Expense (any one person)............................$5,000
Automobile Liability Insurance (including owned, hired
and non-owned coverage)................................$500,000
5. Such insurance as necessary to provide coverage under the
indemnity provisions set forth in Paragraph XXII.C. of this Agreement.
6. Such additional insurance and types of coverage as may be
required by the terms of any lease for the Premises, or as may be required from
time to time by Franchisor.
The amounts required herein may be modified from time to time by
Franchisor to reflect inflation or future experience with claims.
C. The insurance afforded by the policy or policies respecting
liability shall not be limited in any way by reason of any insurance which may
be maintained by Franchisor. Within sixty (60) days of the signing of this
Agreement, but in no event later than thirty (30) days prior to commencement of
operations of the Franchised Business, a Certificate of Insurance showing
compliance with the foregoing requirements shall be furnished by Franchisee to
Franchisor for approval. Such certificate shall state that said policy or
policies shall not be canceled or altered without at least thirty (30) days'
prior written notice to Franchisor and shall reflect proof of payment of
premiums. Maintenance of such insurance and the performance by Franchisee of the
obligations under this Paragraph XV.C. shall not relieve Franchisee of liability
under the indemnity provision set forth in this Agreement. Minimum limits as
required above may be modified from time to time, as conditions require, by
written notice to Franchisee.
D. Should Franchisee, for any reason, not procure and maintain such
insurance coverage as required by this Agreement, Franchisor shall have the
right and authority (without, however, any obligation to do so) to immediately
procure such insurance coverage and to charge same to Franchisee, which charges,
together with a reasonable fee for expenses incurred by Franchisor in connection
with such procurement, shall be payable by Franchisee immediately upon notice.
13
XVI. COVENANTS
---------
A. Unless otherwise specified, the term "Franchisee" as used in this
Paragraph XVI. shall include, collectively and individually, Franchisee as
defined in Paragraph XXXII.
B. Franchisee covenants that, during the term of this Agreement,
except as otherwise approved in writing by Franchisor, Franchisee shall not,
either directly or indirectly, for itself, or through, on behalf of or in
conjunction with any person, persons, partnership, corporation, limited
liability company or other entity:
1. Divert or attempt to divert any business or clients of the
Franchised Business to any competitor, by direct or indirect inducement or
otherwise, or do or perform, directly or indirectly, any other act injurious or
prejudicial to the goodwill associated with the Marks or the System;
2. Employ or seek to employ any person who is at that time
employed by Franchisor or by any other franchisee licensed by Franchisor, or
otherwise directly or indirectly induce or seek to induce such person to leave
his or her employment; or
3. Own, maintain, engage in, consult with or have any interest in
any competitive business (including any business operated by Franchisee prior to
entry into this Agreement) specializing, in whole or in part, in operating a
business providing Internet advertising services, Online Auctions, and related
services, the same as or similar to those offered or provided through the
System.
C. Franchisee specifically acknowledges that, pursuant to this
Agreement, Franchisee shall receive certain trade secrets and confidential
information including, without limitation, information regarding the
promotional, operational, sales and marketing methods and techniques of
Franchisor and the System. Accordingly, Franchisee covenants that, except as
otherwise approved in writing by Franchisor, Franchisee shall not, for a period
of one (1) year after the expiration or termination of this Agreement,
regardless of the cause of termination, either directly or indirectly, for
itself or through, on behalf of or in conjunction with any person, persons,
partnership, corporation, limited liability company or other entity, own,
maintain, engage in, consult with or have any interest in any business
specializing, in whole or in part, in providing Internet advertising services
and related services, the same as or similar to those offered or provided in the
System within:
1. the metropolitan statistical area where the Franchised
Business is located; or
2. a radius of ten (10) miles of the Territory of any other
business using the System, whether franchised or owned and operated by
Franchisor or any affiliate of Franchisor.
D. Each of the foregoing covenants shall be construed as independent
of any other covenant or provision of this Agreement. If all or any portion of a
covenant in this Paragraph XVI. is held unreasonable or unenforceable by a court
or agency having valid jurisdiction in an unappealed final decision to which
Franchisor is a party, Franchisee shall be bound by any lesser covenant subsumed
within the terms of such covenant that imposes the maximum duty permitted by
law, as if the resulting covenant were separately stated in and made a part of
this Paragraph XVI.
E. Franchisee understands and acknowledges that Franchisor shall
have the right, in its sole discretion, to reduce the scope of any covenant set
forth in Paragraphs XVI.B. and XVI.C. in this Agreement, or any portion thereof,
without Franchisee's consent, effective immediately upon receipt by Franchisee
14
of written notice thereof, and Franchisee shall comply forthwith with any
covenant as so modified, which shall be fully enforceable notwithstanding the
provisions of Paragraph XXVII.
F. Franchisor shall have the right to require all of Franchisee's
personnel performing managerial, supervisory and marketing functions and all
personnel receiving training from Franchisor to execute similar covenants in a
form satisfactory to Franchisor.
G. Franchisee acknowledges that Franchisor shall be entitled to seek
immediate equitable remedies including, but not limited to, restraining orders
in order to safeguard such proprietary, confidential and special information of
Franchisor and that money damages alone would be an insufficient remedy with
which to compensate Franchisor for any breach of the terms of this Paragraph
XVI.
XVII. DEFAULT AND TERMINATION
-----------------------
A. If Franchisee is in substantial compliance with this Agreement
and Franchisor materially breaches this Agreement and fails to cure such breach
within a reasonable time after written notice thereof is delivered to
Franchisor, Franchisee may terminate this Agreement unless the breach cannot
reasonably be cured within thirty (30) days, in which case Franchisee will have
the right to terminate this Agreement if, after receipt of a written notice of
default, Franchisor does not promptly undertake and continue efforts to cure
such mutual breach within a reasonable period of time, and furnish Franchisee
reasonable proof of such efforts. To terminate this Agreement under this
Paragraph, Franchisee must provide a separate written notice of termination,
which will be effective thirty (30) days after delivery of such notice to
Franchisor. Such termination shall be effective thirty (30) days after delivery
to Franchisor of written notice that such breach has not been cured and
Franchisee elects to terminate this Agreement.
B. This Agreement shall, at the option of Franchisor, terminate without
notice of termination, if Franchisee or its owner(s), member(s), director(s),
general partner(s), officer(s) or key employee(s):
1. Fails to establish and equip the Premises as provided in
Section III. of this Agreement;
2. Fails to satisfactorily complete the training program as
provided in Section IV. of this Agreement;
3. Has made any material misrepresentation or omission in its
application for the franchise;
4. Is convicted of or pleads no contest to a felony or other
crime or offense that is likely to adversely affect the reputation of
Franchisor, Franchisee or the Franchised Business;
5. Makes any unauthorized use, disclosure or duplication of any
portion of the Manual or duplicates or discloses or makes any unauthorized use
of any trade secret or confidential information provided to Franchisee;
6. Abandons, fails or refuses to actively operate the Franchised
Business for five (5) or more consecutive days, unless the Franchised Business
has not been operational for a purpose approved by Franchisor, or fails to
relocate to approved premises within an approved period of time following
expiration or termination of the lease for the Premises, if applicable;
15
7. Surrenders or transfers control of the operation of the
Franchised Business, makes or attempts to make an unauthorized direct or
indirect assignment of the franchise or an ownership interest in Franchisee, or
fails or refuses to assign the franchise or the interest in Franchisee of a
deceased or incapacitated controlling owner thereof as herein required;
8. Is adjudicated as bankrupt, becomes insolvent, commits any
affirmative act of insolvency or files any action or petition of insolvency; if
a receiver (permanent or temporary) of its property or any part thereof is
appointed by a court of competent authority; if it makes a general assignment
for the benefit of its creditors; if a final judgment remains unsatisfied of
record for thirty (30) days or longer (unless supersedes bond is filed); if
execution is levied against Franchisee's business or property; if suit to
foreclose any lien or mortgage against its Premises or equipment is instituted
against Franchisee and not dismissed within thirty (30) days or is not in the
process of being dismissed;
9. Materially misuses or makes an unauthorized use of any of the
Marks or commits any other act which can reasonably be expected to materially
impair the goodwill associated with any of the Marks;
10. Fails on two (2) or more separate occasions within any period
of twelve (12) consecutive months to submit reports or other information or
supporting records when due, to pay amounts due for purchases from Franchisor
and any affiliate of Franchisor or other payments when due to Franchisor and any
affiliate of Franchisor, or otherwise fails to comply with this Agreement,
whether or not such failures to comply are corrected after notice thereof is
delivered to Franchisee; or
11. Continues to violate any health or safety law, ordinance or
regulation or operates the Franchised Business in a manner that presents a
health or safety hazard to its clients or the public.
12, As a REZcity Plus Franchisee, Franchisee cannot own an
auction site from eBAY or any other provider or sell goods for a third party
under any condition.
C. This Agreement shall terminate, at Franchisor's sole option, upon
the occurrences of any of the following events and Franchisee's failure to cure
within the specified time periods if Franchisee:
1. Fails or refuses to make payments of any amounts due
Franchisor or any affiliate of Franchisor for purchases from Franchisor or any
affiliate of Franchisor, or any other amounts due to Franchisor or any affiliate
of Franchisor, and does not correct such failure or refusal within thirty (30)
days after written notice of such failure is delivered to Franchisee; or
2. Fails or refuses to comply with any other provision of this
Agreement, or any mandatory specification, standard or operating procedure
prescribed in the Manual or otherwise in writing, and does not correct such
failure within thirty (30) days or provide proof acceptable to Franchisor that
Franchisee has made all reasonable efforts to correct such failure and shall
continue to make all reasonable efforts to cure until a cure is effected; if
such failure cannot reasonably be corrected within thirty (30) days after
written notice of such failure to comply is delivered to Franchisee.
D. To the extent that the provisions of this Agreement provide
for periods of notice less than those required by applicable law, or provide for
termination, cancellation, non-renewal or the like, other than in accordance
with applicable law, to the extent such are not in accordance with applicable
law, such provisions shall not be effective, and Franchisor shall comply with
applicable law in connection with each of these matters.
16
XVIII. RIGHTS AND DUTIES OF PARTIES UPON EXPIRATION OR TERMINATION
-----------------------------------------------------------
Upon termination or expiration, this Agreement and all rights granted
hereunder to Franchisee shall forthwith terminate and:
A. Franchisee shall immediately cease to operate the Franchised
Business under this Agreement and shall not thereafter, directly or indirectly,
represent to the public or hold itself out as a present or former franchisee of
Franchisor.
B. Upon demand by Franchisor, Franchisee shall assign (or, if an
assignment is prohibited, a sublease for the full remaining term and on the same
terms and conditions as Franchisee's lease) its interest in a conventional
office space lease (if applicable) then in effect for the Premises to
Franchisor, and Franchisee shall furnish Franchisor with evidence satisfactory
to Franchisor of compliance with this obligation within thirty (30) days after
termination or expiration of this Agreement.
C. Franchisee shall immediately and permanently cease to use, by
advertising or in any other manner whatsoever, any confidential methods,
procedures, trade secrets, processes and techniques associated with the System,
the Marks and any distinctive forms, slogans, signs, symbols, logos or devices
associated with the Marks or System. In particular, Franchisee shall cease to
use, without limitation, all signs, advertising materials, stationery, forms and
any other article which displays the Marks.
D. Franchisee shall take such action as may be necessary to cancel
or assign to Franchisor, at Franchisor's option, any assumed name or equivalent
registration filed with state, city or county authorities which contains the
name "▇▇▇▇▇▇▇.▇▇▇," "▇▇▇▇▇▇▇▇▇▇.▇▇▇," or any of the Marks, and Franchisee shall
furnish Franchisor with evidence satisfactory to Franchisor of compliance with
this obligation within thirty (30) days after termination or expiration of this
Agreement.
E. Franchisee shall promptly pay all sums owing to ▇▇▇▇▇▇▇▇▇▇.▇▇ the
event of termination for any default of Franchisee, such sums shall include, but
not be limited to, all damages, costs and expenses, including reasonable
attorneys' fees incurred by Franchisor as a result of the default.
F. Franchisee shall pay to Franchisor all damages, costs and
expenses, including reasonable attorneys' fees, incurred by Franchisor
subsequent to the termination or expiration of the franchise herein granted in
obtaining injunctive or other relief for the enforcement of any provisions of
this Paragraph XVIII. or Paragraph XVI.
G. Franchisee shall immediately turn over to Franchisor the Manual
and all other manuals, client lists, records, files, instructions, brochures,
agreements, disclosure statements and any and all other materials provided by
Franchisor to Franchisee relating to the operation of the Franchised Business
(all of which are acknowledged to be Franchisor's property).
H. Franchisee hereby acknowledges that all telephone and facsimile
numbers, e-mail and Internet addresses used in the operation of the Franchised
Business constitute property of Franchisor. Franchisee agrees, prior to
utilizing any telephone number in conjunction with the Franchised Business, to
execute an agreement assigning such telephone listing and numbers to Franchisor,
which shall become effective upon termination of this Agreement for any reason.
In addition, Franchisee shall notify the telephone company and all listing
agencies of the termination or expiration of Franchisee's right to use any
telephone numbers and facsimile numbers in any regular, classified or other
telephone directory listing associated with the Marks and to authorize transfer
of same to or at the direction of Franchisor.
17
I. Franchisor shall have the right(but not the duty) to be exercised
by notice of intent to do so within thirty (30) days after termination or
expiration, to purchase for cash, except as provided in this Paragraph XVIII.K.,
any or all assets of the Franchised Business, including leasehold improvements,
equipment, supplies and other inventory, advertising materials and all items
bearing the Marks, at Franchisee's cost or fair market value, whichever is less.
If Franchisor elects to exercise any option to purchase as herein provided, it
shall have the right to set off all amounts due from Franchisee under this
Agreement, if any, against any payment therefore.
J. Franchisee shall comply with the covenants contained in Paragraph
XVI. of this Agreement.
K. All obligations of Franchisor and Franchisee which expressly or
by their nature survive the expiration or termination of this Agreement shall
continue in full force and effect subsequent to and notwithstanding their
expiration or termination and until they are satisfied or by their nature
expire.
XIX. TRANSFERABILITY OF INTEREST
---------------------------
A. This Agreement and all rights hereunder can be assigned and
transferred by Franchisor and, if so, shall be binding upon and inure to the
benefit of Franchisor's successors and assigns; provided, however, that with
respect to any assignment resulting in the subsequent performance by the
assignee of the functions of Franchisor, the assignee shall: (i) at the time of
such assignment, be financially responsible and economically capable of
performing the obligations of Franchisor hereunder; and (ii) expressly assume
and agree to perform such obligations.
B. Franchisee shall not transfer, sell or assign fifteen percent
(15%) or more of the assets used in the Franchised Business or any ownership
interest licensed hereunder without the written consent of Franchisor.
C. The rights and duties of Franchisee as set forth in this
Agreement, and the franchise herein granted, are personal to Franchisee, and
Franchisor has agreed to enter into this contract with Franchisee in reliance
upon Franchisee's personal skill and financial ability. Accordingly, neither
Franchisee nor any successor of Franchisee, either immediate or remote, to any
part of Franchisee's interest in this Agreement may sell, assign, transfer,
convey, give away, pledge, mortgage or otherwise encumber any interest in this
Agreement or in the franchise granted hereby. Any purported assignment or
transfer, whether by operation of law or otherwise, or encumbrance of all or any
part of Franchisee's rights, or of all or any part of Franchisee's company under
this Agreement, or of all or any part of the operating control of the business
of Franchisee, shall be null and void and shall constitute a material breach of
this Agreement, for which breach Franchisor may then terminate this Agreement
without notice or opportunity to cure, unless such assignment, transfer or
encumbrance has the prior written consent of Franchisor.
D. If Franchisee desires to sell or transfer all or any part of
its interest in this Agreement and Franchise, or all or any part of the company
which operates the Franchised Business, to any transferee, Franchisee shall
first obtain the written consent of Franchisor to such transaction, which
consent will be conditioned upon the satisfaction of the following conditions:
1. All obligations owed to Franchisor and all other outstanding
obligations relating to the Franchised Business shall be fully paid and
satisfied.
2. Unless prohibited by the law of the state where the Franchise
is located, Franchisee shall have executed a general release, in a form
satisfactory to Franchisor, of any and all claims against Franchisor including
18
its officers, directors, shareholders and employees, in their corporate and
individual capacities, including, without limitation, claims arising under
federal, state and local laws, rules and ordinances, and any other matters
incident to the termination of this Agreement or to the transfer of Franchisee's
interest herein or to the transfer of Franchisee's ownership of all or any part
of the business which operates this Franchise. If a general release is
prohibited, Franchisee shall give the maximum release allowed by law.
3. The transferee shall have satisfied Franchisor that it meets
Franchisor's management, business and financial standards and otherwise
possesses the character and capabilities, including business reputation and
credit rating, as Franchisor may require to demonstrate ability to conduct the
Franchised Business.
4. The transferee and, at Franchisor's option, all persons owning
any interest in the transferee, shall execute the then-current Franchise
Agreement for new franchisees which may be substantially different from this
Agreement, including, without limitation, differences in Sales Commissions,
territorial protection and other material provisions. The Franchise Agreement
then executed shall be for the term specified in such Agreement.
5. The transferee shall have executed a general release, in a
form satisfactory to Franchisor, of any and all claims against Franchisor and
its officers, directors, shareholders and employees, in their corporate and
individual capacities, with respect to any representations regarding the
franchise or the business conducted pursuant thereto or any other matter that
may have been made to the transferee by the selling Franchisee.
6. Franchisee shall have provided Franchisor with a complete copy
of all contracts and agreements and related documentation between Franchisee and
the transferee relating to the sale or transfer of the franchise.
E. Franchisee shall have paid to Franchisor a transfer fee in the
amount of twenty percent (20%) of the then-current initial Franchise Fee. (Up to
$1,500 per town or city; multiple zip codes within one town or city still
constitute a single franchise)
F. Franchisee agrees to continue to be bound to the obligations of the
new Franchise Agreement and to guarantee the full performance thereof by the
transferee, if required by Franchisor.
G. If Franchisee wishes to transfer this Agreement or any interest
therein to a corporation, limited liability company or other legal entity
("Entity") which shall be entirely owned by Franchisee, which Entity is being
formed for the financial planning, tax or other convenience of Franchisee,
Franchisor's consent to such transfer shall be conditioned upon the following
requirements:
1. The Entity shall be newly organized and its charter shall
provide that its activities are confined exclusively to the operation of the
Franchised Business.
2. Franchisee shall retain total ownership of the outstanding
stock or other capital interest in the transferee Entity, and Franchisee shall
act as the principal officer or officers and directors thereof.
3. All obligations of Franchisee to Franchisor or any
affiliate shall be fully paid and satisfied prior to Franchisor's consent.
19
4. The Entity assignee shall enter into a written agreement
with Franchisor expressly assuming the obligations of this Agreement and all
other agreements relating to the operation of this Franchised Business. If the
consent of any other contracting party to any such agreement be required,
Franchisee shall have obtained such written consent and provided the same to
Franchisor prior to consent by Franchisor.
5. All owners of the stock or other ownership interest of the
transferee Entity shall enter into an agreement with Franchisor, jointly and
severally, guaranteeing the full payment of the Entity's obligations to
Franchisor and the performance by the Entity of all the obligations of the
Agreement.
6. Each stock certificate or other ownership interest
certificate of the Entity shall have conspicuously endorsed upon the face
thereof of a statement in a form satisfactory to Franchisor that it is held
subject to, and that further assignment or transfer thereof is subject to, all
restrictions imposed upon transfers and assignments by this Agreement.
7. Copies of the transferee Entity's Articles of
Incorporation, Bylaws, Operating Agreement, and other governing regulations or
documents, including resolutions of the Board of Directors authorizing entry
into this Agreement, shall be promptly furnished to Franchisor. Any amendment to
any such documents shall also be furnished to Franchisor immediately upon
adoption.
8. The term of the transferred franchise shall be the
unexpired term of this Agreement.
9. Franchisor's consent to a transfer of any interest in this
Agreement or of any ownership interest in the Franchised Business shall not
constitute a waiver of any claims Franchisor may have against the transferor or
the transferee, nor shall it be deemed a waiver of Franchisor's right to demand
compliance with the terms of this Agreement.
H. Franchisor may, without liability of any kind or nature
whatsoever to Franchisee, make available for inspection by any intended
transferee of Franchisee all or any part of Franchisor's records relating to
this Agreement, the Franchised Business, or to the history of the relationship
of the parties hereto. Franchisee hereby specifically consents to such
disclosure by Franchisor and absolutely releases and agrees to hold Franchisor
harmless from and against any claim, loss or injury resulting from an inspection
of Franchisor's records relating to this franchise by an intended transferee
identified by Franchisee.
I. Franchisee shall not , without prior written consent of
Franchisor, place in, on or upon the location of the Franchised Business, or in
any communication media, any form of advertising relating to the sale of the
Franchised Business or the rights granted hereunder.
XX. DEATH OR INCAPACITY OF FRANCHISEE
---------------------------------
A. In the event of the death or incapacity of any person with
an ownership interest in this Agreement, the heirs, beneficiaries, devisee, or
legal representatives of said individual, partner, member or shareholder shall,
within one hundred eighty (180) days of such event:
1. ______________________________ Agreement (except that no
transfer fee shall be required) and upon appointing a designated manager to
operate the Franchised Business which manager must begin Franchisor's training
program no later than six (6) months after the date of Franchisee's death or
disability; or
20
2. Sell, assign, transfer or convey Franchisee's interest in
compliance with the provisions of Sections XIX. and XXI. of this Agreement;
provided, however, in the event a proper and timely application for the right to
continue to operate has been made and rejected, the one hundred eighty (180)
days to sell, assign, transfer or convey shall be computed from the date of
application. For purposes of this Paragraph XX.A.2., Franchisor's silence on an
application made pursuant to Paragraph XIX.D. through the one hundred eighty
(180) days following the event of death or incapacity shall be deemed a
rejection made on the last day of such period.
B. In the event of the death or incapacity of an individual
Franchisee, or any partner, shareholder or member of a Franchisee which is a
partnership, corporation or limited liability company, where the aforesaid
provisions of Paragraph XIX. have not been fulfilled within the time provided,
all rights licensed to Franchisee under this Agreement shall, at the option of
Franchisor, terminate forthwith and automatically revert to Franchisor.
C. For purposes of this Agreement, "incapacity" shall be defined as
the inability of Franchisee to operate or oversee the operation of the
Franchised Business on a regular basis by reason of any continuing physical,
mental or emotional incapacity, chemical dependency or other limitation. Any
dispute as to the existence of an incapacity as defined herein shall be resolved
by majority decision of three (3) licensed medical physicians practicing in the
Metropolitan Statistical Area in which the Franchised Business is located, with
each party selecting one (1) medical physician, and the two (2) medical
physicians so designated selecting the third medical physician. The
determination of the majority of the three (3) medical physicians shall be
binding upon the parties and all costs of making said determination shall be
borne by the party against whom it is made.
XXI. RIGHT OF FIRST REFUSAL
----------------------
If Franchisee or its owners propose to sell the Franchised Business (or
its assets), any ownership interest of Franchisee or any ownership interest in
this Agreement, Franchisee or its owners shall obtain and deliver a bona fide,
executed written offer or proposal to purchase or proposal to merge, along with
all pertinent documents including any contract or due diligence materials to
Franchisor, which shall, for a period of thirty (30) days from the date of
delivery of all such documents, have the right, exercisable by written notice to
Franchisee or its owners, to purchase the ownership interest or assets for the
price and on the terms and conditions contained in such offer or proposal to
Franchisor, provided that Franchisor may substitute cash for the fair market
value of any form of payment proposed in such offer or proposal. If Franchisor
does not exercise this right of first refusal, the offer or proposal may be
accepted by Franchisee or its owners, subject to the prior written approval of
Franchisor, as provided in Paragraph XIX. hereof, provided that if the sale
fails to close within one hundred twenty (120) days of the date thereof,
Franchisor shall again have the right of first refusal herein described. Should
a transferee assume the rights and obligations under this Agreement, such
transferee shall likewise be subject to Franchisor's right of first refusal
under terms and conditions as set forth herein.
XXII. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
------------------------------------------
A. This Agreement does not create a fiduciary relationship between
the parties, nor does it constitute Franchisee as an agent, legal
representative, joint venturer, partner, employee or servant of Franchisor for
any purpose whatsoever; and it is understood between the parties hereto that
Franchisee shall be an independent contractor and is in no way authorized to
make any contract, agreement, warranty or representation on behalf of Franchisor
to incur any debt, or to create any obligation, express or implied, on behalf of
Franchisor.
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B. During the term of this Agreement and any extension hereof,
Franchisee shall hold itself out to the public as an independent contractor
operating the business pursuant to a franchise from Franchisor. Franchisee shall
take such affirmative action as may be necessary to do so including, without
limitation, exhibiting a notice of that fact in a conspicuous place on the
Premises and on all forms, stationery or other written materials, the content of
which Franchisor reserves the right to specify.
C. Franchisee shall defend, at its own cost, and indemnify and hold
harmless Franchisor, its general partners and any shareholders, directors,
officers, employees and agents, from and against any and all losses, costs,
expenses (including, without limitation, reasonable accountants', attorneys' and
expert witness fees, costs of investigation and proof of facts, court costs
other litigation expenses, and travel and living expenses), damages and
liabilities, however caused, resulting directly or indirectly from or pertaining
to the use, condition or construction, equipping, decorating, maintenance or
operation of the Franchised Business, including the sale of any Service sold
from the Franchised Business, or from or pertaining to any breach of this
Agreement by Franchisee. Such losses, claims, costs, expenses, damages and
liabilities shall include, without limitation, those arising from latent or
other defects in the Franchised Business, whether or not discoverable by
Franchisor, and those arising from the death or injury to any person or arising
from damage to the property of Franchisee or Franchisor, their agents or
employees or any third person, firm or corporation, whether or not such losses,
claims, costs, expenses, damages or liabilities were actually or allegedly
caused wholly or in part through the active or passive negligence of Franchisor
or any of its agents or employees or resulted from any strict liability imposed
on Franchisor or any of its agents or employees. All such indemnification shall
survive termination of this Agreement.
D. Franchisor shall not, by virtue of any approvals, advice or
services provide to Franchisee, assume responsibility or liability to Franchisee
or any third parties to which Franchisor would otherwise be subject.
XXIII. NON-WAIVER
----------
No failure of Franchisor to exercise any power reserved to it
hereunder, or to insist upon strict compliance by Franchisee with any obligation
or condition hereunder, and no custom or practice of the parties in variance
with the terms hereof, shall constitute a waiver of Franchisor's right to demand
exact compliance with the terms hereof. Waiver by Franchisor of any particular
default by Franchisee shall not be binding unless in writing and executed by the
party sought to be charged and shall not affect or impair Franchisor's right
with respect to any subsequent default of the same or of a different nature; nor
shall any delay, waiver, forbearance or omission of Franchisor to exercise any
power or rights arising out of any breach or default by Franchisee of any of the
terms, provisions or covenants hereof, affect or impair Franchisor's rights nor
shall such constitute a waiver by Franchisor of any right hereunder or of the
right to declare any subsequent breach or default. Subsequent acceptance by
Franchisor of any payment(s) due to it hereunder shall not be deemed to be a
waiver by Franchisor of any preceding breach by Franchisee of any terms,
covenants or conditions of this Agreement.
XXIV. NOTICES
-------
Any and all notices required or permitted under this Agreement shall be
in writing and shall be deemed received: (a) at the time delivered by hand to
the recipient party (or to an officer, director or partner of the recipient
party); (b) on the next business day of the transmission by facsimile, telegraph
or other reasonably reliable electronic communication system; (c) two (2)
business days after being placed in the hands of a commercial courier service
for guaranteed overnight delivery; or (d) five (5) business days after placement
in the United States Mail by Registered or Certified Mail, Return Receipt
Requested, postage prepaid and addressed to the party to be notified at its most
22
current principal business address of which the notifying party has been
notified in writing. All notices, payments and reports required by this
Agreement shall be sent to Franchisor at the address below:
Notices to Franchisor: RezConnect Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, President
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
EAB Plaza, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Notices to Franchisee:
------------------------------------
------------------------------------
------------------------------------
Fax No.:
-------------------
With a copy to:
------------------------------------
------------------------------------
------------------------------------
Fax No.:
-------------------
XXV. COST OF ENFORCEMENT OR DEFENSE
------------------------------
If Franchisor or Franchisee is required to enforce this Agreement in a
judicial or arbitration proceeding, the prevailing party shall be entitled to
reimbursement of its costs, including reasonable accounting and legal fees, in
connection with such proceeding.
XXVI. APPROVALS
---------
A. Whenever this Agreement requires the prior approval or consent
of Franchisor, Franchisee shall make a timely written request to Franchisor
therefore and, except as otherwise provided herein, any approval or consent
granted shall be effective only if in writing.
B. Franchisor makes no warranties or guarantees upon which
Franchisee may rely and assumes no liability or obligation to Franchisee or any
third party to which it would not otherwise be subject, by providing any waiver,
approval, advice, consent or services to Franchisee in connection with this
Agreement, or by reason of any neglect, delay or denial of any request
therefore.
XXVII. ENTIRE AGREEMENT
----------------
This Agreement, any exhibit attached hereto and the documents referred
to herein, shall be construed together and constitute the entire, full and
complete agreement between Franchisor and Franchisee concerning the subject
matter hereof, and shall supersede all prior agreements. No other representation
has induced Franchisee to execute this Agreement and there are no
representations, inducements, promises or agreements, oral or otherwise, between
the parties not embodied herein, which are of any force or effect with reference
to this Agreement or otherwise. No amendment, change or variance from this
Agreement shall be binding on either party unless executed in writing by both
parties.
23
XXVIII. SEVERABILITY AND CONSTRUCTION
-----------------------------
A. Each paragraph, part, term and/or provision of this Agreement
shall be considered severable, and if, for any reason, any paragraph, part, term
and/or provision herein is determined to be invalid and contrary to, or in
conflict with, any existing or future law or regulation, such shall not impair
the operation of or affect the remaining portions, paragraphs, parts, terms
and/or provisions of this Agreement, and the latter shall continue to be given
full force and effect and bind the parties hereto; and said invalid paragraphs,
parts, terms and/or provisions shall be deemed not part of this Agreement;
provided, however, that if Franchisor determines that said finding of illegality
adversely affects the basic consideration of this Agreement, Franchisor may, at
its option, terminate this Agreement.
B. Anything to the contrary herein notwithstanding, nothing in this
Agreement is intended, nor shall be deemed, to confer upon any person or legal
entity other than Franchisor or Franchisee and such of their respective
successors and assigns as may be contemplated by this Agreement, any rights or
remedies under or by reason of this Agreement.
C. Franchisee expressly shall be bound by any promise or covenant
imposing the maximum duty permitted by law which is contained within the terms
of any provision hereof, as though it were separately stated in and made a part
of this Agreement, that may result from striking from any of the provisions
hereof any portion or portions which a court may hold to be unreasonable and
unenforceable in a final decision to which Franchisor is a party, or from
reducing the scope of any promise or covenant to the extent required to comply
with such a court order.
D. All captions herein are intended solely for the convenience of
the parties, and none shall be deemed to affect the meaning or construction of
any provision hereof.
E. This Agreement may be executed in multiple copies, and each
copy so executed shall be deemed an original.
XXIX. APPLICABLE LAW
--------------
A. THIS AGREEMENT AND THE RIGHTS OF THE PARTIES WILL NOT TAKE EFFECT
UNLESS AND UNTIL THIS AGREEMENT IS ACCEPTED AND SIGNED BY FRANCHISOR. EXCEPT TO
THE EXTENT THIS AGREEMENT OR ANY PARTICULAR DISPUTE IS GOVERNED BY THE U.S.
TRADEMARK ACT OF 1946 OR OTHER FEDERAL LAW, THIS AGREEMENT AND THE FRANCHISE ARE
GOVERNED BY NEW JERSEY LAW (WITHOUT REFERENCE TO ITS CONFLICT OF LAWS
PRINCIPLES), EXCLUDING ANY LAW REGULATING THE SALE OF FRANCHISES OR GOVERNING
THE RELATIONSHIP BETWEEN A FRANCHISOR AND FRANCHISEE, UNLESS THE JURISDICTIONAL
REQUIREMENTS OF SUCH LAWS ARE MET INDEPENDENTLY WITHOUT REFERENCE TO THIS
SECTION. ALL MATTERS RELATING TO ARBITRATION ARE GOVERNED BY THE FEDERAL
ARBITRATION ACT.
B. FRANCHISEE ACKNOWLEDGES THAT THIS AGREEMENT IS ENTERED INTO IN
BERGEN COUNTY, NEW JERSEY, AND THAT ANY ACTION SOUGHT TO BE BROUGHT BY EITHER
PARTY, EXCEPT THOSE CLAIMS REQUIRED TO BE SUBMITTED TO ARBITRATION SHALL BE
BROUGHT IN THE APPROPRIATE STATE OR FEDERAL COURT LOCATED IN BERGEN COUNTY, NEW
JERSEY. THE PARTIES DO HEREBY WAIVE ALL QUESTIONS OF PERSONAL JURISDICTION OR
VENUE FOR THE PURPOSES OF CARRYING OUT THIS PROVISION. THE EXCLUSIVE CHOICE OF
JURISDICTION AND VENUE DOES NOT PRECLUDE THE BRINGING OF ANY ACTION BY THE
24
PARTIES, OR THE ENFORCEMENT BY THE PARTIES OF ANY JUDGMENT OBTAINED IN ANY SUCH
JURISDICTION, IN ANY OTHER APPROPRIATE JURISDICTION, OR RESTRICT THE ABILITY OF
THE PARTIES TO CONFIRM OR ENFORCE ARBITRATION AWARDS IN ANY APPROPRIATE
JURISDICTION.
C. NO RIGHT OR REMEDY CONFERRED UPON OR RESERVED TO FRANCHISOR OR
FRANCHISEE BY THIS AGREEMENT IS INTENDED TO BE, NOR SHALL BE DEEMED, EXCLUSIVE
OF ANY OTHER RIGHT OR REMEDY HEREIN OR BY LAW OR EQUITY PROVIDED OR PERMITTED,
BUT EACH SHALL BE CUMULATIVE OF EVERY OTHER RIGHT OR REMEDY.
D. NOTHING HEREIN CONTAINED SHALL BAR FRANCHISOR'S RIGHT TO OBTAIN
INJUNCTIVE RELIEF AGAINST THREATENED CONDUCT THAT SHALL CAUSE IT LOSS OR
DAMAGES, UNDER THE USUAL EQUITY RULES, INCLUDING THE APPLICABLE RULES FOR
OBTAINING RESTRAINING ORDERS AND PRELIMINARY INJUNCTIONS.
E. ANY CLAIM CONCERNING THE FRANCHISED BUSINESS OR THIS AGREEMENT OR
ANY RELATED AGREEMENT WILL BE BARRED UNLESS AN ARBITRATION OR AN ACTION FOR A
CLAIM THAT CANNOT BE THE SUBJECT OF ARBITRATION IS COMMENCED WITHIN ONE (1) YEAR
FROM THE DATE ON WHICH FRANCHISEE OR FRANCHISOR KNEW OR SHOULD HAVE KNOWN, IN
THE EXERCISE OF REASONABLE DILIGENCE, OF THE FACTS GIVING RISE TO OR THE CLAIM.
F. FRANCHISEE AND FRANCHISOR EACH WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY RIGHT OR CLAIM FOR ANY PUNITIVE OR EXEMPLARY DAMAGES
AGAINST THE OTHER, AND AGREES THAT IF THERE IS A DISPUTE WITH THE OTHER, EACH
WILL BE LIMITED TO THE RECOVERY OF ACTUAL DAMAGES SUSTAINED BY IT INCLUDING
REASONABLE ACCOUNTING AND/OR LEGAL FEES AS PROVIDED IN PARAGRAPH XXVI.
G. FRANCHISEE AND FRANCHISOR EACH IRREVOCABLY WAIVE TRIAL BY JURY IN
ANY ACTION, WHETHER AT LAW OR EQUITY, BROUGHT BY EITHER OF THEM.
XXX. ARBITRATION
-----------
A. Any claim arising out of or relating to this Agreement, or any
breach thereof, except any claim(s) relating to confidential information or the
Marks, shall be submitted to arbitration in Bergen County, New Jersey, in
accordance with the rules of the American Arbitration Association and judgment
upon the award may be entered in any court having jurisdiction thereof and shall
be final, binding and unappealable. The arbitrators are explicitly authorized to
award attorneys' fees as part of their award. Nothing contained herein shall,
however, be construed to limit or to preclude Franchisor from bringing any
action in any court of competent jurisdiction for injunctive or other
provisional relief as Franchisor deems to be necessary or appropriate to compel
Franchisee to comply with its obligations hereunder or to protect its Marks,
copyrights, trade secrets or confidential information of Franchisor. This
arbitration provision shall be deemed to be self-executing and in the event that
either party fails to appear at any properly noticed arbitration proceeding,
award may be entered against either party notwithstanding its failure to appear.
25
B. Nothing herein contained shall bar the right of either party to
seek and obtain temporary injunctive relief from a court of competent
jurisdiction in accordance with applicable law against threatened conduct that
is likely to cause irreparable harm, pending completion of the arbitration.
C. It is the intent of the parties that any arbitration between
Franchisor and Franchisee shall be of Franchisee's individual claim and that the
claim subject to arbitration shall not be arbitrated on a class-wide basis.
XXXI. FORCE MAJEURE
----- -------------
Whenever a period of time is provided in this Agreement for either
party to do or perform any act or thing, except the payment of monies, neither
party shall be liable or responsible for any delays due to strikes, lockouts,
casualties, acts of God, war, governmental regulation or control or other causes
beyond the reasonable control of the parties, and in any event said time period
for the performance of an obligation hereunder shall be extended for the amount
of time of the delay. This clause shall not apply or not result in an extension
of the term of this Agreement.
XXXII. FRANCHISEE DEFINED; GUARANTY
----------------------------
As used in this Agreement, the term "Franchisee" shall include all
persons who succeed to the interest of the original Franchisee by transfer or
operation of law and shall be deemed to include not only the individual or
entity defined as "Franchisee" in the introductory paragraph of this Agreement,
but shall also include all partners of the entity that execute this Agreement
(if the entity is a partnership); all shareholders, officers and directors of
the entity that execute this Agreement (if the entity is a corporation); and all
members, managers or governors of the entity that execute this Agreement (if the
entity is a limited liability company). By their signatures hereto, all
partners, shareholders, officers, directors, members, managers and governors of
the entity that sign this Agreement as Franchisee acknowledge and accept the
duties and obligations imposed upon each of them, individually, by the terms of
this Agreement. The singular usage includes the plural and the masculine and
neuter usages include the other and the feminine.
XXXIII. CAVEAT
------
The success of the business venture contemplated to be undertaken by
Franchisee by virtue of this Agreement is speculative and depends, to a large
extent, upon the ability of Franchisee as an independent businessperson, and its
active participation in the daily affairs of the business as well as other
factors. Franchisor does not, in this Agreement or otherwise, make any
representation or warranty, express or implied, as to the potential success of
the business venture contemplated hereby.
XXXIV. ACKNOWLEDGMENTS
---------------
A. Franchisee represents and acknowledges that it has received, read
and understood this Agreement and Franchisor's Uniform Franchise Offering
Circular; and that Franchisor has fully and adequately explained the provisions
of each to Franchisee's satisfaction; and that Franchisor has accorded
Franchisee ample time and opportunity to consult with advisors of its own
choosing about the potential benefits and risks of entering into this Agreement.
B. Franchisee acknowledges that it has received a copy of this
Agreement and the attachments thereto, at least five (5) business days prior to
the date on which this Agreement was executed. Franchisee further acknowledges
that Franchisee has received the disclosure document required by the Trade
Regulation Rule of the Federal Trade Commission entitled "Disclosure
26
Requirements and Prohibitions Concerning Franchising and Business Opportunity
Ventures" at least ten (10) business days prior to the date on which this
Agreement was executed.
C. Franchisee has been advised to consult with its own advisors with
respect to the legal, financial and other aspects of this Agreement, the
business franchised hereby and the prospects for that business. Franchisee has
either consulted with such advisors or has deliberately declined to do so.
D. The covenants not to compete set forth in this Agreement are fair
and reasonable and shall not impose any undue hardship on Franchisee, since
Franchisee has other considerable skills, experience and education which afford
Franchisee the opportunity to derive income from other endeavors.
E. Franchisee affirms that all information set forth in any and all
applications, financial statements and submissions to Franchisor is true,
complete and accurate in all respects, with Franchisee expressly acknowledging
that Franchisor is relying upon the truthfulness, completeness and accuracy of
such information.
F. Franchisee has conducted an independent investigation of the
business contemplated by this Agreement and recognizes that, like any other
business, an investment in a ▇▇▇▇▇▇▇.▇▇▇ Franchised Business involves business
risks and that the success of the venture is primarily dependent upon the
business abilities and efforts of Franchisee.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed and delivered this Agreement in multiple copies the
date and year first above written.
ATTEST: REZCONNECT TECHNOLOGIES, INC.
By:
-------------------------- -----------------------------------------
Title:
-------------------------- --------------------------------------
(in an official capacity only and not
individually or personally)
Date:
---------------------------------------
ATTEST:
--------------------------------------------
FRANCHISEE
By:
-------------------------- -----------------------------------------
Title:
-------------------------- --------------------------------------
(in an official capacity only and not
individually or personally)
Date:
---------------------------------------
27
EXHIBIT A TO THE FRANCHISE AGREEMENT
------------------------------------
MAP OF TERRITORY
_______ REZcity Franchise
_______ REZcity Plus Franchise
RezConnect Technologies, Inc. FRANCHISEE:
By: By:
------------------------------ ---------------------------
Title: Title:
--------------------------- ------------------------
Date: Date:
---------------------------- -------------------------
EXHIBIT B TO THE FRANCHISE AGREEMENT
------------------------------------
SALES COMMISSION SCHEDULE
----------------------------------- ------------------------------------------------
Sales Made By:
--------------------------------- -------------------------------------------------
Franchisee With Franchisee Franchisor or
Non-Selling sales who also owns other Third
Product: consultants a Travel Party
Agency
--------------------------------- ----------------- ---------------- ---------------
All E-Commerce and Advertising 40%1 40% 20%
Solutions1
--------------------------------- ----------------- ---------------- ---------------
Custom Internet Advertising2 40% 40% 20%
--------------------------------- ----------------- ---------------- ---------------
Online Travel Agency3 Commissions 50% 80% 0%
--------------------------------- ----------------- ---------------- ---------------
REZcity Plus Internet Auction4 50% 50% 20%
--------------------------------- ----------------- ---------------- ---------------
------------------------------------------------------------------------------------
1 Based upon percentage of Net-▇▇▇▇▇ ▇▇▇▇▇▇. Net ▇▇▇▇▇ Revenue is the
total revenue received by Franchisor, ▇▇▇▇▇▇.▇▇▇, Inc., and other
vendors from the merchant less credit card merchant fees and any other
sales commissions paid to a third party.
2 Amount received is based on the payments made by Merchant less any
credit card merchant fees and other sales expense such as advertising
agency commissions to third parties and other sales expense commission
if agreed upon in advance between the Franchisor, Franchisee and /or
the Area Representative.
3 Based upon percentage of the base gross commission profit. Gross
commission Profit is the amount Franchisor receives less direct
expenses for offering such services and other fees relating to the
provision of such services. Some commissions are based on a service fee
charged to the client and these figures will be adjusted for
processing, third party handling and merchants fees deducted before
revenue sharing occurs. Any transaction that requires documents to be
mailed after receipt from the vendor will incur a mailing/shipping fee
before commission splitting occurs.
4 Amount received is based on the payments made by consumer to purchase
merchandise online, less any not-for-profit organization sharing fees,
credit card merchant fees and other sales expense.
EXHIBIT C TO THE FRANCHISE AGREEMENT
------------------------------------
GUARANTY AND ASSUMPTION OF OBLIGATIONS
THIS GUARANTY AND ASSUMPTION OF OBLIGATIONS is given this
day of __________, 20______ , by______________________________________.
In consideration of, and as an inducement to, the execution of that
certain Individual Franchise Agreement (the "Agreement") on this date by
REZCONNECT TECHNOLOGIES, INC. ("us", "we", or "our"), each of the undersigned
personally and unconditionally (a) guarantees to us and our successors and
assigns, for the term of the Agreement and afterward as provided in the
Agreement, that _____________________ ("Franchisee") will punctually pay and
perform each and every undertaking, agreement and covenant set forth in the
Agreement and (b) agrees to be personally bound by, and personally liable for
the breach of, each and every provision in the Agreement, both monetary
obligations and obligations to take or refrain from taking specific actions or
to engage or refrain from engaging in specific activities, including the
non-competition, confidentiality and arbitration requirements.
Each of the undersigned consents and agrees that: (1) his or her direct
and immediate liability under this Guaranty will be joint and several; (2) he or
she will render any payment or performance required under the Agreement upon
demand if Franchisee fails or refuses punctually to do so; (3) this liability
will not be contingent or conditioned upon our pursuit of any remedies against
Franchisee or any other person; and (4) this liability will not be diminished,
relieved or otherwise affected by any extension of time, credit or other
indulgence which we may from time to time grant to Franchisee or to any other
person, including, without limitation, the acceptance of any partial payment of
performance of the compromise or release of any claims, none of which will in
any way modify or amend this Guaranty, which will be continuing and irrevocable
during the term of the Agreement.
Each of the undersigned waives all rights to payments and claims for
reimbursement or subrogation which any of the undersigned may have against
Franchisee arising as a result of the undersigned's execution of and performance
under this Guaranty.
IN WITNESS WHEREOF, each of the undersigned has affixed his or her
signature on the same day and year as the Agreement was executed.
GUARANTOR(S)
------------
--------------------------------- ---------------------------------
--------------------------------- ---------------------------------
--------------------------------- ---------------------------------
--------------------------------- ---------------------------------
AMENDMENT TO THE FRANCHISE AGREEMENT
RezConnect Technologies, Inc.
FOR THE STATE OF CALIFORNIA
---------------------------
This Amendment to the Franchise Agreement is agreed to this ____ day of
__________, 20___, between RezConnect Technologies, Inc. and
____________________________ to amend and revise said Franchise Agreement as
follows:
1. In recognition of the requirements of the California Franchise
Investment Law, Cal. Corp. Code ss.ss.31000-3516 and the California Franchise
Relations Act, Cal. Bus. And Prof. Code ss.ss.2000-20043, the Franchise
Agreement for RezConnect Technologies, Inc. shall be amended as follows:
o Paragraph XVI.C. of the Franchise Agreement contains a covenant not
to compete which extends beyond the expiration or termination of the
Agreement, the covenant may not be enforceable under California law.
o Paragraph XIX.D.5. requires Franchisee to sign a general release as
a condition of transfer of the franchise, such release shall exclude
claims arising under the California Franchise Investment Law and the
California Franchise Relations Act.
o Paragraph XVII.B.9. in the Franchise Agreement which terminates the
Franchise Agreement upon the bankruptcy of the Franchisee may not be
enforceable under federal bankruptcy law (11 U.S.C. Section 101 et
seq.).
o The California Franchise Relations Act provides rights to the
Franchisee concerning termination or non-renewal of the Franchise
Agreement, which may supersede provisions in the Franchise
Agreement, specifically Paragraphs III. and XVII.
o Paragraphs XXIX. and XXX. of the Franchise Agreement require
litigation or arbitration to be conducted in New Jersey, the
requirement may be unenforceable under California law.
o Paragraph XXIX. of the Franchise Agreement requires that the
franchise be governed by New Jersey law, such a requirement may be
unenforceable.
2. Each provision of this Amendment shall be effective only to the
extent that the jurisdictional requirements of the California Law applicable to
the provisions are met independent of this Amendment.
IN WITNESS WHEREOF, each of the undersigned hereby acknowledges having
read this Amendment, understands and consents to be bound by all of its terms.
RezConnect Technologies, Inc. FRANCHISEE:
By: By:
-------------------------------- ---------------------------
Title: Title:
----------------------------- ------------------------
EXHIBIT D TO THE FRANCHISE AGREEMENT
------------------------------------
PROMISSORY NOTE
---------------
$__________ [City, State]
Dated: _______________
FOR VALUE RECEIVED, the undersigned, ____________________ ("Maker"), an
individual residing at _____________________________________________, hereby
promises to pay to the order of _________________________ ("Payee"), a _________
corporation maintaining an office at ____________________________, the principal
sum of __________ Thousand and 00/100 ($___,000.00) Dollars. The principal shall
be payable in ________ (____) monthly installments of _________________
($__________) Dollars, effective ____________. Said principal shall be payable
with interest thereon at the rate of _______ percent (___%) per annum from the
date hereof until such time as this promissory note is paid in full. The entire
principal balance of this note together with all accrued but unpaid interest
shall become due and payable in full upon demand by the holder of this note.
All payments under this note when paid shall be applied first in
reduction of accrued but unpaid interest, and the balance, if any, in reduction
of principal.
From and after the date hereof, Maker shall have the right, without
penalty, to prepay this note in whole or in part at any time.
The full amount of the remaining principal balance and all accrued but
unpaid interest shall, at the election of Payee, become immediately due and
payable upon the failure of Maker to pay in full any installment of interest
when due and payable if the same remains unpaid ten (10) days after its due
date.
It is hereby expressly agreed that the said principal sum secured by
this note shall become due at the option of the holder thereof on the happening
of the aforesaid default.
This note may not be changed or terminated orally.
From and after the date of any Event of Default, late payment charges
shall accrue on the then highest outstanding balance of principal and interest
due on this note, or any installment of interest which is unpaid ten (10) days
after its due date in the event that Payee elects not to accelerate all
installments and principal, at the rate of four percent (4%) of the amount
overdue per every thirty (30) day period or part thereof following the Event of
Default. These charges shall be in addition to, and not in lieu of, all other
remedy provisions contained herein or otherwise available to Payee.
In the event of the Maker's failure to pay the principal balance when
due, either at maturity or upon acceleration after default, the note shall bear
interest at the lower of eighteen percent (18%) per annum or the maximum
interest rate permitted by law from the date the principal balance is due,
whether at maturity or acceleration.
Upon any uncured default hereof, Payee shall be entitled to collection
on the Confession of Judgment then being held by the Payee, who also shall be
entitled to receive from the Maker costs of collection and reasonable attorneys'
fees incurred in connection therewith.
Maker waives presentment, demand, protest, notice of protest and notice
of dishonor of this note.
Maker shall not deduct from or offset against payments to Payee any
amounts or claims for any reason whatsoever.
This Note shall be construed in accordance with the laws of the State
of __________.
IN WITNESS WHEREOF, Maker has executed and sealed this note as of the
date first above written.
___________________________________________
Maker
Print Name:
---------------------------------