EXHIBIT 10.6
IT'S ABOUT GAMES(TM)
FRANCHISE AGREEMENT
BETWEEN
GROW BIZ INTERNATIONAL, INC.
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AND
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Name(s) of Franchisee
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▇▇▇▇ ▇▇▇▇▇ Zip Code
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Area Code Telephone
FRANCHISED LOCATION:
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Street
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City State Zip Code
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Area Code Telephone
IT'S ABOUT GAMES(TM)
FRANCHISE AGREEMENT
INDEX
SECTION DESCRIPTION PAGE
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1. GRANT OF FRANCHISE; FRANCHISED LOCATION...........................1
2. TERM OF FRANCHISE; RENEWAL RIGHTS.................................2
3. OWNERSHIP AND USE OF MARKS........................................3
4. INITIAL FRANCHISE FEE.............................................4
5. CONTINUING FEE....................................................4
6. ADVERTISING AND PROMOTION.........................................4
7. FRANCHISOR'S OBLIGATIONS..........................................6
8. OPERATION OF THE FRANCHISEE'S BUSINESS............................7
9. CONFIDENTIAL INFORMATION.........................................10
10. INSURANCE; BONDING...............................................11
11. INDEPENDENT CONTRACTORS; INDEMNIFICATION.........................11
12. SALES REPORTS, FINANCIAL STATEMENTS AND AUDIT RIGHTS.............12
13. FRANCHISOR'S RIGHT OF FIRST REFUSAL TO PURCHASE..................12
14. ASSIGNMENT OF FRANCHISE AGREEMENT................................13
15. FRANCHISOR'S TERMINATION RIGHTS..................................14
16. FRANCHISEE'S TERMINATION RIGHTS; NOTICE REQUIRED.................15
17. FRANCHISEE'S OBLIGATIONS UPON TERMINATION........................15
18. FRANCHISEE'S COVENANTS NOT TO COMPETE............................16
19. ARBITRATION; ENFORCEMENT.........................................17
20. SEVERABILITY AND CONSTRUCTION....................................18
21. NOTICES..........................................................18
22. ACKNOWLEDGMENTS..................................................19
EXHIBITS A - FRANCHISEE'S DEVELOPMENT AREA AND EXCLUSIVE TERRITORY
B - COMPUTER SOFTWARE LICENSE AGREEMENT
C - PERSONAL GUARANTY
01 GK082597
02 GK030698
IT'S ABOUT GAMES(TM)
FRANCHISE AGREEMENT
THIS FRANCHISE AGREEMENT is made and entered into this _______ day of
_______________, 19____, by and between GROW BIZ INTERNATIONAL, INC., a
Minnesota corporation ("Franchisor"), and ____________________________________
("Franchisee").
BACKGROUND:
A. Franchisor franchises video and computer game resale stores known as
"It's About Games" stores ("It's About Games(TM) Stores") which feature quality
used and new video and computer games and related accessories. Franchisor uses
and licenses certain trademarks, including "It's About Games," and may hereafter
adopt, use and license additional or substitute trademarks, service marks, logos
and commercial symbols in connection with the operation of It's About Games(TM)
Stores (collectively, the "Marks"). It's About Games(TM) Stores use Franchisor's
methods, procedures, standards, specifications and the Marks (all of which are
collectively referred to as the "Business System"), which Franchisor may
periodically improve, further develop or otherwise modify.
B. Franchisee has had an adequate opportunity to be thoroughly advised
of the provisions of this Agreement and Franchisor's Offering Circular and has
had sufficient time and opportunity to evaluate and investigate the Business
System and the procedures and financial requirements associated with the
Business System as well as the competitive market in which it operates.
C. Franchisee desires to operate an "It's About Games" Store which will
conform to the uniform requirements and quality standards of the Business
System.
AGREEMENTS:
The Franchisor and Franchisee agree as follows:
1. GRANT OF FRANCHISE; FRANCHISED LOCATION
▇. ▇▇▇▇▇ of Franchise. Subject to the provisions stated below,
Franchisor grants to Franchisee a personal license and franchise to operate an
It's About Games(TM) Store (the "Store") in conformity with Franchisor's
Business System at a location within the development area specified in Exhibit A
attached hereto. The specified area identified in Exhibit A is referred to as
the "Development Area." Franchisee will operate the Store under the Business
System in strict compliance with the provisions of this Agreement and only at a
location within the Development Area approved by Franchisor (the "Franchised
Location").
B. Franchisee's Protected Area; Rights Reserved By Franchisor. During
the term of this Agreement, Franchisor will not establish for its own account or
franchise others to operate an It's About Games(TM) Store or any other business
generally classified as a video and computer game retail business within the
exclusive area specified in Exhibit A. The exclusive area identified in Exhibit
A, which includes the Development Area, is referred to as the "Exclusive
Territory." Franchisee understands, however, that Franchisor may sell any
products or services under trademarks other than the Marks (subject to those
restrictions described above). Franchisor also may sell products or services
under the Marks through other channels of distribution, provided any such
products or services Franchisor intends to sell directly within the Exclusive
Territory will first be offered to Franchisee on the same terms and conditions
as would otherwise be offered within the Exclusive Territory. The rights and
privileges granted to Franchisee under this Agreement are personal in nature,
and may not be used at any location other than the Franchised Location.
Franchisee will not relocate the Store without Franchisor's prior written
consent and will not open any other It's About Games(TM) Store in the Exclusive
Territory. Franchisee will not have the right to subfranchise or sublicense any
of its rights under this Agreement. Franchisee will not use the Franchised
Location for any purposes other than the operation of an It's About Games(TM)
Store.
2. TERM OF FRANCHISE; RENEWAL RIGHTS
A. Term. The term of this Agreement will be for ten (10) years
commencing on the date of this Agreement.
B. Renewal. Franchisee will have the right to renew its It's About
Games(TM) franchise for the Franchised Location for continuing ten (10) year
terms, provided Franchisee meets the following conditions:
1. Franchisee has given Franchisor written notice at least one
hundred eighty (180) days before the end of the term of this Agreement
of its intention to renew;
2. Franchisee has complied with all of the material provisions
of this Agreement, including the payment of all monetary obligations
owed by Franchisee to Franchisor, and has complied with Franchisor's
material operating and quality standards and procedures;
3. Franchisee has at its expense made such reasonable capital
expenditures necessary to remodel, modernize and redecorate the Store
premises and to replace and modernize the supplies, fixtures, and
equipment used in Franchisee's business so that Franchisee's business
reflects the then-current physical appearance of new It's About
Games(TM) Stores;
4. Franchisee has paid a Renewal Fee of Five Thousand Dollars
($5,000) to Franchisor at least thirty (30) days before the expiration
of the initial (and any renewal) term of this Agreement expires;
5. Franchisee executes the standard Franchise Agreement then
being used by Franchisor; provided that Franchisee will be required to
pay the Renewal Fee in lieu of the Initial Franchise Fee stated in the
then-current Franchise Agreement; and
6. Franchisee is able to secure a renewal or extension of the
lease for the Franchised Location or is able to secure a new location
within the Development Area which has been accepted by Franchisor, such
acceptance not to be unreasonably withheld.
3. OWNERSHIP AND USE OF MARKS
A. Ownership. Franchisor is the owner of the Marks. Any and all
improvements by Franchisee relating to the Marks and Business System will become
the sole property of Franchisor who has the exclusive right to register and
protect all such improvements in its name.
B. Use. Franchisee's right to use and identify with the Marks and
Business System applies only to the operation of the Store at the Franchised
Location, and exists concurrently with the term of this Agreement and only so
long as Franchisee is in complete compliance with Franchisor's quality
standards. Franchisee will have the right to use the Marks and Business System
only in the manner Franchisor directs and approves in writing. Franchisee will
not have or acquire any rights in any of the Marks or Business System other than
the right of use as governed by this Agreement. If, in the judgment of
Franchisor, Franchisee's acts infringe upon or harm the goodwill, standards of
uniformity or quality, or business standing associated with the Marks and
Business System, Franchisee will immediately, upon written notice from
Franchisor, modify its use of the Marks and Business System in the manner
Franchisor directs in writing. Franchisee will not during or after the term of
this Agreement do anything directly or indirectly which would infringe upon,
harm, mislead or contest Franchisor's rights in the Marks or Business System.
Franchisee cannot advertise any liquidation sale or similar type of activity.
C. Promotion. Franchisee will operate the Store so that it is clearly
identified and advertised as an It's About Games(TM) Store. The style, form and
use of the words "It's About Games" in any advertising, written materials or
supplies must, however, have Franchisor's prior written approval, which approval
will not be unreasonably withheld. Franchisee will use the name "It's About
Games" and the other Marks which now or hereafter may form a part of the
Business System, on all paper supplies, business cards, letterhead, envelopes,
uniforms, advertising materials, signs or other articles in the identical
combination and manner as Franchisor may require in writing. Franchisee will
comply with all trademark, trade name, service ▇▇▇▇ and copyright notice marking
requirements.
D. Identity. Franchisee will not use the words "It's About Games" in
its corporate or partnership name. Franchisee will clearly indicate on its
business checks, purchase orders, business cards, receipts, promotional
materials and other written materials that Franchisee is the owner of the Store
and that Franchisee is an It's About Games(TM) franchisee. Franchisee will
display a sign which is clearly visible to the general public indicating that
the Store is independently owned and operated.
E. Substitutions. If any third party claims that its rights to use any
of the Marks are superior and if Franchisor determines that such claim is
legally meritorious, Franchisee will, upon receiving written notice from the
Franchisor, immediately use such changes and amendments to the Marks as
Franchisor may require. Franchisee will not make any changes or amendments in or
to the use of the Marks and Business System unless directed by Franchisor in
writing.
F. Litigation. Franchisee will have no obligation to and will not,
without Franchisor's prior written consent, defend or enforce any of the Marks
in any court or other proceedings for or against imitation, infringement, any
claim of prior use, or for any other allegation. Franchisee will, however,
immediately notify Franchisor of any claims or complaints made against
Franchisee respecting the Marks and will, at its expense, cooperate in all
respects with Franchisor in any court or other proceedings involving the Marks.
Franchisor will pay the cost and expense of all litigation Franchisor incurs,
including attorneys' fees, specifically relating to the Marks. Franchisor and
its legal counsel will have the right to control and conduct any litigation
relating to the Marks.
4. INITIAL FRANCHISE FEE
A. Initial Franchisee Fee. Franchisee will pay Franchisor a
nonrefundable Initial Franchise Fee of _____________ Thousand Dollars ($______),
which will be due and payable on the date of this Agreement. The Initial Fee
payable by Franchisee is payment to Franchisor for the costs that it will incur
to get Franchisee into business including costs Franchisor incurs for training,
site evaluation, business overhead costs, travel costs, and for the other
initial services Franchisor provides hereunder.
B. Refund of Fee. If Franchisor subsequently determines that Franchisee
is not qualified to properly operate the Store, Franchisor will refund to
Franchisee the Initial Franchise Fee. Franchisor will notify Franchisee in
writing within one hundred eighty (180) days of the date of this Agreement if
this Agreement is subject to termination under this Section 4(B).
5. CONTINUING FEE
A. Continuing Fee. Franchisee will, for the term of this Agreement, pay
to Franchisor a Continuing Fee equal to four percent (4%) of Franchisee's Gross
Sales (as defined below). Franchisee's obligation to pay Franchisor the
Continuing Fee under the terms of this Agreement will remain in full force and
effect until this Agreement has expired or is terminated under the provisions
herein.
B. Payment. At Franchisor's request, Franchisee will promptly execute
and deliver to Franchisor appropriate pre-authorized check forms or such other
instruments or drafts Franchisor's bank requires payable against Franchisee's
bank account, so that Franchisor may electronically collect (draft on
Franchisee's account by electronic withdrawal) the Continuing Fee due pursuant
to Section 5(A) above. Franchisor will report to Franchisee on or before
Wednesday of each week its Gross Sales for the previous week. If Franchisee
fails to report its Gross Sales on a timely basis, Franchisor may estimate
Franchisee's Gross Sales to prepare a provisional estimate for billing purposes
for that week. On Thursday of each week, Franchisor will ▇▇▇▇ Franchisee for all
amounts due for the previous week and deposit into its account Franchisee's
pre-authorized check or other instrument for the amounts due either pursuant to
Franchisee's report or Franchisor's estimate. Any unpaid Continuing Fee or other
amounts past due and owing to Franchisor will bear interest at the rate of
eighteen percent (18%) per annum or the maximum rate permitted by law, whichever
is less. Franchisee will pay Franchisor for any and all costs Franchisor incurs
in collecting any unpaid and past due Continuing Fees, including reasonable
attorneys' fees.
▇. ▇▇▇▇▇ Sales. The term "Gross Sales" means the total amount of all
revenues Franchisee receives from the sale of goods and services, whether for
cash or by check, credit card or trade, in connection with the Store, less
customer refunds and returns. Gross Sales will include sales made through the
Internet and wholesale transactions involving any party other than an It's About
Games(TM) franchisee who is in good standing with Franchisor. Gross Sales will
not include sales tax collected from customers and paid to appropriate tax
authorities.
6. ADVERTISING AND PROMOTION
A. Cooperative Advertising. Franchisee will participate in, support and
contribute a proportionate share, but no more than an amount equal to four
percent (4%) of the Gross Sales for the Store, of the cost of regional
cooperative advertising programs either designated by Franchisor or approved by
a regional advertising council established by Franchisor or other It's About
Games(TM) franchisees in Franchisee's area. Franchisor reserves the right to
designate regional advertising markets, to establish regional advertising
councils and to establish the rules under which such councils will operate.
B. Local Advertising Expenditures. To the extent Franchisee's annual
contributions to cooperative advertising programs described in Section 6(A)
above are less than four percent (4%) of the Gross Sales for the Store, or if
the Franchisee cannot participate in any regional cooperative advertising
program because such a program has not been established in Franchisee's
geographic area, Franchisee will then be obligated to conduct advertising and
promotional activities in Franchisee's local geographic area; provided that
Franchisee's local advertising activities will not reduce, eliminate or
otherwise impact Franchisee's obligations under Section 6(A) above. Franchisee's
local advertising expenditures will include advertising, merchandising, sales
promotion and other forms of advertising at the local level. Within thirty (30)
days following the end of each calendar quarter, Franchisee will provide
Franchisor with an accounting of the monies that it has spent for approved
regional cooperative advertising and local advertising for the preceding
calendar quarter. If Franchisee has failed to spend at least four percent (4%)
of its Gross Sales for the calendar quarter for approved regional cooperative
advertising or local advertising, Franchisee will deposit with Franchisor the
difference between what it should have spent for advertising during the calendar
quarter and what it actually spent for advertising during the calendar quarter.
Franchisor will spend such amount for any type of advertising or promotion that
Franchisor deems appropriate for Franchisee's business, although Franchisor will
use reasonable efforts to spend such amounts in Franchisee's local geographic
area.
C. Marketing Fee. In addition to Franchisee's local advertising
obligations described in Section 6(B) above, Franchisee will pay to Franchisor
an annual Marketing Fee of Five Hundred Dollars ($500) which will be payable in
two (2) installments of Two Hundred Fifty Dollars ($250) each on the first day
of January and July of each year. Franchisor will use the Marketing Fee to
develop marketing programs, produce advertising and/or promotional materials,
conduct advertising research, and implement advertising and promotional
campaigns.
D. Yellow Page Advertising. Franchisee will, at its expense, obtain an
annual yellow page listing in the primary yellow page directory serving the
geographic area in which the Store is located. At a minimum, this listing will
consist of a bold heading in such directory. Amounts spent for yellow page
advertising will be credited towards Franchisee's local advertising obligations
described in Section 6(B) above.
E. Future Advertising Programs. Franchisee acknowledges and agrees that
as the It's About Games(TM) franchise system continues to expand and mature, it
will be necessary to revise Franchisee's advertising obligations. Franchisee
therefore agrees that Franchisor may increase Franchisee's minimum advertising
expenditures (as described in Section 6(B) above) up to a total of five percent
(5%) of Franchisee's Gross Sales. Franchisee further agrees that of the five
percent (5%), up to two percent (2%) of Franchisee's Gross Sales will be paid in
the form of an "Advertising Fee" to Franchisor for deposit in an "Advertising
Fund." In such event, Franchisee's advertising obligations under Section 6(A)
(and, if appropriate, Section 6(B)) above will be reduced to three percent (3%)
of the Gross Sales for the Store. Franchisor will provide Franchisee with at
least sixty (60) days' written notice before the commencement of an Advertising
Fee. All Advertising Fees will be placed in an Advertising Fund managed by
Franchisor. Reasonable disbursements from the Advertising Fund will be made
solely for the payment of expenses incurred in connection with the general
promotion of the Marks and the Business System, including the cost of
formulating, developing and implementing advertising and promotional campaigns;
and the reasonable costs of administering the Advertising Fund, including
accounting expenses and the actual costs of salaries and fringe benefits paid to
Franchisor's employees engaged in administration of the Advertising Fund.
Although Franchisor will strive to manage the Advertising Fund in such a manner
that benefits franchisees uniformly, taking into account regional and/or local
advertising costs and forms of media available,
Franchisor cannot insure that any individual franchisee will benefit directly or
on a pro rata basis from the future placement of any such advertising in its
local market. The methods of advertising, media employed and contents, terms and
conditions of advertising campaigns and promotional programs will be within
Franchisor's sole discretion. Franchisor will provide Franchisee an annual
unaudited statement of the receipts and disbursements of the Advertising Fund.
F. Approved Advertising Materials. Franchisee will use only approved
advertising and promotional materials. If Franchisee desires to use any
unapproved advertising or promotional materials bearing the name "It's About
Games" or other Marks, Franchisee must obtain written approval from Franchisor
before using any such materials, which approval will not be unreasonably
withheld.
G. Promotion. Franchisee will use its best efforts to promote and
advertise its It's About Games(TM) business and will participate in all
advertising and promotional programs Franchisor establishes. Franchisee will
have the right to advertise and sell its products at whatever prices Franchisee
determines.
7. FRANCHISOR'S OBLIGATIONS
A. Location. Franchisor will provide Franchisee with assistance
respecting site location and evaluation for the Store. Franchisee acknowledges
that Franchisor's assistance in site location and acceptance of the premises
does not constitute a representation or guaranty by Franchisor that the location
will be a successful location for Franchisee's It's About Games(TM) Store.
▇. ▇▇▇-Out and Design. Franchisor will designate the standard design,
lay-out and motif for Franchisee's premises and will furnish prototype
specifications for the premises.
C. Equipment, Supplies and Inventory. Franchisor will designate the
standard fixtures, equipment, supplies, signs and initial inventory for use in
the Store. Franchisee will purchase only such types, models or brands of
fixtures, furniture, equipment, signs and supplies that Franchisor approves for
It's About Games(TM) Stores as meeting its specifications and standards,
including specifications and standards for quality, design, warranties,
appearance, function and performance.
D. Training. Franchisor will, at its expense, provide a three-part
training program in Minneapolis, Minnesota or other location Franchisor
designates to educate, familiarize and acquaint Franchisee with the business of
operating an It's About Games(TM) Store. The first session of the training
program will include instruction on general business issues related to the
ownership of a privately-owned retail business, including real estate matters,
business plan development, inventory management and point-of-sales systems. The
period of this session will be at Franchisor's discretion but generally will be
for not less than two and one-half (2 1/2) days and will be scheduled by
Franchisor at its discretion. The second session of the training program will
address personnel issues, store buildout, used product purchasing, Franchisor's
preferred vendor program and other topics Franchisor selects. The period of this
session will be at Franchisor's discretion but generally will be for not less
than two and one-half (2 1/2) days and will be scheduled by Franchisor in its
sole discretion. The third session of the training program will include
instruction on sales and marketing, inventory purchasing, computer operation,
store management and other topics Franchisor selects. The period of this session
will be at Franchisor's discretion but generally will be for not less than five
(5) days and will be scheduled by Franchisor in its sole discretion. Franchisee
must successfully complete all sessions of the training program. If Franchisee
fails to successfully complete all sessions, he/she will not be permitted or
authorized to manage Franchisee's business and Franchisor may terminate this
Agreement pursuant to Section 15(A)(2) below. Franchisee will be responsible for
travel
costs, room and board, the salaries, fringe benefits and other expenses
Franchisee and its employees incur in attending all sessions of the training
program.
E. Opening Assistance. Franchisor will assist in scheduling the opening
of the Store. Franchisee will not open or commence business operations until
Franchisor has approved the opening. Franchisor will, at no charge, provide at
least one (1) person to assist Franchisee with the opening of the Store for at
least two (2) days around the time of opening. If Franchisee is opening its
second or subsequent Store, Franchisee will provide this assistance only at
Franchisee's request.
F. Operations Manual. Franchisor will loan Franchisee one copy of the
Operations Manual wherein Franchisor will describe its operational policies,
standards, requirements and practices. Franchisee will comply with all
provisions of the Operations Manual. Franchisor reserves the right to revise the
Operations Manual at any time.
G. Additional Initial Assistance. Franchisor will assist Franchisee in
the development of a business plan. Franchisor and Franchisee may also agree
that Franchisor provide management assistance and other services, in addition to
the usual initial assistance and supervision Franchisor provides to all
franchisees, for additional agreed upon compensation.
H. Ongoing Assistance. During the operation of Franchisee's business,
Franchisor will: (1) inspect the Store as often as Franchisor deems necessary
and provide written reports to Franchisee on operations; (2) provide, upon the
written request of Franchisee, advisory services pertaining to operation of
Franchisee's business; (3) periodically make available to Franchisee all
changes, improvements and additions to the Business System to the same extent as
made available to other franchisees; (4) provide Franchisee with all supplements
and modifications to the Operations Manual; and (5) develop advertising and
marketing materials.
8. OPERATION OF THE FRANCHISEE'S BUSINESS
The Marks and Business System licensed to Franchisee represent valuable
goodwill distinctive of Franchisor's business and reputation. Franchisor will
periodically develop uniform standards of quality and service regarding the
business operations of the Store so as to protect (for the benefit of all
franchisees and Franchisor) the distinction, valuable goodwill and uniformity
represented and symbolized by the Marks and Business System. To insure that all
franchisees will maintain the uniform requirements and quality standards for
goods and services associated with the It's About Games(TM) Stores and with the
Marks and Business System, Franchisee will maintain the uniformity and quality
standards Franchisor reasonably requires for all products and services and
agrees to the following provisions:
A. Managerial Responsibility. During the term of this Agreement, the
parties who have signed this Agreement on behalf of Franchisee will personally
manage and operate Franchisee's business and will not, without Franchisor's
prior written consent, delegate its authority and responsibility with respect to
management and operation. If Franchisee is a corporate entity or a partnership,
one individual will retain at least fifty percent (50%) of the equity and voting
interest in such corporation or partnership and will be obligated to personally
manage and operate the Franchisee's business.
B. Design and Appearance of Premises. The design and appearance of the
exterior and interior of the Store, including signage, are part of the Business
System. It is essential to the integrity of Franchisor's Business System that as
great a degree of uniformity as possible be maintained among the various
premises of It's About Games(TM) franchisees. Franchisee agrees that: (1) no
material alteration or
addition will be made to the premises without Franchisor's prior written
consent; (2) the painting and decor will be maintained in such manner and form
as Franchisor may reasonably require; (3) Franchisee will follow Franchisor's
reasonable instructions with respect to layout and character of interior
fixtures and furnishings; and (4) only such signs, emblems, logos, lettering,
and artwork as Franchisor may reasonably require or periodically provide will be
displayed on the Store premises.
C. General Operation. Franchisee will use the Marks and Business System
in strict compliance with the standards, operating procedures, specifications,
requirements and instructions required of all It's About Games(TM) franchisees,
which Franchisor may periodically amend and supplement.
D. Products and Services. Franchisee will sell only those categories of
products and services Franchisor approves in writing and will offer for sale all
products and services required by Franchisor. Franchisee will conform to all
quality and customer service standards Franchisor requires in writing.
FRANCHISOR DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING ANY
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE IN CONNECTION
WITH FRANCHISOR'S (AND/OR AN AFFILIATE'S) SALE OF ANY GOODS, EQUIPMENT,
FURNITURE, SIGNS OR SUPPLIES TO FRANCHISEE. Franchisee agrees to execute any and
all documents Franchisor reasonably requests, including letters of credit,
security agreements, and financing statements, to provide collateral for amounts
due to Franchisor for purchases of inventory and other items used in
Franchisee's business. Franchisor's approval is not required with respect to new
and used video and computer games and other accessories Franchisee purchases
from its customers or places in the Store on a consignment basis, provided,
however, that Franchisee may not sell or offer for sale any goods which would be
determined unsafe upon reasonable inspection.
E. Maintenance of Premises; Modernization. Franchisee will, at its
expense, repair, paint and keep in an attractive, clean and sanitary condition
the interior and exterior of the Store premises. Franchisee will insure that all
equipment will be kept in good working order and will meet Franchisor's quality
standards. Franchisee will periodically make reasonable capital expenditures to
remodel, modernize and redecorate the Store and to replace and modernize the
furniture, fixtures, signs, supplies and equipment used in the Store so that the
Store will reflect the then-current physical appearance of new It's About
Games(TM) Stores. All remodeling, modernization or redecoration of the Store
must be done pursuant to Franchisor's then-current standards and specifications
and only with Franchisor's prior written approval. Franchisee agrees to commence
remodeling activities within ninety (90) days after written notice from
Franchisor, although Franchisee will not be required to remodel, modernize and
redecorate the Store more than once every five (5) years during the term of this
Agreement.
F. Compliance with Laws. Franchisee will, at its expense, comply with
all applicable local, state, federal and municipal laws, ordinances, rules and
regulations pertaining to the operation of the Store, including any and all
licensing and bonding requirements.
G. Payment of Liabilities. Franchisee will timely pay all of its
obligations and liabilities due and payable to Franchisor, suppliers, lessors
and creditors.
H. Taxes. Franchisee will promptly pay all federal, state and local
taxes arising out of the operation of Franchisee's business. Franchisor will not
be liable for these or any other taxes and Franchisee will indemnify Franchisor
for any such taxes that may be assessed or levied against Franchisor which arise
or result from Franchisee's business.
I. Standardization. Franchisee will require its employees to wear such
uniforms as Franchisor may designate and will comply with such programs of
standardization as Franchisor may periodically develop to promote the common
business image and to protect the goodwill associated with the Marks and
Business System.
J. Personnel. Franchisee will, at all times when open for business,
have a person designated as a management person on duty who will be responsible
for the business operations of Franchisee's business. Franchisee will employ and
maintain a sufficient number of adequately trained and competent employees to
provide efficient service to Franchisee's customers.
K. Hours of Operation. Franchisee's business will be open for business
for such days and hours as Franchisor may reasonably designate.
L. Additional Training Seminars. Franchisor may periodically conduct
refresher courses, seminars and other programs for all It's About Games(TM)
franchisees. Franchisee and/or its employees will be required to attend any such
programs and will be responsible for any expenses incurred by them in attending
such programs including the cost of transportation, lodging, meals and any
wages.
M. Photographs. Franchisor will have the right to photograph the Store
premises and, with prior written consent, Store employees at all reasonable
times.
N. Operations Manual. To protect Franchisor's reputation and goodwill
and to maintain uniform operating standards under the Marks and Business System,
Franchisee will conduct its business in accordance with Franchisor's Operations
Manual, one copy of which Franchisee will have on loan from Franchisor.
Franchisee will treat the Operations Manual as confidential, and will use all
reasonable efforts to maintain the Operations Manual as secret and confidential.
The Operations Manual will remain Franchisor's sole property. Franchisor may
periodically revise the contents of the Operations Manual. Franchisee agrees to
comply with each new or changed standard. Franchisee will insure that its copy
of the Operations Manual is kept current. In the event of any dispute as to the
contents of the Operations Manual, the terms of the master copy of the
Operations Manual maintained by Franchisor will be controlling.
O. Lease. Franchisee's lease or sublease for the Store premises must be
approved by Franchisor before its execution, but such approval will not be
unreasonably withheld. Franchisee must provide Franchisor with an executed copy
of any lease for the Store. Franchisor makes no guarantees concerning the
success of the Store located on any site consented to by Franchisor. Franchisor
recommends that Franchisee employ an independent real estate broker to assist
Franchisee in locating a suitable site and negotiating a lease for such site.
Franchisee's lease must contain provisions requiring that: (i) so long as this
Agreement remains in effect, the premises will be used only for an It's About
Games(TM) business; (ii) Franchisor will be granted the right (but not the duty)
to take possession of the premises and assume the lease in the event of a
termination of this Agreement or a threatened termination of the lease as a
result of a breach by Franchisee; (iii) the landlord will provide Franchisor
written notice of any Franchisee default and/or right to cure; and (iv) upon
termination of this Agreement or the Lease, Franchisee must remove all signs and
materials bearing the name "It's About Games" and other Marks.
P. Point-of-Sale System. Franchisee will utilize in the Store the
point-of-sale system (the "POS System") which Franchisor has developed and/or
selected for the Business System, including all future updates, supplements and
modifications. The computer software package developed for use in Franchisee's
business will include a proprietary software program owned by Franchisor or
developed for Franchisor by a third party (the "Third Party Developer").
Franchisee must lease the proprietary software
from Franchisor or the Third Party Developer. Franchisee and Franchisor will
enter into Franchisor's standard form of Computer Software License Agreement
attached hereto as Exhibit B ("the Software License Agreement") in connection
with Franchisee's use of such software. Franchisor reserves the right to assign
its rights, title and interest in the Proprietary Software or the Software
License Agreement to the Third Party Developer. In such event, Franchisee may be
required to enter into a separate computer software license agreement specified
by the Third Party Developer. Franchisor also reserves the right, upon prior
written notice to Franchisee, to access information and data produced by
Franchisee's POS System. The computer hardware component of the POS System must
conform with specifications Franchisor or the Third Party Developer develops and
must be configured as a package unit as Franchisor or the Third Party Developer
designates. If Franchisor or a third party designee is requested to configure
Franchisee's computer hardware component to conform with the designated computer
software component of the POS System, Franchisor or the third party designee may
provide such assistance for additional agreed upon compensation. Franchisee will
be required to utilize and, at Franchisor's discretion, pay for all future
updates, supplements and modifications to the POS System.
Q. Participation in Internet Web Site. Franchisee acknowledges that the
Internet is a powerful, expanding medium through which business is conducted.
Franchisee must have an e-mail address. In addition, Franchisor may, upon ninety
(90) days' prior written notice, require Franchisee, at Franchisee's expense, to
participate in an It's About Games(TM) World Wide Web Site listed on the
Internet. Franchisor will, at its discretion, determine the content and use of
an It's About Games(TM) Web Site and will establish the rules under which
franchisees may or will participate in such Web Site or separately use the
Internet. Franchisor will retain all rights relating to the It's About Games(TM)
Web Site and may alter or terminate the Web Site upon thirty (30) days' notice
to Franchisee. Franchisee's general conduct on the Internet and specifically its
use of the Marks on the Internet (including the domain name and any other Marks
Franchisor may develop as a result of participation in the Internet) will be
subject to the provisions of this Agreement. Franchisee acknowledges that
certain information obtained through its participation in the It's About
Games(TM) Web Site may be considered Confidential Information (as defined in
Section 9 below), including access codes and identification codes. Franchisee's
right to participate in the It's About Games(TM) Web Site or otherwise use the
Marks or Business System on the Internet will terminate when this Agreement
expires or terminates.
9. CONFIDENTIAL INFORMATION
A. Non-Disclosure of Confidential Information. Franchisee and those
individuals who have signed the Personal Guaranty attached hereto as Exhibit C
will not, during or after the term of this Agreement, communicate, disclose or
use for the benefit of any other person or entity any confidential information,
knowledge or know-how concerning the Business System which may be communicated
to Franchisee. Franchisee will disclose such confidential information only to
such of its employees as must have access to it in order to operate Franchisee's
business. Any and all information, knowledge and know-how, including the
Operations Manual, any other manuals created for use in the operation of the
Store, methods, supplier lists, procedures, specifications, techniques, computer
programs and other data which Franchisor copyrights or designates as
confidential will be deemed confidential for purposes of this Agreement.
B. Confidentiality Agreements. All of Franchisee's employees who have
managerial duties respecting the Store and who have access to confidential
information of Franchisor, as well as all corporate officers, directors and
shareholders if Franchisee is a corporation (all partners if Franchisee is a
partnership), must sign agreements in a form satisfactory to Franchisor,
agreeing to maintain the confidentiality, during the course of their agreement
and thereafter, of all information Franchisor copyrights or designates as
confidential and proprietary. Copies of the executed agreements will be provided
to Franchisor upon request.
10. INSURANCE; BONDING
A. Insurance. Franchisee will obtain and maintain in force (under
policies of insurance issued by solvent and reputable carriers) and pay the
premiums for public liability insurance with complete operations coverage with
minimum limits of $1,000,000 per person and $1,000,000 per occurrence, bailee
insurance protecting Franchisee's consignment goods and other insurance in such
types and amounts as Franchisor may reasonably require. Such insurance policies
will expressly protect both Franchisee and Franchisor and will require the
insurer to defend both Franchisee and Franchisor in any action. Franchisee will
furnish to Franchisor a certificate of insurance as stated above, naming
Franchisor as an additional insured, and providing that such policy will not be
canceled, amended or modified except upon thirty (30) days' prior written notice
to Franchisor. Maintenance of the insurance requirement will not relieve
Franchisee of the obligations of indemnification stated in Section 11 below. If
Franchisee fails to obtain or maintain in force any insurance as required by
this Section or to furnish any certificate of insurance required hereunder,
Franchisor may, in addition to all other available remedies, obtain such
insurance or certificates, and Franchisee will promptly reimburse Franchisor for
all insurance premiums and other costs incurred in obtaining such insurance.
B. Bonding. Franchisee will comply with any and all bonding
requirements which may be applicable to its It's About Games(TM) business,
including bonding requirements resulting from the consignment portion of
Franchisee's business.
11. INDEPENDENT CONTRACTORS; INDEMNIFICATION
A. Relationship. Franchisor and Franchisee are independent contractors.
Neither Franchisor nor Franchisee will make any agreements, representations or
warranties in the name of or for the other or that their relationship is other
than franchisor and franchisee. Neither Franchisor nor Franchisee will be
obligated by or have any liability under any agreements, representations or
warranties made by the other. Franchisee alone will be responsible for all loss
or damage arising out of or relating to the operation of Franchisee's business
or arising out of the acts or omissions of Franchisee or any of its agents,
employees or contractors in connection with the preparation and sale of products
by Franchisee, and for all claims for damage to property or for injury or death
of any persons directly or indirectly resulting therefrom. Franchisee will
indemnify Franchisor against and will reimburse Franchisor for all obligations
and damages arising out of the operation of Franchisee's business, including all
costs Franchisor reasonably incurs in the defense of any such claim brought
against it or in any action in which it is named as a party (including
reasonable attorneys' fees). Franchisor will have the right to defend any such
claim against it. Franchisor will indemnify Franchisee against and reimburse
Franchisee for any obligations or liability for damages attributable to
agreements, representations or warranties of Franchisor, or caused by
Franchisor's negligence or willful action, and for costs Franchisee reasonably
incurs in the defense of any such claim brought against it or in any action in
which it is named as a party, provided that Franchisor will have the right to
participate in and, to the extent Franchisor deems necessary, to control any
litigation or proceeding which might result in liability of or expense to
Franchisee subject to such indemnification. The indemnities and assumptions of
liabilities and obligations stated in this Agreement will continue in full force
and effect following the expiration or termination of this Agreement.
B. Enforcement. The non-prevailing party will pay all costs and
expenses, including reasonable attorneys' fees, incurred by the prevailing party
in any action or proceeding brought to enforce any provision of this Agreement
or to enjoin any violation of this Agreement.
12. SALES REPORTS, FINANCIAL STATEMENTS AND AUDIT RIGHTS
A. Sales Reports. Franchisee will maintain an accurate written record
of daily Gross Sales and will deliver to Franchisor a signed and verified
statement of the weekly Gross Sales of Franchisee's business using such forms as
Franchisor may require in writing. The weekly statement of Gross Sales must be
provided to Franchisor on or before Wednesday of each week for the preceding
week. Franchisor reserves the right to modify or substitute the required forms
and impose additional recordkeeping procedures.
B. Financial Statements. Franchisee will, at its expense, provide
Franchisor with quarterly and annual financial statements and such other
financial reports as Franchisor specifies using the forms and chart of accounts
Franchisor requires. All financial information provided to Franchisor under this
Section must be presented in the form Franchisor periodically requires in
writing. Franchisee will deliver the quarterly financial information to
Franchisor by the thirtieth (30th) day of the month following the end of the
preceding quarter. The annual financial statement must be provided on or before
March 1 of each year for the preceding calendar year.
C. Audit Rights. Franchisee will make all of its financial books and
records available to Franchisor or its designated representative at all
reasonable times for review and audit by Franchisor or its designee.
Franchisee's financial books and records for each fiscal and calendar year will
be kept in a secure place and will be available for audit by Franchisor for at
least five (5) years. If an audit conducted by Franchisor results in a
determination that the Continuing Fees paid to Franchisor are deficient
(underpaid) by more than two percent (2%), Franchisee will pay Franchisor for
the reasonable costs and expenses that it has incurred as a result of the audit.
If pursuant to audits, the Continuing Fees have been deficient by more than two
percent (2%) twice or more within any five (5) year period, this will be
considered a material breach of this Agreement.
13. FRANCHISOR'S RIGHT OF FIRST REFUSAL TO PURCHASE
A. Restrictions. Franchisee will not sell, assign, trade, transfer,
lease, sublease, or otherwise dispose of: (1) any interest in or any part of the
Franchised Location or this Agreement, or (2) any controlling interest (whether
through one or more related transactions) in Franchisee's business or the assets
of Franchisee's business to any third party, without first offering the same to
Franchisor in writing, at the same price and on the same terms as stated in the
proposed third-party offer. Franchisee's written offer to Franchisor must
contain all material provisions of the proposed sale or transfer. Upon
Franchisor's receipt of written notice specifying the proposed price and terms
of a proposed sale or transfer of Franchisee's business or interest therein,
Franchisor will give Franchisee written notice within ten (10) business days
thereafter if Franchisor has an interest in negotiating to purchase the business
or interest being offered according to the proposed terms. If Franchisor
commences negotiations to purchase Franchisee's business or interest therein as
described herein, Franchisee may not sell the business or interest being offered
to a third party for at least thirty (30) days or until Franchisor and
Franchisee agree in writing that the negotiations have terminated, whichever
comes first. If Franchisor waives its right to purchase, Franchisee may complete
the sale or transfer of the business or interest therein according to the terms
described in the written notice to Franchisor but not upon more favorable terms.
Any such sale, transfer or assignment to a
third party is subject to the provisions stated in Section 14 of this Agreement.
Franchisor's nonacceptance of Franchisee's written offer will not affect or
change Franchisee's obligations under this Agreement.
B. Corporate Franchisee. If Franchisee is a corporation, the
shareholders cannot sell, assign, pledge or otherwise dispose of a controlling
interest in the capital stock of Franchisee ("Capital Stock") (except to
immediate family members of the controlling shareholder(s) or to a trust
established for their benefit) until the Capital Stock has been first offered to
Franchisor in writing under the same terms and conditions offered to any third
party. A shareholder of Franchisee may, however, bequeath, sell, assign, trade
or transfer his/her Capital Stock to the other shareholders of Franchisee
corporation because of death or permanent disability without first offering it
to Franchisor, provided Franchisee provides Franchisor with written notice of
all such transactions. All shares of Capital Stock issued by Franchisee's
corporation to its shareholders must bear the following legend on the reverse
side of each issued and outstanding stock certificate:
The shares of capital stock represented by this certificate
are subject to a written Franchise Agreement which grants
Grow Biz International, Inc. a right of first refusal to
purchase these shares of capital stock from the shareholder.
Nothing in this Section will be construed as prohibiting the shares of Capital
Stock of a corporate Franchisee from being pledged as security to an
institutional lender who has provided financing to or for the Store; provided
the institutional lender accepts such security interest subject to Franchisor's
reasonable conditions.
14. ASSIGNMENT OF FRANCHISE AGREEMENT
A. By Franchisor. This Agreement may be assigned and transferred by
Franchisor and will benefit Franchisor's successors and assigns. Any such
assignment or transfer will require the assignee to fulfill Franchisor's
obligations under this Agreement.
B. Corporate Franchisee. This Agreement may be transferred or assigned
by Franchisee to a corporation which is owned or controlled by Franchisee,
provided: (i) Franchisee and all other shareholders of the assignee corporation
owning at least ten percent (10%) of the Capital Stock thereof sign the Personal
Guaranty attached hereto as Exhibit C and agree to be bound by the provisions of
this Agreement; and (ii) Franchisee furnishes prior written proof to Franchisor
substantiating that the corporation will be financially able to perform all of
the provisions of this Agreement. Franchisee will give Franchisor fifteen (15)
days written notice before the proposed date of assignment or transfer of this
Agreement to a corporation owned or controlled by Franchisee; however, the
transfer or assignment of this Agreement will not be valid or effective until
Franchisor has received the legal documents which its legal counsel deems
necessary to properly document such transfer or assignment.
C. Conditions to Other Transfer or Assignment. Franchisee (and its
partners and shareholders, if any) will not transfer (whether voluntary or
involuntary), assign or otherwise dispose of, in one or more transactions,
Franchisee's business, the Franchised Location, substantially all or all of the
assets of Franchisee's business, this Agreement or any controlling interest in
Franchisee (a "controlling" interest will include a proposed transfer of fifty
percent (50%) or more of the Capital Stock of a corporate Franchisee) without
Franchisor's prior written consent, except to trusts established for
Franchisee's benefit. Franchisor will not unreasonably withhold its consent to a
transfer, subject to any or all of the following conditions described below
which Franchisor may, in its sole discretion, deem necessary:
1. All of Franchisee's accrued monetary obligations to
Franchisor will have been satisfied, and Franchisee is not in default
under this Agreement;
2. Franchisee executes a written agreement in a form
satisfactory to Franchisor, in which Franchisee covenants to observe
all applicable post-term obligations and covenants contained in this
Agreement;
3. The transferee-franchisee enters into a written agreement
in a form satisfactory to Franchisor assuming and agreeing to discharge
all of Franchisee's obligations and covenants under this Agreement for
the remainder of its term or, at Franchisor's option, execute
Franchisor's then-current standard form of franchise agreement (which
may provide for different royalties, advertising contributions,
duration, and other rights and obligations from those provided in this
Agreement);
4. The transferee-franchisee is approved by Franchisor and
demonstrates to Franchisor's satisfaction that he/she meets
Franchisor's managerial, financial, and business standards for new
franchisees, possesses a good business reputation and credit rating,
and has the aptitude and ability to conduct the franchised business.
Franchisee understands that Franchisor may communicate directly with
the transferee-franchisee during the transfer process to respond to
inquiries, as well as to ensure that the transferee-franchisee meets
Franchisor's qualifications; and
5. The transferee-franchisee successfully completes
Franchisor's training program.
D. Transfer Fee. If this Agreement is assigned or transferred pursuant
to Section 14(C) above, Franchisee will pay Franchisor a transfer fee of Five
Thousand Dollars ($5,000) for the costs Franchisor incurs, including the costs
of any required training. There will be no transfer fee payable with respect to
transfers to immediate family members.
15. FRANCHISOR'S TERMINATION RIGHTS
A. Grounds. Franchisee will be in default, and Franchisor may, at its
option, terminate this Agreement, as provided herein, if: (1) Franchisee fails
to open and commence operations of the Store at such time as the premises are
ready for occupancy or within nine (9) months of the execution of this
Agreement, whichever occurs first; (2) Franchisee violates any material
provision or obligation of this Agreement; (3) Franchisee or any of its
managers, directors, officers or majority shareholders are convicted of, or
plead guilty to or no contest to (a) a charge of violating any law which
adversely impacts upon the reputation of the franchised business or (b) any
felony; (4) Franchisee fails to conform to the material requirements of the
Business System or the material standards of uniformity and quality for the
products and services Franchisor has established in connection with the Business
System; (5) Franchisee fails to timely pay Continuing Fees, Marketing or
Advertising Fees, buying group (inventory) obligations or any other obligations
or liabilities due and owing to Franchisor or fails to timely pay any
advertising cooperative obligations; (6) Franchisee is insolvent within the
meaning of any applicable state or federal law; (7) Franchisee makes an
assignment for the benefit of creditors or enters into any similar arrangement
for the disposition of its assets for the benefit of creditors; (8) Franchisee
voluntarily or otherwise "abandons" (as defined below) the franchised business;
(9) Franchisee is involved in any act or conduct which materially impairs the
goodwill associated with the name "It's About Games" or any of the Marks or the
Business
System; or (10) Franchisee's lease for the Store premises expires or is
terminated for any reason (unless, through no fault of Franchisee, the lessor of
the premises in which the Store is located refuses to renew Franchisee's lease
and Franchisee relocates within the Development Area to a site approved by
Franchisor within sixty (60) days thereafter). The term "abandon" means
Franchisee's failure to operate the Store during regular business hours for a
period of ten (10) consecutive days without Franchisor's prior written consent
unless such failure is due to an act of God, war, strikes or riots.
B. Procedure. Except as described below, Franchisee will have thirty
(30) days, or such longer period as applicable law may require, after its
receipt from Franchisor of a written Notice of Termination within which to
remedy any default hereunder, and to provide evidence thereof to Franchisor. If
Franchisee fails to correct the alleged default within that time (or such longer
period of time as applicable law may require), this Agreement will terminate
without further notice to Franchisee effective immediately when the thirty (30)
day period (or such longer period as applicable law may require) expires.
Franchisor may terminate this Agreement immediately upon delivery of written
notice to Franchisee, with no opportunity to cure, if the termination results
from any of the following: (1) Franchisee repeatedly fails to comply with one or
more material requirements of this Agreement; (2) the nature of Franchisee's
breach makes it not curable; (3) Franchisee willfully and repeatedly deceives
customers relative to the source, nature or quality of goods sold; (4) any
default under items (3), (6), (8) or (9) in Section 15(A) above; or (5)
Franchisee willfully and materially falsifies any report, statement, or other
written data furnished to Franchisor either during the franchise application
process or after Franchisee is awarded a franchise. Any report submitted
pursuant to Section 12 will be conclusively deemed to be materially false if it
understates Gross Sales by more than four percent (4%).
C. Applicable Law. If the provisions of this Section 15 are
inconsistent with applicable law, the applicable law will apply. Franchisor's
ability to terminate or fail to renew a Wisconsin franchise will be governed by
the Wisconsin Fair Dealership Law, Chap. 135, Wisc. Stats. Minnesota law
provides franchisees with certain termination and non-renewal rights. As of the
date of this Agreement, Minn. Stat. Section 80C.14, Subd. 3, 4 and 5 require
that, except in certain specified cases, a franchisee be given 90 days notice of
termination (with 60 days to cure) and 180 days notice for non-renewal of the
Agreement.
16. FRANCHISEE'S TERMINATION RIGHTS; NOTICE REQUIRED
A. Termination. Franchisee may terminate this Agreement if Franchisor
violates any material obligation of Franchisor to Franchisee and fails to cure
such violation within thirty (30) days after Franchisor's receipt of written
notice from Franchisee; provided, however, that Franchisee is in substantial
compliance with the Agreement at the time of giving such notice of termination.
Franchisee's written notice will identify the violation and demand that it be
cured.
B. Required Notice. A party must give the other party written notice of
an alleged default under or violation of this Agreement after it has knowledge
of, determines, or is of the opinion that there has been an alleged default
under or violation of this Agreement. If there is failure to give written notice
of an alleged default under this Agreement within one (1) year from the date
that the nonbreaching party has knowledge of, determines or is of the opinion
that there has been an alleged default, the alleged default will be deemed to be
approved and waived, and the alleged default or violation will not be deemed to
be a default under or violation of this Agreement.
17. FRANCHISEE'S OBLIGATIONS UPON TERMINATION
A. Post-Term Duties. If this Agreement is terminated for any reason
other than a termination as a result of a breach by Franchisor, Franchisee will:
(1) within five (5) days after termination, pay all amounts due and owing to
Franchisor under this Agreement; (2) return to Franchisor by first class prepaid
United States mail the Operations Manual and any other manuals, advertising
materials, and all other printed materials relating to the operation of the
franchised business; (3) assign to Franchisor the telephone number for the
Store; and (4) remove all signs and other materials bearing the name "Its About
Games" and other Marks; (5) comply with all post-termination obligations under
the Software License Agreement, including the return of all copies of
Franchisor's proprietary software; and (6) comply with all other applicable
provisions of this Agreement, including the non-compete provisions. Upon
termination of this Franchise Agreement for any reason, Franchisee's right to
use the name "It's About Games" and the other Marks and the Business System will
immediately terminate. If Franchisee fails to remove all signs and other
materials bearing the Marks, Franchisor may do so at Franchisee's expense.
B. Redecoration. If this Agreement is terminated for any reason, and
Franchisor permits Franchisee to remain in possession of the Franchised
Location, Franchisee will, at its expense modify, both the exterior and interior
appearance of the business premises so that they will be easily distinguished
from the standard appearance of It's About Games(TM) Stores. At a minimum, such
changes and modifications to the premises will include: (1) repainting the
premises with totally different colors; (2) removing all signs and other
materials bearing the name "It's About Games" and other Marks; (3) removing from
the premises all fixtures which are indicative of It's About Games(TM) Stores;
(4) discontinuing use of the approved employee uniforms and refraining from
using any uniforms which are confusingly similar; and (5) discontinuing use of
all packaging and confidential information regarding the operation of the Store.
18. FRANCHISEE'S COVENANTS NOT TO COMPETE
A. During Term. Franchisee (and the Personal Guarantors) will not,
during the term of this Agreement, on their own account or as an employee,
agent, consultant, partner, officer, director, or shareholder of any other
person, firm, entity, partnership or corporation, own, operate, lease,
franchise, conduct, engage in, be connected with, have any interest in, or
assist any person or entity engaged in any business involving the selling,
leasing, renting or exchanging of new or used video or computer games or related
accessories, or any other related business that is competitive with or similar
to an It's About Games(TM) Store, except with Franchisor's prior written
consent. Separately, Franchisee cannot offer or sell new or used musical
instruments, amplifiers, audio compact discs, or music-related equipment or
electronics (other than equipment or electronics used in connection with video
games) in the Store or elsewhere.
B. After Termination. Franchisee (and the Personal Guarantors) will
not, for a period of one (1) year after this Agreement expires or is terminated
(except for a termination as a result of a Franchisor's breach), on their own
account or as an employee, agent, consultant, partner, officer, director, or
shareholder of any other person, firm, entity, partnership or corporation, own,
operate, lease, franchise, conduct, engage in, be connected with, have any
interest in or assist any person or entity engaged in any business involving the
selling, leasing, renting or exchanging of new or used video or computer games
or related accessories, or any other related business that is competitive with
or similar to an It's About Games(TM) Store which is located at the Franchised
Location or within a six (6) mile radius of the Franchised Location or any It's
About Games(TM) Store. Franchisee expressly agrees that the one (1) year period
and the six (6) mile radius are the reasonable and necessary time and distance
needed to protect Franchisor if this Agreement expires or is terminated for any
reason.
C. Injunctive Relief. Franchisee agrees that damages alone cannot
adequately compensate Franchisor if there is a violation of these noncompetitive
covenants and that injunctive relief is essential for the protection of
Franchisor. Franchisee therefore agrees that in case of any alleged breach or
violation of this Section by it, Franchisor may seek injunctive relief without
posting any bond or security, in addition to all other remedies that may be
available to Franchisor at equity or law.
19. ARBITRATION; ENFORCEMENT
A. Arbitration Process. Except to the extent Franchisor elects to
enforce the provisions of this Agreement by judicial process and injunction as
provided herein, all disputes, claims and controversies between the parties
arising under or in connection with this Agreement or the making, performance or
interpretation thereof (including claims of fraud in the inducement and other
claims of fraud and the arbitrability of any matter) will be settled by
arbitration under the authority of the Federal Arbitration Act in Minneapolis,
Minnesota. The arbitrator will have the right to award specific performance of
this Agreement. The proceedings will be conducted under the commercial
arbitration rules of the American Arbitration Association, to the extent such
Rules are not inconsistent with the provisions of this arbitration provision.
The decision of the arbitrator will be final and binding on all parties. This
Section will survive termination or non-renewal of this Agreement under any
circumstances. Judgment upon the award of the arbitrator may be entered in any
court having jurisdiction thereof. During the pendency of any arbitration
proceeding, Franchisee and Franchisor will fully perform their respective
obligations under this Agreement.
B. Additional Proceedings. If, after Franchisor or Franchisee
institutes an arbitration proceeding, one or the other asserts a claim,
counterclaim or defense, the subject matter of which, under statute or current
judicial decision is nonarbitrable for public policy reasons, the party against
whom the claim, counterclaim or defense is asserted may elect to proceed with
the arbitration of all arbitrable claims, counterclaims or defenses or to
proceed to litigate all claims, counterclaims or defenses in a court having
competent jurisdiction.
C. Punitive Damages. Franchisor and Franchisee acknowledge that
judgment upon an arbitration award may be entered in any court of competent
jurisdiction and will be binding, final and nonappealable. Franchisor and
Franchisee (and their respective owners and guarantors, if applicable) agree to
waive, to the fullest extent permitted by law, the right to or claim for any
punitive or exemplary damages against the other and agree that in the event of a
dispute between them, each will be limited to the recovery of actual damages
sustained by it.
D. Enforcement of Franchise Agreement. Notwithstanding the other
provisions of this Section 19, Franchisee recognizes that the failure of a
single franchisee to comply with the terms of its It's About Games(TM) franchise
agreement could cause irreparable damage to Franchisor or to some or all other
It's About Games(TM) franchisees. Franchisor and Franchisee, therefore agree
that, in the event of a breach or threatened breach of Sections 3, 8, 9, 12, 13,
14, 17 and/or 18 of this Agreement by Franchisee or in the event of any conduct
by Franchisee which is illegal or is dishonest or misleading to Franchisee's
customers or prospective customers or may impair the goodwill associated with
the Marks, Franchisor may seek an injunction restraining such breach or obtain a
decree of specific performance, without showing or proving any actual damage,
until such time as a final and binding determination is made by the arbitrator.
The foregoing equitable remedy will be in addition to, and not in lieu of, all
other remedies or rights which Franchisor might otherwise have by virtue of any
breach of this Agreement by Franchisee.
20. SEVERABILITY AND CONSTRUCTION
A. Severability. All provisions of this Agreement are severable and
this Agreement will be interpreted and enforced as if all completely invalid or
unenforceable provisions were not contained herein and partially valid and
enforceable provisions will be enforced to the extent valid and enforceable. If
any applicable law or rule of any jurisdiction requires a greater prior notice
period than is required hereunder, or if under any applicable law or rule of any
jurisdiction, any provision of this Agreement is invalid or unenforceable, the
prior notice required by such law or rule will be substituted for the notice
requirements hereof, or such invalid or unenforceable provision will be modified
to the extent required to be valid and enforceable. Such modifications to this
Agreement will be effective only in such jurisdiction and will be enforced as
originally made and entered into in all other jurisdictions.
B. Waiver. Franchisor and Franchisee may by written instrument
unilaterally waive any obligation of or restriction upon the other under this
Agreement. No acceptance by Franchisor of any payment by Franchisee and no
failure, refusal or neglect of Franchisor or Franchisee to exercise any right
under this Agreement or to insist upon full compliance by the other with its
obligations hereunder, including any mandatory specification, standard or
operating procedure, will constitute a waiver of any provision of this
Agreement.
C. Cumulative Rights. The rights of Franchisor and Franchisee hereunder
are cumulative and no exercise or enforcement by Franchisor or Franchisee of any
right or remedy hereunder will preclude the exercise or enforcement by
Franchisor or Franchisee of any other right or remedy hereunder or which
Franchisor or Franchisee is entitled by law to enforce.
D. Governing Law. Except to the extent governed by the United States
Trademark Act of 1946 (▇▇▇▇▇▇ Act, 15 U.S.C. Section 1051 et seq.), this
Agreement and the franchise relationship will be governed by the laws of the
state in which the Franchised Location is located.
E. Binding Effect. This Agreement is binding upon the parties hereto
and their respective executors, administrators, heirs, assigns and successors in
interest.
F. Consents. Whenever a party's consent or approval is required under
this Agreement, such consent or approval will not be unreasonably withheld or
delayed.
G. Entire Agreement. The "Background" section is a part of this
Agreement which, together with exhibits, represents the entire agreement of the
parties. This Agreement supersedes and terminates any prior oral or written
understandings or agreements between Franchisor and Franchisee relating to the
subject matter of this Agreement. No modification of this Agreement will be
effective unless it is in writing and signed by Franchisor and Franchisee. The
term "Franchisee" as used herein is applicable (where relevant) to one or more
persons, a corporation or a partnership. References to "Franchisee," "assignees"
and "transferees" which are applicable to an individual or individuals mean the
principal owner or owners of the equity or operating control of Franchisee or
any such assignee or transferee if Franchisee or such assignee or transferee is
a corporation or partnership. If Franchisee consists of more than one
individual, all individuals will be bound jointly and severally by the
provisions of this Agreement.
21. NOTICES
All notices to Franchisor will be in writing and will be made by
personal service or sent by prepaid first class United States mail addressed to
Franchisor at its principal place of business, or at such other
address as Franchisor may designate in writing. All notices to Franchisee will
be made by prepaid first class United States mail addressed to Franchisee at the
Franchised Location, or such other address as Franchisee may designate in
writing. Any notice under this Agreement may also be made by a recognized
delivery service that requires a written receipt.
22. ACKNOWLEDGMENTS
A. Independent Investigation. Franchisee acknowledges that it has
conducted an independent investigation of the business franchised hereunder, and
recognizes that the business venture contemplated by this Agreement involves
business risks and that its success will largely depend on Franchisee's ability
as an independent business person. Franchisor expressly disclaims the making of,
and Franchisee acknowledges that it has not received, any warranty or guarantee,
express or implied, as to the potential volume, profits or success of the
business venture contemplated by this Agreement.
B. Franchise Agreement. Franchisee acknowledges that it has received,
read, and understood this Agreement and that Franchisor has fully and adequately
explained the provisions of it to Franchisee's satisfaction and that Franchisee
has had sufficient time and opportunity to consult with advisors of its own
choosing about the potential benefits and risks of entering into this Agreement.
C. Other Franchises. Franchisee acknowledges that other franchisees of
Franchisor have or will be granted franchises at different times and in
different situations, and further acknowledges that the provisions of such
franchises may vary substantially from those contained in this Agreement.
D. Receipt of Documents. Franchisee acknowledges that it received a
copy of this Agreement at least five (5) business days before the date on which
this Agreement was executed. Franchisee further acknowledges that he/she has
received a Franchise Offering Circular at least ten (10) business days before
the date on which this Agreement was executed.
IN WITNESS WHEREOF, Franchisor and Franchisee have signed this
Agreement as of the day and year first above written.
FRANCHISOR DISCLAIMS ANY WARRANTY OR REPRESENTATION AS TO THE POTENTIAL SUCCESS
OF FRANCHISEE'S BUSINESS OPERATIONS UNDER THIS AGREEMENT.
This is a legal document which grants specific rights to and imposes certain
obligations upon Franchisor and Franchisee. Consult legal counsel to be sure
that you understand your rights and duties. Please insert the name and address
of your attorney: _____________________________________________________________.
"FRANCHISOR" "FRANCHISEE"
GROW BIZ INTERNATIONAL, INC. If "Franchisee" is a corporation,
-------------------------------------------
(Print Corporate Name)
By By
-------------------------------- ----------------------------------------
Its Its
-------------------------- ----------------------------------
If "Franchisee" is one or more individuals,
-------------------------------------------
(Print Individual Name)
By
----------------------------------------
-------------------------------------------
(Print Individual Name)
By
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(Print Individual Name)
By
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EXHIBIT A
TO FRANCHISE AGREEMENT
FRANCHISEE'S DEVELOPMENT AREA AND EXCLUSIVE TERRITORY
1. Description of Development Area:
2. Description of Exclusive Territory:
----------------------------- --------------------------------
Franchisor Franchisee
EXHIBIT B
TO FRANCHISE AGREEMENT
IT'S ABOUT GAMES(TM)
COMPUTER SOFTWARE LICENSE AGREEMENT
This AGREEMENT is made and entered into as of the _____ day of _______________,
199__, by and between GROW BIZ INTERNATIONAL, INC. ("Grow Biz"), and
____________________________ ("Licensee").
BACKGROUND:
Grow Biz owns certain software and related documentation. Licensee is an It's
About Games(TM) franchisee pursuant to a franchise agreement Licensee entered
into with Grow Biz (the "Franchise Agreement"). Licensee wishes to use certain
software in its franchised business under the provisions stated below.
AGREEMENTS:
1. SOFTWARE LICENSE.
▇. ▇▇▇▇▇ of License. Grow Biz grants Licensee a nonexclusive license to
use the software identified on Schedule A attached to this Agreement.
Collectively, all software licensed under this Agreement, and all modifications,
updates and other works derivative of or to such software, and any related
documentation or materials provided, is referred to as the "Software."
B. Initial Software License Fee. Licensee will pay Grow Biz an Initial
Software License Fee of Three Thousand Dollars ($3,000). This fee must be paid
before Grow Biz delivers the Software to Licensee. Licensee will be solely
responsible for all taxes relating to the Initial Software License Fee,
excluding taxes measured by Grow Biz' net income.
C. Scope of License. Licensee may use the Software only on a single
computer or on a network of computers at the franchised business site or sites
identified on Schedule A attached hereto or in Grow Biz' acceptance of
Licensee's order. Unless Grow Biz otherwise agrees in writing, a single license
fee entitles Licensee to use the Software on a network at one site with no more
than five users. Licensee will be charged an additional license fee for use of
the Software on a network at one site with more than five users or for use at
more than one site.
D. Licensee's Agreements. Licensee agrees:
1. Not to disassemble, decompile or otherwise reverse engineer
the Software, nor to create, access or generate the source code of the
Software.
2. Not to modify the Software, nor to develop or create, or
assist any other party in developing or creating, any computer programs
which are derived from, based upon, or contain features or functions
similar to, the Software.
3. To use the Software only in Licensee's internal operation
of the franchise business under the terms of the Franchise Agreement
and not for the business needs of any third parties.
4. Not to disclose to any other party any part of or any
information relating to the Software, nor to permit access to the
Software except by Licensee's employees in the operation of the
franchised business.
5. Not to assign, sublicense, loan or otherwise provide to any
third party the Software, whether or not merged into other programs or
materials.
6. Not to copy the Software, although Licensee may make one
copy of the Software for backup purposes if Licensee reproduces all
copyright and other proprietary notices in such copy.
E. Repairs; Updates; Etc.
1. For so long as Grow Biz owns and requires Licensee to use
the Software, Grow Biz will provide ongoing maintenance and repair
services for the Software owned by Grow Biz so that the Software will
perform substantially as described in documentation Grow Biz has
provided. Such maintenance and repair services include Licensee's right
to receive any fixes and minor enhancements to the Grow Biz Software
which Grow Biz may periodically develop, as well as any other
maintenance or repair services Grow Biz offers in its discretion. Grow
Biz does not warrant that the operation of the Grow Biz Software will
be uninterrupted or error free, that all defects will be corrected or
that the Software will meet Licensee's requirements.
2. Grow Biz may, in its sole discretion, periodically release
updates, modifications and enhancements respecting the Software.
Licensee will install any fixes, updates, modifications or enhancements
which Grow Biz designates as mandatory.
3. Grow Biz is not obligated to provide Licensee with other
services, including installation, support, training or other services
relating to the Software. Further, Grow Biz is not obligated to provide
maintenance or repair services for Software distributed, but not owned,
by Grow Biz.
4. Grow Biz may charge a reasonable fee for its services,
including its maintenance and repair services, as well as for any
updates, modifications and enhancements to the Software which it elects
to release.
2. PROPRIETARY RIGHTS.
A. Confidentiality. The Software is the confidential and proprietary
property of Grow Biz or its vendors. Licensee will hold the Software in
confidence and safeguard it from disclosure to third parties and will use the
Software only as intended by this Agreement. Licensee will notify Grow Biz
promptly of any unauthorized access, copying or use of the Software and will
reasonably assist Grow Biz in prosecuting any resulting claims or proceedings.
B. Ownership. Grow Biz or its vendors retain all title and rights,
including all copyright rights, to the Software, including all modifications,
updates and other works derivative of or to the Software, all of which will be
subject to the provisions of this Agreement.
3. TERM AND TERMINATION.
A. Term and Termination. This Agreement will continue until terminated.
Grow Biz may terminate this Agreement upon written notice to Licensee if
Licensee breaches any term of this Agreement, the Franchise Agreement or any
other agreement with Grow Biz, or if Licensee becomes insolvent. This Agreement
will automatically terminate, without any further action of the parties, upon
termination of the Franchise Agreement for any reason. Finally, this Agreement
will automatically terminate if and when Grow Biz assigns all of its rights,
title and interest in the Software or this Agreement to a third-party assignee.
If such an assignment occurs, Licensee acknowledges and agrees that, to continue
to use the Software, the third-party assignee may require Licensee to enter into
a separate computer software license agreement. If Grow Biz assigns its interest
in the Software or this Agreement to a third-party assignee, and the third-party
assignee replaces the Software, Licensee may incur additional costs related to
the conversion of such replacement software.
B. Consequences of Termination. Upon termination of this Agreement, all
licenses and rights Grow Biz has granted under this Agreement will terminate and
Licensee will have no rights to use, sell or transfer its interest in, the
Software. Licensee agrees to immediately return to Grow Biz all copies of the
Software, or to destroy all Software.
4. LIMITED WARRANTY; DISCLAIMERS.
Grow Biz warrants to Licensee that magnetic diskette or other media on
which the Software is recorded will be free from material defects in materials
or workmanship under normal use for a period of ninety (90) days after delivery
of the media. If during such period the media should be defective, Licensee may
return the media for replacement without charge. Licensee's sole remedy in the
event of a defect is expressly limited to replacement of the media. ALL
SOFTWARE, INCLUDING ALL GROW BIZ SOFTWARE, IS PROVIDED ON AN "AS IS" BASIS.
However, Grow Biz acknowledges its Software maintenance and repair obligations
stated in Section 1 (E). THESE WARRANTIES ARE IN LIEU OF, AND GROW BIZ EXPRESSLY
DISCLAIMS, ALL OTHER WARRANTIES RELATING TO THIS AGREEMENT OR THE SOFTWARE,
WHETHER EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF TITLE,
NONINFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
5. LIMITATION OF LIABILITY.
GROW BIZ' LIABILITY FOR ANY CLAIM RELATED TO ANY SOFTWARE OR SERVICE
PROVIDED WILL BE LIMITED TO THE LESSOR OF LICENSEE'S ACTUAL DAMAGE OR LOSS OR
THE INITIAL FEE PAID FOR THE SOFTWARE. GROW BIZ WILL NOT BE LIABLE FOR ANY
INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, INCLUDING LOST
PROFITS OR LOSS OF OR DAMAGE TO DATA.
6. INFRINGEMENT.
A. Infringement Claims. Grow Biz does not have actual knowledge of any
claim that the Grow Biz Software infringes upon a third party's patent,
copyright or other proprietary right. If a third
party asserts such an infringement claim against Licensee, Licensee will
immediately notify Grow Biz in writing. Grow Biz will have the right (but not
the obligation) to defend any such claim, at Grow Biz' expense, and Licensee
will cooperate with Grow Biz with respect to such defense. In the event of any
such claim, Licensee will, at Grow Biz' direction, immediately discontinue using
the Software. Grow Biz will either modify the Software so as to render it
non-infringing or replace the Software with such other non-infringing Software
as Grow Biz may furnish to Licensee. In either case, Grow Biz will do so only if
the modified or replacement Software performs substantially the same functions
as the infringing Software. So long as Licensee complies with the terms hereof,
Grow Biz will indemnify Licensee for any loss, damage, cost or expense related
to such claim.
B. Limitations. Grow Biz will not be liable to Licensee if an
infringement claim is based on use of the Software in combination with any
product, software or system not delivered by Grow Biz, or Licensee's
unauthorized use or modification of the Software. Grow Biz will not have any
obligations regarding any infringement of any non-Grow Biz Software.
7. GENERAL.
A. Governing Law. This Agreement will be governed by Minnesota law. Any
action related to this Agreement may be brought in any court located in
Minneapolis, Minnesota, and the parties consent and submit to the personal
jurisdiction and venue of any such court. Grow Biz will be entitled to temporary
and permanent injunctive relief, without posting a bond or other security, to
restrain any actual or threatened violation of the provisions of this Agreement,
in addition to any other remedies Grow Biz may have. Grow Biz may recover its
costs and expenses (including reasonable attorneys' fees) incurred in enforcing
its rights under this Agreement.
B. Scope of Agreement; Conflicting Terms. This Agreement will govern
all orders for Software, and all Software Grow Biz provides. No purchase order,
invoice or other similar form may vary the terms of this Agreement. Any term
thereof that is inconsistent with or additional to the terms of this Agreement
will not be binding on Grow Biz.
C. Binding Effect. This Agreement will be binding upon and will benefit
the parties hereto and their respective successors and assigns, subject to the
limitations provided herein. Licensee may not assign or transfer this Agreement
without Grow Biz' prior written consent.
D. Waivers. The failure of either party to enforce or exercise any term
of or any right under this Agreement does not represent a waiver of such term or
right and will not affect that party's right later to enforce or exercise it. No
modification or waiver of any of the provisions of this Agreement will be
binding upon Grow Biz or Licensee unless it is in writing and is executed by the
party against whom such modification or waiver is sought to be enforced.
E. Severability. If any provision contained in this Agreement is held
invalid, such provision will not affect any other provision and the remainder of
this Agreement will continue in full force and effect.
F. Entire Agreement. This Agreement is the complete and exclusive
statement of the agreement of the parties regarding the subject matter hereof,
and supersedes all prior or contemporaneous agreements, oral or written, and all
other communications between the parties relating to the subject matter hereof.
G. Survival. The provisions of this Agreement which by their nature
extend beyond the termination hereof will survive and remain in effect until all
obligations are satisfied.
"GROW BIZ" "LICENSEE"
GROW BIZ INTERNATIONAL, INC. If "Licensee" is a corporation,
(Print Corporate Name)
By By
------------------------------- ----------------------------------------
Its Its
------------------------- ----------------------------------
If "Licensee" is one or more individuals,
-------------------------------------------
(Print Individual Name)
By
----------------------------------------
-------------------------------------------
(Print Individual Name)
By
----------------------------------------
-------------------------------------------
(Print Individual Name)
By
----------------------------------------
Schedule A
Software
Software Site
------------------------------------------- ---------------------------------
Data Recycling System (DRS) point-of-sale Store #: ________________________
and inventory management software (the
Proprietary Software) - Grow Biz' Address:
proprietary software which is specifically _________________________________
designed to track various aspects of your _________________________________
store, including inventory, customer _________________________________
tracking, vendor purchase orders and daily _________________________________
sales reports.
----------------------------------------------
For Office Use Only
Grow Biz International, Inc.
By
-----------------------------------
Its
-----------------------------
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Licensee:
--------------------------------------
(Name of Individual or Corporation)
By
-----------------------------------
(Signature)
Its
-----------------------------
(Title, if applicable)
EXHIBIT C
TO FRANCHISE AGREEMENT
PERSONAL GUARANTY AND AGREEMENT TO BE BOUND
PERSONALLY BY THE PROVISIONS OF THE FRANCHISE AGREEMENT
In consideration of Franchisor's execution of this Franchise Agreement,
and for other good and valuable consideration, the undersigned jointly and
severally: (1) guarantee Franchisee's payment of all amounts due Franchisor and
Franchisee's performance of the covenants and obligations in this Franchise
Agreement; and (2) agree to be personally bound by every provision contained in
this Franchise Agreement including the non-compete provisions and agree that
this Personal Guaranty will be construed as though the undersigned executed a
Franchise Agreement containing the identical provisions of this Franchise
Agreement.
A. Each of the undersigned waives:
(1) notice of demand for payment of any indebtedness or
nonperformance of any obligations hereby guaranteed;
(2) protest and notice of default to any party respecting the
indebtedness or nonperformance of any obligations hereby guaranteed;
and
(3) any right he/she may have to require that an action be
brought against Franchisee or any other person as a condition of
liability.
B. Each of the undersigned consents and agrees that:
(1) he/she will provide any payment or performance required
under the Agreement upon demand if Franchisee fails or refuses to do
so;
(2) such liability will not be contingent or conditioned upon
Franchisor's pursuit of any remedies against Franchisee or any other
person; and
(3) such liability will not be diminished, relieved or
otherwise affected by Franchisee's insolvency, bankruptcy or
reorganization, the invalidity, illegality or unenforceability of all
or any part of the Agreement, or the amendment or extension of the
Agreement with or without notice to the undersigned.
IN WITNESS WHEREOF, each of the undersigned has signed this Guaranty on
the same day and year as the Franchise Agreement was signed.
In the Presence of: PERSONAL GUARANTORS
------------------------------------ --------------------------------------
Individually
--------------------------------------
Address
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Individually
--------------------------------------
Address
------------------------------------ --------------------------------------
Individually
--------------------------------------
Address
------------------------------------ --------------------------------------
Individually
--------------------------------------
Address
1 GK 082597
2 GK 030698
IT'S ABOUT GAMES(TM)
MULTIPLE STORE DEVELOPMENT AGREEMENT
THIS AGREEMENT made and entered into as of the ______ day of
_____________________, 19_____, by and between GROW BIZ INTERNATIONAL, INC., a
Minnesota corporation ("Franchisor") and ("Franchisee").
BACKGROUND:
Franchisor and Franchisee are, on this day, entering into an It's About
Games(TM) Franchise Agreement (the "Initial Franchise Agreement"), whereby
Franchisee will be granted the right to operate an It's About Games(TM) Store in
the area described in Section 1 of the Initial Franchise Agreement. Franchisee
desires to obtain the right to develop more than one It's About Games(TM) retail
store pursuant to Franchisor's standard Franchise Agreement within one or more
specified territories. Franchisor is willing to grant such rights pursuant to
the provisions stated below.
AGREEMENTS:
The Franchisor and Franchisee agree as follows:
1. Development Rights. Subject to the provisions stated below,
Franchisor grants to Franchisee the right to establish and operate for its own
account, but not to subfranchise, sublicense or resell, It's About Games(TM)
retail stores (the "Stores") pursuant to an individual It's About Games(TM)
Franchise Agreement ("Franchise Agreement") in the form then-currently used by
Franchisor at the time of issuance, as amended by Section 2 of this Agreement.
Franchisee's rights to establish and operate Stores under this Agreement will be
limited to the area or areas described on Exhibit A attached hereto (the
"Exclusive Development Territory"). So long as Franchisee is in compliance with
the terms of this Agreement, and in compliance with the terms of the individual
Franchise Agreement for each Store developed hereunder, Franchisor will not, for
the term of this Agreement, establish for its own account or franchise others to
operate an It's About Games(TM) Store within the Exclusive Development Territory
other than to Franchisee pursuant to this Agreement.
2. Fees.
A. Initial Fees. For the rights described in Section 1 above,
Franchisee will pay Franchisor an Initial Fee of _____________________
Thousand Dollars ($_______) for each Store (in addition to the Store
being developed pursuant to the Initial Franchise Agreement) to be
developed pursuant to this Agreement. All Initial Fees will be payable
when Franchisee executes this Agreement.
B. Continuing Fees; Advertising Fees. For each Franchise
Agreement to be executed hereunder, Franchisee will be obligated to pay
Franchisor Continuing Fees and Advertising Fees at the same percentage
rate as provided in the Initial Franchise Agreement.
3. Conditions to Development of Additional Stores. Franchisor will be
obligated to enter into a Franchise Agreement for the development of a Store
under this Agreement only if, at the time Franchisee intends to enter into a
Franchise Agreement for such Store: (1) Franchisee meets the minimum financial
standards stated in Exhibit B attached hereto; (2) All amounts owed by
Franchisee to Franchisor or its affiliates under or relating to the Initial
Franchise Agreement or any Store Franchise Agreement are paid in full and
Franchisee otherwise is in good standing under such Agreements; and (3)
Franchisee is not in default for any reason stated in Section 7 below for which
Franchisee has received written notice. Should Franchisee fail to meet the
minimum development schedule stated in Section 5 below for any Store because it
failed to satisfy the conditions stated in provisions (1) or (2) above,
Franchisor will refund to Franchisee one-half (1/2) of the Initial Franchise Fee
paid to Franchisor for such Store.
4. Development Procedure. Each It's About Games(TM) Store to be
developed pursuant to this Agreement will be governed by the terms of the
Franchise Agreement executed or to be executed by Franchisor and Franchisee for
such Store. Franchisee will not develop any It's About Games(TM) Store at any
site which Franchisor has not evaluated in writing or for which there is no
Franchise Agreement between the parties. Subject only to Franchisor's evaluation
of a proposed site (which evaluation is not a guaranty that the proposed site
will be successful), Franchisee is solely responsible for locating and securing
acceptable sites. If Franchisee fails to provide Franchisor with an executed
Franchise Agreement before Franchisee commences construction or leasehold
improvements on the premises for a Store, Franchisee will be in default under
this Agreement and Franchisor may terminate this Agreement under Section 7
below.
5. Minimum Development Schedule.
A. Franchisee's rights under this Agreement are conditioned
upon its active development of the Exclusive Development Territory.
Franchisee agrees to open for business and thereafter maintain in
operation within the Exclusive Development Territory not less than the
following number of It's About Games(TM) Stores within the time frame
stated below:
____ Store opened and operating within ____ months
from the date of this Agreement.
____ Stores opened and operating within ____ months
from the date of this Agreement.
____ Stores opened and operating within ____ months
from the date of this Agreement.
B. The minimum development schedule described above will be
satisfied only if the required number of Stores are open for business
by the last day before the respective anniversary date of this
Agreement.
C. Franchisee may develop additional Stores within the
Exclusive Development Territory only if: (1) Franchisee is in good
standing under this Agreement, the Initial Franchise Agreement and each
Store Franchise Agreement; (2) the Exclusive Development Territory
described in Section 1(A) of Exhibit A is a general territory within
which all Stores are to be located; and (3) Franchisee and Franchisor
execute Franchisor's then-current form of standard Franchise Agreement
for each additional Store.
6. Term. Subject to Section 7 below, the term of this
Agreement will be for a ____________ (____) years commencing on the
date of this Agreement.
7. Default and Termination.
A. Franchisee may terminate this Agreement at any time with or
without cause by delivering written notice thereof to Franchisor.
Franchisee will be in default, and Franchisor may at its option,
terminate this Agreement, as provided herein, if: (1) Franchisee fails
to meet the minimum development schedule stated herein, (2) Franchisee
violates any other material provision of this Agreement, (3) Franchisee
violates any material provision of the Initial Franchise Agreement or
any Store Franchise Agreement issued hereunder, (4) Franchisee is
declared bankrupt or becomes insolvent, (5) Franchisee is convicted of
violating any law, ordinance or regulation relating to Franchisee's
operation of any Store referenced herein or developed hereunder, or (6)
Franchisee attempts to subfranchise in any manner all or part of its
rights under this Agreement.
B. Except as described below, Franchisee will have thirty (30)
days, or such longer period as applicable law may require, after its
receipt from Franchisor of a written Notice of Termination within which
to remedy any default hereunder, and to provide evidence thereof to
Franchisor. If Franchisee fails to correct the alleged default within
that time (or such longer period of time as applicable law may
require), this Agreement will terminate without further notice to
Franchisee effective immediately upon the expiration of the thirty (30)
day period (or such longer period as applicable law may require).
Franchisor may terminate this Agreement immediately upon delivery of
written notice to Franchisee, with no opportunity to cure, if the
termination results from any of the following: (1) Franchisee
repeatedly fails to comply with one or more material requirements of
this Agreement; (2) the nature of Franchisee's breach makes it not
curable; or (3) any default under items (4), (5) or (6) in Section 7(A)
above.
C. During the period from the date Franchisor sends a notice
of default until all violations and defaults specified therein are
cured by Franchisee or this Agreement is terminated, Franchisor will
not be obligated to enter into any Store Franchise Agreement with
Franchisee or otherwise perform pursuant to this Agreement. Upon
termination or expiration of this Agreement, all rights licensed herein
will automatically revert to Franchisor and Franchisee's exclusive
right to develop It's About Games(TM) Stores within the Exclusive
Development Territory will cease. Termination or expiration of this
Agreement will not affect Franchisee's rights under any individual
Store Franchise Agreements in effect at that time.
8. Transfers. Store Franchise Agreements may be transferred only
pursuant to their respective terms. Franchisee represents and warrants to
Franchisor that it intends to develop, manage, and operate all of the Stores to
be developed hereunder for its own benefit and not for the purpose of or with a
view towards resale or redistribution of the franchises to be issued hereunder.
This Agreement cannot be pledged, transferred or sold in whole or in part by
Franchisee without Franchisor's prior written consent. Franchisor may impose
conditions to any proposed transfer or assignment including the following:
A. Franchisee is in complete compliance with the terms of this
Agreement and all other agreements between the parties;
B. The proposed transferee has been approved by Franchisor as
meeting Franchisor's then-current standards for multiple store
franchisees (if applicable);
C. The proposed transferee has completed Franchisor's training
program;
D. Franchisee assigns to the proposed transferee its interest
in the individual franchise agreements for all Stores located in the
Territory; and
E. Franchisee pays a transfer fee of Five Thousand Dollars
($5,000).
This Agreement may be assigned and transferred by Franchisor and will
benefit Franchisor's successors and assigns. Any such assignment or transfer
will require the assignee to fulfill Franchisor's obligations under this
Agreement.
9. Enforcement. This Agreement, and any dispute arising hereunder, will
be governed by those provisions found in the Initial Franchise Agreement
respecting arbitration, governing law and injunctive relief.
10. Miscellaneous. This Agreement represents the entire Agreement of
the parties relative to its subject and cannot be waived, altered or rescinded
in whole or in part except by an express writing by the parties. The provisions
of this Agreement are severable and the invalidity or unenforceability of any of
them will not affect the remainder of this Agreement.
IN WITNESS WHEREOF, Franchisor and Franchisee have executed this
Agreement as of the date first written above.
"FRANCHISOR" "FRANCHISEE"
GROW BIZ INTERNATIONAL, INC. If "Franchisee" is a corporation,
(Print Corporate Name)
By By
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Its Its
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If "Franchisee" is one or more individuals,
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(Print Individual Name)
By
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(Print Individual Name)
By
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(Print Individual Name)
By
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EXHIBIT A
TO DEVELOPMENT AGREEMENT
FRANCHISEE'S DEVELOPMENT AREA AND EXCLUSIVE TERRITORY
1. Description of Development Area (Select A or B):
_________ A. General Development Area within which all Stores will be
developed:
OR
_________ B. Development Area for each Store to be developed:
Store 1:
Store 2 (if applicable):
Store 3 (if applicable):
2. Description of Exclusive Territory (for each Store to be developed)
Store 1:
Store 2 (if applicable):
Store 3 (if applicable):
By: By:
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Franchisor Franchisee
EXHIBIT B
TO DEVELOPMENT AGREEMENT
MINIMUM FINANCIAL STANDARDS
FOR MULTIPLE STORE DEVELOPMENT
To develop a store under the Multiple Store Development Agreement, Franchisee
will need to satisfy the following requirements at the time Franchisee desires
to proceed with development of that store:
AVERAGE INVESTMENT: $160,000
MINIMUM FOR ONE STORE;
CASH (1/3 of Investment) $ 53,000
FINANCING (Secured through
Bank or other means) $107,000
Franchisee agrees to provide all appropriate financial documentation Franchisor
requests to insure that Franchisee satisfies these requirements.
By: By:
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Franchisor's Initials Franchisee's Initials