PAK MAIL CENTERS OF AMERICA, INC.
FRANCHISE AGREEMENT
Franchisee:
Date:
Franchised Location:
PAK MAIL CENTERS OF AMERICA, INC.
FRANCHISE AGREEMENT
TABLE OF CONTENTS
1. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. GRANT OF FRANCHISE. . . . . . . . . . . . . . . . . . . . . . . . 1
2.1. Grant of Franchise . . . . . . . . . . . . . . . . . . . . . 1
2.2. Scope of Franchise Operations. . . . . . . . . . . . . . . . 1
3. FRANCHISED LOCATION AND TERRITORIAL RIGHTS. . . . . . . . . . . . 2
3.1. Franchised Location. . . . . . . . . . . . . . . . . . . . . 2
3.2. Protected Territory. . . . . . . . . . . . . . . . . . . . . 2
3.3. Limitation on Franchise Rights . . . . . . . . . . . . . . . 2
3.4. Franchisor's Reservation of Rights . . . . . . . . . . . . . 2
4. INITIAL FRANCHISE FEE . . . . . . . . . . . . . . . . . . . . . . 3
4.1. Initial Franchise Fee. . . . . . . . . . . . . . . . . . . . 3
5. DEVELOPMENT OF FRANCHISED LOCATION. . . . . . . . . . . . . . . . 3
5.1. Approval of Franchised Location. . . . . . . . . . . . . . . 3
5.2. Approval of Lease. . . . . . . . . . . . . . . . . . . . . . 3
5.3. Conversion and Design. . . . . . . . . . . . . . . . . . . . 3
5.4. Signs. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.5. Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.6. Permits and Licenses . . . . . . . . . . . . . . . . . . . . 4
5.7. Commencement of Operations . . . . . . . . . . . . . . . . . 5
6. TRAINING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6.1. Initial Training Program . . . . . . . . . . . . . . . . . . 5
6.2. Length of Training . . . . . . . . . . . . . . . . . . . . . 5
6.3. Additional Training. . . . . . . . . . . . . . . . . . . . . 5
7. DEVELOPMENT ASSISTANCE . . . . . . . . . . . . . . . . . . . . . 6
7.1. Franchisor's Development Assistance. . . . . . . . . . . . . 6
8. OPERATIONS MANUAL . . . . . . . . . . . . . . . . . . . . . . . . 7
8.1. Operations Manual. . . . . . . . . . . . . . . . . . . . . . 7
8.2. Confidentiality of Operations Manual
Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8.3. Changes to Operations Manual . . . . . . . . . . . . . . . . 7
9. OPERATING ASSISTANCE. . . . . . . . . . . . . . . . . . . . . . . 8
9.1. Franchisor's Services. . . . . . . . . . . . . . . . . . . . 8
9.2. Additional Franchisor Services . . . . . . . . . . . . . . . 8
10. FRANCHISEE'S OPERATIONAL COVENANTS. . . . . . . . . . . . . . . . 9
10.1. Business Operations . . . . . . . . . . . . . . . . . . 9
11. ROYALTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
11.1. Monthly Royalty . . . . . . . . . . . . . . . . . . . . 11
11.2. Gross Revenues. . . . . . . . . . . . . . . . . . . . . 11
11.3. Royalty Payments. . . . . . . . . . . . . . . . . . . . 11
11.4. Application of Payments . . . . . . . . . . . . . . . . 12
12. ADVERTISING . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12.1. Approval of Advertising . . . . . . . . . . . . . . . . 12
12.2. Marketing Material Beginning Inventory. . . . . . . . . 12
12.3. Advertising Contribution. . . . . . . . . . . . . . . . 12
12.4. Regional Advertising Programs . . . . . . . . . . . . . 14
13. QUALITY CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . 15
13.1. Compliance with Operations Manual . . . . . . . . . . . 15
13.2. Standards and Specifications. . . . . . . . . . . . . . 15
13.3. Inspections . . . . . . . . . . . . . . . . . . . . . . 15
13.4. Restrictions on Services and Products . . . . . . . . . 15
13.7. Shopping Service. . . . . . . . . . . . . . . . . . . . 16
14. MARKS, TRADE NAMES AND PROPRIETARY INTERESTS. . . . . . . . . . . 16
14.1. Marks . . . . . . . . . . . . . . . . . . . . . . . . . 16
14.2. No Use of Other Marks . . . . . . . . . . . . . . . . . 16
14.3. System. . . . . . . . . . . . . . . . . . . . . . . . . 17
14.4. ▇▇▇▇ Infringement . . . . . . . . . . . . . . . . . . . 17
14.5. Franchisee's Business Name. . . . . . . . . . . . . . . 17
14.6. Change of Marks . . . . . . . . . . . . . . . . . . . . 17
15. REPORTS, RECORDS AND FINANCIAL STATEMENTS . . . . . . . . . . . . 18
15.1. Franchisee Reports. . . . . . . . . . . . . . . . . . . 18
15.2. Verification. . . . . . . . . . . . . . . . . . . . . . 18
15.3. Books and Records . . . . . . . . . . . . . . . . . . . 19
15.4. Audit of Books and Records. . . . . . . . . . . . . . . 19
16. TRANSFER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
16.1. Transfer by Franchisee. . . . . . . . . . . . . . . . . 19
16.2. Pre-Conditions to Franchisee's Transfer . . . . . . . . 19
16.3. Franchisor's Approval of Transfer . . . . . . . . . . . 20
16.4. Right of First Refusal. . . . . . . . . . . . . . . . . 21
16.5. Specific Types of Transfers . . . . . . . . . . . . . . 22
16.6. Assignment by the Franchisor. . . . . . . . . . . . . . 22
16.7. Franchisee's Death or Disability. . . . . . . . . . . . 22
17. TERM AND EXPIRATION . . . . . . . . . . . . . . . . . . . . . . . 23
17.1. Term. . . . . . . . . . . . . . . . . . . . . . . . . . 23
17.2. Rights Upon Expiration. . . . . . . . . . . . . . . . . 23
17.3. Exercise of Option for Successor
Franchise. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
17.4. Conditions of Refusal . . . . . . . . . . . . . . . . . 23
18. DEFAULT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . 24
18.1. Termination by Franchisee . . . . . . . . . . . . . . . 24
18.2. Termination by Franchisor - Effective
Upon Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
18.3. Termination by Franchisor - Thirty Days
Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
18.4. Right to Purchase.. . . . . . . . . . . . . . . . . . . 26
18.5. Obligations of Franchisee Upon
Termination or Expiration. . . . . . . . . . . . . . . . . . . . 27
18.6. State and Federal Law . . . . . . . . . . . . . . . . . 28
19. BUSINESS RELATIONSHIP . . . . . . . . . . . . . . . . . . . . . . 29
19.1. Independent Businesspersons . . . . . . . . . . . . . . 29
19.2. Payment of Third Party Obligations. . . . . . . . . . . 29
19.3. Indemnification . . . . . . . . . . . . . . . . . . . . 29
20. RESTRICTIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 29
20.1. Non-Competition During Term . . . . . . . . . . . . . . 29
20.2. Post-Termination Covenant Not to Compete. . . . . . . . 30
20.3. Confidentiality of Proprietary
Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
20.4. Confidentiality Agreement . . . . . . . . . . . . . . . 31
21. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
21.1. Insurance Coverage. . . . . . . . . . . . . . . . . . . 31
21.2. Proof of Insurance Coverage . . . . . . . . . . . . . . 31
22. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . 32
22.1. Governing Law/Consent to Venue and
Jurisdiction.. . . . . . . . . . . . . . . . . . . . . . . . . . 32
22.2. Modification. . . . . . . . . . . . . . . . . . . . . . 32
22.3. Entire Agreement. . . . . . . . . . . . . . . . . . . . 32
22.4. Delegation by the Franchisor. . . . . . . . . . . . . . 32
22.5. Effective Date. . . . . . . . . . . . . . . . . . . . . 33
22.6. Review of Agreement . . . . . . . . . . . . . . . . . . 33
22.7. Attorneys' Fees . . . . . . . . . . . . . . . . . . . . 33
22.8. Injunctive Relief . . . . . . . . . . . . . . . . . . . 33
22.9. No Waiver . . . . . . . . . . . . . . . . . . . . . . . 33
22.10. No Right to Set Off . . . . . . . . . . . . . . . . . . 33
22.11. Invalidity. . . . . . . . . . . . . . . . . . . . . . . 33
22.12. Notices . . . . . . . . . . . . . . . . . . . . . . . . 33
22.13. Acknowledgement . . . . . . . . . . . . . . . . . . . . 34
EXHIBITS
I. Addendum to Franchise Agreement - Location
Approval
II. Personal Guaranty
III. Statement of Ownership
PAK MAIL CENTERS OF AMERICA, INC.
FRANCHISE AGREEMENT
THIS AGREEMENT (the "Agreement") is made this
____ day of ________, 199__, by and between PAK MAIL
CENTERS OF AMERICA, INC., a Colorado corporation,
located at ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Franchisor") and
, located
at
(the "Franchisee"), who, on the
basis of the following understandings and agreements,
agree as follows:
1. PURPOSE
1.1. The Franchisor has developed methods for
establishing, operating and promoting stores offering
a variety of packaging, shipping, crating, freight
forwarding, mailing and communications services ("PAK
MAIL Centers" or "Centers") which use the service ▇▇▇▇
"PAK MAIL" and related trade names and trademarks
("Marks") and the Franchisor's proprietary methods of
doing business ("System").
1.2. The Franchisor grants the right to others
to develop and operate a PAK MAIL Center, under the
Marks and pursuant to the System.
1.3. The Franchisee desires to establish a PAK
MAIL Center at a location identified herein or to be
later identified, and the Franchisor desires to grant
the Franchisee the right to operate a PAK MAIL Center
at such location under the terms and conditions which
are contained in this Agreement.
2. GRANT OF FRANCHISE
2.1. Grant of Franchise. The Franchisor
grants to the Franchisee, and the Franchisee accepts
from the Franchisor, the right to use the Marks and
System in connection with the establishment and
operation of a PAK MAIL Center, at the location
described in Article 3 of this Agreement. The
Franchisee agrees to use the Marks and System, as they
may be changed, improved, and further developed by the
Franchisor from time to time, only in accordance with
the terms and conditions of this Agreement.
2.2. Scope of Franchise Operations. The
Franchisee agrees at all times to faithfully, honestly
and diligently perform the Franchisee's obligations
hereunder, and to continuously use best efforts to
promote the PAK MAIL Center. The Franchisee agrees to
utilize the Marks and System to operate all aspects of
the business franchised hereunder in accordance with
the methods and systems developed and prescribed from
time to time by the Franchisor, all of which are a
part of the System. The Franchisee's PAK MAIL Center
shall offer all products and services as the
Franchisor shall designate and shall be restricted
from offering or selling any products and services not
previously approved by the Franchisor in writing.
3. FRANCHISED LOCATION AND TERRITORIAL RIGHTS
3.1. Franchised Location. The Franchisee is
granted the right and franchise to own and operate a
PAK MAIL Center at the address and location which
shall be set forth in Exhibit I, attached hereto
("Franchised Location"). If, at the time of execution
of this Agreement, the Franchised Location cannot be
designated as a specific address because a location
has not been selected and approved, then the
Franchisee shall promptly take steps to choose and
acquire a location for its PAK MAIL Center within the
Designated Area, set forth in Exhibit I. In such
circumstances, the Franchisee shall select and propose
to the Franchisor for the Franchisor's prior approval
a specific location for the Franchised Location which,
once approved by the Franchisor, shall hereinafter be
set forth in the rider to Exhibit I.
3.2. Protected Territory. So long as the
Franchisee is in compliance with this Agreement, the
Franchisor shall not establish or license another
person or entity to establish a PAK MAIL Center within
a certain geographic area as set forth in Exhibit I
("Protected Territory").
3.3. Limitation on Franchise Rights. The
rights that are granted to the Franchisee are for the
specific Franchised Location and Protected Territory
and cannot be transferred to an alternative Franchised
Location or Protected Territory, or any other
location, without the prior written approval of the
Franchisor, which approval shall not be unreasonably
withheld. The Franchisee shall not operate another
Center or offer services which are part of the System
at any site other than the Franchised Location without
the Franchisor's prior written approval, which
approval can be withheld for any reason, in the
Franchisor's sole discretion.
3.4. Franchisor's Reservation of Rights. The
Franchisee acknowledges that its franchise rights as
granted are non-exclusive and that the Franchisor
retains the rights, among others: (1) to use, and to
license others to use, the Marks and System in
connection with the operation of a Pak Mail Center, at
any location other than in the Protected Territory;
(2) to use the Marks to identify other services and
products other than those which the Franchisee sells,
promotional and marketing efforts or related items, or
to identify services and products made available
through alternative channels of distribution, at any
location; and (3) to use and license the use of other
proprietary marks or methods in connection with the
sale of products and services similar to those which
the Franchisee will sell, whether in alternative
channels of distribution or in connection with the
operation of packaging and mailing businesses at any
location, which businesses are the same as, or similar
to, or different from PAK MAIL Centers, on any terms
and conditions as the Franchisor deems advisable.
4. INITIAL FRANCHISE FEE
4.1. Initial Franchise Fee. In consideration
for the right to develop and operate one PAK MAIL
Center, the Franchisee agrees to pay to the Franchisor
an initial franchise fee of $22,950 as of the date of
execution of this Agreement. The Franchisee
acknowledges and agrees that the initial franchise fee
represents payment for the initial grant of the rights
to use the Marks and System, that the Franchisor has
earned the initial franchise fee upon receipt thereof
and that the fee is under no circumstances refundable
to the Franchisee after it is paid, unless otherwise
specifically set forth in this Agreement.
5. DEVELOPMENT OF FRANCHISED LOCATION
5.1. Approval of Franchised Location. The
Franchisee shall follow the Franchisor's site
selection procedures in locating a Franchised Location
for the PAK MAIL Center. The Franchisee shall seek
the Franchisor's approval of any site proposed as a
Franchised Location, by submitting a complete site
submittal package, including demographics and other
materials requested by the Franchisor, containing all
information reasonably required by the Franchisor to
assess a proposed Franchised Location. The Franchisor
will not unreasonably withhold approval of a proposed
site that meets all of the Franchisor's site selection
criteria.
5.2. Approval of Lease. The Franchisee shall
obtain the Franchisor's prior written approval before
executing any lease or purchase agreement for the
Franchised Location. Any lease for the Franchised
Location shall, at the option of the Franchisor,
contain a provision: (1) allowing for assignment of
the lease to the Franchisor in the event that this
Agreement is terminated or not renewed for any reason;
(2) giving the Franchisor the right to cure any
default by the Franchisee under such lease; and (3)
providing the Franchisor with the right, exercisable
upon and as a condition of the approval of the
Franchised Location, to execute the lease agreement or
other document providing entitlement to the use of the
Franchised Location in its own name or jointly with
the Franchisee as lessee and, upon the exercise of
such option, the Franchisor shall provide the
Franchisee with the right to use the premises as its
sublessee, assignee, or other similar capacity upon
the same terms and conditions as obtained by the
Franchisor. The lease shall be collaterally assigned
to the Franchisor as security for the Franchisee's
timely performance of all obligations under this
Agreement; the Franchisee shall obtain the lessor's
consent to such collateral assignment. The Franchisee
shall deliver a copy of the signed lease for the
Franchised Location to the Franchisor within 15 days
of its execution. The Franchisee acknowledges that
approval of a lease for the Franchised Location by the
Franchisor does not constitute a recommendation,
endorsement or guarantee by the Franchisor of the
suitability or profitability of the location or the
lease and the Franchisee should take all steps
necessary to ascertain whether such location and lease
are acceptable to the Franchisee.
5.3. Conversion and Design. The Franchisee
acknowledges that the layout, design, decoration and
color scheme of PAK MAIL Centers are an integral part
of the Franchisor's proprietary System and
accordingly, the Franchisee shall convert, design and
decorate the Franchised Location in accordance with
the Franchisor's plans and specifications and with the
assistance of contractors and suppliers designated by
or otherwise approved by the Franchisor. The
Franchisee shall obtain the Franchisor's written
consent to any conversion, design or decoration of the
premises before remodeling or decorating begins,
recognizing that any related costs are the ▇▇▇▇-
chisee's sole responsibility. It shall be the
Franchisee's responsibility to have prepared all
required construction plans and specifications to suit
the shape and dimensions of the Franchised Location
and to insure compliance with applicable laws and the
lease.
5.4. Signs. The Franchisee shall purchase or
otherwise obtain for use at the Franchised Location
and in connection with the PAK MAIL Center signs which
comply with the standards and specifications of the
Franchisor as set forth in the Operations Manual, as
that term is defined in Section 8.1. It is the
Franchisee's sole responsibility to insure that any
signs comply with applicable local ordinances, mall
regulations, building codes and zoning regulations.
Any modifications to the Franchisor's standards and
specifications for signs which must be made due to
local ordinances, codes or regulations shall be
submitted to the Franchisor for prior written
approval. The Franchisee acknowledges the Marks, or
any other name, symbol or identifying marks on any
signs shall only be used in accordance with the
Franchisor's standards and specifications and only
with the prior written approval of the Franchisor.
5.5. Equipment. The Franchisee shall purchase
or otherwise obtain for use at the Franchised Location
equipment of a type and in an amount which complies
with the standards and specifications of the
Franchisor. The Franchisee acknowledges that the
type, quality, configuration, capability and/or
performance of the equipment are all standards and
specifications which are a part of the System and
therefore such equipment must be purchased, leased, or
otherwise obtained in accordance with the Franchisor's
standards and specifications and only from sources
approved by the Franchisor. The Franchisee shall
equip the Center with point-of-sale systems, computer
hardware and software, copiers, facsimile machines and
mailboxes and other designated equipment as is
consistent with the standards and specifications of
the Franchisor.
5.6. Permits and Licenses. The Franchisee
agrees to obtain all such permits and certifications
as may be required for the lawful construction and
operation of the PAK MAIL Center together with all
certifications from government authorities having
jurisdiction over the site that all requirements for
construction and operation have been met, including
without limitation, zoning, access, sign, health,
safety requirements, building and other required
construction permits, licenses to do business and
fictitious name registrations, sales tax permits,
health and sanitation permits and ratings and fire
clearances. The Franchisee agrees to obtain all
customary contractors' sworn statements and partial
and final lien waivers for construction, remodeling,
decorating and installation of equipment at the
Franchised Location. Copies of all subsequent
inspection reports, warnings, certificates and ratings
issued by any governmental entity during the term of
this Agreement in connection with the conduct of the
PAK MAIL Center which indicates the Franchisee's
failure to meet or maintain the highest governmental
standards, or less than full compliance by the
Franchisee with any applicable law, rule or
regulation, shall be forwarded to the Franchisor
within five days of the Franchisee's receipt thereof.
5.7. Commencement of Operations. Unless
otherwise agreed to in writing by the Franchisor and
the Franchisee, the Franchisee has 180 days from the
date of this Agreement within which to: (1) secure
all necessary financing for the Center; (2) complete
the initial training program described in Section 6.1
of this Agreement; (3) select, lease and develop the
Franchised Location; (4) purchase an opening inventory
of materials and supplies; (5) obtain and provide
evidence of insurance as described in Section 21.1
below; and (6) commence operation of the PAK MAIL
Center. The Franchisor will extend the time in which
the Franchisee has to commence operations for a
reasonable period of time in the event factors beyond
the Franchisee's reasonable control prevent the
Franchisee from meeting this development schedule, so
long as the Franchisee has made reasonable and
continuing efforts to comply with such development
obligations and the Franchisee requests, in writing,
an extension of time in which to have its PAK MAIL
Center established before such development period
lapses. The Franchisee shall obtain the Franchisor's
approval prior to opening the Center for business.
6. TRAINING
6.1. Initial Training Program. The Franchisee
or, if the Franchisee is not an individual, the person
designated by the Franchisee to assume primary
responsibility for the management of the PAK MAIL
Center ("Principal Operator"), is required to attend
and successfully complete the initial training program
which is offered by the Franchisor at one of the
Franchisor's designated training facilities. Up to
two individuals are eligible to participate in the
Franchisor's initial training program without charge
of a tuition or fee. The Franchisee shall be
responsible for any and all traveling and living
expenses incurred in connection with attendance at the
training program. At least one individual must
successfully complete the initial training program
prior to the Franchisee's commencement of operation of
its PAK MAIL Center.
6.2. Length of Training. The initial training
program shall consist of a total of 12 days, nine of
which shall be classroom instruction at a location
designated by the Franchisor and three of which shall
be on-site at the Franchised Location at or around the
time the Center opens for business. The Franchisee,
and if applicable, the Principal Operator, shall
attend the on-site training at the Franchised
Location. The Franchisor reserves the right to waive
a portion of the training program or alter the
training schedule, if in the Franchisor's sole
discretion, the Franchisee or Principal Operator has
sufficient prior experience or training.
6.3. Additional Training. From time to time,
the Franchisor may present seminars, conventions or
continuing development programs or conduct meetings
for the benefit of the Franchisee. The Franchisee or
its Principal Operator shall be required to attend any
ongoing mandatory seminars, conventions, programs or
meetings as may be offered by the Franchisor. The
Franchisor shall give the Franchisee at least 30 days
prior written notice of any ongoing seminar,
convention or program which is deemed mandatory. The
Franchisor shall not require that the Franchisee
attend any ongoing training more often than once a
year. All mandatory training will be offered without
charge of a tuition or fee; provided, however, the
Franchisee will be responsible for all traveling and
living expenses which are associated with attendance
at the same.
7. DEVELOPMENT ASSISTANCE
7.1. Franchisor's Development Assistance. The
Franchisor shall provide the Franchisee with
assistance in the initial establishment of the PAK
MAIL Center as follows:
a. Provision of the initial training program
to be conducted at the Franchisor's designated
training facilities or at another location
designated by the Franchisor, as described in
Article 6 above.
b. Provision of written specifications for a
Franchised Location which shall include, without
limitation, specifications for space
requirements, build out and the demographics and
character of the surrounding market area. The
Franchisee acknowledges that the Franchisor shall
have no other obligation to provide assistance in
the selection and approval of a Franchised
Location other than the provision of such written
specifications and approval or disapproval of a
proposed Franchised Location, which approval or
disapproval shall be based on information
submitted to the Franchisor in a form sufficient
to assess the proposed location as may be
reasonably required by the Franchisor.
c. Directives regarding the required
conversion, design and decoration of the PAK MAIL
Center premises, plus specifications concerning
signs, decor, color, equipment, machines,
uniforms and equipment.
d. Information regarding the selection of
suppliers of equipment, items and materials used
and inventory and services offered for sale in
connection with the PAK MAIL Center. After
execution of this Agreement, the Franchisor will
provide the Franchisee with a list of approved
suppliers, if any, of such equipment, items,
materials, inventory and services and, if
available, a description of any national or
central purchase and supply agreements offered by
such approved suppliers for the benefit of PAK
MAIL franchisees.
e. Provision of an operations manual in
accordance with Section 8.1 below.
f. The Franchisor will make available to the
Franchisee at or around the commencement of
operations of the Franchisee's PAK MAIL Center a
representative to be present for three days
during the initial operation of the Franchisee's
PAK MAIL Center. The representative will assist
the Franchisee's employees in the initial
operation of the Center at a time scheduled by
the Franchisor, unless in the Franchisor's
determination, the Franchisee or the Principal
Operator have had sufficient prior training or
experience.
g. The Franchisor will grant the Franchisee
a non-exclusive, non-transferable license to use
certain proprietary computer programs and related
materials developed for use in the operation of
Pak Mail Centers ("Program") in accordance with
the terms of the Franchisor's standard Software
License Agreement ("Software License Agreement").
The Franchisee will use the Program in accordance
with the terms of the Software License Agreement,
including using certain computer equipment
designated by the Franchisor as meeting its
specifications ("Designated Equipment").
8. OPERATIONS MANUAL
8.1. Operations Manual. The Franchisor agrees
to provide to the Franchisee one or more manuals,
technical bulletins, or other written materials
(collectively referred to as "Operations Manual")
covering certain standards and specifications for
packaging, shipping, crating, freight forwarding,
mailing and communications services and other
operating and marketing techniques for the PAK MAIL
Center. The Franchisee agrees that it shall comply
with the Operations Manual as an essential aspect of
its obligations under this Agreement and failure by
the Franchisee to substantially comply with the
Operations Manual may be considered by the Franchisor
to be a breach of this Agreement.
8.2. Confidentiality of Operations Manual
Contents. The Franchisee agrees to use the Marks and
System only as specified in the Operations Manual.
The Operations Manual is the sole property of the
Franchisor and shall be used by the Franchisee only
during the term of this Agreement and in strict
accordance with the terms and conditions hereof. The
Franchisee shall not duplicate the Operations Manual
nor disclose its contents to persons other than its
employees or officers who have signed a
confidentiality and noncompetition agreement in a form
approved by the Franchisor. The Franchisee shall
return the Operations Manual to the Franchisor upon
the expiration, termination or assignment of this
Agreement.
8.3. Changes to Operations Manual. The
Franchisor reserves the right to revise the Operations
Manual from time to time as it deems necessary to
update or change operating and marketing techniques or
standards and specifications. The Franchisee, upon
receipt of any updated information, shall update its
copy of the Operations Manual as instructed by the
Franchisor and shall conform its operations with the
updated provisions within a reasonable time
thereafter. The Franchisee acknowledges that a master
copy of the Operations Manual maintained by the
Franchisor at its principal office shall be
controlling in the event of a dispute relative to the
content of any Operations Manual.
9. OPERATING ASSISTANCE
9.1. Franchisor's Services. The Franchisor
agrees that, during the Franchisee's operation of the
PAK MAIL Center, the Franchisor shall make available
to the Franchisee the following services:
a. Upon the reasonable request of the
Franchisee, consultation by telephone, facsimile
or electronic mail, regarding the continued
operation and management of a PAK MAIL Center and
advice regarding the packaging and shipping
services, quality control, inventory issues,
customer and supplier relations issues and
similar advice.
b. Access to advertising and promotional
materials as may be developed by the Franchisor,
the cost of which may be passed on to the
Franchisee, at the Franchisor's option.
c. On-going updates of information and
programs regarding the packaging and shipping
industry, the competition, the PAK MAIL concept
and the System, including, without limitation,
information about special or new products which
may be developed and made available to PAK MAIL
franchisees as a part of the System.
d. The Franchisor shall make the initial
training program available to replacement or
additional Principal Operators during the term of
this Agreement. The Franchisee shall be
responsible for all travel and living expenses
incurred by its personnel during the training
program. The availability of the training
programs shall be subject to space considerations
and prior commitments to new PAK MAIL franchi-
sees.
9.2. Additional Franchisor Services. Although
not obligated to do so, the Franchisor may make its
employees or designated agents available to the
Franchisee for on-site advice and assistance in
connection with the on-going operation of the PAK MAIL
Center governed by this Agreement.
10. FRANCHISEE'S OPERATIONAL COVENANTS
10.1. Business Operations. The Franchisee
acknowledges that it is solely responsible for the
successful operation of its PAK MAIL Center and that
the continued successful operation thereof is, in
part, dependent upon the Franchisee's compliance with
this Agreement and the Operations Manual. In addition
to all other obligations contained in this Agreement
and in the Operations Manual, the Franchisee covenants
that:
a. The Franchisee shall maintain clean,
efficient and high quality PAK MAIL Center
operations and shall operate the business in
accordance with the Operations Manual and in such
a manner as not to detract from or adversely
reflect upon the name and reputation of the
Franchisor and the goodwill associated with the
PAK MAIL name and Marks.
b. The Franchisee will conduct itself and
operate its PAK MAIL Center in compliance with
all applicable laws, health department
regulations and other ordinances and in such a
manner so as to promote a good public image in
the business community. In connection therewith,
the Franchisee will be solely and fully
responsible for obtaining any and all licenses to
carry on business at the PAK MAIL Center.
c. The Franchisee acknowledges that proper
management of the PAK MAIL Center is important
and shall insure that the Franchisee or a
designated Principal Operator who has completed
the Franchisor's initial training program be
responsible for the management of the PAK MAIL
Center.
d. The Franchisee shall offer only products
and services through its Center which meet or
exceed the minimum standards and specifications
established by the Franchisor more fully
described in the Operations Manual. The
Franchisee shall offer all types of products and
services as from time to time may be prescribed
by the Franchisor and shall refrain from offering
any other types of products or services, or
operating or engaging in any other type of
business or profession, from or through the PAK
MAIL Center.
e. The Franchisee will pay on a timely basis
all amounts due and owing to the Franchisor
pursuant to any separate agreements between the
Franchisee and the Franchisor and all amounts due
and owing by the Franchisee to all third parties,
including national vendors and taxing
authorities, with whom the Franchisee does
business at or through the Center. In connection
with any amounts due and owing by the Franchisee
to third parties, the Franchisee expressly
acknowledges that a default by the Franchisee
with respect to such indebtedness may be
considered a default hereunder and the Franchisor
may avail itself of all remedies provided for
herein in the event of default.
f. The Franchisee shall comply with all
agreements with third parties related to the PAK
MAIL Center including, in particular, all
provisions of any premises lease and the Software
License Agreement.
g. The Franchisee and all employees of the
Franchisee shall present a professional
appearance, as described in the Operations
Manual, and shall render competent and courteous
service to customers of the PAK MAIL Center while
working at the Franchised Location. The
Franchisee is required, at the Franchisee's
expense, to purchase specified wearing apparel
from suppliers approved by the Franchisor. All
Principal Operators, employees of the Franchisee,
the Franchisee and its owners, shall wear the
specified uniform at all times while working at
the Franchised Location. The Franchisor has the
right, in its sole and absolute discretion, to
change or modify such dress code guidelines.
h. The Franchisee agrees to renovate,
refurbish, remodel or replace, at its own
expense, the real and personal property and
equipment used in the operation of the PAK MAIL
Center, when reasonably required by the
Franchisor in order to comply with the image,
standards of operation and performance capability
established by the Franchisor from time to time.
If the Franchisor changes its image or standards
of operation, it shall give the Franchisee a
reasonable period of time within which to comply
with such changes.
i. The Franchisee shall be responsible for
training all of its employees who work in any
capacity in the PAK MAIL Center and shall be
fully responsible for all employees' compliance
with the operational standards which are part of
the System. The Franchisee must conduct its
employee training in the manner and according to
the standards as prescribed in the Operations
Manual. Any employee who does not satisfactorily
complete the training shall not work in any
capacity in the Franchisee's PAK MAIL Center.
j. The Franchisee shall at all times during
the term of this Agreement own and control the
PAK MAIL Center authorized hereunder. Upon
request of the Franchisor, the Franchisee shall
promptly provide satisfactory proof of such
ownership to the Franchisor. The Franchisee
represents that the Statement of Ownership,
attached hereto as Exhibit III and by this
reference incorporated herein, is true, complete,
accurate and not misleading, and, in accordance
with the information contained in the Statement
of Ownership, the controlling ownership of the
PAK MAIL Center is held by the Franchisee. The
Franchisee shall promptly provide the Franchisor
with a written notification if the information
contained in the Statement of Ownership changes
at any time during the term of this Agreement and
shall comply with the applicable transfer
provisions contained in Article 16 herein. In
addition, if the Franchisee is an entity, all of
the owners of the Franchisee shall sign the
Personal Guaranty attached hereto as Exhibit II.
k. The Franchisee shall at all times during
the term of this Agreement keep its PAK MAIL
Center open during the business hours as may be
designated by the Franchisor from time to time in
the Operations Manual and shall maintain
sufficient supplies of products and employ
adequate personnel at all times so as to operate
the Center at its maximum capacity and
efficiency.
11. ROYALTIES
11.1. Monthly Royalty. The Franchisee agrees
to pay to the Franchisor a monthly royalty ("Royalty")
equal to 5% of the total amount of its "Gross
Revenues" (defined in Section 11.2 below) for the
first $200,000 of the Center's Gross Revenues, 4 1/2% for
the next $50,000 of the Center's Gross Revenues, 4%
for the next $50,000 of the Center's Gross Revenues,
3 1/2% for the next $50,000 of the Center's Gross
Revenues, and 3% for all subsequent Gross Revenues of
the Center received in that calendar year.
11.2. Gross Revenues. "Gross Revenues" shall
mean and include the aggregate amount of all sales of
services, products or merchandise of every kind or
nature performed, sold from, at or in connection with
the operation of the Center or arising out of the
operation or conduct of business by the Center,
including sales made at or away from the Center,
whether for cash or credit, but excluding all:
(i) federal, state or municipal sales or service taxes
collected from customers and paid to the appropriate
taxing authority; (ii) income generated from the sale
of postage stamps; (iii) key deposits; and (iv) other
exclusions as may be authorized in writing by the
Franchisor.
11.3. Royalty Payments. Royalty payments shall
be made monthly and sent to the Franchisor, postmarked
or otherwise transmitted no later than the 10th day of
each month based on Gross Revenues for the immediately
preceding month. Royalty payments shall be
accompanied by monthly reports, as more fully
described in Article 15 hereof, on standard
transmittal forms containing information regarding the
Franchisee's Gross Revenues and such additional
information as may be requested by the Franchisor.
The Franchisor reserves the right to require Royalty
payments be made on a weekly or bi-weekly basis if the
Franchisee does not timely or fully submit the
required payments or reports. The Franchisor shall
have the right to verify such Royalty payments from
time to time as it deems necessary, in any reasonable
manner. In the event that the Franchisee fails to pay
any Royalties when they are due, the Franchisee shall,
in addition to such Royalties, owe interest after the
due date at the highest applicable legal rate for open
account business credit, not to exceed 1 1/2% per month.
The Franchisee acknowledges that this Section 11.3
shall not constitute the Franchisor's or its
affiliates' agreement to accept such payments after
they are due or a commitment to extend credit to or
otherwise finance operation of the Center. The
Franchisor reserves the right to automatically assess
a $50 late charge for any report and/or financial
statement required under Section 10 below which is not
timely filed by the Franchisee. Such late charge
shall continue to accrue each month that said
report(s) and financial statement(s) remain unfiled,
and shall be due and payable in full upon demand by
the Franchisor. In the event such late charge(s)
is/are not paid upon demand, the Franchisor may elect
to pursue its remedies as further set forth in this
Agreement. In no event shall the Franchisee be
required to pay a late payment and/or interest at a
rate greater than the maximum interest rate permitted
by applicable law.
11.4. Application of Payments. Notwithstanding
any designation by the Franchisee, the Franchisor
shall have sole discretion to apply any payments by
the Franchisee, and any credits received by the
Franchisor on the Franchisee's behalf from third party
vendors, to any of Franchisee's past due indebtedness
to Franchisor for Royalties, Advertising Contribu-
tions, purchases from the Franchisor or its affili-
ates, interest or any other indebtedness.
12. ADVERTISING
12.1. Approval of Advertising. The Franchisee
shall obtain the Franchisor's prior written approval
of all written advertising or other marketing or
promotional programs regarding the PAK MAIL Center,
including, without limitation, "Yellow Pages"
advertising, newspaper ads, flyers, brochures,
coupons, direct mail pieces, specialty and novelty
items and radio and television advertising. The
Franchisee shall also obtain the Franchisor's prior
written approval before using any promotional
materials as may be provided by vendors. The proposed
written advertising or a description of the marketing
or promotional program shall be submitted to the
Franchisor at least 30 days prior to publication,
broadcast or use. The Franchisee acknowledges that
advertising and promoting the PAK MAIL Center in
accordance with the Franchisor's standards and
specifications is an essential aspect of the System,
and the Franchisee agrees to comply with all
advertising standards and specifications. The
Franchisee shall display all required promotional
materials, signs, point of purchase displays and other
marketing materials in its PAK MAIL Center and in the
manner prescribed by the Franchisor.
12.2. Marketing Material Beginning Inventory.
If this Agreement governs the first Center to be
opened and operated by the Franchisee, then the
Franchisee shall pay to the Franchisor and other
suppliers a nonrefundable, nonrecurring fee for
marketing material beginning inventory ("Marketing
Material Beginning Inventory") in an amount between
$571 and $890 for Franchisor's provision of a
beginning inventory of marketing material for the
Franchisee's PAK MAIL Center. The exact amount
payable for the Marketing Material Beginning Inventory
fee shall be determined by the Franchisee. All or a
part of that amount will be due and payable to the
Franchisor and other suppliers by the Franchisee on or
before the Franchisee's commencement of the initial
training program. The Marketing Material Beginning
Inventory will be provided by the Franchisor and other
suppliers at or around the opening of the Franchisee's
Center.
12.3. Advertising Contribution. The Franchisee
shall contribute to an advertising fund established by
the Franchisor ("Advertising Fund") a fee 2% of the
total amount of the Franchisee's Gross Revenues
("Advertising Contribution"). The Advertising
Contribution shall be paid to the Franchisor in
addition to Royalties and the following terms and
conditions shall apply:
a. The Advertising Contribution shall be
payable concurrently with the payment of the
Royalties, mailed to the Franchisor, postmarked
or otherwise transmitted no later than the 10th
day of each month, for the Advertising
Contribution based on the Gross Revenues of the
immediately preceding month.
b. The Advertising Contributions will be
subject to the same late charges as the
Royalties, in an amount and manner set forth in
Section 11.3 above.
c. Upon the request of the Franchisee, the
Franchisor will make available to the Franchisee,
no later than 30 days after the end of each
fiscal quarter, an unaudited financial statement
which indicates how the Advertising Fund has been
spent.
d. The Franchisor shall direct all
advertising and marketing programs financed by
the Advertising Fund, with sole discretion over
the creative concepts, materials and endorsements
used therein, geographic, market and media
placement and allocation, and the administration
thereof. The Franchisee agrees that the
Advertising Fund may be used to pay the costs of
preparing and producing video and audio and
written advertising materials; administering
multi-regional advertising programs, including,
without limitation, purchasing direct mail and
other media advertising and employing advertising
agencies and staff to assist therewith; and
supporting public relations, market research and
other advertising and marketing activities.
e. The Advertising Fund shall be accounted
for separately from the Franchisor's other funds
and shall not be used to defray any of the
Franchisor's general operating expenses, except
for such reasonable administrative costs,
salaries and overhead as the Franchisor may incur
in activities related to the administration of
the Advertising Fund and its marketing programs,
including, without limitation, conducting market
research, preparing material, incurring related
accounting and legal expenses, collecting and
accounting for Advertising Fund contributions and
all costs and expenses related to the Franchise
System Advisory Council. The Franchisor may
spend in any fiscal year an amount greater or
less than the aggregate contribution of all PAK
MAIL Centers to the Advertising Fund in that year
and the Advertising Fund may borrow from the
Franchisor or other lenders to cover deficits or
cause the Advertising Fund to invest any surplus
for future use. All interest earned on monies
contributed to the Advertising Fund will be first
used to pay costs. The Advertising Fund may be
incorporated or operated through an entity
separate from the Franchisor at such time as the
Franchisor deems appropriate, and such successor
entity shall have all rights and duties of the
Franchisor pursuant to this Section 12.3.
f. The Franchisee understands and
acknowledges that the Advertising Fund is
intended to maximize recognition of the Marks and
patronage of PAK MAIL Centers. Although the
Franchisor will endeavor to utilize the
Advertising Fund to develop advertising and
marketing materials and programs and to place
advertising that will benefit all PAK MAIL
Centers, the Franchisor undertakes no obligation
to ensure that expenditures by the Advertising
Fund in or affecting any geographic area are
proportionate or equivalent to the contributions
by PAK MAIL Centers operating in that geographic
area or that any PAK MAIL Center will benefit
directly or in proportion to its contribution
from the development of advertising and marketing
materials or the placement of advertising.
Except as expressly provided in this Section
12.3, the Franchisor assumes no direct or
indirect liability or obligation to the
Franchisee with respect to the maintenance,
direction or administration of the Advertising
Fund.
g. The Franchisor reserves the right to
terminate the Advertising Fund, upon 30 days'
written notice to the Franchisee. All unspent
monies on the date of termination shall be
distributed to the Franchisor's franchisees in
proportion to their respective contributions to
the Advertising Fund during the preceding 12
month period. The Franchisor shall have the
right to reinstate the Advertising Fund upon the
same terms and conditions set forth herein upon
30 days' prior written notice to the Franchisee.
12.4. Regional Advertising Programs. The
Franchisor reserves the right, upon 30 days prior
written notice to the Franchisee, to create a regional
advertising association ("Association") for the
benefit of PAK MAIL franchisees located within a
particular geographic area. If an Association is
established for the area where the Franchisee is
located, the Franchisee will be required to
participate in the Association for the purpose of
selecting and participating in regional marketing and
promotion programs for PAK MAIL Centers. The
Franchisor, in its sole discretion, will contribute up
to one-half of the Advertising Fund payments received
by the Franchisor from franchisees in the Association
for such marketing and advertising programs. The
Franchisee will be required to remain a member of and
be bound by the decisions of the majority of the
members of the Association regarding expenditures,
assessments and dues of the Association, to the extent
that they are approved by the Franchisor. Each
Association has the right, by majority vote, to
require its members to pay additional monthly dues to
the Association. The failure of the Franchisee to
participate in the Association or pay any dues
required by the Association, may, at the option of the
Franchisor, be deemed to be a breach of this
Agreement. The Franchisor has the right, in its sole
discretion, to determine the composition of all
geographic territories and market areas for the
implementation of such regional advertising and
promotion campaigns and to require that the Franchisee
participate in such regional advertising programs as
and when they may be established by the Franchisor.
If a regional advertising program is implemented on
behalf of a particular region by the Franchisor, the
Franchisor, to the extent reasonably calculable, will
only use contributions from PAK MAIL franchisees
within such region for the particular regional
advertising program. The Franchisor also reserves the
right to establish an advertising cooperative for a
particular region to enable the cooperative to self-
administer the regional advertising program.
13. QUALITY CONTROL
13.1. Compliance with Operations Manual. The
Franchisee agrees to maintain and operate the PAK MAIL
Center in compliance with this Agreement and the
standards and specifications contained in the
Operations Manual, as the same may be modified from
time to time by the Franchisor.
13.2. Standards and Specifications. The
Franchisor will make available to the Franchisee
standards and specifications for products and services
offered at or through the PAK MAIL Center and for
decor, displays, uniforms, materials, forms, items,
supplies and services used in connection with the
Center. The Franchisor reserves the right to change
standards and specifications for services and products
offered at or through the PAK MAIL Center and for the
decor, displays, uniforms, materials, forms, items,
supplies and services used in connection with the
Center, upon 30 days prior written notice to the
Franchisee. The Franchisee shall, throughout the term
of this Agreement, remain in compliance and strictly
adhere to all of the Franchisor's current standards
and specifications for the PAK MAIL Center as
prescribed from time to time.
13.3. Inspections. The Franchisor shall have
the right to examine the Franchised Location,
including the inventory, products, equipment,
materials, supplies or services used or sold there, to
ensure compliance with all standards and
specifications set by the Franchisor. The Franchisor
shall conduct such inspections during regular business
hours and the Franchisee may be present at such
inspections. The Franchisor, however, reserves the
right to conduct the inspections without prior notice
to the Franchisee.
13.4. Restrictions on Services and
Products. The Franchisee is prohibited from offering
or selling any products or services not authorized by
Franchisor as being a part of the System. However, if
the Franchisee proposes to offer, conduct or utilize
any products, services, materials, forms, items,
supplies or services for use in connection with or
sale through the PAK MAIL Center which are not
previously approved by the Franchisor as meeting its
specifications, the Franchisee shall first notify the
Franchisor in writing requesting approval. The
Franchisor may, in its sole discretion, for any reason
whatsoever, elect to withhold such approval; however,
in order to make such determination, the Franchisor
may require submission of specifications, information,
or samples of such products, services, materials,
forms, items or supplies. The Franchisor will advise
the Franchisee within a reasonable time whether such
products, services, materials, forms, items or
supplies meet its specifications.
13.5. Approved Suppliers. The Franchisee shall
purchase all products, services, supplies and
materials required for the operation of the PAK MAIL
Center from suppliers designated or approved by the
Franchisor or, if there is no designated or approved
supplier for a particular product, service, supply or
material, from such other suppliers who meet all of
the Franchisor's specifications and standards as to
quality, composition, finish, appearance and service,
and who shall adequately demonstrate their capacity
and facilities to supply the Franchisee's needs in the
quantities, at the times, and with the reliability
requisite to an efficient operation of the PAK MAIL
Center.
13.6. Request to Approve Supplier. In the
event the Franchisee desires to purchase or use
products, services, supplies or materials from
suppliers other than those previously approved by the
Franchisor, the Franchisee shall, prior to purchasing
from or otherwise utilizing any supplier give the
Franchisor a written request to approve the supplier.
In the event the Franchisor rejects the Franchisee's
requested new supplier, the Franchisor must, within 60
days of the receipt of the Franchisee's request to
approve the supplier notify the Franchisee in writing
of its rejection. The Franchisor may continue from
time to time to inspect any suppliers' facilities and
products to assure compliance with the Franchisor's
standards and specifications. Permission for such
inspection shall be a condition of the continued
approval of such supplier. The Franchisor may at its
sole discretion, for any reason whatsoever, elect to
withhold approval of the supplier; however, in order
to make such determination, the Franchisor may require
that samples from a proposed new supplier be delivered
to the Franchisor for testing prior to approval and
use. A charge not to exceed the actual cost of the
test may be made by the Franchisor and shall be paid
by the Franchisee.
13.7. Shopping Service. The Franchisor
reserves the right to use third party shopping
services from time to time to evaluate the conduct of
the Franchisee's PAK MAIL Center, including such
things as customer service, cleanliness, merchandising
and proper use of registers. Franchisor may use such
shopping services to inspect the Franchisee's PAK MAIL
Center at any time at the Franchisor's expense,
without prior notification to the Franchisee. The
Franchisor may make the results of any such service
evaluation available to the Franchisee, in the
Franchisor's sole discretion.
14. MARKS, TRADE NAMES AND PROPRIETARY INTERESTS
14.1. Marks. The Franchisee acknowledges that
the Franchisor has the sole right to own, license and
control the Franchisee's use of the PAK MAIL service
▇▇▇▇ and other of the Marks, and that such Marks shall
remain under the sole and exclusive ownership and
control of the Franchisor. The Franchisee
acknowledges that it has not acquired any right, title
or interest in such Marks except for the right to use
such marks in the operation of its PAK MAIL Center as
it is governed by this Agreement.
14.2. No Use of Other Marks. The Franchisee
agrees that no service ▇▇▇▇ other than "PAK MAIL" or
such other Marks as may be specified by the Franchisor
shall be used in the identification, marketing,
promotion or operation of the PAK MAIL Center.
14.3. System. The Franchisee acknowledges that
the Franchisor owns and controls the distinctive plan
for the establishment, operation and promotion of the
PAK MAIL Center and all related licensed methods of
doing business, previously defined as the "System",
which include, but are not limited to, methods for
shipping, crating, freight forwarding, mailing,
communications, inventory type and control, technical
equipment standards, customer relations, marketing
techniques, written promotional materials,
advertising, and accounting systems, all of which
constitute confidential trade secrets of the
Franchisor, and the Franchisee acknowledges that the
Franchisor has valuable rights in and to such trade
secrets. The Franchisee further acknowledges that it
has not acquired any right, title or interest in the
System except for the right to use the System in the
operation of the PAK MAIL Center as it is governed by
this Agreement and that it is obligated to maintain
the confidentiality of the System in accordance with
Section 20.3 below.
14.4. ▇▇▇▇ Infringement. The Franchisee agrees
to notify the Franchisor in writing of any possible
infringement or illegal use by others of a trademark
the same as or confusingly similar to the Marks which
may come to its attention. The Franchisee
acknowledges that the Franchisor shall have the right,
in its sole discretion, to determine whether any
action will be taken on account of any possible
infringement or illegal use. The Franchisor may
commence or prosecute such action in the Franchisor's
own name and may join the Franchisee as a party to the
action if the Franchisor determines it to be
reasonably necessary for the continued protection and
quality control of the Marks and System. The
Franchisor shall bear the reasonable cost of any such
action, including attorneys' fees. The Franchisee
agrees to fully cooperate with the Franchisor in any
such litigation.
14.5. Franchisee's Business Name. The
Franchisee acknowledges that the Franchisor has a
prior and superior claim to the "PAK MAIL" trade name.
The Franchisee shall not use the words "PAK MAIL" in
the legal name of its corporation, partnership or any
other business entity used in conducting the business
provided for in this Agreement. The Franchisee also
agrees not to register or attempt to register a trade
name using the word "PAK MAIL" in the Franchisee's
name or that of any other person or business entity,
without prior written consent of the Franchisor. The
Franchisee shall not identify itself as being "Pak
Mail Centers of America, Inc." or as being associated
with the Franchisor in any manner other than as a
franchisee or licensee. The Franchisee further agrees
that in all advertising and promotion and promotional
materials it will display its business name only in
obvious conjunction with the phrase "PAK MAIL
Licensee" or "PAK MAIL Franchisee" or with such other
words and in such other phrases to identify itself as
an independent owner of the PAK MAIL Center, as may
from time to time be prescribed in the Operations
Manual.
14.6. Change of Marks. In the event that the
Franchisor, in its sole discretion, shall determine it
necessary to modify or discontinue use of any
proprietary Marks, or to develop additional or
substitute marks, the Franchisee shall, within a
reasonable time after receipt of written notice of
such a modification or discontinuation from the
Franchisor, take such action, at the Franchisee's sole
expense, as may be necessary to comply with such
modification, discontinuation, addition or
substitution.
15. REPORTS, RECORDS AND FINANCIAL STATEMENTS
15.1. Franchisee Reports. The Franchisee shall
establish and maintain, at its own expense,
bookkeeping, accounting and data processing systems
which conform to the specifications which the
Franchisor may prescribe from time to time (including,
without limitation, requirements for timely entry of
information into data bases of the Program, periodic
printouts of reports generated by the Program and the
Franchisor's access to all Program data by modem).
Each transaction of the Center shall be processed on
the Program in the manner prescribed by the
Franchisor. The Franchisor shall have the right of
access to the Program and all data processed thereon
with respect to the Center. The Franchisee shall
provide access to the Franchisor at any time by
installing a modem which meets the Company's standards
and specifications. The Franchisee shall supply to
the Franchisor such types of reports in a manner and
form as the Franchisor may from time to time
reasonably require, including:
a. within 10 days after the end of each
calendar month (or weekly if the Franchisor
requires the Franchisee to pay the Royalty
described in Section 5.B. hereof on a weekly
basis), a report on the Center's Gross Revenues
for such calendar month (or week);
b. within 90 days after the end of the
Franchisee's fiscal year, a balance sheet and
profit and loss statement for the Center for such
year (or monthly or quarterly if required by the
Franchisor, in which case such statements shall
also reflect year-to-date information); and
c. upon request of the Franchisor, within 10
days after such returns are filed, exact copies
of federal and state income, sales and any other
tax returns and such other forms, records, books
and other information as the Franchisor may
periodically require.
The Franchisor reserves the right to require that the
Franchisees submit financial statements on a quarterly
or monthly basis and within such time periods as may
be reasonable under the circumstances. The Franchisor
also reserves the right to disclose data derived from
such reports, without identifying the Franchisee,
except to the extent identification of the Franchisee
is required by law. The Franchisee consents to the
Franchisor obtaining financial and account information
regarding the Center and its operations from third
parties with whom the Franchisee does business, as and
when deemed necessary by the Franchisor.
15.2. Verification. Each report and financial
statement to be submitted to the Franchisor pursuant
to this Agreement shall be signed and verified by the
Franchisee.
15.3. Books and Records. The Franchisee shall
maintain all books and records for its PAK MAIL Center
in accordance with generally accepted accounting
principles, consistently applied, and in a manner as
reasonably prescribed by the Franchisor, and shall
preserve these records for at least five years after
the fiscal year to which they relate.
15.4. Audit of Books and Records. The
Franchisee shall permit the Franchisor to inspect and
audit the books and records of the PAK MAIL Center at
any reasonable time, at the Franchisor's expense. If
any audit discloses a deficiency in amounts for
payments owed to the Franchisor pursuant to this
Agreement, then such amounts shall become immediately
payable to the Franchisor by the Franchisee, with
interest from the date such payments were due at the
lesser of 1 1/2% per month or the maximum rate allowed by
law. In the event such inspection or audit is made
necessary by the Franchisee's failure to furnish
required reports, supporting records or other infor-
mation, or to furnish such information on a timely
basis for two or more consecutive reporting periods,
or if the Franchisee has received advance notice from
the Franchisor and fails to have the books and records
available for such audit or otherwise fails to
cooperate therewith or if an understatement of Gross
Revenues for the period of any audit is determined by
any such audit or inspection to be greater than 5%,
the Franchisee shall reimburse the Franchisor for the
cost of such audit or inspection, including, without
limitation, the charges of attorneys and any
independent accountants and the travel expenses, room
and board and compensation of the Franchisor's
employees.
16. TRANSFER
16.1. Transfer by Franchisee. The franchise
granted herein is personal to the Franchisee and,
except as stated below, the Franchisor shall not allow
or permit any transfer, assignment, subfranchise or
conveyance of this Agreement or any interest
hereunder. As used in this Agreement, the term
"transfer" shall mean and include the voluntary,
involuntary, direct or indirect assignment, sale, gift
or other disposition by the Franchisee (or any of its
owners) of any interest in: (1) this Agreement;
(2) the ownership of the Franchisee; or (3) the Center
or any assets of the Center. An assignment, sale,
gift or other disposition shall include a transfer
resulting from a divorce, insolvency, corporate or
partnership dissolution proceeding or otherwise by
operation of law or, in the event of the death of the
Franchisee, or an owner of the Franchisee by will,
declaration of or transfer in trust or under the laws
of intestate succession.
16.2. Pre-Conditions to Franchisee's Transfer.
The Franchisee shall not transfer its rights under
this Agreement or any interest in it, or any part or
portion of any business entity that owns it or all or
a substantial portion of the assets of the PAK MAIL
Center, unless the Franchisee obtains the Franchisor's
written consent and complies with the following
requirements:
a. Payment of all amounts due and owing
pursuant to this Agreement by the Franchisee to
the Franchisor or its affiliates or to third
parties holding a security interest in any asset
of the franchised business;
b. Agreement by the proposed transferee to
satisfactorily complete the initial training
program described in this Agreement, which
training may be completed by the transferee
either prior to or immediately after assignment
of this Agreement;
c. Execution of a Franchise Agreement in a
form then currently offered by the Franchisor,
which shall supersede this Agreement in all
respects. If a new Franchise Agreement is
signed, the terms thereof may differ from the
terms of this Agreement; provided, however, the
transferee will not be required to pay any
additional initial franchise fee;
d. Provision by the Franchisee of written
notice to the Franchisor 30 days' prior to the
proposed effective date of the transfer, such
notice to contain information reasonably detailed
to enable the Franchisor to evaluate the terms
and conditions of the proposed transfer;
e. The proposed transferee shall have
provided information to the Franchisor sufficient
for the Franchisor to assess the proposed
transferee's business experience, aptitude and
financial qualification, and the Franchisor shall
have ascertained that the proposed transferee
meets such qualifications;
f. Execution by Franchisee of a general
release, in a form satisfactory to the
Franchisor, of any and all claims against the
Franchisor, its affiliates and their respective
officers, directors, employees and agents;
g. Payment by the Franchisee or the proposed
transferee of $2,500; and
h. Agreement by the Franchisee to abide by
the post-termination covenant not to compete set
forth in Section 20.2 below.
16.3. Franchisor's Approval of Transfer. The
Franchisor has 30 days from the date of the written
notice of the proposed transfer to approve or
disapprove in writing, of the Franchisee's proposed
transfer. The Franchisee acknowledges that the
proposed transferee shall be evaluated for approval by
the Franchisor based on the same criteria as is
currently being used to assess new franchisees of the
Franchisor and that such proposed transferee shall be
provided, if appropriate, with such disclosures as may
be required by state or federal law. The Franchisor
shall have the right to approve the material terms and
conditions of the transfer, including, without
limitation, the right to confirm that the price and
terms of payment are not so burdensome as to affect
adversely the transferee's operation of the Center.
If the Franchisee (and/or the transferring owners)
finance any part of the sale price of the transferred
interest, if any, unless waived in writing by the
Franchisor, the Franchisee and/or its owners must
agree that all obligations of the transferee under or
pursuant to any promissory notes, agreements or
security interests reserved by the Franchisee or its
owners in the assets of the Center or the Franchised
Location shall be subordinate to the transferee's
obligations to pay royalty fees, Advertising
Contributions and other amounts due to the Franchisor
and its affiliates and to otherwise comply with this
Agreement. If the Franchisee and the proposed
transferee comply with all conditions for assignment
set forth herein and the Franchisor has not given the
Franchisee notice of its approval or disapproval
within the 30 day period, approval is deemed granted.
16.4. Right of First Refusal. In the event the
Franchisee wishes to transfer its rights under this
Agreement or any interest in it, or any part or
portion of any business entity that owns it, or all or
a substantial portion of the assets of the PAK MAIL
Center, the Franchisee agrees to grant to the
Franchisor a 30 day right of first refusal to purchase
such rights, interest or assets on the same terms and
conditions as are contained in the written offer to
purchase submitted to the Franchisee by the proposed
purchaser; provided, however, the following additional
terms and conditions shall apply:
a. The Franchisee shall notify the
Franchisor of such offer by sending a written
notice to the Franchisor (which notice may be the
same notice as required by Section 16.2(d)
above), enclosing a copy of the written offer
from the proposed purchaser;
b. The 30 day right of first refusal period
will run concurrently with the period in which
the Franchisor has to approve or disapprove the
proposed transferee;
c. Such right of first refusal is effective
for each proposed transfer and any material
change in the terms or conditions of the proposed
transfer shall be deemed a separate offer on
which a new 30 day right of first refusal shall
be given to the Franchisor;
d. If the consideration or manner of payment
offered by a third party is such that the
Franchisor may not reasonably be required to
furnish the same, then the Franchisor may
purchase the interest which is proposed to be
sold for the reasonable cash equivalent. If the
parties cannot agree within a reasonable time on
the cash consideration, an independent appraiser
shall be designated by the Franchisor, whose
determination will be binding upon the parties.
All expenses of the appraiser shall be paid for
equally between the Franchisor and the
Franchisee; and
e. If the Franchisor chooses not to exercise
its right of first refusal, the Franchisee shall
be free to complete the sale, transfer or
assignment, subject to compliance with Sections
16.2 and 16.3 above. Absence of a reply to the
Franchisee's notice of a proposed sale within the
30 day period is deemed a waiver of such right of
first refusal.
16.5. Specific Types of Transfers. The
Franchisee acknowledges that the Franchisor's right to
approve or disapprove of a proposed sale or transfer,
and all other requirements and rights related to such
proposed sale or transfer, as provided for above,
shall apply (1) if the Franchisee is a partnership or
other business association, to the addition or
deletion of a partner or members of the association or
the transfer of any partnership or membership among
existing partners or members; (2) if the Franchisee is
a corporation, to any proposed transfer or assignment
of 25% or more of the stock of the corporate
Franchisee, whether such transfer occurs in a single
transaction or several transactions; and (3) if the
Franchisee is an individual, to the transfer from such
individual or individuals to a corporation controlled
by them, in which case the Franchisor's approval will
be conditioned upon: (i) the continuing personal
guarantee of the individual (or individuals) for the
performance of obligations under this Agreement; (ii)
the issuance and/or transfer of shares which would
affect a change in ownership of 25% or more of the
stock in the corporation being conditioned on the
Franchisor's prior written approval; (iii) a
limitation on the corporation's business activity to
that of operating the PAK MAIL Center and related
activities; and (iv) other reasonable conditions.
With respect to a proposed transfer as described in
subsection (1) and (3) of this Section, the
Franchisor's right of first refusal to purchase, as
set forth above, shall not apply and the Franchisor
will waive any transfer fee chargeable to the
Franchisee for a transfer under these circumstances.
16.6. Assignment by the Franchisor. This
Agreement is fully assignable by the Franchisor and
shall inure to the benefit of any assignee or other
legal successor in interest, and the Franchisor shall
in such event be fully released from the same.
16.7. Franchisee's Death or Disability. Upon
the death or permanent disability of the Franchisee
(or the Franchisee's individual controlling the
Franchisee entity), the executor, administrator,
conservator, guardian or other personal representative
of such person shall transfer the Franchisee's
interest in this Agreement or such interest in the
Franchisee entity to an approved third party. Such
disposition of this Agreement or such interest
(including, without limitation, transfer by bequest or
inheritance) shall be completed within a reasonable
time, not to exceed 120 days from the date of death or
permanent disability, and shall be subject to all
terms and conditions applicable to transfers contained
in this Article 16. Provided, however, that for
purposes of this Section 16.7, there shall be no fee
charged by the Franchisor for the initial training
program offered to the transferee. Failure to
transfer the interest in this Agreement or such
interest in the Franchisee entity within said period
of time shall constitute a breach of this Agreement.
For the purposes hereof, the term "permanent
disability" shall mean a mental or physical
disability, impairment or condition that is reasonably
expected to prevent or actually does prevent the
Franchisee or the owner of a controlling interest in
the Franchisee entity from supervising the management
and operation of the PAK MAIL Center for a period of
120 days from the onset of such disability, impairment
or condition.
17. TERM AND EXPIRATION
17.1. Term. The term of this Agreement is for
a period of 10 years from the date of this Agreement,
unless sooner terminated as provided herein.
17.2. Rights Upon Expiration. At the end of
the initial term hereof the Franchisee shall have the
option to renew its franchise rights for an additional
term, by acquiring successor franchise rights, if the
Franchisor does not exercise its right not to offer a
successor franchise in accordance with Section 17.4
below and if the Franchisee:
a. At least 30 days prior to expiration of
the term, executes the form of Franchise
Agreement then in use by the Franchisor;
b. Has complied with all provisions of this
Agreement during the current term, including the
payment on a timely basis of all Royalties and
other fees due hereunder. "Compliance" shall
mean, at a minimum, that the Franchisee has not
received any written notification from the
Franchisor of breach hereunder more than four
times during the term hereof;
c. Upgrades and/or remodels the PAK MAIL
Center and its operations at the Franchisee's
sole expense (the necessity of which shall be in
the sole discretion of the Franchisor) to conform
with the then current Operations Manual;
d. Executes a general release, in a form
satisfactory to the Franchisor, of any and all
claims against the Franchisor and its affiliates,
and their respective officers, directors,
employees and agents arising out of or relating
to this Agreement; and
e. Pays a successor franchise fee of up to
$5,000.
17.3. Exercise of Option for Successor
Franchise. The Franchisee may exercise its option for
a successor franchise by giving written notice of such
exercise to the Franchisor not later than 180 days
prior to the scheduled expiration of this Agreement.
The Franchisee's successor franchise rights shall
become effective by signing the Franchise Agreement
then currently being offered to new franchisees of the
Franchisor.
17.4. Conditions of Refusal. The Franchisor
shall not be obligated to offer the Franchisee a
successor franchise upon the expiration of this
Agreement if the Franchisee fails to comply with any
of the above conditions of renewal. In such event
(except for failure to execute the then current
Franchise Agreement or pay the successor franchise
fee) the Franchisor shall give notice of expiration at
least 180 days prior to the expiration of the term,
and such notice shall set forth the reasons for such
refusal to offer successor franchise rights. Upon the
expiration of this Agreement, the Franchisee shall
comply with the provisions of Section 18.5 below.
18. DEFAULT AND TERMINATION
18.1. Termination by Franchisee. If the
Franchisee and its owners are in compliance with this
Agreement and the Franchisor fails to comply with this
Agreement and fails to correct such failure within 30
days after written notice of failure to comply is
delivered to the Franchisor, the Franchisee may
terminate this Agreement effective 10 days after
delivery to the Franchisor of notice of termination.
A termination of this Agreement by the Franchisee for
any other reason, or without notice and right to cure,
shall be deemed a termination by the Franchisee
without cause and in no way shall release the
Franchisee from the terms and conditions of this
Agreement.
18.2. Termination by Franchisor - Effective
Upon Notice. The Franchisor shall have the right, at
its option, to terminate this Agreement and all rights
granted the Franchisee hereunder, without affording
the Franchisee any opportunity to cure any default
(subject to any state laws to the contrary, where
state law shall prevail), effective upon receipt of
notice by the Franchisee, addressed as provided in
Section 22.12, upon the occurrence of any of the
following events:
a. Abandonment. If the Franchisee ceases to
operate the PAK MAIL Center or otherwise abandons
the PAK MAIL Center for a period of three
consecutive days, or any shorter period that
indicates an intent by the Franchisee to
discontinue operation of the PAK MAIL Center,
unless and only to the extent that full operation
of the PAK MAIL Center is suspended or terminated
due to fire, flood, earthquake or other similar
causes beyond the Franchisee's control and not
related to the availability of funds to the
Franchisee;
b. Insolvency; Assignments. If the
Franchisee becomes insolvent or is adjudicated a
bankrupt; or any action is taken by the
Franchisee, or by others against the Franchisee
under any insolvency, bankruptcy or
reorganization act, (this provision may not be
enforceable under federal bankruptcy law, 11
U.S.C. SS 101 et seq.), or if the Franchisee
makes an assignment for the benefit of creditors,
or a receiver is appointed by the Franchisee;
c. Unsatisfied Judgments; Levy;
Foreclosure. If any material judgment (or
several judgments which in the aggregate are
material) is obtained against the Franchisee and
remains unsatisfied or of record for 30 days or
longer (unless a supersedeas or other appeal bond
has been filed); or if execution is levied
against the Franchisee's business or any of the
property used in the operation of the PAK MAIL
Center and is not discharged within five days; or
if the real or personal property of the
Franchisee's business shall be sold after levy
thereupon by any sheriff, ▇▇▇▇▇▇▇▇ or constable;
d. Criminal Conviction. If the Franchisee
is convicted of a felony, a crime involving moral
turpitude, or any crime or offense that is
reasonably likely, in the sole opinion of the
Franchisor, to materially and unfavorably affect
the System, Marks, goodwill or reputation
thereof;
e. Failure to Make Payments. If the
Franchisee fails to pay any amounts due the
Franchisor or affiliates, including any amounts
which may be due as a result of any subleases or
lease assignments between the Franchisee and the
Franchisor, within 10 days after receiving notice
that such fees or amounts are overdue;
f. Misuse of Marks. If the Franchisee
misuses or fails to follow the Franchisor's
directions and guidelines concerning use of the
Franchisor's Marks and fails to correct the
misuse or failure within ten days after
notification from the Franchisor;
g. Unauthorized Disclosure. If the
Franchisee intentionally or negligently discloses
to any unauthorized person the contents of or any
part of the Franchisor's Operations Manual or any
other trade secrets or confidential information
of the Franchisor;
h. Repeated Noncompliance. If the
Franchisee has received two previous notices of
default from the Franchisor and is again in
default of this Agreement within a 12 month
period, regardless of whether the previous
defaults were cured by the Franchisee; or
i. Unauthorized Transfer. If the Franchisee
sells, transfers or otherwise assigns the
Franchise, an interest in the Franchise or the
Franchisee entity, this Agreement, the PAK MAIL
Center or a substantial portion of the assets of
the PAK MAIL Center owned by the Franchisee
without complying with the provisions of Article
16 above.
18.3. Termination by Franchisor - Thirty Days
Notice. The Franchisor shall have the right to
terminate this Agreement (subject to any state laws to
the contrary, where state law shall prevail),
effective upon 30 days written notice to the
Franchisee, if the Franchisee breaches any other
provision of this Agreement and fails to cure the
default during such 30 day period. In that event,
this Agreement will terminate without further notice
to the Franchisee, effective upon expiration of the 30
day period. Defaults shall include, but not be
limited to, the following:
a. Failure to Maintain Standards. The
Franchisee fails to maintain the then current
operating procedures and adhere to the
specifications and standards established by the
Franchisor as set forth herein or in the
Operations Manual or otherwise communicated to
the Franchisee;
b. Deceptive Practices. The Franchisee
engages in any unauthorized business or practice
or sells any unauthorized product or service
under the Franchisor's Marks or under a name or
▇▇▇▇ which is confusingly similar to the
Franchisor's Marks;
c. Failure to Obtain Consent. The
Franchisee fails, refuses or neglects to obtain
the Franchisor's prior written approval or
consent as required by this Agreement;
d. Failure to Comply with Manual. The
Franchisee fails or refuses to comply with the
then-current requirements of the Operations
Manual; or
e. Breach of Related Agreement. The
Franchisee defaults under any term of the
sublease or lease assignment for the Franchised
Location, any other agreement material to the PAK
MAIL Center or any other Franchise Agreement
between the Franchisor and the Franchisee and
such default is not cured within the time
specified in such sublease, other agreement or
other Franchise Agreement.
Notwithstanding the foregoing, if the breach is
curable, but is of a nature which cannot be reasonably
cured within such 30 day period and the Franchisee has
commenced and is continuing to make good faith efforts
to cure the breach during such 30 day period, the
Franchisee shall be given an additional reasonable
period of time to cure the same, and this Agreement
shall not automatically terminate without written
notice from the Franchisor.
18.4. Right to Purchase. Upon termination or
expiration of this Agreement for any reason, the
Franchisor shall have the option to purchase the PAK
MAIL Center or a portion of the assets of the Center,
which may include, at the Franchisor's option, all of
the Franchisee's interest, if any, in and to the real
estate upon which the PAK MAIL Center is located, and
all buildings and other improvements thereon,
including leasehold interests, at fair market value,
less any amount apportioned to the goodwill of the PAK
MAIL Center which is attributable to the Franchisor's
Marks and System, and less any amounts owed to the
Franchisor by the Franchisee. The following
additional terms shall apply to the Franchisor's
exercise of this option:
a. The Franchisor's option hereunder shall
be exercisable by providing the Franchisee with
written notice of its intention to exercise the
option given to the Franchisee no later than the
effective date of termination, in the case of
termination, or at least 90 days prior to the
expiration of the term of the franchise, in the
case of non-renewal.
b. The Franchisor and the Franchisee agree
that the terms and conditions of this right and
option to purchase may be recorded, if deemed
appropriate by the Franchisor, in the real
property records and the Franchisor and the
Franchisee further agree to execute such
additional documentation as may be necessary and
appropriate to effectuate such recording.
c. The Franchisor shall set the closing for
the purchase of the PAK MAIL Center to take place
no later than 60 days after the termination or
nonrenewal date. The Franchisor will pay the
purchase price in full at the closing, or, at its
option, in five equal consecutive monthly
installments with interest at a rate of ten
percent per annum. The Franchisee must sign all
documents of assignment and transfer as are
reasonably necessary for purchase of the PAK MAIL
Center or its assets by the Franchisor.
d. During the time after the Franchisor
notifies the Franchisee of the exercise of the
option but before the closing ("Interim Period"),
the Franchisor has the right to obtain an
independent appraisal of the fair market value of
the assets being purchased and, if such an
appraisal is obtained, the appraisal shall be
binding on both parties. The obligation of the
Franchisor to close shall be contingent on the
appraisal being acceptable to the Franchisor.
In the event that the Franchisor does not exercise the
Franchisor's right to purchase the Franchisee's PAK
MAIL Center as set forth above, the Franchisee will be
free to keep or to sell, after such termination or
expiration, to any third party, all of the physical
assets of its PAK MAIL Center; provided, however, that
all appearances of the Marks are first removed in a
manner approved in writing by the Franchisor.
18.5. Obligations of Franchisee Upon
Termination or Expiration. The Franchisee is
obligated upon termination or expiration of this
Agreement to immediately:
a. Pay to the Franchisor all Royalties,
Advertising Contributions, other fees, and any
and all amounts or accounts payable then owed the
Franchisor or its affiliates pursuant to this
Agreement, or pursuant to any other agreement,
whether written or oral, including subleases and
lease assignments, between the parties;
b. Cease to identify itself as a PAK MAIL
franchisee or publicly identify itself as a
former Franchisee or use any of the Franchisor's
trade secrets, signs, symbols, devices, trade
names, trademarks, or other materials.
c. Immediately cease to identify the
Franchised Location as being, or having been,
associated with the Franchisor and, if deemed
necessary by the Franchisor, paint or otherwise
change the interior and exterior of the Center to
distinguish it from a PAK MAIL Center and
immediately cease using any proprietary ▇▇▇▇ of
the Franchisor or any ▇▇▇▇ in any way associated
with the PAK MAIL Marks and System;
d. Deliver to the Franchisor all items which
bear the PAK MAIL ▇▇▇▇, signs, sign-faces,
advertising materials, forms and other materials
bearing any of the Marks or otherwise identified
with the Franchisor and obtained by and in
connection with this Agreement;
e. Immediately deliver to the Franchisor the
Operations Manual and all other information,
documents and copies thereof which are
proprietary to the Franchisor;
f. Promptly take such action as may be
required to cancel all fictitious or assumed
names or equivalent registrations relating to its
use of any Marks which are under the exclusive
control of the Franchisor or, at the option of
the Franchisor, assign the same to the
Franchisor;
g. Notify the telephone company and all
telephone directory publishers of the termination
or expiration of the Franchisee's right to use
any telephone number and any regular, classified
or other telephone directory listings associated
with any ▇▇▇▇ and to authorize transfer thereof
to the Franchisor or its designee. The
Franchisee acknowledges that, as between the
Franchisee and the Franchisor, the Franchisor has
the sole rights to and interest in all telephone,
telecopy or facsimile machine numbers and
directory listings associated with any ▇▇▇▇. The
Franchisee authorizes the Franchisor, and hereby
appoints the Franchisor and any of its officers
as the Franchisee's attorney-in-fact, to direct
the telephone company and all telephone directory
publishers to transfer any telephone, telecopy or
facsimile machine numbers and directory listings
relating to the PAK MAIL Center to the Franchisor
or its designee, should the Franchisee fail or
refuse to do so, and the telephone company and
all telephone directory publishers may accept
such direction or this Agreement as conclusive of
the Franchisor's exclusive rights in such
telephone numbers and directory listings and the
Franchisor's authority to direct their transfer;
h. Comply with all applicable provisions of
the Software License Agreement; and
i. Abide by all restrictive covenants set
forth in Article 20 of this Agreement.
18.6. Acknowledgement. In the event this
Agreement is terminated by the Franchisor prior to its
expiration as set forth in Sections 18.2 and 18.3
above, the Franchisee acknowledges and agrees that, in
addition to all other available remedies, the
Franchisor shall have the right to recover lost future
royalties during any period in which the Franchisee
fails to pay such royalties through and including the
remainder of the then current term of this Agreement.
18.7. State and Federal Law. THE PARTIES
ACKNOWLEDGE THAT IN THE EVENT THAT THE TERMS OF THIS
AGREEMENT REGARDING TERMINATION OR EXPIRATION ARE
INCONSISTENT WITH APPLICABLE STATE OR FEDERAL LAW,
SUCH LAW SHALL GOVERN THE FRANCHISEE'S RIGHTS
REGARDING TERMINATION OR EXPIRATION OF THIS AGREEMENT.
19. BUSINESS RELATIONSHIP
19.1. Independent Businesspersons. The parties
agree that each of them are independent
businesspersons, their only relationship is by virtue
of this Agreement and that no fiduciary relationship
is created hereunder. Neither party is liable or
responsible for the other's debts or obligations, nor
shall either party be obligated for any damages to any
person or property directly or indirectly arising out
of the operation of the other party's business
authorized by or conducted pursuant to this Agreement.
The Franchisor and the Franchisee agree that neither
of them will hold themselves out to be the agent,
employer or partner of the other and that neither of
them has the authority to bind or incur liability on
behalf of the other.
19.2. Payment of Third Party Obligations. The
Franchisor shall have no liability for the
Franchisee's obligations to pay any third parties,
including without limitation, any product vendors, or
any sales, use, service, occupation, excise, gross
receipts, income, property or other tax levied upon
the Franchisee, the Franchisee's property, the PAK
MAIL Center or upon the Franchisor in connection with
the sales made or business conducted by the Franchisee
(except any taxes the Franchisor is required by law to
collect from the Franchisee with respect to purchases
from the Franchisor).
19.3. Indemnification. The Franchisee agrees
to indemnify, defend and hold harmless the Franchisor,
its subsidiaries and affiliates, and their respective
shareholders, directors, officers, employees, agents,
successors and assignees, (the "Indemnified Parties")
against, and to reimburse them for all claims,
obligations and damages described in this Section
19.3, any and all third party obligations described in
Section 19.2 and any and all claims and liabilities
directly or indirectly arising out of the operation of
the PAK MAIL Center or arising out of the use of the
Marks and System in any manner not in accordance with
this Agreement. For purposes of this indemnification,
claims shall mean and include all obligations, actual
and consequential damages and costs reasonably
incurred in the defense of any claim against the
Indemnified Parties, including, without limitation,
reasonable accountants', attorneys' and expert witness
fees, costs of investigation and proof of facts, court
costs, other litigation expenses and travel and living
expenses. The Franchisor shall have the right to
defend any such claim against it. This indemnity
shall continue in full force and effect subsequent to
and notwithstanding the expiration or termination of
this Agreement.
20. RESTRICTIVE COVENANTS
20.1. Non-Competition During Term. The
Franchisee acknowledges that, in addition to the
license of the Marks hereunder, the Franchisor has
also licensed commercially valuable information which
comprises and is a part of the System, including
without limitation, operations, marketing, advertising
and related information and materials and that the
value of this information derives not only from the
time, effort and money which went into its
compilation, but from the usage of the same by all the
franchisees of the Franchisor using the Marks and
System. The Franchisee therefore agrees that other
than the PAK MAIL Center licensed herein or authorized
by separate agreement with the Franchisor, neither the
Franchisee nor any of the Franchisee's officers,
directors, shareholders or partners, nor any member of
his or their immediate families, shall during the term
of this Agreement:
a. have any direct or indirect controlling
interest as a disclosed or beneficial owner in a
"Competitive Business" as defined below;
b. perform services as a director, officer,
manager, employee, consultant, representative,
agent or otherwise for a Competitive Business; or
c. divert or attempt to divert any business
related to, or any customer or account of the PAK
MAIL Center, the Franchisor's business or any
other PAK MAIL franchisee's business, by direct
inducement or otherwise, or divert or attempt to
divert the employment of any employee of the
Franchisor or another franchisee licensed by the
Franchisor to use the Marks and System, to any
Competitive Business by any direct inducement or
otherwise.
The term "Competitive Business" as used in this
Agreement shall mean any business operating, or
granting franchises or licenses to others to operate,
a packaging, crating, freight forwarding and/or
mailing business or any similar business (excluding
operating or granting franchises or licenses to others
for PAK MAIL Centers operated under franchise
agreements with the Franchisor). Notwithstanding the
foregoing, the Franchisee shall not be prohibited from
owning securities in a Competitive Business if such
securities are listed on a stock exchange or traded on
the over-the-counter market and represent 5% or less
of that class of securities issued and outstanding.
20.2. Post-Termination Covenant Not to
Compete. Upon termination or expiration of this
Agreement for any reason, the Franchisee and its
officers, directors, shareholders, and/or partners
agree that, for a period of two years commencing on
the effective date of termination or expiration, or
the date on which the Franchisee ceases to conduct
business, whichever is later, neither Franchisee nor
its officers, directors, shareholders, and/or partners
shall have any direct or indirect interest (through a
member of any immediate family of the Franchisee or
its Owners or otherwise) as a disclosed or beneficial
owner, investor, partner, director, officer, employee,
consultant, representative or agent or in any other
capacity in any Competitive Business, defined in
Section 20.1 above, located or operating within a 25
mile radius of the Franchised Location or within 25
miles of any other franchised or company-owned PAK
MAIL Center. The restrictions of this Section shall
not be applicable to the ownership of shares of a
class of securities listed on a stock exchange or
traded on the over-the-counter market that represent
5% or less of the number of shares of that class of
securities issued and outstanding. The Franchisee and
its officers, directors, shareholders, and/or partners
expressly acknowledge that they possess skills and
abilities of a general nature and have other
opportunities for exploiting such skills.
Consequently, enforcement of the covenants made in
this Section will not deprive them of their personal
goodwill or ability to earn a living.
20.3. Confidentiality of Proprietary
Information. The Franchisee shall treat all
information it receives which comprises or is a part
of the System licensed hereunder as proprietary and
confidential and will not use such information in an
unauthorized manner or disclose the same to any
unauthorized person without first obtaining the
Franchisor's written consent. The Franchisee
acknowledges that the Marks and the System have
valuable goodwill attached to them, that the
protection and maintenance thereof is essential to the
Franchisor and that any unauthorized use or disclosure
of the Marks and System will result in irreparable
harm to the Franchisor.
20.4. Confidentiality Agreement. The
Franchisor reserves the right to require that the
Franchisee cause each of its officers, directors,
partners, shareholders, and Principal Operator, and,
if the Franchisee is an individual, immediate family
members, to execute a Nondisclosure and Noncompetition
Agreement containing the above restrictions, in a form
approved by the Franchisor.
21. INSURANCE
21.1. Insurance Coverage. The Franchisee shall
procure, maintain and provide evidence of (i)
comprehensive general liability insurance for the
Franchised Location and its operations with a limit of
not less than $1,000,000 combined single limit, or
such greater limit as may be required as part of any
lease agreement for the Franchised Location; (ii)
automobile liability insurance covering all employees
of the PAK MAIL Center with authority to operate a
motor vehicle in an amount not less than $1,000,000
or, with the prior written consent of the Franchisor,
such lesser amount as may be available at a
commercially reasonable rate, but in no event less
than any statutorily imposed minimum coverage; (iii)
unemployment and worker's compensation insurance with
a broad form all-states endorsement coverage
sufficient to meet the requirements of the law; and
(iv) all-risk personal property insurance in an amount
equal to at least 100% of the replacement costs of the
contents and tenant improvements located at the PAK
MAIL Center. All of the required policies of
insurance shall name the Franchisor as an additional
named insured and shall provide for a 30 day advance
written notice to the Franchisor of cancellation.
21.2. Proof of Insurance Coverage. The
Franchisee will provide proof of insurance to the
Franchisor prior to commencement of operations at its
PAK MAIL Center. This proof will show that the
insurer has been authorized to inform the Franchisor
in the event any policies lapse or are cancelled. The
Franchisor has the right to change the minimum amount
of insurance the Franchisee is required to maintain by
giving the Franchisee prior reasonable notice, giving
due consideration to what is reasonable and customary
in the similar business. Noncompliance with the
insurance provisions set forth herein shall be deemed
a material breach of this Agreement; in the event of
any lapse in insurance coverage, in addition to all
other remedies, the Franchisor shall have the right to
demand that the Franchisee cease operations of the PAK
MAIL Centers until coverage is reinstated, or, in the
alternative, pay any delinquencies in premium payments
and charge the same back to the Franchisee.
22. MISCELLANEOUS PROVISIONS
22.1. Governing Law/Consent to Venue and
Jurisdiction. Except to the extent governed by the
United States Trademark Act of 1946 (▇▇▇▇▇▇ Act, 15
U.S.C. Sections 1051 et seq.) or other federal law,
this Agreement shall be interpreted under the laws of
the state of Colorado and any dispute between the
parties shall be governed by and determined in
accordance with the substantive laws of the state of
Colorado, which laws shall prevail in the event of any
conflict of law. The Franchisee and the Franchisor
have negotiated regarding a forum in which to resolve
any disputes which may arise between them and have
agreed to select a forum in order to promote stability
in their relationship. Therefore, if a claim is
asserted in any legal proceeding involving the
Franchisee, its officers or directors (collectively,
"Franchisee Affiliates") and the Franchisor, its
officers, directors or sales employees (collectively,
"Franchisor Affiliates") both parties agree that the
exclusive venue for disputes between them shall be in
the state and federal courts of Colorado and each
waive any objection either may have to the personal
jurisdiction of or venue in the state and federal
courts of Colorado. The Franchisor, the Franchisor
Affiliates, the Franchisee and the Franchisee
Affiliates each waive their rights to a trial by jury.
22.2. Modification. The Franchisor and/or the
Franchisee may modify this Agreement only upon
execution of a written agreement between the two
parties. The Franchisee acknowledges that the
Franchisor may modify its standards and specifications
and operating and marketing techniques set forth in
the Operations Manual unilaterally under any
conditions and to the extent in which the Franchisor,
in its sole discretion, deems necessary to protect,
promote, or improve the Marks and the quality of the
System, but under no circumstances will such
modifications be made arbitrarily without such
determination.
22.3. Entire Agreement. This Agreement,
including all exhibits and addenda, contains the
entire agreement between the parties and supersedes
any and all prior agreements concerning the subject
matter hereof. The Franchisee agrees and understands
that the Franchisor shall not be liable or obligated
for any oral representations or commitments made prior
to the execution hereof or for claims of negligent or
fraudulent misrepresentation and that no modifications
of this Agreement shall be effective except those in
writing and signed by both parties. The Franchisor
does not authorize and will not be bound by any
representation of any nature other than those
expressed in this Agreement. The Franchisee further
acknowledges and agrees that no representations have
been made to it by the Franchisor regarding projected
sales volumes, market potential, revenues, profits of
the Franchisee's PAK MAIL Center, or operational
assistance other than as stated in this Agreement or
in any disclosure document provided by the Franchisor
or its representatives.
22.4. Delegation by the Franchisor. From time
to time, the Franchisor shall have the right to
delegate the performance of any portion or all of its
obligations and duties hereunder to third parties,
whether the same are agents of the Franchisor or
independent contractors which the Franchisor has
contracted with to provide such services. The
Franchisee agrees in advance to any such delegation by
the Franchisor of any portion or all of its obliga-
tions and duties hereunder.
22.5. Effective Date. This Agreement shall not
be effective until accepted by the Franchisor as
evidenced by dating and signing by an officer of the
Franchisor.
22.6. Review of Agreement. The Franchisee
acknowledges that it had a copy of this Agreement in
its possession for a period of time not less than ten
full business days, during which time the Franchisee
has had the opportunity to submit same for
professional review and advice of the Franchisee's
choosing prior to freely executing this Agreement.
22.7. Attorneys' Fees. In the event of any
default on the part of either party to this Agreement,
in addition to all other remedies, the party in
default will pay the aggrieved party all amounts due
and all damages, costs and expenses, including reason-
able attorneys' fees, incurred by the aggrieved party
in any legal action, arbitration or other proceeding
as a result of such default, plus interest at the
highest rate allowable by law, accruing from the date
of such default.
22.8. Injunctive Relief. Nothing herein shall
prevent the Franchisor or the Franchisee from seeking
injunctive relief to prevent irreparable harm, in
addition to all other remedies.
22.9. No Waiver. No waiver of any condition or
covenant contained in this Agreement or failure to
exercise a right or remedy by the Franchisor or the
Franchisee shall be considered to imply or constitute
a further waiver by the Franchisor or the Franchisee
of the same or any other condition, covenant, right,
or remedy.
22.10. No Right to Set Off. The Franchisee
shall not be allowed to set off amounts owed to the
Franchisor for Royalties, fees or other amounts due
hereunder, against any monies owed to Franchisee, nor
shall the Franchisee in any event withhold such
amounts due to any alleged nonperformance by the
Franchisor hereunder, which right of set off is hereby
expressly waived by the Franchisee.
22.11. Invalidity. If any provision of this
Agreement is held invalid by any tribunal in a final
decision from which no appeal is or can be taken, such
provision shall be deemed modified to eliminate the
invalid element and, as so modified, such provision
shall be deemed a part of this Agreement as though
originally included. The remaining provisions of this
Agreement shall not be affected by such modification.
22.12. Notices. All notices required to be
given under this Agreement shall be given in writing,
by certified mail, return receipt requested, or by an
overnight delivery service providing documentation of
receipt, at the address set forth in the first Section
of this Agreement or at such other addresses as the
Franchisor or the Franchisee may designate from time
to time, and shall be effectively given when deposited
in the United States mails, postage prepaid, or when
received via overnight delivery, as may be applicable.
22.13. Acknowledgement. BEFORE SIGNING THIS
AGREEMENT, THE FRANCHISEE SHOULD READ IT CAREFULLY
WITH THE ASSISTANCE OF LEGAL COUNSEL. THE FRANCHISEE
ACKNOWLEDGES THAT:
(A) THE SUCCESS OF THE BUSINESS VENTURE
CONTEMPLATED HEREIN INVOLVES SUBSTANTIAL RISKS
AND DEPENDS UPON THE FRANCHISEE'S ABILITY AS AN
INDEPENDENT BUSINESS PERSON AND ITS ACTIVE
PARTICIPATION IN THE DAILY AFFAIRS OF THE
BUSINESS, AND
(B) NO ASSURANCE OR WARRANTY, EXPRESS OR
IMPLIED, HAS BEEN GIVEN AS TO THE POTENTIAL
SUCCESS OF SUCH BUSINESS VENTURE OR THE EARNINGS
LIKELY TO BE ACHIEVED, AND
(C) NO STATEMENT, REPRESENTATION OR OTHER
ACT, EVENT OR COMMUNICATION, EXCEPT AS SET FORTH
IN THIS DOCUMENT, AND IN ANY OFFERING CIRCULAR
SUPPLIED TO THE FRANCHISEE IS BINDING ON THE
FRANCHISOR IN CONNECTION WITH THE SUBJECT MATTER
OF THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first above set forth.
PAK MAIL CENTERS OF FRANCHISEE
AMERICA, INC.,
a Colorado corporation
(Print Name)
By:
Individually
Name:
Title:
Address:
City:
State: Zip:
OR:
(if a corporation or
partnership)
Company Name
By:
Name:
Title:
Address:
City:
State: Zip:
(2/27/97)
EXHIBIT I TO
FRANCHISE AGREEMENT
ADDENDUM TO PAK MAIL CENTERS OF AMERICA, INC.
FRANCHISE AGREEMENT
1. Franchised Location and Protected Territory.
The Franchised Location, set forth in Section 3.1 of
the Agreement shall be:
, and the Protected Territory
described in Section 3.2 of the Agreement, shall be:
OR
Designated Area. The Franchisor and the
Franchisee acknowledge that the Franchised Location
cannot be designated in Section 1 above as a specific
address because the location has not been selected and
approved; therefore, within 90 days following the date
of the Agreement, the Franchisee shall take steps to
choose and acquire a location for its PAK MAIL Center
within the following geographic area ("Designated
Area"):
2. Acknowledgement. By executing this Exhibit
and/or the Rider hereto, the Franchisee acknowledges
that the Franchisor's approval of a site does not
constitute a representation or warranty of any kind,
express or implied, as to the suitability of the site
for a PAK MAIL Center or for any other purpose and
that the Franchisee's acceptance of a franchise for
the operation of a PAK MAIL Center at the site is
based on its own independent investigation of the
suitability of the site.
Fully executed this day of
, 19 .
PAK MAIL CENTERS OF AMERICA, INC.
By:
Title:
FRANCHISEE
By:
Title:
EXHIBIT I-1
TO FRANCHISE AGREEMENT
RIDER TO ADDENDUM - LOCATION APPROVAL
1. Franchised Location. The Franchised
Location, set forth in Section 3.1 of the Agreement
shall be:
2. Legal Address. The business address for any
notices mailed pursuant to Section 22.12 of the
Agreement shall be changed to read as follows:
3. Protected Territory. The Protected Territory
described in Section 3.2 of the Agreement, shall be:
Fully executed this day of
, 19 .
PAK MAIL CENTERS OF AMERICA, INC.
By:
Title:
FRANCHISEE
By:
Title:
EXHIBIT II
TO FRANCHISE AGREEMENT
GUARANTY AND ASSUMPTION OF FRANCHISEE'S OBLIGATIONS
In consideration of, and as an inducement to, the
execution of the above Franchise Agreement (the
"Agreement") by Pak Mail Centers of America, Inc. (the
"Franchisor"), each of the undersigned hereby personally
and unconditionally:
Guarantees to the Franchisor and its successors and
assigns, for the term of this Agreement, including
renewals thereof, that the franchisee as that term is
defined in the Agreement ("Franchisee") shall
punctually pay and perform each and every undertaking,
agreement and covenant set forth in the Agreement; and
Agrees to be personally bound by, and personally
liable for the breach of, each and every provision in
the Agreement.
Each of the undersigned waives the following:
1. Acceptance and notice of acceptance by the
Franchisor of the foregoing undertaking;
2. Notice of demand for payment of any indebtedness
or nonperformance of any obligations hereby
guaranteed;
3. Protest and notice of default to any party with
respect to the indebtedness or nonperformance of
any obligations hereby guaranteed;
4. Any right he or she may have to require that any
action be brought against Franchisee or any other
person as a condition of liability; and
5. Any and all other notices and legal or equitable
defenses to which he or she may be entitled.
Each of the undersigned consents and agrees that:
1. His or her direct and immediate liability under
this guaranty shall be joint and several;
2. He or she shall render any payment or performance
required under the Agreement upon demand if
Franchisee fails or refuses punctually to do so;
3. Such liability shall not be contingent or
conditioned upon pursuit by the Franchisor of any
remedies against Franchisee or any other person;
and
4. Such liability shall not be diminished, relieved
or otherwise affected by any extension of time,
credit or other indulgence which the Franchisor
may from time to time grant to Franchisee or to
any other person, including without limitation the
acceptance of any partial payment or performance,
or the compromise or release of any claims, none
of which shall in any way modify or amend this
guaranty, which shall be continuing and
irrevocable during the term of the Agreement,
including renewals thereof.
IN WITNESS WHEREOF, each of the undersigned has
affixed his or her signature effective on the same day and
year as the Agreement was executed.
WITNESS GUARANTOR(S)
__________________________________
________________________________________
__________________________________
________________________________________
__________________________________
________________________________________
__________________________________
________________________________________
EXHIBIT III
TO FRANCHISE AGREEMENT
STATEMENT OF OWNERSHIP
Franchisee:
Trade Name (if different from above):
Form of Ownership
(Check One)
______ ______ ______ ______
Individual Partnership Corporation Liability
Limited Company
If a Partnership, provide name and address of each
partner showing percentage owned, whether active in
management, and indicate the state in which the
partnership was formed.
If a Limited Liability Company, provide name and
address of each member and each manager showing
percentage owned and indicate the state in which the
Limited Liability Company was formed.
If a Corporation, give the state and date of
incorporation, the names and addresses of each officer
and director, and list the names and addresses of every
shareholder showing what percentage of stock is owned
by each.
Franchisee acknowledges that this Statement of
Ownership applies to the PAK MAIL Center authorized
under the Franchise Agreement.
Use additional sheets if necessary. Any and all
changes to the above information must be reported to
the Franchisor in writing.
Date Name