Exhibit 10.3
CARPETMAX -REGISTERED TRADEMARK- FRANCHISE AGREEMENT
BETWEEN
CARPETMAX, L.P.
AND
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TABLE OF CONTENTS
PAGE NO.
1. GRANT OF FRANCHISE................................................................................1
2. FRANCHISE FEE.....................................................................................3
3. TERM..............................................................................................3
4. PROPRIETARY MARKS.................................................................................3
5. OBLIGATIONS OF THE COMPANY........................................................................4
6. DEALER'S OPERATIONAL COVENANTS....................................................................5
7. ADVERTISING AND MARKETING.........................................................................9
8. CONFIDENTIAL INFORMATION..........................................................................9
9. DISCLAIMER OF WARRANTY AND LIMITATIONS ON LIABILITY..............................................10
10. RESTRICTIVE COVENANT.............................................................................10
11. RIGHT TO ACCESS, INSPECTION AND FINANCIALS.......................................................10
12. INDEMNIFICATION AND INSURANCE....................................................................11
13. TERMINATION......................................................................................11
14. RIGHTS AND DUTIES OF PARTIES UPON TERMINATION....................................................14
15. TRANSFERABILITY OF INTEREST......................................................................15
16. GOVERNING LAW....................................................................................17
17. INDEPENDENT CONTRACTOR...........................................................................17
18. WAIVERS..........................................................................................17
19. INJUNCTIVE RELIEF................................................................................18
20. RIGHT TO OFFSET..................................................................................18
21. NOTICES..........................................................................................18
22. ATTORNEYS' FEES AND LATE CHARGES.................................................................18
23. SEVERABILITY AND CONSTRUCTION....................................................................18
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24. ARBITRATION......................................................................................19
25. LIMITATION ON CERTAIN LIABILITY..................................................................20
26. ENTIRE AGREEMENT.................................................................................20
27. MISCELLANEOUS PROVISIONS.........................................................................20
Schedule "A" - Dealer's Exclusive Area and Miscellaneous Information
Schedule "B" - Merchandise Introductory Package
Schedule "C" - State-Specific Amendments
Schedule "D" - Guaranty by The Maxim Group, Inc.
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CARPETMAX -REGISTERED TRADEMARK- FRANCHISE AGREEMENT
THIS AGREEMENT, made this ______ day of __________________, 19__,
between Carpetmax, L.P., a Georgia limited partnership with its principal place
of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and
___________________ ____________________________________ (the "Dealer") a (check
one) ____ individual ____ partnership or ____ corporation organized under the
laws of the State of ___________________ with its principal place of business
set forth on Schedule "A" hereto.
WITNESSETH:
WHEREAS, through the expenditure of considerable time, effort and
money, the Company and its general partner, The Maxim Group, Inc. ("Maxim"),
have developed a special expertise for the operation of a retail floor
covering business which include certain unique and proprietary products,
goods and services and business methodologies, operational procedures,
business techniques, advertising, sales and promotional techniques, personnel
training, purchasing practices, merchandising programs, access to favorable
pricing from suppliers and distributors of floor covering products, and other
matters relating to the efficient operation of such businesses (hereinafter
collectively referred to as the "System") which will be marketed to the
public under the name CarpetMAX -REGISTERED TRADEMARK- and such other
trademarks, service marks, trade names, logotypes, trade symbols, emblems,
signs, slogans, and insignias as may from time to time be created and
licensed by the Company for use in connection with the franchise granted
hereunder (collectively, the "Proprietary Marks"). The Company has expended
substantial sums of time, effort and money in developing and improving the
System and in advertising and promoting the Proprietary Marks. By these
efforts, the Company has established valuable goodwill in connection with the
System and Proprietary Marks;
WHEREAS, the Dealer currently operates one or more retail floor covering
businesses and after investigating the System and the Company's franchise
network has determined that there are significant advantages to becoming a
franchisee of the Company;
WHEREAS, the Dealer desires to receive a license from the Company by
which it will have the right to utilize the System and the Proprietary Marks
pursuant to the terms hereof. By entering into this Agreement, the Dealer
recognizes the actual and potential value of adding the System and the
Proprietary Marks to the Dealer's existing business. Dealer acknowledges that it
is essential to the maintenance of the high standards which the public has come
to expect of authorized franchisees of the Company, and to the preservation of
the integrity and goodwill of the System and the Proprietary Marks, that each
franchisee adhere to certain uniform procedures and policies as further
described below; and
WHEREAS, the Company is willing, upon the terms and conditions described
in this Agreement, to license the Dealer to operate a business which will
utilize the System and the Proprietary Marks.
NOW, THEREFORE, intending to be legally bound, in consideration of the
mutual covenants and promises contained herein, the parties hereto agree as
follows:
1. GRANT OF FRANCHISE
a. Subject to the terms and conditions of this Agreement, the Company
hereby grants to the Dealer and the Dealer hereby accepts, the franchise and
license to operate one or more CarpetMAX -REGISTERED TRADEMARK- stores
(hereinafter any and all stores operating under the System will be referred
to as the "Store") using the Proprietary Marks in conformity with the System
within the geographic area described on Schedule "A" (the "Exclusive Area").
b. During the term of this Agreement and so long as the Dealer is not
in default hereof, the Company shall not license others to operate, anywhere
within the Exclusive Area, a CarpetMAX -REGISTERED TRADEMARK- franchise
or a retail flooring business utilizing the Proprietary Marks. However, since
the Dealer's license hereunder is limited to using the System and Proprietary
Marks in the Exclusive Area, the Company and its affiliates may own, operate,
license, franchise or in any manner authorize the operation of CarpetMAX
-REGISTERED TRADEMARK- businesses at any location outside the Exclusive Area,
even in areas immediately adjacent to the Exclusive Area. Additionally, the
Company and its affiliates have the right, within or outside the Exclusive
Area, to develop, produce, market and sell, under one or more brands and
trade names (other than the CarpetMAX -REGISTERED TRADEMARK- brand or trade
name) products and services of the type sold or promoted by CarpetMAX
-REGISTERED TRADEMARK- stores and to do so through similar or dissimilar
channels of distribution, pursuant to terms and conditions the Company and
its affiliates deem appropriate and the Company and its affiliates have the
right to provide the products and services they provide to CarpetMAX
-REGISTERED TRADEMARK- franchisees under the System to other retail floor
covering businesses within and outside the Exclusive Area on whatever terms
and conditions they deem appropriate. Furthermore, the Company and its
affiliates have the right to operate or grant franchises to operate floor
covering outlets within the Exclusive Area under brands, trade names and
marks other than the Proprietary Marks. Nothing in this Agreement shall be
deemed to restrict the Company, Maxim or any of its or their affiliates (i)
from acquiring an existing retail floor covering store or group of stores
(whether owned or licensed) and operating such stores in the manner they were
operated at the time of such acquisition, including any such stores located
in the Exclusive Area or (ii) from being acquired by any party regardless of
other lines of business owned by such other party, including retail floor
covering stores operating in the Exclusive Area.
c. Dealer acknowledges that an affiliate of Company, GCO, Inc. ("GCO"),
operates and franchises others to operate discount, outlet and warehouse type
floor covering stores under the name "GCO Carpet Outlet". Nothing herein shall
preclude GCO or any other affiliate of the Company from operating or licensing
others to operate a retail floor covering outlet within the Exclusive Area using
the "GCO Carpet Outlet" name or the GCO Carpet Outlet franchise system. In
connection with the foregoing, Dealer agrees that it is precluded from using the
Proprietary Marks or the System with a discount, outlet or warehouse type floor
covering store or to advertise or position its Store as a discount, outlet or
warehouse type floor covering business. To the extent that Dealer has an
existing retail floor covering outlet which it currently positions as a
discount, outlet or warehouse type business, Dealer understands and agrees that
such outlet shall not be franchised hereunder and shall not become part of the
CarpetMAX -REGISTERED TRADEMARK- franchise system.
d. Dealer acknowledges that an affiliate of Company, CarpetsPlus of
America, Inc. ("CarpetsPlus"), operates a national resource network specializing
in the retail flooring industry. CarpetsPlus, offers franchises to operators of
retail floor covering stores which permit franchisees to purchase products and
other services from CarpetsPlus and its variety of designated suppliers and
distributors. Dealer acknowledges that CarpetsPlus franchisees will operate full
service retail floor covering stores within the Exclusive Area and that nothing
in this Agreement precludes CarpetsPlus from selling franchises within the
Exclusive Area. The Dealer shall have no right to use any trademarks, service
marks or logotypes associated with the CarpetsPlus franchise network.
e. Except for the rights expressly granted to Dealer under this
Agreement, the license granted under this Agreement is non-exclusive, and the
Company and its affiliates, including Maxim, GCO and CarpetsPlus, reserve for
themselves all rights with respect to the System, the Proprietary Marks and
business of the Company.
f. Dealer may sell CarpetMAX -REGISTERED TRADEMARK- private-labeled
products only from a Store which is an authorized CarpetMAX -REGISTERED
TRADEMARK- franchised location within the Exclusive Area. It may, however,
install such products outside of the Exclusive Area, provided, however, that
such products are sold to and installed on behalf of the ultimate consumer of
these products and are not sold for resale or redistribution. Company shall
have the right to terminate this Agreement immediately in the event Dealer
sells CarpetMAX -REGISTERED TRADEMARK- private-labeled products to any
supplier, distributor, broker or other similar entity of floor covering
products either within or outside its Exclusive Area.
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g. Upon execution of this Agreement and payment of the Franchise Fee as
specified below, Dealer will receive the merchandise introductory package shown
on Schedule "B" for one Store within the Exclusive Area (the "Merchandise
Package"). Merchandise Packages for other authorized Stores operated by the
Dealer within the Exclusive Area are available from the Company in accordance
with its standard policies and published prices.
2. FRANCHISE FEE
a. In consideration for its right to use the System and Proprietary
Marks and other assistance and services Dealer will receive in connection
with the CarpetMAX -REGISTERED TRADEMARK- franchise, Dealer agrees to pay to
the Company a franchise fee of $35,000 (the "Franchise Fee"). The Dealer has
elected to pay the Franchise Fee as follows (check appropriate box):
/ / $33,250 upon execution of this Agreement in full payment of its
Franchise Fee;
OR
/ / $3,000 upon execution of this Agreement and the balance paid as follows:
(i) $2,000 on or before 90 days after this Agreement becomes effective,
(ii) $2,000 on or before 180 days after this Agreement becomes effective
and (iii) the balance of $28,000 due and payable in four consecutive
annual payments of $7,000 plus interest on the unpaid balance at the
rate of 10% per annum, which payments shall be due and payable on the
first four anniversary dates of this Agreement. Upon request, the
Company will supply the Dealer with an amortization schedule for this
installment payment option.
b. The Franchise Fee is deemed fully earned upon the execution of this
Agreement and is nonrefundable, either in whole or in part, except as may
otherwise be provided in Section 12.b.(iii) of this Agreement.
3. TERM
This Agreement shall take effect as of the date first written above (the
"Effective Date") and shall continue in full force and effect for an indefinite
period, unless and until terminated by one of the parties as provided in this
Agreement.
4. PROPRIETARY MARKS
a. Dealer acknowledges that the Company has by this Agreement licensed
Dealer to use the Proprietary Marks, and that the Company is the exclusive owner
of the Proprietary Marks and entitled to all goodwill associated with the
Dealer's use of the Proprietary Marks. Dealer agrees not to contest the validity
of the Proprietary Marks during or after the term of this Agreement. Apart from
the right of Dealer to use the Proprietary Marks pursuant to this Agreement,
Dealer shall acquire no right, title or interest of any kind or nature
whatsoever in or to the Proprietary Marks or the associated goodwill. Dealer
shall use the Proprietary Marks only in connection with the System. Dealer
agrees to use the Proprietary Marks solely in compliance with this Agreement and
the rules established from time to time by the Company, such compliance being
essential to maintain the value of the Proprietary Marks. Dealer agrees not to
manufacture, market or sell products or perform services under the Proprietary
Marks which are not floor covering products or services otherwise approved by
Company or use the Proprietary Marks in any way not explicitly authorized by
this Agreement or otherwise in writing by Company. Dealer acknowledges the
substantial goodwill value of the Proprietary Marks and Dealer will not use the
Proprietary Marks in any manner to impair the goodwill of the Proprietary Marks
nor take any action which will harm or jeopardize the Proprietary Marks, or
Company's ownership thereof, in any way.
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b. Dealer shall display the Proprietary Marks only in such form and
manner as is specifically approved by the Company and, upon request by Company,
affix any legends, markings and notices of trademark registration or
franchisor-franchisee relationships specified by the Company or any other notice
of Company's ownership. Dealer hereby agrees not to use any Proprietary ▇▇▇▇ as
any part of its corporate or legal business name except any fictitious name
registration permitted hereunder. Company shall have the right to approve all
stationery, promotional items, displays and other materials using the
Proprietary Marks prepared by Dealer. Dealer agrees to follow Company's
instructions regarding proper usage of the Proprietary Marks in all respects.
c. Dealer shall immediately notify Company in writing of any apparent
infringement of, or challenge to, the Company's, or Dealer's use of any of the
Proprietary Marks, or claim by any entity of any rights in any Proprietary ▇▇▇▇
or similar trade name or trademark of which the Dealer becomes aware. At its own
expense, Company shall defend Dealer against such challenge, and shall take
action against uses by others that, in the opinion of counsel to the Company,
constitute infringement of the Proprietary Marks. Dealer agrees to execute any
and all documents and give any assistance and do any acts that counsel to
Company deems are necessary or advisable in order to protect the interests of
the Company, provided, that the Company shall reimburse the Dealer for the
reasonable out-of-pocket expenses incurred by it in furnishing such assistance.
With respect to any litigation or proceeding undertaken by the Company pursuant
to this Section 4, the Company will not be bound to defend the Dealer unless the
Dealer's use of the Proprietary Marks has been pursuant to and in compliance
with this Agreement or instructions provided to it by the Company. Decisions
regarding action involving the protection and defense of the Proprietary Marks,
and the settlement of any litigation involving same, shall be solely in the
discretion of Company and Dealer shall take no action in this regard without the
express written permission of Company.
d. Company shall have the right at any time, upon notice, to make
additions to, deletions from, and changes in the Proprietary Marks at its
complete discretion, and Dealer shall adopt and use any and all such additions,
deletions and changes pursuant to Company's instructions. Dealer shall use the
Proprietary Marks that are appropriate for the nature of the Dealer's business
as determined by the Company. Company shall not be liable to Dealer for any
alleged injury to goodwill, loss of future sales or consequential or special
damages in the event the Dealer is required to discontinue use of the
Proprietary Marks.
e. Dealer agrees to join with the Company in any application to enter
Dealer as a registered or permitted user or the like of the Proprietary Marks
with an appropriate governmental agency or entity. Upon termination of this
Agreement for any reason whatsoever, Company may immediately apply to cancel
Dealer's status as a registered or permitted user and Dealer shall consent in
writing for the cancellation and shall join in any cancellation petition. The
expense of any of the foregoing recording activities shall be borne by Company.
5. OBLIGATIONS OF THE COMPANY
During the term hereof, Company and its affiliates agree to provide
Dealer with the following assistance, services or payments:
a. continual and ongoing training of Dealer's employees in different
aspects of the operation of a retail floor covering outlet including, without
limitation, providing such employees with the Company's then-current training
programs regarding sales training, sales management training, new employee
training, train the trainer training, human resource training, all installation
accreditation programs established by the Company and sales success system (S3)
training. All training programs will be offered at no charge and will be
conducted at one of the Company's designated training facilities. Company agrees
to offer these programs as often as is necessary to meet the reasonable requests
of Dealer, however, the Company reserves the right to establish reasonable rules
regarding scheduling and attendance at these programs. Dealer shall be
responsible for all travel and living expenses incurred in attending these
training programs, as well as the wages or salaries of the persons receiving the
training and the costs associated with the various program
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materials such as books, tapes and written brochures and any shipping and
handling charges if these materials are delivered to the Dealer;
b. continual and ongoing access to and use of Maxim Marketing or its
successor, for advertising and promotional services so that the Dealer will
receive at no charge (i) all advertising and promotional programs and
materials produced or created by Maxim Marketing for the System for radio,
television or print media including ad slicks, circulars, direct mail pieces
and broad sheets, (ii) unlimited use of the CarpetMAX -REGISTERED TRADEMARK-
jingle and (iii) grand opening kits. Dealer remains obligated to pay for the
costs associated with these programs and materials (and any customizing), the
cost of purchasing media, film, paper, and plates and other hard costs and
any shipping and handling charges associated with delivering these items to
the Dealer. Point of purchase materials will be available to the Dealer at
the Company's cost plus shipping and handling charges;
c. unlimited access to the Company's satellite network. Dealer will be
required to obtain the necessary equipment to access the network, which
equipment will be available only from suppliers designated by the Company which
may include only the Company or an affiliate of the Company. When purchasing the
equipment from the Company or its affiliate, Dealer will be required to sign the
then-current form of Satellite Equipment Purchase Agreement. Dealer shall also
be responsible for (i) bearing all charges associated with equipment "hook-up"
and installation using only installers designated by the Company and (ii) all
ongoing equipment maintenance expenses. As long as Dealer complies fully and
completely with the terms of this Agreement, the Company will waive all monthly
programming charges associated with the network, otherwise Dealer agrees to pay
continually such then-current monthly programming charges.
d. ongoing assistance and advice by the Company's support staff to the
Dealer regarding store planning concepts and designs including production of
floor plans tailored to the Dealer's Store. Dealer shall be responsible for any
shipping and handling charges associated with the Company delivering plans or
materials to Dealer and excessive changes or modifications requested by the
Dealer may result in the Company charging Dealer for the charges or
modifications at its then-current hourly rate;
e. at no charge, the Dealer's Store will be listed on the Company's
World Wide Web Site. At Dealer's request, Company will provide assistance to the
Dealer in establishing its own World Wide Web Site, which assistance will be
charged at the Company's then-current hourly rate;
f. assistance to Dealer in financing its purchase of required
CarpetMAX -REGISTERED TRADEMARK- signage at rates competitive with third
party financing otherwise available to the Dealer; and
g. rebates from the Company's designated carpet suppliers equal to 2% of
the Dealer's total purchases of selected carpet products from such designated
suppliers. Dealer acknowledges that not all product purchases from designated
suppliers will generate rebates. Company will provide Dealer with a list of
designated suppliers on a regular basis. Such cash rebates, if any, will be paid
to Company or its affiliate on behalf of Dealer and distributed to Dealer on an
annual basis.
6. DEALER'S OPERATIONAL COVENANTS
Dealer acknowledges and agrees that its operation of the Store is
important to the Company in order to develop and maintain high and uniform
standards of quality, service, facilities and techniques, to the increase the
demand for the System and the products offered thereunder, and to protect the
reputation and goodwill of the Company and its franchisees. Accordingly, Dealer
specifically covenants and agrees:
a. Dealer agrees to use its best efforts to promote the products and
services offered under or through the CarpetMAX -REGISTERED TRADEMARK- System
at each Store identified on Schedule "A". Subject to compliance with Sections
6c. and d. below, this Agreement does not preclude Dealer from offering for
sale at each Store any type of products or services it desires.
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b. Dealer acknowledges and agrees that if it purchases
private-labeled products from Company and it elects to give or use the
CarpetMAX -REGISTERED TRADEMARK- warranty associated with such products,
then, as between the parties to this Agreement, Dealer is the party primarily
responsible for honoring such warranty to the extent Dealer is capable of
doing so and the warranty would reasonably be assumed to require Dealer to do
so. Dealer agrees to indemnify, defend and hold harmless the Company, its
officers, directors, shareholders, and affiliated entities from any and all
liability arising out of Dealer's failure to fulfill the foregoing or to
honor its responsibilities under the CarpetMAX -REGISTERED TRADEMARK-
warranty. Company agrees to cause all manufacturers of its private-labeled
products to warrant such products to Dealer in accordance with their normal
and customary warranty practices.
c. Dealer recognizes that it is essential to the proper marketing of
all CarpetMAX -REGISTERED TRADEMARK- franchisees and the preservation and
promotion of their reputation and acceptance by the public at large, that
uniform standards of quality be maintained. Accordingly, as part of the
consideration for this Agreement, Dealer agrees that it will at all times
offer and dispense such products and services as shall meet the reasonable
specifications and standards designated from time to time in writing by the
Company. Additionally, since all CarpetMAX -REGISTERED TRADEMARK- franchisees
of the Company are required to execute a franchise agreement in a form
substantially similar to this Agreement, Dealer understands the importance of
complying with the terms of this Agreement and certain specifications and
standards mandated by the Company and, where appropriate, Dealer will operate
its Store in accordance with the System as it may change from time to time.
d. Throughout the term of this Agreement, Dealer shall purchase no
less than 90% of its total purchases of floor covering products intended for
sale through its Store from manufacturers, suppliers or distributors
designated by the Company and sanctioned by the CarpetMAX -REGISTERED
TRADEMARK- Advisory Council (the "CAC"). Company and the CAC reserve the
right to designate, from time to time, a supplier for products or materials
to be sold through the Store and to require the Dealer to use such designated
supplier. Consistent with the foregoing and unless otherwise agreed to by the
Company, throughout the term of this Agreement, Dealer agrees to offer
CarpetMAX -REGISTERED TRADEMARK- Center Stage line of floor covering and
related products at the Store. Dealer acknowledges that in consideration of
this Agreement and the services provided by the Company hereunder, the
Company or its affiliates may receive rebates or commissions from the
Company's designated suppliers or distributors based upon Dealer's purchases
or, in the event the Company has negotiated a price discount for its
franchisees with selected suppliers or distributors, the full dollar amount
of the discount eligible to be received by the franchisees may not be passed
on to Dealer and will instead be paid to the Company or its affiliates.
Dealer's failure to comply with the purchase obligations of this Section 4d.
above shall constitute a default of this Agreement thereby entitling the
Company to terminate this Agreement and the CarpetMAX -REGISTERED TRADEMARK-
franchise granted hereunder. The prices charged to Dealer for products and
services obtained through designated suppliers or distributors may contain
rebates other than those paid to the Company or its affiliates as described
above which the Company is collecting on behalf of the Dealer. Company shall
hold these funds for Dealer and, on an annual basis, shall remit to Dealer
the amount of rebates allocable to its respective purchases from designated
suppliers or distributors. All sums which the Company shall receive on
Dealer's behalf are acknowledged to be Dealer's funds and are being held by
the Company for the administrative convenience of Dealer and the Company.
Notwithstanding the foregoing, to assure payment to the Company of monies due
to it from the Dealer, Dealer hereby irrevocably grants the Company the
continuing right to use all such rebates described herein to offset any and
all monies due to Company or any affiliate by Dealer including, without
limitation, monies Company has paid to unaffiliated third parties due to
Company's guarantee of Dealer's obligation to such third parties. Company
will maintain records of Dealer's purchases, however, to help verify that
Dealer is paid the proper rebate amount due to it, Dealer shall provide
written documentation to the Company, within 60 days after the end of each
month, specifying the amount of its purchases from designated suppliers or
distributors during the preceding month. For example, purchases during
October shall be reported to Company by the end of December.
e. Company may from time to time offer guidance to Dealer regarding
its retail prices for products and services offered by CarpetMAX -REGISTERED
TRADEMARK- franchisees. Dealer shall not be obligated to accept any such
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guidance, and shall have the sole right to determine the prices charged for
products and services at its Store. No such guidance shall be deemed or
construed to impose upon the Dealer any obligation to charge any fixed minimum
price for any product or service offered by Dealer.
f. Dealer will respond in a timely manner to all surveys regarding the
operation of its Store conducted by the Company or any affiliate.
g. Dealer will meet the minimum standards of business ethics which are
adopted by the local chapter of the Better Business Bureau (or a similar
organization acceptable to the Company) operating within the Exclusive Area. In
addition, Dealer will notify the Company promptly of any complaint or claim
filed against Dealer with the Better Business Bureau or such other organization,
and will act diligently to resolve the claim or complaint to the Company's
satisfaction in a timely manner, but in no event later than 30 days after the
complaint or claim is filed.
h. On an annual basis, Dealer will submit to the Company exterior and
interior color photographs of its Store sufficient for the Company to view all
areas of the Store including, without limitation, merchandising displays, the
Store's floor plan and layout, all signage and training facilities and offices.
i. Dealer agrees to send at least one management level employee to
all CarpetMAX -REGISTERED TRADEMARK- regional meetings and all CarpetMAX
-REGISTERED TRADEMARK- conventions, annual or otherwise. Company agrees not
to charge a registration fee for these meetings or conventions, although
Dealer is responsible for its transportation and living expenses (including
reimbursement of room reservation charges incurred by Company) incurred in
attending these meetings and conventions.
j. At each Store, Dealer must enroll and participate in either the
"Wall-To-Wall" consumer credit program or the successor program thereto, or an
alternative consumer credit program approved by the Company. Dealer agrees to
use its best efforts to ensure its customers are aware of the availability of
these programs prior to or at the time of the purchase of floor covering items.
k. Dealer understands and acknowledges that to help the quality,
standards and uniformity of the CarpetMAX -REGISTERED TRADEMARK- System and
the reputation and goodwill associated with the CarpetMAX -REGISTERED
TRADEMARK- name and the Proprietary Marks, Dealer covenants and agrees to
deal fairly and honestly with all customers and to render prompt, courteous
and willing service. Dealer covenants and agrees to comply fully with all
applicable federal, state and local laws, statutes, ordinances and
regulations governing the operation of its business including, but not
limited to, those regulations promulgated by the Equal Employment Opportunity
Commission and the Occupational Safety and Health Administration. Dealer will
conduct itself and operate its Store in a manner so as to promote a good
public image in the business community. Consistent with the foregoing, Dealer
shall properly respond to customer inquiries or complaints and shall take
such other steps as may be required to provide positive customer relations.
Dealer shall use its best efforts to promote the reputation of the System and
the Proprietary Marks by fostering the positive growth and development of the
community surrounding its Store through contributions (financial or
otherwise) to local charities and conducting other public relations functions
which will reflect positively on the Dealer, the Store and the CarpetMAX
-REGISTERED TRADEMARK- brand.
l. Dealer will promptly pay when due all taxes and other obligations
owed to third parties including, without limitation, all federal, state and
local taxes, and any and all accounts payable and other indebtedness of every
kind, incurred by Dealer in the operation of its Store including debts to the
Company and its affiliates and undisputed debts to its distributors and
suppliers.
m. Dealer shall at all times actively promote the sale of products
from the Store and will use its primary and best efforts to cultivate,
develop and expand the market for CarpetMAX -REGISTERED TRADEMARK- branded
products at the Store.
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n. Dealer's sales management and sales staff employees must successfully
complete a minimum level of mandatory on-going training programs offered by the
Company at one of the Company's designated training facilities. This training
will be offered without charge. Company will advise the Dealer in writing of the
types of training offered, the schedules for training and the job description of
those persons required to attend each program. Dealer shall be responsible for
purchasing all training materials and manuals and for any travel, room and board
expenses and other expenses incurred in connection with attendance at the
training programs, as well as wages or salaries of its employees attending the
training.
o. All Dealer's floor covering installers must successfully complete,
achieve and maintain the level of "accredited floor covering installer" as
defined by the Company's then-current floor covering accreditation standards.
Dealer agrees that only accredited installers shall install products purchased
at the Store and, at all times during performance of floor covering installation
and related services, all accredited installers must wear identification issued
by the Company to designate such accreditation.
p. Each CarpetMAX -REGISTERED TRADEMARK- Store operated by Dealer
must participate in the Company's satellite network, which permits the
Company to broadcast information about sales training, store merchandising,
roll and remnant specials, area rug runs and other topics which the Company
believes to be of interest to the franchises. Unless otherwise agreed to by
the Company, Dealer will be required to purchase the necessary equipment from
the Company or its affiliates and to install the equipment using only
installers approved by the Company. Dealer will be responsible for all
hook-up charges and other installation expenses necessary to install the
equipment at a Store. As long as Dealer complies fully and completely with
the terms of this Agreement, the Company will waive the monthly programming
charges normally associated with its satellite network.
q. Dealer will require all employees to wear the standard
then-current CarpetMAX -REGISTERED TRADEMARK- attire established and
approved by the Company. Company will sell the attire to the Dealer at its
cost. All employees will present a clean and neat appearance and will
practice good personal hygiene and grooming.
r. Dealer must display prominently at least one CarpetMAX
-REGISTERED TRADEMARK- Flooring Center stand-alone logo sign inside and
outside its Store, in a manner prescribed or approved in writing by the
Company. The signs must be purchased from a designated signage supplier or
another supplier approved in writing in advance by the Company. Additionally,
the Dealer will only display signs bearing the Proprietary Marks which comply
with guidelines established by the Company and which have been approved by
the Company in writing.
s. Dealer agrees that at least one owner or general manager of the
Dealer will attend the initial CarpetMAX -REGISTERED TRADEMARK- orientation
training program conducted by the Company for CarpetMAX -REGISTERED
TRADEMARK- dealers at such time and place as the Company shall decide and
shall be communicated to Dealer. Dealer shall be responsible for purchasing
all training materials and for any travel, room and board and other expenses
incurred by its attendees in connection with such training.
t. Dealer agrees to ensure that each Store obtains and maintains
adequate computer and related equipment necessary and appropriate for
Dealer's employees and agents at each Store to access at all times the
Company's on-line extranet communication system. In connection with its use
of the extranet communication system, Dealer agrees to pay the Company a
monthly administration and license fee for each computer user. Dealer agrees
to pay such license fees on a yearly basis in advance. Finally, in connection
with its use of the extranet communication system, Dealer shall be
responsible for ensuring each computer has access to the internet through an
acceptable internet service provider and for paying all fees associated with
such internet access.
u. Dealer may at its expense create its own web site for its Store or
Stores. If the web site will contain any Proprietary Marks or reference The
Maxim Group, Inc. or any affiliate, Dealer must submit all web site plans and
information to the Company for its consent prior to creation and use. All web
sites
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created and utilized by Dealer must conform to the Company's standards.
Company shall consent to or reject such plans and materials within 20 days of
receipt. Upon written approval from Company, Dealer must supply Company with
its web site address and domain names. Dealer acknowledges that the Company
has the sole right and interest in and to all domain names and web sites
associated with the Proprietary Marks or the CarpetMAX -REGISTERED
TRADEMARK- franchise licensed hereunder.
7. ADVERTISING AND MARKETING
Dealer acknowledges and agrees that it is important for the System in
general, and the other franchisees of the System in particular, that
advertising and marketing programs used by franchisees of the System attempt
to maximize general public recognition and acceptance of CarpetMAX
-REGISTERED TRADEMARK- branded products and the retail outlets offering
CarpetMAX -REGISTERED TRADEMARK- branded products. Accordingly, Dealer
agrees that the Company and its CAC shall oversee all advertising and
promotional programs undertaken by Dealer and other franchisees with the sole
discretion to approve or disapprove the creative concepts, materials and
media used in such programs, and the placement and allocation thereof. Dealer
agrees not to offer any advertising or promotional programs which do not
conform to the specifications, regulations and code of ethics outlined and
provided by the Company and the CAC. Furthermore, in order to show uniformity
and standardization among all franchisees of the System, Dealer shall obtain
the Company's prior written approval of all written advertising or other
marketing and promotional programs not previously approved by the Company
regarding the Store including, without limitation, "yellow pages"
advertising, newspaper ads, flyers, brochures, coupons, direct mail pieces,
public relations activities, telemarketing programs and campaigns, specialty
and novelty items and radio and television advertising. Any proposed written
advertising or description of a marketing or promotional program not
previously approved by the Company shall be submitted to the Company at least
20 days prior to publication, broadcast or use. Dealer acknowledges that
advertising and promoting the Store in accordance with the Company's
standards and specifications for advertising is an essential aspect of the
Proprietary Marks and the CarpetMAX -REGISTERED TRADEMARK- brand and Dealer
agrees to comply with all advertising standards and specifications. Dealer
shall be solely responsible for compliance with all laws applicable to
advertising in Dealer's Exclusive Area and, in particular, Dealer agrees to
take adequate measures to ascertain all legal requirements with respect to
Dealer advertising and to comply fully with all such requirements. In no
event shall Dealer be required by the Company to engage in any advertising
activities which would violate applicable law in Dealer's jurisdiction.
8. CONFIDENTIAL INFORMATION
Dealer shall hold in trust and confidence for the benefit of the
Company and its affiliates, and shall not communicate, divulge, transmit,
disclose or use for the benefit of any other person, partnership,
association, or corporation any information, knowledge, written materials,
manuals, price lists, trade secrets, techniques, systems, plans, processes or
know-how concerning the Company and its affiliates, the System or the
franchise licensed hereunder (collectively, "Confidential Information"),
which may be communicated to Dealer, or of which Dealer may be apprised, by
virtue of Dealer's operation of a CarpetMAX -REGISTERED TRADEMARK- franchise
under the terms of this Agreement. Dealer acknowledges that the Confidential
Information is not, by definition, generally known in the trade and is beyond
the present skills and experience of Dealer and that for Dealer to develop
such information on its own would be expensive, time-consuming and difficult.
Dealer further acknowledges that the Confidential Information provides a
competitive advantage and will be valuable to Dealer in the development of
its business, and that gaining access to such information is therefore a
primary reason why Dealer is entering into this Agreement. In connection with
the foregoing, Dealer will not make unauthorized copies of any portion of the
Confidential Information and will adopt and implement reasonable procedures
from time to time to prevent unauthorized use or disclosure of the
Confidential Information. Dealer shall divulge such Confidential Information
only to such of its employees as must have access to it in order to operate
the Store licensed hereunder and to comply with this Agreement and who have
agreed in writing to comply with the provisions of this Section 8, which
writing must be in a form acceptable to Company. Company reserves the right
to require Dealer to cause its officers, directors, partners, shareholders
and general manager to sign the CarpetMAX -REGISTERED TRADEMARK-
Nondisclosure Agreement containing these
-9-
restrictions. Dealer hereby acknowledges that the Company and its affiliates
have sole ownership rights in the Confidential Information and that all such
Confidential Information is of significant value to the Company and its
affiliates. Finally, the Dealer acknowledges and agrees that the use of the
Confidential Information in any other business other than its CarpetMAX
-REGISTERED TRADEMARK- franchise would constitute an unfair method of
competition and the protection and maintenance of the Confidential
Information is essential to the Company and its affiliates and that
unauthorized use or disclosure of the Confidential Information will result in
irreparable harm to the Company and its affiliates. The obligations of
confidentiality under this provision shall be effective as of the date first
written above and shall continue in full force and effect during the term of
the Dealer Agreement and for 5 years thereafter; provided, however, that as
to any item of Confidential Information that constitutes a trade secret under
applicable law, the obligations of confidentiality contained herein shall
continue for so long as allowed under applicable law.
9. DISCLAIMER OF WARRANTY AND LIMITATIONS ON LIABILITY
COMPANY AND ITS AFFILIATES SHALL NOT BE LIABLE FOR FAILURE OR DELAY
IN FILLING THE DEALER'S ORDERS EITHER BY THE COMPANY OR BY ANY DESIGNATED
SUPPLIER OR DISTRIBUTOR. COMPANY MAKES ARRANGEMENTS FOR THE SALE OF PRODUCTS
ON AN "AS IS" BASIS AND IN THEIR PRESENT CONDITION, AND COMPANY MAKES NO
WARRANTIES, EXPRESS AND/OR IMPLIED BY LAW OR OTHERWISE, REGARDING THE
CONDITION, WORKMANSHIP, MERCHANTABILITY AND FITNESS OF THE PRODUCTS FOR ANY
PARTICULAR USE AND PURPOSE. THE SOLE AND EXCLUSIVE REMEDY IF THE DEALER IS
DISSATISFIED WITH THE PRODUCTS IS FOR THE DEALER TO RETURN THE PRODUCTS TO
THE MANUFACTURER, SUPPLIER OR DISTRIBUTOR. UNDER NO CIRCUMSTANCES SHALL THE
COMPANY AND/OR ITS OFFICERS, DIRECTORS AND SHAREHOLDERS, AND AFFILIATED
ENTITIES, BE RESPONSIBLE AND/OR LIABLE FOR ANY DAMAGES, EXPENSES, INTEREST,
DEBTS, DUES, TAXES, FINES, INJURIES, LIABILITIES, ASSESSMENTS, COSTS, EVENTS,
CLAIMS, ACTIONS, LAWSUITS, ATTORNEYS' FEES AND ENGINEERING FEES ARISING
DIRECTLY AND/OR INDIRECTLY FROM THE PRODUCTS AND/OR THE USE OF THE PRODUCTS
BY THE DEALER OR ANY THIRD PARTY. THE DEALER AGREES TO INDEMNIFY, DEFEND AND
HOLD HARMLESS THE COMPANY FROM ANY AND ALL LIABILITY ARISING OUT OF THE SALE
OF ANY PRODUCTS OR SERVICES SOLD BY DEALER.
10. RESTRICTIVE COVENANT
DEALER ACKNOWLEDGES THAT, IN ADDITION TO THE RIGHT TO USE THE
PROPRIETARY MARKS HEREUNDER, THE COMPANY IS ALSO LICENSING COMMERCIALLY
VALUABLE INFORMATION WHICH COMPRISES AND IS PART OF THE SYSTEM INCLUDING,
WITHOUT LIMITATION, MARKETING AND ADVERTISING INFORMATION AND TECHNIQUES AND
ACCESS TO FLOOR COVERING PRODUCTS AND METHODS OF OPERATING A RETAIL FLOOR
COVERING BUSINESS, AND THAT THE VALUE OF THIS INFORMATION DERIVES NOT ONLY
FROM THE TIME, EFFORT AND MONEY WHICH WENT INTO ITS CREATION, BUT FROM THE
USAGE BY ALL FRANCHISEES USING THE SYSTEM. ACCORDINGLY, DURING THE TERM OF
AGREEMENT, DEALER AGREES THAT NEITHER IT NOR ANY OF ITS OFFICERS, DIRECTORS,
SHAREHOLDERS OR PARTNERS, NOR ANY AFFILIATED ENTITIES, SHALL JOIN,
PARTICIPATE IN, BE A MEMBER OF, BE AFFILIATED WITH, BE A LICENSEE OF, OR
OTHERWISE PURCHASE PRODUCTS OR SERVICES, DIRECTLY OR INDIRECTLY, FROM ANY
FLOOR COVERING PURCHASING GROUP, FRANCHISE SYSTEM OR LICENSE PROGRAM WHICH
INVOLVES FLOOR COVERING PRODUCTS AND RELATED SERVICES INCLUDING, WITHOUT
LIMITATION, CARPET ONE, ABBEY CARPET OR ANY AND OTHER SUCH SIMILAR GROUPS.
11. RIGHT TO ACCESS, INSPECTION AND FINANCIALS
a. Within 120 days from the close of the Dealer's fiscal year end,
Dealer shall provide the Company with the Dealer's financial statements
including balance sheet and income statement which must include a statement
as to the Dealer's sales volume of floor covering products and its gross
profit margin from the sale of these products. Company may compile and
distribute these numbers, on an anonymous
-10-
basis, to permit CarpetMAX -REGISTERED TRADEMARK- franchisees to compare the
results of their operations with the operations of other franchisees. Dealer
hereby consents to the distribution of such financial information and results.
b. Dealer acknowledges and agrees that the Company shall have the
right to examine the Store and the Dealer's books, records and documents
including, without limitation, the products offered for sale at the Store, to
ensure the Dealer is complying with the terms of this Agreement. Company
agrees to conduct such inspections, if at all, during regular business hours,
but Company is not required to provide prior notice to Dealer.
12. INDEMNIFICATION AND INSURANCE
a. Dealer agrees to indemnify and hold Company harmless from and
against any expense, liability or damage (including attorneys' fees) Company
may incur as a result of claims, demands, costs or judgments, of any kind or
nature, by anyone whomsoever, arising out of, or otherwise connected with,
the ownership, maintenance or operation of the Store by the Dealer, except to
the extent any such expense, liability or damage (including attorneys' fees)
results from the negligence or other act or omission of Company.
b. Dealer agrees to maintain, at Dealer's expense, insurance during
the term hereof as follows:
(i) Dealer shall maintain Commercial General Liability Insurance
coverage on the Store and for the operation of the franchise, including but not
limited to, coverage against all types of public liability, including products
liability, premises liability, completed operations liability, against claims
for personal injury, bodily injury, death or property damage suffered by others
upon, in or about the Store or as a result of the use of products sold by, or
services rendered by, the Dealer, with a minimum coverage of $1,000,000 per
accident or occurrence affecting one or more persons or property damage and
$1,000,000 aggregate.
(ii) Dealer shall maintain motor vehicle liability insurance for
any claims arising out of the Store or occurring as a result of the maintenance
or operation by the Dealer, its employees or persons doing business for the
Dealer of any automobiles, trucks or other vehicles or airplanes or other
facilities with a minimum coverage of $1,000,000 for each accident or occurrence
affecting one or more persons or property damage.
(iii) Worker's compensation, unemployment compensation,
disability insurance, social security and other mandatory insurance coverages
shall be maintained in such amounts as may now or later be required by any
applicable law.
All insurance policies shall be issued by an insurance carrier rated "A" or
better by ▇▇▇▇▇▇ ▇. Best and Company, Inc. All policies described in (i) and
(ii) above shall insure Dealer and name Company as an additional insured, and
shall stipulate that Franchisor shall receive at least 30 days written notice of
cancellation or modification. Dealer's obligation to obtain and maintain the
insurance policies described above shall not be limited in any way by reason of
any insurance which may be maintained by Company, nor shall Dealer's performance
of this obligation relieve it of lia bility under the indemnity provision set
forth in subsection (a).
13. TERMINATION
a. If the Dealer is in compliance with this Agreement and the Company
materially breaches this Agreement, the Dealer shall have the right to terminate
this Agreement if the Dealer gives written notice of such breach to the Company
and the Company does not: (a) correct such material breach within 90 days after
receipt of such notice; or (b) if such material breach cannot reasonably be
cured within 90 days after receipt of such notice, undertake within 10 days
after receipt of such notice reasonable efforts to cure such
-11-
breach and continue such reasonable efforts so as to complete such cure as soon
as is practicable. To terminate this Agreement under this Section 13a., Dealer
must give a separate written notice of termination, which will be effective 10
days after the Company's receipt of such notice to the Company. Any termination
of this Agreement by the Dealer other than as provided in this Section 13a.
shall be deemed a termination by the Dealer without cause. Any termination of
this Agreement shall not relieve Dealer of any monetary or other obligation due
and owing to the Company including, without limitation, the obligation to pay
the entire amount of the Franchise Fee even if such payments would be due
subsequent to the effective date of termination.
b. Dealer acknowledges and agrees that each of Dealer's obligations
described in this Agreement is a material and essential obligation of Dealer and
that non-performance of such obligations will adversely and substantially affect
the Company, the System and the other franchisees of the System. Accordingly,
Dealer agrees that the exercise by Company of the rights and remedies set forth
herein is appropriate and reasonable.
(i) Company shall have the right, at its option, to terminate
this Agreement and all rights granted to Dealer hereunder, without affording
Dealer any opportunity to cure any default (subject to any state laws to the
contrary, if applicable) effective upon receipt of notice by Dealer, upon the
occurrence of any of the following events:
A. If Dealer misuses the System or Proprietary Marks,
or any other names, marks, systems, insignia, symbols or rights provided by
Company to Dealer, or otherwise materially impairs the goodwill associated with
the System and the Proprietary Marks or Company's rights therein and fails to
correct the misuse or impairment within 5 days notification from Company.
B. If Dealer fails to pay any amounts due Company or
any affiliate or any of the Company's designated suppliers or distributors
within 10 days.
C. If Franchisee fails to submit to Franchisor any
financial or other information required under this Agreement and fails to
correct the failure within 10 days after notification from Company.
D. If Franchisee denies Franchisor the right to inspect
the Store as permitted hereunder.
E. If Dealer attempts any assignment other than in
accordance with Section 15 hereof.
F. If Franchisee defaults under any lease or sublease
of the Store or loses the right to possession thereof for any reason whatsoever.
G. If a threat or danger to public health or safety
results from the operation of the Store.
H. If Dealer fails to obtain Company's written approval
or consent prior to taking any action when such consent or approval is expressly
required by this Agreement.
I. If Dealer abandons the Store or the Store ceases
regular operations for a period of 5 consecutive days or any shorter period that
indicates an intent by Dealer to discontinue operation of the Store, except for
a period of not more than 180 days as a result of fire, storm, flood,
condemnation or other similar event occurring out of the ordinary course of
business and beyond the control of Dealer.
-12-
J. If Dealer permits a material violation of any law,
ordinance, rule or regulation of a governmental agency in connection with the
operation of the Store, and permits the same to go uncorrected after
notification, unless there is a bona fide dispute as to the violation or
legality of such law, ordinance, rule or regulation, and Dealer promptly resorts
to courts or forums of appropriate jurisdiction to contest such violation or
illegality.
K. If Dealer fails to cooperate with the implementation
of any advertising or promotional programs or activities as required by Company
pursuant to Sections 6 and 7 or if Dealer takes any unauthorized actions with
respect to advertising and promotional activities in violation of this Agreement
and fails to correct the failure or cure the unauthorized action within 10 days
upon notification from Company.
L. If Dealer has received three notices of default from
Company within a 12-month period, regardless of whether the defaults were cured
by Dealer.
M. If Dealer or any executive officer or person owning
more than 10% of any class of voting securities of Dealer or any general partner
of Dealer is convicted of a felony, a crime involving fraud or moral turpitude
punishable by a term of imprisonment in excess of one year, or any crime or
offense reasonably likely, in the sole opinion of Company, to materially and
unfavorably affect the Proprietary Marks, the System and the associated goodwill
and reputation thereof.
N. If Dealer, or any person controlling, controlled by,
or under common control with Dealer, or any general partner of Dealer, shall
become insolvent by reason of inability to pay debts as they mature; or is
adjudicated a bankrupt, files or has filed against it a petition in bankruptcy,
reorganization or similar proceeding under federal bankruptcy laws; or if a
receiver, permanent or temporary, of the business, assets or property of Dealer
or any such person or any part thereof, is appointed by a court of competent
authority, or if Dealer or any such person requests the appointment of a
receiver or makes a general assignment for the benefit of creditors; or if a
final judgment against Dealer or any such person in the amount of $10,000 or
more remains unsatisfied of record for 30 days or longer; or if the bank
accounts, property or receivables of Dealer or any such person are attached and
such attachment proceedings are not dismissed within a 30 day period; or if
execution is levied against the business or property of Dealer or any such
person, or if suit to foreclose any lien or mortgage against the Store or the
equipment thereof is instituted and not dismissed within 30 days.
O. If Dealer commits fraud in connection with the
purchase or operation of Store or otherwise engages in conduct that, in the sole
judgment of Company, materially impairs the goodwill associated with the
Proprietary Marks or the System.
P. If Dealer makes, or has made, any material
misrepresentation to Company in connection with this Agreement or in conducting
the Store.
Q. The Dealer or any person controlling, controlled
by, or under common control with Dealer, or any general partner of Dealer, is
convicted or pleads no contest to a felony, or to another offense or crime
that may adversely affect the reputation of the Dealer, the Company or the
Store or the goodwill associated with the Proprietary Marks, or engages in
activities or conduct related to the Store or otherwise which adversely
affects the reputation of the Company, its franchisees, CarpetMAX
-REGISTERED TRADEMARK- stores or the goodwill associated with the Proprietary
Marks.
R. If Dealer fails to comply with the prohibitions set
forth in Section 1f.
(ii) Subject to Sections 13(b)(i), 13(b)(iii), and 13(b)(iv),
the Company shall have the right to terminate this Agreement (subject to any
state laws to the contrary, if applicable), effective upon 30 days' written
notice to Dealer, if Dealer breaches any other provision of this Agreement, and
fails to cure the
-13-
default during such 30 day period. In that event, this Agreement will terminate
without further notice to Dealer, effective upon expiration of 30 day period.
Notwithstanding the foregoing, if the breach is curable, but is of a nature
which cannot be reasonable cured within such 30 day period, and Dealer has
commenced and is continuing to make good faith efforts to cure the breach during
such 30 day period, Dealer shall be given an additional reasonable period of
time to cure the default, and this Agreement shall not terminate.
(iii) If the Company believes that the Dealer is not purchasing
to fulfill its obligations under Section 6d., the Dealer, after 20 days' written
notice and demand from the Company, shall submit to the Company a written
statement setting forth all of the Dealer's purchases of products from
designated suppliers or distributors, which statement shall be certified by an
officer of the Dealer. Failure to supply this statement shall permit the
Company, at its option, to terminate immediately this Agreement. If the
statement reveals that the Dealer is not purchasing at the required levels, the
Dealer shall have 90 days after written notice and demand from the Company to
bring its purchases to the required levels and to demonstrate such compliance to
the satisfaction of the Company (which satisfaction shall not be unreasonably
withheld), failing which the Company may immediately terminate this Agreement.
(iv) Company may terminate this Agreement within 60 days of
the Effective Date in the event the Company discovers Dealer has
misrepresented its financial condition or credit history to the Company
during the evaluation process conducted by the Company prior to the execution
of this Agreement or that Dealer's business practices, financial condition or
reputation in the floor covering industry will reflect adversely upon the
Company or the System if Dealer were to remain part of the group of CarpetMAX
-REGISTERED TRADEMARK- franchisees. In the event the Company terminates this
Agreement pursuant to the foregoing, the Dealer shall receive a full refund
of the Franchise Fee actually paid hereunder; provided, however, the Dealer
fully and completely fulfills its obligation as set forth in Section 14 of
this Agreement.
c. Immediately after the execution of this Agreement, Dealer will
receive the Company's current price list for the various products and services
available to the Dealer as a franchisee of the System. Dealer shall have 3
business days from its receipt of the price list to both review it and notify
the Company in writing of the Dealer's approval or disapproval of the terms
thereof. If Dealer notifies the Company in writing that the terms of the price
list are unacceptable, then this Agreement and the rights and obligations of the
parties hereunder shall cease and be deemed to be immediately canceled. Under
such circumstances, any Franchise Fee that may have been previously paid to the
Company by Dealer in connection with this Agreement shall be promptly remitted
to the Dealer. If Dealer expressly notifies the Company that it approves the
price list within the applicable 3 business day period or, in the event that the
Company receives no notice from Dealer during such review period, then this
Agreement shall be deemed to have been fully executed as of the date first above
written. Dealer acknowledges that all information contained in the price list is
Confidential Information of the Company and shall be kept confidential pursuant
to the terms of Section 8 hereof. The price list may not be copied or reproduced
in any manner or for any reason without the Company's prior written consent. If
Dealer elects to cancel this Agreement, it shall immediately return the price
list to the Company and comply with the requirements set forth in Section 14
hereof.
d. 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 DEALER'S RIGHTS REGARDING
TERMINATION OR EXPIRATION OF THIS AGREEMENT.
14. RIGHTS AND DUTIES OF PARTIES UPON TERMINATION
Upon termination of this Agreement for any reason, Dealer shall
immediately cease to be authorized to operate the CarpetMAX -REGISTERED
TRADEMARK- franchise granted hereunder and Dealer shall:
(i) Pay to the Company and its affiliates within 15 days after
the effective date of termination, any and all amounts due by the Dealer to the
Company and its affiliates which are then unpaid.
-14-
(ii) Immediately cease to identify the Store as being, or having
been, associated with the Company and cease immediately using any Proprietary
▇▇▇▇ or any colorable imitation of any Proprietary ▇▇▇▇ in any manner or for any
purpose, or use for any purpose, any trade name, trademark, service ▇▇▇▇ or
other commercial symbol that suggests or indicates an affiliation with the
Company. Additionally, Dealer shall deliver to the Company or remove the
Proprietary Marks from all signs, advertising materials, invoices, forms or
other materials containing any Proprietary Marks or otherwise relating to the
Store, which removal or destruction shall occur within 30 days after termination
hereof and notify the telephone company and all telephone directory publishers
of the termination of the Dealer's right to use the Proprietary Marks. Dealer
acknowledges that, as between Dealer and Company, Company has the sole right to
and interest in all directory listings associated with any Proprietary Marks.
(iii) Immediately cease to use the Confidential Information for
any purpose and return immediately to the Company all copies of confidential
materials previously provided to the Dealer including all manuals, training
manuals, price lists and other written materials relating to the System or the
operation of a retail floor covering business as licensed hereunder.
(iv) Promptly undertake the final accounting to assist Company
in the determination of any fees and other indebtedness due to either party.
(v) Cease immediately to use any advertising materials provided
by the Company as well as any imitations or derivations of any such materials.
(vi) Promptly take such action as may be required to cancel all
fictitious or assumed names or equivalent registrations relating to its use of
any Proprietary Marks which are under the exclusive control of the Company or,
at the option of the Company, assign the same to the Company.
(vii) Cease to use any domain names or web sites associated
with the Proprietary Marks. Dealer acknowledges that the Company shall have
the right to direct InterNIC and other web search engines of the termination
or expiration of Dealer's right to use all domain names, web sites or other
search engines for the Store or Stores and to authorize InterNIC and all
other search engines to transfer to the Company or its assignee all domain
names, web sites and search engines associated with the Proprietary Marks or
the CarpetMAX -REGISTERED TRADEMARK- franchise licensed hereunder.
If Dealer fails to cease operation of the System and to effectuate the
other terms of this Agreement which arise as a result of the termination of this
Agreement, Dealer agrees that the Company shall be entitled to seek equitable
relief by way of temporary and permanent injunctions and such other and further
relief as a court may deem just and proper. Resort to such injunctive relief
shall not be construed as a waiver of any other right or remedy the Company may
have under this Agreement.
All obligations of Dealer which expressly or by their nature survive the
termination of this Agreement shall continue in full force and effect until such
obligations are fulfilled in full or by their nature expire.
15. TRANSFERABILITY OF INTEREST
a. This Agreement is personal to Dealer and, except as stated below,
Company shall not allow or permit any transfer, assignment, subfranchise or
conveyance of this Agreement or any interest hereunder. For purposes of this
Section 15, the term "transfer" includes Dealer's voluntary, involuntary, direct
or indirect transfer, assignment, sale, gift or other disposition of any
interest in this Agreement, the Dealer entity, the Store governed by this
Agreement or a substantial portion of the assets of the Store. Dealer shall not
engage in a transfer unless Dealer obtains Company's written consent, which
consent shall not be arbitrarily withheld, conditioned or delayed. Dealer
acknowledges that Company's right to approve or disapprove a proposed transfer
applies to the following: (1) if Dealer is a corporation, partnership, other
business
-15-
association, (i) to the addition or deletion of a shareholder, partner or member
or the transfer of ownership interest among existing shareholders, partners or
members, and (ii) to any proposed transfer of 25% or more of the interest
(whether stock, partnership interest or membership interest) to a third party;
and (2) if Dealer is an individual, to the transfer from such individual or
individuals to a corporation or entity controlled by them. Notwithstanding the
foregoing, transfers upon the existing shareholders, partners, members or other
existing holders of ownership interest in the Dealer, transfers to the spouse or
adult children of an existing shareholder, partner, member or other existing
holder of ownership interests in Dealer, or transfers to trust, family limited
partnerships or similar entities created primarily for estate planning purposes
for the benefit of an existing shareholder, partner, member or other existing
holder of an ownership interest in Dealer or the heirs of such party shall
require notice to Company but shall not require the consent of the Company,
provided, however, that if the effect of any of the transfers listed in this
sentence serve either individually or cumulatively with all such transfers that
preceded it, to effect a change in voting control of the Dealer or power to
appoint officers or directors of Dealer or to direct day-to-day operations of
the Dealer, such transfer shall require consent of the Company as described
herein. Subject to the satisfaction of the conditions set forth below in this
Section 15, this Agreement and all rights hereunder may be assigned or
transferred by the Dealer and, if so assigned or transferred, shall be binding
upon and inure to the benefit of the Dealer's successors and assigns.
b. No transfer of this Agreement shall be permitted unless each of the
following conditions is satisfied:
(i) The transferee shall enter into a written agreement with the
Dealer and the Company, in a form satisfactory to the Company, wherein the
transferee assumes all of the Dealer's obligations hereunder or, at the
Company's option, the proposed transferee shall sign the then-current form of
CarpetMAX -REGISTERED TRADEMARK- franchise agreement;
(ii) Dealer is current on all of its obligations (financial or
otherwise) to the Company; and all designated suppliers, distributors and
vendors;
(iii) The transferee shall be of good moral character and
reputation, shall have satisfactory business acumen, operational ability, and
management skills, and shall have sufficient financial resources (as determined
by the Company) to operate the Store(s) and the franchise license herein and
have a good credit rating and competent business qualifications reasonably
acceptable to the Company. Dealer shall provide the Company with such
information as the Company may require to make such determination concerning any
proposed transferee; and
(iv) Dealer executes a general release in a form prescribed by
the Company, releasing the Company and any affiliates, their respective
officers, directors, agents and employees from any and all claims which the
Dealer may have against them.
c. Dealer must give the Company at least 45 days' written notice prior
to any transfer of this Agreement by Dealer. The purpose of this provision is to
enable the Company, among other reasons, to comply with applicable state or
federal franchise disclosure laws. In addition, Dealer must, within 15 days of
its receipt of an offer to assume Dealer's franchise or Dealer's offer to sell
the franchise, give the Company written notice thereof. The purpose of this
provision is to enable the Company to comply with any applicable state or
federal franchise disclosure laws or rules.
d. This Agreement may be unilaterally assigned and transferred by
Company and will inure to the benefit of Company's successors and assigns.
Company will provide Dealer with written notice of any such assignment or
transfer and the assignee will be required to fully perform Company's
obligations under this Agreement.
-16-
e. Any transfer in violation of this Section 15 shall be deemed null and
void and of no force or effect.
16. GOVERNING LAW
All matters relating to arbitration shall be governed by the Federal
Arbitration Act (9 U.S.C. ss. 1 eT Seq.). Except to the extent governed by the
Federal Arbitration Act as required hereby, the United States Trademark Act of
1946, as amended, or other federal law, this Agreement, the franchise and the
relationship between the parties will be governed by and construed and enforced
in accordance with the laws of the State of Georgia, which laws shall prevail in
the event of any conflict of law; provided, however, that the application of
such law shall not abrogate or reduce any rights of Dealer provided for under
the existing laws of any other jurisdiction which by their express terms, apply
and supersede Georgia law. Dealer hereby irrevocably agrees that any legal
action or proceeding arising out of or relating to this Agreement or the
relationship established hereunder and not subject to arbitration under Section
24 hereof shall be brought in the courts of the State of Georgia sitting in ▇▇▇▇
County, or of the United States of America for the Northern District of Georgia,
as the Company may elect. The parties agree that this Agreement was entered into
in the State of Georgia and that substantial performance of all obligations
hereunder was rendered in Georgia and that there is a regular stream of business
activity between Dealer and the Company from and into the State of Georgia.
Accordingly, the Dealer hereby irrevocably accepts and submits it generally and
unconditionally, for itself and with respect to its property, to the
jurisdiction of any such court in any such action or proceeding and hereby
waives, to the extent permitted by applicable law, defenses based on
jurisdiction, venue or FORUM NON CONVENIENS.
17. INDEPENDENT CONTRACTOR
a. This Agreement does not form a fiduciary relationship or constitute
the Dealer as agent, legal representative, joint venturer, partner, employee, or
servant of the Company for any purpose whatsoever; and it is understood between
the parties hereto that the Dealer shall be an independent contractor and is in
no way authorized to make any contract, agreement, warranty or representation on
behalf of the Company, or to create any obligation, express or implied, on
behalf of the Company. The Company will have no liability for any sales,
service, use, excise, income, property or other taxes levied against the Dealer
or its assets or on the Company in connection with the business conducted by
Dealer or any payments the Dealer makes to the Company pursuant to this
Agreement or any related agreement. Neither party may represent to anyone else
that their relationship is other than that which is described herein, and
neither party shall be obligated by, or have any liability under any agreements
or representations made by the other that are not expressly authorized
hereunder, nor shall the Company be obligated for any damages to any person or
property directly or indirectly arising out of the operation of the Dealer's
Store.
b. If requested by the Company, the Dealer shall prominently display
in its place of business, a certificate from the Company stating that the
CarpetMAX -REGISTERED TRADEMARK- Store is operated by Dealer under the
licenses granted herein, and not as an agent of the Company.
18. WAIVERS
Waiver by the Company of any particular default by Dealer shall not
effect or impair the Company's right with respect to enforcement of any
subsequent default of the same or of a different nature; nor shall subsequent
acceptance by the Company of a partial cure after any breach by Dealer of any
terms, covenants or conditions of this Agreement constitute a waiver by the
Company. The Company will not be deemed to have waived its right to demand exact
compliance with any of the terms of this Agreement at a later time upon notice
to Dealer. All remedies, either under this Agreement, at law, in equity, or
otherwise afforded to either party, shall be cumulative and not alternative and
may be exercised simultaneously or sequentially in any order.
-17-
19. INJUNCTIVE RELIEF
Notwithstanding anything to the contrary contained in Section 24, the
Company will have the right in a proper case to obtain temporary restraining
orders and temporary and preliminary injunctive relief from a court of competent
jurisdiction in order to enforce the provisions of this Agreement relating to
the Proprietary Marks, the obligations of Dealer upon termination of this
Agreement, the protection of the Company's Confidential Information or to
prohibit any act or omission by Dealer that constitutes a violation of any
applicable law or regulation.
20. RIGHT TO OFFSET
Notwithstanding anything to the contrary in Section 24, Dealer
acknowledges and agrees that to assure payment to the Company of monies due to
it from Dealer for, among other items, purchase of floor covering products,
Dealer hereby irrevocably grants the Company the continuing right to use any and
all rebates earned by Dealer from the Company's designated suppliers or
distributors which the Company may be collecting on behalf of Dealer to offset
monies due to the Company or any affiliated entity.
21. NOTICES
Any notice required or permitted under this Agreement shall be in
writing and shall be actually delivered or sent by certified mail, return
receipt requested, postage prepaid, by hand delivery or pickup or by commercial
courier service for overnight delivery or by any other means which shall provide
evidence of the date received. Notices to the Dealer shall be addressed to the
address listed in Schedule A of this Agreement or to the Dealer at its most
current principal business address of which the Company has been notified.
Notices to the Company shall be addressed to it at the address listed in the
introductory paragraph of this Agreement, or to its most current principal
business address, Attention: President. The addresses herein given for notices
may be changed at any time by either party by written notice given to the other
party as herein provided. All notices shall be deemed given 3 business days
after deposit in the United States Mail as set forth above, or on the next
business day after delivery to the commercial courier service for overnight
delivery, or upon receipt after actual delivery.
22. ATTORNEYS' FEES AND LATE CHARGES
In the event it is necessary for either party hereunder to commence any
legal proceeding against the other party related to this Agreement or the
franchise relationship between the parties including, but not limited to,
arbitration proceedings, the losing party in such proceeding shall pay all of
the prevailing party's costs and expenses, including reasonable attorneys' fees,
relating to such legal proceeding. The prevailing party shall be determined by
the arbitrator(s). In the event that any arbitration proceeding is commenced
pursuant to this Agreement or the franchise relationship between the parties,
the parties agree to share equally the fees and costs of the American
Arbitration Association and its arbitrators. If the Dealer does not pay the
Company the monies due and owing to the Company within 30 days of the date when
due, then such unpaid balance shall accrue interest at the rate of 1.5% per
month until fully paid.
23. SEVERABILITY AND CONSTRUCTION
If any provision of this Agreement is determined to be invalid or
unenforceable for any reason whatsoever, such provision shall be severed from
the other provisions of this Agreement, which other provisions shall remain in
full force and effect. The language of this Agreement shall be construed simply
according to its fair meaning and not strictly for or against either party.
-18-
24. ARBITRATION
Other than as set forth in Sections 14 and 19 of this Agreement and
as provided by the last sentence of this Section 24, unless otherwise
prohibited by applicable state law, any and all controversies, claims,
disputes, suits, actions, proceedings or otherwise between or involving the
Company and Dealer and their respective shareholders, owners, corporate
affiliates, officers, directors, employees, agents or guarantors, whether
arising out of or relating in any way to this Agreement or any other document
ancillary to this Agreement, the franchise relationship created hereunder,
any alleged breach of any duty or otherwise (including, without limitation,
the underlying legality of the offer and/or sale of the CarpetMAX
-REGISTERED TRADEMARK- franchise, any action for rescission or any claim of
fraud) and on whatever theory and/or facts based, will be submitted to and
settled by arbitration in accordance with the Federal Arbitration Act under
the Commercial Arbitration Rules of the American Arbitration Association or
any successor association. All matters within the scope of the Federal
Arbitration Act (9 U.S.C. Section 1 ET SEQ.) shall be governed by it and not
any state arbitration law. In connection with such arbitration, the parties
will execute an appropriate confidentiality agreement. The Company and Dealer
agree that arbitration shall be conducted on an individual basis and not on a
class-wide basis. Arbitration under this Section 24 shall be submitted to the
office of the American Arbitration Association in (or nearest to) Atlanta,
Georgia on demand of either party. Such arbitration proceeding shall be
conducted in Atlanta, Georgia. The parties hereto agree that in any matter
submitted to arbitration, the relevant Rules of Civil Procedures that pertain
to pre-trial discovery shall be applicable. The arbitration panel shall have
the power to order discovery on the basis of what is likely to produce
material and relevant information in the proceeding, and to assess costs and
expenses of the arbitration according to the relative merits of the parties'
position in the case. The arbitration panel may issue temporary restraining
orders, preliminary injunctions, injunctions and other equitable or interim
relief to the extent reasonably necessary pending resolution of the
arbitration. The procedure for selection of the arbitrator shall be
prescribed by the American Arbitration Association or its successor,
provided, however, that if said Association does not provide such a
procedure, then the Company and Dealer shall each select one arbitrator and
the two arbitrators selected shall select a third, and in the event of death,
disability or resignation of an arbitrator, his/her successor shall be chosen
in the same manner as the arbitrator so selected. The parties agree to
proceed with the arbitration in good faith and with due diligence; provided,
however, that in no event shall any demand for arbitration be made after the
date when institution of legal or equitable proceedings based on such claim,
dispute or other matter would be barred by the applicable statute of
limitations. The arbitration panel shall enter judgment by default in the
event either party shall fail or refuse to appear or participate in any
properly noticed arbitration proceeding. Any award or determination in
arbitration shall be final and binding and conclusive upon the parties, and
judgment upon any award so rendered may be entered in any court having
jurisdiction. Company and Dealer hereby waive to the fullest extent permitted
by law, any right to or claim for any punitive or exemplary damages against
the other and agree that in the event of a dispute between them each shall be
limited to the recovery of any actual damages sustained by it. This
arbitration provision shall be deemed to be self-executing and shall remain
in full force and effect after execution or termination of this Agreement.
The provisions of this paragraph are intended to benefit and bind certain
third-party non-signatories and this arbitration provision shall be deemed to
be self-executing and shall remain in full force and effect after expiration
or termination of this Agreement. In the event that any party fails to appear
at any properly-noticed arbitration proceeding, an award may be entered
against such party by default or otherwise notwithstanding that failure to
appear. An arbitration proceeding between the parties shall not be
consolidated with any other arbitration proceeding involving the Company or
any other person. Any of the foregoing to the contrary notwithstanding, this
arbitration provision shall not be applicable to any claim or controversy
which involves solely the payment of a sum of money, such as a claim for
money due and owing. In the event a dispute or claim arises hereunder
involving both matters subject to arbitration under this Section 24 as well
as matters not subject to arbitration under Section 19, or portions of such
claim which are subject to arbitration shall be severed from the
non-arbitrable claims and shall be subject to arbitration hereunder, unless
both parties agree to consolidation in a single action in either forum.
-19-
25. LIMITATION ON CERTAIN LIABILITY
Under no circumstances shall any general partner or any officer or
director of any general partner or any employee, agent, representative or
affiliate of the Company incur any personal liability as a result of the
Company's actions or inactions in connection with this Agreement. Dealer shall
look only to the assets of the Company in its efforts to recover any damages to
which it may be entitled under this Agreement.
26. ENTIRE AGREEMENT
This Agreement, including Schedules, represents the entire understanding
of the parties and supersedes any prior agreements, whether written or oral,
between the parties with respect to the subject matter hereof. Both parties
acknowledge and agree that there are no representations, promises, warranties,
covenants, or understandings other than those set forth herein. The Dealer
should not sign this Agreement if it is relying on any representations or
promises not incorporated into this Agreement. This Agreement is binding upon
the parties hereto and their respective executors, administrators, heirs,
assigns, and successors in interest. Except as otherwise expressly provided
herein, this Agreement may be amended only by a written document signed by both
parties hereto. This limitation on modification is not subject to oral
rescission, modification or waiver. Dealer acknowledges and agrees that no
representations have been made to its by Company regarding projected sales
volumes, market potential, revenues, costs, profits or assistance other than as
stated in this Agreement or in any franchise offering circular provided by the
Company.
27. MISCELLANEOUS PROVISIONS
a. Dealer acknowledges that Company shall have the right to delegate the
performance of any portion or all of its obligations and duties hereunder to
affiliates including subsidiaries or affiliated entities.
b. Dealer acknowledges that it had a copy of the Company's Uniform
Franchise Offering Circular in its possession for not less than 10 full business
days, and this Agreement in its possess for not less than 5 full business days,
during which time Dealer shall have had ample time and opportunity to review
such documents with its own legal counsel and other advisors of its own
choosing, if any, and to consult with them about the potential benefits and
risks of entering into this Agreement.
c. Dealer acknowledges that Company may from time to time approve
exception or changes from the uniform standards of the System which Company, in
its sole absolute discretion, believes necessary or desirable under particular
circumstances. Dealer understands that it has no right to object to or
automatically obtain such variances, and that any exception or change must be
approved in advance by Company in writing. Dealer also understand that other
existing and/or future franchisees may operate under different forms of
agreements, and consequentially the rights and obligations of such franchisees
may differ materially from Dealer's.
d. Dealer acknowledges that it has conducted an independent
investigation of the business contemplated by this Agreement and recognizes that
it involves business risks, and that making a success of a venture is largely
dependent upon dealer's own business abilities. Dealer acknowledges that no
assurance or warranty, express or implied, has been given to Dealer as to the
potential success of business contemplated by this Agreement or the profits
likely to be achieved. Finally, Dealer acknowledges and agrees that no
statement, representation or other act, event or communication, except as set
forth in this Agreement, and in any franchise offering circular provided to
Dealer is binding on the Company in connection with the subject matter of this
Agreement.
e. Dealer acknowledges that Company is an affiliate of Maxim, Maxim
Retail Stores, Inc., Maxim Retail Group, Inc., GCO, Inc. and subsidiaries and
affiliates thereof. These companies and subsidiaries and affiliates own,
operate, develop, license and franchise retail floor covering stores operating
under the names "▇▇▇▇▇ Brothers", "Carpetland USA", "CarpetSmart", "House of
Carpets", "New York
-20-
Carpet World", "▇▇▇▇▇", "▇▇▇▇▇▇▇", "Carpet Factory Outlet", "Clydes", "Carpet
Exchange", "Carpet Center", "GCO Carpet Outlet", and will continue to develop
and acquire other flooring retail concepts. Further, Dealer acknowledges and
agrees that these companies and subsidiaries and Maxim and its affiliates will
have the absolute right to own, operate, develop, license and franchise the
foregoing concepts, and any other floor covering concepts or businesses at any
location in the world, including locations that may be in the Exclusive Area,
and locations that may be near or adjacent to the Exclusive Area even if the
location competes for customers with Dealer.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed, and delivered this Agreement as of the day and year
first written above.
DEALER: CARPETMAX, L.P.
By: By: THE MAXIM GROUP, INC.,
------------------------------- General Partner
Title:
------------------------------- By:
-----------------------
[CORPORATE SEAL] ▇.▇. ▇▇▇▇▇▇
Title: President
[CORPORATE SEAL]
-21-
SCHEDULE "A"
DEALER'S EXCLUSIVE AREA
Description of Exclusive Area:
Dealer's Principal Business Address and Telephone Number:
Addresses of Store(s) Authorized to be CarpetMAX -REGISTERED TRADEMARK-
Stores:
Name and Address of Each Owner of Dealer:
------------------------------------ -------------------------------------
------------------------------------ -------------------------------------
------------------------------------ -------------------------------------
------------------------------------ -------------------------------------
------------------------------------ -------------------------------------
------------------------------------ -------------------------------------
------------------------------------ -------------------------------------
------------------------------------ -------------------------------------
------------------------------------ -------------------------------------
Page 1 of 1
SCHEDULE "B"
MERCHANDISE INTRODUCTORY PACKAGE
ORDER FORM*
CARPETMAX CENTER STAGE COLLECTION
1 Set CARPETMAX Center Stage Collection. This collection is 62 products
(shown on 42 racks) from six of our aligned manufacturers. CARPETMAX has worked
with the ▇▇▇▇▇ to bring you the best valued and the best selling products in the
industry. See the attached list for products and price points.
CARPETMAX DISPLAY SYSTEMS
(Check items desired)
3 racks CARPETMAX 4500 2-Tier Berber System, 6000 High Performance
------- Display & 7000 Premier Pattern Display (▇▇▇▇▇▇)
1 rack CARPETMAX Contract Commercial Rack (Mohawk)
-------
1 rack CARPETMAX Commercial Business Systems (▇▇▇▇ Industries)
-------
1 set CARPETMAX /▇▇▇▇▇ Four Star Wood Program
-------
1 set CARPETMAX Master Builder Program (14 Qualities on 12 Deck Boards)
-------
1 set CARPETMAX/Image Fabulous Value Package (Bi-Monthly Special
------- Program)
1 set CARPETMAX/Ceramic Center Stage products on 2 "Step Up" racks
-------
# of racks CMAX Basket racks (May order up to 30 racks - indicate # of
------- racks desired)
1 set CARPETMAX Conversion Kit (Signage & Graphics)
-------
(After you pay invoice for these samples, send a copy to
CARPETMAX for reimbursement, attention of ▇▇▇▇▇ ▇▇▇▇▇)
POINT OF PURCHASE MATERIALS
CARPETMAX Warranty Brochures (2500 personalized brochures) please call
------- us to place order
Advantage Folders and Installation Brochures
-------
1 Day Orientation for up to Three People (Transportation and Lodging
------- Not included)
Date: Dealer #:
------------------------- ----------------------
Store Name: Contact:
------------------- -----------------------
Shipping Address: Signature:
------------- ---------------------
CARPETMAX Signature:
----------------
Phone: Fax:
----------------------- -------------------
*SUBJECT TO SEASONAL CHANGE
UPDATED 12/01/98
Page 2 of 1
SCHEDULE "C"
STATE-SPECIFIC AMENDMENTS
FOR RESIDENTS OF THE STATE OF HAWAII
Section 14 of the Franchise Agreement, under the heading "Rights and
Duties of Parties Upon Termination", shall be supplemented by the addition of
the following Section 14(viii):
Pursuant to Section 482E-6(3) of the Hawaii Revised Statutes, for so
long as such statute remains in effect and so provides, upon
termination or refusal to renew the franchise, the Dealer shall be
compensated for the fair market value, at the time of termination or
expiration of the franchise, of Dealer's inventory, supplies,
equipment and furnishings purchased from the Company or a supplier
designated by the Company, exclusive of personalized materials which
have no value to the Company. If the Company refuses to renew a
franchise for the purpose of converting the franchised business to one
owned by the Company, the Company, in addition to the remedies
provided in this paragraph, shall compensate the Dealer for the loss
of goodwill. The Company may deduct from such compensation reasonable
costs incurred in removing, transporting and disposing of Dealer's
inventory, supplies, equipment and furnishings pursuant to this
paragraph, and may offset from such compensation any moneys due to the
Company.
FOR RESIDENTS OF THE STATE OF ILLINOIS
Notwithstanding Section 13 of the Franchise Agreement, the conditions
under which the Franchise Agreement can be terminated and the parties' rights
upon non-renewal may be affected by Illinois law, 815 ILCS 705/19 and 705/20.
Nothing in the Franchise Agreement shall limit or prevent the
enforcement of any cause of action otherwise enforceable in Illinois or arising
under the Illinois Franchise Disclosure Act of 1987, as amended. Accordingly,
any provision in the Franchise Agreement which designates jurisdiction or venue
in a forum outside of Illinois is void with respect to any cause of action which
is otherwise enforceable in Illinois, except as this may be restricted by the
Franchise Agreement's arbitration provision.
Any condition, stipulation or provision of the Franchise Agreement
purporting to bind the Dealer to a waiver of compliance with the Illinois
Franchise Disclosure Act of 1987, as amended, is void.
Section 16 of the Franchise Agreement is hereby modified by changing
"State of Georgia" in the second sentence thereof to "State of Illinois" and
deleting the last sentence thereof in its entirety.
FOR RESIDENTS OF THE STATE OF INDIANA
Section 13 of the Franchise Agreement is hereby modified by adding a
new subsection e. as follows:
e. The conditions under which this Agreement can be terminated may be
affected by Indiana law [IC Stat. Sec. 23-2-2.5 and 23-2-2.7] which
provides Franchisee with certain termination rights.
Notwithstanding the terms of Section 15 of the Franchise Agreement,
nothing shall require the Dealer to agree to any general release provisions or
agree to any separate release agreements [IC Stat. Sec. 23-2-2.7-1(5)].
Page 1 of 6
If any of the provisions in the Franchise Offering Circular or
Franchise Agreement are inconsistent with the laws of the State of Indiana,
including but not limited to Indiana Code 23-2-2.7-1(5) & (10), then these
provisions shall govern instead of the terms of the Franchise Offering Circular
or Franchise Agreement. More particularly, notwithstanding anything to the
contrary in Section 16 of the Franchise Agreement, the Franchise Agreement shall
be governed by the laws of the State of Indiana. Additionally, the second
sentence of Section 16 of the Franchise Agreement is hereby deleted in its
entirety.
Section 16 of the Franchise Agreement is hereby modified by adding the
following text as the last sentence thereof:
This provision shall not in any way abrogate or reduce any rights of
Franchisee as provided for under Indiana law including, but not
limited to, the right to submit matters to the jurisdiction of the
courts of Indiana.
With respect to Section 24 of the Franchise Agreement, the Company
agrees to select as the place for arbitration a location within the State of
Indiana if the Dealer so requests and the laws of the State of Indiana shall
apply to the arbitration proceedings. Additionally, the third and eleventh
sentences of Section 23 of the Franchise Agreement are hereby deleted in their
entirety.
Section 25 of the Franchise Agreement is hereby deleted in its
entirety.
FOR RESIDENTS OF THE STATE OF MARYLAND
Any general release required by the terms and conditions of the
Franchise Agreement as a condition of renewal, assignment or transfer shall not
apply to any liability under the Maryland Franchise Registration and Disclosure
Law.
Notwithstanding anything to the contrary in Sections 16 or 24 of the
Franchise Agreement, the Maryland Franchise Registration and Disclosure Law
prohibits the Franchisor from precluding the Franchisee from initiating
litigation against the Franchisor in Maryland. Accordingly, to the extent the
Sections 16 or 24 are inconsistent with the Maryland Franchise Registration and
Disclosure Law, such terms and conditions shall be of no force or effect.
FOR RESIDENTS OF THE STATE OF MINNESOTA
Section 13 of the Franchise Agreement is hereby modified by adding a
new subsection e. as follows:
e. The conditions under which this Agreement can be terminated or not
renewed may be affected by Minnesota law which provides Franchisee
with certain termination and non-renewal rights. Minnesota Statute
Section 80C.14, subdivisions 3, 4 and 5 require, except in certain
specified cases, that the Dealer be given 90 days notice of
termination (with 60 days to cure) and 180 days notice for non-renewal
of the Franchise Agreement.
Section 16 of the Franchise Agreement is hereby modified by adding the
following text as the last sentence thereof:
Pursuant to Minnesota Statute Section 80C.21, this provision shall not
in any way abrogate or reduce any rights of the Dealer as provided for
in Minnesota Statute Chapter 80C.
Page 2 of 6
including, but not limited to, the right to submit matters to the
jurisdiction of the courts of Minnesota.
The Company agrees to indemnify Dealer from and against any losses,
liabilities and damages for which Dealer is held liable by a court of
competent jurisdiction in any proceeding arising out of Dealer's use of the
▇▇▇▇ CarpetMAX -REGISTERED TRADEMARK- and all other trademarks, service
marks and associated marks and symbols utilized by Dealer pursuant to this
Agreement, provided such use is in accordance with and pursuant to the
provisions of this Agreement and instructions from the Company. The foregoing
indemnification is conditioned upon the following: Dealer must (i) provide
written notice to the Company of any claims subject to indemnification
hereunder within 20 days of Dealer's receipt of any written information
pertaining to such claims, (ii) tender the defense of the claims to the
Company if the Company so desires, and (iii) permit the Company to have sole
control of the defense and settlement of any such claim.
Nothing in the Franchise Agreement is intended to abrogate or reduce
any rights of the Franchisee as provided in for Minnesota Statutes, Chapter 80C.
In any arbitration involving a franchise located in Minnesota, the
arbitration site shall be either in Minnesota or a place mutually agreed upon at
the time of the arbitration, as determined by the arbitrator(s).
FOR RESIDENTS OF THE STATE OF NEW YORK
Notwithstanding any provision of the Franchise Agreement, all rights
enjoyed by the Dealer and any causes of action arising in its favor from the
provisions of Article 33 of the General Business Law of the State of New York
and the regulations issued thereunder shall remain in force, it being the intent
of this proviso that the non-waiver provisions of the General Business Law of
the State of New York Sections 687.4 and 687.5 be satisfied.
With respect to the Dealer's indemnification requirements under the
Franchise Agreement, the Dealer shall not be required to indemnify for any
claims arising out of a breach of the Franchise Agreement or other civil wrong
of the Company.
Notwithstanding any provision of the Franchise Agreement to the
contrary, the Company will not transfer and assign its rights and obligations
under the Franchise Agreement unless the transferee will be able to perform the
Company's obligations under the Franchise Agreement, in Company's good faith
judgment, so long as it remains subject to Article 33 of the General Business
Law of the State of New York.
Notwithstanding Section 16 of the Franchise Agreement, the choice of
law and venue provisions should not be construed as a waiver of any right
conferred upon the Dealer by the provisions of Article 33 of the General
Business Law of the State of New York.
FOR RESIDENTS OF THE STATE OF NORTH DAKOTA
Section 16 of the Franchise Agreement is hereby modified by deleting
the current text in its entirety and replacing it with the following: "This
Agreement shall be governed by and construed in accordance with the laws of the
State of North Dakota."
With respect to Section 24 of the Franchise Agreement, the Company
agrees to select as the place for arbitration a location within the State of
North Dakota in close proximity to the Dealer's business.
Page 3 of 6
Additionally, nothing in Section 24 shall bar the right of either party to
obtain injunctive relief from any court of competent jurisdiction against
threatened conduct that will cause loss or damages under the usual equity rules,
including the applicable rules for obtaining preliminary injunctions. Finally,
the fourth to last sentence of Section 24 is hereby deleted in its entirety.
FOR RESIDENTS OF THE STATE OF SOUTH DAKOTA
Notwithstanding anything to the contrary in the Franchise Agreement,
the Company will not terminate the Franchise Agreement for a breach of the
Franchise Agreement, for failure of the Dealer to meet performance and quality
standards unless the Franchisee receives 30 days written notice and an
opportunity to cure such defaults.
Section 16 of the Franchise Agreement is amended in its entirety to
read as follows:
The law regarding franchise registration, employment, covenants not to
compete, and other matters of local concern will be governed by the
laws of the State of South Dakota; but as to contractual and all other
matters, this agreement and all provisions of this instrument will be
and remain subject to the applications, construction, enforcement and
interpretation under the governing law of Georgia. Any provision in
the Franchise Agreement restricting jurisdiction or venue to a forum
outside of South Dakota or requiring the application of the laws of
another state is void with respect to a claim otherwise enforceable
under the South Dakota Franchise Law.
Section 24 of the Franchise Agreement is amended to delete any
references to the site of arbitration being in Georgia. The parties agree that
such arbitration shall be conducted in a mutually agreed upon site in accordance
with Section 11 of the Commercial Arbitration Rules of the American Arbitration
Association. Furthermore, nothing in Section 24 shall be deemed to bar the right
of either party to obtain injunctive relief from any court of competent
jurisdiction against threatened conduct that will cause loss or damages under
the usual equity rules, including the applicable rules for obtaining preliminary
injunctions. Finally, the fourth to last sentence of Section 24 is hereby
deleted in its entirety.
Pursuant to S.D.C.L. 37-5A-86, any acknowledgment provision,
disclaimer, or integration clause or a provision having a similar effect in the
Franchise Agreement does not negate or act to remove from judicial review any
statement, misrepresentation or action that would violate the South Dakota
Franchise Law (S.D.C.L. 37-5A), or any administrative regulations promulgated
thereunder.
FOR RESIDENTS OF THE STATE OF WASHINGTON
Notwithstanding any other provision of the Franchise Agreement to the
contrary, the Company shall not terminate the Franchise Agreement prior to
expiration of its initial Term or any renewal Term except for good cause. Good
cause shall include, without limitation, the failure of the Dealer to comply
with lawful material provisions of the Franchise Agreement or any other
agreement between the Company and the Dealer, and to cure such default after
being given written notice thereof and a reasonable opportunity, which in no
event need be more than thirty days, to cure such default, or if such default
cannot reasonably be cured within thirty days, the failure of the Dealer to
initiate within thirty days substantial and continuing action to cure such
default. After 3 willful and material breaches of the same term of the Franchise
Agreement occurring within a 12 month period, for which the Dealer has been
given notice and an opportunity to cure as provided in this subsection, the
Company may terminate the Franchise Agreement upon any subsequent
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willful and material breach of the same term within the 12 month period without
providing notice or opportunity to cure. The Company may terminate the Franchise
Agreement without giving prior notice or opportunity to cure a default if the
Dealer (i) is adjudicated a bankrupt or insolvent; (ii) makes an assignment for
the benefit of creditors or similar disposition of the assets of the franchised
business; (iii) voluntarily abandons the franchised business; or (iv) is
convicted of or pleads guilty or no contest to a charge of violating any law
relating to the franchised business. Upon termination for good cause, the
Company shall purchase from the Dealer at fair market value at the time of
termination, the Dealer's inventory and supplies, exclusive of (i) personalized
materials which have no value to the Company; (ii) inventory and supplies not
reasonably required in the conduct of the franchised business; and (iii), if the
Dealer is to retain control of the premises of the franchised business, any
inventory and supplies not purchased from the Company or upon the Company's
express requirement: PROVIDED, that the Company may offset against amounts owed
to the Dealer under this paragraph any amounts owed by the Dealer to the Company
or its affiliates.
In any arbitration involving a franchise purchased in Washington, the
arbitration site shall be either in the State of Washington, or in a place
mutually agreed upon at the time of the arbitration, or as determined by the
arbitrator.
If any provision of the Franchise Agreement is inconsistent with the
relationship provisions of RCW 19.100.180 or other requirements of the
Washington Franchise Investment Protection Act (the "Act"), the provisions of
the Act will prevail.
A release or waiver of rights executed the Dealer shall not include
rights under the Act except when executed pursuant to a negotiated settlement
after the Franchise Agreement is in effect and where the parties are represented
by independent counsel. Provisions which unreasonably restrict or limit the
statute of limitations period for claims under the Act, or rights or remedies
under the Act, such as a right to trial by jury, may not be enforceable.
FOR RESIDENTS OF THE STATE OF WISCONSIN
Section 13 of the Franchise Agreement is hereby modified by adding a
new subsection e. as follows:
e. The conditions under which this Agreement can be terminated or not
renewed may be affected by Wisconsin law, Chapter 135, Wisc. Stats.,
the Wisconsin Fair Dealership Law.
Section 13 of the Franchise Agreement is hereby modified by adding the
following: "The Wisconsin Fair Dealership Law supersedes any provision of this
Agreement which is inconsistent with that law."
FOR RESIDENTS OF ALL STATES LISTED IN THIS ADDENDUM
Notwithstanding Section 26 of the Franchise Agreement to the contrary,
this Addendum shall not be merged with or into, or superseded by, the Franchise
Agreement. In the event of any conflict between the Franchise Agreement and this
Addendum, this Addendum shall be controlling. Except as otherwise expressly set
forth herein, no other amendments or modifications of the Franchise Agreement
are intended or made by the parties.
Applicable State: ____________________________
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IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Addendum on the day and year first above written.
DEALER: CARPETMAX, L.P.
--------------------------
By: By: THE MAXIM GROUP, INC.,
------------------------------
General Partner
Title:
---------------------------
By:
---------------------------
[CORPORATE SEAL] ▇.▇. ▇▇▇▇▇▇
Title: President
(SEAL) [CORPORATE SEAL]
---------------------------
Page 6 of 6
SCHEDULE "D"
GUARANTY BY THE MAXIM GROUP, INC.
GUARANTY
THIS GUARANTY (the "Guaranty") is executed as of _________________,
199___ by THE MAXIM GROUP, INC. (the "Guarantor") in favor of
_____________________ ("Dealer").
WHEREAS, Carpetmax, L.P., a Georgia limited partnership ("Company")
that is an affiliate of Guarantor, is the franchisor under that certain
CarpetMAX Franchise Agreement, dated as of _________________, 199___, between
Company and Dealer (the "Franchise Agreement"); and
WHEREAS, in order to provide assurance to Dealer that the Company will
fulfill its obligations to Dealer under the Franchise Agreement, Guarantor is
willing to execute this Guaranty;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Guarantor, the Guarantor agrees
as follows:
1. GUARANTY. Guarantor hereby guarantees to Dealer the full and prompt
performance of Company's obligations to Dealer arising under the Franchise
Agreement. Guarantor agrees that if Company does not perform the obligations
required to be performed thereunder, then upon written notice from Dealer,
Guarantor will perform or cause to be performed such unperformed obligations as
required by the Franchise Agreement.
2. NO WAIVER BY DEALER. No delay or failure of Dealer in the exercise
of any right, power or remedy shall operate as a waiver thereof, and no single
or partial exercise by Dealer of any right, power or remedy shall preclude any
further exercise thereof or the exercise of any other right, any power or
remedy.
3. PLACE OF EXECUTION; GOVERNING LAW. Guarantor acknowledges that this
Guaranty was delivered in Georgia, and shall be governed and construed in
accordance with Georgia law (excluding the laws of conflicts).
4. MODIFICATIONS. This Guaranty may not be changed orally, and no
obligation of Guarantor can be released or waived by Dealer or any officer or
agent of Dealer, except by a writing signed by a duly authorized officer of
Dealer.
5. NOTICES. Any and all notices, elections or demands permitted or
required to be made under this Guaranty shall be in writing, signed by the party
giving such notice, election or demand, and shall be mailed by registered or
certified United States mail, postage prepaid, or otherwise delivered to the
other party at the address set forth below, or at such other address within the
continental United States of America as the addressee may hereafter designate in
writing. The effective date of such notice, election or demand shall be the date
of delivery. For the purposes of this Guaranty:
(a) The address of Dealer is:
-------------------------
-------------------------
(b) The address of Guarantor is:
The Maxim Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
6. SUCCESSORS AND ASSIGNS. The provisions of this Guaranty shall bind
Guarantor and its successors and shall benefit Dealer and its successors and
assigns.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date
first written above.
THE MAXIM GROUP, INC.
By:
------------------------------
Name: ▇.▇. ▇▇▇▇▇▇
Title: President
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