EXHIBIT 10.6
FOR USE ONLY IN THE STATE OF /
DEVELOPMENT AGREEMENT
BETWEEN
WCH, INC.
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Name(s) of FRANCHISEE
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Area Code Telephone
FRANCHISED AREA:
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DATE OF DEVELOPMENT AGREEMENT:
__________________________, 199___
WE CARE HAIR(R)
DEVELOPMENT AGREEMENT
INDEX
Article Description Page
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1 FRANCHISED AREA..................................................2
2 TERM OF DEVELOPMENT AGREEMENT; RIGHT OF FIRST REFUSAL............2
3 EXCLUSIVE TERRITORY FEE; INITIAL FEES; DEVELOPMENT SCHEDULE......3
4 OTHER OBLIGATIONS OF FRANCHISEE..................................5
5 CONFIDENTIAL OPERATIONS MANUAL AND OTHER INFORMATION.............6
6 WCH'S RIGHT OF TERMINATION.......................................7
7 FRANCHISEE'S RIGHTS AND OBLIGATIONS UPON TERMINATION.............9
8 FRANCHISEE'S COVENANTS NOT TO COMPETE...........................10
9 INDEPENDENT CONTRACTORS; INDEMNIFICATION........................11
10 ASSIGNMENT......................................................12
11 ARBITRATION.....................................................14
12 ENFORCEMENT.....................................................16
13 NOTICES.........................................................18
14 ACKNOWLEDGMENTS.................................................18
15 DISCLAIMER; FRANCHISEE'S LEGAL COUNSEL..........................20
16 GOVERNING LAW; STATE MODIFICATIONS..............................21
17 DEFINITIONS.....................................................23
PERSONAL GUARANTY
WE CARE HAIR(R)
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement"), made, entered into and effective
this _____ day of _______________, 19___, by and between WCH, Inc., a Minnesota
corporation ("WCH"), and ____________________________________________ (the
"FRANCHISEE");
WITNESSETH:
WHEREAS, WCH has developed and owns a distinctive business system for operating
hairstyling businesses of a distinctive character with the name "We Care
Hair(R)" (the "Business System" or the "We Care Hair Business System") and has
publicized the name "We Care Hair(R)" and other trademarks, trade names, service
marks and commercial symbols to the public as an organization of hairstyling
businesses operating under the We Care Hair Business System; and
WHEREAS, WCH represents that it has the right and authority to license the use
of the names "We Care Hair(R)" and certain other trademarks, trade names,
service marks, logos and commercial symbols (the "Marks") for use in connection
with hairstyling businesses operated in conformity with the Business System to
selected persons or entities who will comply with WCH'S uniformity requirements
and quality standards; and
WHEREAS, the FRANCHISEE desires to operate We Care Hair hairstyling businesses
at locations in the area designated in Article 1 of this Agreement which will
conform to the uniformity requirements and quality standards established and
promulgated from time to time by WCH; and
WHEREAS, WCH is willing to provide the FRANCHISEE with marketing, advertising,
technology, operational and other business information, experience and "know
how" about the We Care Hair business that has been developed over time by WCH at
significant cost and expense; and
WHEREAS, the FRANCHISEE acknowledges that it would take substantial capital and
human resources to develop a business similar to the We Care Hair business and,
as a consequence, the FRANCHISEE desires to acquire the right to use the Marks
and the Business System and to own and operate We Care Hair businesses subject
to and under the terms and conditions set forth in this Agreement; and
WHEREAS, the FRANCHISEE acknowledges that WCH would not provide the FRANCHISEE
with any business information or "know how" about the We Care Hair Business
System unless the FRANCHISEE agreed to comply with all of the terms and
conditions of this Agreement and to pay the Exclusive Territory Fee and the
other fees specified in this Agreement; and
WHEREAS, the FRANCHISEE has had a full and adequate opportunity to be thoroughly
advised of the terms and conditions of this Agreement by its legal counsel or
other advisor, and has had sufficient time to evaluate and investigate the We
Care Hair Business System, the financial investment requirements, and the
business risks associated with owning and operating We Care Hair businesses;
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth
in this Agreement and for other good and valuable consideration, the parties
hereby contract as follows:
ARTICLE 1
FRANCHISED AREA
1.1 FRANCHISED AREA. WCH hereby grants to the FRANCHISEE, for the term of this
Agreement, the right to enter into Franchise Agreements with WCH for the
operation of We Care Hair hairstyling businesses (the "We Care Hair Businesses"
or the "Businesses"), to be located only within the following exclusive area
_______________________________________________________________________________
_______________________________________________________________________________
_________________________________________________, (the "Franchised Area"). The
Franchised Area may be further described and delineated in Exhibit A attached
hereto and signed by both the FRANCHISEE and WCH.
1.2 EXCLUSIVITY. The rights and privileges granted to the FRANCHISEE in this
Agreement are expressly limited to the Franchised Area and are expressly subject
to the terms and conditions of this Agreement. WCH will not franchise, license,
subfranchise, develop, own or operate ("develop") any We Care Hair businesses in
the Franchised Area while this Agreement is in effect without the consent of the
FRANCHISEE.
1.3 PERSONAL RIGHTS. The FRANCHISEE will not be entitled to franchise,
subfranchise, license or sublicense other persons or entities under this
Agreement and the FRANCHISEE may open, own and operate We Care Hair Businesses
only in the Franchised Area. The rights, privileges and franchise granted and
conveyed to the FRANCHISEE in this Agreement will be exclusively for the
Franchised Area and may not be assigned, sold or transferred by the FRANCHISEE,
except as specifically provided for in this Agreement.
ARTICLE 2
TERM OF DEVELOPMENT AGREEMENT; RIGHT OF FIRST REFUSAL
2.1 TERM. This Agreement will be for a term of ______________ (___) years,
commencing on the date set forth on Page D-1 of this Agreement. This Agreement
will not be considered executed and will not be enforceable until: (A) it has
been signed by WCH and the FRANCHISEE, and, if the FRANCHISEE is a corporation
or partnership, the Personal Guarantors; and (B) the signed Agreement has been
delivered to the FRANCHISEE.
2.2 RIGHT OF FIRST REFUSAL. At the end of the term of this Agreement, the
FRANCHISEE'S exclusive development rights with respect to the Franchised Area
will automatically terminate, and the FRANCHISEE will not have the right to
renew or extend the term of this Agreement. Following the end of the term of
this Agreement, WCH will have the right to reevaluate the prospects for the
establishment of We Care Hair businesses in the Franchised Area, and WCH may
determine that the Franchised Area will be further developed by opening
additional We Care Hair businesses in the Franchised Area. In the event WCH
determines that the Franchised Area will be further developed, the FRANCHISEE
will have a right of first refusal to own and operate any We Care Hair
Businesses proposed for the Franchised Area by WCH. Consequently, if WCH
proposes to develop (either by owning, franchising or subfranchising) any
further We Care Hair businesses in the Franchised Area after the term of this
Agreement has expired, then WCH will give the FRANCHISEE written notice of its
proposal to develop additional We Care Hair businesses in the Franchised Area
and the FRANCHISEE will have thirty (30) days to accept in writing WCH'S
proposal to own and operate further We Care Hair Businesses in the Franchised
Area. The FRANCHISEE will have the right to own and operate We Care Hair
Businesses in the Franchised Area according to the terms and conditions set
forth in WCH'S written proposal, which may vary in form and
substance from the terms, conditions and economics set forth in this Agreement.
If the FRANCHISEE fails to accept in writing WCH'S written proposal within
thirty (30) days from the date the written notice of WCH'S proposal is given to
the FRANCHISEE, then WCH will have the absolute right to open and develop We
Care Hair businesses in the Franchised Area after the term of this Agreement has
expired.
ARTICLE 3
EXCLUSIVE TERRITORY FEE; INITIAL FEES; DEVELOPMENT SCHEDULE
3.1 EXCLUSIVE TERRITORY FEE. On the date this Agreement is executed by the
FRANCHISEE, the FRANCHISEE will pay WCH a nonrefundable exclusive territory fee
equal to ____________________________________________ Dollars ($___________)
(the "Exclusive Territory Fee").
3.2 INITIAL FEES. In addition to the Exclusive Territory Fee, the FRANCHISEE
will pay WCH an Initial Fee, as defined in WCH'S then-current standard Franchise
Agreement, of ___________________________________ Dollars ($__________) for the
first We Care Hair Business required to be owned and operated by the FRANCHISEE
in the Franchised Area pursuant to the development schedule contained in this
Agreement. The FRANCHISEE will pay WCH an Initial Fee of ________________
($______________) for each subsequent We Care Hair Business required to be owned
and operated by the FRANCHISEE in the Franchised Area pursuant to the
development schedule contained in this Agreement. The amount of each Initial Fee
payable to WCH for each We Care Hair Business opened in the Franchised Area in
accordance with the development schedule will be the amount as set forth in this
Article 3.2, even if the then-current standard Franchise Agreement signed by the
FRANCHISEE specifies an Initial Fee that is greater than or different from the
Initial Fee specified herein. Each such Initial Fee will be payable to WCH
pursuant to the terms of this Agreement.
3.3 PAYMENT OF INITIAL FEES. The FRANCHISEE must pay WCH the Initial Fee set
forth in Article 3.2 of this Agreement on or before the date the FRANCHISEE
executes the then-current standard Franchise Agreement for each We Care Hair
Business required to be owned and operated in the Franchised Area pursuant to
this Agreement. A then-current standard We Care Hair Franchise Agreement must be
executed by the FRANCHISEE for each We Care Hair Business owned and operated by
the FRANCHISEE in the Franchised Area on the earlier of: (A) at least ten (10)
days prior to the date the FRANCHISEE commences initial business operations at
each of its We Care Hair Businesses in the Franchised Area; or (B) the date the
FRANCHISEE'S furniture, fixtures and equipment are shipped by WCH to the
FRANCHISEE.
3.4 DEVELOPMENT SCHEDULE. The FRANCHISEE acknowledges and agrees that a material
provision of this Agreement is that the following number of We Care Hair
Businesses must be opened and continuously operating in the Franchised Area
during the term of this Agreement in accordance with the following development
schedule:
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NUMBER OF WE CARE HAIR BUSINESSES REQUIRED CUMULATIVE NUMBER OF WE CARE HAIR BUSINESSES
TO BE OPENED AND CONTINUOUSLY OPERATING FOR REQUIRED TO BE OPEN AND CONTINUOUSLY
BUSINESS IN THE FRANCHISED AREA DURING THE OPERATING FOR BUSINESS IN THE FRANCHISED
PERIOD PERIOD AREA AT THE END OF THE PERIOD
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-first half:
YEAR 1
-second half:
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-first half:
YEAR 2
-second half:
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-first half:
YEAR 3
-second half:
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-first half:
YEAR 4
-second half:
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-first half:
YEAR 5
-second half:
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-first half:
YEAR 6
-second half:
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-first half:
YEAR 7
-second half:
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-first half:
YEAR 8
-second half:
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-first half:
YEAR 9
-second half:
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-first half:
YEAR 10
-second half:
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The half-year periods set forth above will be determined from the date of this
Agreement, so that the first half-year period of the development schedule set
forth above will end six (6) months from the date of this Agreement. For
purposes of determining compliance with the development schedule set forth in
this Article 3.4, only the FRANCHISEE'S We Care Hair Businesses actually open
and continuously operating for business in the Franchised Area as of the end of
a given half-year period will be counted toward the number of We Care Hair
Businesses required to be open and continuously operating for business.
3.5 REASONABLENESS OF DEVELOPMENT SCHEDULE. The FRANCHISEE represents that it
has conducted its own independent investigation and analysis of the prospects
for the establishment of We Care Hair Businesses within the Franchised Area,
approves of the foregoing development schedule as being reasonable and viable,
and recognizes that failure to achieve the results described in the foregoing
development schedule will constitute a material breach of this Agreement.
3.6 FAILURE TO COMPLY WITH DEVELOPMENT SCHEDULE. The FRANCHISEE'S failure to
comply with the above development schedule will constitute a material breach of
this Agreement by the FRANCHISEE and, in that event, WCH will have the right to
terminate this Agreement as provided herein. Termination of this Agreement as a
result of the FRANCHISEE'S failure to meet the development schedule set forth
above will not affect the individual Franchise Agreements signed by the
FRANCHISEE for the We Care Hair Businesses opened and operated in the Franchised
Area pursuant to this Agreement prior to termination; however, upon termination
of this Agreement, all rights to open and operate additional We Care Hair
Businesses in the Franchised Area and all other rights granted to the FRANCHISEE
under this Agreement will immediately revert to WCH, without affecting those
obligations of the FRANCHISEE that continue beyond the termination of this
Agreement.
3.7 TERMINATION FOR FAILURE TO COMPLY WITH DEVELOPMENT SCHEDULE. If this
Agreement is terminated by WCH because of the FRANCHISEE'S failure to meet the
development schedule set forth above, the rights and duties of WCH and the
FRANCHISEE will be as follows: (A) the FRANCHISEE will have no further rights to
open and operate additional We Care Hair Businesses within
the Franchised Area; (B) the FRANCHISEE will continue to pay all required fees
and to operate its We Care Hair Businesses opened and operated in the Franchised
Area pursuant to the terms of the applicable Franchise Agreements signed by the
FRANCHISEE prior to the date of the termination of this Agreement; and (C) WCH
will have the absolute right to develop the Franchised Area or to contract with
another franchisee for future development of the Franchised Area.
ARTICLE 4
OTHER OBLIGATIONS OF FRANCHISEE
4.1 COMPLIANCE WITH APPLICABLE LAWS. The FRANCHISEE agrees to and will, at its
expense, comply with all federal, state, city, municipal and local laws,
ordinances, rules and regulations in the Franchised Area pertaining to the
operation of its We Care Hair Businesses, including all laws relating to
employees and to the regulation of barbers and cosmetologists and all applicable
federal and state environmental laws. The FRANCHISEE will, at its expense, be
absolutely and exclusively responsible for determining all licenses and permits
required by law for the FRANCHISEE'S We Care Hair Businesses, for qualifying for
and obtaining all such licenses and permits, and for maintaining all such
licenses and permits in full force and effect.
4.2 DISTRICT MANAGER. The FRANCHISEE must employ at least one (1) full-time
person (a "District Manager") for each six (6) We Care Hair Businesses opened
and operated in the Franchised Area pursuant to this Agreement to supervise the
FRANCHISEE'S We Care Hair Businesses in the Franchised Area. Each District
Manager will be responsible for the operation and administration of up to six
(6) We Care Hair Businesses under his or her supervision and control in the
Franchised Area, including supervision of the managers and assistant managers.
The FRANCHISEE'S District Managers must devote their full time and attention to
administering and overseeing the operations of the FRANCHISEE'S We Care Hair
Businesses in the Franchised Area. All District Managers of the FRANCHISEE'S We
Care Hair Businesses must attend and successfully complete the training program
required by WCH, and be certified and approved by WCH in writing.
4.3 EXECUTION OF FRANCHISE AGREEMENTS. For each We Care Hair Business opened,
owned, and operated for business by the FRANCHISEE in the Franchised Area, the
FRANCHISEE (and, if applicable, the FRANCHISEE'S shareholders and Personal
Guarantors) must execute WCH'S then-current standard Franchise Agreement (the
"Franchise Agreement") in substantially the same form as Exhibit B attached
hereto. If the FRANCHISEE fails to provide WCH with an executed Franchise
Agreement on the earlier of: (A) at least ten (10) days prior to the date the
FRANCHISEE commences business at each of its We Care Hair Businesses in the
Franchised Area; or (B) on the date the FRANCHISEE'S furniture, fixtures and
equipment are shipped by WCH to the FRANCHISEE, as required by the terms of this
Agreement, it will be deemed a material breach of this Agreement and WCH will
have the right to terminate this Agreement as provided herein.
4.4 CONTINUING FEES. During the term of each Franchise Agreement signed by the
FRANCHISEE pursuant to this Agreement, the FRANCHISEE will pay to WCH weekly
Continuing Fees, as defined in the Franchise Agreement, equal to a percentage of
the weekly Gross Revenues, as defined in the Franchise Agreement, which are
received, billed or generated by or from the FRANCHISEE'S We Care Hair
Businesses in the Franchised Area. Notwithstanding the foregoing, for as long
as, but only so long as, the FRANCHISEE owns and operates eleven (11) or more We
Care Hair Businesses, the FRANCHISEE will be obligated to pay WCH weekly
Continuing Fees equal to four percent (4%) of the FRANCHISEE'S weekly Gross
Revenues for the eleventh (11th) and any subsequent We Care Hair Business. This
reduction in Continuing Fees will apply only to the eleventh (11th) and any
subsequent
We Care Hair Businesses owned and operated by the FRANCHISEE. The FRANCHISEE
will pay Continuing Fees to WCH at the applicable rate stated in the preceding
sentences, even if the Franchise Agreements signed by the FRANCHISEE specify
Continuing Fees that are greater than or different from the Continuing Fees
specified herein. With the possible exception of the percentage of the
FRANCHISEE'S Gross Revenues which will be payable to WCH, the Continuing Fees
for each of the FRANCHISEE'S We Care Hair Businesses will be payable by the
FRANCHISEE according to the terms of the applicable Franchise Agreements signed
by the FRANCHISEE pursuant to this Agreement.
4.5 ADVERTISING FEES. During the term of each Franchise Agreement signed by the
FRANCHISEE pursuant to this Agreement, the FRANCHISEE will pay to WCH weekly
Advertising Fees, as defined in the Franchise Agreement, equal to four percent
(4%) of the weekly Gross Revenues, as defined in the Franchise Agreement, which
are received, billed or generated by or from the FRANCHISEE'S We Care Hair
Businesses in the Franchised Area. The FRANCHISEE will pay Advertising Fees to
WCH at the applicable rate stated in the preceding sentence, even if the
Franchise Agreements signed by the FRANCHISEE specify Advertising Fees that are
greater than or different from the Advertising Fees specified herein. With the
possible exception of the percentage of the FRANCHISEE'S Gross Revenues which
will be payable to WCH, the Advertising Fees for each of the FRANCHISEE'S We
Care Hair Businesses will be payable by the FRANCHISEE according to the terms of
the applicable Franchise Agreements signed by the FRANCHISEE pursuant to this
Agreement.
4.6 LOCAL ADVERTISING; OTHER PAYMENTS. During the term of each Franchise
Agreement signed by the FRANCHISEE pursuant to this Agreement, the FRANCHISEE
will be required to spend monies for items such as grand opening advertising and
promotion, local media advertising and promotion, local group advertising and
promotion, and other expenses. The FRANCHISEE will pay all such required
advertising and promotional fees and expenses at the rates established in, and
in accordance with the terms and conditions of, the applicable Franchise
Agreement for each of the FRANCHISEE'S We Care Hair Businesses opened and
operated by the FRANCHISEE pursuant to this Agreement.
4.7 MODIFICATIONS TO FRANCHISE AGREEMENT. The FRANCHISEE acknowledges that the
Franchise Agreement may be modified from time to time by WCH and that reasonable
modifications and amendments to the Franchise Agreement will not alter the
FRANCHISEE'S obligations under this Agreement.
ARTICLE 5
CONFIDENTIAL OPERATIONS MANUAL AND OTHER INFORMATION
5.1 COMPLIANCE WITH MANUAL. In order to protect the reputation and goodwill of
WCH and to maintain uniform operating standards under the Marks and the Business
System, the FRANCHISEE will, at all times during the term of this Agreement and
the terms of the We Care Hair Franchise Agreements signed by the FRANCHISEE,
conduct its We Care Hair Businesses in accordance with WCH'S confidential
Operations Manual (the "Manual"). The FRANCHISEE acknowledges having received as
a loan one copy of the Manual from WCH.
5.2 CONFIDENTIALITY OF MANUAL. The FRANCHISEE must, at all times during the term
of this Agreement and thereafter, treat the Manual, any other manuals created
for or approved for use in the operation of the FRANCHISEE'S We Care Hair
Businesses, and the information contained therein as secret and confidential,
and the FRANCHISEE will use all reasonable means to keep such information secret
and confidential. Neither the FRANCHISEE nor its employees will make any copy,
duplication, record or reproduction of the Manual (or any portion thereof)
available to any unauthorized person.
5.3 REVISIONS TO MANUAL. The Manual will, at all times during the term of this
Agreement and thereafter, remain the sole and absolute property of WCH. WCH may
from time to time revise the Manual and the FRANCHISEE expressly agrees to
operate its We Care Hair Businesses in accordance with all such revisions. The
FRANCHISEE will at all times keep its copy of the Manual current and up-to-date,
and in the event of any dispute, the terms of the master copy of the Manual
maintained by WCH will be controlling in all respects.
5.4 OTHER CONFIDENTIAL INFORMATION. The FRANCHISEE expressly acknowledges and
agrees that WCH will be disclosing and providing to the FRANCHISEE certain
confidential and proprietary information concerning the Business System and the
procedures, technology, operations and data used in connection with the Business
System. Accordingly, the FRANCHISEE will not, during the term of this Agreement
or thereafter, communicate, divulge or use for the benefit of any other person
or entity any confidential information, knowledge or know-how concerning the
methods of operation of the We Care Hair Businesses which may be communicated to
the FRANCHISEE, or of which the FRANCHISEE may be apprised, by virtue of this
Agreement. The FRANCHISEE will divulge such confidential information only to its
employees that must have access to it in order to operate the FRANCHISEE'S We
Care Hair Businesses. Any and all information, knowledge and know-how including,
without limitation, drawings, materials, equipment, technology, methods,
procedures, specifications, techniques, computer programs, systems and other
data which WCH designates as confidential or proprietary will be deemed
confidential and proprietary for the purposes of this Agreement.
5.5 CONFIDENTIALITY AGREEMENTS WITH EMPLOYEES. The FRANCHISEE will require all
of the FRANCHISEE'S employees who have access to the Manual or other
confidential information execute an agreement, in the form attached as an
Exhibit to the Franchise Agreement or other form satisfactory to WCH, where the
employees agree to maintain the confidentiality, during the course of their
employment and thereafter, of all information designated by WCH as confidential.
Copies of all executed agreements will be submitted to WCH upon request.
5.6 REMEDIES. The FRANCHISEE recognizes that the provisions contained in this
Article are necessary for the protection of WCH and all of the franchisees who
own We Care Hair businesses. If the FRANCHISEE violates any provisions of this
Article, or if any employee of the FRANCHISEE violates his or her
confidentiality agreement executed pursuant to Article 5.5, then WCH will have
the right to: (A) terminate this Agreement (as provided for herein); (B) seek
injunctive relief from a Court of competent jurisdiction; (C) commence an action
or lawsuit against the FRANCHISEE for damages; and (D) enforce all other
remedies against the FRANCHISEE that are available to WCH under common law, in
equity, and pursuant to any federal and state statutes in an action or lawsuit
against the FRANCHISEE.
ARTICLE 6
WCH'S RIGHT OF TERMINATION
6.1 GROUNDS FOR TERMINATION. In addition to the other rights of termination
contained in this Agreement, WCH will have the right and privilege to terminate
this Agreement if: (A) the FRANCHISEE violates any material provision, term or
condition of this Agreement; (B) the FRANCHISEE fails to conform to the Business
System, the standards of uniformity and quality for the goods and services or
the policies and procedures promulgated by WCH in connection with the Business
System, or is involved in any act or conduct which materially impairs the
goodwill associated with the Marks or the Business System; (C) the FRANCHISEE
fails to timely pay any of its uncontested obligations or liabilities due and
owing WCH, suppliers, banks, purveyors, other creditors or any federal,
state and municipal government (including, if applicable, federal and state
taxes); (D) the FRANCHISEE is determined to be insolvent within the meaning of
any state or federal law or becomes a party to any bankruptcy proceedings, files
for bankruptcy, or its adjudicated a bankrupt under any state or federal law;
(E) the FRANCHISEE makes an assignment for the benefit of creditors or enters
into any similar arrangement for the disposition of its assets for the benefit
of creditors; (F) any check issued by the FRANCHISEE is dishonored because of
insufficient funds (except where the check is dishonored because of a
bookkeeping or accounting error) or closed accounts; (G) any We Care Hair
Franchise Agreement executed by the FRANCHISEE is (1) terminated by WCH or (2)
wrongfully terminated by the FRANCHISEE; (H) the FRANCHISEE fails to make, when
due, any payment pursuant to any Franchise Agreement, promissory note, other
contract or other obligation payable by the FRANCHISEE to WCH; (I) the
FRANCHISEE voluntarily or otherwise abandons, as defined herein, the Franchised
Area; or (J) the FRANCHISEE or any of its partners, directors, officers or
majority stockholders is convicted of, or pleads guilty or no contest to, a
charge of violating any law relating to the FRANCHISEE'S We Care Hair
Businesses, or any felony.
6.2 NOTICE OF BREACH. Except as provided for in Article 6.5 and Article 6.6 of
this Agreement, WCH will not have the right to terminate this Agreement unless
and until written notice setting forth the alleged breach in detail has been
given to the FRANCHISEE by WCH and after having been given such written notice
of breach the FRANCHISEE fails to correct the alleged breach within the period
of time specified by applicable law. If applicable law does not specify a time
period to correct an alleged breach, then the FRANCHISEE will have thirty (30)
days after having been given such written notice to correct the alleged breach.
If the FRANCHISEE fails to correct an alleged breach set forth in the written
notice as provided herein within the applicable period of time, then this
Agreement may be terminated by WCH as provided in this Agreement. For the
purposes of this Agreement, an alleged breach of this Agreement by the
FRANCHISEE will be deemed to be "corrected" if both WCH and the FRANCHISEE agree
in writing that the alleged breach has been corrected.
6.3 ARBITRATION. If the FRANCHISEE gives notice of Arbitration, as provided for
in this Agreement, within the time period established in Article 6.2 for
correcting the alleged breach, then WCH will not have the right to terminate
this Agreement until the facts of the alleged breach have been submitted to
Arbitration as provided for herein, the Arbitrator determines that the
FRANCHISEE has breached this Agreement and the FRANCHISEE fails to correct the
breach within the applicable time period. If the Arbitrator determines that the
FRANCHISEE has breached this Agreement as alleged by WCH in the written notice
given to the FRANCHISEE, then the FRANCHISEE will have thirty (30) days from the
date the Arbitrator issues a written determination on the matter to correct the
specified breach or violation of this Agreement, except where applicable law
requires a longer cure period in which event the cure period specified by
applicable law will apply. If the FRANCHISEE timely corrects the specified
breach of this Agreement, then this Agreement will remain in full force and
effect. For the purposes of this Agreement, any controversy or dispute on the
issue of whether the FRANCHISEE has timely corrected the specified breach of
this Agreement will also be subject to Arbitration as provided for herein. The
time limitations set forth in this Article within which the FRANCHISEE may
demand Arbitration of a dispute or controversy relating to the right of WCH to
terminate this Agreement for an alleged breach will be mandatory. If the
FRANCHISEE fails to comply with the time limitations set forth in this Article,
WCH may terminate this Agreement as provided for herein.
6.4 NOTICE OF TERMINATION. If WCH has complied with the notice provisions of
this Article and the FRANCHISEE has not corrected the alleged breach set forth
in the written notice within the time period specified in this Article, then WCH
will have the absolute right to terminate this Agreement by giving the
FRANCHISEE written notice stating to the FRANCHISEE that this Agreement is
terminated,
and in that event, unless applicable law provides to the contrary, the effective
date of termination of this Agreement will be the day the written notice of
termination is given to the FRANCHISEE.
6.5 GROUNDS FOR IMMEDIATE TERMINATION. WCH will have the absolute right and
privilege, unless prohibited by applicable law, to immediately terminate this
Agreement if: (A) the FRANCHISEE or any of its partners, directors, officers or
majority stockholders is convicted of, or pleads guilty or no contest to, a
charge of violating any law relating to the FRANCHISEE'S We Care Hair
Businesses, or any felony; (B) the FRANCHISEE voluntarily or otherwise abandons,
as defined herein, the Franchised Area; or (C) the FRANCHISEE is involved in any
act or conduct which materially impairs the goodwill associated with WCH'S Marks
or Business System, and the FRANCHISEE fails to correct such act or conduct
within twenty-four (24) hours of receipt of written notice from WCH.
6.6 NOTICE OF IMMEDIATE TERMINATION. If this Agreement is terminated by WCH
pursuant to Article 6.5 above, WCH will give the FRANCHISEE written notice that
this Agreement is terminated, and in that event, unless applicable law provides
to the contrary, the effective date of termination of this Agreement will be the
day the written notice of termination is given to the FRANCHISEE.
6.7 DAMAGES. In the event this Agreement is terminated by WCH pursuant to this
Article, or if the FRANCHISEE breaches this Agreement by a wrongful termination
of this Agreement, then WCH will be entitled to seek recovery from the
FRANCHISEE for all of the damages that WCH has sustained and will sustain in the
future as a result of the FRANCHISEE'S breach of this Agreement, which will
include damages based upon the Initial Fees, Continuing Fees, Advertising Fees
and other fees that would have been payable by the FRANCHISEE pursuant to this
Agreement.
6.8 OTHER REMEDIES. Nothing in this Article or this Agreement will preclude WCH
from seeking other damages or remedies under common law, state or federal laws
or this Agreement against the FRANCHISEE including, but not limited to,
attorneys' fees, punitive damages and injunctive relief.
ARTICLE 7
FRANCHISEE'S RIGHTS AND OBLIGATIONS UPON TERMINATION
7.1 OBLIGATIONS UPON TERMINATION. In the event this Agreement is terminated for
any reason, then the FRANCHISEE will: (A) within five (5) days after
termination, pay all amounts due and owing to WCH under this Agreement or any
other contract, promissory note or other obligation payable by the FRANCHISEE to
WCH; and (B) comply with all other applicable provisions of this Agreement,
including those provisions with obligations that continue beyond the termination
of this Agreement.
7.2 REVERSION OF RIGHTS. Upon termination of this Agreement for any reason, all
rights to open and operate additional We Care Hair businesses in the Franchised
Area and all other rights granted to the FRANCHISEE pursuant to this Agreement
will automatically revert to WCH, and WCH will have the right to develop the
Franchised Area or to contract with another franchisee for the future
development of the Franchised Area.
7.3 FRANCHISE AGREEMENTS NOT AFFECTED. The FRANCHISEE will continue to operate
the We Care Hair Businesses owned and operated by the FRANCHISEE in the
Franchised Area pursuant to the terms of the applicable Franchise Agreements
signed by the FRANCHISEE and WCH prior to the termination of this Agreement, and
the rights and obligations of the FRANCHISEE and WCH
with respect to the FRANCHISEE'S We Care Hair Businesses in the Franchised Area
will be governed by the terms of the applicable Franchise Agreements.
ARTICLE 8
FRANCHISEE'S COVENANTS NOT TO COMPETE
8.1 CONSIDERATION. The FRANCHISEE, the FRANCHISEE'S shareholders and the
Personal Guarantors acknowledge that the FRANCHISEE, its partners or officers,
and its employees will receive specialized training, current and future
marketing and advertising plans and strategies, business plans and strategies,
business information and procedures, research and development information,
operations information, and trade and business secrets from WCH pertaining to
the Business System and the operation of a We Care Hair business. In
consideration for the use and license of such valuable and confidential
information, the FRANCHISEE, the FRANCHISEE'S shareholders and the Personal
Guarantors will comply in all respects with the provisions of this Article. WCH
has advised the FRANCHISEE that this provision is a material provision of this
Agreement, and that WCH will not sell a We Care Hair franchise to any person or
entity that owns or intends to own, operate or be involved in any business that
competes directly or indirectly with a We Care Hair business.
8.2 IN-TERM COVENANT NOT TO COMPETE. The FRANCHISEE, the FRANCHISEE'S
shareholders and the Personal Guarantors will not, during the term of this
Agreement, on their own account or as an employee, agent, consultant, partner,
officer, director, member, or shareholder of any other person, firm, entity,
partnership or corporation: (A) seek to employ any person who is at that time
employed by WCH or by any other We Care Hair, City Looks or Cost Cutters(R)
franchisee, or induce any such employee to terminate his or her employment; or
(B) own, operate, lease, franchise, conduct, engage in, be connected with, have
any interest in, or assist any person or entity engaged in any hairstyling,
▇▇▇▇▇▇ or other business that is in any way competitive with or similar to the
We Care Hair businesses conducted by WCH or WCH'S franchisees (including, but
not limited to, the FRANCHISEE), except with the prior written consent of WCH.
8.3 POST-TERM COVENANT NOT TO COMPETE. The FRANCHISEE, the FRANCHISEE'S
shareholders and the Personal Guarantors will not, for a period of one (1) year
after the termination or expiration of this Agreement, on their own account or
as an employee, agent, consultant, partner, officer, director, member or
shareholder of any other person, firm, entity, partnership or corporation: (A)
seek to employ any person who is at that time employed by WCH or by any other We
Care Hair, City Looks or Cost Cutters(R) franchisee, or induce any such employee
to terminate his or her employment; or (B) own, operate, lease, franchise,
conduct, engage in, be connected with, have any interest in or assist any person
or entity engaged in any hairstyling, ▇▇▇▇▇▇ or other business that is in any
way competitive with or similar to the We Care Hair businesses conducted by WCH
or WCH'S franchisees which is located either within the Franchised Area or
within six (6) miles of any We Care Hair business operated by WCH or any of
WCH'S franchisees, or which is located within any exclusive area granted by WCH
or any affiliate or area developer of WCH pursuant to any franchise,
development, license or other territorial agreement. The FRANCHISEE, the
FRANCHISEE'S shareholders and the Personal Guarantors expressly agree that the
one (1) year period, the Franchised Area and the six (6) mile limit are the
reasonable and necessary time and geographical limitations required to protect
WCH and WCH'S franchisees if this Agreement expires or is terminated for any
reason, and that this covenant not to compete is necessary to permit WCH the
opportunity to further develop new We Care Hair businesses in the Franchised
Area.
8.4 INJUNCTIVE RELIEF. The FRANCHISEE, the FRANCHISEE'S shareholders and the
Personal Guarantors agree that the provisions of this Article are necessary to
protect the legitimate
business interests of WCH and WCH'S franchisees including, without limitation,
preventing damage to and/or loss of goodwill associated with the Marks,
preventing the unauthorized dissemination of marketing, promotional and other
confidential information to competitors of WCH and WCH'S franchisees, protection
of WCH'S trade secrets, the Business System and the integrity of WCH'S Business
System, and preventing duplication of the Business System. The FRANCHISEE, the
FRANCHISEE'S shareholders and the Personal Guarantors also agree that damages
alone cannot adequately compensate WCH if there is a violation of this Article
by the FRANCHISEE and that injunctive relief against the FRANCHISEE is essential
for the protection of WCH and WCH'S franchisees. The FRANCHISEE, the
FRANCHISEE'S shareholders and the Personal Guarantors agree therefore, that if
WCH alleges that the FRANCHISEE, the FRANCHISEE'S shareholders or the Personal
Guarantors have breached or violated this Article, then WCH will have the right
to petition a Court of competent jurisdiction for injunctive relief against the
FRANCHISEE, the FRANCHISEE'S shareholders or the Personal Guarantors, in
addition to all other remedies that may be available to WCH at law or in equity.
Unless provided to the contrary by applicable law, WCH will not be required to
post a bond or other security in any action where WCH is seeking to enjoin the
FRANCHISEE, the FRANCHISEE'S shareholders or the Personal Guarantors from
violating this Article. In cases where WCH is granted ex parte injunctive relief
against the FRANCHISEE, the FRANCHISEE'S shareholders or the Personal
Guarantors, then the FRANCHISEE, the FRANCHISEE'S shareholders or the Personal
Guarantors will have the right to petition the court for a hearing on the merits
at the earliest time convenient to the Court.
8.5 SEVERABILITY. It is the desire and intent of the parties to this Agreement,
including the FRANCHISEE'S shareholders and the Personal Guarantors, that the
provisions of this Article be enforced to the fullest extent permissible under
the laws and public policy applied in each jurisdiction in which enforcement is
sought. Accordingly, if any part of this Article is adjudicated to be invalid or
unenforceable, then this Article will be deemed amended to modify or delete that
portion thus adjudicated to be invalid or unenforceable, such modification or
deletion to apply only with respect to the operation of this Article and the
particular jurisdiction in which said adjudication is made. Further, to the
extent any provision of this Article is deemed unenforceable by virtue of its
scope or limitation, the parties to this Agreement including the FRANCHISEE, the
FRANCHISEE'S shareholders and the Personal Guarantors agree that the scope and
limitation provisions will, nevertheless, be enforceable to the fullest extent
permissible under the laws and public policies applied in such jurisdiction
where enforcement is sought.
ARTICLE 9
INDEPENDENT CONTRACTORS; INDEMNIFICATION
9.1 INDEPENDENT CONTRACTORS. WCH and the FRANCHISEE are each independent
contractors and, as a consequence, there is no employer-employee or
principal-agent relationship between WCH and the FRANCHISEE. The FRANCHISEE will
not have the right to and will not make any agreements, representations or
warranties in the name of or on behalf of WCH or represent that their
relationship is other than that of franchisor and franchisee. Neither WCH nor
the FRANCHISEE will be obligated by or have any liability to the other under any
agreements or representations made by the other to any third parties.
9.2 INDEMNIFICATION. WCH will not be obligated to any person for any damages
arising out of, from, in connection with, or as a result of the FRANCHISEE'S
negligence or the operation of the FRANCHISEE'S We Care Hair Businesses that are
conducted by the FRANCHISEE pursuant to this Agreement. The FRANCHISEE will
indemnify and hold harmless WCH against all claims, lawsuits, damages,
obligations, liability, actions and judgments alleged or obtained by any person
or entity against WCH arising out of, from, as a result of, or in connection
with the FRANCHISEE'S negligence or the
operation of the FRANCHISEE'S We Care Hair Businesses that are conducted by the
FRANCHISEE pursuant to this Agreement, including, without limitation, any claims
arising from or relating to: (A) any personal injury, property damage,
commercial loss or environmental contamination resulting from any act or
omission of the FRANCHISEE or any of its employees, agents or representatives;
(B) any failure on the part of the FRANCHISEE to comply with any requirement of
any governmental authority; (C) any failure of the FRANCHISEE to pay any of its
obligations; or (D) any failure or the FRANCHISEE to comply with any requirement
or condition of this Agreement or any other agreement with WCH or any affiliate
of WCH. Further, the FRANCHISEE will indemnify and reimburse WCH for all such
obligations and damages for which WCH is held liable and for all costs
reasonably incurred by WCH in the defense of any such claims brought against it
or in any action arising out of the operation of the FRANCHISEE'S We Care Hair
Businesses in which it is named as a party including, without limitation, costs
for attorneys' fees actually incurred, investigation expenses, court costs,
deposition expenses and travel and living expenses. WCH will have the absolute
right to defend any claim made against it that results from the FRANCHISEE'S We
Care Hair Businesses.
9.3 PAYMENT OF COSTS AND EXPENSES. The FRANCHISEE will pay all costs and
expenses, including actual attorneys' fees, incurred by WCH in enforcing any
term, condition or provision of this Agreement or in seeking to enjoin any
violation of this Agreement by the FRANCHISEE.
9.4 CONTINUATION OF OBLIGATIONS. The indemnification and other obligations
contained in this Article will continue in full force and effect subsequent to
and notwithstanding the expiration or termination of this Agreement.
ARTICLE 10
ASSIGNMENT
10.1 ASSIGNMENT BY FRANCHISOR. This Agreement may be unilaterally assigned and
transferred by WCH without the FRANCHISEE'S approval or consent, and will inure
to the benefit of WCH'S successors and assigns. WCH will provide the FRANCHISEE
with written notice of any such assignment or transfer, and the assignee will be
required to fulfill WCH'S obligations under this Agreement.
10.2 ASSIGNMENT BY FRANCHISEE TO CORPORATION. If the FRANCHISEE is an individual
or a partnership, this Agreement may be transferred or assigned by the
FRANCHISEE to a corporation which is owned or controlled (ownership of at least
fifty-one percent (51%) of the issued and outstanding capital stock) by the
FRANCHISEE, provided that: (A) the FRANCHISEE and all of the shareholders of the
assignee corporation sign the personal guaranty and agreement to be bound by the
terms and conditions of this Agreement attached hereto: (B) the FRANCHISEE
furnishes prior written proof to WCH substantiating that the corporation will be
financially able to perform all of the terms and conditions of this Agreement;
and (C) none of the shareholders owns, operates, franchises, develops, manages
or controls any hairstyling, ▇▇▇▇▇▇ or other business that is in any way
competitive with or similar to a We Care Hair business. The FRANCHISEE will give
WCH fifteen (15) days written notice prior to the proposed date of assignment or
transfer of this Agreement to an owned or controlled corporation of the
FRANCHISEE; however, the transfer or assignment of this Agreement will not be
valid or effective until WCH has received the legal documents which its legal
counsel deems necessary to properly and legally document the transfer or
assignment of this Agreement to the corporation as provided herein.
10.3 ASSIGNMENT UPON DEATH OR DISABILITY OF FRANCHISEE. If the FRANCHISEE is an
individual, then this Agreement may be assigned, transferred or bequeathed by
the FRANCHISEE to
any designated person or beneficiary upon his or her death or permanent
disability. However, the assignment of this Agreement to the transferee,
assignee or beneficiary of the FRANCHISEE will not be valid or effective until
WCH has received the properly executed legal documents which its legal counsel
deems necessary to properly and legally document the transfer, assignment or
bequest of this Agreement, and until the transferee, assignee or beneficiary
agrees to be unconditionally bound by the terms and conditions of this Agreement
and to personally guarantee the performance of the FRANCHISEE'S obligations
under this Agreement.
10.4 APPROVAL OF TRANSFER; CONDITIONS FOR APPROVAL. This Agreement may be
assigned or transferred by the FRANCHISEE only with the prior written approval
of WCH. WCH will not unreasonably withhold its consent to any transfer of this
Agreement, provided that the FRANCHISEE and the transferee Franchisee comply
with the following conditions: (A) all of the FRANCHISEE'S monetary obligations
due to WCH have been paid in full, and the FRANCHISEE is not otherwise in
default under this Agreement; (B) the FRANCHISEE has executed a written
agreement in a form satisfactory to WCH in which the FRANCHISEE agrees to
observe all applicable obligations and covenants contained in this Agreement;
(C) the transferee Franchisee and its shareholders agree to be personally liable
to discharge all of the FRANCHISEE'S obligations under this Agreement and will
enter into a written agreement in a form satisfactory to WCH assuming and
agreeing to discharge all of the FRANCHISEE'S obligations and covenants under
this Agreement; (D) the transferee Franchisee will have demonstrated to WCH'S
satisfaction that he, she or it meets WCH'S managerial, financial, and business
standards for new area franchisees, possesses a good business reputation and
credit rating, and possesses the aptitude and ability to conduct the Business
franchised hereunder (as may be evidenced by prior related business experience
or otherwise); (E) the FRANCHISEE has paid the transfer fee required under
Article 10.6; (F) the transferee Franchisee does not own, operate, franchise,
develop, manage or control any hairstyling, ▇▇▇▇▇▇ or other business that is in
any way competitive with or similar to a We Care Hair business; and (G) if the
transferee Franchisee does not meet WCH'S net worth requirements for operation
of the We Care Hair Businesses, then the FRANCHISEE and/or its shareholders and
the Personal Guarantors will execute a written agreement in a form satisfactory
to WCH agreeing to remain liable to WCH for the obligations of the We Care Hair
Businesses.
10.5 ACKNOWLEDGMENT OF RESTRICTIONS. The FRANCHISEE acknowledges and agrees that
the restrictions on transfer imposed herein are reasonable and are necessary to
protect the We Care Hair Business System and the Marks, as well as WCH'S
reputation and image, and are for the protection of WCH, the FRANCHISEE and all
other franchisees who own and operate We Care Hair businesses. Any assignment or
transfer permitted by this Article 10 will not be effective until WCH receives a
completely executed copy of all transfer documents and WCH consents to the
transfer in writing, and any attempted assignment or transfer made without
complying with the requirements of this Article 10 will be void.
10.6 TRANSFER FEE. If, pursuant to the terms of this Article, this Agreement is
assigned, transferred or bequeathed to another person or entity, or if the
FRANCHISEE'S shareholders transfer over fifty percent (50%) of their capital
stock to another person or entity, then the FRANCHISEE will pay WCH a transfer
fee of One Thousand Dollars ($1,000). This fee is to cover the costs incurred by
WCH for attorneys' fees, accountants' fees, out-of-pocket expenses, long
distance telephone calls, administrative expenses, and the time of its employees
and officers.
ARTICLE 11
ARBITRATION
11.1 DISPUTES SUBJECT TO ARBITRATION. Except as expressly provided to the
contrary in this Agreement, all disputes and controversies between the parties,
including allegations of fraud, misrepresentation or violation of any state or
federal laws or regulations, arising under, as a result of, or in connection
with this Agreement, the Franchised Area or the FRANCHISEE'S We Care Hair
Businesses will be resolved and determined exclusively by Arbitration in
accordance with the Commercial Rules and Regulations of the American Arbitration
Association.
11.2 NOTICE OF DISPUTE. The party alleging the breach, claim, dispute or
controversy ("dispute") must give the other party written notice setting forth
the alleged dispute in detail. The party who has been given such written notice
alleging the dispute will have thirty (30) days after having been given such
written notice from the complaining party to correct or resolve the dispute
specified in the written notice.
11.3 DEMAND FOR ARBITRATION. If the dispute alleged by either party has not been
corrected, settled or compromised within the time period provided for in this
Agreement, then either party may notice Arbitration by giving the other party
written notice demanding Arbitration. Within ten (10) days after a written
demand for Arbitration has been given by the party demanding Arbitration, either
party will have the right to request the office of the American Arbitration
Association in Minneapolis, Minnesota to initiate the procedures necessary to
appoint an Arbitrator. The Arbitrator will be appointed within sixty (60) days
after a written demand for Arbitration has been made in accordance with the
Commercial Rules and Regulation of the American Arbitration Association.
11.4 VENUE AND JURISDICTION. All Arbitration hearings will take place
exclusively in Minneapolis, Minnesota. WCH and the FRANCHISEE and their
officers, Directors and shareholders or partners and the Personal Guarantors
acknowledge that the FRANCHISEE and its officers, Directors and employees have
had substantial business and personal contacts with WCH in Minnesota, do hereby
agree and submit to personal jurisdiction in Minnesota in connection with any
Arbitration hearings hereunder and any suits or actions brought to enforce the
decision of the Arbitrator, and do hereby waive any rights they may have to
contest venue and jurisdiction in Minnesota and any claims that venue and
jurisdiction in Minnesota are invalid.
11.5 POWERS OF ARBITRATOR. The authority of the Arbitrator will be limited to
making a finding, judgment, decision and award relating to the interpretation of
or adherence to the written provisions of this Agreement. The Federal Rules of
Evidence (the "Rules") will apply to all Arbitration hearings and the
introduction of all evidence, testimony, records, affidavits, documents and
memoranda in any Arbitration hearing must comply in all respects with the Rules
and the legal precedents interpreting the Rules. Both parties will have the
absolute right to cross-examine any person who testified against them or in
favor of the other party. The Arbitrator will not have the authority or right to
add to, delete, amend or modify in any manner the terms, conditions and
provisions of this Agreement. All findings, judgments, decisions and awards of
the Arbitrator will be limited to the dispute set forth in the written demand
for Arbitration, and the Arbitrator will not have the authority to decide any
other issues. The Arbitrator will not have the right or authority to award
punitive damages to WCH or the FRANCHISEE or their officers, Directors,
shareholders or partners and Personal Guarantors, and WCH and FRANCHISEE and
their officers, Directors, shareholders or partners, and Personal Guarantors
expressly waive their rights to plead or seek punitive damages. All findings,
judgments, decisions and awards by the Arbitrator will be in writing, will be
made within sixty (60) days after the Arbitration hearings have been completed,
and will be final and binding on WCH and the FRANCHISEE, except as provided for
in Article 11.8. The written decision of the Arbitrator will be deemed to be an
order, judgment and decree and may be entered as such in any Court of competent
jurisdiction by either party.
11.6 DISPUTES NOT SUBJECT TO ARBITRATION. The disputes and controversies between
WCH and the FRANCHISEE which are set forth in Article 12.1 and the following
disputes between WCH and the FRANCHISEE will not be subject to Arbitration: (A)
any dispute involving the Marks; (B) any dispute involving immediate termination
of this Agreement by WCH pursuant to Article 6.5 and Article 6.6 of this
Agreement; (C) any dispute involving enforcement of the confidentiality
provisions set forth in Article 5 of this Agreement; and (D) any dispute
involving enforcement of the covenants not to compete set forth in Article 8 of
this Agreement.
11.7 NO COLLATERAL ESTOPPEL OR CLASS ACTIONS. Except as provided herein, all
Arbitration findings and awards expressly made by the Arbitrator will be final
and binding on WCH and the FRANCHISEE and their officers, Directors,
shareholders or partners, and Personal Guarantors; however, such Arbitration
findings and awards may not be used to collaterally estop either party from
raising any like or similar issues, claims or defenses in any other or
subsequent Arbitration, litigation, court hearing or other proceeding involving
third parties or other franchisees. No party except WCH, the FRANCHISEE, and
their officers, Directors, shareholders or partners, and Personal Guarantors
will have the right to join in any Arbitration proceeding arising under this
Agreement, and, therefore, the Arbitrator will not be authorized to permit or
approve class actions or to permit any person or entity that is not a party to
this Agreement to be involved in or to participate in any Arbitration hearings
conducted pursuant to this Agreement.
11.8 DE NOVO HEARING ON MERITS. If the Arbitrator awards either WCH or the
FRANCHISEE damages (including actual damages, costs and attorneys' fees) in
excess of One Hundred Thousand Dollars ($100,000) in any Arbitration proceeding
commenced pursuant to this Agreement, then the party who has been held liable by
the Arbitrator will have the right to a de novo hearing on the merits by
commencing an action in a court of competent jurisdiction in accordance with the
provisions of this Agreement. If the party held liable by the Arbitrator
commences a court action as provided for herein, then neither party will have
the right to introduce the Arbitrator's decision or findings in any such court
action and the Arbitrator's decision and findings will be of no force and effect
and will not be final or binding on either WCH or the FRANCHISEE. If the party
who has been held liable by the Arbitrator for over One Hundred Thousand Dollars
($100,000) in damages fails to commence a court action within thirty (30) days
after the Arbitrator issues his or her award in writing, then the Arbitrator's
findings, judgments, decisions and awards will be final and binding on WCH and
the FRANCHISEE.
11.9 CONFIDENTIALITY. All evidence, testimony, records, documents, findings,
decisions, judgments and awards pertaining to any Arbitration hearing between
WCH and the FRANCHISEE will be secret and confidential in all respects. WCH and
the FRANCHISEE will not disclose the decision or award of the Arbitrator and
will not disclose any evidence, testimony, records, documents, findings, orders,
or other matters from the Arbitration hearing to any person or entity except as
required by law.
11.10 SEVERABILITY. It is the desire and intent of the parties to this Agreement
that the provisions of this Article be enforced to the fullest extent
permissible under the laws and public policy applied in each jurisdiction in
which enforcement is sought. Accordingly, if any part of this Article is
adjudicated to be invalid or unenforceable, then this Article will be deemed
amended to delete that portion thus adjudicated to be invalid or unenforceable
to the extent required to make this Article valid and enforceable. Any such
deletion will be effective only in the particular jurisdiction in which the
adjudication is made. Further, to the extent any provision of this Article is
deemed unenforceable by virtue of its scope, the parties to this Agreement agree
that the same will, nevertheless, be enforceable to the fullest extent
permissible under the laws and public policies applied in such jurisdiction
where enforcement is sought, and the scope in such a case will be determined by
Arbitration as provided herein.
ARTICLE 12
ENFORCEMENT
12.1 INJUNCTIVE RELIEF. In addition to the provisions of Article 11, WCH will be
entitled to petition a Court of competent jurisdiction for the entry of
temporary and permanent injunctions and orders of specific performance enforcing
the provisions of this Agreement relating to: (A) the FRANCHISEE'S improper or
unauthorized use of the Marks and the Business System; (B) the obligations of
the FRANCHISEE upon termination or expiration of this Agreement; (C) the
transfer or assignment of this Agreement, the Franchised Area or ownership
interests of the FRANCHISEE; (D) the FRANCHISEE'S violation of the provisions of
this Agreement relating to confidentiality and covenants not to compete; and (E)
any act or omission by the FRANCHISEE or the FRANCHISEE'S employees that, (1)
constitutes a violation of any applicable law, ordinance or regulation, (2) is
dishonest or misleading to customers of the FRANCHISEE'S We Care Hair Businesses
or other We Care Hair businesses, (3) constitutes a danger to the employees,
public or customers of the FRANCHISEE'S We Care Hair Businesses, or (4) may
impair the goodwill associated with the Marks and the Business System. In any
action brought under this provision where WCH prevails against the FRANCHISEE,
the FRANCHISEE will indemnify WCH for all costs that it incurs in any such
proceedings including, without limitation, attorneys' fees actually incurred,
expert witness fees, costs of investigation, court costs, travel and living
expenses, and all other costs incurred by WCH. Unless provided to the contrary
by applicable law, WCH will be entitled to obtain injunctive relief without the
posting of any bond or security.
12.2 SEVERABILITY. All provisions of this Agreement are severable and this
Agreement will be interpreted and enforced as if all completely invalid or
unenforceable provisions were not contained herein and partially valid and
enforceable provisions will be enforced to the extent valid and enforceable. If
any applicable law or rule of any jurisdiction requires a greater prior notice
of the termination of this Agreement than is required hereunder or the taking of
some other action not required hereunder, or if under any applicable and binding
laws of any jurisdiction, any provision of this Agreement or any specification,
standard or operating procedure prescribed by WCH is invalid or unenforceable,
the prior notice or other action required by such law or rule will be
substituted for the notice requirements hereof, or such invalid or unenforceable
provision, specification, standard or operating procedure will be modified to
the extent required to be valid and enforceable. Such modifications to this
Agreement will be effective only in such jurisdiction and will be enforced as
originally made and entered into in all other jurisdictions.
12.3 WAIVER. WCH and the FRANCHISEE may, by written instrument signed by WCH and
the FRANCHISEE, waive any obligation of or restriction upon the other under this
Agreement. Acceptance by WCH of any payment by the FRANCHISEE and the failure,
refusal or neglect of WCH to exercise any right under this Agreement or to
insist upon full compliance by the FRANCHISEE of its obligations hereunder will
not constitute a waiver by WCH of any provision of this Agreement. WCH will have
the right to waive obligations or restrictions for other area franchisees under
their Development Agreements without waiving those obligations or restrictions
for the FRANCHISEE and, except to the extent provided by law, WCH will have the
right to negotiate terms and conditions, grant concessions and waive obligations
for other area franchisees of WCH without granting those same rights to the
FRANCHISEE and without incurring any liability to the FRANCHISEE whatsoever.
12.4 NO RIGHT TO OFFSET. The FRANCHISEE will not, on grounds of the alleged
nonperformance by WCH of any of its obligations under this Agreement, any other
contract between WCH and the FRANCHISEE, or for any other reason, withhold
payment of any amounts due WCH under this Agreement or any other contract,
promissory note or other obligation payable by the FRANCHISEE to WCH. The
FRANCHISEE will not have the right to "offset" any liquidated or unliquidated
amounts allegedly due to the FRANCHISEE from WCH against any payments due to WCH
under this Agreement or any other contract, promissory note or other obligation
payable by the FRANCHISEE to WCH.
12.5 WCH'S RIGHTS CUMULATIVE. The rights of WCH hereunder are cumulative and no
exercise or enforcement by WCH of any right or remedy hereunder will preclude
the exercise or enforcement by WCH of any other right or remedy hereunder or
which WCH is entitled by law to enforce.
12.6 VENUE AND JURISDICTION. Unless otherwise required by applicable law, all
Arbitration hearings, litigation, court hearings or other hearings initiated by
either party against the other party must and will be venued exclusively in
Hennepin County, Minnesota. The FRANCHISEE, each of its officers, Directors and
shareholders, and the Personal Guarantors: (A) acknowledge that Minneapolis,
Minnesota is a mutually convenient location for the venue and conduct of any
legal or enforcement proceedings; (B) do hereby agree and submit to personal
jurisdiction in the State of Minnesota for the purposes of any Arbitration
hearings, litigation, court hearings or other hearings brought to enforce or
construe the terms of this Agreement or to resolve any dispute or controversy
arising under, as a result of, or in connection with this Agreement, the
Franchised Area or the FRANCHISEE'S We Care Hair Businesses; and (C) do hereby
agree and stipulate that any Arbitration hearings, litigation, court hearings
and other hearings will be venued and held exclusively in Hennepin County,
Minnesota, and waive any rights to contest such venue and jurisdiction and any
claims that such venue and jurisdiction are invalid.
12.7 AGREEMENT BINDING ON HEIRS AND ASSIGNS. This Agreement is binding upon the
parties hereto and their respective executors, administrators, heirs, assigns
and successors in interest.
12.8 JOINT AND SEVERAL LIABILITY. If the FRANCHISEE consists of more than one
person, their liability under this Agreement will be deemed to be joint and
several.
12.9 ENTIRE AGREEMENT. This Agreement supersedes and terminates all prior
agreements relating to the rights granted herein, either oral or in writing,
between the parties and therefore, any representations, inducements, promises or
agreements between the parties not contained in this Agreement or not in writing
signed by the President or a Vice President of WCH and the FRANCHISEE will not
be enforceable. This Agreement will not supersede or terminate any written
Development Agreement relating to another Franchised Area or Franchise
Agreement(s) executed prior to the date of this Agreement relating to other We
Care Hair franchises operated by the FRANCHISEE that are or will be owned and
operated by the FRANCHISEE. The preambles are a part of this Agreement, which
constitutes the entire agreement of the parties, and there are no other oral or
written understandings or agreements between WCH and the FRANCHISEE relating to
the subject matter of this Agreement.
12.10 CONTROLLING AGREEMENT. The rights and obligations of the FRANCHISEE and
WCH with respect to the operation of each We Care Hair Business opened in the
Franchised Area by the FRANCHISEE will be governed by the terms and conditions
of each We Care Hair Franchise Agreement executed by the FRANCHISEE. In the
event there is a conflict between the terms of this Agreement and the terms of
any We Care Hair Franchise Agreement executed by the FRANCHISEE, then unless
specified otherwise herein, the terms of this Agreement will control.
12.11 HEADINGS; TERMS. The headings of the Articles and the provisions thereof
are for convenience only and do not define, limit or construe the contents of
such Articles. The term "FRANCHISEE" as used herein is applicable to one or more
individuals, a corporation or a partnership, as the case may be, and the
singular usage includes the plural, and the masculine usage includes the neuter
and the feminine and the neuter usage includes the masculine and the feminine.
References to "FRANCHISEE" which are applicable to an individual or individuals
will mean the principal owner or owners of the equity or operating control of
the FRANCHISEE if the FRANCHISEE is a corporation or partnership. If the
FRANCHISEE consists of more than one individual, then all individuals will be
bound jointly and severally by the terms and conditions of this Agreement.
12.12 NO ORAL MODIFICATION. No modification, change, addition, rescission,
release, amendment or waiver of, and no approval, consent or authorization
required by any provision of this Agreement may be made except by a written
agreement subscribed to by duly authorized officers or partners of the
FRANCHISEE and the President or a Vice President of WCH. WCH and the FRANCHISEE
will not have the right to amend or modify this Agreement orally or verbally,
and any attempt to do so will be void in all respects.
ARTICLE 13
NOTICES
All notices to WCH will be in writing and will be made by personal service upon
an officer or Director of WCH or sent by prepaid registered or certified United
States mail addressed to WCH at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ with a copy to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq., ▇▇▇▇, Plant, ▇▇▇▇▇,
▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.A., 3400 City Center, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇. All notices to the FRANCHISEE will be by personal service
upon the FRANCHISEE, a District Manager or a salon manager or assistant manager,
(or, if applicable, an officer or Director of the FRANCHISEE), or sent by
prepaid registered or certified United States mail addressed to the FRANCHISEE
at the first We Care Hair Business opened by the FRANCHISEE in the Franchised
Area or such other address as the FRANCHISEE may designate in writing, or by
delivery to any employee of the FRANCHISEE by a recognized overnight delivery
service (such as Federal Express or UPS) which requires a written receipt of
delivery from the addressee. Notice by mail is effective upon depositing the
same in the mail in the manner provided above, notice by personal service is
effective upon obtaining service and notice by overnight delivery service is
effective upon delivery by such overnight delivery service.
ARTICLE 14
ACKNOWLEDGMENTS
14.1 BUSINESS RISKS; NO FINANCIAL PROJECTIONS. The FRANCHISEE acknowledges that
it has conducted an independent investigation of the prospects for the
establishment of We Care Hair Businesses within the Franchised Area, and
recognizes that the business venture contemplated by this Agreement involves
business and economic risks and that its financial and business success will be
primarily dependent upon the personal efforts of the FRANCHISEE, its management
and employees. WCH expressly disclaims the making of, and the FRANCHISEE
acknowledges that it has not received, any estimates, projections, warranties or
guaranties, express or implied, regarding potential Gross Revenues, profits,
earnings or the financial success of the FRANCHISEE'S We Care Hair Businesses,
except as expressly set forth in writing in WCH'S Uniform Franchise Offering
Circular, receipt of which is acknowledged by the FRANCHISEE.
14.2 NO INCOME OR REFUND WARRANTIES. The FRANCHISEE acknowledges that WCH does
not warrant or guarantee to the FRANCHISEE that the FRANCHISEE will derive
income or profit from the FRANCHISEE'S We Care Hair Businesses or that WCH will
refund all or part of the Exclusive Territory Fee or the price paid for the
FRANCHISEE'S We Care Hair Businesses or repurchase any of the products,
merchandise, furniture, fixtures, equipment, supplies or chattels supplied by
WCH or an approved supplier if the FRANCHISEE is unsatisfied with its We Care
Hair Businesses.
14.3 TERMS OF OTHER DEVELOPMENT AGREEMENTS MAY DIFFER. The FRANCHISEE
acknowledges that other area franchisees of WCH have or will be granted
Development Agreements at different times and in different situations, and
further acknowledges that the terms and conditions of such Development
Agreements may vary substantially in form and substance from those contained in
this Agreement.
14.4 RECEIPT OF UNIFORM FRANCHISE OFFERING CIRCULAR. The FRANCHISEE acknowledges
that it received a copy of this Agreement with all material blanks fully
completed at least five (5) business days prior to the date that this Agreement
was executed. The FRANCHISEE further acknowledges that it received a We Care
Hair Uniform Franchise Offering Circular at least ten (10) business days prior
to the date on which this Agreement was executed.
14.5 POTENTIAL INCREASES IN INVESTMENT REQUIREMENTS. The FRANCHISEE recognizes
and acknowledges that this Agreement requires it to open additional We Care Hair
Businesses in the future pursuant to the development schedule set forth in
Article 3. The FRANCHISEE further acknowledges that the estimated expenses and
investment requirements set forth in Items 6 and 7 of WCH'S Uniform Franchise
Offering Circular are subject to increase over time, and that future We Care
Hair Businesses opened and operated by the FRANCHISEE may involve greater
initial investment and operating capital requirements than those stated in the
Uniform Franchise Offering Circular provided to the FRANCHISEE prior to the
execution of this Agreement.
14.6 CITY LOOKS(R) AND HAIR PERFORMERS(R) BUSINESSES. The FRANCHISEE agrees and
acknowledges that the "City Looks(R)," "City Looks Salons International(R),"
"City Looks(R) By The Barbers(R)" and "The Barbers(R)" businesses ("City
Looks(R) businesses") which are operated and franchised by The Barbers,
Hairstyling for Men & Women, Inc. ("The Barbers") and the "Hair Performers(R)
businesses which are serviced by Hair Performers International, Inc., a
wholly-owned subsidiary of The Barbers, are full service hair care salons that
address different markets and, thus, are not competitive with We Care Hair
businesses. Further, the FRANCHISEE acknowledges and agrees that The Barbers and
Hair Performers International, Inc. will have the absolute right to develop,
own, manage, license or franchise City Looks(R) and Hair Performers(R)
businesses at any location in the world, and the FRANCHISEE hereby waives any
and all rights that it may have or allege against WCH or any affiliate of WCH
resulting from the opening of any City Looks(R) or Hair Performers(R) business,
including those City Looks(R) or Hair Performers(R) businesses that may be
located in the Franchised Area or near, adjacent or contiguous to any of the
FRANCHISEE'S We Care Hair Businesses.
14.7 COST CUTTERS(R) AND FAMILY HAIRCUT(R) BUSINESSES. The FRANCHISEE agrees and
acknowledges that the "Cost Cutters Family Hair Care(R)" businesses which are
franchised by The Barbers and the Family Haircut(R) business serviced by The
Barbers ("Cost Cutters(R) and Family Haircut(R) businesses"), are hair care
salons that address similar markets and, thus, may be competitive with We Care
Hair businesses. Further, the FRANCHISEE acknowledges and agrees that The
Barbers will have the absolute right to develop, own, manage, license or
franchise Cost Cutters(R) and Family Haircut(R)
businesses at any location in the world, and the FRANCHISEE hereby waives any
and all rights that it may have or allege against WCH or any affiliate of WCH
resulting from the opening of any Cost Cutters(R) or Family Haircut(R) business,
including those Cost Cutters(R) and Family Haircut(R) businesses that may be
located in the Franchised Area or near, adjacent or contiguous to any of the
FRANCHISEE'S We Care Hair Businesses.
ARTICLE 15
DISCLAIMER; FRANCHISEE'S LEGAL COUNSEL
15.1 DISCLAIMER BY FRANCHISOR. WCH expressly disclaims the making of any express
or implied representations or warranties regarding the sales, earnings, income,
profits, Gross Revenues, business or financial success, or value of the
FRANCHISEE'S Businesses, except those expressly set forth in Item 19 of the We
Care Hair Uniform Franchise Offering Circular received by the FRANCHISEE.
15.2 ACKNOWLEDGMENTS BY FRANCHISEE. The FRANCHISEE acknowledges that it has not
received any express or implied representations or warranties regarding the
sales, earnings, income, profits, Gross Revenues, business or financial success,
value of the Businesses or any other matters pertaining to the We Care Hair
Businesses from WCH or any of WCH'S officers, employees or agents that were not
contained in writing in the Uniform Franchise Offering Circular (including this
Agreement) received by the FRANCHISEE ("representations or warranties"). The
FRANCHISEE further acknowledges that if it had received any representations or
warranties not contained in WCH'S Uniform Franchise Offering Circular, it would
not have executed this Agreement, and the FRANCHISEE would have: (A) promptly
notified the President of WCH in writing of the person or persons making such
representations or warranties; and (B) provided to WCH a specific written
statement detailing the representations or warranties made that were not
contained in the Uniform Franchise Offering Circular received by the FRANCHISEE.
15.3 LEGAL REPRESENTATION. The FRANCHISEE acknowledges that this Agreement
constitutes a legal document which grants certain rights to and imposes certain
obligations upon the FRANCHISEE. The FRANCHISEE was advised by WCH to consult an
attorney or other advisor prior to the execution of this Agreement to review
WCH'S Uniform Franchise Offering Circular, to review this Agreement in detail,
to review the economics, operations and other business aspects of the We Care
Hair Businesses, to determine compliance with franchising and other applicable
laws, to advise the FRANCHISEE about all federal, state and local laws, rules,
ordinances, special regulations and statutes that apply to the FRANCHISEE'S We
Care Hair Businesses and to advise the FRANCHISEE about the economic risks,
liabilities, obligations and rights under this Agreement. The name of the
FRANCHISEE'S attorney or other advisor is:
Name:
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Name of Firm:
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Address:
----------------------------------------------------
City, State, Zip Code:
--------------------------------------
Telephone Number: ( )
-------------------------------------------
Fax Number: ( )
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ARTICLE 16
GOVERNING LAW; STATE MODIFICATIONS
16.1 GOVERNING LAW. Except to the extent governed by the United States Trademark
Act of 1946 (▇▇▇▇▇▇ Act, 15 U.S.C. ss.1051 et seq.), this Agreement and the
relationship between WCH and the FRANCHISEE will be governed by the laws of the
state in which the Franchised Area is located. If the Franchised Area contains
more than one state, then the laws of the state in which the FRANCHISEE'S
principal place of business is located will govern. The provisions of this
Agreement which conflict with or are inconsistent with applicable governing law
will be superseded and/or modified by such applicable law only to the extent
such provisions are inconsistent. All other provisions of this Agreement will be
enforceable as originally made and entered into upon the execution of this
Agreement by the FRANCHISEE and WCH.
16.2 STATE MODIFICATIONS. The following states have statutes which may supersede
the provisions of this Agreement in the FRANCHISEE'S relationship with WCH
including the areas of termination and renewal of the Franchise: ARKANSAS [Stat.
Section 70-807], CALIFORNIA [Bus. & Prof. Code Sections 20000-20043],
CONNECTICUT [Gen. Stat. Section 42-133e et seq.], DELAWARE [Code Section 2552],
HAWAII [Rev. Stat. Section 482E-1], ILLINOIS [815 ILCS 705/19 and 705/20],
INDIANA [Stat. Section 23-2-2.7], IOWA [Code 523H.1-523H.17], MICHIGAN [Stat.
Section 19.854(27)], MINNESOTA [Stat. Section 80C14], MISSISSIPPI [Code Section
75-24-51], MISSOURI [Stat. Section 407.400], NEBRASKA [Rev. Stat. Section
87-401], NEW JERSEY [Stat. Section 56:10-1], SOUTH DAKOTA [Codified Laws Section
37-5A-51], VIRGINIA [Code 13.1-557-574-13.1-564], WASHINGTON [Code Section
19.100.180], WISCONSIN [Stat. Section 135.03]. These and other states may have
court decisions which may supersede the provisions of this Agreement in the
FRANCHISEE'S relationship with WCH including the areas of termination and
renewal of the Franchise. If the Franchised Area is located in any one of the
states specifically indicated below in this Article 16.2, or if the laws of any
such state are otherwise applicable, then the designated provisions of this
Agreement will be amended and revised as follows:
CALIFORNIA. If this Agreement is governed by the laws of the State of
California, then the covenant not to compete upon termination or expiration of
this Agreement contained in Article 8.3 may be unenforceable, except in certain
circumstances provided by law.
ILLINOIS. If this Agreement is governed by the laws of the State of
Illinois, then: (1) the consent by the FRANCHISEE to jurisdiction and venue in
Hennepin County, Minnesota contained in Article 12.6 may be inapplicable;
provided, however, that such inapplicability in the State of Illinois will not
be construed to mean that venue in Hennepin County, Minnesota is improper, or
that the FRANCHISEE and its officers, directors and shareholders are not subject
to jurisdiction in Hennepin County, Minnesota, or in any other state; and (2)
Section 41 of the Illinois Franchise Disclosure Act states that "any condition,
stipulation or provision purporting to bind any person acquiring any franchise
to waive compliance with any provision of this Act is void", accordingly any
acknowledgments contained in Article 14.2, Article 14.4, Article 15.2, and the
second sentence of Article 14.1 will be unenforceable against the FRANCHISEE.
INDIANA. If this Agreement is governed by the laws of the State of
Indiana, then: (1) the geographical limitation contained in Article 8.3 will be
limited to an area of reasonable size; (2) the consent by the FRANCHISEE to
jurisdiction and venue in Hennepin County, Minnesota contained in Article 12.6
and the Personal Guaranty attached to this Agreement may be inapplicable;
provided,
however, that such inapplicability in the State of Indiana will not be construed
to mean that venue in Hennepin County, Minnesota is improper, or that the
FRANCHISEE and its officers, directors, shareholders and Personal Guarantors are
not subject to jurisdiction in Hennepin County, Minnesota, or in any other
state; (3) notwithstanding any provisions of this Agreement to the contrary, a
Court of competent jurisdiction will determine the adequacy of money damages,
whether WCH will be required to post a bond or other security, and the amount of
such bond or other security, in any injunctive proceeding commenced by WCH
against the FRANCHISEE or the FRANCHISEE'S shareholders; (4) the provisions of
Article 11 requiring Arbitration hearings to take place in Minneapolis,
Minnesota will be inapplicable and in the event of Arbitration between WCH and
the FRANCHISEE, such Arbitration will be conducted in Indianapolis, Indiana or
at a mutually agreed upon location; (5) the parties' waiver of their right to
claim punitive damages, as set forth in Article 11.5, will be inapplicable; (6)
notwithstanding any provisions of this Agreement to the contrary, the FRANCHISEE
will have the right to petition a Court of competent jurisdiction for injunctive
relief relating to WCH'S improper termination of this Agreement or WCH'S
unreasonable refusal to consent to transfer or assignment by the FRANCHISEE
pursuant to Article 10 of this Agreement; (7) Article 9.2 is hereby amended to
provide that the FRANCHISEE will not be required to indemnify WCH for any
liability imposed upon WCH as a result of the FRANCHISEE'S reliance upon or use
of procedures or products which were required by WCH, if such procedures or
products were utilized by the FRANCHISEE in the manner prescribed by WCH; (8)
Article 9.3 is hereby amended to state that WCH has the right to seek recovery
of all costs and expenses, including actual attorneys' fees, incurred by WCH in
enforcing any term, condition or provision of this Agreement or in seeking to
enjoin any violation of this Agreement by the FRANCHISEE; and (9)
notwithstanding anything to the contrary in Article 12.9, the FRANCHISEE does
not waive any right under the Indiana statutes with regard to prior
representations made in the Indiana Uniform Franchise Offering Circular.
MINNESOTA. If this Agreement is governed by the laws of the State of
Minnesota, then: (1) Article 6.2 will be amended to require that, except as set
forth in Article 6.5 and Article 6.6, in the event WCH gives the FRANCHISEE
written notice that the FRANCHISEE has breached this Agreement, such written
notice will be given to the FRANCHISEE at least ninety (90) days prior to the
date this Agreement is terminated by WCH, and the FRANCHISEE will have sixty
(60) days after having been given such written notice within which to correct
the breach specified in the written notice; and (2) notwithstanding any
provisions of this Agreement to the contrary, a Court of competent jurisdiction
will determine whether WCH will be required to post a bond or other security,
and the amount of such bond or other security, in any injunctive proceeding
commenced by WCH against the FRANCHISEE or the FRANCHISEE'S shareholders.
NORTH DAKOTA. If this Agreement is governed by the laws of the State of
North Dakota, then: (1) the covenant not to compete upon termination or
expiration of this Agreement contained in Article 8.3 may be unenforceable,
except in certain circumstances provided by law; (2) the consent by the
FRANCHISEE to jurisdiction and venue in Hennepin County, Minnesota contained in
Article 12.6 may be inapplicable; provided, however, that such inapplicability
in the State of North Dakota will not be construed to mean that venue in
Hennepin County, Minnesota is improper, or that the FRANCHISEE and its officers,
directors and shareholders are not subject to jurisdiction in Hennepin County,
Minnesota, or in any other state; (3) the provisions of Article 11 requiring
Arbitration hearings to take place in Minneapolis, Minnesota will be
inapplicable and in the event of Arbitration between WCH and the FRANCHISEE,
such Arbitration will be conducted in Fargo, North Dakota or at a mutually
agreed upon location; and (4) the parties' waiver of their right to claim
punitive damages, as set forth in Article 11.5, may not be enforceable under
North Dakota law.
RHODE ISLAND. If this Agreement is governed by the laws of the State of
Rhode Island, then any provision of this Agreement which restricts jurisdiction
or venue to a forum outside the State of Rhode Island is void with respect to a
claim otherwise enforceable under the Rhode Island Franchise Investment Act.
SOUTH DAKOTA. If this Agreement is governed by the laws of the State of
South Dakota, then: (1) the covenant not to compete upon termination or
expiration of this Agreement contained in Article 8.3 may be unenforceable,
except in certain circumstances provided by law; (2) any provision of this
Agreement which designates jurisdiction or venue outside of the State of South
Dakota or requires the FRANCHISEE to agree to jurisdiction or venue in a forum
outside of the State of South Dakota is void with respect to any cause of action
which is otherwise enforceable in the State of South Dakota; (3) the provisions
of Article 11 requiring Arbitration hearings to take place in Minneapolis,
Minnesota will be inapplicable and in the event of Arbitration between WCH and
the FRANCHISEE, such Arbitration will be conducted in Sioux Falls, South Dakota
or at a mutually agreed upon location; and (4) Pursuant to SDCL ss.37-5A-86, any
acknowledgment provision, disclaimer, integration clause or a provision having a
similar effect in this Agreement will not negate or act to remove from judicial
review any statement, misrepresentation or action that violates Chapter 37-5A or
a rule or order under Chapter 37-5A.
WISCONSIN. If this Agreement is governed by the laws of the State of
Wisconsin, then the provisions of the Wisconsin Fair Dealership Law, Wis. Stat.
Chapter 135, will supersede any conflicting terms of this Agreement.
16.3 SEVERABILITY. The severability provisions of this Agreement contained in
Article 8.5, Article 11.10 and Article 12.2 of this Agreement will pertain to
all of the applicable laws which conflict with or modify the provisions of this
Agreement including, but not limited to, the provisions of this Agreement
specifically addressed in Article 16.2 above.
ARTICLE 17
DEFINITIONS
17.1 ABANDON. "Abandon" as used in this Agreement will mean the conduct of the
FRANCHISEE, including acts of omission as well as commission, indicating the
willingness, desire or intent of the FRANCHISEE to discontinue the opening and
operating of We Care Hair Businesses in the Franchised Area in accordance with
the terms of this Agreement.
17.2 TERMS DEFINED IN FRANCHISE AGREEMENT. Capitalized terms used but not
defined in this Agreement will, if defined in the Franchise Agreement, have the
meanings ascribed to such terms in the Franchise Agreement.
IN WITNESS WHEREOF, WCH, the FRANCHISEE, and the shareholders or partners of the
FRANCHISEE have executed this Agreement effective as of the day and year first
above written.
"WCH"
In the Presence of: WCH, INC.
----------------------------------------
By
------------------------------------- -------------------------------------
Its
-----------------------------------
In the Presence of: "FRANCHISEE"
----------------------------------- ----------------------------------------
----------------------------------- ----------------------------------------
----------------------------------- ----------------------------------------
----------------------------------- ----------------------------------------
The undersigned individual shareholders or partners of the FRANCHISEE
hereby agree to be bound by the terms and conditions of this Agreement.
Percentage of
In the Presence of: SHAREHOLDERS Ownership
%
------------------------------ --------------------------- -----------------
%
------------------------------ --------------------------- -----------------
%
------------------------------ --------------------------- -----------------
%
------------------------------ --------------------------- -----------------
The undersigned spouse(s) of the individual FRANCHISEE(S) hereby agree to be
bound by the terms and conditions of this Agreement regarding confidentiality of
information and covenants not to compete.
----------------------------------- ----------------------------------------
----------------------------------- ----------------------------------------
Print Name Print Name
PERSONAL GUARANTY AND AGREEMENT TO BE BOUND
PERSONALLY BY THE TERMS AND CONDITIONS
OF THE DEVELOPMENT AGREEMENT
In consideration of the execution of this Agreement by WCH, and for
other good and valuable consideration, the undersigned, for themselves, their
heirs, successors, and assigns, do jointly, individually and severally hereby
become surety and guaranty for the payment of all amounts and the performance of
the covenants, terms and conditions in this Agreement, to be paid, kept and
performed by the FRANCHISEE.
Further, the undersigned, individually and jointly, hereby agree to be
personally bound by each and every condition and term contained in this
Agreement and agree that this PERSONAL GUARANTY will be construed as though the
undersigned and each of them executed an Agreement containing the identical
terms and conditions of this Agreement.
If the FRANCHISEE breaches the terms and conditions of this Agreement,
then the undersigned, their heirs, successors and assigns, do hereby,
individually, jointly and severally, promise and agree to pay to WCH all monies
due and payable to WCH under the terms and conditions of this Agreement.
In addition, if the FRANCHISEE fails to comply with any other terms and
conditions of this Agreement, then the undersigned, their heirs, successors and
assigns, do hereby, individually, jointly and severally, promise and agree to
comply with the terms and conditions of this Agreement for and on behalf of the
FRANCHISEE.
In addition, should the FRANCHISEE at any time be in default on any
obligation to pay monies to WCH or any subsidiary or affiliate of WCH, whether
for merchandise, products, supplies, furniture, fixtures, equipment or other
goods purchased by the FRANCHISEE from WCH or any subsidiary or affiliate of WCH
or for any other indebtedness of the FRANCHISEE to WCH or any subsidiary or
affiliate of WCH, then the undersigned, their heirs, successors and assigns, do
hereby, individually, jointly and severally, promise and agree to pay all such
monies due and payable from the FRANCHISEE to WCH or any subsidiary or affiliate
of WCH.
It is further understood and agreed by the undersigned that the
provisions, covenants and conditions of this GUARANTY will inure to the benefit
of the successors and assigns of WCH. Each of the undersigned hereby submits to
personal jurisdiction in the state or federal courts of Minnesota with respect
to any litigation pertaining to this GUARANTY, and agrees that all litigation
pertaining to this GUARANTY will and must be venued exclusively in Hennepin
County, Minnesota.
PERSONAL GUARANTORS
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INDIVIDUALLY INDIVIDUALLY
------------------------------------- ---------------------------------------
Address Address
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City State Zip Code City State Zip Code
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Telephone Telephone
------------------------------------- ---------------------------------------
INDIVIDUALLY INDIVIDUALLY
------------------------------------- ---------------------------------------
Address Address
------------------------------------- ---------------------------------------
City State Zip Code City State Zip Code
------------------------------------- ---------------------------------------
Telephone Telephone
------------------------------------- ---------------------------------------
INDIVIDUALLY INDIVIDUALLY
------------------------------------- ---------------------------------------
Address Address
------------------------------------- ---------------------------------------
City State Zip Code City State Zip Code
------------------------------------- ---------------------------------------
Telephone Telephone