Exhibit 10.9
RENT-A-WRECK
FRANCHISE AGREEMENT
THIS AGREEMENT is made and entered into this ____ day of ____________, 20__ by
and between ▇▇▇▇▇ AMERICAN CORPORATION, a Maryland corporation, with its
principal office at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("Company") and __________________________________________________________
____________________________________________________________________________
whose principal address is
____________________________________________________________________________
__________________________________________________ ("FRANCHISEE").
1. THE FRANCHISE.
A. PREAMBLES.
COMPANY has developed a system for the operation of a vehicle rental and
leasing business under the name "RENT-A-WRECK". COMPANY uses and licenses the
trade and service ▇▇▇▇ "RENT-A-WRECK" and related logo, and other marks which
COMPANY has developed and may develop in the future (the "Marks"). FRANCHISEE
has applied for a franchise to own and operate a RENT-A-WRECK business and such
application has been approved by COMPANY in reliance upon all of the
representations made therein.
COMPANY expressly disclaims the making of, and FRANCHISEE acknowledges that
he has not received or relied upon, any warranty or guaranty, express or
implied, as to the revenues, profits or success of the business venture
contemplated by this Agreement. FRANCHISEE acknowledges that he has read this
Agreement and COMPANY's Franchise Offering Circular and that he has no knowledge
of any representations by COMPANY, or its officers, directors, shareholders,
employees or agents that are contrary to the statements made in COMPANY's
Franchise Offering Circular or to the terms herein.
▇. ▇▇▇▇▇.
Subject to the provisions of this Agreement, COMPANY hereby grants to
FRANCHISEE a franchise (the "Franchise") to operate a RENT-A-WRECK business (the
"BUSINESS") offering vehicles for rental and utilizing COMPANY's formats,
methods, standards, operating procedures and the Marks at (and only at) the
premises (the "Premises") identified in Section 1 of Exhibit A, which is
attached hereto and made a part hereof by this reference, for a term of ten (10)
years commencing on the date of execution hereof. Termination or expiration of
this Agreement constitutes termination or expiration of the Franchise. Provided
that FRANCHISEE is in compliance with this Agreement, COMPANY shall not operate
or grant a franchise for the operation of another RENT-A-WRECK Business within
FRANCHISEE's primary service area (the "Primary Service Area"), as described in
Section 2 of Exhibit A. However, COMPANY has the right to operate, or license
others to operate, vehicle sales, rental or leasing businesses within
FRANCHISEE's Primary Service Area under other trade names, trademarks or service
marks. COMPANY has the right to operate, or license others to operate,
RENT-A-WRECK businesses anywhere outside the Primary Service Area regardless of
proximity to the boundaries of the Primary Service Area.
FRANCHISEE may not regularly deliver vehicles to, transport customers to or
pick-up customers at locations within the primary service area of another
RENT-A-WRECK business during the term of this Agreement. FRANCHISEE acknowledges
that COMPANY may enter into national account contracts and, subject to
FRANCHISEE's qualification for participation in such accounts, FRANCHISSE will
be offered the opportunity to service such accounts. If FRANCHISEE is not
qualified to participate, COMPANY shall have the right to use other sources
to service such accounts, wherever located.
c. RENEWAL.
FRANCHISEE shall have the right to obtain a renewal franchise ("Renewal
Franchise"), and successive renewal franchises thereafter, each for a term of
five (5) years, at FRANCHISEE's sole option, if FRANCHISEE is in complete
compliance with the terms and conditions of the Franchise Agreement, notifies
COMPANY in writing of his desire to obtain a Renewal Franchise no later than
ninety (90) days but no earlier than one hundred eighty (180) days prior to the
expiration of this Agreement, releases COMPANY of any and all possible claims
related to this Agreement and/or FRANCHISEE's relationship with COMPANY,
terminates this Agreement and executes COMPANY's then-current form of franchise
agreement containing the then-current terms, conditions, fees and contributions
for the operation of the BUSINESS modified to reflect that FRANCHISEE is
receiving a Renewal Franchise and such ancillary agreements as are then
customarily used by COMPANY in granting renewal franchises.
2. DEVELOPMENT AND OPENING OF THE BUSINESS.
A. LOCATION OF THE BUSINESS PREMISES.
FRANCHISEE may operate the BUSINESS only at the Premises or at a substitute
location and premises hereafter approved by COMPANY in writing. The Premises, or
substitute location hereafter approved by COMPANY, must be located entirely
within the Primary Service Area. On or before the execution of this Agreement,
FRANCHISEE shall provide at COMPANY's request: (1) evidence of FRANCHISEE's
ownership of premises for the BUSINESS; or (2) a copy of a lease for the
premises of the BUSINESS on terms satisfactory to COMPANY and which shall be
executed prior to the opening of the BUSINESS.
B. DEVELOPMENT AND OPENING OF THE BUSINESS.
FRANCHISEE agrees to develop the BUSINESS and have the BUSINESS open and
operating within ninety (90) days of the date of this Agreement.
C. SIGNS, EQUIPMENT AND FORMS.
FRANCHISEE must prominently display on or near the Premises, a sign that
COMPANY has approved as meeting its specifications and standards for design and
appearance. FRANCHISEE also agrees to acquire: (1) a fax machine capable of
receiving transmissions 24 hours a day; and (2) at such time as FRANCHISEE has a
fleet of ten (10) or more Rental Vehicles, a computer system meeting COMPANY's
specifications and standards. FRANCHISEE shall use only Rental Agreements
purchased from COMPANY, or use Rental Agreement forms generated by FRANCHISEE's
computer in a format, and containing only language, approved in a prior writing
by COMPANY. As used in this Agreement, the phrase "Rental Agreement" means a
sequentially-numbered retail contract form used for the renting of vehicles that
is printed by COMPANY, or that is approved in a prior writing by COMPANY for
printing by the FRANCHISEE's computer using computer software applications
approved by COMPANY.
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3. FLEET REQUIREMENTS.
A. DEFINITION OF "RENTAL VEHICLE".
As used in this Agreement, the term "Rental Vehicle" shall mean any vehicle
directly or indirectly owned, used or kept for rental by FRANCHISEE in the
Primary Service Area, whether or not used in the BUSINESS. Rental Vehicle
includes but is not limited to vehicles rented, leased or sold on a rent to own
basis.
B. DEFINITION OF "AGREEMENT YEAR".
As used in this Agreement, the tern "Agreement Year" shall mean a one-year
period of time commencing on an anniversary date of the execution of this
Agreement and ending on the day before the next anniversary date. The first
Agreement Year commences on the date of execution hereof.
C. THE FLEET.
FRANCHISEE agrees to have the minimum number of Rental Vehicles available
for lease or rental in the Rental Vehicle fleet of the BUSINESS (the "Fleet") as
specified in Section 3 of Exhibit A.
D. COMPANY VEHICLES.
COMPANY may place Rental Vehicles at the BUSINESS and FRANCHISEE must make
such vehicles available to customers. COMPANY will pay the costs of maintenance
and insurance on such vehicles. COMPANY will pay FRANCHISEE a commission on all
rentals of these vehicles. Such vehicles will not be subject to Monthly Fees
(defined below) or advertising contributions.
4. FEES.
A. INITIAL FRANCHISE FEE.
FRANCHISEE agrees to pay to COMPANY a nonrecurring initial franchise fee in
the amount specified in Section 4 of Exhibit A which shall be payable to COMPANY
upon the execution of this Agreement. The initial franchise fee shall be fully
earned by COMPANY and non-refundable.
B. CONTINUING FRANCHISE FEE.
1. Monthly Fee. FRANCHISEE agrees to pay to COMPANY a monthly
continuing franchise fee (the "Monthly Fee") in the amount of thirty dollars
($30.00) for each Rental Vehicle in the Fleet. The Monthly Fee must be received
by COMPANY on or before the tenth (10th) day of each month for the total number
of Rental Vehicles insured in the Fleet on the last day of the preceding
calendar month. In order to verify the number of Rental Vehicles in FRANCHISEE's
Fleet each month, FRANCHISEE will submit to COMPANY (along with the Monthly Fee)
a copy of each of FRANCHISEE's monthly insurance statements for the preceding
month showing the number of Rental Vehicles. The amount of Monthly fees paid by
FRANCHISEE shall be subject to the minimum fee schedule provided in Section
4B(2) of this Agreement.
2. Minimum Fee. The minimum annual total of Monthly Fees paid by
FRANCHISEE (the "Minimum Fee") shall be as specified in Section 5 of Exhibit A.
If in any Agreement Year, the total Monthly Fees paid by FRANCHISEE in such
Agreement Year are less than the Minimum Fee for such Agreement Year provided
herein, FRANCHISEE agrees to pay to COMPANY an amount equal to the difference
between the Monthly Fees paid and the Minimum Fee for such Agreement Year. Such
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amount shall be paid by FRANCHISEE to COMPANY within thirty (30) days after the
last day of such Agreement Year.
3. Monthly Fee and Minimum Fee Increases. COMPANY shall have the
right to increase the Monthly Fee once per Agreement Year. The amount of such
increase shall not exceed ten percent (10%) of the Monthly Fee charged as of the
date of such increase. Additionally, the maximum Monthly Fee COMPANY will charge
during the initial term of the Agreement is Forty-Five Dollars ($45) per Rental
Vehicle per month. COMPANY shall have the right to increase the Minimum Fee once
per Agreement year. The increase in Minimum Fee shall not exceed ten percent
(10%) of the Minimum Fee specified in the Minimum Fee schedule in Exhibit A for
that Agreement Year. For each subsequent Agreement Year, the increase in the
Minimum Fee shall not exceed ten percent (10%) of the Minimum Fee for the
preceding Agreement Year.
C. LATE PAYMENT FEES AND INTEREST ON LATE PAYMENTS.
Monthly Fees owed by FRANCHISEE may be assessed a late payment fee on the
first business day after their due date, which late payment shall be immediately
due and payable and equal to five percent (5%) of the amount owed. Additionally,
all amounts owed COMPANY shall bear interest after their due date accruing at
the highest applicable rate for open account business credit, not to exceed two
percent (2%) per month. FRANCHISEE acknowledges that this Section 4C shall not
constitute COMPANY'S agreement to accept such payments after same are due or a
commitment by COMPANY to extend credit to the BUSINESS and that FRANCHISEE's
failure to pay all amounts when due shall constitute grounds for termination of
the Agreement.
D. APPLICATION OF PAYMENTS.
Notwithstanding any designation by FRANCHISEE, COMPANY shall have sole
discretion to apply any payments received from FRANCHISEE or any indebtedness of
COMPANY to FRANCHISEE, to any past due indebtedness of FRANCHISEE for Monthly
Fees, contributions to the Funds (as defined below in Section 7A), purchases
from COMPANY or its Affiliates, late payment fees, interest, or any other
indebtedness of FRANCHISEE to COMPANY or its Affiliates.
5. TRAINING AND GUIDANCE.
A. TRAINING.
COMPANY shall furnish to FRANCHISEE a training program for the operation of
the BUSINESS as designated by COMPANY prior to the opening of the BUSINESS. The
training program shall be furnished at COMPANY's principal office and/or at such
other location designated by COMPANY. FRANCHISEE may attend additional initial
training at a location designated by COMPANY which is within driving distance of
the Premises of the BUSINESS. FRANCHISEE shall be responsible for any travel and
living expenses which he or his employees incur in connection with such
training. FRANCHISEE and FRANCHISEE's general manager (the person(s) identified
in Section 6D) shall be required to complete the training program to the
satisfaction of COMPANY.
B. HIRING AND TRAINING OF EMPLOYEES BY FRANCHISEE.
FRANCHISEE shall hire all employees of the BUSINESS, be exclusively
responsible for the terms of their employment and compensation and for the
proper training of such employees in the operation of the BUSINESS, provided
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that supervisory employees hired by FRANCHISEE after the opening of the BUSINESS
may, subject to reasonable limitations prescribed by COMPANY and at FRANCHISEE's
expense for travel and living costs, enroll in training programs conducted by
COMPANY.
C. GUIDANCE.
COMPANY shall furnish to FRANCHISEE guidance in connection with the
operation of the BUSINESS. Such guidance shall be furnished in the form of
COMPANY's operating manual (the "Operating Manual"), bulletins, other written
materials, group meetings and consultations by telephone and/or consultants at
the offices of COMPANY or at the BUSINESS.
6. BUSINESS IMAGE AND OPERATING STANDARDS.
A. BUSINESS IMAGE, OPERATING STANDARDS AND COMPANY PROGRAMS.
FRANCHISEE agrees to maintain the appearance of the BUSINESS consistent
with the image of a BUSINESS as a clean, attractive and efficiently operated
business for the rental and lease of vehicles. FRANCHISEE further agrees to
conspicuously identify himself at the Premises and in all dealings with
customers, suppliers, public officials and others as the owner of the BUSINESS
under a franchise from COMPANY. FRANCHISEE agrees not to use this Agreement or
the Franchise as collateral to secure any personal or corporate obligation.
FRANCHISEE, if requested by COMPANY, agrees to acquire, at FRANCHISEE's sole
expense, computer hardware and software programs meeting COMPANY's
specifications to assist in the operation of the BUSINESS.
B. UNIFORM IMAGE AND SPECIFICATIONS, STANDARDS AND PROCEDURES.
The presentation of a uniform image to the public is an essential element
of a successful franchise system and FRANCHISEE agrees to operate the BUSINESS
in accordance with the specifications, standards and procedures prescribed by
COMPANY, including without limitation: (1)mechanical condition, running order,
safety, repair, age and appearance of Rental Vehicles; (2)the safety,
maintenance and appearance of the Premises; (3)appearance and training of
employees; (4)use of standard rental and leasing agreements and forms;
(5)minimum standards with respect to customers and hours of operation of the
BUSINESS; (6)compliance with and participation in COMPANY's programs;
(7)compliance with all reasonable insurance policy requirements of COMPANY;
(8)establishment of minimum daily business hours for the BUSINESS; (9)proper
display of the Marks; (10)quality business and advertising practices and
controls: and (11)obtain an automobile dealer's license, where possible.
Mandatory specifications, standards and operating procedures prescribed
from time to time by COMPANY in the Operating Manual for the BUSINESSES or
communicated to FRANCHISEE in writing, shall constitute provisions of this
Agreement as if set forth herein. All references herein to the Agreement shall
include all such mandatory specifications, standards and operating procedures.
COMPANY will loan to FRANCHISEE during the term of the Franchise one copy
of the Operating Manual. COMPANY shall have the right to add to and otherwise
modify the Operating Manual from time to time to reflect changes in the
specifications, standards of operating procedures for a RENT-A-WRECK business.
FRANCHISEE shall keep his copy of the Operating Manual current. The master copy
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of the Operating Manual shall be maintained by COMPANY at its principal office
and shall be controlling in the event of a dispute.
C. COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES.
FRANCHISEE shall secure and maintain in force all required licenses,
permits and certificates relating to the operation of the BUSINESS and shall
operate the BUSINESS in full compliance with all applicable laws, ordinances and
regulations. The BUSINESS shall in all dealings with its customers, suppliers,
COMPANY and the public adhere to the highest standards of honesty, integrity,
fair dealing and ethical conduct. FRANCHISEE agrees to refrain from any business
or advertising practice which may be injurious to COMPANY and the goodwill
associated with the Marks and other RENT-A-WRECK businesses. FRANCHISEE shall
notify COMPANY in writing within five (5) days of the commencement of any
action, suit or proceeding which may adversely affect the operation or financial
condition of FRANCHISEE or the BUSINESS.
D. MANAGEMENT OF THE BUSINESS.
The BUSINESS shall, at all times during the term of this Agreement, be
under the direct, on-premises supervision of a trained and competent general
manager who has completed COMPANY's training program or equivalent training to
COMPANY's satisfaction, and who is employed on a full-time basis to work for and
at the BUSINESS. The person(s) specified in Section 6 of Exhibit A will
initially exercise the functions of general manager with respect to all elements
of the BUSINESS. FRANCHISEE shall keep COMPANY informed at all times of the
identity of the general manager of the BUSINESS.
E. INSURANCE.
FRANCHISEE shall maintain reasonable coverage for the rental or lease of
any vehicle owned, rented or leased by FRANCHISEE or the BUSINESS and any other
vehicle which is rented, leased, or sold on a rent-to-own basis, or is available
for rental, lease or sale to customers of FRANCHISEE. Such insurance shall
provide coverage against bodily and personal injury, death and property damage
caused by or occurring in conjunction with the rental or lease of vehicles, the
operation of the BUSINESS or otherwise in conjunction with the conduct of
business by FRANCHISEE pursuant to the Franchise with such minimum limits as
COMPANY specifies in writing from time to time. Such insurance shall not be a
claims-made policy, but must be written on an occurrence form. Such insurance
coverage shall be maintained under one or more policies of insurance issued by
carriers rated "A" or better by ▇▇▇▇▇▇ ▇. Best & Company, Inc., unless otherwise
approved by writing by Company. COMPANY may designate one or more suppliers of
rental vehicle liability insurance, and the designated supplier may be COMPANY
or an affiliate, and FRANCHISEE must purchase such coverage from the designated
supplier. All liability insurance policies required hereunder shall name COMPANY
(and its officers, directors and employees) as an additional insured, contain a
waiver by the insurance carrier of all subrogation rights against COMPANY and
shall provide that COMPANY receive thirty (30) days prior written notice of
termination, expiration or cancellation or modification of any such policy.
FRANCHISEE shall furnish to COMPANY annually a copy of the certificate of or
other evidence of the renewal or extension of each such insurance policy.
COMPANY may reasonably increase the minimum protection requirement as of the
renewal date of any policy, and reasonably require different or additional kinds
of insurance at any time, including excess liability (umbrella) insurance, which
COMPANY deems, in COMPANY's sole discretion, to be necessary or advantageous to
FRANCHISEE or COMPANY's system of franchises. FRANCHISEE shall at all times
during the term of the Franchise maintain in force at his sole expense
comprehensive general liability insurance coverage (including, but not limited
to, coverage for personal injury, property damage and product and motor vehicle
liability) against claims arising from the operation of the Business.
FRANCHISEE appoints COMPANY its attorney-in-fact to direct any and all of
FRANCHISEE's insurers to provide COMPANY, upon COMPANY'S request, with
information showing the number of vehicles FRANCHISEE has insured at any time.
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F. COMPANY PROGRAMS.
FRANCHISEE shall subscribe to, participate in and comply with any of the
programs, promotions, campaigns or activities which COMPANY enters into, engages
in or reasonably prescribes (e.g., credit card programs, telephone service
programs or advertising programs). FRANCHISEE shall supervise and service such
programs, promotions and activities pursuant to the terms thereof. FRANCHISEE
shall contribute to the expenses thereof, if any, on the same pro rate basis as
other franchisees. FRANCHISEE shall encourage and solicit vehicle rental
customers to patronize other RENT-A-WRECK business, and will exclusively refer,
commission free, all vehicle reservations to other franchisees or COMPANY rental
locations, when there is such a franchisee or COMPANY rental location in the
area concerned. FRANCHISEE also shall provide a 24-hour emergency road service.
If COMPANY offers a national program, FRANCHISEE may be required to participate
in such program. FRANCHISEE shall provide COMPANY with information about
FRANCHISEE's emergency service providers and shall keep such information current
so that COMPANY can make arrangements when and if necessary. FRANCHISEE is
authorized to expend up to seventy dollars ($70) on behalf of another franchisee
without his authorization. Any amount in excess of seventy dollars ($70) shall
require the oral authorization from the other franchisee. FRANCHISEE agrees to
▇▇▇▇ the franchisee from whom such car was rented, only for the actual
out-of-pocket cost of such servicing, and to promptly pay other franchisees who
assist one of its customers.
G. CUSTOMER COMPLAINTS.
FRANCHISEE shall make every attempt to resolve disputes with its customers
in a fair and even-handed manner. Customer complaints originating with COMPANY
shall be referred first to FRANCHISEE for resolution. COMPANY has the right to
intervene in disputes that cannot be resolved by FRANCHISEE, and to resolve such
disputes on terms it deems fair and reasonable in its sole discretion. Such
resolutions may result in payments to customers, for which FRANCHISEE shall be
solely responsible. COMPANY has the right to make such payments to customers on
FRANCHISEE's behalf, in which cases, FRANCHISEE shall pay said amounts to
COMPANY on demand.
7. ADVERTISING AND PROMOTION.
A. BY COMPANY.
Recognizing the value of uniform advertising and promotion to the goodwill
and public image of RENT-A-WRECK businesses of COMPANY, COMPANY agrees to
maintain and administer an advertising fund (the "National Fund") for the
preparation of advertising materials and such advertising programs as COMPANY
may deem necessary or appropriate. FRANCHISEE shall contribute to the National
Fund seven dollars ($7) for each Rental Vehicle in the Fleet. Such contribution
is due and payable by the tenth (10th) day of each month on the total number of
Rental Vehicles in the Fleet on the last day of the preceding calendar month. In
order to verify the number of Rental Vehicles in the Fleet each month,
FRANCHISEE will submit to COMPANY (along with the advertising contribution) a
copy of FRANCHISEE's monthly insurance statements for the preceding month
showing the number of Rental Vehicles. Additionally, FRANCHISEE agrees to
contribute, as specified from time to time by COMPANY, to a regional advertising
fund (the "Regional Fund"); provided, however, that such contribution may not
exceed FRANCHISEE's payment to the National Fund. If FRANCHISEE's advertising
contributions are not current, then FRANCHISEE may be excluded from
participating in any program paid for by the National Fund.
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FRANCHISEE agrees that the National and Regional Funds (the "Funds") may be
used to meet any and all costs of maintaining , administering, directing and
preparing national, regional or local advertising, sales promotion and public
relations activities, including, without limitation, the costs of preparing and
conducting television, radio, magazine, billboard, newspaper and other media
programs and activities, and employing advertising agencies. COMPANY may spend
in any fiscal year an amount greater or less than the aggregate contributions of
RENT-A-WRECK businesses to the Funds in that year and COMPANY may make loans to
the Funds bearing reasonable interest to cover any deficits of the Funds and
cause the Funds to invest any surplus for future use by the Funds. FRANCHISEE
shall have no right, claim or interest of any kind in or to any of the
contributions paid by the FRANCHISEE, or any other entity, or to any allocation
of or use of the National Fund or Regional Fund, The Funds shall be accounted
for separately from the other funds of COMPANY and shall not be used to defray
any of COMPANY's general operating expenses not associated with or attributable
to the activities of the Funds. A report of the operations of the Funs shall be
prepared annually by COMPANY and shall be made available to FRANCHISEE upon
request.
Franchisee's contribution to either or both the Funds may be increased if:
(i)the majority of the duly elected or appointed members of COMPANY's Franchisee
Advisory Council (the "Advisory Council" recommends an increase; and
(ii)COMPANY, in its sole discretion, approves the Advisory Council's
recommendation; provided, however, that such increase shall only occur once
during any Agreement Year; and, provided further that the amount of such
increase will not exceed ten percent (10%) of the contribution charged as of the
date of such increase. If COMPANY's Franchise Advisory Council has been
disbanded or terminated, COMPANY may in its sole discretion increase
Franchisee's contributions to the Funds, subject to the above restrictions,
provided that COMPANY increases the contributions of all other franchisees in
cases where COMPANY has the contractual right to do so. FRANCHISEE understands
and acknowledges that the Funds are intended to maximize general public
recognition and patronage of the Marks and the entire system for the benefit of
all RENT-A-WRECK businesses and that COMPANY undertakes no obligation in
administering the Funds to ensure that expenditures which are proportionate or
equivalent to FRANCHISEE's contributions are made for the market area of the
BUSINESS or that any RENT-A-WRECK businesses benefit directly or pro-rata from
the placement of advertising. Except as expressly provided in this Section,
COMPANY assumes no direct or indirect liability or obligation to FRANCHISEE with
respect to the maintenance, direction or administration of the Funds. FRANCHISEE
acknowledges and agrees that COMPANY has no fiduciary obligation to FRANCHISEE
or any other RENT-A-WRECK business in connection with the collection, control or
administration of monies paid to the Fund.
B. BY FRANCHISEE.
FRANCHISEE agrees to list and advertise the BUSINESS in conformance with
the requirements specified in COMPANY's Operating Manual. FRANCHISEE shall not
advertise in any telephone directory or other medium that is circulated wholly
outside the Primary Service Area. If FRANCHISEE advertises in a telephone
directory in which advertisements by another or other Rent-A-Wreck franchisee(s)
appear, all franchisees who advertise in that directory shall share a single
display advertisement. If the franchisees cannot agree on the size or content or
cost-sharing of the joint advertisement, COMPANY shall, in its sole discretion,
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determine the size, content, cost sharing arrangements and all other aspects of
the joint advertisement; and that decision shall be binding on FRANCHISEE.
Additionally, FRANCHISEE shall maintain at least two (2) telephone numbers, one
of which shall be a local number and the other a toll free number. The numbers
shall be listed and identified exclusively with the BUSINESS and shall be
separate and distinct from all other telephone numbers maintained for or by the
FRANCHISEE. FRANCHISEE shall register all of its telephone numbers used in
connection with the BUSINESS with COMPANY within five (5) days of first use, to
provide updates if any changes to such numbers occur and execute COMPANY's form
of Assignment of Telephone Numbers and Listings which is attached to this
Agreement as Exhibit B.
8. MARKS.
A. OWNERSHIP AND GOODWILL OF MARKS.
FRANCHISEE acknowledges that COMPANY is the owner of the Marks licensed to
FRANCHISEE by this Agreement, that FRANCHISEE's right to use the Marks is
derived solely from this Agreement and is limited to the conduct of business by
FRANCHISEE pursuant to and in compliance with this Agreement and all applicable
specifications, standards and operating procedures prescribed by COMPANY from
time to time during the term of the FRANCHISEE. Any unauthorized use of the
Marks by FRANCHISEE shall constitute an infringement of the rights of COMPANY in
and to the Marks. FRANCHISEE agrees that all usage of the Marks by the
FRANCHISEE and any goodwill established thereby shall inure to the exclusive
benefit of COMPANY and FRANCHISEE acknowledges that this Agreement does not
confer any goodwill or other interests in the Marks upon FRANCHISEE.
B. LIMITATIONS ON FRANCHISEE'S USE OF MARKS.
FRANCHISEE agrees to use the Marks as the sole identification of the
BUSINESS, provided that FRANCHISEE shall identify himself as the independent
owner thereof in the manner prescribed by COMPANY. FRANCHISEE shall not use any
▇▇▇▇ or any corporate or business name of COMPANY, (i)as part of any corporate
or trade name, (ii)with any prefix, suffix or other modifying words, terms,
designs or symbols (other than logos licensed to FRANCHISEE hereunder), (iii)in
any modified form, (iv)as part of any domain name, website, home page,
electronic address, or other interactive site maintained on the internet, the
world wide web, or any other similar proprietary or common carrier electronic
delivery system, or (v)in any manner not expressly authorized in writing by
COMPANY. FRANCHISEE agrees to prominently display the Marks on or in connection
with all advertising, rental agreements, stationary, forms and any other
materials designated by COMPANY, and in the manner prescribed by COMPANY, to
give such notices of trade and service ▇▇▇▇ registrations and copyrights as
COMPANY specifies and to obtain such fictitious or assumed name registrations as
may be required under applicable law.
C. NOTIFICATION OF INFRINGEMENTS AND CLAIMS.
FRANCHISEE shall immediately notify COMPANY of any apparent infringement of
or challenge to FRANCHISEE'S use of any ▇▇▇▇. COMPANY shall have sole discretion
to take such action as it deems appropriate and the right to exclusively control
any litigation or proceeding arising out of any such infringement or
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challenge and FRANCHISEE agrees to render such assistance in connection
therewith as COMPANY deems necessary or advisable.
D. INDEMNIFICATION OF FRANCHISEE.
COMPANY agrees to indemnify FRANCHISEE against and to reimburse FRANCHISEE
for all damages for which he is held liable in any proceeding arising out of his
authorized use of any ▇▇▇▇ pursuant to and in compliance with this Agreement and
for all costs reasonably incurred by FRANCHISEE in such proceeding in which
FRANCHISEE is named as a party, provided that FRANCHISEE has timely notified
COMPANY of such claim or proceeding and has otherwise complied with this
Agreement. If it becomes advisable at any time in COMPANY'S sole discretion for
COMPANY and/or FRANCHISEE to modify or discontinue use of any ▇▇▇▇, and/or use
one or more additional or substitute trade or service marks, FRANCHISEE agrees
to comply with COMPANY's direction within a reasonable time after notice
thereof. COMPANY will pay for FRANCHISEE's out of pocket expenses incurred in
complying with such direction.
9. KNOW-HOW.
COMPANY possesses proprietary know-how comprising methods, techniques,
specifications, procedures, information, systems and knowledge of and experience
in the development and operation of RENT-A-WRECK businesses (the "Know-How").
COMPANY will disclose the Know-How to FRANCHISEE in the training program, the
Operating Manual and in guidance furnished to FRANCHISEE during the term of the
Franchise. FRANCHISEE acknowledges that the Know-How is proprietary and a trade
secret of COMPANY and disclosed to FRANCHISEE solely for use by FRANCHISEE in
the operation of the BUSINESS during the term of the Franchise.
FRANCHISEE acknowledges that it would not be possible for COMPANY to
protect its trade secrets against unauthorized use or disclosure if FRANCHISEE
holds an interest in a business similar to the BUSINESS. FRANCHISEE therefore
agrees that all employees of the BUSINESS shall execute COMPANY's then current
form of confidentiality and non-competition agreement and FRANCHISEE,
FRANCHISEE's general manager and FRANCHISEE's immediate family members and
owners will not during the term of the Franchise have any interest as an owner,
director, officer, employee, consultant, representative or agent, or in any
other capacity, in any Competitive Business. As used in this Agreement,
"Competitive Business" means any business or enterprise other than a
RENT-A-WRECK or PRICELE$$ business that rents or leases automobiles, vans or
trucks, or any other vehicles.
10. RELATIONSHIP OF THE PARTIES/INDEMNIFICATION.
The parties agree that this Agreement does not create a fiduciary
relationship between them, that the parties are and shall be independent
contractors and that nothing in this Agreement is intended to make either party
a general or special agent, legal representative, subsidiary, joint-venturer,
partner, employee or servant of the other for any purpose. COMPANY shall not be
obligated for any damages to any person or property directly or indirectly
arising out of the operation of the BUSINESS whether caused by FRANCHISEE's
negligent or willful action or failure to act. COMPANY shall have no liability
for any sales, use, excise, gross receipts, income, property or other taxes,
whether levied upon FRANCHISEE, the BUSINESS or its assets, or upon COMPANY, in
connection with the business conducted by FRANCHISEE, or any fees, contributions
to other payments made by FRANCHISEE to COMPANY.
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FRANCHISEE shall indemnify, defend and hold COMPANY, its subsidiaries,
affiliates, stockholders, directors, officers, employees, agents, successors and
assignees harmless against any liability for any claims, actual and
consequential damages, taxes, attorneys' fees and costs incurred in defending
any claim against any of them, directly of indirectly arising out of the
operation of the BUSINESS. The indemnities and assumptions of liabilities and
obligations herein shall continue in full force and effect subsequent to and
notwithstanding the expiration or termination of this Agreement.
11. RECORDS AND REPORTS.
A. RECORDS.
During the term of the Franchise, FRANCHISEE agrees, at his expense, to use
the rental agreement numbering system assigned to him by COMPANY and the then
current standard rental agreement specified by COMPANY, and to maintain at
FRANCHISEE's principal office and preserve for three (3) years from the date of
their preparation any and all rental agreements, records of Rental Vehicles and
such other documents, supporting records and forms designated by COMPANY.
COMPANY may require that specified information be compiled by FRANCHISEE in a
computerized database. FRANCHISEE shall provide COMPANY on or before the tenth
(10th) day of each month with copies of each rental agreement entered into
during the preceding calendar month. FRANCHISEE shall pay COMPANY a one hundred
dollar ($100.00) fee for each rental agreement which is missing or which
FRANCHISEE fails to provide to COMPANY as required herein.
B. REPORTS.
FRANCHISEE shall furnish COMPANY on the tenth (10th) day of each month, in
the form prescribed by COMPANY from time to time, a report signed and verified
by FRANCHISEE (or, if a corporation or partnership, an officer or managing
partner of FRANCHISEE), if such statements are prepared by FRANCHISEE's internal
staff, or by a Certified Public Accountant, if such statements are prepared by a
Certified Public Accountant, accurately reflecting each Rental Vehicle in the
Fleet, the number of the rental agreements used, total Gross Revenues for the
preceding month, weekly and/or monthly summaries of daily activity reports and
such other data, information and supporting records as COMPANY from time to time
requires. FRANCHISEE shall also furnish COMPANY semi-annual reports, in such
form as specified by COMPANY, containing information including but not limited
to that supplied in FRANCHISEE's monthly reports during the preceding six (6)
months, and such other data, information and records as COMPANY may from time to
time require. COMPANY may require that FRANCHISEE submit reports via e-mail or
other computerized form and/or that COMPANY have access to FRANCHISEE's computer
system to obtain such reportable information.
C. STANDARD CHART OF ACCOUNTS.
FRANCHISEE shall establish a bookkeeping and accounting system which
utilizes, without violation, COMPANY's then current standard chart of accounts.
All bookkeeping and accounting records maintained by FRANCHISEE, all financial
statements prepared by or for FRANCHISEE and all reports submitted by FRANCHISEE
to COMPANY shall conform to COMPANY's then current standard chart of accounts as
described in the Operating Manual. All such bookkeeping and accounting records
and all financial statements, for such periods as may from time to time be
prescribed in the Operating Manual, shall be maintained available for inspection
by COMPANY during normal business hours.
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12. COMPANY'S RIGHT TO INSPECT AND AUDIT THE BUSINESS.
To determine whether FRANCHISEE is complying with this Agreement, COMPANY
shall have the right at any time during business hours, and without prior notice
to FRANCHISEE, to inspect the BUSINESS, the Rental Vehicles in the Fleet, all
records of the BUSINESS, whether hand-written, printed, computer-generated or
electronic; and, FRANCHISEE shall allow COMPANY full and complete access to all
computers and computer systems used in the BUSINESS. FRANCHISEE also agrees to
allow COMPANY access to the federal, state and local income tax returns of
FRANCHISEE and FRANCHISEE hereby waives any privilege pertaining thereto.
FRANCHISEE shall fully cooperate with representatives of COMPANY making any such
inspection and/or audit and shall permit representatives of COMPANY to take
photographs, movies or video-tapes of the BUSINESS and to interview the
employees of the BUSINESS. COMPANY shall bear the cost of all such inspection
and audits, provided that if any such inspection or audit discloses that
FRANCHISEE has failed to comply with any provision of this Agreement or the
Operating Manual in a manner that would permit COMPANY to terminate this
Agreement pursuant to Section 15 of this Agreement, in addition to al other
remedies and rights available to COMPANY, the cost of such inspection and/or
audit, including normal daily compensation, traveling expenses, room and board
(not to exceed one thousand dollars ($1,000.00), shall be borne by FRANCHISEE.
COMPANY's rights under this Section 12 shall apply only to the operation of the
BUSINESS.
13. ASSIGNMENT.
A. BY COMPANY.
This Agreement and the Franchise is fully assignable by COMPANY and shall
inure to the benefit of any assignee(s) or other legal successor(s) to the
interest of COMPANY herein.
B. FRANCHISEE MAY ASSIGN WITH THE APPROVAL OF COMPANY.
FRANCHISEE understands and acknowledges that the right and duties created
by this Agreement are personal to FRANCHISEE or to its owner and that COMPANY
has granted the Franchise in reliance upon the individual or collective
character, skill, aptitude, attitude, business ability and financial capacity of
FRANCHISEE or its owner. Therefore, the Franchise, the BUSINESS (or any interest
therein) or any part or all of the ownership of FRANCHISEE may be assigned,
sold, subdivided or otherwise transferred by FRANCHISEE or its owner only upon
prior written approval of COMPANY, and any such assignment or transfer without
such approval shall constitute a breach hereof and convey no rights to or
interests in the Franchise of the BUSINESS.
C. CONDITIONS FOR APPROVAL OF ASSIGNMENT.
If FRANCHISEE and its owners are in full compliance with this Agreement,
COMPANY shall not unreasonably withhold its approval of an assignment, provided
that the proposed assignee(s) are, in the opinion of COMPANY, individuals of
good moral character who have sufficient business experience, aptitude and
financial resources to own and operate the BUSINESS and otherwise meet COMPANY's
then applicable standards for franchisees, and further provided that the
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following conditions are met prior to, or concurrently with, the effective date
of the assignment:
1. all obligations of FRANCHISEE and its owner incurred in connection
with this Agreement have been assumed by the assignee;
2. FRANCHISEE shall have paid such continuing franchise and service
fees, advertising contributions and any other amounts owed to COMPANY or
its affiliates, or to any other person or entity to which non-payment will
affect the ongoing operations of the BUSINESS, which are then due and
unpaid;
3. the assignee agrees to complete the training program required of
new franchisees;
4. the assignee and its owner shall have executed and agreed to be
bound by COMPANY's then current form of franchise agreement and such
ancillary agreements as are then customarily used by COMPANY in the grant
of franchises for RENT-A-WRECK businesses of COMPANY;
5. FRANCHISEE or the assignee shall have paid a reasonable transfer
fee to COMPANY in an amount equal to the transfer fee then being charged by
COMPANY;
6. COMPANY shall have approved the material terms and conditions of
such assignment; and
7. FRANCHISEE and its owner shall have executed a release of COMPANY
of all possible liability to FRANCHISEE and its owner and a non-competition
covenant in favor of COMPANY and the assignee, agreeing that for a period
of not less than two (2) years, commencing on the effective date of the
assignment, they will not have any interest as an owner, investor, partner,
director, officer, employee, consultant, representative or agent, or in any
other capacity, in any Competitive Business (as defined in Section 9)
located within the Primary Service Area or within five miles of the border
of the Primary Service Area.
D. DEATH OR DISABILITY OF FRANCHISEE.
Upon the death or permanent disability of FRANCHISEE or a principal owner
of FRANCHISEE, the executor, administrator, conservator or other personal
representative of such person shall, within six (6) months from the date of
death or disability, assign his interest in the Franchise and the BUSINESS or
FRANCHISEE, to a third party approved by COMPANY subject to the conditions of
Section 13C of this Agreement.
E. COMPANY'S RIGHT OF FIRST REFUSAL.
If FRANCHISEE or its owner(s) shall at any time determine to sell an
interest in the BUSINESS or an ownership interest in FRANCHISEE, FRANCHISEE or
its owner(s) shall obtain a bona fide, executed written offer and a reasonable
▇▇▇▇▇▇▇ money deposit from a responsible and fully disclosed purchaser and shall
submit an exact copy of such offer to COMPANY. COMPANY shall have the right,
exercisable by written notice delivered to FRANCHISEE or its owners(s) within
thirty (30) days from the date of delivery of an exact copy of such offer to
COMPANY, to purchase such interest in the BUSINESS or such ownership interest in
FRANCHISEE for the price and on the terms and conditions contained in such
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offer, provided that COMPANY may substitute cash for any form of payment
proposed in such offer and shall have not less than thirty (30) days to prepare
for closing. If the proposed assignment or franchise transfer includes assets of
FRANCHISEE not strictly related to the BUSINESS, COMPANY shall not be required
to purchase such other assets. If COMPANY does not exercise its right of first
refusal, FRANCHISEE or its owner(s) may complete the sale to such purchaser
pursuant to and on the terms of such offer, subject to COMPANY's approval of the
purchaser as provided in Sections 13B and 13C, provided that if the sale to such
purchaser is not completed within ninety (90) days after delivery of such offer
to COMPANY, or if there is a material change in the terms of the sale, COMPANY
shall again have the right of first refusal herein provided.
F. DELEGATION BY COMPANY.
FRANCHISEE agrees that COMPANY shall have the right, from time to time, to
delegate the performance of any portion or all of its obligations and duties
under this Agreement to designees, whether the same are agents of COMPANY or
independent contractors with which COMPANY has contracted to provide such
services.
14. TERMINATION OF THE FRANCHISE BY COMPANY.
If FRANCHISEE (or FRANCHISEE's owners): (a) fails to secure premises for
the BUSINESS as provided in Section 2A of this Agreement; (b) fails to develop
the BUSINESS and have the BUSINESS open and operating within ninety (90) days of
the date of this Agreement as provided in Section 2B of this Agreement; (c)
fails to meet the Fleet requirements provided in Section 3 of this Agreement; or
(d) fails to satisfactorily complete the training program as provided in Section
5A of this Agreement, COMPANY shall have the right to terminate this Agreement,
effective fifteen (15) days after delivery of notice of termination to
FRANCHISEE.
COMPANY shall have the further right to terminate this Agreement effective
upon delivery of notice of termination of FRANCHISEE if FRANCHISEE (or
FRANCHISEE's owners):
(1) makes an assignment for the benefit of creditors;
(2) makes a written admission of inability to pay debts or obligations
as they become due;
(3) files a voluntary petition in bankruptcy;
(4) is adjudicated as bankrupt or insolvent;
(5) files a petition or other pleading seeking reorganization,
dissolution or any similar relief under any statute, law or regulation or
admits or fails to immediately contest the material allegations of a
petition or other pleading filed in any such proceeding;
(6) seeks, consents to or acquiesces in the appointment of any
trustee, receiver or liquidator of the BUSINESS or all or a substantial
part of any of its assets, or fails to vacate the appointment of any
trustee, receiver or liquidator for any such purpose within thirty (30)
days of such appointment;
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(7) has made any material misrepresentation or omission in its
application;
(8) abandons or fails to actively operate the BUSINESS for a period of
more than seven (7) consecutive days without the prior written consent of
COMPANY;
(9) attempts to transfer, or transfers control of all or any interest
in the BUSINESS or Franchise or FRANCHISEE, without the prior written
permission of COMPANY;
(10) submits on three or more separate occasions during the term of
this Agreement reports which understate the number of Rental Vehicles in
the Fleet or Gross Revenues generated by the BUSINESS by more than ten
percent (10%);
(11) fails on two (2) or more separate occasions within any six (6)
consecutive month period to submit when due, reports or other data,
information or records, and/or to pay when due the continuing franchise and
service fees, advertising contributions or other payments due to COMPANY,
and/or otherwise fails to comply with this Agreement, whether or not such
failures to comply are corrected after notice to them;
(12) fails to maintain the insurance coverage required by Section 6E
of this Agreement or experiences an excessive loss ratio which is
disproportionate to industry standards applied on a regional basis in
connection with any liability insurance program endorsed by COMPANY.
(13) entered into a PRICELE$$ Franchise Agreement for substantially
the same primary service area as the RENT-A-WRECK Primary Service Area and
such PRICELE$$ Franchise Agreement is terminated or expires without
renewal;
(14) (i) is convicted of, pleads guilty to, or enters a plea of nolo
contendere to any felony; or, (ii) is convicted of, pleads guilty to, or
enters a plea of nolo contendere to any criminal offense related to the
BUSINESS, other than minor traffic violations; or, (iii) is convicted of,
pleads guilty to, or enters a plea of nolo contendere to any crime or
commits any act, whether or not related to the BUSINESS that COMPANY
determines, in its sole discretion, threatens the integrity or reputation
of COMPANY, any of the Marks, the BUSINESS or other RENT-A-WRECK
BUSINESSES; or
(15) directly or indirectly maintains Rental Vehicles within the
Primary Service Area on which no royalties are paid to COMPANY.
COMPANY shall have the further right to terminate this Agreement without
further notice, such termination effective immediately upon the expiration of
any correction or cure period, if FRANCHISEE, its owners or the BUSINESS fails
to comply with any other provision of this Agreement or any mandatory
specification, standard or operating procedure prescribed by COMPANY and do not
correct such failure within thirty (30) days after written notice of such
failure to comply is delivered to them if a non-monetary matter is involved and
fifteen (15) days after written notice if a monetary matter is involved,
however, see (11) above which applies as specified therein.
15
15. RIGHTS OF COMPANY AND OBLIGATIONS OF FRANCHISEE UPON TERMINATION OR
EXPIRATION OF THE FRANCHISE.
A. PAYMENT OF AMOUNTS OWED TO COMPANY.
Within fifteen (15) days after the effective date of termination or
expiration of the Franchise, FRANCHISEE agrees to pay to COMPANY any unpaid
continuing franchise fees, advertising contributions, interest due COMPANY on
any of the foregoing and all other amounts owed to COMPANY or its affiliates,
whether such obligations were incurred under this Agreement or otherwise in the
conduct of the BUSINESS, and pay other franchisees of COMPANY or any other
person or entity any monies owed to them incurred in connection with the
operation of the BUSINESS (i.e., phone bills, rent).
B. DE-IDENTIFICATION.
FRANCHISEE agrees that after the termination or expiration of the Franchise
he will immediately:
1. return to COMPANY all copies of the Operating Manual and other
items or materials which have been loaned or furnished without charge by
COMPANY;
2. take such action as may be required to cancel all fictitious or
assumed name or equivalent registrations relating to his use of any ▇▇▇▇;
3. remove from the Premises or take down all signs, sign-faces,
advertising materials, forms, invoices and other materials containing any
▇▇▇▇ or otherwise identifying or relating to the BUSINESS, unless COMPANY
exercises its option to purchase under Section 15C.
4. notify the telephone company and all listing agencies of the
termination or expiration of FRANCHISEE's right to use any telephone number
and any regular, classified or other telephone directory listings
associated with any ▇▇▇▇ and to authorize transfer of same to or at the
direction of COMPANY. FRANCHISEE acknowledges that as between COMPANY and
FRANCHISEE, COMPANY has the sole rights to and interest in all telephone
numbers and directory listings associated with any ▇▇▇▇ and FRANCHISEE
authorizes COMPANY and any officer of COMPANY as his attorney-in-fact, to
direct the telephone company and all listing agencies to transfer same to
COMPANY under the Telephone Numbers and Listings Assignment signed
concurrently with the Franchise Agreement. At COMPANY's direction, should
FRANCHISEE fail to do so, the telephone company and all listing agencies
may accept such direction or this Agreement as conclusive proof of the
exclusive rights of COMPANY in such telephone numbers and directory listing
and its authority to direct their transfer, and take such other actions or
execute such other documents, including but not limited to execution of
COMPANY's telephone number transfer form, as may be necessary or as COMPANY
requests;
5. not directly or indirectly at any time or in any manner identify
himself or any business as a current or former RENT-A-WRECK business, or as
a franchisee, licensee or dealer of or as otherwise associated with
COMPANY, or use any ▇▇▇▇, any colorable imitation thereof or other indicia
of a RENT-A-WRECK business in any manner or for any purpose, or utilize for
any purpose any trade name, trade or service ▇▇▇▇ or other commercial
symbol that suggests or indicates a connection or association with COMPANY
or use any of COMPANY's trade secrets, forms, slogans, signs, symbols,
devices or materials that indicate an association with COMPANY or that is
or was used by COMPANY and/or other RENT-A-WRECK businesses;
16
6. take any actions necessary to effectuate the transfer to whomever
COMPANY directs or to attempts to cancel or terminate, all at COMPANY's
sole election, any and all of the licenses, agreements and permits, which
were used in conjunction with the BUSINESS; and
7. furnish to COMPANY within thirty (30) days after the effective date
of termination or expiration evidence satisfactory to COMPANY of
FRANCHISEE's compliance with the foregoing obligations.
C. COVENANT NOT TO COMPETE.
FRANCHISEE agrees that upon termination of the Franchise prior to its
expiration, for a period of two (2) years, commencing on the effective date of
termination, or the date on which FRANCHISEE ceases to conduct the business
conducted pursuant to this Agreement, whichever is later, FRANCHISEE, its
general manager and FRANCHISEE's immediate family members and owners will not
have any interest as an owner, partner, director, officer, employee, consultant,
representative or agent, or in any other capacity, in any Competitive Business
(as defined in Section 9) located within the Primary Service Area or within five
miles of the border of the Primary Service Area.
D. CONTINUING OBLIGATIONS
All obligations of COMPANY and FRANCHISEE which expressly or by their
nature survive the expiration or termination of this Agreement shall continue in
full force and effect subsequent to and notwithstanding its expiration or
termination and until they are satisfied in full or by their nature expire.
16. ENFORCEMENT
A. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS
Each section, paragraph, term and provision of this Agreement shall be
considered severable and if any such portion of this Agreement is held to be
invalid, contrary to, or in conflict with any applicable present or future law
or regulation, it shall not have any effect upon such other portions of this
Agreement as may remain otherwise intelligible. If any applicable and binding
law or rule of any jurisdiction requires a greater prior notice of the
termination of this Agreement or refusal to grant a Renewal Franchise than is
required hereunder, or the taking of some other action not required hereunder or
any provision of this Agreement or any specification, standard or operating
procedure prescribed by COMPANY is invalid or unenforceable, the prior notice
and/or other action required by such law or rule shall be substituted for the
comparable provisions hereof, and COMPANY shall have the right to modify such
invalid or unenforceable provision, specification, standard or operating
procedure to the extent required to be valid and enforceable. FRANCHISEE agrees
to be bound by any such modification to this Agreement.
B. WAIVER OF OBLIGATIONS
COMPANY and FRANCHISEE may by written instrument unilaterally waive or
reduce any obligation of or restriction upon the other under this Agreement,
17
effective upon delivery of written notice thereof to the other, but this
Agreement may not be otherwise modified except by written agreement signed by
both parties. COMPANY and FRANCHISEE shall not be deemed to have waived or
impaired any right, power or option reserved by this Agreement by virtue of any
custom or practice of the parties at variance with the terms hereof; any
failure, refusal or neglect of COMPANY or FRANCHISEE to exercise any right under
this Agreement or to insist upon exact compliance by the other with its
obligations hereunder; any waiver, forbearance, delay, failure or omission by
COMPANY to exercise any right, power or option with respect to any other
RENT-A-WRECK business(es); or the acceptance by COMPANY of any payments due from
FRANCHISEE after any breach of this Agreement.
C. FRANCHISEE MAY NOT WITHHOLD PAYMENTS.
FRANCHISEE agrees that he will not, on grounds of the alleged
nonperformance by COMPANY of any of its obligations hereunder, withhold payment
of any continuing franchise and service fees, advertising contributions or any
other amounts due COMPANY or its affiliates.
D. COSTS AND ATTORNEYS' FEES.
If a claim for amounts owed by FRANCHISEE to COMPANY or its affiliates is
asserted in any legal proceeding before a court or arbitrator, or if COMPANY or
FRANCHISEE is required to enforce this Agreement in a judicial or arbitration
proceeding, the party prevailing in such proceeding shall be entitled to
reimbursement of its costs and expenses, including but not limited to attorneys'
and accountants' fees.
E. GOVERNING LAW/CONSENT TO JURISDICTION
Except to the extent governed by the United States Trademark Act of 1946
(▇▇▇▇▇▇ Act, 15 U.S.C. Sections 1051 et seq.), this Agreement and the franchise
shall be governed by the laws of the State of Maryland. FRANCHISEE agrees that
COMPANY may institute any action against FRANCHISEE in any state or federal
court of general jurisdiction in the State of Maryland and FRANCHISEE
irrevocably submits to the jurisdiction of such court and waives any objection
he may have to the jurisdiction or venue of such court.
F. ARBITRATION.
Except for controversies, disputes or claims related to or based on
FRANCHISEE'S use of the Marks after this Agreement expires or terminates, all
controversies, disputes or claims between COMPANY and its shareholders,
officers, directors, agents and employees and FRANCHISEE (its owners,
guarantors, affiliates and employees, if applicable) arising out of or related
to:
1. this Agreement or any other agreement between FRANCHISEE and
COMPANY or any provision of any of these agreements;
2. COMPANY's relationship with FRANCHISEE;
3. the validity of this Agreement or any other agreement between
COMPANY and FRANCHISEE or any provision of any of these agreements; or
18
4. any System Standards relating to establishing or operating the
BUSINESS;
must be submitted for arbitration, on demand of either party, to the Baltimore,
Maryland office of the American Arbitration Association. The arbitration
proceedings will be conducted at the American Arbitration Association office
and, except as this Agreement otherwise provides, heard by one arbitrator
according to the then current commercial arbitration rules of the American
Arbitration Association. All matters relating to arbitration will be governed by
the Federal Arbitration Act (9 U.S.C. ▇▇.▇▇. 1 et seq.) and not by any state
arbitration law.
Notwithstanding the above paragraph, the obligation to arbitrate shall not
be binding on COMPANY in claims for the collection of monies due to COMPANY from
FRANCHISEE if the amount claimed by COMPANY is less than ten thousand dollars
($10,000).
The arbitrator has the right to award or include in his or her award any
relief which he or she deems proper in the circumstances, including, without
limitation, money damages (with interest on unpaid amounts from the date due),
specific performance, injunctive relief and attorneys' fees and costs, provided
that the arbitrator may not declare any ▇▇▇▇ generic or otherwise invalid or,
except as Subsection G below otherwise provides, award exemplary or punitive
damages. The arbitrator's award and decision are conclusive and binding upon all
parties, and judgment upon the award may be entered in any court of competent
jurisdiction.
COMPANY and FRANCHISEE agree to be bound by the provisions of any
limitation on the period of time in which claims must be brought under
applicable law or this Agreement, whichever expires earlier. COMPANY and
FRANCHISEE further agree that, in any arbitration proceeding, each must submit
or file any claim which would constitute a compulsory counterclaim (as defined
by Rule 13 of the Federal Rules of Civil Procedure) within the same proceeding
as the claim to which it relates. Any claim which is not submitted or filed as
required is forever barred.
COMPANY and FRANCHISEE agree that arbitration will be conducted on an
individual, not a class-wide, basis, and that an arbitration proceeding between
COMPANY and its shareholders, officers, directors, agents and employees and
FRANCHISEE (and/or FRANCHISEE's owners, guarantors, affiliates and employees, if
applicable) may not be consolidated with any other arbitration proceeding
between COMPANY and any other person, corporation, limited liability entity or
partnership.
Despite COMPANY's agreement to arbitrate, COMPANY and FRANCHISEE each have
the right in a proper case to seek temporary restraining orders and temporary or
preliminary injunctive relief from a court of competent jurisdiction; provided,
however, that COMPANY and FRANCHISEE must contemporaneously submit COMPANY's
dispute for arbitration on the merits as provided in this Subsection.
The provisions of this Subsection are intended to benefit and bind certain
third party non-signatories and will continue in full force and effect
subsequent to and notwithstanding this Agreement's expiration or termination.
19
G. WAIVER OF PUNITIVE DAMAGES AND JURY TRIAL
Except for claims COMPANY may bring against FRANCHISEE for his unauthorized
use of the Marks or unauthorized use or disclosure of any confidential
information, COMPANY and FRANCHISEE and their respective owners waive to the
fullest extent the law permits any right to or claim for any punitive or
exemplary damages against the other and agree that, in the event of a dispute
between COMPANY and FRANCHISEE, the party making a claims will be limited to
equitable relief and recovery of any actual damages its sustains. However, if
FRANCHISEE is required to indemnify COMPANY for any claim or liability under
Section 10, FRANCHISEE shall indemnify COMPANY for the full amount of any such
claim or liability, including any punitive damages.
COMPANY and FRANCHISEE irrevocably waive trial by jury in any action,
proceeding or counterclaim, whether at law or in equity, brought by either of
them.
H. BINDING EFFECT.
This Agreement is binding upon COMPANY and FRANCHISEE and their respective
executors, administrators, heirs, beneficiaries, assigns and successors in
interest and may not be modified except by a written agreement signed by both
COMPANY and FRANCHISEE.
I. LIMITATIONS OF CLAIMS.
Except for claims arising from FRANCHISEE's non-payment or underpayment of
amounts FRANCHISEE owes COMPANY under this Agreement or otherwise, any and all
claims arising out of or relating to this Agreement or COMPANY's relationship
with FRANCHISEE will be barred unless a judicial or arbitration proceeding is
commenced within twelve (12) months from the date on which the party asserting
the claim knew or should have known of the facts giving rise to the claims.
J. CONSTRUCTION.
The preambles and exhibits(s) 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 COMPANY and FRANCHISEE relating to
the subject matter of this Agreement. The term "FRANCHISEE" as used herein is
applicable to one or more persons, a corporation or a partnership and the
singular usage includes the plural and the masculine and neuter usages include
the other and the feminine. If two or more persons are at any time FRANCHISEE
hereunder, their obligations and liabilities to COMPANY shall be joint and
several. References to "FRANCHISEE" and "assignee" which are applicable to an
individual or individuals shall mean the principal owner or owners of the equity
or operating control of FRANCHISEE or the assignee and the general manager(s) of
the FRANCHISEE or the assignee, if FRANCHISEE is a corporation or partnership.
17. NOTICES AND PAYMENTS.
All written notices and reports permitted or required to be delivered by
this Agreement or the operating manual shall be deemed so delivered at the time
delivered by hand, one (1) business day after sending by overnight delivery
service or electronic system or two (2) business days after placed in the mail
by Registered or Certified Mail, Return Receipt Requested, postage prepaid and
addressed to the party to be notified at its current principal business address.
All payments and reports required by this Agreement shall be directed to COMPANY
at the address notified to FRANCHISEE from time to time. Any required payment or
report not actually received by COMPANY during regular business hours on the
date due and not postmarked by postal authorities at least two (2) days prior
thereto, shall be deemed delinquent.
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IN WITNESS WHEREOF the parties hereto have executed, sealed and delivered
this Agreement in multiple originals on the day and year first above written.
COMPANY FRANCHISEE
▇▇▇▇▇ AMERICAN CORPORATION, a If an Individual
Maryland corporation
_____________________, an individual
By:___________________________
Title:________________________ By:___________________________
Date:_________________________ Date:_________________________
If a corporation:
______________________________
a ______________________ corporation
By:___________________________
Title:________________________
Date:_________________________
By:___________________________
Title:________________________
Date:_________________________
If a partnership:
______________________________
a ______________________ partnership
By:___________________________
Title:________________________
Date:_________________________
By:___________________________
Title:________________________
Date:_________________________
21
EXHIBIT A TO THE
RENT-A-WRECK FRANCHISE AGREEMENT
BY AND BETWEEN ▇▇▇▇▇ AMERICAN CORPORATION
AND ___________________________
DATED: _______________, ____
AGREEMENT TERMS
1. Premises. The Premises referred to in Section 1B of the above captioned
agreement shall be located at and only at the following address or such other
address(es) as are approved in writing by COMPANY:
________________________________________________________________________________
________________________________________________________________________________
2. Primary Service Area. The Primary Service Area referred to in Section 1B of
the above captioned agreement shall be all of the area located within:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
3. Fleet. The minimum number of Rental Vehicles in the Fleet referred to
Section 3C of the above-captioned agreement throughout the following period
shall be:
Time Period Number of Rental Vehicles
One or before the last month
of the first Agreement Year _____________________ (____)
One or before the last month
of the second Agreement Year _____________________ (____)
One or before the last month
of the third Agreement Year _____________________ (____)
At no time after the end of the third Agreement Year shall there be less than
_____________________ (____) Rental Vehicles in the Fleet.
4. Initial Franchise Fee: The initial franchise fee referred to in Section 4A
of the above-captioned agreement shall be _____________________ Dollars
($_____________________).
5. Minimum Fee. The Minimum Fee referred to in Section 4B(2) of the
above-captioned agreement shall be as follows:
Agreement Year Minimum Fee
-------------- -----------
First (1st) _____________________
Second (2nd) _____________________
Third (3rd) _____________________
After the end of the third (3rd) Agreement Year, the annual Minimum Fee
shall be _____________________ Dollars ($_____________________).
6. General Manager(s). The initial manager(s) referred to in Section 6D of the
above-captioned agreement shall be:
NAME ADDRESS TITLE
---- ------- -----
COMPANY FRANCHISEE
▇▇▇▇▇ AMERICAN CORPORATION, a If an Individual
Maryland corporation
_____________________, an individual
By:___________________________
Title:________________________ By:___________________________
Date:_________________________ Date:_________________________
If a corporation:
______________________________
a ______________________ corporation
By:___________________________
Title:________________________
Date:_________________________
By:___________________________
Title:________________________
Date:_________________________
If a partnership:
______________________________
a ______________________ partnership
By:___________________________
Title:________________________
Date:_________________________
By:___________________________
Title:________________________
Date:_________________________
EXHIBIT B TO THE
RENT-A-WRECK FRANCHISE AGREEMENT
BY AND BETWEEN ▇▇▇▇▇ AMERICAN CORPORATION
AND ___________________________
DATED: _______________, ____
ASSIGNMENT OF
TELEPHONE NUMBERS AND LISTINGS
In accordance with the terms of the RENT-A-WRECK Franchise Agreement
between ___________________________________ ("FRANCHISEE") and ▇▇▇▇▇ American
Corporation, a Maryland corporation ("COMPANY"), executed concurrently with this
Assignment, under which COMPANY granted FRANCHISEE the right to own and operate
a RENT-A-WRECK business located at ___________________________________ (the
"BUSINESS"), FRANCHISEE, for value received, hereby assigns to COMPANY, all of
FRANCHISEE's right, title and interest in and to those certain telephone numbers
and regular, classified or other telephone directory listings (collectively, the
"Telephone Numbers and Listings") associated with COMPANY's trade and service
marks and used from time to time in connection with the operation of the
BUSINESS. This assignment is for collateral purposes only and, except as
specified herein, COMPANY shall have no liability or obligation of any kind
whatsoever arising from or in connection with this Assignment unless COMPANY
shall notify the telephone company and all listing agencies (collectively, the
"Telephone Company") pursuant to the terms hereof to effectuate the assignment.
Upon termination or expiration of the Franchise Agreement (without renewal
or extension), COMPANY shall have the right and is hereby empowered to
effectuate the assignment of the Telephone Numbers and Listings, and, in such
event, FRANCHISEE shall have no further right, title or interest in the
Telephone Numbers and Listings and shall remain liable to the Telephone Company
for all past due fees owing to the Telephone Company on or before the effective
date of the assignment hereunder.
FRANCHISEE agrees and acknowledges that as between COMPANY and FRANCHISEE,
upon termination or expiration of the Franchise Agreement, COMPANY shall have
the sole right to and interest in the Telephone Numbers and Listings, and
FRANCHISEE appoints COMPANY as FRANCHISEE's true and lawful attorney-in-fact to
direct the Telephone Company to assign same to COMPANY, and execute such
documents and take such actions as may be necessary to effectuate the
assignment. Upon such event, FRANCHISEE shall immediately notify the Telephone
Company to assign the Telephone Numbers and Listings to COMPANY. If FRANCHISEE
fails to promptly direct the Telephone Company to assign the Telephone Numbers
and Listings to COMPANY, COMPANY shall direct the Telephone Company to
effectuate the assignment contemplated hereunder to COMPANY. The parties agree
that the Telephone Company may accept COMPANY's written direction or this
Assignment as conclusive proof of COMPANY's exclusive rights in and to the
Telephone Numbers and Listings upon such termination or expiration. The parties
further agree that if the Telephone Company requires that the parties execute
the Telephone Company's assignment forms or other documentation at the time of
termination or expiration, COMPANY's execution of such forms or documentation
shall effectuate FRANCHISEE's consent and agreement to the assignment. The
parties agree that at any time after the date hereof, they will perform such
acts and execute and deliver such documents as may be necessary to assist in or
accomplish the assignment described herein upon termination or expiration of the
Franchise Agreement.
ASSIGNOR
___________________________________ ___________________________________
Date: (FRANCHISEE)
___________________________________
___________________________________
ASSIGNEE:
▇▇▇▇▇ AMERICAN CORPORATION
By:________________________________
Its:____________________________
APPROVED AND ACCEPTED BY:
___________________________________
(Telephone Company Authorized
Representative)
___________________________________
(Name of Telephone Company)
OWNER'S GUARANTY AND
ASSUMPTION OF FRANCHISEE'S OBLIGATIONS
This Guaranty must be signed by the principal owners ("Guarantor(s)") of
___________________________________ ("FRANCHISEE") under the foregoing
RENT-A-WRECK Franchise Agreement (the "Agreement").
In consideration of and as an inducement to the execution of the Agreement
by ▇▇▇▇▇ American Corporation ("COMPANY") each Guarantor signing this Guaranty
hereby personally and unconditionally: (A) guarantees to COMPANY and COMPANY's
successors and assigns that FRANCHISEE will punctually pay and perform each and
every undertaking, agreement and covenant set forth in the Agreement; and (B)
agrees to be personally bound by, and personally liable for the breach of, each
and every provision in the Agreement.
Each Guarantor waives: (1) acceptance and notice of acceptance by COMPANY
of Guarantor's obligations under this Guaranty; (2) notice of demand for payment
of any indebtedness or nonperformance of any obligation guaranteed by Guarantor;
(3) protest and notice of default to any party with respect to the indebtedness
or nonperformance of any obligations guaranteed by Guarantor; (4) any right
Guarantor may have to require that an action be brought against FRANCHISEE or
any other person as condition of Guarantor's liability; (5) all rights to
payment and claims for reimbursement or subrogation which any of the undersigned
Guarantor may have against FRANCHISEE arising as a result of the execution of
and performance under this Guaranty by Guarantor; and (6) all other notices and
legal or equitable defenses to which Guarantor may be entitled in Guarantor's
capacity as guarantor(s).
Each Guarantor consents and agrees that: (a) Guarantor's direct and
immediate liability under this Guaranty shall be joint and several; (b)
Guarantor will make any payment or render any performance required under the
Agreement upon demand if FRANCHISEE fails or refuses punctually to do so; (c)
Guarantor's liability will not be contingent or conditioned upon COMPANY's
pursuit of any remedies against FRANCHISEE or any other person; (d) Guarantor's
liability will not be diminished, relieved or otherwise affected by any
extension of time, credit or other indulgence which COMPANY may from time to
time grant to FRANCHISEE or to any other person, including, for example, the
acceptance of any partial payment or performance or the compromise or release of
any claims and no such indulgence shall in any way modify or amend this
Guaranty; and (e) this Guaranty will continue and be irrevocable during the term
of the Agreement and, if required by the Agreement, after its termination or
expiration.
Each Guarantor now executes and delivers this Guaranty as of the execution
of the Agreement.
PERCENTAGE OF
GUARANTOR(S) OWNERSHIP IN FRANCHISEE
___________________________________ _______%
___________________________________ _______%
___________________________________ _______%