EXHIBIT 10.4
FOR USE ONLY IN THE STATE OF ILLINOIS
CITY LOOKS SALONS INTERNATIONAL(R)
DEVELOPMENT AGREEMENT
BETWEEN
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.
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AND
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Name(s) of FRANCHISEE
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Area Code Telephone
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Area Code Telephone
DATE OF DEVELOPMENT AGREEMENT
________________, 199___
CITY LOOKS SALONS INTERNATIONAL(R)
DEVELOPMENT AGREEMENT
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...............8
6 CITY LOOKS' RIGHT OF TERMINATION...................................9
7 FRANCHISEE'S RIGHTS AND OBLIGATIONS UPON TERMINATION..............11
8 FRANCHISEE'S COVENANTS NOT TO COMPETE.............................12
9 INDEPENDENT CONTRACTORS; INDEMNIFICATION..........................13
10 ASSIGNMENT........................................................14
11 ARBITRATION.......................................................16
12 ENFORCEMENT.......................................................18
13 NOTICES...........................................................20
14 ACKNOWLEDGMENTS...................................................21
15 DISCLAIMER; FRANCHISEE'S LEGAL COUNSEL............................22
16 GOVERNING LAW; STATE MODIFICATIONS................................23
17 DEFINITIONS.......................................................25
PERSONAL GUARANTY
CITY LOOKS SALONS INTERNATIONAL(R)
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement"), made, entered into and effective
this _____ day of _______________, 199____, by and between The Barbers,
Hairstyling for Men & Women, Inc., a Minnesota corporation ("CITY LOOKS"), and
___________________________________________, a _______________________________
(the "FRANCHISEE");
WITNESSETH:
WHEREAS, CITY LOOKS has developed and owns a distinctive business system for
operating hairstyling businesses of a distinctive character with the name "City
Looks Salons International(R)" (the "Business System" or "the City Looks
Business System") and has publicized the name "City Looks(R)", "City Looks
Salons International(R)", and other trademarks, trade names, service marks, and
commercial symbols to the public as an organization of businesses operating
under the City Looks Business System; and
WHEREAS, CITY LOOKS represents that it has the right and authority to license
the use of the name "City Looks(R)", "City Looks Salons International(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 CITY LOOKS' uniformity requirements and quality standards; and
WHEREAS, the FRANCHISEE desires to operate City Looks Salons International
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 CITY LOOKS; and
WHEREAS, CITY LOOKS is willing to provide the FRANCHISEE with marketing,
advertising, technology, operational and other business information, experience
and "know how" about the City Looks Salons International business that has been
developed over time by CITY LOOKS at a 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 City Looks Salons
International 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 City
Looks Salons International businesses subject to and under the terms and
conditions set forth in this Agreement; and
WHEREAS, the FRANCHISEE acknowledges that CITY LOOKS would not provide the
FRANCHISEE with any business information or "know how" about the City Looks
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 City
Looks Business System, the financial investment requirements, and the business
risks associated with owning and operating City Looks Salons International
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. CITY LOOKS hereby grants to the FRANCHISEE, for the term of
this Agreement, the right to enter into Franchise Agreements with CITY LOOKS for
the operation of hairstyling businesses under the name "City Looks Salons
International(R)" and the other Marks, and operated in conformity with the City
Looks Business System (the "City Looks" or "City Looks Salons International"
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 CITY LOOKS.
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. CITY LOOKS will not franchise,
license, subfranchise, develop or own any City Looks 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 develop, own and operate City Looks 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 CITY LOOKS 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, CITY LOOKS will have the right to reevaluate the prospects for
the establishment of City Looks businesses in the Franchised Area, and CITY
LOOKS may determine that the Franchised Area will be further developed by
opening additional City Looks businesses in the Franchised Area. In the event
CITY LOOKS determines that the Franchised Area will be further developed, the
FRANCHISEE will have a right of first refusal to own and operate any City Looks
businesses proposed for the Franchised Area by CITY LOOKS. Consequently, if CITY
LOOKS proposes to develop (either by owning, franchising or subfranchising) any
further City Looks businesses in the Franchised Area after the
term of this Agreement has expired, then CITY LOOKS must give the FRANCHISEE
written notice of its proposal to develop additional City Looks businesses in
the Franchised Area and the FRANCHISEE will have thirty (30) days to accept in
writing CITY LOOKS' proposal to own and operate further City Looks businesses in
the Franchised Area. The FRANCHISEE will have the right to own and develop City
Looks businesses in the Franchised Area according to the terms and conditions
set forth in CITY LOOKS' 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 CITY LOOKS' written proposal within thirty
(30) days from the date the written notice of CITY LOOKS' proposal is given to
the FRANCHISEE, then CITY LOOKS will have the absolute right to open and develop
City Looks 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 CITY LOOKS 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 CITY LOOKS an Initial Fee, as defined in CITY LOOKS' then-current
standard Franchise Agreement, of Seventeen Thousand Dollars ($17,000) for the
first City Looks 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 CITY LOOKS an Initial Fee of Ten Thousand
Dollars ($10,000) for each subsequent City Looks 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 CITY LOOKS for each City Looks business opened in the Franchised Area
in accordance with the development schedule will be as set forth above, 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 CITY LOOKS pursuant to the
terms of this Agreement.
3.3 PAYMENT OF INITIAL FEES. The FRANCHISEE must pay CITY LOOKS the Initial Fee
for each City Looks business required to be owned and operated in the Franchised
Area pursuant to this Agreement on or before the date that the FRANCHISEE
executes the then-current standard Franchise Agreement for each such City Looks
business. A then-current standard City Looks Salons International Franchise
Agreement must be executed by the FRANCHISEE for each City Looks business opened
and operated by the FRANCHISEE in the Franchised Area at least ten (10) days
prior to the date on which the FRANCHISEE commences initial business operations
at each of its City Looks businesses in the Franchised Area.
3.4 DEVELOPMENT SCHEDULE. The FRANCHISEE acknowledges and agrees that a material
provision of this Agreement is that the following number of City Looks Salons
International 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 CITY LOOKS BUSINESSES REQUIRED CUMULATIVE NUMBER OF CITY LOOKS
TO BE OPENED AND CONTINUOUSLY OPERATING BUSINESSES REQUIRED TO BE OPEN AND
FOR BUSINESS IN THE FRANCHISED AREA CONTINUOUSLY OPERATING FOR BUSINESS IN
PERIOD DURING THE PERIOD. THE FRANCHISED AREA AT THE END OF THE PERIOD.
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YEAR 1
- first half
- second half
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YEAR 2
- first half
- second half
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YEAR 3
- first half
- second half
------------------------- ------------------------------------------ --------------------------------------------
YEAR 4
- first half
- second half
------------------------- ------------------------------------------ --------------------------------------------
YEAR 5
- first half
- second half
------------------------- ------------------------------------------ --------------------------------------------
YEAR 6
- first half
- second half
------------------------- ------------------------------------------ --------------------------------------------
YEAR 7
- first half
- second half
------------------------- ------------------------------------------ --------------------------------------------
YEAR 8
- first half
- second half
------------------------- ------------------------------------------ --------------------------------------------
The half-year periods set forth above will be determined from the date of this
Agreement, so that the first half-year of the development schedule set forth
above will be 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 City Looks 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 City Looks 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 City Looks Salons International 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, CITY LOOKS 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 City Looks 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 City
Looks businesses in the Franchised Area and all other rights granted to the
FRANCHISEE under this Agreement will immediately revert to CITY LOOKS, 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 CITY LOOKS because of the FRANCHISEE'S failure to
meet the development schedule set forth above, the rights and duties of CITY
LOOKS and the FRANCHISEE will be as follows: (A) the FRANCHISEE will have no
further rights to open and operate additional City Looks businesses within the
Franchised Area; (B) the FRANCHISEE will continue to pay all required fees and
to operate its City Looks 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 (3) CITY
LOOKS 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 City Looks 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 City Looks 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) City Looks businesses opened and
operated in the Franchised Area pursuant to this Agreement to supervise the
FRANCHISEE'S City Looks businesses in the Franchised Area. Each District Manager
will be responsible for the operation and administration of up to six (6) City
Looks 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 City Looks
businesses in the Franchised Area. All District Managers of the FRANCHISEE'S
City Looks businesses must attend and successfully complete the training program
required by CITY LOOKS, and be certified and approved by CITY LOOKS in writing.
4.3 EXECUTION OF FRANCHISE AGREEMENTS. For each City Looks 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 CITY LOOKS' then-current standard Franchise Agreement
(the "Franchise Agreement") in substantially the same form as Exhibit B attached
hereto. If the FRANCHISEE fails to provide CITY LOOKS with an executed City
Looks Salons International Franchise Agreement at least ten (10) days prior to
the date on which the FRANCHISEE commences business at each City Looks business
in the Franchised Area as provided by the terms of this Agreement, it will be
deemed a material breach of this Agreement and CITY LOOKS 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, the FRANCHISEE will pay to CITY LOOKS 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 City Looks businesses in the Franchised
Area. For the first (1st) through the seventeenth (17th) weeks of the
FRANCHISEE'S operation of each of the City Looks businesses opened and operated
pursuant to this Agreement, the FRANCHISEE will not be obligated to pay a
Continuing Fee to CITY LOOKS. For the eighteenth (18th) through the
thirty-fourth (34th) weeks of the FRANCHISEE'S operation of each of its City
Looks businesses, the FRANCHISEE will pay to CITY LOOKS a weekly Continuing Fee
equal to two percent (2%) of the FRANCHISEE'S Gross Revenues. For the
thirty-fifth (35th) week of the FRANCHISEE'S operation of each of the City Looks
businesses opened and operated pursuant to this Agreement and thereafter for the
balance of the remaining term of the applicable Franchise Agreement, the
FRANCHISEE will pay to CITY LOOKS a weekly Continuing Fee equal to four percent
(4%) of the FRANCHISEE'S Gross Revenues; provided, however, that commencing with
the fifty-third (53rd) week of the FRANCHISEE'S operation of each of its City
Looks businesses, and continuing throughout the remaining term of the Franchise
Agreements for the City Looks businesses, the FRANCHISEE will pay to CITY LOOKS
a weekly Continuing Fee equal to the greater of four percent (4%) of the
FRANCHISEE'S weekly Gross Revenues or One Hundred Dollars ($100) per week. The
FRANCHISEE will pay Continuing Fees to CITY LOOKS 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 CITY LOOKS, the
Continuing Fees for each of the FRANCHISEE'S City Looks 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 GROSS REVENUES CAP. At such time as the FRANCHISEE achieves Gross Revenues
of One Million Dollars ($1,000,000) (the "Gross Revenues Cap") within a single
calendar year (the first such year being referred to herein as the "Base Year")
in any single City Looks business opened pursuant to this Agreement, the
FRANCHISEE will no longer be obligated, so long as the FRANCHISEE is in
compliance with all terms and conditions of the applicable Franchise Agreement
including, but not limited to, the obligation to pay Continuing Fees on all
Gross Revenues up to and including the Gross Revenues Cap, to pay Continuing
Fees with respect to any Gross Revenues in excess of the Gross Revenues Cap
which are achieved during the remainder of such calendar year from such single
City Looks business. Commencing on January 1 of the year following the Base Year
and on each January 1 thereafter, the FRANCHISEE will resume payment of weekly
Continuing Fees pursuant to the applicable Franchise
Agreement until the FRANCHISEE has achieved the Gross Revenues Cap for such year
for such business. For each year after the Base Year, the Gross Revenues Cap for
such City Looks business shall be increased to an amount equal to the product
obtained by multiplying the Gross Revenues Cap for the immediately preceding
calendar year by the sum of one plus the percent of increase (but not decrease)
in the Consumer Price Index, U.S. City Average (All Items) For All Urban
Consumers (CPI-U) (1984 = 100) (the "Index") from the first day of such
immediately preceding calendar year to the last day of such immediately
preceding calendar year, as published by the U.S. Bureau of Labor Statistics
("BLS"). If the Index is no longer published, the FRANCHISOR will select a
replacement index that will, in the FRANCHISOR's sole discretion, most closely
approximate the Index. Notwithstanding anything to the contrary contained in
this Article 4.5 or the applicable Franchise Agreement, the relief from paying
Continuing Fees with respect to Gross Revenues in excess of the Gross Revenues
Cap granted pursuant to the applicable Franchise Agreement and this Agreement
shall immediately cease and terminate in the event the FRANCHISEE fails to (a)
submit the weekly Gross Revenues reports as required pursuant to the applicable
Franchise Agreement, (b) pay weekly Continuing Fees with respect to Gross
Revenues up to and including the Gross Revenues Cap as required under the
applicable Franchise Agreement or (c) comply with any other term or provision of
this the applicable Franchise Agreement; in addition, for purposes of the Gross
Revenues Cap and this Article 4.5, Gross Revenues must be calculated for each
City Looks business separately and Gross Revenues from more than one such
business may not be combined.
4.6 NATIONAL ADVERTISING PRODUCTION FEES. During the term of each Franchise
Agreement signed by the FRANCHISEE pursuant to this Agreement, the FRANCHISEE
will pay to CITY LOOKS weekly National Advertising Production Fees, as defined
in the Franchise Agreement, equal to one-half of one percent (.5%) the weekly
Gross Revenues, as defined in the Franchise Agreement, which are received,
billed or generated by or from the FRANCHISEE'S City Looks businesses in the
Franchised Area. The FRANCHISEE will pay National Advertising Production Fees to
CITY LOOKS at the applicable rate stated in the preceding sentences, even if the
Franchise Agreements signed by the FRANCHISEE specify National Advertising
Production Fees that are greater than or different from the National Advertising
Production Fees specified herein. With the possible exception of the percentage
of the FRANCHISEE'S Gross Revenues which will be payable to CITY LOOKS, the
National Advertising Production Fees for each of the FRANCHISEE'S City Looks
businesses will be payable by the FRANCHISEE according to the terms of the
applicable Franchise Agreements signed by the FRANCHISEE pursuant to this
Agreement.
4.7 LOCAL ADVERTISING. For the first (1st) through the thirty-fourth (34th)
weeks of the FRANCHISEE'S operation of each of its City Looks businesses opened
pursuant to this Agreement, the FRANCHISEE must spend an amount equal to at
least four percent (4%) of its Gross Revenues from each such business for
approved local media advertising and promotion. For the thirty-fifth (35th) and
each subsequent week of the FRANCHISEE'S operation of each of its City Looks
businesses opened pursuant to this Agreement through the balance of the
remaining term of the applicable Franchise Agreements, the FRANCHISEE must spend
an amount equal to three percent (3%) of its Gross Revenues for approved local
media advertising and promotion. The FRANCHISEE will make such expenditures in
accordance with the terms and conditions of the applicable Franchise Agreement
for each of the FRANCHISEE'S City Looks businesses opened and operated by the
FRANCHISEE pursuant to this Agreement.
4.8 ADVERTISING FUND. In addition to the National Advertising Production Fees
required under Article 4.6 of this Agreement, CITY LOOKS reserves the right, in
its sole discretion, to require the FRANCHISEE to contribute a maximum of three
percent (3%) of the FRANCHISEE'S Gross Revenues of each of its City Looks
businesses opened pursuant to this Agreement into an advertising fund which
will be administered and controlled by CITY LOOKS. The requirement for the
FRANCHISEE to contribute to an advertising fund will not take effect until the
FRANCHISEE has been given not less than thirty (30) days written notice of such
requirement. In the event CITY LOOKS requires the FRANCHISEE to contribute to an
advertising fund, the FRANCHISEE'S requirement to spend an amount for local
advertising under Article 4.7 of this Agreement will be reduced by the same
percentage that the FRANCHISEE will be required to contribute to CITY LOOKS for
the advertising fund. The use of the monies in such advertising fund will be
under the absolute discretion and control of CITY LOOKS to purchase and pay for
any products or services relating to advertising for City Looks franchisees. The
advertising fees payable by the FRANCHISEE into the advertising fund will be
payable in the same fashion and under the same terms and conditions as the
National Advertising Production Fees are payable and will not be refundable to
the FRANCHISEE under any circumstances.
4.9 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 City Looks businesses opened and operated by the FRANCHISEE
pursuant to this Agreement.
4.10 MODIFICATIONS TO FRANCHISE AGREEMENT. The FRANCHISEE acknowledges that the
Franchise Agreement may be modified from time to time by CITY LOOKS 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
CITY LOOKS 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 each City Looks Salons International Franchise
Agreement signed by the FRANCHISEE, conduct its City Looks businesses in
accordance with CITY LOOKS' confidential Operations Manual (the "Manual"). The
FRANCHISEE acknowledges having received as a loan one copy of the Manual from
CITY LOOKS.
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 City Looks
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 CITY LOOKS.
CITY LOOKS may from time to time revise the Manual and the FRANCHISEE expressly
agrees to operate its City Looks 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 CITY LOOKS will be controlling in all respects.
5.4 OTHER CONFIDENTIAL INFORMATION. The FRANCHISEE expressly acknowledges and
agrees that CITY LOOKS 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 a City Looks business 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 who must have access to it in order to operate
the FRANCHISEE'S City Looks 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 CITY LOOKS 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 CITY LOOKS,
where the employees agree to maintain the confidentiality during the course of
their employment and thereafter, of all information designated by CITY LOOKS as
confidential. Copies of all executed agreements will be submitted to CITY LOOKS
upon request.
5.6 REMEDIES. The FRANCHISEE recognizes that the provisions contained in this
Article are necessary for the protection of CITY LOOKS and all of the
Franchisees who own City Looks 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 CITY LOOKS
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 CITY LOOKS under
common law, in equity, and pursuant to any federal and state statutes in an
action or lawsuit against the FRANCHISEE.
ARTICLE 6
CITY LOOKS' RIGHT OF TERMINATION
6.1 GROUNDS FOR TERMINATION. In addition to the other rights of termination
contained in this Agreement, CITY LOOKS 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 CITY LOOKS 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 CITY LOOKS, 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 City Looks
Salons International Franchise Agreement executed by the FRANCHISEE is (1)
terminated by CITY LOOKS or (2) wrongfully terminated by the FRANCHISEE; (H) the
FRANCHISEE voluntarily or otherwise abandons, as defined herein, the Franchised
Area; or (I) 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 City Looks businesses,
or any felony.
6.2 NOTICE OF BREACH. Except as provided in Article 6.5 and Article 6.6 of this
Agreement, CITY LOOKS 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 CITY LOOKS 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 CITY LOOKS 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 CITY LOOKS 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 CITY LOOKS 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 CITY LOOKS 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 CITY
LOOKS 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, CITY LOOKS may terminate this Agreement as provided for herein.
6.4 NOTICE OF TERMINATION. If CITY LOOKS 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 CITY LOOKS 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. CITY LOOKS will have the absolute right
and privilege, where permitted 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 to or no contest to, a
charge of violating any law relating to the FRANCHISEE'S City Looks
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 CITY LOOKS'
Marks or Business System and which the FRANCHISEE fails to correct within
twenty-four (24) hours of receipt of written notice from CITY LOOKS.
6.6 NOTICE OF IMMEDIATE TERMINATION. If this Agreement is terminated by CITY
LOOKS pursuant to Article 6.5 above, CITY LOOKS will give the FRANCHISEE written
notice, unless applicable law provides to the contrary, that this Agreement is
terminated and in that event 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 CITY LOOKS pursuant to
this Article, or if the FRANCHISEE breaches this Agreement by a wrongful
termination of this Agreement, then CITY LOOKS will be entitled to seek recovery
from the FRANCHISEE for all of the damages that CITY LOOKS 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 CITY
LOOKS from seeking damages or other 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 CITY LOOKS under this Agreement or
any other contract or obligation; (B) return to CITY LOOKS by first class
prepaid United States mail all Manuals, advertising and promotional materials
and all other printed materials pertaining to the operation of a City Looks
Salons International business; and (C) 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 City Looks Salons International businesses
in the Franchised Area and all other rights granted to the FRANCHISEE pursuant
to this Agreement will automatically revert to CITY LOOKS, and CITY LOOKS 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 City Looks 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 CITY LOOKS prior to the termination of this Agreement, and the
rights and obligations of the FRANCHISEE and CITY LOOKS with respect to the
FRANCHISEE'S City Looks 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, pursuant to this Agreement, 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 secrets from CITY
LOOKS pertaining to the Business System and the operation of a City Looks Salons
International 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. CITY LOOKS has advised the FRANCHISEE that this
provision is a material provision of this Agreement, and that CITY LOOKS will
not sell a City Looks Salons International 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 City Looks Salons International 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 CITY LOOKS or by any other City Looks Salon, The Barbers, City Looks
By The Barbers, Cost Cutters or We Care Hair(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 City Looks Salon, The
Barbers or City Looks By The Barbers businesses conducted by CITY LOOKS or CITY
LOOKS' franchisees (including, but not limited to, the FRANCHISEE), except with
the prior written consent of CITY LOOKS.
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 CITY LOOKS or by any
other City Looks Salon, The Barbers, City Looks By The Barbers, Cost Cutters or
We Care Hair(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 Barbers, City Looks Salons International, or the City Looks By
The Barbers businesses conducted by CITY LOOKS or CITY LOOKS' franchisees which
is located either within the Franchised Area or within six (6) miles of any City
Looks Salons International, The Barbers or City Looks By The Barbers business
operated by CITY LOOKS or any of CITY LOOKS' franchisees, or which is located
within any exclusive area granted by CITY LOOKS or any affiliate or area
developer of CITY LOOKS 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 needed to protect CITY LOOKS and CITY LOOKS'
franchisees if this Agreement expires or is terminated for any reason, and that
this covenant not to compete is necessary to permit CITY LOOKS the opportunity
to further develop new City Looks 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 CITY LOOKS and CITY LOOKS'
franchisees including, without limitation, preventing damage to or loss of
goodwill associated with the Marks, preventing the unauthorized dissemination of
marketing, promotional and other confidential information to competitors of CITY
LOOKS and CITY LOOKS' franchisees, protection of CITY LOOKS' trade secrets, the
Business System and the integrity of CITY LOOKS' Business System, and the
prevention of duplication of the Business System. The FRANCHISEE, the
FRANCHISEE'S shareholders and the Personal Guarantors acknowledge that damages
alone cannot adequately compensate CITY LOOKS if there is a violation of this
Article by the FRANCHISEE and that injunctive relief against the FRANCHISEE is
essential for the protection of CITY LOOKS and CITY LOOKS' franchisees. The
FRANCHISEE, the FRANCHISEE'S shareholders and the Personal Guarantors agree
therefore, that if CITY LOOKS alleges that the FRANCHISEE, the FRANCHISEE'S
shareholders or the Personal Guarantors have breached or violated this Article,
then CITY LOOKS will have the right to petition 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 CITY LOOKS at law or in
equity. Unless applicable law provides to the contrary, CITY LOOKS will not be
required to post a bond or other security in any action where CITY LOOKS is
seeking to enjoin the FRANCHISEE, the FRANCHISEE'S shareholders or the Personal
Guarantors from violating this Article. In cases where CITY LOOKS is granted ex
parte injunctive relief against the FRANCHISEE, the FRANCHISEE'S shareholders or
the Personal Guarantors (if any), 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 the 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. CITY LOOKS and the FRANCHISEE are each independent
contractors and, as a consequence, there is no employer-employee or
principal-agent relationship between CITY LOOKS 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 CITY LOOKS or
represent that their relationship is other than that of franchisor and
franchisee. Neither CITY LOOKS 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. CITY LOOKS 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 City Looks
businesses that are conducted by the FRANCHISEE pursuant to this
Agreement. Therefore, the FRANCHISEE will indemnify and hold harmless CITY LOOKS
against all claims, lawsuits, damages, obligations, liability, actions and
judgments alleged or obtained by any person or entity against CITY LOOKS arising
out of, from, as a result of, or in connection with the FRANCHISEE'S negligence
or the operation of the FRANCHISEE'S City Looks 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 CITY LOOKS or any
affiliate of CITY LOOKS. Further, the FRANCHISEE will indemnify and reimburse
CITY LOOKS for all such obligations and damages for which CITY LOOKS is held
liable and for all costs reasonably incurred by CITY LOOKS in the defense of any
such claim brought against it or in any action arising out of the operation of
the FRANCHISEE'S City Looks 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. CITY LOOKS will have the absolute right to defend any claim made
against it that results from the FRANCHISEE'S City Looks businesses.
9.3 PAYMENT OF COSTS AND EXPENSES. The FRANCHISEE will pay all costs and
expenses, including actual attorneys' fees, incurred by CITY LOOKS 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 provisions and other
obligations contained in the 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 CITY LOOKS. This Agreement may be unilaterally assigned and
transferred by CITY LOOKS without the FRANCHISEE'S approval or consent, and will
inure to the benefit of CITY LOOKS' successors and assigns. CITY LOOKS will
provide the FRANCHISEE with written notice of any such assignment or transfer,
and the assignee will be required to fulfill CITY LOOKS' 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 CITY LOOKS 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 City Looks Salons International
business. The FRANCHISEE will give CITY LOOKS 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 CITY LOOKS 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 CITY LOOKS 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 CITY LOOKS. CITY LOOKS 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 CITY LOOKS 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 CITY LOOKS 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 CITY LOOKS assuming and agreeing to discharge all of the
FRANCHISEE'S obligations and covenants under this Agreement; (D) the transferee
Franchisee will have demonstrated to CITY LOOKS' satisfaction that he, she or it
meets CITY LOOKS' 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 City Looks Salons International business; and (G) if the
transferee Franchisee does not meet CITY LOOKS' net worth requirements for
operation of the City Looks Salons International Businesses, then the FRANCHISEE
and/or its shareholders and the Personal Guarantors will execute a written
agreement in a form satisfactory to CITY LOOKS agreeing to remain liable to CITY
LOOKS for the obligations of the City Looks 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 City Looks Business System and the Marks, as well as CITY LOOKS'
reputation and image, and are for the protection of CITY LOOKS, the FRANCHISEE
and all other franchisees who own and operate City Looks businesses. Any
assignment or transfer permitted by this Article 10 will not be effective until
CITY LOOKS receives a completely executed copy of all transfer documents and
CITY LOOKS consents to the transfer in writing, 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 CITY LOOKS a
transfer fee of One Thousand Dollars ($1,000). This fee is to cover the costs
incurred by
CITY LOOKS 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 City Looks
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. CITY LOOKS 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 CITY LOOKS 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 CITY LOOKS or the FRANCHISEE or their officers, Directors,
shareholders or partners and Personal Guarantors, and CITY LOOKS 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 CITY
LOOKS 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
CITY LOOKS and the FRANCHISEE which are set forth in Article 12.1 and the
following disputes between CITY LOOKS 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 CITY LOOKS 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 CITY LOOKS 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 CITY LOOKS, 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 CITY LOOKS or
the FRANCHISEE damages (including actual damages, costs and attorneys' fees) in
excess of One Hundred Thousand Dollars ($100,000) in an 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 CITY LOOKS 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 CITY LOOKS and the FRANCHISEE.
11.9 CONFIDENTIALITY. All evidence, testimony, records, documents, findings,
decision, judgments and awards pertaining to any Arbitration hearing between
CITY LOOKS and the FRANCHISEE will be secret and confidential in all respects.
CITY LOOKS 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, CITY LOOKS
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 City Looks businesses
or other City Looks or The Barbers businesses, (3) constitutes a danger to the
employees, public or customers of the FRANCHISEE'S City Looks businesses, or (4)
may impair the goodwill associated with the Marks and the Business System. In
any action brought under this provision where CITY LOOKS prevails against the
FRANCHISEE, the FRANCHISEE will indemnify CITY LOOKS 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 CITY LOOKS. Unless
provided to the contrary by applicable law, CITY LOOKS 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
law of any jurisdiction, any provision of this Agreement or any specification,
standard or operating procedure prescribed by CITY LOOKS 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. CITY LOOKS and the FRANCHISEE may, by written instrument signed by
CITY LOOKS and the FRANCHISEE, waive any obligation of or restriction upon the
other under this Agreement. Acceptance by CITY LOOKS of any payment by the
FRANCHISEE and the failure, refusal or neglect of CITY LOOKS 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 CITY LOOKS of any
provision of this Agreement. CITY LOOKS 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, CITY
LOOKS will have the right to negotiate terms and conditions, grant concessions
and waive obligations for other area franchisees of CITY LOOKS 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 CITY LOOKS of any of its obligations under this Agreement or
any other contract between CITY LOOKS and the FRANCHISEE, or for any other
reason, withhold payment of any amounts due CITY LOOKS under this Agreement or
any other contract or obligation. The FRANCHISEE will not have the right to
"offset" any liquidated or unliquidated amounts allegedly due to the FRANCHISEE
from CITY LOOKS against any payments due to CITY LOOKS under this Agreement or
any other contract or obligation.
12.5 CITY LOOKS' RIGHTS CUMULATIVE. The rights of CITY LOOKS hereunder are
cumulative and no exercise or enforcement by CITY LOOKS of any right or remedy
hereunder will preclude the exercise or enforcement by CITY LOOKS of any other
right or remedy hereunder or which CITY LOOKS 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 City Looks 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 CITY LOOKS 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 City
Looks 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 CITY LOOKS and the FRANCHISEE
relating to the subject matter of this Agreement.
12.10 CONTROLLING AGREEMENT. The rights and obligations of the FRANCHISEE and
CITY LOOKS with respect to the operation of each City Looks business opened in
the Franchised Area by the FRANCHISEE will be governed by the terms and
conditions of each City Looks Franchise Agreement executed by the FRANCHISEE. In
the event there is a conflict between the terms of this Agreement and the terms
of any City Looks 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 CITY LOOKS. CITY LOOKS 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 CITY LOOKS will be in writing and will be made by personal
service upon an officer or Director of CITY LOOKS or sent by prepaid registered
or certified United States mail addressed to CITY LOOKS 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 or a District Manager or Salon
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 City Looks Salons International 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 City Looks Salons International 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. CITY LOOKS 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
City Looks businesses, except as expressly set forth in writing in CITY LOOKS'
City Looks Salons International Uniform Franchise Offering Circular, receipt of
which is acknowledged by the FRANCHISEE.
14.2 NO INCOME OR REFUND WARRANTIES. The FRANCHISEE acknowledges that CITY LOOKS
does not warrant or guarantee to the FRANCHISEE that the FRANCHISEE will derive
income or profit from the FRANCHISEE'S City Looks businesses or that CITY LOOKS
will refund all or part of the Exclusive Territory Fee or the price paid for the
FRANCHISEE'S City Looks businesses or repurchase any of the products,
merchandise, furniture, fixtures, equipment, supplies or chattels supplied by
CITY LOOKS or an approved supplier if the FRANCHISEE is unsatisfied with its
City Looks businesses.
14.3 TERMS OF OTHER DEVELOPMENT AGREEMENTS MAY DIFFER. The FRANCHISEE
acknowledges that other area franchisees of CITY LOOKS 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 City Looks
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 City Looks
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 CITY LOOKS' City Looks
Salons International Uniform Franchise Offering Circular are subject to increase
over time, and that future City Looks 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 HAIR PERFORMERS(R) BUSINESSES. The FRANCHISEE agrees and acknowledges that
the "Hair Performers(R)" businesses serviced by Hair Performers International,
Inc., a wholly-owned subsidiary of The Barbers, Hairstyling for Men & Women,
Inc. ("The Barbers") are hair salons that address similar markets and, thus, may
be competitive with City Looks businesses. Further, the FRANCHISEE acknowledges
and agrees that Hair Performers International, Inc. will have the absolute right
to develop, own, manage, license or franchise 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 CITY LOOKS or any affiliate of CITY LOOKS
resulting from the opening of any Hair Performers(R) business, including those
Hair Performers(R) businesses that may be located in the Franchised Area or
near, adjacent or contiguous to any of the FRANCHISEE'S City Looks businesses.
14.7 COST CUTTERS(R), WE CARE HAIR(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, the "We Care Hair(R)" businesses
which are franchised by WCH, Inc., a
wholly-owned subsidiary of The Barbers, and the Family Haircut(R) business
serviced by The Barbers ("Cost Cutters(R), We Care Hair(R) and Family Haircut(R)
businesses") are hair salons that address different markets and, thus, are not
competitive with City Looks Salons International businesses. Further, the
FRANCHISEE acknowledges and agrees that WCH, Inc. and The Barbers will have the
absolute right to develop, own, manage, license or franchise Cost Cutters(R), We
Care Hair(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 CITY LOOKS or any affiliate of CITY LOOKS resulting from the opening of
any Cost Cutters(R), We Care Hair(R) or Family Haircut(R) businesses, including
those Cost Cutters(R), We Care Hair(R) or Family Haircut(R) businesses that may
be located in the Franchised Area or near, adjacent or contiguous to any of the
FRANCHISEE'S City Looks businesses.
ARTICLE 15
DISCLAIMER; FRANCHISEE'S LEGAL COUNSEL
15.1 DISCLAIMER BY CITY LOOKS. CITY LOOKS 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 writing in Item 19
of the City Looks Salons International 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 City Looks Salons
International businesses from CITY LOOKS or any of CITY LOOKS' 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 CITY LOOKS'
City Looks Salons International Uniform Franchise Offering Circular, it would
not have executed this Agreement, and the FRANCHISEE would have: (A) promptly
notified the President of CITY LOOKS in writing of the person or persons making
such representations or warranties; and (B) provided to CITY LOOKS a specific
written statement detailing the representations or warranties made that were not
contained in the City Looks Salons International 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 CITY LOOKS to
consult an attorney or other advisor prior to the execution of this Agreement to
review CITY LOOKS' City Looks Salons International Uniform Franchise Offering
Circular, to review this Agreement in detail, to review the economics,
operations and other business aspects of the City Looks Salons International
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 City
Looks Salons International 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:
-------------------------------------------------------
Name of Firm:
-----------------------------------------------
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 CITY LOOKS 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 CITY LOOKS.
16.2 STATE MODIFICATIONS. The following states have statutes which may supersede
the provisions of this Agreement in the FRANCHISEE'S relationship with CITY
LOOKS 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 CITY LOOKS 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:
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 14.5, Article 15.2, and the second sentence of
Article 14.1 will be unenforceable against the FRANCHISEE.
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
CITY LOOKS 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 CITY LOOKS, and the FRANCHISEE will have sixty (60)
days after having been given of 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 CITY LOOKS 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 CITY
LOOKS 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
CITY LOOKS 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.
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.
17.3 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 City Looks Salons International 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, CITY LOOKS, the FRANCHISEE and the shareholders or partners
of the FRANCHISEE have executed this Agreement effective as of the day and year
first above written.
In the Presence of: "CITY LOOKS"
THE BARBERS, HAIRSTYLING FOR MEN &
WOMEN, 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/PARTNERS OWNERSHIP
%
------------------------------ --------------------------- -----------------
%
------------------------------ --------------------------- -----------------
%
------------------------------ --------------------------- -----------------
%
------------------------------ --------------------------- -----------------
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 CITY LOOKS, 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 CITY LOOKS all monies due and
payable to CITY LOOKS 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 CITY LOOKS or any subsidiary or affiliate of CITY LOOKS,
whether for merchandise, products, supplies, furniture, fixtures, equipment,
rent or other goods purchased by the FRANCHISEE from CITY LOOKS or any
subsidiary or affiliate of CITY LOOKS or for any other indebtedness of the
FRANCHISEE to CITY LOOKS or any subsidiary or affiliate of CITY LOOKS, 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 CITY LOOKS or any subsidiary or affiliate of CITY LOOKS.
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 CITY LOOKS. Each of the undersigned hereby submits to
personal jurisdiction in the state and 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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