CENTER #______
GREASE MONKEY
FRANCHISE AGREEMENT
(5/9/97)
TABLE OF CONTENTS
BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. GRANT OF FRANCHISE AND INITIAL FRANCHISE FEE . . . . . . . . . . . . . . 1
1.1. Grant of Franchise.. . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Initial Franchise Fee. . . . . . . . . . . . . . . . . . . . . . 1
2. FRANCHISED LOCATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1. Franchised Location. . . . . . . . . . . . . . . . . . . . . . . 2
2.2. Relocation . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3. Reservation of Rights. . . . . . . . . . . . . . . . . . . . . . 2
3. DEVELOPMENT OF CENTER. . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1. Site Selection . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2. Commencement of Operations.. . . . . . . . . . . . . . . . . . . 3
3.3. Lease or Purchase of Franchised Location.. . . . . . . . . . . . 3
3.4. Design and Decor.. . . . . . . . . . . . . . . . . . . . . . . . 4
3.5. Signage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.6. Other Pre-Opening Obligations. . . . . . . . . . . . . . . . . . 5
4. OPENING ASSISTANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1. Opening Assistance.. . . . . . . . . . . . . . . . . . . . . . . 5
5. TRAINING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1. Initial Training.. . . . . . . . . . . . . . . . . . . . . . . . 6
5.2. Additional Training. . . . . . . . . . . . . . . . . . . . . . . 6
5.3. Additional Seminars. . . . . . . . . . . . . . . . . . . . . . . 7
6. OPERATIONS MANUAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.1. Operations Manual. . . . . . . . . . . . . . . . . . . . . . . . 7
6.2. Revisions to Operations Manual.. . . . . . . . . . . . . . . . . 7
6.3. Confidentiality of Operations Manual.. . . . . . . . . . . . . . 7
7. OPERATING ASSISTANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.1. Operating Assistance.. . . . . . . . . . . . . . . . . . . . . . 8
7.2. Additional Assistance. . . . . . . . . . . . . . . . . . . . . . 8
8. FRANCHISEE'S OPERATIONAL COVENANTS . . . . . . . . . . . . . . . . . . . 8
8.1. Franchised Operations. . . . . . . . . . . . . . . . . . . . . . 8
9. QUALITY CONTROL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.1. Standards and Specifications.. . . . . . . . . . . . . . . . . . 11
9.2. Approved Services and Products.. . . . . . . . . . . . . . . . . 11
9.3. Obligation For Purchases.. . . . . . . . . . . . . . . . . . . . 11
9.4. Designation of Oil Supply. . . . . . . . . . . . . . . . . . . . 11
9.5. Inspections. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.6. Confidentiality of Licensed Methods. . . . . . . . . . . . . . . 12
10. FEES AND OTHER CONSIDERATION. . . . . . . . . . . . . . . . . . . . . . 12
10.1. Royalty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10.2. Gross Receipts.. . . . . . . . . . . . . . . . . . . . . . . . . 12
10.3. Marketing Expenditures.. . . . . . . . . . . . . . . . . . . . . 12
10.4. Payment Schedule.. . . . . . . . . . . . . . . . . . . . . . . . 13
10.5. Late Charges.. . . . . . . . . . . . . . . . . . . . . . . . . . 13
11. PROPRIETARY MARKS . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11.1. Marks and Licensed Methods.. . . . . . . . . . . . . . . . . . . 14
11.2. Change of Proprietary Marks. . . . . . . . . . . . . . . . . . . 14
11.3. Cessation of Use of Marks. . . . . . . . . . . . . . . . . . . . 14
11.4. Trademark Infringement.. . . . . . . . . . . . . . . . . . . . . 14
11.5. Franchisee's Business Name.. . . . . . . . . . . . . . . . . . . 15
12. REPORTS, RECORDS AND FINANCIAL REVIEW . . . . . . . . . . . . . . . . . 15
12.1. Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
12.2. Books and Records. . . . . . . . . . . . . . . . . . . . . . . . 15
12.3. Failure to Submit Reports. . . . . . . . . . . . . . . . . . . . 15
12.4. Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
13. ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
13.1. Assignment by Franchisee.. . . . . . . . . . . . . . . . . . . . 16
13.2. Pre-Conditions to Franchisee's Assignment. . . . . . . . . . . . 16
13.3. Grease Monkey's Approval of Transfer.. . . . . . . . . . . . . . 17
13.4. Right of First Refusal.. . . . . . . . . . . . . . . . . . . . . 18
13.5. Types of Transfers.. . . . . . . . . . . . . . . . . . . . . . . 19
13.6. Effect of Breach of Certain Restrictions on Assignment.. . . . . 19
13.7. Assignment by Grease Monkey. . . . . . . . . . . . . . . . . . . 20
13.8. Death or Disability of Franchisee. . . . . . . . . . . . . . . . 20
14. TERM AND EXPIRATION . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14.1. Term.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14.2. Rights Upon Expiration.. . . . . . . . . . . . . . . . . . . . . 20
14.3. Refusal to Offer Successor Franchise.. . . . . . . . . . . . . . 21
15. DEFAULT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 22
15.1. Termination by Grease Monkey - Effective Upon Notice.. . . . . . 22
15.2. Termination by Grease Monkey - Fifteen Days Notice.. . . . . . . 22
15.3. Termination by Grease Monkey - Thirty Days Notice. . . . . . . . 22
15.4. Cross Default. . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.5. Rights and Obligations Upon Termination or Expiration. . . . . . 23
15.6. Right to Repurchase. . . . . . . . . . . . . . . . . . . . . . . 24
15.7. Continuing Obligations.. . . . . . . . . . . . . . . . . . . . . 26
15.8. Governing State Law. . . . . . . . . . . . . . . . . . . . . . . 27
16. RESTRICTIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 27
16.1. Noncompetition During Term.. . . . . . . . . . . . . . . . . . . 27
16.2. Post-Termination Covenant Not to Compete.. . . . . . . . . . . . 28
16.3. No Interference With Business. . . . . . . . . . . . . . . . . . 28
16.4. Confidentiality of Proprietary Information.. . . . . . . . . . . 29
16.5. Injunctive Relief. . . . . . . . . . . . . . . . . . . . . . . . 29
16.6. Confidentiality Agreements.. . . . . . . . . . . . . . . . . . . 29
16.7. Beginning of Three Year Period . . . . . . . . . . . . . . . . . 29
16.8. Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . 29
17. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17.1. Insurance Coverage.. . . . . . . . . . . . . . . . . . . . . . . 30
17.2. Proof of Insurance.. . . . . . . . . . . . . . . . . . . . . . . 30
18. OPTION TO PURCHASE ADDITIONAL FRANCHISE . . . . . . . . . . . . . . . . 30
18.1. Option to Purchase.. . . . . . . . . . . . . . . . . . . . . . . 30
19. BUSINESS RELATIONSHIP . . . . . . . . . . . . . . . . . . . . . . . . . 31
19.1. Independent Businesspersons. . . . . . . . . . . . . . . . . . . 31
19.2. Payment of Third Party Obligations.. . . . . . . . . . . . . . . 31
19.3. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 31
20. ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
20.1. Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
20.2. Injunctive Relief. . . . . . . . . . . . . . . . . . . . . . . . 33
20.3. Governing Law/Consent to Jurisdiction/Waiver of Jury Trial.. . . 33
21. MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . 33
21.1. Entire Agreement.. . . . . . . . . . . . . . . . . . . . . . . . 33
21.2. Effective Date.. . . . . . . . . . . . . . . . . . . . . . . . . 34
21.3. Review of Agreement. . . . . . . . . . . . . . . . . . . . . . . 34
21.4. Invalidity.. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
21.5. Waiver.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
21.6. Notice.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
21.7. Cost of Enforcement. . . . . . . . . . . . . . . . . . . . . . . 34
21.8. Modification.. . . . . . . . . . . . . . . . . . . . . . . . . . 35
21.9. Injunctive Relief. . . . . . . . . . . . . . . . . . . . . . . . 35
21.10. Prohibition Against Nonpayment.. . . . . . . . . . . . . . . . . 35
21.11. Acknowledgement. . . . . . . . . . . . . . . . . . . . . . . . . 35
EXHIBITS TO FRANCHISE AGREEMENT
I Addendum to Franchise Agreement
II Statement of Ownership
III Guaranty and Assumption of Franchisee's Obligations
GREASE MONKEY
FRANCHISE AGREEMENT
THIS AGREEMENT is entered into on this _____ day of___________, 19__, by
and between GREASE MONKEY INTERNATIONAL, INC., ("GREASE MONKEY"), located at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, and
_______________________ located at ____________________________ ("FRANCHISEE").
BACKGROUND
A. GREASE MONKEY has developed a system for establishing and operating
fast service automotive lubrication centers ("GREASE MONKEY Centers" or
"Centers"), associated with the service ▇▇▇▇ "GREASE MONKEY, THE 10 MINUTE
LUBE & OIL PROS" and other trademarks, service marks, logos and identifying
features (the "Marks") and GREASE MONKEY's distinctive methods ("Licensed
Methods") for establishing and operating GREASE MONKEY Centers.
B. GREASE MONKEY grants the right to others to develop and operate
GREASE MONKEY Centers under the Marks and pursuant to the Licensed Methods.
C. FRANCHISEE desires to establish a GREASE MONKEY Center at a
location identified below or to be later identified ("Franchised Business"),
and GREASE MONKEY desires to grant FRANCHISEE the right to operate a GREASE
MONKEY Center at such location under the terms and conditions contained in
this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties agree as follows:
1. GRANT OF FRANCHISE AND INITIAL FRANCHISE FEE
1.1. GRANT OF FRANCHISE. GREASE MONKEY grants to FRANCHISEE, and
FRANCHISEE accepts from GREASE MONKEY, the right and license ("Franchise") to
operate a GREASE MONKEY Center using the Marks and the Licensed Methods, at
the location described in Article 2 below. FRANCHISEE agrees to use the
Marks and Licensed Methods as they may be changed, improved and further
developed from time to time, only in accordance with the terms and conditions
of this Agreement. GREASE MONKEY grants the Franchise to FRANCHISEE in
reliance upon FRANCHISEE'S representations that FRANCHISEE will at all times
faithfully, honestly and diligently perform its obligations hereunder and
continuously exert its best efforts to promote and enhance the GREASE MONKEY
Center.
1.2. INITIAL FRANCHISE FEE. FRANCHISEE shall pay to GREASE MONKEY an
initial franchise fee of $28,000 due and payable in full on or before the
date of execution of this Agreement. GREASE MONKEY acknowledges receipt of
the initial franchise fee due hereunder. FRANCHISEE acknowledges and agrees
that the initial franchise fee represents payment for the
initial grant of rights to use the Marks and Licensed Methods, that GREASE
MONKEY has earned the initial franchise fee upon receipt thereof and that the
fee is under no circumstances refundable to FRANCHISEE after it is paid,
unless otherwise specifically set forth herein.
2. FRANCHISED LOCATION
2.1. FRANCHISED LOCATION. FRANCHISEE shall have the right to operate
one GREASE MONKEY Center at the address and location which shall be set forth
in EXHIBIT I, attached hereto and incorporated by this reference ("Franchised
Location").
2.2. RELOCATION. The Franchise that is hereby granted to FRANCHISEE is
for the right to establish and operate a GREASE MONKEY Center at the specific
Franchised Location only and cannot be relocated without the prior written
approval of GREASE MONKEY, which approval shall not be unreasonably withheld.
2.3. RESERVATION OF RIGHTS. FRANCHISEE expressly acknowledges that the
franchise granted hereunder is non-exclusive and that GREASE MONKEY retains
the right, among others, to use, and to license others to use, the Marks and
Licensed Methods for the operation of GREASE MONKEY CENTERS at any location
other than at the Franchised Location; to use the Marks and Licensed Methods
in connection with other services and products, promotional and marketing
efforts or related items or in alternative channels of distribution, without
regard to location; and to use and license the use of other proprietary marks
or methods in connection with the operation of businesses under names which
are not the same as or confusingly similar to the Marks, whether in
alternative channels of distribution at any location, which businesses are
the same as, or similar to, or different from GREASE MONKEY CENTERS, on any
terms and conditions as GREASE MONKEY deems advisable, and without granting
the FRANCHISEE any rights therein.
3. DEVELOPMENT OF CENTER
3.1. SITE SELECTION. FRANCHISEE shall obtain the written approval of
GREASE MONKEY of a site suitable for the operations of its GREASE MONKEY
Center within the designated area described in EXHIBIT I, attached hereto and
incorporated herein by reference, within 120 days from the Effective Date of
this Agreement. FRANCHISEE shall propose sites for approval by GREASE MONKEY
on forms and in the manner designated from time to time by GREASE MONKEY. A
proposed site shall only be submitted to GREASE MONKEY for approval after
FRANCHISEE has evaluated the site and determined that it meets GREASE
MONKEY's then current criteria for sites which GREASE MONKEY has communicated
to FRANCHISEE. FRANCHISEE shall be responsible for obtaining GREASE MONKEY's
then current site criteria prior to submitting a site approval application.
FRANCHISEE shall have every proposed site reviewed by GREASE MONKEY and shall
submit to GREASE MONKEY the site approval application. GREASE MONKEY shall
review the site approval application, and
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within 30 days of GREASE MONKEY's receipt thereof GREASE MONKEY shall approve
or reject the proposed site. Unless otherwise agreed to in writing by GREASE
MONKEY, final site approval will be conditioned upon GREASE MONKEY's receipt
of evidence of FRANCHISEE's ownership, lease or control of the property in
accordance with Section 3.3 of this Agreement. FRANCHISEE acknowledges and
agrees that GREASE MONKEY's approval of a site or provision of criteria
regarding the site do not constitute a representation or warranty of any
kind, express or implied, as to the suitability of the site for a GREASE
MONKEY Center or for any other purpose. GREASE MONKEY's approval of the site
indicates only that GREASE MONKEY believes that a site falls within the
acceptable criteria established by GREASE MONKEY as of that time.
3.2. COMMENCEMENT OF OPERATIONS. Unless otherwise agreed in writing by
GREASE MONKEY and FRANCHISEE, FRANCHISEE has 12 months from the date of this
Agreement within which to have its Franchised Business open and operating
("Development Period"). GREASE MONKEY will extend the Development Period for
a reasonable period of time in the event factors beyond FRANCHISEE's
reasonable control prevent FRANCHISEE from meeting this development schedule,
so long as FRANCHISEE has made reasonable and continuing efforts to comply
with such development obligations and FRANCHISEE requests, in writing, an
extension of time in which to have its Franchised Business open and operating
before the Development Period lapses.
3.3. LEASE OR PURCHASE OF FRANCHISED LOCATION. FRANCHISEE shall obtain
GREASE MONKEY's prior written approval of any lease or sublease (the "Lease")
for the Franchised Location prior to its execution by FRANCHISEE. If
FRANCHISEE is purchasing real estate upon which to operate its GREASE MONKEY
Center, FRANCHISEE shall obtain GREASE MONKEY's prior written approval of any
purchase agreement or other acquisition document proposed to be executed by
FRANCHISEE. All documents submitted to GREASE MONKEY hereunder shall be
delivered at least 10 days prior to execution thereof. After final execution
is completed, FRANCHISEE shall provide GREASE MONKEY with a fully executed
copy of the document. In addition:
a. The terms of any financing that FRANCHISEE may need to fund
the acquisition and/or construction of a GREASE MONKEY Center,
information regarding the obtaining of all required zoning and/or
building permits and provisions for satisfaction of relevant conditions
precedent within acceptable time frames shall be provided in the Lease
or purchase contract, or through separate documentation provided to
GREASE MONKEY.
b. If a Lease is to be signed, the Lease shall contain provisions
allowing for the assignment of the Lease to GREASE MONKEY, at the option
of GREASE MONKEY, in the event that this Agreement is for any reason
terminated or not renewed due to a default in FRANCHISEE's obligations
hereunder, and for providing GREASE
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MONKEY with a right to cure a default in FRANCHISEE's leasehold
obligations under the Lease, and/or to take an assignment of the Lease
upon such default, in GREASE MONKEY's sole discretion.
c. If a purchase contract is to be signed, FRANCHISEE shall grant
GREASE MONKEY the right to lease the premises from FRANCHISEE on
commercially reasonable terms in the event that this Agreement is for any
reason terminated or not renewed due to a default in FRANCHISEE's
obligations hereunder.
d. FRANCHISEE shall at all times keep GREASE MONKEY informed of
FRANCHISEE's progress toward the satisfaction of all obligations and
conditions contained in any Lease or purchase contract related to the
acquisition and/or construction of the GREASE MONKEY Center. FRANCHISEE
shall provide GREASE MONKEY with copies of all site plans, surveys, title
reports and other related real estate information as and when it becomes
available.
FRANCHISEE acknowledges that GREASE MONKEY's approval of a Lease or purchase
agreement or any assistance in the Lease or purchase negotiations does not
constitute a guarantee, recommendation or endorsement of the Lease, purchase
agreement, or the Franchised Location and FRANCHISEE should take all steps
necessary to ascertain whether such Lease or purchase agreement is acceptable
to FRANCHISEE. FRANCHISEE acknowledges that it is required to enter into
either a conditional assignment of lease or an option agreement with GREASE
MONKEY or a related entity in connection with the Lease or purchase of real
estate.
3.4. DESIGN AND DECOR. FRANCHISEE shall submit to GREASE MONKEY for
approval, plans for the interior and exterior design of the building, layout,
floor plan, parking and driveway facilities, which shall be in compliance
with local and state building codes, and shall include specifications for
color, decor, equipment and machines that relate to the Franchised Location
and which are in compliance with GREASE MONKEY's standards and specifications.
3.5. SIGNAGE. FRANCHISEE shall only use that signage at the Franchised
Location that complies with the drawings and specifications provided by
GREASE MONKEY. If such signage cannot be used because of local ordinances or
applicable building codes, then FRANCHISEE must submit to GREASE MONKEY
detailed drawings and specifications of the proposed signage to be used, in
sufficient detail acceptable to GREASE MONKEY, which signage can only be used
upon receiving the prior written approval of GREASE MONKEY. FRANCHISEE
agrees that, other than the Marks, no other name, symbol or identifying marks
shall be used in conjunction with the approved signage; provided, however,
that a trademark of an approved oil supplier may be included on the signage.
FRANCHISEE shall obtain GREASE MONKEY's prior written consent as to the
manner of the use of the trademark of the approved oil supplier and
configuration of the signage in each instance.
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3.6. OTHER PRE-OPENING OBLIGATIONS. During the Development Period,
FRANCHISEE shall, in addition to all other development obligations contained
in this Agreement, at its sole expense do or cause to be done all of the
following with respect to developing the GREASE MONKEY Center at the
Franchised Location: (a) secure all required financing; (b) obtain all
required permits and licenses; (c) construct all required improvements and
decorate the Center in compliance with approved plans and specifications; (d)
purchase and install all required fixtures and equipment; and (e) purchase an
opening inventory of oil and other approved products, materials and supplies.
FRANCHISEE shall also successfully complete the initial training program and
other training requirements as GREASE MONKEY shall require prior to the
opening of the Center.
4. OPENING ASSISTANCE
4.1. OPENING ASSISTANCE. GREASE MONKEY shall provide FRANCHISEE with
assistance in the initial opening of the Franchised Business as follows:
a. Assistance to FRANCHISEE related to the acceptance of a site
for the Franchised Business, although FRANCHISEE acknowledges that
GREASE MONKEY shall have no obligation to select or acquire a site on
behalf of FRANCHISEE. GREASE MONKEY's assistance will consist of the
provision of criteria for a satisfactory site, an on-site inspection and
a determination of whether a proposed site fulfills the requisite
criteria, prior to formal acceptance of a site selected by FRANCHISEE.
Site selection, acquisition and development shall be the sole obligation
of FRANCHISEE except as may be set forth in this Agreement or any other
written agreement executed by GREASE MONKEY. FRANCHISEE acknowledges
that GREASE MONKEY is under no obligation to provide additional site
selection services other than may be set forth in a written, executed
agreement and that GREASE MONKEY's acceptance of the site does not infer
or guarantee the success or profitability of the site in any manner
whatsoever.
b. Standards and specifications for the interior and exterior
design of the building, layout, floor plan, parking and driveway
facilities, signs, color, decor, equipment and machines. GREASE MONKEY
agrees to provide FRANCHISEE with a standard set of blueprints for the
building for the Franchised Business and FRANCHISEE agrees to be
responsible for assuring that any necessary alterations are made to the
same in order to fit the needs of FRANCHISEE, the Franchised Location
and local zoning and other regulations.
c. A New Center Development Opening Guide which sets forth
procedures for opening a Center.
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d. A nonexclusive license to use certain proprietary computer
programs in accordance with the terms of GREASE MONKEY's standard Software
License and Electronic Reporting Agreement.
e. Recommendations for accounting systems for the Center.
f. Between FRANCHISEE's actual opening and its grand opening
advertising promotion, GREASE MONKEY shall have one of its representatives
on site to assist FRANCHISEE in training employees and in determining that
the Franchised Business is properly established and that FRANCHISEE and its
employees are instructed in the operation and management thereof. A GREASE
MONKEY representative shall normally spend three to four days at
FRANCHISEE's Franchised Location to provide opening assistance; FRANCHISEE
acknowledges, however, that this may be subject to variation based on the
experience and capabilities of FRANCHISEE, as assessed by GREASE MONKEY in
its sole discretion. The time for the on-site opening assistance shall be
established by mutual agreement of the parties.
g. Technical advice regarding the construction and installation of
equipment in each Center.
h. An initial training program for FRANCHISEE or, if FRANCHISEE is
not an individual, the person designated by FRANCHISEE to assume primary
responsibility for the management of the Center ("Principal Operator"), as
more fully described in Article 5 below.
i. An Operations Manual, as defined and described in Section 6
below.
5. TRAINING
5.1. INITIAL TRAINING. FRANCHISEE or its Principal Operator is
required to attend and successfully complete the initial training program
offered by GREASE MONKEY prior to the opening of the Franchised Business, at
a location designated by GREASE MONKEY. Successful completion of the initial
training program shall be evidenced by FRANCHISEE or its Principal Operator
receiving a certificate of training completion. GREASE MONKEY's initial
training program lasts a minimum of five days in duration, and FRANCHISEE or
its Principal Operator may attend the program or programs until they have
successfully completed the same, at a time prior to the opening of the
Franchised Business, but not earlier than six months prior to the opening of
the Center. FRANCHISEE shall pay for its own transportation costs and living
expenses while attending the initial training program.
5.2. ADDITIONAL TRAINING. FRANCHISEE agrees that the Franchised
Business shall only be managed and operated by certified individuals who have
successfully completed the
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initial training program. If FRANCHISEE or an original Principal Operator
trained by GREASE MONKEY is no longer actively involved in the operation of
the Franchised Business, then FRANCHISEE shall notify GREASE MONKEY of its
replacement Principal Operator, who shall be required to successfully
complete the initial training program. FRANCHISEE may be required to pay to
GREASE MONKEY the then current training fee for any subsequent Principal
Operators that are to be trained by GREASE MONKEY to satisfy the terms of
this Agreement.
5.3. ADDITIONAL SEMINARS. FRANCHISEE agrees and understands that
GREASE MONKEY presents seminars, conventions or continuing development
programs from time to time for the benefit of its franchisees. The
attendance by FRANCHISEE, or its Principal Operator, at most of these
seminars is voluntary. However, FRANCHISEE, or the Principal Operator, shall
attend any mandatory seminar, convention, or program offered by GREASE
MONKEY; provided, that FRANCHISEE, or the Principal Operator, shall not be
required to attend any mandatory seminar, convention or program more than
once per year. GREASE MONKEY shall give FRANCHISEE at least 30 days prior
written notice of any seminar, convention or program which is considered
mandatory. FRANCHISEE is responsible for all costs and expenses associated
with attending any training program, seminar or convention.
6. OPERATIONS MANUAL
6.1. OPERATIONS MANUAL. GREASE MONKEY shall loan FRANCHISEE its New
Center Development Opening Guide and its other operations and marketing
manuals (collectively referred to as "Operations Manual") covering proper
operating and marketing techniques of the Franchised Business as well as
standards and specifications for the operation of the Franchised Business.
FRANCHISEE agrees that it shall comply with the Operations Manual as an
essential aspect of its obligations under this Agreement and failure to
substantially comply with the Operations Manual may be considered a breach of
this Agreement.
6.2. REVISIONS TO OPERATIONS MANUAL. The Operations Manual contents
may be updated periodically by GREASE MONKEY and FRANCHISEE shall update
FRANCHISEE's copy of the Operations Manual as instructed by GREASE MONKEY and
shall conform the Franchised Business operations with the updated provisions,
within 30 days after receipt of the update or as may be otherwise agreed upon
by the parties. FRANCHISEE acknowledges that a master copy of the Operations
Manual maintained by GREASE MONKEY at its principal office shall be
controlling in the event of a dispute relative to the contents of any
Operations Manual.
6.3. CONFIDENTIALITY OF OPERATIONS MANUAL. FRANCHISEE shall use the
Marks and Licensed Methods only as specified in the GREASE MONKEY Operations
Manual. The GREASE MONKEY Operations Manual is the sole property of GREASE
MONKEY and shall be used by FRANCHISEE only during the term of this Agreement
and in strict accordance with the terms and conditions hereof. FRANCHISEE
shall not duplicate the Operations Manual nor disclose its contents to
persons other than employees of its GREASE MONKEY Center.
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FRANCHISEE shall return the Operations Manual to GREASE MONKEY upon the
expiration, termination or assignment of this Agreement.
7. OPERATING ASSISTANCE
7.1. OPERATING ASSISTANCE. During the operation of FRANCHISEE's
Franchised Business, GREASE MONKEY shall provide:
a. Advice and consultation, as GREASE MONKEY deems necessary, in its
sole discretion, regarding the continuing operation and management of a
GREASE MONKEY Center.
b. Information regarding any new product, service or supplier or any
updated methods of doing business available to GREASE MONKEY Centers.
GREASE MONKEY will use national, regional or local seminars, conventions or
continuing development programs, Operations Manual updates, bulletins,
newsletters or regional representatives to introduce FRANCHISEE to new
products, services, supplies and new techniques and methods of doing
business.
c. Access to advertising and promotional programs and materials, in
a manner deemed appropriate by GREASE MONKEY, in its sole discretion,
funded through Advertising Fee contributions; provided, however, that
FRANCHISEE shall be solely responsible for the placement of advertising for
FRANCHISEE's Center.
d. At least once per year, a GREASE MONKEY representative will visit
the Franchised Location and provide consulting assistance.
7.2. ADDITIONAL ASSISTANCE. In the event FRANCHISEE requires
additional on-site assistance in the operation of its Franchised Business,
FRANCHISEE can request, in writing, that a GREASE MONKEY representative visit
the Franchised Location and provide the additional assistance. Before
additional on-site assistance is provided, FRANCHISEE and GREASE MONKEY must
agree, in writing, as to the compensation to be paid to GREASE MONKEY by
FRANCHISEE, if any, and the amount and duration of the assistance to be given.
8. FRANCHISEE'S OPERATIONAL COVENANTS
8.1. FRANCHISED OPERATIONS. FRANCHISEE acknowledges that it is solely
responsible for the operation of its GREASE MONKEY Center and that the
successful operation is, in part, dependent upon FRANCHISEE's compliance with
this Agreement and the Operations Manual. In addition to all other
obligations contained herein and in the Operations Manual, FRANCHISEE
covenants that:
8
a. FRANCHISEE shall maintain a clean, efficient and high quality
GREASE MONKEY Center and shall operate the Franchised Business in
accordance with the Operations Manual and in such a manner as not to
detract from or adversely reflect upon the name and reputation of GREASE
MONKEY.
b. FRANCHISEE agrees to conduct itself and operate its Franchised
Business in compliance with all applicable laws and ordinances and in such
a manner as to promote a good public image in the business community.
FRANCHISEE shall at all times be fully responsible for obtaining and
maintaining all licenses to carry on the Franchised Business.
c. FRANCHISEE agrees to maintain business hours at the Center as may
from time to time be prescribed by GREASE MONKEY throughout the term of
this Agreement and to maintain sufficient supplies of products and to
employ adequate personnel at all times so as to operate the Center at its
maximum capacity and efficiency.
d. FRANCHISEE shall cause all employees of FRANCHISEE, while working
in the Center, to present a professional appearance, as described in the
Operations Manual, and to render competent and courteous service to Center
customers.
e. FRANCHISEE shall offer only those products and services through
its Franchised Business which meet or exceed the standards and
specifications established by GREASE MONKEY. Standards and specifications
may be given to FRANCHISEE in writing and may be changed by GREASE MONKEY
at any time. FRANCHISEE shall offer for sale at the Center only those
products and services now or hereafter designated by GREASE MONKEY and
shall at all times refrain from offering any other products or services
from or through the Center, without GREASE MONKEY's prior written consent.
f. FRANCHISEE will submit all reports required hereunder and pay its
Royalty and Advertising Fees on a timely basis.
g. FRANCHISEE will pay on a timely basis all amounts due and owing
to GREASE MONKEY pursuant to any separate agreements between FRANCHISEE and
GREASE MONKEY and all amounts due and owing by FRANCHISEE to all third
parties with whom FRANCHISEE does business at or through the Center. In
connection with any amounts due and owing by FRANCHISEE to third parties,
FRANCHISEE expressly acknowledges that a default by FRANCHISEE with respect
to such indebtedness may be considered a default hereunder and GREASE
MONKEY may avail itself of all remedies provided for herein in the event of
default.
h. FRANCHISEE will use its best efforts in establishing, operating
and maintaining the GREASE MONKEY Center.
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i. FRANCHISEE acknowledges that proper management of the GREASE
MONKEY Center is critical to the successful operations of a GREASE MONKEY
Center and shall ensure that FRANCHISEE, individually, or if applicable,
the Principal Operator who has completed the GREASE MONKEY initial training
program, will be responsible for the management of the GREASE MONKEY
Center.
j. FRANCHISEE shall at all times during the term of this Agreement
own and control the GREASE MONKEY Center. Upon request, FRANCHISEE shall
promptly provide satisfactory proof of such ownership to GREASE MONKEY.
FRANCHISEE represents that the Statement of Ownership, attached hereto as
EXHIBIT II and by this reference incorporated herein, is true, complete,
accurate and not misleading and, in accordance with the information
contained in the Statement of Ownership, the controlling ownership of the
GREASE MONKEY Center is held by FRANCHISEE. FRANCHISEE acknowledges that
each officer, director or other principal who owns five percent or more of
the interest in FRANCHISEE will be required to guarantee the performance of
FRANCHISEE hereunder and sign the Guaranty and Assumption of Franchisee's
Obligations which is attached to this Agreement as EXHIBIT III. FRANCHISEE
shall promptly provide GREASE MONKEY with a written notification if the
information contained in the Statement of Ownership changes at any time
during the term of this Agreement and shall in such circumstances comply
with the applicable transfer provisions contained in Article 13 herein.
k. FRANCHISEE shall only use advertising materials at or in
connection with the Franchised Business that are either provided or
approved by GREASE MONKEY. FRANCHISEE shall submit any proposed new
advertising material to GREASE MONKEY for its written approval prior to
publication or broadcast and if GREASE MONKEY does not respond to
FRANCHISEE's request for approval within 30 days of receipt of the proposed
new advertising material, approval shall be deemed granted.
l. FRANCHISEE shall at all times comply with the terms and
conditions of the Software License and Electronic Reporting Agreement,
including, but not limited to, the use of the proprietary computer software
programs licensed thereunder.
m. FRANCHISEE shall service all local, regional and national fleet
accounts of GREASE MONKEY in accordance with GREASE MONKEY's policies and
procedures concerning fleet accounts and its agreements with any fleet
account vendor, which may change from time to time upon notice to
FRANCHISEE.
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9. QUALITY CONTROL
9.1. STANDARDS AND SPECIFICATIONS. FRANCHISEE agrees to maintain and
operate the GREASE MONKEY Center in compliance with this Agreement and the
standards and specifications contained in the Operations Manual, as the same
may be modified from time to time by GREASE MONKEY.
9.2. APPROVED SERVICES AND PRODUCTS. FRANCHISEE agrees to purchase or
lease its entire requirements of products, equipment, supplies, other items
and services used, sold or leased at or through its Franchised Business in
accordance with GREASE MONKEY's standards and specifications and only from
suppliers approved in advance by GREASE MONKEY. GREASE MONKEY shall upon
request make available to FRANCHISEE a list of approved suppliers, together
with complete specifications and levels of performance of the products,
equipment, supplies, other items or services to be used, sold or leased by
FRANCHISEE at or through its Franchised Business. GREASE MONKEY shall not
unreasonably withhold its approval of a different supplier of FRANCHISEE's
choosing, provided that such supplier meets any published standards and
specifications of GREASE MONKEY. If FRANCHISEE proposes to purchase, lease or
offer any equipment, supplies, materials or services not previously approved
by GREASE MONKEY as meeting its standards and specifications, then FRANCHISEE
will notify GREASE MONKEY requesting approval and GREASE MONKEY's approval
shall not be unreasonably withheld. GREASE MONKEY reserves the right to
change the published standards regarding approved suppliers and any products
used and/or offered for sale or lease at the Franchised Business from time to
time upon 30 days written notice to FRANCHISEE and all applicable approved
suppliers.
9.3. OBLIGATION FOR PURCHASES. All purchases of approved supplies and
products by FRANCHISEE shall be made at FRANCHISEE's own expense and for
FRANCHISEE's own account. GREASE MONKEY shall in no way be obligated or
liable for said purchases by FRANCHISEE, and FRANCHISEE shall be obligated to
inform all of its suppliers to this effect.
9.4. DESIGNATION OF OIL SUPPLY. GREASE MONKEY reserves the right to
designate the source of FRANCHISEE's supply of oil, so long as such
designation will not result in FRANCHISEE's violation of any other agreement
with an existing oil supplier, will allow FRANCHISEE to remain competitive in
its market area, will not materially adversely affect FRANCHISEE's Franchised
Business and will be in compliance with applicable laws and regulations, if
any, such compliance to be determined by GREASE MONKEY.
9.5. INSPECTIONS. FRANCHISEE agrees to permit inspection by GREASE
MONKEY, or GREASE MONKEY's designated representative, of the Franchised
Business, and the supplies, equipment and services of every kind used in
connection with the Franchised Business, at all reasonable times during
regular business hours. GREASE MONKEY reserves the right to inspect the
Franchised Business without prior notice of the inspection to FRANCHISEE.
FRANCHISEE
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will furnish promptly, upon request, any desired information regarding its
supplies, equipment, services and methods used in conducting its Franchised
Business.
9.6. CONFIDENTIALITY OF LICENSED METHODS. FRANCHISEE acknowledges that
all of GREASE MONKEY's Licensed Methods are confidential and agrees that at
all times information regarding the same, including all written manuals,
technical information and other material regarding the GREASE MONKEY methods
of doing business shall be treated as confidential and as GREASE MONKEY's
sole and exclusive property.
10. FEES AND OTHER CONSIDERATION
10.1. ROYALTY. FRANCHISEE agrees to pay to GREASE MONKEY on a monthly
basis a nonrefundable fee ("Royalty") of five percent of FRANCHISEE's total
monthly "Gross Receipts," defined below.
10.2. GROSS RECEIPTS. "Gross Receipts" shall means and includes the
aggregate amount received from all sales of services, products or merchandise
of every kind or nature, performed or sold from, at or in connection with the
operation of the GREASE MONKEY Center or arising out of the operation or
conduct of the Franchised Business, whether for cash or credit, but excluding
(i) the amount of the discount given off the regular retail price of such
services or products in connection with the use of coupons or other discount
promotions; and (ii) federal, state or municipal sales or services taxes
collected from customers and paid to the appropriate taxing authority.
10.3. MARKETING EXPENDITURES.
a. FRANCHISEE shall allocate, for expenditures for marketing
purposes, six percent of FRANCHISEE's total monthly Gross Receipts
("Marketing Allocation"), to be thereafter used for advertising and
marketing the Franchised Business in a manner set forth in this Section
10.3.
b. FRANCHISEE shall remit to GREASE MONKEY a marketing materials
fee ("Marketing Materials Fee") of up to one-sixth of the total Marketing
Allocation (one percent of Gross Receipts). The Marketing Materials Fee
may be changed from time to time by GREASE MONKEY, upon 30 days prior
written notice to FRANCHISEE, except that the Marketing Materials Fee will
in no event exceed one sixth of the total Marketing Allocation (one percent
of Gross Receipts). The Marketing Materials Fee is payable concurrently
with the payment of the Royalty, within 10 days following the end of the
month, based on the amount of Gross Receipts of the previous month. The
Marketing Materials Fee shall be deposited in a separate bank account,
commercial account or savings account ("Account"). Upon request, GREASE
MONKEY shall make available to FRANCHISEE an annual financial report for
the Account which indicates how the
12
Account has been spent. The Account will be administered by GREASE
MONKEY, in its sole discretion. GREASE MONKEY may reimburse itself for
independent audits, reasonable accounting, bookkeeping, reporting and
legal expenses, taxes and any and all other reasonable direct or
indirect expenses as may be incurred by GREASE MONKEY or its authorized
representatives in connection with the programs funded by the Account.
c. FRANCHISEE shall retain for regional or local advertising
purposes the remaining portion of the total Marketing Allocation to a
marketing fund administered by FRANCHISEE, which shall be used for regional
and/or local advertising. FRANCHISEE shall prepare and submit to GREASE
MONKEY a report accounting for and evidencing the use of these funds for
advertising. The report shall be submitted to GREASE MONKEY concurrently
with the remittance of the Marketing Materials Fee and the Royalty to
GREASE MONKEY.
d. GREASE MONKEY reserves the right, upon 30 days prior written
notice to FRANCHISEE, to collect all or any part of the remaining Marketing
Allocation (five percent of Gross Receipts) to be used for regional
advertising or paid into a regional advertising fund and no longer retained
by FRANCHISEE. GREASE MONKEY shall not exercise this right, however, until
such time as GREASE MONKEY determines, in its sole discretion, that the
market area or "Area of Dominant Influence" ("A.D.I.") wherein FRANCHISEE
is located is developed to the extent that a regional advertising program
is warranted, at which time, GREASE MONKEY will notify FRANCHISEE that it
will collect and/or allocate, at its discretion, all or a part of the
remaining five-sixths of the Marketing Allocation (five percent of Gross
Receipts) for regional advertising for the franchisees located in the
A.D.I. or market area, the scope of such A.D.I. or market area to be
determined by GREASE MONKEY. GREASE MONKEY agrees that it will collect such
funds, or require payment into a regional advertising fund, from all
franchisees within the A.D.I. or market area on a uniform basis, to the
extent such uniform treatment may be enforced by GREASE MONKEY.
10.4. PAYMENT SCHEDULE. All Royalty, Marketing Materials Fees and any
other fees to be paid to GREASE MONKEY by FRANCHISEE pursuant to this
Agreement shall be made by the 10th day of each month, based on the amount of
Gross Receipts of the previous month. This payment shall be submitted on a
computer generated transmittal record in a form approved by GREASE MONKEY,
who may also request certain additional information it determines useful in
the overall management and marketing of the GREASE MONKEY franchise system.
10.5. LATE CHARGES. Delinquent Royalties and Marketing Materials Fees
or other amounts as may be due from FRANCHISEE to GREASE MONKEY hereunder,
shall bear interest at 1.5% per month; provided, however, in no event shall
FRANCHISEE be required to pay interest at a rate greater than the maximum
interest rate permitted by applicable law.
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11. PROPRIETARY MARKS
11.1. MARKS AND LICENSED METHODS. FRANCHISEE acknowledges that GREASE
MONKEY is the sole owner of the Marks and Licensed Methods and the Marks and
Licensed Methods shall remain the sole and exclusive property of GREASE
MONKEY. FRANCHISEE acknowledges that it has not acquired any right, title or
interest in the Marks and Licensed Methods except for the right to use the
Marks and Licensed Methods in the operation of its Franchised Business in
accordance with this Agreement. FRANCHISEE agrees that no name or ▇▇▇▇ other
than the Marks shall be used in the operation of the Franchised Business nor
shall any other name, symbols, logo or other identifying marks be used in
connection with the Franchised Business without the prior written approval of
GREASE MONKEY.
11.2. CHANGE OF PROPRIETARY MARKS. In the event that GREASE MONKEY, in
its sole discretion, shall determine to modify or discontinue use of the
Marks, or to develop additional or substitute proprietary marks, FRANCHISEE
shall, within a reasonable time after receipt of written notice from GREASE
MONKEY, take such action, at FRANCHISEE's sole expense, as may be necessary
to comply with such modification, discontinuation, addition or substitution.
GREASE MONKEY shall not be obligated to reimburse FRANCHISEE for any loss of
goodwill associated with any modifications or discontinuance of the Marks or
for any expenditures made by FRANCHISEE to promote a modified or substitute
trademark or service ▇▇▇▇. FRANCHISEE's changes or improvements to the
System, FRANCHISEE's usage of the Marks and Licensed Methods and any goodwill
established thereby will inure to GREASE MONKEY's exclusive benefit.
11.3. CESSATION OF USE OF MARKS. In the event this Agreement is
terminated for any reason, FRANCHISEE shall immediately cease using any of
the Marks or other trade names or any other symbols used to identify GREASE
MONKEY and all rights FRANCHISEE had to the same shall automatically
terminate. FRANCHISEE agrees to execute any documents of assignment as may be
necessary to transfer any rights FRANCHISEE may possess in and to the Marks.
11.4. TRADEMARK INFRINGEMENT. FRANCHISEE will notify GREASE MONKEY in
writing of any possible infringement or illegal use by others of a trademark
the same as or similar to the Marks which may come to its attention.
FRANCHISEE acknowledges that GREASE MONKEY shall have the right to determine
whether action will be taken on account of any possible infringement or
illegal use. GREASE MONKEY shall commence or prosecute such action in GREASE
MONKEY's own name and may join FRANCHISEE as a party to the action if GREASE
MONKEY determines it to be reasonably necessary for the continued protection
and quality control of the Marks and Licensed Methods. GREASE MONKEY shall
bear the reasonable cost of any such action, including attorneys' fees.
FRANCHISEE will not institute any action on account of any possible
infringement or illegal use without first obtaining GREASE MONKEY's prior
written consent.
14
11.5. FRANCHISEE'S BUSINESS NAME. FRANCHISEE acknowledges that GREASE
MONKEY has a prior and superior claim to the GREASE MONKEY trade name.
FRANCHISEE agrees not to register or attempt to register such trade name or
any variation thereof in FRANCHISEE's name or that of any other person or
business entity without prior written consent of GREASE MONKEY. FRANCHISEE
shall not use any of the Marks in the legal name of its corporation,
partnership or any other business entity used in conducting the Franchised
Business provided for in this Agreement.
12. REPORTS, RECORDS AND FINANCIAL REVIEW
12.1. REPORTS. FRANCHISEE shall supply GREASE MONKEY with reports in
such manner and form as GREASE MONKEY may from time to time reasonably
require, including:
a. Monthly transmittal reports in a form as may be prescribed by
GREASE MONKEY, which shall accompany FRANCHISEE's Royalty and Marketing
Materials Fee payments, to be submitted to GREASE MONKEY by the 10th day of
each month;
b. Financial statements, including a balance sheet as of the end of
the quarter and a profit and loss statement for the quarter, in a form
acceptable to GREASE MONKEY, shall be submitted within 45 days after the
end of each quarter of FRANCHISEE's fiscal year for each of the preceding
three months;
c. Copies of FRANCHISEE's federal income tax reports, relating to
the Franchised Business for the preceding year, shall be submitted to
GREASE MONKEY by May 1st of each year; and
d. Electronic access to certain nonproprietary daily information of
FRANCHISEE's GREASE MONKEY Center in accordance with the Software License
and Electronic Reporting Agreement.
12.2. BOOKS AND RECORDS. FRANCHISEE shall maintain all books and
records for the Franchised Business in accordance with generally accepted
accounting principles, consistently applied, and preserve these records for
at least three years after the fiscal year to which they relate.
12.3. FAILURE TO SUBMIT REPORTS. If FRANCHISEE fails to timely submit
the reports and financial statements required in Section 12.1 of this
Agreement, then FRANCHISEE agrees that GREASE MONKEY, at its option, has the
right to audit the books and records of the Franchised Business, at
FRANCHISEE's expense. If such audit discloses an understatement of
FRANCHISEE's Gross Receipts of the Franchised Business, FRANCHISEE shall
immediately pay all deficiencies which may be due and owing to GREASE MONKEY,
including interest at 18% per annum. The failure of FRANCHISEE to timely
submit the required reports and
15
financial statements may be considered by GREASE MONKEY to be a material
default under this Agreement.
12.4. AUDIT. FRANCHISEE agrees to allow GREASE MONKEY the right to
review, inspect and/or audit the books and records of the Franchised Business
at any time during regular business hours, at GREASE MONKEY's expense.
"Books and records" includes but is not limited to, all books and records of
the Franchised Business, local, state and federal tax returns and reports,
cash register tapes, sales slips and bank statements. In the event that any
audit discloses an understatement of FRANCHISEE's Gross Receipts of the
Franchised Business, FRANCHISEE shall immediately pay all deficiencies which
may be due and owing to GREASE MONKEY, including interest at 18% per annum.
In addition, if such audit reflects an underpayment to GREASE MONKEY by five
percent or more, FRANCHISEE will bear the entire cost of such audit and all
related reasonable expenses and GREASE MONKEY shall be entitled to reaudit
the Franchised Business at FRANCHISEE's expense, at any time within one year
from the date of the current audit, to determine whether FRANCHISEE has
accurately reported the Gross Receipts of the Franchised Business.
13. ASSIGNMENT
13.1. ASSIGNMENT BY FRANCHISEE. The franchise rights granted herein
are personal to FRANCHISEE and, except as stated below, GREASE MONKEY shall
not allow or permit any transfer, assignment, subfranchise or conveyance of
this Agreement or any interest hereunder. A transfer of ownership in the
Franchised Business may only be made in conjunction with a transfer of this
Agreement. The failure of FRANCHISEE to abide by the provisions of this
Article 13 may be considered by GREASE MONKEY to be a material default under
this Agreement.
13.2. PRE-CONDITIONS TO FRANCHISEE'S ASSIGNMENT. FRANCHISEE shall not
sell, transfer or assign its rights under this Agreement, or any interest in
it, or any part or portion of the business entity that owns it, or a
substantial portion of the assets used in connection therewith, unless
FRANCHISEE and the transferee obtain GREASE MONKEY's prior written consent
and comply with the following:
a. FRANCHISEE shall pay all amounts due and owing to GREASE MONKEY.
b. The proposed transferee must be qualified to become a franchisee
and shall be evaluated for approval by GREASE MONKEY, based on the same
criteria as is currently being used to assess new franchisees of GREASE
MONKEY.
c. The proposed transferee shall execute a written assumption of
this Agreement, or at the option of GREASE MONKEY, a franchise agreement
and related
16
agreements in a form then currently offered by GREASE MONKEY, the term
of which shall end on the expiration date of this Agreement and
supersede this Agreement in all respects. If a new franchise agreement
is signed, the terms thereof may differ from the terms of this
Agreement. The transferee will not be required to pay any additional
initial franchise fee.
d. FRANCHISEE must execute a general release, in a form
satisfactory to GREASE MONKEY, of any and all claims against GREASE MONKEY
and affiliated companies and their respective officers, directors,
employees and agents arising up to the effective date of the transfer.
e. FRANCHISEE or the proposed transferee shall pay a transfer fee
in the amount of $5,000.
f. FRANCHISEE shall give written notice to GREASE MONKEY of the
proposed transfer 30 days prior to the proposed transfer date. The notice
shall include disclosure of all material terms and conditions of the
proposed transaction and an executed agreement with the proposed
transferee, together with such information about the proposed transferee as
shall be necessary for GREASE MONKEY to assess the qualifications of the
proposed transferee to become a GREASE MONKEY franchisee. Any purchase
agreement or other agreement entered into by FRANCHISEE for the sale or
transfer of the Franchised Business or other interest in the Franchise
shall include in its terms that the sale or transfer is conditional upon
and subject to GREASE MONKEY's right of first refusal, described in Section
13.4 below, and GREASE MONKEY's right to approve the sale or transfer in
accordance with this Agreement.
g. Written evidence shall be submitted from FRANCHISEE's landlord,
if applicable, that the landlord will consent to assign the lease or
sublease for the GREASE MONKEY Center to the transferee, or other evidence
shall be submitted to GREASE MONKEY showing that the transferee will have a
right to possession of the Franchised Location.
h. FRANCHISEE must continue to abide by the restrictive covenants
contained in Article 16 below.
13.3. GREASE MONKEY'S APPROVAL OF TRANSFER. GREASE MONKEY has 30 days
from the date of notice from FRANCHISEE to approve or disapprove of
FRANCHISEE's proposed transfer or sale. FRANCHISEE acknowledges the proposed
transferee shall be evaluated for approval by GREASE MONKEY based on the same
criteria as is currently being used to assess new franchisees of GREASE
MONKEY and that such proposed transferee shall be provided with such
disclosures as may be required by state or federal law. If FRANCHISEE and
its proposed transferee comply with all conditions for assignment set forth
herein and GREASE MONKEY
17
has not given FRANCHISEE notice of its approval or disapproval within the 30
day period after notice, approval is deemed granted.
13.4. RIGHT OF FIRST REFUSAL. In the event FRANCHISEE wishes to sell
or otherwise transfer its franchise rights, this Agreement, or a substantial
portion of the assets of the Franchised Business to a third party, FRANCHISEE
hereby grants to GREASE MONKEY a 30 day right of first refusal to purchase
such rights or assets proposed to be transferred on the same terms and
conditions as are contained in the written agreement signed by FRANCHISEE and
the proposed transferee; provided however, the following additional terms and
conditions shall apply:
a. The 30 day period shall run concurrently with the period in
which GREASE MONKEY has to approve or disapprove of FRANCHISEE's proposed
transfer or sale. The time within which GREASE MONKEY may exercise its
right of first refusal shall commence as of the date of the notice provided
by FRANCHISEE to GREASE MONKEY containing all information described in
Section 13.2(f) above and receipt by GREASE MONKEY of the written agreement
of transfer signed by FRANCHISEE and the proposed transferee containing all
of the terms and conditions of the transfer.
b. GREASE MONKEY's right of first refusal shall include the right
of first refusal to purchase any portion or all of FRANCHISEE's interest in
the Franchised Business premises, whether the premises are owned or leased
by FRANCHISEE, if such interest is part of the assets proposed to be
transferred or sold. The terms and conditions of GREASE MONKEY's right of
first refusal may be recorded, if deemed appropriate by GREASE MONKEY, in
the real property records. GREASE MONKEY and FRANCHISEE agree to execute
such additional documentation as may be necessary in connection with the
recording.
c. GREASE MONKEY's right of first refusal arises with respect to
each proposed transfer. Any material change in the terms or conditions of
the proposed transfer shall be deemed a separate transfer for which a new
30 day period for the right of first refusal shall be given and new
documents shall be submitted to GREASE MONKEY.
d. If the consideration or the manner of payment offered by a third
party is such that GREASE MONKEY may not reasonably be required to furnish
the same, then GREASE MONKEY may purchase the interest which is proposed to
be sold for the reasonable cash equivalent. If the parties cannot agree
within a reasonable time on the cash consideration, an independent
appraiser shall be designated by GREASE MONKEY, whose determination will be
binding upon the parties. All expenses of the appraiser shall be paid for
equally between GREASE MONKEY and FRANCHISEE. In the event that the terms
of the proposed transfer include an offer on the part of FRANCHISEE to
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finance a portion of the purchase price on behalf of the proposed
transferee, then the same terms shall be made available to GREASE MONKEY.
e. The closing between GREASE MONKEY and FRANCHISEE shall occur
upon the later of the date of closing set forth in the written agreement of
transfer signed by FRANCHISEE and the proposed transferee, or 60 days from
the date of GREASE MONKEY's notice of exercise of its right of first
refusal.
13.5. TYPES OF TRANSFERS. FRANCHISEE acknowledges that GREASE MONKEY's
right to approve or disapprove of a proposed sale or transfer and GREASE
MONKEY's right of first refusal as provided for herein shall apply: (a) if
FRANCHISEE is a partnership or other business association, to the proposed
addition or deletion of a partner or members of the association or the
transfer of any partnership or membership among existing partners or members;
(b) if FRANCHISEE is a corporation, to any proposed issuance of securities or
transfer of outstanding securities of a corporate FRANCHISEE, which issuance
or transfer would involve 40% or more of the outstanding equity securities of
the corporate FRANCHISEE, whether such issuance or transfer occurs in a
single transaction or several transactions; and (c) if FRANCHISEE is an
individual, to the proposed transfer from such individual or individuals to a
corporation controlled by them, in which case, GREASE MONKEY's approval will
be conditioned upon: (i) the continuing personal guarantee of the individual
(or individuals) for the performance of obligations under the Agreement; (ii)
the issuance and/or transfer of shares which would affect the controlling
interest in the corporation being conditioned on GREASE MONKEY's prior
written approval; (iii) a limitation on the corporation's business activity
to that of owning the Franchised Business and related activities; and (iv)
other reasonable conditions. With respect to a proposed transfer as
described in subsection (c) of this section, GREASE MONKEY's right of first
refusal to purchase certain rights being transferred, as set forth above,
shall not apply and GREASE MONKEY hereby agrees to waive any transfer fee
chargeable to the FRANCHISEE for a transfer under these circumstances.
13.6. EFFECT OF BREACH OF CERTAIN RESTRICTIONS ON ASSIGNMENT. Under no
circumstances will FRANCHISEE be entitled to transfer or make a bulk sale of
a material portion of the assets of the Franchised Business separate and
apart from this Agreement and the Franchise conferred hereunder. FRANCHISEE
acknowledges that if FRANCHISEE violates this provision, it may be difficult
to ascertain the damages to GREASE MONKEY. Therefore, if FRANCHISEE sells,
assigns or otherwise transfers its ownership in the Franchised Business
without a corresponding approved transfer of this Agreement and the
Franchise, this Agreement shall automatically terminate without notice or a
right to cure and, in addition to all other obligations of FRANCHISEE arising
upon termination, FRANCHISEE shall be required to pay to GREASE MONKEY, in
cash or certified funds, a sum equal to the average monthly royalties due
from FRANCHISEE to GREASE MONKEY over the three years immediately prior to
the unauthorized transfer, or such shorter period if the unauthorized
transfer occurred prior to the third anniversary of this Agreement,
multiplied by the number of full months from the date of the
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unauthorized transfer until the end of the term of this Agreement, or the
"total consideration" received for such transfer, whichever is greater. The
"total consideration" shall include all cash, notes and the value in kind of
other assets received in the transfer, as well as the value received from the
assumption of liability, taxes, contracts, leases and other similar
consideration given by the transferee. Such payment shall be due within five
business days of the unauthorized transfer. Notwithstanding the foregoing,
the restrictive covenants contained in Article 16 shall remain in full force
and effect and shall survive the termination of this Agreement.
13.7. ASSIGNMENT BY GREASE MONKEY. This Agreement is fully assignable
by GREASE MONKEY and shall inure to the benefit of any assignee or other
legal successor in interest.
13.8. DEATH OR DISABILITY OF FRANCHISEE. Upon the death or permanent
disability of FRANCHISEE (or a guarantor of FRANCHISEE's obligations under
this Agreement or an owner of 40% or more of the equity securities of a
corporate FRANCHISEE), the executor, administrator, conservator, guardian or
other personal representative of such person shall transfer his or her
interest in this Agreement or such interest in FRANCHISEE to an approved
third party. Such disposition of this Agreement or such interest (including,
without limitation, transfer by bequest or inheritance) shall be completed
within a reasonable time, not to exceed six months from the date of death or
permanent disability, and shall be subject to all the terms and conditions
applicable to transfers contained in Article 13 of this Agreement. Failure
to transfer the interest in this Agreement or such interest in FRANCHISEE
within said period of time shall constitute a breach of this Agreement. For
purposes hereof, the term "permanent disability" shall mean a mental or
physical disability, impairment or condition that is reasonably expected to
prevent or actually does prevent FRANCHISEE, Guarantor or an owner of 40% or
more of the equity securities of a corporate FRANCHISEE from supervising the
management and operation of the Franchised Business for a period of six
months from the onset of such disability, impairment or condition.
14. TERM AND EXPIRATION
14.1. TERM. The term of this Agreement is for a period of 15 years
from the date of the opening of the Franchised Business, unless sooner
terminated as provided herein.
14.2. RIGHTS UPON EXPIRATION. FRANCHISEE shall have the option to
renew the Franchise for an additional 15 year term, by acquiring successor
franchise rights. FRANCHISEE shall be deemed to have exercised its option to
renew unless FRANCHISEE gives GREASE MONKEY written notice of its election
not to renew not earlier than 12 months nor later than nine months prior to
the expiration of the term. The grant of a successor franchise by GREASE
MONKEY is subject to FRANCHISEE fulfilling the following conditions precedent:
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a. FRANCHISEE shall have performed all obligations under this
Agreement and shall have not received a written notification of breach of
this Agreement more than five times during the term;
b. FRANCHISEE is not, at the time of renewal, in default or under
notification of breach of this Agreement;
c. FRANCHISEE executes the then current form of franchise agreement
being offered to new GREASE MONKEY franchisees within 30 days after the new
form of agreement is submitted to FRANCHISEE for execution, which agreement
may contain terms materially different than those in this Agreement.
GREASE MONKEY shall not charge any additional initial franchise fee. As to
royalty fees, advertising fees and other fees, FRANCHISEE shall be subject
to any changes in such fees or other material provisions of this Agreement;
provided, however, when there has been an increase in the royalty fees,
GREASE MONKEY may, in its sole discretion, keep the royalty fee in the new
franchise agreement the same as the royalty fee set forth herein for the
first five years of the term of the new franchise agreement, and then
increase the royalty fee to the rate in effect as the date of the new
franchise Agreement for the remainder of the term of the new franchise
agreement;
d. FRANCHISEE upgrades and/or remodels the GREASE MONKEY Center and
its equipment and systems, at FRANCHISEE's expense, to conform to the then
current design and performance specifications, as reasonably determined
necessary, in the sole discretion of GREASE MONKEY; and
e. FRANCHISEE executes a general release, in form satisfactory to
GREASE MONKEY, of any and all claims against GREASE MONKEY and its
affiliated companies and their respective officers, directors, employees
and agents arising out of or relating to this Agreement.
14.3. REFUSAL TO OFFER SUCCESSOR FRANCHISE. Unless FRANCHISEE has
given timely notice to GREASE MONKEY of its election not to acquire successor
franchise rights, and if FRANCHISEE has not satisfied one or more of the
above conditions precedent to the offer of a successor franchise, GREASE
MONKEY shall give FRANCHISEE written notice of GREASE MONKEY's refusal to
offer successor franchise rights not later than 180 days prior to the
expiration of the term (unless such refusal is based upon FRANCHISEE's
failure to execute a new franchise agreement) and such notice will set forth
the reasons for such refusal to offer successor franchise rights. In such
event, this Agreement will expire at the end of the 15-year term and
FRANCHISEE will be required to comply with the post-termination obligations
set forth in Section 15.5 below.
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15. DEFAULT AND TERMINATION
15.1. TERMINATION BY GREASE MONKEY - EFFECTIVE UPON NOTICE. GREASE MONKEY
shall have the right to terminate this Agreement, effective immediately upon
written notice to FRANCHISEE under the following circumstances to the extent
allowed by applicable law or regulation: (a) FRANCHISEE files a voluntary
petition in bankruptcy or is adjudicated bankrupt as a result of an involuntary
petition in bankruptcy being filed against it. (This provision may not be
enforceable under federal bankruptcy law, 11 U.S.C. Sections 101 ET SEQ.); (b) a
receiver is appointed for the Franchised Business, FRANCHISEE makes a general
assignment for the benefit of creditors, or procedures for reorganization or
rearrangement of its business entity are instituted by, for or against
FRANCHISEE; (c) FRANCHISEE is convicted of a crime or offense that is reasonably
likely, in the sole opinion of GREASE MONKEY, to materially and unfavorably
affect the GREASE MONKEY franchise system or Marks or goodwill thereof; (d)
FRANCHISEE receives a third notice of default from GREASE MONKEY within a six
month period or a fourth notice of default within a twelve month period,
regardless of whether the previous defaults were cured by FRANCHISEE, if
allowable under applicable state law or regulation; (e) FRANCHISEE makes an
unauthorized assignment of the Franchise Agreement or interest in the Franchised
Business or entity owning the Franchise; or (f) FRANCHISEE materially misstates
the amount of Gross Receipts upon which it bases its Royalty payments.
15.2. TERMINATION BY GREASE MONKEY - FIFTEEN DAYS NOTICE. GREASE MONKEY
shall have the right to terminate this Agreement upon 15 days prior written
notice, such notice to contain a right to cure the default within such 15 day
period, if FRANCHISEE: (a) defaults in prompt and full payment of Royalties,
advertising fees or any other indebtedness due to GREASE MONKEY and the default
continues for a 10 day period after the date such indebtedness is due; or (b)
closes the Franchised Business for a period in excess of seven consecutive days,
which acts shall be deemed an abandonment of the Franchised Business, unless the
abandonment is reasonably unavoidable due to war conditions, government
regulations, strikes or any other conditions which are beyond its reasonable
control.
15.3. TERMINATION BY GREASE MONKEY - THIRTY DAYS NOTICE. GREASE MONKEY
shall have the right to terminate this Agreement, upon 30 days prior written
notice to FRANCHISEE, if FRANCHISEE breaches any other provision of this
Agreement. Under circumstances where the breach is of a nature that may be cured
through the actions of FRANCHISEE, GREASE MONKEY shall permit FRANCHISEE the
same 30 day period to cure any such breach or default. If the breach or default
has not been cured within such 30 day period, this Agreement will terminate
without further notice to FRANCHISEE upon expiration of the 30 day period.
Notwithstanding the foregoing, if the breach is curable, but is of a nature
which cannot reasonably be cured within such 30 day period and FRANCHISEE has
commenced and is continuing to make good faith efforts to cure the breach during
such 30 day period, then FRANCHISEE shall be given an additional reasonable
period of time to cure the same and the Agreement shall not terminate.
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15.4. CROSS DEFAULT. Any default or breach by FRANCHISEE of any other
agreement with GREASE MONKEY, the parent of GREASE MONKEY, GREASE MONKEY HOLDING
CORPORATION, or any of its subsidiaries may, at the option of GREASE MONKEY,
constitute a breach or default under this Agreement.
15.5. RIGHTS AND OBLIGATIONS UPON TERMINATION OR EXPIRATION. Upon
termination or expiration of this Agreement, FRANCHISEE shall:
a. Pay Royalties, Marketing Materials Fees and other charges owed
to GREASE MONKEY within 10 days of the effective date of termination or
expiration;
b. Not hold itself out as a current or former GREASE MONKEY
franchisee and cease use of the Marks, processes, materials, methods or
promotional materials provided by GREASE MONKEY and take all necessary
steps to disassociate itself from GREASE MONKEY, including without
limitation, the removal of signs, destroying letterhead, advertising
materials, invoices or other items containing the Marks;
c. Deliver to GREASE MONKEY the Operations Manual and all other
information and materials proprietary to GREASE MONKEY;
d. Relinquish all interest of any kind in the Franchise and, in the
event GREASE MONKEY does not exercise its right to acquire FRANCHISEE's
interest in the Franchised Business and the Franchised Location, including
FRANCHISEE's leasehold or fee simple interest in any real estate,
immediately take steps to deidentify the Franchised Location so as to
distinguish it from a GREASE MONKEY Center, including removal of signage,
alteration of distinctive coloring, interior and exterior design and
modification of other aspects of the premises closely identified with the
GREASE MONKEY name and Marks;
e. Promptly take such action as may be required to cancel all
assumed or trade names or equivalent registrations relating to the use of
the GREASE MONKEY name;
f. Notify the telephone company and all telephone directory
publishers of the termination or expiration of FRANCHISEE's right to use
any telephone number and any regular, classified or other telephone
directory listings associated with any ▇▇▇▇ and to authorize transfer
thereof to GREASE MONKEY or its designee. FRANCHISEE acknowledges that, as
between FRANCHISEE and GREASE MONKEY, GREASE MONKEY has the sole rights to
and interest in all telephone, telecopy or facsimile machine numbers and
directory listings associated with any ▇▇▇▇. FRANCHISEE authorizes GREASE
MONKEY, and hereby appoints GREASE MONKEY and any of its officers as
FRANCHISEE's attorney-in-fact, to direct the telephone company and all
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telephone directory publishers to transfer any telephone, telecopy or
facsimile machine numbers and directory listings relating to the Franchised
Business to GREASE MONKEY or its designee, should FRANCHISEE fail or refuse
to do so, and the telephone company and all telephone directory publishers
may accept such direction or this Agreement as conclusive evidence of
GREASE MONKEY's exclusive rights in such telephone numbers and directory
listings and GREASE MONKEY's authority to direct their transfer;
g. Comply with all applicable provisions of the Software License
and Electronic Reporting Agreement;
h. Comply with all applicable provisions of the Conditional
Assignment of Lease or Option Agreement; and
i. Abide by the covenants not to compete and confidentiality
provisions set forth in Article 16 of this Agreement.
15.6. RIGHT TO REPURCHASE.
a. Within 60 days after the termination or expiration of this
Agreement by FRANCHISEE or by GREASE MONKEY, GREASE MONKEY shall have the
right to exercise its option to purchase the Franchised Business, which may
include, at GREASE MONKEY's option, all of FRANCHISEE's interest, if any,
in and to the real estate upon which the Franchised Business is located,
and all buildings and other improvements thereto, including leasehold
interests (to the extent not already assigned to GREASE MONKEY pursuant to
a Conditional Assignment of Lease or Option Agreement), at fair market
value, less any amount apportioned to the goodwill of the Franchised
Business which is attributable to GREASE MONKEY's Marks and Licensed
Methods, and less any amounts owed to GREASE MONKEY by FRANCHISEE. For
purposes of this Section 15.6, goodwill shall be deemed to be the
difference between the fair market value of the Franchised Business and the
value of the tangible assets of the Franchised Business as set forth in
FRANCHISEE'S most recent financial records then available.
b. GREASE MONKEY's option hereunder shall be exercisable by
providing FRANCHISEE with written notice of its intention to exercise the
option given to FRANCHISEE no later than 60 days after the effective date
of termination or the expiration of the term of this Agreement. For
purposes of this Section 15.6, the effective date of termination of this
Agreement shall be that date GREASE MONKEY notifies FRANCHISEE in writing
in accordance with Section 21.6 of this Agreement, that this Agreement
shall be terminated and the effective date of the expiration of this
Agreement shall be the date determined in accordance with Section 14.1 of
this Agreement.
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c. In the event that GREASE MONKEY and FRANCHISEE cannot agree to a
fair market value of the Franchised Business and/or real estate or
leasehold interest thereunder, then the fair market value shall be
determined by an independent third party appraisal. GREASE MONKEY and
FRANCHISEE shall each select one independent, qualified appraiser, and the
two so selected shall select a third appraiser, all three to determine the
fair market value of the Franchised Business and/or real estate or
leasehold interest therein. The purchase price shall be the median of the
fair market values as determined by the three appraisers. The expenses of
the appraisers shall be paid for equally between GREASE MONKEY and
FRANCHISEE.
d. GREASE MONKEY and FRANCHISEE agree that the terms and conditions
of this right and option to purchase may be recorded, if deemed appropriate
by GREASE MONKEY, in the real property records and GREASE MONKEY and
FRANCHISEE further agree to execute such additional documentation as may be
necessary and appropriate to effectuate such recording.
e. The closing for GREASE MONKEY's purchase of the Franchised
Business will take place within 60 days after determination of the purchase
price. GREASE MONKEY will pay the purchase price in full at the closing,
or, at its option, in five equal consecutive monthly installments with
interest at a rate of 10% per annum. FRANCHISEE must sign all documents of
assignment and transfer as are reasonably necessary for purchase of the
Franchised Business by GREASE MONKEY.
f. Notwithstanding the foregoing, in the event that GREASE MONKEY
does not exercise GREASE MONKEY's right to repurchase FRANCHISEE's
Franchised Business as set forth above, for a period of one year following
the termination or expiration of this Agreement should any third party
offer or agree to purchase any or all of the physical assets of
FRANCHISEE's Franchised Business, then FRANCHISEE hereby grants to GREASE
MONKEY a 30 day right of first refusal to purchase such rights or assets
proposed to be transferred on the same terms and conditions as are
contained in the written agreement signed by FRANCHISEE and the proposed
transferee; provided however, the following additional terms and conditions
shall apply:
i. The time within which GREASE MONKEY may exercise its right
of first refusal shall commence as of the date GREASE MONKEY
receives the notice provided by FRANCHISEE to GREASE MONKEY of the
right of first refusal and a copy of the written agreement signed by
the FRANCHISEE and the proposed transferee containing all of the
terms and conditions of the transfer.
ii. GREASE MONKEY's right of first refusal shall include the
right of first refusal to purchase any portion or all of
FRANCHISEE's interest in the Franchised Business premises, whether
the premises are owned or leased by
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FRANCHISEE, if such interest is part of the assets proposed to be
transferred or sold. The terms and conditions of GREASE MONKEY's
right of first refusal may be recorded, if deemed appropriate by
GREASE MONKEY, in the real property records. GREASE MONKEY and
FRANCHISEE agree to execute such additional documentation as may be
necessary in connection with the recording.
iii. GREASE MONKEY's right of first refusal arises with
respect to each proposed transfer. Any material change in the terms
or conditions of the proposed transfer shall be deemed a separate
transfer for which a new 30 day period for the right of first
refusal shall be given and new documents shall be submitted to
GREASE MONKEY.
iv. If the consideration or the manner of payment offered by a
third party is such that GREASE MONKEY may not reasonably be
required to furnish the same, then GREASE MONKEY may purchase the
interest which is proposed to be sold for the reasonable cash
equivalent. If the parties cannot agree within a reasonable time on
the cash consideration, an independent appraiser shall be designated
by GREASE MONKEY, whose determination will be binding upon the
parties. All expenses of the appraiser shall be paid for equally
between GREASE MONKEY and FRANCHISEE. In the event that the terms
of the proposed transfer include an offer on the part of FRANCHISEE
to finance a portion of the purchase price on behalf of the proposed
transferee, then the same terms shall be made available to GREASE
MONKEY.
v. The closing between GREASE MONKEY and FRANCHISEE shall occur
upon the later of the date of closing set forth in the written
agreement of transfer signed by FRANCHISEE and the proposed
transferee or 60 days from the date of GREASE MONKEY's notice of
exercise of its right of first refusal.
Following the expiration of the one year period following the termination or
expiration of this Agreement, FRANCHISEE will be free to keep or to sell to any
third party, all of the physical assets of its Franchised Business; provided,
however, that all appearances of the Marks are first removed in a manner
approved in writing by GREASE MONKEY. GREASE MONKEY will only be obligated to
repurchase any assets of the Franchised Business in the event and to the extent
it is required by applicable state or federal law.
15.7. CONTINUING OBLIGATIONS. The foregoing rights of GREASE MONKEY upon
termination for any reason shall not be exclusive, but shall be in addition to
and not in lieu of any other rights available to GREASE MONKEY under the terms
hereof or at law or in equity. Termination of this Agreement under any
circumstances shall not abrogate, impair, release, or extinguish the debt,
obligation or liability of FRANCHISEE which may have accrued hereunder,
including without limitation, any debt, obligation or liability which was the
cause of termination.
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All covenants and agreements of FRANCHISEE which by their terms or by
reasonable implication are to be performed, in whole or in part, after the
termination of this Agreement, including without limitation, FRANCHISEE's
obligations of nondisclosure and confidentiality, shall survive any
termination of this Agreement.
15.8. GOVERNING STATE LAW. If any mandatory provisions of governing state
law prohibit termination of this Agreement or limit GREASE MONKEY's rights to
terminate to some other basis or term than are herein provided, or require
renewal hereof, or require repurchase, then such mandatory provisions of state
law shall be deemed incorporated in this Agreement by reference and shall
prevail over any inconsistent terms in this Agreement.
16. RESTRICTIVE COVENANTS
16.1. NONCOMPETITION DURING TERM. FRANCHISEE acknowledges that, in
addition to the license of the Marks hereunder, GREASE MONKEY has also licensed
commercially valuable information which comprises and is a part of the Licensed
Methods, including without limitation, operations, marketing, advertising and
related information and materials and that the value of this information derives
not only from the time, effort and money which went into its compilation, but
from the usage of the same by all franchisees of GREASE MONKEY using the Marks
and Licensed Methods. FRANCHISEE therefore agrees that other than the GREASE
MONKEY Center licensed herein, and any other GREASE MONKEY Centers licensed
under other franchise agreements with GREASE MONKEY, neither FRANCHISEE nor any
of FRANCHISEE's officers, directors and owners of five percent or more of the
equity securities of a corporate franchisee, nor any member of his or their
immediate families, shall during the term of this Agreement:
a. Have any direct or indirect controlling interest as a disclosed
or beneficial owner in a Competitive Business; or
b. Perform services as a director, officer, manager, employee,
consultant, representative, agent or otherwise for a Competitive Business;
or
c. Owns any assets used to operate a Competitive Business; or
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d. Receives any portion of the sales proceeds or net income or any
other benefit from a Competitive Business.
The term "Competitive Business" as used in this Agreement shall mean any
business providing, or granting franchises or licenses to others to operate a
business providing, automotive lubrication services. For purposes of this
Agreement, a "business providing automotive lubrication services" shall be
deemed to mean any business where 40% or more of the gross sales revenue is
derived from automotive lubrication, oil changes, radiator flush and fill, and
transmission and fluid replacement services. Notwithstanding the foregoing,
FRANCHISEE shall not be prohibited from owning securities in a Competitive
Business if such securities are listed on a stock exchange or traded on the
over-the-counter market and represent five percent or less of that class of
securities issued and outstanding.
16.2. POST-TERMINATION COVENANT NOT TO COMPETE. FRANCHISEE acknowledges
that, pursuant to the franchise relationship established in this Agreement,
FRANCHISEE has acquired from GREASE MONKEY confidential information regarding
GREASE MONKEY's Marks and Licensed Methods and that, in the event this Agreement
is terminated, FRANCHISEE could injure GREASE MONKEY, not only because it is no
longer a FRANCHISEE but, in addition, because FRANCHISEE would be able to take
those customers it has acquired over a period of time in the event FRANCHISEE
were to start another fast service automotive lubrication operation. FRANCHISEE,
therefore, agrees that in the event this Franchise is ever terminated, expires
or FRANCHISEE otherwise relinquishes all rights to the Franchise through
assignment or otherwise, for whatever reason, neither FRANCHISEE nor its
officers, directors and owners of five percent or more of the equity securities
of a corporate franchisee, for a period of three years, commencing on the date
of termination or expiration as determined in accordance with Section 15.6(c) or
16.7 of this Agreement, or the date on which FRANCHISEE ceases to conduct
business, whichever is later, unless authorized under another franchise
agreement with GREASE MONKEY, shall (a) have any direct or indirect interest
(through a member of any immediate family of FRANCHISEE, its officers, directors
and owners of five percent or more of the stock of a corporate franchisee or
otherwise) as a disclosed or beneficial owner, investor, partner, director,
officer, employee, consultant, representative or agent in, or (b) in any other
capacity (i) engage in, (ii) own any assets used in, or (iii) receive any
portion of the sales proceeds or net income or any other benefit from, a
Competitive Business within a radius of 25 miles of the location of FRANCHISEE's
former Franchised Business. This covenant not to compete is intended to be a
reasonable restriction on FRANCHISEE. For purposes of interpreting this covenant
not to compete, every month of time and mile of distance shall be considered
severable. In the event a court of competent jurisdiction interprets either the
spatial or temporal limitations of this Agreement to be overly broad, then the
court shall adjust the offending limitation, either by months of time or miles
of distance, so as to fashion a reasonably enforceable covenant.
16.3. NO INTERFERENCE WITH BUSINESS. During the term of this Agreement
and for three years thereafter, FRANCHISEE and its officers, directors and
owners of five percent or more of
28
the equity securities of a corporate franchisee, and his or their immediate
families, shall not divert or attempt to divert any business related to, or
any customer or prospective customer of the GREASE MONKEY Center, by direct
inducement or otherwise, or diverting or attempting to divert the employment
of any employee of GREASE MONKEY or another franchisee licensed by GREASE
MONKEY to use the Marks, to any Competitive Business by any direct inducement
or otherwise.
16.4. CONFIDENTIALITY OF PROPRIETARY INFORMATION. FRANCHISEE acknowledges
that after execution of this Agreement, FRANCHISEE will have access to
confidential information and trade secrets which are proprietary to GREASE
MONKEY. FRANCHISEE acknowledges that the unauthorized use of such information
or the disclosure of such information, or any part thereof, to unauthorized
third parties will be injurious to GREASE MONKEY. FRANCHISEE covenants and
agrees that it shall not make unauthorized use of, or disclose to any
unauthorized third party, the systems, techniques, operating procedures,
marketing systems or other trade secrets or confidential information relating to
the establishment and operation of a GREASE MONKEY franchise.
16.5. INJUNCTIVE RELIEF. FRANCHISEE irrevocably grants GREASE MONKEY, in
addition to other legal remedies available, the right to apply for an
injunction, without bond, to enforce the covenants herein and FRANCHISEE's sole
remedy in the event of the entry of such injunctive relief shall be the
dissolution of such injunctive relief, if warranted, upon hearing duly held (all
claims for damages by reason of the wrongful issuance of such injunction being
expressly waived hereby). Any such action shall be brought as provided in
Section 20.3 below.
16.6. CONFIDENTIALITY AGREEMENTS. GREASE MONKEY reserves the right to
require that FRANCHISEE have its officers, directors, owners of five percent
or more of the equity securities of a corporate FRANCHISEE, or members of
FRANCHISEE's immediate family execute a nondisclosure and noncompetition
agreement containing the provisions set forth in this Article 16, and
further, FRANCHISEE shall notify GREASE MONKEY of the identity of each and
every above-described person and provide GREASE MONKEY with an originally
executed copy of each such nondisclosure and noncompetition agreement.
16.7. BEGINNING OF THREE YEAR PERIOD. If FRANCHISEE commits a breach of
Section 16.2 or Section 16.3 above, the three year period shall start on the
date FRANCHISEE is enjoined from competing or interfering, or stops competing or
interfering with the business of GREASE MONKEY, whichever is later.
16.8. LIQUIDATED DAMAGES. FRANCHISEE acknowledges and agrees that if
there is any act in violation of Sections 16.1, 16.2, 16.3 or 16.4, it will be
impossible to determine with specificity the damage to GREASE MONKEY.
Therefore, for purposes of this Agreement, as liquidated damages and not as a
penalty, within 30 days of any act in violation of Section 16.1, 16.2, 16.3 or
16.4, FRANCHISEE shall pay to GREASE MONKEY the sum of $20,000 plus five
29
percent of the average of FRANCHISEE's monthly Gross Receipts over the three
years immediately prior to the violation, or such shorter period if the
violation occurred prior to the third anniversary of this Agreement,
multiplied by the number of full months from the date of the violation until
the end of the term of this Agreement.
17. INSURANCE
17.1. INSURANCE COVERAGE. FRANCHISEE agrees to procure and maintain
during the term of this Agreement, with an insurer or insurers reasonably
acceptable to GREASE MONKEY, a policy or policies of the following insurance:
(a) comprehensive and general liability insurance with a limit of not less than
$1,000,000 for injury to one person; (b) replacement cost property insurance in
an amount equal to at least 80% of the highest coverage permitted by law or the
replacement cost of the building and contents comprising the GREASE MONKEY
Center as provided in a lease; (c) garage-keepers liability insurance for damage
to vehicles that are in the Franchisee's care, custody and control with a limit
of not less than $30,000 for the GREASE MONKEY Center; and (d) unemployment and
workmen's compensation insurance with a broad form all-states endorsement
coverage sufficient to meet the requirements of applicable state law. All
policies of insurance shall contain a 10 day advance written notice of
cancellation requirement and shall designate GREASE MONKEY as an additional
named insured.
17.2. PROOF OF INSURANCE. FRANCHISEE will provide proof of insurance to
GREASE MONKEY prior to commencement of operations at its Franchised Business.
This proof will show that the insurer has been authorized to inform GREASE
MONKEY in the event any policies lapse or are cancelled. GREASE MONKEY has the
right to change the minimum amount of insurance FRANCHISEE is required to
maintain by giving FRANCHISEE prior reasonable notice. Noncompliance with the
insurance provisions set forth herein shall be deemed a material breach of this
Agreement; in the event of any lapse in insurance coverage, in addition to all
other remedies, GREASE MONKEY shall have the right to demand that FRANCHISEE
cease operations of the Franchised Business until coverage is reinstated, or, in
the alternative, pay any delinquencies in premium payments and charge the same
back to FRANCHISEE.
18. OPTION TO PURCHASE ADDITIONAL FRANCHISE
18.1. OPTION TO PURCHASE.
a. During the term of this Agreement, FRANCHISEE may purchase an
additional franchised location for a discounted initial franchise fee equal
to 60% of the then current initial franchise fee; provided however, that
such discount is available only if FRANCHISEE is in compliance with this
Agreement and FRANCHISEE maintains a majority interest in the additional
franchise. Except for the discounted initial franchise fee, the additional
franchise will be subject to all of the terms and conditions which are
30
contained in the franchise agreement in effect at the time of the sale. In
addition, FRANCHISEE will be required to meet the then current franchisee
qualification standards of GREASE MONKEY, including without limitation,
financial requirements.
b. For each additional GREASE MONKEY franchise purchased, a
separate franchise agreement shall be executed. Payment of 50% of the
discounted initial franchise fee is due and payable to GREASE MONKEY upon
the execution of the franchise agreement. The remaining amount due for the
discounted initial franchise fee is due upon the earlier of GREASE MONKEY's
approval of the site for the GREASE MONKEY Center to be established under
the franchise agreement or 180 days after execution of the franchise
agreement. Each portion of the initial franchise fee is nonrefundable when
received in all circumstances.
c. Notwithstanding the foregoing, the grant of the additional
franchise shall be conditional upon and subject to GREASE MONKEY's ability
to comply with all applicable laws and regulations regarding the sale of
the franchise. GREASE MONKEY shall use reasonable efforts to enable
FRANCHISEE to exercise its options granted hereunder; however, GREASE
MONKEY makes no guarantee that such a franchise can be granted at the time
that FRANCHISEE desires to exercise this option.
19. BUSINESS RELATIONSHIP
19.1. INDEPENDENT BUSINESSPERSONS. During the term of this Agreement,
FRANCHISEE shall be an independent contractor and shall in no way be considered
as an agent, servant or employee of GREASE MONKEY. It is understood and agreed
that no agency, partnership or fiduciary relationship is created by this
Agreement. As such, FRANCHISEE has no authority of any nature whatsoever to bind
GREASE MONKEY or incur any liability for or on behalf of GREASE MONKEY or to
represent itself as anything other than an independent contractor. FRANCHISEE
agrees to exercise full and complete control over and have full responsibility
for any and all labor relations, including the hiring, firing, disciplining,
compensation and work schedule of their employees.
19.2. PAYMENT OF THIRD PARTY OBLIGATIONS. GREASE MONKEY shall have no
liability for FRANCHISEE's obligations to pay any third parties, including
without limitation, any sales, use, service, occupation, excise, gross receipts,
income, property or other tax levied upon FRANCHISEE, FRANCHISEE's GREASE MONKEY
Center, FRANCHISEE's property or upon GREASE MONKEY in connection with the sales
made or business conducted by FRANCHISEE (except any taxes GREASE MONKEY is
required by law to collect from FRANCHISEE with respect to purchases from GREASE
MONKEY).
19.3. INDEMNIFICATION. FRANCHISEE agrees to indemnify, defend and hold
harmless GREASE MONKEY, its subsidiaries and affiliates, and their shareholders,
directors, officers,
31
employees, agents, successors and assignees, (the "Indemnified Parties")
against, and to reimburse them for all claims, obligations and damages
described in this Section 19.3, any and all third party obligations described
in Section 19.2 and any and all claims and liabilities directly or indirectly
arising out of the operation of the GREASE MONKEY Center, or the relationship
of the parties under this Agreement, or arising out of the use of the Marks
and Licensed Methods in any manner not in accordance with this Agreement.
For purposes of this indemnification, claims shall mean and include all
obligations, actual and consequential damages and costs reasonably incurred
in the defense of any claim against the Indemnified Parties, including,
without limitation, reasonable accountants', attorneys' and expert witness
fees, costs of investigation and proof of facts, court costs, other
litigation expenses and travel and living expenses. GREASE MONKEY shall have
the right to defend any such claim against it. This indemnity shall continue
in full force and effect subsequent to and notwithstanding the expiration or
termination of this Agreement.
20. ARBITRATION
20.1. ARBITRATION. Except for controversies, disputes or claims related
to or based on the Marks or any lease of real estate, all controversies,
disputes or claims between GREASE MONKEY, its subsidiaries and affiliated
companies and their shareholders, officers, directors, agents, employees and
attorneys (in their representative capacity) and FRANCHISEE (and its owners and
guarantors, if applicable) arising out of or related to: (1) this Agreement or
any other agreement between the parties or any provision of such agreements; (2)
the relationship of the parties hereto; (3) the validity of this Agreement or
any other agreement between the parties or any provision of such agreements; or
(4) any system standard shall be submitted for arbitration to the Denver,
Colorado Office of the American Arbitration Association on demand of either
party. Such arbitration proceedings shall be conducted in Denver, Colorado and
shall be heard by one arbitrator in accordance with the then current Commercial
Arbitration Rules of the American Arbitration Association.
The arbitrator shall have the right to award or include in the award any
relief which he deems proper in the circumstances, including, without
limitation, money damages (with interest on unpaid amounts from the date
due), specific performance, and attorneys' fees and costs, in accordance with
Section 21.7 of this Agreement, provided that the arbitrator shall not award
exemplary or punitive damages. The award and decision of the arbitrator
shall be conclusive and binding upon all parties hereto and judgment upon the
award may be entered in any court of competent jurisdiction. Each party
waives any right to contest the validity or enforceability of such award.
The parties agree to be bound by the provisions of any applicable limitation
on the period of time by which claims must be brought under applicable law or
this Agreement, whichever is less. The parties further agree that, in
connection with any such arbitration proceeding, each shall file any
compulsory counterclaim (as defined by Rule 13 of the Federal Rules of Civil
Procedure) within 30 days after the date of the filing of the claim to which
it
32
relates. This provision shall continue in full force and effect subsequent
to and notwithstanding the expiration or termination of this Agreement.
GREASE MONKEY and FRANCHISEE agree that arbitration shall be conducted on
an individual, not a class wide, basis and that an arbitration proceeding
between GREASE MONKEY and FRANCHISEE shall not be consolidated with any other
arbitration proceeding involving GREASE MONKEY and any other person, corporation
or partnership.
20.2. INJUNCTIVE RELIEF. Notwithstanding anything to the contrary
contained in Section 20.1 of this Agreement, GREASE MONKEY and FRANCHISEE shall
each have the right in a proper case to obtain temporary or preliminary
injunctive relief from a court of competent jurisdiction. FRANCHISEE agrees
that GREASE MONKEY may have such temporary or preliminary injunctive relief,
without bond, but upon due notice, and FRANCHISEE's sole remedy in the event of
the entry of such injunctive relief shall be the dissolution of such injunctive
relief, if warranted, upon hearing duly held (all claims for damages by reason
of the wrongful issuance of such injunction being expressly waived hereby). Any
such action shall be brought as provided in Section 20.3 below.
20.3. GOVERNING LAW/CONSENT TO JURISDICTION/WAIVER OF JURY TRIAL. Except
to the extent governed by the United States Trademark Act of 1946 (▇▇▇▇▇▇ Act,
15 U.S.C. Sections 1051 ET SEQ.) or other federal law, this Agreement shall be
interpreted under the laws of the state of Colorado and any dispute between the
parties shall be governed by and determined in accordance with the substantive
laws of the state of Colorado, which laws shall prevail in the event of any
conflict of law. FRANCHISEE and GREASE MONKEY have negotiated regarding a forum
in which to resolve any disputes which may arise between them and have agreed to
select a forum in order to promote stability in their relationship. Therefore,
if a claim is asserted in any legal proceeding involving FRANCHISEE, its
employees, officers or directors (collectively, "FRANCHISEE Affiliates") and
GREASE MONKEY its employees, officers, or directors (collectively, "GREASE
MONKEY Affiliates") both parties agree that the exclusive venue for disputes
between them shall be in the state and federal courts of Colorado and each waive
any objection either may have to the personal jurisdiction of or venue in the
state and federal courts of Colorado. GREASE MONKEY, the GREASE MONKEY
Affiliates, FRANCHISEE and the FRANCHISEE Affiliates each waive their rights to
a trial by jury.
21. MISCELLANEOUS PROVISIONS
21.1. ENTIRE AGREEMENT. This Agreement (which includes the attachments
and exhibits expressly incorporated herein) contains the entire agreement
between the parties and supersedes any and all prior agreements concerning
the subject matter hereof. FRANCHISEE agrees and understands that GREASE
MONKEY will not be liable or obligated for any oral representations or
commitments made prior to the execution hereof or for claims of negligent or
fraudulent misrepresentation based on any such oral representations or
commitments and that no
33
modifications of this Agreement will be effective except those in writing and
signed by both parties. GREASE MONKEY does not authorize and will not be bound
by any representation of any nature other than those expressed in this
Agreement. FRANCHISEE further acknowledges and agrees that no representations
have been made to it by GREASE MONKEY regarding projected sales volumes, market
potential, revenues, profits of the FRANCHISEE's Franchised Business, or
operational assistance other than as stated in this Agreement or in any
franchise offering circular or advertising or promotional materials provided by
GREASE MONKEY in connection herewith.
21.2. EFFECTIVE DATE. This Agreement shall not be effective until
accepted by GREASE MONKEY as evidenced by dating and signing by an officer of
GREASE MONKEY.
21.3. REVIEW OF AGREEMENT. FRANCHISEE acknowledges that it had a copy of
this Agreement in its possession for a period of time not less than 10 full
business days, during which FRANCHISEE has had the opportunity to submit same
for professional review and advice of FRANCHISEE's choosing prior to freely
executing this Agreement.
21.4. INVALIDITY. If any provision of this Agreement is held invalid by
any tribunal in a final decision from which no appeal is or can be taken, such
provision shall be deemed modified to eliminate the invalid element and, as so
modified, such provision shall be deemed a part of this Agreement as though
originally included. The remaining provisions of this Agreement shall not be
affected by such modification.
21.5. WAIVER. No waiver of any condition or covenant contained in this
Agreement or failure to exercise a right or remedy by GREASE MONKEY or the
FRANCHISEE shall be considered to imply or constitute a further waiver by GREASE
MONKEY or FRANCHISEE of the same or any other condition, covenant, right or
remedy.
21.6. NOTICE. All notices or demands required hereunder shall be made in
writing and shall be deemed to be fully given when deposited in the U.S.
certified mail, postage prepaid, return receipt requested or when sent Federal
Express or similar overnight courier to Grease Monkey International, Inc., ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or to its then current
address, and to FRANCHISEE to the address given in this Agreement. Mailing any
notice hereunder sent by U.S. certified mail, postage prepaid or when sent
Federal Express or similar overnight courier shall be presumptive evidence of
delivery of the notice. Either party may change its address hereunder by notice
to the other party, sent by U.S. certified mail postage prepaid, return receipt
requested or when sent Federal Express or similar overnight courier.
21.7. COST OF ENFORCEMENT. In the event of any default on the part of
either party to this Agreement, in addition to all other remedies, the party
in default will pay the aggrieved party all amounts due and all damages,
costs and expenses, including reasonable attorneys' fees, incurred
34
by the aggrieved party in any legal action or proceeding as a result of such
default, plus interest at the highest rate allowable by law, accruing from
the date of such default.
21.8. MODIFICATION. GREASE MONKEY and/or FRANCHISEE may modify this
Agreement only upon execution of a written agreement between the parties.
FRANCHISEE acknowledges that GREASE MONKEY may modify its standards and
specifications set forth in the Operations Manual unilaterally under any
conditions and to the extent in which GREASE MONKEY, in its sole discretion,
deems necessary to protect, promote, or improve the Marks and the quality of the
Licensed Methods, but under no circumstances will such modifications be made
without good cause therefor. FRANCHISEE agrees to accept and utilize any such
changes or modifications which are reasonably requested as if they were a part
of this Agreement.
21.9. INJUNCTIVE RELIEF. Nothing herein shall prevent GREASE MONKEY or
FRANCHISEE from seeking injunctive relief to prevent irreparable harm in
addition to all other remedies.
21.10. PROHIBITION AGAINST NONPAYMENT. FRANCHISEE agrees to consult with
GREASE MONKEY with respect to any alleged nonperformance of GREASE MONKEY and
FRANCHISEE will not, on the grounds of any alleged nonperformance by GREASE
MONKEY of its obligations hereunder, withhold payment of any Royalties,
Marketing Materials Fees, rents or other payment or fee payable by FRANCHISEE
pursuant to the terms of this Agreement or any related document.
21.11. ACKNOWLEDGEMENT. BEFORE SIGNING THIS AGREEMENT, FRANCHISEE SHOULD
READ IT CAREFULLY WITH THE ASSISTANCE OF LEGAL COUNSEL. FRANCHISEE ACKNOWLEDGES
THAT:
A. THE SUCCESS OF THE BUSINESS VENTURE CONTEMPLATED HEREIN INVOLVES
SUBSTANTIAL RISKS AND DEPENDS UPON FRANCHISEE'S ABILITY AS AN INDEPENDENT
BUSINESSPERSON AND ITS ACTIVE PARTICIPATION IN THE DAILY AFFAIRS OF THE
BUSINESS, AND
B. NO ASSURANCE OR WARRANTY, EXPRESSED OR IMPLIED, HAS BEEN GIVEN AS TO
THE POTENTIAL SUCCESS OF SUCH BUSINESS VENTURE OR THE EARNINGS LIKELY TO BE
ACHIEVED, AND
C. NO STATEMENT, REPRESENTATION OR OTHER ACT, EVENT OR COMMUNICATION,
EXCEPT AS SET FORTH IN THIS DOCUMENT, AND IN ANY OFFERING CIRCULAR SUPPLIED TO
FRANCHISEE IS BINDING ON GREASE MONKEY IN CONNECTION WITH THE SUBJECT MATTER OF
THIS AGREEMENT.
35
IN WITNESS WHEREOF, the parties hereto set their hands and seals the day
and year as set forth above.
FRANCHISOR:
GREASE MONKEY INTERNATIONAL, INC.
ATTEST: By:
---------------------------------------
Title:
--------------------------------
FRANCHISEE:
-------------------------------------------
ATTEST: By:
---------------------------------------
Title:
--------------------------------
36
EXHIBIT I TO
FRANCHISE AGREEMENT
ADDENDUM TO GREASE MONKEY
FRANCHISE AGREEMENT - LOCATION ACCEPTANCE
1. The Franchised Location set forth in Section 2.1 of the Agreement
shall be:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
2. [If applicable] The designated area set forth in Section 3.1
shall be:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
3. The business address for any notices mailed pursuant to
Section 21.6 of the Agreement shall be as follows:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
4. By execution hereof, GREASE MONKEY hereby accepts the above-stated
Franchised Location and the Franchisee acknowledges and warrants that (1)
GREASE MONKEY's acceptance of the Franchised Location does not constitute a
guarantee, recommendation or endorsement of the Franchised Location and the
success of the GREASE MONKEY Service Center to be operated at such Franchised
Location is dependent upon the Franchisee's abilities as an independent
business person; and (2) that GREASE MONKEY has complied with its obligations
under the Agreement and, if applicable, the Site Selection and Commitment
Agreement, to assist the Franchisee by provision of criteria for the
Franchised
Location and an on-site inspection and determination of
fulfillment of the requisite criteria for the Franchised Location.
Fully executed this ______ day of __________________ , 19____.
GREASE MONKEY INTERNATIONAL, INC.
By:
---------------------------------
Title:
FRANCHISEE:
--------------------------------------
By:
---------------------------------
Title:
EXHIBIT II
TO FRANCHISE AGREEMENT
STATEMENT OF OWNERSHIP
Franchisee: ______________________________
Trade name (if different from above): _________________________________________
_______________________________________________________________________________
Form of Ownership
(Check One)
____ Individual ____ Partnership ____ Corporation ____ Limited Liability
Company
If a Partnership, provide name and address of each partner showing
percentage owned, whether active in management, and indicate the state in which
the partnership was formed.
If a Corporation, give the state and date of incorporation, THE NAMES AND
ADDRESSES OF EACH OFFICER AND DIRECTOR, and list the names and addresses of
every shareholder showing what percentage of stock is owned by each.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Franchisee acknowledges that this Statement of Ownership applies to the
GREASE MONKEY Service Center authorized under the Franchise Agreement.
Use additional sheets if necessary. Any and all changes to the above
information must be reported to GREASE MONKEY in writing.
---------------------------------- ------------------------------------------
Date
EXHIBIT III
TO FRANCHISE AGREEMENT
GUARANTY AND ASSUMPTION OF FRANCHISEE'S OBLIGATIONS
In consideration of, and as an inducement to, the execution of the above
Franchise Agreement (the "Agreement") by Grease Monkey International, Inc.
("GREASE MONKEY"), each of the undersigned hereby personally and
unconditionally:
1. Guarantees to GREASE MONKEY and its successors and assigns, for the
term of this Agreement, including renewals thereof, that
___________________ ("Franchisee") shall punctually pay and perform
each and every undertaking, agreement and covenant set forth in the
Agreement; and
2. Agrees to be personally bound by, and personally liable for the
breach of, each and every provision in the Agreement.
Each of the undersigned waives the following:
1. Acceptance and notice of acceptance by GREASE MONKEY of the
foregoing undertaking;
2. Notice of demand for payment of any indebtedness or nonperformance
of any obligations hereby guaranteed;
3. Protest and notice of default to any party with respect to the
indebtedness or nonperformance of any obligations hereby
guaranteed;
4. Any right he or she may have to require that any action be brought
against Franchisee or any other person as a condition of liability;
and
5. Any and all other notices and legal or equitable defenses to which
he or she may be entitled.
Each of the undersigned consents and agrees that:
1. His or her direct and immediate liability under this guaranty shall
be joint and several;
2. He or she shall render any payment or performance required under
the Agreement upon demand if Franchisee fails or refuses punctually
to do so;
3. Such liability shall not be contingent or conditioned upon pursuit
by GREASE MONKEY of any remedies against Franchisee or any other
person;
4. Such liability shall not be diminished, relieved or otherwise
affected by any extension of time, credit or other indulgence which
GREASE MONKEY may from time to time grant to Franchisee or to any
other person, including without limitation the acceptance of any
partial payment or performance, or the compromise or release of any
claims, none of which shall in any way modify or amend this
guaranty, which shall be continuing and irrevocable during the term
of the Agreement, including renewals thereof;
5. He or she shall be bound by the restrictive covenants and
confidentiality provisions contained in Article 16 of the Agreement
and the indemnification provision contained in Section 19.3 of the
Agreement; and
6. The arbitration, injunctive relief, governing law and jurisdiction
provisions contained in Article 20 of the Agreement shall govern
this Guaranty and such provisions are incorporated into this
Guaranty by this reference.
IN WITNESS WHEREOF, each of the undersigned has affixed his or her
signature on the same day and year as the Agreement was executed.
GUARANTOR(S)
----------------------------------------
(Name)
----------------------------------------
(Address)
----------------------------------------
(Telephone Number)
----------------------------------------
(Name)
----------------------------------------
(Address)
----------------------------------------
(Telephone Number)