Franchise Agreement

Download PDF: 1st Propane Franchising Franchise Agreement 1

The original documents were scanned as an image. The original file can be downloaded at the link above.

Sample Franchise Agreement

EXHIBIT A TO THE FRANCHISE OFFERING CIRCULAR

FRANCHISE AGREEMENT WITH INDEX AND OWNER'S GUARANTY AND ASSUMPTION OF CORPORATE OBLIGATIONS

1^st Propane Franchising, LLC-UFOC � 10/2006

l" Propane Franchising, Inc. Franchise Agreement

This Franchise Agreement (the agreement) is made between 1st Propane Franchising Inc., a California cGorporation, and

1. INTRODUCTION. DEFINITIONS. AND PRELIMINARY AGREEMENTS.

1.1 Introduction. We've developed, and plan to continue to develop, methods of operating businesses which provide retail distribution of propane gas in bulk, and certain related and other products and services, including installation of distribution and other facilities. These businesses, referred to in this Agreement as "1st Propane® Franchise," operate at locations that feature a distinctive format and method of doing business, including color scheme, signs, equipment, layouts, systems, methods, procedures, designs and marketing and advertising standards and formats (the "1st Propane® System" or "System"), any element of which we can modify from time-to-time in our sole and absolute discretion and with which you'll promptly comply. We may own and operate, and selectively award franchises for others to own and operate, 1st Propane® outlets using the 1st Propane® System and the Marks (as defined below). You've applied for a franchise to own and operate a 1st Propane® Franchise at the Office/Yard (as defined below) and your application has been approved by us in reliance on all of the representations made in your application.

1.2 Definitions. For purposes of this Franchise Agreement, the following terms have the meanings listed below. Other terms used in this Agreement are defined and construed in the context in which they occur.

"1st Propane® Franchise" - The 1st Propane® Franchise, providing retail distribution of propane gas in bulk, and certain related and other products and services, including installation and service, in the Territory only, of storage, distribution and other facilities, which you're franchised to operate pursuant to this Agreement.

"Affiliate" - Any person, company or other entity which controls, is controlled by or is under common control with another person, company or other entity.

"Agreement" - This Franchise Agreement.

"Designated Equipment" - Equipment that meets our requirements and is to be obtained and used by you in the operation of your 1st Propane® Franchise, including all tanks, vehicles, storage and other equipment used by you in connection with your 1st Propane® Franchise.

"Franchise" - The right to operate a single I st Propane® Franchise at the Office/Yard pursuant to the terms and conditions of this Agreement.

"Franchisor" - I st Propane Franchising, Inc.

"Franchisor-Related Persons/Entities" - 1st Propane Franchising, Inc., its shareholders, officers, directors, agents, attorneys, accountants, and/or employees and/or any Affiliate and/or otherwise affiliated companies and/or persons, and each of their respective partners, shareholders, officers, directors, agents, attorneys, accountants, and/or employees, as well as any com-pany(ies)/person(s) acting by, through, under or in concert or affiliated or associated in any way with any of the foregoing.

"General Release" - A general release, in form prescribed by us, of any and all claims, liabilities and/or obligations, of any nature whatsoever, including (but not limited to) all those arising prior to the date of any such release, however arising, known or unknown, whether against us and/or any or all of the Franchisor-Related Persons/Entities.

1st Propane Franchising, Inc.

Franchise Agreement 9V2S/GM0/051 1/06

INITIALS

Page 1 of 58

"Manuals" - One or more handbooks, manuals, bulletins and/or volumes, other written materials (including materials distributed electronically or otherwise), and video, audio and/or software media, regardless of title, containing (among other things) specifications, standards, policies and procedures prescribed from time-to-time by us and to be followed by you in connection with your operation of a 1st Propane® Franchise and your performance under this Agreement. The Manuals include all changes and supplements issued by us in the future, each of which you'll promptly comply with.

"Marks" - The trademarks, service marks and other commercial symbols now and/or in the future owned by us and which we designate, from time-to-time, to be used to identify the services and/or products offered by 1st Propane® Franchises, including (but not limited to) the marks "1st Propane®", "1 st Propane First in Service®," the Trade Dress and certain associated logos.

"Office/Yard" - The location at which you will operate your 1st Propane® Franchise and as accepted by us pursuant to this Agreement, including (but not limited to) any storage and/or distribution facilities used by you.

"Products" and "Services" - Products and services designated by us from time-to-time for use, sale, lease, rental or to be otherwise used and/or provided at or from your 1st Propane® Franchise, and/or in association with the Marks.

f "Proprietary Software" - Software owned and/or developed by us (or which is otherwise not generally available to the public and which we have the right to distribute to 1st Propane® Franchisees), and which is specified by us from time-to-time for mandatory or optional use in a 1st Propane® Franchise, including (but not limited to) "PLATO."

"Repurchase" - Repurchase includes (but is not limited to) any acquisition by us (and/or any of the Franchisor-Related Persons/Entities), whether by exercise of right-of-first-refusal or otherwise, of any of your rights in and/or to any of the following: (1) this Agreement; (2) the Franchise; (3) the ownership of the Franchisee; (4) your 1st Propane® Franchise; or (5) any assets associated with any of the foregoing.

"Similar Business" - Any business offering or involved with, whether at wholesale, retail or otherwise, retail or wholesale distribution of propane gas in bulk, and/or related products and services, including installation of storage, distribution and other facilities, or similar products or services, whether by sales, rental or other distribution means, including any business awarding franchises or licenses to others to operate or be involved with such products, as well as any business that offers, sells, distributes, provides or is otherwise involved or deals with goods and/or services which may be authorized by us in the future to be offered by 1st Propane® Franchises.

"Territory" - The geographical area described in Exhibit 2.2.

"Trade Dress" - The 1st Propane® Franchise design and image developed and owned by us and used by 1st Propane® Franchises, as it currently exists and as it may be further developed and revised by us from time-to-time in our sole and absolute discretion.

"Us." "We." "Our." "the Company" or "Franchisor" - 1st Propane Franchising, Inc., a California corporation.

"You." "Your" or "Franchisee" - The individual(s) signing this Agreement as Franchisee. (If there's more than one Franchisee, each is jointly and severally obligated under this Agreement and all other agreements with us.)

U 2. GRANT OF FRANCHISE. >

2.1 Grant of Franchise; Term, Your Basic Commitment We're pleased to award you a franchise to operate a'

retail 1st Propane® Franchise to be operated in the Territory only, and to use the Marks and the 1st Propane® System in the operation thereof, for a term often (10) years, commencing on the date of this Agreement. AH facilities involved with your 1st Propane® Franchise must be located in the Territory, you're only allowed to service sites located in the Territory and you won't use the Marks or System outside the Territory or for any purpose other than the operation of a franchised 1st Propane®

1st Propane Franchising, Inc.

Franchise Agreement <W2S/05-IO/O511/O6

INITIALS

Page 2 of 58

outlet in good standing and full compliance with the System and the Manuals as we may change them from time-to-time. You will only provide and distribute Products and Services at retail and will not engage in any wholesale business activities. ^

c This grant of franchise is for the operation of only one office/yard within the territory. ,

You will at all times faithfully, honestly and diligently perform your obligations hereunder, and you will continuously exert your best efforts to promote, enhance and maximize the business of your 1st Propane® Franchise and the goodwill of the Marks.

2.2 Territory. During the term of this Agreement, we will not enter into a Franchise Agreement licensing a 1st Propane® Franchise, or open a 1st Propane® outlet owned by us, to service sites located inside the area (the "Territory") described on Exhibit "2.2," provided that you (and each affiliate of yours) are not and have not been in default under any of your covenants, obligations and/or agreements under this Agreement and/or other agreement with us or any affiliate of ours and, in any event, subject to our rights as set forth in this Agreement, including the provisions of this Section.

Other than as expressly provided above, you do not have any "exclusive territory" or any "exclusive," "protected" or "reserved" territorial or other rights or expectations, no such rights are granted or will be inferred and there is, and will be, no limitation of any type on our rights to locate and/or consent to the location of other 1 st Propane® Franchises or other distribu^ tion facilities of any type at any location, regardless of the distance from, impact on, or vicinity of, your 1st Propane® Franchise or the number of 1st Propane® Franchises or other outlets in an area or market. In any event, and notwithstanding any-^rthing else in this Franchise Agreement or otherwise, we (and/or those we appoint) can own and/or operate ourselves or authorize others to own and/or operate (1) 1st Propane® outlets servicing sites located outside the Territory using the Marks and/or System and (2) any business located anywhere, whether using the Marks and/or 1st Propane® System or not, which is not substantially similar to and/or competitive with the business franchised to you under this Agreement.

In any event, we can acquire or be acquired, or engage in any other transaction with other businesses, with units located anywhere (including in the Territory), under any other format. We or any affiliate may be acquired and/or our company-owned or other businesses may be converted to another format, maintained as a new concept, or maintained as a separate concept. Units in the Territory may not be converted by us to the 1st Propane® format (and using the Marks and/or 1st Propane® System). Any company acquiring us may exercise any of our rights under this agreement.

If you are subject to termination, or have failed to meet the performance standards set forth in Section 16.2, we may, in our sole and absolute discretion, reduce, eliminate or otherwise modify your territorial rights. You will not use the Marks and/or System, or operate your 1 st Propane® Franchise outside the Territory without our prior written consent, which we may. withhold or condition in our sole and absolute discretion. ;

3. DEVELOPMENT AND OPENING OF YOUR l" PROFANE® FRANCHISE

3.1 Site Selection. The Franchisee will not operate a 1st Propane® Franchise and/or use any of the Marks, from or

at any location (nor will the Franchisee relocate a 1st Propane® Franchise) until and unless we have received, reviewed and accepted the Franchisee's completed application, checklist and engineered plans for such location and all related facilities.

We may, as a courtesy, assist the Franchisee in evaluating or negotiating any lease (or other documents or arrangements) or otherwise assist the Franchisee to select and obtain a site and/or related facilities by providing consultation, evaluation and/or otherwise (including providing references to potential contractors, real estate agents, site selection specialists and other professionals, some of whom may be affiliated and/or associated with the Franchisor), we strongly recommend that the Franchisee have all matters related to the site and related facilities reviewed by the Franchisee's own attorney, real estate broker, architect, civil engineer, contractor and other independent professionals. Acceptance by us of any site is no assurance that such site will be successful. >'

INITIALS________________________________

Page 3 of58

1st Propane Franchising, Inc.

Franchise Agreement 9/2S/051O/051I/O6

We will make available to the Franchisee standard propane facility plans and specifications to be utilized in the construction or otherwise of a 1st Propane® Franchise and/or any related facilities. The Franchisee will obtain, at his sole expense, for our review and acceptance, all further qualified architectural and engineering services to provide plans and specifications and/or adapt any plans and specifications to the Franchisee's location. The Franchisee is responsible for providing all direct and indirect related reports, studies, applications, permits and fees and for compliance with all applicable federal, state and local laws, regulations, codes and ordinances and the authorities having jurisdiction. \

We may (but are not obligated to) agree to provide the Franchisee with customized site specific designs and/or other services but any such agreement (1) will be the subject of a separate written contract between the Franchisee and us (or our affiliate), (2) will be under separate terms and conditions, including the payment of additional fees, and (3) our (and any affiliates') liabilities under such contract and for such services will be limited to the total amount to be paid by the Franchisee for such services.

3.2 Lease of Office/Yard. Any lease or sublease for the Office/Yard must be reasonably satisfactory to us and

must, in any event, contain the following provisions, each of which you agree is reasonable:

(1) Providing us with the right, at our sole option at any time and without further consideration, to receive an assignment of your leasehold interest, whether on termination, cancellation or rescission of your rights under any lease/sublease or under this Agreement or otherwise, in each case without the lessor's or sublessor's consent and specifying that the lessor/sublessor will accept us as a substitute tenant on notice from us that we are exercising our rights (if we exercise this option and you aren't in default, or under notice of default, we'll sublease the Office/Yard to you on substantially the same terms as we lease it). You agree to do all acts necessary or appropriate to accomplish such assignment, on our request and will, at the same time you sign this Agreement, sign the Collateral Assignment of Lease attached as Exhibit 3.2;

(2) Obligating the lessor/sublessor to provide us with all sales and other information it may have, whether provided by you

or otherwise, related to the operation of your 1st Propane® Franchise;

(3) Evidencing your right to operate your 1st Propane® Franchise in accordance with this Agreement and the Manuals, subject only to the provisions of applicable law;

(4) Prohibiting you from subleasing or assigning all or any part of your rights, extending the term or renewing or modifying the lease without our prior written consent, which may be withheld in our sole and absolute discretion;

(5) Requiring the lessor/sublessor to concurrently provide us with a copy of any written notice of default under the lease sent to you and granting us the right (but without any obligation on our part) to cure any default under the lease, if you fail to do so, within fifteen (15) days after the expiration of the period in which you can cure the default and then, at our further op^ tion, to receive an assignment of your leasehold interest but without any liability for past defaults; ■=

(6) Providing that the Office/Yard will be used only for the operation of a I st Propane® Franchise pursuant to a Franchise Agreement with us in good standing;

(7) Providing that any default by the Franchisee under this Agreement or any other agreement with us (or any of our affiliates) may, at our option, constitute a default under the lease (you agreeing that any default by you under the lease may, at our option, constitute a default under this Agreement); and

(8) Providing that no sale, assignment or transfer of your leasehold interest will be approved or otherwise consented to, or any change, addition, or other modification to the lease or other instruments be made, without obtaining our prior written consent.

1st Propane Franchising, Inc. INITIALS________________________________

Franchise Agreement ~~9/2~~8~~/05~~10/0511/06 Page 4 of 58

You won't execute a lease or sublease, or any modification or amendment, without our prior written consent, which we can withhold in our sole and absolute discretion. You'll deliver a copy of the signed lease or sublease to us within five (5) days after it's signed. If you own the Office/Yard and we request, you'll enter into a lease with us for a term equal to the term of the Franchise (with matching renewal options) on commercially reasonable terms, and will sublease the Office/Yard from us on the same terms as the prime lease.

If such provisions are not included in the lease or other instruments, we may, without liability and at our sole option at any time (a) require that you immediately cause such provisions to be inserted or (b) terminate your rights and our obligations under this Agreement. If you own (or acquire) the Office/Yard, you will enter into arrangements with us granting us benefits substantially identical to those set out above.

3.3 1st Propane® Design Specifications. We'll furnish you with (and may update from time-to-time) our standard specifications and other requirements for design, decoration, layout, equipment, tanks, vehicles, fixtures, signs and other items for 1st Propane® Franchises (the "1st Propane® Standard Design Specifications"), including vehicles and the Of^�fice/Yard, with which you'll promptly comply. You agree that rfw-lst Propane® Franchise Sstandard Design Specifications are an integral part of the 1st Propane® System and that your 1st Propane® Franchise will be developed, constructed, designed and operated in full compliance with the latest 1st Propane® Standard Design Specifications at all times.

3.4 Development Schedule for Your 1st Propane® Franchise. Within twelve (12) months from the date of this Agreement, you must: (1) secure all financing required to fully develop your 1st Propane® Franchise; (2) submit to us for consent any proposed modifications to the 1st Propane® Franchise Standard Design Specifications to comply with applicable local ordinances, building codes, permit requirements, lease requirements and restrictions (any modifications will be at your expense); (3) obtain all required planning & zoning changes, fire department, hazardous materials, building & safety, public works, utility, sign, environmental health, sanitation and business permits and licenses and any other required permits and licenses; (4) construct all required improvements in compliance with construction plans and specifications supplied or consented to by us; (5) establish your 1st Propane® Franchise in compliance with plans and specifications consented to by us; (6) purchase and install, as applicable, all required equipment, tanks, vehicles, fixtures and signs (including the Designated Equipment and computer hardware and software); (7) obtain all customary contractors' sworn statements and partial and final waivers of lien for construction, remodeling, decorating and installation services; and (8) open your 1st Propane® Franchise for business with the general public, subject only to our final inspection and consent or your franchise may be terminated by us in our sole and absolute discretion, and no refund of franchise fee will be given.

Within that time period you'll also select and employ a licensed contractor (as necessary) reasonably consented to by us and you'll commence construction and/or development as soon as possible and will expeditiously attend to its completion, purchase and pay for all supplies; purchase, pay for and attend to the installation of all fixtures and equipment, train all employees, obtain all required insurance, permits and licenses and do everything necessary for your 1st Propane® Franchise to open for business. We do not warrant or guaranty to you in any way that any contractor or other professional is suitable, competent, reliable or otherwise able to perform adequately the tasks for which they are hired and you're the only person/company with any responsibility for the work of any contractor selected and/or employed by you.

3.5 Equipment, Fixtures, Vehicles, Signs. You'll use in the development and operation of your 1st Propane® Franchise only those brands, types and/or models of equipment fixtures, tanks, vehicles, signs, Products, Services as are consented to and required by us. You'll purchase or otherwise obtain approved brands, types and/or models of equipment, fixatures, tanks, vehicles and signs only from suppliers designated by us, which may include ourselves and/or our affiliates. We

i can require you to purchase, lease, and finance or otherwise acquire all items through us and/or an affiliate.

3.6 1st Propane® Franchise Opening. You won't open your 1st Propane® Franchise for business until: (1) we notify you that all of your pre-opening obligations have been fulfilled; (2) pre-opening training of all of your personnel has been completed; (3) all amounts then due us (or any affiliate) have been paid; and (4) we've been furnished with copies of all insurance policies as required under Section 10.6 (or such other evidence of insurance coverage and payment of premiums as

1st Propane Franchising, Inc. INITIALS________________________________

Franchise Agreement 9&Sm 10/0511/06 Page 5 of 58

we request) and leases/subleases as required by this Agreement. You will open your 1st Propane® Franchise for business and commence business pursuant to this Agreement within five (5) days after we give notice to you stating that your 1st Propane® Franchise is ready for opening.

3.7 Grand Opening Program. You will, on signing this Agreement, deposit Four Thousand Dollars ($4,000) with us, which we will disburse, in our sole and absolute discretion with respect to media, content and otherwise, for a grand opening advertising and promotional program covering your 1st Propane® Franchise, beginning approximately fourteen (14) days before and continuing for approximately twenty eight (28) days after, the opening of your 1st Propane® Franchise. ~~You'll conduot a grand opening advertising and promotional program for your 13t Propano© Franchise bo ginning two weeks (1~~4~~) days before, and continuing four weeks (2~~8~~) days after, the opening of your 1st Propane® Franchise~~ In connection therewith, ~~and to spend no less than Four Thousand Do~~l~~lars ($~~-1~~,000) on ouch advertising and promotion dur ing that t~~i~~me. Such~~ such advertising and promotional program will utilize marketing and public relations programs and media and advertising materials conse~~nted~~ as selected fe-by us in our sole and absolute discretion. We'll furnish additional advice

and guidance to you with respect to your grand opening advertising and promotional program.

3.8 Relocation of 1st Propane® Franchise Office/Yard. If your lease or sublease for your 1st Propane® Fran4 chise Office/Yard expires or terminates without your fault, if the Office/Yard are damaged, condemned or otherwise rendered unusable, or if, in your and our judgment, there is a change in the character of the location of the Office/Yard sufficiently det^-rimental to its business potential to warrant its relocation, we'll grant permission for relocation of your 1st Propane® Office/Yard to a location reasonably acceptable to us and without charging you an additional initial franchise fee, but any such relocation will be at your sole expense and you (and each affiliate of yours) will sign a general release, in form prescribed by us, of any and all claims, liabilities and/or obligations, of any nature whatsoever, however arising, known or unknown, against us and/or any or all of the Franchisor-Related Persons/Entities.

3.9 Assistance in Financing. We will refer you to companies experienced in the field of financing operations similar to a 1st Propane® Franchise and may assist you in the application process, but, due to possible changes in credit markets, evaluation of your credit worthiness and other factors (many of which are beyond our control), we can't give you any guarantees or make any representations as to the continuing availability, terms, conditions or otherwise of any possible financing, guarantees or financial or other support. �

3.10 Assistance with obtaining Liability Insurance. We may refer you to companies and/or brokers experienced in the field of providing liability insurance and may assist you in the application process, but due to possible changes in insure ance markets, evaluation of your driving and claims history and other factors (many of which are beyond our control), we can't give you any guarantees or make any representations as to the continuing availability, terms, conditions or otherwise of any liability insurance. ?

4. COMPUTER HARDWARE AND SOFTWARE SYSTEMS.

4.1 Since the effective and efficient operation of a 1st Propane® Franchise is intimately connected with the use and maintenance of appropriate computer hardware and software systems, with direct interconnection to (and access by) our computer hardware and software systems, you must purchase, use, maintain and update computer and other systems (including point-of-sale systems) and software programs which meet our specifications as they evolve over time and which, in some cases, may only be available through us and/or our affiliates. You must maintain your systems on-line to provide us with full access and you must promptly update and otherwise change your computer hardware and software systems as we require from time-to-time, at your expense. You'll pay all amounts charged by any supplier or licensor of the systems and programs used by you, including charges for use, maintenance, support and/or update of these systems or programs, other than proprietary 1st Propane program software. j

4.2 We'll provide the software necessary to operate the 1st Propane® System and may provide periodic updates; improvements and revisions to such software (as we deem appropriate in our sole and absolute discretion) at no cost to you;

INITIALS________________________________

Page 6 of 58

1st Propane Franchising, Inc.

Franchise Agreement 9/2S/0M 0/0511/06

each of which you'll promptly implement. You understand that the software may contain features allowing us to remotely; disable it, to disable it if certain codes (supplied by us) are not supplied at the appropriate time and to protect against theft or in the breach of any of your obligations to us and/or any affiliate. We're not required to make any updates, improvements, revisions or otherwise and all such matters are in our sole and absolute discretion. Software other than that provided or approved by us will not be permitted to be installed on or used with the computer that is designated by you as your primary computer^ We require you to purchase your computer hardware per our specifications.

4.3 "Electronic Information" shall mean any information stored in your computer system(s) or exchanged between the Franchisor's Website and your computer system(s) relating to the operation of your l^sl Propane Franchise, including, but not limited to, financial transactions, products sold, and any and all information collected and stored in the Plato Database.

4.4 We shall be deemed to be the exclusive owner of the Electronic Information and will allow you to access and use the Electronic Information during the Term and during the term of any Successor Franchise. Subject to the provisions of this Agreement, all laws relating to privacy and the rights of third parties, we may use the Electronic Information in any way we think fit in our Business Judgment.

4.5 Upon a transfer of the whole of the assets or a change of control of the equity of the Franchised Business, which transfer has been approved by us in accordance with the Franchise Agreement, we shall grant the new franchisee all rights necessary to use the Electronic Information on the terms of our then current franchise agreement. If you are required by law to" provide any of the Electronic Information to any third party, then we shall provide you with a copy of the Electronic Information, solely for the purposes of compliance with the applicable law. We can disclose, in offering circulars and other places we designate, and/or as required by law, any information relating to your 1^st Propane Franchise, including your name, any address and/or phone number(s), revenues, expenses, results of operations and/or other information, provided that financial information will b& in statistical form.

5. TRAINING. GUIDANCE AND MANUALS.

5.1 Initial Training Program. We w4H furnish the Franchisee (or a managing partner or majority shareholder

designated by you and consented to by us), and the Franchisee's initial 1st P~~ropnnc© Franchise~~ Franchise manager appointed by the Franchisee, an initial training program covering the operation of a 1st Propane® Franchise. We will furnish the initial training program at a time and place, and for such a period, as we designate (in our sole and absolute discretion). If the Franchisee, managing partner, majority shareholder or Franchise manager has been previously trained by us, or has received ~~Comp~~any-~~approved~~ equivalent certified training, as determined and approved by us, as an employee or owner of another propane business, we may substitute a revised/shortened training program.

Before any personnel of the Franchisee are allowed to handle propane, they must successfully complete the Company'^ prescribed course of training in addition to training required by federal, state and/or local codes and regulations. It is the re* sponsibility of the Franchisee to provide and document training for all of their personnel. The Company may provide and/o'r require the Franchisee to purchase or rent training -manuals; computer based training programs, exams and/or other materials and may impose a reasonable charge for such materials. Training may be provided at the Company's regular scheduled training classes on a "space available" basis and at reasonable charges as determined in our sole and absolute discretion. In all cases, ffiie Franchisee is responsible for travel, meals, lodging and other related living and travel expenses.

For Franchisee's personnel, other than the initial individual Franchisee or the initial managing partner, majority shareholder and/or Franchise manager, the Company may impose an additional reasonable charge^ the-G~~offl~~ffa*>y--t~~nay~~ to provide a certified instructor and/or proctor to administer the classroom training programs and exams and ~~a c~~ert4fted-»>--st~~ructor~~ to verify -the ~~emp~~l~~oyee~~ the performance-based skills assessments ~~skill le~~ve~~l as~~sessme~~nts~~ at times and places k*-be designated by the Company.

The Franchisee will appoint a key system operator (the "Key System Operator") thef-who will be responsible for operating the computer�based PLATO system s~~oftwa~~re and any other Proprietary programs, Software or systems. This Key System Ooperator will be trained by us. We will be available to provide ongoing and refresher training -~~continue~~, uv fraw and/or to upgrade the skills of the initial Key System Operator this ope~~rator~~ by telephone and e-mail, at such time';?

1st Propane Franchising, Inc. INITIALS______________________________________

Franchise Agreement ~~9/2~~8~~/05~~10/0511/06 Page 7 of 58 /;

�

and/or to upgrade the skills of the initial Key System Operator thi~~n oporutor~~ by telephone and e-mail, at such times and in such manner as we determine. Training for each additional or replacement ~~key oporatora~~Key System Operator will be furnished at a reasonable charge at times and places designated by the Company. The Franchisee (or a managing partner or majority shareholder consented to by us), and the-each of Franchisee's Key System Operators ~~key operat~~i~~ng person~~-will be required to participate in the initial training session for the key system so~~ftwttf~~e operator in order to be familiar with the opera-., tion of the systems and the features that apply to everyday management information, marketing and operations. ?.

i We will not train the Franchisee, managing partner, majority shareholder, er-&e Franchisee^ manager or employees for obtaining licenses such as commercial driver licenses, -contractor's licenses or any other licenses that may be required or useful in the operation of a 1st Propane® Franchise. The Franchisee is advised to contact their state driver's license issuing agency to obtain the current requirements to apply for a commercial driver's license, ftv including hazardous materials, tank truck and air brake endorscinents.-eBmefSr We will advise the Franchisee regarding obtaining state required licenses related directly to the operation of a propane business, but we are not responsible for and can make no assurances that such licenses will be issued.

If we, in our sole and absolute discretion, determine that the Franchisee (or a managing partner or shareholder consented to by us) or the Franchisee's manager has not successfully completed (or is not making satisfactory progress in) the Franchisee's initial training, we may cancel all of the Franchisee's rights (and all of our obligations) under this Agreement and/or any other agreements with the Franchisee. The Franchisee will return all manuals and other materials provided by the Company, and the Franchisee (and each affiliate of the Franchisee) will sign a General Release and we will provide the Franchisee with a similar release, except that the Franchisee's indemnity, non-competition, confidentiality obligations, and the dispute avoidance and resolution provisions of this Agreement, including those of Article 19, together with the provisions of Article 21, will be preserved. .

Since the possibility of such termination exists, the Franchisee understands that if the Franchisee makes any invest ments or signs any documents prior to completion of training, the Franchisee is at risk. Alternatively, we can (in our sole and absolute discretion) require the Franchisee to hire a substitute manager and arrange for him/her to complete the initial trainin| program to our satisfaction. ':

If, whether as a result of observations, audits, test results or otherwise during initial training or thereafter (including during operation of a 1st Propane® Franchise) we determine, in our sole and absolute discretion, that it's appropriate, we can require that (1) a manager or other person designated by us be placed in the Franchisee's 1st Propane® Franchise to supervise its day-to-day operations for the purpose of assuring compliance with our standards and the Franchisee will pay all costs in con_:nection therewith, including salary, normal corporate benefits, travel, meals, lodging and incidental expenses and/or (2) the Franchisee (or a managing partner or shareholder consented to by us) and/or a manager appointed by the Franchisee, at the Franchisee's sole cost, re-attend and successfully complete the Company's initial training program r at a time and place designated by us, in our sole and absolute discretion.

i) Additional and/or Refresher Training: The Franchisee (or a managing partner or shareholder consented to by us) and the Franchisee's manager and other employees must attend additional and/or refresher training programs (if we designate them as mandatory) conducted at location(s) specified by us. The Franchisee and the Franchisee's managers and employees may attend any additional and/or refresher training programs offered by us from time-to-time, which we designate as opj tional. We won't charge a fee for any additional mandatory training programs but we may charge a fee for any optional trainV ing programs. In all cases, tThe Franchisee will be responsible for all training fees, travel, living, incidental and other expenses and compensation of the Franchisee and the Franchisee's personnel attending any training program.

Franchisee will cause himself and each employee to undertake a minimum of 1 day (8 hours) of safety, technical, operations, management, marketing or other related refresher training between the months of May and September each year. Prior to September 30 each year of this Aagreement, Franchisee will provide Franchisor with a signed statement certifying each

1st Propane Franchising, Inc.

Franchise Agreement 9&8/9410/GS11/06

INITIALS

Page 8 of 58

pe^Hms-Franchisee's and/or each employce's-tbe completion of this training. This statement will list the trainer's name, the trainee's name, a legal identification number and the courses of training completed.

ii) Safety Meetings: All Franchisee managers, supervisors and employees are required to participate in monthly safety meetings that are held at the Franchisee's location and administered by the Franchisee. We may provide the materials for this meeting and the Franchisee agrees to document the holding of the meeting, as well as attendance by the required personnel on) forms provided by us. Periodically, at a time of our choosing, we may hold a safety and/or training meeting at the Franchisee's location. All personnel that handle propane will be required to attend safety and/or operations related meetings. All personnel involved in marketing will be required to attend sales and/or training meetings that we may hold at the Franchisee's location, at a time of our choosing. We can charge a reasonable fee for materials used and/or distributed at such meetings. >

5.2 Guidance and Assistance. We'll furnish guidance to you with respect to: (1) specifications, standards, policies and operating procedures utilized by 1st Propane® Franchises, including any modifications; (2) purchasing approved equipment, tanks, vehicles, fixtures, signs, inventory, operating materials and supplies; (3) developing and implementing local advertising and promotional programs; (4) administrative, bookkeeping, accounting, inventory control and general operating and management procedures; (5) establishing and conducting employee training programs at your 1 st Propane® Franchise; (6) marketing strategy; and (7) help identify and negotiate with sources for wholesale propane supplies and identify liability insurers. This guidance can, in our sole and absolute discretion, be furnished in the Manuals, bulletins, written reports and recommendations, other written materials, refresher training programs and/or telephonic consultations or consultations at our offices or at your 1st Propane® Franchise. You agree t(H44 follow and utilize this guidance.

It is your sole responsibility to establish, with respect to your employees, appropriate personnel and security-related policies and procedures (provided that we always have the right to terminate your rights by declaring a breach under this Agreement for conduct by you which threatens the goodwill associated with the Marks.) You and we acknowledge and agre^ that we neither dictate nor control labor or employment matters for you and your employees, including (but not limited to) hir-j ing, firing and/or discipline of employees, nor control the manner and means by which they carry out their duties. You and we agree that neither of us are, or shall be deemed to be, a joint employer with the other and you will indemnify us with respect td any such or similar claims against us.

We will provide, at no additional charge to you, one on-site visit to your facility to assist you in starting your 1st Propane® business. Any additional visits will be subject to our mutual agreement and convenience and we may charge you (and require a deposit) for costs of travel, meals and lodging, along with a reasonable per diem charge. We will also provide you with a limited supply of promotional and business identity items.

5.3 Manuals. We'll jtHtn-o^make our Manuals available to you_? on our PLATO software system or in such other manner as we select? and will authorize you to use the Manuals only during the term and subject to the provisions

of this Agreement.~~; our~~-~~Manua~~ts. We can, in our sole and absolute discretion, modify any aspect of the 1st Propane® System and/or specifications, standards, policies and procedures of 1st Propane® Franchises. You'll promptly and continuously comj ply, at your sole expense, with all provisions of, and changes to, the Manuals and the 1st Propane® System. ~~In tho~~ e~~vent of q dispute abouHhe cont~~e~~nts of the Manuals,~~-~~thc~~-mas~~ter copi~~e~~s maintained by us w~~tH-be ~~control~~li~~ng;~~- You won't copy or permit others to copy any part of the Manuals and the Manuals are always our property. ~~We may, at our~~-~~option, provide yoa~~-ftleo; ~~tron~~io-~~cop~~ies of-~~our tnanuals~~T \

5.4 Marketing Assistance. We will assist you with marketing by compiling a mailing of up to 100 names from

your prospect list each month. We will pay the cost of the materials mailed, postage and our time to assemble the mailing and we may be reimbursed from the Marketing Fund for our direct and other costs in connection therewith. You agree to compile and maintain the list necessary for us to do this mailing with a suggested target of 100 names. We will assist you, to the extent necessary in our sole and absolute discretion, with developing marketing materials specific to individual locations. We may, through mutual agreement, group the monthly mailing obligation into larger groups.

1st Propane Franchising, Inc.

Franchise Agreement 9tW0�1 0/0511/06

INITIALS

Page 9 of 58

5.5 Accounting Services. Provided that you're in full compliance with all of your operational, payment and other

obligations to us (and/or any affiliate), including but not limited to appropriate use of our Proprietary Software, use of desig-_:nated hardware and other software and providing us with all required reports, we will provide, through our software, various reports that will assist you with the operation of your 1st Propane® Franchise. As soon as is practical after the end of each month, we will provide you with an (unaudited) financial statement presenting the results of your operations for the previous month and year to date. This statement will include an income statement and a balance sheet, and other reports which we feel may be useful in the operation of your 1st Propane® Franchise. We will print your customer statements each month, on a date designated by us, and will forward those statements to you for postage and mailing. We will process your payroll every two weeks, providing you with an itemized payroll statement for you to present to your employees with their payroll check, but all actual payroll (and other) payments are your sole responsibility.

We will keep track of your payroll tax withholding and prepare monthly and quarterly payroll tax reports, forwarding the reports to you for your signature and payment. We will keep track of your sales tax and fuel tax collections and payment obligations, forwarding the reports to you for your signature and payment. We will process certain other tax reports and forms for you, including, but not limited to, property tax reports and end of year payroll tax reports and employee W-2's, but we will not prepare or otherwise be involved with tax reports concerning or related to income taxes, VAT, GST or similar taxes. All obligations (including payment) and liabilities related in any way to your taxes are solely yours and our services are limited to preparing such statements based on information received from you. y

6. MARKS. t

6.1 Goodwill and Ownership of Marks. Your right to use the Marks is derived solely from this Agreement and is limited to the operation of your 1st Propane® Franchise by you, solely within the Territory, in compliance with this Agree_:. ment and all applicable standards, specifications and procedures prescribed by us. You'll use the Marks only as expressly authorized by us, and you will use and display the Marks only in such manner, and using such equipment and other systems, as we authorize from time to time, in each case promptly complying with any changes we may require, all at your sole cost and expense. You won't oppose, or engage in any acts or omissions inconsistent with, our rights in and to the Marks. Any unauthorized use of the Marks by you is a breach of this Agreement and an infringement of our rights in and to the Marks. This Agreement, and your operation of your 1st Propane® Franchise, does not confer any goodwill or other interests in the Marks on you (other than the right to operate your 1st Propane® Franchise in compliance with this Agreement), all goodwill (whether relating to the Marks, your use thereof or otherwise) and such interests belonging exclusively to us and all use of the Marks to inure to our benefit. All provisions of this Agreement applicable to the Marks will apply to any other trademarks, service marks and/or commercial symbols whenever authorized for use by, and licensed to, you by us. Any marks or other forms of identification developed by us in the future will remain our property and you will have no rights in or to them but we may rej-quire you to use them as we direct. You agree that if you breach any obligation regarding the Marks, we would have no ade^ quate remedy at law and that we will be entitled to equitable relief with respect to any such breach. Your rights to the Marks are non-exclusive, are only as set forth in this Agreement, and we retain the sole right to grant other licenses for the Marks (in addition to those already granted) and to establish and/or become involved with other, similar and/or related businesses and to grant them rights with respect to the Marks without providing you with any rights.

6.2 Limitations and use of Marks. Unless we direct or consent (in writing) otherwise, you will use the Marks as the sole identification in connection with your 1st Propane® Franchise, provided that you'll identify yourself as the independr ent owner of your 1st Propane® Franchise as prescribed by us. You'll not use any Mark as part of any corporate name or with any prefix, suffix, or other modifying words, terms, designs, or symbols, or in any modified form, except as expressly permitted by us in our sole and absolute discretion. You won't use any Mark in connection with the performance or sale of any unauthorized services or products or at any location or in any other manner not expressly authorized in writing by us. The use of any geographic or other designation in connection with the Marks will only be as permitted by us, you will have no exclusive or other rights with regard to any geographic or other designation and you will not take any action inhibiting or otherwise art fecting the use of the Marks by any 1st Propane® Franchise Franchisee or anyone else, unless expressly authorized by us in. writing. You'll display the Marks prominently as we require at your 1 st Propane® Franchise and in connection with advertisr

1st Propane Franchising, Inc. INITIALS________________________________

Franchise Agreement 9/28~~/05~~10/ftfl 1/06 Page 10 of 58

ing and marketing materials and you won't use any of the Marks so as negatively affect the goodwill associated with the Marks. You won't provide any goods or services from your 1st Propane® Franchise or otherwise under any identification or tradename, other than the Marks. You'll give such trademark and other notices as we direct and will, at your expense, obtain fictitious or assumed name registrations as may be required under law. You'll sign such documents and do such acts as required by us from time-to-time to protect our interests in the Marks and you won't take any action, or omit to take an action, so as to jeopardize our interests or their validity or enforceability of the Marks.

6.3 Notification of Infringements and Claims. You'll immediately notify us of any apparent or actual infringement of, or challenge to, your use of any Mark, or any claim by any person of any rights in any Mark, and you won't communicate with anyone other than us and our counsel in connection with any such matter. We'll have sole and absolute discretion to take such action as we deem appropriate in connection with such (or any related) matters, and the right to control exclusively any settlement, litigation or Patent and Trademark Office or other proceeding arising out of or related to any such matters or otherwise relating to any Mark. You'll execute any and all instruments and documents, render such assistance, and dp such acts and things as may, in our opinion, be advisable to protect and maintain our interests in any litigation or other pro*

ceeding or to otherwise protect and maintain our interests in the Marks. }

6.4 Discontinuance of Use of Marks. If it becomes advisable at any time, in our sole and absolute discretion, for you to modify or discontinue the use of any of the Marks or use one or more additional or substitute trademarks or service marks, you will promptly comply (at your sole expense) with our directions to modify or otherwise discontinue the use of such Marks, or use one or more additional or substitute trademarks or service marks. We won't have any liability or obligation (whether of indemnity, expense reimbursement or otherwise) to you, and you agree to make no claim, for, or in connection with, any modification, discontinuance or otherwise, and/or any dispute regarding the Marks and/or your and/or our rights in or to them.

7. RELATIONSHIP OF THE PARTIES: INDEMNIFICATION.

7.1 Independent Contractor. You and we understand and agree that neither this Agreement nor anything else creates a fiduciary or agency relationship between you and us, that you and we are and will be independent businesses, and that nothing in this Agreement is intended to make either you or us a general or special agent, joint venturer, partner, employee or fiduciary of or for the other for any purpose. You'll conspicuously and clearly identify yourself (through prominently^ placed signage and otherwise as we direct) in all dealings with customers, suppliers, public officials, employees and others as an independent owner of your 1st Propane® Franchise under a franchise granted by us and make it clear that the operation of your 1st Propane® Franchise is separate and distinct from the operation of our business. In particular, you'll place notices of independent ownership on such vehicles signage, other signage, forms, invoices, business cards, stationery, advertising, and other materials as we require from time-to-time. Subject to the requirements of this Agreement and the Manuals, you'll have complete operational control of your business, including the right to hire and fire each employee. It is your sole responsibility to establish, with respect to your employees, appropriate personnel and security-related policies and procedures (provided that we always have the right to terminate your rights by declaring a breach under this Agreement for conduct by you which threatens the goodwill associated with the Marks.) You and we acknowledge and agree that we neither dictate nor control labor or employment matters for you and your employees, including (but not limited to) hiring, firing and/or discipline of employees, nor control the manner and means by which they carry out their duties. You and we agree that neither of us are, or shall be deemed to be, a joint employer with the other and you will indemnify us with respect to any such or similar claims against us.

7.2 No Liability for Acts of Other Party. You won't use any of the Marks or the System in a manner that may result in our liability for any indebtedness or obligations of yours, nor use the Marks or System in any way not expressly authorized in this Agreement. Neither we nor you will make any express or implied agreements, warranties, guarantees or representations, or incur any debt in the name, or on behalf, of the other, or represent that your and our relationship is other than that of independent Franchisor and Franchisee. Neither you nor we will be obligated by or have any liability under any-acts, omissions, agreements or representations made by the other that are not expressly authorized in writing, nor will we be obligated for any damages to any person or property directly or indirectly arising out of the operation of your 1st Propane*!}

1st Propane Franchising, Inc. INITIALS________________________________

Franchise Agreement W28/&510/0S11/06 Page 11 of 58

Franchise or otherwise, all such obligations and liabilities being solely yours and you indemnifying us, and each of our affile

ates, with respect thereto.

7.3 Taxes. We'll have no liability for any sales, VAT, GST, use, service, occupation, excise, gross receipts, income, property or other taxes, whether levied on you, your 1st Propane® Franchise or your property, or on us, in connection with the sales made and/or business conducted by you (except for any taxes we are required by law to collect from you with respect to purchases from us.) Payment of all taxes will be your sole responsibility.

7.4 Responsibility, Indemnity. You're the only one responsible for any damage, loss or other claims arising out of, or related in any way to, any of your acts, errors or omissions, whether related to you, your employees, agents or representatives, your operations or ownership of your 1st Propane® Franchise or otherwise arising. You will indemnify and hold harmless us, all of Franchisor-Related Persons/Entities, all 1st Propane® Franchisees or other operators and/or any of the foregoing, from all fines, suits, proceedings, claims, demands, actions, loss, damages, costs, fees (including attorney's fees and related expenses) and/or any other expense, obligation and/or liability of any kind or nature, however arising, growing out of or otherwise connected with and/or related to any act, error and/or omission of yours (including, but not limited to, your ownerj ship and/or operation of your 1st Propane® Franchise, any act or omission of your employees and/or agents, and/or any trans? fer of any interest in this Agreement, your 1st Propane® Franchise, the Franchise, the Franchisee or otherwise.) We'll have the right to control all litigation, and defend and/or settle any claim, against and/or including us and/or the Franchisor-Related Persons/Entities or affecting our and/or their interests, in such manner as we deem appropriate in our sole and absolute discre? tion, in each case without affecting our rights under such indemnity.

With respect to anything (goods, services or otherwise) provided, approved or otherwise by us, the Franchisor-Related Persons/Entities and/or any person/company affiliated in any way with and/or referred by us or them, other than specific written warranties expressly provided by us in connection with such items, such items are provided without any warranties, express or implied, THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE BEING EXPRESSLY DISCLAIMED, nor do there exist any express or implied warranties on the part of us, the Franchisor-Related Persons/Entities or any affiliate as to the design, condition, capacity, performance or any other aspect of such items or their material or workmanship. Any warranty or other responsibility with respect to any Designated Equipment, Products and/or Services or otherwise will be those of the manufacturers or service providers only.

8. CONFIDENTIAL INFORMATION: EXCLUSIVE RELATIONSHIP. }

8.1 Confidential Information - Non-Disclosure and Non-use. We have, and plan to develop and acquire from

time-to-time, certain confidential and proprietary information and trade secrets, including but not necessarily limited to, th? following categories (the "Confidential Information"): (1) methods, techniques, specifications, standards, policies, procedures; information, concepts, systems, and knowledge of and experience in the development, operation and franchising of 1st Propane® Franchises; (2) marketing programs for 1st Propane® Franchises; (3) specifications for, and suppliers of, certain materials, equipment, vehicles and fixtures for 1st Propane® Franchises; (4) methods, procedures and techniques for preparing, marketing and presenting the Products and Services; and (5) information regarding the Products and Services authorized to be offered from 1st Propane® Franchises from time-to-time. In any dispute between you and us involving any question as to whether or not certain information is, in fact, confidential and/or proprietary to us, or any related issues, the burden of proof and the burden of going forward will be on you.

We'll disclose, to you, during training, in the Manuals and in guidance and assistance furnished to you during the term of the Franchise, parts of the Confidential Information needed for the operation of a 1st Propane® Franchise, and you may learn additional Confidential Information of ours during the term of the Franchise. You will not acquire any interest in the Confidential Information, other than the right to utilize it in the operation of a franchised 1st Propane® Franchise at the Office/Yard and pursuant to this Agreement. ■;

i "t

INITIALS________________________________

Page 12 of 58

1st Propane Franchising, Inc.

Franchise Agreement 9&S/G510/0511/06

You acknowledge and agree that the Confidential Information is a valuable asset of ours, includes trade secrets of ours and will be disclosed to you solely on the condition that you will forever: (1) not use the Confidential Information in any way other than the operation of your 1st Propane® Franchise under a Franchise Agreement in good standing with us; (2) maintain the absolute secrecy and confidentiality of the Confidential Information during and after the term of this Agreement; (3) not make unauthorized copies of any portion of the Confidential Information; and (4) adopt and implement all reasonable procedures prescribed by us from time-to-time to prevent unauthorized use or disclosure of, or access to, the Confidential Information. You agree that any unauthorized use or duplication of any part of the Confidential Information, including in any other business, would be an unfair method of competition with us and other 1st Propane® Franchisees.

So as to assist in the development of the 1st Propane® System and for the mutual benefit of all 1st Propane® operators, we'll have the perpetual right to use and to authorize other 1st Propane® Franchises to use, and you'll fully and promptly disclose to us, and allow us and all other 1st Propane® operators to use, all ideas, concepts, methods, techniques and otherwise relating to the development, marketing and/or operation of a 1st Propane® Franchise, or which would be usable therein, which are conceived or developed by you and/or your employees during the term of this Agreement, in each case without compensa-^;tion or other obligation. ^:.

v You'll cause each of your employees, agents, principals and affiliates to execute and deliver to you an agreement com

taining substantially the same provisions as set forth in this Section, in a form or forms consented to by us. An original of

each executed Confidentiality Agreement will be available for our inspection during business hours. You will, on our request^

deliver to us copies of any Confidentiality Agreement. ,

8.2 Exclusive Relationship., Restrictions on Similar Businesses During Franchise Term and After Termina-

tion. Expiration, Repurchase. You and we share a mutual interest in avoiding situations where persons or companies who are, or have been, 1st Propane® Franchisees operate, or otherwise become involved with, a Similar Business, anywhere, either during the term of, or after the termination or expiration, of your rights under, this Agreement.

In addition, and as independent bases for the provisions of this section, you acknowledge and agree that (1) you will receive valuable training and confidential information throughout the term of the Franchise, including, without limitation, information regarding our promotional, operation, sales, and marketing methods and techniques and the System which was not known to you before becoming a 1st Propane® Franchisee, (2) we would be unable to protect such confidential information and other information and techniques against unauthorized use or disclosure, would be unable to encourage a free exchange of ideas and information among 1st Propane® franchisees and the goodwill and other assets of our business and those of other 1st Propane® Franchisees would be at risk if franchise owners and members of their immediate families were permitted to hold interests in or perform services for a Similar Business during or after the term of the Franchise Agreement and (3) you'j; ownership and/or operation of, or any other relationship with, a Similar Business would necessarily benefit from, and be inr consistent with, your status and obligations as a 1 st Propane® franchisee. �'

We've entered into this Agreement with you on the express condition that with respect to the operation of any Similar Business, you and your owners (in the event you are a corporation or partnership) and members of your and their respective immediate families will deal exclusively with us during the term of this Agreement (and any other Franchise Agreement with us) and will not be involved with any Similar Business for a specified period of time thereafter.

Therefore, to protect your and our investment and that of all 1st Propane® Franchisees, you and we agree as follows: (1) during the term of this Agreement (and any other Franchise Agreement with us) and any extension thereof, and (2) for three (3) years after any, the termination (for cause) of your rights, or any assignment and/or the date on which you cease to operate your last 1st Propane® Franchise, whichever is later, neither you, any affiliate of yours, nor any shareholder or partner of yours (in the event you are or become a corporation or partnership), nor any member of your immediate family nor any member of the immediate family of any affiliate, shareholder or partner of yours will (except for 1st Propane® Franchises operated in good standing under franchise agreements with us): (a) have any direct or indirect interest as a disclosed or beneficial owner in any Similar Business located, or operating units located, anywhere; (b) have any direct or indirect interest (through a

1st Propane Franchising, Inc.

Franchise Agreement ft^/9^10/0511/06

INITIALS

Page 13 of 58

member of the immediate family of yours or any owner of you, or otherwise) as a disclosed or beneficial owner in any entity which is granting franchises or licenses or establishing joint ventures or other business enterprises for the operation of Similar Businesses located, or operating units located, anywhere; (c) perform services as a director, officer, manager, employee, consultant, representative, agent, or otherwise for any Similar Business or any entity which is granting franchises or licenses or es^ tablishing joint ventures to operate Similar Businesses anywhere; or (d) directly or indirectly employ, or seek to employ, any person who is employed by us or any affiliate or by any other 1st Propane® franchisee, nor induce nor attempt to induce any. person to leave said employment without the prior written consent of us and that person's employer; provided that if the fore^ going restriction regarding our and the employer's consent is unenforceable, you will first notify us and that employer before taking any action with respect to any such employment or any offer of employment. You confirm that prior to entering into your 1st Propane® Franchise you possessed (and still possess) valuable skills unrelated to your 1st Propane® Franchise, have the ability to be gainfully employed in other fields entirely acceptable to you and that the strict enforcement of the restrictions of this Agreement will not work any undue or significant hardship on you or your family.

If any of the restrictions of this Section are determined to be unenforceable due to excessive duration, geographic scope, business coverage or otherwise, you and we agree that they will be reduced to the level that provides the greatest restriction but which is still enforceable, notwithstanding any choice-of-law or other provisions in this Agreement to the contrary. The time period of the competitive restrictions described in this Agreement will be extended by the length of time in which you or any other person or entity are in breach of any provision of this Agreement (including the limitations of this Section.) The provisions of this Section will continue in full force and effect through the extended time period.

The restrictions of this Section don't apply to the ownership of shares of a class of securities listed on a stock exchange or traded on the over-the-counter market that represent less than three percent (3%) of the number of shares of that class issued and outstanding. P

If you violate any obligations under this Agreement (or otherwise) with respect to a Similar Business, our remedies will include (but are not limited to) the right to obtain a temporary restraining order, preliminary and/or permanent injunction (or other equitable relief), notwithstanding any provisions to the contrary.

On our request, you will obtain written non-competition commitments from the persons subject to the non-competition provisions of this Agreement, in such form as we direct and naming you and us as beneficiaries of such agreements.

If the restrictions of this Section are unenforceable or are reduced to a level which we, in our sole and absolute discretion, find unacceptable, we may, in addition to any other remedies available to us, require you to pay a fee (either paid immediately on a present value basis or over time, as we select) of one-half (1/2) of the royalties and advertising contributions which would be payable if the business in question was a franchised 1st Propane® unit, for three (3) years after termination, expiration or repurchase, such amount having been jointly selected by you and us as fair and appropriate damages and in consideration of (1) the difficulty of accurately predicting actual damages, (2) the fact you will inevitably benefit in the operation of such business from your training and experience as a 1st Propane® Franchisee, (3) the possible impact on the expansion and operation of our system, including the expense and difficulty of a sale of a franchise in your area and (4) you not having any rights, nor we having any obligations, under this Agreement or otherwise during such period. ■

9. FEES. i

9.1 Initial Franchise Fee. You'll pay us, on signing this Agreement, an initial franchise fee of Thirty Thousand

Dollars ($30,000). The initial franchise fee is fully earned by us on signing of this Agreement and is entirely nonrefundable (as are all amounts paid to us). You understand that the initial franchise fee may not be same for all franchisees and may take into account factors such as size of territory, previous business relationship with us or otherwise.

INITIALS

Page 14 of 58

Download PDF: 1st Propane Franchising Franchise Agreement 1

The original documents were scanned as an image. The original file can be downloaded at the link above.

The Free Franchise Resource Center

Franchise Agreement

Sample Franchise Agreement