Franchise Agreement

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Sample Franchise Agreement

AMERICINN INTERNATIONAL, LLC FRANCHISE AGREEMENT

THIS FRANCHISE AGREEMENT (hereinafter referred to as the

"AGREEMENT"), made, entered into and effective this_____day of_______________,

_____(hereinafter referred to as the "Effective Date"), by and between Americlnn

International, LLC, a Minnesota limited liability company (hereinafter referred to as the

"FRANCHISOR"), and_________________________________________(hereinafter

referred to as the "FRANCHISEE");

WITNESSETH:

WHEREAS, the FRANCHISOR has developed a business concept for providing the public with lodging services of a distinctive character under the names "Americlnn ," "Americlnn Lodge & Suites®," "Americlnn Hotel & Suites®," "Americlnn Motel & Suites®" and "Americlnn Motel®" (hereinafter referred to as the "Business System") and has publicized the names "Americlnn®," "Americlnn Lodge & Suites®," "Americlnn Hotel & Suites®," "Americlnn Motel & Suites®," "Americlnn Motel®" and certain other trademarks, trade names, service marks, copyrights, decor, motif, graphics, slogans, signs, logos, interior and exterior building designs, commercial symbols and color combinations (hereinafter referred to collectively as the "Existing Marks") to the public and other businesses as an organization of motels, hotels and lodges operating under the Business System; and

WHEREAS, the FRANCHISEE desires to operate a motel, hotel or lodge using one or more of the Existing Marks and/or the New Marks (as hereinafter defined), if any, at the single location set forth in ARTICLE 1 which will conform to the Business System and the standards of quality and uniformity established and promulgated from time to time by the FRANCHISOR (hereinafter referred to as the "Americlnn"); and

WHEREAS, the FRANCHISEE has had a full and adequate opportunity to be thoroughly advised of the terms and conditions of this AGREEMENT by legal counsel or a personal advisor, and has had sufficient time to evaluate and investigate both the Business System and the financial investment associated with the Business System; and

WHEREAS, the FRANCHISOR is willing to provide the FRANCHISEE with marketing, advertising, operational and other business information and know-how concerning the Business System that has been developed by the FRANCHISOR over time and at a significant cost to the FRANCHISOR; and

WHEREAS, the FRANCHISEE acknowledges that it would take substantial capital and human resources to develop a motel, hotel or lodge similar to an Americlnn and, as a result, desires to acquire the right to use one or more of the Existing Marks and the New Marks (hereinafter referred to collectively as the "Marks") and the Business

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System from the FRANCHISOR on the terms and conditions set forth in this AGREEMENT; and

WHEREAS, the FRANCHISEE acknowledges that the FRANCHISOR would not provide the FRANCHISEE with any information or know-how about an Americlnn or the Business System unless the FRANCHISEE agreed to comply in all respects with the terms and conditions of this AGREEMENT;

NOW, THEREFORE, in consideration of the foregoing premises, the mutual promises and covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby contract as follows:

ARTICLE 1: FRANCHISED LOCATION; GRANT OF FRANCHISE

(A) Franchised Location. The FRANCHISOR hereby grants to the FRANCHISEE a nonexclusive arid personal license to operate one (1) Americlnn in conformity with the Business System and further grants the FRANCHISEE a nonexclusive and personal license to operate such Americlnn using the Marks at the following single location:

Street Address (if the exact street address is not known at the time this AGREEMENT is signed, the street address should be left blank at time of execution and inserted by the

parties later when it is known)

City, State, Zip Code

(hereinafter referred to as the "FRANCHISED LOCATION"). Until the expiration or earlier termination of this AGREEMENT, FRANCHISOR shall not, so long as the

FRANCHISEE'S Americlnn contains at least____guest rooms and the FRANCHISEE

is not in default hereunder, grant a franchise to operate another Americlnn in the following area:

(hereinafter referred to as the "Protected Area"). "Nonexclusive", for the purposes of this provision, shall mean that the FRANCHISOR has granted or will grant franchises to other franchisees authorizing such franchisees to operate Americlnns in conformity with the Business System using the Marks outside of the Protected Area some of which, depending upon their locations, may compete with the FRANCHISEE'S Americlnn for customers within the Protected Area. In addition, the FRANCHISOR or its affiliates may

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license or operate other lodging properties using trade names other than "Americlnn , either within the Protected Area, or outside of the Protected Area, even if such lodging properties offer services similar to those offered in the FRANCHISEE'S Americlnn.

(B)      Franchisee! Name. The FRANCHISEE will operate its Americlnn under

the name_____________________________________________________(the

"Franchised Name"), and will not change the Franchised Name of its Americlnn or use any other Marks except with the FRANCHISOR'S prior written permission. The FRANCHISEE'S Americlnn shall conform to the requirements for the use of the Franchised Name set forth in the FRANCHISOR'S Minimum Design Standards Manual (as the same may be revised, modified and/or supplemented from time to time by FRANCHISOR in its sole discretion, the "Design Manual") and/or Confidential Operations Guide, (as the same may be revised, modified and/or supplemented from time to time by FRANCHISOR in its sole discretion, (the "Operations Guide").

(C)      Conditions. The FRANCHISEE hereby undertakes the obligation to operate an Americlnn at the FRANCHISED LOCATION under the Business System using the Marks in strict compliance with the terms and conditions of this AGREEMENT for the entire term of this AGREEMENT. The rights and privileges granted to the FRANCHISEE by the FRANCHISOR under this AGREEMENT are applicable only to the single location designated as the FRANCHISED LOCATION, are personal in nature, and may not be used elsewhere or at any other location by the FRANCHISEE.

ARTICLE 2: TERM OF FRANCHISE; FRANCHISEE'S RIGHT OF FIRST REFUSAL

TO REACQUIRE FRANCHISE

(A)      Term. The term of this AGREEMENT shall commence on the Effective Date and shall continue thereafter until the date which is twenty (20) years after the date the FRANCHISEE'S Americlnn opens for business, subject to earlier termination as set forth herein. This AGREEMENT will not be enforceable until it has been signed by both the FRANCHISEE and the FRANCHISOR, and until the signed AGREEMENT has been delivered to the FRANCHISEE.

(B)      Rights Upon Expiration. At the expiration of the term of this AGREEMENT, the FRANCHISEE will not have the right to renew or to extend the term of this AGREEMENT. Notwithstanding the foregoing and subject to the provisions of ARTICLE 2(C) hereof, at the end of the term of this AGREEMENT, the FRANCHISEE will have a right of first refusal to reacquire the franchise for the FRANCHISED LOCATION under the same terms and conditions then being offered to other franchisees by the FRANCHISOR under the FRANCHISOR'S then-current standard Franchise Agreement provided that the FRANCHISEE has agreed to and complied in all material respects with each of the following conditions:

(1) The FRANCHISEE has given the FRANCHISOR written notice at least one hundred eighty (180) days prior to the end of the term of this

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AGREEMENT of its intent to reacquire the franchise for the FRANCHISED LOCATION.

(2)       Throughout the term of this AGREEMENT, the FRANCHISEE has complied with the terms and conditions of this AGREEMENT in all material respects.

(3)       The monetary obligations owed by the FRANCHISEE to the FRANCHISOR have been paid or satisfied prior to the end of the term of this AGREEMENT, and have been timely paid or satisfied throughout the term of this AGREEMENT.

(4)       The FRANCHISEE pays to the FRANCHISOR at the time it executes the FRANCHISOR'S then-current standard Franchise Agreement the inspection fee provided for in ARTICLE 7(Q) hereof and has agreed, in writing, to make the reasonable capital expenditures necessary to remodel, modernize, redecorate and renovate its Americlnn and to replace and modernize the furniture, fixtures, supplies and equipment used in the FRANCHISEE'S Americlnn so that the FRANCHISEE'S Americlnn will reflect the then-current image intended to be portrayed by Americlnns. All such remodeling, modernizing, redecorating and renovating shall be conducted in accordance with ARTICLE 7(F) hereof.

(5)       As of the date the FRANCHISEE exercises its right of first refusal to reacquire the franchise for the FRANCHISED LOCATION, the FRANCHISEE establishes to the reasonable satisfaction of FRANCHISOR that the FRANCHISEE owns the FRANCHISED LOCATION.

(6)       The FRANCHISEE agrees to execute and comply with the then-current standard Franchise Agreement then being offered to new franchisees by the FRANCHISOR.

(7)       The FRANCHISEE pays to the FRANCHISOR at the time it executes the FRANCHISOR'S then-current standard Franchise Agreement a reacquisition fee in the amount of seventy percent (70%) of the initial fee payable by new franchisees as specified in such then-current standard Franchise Agreement.

(8)       The FRANCHISEE submits to the FRANCHISOR such documents and information as the FRANCHISOR may reasonably request, including (i) copies of the organizational documents of FRANCHISEE, and (ii) reasonably current financial statements for FRANCHISEE and the Personal Guarantors of the FRANCHISEE'S under the then-current standard Franchise Agreement to be executed by the FRANCHISEE in connection with the reacquisition of the franchise.

(C) Terms Of Right Of First Refusal. If the FRANCHISEE exercises its right to reacquire the franchise for the FRANCHISED LOCATION and executes the

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FRANCHISOR'S then-current standard Franchise Agreement, the FRANCHISEE will not be required to pay the initial fee specified in the then-current standard Franchise Agreement. However, the FRANCHISEE will be required to pay FRANCHISOR the reacquisition fee described above and to make the local advertising expenditures and pay the Continuing Fees, Marketing Fees and all other fees at the rates specified in the FRANCHISOR'S then-current standard Franchise Agreement, plus any additional fees not provided for in this AGREEMENT, but which are required to be paid to the FRANCHISOR or others by the terms of the FRANCHISOR'S then-current standard Franchise Agreement. The FRANCHISEE acknowledges that the terms, conditions and economics of the then-current standard Franchise Agreement of the FRANCHISOR may, at that time, vary in substance and form from the terms, conditions and economics of this AGREEMENT. Specifically, and without limiting the manner in which the terms, conditions and economics of the FRANCHISOR'S then-current standard Franchise Agreement may vary from this AGREEMENT, the FRANCHISEE acknowledges and agrees that (1) the Continuing Fees, Marketing Fees, training fees, inspection fees, transfer fees and other fees payable to the FRANCHISOR under such then-current standard Franchise Agreement may be greater than that provided for herein, (2) such then-current standard Franchise Agreement may provide for the payment of fees by the FRANCHISEE to the FRANCHISOR which are not provided for herein, and (3) such then-current standard Franchise Agreement may require the FRANCHISEE to spend more for local advertising, marketing and promotion then provided for herein.

ARTICLE 3: FRANCHISOR'S RIGHT TO LICENSE THE MARKS

(A)      Right To Franchise Marks. The FRANCHISOR warrants that it has the right, except as provided herein, to license the Marks to the FRANCHISEE. Any and all improvements made by or on behalf of the FRANCHISEE relating to the Marks or the Business System will become the sole and absolute property of the FRANCHISOR which will have the sole and exclusive right to register and protect all such improvements in its name. FRANCHISEE shall assign and transfer its rights in and to any such improvements to the FRANCHISOR pursuant to a bill of sale or assignment in such form as FRANCHISOR may reasonably require. FRANCHISEE will not be entitled to, and hereby expressly waives, any right that it may have to be compensated by the FRANCHISOR for any such improvements to the Marks and/or Business System. The FRANCHISEE'S right to use and identify with the Marks and the Business System will exist concurrently with the term of this AGREEMENT and such use by the FRANCHISEE will inure exclusively to the benefit of the FRANCHISOR.

(B)      Conditions To License Of Marks. The FRANCHISEE'S nonexclusive and personal right to use the Franchised Name as the name of the FRANCHISEE'S Americlnn and its right to use the Marks and the Business System applies only to the FRANCHISED LOCATION and such rights will exist only so long as the FRANCHISEE fully performs and complies with all of the terms and conditions of this AGREEMENT. The FRANCHISEE will not have or acquire any rights in any of the Marks or the Business System other than the right of use as provided herein. The FRANCHISEE will have the right to use the Marks and the Business System only in the manner

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prescribed, directed and approved by the FRANCHISOR in writing. If, in the judgment of the FRANCHISOR, the acts of the FRANCHISEE infringe upon or demean the goodwill, standards of quality or uniformity, or business standing associated with the Marks or the Business System, then the FRANCHISEE will, upon written notice from the FRANCHISOR, immediately modify its use of the Marks and the Business System in the manner prescribed by the FRANCHISOR in writing. The FRANCHISEE expressly understands and acknowledges that the FRANCHISOR is the owner of all rights, title and interest in and to the Marks and the Business System, and the goodwill associated with and symbolized by the Marks and the Business System. The Marks are valid and serve to identify the FRANCHISOR as the source of origin of the goods and services provided under the Business System. Any and all goodwill associated with the Marks and the Business System will inure exclusively to the FRANCHISOR'S benefit, and upon the expiration or termination of this AGREEMENT, no monetary amount will be assigned as attributable to any goodwill associated with the FRANCHISEE'S use of the Marks and the Business System. The FRANCHISEE will at no time take any action whatsoever to contest the FRANCHISOR'S Marks and Business System and the goodwill associated therewith and will not allege any ownership in the Marks or the Business System.

(C)      Substitution of Marks. The FRANCHISOR reserves the right to modify the Marks or to substitute new or different trademarks, trade names, service marks, copyrights, decor, motif, graphics, slogans, signs, logos, interior and exterior building designs, commercial symbols and/or color combinations (hereinafter referred to collectively as the "New Marks") to identify the Americlnns operating under the Business System, if the FRANCHISOR, in its sole discretion, determines that the modification of the Marks or substitution of New Marks will be beneficial to the Business System. In that event, upon receipt of written notice from the FRANCHISOR, the FRANCHISEE will, at its expense, immediately make all modifications to the Marks specified by the FRANCHISOR in the written notice, and if so specified, the FRANCHISEE will cease using the Marks and commence using the New Marks.

(D)      Adverse Claims. If there is a claim by any party that its rights to any or all of the Marks are superior to those of the FRANCHISOR and if the FRANCHISOR'S attorneys are of the opinion that such claim is legally meritorious, or if there is an adjudication by a Court of competent jurisdiction that any party's rights to any or all of the Marks (hereinafter referred to as the "Conflicting Marks") are superior to those of the FRANCHISOR, then upon receiving written notice from the FRANCHISOR, the FRANCHISEE will, at its expense, immediately discontinue use of the Conflicting Marks and, if so specified, the FRANCHISEE will as soon as reasonably possible, commence using the New Marks designated by the FRANCHISOR in writing in connection with the operation of the FRANCHISEE'S Americlnn, including on all signs, and in connection with all advertising, marketing and promotion thereof. In the event the FRANCHISEE is required by FRANCHISOR to change its exterior sign faces bearing the name Americlnn or any of the other Marks pursuant to ARTICLE 3(C) or this ARTICLE 3(D), the FRANCHISOR shall reimburse the FRANCHISEE for the undepreciated value (i.e., "book value") of such sign faces. The FRANCHISEE will not make any changes or

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amendments whatsoever to the Marks or the Business System unless approved by the FRANCHISOR in writing.

(E)      Defense Or Enforcement Of Rights To Marks. The FRANCHISEE will have no right to and will not, without the written consent of the FRANCHISOR, defend or enforce any rights associated with the Marks or the Business System in any Court or other proceedings for or against imitation, infringement, prior use, or for any other claim or allegation. The FRANCHISEE will give the FRANCHISOR prompt written notice of any and all claims or complaints made against or associated with the Marks and the Business System and will, without compensation for its time and at its expense, cooperate in all respect with the FRANCHISOR in any lawsuits or other proceedings involving the Marks or the Business System. The FRANCHISOR will have the sole and absolute right to determine whether it will commence any action against or defend any action by any third party involving the Marks or the Business System and the cost and expense of all such actions incurred by the FRANCHISOR, including attorneys' fees, specifically relating to the Marks or the Business System will be paid by the FRANCHISOR.

(F)      Franchisee's Right To Participate In Litigation. The FRANCHISEE may, at its expense, retain an attorney to represent it individually in all litigation and Court proceedings involving the Marks or the Business System, and will do so with respect to matters involving only the FRANCHISEE (i.e. not involving the FRANCHISOR or its interests); however, the FRANCHISOR and its legal counsel will control and conduct all litigation involving the Marks or the Business System. Except as expressly provided for herein, the FRANCHISOR will have no liability to the FRANCHISEE for any costs that the FRANCHISEE may incur in any litigation or other proceedings involving the Marks or the Business System and the FRANCHISEE will pay for all costs, including attorneys' fees, that it may incur in any litigation or proceedings arising as a result of matters referred to under this ARTICLE.

(G)      Tender Of Defense. If the FRANCHISEE is named as a defendant or party in any action involving the Marks or the Business System and if the FRANCHISEE is named as a defendant or party solely because the plaintiff or claimant is alleging that the FRANCHISEE does not have the right to use the Marks or the Business System licensed by the FRANCHISOR to the FRANCHISEE at the FRANCHISED LOCATION pursuant to this AGREEMENT, then the FRANCHISEE will have the right to tender the defense of the action to the FRANCHISOR within ten (10) days of receiving service of the Summons and Complaint in the action and, provided that the FRANCHISEE timely tenders the defense of the action, the FRANCHISOR will, at its expense, defend the FRANCHISEE in the action. The FRANCHISOR will indemnify and hold the FRANCHISEE harmless from any damages assessed against the FRANCHISEE in any such actions resulting solely from the FRANCHISEE'S use of the Marks and the Business System at the FRANCHISED LOCATION if the FRANCHISEE has tendered the defense of the action to the FRANCHISOR within ten (10) days of receiving service of the Summons and Complaint.

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ARTICLE 4: INITIAL FEE; APPROVAL OF FRANCHISEE

(A)      Initial Fee. The FRANCHISEE will pay the FRANCHISOR an initial fee of Thirty-Five Thousand Dollars ($35,000) (the "Initial Fee"), all of which will be due and payable on the date this AGREEMENT is executed by the FRANCHISEE.

(B)      Franchisor's Unilateral Right To Reject Franchisee. The

FRANCHISOR will have the absolute right to reject the FRANCHISEE and terminate this AGREEMENT at any time within one hundred twenty (120) days of the Effective Date if: (1) the FRANCHISOR determines that any financial, personal or other information provided by or on behalf of the FRANCHISEE to the FRANCHISOR is materially false, misleading, incomplete or inaccurate; (2) the FRANCHISOR reasonably determines that the FRANCHISEE or the FRANCHISEE'S Manager is not qualified or competent to properly manage or operate the FRANCHISEE'S Americlnn because he or she has not successfully completed the FRANCHISOR'S management training program or is deemed by the FRANCHISOR to be incapable of successfully completing the FRANCHISOR'S management training program; (3) the FRANCHISEE fails to purchase or contract to purchase a suitable site for the FRANCHISED LOCATION; or (4) the FRANCHISEE fails to provide the FRANCHISOR with evidence acceptable to FRANCHISOR in its sole discretion of the fact that FRANCHISEE has obtained any and all financing necessary to develop, construct and operate its Americlnn. The FRANCHISEE shall not sign a purchase agreement for the FRANCHISED LOCATION unless the enforceability of the purchase agreement is conditioned upon the FRANCHISEE being approved by the FRANCHISOR and is subject to cancellation in the event that the FRANCHISEE is rejected and/or this AGREEMENT is terminated by the FRANCHISOR pursuant to this ARTICLE 4(B). The FRANCHISEE will be promptly notified by the FRANCHISOR in writing if the FRANCHISEE is rejected or this AGREEMENT is terminated pursuant to this ARTICLE 4(B).

(C)      Termination By Franchisee. The FRANCHISEE will have the absolute right to terminate this AGREEMENT at any time within ninety (90) days of the Effective Date by giving written notice of such termination to FRANCHISOR if: (1) the FRANCHISEE fails to purchase or contract to purchase a suitable site for the FRANCHISED LOCATION; or (2) FRANCHISEE fails to obtain any and all financing which it may require to develop, construct and operate its Americlnn.

(D)      Refund Of Initial Fee. If the FRANCHISEE is rejected, or this AGREEMENT is terminated by the FRANCHISOR pursuant to ARTICLE 4(B) or by the FRANCHISEE pursuant to ARTICLE 4(C), then the Initial Fee will be refunded to the FRANCHISEE after the FRANCHISOR deducts all reasonable administrative and out-of-pocket expenses incurred by the FRANCHISOR in processing the application of the FRANCHISEE, including, but not limited to, executives' and employees' salaries, salespersons' commissions, training costs, marketing costs, attorneys' fees, accountants' fees, travel expenses and long distance telephone calls. The FRANCHISOR will provide the FRANCHISEE with a written accounting of the administrative and out-of-pocket expenses that were incurred by the FRANCHISOR and deducted from the Initial Fee.

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(E) Disclosure Of Information. To enable FRANCHISOR to evaluate FRANCHISEE and its proposed Americlnn, the FRANCHISEE shall be required to promptly disclose and supply to the FRANCHISOR such information as the FRANCHISOR may reasonably request concerning (1) the financial condition, net worth and income of the FRANCHISEE and any personal guarantors of FRANCHISEE'S debts, liabilities and obligations to the FRANCHISOR (hereinafter the "Personal Guarantors"); (2) the terms and conditions of any financing the FRANCHISEE may obtain to enable it to develop, construct and/or operate its Americlnn; (3) the FRANCHISEE'S proposed expenditures in developing, constructing and/or operating its Americlnn; and (4) the owners of the FRANCHISEE if it is an entity.

ARTICLE 5: CONTINUING FEES

(A)      Amount Of Continuing Fees. In addition to the Initial Fee, the FRANCHISEE shall, for the entire term of this AGREEMENT, pay to the FRANCHISOR monthly continuing fees (the "Continuing Fees") equal to five percent (5%) of the FRANCHISEE'S monthly Gross Revenues (as hereinafter defined). For purposes of this AGREEMENT, "Gross Revenues" mean the gross total dollar revenues which are received, billed or generated by, as a result of, or from the FRANCHISEE'S Americlnn, whether the transactions are cash, creditor charge sales, attributable to room rentals (including meeting, pool and other room rentals) and/or admission or other similar fees for use of any water park at the FRANCHISEE'S Americlnn, including the equivalent value thereof in the case of room rentals the consideration for which is other than cash such as, but not limited to, trade-outs for goods and services supplied to the FRANCHISEE, but excluding the provision of rooms to persons for promotional purposes. This definition will be applicable regardless of whether such sales, receipts or revenues are produced or received by the FRANCHISEE, by any permitted subfranchisee, tenant or agent of the FRANCHISEE, or by any other business associate of the FRANCHISEE who or which is associated with the FRANCHISEE in order to receive the benefits of the rights granted hereunder to the FRANCHISEE. Gross Revenues will not include (1) any sales, use or gross receipts tax imposed by any federal, state, municipal or other governmental authority directly upon sales, if: (a) the amount of the tax is added to the selling price and is expressly charged to the customer; (b) a specific record is made at the time of each sale of the amount of such tax; and (c) the amount thereof is paid over to the appropriate taxing authority by the FRANCHISEE, (2) any sales, receipts or revenues produced by vending machines, coin-operated machines or telephones operated on or about the FRANCHISED LOCATION, or (3) any sales, receipts or revenues received or generated by or as a result of the resale of telecommunication services provided by others. In no event shall Gross Revenues be reduced by or due to any payments by FRANCHISEE to FRANCHISOR provided for in this AGREEMENT, including, but not limited to, payments to the FRANCHISOR pursuant to ARTICLE 7(C) hereto with respect to the INN-Pressive Club®, or by reason of any bad debts or uncollected accounts receivable of FRANCHISEE.

(B)      Franchisee's Obligation To Pay. The FRANCHISEE'S obligation to pay the FRANCHISOR the Continuing Fees under the terms of this AGREEMENT will be

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absolute and unconditional and will remain in full force and effect until the term of this AGREEMENT has expired or until this AGREEMENT is terminated by FRANCHISEE in strict accordance with the terms and conditions set forth in this AGREEMENT and applicable law. Notwithstanding any provision of this AGREEMENT to the contrary, the FRANCHISOR shall have the right to commence a legal action against the FRANCHISEE in a court of competent jurisdiction to collect any amounts due and payable by the FRANCHISEE to the FRANCHISOR hereunder, including, but not limited to, Continuing Fees, without terminating this AGREEMENT.

(C)      Date Payable. The monthly Continuing Fees payable by the FRANCHISEE must be paid to and received by the FRANCHISOR on or before the tenth (10th) day of each month for the preceding month and must be submitted with the FRANCHISEE'S monthly report of Gross Revenues required under ARTICLE 17(C) hereof.

(D)      Electronic Funds Transfer. At the option of FRANCHISOR, Continuing Fees, Marketing Fees, amounts due for purchases by FRANCHISEE from FRANCHISOR and other amounts which FRANCHISEE owes to FRANCHISOR shall be paid through electronic funds transfer, direct debit of account or other similar technology as FRANCHISOR may designate from time to time in the Operations Guide (collectively, a "Bank Draft Arrangement"). Immediately following request by FRANCHISOR, FRANCHISEE shall set up a Bank Draft Arrangement and FRANCHISOR shall have access to FRANCHISEE'S bank account for the purpose of receiving payment for Continuing Fees, Marketing Fees, amounts due for purchases by FRANCHISEE from FRANCHISOR and any other amounts which FRANCHISEE owes to FRANCHISOR. Every month FRANCHISEE shall make deposits to the account sufficient to cover amounts owed to FRANCHISOR, in accordance with the procedures set forth in the Operations Guide.

ARTICLE 6: ADVERTISING

(A) Required Local Advertising Expenditures. Each month during the term of this AGREEMENT, the FRANCHISEE will spend an amount which is not less than one percent (1%) of its monthly Gross Revenues for the preceding month for approved local media advertising, marketing and promotion. All advertising, marketing and promotion conducted by the FRANCHISEE, including, but not limited to, billboards and other outdoor and out-of-home advertising, must have the prior written approval of the FRANCHISOR, which approval shall not be unreasonably withheld. On or before the tenth (10th) day of each month, the FRANCHISEE will furnish to the FRANCHISOR, in the form prescribed by the FRANCHISOR, an accurate accounting of the FRANCHISEE'S previous month's expenditures for approved local media advertising, marketing and promotion. If the FRANCHISEE has failed to spend at least one percent (1%) of its monthly Gross Revenues for approved local media advertising, marketing and promotion during any month as required under this ARTICLE, then the FRANCHISEE will be required to deposit with the FRANCHISOR the difference between one percent (1%) of its monthly Gross Revenues and what it actually spent

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during such month for approved local advertising, marketing or promotion and the FRANCHISOR shall spend such deposit in such manner as the FRANCHISOR deems, in its sole discretion, to be in the best interest of the FRANCHISEE'S Americinn. Amounts spent by the FRANCHISEE for approved local media advertising, marketing and promotion shall not, in any event, be offset against the Marketing Fees payable to the FRANCHISOR under ARTICLE 6(C) below.

(B)      Local Advertising Group. At such time as there are two (2) or more Americinn® franchisees (including the FRANCHISEE) with Americlnns located within a geographic region designated by the FRANCHISOR in its sole discretion (the "Designated Region"), the FRANCHISOR shall have the right, at its option, to require all of such franchises, including the FRANCHISEE, to become a member of and to participate in a local advertising group that will conduct and administer local media advertising, marketing and promotion wjthin the Designated Region. The cost of the advertising, marketing and promotion approved by a majority of the franchisees constituting the local advertising group will be allocated among and billed to all of the franchisees with Americlnns located within the Designated Region and each franchisee's share will be in proportion to the number of guest rooms in each franchisee's Americinn; provided, however, that FRANCHISEE shall not be allocated or billed for such approved local advertising, marketing or promotion expenses in an amount in excess of one percent (1 %) of FRANCHISEE'S monthly Gross Revenues. Each local advertising group will have a membership with equal representation for each Americinn located within the Designated Region. Payments to the local advertising group by the FRANCHISEE may be offset against the local media advertising, marketing and promotion expenditures required under ARTICLE 6(A) above, but shall not be offset against the Marketing Fees payable to the FRANCHISOR under ARTICLE 6(C) below.

(C)      Amount Of Marketing Fees; Use Of Funds. Each month during the term of this AGREEMENT, the FRANCHISEE will pay the FRANCHISOR marketing fees equal to two percent (2%) of the FRANCHISEE'S monthly Gross Revenues for the preceding month (the "Marketing Fees") for deposit in a Marketing Fund. All Marketing Fees received by FRANCHISOR from FRANCHISEE and other Americinn® franchisees which are not utilized by FRANCHISOR for the purposes set forth herein within forty-five (45) days of receipt by the FRANCHISOR will be held by the FRANCHISOR in a separate, interest-bearing account which, together with any interest thereon, shall be dedicated exclusively to the purposes set forth in this ARTICLE 6(C). The FRANCHISOR shall not be required to immediately spend all Marketing Fees which it receives but may, in its discretion, maintain such reserve or reserves for such purpose or purposes set forth herein as FRANCHISOR deems necessary or advisable. The Marketing Fund will be administered and controlled by the FRANCHISOR. An Advisory Board, consisting of members designated by FRANCHISOR or nominated and elected in such manner as FRANCHISOR may from time to time determine in its sole discretion, will have the right to provide recommendations and advice to the FRANCHISOR regarding the use and application of the monies in the Marketing Fund. However, the FRANCHISOR will have the right to determine when, how and where the Marketing Fees and other amounts deposited in the Marketing Fund will be spent. This will

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include the right of the FRANCHISOR to purchase and pay for product research and development, production materials, ad slicks, brochures, video tapes, radio research, media time and space advertising (including radio, television, Internet, newspaper, magazine and other print advertising), promotions, marketing, public relations, national conventions, telemarketing and national, regional and local advertising, marketing and promotion that the FRANCHISOR deems appropriate and in the best interests of all Americlnn® franchisees and the Business System. The Marketing Fees and other amounts deposited in the Marketing Fund may also be utilized by FRANCHISOR to develop, produce, reproduce and distribute Americlnn® system directories and brochures and other materials for use in connection with FRANCHISOR'S INN-Pressive Club® and/or other promotional programs sponsored by FRANCHISOR from time to time. Although the FRANCHISOR will endeavor to utilize the Marketing Fund to develop advertising and marketing materials and programs, and place advertising that will benefit the Americlnn® Business System, the FRANCHISOR is not obligated to insure that expenditures by the Marketing Fund in or affecting any geographic area are proportionate or equivalent to the contributions to the Marketing Fund by Americlnn's operating in that geographic area or that any Americlnn will benefit directly or in proportion to its contributions to the Marketing Fund. The FRANCHISOR will not be required to pay Marketing Fees; however, any Americlnns that are owned and operated by the FRANCHISOR will be required to pay Marketing Fees in accordance with the terms of their respective Franchise Agreements.

(D)      Date Payable. The Marketing Fees will be paid directly to the FRANCHISOR on or before the tenth (10th) day of each month for the preceding month.

(E)      Right To Borrow Funds. If the Marketing Fund does not contain sufficient funds to make the expenditures determined by the FRANCHISOR to be necessary or advisable, then the FRANCHISOR will have the right, but not the obligation, to loan funds to the Marketing Fund in an amount sufficient to cover such expenditures, and the loan (plus interest as provided for herein) will be repaid from future Marketing Fees paid by all Americlnn franchisees pursuant to their Franchise Agreements with the FRANCHISOR. The FRANCHISOR will have the right and option to either use its own funds, or borrow the necessary funds in the name of the FRANCHISOR or in the name of the Marketing Fund from one or more financial institutions. The unpaid balance of any loan made by the FRANCHISOR to the Marketing Fund will be subject to interest at either: (1) a rate equal to the rate of interest established by U.S. Bank National Association as its "Reference Rate" at the time of the loan, if the FRANCHISOR utilized its own funds for the loan; or (2) if the FRANCHISOR borrowed the funds for the loan from a financial institution, a rate equal to the rate of interest being charged to the FRANCHISOR by such financial institution.

(F)      Telephone Directory Listings. During the term of this AGREEMENT, the FRANCHISEE must advertise in the Yellow Pages of the local telephone directories under the listings of "Motels" and "Hotels", using formats and content approved in writing from time to time by the FRANCHISOR. Expenditures for Yellow Pages advertising wilt be in addition to all other advertising, marketing and promotional requirements set forth in this AGREEMENT. Upon the termination or expiration of this

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AGREEMENT, FRANCHISOR shall have the right to notify and instruct the publishers of any and all telephone and other directories which contain a listing for FRANCHISEE'S Americlnn to remove any reference to the name "Americlnn®" in FRANCHISEE'S listings.

ARTICLE 7: QUALITY CONTROL, UNIFORMITY AND STANDARDS REQUIRED OF THE FRANCHISEE

The FRANCHISOR will promulgate, from time to time, standards of quality, uniformity and service regarding the business operations of the FRANCHISEE'S Americlnn so as to protect and maintain (for the benefit of all Americlnn® franchisees and the FRANCHISOR), the distinction, valuable goodwill and uniformity represented and symbolized by the Marks and the Business System. Accordingly, to ensure that all Americlnn® franchisees will maintain uniformity requirements and quality standards for the products and services associated with the Marks and the Business System, the FRANCHISEE agrees to maintain the standards of quality and uniformity required by the FRANCHISOR for all products and services and agrees to the following terms and conditions to assure that all Americlnns will be uniform in nature and will sell and dispense quality products and services to the public:

(A)      Identification Of Business. The FRANCHISEE will operate its Americlnn so that it is clearly identified by and advertised under the Franchised Name. However, the use, style and form of the word "Americlnn®" or other registered trademarks or variations of marks (e.g., Splash Bay Adventure®, INN-Pressive Club®, etc.) in any advertising, marketing, Internet website or Electronic Presence (as hereinafter defined), public relations, telemarketing or promotional campaign or program must have the prior written approval of the FRANCHISOR. The FRANCHISEE will use the Marks which now or hereafter may form a part of the Business System, on all telephone face plates, face and bathsoaps, shampoo and conditioner bottles, ice buckets, waste baskets, Plexiglas information racks or information folders, lobby showcase maps, Americlnn® system directories, comment cards, INN-Pressive Club® brochures and/or other articles and supplies used in connection with the FRANCHISEE'S Americlnn in the identical combination and manner prescribed by the FRANCHISOR in the FRANCHISOR'S Crisis Management Guide, Design Manual, Operations Guide, INN-Pressive Club® Operations Guide and such other guides and manuals as the FRANCHISOR may publish from time to time (collectively the "Manuals") or otherwise in writing. The FRANCHISEE will, at its expense, comply with all notices of registration required by the FRANCHISOR and will, at its expense, comply with any other trademark, trade name, service mark, copyright, patent and other notice marking requirements required by applicable law or by the FRANCHISOR.

(B)      Franchisee's Name. The FRANCHISEE will not use the word "Americlnn®" in its corporate, partnership, limited liability company or sole proprietorship name and FRANCHISEE will not attempt to register or otherwise obtain an interest in any Internet domain name containing any of the Marks or any other word, name or symbol which is similar to or likely to cause confusion with any of the Marks. The

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FRANCHISEE will hold itself out to the public as an independent contractor operating its Americlnn pursuant to a franchise granted by the FRANCHISOR. Whenever practical, the FRANCHISEE will clearly indicate on the FRANCHISEE'S business checks, stationery, purchase orders, folios, business cards, invoices, receipts, promotional materials and other written materials, as well as on any home page, Internet website, or other Electronic Presence, that the FRANCHISEE is an Americlnn® franchisee and an independent licensee of Americlnn International, LLC. FRANCHISEE will take all necessary steps, including those from time to time reasonably requested by FRANCHISOR to minimize the chance of a claim being made against FRANCHISOR for anything that occurs at the FRANCHISEE'S Americlnn, or for acts, omissions or obligations of FRANCHISEE or anyone associated or affiliated with FRANCHISEE or the FRANCHISEE'S Americlnn. Such steps, for example, include displaying a sign at the front desk of the FRANCHISEE'S Americlnn and in each guest room which is clearly visible to the general public indicating that the FRANCHISEE'S Americlnn is independently owned and operated as a franchised business. The FRANCHISEE will file for a Certificate of Assumed Name in the manner required by law so as to notify the public that the FRANCHISEE is operating its Americlnn as an independent business pursuant to this AGREEMENT.

(C)      INN-Pressive Club®. At all times during the term of this AGREEMENT, the FRANCHISEE shall, at its expense, participate in all programs now or at any time hereafter sponsored by the FRANCHISOR to promote and reward the frequent and regular guests of Americlnns. All such programs shall be set forth in the FRANCHISOR'S Manuals. Under the FRANCHISOR'S current program, the INN-Pressive Club®, participating guests of Americlnns receive, among other things, a refund from the FRANCHISOR or credit against their bill for the eleventh (11th) night they spend at an Americlnn, in the amount of Forty and No/100 Dollars ($40.00) for each ten (10) nights spent at an Americlnn. If the guest elects to receive a credit against their bill, the FRANCHISOR will credit Forty and No/100 Dollars ($40.00) to the affected franchisee upon the submission of appropriate documentation. The FRANCHISOR then charges, and the franchisees whose Americlnns were patronized by the guest must pay FRANCHISOR, Four and No/100 Dollars ($4.00) for each of the ten (10) nights the guest stayed at each such franchisee's Americlnn. Such amounts are payable by FRANCHISEE to FRANCHISOR within thirty (30) days of receiving FRANCHISOR'S invoice for the same. The FRANCHISOR reserves the right, at any time and from time to time, to modify the terms of its INN-Pressive Club® program, discontinue the INN-Pressive Club® program, and/or establish or implement one or more new programs for frequent and regular guests. The FRANCHISEE acknowledges that the cost of its participation in any such modified or new program may be different or greater than that incurred by the FRANCHISEE under the current INN-Pressive Club®.

(D)      Guest Referral. The FRANCHISEE will, whenever possible, refer guests and customers to another Americlnn, and will use every reasonable means to encourage the use of Americlnns by the public, including, but not limited to, displaying on the premises of the FRANCHISEE'S Americlnn all brochures, including INN-Pressive Club® brochures, system directories, display boards, lobby showcase maps and promotional materials supplied by the FRANCHISOR for use at Americlnns.

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(E)      Compliance With Standards And Specifications. The FRANCHISEE) LOCATION must conform to (1) the FRANCHISOR'S then-current approved standard plans and specifications consisting of conceptual drawings, including floor plans, elevations and general details for the development of working drawings for an Amenclnn (hereinafter referred to as the "Then-Current Standard Plans"), (2) the FRANCHISOR'S minimum design standards and specifications (hereinafter referred to as the "Minimum Design Standards") set forth in FRANCHISOR'S Design Manual, and (3) the detailed building plans and specifications prepared by or on behalf of the FRANCHISEE and approved by FRANCHISOR'S Board of Review in writing pursuant to ARTICLE 19(C) hereof. The FRANCHISEE will not add any guest rooms or make any architectural, structural, design or decorating changes to the interior or exterior of the FRANCHISED LOCATION without the FRANCHISOR'S prior written approval, which approval shall not be unreasonably withheld. The furniture, fixtures and equipment used in the FRANCHISEE'S Americlnn must conform to the FRANCHISOR'S minimum design standards and specifications set forth in the Design Manual, and must conform to the standards of quality and uniformity established by the FRANCHISOR from time to time. Unless otherwise authorized by the FRANCHISOR in its sole discretion, all guest rooms within the FRANCHISED LOCATION must have a minimum width of fourteen (14) feet.

(F)      Remodeling And Redecoration Of Business. The FRANCHISEE will, from time to time, make the reasonable capital expenditures necessary to remodel, modernize, redecorate and renovate its Americlnn and to replace and modernize the furniture, fixtures, supplies and equipment used in FRANCHISEE'S Americlnn so that the FRANCHISEE'S Americlnn will reflect the then-current image intended to be portrayed by Americlnns. FRANCHISEE will be required to complete such remodeling, modernization, redecoration and renovation of its Americlnn as may be identified by the FRANCHISOR in connection with the reacquisition of the franchise for the FRANCHISED LOCATION pursuant to ARTICLE 2(B) and in connection with the sale, assignment or other transfer by the FRANCHISEE or its shareholders, partners or members of this AGREEMENT, shares of capital stock, partnership interests, membership interests or other ownership interests in FRANCHISEE or the Business Assets (as hereinafter defined) of the FRANCHISEE pursuant to ARTICLE 18(D) hereof. All remodeling, modernization, redecoration and renovation of the FRANCHISEE'S Americlnn must be done in accordance with the Minimum Design Standards and with the prior written approval of the FRANCHISOR. All replacements for the furniture, fixtures, supplies and equipment must conform to the FRANCHISOR'S then-current standards and specifications set forth in the Design Manual and must be approved by the FRANCHISOR in writing, which approval shall not be unreasonably withheld. The FRANCHISEE will commence remodeling, modernizing, redecorating and renovating its Americlnn within six (6) months of the date that the FRANCHISEE receives written notice specifying the required remodeling, modernization, redecoration and renovation from the FRANCHISOR, and will diligently complete such remodeling within a reasonable time after its commencement. Except as provided in ARTICLE 7(K) hereof, the FRANCHISEE will not be required to extensively remodel, modernize, redecorate and renovate its Americlnn or to replace and modernize its furniture, fixtures,

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supplies and equipment more than once every six (6) years during the term of this AGREEMENT.

(G) Compliance With Standards. The FRANCHISEE will use the Marks and the Business System, and will operate its Americlnn, in strict compliance with the standards, operating procedures, specifications, requirements and instructions required by the FRANCHISOR of all Americinns, which may be amended and supplemented by the FRANCHISOR from time to time. The FRANCHISEE will conform to all guest service procedures and standards prescribed by the FRANCHISOR in the Manuals or otherwise in writing. The FRANCHISEE shall only use the form of guest registration card prescribed by FRANCHISOR in the Operations Guide in the operation of its Americlnn. The FRANCHISEE shall comply with the FRANCHISOR'S policies and procedures concerning comment cards received from guests contained in the Operations Guide, as the same may change from time to time. FRANCHISEE will at all times fully participate in the FRANCHISOR'S electronic customer satisfaction programs and follow all procedures related to these programs as the same may be changed from time to time by the FRANCHISOR.

(H) Limitations On Products And Services. The FRANCHISEE will sell only those products and services at its Americlnn approved by the FRANCHISOR in writing and will offer for sale at its Americlnn all products and services prescribed from time to time by the FRANCHISOR. Without limiting the generality of the foregoing, the FRANCHISEE must provide its guests each day with a free continental breakfast consisting of such food and beverage items as the FRANCHISOR may prescribe from time to time. The FRANCHISEE will have the absolute right to sell all products and services at its Americlnn at whatever prices and on whatever terms it deems appropriate.

(I) Compliance With Manuals. The FRANCHISOR will provide the FRANCHISEE with one copy of each of the FRANCHISOR'S Manuals. The FRANCHISEE will conform to the common image and identity created by the products and services associated with Americinns which are portrayed and described by the Manuals and the FRANCHISEE will conform to all changes and modifications to the Manuals made by the FRANCHISOR and provided to the FRANCHISEE that are deemed by the FRANCHISOR necessary to: (1) improve the standards of service or the products offered for sale under the Business System; (2) protect the goodwill associated with the Marks; (3) improve the operation or efficiency of the FRANCHISEE'S Americlnn; and/or (4) market the products and services associated with the Business System.

(J) Approved Suppliers. The FRANCHISEE will purchase from suppliers approved in writing by the FRANCHISOR all products, goods, merchandise, supplies, sundries, machinery, uniforms, signs, furniture, fixtures, equipment and services (sometimes referred to herein as "goods and services") to be used or sold at the FRANCHISEE'S Americlnn which the FRANCHISOR determines meet the standards of quality and uniformity required to protect the valuable goodwill and uniformity symbolized by and associated with the Marks and the Business System. The

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FRANCHISOR shall have the right to provide the FRANCHISEE with a written schedule of the names of approved suppliers of goods and services, and with any modifications and additions to any such schedule of approved suppliers thereafter. The FRANCHISOR shall have the right to require that the FRANCHISEE purchase certain goods and services from one or more vendors or suppliers designated by the FRANCHISOR. Except for goods and services which the FRANCHISEE must purchase from a designated supplier or vendor, the FRANCHISEE will have the right and option to purchase goods and services from other outside suppliers provided that such goods and services conform in quality and uniformity to the FRANCHISOR'S standards. If the FRANCHISEE desires to purchase any goods and services from such other suppliers, then the FRANCHISEE shall submit representative samples to the FRANCHISOR who will determine whether they comply with the FRANCHISOR'S standards. The written approval of the FRANCHISOR must be obtained by the FRANCHISEE prior to the time that any unapproved goods or services are sold or used at the FRANCHISEE'S Americlnn, which approval will not be unreasonably withheld. The FRANCHISEE will generally receive written notification from the FRANCHISOR of the FRANCHISOR'S determination regarding the unapproved supplier within thirty (30) days of receipt of the FRANCHISEE'S request. Upon request by the FRANCHISEE or a supplier, the FRANCHISOR will provide information regarding its standards. The FRANCHISOR shall have the right to receive and retain marketing allowances, royalties, commissions and/or other payments or consideration from approved suppliers and vendors in connection with the sale of goods and services to the FRANCHISOR and/or the FRANCHISOR'S franchisees, including the FRANCHISEE. The FRANCHISOR may, in its discretion, deposit all or part of such allowances, royalties, commissions and/or other payments and consideration into the Marketing Fund and/or use the same to offset alt or part of the costs and expenses incurred by the FRANCHISOR in producing and/or sponsoring its national convention.

(K) Maintenance. The FRANCHISEE will, at its expense, maintain, repair, paint and keep in a clean and sanitary condition the interior, the exterior and the grounds of the FRANCHISED LOCATION, and will replace all floor coverings, wall coverings, light fixtures, curtains, sheets, bedspreads, pillows, linens, room furnishings, wall hangings, fixtures and other decor items as such items become worn-out, soiled or in disrepair. All mechanical equipment must meet the FRANCHISOR'S quality standards. Any replacement equipment, decor items and supplies must comply with the FRANCHISOR'S then-current standards and specifications.

(L) Vending And Gaming Machines; Tickets. The FRANCHISEE will not permit any jukebox, video and electronic games, vending machines, or coin or token operated machines (including pinball and slot machines) to be used on or at any location within the premises of the FRANCHISED LOCATION other than those approved by the FRANCHISOR in writing. The FRANCHISEE will not keep or offer for sale or allow employees to offer for sale at or near the FRANCHISED LOCATION any tickets, subscriptions, pools, chances or raffles, lottery, tickets or pull tabs.

(M) Compliance With Applicable Law. The FRANCHISEE will, at its expense, comply with all applicable federal, state, city, local and municipal laws,

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ordinances, rules and regulations pertaining to the purchase, construction, renovation, remodeling and/or operation of the FRANCHISEE'S Americlnn, including, but not limited to, the Americans with Disabilities Act of 1990 (42 U.S.C.A. § 12101 et. seq.) (the "ADA") and any and all applicable federal and state laws, codes and regulations relating to employees and/or the environment. The FRANCHISEE will, at its expense, be absolutely and exclusively responsible for determining the licenses and permits required by law for the construction, renovation and/or operation of FRANCHISEE'S Americlnn, for qualifying for and obtaining all such licenses and permits, and for maintaining all such licenses and permits in full force and effect. In the event FRANCHISEE receives any complaint, claim or other notice alleging a failure to comply with the ADA, FRANCHISEE shall provide FRANCHISOR with a copy of such notice within five (5) days after receipt thereof.

(N) Payment Of Taxes. The FRANCHISEE will be absolutely and exclusively responsible and liable for the prompt payment of all federal, state, city, and local taxes, including, but not limited to, individual and corporate income taxes, sales and use taxes, franchise taxes, gross receipt taxes, employee withholding taxes, FICA taxes, unemployment taxes, inventory taxes, personal property taxes, real estate taxes and all other taxes payable in connection with the FRANCHISEE'S Americlnn (hereinafter referred to as "taxes"). The FRANCHISOR will have no liability for any taxes that arise or result from the operation of the FRANCHISEE'S Americlnn, and the FRANCHISEE will indemnify the FRANCHISOR for any such taxes that may be assessed or levied against the FRANCHISOR.

(O) Reimbursement Of Franchisor For Taxes. If any sales, use, franchise, gross receipts, privilege, doing business, business and occupation or other tax is imposed upon the FRANCHISOR by any taxing authority based upon the Gross Revenues, receipts, sales, business activities or operations generated by the FRANCHISEE'S Americlnn or upon the Initial Fee, Continuing Fees and/or Marketing Fees payable to the FRANCHISOR hereunder, then the FRANCHISEE will reimburse the FRANCHISOR for the amount of such taxes. However, in no event will the FRANCHISEE be required to reimburse the FRANCHISOR for any income tax imposed upon the FRANCHISOR. The FRANCHISEE will be notified in writing when the FRANCHISOR is entitled to reimbursement for the payment of such taxes and, in that event, the FRANCHISEE will pay the FRANCHISOR the amount specified within ten (10) days of receipt by the FRANCHISEE of written notice from the FRANCHISOR.

(P) Business Hours; Personnel. The FRANCHISEE'S Americlnn will be open for business twenty-four (24) hours a day, 365 days a year, unless the FRANCHISOR, in its sole discretion, authorizes the FRANCHISEE to be open less hours because of economic or other business considerations. The FRANCHISEE will, between the hours of 8:00 a.m. and 5:00 p.m., have a "manager" on duty who is responsible for supervising the employees and the business operations of the FRANCHISEE'S Americlnn. The FRANCHISEE will have a sufficient number of adequately trained and competent personnel on duty at all times to guarantee efficient service to the FRANCHISEE'S customers! All persons employed by the FRANCHISEE must practice good personal hygiene and must wear clean and neat standard attire or

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uniforms approved by the FRANCHISOR. FRANCHISEE shall not recruit or hire any employee or former employee of FRANCHISOR or Three Rivers Hospitality, LLC without obtaining the prior written consent of FRANCHISOR or Three Rivers Hospitality, LLC, respectively, unless at least six (6) months shall have elapsed since the last day of such employee's employment with FRANCHISOR or Three Rivers Hospitality, LLC, as the case may be.

(Q) Franchisor's Inspection Rights. The FRANCHISOR will have the absolute right to examine, inspect and take photographs and videotapes of the interior and exterior of the FRANCHISEE'S Americinn, including the FRANCHISEE'S Americinn® Free Standing Sign at all reasonable times, to examine representative samples, goods and paper products sold or used at the FRANCHISEE'S Americinn and to evaluate the quality of the products and services provided by the FRANCHISEE to its customers. The FRANCHISOR will have the right to use all photographs and videotapes of the FRANCHISEE'S Americinn for such purposes as the FRANCHISOR deems appropriate, including, but not limited to, use in advertising, marketing and promotional materials. The FRANCHISEE will not be entitled to, and hereby expressly waives any right that it may have, to be compensated by the FRANCHISOR, its advertising agencies, and other Americinn® franchisees for the use of such photographs or video tapes for advertising, marketing and promotion of the FRANCHISOR or the Americinn Business System. The FRANCHISOR shall have the right to inspect the FRANCHISEE'S Americinn prior to the reacquisition of the franchise for the FRANCHISED LOCATION pursuant to ARTICLE 2(B) hereof and in connection with the sale, assignment or other transfer by the FRANCHISEE or its shareholders, partners or members of this AGREEMENT, shares of capital stock, partnership interests, membership interests or other ownership interests in FRANCHISEE or the FRANCHISEE'S Business Assets for purposes of identifying the reasonable capital expenditures which are necessary to remodel, modernize, redecorate and renovate the Americinn or any furniture, fixtures, supplies and equipment used in the Americinn which must be replaced so that the Americinn will reflect the then-current image intended to be portrayed by Americlnns. In connection with any such inspection, or an inspection by FRANCHISOR at the request of FRANCHISEE, the FRANCHISEE shall pay the FRANCHISOR an inspection fee in the amount of Five Thousand Dollars ($5,000) prior to the reacquisition or transfer or within ten (10) days of receiving FRANCHISOR'S invoice, as applicable.

(R) Credit Cards. The FRANCHISEE will honor all credit, charge and cash cards required or approved by the FRANCHISOR. Prior to honoring any unapproved credit, charge or cash cards, the FRANCHISEE must obtain the written approval of the FRANCHISOR, which approval shall not be unreasonably withheld.

(S) Default Notices. The FRANCHISEE will immediately deliver to FRANCHISOR a copy of any notice of default received from any mortgagee, trustee under any deed of trust, contract for deed vendor, lessor or any other party with respect to the real estate for the FRANCHISED LOCATION, and copies of all written notifications of any lawsuits, consumer claims, employee claims, federal or state administrative or agency proceedings or investigations, or other claims, actions or

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proceedings relating to the FRANCHISEE'S Americlnn and, upon request from the FRANCHISOR, the FRANCHISEE will provide such additional information as may be required by the FRANCHISOR regarding the alleged default, lawsuit, claim, action or proceeding or any subsequent action or proceeding in connection with the alleged default, lawsuit, claim, action or proceeding.

(T) Sale Of Securities To The Public. If the FRANCHISEE is an entity and intends to sell any of its securities to the public pursuant to either federal or state securities laws, then the FRANCHISEE will provide the FRANCHISOR with a copy of the proposed offering circular or prospectus for its review at least ten (10) days prior to the time that the offering circular or prospectus is first filed with any state securities commission or the United States Securities and Exchange Commission or is distributed to members of the investing public. The FRANCHISOR will have the absolute right to attend all "due diligence" meetings held in preparation for the offer to sell the FRANCHISEE'S securities to the public, and the FRANCHISEE will give the FRANCHISOR at least two (2) business days prior written notice of such meetings. The FRANCHISEE will not offer its securities using the name "Americlnn®", or any names deceptively similar thereto. The FRANCHISEE will not have the right to sell any of its securities to the public or to any other person or entity until the FRANCHISEE has complied in all respects with all applicable provisions of this AGREEMENT, including the applicable provisions of ARTICLE 18.

(U) Meeting Attendance. FRANCHISEE shall, at its sole cost and expense, attend such meetings sponsored by the FRANCHISOR as FRANCHISOR may from time to time reasonably require. Such meetings shall include FRANCHISOR'S national convention and such training and motivational programs conducted by the FRANCHISOR that are designed to generate employee awareness, sensitivity and responsiveness to the customers who patronize the FRANCHISEE'S Americlnn. The FRANCHISEE shall pay the FRANCHISOR the registration fees for such meetings and conventions reasonably imposed by FRANCHISOR regardless of whether the FRANCHISEE attends the meetings or conventions.

(V) Property Ownership and Management. The FRANCHISEE shall at all times during the term of this AGREEMENT own (as opposed to lease) the FRANCHISED LOCATION, including the real property and the improvements thereto. The FRANCHISEE will obtain the prior written approval of the FRANCHISOR, and will submit copies of proposed management agreements to the FRANCHISOR, prior to the appointment of a management company to operate the FRANCHISEE'S Americlnn.

(W) Central Reservation System-Dedicated Phone Lines and High Speed Internet Access. The FRANCHISEE must participate in all of the reservation systems which the FRANCHISOR may establish and maintain from time-to-time in accordance with ARTICLE 13(B) hereof. To facilitate such participation, the FRANCHISEE shall, at its sole expense, maintain at all times during the term of this AGREEMENT, high speed Internet access, including all specifications for static IP addresses and such number of telephone and facsimile transmission lines dedicated exclusively for use with such reservation systems as the FRANCHISOR may prescribe from time to time. If the

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