Franchise Agreement
The original documents were scanned as an image. The original file can be downloaded at the link above.
Sample Franchise Agreement
AUSSIE PET MOBILE® FRANCHISE AGREEMENT
Commencement Date:_____________________
Expiration Date:__________________________
PARTIES: Aussie Pet Mobile, Inc., a California corporation
("Franchisor", "we," "us" or "our"); and
("Franchisee," "you" or "your")
doing business as Aussie Pet Mobile®____________________________; and
("Guarantor"). THE PARTIES AGREE as follows: 1. BUSINESS BACKGROUND AND PRELIMINARY AGREEMENTS
1.1 The Aussie Pet Mobile® System. We have developed methods of marketing and operating mobile businesses providing pet grooming services, including a distinctive system for promoting, advertising, managing and selling such businesses, as well as for marketing and supporting franchisees operating such businesses. We have made a strategic decision to use franchising to create brand identity, maximize market penetration and achieve and maintain a competitive edge for our brand. Aussie Pet Mobile® Franchise Businesses use certain proprietary knowledge, procedures, formats, systems, printed materials, applications, specifications, standards and techniques authorized or developed by us and feature distinctive signs, brochures, contracts and related forms, formats, procedures and advertising (the Aussie Pet Mobile® "System"). We identify Aussie Pet Mobile® Franchise Businesses and various components of the System by certain trademarks, service marks, designs, trade dress and other commercial symbols, including "Aussie Pet Mobile®". We may, in the future, develop or modify various aspects of the Aussie Pet Mobile® System and/or discontinue the Marks as well as add new trademarks and/or trade dress.
1.2 Acknowledgments. We are presenting this Agreement to you because you expressed the desire to operate one or more Aussie Pet Mobile® Franchise Businesses. You understand and agree that the terms of this Agreement are reasonable and necessary to maintain our high quality and uniform service standards at each Aussie Pet Mobile® Franchise Business, thereby, preserving the goodwill of the Marks and the Aussie Pet Mobile® System. By signing this Agreement, you acknowledge: (a) the importance of operating each of your Aussie Pet Mobile® Franchise Businesses in strict conformity with our standards; (b) that you recognize that the Aussie Pet Mobile® System may change over time as we specify and that you will be required to conform with such changes; and (c) that the purchase of one or more Aussie Pet Mobile® Franchise Businesses involves business risks, and that the success of each of vour Aussie Pet Mobile® Franchise Businesses is not guaranteed, is dependent on your business abilities
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and efforts, including your, diligent and thorough knowledge and application of the Aussie Pet Mobile® System.
1.3 No Representations or Guarantees. You specifically acknowledge that you have not received or relied on (nor have we or anyone else provided) any statements, promises or representations that you will succeed in any of your Aussie Pet Mobile Franchise Businesses; achieve any particular sales, income or other levels of performance; earn any particular amount, including any amount in excess of your initial Franchise Fee or other payments to us; or receive any rights, goods, or services not expressly set forth in this Agreement. Any statements regarding actual, potential or probable revenues or profits of any Aussie Pet Mobile'8' Franchise Business not contained in our Franchise Offering Circular is unauthorized, unwarranted and unreliable, we will not be responsible for it and it should be reported to us immediately. If there are any exceptions to any of your acknowledgments in Sections 1.2 and/or 1.3. vou will: fa) immediately notify our Chief Executive Officer: and (b) note such exceptions bv attaching a statement of exceptions to this Agreement prior to signing it. Any such statement which is signed by you and us will become a part of this Agreement.
2. DEFINITIONS
To simplify this Agreement and make it easier to read and understand, we have defined certain terms used in this Agreement. When you see a capitalized word, or if you do not understand the meaning of a particular pronoun reference, look below at this Section to see whether the term has been defined. Capitalized words that are not defined in this Section are defined in the section where they first appear.
"Affiliate" - Any person or entity which controls, is controlled by or is under common control with another person or entity; as to the Franchisee, any owner of any interest in the Franchisee, any employee or agent of the Franchisee, and/or independent contractor performing functions for or on behalf of the Franchisee, and any entity controlled by any of the foregoing.
"Agreement" - This Franchise Agreement.
"Approved Name" - The name under which the Franchisee shall conduct the Franchise Business as consented to by us under this Agreement.
"Business Day" - A day on which banks are open to the public for transacting business.
"Business Entity" - Includes a corporation, partnership, joint venture, limited liability company, limited partnership, or other form of business recognized in any jurisdiction. If you are a Business Entity, then we can require each of your owners in our Business Judgment to guaranty your performance. Our current form of Owners Guaranty is attached as the Eighth Schedule to this Franchise Agreement.
"Business Judgment" - Means that we are allowed to exercise our judgment however we consider appropriate in our sole and absolute discretion, except that we will not do so arbitrarily. You and we agree that provisions in this Agreement where we describe instances in which we may exercise our Business Judgment, we must and do have the unrestricted right to make decisions and/or take (or refrain from taking) actions, except that we will not do so arbitrarily. We have this right even if a particular decision/action may have negative consequences for you, a particular individual or group. You
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understand and agree that the exercise of Business Judgment is critical to our roie as Franchisor and to our goals for its continuing improvement. This is a defined term for purposes of ease and clarity in this Agreement and is not intended and should not be construed to incorporate principles related to the application of the business judgment rule in a corporate law context.
"Commencement Date" - The date specified on Page 1 of this Agreement as the first day of the Term.
"Confidential Information" - All information used or useable (current or future) in connection with the operation of each Aussie Pet Mobile® Franchise Business or which relates to the System, including, among other things, all: (1) techniques, policies, procedures, information, systems, and knowledge regarding the development, marketing, operation and franchising of Aussie Pet Mobile® Franchise Businesses (2) information regarding, and suppliers of, items used and/or offered by Aussie Pet Mobile® Franchise Businesses, including the Products and Services and (3) all information regarding customers and/or Franchisees, including any statistical and/or financial information and all lists and (4) any trade secrets, including the Customized Vehicle and Designated Equipment, and the Hydrobath, which constitute and/or contain trade secrets of Aussie Pet Mobile, Inc. Of course, the Confidential Information includes all Manuals and their contents, as well as all materials, information, and advice provided by us during training or thereafter. Confidential Information does not include: information that (a) is or becomes generally available to the public, except as a result of a breach of this Agreement; (b) becomes available to you from a source other than us, except where such source has breached a legal obligation of confidentiality; (c) is developed by you without reliance on any Confidential Information, except that where such developed information is applicable to the operation or otherwise of an Aussie Pet Mobile® Franchise Business, it will become part of the Confidential Information.
"Customized Vehicle" - A Sprinter Van, or such other vehicle as we shall designate in writing from time to time, customized by the installation of the Designated Equipment Package and decorated with our trade dress.
"Designated Equipment" - Equipment that meets our requirements and which must be obtained and used in the operation of each Aussie Pet Mobile® Franchise Business. Designated Equipment includes (among other things) the Aussie Pet Mobile® Customized Vehicle, Hydrobath and related items. (See the Fourth Schedule attached to this Agreement).
"Designated Equipment Package" - The Designated Equipment that you will acquire prior to the opening of any Franchise as described in Schedule 4 attached hereto.
"Face-to-Face Meeting" - A meeting in which all of the disputants are physically present at the same time and place, and does not include teleconferencing or any other electronic form of communication.
"Franchise" - The right or license to operate one, 2, 3 or 6 Aussie Pet Mobile® Franchise Businesses as specified in and under the terms of this Agreement.
"Franchise Business" - The Aussie Pet Mobile® business operations conducted by, at or in connection with each Designated Equipment Package in your Bronze, Silver, Gold or Platinum Protected Area(s) as described on the appropriate Schedule attached to this Agreement.
"Franchise Fee" - A single amount paid for the award of a Franchise.
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"Franchisor-Related Persons/Entities" - Aussie Pet Mobile, Inc., Aussie Pet Mobile International, Inc., each Aussie Pet Mobile® marketing and/or advertising fund, each Franchisee Advisory Council ("FAC"), Franchisee Marketing Group ("FMG"), (and their members) and each and all of the following, whether past, current and/or future: Each and all company(ies) and/or person(s) acting through, in concert, affiliated and/or associated in any way with, any of the foregoing, each and all of the partners, shareholders, officers, directors, agents, attorneys, accountants, and/or employees of any of the foregoing (including, but not limited to, Ian W. Moses and/or Vivienne Mcintosh), as well as each and all of the successors and/or assigns of 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 those arising between the date of this Agreement and 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. A copy of our general releasing language as currently used by us is attached as the Third Schedule and is approved by you.
"Good Standing" - You are in "Good Standing" if you (and each of your owners and Affiliates) are not in default of any obligation to us and/or any of the Franchisor-Related Persons/Entities, whether arising under this Agreement or any other agreement between you (and each of your owners and Affiliates) and us (and/or any of the Franchisor-Related Persons/Entities), the Manuals or other System requirements (collectively, the "Obligations"); provided that you are not in Good Standing if you have been in default of any Obligations and such defaults are incurable by nature and/or part of a series of Repeated or Cross Defaults as defined in this Agreement.
"Gross Volume" - Gross Volume includes all charges and/or revenues which are, or could be, received or earned by you (and/or any Affiliate):
A) by, at or in connection with your Aussie Pet Mobile Franchise Businesses;
B) relating to the kinds of goods or services available now or in the future through a Aussie Pet Mobile Franchise Business and/or distributed in association with the Marks or the Aussie Pet Mobile Franchise Business;
C) relating to the operation of any Similar Business; and/or
D) with respect to any co-branding activities.
All sales and/or billings, whether collected or not, will be included in Gross Volume, with no deduction for credit card or other charges. Gross Volume does not include customer refunds.
"Guarantor" - The person or persons named on page 1 of this Agreement.
"Hydrobath" - Our proprietary heated Hydrobath and bathing system.
"Intellectual Property" - All registered and unregistered copyrights, Marks, Trade Dress and/or Trade Secrets, patents (including, without limitation, patents, patent applications and/or items which may be the subject of patent applications), the design and operation of the Designated Equipment, processes and corporate names, developed by the Company, as well as any secret process or Confidential Information, which is designated by us, from time-to-time and in our reasonable discretion, for use with the System.
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"Image" - A specific style and appearance created by us to identify the System and includes names, Marks, color schemes and designs as well as identification badges, uniforms and stationery.
"Input" - When we refer to input (or use a similar word or phrase) from Franchisee bodies or otherwise (for example, FAC or FMG input), that means that the designated Franchisee body will provide advice and suggestions regarding specified matters, but we will retain the ultimate decision-making authority and responsibility for all such matters and such Franchisee body input will not be binding on us nor will Franchisee body approval or consent be required.
"Manuals" - Written, video, audio and/or software media (including materials distributed electronically), regardless of title, containing specifications, standards, policies and procedures prescribed by us from time-to-time, and subject to changes in our Business Judgment, and to be followed by you in the operation of each of your Aussie Pet Mobile® Franchise Businesses and your performance under this Agreement, including (but not limited to) all goods and services to be sold and/or provided at or from an Aussie Pet Mobile® Franchise Business and/or in association with the Marks.
"Marks" - The trademarks, service marks and other commercial symbols and designs now and/or in the future owned by (or licensed to) us to identify the services and/or products offered by Aussie Pet Mobile® Franchise Businesses, including (but not limited to) "Aussie Pet Mobile®", the Trade Dress and other logos, slogans and identifiers designated by us from time to time.
"Month" - A calendar month.
"Products" and "Services" - Goods, products and services, including without limitation the Customized Vehicle and Hydrobath, designated by us from time to time for use, sale or otherwise provided and/or used at and/or from each of your Aussie Pet Mobile® Franchise Businesses and/or in association with the Marks.
"Protected Area" - The geographic area typically representing approximately 40,000 to 50,000 in population that is defined on the attached Protected Area Schedule or Development Schedule by a zip code or group of zip codes wherein you are authorized to operate a single Aussie Pet Mobile® Franchise Business. The Protected Area population may vary depending upon the characteristics related to the particular Protected Area in our Business Judgment. Should boundaries of any zip code designated on the Protected Area Schedule change due to political re-districting, or other such action, your Protected Area will be deemed the same geographic boundaries as those designated for that zip code on the Commencement Date of this Agreement.
"Royalty" - The periodic fee(s) payable by you to us for each of your Franchise Businesses pursuant to the terms of this Agreement.
"Similar Business" - Any enterprise or entity that offers or is otherwise involved in or deals with any goods, products and/or services which are substantially similar to those goods, products and/or services now or in the future authorized by us for sale at or from each of your Aussie Pet Mobile® Franchise Businesses, including any such enterprise or entity awarding franchises or licenses to operate or be involved with any such business. Our receipt of any royalties with respect to any Similar Business is not an approval of your involvement with any Similar Business.
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"Sprinter Van" - A Mercedes Sprinter Cargo Van including the following features: 2500 Cargo Van, 140 inch wheelbase (HIGH ROOF), powered by a Mercedes-Benz 2.7L Turbo Diesel Engine, five-speed transmission, headliner heating and air conditioning system, compressor mounting kit, 150 amp alternator, high idle sensor, parabolic side mirrors, cargo partition with window, windows all around, Mercedes upgrade logo package, 12 volt ceiling vent, insulated and finished ceiling, paneled and insulated walls and finished floor.
"System" - The distinctive format and method of marketing and operating mobile pet grooming services developed and/or used in the operation of each Aussie Pet Mobile Franchise Business and subject to change by us in our Business Judgment.
"Term" - The period set out in Section 3.
"Trade Dress" - The Aussie Pet Mobile® design and Image authorized and owned by us for Aussie Pet Mobile® Franchise Businesses subject to change by us in our Business Judgment.
3. AWARD OF FRANCHISE; TERM
A. We are pleased to award you a Franchise to operate an Aussie Pet Mobile® Franchise Business within each of the Protected Areas as per the attached Protected Area or Development Schedule and to use the Marks and System, in the operation of each of your Aussie Pet Mobile Franchise Business(es). If you are a Silver, Gold or Platinum Program participant, you agree to purchase and open (and maintain as fully open for business for the duration of this Agreement) the number of Aussie Pet Mobile Franchise Businesses, in the Protected Area designated for each and no later than the dates as per the Development Schedule.
B. If this Agreement is with a new Franchise, the Franchise is awarded for an initial term often (10) years from the Commencement Date on page 1. If you are acquiring an existing Aussie Pet Mobile® Franchise Business, the initial term shall be no longer than the then remaining term of the Aussie Pet Mobile® Franchise Agreement which relates to the Franchise Business you acquired. This Agreement is subject to the award of two successor Franchises as set forth elsewhere in this Agreement, however, after the award of two successor Franchises, additional successor Franchises will be awarded in our Business Judgment. The term of any successor Franchise awarded to you will be governed by the successor provisions of the franchise agreement under which you operated during your initial term even though then-expired.
C. Full Performance. You will perform your obligations under this Agreement honestly and continuously exert your best efforts to promote and enhance each of your Aussie Pet Mobile® Franchise Businesses, and maximize business volume. You will not engage in any other business or activity that may conflict with your obligations under this Agreement or reduce the Gross Volume of any of your Aussie Pet Mobile® Franchise Businesses. The Franchise awarded to you by this Agreement is to operate each of your Aussie Pet Mobile® Franchise Businesses and to use the Marks and the System only for purposes of conducting such business in accordance with the provisions of this Agreement, the Manuals or as otherwise communicated to you from time to time. You will not (without our prior written consent) operate an Aussie Pet Mobile® Franchise Business or any Similar Business at any location, or servicing customers, outside the Protected Areas designated on your Protected Area Schedule. You must not, without our prior consent: (a) use the System, Marks or Designated Equipment at any other
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location or for any purpose other than to conduct each of your Aussie Pet Mobile® Franchise Businesses; or (b) conduct any activities in connection with the Designated Equipment other than the operation of each of your Aussie Pet Mobile® Franchise Businesses.
D. Importance of Uniformity. You acknowledge that every detail of each of your Aussie Pet Mobile® Franchise Businesses is important—not only to you, but to us and to all Aussie Pet Mobile® Franchisees and associates—in order to: (a) develop and maintain the value of the Marks and quality and uniform operating standards; (b) increase the demand for the Products and Services; and (c) establish and maintain a reputation for operating uniform and high quality mobile pet grooming businesses exemplifying high client servicing standards and ethical business practices. You agree to operate each of your Aussie Pet Mobile® Franchise Businesses in accordance with Aussie Pet Mobile® System Standards as modified by us from time to time, in our Business Judgment. Without this commitment by you, we would be unwilling to award you this Franchise.
4. PROTECTED AREA
4.1 Protected Area. You and we understand and agree that under this Agreement we are awarding you a Franchise to operate within one or more certain Protected Areas defined in advance, but are not awarding you rights to operate more than one Franchise Business in each such Protected Area. Subject to our rights as set forth in this Agreement and as long as you remain in Good Standing, we will not award an Aussie Pet Mobile® Franchise or open a Franchisor-owned Franchise Business within the Protected Area(s) (as defined on your Protected Area or Development Schedule). Your rights in the Protected Area(s) are exactly (and only) as expressly set forth in this Agreement. The Franchise does not include a grant to you of any rights with respect to other and/or related businesses, products and/or services, in which we or any Franchisor Related Persons/Entities may be involved, now or in the future.
We and any Franchisor Related Persons/Entities expressly reserve all other rights, including among them the rights to:
(1) sell or otherwise distribute any products or services anywhere, whether at wholesale, retail or otherwise and whether or not using the Marks or System, without restriction of any kind, in any alternative or other channel of distribution other than mobile facilities providing pet grooming services under the Marks and System, whether or not located in the Protected Area(s) designated on your Protected Area or Development Schedule, and to customers located anywhere,
(2) retain all rights to distribution of branded Products and Services through any outlet (including sales through general retail stores, pet stores or otherwise and/or by electronic means, including but not limited to the internet) located anywhere,
(3) own and/or operate ourselves or authorize others to own and/or operate (a) any business located outside the Protected Areas designated on your Protected Area or Development Schedule, whether or not using the Marks and/or System, (b) any business anywhere, whether using the Marks and/or System or not, which is not substantially similar to the business franchised to you under this Agreement and/or (c) any business anywhere which does not use the Marks, and
(4) acquire, merge, affiliate with or engage in any transaction with other businesses (whether competitive or not), with units located anywhere, including arrangements in which we (and/or any of the
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Franchisor-Related Entities) are acquired, and/or company-owned, franchised or other businesses (including your Aussie Pet Mobile® Franchise Businesses) are converted to another format, maintained under the Aussie Pet Mobile® System or otherwise. Each Aussie Pet Mobile® Franchise Business awarded to you will fully participate in any such conversion subject to any person/entity merging with, or acquiring us, reimbursing you for reasonable costs directly related to such conversion.
4.2 E-Commerce Business and Special Accounts - Current Policies. You will not market or sell through the Internet, World Wide Web, and other electronic or other means of marketing and distribution of Products and Services, or any channel of distribution other than your Franchise Businesses. We reserve the right, in our Business Judgment, to offer/provide Products and Services through the Internet, World Wide Web and/or other similar venues (no matter where the customer is located).
4.3 Servicing Other Franchisee Clients - Restrictions. If you provide grooming or related sales or services to clients located within another Aussie Pet Mobile franchisee's Protected Area, whether intentionally or in error, you will be charged an "encroachment" fee of $100.00 payable to us and must reimburse such franchisee in an amount equal to the charge for the goods and services sold. You will also be considered in default (with an opportunity to cure) under this Agreement as provided in Section 21.2 B. This provision does not constitute and shall not be deemed to constitute a limitation on the private remedies and/or relief to which any franchisee may be entitled under the law.
5. PAYMENTS BY FRANCHISEE
5.1. Franchise Fee. On signing this Agreement you will pay us a Franchise Fee in the amount set forth below, which is fullv earned bv us on signing this Agreement and is entirely nonrefundable (as are all amounts paid to us and/or any Affiliate). The Franchise Fee (and other amounts charged) may not be the same for all franchisees, depending on prior relationship, number of Franchises awarded and other factors. We currently offer four programs in connection with your purchase of Franchise rights under this Agreement: (please initial the Program that applies)
(1) _________Bronze Program: Under our Bronze Program you will receive one
Franchise Business and pay us a Franchise Fee equal to $35,000.
(2) _________Silver Program: Under our Silver Program you will receive two Franchise
Businesses and pay us a Franchise Fee equal to $30,000 times 2 for a Total Franchise Fee of $60,000, representing a discount of $10,000.
(3) _________Gold Program: Under our Gold Program, you will receive three Franchise
Businesses and pay us a Franchise Fee equal to $25,000 times 3 for a total Franchise Fee of $75,000, representing a discount of $30,000.
(4) _________Platinum Program: Under our Platinum Program, you will receive six
Franchise Businesses, one of which will be free of any Franchise Fee, and pay us a total Franchise Fee of $125,000,000 ($25,000 times 5), representing a discount of $85,000.
5.2. Purchase of Additional Franchise Businesses, (please initial the purchase that applies)
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(1) _________If, after signing this Agreement and paying the Franchise Fee, you are in
Good Standing and wish to purchase one or more additional Franchise Businesses within a Protected Area (or portion of a Protected Area) already designated to you by us in connection with a prior written agreement, (as long as such Franchise Businesses are available in our Business Judgment) you may do so upon satisfying all of the following requirements:
(a) signing our then-current form of franchise agreement,
(b) signing our then-current form of General Release excepting only (where so required by applicable law) those claims solely related to the offer and sale of the new Franchise Business itself, and
(c) paying all amounts due for the Designated Equipment Package in accordance with our then-current franchise agreement.
(2) _________If, after signing this Agreement and paying the Franchise Fee, you are in
Good Standing and wish to purchase one or more additional Franchise Businesses in Protected Areas (or portion of a Protected Area) not already designated to you by us in connection with a prior written agreement, (as long as such Franchise Businesses are available in our Business Judgment) you may do so only and upon satisfying all of the following requirements:
(a) signing our then-current form of franchise agreement,
(b) paying our then-current franchise fee for your program,
(c) signing our then-current form of General Release excepting only (where so required by applicable law) those claims solely related to the offer and sale of the new Franchise Business itself, and
(d) paying all amounts due for the Designated Equipment Package in accordance with our then-current franchise agreement.
An initial franchise fee of ___________________________________ Dollars
($__________________) is fully earned and payable to us on signing of this Agreement. The fee is
entirely nonrefundable.
5.3 Designated Equipment Package. The Aussie Pet Mobile® Designated Equipment Package is described on the Fourth Schedule attached to this Agreement and is currently priced at $25,000 per Designated Equipment Package (plus applicable sales tax and shipping) ("the Designated Equipment Package Fee"). We reserve the right to offer used and/or refurbished Designated Equipment (if available) at a reduced cost. You must purchase a Sprinter Van according to our specifications and only from our authorized supplier(s). We will install the Designated Equipment Package in your Sprinter Van ("Customized Vehicle").
5.4 Designated Equipment Package Fee. Each Designated Equipment Package Fee of $25,000 is fully earned bv us on signing this Agreement and is entirely non-refundable (as are all amounts paid to us and/or any Affiliate) and is due and payable prior to attending training.
Under the Bronze Program, you must pay a Designated Equipment Package Fee to cover the cost of the Aussie Pet Mobile® Designated Equipment Package for your Franchise Businesses, before attending training.
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Under the Silver Program, you must pay two Designated Equipment Package Fees to cover the cost of the Aussie Pet Mobile® Designated Equipment Packages for both Franchise Businesses, before attending training.
Under the Gold and Platinum Programs you must pay a Designated Equipment Package Fee to cover the cost of the Aussie Pet Mobile® Designated Equipment Packages for Franchise Businesses 1, 2 and 3 on your Development Schedule before attending training.
Under the Platinum Program, you must pay a Designated Equipment Package Fee for the cost of the Aussie Pet Mobile® Designated Equipment Package for the 4th, 5th and 6th Franchise Businesses as follows:
4th Franchise Business - at least 60 days before the date set on your Development Schedule for delivery and opening of the 4th Franchise Business.
5th Franchise Business - at least 60 days before the date set on your Development Schedule for delivery and opening of the 5th Franchise Business.
6th Franchise Business - at least 60 days before the date set on your Development Schedule for delivery and opening of the 6th Franchise Business.
Each Designated Equipment Package Fee for Franchise Businesses 4, 5 and 6, is fully earned by us on payment and is entirely non-refundable.
5.5 Delivery of the Sprinter Van to Us for Installation of Designated Equipment Package. Bronze Program participants must deliver the Sprinter Van to us for installation of the Designated Equipment Package before attending training. Bronze participants must place the Customized Vehicle for the Franchise Business into operation within 15 Business Days from taking delivery.
If you are purchasing an additional Franchise Business, you must deliver the Sprinter Van to us for installation of the Designated Equipment Package at least 60 days before the expected opening date of the Franchise Business.
Silver Program participants must deliver the first Sprinter Van to us for installation of the Designated Equipment Package before attending training. You must deliver the second Sprinter Van to us for installation of the Designated Equipment Package at least 60 days before the date set on your Development Schedule for opening the second Franchise Business (4 months after taking possession of the Designated Equipment for first Franchise Business). You must place the Customized Vehicle into operation within 15 Business Days from taking delivery.
Gold and Platinum Program participants must deliver the first Sprinter Van to us for installation of the Designated Equipment Package before attending training. You must deliver the second Sprinter Van to us for installation of the Designated Equipment Package at least 60 days before the date set on your Development Schedule for opening the second Franchise Business (4 months after taking possession of the Designated Equipment for first Franchise Business). You must deliver the third Sprinter van to us for installation of the Designated Equipment Package at least 60 days before the date set on your Development Schedule for opening the third Franchise Business (10 months after taking
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possession of the Designated Equipment for first Franchise Business). You must place the Customized Vehicle into operation within 15 Business Days from taking delivery.
Under the Platinum Program you must deliver the fourth Sprinter Van to us for installation of the Designated Equipment Package at least 60 days before the date set on your Development Schedule for opening the fourth Franchise Business (16 months after taking possession of the Designated Equipment for first Franchise Business). You must deliver the fifth Sprinter Van to us for installation of the Designated Equipment Package at least 60 days before the date set on your Development Schedule for opening the fifth Franchise Business (22 months after taking possession of the Designated Equipment for first Franchise Business). You must deliver the fifth Sprinter Van to us for installation of the Designated Equipment Package at least 60 days before the date set on your Development Schedule for opening the sixth Franchise Business (28 months after taking possession of the Designated Equipment for first Franchise Business). You must place the Customized Vehicle into operation within 15 Business Days from taking delivery.
5.6 Royalty - Percentage. Minimum and Payment Dates. Every month (or otherwise as we require from time-to-time in our Business Judgment with appropriate pro rata adjustments if the period is not monthly), for each of the Aussie Pet Mobile® Franchise Businesses awarded to you under this Agreement, you will pay us the greater of (a) eight percent (8%) of the "Gross Volume" received or earned during the preceding month or (b) a minimum royalty of Five Hundred Forty Sixty Sovon Six Dollars ($S4?566), subject to inflation adjustment.
Percentage and minimum royalties are to be paid on the third (3rd) business day of each month for the preceding month (or otherwise as we require from time-to-time in our Business Judgment). Percentage and minimum royalty payments are due for the earlier of the first month in which your Aussie Pet Mobile® Franchise Business (a) begins operations or (b) is required to begin operations under the terms of this Agreement.
In order to reward your success, we currently offer a royalty incentive program. For any month in which you achieve a Gross Volume in excess of $15,000, we wilt reduce your monthly percentage royalty fee from the standard eight percent (8%) down to five percent (5%) of Gross Volume, with no minimum royalty requirement, for any and all of the months in which you achieve this level. If your Gross Volume falls to $15,000.00 or below during any subsequent month, you will no longer be eligible for this incentive and the standard percentage and minimum royalty fees will apply during such months. We reserve the right to cancel or modify this program at any time in our Business Judgment and without advance notice to you.
5.7 Releases. The execution of this Agreement, any addendum and/or amendment will constitute [and you (and each Affiliate of yours), as a condition to the granting of this and any future or other franchise (or any addendum or amendment) will execute, in a form prescribed by us] a General Release (waiving the benefits of any statutory or decisional law limiting a release in any way) of any and all claims, liabilities and/or obligations, from the beginning of time to the date of such release, of any nature whatsoever, however arising, whether known or unknown, against any of the "Franchisor-Related Persons/Entities," excluding only (where so required by applicable law) those claims solely related to the offer and sale of the new Franchise Business, you agreeing that it would be inappropriate and improper from a business standpoint for you to enter into further franchise relationships with us, and have the right to use the Marks and System, while there might be a possibility of claims based on a prior relationship or
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otherwise. We can make no assurance as to whether additional or future franchises or any addenda or amendments may be granted to you or the prices, terms or conditions relating thereto. If we should, through inadvertence or otherwise, fail to require such separate releases at any time, the execution of this Agreement, any addendum and/or amendment, and each Franchise Agreement, addendum and/or amendment after this one, will be regarded as the equivalent of the granting of such release(s).
5.8 Electronic Funds Transfer. You must participate in our then-current electronic funds transfer program and pay all royalties, marketing fund contributions and other amounts through that program on a monthly basis (or otherwise as we specify from time-to-time in our Business Judgment). All payments must be received by us or credited to our account by pre-authorized bank debit before 5:00 p.m. Pacific Time, on the third (3rd) business day of each month or other point in time specified by us. In any event, you will pay us all amounts due us at the times, and in the manner, specified in the Manuals from time to time.
5.9 Interest on Late Payments. All amounts you owe us and/or our affiliates bear interest at the highest applicable legal rate for open account business credit, but not to exceed one and one-half percent (1.5%) per month.
5.10 Application of Payments. Set-Offs etc. We can apply any payments received from you (and/or any affiliate of yours) to any past due or other indebtedness of yours for royalties, marketing contributions, purchases, interest or otherwise as we choose in our Business Judgment, but we will apply your Marketing Fund Contributions only to the Marketing Fund, unless authorized to do otherwise by the FMG. We can set off, from any amounts that may be owed to you, any amount that you owe to us or any marketing fund. We can retain any amounts we have received for your account (whether rebates from suppliers or otherwise), as a credit and payment against any amounts that you owe or will owe to us or with respect to any marketing contribution, without notice and at any time.
5.11 Inflation Adjustments. Amounts specified as subject to inflation adjustment will be adjusted each year in proportion to the changes in the Consumer Price Index (U.S. Average, all items) maintained by the U.S. Department of Labor (or any successor index) as compared to the previous year and the amount rounded to the nearest dollar. We will notify you of the percentage adjustment each year.
5.12 No Offset or Retention of Funds. You cannot offset or withhold payments owed to us (and/or any of the Franchisor-Related Persons/Entities) for amounts purportedly due you (or any Affiliate of yours) as a result of any dispute of any nature or otherwise, but will pay such amounts to us (or our Affiliate) and only thereafter seek reimbursement. If you believe that we or any other person/entity has violated any legal duty to you, you will, notwithstanding such dispute, pay all sums specified under this Agreement or otherwise and will not withhold any payments until and unless such dispute has been finally determined in your favor. Any payment to be made to us and/or any of the Franchisor-Related Persons/Entities shall be made by cash, check, direct deduction to us or by electronic funds transfer as we direct from time-to-time.
6. YOUR AUSSIE PET MOBILE® FRANCHISE BUSINESS — IMAGE AND OPERATION
6.1 System Compliance. Regular Upgrading. You will always operate each of your Aussie Pet Mobile® Franchise Businesses in full compliance with the then-current Aussie Pet Mobile® System and the Manuals, as each is modified by us from time-to-time in our Business Judgment.
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In particular, you will promptly comply with all ongoing requirements, standards and operating procedures relating to the operation, appearance, function, cleanliness, products, services, days and hours of operation, and otherwise of each of your Aussie Pet Mobile® Franchise Businesses (including use of specified equipment, products, services, programs and computer hardware and software), and with our other requirements for an Aussie Pet Mobile® Franchise Business. Mandatory specifications, standards and operating procedures prescribed from time-to-time in the Manuals, or otherwise communicated to you in writing, electronically or otherwise, will constitute provisions of this Agreement as if fully set forth herein. All references to this Agreement include all such mandatory specifications, standards and operating procedures.
Your Aussie Pet Mobile® Franchise Businesses will always be maintained by you in the same first-class condition, and presented to the public with the same features, programs, equipment, decor and otherwise, and offering the same products and services, as new Aussie Pet Mobile® Franchise Businesses and you will, at your sole expense, promptly undertake all changes as are required by us from time-to-time, in our reasonable discretion, including new equipment, signage, compliance with all then-current standards for design, trade dress, software, changing any products and/or services offered, methods of operation and otherwise as we may require to reflect then-current Aussie Pet Mobile® System requirements. If you fail to do so, we may do so on your behalf and for your account, and require that you reimburse us within 10 days of our submission to you of any invoice.
Each of your Aussie Pet Mobile® Franchise Businesses will not be used for any purposes other than the operation of an Aussie Pet Mobile® Franchise Business in full compliance with this Agreement and the Manuals, you will not make any alterations to your Aussie Pet Mobile® Franchise Businesses, any equipment (including the exterior and interior of the Customized Vehicle and all Designated Equipment and related equipment), products or other items, or to the appearance of your Aussie Pet Mobile® Franchise Businesses as originally approved by us, or the products and/or services offered by you, without our prior written approval; and you will place or display at your Aussie Pet Mobile® Franchise Businesses, products and otherwise, only (and all of) such signs, logos and advertising materials as are from time-to-time specified by us.
We (and/or any of the Franchisor-Related Persons/Entities) may, from time-to-time, develop new businesses concepts and services, whether in connection with (and/or using) the Marks, System or otherwise, and which may be offered through any channels of distribution, located anywhere and offering products and services to customers located anywhere. Such concepts and/or services are not included in the System and you do not have any rights in or related to them. In our Business Judgment, we may incorporate such concepts, products and/or services in the System (which you will use and offer) and they will be subject to this Agreement or we may use, franchise and/or offer such concepts, products and/or services through alternative or other channels of distribution, located anywhere and offering products and services to customers located anywhere.
6.2 Designated Equipment. Products. Services and/or Suppliers. Each of your Aussie Pet Mobile® Franchise Businesses must purchase, use and offer such types, brands and/or quality of Designated Equipment, Products and Services and/or suppliers as we designate so long as competitive in price and quality to other products and/or suppliers. Such suppliers may include or be limited to us and/or our Affiliates. We can designate a single supplier or limited number of suppliers, may designate a supplier only as to certain items and may concentrate purchases with one or more suppliers in our
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reasonable discretion. Specification of a supplier may be conditioned on requirements relating to frequency of delivery, standards of service, including prompt attention to complaints, as well as payments, contributions or other consideration to us, our affiliates, any marketing fund and/or otherwise, and may be temporary, in each case in our reasonable discretion. We can, from time-to-time, withhold, condition and/or revoke our approval of particular items or suppliers in our reasonable discretion. We may receive rebates and other benefits from suppliers in relation to items purchased by you and/or other franchisees. You will notify us in writing (and submit to us such information and samples as we request) if you propose to purchase, use or offer any type, brand and/or quality of items that have not been previously specified by us, or if you propose to use any supplier who has not been previously specified by us for the proposed item and will pre-pay reasonable charges connected with our review and evaluation of any proposal. We will notify you within a reasonable time whether or not you're authorized to purchase or use the proposed item or to deal with the proposed supplier. Our consent to an alternative supplier will not be unreasonably withheld nor based on any economic benefit that we may gain from your using our designated suppliers.
6.3 Compliance with Laws and Ethical Business Practices. You will operate each of your Aussie Pet Mobile® Franchise Businesses in full compliance with all applicable laws, ordinances and regulations, including all licensing requirements. You will not engage in any illegal discriminatory practices. We make no representations as to what (if any) licenses, permits, authorizations or otherwise will be required in connection with your establishment or operation of your Aussie Pet Mobile® Franchise Businesses and it is your sole responsibility to determine what licenses, permits, authorizations or otherwise are required and to obtain them, all at your sole cost. All advertising by you will be completely factual, in good taste, and will conform to high standards of ethical advertising. You will, in all dealings with your customers, suppliers and public officials, adhere to high standards of honesty, integrity, fair dealing and ethical conduct. You will refrain from any practice which may injure the goodwill associated with the Marks. You will notify us in writing within five (5) days of the commencement of any action, suit, or proceeding, and of the issuance of any order, writ, injunction, award, or decree of any court, agency, or other governmental instrumentality, which relates to, or which may affect the operation or financial condition of, you and/or your Aussie Pet Mobile® Franchise Businesses.
You agree to comply and/or assist us in our compliance efforts, as applicable, with any and all laws, regulations, Executive Orders or otherwise relating to antiterrorist activities, including without limitation the U.S. Patriot Act, Executive Order 13224, and related U.S. Treasury and/or other regulations. In connection with such compliance efforts, you agree not to enter into any prohibited transactions and to properly perform any currency reporting and other activities relating to your Franchised Business as may be required by us or by law. You are solely responsible for ascertaining what actions must be taken by you to comply with all such laws, orders and/or regulations, and specifically acknowledge and agree that your indemnification responsibilities as provided in Section 15 pertain to your obligations hereunder. You agree to sign and deliver to us, along with a signed copy of this Agreement, the attached Schedule 6, "Executive Order 13224 and Related Certifications".
6.4 Management and Personnel of Your Aussie Pet Mobile® Franchise Businesses. Training. We will allow you to operate your Aussie Pet Mobile® Franchise Businesses along with employees who meet all of our then-current training and other requirements. Absentee ownership exposes vou to a greater risk of failure than if vou are personally involved, on a full time basis, in the daily management of vour Aussie Pet Mobile® Franchise Businesses.
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Under the Bronze Program, the training fee for you is $1,000 payable prior to commencement of training and you will be responsible for all travel, meals, lodging and similar costs while attending training. Under the Silver, Gold and Platinum Programs training for you is included in the Franchise Fee. The training fee is $1,000 for each employee of each Franchise Business you purchase and you will be responsible for all compensation, travel, meals, lodging and similar costs for all persons while attending training.
If you have a qualified Level 1 trainer (as described in the Manual) on staff, your Level 1 trainer may train your employees. You are encouraged to obtain and maintain a Level 1 Trainer on your staff to carry out groomer training. You will not be required to pay groomer training fees for training carried out by your Level 1 trainer.
If you have a qualified Level 2 trainer (as described in the Manual) on staff, your Level 2 trainer may train your employees to be Level 1 Trainers and may also provide services to us and to other franchisees in accordance with and subject to the execution of a Trainer Services agreement substantially in the form attached hereto as the Fifth Schedule to this Agreement.
You must keep us advised of the identities of each of your employees and other supervisors of your Aussie Pet Mobile® Franchise Businesses, and we will have the right to deal with such personnel on matters pertaining to day-to-day operations of, and reporting requirements for, your Aussie Pet Mobile® Franchise Businesses.
6.5 Employment Agreements. You and we understand and agree that under the Bronze Program it may be necessary, and mandatory under the Silver, Gold and Platinum Programs, for you to hire employees to operate your Franchise Businesses. You agree that each such employee will sign our then-current version of Employment Agreement approved by us. We strongly recommend that you retain local counsel in your state to review and conform the language of the Employment Agreement to ensure that it complies with local laws applicable to your Aussie Pet Mobile® Franchise Businesses. You will be solely responsible for any and all legal and other fees incurred by you to do so. You, or anyone you designate, will hire all employees of your Aussie Pet Mobile® Franchise Businesses and will be solely responsible for their supervision, termination, terms of employment and compensation and proper training.
6.6 Insurance. You will maintain in force policies of insurance issued by carriers approved by us covering various risks, as specified by us from time-to-time. We can specify the types and amounts of coverage required under such policies and require different and/or additional kinds of insurance at any time, including excess liability insurance, Each insurance policy must name us and the Franchisor-Related Persons/Entities as additional named insureds, will contain a waiver of all subrogation rights against us, our affiliates, the Franchisor-Related Persons/Entities and any successors and assigns, and will provide for thirty (30) days' prior written notice to us of any material modifications, cancellation, or expiration of such policies. Your obligations to maintain insurance coverage will not be affected by reason of any separate insurance maintained by us, nor will the maintenance of such insurance relieve you of any obligations under this Agreement or otherwise.
On our written request, you will provide us with (1) a copy of each renewal or replacement insurance policy to be maintained by you for the immediately following term and (2) evidence of prepayment of the premium. If you fail to maintain required insurance coverage, or fail to furnish satisfactory
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evidence thereof and fail to pay premiums, we can obtain such insurance coverage on your behalf and you will fully cooperate with us in our efforts to obtain such insurance policies, promptly execute all forms or instruments required, allow any required inspections of your Aussie Pet Mobile® Franchise Businesses, and pay to us, on demand, any costs and premiums incurred by us.
6.7 Program Participation. We can condition your participation in any program, whether with suppliers, referral sources or otherwise as we determine in our reasonable discretion, including our requiring that you be in Good Standing.
6.8 Toil-Free Number. Secret Shoppers, etc. We can institute various programs for verifying customer satisfaction and/or your compliance with all operational and other aspects of the Aussie Pet Mobile® System, including {but not limited to) a toll-free number, customer comment cards, secret shoppers, "phone phantom" or otherwise. We will share the results of such programs, as they pertain to each of your Aussie Pet Mobile® Franchise Businesses, with you and you will reimburse us for all costs associated with any and all such programs provided that you will not receive any reports, or other benefits of the program, if you are not in Good Standing.
6.9 Beginning Operations. Grand Opening Advertising. You will open your Franchise Business to the general public within 4 weeks after successfully completing training and, in any event, within 12 weeks after the date of this Agreement. Under the Bronze Program, or if you are purchasing an additional Franchise Business under the Silver, Gold or Platinum Programs, you will spend at least Two Thousand Dollars ($2,000) on a grand opening marketing program during the first three (3) months of operation of your Franchise Business. Under the Silver Program, you will spend at least Four Thousand Dollars ($4,000) on a grand opening marketing program during the first three (3) months of operation of your first Franchise Business. Under the Gold or Platinum Programs, you will spend at least Six Thousand Dollars ($6,000) on a grand opening marketing program during the first three (3) months of operation of your first Franchise Business.
You will only use marketing, advertising and public relations programs, media and materials consented to by us. We will furnish advice and guidance to you with respect to your grand opening advertising, which you will follow.
6.10 Mandatory Conference Attendance. Attendance by you at Aussie Pet Mobile® conferences (and/or any other meeting where attendance is designated by us as required) is especially important for you to stay up-to-date on competitive challenges and opportunities, new programs and techniques, to learn about best practices as developed by us and other Aussie Pet Mobile® Franchisees and to establish beneficial relationships with approved suppliers, among other things, and is, therefore, mandatory. We may excuse you from attendance on a meeting-by-meeting basis in our reasonable discretion and we will excuse you in the following cases: You or a member of your immediate family is in the hospital or gravely ill, a death in your family, cancelled airline flights with no reasonable alternative transportation arrangements being available or a natural disaster making your attendance impossible. You must be in Good Standing in order to attend conferences.
You must attend on behalf of your Franchise Businesses. Failure to attend such mandatory meetings will be deemed a breach of this Agreement. We will not charge any attendance fee for you, but we may charge for materials, meals, entertainment, special programs and otherwise and you will bear all
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other costs of attendance.
7. CUSTOMERS
You acknowledge that the System is dependent on (among other things) the establishment and maintenance of good relationships with your customers. You therefore agree:
(a) to adopt and adhere to all aspects of the System, including (among others) systems whereby any inquiries by customers or potential customers are responded to within twenty four (24) hours;
(b) to immediately report all customer complaints to us and to participate in any procedures specified by us for the resolution of such complaints. In addition, you will fully cooperate with all means of quality control as we specify from time-to-time, including (among others) pro-active quality control systems, such as "secret shoppers," "phone phantoms," customer response cards, etc.
8. MARKETING
8.1 Marketing Fund
A. We have instituted an advertising, publicity and marketing fund (the "Marketing Fund") to promote Aussie Pet Mobile® Franchise Businesses and our Marks. Every month (or otherwise as we require from time-to-time in our Business Judgment) you must contribute to the Marketing Fund the greater of either (i) four percent (4%) of Gross Volume for the preceding month for your each of your Aussie Pet Mobile Franchise Businesses or (ii) a minimum contribution of $274283, subject to inflation adjustment.
In order to reward your success, we currently offer a Marketing Fund contribution incentive program. For any month in which you achieve a Gross Volume in excess of $15,000, we will reduce your monthly percentage Marketing Fund Contribution rates from the standard four percent (4%) down to three percent (3%) of Gross Volume, with no minimum royalty requirement, for any and all of the months in which you achieve this level. If your Gross Volume falls to $15,000.00 or below during any subsequent month, you will no longer be eligible for this incentive and the standard percentage and minimum Marketing Fund Contribution rates will apply during such months, We reserve the right to cancel or modify this program at any time in our Business Judgment and without advance notice to you.
Percentage and minimum marketing contributions will be calculated and payable at the same time and in the same manner as percentage and minimum royalties. Funds in the Marketing Fund must be expended, prior to termination of the Marketing Fund, only for the purposes authorized by the relevant franchise agreement(s). No profit, gain or other benefit will directly accrue to us from the Marketing Fund.
B. We will have sole and absolute discretion over aM matters relating to the Marketing Fund operational, marketing or other matter (consistent with its purposes and the provisions of this Agreement.) The Marketing Fund may be used for (among other things) creation, production and distribution of marketing, advertising, public relations and other materials in any medium, including the Internet; administration expenses; brand/image campaigns; media; national, regional and other marketing programs; activities to promote current and/or future Aussie Pet Mobile® Franchise Businesses and the Marks, agency and consulting services; research, any expenses approved by us and associated with, FAC (defined in this Section) or other such advisory groups. A brief statement regarding the availability of information regarding the purchase of Aussie Pet Mobile® franchises may be included in advertising and
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other items produced using the Marketing Fund. The FAC is the advisory group selected (or which may be selected) by us in our Business Judgment, which shall provide Input as provided in this Agreement and as we may request from time to time. The FAC will consist of Franchisees in Good Standing and/or our representatives. We have the right to add or remove members of the FAC in our Business Judgment. The FAC may adopt its own bylaws, rules, regulations and procedures, subject to our consent in our Business Judgment.
C. If approval is granted by a majority of the FAC, we and/or any Franchisor-Related Person/Entities can provide goods, services, materials, etc. (including administrative services and/or "in-house advertising agency" services) and be compensated and/or reimbursed for the same by the Marketing Fund provided that any such compensation must be reasonable in amount. Without FAC approval, we can arrange for goods, services, materials, etc. (including administrative services to be provided by independent persons/companies and all related costs, fees, etc. will be paid by the Marketing Fund. While we are not required to do so, if we submit any matters for approval to the FAC and approval is granted by a majority of the members, approval will be binding on you.
D. The Marketing Fund will be accounted for separately and may be used to pay all administrative and other costs of the Marketing Fund related to its activities and purposes and/or as authorized by the relevant franchise agreements. All taxes of any kind incurred in connection with or related to the Marketing Fund, its activities, contributions to the Marketing Fund and/or any other Fund aspect, whether imposed on us, the Marketing Fund or any other related party, will be the sole responsibility of the Marketing Fund. We will prepare financial statements for the Marketing Fund annually, which will be furnished to you upon written request. Such statements may be audited and any related accounting/auditing costs will be paid by the Marketing Fund. All interest earned on monies contributed to, or held in, the Marketing Fund will be remitted to the Marketing Fund and will be subject to the restrictions of the relevant Franchise Agreement(s). In making expenditures, the Marketing Fund will first spend any contributions made by any supplier; second, any earnings on assets held by the Marketing Fund; third, any contributions made by us; and finally any contributions made by Franchisees.
E. Financial management of the Marketing Fund will be our sole responsibility. We can in our Business Judgment, do any of the following:
1) compensate ourselves and/or any Franchisor Related Person/Entity for salaries, administrative costs, overhead and other expenses incurred in Marketing Fund related programs/activities, including but not limited to production, research, insurance, and collection expenses, as well as any legal expense related to the activities and purposes of the Marketing Fund (consistent with the provisions of this Agreement);
2) charge the Marketing Fund for attorney's fees and other costs related in any way to claims against us and/or any of the Franchisor-Related Persons/Entities regarding the Marketing Fund. However, we shall be required to reimburse the Marketing Fund for any attorneys' fees and/or costs paid by the Marketing Fund in connection with any action in which we are finally found to have acted unlawfully or to be guilty of wrongdoing with respect to the Marketing Fund;
3) spend in any fiscal year an amount greater or less than the aggregate contributions to the Marketing Fund in that year, and the Marketing Fund may borrow from us or other lenders to cover deficits of the Marketing Fund or cause the Marketing Fund to invest any surplus;
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4) collect for remission to the Marketing Fund any advertising or promotional amounts offered by any supplier based upon franchisee purchases. Any such contributions, whether or not made with respect to purchases by you, will not count toward your required Marketing Fund contributions;
5) pay the advertising, marketing, public relations and related costs involved in any co-branding, dual franchising or other such multi-sponsor programs;
6) revise marketing and other programs, and/or make separate expenditures from the Marketing Fund, to take account of cultural or other differences (and/or we can delegate management of a portion of the Marketing Fund in connection therewith);
7) defer, waive and/or compromise claims for current/future contributions to, and/or claims against or with respect to, the Marketing Fund and fund the same with the Marketing Fund;
8) take legal or other action against any franchisee in default of their obligations to the Marketing Fund;
9) merge the Marketing Fund with any marketing fund otherwise established for Aussie Pet Mobile Franchise Businesses for use as described in this Section 8.1, so long as the restrictions of the relevant Franchise Agreement(s) continue to apply to contributions made by Franchisees under such agreements;
10) maintain Marketing Fund assets in one or more accounts designated as "trust accounts" for purposes of protecting such assets from claims of third-party creditors, (but such action shall not be deemed to create any "trust," "fiduciary relationship" or similar special arrangement);
11) incorporate the Marketing Fund or operate it through an entity separate from us, which is subject to all rights and duties of ours relating to the Marketing Fund;
12) take such other actions in connection with the Marketing Fund as we consider to be appropriate and as are consistent with the provisions of this Section 8.1.
F. You acknowledge and agree that we have no obligation to ensure that expenditures by the Marketing Fund are or will be proportionate or equivalent to contributions to the Marketing Fund by Aussie Pet Mobile Franchise Businesses operating in any geographic area, or that any Aussie Pet Mobile Franchise Businesses will benefit directly, indirectly or in proportion to its contribution to the Marketing Fund. All Aussie Pet Mobile Franchise Businesses owned by us will make contributions to the Marketing Fund as if they were subject to the then-current form of Franchise Agreement.
G. Neither we nor any of the Franchisor-Related Persons/Entities, including the FAC will be liable for any act or omission in connection with the Marketing Fund which is consistent with this Agreement. You and we expressly agree that none of the relationships with you in connection with the Marketing Fund are in the nature of a "trust," "fiduciary" or similar special arrangement.
H. Subject to the express requirements of this Agreement that your contributions will only be spent as authorized herein, if you are in default of any of your obligations to us, the Franchisor-Related
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Persons/Entities and/or the Marketing Fund, or your Franchise Agreement is otherwise subject to termination, you will have no rights with respect to the Marketing Fund. We can deny access to any and all programs and/or materials created by, and benefits of, the Marketing Fund to Franchisees who are in default in any obligations to the Marketing Fund.
8.2 Your Participation in the Marketing Fund. You agree to participate in all Marketing Fund programs. You have the right to set your own prices, except that we can specify maximum prices for goods or services to the greatest degree permitted by law. You must fully honor all coupons, price reduction and other promotions/programs as directed by us. The Marketing Fund may furnish you with marketing, advertising and promotional materials; however, we can require that you pay the cost of producing, shipping and handling for such materials.
8.3 Your Local Marketing Activities.
A. You must locally advertise and promote each of your Aussie Pet Mobile Franchise Businesses. Appropriate local advertising expenditures may include, but are not limited to, direct mail coupons, fliers, door hangers, postcards, cable television commercials, radio commercials, yellow pages, and newspaper advertising.
B. Your advertising must be in good taste and conform to ethical and legal standards. We require that samples of all advertising and promotional materials for any media, be submitted to us for our review and approval prior to use. You agree not to use any materials or programs disapproved by us at any time in our Business Judgment. We can require that a brief statement regarding the availability of Aussie Pet Mobile® franchises be included in advertising used by you and/or that brochures regarding purchase of Aussie Pet Mobile® franchises be displayed in each of your Aussie Pet Mobile® Franchise Businesses.
C. Your right to use the Internet and/or World Wide Web in the marketing and operation of your Aussie Pet Mobile® Franchise Businesses is limited to your limited participation in the Aussie Pet Mobile Website, and we require that you use e-mail addresses for your Aussie Pet Mobile® Franchise Businesses that we provide under our domain name. You cannot establish any independent website, domain name, e-mail address or other presence for use with your Aussie Pet Mobile® Franchise Businesses. You must comply with the Manuals and any other specifications we give to you regarding your use of the Internet, World Wide Web or other electronic media in connection with your Aussie Pet Mobile® Franchise Businesses.
8.4 Franchise Marketing Group(s) ("FMG"). We can, in our Business Judgment, elect to form one or more associations and/or sub-associations of Aussie Pet Mobile® franchisees to conduct various marketing related activities on a cooperative basis {an "FMG"). If an FMG (local, regional or national) is formed covering your area, then you must join and actively participate. You may be required to contribute such amounts as are determined from time-to-time by the FMG. The FMG may adopt its own governing rules, regulations and procedures, subject to our consent in our Business Judgment. Any failure to timely pay amounts due to, or to comply with the bylaws, rules, regulations and procedures of the FMG, shall be a breach of this Agreement. We may offset against amounts we owe to you the amount of your unpaid FMG obligations. While we're not required to do so, if we submit any matters for approval to the FMG and approval is granted, the approval will be binding on you.
9. OUR OBLIGATIONS TO YOU
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9.1
Manuals. We will provide the Manuals to you.
9.2 Initial Training. Under the Bronze Program, we will provide an 80-hour training program for you, at a time and place, and for such period, as we designate in our Business Judgment. You must attend and complete our training program to our satisfaction (in our reasonable discretion) before beginning operation of your Aussie Pet Mobile® Franchise Business. The fee for this training is One Thousand Dollars ($1,000), and you will be responsible for all travel, living, incidental and other expenses and compensation of you attending any training program.
Under the Silver, Gold and Platinum Programs, the Franchise Fee covers a 3-day training program for you, at a time and place, and for such period, as we designate in our Business Judgment. We will also provide an 80-hour training program for one employee for each of the Franchise Businesses you purchase. The fee for this training is One Thousand Dollars ($1,000) per employee and you will be responsible for all travel, living, incidental and other expenses and compensation of you and your authorized personnel attending any training program. If you have a qualified Level 1 trainer on staff, your Level 1 trainer may train your employees. You will not be required to pay us training fees for training carried out by your Level 1 trainer. You and your employee(s) must attend and complete our training program to our satisfaction (in our reasonable discretion) before beginning operation of each of your Aussie Pet Mobile® Franchise Businesses, You will be responsible for ensuring that each of your employees is adequately trained and assuring that they meet all of our then-current standards and requirements.
If you are purchasing an additional Franchise Business, you must pay a training fee of One Thousand Dollars ($1,000) for an 80-hour training program for one employee at a time and place, and for such period, as we designate in our Business Judgment. If you have a qualified Level 1 trainer on staff, your Level 1 trainer may train your employees. You will not be required to pay us training fees for training carried out by your Level 1 trainer.
Your employee(s) must attend and complete our training program to our satisfaction (in our reasonable discretion) before beginning operation of each of your Aussie Pet Mobile® Franchise Businesses. You will be responsible for all travel, living, incidental and other expenses and compensation of you and your authorized personnel attending any training program.
9.3 Identification with System and Image. We will authorize you to identify each of your Aussie Pet Mobile® Franchise Businesses as a Franchisee of the System and to conduct such business using the System and Image, subject to the requirements of this Agreement and the Manuals.
9.4 Advice. We will promptly provide such advice and information as we consider reasonably appropriate to assist you with: all methods and procedures associated with the System; marketing and advertising; management and administration; the use of the Image or any changes to it; the use and application of Products and Services. You understand and agree that such advice and information may be rendered by phone, electronically, through the Manuals, training and/or by such other means as we deem appropriate in our Business Judgment.
9.5 Consent to The Use of the Business Name. We will give approval to any proposed name or description under or by which you propose to carry on each of your Aussie Pet Mobile®
Aussie Pet Mobile, Inc.
Franchise Agreement — 9A-/053/1/O6 Page 21
California
Your Initials: /
The original documents were scanned as an image. The original file can be downloaded at the link above.