Franchise Agreement

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


Sample Franchise Agreement

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CANDY BOUQUET INTERNATIONAL. INC. FRANCHISE AGREEMENT

This FRANCHISE AGREEMENT ("Agreement") is being entered into between CANDY BOUQUET INTERNATIONAL, INC., an Arkansas Corporation (referred to as "CBI" in this Agreement), and

(referred to as "you" or "your "). If you are a corporation or partnership, or if this Agreement is transferred to a corporation or partnership, the term "you or your" in this Agreement refers to the shareholders, partners, and/or investors of the corporation or partnership. Unless otherwise stated the term "controlling shareholder or partner" refers to the person who owns in excess of fifty percent (50%) of the entity owning the franchise.

1. INTRODUCTION

CBI has developed designs for candy bouquet arrangements that integrate candy into floral-like arrangements, CBI sells other candy and gift items. CBI also owns, uses, promotes and licenses a name and trademark that is comprised of (a) the name "CANDY BOUQUET," (b) a commercial symbol, or "Logo" and, (c) the slogan, "A Delicious Alternative to Flowers." The name and trademark is shown on the cover of the offering circular.

You have applied to CBI for a franchise to operate a CANDY BOUQUET store or operation utilizing the name and trademark at the location identified in this Agreement. CBI has approved your application in reliance upon the representations made by you in your application, including those concerning your financial resources and the manner in which the franchise you will purchase will be owned and operated. The place of business that you open for the operation of the Candy Bouquet franchise will be referred to in this agreement as "Store" whether one or more.

You acknowledge that you have read this Agreement and the Uniform Franchise Offering Circular and have been given an opportunity to obtain clarification of any provision that you do not understand. You also understand and agree that the terms and conditions contained in this Agreement are necessary to maintain the high standards of quality and service and the uniformity of those standards at all CANDY BOUQUET stores or operations.

2.  GRANT AND TERM OF FRANCHISE

A. Grant of Franchise

Subject to the terms of this Agreement, CBI grants you a franchise to establish and operate CANDY BOUQUET stores under the terms of this Agreement and a license to use the name and Trademark in the operation of the Store(s) within the geographic territory described in Section 4A of this Agreement.

B. Term of Franchise

The initial term of this Franchise Agreement shall be for a period of five (5) years beginning upon the execution of this Agreement.

3. RENEWAL OF FRANCHISE

A. Option to Renew

You may renew the franchise for additional five-year terms at the end of the initial term, provided 1) You are not in default of any provision of this Agreement or any other agreement with us or our subsidiaries or affiliates, 2) you have complied with the terms and conditions of this Agreement and Contracts during their terms and 3) you fulfill the conditions in 3.B below. Your renewal fee is_________________. Your renewal date is_________________.

B. Manner and conditions of Renewal

Franchisee must:

1. provide CBI written notice of intent to renew this Agreement at least six (6) months prior to the end of the term hereof;

2. at the time of such notice, pay a renewal fee of 25% of your initial franchise fee;

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3. execute the then-current CBI Franchise Agreement for new franchisees as of the date of expiration of the term of this agreement;

A, be in complete compliance with this Agreement, including payment of all fees due, the requirements described in the Manuals and all other agreements and policies in effect between CBI and you;

5.  be current with all financial obligations to third parties, including your landlord and other vendors of products or

services to you;

6. upgrade, remodel and refurbish your Candy Bouquet Store both exterior and interior to comply with CBI's then-

current standards as described in the current Training and Operations Manual.

CBI will send all agreements relating to renewal of the franchise for your review and execution upon your request. Your failure to follow the manner of renewal outlined above will be deemed an election by you not to enter into a renewal of your franchise. The current Franchise Agreement used for renewal may contain provisions that are different from your original agreement, including financial terms.

There are no other terms or conditions under which CBI may refuse to renew the Agresment.

4. EXCLUSIVE TERRITORY A. Defined

The following geographic territory will be defined as your "Exclusive Territory" iind Grant of Franchise. This territory is also referenced in an attached map. Your exclusive territory is defined a;; the area that you purchased. All contract territory must be contiguous.

STATE

COUNTY

ZIP

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B. Protected Area

Provided you are in compliance with the terms of this Agreement, CBI will not operate or grant a franchise for the operation of a CANDY BOUQUET store or operation within your Exclusive Territory during the term, of this Franchise Agreement or any renewal period. You may open multiple units and operate anywhere within your Exclusive Territory. Notification to CBI is required for each additional store that is opened. If you establish a home-based business, your home must be located within your Exclusive Territory.

If you purchase additional territory to expand your franchise area you will be required to execute a new franchise agreement. Franchisees owning more than one contiguous territory are not required to open additional stores.

Because of changes in the way land areas are defined by zip codes and the possibility of mistakes, it is possible that you could be sold a territory that is already owned by another CBI franchisee. CBI will make the best effort to not make mistakes in selling territory, but in the event it is discovered that all or part of your Exclusive Territory is subject to another CBI franchise, you agree that CBI's only liability or obligation is to give you the option of receiving another territory of approximately the same population or receiving a refund of your pro-rated franchise fee plus your verified pro-rated out-of-pocket expenses relating to your purchase of the franchise.

From time to time the U.S. postal service splits and/or adds zip codes to certain areas. In order to maintain your exclusive territory size, you agree that it is your responsibility to inform CBI of any zip code changes in your territory within 7 days of that change. CBI is not responsible for your failure to do so, and these events could lead to parts of your exclusive territory being sold to another franchisee.

C. Limitation of Area

CBI can sell a franchise in any territory outside or contiguous to your exclusive territory. CBI will not market, advertise or sell candy bouquet arrangements direct through other forms of distribution. CBI does maintain a web site for the benefit of all franchisees with links to those franchisees that maintain their own web site. CBI retains the right to implement a national marketing and advertising program for the benefit of all CBI franchises. You agree, however, not to market or sell, permit the marketing or selling of Candy Bouquet products, or distribute sales materials, advertising materials or the like, by you or your agents outside of your Exclusive Territory, unless specifically authorized in accordance with this agreement. No purchases from CBI's Distribution Center will be sent to you from CBI to anywhere outside of your exclusive territory.

5. INITIAL PAYMENTS TO FRANCHISOR

A. Initial Franchise Fee

The total amount of your initial franchise fee for the territory defined in Section 4 A of this Franchise Agreement

is___________________. Upon the signing of this Agreement, you agree to pay to CBI 25% of your initial

franchise fee in the amount of___________________. This signed Agreement and your 25% payment must be

sent to CBI and upon receipt your training date will be scheduled. Your 25% payment will retain your Exclusive

Territory for a period of four (4) months beginning on_________________, being the date your payment was

received by CBI. The balance, or 75%, of your initial franchise fee in the amount of___________________must

be paid at the time you report to CBI headquarters educational facility for training. The 75% payment is payable by cashiers check or credit card and must be in U.S. dollars. Your franchise fee payments are not refundable.

B. Opening Inventory

You will purchase an opening inventory of candy and supplies at a cost of approximately $2,000. You may choose to purchase additional inventory supplies. All opening inventory purchased from CBI's distribution center during your initial training period must be paid for before the final day of the training period. Payment must be in U.S. funds.

Credit and Payment Terms

After your opening inventory purchase and upon approval from CBI you will be extended a $1,000 credit limit in

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CBI's warehouse. You are required to have a current credit card number and signed authorization form on file to secure purchases over that credit limit. Credit terms are Net 30. Purchases from CBI's wholesale warehouse are payable via electronic funds transfer, check, or credit card within 30 days of billing. Credit limits may be increased or decreased at the sole discretion of CBI.

All franchisees located outside the US and Canada are required to secure Export-Import Insurance from the Export-Import Bank of the United States in order to receive Net 30 privileges. All orders placed without such insurance must be paid in full prior to shipment.

C. Training, Site Selection and Opening Costs and Charges

You agree to pay the expenses of you and your employees for training. You agree to pay CBI's travel-related expenses if you consider it necessary for CBI to travel to your location to approve the: site for your Store, or should you request that we assist you in the opening of your location. In addition, you may incur other costs, prior to opening, which may be determined by your specific location and size of store. Site selection and additional training assistance will be billed to you at a rate fifty dollars ($50) an hour.

D. Non-refundability of Fees and Purchases

The fees paid, inventory purchased and other charges under this Section 5 are not refundable.

6. ROYALTY FEES AND OTHER CHARGES

A. Royalty Fees

There are no royalty fees paid to CBI.

B. Association Fees

You are required to pay CBI an additional monthly Association fee. These monthly fees are due and payable in monthly payments via credit card, check, or electronic funds transfer within 30 days of billing. The amount payable is determined by the population size of your Exclusive Territory and is summarized in the table that follows.

Monthly Association Fee Based On Population*

Population

Monthly Association Fee

1 - 5,000

$55

5,001 - 10,000

$70

10,001-20,000

$85

20,001 - 40,000

$100

40,001 - 60,000

$115

60,001 - 80,000

$135

Population

Monthly Association Fee

80,001 - 100,000

$145

100,001 - 125,000

$lo5

125,001 - 150,000

$195

150,001-200,000

$235

200,001-250,000

$275

250,001-and up

$1.25 per 1000

* An Association Fee of $50 will be billed for each additional retail location that you open within your Exclusive Territory.

YOUR MONTHLY ASSOCIATION FEE is

per month for the five-year period of this Franchise

Agreement. The monthly association fee may be adjusted for inflation at the time your franchise is renewed.

FRANCHISOR will charge a late fee of $15 for accounts that are over their Net 30 terms. The company has the right to terminate this Franchise Agreement if the Association fee is 30 days overdue from date of billing.

C. Advertising Fees

There are no advertising fees paid to CBI.

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D. Transfer Fee

The franchisee shall not engage in a transfer unless the franchisee has obtained written consent and is in full compliance with their Franchise Agreement. If you transfer your franchise in accordance with the procedures set forth in this Agreement, you agree to pay a transfer fee of $3,000. CBI must approve the new franchisee. The new franchisee must sign a current Franchise Agreement with CBI for the remaining term of your franchise agreement. To train the new franchisee there is a training fee of $500. The Training and Operations Manual given to you must be returned at the time of the transfer.

Transferring of any part of your Exclusive Territory for another Exclusive Territory can only be done with written permission form CBI, signing a new Franchise Agreement, and payment of a transfer fee.

E. Exit Fee

When exiting the franchise system before your contract has expired, you must give at least 3 months advanced notice and pay an exit fee of $500 for every year that is left on your contract.

Years left on contract

Exit Fee

4 years to 5 years

$2,500

3 years to 4 years

$2,000

2 years to 3 years

$1,500

1 year to 2 years

$1,000

0 to 1 year

$500

After renewal

$0

7.   STORE LOCATION

CBI will, at your request, provide you with information on evaluating and selecting a location for your Store. You shall not allow the premises of the Store to be used for any immoral or illegal purpose.

8.   STORE DEVELOPMENT

A. Initial Development

You agree that after obtaining possession of the site for your Store(s) you will purchase or lease equipment, fixtures, furniture and signs.

B. Equipment, fixtures, furniture and signs

CBI requires that you display the name "CANDY BOUQUET" with no prefix or suffix on the exterior of your store in lettering that is at least sixteen (16) inches high. Lettering height requirement is waved to comply with any building requirements or municipal codes and does not apply to home based franchises. The Company's trademark in color, at least twenty-six (26) inches high must also be displayed within the interior of the Store and on the exterior of the Store or in the window of the Store. Outside signage is optional for a home-based operation.

C. Store or Location Opening

You agree to be open for business in your retail operation, home based or storefront, and have it stocked with a minimum of supplies to meet all standards of operation. CBI requires you to open your franchise business within 90 days after your training date. Any opening date extension must be agreed to in writing.

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9.   TRAINING

A. Initial Training

You must enroll and complete all training programs and classes that CBI requires for the operation of your CANDY BOUQUET store. The initial training class will last four and one half (4 1/2) days. This training is done at one time on consecutive days. The actual time may vary depending upon the artistic, creative and business skills of you and your employees. These training programs and classes will be furnished at such times as CBI designates. All training will take place at CBI's headquarters and educational facility, located in Little Rock, Arkansas. There will be no separate charge for training you and one other person. All training programs and classes must be completed to our satisfaction. You will be responsible for your own travel, living expenses and compensation of you and your employee incurred during these training programs and classes. The majority owner of your operation is required to attend the initial training classes. The initial training will be provided and is required within 90 days of sending your signed Franchise Agreement and your 25% deposit. Any training date extension must be agreed to in writing. If multiple units are opened, Franchisee's employees will be trained by the Franchisee. All Franchisee's employees will be trained after they have signed and dated CBI's Employee Non Disclosure and Non Competition Agreement and it is on file for inspection by CBI.

B. Training of Employees

You agree to implement a training program for employees of your Store in accordance with the training standards and procedures prescribed by us from time to time. You will be given a Training and Operations Manual at the initial training session. This manual is to be returned to CBI for destruction upon expiration of this agreement. You and all employees, including spouses, partners, and silent partners, must sign an Employee Non-Disclosure and Non-Competition form before being trained. An Employee Non Disclosure Agreement is included with the training program material. You agree that you are responsible for any violation of confidential information by an employee that has not signed a non-disclosure non-competition form.

C. Additional Training

Additional training is not required, but is available for you and your employees to attend supplemental or additional training programs that may be offered from time to time by us during the term of this franchise at CBI's Headquarters and Educational facility. You will not be charged for such training; programs but you will be responsible for the travel, living expenses and compensation for you and your employees while attending these training programs. We will attempt to keep you informed of developments within the CANDY BOUQUET system and invite you and your employees to attend, at your cost, all seminars and other Franchisee-related functions that we may sponsor. CBI has an optional Advanced Certification Program at no additional cost. Upon completion of these programs you will be present with a $250 gift certificate to the CBI warehouse and a silver pin in recognition of you accomplishment. These will be presented to you at the annual convention.

10.  OPERATING ASSISTANCE

A. Advice and Guidance

CANDY BOUQUET may provide reasonable operating assistance by telephone, written communications and personal visitation as we determine from time to time to be necessary for the operation of your CANDY BOUQUET operation. Operating Assistance may include advice and guidance regarding: (a) methods of CANDY BOUQUET assembly; (b) hiring and training of employees; (c) formulating and implementing advertising and promotional programs; and (d) the establishment of administrative, bookkeeping, accounting, inventory control and general operating procedures. We will require that you imitate "as near as possible" a designated model Store within the CBI organization. At your request and your cost, we will send a Company representative to advise and assist you in all phases of operating your store during the store's first three days of operations at an hourly rate of $50. Any other assistance will be billed at an hourly rate of $50.

B. Operating Problems

We may advise you from time to time of operating problems of the CANDY BOUQUET store disclosed by reports

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submitted to us and from inspections made by us. We will make no separate charge for operating assistance, except that we may make a reasonable charge for forms and other materials supplied to you at your request and for operating assistance made necessary in our judgment as a result of your failure to comply with any provision of this Agreement or for operating assistance requested by you in excess of that normally provided by us.

11. STORE PRODUCTS AND SERVICE

There is no official requirement as to the type of Candy Bouquets and what a location must carry as a specific inventory, with the exception of our basic patterns for wire service between Franchisees. Inventory will ultimately be determined by market conditions within your Exclusive Territory. CBI does have suggestions as to the type bouquets that should be carried initially. CBI strongly recommends that you use the candies that are included in the CBI's wholesale price list.

A. Referrals and Servicing of Referrals

You agree that if you refer an order to another Candy Bouquet store, you will collect payment for the order. You further agree that you will then forward 80% of the payment for the sale to the Candy Bouquet store servicing the order within 30 days. You may contact the Candy Bouquet Franchise Advisory Council for inclusion on the preferred referral list. You agree to follow CBI's design pattern.

B. Supplies and Materials

In order to maintain quality control, you agree to stock the materials and supplies necessary to assemble and sell the candy bouquet arrangements, including but not limited to candy, brochures, Logo items, wire, floral tape, cellophane, styrofoam, artificial flowers and grasses, floral containers, baskets, ribbons, balloons and other necessary supplies. To ensure quality control, CBI requires that you also stock seasonal kits. Further, to maintain quality control you are restricted, and therefore you agree not to purchase any type of pre-owned or used inventory from any source. We will provide you with a list of suppliers for inventory items not provided by CBI that are needed to stock and operate your store. Neither CBI, nor any of its affiliates will derive income from your purchases, except candy and supplies purchased from CBI's warehouse or preferred vendors.

Other than the above, you are under no obligation to buy any other items from CBI. Most of the necessary supplies to open a Candy Bouquet franchise operation will be offered to you at wholesale prices by CBI. As a service to you, CBI will offer smaller quantities at competitive prices. When you purchase equipment or supplies from CBI, or from CBI preferred vendors, CBI profits from these purchases.

C. Restriction on Goods and Services

You are not prohibited from stocking and selling any related products or services. These products may include loose and packaged candies, tasteful cards, balloons, flowers, gift baskets and other compatible gift items. You are restricted from using the premises for any purpose other than the operation of a "CANDY BOUQUET" store, unless approved by CBI. You are prohibited from using the Candy Bouquet premises for illegal or immoral purposes, or for any way whatsoever that would cause damage to the goodwill and image of CBI.

D. Advertising

CBI has no advertising fees. CBI does have an advertising policy and certain restrictions on advertising by franchisees. Advertising is not allowed outside your Exclusive Territory with the exception of the situations as outlined. CBI permits franchisees to do their own advertising within their Exclusive Territory. However, all advertising material must include the Candy Bouquet logo and the phrase "or contact a Candy Bouquet Franchise nearest you." and reference to the CBI's web address www.candybouquet.com. A mail order business for Candy Bouquet products is not permitted. Any direct mail advertising or other direct advertising must be done within your exclusive territory only.

Mass media advertising is permitted provided your Exclusive Territory is within the mass media's primary market area. If more than one Candy Bouquet Exclusive territory is within the mass media's market area, then the originator of the advertising must offer the other Candy Bouquet franchisees within the market area the right to cooperate in

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the advertising effort. Mass media includes newspaper, radio, television and yellow page ads, and other forms of advertising that may go beyond your exclusive territory.

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CBI has found that soliciting business on auction or referral type sites such as EBay are not conducive to quality control. You are therefore, restricted from using these types of sites to solicit your products.

CBI allows you to have a personalized website, however, CBI must approve all Intermit or web advertising portals in writing. Submission for approval must be done in writing with an attached print version of the advertisement.

12. OPERATING PROCEDURES AND REQUIREMENTS

A. Operating Procedures

You agree to fully comply with all specifications, standards, and operating procedures and rules from time to time prescribed by us for your Store(s) or operation, including, but not limited to, specifications, standards and operating procedures and rules relating to the following:

1.   The safety, maintenance, cleanliness, sanitation, function and appearance of the store premises and its equipment, fixtures, furniture, decor and signs;

2.   Qualifications, dress, grooming, general appearance and demeanor of you and your employees;

3.  Quality, design, size and uniformity, and manner of assembly and sale, of all candy bouquets and other items.

4.   Methods and procedures relating to receiving, preparing and delivering customer oiders;

5.   Use of exterior and interior signs, posters, displays, and similar items;

6.   The handling of customer complaints; and

7.   Compliance with our identity programs, as these may exist from time to time.

8.    Immediate notification to CBI of any changes in address, telephone numbers, email address, and shipping address.

9.   Checking email, phone, fax, or applicable messages at least every 24 hours to ensure order and inquires are

responded to within a reasonable time frame.

B. Compliance with Laws and Other Business Practices

You agree to secure and maintain in force all required licenses, sales tax permits, other permits and certificates and to operate the Store in full compliance with all applicable laws, ordinances and regulations. You also agree to pay when due all amounts payable pursuant to any provision of this Agreement or any other agreement with us or our affiliates or subsidiaries or pursuant to any agreement with any other creditor or supplier of your Store.

C. Prices To Be Determined By Franchisee

We will suggest price guidelines for all Candy Bouquet items offered by your Store. You may determine, in your sole discretion, the prices to charge for the items to be sold in your Store. We do have "uniform bouquets " for wire service purposes; CBI and/or a Franchise Advisory Committee will suggest the prices for these wire service items.

D. Training and Operations Manual

CBI will give to you during the term of the franchise one copy of our Operations Manual and any operational bulletins or similar materials containing suggested specifications, standards and operating procedures and rules prescribed from time to time by us. The entire contents of the Operations Manual will remain confidential and are to be returned to CBI for destruction upon termination or expiration of this agreement. We will have the right to add to, supplement and otherwise modify the Operations Manual from time to time, if we deem it necessary to improve the standards of service or product quality to protect or maintain the goodwill associated with any Trademark, Copyrights, or other Marks or to meet competition. No such addition or modification shall alter your fundamental status and rights under this Agreement. The provisions of the Operations Manual and the specifications, standards and operating tips prescribed by us and communicated to you in writing, will constitute provisions of this Agreement as if contained in this Agreement. However, no changes to the manual1 will be made which would impose any unreasonable economic burden on you or unreasonably increase your obligations.

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E. New Concepts and Designs

If you develop any new concept, design or improvement in the operation or promotion of your CANDY BOUQUET business, you agree to promptly notify us and provide us with all necessary information without compensation. You acknowledge that any such concept, design or improvement shall become our property and that we may utilize and disclose this information to other franchisees.

F. You Must Directly Supervise Store

The Store shall at all times be under the direct supervision of you (or the controlling shareholder or partner if you are a corporation or partnership). If you own more than one (1) store, each store owned must be under the direct, on-premises supervision of a manager who has met the following:

1.   has completed, to our satisfaction, such training (as is specified in Section 9A of this Agreement);

2.   whose identity has been disclosed to us; and

3.   who shall have executed an Employee Non-Disclosure and Non-Competition Agreement not to divulge any trade secret or confidential or proprietary information, including the contents of the Training and Operations Manual, or to engage in or have any interest in any other candy, florist, or gift store business.

G. Insurance

You shall, at all times during the term of this Franchise Agreement, maintain and enforce at your sole expense, insurance coverage for your Candy Bouquet operation as follows:

General Liability insurance, including Products Liability and Completed Operations, for bodily injury and

property damage in the minimum amount of $500,000 per occurrence except $500, 000 in the aggregate annually

for products liability and completed operations limit;

Automobile liability insurance in the minimum amount of $500,000 per occurrence;

Policies described above shall have CBI named as additionally insured;

Policies shall be written with a responsible insurance company reasonably satisfactory to CBI;

Provide that CBI will receive thirty (30) days prior written notice of termination, expiration, cancellation,

modification or reduction in coverage or limits of any such policy;

You must submit to us annually, a copy of the certificate of or evidence of the renewal or extension of each such

insurance policy or any modifications to any such insurance policies;

If at any time you fail to or refuse to maintain in effect any insurance coverage required by us, or to furnish

satisfactory evidence of such insurance, we may, at our option and in addition to the other rights and remedies

that we may have, terminate this Agreement.

H. Store Hours

Franchisees must maintain at least 39 hours of store operations weekly, and be open on Saturdays for a minimum of four hours, unless working from a home based operation or under hours set by lease agreements. Suggested hours are 10:00 a.m. - 5:00 p.m. weekdays and 10:00 a.m. - 2:00 p.m. Saturdays. This section does not apply to home based operations, but reasonable hours with an answering machine and a separate home phone for business must be maintained.

I. English Language Requirement

CBI and our affiliates conduct business in English (as spoken in the United States of America). All communication and business between CBI and you will be in English, including but not limited to, training programs, training material, correspondence, contracts, transferred documents, sales literature, manuals, newsletters, specifications, reports, notices, and arbitrations. You represent and acknowledge that you can read and understand the English language.

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13.  RECORDS AND REPORTS

Bookkeeping and Record-Keeping

You agree to establish bookkeeping and record keeping systems conforming to state and federal requirements. CBI suggests using a computerized accounting package such as Quick Books or Quicken. Although you are not required to ov™ a computer, you are required to have access to a computer with modem and Inlernet access. We also strongly suggest using a Certified Public Accountant for bookkeeping and record keeping and Internal Revenue Service tax filings.

You are required to provide CBI with your gross sales figures if requested by CBI for the following ending calendar periods: first quarter, second quarter, third quarter, and year-end. This information will be submitted to CBI on a form supplied to you by CBI.

14.  PROPRIETARY MARKS AND COPYRIGHTS.

A. Usage

The franchisee acknowledges that the franchisor has a prior and superior claim to the Candy Bouquet name. You will operate and promote the Candy Bouquet franchise under the name "Candy Bouquet" or other name we direct and without a prefix or suffix added to the name. The franchisee shall not use the words Candy Bouquet in the legal name of its corporation, partnership, or any business entity used in conducting business provided for this Agreement. All business by you will be conducted under your own name (individual, partnership, or corporation) doing business as (DBA) "Candy Bouquet" or "CANDY BOUQUET - A DELICIOUS ALTERNATIVE TO FLOWERS. The franchisee also agrees not to register, or attempt to register a trade name using Candy Bouquet in the franchisee's name or that of any other person or business entity without prior written consent of CBI.

You acknowledge that CBI is the owner of any trademark, service marks, trade namus, logo types, or commercial symbols (collectively, the "Marks") licensed to you by this Agreement and that all usage of the Marks and any goodwill established shall inure to our exclusive benefit. You will not use any Marks as part of any company name or in any connection with the sale of any unauthorized product or service or in any other manner not explicitly authorized in writing by us. You agree not to contest the validity or any ownership rights of CBI in the Marks, and you will not register or attempt to register any of the marks.

B. Infringements

You agree to immediately notify us of any infringement of or challenge to your or our use of the Trademark, any Copyrights, or any other Marks or claim by any person of any rights in any Trademark. You agree that you will not communicate with any person, other than us and our counsel, in connection with any such infringement, challenge or claim. CBI alone has the right to control or settle any legal actions or proceedings regarding its trademark. CBI will protect your right to use the trademarks, service marks, trade names, logo types or other commercial symbols or indemnify the franchisee from any loss, cost or expenses arising out of any claim, suit or demand regarding the use of the name. You agree not to contest CBI's right, title or interest in such trademark. You agree to execute any and all instruments and documents, render such assistance and do such acts and things as may, in the opinion of our counsel, be necessary or advisable to protect and maintain our interests in any such litigation or Patent and Trademark Office or other proceeding or to otherwise protect and maintain our interest in the Marks.

C. Modification or Discontinuance of Trademark

If it becomes advisable at any time in our sole discretion for you to modify or discontinue use of any Trademark and/or use one or more additional or substitute Trademarks, you agree to do so. You agree to use your own legal counsel or other advisor to determine if the Candy Bouquet name and Trademark is a valid and useable mark within your Exclusive Territory at this specific time.

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INSPECTIONS

We, or our designee, will have the right, but not the obligation, at any time during business hours and without prior notice to conduct reasonable inspections of your Store(s). We will not provide regular field supervision, but may make recommendations regarding operations methods and opportunities for cost savings and marketing improvements based on our inspections of your Store(s). These inspections will be made at our expense, unless we are required to make any additional inspections in connection with your failure to comply with this Agreement. In such event, we will have the right to charge you for the costs of making all additional inspections in connection with your failure to comply, including without limitation the travel expenses, lodging and compensation of our employees.

16. TERMINATIONS AND EXPIRATION.

A. Termination by You

You may not terminate this Agreement other than as described in Section 16 B3 or if CBI has committed a material breach of the Franchise Agreement.

B. By CBI upon your default

We shall have the right to terminate this Agreement effective upon delivery of notice of termination to you, if any of the following occurs:

1.   You fail to pay any franchise association fees, invoices, or other amounts due to CBI within thirty (30) days after receiving written notice that such fees are overdue;

2.   You abandon the franchise by failing to operate the business for five (30) consecutive days during which FRANCHISEE is required to operate the business under the terms of the Franchise Agreement, or any shorter period after which it is reasonable under the facts and circumstances for FRANCHISOR to conclude that FRANCHISEE does not intend to continue to operate the franchise, unless such failure to operate is due to fire, flood, earthquake, or other similar cause beyond your control;

3.   You give CBI 3 months advanced notice that you wish to terminate the franchise and CBI agrees in writing; and you pay an exit fee of $500 for every year that is left on your contract (5 years- $2,500; 4 years- $2,000; 3 years-$1,500; 2 years $1,000; 1 year- $500; after 5 year renewal- $0

4.   You make any material misrepresentations relating to the acquisition of the franchise business, or you engage in conduct that reflects materially and unfavorably upon the operation and reputation of the franchise business or system;

5.   You fail, for a period often (10) days after notification of non-compliance, to comply with any federal, state, or local law or regulation applicable to the operation of the franchise;

6.   After curing any failure in accordance with the Franchise Agreement, you engage in the same non-compliance whether or not such non-compliance is corrected after notice;

7.   You repeatedly fail to comply with one or more requirements of the Franchise Agreement, whether or not corrected after notice. FAILURE BY YOU TO HAVE EMPLOYEES, FRIENDS, ACQUAINTANCES, SALESMEN, FAMILY MEMBERS, OR ANYONE WORKING AND/OR IN CONTACT WITH CANDY BOUQUET OPERATIONS IN ANY MANNER, SIGN THE EMPLOYEE NON-DISCLOSURE AND NONCOMPETITION AGREEMENT;

8.   You declare bankruptcy, the Franchised business or business premises of the franchise are seized, taken over, or foreclosed by a government official in the exercise of his duties, or seized, taken over, or foreclosed by a creditor, lien holder, or lessor, provided that a final judgment against FRANCHISEE remains unsatisfied for 30 days (unless a supersedes or other appeal bond has been filed, or a levy of execution has been made upon the license granted by the Franchise Agreement or upon property used in the franchised business, and it is not discharged within five (5) days of such levy);

9.   You are convicted of a felony or any other criminal misconduct that is relevant to the operation of the franchise;

10. You make a reasonable determination that continued operations of the franchise by you will result in an imminent danger to public health or safety;

11. You fail to comply with the opening date provisions of Section 8C of this Franchise Agreement.

12. You fail to obtain or maintain insurance required by CBI and you do not correct this requirement within forty-eight (48) hours after written notice is delivered to you;

Franchisee____                                                     11

Franchisor


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