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Sample Franchise Agreement
CANNON HYGIENE FRANCHISING (USA) INC. FRANCHISE AGREEMENT
THIS AGREEMENT is made and entered into this_____day of__________,_____, between
CANNON HYGIENE FRANCHISING (USA) INC., a Delaware corporation with its principal office at 1600 Shore Road, Suite A, Naperville, Illinois 60563 ("Cannon," "Franchisor" or the "Company") and
___________________________________________________________, whose principal address
1.1 The Cannon Hygiene Businesses and System
As a result of the expenditure of time, skill, effort and money, Franchisor and its affiliates have developed a proprietary system for developing, opening and operating businesses ("Cannon Hygiene Businesses") specializing in the offer and sale of personal hygiene services through the installation and routine servicing of disposal units for the safe, hygienic and discreet disposal of sanitary napkins, tampons, babies' diapers and incontinence waste and related services and products (the "Cannon Hygiene System" or the "System").
The Cannon Hygiene System includes (without limitation) services, methods, procedures, systems and techniques for the installation and servicing of disposal units for the safe, hygienic and discreet disposal sanitary napkins, tampons, babies' diapers and incontinence waste; proprietary disposal units (the "Units"); a fluid used to fill and refill the Units (the "Cannon GRASafe Fluid"); specifications and standards for equipment, chemicals, related products, materials and supplies; sales, marketing and advertising methods; and, business and reporting forms. Franchisor continues to expend time, skill and money to investigate new or substitute procedures, systems, services, products, programs and activities and, if Franchisor deems it desirable, to develop and integrate them into the System.
1.2 The Intellectual Property
Franchisor owns or is licensed to use the trademark, service mark, trade name and logotype "CANNON HYGIENE" (the "Proprietary Mark") and various copyrights which are associated with the operation of an authentic Cannon Hygiene Business; constitute an integral part of the Cannon Hygiene System; and, are licensed to Franchisee under this Agreement (the Proprietary Mark, such copyrights and any patents which in the future may constitute part of the Cannon Hygiene System and be licensed to Franchisee hereunder referred to collectively as the "Intellectual Property"). Franchisor continues to develop, use and control the use of the Proprietary Mark and other Intellectual Property in order to identify for the public the source of services and products marketed under the Proprietary Mark and in association with the other Intellectual Property and to represent the high standard of quality associated with these services and products.
1.3 The Franchise
Franchisee desires to obtain a franchise to operate one Cannon Hygiene Business under the Proprietary Mark and the Cannon Hygiene System in the Territory described in Section 3.1 below. Franchisor desires to grant to Franchisee a franchise on the terms and subject to the conditions of this Agreement.
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2. GRANT OF FRANCHISE AND LICENSE
2.1 Grant of Franchise
Franchisor grants to Franchisee, and Franchisee accepts, the right to operate one Cannon Hygiene Business (the "Business"), subject to the terms and provisions of this Agreement and all related agreements. Franchisor also grants to Franchisee the right to use the Cannon Hygiene System, as Franchisor may change, improve, modify or further develop it from time to time. The grant of rights under this Agreement is limited to the Territory specified in Section 3.1 of this Agreement.
2.2 Grant of License to Proprietary Mark and Other Intellectual Property
Franchisor grants to Franchisee, and Franchisee accepts, a non-exclusive license to use and display the Proprietary Mark "CANNON HYGIENE" and to use Franchisor's other Intellectual Property, subject to the terms and provisions of this Agreement and all related agreements. This license applies solely to the operation of the franchised Business and the services and products offered and sold at and from the Business. This license is limited to the Territory specified in Section 3.1 of this Agreement.
3.1 Territorial Grant
Franchisee's right to establish and operate a Cannon Hygiene Business is restricted to the geographic area (the "Territory") described in Exhibit A by a map or written description. Franchisee may operate its Cannon Hygiene Business from only one Premises situated within the Territory. "Premises" means the location selected by Franchisee and approved by Franchisor from which Franchisee shall operate its franchised Business continuously and without interruption throughout the term of this Agreement.
3.2 Franchisor Restrictions
■ Within the Territory, Franchisor and its affiliates, subsidiaries and designees (together, the "Affiliates") will not operate a Company-owned business of the type franchised under this Agreement or grant a franchise for the operation of a similar or competitive business, so long as Franchisee is not in default under this Agreement and all other related agreements, and except as provided in Section 3.4 ("Rights Reserved By Franchisor"). Franchisee acknowledges, however, that this Agreement confers no marketing exclusivity in the Territory on Franchisee, and that all Cannon Hygiene Businesses (whether Company-owned, Company joint-ventured, franchised or otherwise) may solicit, service, advertise and offer their services and products to any individual or entity, regardless of its or its geographic location, including Franchisee's Territory.
3.3 Franchisee Restrictions
Franchisee may only engage in the retail sale of Cannon Hygiene System services. Franchisee is prohibited from engaging in the wholesale sale or distribution of the Cannon GRASafe Fluid, the Units or any service, product, chemical, equipment or other component which is now or in the future part of the Cannon Hygiene System, or any related product or service. "Retail sale" means any sale by Franchisee directly to an ultimate consumer. "Wholesale sale or distribution" means any sale or distribution by Franchisee to a third party for resale, retail sale, or further distribution. "Component" means any constituent part, ingredient, element, segment or derivative.
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3.4 Rights Reserved By Franchisors
Franchisee agrees that Franchisor and its Affiliates have the right, now or in the future:
A. To own, operate and situate (outright, through contract, joint-ventures or otherwise) Cannon Hygiene Businesses outside the Territory as they consider appropriate.
B. To grant franchises and/or licenses for the operation of Cannon Hygiene Businesses outside the Territory as they consider appropriate.
C. To offer and sell services and products within the Territory that are not part of the Cannon Hygiene System through any distribution method, exploiting their Proprietary Mark, other Intellectual Property, name, reputation and know-how.
D. To purchase, merge, acquire or affiliate with an existing chain providing disposal services for sanitary napkins, tampons, babies' diapers and/or incontinence waste; an existing personal hygiene services chain; or, any other business regardless of the location of its facilities, and to operate, franchise or license those facilities as Cannon Hygiene Businesses operating under the Proprietary Mark or any other marks following Franchisor's purchase, merger, acquisition or affiliation, regardless of the location of these facilities, which may be proximate to Franchisee's Premises Location.
E. On the termination or expiration of this Agreement, to offer and sell within the Territory (either themselves or through franchisees) those services and products which this Agreement contemplates Franchisee will offer and sell.
F. Both within and outside the Territory, to offer and sell Cannon Hygiene System services and products at retail to National/Regional Accounts. "National/Regional Accounts" are retail customers such as customers such as large corporations, hospital chains, federal, state and local governmental agencies and any other customers not confined to Franchisee's Territory. Franchisor will give Franchisee the opportunity to service any outlets or locations of National/Regional Accounts in Franchisee's Territory at the price and on the terms agreed on between Franchisor and the National/Regional Account. If Franchisee does not desire to or cannot service a National/Regional Account for any reason, then Franchisor, its Affiliates or any other Cannon Hygiene franchisee may service the Account within Franchisee's Territory. The procedures governing Franchisor's National/Regional Accounts program are set forth in Franchisor's Manual.
4. TERM AND RENEWAL
4.1 Initial Term
The initial term ("Initial Term") of this Agreement will be five years, commencing on the date of execution of this Agreement by Franchisor, unless this Agreement is sooner terminated in accordance with its provisions.
4.2 Renewal Term
Franchisee will have the right, but not the obligation, to enter into Renewal Franchise Agreements for one additional consecutive term of five years (the "Renewal Term"), if Franchisee has complied with the conditions and procedures for renewal set forth in Article 15 of this Agreement and
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if Franchisor is franchising in this State (as defined below) at the time of renewal, and has not determined to cease doing so. The Renewal Term will begin on the date of the expiration of the Initial Term. Franchisor will be "franchising in this State" if Franchisor has, within the one year period before the expiration of the Initial Term, obtained, maintained, renewed or combined any required franchise registration in Franchisee's state of residence (or, if Franchisee is an entity, the state in which Franchisee's principal place of business is situated) or, if no franchise registration is required in Franchisee's state, if Franchisor has offered or sold franchises in Franchisee's state (as defined above) within this one year period. If Franchisor (or any successor of Franchisor) ceases franchising in this State, then upon expiration of this Agreement (but not upon termination for cause), neither Franchisor nor any successor to Franchisor will enforce the post-term covenant not to compete set forth in Section 14.1 of this Agreement.
5. INITIAL FRANCHISE FEE
5.1 Initial Franchise Fee
In consideration of the execution of this Agreement by Franchisor, Franchisee agrees to pay Franchisor an Initial Franchise Fee of $5,000. The Initial Franchise Fee is payable in full upon the execution of this Agreement by Franchisee and will be fully earned when paid.
6. THE PREMISES
6.1 Premises Location
Franchisee may operate its franchised Cannon Hygiene Business only from its Premises Location. Franchisee may use the Premises Location for no other purpose than the operation of the franchised Business without Franchisor's prior written consent. If, at the time of execution of this Agreement, a Premises Location for the franchised Premises has been obtained by Franchisee and approved by Franchisor, then the Premises Location will be set forth on Exhibit A to this Agreement.
If, at the time of execution of this Agreement, a Premises Location for the franchised Premises has not been obtained by Franchisee and approved by Franchisor, then Franchisee agrees to use its best efforts to find an acceptable Premises Location within the Territory, using its own resources, skills and know-how. Franchisee further agrees to comply with all Franchisor's Premises specifications, requirements and restrictions in its Manual or otherwise. The Premises Location will be subject to Franchisor's prior written approval, and Franchisor's determination will be final.
If Franchisee is licensed to operate more than one franchised Cannon Hygiene Business, Franchisee may employ a single Premises for all its Businesses, so long as the Premises is within the Territory of one of its franchised Businesses and no more than one hour's driving time from the farthest boundary of each of its Territories.
6.2 Government Approvals, Consents and Licenses
It will be Franchisee's sole responsibility to promptly seek and obtain all government and quasi-governmental approvals, consents and licenses required to open and operate the franchised Business. Franchisee undertakes to use all possible efforts to obtain all required approvals, consents and licenses. Franchisor makes no representation or warranty that Franchisee will be able to obtain all required approvals, consents and licenses. If Franchisee is unable to do so by the scheduled date of commencement of operations pursuant to Section 8.1, then either party will have the right to terminate this Agreement immediately upon notice to the other party. If either party terminates the Agreement for this reason, then (i) any funds paid by Franchisee to Franchisor will be deemed earned
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by Franchisor, except that Franchisor will return to Franchisee 75% of the Initial Franchise Fee and of any Unit Fees paid to Franchisor by Franchisee (or 50% if Franchisor has furnished its Initial Training Program to Franchisee), and (ii) Franchisee will bear all costs of shipping any Units received from Franchisor to the location within the United States designated by Franchisor.
6.3 Relocation of the Franchised Business
Franchisee may not relocate its Cannon Hygiene Premises to another location without first obtaining Franchisor's written approval for the new location. If Franchisee relocates the franchised Business subject to the terms of this Section 6.3, the new location will be the "Premises Location" of the franchised Business as that term is used in this Agreement. Any relocation will be at Franchisee's expense.
6.4 Leasehold Improvements, Fixtures and Equipment
Franchisee agrees, at its expense, to make all leasehold improvements and install all fixtures and equipment at the Premises required to comply with Franchisor's current requirements and specifications. Franchisor will advise Franchisee concerning design plans. Unless otherwise provided in this Agreement, Franchisee may substitute manufacturers and suppliers and purchase the required fixtures and equipment from any source. Franchisor will advise Franchisee on equipment and suppliers.
All exterior and interior signs used in connection with the franchised Business and any vehicles used in the operation of the franchised Business must conform to Franchisor's sign criteria as to type, color, size, design and location. All signs must be approved in writing by Franchisor before installation or display.
7. DUTIES OF FRANCHISOR
7.1 Confidential Operating Manual
Franchisor will lend Franchisee one copy of its confidential operating manual (the "Manual"), which may be in the form of looseleaf or bound volumes, written bulletins, notices, facsimiles, written notices or electronic communications. Franchisee agrees to operate its Business in strict compliance with the operational systems, procedures, policies, methods and requirements prescribed from time to time in the Manual.
Franchisor retains the right to prescribe additions to, deletions from or revisions of the Manual (the "Supplements to the Manual"), all of which will be deemed a part of the Manual. These will become binding on Franchisee as if originally set forth in the Manual, upon being delivered to Franchisee. Franchisee agrees to immediately adopt and use the services, products, programs, materials, standards, specifications, policies, methods, procedures and techniques set forth in modifications or Supplements to the Manual. The Manual and any additions, deletions, revisions or Supplements to the Manual will not materially alter Franchisee's rights, and obligations under this Agreement.
The Manual may include (but need not be limited to, nor necessarily include all of) the following subjects: components, requirements, duties, standards, procedures, policies, systems, techniques, guidelines and specifications pertaining to the Cannon Hygiene System and to the operation of a franchised Cannon Hygiene Business; services, methods, procedures, systems and techniques for
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the installation and servicing of the Units; utilization of the Cannon GRASafe Fluid; specifications and standards for equipment, chemicals, materials and supplies; sales, marketing and advertising methods; business and reporting forms; programs, procedures and guidelines; quality assurance programs; supervision systems; recordkeeping systems and materials; management and control systems; personnel qualifications; display of signs and notices; authorized or required equipment, chemicals, supplies, appliances and appurtenances; required uses of the Proprietary Mark and the other Intellectual Property; insurance requirements; license requirements; required attire; required manner of offering and selling the services, products and programs used in the Cannon Hygiene System; standards of maintenance and appearance; customer satisfaction; staff training requirements; training specifications; and, additions to, deletions from, modifications to and variations of the services, products, programs and other components constituting the Cannon Hygiene System, including standards and specifications related to the System.
Franchisee acknowledges that Franchisor is the owner of all proprietary rights in the Cannon Hygiene System, the Manual and all Supplements to the Manual. The Manual will at all times remain the property of Franchisor. Franchisee agrees that it, its agents, independent contractors, and employees will treat the Manual and the information contained in it as confidential. Franchisee shall return the Manual and all Supplements to the Manual to Franchisor, or at Franchisor's direction obliterate or destroy them.
7.2 Initial Training Program
Before the opening of the franchised Business, Franchisorwill offer and Franchisee's Business Manager (as defined in Section 8.6 below) will be required to attend and successfully complete an initial training program (the "Initial Training Program"). Franchisorwill determine and notify Franchisee of the date of commencement, location and duration of the Initial Training Program, which will be conducted at a sites in the United States designated by Franchisor.
The cost for the Initial Training Program for Franchisee's personnel (including Franchise's Business Manager) will be included in the Initial Franchise Fee. Franchisee agrees to pay all travel and transportation expenses incurred by its trainees and itself in connection with training, but Franchisor will pay for the meals, lodging and other living expenses of Franchisee's trainees.
Any Business Managers hired or appointed by Franchisee after the commencement of operation of the franchised Business must attend and successfully complete Franchisor's next scheduled Initial Training Program. Franchisee agrees to pay all travel and transportation expenses incurred by its trainees and itself in connection with training, but Franchisor will pay for the meals, lodging and other living expenses of Franchisee's trainees.
7.3 On-Site Training or Assistance
Franchisee may request on-site training or assistance at any time in accordance with all guidelines Franchisor may specify in the Manual or otherwise. Franchisor will not be obligated to provide on-site training or assistance, but if it elects to do so, may impose a fee for each day of on-site training or assistance it agrees to provide.
7.4 On-Going Training
Franchisor may from time to time conduct an annual conference, convention or training session. Franchisor will determine the duration, curriculum and location of these. Franchisee and its Business Manager shall attend each annual conference, convention or training session at which such attendance is required by Franchisor. Franchisee agrees to pay all travel and transportation expenses
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incurred by its trainees and itself in connection with training, but Franchisor will pay for the meals, lodging and other living expenses of Franchisee's trainees.
7.5 Support Services
Franchisor may furnish to Franchisee such support services as Franchisor alone considers advisable. Support services may include advice with respect to services, equipment, procedures, guidelines, systems, specifications or techniques pertaining to the operation of Franchisee's Cannon Hygiene Business. Franchisor's representatives may rendersupport services on-site, off-site, by letter, telephone, e-mail or fax, or through other communication devices. The timing of all advice, consultation and training provided for in this Agreement will be subject to the availability of Franchisor's personnel.
7.6 Consultation Services
If Franchisee so requests, Franchisor may offer Franchisee, for a fee, consultation services beyond the support services described in Section 7.5. Franchisor's representatives may render consultation services on-site, off-site, by letter, telephone, e-mail or fax, or through other communication devices, subject to scheduling availability. Consultation services may include specialized advice related to the operation of Franchisee's Cannon Hygiene Business; on-site reviews of Franchisee's operations and the furnishing or retraining as needed; on-site training of Franchisee's Business Manager and other personnel; and, other specialized assistance as may be requested by Franchisee. Franchisee agrees to pay Franchisor for any consultation services performed at Franchisee's request on the terms, at the times and in the amounts that Franchisor sets forth at the time of offer or sale, in its Manual or otherwise.
7.7 Supply of Units
A. During the term of this Agreement, Franchisor agrees to supply Franchisee (directly, or though an Affiliate) with as many of the Units as Franchisee may from time to time request, of the type that Franchisee may from time to time request, subject to availability and the allocation provisions of Section 7.9 below. Franchisor will have the right from time to time during the term of this Agreement to change the specifications of either or both types of Units if it believes that the change will improve the performance, durability and/or appearance of the Unit(s) in question.
B. The following definitions concerning Units will apply to this Agreement: "Model A Units and Model B Units" are models of Units used for the disposal of sanitary napkins and tampons. "Model C Units" are Units used for the disposal of babies' diapers and incontinence waste. The "Use Period" of any Unit means the period between (i) the date of its deemed delivery (as provided below) and (ii) the fifth anniversary thereof or, if sooner, the date of expiration or termination of this Agreement. A Unit will be deemed delivered for the purpose of this Agreement on the first day of the calendar month following the calendar month during which it is actually delivered to Franchisee.
C. Franchisor will not be obligated to supply fewer than one hundred Units pursuant to any one request. Franchisor will have the right to disregard any request by Franchisee for fewer than one hundred Units and if Franchisor so disregards the request, the requested Units may not be included in calculating the number of Units actually requested by Franchisee for the purpose of Section 8.7("Obligations of Franchisee Concerning Units; Annual Minimum Unit Requirement").
D. Franchisee acknowledges and agrees that legal and beneficial ownership of the Units will at all times remain vested in Franchisor. Franchisor will have the right at any time or times, upon the occurrence of any event giving rise to the right of Franchisor to terminate this Agreement or upon
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the expiration or termination of this Agreement for any reason, at Franchisor's option, either (i) to require Franchisee to return ail Units to Franchisor at Franchisee's expense, or (ii) to require Franchisee to collect all Units previously supplied by Franchisor and store them upon the Premises, and for Franchisor's representative to.have the right to subsequently to enter upon the Premises (or any other premises occupied or controlled by Franchisee) without notice, and to recover the Units therefrom. Franchisee agrees to procure an equivalent right in favor of Franchisor from all customers to whom it parts with possession of any Units.
E. Franchisor will deliver Units to Franchisee (directly, or though an Affiliate) F.O.B. the location within the United States which Franchisor designates (which designation Franchisor may change from time to time), and Franchisee will be responsible for the payment of all shipping charges from that point to Franchisee's delivery destination. Franchisor (or its Affiliate) arranges shipment of Units to Franchisee only as a gratuitous accommodation for the convenience of Franchisee. Franchisor (and such Affiliate) will have no duty or responsibility regarding the selection or actions of any carrier. Franchisee waives any possible claim against Franchisor (and such Affiliate) arising out of or related to the shipment of Units or the selection of any carrier.
F. Franchisee's exclusive remedy and Franchisor's (and its Affiliates') exclusive liability for any and all claims as to any Units delivered hereunder or for delayed delivery or non-delivery of any such Units, shall be limited to the shipment costs and/or duties, if any, paid by Franchisee with respect to such Units and, at Franchisor's option, the replacement of such Units at Franchisee's destination. In no event shall Franchisor (or its Affiliates) be liable for special, incidental, indirect or consequential damages, whether or not caused by or resulting from the negligence of Franchisor (or its Affiliate).
G. If Franchisee is in default under this Agreement, Franchisor (and its Affiliates) will have no obligation to supply any Units to Franchisee; Franchisee will not have any right to offer or sell Cannon Hygiene services and products; and, Franchisee will not, as a result, have a defense at law or equity based on impossibility of Franchisee's performance or any claim against Franchisor (or its Affiliates).
7.8 Sale of Cannon GRASafe Fluid
A. Franchisor will sell to Franchisee, and Franchisee will be required to purchase the Cannon GRASafe Fluid from Franchisor. The chemical formula of Franchisor's Cannon GRASafe Fluid is proprietary to Franchisor's designated manufacturer and constitutes a trade secret known only to such manufacturer, Franchisor and Franchisor's Affiliates, to whom the formula has been imparted under conditions and obligations of secrecy and confidence. Franchisee may use no other fluid in connection with the Units at any time during the term of this Agreement. Franchisee agrees to pay Franchisor for the Cannon GRASafe Fluid at the price that Franchisor sets forth at the time of sale, in its Manual or otherwise. Franchisor's prices will be subject to change at any time upon written notice to Franchisee; provided however, that Franchisor will the prices in effect on the date of commencement of operations of the franchised Business for the first for six months following the commencement of operations of the Business. Franchisor agrees to sell the Cannon GRASafe Fluid to Franchisee at the same price as paid by other U.S. franchisees of Franchisor who are similarly situated. Franchisee will bear the shipping costs and all other applicable taxes and duties for all Cannon GRASafe Fluid purchased from Franchisor.
B. Franchisee shall transmit payment for Cannon GRASafe Fluid within thirty days after it clears customs at its place of importation in the United States,; provided, however, that Franchisor will have the right to demand payment in full for the Cannon GRASafe Fluid (including, if Franchisor elects to arrange for shipment, estimated shipping charges and applicable taxes) at the time
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Franchisee places an order and before the Cannon GRASafe Fluid is loaded for shipment. Payment for all Cannon GRASafe Fluid shall be made in U.S. Dollars by (at Franchisor's option) check or bankers draft payable to Franchisor or by wire transfer or other form of electronic transfer to the Franchisor's designated bank account.
D. Franchisor will have no responsibility concerning shipment of Cannon GRASafe Fluid to Franchisee. Franchisor will sell Franchisee all Cannon GRASafe Fluid F.O.B. the location within the United States which Franchisor designates (which designation Franchisor may change from time to time). If Franchisor arranges shipment of Cannon GRASafe Fluid to Franchisee, Franchisor will do so only as a gratuitous accommodation for the convenience of Franchisee. Franchisor will have no duty or responsibility regarding the selection or actions of any carrier. Franchisee waives any possible claim against Franchisor (or its Affiliates) arising out of or related to the shipment of Cannon GRASafe Fluid or the selection of any carrier.
E. Franchisee's exclusive remedy and Franchisor's (and its Affiliates') exclusive liability for any and all claims as to Cannon GRASafe Fluid delivered under this Agreement or for delayed delivery or non-delivery of the Cannon GRASafe Fluid will be limited to the purchase price of the Cannon GRASafe Fluid (plus shipment costs, if any, paid by Franchisee for the Cannon GRASafe Fluid) or, at Franchisor's option, the replacement of the Cannon GRASafe Fluid shipped to Franchisee's Cannon Hygiene Business. Franchisor (and its Affiliates) will not be liable for special, incidental, indirect or consequential damages, whether or not caused by or resulting from negligence.
F. If Franchisee is in default under this Agreement, Franchisor will have no obligation to sell any Cannon GRASafe Fluid or non-proprietary products, equipment or services to Franchisee; Franchisee will not have any right to offer or sell Cannon Hygiene services and products;
and, Franchisee will not, as a result, have a defense at law or equity based on impossibility of Franchisee's performance or any claim against Franchisor.
7.9 Allocation of Units and Cannon GRASafe Fluid
Franchisor will exert reasonable efforts to fulfill Franchisee's requests for Units and Cannon GRASafe Fluid ordered by Franchisee pursuant to this Agreement on a timely basis. In the event that Franchisor (or its suppliers) are unable to supply Franchisor's clientele (including Franchisee and other Cannon Hygiene franchisees) with the quantity and type of Units or Cannon GRASafe Fluid which such businesses request, as a result of strikes, lockouts or other industrial action; refusal of Franchisor's or its supplier's employees to load, check or otherwise deal with Units or Cannon GRASafe Fluid; accidents to, or breakdowns of, plant machinery or equipment of Franchisor's suppliers; embargoes; fire; wind; earthquake; flooding; hots; civil disorders; national emergencies; any act of God; nonavailability of supplies or raw materials; any third party supplier's act, error, omission or failure to produce; delays of suppliers or carriers; governmental actions, regulations, restrictions, prohibitions, or allocations; or, any cause beyond the control of Franchisor or such supplier, then Franchisor in its sole and exclusive judgment shall allocate the available respective quantities and types thereof on an equitable basis among the respective businesses ordering Units and/or Cannon GRASafe Fluid. In the event that Franchisee does not receive Units or Cannon GRASafe Fluid from Franchisor or suppliers because of any of the reasons set forth above, the same shall not be deemed a breach by Franchisor of the terms of this Agreement, nor shall Franchisor (or any of its suppliers or Affiliates) be liable to Franchisee therefor (whether for lost opportunity, lost profits or otherwise).
To enhance the interbrand competitiveness of the Cannon Hygiene System; to enable competitive and system-wide "price point" advertising; and, to benefit Cannon Hygiene customers,
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Franchisor may, at its sole option, from time to time establish maximum prices above which Franchisee's Cannon Hygiene Business may not offer and sell products and/or services under this Agreement (and Franchisor shall likewise have the right from time to time to revise or eliminate any such maximum prices at its sole option). Franchisee shall adhere to any such maximum price requirement imposed by Franchisor. Franchisor may, at its sole option, advertise specific products or services as for sale throughout the Cannon Hygiene System at such maximum prices "or less". Under no circumstances, however, will Franchisor establish or advertise any minimum prices below which Franchisee may not offer or sell its products or services.
In addition, or alternatively, Franchisor may from time to time suggest prices for products or services offered and sold by Franchisee's Cannon Hygiene Business. Franchisor and Franchisee agree that any list or schedule of such prices suggested by Franchisor will be recommendations only and not be mandatory on Franchisee unless Franchisor expressly labels any or all of such prices as a maximum price (as provided above). Franchisee understands and agrees that Franchisor's suggested or maximum prices, fees, markups or margins may or may not increase or optimize the revenues or profitability of the franchised Business.
Franchisee agrees to inform Franchisor of all prices charged for services and products sold by Franchisee and promptly inform Franchisor of any new prices it establishes. Franchisee agrees to research the prices charged by competitors in the Territory from time to time pursuant to instructions in Franchisor's Manual, and to provide this information to Franchisor.
7.11 Nature of Obligations
All Franchisor's obligations under this Agreement are to Franchisee alone. No other party is entitled to rely on, enforce or obtain relief for breach of any of Franchisor's obligations hereunder, either directly or by subrogation.
7.12 Unavoidable Delay or Failure to Perform
Any delay in Franchisor's performance of any duties under this Agreement or non-performance of its duties that is not the fault of Franchisor or within its reasonable control (including, but not limited to, fire, flood, natural disasters, Acts of God, delays or defaults in deliveries by common carriers and/or the United States Postal Service, governmental acts or orders, late deliveries or non-deliveries of goods or non-furnishing of services by third party vendors, strikes, civil disorders or war) will not cause a default under this Agreement. Franchisee agrees to extend the time of performance for the period of the delay or for any longer reasonable period of time Franchisee agrees to in writing. If performance has become impossible through no fault of Franchisor or due to causes not within Franchisor's reasonable control, then Franchisor's non-performance of its duties will not constitute a breach by Franchisor of the terms of this Agreement.
8. DUTIES OF FRANCHISEE
8.1 Commencement of Operations
Franchisee agrees to commence the operation of its franchised Cannon Hygiene Business no later than six months following execution of this Agreement by Franchisor. "Commencement of operations of the franchised Business" means the first day that Franchisee receives any revenues directly or indirectly to the franchised Cannon Hygiene Business, offers any services or products for sale thereat or therefrom, or conducts any of the activities contemplated by this Agreement, whichever comes first. Before commencing operations, Franchisee agrees to fulfill all the pre-opening obligations called for by this Agreement. Franchisee will be excused from the timely performance of its obligations
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under this Section 8.1 only as a result of delays due to causes beyond Franchisee's control, such as strikes, material shortages, fires, and other causes which Franchisee could not have avoided by the exercise of due diligence.
8.2 Manner of Operation
Franchisee acknowledges that every component of the Cannon Hygiene System is vital to Franchisor, to other Cannon Hygiene franchisees and to the operation of the franchised Business. Franchisee further acknowledges that its compliance with the Cannon Hygiene System is of the essence to this Agreement. Franchisee therefore agrees to conduct the activities and operations of its Cannon Hygiene Business at all times in compliance with the Cannon Hygiene System, including all standards, procedures and policies Franchisor from time to time establishes (in its Manual or otherwise), as though specifically set forth in this Agreement. Franchisee agrees to offer and sell to the public all services, products and programs, and disseminate to the public all promotional and other materials, which are specified by Franchisor and part of the Cannon Hygiene System.
8.3 Maintenance and Repair
At all times during the term of this Agreement, Franchisee agrees, at its reasonable expense, to maintain the interior and exterior of its Cannon Hygiene Premises, and to keep and maintain all equipment, furniture, decorating, signs and appurtenances in or at the franchised Premises in the highest degree of cleanliness, maintenance, condition and repair. Franchisee will not be required to expend any unreasonably excessive amount to comply with the provisions of this Section 8.3.
8.4 Modifications to the Cannon Hygiene System
Franchisee understands and agrees that the Cannon Hygiene System must not remain static if it is to meet presently unforeseen changes in technology, competitive circumstances and customer needs and to best serve the interests of Franchisor, Franchisee and the Cannon Hygiene System. Franchisee therefore agrees that Franchisor may from time to time change the components of the Cannon Hygiene System, including, but not limited to, altering the services, products, programs, methods, standards, forms, policies and procedures of the System; adding to, deleting from or modifying those services, products and programs which Franchisee's Business is authorized to offer; and, changing, improving, modifying, adding to or deleting from the Proprietary Mark and/or other Intellectual Property. Subject to the other provisions of this Agreement, Franchisee agrees to abide by any of these modifications, changes, additions, deletions and alterations, so long as the changes do not materially and unreasonably increase Franchisee's obligations under this Agreement.
8.5 Compliance with Laws, Rules and Regulations
Franchisee agrees to operate the franchised Business in strict compliance with all applicable laws, rules and regulations of all governmental authorities; comply with all applicable wage, hour and other laws and regulations of federal, state and local governments; prepare and file all necessary tax returns; pay all taxes imposed on Franchisee related to the franchised Business; and, obtain and keep in good standing all necessary licenses, permits and other required forms of governmental approval required of Franchisee to offer and sell the services and products which now or in the future are part of the Cannon Hygiene System. Franchisee agrees that it will be responsible for compliance with all applicable laws, rules and regulations, including, without limitation, the Americans with Disabilities Act.
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8.6 Franchisee Participation in Operation of Business; Business Manager
A. Franchisee agrees to personally and directly supervise the operation of the franchised Business, unless otherwise permitted in writing by Franchisor. Franchisee agrees to devote the amount of its time, attention and best efforts to the performance of its duties under this Agreement that is necessary for the proper and effective operation of the franchised Business. Franchisee's failure to do so will constitute a material and incurable breach of this Agreement which, unless waived by Franchisor, will entitle Franchisor to terminate this Agreement immediately upon notice to Franchisee, with no opportunity to cure.
If Franchisee is licensed to operate more than one Cannon Hygiene Business, Franchisee agrees to devote the amount of its time and attention to the performance of its duties under this Agreement that is necessary for the proper and effective operation of the Businesses.
If Franchisee is a corporation, then Franchisee's "Principal Shareholder," defined as the shareholder owning a registered holding of, and the beneficial ownership in, at least 51 % of the shares of Franchisee, shall execute an Undertaking concerning ownership and control of Franchisee in the form of Exhibit D to this Agreement.
B. If Franchisee is an individual, Franchisee shall designate or serve as a Business Manager. If Franchisee is an entity, then Franchisee shall designate a Business Manager. Franchisee shall inform Franchisor in writing as to the identity of its Business Manager and any successor Business Managers. Franchisee's Business Manager will have day-to-day management responsibility for the franchised Business, exercise on-premises supervision and personally participate in the direct operation of the franchised Business. Each Business Manager must complete to Franchisor's satisfaction the Initial Training Program, under the terms and conditions specified in Section 7.2.
Upon the death, disability or termination of employment of Franchisee's designated Business Manager, Franchisee agrees immediately to notify Franchisor. Franchisee agrees to designate a successor or acting Business Manager no later than ten days following the death, disability or termination of the predecessor Business Manager. Each successor Business Manager must attend and successfully complete Franchisor's next scheduled Initial Training Program and complete any other reasonable training at the times Franchisor specifies, under the terms and conditions specified in Section 7.2. If Franchisee does not employ and train a successor Business Manager, this will constitute a material breach of this Agreement, which, unless cured by Franchisee as provided in Section 19.3, will result in this Agreement being terminated immediately.
8.7 Obligations of Franchisee Concerning Units; Annual Minimum Unit Requirement
A. As Section 7.7 provides, Franchisor will supply Franchisee with Units (subject to availability and the allocation provisions of Section 7.9), but legal and beneficial ownership of the Units will at all times remain vested in Franchisor. Franchisee shall hold all Units as bailee and shall not deal with them, or do, cause or permit anything to be done with them, whereby the rights of Franchisor as owner are or may be prejudicially affected. Franchisee shall part with possession of the Units only to bona fide customers of the franchised Business in the ordinary course of such Business. Franchisee shall use the Units in its Business by supplying them to its customers as part of the services it supplies to such customers, and for no other purpose whatsoever. Franchisee shall use the Units only for the purposes contemplated by this Agreement, and shall not alter or interfere with them in any way. Franchisee shall maintain the Units in good condition until returned to Franchisor (subject to reasonable allowance for wear and tear).
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B. Franchisee agrees to draw to its customers' attention the fact that the Units are and will remain the property of Franchisor. Franchisee further agrees to give, or require its customers to give, notice to the owner of and all other persons having any interest in each property at which a Unit is installed, used or stored, that the Unit in question is the property of Franchisor. Franchisee shall not remove or obliterate, or allow to be removed or obliterated, any label, plate or sign attached or applied to any Unit by Franchisor to indicate Franchisor's ownership of the Unit.
C. Franchisee agrees to request Franchisor to supply the minimum quantity of Units set forth on Exhibit A to this Agreement during the twelve months commencing upon the scheduled commencement of operations of the franchised Business as provided in Section 8.1 (the "Scheduled Commencement Date"). In each period of twelve months following the anniversary of the Scheduled Commencement Date (each, an "Anniversary Year"), Franchisee shall not maintain fewer than the applicable minimum number of Units set forth on Exhibit A (including Units on Franchisee's Premises and installed at a customer's premises) at any time during the Anniversary Year in question. Franchisee may satisfy the Annual Minimum Unit Requirement with any type or combination of types of Units. Failure by Franchisee to satisfy the Annual Minimum Unit Requirement for any Anniversary Year will constitute a material and incurable breach of this Agreement which, unless waived by Franchisor, will entitle Franchisor to terminate this Agreement immediately on notice to Franchisee, with no opportunity to cure.
D. Franchisee shall retain all Units which it obtains from Franchisor for their Use Period and no longer. As Section 7.7 (B) provides, the "Use Period" of any Unit means the period between (i) the date of its deemed delivery (as provided below) and (ii) the fifth anniversary thereof or, if sooner, the date expiration or termination of this Agreement. A Unit will be deemed delivered for the purposes of this Agreement on the first day of the calendar month during which it is actually delivered to Franchisee. Unless the parties otherwise agree, on the expiration of the Use Period for each Unit, Franchisee shall ship the Unit back to Franchisor's headquarters. Franchisee will bear the costs of shipment and any associated duties.
8.8 Requirements Concerning Products and Services
A. Sources of Supply and Specifications for
Non-Proprietary Products, Services and Equipment
As Section 7.8 sets forth in full, Franchisee will be required to purchase the Cannon GRASafe Fluid from Franchisor. As detailed in Franchisor's Manual, Franchisee must purchase certain other supplies, equipment, materials and services required for the operation of the franchised Business from suppliers designated in writing by Franchisor; from suppliers selected by Franchisee and approved by Franchisor; and/or, in accordance with Franchisor's written specifications.
Franchisor agrees to exercise its approval of suppliers reasonably, in accordance with the following procedure:
1. Franchisee shall submit a written request to Franchisor for approval of the supplier;
2. The supplier must demonstrate to Franchisor's reasonable satisfaction that it is able to supply a product or service to Franchisee meeting Franchisor's specifications; and,
3. The supplier must demonstrate to Franchisor's reasonable satisfaction that the supplier is in good standing in the business community with respect to its financial soundness and the reliability of its product or service.
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Franchisor reserves the right to test, analyze, inspect or randomly sample the product or service of any Franchisee-proposed supplier at Franchisee's expense, whether or not Franchisor approves or rejects the supplier. Franchisor agrees to give Franchisee notice of its approval or disapproval within a reasonable time. If Franchisor revokes approval of a supplier, it will give Franchisee written notice.
Franchisor may from time to time provide Franchisee with specifications governing the minimum standards of non-proprietary products, services or equipment procured by Franchisee from a third party (that is, from any party other than Franchisor or its Affiliates, or the designees of either), in Franchisor's Manual or in other written notices transmitted to Franchisee. Franchisor may modify its specifications in writing from time to time.
Franchisor may offer and sell to Franchisee any non-proprietary products and services required to be purchased by Franchisee at the prices as Franchisor determines and sets forth at the time of sale, in its Manual or otherwise. Franchisor reserves the right to earn a profit from the sale to Franchisee of non-proprietary services and goods. Franchisee will be under no obligation to purchase any non-proprietary services or goods from Franchisor.
B. Services Offered and Sold by Franchisee
Franchisee agrees to offer and sell all services which are part of the Cannon Hygiene System. Franchisee is currently required to offer and sell the following Cannon Hygiene services, in compliance with the methods, procedures and techniques required by Franchisor (in its Manual or otherwise):
1. The supply of Franchisor's sanitary disposal Units, rendered hygienic through the use of Franchisor's Cannon GRASafe Fluid, and
2. The regular exchange of such Units with empty replacement Units stringently cleaned and processed for re-use by Franchisee.
In addition to the foregoing, Franchisee shall offer and sell all other services which Franchisor in the future incorporates into the Cannon Hygiene System, and shall cease to offer and sell any services which Franchisor deletes from the System. Franchisee is prohibited from offering or selling any service, product or program which is not a part of the Cannon Hygiene System or is hereafter deleted from the System. Franchisee may not use the Cannon Hygiene name, the Proprietary Mark or the other Intellectual Property for the benefit of any business other than the franchised Business. Franchisee may not conduct (or permit the conducting of) any business other than the business contemplated by this Agreement at or from the Premises without Franchisor's prior written consent, which Franchisor may withhold for any reason or for no reason.
Without limited the generality of the foregoing, Franchisee shall not:
(i) Use, supply or sell in the franchised Business any disposal units or any other products
which compete with, are identical to or are similar to the Units, other than the Units Franchisee obtains from Franchisor;
(ii) Use, supply or sell in the franchised Business any fluid or product which competes with, is identical to or is similar to the Cannon GRASafe Fluid, other than the Cannon GRASafe Fluid Franchisee purchases from Franchisor;
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(iii) Manufacture, for use, supply or sale in the franchised Business (or any other business), the Units, the Cannon GRASafe Fluid or any other products which compete with, are identical to or are similar to the Units or Cannon GRASafe Fluid.
Franchisee shall at all times maintain adequate inventory of the Units and Cannon GRASafe Fluid, and all other products and supplies to provide Cannon Hygiene services to Franchisee's customers with reasonable efficiency.
8.9 Computer System
When so directed by Franchisor, Franchisee agrees to procure and install, at its expense, the computer hardware, software, required dedicated telephone and power lines and other computer-related accessories, peripherals and equipment that Franchisor specifies (in its Manual or otherwise). Franchisee agrees to provide all assistance that Franchisor requires to bring Franchisee's computer system on-line with Franchisor's headquarters computer at the earliest possible time and to maintain this connection as Franchisor requires. Franchisee agrees to input and maintain in its computer system all data and information which Franchisor prescribes in its Manual, in its proprietary software programs and otherwise. Franchisee agrees that Franchisor may retrieve from Franchisee's computer system all information that Franchisor deems necessary, desirable or appropriate. Franchisor will bear the telephone costs of information retrieval.
Franchisor may, in the future, develop (or have developed on its behalf) proprietary software for use by the Cannon Hygiene System. If Franchisor determines to adopt proprietary software for use by the Cannon Hygiene System, then when directed by Franchisor, Franchisee agrees to use the proprietary software developed by or on behalf of Franchisor and to execute Franchisor's standard form Software License Agreement (Exhibit G). Franchisee agrees to obey the provisions of the Software License Agreement at all times following execution. If Franchisor determines to adopt proprietary software for use by the Cannon Hygiene System, then Franchisor will initially furnish to Franchisee its proprietary software and associated manuals and materials at Franchisor's expense. Franchisee agrees to purchase from Franchisor new, upgraded or substitute proprietary software whenever Franchisor determines to adopt it system-wide, at the prices and on the terms that Franchisor establishes.
Franchisee agrees, at its expense, to keep its computer system in good maintenance and repair. Franchisor may mandate that Franchisee add memory, ports, accessories, peripheral equipment and additional, new or substitute software. Following Franchisor's testing and determination that it will prove economically or systemically beneficial to Franchisee and Franchisor, Franchisee agrees to install at its own expense the additions, modifications, substitutions and/or replacements to its computer hardware, software, telephone and power lines and other computer facilities as Franchisor directs, on the dates and within the times Franchisor specifies in its Manual or otherwise.
Upon termination or expiration of this Agreement, Franchisee shall return all computer software, disks, tapes and other magnetic storage media to Franchisor in good condition, allowing for normal wear and tear.
8.10 Staffing Requirements and Qualifications
Franchisee agrees to staff the franchised Cannon Hygiene Business in accordance with all criteria, specifications and directions Franchisor sets forth in its Manual or otherwise concerning the selection, qualifications, hiring, training, pre-training and post-training duties of Franchisee's Business
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Managers and other personnel. All personnel employed by Franchisee shall maintain the standards of appearance, manner and demeanor established by Franchisor in its Manual or otherwise.
8.11 Adequate Reserves
Franchisee agrees at all times to maintain adequate reserves to cover the risks and contingencies of the Business for at least two months, in amounts specified in Franchisor's Manual. These reserves may be in the form of cash deposits or lines of credit. If Franchisee does not do so, this will constitute a material and incurable breach of this Agreement which, unless waived by Franchisor, will entitle Franchisor to terminate this Agreement immediately on notice to Franchisee, with no opportunity to cure.
Franchisee agrees at all times to defend at its own cost, and to indemnify and hold harmless to the fullest extent permitted by law, Franchisor, its corporate parent(if any), the corporate subsidiaries, affiliates, successors, assigns and designees of any of the foregoing entities, and the respective directors, officers, employees, agents, shareholders, designees, contractors and representatives of each (Franchisor and all others collectively the "Indemnitees") from all losses and expenses (as defined below) incurred in connection with any action, suit, proceeding, claim, demand, investigation, or formal or informal inquiry (regardless of whether it is reduced to judgment) or any settlement thereof which arises out of or is based on any of the following: any personal injury suffered by any customer, visitor, employee or guest of the franchised Business, the Premises or any site at which Franchisee is providing service to a customer; claims of any type or nature advanced by or against Franchisee or any of Franchisee's officers, directors, shareholders, agents, employees, representatives and contractors by a third party (or, as applicable, against a third party) or between or among themselves; any service provided by Franchisee from, at, or related to the operation of, the franchised Business; crimes committed on or near the premises of the franchised Premises or any site at which Franchisee is providing service to a customer; Franchisee's alleged or actual infringement or violation of any patent, mark or copyright or other proprietary right owned or controlled by third parties; Franchisee's alleged violation or breach of any contract, federal, state or local law, regulation, ruling, standard or directive or of any industry standard; any acts, errors or omissions of Franchisee or any of its agents, servants, employees, contractors, partners, proprietors, affiliates or representatives; latent or other defects in the Premises, whether or not discoverable by Franchisor or Franchisee; the supply or sale by Franchisee of any product not previously supplied to Franchisee by Franchisor (or any product not supplied to Franchisee by Franchisor in the same state or condition as at the time of the event giving rise to the claim) which is defective in any respect, or is or may be injurious to the health or safety of a person using, consuming or handling it; the use or operation of any equipment, chemical or vehicle in connection with the operation of the Business; any service provided by Franchisee at, from or related to the operation at the Business, the Premises or any site at which Franchisee is providing service to a customer; any action by any customer of Franchisee or visitor to the Premises or any site at which Franchisee is providing service to a customer; and, any damage to the property of Franchisee, Franchisor or its Affiliates, their agents or employees, or any third person, firm or corporation.
Specifically excluded from this indemnity is any liability arising from the gross negligence of Indemnitees, except to the extent that joint liability is involved, in which event the indemnification provided by this Section 8.12 will extend to any finding of comparative negligence or contributory negligence attributable to Franchisee or any of the Indemnitees, as the case may be.
For the purpose of this Section 8.12, "losses and expenses" includes all losses; compensatory, exemplary or punitive damages; fines; charges; costs; expenses; lost profits; attorneys' fees; experts'
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fees; court costs; settlement amounts; judgments; compensation for damages to Franchisor's reputation and goodwill; costs of or resulting from delays; financing; costs of advertising material and media time or space, and costs of changing, substituting or replacing them; and, all expenses of recall, refunds, compensation, public notices and other amounts incurred in connection with the matters described.
Franchisee agrees to give Franchisor notice of any such action, suit, proceeding, claim, demand, inquiry or investigation. At Franchisee's expense and risk, Franchisor may elect to assume (but under no circumstance will be obligated to undertake) the defense and/or settlement of the action, suit, proceeding, claim, demand, inquiry or investigation. However, Franchisor shall seek Franchisee's advice and counsel and keep Franchisee informed with regard to any such proposed or contemplated settlements. Franchisor's undertaking of defense and /or settlement will not diminish Franchisee's obligation to indemnify Franchisor and to hold it harmless.
In order to protect persons or property, its reputation or goodwill, or the reputation or goodwill of others, Franchisor may, at any time as it deems appropriate, offer, order, consent or agree to settlements or take any other remedial or corrective actions it deems expedient with respect to the action, suit, proceeding, claim, demand, inquiry or investigation if, in Franchisor's sole judgment, there are reasonable grounds to believe that:
1. Any of the acts or circumstances enumerated in. this Section 8.12 have occurred, or
2. Any act, error, or omission of Franchisee may result directly or indirectly in damage, injury or harm to any person or any property.
All losses and expenses incurred under this Section 8.12 will be chargeable to and paid by Franchisee pursuant to its indemnity obligations under this Section, regardless of any actions, activity or defense undertaken by Franchisor or the success or failure of the actions, activity or defense. Indemnitees assume no liability for acts, errors, or omissions of those with whom Franchisee may contract for any purpose. Franchisee agrees to hold harmless and indemnify Indemnitees for all losses and expenses which may arise out of any acts, errors or omissions of these third parties. Under no circumstances will Indemnitees be required to seek recovery from third parties or otherwise mitigate their losses to maintain a claim against Franchisee. Franchisee agrees that any failure to pursue recovery from third parties or mitigate loss will in no way reduce the amounts recoverable by Indemnitees from Franchisee.
8.13 Inspection and Operational Audit
Franchisee agrees that Franchisor or any of its authorized agents or representatives may at any time during normal business hours enter on the Premises and/or visit any locations at which Franchisee is rendering or has rendered services to customers, to conduct an operational audit to determine compliance with this Agreement and with Franchisor's policies, procedures, programs, standards, specifications and techniques as set forth in its Manual. Franchisor's representatives may examine and inspect the Premises, the services provided from or at the Premises, the services provided any locations at which Franchisee is rendering or has rendered services to customers; the equipment, products and supplies contained in the Premises, the products, equipment and supplies installed by Franchisee at customer locations, and the condition of the Premises. Franchisee agrees to provide Franchisor's representatives with such information and facilities for taking samples and making tests as Franchisor may reasonably require for the above purposes. Franchisor's representatives may examine, inspect and confer with Franchisee's employees and customers. Franchisee agrees to use all reasonable endeavors to obtain for Franchisor's representatives access
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to any locations at which Franchisee is rendering or has rendered services to customers for these purposes.
Following any inspection and operational audit, and subject to the other provisions of this Agreement, Franchisee agrees to incorporate into its Cannon Hygiene Business any corrections and modifications Franchisor requires to maintain the standards of quality and uniformity prescribed by Franchisor, as quickly as is reasonably possible and using all resources at its disposal.
8.14 Contracts and Forms
Franchisee agrees to use all contracts and forms specified by Franchisor as part of the Cannon Hygiene System in the conduct of the franchised Business; to use only the latest version of any contract or form designated as current by Franchisor; and, not to use any unauthorized or obsolete contract or form.
8.15 Corporate and Partnership Franchisee Requirements; Records
A. Franchisee, if a corporation, and any corporate assignee shall comply with the following requirements:
1. Furnish Franchisor with its Articles of Incorporation; Bylaws; other governing documents; list of officers, directors and shareholders (including number and percentage of shares held); and any other documents Franchisor may reasonably request, and any amendments to them.
2. Confine its activities to the operation of the franchised Business, and its governing documents provide that its activities are confined exclusively to the operation of the franchised Business.
3. Maintain stop transfer instructions against the transfer on its records of any equity securities, and must not issue any securities on the face of which the following printed legend does not legibly and conspicuously appear:
"The transfer of this stock is subject to the terms and conditions of a Franchise
Agreement with Cannon Hygiene Franchising (USA) Inc., dated ________.
Reference is made to the provisions of this Franchise Agreement and to the Articles and Bylaws of this Corporation. This certificate is not transferable and is not subject to sale, assignment, pledge, mortgage, encumbrance, or transfer, by operation of law or otherwise, without the prior written consent of Cannon Hygiene Franchising (USA) Inc."
4. Maintain a current list of all owners of record and all beneficial owners of any class of voting stock of Franchisee, and must furnish this list to Franchisor on request.
B. Franchisee, if a partnership or proprietorship, and any partnership or proprietorship assignee shall comply, except as otherwise approved in writing by Franchisor, with the following requirements:
1. Furnish to Franchisor a copy of its partnership agreement and any other documents which Franchisor reasonably requests, and any amendments to them.
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2. If Franchisor requests, prepare and furnish to Franchisor a list of all partners . and proprietors of Franchisee.
C. Franchisee and any corporate, partnership or proprietorship assignee shall promptly notify Franchisor of any change in any of the information called for in this Section 8.15 or in any document referred to in this Section.
8.16 Continuing Training of Franchisee's Personnel
To impart to its employees the latest procedures, techniques, policies and standards of the Cannon Hygiene System, Franchisee agrees to conduct the in-nouse meetings, training sessions, electronic training programs or other programs that Franchisor specifies in its Manual or otherwise, using any materials provided by Franchisor for this purpose.
8.17 Testimonials and Endorsements
Franchisee agrees to permit Franchisor or any of its authorized agents or representatives to communicate in any manner with Franchisee's customers to procure customer testimonials and endorsements of the services or products furnished by Franchisee, the Cannon Hygiene System and any related services or products. Franchisee agrees to cooperate with Franchisor in procuring testimonials and endorsements. Franchisee agrees that Franchisor will be free to make whatever use oftestimonials and endorsements that Franchisordetermines, and that Franchisorwill owe Franchisee absolutely no direct or indirect compensation or other duty as a consequence.
8.18 Services, Equipment, Products, Programs and Intellectual Property Developed by Franchisee
Franchisee irrevocably and permanently licenses to Franchisor for incorporation in the Cannon Hygiene System and use by Franchisor, its Affiliates and (if Franchisor determines) other Cannon Hygiene franchisees, all of the following if developed by or on behalf of Franchisee in conjunction with or related to the franchised Business: personal hygiene disposal services, equipment, products and programs; related services, equipment, and products (including, without limitation, any computer software); all intellectual property; and, sales, marketing and promotional programs and campaigns. Franchisee agrees that Franchisor, its Affiliates and franchisees will not be liable to Franchisee in any manner, whether for compensation or otherwise, as a consequence of this license.
8.19 No Unauthorized Representations or Warranties to Customers; No Statements by Franchisee
Franchisee shall make no representations, and shall give no warranties, to customers relating to the services, equipment, supplies, materials or products utilized by the franchised Business, other than those representations and warranties (if any) for which Franchisor has given Franchisee prior, specific written authorization. Franchisee agrees to make no statements or comments without Franchisor's prior written approval to any media representative or any other third party (except for persons considering purchasing a Cannon Hygiene franchise) relating to the contents of this Agreement, Franchisor or any Affiliate.
8.20 Quality Standards
Franchisor may require Franchisee to discontinue providing any service, or using or selling any service, equipment, supplies, product or program which; in Franchisor's opinion, does not conform to
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the image of quality, performance, ethics, packaging, source or other standards or specifications established by Franchisor.
8.21 Best Efforts; Cooperation with Franchisor
Franchisee agrees to use its best efforts to develop and expand the market for the services and products offered by its franchised Cannon Hygiene Business, to achieve maximum sustainable growth of that market, and to cooperate with Franchisor in accomplishing the purposes of this Agreement.
8.22 Variance of Standards and Terms
Franchisee acknowledges that because complete and detailed uniformity under many varying conditions may not be possible or practical, Franchisor reserves the right, as it may consider in the best interests of all concerned, to vary standards for any System franchisee based on the peculiarities of the particular Territory or circumstance, density of population, business potential, population of trade area, existing business practices or any other condition which Franchisor considers important to the successful operation of the franchisee's business. Franchisee will have no right to require Franchisor to disclose any variation to Franchisee or to grant Franchisee the same or a similar variation under this Agreement.
Franchise further agrees that Franchisor will have the right to grant franchises using the Cannon Hygiene System, the Proprietary Mark and the other Intellectual Property under terms that may differ materially from the terms of this Agreement, so long as the different provisions are due to the franchise being granted at materially different times or other non-arbitrary distinctions. For this reason, Franchisor's obligations and rights with respect to its various Cannon Hygiene franchisees may from time to time differ materially from the terms of this Agreement, without in any way altering or affecting the provisions of this Agreement. Franchisee will have no right to require Franchisor to disclose any variation to Franchisee or to grant Franchisee the same or a similar variation under this Agreement.
9.1 Required Insurance Coverage
Franchisor imposes and prescribes minimum standards and limits for certain types of required insurance coverage in its Manual or by other written notice to Franchisee. Franchisee agrees that Franchisor may modify the required minimum limits of insurance coverage from time to time by written notice to Franchisee. Upon delivery or attempted delivery of this written notice, Franchisee agrees to immediately purchase insurance conforming to the newly established standards and limits prescribed by Franchisor.
A. Franchisee agrees to purchase at its expense, and maintain in effect at all times during the term of this Agreement, the following categories of insurance coverage in forms and through insurance companies satisfactory to Franchisor:
1. Broad form comprehensive general liability coverage and broad form contractual liability coverage satisfactory to Franchisor of at least $1,000,000 aggregate. This insurance may not have a deductible or self-insured retention of over $5,000.
2. Fire and Extended Coverage Insurance on Franchisee's Premises and property in an amount adequate to replace them in case of an insured loss.
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3. If any vehicle is operated in connection with the conduct of the franchised Business, automobile liability coverage, including coverage of owned, non-owned and hired vehicles, with minimum limits of liability in the greater of (i) the amount required by all applicable state and federal laws, or (ii) $1,000,000 for each person killed or injured, and, subject to that limit for each person, a total minimum liability of $2,000,000 for any number of persons injured or killed in one accident, and a minimum limit of $300,000 for injury, destruction or loss of use of property of third persons as the result of any one accident.
4. Business Interruption Insurance in sufficient amounts to cover the rental of the Premises, previous profit margins, maintenance of competent personnel and other fixed expenses.
5. Worker's compensation and employer's liability insurance (in statutory amounts), unemployment insurance and state disability insurance (as required by governing law), for Franchisee's employees.
B. The insurance coverage acquired and maintained by Franchisee at its own expense, as set forth in subsection (A) of this Section 9.1, shall:
1. Name Franchisor and the other Indemnitees identified in Section 8.12 as Additional Insureds and provide that the coverage afforded applies separately to each insured against whom claim is brought as though a separate policy had been issued to each insured (except for the insurance coverages provided in subsection 9.1 (A) (5) above).
2. Contain no provision which in any way limits or reduces coverage for the Franchisee if there is a claim by any one or more of the Indemnitees.
3. Extend to and provide indemnity for all obligations assumed by Franchisee under this Agreement and all other items for which Franchisee is required to indemnify Franchisor under this Agreement.
4. Be primary to and without right of contribution from any other insurance purchased by Indemnitees.
5. Provide, by endorsement, that Franchisor is entitled to receive at least thirty days prior written notice of any intent to reduce policy limits, restrict coverage, cancel or otherwise alter or amend the policy.
Franchisee agrees not to reduce the policy limits, restrict coverage, cancel or otherwise alter or amend these insurance policies without Franchisor's written consent.
If there is a claim by any one or more of the Indemnitees against Franchisee, Franchisee shall, upon Franchisor's request, assign to Franchisor all rights which Franchisee then has or thereafter may have with respect to the claim against the insureds) providing the coverages described in this Section 9.1.
9.2 Purchase of Insurance on Franchisee's Behalf
If Franchisee fails to purchase insurance conforming to the standards and limits prescribed by Franchisor, Franchisor may (but is not required to) obtain the insurance necessary to meet these
Initials: Franchisor____ Franchisee
The original documents were scanned as an image. The original file can be downloaded at the link above.