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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This Agreement is made and entered into this __________________ day of
____________________, 2005, by and between FOOT SOLUTIONS, INC., a Georgia Corporation,
with its principal office at 2359 Windy Hill Road, Suite 220, Marietta, Georgia 30067, ("Franchisor"),
and _____________________________________________________whose principal address is
__________________________________________________________________("Franchisee").
1. RECITALS OF FACT
This Agreement is made and entered into by the Franchisor and Franchisee with reference to the following facts:
A. Franchisor, as the result of the expenditure of time, skill, effort and money, has developed and owns a unique system ("System") for businesses specializing in specialty retail health, wellness and foot care centers providing comfort shoes and accessories, foot orthotics, computerized foot scanning, and custom inserts for shoes for work, dress and play.
B. The system includes names, trademarks, service marks, logo types and symbols ("Names and Marks"), business products, a standard Store design, certain equipment and other techniques and features.
C. Certain distinguishing characteristics of the systems include special techniques for: fitting customers properly, on-site shoe and insert modification, management, promotion, operation, advertising, telephone sales, programs, methods/procedures for keeping books and records, sales and technical training and materials; all of which may be changed, improved, and further developed by Franchisor from time to time.
D. The Franchisor has experience, know-how, and the ability to provide assistance and guidance in the operation of a retail specialty foot care store, providing comfort shoes and accessories, foot orthotics, computerized foot scanning, and custom accommodative inserts for comfort, work, dress, or play shoes.
E. The Franchisor grants to qualified persons a Franchise to use the Name and Marks, and to own and operate a FOOT SOLUTIONS Store ("Store"), which offers the services authorized by the Franchisor, utilizing the business systems, formats, methods, specifications, standards, and operating procedures.
F. The Franchisee has executed a completed a FOOT SOLUTIONS questionnaire for a Franchise to own and operate a Store.
G. The Franchisor has approved Franchisee's questionnaire in reliance upon all of the representations and warranties made, and grants to Franchisee a Franchise to own and operate a Store, and to use the Names and Marks in such operation.
H. The Franchisee acknowledges he has investigated the Franchisor and the Franchise program
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fully and completely, and agrees to adhere to all elements of this Franchise Agreement.
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2. GRANT OF FRANCHISE
A. Location .of Store
Franchisor grants to Franchisee, and Franchisee accepts, a Franchise to operate the Store, utilizing the System for on-premises associated sales and services, at the location agreed upon by Franchisor and Franchisee, as described in Schedule A ("Territory"). Franchisor also grants and Franchisee accepts, a limited Franchise to the use of only such Names and Marks, and only in connection with the operation of the Store. The Franchisee may move the Store to a new location only upon prior written approval of Franchisor, approval of which will not be unreasonably withheld.
B. Territory
The Franchisor agrees during the term of this Agreement, (provided Franchisee is in full compliance with this Agreement), that Franchisor will not operate or grant a Franchise to operate a business under the System at a location within the protected Territory, as defined in Schedule A -Description of Territory.
3. TERM AND RENEWAL
A. Term
Subject to the provisions in this Agreement, the term of this Franchise shall expire twenty (20) years from the date of execution of this Agreement.
B. Renewal
Franchisee may opt to renew this Franchise for four (4) additional periods often (10) years each, subject to the following conditions, which must be complied with prior to renewal:
1. Franchisee shall give Franchisor written notice of election to renew (not less than six (6) months or more than twelve (12) months), prior to the end of the then current term;
2. Franchisee shall not be in default of any provision or amendment of this Agreement, or any other agreement between Franchisor and Franchisee. Franchisee shall have substantially complied with all conditions of all agreements during the effective term.
3. Franchisee shall complete such Store maintenance and/or renovation reasonably required in writing by Franchisor.
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4. Franchisee shall satisfy all monetary obligations owed by Franchisee to Franchisor, subsidiaries, and affiliates, and shall have timely met these obligations throughout the previous term;
5. Franchisee shall execute, for the renewal term, Franchisor's then current form of Franchise Agreement, which Agreement shall supersede this Agreement in all respects, and the terms of which may differ from the terms of this Agreement; and shall pay to Franchisor on the date of execution of the renewal Franchise Agreement, a renewal fee in the amount of ten percent (10%) of the then current franchise fee.
6. Franchisee shall comply with Franchisor's then current qualification and training requirements; and
7. Franchisee shall execute a general release, in a form prescribed by Franchisor, of any and all claims against Franchisor, subsidiaries, and affiliates, and their respective officers, directors, agents and employees.
4. INITIAL FRANCHISE FEE
In consideration of the Franchise granted herein, Franchisee shall pay to Franchisor an initial franchise fee of: Twenty-Seven Thousand, Five Hundred Dollars ($27,500.00) for the FOOT SOLUTIONS specialty retail foot care services business. Said initial franchise fee is not refundable, and is fully earned by the Franchisor upon execution by the Franchisee of the Franchise Agreement.
5. ROYALTY/SERVICE FEES
Franchisee agrees to pay to Franchisor each month no later than the 15th of the month a monthly Royalty Fee of Five Percent (5%) of the "Net Sales." Franchisee agrees to report all Store sales to FOOT SOLUTIONS, INC. on a monthly basis, no later than the 5th of each month. All monthly payments required by this section and the sections relating to Franchisee's payment of National and Local Advertising Fees shall be due and payable to Franchisor by the 15 of each month with respect to Net Sales during the preceding calendar week, and shall be submitted to Franchisor together with any statements or reports regarding the basis of such payments as required by Franchisor from time to time.
In this Agreement, the term "Net Sales" shall mean the amount of all receipts from the sale of any goods or services of the Store, less returns. "Net Sales" shall not include any sales taxes or other taxes collected by Franchisee for transmittal to the appropriate taxing authority.
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A. Payment Procedure. Franchisee shall execute and deliver to Franchisor appropriate pre-authorized draft forms for Franchisee's operating account, so that Franchisor may withdraw money on a timely basis to collect royalty payments national advertising fund payments, and any other charges owed by Franchisee. Franchisee shall make the funds available to Franchisor for withdrawal no later than the due date for payment. Franchisee shall report Net Sales each month by electronic mail, facsimile or other electronic means specified by Franchisor by the Fifth of each month using the format specified in the Foot Solutions Operations Manual, for the business week ended on Sunday. If Franchisee fails to report its Net Sales on a timely basis, Franchisor shall have the right to collect monthly royalty payment based on the previous four (4 months' reported sales to calculate an average monthly amount. In this event, Franchisee grants Franchisor the right to unilaterally collect this amount. Any fees collected in this manner will be reconciled and adjusted as needed when Franchisor receives actual sales reports. Franchisee shall pay to Franchisor interest on any such unpaid amount from the date on which payment was due at a rate equal to that set forth above.
B. Late Fees and Damage Provisions. In addition to its other rights and remedies, Franchisor may charge Franchisee a late fee of Twenty-Five Dollars ($25.00) for any payment or electronic funds transfer that is not received by Franchisor or its affiliates by the due date, as well as for any report that is not received by Franchisor or its affiliates by the due date.
6. ADVERTISING FEES
1. The National Advertising fee is maintained and administered by the Franchisor.
2. Franchisee shall contribute (based on the monthly accounting system), Two Percent (2%) of monthly Net Sales, to the National Advertising Fund ("National Fund").
3. Franchisee agrees to make contributions to the National Fund as required under Section 6. The Franchisee agrees the National Fund shall be maintained and administered by Franchisor as follows:
(a) Franchisor shall oversee all advertising and promotional programs with sole discretion to approve or disapprove the creative concepts, materials and media, and the placement and allocation of such program. Franchisee agrees and acknowledges that the National Fund is intended to maximize general public recognition and acceptance of the Names and Marks for the benefit of the System, and that Franchisor undertakes no obligation in administering the National Fund to make expenditures for Franchisee, which are equivalent or proportionate to the contribution, or to ensure that any particular Franchisee benefits directly or pro rata from the advertising or promotion conducted under the National Fund.
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(b) All contributions of the National Fund and any earnings shall be used exclusively to meet any and all costs of maintaining, administering, directing, and preparing advertising activities (including cost of preparing and conducting advertising campaigns in various media; marketing surveys and other public relations activities; employing advertising agencies; and providing promotional brochures and other marketing materials to the businesses operated under the System including 888 FitFoot to cover costs for the free locator number used for all stores in the U.S.A. All sums paid by Franchisee to the National Fund and any earnings shall be maintained in an account separate from the other monies of Franchisor, and shall not be used to defray any of Franchisor's expenses, except for such reasonable administrative costs and overhead, as Franchisor may incur in activities reasonably related to the administration or direction of the National Fund and advertising programs for Franchisees and the System. The National Fund earnings shall not otherwise inure to the benefit of Franchisor. Franchisor shall maintain separate bookkeeping accounts for the National Fund. Franchisee shall contribute to the National Fund by separate check made payable to the National Fund. For each Franchisor-owned business operating under the System, Franchisor shall make contributions to the National Fund on the same basis as the assessments required of comparable Franchised businesses within the System.
(c) It is anticipated that all contributions to and earnings of the National Fund shall be expended for the purposes described during the taxable year, within which the contributions and earnings are received. If, however, excess amounts remain in the National Fund at the end of such taxable year, all expenditures in the following taxable year(s) shall be made first out of accumulated earnings from previous years, next out of earnings in the current year, and finally from contributions.
(d) The National Fund is not and shall not be an asset of Franchisor. A statement of the operations of the National Fund as shown on the books of the National Fund shall be prepared annually by an independent certified public accountant selected by Franchisor and shall be made available to Franchisee.
(e) Although the National Fund is intended to be of perpetual duration, Franchisor maintains the right to terminate the National Fund. The National Fund shall not be terminated, however, until all monies in the National Fund have been expended for the purposes described in this section.
B. Grand Opening Expenditures
Franchisee shall expend, prior to the beginning of the third month of Franchisee's Store operation, a minimum of Six Thousand Dollars ($6,000.00) for advertising and promotional items. Such advertising and promotional items must be utilized or employed prior to commencement, and during the first two (2) months of operation of the Franchisee's Store. Franchisor will coordinate, control and work with the Franchisee regarding the preparation and placement of such advertising and promotional items for the Grand Opening.
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C. Local Advertising Plan
Franchisee agrees to implement and follow the recommended advertising and marketing plan created by Franchisor for grand opening and monthly plan posted on web site. Franchisee may implement additional advertising, provided such advertising conforms to the standards and requirements of Franchisor, as set forth in the Franchisor's Manuals, or as otherwise designated by Franchisor.
Franchisee shall not advertise the Store's business in conjunction with any other business, except with Franchisor's prior written consent. Franchisee shall obtain Franchisor's prior approval of all advertising and promotional plans and materials that Franchisee desires to use, and that have not been prepared or previously approved by Franchisor within the preceding twelve (12) month period. Franchisee shall submit such unapproved plans and/or materials to Franchisor (by personal deliver or via certified mail/return receipt requested). Franchisee shall use no such plans or materials until they have been approved by Franchisor, and shall promptly discontinue use of any advertising or promotional plans or materials upon notice by Franchisor. Any plans or materials submitted by Franchisee to Franchisor which have not been approved or disapproved in writing, within fourteen(l4) days of receipt by Franchisor, shall be deemed approved.
D. Local Advertising Expenditures
Franchisee agrees to expend a minimum for local advertising, an amount equal to ten percent (10%) of monthly "Net Sales" during the preceding calendar month, during the first year of operation or a minimum of Two Thousand Dollars ($2,000.00) per month, not counting the Six Thousand Dollars ($6,000.00) for Grand Opening. The first year advertising is more intensive to establish the business and client base. Following the first year, the minimum for local advertising shall decrease to four percent (4%).
7. DUTIES OF FRANCHISOR
A. Pre-Qpening
Franchisor shall provide certain pre-opening consultation, support and assistance regarding certain matters, including site selection, lease negotiations, lease review, store design and layout, blue line drawings bank loan proposal, equipment, start up inventory, store fixtures, training, manuals, signage, and store opening support. This support includes sending an employee to assist with store setup for three (3) days as well as an employee to assist with Grand Opening for three (3) days. Note: If required, architectural stamps and/or detailed drawings. They must be obtained locally and paid for by the Frachisee.
B. Training
Training will consist of videos, reading materials, and web site access, as well as pre-opening training at Franchisor's facilities for a period of at least two (2) weeks. Franchisor shall also provide to Franchisee a representative at Franchisee's Store for a minimum of three (3) days for Franchisee's Store set-up and an additional three (3) days for Grand Opening. Ongoing training includes monthly calls, web based training, regional seminars, and annual meetings.
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C. On-Going Assistance
Franchisor shall provide on going seminars, consultation, advice, field visits and assistance, on a continuing basis and at Franchisee's request, as Franchisor deems advisable. For assistance required above and beyond normal on going assistance, Franchisee shall pay all reasonable expenses incurred by Franchisor and its representatives in connection with such additional assistance, including the costs of transportation, lodging, meals, and wages.
D. Manuals
Upon signing the Franchise Agreements and payment of the full franchise fee, training videos, access to the private website (intranet) and other materials will be sent to Franchisee to begin the training program assignments.
E. Advertising/Promotional Material
Franchisor shall make available to Franchisee, on a regular and on going basis, advertising and promotional materials for use by Franchisee in local advertising of the Franchisee's Store, and other bulletins on sales and service, marketing developments and techniques, and business and operational procedures. Computer and email is critical to accessing the advertising materials configured to be downloaded for modification for the specific store address, telephone numbers, and other information specific to the Franchisee's place of business. The Franchisor's monthly advertising and marketing plan currently in place includes window signage and advertising materials, Dr. Bill's Q. & A., and press releases. This group plan must be followed by the Franchisee for best results.
F. Additional Consultation
Franchisor may offer to Franchisee additional training, seminars, consultation, and advice by representatives of Franchisor, to be given by telephone, website and/or by personal visits from Franchisor's representatives, from time to time and at Franchisor's discretion.
G. Workshops/Seminars
Franchisor may conduct, on an annual or other basis, workshops or seminars for the management and operation of the Franchisee's Store, and provide up-to-date sales methods, solicitation techniques, and other items of information for the purpose of assisting Franchisee to generate increased revenues. Franchisee shall bear all costs of attendance at any such workshops, seminars, or meetings offered by Franchisor, including transportation, lodging, meals, and wages.
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8. DUTIES OF FRANCHISEE
A. Maintaining Operating Standards
Franchisee understands and acknowledges every detail of the Store is important to Franchisee, Franchisor, and other Franchisees, to develop and maintain high operating standards and personal customer service, in order to increase the demand for the products and services sold by all Stores under the System, and to protect Franchisor's reputation and goodwill.
B. Corporation of Franchisee
In the event Franchisee is a corporation, the following requirements shall apply:
1. Copies of Franchisee's Articles of Incorporation or Charter, Bylaws, and other governing documents, and any Amendments, including the Resolutions of the Board of Directors authorizing entry into this Agreement, shall be promptly furnished to Franchisor.
2. Franchisee shall maintain a current list of all owners of record and all beneficial owners of any class of voting stock of Franchisee, and shall furnish such list to Franchisor upon request.
3. Primary shareholder of Franchisee's corporation shall personally guaranty Franchisee's performance, and shall bind himself/herself to the terms of this Agreement; provided, however, the requirements of this sub-paragraph B. shall not apply to a corporation registered under the Securities Exchange Act of 1934 ("Public-Held Corporation").
C. Execution of Lease
Franchisor will have the right to assist and participate in site evaluation, site selection, lease negotiations, and/or negotiations to purchase the location of the Store of Franchisee. Within one hundred eighty (180) days of execution of this Agreement, the Franchisee must execute a lease, or submit to Franchisor satisfactory written proof of ownership or evidence of a right to acquire ownership of the premises of the Store.
D. Clauses in Lease
If the Store is to be leased, the Lease Agreement shall be submitted to Franchisor for written approval prior to execution, and such approval shall not be unreasonably withheld. The Lease Agreement shall give Franchisor, agents, or designees, the right to enter the premises to conduct inspections at any time during regular business hours, and the right, but not the duty, to assume the lease for all or any part of the term, if Franchisee defaults under the lease or is evicted, or if this Agreement expires or is terminated. Franchisee further agrees, during the term of this Agreement, it shall not lease or sublet all or any part of the Store to others without Franchisor's prior written consent, which shall not be unreasonably withheld.
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E. Opening of Store
Within one hundred eighty (180) days after execution of the lease on the store space, Franchisee shall have obtained Franchisor's approval to open and shall be in the process of building the Store. Prior to opening, Franchisee shall complete to Franchisor's satisfaction, preparation of the Store, including installation of fixtures, furnishings and equipment, and acquisition of supplies and inventory. Franchisee shall install the fixtures, equipment and supplies purchased from Franchisor as required by this Agreement. NOTE: A deposit of fifty percent (50%) is required on all opening orders for fixtures, equipment and inventory. The balance due must be paid prior to items being shipped to store. Since build-out does not take very long, it is important to get store opening orders processed as early as possible to allow for the normal lead time for the opening order, which is two (2) months from receipt of the deposit.
F. Training of Employees
Franchisee agrees it is important to the operation of the System and the Store that Franchisee and Franchisee's employees receive such training as Franchisor may require, and agrees:
1. Franchisee and/or Franchisee's designated manager shall attend and complete, to Franchisor's satisfaction, the pre-opening training program conducted by Franchisor at Franchisor's training facilities, or at a location chosen by Franchisor, at a date or dates to be set by Franchisor. Franchisor shall provide and pay only for the training instructors, facilities and training materials in connection with Franchisee's initial training, as required by this Agreement. At Franchisor's option, any person subsequently employed as manager of the Store may be required to attend and satisfactorily complete an initial training program, in accordance with the provisions of this Agreement.
2. Franchisee shall complete, and/or shall cause its employees to complete, to Franchisor's satisfaction, such other initial or additional training as Franchisor may require from time to time, in accordance "with provisions of this Agreement.
3. Franchisee and Franchisee's employees may attend such optional training programs Franchisor may from time to time offer.
4. Franchisee shall pay all expenses incurred by Franchisee and its employees in connection with all training, including the cost of transportation, lodging, meals, and wages (if any).
G. Operation of Store
Franchisee shall operate the Store in conformity with such standards, techniques, and procedures as Franchisor may from time to time prescribe in the Manuals, or otherwise in writing, and shall not deviate from, without Franchisor's prior written consent.
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Franchisee further agrees:
1. To maintain at all times such minimum stocks of inventory and/or supplies as Franchisor may from time to time prescribe in the Manuals, or otherwise in writing.
2. To offer the customer all products and services which Franchisor may from time to time prescribe. To offer to customers only those products and services which meet Franchisor's standards of quality, and which Franchisor has expressly approved in writing to be offered in connection with the Store's operations; and to discontinue offering any products or services which Franchisor may, in its discretion, disapprove in writing at any time; and
3. To utilize only Franchisor's standard forms of agreements and contracts, except with the expressed written approval of Franchisor.
4. The Franchisee shall make a best effort to have at least one (1) person in the store operation become certified as a Pedorthist within twelve (12) months of the store opening. The Franchisor's training program provides pre-certification required to sit for the exam.
5. Franchisee shall pay promptly to Franchisor any fees or contributions required under this Agreement, as well as any additional payments, fees, or charges incurred for any equipment, products, supplies, or services to be furnished by Franchisor at Franchisee's request.
6. Terms for payment of such products, supplies and services purchased by Franchisee shall be "on demand." Any payments, which are past due, shall bear interest at the annual rate of eighteen percent (18%) per annum, unless applicable state law requires a lower maximum interest rate.
H. Use of Proper Equipment
In operating the Store, Franchisee shall use only Franchisor's approved equipment and supplies, which may be serviced only by Franchisor or by service representatives authorized by Franchisor, during any warranty period for such equipment. After the warranty period for such equipment expires, Franchisee is free to choose any service representative, provided that such representative is trained and qualified to perform the necessary service.
I. Use of Proper Supplies and Products
Franchisee shall purchase all inventory supplies and other products and materials required for the operation of the Store solely from suppliers (including manufacturers and distributors) who are approved by Franchisor and who demonstrate, to the continuing reasonable satisfaction of Franchisor, the ability to meet Franchisor's reasonable standards and specifications for such items; who possess adequate quality control and capacity to meet Franchisee's needs promptly and reliably; and who were approved in writing by Franchisor, and not subsequently disapproved. If Franchisee desires to purchase any items from an unapproved supplier, Franchisee shall submit to Franchisor a written request for such approval, or shall request the supplier to do so, which approval Franchisor shall not unreasonably withhold.
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Franchisor shall have the right to require its representatives be permitted to inspect the supplier's facilities, and that samples from the supplier be delivered at Franchisor's option, either to Franchisor or to an independent laboratory designated by Franchisor for testing. A charge not to exceed the reasonable cost of the inspection and the actual cost of the testing shall be paid by Franchisee or the supplier. Franchisor reserves the right, at its option, to re-inspect the facilities and products of any such approved supplier, and to revoke approval upon the supplier's failure to continue to meet any of Franchisor's criteria for standards and specifications. Franchisor shall be entitled, upon request, to periodic inventory reports from Franchisee, including product identification and serial numbers, and Franchisee shall provide such reports in accordance with Franchisor's request.
J. Image of Store
Franchisee shall maintain the Store in a clean, orderly condition and in good repair. At Franchisor's request, which shall not occur more than once during the initial term of this Agreement (including any renovation in connection with renewal or transfer), Franchisee shall, at Franchisee's expense, complete all improvements and alterations that may be determined by Franchisor to be necessary so that facilities of the Store which are viewed by the public will conform to the System image as it may be prescribed by Franchisor from time to time. Franchisee shall undertake and complete such improvements and alterations within the time and under the terms and conditions reasonably specified by Franchisor.
K. Normal Business Hours
Except as otherwise approved in writing by Franchisor, Franchisee shall keep the Store open and in normal operation for such minimum days and hours as Franchisor may prescribe. Normal hours are described as 10:00 A.M. to 6:00 P.M. Monday through Friday, 11:00 A.M. to 5:00 P.M. on Saturday, and closed on Sunday.
L. Maintaining Staff
Franchisee agrees to maintain a competent, conscientious, trained staff, including at least one (1) trained, full-time Manager or Assistant in-store during operational hours, and to take such steps as are necessary to ensure employees preserve good customer relations.
M. Telephone Numbers of Store
Franchisee understands and agrees that the telephone number(s) for the Store constitute(s) a part of the System and are subject to the restrictions of this Agreement. Accordingly, Franchisee shall not change the telephone number(s) for the Store without prior written notice and subsequent approval of Franchisor. Franchisee shall advertise and publish the telephone number(s) for the Store in the manner prescribed by Franchisor.
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N. Right to Enter Store
Franchisee shall permit Franchisor and its agents or representatives to enter the Store at any reasonable time for the purpose of conducting inspections; shall cooperate fully with Franchisor's representatives in such inspections by rendering such assistance as they may reasonably request; and, upon notice from Franchisor or its agents, and without limiting Franchisor's other rights under this Agreement, shall take such steps as may be deemed necessary to immediately correct any deficiencies detected during such inspections. In the event Franchisee fails or refuses to correct immediately any deficiency detected during such inspection, Franchisor shall have the right to make or cause to make such changes as may be required, at the expense of Franchisee, which expense Franchisee agrees to pay upon demand. The foregoing shall be in addition to any other remedies Franchisor may be granted in this Agreement.
O. Operate FOOT SOLUTIONS System
Franchisee shall utilize the System, Names, and Marks provided to Franchisee by Franchisor for the operation of a FOOT SOLUTIONS retail shoe store providing services in the areas of comfort shoes and accessories, foot orthotics, computerized foot scanning, and custom inserts for comfort shoes, but shall not utilize such in connection with any other line of business or any other activity. Neither the Franchisee nor any of its employees, may conduct any business at the Store other than the permitted businesses and related services, without the prior, written approval of Franchisor. Neither the Franchisee nor any of its employees, may conduct any activity at or in connection with the Store, which is illegal or which results in damage to the Names and Marks and/or reputation and goodwill of the Franchisor.
P. Participation in Franchisee Councils
If Franchisor establishes a local or regional council of Franchisees, the Franchisee agrees to immediately join and participate. Such council may make recommendations and suggestions concerning the expenditure of council funds available for promotional purposes in the local or regional area. Such council may adopt its own rules and procedures, but such rules and procedures shall not restrict Franchisee's rights or obligations under this Agreement. Franchisor may participate in any such council. Franchisee agrees to pay any fees or dues charged to Franchisee by such council of Franchisees. Such dues shall not exceed Two Hundred Dollars ($200) annually.
Q. Compliance With Laws
Franchisee shall comply with all federal, state, and local laws and regulations, and shall obtain and at all times maintain any and all permit, certificate, or license necessary for the full and proper conduct of the Store franchised under this Agreement.
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9. USES OF NAMES AND MARKS
A. Franchisor - Ownership of Names and Marks
Franchisor warrants with respect to the proprietary Names and Marks that:
1. Franchisor is the owner of all right, title, and interest in and to the Names and Marks;
2. Franchisor is taking and will take such steps as are reasonably necessary to preserve and protect the ownership and validity of such Names and Marks; and
3. Franchisor will use and permit Franchisee and other Franchisees to use the Names and Marks, only in accordance with the System standards and specifications, which underlie the goodwill associated with and symbolized by the Names and Marks.
B. Franchisee - Use of Names and Marks
With respect to Franchisee's use of the Names and Marks granted in this Agreement, Franchisee agrees:
1. Franchisee shall use only the Names and Marks as are approved in writing by Franchisor for Franchisee's use, and shall use them only in the manner authorized and permitted by Franchisor;
2. Franchisee shall use the Names and Marks only in connection with the operation of the franchised business within the Territory and in the advertising for the Store;
3. Franchisee shall use and display, as Franchisor may require in the operation of the Store, a notice in a form approved by Franchisor, indicating Franchisee is a "Franchised Operator" under the System, and that the Names and Marks are used by Franchisee under such franchise;
4. Unless otherwise authorized or required by Franchisor, Franchisee shall operate and advertise the Store under the Name and Mark "FOOT SOLUTIONS" or "FOOT SOLUTIONS HQ;"
5. Franchisee's right to use the Names and Marks is limited to such uses authorized under this Agreement, and any unauthorized use shall constitute an infringement of Franchisor's rights;
6. Franchisee shall not use the Names and Marks to incur any obligations or indebtedness on behalf of Franchisor;
7. Franchisee shall not use the Names and Marks as part of an incorporation or other legal name, in written or electronic form, including the world wide web; Franchisee may use FS and name of town or shopping center for the corporate name;
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8. Franchisee shall comply with Franchisor's instructions in filing and maintaining the requisite trade name or fictitious name restrictions, and shall execute any documents deemed necessary by Franchisor or its counsel to obtain protection for the Names and Marks, or to maintain their continued validity and enforceability; and
9. In the event litigation involving the Names and Marks is instituted or threatened against Franchisee, Franchisee shall promptly notify Franchisor, and shall cooperate fully in defending such litigation. Franchisor will bear the cost of defending its name.
C. Other Covenants of Franchisee
Franchisee expressly understands and acknowledges that:
1. As between the Franchisor and Franchisee, the Franchisor is the owner of all right, title, and interest in and to the Names and Marks, and the goodwill associated with and symbolized by them;
2. The Names and Marks are valid and serve to identify the System and those franchised under the System;
3. Franchisee shall not directly or indirectly contest the^validity or the ownership of the Names and Marks;
4. Franchisee's use of the Names and Marks granted in this Agreement do not give Franchisee any ownership interest or other interest in or to the Names and Marks, except the non-exclusive franchise granted;
5. Any goodwill arising from Franchisee's use of the Names and Marks in its Store under the System shall inure solely and exclusively to Franchisor's benefit; and upon expiration or termination of this Agreement and the franchise granted, no monetary amount shall be assigned as attributable to any goodwill associated with Franchisee's use of the System or the Names and Marks;
6. Except as provided in this Agreement, the right to the Names and Marks granted to Franchisee is non-exclusive, and Franchisor may:
(a) Grant other Franchisees the right to the Names and Marks, in addition to those Franchises already granted to existing Franchisees;
(b) Use the Names and Marks in connection with selling products and services;
(c) Deleted
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7. Franchisor reserves the right to substitute different Names and Marks for use in identifying the System, the Store, and other Franchised business operations; and
8. Franchisee hereby agrees not to register or attempt to register such Names and Marks in Franchisee's name, or that of any other firm, person or corporation.
10. OPERATIONS MANUALS
In order to protect the reputation and goodwill of Franchisor, and to maintain requisite operating standards under the Names and Marks, Franchisee shall conduct business in accordance with the provisions, standards, and procedures set forth in Franchisor's Manual(s).
Franchisee agrees:
1. Franchisee shall at all times treat the Manuals, created for or approved for use in the operation of the Store, and the information contained therein, as confidential; and shall use all reasonable efforts to maintain such information as secret and confidential;
2. The Manuals shall at all times remain the sole property of Franchisor, shall be kept in a secure place in the Store, and shall be returned to Franchisor immediately upon expiration or termination of this Agreement;
3. Franchisor may from time to time, revise the contents of the Manuals, and the Franchisee expressly agrees to comply with new or modified provisions. Revisions to the contents of the Manuals shall be deemed effective seven (7) days after the date of mailing or receipt of such revisions by Franchisee, unless otherwise specified by Franchisor;
4. Franchisee shall at all times ensure copies of the Manuals are kept current and up-to-date; and in the event of any dispute as to the contents of the Manuals, the terms of the master copy of the Manual maintained by Franchisor at Franchisor's corporate office shall be controlling; and
5. Franchisee shall not at any time, without Franchisor's prior written approval, copy, duplicate, record, or otherwise reproduce the Manuals in whole or in part, nor otherwise make the same available to any unauthorized person.
11. CONFIDENTIALITY AND TRADE SECRETS .
A. Franchisee Will Learn Proprietary Matters
Franchisee acknowledges the Franchisor will provide Franchisee with knowledge of proprietary matters, techniques, and business procedures of Franchisor necessary and essential to the operation of the Store's business. Without such information, Franchisee could not efficiently and effectively operate said business. This information includes pre-selling techniques, computer foot scanning procedures, FOOT SOLUTIONS custom shoe fitting, FOOT SOLUTIONS retail skills, and cash collection systems.
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Franchisee acknowledges such proprietary information was unknown to Franchisee prior to execution of this Agreement, and the methods of Franchisor to be unique and novel to Franchisee. Franchisee will not divulge proprietary information, without the prior written consent of Franchisor; and will not sell, assign, copy, assist, or make available to anyone, any information that would enable such person to substantially duplicate the System.
B. Injunctive Relief Available to Franchisor
Franchisee acknowledges any failure to comply with the requirements of this paragraph will cause Franchisor irreparable injury, and Franchisee agrees to pay all court costs and reasonable attorney's fees incurred by Franchisor in obtaining specific performance of, or an injunction against violation of, requirements of this paragraph.
C. Franchisee's Employees Shall Not Disclose Trade Secrets
Franchisee shall obtain from each employee, representative or agent, an agreement that such person" shall not during the course of employment, representation, or agency with Franchisee, or at any time, use, divulge, disclose or communicate, directly or indirectly, in any form or manner, to any person, firm or corporation, any of the trade secrets of Franchisor.
12. TRAINING OF FRANCHISEE
A. Initial Training
Franchisor shall provide a training program on the operation of the Store, consisting of a two (2) week training program at FOOT SOLUTIONS Corporate Headquarters, hi addition, training will take place in the Franchisee's store for three (3) days during Grand Opening and during the three (3) day store setup.
B. Additional Training
In the event Franchisee requests additional training beyond the provided two (2) week corporate training program, three (3) day store set-up, and the three (3) days for Grand Opening, Franchisee may request additional field training from Franchisor; but shall pay a daily training fee of Four Hundred Dollars ($400) to Franchisor, plus all out of pocket expenses, including transportation, lodging, meals and wages (if any) connected with such additional training. If such additional requested training can be provided at a time when a regularly scheduled training class can accommodate the Franchisee's trainees, there shall be no additional charge.
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C. Number of Persons to be Trained
Franchisee can select up to a maximum of four (4) persons to receive the initial training from Franchisor. Franchisee agrees to have, during the entire term of this Agreement, at least one (1) fully trained manager or assistant manager to operate the Store. If Franchisee requires more than four (4) people trained, additional trainees will have to pay One Thousand Dollars ($1,000.00) per week.
D. Expenses Paid by Franchisee
Franchisee, and those selected by Franchisee to be trained by Franchisor, shall pay all expenses incurred in such training program, including transportation, lodging, meals, and wages (if any). In the event Franchisee or its representatives fail to complete the training program for the specific Store operation designated by this Agreement, Franchisee shall be deemed to be in violation of this Agreement.
13. ACCOUNTING AND RECORDS
A. Bookkeeping. Accounting and Records
Franchisee shall maintain during the term of this Agreement, and shall preserve for the time period specified in the Manual, full, complete and accurate books, records and accounts in accordance with the standard accounting system described by Franchisor in the Manual or otherwise in writing.
B. Payment of Monies to Franchisor
Franchisee shall submit to Franchisor, a monthly sales report no later than the Fifth of each month for the previous monthly sales during the term of this Agreement, on forms prescribed by Franchisor, accurately reflecting all net revenues during the preceding month, and such other data and information regarding the operation of the Store as Franchisor may require. This monthly report will provide the basis for the electronic funds to be transferred monthly..
C. Submission of Financial Statements
Franchisee shall, at its expense, submit to Franchisor within sixty (60) days of the end of each fiscal year of operation during the term of this Agreement, a complete financial statement for said fiscal year, including both an income statement and balance sheet, which may be un-audited, together with such information in such form as Franchisor may require. Each financial statement shall be signed by Franchisee or by Franchisee's treasurer or chief financial officer, attesting the statement is true and correct. Franchisee shall also submit to Franchisor the current financial statement and tax return filing(s), and any other forms, records, reports, information or data Franchisor may reasonably designate, in the form and at the times and places reasonably required by Franchisor, upon request, and as specified from time to time in the Manuals, or otherwise in writing. Annual financial statements are reviewed to help identify any excessive costs or other financial signals to ensure business success.
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D. Franchisor's Right to Audit
Franchisor or its designated agents, shall have the right at all reasonable times, to examine and copy (at its expense), Franchisee's books of account. Franchisor shall also have the right at any time, to audit the books and records of Franchisee. If any audit should reveal payments due Franchisor have been understated by more than five percent (5%) in any report to Franchisor, Franchisor may at its option, charge Franchisee for any and all costs and expenses incurred in connection with such audit. Franchisee shall pay to Franchisor any amounts owing, immediately upon demand, together with interest from the date such amounts were due until paid, at the lesser of three (3) percentage points above the prime rate, on the date payment was due, as reported in the WALL STREET JOURNAL on that date, or the maximum rate permitted by law. Such remedy shall be in addition to any other remedies available to Franchisor. If Franchisor's audit reveals understated payments more than two (2) times during the term of this Agreement, Franchisor at its option, in addition to any other remedies it may have, may elect to require Franchisee's future financial statements, as required by this Agreement, be audited at Franchisee's expense.
14. INSURANCE
Franchisee shall at all times and at its sole expense during the term of this Agreement, maintain in force comprehensive, public and product liability, and motor vehicle liability insurance against claims for bodily and personal injury, death and property damage caused by or occurring in conjunction with the operation of the Store, or otherwise in conjunction with the conduct of the business of Franchisee, pursuant to this Agreement and the Franchise granted. Motor vehicle insurance is required if Franchisee's FOOT SOLUTIONS business owns a vehicle used for business purposes.
Franchisee shall maintain general casualty insurance (including fire, extended coverage, vandalism and malicious mischief) on the leasehold improvements (to the extent required by Franchisee's lease for the Store), fixtures, signs, equipment, inventory, materials and supplies of the Store, and worker's compensation insurance. Such insurance coverage shall be maintained under one or more policies of insurance containing the amounts and type of coverage of no less than $1,000,000. All public and product liability and motor vehicle liability insurance policies shall name the Franchisor as an additional insured, and shall provide that the Franchisor shall receive ten (10) days prior written notice of termination, expiration, or cancellation of any such policy. Franchisee shall submit to the Franchisor annually a copy of the certificate of, or other evidence of, the renewal or extension of each such insurance policy. If Franchisee at any time fails or refuses to maintain any insurance coverage required by Franchisor, or to furnish satisfactory evidence, the Franchisor, at its option and in addition to any other rights and remedies available, may, but need not, obtain such insurance coverage, on behalf of Franchisee. If the Franchisor elects to obtain any such insurance on behalf of Franchisee, all costs and premiums for such shall be paid upon demand by Franchisee to Franchisor.
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15. ASSIGNMENT
A. By Franchisor
This Agreement is fully assignable by the Franchisor, and shall inure to the benefit of any assignee or other legal successor, to the interest of Franchisor.
B. Franchisee May Not Assign Without Approval of Franchisor
This Franchise is personal to Franchisee, and neither the franchise (except as provided with respect to assignment to partnership or corporation), nor any part of the ownership of franchise (which shall mean and include voting stock, convertible securities, proprietorship and general partnership interests), may be voluntarily, involuntarily, directly or indirectly, assigned, subdivided, sub-franchised, or otherwise transferred by Franchisee or its owners (including by will, declaration of or transfer in trust under the laws of intestate succession), without the prior written approval of the Franchisor. Any such attempted assignment or transfer without such approval shall constitute a breach of this Agreement. The Franchisor shall not unreasonably withhold its approval of assignment or transfer to proposed assignees or transferees who:
1. Meet the then applicable standards for Franchisees;
2. Are not operating a franchised or independent store offering similar services as that offered by the Franchisor (e.g., computerized scanning for custom insoles, and selling similar lines of comfort shoes); and
3. Are willing to execute and be bound by all provisions of the Franchisor's then current form of Standard Franchise Agreement and all other agreements and legal instruments and documents then customarily used by the Franchisor in the granting of Franchises.
The Franchisor shall not charge such assignee an initial Franchise Fee for the Franchise, but will charge a transfer fee of a minimum of $5,000 to a maximum of $10,000, depending on the size and type of Franchise, and the amount of services required to establish a smooth transition. The terms are set forth in the ASSIGNMENT TO STANDARD FRANCHISE AGREEMENT, and include services rendered in preparation of legal documents, consultation, and required training in the operation of a FOOT SOLUTIONS Franchise. The Franchisor shall have the right to require Franchisee and its owners to execute a general release of the Franchisor in a form satisfactory to Franchisor's counsel as a condition of its approval of assignment or other transfer of the Franchise, Nothing contained herein shall limit or impose any charge upon the transfer of the Franchise rights of individuals, either by testamentary devise or by joint ownership to a surviving spouse, assignee, or other legal successor, provided that written notice is first given to the Franchisor of such transfer, and provided further that the Legatee or Devisee personally accepts the assignment, and guarantees in writing to accept the obligations and commitments set forth in this Agreement, within thirty (30) days after such demise. The Franchisor's transfer fee shall be waived in the case of a valid disability. Note: If a' franchisee sells their store to a Foot Solutions lead they are responsible for paying the broker fee of $15,000 (fifteen thousand dollars) at the time of the sale.
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C. Assignment to Partnership or Corporation
This Franchise may be assigned to a partnership or corporation which conducts no business other than operating the Store, which is actively managed by Franchisee or a qualified manager, and in which Franchisee owns and controls not less than 51% of the general partnership or equity in voting stock, provided all shareholders of voting stock shall execute a Guarantee Agreement undertaking to be bound, jointly and severally, by all provisions of this Agreement and all other agreements with the Franchisor, and undertaking to guaranty, jointly and severally, the payment of all sums due or to become due to the Franchisor. All issued and outstanding stock certificates of such corporation shall bear the following legend:
TRANSFER OF THESE SHARES ARE SUBJECT TO CERTAIN RESTRICTIONS
CONTAINED IN A FRANCHISE AGREEMENT BETWEEN ___________________AND FOOT
SOLUTIONS, INC. CORPORATION (D/B/A FOOT SOLUTIONS)_____________________, 20____.
D. Franchisor Right of First Refusal
If the Franchisee (or its owners) desire to sell the Store or part or all of the ownership of Franchisee, then the Franchisor will reasonably assist Franchisee (or it owners) in such efforts. If Franchisee (or its owners) shall obtain a bona fide, written offer to purchase the Store or such ownership, such offer shall be submitted to the Franchisor, which shall for a period of fifteen (15) days from the date of delivery of such offer, have the right, exercisable by written notice to Franchisee (or its owners), to purchase the Store or such ownership for the price and on the terms and conditions contained in such offer; provided the Franchisor may substitute cash for any form of payment proposed for such offer. If the Franchisor does not exercise the right of first refusal, the bona fide written offer may be accepted by Franchisee or its owners, subject to the prior written approval of the Franchisor, as provided in this Agreement.
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The original documents were scanned as an image. The original file can be downloaded at the link above.