Franchise Agreement
The original documents were scanned as an image. The original file can be downloaded at the link above.
Sample Franchise Agreement
THIS FRANCHISE AGREEMENT is entered into as of_______________, 200_, by and
between GOOD FEET WORLDWIDE, LLC, a Delaware limited liability company located at 2270 Cosmos Ct., Carlsbad, California 92011 ("Good Feet"), and
_____________________• ______, a________________________("Franchisee"), located
at:__________________________________________________________________________.
BACKGROUND
Good Feet grants franchises for stores that offer GOOD FEET® brand arch supports and related foot products, some of which bear the Marks (collectively, the "Products"), that operate under a specified system prescribed by Good Feet (the "Good Feet System"), and that use as their primary trade identity the marks "The Good Feet Store®," "Good Feet Your Arch Support Store®," "Good Feet®," and their related indicia of origin specified by Good Feet from time to time (the "Marks"). Stores offering Products, operating pursuant to the Good Feet System, and using the Marks as their primary trade identity are referred to in this Agreement as "Good Feet Stores."
Good Feet Stores sell foot products purchased principally from Good Feet's affiliate, Dr.'s Own, Inc., a California corporation ("Dr.'s Own"), and shoes from approved suppliers of Good Feet. The Products are not intended as medical products or devices.
The Good Feet System includes a facility design for the Good Feet Store; a system for the offer and sale of Products; designed decor and signage; and confidential operating procedures, methods and techniques for operations, record keeping, accounting and reporting, personnel management, purchasing, sales, promotion, marketing and advertising, all of which may be changed, improved and, further developed by Good Feet and its affiliates from time to time. The Good Feet System also requires franchisees to offer customers certain terms, return rights and privileges specified by Good Feet from time to time (the "Customer Benefits").
Franchisee wants to obtain a franchise to operate a Good Feet Store at a specific location within a defined geographic area on the terms and conditions of this Agreement.
NOW, THEREFORE, the parties, in consideration of the undertakings and commitments of each party to the other party, hereby agree as follows:
1. GRANT
1.1 Grant. Subject to the terms and conditions of this Agreement, Good Feet hereby grants to Franchisee and Franchisee hereby accepts a franchise (the "Franchise") to open and operate a Good Feet Store utilizing the Good Feet System and the Marks (the "Store") in the geographical area described on Exhibit A (the "Territory") and at the location set forth on Exhibit A (the "Location"). Franchisee may not use the name Good Feet or any part thereof in its business name, but will establish a business trading as "The Good Feet Store." Termination or expiration of this Agreement will constitute a termination of the Franchise and Franchisee's right to operate the Store in the Territory. During the term of this Agreement, Good Feet will not establish or operate, or franchise or license a third party to establish or operate, a Good Feet Store the physical premises of which are located in the Territory so long as franchisee honors the terms of this Agreement.
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1.2 Development of the Store. Franchisee will comply with its obligations pursuant to Section 4 of this Agreement and open the Store for business at the Location no later than 120 days after the date of this Agreement.
1.3 Limitations on Franchisee's Rights. Franchisee shall have the right to sell the Products only by retail sale through its Store at the Location and at trade shows and home shows within its DMA (defined below). Franchisee shall have no right to sell, market or otherwise distribute the Products through any other trade or distribution channel, including at wholesale, by on-line computer sales (such as the Internet) or other computer sales methods, by direct response sales methods, by mail order marketing, for re-distribution through third parties, or by specialty sales on the premises of third parties. Franchisee shall not sell Products outside the Territory or to any other franchisee, licensed dealer (whether or not of Products), retailer, or military or governmental entity without prior written consent of Good Feet. Franchisee shall conduct the business of the Store only from the Location, except that Franchisee may participate in trade shows and home shows in the Designated Market Area ("DMA") (as defined by such sources as Good Feet specifies) in which the Territory is located. Franchisee's participation in trade shows, home shows, or any other off-premises promotion must be approved in advance by Good Feet. If Good Feet receives multiple requests for approval from franchisees in any DMA to attend a trade show or home show, requests will be considered in the order of receipt. Franchisee shall have no right to subfranchise or grant licenses to third parties under this Agreement.
1.4 Reservation of Rights. Good Feet, on behalf of itself and its affiliates, reserves all rights not expressly granted to Franchisee pursuant to this Agreement, including all rights in and to the Marks, the Good Feet System, Products, Good Feet Stores, and their associated goodwill. Good Feet's reserved rights include, directly and indirectly, without limitation:
A. operating and granting others the right to operate a Good Feet Store the physical premises of which are located outside the Territory and any other type of business under the Marks or any other marks in any geographical location outside the Territory, on such terms and conditions as Good Feet deems appropriate; and
B. offering, selling, licensing, marketing, delivering, or otherwise distributing Products or other items to customers or potential customers located within and outside the Territory, whether such Products or other items are identified by the Marks or other trademarks or service marks, through any distribution channels Good Feet deems best (including, but not limited to, mail order and the Internet), wherever such distribution channels are located or operating (including within the Territory), except not through Good Feet Stores (other than Franchisee's Store) the physical premises of which are located within the Territory.
1.5 Restrictions. Franchisee agrees that all Good Feet Stores (whether owned, licensed or franchised by Good Feet or its affiliates or otherwise) may solicit and service at their Good Feet Stores customers from any geographic location, and otherwise advertise and offer the Products and services of their respective Stores to any customers, except as otherwise provided in this Agreement. The Products are not medical products or devices and are not to be sold as such. The Products are not intended for, nor shall they be sold as, treatment of medical conditions or in connection with any purported or actual medical diagnosis or prescription. Franchisee shall not engage in diagnosis, prescription or treatment of any medical condition in connection with its operation of the Store. Franchisee and its agents and employees shall not
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represent or sell any Product as a medical device or as treatment for any medical condition. In addition, Franchisee may not sell any Product, and may not permit any agent or employee to sell any Product, to any individual with diabetes; with arthritis, skin disorders, or broken bones affecting the feet; or under the age of 18, unless authorized in writing by a physician. Franchisee shall conduct regular training and communication sufficient to guaranty that no employee or other agent of Franchisee violates the provisions of this Section 1.5.
1.6 Owner's Guaranty. If Franchisee is an entity, each direct and indirect legal, beneficial and equitable owner of Franchisee (an "owner") shall execute and deliver to Good Feet an Owner's Guaranty and Assumption of Obligations in the form attached hereto as Exhibit B (the "Guaranty") concurrently with Franchisee's execution and delivery of this Agreement. Any individual or entity who becomes an owner of Franchisee after the date of execution of this Agreement must be approved under Section 12.2 of this Agreement and shall execute and deliver to Good Feet a Guaranty prior to the date the owner acquires its interest in Franchisee.
2. TERM AND RENEWAL
2.1 Term. The Term of this Agreement will be five (5) years commencing on the date this Agreement is executed (the "Term").
2.2 Renewal. Franchisee will have the right to renew the Franchise for two successor terms of five (5) years, provided that all of the following conditions have been met for each renewal:
A. Franchisee has given Good Feet written notice at least one hundred eighty (180) days prior to the end of the then current term of its intention to renew the Franchise;
B. Franchisee has complied with all the material terms and conditions of this Agreement or the then existing franchise agreement during the expiring term;
C. Franchisee corrects any deficiencies in its operation of the Store identified by Good Feet and agrees to upgrade, remodel and redecorate the premises of the Store as specified by Good Feet to conform to the current image of a Good Feet Store and the Good Feet System;
D. Franchisee has the right to occupy the premises of the Store or a replacement location approved by Good Feet in writing for no less than the renewal term;
E. Franchisee executes the then current form of franchise agreement and other related agreements and guarantees which Good Feet is then requiring of new franchisees, which may contain terms and conditions that differ materially from any and all of those contained in this Agreement, including a reduced Territory and increased fees (but which shall not require Franchisee to pay an Initial Franchise Fee);
F. Franchisee and Good Feet will execute a mutual written general release of all claims and demands against one another, their respective affiliates, and the officers, directors, employees and representatives of each of them (except for Franchisee's then current indemnification obligations to Good Feet and amounts then due for Products, Continuing Service Fees, Advertising Fund contributions, and Area Cooperative contributions); and
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G. Franchisee pays to Good Feet a renewal fee of Five Thousand Dollars ($5,000) for the first five-year renewal term and Five Thousand Dollars ($5,000) for the second five-year renewal term.
Franchisee's failure to sign these agreements and releases within thirty (30) days after they are delivered to Franchisee will be deemed an election by Franchisee not to renew the Franchise. Good Feet may unilaterally extend the Term or first renewal term of this Agreement for any period of time necessary to provide Franchisee with any notices of non-renewal required by this Agreement or applicable law.
3. SERVICES OF GOOD FEET
3.1 Initial Training Program. Prior to opening the Store, the following individuals must attend and complete, to Good Feet's satisfaction, Good Feet's Initial Training Program: if Franchisee will act as the general manager of the Store, Franchisee; if Franchisee shall not act as the general manager, Franchisee and the individual who will act as the general manager; or if Franchisee is an entity, the individual who will act as the general manager and one of Franchisee's owners who will be actively involved in the management and operation of the Store. The Initial Training Program will last approximately 7 days and will be conducted at Good Feet's principal offices or at an alternate place Good Feet designates. Good Feet will not charge a training fee in connection with providing the Initial Training Program to two individuals. Good Feet will also provide the Initial Training Program to Franchisee's subsequent general managers and additional individuals associated with Franchisee throughout the term of this Agreement for Good Feet's then current Training Fee. All expenses incurred by Franchisee and its representatives and employees in attending the Initial Training Program, including, without limitation, wages, benefits, travel, room and board expenses and compensation will be the sole responsibility of Franchisee. No person may be employed as a general manager of the Store unless such person has completed Good Feet's Initial Training Program to Good Feet's satisfaction. (Experienced Managers may be granted a training waiver at the sole discretion of Good Feet.)
3.2 Specifications for the Store and Products. Good Feet will provide Franchisee with Good Feet's specifications for the building, equipment, furnishings, decor, layout and signs of a Good Feet Store or cause its store design service to do so. Good Feet will also cause Dr.'s Own to make available for Franchisee's purchase Products and other goods and supplies as discussed in Section 5.3. Good Feet reserves the right to modify, cancel, withdraw and substitute Products, and the right to add new arch supports and related foot products to the Products, at any time.
3.3 Confidential Operating Manual. Good Feet will loan Franchisee one (1) copy of Good Feet's Confidential Operating Manual (together with all supplements and revisions, the "Manual") for use during the term of the Franchise. Good Feet will have the right to modify the Manual when it deems best. Changes to the Manual will be effective upon Good Feet's giving notice of the change to Franchisee. Franchisee shall comply with Manual changes within 30 days of effective notice. Franchisee will conduct the operation of the Store in compliance with Good Feet's System and all mandatory systems, procedures, policies, methods and requirements outlined in the Manual. All mandatory provisions of the Manual will be binding on Franchisee as if originally outlined in this Agreement. In the event of any dispute as to Franchisee's
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compliance with the provisions of the Manual, the terms of the master copy of the Manual maintained by Good Feet at Good Feet's principal office will be controlling. Franchisee shall not duplicate the Manual or allow the Manual to be duplicated.
At Good Feet's option, Good Feet may post some or all of the Manual on a restricted Website, intranet, or extranet to which Franchisee will have access. (For purposes of this Agreement, "Website" means an interactive electronic document contained in a network of computers linked by communications software, including, without limitation, the Internet and World Wide Web home pages.) If Good Feet does so, Franchisee agrees to monitor and access the Website, intranet, or .extranet for any updates to the Manual. Any password or other digital identification necessary to access the Manual on a Website, intranet, or extranet will be deemed to be Good Feet's proprietary information, subject to Section 5.15 below.
3.4 Additional Training. Good Feet may require that previously trained and experienced franchisees (or, if entities, their owners) or their managers attend and successfully complete additional training programs or seminars to be conducted at Good Feet's principal offices or other locations chosen by Good Feet. Franchisee (or its owners) and/or Franchisee's employee(s) will attend such programs or seminars at Franchisee's expense. Good Feet reserves the right to charge fees for attendance at such training programs or seminars. Good Feet agrees that additional training programs and/or seminars will not exceed one per year, unless presented as part of the Annual Convention.
3.5 Guidance. During the operation of Franchisee's Store, Good Feet will:
A. Inspect the Store as often as Good Feet deems necessary;
B. Make its staff available at its principal offices for consultation and guidance in the operation and management of the Store;
C. Make available to Franchisee all changes, improvements, and additions to the Good Feet System to the same extent as made available to other franchisees of Good Feet Stores; and
D. Provide Franchisee with all supplements and modifications to the Manual.
3.6 Inspections. Good Feet will have the right to enter and inspect the Store at all reasonable times to observe Franchisee's operation of the Store, to confer with Franchisee's employees and customers and to evaluate Franchisee's compliance with this Agreement, the Good Feet System and the Manual. Franchisee will cooperate with Good Feet and will promptly undertake to correct any deficiencies brought to Franchisee's attention.
3.7 Additional Guidance and Assistance. At Franchisee's request, and subject to the availability of Good Feet's personnel, Good Feet will furnish additional guidance and assistance to Franchisee, beyond that customarily provided to franchisees, at Franchisee's location at Good Feet's then current per diem fee plus reimbursement of out of pocket expenses of Good Feet and its personnel. If Good Feet determines that additional guidance and assistance is required due to the failure of the Store to operate according to the Good Feet System, Good Feet will have the right to require that Franchisee (or its owners) and/or Franchisee's managers and employees undergo a retraining program or Good Feet may provide other remedial assistance. Franchisee
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will pay Good Feet its then current per diem fee and out of pocket expenses incurred in providing this retraining or remedial assistance.
3.8 Advisory Council. Good Feet will form an Advisory Council. The purpose of this Advisory Council will be to give Good Feet advice and guidance on various aspects of the Good Feet System and its development and to perform other functions Good Feet specifies. The Advisory Council will be governed by bylaws adopted by the Advisory Council, although Good Feet shall have the right to modify those bylaws. The Advisory Council will be composed of 7 franchisees elected annually pursuant to the bylaws. Members will be elected to serve a one-year term. No franchisee shall serve more than five consecutive terms. The Board will be chaired by Good Feet's then current Chief Operating Officer or an individual appointed by Good Feet's Chief Operating Officer. Franchisees will participate in the Advisory Council and its activities at their own expense. The Advisory Council will not have any decision-making authority.
3.9 No Other Obligation. Except as stated above, Good Feet has no obligation to offer advice, guidance or assistance to Franchisee in the development or operation of its Store.
3.10 Franchise System Website. Good Feet may establish one or more websites to advertise, market, and promote Good Feet Stores, the Products, and/or the Good Feet franchise opportunity (each a "Franchise System Website")- If Good Feet establishes a Franchise System Website, it may provide Franchisee with a webpage on the Franchise System Website that references the Store. Franchisee must give Good Feet the information and materials Good Feet requests to develop, update, and modify Franchisee's webpage. By providing the information and materials to Good Feet, Franchisee will be representing that they are accurate and not misleading and do not infringe any third party's rights. However, Good Feet will own all intellectual property and other rights in the Franchise System Website, Franchisee's webpage, and all information they contain (including, without limitation, the domain name or URL for Franchisee's webpage, the log of "hits" by visitors, and any personal or business data that visitors supply).
Good Feet will maintain the Franchise System Website, including Franchisee's webpage, and may use the Advertising Fund's assets to develop, maintain, and update the Franchise System Website (other than that portion of the Franchise System Website that specifically promotes the sale of Good Feet franchises). Good Feet periodically may update and modify the Franchise System Website (including Franchisee's webpage). At Franchisee's request, Good Feet will update the information on Franchisee's webpage or add information that Good Feet approves. Franchisee must notify Good Feet whenever any information on its webpage changes or is not accurate. Franchisee must pay Good Feet's then current fee to be on the Franchise System Website or to update or modify Franchisee's webpage (to the extent the Advertising Fund does not cover these costs). Good Feet has final approval rights over all information on the Franchise System Website. Good Feet may implement and periodically modify System standards and specifications relating to the Franchise System Website.
Good Feet will maintain Franchisee's webpage on its Franchise System Website, if any, and allow Franchisee access to the Franchise System Website only while Franchisee is in full compliance with this Agreement and all Good Feet System standards and specifications (including, without limitation, those relating to the Franchise System Website). If Franchisee is in default of any obligation under this Agreement or Good Feet System standards and
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specifications, then Good Feet may, in addition to its other remedies, temporarily remove Franchisee's webpage from the Franchise System Website, or deny Franchisee access to the Franchise System Website, until Franchisee fully cures the default. Good Feet will permanently remove Franchisee's webpage from the Franchise System Website, and terminate Franchisee's access thereto, upon this Agreement's expiration or termination.
At Good Feet's request, all advertising, marketing, and promotional materials that Franchisee develops for the Store must contain notices of the Franchise System Website's domain name in the manner Good Feet designates. Franchisee may not develop, maintain, or authorize any other Website that mentions or describes Franchisee or the Store or displays any of the Marks.
4. OPENING THE STORE
4.1 Location. If the premises of the Store have been selected prior to execution of this Agreement, it will be designated on Exhibit A as the Location. If the premises have not been selected as of the date of this Agreement, Franchisee will advise Good Feet in writing of the premises Franchisee selects within the Territory, and, subject to compliance with Section 4.4, that premises will be deemed the Location for purposes of Exhibit A.
4.2 Construction of Store. Franchisee will construct and develop the Store using Good Feet's specifications provided under Section 3.2, in full compliance with the Good Feet Store design and layout specifications outlined in the Manual or elsewhere and using the Store Decor Package provided by Good Feet pursuant to Section 3.2. Promptly after securing rights to the premises of a Store, Franchisee will prepare and submit to Good Feet for approval a site. survey and any modifications to Good Feet's basic plans and specifications (including requirements for dimensions, exterior design, materials, interior design and layout, equipment, fixtures, furniture, signs and decorating) required for development of the Store at the premises . (the "Plans"). Good Feet will have the right to disapprove the Plans or condition approval as Good Feet deems appropriate. Based on approved Plans, Franchisee shall (i) obtain all required zoning changes; all required building, utility, health, sanitation, and sign permits and licenses; and any other required permits and licenses; (ii) purchase or lease and install the Store Decor Package and all equipment, fixtures, furniture, and signs required by Good Feet in the Plans or in the Manual; (iii) complete decorating the Store in full and strict compliance with the Plans approved by Good Feet and all applicable ordinances, building codes, and permit requirements and obtain Good Feet's approval of any modifications thereto; (iv) obtain all customary contractors' sworn statements and partial and final waivers of lien for construction, remodeling, decorating, and installation services; and (v) otherwise complete the development of and have the Store ready to open and conduct business according to Section 1.2. Good Feet shall not be liable for any loss or damage arising from the Plans or by reason of its approval of Plans or otherwise. Franchisee shall also develop the Store in compliance with all laws, rules and regulations of all governmental entities and landlords as they affect the Store, including compliance with the Americans with Disabilities Act and corresponding state disabled access requirements.
4.3 Purchase of Initial Inventory. On the terms outlined in Section 5.3, below, Franchisee shall purchase from Dr.'s Own initial inventory for the Store in an amount Dr.'s Own
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deems sufficient for opening the Store and shall place the order and pay Dr.'s Own for this initial inventory during Franchisee's attendance at the Initial Training Program.
4.4 Lease or Purchase Agreement. Franchisee must submit its lease or purchase or other occupancy agreement for the Store to Good Feet for approval prior to execution. The occupancy agreement must contain the provisions Good Feet requires, including but not limited to: (i) a provision which requires that Good Feet will receive a copy of any written notice of default under the occupancy agreement and which grants Good Feet, in its sole discretion, the right, but not the obligation, to cure any default within 30 business days after the expiration of the period in which Franchisee may cure the default; (ii) a provision which evidences the right of Franchisee to display the Marks according to the specifications required by the Manual, subject only to the provisions of applicable law; (iii) a provision which grants Good Feet the right, but not the obligation, to assume the obligations of and replace Franchisee under the occupancy agreement in the event of the expiration or termination of this Agreement for any reason; and (iv) a provision that the Store be used only for the operation of a Good Feet Store.
5. OPERATING THE STORE
5.1 Maintain Standards, Upgrades, Customer Benefits. In order to protect the Good Feet System and to maintain the standards of all Good Feet Stores and the Products, Franchisee will operate the Store at all times in strict compliance with the requirements of this Agreement, the Manual and the Good Feet System/Franchisee will sell all Products according to the sales procedures outlined in the Manual, as they may be revised from time to time, and offer each customer the current Customer Benefits prescribed by Good Feet, which may include warranties, return policies, and other benefits.
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5.2 Maintaining the Store. Franchisee will, at Franchisee's expense, maintain the
condition and appearance of the Store and use the Store solely for the purpose of conducting the business of a Good Feet Store. Franchisee will also upgrade the physical condition and appearance of the Store consistent with Good Feet's standards each time Good Feet notifies Franchisee to do so according to the requirements of Good Feet's notification request. The name of the Store shall be "The Good Feet Store®." Except for signs provided to Franchisee by Good Feet as part of the Store Decor Package or otherwise, the printed or written copy for all signs displayed inside and outside the Store must be submitted to Good Feet for approval prior to any use or display and may not be used unless and until written approval is given to Franchisee by Good Feet. This approval shall be in addition to any approval that may be required by Franchisee's lease or by applicable laws, ordinances, rules or regulations.
5.3 Spurring. Franchisee shall purchase (for resale at the Store) only from Dr.'s Own all of the types of Products that Dr.'s Own manufactures and/or sells. If Dr.'s Own manufactures and/or sells a particular type of Product, Franchisee may purchase that type of Product only from Dr.'s Own and from no other source. Such purchases will be made on Dr.'s Own's then current terms and conditions of sale and at prices established by Dr.'s Own's then current price list. All orders are subject to acceptance by Dr.'s Own. Throughout the term of this Agreement, Dr.'s Own will have the right to revise its terms and conditions of sale and price list for future orders, effective upon a 30-day written notice to Franchisee. Franchisee must not be in default of the Franchise Agreement to place an order. In addition, in (this includes both payment and operational defaults'). Dr.'s Own may refuse to sell Products to Franchisee if Franchisee is in
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default of this Agreement. In addition. Dr.'s Own mav refuse to sell Products to Franchisee for the Store if Franchisee (or any of its affiliates') owes money to Good Feet or Dr.' s Own (meaning that payment has not been made bv the date due) under anv other Franchise Agreement or other agreement in connection with the operation of any other Good Feet Store. If Dr.'s Own takes such action due to Franchisee's- (or anv affiliate's') default. Franchisee has no right to sell unapproved replacement products at the Store. Franchisee's only course of action is to cure, or cause its affiliate to cure, the particular default so that Dr.'s Own once again will sell Products to Franchisee. In connection with developing the Store under Section 4 and operating the Store, if Good Feet designates a product or service to be purchased from or provided by one or more suppliers (other than the Products that may be purchased only from Dr.'s Own), Franchisee must source the product or service only from those suppliers; if Good Feet specifies brands and types of goods or services to be used or sold at the Store, Franchisee must purchase for use and resale at the Store only those brands and types of goods or services; and if Good Feet identifies specifications for goods or services for use or sale by the Store, Franchisee must purchase only goods and services that meet those specifications and requirements. Franchisee must at all times provide an adequate inventory and selection of Products as required by the Manual and as necessary to meet potential customer demand.
5.4 Information System. Because information and communications are critical to operation of each Good Feet Store, Good Feet will specify and update specifications for an information system to be installed and used by each Good Feet Store (the "Information System"). When the Information System specifications are updated, Franchisee will acquire all hardware, software and peripherals, install all communications lines and wiring, contract for all required support and maintenance and meet all other requirements for the Store. The Manual or other communications will state whether items must be purchased from a specific supplier, whether specific brands of hardware, software, peripherals or other items must be acquired, or whether the items can be sourced from approved suppliers. Franchisee may acquire, install and maintain the Information System of its choice, provided that the system meets the minimum reporting guidelines established by Good Feet.
5.5 Approved Suppliers. In addition to the Products that must be purchased exclusively from Dr.'s Own, the purchase of quality products and services is an essential aspect of the. Good Feet System. Franchisee authorizes Good Feet to negotiate agreements with suppliers for the provision of products and services to all Good Feet Stores for the benefit of Good Feet and the Good Feet System. Franchisee agrees that certain of these agreements may be negotiated with Good Feet's affiliates, and that Good Feet's affiliates may profit from the agreements. Franchisee further agrees that certain of these agreements may provide for certain revenues to be paid to Good Feet or its affiliates for services rendered, license fees or the like, and that Good Feet or its affiliates may collect monies from these suppliers. Good Feet makes no representation or warranty that these agreements will provide any specific Good Feet Store with the lowest cost products or services available to such Store or that any individual Good Feet Store will benefit proportionately from any arrangement with any supplier. Further, Good Feet shall not be responsible to Franchisee for the failure of any supplier to perform its agreements with, or obligations to, Franchisee or to perform pursuant to any agreements negotiated by Good Feet.
Good Feet may designate a single supplier for any category or item and may designate a supplier only as to certain categories of items (for example, Dr.'s Own is the exclusive supplier
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of the types of Products it manufactures and/or sells). Good Feet may concentrate purchases with one or more suppliers to obtain lower prices, the best advertising support and/or the best services. For all goods and services other than the Products which may be obtained only from Dr.'s Own, Good Feet will entertain Franchisee's proposals for approval of additional suppliers. If Franchisee proposes to purchase goods or services from any supplier that Good Feet has not previously approved for such goods or services, Franchisee must notify Good Feet and submit to Good Feet all information, specifications and samples that Good Feet requests. Upon Franchisee's request, Good Feet will provide its standards and specifications and other approved supplier criteria to a supplier proposed by Franchisee, but if Good Feet determines that these standards, specifications or criteria contain confidential information, Good Feet will have the right to require the proposed supplier to execute a confidentiality agreement acceptable to Good Feet as a condition of evaluating the supplier. Good Feet will have the right to require that its representatives, at Franchisee's expense, be permitted to inspect the proposed supplier's facilities and that samples from the proposed supplier be delivered to Good Feet or its designated testing facility for evaluation and testing.
Good Feet may take up to three months to review the proposed supplier and will have the right to approve or disapprove any supplier. Good Feet is not obligated to approve any supplier. Approval of a supplier, as to any goods or services, may be conditioned on requirements relating to the frequency of delivery, standards of quality and service, including prompt attention to complaints, other criteria, work environment and concentration of purchases; may be conditioned on the supplier providing Good Feet with adequate insurance protection, the supplier's execution of reasonable license, indemnity and confidentiality agreements, and the supplier's payment of reasonable license fees to Good Feet; and may be temporary or conditional, pending Good Feet's further evaluation of the supplier. Good Feet reserves the right, at any time, to re-inspect the facilities, products and/or services of any supplier and to revoke its approval upon the supplier's failure to continue to meet any of Good Feet's then-current criteria. Franchisee understands and agrees that Good Feet's primary business is the sale of arch supports. Franchisee further understands that the sale of shoes (purchased from approved vendors) in Good Feet stores is ancillary and not the primary focus of a Good Feet Store. The number of shoes and shoe styles is limited to a few shoe lines and styles as outlined in the Manual. Good Feet has established relationships with shoe manufacturers that will offer shoes to Franchisees, and Franchisee understands that the shoe inventory shall not occupy more than 25% of showroom display area at any time.
5.6 Compliance with Laws and Good Business Practices. Franchisee will, at its expense, secure and maintain in force all required licenses, permits, and certificates relating to the operation of the Store and will operate the Store in strict compliance with all applicable local, state and federal laws, rules and regulations. Franchisee agrees to refrain from any merchandising, advertising or promotional practice which is unethical or may be injurious to the Store, Good Feet, other Good Feet Stores or the goodwill associated with the Marks. Franchisee shall deal with its customers honestly and fairly. All customer complaints shall be accommodated reasonably and fairly by Franchisee, but if all attempts to satisfy the customer fail, Franchisee shall not refuse to refund the customer's full purchase price. If Franchisee fails to satisfy the customer within the required time period, and the customer complains to Good Feet, Good Feet shall contact Franchisee and request that franchisee comply with the terms of this Agreement. The complaint will then be noted in Franchisee's file. In Good Feet's judgment, if the quantity of such complaints becomes excessive (12 or more during any 12 month period)
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GOOD FEET AMENDED FA (44 U/95^) CHG01^Q684524,v-!-\3_G87.<imi
and Franchisee continually fails to satisfy customers after being put on notice by Good Feet, Good Feet may exercise its termination rights pursuant to Section 13.B.9, below.
5.7 Payment of Liabilities and Taxes. Franchisee will pay, when due, all of its obligations, liabilities and taxes to Good Feet, suppliers, lessors, creditors and taxing authorities. Franchisee must reimburse Good Feet for any taxes that Good Feet must pay to any state taxing authority on account of either Franchisee's operation or payments that Franchisee makes to Good Feet (but not including Good Feet's income taxes). Franchisee's failure to comply with this provision will be deemed a material breach of this Agreement.
5.8 Standardization. Franchisee will require its employees to maintain Good Feet's appearance standards. Franchisee will comply with all standardization programs Good Feet specifies for Good Feet Stores to promote its image and goodwill. Good Feet may suggest prices for the resale of the Products; however, nothing contained in this Agreement will restrict Franchisee's right to resell Products at any price Franchisee chooses. Nevertheless, Franchisee may not engage in any "off-premises" advertising (that is, advertising away from the Location) that advertises any price for Products other than Good Feet's suggested retail price.
5.9 Management. During all hours Good Feet specifies, the Store must be under the direct, on premises supervision of a trained and competent individual acting as a full-time general manager who must have completed Good Feet's Initial Training Program. Franchisee will at all times faithfully, honestly and diligently perform its obligations under this Agreement, use its best efforts to promote and enhance the Store, and not engage in any business or other activity that will conflict with Franchisee's obligations under this Agreement.
5.10 Employee Training. Franchisee (or, if an entity, its owner) or Franchisee's general manager must train all employees of the Store according to Good Feet's training requirements.
5.11 Unauthorized Activities. Franchisee must not install or maintain at any Store any telephone booths, newspaper racks, video games, juke boxes, gum machines, games, rides, vending machines or other similar devices without Good Feet's prior written approval.
5.12 Notice to Good Feet. Franchisee will notify Good Feet in writing within five (5) days after (a) receiving any customer complaint, irrespective of the amount of money at issue, or (b) receiving notice of any action, suit, or proceeding or the issuance of any order, writ, injunction, award or decree of any court, agency or other governmental instrumentality which may adversely affect the operation or financial condition of the Store or the reputation of Good Feet Stores.
5.13 Modifications to the Good Feet System. Good Feet may modify, change, enhance and further develop the Good Feet System as it deems appropriate. System changes may include, but are not limited to, changing the components of the Good Feet System, Customer Benefits, and the Information System; changing the programs, services, methods, standards, forms, equipment, decorations, policies and procedures of the Good Feet System; adding to, deleting from, or modifying the programs, services and Customer Benefits which the Store is authorized or required to offer; and changing, improving, modifying or deleting one or more of
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GOOD FEET AMENDED FA (WI2/05Q6) CHGOl£06»4sa*^3fl82fig3QJ.
the Marks. Franchisee agrees to comply with modifications, changes, additions, deletions and alterations at and to the Store promptly and at Franchisee's expense.
5.14 Improvements. Any addition, modification, adaptation, improvement, refinement, discovery, invention or innovation Franchisee or its owners or employees make related to the Products or a Good Feet Store, the Good Feet System, the Manual, the Confidential Information discussed below in Section 5.15, the Programs (as defined in Section 8.1) and any advertising or marketing materials or other materials Franchisee or its owners or employees may create or modify using the Marks or related to a Good Feet Store or the Products (an "Improvement") will be the sole and exclusive property of Good Feet, regardless of the participation or sole participation by Franchisee or its owners or employees in developing the Improvement, will be part of the Good Feet System, will be deemed works made-for-hire for Good Feet, and will be deemed assigned to Good Feet. Franchisee will, and will cause its employees and owners to, execute any instruments and documents Good Feet requests and give Good Feet assistance to perfect or protect all intellectual property rights in any Improvement, without compensation for the use or licensing of any Improvement.
5.15 Confidential Information. Good Feet possesses (and will continue to develop and acquire) certain confidential information, some of which constitutes trade secrets under applicable law (the "Confidential Information"), relating to developing and operating Good Feet Stores, including (without limitation):
(a) site selection criteria;
(b) training and operations materials and manuals;
(c) methods, formats, specifications, standards, systems, procedures, sales and marketing techniques, knowledge, and experience used in developing and operating Good Feet Stores;
(d) marketing and advertising programs for Good Feet Stores;
(e) knowledge of specifications for and suppliers of Products;
(f) any computer software or similar technology that is proprietary to Good Feet, including, without limitation, digital passwords and identifications and any source code of, and data, reports, and other printed materials generated by, the software or similar technology,
(g) knowledge of the operating results and financial performance of Good Feet Stores other than Franchisee's Store; and
(h) graphic designs and related intellectual property.
Franchisee acknowledges and agrees that it will not acquire any interest in Confidential Information, other than the right to use it as Good Feet specifies in operating the Store during this Agreement's term, and that Confidential Information is proprietary, includes Good Feet's trade secrets, and is disclosed to Franchisee only on the condition that Franchisee agrees, and Franchisee hereby does agree, that it:
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GOOD FEET AMENDED FA (4+U/B5fti) CHGOli30684534^*-i3flS2692Qa
(i) will not use Confidential Information in any other business or capacity;
(ii) will keep confidential each item deemed to be a part of Confidential Information, both during this Agreement's term and then afterward for as long as the item is not generally known in the industry in which Good Feet Stores operate;
(iii) will not make unauthorized copies of any Confidential Information disclosed via electronic medium or in written or other tangible form; and
' (iv) will adopt and implement reasonable procedures to prevent unauthorized use or disclosure of Confidential Information, including, without limitation, restricting its disclosure to Store personnel and others and using non-disclosure and non-competition agreements with those having access to Confidential Information. Good Feet has the right to regulate the form of agreements that Franchisee uses and to be a third party beneficiary of those agreements with independent enforcement rights.
Confidential Information does not include information, knowledge, or know-how that Franchisee can demonstrate lawfully came to its attention before Good Feet provided it to Franchisee directly or indirectly; that, at the time Good Feet disclosed it to Franchisee, already had lawfully become generally known in the industry through publication or communication by others (without violating an obligation to Good Feet); or that, after Good Feet discloses it to Franchisee, lawfully becomes generally known in the industry through publication or communication by others (without violating an obligation to Good Feet). However, if Good Feet includes any matter in Confidential Information, anyone who claims that it is not Confidential Information must prove that one of the exclusions provided in this paragraph is satisfied.
6. TRADEMARKS
6.1 Ownership. Franchisee acknowledges the validity of the Marks and that they are the sole property of Good Feet and its affiliates. Franchisee's right to use the Marks is derived solely from this Agreement in the formats required by the Manual or otherwise and is limited to the conduct of the Store by Franchisee pursuant to and in compliance with this Agreement and the Good Feet System. Franchisee's unauthorized use of the Marks will be a material breach of this Agreement and an infringement of the rights of Good Feet and its affiliates. All use of the Marks by Franchisee and any goodwill established by Franchisee's use of the Marks will be the exclusive property of Good Feet and its affiliates. Franchisee agrees not to contest the validity or Good Feet's and its affiliates' ownership of the Marks.
6.2 Use. Franchisee must use the Marks only as outlined in the Manual or otherwise. Franchisee must not use the Marks as part of any corporate or trade name, or with any prefix, suffix, or other modifying words, terms, designs, or symbols, or in any modified form, nor may Franchisee use the Marks in connection with the sale of any unauthorized product or service or in any other manner not expressly authorized by Good Feet (including on websites). Franchisee shall not use the Marks to identify Franchisee on any payment, in any contract with third parties, or in any other manner not approved by Good Feet in writing. Franchisee will give all notices of trademark and service mark registration Good Feet specifies and obtain all fictitious or assumed name registrations as may be required under applicable law. Franchisee may not use any names or marks which are confusingly or deceptively similar to the Marks.
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GOOD FEET AMENDED FA (1-U2/Q-5O0 CHGO130684534=vl-i3QSZfi23flJ.
6.3 Infringement Franchisee will immediately notify Good Feet in writing of any apparent infringement or challenge to Franchisee's use of, or claim by any person of any rights in, the Marks or any other intellectual property of Good Feet and its affiliates of which Franchisee becomes aware. Franchisee must not directly or indirectly communicate with any person other than Good Feet and its counsel in connection with any such infringement, challenge or claim. Good Feet and its affiliates will have sole and exclusive right to take such action as they deem appropriate (including no action) and to control any litigation, U.S. Patent and Trademark Office proceeding or other administrative proceeding arising out of such infringement, challenge or claim or otherwise relating to the Marks or Good Feet's or its affiliates' other intellectual property. Franchisee will execute any and all instruments and documents, render such assistance, and do all acts and things as may, in the opinion of Good Feet's counsel, be necessary or advisable to protect and maintain the interests of Good Feet and its affiliates in any such litigation or administrative proceedings, or to otherwise protect and maintain the interest of Good Feet and its affiliates in the Marks and their other intellectual property.
6.4 Substitutions. If Good Feet determines that it is advisable for Good Feet and/or Franchisee to modify or discontinue the use of any of the Marks, and/or use one or more additional or substitute Marks, then upon notice from Good Feet, Franchisee, at its expense, will immediately make such changes and amendments to the Marks and their use at the Store. Good Feet need not reimburse Franchisee for its costs of doing so.
6.5 Patent Markings. To the extent required by applicable law, Franchisee shall maintain the patent marking on all of the Products according to applicable patent marking laws, including but not limited to retaining patent marking stickers and visible patent marks on Products and all related advertising and promotional material.
7. FEES ■
7.1 Initial Franchise Fee. Franchisee must pay to Good Feet the Initial Franchise Fee of Twenty Thousand Dollars ($20,000) upon the execution of this Agreement.
7.2 Continuing Service Fee. In addition to the Initial Franchise Fee, Franchisee will pay to Good Feet a continuing service fee (the "Continuing Service Fee") each month in an amount equal to 2% of the Gross Sales of the Store during the previous month. The Continuing Service Fee and a report of the Gross Sales will be due on or before the fifteenth (15th) day of each month for Gross Sales during the prior month. For purposes of this Agreement, "Gross Sales" shall mean the total of all sales, monies, property or receipts from all sales of Products and other goods or services derived by Franchisee at, from or related to the Store and the proceeds of any business interruption insurance, whether such revenues are evidenced by cash, services, property or other means of exchange. "Gross Sales" shall exclude any sale of merchandise for which cash or credit has been refunded or re-credited during the accounting period during which such sale occurred, and the amount of any sales, value added or consumption taxes imposed by any federal, national or local governmental authority that are actually paid over to that governmental authority. Any sale that shall have been included in Gross Sales for any accounting period and for which a refund or re-credit is made in a subsequent accounting period shall be deducted from Gross Sales for the accounting period in
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GOOD FEET AMENDED FA (1412/6506) CHG01 ^e6&4534,vi-\2M7M2ii
which such refund or re-credit is made. No deduction shall be made for commissions or uncollectible accounts or for any costs incurred in connection with operation of the Store.
7.3 Advertising Fund. During the term of this Agreement, Good Feet may maintain and administer an Advertising Fund for Good Feet Stores and the Products. Good Feet may direct the Advertising Fund to be formed as, or operated through, a separate entity. This entity will have all of the rights of Good Feet under this Agreement. Franchisees of Good Feet will contribute 3% of all Gross Sales into the Advertising Fund (as specified by Good Feet) on a monthly basis, to be paid on the 15th of the month.
7.4 Service Charge on Late Payments. Franchisee agrees to pay Good Feet a late fee for each required payment not made on or before its original due date. This late fee will equal Fifty Dollars ($50). The late fee is not interest or a penalty but compensates Good Feet for increased administrative and management costs due to Franchisee's late payment. In addition, all amounts that Franchisee owes Good Feet or its affiliates for any reason, if more than seven (7) days late, will bear interest accruing as of their original due date at one and one-half percent (1.5%) per month or the highest commercial contract interest rate the law allows, whichever is less. This paragraph does not constitute an agreement by Good Feet or its affiliates to accept such payments after the same are due or a commitment by Good Feet to extend credit to or otherwise finance Franchisee's operation of the Store. Acceptance by Good Feet of any payment by Franchisee shall not constitute a waiver of any amounts remaining due to Good Feet.
7.5 Application of Payments. In spite of any designation by Franchisee, Good Feet will have the right to apply any payments by Franchisee to any past due indebtedness of Franchisee to Good Feet or its affiliates for Continuing Service Fees, Advertising Fund contributions, purchases of Products or any other indebtedness of Franchisee.
7.6 Non-Refundability. All payments to Good Feet and its affiliates will be fully earned on payment and are non-refundable.
7.7 Method of Payment. At Good Feet's request, Franchisee agrees to sign and deliver to Good Feet the documents it requires to authorize Good Feet to debit Franchisee's business checking account automatically for the Continuing Service Fee, Advertising Fund contributions, and other amounts due under this Agreement and for Franchisee's purchases of Products and other items from Good Feet and/or its affiliates (the "Electronic Account"). Good Feet will debit the Electronic Account for these amounts on their due dates. Franchisee agrees to ensure that funds are available in the Electronic Account to cover Good Feet's withdrawals and to report Gross Sales as Good Feet requires.
If Franchisee fails to report the Store's Gross Sales, Good Feet may debit the Electronic Account for one hundred twenty percent (120%) of the last Continuing Service Fee and Advertising Fund contribution that it debited (together with the late fee and interest noted in Section 7.4 above). If the amounts that Good Feet debits from the Electronic Account are less than the amounts Franchisee actually owes Good Feet (once Good Feet has determined the Store's actual Gross Sales), Good Feet will debit the Electronic Account for the balance on the day it specifies. If the amounts that Good Feet debits from the Electronic Account are greater than the amounts Franchisee actually owes, Good Feet will credit the excess against the amounts it otherwise would debit from the Electronic Account during the next debit period.
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GOOD FEET AMENDED FA (HU/05Q6)
Good Feet may require Franchisee to pay any amounts due to it or its affiliates under this Agreement or otherwise by means other than automatic debit (e.g., by check) whenever it deems appropriate, and Franchisee agrees to comply with Good Feet's payment instructions.
8. ADVERTISING AND PROMOTION
8.1 Programs. Good Feet has licensed from its affiliate, Dr.'s Own, Inc. ("Licensor"), certain television and radio commercials and infomercials relating to the Products (the "Programs"). Good Feet grants to Franchisee a license for the term of this Agreement to use the Programs provided to and purchased by Franchisee. In addition, Good Feet will, from time to time, offer licenses to Franchisee to use other Programs at Good Feet's then current charges therefor. Franchisee agrees that Licensor retains all ownership right, title and interest in the Programs, including, without limitation, all copyright ownership. Neither Franchisee nor any persons under its control or on its behalf shall produce or broadcast, by television or radio, any program that is substantially similar or identical to the Programs. The Programs may not be copied, edited, modified or altered in any manner whatsoever by Franchisee or any person under its control or on its behalf. Good Feet will arrange for all Programs, except loop tapes, to be delivered directly to the cable television, broadcast television and/or radio stations (the "Stations") selected by Franchisee. No loop tape is to be distributed to any other party and must be returned to Good Feet upon expiration or termination of this Agreement. If Franchisee desires to contract with an independent advertising agency, the agency must be approved by Good Feet to represent franchisees and must agree to sign covenants not to compete with Good Feet and/or its franchisees for the term of their representation of any Good Feet Store (as consultant/agent) and for 6 months following the termination of the relationship (for any reason by either party), nor may agencies represent, consult or become employees of any direct competitor during the term of the agreement and for 6 months following. The agency must have a clean business record with Better Business Bureau, credit agencies, and media outlets and shall not have any late or non-payment history with any media outlets. Good Feet reserves the right to investigate backgrounds and credit history of all agency principals prior to approval. Agencies will agree to use the creative materials provided and/or approved by Good Feet, and will not air or run unauthorized, unapproved advertising. Franchisees will pay stations directly, in advance, and pay agency commissions only. Franchisee may advertise only in the DMA in which the Territory is located.
A. Good Feet and Franchisee agree that all advertising programs, if any, that were being licensed to Franchisee by Licensor on the date of this Agreement will be considered "Programs" currently licensed to Franchisee by Good Feet pursuant to the terms of this Agreement.
B. Franchisee may create (or have created) for its Good Feet Store print, radio and TV advertising for the Products. Any advertising agency hired by Franchisee to create advertising must meet the criteria outlined above in this Section 8.1. All advertising created by Franchisee or its advertising agencies must be approved by Good Feet in advance (according to the procedures below) prior to use. All programs and advertising created by Franchisee or its advertising agencies will be deemed to be works made-for-hire for Good Feet and Good Feet's sole and exclusive property. Good Feet may allow all franchisees to use such programs and advertising. Franchisee will take all action (and/or will cause its advertising agency to take all action) necessary to confirm Good Feet's ownership of all copyrights in the programs and
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GOOD FEET AMENDED FA (1412/0506) CHG0130684534^130826230.I
advertising without any required payment by Good Feet. For example, Franchisee shall ensure that its contracts with advertising and other agencies state that Good Feet will, without any separate payment required, own all materials related to the Good Feet System prepared by such agencies and that such materials shall be deemed to be works made-for-hire for Good Feet. Franchisee also is not entitled to any compensation from Good Feet for such materials.
C. The following procedures will be used for advertising approval. Franchisee must send the proposed advertising to Good Feet's then current principal business address, c/o Media Approval Department, via UPS, Federal Express, or other means that produce a delivery receipt. Good Feet will review all programs and advertising and grant or deny approval or require changes to the advertising. Approval will not be unreasonably withheld. If Good Feet does not comment within 10 business days, the advertising will be deemed approved.
8.2 National Advertising, Telephone Numbers and Advertising Fund. During the term of this Agreement, Good Feet may develop and implement a media advertising program to promote the Products as well as all Good Feet Stores through the Advertising Fund. Franchisee acknowledges and agrees that the advertising which Good Feet will have produced and placed through the Advertising Fund will contain "800" numbers to an answering and referral service maintained by Good Feet. This service will refer customer calls to franchised Good Feet Stores and to Good Feet Stores owned by Good Feet and its affiliates according to Good Feet's then current policies.
A. During the term of this Agreement, Good Feet may maintain and administer an Advertising Fund for Good Feet Stores and the Products. Good Feet may cause the Advertising Fund to be formed as or operated through a separate entity, and this entity will have all of the rights of Good Feet under this Agreement.
B. Good Feet will direct all marketing and advertising programs financed by the Advertising Fund, and will have sole control over the creative concepts, materials and endorsements used and the geographic, market and media placement and allocation of the marketing and advertising. The Advertising Fund may be used to pay the costs of the media advertising program, maintenance of the advertising and referral service, and other costs of preparing and producing video, audio and written advertising materials; developing, maintaining, and implementing an electronic commerce website (including one or more Franchise System Websites) and/or related strategies; administering local, regional, multi-regional and national advertising programs, including, without limitation, purchasing direct mail and other media advertising; employing advertising, public relations and media buying agencies to assist in these activities; supporting public relations, market research and other advertising and marketing activities; and reimbursing Good Feet or its affiliates for expenditures Good Feet or its affiliates have made or may make for advertising and marketing to be used by the Advertising Fund. Franchisee acknowledges and agrees that all advertising, marketing and other programs and material financed by the Advertising Fund may include Dr.'s Own's suggested retail prices and references to Good Feet's offer and sale of franchises, although the Advertising Fund will not be used to fund any materials or programs that are solely for solicitation of prospective franchisees. Franchisee further agrees that advertising, marketing and programs, including the media advertising program, may be placed through Good Feet's affiliates, and that such affiliates will charge the Advertising Fund for their standard commissions (15%), fees and other charges. If Good Feet or its affiliates place advertising on behalf of the Advertising Fund, then Good Feet or
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GOOD FEET AMENDED FA (H12/05Q6)
the affiliate will use reasonable efforts to negotiate the best possible pricing for the advertising placement. If commissions for placement of similar amounts and placements of advertising are typically available at rates lower than 15%, then Good Feet and its affiliates will either use an advertising agency charging such lower commissions to handle placements or match the lower agency commissions. Final decision and selection of advertising agencies will be made solely by Good Feet. The Advertising Fund may elect to furnish Franchisee with marketing, advertising and promotional formats and sample materials without additional charge, or provide Franchisee with multiple copies of marketing, advertising and promotional materials at its direct cost of producing them, plus related shipping, handling and storage charges.
C. The Advertising Fund will be accounted for separately from Good Feet's other funds and will not be used to defray any of Good Feet's general operating expenses, except for costs, salaries, travel expenses, administrative costs and overhead Good Feet may incur in activities reasonably related to the administration of the Advertising Fund and its marketing programs (including, without limitation, conducting market research, preparing advertising and marketing materials, general production costs and accounting for contributions to and expenses of the Advertising Fund). Good Feet may spend in any fiscal year an amount greater or less than the total contribution to the Advertising Fund in that year, and Good Feet may cause the Advertising Fund to borrow from Good Feet or others (paying reasonable interest) or to invest any surplus for future use by the Advertising Fund. Franchisee authorizes Good Feet to collect for remission to the Advertising Fund any advertising or promotional monies or credits offered by any supplier based upon Franchisee's purchases. All interest earned on monies contributed to the Advertising Fund will be used to pay costs of the Advertising Fund before other assets of the Advertising Fund are expended. Good Feet will have an independent firm prepare an annual, unaudited statement of monies collected and costs incurred by the Advertising Fund and will furnish it to Franchisee upon written request. Good Feet may have the Advertising Fund audited annually, at the Advertising Fund's expense, by an independent certified public accountant.
D. Franchisee agrees that the Advertising Fund will be intended to maximize recognition of the Marks and the Products and patronage of all Good Feet Stores. Although Good Feet will endeavor to utilize the Advertising Fund to develop advertising and marketing materials and programs, and to place advertising, that will benefit all Good Feet Stores, Good Feet undertakes no obligation to ensure that expenditures by the Advertising Fund in or affecting any geographic areas will be proportionate or equivalent to the Advertising Fund contributions paid by franchisees operating in that geographic area or that any franchised Good Feet Store will benefit directly or in proportion to its payment of Advertising Fund contributions from Advertising Fund materials or the placement of advertising.
E. Good Feet has the right, but no obligation, to use collection agents and institute legal proceedings to collect Advertising Fund contributions at the Advertising Fund's expense. Good Feet also may forgive, waive, settle, and compromise all claims by or against the Advertising Fund. Except as expressly provided in this Section 8.2, Good Feet assumes no direct or indirect liability or obligation to Franchisee for collecting amounts due to, maintaining, directing, or administering the Advertising Fund.
F. Good Feet may at any time defer or reduce Advertising Fund contributions of a Good Feet Store and, upon thirty (30) days' prior written notice to Franchisee, reduce or suspend Advertising Fund contributions and operations for one or more periods of any length and
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GOOD FEET AMENDED FA {HU/GSQ0 CHGO1 ^0684531tW-\3.Q8?<j.9?-QJ_
terminate (and, if terminated, reinstate) the Advertising Fund. If Good Feet terminates the Advertising Fund, it will distribute all unspent monies to its.franchisees (and, if applicable, to itself and its affiliates) in proportion to their respective Advertising Fund contributions during the preceding twelve (12) month period.
8.3 Advertising Generally. Good Feet will provide Franchisee printed product brochures, displays, packaging, sales tools copyrighted or trademarked by Good Feet or its affiliates and other promotional material to Franchisee, some at no charge and some at a nominal cost. These may not be changed or altered in any way under any conditions. No other manuals, sales training aids, product literature or any other document not provided or approved by Good Feet may be used in connection with sales or sales training of the Products. When such materials are changed or updated, Franchisee shall ensure that the superseded materials are immediately retired and not used.
8.4 Franchisee's Advertising. Prior to any use by Franchisee, graphics and copy of all advertising, marketing or promotional materials or a description of all marketing plans not prepared, licensed or previously approved by Good Feet must be submitted to Good Feet for approval and Franchisee must maintain dated proof of submission. If Good Feet fails to grant such approval, in writing, within 10 business days of the submission, the submission will be deemed approved. Franchisee agrees to use proper trademark, copyright and other proprietary notices on all such materials. In addition, Franchisee shall not use the internet in any sales or marketing capacity whatsoever, including, but not limited to, websites, e-commerce sites, referrals or any other computer-aided sales or advertising tool, except pursuant to such programs as may be offered by Good Feet from time to time. Franchisee may use the Internet to communicate with its already-existing customers via e-mail (but may not send "spam" or other unsolicited commercial e-mail to persons that have not previously purchased Products from Franchisee). Franchisee shall not engage in mail order marketing except pursuant to such programs as may be offered by Good Feet, and provided Franchisee complies with all applicable laws, specifically including all applicable consumer protection laws. In no event may Franchisee engage in mail order marketing outside of Franchisee's Territory.
Franchisee acknowledges the value of initial and continuing uniform advertising and promotion to further the public image and recognition of Good Feet. Therefore, in addition to the Advertising Fund, Franchisee agrees to:
A. Expend not less than $10,000.00 for advertising and promotional items to be used prior to and during Franchisee's first four months of operation. These advertising and promotional items are to be designated "Grand Opening" advertising and promotion. Prior to all grand opening advertising and promotion, Franchisee must obtain approval of all advertising and promotion from Good Feet.
B. Franchisee agrees to expend a minimum of two percent (2%) of the Store's Gross Sales each month for advertising in Franchisee's DMA, and this advertising will be subject to the approval of Good Feet. This does not include Yellow Page advertising, which Franchisee is required to pay for separately.
C. Franchisee agrees to submit to Good Feet prior to use, for approval by Good Feet, all sales promotion materials and advertising to be used by Franchisee, including, but not limited
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to, newspaper, specialty and novelty items, signs, promotional items and products, posters, boxes, bags and wrapping paper.
D. Franchisee agrees not to advertise or use in advertising or any other form of promotion the Marks or copyrighted materials without the appropriate ® and © registration marks or the designation of ™ where applicable.
E. Franchisee agrees during the term of this Agreement to make available to Good Feet for use by other parties in the system all advertising, marketing, and other promotional materials that Franchisee develops. Good Feet requires all other Franchisees to share developed advertising, marketing, and other promotional concepts in the same manner. Good Feet shall own all such materials, as provided in Sections 5.14 and 8.1.B of this Agreement.
8.5 Area Advertising Cooperative. If the DMA in which the Store is located encompasses Good Feet Stores operated by at least two (2) franchisees (including Franchisee and its Stores(s)), Franchisee agrees at Good Feet's request, and with Good Feet's advice and assistance, to form a cooperative advertising association (an "Area Cooperative") with the other franchisees for the purpose of jointly advertising and promoting their Good Feet Stores located in the DMA. Each Area Cooperative will be organized and governed in a form and manner and pursuant to the agreements, bylaws, and other documents, and begin operating on a date, that Good Feet determines. The Area Cooperative's members in the DMA will include all of the Good Feet Stores operating in that area (unless one or more Good Feet Stores in the DMA are not obligated by their franchise agreements to participate in the Area Cooperative and they choose not to participate). If an Area Cooperative has been established as of this Agreement's effective date for the DMA in which Franchisee's Store is located, Franchisee's Store automatically will become a member of that Area Cooperative when Franchisee signs this Agreement (although the contributions below will not begin until the Store opens for business).
If an Area Cooperative is or has been established in the DMA, Franchisee agrees (a) to join, participate in, and actively support the Area Cooperative in compliance with its governing documents, and (b) to contribute two percent (2%) of the monthly Gross Sales of each of its Stores in the DMA to the Area Cooperative. This contribution is in place of Franchisee's required advertising expenditures under Subsection 8.4.B above (but in addition to its required Advertising Fund contribution under Section 7.3 above).
If the Area Cooperative's members cannot agree on any aspect of the Area Cooperative's formation, administration, or operation, and the disagreement continues for twenty (20) days after written notice to Good Feet that a disagreement exists, Good Feet has the authority to resolve the matter. Good Feet's decision will be final and binding on all members of the Area Cooperative.
Franchisee agrees to send Good Feet and the Area Cooperative any reports that Good Feet requires, including, but not limited to, information to confirm Franchisee's compliance with its minimum contribution obligations. The Area Cooperative will operate only for the purpose of advertising and promoting Good Feet Stores located in the DMA. The Area Cooperative and its members may not use any advertising or promotional plans or materials without Good Feet's prior written consent.
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GOOD FEET AMENDED FA (UJJ/G-5Q6) CHGO1 £Q684S34^B3flaZ693&.l
9. RELATIONSHIP OF PARTIES/INDEMNIFICATION
9.1 Relationship of the Parties. This Agreement does not create a fiduciary relationship between the parties. Franchisee is, and will be, an independent contractor. Nothing in this Agreement is intended to make either party a general or special agent, joint venturer, partner or employee of the other for any purpose.
FRANCHISEE WILL CONSPICUOUSLY IDENTIFY ITSELF AND THE STORE, AND IN ALL DEALINGS WITH CUSTOMERS, SUPPLIERS, PUBLIC OFFICIALS, AND OTHERS, AS AN INDEPENDENT FRANCHISEE OF GOOD FEET, AND WILL PLACE SUCH NOTICES OF INDEPENDENT OWNERSHIP ON ALL FORMS, BUSINESS CARDS, STATIONERY, ADVERTISING, SIGNS AND OTHER MATERIALS AND IN THE MANNER GOOD FEET SPECIFIES AND REQUIRES FROM TIME TO TIME.
9.2 No Liability for Acts of the Other. Except as otherwise expressly authorized by this Agreement, neither party hereto will make any express or implied agreements, warranties, guarantees or representations or incur any debt in the name or on behalf of the other party, or represent that the relationship between Good Feet and Franchisee is other than that of franchisor and franchisee. Good Feet does not assume any liability, and shall not be deemed liable, for any agreements, representations, or warranties made by Franchisee, nor will Good Feet be obligated for any damages to any person or property which directly or indirectly arise from or relate to the operation of the Store. Neither Franchisee nor any employee of Franchisee may, in any way, directly or indirectly, expressly or by implication, be construed to be an employee of Good Feet for any purpose. Good Feet will have no liability for any sales, use, occupation, excise, gross receipts, income, property or other taxes, whether levied upon Franchisee, the Store, or Franchisee's property, or upon Good Feet, in connection with sales made or business conducted by Franchisee or the Store or any payments to Good Feet. Franchisee must reimburse Good Feet for any taxes that Good Feet must pay to any state taxing authority on account of either Franchisee's operation or payments that Franchisee makes to Good Feet (but not including Good Feet's income taxes).
9.3 Indemnification. Franchisee agrees to indemnify, defend and hold Good Feet, Good Feet's affiliates and all of their respective owners, directors, officers, employees, agents, attorneys, consultants, independent contractors, designees, successors and assignees (the "Indemnified Parties") harmless from and against, and to reimburse the Indemnified Parties for, any Losses and Expenses which the Indemnified Parties may suffer, sustain or incur and which arise out of or relate to (a) any act or failure to act of Franchisee, any owner or employee of Franchisee or any person controlled by Franchisee or under contract with Franchisee; (b) the development or operation of the Store; (c) any breach of this Agreement or any agreement, document or instrument executed pursuant hereto or concurrently herewith; (d) any breach of any of Franchisee's representations or warranties; (e) any death or personal injury or property damage occurring at or related to the operation of the Store; or (f) any violation of any law, rule, regulation or ordinance by Franchisee, its owners or employees or the Store.
Franchisee must immediately undertake the defense of any legal action against or involving the Indemnified Parties, and will retain reputable, competent and experienced counsel to represent the interests of the Indemnified Parties. Franchisee will notify Good Feet of the identity of such counsel not less than 48 hours prior to retaining them and Good Feet will have
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GOOD FEET AMENDED FA (4412/0SQ6) CHGOl £Q6^a4^&QE26Smi
The original documents were scanned as an image. The original file can be downloaded at the link above.