Franchise Agreement
The original documents were scanned as an image. The original file can be downloaded at the link above.
Sample Franchise Agreement
HUNTINGTON LEARNING CENTERS, INC. FRANCHISE AGREEMENT
Pagel
This HUNTINGTON LEARNING CENTERS, INC. FRANCHISE AGREEMENT (the "Agreement") is made this
date,____________________________________________________________(the "Agreement Date") between
HUNTINGTON LEARNING CENTERS, INC. ("Franchisor" or "Huntington"), a corporation incorporated in
Delaware and you, the Franchisee,_________________a (in the following space, insert one of individual (sJ,
corporation, partnership, or limited liability company) . Except as otherwise provided in
this Agreement, the term (the "Term") of this Agreement begins on the Agreement Date and ends on
_______________________________(the "Expiration Date"). "You" and "Franchisee" as used in this Agreement
mean the individuals, corporation, partnership, or limited liability company referred to as the Franchisee in this paragraph of this Agreement.
Based upon the representations, warranties, and covenants in this Agreement and subject to this Agreement, you and the Franchisor agree as follows:
1. DEFINED TERMS
1.1. ACT. "ACT" refers to the ACT Assessment, a standardized college admissions test created by ACT, Inc. ACT is a registered trademark of ACT, Inc.
1.2. Acts. " Acts" shall mean any acts, omissions, or failures to act of you or of your employees or agents in connection with, or arising from, your Franchised Center; any acts, omissions, failures to act, transmission of information, or failures to transmit information to, for, or on behalf of, your customers, employees, agents, vendors, and others by you, your employees, or your agents in connection with, or arising from, your Franchised Center; any acts, omissions, or failures to act of you, your employees, or agents arising out of your possession, ownership, or operation of your Franchised Center or its furniture, fixtures, or equipment; and the sale or rendition of services, materials, goods, or products used or sold at, or from, your Franchised Center.
1.3. Advertising Fee. The "Advertising Fee" is the non-refundable fee you are required to pay monthly to the Franchisor as described in Paragraph 12.2 below.
1.4. ADA. The "ADA" shall mean the Americans with Disability Act, as amended.
1.5. Advertising Fund. The "Advertising Fund" is a fund created by the Franchisor to pay the expenses of promoting and enhancing the value, general public recognition, and acceptance of the Marks.
1.6. Affiliate. An "affiliate" shall mean an entity or person controlling, controlled by, or under common control with, another entity or person.
1.7. Agreement. The "Agreement" shall mean this franchise agreement between you and the Franchisor.
1.8. Agreement Date. The "Agreement Date" shall mean the date as set forth in the opening paragraph of this Agreement.
1.9. Approved Location. The "Approved Location" is the location from where you will operate the Franchised Center; is subject to the Franchisor's approval; and is set forth in Exhibit A to this Agreement.
1.10. Association. An "Association" is a group formed by the Franchisor composed of Huntington Learning Centers operated by you, other franchisees, the Franchisor, or the Franchisor's affiliates in a geographic area designated by the Franchisor.
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1.11. CITA. "CITA" is the Commission on International and Trans-Regional Accreditation, or its successor organization, if any, as determined by the Franchisor and as described in the Manual.
1.12. Continuing Royalty. The "Continuing Royalty" is a non-refundable fee you must pay to the Franchisor each month, as described in Paragraph 6.2 below.
1.13. Cooperative Advertising Fee. A "Cooperative Advertising Fee" is a non-refundable fee imposed by an Association, as described in Paragraph 12.3 below.
1.14. Cure Period. "Cure Period" shall mean the period of time, not less than 60 days, during which the Franchisor shall have the right to correct any default alleged by you under this Agreement as set forth in a written default notice provided to the Franchisor under the terms of Paragraph 24.2 below.
1.15. Discovery Conference Call. A "Discovery Conference Call" is a Franchisor-organized conversation among franchisees and prospective franchisees.
1.16. Exam Preparation Service. "Exam Preparation Service" is tutoring provided personally to customers attending a Huntington Learning Center to prepare them for standardized entrance examinations, including, without limitation, the SAT and ACT, or such other standardized examinations as may be determined by the Franchisor from time to time.
1.17. Exclusive Area. The "Exclusive Area" shall mean that geographic area, if any, about or around your Approved Location as determined by you and the Franchisor and that is set forth in Exliibit A to this Agreement. The Exclusive Area shall not include any geographic area in the territory of any other franchisee operating under a franchise agreement with the Franchisor in which a territory has been granted (unless otherwise permitted by the Franchisor in writing).
1.18. Expiration Date. The "Expiration Date" shall mean the date on which the Term of this Agreement ends, as set forth in the opening paragraph of this Agreement.
1.19. Franchised Center. The "Franchised Center" is the Huntington Learning Center you shall operate under this Agreement.
1.20. Franchisee. "Franchisee" shall mean you, the individual(s), corporation, partnership, or limited liability company referred to in the opening paragraph of this Agreement.
1.21. Franchisee Council. A "Franchisee Council" is an association or group of persons formed by the Franchisor pursuant to Paragraph 8.13 below.
1.22. Franchisee Member. "Franchisee Member" shall mean each owner of any interest, directly or indirectly, in any corporation, partnership, or limited liability company that is the Franchisee.
1.23. Franchisor. The "Franchisor" shall mean Huntington Learning Centers, Inc., as set forth in the opening paragraph of this Agreement.
1.24. Gross Revenue. "Gross Revenue" shall mean all received and accrued revenue, including cash, cash equivalents, and credit, derived directly or indirectly from all business conducted with the use of the Marks or System or upon, from, or with, your Franchised Center, whether evidenced by check, cash, credit, charge, exchange, or otherwise and whether for services or products provided or to be provided. Gross Revenue shall not be offset by any expense; however, Gross Revenue shall not include sales or similar tax
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that, by law, is chargeable to customers (if such taxes are separately stated and charged to the customer, paid by the customer, and paid to the appropriate taxing authority by you) or any documented refund given to customers by you in good faith.
1.25. Guarantor. "Guarantor" shall mean each person who signs the Guarantee Agreement attached as Exhibit B to this Agreement.
1.26. Huntington Advertising Fund, Inc. The "Huntington Advertising Fund, Inc." shall mean Huntington Advertising Fund, Inc., the entity that controls and determines the manner in which the monies in the Advertising Fund are expended.
1.27. Huntington Learning Center. A "Huntington Learning Center" is a business operated under the Marks and the System at a physical location attended by customers.
1.28. Huntington Services. "Huntington Services" are those services and products, described in the Manual or authorized in writing by the Franchisor from time to time, that are provided personally to customers attending a Huntington Learning Center, including, without limitation, Learning Center Services and Exam Preparation Services. Huntington Services do not include School Services, as defined herein.
1.29. Incapacity. "Incapacity" shall mean the death or physical or mental incapacity of any person with an interest in this Agreement, in you, or in all or substantially all of the assets of your business operated under this Agreement.
1.30. Initial Franchise Fee. The "Initial Franchise Fee" shall mean the non-refundable fee in the amount set forth in Paragraph 6.1 below.
1.31. Learning Center Service. "Learning Center Service" is individualized instruction in reading, phonics, study skills, mathematics, and related areas provided personally to customers attending a Huntington Learning Center.
1.32. Local Media. "Local Media" shall mean advertising media that claim circulation in an area (including, without limitation and by way of example, a town, county, an area located in a ZIP code, or other geographic area) in which the Premises are located, and shall include, without limitation and by way of example, direct mail, newspapers, magazines, and television, radio, and cable stations, as determined by the Franchisor from time to time. Any dispute about Local Media, including, without limitation, any dispute about definition or interpretation, shall be resolved by the Franchisor, in its sole discretion.
1.33. Major Upgrade. A "Major Upgrade" shall include structural changes, installation of new equipment, remodeling, and decoration of the Premises. Any dispute about Major Upgrades, including, without limitation, any dispute about definition or interpretation, shall be resolved by the Franchisor, in its sole discretion.
1.34. Manager. The "Manager" is the individual primarily responsible for the day-to-day management of your Franchised Center.
1.35. Manual. The "Manual" is the written description of the System, and of mandatory standards, specifications, policies, and procedures imposed by the Franchisor, and relating to, the Marks and System.
1.36. Marks. The "Marks" are certain trade names, service marks, trademarks, logos, emblems, trade dress, and indicia of origin, including, without limitation, the mark, "Huntington Learning Center", as are now
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designated or as may in the future be designated by the Franchisor in writing for use in connection with the System. The System is identified by the Marks.
1.37. Phone Number. The "Phone Number" is the telephone number, 1-800-226-5327, or such other telephone number(s) as the Franchisor may designate from time to time in the Manual or in writing.
1.38. Premises. "Premises" shall mean the interior and exterior physical location of your Franchised Center.
1.39. Primary Franchisee Member. The "Primary Franchisee Member" is a Franchisee Member with at least a 20% ownership interest in you, as described in Paragraph 8.6 below and identified in Exhibit I.
1.40. Renewal Agreement. The "Renewal Agreement" is the Franchisor's then-current franchise agreement and all additional agreements and exhibits then required by the Franchisor at the time you renew the rights under this Agreement, which will supersede this Agreement in all respects and the terms of which may differ substantially from the terms of this Agreement, as described more fully in Paragraph 3.1 below.
1.41. Renewal Franchise Fee. The "Renewal Franchise Fee" is the non-refundable fee in the amount set forth in Paragraph 3.1 below.
1.42. Renewal Notice. "Renewal Notice" shall mean your written notice informing the Franchisor of your decision to exercise your renewal option according to Paragraph 3.1 below.
1.43. Renewal Notice Deadline. "Renewal Notice Deadline" shall mean the date that is 180 days prior to the Expiration Date.
1.44. SAT. "SAT" refers to the SAT I, a standardized college admissions tests created by the College Board, Inc. SAT is a registered trademark of the College Board.
1.45. School Services. "School Services" are those educational services provided in connection with any local, state, or federal government program, including, without limitation, the federal No Child Left Behind Act of 2001, as amended, which services may be provided at a Huntington Learning Center or any other location by the Franchisor or any of its affiliates or by any franchisee of the Franchisor or of any of its affiliates.
1.46. Site Selection Area. The "Site Selection Area" is the geographic area or boundaries set forth in Exhibit A to this Agreement within which you shall obtain an Approved Location for your Franchised Center if, as of the Agreement Date, you have not already obtained an Approved Location.
1.47. Software. "Software" shall mean the software you must license from the Franchisor under the Franchisor's then-current, non-exclusive software license agreement.
1.48. System. The "System" is the learning center and exam preparation format and operating system designed to provide uniform, high quality instruction in a personal and professional manner on which the Franchisor has expended time, effort, and money to develop. The System consists of uniform standards and procedures for the marketing and operation of, and procedures, business practices, and management methods for, a Huntington Learning Center, which include use of the Marks and the offer and sale of Huntington Services; preparation of customer and school contacts lists; student testing and instructional materials; procedures for student administration; sales and marketing materials, curricula and instructional materials; computer software; procedures for staff recruitment and training; training for you and your full-time or part-time employees; standards and specifications for inventory, supplies, equipment, furniture, and
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fixtures for your Franchised Center; standards and specifications for the construction and decoration of your Franchised Center; promotional materials; marketing and advertising techniques and materials; design specifications; and accounting, business, and administrative systems (including, without limitation, accounting, bookkeeping, payroll, cash control, and finance procedures and systems); all of which may be changed, improved, and further developed by the Franchisor from time to time. The Franchisor has the right, in its sole and absolute discretion, to supplement, modify, and delete from, the System at any rime; and, upon written notice to you, you agree promptly to comply with all requirements of the Franchisor in that regard, including, without limitation, offering and selling new products and services as the Franchisor specifies.
1.49. Term. "Term" shall mean the term of this Agreement as set forth in the opening paragraph of this Agreement.
1.50. Transfer. "Transfer" shall mean the direct, indirect, or contingent sale, assignment, transfer, conveyance, gift, pledge, mortgage or other encumbrance (whether by or among any of your Franchisee Members or others and whether by agreement or by law) of any interest in the Franchisee, this Agreement, any asset of your Franchised Center, any share of stock in a corporate Franchisee, any membership interest in a limited liability company Franchisee, or any partnership interest in a partnership Franchisee.
1.51. Transfer Fee. A "Transfer Fee" is a fee payable to the Franchisor as described in Paragraph 14 below in the event of a Transfer.
1.52. Transferee. "Transferee" shall mean any person or entity to whom any Transfer is made under this Agreement.
1.53. Web Site. The "Web Site" shall mean a World Wide Web site the Franchisor has the right, but not the obligation, to establish and maintain, as described in Paragraph 12 below. Any dispute about the Web Site, including, without limitation, any dispute about definition or interpretation, shall be resolved by the Franchisor, in its sole discretion.
1.54. You. The term, "you", shall mean the Franchisee, the individuals), corporation, partnership, or limited liability company referred to in the opening paragraph of this Agreement.
2. GRANT
2.1. The Franchisor grants to you, and you accept, the limited right and obligation, subject to the terms of this Agreement and solely during the Term of this Agreement:
2.1.1. To establish and operate a Franchised Center at the Approved Location;
2.1.2. To use the System solely at your Franchised Center;
2.1.3. To use the Marks as described herein; and
2.1.4. To market Huntington Services in any geographic area, except (a) in the territory of any other franchisee operating under a Huntington franchise agreement in which a territory has been granted (unless otherwise permitted by the Franchisor in writing), or (b) as otherwise restricted herein.
2.2. The Franchisor will not establish or operate, or license any other party to establish or operate, a Huntington Learning Center within the Exclusive Area during the Term of this Agreement.
2.3. You acknowledge and agree that this Agreement does not grant you any right to provide School Services at any time or at any location.
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3. RENEWAL
3.1. Renewal. Subject to the conditions in this Paragraph 3.1, you will have the right to renew the rights under this Agreement for unlimited consecutive terms of 10 years each. Each of the following conditions shall be met prior to your renewal, each of which is a material condition to your right to renew described in this Paragraph 3.1:
3.1.1. No later than 180 days before the Expiration Date, but not more than 240 days before the Expiration Date, you shall give the Franchisor a Renewal Notice;
3.1.2. During the Term of this Agreement, you shall not have received four or more notices of a material default under this Agreement (whether cured or not) of any obligation in this Agreement, or any other agreement between you or any of your affiliates and the Franchisor or any of its affiliates. Without any farther notice to you, upon your receipt of a fourth notice of such default, you will have waived conclusively your right to renew this Agreement under this Paragraph 3.1;
3.1.3. During the Term of this Agreement, you shall have satisfied fully all monetary and all other obligations to the Franchisor and its affiliates within the time periods required by the Franchisor and its affiliates;
3.1.4. Before the Renewal Notice Deadline, you and your staff shall have completed any initial and ongoing training the Franchisor is requiring for its then-current franchisees, or you shall have made arrangements to comply fully with such requirements within a time period and in a manner satisfactory the Franchisor. You acknowledge you may have to make substantial expenditures for such training;
3.1.5. Before the Renewal Notice Deadline, you shall have upgraded your Franchised Center to comply fully with the Franchisor's then-current standards and specifications, including, without limitation, standards for insurance, location, location lease, signs, graphics, curriculum, furniture, fixtures, equipment (including, without limitation and by way of example, Internet, telecommunications equipment, computer equipment, audio and video equipment, and related software), computer and other software, and leasehold improvements, or you shall have made arrangements to comply fully with such standards and specifications within a time period and in a manner satisfactory to the Franchisor. The Franchisor does not represent it will review or cause others to review your lease or any proposed lease you provide to the Franchisor; however, if the Franchisor conducts any review of any lease or proposed lease you provide to the Franchisor, you agree to pay to the Franchisor or its designee all its attorneys' and accountants' fees and expenses related to any such lease review. You acknowledge you may have to make substantial expenditures for such upgrading;
3.1.6. Before the Expiration Date, you pay to the Franchisor or its designee anon-refundable Renewal Franchise Fee, plus all its attorneys' and accountants' fees and expenses related to the renewal that are incurred by the Franchisor. The Renewal Franchise Fee shall be:
3.1.6.1. $6,000 if Gross Revenue at the Franchised Center during the 12 complete months immediately preceding the Renewal Notice Deadline was greater than or equal to $600,000;
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3.1.6.2. $12,000, if Gross Revenue at the Franchised Center during the 12 complete months immediately preceding the Renewal Notice Deadline was greater than, or equal to $400,000, but less than $600,000; or
3.1.6.3. The greater of (a) $20,000 or (b) 50% of the Franchisor's then-current initial franchise fee, if Gross Revenue at the Franchised Center during the 12 complete months immediately preceding the Renewal Notice Deadline was less than $400,000, providing the Franchisor agrees, in its sole discretion and without obligation, to waive the minimum Gross Revenue requirement set forth in Paragraph 4.8 below;
3.1.7. Before the Expiration Date, you execute the Renewal Agreement, which shall supersede completely this Agreement and may contain terms, obligations, continuing royalty, advertising fee, and other fees and expenses that are significantly different from, in addition to, or less favorable to you than, those in this Agreement, including, without limitation, a smaller exclusive area as determined by the Franchisor. The Renewal Agreement shall not require payment of an initial franchise fee in addition to the Renewal Franchise Fee. If you renew as described in this Paragraph 3.1, the Franchisor shall execute the Renewal Agreement and, after the Expiration Date, shall deliver one fully executed copy to you;
3.1.8. Before the Renewal Notice Deadline, you shall supply the Franchisor with evidence satisfactory to it of your compliance with the Franchisor's then-current qualification requirements and all other requirements, including, without limitation, insurance, location lease, signs, graphics, curriculum, furniture, fixtures, equipment (including, without limitation and by way of example, Internet, telecommunications equipment, computer equipment, audio and video equipment, and related software), computer and other software, and leasehold improvements;
3.1.9. Before the Renewal Notice Deadline, you shall present evidence satisfactory.to the Franchisor that you have the right to remain in possession of the Premises of the Franchised Center for at least the first 36 complete months of the renewal term or shall obtain the Franchisor's approval of a new location for the Franchised Center for the duration of the renewal term;
3.1.10. You and each of your Franchisee Members and Guarantors shall execute the Franchisor's then-current general release of the Franchisor and the Franchisor's affiliates, and their respective present and past officers, directors, employees, and agents, when you give the Franchisor the Renewal Notice and when you execute the Renewal Agreement, to the extent not prohibited by applicable law. You agree the requirements of this Paragraph 3.1.9 to provide the Franchisor with a release when you give the Franchisor the Renewal Notice and when you execute the Renewal Agreement are material conditions to your renewal and your failure to comply with these requirements will terminate your right to renew this Agreement; and
3.1.11. Your Gross Revenue shall have equaled or exceeded $400,000 for the 12 complete months immediately preceding the Renewal Notice Deadline. In addition to, and without limiting, the foregoing, your Gross Revenue shall have equaled or exceeded $400,000 for each complete 12-month period following the fifth anniversary date of the Agreement Date; provided, however, if you are the transferee of a Huntington franchise agreement, the requirements of this Paragraph 3.1.11 shall apply following the first anniversary of the Agreement Date; and, if you are renewing a Huntington franchise agreement, the requirements of this Paragraph 3.1.11 shall apply as of the Agreement Date.
3.2. Option for Additional Franchised Center. If you renew as required in this Agreement and if your
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Renewal Agreement's exclusive area is smaller than the Exclusive Area granted in this Agreement, then, providing (a) your Gross Revenue shall have equaled or exceeded $400,000 for each 12-month period following the fifth anniversary date of the Agreement Date; and (b) during the Term of this Agreement, you did not receive four or more notices of a material default under this Agreement (whether cured or not) of any obligation in this Agreement, or any other agreement between you or any of your affiliates and the Franchisor or any of its affiliates, then the Franchisor shall grant you the limited, non-transferable right to obtain franchise rights, within a site selection area determined solely by the Franchisor, for one Huntington Learning Center in the geographic area comprised of the difference between the Renewal Agreement's exclusive area and the Exclusive Area granted in this Agreement, subject to the following conditions, each of which is a material condition to your execution of the right described in this Paragraph 3.1.11:
3.2.1. You and the Franchisor execute the Franchisor's then-current franchise agreement and all additional agreements and exhibits then required by the Franchisor for said Huntington Learning Center within 180 days of the Franchisor's execution of the Renewal Agreement; and you pay in full all fees in connection with such agreements. The franchise agreement for said Huntington Learning Center may contain terms, obligations, continuing royalty, advertising fee, and other fees significantly different from, in addition to, and less favorable to you than, those in this Agreement, including, without limitation, no exclusive area or a smaller exclusive area than granted in this Agreement as determined solely by the Franchisor. You and each of your Franchisee Members and Guarantors shall execute the Franchisor's then-current general release of the Franchisor and the Franchisor's affiliates, and their respective present and past officers, directors, employees, and agents, releasing any and all claims against the Franchisor and its affiliates, and their respective present and past officers, directors, shareholders, agents, and employees, to the extent not prohibited by applicable law.
3.2.2. Recognizing that time is of the essence, if you do not timely execute the Franchisor's then-current franchise agreement, general release (to the extent not prohibited by applicable law), and all additional agreements and exhibits then required by the Franchisor for such Huntington Learning Center within 180 days of the Franchisor's execution of the Renewal Agreement and pay in full all fees in connection with such agreements, the right granted to you under this Paragraph 3.1.11 shall terminate upon the end of the 180th day after the Franchisor's execution of the Renewal Agreement and the Franchisor and its affiliates have the right anytime thereafter to operate or franchise Huntington Learning Centers at any location outside the Renewal Agreement's exclusive area.
3.3. Non-renewal. If, for any reason, this Agreement expires or is terminated or you do not timely fulfill each and all of the conditions to renewal as described in this Paragraph 3, your renewal option shall terminate immediately as of the date of the expiration or termination of this Agreement. Upon such termination or expiration, you shall comply fully with all the terms and conditions of this Agreement that survive its termination or expiration, including, without limitation, Paragraph 16 below.
4. FRANCHISED CENTER
4.1. Approved Location. You must operate the Franchised Center only at the Approved Location set forth in
Exhibit A to this Agreement. If, at the time of execution of this Agreement, the Franchisor has not approved a location for the Franchised Center, you and the Franchisor shall agree on a geographic area or boundaries, set forth in Exhibit A, within which the Approved Location shall be located, as described in this Paragraph 4.
4.2. Location Lease. You must purchase, lease, or sublease the Premises for your Franchised Center. Within 10 days after you execute any lease or sublease for the Premises, you shall deliver a copy of such lease or
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sublease to the Franchisor, together with a fully-executed copy of the Franchisor's then-current form of landlord authorization. You shall be solely responsible for your lease or sublease and to perform all of your obligations under such lease or sublease and for any breach of it. You shall comply with all terms of such lease or sublease, and all other agreements affecting the operation of the Franchised Center; shall undertake best efforts to maintain a good and positive working relationship with your landlord or lessor or both; and shall refrain from any activity that may jeopardize your right to remain in possession of, or to renew the lease or sublease for, the Premises. You shall not terminate, renew, amend, modify, or assign such lease or sublease, or sublet the Premises, without first obtaining the Franchisor's written approval. In any lease of the Premises, you shall not obligate the Franchisor, grant any rights against the Franchisor, or agree to anything inconsistent with this Agreement. You shall give the Franchisor copies of all proposed modifications to any lease of your Premises, and, when executed, copies of such modifications. Within 10 days of your receipt of any written notice you receive from your landlord or lessor, including, for example, any notice of any violation of any lease, you shall deliver a copy of such notice to the Franchisor. The Franchisor does not represent it will review or cause others to review your lease or any proposed lease you provide to the Franchisor; however, if the Franchisor conducts any review of any lease or proposed lease you provide to the Franchisor, you agree to pay to the Franchisor or its designee all its attorney's and accountants' fees and expenses related to any such lease review.
4.3. Location Renovation, Construction, and Signs. Before commencing any renovation or construction of the Franchised Center, you, at your expense, shall employ a qualified architect or engineer to prepare preliminary and final architectural drawings and specifications of the Premises in accordance with the Franchisor's standard plans, the Manual, and drawings approved by the Franchisor. You acknowledge that such plans and approved drawings shall not contain the requirements of any federal, state or local law, code or regulation (including, without limitation, those concerning the ADA or similar rules governing public accommodations or commercial facilities for persons with disabilities). You shall not construct or decorate your Premises, or construct or affix any interior or exterior signage for the Premises, using any drawings not approved in writing by the Franchisor. You shall submit any and all drawings for construction, decoration, and signage to the Franchisor for its prior, written approval. The Franchisor has 30 days to approve your drawings in writing. If the Franchisor does not approve your drawings in writing within such 30 days, they are deemed disapproved. The drawings and specifications shall not thereafter be changed or modified without the prior written approval of the Franchisor. You shall be solely responsible, at your expense, to conform the Premises to local ordinances and building codes, the ADA, and to obtain all zoning classifications, permits, and clearances, including, without limitation, health, sanitation, building, utility, and sign permits, or certificates of occupancy, that may be required by federal, state, or local laws, ordinances, or regulations, or that may be necessary or advisable owing to any restrictive covenants relating to the Premises or required by the lessor. You agree to pay to the Franchisor or its designee all its out-of-pocket architectural fees and expenses related to any review of the architectural drawings and specifications of the Premises conducted by the Franchisor. The Franchisor does not warrant or represent that any design specifications for a Huntington Learning Center comply with any building, disability, ADA, zoning, or other requirement, rule, or regulation imposed by any law or governmental agency, and you agree to comply with all such laws and requirements. The Franchisor's approval shall not relate to your obligations with respect to any federal, state and local laws, codes and regulations including, without limitation, the applicable provisions of the ADA regarding the construction, design and operation of the Franchised Center, which shall be your sole responsibility.
4.4. Opening; Continuous Operation. Unless you are renewing a Franchise Agreement, you shall identify an Approved Location and open your Franchised Center within 180 days after the Agreement Date; provided, however, that you may request in writing a one-time extension of this 180-day period, to which the Franchisor will not unreasonably withhold its written consent. In connection with any such extension granted by the Franchisor, you and each of your Franchisee Members and Guarantors shall execute the
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Franchisor's then-current general release of the Franchisor and the Franchisor's affiliates, and then-respective present and past officers, directors, employees, and agents, releasing any and all claims against the Franchisor and its affiliates, and their respective present and past officers, directors, shareholders, agents, and employees, to the extent not prohibited by applicable law. The length of any such extension granted will be determined by the Franchisor, in its sole discretion, and shall in no event be greater than 90 days. You shall obtain the Franchisor's written approval before opening the Franchised Center. You agree that time is of the essence in the opening of the Franchised Center. You shall operate your Franchised Center from the Approved Location continually during the Term of this Agreement, except as described in Paragraph 4.7 below. Before opening the Franchised Center; after any renovation, as described in Paragraph 4.5 below; and after any relocation, as described in Paragraph 4.7 below, you shall execute and deliver to Huntington an ADA Certification in the form attached to this Agreement as Exhibit C, to certify to the Franchisor that the Franchised Center and any proposed renovations comply with the ADA.
4.5. Maintenance; Refurbishment.
4.5.1. You shall maintain in good condition and in excellent repair, continually during the Term of this Agreement, the Premises (including, without limitation, its fixtures and utilities), the furniture, fixtures, and equipment in and on the Premises (including, without limitation and by way of example, computers, computer and other software, telephones, video conference equipment, Internet, telecommunications and other communications equipment, furniture, and furnishings), and the signs in and at your Franchised Center. You shall adhere to all standards, specifications, and procedures at your Franchised Center for its signs, furnishings, furniture, fixtures, and equipment as described in the Manual, or as otherwise required by the Franchisor in writing from time to time.
4.5.2. The Franchisor has the sole and absolute right, at any time, to modify, add to, or delete from, the standards, specifications, policies, and procedures for signs, furnishings, furniture, fixtures, and equipment for the Franchised Center to conform to the building design, trade dress, color schemes, and presentation of the Marks in a manner consistent with the then-current image for Huntington Learning Centers. If the Franchisor modifies, adds to, or deletes from, these standards, specifications, and procedures, you shall promptly upgrade, refurbish, and improve the Premises, the signs in and at your Franchised Center, and the furniture, fixtures, and equipment in and about your Franchised Center as required by the Franchisor in writing, and discontinue the use of any unauthorized signs, furnishings, furniture, fixtures, or equipment.
4.5.3. During the Term of this Agreement, the Franchisor will not require you to make a Major Upgrade more than once every 3 years. If the Franchisor requires any Major Upgrade during the last 2 years of the Term of this Agreement, you will not be required to make such Major Upgrade, if you provide written notice, in the form and manner required by the Franchisor, to the Franchisor within 30 days of the Franchisor's notice of the required Major Upgrade that you conclusively and unconditionally waive your right to renew this Agreement.
4.5.4. Maintenance, refurbishment, modification, and upgrading of your Premises shall be at your sole cost and expense. You acknowledge that you may have to make substantial expenditures for this maintenance, refurbishment, modification, and upgrading.
4.6. Damage to your Franchised Center. If the Premises are damaged or destroyed or need repair or reconstruction, you shall promptly repair or reconstruct the Premises in compliance with the terms of Paragraph 4 hereof.
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4.7. Relocation. Any request by you to relocate the Franchised Center shall be in writing and shall be accompanied by payment to the Franchisor of the Franchisor's then-current, non-refundable relocation fee. You shall not relocate your Franchised Center without the prior written approval of the Franchisor, provided, however, the Franchisor has the absolute right to refuse to approve any relocation (a) for any reasonable business reason; (b) if you are in default of this Agreement; or (c) if you or any of your affiliates are in default of any agreement between you or any of your affiliates or the Franchisor or any of its affiliates. The Franchisor has the absolute right to refuse to approve any relocation of your Franchised Center outside the Exclusive Area. Upon relocation of your Franchised Center, the new, approved location shall be deemed to be your Approved Location, and shall be subject to all the terms and conditions of this Agreement. If your Franchised Center is not relocated to the new, approved location within 180 days after you receive the Franchisor's written approval, the Franchisor's approval shall be withdrawn automatically, without notice to you. The Franchisor does not represent it will review or cause others to review your lease or any proposed lease you provide to the Franchisor; however, if the Franchisor conducts any review of any lease or proposed lease you provide to the Franchisor, you agree to pay to the Franchisor or its designee all attorney's and accountants' fees and expenses related to any such lease review. You agree to pay to the Franchisor or its designee all its architectural fees and expenses related to any review of the architectural drawings and specifications of the Premises conducted by the Franchisor. You agree to pay to the Franchisor or its designee all its costs and expenses, including all attorneys' and accountants' fees and expenses, in connection with any request by you to relocate and in connection with any relocation of your Franchised Center. In connection with any relocation of your Franchised Center, you and each of your Franchisee Members and Guarantors shall execute the Franchisor's then-current general release of the Franchisor and the Franchisor's affiliates, and their respective present and past officers, directors, employees, and agents, releasing any and all claims against the Franchisor and its affiliates, and then-respective present and past officers, directors, shareholders, agents, and employees, to the extent not prohibited by applicable law, when you notify the Franchisor of your intent to relocate your Franchised Center and upon its relocation. You agree your compliance with each requirement in this Paragraph 4.7 is a material condition to the Franchisor granting you written approval to relocate your Franchised Center.
4.8. Gross Revenue Requirement. Your Gross Revenue shall equal or exceed $400,000 for each 12-month period following the fifth anniversary date of the Agreement Date; provided, however, if you are the transferee of a Huntington franchise agreement, the requirements of this Paragraph 4.8 shall apply following the first anniversary of the Agreement Date; and, if you are renewing a Huntington franchise agreement, the requirements of this Paragraph 4.8 shall apply as of the Agreement Date.
5. FRANCHISOR'S DUTIES
5.1. Manual. Before you open your Franchised Center, the Franchisor will either lend you one copy of the Manual or provide you with electronic access to the Manual (via Internet, extranet, or other electronic means) for your use during the Term of this Agreement. During the Term of this Agreement, the Franchisor will provide you with modifications, additions, and deletions to the Manual from time to time, as the Franchisor determines and in the manner determined by the Franchisor.
5.2. Design Specifications. Before you open your Franchised Center, the Franchisor will provide you with standard design specifications for a prototypical Huntington Learning Center for adaptation by you to your Premises.
5.3. Advice. During the Term of this Agreement, the Franchisor will provide you, in the Franchisor's sole and absolute discretion, with such advice about the operation of your Franchised Center and delivery of Huntington Services as the Franchisor determines and in the manner determined by the Franchisor.
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5.4. Training. Before you open your Franchised Center, the Franchisor will offer an initial training program to you and the individuals described in Paragraph 7 below.
5.5. Supplies, Suppliers. Before you open your Franchised Center, the Franchisor will provide you with a list of products and services required for use at the Franchised Center, including educational materials, and any required or suggested suppliers for the System. The Franchisor will offer to sell you certain materials required for operation of the Franchised Center that are owned by, or licensed to, the Franchisor on terms and prices determined by the Franchisor from time to time in the price list in the Manual.
5.6. Advertising and Marketing Materials. The Franchisor shall make available to you advertising and promotional materials for use by your Franchised Center, from time to time, as provided in Paragraph 12 below.
6. FEES
6.1. Franchise Fee. In consideration of the rights granted in this Agreement, you shall pay to the Franchisor or its designee when or before you execute this Agreement a non-refundable, Initial Franchise Fee of
_________________receipt of which is hereby acknowledged; provided, however, the Initial Franchise
Fee is waived, if you are renewing a Huntington franchise agreement and have paid the renewal franchise fee due under that agreement. The entire Initial Franchise Fee or renewal franchise fee is fully earned by the Franchisor upon execution of this Agreement for administrative and other expenses incurred by the Franchisor and for development opportunities lost or curtailed as a result of the rights granted to you.
6.2. Continuing Royalty. You shall pay monthly to the Franchisor a non-refundable, Continuing Royalty in an amount equal to 8% of your monthly Gross Revenue, which, beginning on the first day of the earlier of (a) the 9th full calendar month after the date you open your Franchised Center, as determined by the Franchisor, and (b) the 15th full calendar month after the Agreement Date, shall be a minimum of $1,200 per month. The Franchisor has the right, but not the obligation, to waive in writing this minimum for one month, if, in each of the prior 12 months you have paid the Franchisor Continuing Royalty in excess of this minimum amount. If you are renewing or are a transferee under an existing Huntington franchise agreement, you shall begin paying said minimum Continuing Royalty beginning on the Agreement Date. Each Continuing Royalty payment shall be made by separate electronic payment, or, solely with Franchisor written consent, by separate check, made payable to the Franchisor or its designee, and shall be accompanied by a monthly profit and loss statement, operations statement, and other monthly reports described in Paragraph 11 below, in the mariner and form required in the Manual or by the Franchisor in writing from time to time. Any electronic payment not actually received by the Franchisor on or before the 15th day of the month shall be deemed overdue. Continuing Royalty paid by non-electronic payment shall be paid to the Franchisor monthly by the 10th day of each month, calculated on the Gross Revenue for the preceding month. Any non-electronic payment not actually received by the Franchisor on or before the 15th day of the month shall be deemed overdue, if not postmarked by the 10th day of the month.
6.3. Interest; Late Fee. Any Continuing Royalty, Advertising Fee, or other payment due the Franchisor or any of its affiliates or Huntington Advertising Fund, Inc. under this Agreement that is not paid when due shall be subject to the then-current late fee and shall bear daily interest at the rate of 10% per annum, but no more than the highest rate permitted by applicable law. Entitlement to such late fee and interest shall be in addition to any other remedies the Franchisor may have under this Agreement or at law or in equity. This Paragraph 6.3 shall not bind the Franchisor to accept any payment after its due date.
6.4. Payment Terms. You shall pay promptly to the Franchisor or its designee when due and without prior demand or notice the Continuing Royalty due and payable to the Franchisor under this Agreement. You
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shall pay promptly to the Franchisor or its designee upon written notice to you all other amounts due to the Franchisor and its affiliates for products or services purchased by you from the Franchisor or its affiliates hereunder; and any monies advanced by the Franchisor or its affiliates to you, or which the Franchisor or its affiliates has paid, or become obligated to pay, on your behalf hereunder. You shall pay all amounts due the Franchisor and its affiliates at the Franchisor's principal business address as listed in Exhibit E to this Agreement, or at any other address the may Franchisor designate in writing from time to time. If you are delinquent in any payment to the Franchisor, the Franchisor has the right to apply any of your payments to any late fee, interest charge, or past due indebtedness. Neither you nor any of your affiliates shall have any right to withhold any payment of any Continuing Royalty, Advertising Fee, or any other monies due to the Franchisor or any of its affiliates on any grounds (including, without limitation, any claim or counterclaim by you under this Agreement or by you or any of your affiliates under any agreement between you or your affiliates and the Franchisor or any of its affiliates, or otherwise). Neither you nor any of your affiliates shall have any right to set-off any amount due to the Franchisor or any of its affiliates by you or any of your affiliates against any monetary claim by you or any of your affiliates against the Franchisor or its affiliates.
6.5. Electronic Payments. The Franchisor has the right to require, in the Manual or otherwise in writing, that you make Continuing Royalty payments and any other payments required under this Agreement directly to the Franchisor, its affiliates, or to a bank or such other financial institution account specified by the Franchisor, at the times and with the frequency designated by the Franchisor, by electronic funds transfer, on-line banking, pre-authorized auto-draft arrangement, or such other means as the Franchisor may specify from time to time, notwithstanding any other provisions of this Agreement, and you agree to comply with such requirement. You must furnish the Franchisor, the Franchisor's bank, or other financial institution, and any other recipient of payment with such information and authorizations as may be necessary to permit such persons to make withdrawals by electronic funds transfer, on-line banking, or auto-draft arrangement. You shall bear all expenses, if any, associated with such authorizations and payments.
6.6. Third Party Fees. You agree to reimburse the Franchisor for any fees imposed on the Franchisor or its affiliates by any third party to process any payment you make to the Franchisor or its affiliates under this Agreement. Such third party fees include, without limitation, any fees imposed by a bank or credit card company to process any credit card payment you make to the Franchisor or its affiliates.
7. TRAINING
7.1. Initial Training Requirements. Within 180 days of the Agreement Date and before you open your Franchised Center, you (or, if you are a corporation, partnership, or limited liability company, a person who has at least a 20% ownership interest in you) and your Manager (if any) must complete the Franchisor's initial training program to the Franchisor's satisfaction. All full-time staff members (including, without limitation, your Manager) employed by you shall attend and complete the Franchisor's initial training program to the Franchisor's satisfaction within 90 days of the date of their hire by you, unless otherwise permitted by the Franchisor in writing. The length of any such extension shall in no event be greater than 30 days.
7.2. Ongoing Training Requirements. The Franchisor has the right, in its sole and absolute discretion:
7.2.1. To require that you (or, if you are a corporation, partnership, or limited liability company, a person who has at least a 20% ownership interest in you) attend any additional initial or subsequent training program;
7.2.2. To require you and any of your full-time or part-time staff attend any continuing training,
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meetings, workshops, and the Franchisor's franchise convention from time to time;
7.2.3. To determine the curricula, standards, location, direction, manner of instruction (including, without limitation, video-conference and Internet training), class size, and all other aspects of all training, meetings, workshops, and conventions conducted by the Franchisor; and
7.2.4. To require you to pay to the Franchisor or its designee the then-current training fee for each trainee attending any portion of any training required by the Franchisor, including, without limitation, the initial training program described in Paragraph 7. The Franchisor has the right, but not the obligation, to exempt any Franchisee Member from this requirement.
7.3. Training Expenses. You shall be solely responsible to pay all costs and expenses related to your and your Manager's and staffs training, including, without limitation, your and their salaries and expenses for travel, food, and lodging.
7.4. Franchisee's Training Programs. You shall train your full-time and part-time employees at the Franchised Center in such manner as the Franchisor requires, or as it permits, from time to time, as described in this Paragraph 7 or in the Manual or in writing from time to time. You shall not use any training program not approved in writing by the Franchisor. If you use any training program developed by the Franchisor, you shall use it solely in the manner directed by the Franchisor. If you wish to use any training program not developed by the Franchisor, you shall submit it to the Franchisor, together with such information related to it as the Franchisor requests for its written approval. The Franchisor has 30 days to approve such training program in writing. If Ihe Franchisor does not approve such training program in writing within such 30 days, it is deemed disapproved.
8. FRANCHISEE'S DUTIES
8.1. Manner of Operation. At all times during the Term of this Agreement, you shall operate your Franchised Center solely for the business franchised hereunder; you shall keep it open and in operation for such minimum hours and days as the Franchisor shall specify in the Manual or in writing from time to time; you shall operate your Franchised Center in strict compliance with the standards, specifications, procedures, and policies described in this Agreement, in the Manual, and required by the Franchisor in writing from time to time; you shall refrain from deviating from such standards, specifications, procedures, and policies without the Franchisor's prior, written consent; and you shall not use your Franchised Center or the Premises for any purpose or activity other than that of a Huntington Learning Center. You shall provide all services to your customers at your Franchised Center and at no other location. You shall not transport, or provide or arrange for transportation of, any customer to or from the Franchised Center.
8.2. Services and Products for Customers. You understand and acknowledge that every detail of the Franchised Center is important to you, the Franchisor, and other franchisees of the Franchisor in order to develop and maintain high operating standards, to increase the demand for Huntington Services, and to protect the Franchisor's reputation and goodwill. You agree to comply fully with all the terms of this paragraph 8.2 at your sole expense. You agree:
8.2.1. To offer and provide all Huntington Services specified by the Franchisor in the Manual or
otherwise in writing from time to time, and no other services or products, and to refrain from using or permitting the use of the Premises for any other business purpose or activity at any time; to discontinue offering and selling any services or products that the Franchisor, in its sole and absolute discretion, may disapprove at any time; to adhere to all standards, specifications, policies, and procedures related to Huntington Services as required in this Agreement, the
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Manual, and by the Franchisor in writing from time to time; and to refrain from offering for sale or selling any Huntington Services in any manner other than at the Premises, including, without limitation and by way of example, through any computer service, the Internet, or any computer, television, or other electronic device;
8.2.2. To comply with all reasonable restrictions on maximum prices of specific goods or services to be offered or sold hereunder by you as required in the Manual, in any advertising programs for the System described in Paragraph 12 below, or as otherwise reasonably specified in writing from time to time by the Franchisor;
8.2.3. To meet the Franchisor's then-current standards and specifications for such services and products to be used at your Franchised Center as the Franchisor specifies in the Manual or otherwise in writing from time to time; to purchase all products and supplies from suppliers for such services and products as the Franchisor specifies in the Manual or otherwise in writing from time to time that comply with the standards and specifications in the Manual or otherwise specified in writing by the Franchisor; and
8.2.4. To purchase, install, and use all furniture, fixtures, furnishings, equipment, decor, supplies, and signage as the Franchisor may direct from time to time in the Manual or otherwise in writing and in accordance with the Franchisor's standards and specifications; and to refrain from installing or permitting to be installed on or about the Premises, or from using, without the Franchisor's prior written consent, any furniture, fixtures, furnishings, equipment, signage, or other items not previously approved in writing as meeting the Franchisor's standards and specifications.
!.3. Educational Materials. You acknowledge and agree that certain products, including, without limitation, certain educational materials, are essential to the Huntington Services offered at the Franchised Center and in some cases may be proprietary to the Franchisor or its affiliates. You shall purchase such products from such suppliers (which may include the Franchisor or its affiliates) for use or sale at your Franchised Center.
:.4. Software; Phone Number. You shall license the Software from the Franchisor by executing the
Franchisor's then-current, non-exclusive software license agreement simultaneously with your execution of this Agreement. You shall license from the Franchisor the Phone Number by executing the Franchisor's then-current, non-exclusive phone number license agreement simultaneously with your execution of this Agreement.
.5. Products and Services Requested by You. If you want the Franchisor to approve your use of any product or service not in the Manual, then, at your expense, you shall submit to the Franchisor such product or service and such information and samples related thereto as requested by the Franchisor. The Franchisor will review such information and samples in accordance with its standards and specifications. The Franchisor shall notify you of its receipt of this information and samples and of its approval or disapproval of the submitted product or service. You shall not use any product or service not approved by the Franchisor in writing.
.6. Franchised Center Supervision.
8.6.1. You shall use your best and continuing efforts to promote and develop Huntington Services at your Franchised Center. You {or if you are a corporation, partnership, or limited liability company, a person who has at least 20% ownership interest in you) shall devote your full time and best efforts to the operation and management of your Franchised Center.
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8.6.2. You (or if you are a corporation, partnership, or limited liability company, a person who has at least 20% ownership interest in you) or your Manager shall exercise full-time, on-premises supervision of your Franchised Center during all hours it is open or operating. However, if you have not operated or managed a Huntington Learning Center prior to executing this Agreement, then you may only appoint a Manager to exercise full-time, on-premises supervision of your Franchised Center (during all hours it is open or operating) after the Franchised Center has been open and operating for a minimum of 12 complete months.
8.6.3. If you are a corporation, partnership, or limited liability company, you shall designate, in writing, a Primary Franchisee Member using the attached Exhibit I. The Primary Franchisee Member is the person whom the Franchisor may contact at any time with regard to this Agreement and the Franchised Business. The Franchisor is not obligated to discuss this Agreement or the Franchised Business with any Franchisee Member other than the Primary Franchisee Member. The Primary Franchisee Member shall have at least a 20% ownership interest in you. You may not change the Primary Franchisee Member without the Franchisor's permission, which shall not be unreasonably withheld.
8.7. Customer Relations; Staffing. You shall maintain a competent, conscientious, trained staff at the Franchised Center. You shall, and you shall take such steps as are necessary to ensure that your employees, treat all customers fairly and provide Huntington Services in an honest, ethical, and non-discriminatory manner; not withhold any material information from your customers or attempt to sell any product or service to them that you believe, in your good faith estimation, is not needed; not advertise in a deceptive, misleading, or unethical manner; make solely those promises, representations, and guarantees to customers and others at your Franchised Center authorized in the Manual or in writing by the Franchisor from time to time; preserve good customer relations; render competent, prompt, courteous, and knowledgeable service; and meet such miniinum standards as the Franchisor may establish in the Manual or in writing from time to time. You and your employees shall handle all customer complaints, refunds, returns, and other adjustments in a manner that will not detract from the name and goodwill of the Franchisor. You shall pay to any customer any refund properly due and owing to that customer within 30 days of demand by that customer, or within such other time period as the Franchisor may require in the Manual or from time to time in writing. You shall be solely responsible for all employment decisions and functions of the Franchised Center including, without limitation, those related to hiring, firing, training, wage and hour requirements, record-keeping, supervision, and discipline of employees and you shall inform your employees as to such requirement. No Franchisor advice and no training program conducted, supplied, or recommended by the Franchisor shall reduce in any way your sole responsibility for your employment and management of your staff.
8.8. Confidentiality of Student Financial Information. You acknowledge and agree you are solely responsible to maintain the confidentiality of all student and parent and guardian data and their identities and financial information, including, without limitation, any information you obtain by virtue of completing loan applications or other financial documents on behalf of students or parents. You agree to take all steps necessary to protect such information.
8.9. Accreditation. To the extent permitted by CITA, you shall apply to the Franchisor to be accredited by CITA and, if you are accredited by CITA, you shall comply with the Franchisor's and CITA's requirements to maintain such accreditation in full force and effect continually during the Term of this Agreement and as described in the Manual and in writing from time to time. The Franchisor has the right to modify, add to, or delete from, such requirements from time to time in writing. You shall pay to CITA, or, at CITA's direction, to CITA's designee or to the Franchisor, all accreditation fees and expenses and all ongoing fees, and reimburse the Franchisor and CITA for all their out-of-pocket expenses incurred in
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connection with your accreditation.
8.10. Inspection. You shall permit the Franchisor and its agents and designees to enter upon the Premises at any time for the purpose of conducting inspections; shall cooperate fully with the Franchisor and its agents and designees in such inspections by rendering such assistance as they may request; and, upon notice from the Franchisor or its agents or designees, and without limiting the Franchisor's other rights under this Agreement, shall take such steps as may be necessary to correct immediately any deficiencies detected during any such inspection. Should you, for any reason, fail to correct such deficiencies within a time as determined by the Franchisor, the Franchisor shall have the right, but not the obligation, to correct any deficiencies that may be susceptible of correction by the Franchisor and you agree to pay to the Franchisor or its designee all its related costs and expenses, including its attorneys' and accountants' fees and expenses, immediately upon Franchisor demand. The foregoing shall be in addition to such other remedies the Franchisor may have under this Agreement or at law or in equity.
8.11. Marks. You shall ensure that all advertising and promotional materials, signs, decorations, and other items specified by the Franchisor bear the Marks in the form, color, location, and manner prescribed by the Franchisor and in no other way.
8.12. Change, Amendment, Improvement, or Deletion. You shall not implement any change, amendment, or improvement to the System, or deletion from the System, without the express prior written consent of the Franchisor. You shall notify the Franchisor in writing of any change, amendment, or improvement to the System, or any deletion from the System, you propose to make, and you shall promptly provide to the Franchisor at your sole expense such proposed change, amendment, improvement, or deletion, and such information as the Franchisor requests regarding the proposed change, amendment, improvement, or deletion. You acknowledge and agree that the Franchisor shall have no obligation to implement any change, amendment, or improvement to the System, or deletion from the System, proposed by you; and has the right to incorporate any such proposed change, amendment, or improvement to the System, or deletion from the System, and shall thereupon obtain all right, title, and interest therein without any compensation to you.
8.13. Franchisee Councils. You acknowledge and agree that the Franchisor shall have the right, but not the obligation, to establish one or more Franchisee Councils. If established, you acknowledge and agree that, if you have agreed to participate in a Franchisee Council, you shall use your best efforts to participate actively in each such Franchisee Council as the Franchisor designates and participate in all Franchisee Council programs approved by the Franchisor; the Franchisor reserves the right to prepare and amend the bylaws of any Franchisee Council from time to time, and may merge, change, or discontinue any Franchisee Council, in its sole and absolute discretion, at any time; members of any Franchisee Council shall be determined by the Franchisor; each Franchisee Council shall serve only in an advisory capacity.
9. MARKS
9.1. Use. With respect to your use of the Marks, you agree that:
9.1.1. The Franchisor has the sole and absolute right to approve any use of the Marks and any object using or exhibiting the Marks, including, without limitation and by way of example, all signs, decorations, stationery, business cards, brochures, forms, and web sites; and in every medium, including, without limitation, print, audio, video, electronic, and Internet;
9.1.2. You shall not do or permit any act or thing to be done in derogation of the Marks or of any Franchisor rights to the Marks;
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9.1.3. You shall not use the Marks in any business other than in connection with your Franchised Center; and you shall use the Marks only for the operation of the Franchised Center and only from the Approved Location, or in advertising or marketing for the Franchised Center;
9.1.4. You shall not use the Marks to incur any obligation or indebtedness for the Franchisor;
9.1.5. You shall not, directly or indirectly;, at any time cause or permit any act impairing or tending to impair the Franchisor's right, title, or interest in the Marks;
9.1.6. You shall use only the Marks designated by the Franchisor, and shall use them only in the manner authorized and permitted by the Franchisor;
9.1.7. You shall not use the Marks in connection with the Internet or with anything related to the Internet, including reservation or use of domain names, as part of an electronic mail address or any other form of identification in an electronic medium, without the Franchisor's prior written approval;
9.1.8. In connection with your Franchised Center, you shall not use the name "Huntington" alone, or any trademark, service mark, logotype, symbol, or other mark that is not part of the Marks or that is confusingly similar to the Marks, and you shall not use the Marks or any trademark, service mark, logotype, symbol, or other mark that the Franchisor determines, in its sole and absolute discretion, may be confusingly similar to any of the Marks in connection with any other business in which you have an interest, or in connection with the sale of any unauthorized product or service from your Franchised Center;
9.1.9. In the adoption of a corporate, partnership, or limited liability company name, you shall not use any of the Marks, any variations or abbreviations of the Marks, or any words or symbols deemed by the Franchisor to be confusingly similar to the Marks, including, without limitation, the words, "Huntington", "Learning", "Center", "Exam", "NCLB", "Prep,", "Provider", "School", "Service", "Supplemental", or "Tutor", or any combination of these words with or without prefix or suffix, whether in English or any other language;
9.1.10. Unless otherwise authorized or required by the Franchisor in writing, you shall operate and advertise the Franchised Center only under the name "Huntington Learning Center," and shall use all Marks without prefix or suffix;
9.1.11. You shall identify yourself as the operator of the Franchised Center (in the manner required by the Franchisor from time to time) in conjunction with any use of the Marks, including, without limitation, on invoices, order forms, receipts, and business stationery, as well as at such conspicuous locations at the Premises as the Franchisor may designate in writing from time to time;
9.1.12. Your right to use the Marks is limited to such uses as are authorized under this Agreement, and any unauthorized use thereof shall constitute an infringement of rights of the Franchisor; and
9.1.13. You shall execute any documents deemed necessary by the Franchisor, at your sole cost and expense, to obtain protection for the Marks or to maintain their continued validity and enforceability.
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9.2. Acknowledgments. You expressly understand and acknowledge that:
9.2.1. All ownership, right, title, and interest to the Marks is vested solely in the Franchisor or its affiliates, and the Franchisor has the right to use, and license others to use, the Marks;
9.2.2. All goodwill created by your use of the Marks shall inure exclusively to the Franchisor;
9.2.3. You disclaim any right, title, and interest in the Marks and any goodwill derived from them;
9.2.4. You shall not assert any claim to any goodwill, reputation, or ownership of the Marks by virtue of your licensed or franchised use of them or otherwise;
9.2.5. You have no right to restrict the Franchisor, any Franchisor affiliate, or any other Huntington franchisee from using the Marks in any way not prohibited by this Agreement; and you shall not contest, directly or indirectly, the validity of, or the Franchisor's or its affiliates1 ownership of, or right to use and to license others to use, the Marks;
9.2.6. You shall not in any way dispute or impugn the validity of the Marks;
9.2.7. You irrevocably waive any right for compensation by the Franchisor and by any Franchisor affiliate that you may have for any goodwill created by your use of the Marks;
9.2.8. The Marks are valid and serve to identify the System and those who are authorized to operate under the System;
9.2.9. Immediately upon expiration or termination of this Agreement for any reason, you shall not use the Marks, or dispute or impugn the rights of the Franchisor, the Franchisor's affiliates, its franchisees, licensees, or other authorized users, to use the Marks for any purpose; and
9.2.10. The Franchisor reserves the right to modify, amend, or discontinue the Marks hereunder, and to substitute different Marks, for use in identifying the System and the franchised Huntington Learning Centers operating thereunder. You agree to comply immediately with such modification, amendment, discontinuance, or substitution, when notified by the Franchisor to do so, at your sole cost and expense, and the Franchisor shall have no liability or obligation whatsoever to you with respect thereto.
9.3. Infringement. You shall promptly notify the Franchisor of: any suspected infringements, imitations, or suspected unauthorized use of the Marks, or any challenges to the validity, the Franchisor's ownership of, right to use and license others to use, or to your use of, the Marks. You acknowledge the Franchisor has the sole right to institute, defend, direct, and control any judicial, arbitration, and administrative proceedings and actions involving the Marks, including any settlement. The Franchisor has the right, but not the obligation, to take action against uses by others that may constitute infringement of the Marks. The Franchisor has the right, but not the obligation, to defend you against any third-party claim, suit, or demand arising out of your use of the Marks; and, if the Franchisor provides such a defense, then the cost of the defense, including the cost of any judgment or settlement, shall be borne by you. If the Franchisor undertakes the defense or prosecution of any judicial, arbitration, or administrative proceedings or actions affecting the Marks, you shall cooperate with the Franchisor in these proceedings or actions and you agree to execute at your sole expense all documents and to do those acts and things as may, in the opinion of the Franchisor's counsel, be necessary to comply with this Paragraph 9, including being named as a nominal party in these proceedings or actions. The Franchisor will not indemnify you for any damages or expenses
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incurred by you, due to any judicial, arbitration, or administrative proceedings or actions involving the Marks. The Franchisor shall not be liable for any loss, expense, or damage incurred by you because of your use of the Marks, except as described in this Paragraph 9.3. You irrevocably appoint the Franchisor or the Franchisor's nominee to be your attorney-in-fact coupled with an interest, with power of substitution, to execute and to file for you any relevant document and to perform any legal act necessary to defend, compromise, and settle in any judicial, arbitration, or administrative proceedings or actions affecting the Marks. The Franchisor has the right to file an original counterpart or a copy of this Agreement with any court, arbitrator, or agency as written evidence of the appointment by you of the Franchisor or the Franchisor's nominee to be your attomey-in fact with regard to this matter. Solely with the Franchisor's written consent, you may participate at your own expense in any judicial, arbitration, or administrative proceedings or actions affecting the Marks.
10. MANUAL AND CONFIDENTIAL INFORMATION
10.1. The Manual. The subject matter of the Manual includes the description of the System's uniform standards, specifications, policies, and procedures for marketing techniques, operational procedures, business practices, and management methods described in this Agreement. The purpose of the Manual is to protect the reputation and goodwill of the Franchisor and to maintain uniform standards of operation under the Marks and System.
10.1.1. The Franchisor has the sole and absolute right to modify, add to, and delete from, the Manual for any business purpose at any time. When notified in writing by the Franchisor, you shall promptly update your copy of the Manual with any modifications of, additions to, and deletions from, it. If you do not receive a paper copy of the Manual, but instead are provided electronic access to the Manual, all modifications of, additions to, and deletions from the Manual will be made by the Franchisor. Any written notice that the Franchisor delivers to you containing any such modification of, addition to, and deletion from the Manual shall bind you upon your receipt of such notice. You shall be solely responsible to insure that the Franchised Center is operated in compliance with the most current and up-to-date version copy of the Manual.
10.1.2. The electronic copy (or, if unavailable, paper copy) of the Manual maintained by the Franchisor at its home office is, and shall be, controlling in the event of any dispute as to the Manual's contents. You shall use the Manual solely for the operation of your Franchised Center.
10.1.3. The Manual contains confidential business information and trade secrets that belong to the Franchisor. The Franchisor owns the Manual and all rights, including proprietary rights, in, and to, the Manual and its information. Any copies and summaries of the Manual are, and shall at all times remain, the property solely of the Franchisor. You shall at all times treat the Manual and its information as confidential. You shall use all reasonable efforts to maintain the information in the Manual as secret and confidential.
10.1.4. The Franchisor has the right to maintain all or any portions of the Manual in written or electronic form, including, without limitation, on one or more web sites. If the Franchisor maintains the Manual in electronic form or on one or more web sites, you agree (a) to install, maintain, and upgrade continually throughout the: Term of this Agreement and as required by the Franchisor in the Manual and in writing from time to time, at your sole expense, the highest-speed Internet connection available to provide access to such portions of the Manual; (b) to make one copy of such portions of the Manual and to maintain such copies and their contents as secret and confidential; and (c) you and none of your Franchisee Members or staff shall make any electronic copy of any portion of the Manual.
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10.2. Confidential Information.
10.2.1. You shall not, during the Term of this Agreement or thereafter, communicate, divulge, or use for the benefit of any other person, partnership, association, limited liability company, corporation, or other entity, any confidential information, knowledge, or know-how concerning the methods of operation of the Franchised Center (including, without limitation, the Manual) that may be communicated to you or any of your employees of which you or your employees may be apprised by virtue of your operation under this Agreement. You shall divulge such confidential information only to such of your employees as must have access to it in order to operate the Franchised Center. All information, knowledge, know-how, techniques, and other data that the Franchisor designates as confidential shall be deemed confidential for purposes of this Agreement.
10.2.2. If you become aware of any unauthorized disclosure or use of the Manual or any confidential information or trade secret of the Franchisor, you shall immediately notify the Franchisor in writing, and the Franchisor shall have the sole and absolute right to take any actions it deems appropriate.
10.2.3. You shall require your spouse, the Franchisee Members, the spouses of the Franchisee Members, your Manager, the spouses of Guarantors, and any of your employees having access to any of the Franchisor's confidential information to execute the Confidentiality and Non-competition Agreement described in Paragraph 17 below.
11. ACCOUNTING AND RECORDS
11.1. Records. You shall record all sales from your Franchised Center in the manner required by the Franchisor, which may be on a computer- or Intemet-based, record-keeping and control system designated by the Franchisor, or on other equipment specified by the Franchisor in the Manual or otherwise in writing from time to time. During the Term of this Agreement, you shall maintain records of your Franchised Center, including, without limitation, those records required in the Manual, and retain them for a minimum of 3 years after the end of each calendar year or for such longer period of time as required by law.
11.2. Reports.
11.2.1. You shall submit to the Franchisor in the manner required by the Franchisor such reports
required by the Franchisor in the Manual or otherwise in writing from time to time, including the following reports:
Such monthly reports as to Gross Revenue, advertising, marketing, operations, student activity, parent contact, school contact, and finance, and such other reports, as required by the Franchisor in the Manual or in writing from time to time;
A monthly profit and loss statement, balance sheet, and cash flow statement of the Franchised Center for the preceding month;
Within 60 days after the end of each calendar year, a profit and loss statement and cash flow statement for the preceding calendar year for you, and a balance sheet as of the end of each such calendar year; and
11.2.1.1.
11.2.1.2.
11.2.1.3.
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The original documents were scanned as an image. The original file can be downloaded at the link above.