The original documents were scanned as an image. The original file can be downloaded at the link above.
Sample Franchise Agreement
PLANET BEACH FRANCHISING CORPORATION SINGLE UNIT FRANCHISE AGREEMENT
THIS FRANCHISE AGREEMENT (the "Agreement") is made as of the Effective Date set forth on the Data; Sheet of this Agreement between Planet Beach Franchising Corporation, a Louisiana corporation with:an address at 5161 Taravella Road, Marrero, Louisiana 70072 ("Planet Beach"), and the Franchisee identified in the Data Sheet ("you"). The information contained in the Data Sheet is incorporated into this Agreement. '■
A. Through the expenditure of money, time and effort, Planet Beach has developed a distinct and I proprietary method business format for the operation of tanning spas (the "System"), the distinguishing l characteristics of which include proprietary operating procedures and standards and specifications for
products and services, as amended from time to time in Planet Beach's sole discretion.
B. ! The System is identified by proprietary trademarks, service marks, trade dress, logos and other indicia of origin including, without limitation, the trade name and service mark "Planet Beach Tanning Spa" (the "Proprietary Marks").
C. | Planet Beach offers franchises to qualified individuals for the right toi use the System and Proprietary Marks at a single approved location (the "Spa"). \
D. You have applied to Planet Beach for the right to operate a Spa pursuant to the terms of this Agreement, and Planet Beach has approved your application in reliance upon all of the representations made in your application, including those concerning your financial resources, your business experience and interests, and the manner in which the franchise will be owned and operated. :
E. You acknowledge that you have read this Agreement and Planet Beach's Uniform Franchise Offering Circular, and that you have been given an opportunity to obtain clarification of any provision that you did not understand. You also understand and agree that the terms and conditions in this Agreement are necessary to maintain Planet Beach's high standards of quality and service, and the uniformity of those standards at all Planet Beach Tanning Spas.
JOW THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, mutually agree as follows:
1. FRANCHISE GRANT
i planet Beach grants to you, and you hereby accept, a nonexclusive franchise to establish and operate one Spa pursuant to the terms of this Agreement. This Agreement does not give you I he right to establish additional Spas.
2. ! LOCATION
2.1. I Approved Location. You shall operate your Spa only from the Approved Location identified in, or (if the parties have not agreed upon a location at the time this Agreement is signed) to be identified, in trie Data Sheet. You may not offer or sell any products or services offered by the, Spa at or from any
Planet Beach Franchising Corporation Uniform Franchise Offering Circular 03/06 Registration and Non-Registration States
location other than the Approved Location. You may not conduct any other business from the Approved Location.
2.2. Site Selection. Within 60 days from the Effective Date set forth on the Data Sheet ("Site Selection Period"), you shall obtain a site for the Spa either by (i) entering into a lease or sublease with the owner of a site or the prime tenant having possession of a site which is mutually acceptable to you and Planet Beach; or (ii) purchasing real estate which is mutually acceptable to you and Planet Beach. Prior to the expiration of the Site Selection Period, upon your written request, Planet Beach, in Planet Beach's sole and absolute discretion, may elect to extend the Site Selection Period. Upon location of a proposed site, you must provide Planet Beach such site information as Planet Beach may reasonably request to evaluate the proposed site for compliance with Planet Beach's then-current site selection criteria. Planet Beach will notify you of its acceptance or rejection of the proposed site within 30 days after receiving all requested information. Planet Beach's acceptance of a site does not constitute any representation or guarantee concerning the site's viability or success. You are solely responsible for selecting a site for the operation of your Spa.
23. Lease. If you elect to lease premises for your Spa, you must submit a copy of your proposed lease for Planet Beach's approval prior to execution. Planet Beach will notify you of its approval or disapproval within 30 days from its receipt of the proposed lease. Planet Beach has the right to condition its approval of the lease on, among other things, the landlord's execution of the Rider to Lease attached as Exhibit D to this Agreement. Your lease must provide that all signs erected at or installed upon the leased premises shall be deemed not to be fixtures, shall not become a part of the leased premises, and may be removed upon expiration or termination of this Agreement. You must obtain a waiver of any lien or right of lien on signs to secure payment for any obligation due to the landlord under the lease. You must deliver an executed copy of the lease to Planet Beach within 15 days after the execution of the lease. Planet Beach's acceptance of the lease terms does not constitute an expression of Planet Beach's opinion regarding the terms of the lease or the viability of the location.
2.4. Relocation. Planet Beach will permit you to relocate your Spa to a new approved location within the Territory, at your expense, if you lose the right to possess the premises through no fault of your own, or if the Spa is destroyed by vandalism, fire or act of God. Planet Beach will approve the new site if it meets Planet Beach's site selection criteria. You have no right to relocate the Spa without Planet Beach's prior written consent.
3.1. Territory. During the term of this Agreement, so long as you are in substantial compliance with the terms and conditions of this Agreement, Planet Beach will not establish or locate, or grant any third party the right to establish or locate, another Planet Beach Tanning Spa using the System and Proprietary Marks within the Territory identified, or to be identified, in the Data Sheet, except as set forth in paragraph 3.2 below. This Agreement does not grant you any other territorial rights.
3.2. Reservation of Rights. Planet Beach retains the right, among others, to: (i) establish and grant others the right to establish Planet Beach Tanning Spas outside the Territory; and (ii) use the Proprietary Marks in alternative forms of distribution for selling its products including, but not limited to, tanning beds, lotions and other products. Such forms of distribution include, without limitation, offering Planet Beach products within health clubs, beauty salons, spas, stores, boutiques and other locations, as well as through fixed stores, the internet and mail order sales.
4. TERM AND RENEWAL
Planet Beach Franchising Corporation Uniform Franchise Offering Circular 03/06 Registration and Non-Registration States
4.1.; Term. The initial term of this franchise shall begin on the Effective Date set forth on the Data Sheet by Planet Beach and shall expire at midnight on the fifteenth anniversary of the Effective Date.
4.2.1 Renewal. You have the right to renew this Agreement for perpetual consecutive additional 5-year terms, if you meet the following conditions:
. 4.2.1. You are in compliance with all the terms and conditions of this Agreement at the time of renewal and have substantially complied with the terms of this Agreement and with the ] operating standards and criteria established by Planet Beach throughout the initial term
! and any renewal term of this Agreement;
4.2.2, You have satisfied all monetary obligations owed to Planet Beach and its affiliates;
4.2.3. You are in compliance with all other agreements between you and.Planet Beach and/or its ' affiliates;
i 4.2.4. You have provided Planet Beach with written notice of your intention to renew the ! Franchise Agreement at least 90 days but not more than 180 day;; prior to expiration of
j the then-current term;
j 4.2.5. You have the right to remain in possession of the Spa premises, or you have secured j other premises acceptable to Planet Beach for the renewal term;
4.2.6. At Planet Beach's request, you effectuate, at your expense, an;' changes in services, facility, items offered or business system so as to reflect Planel Beach's then-current
( image including interior and exterior design or offerings of Planet I leach Tanning Spas;
4.2.7. You execute Planet Beach's then-current form of franchise agreement, which may vary materially from the terms of this Agreement and may include, without limitation, higher
| royalty and marketing fees. The renewal franchise agreement, when executed, will
i supersede this Agreement in all respects; and
: 4.2.8. You sign a general release in the form prescribed by Planet Beai;h, in favor of Planet Beach and its affiliates and their respective officers, directors, agen::s, and employees, for ; all claims arising out of or related to this Agreement or any related agreements with
! Planet Beach or its affiliates.
5. CONSTRUCTION OF SPA
After you identify a site for the Spa (either by signing a lease, sublease or purchasing real estate), you must engage the Leasing Department of Planet Beach to help with lease negotiations, unless otherwise approved in writing by Planet Beach. Upon site acquisition, you must engage the Design and Construction Department of Planet Beach to assist you with the layout and design of your Spa. Planet Beach! will provide you with construction drawings that consist of the following: Sheet 1 Existing Conditions and Proposed Layout, Sheet 2 Finish Schedule and Wall System Details, Sheet 3 Electrical Layout, Sheet 4 Lighting Layout, Sheet 5 HVAC Layout and Sheet 6 Interior Elevations. The drawings provided by Planet Beach DO NOT include Mechanical, Electrical and Plumbing drawings (MEPs). You are responsible for the $2,500 fee for Planet Beach Construction Drawings. Upon completion of the construction drawings provided by Planet Beach, you will need to engage a licensed architectural firm to complete the Mechanical, Electrical and Plumbing (MEP) Drawings. Linear Architecture is Planet Beach's approved vendor who you must engage to complete the MEP Drawings. linear Architecture is
planet Beach Franchising Corporation Uniform Franchise Offering Circular 03/06 Registration and Non-Registration States
capable of completing, stamping and submitting MEP Drawings that are compliant with local building requirements and specifications to Franchisees in all 50 states. Upon completion of the MEP Drawings, you must employ a qualified licensed contractor, reasonably acceptable to us, to construct the Spa and to complete all improvements in accordance with approved plans. You will remain responsible for all costs of and connected with design and construction, including, but not limited to construction drawings, architectural and/or engineering drawings, including stamps and seals, fees associated with obtaining building permits, leasehold improvements, equipment, furniture, fixtures and signs, and you must bear the cost and responsibility for compliance with state or local ordinances, rules and regulations, including those related to zoning.
6.1. Initial Training Program. Within 6-months of the Effective Date of this Agreement and prior to 30-days of the opening of your Spa (the "initial training period"): Each franchisee (if the franchisee is not a limited liability company) and your designated Spa manager shall satisfactorily complete all of Planet Beach's required training programs as defined in paragraphs 6.1.1, 6.1.2, 6.1.3 and 6.1.4 below. Planet Beach will provide you with access to classroom training through Franchisee and Manager School. Each of your additional or replacement managers are required to successfully complete all required manager training programs to Planet Beach's satisfaction within 30 days of assuming management responsibilities. You are solely responsible for full payment of the monthly Education & Training fee beginning with the month of your lease signing. This fee provides a single location with access to all certification and training programs for you, your designated manager and your staff. You shall be solely responsible for all other training-related expenses including, without limitation, travel expenses to and from the training site, lodging accommodations, dining expenses, and salaries for your employees.
6.1.1. Planet Beach University Online Certification Program. Each Franchisee must successfully complete all required modules and courses of Planet Beach University Online, a web-based training and certification program, according to the training schedule provided to you at Orientation.
6.1.2. Franchisee and Manager School. You and every franchisee signing this agreeement must attend and complete Franchisee and Manager School, currently a 5-day program conducted at Planet Beach's headquarters or other meeting facility designated by Planet Beach. In its sole discretion, PBFC may adjust the duration of Franchisee and Manager School by one or more consecutive days.
6.1.3. Operator Certification. You and every franchisee who works with customers as an operator in any franchise location must successfully complete a nationally recognized indoor tanning operator certification prior to working in a location.
6.1.4. Onsite Grand Opening Training. You and your initial staff must successfully attend and participate in your Spa's Grand Opening Training Program. This consecutive 5-Day Program will be conducted by your Grand Opening Specialist, at your Spa, within two weeks of the opening date of your first location. Franchisee owner-operators, Spa Managers and Associates are required to be present on each day of the Onsite Grand Opening Training.
6.2. Training Program for Managers. During the initial training period, your Spa Manager must satisfactorily complete all required modules and courses of Planet Beach University Online prior to working in a franchise location and/or attending Franchisee and Manager School. Spa Managers must attend Franchisee School within 30 days of their employment. Spa Managers must also be present for the duration of your Spa's Onsite Grand Opening Training. You are responsible for any and all additional training-related expenses. Replacement Managers must complete all required modules and courses of Planet Beach University Online, indoor tanning operator certification and attend Franchisee and Manager School within 30 days of employment. You are responsible for any and all additional training-related
Planet Beach Franchising Corporation Uniform Franchise Offering Circular 03/06 Registration and Non-Registration States
, 6.3. Training Program for Associates. During the initial training period, your employees ("Associates") must satisfactorily complete all required modules and courses of Planet Beach University
I Online and indoor tanning operator certification prior to working in the Spa and prior to Grand Opening Day.; Associates must also be present at your Spa's Onsite Grand Opening Training. All replacement Associates must satisfactorily complete all required modules and courses of Planet Beach University Online and complete indoor tanning operator certification within 30 days of their'employment. You are responsible for payment of any and all additional training-related expenses for your associates.
6.4. ■ Training Program for Assistant Managers. PBFC does not specifically require you to hire someone to fill the position of Assistant Manager in your location. Should you choose to hire an Assistant Manager before your store opens, he or she must satisfactorily complete all required modules and courses of Planet Beach University Online prior to accepting the position of Assistant Manager. Completion of Franchisee School and Advanced Spa Management Training are not required unless your Assistant Manager works more than 30 hours per week. All Assistant Managers must be present for the duration of your Spa's Onsite Grand Opening Training. Assistant Managers hired after Spa opening must complete Modules Three and Four of Planet Beach University Online, and attend Franchisee School (when applicable) within 30 days of their employment. You are responsible for tuition charges, online certification charges and any related expenses.
6.5. National Indoor Tanning Certification. During the initial training period, you and your Designated Manager, Associates, bed cleaners and any and all other individuals who may interact with 'customers during the daily business of the Spa must successfully complete a national indoor tanning Spa operator certification program ("Certification"), at your expense. Planet Beach accepts those national training certification programs that are recognized by the Food and Drug Administration or by an individually regulated state. New or replacement Managers and Associates must obtain Operator's Certification within 30 days of their employment.
6.6. ' Additional Training Programs and Seminars. Planet Beach has the right, but is not obligated, to provide continuing education training programs or seminars for previously-trained franchisees and managers, assistant managers and associates and to require you to attend and successfully complete these programs or seminars. Planet Beach will not require your attendance at more than,two programs in any calendar yea,r and each mandatory program shall not exceed 5 days in duration. You are solely responsible for tuition and all training-related expenses including, without limitation, travel expenses, living and dining accommodations, and employee salaries.
6.7. , Attendance at Annual Conventions. You must attend all Planet Beach's Annual Conventions unless'exigent circumstances exist and you receive Planet Beach's prior approval not to attend, or in the event that the nature of the exigent circumstances renders obtaining prior approval impracticable, you must notify Planet Beach of the reasons for your non-attendance as soon as it becomes practicable. All costs related to the Annual Convention, including but not limited to, travel expenses, lodging and entertainment shall be your sole responsibility.
7. ! CONFIDENTIAL OPERATIONS MANUAL
You are entitled to view Planet Beach's confidential operations manual (the "Operations Manual"), containing policies, procedures, standards, specifications and methods of operating a Planet Beach Tanning Spa. Planet Beach has the right to amend and supplement the Operations Manual from time to time in! its discretion. The contents of the Operations Manual are protected by the Copyright law of the
Planet Beach Franchising Corporation Uniform franchise Offering Circular 03/06 Registration and Non-Registration States
United States and may not be disclosed to any person or entity not affiliated with Planet Beach and may not be duplicated, copied, reproduced or altered in any way. Planet Beach will post its Operations Manual on its website, accessible only to Planet Beach and its franchisees, it shall be in "read only" format and may not be downloaded, saved, copied, duplicated, distributed or altered in any way. A violation of Planet Beach's copyright will be punishable to the maximum extent permitted by law.
8. APPLICABLE LAWS AND LICENSING REQUIREMENTS
You must obtain and maintain all permits, licenses, and registrations required for the lawful operation of your Spa and comply with all health and safety codes. Upon written request, Planet Beach may provide you reasonable assistance in complying with applicable licensure requirements. You must provide Planet Beach with copies of all permits, licenses and registrations within 30 days of opening your Spa.
9.1. Opening for Business. You must open the Spa for business within 275 days of execution of this Agreement. If you cannot open within 275 days due to vandalism, fire, act of God or other circumstances beyond your control, you must request an extension from Planet Beach immediately, which extension will not be unreasonably withheld. It is your sole responsibility to ensure that your Spa opens within 275 days of execution of this Agreement. You may not open the Spa for business until a Planet Beach Representative has approved the Spa for opening.
9.2. Grand Opening Advertising. During the 15 days immediately prior to the scheduled grand opening of your Spa for business and for the first 30 days after the grand opening of your Spa, you must expend at least $3,000 on grand opening advertising and promotion within your Territory. You shall make such expenditure in accordance with Planet Beach's written requirements and specifications. Within 60 days of the Spa's opening, you shall supply Planet Beach with written evidence (by means of cancelled checks, paid invoices, copies of advertisements) of the purchase and publication of such grand opening advertising, promotion and publicity. You have the right, but are not required, to spend additional sums with respect to grand opening advertising.
9.3. Grand Opening Specialist. Planet Beach will provide you with a Grand Opening Specialist who shall be available to consult with you during the pre-opening process. Your assigned Grand Opening Specialist will be on-site at your Spa within two week of your first opening day to provide 5 consecutive days of on-site training. Your Grand Opening Specialist may or may not be the same individual assigned as your permanent Spa Consultant. Franchisee owner-operators, Spa Managers and Associates are required to be present during each day of the Onsite Grand Opening Training. Scheduling is to be determined solely by the Grand Opening Specialist. Planet Beach will not provide you with a Grand Opening Specialist for any additional Spas you open.
10. CONSULTATION AND ADVICE
During the term of this Agreement, Planet Beach will provide such consultation and advice concerning the management and operation of your Spa, as Planet Beach deems necessary and appropriate in its discretion. Initially, Planet Beach will provide you with general site selection criteria, construction drawings and documents, and furnish general advertising material, ideas and suggestions for the grand opening advertising campaign, as it deems appropriate. Planet Beach will make available to you any and all improvements and changes in Planet Beach's services or business methods to the same extent and in the same manner as they are made available to other franchisees.
PLANET BEACH RESERVES THE RIGHT TO WITHHOLD FROM YOU ANY PRODUCTS,
SERVICES, MAINTENANCE, INFORMATION, ADVICE, CONSULTATION AND TRAINING, TO| DIRECT SUPPLIERS NOT TO OFFER SYSTEM DISCOUNTS, TO DELETE YOUR SPA FROM THE PLANET BEACH WEBSITE, AND TO DENY YOU ACCESS TO PLANET BEACH'S COMPUTER SYSTEM IF YOU ARE NOT IN COMPLIANCE WITH THE TERMS OF [THIS AGREEMENT OR THE OPERATIONS MANUAL.
11. ; YOUR OBLIGATIONS
11.1. Operations. You shall operate the Spa during such hours of the day and such days of the year, as Planet Beach shall specify from time to time, or as may be required under your leaiie.
11.2! Compliance with Applicable Laws. You shall operate your Spa in strict compliance with all
! applicable laws, regulations and ordinances including, without limitations, laws and regulations
I applicable to or affecting health and safety. Planet Beach is neither responsible nor liable for researching,
I knowing, acting on, and/or advising you and/or anyone on any state, city, county, parish, and/or local
I laws that will apply to the Spa's operations in that specific area. You will be responsible for operating
according to your respective state and/or local laws/regulations pertaining to all operations of the Spa and
youribusiness, including, but not limited to, registering your Spa with the appropriate authority where and
when applicable, taxation issues, membership agreements, and employee contracts. Planet Beach cannot
provide you with any advice, legal or otherwise, on local issues.
11.3.1 Compliance with Planet Beach's Policies and Procedures. You shall operate your Spa in strict compliance with this Agreement and Planet Beach's standards, specifications, policies and procedures as set forth in the Operations Manual and/or Training Manual, as it may be amended from time to time, or otherwise in writing. You shall at no time engage in deceptive, misleading or unethical practices or I conduct which may have a negative impact on the reputation and goodwill i of Planet Beach, its franchisees or the franchised System.
11.4.: Best Efforts. You shall exploit the Territory to its fullest potential, and use ^est efforts to develop new customers, increase business and expand the market for all products and services authorized for sale by Planet Beach through personal participation and active promotion.
11.5. ; Personal Supervision. You (if the franchisee is an individual) or at least one of your principals who owns at least a 10% interest in the Spa, (if the franchisee is a corporation, partnership or limited liability company) or your designated manager shall personally supervise the day-to-day operation of the Spa. ]Planet Beach may permit you to operate the Spa through a full-time designated manager (the ('Designated Manager") who will work at least 40 hours per week and who will supervise the day-to-day operations of the Spa. The Designated Manager must successfully complete i all required training programs (as described in paragraph 6 above) and sign a Confidentiality and Noncompete Agreement in the form attached as Exhibit D to this Agreement prior to assuming his/her responsibilities. However, the appointment of a manager shall not relieve you of any duties or obligations under this Agreement.
11.6. i Customer Service. You and all employees shall: (i) render prompt, willing and courteous service to all customers, and adhere to Planet Beach's customer service procedures; (ii) deal fairly and honestly with planet Beach, prospective customers, customers, suppliers and others with! whom you or your employees shall come in contact in connection with the operation of the Spa; and (Hi) present a neat and clean appearance at all times. Planet Beach may require that designated uniforms or clothing be worn.
11.7. \ Authorized Products and Services and Approved Suppliers. You must offer all authorized products and services and only those products and services that Planet Beach specifics. Planet Beach has the right to require you to purchase any products including, without limitation, inventory items, furniture,
fixtures and equipment from designated or approved suppliers as well as to enter into service agreements with approved vendors. A description of currently authorized products and services is attached as Exhibit A to this Agreement (the "Authorized Products and Services"). Planet Beach has the right to add, eliminate, modify and substitute any of the Authorized Products and Services or the designated suppliers in its sole discretion. If you wish to offer any product or service that Planet Beach has not authorized or to acquire items or services from an unapproved supplier, you must request Planet Beach's approval in writing and provide Planet Beach all information it may reasonably need to evaluate the proposed product, service or supplier. Planet Beach will make a good faith effort to notify you of its approval within 15 days of receiving such information. Planet Beach's failure to approve a product, service or supplier within thisl5 day period will constitute disapproval of the proposed product, service or supplier. If Planet Beach approves your request to offer a new product or service or to acquire items from a new supplier, such approval will be only for the specific product, service or supplier for which approval was granted.
11.8. Compliance with Standards and Specifications. The Spa shall at all times emulate the image intended for the System including, without limitation, its high standards of quality, cleanliness, convenience and courteous services. You must maintain the Spa in the highest condition of cleanliness and good repair. You shall comply with all of Planet Beach's standards and specifications for, among other things, inventory, furniture, fixtures, equipment and Spa appearance, as they are disclosed to you in the Operations Manual or otherwise in writing. You shall purchase and place or erect, at your expense, all signs and interior and exterior graphics and only such signs and interior and exterior graphics as Planet Beach may from time to time prescribe for use by System franchisees. However, architectural refurbishment will not be required more than once every 4 years.
11.9. Computer Software and Hardware. You shall purchase and use any and all computer software programs ("Software") which Planet Beach has developed or may develop and/or designate for use for the System, and shall purchase such computer hardware as may be necessary for the efficient operation of the Software within 90 days from the date you receive written notice from Planet Beach. You must also establish a high-speed internet connection prior to the opening of your Spa. The Software is and shall remain the sole property of Planet Beach and you agree to execute any license agreement required by Planet Beach. Planet Beach has the right to require you to update or upgrade computer hardware components and/or Software as Planet Beach deems necessary from time to time but not more than 3 times per calendar year. In addition, Planet Beach has the right to require you to enter into a separate maintenance agreement for such computer hardware and/or Software in the form Planet Beach prescribes. In your use of the Software, you agree to be bound by the terms of Planet Beach's Confidentiality and Privacy Policies (as contained in the Operations Manual). You acknowledge and agree that Planet Beach may deny you access to the Software if you fail to meet your obligations under this Agreement or the Operations Manual.
11.10. Collection of Data. You shall collect and maintain such data relating to the business as Planet Beach may require from time to time, including but not limited to, the names, addresses and purchase history of all customers. You shall provide such data to Planet Beach in the form Planet Beach specifies. Any such data shall be Planet Beach's sole property and shall not be disclosed or distributed to any person or entity for any reason; provided that you have a license to use any such data solely for internal marketing and accounting purposes in accordance with all applicable laws and regulations.
11.11. Debts and Obligations. You shall pay all the debts and obligations relating to the operation of the Spa and shall not fail to pay any debts to third parties that may result in claims of liability to Planet Beach.
11.12. Product Warranty Programs. You shall participate in, comply with and honor all approved
warranty programs and approved forms of warranties as described in the Operations Manual, issued by Planet Beach or any other Planet Beach Tanning Spa at their expense. You must dso comply with Planet Beach's 100% refund policy on all products sold in your Spa.
11.13. Memberships and Reciprocity. You must participate in, comply with and honor Planet Beach's Membership Policy and Reciprocation Policy as specified in the Operations Manual.
11.14. Consumer Complaints. You must answer all consumer complaints or better business bureau complaints within 15 days of receipt or such shorter period of time as may be proyided in the complaint. You Imust provide Planet Beach with a copy of your answer within 3 days of the date the answer is forwarded to the consumer or better business bureau. <
1 . i
11.15. Notifications of Actions. You must notify Planet Beach in writing within '» days of the receipt of any complaint of any nature relating directly or indirectly, to the operation of your Spa or of the commencement of any action, suit or proceeding against you, and of the issuance of any inquiry, subpoena, order writ, injunction award, or decree of court, agency or other governmental instrumentality, which arises out of, concerns, or may affect the operation or financial condition' of the Spa, including without limitation, any criminal action or proceeding brought by you against employees, customers, or other;persons and shall within 10 days of receipt by you or your counsel, provide Planet Beach with copies of all pleading and other documents. Without limiting the foregoing, you|agree to notify Planet Beach of your intent to initiate any civil or criminal action against a customer or employee relating to the
operation of the Spa.
12. INITIAL AND CONTINUING FEES
12.1. Initial Franchise Fee. In consideration of the rights granted under this Agreement, you have paid to Planet Beach an initial franchise fee ("Initial Franchise Fee") in the amount reflected on the Data Sheet. The initial franchise fee is deemed fully earned upon payment and non-refundable. -
12.2. ' Royalty Fee. During the term of this Agreement, you will pay to Planet Beach a monthly Royalty Fee ("Royalty Fee") in an amount equal to 6% of your "Gross Sales" earned during^the preceding month. Gross,Sales shall include all revenues from sales made by you from all business conducted at or from your Spa, including but not limited to amounts received from the sale of tanning sessions, prepaid tanning packages, memberships and any other goods and services and tangible property of any nature whatsoever. Planet! Beach will sometimes refer to Gross Sales as the sum of Cash, NET EFT and Retail. Gross Sales shall riot include the amount of sales tax imposed by any federal, state, municipal or other governmental authority and you agree to pay such amounts as and when they become due. Each charge or sale upon installment or credit shall be treated as having been received in full by you at l he time you receive payment. Sales relating to items for which the full purchase price has been refunded or the item exchanged shall be excluded from Gross Sales at the time of refund or exchange, provided that such sales have previously been included in Gross Sales.
12.3. ' Information Technology Fees. You shall pay to Planet Beach a monthly information technology fee of $49.95. j
12.4. ; Marketing Fees. You shall pay to Planet Beach marketing fees as further explained in Paragraph
i 1;2.5. , Construction Drawing Fee. You shall pay to Planet Beach $2,500 for the completion of your site specific construction drawings.
Planet Beach Franchising Corporation Uniform franchise Offering Circular 03/06 Registration and Non-Registration States
12.6. Education and Training Fee. You shall pay to Planet Beach a monthly education and training fee of $69.95, beginning with the first month following lease execution.
12.7. Credit Card Processing Fee. You shall pay to Planet Beach a 3% credit card processing fee for any payments made by you to Planet Beach and/or any purchases made by you from Planet Beach.
12.8. Payment Procedures. You must make all payments to Planet Beach through the AUTODRAFT system. All payments are due on the 5th of every month for the preceding month. In the event that any payments are due on a national holiday, payment will be due on the first business day following such holiday. A late fee of $100 will be assessed for each week that payment is delinquent. An insufficient funds fee of $100 will be assessed for any AUTODRAFT payment rejected as a result of insufficient funds. In addition to the late fee and the overdue amount, interest will accrue on such amount from the date it was due until paid at 18% per annum or the maximum rate permitted by state law, whichever is less. Interest will be calculated on a daily basis and shall be in addition to any other remedy Planet Beach may have under this Agreement or applicable law.
12.9. Refunds. All fees are fully earned when they become due and are not refundable.
13. PROPRIETARY MARKS AND COPYRIGHTS
13.1. License. During the term of this Agreement, you are granted a non-exclusive license to use the Proprietary Marks in connection with the operation of your Spa. You shall display the Proprietary Marks only in the manner that Planet Beach directs or permits. Your license to use the Proprietary Marks shall automatically cease upon termination or expiration of this Agreement.
13.2. Ownership. You acknowledge that the Proprietary Marks are valid and are Planet Beach's sole property. You will not, either during or after the term of this Agreement, do anything, or assist any other person to do anything, which would infringe upon, harm or contest Planet Beach's rights in any of the Proprietary Marks.
13.3. Goodwill. You acknowledge that all goodwill which may arise from your use of any of the Proprietary Marks is and shall at all times remain Planet Beach's sole and exclusive property and shall inure to Planet Beach's sole benefit.
13.4. Modification. You acknowledge that Planet Beach has the right to add, modify, substitute or discontinue use of any of the Proprietary Marks in its sole discretion. You agree to make any additions, deletions and modifications on all interior and exterior signs, packaging materials, printed materials and advertising as Planet Beach directs at your own expense.
13.5. Internet Usage. If you maintain an internet site, you may not register or use the words "Planet Beach" in your domain name. An individual website for your Spa may only be operated and maintained through Planet Beach's website.
13.6. Infringement. You shall promptly notify Planet Beach of any infringement of, or challenge to, the Proprietary Marks and Planet Beach shall, in its discretion, take such action, as it deems appropriate. Planet Beach will indemnify and hold you harmless from any suits, proceedings, demands, obligations, actions or claims, including costs and reasonable attorneys' fees, for any alleged infringement under federal or state trademark law arising solely from your use of the Proprietary Marks according to this Agreement and Planet Beach's other written directives if you have promptly notified Planet Beach of such claim. If Planet Beach undertakes the defense or prosecution of any litigation pertaining to any of the Proprietary Marks, you must execute any and all documents and do such acts and things as may, in the
opinion of Planet Beach's counsel, are necessary to carry out such defense or prosecution.
13.7- Other Covenants. You will not, either during or after the term of this Agieement, do anything, or
aid or assist any other person to do anything which would hinder or prevent Planet Beach from using or
licensing the use of the Proprietary Marks in any jurisdiction. If you are a corporation, partnership or
limited liability company, the name of your entity shall not include any portion of any the Proprietary
Marks; provided, however, you shall register for fictitious name usage in the jurisdiction in which the Spa
is located and promptly provide Planet Beach a copy of the registration. You shall not use the Proprietary
Marks, or any part thereof, as part of any web site domain name without Planet Beach's prior written
13.8, Franchisee Developments. Planet Beach shall own and have the exclusive right to use and incorporate in the Planet Beach Franchise System, for the benefit of other franchisees and Planet Beach, any modifications, changes and improvements to the System, in whole or in part, developed or discovered by you or your employees or agents in connection with the System or the operation of your Spa, without any liability or obligation to you. This includes, but is not limited to, discoveries or development of products, systems or techniques, management practices or procedures, architectural designs and philosophies and names or groups of words relating to the System or describing ihe services offered by
Planet Beach Tanning Spas.
13.9., Customer Data. Planet Beach shall own and have exclusive rights to use all customer data compiled by you in the operation of your Spa.
14. CONFIDENTIAL INFORMATION
1 You acknowledge and agree that the Operations Manual, training material, Planet Beach's trade secrets, methods and other techniques and know-how are Planet Beach's exclusive and! confidential property which Planet Beach provides to you in confidence ("Confidential Information"). You agree to use the Confidential Information only for the purposes and in the manner Planet Beach 'authorizes in writing, Iwhicti use will inure exclusively to Planet Beach's benefit. Planet Beach's trade seciets consist of, without limitation, sales techniques, merchandising and display techniques, Spa layout,1 advertising formats, accounting systems, operations systems, policies, procedures, systems, compilations of information, records, specifications, manuals and other confidential information which Planet Beach or its affiliates ihave developed for use in the operation of Spas. You may not contest, directly or indirectly, Planet Beach's ownership of its trade secrets, methods or procedures or contest Planet Beiich's right to register, use or license others to use any such trade secrets, methods and procedures. jYou (including your partners, officers, directors, shareholders, as applicable), your employees, and their respective heirs, successors and assigns, are prohibited from using and/or disclosing any Confidential Information in any manner other than as Planet Beach permits and must execute a Confidentiality and Non-Competition Agreement in the form attached as Exhibit D.
15. ! MARKETING
15.1. ; Generally. You must participate in all marketing programs required by Planet Beach in writing or contained in the Operations Manual. You may place or display at your Spa (interior and exterior) only the signs, emblems, lettering, logos and displays and marketing materials as Planet Beach approves in writing from time to time. You must submit to Planet Beach, at least 10 days priorjto your use, samples of all sales promotional and marketing materials you desire to use for approval. Planet Beach's failure to approve or disapprove the materials within 10 days of receipt will be deemed a disapproval. You may not use any marketing or promotional materials for which Planet Beach has not given its prior written
15.2. Territorial Marketing Restriction. You are not permitted to solicit customers and/or market outside your Territory, except to the extent that you have received Planet Beach's prior written authorization, which Planet Beach will not unreasonably withhold. Planet Beach may condition its authorization upon your agreement to offer System franchisees who are operating Spas in contiguous territories the opportunity to participate in, and share the expense of, such solicitation and/or marketing. You may not market your Spa or any products or services offered by the Spa via the Internet without Planet Beach's prior written consent, which may be given or withheld in Planet Beach's sole discretion.
15.3. Marketing Fund. Planet Beach has established a national marketing fund ("National Fund") and may, in its discretion, establish local marketing cooperatives for the common benefit of Planet Beach's franchisees.
15..3.1 National Fund. Planet Beach requires you to participate in and contribute monthly to the National Fund a minimum of 1%, not to exceed 2%, of your Gross Sales ("Monthly Marketing Fee"). The Monthly Marketing Fee shall be paid, through the AUTODRAFT system on the 5th day of each month. In the event that any payments are due on a national holiday, payment will be due on the first business day following such holiday. Planet Beach will use National Fund contributions, in its sole discretion, to develop, produce and distribute national, regional and/or local marketing and to create marketing materials and public relations, which promote, in Planet Beach's sole judgment, the products and services offered by Planet Beach Tanning Spas. Planet Beach has the sole right to determine contributions and expenditures from the National Fund and sole authority to determine, without limitation, the selection of the marketing materials and programs; provided, however, that Planet Beach will make a good faith effort to expend National Fund contributions in the general best interests of the System. Nevertheless, you acknowledge that not all Planet Beach franchisees will benefit directly or on a pro rata basis from such expenditures. While Planet Beach does not anticipate that any part of the National Fund contributions will be used for marketing which is principally a solicitation for franchisees, Planet Beach reserves the right to include a notation in any advertisement indicating "Franchises Available" or "For Franchise Information Call." Planet Beach has the right to reimburse itself from the National Fund contributions for such reasonable costs and overhead, if any, as Planet Beach may incur in activities reasonably related to the direction and implementation of the National Fund. At your request, Planet Beach will provide you with an unaudited accounting of National Fund expenditures on an annual basis.
15.3.2. Local Cooperatives. Planet Beach has the right, in our discretion, to designate any geographical area for purposes of establishing a regional marketing and promotional cooperative ("Cooperative"), and to determine whether you must participate in a Cooperative. If a Cooperative has been established applicable to the Spa at the time you begin operating under this Agreement, you must immediately become a member of such Cooperative. If a Cooperative applicable to the Spa is established at any later time during the term of this Agreement, you must become a member of such Cooperative no later than 30 days after the date on which the Cooperative begins operation. Planet Beach has the right to change, combine or dissolve cooperatives. If the Spa is within the territory of more than one Cooperative, you are required to be a member of only one such Cooperative. The following provisions will apply to each Cooperative:
a) Each Cooperative will be organized and governed in a form and manner, and will commence operation on a date, approved in advance by Planet Beach;
b) Each Cooperative will be organized for the exclusive purpose of administering regional marketing programs and developing, subject to
! our approval, standardized marketing materials for use by the members
, in local marketing;
i c) All activities and contributions to the Cooperative shall be determined by
i a majority vote of the Spas in the Cooperative; and
i d) No promotional or advertising plans or material;; may be used by a
I Cooperative or furnished to its members without our prior written
; approval. All such plans and materials shall be submitted to Planet Beach
; in accordance with the procedure set forth in Paragraph 15.1 hereof.
15.4. ' Telephone Directory Advertising. At Planet Beach's request, you must advertise your Spa in the local telephone directory or directories covering the area from which the Spa is likely to draw customers. Such advertising must be placed in accordance with size and content formulas provided by Planet Beach. The amount of payments for such directory advertising may be included to i meet the marketing requirements set forth in paragraph 15.3, above.
16. i INSURANCE
You must obtain and maintain at your sole expense at all times during the term of, this Agreement such insurance coverage, as Planet Beach from time to time shall specify, including but not limited to, comprehensive general liability insurance, worker's compensation insurance, unemployment insurance and any other insurance coverage required by law. Each policy shall be written by an insurance company acceptable to Planet Beach, and shall name Planet Beach and its officers, directors, agents, attorneys, employees and affiliates as additional insured parties. You shall promptly deliver to Planet Beach original certificates evidencing that all insurance required by Planet Beach is in full force and effect prior to opening the Spa for business. You shall deliver to Planet Beach each year renewal certificates. All policies must provide that the policy may not be cancelled, terminated, modified oi reduced in terms of coverage, without 30 days prior written notice to Planet Beach. If you fail to ot'-tain or maintain the required insurance, Planet Beach has the right, but is not obligated, to obtain and maintain such insurance coverage on your behalf and to charge you for such coverage, together with a service fee which shall not exceed 25% of the insurance premium. There is no assurance that minimum insurance requirements will be adequate to satisfy your needs.
17. BOOKS, RECORDS AND REPORTS
17.1. ' Books and Records. You must maintain at the Approved Location or other approved location such books, accounts, records and memoranda disclosing all transactions relating, to or involving the operation of the Spa. Planet Beach's representatives shall have access to examine, inspect and copy all such books, accounts, records, memoranda, computer files and systems to review, inspect and poll such data during regular business hours. Financial records and statements must be kept and maintained in conformity with generally accepted accounting principles or such other accounting method that is acceptable for tax reporting purposes. You must keep and maintain such record-keeping or electronic reporting systems as Planet Beach may require, and make the same available to Planet Beach as Planet Beach specifies or as a report or statement. You must use those forms specified by Planet Beach. In addition, you must keep in the manner specified by Planet Beach, consecutively i numbered customer receipt forms for each purchase or service rendered in the operation of the Spa. You must retain these for Planet Beach's inspection, and upon Planet Beach's request, forward them to Planet Beach.
17.2. : Periodic Reports. You must provide to Planet Beach periodic royalty reports and all other documentation as Planet Beach may reasonably prescribe from time to time. Planet Beach reserves the
right to specify the accounting and/or bookkeeping procedures, formats, systems and forms you will use in the operation of the Spa. You must deliver to Planet Beach within 20 days of the end of each fiscal quarter a complete and accurate profit and loss statement for such quarter, in a format acceptable to Planet Beach.
17.3. Daily Production and Monthly Spa Financial Reports. You must fax or e-mail your cumulative monthly Daily Production Report ("DPR") to Planet Beach, following the close of business on the last business day of every month. Failure to submit your previous month's DPR by the 3rd day of each month will result in a maximum late charge of $300.00 per month, per occurrence. You must submit your monthly Spa financial reports in a manner specified by Planet Beach, including accurate amounts for all Spa operational expenses. Failure to submit your Spa's financial reports by the 3rd day of each month will result in a maximum late charge of $300.00 per month, per occurrence. E-mail will be through Planet Beach's web site.
17.4 Annual Financial Statement, Balance Sheet And Tax Return. Within 90 days after the close of each of fiscal year (ending December 31) you must deliver to Planet Beach annual financial statements, including but not limited to profit and loss statements and balance sheets for the preceding year prepared in accordance with generally accepted accounting principles or such other accounting methods that are acceptable for tax reporting purposes. You must furnish to Planet Beach copies of federal, state and local sales, income or other tax returns filed in connection with the Spa by April 1 of the following year.
18.1. Application of Payments. Planet Beach has the right to apply all payments as it deems appropriate in its discretion, regardless of the purpose for which such payment is designated; provided, however, Planet Beach shall not apply payment to any indebtedness that you have identified in writing as a disputed charge.
18.2. Interest. You must pay all bills, fees, charges and other obligations to Planet Beach in strict accordance with the applicable payment and credit terms. Any amount not paid when due, will bear interest from the due date at the rate of 18% per annum, or the maximum allowed by law, whichever rate shall be less. Interest will be compounded monthly. The payment of such interest or other amounts due shall not be deemed to constitute a waiver of any other rights available to Planet Beach.
18.3. Audits. Planet Beach or its designee may inspect or conduct an audit of your accounts, business and financial books and records, local marketing records, tax returns and other records during regular business hours. If the audit discloses an understatement of Gross Receipts for any period or periods, you must immediately pay to Planet Beach all Royalty Fees and any other sums due under this Agreement, plus interest on these monies at the rate set forth in this Agreement. If any audit reveals that you have underreported any amounts by more than 2% in any period or periods, or if you fail to timely submit complete, accurate and legible reports, then in addition to paying all monies due, you shall reimburse Planet Beach for the cost of the audit, including the charges of any independent certified public accountant, attorneys' fees, other legal costs and the travel expenses, room, board and compensation of Planet Beach's employees.
Planet Beach has the right at any time during regular business hours, and without prior notice, to conduct a reasonable inspection of the Spa. Any such inspection will be at Planet Beach's expense, unless Planet Beach is required to make any additional inspections in connection with your failure to comply with this Agreement. In such event, Planet Beach has the right to charge you for the costs of making the additional
inspections, including without limitation travel expenses, room and board: and compensation of employees. You must promptly remedy at your sole expense any deficiency founc during any inspection.
20. i COVENANTS
20. IL During the Term of this Agreement. During the term of this Agreement^ neither you nor any of your principals shall, directly or indirectly, through corporations, partnerships, limited liability companies, trusts, associations, joint ventures, or other unincorporated businesses, perform any services for, engage in or acquire, participate or have any financial or other interest in any. other business or other entities offering tanning services or other services or products offered by Planet Beach Tanning Spas; provided, however, that this provision shall not apply to the operation of any other Planet Beach Tanning Spa franchised business pursuant to a valid franchise agreement with Planet Beach:
20.2. After the Term of this Agreement. For a period of 2 years following termination or expiration of this Agreement, or the termination of any principal's interest in the Spa, neithe; you nor any of your principals shall, directly or indirectly, through corporations, partnerships, limited liability companies, trusts, associations, joint ventures, or other unincorporated businesses, perform any, services for, engage in or acquire, participate or have any financial or other interest in any other business or other entities offering tanning services or other services or products offered by Planet Beach Tanning Spas: (1) at the Approved Location (or the location of your former Planet Beach Tanning Spa); (2) within the Territory; (3) within a 10 mile area surrounding the perimeter of the Territory; or (4) within a 10 mile radius of any Planet Beach Tanning Spa in existence on the date of expiration or termination of this Agreement; provided, however, that this provision shall not apply to the operation of any other: Planet Beach Tanning Spa franchised business pursuant to a valid franchise agreement with Planet Beach The aforesaid 2-year period shall be tolled during any period of noncompliance.
20.3. i Spouses and Immediate Family Members. It shall be deemed a breach of this Agreement if your spouse or children engage in any of the prohibited conduct.
20.4. Reformation. It is the intention of the parties that this section be enforced to the fullest extent possible. If a court shall determine that it is not enforceable as drawn, then it s hall be reformed and enforced to the fullest extent lawful in the jurisdiction.
21. ; INDEPENDENT CONTRACTOR; INDEMNIFICATION
21.1. I Independent Contractor. You are an independent contractor responsible for full control over the internal management and daily operation of your Spa, and neither Planet Beach nor you are the agent, principal, partner, employee, employer or joint venturer of the other. You musi not act or represent yourself, directly or by implication, as an agent, partner, employee or joint venture of Planet Beach, nor may you incur any obligation on Planet Beach's behalf or in its name.
21.2. Responsibility for Debts. You acknowledge full responsibility for all the debts and obligations of your Spa including, but not limited to all bills, debts, taxes, rents, employee (axes, unemployment compensation insurance and employee benefits. You shall not use the Proprietary Marks to incur or secure any obligation for yourself or for any other person or entity. Planet Beach shall not be liable for any of the debts or obligations of your Spa.
21.3. | Dispute. In the event of any bona fide dispute as to liability for tax.is assessed or other
indebtedness, you may contest the validity or the amount of tax or indebtedness in accordance with the procedures of the taxing authority or applicable law, provided that in no event shall you permit a tax sale or seizure by levy of execution or similar writ or warrant, or attachment by creditor, to occur against the
plane! Beach Franchising Corporation Ipniform Franchise Offering Circular 03/06 Registration and Non-Registration States
premises of the Spa or any improvements thereon.
21.4, Indemnification. You must defend, indemnify and hold Planet Beach and/or its affiliates harmless from all fines, suits, proceedings, claims, demands, obligations or actions of any kind (including costs and reasonable attorneys' fees) arising in whole or in part from training, the construction or operation of your Spa or the performance of your obligations under this Agreement that exist upon execution or that may arise in the future, except as otherwise provided in this Agreement.
All notices, requests and reports to be given under this Agreement shall be in writing, and delivered by either hand, e-mail with a confirming receipt, overnight mail, or certified mail, return receipt requested, prepaid, or by facsimile transmission (except that regular monthly and other reports from you may be sent by regular mail), to the address or fax number set forth in the Data Sheet (which may be changed by written notice).
23. SALE OR ASSIGNMENT
23.1. Assignment by Planet Beach. Planet Beach has the right to assign this Agreement and to delegate its obligations under this Agreement in whole or in part in its sole discretion. Planet Beach is not obligated to provide you with prior notice of such assignment.
23.2. Assienment by You. Your rights under this Agreement are personal, and you shall not sell, transfer, assign or encumber your interest in the franchised business without our prior written consent. Any sale, transfer, assignment or encumbrance made without our prior written consent shall be voidable at our option and shall subject this Agreement to termination as specified herein. A sale, transfer or assignment requiring our prior written consent shall be deemed to occur: (i) if you are a corporation, upon any assignment, sale, pledge or transfer of any fractional portion of your voting stock or any increase in the number of outstanding shares of your voting stock which results in a change of ownership, (ii) if you are a partnership, upon the assignment, sale, pledge or transfer of any fractional partnership ownership interest; or (iii) if you are a limited liability company, upon the assignment, sale, pledge or transfer or any interest in the limited liability company. Any new partner, shareholder, or member or manager owning more than 10% of the outstanding shares of the corporation, will be required to personally guarantee your obligations under this Agreement.
23.3. Conditions for Transfer. Planet Beach shall have the right to condition its consent to a transfer of the Spa upon:
23.3.1. The buyer must be an existing franchisee, unless otherwise approved by Planet Beach.
23.3.2. The satisfaction of all of your monetary and non-monetary obligations under this Agreement and any other agreement between you and Planet Beach or its affiliates;
23.3.3. The buyer having met Planet Beach's qualifications for new franchisees and first becoming a Planet Beach franchisee through Planet Beach's application and qualification process which includes, without limitation, supplying Planet Beach with a financial application and attending Planet Beach's Discovery Day;
23.3.4. The buyer's upgrade of the Spa to conform with Planet Beach's current specifications;
23.3.5. Planet Beach is provided with an executed agreement of sale between you and the buyer;
[ 23.3-6. The buyer's successful completion of Planet Beach's required training programs and any
other training or services as stated in paragraph 6.5; i
| 23.3.7. The buyer's receipt of your last year's business tax return and other documents relevant to I your business;
23.3.8. Your execution (or your principals' execution, as applicable) of a general release, in a
i form prescribed by Planet Beach, of all claims against Planet Beach and its officers,
I directors, agents, employees, and affiliates. Notwithstanding such release, you shall
: remain obligated under those provisions of this Agreement that expressly extend beyond
I the term hereof.
i 23.3.9. The buyer's execution of Planet Beach's then-current Single Unit Franchise Agreement as
well as execution of a personal guaranty if a partnership, corporation or limited liability
! 23.3.10.Payment to Planet Beach of a transfer fee equal to 35% of the then-current Initial i Franchise Fee; ,
I 23.3.11. If the buyer is a corporation or limited liability company, the corporation's or limited
I liability company's satisfaction of Planet Beach's requirements for such entities are set
forth in Section 23 (except 23.4 and 23.5), below. In addition, Planet Beach must
approve all shareholders of a corporation transferee, or all members and managers of a
I limited liability company transferee. Planet Beach may require that a particular
I individual remain the owner of at least fifty-one percent (51%) of,the outstanding stock
of a franchisee corporation, or retain an interest of at least 51% in the limited liability
: company, as applicable, and serve as the corporation's chief executive officer or the
I limited liability company's manager.
23.4. ! Death or Disability. In the event of your death, disability or incapacitation (or the death,
disability or incapacitation of your principals or personal guarantors if you are a partnership, corporation or limited liability company), your legal representative (or your principal's or guarantor's respective legal representative, as applicable) shall have the right to continue the operation oi the Spa under this Agreement, without payment of a transfer fee, if: (i) within 90 days from the date of death, disability or incapacitation (the "90 day period"), such person has obtained Planet Beach's prior written approval; and (ii) such person successfully completes Planet Beach's required training programs (which Planet Beach will provide at its then-current tuition rate). Such assignment by operation of law will not be deemed in violation of this Agreement, provided such heirs or legatees accept the conditions imposed by this Agreement and are acceptable to Planet Beach.
23.5. ; Right of First Refusal. Planet Beach shall have the irrevocable first right and option to purchase your business on the same terms and conditions as any bona fide purchaser who [wishes to become a Planet !Beach franchisee. If you receive an acceptable bona fide offer from a third party to purchase the Spa or any or all of the Spa's assets, you shall provide Planet Beach with a copy of the written purchase offer, which offer shall contain all of the terms of the proposed sale and the identity of the proposed purchaser. At Planet Beach's request, the proposed purchaser shall promptly complete and submit to planet iBeach a franchise application and any other information Planet Beach deems necessary, in its discretion, to evaluate the proposed transferee. Planet Beach may exercise this right of first refusal by notifying you of Planet Beach's decision to do so in writing within 30 days after receipt of all items required above. Silence on Planet Beach's part shall constitute rejection. If Planet Bpach fails to exercise
PJanet Beach Franchising Corporation Uniform Franchise Offering Circular 03/06 Registration and Non-Registration States
this option, all provisions relating to assignment of this Agreement remain in full force and effect. The election by Planet Beach not to exercise Planet Beach's option as to any offer shall not affect Planet Beach's right of first refusal as to any subsequent offer. Any sale or attempted sale without first giving Planet Beach the right of first refusal shall be void and of no force or effect.
23.6. Transfer to a Corporation or Limited Liability Company. If you are an individual or partnership, you have the right to assign your rights under this Agreement to a corporation or limited liability company. Such transfer shall not be subject to the conditions set forth in Section 23.3 of this Agreement, above, provided that the corporation or limited liability company complies with the following requirements:
23.6.1. The corporation or limited liability company must be newly organized and its activities confined to acting exclusively as a Planet Beach Tanning Spa franchisee;
23.6.2. You are, and at all times remain, the owner of 51% of the outstanding shares of the corporation or a controlling interest in the limited liability company;
23.6.3. The corporation or limited liability company agrees in writing to assume all of your obligations hereunder;
23.6.4. All shareholders of the corporation, or all members and managers of the limited liability company, must sign Planet Beach's Guaranty Agreement, personally agreeing to be bound by the terms of this Agreement, and guaranteeing performance of all of the franchisee's obligations under this Agreement;
23.6.5. Each stock certificate must be conspicuously endorsed upon its face with a statement in form satisfactory to Planet Beach that it is held subject to, and that further assignment or transfer is subject to, all restrictions imposed upon assignment by the Planet Beach Franchising Corporation Franchise Agreement. In addition, a corporate franchisee's shareholders' agreement, if any, or a limited liability company's operating agreement, as applicable, must restrict transfer of interests to third parties;
23.6.6. The articles of incorporation and bylaws of the corporation, or the operating agreement or other governing document of the limited liability company, shall reflect this Agreement and all other agreements Planet Beach specifies, and the transferee must submit to Planet Beach such documents relating to the corporation or limited liability company as Planet Beach may require; and
23.6.7. The corporation or limited liability company, as applicable, must adhere to the requirements set forth in this Agreement relating to management of the Spa.
24.1. Automatic Termination. This Agreement will automatically terminate, without notice and without an opportunity to cure, if:
24.1.1. You make an assignment for the benefit of creditors, file a voluntary petition in bankruptcy, are adjudicated a bankrupt or insolvent, file or acquiesce in the filing of a petition seeking reorganization or arrangement under any federal or state bankruptcy or insolvency law, or consent to or acquiesce in the appointment of a trustee or receiver for you or for the Spa; or
1 24.1.2. You purport to sell, transfer or assign your rights under this Agreement.
24.21 Termination With Notice and Without Opportunity to Cure. Planet Heach has the right to terminate this Agreement, which termination shall become effective upon delivery of notice of termination, without providing you an opportunity to cure, if: ]
! 24.2.1. Proceedings are commenced to have you adjudicated as bankrupt or to seek your reorganization under any state or federal bankruptcy or insolvency law, and such proceedings are not dismissed within 60 days, or a trustee or receiver is appointed for you
[ or for the Spa without your consent, and the appointment is not vacated within 60 days;
! 24.2.2. A levy or writ of attachment or execution or any other lien is placed against you or any of your principals, as applicable, or any of your assets or your principal's assets which is not released or bonded against within 30 days;
! 24.2.3. If in the sole and absolute discretion of Planet Beach, you fail to successfully complete all ! required Planet Beach training programs at least 60 days following the opening of your
] 24.2.4. You or any of your principals are insolvent.
24.2.5. You or any of your principals are convicted of or plead no contest to a felony or criminal misconduct relevant to the performance of your duties under this Ajjreement;
1 24.2.6. You have misrepresented any material information to Planet Beach given in connection with this Agreement including, but not limited to information in your franchise ! application, or you falsify any material information provided to Planet Beach;
24.2.7. You or your principals commit any fraud or engage in any illegal conduct in connection 1 with the Spa; or intentionally underreport or misstate any information you are required to
| report to Planet Beach; !
1 24.2.8. You misuse any of the Proprietary Marks, Copyrights or Confidential Information and ] fail to immediately cease or correct such use after receiving written or oral notification
i from Planet Beach;
! 24.2.9. You fail to find a site for your Spa and submit it to Planet Beach for approval within 60 ! days of the execution of this Agreement, and you fail to request ih writing, and Planet
I Beach does not elect to grant you, an extension of this Site Selection Period;
; 24.2.10. If your fail to open your Spa within 275 days of Planet Beach's execution of this ! Agreement;
] 24.2.11. You abandon your Spa (for purposes of this provision, the term "abandon" shall mean j your failure to operate the Spa for 3 or more consecutive days);
I 24.2.12. If you fail to cure any default of your lease or sublease for;your Spa's location
| \ within the relevant cure period, if any, or to remedy any default under any note,
! j lease, or sublease for the Spa's location, or for the equipment or inventory
j therein, or lose the right to possession of the Spa's location,, provided however,
Pjanet Beach Franchising Corporation ]
Uniform Franchise Offering Circular 03/06
Registration and Non-Registration States i
that if any such loss of possession results through no fault of your own, and the premises are damaged or destroyed by fire, flood or other natural disaster such that they cannot, in Planet Beach's sole judgment, reasonably be restored, or you are not permitted under the lease or sublease to restore, then this Agreement shall not be terminated for that reason for a period of 60 days thereafter, provided that Planet Beach has approved (i) a site within that time to which you will relocate for the remainder of the term of this Agreement; and (ii) your schedule for reopening the Spa, which approval shall not be unreasonably withheld;
24.2.13. You purport to transfer any rights or obligations arising under this Agreement to any third party without Planet Beach's prior written consent;
24.2.14. You violate the confidentiality/non-disclosure obligations of this Agreement;
24.2.15. If the provisions contained in this Agreement for transfer by you upon death, disability or incompetence are not strictly followed;
24.2.16. You violate the covenant not to compete;
24.2.17. You fail to obtain Planet Beach's approval or consent as required by this Agreement;
24.2.18. You violate any of the provisions of this Agreement and/or any other agreement with Planet Beach on 2 or more occasions within any 12-month period (notwithstanding the cure of any individual violation) and you have failed, on each occasion, to cure your violations within the allotted cure period; or
24.2.19. You violate the terms of the Construction Loan Agreement and/or any of its ancillary documents see Item 10.
24.3. Termination by Planet Beach After a Seven (7) Day Cure Period. Planet Beach has the right to terminate this Agreement, which notice will become effective upon delivery of notice of termination, after providing you a 7-day cure period, if you fail to pay any sums due Planet Beach and/or its affiliates.
24.4. Termination by Planet Beach After a Thirty (30) Day Cure Period. Planet Beach has the right to terminate this Agreement, after providing you a 30-day cure period, if you fail to comply with any other term of this Agreement.
24.5. Cross-Default. If you are the owner of more than 25% of another Planet Beach Tanning Spa franchise or corporate or limited liability company franchisee, then any breach of the franchise agreement for such additional franchise will constitute a breach of this Agreement, and be grounds for Planet Beach to terminate this Agreement.
25. YOUR OBLIGATIONS UPON TERMINATION
25.1. Upon termination or expiration of this Agreement, you shall:
The original documents were scanned as an image. The original file can be downloaded at the link above.