Franchise Agreement

The original documents were scanned as an image. The original file can be downloaded at the link above.


Sample Franchise Agreement

EXHIBIT B

Franchise Agreement


Robeks Juice Logo

Fruit Smoothies & Healthy Eats

Robeks Franchise Corporation

Franchise Agreement

DATED:

FRANCHISEE: FRANCHISE LOCATION:

CONFIDENTIAL

© 2005 Robeks Franchise Corporation


TABLE OF CONTENTS

PARAGRAPH                                                                                                                                        PAGE

1.                   DEFINITIONS......................................................................................................................................1

2.                   GRANT.................................................................................................................................................3

3.                   FRANCHISE LOCATION; NO TERRITORIAL RIGHTS..................................................................4

4.                   TERM AND RENEWAL......................................................................................................................5

5.                   FRANCHISE LOCATION DEVELOPMENT AND OPENING DATE..............................................7

6.                   TRAINING............................................................................................................................................8

7.                   PROPRIETARY MARKS.....................................................................................................................9

8.                   MANUAL............................................................................................................................................10

9.                   CONFIDENTIAL INFORMATION...................................................................................................11

10.                 ADVERTISING..................................................................................................................................12

11.                 PAYMENTS........................................................................................................................................15

12.                 ACCOUNTING AND RECORDS......................................................................................................16

13.                 STANDARDS OF QUALITY AND PERFORMANCE.....................................................................18

14.                 COMPANY'S OPERATIONS ASSISTANCE...................................................................................21

15.                 INSURANCE......................................................................................................................................22

16.                 COVENANTS.....................................................................................................................................24

17.                 DEFAULT AND TERMINATION.....................................................................................................25

18.                 RIGHTS AND DUTIES OF PARTIES UPON EXPIRATION OR TERMINATION.......................27

19.                 ASSIGNMENT AND TRANSFER.....................................................................................................29

20.                 RELATIONSHIP OF PARTIES; INDEMNIFICATION....................................................................34

21.                 PERSONAL GUARANTY.................................................................................................................34

22.                 DISPUTE RESOLUTION...................................................................................................................35

23.                 ACKNOWLEDGEMENTS.................................................................................................................37

24.                 MISCELLANEOUS............................................................................................................................38

25.                 WAIVER OF JURY TRIAL................................................................................................................40

EXHIBITS

A.                  IDENTIFICATION OF FRANCHISE LOCATION

B.                  PERSONAL GUARANTY

C.                  ADDENDUM TO LEASE

D.                  EXPIRATION DATE ADDENDUM ACKNOWLEDGEMENT ADDENDUM

Robeks Franchise Agreement (3-21-06) (Amended 4-14-06)


ROBEKS FRANCHISE CORPORATION FRANCHISE AGREEMENT

This Franchise Agreement ("the Agreement") is made and entered into on __________________,___(the

"Effective Date") by and between ROBEKS FRANCHISE CORPORATION, a California corporation ("Company"), and___________________________("Franchisee") with reference to the following facts:

RECITALS

A.           Company's parent, Robeks Corporation, owns and has granted Company the perpetual license to use and sublicense the Robeks® name and service mark, as well as other trademarks, service marks, logos and commercial symbols which identify, and are used in connection with the development, operation and marketing of Robeks stores (collectively referred to as the "Proprietary Marks")

B.           Company's parent, Robeks Corporation, owns and has granted Company the perpetual license to use and sublicense certain business methods for the development and operation of retail stores featuring blended-to-order fruit smoothies, freshly squeezed juice products, ROBEKS Nutritional Boosts, other nutritional supplements, and complimentary health-oriented foods and products. These business methods include distinctive signs and store design specifications; interior and exterior imaging requirements; uniform operating, merchandising and marketing methods; mandatory products and ingredients, including products which are specially formulated or branded for Company, which we refer to as "Proprietary Products," and confidential information and trade secrets. These business methods encompass aspects of developing, operating and marketing ROBEKS stores and are referred to in this Agreement as the "Robeks System."

C.           Company reserves the right to modify the ROBEKS System and the Proprietary Marks as often, and at such times, as it believes in its judgment will best promote ROBEKS stores to the public.

D.           Franchisee desires to obtain a franchise and license to use the ROBEKS System and the Proprietary Marks in the operation of a ROBEKS store. Company is willing to grant a license to Franchisee on the terms and conditions of this Agreement.

NOW, THEREFORE, the parties agree as follows:

1.           DEFINITIONS

In addition to definitions incorporated in the body of this Agreement, the following capitalized terms in this Agreement are defined as follows:

A.    "Accounting Period" means the specific period that Company designates from time to time in the Manual or otherwise in writing for purposes of Franchisee's financial reporting or payment obligations described in this Agreement. For example, an Accounting Period may be based on a calendar month, a quarterly financial calendar (which may or may not be subdivided into blocks of weeks, e.g., 4 weeks, 4 weeks and 5 weeks), or a shorter or longer time period that Company selects. Company may designate different Accounting Periods for purposes of paying fees and for discharging reporting obligations under this Agreement.

B.    "Addendum to Lease" means the written agreement by and between Franchisee and the landlord of the Franchise Location that adds specific terms and conditions required by Company to the Lease and grants Company the right, but not the obligation, to accept an assignment of the Lease under stated conditions, in the form attached hereto as Exhibit C.

C.    "Affiliate" means an entity that controls, is controlled by, or is under common control with, a party to this Agreement.

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D.    "Applicable Law" means and includes applicable common law and all statutes, laws, rules, regulations, ordinances, polices and procedures established by any governmental authority with jurisdiction over the operation of the Franchised Business. Applicable Laws includes those relating to building permits and zoning requirements applicable to the use, occupancy and development of the Franchise Location; business licensing requirements; hazardous waste; occupational hazards and health; consumer protection; trade regulation; worker's compensation; unemployment insurance; withholding and payment of federal and state income taxes and social security taxes; collection and reporting of sales taxes; and the American With Disabilities Act.

E.    "Calendar Year" means the 12-month period starting on January 1 and ending on December 31.

F.    "Controlling Interest" means the possession, directly or indirectly, of power to direct, or cause a change in the direction of, the management and policies of a business entity. Company shall consider whether a transfer, either alone or together with all other previous, simultaneous or proposed transfers, would have the effect of transferring, in the aggregate, a sufficient number of the equity or voting interests of business entity to enable the purchaser or transferee to direct, or cause a change in the direction of, the management and policies of the business entity. For purposes of this Agreement, any person who qualifies as a Primary Owner shall be deemed to own a Controlling Interest.

G.    "Effective Date" is the date indicated on page 1 of this Agreement.

H. "Franchise Location" means the business premises approved by Company for the operation of the ROBEKS store that is the subject of this Agreement, having the address shown on Exhibit A.

I. "Lease" refers to the written agreement by and between Franchisee and the owner of the real property business premises where the Franchise Location is situated, which agreement grants Franchisee the right to occupy and use the Franchise Location for the operation of a Robeks store.

J. "Malls" include regional shopping malls, discount outlet malls and pedestrian shopping destinations, whether or not the Mall is open on the Effective Date or first opens for business after the Effective Date. Regional shopping malls refer to an integrated multiple tenant building or buildings designated by a common name providing a physical destination for retail transactions, with one or more anchor tenants and dedicated parking facilities. Pedestrian shopping destinations are a unified grouping of stores which promote themselves as a destination shopping experience, like the Universal City Walk, Old Town Pasadena or Third Street Promenade in Los Angeles County, California.

K. "Manual" refers to all of the confidential operating manuals and other written materials loaned to Franchisee in confidence during the Term.

L. "Non-Proprietary Products" refers to all foods, ingredients, condiments, beverages, fixtures, furnishings, equipment (including computer/IT equipment and POS system), supplies, menus, packaging, merchandise, and services, other than Proprietary Products, authorized by Company which Franchisee may, or must, use, offer, sell or promote in operating the Franchised Business.

M. "Non-Traditional Venues" encompass a broad variety of atypical retail sites, including office buildings and business complexes; arenas and stadiums; health club and recreational facilities; airports, train stations, toll road facilities and other transportation terminals and related facilities; educational, medical, governmental and other types of institutional facilities; and store in store (for example, a, Robeks store within a grocery store or movie theater).

N. "Primary Owner" refers to any person who owns at least 25% of the outstanding equity or voting interests of a Franchisee that is a business entity.

O. "Proprietary Products" refers to (i) all products and merchandise (a) manufactured by, or for, Company or Company's Affiliate in accordance with proprietary recipes, specifications or formulas, or (b) displaying any of the Proprietary Marks and promoted as a Robeks brand item; and (ii) uniforms displaying any of the Proprietary Marks.

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P.          "World Wide Web" means that portion of the Internet used primarily as a commercial computer

network by the general public, and any successor technology, whether now existing or developed after the Effective Date, that enables the general public to purchase goods or services from merchant-controlled World Wide Web sites or through other electronic means.

2.           GRANT

A.           Award of Rights. Company hereby awards to Franchisee, and Franchisee accepts, the right and license to use the ROBEKS System and the Proprietary Marks in connection with the operation of one ROBEKS store (the "Franchised Business") at the Franchise Location, on the terms and conditions of this Agreement. In accepting the award of rights, Franchisee agrees at all times to faithfully, honestly and diligently perform its obligations under this Agreement and to continuously exert its best efforts to promote and enhance the Franchised Business and the goodwill associated with the Proprietary Marks and the ROBEKS System.

B.    Limitations.

1.     Company grants Franchisee no rights other than the rights expressly stated in this Agreement. Franchisee's use of the ROBEKS System or the Proprietary Marks for any purpose, or in any manner, not permitted by this Agreement shall constitute a breach of this Agreement. The franchise and license awarded to Franchisee apply to the Franchise Location, and to no other location. Nothing in this Agreement gives Franchisee the right to sublicense the use of the Proprietary Marks or ROBEKS System to others. Nothing in this Agreement gives Franchisee the right to object to Company's award of franchises or development rights to others.

2.     This Agreement authorizes Franchisee to engage only in retail transactions of authorized products and services to customers for their own use and consumption at the Franchise Location. Franchisee shall not engage in wholesale sales or distribution of products or services of any kind. The term "wholesale sales or distribution" means the direct or indirect sale of products or services to a third party for resale or further distribution through any trade method or trade channel. Franchisee shall not maintain a World Wide Web site or otherwise maintain a presence or advertise using any public computer network in connection with the Franchised Business. Franchisee shall not advertise or sell merchandise or services by mail order, catalog sales or comparable methods that solicit business from customers by means not requiring the customer's physical presence in the Franchise Location to complete the transaction, except for telephone orders for sales delivered from the Franchise Location to the customer's designated address in areas approved by Company.

C.    Improvements; Duty to Conform to Modifications.

1.     Any improvements, modifications or additions which Company makes to the ROBEKS System, or which become associated with the ROBEKS System, including ideas suggested or initiated by Franchisee, shall inure to the benefit, and become the exclusive property, of Company. Franchisee hereby assigns to Company or its designee all intellectual property rights, including all copyrights, in and to any improvements or works which Franchisee may create, acquire or obtain in operating the Franchised Business. Franchisee understands and agrees that nothing in this Agreement shall constitute or be construed as Company's consent or permission to Franchisee modifying the ROBEKS System.

2.     Franchisee understands and agrees that Company may modify the ROBEKS System from time to time as often as Company believes is necessary in its judgment to best promote ROBEKS stores to the public. In the event of any change to the ROBEKS System, Company shall give Franchisee written notice of the change. Franchisee shall, at its own cost and expense, promptly adopt and use any changes to the ROBEKS System as specified by Company and shall promptly discontinue the use of those parts of the ROBEKS System which Company directs are to be discontinued.

D.    Deviations from the ROBEKS System. Franchisee shall not change, modify or alter the ROBEKS System in any way, except as Company directs. Company, in its judgment, may allow other franchisees and licensees to deviate from the ROBEKS System in individual cases. Franchisee understands and agrees that it has no right to object to any variances that Company may allow to itself, Company's Affiliate or other franchisees. Franchisee

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understands and agrees that Company has no obligation to waive, make any exceptions to, or permit Franchisee to deviate from, the uniform standards of the Robeks System. Any exception or deviation that Company does allow Franchisee must be stated in writing.

E. Additional Franchises. Franchisee understands and agrees that this Agreement does not grant Franchisee any implied or preferential right of any kind to acquire an additional franchise to operate another Franchised Business.

3.           FRANCHISE LOCATION: NO TERRITORIAL RIGHTS

A.    Selection of Franchise Location.

1.     Franchisee shall select the Franchise Location, subject to Company's approval and pursuant to Company's written procedures as set forth in the Manual or otherwise. In evaluating potential sites, Franchisee shall consider Company's current site selection criteria as well as the ability of a site to be improved to meet Company's current specifications for the design, appearance and leasehold improvements of a typical Robeks store. To obtain Company's approval of a proposed site, Franchisee shall submit a written site proposal to Company in the form indicated in the Manual, together with any other information that Company requests. Following receipt of Franchisee's written site proposal Company may make an on-site visit to the proposed site at its expense if Company reasonably believes that physical inspection of the demographic conditions of the area, or the proposed site, is necessary or desirable to evaluate Franchisee's proposal. Franchisee understands and agrees that the on-site visit is at Company's option and not required by this Agreement.

2.     Company will review the site proposal and either deny or approve the proposal. If Company notifies Franchisee of its final approval of Franchisee's proposed site, Company shall have the further right to approve the final execution documents for the Lease and Addendum to Lease. Promptly following Company's approval of the Franchise Location, Franchisee shall (i) execute a Lease and Addendum to Lease with the real property owner or master landlord of the Franchise Location, and (ii) deliver to Company a copy of the fully-executed Lease and Addendum to Lease and Exhibit A to indicate the street address of the Franchise Location.

3.    Franchisee understands and agrees that: (i) it is responsible for site selection and for negotiation of a lease for the Franchise Location; (ii) Company's proposal or approval of a site or assistance in the negotiation of a lease does not constitute a guaranty or warranty that operation of a ROBEKS store located at the approved site will be successful or profitable. Company's approval of a site signifies only that the site meets Company's current site criteria; and (iii) Company's proposal or approval of a site or assistance in the negotiation of a lease does not certify that Franchisee's development, use or occupancy of the proposed site as a ROBEKS store will conform to Applicable Laws. Franchisee understands and agrees that it is responsible for investigating and complying with all Applicable Laws concerning its development and occupancy of each Franchise Location.

4.     Company may terminate this Agreement if Franchisee fails to secure Company's approval of the Franchise Location and deliver the executed Lease and Addendum to Lease to Company within 24 months after the Effective Date. If this Agreement terminates for the reasons stated in this Paragraph, Franchisee shall not be entitled to a refund of any fees or other payments paid to Company or Company's Affiliate.

B.    No Territorial Rights.

1.     Franchisee understands and agrees that nothing in this Agreement grants to Franchisee any area, market or territorial rights or protection of any kind. Company may open or operate, or grant others, including Company's Affiliate, the right to open or operate, ROBEKS stores anywhere regardless of the proximity to the Franchise Location.

2.     Franchisee understands and agrees that (i) the rights and license awarded to Franchisee are nonexclusive; (ii) Company reserves all other rights to use the Proprietary Marks for all purposes; and (iii) Franchisee shall have no right to enjoin or be compensated for the opening or operation of another Robeks store or for any other type of use of the Robeks System regardless of its proximity to the Franchise Location.

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3. Company expressly reserves the right to distribute any and all Non-Proprietary Products and Proprietary Products using the Proprietary Marks through all channels of trade and distribution, regardless of whether the channel of distribution now exists or is developed after the Effective Date, or the Non-Proprietary Products or Proprietary Products are now, or in the future, authorized for sale at ROBEKS stores. As examples of Company's reserved rights, and not by limitation, Company may directly or indirectly, itself or through Company's Affiliate, licensee, franchisee, assignee, agent and others:

a.     Produce, license, distribute, market and sell products and services of any kind, including Proprietary Products, (i) through other retail and wholesale channels of distribution, including by means of electronic communication, the World Wide Web, mail order catalogues, direct mail advertising, and comparable methods that solicit business from customers by means not requiring a physical transaction at a retail or wholesale location, or (ii) from supermarkets, health food stores and other wholesale and retail food stores owned by third parties that are not licensed to do business under the Proprietary Marks;

b.     Operate other kinds of businesses under the Proprietary Marks that do not feature nutritional products, Proprietary Products, or other products and services similar to those now, or in the future, featured at ROBEKS stores; and

c.     Operate other retail and wholesale concepts under trade names dissimilar to the Proprietary Marks that compete with ROBEKS stores, including retail and wholesale businesses that feature nutritional products or other products and services similar to those now, or in the future, featured at ROBEKS stores.

C. Relocation. Franchisee shall not relocate the Franchised Business except as set forth below:

1.     If (i) the Lease expires or terminates for reasons other than Franchisee's breach; (ii)the Franchise Location or building in which the Franchised Business is located is destroyed, condemned or otherwise rendered unusable; or (iii) the parties' mutually believe that relocation will increase the business potential of the franchise, Franchisee agrees to relocate the Franchised Business, at Franchisee's sole expense, to a new location selected by Franchisee and approved by Company, in accordance with Company's then-current site selection procedures as specified in the Manual. The parties shall amend Exhibit A to reflect the address of the new Franchise Location.

2.    At Franchisee's sole expense, Franchisee shall construct and develop the new premises to conform to Company's then-current specifications for design, appearance and leasehold improvements for new ROBEKS stores. Franchisee shall complete relocation without any interruption in the continuous operation of the Franchised Business unless Company's prior written consent is obtained or as otherwise noted below in this Paragraph 3.C. In the event Company consents to a disruption in operations and such operations cease, then Franchisee agrees that, until operations resume at the new location: (i) the term of this Agreement shall not be abated, and (ii) Franchisee shall remain liable to pay Royalty Fees as defined in Paragraph ll.B. herein and Advertising Fees as defined in Paragraph 10.C.2., in an amount equal to the average amount paid by Franchisee during the four calendar quarters immediately preceding the date that operations cease or the shorter period that Franchisee has been in business at the original Franchise Location. Franchisee, however, shall not be required to pay said fees if the Franchised Business closes as a result of unforeseeable events beyond Franchisee's control, including, for example, when the premises are rendered unusable due to fire or other events of Force Majeure. In the event of a closure due to such events, Franchisee shall, within 90 days from the date of closure and with Company's prior written consent, either relocate to alternative premises in accordance with the requirements of this Paragraph 3.C. or rebuild the Franchise Location to conform to Company's then-current specifications for design, appearance and leasehold improvements for new ROBEKS® stores, but Franchisee shall not be required to pay the fees described in subpart (ii) during the period of closure.

4.           TERM AND RENEWAL

A. Term. This Agreement shall begin on the Effective Date and shall expire without notice 10 years from the Effective Date, unless this Agreement is sooner terminated as provided herein (the 10-year period is referred to as the "Term"). The parties acknowledge and agree, however, that Company may modify the expiration date of the

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Term by means of Exhibit "D" to take into account the expiration date of the Lease, which date may be shortly before or shortly after the date which is 10 years from the Effective Date.

B.    Renewal Term. Franchisee may, at its option, renew the franchise for 2 successive options each for an additional 5 years (each option is for a period described as the "Renewal Term" individually, and successively, as the "First Renewal Term" and "Second Renewal Term"). To exercise each renewal option, Franchisee must comply with the following conditions:

1.    Franchisee must give Company written notice of Franchisee's election to renew (the "Renewal Notice") at least 9 months, but not more than 12 months, before the end of the Term or the applicable Renewal Term. Each successive Renewal Term shall begin on the day immediately following the expiration of the Term or prior Renewal Term.

2.    Franchisee's Renewal Notice must each be accompanied by a non-refundable renewal fee equal to 25% of the Initial Franchise Fee that Company is then charging for a new single-unit franchise in the United States.

3.    Franchisee must not be in default under this Agreement or any successor Franchise Agreement at the time it gives its Renewal Notice or on the first day of the applicable Renewal Term. Further, Franchisee must not have received more than 3 notices of default during any 24 month period during the Term or then-current Renewal Term, whether or not the notices relate to the same or to different defaults, and whether or not the defaults have each been timely cured by Franchisee.

4.     To exercise each renewal option, Franchisee shall execute Company's then-current form of Franchise Agreement for a 5-year term, which agreement shall supersede this Agreement in all respects; provided, however, Franchisee shall have no additional renewal rights beyond those granted under this Agreement even if the renewal Franchise Agreement provides for a renewal option that is different than this Agreement. Franchisee shall not be required to pay the Initial Franchise Fee stated in each renewal Franchise Agreement, but instead shall pay the renewal fee stated in this Agreement. Franchisee understands that the renewal Franchise Agreement it is required to execute may be materially different than this Agreement, including requiring payment of additional or different fees to Company.

5.     Franchisee shall satisfy Company's then-current training requirements for renewing franchisees.

6.    Franchisee shall satisfy Company's then-current appearance and design standards and equipment specifications that apply to new ROBEKS® stores, including conforming the Franchised Business to Company's then-current requirements relating to decoration, furnishings, merchandise, services and inventory and accounting systems.

7.     Franchisee shall execute and deliver a general release, in form satisfactory to Company, of any and all claims against Company, Company's Affiliate and their respective officers, directors, shareholders, employees and agents.

C.    Ineffective Exercise of Renewal Option. Franchisee's failure to deliver the agreements and release required by this Paragraph within 30 days after Company delivers them to Franchisee shall be deemed an election by Franchisee not to exercise the applicable renewal option.

D.    Failure to Satisfy Renewal Conditions. If any of the renewal conditions are not timely satisfied, this Agreement will expire on the last day of the Term without further notice from Company; provided, however, Franchisee shall remain obligated to comply with all provisions of this Agreement which expressly, or by their nature, survive the expiration or termination of this Agreement.

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5.          FRANCHISE LOCATION DEVELOPMENT AND OPENING DATE

A.    Franchisee's Design Plans.

1.    Company will provide to Franchisee and Franchisee shall pay Company for an initial floor plan and layout based on Company's prototype plans and specifications for a typical Robeks store after the parties execute this Agreement and upon the date Franchisee is prepared to commence architectural drawings for the Franchise Location.

2.     At Franchisee's sole expense, Franchisee shall retain the services of a licensed and qualified architect or other construction personnel, either of which shall be subject to Company's prior approval, to prepare design and construction plans ("Franchisee's Design Plans") that adapt Company's prototype plans and specifications to the specific dimensions and conditions of the Franchise Location and to the requirements of the Lease and Applicable Laws. At a minimum, Franchisee's Design Plans shall address all exterior and interior improvements, together with other information as may be specified in the Manual. It is Franchisee's responsibility to ensure the Design Plans conform to the requirements of the Lease and Applicable Laws. Franchisee acknowledges and agrees that Company may designate one or more architects to assist Franchisee with Franchisee's Design Plans.

3.     Franchisee shall submit Franchisee's Design Plans to Company for review by Company or Company's architect. Company shall promptly review Franchisee's Design Plans and may reject or approve Franchisee's Design Plans completely, or approve Franchisee's Design Plans subject to specified modifications. Company's review is to determine if the Design Plans meet Company's specifications for design, appearance and leasehold improvements. Company shall communicate its decision in writing within 15 days after receipt of complete Franchisee's Design Plans.

B.    Development of Franchise Location.

1.     Franchisee shall cause all construction and other development work to be carried out in compliance with the version of Franchisee's Design Plans that Company approves, including any required specified modifications. Franchisee acknowledges and agrees that Company may designate one or more project managers to assist Franchisee with its construction and development work. Franchisee is solely responsible for procuring all equipment, fixtures, furniture, computer systems, signs, supplies, materials and supplies required for development and operation of the ROBEKS store. Franchisee shall not make any material changes to the approved Franchisee's Design Plans without first submitting the changes to Company for its approval. Franchisee shall furthermore cause all construction and development work to conform with the Lease and Applicable Laws, including all government and utility permit requirements (such as, for example, zoning, sanitation, building, utility and sign permits). Franchisee shall complete development of the Franchise Location diligently, expeditiously and in a first-class manner. Franchisee understands and agrees that it is solely responsible for selecting competent construction personnel and for supervising, and for the acts and omissions of, its construction personnel and that all such construction personnel shall meet the experience and other standards established by Company. Franchisee shall obtain all customary contractors' lien waivers for the work performed no later than 30 days after completion of construction. Franchisee also shall submit detailed construction costs (as specified in the Manual) within 60 days following the earlier completion of construction or opening of business for the Franchise Location, and any additional construction information within 15 days following Company's written request to Franchisee.

2.     Company shall have no responsibility for any delays in development or opening of the Franchised Business or for any loss resulting from the design of the Franchise Location. Company shall have access to the Franchise Location to inspect the work and performance by Franchisee's construction personnel. As required by Company, Franchisee shall provide photographs, reports or other information for Company to determine the progress of construction at the Franchise Location. Franchisee understands and agrees that if Company inspects the work and performance of Franchisee's construction personnel, the inspection is not for purposes of reviewing or certifying that development is in compliance with the Lease or Applicable Laws, but solely to evaluate that development conforms with the set of Franchisee's Design Plans that Company has approved and otherwise with Company's specifications for design, appearance and leasehold improvements.

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3. Franchisee shall provide all actual investment data (including construction costs, equipment purchases and other expenses) to Company in the form Company requires within 60 days of the Franchise Location opening.

C. Opening Date. Franchisee may not open the Franchise Location for business to the public unless and until Company issues a written completion certificate. Company may terminate this Agreement effective upon written notice to Franchisee if Franchisee fails to complete construction of improvements and open for business to the public by no later than 36 months after the Effective Date (the "Opening Date")- If this Agreement terminates for the reasons stated in this Paragraph, Franchisee shall not be entitled to a refund of any fees or other payments paid to Company or Company's Affiliate. Company may extend the Opening Date if Company determines that the Franchise Location's opening has been, or will be, delayed due to events of Force Majeure. The term "Force Majeure" includes an event caused by or resulting from an act of God, labor strike or other industrial disturbance, war, riot, epidemic, fire or other catastrophe, act of any government, failure of the landlord to substantially complete its work in a timely manner for reasons not directly or indirectly attributable to Franchisee, or other cause which Company determines is not within Franchisee's control. Both the determination that an event of Force Majeure has occurred, and the length of the extension, shall be made solely by Company based upon the event causing the delay. Company shall identify the extended Opening Date in writing delivered to Franchisee.

6.          TRAINING

A.    Initial Training Program.

1.     Either Franchisee, Franchisee's Primary Owner, or a senior operations employee acceptable to Company who will have general management and supervisory responsibilities for one or more of ROBEKS stores, must successfully complete Company's initial training program and qualify as a Certified Manager before the opening of the Franchised Business. Qualifying as a Certified Manager signifies that the person is qualified to train Franchisee's other store-level managers and employees. If, at the end of the initial training program, Company determines in good faith that this person fails to demonstrate the requisite competency to operate and manage a ROBEKS store, Company may terminate this Agreement. Termination shall be effective upon delivery of written notice.

2.     Company shall provide the initial training program to 2 persons. This initial training will be conducted at no extra charge one time only, provided both persons attend the same initial training sessions. Franchisee may enroll additional trainees in the initial training program under the conditions specified in this Agreement. Company shall not be obligated to provide an initial training program in connection with Franchisee's exercise of any renewal option.

B.    Additional Training.

1.     At all times during the Term, Franchisee must employ at least one Certified Manager for the Franchised Business, who must devote full time and best interests to managing the Franchised Business and who may not serve as the Certified Manager or manager for another business owned by Franchisee or its Primary Owners. The Certified Manager is responsible to train Franchisee's other store-level managers and employees. Company shall have no responsibility for the operating results of the Franchised Business or the performance of Franchisee's employees. Company may change the criteria for designation as a Certified Manager at any time effective upon notice to Franchisee. Company's notice shall specify the additional training and other requirements applicable to new Certified Managers which existing Certified Managers must complete to maintain their designation as a Certified Manager. Company shall allow existing Certified Managers 90 days after the new criteria become effective in which to satisfy the additional training and other requirements without suffering a lapse in their designation as a Certified Manager. All newly hired and replacement management personnel shall demonstrate the requisite competency to operate and manage a ROBEKS store in Company's judgment.

2.     Franchisee may request permission (i) to send additional persons to the initial training program, (ii) to enroll its employees in other initial training program sessions during the Term or in connection with the opening of subsequent ROBEKS stores, (iii) to extend the initial training program for a longer period, or (iv) to receive additional training and on-site assistance after the Opening Date. Franchisee understands and agrees that all

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additional training shall be at mutually scheduled times, subject to space availability and Company's other training commitments, and that, as a condition to receiving additional training, Franchisee must pay Company's then-current per person training fees stated in the Manual. In connection with additional on-site instruction, Franchisee shall also reimburse Company for its reasonable travel-related expenses, including expenses for air and ground transportation, lodging, meals, and personal charges.

3. Company reserves the right to require that Franchisee's Certified Managers or other designated personnel attend specified additional training programs; provided, however, Company shall not require that more than 2 persons designated by Company complete more than one additional training program of up to 3 days during any 12 month period. As a condition to completing mandatory additional training, Franchisee shall pay Company's then current per person training fees.

7.           PROPRIETARY MARKS

A.    Ownership. Franchisee understands and agrees that, as between the parties, Company or Company's Affiliate owns the Proprietary Marks and the ROBEKS System, and Franchisee owns no rights in the Proprietary Marks or the ROBEKS System except for the license granted by this Agreement. Franchisee agrees not to contest, or assist any other person to contest, the validity of Company's or Company's Affiliate's rights and interest in the Proprietary Marks or the ROBEKS System either during the Term or after this Agreement terminates or expires.

B.    Use of Proprietary Marks and ROBEKS System.

1.     In operating the Franchised Business, Franchisee shall (i) use only the Proprietary Marks and elements of the ROBEKS System designated by Company and only in the manner authorized and permitted by Company; (ii) use the Proprietary Marks only to operate the Franchised Business and in connection with no other activities; (iii) display notices of trademark and service mark registrations in the exact manner that Company specifies; (iv) obtain fictitious or assumed name registrations as required by Applicable Law; and (v) prominently post notices to customers informing them that Franchisee is the independent owner of the Franchised Business under license from Company.

2.     Franchisee shall not use any of the Proprietary Marks or any part thereof: (i) in its corporate or legal name (if Franchisee is a business entity); (ii) with any prefix, suffix or other modifying words, terms, designs, colors or symbols; (iii) in any modified form; (iv) in connection with the sale of any unauthorized products or services; (v) in any manner not expressly authorized in writing by Company; or (v) in any manner that may result in Company's liability for Franchisee's debts or obligations.

3.     Company reserves the right to: (i) modify or discontinue licensing any of the Proprietary Marks; (ii) add new names, marks, designs, logos or commercial symbols to the Proprietary Marks and require that Franchisee use them; and (iii) require that Franchisee introduce or observe new practices as part of the ROBEKS System in operating the Franchised Business. Franchisee understands and agrees that the term Proprietary Marks means the specific names, marks, designs, logos or commercial symbols licensed by Company at any given point in time, subject to Company's right to impose changes. Franchisee shall comply, at Franchisee's sole expense, with Company's directions regarding changes in the Proprietary Marks and Robeks System within a reasonable time after written notice from Company. Company shall have no liability to Franchisee for any cost, expense, loss or damage that Franchisee incurs in complying with Company's directions and conforming to required changes.

4.     Franchisee understands and agrees that any unauthorized use of the Proprietary Marks or the Robeks System by Franchisee shall constitute both a breach of this Agreement and an infringement of Company's intellectual property rights.

C.    Defense of Proprietary Marks and ROBEKS System.

1. Company or Company's Affiliate shall have the sole right to handle disputes with third parties concerning the ownership of, rights in, or Franchisee's use of, the Proprietary Marks or the ROBEKS System. Franchisee shall immediately notify Company in writing if Franchisee receives notice, or is informed, of any:

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(i) improper use of any of the Proprietary Marks or elements of the ROBEKS System; (ii) use by any third party of any mark, design, logo or commercial symbol which may be confusingly similar to any of the Proprietary Marks; (iii) use by any third party of any business practice which unfairly simulates the ROBEKS System in a manner likely to confuse or deceive the public; or (iv) claim, challenge, suit or demand asserted against Franchisee based upon Franchisee's use of the Proprietary Marks or the ROBEKS System.

2.    Company shall have the sole right to take such action as it deems appropriate and to control any legal proceeding or negotiation arising out of any infringement, challenge or claim or otherwise relating to the Proprietary Marks or the ROBEKS System. Franchisee shall not settle or compromise any claim, suit or demand asserted against it and agrees to be bound by Company's decisions in handling disputes regarding the Proprietary Marks and the ROBEKS System. Franchisee shall cooperate fully with Company and execute such documents and perform such actions as may, in Company's judgment, be necessary, appropriate or advisable in the defense of such claims, suits or demands and to protect and maintain Company's rights in the Proprietary Marks and the ROBEKS System.

3.     Unless it is established that a third party claim asserted against Franchisee is based, directly or indirectly, upon circumstances where Franchisee is not using the Proprietary Marks or the ROBEKS System as prescribed by Company, and the misuse constitutes a breach of this Agreement, Company agrees to defend and hold Franchisee harmless against the third party claim and pay any related settlement, judgment or other award rendered against Franchisee, provided Franchisee has notified Company immediately after learning of the claim and fully cooperates in the defense of the action. Because Company will defend the third party claim, Franchisee is not entitled to be reimbursed for legal or other professional fees or costs paid to independent legal counsel or others in connection with the matter. Notwithstanding Company's agreement to defend and hold Franchisee harmless and pay any related settlement, judgment or other award rendered against Franchisee under the conditions stated in this Paragraph, Franchisee understands and agrees that Company is not liable to indemnify or reimburse Franchisee for any costs, expenses or losses that Franchisee may sustain as a result of the third party claim, unless (i) the third party claim relates to the third party's superior rights to operate retail stores and offer products that are similar to the Robeks stores and products and (ii) due to the third party claim Franchisee must discontinue operating stores under the ROBEKS System during the initial three year period from the Effective Date, in which case Company shall reimburse Franchisee for any costs, expenses or losses (but not future lost profits or consequential damages of any kind) Franchisee sustains from the Effective Date through the period Franchisee discontinues the operation of its stores under the ROBEKS System. Except as otherwise provided herein, Franchisee, on behalf of itself and each Covered Person (as defined in Paragraph 16.A.1. below), hereby waives any claim against Company, Company's Affiliates, and their respective officers, directors, shareholders, employees and agents based on third party claims involving the ROBEKS System or the Proprietary Marks, including for lost profits or consequential damages of any kind.

8.           MANUAL

A. Loan. Company will loan Franchisee one copy of its current Manual for as long as this Agreement is in effect and the following conditions apply to Franchisee's use of the Manual. The Manual is, and at all times shall remain, Company's sole property and shall promptly be returned to Company upon expiration, termination or an assignment of this Agreement.

1.    Franchisee shall treat all information contained in the Manual as confidential, and shall use all reasonable efforts to keep the information secret. Franchisee shall not, without Company's prior written consent, copy, duplicate, record or otherwise reproduce the Manual, in whole or in part, or otherwise make it available to any person not required to have access to its contents in order to carry out his or her employment functions. At all times that the Manual is not in use by authorized personnel, Franchisee shall keep the Manual in a locked receptacle at the Franchise Location and shall only grant authorized personnel, as defined in the Manual, access to the key or lock combination of the receptacle. Upon each Company visit to the Franchise Location, Franchisee shall demonstrate that the Manual is in Franchisee's possession and handled in accordance with the requirements herein. In the event Franchisee cannot produce the Manual upon Company's request, the Manual shall be deemed lost.

2.     The Manual contains both mandatory and recommended specifications, standards, procedures, rules and other information pertinent to the Robeks System and Franchisee's obligations under this Agreement.

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Franchisee shall fully comply with all mandatory requirements now or hereafter included in the Manual. Any mandatory requirements exist to protect Company's interests in the System and the Proprietary Marks and not for the purpose of establishing any control or duty to take control over those matters that are reserved to Franchisee.

B.    Updating. Company reserves the right to modify the Manual from time to time to reflect changes that it may implement to the ROBEKS System. All revisions will be reflected in written supplements to the Manual or in other written communications delivered to Franchisee, and each supplement or communication shall become effective upon receipt or on the later date specified in the writing. Franchisee shall insert any updated pages in its copy of the Manual upon receipt and remove superseded pages and return them to Company within 5 days following receipt. Franchisee shall immediately conform its operations to all revisions in mandatory specifications, standards, operating procedures and rules prescribed by Company.

C.    Lost or Destroyed Manual. Franchisee shall promptly notify Company if any volume or part of its copy of the Manual is lost or destroyed for any reason. Provided (i) the loss is not the result of Franchisee's breach of its duty to keep the contents of the Manual confidential, and (ii) Franchisee is not otherwise in default under this Agreement, Company shall furnish Franchisee with the needed replacement copy or portion of the current Manual. Franchisee shall pay Company a replacement Manual fee of $1,000.00, per volume, plus all shipping expenses, in full within 10 days following receipt of invoice. If either (i) or (ii) is not satisfied, Company may terminate this Agreement on account of the loss or destruction of the Manual or any portion thereof.

9.           CONFIDENTIAL INFORMATION

A.    Confidential Information Defined. As used in this Agreement, the term "Confidential Information" includes the following: any information or knowledge concerning the formulation, ingredients, raw materials, recipes, and food preparation processes for Proprietary Products, Non-Proprietary Products and other merchandise and services sold at ROBEKS stores; knowledge of supply relationships; inventory purchase and control procedures; knowledge of pricing, sales, profit performance or other results of operations of any individual ROBEKS store, including the Franchised Business, or group of ROBEKS stores or the entire chain; demographic data for determining sites and territories; the results of customer surveys and promotional programs; and, in general, methods, specifications, customer data, pricing and cost data, procedures, information systems and knowledge about the operation of ROBEKS stores or the ROBEKS System, whether it is now known or exists or is acquired or created in the future, and whether or not the information is included in the Manual, and any information which Company expressly designates as Confidential Information. Confidential Information does not include (i) information which Franchisee can demonstrate came to its attention independent of the ROBEKS franchise and prior to Company's disclosure of the information in the Manual or otherwise, and (ii) information that Company agrees is, or has become, generally known in the public domain, except where public knowledge is the result of wrongful disclosure (whether or not deliberate or inadvertent).

B.    Limitations.

1. Company will disclose Confidential Information to Franchisee in furnishing Franchisee with the Manual, in providing or arranging for the supply of Proprietary Products, and otherwise through the performance of Company's obligations and the exercise of its rights under this Agreement. Franchisee shall acquire no interest in Confidential Information, other than a license to utilize it in the operation of the Franchised Business subject to the terms of this Agreement. Franchisee's use, publication or duplication of Confidential Information for any purpose not authorized by this Agreement constitutes an unfair method of competition by Franchisee and, additionally, grounds for termination of this Agreement. Franchisee agrees to: (i) confine disclosure of Confidential Information to those of its employees and agents who require access in order to perform the functions for which they have been hired or retained; and (ii) observe and implement reasonable procedures prescribed from time to time by Company to prevent the unauthorized or inadvertent use, publication or disclosure of Confidential Information, including requiring that Covered Persons and employees with access to Confidential Information execute a form of Confidentiality, Non-Disclosure and Non-Competition Agreement approved by Company. Upon request from Company, Franchisee shall deliver to Company a copy of each executed Confidentiality, Non-Disclosure and Non-Competition Agreement for its records.

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2. Company may terminate this Agreement if Franchisee, or any person required by this Agreement to execute a Confidentiality, Non-Disclosure and Non-Competition Agreement with Company or Franchisee, breaches the Confidentiality, Non-Disclosure and Non-Competition Agreement. All agreements contained in this Agreement pertaining to Confidential Information shall survive the expiration, termination or Franchisee's assignment of this Agreement. The provisions concerning non-disclosure of Confidential Information shall not apply if disclosure of Confidential Information is legally compelled in a judicial or administrative proceeding, provided Franchisee shall have used its best efforts, and shall have afforded Company the opportunity, to obtain an appropriate protective order or other assurance satisfactory to Company of confidential treatment for the information required to be disclosed.

C. Extraordinary Relief. Franchisee understands and agrees that Company will suffer irreparable injury not capable of precise measurement in money damages if any Confidential Information is obtained by any person, firm or corporation and is used to compete with Company or another Robeks franchisee or otherwise in a manner adverse to Company's interest. Accordingly, in the event a breach of any provision regarding use of Confidential Information, Franchisee, on behalf of itself and each Covered Person, hereby consents to entry of a temporary restraining order or other injunctive relief as well as to any other equitable relief which may be granted by a court having proper jurisdiction, without the requirement that Company post bond. Franchisee further agrees that the award of equitable remedies to Company in the event of such breach is reasonable and necessary for the protection of the business and goodwill of Company.

10.         ADVERTISING

Recognizing the value of advertising and the importance of standardizing advertising to maximize goodwill in the Proprietary Marks, enhance general consumer awareness of Robeks stores, and promote the Franchised Business, Franchisee agrees as follows:

A.    Local Advertising.

1.    All Local Advertisements must be approved by Company in the manner set forth in this Agreement before Franchisee may use them. The term "Local Advertisements" is used in its broadest sense to include: (i) any written, printed or electronic communication of any kind; (ii) any communication by means of a recorded telephone message, spoken on radio, television or similar communication media; (iii) any promotional item or promotional or publicity event; or (iv) the use of any of the Proprietary Marks on merchandise, displays, signs, packaging materials, boxes, novelty items or other tangible personal property of any kind. Company shall provide Franchisee with written guidelines for Local Advertisements. Franchisee shall not use, disseminate, broadcast or publish any material using the Proprietary Marks or promoting the Franchised Business without first obtaining Company's written approval of the copy, proposed media, method of distribution and marketing plan for the proposed Local Advertisements. To apply for Company's approval, Franchisee shall submit a true and correct copy, sample or transcript of the proposed Local Advertisements and additional information material to the proposal disclosing Franchisee's intended use of the proposed Local Advertisements. Company shall have 15 days from the date of receipt in which to approve or disapprove of the submitted materials. If written approval is not received by the end of 15 days, Company shall be deemed to have rejected the proposed Local Advertisements. If written approval is given on or before the end of 15 days, Franchisee may use the proposed Local Advertisements, but only in the exact form submitted to Company.

2.     Franchisee shall maintain white page listings for the Franchised Business in the form approved by Company, in one or more telephone directories which Company designates servicing the Franchised Business' market area. All telephone directory advertising shall be considered Local Advertisements, subject to Company's prior approval.

B.    Grand Opening Advertising. In addition to Franchisee's obligations for Advertising Fees, Franchisee shall spend a minimum of $5,000 on grand opening advertising and promotion in Franchisee's market to publicize the opening of the Franchised Business. The grand opening advertising and promotion shall occur during the period beginning 30 days prior to and extending through 60 days after the opening of the Franchise Location. Franchisee shall submit a grand opening plan and budget in a form required by Company ("Grand Opening Plan") no later than the date Franchisee commences construction at the Franchise Location. The Grand Opening Plan is subject to

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Company's approval, and Franchisee shall modify its Grand Opening Plan to conform to Company's requirements. Franchisee shall not open for business without a Grand Opening Plan approved by Company. Franchisee shall implement all items in the Grand Opening Plan to satisfy its $5,000 minimum grand opening obligation. If the Franchise Location is in a Mall or Non-Traditional Venue, Franchisee may, with Company's written approval, be excused from this obligation, but shall in any event shall be obligated to comply with all grand opening and continuing advertising obligations imposed under the Lease which Franchisee enters into for the Mall or Non-Traditional Venue location. Company shall assist Franchisee in developing a grand opening promotional program and implementation plan. All grand opening advertising is subject to Company's approval, which Franchisee shall obtain according to the procedure for Local Advertisements.

C. ROBEKS Marketing Fund.

1.    Company shall develop the ROBEKS Marketing Fund ("Marketing Fund") for the purpose of underwriting expenses associated with the creation, development and publication of advertising and promotional programs designed to enhance consumer awareness and identity of the Proprietary Marks and ROBEKS stores generally for the benefit of the ROBEKS brand and ROBEKS stores.

2.     Franchisee shall pay to Company, without offset, credit or deduction of any nature, an advertising fee at a rate equal to 2.5% of Franchisee's Gross Sales (the "Advertising Fee" or "Advertising Fees"). The Advertising Fee shall be due and payable weekly, together with the Royalty Fee, by automatic bank debit, as Company may from time to time direct. Company shall deposit the Advertising Fee into the Marketing Fund, which shall be maintained in a separate bank account segregated from the Company's other funds. The separate bank account, however, is not a trust or escrow account.

a.     Company shall use the Marketing Fund to meet all costs of maintaining, administering, directing and preparing advertising and marketing programs, public relations and market research. Company will not be restricted with respect to what, where and how the Marketing Fund will be applied for these purposes. Company has the absolute right to determine the form, content, time, location, market and choice of media and markets for all advertising and promotion paid for from the Marketing Fund proceeds. Without limiting the scope of Company's general authority, Company may use the Marketing Fund to pay for the cost to (i) create, prepare and produce advertising and promotional formats, materials and samples including point of sale materials, promotional graphics, brochure take-away graphic menus, and coupons; purchase media space or time; purchase outdoor advertising art and space; create direct mail advertising and literature of all kinds; (ii) administer local, regional and national advertising programs, including buying direct mail and other media advertising, and purchasing electronic listings in white and yellow page web sites; (iii) conduct electronic advertising promoting the ROBEKS System and Proprietary Marks; (iv) employ advertising, public relations and media buying agencies; (v) support public relations, market research, consumer research and new product research; (vi) maintain a toll-free telephone number and system-wide intranet for franchisees to access for marketing assistance; and (vii) pay expenses directly associated with maintaining and administering the Marketing Fund, including the cost to prepare annual accountings, expenses to collect Advertising Fees from delinquent franchisees, and the cost of conducting the Annual Meeting if Company elects to hold one.

b.     Company makes no representation that any amount of the Marketing Fund will be spent in any given geographic region or area, that monies will be spent on advertising or promotion which is national in scope, or that monies will be spent in Franchisee's market area in proportion to Franchisee's contributions to the Marketing Fund. Company has no fiduciary obligations to any franchisee with respect to the Marketing Fund and its activities.

c.     Franchisee understands and agrees that Company may (i) collect rebates, credits or other payments from suppliers, and (ii) condition its approval of a supplier on the supplier's willingness to agree to make such payments to Company or Company's Affiliates. These payments may or may not be based on account of purchases by ROBEKS franchisees. Company shall have the right to refund certain payments to Franchisee, contribute the payments to the Marketing Fund, or retain the payments for Company's own use, regardless of any designation given to the payments by the supplier. If Company elects to contribute a payment to the Marketing Fund, the contribution shall not reduce Franchisee's obligation for Advertising Fees.

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d.     As long as Franchisee is not in default under this Agreement for nonpayment of Advertising Fees, Company shall make marketing, advertising and promotional formats and sample materials created by the Marketing Fund available to Franchisee. Franchisee shall be solely responsible for all costs to reproduce the formats and materials for its own use and distribution. In connection with reproduction and use of formats and materials created by the Marketing Fund, Franchisee shall observe Company's requirements with respect to protecting Confidential Information.

e.     Company will prepare an unaudited annual accounting of the Marketing Fund, and will furnish a copy of it to Franchisee upon request. While Company will attempt to expend Marketing Fund collections on a current basis, it may recover over-expenditures from subsequent years and may carry forward under-expenditures. Company may reimburse itself for internal expenses that it and its Affiliate incur directly associated with maintaining and administering the Marketing Fund including expenses to collect contributions and general operating expenses (such as for rent and salaries in proportion to time devoted to Marketing Fund matters) and for attorneys fees and other costs related to claims by, or against, the Marketing Fund.

f.     Company may, but is not obligated to, loan money to the Marketing Fund in the event desired expenditures for any period exceed the balance in the Marketing Fund. Any funds loaned to the Marketing Fund will be repayable upon demand when funds are available and bear interest at no more than 2 points over the prime lending rate of Bank of America, its successor, or, if no longer in operation, another national banking institution with headquarters in the United States.

g.     Although Company intends the Marketing Fund to be of perpetual duration, Company reserves the right to terminate the Marketing Fund at any time. If there is a balance in the Marketing Fund after payment of final expenses when Company terminates the Marketing Fund, Company shall refund part of the balance to all Robeks operators who paid Advertising Fees for the Accounting Period before Company announced the Marketing Fund's termination in proportion to the amount of each operator's payment. Company may reinstate the Marketing Fund on the terms and conditions stated in this Agreement effective upon no less than 30 days written notice to Franchisee.

h. For each ROBEKS store which Company or Company's Affiliate own, Company or Company's Affiliate shall contribute to the Marketing Fund an amount equal to the product of the lowest percentage rate of contribution that any ROBEKS franchisee is then required to pay to the Marketing Fund multiplied by the Gross Sales of the store.

D. Regional Advertising Cooperatives.

1.     If, at any time during the Term, two-thirds of the ROBEKS stores in a specific geographic area encompassing the Franchise Location approve the formation of a regional advertising cooperative, Franchisee shall become a member of the regional advertising cooperative and be bound by the cooperative's governing rules regardless of whether Franchisee votes in favor of the cooperative's formation or not. Company shall establish the boundaries of each regional advertising cooperative based on factors which Company deems relevant including the geographic boundaries of local media markets. As a condition of this Agreement, Franchisee must remain a member in good standing of each cooperative to which it may be assigned. In no event shall Franchisee be required to be a member of more than one cooperative at any time.

2.     The regional advertising cooperative's purpose will be to pool member contributions to purchase media and engage in collective marketing efforts that specifically benefit Robeks stores in the designated geographic area. The members of any regional cooperative to which Franchisee is assigned may elect their own officers and directors, subject to the terms of this Agreement and Company's right to approve these rules and procedures to verify that they are consistent with the minimum governance procedures as set forth in the Manual. Company will establish the bylaws for each regional cooperative. Each regional advertising cooperative's members and elected officers shall be responsible for the regional advertising cooperative's administration. All advertising and marketing activities that the regional cooperative engages in shall be subject to Company's prior written consent to be obtained in accordance with the procedures set forth in the Manual.

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3.     All Robeks stores in good standing (as defined in the Manual) in a regional advertising cooperative's territory shall have the right to cast one vote; provided, however, no person owning more than one ROBEKS store in a regional advertising cooperative's territory may cast more than 50% of all votes entitled to be cast. Company and Company's Affiliate (if Company or Company's Affiliate own a Robeks store in a designated geographic area) shall have the same voting rights as franchisee members.

4.    Company may merge adjacent regional advertising cooperatives, subdivide regional advertising cooperatives, change a regional cooperative's geographic boundaries, and dissolve all regional advertising cooperatives, all effective upon no less than 30 days prior written notice. If a boundary change, merger of subdivision changes the ROBEKS stores in the regional cooperative, two-thirds of the owners of ROBEKS stores in the new geographic area must approve the formation of the new regional advertising cooperative. Franchisee shall become a member of the new regional advertising cooperative and be bound by the cooperative's governing rules regardless of whether Franchisee approves of the new cooperative's formation or not.

5.     If Franchisee is assigned to a regional advertising cooperative, Franchisee agrees to pay all fees and assessments imposed from time to time that are approved by two-thirds of the ROBEKS stores regardless of whether or not Franchisee votes in favor of the fees or assessments, which fees shall be in addition to the Advertising Fee describe in Para 10.C.2.

11.         PAYMENTS

A.    Initial Franchise Fee. In consideration of the franchise and license granted to Franchisee, Franchisee shall pay to Company in full upon execution of this Agreement as an initial franchise fee (the "Initial Franchise Fee") the sum of $25,000. The Initial Franchise Fee is fully earned when paid and no portion of it is refundable under any circumstance. If Company's Offering Circular delivered to Franchisee in connection with the sale of this franchise disclosed that Company will discount the initial franchise fee when an existing franchisee purchases a subsequent franchise or in connection with the sale of a franchise to a regional director, and if Franchisee qualifies for the discount, Company will adjust the Initial Franchise Fee to conform with Company's Offering Circular.

B.    Royalty Fee. Beginning on the Opening Date and for the remainder of the Term, Franchisee shall pay to Company, without offset, credit or deduction of any nature, a Royalty Fee equal to 7% of Gross Sales (the "Royalty Fee" or "Royalty Fees"). Franchisee shall pay the Royalty Fee by automatic bank debit, as Company may from time to time direct. The Royalty Fee shall be due and payable within 10 days after the then-applicable Accounting Period based upon the Franchised Business' Gross Sales during the Accounting Period just ended, except when the payment method is automatic bank debit or other electronic means in which case the Royalty Fee shall be due as early as the day after the then-applicable Accounting Period.

C.    Advertising Fee. Beginning on the Opening Date and for the remainder of the Term, Franchisee shall pay to Company, without offset, credit or deduction of any nature, the Advertising Fee described in this Agreement at the same time, for the same period and in the same manner as the Royalty Fee.

D.    Gross Sales. For purposes of this Agreement, "Gross Sales" means the aggregate of all sales and other income from the Franchised Business, and any sales or other income resulting from Franchisee's conduct of any business outside of the Franchise Location involving the ROBEKS System, the Proprietary Marks or Proprietary Products, whether payment is in cash credit, gift certificate(s), proprietary stored value cards or other generally accepted form of payment. Gross Sales includes all proceeds from any business interruption insurance, the sale of Proprietary Products and approved wholesale transactions, but excludes: (1) all sales taxes and other taxes separately stated that Franchisee collects from customers and pays to taxing authorities under Applicable Laws; (2) all refunds and credits made in good faith to arms' length customers; (3) the proceeds from the sale of gift certificates or proprietary stored value cards to customers; and (4) the discount value of all authorized coupons, vouchers or other allowances redeemed by Franchisee.

E.    Electronic Payment. Company reserves the right to collect from Franchisee all obligations arising under this Agreement, and all sums owed to Company's Affiliate, electronically through one or more depository transfer accounts or using such methods as Company may designate in the Manual or otherwise in writing.

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Franchisee shall bear all costs to establish and maintain the required electronic payment system and shall comply with Company's procedures for electronic payment, which Company may modify during the Term.

F.    Late Payment. If Franchisee fails to pay any amount due to Company under this Agreement by the date payment is due, Franchisee shall be obligated to pay, as a late charge, the sum of $200. Additionally, Franchisee shall pay interest on the amount outstanding at the rate of 1 1/2% per month (but not to exceed the maximum legal rate of interest) imposed from the date payment was due until the entire sum and late charge is paid in full.

G.    Application of Fees. Notwithstanding any designation by Franchisee, Company shall have the right to apply any payments by Franchisee to any past due indebtedness of Franchisee for Royalty Fees, Advertising Fees, purchases from Company or Company's Affiliate, interest or any other indebtedness, in such amounts and in such order as Company shall determine.

H. If Franchisee fails to pay any amounts due under this Agreement or provide any reports required by Paragraph 12 hereof, Company shall have the right to (i) refuse Franchisee's orders for Proprietary Products, and (ii) request that Company's designated supplier or suppliers, which may include Company's Affiliate, and any of Company's approved suppliers refuse any orders from Franchisee.

12.         ACCOUNTING AND RECORDS

A.    Maintenance of Business Records. During the Term, Franchisee shall maintain full, complete and accurate business records in accordance with the standards stated in the Manual or otherwise prescribed by Company in writing. Franchisee shall keep all business records and required business equipment and software systems together at the place where notices to Franchisee are required to be sent, unless Company grants Franchisee permission to keep its business records elsewhere. All business records that this Agreement requires Franchisee to maintain shall be retained by Franchisee for a minimum of 7 years during, and following, the expiration, termination, or Franchisee's assignment, of this Agreement.

B.    Reports.

1.     Franchisee shall submit to Company weekly statistical control forms and such other financial, operational and statistical information as Company may require to (i) assist Franchisee in the operation of the Franchised Business in accordance with the ROBEKS System; (ii) allow Company to monitor Franchisee's Gross Sales, purchases, costs and expenses; (iii) enable Company to develop chain-wide statistics; (iv) assist Company to develop new authorized products, remove unsuccessful authorized products, including unsuccessful Proprietary Products, and improve and enhance Proprietary Products; and (v) implement changes in the ROBEKS System to respond to competitive and marketplace changes; provided, however, nothing herein shall prevent Company from polling Franchisee's point of sale cash collection system and other financial records daily, or more frequently, by electronic or other remote means. If Company chooses to conduct such polling of Franchisee's point of sale cash collection system and other financial records daily and Franchisee, for any reason, does not comply with such polling procedure and does not provide physical copies by facsimile or other means within 24 hours from the time Company attempts to conduct the polling procedure, Company shall have the right, but not the obligation, to reconstruct Franchisee's sales in accordance with Company's then-current procedures, and then collect Royalty Fees on those reconstructed sale. Notwithstanding such collection of Royalty Fees by Company, Franchisee shall not be relieved of its obligations to provide actual reports for the period that Company is unable to conduct the polling procedure, and Company shall have the right to reconcile the collection of Royalty Fees based upon such actual reports.

2.     Franchisee shall comply with Company's requests for additional information, including supplying a copy of all sales and income tax returns relating to the Franchised Business at the time Franchisee files them with governmental authorities. Franchisee shall conform to Company's prescribed inventory control procedures, including using prescribed proprietary systems to document inventory sold, remaining inventory levels and other information pertinent to inventory and restocking. Such information shall be conveyed to Company electronically and, upon request, in writing.

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3. After the Opening Date, Franchisee shall submit to Company:

a.     Financial reports substantiating and documenting actual Gross Sales of the Franchised Business, including any business conducted outside of the Franchise Location involving the Robeks System, the Proprietary Marks or Proprietary Products, and providing such additional information as Company may request, on forms and in the manner prescribed by Company, which cover the same Accounting Period as, and must be submitted to Company on or before the date for payment of, Royalty Fees.

b.     On or before 20 days after the end of each Accounting Period, in the form approved by Company, a profit and loss statement and balance sheet providing the results of operation during the Accounting Period just ended and cumulative information for the Calendar Year-to-date.

c.     Within 45 days after the end of each Calendar Year during the Term and any Renewal Term, a profit and loss statement and balance sheet as of the last day of the Calendar Year and prepared in accordance with the accounting procedures stated in the Manual.

4. All reports submitted to Company pursuant to this Agreement shall be executed by Franchisee or a duly authorized representative of Franchisee, certifying that the information is true and correct and that no material fact has been omitted which is necessary in order to make the information disclosed not misleading.

C.    Recording of Transactions. Franchisee shall track and record all sales and transactions with customers of the Franchised Business utilizing the equipment, recording and point-of-sale systems prescribed by Company in the Manual. Franchisee shall additionally utilize a computer terminal, dedicated modem and such other business equipment required by Company and shall purchase, install and use designated non-proprietary and proprietary software programs to record business activities, sales and inventories and to prepare operating reports in accordance with the requirements of the Manual. All of the foregoing equipment and software shall by purchased and maintained by Franchisee at its sole expense and shall at all times conform to Company's specifications, which Company may modify from time to time. If Company requires Franchisee to use proprietary software in operating the Franchised Business, Franchisee shall execute Company's form of separate software license agreement within 10 days after its delivery by Company.

D.    Audit Rights.

1.    Company and its representatives shall have full access to examine, audit and copy Franchisee's business records relating to the Franchised Business, including Franchisee's federal and state income tax returns and sales tax returns, bank statements (including deposit slips and canceled checks), data stored on Franchisee's computer terminal, point-of-sale systems or on disk, and any other documents and information that Company reasonably requests in order to verify Gross Sales or other information reported to Company. Company may conduct its examination in Franchisee's business office where the records are kept or request that copies of documents be made by Franchisee and sent to Company or to its representatives for their examination in their office. Additionally, Company may, at its expense, have an independent audit made of Franchisee's business records at any time. Franchisee also understands and agrees that Company or its representatives may access Franchisee's business records kept on disk or stored on Franchisee's computer terminal at any time, without notice, by remote electronic means.

2.     If any examination or audit conducted by Company reveals an understatement in the Gross Sales or other information reported by Franchisee to Company, then Franchisee shall, within 10 days after notice from Company, pay to Company any additional Royalty Fees and Advertising Fees which are owed, together with late charges as provided in this Agreement. If Company discovers that Franchisee has underreported Gross Sales by an amount which is 2% or more of the actual Gross Sales for the period, Franchisee shall also pay and reimburse Company for all expenses that Company incurs connected with Company's examination and audit, including, but not limited to, Company's accounting and legal fees and travel expenses. If 2 or more audits or examinations of Franchisee's business records conducted within any 24 month period disclose that Franchisee has underreported Gross Sales by an amount which is 2% or more of the actual Gross Sales for the period, then the second understatement shall be conclusively presumed to have been intentional for purposes of this Agreement. In addition to the consequences identified in this Agreement arising because of the understatement, Company may terminate

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this Agreement upon discovery of the second understatement based upon Franchisee's intentional underreporting of Gross Sales.

E. Project and Business Management Software. Company reserves the right to require that Franchisee use specific software applications, tracking systems or other similar means, at Franchisee's cost, which Company may, from time to time, designate or specify to manage the process of developing the Franchise Location, from selection of potential sites through the completion of construction and store opening obligations and to assist in the management of the Franchised Business.

13.         STANDARDS OF QUALITY AND PERFORMANCE

A.    Strict and Punctual Performance. Franchisee understands and agrees that its strict and punctual performance of all obligations set forth in this Agreement, the Manual or otherwise communicated to Franchisee in writing is a condition of the franchise granted to Franchisee. Without limiting the scope of Franchisee's duties, Franchisee understands and agrees that the failure to abide by Company's standards of quality and performance shall not only constitute a breach of this Agreement, but infringement of the Proprietary Marks.

B.    Proprietary Products. Franchisee shall purchase, use, offer, sell and promote certain Proprietary Products designated by Company and maintain those Proprietary Products in stock at the Franchise Location in quantities needed to meet reasonably anticipated consumer demand. Company shall not be obligated to reveal the specifications, formulas, recipes or supply arrangements of Proprietary Products, which information Franchisee understands and agrees constitutes Confidential Information. Franchisee understands and agrees that Company may as frequently as it deems necessary, change the identity, specifications, formulas, recipes, inventory requirements and designations, and add new products and delete existing products, from the items that it designates as Proprietary Products. Franchisee shall conform to all changes immediately upon written notice from Company unless Company's written notice specifies a later implementation date. Franchisee shall purchase Proprietary Products only from Company's designated supplier or suppliers, which may include Company's Affiliate. Franchisee understands and agrees that certain Proprietary Products may have a single designated supplier. Company shall not be liable to Franchisee for delays or shortages in the supply of Proprietary Products or for any defect in the Proprietary Products purchased, and that Franchisee's sole remedy in any of the foregoing events shall be against the manufacturer or supplier of the Proprietary Products.

C.    Non-Proprietary Products; Alternative Suppliers.

1.     Company shall designate all Non-Proprietary Products which Franchisee may, or must, use, offer, sell or promote in operating the Franchised Business. To the extent any Non-Proprietary Products constitute inventory sold to the public, or ingredients or raw materials used to prepare foods or beverages sold to the public, Franchisee shall maintain sufficient quantities of the Non-Proprietary Products in stock at the Franchise Location in order to meet reasonably anticipated consumer demand. Franchisee shall purchase Non-Proprietary Products only from suppliers included on Company's then-current list of approved suppliers, which Company may revise as frequently as it deems necessary. All changes in the specifications for Non-Proprietary Products or to the list of approved suppliers shall be communicated to Franchisee by written supplements to the Manual or otherwise in writing. Franchisee shall not place a new order for any Non-Proprietary Products with a supplier after receiving written notice of changes in the Non-Proprietary Products' specifications or that Company's approval of the supplier has been withdrawn or revoked.

2.     If Franchisee desires to offer for sale or use at the Franchised Business any item which does not, at that time, meet Company's specifications for Non-Proprietary Products, or desires to purchase Non-Proprietary Products from a supplier not on Company's approved supplier list, Franchisee shall comply with Company's current approval procedures and requirements for suppliers and Non-Proprietary Products. Franchisee understands and agrees that Company's recommendation or approval of a supplier does not constitute a representation or warranty of the supplier's ability to meeting Franchisee's purchasing requirements nor of the fitness or merchantability of the Non-Proprietary Products sold by the supplier. Franchisee understands and agrees that its sole remedy in the event of any shortages, delays or defects in the Non-Proprietary Products purchased shall be against the manufacturer or supplier of the Non-Proprietary Products.

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D.    Purchases from Company or Company's Affiliate. From time to time, Company or Company's Affiliate may be a, or the sole, designated supplier of specific Proprietary Products and Non-Proprietary Products in which case the following terms shall apply: (i) Franchisee understands and agrees that Company or Company's Affiliate, as supplier, shall have the right to establish and change prices and other terms of sale, shipment and delivery, which shall be stated on the invoice or purchase order form or in the Manual or by other means of communication; (ii) neither Company nor Company's Affiliate shall be liable to Franchisee for delays or shortages in any Proprietary Products or Non-Proprietary Products that they elect to sell to Franchisee due to causes beyond their control; and (iii) neither Company nor Company's Affiliate shall be obligated to fill or ship any orders to Franchisee if Franchisee is in breach of any obligation under this Agreement.

E.    Standards of Service. Franchisee shall (i) offer for sale, and sell, only the specific foods, beverages, Proprietary Products, Non-Proprietary Products, equipment, and other merchandise designated by Company; (ii) label and identify all items offered for sale by the specific name designation given to them by Company; (iii) use only the equipment, supplies, utensils, materials, signs, menu boards, packaging and delivery services prescribed by Company or which conform to Company's current specifications and standards; (iv) adhere to Company's instructions for storing, handling, preparing, serving and delivering foods and beverages, including following Company's recipes and specifications for weight, dimensions and other characteristics of consumable products, Company's requirements for food safety, and Company's specifications for reproducing the Proprietary Marks on containers, napkins and packaging; (v) adhere to Company's instructions regarding signs, awnings, lighting and security; and (vi) operate the Franchised Business in accordance with Company's inventory, restocking, and customer service standards and specifications. All standards and specifications shall be set forth in the Manual or otherwise communicated to Franchisee and may be revised by Company as frequently as Company deems necessary.

1.    All foods and beverages shall be of the highest quality and sold only in containers and with packaging and other materials approved by Company. Franchisee understands and agrees that Company's authorized menu and menu formats may include requirements concerning organization, graphics, product descriptions, illustrations and other design and content features; that Company may vary the menu, menu format, descriptions and other designations depending on market size, geographic region, store size and other factors in Company's sole judgment; and Company may implement changes in the menu and menu formats and authorize tests and special promotions of new foods, beverages, Proprietary Products, Non-Proprietary Products, equipment, and other merchandise at selected Robeks stores or within selected regions. Franchisee shall not install or maintain on the Franchise Location any newspaper racks, video games, juke boxes, gaming machines, gum machines, games, rides, vending machines or other similar devices. Franchisee shall cooperate with and participate in any e-commerce programs that Company implements, to serve as a local retail support center or in another capacity that Company designates.

2.     Franchisee shall, at its own expense, conform to all changes implemented by Company immediately upon written notice from Company unless Company's written notice specifies a later implementation date. Franchisee shall not offer for sale or sell any other kind of merchandise or services, or deviate from Company's current standards or specifications, except with Company's prior written consent. Company may, from time to time, authorize Franchisee to test market specific products or services in connection with operation of a ROBEKS store. Franchisee shall cooperate in test marketing programs and shall comply with Company's rules and regulations established in connection therewith, without reimbursement or compensation of any kind.

F.    Computer and IT Equipment. POS System and IT Support.

1.    Franchisee shall use and maintain computer equipment, information technology ("IT") equipment, and point of sale cash collection system ("POS System") as is specified in the Manual or otherwise by Company in writing. Franchisee shall also use, at Franchisee's expense, IT support services, if any, specified in the Manual or otherwise by Company in writing.

2.     The POS System, computer equipment, IT equipment, and IT support specified by Company are considered a "Non-Proprietary Products" and shall be purchased by Franchisee in accordance with Paragraph 13.C, above.

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3. Additionally, Franchisee shall maintain electronic data exchange service designated by Company to enable Company to remotely retrieve sales, inventory and other operating data as frequently as Company deems necessary.

G. Franchise Location and Tangible Property.

1.    Franchisee shall, at its own expense, maintain the condition and appearance of the Franchise Location and all tangible property used to operate the Franchised Business in the highest degree of cleanliness, orderliness and repair, consistent with the standards, specifications and requirements of the ROBEKS System and as Company may from time to time direct. Franchisee shall promptly replace any tangible property used to operate the Franchised Business which becomes worn, damaged and non-repairable, or mechanically impaired to the extent that it no longer adequately performs the function for which it was originally intended. All replacement items shall be of the same type, model and quality then specified in the Manual at the time replacement is required. In addition to maintaining the Franchise Location and tangible property in continuous good condition and repair in accordance with this Agreement, Franchisee shall, at its sole expense, periodically make reasonable capital expenditures to remodel, modernize and redecorate the Franchise Location so that the Franchised Business at all times reflects the then-current image of the Robeks System. All remodeling, modernization or redecoration of the Franchise Location must be done in accordance with the standards and specifications that Company prescribes, subject to Company's right to modify those standards and specifications reasonably in the exercise of Company's business judgment.

2.    Franchisee understands and agrees that its failure to repair or maintain the Franchise Location and the tangible property of the Franchised Business in accordance with Company's standards shall constitute a breach of this Agreement. Without waiving its right to terminate this Agreement for such reason, Company may notify Franchisee in writing specifying the action to be taken by Franchisee to correct the deficiency. If Franchisee fails or refuses to initiate a bona fide program to complete any required repair, maintenance or corrective work within 30 days after receiving Company's notice, Company shall have the right, in addition to all other remedies, to enter the Franchise Location and complete the required repair, maintenance or corrective work on Franchisee's behalf. Company shall have no liability to Franchisee for any work performed. To the extent Company elects to perform required repair, maintenance or corrective work, or to replace non-conforming property with conforming property, Franchisee shall be invoiced for labor and materials, plus an amount sufficient to reimburse Company for Company's actual direct costs to supervise, perform and inspect the work and procure any replacement items, including labor, materials, transportation, lodging, meals, contractor fees and other direct expenses, all of which shall be due and payable upon receipt of invoice.

H. Compliance With Laws. Franchisee shall at all times operate the Franchised Business in strict compliance with all Applicable Laws. Franchisee shall secure and maintain in good standing all necessary licenses, permits, deposits and certificates required to operate the Franchised Business lawfully and shall provide Company with proof of compliance promptly following Company's request.

I. Credit Cards; Gift Certificates/Cards and Other System-Wide Marketing Programs. Franchisee shall honor all credit cards designated by Company and enter into and maintain, at Franchisee's expense, all necessary credit card agreements with the issuers of designated cards. Franchisee shall participate in and abide by, at Franchisee's expense, the Robeks gift certificate/card program described in the Manual, as Company may revise it from time to time, and such other system-wide marketing programs identified by Company, including participation in designated e-commerce programs to serve as a retail support center or in another capacity for Company's electronic distribution activities. Certain programs (including stored value cards) may have transaction charges/service fees and may be administered by Company or a third-party vendor designated by Company. Gift certificates/cards or stored value cards once issued are not refundable unless used for the purchase of products in Robeks stores.

J. Complaints and Other Actions. Franchisee shall submit to Company promptly upon receipt copies of all customer complaints and notices and communications received from any government agency relating to alleged violations of Applicable Laws and hereby authorizes the government agency to provide the same information directly to Company upon Company's request. Franchisee shall respond to all customer complaints as set forth in the Manual. Additionally, Franchisee shall promptly notify Company of any written threat, or the actual

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commencement, of any action, suit or proceeding against Franchisee, any person who is a Primary Owner or involving the Franchise Location or the business assets which might adversely affect the operation or financial condition of the Franchised Business, and provide Company with a copy of all relevant documents.

K. Hours of Operation.

1.     Franchisee shall operate the Franchised Business on all of the days and during the hours prescribed in the Manual, unless Company's prior written approval of different days or hours is obtained. Franchisee acknowledges that if the Franchise Location is in a Mall its operating hours shall be the same as the operating hours at the Mall. Before the Opening Date, Franchisee shall advise Company of the Franchised Business' operating hours and promptly notify Company of any changes in its operating hours required by the Lease. Franchisee shall prominently disclose its operating hours to the public in the manner required by the Manual, and shall be open and fully prepared to conduct business during all posted operating hours.

2.      In the event that Franchisee fails to operate the Franchise Location during such hours for: (a) two consecutive calendar days or (b) on three or more occasions during any seven-day period, unless such failure to operate is due to fire, flood, earthquake, an unforeseen act of government authority beyond Franchisee's control, or other similar causes beyond Franchisee's control, Company and Franchisee agree that Company or Company's designee may, at Company's option, enter the Franchise Location and operate the Franchised Business on Franchisee's behalf. In such event, Franchisee shall pay Company its reasonable costs and expenses of operating (or arranging for operation of) the Franchised Business. Franchisee's failure to operate the Franchise Location during the prescribed hours may constitute abandonment of the Franchised Business under this Agreement.

L. Employees.

1.     Franchisee shall employ a sufficient number of competent employees and cause them to receive such in-store training in the Robeks System as Company may require. All employees whose duties include customer service shall have sufficient literacy and fluency to adequately meet the public. Franchisee shall cause all employees, while working in the Franchised Business to wear uniforms in the color, style and design then specified by Company, and to present a neat and clean appearance. Franchisee is solely responsible for hiring, firing and establishing employment policies applicable to its employees, and understands and agrees that this Agreement does not impose any controls, or otherwise impinge, on Franchisee's judgment to make all employment-related decisions.

2.     The Franchised Business shall at all times be under the direct, personal supervision of at least one Certified Manager. Franchisee's Certified Managers are solely responsible for training all employees who do not participate in Part-One Training before the Opening Date of the Franchised Business.

M. Participation in an Internet Web Site or Other Online Communications. Company may require Franchisee, at Franchisee's expense, to participate in Company's website on the World Wide Web as well as an intranet system and other on-line communication systems. Company has the right to determine the content and use of the web site and will establish the rules under which franchisees may participate. Franchisee may not separately register any domain name containing any of the Proprietary Marks. Company will retain all rights relating to its web site and may alter or terminate the web site without prior notice. Franchisee's general conduct on the web site or on other online communications and specifically Franchisee's use of the Proprietary Marks or any advertising on any web site or other online communications is subject to the provisions of this Agreement. Franchisee acknowledges that certain information obtained through Franchisee's participation in the web site may be considered Confidential Information, including access codes and identification codes. Franchisee's right to participate in the web site or otherwise use the Proprietary Marks on the internet or other online communications will terminate when this Agreement expires or terminates.

14.         COMPANY'S OPERATIONS ASSISTANCE

In addition to obligations stated elsewhere in this Agreement, and provided Franchisee is not in default under the terms of this Agreement, Company shall provide the following services:

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A.    Continuing Consultation and Advice. As and to the extent required in Company's judgment, Company shall provide:

1.    Regular consultation and advice to Franchisee in response to Franchisee's inquiries about specific administrative and operating issues which Franchisee brings to Company's attention. Company shall have the right to determine the method for communicating the consultation or advice, which may differ from the methods used for other ROBEKS franchisees. For example and without limitation, consultation and advice may be provided by telephone, in writing, electronically, in person, or by other means.

2.     Upon Franchisee's request, Company may agree to provide on-site instruction and assistance at a mutually-scheduled time, provided Franchisee pays Company its then-current per diem fee set forth in the Manual, plus reimbursement of Company's reasonable expenses in providing on-site instruction, including expenses for air and ground transportation, lodging, meals, and personal charges.

B.    Inspections. In addition to Company's audit rights described in this Agreement, Franchisee expressly authorizes Company and its representatives, at any reasonable time, and without prior notice to Franchisee, to enter the premises of the Franchise Location and conduct regular inspections of the Franchised Business and Franchisee's methods of operation, including observing and conducting discussions with Franchisee's employees, observing customer interaction and services, and reviewing Franchisee's books and records (including data stored on Franchisee's computer hard drive and disks) in order to verify compliance with this Agreement. Company and its representatives reserve the right to select or request that Franchisee provide them, free of charge, with inventory, equipment, advertising and other samples for inspection and evaluation purposes to make certain that the items conform with Company's then-current standards. Franchisee shall cooperate fully with Company's inspections and promptly cure all deviations from Company's standards, specifications and operating procedures which Franchisee is notified of either orally or in writing.

C.    Annual Meeting. In addition to additional training, Company may conduct an annual meeting at a location that Company selects (the "Annual Meeting") to address recently-implemented changes in the ROBEKS System and other topics of common interest to franchisees, including new merchandising approaches, changes in Proprietary Products and Non-Proprietary Products, industry trends, customer relations, personnel administration, local retail marketing, and competitive changes in the market for health foods, fruit smoothies and related products

and merchandise. Franchisee or at least one person who is a Primary Owner must attend each Annual Meeting held, and Company may additionally require the attendance of Franchisee's Certified Managers or other designated personnel at one or more Annual Meetings, but in no event shall Company require attendance by more than 2 persons. Company will not impose a fee to attend the Annual Meeting, but Franchisee must pay the transportation, lodging, personal expenses and salary for each employee who attends an Annual Meeting.

D.    Research and New Developments. As and to the extent required in Company's judgment, Company will investigate and conduct market research; monitor the activities of competitors; and monitor advances in products that compete with Proprietary Products in order to maintain and enhance the reputation and demand for ROBEKS franchises and the products and merchandise sold therefrom.

15.         INSURANCE

A. Minimum Coverage. Before the Opening Date, Franchisee shall procure, at its own expense, and maintain in full force and effect during the Term policies of insurance in accordance with the following terms and conditions:

1. Comprehensive general liability insurance with minimum coverage per Franchise Location of $2,000,000.00 combined single limit (including broad form contractual liability; products/completed operations; personal and advertising injury; medical payments and fire damage liability), or the higher amount required by the Lease, insuring Company and Franchisee against all claims, suits, obligations, liabilities and damages, including attorneys' fees, based upon or arising out of actual or alleged personal injuries or property damage resulting from, or occurring in the course of, or otherwise relating to the Franchised Business or the activities of Franchisee's

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employees. The required liability coverage shall not be limited in any way by reason of any insurance which Company maintains. Company shall be named an additional insured on each liability policy.

2.    Workers compensation and employer's liability insurance as required by Applicable Law.

3.    All "Risks" or "Special" form general casualty insurance coverage insurance including fire and extended coverage, vandalism and malicious mischief insurance, for any vehicle that Franchisee uses in operating the Franchised Business and for additional perils (including flood and earthquake coverage) if applicable to the area with the Franchised Business is located, for the full replacement value of the Franchised Business and its contents based on the cost of replacing the damaged or destroyed property with property meeting Company's current specifications at the time replacement is required. The minimum coverage shall be no less than the amount specified in the Manual on the Effective Date.

4.     Business interruption insurance covering actual losses and contract liabilities (including obligations to Company and Company's Affiliate under this Agreement or for minimum inventory quantities of Proprietary Products) that Franchisee may sustain, for a twelve (12) month period minimum.

5.     Additional types and amounts of insurance coverage as may be required by the Lease, including coverage for all parties which the Lease requires be covered as additional insureds.

B. Additional Insurance Specifications.

1.    Company shall specify the deductible limits for each required insurance policy and may, from time to time, increase the minimum insurance requirements, establish and change deductible limits, require that Franchisee procure and maintain additional forms of insurance, and otherwise modify the insurance requirements contained in this Agreement based upon inflation, general industry standards, Company's experience with claims, or for other commercially reasonable reasons. Franchisee shall comply with any change imposed by Company within 30 days after written notice from Company and shall submit written proof of compliance to Company upon request.

2.    Each insurance policy required by this Agreement shall be written by insurance companies of recognized responsibility meeting the standards stated in the Manual. Before the Opening Date, or the earlier date specified in the Lease, Franchisee shall submit to Company certificates of insurance showing compliance with Company's insurance requirements. All certificates shall state that the policy will not be canceled or altered without at least 30 days prior written notice to Company. Maintenance of required insurance shall not relieve Franchisee of liability under the indemnity provisions set forth in this Agreement. Franchisee shall cause each policy of insurance required by this Agreement to include a waiver of subrogation, which shall provide that Franchisee and Company each releases and relieves the other, and each waives its entire right to recover damages, in contract, tort and otherwise, against the other for any loss or damage occurring to Franchisee's property arising out of or resulting from any of the perils required to be insured against under this Agreement. The effect of these releases and waivers by Company and Franchisee shall not be limited by the amount of insurance carried by Franchisee or required by this Agreement or by any deductible applicable thereto.

3.     Should Franchisee not procure or maintain the insurance required by this Agreement, Company may, without waiving its right to declare a breach of this Agreement based on Franchisee's default, procure the required insurance coverage at Franchisee's expense, although Company has no obligation to do so. Franchisee shall pay Company an amount equal to the premiums and related costs for the required insurance in full upon receipt of invoice, plus an amount sufficient to reimburse Company for its actual direct costs in obtaining the required insurance.

4.     Franchisee understands and agrees that the minimum insurance requirements set forth in this Agreement do not constitute a representation or warranty by Company that the minimum coverage and specified types of insurance will be sufficient for the Franchised Business. Franchisee understands and agrees that it is solely responsible for determining if the Franchised Business requires higher coverage limits or other types of insurance protection.

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16.         COVENANTS

A.    Definitions. For purposes of this Agreement: (1) "Covered Person" means: (i) the individual executing this Agreement as Franchisee; (ii) each officer, director, shareholder, member, manager, trustee or general partner of Franchisee and each Franchisee Affiliate; and (iii) each member of Franchisee's or any of the foregoing individuals' immediate family; and (2) "Covered Area" means anywhere within a 10 mile radius measured from: (i) the Franchise Location, and (ii) the franchise location of every other Robeks store located anywhere in the world regardless of whether the ROBEKS store opens before or after the Effective Date of Termination or Expiration of this Agreement or is owned by another franchisee, Company or Company's Affiliate.

B.    Noncompetition.

1.     During the Term and any Renewal Term, it shall be a breach of this Agreement for Franchisee, Franchisee's Affiliate or any Covered Person, directly or indirectly, to own (either beneficially or of record), engage in or render services to, whether as an investor, partner, lender, director, officer, manager, employee, consultant, representative or agent, any business located anywhere in the world which derives more than 10% of its gross sales from the manufacture, sale or distribution, at retail or wholesale, of fresh or frozen fruit juice-type beverages of any kind, nutritionally-oriented foods or nutritional or vitamin supplements; provided, however, the restrictions stated in this Paragraph shall not apply to any Covered Person after 2 years from the date the Covered Person ceases to be an officer, director, shareholder, member, manager, trustee, owner, general partner, employee or otherwise associated in any capacity with Franchisee.

2.     For 2 years following the Effective Date of Termination or Expiration of this Agreement (as defined in this Agreement) for any reason, or an event of transfer as defined in this Agreement, whichever occurs first, it shall be a breach of this Agreement for Franchisee, Franchisee's Affiliate or any Covered Person, directly or indirectly, to own, engage in or render any services to, whether as an investor, partner, lender, director, officer, manager, employee, consultant, representative or agent, any business which:

a.     is located in the Covered Area and derives more than 10% of its gross sales from the manufacture, sale or distribution, at retail or wholesale, of any or all of the following: fresh or frozen fruit juice-type beverages, nutritionally-oriented foods or nutritional supplements; or

b.     is located outside of the Covered Area, but derives more than 10% of its gross sales from the manufacture, sale or distribution, at retail or wholesale, to persons in the Covered Area, of any or all of the following: fresh or frozen fruit juice-type beverages, nutritionally-oriented foods or nutritional supplements.

c.     The restrictions stated in this Paragraph shall not apply to any Covered Person after 2 years from the date that the Covered Person ceases to be an officer, director, shareholder, member, manager, trustee, owner, general partner, employee or otherwise associated in any capacity with Franchisee.

3.     This Agreement does not prohibit Franchisee, Franchisee's Affiliate or any Covered Person from owning 5% or less of the voting stock of an entity whose shares are publicly traded on a national or foreign stock exchange that manufactures, sells or distributes, at retail or wholesale, fresh or frozen fruit juice-type beverages, nutritionally-oriented foods or nutritional supplements.

C.    Interference. Neither Franchisee nor any Covered Person shall, directly or indirectly, for itself or on behalf of any other person: (i) divert, or attempt to divert, any business or customer of the Franchised Business to any competitor by direct or indirect inducement or perform any act which directly or indirectly could, or may, injure or prejudice the goodwill and reputation of the Proprietary Marks or the Robeks System; or (ii) employ or seek to employ any person who is at that time employed by Company, Company's Affiliate or another franchisee of Company or otherwise directly or indirectly induce or seek to induce the person to leave his or her employment.

D.    Written Agreement. As a condition of this Agreement, unless they have already done so, Franchisee shall cause each Covered Person to execute Company's form of Confidentiality, Non-Disclosure and Non-

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Competition Agreement with Company containing restrictions substantively identical to the provisions of this Agreement.

E.    Survival. The covenants stated in this Article shall survive termination, expiration or the transfer of this Agreement.

F.    Savings Clause. Franchisee acknowledges that the covenants set forth in this Article are fair and reasonable for the protection of the interests of Company, the ROBEKS System and other franchisees. If, however, a court of competent jurisdiction determines that the restrictions in this Article, given the scope and time of the restrictions, are unenforceable as written, the parties agree that the scope and time shall be deemed to extend only over the maximum period of time and geographic area which the court deems enforceable.

G.    Enforcement. Franchisee understands and agrees that Company will suffer irreparable injury not capable of precise measurement in money damages if Franchisee or any Covered Person breaches the covenants set forth in this Article. Accordingly, in the event a breach occurs, Franchisee, on behalf of itself and each Covered Person, hereby consents to entry of a temporary restraining order or other injunctive relief as well as to any other equitable relief which may be granted by a court having proper jurisdiction, without the requirement that Company post bond. Franchisee further agrees that the award of equitable remedies to Company in the event of such breach is reasonable and necessary for the protection of the business and goodwill of Company.

17.         DEFAULT AND TERMINATION

A.    Termination by Franchisee.

1.     Franchisee may terminate this Agreement by written notice to Company for any reason constituting good cause, provided (i) Franchisee is not in default of any obligation under this Agreement when it serves written notice of default on Company, and (ii) termination is accomplished in accordance with the requirements of this Agreement. Any attempt by Franchisee to terminate this agreement except on the grounds, or according to the procedures, stated in this Agreement shall be void. Franchisee's termination of this Agreement shall not entitle it to a refund of any monies that Franchisee has paid to Company or Company's Affiliate.

2.     Good cause means that Company has committed a material and substantial breach of this Agreement which it has not cured within the period allowed by this Agreement. Franchisee's written notice must specify with particularity the matters cited to be in default and provide Company with a minimum of 30 days in which to cure the default. Additional time to cure must be provided as is reasonable under the circumstances if a default cannot reasonably be cured within the minimum 30-day period.

B.    Termination By Company Without Opportunity to Cure.

Company may terminate this Agreement effective immediately upon Company's delivery of written notice of termination to Franchisee based upon the occurrence of any of the following events which shall be specified in Company's written notice, and Franchisee shall have no opportunity to cure a termination based on any of the following events:

1.     Should Franchisee (i) fail to obtain approval of the Franchise Location or deliver an executed Lease and Addendum to Lease on or before the deadlines specified in this Agreement or (ii) execute a Lease without the written consent of Company or the execution of a Lease Addendum in a form not approved by Company;

2.     Should Franchisee fail to open the Franchised Business to the public on or before the Opening Date, as specified in this Agreement;

3.     Should Franchisee fail or refuse to pay, on or before the date payment is due, any fees or other amounts payable to Company, Company's Affiliate or the Marketing Fund, and should the default continue for a period of 10 days after written notice of default is given by Company to Franchisee;

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4.     Should Franchisee fail or refuse to submit any report or financial statement on or before the date due, and should the default continue for a period of 10 days after written notice of default is given by Company to Franchisee;

5.     Should Franchisee lose the right to possession of the Franchise Location due to (i) Franchisee's breach of the Lease which either cannot be cured or which Franchisee has failed to cure within the allowed time period or (ii) Franchisee's failure to exercise an option to extend the Lease within the time periods set forth in the Lease;

6.     Should Franchisee commit an event of default under any other agreement by and between Franchisee and Company pertaining to the Franchised Business and franchise granted by this Agreement which, by its terms, cannot be cured or which Franchisee has failed to cure within the allowed time period, including a default under any personal guaranty;

7.     Should Franchisee make any general arrangement or assignment for the benefit of creditors or become a debtor as that term is defined in 11 U.S.C. 1101 or any successor statute, unless, in the case where a petition is filed against Franchisee, Franchisee obtains an order dismissing the proceeding within 60 days after the petition is filed; or should a trustee or receiver be appointed to take possession of all, or substantially all, of the assets of the Franchised Business, unless possession of the assets is restored to Franchisee within 30 days following the appointment; or should all, or substantially all, of the assets of the Franchised Business or the franchise rights be subject to an order of attachment, execution or other judicial seizure, unless the order or seizure is discharged within 30 days following issuance;

8.     Should Franchisee, or any duly authorized representative of Franchisee, make a material misrepresentation or omission in obtaining the franchise rights granted hereunder, or should Franchisee, or any officer, director, shareholder, member, manager, or general partner of Franchisee, be convicted of or plead no contest to a felony charge or engage in any conduct or practice that, in Company's reasonable judgment, reflects unfavorably upon or is detrimental or harmful to the good name, goodwill or reputation of Company or to the business, reputation or goodwill of the Robeks System or the Proprietary Marks;

9.     Should Franchisee fail to comply with the conditions governing the transfer of rights under this Agreement;

10.   Should an order be made or resolution passed for the winding-up or the liquidation of Franchisee (if Franchisee a corporation, LLC, partnership or other business entity) or should Franchisee adopt or take any action for its dissolution or liquidation;

11.   Should Franchisee have received from Company, during any consecutive 24 month period, 3 or more notices of default (whether or not the notices relate to the same or to different defaults and whether or not the defaults were timely cured by Franchisee);

12.   Should Franchisee make any unauthorized use, publication, duplication or disclosure of any Confidential Information or any portion of the Manual, or should any person required by this Agreement to execute a Confidentiality, Non-Disclosure and Non-Competition Agreement with Company or Franchisee breach the Confidentiality, Non-Disclosure and Non-Competition Agreement;

13.  Should Franchisee abandon or fail or refuse to actively operate the Franchised Business for any period such that Company may reasonably conclude that Franchisee does not intend to continue operating it, unless Franchisee obtains Company's written consent to close the Franchised Business for a specified period of time before Franchisee ceases regular activities;

14.   Should Franchisee materially misuse or make an unauthorized use of any of the Proprietary Marks or commit any other act which does, or can reasonably be expected to, materially impair the goodwill or reputation associated with any of the Proprietary Marks or the Robeks System;

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15.  Should Franchisee intentionally underreport Gross Sales under the criteria established in this Agreement;

16.   Should Franchisee fail to comply with its Lease such that the landlord has terminated the Lease or could terminate the Lease without any further opportunity of Franchisee to cure; or

17.  Should Franchisee fail to comply with any violation of federal, state or local law within 10 days after being notified of non-compliance.

C.    Termination bv Company With Right to Cure. Should Franchisee breach, or refuse to fulfill or perform, any obligation arising under this Agreement not identified in Subparagraph B. above, or fail or refuse to adhere to any mandatory operating procedure, specification or standard prescribed by Company in the Manual or otherwise communicated to Franchisee, Company may terminate this Agreement effective at the close of business 30 days after giving written notice of default to Franchisee which specifies the grounds of default, if Franchisee fails to cure the default cited in the notice. Company shall indicate its decision to terminate by notice given to Franchisee either before, or after, the end of the 30-day cure period. If a default cannot reasonably be cured within 30 days, Franchisee may apply to Company for additional time to complete the cure. The length of the additional cure period, if any, allowed by Company shall be stated in writing signed by Company. If Company grants an extension and if Franchisee does not complete the required cure within the extended cure period, termination of this Agreement shall be effective at the close of business on the last day of the extended cure period without further notice from Company.

D.    Effect of Termination or Expiration. Termination or expiration of this Agreement shall result in the concurrent, and automatic, termination of all agreements between the parties pertaining to the Franchised Business or the franchise granted by this Agreement. In any proceeding in which the validity of termination of this Agreement is at issue, Company shall not be limited to the reasons set forth in any notice of termination or default given to Franchisee. Notwithstanding the termination of this Agreement, the parties agree that any other Franchise Agreements then in effect between the parties concerning other ROBEKS stores owned by Franchisee shall remain in full force and effect, unless the grounds which Company has relied upon to terminate this Agreement also constitute grounds for terminating the other Franchise Agreements and Company has satisfied all requirements to terminate the other Franchise Agreements.

E.    Effective Date of Termination or Expiration of this Agreement.

For purposes of this Agreement, the Effective Date of Termination or Expiration of this Agreement is defined as follows: The Effective Date of Termination is: (i) the date Franchisee receives notice of termination described in Paragraph 17.B., or (ii) the last day of the permitted cure period for a default described in Paragraph 17.C; and the Effective Date of Expiration of this Agreement is the last day of the Term.

18.         RIGHTS AND DUTIES OF PARTIES UPON EXPIRATION OR TERMINATION

A. Franchisee's Obligations.

On and after the Effective Date of Termination or Expiration of this Agreement, Franchisee must comply with the following duties:

1. Within 10 days following the Effective Date of Termination or Expiration of this Agreement, Franchisee shall pay all fees and other amounts owed to Company, including late charges and interest on any late payments.

a. Royalty Fees and Advertising Fees imposed pursuant to this Agreement shall continue to be due and payable (and late charges and interest thereon assessed) after the Effective Date of Termination or Expiration of this Agreement until the date that Franchisee completes all post-termination obligations required by this Agreement. Franchisee's payments shall be accompanied by all reports required by Company regarding Gross Sales and business transactions through the date of payment.

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b. When termination is based upon Franchisee's default, Franchisee shall also pay to Company all damages, costs and expenses, and reasonable attorneys' fees, incurred by Company in enforcing the default and termination.

2.    Franchisee shall immediately cease using and, within 48 hours after the Effective Date of Termination or Expiration of this Agreement, deliver to Company the Manual; all documents, proprietary software and supporting documentation, if any, and all other confidential or proprietary materials that Company has provided to Franchisee pursuant to this Agreement; and shall retain no copy or record of any of the foregoing. Continued use by Franchisee of any copyrighted material shall constitute willful copyright infringement by Franchisee.

3.    With respect to the Franchise Location, Company may, pursuant to the Addendum to Lease, accept an assignment of the Lease, in which case, upon notice from Company, Franchisee shall forthwith vacate the Franchise Location, leaving it in good condition and repair with all fixtures and equipment in good working order. Company shall give Franchisee written notice of its election to accept an assignment of the Lease within 10 days after the Effective Date of Termination or Expiration. Company's failure to timely notify Franchisee shall signify its decision not to accept an assignment of the Lease. If Company does not accept an assignment of the Lease, Franchisee shall, at its sole cost and expense, within 20 days after the Effective Date of Termination or Expiration, remove all signs and other physical and structural features that readily identify the site as a Robeks store, in a manner acceptable to Company, so that the former Franchise Location no longer suggests or indicates a connection with the Robeks System.

4.     Franchisee shall execute and deliver a general release, in form satisfactory to Company, of any and all claims against Company and its officers, directors, shareholders, employees and agents.

5.    Franchisee shall cease using or selling all Proprietary Products. This obligation shall extend to perishable and non-perishable Proprietary Products, regardless of their condition.

6.    Franchisee shall permanently cease using, in any manner whatsoever, the Proprietary Marks, Confidential Information, and any other property associated with the Robeks System or which suggest or indicate that Franchisee is, or was, an authorized Robeks franchisee or continues to remain associated with the ROBEKS System. Franchisee shall cancel all advertising and promotional activities which associate Franchisee with the ROBEKS System. Continued use by Franchisee of any of the Proprietary Marks or Confidential Information shall constitute willful trademark infringement and unfair competition by Franchisee.

7.    Franchisee shall take such action as may be required to cancel all fictitious or assumed name or equivalent registrations relating to its use of the Proprietary Marks.

8.    Franchisee shall cease using all telephone and facsimile numbers and listings used in operating the Franchised Business and take all steps necessary to remove all telephone and other business directory listings that display any of the Proprietary Marks. Franchisee shall furnish Company with evidence satisfactory to Company demonstrating Franchisee's compliance with this obligation within 10 days after the Effective Date of Termination or Expiration of this Agreement. Company shall have the right to demand an assignment of the telephone and facsimile numbers and listings, in which case Franchisee hereby consents to the assignment, without compensation, as of the Effective Date of Termination or Expiration.

9.    Franchisee shall comply with the covenants set forth in this Agreement regarding competition, non-interference and Confidential Information.

10.  Franchisee shall keep and maintain all business records pertaining to the business conducted at the Franchised Business for 7 years after the Effective Date of Termination or Expiration of this Agreement. During this period, Franchisee shall permit Company to inspect such business records as frequently as Company deems necessary.

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B.    Company's Right to Purchase Proprietary Products and Other Assets.

1.    Company shall purchase from Franchisee, and Franchisee shall sell to Company, all non-perishable Proprietary Products in resaleable condition at Franchisee's actual cost. Additionally, Company shall have the right, but not the obligation, to purchase all, or any, of Franchisee's remaining physical assets, at Franchisee's original cost less depreciation, based upon the depreciation schedule which Company or Company's Affiliate uses for like or comparable property. Company may exercise this option by giving Franchisee written notice within 10 days after the Effective Date of Termination or Expiration of this Agreement, specifying in the notice the assets it desires to purchase. Within 10 days following receipt of Company's notice, Franchisee shall furnish Company with documentation substantiating the original cost of each item identified by Company and depreciation taken as reported by Franchisee in its federal and state income tax returns. Within 10 days following receipt of Franchisee's documentation, Company shall notify Franchisee of the particular assets it will purchase and calculate the purchase price for the items in accordance with this Paragraph, and within 5 days after giving the notice, Company will pay Franchisee the purchase price, less permitted set-offs. Company's failure to serve written notice of its election within 10 days after the Effective Date of Termination or Expiration of this Agreement shall signify its decision not to purchase any remaining physical assets of Franchisee. Franchisee shall deliver possession of the Proprietary Products and physical assets to Company upon Company's payment of the purchase price.

2.    With respect to the Proprietary Products and physical assets that Company purchases, Company shall have the absolute right to set off from the purchase price all sums owed by Franchisee to Company under this Agreement, including damages, costs and expenses and reasonable attorneys' fees in enforcing the default and termination, and under Applicable Law, as well as all amounts then due and owing to the Marketing Fund. The right to set off shall not limit Company's remedies under this Agreement or Applicable Law.

C.    Survival of Obligations. All obligations of the parties that expressly, or by their nature, survive the Effective Date of Termination or Expiration of this Agreement shall continue in full force and effect subsequent to the Effective Date of Termination or Expiration of this Agreement until they are satisfied in full. Franchisee shall remain fully liable for any and all obligations of the Franchised Business, whether incurred before, or after, the Effective Date of Termination or Expiration of this Agreement, including obligations arising under this Agreement, the Lease, and all obligations owed to Company's Affiliate and other third parties including obligations for Proprietary Products, other inventory, equipment, supplies, materials, salaries to employees, and taxes.

D.    Third Party Rights; Available Remedies. No person acting for the benefit of Franchisee's creditors or any receiver, trustee in bankruptcy, sheriff or any other officer of a court or other person in possession of Franchisee's assets or business shall have the right to assume Franchisee's obligations under this Agreement without Company's prior consent. Company's right to terminate this Agreement shall not be its exclusive remedy in the event of Franchisee's default, and Company shall be entitled, alternatively or cumulatively, to affirm this Agreement in the event of Franchisee's default and obtain damages arising from the default, injunctive relief to compel Franchisee to perform its obligations under this Agreement or to prevent Franchisee from breaching this Agreement, and any other remedy available under Applicable Law.

19.         ASSIGNMENT AND TRANSFER

A.    Assignment by Company. Franchisee acknowledges that Company maintains a staff to manage and operate the ROBEKS System and that staff members can change from time to time. Franchisee represents that it has not signed this Agreement in reliance on any shareholder, director, officer, or employee remaining with Company in that capacity. Company is free to transfer and assign all of its rights under this Agreement to any person or business entity, provided the assignee agrees in writing to assume Company's obligations. Upon such assignment and assumption, Company shall have no further obligation to Franchisee.

B.    Assignment by Franchisee: In General.

1. Franchisee understands and agrees that the franchise rights granted to it are personal and are granted in reliance upon, among other considerations, the individual or collective character, skill, aptitude, attitude, experience, business ability and financial condition and capacity of Franchisee and, if Franchisee is a corporation, LLC or other business entity, that of its officers, directors, shareholders, managers, members, trustees or owners.

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Franchisee also understands and agrees that, without Company's prior written consent, it has no right, by operation of law or otherwise, to sell, assign, transfer, pledge, donate, encumber or otherwise deal with, directly or indirectly, (i) any interest in this Agreement, (ii) the right to use the Robeks System or the Proprietary Marks granted pursuant to this Agreement, or (iii) all or a significant portion of the other assets of the Franchised Business or Franchisee's leasehold rights. Further, Franchisee understands and agrees that it may not assign this Agreement (or any interest therein) until the Franchised Business is open and operating. Company agrees not to withhold its consent unreasonably if, in Company's judgment, Franchisee satisfies the conditions to transfer identified in this Agreement. Without Company's prior written consent, Franchisee shall not offer for sale or transfer at public or private auction any of the individual assets of the Franchised Business.

2.     For purposes of this Agreement, each of the following events is an event of transfer which requires Company's prior written consent and is subject to the conditions to transfer identified in this Agreement:

a.     A change in ownership of Franchisee due to a consolidation or merger involving Franchisee or any Franchisee Affiliate.

b.     If Franchisee is an individual, an order dissolving Franchisee's marriage. The parties agree that an order dissolving Franchisee's marriage shall not be treated as an event of transfer under this Agreement, but shall be treated as a Qualified Transfer if the order does not (i) adversely affect Franchisee's financial condition in a manner that might impair Franchisee's ability to perform its duties under this Agreement in Company's judgment, or (ii) vest ownership of the business in a person who is not a Certified Manager and, at the time of the order, not intimately involved in day-to-day administration of the Business.

c.     The death or Incapacity (as defined in this Agreement) of Franchisee if Franchisee is an individual, or the death or Incapacity of any person satisfying the definition of Franchisee's Primary Owner.

d.    Either (i) the sale, assignment, transfer, pledge, donation, encumbrance or other alienation by any Primary Owner of its entire ownership interest, or of a smaller interest that constitutes a Controlling Interest in the equity or voting interests of Franchisee; (ii) the sale, assignment, transfer, pledge, donation, encumbrance or other alienation of a Controlling Interest in the equity or voting interests of any Franchisee Affiliate; or (iii) the issuance of additional shares representing a Controlling Interest in the equity or voting interests of Franchisee or any Franchisee Affiliate. For example, and without limitation, a financial restructuring or recapitalization secured by either a Controlling Interest in the equity or voting interests of Franchisee or all or substantially all of the physical assets of the Franchised Business, shall constitute an event of transfer subject to the provisions of this Agreement.

e.     The sale, assignment, transfer, pledge, donation, encumbrance or other alienation of all, or substantially all, of the assets of the Franchised Business.

f.     A transfer of any interest in this Agreement.

g.     The transfer by Franchisee or any Primary Owner all of his or her rights under this Agreement to a newly formed corporation, LLC or other business entity or to a trust.

h. The offer or sale of securities of Franchisee pursuant to a transaction subject to registration under federal or state securities laws or by private placement pursuant to a written offering memorandum.

3.     Any attempted or purported transfer which fails to comply with the requirements of this Agreement shall be null and void and shall constitute a default under this Agreement.

C. Company's Right of First Refusal.

1. Except with respect to Qualified Transfers, if Franchisee, or the person to whom an offer is directed (the "Individual Transferor"), receives a bona fide written offer ("Third Party Offer") to purchase or

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otherwise acquire an interest which will result in an event of transfer within the meaning of this Agreement, Franchisee or the Individual Transferor, shall, within 5 days after receiving the Third Party Offer and before accepting it, apply to Company in writing for Company's consent to the proposed transfer. Franchisee, or the Individual Transferor, shall attach to its application for consent to the transfer a complete copy of the Third Party Offer together with (i) information relating to the proposed transferee's experience and qualifications, (ii) a copy of the proposed transferee's current financial statement, and (iii) any other information material to the Third Party Offer, proposed transferee and proposed assignment or that Company requests.

2.     Company or its nominee shall have the right, exercisable by written notice ("Notice of Exercise") given to Franchisee or the Individual Transferor, within 30 days following receipt of the Third Party Offer, all supporting information, and the application for consent, to notify Franchisee or the Individual Transferor that it will purchase or acquire the rights, assets, or interests proposed to be assigned on the same terms and conditions set forth in the Third Party Offer, except that Company may (i) substitute cash for any form of payment proposed in the offer discounted to present value based upon the rate of interest stated in the Third Party Offer, and (ii) deduct from the purchase price the amount of any commission or fee otherwise payable to any broker or agent in connection with the Third Party Offer and all amounts then due and owing from Franchisee to Company, Company's Affiliate and the Marketing Fund under this Agreement or otherwise. Notwithstanding the foregoing, in the event of (i) a transfer or assignment of stock or similar ownership interests in Franchisee or (ii) Franchisee's or the Individual Transferor's insolvency or the filing of any petition by or against them under any provisions of any bankruptcy or insolvency law, Company's offer will be to purchase Franchisee's interest in this Agreement and the ROBEKS business operated at the Franchise Location. An amount and terms of purchase must be established by a qualified appraiser selected by Company and Franchisee. If the parties cannot agree upon the selection of an appraiser, one will be appointed by the American Arbitration Association upon petition of either party to appoint an appraiser to establish such price in accordance with the rules and procedures of the Association.

3.     The closing shall take place at Company's headquarters at a mutually agreed upon date and time, but not later than 60 days following Company's receipt of the Third Party Offer, all supporting information, and the application for consent to transfer. At the closing, Franchisee or the Individual Transferor shall deliver to Company the same documents, affidavits, warranties, indemnities and instruments as would have been delivered by Franchisee or the Individual Transferor to the proposed transferee pursuant to the Third Party Offer. Additionally, Franchisee and the Individual Transferor shall deliver a general release, in form satisfactory to Company, of any and all claims against Company, Company's Affiliates and their respective officers, directors, shareholders, employees and agents. All costs, fees, document taxes and other expenses incurred in connection with the transfer shall be allocated between Franchisee and Company in accordance with the terms of the Third Party Offer, and any costs not allocated shall be paid by Franchisee or the Individual Transferor.

4.     In the event Company gives timely Notice of Exercise but, through no fault of Franchisee or the Individual Transferor, fails to close the purchase for any reason, Franchisee or the Individual Transferor shall have no recourse against Company. Franchisee or the Individual Transferor may not complete the sale to the proposed transferee without first obtaining Company's prior written consent and satisfying the other conditions to transfer stated in this Agreement.

D. Qualified Transfers.

1.     The following events are collectively referred to as "Qualified Transfers:"

a.     If Franchisee is a Business Entity, the sale, assignment, transfer, pledge, donation, encumbrance or other alienation of equity or voting interests constituting less than a Controlling Interest of the total outstanding equity or voting interests of a Franchisee; and

b.     If Franchisee is an individual, the transfer by Franchisee of all of his or her rights under this Agreement to a newly-formed Business Entity provided all of the equity or voting interests of the new Business Entity are owned by the individual.

2.     In order to complete a Qualified Transfer, Franchisee must (i) give Company written notice of its desire to complete a Qualified Transfer; (ii) when the Qualified Transfer is to a newly-formed Business Entity,

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deliver the documents required to be delivered by a Business Entity Franchisee, including a duly executed personal guaranty in favor of Company from each Person who is required to give a personal guaranty under this Agreement; and (iii) pay a transfer fee of $1,500 to compensate Company for its expenses in recording the ownership change. The Qualified Transfer shall not be effective unless and until Franchisee satisfies conditions (i), (ii) and (iii).

3. Company shall not have any right of first refusal with respect to a Qualified Transfer, nor shall Franchisee be required to obtain Company's prior written consent to a Qualified Transfer if Franchisee satisfies the conditions stated in this Paragraph.

E. Conditions of Assignment to Third Party.

1.    If Company does not exercise its right of first refusal or complete the purchase of an interest which is the subject of a Third Party Offer, Franchisee may not complete the proposed transfer without Company's prior written consent. Any transfer, or attempt to complete a transfer, in violation of this provision is a material breach of this Agreement. The requirements of this Paragraph do not apply to a Qualified Transfer.

2.     As a condition to issuing consent to a transfer, Company shall require that all of the following conditions be satisfied:

a.     The proposed transferee must submit a completed franchise application to Company, pay Company's then-current application fee, if any, and meet Company's then-current qualifications for new ROBEKS franchisees, including qualifications pertaining to financial condition, credit rating, experience, moral character and reputation.

b.     As of the date consent is requested and through the date of closing of the proposed transfer and assignment, Franchisee must not be in default under this Agreement, the Lease, or any other agreements with Company, and must be current with all monetary obligations owed to third parties, including Company's Affiliate.

c.     The transferee must sign Company's then-current from of Franchise Agreement, the terms of which may differ materially from any and all of the terms contained in this Agreement, and which shall supersede this Agreement in all respects, and, upon execution, pays a $10,000 transfer fee.

d.     Franchisee will remain subject to all obligations stated herein that expressly, or by their nature, survive the Effective Date of Termination or Expiration of this Agreement, including the provisions prohibiting competition, non-interference and non-disclosure of Confidential Information.

e.     Franchisee must execute and deliver a general release, in form satisfactory to Company, of any and all claims against Company, Company's Affiliate and their respective officers, directors, shareholders, employees and agents.

f.     All required third party consents to the transfer must be obtained including the consent of the landlord of the Franchise Location.

g.     The proposed transferee must execute all other documents and agreements required by Company to consummate the transfer of this Agreement. If the proposed transferee is a corporation, LLC or other business entity, each person who at the time of the transfer, or later, owns or acquires, either legally or beneficially, 25% or more of the equity or voting interests of the proposed transferee must execute the form of personal guaranty attached to this Agreement as Exhibit B and incorporated herein by reference.

h. Franchisee's right to receive the sales proceeds from the proposed transferee in consideration of the transfer, or otherwise, shall be subordinate to the proposed transferee's and Franchisee's duties owed to Company and Company's Affiliate under, or pursuant to, this Agreement or any other agreement. All contracts by and between Franchisee and the proposed transferee shall expressly include a subordination provision

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permitting payment of the sales proceeds to Franchisee only after any outstanding obligations owed to Company and Company's Affiliate are fully satisfied.

i. Except when the transferee is an existing franchisee, the proposed transferee, its Primary Owner, or a senior operations employee who will have general management and supervisory responsibilities for one or more of ROBEKS stores acceptable to Company, must complete to Company's sole satisfaction Company's next available Part-One Training immediately after possession of the Franchised Business is transferred to the proposed transferee.

j. Franchisee must simultaneously transfer its rights under the Lease, and any other contracts whose continuation is necessary for operation of the Franchised Business, to the same proposed transferee and satisfy any separate conditions to obtain any third party consents required for the transfer of Franchisee's rights to the proposed transferee.

k. Within a reasonable period of time following the closing date, the proposed transferee shall conform the Franchised Business to Company's then-current appearance and design standards and equipment specifications then applicable to new ROBEKS Franchised Businesses.

F.    Closing of Sale to Third Party. Should Company consent to a transfer to a third party, Franchisee, or the Individual Transferor, may only complete the transfer to the proposed transferee on the terms identified in the Third Party Offer or as otherwise stated in Franchisee's application for consent. If there is any material change in the terms of the Third Party Offer, Company has a right of first refusal to accept the new terms subject to the conditions stated in this Paragraph. If Company consents to the transfer to a third party, the transfer must close within 60 days from the date the Third Party Offer is first submitted to Company unless Company grants an extension of time in writing; otherwise, it must again be offered to Company.

G.    Business Entity Franchisee.

1.     If Franchisee is a corporation, LLC, partnership, or other business entity, it shall furnish to Company, upon execution of this Agreement or at such other time as transfer to the business entity is permitted, a copy of its articles of incorporation, by-laws, operating agreement, partnership agreement or other governing agreement, and a list of all persons owning an interest in the equity or voting interests of the business entity. Additionally, Franchisee shall promptly provide Company with a copy of any amendments to, or changes in, the information during the Term. The chief financial officer of Franchisee shall deliver a certificate to Company annually, when Franchisee's annual financial statements are delivered, which lists all owners of record and all beneficial owners of any interest in the equity or voting interests of Franchisee and identifies all transfers of equity or voting interests in Franchisee which have occurred during the period covered by the annual financial statement.

2.     During the Term, each person who now or later owns or acquires, either legally or beneficially, 25% or more of the equity or voting interests of Franchisee must execute Company's form of personal guaranty attached hereto as Exhibit B.

3.     Franchisee shall maintain stop transfer instructions against the transfer on its records of any equity or ownership interests. Each certificate representing an ownership interest in Franchisee shall bear a legend, in the form stated in the Manual, that it is held, and further assignment or transfer thereof is, subject to all restrictions imposed upon transfer set forth in this Agreement.

H. Death or Incapacity.

1. In the event of the death or Incapacity of Franchisee, if Franchisee is an individual, or the death or Incapacity of Franchisee's Primary Owner, if Franchisee is a business entity, the spouse, heirs or personal representative of the deceased or incapacitated individual, or the Franchisee's remaining shareholders, members, partners or owners, as appropriate to the circumstance (collectively referred to as the "Successor") shall have 180 days from the date of death or Incapacity in which to (i) qualify as a Franchisee or Primary Owner, as the case may be, and satisfy Company's conditions to assume the responsibilities and obligations of Franchisee under this

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Agreement, or (ii) complete the sale or assignment of the interest to a qualified, approved third party, provided, in either case, the purchase or assignment complies with the conditions for transfer stated in this Paragraph. During any period that the Successor operates Franchisee's Franchised Business, the Successor shall perform all of the obligations of Franchisee under this Agreement. At the end of the 180-day period, if the Successor has not qualified as a Franchisee or Primary Owner and satisfied Company's conditions or obtained Company's consent to a transfer to a third party, Company may, at its election, terminate this Agreement.

2. For purposes of this Agreement, the term "Incapacity" means an inability due to medical reasons to devote full time and attention to supervising all administrative and operational activities of the Franchised Business and compliance with this Agreement continuing for at least 4 months in the aggregate during any consecutive 12 month period during the Term, based upon the examination and findings of a physician selected by Company. A period of Incapacity shall continue without interruption unless and until the person suffering the Incapacity resumes his or her duties under this Agreement on a full time basis for 30 consecutive days.

20.          RELATIONSHIP OF PARTIES: INDEMNIFICATION

A.    Independent Contractor. This Agreement does not create a fiduciary relationship between the parties, nor does it make either party a general or special agent, joint venturer, partner or employee of the other for any purpose. With respect to all matters, Franchisee relationship to Company is as an independent contractor. Franchisee understands and agrees that it is the independent owner of the Franchised Business and in sole control of all aspects of its operation, and shall conduct its business using its own judgment and discretion, subject only to the provisions of this Agreement. Franchisee shall conspicuously identify itself in all advertising and all dealings with customers, suppliers and other third parties as the owner of the Franchised Business operating under a license from Company.

B.    Indemnification by Franchisee. Franchisee shall indemnify and hold Company, Company's Affiliate and their respective officers, directors, shareholders, employees, agents, successors and assigns, harmless from and against any and all costs, expenses, losses, liabilities, damages, causes of action, claims and demands whatsoever, arising from or relating to the business conducted by Franchisee at or from the Franchised Business, whether or not arising from bodily injury, personal injury or property damage, or any other violation of the rights of others, or in any other way and regardless of cause or any concurrent or contributing fault or negligence of any party. Franchisee's obligation to indemnify Company shall extend to all claims for actual and consequential damages, and Company's costs and expenses incurred in defending any third party claim covered by Franchisee's indemnification, including attorneys and other professional fees, court costs, and travel and living expenses. Company shall have the right to retain its own counsel to defend any third party claim asserted against it which is covered by this indemnification agreement. Franchisee's indemnification obligation shall survive the expiration, termination or assignment of this Agreement for any reason.

C.    Indemnification by Company. Company shall defend, indemnify and hold Franchisee, Franchisee's Affiliates, if any, and their respective officers, directors, shareholders, employees, agents, successors and assigns, harmless from and against any and all costs, expenses, losses, liabilities, damages, causes of actions, claims and demands whatsoever, arising from or relating to product liability claims where Company or Company's Affiliates have manufactured the products or any third party claims based on statements made in marketing or promotional materials prepared by Company. Company's obligation to defend and indemnify Regional Director shall extend to all claims for actual and consequential damages, and Franchisee's costs and expenses incurred in the defense of any third party claim. Because Company will defend the third party claim, Franchisee is not entitled to be reimbursed for legal or other professional fees or costs paid to independent legal counsel or others in connection with the matter.

21.          PERSONAL GUARANTY

A. Scope. If Franchisee is a corporation, LLC or other business entity, each person who owns or at anytime during the Term acquires, either legally or beneficially, 25% or more of the equity or voting interests of Franchisee shall furnish any financial information reasonably required by Company and execute Company's form of personal guaranty attached to this Agreement as Exhibit B.

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B. Default. An event of default under this Agreement shall occur if any guarantor fails or refuses to deliver to Company, within 10 days after Company's written request: (i) evidence of the due execution of the personal guaranty, and (ii) current financial statements of guarantor as may from time to time be requested by Company.

22.         DISPUTE RESOLUTION

A. Agreement to Mediate Disputes. Except as provided in Subparagraph C of this Article, no one shall bring an action or proceeding to enforce or interpret any provision of this Agreement, or seek any legal remedy from any controversy or claim arising out of or related to this Agreement or an alleged breach of this Agreement, until the dispute has been submitted to a mediation proceeding conducted in accordance with the procedures stated in this Agreement.

1.    The mediation proceeding shall be conducted pursuant to the mediation rules of the National Franchise Mediation Program, a dispute resolution process for franchising administered under the auspices of the Center for Public Resources with offices in New York, New York ("the Mediation Service"). Either party may initiate the mediation proceeding (the "Initiating Party") by notifying the Mediation Service in writing, with a copy to the other party (the "Responding Party"). The notice shall describe with specificity the nature of the dispute and the Initiating Party's claim for relief. Thereupon, both parties will be obligated to engage in the mediation, which shall be conducted in accordance with the Mediation Service's then current rules, except to the extent such rules conflict with this Agreement, in which case this Agreement shall control.

2.     Upon receipt of the written mediation demand, the Mediation Service shall provide the parties with a list of mediators willing to serve. If the parties do not agree upon a mediator, and so advise the Mediation Service in writing, within 10 days of receipt of such list, the Mediation Service shall appoint the mediator. The mediator must be either a practicing attorney with experience in business format franchising or a retired judge. Except as otherwise provided in these Dispute Resolution Sections: (i) the fees and expenses of the Mediation Service, including the mediator's fee and expenses, shall be shared equally by the parties, and (ii) each party shall bear its own attorney's fees and other costs incurred in connection with the mediation irrespective of the outcome of the mediation.

3.     The mediation conference shall take place within 30 days after selection of the mediator. Regardless of whether Company or the undersigned is the Initiating Party, the mediation shall be conducted at Company's headquarters, unless the parties agree upon a mutually acceptable alternative location. At least 7 days before the first scheduled session of mediation, each party shall deliver to the mediator and to the other party a concise written summary of its position with respect to the matters in dispute and the Initiating Party's claims for relief, and such other matters required by the mediator.

4.     The parties shall participate in good faith in the entire mediation proceeding, including the mediation conference, with the intention of resolving the dispute, if at all possible. The parties shall each send at least one representative to the mediation conference who has authority to enter into a binding contract on that party's behalf and on behalf of all principals of that party who are required by the terms of the parties' settlement to be personally bound by it.

5.     If one party breaches this Agreement by refusing to participate in the mediation proceeding in accordance with this Agreement, the non-breaching party may immediately file suit and take such other action to enforce its rights as permitted by law and the breaching party shall be obligated to pay: (aa) the mediator's fees and costs, (bb) the non-breaching party's reasonable attorneys' fees and costs incurred in connection with the mediation, and (cc) to the extent permitted by law, the non-breaching party's reasonable attorneys' fees and costs incurred in any suit arising out of the same dispute, regardless of whether the non-breaching party is the prevailing party. Additionally, in connection with (cc), the breaching party shall forfeit any right to recover its attorneys' fees and costs should it prevail in the suit. The parties agree that the foregoing conditions are necessary in order to encourage meaningful mediation as a means for efficiently resolving any disputes that may arise.

6.     The mediation proceeding will be treated as a compromise settlement negotiation. All offers, promises, conduct and statements, whether oral or written, made in the course of the mediation proceeding by any

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party or their agents, experts, counsel, employees or representatives, and by the mediator and the Mediation Service's employees, are confidential. Such offers, promises, conduct and statements may not be disclosed to any third party and are privileged and inadmissible for any purpose, including impeachment, under applicable federal and state laws or rules of evidence; provided however, that evidence otherwise discoverable or admissible shall not be rendered not discoverable or inadmissible as a result of its use in the mediation. If a party informs the mediator that information is conveyed in confidence by the party to the mediator, the mediator will not disclose the information.

B.    Arbitration.

1.     Except as provided in Subparagraph C of this Article, any dispute not resolved through mediation must be submitted to binding arbitration under the authority of the Federal Arbitration Act and must be arbitrated in accordance with the rules and procedures and under the auspices of the American Arbitration Association. The arbitration will take place in the city where Company's headquarters are located.

2.    The decision of the arbitrators will be final and binding on all parties to the dispute; however, the arbitrators may not under any circumstances: (i) stay the effectiveness of any pending termination of this Agreement; (ii) assess punitive or exemplary damages; or (iii) make any award that extends, modifies or suspends any lawful term of this Agreement or any reasonable standard of business performance set by Company. The parties agree neither party shall pursue class claims and/or consolidate the arbitration with any other proceeding to which Company is a party. Judgment upon the award may be entered in any court having jurisdiction thereof.

C.    Exceptions to Duty to Mediate and Arbitrate Disputes. The obligation to mediate and arbitrate shall not apply to:

1.     Any claim by either party seeking interim relief, including requests for temporary restraining orders, preliminary injunctions, writs of attachment, appointment of a receiver, for claim and delivery, or any other orders which a court may issue when deemed necessary in its discretion to preserve the status quo or prevent irreparable injury, including the claim of either party for injunctive relief to preserve the status quo pending the completion of a mediation proceeding. The party awarded interim or injunctive relief shall not be required to post bond. Once interim relief is obtained, the parties agree to submit the dispute to, or continue, mediation in accordance with this Agreement.

2.     Any claim by Company or the holder of rights under any lease or sublease for unlawful detainer or similar remedies available to a landlord or for the enforcement of Company's other rights under any Addendum to Lease.

D.    Judicial Relief. The parties agree that (i) all disputes arising out of or relating to this Agreement which are not resolved by negotiation, mediation or arbitration, and (ii) all claims described in Subparagraph C, shall be brought in the Superior Court of California located closest to Company's headquarters, unless the subject matter of the dispute arises exclusively under federal law, in which event the dispute shall be submitted to the United States District Court located closest to Company's headquarters. As of the date of this Agreement, the parties acknowledge that the Superior Court of the County of Los Angeles, and the United States District Court of the Central District of California are, respectively, the state and federal courts that are located closest to Company's headquarters; however, the parties further acknowledge that Company may relocate its headquarters in its discretion at any time without notice to the undersigned party. The parties agree to submit to the jurisdiction of the courts mutually selected by them pursuant to this Paragraph and mutually acknowledge that selecting a forum in which to resolve disputes arising between them is important to promote stability in their relationship. To the fullest extent that it may effectively do so under Applicable Law, Franchisee waives the defense of an inconvenient forum to the maintenance of an action in the courts identified in this Paragraph and agrees not to commence any action of any kind against Company, Company's Affiliate and their respective officers, directors, employees, agents or property arising out of or relating to this Agreement except in the courts identified in this Paragraph.

E.    Choice of Law. Except to the extent governed by the United States Trademark Act of 1946, as amended (Lanham Act, 15 U.S.C. Section 1501 et seq.), the parties agree that the law of the state in which the Franchise Location is located shall govern any dispute between the parties and the construction, interpretation,

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validity and enforcement of this Agreement and shall be applied in any proceeding to resolve all disputes between them.

F.    Limitations Period. To the extent permitted by Applicable Law, any legal action of any kind arising out of or relating to this Agreement or its breach, including any claim that this Agreement or any of its parts is invalid, illegal or otherwise voidable or void, must be commenced by no later than the last to occur of the following: (i) 90 days after obtaining knowledge of the facts which constituted or gave rise to the alleged violation or liability, or (ii) one year after the act, event, occurrence or transaction which constituted or gave rise to the alleged violation or liability; provided, however, the applicable limitations period shall be tolled during the course of any mediation or arbitration proceeding which is initiated before the last day of the limitations period, and such toll shall continue until the date the proceeding is concluded.

G.    Punitive or Exemplary Damages. Company and Franchisee, and their respective directors, officers, shareholders and guarantors, as applicable, each hereby waive to the fullest extent permitted by law, any right to, or claim for, punitive or exemplary damages against the other and agree that, in the event of a dispute between them, each is limited to recovering only the actual damages proven to have been sustained by it.

H. Attorneys' Fees. Except as expressly provided in this Agreement, in any action or proceeding brought to enforce any provision of this Agreement or arising out of or in connection with the relationship of the parties hereunder, the prevailing party shall be entitled to recover against the other its reasonable attorneys' fees and costs in addition to any other relief awarded by the court. As used in this Agreement, the "prevailing party" is the party who recovers greater relief in the action.

23.         ACKNOWLEDGEMENTS

Franchisee understands and agrees and represents to Company, to induce Company to enter into this Agreement, that:

A.    Acceptance of Conditions. Franchisee has read this Agreement and Company's Offering Circular and understands and accepts the terms, conditions and covenants contained in this Agreement as being reasonably necessary to maintain Company's standards of service and quality and the uniformity of those standards at all ROBEKS Franchised Business in order to protect and preserve the Robeks System and the goodwill of the Proprietary Marks;

B.    Independent Investigation. Franchisee has conducted an independent investigation of the business contemplated by this Agreement. Franchisee recognizes that the Robeks System may evolve and change over time; that an investment in this franchise involves business risks; and that the success of the investment depends upon Franchisee's business ability and efforts;

C.    Reliance. Franchisee has not received or relied upon any promise or guaranty, express or implied, about the revenues, profits or success of the business venture contemplated by this Agreement;

D.    No Representations: Status of Franchisee.

1.     No representations have been made by Company, Company's Affiliate or their respective officers, directors, shareholders, employees or agents, that are contrary to statements made in the Offering Circular previously received by Franchisee or to the terms contained in this Agreement; and

2.     Franchisee (if an individual) or each person executing a guaranty of Franchisee's obligations, is a United States citizen or a lawful resident alien of the United States; if Franchisee is a corporation, LLC, partnership or other business entity, it shall remain duly organized and in good standing for as long as this Agreement is in effect and it owns the franchise rights; and all financial and other information provided to Company in connection with Franchisee's application is true and correct and no material information or fact has been omitted which is necessary in order to make the information disclosed not misleading.

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24.         MISCELLANEOUS

A.    Interpretation of Rights and Obligations. The following provisions apply to and govern the interpretation of this Agreement, the parties' rights under this Agreement, and the relationship between the parties:

1.     Company's Rights. Whenever this Agreement provides that Company has a certain right, that right is absolute and the parties intend that Company's exercise of that right will not be subject to any limitation or review. Company has the right to operate, administrate, develop, and change the System in any manner that is not specifically precluded by the provisions of this Agreement.

2.     Company's Reasonable Business Judgment. Whenever Company reserves discretion in a particular area or where Company agrees to exercise its rights reasonably or in good faith, Company will satisfy its obligations whenever Company exercises Reasonable Business Judgment in making its decision or exercising our rights. Company's decisions or actions will be deemed to be the result of Reasonable Business Judgment, even if other reasonable or even arguably preferable alternatives are available, if its decision or action is intended, in whole or significant part, to promote or benefit the Robeks System generally even if the decision or action also promotes Company's financial or other individual interest. Examples of items that will promote or benefit the ROBEKS System include enhancing the value of the Proprietary Marks, improving customer service and satisfaction, improving product quality, improving uniformity, enhancing or encouraging modernization and improving the competitive position of the ROBEKS System.

B.    Notices.

1.     All communications required or permitted to be given to either party hereunder shall be in writing and shall be deemed duly given on the earlier of (i) the date when delivered by hand; (ii) one business day after delivery to a reputable national overnight delivery service; or (iii) 4 business days after being placed in the United States Mail and sent by certified or registered mail, postage prepaid, return receipt requested.

2.    All notices shall be addressed as follows:

To Company: ROBEKS FRANCHISE CORPORATION Attention: Legal Department 1230 East Rosecrans Avenue, Suite 400 Manhattan Beach, CA 90266

To Franchisee: ______________________________________________

3. Either party may change its address for receiving notices by appropriate written notice to the other. All payments and reports required to be delivered to Company shall be directed to Company at the above address, Attn: Franchise Accounting Department. Notwithstanding the parties' agreement regarding when notices shall be deemed to be given, any required payment or report not actually received by Company during regular business hours on the date it is due shall be deemed delinquent.

C.    Time of the Essence. Time is of the essence of this Agreement with respect to each and every provision of this Agreement in which time is a factor.

D.    Withholding of Consent. Except where this Agreement expressly obligates Company to reasonably approve or not unreasonably withhold its approval of any action or request by Franchisee, Company has the absolute right to refuse any request by Franchisee or to withhold its approval of any action by Franchisee. Further, whenever the consent or approval of Company is required under this Agreement such consent or approval must be in writing unless this Agreement specifies otherwise.

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E.    Waiver. Any waiver granted by Company to Franchisee excusing or reducing any obligation or restriction imposed under this Agreement shall be in writing and shall be effective upon delivery of such writing by Company to Franchisee or upon such other effective date as specified in the writing, and only to the extent specifically allowed in such writing. No waiver granted by Company, and no action taken by Company, with respect to any third party shall limit Company's right to take action of any kind, or not to take action, with respect to Franchisee. Any waiver granted by Company to Franchisee shall be without prejudice to any other rights Company may have. The rights and remedies granted to Company are cumulative. No delay on the part of Company in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by Company of any right or remedy shall preclude Company from fully exercising such right or remedy or any other right or remedy. Company's acceptance of any payments made by Franchisee after a breach of this Agreement shall not be, nor be construed as, a waiver by Company of any breach by Franchisee of any term, covenant or condition of this Agreement.

F.    Paragraph Headings: Language. The paragraph headings used in this Agreement are inserted for convenience only and shall not be deemed to affect the meaning or construction of any of the terms, provisions, covenants or conditions of this Agreement. The language used in this Agreement shall in all cases be construed simply according to its fair meaning and not strictly for or against Company or Franchisee. The term "Franchisee" as used herein is applicable to one or more persons, corporations, partnerships or entities, as the case may be, and the singular usage includes the plural and the masculine and neuter usages include the other and the feminine. If two or more persons are at any time Franchisee hereunder, whether or not as partners or joint venturers, their obligations and liabilities to Company shall be joint and several. Nothing in this Agreement is intended, nor shall it be deemed, to confer any rights or remedies upon any person or business entity not a party hereto. Whenever this Agreement refers to "business days," it shall mean weekdays only, excluding Saturdays, Sundays and nationally recognized holidays.

G.    Binding on Successors. The covenants, agreements, terms and conditions contained in this Agreement shall be binding upon, and shall inure to the benefit of, the successors, assigns, heirs and personal representatives of the parties hereto.

H. Validity: Conformity With Applicable Law. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be valid under Applicable Law, but if any provision of this Agreement shall be invalid or prohibited under Applicable Law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement. To the extent that the provisions of this Agreement provide for periods of notice less than those required by Applicable Law, or provide for termination, cancellation, non-renewal or the like other than in accordance with Applicable Law, such provisions shall be deemed to be automatically amended to conform them to the provisions of such Applicable Law. To the extent any provision of this Agreement is deemed unenforceable by virtue of its scope in terms of geographic area, business activity prohibited or length of time, but could be enforceable by reducing any or all thereof, the parties agree that the provision shall be enforced to the fullest extent permissible under the laws of the jurisdiction in which enforcement is sought.

I. Amendments. No amendment, change, modification or variance to or from the terms and conditions set forth in this Agreement shall be binding on any party unless it is set forth in writing and executed: (i) on behalf of Franchisee, by Franchisee if Franchisee is an individual, and, if not, by an authorized agent or officer of Franchisee; and (ii) on behalf of Company, by any duly authorized officer of Company.

J. Complete Agreement. This Agreement, including all exhibits attached hereto, and all agreements or documents which by the provisions of this Agreement are expressly incorporated herein or made a part hereof, sets forth the entire agreement between the parties, fully superseding any and all prior agreements or understandings between them pertaining to the subject matter hereof.

K. Submission of Agreement. The submission of this Agreement to Franchisee does not constitute an offer to Franchisee, and this Agreement shall become effective only upon execution by Company and Franchisee.

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25.         WAIVER OF JURY TRIAL

COMPANY AND FRANCHISEE EACH HEREBY WAIVE THEIR RESPECTIVE RIGHT TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, COUNTERCLAIM OR CROSS-COMPLAINT IN ANY ACTION, PROCEEDING AND/OR HEARING BROUGHT BY EITHER COMPANY OR FRANCHISEE ON ANY MATTER WHATSOEVER ARISING OUT OF, OR IN ANY WAY CONNECTED WITH, THIS AGREEMENT, THE RELATIONSHIP OF THE PARTIES, THE USE OF THE PROPRIETARY MARKS OR ROBEKS® SYSTEM BY FRANCHISEE, OR ANY CLAIM OF INJURY OR DAMAGE, OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY LAW, STATUTE, REGULATION, EMERGENCY OR OTHERWISE, NOW OR HEREAFTER IN EFFECT, TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date stated on page 1.

[Company] ROBEKS FRANCHISE CORPORATION

By: Its:

[FRANCHISEE]

[Signature]

[Print Name]

[NAME OF CORPORATION OR PARTNERSHIP]

By: Its:

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EXHIBIT "A

FRANCHISE LOCATION

The street address of the Franchise Location is as follows:

Dated:

[COMPANY]

ROBEKS FRANCHISE CORPORATION

[FRANCHISEE]

[Signature]

By:_ Its:

[Print Name]

[NAME OF CORPORATION OR PARTNERSHIP]

By:

Its

Robeks Franchise Agreement (3-21-06) (Amended 4-14-06)


The original documents were scanned as an image. The original file can be downloaded at the link above.