Franchise Agreement
The original documents were scanned as an image. The original file can be downloaded at the link above.
Sample Franchise Agreement
TAB BOARDS INTERNATIONAL, INC. FRANCHISE AGREEMENT
THIS AGREEMENT ("Agreement") is made this____day of______________, 20_, between
TAB Boards International, Inc. ("TAB"), a Colorado corporation located at 1640 Grant Street, Suite 200,
Denver, CO 80203, and___________________________________________________("You"), located
at_______________________________________________, which is managed or owned in part or in
whole by_________________________("Managing Party", as further defined below), whose address is
____________________________________, who, on the basis of the following understandings and in
consideration of the following promises, agree as follows:
DEFINITIONS
For purposes of this Agreement, the following terms shall have the meaning as set forth below:
"Affiliate" means individually or collectively any and all entities controlling, controlled by, or under common ownership with TAB, including DCS, Allen Fishman Business Consultants, Inc., and TAB Boards International (Canada) Corporation.
"Ancillary Business" means certain ancillary services or products approved by TAB, such as consulting services that are not the same as or similar in nature to those that form a part of the SBL System as further described in Section 6.6.
"Amounts Collected on Your Behalf is defined in Section 4.3.
"Boards" or "TAB Boards" means the groups of business leaders who become TAB Members that You will form as part of Your TAB Business.
"Business(es)" or "TAB Business(es)" means the business You will operate according to the Licensed Methods under the Trademarks and pursuant to the terms of this Agreement.
"Business Assessment Fees" means fees paid by Your TAB Members. You are required to pay a portion of these Business Assessment Fees to TAB on a monthly basis.
"Competitive Activity" is defined in Section 11.1.
"Copyrighted Materials" means the Confidential Manual and all other manuals, systems, binders, videos, software, web content, electronic files and printed materials, Licensed Methods including all revisions of or to any of these materials, provided to You by TAB.
"Confidential Information and Trade Secrets" is defined in Section 11.4.
"Confidential Manual" means the Confidential Manual as described in greater detail in Section 5.5.
"Contract Facilitator" is an independent contractor engaged by a TAB franchisee to form and/or facilitate TAB Boards and to provide SBL coaching to TAB Members in full compliance with TAB's requirements.
::ODMA\PCDOCS\DOCS\951626\2 i
F.A. 3/2007
Franchisee Initials
"International Conference Facilitator Registration Fee" means the registration fee You must pay for the International Conference as described in Section 4.2.h.
"Kick-Off Marketing Campaign" means the marketing campaign to solicit Members to attend a Group Information Meeting as more fully described in Section 6.11.a. 1.
"Kick-Off Marketing Costs" means those costs and expenses associated with the Kick-Off Marketing Campaign.
"Licensed Methods" means individually and collectively, the TAB System and SBL System.
"Managing Party" means that if You are a partnership, corporation, limited liability company, or other legal entity, You will designate one owner, partner, manager, member, or officer as the managing party who will have the management responsibility for operating the Business.
"Marketing Development Fee" means the monthly fee You pay to TAB which is deposited in the Franchise Marketing Account as more fully described in Section 7.1.
"Mass Marketing Campaigns" means the campaigns You will conduct as part of Your Business in order to invite prospective TAB Members to attend Group Information Meetings as more fully described in Section 6.11.
"Mediation" is defined in Section 14.2.
"Member(s)" or "TAB Member(s)" means business leaders who participate in the TAB Boards You form and facilitate and/or to whom you provide SBL coaching.
"Member Administration and Support Fee" means the monthly fee You must pay TAB which is explained in Section 4.2.g.
"Membership Dues" means the dues You will charge Your TAB Members.
"Membership Information" means all aspects of the Licensed Methods that relate to TAB's methods for forming TAB Boards, providing SBL coaching and soliciting new Members, and to all written agreements with Members, membership lists, RMP lists, documents, correspondence, membership data, files, lists of renewal dates, rates, and literature of whatever form respecting TAB Boards, TAB Members, or TAB Member prospects with whom You discussed or have had an appointment to discuss any of the Licensed Methods, in the past, present, or future. The term Membership Information does not include Your work product or matters related solely to an Ancillary Business.
"Non-TAB Members" are business leaders who are not TAB Members.
"Opportunity Fee" is a fee You will pay starting on month 19 after Your Start of Business Operations, or earlier if You so elect, in lieu of the Royalty Fee.
"Other businesses" is defined in Section 2.6.
::ODMA\PCDOCS\DOCS\951626\2 3
F.A. 3/2007
Franchisee Initials
"TAB Indemnified Parties" is defined in Section 12.2.
"TAB Trademarks" means such service marks, trademarks, trade dress, trade names and copyrights, as may presently exist or which may be modified, changed or acquired by TAB or its Affiliates in connection with the operation of the TAB System including but not limited to, THE ALTERNATIVE BOARD TAB®, THE ALTERNATIVE BOARD®, TIPS FROM THE TOP®, TAB ADVISORY FORUM®, TAB BOARDS® , TAB®, TAB BOARDS REWARDS®, TAB BUSINESS VANTAGE®, POCKET VISION®, and pending applications for the Arrow Design logo, ACHIEVE SUCCESS WITH PEER ADVICE AND COACHING'" and TALKTAB™.
"TAB System" means the proprietary methods and system to operate a TAB Business, including TAB's know-how, trade secrets, materials, and methods for providing these products and services as may be changed, improved, modified and further developed by TAB and its Affiliates from time to time.
"TAB Membership Developer" or "TMD" is an individual who provides field support to assist You in the member acquisition process.
"TAB Membership Developer Field Support Fee" or "TMD Field Support Fee" is a fee You must pay which is described in Section 4.2.d.l.
"TAB Membership Developer Field Support Bonus" or "TMD Field Support Bonus" is a fee You
must pay which is described in Section 4.2 d.(2) below.
"Trademarks" means individually and collectively the SBL Marks and the TAB Trademarks.
"You" or "Your" is applicable to all persons, corporations, limited liability companies, partnerships, and the Managing Party. You, Your owners, Your assignees and transferees, which in the context are applicable to an individual or individuals, will mean the owner or owners of an equity or voting interest of the Business or any such assignee or transferee, if You or such assignee or transferee is a corporation, partnership, or limited liability company.
1. BACKGROUND AND PURPOSE
1.1 TAB Businesses
TAB owns, operates, and grants franchises for the establishment and operation of a TAB Business that:
a) forms TAB Boards, provides facilitation services, both in person and by electronic communication methods for the TAB Boards Meetings and provides private coaching sessions for TAB Members, all according to the TAB System and under the TAB Trademarks. TAB Boards act as an alternative to a formal board of directors, to provide objective advice to Members.
b) provides personal and business planning coaching for TAB Members, which includes, without limitation, a personal and business planning process for business owners and the businesses they own, all according to the SBL System and under the SBL Marks.
::ODMA\PCDOCS\DOCS\951626\2 F.A. 3/2007
Franchisee Initials
(5) To have direct communications, including without limitation, conducting research surveys and testing programs with any party within Your Protected Territory. Such direct communications may include, but are not limited to, TAB contacting You, Your Members and Your prospective Members served by Your Business. You agree to cooperate by participating in such direct communications, as reasonably requested by TAB.
b) To Allen E. Fishman
The following rights are retained by and reserved to Allen E. Fishman, the developer of the TAB System and the SBL System and his successors and assigns: The right to give talks, write books and otherwise communicate information in any form relating to the TAB System and the SBL System and to use the TAB Trademarks and the SBL Marks in connection therewith.
c) To DCS
The following rights are retained by and reserved to DCS and its successors and assigns: The right to use any of the methodology, aspects, elements or know-how of the SBL System, for any purpose whatsoever other than in connection with the personal and business planning process for business owners and the businesses they own. However, DCS does not have the right to use the SBL Marks.
2.3 Protected Territory
So long as this Agreement is in effect and You are not in default of any provisions in this Agreement, TAB and its Affiliates will not engage in, or grant licenses or franchises to others to engage in, soliciting Member prospects for membership in TAB Boards whose business offices are located within Your Protected Territory, with the exception of Prospect Exceptions, as defined in Section 2.4. and individuals running businesses that have offices both within Your Protected Territory and also within the Protected Territory of another party. You acknowledge that the designation of Your Protected Territory: (i) may be modified pursuant to the terms of this Agreement; and (ii) may vary significantly in terms of size, number of total businesses and demographics from the territories of other TAB franchisees due to density of population, business potential, business practice, or any other conditions deemed important by TAB and that TAB will have no obligation to grant You like or similar variations. Your rights and obligations in and to Your Protected Territory will be subject to, and may be modified by, the following:
a) Protected Territory Classification
Your Protected Territory Classification is the then current number of total businesses, as determined by third party vendor(s) selected by TAB in its sole discretion that is set forth in Exhibit I. Your Protected Territory Classification will affect the amount of the Initial Franchise Fee, Marketing Development Fee and Opportunity Fee You pay.
b) Review And Reclassification Of Your Protected Territory
Your Protected Territory Classification can increase or decrease with fluctuation in the number of total businesses in Your Protected Territory. Starting with the second year after Your Start of Business Operations, Your Protected Territory Classification will be reviewed annually by TAB. Based on the then most current information available to TAB using the zip codes,
::ODMA\PCDOCS\DOCS\95l626\2 F.A. 3/2007
7
Franchisee Initials
c) Effect Of Increase In Or Reduction Of Protected Territory Classification On Initial
Franchise Fee
A reduction in the Protected Territory Classification of Your Protected Territory will not, for any reason, result in an adjustment of the Initial Franchise Fee You already paid to TAB, as the Initial Franchise Fee, once paid, is not refundable under any circumstances. If the Protected Territory Classification of Your Protected Territory is increased for any reason, You will pay to TAB the difference of the then current Initial Franchise Fee for the higher Protected Territory Classification and the Initial Franchise Fee You already paid to TAB.
2.4 Marketing Outside Your Protected Territory
You may advertise, market, or otherwise solicit for prospective TAB Members if any one or all of the following requirements are met: (1) the prospect has an office within Your Protected Territory; or (2) You have received TAB's explicit, prior written approval. On occasion, a Prospect Exception from outside Your Protected Territory may become a TAB Board Member if any one or all of the following requirements are met. The term "Prospect Exception(s)" refers to the following:
a) A prospect with whom You have a previous or existing personal, social, or business relationship (such as the prospect having been Your consulting client);
b) A prospect referred to You by a TAB Member or other party who personally knows the referred prospect (However, the referring party may not solicit outside Your Protected Territory on Your behalf for prospective TAB Members); or
c) A prospect who attended a Group Information Meeting presented by You prior to the date of this Agreement in Your Protected Territory, if You were an authorized Contract Facilitator engaged by TAB as an independent contract facilitator to facilitate TAB Boards in a TAB-operated territory.
For clarification, TAB interprets "a previous or existing personal, social, or business relationship" in subparagraph (a) above to mean a prospect with whom a franchisee has a relationship that existed before a franchisee signed the Franchise Agreement, or that developed out of an association that occurred naturally and was not solicited. Additional clarification is contained in the Confidential Manual.
You may only solicit prospective TAB Members using materials and methods approved in the TAB Confidential Manual, or which have been approved in writing by TAB. The SBL System may be used only with TAB Members.
You must obtain TAB's prior written approval before You may advertise, market, or solicit for new TAB Members or use any of the Trademarks in any form of general solicitation, including, but not limited to, advertising through radio, television, print media such as the yellow pages or newsprint, e-mail, direct mail, or a website that uses one or more of the words used in any of the Trademarks.
Any URL or website address that You wish to use that includes any of the Trademarks in any form, including, without limitation, using the word "TAB" along with any geographic location or referring to the TAB Business in any way, will be owned by TAB. If You wish to use such a URL or website address, You will request that TAB apply for ownership of the desired URL or website address and license it to You for Your use so long as this Agreement, or any other agreement with TAB or its
::ODMA\PCDOCS\DOCS\95l626\2
F.A. 3/2007
9
Franchisee Initials
subsequent renewal period. Notwithstanding the foregoing, nothing herein implies that You have a right to a holdover and nothing shall limit TAB's rights and remedies with respect to such holdover.
3.3 Renewal
Upon the expiration of the initial term of this Agreement, You have the option to renew the Agreement by executing the then current Franchise Agreement, obtainable from TAB, for consecutive additional terms consisting of 10 years each, subject to all of the following:
a) Delivery of written notice to TAB of Your intent to renew. The notice must be received not earlier than 12 months and not later than 6 months prior to the expiration date of the term under which You are then operating;
b) Not later than 90 days before the expiration date of this Agreement, You will execute the .then current Franchise Agreement, which may contain materially different terms from
those contained in this Agreement;
c) Not later than 90 days before the date of expiration of this Agreement, You will pay a renewal fee in the amount of $5,000;
d) Prior to execution of the then current Franchise Agreement, You will cure any defaults under this Agreement and any other agreement between You and TAB, including satisfaction of all obligations You may have with TAB or its Affiliates, including, but not limited to, all obligations to pay fees and obligations to comply with the Confidential Manual;
e) You will have attended and satisfactorily completed such refresher training, if any, as TAB may require as a condition of renewal, in its sole discretion, at the then current fee, at such time and place prior to expiration of the initial term of this Agreement or any renewals thereof; and
f) You will have executed a release, in the form set forth in Section 10.4(0. however, TAB will not be obligated to release any claim against You for any money owed by You to TAB prior to the renewal date.
4. PAYMENTS TO TAB OR THIRD PARTIES
4.1 Payments Due at Time of Signing Franchise Agreement
You must pay the following amounts to TAB, at the time You sign this Agreement, all of which are set forth on the Addendum to Franchise Agreement as Exhibit I of this Agreement, and none of which are refundable in whole or in part:
a) Initial Franchise Fee
An Initial Franchise Fee, which varies depending upon Your Protected Territory Classification as follows:
::ODMA\PCDOCS\DOCS\951626\2 F-A. 3/2007
11
Franchisee Initials
c) Opportunity Fee (In Lieu of Royalty Fee)
Starting on the 19" month after Your Start of Business Operations, or earlier if You so elect, You will pay TAB an Opportunity Fee each month instead of the Royalty Fee.
The Opportunity Fee is for the opportunity that the TAB Business provides You to earn income from TAB Members, including the income from Membership Dues and Business Assessment Fees. The Opportunity Fee is payable monthly, will be in lieu of the Royalty Fee, and will vary by Your Protected Territory Classification as set forth in the table below.
|
Monthly Opportunity Fee Schedule By Protected Territory Classification |
|||
|
Personal Class 1 |
Personal Class 2 |
Master Licensee Class 1 |
Master Licensee Class 2 |
|
$1,500 |
$2,500 |
$3,500 |
$4,500 |
Your Opportunity Fee will be deducted from the Amounts Collected on Your Behalf.
During the 371 through 39" months from Your Start Of Business, You will have the right to give TAB written notice that You wish to elect to pay TAB a Royalty Fee instead of an Opportunity Fee. In such event You will need to execute the Royalty Fee Addendum To Franchise Agreement ("Royalty Fee Addendum"), attached as Exhibit IV. The terms of the Royalty Fee Addendum require, among other things, that You relinquish Your Protected Territory and relinquish all marketing rights. The reversion to Royalty Fee will be effective the first full month following 90 days from the date of notice or sooner, in TAB's sole discretion.
d) TMD Field Support Fees And Bonuses
(1) TMD Field Support Fee
You will pay TAB a "TMD Field Support Fee" of $2,500 per week for the 3rd and 4th weeks the TMD assists You in Your Group Information Meetings and other Member development activities. Payment is due upon presentation of the TMD Field Support Fee invoice. You will also pay the travel, accommodation, and living expenses for Your TMD, up to a maximum of $1,500 for each of the four weeks of TMD assistance.
(2) TMD Field Support Bonus
You will pay to TAB a "TMD Field Support Bonus" of the total of the first month's Membership Dues received from new Members who join Your TAB Boards within 150 days after attending a meeting in which the TMD participated in presentations or interviews. The TMD Field Support Bonus will be deducted by TAB from Amounts Collected on Your Behalf. TAB will not earn any Royalty Fee on first month's Membership Dues earned by TMD. These amounts will be used in the TMD compensation plan, including payment of bonuses to theTMDs.
::ODMA\PCDOCS\DOCS\951626\2 13
F.A. 3/2007
Franchisee Initials
attending the International Conference at the then current International Conference Facilitator Registration Fee, which is currently $250 per person per conference, and FBE Fee. You will also pay for all travel and living expenses for You and Your guests, employees who attend International Conferences.
i) First Year Business Coaching Fees
You are required to use and pay for the services of a Business Coach for a minimum of 90 minutes of business coaching per month for the first four full months and 60 minutes per month for the next eight full months after You complete the Initial Training Program ("First Year Business Coaching"). You are required to pay Your Business Coach for his/her services as invoiced, either directly or to TAB, depending on Your TAB-designated Business Coach. First Year Business Coaching services will be charged at the then current rate, which is currently $100 per hour, whether the services are provided in person, by telephone, email or fax. You are also responsible for all applicable telephone or other communication expenses incidental to the provision of the First Year Business Coaching. If You elect to pay an Opportunity Fee in lieu of a Royalty Fee, Your obligations to use and pay for First Year Business Coaching will cease at such time as You begin paying the Opportunity Fee. However, You may elect to continue using and paying a Business Coach after election of the Opportunity Fee, subject to Business Coach availability.
j) Contract Facilitator License Fee For Personal Class 1 And Personal Class 2
Territories Only
If, pursuant to Section 6.9. You are eligible and You elect to obtain the right to license independent Contract Facilitator(s) in Your Protected Territory, as described below, You will pay TAB a Contract Facilitator License Fee of $500 per month for each of Your Protected Territories, regardless of the number of Contract Facilitators You choose to engage effective the earlier of sixty (60) days after Your Contract Facilitator attends Initial Training or upon the first month that Your Contract Facilitator facilitates Boards or coaches TAB Members.
k) Purchases Of Promotional Materials. Designated Materials, Supplemental Products
And Services
You will maintain, at all times and in the quantities set forth in the Confidential Manual, or as otherwise communicated, an inventory of Promotional Materials for use by Your Business.
TAB may from time to time, at TAB's option, require You to purchase, as a part of the TAB Promotional Materials, copies of Designated Materials to give or sell to Your TAB Members, TAB Member prospects, and referral sources as part of Your Member acquisition and retention efforts. The number of copies of Designated Materials that You are required to purchase varies based on Your Protected Territory Classification and will be set forth in the Confidential Manual or otherwise communicated to You. You are not required to purchase more than $500 of Designated Materials during any six-month period.
::ODMA\PCDOCS\DOCS\951626\2 F.A. 3/2007
15
Franchisee Initials
TAB may deduct and off-set the amounts due, plus any applicable penalties and/or interest, from Amounts Collected on Your Behalf in the future.
e) Payment Of Taxes
You will reimburse TAB, its Affiliates, and designees, promptly and when due, the amount of all sales taxes, use taxes, personal property taxes, and similar taxes imposed upon, required to be collected by, or paid by TAB, its Affiliates, or designees, on account of services or goods furnished to You by TAB, its Affiliates, or designees, through sale, lease, or otherwise, or on account of collection by TAB, its Affiliates, or designees, of the Initial Franchise Fee, the Royalty Fee, or any other payments made by You to TAB, its Affiliates, or designees required under the terms of this Agreement.
f) Increases For Fees, Products, And Services
Notwithstanding anything contained herein to the contrary, TAB has the right to increase any fees due from You, as well as any charges for products, materials, and services provided to You (whether referred to in this Section 4 or elsewhere in this Agreement), based on TAB's reasonable judgment, from time to time. However, TAB will notify You of such increases at least 30 days before they go into effect, either by memo to You or by an amendment to the Confidential Manual. However, annual increases in the Opportunity Fee and the Contract Facilitator License Fee are limited to the percentage increase in the Consumer Price Index, calculated as of the same date each year ("Date of Adjustment"). The annual adjustment, if any, will be applied beginning. the first January following Your first full 12 months after Your Start of Business Operations and each January thereafter, based on the previous calendar year's Consumer Price Index. "Consumer Price Index" means the Consumer Price Index published by the Bureau of Labor Statistics of the United States Department of Labor, U.S. City Average, All items, and Major Group Figures for all Urban Consumers (CPI-U 1982 - 84 = 100). Prices shall never decrease below the prices for the same items in the previous year.
5. SERVICES AND ASSISTANCE PROVIDED BY TAB
5.1 Training Programs
a) Initial Training
TAB will conduct an Initial Training Program at TAB's corporate training and support location, consisting of instruction during a minimum six-day period. The Initial Training Program will include a curriculum that is intended to qualify attendees as both a Certified Facilitator and Certified SBL Coach. During Your Initial Training Program, You will receive approximately 2 days of SBL System training needed to become a "Certified SBL Coach." The availability for parties other than the Managing Party to attend the Initial Training Program will be subject to space considerations and prior commitments and will be scheduled by TAB in its sole judgment. Anyone who will serve as a Facilitator must satisfactorily complete the portion of the Initial Training Program designed for Facilitators. Anyone who will serve as a Certified SBL Coach must satisfactorily complete the portion of the Initial Training Program designed for SBL Coaches.
::ODM A\PCDOCS\DOCS\951626\2 F.A. 3/2007
17
Franchisee Initials
5.2 New Member Materials And SBL Kits
TAB will provide one set of New Member Materials and one SBL Kit to You for each of Your new TAB Members at no cost.
5.3 Support In Your Protected Territory During Your Kick-Off Campaign
TAB will provide You with a TMD for the first four weeks during which You hold Group Information Meetings; however, You will be responsible to pay for two weeks of TMD Field Support in the 3rd and 4'1' weeks that You hold Group Information Meetings. Unless Your Kick-Off Campaign is completed within one phase, TAB will schedule a TMD for two weeks during phase one of Your Kick-Off Campaign and for two weeks during phase two of Your Kick-Off Campaign, subject to TMD availability. If Your Kick-Off Campaign is completed within one phase, TAB will schedule a TMD for two weeks during Your Follow-Up Campaign, subject to TMD availability.
Your Kick-Off Campaign will generally consist of direct mail and telemarketing to a number of prospects equal to the then current number of Your RMPs, subject to a maximum of 5,000 prospects for any particular campaign. During the two weeks of each phase (if applicable) of Your Kick-Off Campaign, the TMD will conduct Group Information Meetings.
During the trips to Your Protected Territory, the TMD will provide field support in addition to being the primary presenter of Group Information Meetings and conducting membership interviews that are scheduled during the trips.
The TMD will spend approximately five days in Your Protected Territory, and Your TMD will make up to four separate trips (i.e., one trip for each week of Your first four weeks of Group Information
Meetings).
The tentative meeting dates for Your first Group Information Meetings are set forth in the Addendum To Franchise Agreement, attached hereto as Exhibit I.
5.4 International Conferences
TAB will produce, on an annual basis, an International Conference, at a time and place designated by TAB. You are required to attend the International Conference each year, absent extenuating circumstances acceptable to TAB. During any year, International Conferences may consist of any combination of conferences for Facilitators, conferences for Members, or conferences for both Facilitators and Members.
5.5 Confidential Manual
a) General Provisions
The Confidential Manual has evolved through TAB's business practices and has significant value. TAB will provide access to You, during the term of this Agreement, the Confidential Manual. You will not make additional copies of the Confidential Manual. For the purposes of this Agreement, the term Confidential Manual will include, without limitation, references to all written, audio, video, website, training materials and manuals, facilitator's website and electronic materials that TAB or its Affiliates loan to
::ODMA\PCDOCS\DOCS\951626\2 19
F.A. 3/2007
Franchisee Initials
You or give You access to during the term of this Agreement that relate to the Licensed Methods, Copyrighted Materials and Trademarks, including, but not limited to, the TAB Trademarks, the SBL System, TAB System, and the SBL Marks. In order to protect TAB and to maintain the standards of operation associated with the Licensed Methods, Copyrighted Materials and Trademarks, the Confidential Manual may contain mandatory and suggested specifications, standards, and procedures for the operation of the Business, as well as information relative to Your other obligations hereunder. You agree to operate the Business in accordance with those portions of the Confidential Manual that relate to protection of the Licensed Methods, Copyrighted Materials and Trademarks as may be designated as mandatory or required. All such specifications, standards, and operating procedures will be reasonable and consistent with this Agreement and all applicable laws. Specifications, standards, and operating procedures prescribed from time to time by TAB in the Confidential Manual, or otherwise communicated to You in writing, will constitute provisions of this Agreement as if fully set forth herein. The Confidential Manual constitutes a confidential trade secret of TAB and shall remain the property of TAB. The Confidential Manual cannot be photocopied, reproduced, or disseminated without TAB's written consent.
b) Changes To Confidential Manual And Licensed Methods
You understand and agree that due to changes in competitive circumstances, presently unforeseen changes in the needs of customers, and/or presently unforeseen technological and other innovations, the Licensed Methods may need to undergo changes in order that it best serves the interests of TAB, You, other franchisees and licensees and the Licensed Methods. Accordingly, You expressly understand and agree that TAB may from time to time, in its sole discretion, change the components of the Licensed Methods, deleting from, adding to, or modifying those products and services which the Business is authorized to offer; and changing, improving or modifying the Trademarks and making changes to the Confidential Manual. You may be notified of such changes by any method, including but not limited to, e-mail, the Internet or facsimile. Upon TAB's notification, You expressly agree to abide by any such modifications, changes, additions, deletions and alterations and acknowledge that such modifications, changes, additions, deletions and alterations may require further expenditures by You. Further, You agree to execute any and all documents necessary to effectuate the changes. Changes in software programs and hardware or other changes in the Licensed Methods may require You to upgrade Your computer system and incur costs in obtaining other or additional computer hardware, equipment, and software.
You acknowledge that You may also need to purchase updated equipment, products, and supplies in the future and will be responsible for the cost. Further, You expressly agree to comply with such changed requirements and cost of products within 90 days after notice from TAB to You of the changes; provided, however, no such addition or modification will alter Your fundamental status and rights under this Agreement. You agree to accept, implement, and adopt all such modifications at Your own cost, except as otherwise expressly stated in this Agreement. The official current version of the Confidential Manual, and any other TAB loaned manuals, are available online at the TAB facilitator website.
::ODMA\PCDOCS\DOCS\951626\2 l-.A. 3/2007
20
Franchisee Initials
5.6 Initial Inventory Of TAB Materials
You will receive an initial inventory of TAB Membership Materials and TAB Promotional Materials, as set forth in the Confidential Manual, needed for Your initial Group Information Meetings, included in Your Initial Franchise Fee.
5.7 Pricing
TAB may advise or offer guidance to You from time to time concerning suggested minimum service or product prices to be charged by You for Membership Dues and Business Assessment Fees. You will not be obligated to accept any such advice or guidance and will have the sole right to determine the prices You charge. Such advice or guidance will not impose upon You any obligation to charge any particular price. You will not suffer any penalty from TAB whatsoever for failing to accept such guidance. Such advice or guidance concerning prices may be contained in the Confidential Manual, advertisements and/or promotional material prepared or arranged by TAB, or in other written materials or oral consultations.
5.8 Services Provided For Member Administration And Support Fee
In exchange for the Member Administration and Support Fee, TAB will do the following:
a) Invoice/Charge Your Members as set forth in Section 43(a).
b) Develop, produce, and distribute to You and each of Your active Members, a monthly newsletter currently entitled Tips From The Top®;
c) Review and evaluate periodic evaluations from active Members;
d) Provide a central TAB corporate website using the current URL of www.TABBoards.com or another URL selected by TAB;
e) Provide a periodic report/newsletter for Facilitators that includes ideas and advice;
0 Provide the TAB Hotline, which can be used by Facilitators to obtain advice from other
Facilitators; and
g) Provide various membership administrative functions.
6. YOUR OBLIGATIONS
In addition to the other obligations set forth in other sections of this Agreement, You are required to do the following, and restricted from doing those things where noted.
6.1 Training
You or Your Managing Party will attend and successfully complete the Initial Training Program, the First Year Advanced Training, and the First Year Business Coaching. In addition, all Contract Facilitators engaged by Your Business will attend the portion of the Initial Training Program designated
::ODMA\PCDOCS\DOCS\951626\2 F.A. 3/2007
21
Franchisee
55
for Contract Facilitators by TAB. All Your costs for travel, meals, lodging, telephone charges and other such expenses involved in attending the training programs provided by TAB or its Affiliates will be Your responsibility.
6.2 Office Equipment and Location
You will own or lease and keep in good working order a personal computer with DVD and/or CD-ROM bay and LCD projector, all of which will meet the minimum requirements set forth in the Confidential Manual. You will also have a telephone line that is answered with identification of The Alternative Board®. Required office equipment, including the necessary specifications and/or minimum requirements of any such office equipment, may be changed by TAB in accordance with the standards and specifications set forth in the Confidential Manual. You will send proof of owning or leasing all required office equipment to TAB before Your first Group Information Meeting of Your Kick-Off Campaign, or TAB may lease such equipment for You and charge the lease payments to You. All costs for acquiring and maintaining Your office equipment will be Your sole responsibility. We may have minimum requirements for selecting an office as described in the Confidential Manual.
6.3 Start of Business
Your Start of Business Operations is the first day of the month after You successfully complete the Initial Training Program, unless You acquired Your Business from another franchisee, or You have operated as a Contract Facilitator engaged by either another TAB franchisee or Us in a geographic area that includes some part of the Protected Territory, in which case Your Start of Business Operations is the date any person first signed any kind of TAB agreement or as specified in Exhibit I of Your Franchise Agreement to operate a Business or facilitate TAB Boards in that geographic area. For purposes of this Agreement, the date of Your Start of Business Operations is set forth in the Addendum To Franchise Agreement, attached hereto as Exhibit I.
6.4 Diligent Performance; Best Efforts
You agree to act in good faith and use Your best efforts to comply with Your obligations under this Agreement and cooperate with TAB in accomplishing the purposes of this Agreement. The Business will be managed at all times by You or Your Managing Party, who will have successfully completed the Initial Training Program. You agree, at all times, to give prompt, courteous, friendly, and efficient service to all TAB Members. You agree that, in all dealings with TAB Members, suppliers, TAB, and the public, You will adhere to the highest standards of honesty, integrity, fair dealing, and ethical conduct. This conduct includes keeping confidential and not disclosing information about personal or business matters of a confidential nature that You hear from TAB Members at TAB Board Meetings or from any private consulting or private coaching sessions with TAB Members. You also agree to refrain from any business or advertising practice that may be injurious to the business or reputation of TAB and the goodwill associated with the Trademarks and Licensed Methods.
6.5 Presentation Of Uniform Image
The presentation of a uniform image to the public is an essential element of the Licensed Methods. You therefore agree that the Business will offer only such types and classes of services and products, including Supplemental Products and Services, as TAB authorizes from time to time for use by Your Business. You further agree to conduct the Business in accordance with the formats, specifications, standards, and procedures prescribed from time to time by TAB. You recognize that TAB may change
::ODMA\PCDOCS\DOCS\95I626\2 22 ' "
F.A. 3/2007
Franchisee Initials
the formats, specifications, standards, and procedures from time to time and You agree to adopt and implement such changes in conducting the Business. You may not market or conduct other board meetings of business leaders, other than through TAB Boards. You may not conduct TAB Board Meetings via television, cable, network, telephone, telecommunications device, computer or computer modem, closed circuit or satellite transmission, or by technological means or methods in use now or developed during the term of the Franchise Agreement, without our written approval, which approval may be withheld for any reason whatsoever.
6.6 Permitted Ancillary Businesses
You, Your Managing Party, partners and/or Contract Facilitator(s) licensed by You may offer and advertise within or outside Your Protected Territory, Ancillary Business(es), so long as: (i) You do not use the Licensed Methods, Copyrighted Materials or Trademarks; (ii) the Ancillary Business does not constitute a Competitive Activity, as defined in Section 11.1; and (iii) Ancillary Business would not, in TAB's sole opinion, compete with the Business and/or would not likely harm or disparage the goodwill associated with the Business and/or the Licensed Methods.
6.7 Approved Suppliers and Use of Products
You shall purchase all products, services, supplies, and equipment and materials required for the operation of the Business from manufacturers, suppliers, or distributors designated by Us, or from other suppliers We approve who meet Our specifications and are able to provide products and equipment in accordance with the standards as to quality, appearance and service, and who adequately demonstrate their ability to supply Your needs in a timely and reliable manner. You acknowledge and understand that We or Our Affiliates may receive rebates, commissions, allowances, and other benefits from such approved or recommended suppliers in relation to products and services purchased by You and other TAB franchisees.
If You desire to use any product not supplied by TAB that bears any of the Trademarks or contains any Licensed Methods, Copyrighted Materials, as defined below, the supplier of any such product must first receive written authorization from TAB. In no event may You sell any such products or services that bear any of the Trademarks or Copyrighted Materials without TAB's approval, which may be withheld for any reason. TAB may require the supplier to pay to TAB a fee, as determined by TAB in its sole discretion, for use of the Trademarks or Copyrighted Materials.
TAB will have the right to impose reasonable limits on the.number of approved suppliers of any products or services. TAB will be entitled to revoke its approval of any product or service if (1) any such product or service fails to continue to meet TAB's standards and specifications; or (2) if the supplier of any such product or service breaches any agreement it may have with TAB. TAB may be an approved supplier and, in some cases, TAB will be the only approved supplier for certain products and services.
You may not reship, transship, or sell any products purchased from TAB to any other current or former TAB franchisee or distributor or any reseller of the products, either within or outside of the United States. You may sell the products purchased through TAB only through Your Business and only to clients who are the actual end users of the products. In addition, You cannot purchase products from any of TAB'S current or former franchisees without TAB's prior consent. You must obtain Our consent in writing before You distribute other materials or offer any other type of products or services using Our Trademarks or Licensed Methods.
::ODMA\PCDOCS\DOCS\951626\2 23
F.A. 3/2007
Franchisee Initials
6.8 Lists for Mass Marketing Campaigns
You will use the services of TAB or its designees for licensing or renting TAB-approved Member prospect lists for use with all Your required Mass Marketing Campaigns. To improve the accuracy of Your Member prospect list, during Your first 18 months or until You have elected the Opportunity Fee, You will either re-license or purchase an update of Your lists of Member prospects in Your Protected Territory as defined in the Confidential Manual.
6.9 Contract Facilitators
a) Master Licensees
If You have either a Master Licensee Class 1 or Master Licensee Class 2 Territory, You may (and TAB recommends that You) engage independent Contract Facilitators to both facilitate TAB Boards and to provide private coaching services for TAB Members, during such time that You or Your Managing Party are facilitating a minimum of one TAB Board per month and providing monthly private coaching services for the TAB Members of that TAB Board.
b) Personal Class 1 and Class 2 Territory
In addition, if You have a Personal Class 2 Territory or a Personal Class 1 Territory, where according to Our guidelines, there is no contiguous territory available to make Your territory a Personal Class 2 Territory, You will be eligible to elect to obtain the right to license independent Contract Facilitator(s) in Your Protected Territory by giving TAB written notice of Your desire to license Contract Facilitator(s) and agreeing to pay the Contract Facilitator License Fee.
The Contract Facilitator License Fee will start with the first full month in which Your first Contract Facilitator facilitates a TAB Board or provides coaching services to Members, but in no event later than 60 days from the first full month after the date that that Contract Facilitator completes the Initial Training Program. The Contract Facilitator License Fee will continue monthly for the remainder of the calendar year in which it was elected, with automatic renewal for each following year unless written notice of termination is given. The notice must be given during any day in December, which would be effective as of January 1 of the following year. In order to relinquish the right to license Contract Facilitator(s), You must provide, along with the written notice, a written acknowledgment signed by the Contract Facilitator(s) that they have no rights to use, nor will they be using the Licensed Methods as of January 1. You will need to send TAB a notice of election of Contract Facilitator License Fee, TAB's then current Contract Facilitator Agreement and the then current fee for their training. If You have opted out of the Contract Facilitator License Fee, You may opt back in at any time by following the same procedures for initial opt-in.
c) Approval by TAB
All Contract Facilitators must be approved by TAB, which approval will not be unreasonably withheld, and must satisfactorily complete the Initial Training program required for the Contract Facilitators. TAB's approval of any Contract Facilitators is not
::ODM A\PCDOCS\DOCS\951626\2 24
F.A. 3/2007
Franchisee Initials
an endorsement or warranty of the Facilitator, and You assume responsibility for recruiting, investigating and qualifying Your Contract Facilitators. TAB is in no way responsible for the actions or conduct of Your Contract Facilitators.
d) Compliance with Guidelines
Any use of Contract Facilitators must strictly follow TAB's guidelines, as set forth in the Confidential Manual, to avoid any possibility that the Franchisee/Contract Facilitator relationship could be deemed a sub-franchise relationship or a business opportunity subject to any applicable state or federal registration or disclosure requirement - which is hereby strictly prohibited by TAB. These guidelines include, but are not limited to, the following: (1) You must use TAB's current form Contract Facilitator Agreement when using Contract Facilitators, which form can be obtained from TAB, and must be reviewed at Your expense by Your attorney to comply with applicable state laws; and (2) Your Contract Facilitators cannot be required to make any payments to You, TAB, or any companies affiliated with You or TAB. (3) You are required to pay for and should not be reimbursed by the Contract Facilitator for the following: (a)training fees to TAB; and (b) products and services that are required for the operation of the business which are realistically only available from TAB or TAB's Affiliates or from a third party who gives TAB or You a rebate; and (4) Contract Facilitators are to be paid on a commission basis only, based on a percentage of Membership Dues and Business Assessment Fees that are collected by TAB or You from TAB Members facilitated by Your Contract Facilitators. You are responsible for paying Your Contract Facilitators any commissions owed from the amounts You receive from TAB.
If You desire, Your Contract Facilitators can pay for the following: (a) payments to TAB, its Affiliates, or third parties (even if TAB or You receives a rebate), as long as those purchases are for products or services that are optional and not essential to the operation of the business; (b) payments to TAB, its Affiliates, or third parties (even if TAB or You receives a rebate), as long as those purchases are for products or services that are merely recommended and not required by TAB or You; and (c) payments directly to third parties, even if required, who are not affiliated with TAB or You for expenses relating to the business, such a travel expenses and regular business expenses, so long as TAB or You do not receive a rebate.
If at any time You or Your Contract Facilitator(s) terminate Your Contract Facilitator Agreement, You must notify TAB in writing within 10 days of the termination.
e) Contract Facilitator Agreement
You will deliver to TAB a fully executed, original contract, in the form then required by TAB ("Contract Facilitator Agreement"), prior to Contract Facilitator commencing the Initial Training Program. You are responsible for assuring that the Contract Facilitator complies with the lawful obligations contained in the Contract Facilitator Agreement. TAB makes no representations or guarantees, express or implied, that the Contract Facilitator Agreement is legal and/or enforceable in any particular state. It is Your sole responsibility to verify, with a licensed attorney in the state in which You do business, that the Contract Facilitator Agreement meets the requirements of all
::ODMA\PCDOCS\DOCS\95t626\2 25
F.A. 3/2007
Franchisee Initials
applicable laws and/or regulations in the state in which You do business. If You fail to deliver to TAB said Contract Facilitator Agreement, and permit a Contract Facilitator to facilitate a TAB Board or coach a TAB Member, TAB will have the right to treat such failure as a material default under this Agreement and good cause for termination.
f) Completion of Training Program
Each Contract Facilitator used by You must successfully complete the Initial Training Program presented by TAB in order to certify Contract Facilitators at Your sole cost and expense. Contract Facilitator will not be permitted to reimburse You for the cost of the Initial Training Program. You shall monitor each Contract Facilitator to assure he or she complies with all provisions of the Contract Facilitator Agreement and the facilitation and private coaching session requirements set forth in the Confidential Manual.
6.10 Tins From The Top® And TAB Hotline
You are required to create, during Your TAB Board Meetings, notes of the best advice expressed during each of Your TAB Board Meetings, including the name of the person who gave the advice. You will use the notes to submit three written business tips and points of business advice during each calendar quarter of each year to the Tips From The Top® newsletter and give Your advice to the TAB Hotline. Submissions to the Tips From The Top® newsletter and the TAB Hotline will comply with the then current published guidelines for the publications. TAB may use the business tips or points of business advice if TAB decides to do so, in its sole discretion.
6.11 Membership Mass Marketing Campaigns And Reporting
a) Mass Marketing Campaigns
You must conduct Mass Marketing Campaigns per the guidelines set forth in the Confidential Manual in order to reach all RMPs in Your Territory. The marketing of Member prospects will be done using TAB's designated methods and within the time frames set forth in the Confidential Manual. There is no guarantee that marketing efforts required or recommended by TAB will achieve any minimum amount of results. While Your number of RMPs may fluctuate subsequently with changes in population, number of total businesses, etc., the number of RMPs You are required to market to during Mass Marketing Campaigns subsequent to Your Kick-Off Campaign will not be increased by more than 10% over the number of RMPs marketed to during Your Kick-Off Campaign, regardless of the actual percentage increase or decrease which may take place. TAB recommends, but does not require, that You also market other prospects for membership who are not RMPs but run businesses that have offices located within Your Protected Territory.
You must also include TAB as a mail recipient in all Mass Marketing Campaigns for which You do not or are not required to use TAB's corporate marketing department for campaign coordination.
::ODM A\PCDOCS\DOCS\951626\2 F.A. 3/2007
26
Franchisee Initials
Beginning with the 19th month after Your Start of Business Operations, or when You elect to begin paying TAB an Opportunity Fee, as more fully described in Section 4,2.fc). whichever is earlier, You will no longer be required to conduct mandatory Mass Marketing Campaigns.
The required Mass Marketing Campaigns, which are more fully described in the Confidential Manual, are:
(1) Kick-Off Campaign. The purpose of the Kick-Off Campaign is to invite prospective TAB Members to attend Group Information Meetings and begin the Member development process to potentially form initial boards in Your Protected Territory. All RMPs must be marketed during the Kick-Off Campaign period. TAB, in its sole discretion, may require You to conduct Your Kick-Off Campaign in more than one phase to reduce the number of RMPs to whom You market in each phase. TAB's decision may be based on factors including but not limited to having more than 2,500 RMPs and geographic logistics. You will typically start Your Kick-Off Campaign within 30 days following Your Start of Business Operations and will typically complete it within 90 days after Your Start of Business Operations, subject to TMD availability. The Kick-Off Campaign will consist of a Mass Marketing Campaign, possibly conducted in either one or two phases, as determined by TAB, and will be targeted to the then current number of RMPs in Your Protected Territory, the exact number and definition of which is determined by TAB in its sole discretion. However, regardless of the number of Your RMPs, You will not be required to market to any more than a maximum of 5,000 prospects in any particular Mass Marketing Campaign. If Your number of RMPs exceeds 5,000, You must consult with TAB's corporate marketing department to decide upon a mutually agreeable set of prospects to whom to market.
In order to increase the likelihood of forming Your first TAB Board(s), TAB, in its sole discretion, may require an additional number of prospects, not to exceed 1,500, to be marketed during the Kick-Off Campaign for Personal Class 1 or Personal Class 2 Territories. You are also responsible for arranging and paying for meeting rooms, food, and equipment that meets TAB's specifications for TAB Group Information Meetings in Your Protected Territory for Your Kick-Off Campaign.
(2) Follow Up Campaign. After Your Kick-Off Campaign, and typically within 90-120 days from the start of Your Kick-Off Campaign, You must conduct another campaign to a number of prospects equal to Your then current number of RMPs, subject to availability of TMDs, if applicable, and subject to the aforementioned maximum of 5,000 prospects for any particular Mass Marketing Campaign.
(3) Mass Marketing Campaigns. For the first 18 months after Your Start of Business Operations, You will also be required to conduct two Mass Marketing Campaigns, one during every calendar six months after the calendar six months in which Your Kick-Off Campaign and Follow-Up Campaign take place until Your election or obligation to pay the Opportunity Fee, whichever occurs first.
::ODMA\PCDOCS\DOCS\951626\2 27
F.A. 3/2007
Franchisee Initials
(4) Updating Membership List. You are responsible for keeping Your Member prospect list updated in order to correct any inaccuracies.
b) Use of TAB's Corporate Marketing Department
You will use TAB's corporate marketing department to direct and oversee implementation of the required Mass Marketing Campaigns, but only those Mass Marketing Campaigns that take place prior to Your election or obligation to pay the Opportunity Fee, whichever occurs first.
6.12 Support of Direct Communications
You agree to cooperate by supporting or participating in TAB's direct communication with You, Your TAB Members and prospective TAB Members, including, without limitation, the research and testing programs as set forth in Section 2.5 above and as reasonably requested by TAB.
6.13 Required Licenses, Permits, And Certificates/Compliance with Law
You warrant and represent that You have familiarized yourself with the laws and licensing requirements which govern the operation of the Business in the Protected Territory. You agree to operate the Business in full compliance with all applicable laws, ordinances, and regulations, including, without limitation, government regulations relating to workers' compensation insurance, unemployment insurance and withholding, and payment of federal and state income taxes, social security taxes, and sales taxes. Further, You are required to obtain any approvals required by law and to comply with all laws with respect to Your marketing efforts, includinga without limitation, permission to fax, call, or send e-mail to prospects. You agree to obtain and maintain in force throughout the term of this Agreement all required licenses, permits, and certificates relating to the operation of the Business.
6.14 Third Party Obligations
You agree to comply with all agreements with third parties concerning Your Business, including, without limitation, all terms of any TAB Member agreements, and You agree to pay all obligations incurred in connection with Your Business on a timely basis.
6.15 Insurance Coverage
You agree to procure and maintain in full force and effect throughout the term of this Agreement, at Your sole cost and expense, the required insurance coverage set forth in the Confidential Manual. TAB, in its reasonable discretion, may modify the insurance coverage requirements in the Confidential Manual, and You agree to comply with any such change within such reasonable time as TAB may require. Upon 30 days' notice to You, TAB may increase the minimum protection requirements as of the renewal date of any policy, and may require different or additional kinds of insurance at any time, including, without limitation, excess liability (umbrella) insurance.
All insurance policies obtained by You and/or required in the Confidential Manual will: (1) name TAB as an additional or "added" insured, if permitted by the insurance company to do so; (2) contain a waiver by the insurance carrier of all subrogation rights against TAB, its Affiliates, officers, directors, and
::ODMA\PCDOCS\DOCS\951626\2 F.A. 3/2007
28
Franchisee Initials
employees; and (3) provide that TAB receive 30 days' written notice prior to the termination, cancellation, expiration, or modification of any such policy.
6.16 Evidence Of Insurance
Within 30 days of this Agreement or prior to the commencement of Your Kick-Off Campaign, whichever is earlier, and annually thereafter, You agree to furnish to TAB a copy of the certificate, or other evidence, of the insurance or renewal or extension for each required insurance policy, together with evidence of payment of premiums and the policy limits then required. If You at any time fail or refuse to maintain in effect any insurance coverage required by this Agreement, or to furnish satisfactory evidence thereof, after 30 days notice to You, TAB, at its sole option and in addition to its other rights and remedies hereunder, may, but need not, obtain such insurance coverage on Your behalf, and You agree to promptly execute any applications or other forms or instruments required to obtain any such insurance. You further agree to, in such case, pay to TAB, on demand, any costs, expenses, and premiums incurred by TAB, or TAB may, at its option, deduct the cost of such insurance, plus any administrative costs and expenses incurred by TAB in obtaining such insurance, from Your Gross Received Revenue.
6.17 Warranties And Guarantees
Any warranty or guarantee relating to services or products offered by Your Business must be authorized by TAB. You agree to honor all proper claims under such authorized warranties and guarantees issued by You, to replace all products or refund all monies in accordance with the terms and conditions of such warranties and guarantees, and to otherwise fully comply with the obligations of such warranties and guarantees. TAB has developed or may develop certain product and service warranties and guarantees that it deems to be essential to the successful operation of the Business. You acknowledge the significance of such authorized warranties and guarantees and agree to furnish all authorized warranties and guarantees to all Members and other customers of the Business who qualify. You further agree to fully, accurately, and clearly inform Members and other customers of Your Business about such warranties and guarantees in accordance with the policies and procedures from time to time prescribed by TAB.
6.18 Methods Of Payment For Members
TAB may make arrangements with Visa, MasterCard, American Express, and other credit card issuers or sponsors, check verification services, electronic funds transfer (EFT) systems, and financial institutions offering retail financing as TAB designates from time to time, in order that the Business may accept customers' credit cards, checks, and other methods of payment. EFT fees at the then current rate are Your sole responsibility at all times. Credit card fees will be shared by You and TAB in the following manner: (1) while You are paying TAB a Royalty Fee, credit card fees at the then current rate will be allocated between You and TAB based upon the Royalty Fee split currently in effect. For example, assuming an earned amount of $100, a 2.8% credit card fee, and a 65%/35% Royalty Fee split, the resulting S2.80 credit card fee would be divided based upon the royalty split as follows: $1.82 from franchisee (65% of the $2.80 fee) and $.98 from TAB (35% of the $2.80 fee); or (2) while You are paying TAB an Opportunity Fee, credit card and EFT fees will be Your sole responsibility. The Business may not make its own arrangements for such credit card processing. This does not limit Your right to accept credit card payments solely in connection with the conduct of any Ancillary Business.
::ODM A\PCDOCS\DOCS\951626\2 F.A. 3/2007
29
Franchisee Initials
6.19 Ownership And Control Of Business
You or Your Managing Party will, at all times, own and control Your Business. At TAB's request, You or Your Managing Party will promptly provide TAB with satisfactory proof of Your ownership. You represent that the Statement of Ownership, attached hereto as Exhibit II and by this reference incorporated into this Agreement, is true, complete, accurate, and not misleading. You will promptly provide TAB with written notice if the information contained in the Statement of Ownership changes at any time and will comply with the applicable transfer terms contained below.
You have the sole right and responsibility for the manner and means by which the day-to-day operation of the Business is determined and conducted and for achieving its business objectives. Subject to any approval, inspection and enforcement rights reserved to TAB, this right and responsibility includes, without limitation, the employment, supervision, setting the conditions of employment and discharge for Your employees and independent contractors, safety concerns, and the achievement of conformity with the Licensed Methods. You shall not incur any obligations or indebtedness except in Your name.
In all dealings with third parties including, without limitation, employees, suppliers and customers, You shall disclose in an appropriate manner acceptable to TAB that You are an independent entity licensed by TAB and that any time You use Your title (i.e. president), it should clearly relate to the position You hold with Your entity and not with TAB.
TAB's retention and exercise of the right to approve certain matters, to inspect the Business and its operation and to enforce its rights, exists only to the extent necessary to protect TAB's interest in the Licensed Methods, Copyrighted Materials and Trademarks for the benefit of TAB, its Affiliates and other licensees and franchisees. Neither the retention nor the exercise is for the purpose of establishing any control, or the duty to take control, over those matters which are clearly reserved to TAB, nor shall they be construed to do so. You acknowledge that no approvals, consents, waivers, conditions, or the like by TAB are an endorsement by TAB or a warranty by TAB of the success of the franchise or the appropriateness of the particular items, persons, or matters so approved. Furthermore, although TAB will collect certain payments on Your behalf, TAB shall have no responsibility to You for Your share of any payments otherwise payable to You hereunder if a TAB Member fails to pay TAB. You bear the risk of uncollectibility.
If You are a corporation, partnership, limited liability company, or other entity, or in the future become a corporation, partnership, limited liability company, or other entity, TAB will require Your officers, directors, shareholders, partners, members, or other owners or managers to sign the Guaranty And Assumption Of Franchisee's Obligations, attached hereto as Exhibit III.
6.20 Support Of Membership Conference
You will use Your best efforts to encourage Your Members to attend all International Conferences that TAB may produce to which Members are invited.
6.21 Use of Licensed Methods
You will use the TAB System for forming and facilitating TAB Boards and when using the TAB Trademarks. You are required to provide to Your new Members, in exchange for their Business Assessment Fee, the New Member Materials, an SBL Kit, and TAB Business Vantage®.
::ODM A\PCDOCS\DOCS\951626\2 F.A. 3/2007
30
Franchisee Initials
The original documents were scanned as an image. The original file can be downloaded at the link above.