The original documents were scanned as an image. The original file can be downloaded at the link above.
Sample Franchise Agreement
TWO MEN AND A TRUCKS/INTERNATIONAL, Inc.
THIS AGREEMENT, hereinafter referred to as the "Agreement" is entered into between TWO MEN AND A TRUCKo/INTERNATIONAl, Inc., located at 3400 Belle Chase Way, Lansing, Michigan 48911-4251, hereinafter referred to as "Home Office," and the person signing this Agreement as Franchisee, who is hereinafter referred to as "Franchisee".
Home Office has developed a system for the establishment and operation of a business offering to the public moving services and related services (the "System"); and
Franchisee desires to enter into an agreement with Home Office to enable Franchisee to obtain the rights to operate a business using the System. The business location will hereinafter sometimes be referred to as the "Unit" or "Franchise Unit".
Based upon their mutual promises and adequate consideration as acknowledged by each of them, the parties hereto agree as follows:
ARTICLE I BENEFITS FRANCHISEE ACQUIRES
1. Marketing Area.
(a) Right to Operate One Unit Within Marketing Area. Home Office grants to Franchisee the right to establish and operate one Franchise Unit at a single location within the Marketing Area specifically described in Section A of Exhibit 1. Home Office will not locate its own units, or grant to any other person or entity the right to locate any franchise unit, within Franchisee's Marketing Area using the same or a similar system as that licensed by this Agreement. Nothing in this Agreement will prevent Home Office from granting the right to establish or operate, or itself establishing or operating, businesses using the same or a similar system anywhere outside of Franchisee's Marketing Area, or marketing services or products that are not a part of the franchise offered by this Agreement under the Home Office's name and marks within a Marketing Area. In addition, nothing in this Agreement will prevent the Home Office or another TWO MEN AND A TRUCK© franchisee [except franchisees having licensed protected territories (see Article I, Section 4(c), below)], or another person from originating moves within Franchisee's Marketing Area or from moving Customers located outside Franchisee's Marketing Area into the Marketing Area.
(b) Selection of Site for Franchise Unit. Franchisee must conduct its business from a location within the Marketing Area that Home Office approves, which Marketing Area is described in Section A of Exhibit 1. If Home Office has not disapproved of the site within fifteen (15) days of receiving written notice of it, then Home Office will be deemed to have approved it. Among the factors Home Office considers before approving franchise sites are population density, general location within the Marketing Area, neighborhood, traffic patterns, parking, size, physical characteristics of the building and lease terms, zoning restrictions, the ARCGIS, ARCMAP Version 9.1 software for population data for Franchisee's Marketing Area (or use of another credible and recognized source for
April 1, 2007 _____________
ascertaining populations), and the location of other franchisees' units in Marketing Areas adjacent to Franchisee. The essence of Home Office's core values, care and integrity, requires that each franchisee in the System respect all other franchisees. When Franchisee selects a site location for its franchise unit, Franchisee must consider each of the factors described in this paragraph, while honoring Home Office's core values.
(c) Adding Franchise UnitfsV If Home Office determines, in its sole discretion, that sound business reasons exist to approve Franchisee to operate an additional location(s) within Franchisee's Marketing Area, Home Office may approve an additional location(s).
(d) Performance Requirements Necessary to Maintain Marketing Area. If Franchisee fails to obtain and maintain, year to year, the minimum amount of business described in Section 19 of Article II, Home Office can, unless the parties otherwise agree in writing, upon sixty (60) days written notice, reduce the Marketing Area to an area encompassing a population equal to 50,000 for each 100 hours of moves averaged by Franchisee each month during the prior twelve (12) months or refuse to renew the Franchise Agreement at the end of its term per Section 19 of Article II. The reduced Marketing Area will include Franchisee's approved location but will otherwise be determined by Home Office in its sole discretion.
(e) Right to Divide Marketing Area Upon Termination, Expiration or Renewal of Agreement. If Franchisee's Marketing Area is or attains a population of Eight Hundred Thousand (800,000) residents, or more (as measured by ARCGIS, ARCMAP Version 9.1 software or another credible and recognized source for ascertaining populations), Home Office reserves the right at the time of termination, expiration or renewal to divide the Marketing Area into two marketing areas equal to approximately four hundred thousand (400,000) residents, or more, and in a manner Home Office determines is reasonable in its sole discretion. Provided Franchisee is in compliance with this Agreement, Franchisee may: (i) without payment of any additional initial franchise fee, operate both of the newly created marketing areas under separate franchise agreements, or (ii) transfer one or both of the newly created marketing areas in accordance with Section 2 of Article VII of this Agreement, including but not limited to the obligation to pay Home Office a transfer fee(s).
2. License to Use System. Home Office grants to Franchisee a license to use the System for establishing and operating a moving, and related services, business. The System includes specific operational methods, techniques, procedures, formats and forms for establishing and operating such a business, which constitute confidential and proprietary information owned by Home Office. This license is only for Franchisee's use of the System. Except as this Agreement allows, Franchisee has no authority to license, train, or otherwise assist or authorize others to use the System in any way.
3. License to Use Service Marks. Home Office grants to Franchisee a license to use the service mark TWO MEN AND A TRUCK®, and all other service marks Home Office adopts for use in conjunction with the business operated pursuant to the System. Home Office expressly licenses Franchisee to use the following federally registered service marks only in conjunction with and in accordance with the System, and this license exists only for the duration of this Agreement:
2 April 1,2007 Initials__________
Federal Registration Number
TWO MEN AND A TRUCK® 3,006,8)4
TWO MEN AND A TRUCK® 3,006,815
TWO MEN AND A TRUCK® 2,020,083
TWO MEN AND A TRUCK® 1,953,964
The Compony that's on the Move® 1,953,011
Movers Who Core® 1,915,497
STICK MEN UNIVERSITY® 2,323,802
THE GRANDMA RULE® 2,946,487
These service marks and logos are hereafter sometimes referred to as the "Marks". The Marks are further defined in Section 1 of Article III. Franchisee's licensee rights to use the Marks are defined by and limited to the terms of this Agreement.
4. Limits on License.
(a) Limits on Use of Service Marks and Logos. Franchisee agrees to use the Marks as its sole identification for its moving and related services business, except that Franchisee agrees to identify itself as an independent owner in the manner Home Office approves. Except as otherwise explicitly authorized by this license or as Home Office's President or Chief Executive Officer may otherwise authorize in writing, Franchisee may not use any Mark: (i) as part of any corporate or legal business name, (ii) with any prefix, suffix, or other modifying words, terms, designs or symbols, (iii) in selling any unauthorized services or products, (iv) as a part of any domain name, homepage, electronic address, or otherwise in connection with a Website, or (e) in any other manner that Home Office has not expressly authorized in writing. Franchisee may not use any Mark in advertising the transfer, sale, or other disposition of the TWO MEN AND A TRUCK® moving business or an ownership interest in the Franchisee without Home Office's prior written consent, which Home Office will not unreasonably withhold. Franchisee agrees to display the Marks prominently as Home Office prescribes at its TWO MEN AND A TRUCK® moving business and on trucks, vans, forms, advertising, supplies, and other materials Home Office designates. Franchisee agrees to give the notices of trade and service mark registrations that Home Office specifies and to obtain any fictitious or assumed name registrations required under applicable law.
April 1,2007 Initials
(b) Services Offered Must Comply With Law and Agreement. Franchisee will offer moving and related services only as permitted by applicable law and only as authorized by this Agreement. Franchisee must market its business within Franchisee's Marketing Area and at all times in accordance with the requirements of Section 10 of Article II and in line with policies established by Home Office.
(c) Services in "Protected Territories". Franchisee may not originate moves from "protected territories" licensed to other TWO MEN AND A TRUCK© franchisees. A "protected territory" is defined in other franchisee's franchise agreements having protected territories, but generally has the attributes of a Marketing Area, with the added provision of granting the franchisee the exclusive right to originate moves within the "protected territory". Franchisees having licensed "protected territories" may not originate moves from other franchisees' Marketing Areas or other franchisees' "protected territories". Home Office reserves the right to specify or change procedures that affect one or more Marketing Area(s) and/or protected territory(ies), and Franchisee must follow these procedures.
(d) Limitations Within Certain Geographical Areas of the United States. With respect to certain locations in the United States, there are restrictions and/or conditions that may affect Franchisee's right to operate or provide services in its TWO MEN AND A TRUCK® business:
(i) As the result of an agreement dated December 20, 2000 between Home Office and CSM, Inc., a Virginia corporation, Joleen M. Michalowicz and David S. Underwood, Franchisee may originate and/or end moves in Maryland, Virginia and Washington D.C., so long as: (i) neither Franchisee, nor any agent, affiliate or assign of Franchisee establishes any Business Location using the TWO MEN AND A TRUCK® service marks or confusingly similar service marks in Maryland, Virginia or Washington D.C., (ii) at least eighty percent (80%) of the subscribers to any media in which Franchisee, its agents, affiliates and assigns advertise their business(es), are not residents of Maryland, Virginia and Washington D.C, and (iii) Franchisee, its agents, affiliates and assigns have otherwise satisfied all federal, state and local laws relating to their business(es). "Business Location" means any place where Franchisee or its agents, affiliates or assigns have an office or other facility located to support a moving van or related business, including but not limited to parking areas and/or structures where trucks are, in the ordinary course of the business, parked, maintained or otherwise serviced or stored.
(ii) Under an agreement dated August 18, 2000 between Home Office and Richard McBee, Home Office acquired the right to the names and service marks TWO MEN AND A TRUCK, TWO MEN AND A TRUCK, INC. and the corporate name Two Men and a Truck, Inc. for the State of Georgia, together with the goodwill of the business symbolized by such names and marks. Among other things, the agreement with Richard McBee provides him or his assigns certain reversionary rights in the names and service marks: TWO MEN AND A TRUCK, TWO MEN AND A TRUCK, INC. and the corporate name Two Men and a Truck, Inc. for the State of Georgia under certain circumstances. With respect to these reversionary rights, the agreement states:
Reversion of Rights. If Home Office or our assign file or are involuntarily and properly placed in liquidation bankruptcy, or cease licensing the operation of, or operating a TWO MEN AND A TRUCK® franchise(s) or company-owned business(es) within the State of Georgia for a period of one year or more, then the rights assigned to Home Office under the agreement with Richard McBee shall revert to him or his heirs, executors, administrators, successors or assigns upon thirty (30) days written notice from Richard McBee or his heirs, executors, administrators, successors or assigns of the intent to enforce the reversion right. This reversion, if enforced, would have the effect of assigning, conveying, and transferring to Richard McBee all of Home Office's right, title, and interest in the State of Georgia to the names and service marks, together with the goodwill of the business symbolized by the names and service marks.
(iii) Under an Agreement of Understanding dated January 18, 2006 between Home Office, and John Mitchell and John Mitchell Moving - Two Guys and a Truck Incorporated, an Indiana corporation, it was agreed that John Mitchell and John Mitchell Moving - Two Guys and a Truck Incorporated, and their agents, employees, representatives, officers, directors, successors, assigns, licensees and heirs could no longer operate any moving and/or related services business identified, advertised or promoted as "Two Guys and a Truck," or any substantially similar words unless they included the words "John Mitchell Moving" immediately preceding the words "Two Guys and a Truck," and in any event, it was agreed that they cannot locate any moving and/or related services business outside the state of Indiana that use the words "Two Guys and a Truck" or any confusingly similar words. It was also agreed that Home Office and its agents, employees, representatives, officers, directors, successors, assigns and licensees, will not identify, advertise, promote and/or operate a moving or related services business using the words "John Mitchell", "John Mitchell Moving" or "Two Guys and a Truck," or any substantially similar words anywhere. The parties specifically agreed that the words "Two Men and a Truck" are not substantially similar words to "Two Guys and a Truck" for purposes of the agreement.
(e) Parking TWO MEN AND A TRUCK® Trucks in Franchisee's Marketing Area. Home Office reserves the right to permit another TWO MEN AND A TRUCK® franchisee to park its trucks on a regular basis in Franchisee's Marketing Area if an appropriate location for parking trucks within the other franchisee's marketing area cannot reasonably, in Home Office's sole discretion, be obtained. If Home Office permits another franchisee to park its trucks in Franchisee's Marketing Area, Home Office will not permit the other franchisee to advertise on its trucks any telephone number (other than an "800" telephone number common to each of the franchisees), business location(s), or other information that would distinguish its franchise from Franchisee's, unless otherwise required by law.
5. Initial Training. Home Office will provide a minimum of fifteen (15) days of
training for Franchisee. Franchisee is required to attend and successfully complete the initial training program. Franchisee must also attend any additional training, sales programs or meetings at such location and at such times as Home Office may reasonably require. Franchisee is responsible for all expenses incident to attending the initial training program or
5 April 1,2007 Initials_________
any additional training programs. Subject to Home Office's express approval, Franchisee may be permitted to bring additional attendees to training at Franchisee's expense.
6. Enrichment Training and Performance Improvement Requirements. If
Franchisee's business is performing unsatisfactorily (as determined by Home Office) in any of the areas listed below, or in another area that Home Office determines to be material, Home Office can require Franchisee, at Franchisee's expense, to: a) attend Home Office's Enrichment Training program; b) visit another franchise location for a Performance Improvement Visit; c) make a Performance Improvement Visit to Home Office; or d) receive a Performance Improvement Visit from a Home Office staff member. The following are examples of matters that are of material concern to Home Office:
Failing to meet the minimum performance requirements as described in this Agreement;
Suffering a negative growth rate for six or more consecutive months ("negative growth rate" means a decrease in the total gross revenue subject to royalties as compared to the same month of the prior year);
Excessive paperwork problems (i.e. failure to comply with paperwork procedures and/or due dates for two or more consecutive months);
Excessive damages/Customer complaints.
If Home Office requires Franchisee to attend the Enrichment Training, Franchisee must pay all travel and living expenses, as well as a fee to cover the cost of the Enrichment Training program. Franchisee must perform the Enrichment Training program within three months of receiving notice that Home Office requires Franchisee to take it. If Home Office requires Franchisee to undertake one of the Performance Improvement Visit options, Franchisee will be responsible for all costs and expenses associated with the visit. Franchisee must complete the Performance Improvement Visit requirement within three months of receiving the notice.
7. On-Going Training. At Franchisee's request, Home Office will provide the services of appropriate Home Office staff to assist and counsel Franchisee during the operation of Franchisee's Unit. Franchisee must attend at least one Approved Training Session (participation in the Fiscal Fitness Program is defined as an Approved Training Session) every two years. Franchisee must attend an Approved Training Session within 12 months of receiving notice of it. Franchisee must also attend the Annual Meeting at least once every three years. Franchisee is responsible for all travel and living expenses incurred during training and all expenses, including registration fees, incurred during all other approved meetings, when applicable.
8. Start Up Materials. Within a reasonable time after signing this Agreement, Home Office will provide Franchisee a start-up materials package for no additional charge.
9. Assistance. Home Office will give reasonable assistance and advice to Franchisee as Home Office determines in its sole judgment, for the commencement and operation of the Franchise Unit. Home Office can charge Franchisee a reasonable per diem fee for the services of staff member(s) rendered in connection with this assistance.
April 1,2007 Initials
ARTICLE II FRANCHISEE'S AGREEMENTS
1. Compliance with Applicable Law. Franchisee agrees to comply with all federal, state or local governmental laws, ordinances and regulations which may in any way regulate or affect the operation of the Franchise Unit, including obtaining all required permits, certificates and licenses. Franchisee will promptly pay all payroll and business taxes, fees and expenses and any and all other amounts required by law.
2. Performing Audits, Other Inspections and Obtaining Credit Reports.
(a) Obligation to Keep Complete and Accurate Records; Performance of Audits and Inspections. Franchisee agrees to keep complete and accurate books and records of its operations and business. Franchisee agrees that Home Office's representative can perform audits and other inspections of all of Franchisee's business locations and vehicles from time to time during normal business hours. Home Office, its certified public accountants and/or other duly authorized agent, has the right during normal business hours to examine and make copies of Franchisee's books, records, tax returns, DOT driver log records and any other records. If Franchisee has more than one Marketing Area, Home Office may audit Franchisee's business records for any of Franchisee's Marketing Areas to determine if moves have been shifted from one franchise to another to meet performance requirements, win awards or to otherwise gain improper advantage, and for any other business reason that Home Office deems appropriate.
(b) Audit or Inspection Deficiencies; Obligation to Pay for Expenses. If any audit or investigation discloses a deficiency in the Gross Receipts (as defined in Article IV, Section 2) reported to Home Office, and the deficiency is in excess of two percent (2%) of reported Gross Receipts for any reporting period, Franchisee will bear the reasonable expenses of the audit and investigation. Franchisee's obligation to pay the expenses will not affect any other right Home Office has arising out of such under reporting, or other violations of the terms of this Agreement.
(c) Right to Obtain Franchisee's Credit Report from Time to Time. Franchisee consents to permitting Home Office to obtain Franchisee's credit report from time to time to confirm that Franchisee is paying third-party creditors, and Franchisee agrees to cooperate to enable Home Office to acquire Franchisee's credit report.
3. Opening and Operation of the Franchise Unit; "Operations Manual" Defined. Franchisee must purchase or lease, prior to opening the Franchise Unit, and maintain at all times thereafter, all equipment, fixtures, signs, inventory and supplies Home Office specifies, including at least two (2) moving trucks that display Home Office's TWO MEN AND A TRUCK® and other services marks. Franchisee must also perform the other pre-opening obligations specified in the Operations Manual. The "Operations Manual" includes, but is not limited to, the manuals entitled Pre-Opening Manual, Franchise Operations Marketing Manual, All About Trucks And Equipment Manual and Managing Personnel Manual, and all written, electronic, video and audio recorded policies, procedures, techniques, forms and guidelines used within the System to assist Franchisee in the operation of its TWO
7 April 1,2007 Initials___________
MEN AND A TRUCK® moving business. Franchisee must commence operation of the Franchise Unit no later than four months from the date of this Agreement. After opening, Franchisee must continually operate the Franchise Unit and must use its best efforts to market the business, expand the Customer base and income of the franchise and maximize Customer satisfaction.
4. Approved Products and Services; Maintenance.
(a) Approved Services and Products. Franchisee can only offer local moving services, long distance moving services and other such products and services as Home Office previously approves in writing. Home Office may add approved products and/or services to the System from time to time. Franchisee must add products and/or services that Home Office requires to be added. This may include participation in any referral program or program offering loading and unloading services. Additional products and services Home Office approves will be subject to the royalty and advertising fees specified in Article IV of this Agreement.
(b) Purchase of Equipment, Inventory and Supplies, Maintenance of Same. Franchisee must purchase all equipment, inventory and supplies for the Franchise Unit in accordance with Home Office's specifications and only from suppliers Home Office approves. Franchisee must always maintain sufficient inventory, equipment and supplies to operate the Franchise Unit at optimal capacity and efficiency. Franchisee must maintain its vehicles and other equipment as specified in the Operations Manual. All truck lettering must be acquired from or through Home Office.
5. Insurance; Obligation to Maintain Minimum Amounts and Coverage.
(a) Insurance Coverages. Franchisee must at all times during the entire term of this Agreement and at its own expense keep in force, by advance payment or payments, policies of insurance in the amounts and with the coverage (at a minimum), as specified by Home Office. Home Office will determine the minimum amounts of insurance and coverage required based on reasonable business judgment.
At a minimum, such policies must include the following:
(i) Commercial general liability insurance coverage in the amount of $1,000,000, per person/per occurrence for bodily injury and property damage combined with a general aggregate of $2,000,000; this insurance must also have products/completed operations coverage with an aggregate limit of $1,000,000, personal and advertising insurance with a limit of $1,000,000, fire damage coverage with a limit for any one fire of $50,000, medical expense coverage with a limit for any one person of $5,000;Employment practices insurance (including sexual harassment, wrongful termination and discrimination coverage) in the amount of at least $500,000 for each incident and a general aggregate of $1,000,000;
(ii) Motor vehicle liability coverage must include bodily injury, property damage, on all leased, owned, rented or borrowed motor vehicles having a combined single limit of at least $1,000,000 resulting from each occurrence;
(iii) Cargo insurance coverage - in addition to insurance coverage for damage or loss to the cargo while it is being moved, there must be coverage while items are being loaded and unloaded or otherwise in the possession of your franchise. The minimum cargo insurance coverage must be $50,000 per truck, regardless of the size of the truck;
(iv) Umbrella policy (covering general liability, auto, and employer's liability) with a limit of $2,000,000;
(v) Business personal property insurance in the amount of at least $10,000 per location;
(vi) Employee dishonesty insurance in the amount of at least $10,000, and third-party dishonesty bond insurance of $ 10,000;
(vii) Worker's Compensation coverage in an amount required by law;
(viii) All other insurance coverage required by the law where Franchisee is located or that Home Office otherwise requires.
Home Office may adjust the amounts of coverage required under such policies at any time and require different or additional kinds of insurance based upon its business judgment.
(b) Parties Required to Be Covered, Mainetenance of Coverage and Notice of Cancellation to Home Office. Each insurance policy must name Franchisee and Home Office, as an additional insured, and Home Office must be provided with at least a twenty (20) day advance written notice of cancellation in connection with every policy. Original or duplicated copies of all insurance policies, certificates of insurance or other proof of insurance Home Office accepts must be promptly furnished to Home Office together with proof of premium payments. If Franchisee fails to obtain or maintain any of the required insurances, Home Office may obtain such insurance and keep the same in full force and effect and Franchisee must pay Home Office upon demand the premium cost thereof. Franchisee's failure to obtain or maintain such insurance is a material breach of this Agreement entitling Home Office to terminate this Agreement.
(c) Home Office's Right to Reports of Losses. Home Office may require Franchisee to provide, or require Franchisee to authorize the Franchisee's insurance carrier(s) to provide to Home Office monthly, quarterly and/or annual reports of losses paid by the Franchisee's insurance carrier(s) on behalf of the Franchisee for losses suffered under the Franchisee insured's insurance policies. These policies may include, among others, Worker's Compensation, Cargo, Automobile Liability, General Liability and Excess Liability policies. Franchisee hereby grants Home Office Franchisee's power-of attorney, authorizing Home Office to obtain whatever loss reports Home Office determines, in its sole discretion, are necessary to protect the integrity of its trademarks, service marks and/or franchise business system or for any other reasonable business purpose. Franchisee agrees to cooperate with Home Office and Franchisee's insurance carrier(s) to enable Home Office to obtain the Insurance Loss Reports as promptly and efficiently as possible, which cooperation may
9 April 1,2007 Initials_________
include providing written authorization to permit Home Office to obtain the report(s), in addition to the power of attorney granted in this paragraph,.
6. Operating Standards/Operations Manual.
(a) Obligation to be Governed by Highest Ethical Standards and to Comply with All Laws and Regulations. Franchisee acknowledges that every component of the System is important to Home Office and to the operation of the Franchise Unit. Franchisee must at all times operate the Unit in a competent manner and in full compliance with all aspects of the System specified by Home Office. In all business dealings with the public, Franchisee will be governed by the highest standards of honesty, integrity, fair dealing and ethical conduct and act at all times to support and grow Home Office's System. Franchisee must not engage in any activity or practice that results in or may reasonably be anticipated to result in damage to Home Office's business reputation, or result in or reasonably be anticipated to result in any public criticism of the Home Office's System or Marks. Franchisee will not use or engage any federal, state or local law, regulation, court or tribunal to retard or prevent another franchisee or prospective franchisee of the System from obtaining a license or authority to operate as a household goods mover or in any other capacity authorized by this Agreement. Franchisee acknowledges that such violation(s) will be good cause for immediate termination of this Agreement.
(b) Obligation to Comply with All Company Policies and Procedures; Confidentiality of Operations Manual Containing Company Policies. To preserve and enhance the reputation and the goodwill associated with the Home Office's System and Marks and to maintain uniform standards of operations throughout the entire System, Franchisee must comply with all lawful policies and procedures Home Office specifies from time to time in connection with the operation of the Franchise Unit, even if Franchisee believes the policies and/or procedures as originally issued or subsequently modified, are not in the best interests of the System. These policies and procedures are contained in the Operations Manual, including written policies, memos, bulletins, newsletters or other written or electronic materials prepared by Home Office. Franchisee will be issued a copy of the currently existing Operations Manual subsequent to its execution of this Agreement via Home Office's intranet and/or in hard copy. Franchisee will be issued applicable modifications or additions to the Operations Manual as they become available via intranet and/or in hard copy. The Operations Manual remains Home Office's confidential property, will not be duplicated by Franchisee, and will be returned to Home Office upon termination or expiration of this Agreement, or the transfer of Franchisee's Unit. Franchisee will at all times ensure that its copy of the Operations Manual is kept current and up-to-date. If any dispute arises as to the contents of the Operations Manual, the contents of the master copy of Home Office's Operations Manual will control.
(c) Policies Intended to Financially Benefit Franchise System, But No Assurances. Due to the nature of operation of the Unit and the fact that the standards of operation must and do change, Home Office reserves the right to change the System from time to time, and to change the terms of the Operations Manual from time to time to reflect those changes. These changes, when they occur, will occur with the intent of improving the System. Home Office will use its reasonable business judgment when making changes. Franchisee understands and acknowledges that although such changes, when they do occur, are intended to financially
benefit the System, there are no assurances that a change(s) will financially benefit the System. The terms of the Operations Manual cannot change the terms of the Franchise Agreement, but will be an addition to it, and will have the same effect as if set forth in this Agreement. Where the Operations Manual is inconsistent with the Franchise Agreement, the Franchise Agreement will control.
7. Personal Supervision and Management of Unit Within Marketing Area.
(a) Obligation to Personally Supervise and Manage Dav-to-Dav Operations. Franchisee, or if Franchisee is a corporation, limited liability company or other legal entity, a representative approved in writing by Home Office, must personally supervise the day-uxlay operation of the Franchise Unit at all times and personally exercise his or her best efforts to market the products and services of the franchise. The Franchisee or designated operator may not delegate any substantial portion of its responsibility under this Section to a manager, unless Home Office approves the manager. Franchisee must have a full-time presence at his/her Unit, and must book all services from the Unit. The Unit must be staffed for at least nine consecutive hours per day and must be staffed with sufficient personnel to provide optimum services. If Franchisee is a multi-unit franchise owner, Franchisee may not use a centralized booking system for moves or other services to operate the Unit.
(b) Franchisee. Only. Has the Right to Control Employees. Home Office does not control, and does not have the right to control, Franchisee's decisions regarding hiring, disciplining or terminating Franchisee's employees or agents. Nor does Home Office control or have the right to control Franchisees other day-to-day business activities. Even so, Home Office may take any legal action necessary to enforce its rights under this Agreement and to protect and preserve its System's policies and procedures.
(c) Obligation of Franchisee to Provide Business Plan for Other Businesses Franchisee Desires to Establish. If Franchisee, its principal(s) and/or its affiliate(s) wish to commence the operation of any additional business other than the business operated under the terms of this Agreement, Franchisee must provide Home Office with a business plan that describes in substantial detail how Franchisee, its principal(s) and/or its affiliate(s) will maintain the operation of the business authorized hereunder in accordance with its terms, while simultaneously operating the additional business. Before commencing the operation of the additional business, Franchisee must obtain Home Office's approval of the business plan, which approval will not be unreasonably withheld. Even if Home Office approves the business plan, however, Home Office may review the business plan at any time after approval to determine if Franchisee, its principal(s) and/or its affiliate(s) are complying with the business plan. Home Office may require Franchisee to modify the business plan, and Franchisee must modify it. Franchisee's, it principals' and/or its affiliates' failure to comply with the business plan, as determined by Home Office in its sole discretion, will constitute a violation of this Agreement, entitling Franchisee to any and all remedies authorized under it, up to and including termination.
April 1,2007 Initials
8. Computers, IP Telephony Systems and Internet Access.
(i) Home Office owns the rights to the Movers Who Core® computer software relating to the operation of Franchisee's Unit. Franchisee is licensed to use this software and must use it. Franchisee may be required to update the software from time to time. Franchisee must purchase or otherwise obtain such computer equipment as specified by Home Office to utilize the Movers Who Core® software, and must provide Home Office with direct electronic access to Franchisee's computer equipment and software.
(ii) Franchisee is required to transmit to Home Office at the end of each business day certain customer and other business data required to be stored by the software. If Franchisee fails to electronically transmit to Home Office the data generated that day by the end of that day, Franchisee will incur a liquidated damages charge of $100 for each day that data is not transmitted. This liquidated damages charge will cover expenses Home Office incurs to collect this data. If a documented technology failure prevents electronic transmittal of the data, or some other bona fide emergency occurs preventing electronic transmittal of the data (as Home Office determines in its sole discretion), the liquidated damages charge will not be imposed.
(b) IP Telephony System and Internet Access.
(i) If Franchisee is new to the System, Franchisee is required to purchase/lease, up-date and maintain the IP telephony package and program offered by Verizon Business Network Services, Inc. ("Verizon") as determined by Home Office, which package and program provides the hardware, installation services, training and support services for the IP telephony system, as well as internet access ("Approved IP System"). Franchisee must pay for all the products and services provided by or on behalf of Verizon. Franchisee must also pay for the internet access, and all costs relating to the installation of equipment pertaining to it.
(ii) If Franchisee is a renewing franchisee with an existing Franchise Agreement, an Approved IP System must be installed and be operative at each franchise location by January I, 2010 or the date the franchisee's existing telephone service provider's contract expires, whichever is later, but in no event later than December 31, 2010. Franchisee must pay for all the products and services provided by or on behalf of Verizon. Franchisee must also pay for the internet access, and all costs relating to the installation of equipment pertaining to it.
(iii) If Franchisee transfers or sells its rights under this Agreement, the purchasing franchisee must begin business operations using an Approved IP System as required by the terms of the purchasing franchisee's new franchise agreement.
(iv) Every installed Approved IP System must be operated, up-graded and maintained as Home Office requires at Franchisee's expense. The specific technology guidelines for the Approved IP System are available on Home Office's intranet
TruckStop website. Home Office has developed and intends to continue to develop and design the applications of the IP telephony system. Although Home Office intends to continue to use Verizon as the IP telephony system and internet access provider for Franchisee, Home Office reserves the right to select a successor IP telephony and/or internet provider if Home Office determines that it is in the best interest of the TWO MEN AND A TRUCK® System to do so.
(c) Certain Telephone Technology Prohibited. Telephone technology permits multiple franchise locations to have one or more telephone numbers that "roll over" to or "hunt" for an open line in one location or another. This telephone technology can be used to avoid the obligations under this Agreement, including the avoidance of properly staffing one or more franchise locations as required. Consequently, Franchisee is not permitted to use "roll over" or "hunt" telephone line system technology where there are multiple franchise locations.
9. Franchisee Councils. Home Office may establish councils, cooperatives, and other organizations for franchisees. If one or more of such organizations is established for a geographic area encompassing the location of Franchisee's Unit, Franchisee must join and participate in it, and must comply with its rules and procedures, but such rules and procedures will not modify Franchisee's rights or obligations under this Agreement. Any action of such an organization at a meeting attended by a majority of the members, including assessments for promotion and advertising purposes, will be binding upon Franchisee if approved by a majority of members present, with each member having one vote. Franchisee will not be required to pay more than two percent (2%) of its annual gross receipts (or $500/month for a "new franchisee" who is not a transfer franchisee as described in Article IV, Section 3, below) toward any assessment for advertising by any such organization unless all members agree to a higher rate. This advertising assessment, if it is assessed, is included as a portion of the 3% of gross receipts Franchisee must expend for advertising within its Marketing Area under Article IV, Section 3. If Home Office operates any Unit within the geographic area of the council, cooperative, or other organization, such Units of Home Office will be required to pay any assessments for promotion or advertising purposes approved by such an organization for its membership as any other member would be required to pay.
10. Advertising Requirements and Limitations.
(a) Local Advertising Expenditures Franchisee Must Make to Promote Its Franchise.
(i) In any calendar year, Franchisee must spend an amount equal to or greater than 3% of its gross receipts of the previous calendar year for advertising and promoting the business in its Marketing Area. For a new franchisee (excluding a new franchisee transferee) who has not been in operation for all 12 months of the previous calendar year, there is an exception to the 3% requirement. Such new franchisee must average during its first calendar year a minimum expenditure of $1,000 per month on local advertising until it has been in business for one full calendar year. For example, a new franchisee who completed its first move in March must invest $10,000 ($1,000 x 10 months) on local advertising during the first calendar year of business. In this example, the new franchisee would be required to spend a minimum of $12,000
($1,000 x 12 months) during the second calendar year, because at the beginning of the second calendar, the new franchisee would still not have been in the operation for 12 months during the previous calendar year. Beginning with the third calendar year, the new franchisee in this example would be required to spend a minimum of 3% of the previous calendar year's (i.e. second calendar year's) gross revenues on local advertising.
(ii) A new franchisee to whom a franchise has been "transferred" must spend on local advertising during the first calendar year the franchisee operates, at minimum, an annualized portion of the 3% of gross sales of the prior year's sales. For example, if a franchise generated $1,000,000 in gross sales in the year 2000 and the franchisee sold the franchise on July 1, 2001, the transferee (new) franchisee would have been required to spend a minimum of $15,000 ($1,000,000 x 3% x 6/12 months) on local advertising from July through December in the year 2001. In this example, if the gross sales for the calendar year 2001 (without regard to the transfer) had been $1,200,000, then the transferee (new) franchisee would have had to spend a minimum of $36,000 ($1,200,000 x 3% x 12/12 months) during the calendar year 2002. Franchisee must provide Home Office proof of making such expenditures as requested from time to time. These expenditures are in addition to the advertising fees Franchisee must pay to Home Office under Article IV, Section 3.
(b) Telephone Directory Advertising. All telephone directory advertising, including internet telephone directory advertising, must be placed through Home Office or a supplier Home Office selects. In rare and exceptional circumstances, and only if authorized by Home Office, in writing, Franchisee may be permitted to place its own telephone directory advertising.
(c) Advertising Materials Must be Approved by Home Office. Any advertising, marketing, or promotional materials Franchisee desires to acquire or use in any manner or media in conjunction with the operation of its Unit must be approved by Home Office in writing prior to use, unless otherwise approved in accordance with this Agreement. Proposed advertising or promotional materials must be submitted to Home Office's Marketing Department at least fifteen (15) working days before the advertising deadline. If Home Office has not provided written notice of approval or disapproval within ten (10) days of Franchisee's submission of the proposed advertising or materials, then Franchisee must give Home Office notice of Home Office's failure to act, requesting action with three (3) days. Home Office will not unreasonably deny approval, although it will require strict compliance to its advertising policies.
(d) Advertising Not Authorized by Franchisee or its Agent. Advertising for Franchisee's business that appear in publications for distribution outside Franchisee's Marketing Area that are not purchased by or on behalf of Franchisee or otherwise authorized by Franchisee or its agent are not considered unauthorized advertising for purposes of this Agreement.
(e) Information Required in Advertising. Excepting for advertising displayed on Franchisee's moving vehicles, Franchisee must describe in all advertising its business location by indicating at a minimum, the city, township, or other municipal unit in which the business
office is located. Franchisee must also include the state, if necessary, to avoid confusion, to identify the location. For example, if Franchisee is located near a state border, then the state in which the Franchisee's business office is located must ordinarily be included in the advertising.
(f) Required Advertising on Moving Trucks and Other Business Vehicles. Each moving truck and other business vehicle must display the TWO MEN AND A TRUCK® service mark and any other of Home Office's service marks and logos as Home Office determines in accordance with marketing policy. Except as Home Office explicitly permits in writing, Franchisee may not display its business location, a telephone number, an internet website address or other website information on Franchisee's moving trucks or other business vehicles. If Franchisee's Marketing Area is located in the state of California, Oregon, Washington, Nevada, Idaho, New Mexico or Texas, and unless otherwise dictated by law, Franchisee may not display a local telephone number on its moving trucks or other business vehicles. In those states, Franchisee must choose one of the following options with respect to displaying telephone number or internet website address on Franchisee's trucks and other business vehicles:
(i) Franchisee may choose not to display any phone number or internet website address; or
(ii) Franchisee may display the system's toll-free phone number (800) 863-6683; or
(iii) Franchisee may display its internet website address.
(g) Cooperative Advertising. Advertising placed through a co-op advertising group that includes advertising of all co-op members' businesses may be placed anywhere within any co-op member's Marketing Area, provided such arrangement is approved by the co-op and does not violate the terms of a co-op member's Franchise Agreement not approving the advertising. Neither Franchisee, nor any co-op advertising group that Franchisee may join, has authority to place telephone directory or internet directory advertising.
(h) General Limitations on Advertising and Marketing. Franchisee may not authorize advertising or advertise outside Franchisee's Marketing Area, except to the extent that the advertising, by its nature, could not be limited to the Marketing Area or is otherwise authorized by this Agreement or Home Office policy. Internet, television and radio advertisements, yellow pages ads published for Franchisee's Marketing Area and newspaper advertising published for distribution in Franchisee's Marketing Area heard or seen outside the Marketing Area is not unauthorized advertising so long as the advertising identifies Franchisee's business address and otherwise conforms to the terms of this Agreement and/or Home Office policy.
(i) Present and Future Advertising Policy May Limit Franchisee's Right to Advertise. Franchisee acknowledges that Home Office has developed and will continue to develop advertising policies regarding the methods and manner of advertising in various media and that Franchisee is obligated to comply with all advertising policies Home Office implements at any time. Franchisee understands that existing and/or future advertising
policies may limit or eliminate Franchisee's right to use telephone number(s) and/or internet website address(es) in advertising placed on Franchisee's moving vehicles and/or elsewhere. Franchisee also understands that existing and/or future policy(ies) may otherwise limit Franchisee's ability to advertise in a particular manner. Such limitations, when established, are established for the benefit of all the System's customers and/or to establish reasonable rules to govern the actions between franchisees.
(j) Agreement to Comply With Home Office Policy. Franchisee acknowledges and agrees that it is required to comply fully with Home Office's advertising policies, which are set forth in writing and available to Franchisee via Home Office's intranet.
(k) Agreement to Comply With Modifications and Changes to Home Office Policy. Home Office, in its sole discretion, reserves the right to modify or change its marketing and advertising policies, and Franchisee is obligated to comply with them (and all other policies), whether or not Franchisee believes such policy(ies) will benefit it.
(I) No False Advertising. Franchisee will make no misrepresentations in any of its advertisements.
(m) Franchisee Responsible for Content of Advertisements. Home Office does not, by virtue of its approval of any proposed advertisement or promotional material, assume any responsibility for the contents of the advertisement. Franchisee agrees to indemnify and save harmless Home Office from any claims, demands, liability, costs and expenses that Home Office suffers arising from the use of any such advertisement or promotional material.
(n) Liquidated Damages for Displaying Unapproved or Unauthorized Advertising. Except in the case of a minor violation that can be immediately cured (as determined in Home Office's sole discretion), Franchisee must pay to Home Office's Advertising Fund One Thousand ($1,000) Dollars in liquidated damages for any portion of any month Franchisee displays any advertising that Home Office did not approve or is otherwise unauthorized. For example, placing a one-year telephone directory ad not approved by Home Office could result in liquidated damages of $12,000. Imposition of such damages does not bar Home Office from seeking other remedies, including injunctive relief barring Franchisee from its on-going advertising violations, assignment of Franchisee's telephone number(s) to Home Office, or other relief, up to and including termination of the Franchise Agreement.
(o) Incentives to Advertise.
(i) To promote use of certain forms of advertising that Home Office determines will best grow the System, Home Office may offer incentives, including cash incentives, to encourage franchisees to choose alternative methods of advertising. Cash incentives will generally be paid from the Advertising Fund. Franchisee understands that these cash incentives will benefit franchisees that choose to use the type of advertising that Home Office is promoting, and will not benefit franchisees that choose not to use such form of advertising. Franchisee agrees that Home Office may, in its sole discretion, determine the best use of cash incentives drawn from the Advertising Fund to promote advertising activities, and that Franchisee will have no
April 1,2007 Initials_________
claim against Home Office regarding such activities whether or not Franchisee chooses to participate in the incentive program.
(ii) To promote co-op advertising, Home Office may, in its sole discretion, provide incentives, including cash incentives, to franchisees participating in co-op advertising per Home Office's advertising policy. Cash incentives will generally be paid from the Advertising Fund. Franchisee understands that these cash incentives may benefit some franchisees and not others, and Franchisee agrees that Home Office may, in its sole discretion, determine the best use of the Advertising Funds for use as cash incentives. Franchisee agrees it will have no claim against Home Office whether or not it decides to participate in a co-op advertising program offering such incentives.
11. Corporate Stock Restrictions. If Franchisee is a corporation or this Agreement is transferred to a corporation under Section 3 of Article VII, in whole or in part, Franchisee's board of directors will pass a resolution requiring, and the corporation must otherwise require, the prominent placement of the following notation regarding transfer restrictions on each certificate representing shares in the corporation:
"The transfer of the shares represented by this certificate are subject to the terms and conditions of a certain written franchise agreement entered into with TWO MEN AND A TRUCK®/INTERNATIONAL, Inc."
Franchisee must provide Home Office with proof of complying with this provision within fifteen (15) days following the date on which any corporation obtains rights under this Agreement, in whole or in part.
12. Employee Agreements. To enable Home Office to protect its confidential and proprietary materials and documents, Franchisee must require its employees and agents to sign such agreements and documents as necessary to maintain the confidentiality and proprietary nature of Home Office's materials and documents.
13. Information to Home Office; Records.
(a) Providing Business Information to Home Office; Customer Lists. Franchisee will supply Home Office with such information about the business (in addition to that otherwise provided for in this Agreement) as Home Office may require from time to time. It is hereby agreed and understood that the Customer lists of Franchisee's business are and will remain Home Office's property.
(b) Financial Documents Submitted Annually to Home Office. Within ninety (90) days after the close of Franchisee's accounting year, whether fiscal or calendar, Franchisee will submit to Home Office a profit and loss statement for the accounting year, a balance sheet as of the end of the period, and a copy of the tax return prepared for that business. Franchisee will warrant such financial statements and tax returns to be true and correct.
(c) Maintaining Business Records as Home Office Requires. Franchisee agrees to keep true, complete and correct books of account, business records and records of Gross Receipts, in accordance with Home Office's specifications and in accordance with generally
accepted accounting principles. Franchisee will keep all of its business records for a minimum of six years.
14. Daily and Monthly Reports and Due Dates.
(a) Daily Reports. Franchisee will electronically transmit to Home Office daily reports of financial, marketing and other information data requested by Home Office at the end of the day in which the financial, marketing and other information data is generated.
(b) Monthly Reports.
(i) Franchisee will electronically transmit to Home Office monthly sales reports pertaining to Franchisee's Gross Receipts and such other additional information requested by Home Office in monthly sales report forms furnished by Home Office ("Monthly Sales Reports"). Monthly Sales Reports are due at Home Office on or before the 15* day following the month in which the sales occurred. In addition, monthly Profit Maximization Analysis (PMA) Reports are due on or before the 20th day following the month to which the report pertains. Home Office can share information in these reports with other franchisees in the ordinary course of Home Office's business as a tool to improve the System's volume of business.
(ii) The Monthly Sales Reports and PMA Reports must be electronically transmitted to Home Office using Home Office's Movers Who Core® software system. If Franchisee fails to electronically transmit these reports due to a bona fide and verified system failure, and provides them to Home Office via facsimile, mail or otherwise, Home Office will manually input the data reflected on the reports. To cover costs for manual input, a processing fee will be charged and invoiced and payment of the processing fee will be due within 14 days of the date of the invoice. Current processing fees charges, which can change at any time, are $100.00 for each Monthly Sales Report Report and $100.00 for each PMA Report. Except in the case of electronically transmitted reports (which are deemed verified when electronically transmitted), Franchisee, or another person authorized by Franchisee, must sign each report verifying the information contained in it.
15. Notice of Lawsuits. Franchisee will notify Home Office, in writing, within five (5) days of the commencement of any action, suit or proceeding by Franchisee or by any person or government agency against Franchisee, and of the issuance of any order, suit or proceeding of any court, agency or other governmental body that may adversely affect the operation or financial condition of the Unit. See Section 3 of Article III regarding litigation involving any of the Marks.
16. Disputes Arising With Third Party(ies) Not Involving a Lawsuit. If Home Office becomes aware of a bona fide dispute between Franchisee and one or more third parties regarding Franchisee's TWO MEN AND A TRUCK©business, Home Office may, in its sole discretion, undertake one or more of the following options:
April 1,2007 initials
(a) take no action, except to direct the Franchisee to resolve the dispute in a manner that will not cause injury to the reputation of the Marks and the TWO MEN AND A TRUCK® franchise system;
(b) assist the parties in the resolution of the dispute, if Home Office in its sole discretion, determines that it can constructively do so, and/or
(c) if Home Office determines in its sole discretion that Franchisee cannot or will not resolve the dispute, and that such failure to resolve it has or is reasonably likely to cause damage to the Marks and/or the TWO MEN AND A TRUCK® franchise system's business reputation, then upon notice to Franchisee, Home Office may resolve the dispute directly with the third party(ies) by payment of damages, including attorney's fees, alleged and supported by documentary evidence by the third party(ies), and Franchisee agrees to indemnify Home Office for all such payments. If Home Office pays such damages to a third party(ies), Home Office will invoice Franchisee for the damages paid, and payment from the Franchisee will be due Home Office within fourteen (14) days from the date of invoice. In Home Office's sole discretion, it may consult a designated franchisee group to provide it with an advisory opinion regarding resolution of the dispute. Home Office would not be obligated to comply with the advice of the designated franchisee group. If Home Office consulted with a designated franchisee group, it would provide the designated group with the facts and circumstances of the dispute, but Home Office would not provide it with the identity of any of the parties to the dispute.
17. Supplemental Exhibits and Agreements. Franchisee is required to sign supplemental agreements simultaneous with the execution of this Agreement, including the following:
(a) Exhibit 1. Specifics. This document describes Franchisee's Marketing Area and provides other information.
(b) Exhibit 2, Guarantee. Principals of Franchisee and others personally liable for obligations under the Franchise Agreement sign this document.
(c) Exhibit 3, Telephone Number. Internet Domain Name and E-Mail Address Assignment. Simultaneously with the signing of this Agreement and any time thereafter, as Home Office requests, Franchisee will sign an assignment of the telephone number(s), internet domain name(s) and e-mail address(es) used by Franchisee in the System's business in the form of Exhibit 3 attached to this Agreement. The assignment provides that the assignment of the telephone number(s) internet domain name(s) and e-mail address(es) is effective upon the expiration without renewal, or termination of this Agreement, or upon the transfer of the franchise to a third party where the telephone number(s), internet domain name(s) and/or e-mail address(es) are not assigned to the third party.
(d) Exhibit 4, Software License Addendum. Franchisee will sign a Software License Addendum in the form of Exhibit 4 attached to this Agreement, which, among other things, will provide Franchisee with the right and obligation to use Home Office's software products in accordance with the terms and conditions of the Software License Addendum.
April 1,2007 Initials__________
The original documents were scanned as an image. The original file can be downloaded at the link above.