Common use of Franchise Matters Clause in Contracts

Franchise Matters. (a) GAM has never offered or sold Franchises. Except as set forth on Schedule 4.23(a), since January 1, 2004, GACCF has been the only Person offering and selling Franchises and no Subsidiary or Affiliate has ever offered or sold Franchises domestically or internationally. GACCF and its Affiliates are the only Persons that have offered or sold Franchises for their respective Brands since January 1, 2000. (b) Schedule 4.23(b) sets forth a listing of, and GACCF has provided Buyer with a true and complete copy of, its’ currently effective Seller UFOC(s), together with true and complete copies of all Seller UFOCs used by such Seller since January 1, 2004 in connection with the offer and sale of Franchises. (c) Schedule 4.23(c) sets forth a true and complete list of all Franchise Agreements to which GACCF is a party, including for each Franchise Agreement (i) the name, address and telephone number of each and every Franchisee; (ii) the effective dates and expiration dates; and (iii) a description of any protected or exclusive territory. There are no other currently effective Franchise Agreements relating to the Brands. Except as noted in Schedule 4.23(c), each Franchise Agreement entered is substantially similar to the form of Franchise Agreement incorporated into the Seller UFOC that was issued to the Franchisee contemporaneously with the sale of such Franchise by GACCF to the Franchisee. GACCF has and has had made available to Buyer true, complete and correct copies of all Franchise Agreements listed or required to be listed on Schedule 4.23(c), including all amendments and addenda thereto, except those in respect of which Sellers have indicated on Schedule 4.23(c) that the Franchise Agreement on file is missing. (d) From and after the date of its formation, GACCF has and has had at all relevant times, the limited liability company power and authority and legal right to enter into and carry out the terms of each Franchise Agreement. All of the Franchise Agreements are valid, binding and enforceable against the Franchisee thereunder in accordance with its terms, subject to any such Franchisee’s bankruptcy, insolvency, receivership or similar proceeding under state or federal law and subject to any equitable doctrines and Legal Requirements which may affect the enforceability of the Franchise Agreements against Franchisees. GACCF has maintained a standard practice of refraining from the negotiation of the Franchise Agreements on a Franchisee by Franchisee basis. (e) Schedule 4.23(e) identifies each existing Franchisee that (i) is, to the Seller’s Knowledge, currently in material default under any Franchise Agreement, whether or not GACCF has notified the Franchisee about the default; (ii) has received within the twelve (12) month period prior to the date of this Agreement a Notice of Default from GACCF that such Franchisee has incurred a default under such Franchise Agreement; (iii) has on three or more occasions within any twelve (12) month period received Notices of Default under a Franchise Agreement; or (iv) is a party to a Franchise Agreement under which the franchise unit is not yet open and operating. (f) Schedule 4.23(f) sets forth a true and complete list of all written or oral agreements or arrangements (and with respect to oral agreements a description thereof) with independent sales representatives, contractors, brokers or consultants under which GACCF has authorized any person to sell or promote Franchises on behalf of GACCF or has agreed to rebate or share amounts receivable under any Franchise Agreement in connection with the offer and sale of any such Franchise Agreement and indicating which of such agreements are in default and may be terminated by GACCF by notice to the other party. GACCF has delivered to Buyer true, correct and complete copies of all written agreements described in Schedule 4.23(f). GACCF has delivered to Buyer true, correct and complete copies of all written correspondence and memoranda evidencing such oral agreements described in Schedule 4.23(f). (g) To the Seller’s Knowledge, except as set forth on Schedule 4.23(g), GACCF has not (i) offered nor sold, nor otherwise granted rights, to any Person conferring upon that Person area development, area representative, master franchise, sub-franchise, or other multi-unit or multi-level rights with respect to the Brands within the United States or (ii) used or uses independent sales representatives, area directors, contractors, sales and service providers or brokers to sell or promote the sale of its Franchises. (h) To the Seller’s Knowledge, except as set forth on Schedule 4.23(h), and except as may be granted by operation of law, (i) no Franchisee has been granted any Territorial Rights by GACCF pursuant to which (A) GACCF is restricted in any way in their right to own or operate, or license others to own or operate, any business or line of business or (B) the Franchisee is granted rights for the acquisition of additional franchises or expansion of the Franchisee’s territory, (ii) no Franchisee’s Territorial Rights conflict with the Territorial Rights of any other Franchisee, and (iii) to the extent GACCF has granted any such Territorial Rights (whether or not disclosed or required to be disclosed herein), GACCF has complied with such Territorial Rights and in the course of offering or selling franchises has not violated the Territorial Rights of any Franchisee. (i) Since January 1, 2004, and except as set forth on Schedule 4.23(i), each Seller has: (i) prepared and maintained each Seller UFOC in accordance with applicable law; (ii) filed and obtained registration of the offer and sale of the Franchises in all jurisdictions requiring such registration prior to any offers or sales of Franchises in such jurisdictions (the “Registration Laws”) and has filed all material changes, amendments and renewals thereto on a timely basis as required by Legal Requirements in such jurisdictions; (iii) filed all notice filings (including the filing of Seller UFOC, as applicable) in all jurisdictions in which a notice filing is required to be filed prior to the offer and sale of franchises in such jurisdictions; (iv) filed all notices of exemption in all jurisdictions in which a notice filing is required in order to obtain an exemption from regulation as a “business opportunity” or to otherwise be subject to regulation under Legal Requirements in such jurisdictions absent such notice filing; and (v) sold no franchises during periods after the need for amendment arose and before the prospective Franchisee had been in receipt of an amended Seller UFOC for the required period for redisclosure in the jurisdiction. Seller UFOCs were prepared in all material respects in compliance with the UFOC Guidelines and/or other Legal Requirements and there were no material misrepresentations or misstatements of fact or omissions to state material information in any Seller UFOC necessary to make the statements made therein not misleading under the circumstances at the time such Seller was using such Seller UFOC. Since January 1, 2004, GACCF has never withdrawn any of its applications or registrations to offer and sell franchises from any jurisdiction except as set forth on Schedule 4.23(i). (j) To the Seller’s Knowledge, except as set forth on Schedule 4.23(j), GACCF has not (i) offered or sold franchises or any form of agreement for operations under the Brands outside of the United States or (ii) filed any application seeking registration, exemption, and/or approval to do so. (k) GACCF has heretofore made available to Buyer correct and complete copies of all correspondence with Government Authorities concerning compliance with Registration Laws (including franchise registration orders), franchise advertising or promotional materials, UFOCs, and Franchise Agreements with current and past Franchisees. GACCF has made available or delivered to Buyer true and complete copies of the Franchisee files and other materials associated with each and every Franchisee. Since January 1, 2005, GACCF has not, in any of the aforementioned documents or filings under any Registration Laws, made any untrue statement of a material fact, or omitted to state any fact necessary to make the statements made by GACCF, not misleading, in connection with the offer or sale of any franchise or business opportunity. (l) Except as disclosed in Schedule 4.23(l), each Franchise Agreement complies, and the offer, sale, administration and relationship of such Franchise complied at the time such offer and sale was made and at all times since such Franchise Agreement became effective, with all Legal Requirements. (m) Except as listed or described in Schedule 4.23(m), the rights of GACCF under any and all of the Franchise Agreements have not been subordinated to the rights of any other Person and no provision regarding the calculation and payment of royalty fees in any Franchise Agreement has been waived, altered or modified in any material respect adverse to GACCF. (n) Set forth in Schedule 4.23(n) is a description of any franchisee organization which holds itself out as a representative of any group of two or more Franchisees, indicating thereon whether such franchisee organization is sponsored by GACCF or is independently maintained. There are no agreements of any kind in effect between any such franchisee organization and GACCF. (o) Except as set forth on Schedule 4.23(o), no orders, consents or decrees (other than routine comment letters from regulators, orders approving registrations, renewals of registrations or registration exemptions) have been issued by any foreign or domestic (federal or state) administrative or regulatory agency to GACCF nor have letters of inquiry, investigation or the like been issued to GACCF by such foreign or domestic administrative or regulatory agencies relating, directly or indirectly, to GACCF’s offer and sale of Franchises. (p) GACCF has not offered or sold Franchises in any jurisdiction where the sale of any such Franchise violated any Legal Requirements of such jurisdiction. GACCF has not offered rescission as would be required under any Legal Requirements arising from a possible violation of any Legal Requirements. No Franchisee: (i) paid any consideration or signed any Franchise Agreement before the expiration of all applicable waiting periods; (ii) has asserted or exercised any statutory right of rescission arising from a violation of the Legal Requirements; (iii) has an immediate or inchoate right to exercise any statutory right of rescission arising from the violation of any Legal Requirements relating to the offer and sale of Franchises. With the exception of routine comment letters from regulators, GACCF has never received: (A) a stop order, revocation or withdrawal of approval or a license or exemption to offer and sell Franchises in any jurisdiction; or (B) an official notice, complaint, subpoena, request for information, or any form of formal or informal inquiry from any Government Authority regarding the offer or sale of Franchises. GACCF has not participated in any remedial program directed towards its franchise selling practices administered by the National Franchise Council, the International Franchise Association, the Federal Trade Commission, any state or provincial authority, or any other public or private organization. (q) The Books and Records of GACCF and the files of its franchise counsel include all written communications and written memorialization of all material oral communications with franchise regulatory authorities regarding the franchises, including without limitation all applications for initial registration, renewal applications, amendments, comment letters, approvals, licenses, consents, exemption filings, withdrawals, and undertakings regarding future changes in such Seller’s offering materials. (r) Except as set forth in Schedule 4.23(r), GACCF has complied with all Legal Requirements applicable to the administration of the relationships with the Franchisees under the Franchise Agreements. (s) GACCF has delivered or made available to Buyer correct and complete copies of all registrations, material advertising or promotional materials (used by GACCF subsequent to January 1, 2005), Seller UFOCs or agreements used by GACCF or filed with any foreign or domestic administrative or regulatory agency or otherwise used by GACCF in connection with the offer, sale and operation of Franchises in any jurisdiction (domestic or international) since January 1, 2005. GACCF has not published any franchise recruitment advertising in violation of the Legal Requirements of any jurisdiction. GACCF has effected timely filing of franchise recruitment advertising with the applicable Government Authority before publication and obtained any approvals or clearances, or received no comments requiring changes to the advertising materials that were not incorporated in the final copy.

Franchise Matters. (a) GAM has never offered or sold Franchises. Except as set forth on Schedule 4.23(a), since January 1, 2004, GACCF neither Seller has been the only Person offering and selling Franchises and no or had any Subsidiary or Affiliate has ever offered offering or sold selling Franchises domestically or internationally. GACCF The Sellers and its their Affiliates are the only Persons persons or entities that have offered or sold Franchises for their respective Brands since January 1, 2000. (b) Schedule 4.23(b) sets forth a listing of, and GACCF each Seller has provided Buyer with a true and complete copy of, its’ each Seller’s currently effective Seller UFOC(s), together with true and complete copies of all Seller UFOCs used by such Seller since January 1, 2004 in connection with the offer and sale of Franchises. (c) Schedule 4.23(c) sets forth a true and complete list of all Franchise Agreements to which GACCF each Seller is a party, including for each Franchise Agreement (i) the name, address and telephone number of each and every Franchisee; (ii) the effective dates and expiration dates; and (iii) a description of any protected or exclusive territory. There are no other currently effective Franchise Agreements relating to the Brands. Except as noted in Schedule 4.23(c), each Franchise Agreement entered is substantially similar to the form of Franchise Agreement incorporated into the Seller UFOC that was issued to the Franchisee contemporaneously with the sale of such Franchise by GACCF each Seller to the Franchisee. GACCF Each Seller has and has had made available to Buyer true, complete and correct copies of all Franchise Agreements listed or required to be listed on Schedule 4.23(c), including all amendments and addenda thereto, except those in respect of which Sellers have indicated on Schedule 4.23(c) that the Franchise Agreement on file is missing. (d) From and after the date of its formation, GACCF each Seller has and has had at all relevant times, the limited liability company power and authority and legal right to enter into and carry out the terms of each Franchise Agreement. All of the Franchise Agreements are valid, binding and enforceable against the Franchisee thereunder in accordance with its terms, subject to any such Franchisee’s bankruptcy, insolvency, receivership or similar proceeding under state or federal law and subject to any equitable doctrines and Legal Requirements which may affect the enforceability of the Franchise Agreements against Franchisees. GACCF Each Seller has maintained a standard practice practive of refraining from the negotiation of the Franchise Agreements on a Franchisee by Franchisee basis. (e) Schedule 4.23(e) identifies each existing Franchisee that (i) is, to the each Seller’s Knowledge, currently in material default under any Franchise Agreement, whether or not GACCF such Seller has notified the Franchisee about the default; (ii) has received within the twelve (12) month period prior to the date of this Agreement a Notice of Default from GACCF either Seller that such Franchisee has incurred a default under such Franchise Agreement; (iii) has on three or more occasions within any twelve (12) month period received Notices of Default under a Franchise Agreement; or (iv) is a party to a Franchise Agreement under which the franchise unit is not yet open and operating. (f) Schedule 4.23(f) sets forth a true and complete list of all written or oral agreements or arrangements (and with respect to oral agreements a description thereof) with independent sales representatives, contractors, brokers or consultants under which GACCF either Seller has authorized any person to sell or promote Franchises on behalf of GACCF such Seller or has agreed to rebate or share amounts receivable under any Franchise Agreement in connection with the offer and sale of any such Franchise Agreement and indicating which of such agreements are in default and may be terminated by GACCF such Seller by notice to the other party. GACCF Each Seller has delivered to Buyer true, correct and complete copies of all written agreements described in Schedule 4.23(f). GACCF Each Seller has delivered to Buyer true, correct and complete copies of all written correspondence and memoranda evidencing such oral agreements described in Schedule 4.23(f). (g) To the Seller’s Sellers’ Knowledge, except as set forth on Schedule 4.23(g), GACCF neither Seller has not (i) offered nor sold, nor otherwise granted rights, to any Person Party conferring upon that Person Party area development, area representative, master franchise, sub-franchise, or other multi-unit or multi-level rights with respect to the Brands within the United States or (ii) used or uses independent sales representatives, area directors, contractors, sales and service providers or brokers to sell or promote the sale of its Franchises. (h) To the Seller’s Sellers’ Knowledge, except as set forth on Schedule 4.23(h), and except as may be granted by operation of law, (i) no Franchisee has been granted any Territorial Rights by GACCF either Seller pursuant to which (A) GACCF such Seller is restricted in any way in their right to own or operate, or license others to own or operate, any business or line of business or (B) the Franchisee is granted rights for the acquisition of additional franchises or expansion of the Franchisee’s territory, (ii) no Franchisee’s Territorial Rights conflict with the Territorial Rights of any other Franchisee, and (iii) to the extent GACCF either Seller has granted any such Territorial Rights (whether or not disclosed or required to be disclosed herein), GACCF such Seller has complied with such Territorial Rights and in the course of offering or selling franchises has not violated the Territorial Rights of any Franchisee. (i) Since January 1, 2004, and except as set forth on Schedule 4.23(i), each Seller has: (i) prepared and maintained each Seller UFOC UFOCs in accordance with applicable law; (ii) filed and obtained registration of the offer and sale of the Franchises in all jurisdictions requiring such registration prior to any offers or sales of Franchises in such jurisdictions (the “Registration Laws”) and has filed all material changes, amendments and renewals thereto on a timely basis as required by Legal Requirements in such jurisdictions; (iii) filed all notice filings (including the filing of Seller UFOC, as applicable) in all jurisdictions in which a notice filing is required to be filed prior to the offer and sale of franchises in such jurisdictions; (iv) filed all notices of exemption in all jurisdictions in which a notice filing is required in order to obtain an exemption from regulation as a “business opportunity” or to otherwise be subject to regulation under Legal Requirements in such jurisdictions absent such notice filing; and (v) sold no franchises during periods after the need for amendment arose and before the prospective Franchisee had been in receipt of an amended Seller UFOC for the required period for redisclosure in the jurisdiction. Seller UFOCs were prepared in all material respects in compliance with the UFOC Guidelines and/or other Legal Requirements and there were no material misrepresentations or misstatements of fact or omissions to state material information in any Seller UFOC necessary to make the statements made therein not misleading under the circumstances at the time such Seller was using such Seller UFOC. Since January 1, 2004, GACCF neither Seller has never ever withdrawn any of its their applications or registrations to offer and sell franchises from any jurisdiction except as set forth on Schedule 4.23(i). (j) To the Seller’s Sellers’ Knowledge, except as set forth on Schedule 4.23(j), GACCF neither Seller has not (i) offered or sold franchises or any form of agreement for operations under the Brands outside of the United States or (ii) filed any application seeking registration, exemption, and/or approval to do so. (k) GACCF has The Sellers have heretofore made available to Buyer correct and complete copies of all correspondence with Government Authorities concerning compliance with Registration Laws (including franchise registration orders), franchise advertising or promotional materials, UFOCs, and Franchise Agreements with current and past Franchisees. GACCF has The Sellers have made available or delivered to Buyer true and complete copies of the Franchisee files and other materials associated with each and every Franchisee. Since January 1, 2005, GACCF has Sellers have not, in any of the aforementioned documents or filings under any Registration Laws, made any untrue statement of a material fact, or omitted to state any fact necessary to make the statements made by GACCFSellers, taken as a whole, not misleading, in connection with the offer or sale of any franchise or business opportunity. (l) Except as disclosed in Schedule 4.23(l), each Franchise Agreement complies, and the offer, sale, administration and relationship of such Franchise complied at the time such offer and sale was made and at all times since such Franchise Agreement became effective, with all Legal Requirements. (m) Except as listed or described in Schedule 4.23(m), the rights of GACCF under any and all of the no Franchise Agreements have not Agreement has been subordinated to the rights of any other Person and no provision regarding the calculation and payment of royalty fees in any Franchise Agreement has been waived, altered or modified in any material respect adverse to GACCFeither Seller. (n) Set forth in Schedule 4.23(n) is a description of any franchisee organization which holds itself out as a representative of any group of two or more Franchisees, indicating thereon whether such franchisee organization is sponsored by GACCF or is independently maintained. There are no agreements of any kind in effect between any such franchisee organization and GACCFeither Seller. (o) Except as set forth on Schedule 4.23(o), no orders, consents or decrees (other than routine comment letters from regulators, orders approving registrations, renewals of registrations or registration exemptions) have been issued by any foreign or domestic (federal or state) administrative or regulatory agency to GACCF either Seller nor have letters of inquiry, investigation or the like been issued to GACCF either Seller by such foreign or domestic administrative or regulatory agencies relating, directly or indirectly, to GACCF’s either Sellers’ offer and sale of Franchises. (p) GACCF Neither Seller has not offered or sold Franchises in any jurisdiction where the sale of any such Franchise violated any Legal Requirements of such jurisdiction. GACCF Neither Seller has not offered rescission as would be required under any Legal Requirements arising from a possible violation of any Legal Requirements. No Franchisee: (i) paid any consideration or signed any Franchise Agreement before the expiration of all applicable waiting periods; (ii) has asserted or exercised any statutory right of rescission arising from a violation of the Legal Requirements; (iii) has an immediate or inchoate right to exercise any statutory right of rescission arising from the violation of any Legal Requirements relating to the offer and sale of Franchises. With the exception of routine comment letters from regulators, GACCF neither Seller has never ever received: (A) a stop order, revocation or withdrawal of approval or a license or exemption to offer and sell Franchises in any jurisdiction; or (B) an official notice, complaint, subpoena, request for information, or any form of formal or informal inquiry from any Government Authority regarding the offer or sale of Franchises. GACCF Neither Seller has not participated in any remedial program directed towards its franchise selling practices administered by the National Franchise Council, the International Franchise Association, the Federal Trade Commission, any state or provincial authority, or any other public or private organization. (q) The Books and Records of GACCF each Seller and the files of its franchise counsel include all written communications and written memorialization of all material oral communications with franchise regulatory authorities regarding the franchises, including without limitation all applications for initial registration, renewal applications, amendments, comment letters, approvals, licenses, consents, exemption filings, withdrawals, and undertakings regarding future changes in such Seller’s offering materials. (r) Except as set forth in Schedule 4.23(r), GACCF each Seller has complied with all Legal Requirements applicable to the administration of the relationships with the Franchisees under the Franchise Agreements. (s) GACCF Each Seller has delivered or made available to Buyer correct and complete copies of all registrations, material advertising or promotional materials (used by GACCF such Seller subsequent to January 1, 2005), Seller UFOCs or agreements used by GACCF such Seller or filed with any foreign or domestic administrative or regulatory agency or otherwise used by GACCF such Seller in connection with the offer, sale and operation of Franchises in any jurisdiction (domestic or international) since January 1, 2005. GACCF Neither Seller has not published any franchise recruitment advertising in violation of the Legal Requirements of any jurisdiction. GACCF Each Seller has effected timely filing of franchise recruitment advertising with the applicable Government Authority before publication and obtained any approvals or clearances, or received no comments requiring changes to the advertising materials that were not incorporated in the final copy.