Franchise Agreement [FOR MARRIOTT BRANDS:] During the Term of this Agreement, subject to the availability of adequate funds, Manager shall perform all of the obligations of Owner as “Franchisee” under the Franchise Agreement to the extent such obligations relate to the management or operation of the Hotel, including, without limitation, the obligations of “Franchisee” under Sections XIII (Accounts and Receipts) and XIV (Insurance) of the Franchise Agreement, and Manager shall not commit any act or omit to take any action that would cause a default by the Franchisee under the Franchise Agreement. In the event of any inconsistency between the provisions of this Agreement and the provisions of the Franchise Agreement, the provisions of the Franchise Agreement shall prevail. Manager shall send promptly to Owner any and all notices that Manager receives from the Franchisor with respect to the Hotel or the Franchise Agreement and shall keep Owner fully informed with respect to all matters that come to Manager’s attention under the Franchise Agreement. Likewise, Owner shall send promptly to Manager any and all notices that Owner receives from the Franchisor with respect to the Hotel or the Franchise Agreement that would require action or compliance on the part of Manager. Notwithstanding the foregoing, Manager shall not have the right to grant any consent, approval or other right reserved to the Franchisee under the Franchise Agreement or to make any decision or agreement on behalf of Owner under the Franchise Agreement. In the event the Franchise Agreement is terminated for any reason, this Agreement shall also terminate effective as of the date of termination of the Franchise Agreement, unless the parties hereto agree otherwise. [FOR HILTON BRANDS:] During the Term of this Agreement, subject to the availability of adequate funds, Manager shall perform all of the obligations of Owner as “Licensee” under the Franchise Agreement to the extent such obligations relate to the management or operation of the Hotel, including, without limitation, the obligations of “Licensee” under Paragraphs 6, 7 and 8 of the Franchise Agreement, and Manager shall not commit any act or omit to take any action that would cause a default by the Licensee under the Franchise Agreement. In the event of any inconsistency between the provisions of this Agreement and the provisions of the Franchise Agreement, the provisions of the Franchise Agreement shall prevail. Manager shall send promptly to Owner any and all notices that Manager receives from the Franchisor with respect to the Hotel or the Franchise Agreement and shall keep Owner fully informed with respect to all matters that come to Manager’s attention under the Franchise Agreement. Notwithstanding the foregoing, Manager shall not have the right to grant any consent, approval or other right reserved to the Licensee under the Franchise Agreement or to make any decision or agreement on behalf of Owner under the Franchise Agreement. In the event the Franchise Agreement is terminated for any reason, this Agreement shall also terminate effective as of the date of termination of the Franchise Agreement, unless the parties hereto agree otherwise.
Franchise Matters (a) The Franchisor is the only Person that has operated the Franchise System or sold Franchises of the Business. All such Franchises were sold and/or operated only in the United States of America. Solely for purposes of this Section 3.25, the term “Business” shall not be deemed to include the operation of the Buddy’s Home Furnishings stores by the Seller and its Subsidiaries.
(b) Section 3.25(b) of the Disclosure Schedule sets forth a complete and accurate list of the Franchisees of the Franchise System, indicating the address of each franchised Sears Outlet store operated by the Franchisee and the scheduled expiration date of the Franchise Agreement evidencing such franchised Sears Outlet store. Except as set forth in the Franchise Agreements, the Franchisor is not limited in its right to grant Franchises or develop (or grant rights to any other Person to develop) any business that competes with any Franchise of the Business.
(c) Each Franchise Agreement is similar in all material respects to the form of Franchise Agreement contained in the FDD that was issued to the applicable Franchisee, except for deviations from such form that are contained in such Franchise Agreement or an addendum to such Franchise Agreement, a copy of which has been made available to Purchaser. There are no oral modifications of any Franchise Agreement or oral agreements between any Franchisee and Franchisor relating to matters pertaining to material obligations of such Franchisee thereunder.
(d) Since January 31, 2016, the Franchisor has been at all times in compliance in all material respects with all applicable Franchise Laws in connection with the offer or sale of Franchises of the Business, relationships with Franchisees, the operation of the Franchise System and the termination, non-renewal and transfers of Franchises of the Business and, to the Seller’s Knowledge, no current or former Franchisee or any Governmental Authority has alleged that Franchisor has failed to comply in all material respects with any applicable Franchise Laws during its operation of the Franchise System. No financial performance representations (as defined in the FTC Rule) or any other representations concerning actual or projected revenues, earnings, income or profits have been made to any Franchisee or any prospective Franchisee by the Franchisor or any franchise broker, agent or other franchise seller (as defined in the FTC Rule) of the Franchisor, other than as disclosed in the franchise disclosure document for the Franchise System. All FDDs that the Franchisor has used to offer or sell Franchises at any time since January 31, 2016 were prepared and delivered to prospective Franchisees in compliance in all material respects with Franchise Laws.
(e) Each Franchisee who left the Franchise System since December 1, 2015 has executed agreements with the Franchisor which released the Franchisor and its Subsidiaries and affiliates from any and all Liabilities and claims that such Franchisee had, has or may have against the Franchisor and its Affiliates which relate in any way to the Franchisee’s Franchise Agreement.
(f) Since January 31, 2016, all rebates, allowances, discounts or other payments or remunerations received by the Franchisor or the Seller from vendors, suppliers or other third parties, on account of any Franchisee’s direct or indirect purchases from those vendors, suppliers or third parties, have been received, administered, disclosed and spent in accordance with the operation manuals utilized by the Franchise System, all Franchise Laws, the FDDs delivered to such Franchisees, the applicable Franchise Agreement, and other applicable Contracts associated with the Franchise System, in each case, in all material respects. Except as set forth in the Franchise Agreements, there are no material restrictions on the Franchisor’s use of any such rebates, allowances, discounts or other payments or remuneration for any purpose.
(g) Since January 31, 2016, no Person has alleged, to the Seller’s Knowledge, the Franchisor to be, and the Franchisor has not received any written complaint, allegation or notice of inquiry or investigation from any Franchisee, employee of a Franchisee, third party or Governmental Authority, alleging that the Franchisor is or may be joint employers with, or subject to joint employment liability with, any Franchisee. The Franchisor has properly classified each Franchisee as an independent contractor and not an employee under applicable Law, and to the Seller’s Knowledge, no written allegation has been made since January 31, 2016 that any Franchisee or any of a Franchisee’s employees have been or are employees of the Franchisor, the Seller or any of its Subsidiaries or improperly classified as independent contractors in accordance with applicable Law.
