MIDAS FRANCHISE AND TRADEMARK AGREEMENT
THIS AGREEMENT is made as of _____________________ by and between Midas
International Corporation, a Delaware corporation (hereafter referred to as
"Midas"), and _______________________________________ (hereafter referred to as
"Franchisee").
RECITALS:
Midas and Franchisee mutually acknowledge as follows:
Midas is engaged in the business of operating, and of licensing the
operation by others, of automotive specialty shops known as "Midas Shops", which
engage in the sale and installation of those products listed in Schedule A
attached hereto, and in the performance of those services listed in said
Schedule A. Midas makes available and furnishes to its franchisees genuine Midas
products which are offered, sold, and installed by said shops, certain of which
products carry a unique and valuable guarantee to the consumer public.
All of said Midas Shops are operated in connection with and through the
use of various trademarks, tradenames, and service marks consisting of or
containing the words "Midas", "Midas Shops", and certain related words, letters,
and symbols, (all of which are hereafter collectively referred to as the
"Proprietary Marks"), and in connection with certain designs of signs and
buildings, logos, and copyrighted materials, (all of which are hereafter
collectively referred to as the Midas "indicia"). The Proprietary Marks include,
but are not limited to, those registered in the United States Patent Office as
Nos. 620,322, 641,711, 651,747, 655,353, 657,036, 674,939, 678,396, 681,974,
700,490, 716,626, 716,627, 722,195, 726,350, 733,724, 736,168, 749,922, 753,876,
757,630, 798,254, 803,611, 803,612, 803,613, 803,614, 855,053, 855,054, 858,213,
864,048, 864,049, 864,889, 867,496, 864.889, 886,623, 886,624, 888,471, 892,784,
902,166, 1,238,734, 1,247,295, 1,244,801, and 1,258,822. In addition, other
applications for registration are presently pending and/or may be applied for in
the future.
Midas has also developed a unique and successful system for the
establishment and operation of said shops, (hereinafter referred to as the
"Midas System"), which includes site selection, shop construction and layout,
equipment selection and installation, purchasing and inventory control methods,
accounting methods, merchandising, advertising, sales, and promotional
techniques, installation techniques, personnel training, and other matters
relating to the efficient and successful operation of said shops and the
maintenance of high standards of quality.
Midas has expended large sums of money over a period of many years in
developing and improving the Midas System, and in advertising, promoting, and
publicizing the Midas Proprietary Marks and indicia, as well as the various
unique Midas guarantees, all of which have become well and favorably known to
the public throughout the United States and Canada, and Midas has acquired a
valuable goodwill therein. The public has come to associate said Proprietary
Marks and indicia exclusively with the products and services offered, sold,
installed, and rendered by authorized Midas Shops.
In order to assist authorized Midas franchisees to get started in business
and to achieve maximum results, Midas makes available to all franchisees both
initial and continuing information, experience, advice, guidance, and know-how
with respect to shop management, operation, financing, and promotion.
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Franchisee desires to establish and operate a Midas Muffler Shop at the
location hereafter designated, to use in connection therewith the Midas
Proprietary Marks and indicia and the Midas System, to have the right to sell
and install therein genuine Midas products and to issue and honor the Midas
guarantees in connection therewith, and to derive the benefits of Midas'
information, experience, advice, guidance, know-how, and customer goodwill.
Franchisee acknowledges that it is essential to the maintenance of the
high standards which the public has come to expect of authorized Midas Shops, to
the preservation of the integrity of the Midas Proprietary Marks, indicia, and
goodwill, and to the value of the Midas guarantees, that each franchisee adhere
to certain uniform standards, procedures and policies hereafter described.
In consideration of the foregoing recitals, of the mutual covenants
hereafter set forth, and of other good and valuable considerations, Midas and
Franchisee agree as follows:
ARTICLE ONE
GRANT, TERM AND INITIAL FEE
1.1 GRANT OF LICENSE. Midas hereby grants to Franchisee, and Franchisee
hereby accepts from Midas, the right, franchise and license, for the term and
upon the terms and conditions hereafter set forth:
(a) To establish and operate a Midas Muffler Shop at the
following location only _______________________________________________.
(b) To use, in connection with the operation of said shop, the
Midas Proprietary Marks and indicia, and the Midas System;
(c) To purchase from Midas and to resell from said shop those
genuine Midas products listed in Schedule A attached hereto, and to sell
and install said genuine Midas products in or from Franchisee's shop;
(d) To perform in Franchisee's shop those genuine Midas services
listed in Schedule A attached hereto; and
(e) To issue and honor the various Midas guarantees in connection
with such of said products and services as may be subject to guarantee
from time to time.
1.2 NON-EXCLUSIVITY. The right, franchise, and license granted
herein shall be non-exclusive. Midas shall at all times have the right
either to establish and operate itself, or to license any other party or
parties to establish and operate, a Midas Muffler Shop or Shops at any
other location or locations whatever.
1.3 TERM. The term of this Agreement and of the right, franchise,
and license herein granted shall commence on ___________________ and shall
end on ___________________ unless sooner terminated in accordance with the
terms hereof.
1.4 INITIAL FRANCHISE FEE. Franchisee has paid to Midas, or will
concurrently with the execution of this Agreement pay to Midas, the sum of
twenty thousand dollars ($20,000.00) as an initial fee for the right,
franchise and license hereby granted. Said fee shall be deemed fully
earned by Midas upon the execution and delivery of this Agreement by
Midas, subject only to the provisions of the next sentence, and is in
addition to the periodic royalty payable pursuant to Section 4 1 below, to
any and all amounts paid or to be paid by Franchisee to Midas Realty
Corporation (a wholly-owned subsidiary of Midas International Corporation)
for its services in relation to the location and development of the shop,
and to any and all other amounts, whether for merchandise, or for any
other reason, which may be owed to Midas from time to time. In the event
this
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Agreement is terminated by either party or in any manner in accordance
with the terms hereof effective on any date within one year from the date
of this Agreement, said initial fee shall be refunded to the Franchisee to
the extent of sixteen thousand dollars ($16,000.00) only, without
interest. Except as expressly stated in the immediately preceding
sentence, said initial fee of twenty thousand dollars ($20,000.00) shall
not be refunded, in whole or in part, upon termination of this Agreement
nor at any other time or under any other circumstances whatever.
ARTICLE TWO
PROPRIETARY MARKS, INDICIA,
AND CONFIDENTIAL INFORMATION
2.1 VALIDITY AND USE OF PROPRIETARY MARKS. Franchisee hereby
acknowledges the validity of the Proprietary Marks, and acknowledges that
the same are the sole property of Midas. Franchisee shall use the
Proprietary Marks only for so long as the right, franchise, and license
granted herein remains in force, and only in connection with the sale and
installation of genuine Midas products and the rendition of genuine
authorized Midas services, in the manner and for the purposes specified in
this Agreement. Franchisee shall not, either during or after the term of
this Agreement, do anything, or aid or assist any other party to do
anything, which would infringe upon, harm, or contest the rights of Midas
in any of the Proprietary Marks or in any other xxxx or name which
incorporates the word "Midas." Franchisee shall not use any xxxx or name
other than as herein licensed in connection with the sale of any genuine
Midas products or services, and shall not place any name or xxxx, other
than the names or marks originally appearing thereon, on any products,
packages, or other materials which Franchisee obtains from Midas.
2.2 DESIGNATION OF SHOP AND FIRM NAME. Franchisee shall operate,
advertise, and promote his shop under the designation "Midas Shops,
"without the addition of any prefix or suffix, or under such other name or
names as Midas may from time to time designate, and under no other name or
designation whatever. However, Franchisee shall not use the name "Midas
Shops," any other name containing the word "Midas," or any other
Proprietary Xxxx in or as part of the firm or corporate name of
Franchisee. Franchisee shall, upon the demand of Midas at any time,
promptly discontinue the use of any such name or word (or any confusingly
similar name or word) in its firm or corporate name, and shall promptly
take such steps as may be necessary or appropriate in the opinion of Midas
to eliminate any such name or word from Franchisee's firm or corporate
name.
2.3 VALIDITY AND USE OF MIDAS INDICIA. Franchisee acknowledges
that the Midas indicia are the exclusive property of Midas. Franchisee
shall not, either during or after the term of this Agreement, utilize any
of the Midas indicia, or any indicia confusingly similar thereto, except
in accordance with the terms of this Agreement. Franchisee agrees that any
further rights that may develop in any Proprietary Marks or in any of the
Midas indicia in the future as trade names, trademarks, or service marks
shall inure and accrue to the benefit of Midas.
2.4 CONFIDENTIAL NATURE OF MIDAS SYSTEM. Franchisee hereby
acknowledges that Midas is the sole owner of all proprietary rights in and
to the Midas System and each and every part thereof and all material and
information now or hereafter revealed to Franchisee under this Agreement
relating to the System. Franchisee further acknowledges that the Midas
System, in its entirety, constitutes trade secrets of Midas which are
revealed to Franchisee in confidence, solely for the purpose of enabling
Franchisee to establish and operate the shop herein licensed in accordance
with the terms of this Agreement. Such trade secrets include, but are not
limited to, product catalogues, price lists, training manuals, policy
manuals, sales promotion aids, business forms, accounting procedures,
marketing reports, informational bulletins, and inventory systems.
Franchisee agrees that both during and after the term of this Agreement,
(a) he will not reveal any of such trade secrets to any other person,
firm, or entity, and (b), he will not use any of such trade secrets in
connection with any business or venture in which he has a direct or
indirect interest, whether as proprietor, partner, joint venture,
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shareholder, officer, director, or in any other capacity whatever, other
than in connection with the operation of the shop herein licensed.
Franchisee acknowledges that the products, methods of doing
business, and other elements of the Midas System are unique and
distinctive and have been developed by Midas at great effort, time and
expense; that Franchisee has regular and continuing access to valuable and
confidential information, training, and trade secrets regarding the Midas
System; that as a result of the foregoing, it would be impossible for
Franchisee to engage in a similar business without making use of or
revealing Midas, confidential information, procedures, and trade secrets;
and that Franchisee has an obligation to promote sales under the Midas
System. Franchisee accordingly agrees that during the term of this
Agreement, including any renewals or extensions thereof, Franchisee shall
not, without the prior written consent of Midas, directly or indirectly,
individually or as a member of any business organization, engage or have
an interest, as an employee, owner, investor, partner (inactive or
otherwise) or agent, or as a stockholder, director or officer of a
corporation, or otherwise, in any business whose activities include the
sale at wholesale or the sale or installation at retail of exhaust system
components, shock absorbers, or and other product or service nationally
offered by Midas Shops and which conducts such activities--
(a) within 15 miles of the Midas Muffler Shop licensed herein,
(b) within 15 miles of any other then-existing Midas Muffler
Shop, or
(c) at any other location.
In the event that Franchisee is a corporation, the foregoing restrictions
shall apply to each shareholder owning 25% or more of the capital stock thereof,
and in the event that Franchisee is more than one person, the foregoing
restrictions shall apply to them jointly and severally; provided that the
foregoing restrictions shall not apply to investment in the shares or stock of a
public company which at the time of investment is listed on a recognized Stock
Exchange so long as such shares or stock are listed.
The restrictions contained in this Section 2.4 shall be severable in
accordance with the provisions of Section 10.7 of this Agreement.
2.5 GOODWILL. Franchisee acknowledges that all goodwill which may arise
from Franchisee's use of the Proprietary Marks, the Midas indicia, or the Midas
System, is and shall at all times remain the sole and exclusive property of
Midas and shall inure to the sole benefit of Midas. Nothing contained in the
preceding sentence shall be construed to prohibit Franchisee from receiving for
a sale of his business made in compliance with the provisions of Article Seven a
price which includes payment for any goodwill belonging to Franchisee.
2.6 UNAUTHORIZED USE. Franchisee shall promptly report to Midas any
unauthorized use of the Proprietary Marks or Midas indicia that comes to his
attention in any manner whatsoever. If requested by Midas, Franchisee will
cooperate with Midas in precluding unauthorized use of the Proprietary Marks and
Midas indicia, or any confusingly similar xxxx or indicia, but at the sole
expense of Midas.
ARTICLE THREE
CONTINUING OBLIGATIONS OF MIDAS
3.1 SERVICES TO BE RENDERED BY MIDAS. In addition to any assistance
which Midas may have heretofore rendered to Franchisee relating to site
selection, shop construction and layout, and equipment selection and
installation, Midas agrees that it will perform the following continuing
services for the benefit of Franchisee:
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(a) If Franchisee's shop has not yet opened, Midas will instruct
Franchisee, prior to the opening of Franchisee's shop, in all aspects of
the Midas System by providing a training program which shall be attended
by Franchisee and such of his management and supervisory personnel as
Midas may reasonably designate. From time to time after the opening of
Franchisee's shop, Midas may, at its option, provide a training program or
programs to Franchisee and such of his employees as Midas may reasonably
designate, and Franchisee agrees to attend and to cause all such
designated employees to attend such training program or programs. All
expenses of travel, lodging, meals, and other living expenses, incurred by
Franchisee and/or such employees in attending such initial or subsequent
program or programs shall be borne and paid by Franchisee.
(b) Midas agrees to make available to Franchisee from time to
time all improvements and additions to the Midas System, to the same
extent and in the same manner as they are made available to Midas
franchisees generally.
(c) Midas agrees to counsel with and to assist Franchisee on a
continuing basis with respect to the management and operation of
Franchisee's shop, and will make available to Franchisee the benefits of
Midas' information, experience, advice, guidance, and know-how in
connection therewith.
(d) Midas agrees that it will purchase and place from time to
time advertising promoting the products and services sold by Franchisees.
Subject to the provisions hereafter set forth, all decisions from time to
time regarding whether to utilize national/ regional, or local
advertising, or some combination thereof, and regarding selection of the
particular media and advertising content, shall be within the sole
discretion of Midas and such agencies or others as it may appoint. Midas
agrees that it will expend for media costs, commissions and fees,
production costs, and other costs of such advertising, with respect to all
Midas franchisees, an amount not less than one-half of the royalties
actually received by Midas from all Midas franchisees. Such amounts, as so
computed, shall be expended for advertising which is published, broadcast,
displayed, or otherwise disseminated either during the calendar year
within which such royalties are received by Midas, or during the
immediately succeeding calendar year. Nothing herein shall be deemed to
prohibit Franchisee from engaging in any advertising or promotion of his
shop or business, in addition to the advertising paid for by Midas,
provided such advertising or promotion shall be at the sole cost of
Franchisee and without deduction or credit against royalties or other
amounts owed by Franchisee to Midas, and shall be subject to the
provisions of Section 6.8.
(e) On or before May 1st of each year, Midas shall provide
Franchisee with its certificate, signed by an officer of Midas, stating
with respect to the preceding calendar year, (1) the amount of royalties
actually received, and (2) the amount expended for advertising pursuant to
this Section 3.1. Midas shall also provide Franchisee with details of the
amounts expended for media costs, commission and fees, and production
costs relating to the advertising.
In the event Midas expends for such advertising an amount in excess
of one-half of royalties actually received in any calendar year, then such
excess may be applied by Midas in satisfying the expenditure requirement
during the succeeding calendar year.
3.2 SALES OF PRODUCTS BY MIDAS. (a) Midas agrees to sell to Franchisee,
during the term of this Agreement and subject to the terms hereafter set forth,
such quantities of those genuine Midas products referred to in Schedule A
attached hereto as Franchisee may order from time to time, provided however,
that Midas may at any time and from time to time, in its sole discretion,
discontinue the sale to all its franchisees of any product or products, if, in
the opinion of Midas, the continued sale of such product or products becomes
unfeasible, unprofitable, or otherwise undesirable, and upon such
discontinuation the license herein granted with respect to such product or
products shall terminate unless Midas has provided for alternative sources of
supply meeting its standards and specifications and expressly elects to continue
such license subject to such standards and specifications.
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(b) The prices, delivery terms, terms of payment, and other terms
relating to the sale of such products by Midas shall be as prescribed by
Midas from time to time, and shall be subject to change by Midas without
prior notice at any time.
(c) Upon the giving by Franchisee of notice of termination of
this Agreement pursuant to Section 8.1, or upon the giving by Midas of
notice of termination pursuant to Section 8.2 (subject to the provisions
of paragraph (e) of such Section 8.2), or upon the termination of this
Agreement pursuant to Section 8.3, Midas shall not be obligated to fill or
ship any orders for merchandise theretofore or at any time thereafter
received from Franchisee.
(d) Midas shall in no event be liable to Franchisee for
unavailability of or delay in shipment or receipt of merchandise due to
temporary product shortages or unavailabilities, order backlogs,
production difficulties, delays in or unavailability of transportation,
fire, strikes, work stoppages, or other causes beyond the reasonable
control of Midas.
ARTICLE FOUR
ROYALTIES
4.1 PAYMENT OF ROYALTY. Franchisee agrees to pay to Midas, within ten
days after the close of each calendar month during the term of this Agreement, a
royalty in an amount equal to ten percent ( 10%) of Franchisee's Net Revenue for
said preceding month. For purposes of this Section 4.1, Net Revenue is defined
as the total gross revenue derived by Franchisee from the operation of his shop,
whether from sales for cash or credit, and irrespective of the collection
thereof, including sales of both merchandise and services, and including
installation charges for installation of automobile mufflers or any other
products which may be permitted pursuant to the terms of the Midas guarantees on
such mufflers and other products, but exclusive of all sales taxes, use taxes,
gross receipts taxes, and other similar taxes added to the sales price and
collected from the customer, and less any bona fide refunds, rebates, and
discounts. Royalties received by Midas pursuant to this Section 4.1 shall not be
deemed trust funds nor shall Midas be required to segregate such funds in any
way, but they shall be deemed general funds of Midas for all purposes.
4.2 REPORTS AND RECORDS. (a) Franchisee shall submit to Midas, with and
at the time each monthly payment of royalty is required pursuant to Section 4.1
above, a true, correct and complete statement of Net Revenue (as defined in
Section 4.1) on forms provided by Midas, containing all information called for
by such forms and certified to by Franchisee.
(b) If the term of this Agreement commences or ends on a day
other than the first or last day of a calendar month, respectively, the
royalty for such month shall be based upon Net Revenue for the portion of
the month commencing or ending with the date of commencement or
termination of the term of this Agreement, as the case may be.
(c) Within sixty days after the close of Franchisee's fiscal
year, Franchisee shall furnish a statement, on forms provided by Midas,
containing all the information requested on such forms, certified to by
Franchisee and signed by Franchisee's accountant, showing the total Net
Revenue for said preceding fiscal year, as finally adjusted and reconciled
after the closing and review of Franchisee's books and records for such
fiscal year. If such statement disclosed any underpayment of royalties for
such fiscal year, Franchisee shall pay to Midas, at the time of submitting
such statement, the amount of any such underpayment. Any overpayment shall
be credited to Franchisee's account.
(d) Franchisee shall maintain his books and records in such
manner as to clearly and accurately reflect Net Revenue as defined in
Section 4.1. All such books and records shall also be maintained in
accordance with the minimum standards as prescribed from time to time by
Midas, and shall be preserved for a period of not less than five years
after the close of Franchisee's fiscal year to which they relate and
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shall be open at all reasonable times to inspection and verification by
Midas or any of its representatives. Midas shall be entitled at any time
to have Franchisee's books and records (including federal, state and local
tax returns) examined or audited at Midas' expense, and Franchisee shall
cooperate fully with the party or parties making such examination or audit
on behalf of Midas. Franchisee shall promptly pay to Midas, or Midas shall
credit to Franchisee's account, as the case may be, any underpayment or
overpayment of royalties disclosed by such examination or audit. If any
examination or audit is necessitated by Franchisee's failure to submit
statements of Net Revenue or to maintain books and records as required by
this Section 4.2, or in the event that the Net Revenues reported by
Franchisee for any period of twelve consecutive months are more than five
percent (5%) below the actual Net Revenues of Franchisee for such period
as determined by any such examination or audit, then Franchisee shall
immediately pay to Midas the cost of such examination or audit (including
reasonable compensation for any time necessarily expended by Midas' own
employees and reimbursement for expenses necessarily incurred by them), as
well as any additional amount of royalties shown to be due. Such payments
shall be without prejudice to any right of Midas to terminate this
Agreement on account of such defaults by Franchisee, in accordance with
the terms of Section 8.2 below.
(e) Any amount properly owing from Franchisee to Midas for
royalties, if not paid when due, whether such amount has been shown on any
report required to be submitted by Franchisee or has subsequently been
determined by verification, examination, or audit to have been due for any
month, shall bear interest at the rate per annum of three percentage
points above the prime lending rate of The First National Bank of Chicago
in effect on the first day of each month for the period during which any
such amount is outstanding, beginning ten ( 10) days after the date such
amount was or would have been due until paid, except that if the amount is
not paid within thirty (30) days after the due date, it shall bear the
said interest from the due date.
ARTICLE FIVE
WARRANTIES AND GUARANTEES
5.1 EXCLUSION OF WARRANTIES AND GUARANTEES. There are no warranties or
guarantees, expressed or implied, made by Midas either to Franchisee or to any
of his customers, with respect to any products purchased by Franchisee from or
through Midas, except as expressly set forth in Sections 5.2 and 5.3 below.
Franchisee shall make no warranties or guarantees to his customers with respect
to any such product or with respect to any services licensed hereunder except as
expressly set forth in said Sections 5.2 and 5.3. Midas shall not be liable to
Franchisee or to any of his customers, on account of any alleged warranty,
express or implied, except to the extent and in the manner set forth in Sections
5.2 and 5.3.
5.2 WARRANTY AGAINST FACTORY DEFECTS. All products purchased by
Franchisee from Midas, including those covered by specific guarantees as set
forth in Section 5.3, are warranted by Midas to the ultimate consumer for 90
days from the date of such consumer's purchase against defects in materials and
workmanship. If a product disclosing any such defect is returned to Franchisee
within that time, whether the product was installed by Franchisee or any other
Midas franchisee, Franchisee shall replace the product by installation of
another genuine Midas product of like grade and quality and which is proper for
the application as specified in the Midas parts catalogue or product bulletins
issued pursuant thereto, and shall make no charge whatever to the customer
either for the product or for installation thereof. Upon compliance with
policies and procedures then in force governing the return of such defective
products, Franchisee shall be entitled to credit in an amount equal to the then
current price at which such product is being offered by Midas to Franchisee,
plus the cost of shipping such product back to Midas or its supplier if and as
directed by Midas, but exclusive of any other freight or any other applicable
charges.
5.3 MIDAS GUARANTEES. Certain products purchased by Franchisee from
Midas are and may from time to time be guaranteed by Midas to the ultimate
consumer in accordance with the terms of a printed "Guarantee",
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furnished by Midas. With respect to those products as to which Midas from time
to time furnishes such a printed Guarantee, it is agreed by Midas and Franchisee
as follows:
(a) Franchisee will deliver to each and every customer who
purchases such a product (except such classes of customers as Midas may
from time to time expressly exclude from the operation of such Guarantee)
the printed Midas Guarantee applicable thereto, and will not issue,
deliver, or otherwise furnish any other warranty or guarantee whatsoever
in connection therewith.
(b) Franchisee will not deliver or otherwise furnish any such
printed Midas Guarantee in connection with any product other than the
genuine Midas product to which such Guarantee is made applicable by Midas.
(c) Franchisee will honor each such printed Midas Guarantee
presented to Franchisee by the holder thereof, in accordance with the
respective terms thereof and in accordance with policies and procedures
promulgated by Midas from time to time, irrespective of whether such
Guarantee was furnished by Franchisee or by any other Midas franchisee.
Franchisee will replace the part so guaranteed only with another genuine
Midas part of like grade and quality, and which is proper for the
application as specified in the Midas parts catalogue or product bulletins
issued pursuant thereto, and shall deliver to the customer a like
Guarantee in connection with such replacement part.
(d) Franchisee will make no charge to the customer for honoring
any such printed Guarantee, except to the extent permitted by the express
terms of the Guarantee. Where such terms permit the making of an
installation charge, such charge shall not exceed an amount which is
reasonable for the labor involved in installing the part so installed
pursuant to the Guarantee.
(e) Franchisee will comply with all reasonable policies and
procedures promulgated from time to time by Midas relating to such
Guarantees, including but not limited to the delivery and validation
thereof, the honoring thereof, and the presentation thereof to Midas for
credit.
(f) Upon presentation to Midas of proper evidence of having duly
honored any such printed Guarantee and upon having complied with all
applicable policies and procedures then in force with respect to requests
for credit thereunder, Franchisee shall be entitled to full or partial
credit from Midas, if any, in such amounts and in such manner as may be
prescribed from time to time by Midas, subject to the provisions of
paragraph (g) below.
(g) Midas may from time to time furnish such printed Guarantees
with respect to additional categories of products, or may discontinue or
modify said Guarantees or the policies of reimbursement to its franchisees
therefor, with respect to any category or categories of products now or
hereafter covered, without any liability to Franchisee, provided however,
that notwithstanding any such discontinuance or modification by Midas,
Franchisee shall honor, in accordance with the terms thereof, all
Guarantees delivered to customers prior to the date of such discontinuance
or modification, and Franchisee shall remain entitled, with respect to all
such previously delivered Guarantees, to credit from Midas in the same
amounts as were available at the time of delivery of such Guarantees.
5.4 NO SET-OFF. Franchisee agrees not to set off against any amounts due
to Midas any claims for credit pursuant to warranties or Guarantees honored by
Franchisee, except to the extent that such credits have been granted by the
issuance of a written credit memorandum to Franchisee prior to the dates such
amounts are due to Midas. If, after such payment is made by Franchisee,
Franchisee shall receive any such written credit memorandum, Midas agrees to
credit the same against the next future payments owing from Franchisee, or to
pay Franchisee the amount thereof if Franchisee is not then indebted to Midas
and has no orders pending.
5.5 MISREPRESENTATION AND DISCLOSURE. Franchisee shall make no untrue or
misleading representations to customers or potential customers, whether written
or oral, concerning the warranties or
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Guarantees described in Sections 5.2 and 5.3 above, and shall make all
affirmative disclosures which may at any time be required by Midas or by law in
order to properly advise customers with respect to such warranties and
Guarantees and to avoid possible deception or confusion in connection therewith.
5.6 IMPROPER WORK AND UNAUTHORIZED GUARANTEES. In the event any Midas
franchisee replaces or does corrective work with respect to a product sold or
installed by Franchisee, whether or not pursuant to any warranty or Guarantee,
and such replacement or corrective work is the result of an improper, incorrect,
faulty, or defective installation by Franchisee, or any such Guarantee was
issued in violation of the provisions of Section 5.3 or of the policies and
procedures applicable thereto, Franchisee shall promptly pay to Midas for
reimbursement to the shop making such replacement or doing such corrective work
the total cost to the shop of all parts and the total labor cost involved, or if
Franchisee is the shop making such replacement or doing such corrective work,
then Franchisee shall receive no credit from Midas with respect thereto. Subject
to the right of reimbursement as provided in the preceding sentence, Franchisee
shall honor all Midas warranties and Guarantees presented by customers,
irrespective of whether Franchisee or any other Midas franchisee made an
improper, incorrect, faulty, or defective installation or issued such a
Guarantee in violation of the provisions of Section 5.3 or of the policies and
procedures applicable thereto. Nothing contained in this Section 5.6 shall
authorize a violation of such provisions, policies, or procedures, or shall
impair any remedy given Midas elsewhere in this Agreement for such violation.
5.7 POST-TERMINATION OBLIGATIONS. Midas agrees that every warranty or
Guarantee properly issued to Franchisee's customers during the term of this
Agreement will be honored by Midas or by an authorized Midas franchisee. Upon
termination of this Agreement under any circumstances, Franchisee shall not
honor any further warranties or Guarantees and shall not be entitled to credit
with respect to any such further warranties or Guarantees honored by Franchisee
in violation of the provisions of this Section 5.7. Franchisee shall thereafter
refer all requests for honoring of such warranties and Guarantees to Midas or to
such other Midas franchisee or franchisees as Midas may from time to time
designate.
ARTICLE SIX
AGREEMENTS OF FRANCHISEE WITH RESPECT TO
OPERATION OF SHOP
6.1 GENERAL. Franchisee will keep his shop open to the public during all
normal business days and hours throughout the year during the term of this
Agreement, and will at all times operate the shop diligently so as to maximize
the revenues and profits therefrom.
6.2 PROMOTION OF MIDAS PRODUCTS AND SERVICES. FRANCHISEE will at all
times actively promote the sale of Midas products and services and will use his
best efforts to cultivate, develop, and expand the market therefor. Franchisee
shall not sell any product or perform any service not listed on Schedule A to
this Agreement without the prior written consent of Midas.
6.3 MAINTENANCE OF INVENTORY. Franchisee acknowledges that a large
public demand has been created and exists for genuine Midas products of all
types, and that members of the public have come to expect that they will be able
to obtain such products at an authorized Midas Muffler Shop. Accordingly,
Franchisee agrees that he will at all times during the term of this Agreement
maintain an inventory of those genuine Midas products listed in Schedule A
attached hereto which is adequate both in terms of range of items covered and in
terms of quantities of the respective items, to fulfill the public demand in
Franchisee's market for such genuine Midas products and to promptly satisfy
customers seeking such genuine Midas products at Franchisee's shop, including
customers' requests for replacement under the terms of the Midas Guarantees.
6.4 MANAGERIAL RESPONSIBILITY. (a) Subject to the provisions of
paragraphs (b) and (c) of this Section 6.4, it is agreed that at all times
during the term of this Agreement,_________________________________________.
9
(i) shall devote his full time and effort to the active
management and operation of Franchisee's shop, (ii) shall, irrespective of
any delegation of authority not inconsistent with clause (i), reserve and
exercise ultimate authority and responsibility with respect to the
management and operation of Franchisee's shop, and (iii) shall represent
and act on behalf of Franchisee in all dealings with Midas. If two or more
individuals are named in this paragraph (a), each of them shall fulfill
the requirements of clause (i), and both or all of them shall jointly
fulfill the requirements of clauses (ii) and (iii).
(b) If Franchisee operates or hereafter commences to operate
under license from Midas, one or more additional Midas Shops, and if the
individual or individuals named in paragraph (a) of this Section 6.4 is or
are also named in the corresponding provision of such other agreement or
agreements, then such provisions shall be deemed to apply to all such
shops in the aggregate.
(c) In the event of the resignation, disability, or death of such
individual or individuals, the provisions of Article Seven shall govern,
provided however that if two or more individuals are named in paragraph
(a) of this Section 6.4, then upon the resignation, disability, or death
of one or more but less than all of such individuals, the provisions of
Article Seven shall not govern and the provisions of this Section 6.4
shall apply to the remaining or surviving individual or individuals.
6.5 SHOP DESIGN AND APPEARANCE. Franchisee acknowledges that the design
and appearance of both the exterior and interior of his shop building are part
of the Midas indicia, subject to modification of such indicia from time to time
by Midas, and that it is essential to the integrity of said indicia that as
great a degree of uniformity as possible be maintained among the various shop
premises of Midas franchisees. Accordingly, Franchisee agrees that:
(a) He will make no change, addition, or alteration of any kind
to the structural elements of the shop building or to the adjacent areas,
without the prior written consent of Midas.
(b) He will at his sole expense maintain interior and exterior
painting and decor in such manner and form as may be reasonably prescribed
from time to time by Midas.
(c) He will follow the reasonable instructions of Midas with
respect to floor layout and character of interior furnishings.
(d) He will purchase and display, on and about the interior and
exterior of the shop building, such and only such signs, emblems, logos,
lettering, and pictorial materials as may be reasonably prescribed by
Midas from time to time.
6.6 SHOP MAINTENANCE. Franchisee will at all times maintain his shop
premises in a clean, wholesome, attractive, and safe condition, and will keep
the same in good maintenance and repair.
6.7 STANDARDS OF OPERATION. Franchisee will at all times give prompt,
courteous, and efficient service to the public, will perform work competently
and in a workmanlike manner; and in all business dealings with members of the
public will be governed by the highest standards of honesty, integrity, fair
dealing, and ethical conduct. Franchisee will do nothing which would tend to
discredit, dishonor, reflect adversely upon, or in any manner injure the
reputation of Midas, Franchisee, or any other Midas franchisee.
6.8 ADVERTISING MATERIALS. Franchisee will not use, display, publish,
broadcast, or in any manner disseminate any advertising or promotional material
unless the same has first been approved in writing by Midas. In the event that
Midas from time to time furnishes to Franchisee any advertising, promotional or
informational materials to be used, displayed, or distributed in or about
Franchisee's shop, Franchisee agrees to follow the instructions of Midas in
connection therewith.
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6.9 INSURANCE. Franchisee alone shall be responsible for all loss or
damage arising out of or relating to the operation of Franchisee's shop or
arising out of the acts or omissions of Franchisee or any of his agents,
servants, or contractors in connection with the sale of products or rendering of
services by Franchisee, and for all claims for damage to property or for injury
or death of any persons directly or indirectly resulting therefrom, and
Franchisee agrees to indemnify and hold Midas harmless against and from any and
all such claims, loss, and damage, including costs and reasonable attorney fees.
Franchisee shall obtain and at all times during the term of this Agreement
maintain in force and pay the premiums for public liability or garage liability
insurance, in either case with completed operations coverage, in companies
acceptable to Midas, with $2,000,000 combined single limit per occurrence. Such
limits of liability shall be increased, and modified or additional types of
coverage shall be obtained at the direction of Midas, as and when changed
circumstances reasonably so require. Said policies of insurance shall expressly
protect both Franchisee and Midas and shall require the insurer to defend both
Franchisee and Midas in any such action. Franchisee shall furnish to Midas a
certified copy or certificate with respect to each such policy, evidencing
coverage as set forth above, naming Midas as an additional insured, and
providing that such policy shall not be canceled, amended, or modified except
upon ten days prior written notice to Midas. Maintenance of the insurance
required under this Section shall not relieve Franchisee of the obligations of
indemnification contained in the first sentence of this Section. If Franchisee
fails to procure or maintain in force any insurance as required by this Section
6.9 or to furnish the certified copies or certificates thereof required
hereunder, Midas may, in addition to all other remedies it may have, procure
such insurance and/or certified copies or certificates, and Franchisee shall
promptly reimburse Midas for all premiums and other costs incurred in connection
therewith.
6.10 FINANCIAL INFORMATION. In addition to the reports required of
Franchisee pursuant to Sections 4.2 (a) and (c) above, Franchisee shall submit
to Midas, within ninety days after the end of each fiscal year of Franchisee,
complete financial statements in form prescribed by Midas, including balance
sheet, profit and loss statement, and statement of source and disposition of
funds. In addition Franchisee shall submit to Midas such other reports and
financial information as Midas may from time to time require, including by way
of example and not limitation, sales and cost data and analyses, data on jobs
performed under the Midas Guarantee, and personal financial statements of any
persons having a material financial interest in Franchisee's business. If any
report actually submitted willfully and materially understates Net Revenue, then
Midas may, in addition to its other rights under this Agreement including
termination, require Franchisee to have its annual financial statement audited
by a certified public accountant and submitted to Midas, beginning for the
fiscal year in which the request is made, and for each subsequent year
thereafter until Midas determines that Franchisee's books and records clearly
and accurately reflect the business of the Shop.
6.11 PAYMENT OF BILLS. Franchisee will pay all indebtedness to Midas, as
reflected by invoices and customer statements rendered by Midas, in strict
accordance with the payment and credit terms applicable thereto from time to
time. Any such amount not paid when due, as well as any amount due from
Franchisee pursuant to Section 5.6 or Section 6.9, shall bear interest at the
rate per annum of three percentage points above the prime lending rate of The
First National Bank of Chicago in effect on the first day of each month for the
period during which any such amount is outstanding, beginning ten (10) days
after the date such amount was or would have been due until paid, except that if
the amount is not paid within thirty (30) days after the due date, it shall bear
the said interest from the due date. The payment of such interest shall not be
deemed to authorize any delay in payment of such invoices, statements or other
amounts. Franchisee will further pay when due all bills and other amounts owed
to third parties, but Midas shall not by virtue hereof become liable to any such
third party.
6.12 COMPLIANCE WITH LAWS. Franchisee shall comply with all federal,
state, county, municipal, or other statutes, laws, ordinances, regulations,
rules, or orders of any governmental or quasi-governmental entity, body, agency,
commission, board, or official applicable to the Franchisee's shop or business.
Nothing herein shall prevent Franchisee from engaging in a bona fide contest of
the validity or applicability thereof in any manner permitted by law.
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6.13 INTERFERENCE WITH EMPLOYMENT RELATIONS. During the term of this
agreement, and for a period of 12 months thereafter, Franchisee shall not,
without the written consent of such person's employer, employ or attempt to
employ any person who is at the time employed by Midas or by any other Midas
franchisee, and Midas shall not, without the written consent of Franchisee,
employ or attempt to employ any person who is at the time employed by
Franchisee, nor shall Franchisee or Midas otherwise directly or indirectly
induce or attempt to induce any such person to leave his employment as
aforesaid.
6.14 FRANCHISEE NOT AGENT OF MIDAS. This Agreement does not in any way
create the relationship of principal and agent between Midas and Franchisee, and
in no circumstances shall Franchisee be considered an agent of Midas. Franchisee
shall not act or attempt to act, or represent himself, directly, or by
implication, as an agent of Midas or in any manner assume or create or attempt
to assume or create any obligation on behalf of or in the name of Midas, nor
shall Franchisee act or represent himself as an affiliate of any other
authorized Midas franchisee.
6.15 COMPLIANCE WITH POLICIES, REGULATIONS, AND PROCEDURES. Franchisee
shall at all times comply with all lawful and reasonable policies, regulations,
and procedures promulgated or prescribed from time to time by Midas in
connection with Franchisee's shop or business, including but not limited to
standards, techniques, and procedures in the installation or servicing of
products or the rendering of other services, selection, supervision, and
training of personnel, sales, advertising, and promotional techniques, programs,
and procedures, maintenance and appearance of shop and shop premises, policies
and procedures relating to warranties or guarantees, payment, credit, and
accounting, and financial reporting policies and procedures.
6.16 RIGHT TO INSPECT SHOP. Midas, through its authorized
representatives, shall have the right at all reasonable times, to visit
Franchisee's shop for the purpose of inspecting the merchandise and equipment on
hand, inspecting the nature and quality of goods sold and services rendered,
examining and auditing Franchisee's books and records, and observing the manner
and method of operating the shop. If any of Franchisee's books, records, or
inventory is located outside the shop premises, Midas shall have similar rights
with regard to the same.
ARTICLE SEVEN
TRANSFERABILITY
7.1 GENERAL. Except as set forth in sections 7.2 through 7.10,
inclusive, and subject to all the terms and provisions thereof and of Section
7.11, Franchisee shall not make or suffer any assignment of this Agreement or of
any rights or interest herein. For all purposes of this Agreement, each of the
following shall be deemed to be an assignment of this Agreement:
(a) Any sale, assignment, transfer, subfranchise, or sublicense
by Franchisee of or with respect to this Agreement or any rights or
interest herein.
(b) Any pledge, encumbrance, or grant of any security interest
herein by Franchisee.
(c) Sale at judicial sale or under power of sale, conveyance or
retention of collateral in satisfaction of debt, or other procedure to
enforce the terms of any pledge, encumbrance, or security interest in this
Agreement which results in disposition of Franchisee's interest herein.
(d) The passing by operation of law to any other party or parties
of Franchisee's interest in this Agreement or any part thereof.
(e) In the event Franchisee is a corporation, partnership, or
other form of business association, any act, transaction, or event of a
nature described in paragraphs (a), (b), (c), or (d) above which, instead
of operating upon his Agreement as such, operates upon or affects any
interest in such corporation,
12
partnership, or association and results in any change in the present
controlling interest in such corporation, partnership, or association,
whether by means of one or a sequence of more than one transaction or
event. If Franchisee herein is two or more individuals, Franchisee shall
be deemed to be a partnership for all purposes of this Article Seven,
irrespective of whether or not such individuals are designated herein as a
partnership.
(f) In the event the person or persons designated in Section 6.4
of this Agreement cease to comply with any one or more of the provisions
of that Section, whether by reason of voluntary action or inaction,
disability, death, or other cause, subject however, to the proviso of
paragraph (c) of Section 6.4.
Any assignment of this Agreement, other than in accordance with and
subject to all the terms and provisions of Sections 7.2 through 7.11
inclusive, shall constitute a breach of this Agreement, shall be subject
to the provisions of Section 8.2 (d) (iv), and shall confer no rights or
interest whatever under this Agreement upon any other party.
7.2 TRANSFER TO CONTROLLED CORPORATION. If Franchisee is an individual or
a partnership, he or they may at any time assign and transfer this Agreement to
a corporation organized and operated for the sole purpose of conducting the
business for which Franchisee is franchised and licensed hereunder, subject to
the following conditions:
(a) Franchisee shall be and remain the owner of one hundred
percent (100%) of the issued and outstanding capital stock of said
corporation, provided that he or they may cause stock possessing not more
than forty-nine percent (49%) of the total voting power in said
corporation to be issued to his or their wife or wives.
(b) The person or persons designated in Section 6.4 shall
continue to comply with all the requirements of that Section.
(c) Such assignment and transfer shall be evidenced by a written
instrument, in form reasonably satisfactory to Midas, in which said
corporation expressly assumes all obligations of Franchisee hereunder,
whether accrued at the time of such assignment or arising thereafter, and
agrees to be bound by all the terms and provisions of this Agreement to
the same extent and in the same manner as Franchisee. A copy of said
instrument, executed by both Franchisee and said corporation, shall be
promptly delivered to Midas.
(d) Franchisee shall execute and deliver to Midas its then
standard forms of personal guaranty of such corporation's debts to Midas
and of subordination agreement. Further, Franchisee shall not be released
from but shall remain personally bound and liable to Midas,
notwithstanding said assignment and transfer, with respect to all
non-monetary obligations of Franchisee under this Agreement then accrued
or thereafter arising, and to evidence such obligations shall execute the
personal undertaking set forth at the end of this Agreement, following the
signatures of Midas and Franchisee.
7.3 SALE OF BUSINESS. In the event it is proposed to sell the business
operated pursuant to this Agreement, whether by sale of assets thereof, by sale
of a controlling interest in Franchisee if Franchisee is a corporation,
partnership, or other form of business association, or by any other means which
directly or indirectly transfers said business or control thereof, there shall
first be submitted to Midas a copy of any bona fide written offer made or
received, or if none, a statement in writing of all the terms of the proposed
sale and the identity of any proposed purchaser. Midas shall have the
irrevocable first right and option to purchase the business on the same terms as
stated therein, exercisable by notifying Franchisee in writing of its election
to do so within 14 days after its receipt of such written offer or statement. If
Midas does not so notify Franchisee within said 14-day period, then a sale of
the business to a third party may be consummated, but only on all the same terms
as are set forth in said written offer or statement and to the same party, if
any, identified therein, and subject to all the provisions, conditions, and
limitations of Sections 7.1 and 7.4. If such a sale is not
13
consummated with the third party within 120 days after receipt by Midas of such
written offer or statement, then the proposed sale shall be deemed withdrawn,
and all the provisions of this Section 7.3 shall again become fully applicable,
as if no such sale had been proposed. Nothing contained in this Section 7.3
shall abrogate, impair, or limit the application of any of the provisions of
Section 7.1 or 7.4.
7.4 CONSENT OF MIDAS TO VOLUNTARY ASSIGNMENT. In the event Franchisee
desires or proposes to voluntarily sell, assign, or transfer this Agreement to
any party other than a corporation described in Section 7.2, or if Franchisee is
a corporation, partnership, or other form of business association, then in the
event Franchisee and/or the holder or holders of any interest in such
corporation, partnership, or association desire or propose to take any action
which would constitute or create an assignment of this Agreement within the
meaning of Section 7.1, Franchisee or the holders of such interest, as the case
may be, shall first notify Midas in writing of such proposed sale, assignment,
transfer, or other action, setting forth in detail the nature of the item or
interest to be sold, assigned, transferred, or otherwise acted upon, the name
and address of the proposed purchaser, assignee, or transferee, or party
acquiring any interest, and the consideration, if any, therefor. Subject to
prior compliance with the provisions of Section 7.3, Midas shall consent to the
proposed transaction provided that each of the following conditions is
fulfilled:
(a) It shall be demonstrated to the reasonable satisfaction of
Midas that the proposed purchaser, assignee, transferee, or person
otherwise to acquire an interest, is of good moral character, and
possesses the business experience and capability, credit standing, health,
and financial resources necessary to successfully operate Franchisee's
shop in accordance with the terms of this Agreement. If the proposed
purchaser, assignee, or transferee is a corporation, partnership, or other
business association, the provisions of the preceding sentence shall apply
to the individuals who are to own such corporation, partnership, or
association. Franchisee shall cooperate with Midas in making available
such information as Midas may require to make the above-described
determinations.
(b) The person who is to be substituted in Section 6.4 of this
Agreement shall have been approved by Midas and shall have successfully
completed the training course then in effect for Midas franchisees. Upon
consummation of the transaction, this Agreement shall be deemed amended to
insert the name of such person in Section 6.4 hereof.
(c) Franchisee shall not be in default under any provision of
this Agreement, and shall pay in full all amounts owed to Midas at or
prior to the closing of the transaction.
(d) Any sale, assignment or transfer of this Agreement as such to
be made by Franchisee shall be evidenced by a written instrument, in form
reasonably satisfactory to Midas, in which the purchaser. assignee or
transferee expressly assumes all obligations of Franchisee hereunder,
whether accrued at the time of such assignment or arising thereafter, and
agrees to be bound by all the terms and provisions of this Agreement to
the same extent and in the same manner as Franchisee. A copy of said
instrument executed by both Franchisee and such purchaser, assignee, or
transferee, shall be promptly delivered to Midas. If the purchaser,
assignee, or transferee is a corporation, limited partnership, or other
entity any of the owners of which enjoy limited liability by law, the
individual or individuals who own the controlling interest therein shall
execute and deliver to Midas its then standard forms of personal guaranty
and subordination agreement, and shall further execute the personal
undertaking set forth at the end of this Agreement following the
signatures of Midas and Franchisee.
(e) In the case of any party or parties who are to acquire an
interest in Franchisee, the individual or individuals who are to acquire,
directly or indirectly, the controlling interest in Franchisee shall have
executed and delivered to Midas its then standard forms of personal
guaranty and subordination agreement, and shall further execute the
personal undertaking set forth at the end of this Agreement following the
signatures of Midas and Franchisee.
14
(f) Franchisee and each of its stockholders, directors, and
officers shall have executed and delivered to Midas a general release of
any and all claims and causes of action against Midas, its affiliated
corporation, and their respective officers, agents, and employees.
(g) That Franchisee shall have paid Midas a transfer fee equal to
one-half of one percent (0.5%) of the sale price (excluding that part of
the price, if any, fairly attributable to the sale of the real estate). If
the shop is sold following the refusal of Midas to extend the franchise
relationship as provided for in Section 9.6, no transfer fee shall be due
Midas.
7.5 CONSENT OF MIDAS TO PLEDGE. In the event Franchisee desires or
proposes to pledge, encumber, or grant any security interest in this Agreement,
or, if Franchisee is a corporation, partnership, or other form of business
association, then in the event the holder of any interest in such corporation,
partnership, or association desires or proposes to pledge, encumber, or grant
any security interest therein under circumstances which would constitute or
create an assignment of this Agreement within the meaning of Section 7.1,
Franchisee or the holder of such interest, as the case may be, shall first
notify Midas in writing of such proposed transaction. Midas shall not
unreasonably withhold its consent to such transaction, subject, however, to the
following conditions:
(a) Any consent so granted shall not be deemed a consent to such
pledgee, encumbrancer, or secured party exercising any rights or
prerogatives of Franchisee under this Agreement, nor to its exercise of
any rights or prerogatives of a holder of an ownership interest in
Franchisee.
(b) Any consent so granted shall not be deemed a consent to any
subsequent disposition described in Section 7.1 (c) or so much of Section
7.1 (e) as refers to Section 7.1 (c). Any such subsequent disposition
shall be deemed an assignment of this Agreement within the meaning of
Section 7.1, and shall be subject to the provisions of Section 7.6.
(c) The pledgee, encumbrancer, or secured party shall have
executed and delivered to Midas an instrument in writing agreeing to be
bound by the provisions of this Article Seven.
7.6 CONSENT OF MIDAS TO DISPOSITION TO OR BY SECURED PARTY. In the event
any party proposes to acquire the interest of Franchisee in this Agreement, if
Franchisee is an individual, in a transaction described in Section 7.1 (c), or
any such party proposes to acquire the interest of any party or parties having
an interest in Franchisee, if Franchisee is a corporation, partnership, or other
business association, in a transaction described in Section 7.1 (e) of a type
described in Section 7.1 (c), the party proposing to acquire such interest
shall notify Midas thereof in writing. Subject to prior compliance with the
provisions of Section 7.3, Midas shall consent to the proposed transaction,
provided that each of the following conditions is fulfilled:
(a) It shall be demonstrated to the reasonable satisfaction of
Midas that such party is of good moral character, and possesses the
business experience and capability, credit standing, health, and financial
resources necessary to successfully operate Franchisee's shop in
accordance with the terms of this Agreement. If such party is a
corporation, partnership, or other business association, other than a
corporation whose stock is publicly traded, the provisions of the
preceding sentence shall apply to the individuals who own the same.
(b) The person who is to be substituted in Section 6.4 of this
Agreement shall have been approved by Midas and shall have successfully
completed the training course then in effect for Midas franchisees. Upon
consummation of the transaction, this Agreement shall be deemed amended to
insert the name of such person in Section 6.4 thereof.
(c) There shall be no existing default in any of the obligations
of Franchisee under this Agreement, and all amounts owed to Midas shall be
paid in full at or prior to the consummation of such transaction.
15
(d) Such party shall have submitted to Midas satisfactory
evidence that he has acquired and has become entitled to all rights of
Franchisee hereunder, or to all rights in Franchisee belonging to the
party or parties whose interests have been acquired as the case may be. If
the interest of Franchisee hereunder is to be acquired, the party
acquiring such interest shall have executed and delivered to Midas a
written instrument, in form reasonably satisfactory to Midas, by which he
expressly assumes all obligations of Franchisee hereunder, whether then
accrued or thereafter arising, and agrees to be bound by all the terms and
provisions of this Agreement to the same extent and in the same manner as
Franchisee. In addition, if such acquiring party is a corporation other
than a corporation whose stock is publicly traded or is a limited
partnership or other entity any of whose owners enjoy limited liability by
law, the individual or individuals who own the controlling interest
therein shall execute and deliver to Midas its then standard forms of
personal guaranty and subordination agreement, and shall further execute
the personal undertaking set forth at the end of this Agreement, following
the signatures of Franchisee and Midas. If an interest in Franchisee is to
be acquired, the individual or individuals who are to acquire, directly,
or indirectly, the controlling interest in Franchisee shall have executed
and delivered to Midas said forms of guaranty and subordination agreement
and shall have executed the said personal undertaking set forth at the end
of this Agreement.
7.7 DEATH. In the event of the death of Franchisee, if Franchisee is an
individual, or, if Franchisee is a corporation, partnership, or other form of
business association, then in the event of the death of any party or parties
owning an interest in Franchisee, which death results in an assignment of this
Agreement within the meaning of Section 7.1, Midas shall consent to an
assignment and transfer of this Agreement to the executor, administrator, or
other personal representative of the deceased, and subsequently to the person or
persons entitled to distribution from the deceased's estate, (or directly to the
latter persons if no probate proceedings are instituted with respect to the
estate), provided that each of the following conditions is fulfilled with
respect to each such assignment and transfer:
(a) It shall be demonstrated to the reasonable satisfaction of
Midas that such executor, administrator, personal representative, or
distributee is of good moral character, and possesses the business
experience and capability, credit standing, health, and financial
resources necessary to successfully operate Franchisee's shop in
accordance with the terms of this Agreement. Such executor, administrator,
personal representative, or distributee shall cooperate with Midas in
making available such information as Midas may require to make the
above-described determinations.
(b) The person who is to be substituted in Section 6.4 of this
Agreement shall have been approved by Midas and shall have successfully
completed the training course then in effect for Midas franchisees. Upon
such approval and completion, this Agreement shall be deemed amended to
insert the name of such person in Section 6.4 thereof.
(c) There shall not be an existing default in any of the
obligations of Franchisee hereunder, and all amounts owed to Midas as of
the date of death shall be paid in full.
(d) Such executor, administrator, personal representative, or
distributee shall have submitted to Midas satisfactory evidence that he
has succeeded or otherwise become entitled to all rights of Franchisee
hereunder, or to all rights of the deceased in Franchisee, as the case may
be. If the deceased was the Franchisee, such executor, administrator,
personal representative, or distributee shall have executed and delivered
to Midas a written instrument, in form satisfactory to Midas, by which he
expressly assumes all obligations of Franchisee hereunder, whether accrued
at the date of Franchisee's death or arising thereafter, and agrees to be
bound by all the terms and provisions of this Agreement to the same extent
and in the same manner as Franchisee. If the deceased was the owner of an
interest in Franchisee, such executor, administrator, personal
representative, or distributee shall execute and deliver to Midas its then
standard forms of personal guaranty and subordination agreement (limited,
in the case of an executor, administrator, or personal representative to
his representative capacity), and shall execute the personal
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undertaking (similarly limited to such representative capacity) set forth
at the end of this Agreement, following the signatures of Midas and
Franchisee.
Any consent by Midas to an assignment and transfer of this Agreement
or of any interest in Franchisee to the executor, administrator, or
personal representative of the deceased shall not constitute a consent to
any subsequent assignment or transfer thereof from such executor,
administrator, or personal representative of the estate. Any consent by
Midas to such subsequent assignment or transfer shall be subject to
fulfillment, with respect to said subsequent assignment or transfer
separately and specifically. of all the conditions stated in
this Section 7.7.
7.8 CONSENT TO TRANSFER OF MANAGERIAL RESPONSIBILITY. In the event the
person designated in Section 6.4 of this Agreement ceases to comply with any one
or more of the provisions thereof, whether by reason of voluntary action or
inaction, disability, death, or other cause, (or, if two or more persons are
designated in Section 6.4, then in the event all of them cease to comply as
aforesaid), other than in connection with a transaction described in Sections
7.4, 7.6, or 7.7, Midas shall consent to the designation by Franchisee of
another person or persons to be substituted therein, and Section 6.4 hereof
shall be amended accordingly. but only if Midas in its reasonable discretion
finds such person or persons acceptable and he or they shall thereafter
successfully complete the training course then in effect for Midas franchisees.
7.9 TIME LIMITATION. In the case of any transaction described in Section
7.2, 7.4, 7.5, 7.6, or 7.7, Midas shall not be required to give its consent to
such transaction unless each condition precedent to such consent requiring
action by Franchisee or any third party has been fulfilled within 90 days from
the date of the event giving rise to the requirements of such consent, provided
however, if in any case the person who is to be substituted in Section 6.4 of
this Agreement has been unable, within said 90-day period, to complete the
required training course solely by reason of such course not having been offered
by Midas at an earlier date, and if all other conditions to Midas' consent have
been fulfilled within said 90-day period, then Midas shall consent to such
transaction conditioned upon successful completion of such training course by
such person at the earliest practicable date.
7.10 EXCLUSION. Nothing contained in this Article Seven shall be deemed
to refer to any event referred to in paragraph (b), (c), or (d) of Section 8.3.
7.11 ARBITRATION. In the event that Midas is requested, pursuant to
Section 7.4, 7.5, 7.6, 7.7, or 7.8, to grant any consent, subject to the
conditions set forth in said sections and in Section 7.9, and if Midas fails or
refuses to grant such consent, then upon written demand made by Franchisee upon
Midas at any time within 10 days after Franchisee's receipt of written refusal
by Midas to grant such consent, or if no such written refusal is sent by Midas,
then at any time within 10 days after expiration of the period defined in
Section 7.9 within which the conditions to Midas' consent are to be fulfilled or
within 10 days after earlier written notice of Franchisee's binding election to
waive the balance of such period and to stand upon the circumstances then
existing, such dispute shall be submitted to arbitration in accordance with and
subject to all the same terms, provisions, and conditions as are set forth in
paragraph (e) of Section 8.2 (including all subparagraphs thereof except
subparagraphs (vi) and (vii), and except that the time within which such
arbitration is to be requested shall be as provided in this Section 7.11, and
except further that the issues of fact and law referred to in subparagraph (iii)
of said paragraph (e) shall be those the determination of which is necessary to
determine whether Midas is required, pursuant to and subject to all the
conditions of Section 7.4. 7.5, 7.6, 7.7, or 7.8, and of Section 7.9, to grant
such consent. If Franchisee fails to serve proper written demand for arbitration
as set forth in this Section 7.11 within the time specified herein, Franchisee
shall be barred from seeking any relief, whether by way of arbitration or by way
of action or defense in any court, with respect to any matter of issue which was
subject to arbitration pursuant to this Section 7.11. If Franchisee makes proper
and timely written demand for arbitration pursuant to this Section 7.11, then
Midas shall grant the required consent promptly upon termination of the
proceedings in favor of Franchisee, either by rendition of final decision or
award by the arbitrator or by entry of a final and non-appealable order of any
court of competent jurisdiction in which lawful review of such decision
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or award may be sought by Midas or Franchisee. Midas shall not be liable to
Franchisee for any damage alleged to have accrued to Franchisee by reason of the
fact that such consent shall have been delayed until termination of the
proceedings as aforesaid.
7.12 ASSIGNABILITY BY MIDAS. This Agreement may be assigned by Midas or
by any hereafter referred-to successor, to any corporation which may succeed to
the business of Midas or of such successor by sale of assets, merger, or
consolidation, and may also be assigned by Midas or by such successor to the
shareholder or shareholders thereof in connection with any distribution of the
assets of said corporation.
ARTICLE EIGHT
DEFAULT AND TERMINATION
8.1 TERMINATION BY FRANCHISEE. Franchisee may terminate this Agreement
at any time, at the will of Franchisee and without cause, by giving to Midas
written notice of such termination no less than thirty days prior to the date of
termination.
8.2 TERMINATION BY MIDAS. (a) In the event Franchisee fails to make any
payment of money owed to Midas when due, or fails to submit to Midas when due
any report required by Section 4.2 or 6.10 hereof, and such default is not
totally cured within thirty days after Midas gives written notice of such
default to Franchisee, then Midas may terminate this Agreement at any time
thereafter by giving written notice of such termination to Franchisee.
(b) In the event Franchisee fails to perform any obligation imposed
upon Franchisee by this Agreement, other than those referred to in
paragraph (a) or (d) of this Section 8.2, and such default is not totally
cured within thirty day after Midas gives written notice of such default
to Franchisee, then Midas may terminate this Agreement at any time
thereafter by giving written notice of such termination to Franchisee,
provided however, that if the default is of such nature that it is not
capable of being totally cured with reasonable diligence by Franchisee
within said thirty-day period, then this Agreement shall not be terminated
by Midas if Franchisee has commenced, immediately upon receipt of such
notice, to exercise reasonable diligence to cure such default, Franchisee
continues to be diligently engaged in curing same upon the expiration of
said thirty-day period, and the curing thereof is completed as soon
thereafter as is reasonably practicable.
(c) In the event Franchisee has been given written notice of default
by Midas three times within any period of twelve consecutive months
pursuant to paragraphs (a) and/or (b) above, and in each of such prior
instances Franchisee has cured the default within the time permitted, then
in the event Franchisee again fails, within said twelve-month period, to
perform any obligation referred to in paragraph (a) or ( b), Midas may at
any time thereafter terminate this Agreement forthwith, without giving
prior notice of such default and without affording Franchisee any period
in which to cure such default, by giving written notice of such
termination to Franchisee.
(d) Midas may terminate this Agreement forthwith, by giving written
notice to Franchisee, on account of any of the following matters:
(i) Any willful and material falsification by Franchisee of any
report, statement, or other written data furnished to Midas. Any report
submitted pursuant to Section 4.2 shall be conclusively deemed to be
materially false if it willfully understates Net Revenue.
(ii) Any willful and repeated deception of customers by
Franchisee, relating to the source, nature, or quality of goods sold, or
relating to the terms or applicability of any of the Midas Guarantees.
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(iii) Any willful and repeated refusal to honor any of the Midas
Guarantees in accordance with the provisions of Article Five, or any
willful and repeated issuance of guarantees other than those permitted and
authorized by said Article Five.
(iv) Any attempted or purported assignment of this Agreement (as
defined in Section 7.1) not in compliance with Sections 7.2 through 7.11,
provided that if Midas does not elect to exercise its right to terminate
this Agreement pursuant to this Section 8 (d) (iv), such inaction shall
not be deemed to constitute a consent to such assignment nor to confer any
rights or interest whatever upon the purported assignee, but this
Agreement shall remain binding and in full force and effect as between
Midas and Franchisee herein unless and until Midas elects to terminate the
same.
(v) The conviction of, or a plea of guilty or no contest to, any
crime for which the maximum penalty includes imprisonment for one year or
more.
Any act or omission described in subparagraph (ii) or (iii) above
shall be conclusively deemed to be willful and repeated if it occurs after
written notice from Midas to cease and desist therefrom, but nothing in
this sentence shall be construed to mean that acts or omissions described
in either of said subparagraphs may not be considered to be willful and
repeated in the absence of such notice from Midas. Any notice of
termination given by Midas pursuant to this paragraph (d) shall be fully
effective, and this Agreement shall thereby be terminated, notwithstanding
that Franchisee may have ceased engaging in, or may not at the time of
such notice be engaged in, any of the acts which give rise to such notice,
and notwithstanding that Franchisee may have taken steps to counteract the
effects of any such acts.
(e)
(i) In the event that Midas gives to Franchisee any notice of
default and/or notice of termination pursuant to paragraph (a), (b), (c),
or (d) of this Section 8.2, and Franchisee disputes the right of Midas to
terminate this Agreement pursuant to said notice or notices, then upon
written demand made by Franchisee upon Midas at any time prior to or
within ten days after notice of termination, such dispute shall be
submitted to arbitration in accordance with the rules and procedures for
commercial arbitration of the American Arbitration Association or any
successor organization, and in accordance with and subject to all the
provisions of the Uniform Arbitration Act as in force in the State of
Illinois. The place of arbitration shall be Chicago, Illinois.
(ii) The procedure for selection of the arbitrator shall be as
may be then prescribed by said Association or its successor, provided
however, that if said Association or a successor is not in existence or
does not provide such a procedure, then Midas and Franchisee shall each
select one arbitrator and said arbitrators shall select a third, and in
the event of the death, resignation, or disability of any such arbitrator,
his successor shall be chosen in the same manner as the arbitrator so
succeeded.
(iii) The arbitrator or arbitrators shall have full power to
determine all issues of fact and of law necessary to determine whether
Midas has the right to terminate this Agreement pursuant to the notice or
notices given, and the determination of the arbitrators thereon shall be
final and conclusive upon the parties, subject only to the provisions of
said Uniform Arbitration Act. Any such determination of an issue of fact
or law made by the arbitrators, however, shall be binding upon the parties
only with respect to and in connection with the particular arbitration
proceeding and the specific final decision or award of the arbitrators
made therein, and shall not be binding upon the parties nor shall it be
admissible in any other proceeding or for any other purpose, provided that
nothing herein shall prevent any party from enforcing the specific
decision or award of the arbitrators by any appropriate and lawful means.
(iv) The costs of arbitration (not including attorneys fees)
shall be taxed and borne as provided in said Uniform Arbitration Act.
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(v) The arbitrators shall not have the power to determine or decide
any issue or matter other than those hereinabove expressly set forth, and
shall in no event have any right or power to award or assess damages to or
against any party.
(vi) The serving of a proper and timely demand for arbitration
shall suspend the running of any period for curing a default or shall
suspend the effectiveness of any termination of this Agreement, as the
case may be, until the decision or award of the arbitrator is made. If
such decision or award is in favor of Midas, such curative period shall
immediately resume running or such termination shall immediately take
effect, as the case may be, notwithstanding the pendency of any
proceedings to modify, set aside, or vacate said decision or award,
whether taken or brought before the arbitrators or in any court.
(vii) If Franchisee fails to serve proper written demand for
arbitration as set forth in subparagraph (i) above within the time
specified in said subparagraph, Franchisee shall be barred from seeking
any relief, whether by way of arbitration or by way of action or defense
in any court, with respect to any matter or issue which was subject to
arbitration in accordance with this paragraph (e).
(f) No notice of default or notice of termination purporting to be
given pursuant to paragraph (a), (b), (c), or (d) of this Section 8.2
shall be of any force or effect unless signed by a corporate officer of
Midas. Regional directors, district managers, and other agents of Midas
having authority with respect to a specific geographic area shall in no
event be deemed corporate officers for purposes of this paragraph (f).
(g) The right of Midas to terminate this Agreement pursuant to this
Section 8.2, whether or not exercised, shall not be exclusive of any other
remedies given Midas by this Agreement or by law on account of any default
of Franchisee hereunder.
8.3 AUTOMATIC TERMINATION. This Agreement shall terminate immediately upon
the occurrence of any of the following events, without the necessity of notice
of any kind by Midas or Franchisee:
(a) Any termination of Franchisee's right to possession of the
premises designed in Section 1.1 (a), subject however, to the provisions
of Section 8.4.
(b) The adjudication of Franchisee a bankrupt, or the filing of any
petition by or against Franchisee, under the Federal Bankruptcy laws or
the laws of any State or territory relating to relief of debtors, for
reorganization, arrangement, or other similar relief provided therein,
unless such petition filed against Franchisee is dismissed within 30 days,
or the making by Franchisee of a general assignment for the benefit of
creditors.
(c) The appointment of any receiver, trustee, sequestrator, or
similar officer to take charge of Franchisee's business, or any
attachment, execution, levy, seizure, or appropriation by any legal
process of Franchisee's interest in this Agreement, unless the appointment
of such officer is vacated or discharged or the effect of such legal
process is otherwise released within thirty days.
(d) If Franchisee is a corporation, partnership, or other business
association, the occurrence of any act of a type described in paragraph
(b) or (c) above which relates to, involves, or affects the interest of
any person owning a controlling interest in Franchisee.
8.4 RELOCATION OF SHOP IN CERTAIN EVENTS. (a) If Franchisee's right to
possession of the premises designated in Section 1.1 (a) is terminated, prior to
expiration of the term of this Agreement specified in Section 1.3, without fault
or affirmative action on the part of Franchisee, including without limitation,
(i) expiration of the term of Franchisee's lease or sublease by
lapse of time.
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(ii) destruction by casualty or taking by eminent domain of all
or part of the premises resulting in termination of such lease or sublease
by its terms or by action of a party other than Franchisee, or
(iii) the taking by eminent domain of all or a material part of
the premises if such premises are owned by Franchisee,
then within 120 days after Franchisee notifies Midas in writing that
such event has occurred or will occur on a date certain not more than six
months after the date of such notice, Midas shall, subject to the
provisions of paragraphs (b), (c), and (d) of this Section 8.4, propose to
Franchisee a new location at which Franchisee's shop may be operated for
the remainder of the term of this Agreement specified in Section 1.3.
(b) The location to be proposed by Midas as provided in paragraph
(a) of this Section 8.4 shall be within the trading area of the shop
theretofore operated by Franchisee, provided however, that if Midas
determines that no appropriate location is available within said trading
area, then Midas shall propose the next nearest location determined by it
to be appropriate and available. The definition of the trading area of
Franchisee's shop, the selection of a particular location within such
trading area, the determination that an appropriate location is not
available within such trading area, and the determination, if necessary,
of the next nearest appropriate and available location outside
Franchisee's trading area, shall all be within the sole and absolute
discretion of Midas, and its decisions thereon shall be final, provided
however, that a given location within or without the trading area of the
shop theretofore operated by Franchisee shall not be deemed inappropriate
or unavailable pursuant to this paragraph (b) solely because of a
determination by Midas to establish and operate itself, or to license any
party other than Franchisee to establish and operate, a shop at such
location, if Midas has not become legally committed with respect thereto.
(c) The proposal by Midas of a new location at which Franchisee's
shop may be operated, as provided in paragraphs (a) and (b) of this
Section 8.4, shall be given to Franchisee in writing. If such location is
to be leased, subleased, or sold by Midas or any affiliated corporation to
Franchisee, such proposal shall be accompanied by the form of lease,
sublease, or sale contract to be entered into by Franchisee, which shall
include such provisions as may be prescribed by Midas relating to the
construction or alteration of improvements on the premises. If such
location is not leased, subleased, or sold by Midas or any affiliated
corporation to Franchisee, such proposal shall be accompanied by a
statement of such requirements as may be prescribed by Midas relating to
the construction or alteration of improvements on the premises, but Midas
shall not require that Franchisee sell, assign, grant, or transfer to
Midas or any affiliated entity, upon termination of this Agreement,
ownership of or a leasehold interest in such premises. Midas shall not
submit to Franchisee any lease or sublease with Midas or any affiliated
entity the terms of which extends beyond the term of this Agreement
specified in Section 1.3.
(d) If, within 30 days after receipt of Midas, proposal of such
location, Franchisee gives to Midas written notice of acceptance of such
proposal, and either enters into such tendered lease, sublease, or sale
contract, or if none is tendered, agrees in writing to comply with any and
all requirements prescribed by Midas relating to construction or
alteration of improvements on the premises, then notwithstanding the
provisions of paragraph (a) of Section 8.3, this Agreement shall be
reinstated for the remainder of the term specified in Section 1.3 as if it
has not been terminated, and paragraph (a) of Section 1.1 shall be deemed
amended to refer to such new location. If Franchisee fails to comply with
the provisions of this paragraph (d) within said 30-day period, then the
termination of this Agreement pursuant to Section 8.3 (a) shall be and
remain effective and Franchisee shall have no further rights under or by
virtue of this Section 8.4.
8.5 RELIEF IN EQUITY AGAINST CERTAIN DEFAULTS. Franchisee agrees that
neither termination of this Agreement, nor an action at law, nor both, would be
an adequate remedy for a breach or default by Franchisee, or by any other
persons bound thereby, in the performance of any obligation relating to the
Midas Proprietary Marks or indicia, the trade secrets revealed to Franchisee in
confidence hereunder, the Midas Guarantees, or the
21
obligations of Franchisee and such others upon and after termination of this
Agreement, including, but not limited to, the provisions of Sections 2.1, 2.2,
2.3, 2.4, 2.5, 5.1, 5.2, 5.3, 5.5, 5.6, 5.7, 6.4, 6.5, 6.7, 6.8, 6.13, 6.14,
6.15 (including any policies, regulations and procedures referred to therein),
6.16, 8.7 and 8.8 (c). It is agreed that in the event of any such breach or
default, in addition to all other remedies provided elsewhere in this Agreement
or by law, Midas shall be entitled to relief in equity (including a temporary
restraining order, temporary or preliminary injunction, and permanent mandatory
or prohibitory injunction), to restrain the continuation of any such breach or
default or to compel compliance with such provisions of this Agreement.
8.6 LIQUIDATED DAMAGES. Midas, Franchisee, and the other parties bound
hereunder, mutually acknowledge that it would be difficult to ascertain the
exact amount of damages incurred by Midas in the event of any breach or default
described in Section 8.5, and that in addition to all other remedies provided
elsewhere in this Agreement or by law, Midas shall be entitled to recover from
all such parties jointly and severally, as and for its liquidated damages, the
sum of $100.00 for each day's continuance of such breach or default after
written notification thereof by Midas to Franchisee, it being agreed that said
sum represents a reasonable estimate of the damage which would thereby accrue to
Midas, reserving to Midas the right to recover such other or additional damages
as may be provided by law.
8.7 OBLIGATIONS UPON AND AFTER TERMINATION. Upon termination of this
Agreement, whether by lapse of time, by termination pursuant to any provision of
this Article Eight, by mutual consent of the parties, by operation of law, or in
any other manner, Franchisee shall cease to be an authorized Midas franchisee as
to any products or services whatever, and Franchisee and all persons directly or
indirectly owning any interest in Franchisee or in any way associated with or
related to Franchisee shall:
(a) Promptly cause Franchisee to pay Midas all liquidated or
ascertainable sums owing from Franchisee to Midas, without set-off or
other diminution on account of unliquidated claims.
(b) Immediately and permanently discontinue the use of any of the
Proprietary Marks, any of the Midas indicia or the Midas System, or any
marks, names or indicia which in the opinion of Midas are confusingly
similar thereto, or any other materials which may in any way indicate or
tend to indicate that Franchisee is or was an authorized Midas franchisee
or is or was in any way associated with Midas.
(c) Immediately and permanently remove, destroy, or obliterate. at
Franchisee's expense, all signs containing any of the marks, names,
indicia, or other things the use of which is prohibited by paragraph (b)
above, and shall also sell to Midas, f.o.b. Franchisee's shop, such of the
aforesaid signs as Midas may request, at a price equal to the original
installed cost thereof to Franchisee minus a reasonable allowance for
depreciation, wear and tear, and obsolescence.
(d) Promptly destroy or surrender to Midas all stationery,
letterheads, forms, printed matter, promotional displays. and advertising
containing any of the marks, names, indicia, or other things the use of
which is prohibited by paragraph (b) above.
(e) Immediately and permanently discontinue all advertising placed
by Franchisee as an authorized Midas franchisee or which contains or makes
reference to any of the marks, names, indicia, or other things the use of
which is prohibited by paragraph (b) above, and will cancel all such
advertising already placed or contracted for which would otherwise be
published, broadcast, displayed, or disseminated after the date of
termination hereof.
(f) Immediately cease using or claiming any right to use any
telephone number which Midas, as the subscriber therefor, has allowed
Franchisee to use during the term of this Agreement. and pay all bills
incurred for the period during which Franchisee used such number or
numbers. As to each telephone number for which Franchisee may be the
subscriber and which shall have been listed or advertised by Franchisee at
any time within the 24-month period prior to termination in any telephone
directory or other medium in connection with any of the Proprietary Marks
or any similar designation, Franchisee shall
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immediately transfer and assign any such number to Midas or to such person
or firm as Midas may designate, and shall immediately execute such
instruments and take such steps as in the opinion of Midas may be
necessary or appropriate to transfer and assign each such telephone
number, and Franchisee further irrevocably appoints the then acting
President of Midas International Corporation or its successor as his duly
authorized agent and attorney-in-fact to execute all such instruments and
take all such steps to transfer and assign each such telephone number.
(g) Immediately and permanently discontinue any use of the word
"Midas" or any word confusingly similar thereto in Franchisee's firm name,
corporate name, or trade name, and take such steps as may be necessary or
appropriate in the opinion of Midas to change such names to eliminate
therefrom the word "Midas" or any word confusingly similar thereto.
(h) Sell to Midas, f.o.b. Franchisee's shop, all or such part of
inventories of genuine Midas products on hand as of the date of
termination as Midas may request in writing prior to or within 30 days
after the date of termination (and will surrender all Midas guarantee
certificates in Franchisee's possession or control), at the current
published prices then being charged by Midas to authorized Midas
franchisees operating under agreements in form similar to this Agreement,
not including any costs of storage or transportation paid by Franchisee to
bring the goods initially to the shop, minus all costs incurred or to be
incurred by Midas to restore such goods or packaging thereof to a saleable
condition, and minus a reasonable allowance for physical deterioration.
obsolescence, or damage to the extent not restored under the preceding
clause. Midas shall have the right to set off and apply any amounts due to
Franchisee pursuant to this paragraph (h) against any and all other
amounts which may be due from Franchisee to Midas.
(i) Thereafter refrain from doing anything tending to indicate that
Franchisee is or was an authorized Midas franchisee, or is or was in any
way associated with Midas.
8.8 GENERAL PROVISIONS REGARDING TERMINATION. (a) Termination of this
Agreement under any circumstances shall not abrogate, impair, release, or
extinguish any debt, obligation. or liability of Franchisee to Midas which may
have accrued hereunder, including without limitation, any such debt, obligation,
or liability which was the cause of termination or arose out of such cause.
(b) All covenants and agreements of Franchisee which by their terms
or by reasonable implication are to be performed, in whole or in part,
after the termination of this Agreement, shall survive such termination.
(c) In the event this Agreement is assigned by Franchisee within the
meaning of Section 7.1, and such assignment is consented to by Midas
pursuant to the provisions of Sections 7.4, 7.6, or 7.7, this Agreement
shall be deemed to have terminated as to the assignor or assignors as of
the date of such consent. and such assignor or assignors shall thereupon
be bound by all the provisions of Section 8.7 (except paragraph (h)
thereof) and this Section 8.8, to the same extent and in the same manner
as if this Agreement had been terminated in its entirety as of said date.
(d) Nothing contained in Section 8.7 shall be deemed to apply to or
affect the operation by Franchisee or by any other party bound thereby of
a Midas Muffler Shop at any other location pursuant to and in accordance
with the provisions of any other valid and outstanding agreement with
Midas.
ARTICLE NINE
EXTENSION OF FRANCHISE RELATIONSHIP
9.1 NOTIFICATION REGARDING EXTENSION. On or before the first day of the
thirtieth (30th) month prior to the expiration of the term of this Agreement as
set forth in Section 1.3, Midas will notify Franchisee in writing
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whether or not Midas will extend the franchise relationship with Franchisee with
respect to the shop, and under what special conditions, if any, such extension
will be granted.
9.2 GROUNDS FOR REFUSAL TO EXTEND OR IMPOSITION OF CONDITIONS. If there
is good cause, Midas may refuse to extend the franchise relationship with
Franchisee or impose special conditions for such extension. As the basis for
refusing to extend. good cause shall mean the failure of Franchisee through act
or omission to achieve and maintain those standards of operation reasonably
required by Midas to maximize the sale of goods and services or to preserve the
goodwill of the Midas indicia and franchise program. By way of illustration, but
not limitation, inadequate inventory, chronic late payment of sums due Midas,
failure to devote sufficient personal time to the business, poor quality or
workmanship performed and or products sold, substandard maintenance of shop
premises, unsatisfactory customer relations as evidenced by the number of
complaints, and inadequate hours of operation shall constitute good cause for
refusing to extend. Special conditions which Midas may impose for extending the
franchise relationship are those changes in franchisee's operations which Midas
reasonably requires to maximize the sale of goods and services by Franchisee and
to preserve the goodwill of the Midas indicia and franchise program, and could
include by way of illustration, but not limitation, renovation of shop premises
or relocation of the shop. It is agreed and understood that good cause as used
herein includes conduct by Franchisee which would not constitute grounds for
termination of this Agreement under Article Eight.
9.3 TERMS OF FRANCHISE DURING EXTENSION PERIOD. The term of the
extension of the franchise relationship shall be twenty (20) years, and the
franchise fee for such extension shall be one-half of the franchise fee charged
new franchisees by Midas at the time of the extension. In all other respects,
the form of agreement governing the extension of the franchise relationship
shall be the same as that granted to new franchisees at the time of such
extension except for special conditions, if any, which are imposed in connection
with the extension. Franchisee and each of its stockholders, directors, and
officers shall as a condition for the extension of the franchise relationship.
execute and deliver to Midas a general release of any and all claims and causes
of action against Midas, its affiliated corporations, and their respective
officers, agents, and employees.
9.4 PAYMENT OF FRANCHISE FEES UPON EXTENSION. If Franchisee has only one
Midas Muffler Shop franchise the franchise fee charged for the extension of the
relationship shall be paid to Midas in two equal installments: one on the date
of extension and the second on the same date one year later. If Franchisee has
more than one Midas Muffler Shop franchise (including franchises granted to
corporations controlled by Franchisee or its principals) for which extensions
are to be granted within any 12-month period, then the total of all the
franchisee fees must be paid in the same number of equal annual installments as
the number of relationships so extended, but not to exceed ten (10)
installments, beginning on the date of the first extension and on the same date
each year thereafter until fully paid.
9.5 EXTENSION UNDER SPECIAL CONDITIONS. If Midas notifies Franchisee
that it will extend the franchise relationship, but only under special
conditions, Midas shall set forth in detail the nature of such conditions and,
if applicable, the time within which such conditions shall be met by Franchisee.
9.6 FRANCHISEE'S RIGHT TO SELL FRANCHISED SHOP. If Midas notifies
Franchisee that the franchise relationship will not be extended upon the
expiration of the term of this Agreement or that the franchise relationship will
be extended only upon compliance with special conditions, Midas shall, in such
notice set forth the reasons therefor. Franchisee may thereafter at his option
if he is not in default under this Agreement sell his franchised Midas Muffler
Shop. Midas shall grant the transferee a new franchise agreement, provided the
provisions of Section 7.4 are satisfied and the transferee agrees to perform all
of the special conditions, if any, set forth by Midas in its notice to
Franchisee. The term of the franchise agreement granted to the transferee shall
be twenty (20) years, and the franchise fee shall be one-half of the franchise
fee charged new franchisees by Midas at the time of the sale. In all other
respects, the form of the franchise agreement shall be the same as that granted
to new franchisees at the time of such sale.
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9.7 ARBITRATION. (a) If Franchisee disputes the refusal of Midas to
extend the franchise relationship or disputes the imposition of special
conditions for extending the franchise relationship, then upon written demand
made by Franchisee upon Midas at any time within sixty (60) days after receipt
of notice of such refusal or imposition of special conditions, the dispute shall
be submitted to arbitration in accordance with Section 9.7 (b) below. The rules
and procedures for commercial arbitration of the American Arbitration
Association or any successor organization, and all the provisions of the Uniform
Arbitration Act as in force in the State of Illinois shall apply to an
arbitration under this Article. The place of arbitration shall be in Chicago,
Illinois.
(b) Midas and Franchisee shall each select one arbitrator, (who need
not be neutral), and said arbitrators shall select a third arbitrator from
a panel submitted by the American Arbitration Association and in
accordance with the rules of the Association pertaining thereto. In the
event of the death, resignation, or disability of any such arbitrator, his
successor shall be chosen in the same manner as the arbitrator so
succeeded.
(c) The arbitrators shall have full power to determine whether Midas
has good cause to refuse to extend the franchise relationship or to impose
special conditions for extending the franchise relationship pursuant to
the notice or notices given. The determination of the arbitrators thereon
shall be final and conclusive upon the parties, subject only to the
provisions of said Uniform Arbitration Act. Any determination of an issue
of fact or law made by the arbitrators, however, shall be binding upon the
parties only with respect to and in connection with the particular
arbitration proceeding and the specific final decision or award of the
arbitrators made therein, and shall not be binding upon the parties nor
shall it be admissible in any other proceeding or for any other purpose,
provided that nothing herein shall prevent any party from enforcing the
specific decision or award of the arbitrators by an appropriate and lawful
means.
(d) The cost of arbitration (not including attorneys fees) shall be
taxed and borne as provided in said Uniform Arbitration Act.
(e) The arbitrators shall not have the power to determine or decide
any issue or matter other than those hereinabove expressly set forth, and
shall in no event have any right or power to award or assess damages to or
against any party.
(f) If Franchisee fails to serve proper written demand for
arbitration as set forth in Section 9.7 (a) within the time specified
therein, Franchisee shall be barred from seeking any relief, whether by
way of arbitration or by way of action or defense in any court, with
respect to any matter or issue which was subject to arbitration under this
Article Nine. Even though a dispute is referred to arbitration, and even
though the arbitration should result in an award favorable to Midas,
Franchisee may sell his franchised Midas Muffler Shop as permitted in
Section 9.6, provided that the transferee agrees to meet any special
conditions imposed by Midas which are sustained by arbitration.
ARTICLE TEN
MISCELLANEOUS PROVISIONS
10.1 GRAMMAR. The masculine of any pronoun shall include the feminine
and/or the neuter thereof, and the singular of any noun or pronoun shall include
the plural, or vice-versa, wherever the context shall require.
10.2 FRANCHISEE. Upon any effective assignment of Franchisee's interest
in this Agreement pursuant to Article Seven, any and all references herein to
"Franchisee" shall, unless the context otherwise requires, mean and refer to
such assignee.
10.3 SECTION HEADINGS. Section headings are for convenience of reference
only, and shall not be construed as part of this Agreement, nor shall they limit
or define the meaning of any provision herein.
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10.4 COST OF ENFORCEMENT OR DEFENSE. In the event Midas is required to
employ legal counsel or to incur other expense to enforce any obligation of
Franchisee hereunder, or to defend against any claim, demand, action, or
proceeding by reason of Franchisee's failure to perform any obligation imposed
upon Franchisee by this agreement, and provided that legal action is filed by or
against Midas and such action or the settlement thereof establishes Franchisee's
default hereunder, then Midas shall be entitled to recover from Franchisee the
amount of all reasonable attorneys fees of such counsel and all other expenses
incurred in enforcing such obligation or in defending against such claim,
demand, action, or proceeding, whether incurred prior to or in preparation for
or contemplation of the filing of such action or thereafter. Nothing contained
in this Section 10.4 shall relate to arbitration proceedings pursuant to Section
7.11 or 8.2 (e).
10.5 REMEDIES CUMULATIVE. All rights and remedies conferred upon Midas by
this Agreement and by law shall be cumulative of each other, and neither the
exercise nor the failure to exercise any such right or remedy shall preclude the
exercise of any other such right or remedy.
10.6 NON-WAIVER. No failure by Midas to take action on account of any
default by Franchisee, whether in a single instance or repeatedly, shall
constitute a waiver of any such default or of the performance required of
Franchisee. No express waiver by Midas of any provision or performance hereunder
or of any default by Franchisee shall be construed as a waiver of any other or
future provision, performance, or default.
10.7 INVALIDITY. If any provision of this Agreement shall be invalid or
unenforceable, either in its entirety or by virtue of its scope or application
to given circumstances, such provision shall be deemed modified to the extent
necessary to render the same valid, or as not applicable to given circumstances,
or to be excised from this Agreement, as the situation may require, and this
Agreement shall be construed and enforced as if such provision had been included
herein as so modified in scope or application, or had not been included herein,
as the case may be, it being the stated intention of the parties that had they
known of such invalidity or unenforceability at the time of entering into this
Agreement, they would have nevertheless contracted upon the terms contained
herein, either excluding such provisions, or including such provisions only to
the maximum scope and application permitted by law, as the case may be. In the
event such total or partial invalidity or unenforceability of any provision of
this Agreement exists only with respect to the laws of a particular
jurisdiction, this Section 10.7 shall operate upon such provision only to the
extent that the laws of such jurisdiction are applicable to such provision.
10.8 NOTICES. Any notice or demand given or made pursuant to the terms of
this Agreement shall be served in the following manner:
(a) If given to Midas, it shall be sent by United States registered
or certified mail, postage fully prepaid, addressed to Midas International
Corporation, 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, 00000, or at
such changed address or addresses as Midas may from time to time
designate.
(b) If given to Franchisee, it shall either be delivered personally
to the person (or any one of the persons) designated in Section 6.4, or
shall be sent by United States registered or certified mail, postage fully
prepaid, addressed to Franchisee at the address of Franchisee's shop as
shown in Section 1.1 (a) hereof.
Any such notice or demand shall be deemed to have been given or made
and shall be deemed effective when the same has been received, provided
that any demand for arbitration pursuant to Section 7.11 or 8.2 (e) or any
notice pursuant to Section 8.4 (d) shall be deemed to have been made or
given and shall be deemed effective when mailed in accordance with this
Section 10.8, provided that the same is received by Midas within five
business days after expiration of the period for making or giving such
demand or notice.
10.9 ENTIRE AGREEMENT. This Agreement, together with any written lease or
sublease of the shop premises described in Section 1.1 (a) entered into between
Franchisee and Midas or any of its subsidiaries or
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affiliated corporations, constitutes and contains the entire agreement and
understanding of the parties with respect to the subject matter hereof and
thereof. There are no representations, undertakings, agreements, terms or
conditions not contained or referred to herein or in any such lease or sublease.
This Agreement supersedes and extinguishes any prior written agreement between
the parties or any of them relating to the shop location described in Section
1.1 (a) hereof, provided that it shall not abrogate, impair, release, or
extinguish any debt, obligation or liability of Franchisee to Midas accrued
immediately prior to the execution of this Agreement nor cancel any credit owed
by Midas to Franchisee at said time, nor shall it abrogate or impair any action
heretofore taken by Midas or Franchisee under any "Dealer Application, Receipt,
and Agreement, executed by Midas and Franchisee or their predecessors, or any
understandings or approvals relating to plans and specifications for the shop
building and premises or the equipment and opening inventory to be installed or
placed therein. Nothing contained herein shall affect or relate to any agreement
between the parties or any of them relating to any shop location other than the
one described in Section 1.1 (a) of this Agreement, except as expressly stated
in Section 6.4 hereof.
10.10 BINDING EFFECT. Subject to all the provisions of Article Seven
and Section 8.8 (c), this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto (including the parties whose signatures follow
those of Midas and Franchisee) and their respective heirs, executors,
administrators, personal representatives, successors, and assigns.
10.11 REFERENCE TO MIDAS. Midas International Corporation has
succeeded to all rights, interests, property, and assets of its former
wholly-owned subsidiary, Midas, Inc., an Illinois corporation, and all
references in this Agreement to acts heretofore performed by Midas or to rights
developed, acquired, owned, or possessed by Midas shall be deemed to include a
reference to all such acts heretofore performed by Midas, Inc. and to all such
rights developed, acquired, owned or possessed initially by Midas, Inc.
10.12 CONTROLLING LAW. This Agreement, including all matters relating
to the validity, construction, performance, and enforcement thereof, shall be
governed by the laws of the state in which the shop is located.
10.13 COUNTERPARTS. This Agreement may be executed in any number of
identical counterparts, and each such counterpart shall be deemed a duplicate
original hereof.
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IN WITNESS WHEREOF, Midas and Franchisee have caused this Agreement to be
executed and entered into as of the day and year first above written.
MIDAS INTERNATIONAL CORPORATION FRANCHISEE:
By: __________________________________ _________________________________
Xxxx X. Xxxxx, President
By: __________________________________ _________________________________
Xxxxxx X. Xxxxxxxx, Secretary
Each of the undersigned, being directly or indirectly beneficially interested
in the business to be conducted by Franchisee pursuant to the foregoing
Agreement, and in order to induce Midas to enter into said Agreement and in
consideration of its doing so, hereby joins in and agrees to be personally
bound by all the terms and provisions of this Agreement, other than those
requiring the payment of money by Franchisee, to the same extent and in the
same manner as Franchisee is bound. Nothing herein shall be deemed to
abrogate or impair any separate instrument of guaranty or subordination which
any of the undersigned may have heretofore executed or may contemporaneously
herewith or hereafter execute.
___________________________________
___________________________________
___________________________________
___________________________________
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SCHEDULE A
PRODUCTS SERVICES
Automobile mufflers and other exhaust Exhaust system services
system replacement units and parts,
including but not limited to exhaust
pipes, tail pipes, and installation Front-end and wheel alignment services
hardware
Shock absorbers and MacPherson struts
Brake shoes and other brake system Brake adjustment and other brake system
replacement parts services
Front-end parts Other: Only as authorized in writing
(Form #6700-02)
Coil and Leaf Springs
Other: Only as authorized in writing (Form #6700-02)
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