WHY USA
NORTH AMERICA, INC.
REAL ESTATE FRANCHISE AGREEMENT
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Table of Contents
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Section Page
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RECITALS ............................................................1
1. GRANT OF A FRANCHISE ................................................1
2. TERM OF FRANCHISE; RENEWAL OPTIONS ..................................2
3. FRANCHISEE'S TRADE NAME .............................................2
4. LOCATION AND OPENING.................................................2
5. OBLIGATIONS OF WHY USA ..............................................3
6. FEES PAID BY FRANCHISEE..............................................4
7. OTHER OBLIGATIONS OF FRANCHISEE .....................................5
8. TRADE SECRETS AND CONFIDENTIALITY....................................7
9. REPRESENTATIONS BY FRANCHISEE .......................................7
10. TERMINATION OF AGREEMENT.............................................8
11. COVENANT NOT TO COMPETE ............................................10
12. SALE, ASSIGNMENT, TRANSFER OR OTHER DISPOSTION BY FRANCHISEE........10
13. SALE, ASSIGNMENT OR TRANSFER OF THIS AGREEMENT BY WHY USA ..........12
14. COVENANTS FROM INDIVIDUALS..........................................12
15. INTEGRATION / MODIFICATION .........................................12
16. WAIVER..............................................................12
17 DISPUTE RESOLUTION..................................................13
18. SEVERABILITY .......................................................14
19 NOTICES.............................................................14
20. SURVIVAL OF OBLIGATIONS.............................................14
21. INFORMATION.........................................................14
22. INDEPENDENT CONTRACTOR AND INDEMNIFICATION..........................14
23. ELECTIVE PROVISIONS.................................................15
24. APPROVAL AND GAURANTEE OF SHAREHOLDERS, MEMBERS OR PARTNERS.........16
REAL ESTATE FRANCHISE AGREEMENT
THIS REAL ESTATE FRANCHISE AGREEMENT ("Agreement") is made and entered into by
and between WHY USA NORTH AMERICA, INC., a Wisconsin corporation ("WHY USA"),
having its principal offices at 0000 XX Xxxxxxx 00, Xxxxxxxxx, Xxxxxxxxx
00000, and that party designated as "Franchisee" in Section 23.1 herein. WHY
USA and Franchisee are collectively referred to as the "Parties."
RECITALS:
A. THE WHY USA SYSTEM
WHY USA has developed a unique and proprietary plan of operation to assist
independent real estate brokers and their sales agents in the listing,
marketing, advertising, sale, leasing, and/or exchange of residential real
property, as the plan may be revised periodically ("System"). The System
consists of listing, selling, marketing and management techniques developed by
WHY USA, supported by assistance that includes an ongoing sequence of training
programs and a variety of copyrighted marketing and educational materials.
The System involves use of the "WHY USA" name and service marks. Franchisees
may also participate in joint marketing and educational programs and receive
access to newly developed WHY USA promotional and training materials.
References to "Franchisee" hereinafter will be deemed to include the
Franchisee and its franchised business operation.
WHY USA does not set or dictate fees or commissions charged by Franchisee.
Such fees are set by each Franchisee individually.
B. THE TRADEMARKS
WHY USA has the right to license use of the trade name and service xxxx "WHY
USA." The xxxx was registered by the U.S. Patent and Trademark Office on
February 14, 1989, registration number 1,524,821. WHY USA owns rights to
other marks, names, and logos which are or may be used in the operation of the
System. These marks, names, and logos may be added to, discontinued or
changed from time to time by WHY USA. Additionally, WHY USA may obtain other
marks, names and logos which may be used in the operation of the System. All
such marks, names, and logos will hereafter be referred to as the
"Trademarks."
AGREEMENTS:
1. GRANT OF A FRANCHISE
In consideration of Franchisee's payment of the Initial Franchise Fee and the
promises contained in this Agreement, WHY USA hereby grants to Franchisee and
Franchisee accepts, a nonexclusive license to use the WHY USA System,
Trademarks and copyrighted materials pursuant to the terms of this Agreement.
2. TERM OF FRANCHISE; RENEWAL OPTIONS
2.1 Initial Term. The initial term of this Agreement will commence on the
date it is executed by WHY USA and expire three years thereafter, unless
terminated earlier as provided herein.
2.2 Renewal Option and Manner of Exercise. Franchisee may renew this
Agreement for three (3) additional consecutive three year terms, provided that
prior to the commencement of any renewal term, Franchisee has fulfilled the
following preconditions: (i) Franchisee has fully complied with its
obligations under this Agreement throughout the then-current term; (ii)
Franchisee gives WHY USA written notice of its decision to renew no earlier
than six (6) months and no later than thirty (30) days prior to expiration;
and (iii) Franchisee executes a general release in the form prescribed by WHY
USA releasing any and all claims against WHY USA and its officers, directors,
employees, agents, and affiliates. Upon renewal, Franchisee agrees, at WHY
USA's request, to execute a Real Estate Franchise Agreement in the same form
as WHY USA is, at the time of such renewal, offering to new franchisees or
franchisees who are likewise renewing their Franchise, except that the number
of renewal terms remaining shall be reduced by one at each renewal, so that,
in the aggregate, the maximum length of any franchise relationship shall be 12
years (one initial and three renewal terms). The revised Real Estate
Franchise Agreement may contain terms different from those contained in this
Agreement, except that no Initial Franchise Fee or Renewal Fee will be
payable. WHY USA may, at its option, require Franchisee to execute a Renewal
Agreement instead of a new Franchise Agreement.
3. FRANCHISEE'S TRADE NAME
Franchisee will operate the Real Estate Franchise only under a trade name
approved in writing by WHY USA. Franchisee agrees that during and after the
term of this Agreement, it will not use the words "WHY" or "USA" in the
corporate or trade name of any real estate entity in which Franchisee is
involved.
4. LOCATION AND OPENING
4.1 Office Location. Franchisee is entitled to operate one WHY USA Office
within Franchisee's Protected Area at a location approved by WHY USA. WHY USA
has the right to disapprove an office location if, in WHY USA's reasonable
judgment, the location is not suitable for a WHY USA real estate office.
4.2 Protected Area. Franchisee receives a Protected Area as specified in
Section 23.4 of this Agreement. The grant of a Protected Area prohibits WHY
USA or a WHY USA affiliate from opening, or granting another franchisee the
right to open, an office location within that Protected Area for the listing,
marketing, advertising, sale, leasing, and/or exchange of residential real
property under the System and using the name "WHY USA." Except as provided in
the previous sentence, all WHY USA offices, regardless of whether they are
franchised or WHY USA or WHY USA-affiliate owned, may engage in the listing,
marketing, advertising, sale, leasing, and/or exchange of residential real
property anywhere permitted by law, as well as any other activities within and
outside of the Protected Area using the System and/or the WHY USA name.
4.3 Opening. Franchisee agrees to open its WHY USA Office within one hundred
twenty (120) days from the date of this Agreement.
5. OBLIGATIONS OF WHY USA
In addition to its other obligations set forth in this agreement, WHY USA
agrees as follows:
5.1 Manual. WHY USA will provide Franchisee with the use of a confidential
operations/ procedures manual ("Manual"), agent training video/audio tapes,
and sample marketing materials.
5.1.1 WHY USA reserves the right to modify the quantity and content
of the Manual and other training materials and tapes from time
to time. All training manuals, tapes and related materials
shall remain the property of WHY USA and shall be promptly
returned to WHY USA upon termination of this Agreement.
5.2 Franchise System Training. WHY USA will provide Franchisee with an
Initial Training Library of videotapes or audio tapes and manuals and
supervise Franchisee's progress with respect to the comprehension and
application of the material presented therein. WHY USA also shall provide an
Initial Franchise Training Seminar of 1-2 days at a location selected by WHY
USA. WHY USA does not charge for providing training but Franchisee pays
travel, lodging and incidental expenses to attend. Training includes detailed
instruction on the operation of a WHY USA Franchise. Franchisee or
Franchisee's manager is required to attend this Training Program within one
hundred twenty (120) days from the date of this Agreement. If Franchisee's
manager changes during the term of this Agreement, the new manager is required
to attend the Training Program prior to becoming the manager.
5.3 Other Materials. WHY USA may, but is not required, to provide new and/or
supplemental marketing, educational and advertising materials to Franchisee
from time to time during the term of this Agreement.
5.4 Other Assistance. WHY USA shall provide such initial and continuing
advisory assistance to Franchisee as WHY USA, in its sole and absolute
discretion, shall deem advisable.
5.5 Advertising Funds. WHY USA shall have the right to establish and operate
a national and/or one or more regional advertising funds and to require
Franchisee to contribute to such funds. The purpose of any national and/or
regional fund shall be to promote the System and the WHY USA offices. Any
such fund(s) shall operate in accordance with rules and procedures specified
by WHY USA in its Manual or otherwise in writing, provided, however, that (i)
aggregate monthly contributions shall not be less than $50 or more than 10% of
Franchisee's transaction fees for the month; and (ii) any WHY USA office owned
or operated by WHY USA shall contribute to the fund(s) on the same basis as
franchisees.
5.6 Delegation of Obligations. Franchisee acknowledges and agrees that any
duty or obligation imposed on WHY USA may be performed by any designee of WHY
USA, as WHY USA may direct.
6. FEES PAID BY FRANCHISEE
6.1 Initial Franchise Fee. Franchisee agrees to pay a nonrefundable Initial
Franchise Fee as indicated in Section 23.2.
6.2 Transaction Fees. Franchisee shall submit reporting forms and pay a
non-refundable monthly transaction fee to WHY USA in an amount equal to $95
per transaction or 6% of the revenue received from each transaction, whichever
is less; provided, however, that after the fourth full month following the
date of this Agreement, the Franchisee shall be required to pay a monthly
transaction fee to WHY USA in an amount of no less than $325. All payments
required by this Section 6 shall be calculated on revenues received from
transactions in the preceding month, and shall be submitted to WHY USA,
together with any reports or statements required under this Agreement, on or
before the tenth day of the subsequent month.
By way of example, on the tenth day of the second month after the date of this
Agreement, the Franchisee will be required to pay transaction fees on
transactions occurring during the first month. However, in the event these
fees for the month do not equal $325, the Franchisee will not be required to
pay any additional amount to WHY USA. By way of further example, if during
the 4th month the Franchisee had transactions requiring the Franchisee to pay
to WHY USA $600.00 on the tenth day of the fifth month, the Franchisee would
not be required to pay the minimum monthly transaction fee of $325. However,
if the Franchisee had transactions in such month requiring the Franchisee to
only pay $200.00 to WHY USA, the Franchisee would be required to make an
additional payment of $125.00 for such month to WHY USA and such payment would
be due on the tenth day of the fifth month.
Any payment or report not actually received by WHY USA on or before such date
shall be deemed overdue. WHY USA shall have the right to require that
payments be made by means of electronic fund transfer, pre-authorized
auto-draft, or such other means as WHY USA may specify. If any payment under
this Agreement is overdue, Franchisee shall pay to WHY USA, immediately upon
demand, in addition to the overdue amount, interest on such amount from the
date it was due until paid, at the rate of 18% per annum, calculated monthly,
or the maximum rate permitted by law, whichever is greater, plus a one-time
late charge of $50.00. Entitlement to such interest shall be in addition to
any other remedies WHY USA may have. Franchisee shall not be entitled to
set-off any payments required to be made under this Section 6 against any
monetary claim it may have against WHY USA. If Franchisee allows its account
with WHY USA to fall in arrears in excess of 60 days, the Franchisee will
remit the required transaction fees and reporting forms on a weekly basis
until such time as WHY USA provides written approval to return to the monthly
transaction fee payment schedule. A transaction is defined as including any
of the following:
(a) a commission received upon any closing as listing agency;
(b) a commission received upon any closing as selling agency;
(c) a referral fee received;
(d) a retainer or advance fee received from a prospective seller or
buyer of real estate. If franchisee pays a transaction fee upon
receipt of an advance fee, said amount may be deducted from the
"final" transaction fee paid upon the closing of the related
transaction;
(e) Franchisee shall pay a 1.5% transaction fee on commissions
received on the sale of all non-residential property.
6.3 Transfer Fee. Upon an approved transfer, Franchisee agrees to pay WHY
USA a nonrefundable Transfer Fee of $2,500.
7. OTHER OBLIGATIONS OF FRANCHISEE
7.1 Start-up Obligations. Prior to commencing business and utilizing the WHY
USA Trademarks or the System, Franchisee must complete the Initial Franchise
Training Seminar and thoroughly study the manuals and video training tapes to
the reasonable satisfaction of WHY USA.
7.2 Continuing Obligations. Franchisee, at its expense, agrees to:
7.2.1 Operate the Franchise continuously in accordance with
reasonable standards of WHY USA as may be modified from time to
time and in accordance with all applicable laws;
7.2.2 Assist WHY USA in the protection of its Trademarks and
implement substitute marks or changes to the marks at
Franchisee's expense within a reasonable period (not to exceed
one year);
7.2.3 Include the WHY USA logo, $990 Sells Homes logo and the slogan
"INDEPENDENTLY OWNED AND OPERATED" on promotional materials,
including signs, billboards, Internet sites, and other
materials used to promote the franchised business;
7.2.4 At its expense, purchase or lease, and thereafter maintain,
computer hardware, software, dedicated telephone and power
lines, modem(s), printer(s), and other computer-related
accessories or peripheral equipment specified by WHY USA.
Franchisee's computer system must have and maintain Internet
access capability. WHY USA will have the unlimited right to
access, retrieve, and use all data and information from
Franchisee's computer system relating to the parties' rights
and obligations under this Agreement. Franchisee must keep its
computer system in good repair, and at its expense, must
promptly install additions, changes, modifications,
substitutions, and/or replacements to the computer hardware,
software, telephone and power lines, and other computer-related
facilities, as requested by WHY USA; provided, however, that
Franchisee shall not be required to spend more than $2,500 on
hardware and software modifications during the term of this
Agreement. Franchisee shall not create or maintain any "Web
page" or other similar Internet presence in connection with the
WHY USA business contemplated herein without WHY USA's prior
written consent as to use and content and if Franchisee creates
such a Web page, upon termination or expiration of the
franchise, Franchisee will transfer the domain name to WHY USA;
7.2.5 Act as or designate and maintain a licensed real estate broker
or as the manager of the franchised business;
7.2.6 Make an independent determination that any marketing,
advertising or other materials provided by WHY USA to
Franchisee comply with applicable laws, rules and regulations
before utilizing same;
7.2.7 Maintain and report listings sold, sales and financial
information as reasonably prescribed by WHY USA;
7.2.8 Permit WHY USA to inspect Franchisee's business premises and
business records upon reasonable notice. WHY USA shall also
have the right to audit Franchisee's books and records for the
purpose of determining amounts due WHY USA under this
Agreement. Franchisee shall pay costs of the audit if the
audit establishes a 3% or more underpayment of fees due;
7.2.9 Secure and maintain at its expense, comprehensive public
liability insurance, covering all actions which are subject to
Franchisee's indemnification obligation set forth in Section
22.4 of this Agreement. Coverage will be in the minimum amount
of $500,000 bodily injury liability and $100,000 property
damage liability. WHY USA shall be designated as an additional
named insured. In addition, Franchisee shall furnish WHY USA
with all Certificates of Insurance evidencing the proper types
and minimum amounts of required coverage. All Certificates
shall expressly provide that no less than 30 days' prior
written notice shall be given to WHY USA in the event of
material alteration to or cancellation or non-renewal of the
coverages evidenced by such Certificates. Certificates shall
name WHY USA as an additional insured, and shall expressly
provide that any interest of WHY USA shall not be affected by
any breach by Franchisee of any policy provisions for which
such Certificates evidence coverage;
7.2.10 WHY USA shall have the right to appoint approved suppliers
and/or establish minimum specifications for suppliers,
materials and services used by WHY USA offices. Franchisee's
purchases shall be in accordance with any approved suppliers or
minimum specifications;
7.2.11 During each year of the term of this Agreement, attend at least
one training session held at the WHY USA National Office or
attend the yearly WHY USA National Conference.
8. TRADE SECRETS AND CONFIDENTIALITY
8.1 Proprietary Nature of System. Franchisee acknowledges that WHY USA has
expended considerable time and monies in the development and refinement of a
unique, proprietary and confidential System.
8.2 Confidentiality. Franchisee acknowledges that all information delivered
to Franchisee by WHY USA, except information specifically designed to be
promoted to the public, constitutes proprietary and confidential information
and Franchisee agrees not to disclose such information except as authorized by
WHY USA.
8.3 Property of WHY USA. Franchisee acknowledges that the Trademarks,
System, and other information or property provided to Franchisee by WHY USA
are the exclusive property of WHY USA and that Franchisee acquires no interest
therein, except for Franchisee's right to use same in the manner prescribed by
WHY USA. Franchisee agrees to use the marks, copyrighted materials and WHY
USA System, only as set forth in this Agreement and the Manual as it may be
updated and modified from time to time. Franchisee further agrees that it
will not contest WHY USA's ownership, title, right or interest in and to the
Trademarks, nor WHY USA's right to register, use or license others to use the
Trademarks, nor do anything which would jeopardize or diminish WHY USA's right
to or the value of the Trademarks.
9. REPRESENTATIONS BY FRANCHISEE
Franchisee represents to WHY USA that the following statements are accurate:
9.1 Disclosure. Franchisee received a copy of the WHY USA Franchise Offering
Circular and all attachments thereto, including this Agreement, at the earlier
of: (1) the first personal meeting between Franchisee and any representative
of WHY USA; (2) ten business days before the signing of any Franchise or
related agreement, including this Agreement; and (3) ten business days before
payment of any consideration in connection with the sale of the Franchise.
Franchisee received a copy of this Agreement, containing all material terms
and any amendments thereto, at least five business days prior to signing the
same.
9.2 Earnings. Franchisee acknowledges that neither WHY USA nor anyone of its
employees or agents has made any representations or statements regarding the
past, current or projected revenue, profits or expected earnings of
Franchisee's WHY USA business or any other WHY USA-owned or franchised
business. Franchisee acknowledges that the success of the franchise is
dependent upon the personal efforts of Franchisee and market forces, and that
WHY USA has no control over these factors.
10. TERMINATION OF AGREEMENT
This Agreement and the Franchise, in addition to being terminated by
expiration of the term, may be terminated only as follows:
10.1 Mutual Consent. Upon the mutual written consent of the Parties.
10.2 Termination After Fifteen (15) Days Notice. WHY USA may suspend ongoing
services and/or terminate this Agreement fifteen (15) days after written
notice to Franchisee specifying Franchisee's default of any material
provision(s) of this Agreement, if one or more of those defaults remain
uncured at the end of the fifteen day period. Among the acts constituting a
default of a material provision is the failure to make any payment due under
this Agreement or any ancillary agreement (such as, for example, a Promissory
Note) at the time such payment is due.
10.3 Immediate Termination. WHY USA may terminate this Agreement and the
Franchise immediately upon receipt by Franchisee of written notice from WHY
USA, and without any opportunity to cure, without refund of any Fees, and
without being deemed to have elected its remedies for any of the following
reasons:
(a) Franchisee becomes insolvent or makes a general assignment for
the benefit of creditors, or a petition in bankruptcy is filed by
Franchisee or such a petition is filed against and not opposed
by Franchisee;
(b) Franchisee or any shareholder, member, or partner is convicted of
a felony, a crime involving moral turpitude, or any other crime
or offense that WHY USA believes is reasonably likely to have an
adverse effect on the System or the Trademarks; or engages in any
other activity which, in WHY USA's reasonable judgment, is
morally offensive to community standards;
(c) Franchisee has made any material misrepresentation or omission to
WHY USA prior to the execution of this Agreement;
(d) Franchisee breaches any provision of the Covenant Not to Compete,
Section 11, or the Confidentiality provision, Section 8.2;
(e) Franchisee commits three defaults within an 18 month period for
which WHY USA sends a Notice of Termination pursuant to Section
10.2, whether or not cured after notice;
(f) Franchisee abandons or closes the business for a period of seven
consecutive days without WHY USA's prior written consent;
(g) Franchisee loses any license required with respect to the
operation of a residential real estate brokerage business;
(h) Franchisee understates any payment to WHY USA by ten percent or
more, or understates any such payment in any amount, twice in any
two-year period;
(i) Any purported transfer is made to any third party without WHY
USA's prior written consent or opportunity to exercise its right
of first refusal, contrary to the terms of Section 12 hereof; or
(j) Franchisee fails to deliver to WHY USA the executed covenants
required under Section 14.
10.4 Procedures After Expiration or Termination. Upon expiration or
termination of this Agreement, the Franchise granted herein will automatically
terminate and revert back to WHY USA and Franchisee will cease to be a
Franchisee of WHY USA. All money owed by Franchisee to WHY USA or its
designees, including Fees and the balance of promissory notes, if any, shall
become immediately due and payable and Franchisee will at its own cost and
expense:
(a) Discontinue use of the System, the Trademarks and similar names
or marks indicating that Franchisee is or was a Franchisee.
(b) Return to WHY USA all training and education materials, customer
lists, manuals, forms, brochures or any other information on hand
which contain WHY USA's Trademarks or which are part of the
System, assign Franchisee's domain name to WHY USA if the domain
name contains either the word "WHY" or the word "USA," or any
similar derivative or variation and immediately delete and
disconnect any Web-sites whose creation and presence may have
been permitted under Section 7.2.4, as well as any e-mail
addresses using any WHY USA trademarks.
(c) Promptly pay all sums owing from Franchisee to WHY USA or its
designees.
(d) Maintain books and records required by WHY USA pursuant to this
Agreement for a period of one (1) year and allow WHY USA to
inspect and audit such books and records upon reasonable notice
during such period for the purposes of verifying amounts payable
to WHY USA by Franchisee.
(e) Abide by all provisions of the Covenant Not to Compete, Trade
Secrets and Confidentiality Sections of this Agreement and by all
other terms which survive the termination or expiration hereof.
(f) Immediately take such actions as may be required to cancel all
assumed names or equivalent registrations relating to the use of
any name or Trademarks.
(g) Comply with all obligations to clients under existing listing
agreements.
10.5 Limited Power of Attorney. Franchisee irrevocably appoints WHY USA as
its attorney-in-fact, to take all actions necessary to cause Franchisee to
cease using Trademarks.
10.6 Injunctive Relief. WHY USA shall have the right to seek injunctive
relief to obtain the entry of temporary and permanent injunctions and orders
of specific performance enforcing the provisions of this Agreement relating to
Franchisee's (i) use of the Trademarks; (ii) alleged, actual, or threatened
violations of Section 8, 11, or 12; or (iii) any acts or omissions by
Franchisee or its employees or agents that constitute a violation of any
applicable law, are dishonest or misleading to Franchisee's clients or to the
public, or which may impair the goodwill associated with the Trademarks or
System. Franchisee agrees to pay all costs and reasonable attorneys' fees
incurred by WHY USA in obtaining injunctive relief.
11. COVENANT NOT TO COMPETE
During the term of this Agreement, Franchisee shall not, without the prior
written consent of WHY USA, directly or indirectly have any legal or financial
interest in or association with, or provide any assistance to, any other
business which lists, markets, advertises, sells, leases, and/or exchanges
residential real estate. For the one-year period following the termination or
expiration of this Agreement, Franchisee shall not, without the prior written
consent of WHY USA, directly or indirectly have any legal or financial
interest in or association with, or provide any assistance to, any other
business which lists, markets, advertises, sells, leases, and/or exchanges
residential real estate and which has an office located (i) within the
Protected Area; or (ii) within a radius of 30 miles of any WHY USA office
(franchised or company or affiliate-owned) open at the time of the termination
or expiration of this Agreement.
12. SALE, ASSIGNMENT, TRANSFER OR OTHER DISPOSITION BY FRANCHISEE
(a) No individual Franchisee, or partner, shareholder or member of a
Franchisee, without the prior written consent of WHY USA, by
operation of law or otherwise, shall sell, assign, transfer,
convey, give away, or encumber to any person, firm or
corporation, its interest in this Agreement or its interest in
the Franchise granted hereby or its interest in any
proprietorship, partnership, limited liability company, or
corporation which owns any interest in the Franchise. Any
purported assignment not having the necessary consent shall be
null and void and shall constitute a material default hereunder.
Further, and in any event, the franchised business may not be
transferred or assigned separate from this Agreement.
(b) WHY USA shall not unreasonably withhold its consent to any
assignment of one-half (1/2) or less of the beneficial interest
in the Franchise or the franchised business, provided such
transfer is not part of a series of transfers intended to evade
this provision, and further provided:
(i) The transferee shall enter into a written agreement with
WHY USA, in a form satisfactory to WHY USA, assuming
and/or guaranteeing all of the Franchisee's obligations
hereunder;
(ii) Any defaults under this Agreement on the part of the
Franchisee have been remedied; and
(iii) Such other reasonable conditions as may be required by
WHY USA in connection with the transaction or assignment
have been satisfied.
(c) If an assignment, alone or together with other previous,
simultaneous or proposed transfers, would have the effect of
transferring more than one-half (1/2) of the beneficial interest
in the Franchise or the franchised business, WHY USA shall
provide its consent to the assignment only if all of the
following conditions and requirements shall first be satisfied:
(i) The transferee shall be of good moral character and
reputation and shall have a good credit rating,
financial capabilities and competent business
qualifications reasonably acceptable to WHY USA. The
Franchisee shall provide WHY USA with the information it
may reasonably require to make a determination
concerning the proposed transferee;
(ii) The transferee, including all shareholders, members or
partners of the transferee, shall jointly and severally
execute a written assignment, in a form satisfactory to
WHY USA, assuming all of the Franchisee's obligations
under this Agreement;
(iii) The Franchisee shall have fully paid and satisfied all
of the Franchisee's obligations to WHY USA and its
affiliates and the Franchisee shall fully pay to WHY USA
a transfer fee equal to Two Thousand Five Hundred
Dollars ($2,500);
(iv) If the transferee is a corporation, limited liability
company, or partnership, all the shareholders, members,
or partners of the transferee shall enter into a written
agreement, in a form satisfactory to WHY USA, jointly
and severally guaranteeing the full payment and
performance of the transferee's obligations to WHY USA
and agreeing to be personally bound by all covenants and
restrictions imposed upon the transferee under the terms
of this Agreement;
(v) The transferee must satisfactorily complete WHY USA's
initial training seminar before the transferee may
assume responsibility for the operation of the
franchised business;
(vi) Franchisee executes a general release in the form
prescribed by WHY USA against any and all claims against
WHY USA and its officers, directors, employees, agents,
and affiliates;
(vii) The transferee signs WHY USA's then-current form of
Franchise Agreement and assumes all obligations of
Franchisee;
(viii) Franchisee is not in default of any obligation under
this Agreement; and
(ix) The transferee meets WHY USA's criteria for new
franchisees.
In addition, the Franchisee specifically consents to WHY USA releasing to any
proposed transferee any information concerning the franchised business which
the Franchisee has reported to WHY USA.
13. SALE, ASSIGNMENT OR TRANSFER OF THIS AGREEMENT BY WHY USA
WHY USA shall have the right to transfer or assign all or any part of its
rights or obligations under this Agreement to any person or legal entity.
With respect to any assignment which results in the subsequent performance by
the assignee of all of WHY USA's obligations under this Agreement, the
assignee shall expressly assume and agree to perform such obligations, and
shall become solely responsible for all obligations of WHY USA under this
Agreement from the date of assignment. In addition, and without limitation to
the foregoing, Franchisee expressly affirms and agrees that WHY USA may sell
its assets, its Trademarks, or its System; may sell its securities in a public
offering or in a private placement; may merge, acquire other corporations, or
be acquired by another corporation; and may undertake a refinancing,
recapitalization, leveraged buy-out, or other economic or financial
restructuring.
14. COVENANTS FROM INDIVIDUAL
Franchisee shall obtain and furnish to WHY USA executed covenants from all
officers and directors; and any employee, sales agent, or other individual
associated with Franchisee who may have access to any confidential information
regarding the WHY USA business, that such individuals shall comply with and be
personally bound by the covenants applicable to Franchisee concerning
confidentiality and non-competition, as set forth in Sections 8.2 and 11.
Every covenant required by this Section 14 shall be on a form provided by WHY
USA, which form shall, among other things, designate WHY USA as a third party
beneficiary of such covenants with the independent right to enforce them.
15. INTEGRATION/MODIFICATION
This Agreement shall constitute the entire agreement between the Parties,
supersede any prior understandings and may not be modified or amended other
than by mutual written agreement of the Parties. In the event of a conflict
between provisions in this Agreement and the Offering Circular, the terms of
this Agreement shall prevail.
16. WAIVER
No delay, waiver, omission, or forbearance on the part of WHY USA to exercise
any right, option, duty, or power arising out of any breach or default by
Franchisee, or by any other franchisee, of any of the terms, provisions, or
covenants thereof, and no custom or practice by the parties at variance with
the terms hereof, shall constitute a waiver by WHY USA to enforce any such
right, option, or power as against Franchisee, or as to a subsequent breach or
default by Franchisee. Subsequent acceptance by WHY USA of any payments due
to it hereunder shall not be deemed to be a waiver by WHY USA of any preceding
or succeeding breach by Franchisee of any terms, covenants, or conditions of
this Agreement.
17. DISPUTE RESOLUTION
17.1 Choice of Law and Venue. This Agreement takes effect upon its
acceptance and execution by WHY USA in Wisconsin, and any claim or controversy
arising out of or related to this Agreement, or the making, performance,
breach, interpretation, or termination thereof, except to the extent governed
by the United States Trademark Act of 1946, shall be interpreted and construed
under the laws of Wisconsin. In the event of any conflict of law, the laws of
Wisconsin shall prevail, without regard to the application of Wisconsin
conflict-of-law rules. If, however, any provision of this Agreement would not
be enforceable under the laws of Wisconsin, and if the Protected Area is
located outside of Wisconsin and such provision would be enforceable under the
laws of the state in which the Protected Area is located, then such provision
shall be interpreted and construed under the laws of that state. Nothing in
this Section 17.1 is intended by the parties to subject the Agreement to any
franchise or similar law, rule, or regulation of Wisconsin to which it would
not otherwise be subject. Any judicial action not subject to arbitration
pursuant to Section 17.2 shall be brought (if by Franchisee) and may be
brought (if by WHY USA) in the federal district court covering the location
where WHY USA has its principal place of business at the time the action is
commenced, except that if the federal district court lacks subject matter
jurisdiction, then the action shall be brought in the state court covering
such location.
17.2 Arbitration. Except for any actions brought with respect to: (i)
ownership or use of the Trademarks; (ii) issues concerning the alleged
violations of federal or state antitrust laws; or (iii) securing injunctive
relief or specific performance, any claim or controversy arising out of or
related to this Agreement, or the making, performance, breach, interpretation,
or termination thereof, shall be finally settled by arbitration pursuant to
the then-prevailing Commercial Arbitration Rules of the American Arbitration
Association or any successor thereto, by one arbitrator appointed in
accordance with such rules. Any award of the arbitrator shall be in writing,
shall state the reasons for the award (including any findings of fact and
conclusions of law) and shall explain the manner in which any awarded damages
are calculated. The arbitrator shall not have the power to award damages in
excess of actual damages, such as punitive damages, except as may be
authorized by federal law. Each party shall pay for its own costs and
expenses, including reasonable attorneys' fees and accounting fees, and shall
share equally in any costs imposed by the arbitrator and/or the American
Arbitration Association. All arbitration proceedings shall take place in Xxxx
County, Wisconsin. The arbitration award shall be binding upon the parties
and may be entered and enforced in any court of competent jurisdiction. Any
arbitration proceeding shall be limited to controversies between WHY USA and
Franchisee and shall not be expanded to include any other franchisee as a
party, or include the adjudication of class action claims.
17.3 Limitations on Action. Any and all disputes or claims arising out of or
relating to this Agreement, the relationship of Franchisee and WHY USA, or
Franchisee's operation of the WHY USA office, brought by any Party against the
other, shall be commenced within two years from the occurrence of the facts
giving rise to such claim or action, or such claim or action shall be barred.
WHY USA and Franchisee hereby waive to the fullest extent permitted by law any
right to or claim of any punitive or exemplary damages against the other and
agree that in the event of a dispute between them, each shall be limited to
the recovery of any actual damages sustained by it.
18. SEVERABILITY
In the event all or part of any provision of this Agreement is declared
invalid or unenforceable, said provision or part thereof will be deemed
modified to the extent necessary to make it valid and enforceable, or if it
cannot be so modified, then severed. The remainder of the Agreement will
continue in full force and effect, provided, however, that if any part of this
Agreement relating to payments to WHY USA is declared unenforceable or
invalid, then WHY USA may terminate this Agreement upon written notice to
Franchisee.
19. NOTICES
Any and all notices furnished pursuant to this Agreement shall be in writing
and shall be personally delivered, sent by telecopier, or dispatched by
overnight delivery envelope to the respective parties at the addresses set
forth in Section 23.5 of this Agreement, unless and until a different address
has been designated by written notice to the other Party. Notices shall be
deemed to have been received as follows: by personal delivery or telecopier
-- at time of delivery; by overnight delivery service -- on the first business
day following the date on which the Notice was given to the overnight delivery
service. Notices furnished by telecopier shall be confirmed by overnight
delivery service.
20. SURVIVAL OF OBLIGATIONS
Any provision or covenant of this Agreement which expressly or by its nature
imposes obligations beyond the expiration or termination of this Agreement
shall survive such expiration or termination.
21. INFORMATION
Franchisee agrees that information provided by and data, suggestions, forms,
sales tools, etc., developed by Franchisee may be used, reprinted and
published by WHY USA without compensation to Franchisee.
22. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
22.1 It is understood and agreed by the parties hereto that this Agreement
does not create a fiduciary relationship between them; that Franchisee shall
be an independent contractor; and, that nothing in this Agreement is intended
to constitute either party an agent, legal representative, subsidiary, joint
venturer, partner, employee, or servant of the other for any purpose
whatsoever.
22.2 At all times during the term of this Agreement and any extensions
hereof, Franchisee shall hold itself out to the public as an independent
contractor operating the business pursuant to a franchise from WHY USA.
Franchisee agrees to take such action as may be necessary to do so, including,
without limitation, exhibiting a notice of that fact in a conspicuous place at
the Office Location, the content of which WHY USA reserves the right to
specify.
22.3 It is understood and agreed that nothing in this Agreement authorizes
Franchisee to make any contract, agreement, warranty, or representation on WHY
USA's behalf, or to incur any debt or other obligation in WHY USA's name; and
that WHY USA shall in no event assume liability for, or be deemed liable
hereunder as a result of, any such action; nor shall WHY USA be liable by
reason of any act or omission of Franchisee in its conduct of WHY USA's real
estate franchise or for any claim or judgment arising therefrom against
Franchisee or WHY USA.
22.4 Franchisee shall indemnify and hold WHY USA, WHY USA's owners and
affiliates, and their respective officers, directors, employees, and agents
harmless against any and all claims arising directly or indirectly from, as a
result of, or in connection with Franchisee's operation of its WHY USA real
estate franchise, as well as the costs, including attorneys' fees, of
defending against them.
23. ELECTIVE PROVISIONS
23.1 Franchisee's Legal Name:
Franchisee is an individual( ), a partnership( ), a corporation( ),
a limited liability company ( ).
Mailing Address:_____________________________________________________________
_____________________________________________________________________________
Home Address :_______________________________________________________________
_____________________________________________________________________________
Home Phone Number:______________________________________
SHAREHOLDERS/MEMBERS/PARTNERS
NUMBER OF PERCENT
NAME ADDRESS SHARES INTEREST
---- ----------- ----------- -----------
______________________________________________________________________________
______________________________________________________________________________
23.2 Initial Franchise Fee.
The Initial Franchise Fee shall be $14,990.
23.3 Other Provisions.
______________________________________________________________________________
______________________________________________________________________________
23.4 Protected Area.
The Protected Area set forth in Section 4.2 shall be the following geographic
territory:
______________________________________________________________________________
______________________________________________________________________________
23.5 Addresses for Notices.
Notices to WHY USA: WHY USA North America, Inc.
0000 XX Xxxxxxx 00
X.X. Xxx 000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Notices to Franchisee: __________________________________
__________________________________
__________________________________
24. APPROVAL AND GUARANTEE OF SHAREHOLDERS, MEMBERS OR PARTNERS
If Franchisee is a corporation, limited liability company, or partnership, all
shareholders, members, or partners of the Franchisee (and their respective
spouses) hereby guarantee the performance of Franchisee under this Agreement.
____________________________________
Guarantor Signature (Personally) Interest in Franchisee:____________
____________________________________
Guarantor (Spouse Personally)
____________________________________
Guarantor Signature (Personally) Interest in Franchisee:____________
____________________________________
Guarantor (Spouse Personally)
IN WITNESS WHEREOF, the Parties have executed this Real Estate Franchise
Agreement.
WHY USA NORTH AMERICA, INC. FRANCHISEE
By:____________________________ By:_________________________________
Xxxxx X. Xxxxxx
Its: President Its: _______________________________
Date:__________________________ Date:_______________________________
