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EXHIBIT 10.6A
FRANCHISE AGREEMENT
This Agreement, made this _____ day of _____________, 19_____, by and
between FACTUAL DATA CORP a corporation formed and operating under the laws of
the State of COLORADO, having its principal place of business at 3665 J.F.K.
Parkway, Building 1, Suite 200, Fort Xxxxxxx, Colorado, 80525 (hereinafter
referred to as "FRANCHISOR"), and: __________________________________________
in the City of _________________________, in the State of _______________,
(hereinafter referred to as "FRANCHISEE").
WITNESSETH:
WHEREAS as the result of the expenditure of time, effort and money,
FRANCHISOR has acquired unique experience, special skills, technique and
knowledge with reference to the development, opening and operating of FACTUAL
DATA. The FRANCHISEE acknowledges that he does not presently know the special
skills, techniques or business policies, nor does the FRANCHISEE have business
forms or access to the FRANCHISOR'S body of knowledge; and
WHEREAS FRANCHISOR has devised a standard, unique and uniform system
for the establishment, operation and development of such a business with
distinctive features in the product, services, production, distribution,
accounting, and comprehensive management assistance, which system is identified
by the xxxx, FACTUAL DATA; and
WHEREAS FRANCHISOR is the owner of the entire right, title and
interest, together with all the goodwill connected therewith, in and to the
service and trademarks, FACTUAL DATA services and the business operated under
such system and in its name; and
WHEREAS all of the foregoing having a distinctive and valuable
significance to the public, and FRANCHISEE, being cognizant thereof, desires to
make use of the name, "FACTUAL DATA", and to enjoy the commercial benefits of
the merchandising system and operating services related thereto;
WHEREAS the FRANCHISEE understands that information received from the
FRANCHISOR or from any of its officers, employees, agents or franchisees is
confidential and has been developed with a great deal of effort and expense.
FRANCHISEE acknowledges that the information is being made available to him so
that he may more effectively establish and operate a FACTUAL DATA franchise.
WHEREAS the FRANCHISOR has and will continue to license others to use
its servicemarks in connection with the operation of FACTUAL DATA offices at
FRANCHISOR approved locations;
WHEREAS the FRANCHISEE acknowledges that he received the FRANCHISOR'S
Franchise Offering Circular at or prior to the first personal meeting with a
FRANCHISOR representative and at least ten business days prior to the signing
of this agreement;
WHEREAS the FRANCHISEE acknowledges that he understands that the
success of the business to be operated by him under this agreement depends
primarily upon his efforts and that neither the FRANCHISOR or any of its agents
or representatives have made any oral, written or visual representations or
projections of actual or potential sales, earnings, net or gross profits.
NOW THEREFORE, the parties hereto intending to be legally bound in
consideration of the mutual agreements, covenants and promises contained
herein, do hereby agree as follows:
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I. APPOINTMENT AND FRANCHISE FEE
A. FRANCHISOR hereby grants unto FRANCHISEE the right to use the
xxxx, "FACTUAL DATA", and the right, franchise and privilege to use "FACTUAL
DATA CORP" procedures, methods and techniques in the operation of a "FACTUAL
DATA" office, under the specific conditions hereinafter set forth, at one
office only, to be located at a site approved by the FRANCHISOR and the
FRANCHISEE. This location shall be the FRANCHISEE'S primary area of
responsibility.
B. FRANCHISOR will not, so long as this Agreement is in force and
effect and FRANCHISEE is not in default under any of the terms hereof,
enfranchise or operate any other "FACTUAL DATA" Business for the same area as
that granted to FRANCHISEE.
C. FRANCHISEE shall pay to FRANCHISOR ( $.00), based on the
population of FRANCHISEE'S territory, in return for which FRANCHISEE shall
receive all the rights to do business in the counties of Broward, Dade,
Collier, Xxxxxx, Xxx and Monroe as a licensed "Factual Data" FRANCHISEE,
subject to compliance by the FRANCHISEE with the terms of this Agreement.
D. Every franchise is directly related to a specific place of
business for a designated city, town, or other defined area. Each franchise is
an exclusive grant of a license solely in relation to such place of business.
E. FRANCHISOR transfers to FRANCHISEE all items attached hereto
and made a part of this Agreement.
In order for the FRANCHISEE to operate a "FACTUAL DATA" franchise in
an additional location, a separate Franchise Agreement must be signed and an
additional franchise fee will be required.
II. LOCATION
A. FRANCHISOR agrees to analyze FRANCHISEE'S market area, to
determine site feasibility, and to designate the franchise location (subject to
FRANCHISEE'S approval of the same). When FRANCHISOR agrees to designate a
location, nothing contained herein shall be interpreted as an ultimate
guarantee of success for said location.
B. Following designation and approval of the location, FRANCHISOR
agrees that upon request of the FRANCHISEE, it will aid the FRANCHISEE in the
negotiation for the location, and in suggestions for layout and design of a
typical franchise place of business.
C. Nothing in the foregoing shall prevent the FRANCHISEE from
acquiring, leasing, or developing such a location independent of the
FRANCHISOR. The use of the FRANCHISOR'S suggestions and specifications is not
included in the price of this franchise, and the FRANCHISEE shall therefore not
be entitled to any reduction in the price of the franchise if he uses his own
design and services.
D. The FRANCHISEE's primary area of responsibility described by a
geographical area is outlined in Exhibit H attached hereto and made a part
hereof.
III. PROPRIETARY MARKS
A. FRANCHISEE acknowledges that the name, "FACTUAL DATA", is a
valid service and/or trademark owned by FRANCHISOR, and that only the
FRANCHISOR or its designated
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FRANCHISEES have the right to use such trademark and such other trademarks,
servicemarks and tradenames as may exist or be acquired by FRANCHISOR.
FRANCHISEE further acknowledges that valuable goodwill is attached to such
trademarks, servicemarks and tradenames, and that he will use same only in the
manner and to the extent specifically licensed by this Agreement.
1. FRANCHISEE understands and agrees that his license under said
Proprietary marks is non-exclusive, and that FRANCHISOR, in its sole
discretion, has the right itself to operate businesses under said marks, and to
grant other licenses in, to and under said marks, and to grant other licenses
in, to and under such Proprietary marks on any terms and conditions FRANCHISOR
deems fit; provided, however, that FRANCHISOR agrees to abide by the provisions
of Paragraph I.B. of this Agreement.
2. FRANCHISEE expressly covenants that during the term of this
Agreement, and after the expiration or termination thereof, FRANCHISEE shall
not directly or indirectly contest or aid in contesting the validity or
ownership of Proprietary marks and copyrights.
3. FRANCHISEE agrees to promptly notify FRANCHISOR of any claim,
demand, or suit based upon or arising from, or of any attempt by any other
person, firm, or corporation, to use the service and/or trademarks licensed
hereunder, or any trademark, service xxxx, symbol, trade name, copyright, or
colorable variation thereof, in which FRANCHISOR has a proprietary interest.
FRANCHISEE agrees also to promptly notify FRANCHISOR of any litigation
instituted by FRANCHISEE, or by any person, firm, corporation or governmental
agency against FRANCHISEE. In the event FRANCHISOR, pursuant to the terms of
Paragraph III, undertakes the defense or prosecution of any litigation,
FRANCHISEE agrees to execute any and all documents and do such acts and things
as may, in the opinion of counsel for FRANCHISOR, be necessary to carry out
such defense or prosecution, either in the name of FRANCHISOR or in the name of
FRANCHISEE, as FRANCHISOR shall elect.
4. In the event any of the FRANCHISOR'S servicemarks or
trademarks (registered or unregistered) are challenged by third parties
claiming infringement of alleged prior or superior rights in such marks,
FRANCHISOR shall have the option and right to modify or discontinue use of its
servicemarks or trademarks and adopt substitute servicemarks or trademarks in
the FRANCHISEE'S geographical business areas and in such other areas as the
FRANCHISOR chooses. The FRANCHISOR'S liability to the FRANCHISEE under such
circumstance shall be limited to the cost of replacement of the FRANCHISEE'S
signs and advertising materials in effecting such modifications,
discontinuance or adoption of substitute service marks or trademarks.
B. FRANCHISEE shall not use the word "FACTUAL DATA" as part of
its corporate or other business name. FRANCHISEE shall not license, register
or purchase vehicles, fixtures, products, supplies or equipment, or perform any
other activity or incur any obligation or indebtedness except in his
individual, corporate or other business name. FRANCHISEE may, however,
identify itself as a "FACTUAL DATA" Franchise as prescribed in the Operating
Manual.
C. FRANCHISEE understands and acknowledges that each and every
detail of the "FACTUAL DATA" Franchise is important to FRANCHISOR, to
FRANCHISEE, and to other licensed "FACTUAL DATA" franchisees in order to
develop and maintain uniformity of services, and therefore, to enhance the
reputation, trade demand and goodwill of "FACTUAL DATA", FRANCHISEE accordingly
covenants:
1. To operate, advertise and promote his franchise under the
name, "FACTUAL DATA" without prefix or suffix; and
2. To adopt and use the Proprietary Marks licensed hereunder
solely in the manner prescribed by FRANCHISOR; and
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3. To carry out his business under said Proprietary marks in
accordance with operational standards established by FRANCHISOR, and as set
forth in the Operating Manual and/or other documents, if such a Manual or other
documents are provided to the FRANCHISEE.
D. In order to preserve the validity and integrity of the
Proprietary Marks licensed herein, and to assure that FRANCHISEE is properly
employing the same in the operation of its franchise, FRANCHISOR or its agents
shall at all reasonable times have the right to entry and inspection of
FRANCHISEE'S premises, and, additionally, shall have the right to observe the
manner in which FRANCHISEE is rendering its services, to confer with
FRANCHISEE'S employees and clients, and to suggest products and services for
testing and evaluation in order to make certain that they are satisfactory with
the quality control provisions established by the FRANCHISOR.
IV. TRAINING AND ASSISTANCE
A. FRANCHISOR shall make available to FRANCHISEE or FRANCHISEE'S
designated manager, and FRANCHISEE or its manager shall attend and successfully
complete, prior to opening for business, a twenty (20) working day training and
familiarization course at such places and for such lengths of time as
FRANCHISOR shall designate. Said training program shall cover all aspects of
the operation of a "FACTUAL DATA" franchise. Room, board and travel expenses
during this period shall be borne by FRANCHISEE.
B. During the first month of operation of FRANCHISEE'S "FACTUAL
DATA" business, FRANCHISOR will furnish to FRANCHISEE , one of FRANCHISOR'S
representatives for the purpose of facilitating the opening of the FRANCHISEE'S
Factual Data office. Such representative will also assist FRANCHISEE in
establishing and standardizing procedures and techniques essential to the
operation of a distinctive "FACTUAL DATA" business, and, if necessary and
requested by the FRANCHISEE, shall assist in hiring and training FRANCHISEE'S
personnel at FRANCHISEE'S expense.
C. FRANCHISOR may, but shall not be required to, provide a
continuing advisory service which shall include, but not be limited to,
consultation on promotional, business, or operational problems with analysis of
FRANCHISEE'S sales, marketing, and financial data.
D. FRANCHISOR shall initially, and from time to time when
available, offer to FRANCHISEE materials and bulletins on sales, marketing
developments, products and techniques either without charge or according to the
then current price list.
E. FRANCHISOR will provide FRANCHISEE a marketing representative
for on-site consultation during 10 working days of the franchise.
V. ADVERTISING FEES AND CONTROLS
A. FRANCHISEE shall determine when business development expense
is necessary for advertising. FRANCHISOR is not bound to provide any
advertising to FRANCHISEE.
B. Recognizing the value of advertising and the importance of the
standardization of advertising and promotion to the furtherance of the goodwill
and public image of "FACTUAL DATA", FRANCHISEE agrees to submit to FRANCHISOR
or its designated agency, for its prior approval, all sales promotion materials
and advertising to be used by FRANCHISEE, including, but not limited to,
newspapers, radio and television advertising, specialty and novelty items. In
the event written or oral disapproval of said advertising and promotional
material is not received by FRANCHISEE from FRANCHISOR or its designated agency
within fifteen (15) days from the date such material is submitted to and
received by FRANCHISOR, said materials shall be deemed approved.
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Failure by FRANCHISEE to conform with the provisions herein and subsequent
non-action by FRANCHISOR to this failure and default shall not be deemed as a
waiver of further or additional failures and defaults. The submission of
advertising to FRANCHISOR for approval shall not affect FRANCHISEE'S right to
determine the prices at which FRANCHISEE sells its services.
C. FRANCHISEE shall not advertise or use in advertising or any
other form of promotion, the trademarks of FRANCHISOR without appropriate C, TM
or R copyright and registration marks.
D. FRANCHISOR may, but is not required to, advertise for Factual
Data and its business outlets.
VI. CONFIDENTIAL OPERATING MANUAL
A. In order to protect the reputation and goodwill associated
with the xxxx, "FACTUAL DATA", and to maintain the uniform standards of
operation thereunder, FRANCHISEE shall conduct its "FACTUAL DATA" franchise in
strict accordance with FRANCHISOR'S Operating Manual.
B. FRANCHISEE shall at all times treat as confidential, and shall
not at any time disclose, copy, duplicate, record or otherwise reproduce, in
whole or in part, or otherwise make available to any unauthorized person or
source, the contents of said Manual.
C. The Operating Manual shall at all times remain the sole
property of FRANCHISOR and shall promptly be returned upon the expiration or
other termination of this Agreement. Upon sale to a new FRANCHISEE, all
materials will be made available to the purchaser after all purchase and
Franchise contracts are completed.
D. FRANCHISOR may, from time to time, revise the contents of said
Manuals to convey to FRANCHISEE advancements and new developments in sales,
marketing, operational techniques and other items and procedures relevant to
the operation of a "FACTUAL DATA" franchised business.
VII. ACCOUNTING AND RECORDS
A. To enable FRANCHISEE and FRANCHISOR to best ascertain their
costs and maintain an economical method of operation, FRANCHISEE agrees to keep
and preserve, at its cost, during the term of the franchise granted hereunder,
full, complete, and accurate books and accounts in an accounting form and
manner as prescribed in the Operating Manual. At the request of FRANCHISEE,
FRANCHISOR will furnish a list of recommended accounting firms who meet the
standards and requirements of FRANCHISOR.
B. FRANCHISEE shall submit to FRANCHISOR such periodic reports,
forms and records, at its sole cost, as specified and in the manner and at the
time as specified in the Operations Manual.
C. FRANCHISOR'S representatives shall have the right at any time
to inspect FRANCHISEE'S books, records, and cash control devises or systems.
VIII. STANDARDS OF QUALITY
A. FRANCHISEE recognizes that it is essential to the proper
marketing of "FACTUAL DATA" and to the preservation and promotion of its
reputation and acceptance by the public at large, that uniform standards of
quality and of appearance be maintained; that uniform size, quality, texture,
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absorbency, strength, finish, and appearance, displaying FRANCHISOR'S various
Proprietary Marks, be used in distribution to the public. FRANCHISEE therefore
agrees, as part of the consideration for this Agreement, that FRANCHISEE will
at all times dispense, sell, or offer for sale to the public, only such
services as shall meet the reasonable specifications and standards from time to
time designated in writing by FRANCHISOR for sale and service from or at the
"FACTUAL DATA" business licensed herein; and FRANCHISEE shall sell, serve and
dispense all such services as shall meet all such specifications and standards
designated by FRANCHISOR.
B. FRANCHISEE shall purchase all printed material required for
the operation of the "FACTUAL DATA" franchise licensed herein from FRANCHISOR
through requisition procedures set forth in the Operations Manual.
IX. MODIFICATION OF THE SYSTEM
FRANCHISEE recognizes and agrees that from time to time hereafter
FRANCHISOR may change or modify the system presently identified by the xxxx
"FACTUAL DATA", including the adoption and use of new or modified trade names,
trademarks, service marks or copyrighted materials, new products, new equipment
or new techniques, and that FRANCHISEE may accept, use and display for the
purpose of this Agreement any such changes in system, including new or modified
trade names, trademarks, service marks or copyrighted materials, new products,
new equipment or new techniques, as if they were part of this Agreement at the
time of execution hereof. FRANCHISEE may make such expenditures as such
changes or modifications in the system may reasonably require, and do so within
a reasonable time.
X. CONTINUING SERVICES AND ROYALTY FEE
A. FRANCHISEE shall pay to FRANCHISOR, so long as this Agreement
shall be in effect, a Continuing Services and Royalty Fee (equal to a
percentage in accordance with the Table below) per mortgage credit report
("unit") made by FRANCHISEE'S gross sales derived from the "FACTUAL DATA"
Business franchised hereunder. Said royalty is to be paid monthly in the
manner specified below or as otherwise prescribed in the Operations Manual.
TABLE OF ROYALTY CHARGES
Number of Units Sold Per Month Percentage of Gross Sales
Number of Units Sold Per Month
5% of Gross sales sold per month
* ON ALL UNITS SOLD THAT MONTH
The FRANCHISEE acknowledges that the above table reflects a total rate for ALL
units sold that month, and that only one percentage rate is applied, that being
the greatest percentage rate attained each month.
The FRANCHISEE agrees to permit FRANCHISOR access to its computers to obtain
FRANCHISEE'S sales reports for the previous month of operations. This access
will be given not later than the 5th day of each month. The continuing
services and royalty fee payment based on the gross sales shown by FRANCHISEE'S
computer records must also be paid no later than the 10th day of each month.
FRANCHISOR will also utilize FRANCHISEE'S sales reports for the preparation of
FRANCHISEE'S monthly billing statements.
FRANCHISEE will make available for reasonable inspection at reasonable times by
FRANCHISOR, all original books and records that FRANCHISOR may deem necessary
to ascertain gross sales.
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B. FRANCHISEE will supply to FRANCHISOR on or before the
twentieth (20th) day of each month, in the form approved by FRANCHISOR, an
operating statement of receipts and disbursements for the last preceding
calendar month. In addition, within ninety (90) days after the close of
FRANCHISEE'S fiscal year, FRANCHISEE shall deliver to FRANCHISOR an unaudited
Profit and Loss Statement and Balance Sheet as of the end of FRANCHISEE'S last
fiscal year. The Operating Statement, Profit and Loss Statement and Balance
Sheet shall be provided at FRANCHISEE's cost and expense.
C. In the event FRANCHISEE fails to pay any Continuing Services
and Royalty Fee within fifteen (15) days after it is due, FRANCHISEE shall pay
interest on the amount due at the rate of one and one half percent (1.5%) per
month for each and every month that said amount is not paid, but in no event
shall FRANCHISEE be compelled to pay interest at a rate greater than the
maximum permitted by applicable law.
XI. INSURANCE
A. FRANCHISEE shall procure before the commencement of business,
and maintain in full force and effect during the entire term of this Agreement,
at FRANCHISEE'S sole expense, an insurance policy or policies protecting
FRANCHISEE and FRANCHISOR and their officers and employees against any loss,
liability or expense whatsoever from fire (including extended coverage),
personal injury, death, property damage, products liability or theft, arising
or occurring upon or in connection with such premises or by reason of
FRANCHISEE'S operation upon, from, or occupancy of, such premises. FRANCHISOR
shall be an additional named insured in such policy or policies (Workmen's
Compensation excepted.) Such policy or policies shall be written by a
responsible insurance company or companies satisfactory to FRANCHISOR, and
shall include the following:
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KIND OF INSURANCE MINIMUM LIMITS OF LIABILITY
Worker's Compensation Statutory
1. (A) $100,000. contents (all risk)
(B) Loss of Income, Extra Expense, Valuable Papers at $5,000.
(C) Accounts Receivable at $5,000.
(D) Property of Others at $1,000.
(E) Liability at $1,000,000.
(F) Medical Payments at $1,000. / $25,000.
(G) Personal Injury, Non-Owned Auto and Hired Auto, Employees as
Additional Insured, Products and Completed Operations, Broad
Form Property Damage, Money and Securities at $2,000.
2. Worker's Compensation as required by your state.
The insurance afforded by the policy or policies respecting liability shall not
be limited in any way by reason of any insurance which may be maintained by
FRANCHISOR. Within thirty (30) days of the signing of this Agreement, but in
no event later than the day before the date on which FRANCHISEE first opens its
establishment for business, the Certificates of Insurance showing compliance
with the foregoing requirements shall be furnished by FRANCHISEE to FRANCHISOR
for approval. Such certificate shall state that said policy or policies will
not be cancelled or altered without at least ten (10) days prior written notice
to FRANCHISOR. Maintenance of such insurance, and the performance by
FRANCHISEE of the obligations under the indemnity provision set forth in this
Agreement, shall be the responsibility of the FRANCHISEE. Minimum limits, as
required above, may be reasonably modified from time to time, as conditions
require, by written notice to FRANCHISEE. FRANCHISOR need not be included in
any fire policy if FRANCHISOR has no interest in said premises or the equipment
therein as owner, lessee, mortgagee or otherwise.
B. Should FRANCHISEE, for any reason, not procure and maintain
such insurance coverage as required by this Agreement, then FRANCHISOR shall
have the right and authority, as its option, to immediately procure such
insurance upon notice, and FRANCHISEE will pay and reimburse FRANCHISOR for all
costs of same.
XII. TERM
A. The term of this agreement shall be for ten (10) years from
the date of its execution, and shall be automatically extended for additional
ten (10) year periods by FRANCHISEE provided FRANCHISEE is not in default of
any provision herein.
The FRANCHISEE agrees to commence operations not later than 90 days after the
execution of this agreement. If FRANCHISEE fails to commence operations within
90 days, and to continually maintain such operation, FRANCHISEE shall be in
default.
B. In order to not extend this Agreement, FRANCHISEE must give
the FRANCHISOR written notice of his election not to renew or extend not less
than ninety (90) days prior to the expiration of each ten year term. No
renewal or extension fee will be required.
C. FRANCHISOR reserves the right to refuse to extend or renew
this Agreement if FRANCHISEE fails to satisfactorily comply with this
Agreement. If FRANCHISOR decides to not renew, it must give FRANCHISEE 60 days
notice prior to renewal date, and the reason therefore. FRANCHISEE has 30 days
to remedy the claimed defaults to the satisfaction of FRANCHISOR, and if
remedied, the notice shall be void.
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D. Any dispute arising under this Section XII shall be settled
through arbitration in accordance with the rules of the American Arbitration
Association at a hearing to be held in Ft. Xxxxxxx, Colorado.
XIII. COVENANTS OF FRANCHISEE
A. During the term of this Franchise Agreement or any extension
thereof:
1. FRANCHISEE, or its designated manager, shall devote
all the time, energy and effort reasonably required for the management and
operation of the "FACTUAL DATA" business licensed hereunder.
2. FRANCHISEE shall not, either directly or indirectly,
for itself or on behalf of or in conjunction with any other person, persons,
partnership or corporation, own, maintain, engage in, participate or have any
interest in the operation of other directly competing business; provided,
however, that:
(a) The above provisions relating to interests in
other businesses shall not apply to ownership by FRANCHISEE in any business
which does not use any system of operation competitive with the "FACTUAL DATA"
method of operation.
B. FRANCHISEE further covenants that during the term of this
Agreement, and for a period of two (2) years thereafter, regardless of the
cause of termination, FRANCHISEE shall not:
1. Divert, or attempt to divert, any business of, or any
customers of, the "FACTUAL DATA" business licensed hereunder to any other
competitive establishment, by direct or indirect inducement or otherwise;
2. Employ, or seek to employ, any person employed by
FRANCHISOR, or any other person who is at the time operating or employed by or
at any other "FACTUAL DATA" business, or otherwise directly or indirectly
induce such persons to leave their employment therewith.
C. FRANCHISEE further covenants that for a period of two (2)
years after the termination of the franchise, regardless of the cause of
termination, he shall not, either directly or indirectly, for himself, or on
behalf of or in conjunction with any other person, persons, partnership or
corporation, own, maintain, engage in, or participate in the operation of any
"FACTUAL DATA"-type business covering a radius of one hundred (100) miles of
the location franchised hereunder. In the event of a breach of this provision,
the FRANCHISEE shall pay to the FRANCHISOR $150,000.00 for each office plus 11%
of the gross sales of each office he is associated with within the restricted
area for a two (2) year period.
D. FRANCHISEE shall not during the term of this Agreement or
after its termination communicate or divulge to any other person, persons,
partnership or corporation, any information or knowledge concerning the methods
of manufacture, preparation, promotion, sale or distribution used in a "FACTUAL
DATA" business, nor shall FRANCHISEE disclose or divulge in whole or in part
any trade secrets or private processes of FRANCHISOR or its affiliated
companies, nor shall FRANCHISEE engage in any other business identical or
similar to this franchise. If this provision is breached, FRANCHISEE shall pay
FRANCHISOR $150,000.00 for each office plus 11% of the gross sales of each
office operated or controlled by him.
E. Covenants contained in this paragraph shall be construed as
severable and independent and shall be interpreted and applied consistent with
the requirements of reasonableness and equity. Any judicial reformation of
these covenants consistent with this interpretation shall be enforceable as
though contained herein, and shall not affect any other provisions or terms of
this Agreement.
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XIV. TERMINATION AND DEFAULTS
A. In the event that FRANCHISEE shall become insolvent or make an
assignment for the benefit of creditors, or if a petition in bankruptcy is
filed by FRANCHISEE, or such a petition is filed against and consented to by
FRANCHISEE, or if FRANCHISEE is adjudicated a bankrupt, or if a xxxx in equity
or other proceeding for the appointment of a receiver of FRANCHISEE or other
custodian for FRANCHISEE'S business or assets is filed and/or is consented to
by FRANCHISEE, or a receiver or other custodian is appointed, or if proceedings
for composition with creditors under any state or federal law should be
instituted by or against FRANCHISEE or if FRANCHISEE shall be attached or
levied upon by any sheriff, marshal, or constable and shall not be seasonably
cured, then in any of said events, FRANCHISEE shall be deemed to be in default
under this Agreement, and all rights granted to FRANCHISEE hereunder shall
thereupon terminate upon the occurrence of the above event or events
immediately after a 30 day notice to FRANCHISEE from the FRANCHISOR.
B. Except as provided in XIV.A. and B.1. of this Agreement, if
FRANCHISEE shall be in default under the terms of this Agreement, and such
default shall not be cured within thirty (30) days after receipt of written
"Notice to Cure" thereof from FRANCHISOR, then in addition to all other
remedies at law or in equity, FRANCHISOR may immediately terminate this
Agreement. In the event FRANCHISEE is in default under the terms of the
Franchise Agreement within twelve (12) months after a prior default, and
FRANCHISOR has served FRANCHISEE with a "Notice to Cure" with respect to such
prior default, this Agreement may be terminated immediately after a 30 day
notice by FRANCHISOR upon such subsequent default. FRANCHISEE shall be in
default under this Agreement:
1. If FRANCHISEE fails, refuses, or neglects to promptly pay to
FRANCHISOR any monies owing to FRANCHISOR on date due, the FRANCHISOR may
terminate this Agreement upon ten (10) day notice to FRANCHISEE of the default.
FRANCHISEE has ten (10) days from the date of delivery of the notice to remedy
the default; or
2. If FRANCHISEE fails to submit reports or financial data with
FRANCHISOR required under this Agreement; or
3. If FRANCHISEE fails to comply with any of the requirements
imposed upon it by this Agreement and the Operating Manual, or other such
operational memoranda issued by FRANCHISOR, or uses bad faith in carrying out
the terms of the franchise.
4. If FRANCHISEE loses his location or fails to make rent
payments on time;
5. If FRANCHISEE under reports his gross sales by 2% for a year
or any part of a year or materially distorts any other material information.
6. If FRANCHISEE loses any permit or license he needs to operate
the business.
7. Fails to continuously and actively operate his Factual Data
franchise office.
8. Makes an unauthorized assignment of the Franchise Agreement.
9. Repeatedly fails to comply with the Franchise Agreement,
whether or not such failures are corrected, after notice thereof is delivered
to the Franchisee.
10. Has made any material misrepresentations or misstatements on
his application for the franchise or with respect to the ownership of the
franchise.
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C. Upon any breach, default or other material failure by
FRANCHISOR under the provisions of this instrument continued and uncured for
more than thirty (30) days after express written notice given to FRANCHISOR by
FRANCHISEE of such claimed failure or upon the bankruptcy or like insolvency of
the FRANCHISOR, FRANCHISEE shall have the right by an additional express notice
given to FRANCHISOR by FRANCHISEE to terminate the term of this agreement at
the date of such notice or at any date not more than sixty (60) days thereafter
so specified by such notice. FRANCHISOR has the right to cure or otherwise
remedy any failure within 30 days thereof; and any such cure will abrogate the
right to terminate and nullify any attempted termination of the term of this
agreement by reason of such default.
D. For purposes of this Section, receipt of notice is defined in
Paragraph XXIV.
E. In the event FRANCHISOR is required to purchase the equipment
and/or leasehold improvements of the FRANCHISEE upon termination of this
Agreement pursuant to the requirements of any Federal, State or local statute,
rule or regulation or any judicial determination, the purchase price shall be
computed at FRANCHISEE'S cost less depreciation and amortization based upon a
five (5) year life under the straight-line method.
XV. RIGHTS AND DUTIES OF PARTIES UPON EXPIRATION OR TERMINATION
A. Upon termination or expiration of this Agreement, FRANCHISEE
shall immediately cease to be a licensed "FACTUAL DATA" FRANCHISEE and:
1. FRANCHISEE shall promptly pay FRANCHISOR all sums owing from
FRANCHISEE to FRANCHISOR under the terms of this Agreement. Said sums shall
include all damages, costs and expenses, including reasonable attorney's fees,
incurred by FRANCHISOR by reason of default on the part of FRANCHISEE, whether
or not such occur prior to or subsequent to the termination or expiration of
the franchise, and said sums shall include all costs and expenses, including
reasonable attorney's fees, incurred by FRANCHISOR in obtaining injunctive or
other relief to enforce the provisions of this contract.
2. FRANCHISEE shall immediately thereafter cease to use, by
advertising or in any manner whatsoever, the name "FACTUAL DATA", or any forms,
manuals, slogans, signs, marks, symbols, or devices used in connection with the
operation of a "FACTUAL DATA" franchise. FRANCHISEE shall not represent or
advertise that FRANCHISOR or FRANCHISEE were formerly parties to this Franchise
Agreement, or that FRANCHISEE did business under the trademarks or name of
FRANCHISOR.
3. FRANCHISEE shall take such action as shall be necessary to
cancel any assumed name or equivalent registration on which contains the name
"FACTUAL DATA" or any other trademark of FRANCHISOR, and FRANCHISEE shall
furnish FRANCHISOR evidence satisfactory to FRANCHISOR of compliance with the
obligation within thirty (30) days after said termination.
4. FRANCHISEE shall assign to FRANCHISOR all his rights, title
and interest in and to FRANCHISEE'S telephone numbers.
5. FRANCHISEE shall immediately return to FRANCHISOR all
operating manuals, computer programs, and other memoranda reflecting operating
procedures of the franchise. FRANCHISEE acknowledges that the computer
programs shall always remain the property of FRANCHISOR.
6. FRANCHISEE shall be solely liable and hold FRANCHISOR harmless
for any contracts then in effect;
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7. FRANCHISEE shall transfer to FRANCHISOR, or any other person
designated by FRANCHISOR, by assignment of lease, by lease, or by any other
reasonable or suitable means, the exclusive occupation and use of the licenced
location, at the option of FRANCHISOR;
8. All fees paid by FRANCHISEE in connection with the purchase of
the franchise are non-refundable, and shall be deemed earned on the date of the
execution of this agreement.
9. FRANCHISEE retains the furniture, equipment and computer
hardware he obtained for the franchise. All other items must be returned to the
FRANCHISOR. FRANCHISOR has no obligation to purchase FRANCHISEE'S retained
furniture, equipment and computer hardware or to make any payment or adjustment
whatsoever to the FRANCHISEE for any goodwill the FRANCHISEE may have
established prior to or during operation of the Factual Data franchise.
B. No right or remedy herein conferred upon or reserved to
FRANCHISOR is exclusive of any other right or remedy herein or by law or equity
provided or permitted; but each shall be cumulative of every other right or
remedy given hereunder.
XVI. COMMENCEMENT AND CONTINUITY OF OPERATION
A. FRANCHISEE recognizes that continuous availability of the
"FACTUAL DATA" services to the public is essential to the adequate promotion of
"FACTUAL DATA" and that any failure to provide such availability affects the
FRANCHISOR both locally and nationally.
B. FRANCHISEE therefore recognizes an obligation to commence
operations not later than ninety (90) days after the approval of this Agreement
by the FRANCHISOR. If the FRANCHISEE fails to commence operation as herein
provided, and to continuously maintain such operation, such failure shall be
considered a default, and FRANCHISOR may terminate this Agreement as provided
herein.
XVII. TRANSFERABILITY OF INTEREST
A. This Agreement and all rights hereunder may be assigned and
transferred by FRANCHISOR and, if so, shall be binding upon and inure to the
benefit of FRANCHISOR'S successors and assigns.
B. This Agreement, and all rights hereunder, may be assigned and
transferred by FRANCHISEE and, if so, shall be binding upon and injure to the
benefit of FRANCHISEE'S successors and assigns, subject to the following
conditions and requirements.
1. No FRANCHISEE, partner (if FRANCHISEE is a partnership), or
shareholder (if FRANCHISEE is a corporation), without FRANCHISOR'S prior
written consent, shall, by operation of law or otherwise, sell, assign,
transfer, convey, give away, or encumber to any person, firm, or corporation,
his interest in this Agreement or his interest in the franchise granted hereby
or his interest in any proprietorship, partnership or corporation which owns
any interest in the franchise, nor offer, permit, or suffer the same. Any
purported assignment not having the aforesaid consent shall be null and void
and shall constitute a material default hereunder.
2. FRANCHISOR shall not unreasonably withhold its consent to any transfer
referenced in Paragraphs XVII.B.1. of this Agreement when requested; provided,
however, that the following conditions and requirements shall first be met to
the full satisfaction of FRANCHISOR.
(a) If FRANCHISEE is an individual or partnership and
desires to assign and transfer his rights to a corporation:
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(1) Said transferee corporation shall be newly
organized, and its charter shall provide that its activities are confined
exclusively to acting as a "FACTUAL DATA" franchise as licensed under this
Agreement;
(2) FRANCHISEE shall be, and shall remain, the
owner of the majority stock interest of the transferee corporation;
(3) The individual FRANCHISEE (or, if FRANCHISEE
is a partnership, one of the partners) shall be, and shall remain, the
principal executive officer of the corporation;
(4) The transferee corporation shall enter into a
written assignment with FRANCHISEE and FRANCHISOR, under seal, (in form
satisfactory to FRANCHISOR) assuming all of FRANCHISEE'S obligations hereunder;
(5) All shareholders of the transferee
corporation shall enter into a written agreement, in a form satisfactory to
FRANCHISOR, jointly and severally guaranteeing the full payment and performance
of the transferee corporation's obligations to FRANCHISOR;
(6) Each stock certificate of the transferee
corporation shall have conspicuously endorsed upon it a statement that it is
held subject to, and that further assignment or transfer thereof is subject to
all restrictions imposed upon assignments by this Agreement;
(7) No new shares of common or preferred voting
stock in the transferee corporation shall be issued to any person, partnership,
trust, foundation or corporation without obtaining FRANCHISOR'S prior written
consent; and
(8) All accrued money obligations of FRANCHISEE
to FRANCHISOR, its subsidiaries or assignees, shall be satisfied prior to
assignment or transfer.
(b) If the transfer, other than such transfer as is
authorized under Paragraph XVII.B.2a. of this Agreement, is consummated alone
or together with other related previous, simultaneous, or proposed transfers
and would have the effect of transferring control of the franchise licenses
herein to someone other than an original signatory of this Agreement:
(1) The transferee(s) shall be of good moral
character and reputation, and shall have a good credit rating and competent
business qualifications reasonably acceptable to FRANCHISOR. FRANCHISEE shall
provide FRANCHISOR with such information as FRANCHISOR may require to make such
determination concerning each such proposed transferee(s).
(2) The transferee(s), or such other
individual(s) as shall be the actual manager of the franchise, shall have
successfully completed and passed the training course then in effect for
FRANCHISEES, or otherwise demonstrated to FRANCHISOR'S satisfaction, sufficient
ability to operate the unit being transferred.
(3) The transferee(s), including all shareholders
and partners of the transferee(s), shall jointly and severally execute both or
either (as FRANCHISOR shall direct):
aa. A Franchise Agreement and other
standard ancillary agreements with FRANCHISOR, on the current standard forms
being used by FRANCHISOR, and/or
bb. A written assignment with FRANCHISEE
and FRANCHISOR, under seal, (in a form satisfactory to FRANCHISOR) assuming all
of FRANCHISEE'S obligations hereunder.
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(4) In the event FRANCHISOR is reasonably
unsatisfied with the qualifications of the transferee(s) as required in the
foregoing provisions of Paragraph XVII.B.2.b.(1), FRANCHISEE shall, upon request
of FRANCHISOR, enter into a written agreement with FRANCHISOR, under seal, (in a
form satisfactory to FRANCHISOR) guaranteeing the full payment and performance
of the obligations assumed by or assigned to transferee(s).
(5) The term of said agreements required pursuant
to subparagraph XVII.B.2.b.(3) and (4) shall be for the unexpired term of this
Agreement as provided herein.
(6) If transferee is a corporation:
aa. Each stock certificate of the
transfer corporation shall have conspicuously endorsed upon it a statement that
is held subject to, and that further assignment or transfer thereof is subject
to, all restrictions imposed upon assignments by this Agreement; and,
bb. No new shares of common or preferred
voting stock in the transferee corporation shall be issued to any person,
partnership, trust, foundation, or corporation without obtaining FRANCHISOR'S
prior written consent.
(7) All accrued money obligations of FRANCHISEE
or FRANCHISOR, its subsidiaries, affiliates or assignees, shall be satisfied
prior to assignment or transfer, and FRANCHISEE shall not be in default under
the terms of this Agreement.
3. FRANCHISEE shall have fully paid and satisfied all of FRANCHISEE'S
obligations to FRANCHISOR, and the transferee or FRANCHISEE shall have fully
paid to FRANCHISOR a transfer fee of 35% of the then current Franchise fee to
cover FRANCHISOR'S expenses in connection with the transfer, which includes the
required training course, supervision, accounting and legal expense. This
transfer fee does not apply to an Assignment of Interest to a corporation under
Paragraph XVII.B.2.a. of this Agreement.
4. No sale, assignment, transfer, conveyance, encumbrance, or gift of any
interest in this Agreement, or in the franchise granted thereby, shall relieve
FRANCHISEE, and the shareholders or partners participating in any transfer, of
the obligations of the covenant not to compete contained in Paragraph XIII,
except where FRANCHISOR shall expressly authorize in writing.
XVIII. DEATH OF FRANCHISEE
A. In the event of the death of an individual FRANCHISEE, or any
partner or shareholder of a FRANCHISEE which is a partnership or corporation,
the heirs, beneficiaries, devisees, or legal representatives of said
individual, partner or shareholder, together with all surviving partners or
shareholders, shall, within ninety (90) days of such event :
1. Apply to FRANCHISOR for the right to continue to operate the
franchise (for the duration of the term of this Agreement), which right shall
be granted upon the fulfillment of all of the conditions set forth in
Paragraphs XVII.B.2.b. of this Agreement (except that no transfer fee shall be
required); or
2. Sell, assign, transfer, convey FRANCHISEE'S interest in
compliance with the provisions of Paragraphs XVII.B. of this Agreement;
provided, however, in the event a proper and timely application in the right to
continue to operate has been made and rejected, the ninety (90) days to sell,
assign, transfer or convey shall be computed from the date of said rejection.
B. Except as herein provided, if said representatives fail to
take the steps herein above noted, the franchise shall automatically terminate
ninety (90) days after the death of such
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FRANCHISEE, partner or shareholder and the FRANCHISOR may repurchase the
Franchise for 50% of the preceding year's gross incomes.
XIX. RIGHT OF FIRST REFUSAL
If at any time during the term of ownership, FRANCHISEE shall receive
a bona fide offer to purchase the franchise and/or the equipment and chattels
incidental thereto, which offer FRANCHISEE is willing to accept, FRANCHISEE
shall communicate to FRANCHISOR in writing the full terms of said offer and the
name of the offeror. FRANCHISOR may elect to purchase said franchise and the
equipment and chattels incidental thereto on the terms as contained in the
offer, and if FRANCHISOR so elects, it shall give to FRANCHISEE a written
notice of such election within ten (10) days after receipt of FRANCHISEE'S
communication of offer to FRANCHISOR. If FRANCHISOR shall fail to give such
written notice of election within the ten (10) days, FRANCHISEE may sell to the
offeror on the terms offered, subject to the provisions relating to
transferability as heretofore set forth in Paragraph XVII. In the event
FRANCHISOR elects to purchase, said purchase must be completed within one
hundred twenty (120) days from the date of FRANCHISOR'S notice of election to
purchase. Xxxxxxx money (not refundable) of 20% of the purchase price must be
paid to the selling FRANCHISEE by the tenth day following the offer to
purchase.
XX. OPERATION IN EVENT OF ABSENCE, DISABILITY OR DEATH
In order to prevent any interruption of the franchised business which
would cause harm to said business and thereby depreciate the value thereof,
FRANCHISEE authorizes FRANCHISOR, in the event that FRANCHISEE is absent or
incapacitated by reason of illness or death and is not, therefore, in the sole
judgement of FRANCHISOR, able to operate the business licensed hereunder, to
operate said business for so long as FRANCHISOR deems necessary and practical,
and without waiver of any other rights or remedies FRANCHISOR may have under
this Agreement. All monies from the operation of the business during such
period of operation by FRANCHISOR shall be kept in a separate account, and the
expenses of the business, including reasonable compensation and expenses for
FRANCHISOR'S representative, shall be charged to said account. If, as herein
provided, FRANCHISOR temporarily operates for FRANCHISEE the business licensed
herein, FRANCHISEE agrees to hold harmless FRANCHISOR and any representative of
FRANCHISOR who may act hereunder.
XXI. TAXES AND PERMITS
A. FRANCHISEE shall promptly pay when due all taxes and
assessments against the premises or the equipment used in connection with
FRANCHISEE'S business, and all liens or enumerations of every kind or character
placed upon or against any of said property, and all accounts and other
indebtedness of every kind incurred by FRANCHISEE in the conduct of said
business.
B. FRANCHISEE shall comply with all federal, state, and local
laws and regulations, and shall obtain any and all permits, certificates, or
licenses necessary for the full and proper conduct of the "FACTUAL DATA"
franchised business in a timely manner.
XXII. INDEPENDENT CONTRACTOR
A. This Agreement does not constitute FRANCHISEE as an agent,
legal representative, joint venturer, partner, employee, or servant of
FRANCHISOR for any purpose whatsoever; and FRANCHISOR will have no judiciary or
other relationship with FRANCHISEE except for the contractual relationship
expressed by the provisions of this instrument; and it is understood between
the parties hereto that FRANCHISEE is an independent contractor and is in no
way authorized to make
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any contract, agreement, warranty or representation on behalf of FRANCHISOR, or
to create any obligation, express or implied, on behalf of FRANCHISOR.
FRANCHISEE shall prominently display in its place of business a certificate
from FRANCHISOR stating that said business is operated by FRANCHISEE as a
FRANCHISEE of "FACTUAL DATA" and not as an agent thereof.
B. Under no circumstances shall FRANCHISOR be liable for any act,
omission debt or any other obligation of FRANCHISEE. FRANCHISEE shall
indemnify and save FRANCHISOR harmless against any such claim and the costs of
defending against such claims arising directly or indirectly from, or as a
result of, or in connection with, FRANCHISEE'S operation of the franchised
business.
XXIII. NON-WAIVER
No failure of FRANCHISOR to exercise any power reserved to it
hereunder, or to insist upon strict compliance by FRANCHISEE with any
obligation or condition hereunder, and no custom or practice of the parties in
variance with the terms hereof, shall constitute a waiver of FRANCHISOR'S right
to demand exact compliance with the terms hereof. Waiver by FRANCHISOR of any
particular default by FRANCHISEE shall not affect or impair FRANCHISOR'S right
in respect to any subsequent default of the same or of a different nature; nor
shall any delay, waiver, forbearance, or omission of FRANCHISOR to exercise any
power or rights arising out of any breach or default by FRANCHISEE of any of
the terms, provisions, or covenants hereof, affect or impair FRANCHISOR'S
rights, nor shall such constitute a waiver by FRANCHISOR of any right hereunder
or of the right to declare any subsequent breach or default. Subsequent
acceptance by FRANCHISOR of the payments due to it hereunder shall not be
deemed to be a waiver by FRANCHISOR of any preceding breach by FRANCHISEE of
any terms, covenants or conditions of this Agreement.
XXIV. NOTICE
Any notices required to be given hereunder shall be given in writing
by personal delivery, telegram, or by certified or registered mail directed to
FRANCHISOR or to FRANCHISEE at their respective last known addresses. Notice
by mail shall be deemed received on the third business day following the date
same was deposited in the mail.
XXV. LIABILITY FOR BREACH
In the event of any default on the part of either party hereto, in
addition to any other remedies of the aggrieved party, the party in default
shall pay to the aggrieved party all amounts due and all damages, costs and
expenses, including reasonable attorney's fees, incurred by the aggrieved party
as a result of any such default.
XXVI. ENTIRE AGREEMENT
This Agreement and the documents referred to herein shall be construed
together and constitute the entire, full and complete agreement between
FRANCHISOR and FRANCHISEE concerning the subject matter hereof, and supersedes
all prior agreements, no other representation having induced FRANCHISEE to
execute this AGREEMENT, and there are no representations, inducements,
promises, or agreements, oral or otherwise, between the parties not embodied
herein, which are of any force or effect with reference to this Agreement or
otherwise. No amendment, change or variance from this Agreement shall be
binding on either party unless executed in writing.
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XXVII. SEVERABILITY
Each section, part, term and/or provision of this Agreement shall be
considered severable, and if, for any reason, any section, part, term and/or
provision herein is determined to be invalid and contrary to, or in conflict
with, any existing or future law or regulation, such shall not impair the
operation or affect the remaining portions, sections, parts, terms, and/or
provision of this Agreement, and the latter will continue to be given full
force and effect and bind the parties hereto; and said invalid sections, parts,
terms and/or provision shall be deemed not to be a part of this Agreement;
provided , however, that if FRANCHISOR determines that said finding of
illegality adversely affects the basic consideration of the Agreement,
FRANCHISOR, may at its option, terminate this Agreement.
XXVIII. APPLICABLE LAW
This Agreement was accepted in the State of Colorado, and shall be
interpreted and construed under the laws thereof, which laws shall prevail in
the event of any conflict of laws.
XXIX. ARBITRATION
Except as specifically otherwise provided in this Agreement, the
parties agree that any and all disputes between them, and any claim by either
party that cannot be amicably settled, shall be determined solely and
exclusively by arbitration in accordance with the rules of the American
Arbitration Association at its office nearest the home office of FRANCHISOR.
A. Each party shall select one arbitrator, and the two so
designated shall select a third arbitrator. If either party shall fail to
designate an arbitrator within seven (7) days after arbitration is requested,
or if the two arbitrators shall fail to select a third arbitrator within
fourteen (14) days after arbitration is requested, then an arbitrator shall be
selected by the American Arbitration Association upon application of either
party. Arbitration proceedings shall be conducted in accordance with the rules
then prevailing of the American Arbitration Association. Judgment upon an
award of the majority of the arbitrators shall be binding, and shall be entered
in a court of competent jurisdiction.
B. Nothing herein contained shall bar the right of either party
to obtain injunctive relief against threatened conduct that will cause loss or
damages under the usual equity rules, including the application rules for
obtaining preliminary injunction, provided an appropriate bond against damages
be provided.
XXX. FRANCHISEE
The term "FRANCHISEE" shall be deemed to include all persons who
succeed to the interest of the original FRANCHISEE by transfer or operation of
law in accordance with the provisions of this Agreement.
XXXI. CAVEAT
The success of the business venture contemplated to be undertaken by
FRANCHISEE by virtue of this Agreement is speculative and depends, to a large
extent, upon the ability of FRANCHISEE as an independent businessman, as well
as other factors. FRANCHISOR does not make any representation or warranty as
to the potential success of the business venture contemplated hereby.
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FRANCHISEE acknowledges that it has entered into this Agreement after
making an independent investigation of FRANCHISOR'S operations, and not upon
any representation as to profits which FRANCHISEE in particular might be
expected to realize, nor has anyone made any other representation which is not
expressly set forth herein, to induce FRANCHISEE to accept this franchise and
execute this Agreement.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed, sealed and delivered this Agreement in triplicate
the day and year first above written.
/ /
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FRANCHISEE Date
/ /
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FRANCHISEE Date
Accepted and approved,
FACTUAL DATA CORP
/ /
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X.X. Xxxxxx, President, FRANCHISOR Date
ATTEST: / /
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Date
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