[LETTERHEAD OF ECOMAT]
April 30, 1996
Xx. Xxxxx X. Xxxx, Managing Director
GLOBAL ACCESS CORPORATION
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Re: Franchise Rights
Dear Xx. Xxxx:
We are entering into this letter of agreement, as Ecofranchising, Inc.
("ecomat"). ecomat has agreed to grant you an option for the development of
ecomat laundry and cleaning facilities within the country of INDIA
("Territory"). ecomat has agreed for you to form an affiliate to be licensed,
as a master franchisee of ecomat, to use ecomat's trademarks and service marks
("Marks") and its franchise system, to develop Industrial Cleaning Facilities
("Cleaning Facilities") in the Territory.
This letter is intended to set our understanding of the major and
important terms of the Master Franchise Agreement.
1. Parties Territory; and Rights to be Granted. ecomat and an
affiliate you form as the Master Franchisee ("Master Franchisee") intend to
enter into a Master Franchise Agreement ("Agreement"). The Master Franchisee
will be a newly formed legal entity, an off-shore company located in a mutually
agreed upon country. ecomat will prepare the Agreement which will grant the
Master Franchisee the right in the Territory to (a) establish and operate
Cleaning Facilities, through affiliates of the Master Franchisee ("Affiliated
Franchisees"), and (b) license other unaffiliated parties ("Unaffiliated
Franchisees") to establish and operate Cleaning Facilities. (Affiliated
Franchisees and Unaffiliated Franchisees are referred to as "FRANCHISEES".)
Master Franchisee will also have the right to enter into a Development Agreement
with Franchisees to develop Clusters of Industrial Cleaning Facilities, as
defined in the Uniform Franchise Offering Circular, according to a development
schedule. ecomat reserves the right to approve each Franchisee or Developer, and
such approval will not be unreasonably withheld. An Affiliate is any legal
entity controlling, controlled by, or under common control with, the Master
Franchisee. Terms of the Franchise Agreement and Development Agreement will be
based on ecomat's U.S. Agreements.
2. Manual: Training: Site Selection.ecomat will loan to the Master
Franchisee, the ecomat Manual used in the United States; Master Franchisee will
translate and adapt the Manual for use in the Territory. ecomat will furnish
training for up to six (6) employees of Master Franchisee in the United States,
and such employees of Affiliated Franchisees as ecomat designates, at no
charge.
Training of any additional employees of Master Franchisee or any
Affiliated Franchisee shall be at the then-current rate established for such
training in the Manual. ecomat shall require training of Master Franchisee's
employees in the United States until ecomat is satisfied that Master Franchisee
can furnish all such training. The Master Franchisee and franchisee will bear
all expenses related to the training of their employees in the United States.
ecomat reserves the right to approve the site for each Industrial Cleaning
Facility, based on such information as Master Franchisee furnishes to ecomat at
its request, and reserves the right to inspect each site prior to such
approval. Further, ecomat agrees that such approval shall not be unreasonably
withheld. Each time ecomat elects to exercise this right, they agree to send a
trained representative who is authorized to make such
Xxxx, GLOBAL ACCESS CORP., April 30, 1996
approval to inspect the site within ten(10) days of notification. Costs for
such approval trips will be at ecomat's sole expense.
3. ecomat In-Country Assistance. Within the first 6 months after the
date of the Agreement, ecomat will furnish to Master Franchisee in-country
assistance for a minimum of 21 days, which may not be consecutive, at Master
Franchisee's sole cost and expense. After the first 6 months from the
Agreement, and for each subsequent twelve month period thereafter (upon Master
Franchisee's request), ecomat will furnish a management person at least 5
work-days at Master Franchisee's expense. Any such additional assistance
provided thereafter will be at the rate described in the ecomat operations
manual ("Manual") plus expenses. ecomat will pay the salary and Master
Franchisee will pay the reasonable living and travel expenses of ecomat's
employees as described above.
4. Territory: Development Schedule/Term/Exclusivity. The Territory
will consist of the country of INDIA. 60 Industrial Cleaning Facilities shall
be opened and operating, either by Affiliated Franchisees or Unaffiliated
Franchisees. Affiliated Franchisees only shall have the right to open the first
two (2) Industrial Cleaning Facilities within the first year of the Agreement.
Thereafter, Industrial Cleaning Facilities shall be opened and operated by
either Affiliated Franchisees or Unaffiliated Franchisees according to the
following minimum development schedule which lists the cumulative total number
of Facilities to be open and operating at the end of each year.
--------------------------- ------- ------ ------- ------- ------- -----------
Year Year Year Year Year Country
1 2 3 4 5 Total
--------------------------- ------- ------ ------- ------- ------- -----------
Industrial Cleaning 2 4 18 18 18 60
Facilities
--------------------------- ------- ------ ------- ------- ------- -----------
--------------------------- ------- ------ ------- ------- ------- -----------
Cumulative Total 2 6 24 42 60 60
--------------------------- ------- ------ ------- ------- ------- -----------
The Agreement will end when the last Franchise Agreement executed
pursuant to the development schedule expires or terminates. Each Franchise
Agreement shall consist of an initial term of ten years and 3 renewal terms of
5 years each.
ecomat will not establish or operate, nor license any other party to
establish or operate ecomat Cleaning Facilities in the territory until the end
of the Development Schedule as long as Master Franchisee is in compliance with
the development schedule.
Thirty-six months after the Agreement ecomat shall have the right to
repurchase the franchise rights in the Territory if Master Franchisee has not
met the Development Schedule by subtracting a dollar amount as credit from the
original franchise fee paid. This number will be developed by multiplying the
master franchisee fee by a fraction, the numerator of which will be the number
of units opened and operating and the denominator of which will be the total
number of units under the agreement in the table above.
5. Fee. The fees that the Master Franchisee will be required to pay
ecomat are:
(a) a Ten Dollar $10 (US) deposit, receipt of which is hereby
acknowledged. This fee is non-refundable. The deposit shall be credited to the
master franchise fee payable under 5(b)(i), below.
(b) Under the Agreement:
i) a non-refundable Master Franchise Fee of Sixty
Thousand Dollars $60,000 (US) (with a credit for the deposit), which Master
Franchisee will pay to ecomat upon execution of the Agreement
ii) an ongoing, monthly royalty fee in the amount of
twenty-five percent (25%) of the Master Franchisee's gross receipts consisting
of revenue from those Industrial Cleaning Facilities operated by the Affiliated
Franchisees in the Territory including:
a) any franchise fees charged to each
Unaffiliated Franchisee for any Industrial Cleaning Facility opened,
b) any Development Fees charged to each
Unaffiliated Developers,
c) any and all royalties collected from
Unaffiliated Franchisees.
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Xxxx, GLOBAL ACCESS CORP., April 30, 1996
iii) there will be no initial franchise fee payable
to ecomat for Cleaning Facilities established by Affiliated Franchisees and
thus not included in the Gross Revenue calculation.
iv) Affiliated Franchisees and Unaffiliated
Franchisees must expend a minimum of three percent (3%) of Gross Sales of each
Cleaning Facility on local advertising. ecomat reserves the right to require
the Master Franchisee to pay ecomat a mutually agreed upon share of advertising
costs incurred in using the Internet or other electronic media in the Territory
in the future.
v) All fees will be paid net any withholding taxes
imposed by any country in the Territory.
6. Marks. ecomat will apply for trademark protection for the ecomat
mark(s) in INDIA. You and your affiliates agree:
(a) not to seek to register any trademark or service mark
using the words "ecomat" or any ecomat logos in the Territory or any other
country at any time, and
(b) to assign ecomat any applications for such marks which
may have been made prior to execution of this letter.
7. Advertising/Software/Equipment. ecomat reserves the right to
approve all advertising campaigns. Master Franchisee will have the right to
establish advertising cooperatives within the Territory. Master Franchisee and
Franchisees must use ecomat's computer software. All cleaning equipment used
must be in accordance with ecomat's standards and specifications.
8. Feasibility Study and Timing. Master Xxxxxxxxxx agrees to use his
best efforts to prepare, within 150 days from the date of this letter, a
feasibility study for the business contemplated hereunder and to provide a copy
of the study to ecomat promptly upon its completion. ecomat and the Master
Franchisee agree to use their best efforts to execute a Master Franchise
Agreement within 180 days of the date of this letter and at that date, this
exclusive option will expire.
Kindly indicate your agreement to the terms of this letter
below. Please sign both copies and return one to us.
/s/ Xxxxx Xxxxxx /s/ Xxxxx X. Xxxx
------------------------------------- -------------------------------------
Xxxxx Xxxxxx date Xxxxx X. Xxxx date
Ecofranchising, Inc. GLOBAL ACCESS CORPORATION
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