Superior Carpet Care Franchise Agreementrevised 09/05/2002
SUPERIOR CARPET CARE
FRANCHISE AGREEMENT
To simplify the language of this Agreement Franchisor means
Superior Carpet Care Franchise Systems, Inc., the "Franchisor".
"You" means the person, corporation, partnership or other entity
who is buying the franchise, the Franchisee. If a corporation,
partnership or other entity is the Franchisee, "You" includes the
Franchisee's owners.
This Franchise Agreement is entered into between Superior
Carpet Care Franchise Systems, Inc., a Colorado corporation,
whose principal address is 0000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxx 00000, and you, the Franchisee as designated below;
A. If the Franchisee is an individual,
Xxxxxx X. and Xxxxxxx X. Xxxx with his or her
current residence at,
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000;xx
B. If the Franchisee is a partnership,
___________________________________________ whose
partners names and addresses are,
___________________________________________
___________________________________________
with its principal place of business located at,
___________________________________________
___________________________________________and which
partnership agreement is attached, certified by a
partner as being a true and complete copy of the
partnership agreement; or
C. If the Franchisee is a corporation
__________________________________________ a corporation
organized under the laws of the State
of___________________, and duly
qualified to do business in the State of
___________________,which corporation has its principal
place of business located at
_________________________________________
_________________________________________ and which has
attached its Certificate of Incorporation, Certificate
of Good Standing, Certificate of Qualification to do
business within the
State of _______________________, if applicable, and
its Corporate Resolution authorizing the Corporation to
enter into this Franchise Agreement.
LET ALL PARTIES KNOW
Franchisor owns a unique system for opening and operating a
business designed to provide residential and commercial carpet
and upholsery cleaning services through a uniform system which
has high standards of service, uses quality products, operates
under the business format created and developed by Franchisor and
which is known as the Superior Carpet Care System (the "System");
The distinguishing characteristics of the System include the
name "Superior Carpet Care" distinctive interior and exterior
designs, confidential operating procedures, standards and
specifications for equipment, services, products and, management
and marketing programs. All of these distinguishing
characteristics may be changed, improved, and further developed
by Franchisor from time to time. They are known as "Trade
Secrets" and are designated by and identified with the marks
described in this Agreement;
Franchisor identifies Superior Carpet Care by means of
certain trade names, service marks, logos, emblems, and indicia
of origin, including the trademark "Superior Carpet Care" and
other trade names and service marks which are now, or may be in
the future, designated by Franchisor in writing for use in
connection with the System (the "Marks");
Franchisor continues to use, develop and control the use of
the Marks in order to identify for the public the source of
services and products marketed under the System, and which
represent the System's high standards of quality, cleanliness,
appearance and service;
You recognize the benefits to be derived from being
identified with the System. You also recognize the value of the
Marks and the continued uniformity of image to you, Franchisor,
and other franchisees of Franchisor. You understand the
importance to the System of Franchisor's high and uniform
standards of quality, cleanliness, appearance and service, and
further recognize the necessity of opening and operating your
Superior Carpet Care outlet (the "Outlet") in conformity with the
System;
You recognize that in order to enhance the value of the
System and goodwill associated with it, this Agreement places
detailed obligations on you, including strict adherence to
Franchisor's reasonable present and future requirements regarding
the types of services offered, advertising, physical facilities,
operational techniques, and related matters; and
You wish to be assisted, trained, and franchised to operate
an Outlet pursuant to the provisions and at the location within
the territory specified in this Agreement. You have also had an
adequate opportunity to be thoroughly advised of the terms and
conditions of this Agreement by counsel of your own choosing.
THEREFORE, you and Franchisor, intending to be legally bound
and in consideration of mutual agreements, covenants and promises
contained in this Agreement, agree as follows:
SECTION 1 - GRANT OF LICENSE
1.1 Subject to the limitations contained in this Agreement,
Franchisor grants to you, during the License Term and any
extensions, the right and license (the "License") to:
A. Operate an Outlet upon the terms and conditions of this
Agreement, in 1 territorial area and at 1 location described
in Exhibit A;
B. Use the Marks at the Outlet; and
C. Offer and market at the Outlet only Franchisor's
approved services and products.
1.2 The License does not include the right to sell the products
to any vendor who would in turn sell to consumers, the right to
sell any product from any place except the Outlet, or the right
to perform any service at any place other than the Outlet.
1.3 During the License Term and any extensions, Franchisor will
not use or license others to use any of the Marks licensed to you
in connection with the operation of any other Outlet within your
Territory described in Exhibit A.
SECTION 2 - LICENSE TERM AND EXTENSION PERIODS
This Agreement and the License granted will continue for a period
of 10 years. This 10-year period, will begin on the date this
Agreement is executed by Franchisor and is subject to prior
termination in accordance with the provisions of this Agreement.
When the original 10 year period expires and the end of each
renewal period contemplated, you will have the option to renew
your Franchise License for successive periods of 10 years each.
Franchisor may refuse to renew this Agreement and License if
you have:
A. Failed to remedy any breach of this Agreement specified
by Franchisor in a written notice to you; or
B. Committed 2 or more breaches of this Agreement of a
substantial nature in the preceding 24 months prior to
extension.
Franchisor may also refuse to renew this Agreement and
License if you are not current in payment obligations to
Franchisor and to all of your trade creditors and your business
location landlord or mortgage holder (if any).
You will execute a Renewal Franchise Agreement and all other
legal agreements in the form then being used by Franchisor in
granting new franchises. These agreements may include without
limitation higher Royalty Fees and higher Advertising Fees.
There will not be, however, another Initial Franchise Fee charged
in the renewal of the Franchise Agreement. Failure by you to
execute these renewal agreements within 30 days after their
delivery to you will be deemed an election by you not to renew
the Superior Carpet Care Franchise.
As additional conditions to renewal, you will:
C. Execute a general release of all claims you may have
against Franchisor, its officers, directors, shareholders,
agents, and employees, whether in their corporate and/or
individual capacities. This release will include all claims
arising under any federal, state, or local law, rule, or
ordinance arising out of or concerning this Agreement and
will be in a form satisfactory to Franchisor;
D. Make capital expenditures as may be reasonably required
to renovate and modernize the Outlet and its signs and
equipment so as to reflect the then-current image of the
Outlets. If renovation and modernization of the Outlet is
not possible or feasible, you will relocate the Outlet
within your exclusive Territory after approval by Franchisor
in writing and in accordance with Franchisor's relocation
procedures.
The renewal fee is $5,000 and is due and payable to
Franchisor at the time of signing.
You and Franchisor agree to give each other not less than 6
months prior written notice of an election not to renew this
Agreement and License.
SECTION 3 - INITIAL FRANCHISE FEE
3.1 Upon executing this Agreement, you will pay to Franchisor
the $20,000 Initial Franchise Fee. The Franchisor will
indemnify, hold you harmless and will reimburse you for your
liability and reasonable costs in connection with defending the
Franchisor's trademark.
The Initial Franchise Fee is non-refundable, in whole or in part,
under any circumstance.
SECTION 4 - CONTINUING ROYALTIES
4.1 On or before the 10th day of each month, you will, without
notice from Franchisor, pay Franchisor a Royalty Fee in the
amount of 8% of Gross Revenues of the preceding month or partial
month. Gross Revenues is defined in Section 6.
4.2 Each Royalty Fee payment will be accompanied by a statement
of the previous month's Gross Revenues on a form approved by
Franchisor.
4.3 If you are unable to operate from the Outlet due to damage
or loss to the Outlet caused or created by a casualty, act of
God, condemnation, or other condition over which you have no
control, then the Royalty Fee will be waived for a period no
greater than 1 year commencing with the month in which the damage
or loss occurs.
SECTION 5 - ADVERTISING AND PROMOTION
5.1 You will advertise and promote the opening of the Outlet at
your own expense, however Franchisor will recommend the type,
manner, and time period. Minimum required advertising and
promotional expense just prior to and during the first 3 months
of operation will be $5,000.00.
5.2 After the first 3 months of operation and during the
remaining License Term, you will spend a minimum of 4% of the
Gross Revenues for the preceding month or portion thereof for
advertising and promotion. This advertising expense is called
the "Minimum Individual Advertising Expense."
During the License Term you will furnish Franchisor an
accounting of your previous month's expenditures for advertising
and promotion on a form approved by Franchisor.
Franchisor will make available to you all advertising and
promotion material for the Outlet which are used by Franchisor,
and other franchisees. You will receive one sample of each type
of advertising and promotion material at no charge. If you want
additional copies you must pay duplication costs. You may
develop advertising materials for your own use, at your own cost.
Franchisor must approve or disapprove your advertising materials
in writing within 10 working days. If Franchisor takes no
action, you may use the advertising material submitted.
At a point in time when there are 3 or more Superior Carpet
Care franchises in a "Local Media Area," a "Local Advertising
Cooperative" will be established. The "Local Media Area" will
mean the area covered by primary advertising media (television,
radio and print) as designated by Franchisor. You must
participate in a Local Advertising Cooperative if it now exists
or when it is established in the Local Media Area where your
business is located.
Your contribution to the Local Advertising Cooperative will
be a minimum of 4% of the Gross Revenues for the preceding month
or portion thereof. When you are participating in a Local
Advertising Cooperative you are not required to expend a minimum
of 4% of your Gross Revenues for the preceding month on the
Minimum Individual Advertising Expense. During the License Term
you will furnish Franchisor an accounting of your previous
month's contribution to the Local Advertising Cooperative on a
form approved by Franchisor.
Franchisor will make available to the Local Advertising
Cooperative all advertising and promotional material for the
Outlets which are used by Franchisor, and other Local Advertising
Cooperatives and franchisees. The Local Advertising Cooperative
will receive one sample of each type of advertising and
promotional material at no charge. If the Local Advertising
Cooperative wants additional copies it must pay duplication
costs. The Local Advertising Cooperative may develop advertising
materials for its own use, at its own cost. Franchisor must
approve or disapprove the advertising materials in writing within
10 working days. If Franchisor takes no action, the Local
Advertising Cooperative may use the advertising material
submitted.
Each Local Advertising Cooperative must adopt written
governing documents. Each Local Advertising Cooperative will
determine its own voting procedures; however, each Company-Outlet
(owned by Franchisor) in a Local Media Area, if any, will be
entitled to one vote in the Local Advertising Cooperative and
will contribute to the Local Advertising Cooperative in the same
manner as you contribute. The members and their elected officers
will be responsible for the administration of the Local
Advertising Cooperative. Local Advertising Cooperatives will
prepare quarterly and annual financial statements. The annual
financial statement must be prepared by an independent Certified
Public Accountant at the Local Advertising Cooperative's cost and
be made available to you and all other franchisees in the Local
Advertising Cooperative.
At some future date, Franchisor may form a national
advertising fund (the "National Fund"). When a National Fund is
in existence, on or before the 10th day of each month, and in
addition to your Minimum Individual Advertising Expense or
contribution to the Local Advertising Cooperative obligation, you
will remit 2% of the Gross Revenues for the preceding month or
portion thereof to Franchisor.
No action taken by you or any Local Advertising Cooperative
will diminish your obligations to pay advertising fees to the
National Fund. Advertising materials and services will be
provided to you through the National Fund. Franchisor may
occasionally provide for placement of advertising on behalf of
the entire System, including franchisees, through the National
Fund. Franchisor reserves the right to use advertising fees from
the National Fund to place advertising in national media
(including broadcast, print or other media) in the future.
National advertising, public relations, and promotions will
be started and continued by Franchisor, when, in Franchisor's
sole discretion, Franchisor deems that it has accumulated
sufficient moneys for that purpose. Advertising funds will be
used to promote the products and/or services sold by the
franchisees and are not used to sell additional franchises. The
National Fund will be administered by Franchisor's accounting and
marketing personnel. The National Fund will be a non-profit
corporation which collects advertising fees from all franchisees.
All Company-owned Outlets of Superior Carpet Care Franchise
Systems, Inc. will contribute to the National Fund on the same
basis as franchisees. All payments to the National Fund must be
spent on advertising, promotion and marketing of goods and
services provided by Franchisor. An annual audited financial
statement of the National Fund, at the expense of the National
Fund, will be available to you upon request.
The Advertising Fee will be expended by Franchisor at its
discretion for advertising and promotion in both your market area
and on a national basis, except for that portion used for the
production of advertising and promotion.
5.3 You will install and, during the term of this Agreement and
License, will maintain an outdoor sign in a prominent location in
accordance with Franchisor's sign specifications or as approved
in writing by Franchisor, unless prohibited from doing so by
applicable laws and regulations. You will use your best efforts
to obtain any permit or variance required in order to allow the
installation and maintenance of an outdoor sign meeting
Franchisor's specifications so long as it does not impose any
undue economic burden on you.
5.4 Franchisor will be developing a franchise website that will
promote the products and services of the Superior Carpet Care
business. Each franchisee will have its own e-mail address and
hyperlink to promote its own individual Superior Carpet Care
business. A monthly fee of TWENTY-FIVE ($25.00) DOLLARS will be
assessed to each franchisee to be paid along with the monthly
fees. Franchisor may at its sole discretion increase this
monthly fee, but not to exceed $50.00 per month.
SECTION 6 - GROSS REVENUES
6.1 No mention of services or products in this Section is
intended to mean or imply that such services or products are
approved for sale at the Outlet by Franchisor.
6.2 For purposes of this Agreement, Gross Revenues includes the
total of all receipts derived from services performed and
products sold at the Outlet, whether the receipts are evidenced
by cash, credit, checks, gift certificates, scrip, coupons (see
Subsection 6.3 B.), services, property or other means of
exchange.
6.3 Gross Revenues will not include:
A. Sales taxes or other taxes measured on the basis of the
gross revenues of the business imposed by governmental
authorities directly on sales and collected from customers,
provided the taxes are added to the selling price and are in
fact paid by you to the appropriate governmental
authorities;
B. Promotional or discount coupons to the extent that you
realize no revenue;
C. Tips collected and paid by you to employees and service
charges paid by you for credit card receipts; and
D. Employee receipt of service or products, if free, or
any portion not paid for by an employee.
Cash refunded and credit given to customers, and receivables
uncollectible from customers, will be deducted in computing Gross
Revenues to the extent that it was previously included in Gross
Revenues on which a Royalty Fee was paid.
6.4 Gross Revenues will be deemed received by you at the time
the services or products from which they were derived are
delivered or rendered or at the time the relevant sale takes
place, whichever occurs first. Gross Revenues consisting of
property or services will be valued at the retail prices
applicable and in effect at the time they are received.
SECTION 7 - RECORDS AND AUDITS - LATE PAYMENT CHARGE
7.1 You will prepare on a current basis, complete and accurate
records concerning all financial, marketing and other operating
aspects of the business conducted under this Agreement. You will
maintain an accounting system which accurately reflects all
operational aspects of the Outlet including uniform reports as
may be required by Franchisor. Your records will include tax
returns, daily reports, statements of Gross Revenues (to be
prepared each month for the preceding month), profit and loss
statements (to be prepared at least quarterly by an independent
Certified Public Accountant) and balance sheets (to be prepared
at least annually by an independent Certified Public Accountant).
You will also submit to Franchisor current financial statements
and other reports as Franchisor may reasonably request to
evaluate or compile research data on any operational aspect of
the Outlet. All financial data with respect to your business
that is required will be for Franchisor's own use, will be kept
confidential and will not be made available to other franchisees,
prospective franchisees, or other third parties except to the
extent that Franchisor decides, or is required to, make an
"earnings claim" under the franchise disclosure laws. The
records required under this Subsection pertain only to your
operation of the Outlet. Franchisor has no right to inspect,
audit or copy the records of any unrelated business activity you
may have.
7.2 From the date you and Franchisor sign this Agreement until 3
years after the end of the term of this Agreement including
renewals, Franchisor or our authorized agent will have the right
to request, receive, inspect and audit any of the records
referred to above wherever they may be located. Franchisor
agrees to do inspections and audits at reasonable times. You
agree to keep all records and reports for 6 years from the date
they originated. Should any inspection or audit disclose a
deficiency in the payment of any Royalty, Advertising Fee or
other amounts required to be paid under this agreement, you will
immediately pay the deficiency to Franchisor, provided the
deficiency exceeds $50.00, without prejudice or any other remedy
of Franchisor under this Agreement. In addition, if the
deficiency for any audit period equals or exceeds 2% of the
correct amount of any Royalty, Advertising Fee or other amounts
due, you will also immediately pay to Franchisor the entire cost
of the inspection or audit including travel, lodging, meals,
salaries and other expenses of the inspecting or auditing
personnel. For the purposes of this Subsection, an audit period
will be each fiscal year. Should the audit disclose an
overpayment of any Royalty, Advertising Fees or other amounts
due, Franchisor will promptly pay the amount of the overpayment
to you provided that the amount exceeds $50.00.
7.3 To encourage prompt payment and to cover the costs and
expenses involved in handling and processing late payments, you
will also pay, upon demand, a late payment charge equal to the
lesser of; (i) the maximum rate of interest due on open accounts;
or (ii) 1 1/2% per month, on all payments due to Franchisor
during the period of time said payments are due and unpaid but
not more than the highest rate permitted by law. Each failure to
pay Royalty Fees, Advertising Fees and other amounts payable to
Franchisor when due is a material breach of this Agreement.
SECTION 8 - SERVICES AND ASSISTANCE PROVIDED BY THE FRANCHISOR
8.1 The Initial Franchise Fee and Royalty Fees are paid for the
License, which includes the use of the Marks of Franchisor and
for certain services rendered by Franchisor.
8.2 Franchisor will offer you initial and continuing services as
Franchisor deems necessary or advisable in furthering your
franchised business and the business of the System as a whole and
in connection with protecting the Marks and goodwill of
Franchisor. Failure of Franchisor to provide any particular
service, either initial or continuing, will not excuse you from
paying the Initial Franchise Fee or the continuing Royalty Fees.
8.3 Currently, initial and continuing services provided by
Franchisor are:
A. Designation of your exclusive Territory as stipulated
in Sect.1.
B. Assisting you in finding and negotiating the lease or
purchase of a location for your Outlet within your exclusive
Territory if requested by you to do so as stipulated in
Subsection 9.1.
C. Furnish you with specifications for all initial and
replacement equipment, inventory and supplies required for
the operation of your Outlet as stipulated Subsection 9.1.
D. Providing you and 1 of your employees with an initial
training program. You or your designated Outlet manager
will attend and satisfactorily complete the initial training
program prior to opening the franchised Outlet. The initial
training program will not commence prior to the start of
construction of your Outlet and will be conducted
approximately 30 days prior to the opening of your Outlet.
You will be responsible for personal traveling and living
expenses incurred by yourself or the Outlet manager and that of
any of your employees that participate in the training program.
The initial training program will be held at Franchisor's
facilities in Littleton, Colorado and will be conducted over a 5
day period. Training will consist of a discussion of the System,
techniques, procedures, and methods of operation, explanation of
the accounting system, inventory control, credit and other
financial management techniques, job descriptions and hiring
practices, advertising, sales, promotion and other marketing
plans, customer relations, instructions on quality standards and
practical experience in the operation of a Superior Carpet Care
franchise.
The initial training program for your staff will be held at
your Outlet. Training is approximately 3 days in duration and is
conducted immediately prior to and concurrently with the opening
of your Outlet. The content of the on site staff training
consists of operational techniques, equipment operation, sales
training, and thorough indoctrination in the System.
Each week for the first 90 days after you open your
business, Franchisor will telephone to discuss your operational
problems.
Franchisor will hold annual conferences to discuss sales
techniques, personnel training, bookkeeping, accounting,
inventory control, performance standards, advertising programs
and merchandising procedures. There is no conference fee, but
you must pay all your travel and living expenses. These elective
conferences are held at our Littleton, Colorado headquarters or
at a location chosen by a majority vote of all franchisees.
E. Assistance with respect to pre-opening and opening
activities will be conducted as reasonably determined by
Franchisor and just prior to and including the first week of
operation of your Outlet.
F. Formulation of advertising and promotional programs as
further stipulated in Section 5.
G. Franchisor will engage in the development of new
products and service methods, as deemed beneficial in the
sole discretion of Franchisor for the successful operation
of the System. You will be informed of any new product or
service methods.
H. You will be loaned 1 copy of Franchisor's Confidential
Manual(s) containing mandatory and suggested specifications,
standards, operating procedures and rules prescribed from
time to time by Franchisor as further stipulated in Section
11.
SECTION 9 - LOCATION OF OUTLET;
CONSTRUCTION AND OPENING FOR BUSINESS; LEASE OR MORTGAGE
9.1 If no location is specified within your exclusive Territory
for your Outlet in Exhibit A, you, at your own cost and expense,
will be solely responsible for locating and designating a
location and for constructing and equipping the Outlet at the
location in accordance with Franchisor's standards and general
specifications. The location will be submitted in advance to
Franchisor for acceptance, which will be deemed given if
Franchisor does not object in writing specifying our objections
within 15 days. The location will be submitted for Franchisor's
acceptance within 6 months of this Agreement date, or this
Agreement will terminate and all fees will be retained by
Franchisor as compensation for our services rendered to you. You
will provide Franchisor with the information Franchisor may
reasonably request in connection with our evaluation of the
location, including the cost of acquisition, development and
construction and, if the property is to be leased by you, a copy
of the lease. Any location inspection will be made solely at the
option of Franchisor and will not be deemed to impose any
responsibility on Franchisor for the construction of the Outlet.
Upon designation and acceptance, the location will be deemed to
be the location specified in Exhibit A as if originally
incorporated in Exhibit A.
9.2 You and Franchisor acknowledge that the location of the
Outlet is a major factor in the Outlet's potential for success
and Franchisor may reject any location in our sole discretion,
but Franchisor will not unreasonably withhold its consent to any
location. The Franchisor makes no representations or warranties
with respect to the availability of appropriate locations or the
suitability or potential of locations which it approves.
9.3 If requested to do so, Franchisor will assist you in finding
and negotiating the lease or purchase of a location for an Outlet
within 60 days of the execution of this Agreement. There are no
specific methods used by Franchisor to select the location for
your business. Franchisor assists in the location selection by
ascertaining population density, traffic patterns and proximity
of the proposed location to any other Superior Carpet Care
locations. Franchisor does not hold itself out as a real estate
expert, does not undertake to perform any analysis of any
location, and does not undertake to advise as to the suitability
of any location. Franchisor's approval of a location merely
reflects belief that the proposed location appears to be suitable
for the development of an Outlet.
9.4 You agree to construct (or renovate) and equip the Outlet at
your expense in a good, workmanlike manner on or before the
Construction Completion Date. The Construction Completion Date
will be the earlier of: (a) 3 months from the date of execution
of a lease the Outlet; or (b) 6 months of this Agreement date.
The construction (or renovation) will conform with all applicable
requirements of local authorities and will be in accordance with
the standards and general specifications of Franchisor. You
acknowledge that the final plans and specifications for the
Outlet will be prepared by an architect of your choosing and at
your expense. All plans and specifications or modifications
proposed by you will be submitted to Franchisor prior to
construction and will be modified as reasonably requested by
Franchisor. Franchisor will have the right, but not the
obligation, to inspect the construction to determine if the
construction conforms to Franchisor's standards and general
specifications.
9.5 You will have discharged, released of record or fully
bonded, any construction liens or other liens that may be
recorded or perfected which may be attached to the Outlet as a
result of work done by or for you. In the event that the Outlet
is not open for business on or before the Construction Completion
Date (other than as a result of acts of God, unforeseen
unavailability of raw materials or supplies, inability or delay
in obtaining necessary equipment or approvals, permits or
licenses, labor disputes or acts or omissions of Franchisor),
Franchisor may terminate this Agreement with 30 days' prior
written notice unless the Outlet will open for business within
the 30 day period.
9.6 No Outlet may be opened until such time as Franchisor
reasonably agrees that all construction has been satisfactorily
completed, your managers (if any) and all employees have been
trained, the Outlet is ready for opening in all other respects
(including signboards, inventory, uniforms, fixtures and
equipment), certificates of insurance have been furnished in
accordance with Section 14, you are in compliance with all the
terms of this Agreement, including those set forth in Section 12,
and all items contained in Franchisor's Opening Checklist
(contained in the Confidential Operating Manual) have been
completed to Franchisor's satisfaction. You acknowledge that any
opening for business prior to satisfaction of all of the above
conditions, will be seriously detrimental to the financial
prospects of the Outlet and will cause irreparable damage to
Franchisor's goodwill and reputation.
9.7 If you lease the Outlet, the lease will be subject to
Franchisor's reasonable approval and will have a term, or have
options to renew, which in total are equal to or greater than the
License Term and will provide that;
A. On termination of this Agreement, for any reason
provided for in this Agreement, Franchisor or its designee
will have the option for 30 days to assume your remaining
lease obligations without accruing any liability regarding
the lease prior to the effective date of any assignment, or
Franchisor will have the right to execute a new lease for
the remaining term on the same terms and conditions;
B. Copies of all notices of default under the lease will
be sent to Franchisor;
C. In the event of your default under the lease,
Franchisor or its designee will have an opportunity to cure
such default and assume your remaining obligations under the
lease, but will not have any obligation to do so; and
D. All signs, advertising, logos or other forms or
insignia pertaining to the System be removed from the
premises demised under the lease in the event neither you,
Franchisor nor its designee is the tenant under the lease
upon termination of this Agreement.
9.8 If you own the Outlet and the Outlet is (or is to be)
mortgaged, the mortgage will be subject to Franchisor's
reasonable approval and will provide that:
A. On termination of this Agreement, for any reason
provided for in this Agreement, Franchisor or its designee
will have the option for 30 days to assume your mortgage
obligations without accruing any liability regarding the
mortgage prior to the effective date of any assignment, or
Franchisor will have the right to execute a new mortgage for
the remaining term on the same terms and conditions;
B. Copies of all notices of default under the mortgage
will be sent to Franchisor;
C. In the event of your default under the mortgage,
Franchisor or its designee will have an opportunity to cure
such default and assume your remaining obligations under the
mortgage, but will not have any obligation to do so; and
D. All signs, advertising, logos or other forms or
insignia pertaining to the Superior Carpet Care System be
removed from the premises demised under the mortgage in the
event neither you, Franchisor nor its designee is the owner
of the property mortgaged or upon termination of this
Agreement.
SECTION 10 - MAINTENANCE AND UPGRADING OF OUTLET
10.1 Subject to the terms of this Section and particularly
Subsection 10.2, you will at all times comply with all of
Franchisor's standards, specifications, processes, procedures,
requirements and instructions regarding the Outlet's physical
facilities, including the layout of furnishings and fixtures, at
which you are permitted by Franchisor to render, store, handle,
or transport approved services or products. You will maintain
the Outlet and any parking areas in good and safe condition.
10.2 You will remodel or upgrade the Outlet at your cost in
accordance with Franchisor's standards and at our request at any
renewal of this Agreement. You will also pay the cost of adding
equipment and altering the Outlet for required services or
products which Franchisor requires you to market pursuant to
Subsection 12.5. YOU ACKNOWLEDGE THAT AN ADDITIONAL INVESTMENT
MAY BE REQUIRED RELATED TO THIS SUBSECTION.
10.3 Franchisor agrees that it will not require remodeling or
upgrading according to standards that exceed those applied to
other Outlets in the market nearest your Outlet. The Outlets in
the nearest market will be considered as a whole, and you may not
avoid your obligations under this Section by comparing your
Outlet to any single Outlet in the nearest market.
SECTION 11 - CONFIDENTIAL OPERATING MANUAL
11.1 You will acknowledge receipt of a copy of the Superior
Carpet Care Confidential Operating Manual (the "Manual"). The
Manual will at all times remain the sole property of Franchisor.
You agree to immediately return the Manual to Franchisor at the
expiration or sooner termination of this Agreement.
11.2 You will at all times treat the contents of the Manual as
confidential and will not copy or otherwise reproduce, in whole
or in part or in any way make the contents of the Manual
available to any person other than those persons employed by you
to whom disclosure is necessary to enable you to operate the
Outlet under the terms of this Agreement.
11.3 Franchisor may revise the Manual. The revisions presently
contemplated by Franchisor include changes with respect to:
A. Advertising and promotions;
B. Equipment and supplies;
C. Employee uniforms;
D. Internal and external design and layout of the Outlet;
E. Accounting and reporting systems and forms;
F. Insurance requirements;
G. Operating procedures;
H. Services; and
I. Products.
J. Website Price
11.4 You agree to operate the Outlet in accordance with the
Manual and to be responsible for assuring strict compliance with
the standards, specifications, requirements and instructions
presently set forth in the Manual and any subsequent amendments
and supplements. Failure to comply with the standards set forth
in the Manual will constitute a material breach of this
Agreement.
SECTION 12 - FRANCHISEE'S DUTIES AND OBLIGATIONS
12.1 You will, consistent with the terms of this Agreement,
diligently develop the business of the Outlet and use your best
efforts to market and promote the required services and products.
12.2 Subject to the terms of this Agreement, including
Subsections 10.2 and 11.4, during the License Term, you will
strictly comply with all present and future standards,
specifications, processes, procedures, requirements, and
instructions of Franchisor regarding the operation of the
business and you must comply with the following requirements:
A. You, or a fully trained and qualified operating
manager, must devote full time to the management and
operation of the Outlet.
B. You or your manager and certain key employees at the
Outlet must attend and complete all programs and seminars at
locations as Franchisor may reasonably require, and you will
pay all salary and other expenses of persons attending.
Franchisor will provide you or your operating manager and 1
employee with an initial training program. Attendance by
you or your operating manager (if any) is compulsory and
must be satisfactorily completed at least 4 weeks prior to
the opening of your Outlet.
C. Any additional required service or product introduced
into the System by Franchisor must be offered for sale on a
continuing basis at the Outlet at the time and in the manner
required by Franchisor.
D. No service and product, except approved services or
products, may be offered for sale at or from the Outlet.
E. Only signs, advertising and promotional material,
services, equipment, supplies, uniforms, furnishings, and
fixtures that meet Franchisor's standards and specifications
will be used at the Outlet.
F. All equipment, signs, products, supplies and other
items necessary to add new required services or products
must be acquired, installed and utilized, and the marketing
of new services and products must begin at the Outlet as
reasonably required by Franchisor.
G. Equipment, signs, services, products, supplies and
other items must be added, eliminated, substituted and
modified at the Outlet as soon as practicable in accordance
with changes in Franchisor's specifications and
requirements.
H. The Outlet and everything located at the Outlet must be
maintained in first-class condition and must be kept clean,
neat and sanitary. The Outlet must be adequately lighted
and operated in a clean, wholesome and sanitary manner
consistent with Franchisor's requirements. All maintenance,
repairs and replacements reasonably requested by Franchisor
or needed in connection with the Outlet must be promptly
made. All employees must be clean and neat in appearance.
I. No alterations of the Outlet materially affecting the
image of the Outlet may be made except at Franchisor's
request or approval, and any alterations must strictly
conform to specifications and requirements established or
approved by Franchisor.
J. The Outlet and its business must comply with all
applicable laws, ordinances, rules, regulations and other
requirements.
K. Advertising materials which are by Franchisor for use
by you may be used only in the manner and during the period
specified by Franchisor.
L. The Outlet must be open for business 5 days per week
(Monday thru Friday) from 8:00 a.m. until 5 p.m. during the
License Term (or such later time as may be permitted or such
earlier time as may be required by applicable licensing laws
and local conditions) or other hours reasonably approved by
Franchisor, except for Christmas Day, New Years Day, and
Thanksgiving Day, and days the Outlet is closed for repairs
pursuant to Section 16. Hours of operation must be posted.
M. The employees, the equipment and supplies, the
inventory and other items on hand at the Outlet, must be at
all times sufficient to efficiently meet the anticipated
volume of business.
N. All debts and taxes arising in connection with the
Outlet and its business, except those duly contested in a
bona fide dispute, must be paid when due including debts
payable to your landlord, Franchisor.
O. All dealing and transactions with customers and
suppliers must be fair and honest.
12.3 In prescribing standards, specifications, processes,
procedures, requirements, price quotes or instructions under
Subsection 12.2 or any other provision of this Agreement,
Franchisor will assist in local market research and provide
guidance in determining the prices charged by you for services or
products of any kind. Franchisor will not have control over the
day-to-day managerial operations of the Outlet. You are free to
establish your own prices.
12.4 Franchisor and our representatives will have the right
during business hours, to enter and inspect the Outlet and all
other facilities used for service or storage, sale and
transportation of any approved products. Franchisor and our
representatives will have the right to discuss with you or other
people you may designate, all matters that may pertain to
compliance with this Agreement and with Franchisor's standards,
specifications, requirements, instructions and procedures and to
take photographs of the Outlet. Franchisor and our
representatives will have the right to have any of Franchisor's
required services rendered by any employee at your Outlet. You
will in all respects cooperate with Franchisor's rights under
this Subsection provided that our exercise of these rights will
not unreasonably interfere with conduct of your business.
12.5 On advance notice of at least 3 months, Franchisor, in our
sole discretion may specify a new service or product as a
required service or product. The new service or product will not
be deemed a required service or product if you demonstrate to
Franchisor's reasonable satisfaction that:
A. A substantial capital improvement not contemplated by
this Agreement or in the Manual, is required, thereby
resulting in a material hardship to you; and
B. A material reduction in sales or profitability would
result therefrom.
12.6 Franchisor agrees not to require compliance with the
provisions of this Section to the extent that it does not require
such compliance by all Outlets, taken as a whole, operating in
the market nearest the Outlet.
12.7 You agree that during the License Term and for 3 years after
the expiration and termination of this Agreement that you will
supply to Franchisor your home address and telephone number which
Franchisor is required by law to include in its offering
circular.
12.8 Franchisor does not require that you personally supervise
the franchised business. The business must be directly
supervised on premises by a manager who has successfully
completed Franchisor's training program. The on premises manager
can not have an interest or business relationship with any of
Franchisor's business competitors. The manager need not have an
ownership interest in the corporate or partnership franchisee.
The manager must sign a written agreement to maintain
confidentiality of the trade secrets described in Section 15 and
to conform with the covenants not to compete described in Section
17.
SECTION 13 - PURCHASE OF EQUIPMENT, INVENTORY AND SUPPLIES
13.1 You will have the right to purchase directly from any
manufacturer or supplier the equipment and products required for
the operation of the Outlet. The names and addresses of
Franchisor's recommended manufactures and suppliers are in the
Manual.
13.2 The standards and specifications for equipment, supplies, or
other products required by Franchisor are in the Manual. You are
required to follow Franchisor's standards and specifications when
purchasing all equipment, supplies, or other products required
for the operation of the Outlet.
13.3 If you desire to purchase the required equipment, supplies,
or other products from a manufacturer or supplier not approved by
Franchisor, you will provide Franchisor with all information
regarding the manufacturer or supplier you wish approved which is
reasonably requested by Franchisor. On Franchisor's request, the
manufacturer or supplier may be required to provide Franchisor
with samples of the equipment, products, or other supplies you
wish to purchase. Any tests required by Franchisor to determine
whether the equipment, products, or other supplies meet our
standards and specifications will be performed by or under the
direction of Franchisor but at the cost of the manufacturer or
supplier you wish approved. On the completion of any tests,
Franchisor will determine whether the goods are of sufficient
quality, and whether the manufacturer or supplier possesses
adequate capacity and facilities to supply your needs in a
reliable manner. Franchisor will then promptly advise you and
the manufacturer or supplier as to approval and of the basis for
our decision. Franchisor will not be required to approve sources
of equipment, products, or other supplies which do not meet our
standards and specifications or which constitute or embody trade
secrets of Franchisor.
13.4 Franchisor may review the quality of the equipment,
products, and other supplies produced or supplied by approved
manufacturers or suppliers (and their capacity and facilities),
and will have the right to monitor the production, use and
ultimate disposition of items bearing the Marks. On the basis of
any review and monitoring, Franchisor may remove manufacturers or
suppliers from the list of approved sources. In this event,
Franchisor will promptly advise you.
SECTION 14 - INSURANCE AND INDEMNIFICATION
14.1 You will, upon commencement of the License Term, purchase
and at all times maintain in full force and effect:
A. Workers' compensation insurance in amounts prescribed
by law;
B. Fire and lightning, extended coverage, theft, vandalism
and malicious mischief, flood (if the Outlet is in a
Designated Flood Hazard Area), and sprinkler leakage
insurance on the Outlet and all fixtures, equipment,
supplies and other property used in the operation of the
Outlet, for not less than 80% of the cash value of the same,
except that an appropriate deductible clause will be
permitted;
C. Comprehensive general liability insurance, bonding and
product liability insurance coverage in such amounts and
upon such terms as may from time to time be customary for
carpet cleaning businesses located in your Territory, but
not less than $1,000,000.00, insuring both you and
Franchisor against all claims, suits, obligations,
liabilities, and damage, including attorneys' fees, based
upon or arising out of actual or alleged personal injuries
or property damage relating to the use or condition of the
Outlet; and,
D. Such additional insurance as may be required by the
terms of any lease or mortgage for the Outlet.
The liability insurance afforded by the policy or policies
will not be limited in any way by reason of any insurance that
may be maintained by Franchisor.
14.2 All policies of insurance required under this Section will
be with responsible companies qualified to do business and in
good standing in the state where the Outlet is located, and will
be in a form reasonably satisfactory to Franchisor. Prior to
opening for business you will furnish to Franchisor certificates
issued by each of your insurers indicating that all premiums due
have been paid, that all required insurance is in full force and
effect and that the insurance will not be terminated or changed
without at least 30 days' prior written notice from the insurer
to Franchisor. New certificates evidencing renewal of insurance
will be furnished at least 30 days prior to the date of
expiration of each policy. Within 5 days of any request by
Franchisor, you will deliver a copy of all insurance policies to
Franchisor for examination.
14.3 If you fail to obtain or maintain adequate insurance,
Franchisor may, at its election and sole discretion, obtain
insurance for and in your name. Within 5 days of any written
request by Franchisor, you will pay all costs of obtaining
adequate insurance.
14.4 You will indemnify, defend and hold Franchisor harmless
against all claims, demands, losses, damages (including punitive
damages), costs, suits, judgments, penalties, expenses (including
reasonable attorneys' fees and amounts paid in settlement or
compromise) and liabilities of any kind, whether or not
ultimately determined to be meritorious (and including damages
suffered by you or any of your property), collectively,
"Damages", arising directly or indirectly out of or in connection
with the construction, operation, maintenance or occupancy of the
Outlet, except to the extent that such liabilities arise from the
gross negligence or willful acts of Franchisor.
14.5 All fixtures, equipment, signs, merchandise, supplies, and
other property on or about the Outlet will be at your sole risk
and hazard, and if they are destroyed or damaged in any way, no
part of the loss or damage is to be paid by Franchisor except to
the extent caused by Franchisor's gross negligence or willful
acts.
SECTION 15 - TRADEMARKS AND TRADE SECRETS
15.1 You recognize and acknowledge Franchisor's exclusive
ownership of and rights in Franchisor's current and future Marks
and in all related practices, procedures, methods and devices.
All goodwill now or in the future associated with or relating to
the Marks will accrue directly and exclusively to the benefit and
is the property of Franchisor. Nothing contained in this
Agreement will be construed to entitle you any right, title or
interest in or the Marks or the goodwill now or in the future
associated with them, other than the rights and license expressly
granted in this Agreement.
15.2 You represent, warrant and agree that you will not:
A. Directly or indirectly contest or aid in contesting,
either during the term of this Agreement or following its
termination, the validity or ownership of the Marks; or
B. Take any action in derogation of Franchisor's claimed
rights whether now existing or later obtained.
15.3 You agree to use only Franchisor's existing or future Marks,
and related practices, systems, procedures and methods in
connection with the promotion and operation of the Outlet, and
only in accordance with the procedures established by Franchisor.
15.4 You will cause Franchisor's Marks to be reproduced exactly
and accurately.
15.5 With the exception of the registration of a "d/b/a" or a
fictitious name certificate in connection with the operation of
the Outlet, you will not register or attempt to register the
Marks in your own name.
15.6 You will immediately inform Franchisor of any suspected,
known or threatened infringement, piracy or challenge to the
Marks, trade secrets, methods and procedures used in the System.
You will assist and cooperate with Franchisor in taking action,
at Franchisor's expense, as Franchisor deems appropriate to
protect the System. The Franchisor will indemnify, hold you
harmless and will reimburse you for your liability and reasonable
costs in connection with defending the Franchisor's trademark.
15.7 Immediately upon the expiration or sooner termination of
this Agreement, you will:
A. Cease and forever abstain from using any of the Marks;
B. Take all actions necessary to cancel any d/b/a or
fictitious name registration containing any of the Marks;
and
C. Furnish Franchisor evidence satisfactory to Franchisor
of compliance with the foregoing obligations within 30 days
after any expiration or sooner termination.
15.8 You acknowledge that you took no part in creating or
developing, no prior knowledge of, and no rights or claims in or
to, any element of the System. You agree that all materials
loaned or made available to you will be kept confidential by you
and will remain the property of Franchisor. You will not
disclose, exhibit or reproduce any confidential element of the
System which becomes known to you through Franchisor in any
manner, except to those persons employed by you to whom
disclosure must be made to enable you to operate the Outlet under
the terms of this Agreement. After the expiration or sooner
termination of this Agreement, neither you and your employees,
nor any of your officers, directors, shareholders if you are
incorporated, will disclose, exhibit or reproduce any
confidential information or trade secrets to any corporation,
association, partnership or person. You recognize that all of
the existing or future Marks, related practices, systems,
procedures and methods are trade secrets, that Franchisor has
made a substantial investment in these trade secrets and that
disclosure of the trade secrets is prohibited. You agree to
cause your employees to execute proprietary information
agreements containing the provisions of this Subsection and any
confidentiality agreements if requested by Franchisor.
15.9 Except as specifically disclosed in the Franchise Offering
Circular, Franchisor represents and warrants to the best of
Franchisor's knowledge, that the Marks do not violate or infringe
upon any rights of others.
SECTION 16 - CONDEMNATION AND CASUALTY
16.1 You will promptly advise Franchisor upon your receipt of a
notice of default or termination under your lease or mortgage,
and will promptly provide Franchisor a copy of the notice. You
will also give Franchisor notice of any proposed taking of the
Outlet or any portion thereof through the exercise of the power
of eminent domain at the earliest possible time. If the Outlet
or a substantial part thereof is to be taken, the Outlet may be
relocated within the area specified in Exhibit A, or elsewhere
with Franchisor's written approval in accordance with our
relocation procedures. If you open a new outlet at another
location in accordance with Franchisor's standards and general
specifications within one year of the closing of the old Outlet,
the new Outlet will be deemed to be the Outlet licensed under
this Agreement. If a condemnation, lease termination or mortgage
default takes place and a new Outlet does not, for any reason,
(other than those specified in Section 9) become the Outlet as
provided in this Subsection then the License will terminate upon
notice by Franchisor.
16.2 If the Outlet is damaged, you will expeditiously repair the
damage. If the damage or repair requires closing the Outlet, you
will immediately notify Franchisor in writing, and will:
A. Relocate the Outlet as provided in Subsection 16.1; or
B. Repair or rebuild the Outlet in accordance with
Franchisor's then existing standards and general
specifications, and reopen the Outlet for continuous
business operations as soon as practicable (but in any event
within 12 months after closing the Outlet), giving
Franchisor 30 days' advance notice of the date of reopening.
If the Outlet is not (or, in the opinion of Franchisor
cannot be) reopened in accordance with this Section, or
relocated pursuant to Subsection 16.1, the License will
terminate upon notice to you.
16.3 The License Term will not be extended by any interruption in
the Outlet's operations, except for an act of God that results in
the Outlet being closed not less than 60 days nor more than 180
days. You must apply for any extension within 30 days following
the reopening of the Outlet. Except as provided in Subsection
4.3, no event during the License Term will excuse you from paying
Royalty Fees or Advertising Fees as provided in this Agreement.
SECTION 17 - RESTRICTIONS ON COMPETITION
17.1 During the term of this License and Agreement, or any
extensions or renewals and for a period of 2 years following
expiration or termination of the License and this Agreement, you
will not directly or indirectly, through corporations, or through
partnerships, trusts, associations, joint ventures or other
unincorporated businesses, perform any services for, engage in or
acquire, be an employee of, have any financial, beneficial or
equity interest in, or have any interest based on the profits or
revenues of, any business similar to the franchised business,
except for other outlets franchised by Franchiser, within 10
miles of any Superior Carpet Care Outlet.
17.2 Nothing in this Section will prevent any active officer of
yours or member of your family either individually or
collectively, from owning not more than a total of 5% of the
stock of any company which is subject to the reporting
requirements of Sections 11 or Subsection 14(D) of the Securities
and Exchange Act of 1934.
17.3 You will not at any time employ or otherwise interfere with
the employment relationship of any person who is employed by
Franchisor.
17.4 If any court having jurisdiction to determine the validity
or enforceability of this Section determines that, strictly
applied, it would be invalid or unenforceable, the definition of
"similar business" or the time or geographical provisions of this
Section will be deemed modified to the extent necessary (but only
to that extent) so that such restrictions as modified, will be
valid and enforceable.
17.5 You acknowledge that as a Superior Carpet Care franchisee,
you will have access to Franchisor's trade secrets and
confidential practices and therefore be in a unique position to
use the special knowledge you will have gained while a
franchisee. You acknowledge that a breach of the covenants
contained in this Section will be deemed to threaten immediate
and substantial irreparable injury to Franchisor. Accordingly,
you agree that Franchisor will have the right, without prior
notice to you, to obtain immediate injunctive relief without
limiting any other rights or remedies.
17.6 In the event that you are not an individual, this Section
will also apply to the officers, directors, stockholders,
trustees, beneficiaries and/or principals of you, the franchisee,
and any persons controlled by, controlling or under common
control with you.
SECTION 18 - TERMINATION OF LICENSE
18.1 Termination by you.
If you are in compliance with this Agreement and Franchisor
breaches this Agreement and fails to cure the breach within 30
days after a written notice of the breach is delivered to
Franchisor by you, you may terminate the License and Agreement,
effective 10 days after the delivery to Franchisor of a notice of
termination. There are no other provisions in this Agreement
that grant you the right to terminate the License and Agreement.
Should you terminate the License and Agreement in compliance
with this Subsection, you are required to comply with the
termination procedures as set forth in Subsection 18.4.
18.2 Termination by Franchisor without Notice.
Unless Franchisor promptly, after discovery of the relevant
facts, notifies you to the contrary in writing, the License and
this Agreement will immediately terminate without notice (or in
the event notice is required by law, immediately upon the giving
of such notice or at the earliest time thereafter permitted by
applicable law) in the event that:
A. No site has been designated and accepted pursuant to
Subsection 9.1;
B. A permanent or temporary receiver or trustee for the
Outlet or all or substantially all of your property is
appointed by any court, or any such appointment is consented
to or not opposed through legal action by you, or you make a
general assignment for the benefit of your creditors or you
make a written statement to the effect that you are unable
to pay your debts as they become due, or a levy or execution
is made on the License, or an attachment or lien remains on
the Outlet for 30 days unless the attachment or lien as
being duly contested in good faith by you and Franchisor is
advised;
C. You loose possession or the right of possession of all
or a significant part of the Outlet through condemnation,
casualty, lease termination or mortgage foreclosure and the
Outlet is not relocated or reopened as provided in Section
16;
D. You contest in any court or proceeding the validity of,
or Franchisor's ownership of, any of the Marks;
E. A breach of Section 19 (Assignment)occurs; or
F. You are a corporation and any action is taken which
purports to merge, consolidate, dissolve or liquidate you
without Franchisor's prior written consent.
18.3 Termination by Franchisor With Notice.
The License and this Agreement will terminate on notice
under certain circumstances as provided in Subsections 6.3, 9.5
and Sections 12, 14 and 16. The License will terminate on the
termination date specified in any notice by Franchisor to you
(without any further notice of termination unless required by
law), provided that:
A. The notice is hand-delivered or mailed at least 30 days
(or any longer period as may be required by law) in advance
of the termination date;
B. The notice reasonably identifies one or more breaches
or defaults in your obligations or performance under this
Agreement or the Manual;
C. The notice specifies the manner in which the breach(es)
or default(s) may be remedied; and
D. The breach(es) and default(s) are not fully remedied
before, or as of, the termination date specified in the
notice.
The period given to remedy breaches and defaults will, if
permitted by law, be 10 days instead of 30 days if you will have
engaged in repeated breaches or defaults under this Agreement
within the preceding 24 months for which you have received notice
of termination and termination failed to take effect because the
breaches or defaults were remedied. The period will be extended
if the breach cannot reasonably be cured in such 10 or 30 days,
provided that:
A. You have taken all steps to completion towards a cure
that are possible within such 10-or 30-day period;
B. You diligently prosecute a cure to completion; and
C. Such period will in no event be extended by more than
60 days.
18.4 Effect of Termination.
Should this Agreement or the License expire or be terminated
by any party and for any reason, all rights and obligations
between you and Franchisor under this Agreement will terminate,
except for Subsections 6.2, 11.1, 11.2, and Section 15 and 17 and
Subsection 18.8. In an instance of expiration or termination,
you will cease to be a licensed participant in the System, and
you will:
A. Promptly pay Franchisor all amounts owing by you based
on operations of the Outlet through the date of termination
plus interest at the lower of (i) 18% per annum; or (ii) the
highest rate permitted by law;
B. Immediately discontinue the use of all Marks, signs,
structures, forms of advertising, telephone listings and
service, the Manual, and all materials and products of any
kind which are identified or associated with the System and
subject to Subsection 18.5, return all these materials and
products to Franchisor and, at Franchisor's request, assign
your telephone number to Franchisor;
C. Make no representation nor state that you are in any
way approved, endorsed or licensed by Franchisor or
associated or identified with Franchisor or the System in
any manner;
D. Immediately take all steps necessary to amend or
terminate any registration or filing of any d/b/a or
fictitious name or any other registration or filing
containing the Marks so as to delete the Marks and all
references to anything associated with the System;
E. Provide Franchisor the option to purchase required by
Section 20; and
F. Comply with the provisions of Subsections 15.7 and
17.1.
18.5 If, within 30 days after termination of this Agreement by
Franchisor, you fail to remove all displays of the Marks from the
Outlet which are identified or associated with the System,
Franchisor may enter the Outlet to effect removal. In this
event, Franchisor will not be charged with trespass nor be
accountable or required to pay for any displays or materials.
18.6 If, within 30 days after termination you have not taken all
steps necessary to amend or terminate any registration or filing
of any fictitious name or any other registration or filing
containing the Marks, you hereby irrevocably appoint Franchisor
as your true and lawful attorney for you, and in your name, place
and xxxxx and on your behalf, to take action as may be necessary
to amend or terminate all registrations and filings, this
appointment being coupled with an interest to enable Franchisor
to protect the System.
18.7 Termination of this Agreement will not affect, modify or
discharge any claims, rights, causes of action or remedies which
Franchisor may have against you, whether such claims or rights
arise before or after termination.
SECTION 19 - ASSIGNMENT
19.1 General.
None of your rights under this Agreement or the License
granted, all of which are personal in nature, may be the subject
of any pledge, lien, levy, attachment, or security arrangement,
or acquired through execution, foreclosure, or like action. None
of your rights or obligations under this Agreement or the License
granted are assignable or transferable (including by will,
declaration of or transfer in trust or the laws of intestate
succession) without Franchisor's prior written consent and
compliance in all other respects with the terms of this Section.
If you are a general partnership, limited partnership or
corporation, no initial personal interest in the general
partnership, limited partnership, or corporation is assignable or
transferable without Franchisor's prior written consent and
compliance in all other respects with the terms of this Section.
Any purported action contrary to this Section will be a material
breach of this Agreement and will be void.
With and after each valid assignment of this Agreement
pursuant to this Section, the assignee or assignees will be
deemed to be you, the franchisee, under this Agreement and will
be bound by and liable for all of your existing and future
obligations. No stockholder in any corporation which becomes the
franchisee will have any rights under this Agreement by reason of
his, her or its stock ownership, and the name of such corporation
will not include any of the Marks.
19.2 Conditions to Assignments and Transfers.
No transfer or assignment of this Agreement will be approved
by Franchisor or be effective unless and until:
A. There be no default in the performance or observance of
any of your obligations under this Agreement or any other
agreement with Franchisor
B. You have settled all outstanding accounts with
Franchisor, and you and every principal of you, the
franchisee, have executed a general release of Franchisor
and all principals of Franchisor from all claims that may be
brought by you or any principal
C. The proposed transferee pays Franchisor a Transfer Fee
in the amount of $2,500.00, unless the transferee is;
1. A corporation of which you are the majority
stockholder, or a child, parent, sibling or spouse of
yours, in which case no Transfer Fee will be required,
or
2. Another franchisee of the Franchisor, in which case
the Transfer Fee will be $5,000.00.
D. The proposed transferee will execute a separate
Franchise Agreement with Franchisor, using our then current
form of Franchise Agreement, and the proposed transferee
will execute an Acknowledgment of Receipt of a then current
copy of our Uniform Franchise Offering Circular.
E. The proposed transferee will pay for, attend and
satisfactorily complete the training program for new
franchisees unless,
1. The transferee is a current franchisee in good
standing in the System, or
2. The transferee is and has been a manager for a
period of one year or more of an Outlet in good
standing.
F. The individual proposed transferee, or the
stockholders, partners or trustees and beneficiaries of a
proposed corporate, partnership or trust transferee, will
each execute a personal guarantee, jointly and severally
guaranteeing the performance of the proposed transferee's
obligations.
G. The proposed transferee will have demonstrated to
Franchisor's satisfaction that he or she in all respects our
standards applicable to new franchisees regarding
experience, personal and financial reputation and stability,
willingness and ability to devote his or her full time and
best efforts to the operation of the franchised business,
and any other conditions as Franchisor may reasonably apply
in evaluating new franchisees. Franchisor must be provided
all information about the proposed transferee as we may
reasonably require. Because of the confidential information
available to a franchisee, no assignment to a competitor of
Franchisor will be permitted.
H. The parties to the proposed transaction will have
entered a binding agreement subject only to the rights of
Franchisor. Franchisor will be furnished a copy of this
binding agreement (a "Purchase Offer"), and Franchisor must
waive in writing its rights under Section 20. You will
advise each prospective transferee of this provision and the
other terms of this Agreement.
19.3 If you are an individual and you desire to transfer your
rights under this Agreement to a corporation, partnership or
trust which you will newly form and of which you will be a
majority shareholder, partner, trustee, beneficiary and/or an
executive officer, you may do so only if:
A. Your name remains on this Agreement and the
corporation, partnership or trust is added as a co-
Franchisee;
B. You continue to devote your full time and best efforts
to manage the day-to-day operations of the franchised
business unless you have a operational partner or manager
approved by Franchisor;
C. The corporation's, partnership's or trust's activities
be confined exclusively to operating the franchised
business;
D. The corporation, partnership, trust and all officers
sign an agreement with Franchisor assuming jointly and
severally all your obligations under this Agreement; and
E. The stock certificates, certificated units of
partnership or certificated beneficial interests of the
corporation, partnership or trust will bear the following
legend:
"The (shares of capital stock) (partnership interest)
(beneficial interest) represented by this certificate are subject
to the terms and conditions set forth in that certain Superior
Carpet Care Franchise Agreement dated April 22, 2001 between the
(Corporation) (Partnership) (Trust) and Superior Carpet Care
Franchise Systems, Inc. a copy of which is on file in the
principal office of the (Corporation) (Partnership) (Trust) and a
copy of which will be provided to the holder of record hereof
upon written request without charge."
It is expressly understood that the assumption of your
obligation by any corporation, partnership or trust does not
limit your personal obligations under this Agreement, and that
you and the corporation, partnership or trust will be jointly and
severally liable.
19.4 Upon the death of an individual Franchisee, the rights
granted by this Agreement may pass (without payment of any
Transfer Fee) to the next of kin or legatees, provided that your
legal representatives will within 120 calendar days of your death
apply in writing to Franchisor for the right to transfer to the
next of kin or legatee your rights under this Agreement.
Franchisor will not unreasonably withhold our permission so long
as the proposed transferees meet each of the requirements set
forth in Subsection 19.2 without regard to Subsection 19.2(C).
19.5 Any attempt by you to transfer any of your rights or
interest under this Agreement or the License, without having
received Franchisor's prior written consent will constitute a
material breach of this Agreement. However, if you die and your
personal representative does not desire to sell the Outlet, and
if under controlling local law your interest in the Outlet, the
License and Agreement are distributable to heirs or legatees who
are members of his or her immediate family and who otherwise
would qualify as assignees, then, such attempted assignment by
operation of law or will will not be deemed in violation of this
Agreement, provided that such heirs or legatees accept the
conditions imposed on otherwise permitted assignees.
19.6 You will not have the right to grant a subfranchise.
19.7 Franchisor may assign its rights under this Agreement as it
sees fit without notice to you.
SECTION 20 - OPTION TO PURCHASE
20.1 Unless otherwise explicitly provided by this Agreement,
Franchisor will be entitled to exercise the rights provided in
this Section immediately upon:
A. The expiration without renewal or the termination for
any reason of the License or this Agreement;
B. Any breach, default or other event that gives
Franchisor the right to terminate the License or this
Agreement; or
C. The receipt by Franchisor of a copy of a Purchase
Offer.
20.2 Upon any event described in Subsection 20.1, Franchisor will
have the option to purchase all of your rights, title and
interest in the Outlet, and all its improvements, furniture,
fixtures, equipment and products, and all of your accounts,
contract rights, customer and vendor lists, work in progress and
other business assets.
20.3 The purchase price for assets itemized in Subsection 20.2
will be the current fair market value if Subsection 20.1A or
20.1B is applicable or the price specified in any written
purchase offer received by you if Subsection 20.1C is applicable.
If you and Franchisor cannot agree on fair market value within a
reasonable time, an independent appraiser will be designated by
each of us and an average of the 2 appraised values will be
binding. Appraised values will exclude any and all consideration
for goodwill or going concern value created by the Marks and
business system licensed to you.
If Franchisor elects to exercise any option to purchase provided
in this Subsection, Franchisor will have the right to set off all
amounts due from you under the Franchise Agreement and the cost
of the appraisal, if any, against any payment.
20.4 Franchisor will notify you of our intention to exercise its
rights to purchase (a "Notice of Intent") within 60 days
following an event described in Subsection 20.1. The Notice of
Intent will specify the assets to be purchased, and the fair
current market value as determined by Franchisor. You will have
14 days following receipt of Franchisor's Notice of Intent to
object to any of the prices specified therein, and any disputes
over pricing will be resolved through appraisal as specified
Subsection 20.3. If Franchisor declines to exercise its rights
under this Section within 60 days, you may thereafter, sell or
dispose of the franchised business to a third party, but not at a
lower price nor on more favorable terms than set forth in the
Purchase Offer, if any, and subject to the prior written
permission of Franchisor and satisfaction of the other conditions
to assignment set forth in Section 19.
20.5 The purchase and sale contemplated in this Section will be
consummated as soon as practicable. Following the delivery of a
Notice of Intent as specified in Subsection 20.4, Franchisor or
our designee will have the right to take possession of the Outlet
and to carry on and develop the franchised business for the
exclusive benefit of Franchisor or its designee.
20.6 In the event that Franchisor elects not to exercise its
option to purchase under this Section, the provisions of Section
19 will apply to any proposed transfer by you.
SECTION 21 - BANKRUPTCY OR INSOLVENCY
You will be deemed in default under this Agreement and all
rights granted herein will automatically terminate without notice
in the event of the following:
A. You become insolvent, or make a general assignment for
the benefit of creditors;
B. You file a petition of bankruptcy, or do not oppose a
petition filed against you;
C. You consent to the filing of a receivership or other
custodianship for your business assets;
D. You have instituted by or against you a proceedings for
a composition with creditors under any state or federal law;
E. You have a final judgment filed against you which
remains unsatisfied or of record for 30 days or longer
(unless supersedeas bond is filed);
F. You are dissolved;
G. An execution is levied against your franchise or
property contained in the Outlet, or a suit to foreclose any
lien against the Outlet or equipment is instituted against
you and not dismissed within 30 days, provided that this
provision will not apply if a supersedeas bond is timely
filed; or
H. Your Outlet's property is sold after levy by any
sheriff, marshal, or constable.
SECTION 22 - MISCELLANEOUS
22.1 Relationship of Parties.
You neither have nor will you exercise any authority,
express, implied or apparent, to act on behalf of or as an agent
of Franchiser, for any purpose, and will take no action which
might tend to create an apparent employer-employee or agency
relationship between you and Franchisor. No fiduciary
relationship exists between you and Franchisor. You are, and
will remain, an independent contractor responsible for all
obligations and liabilities of, and for all loss or damage to,
the Outlet and its business and for all claims and demands based
on damages or destruction of property or based on injury, illness
or death of any person or persons, directly or indirectly arising
from or in connection with the operation of the Outlet.
Franchisor will neither have, nor exercise the right to, control
the day-to-day managerial operations of the Outlet.
22.2 No Conflict with Other Agreements.
You represent that you are not a party to or subject to
agreements that might conflict with the terms of this Agreement
and agree not to enter into any conflicting agreements during the
License Term.
22.3 Cost of Enforcement.
If either party institutes and prevails entirely or in part
in any action at law or in equity against the other party based
entirely or in part on the terms of this Agreement, the
prevailing party will be entitled to recover from the losing
party, in addition to any judgment reasonable attorneys' fees,
court costs and all of the prevailing party's expenses in
connection with any action at law.
22.4 No Waiver.
No failure, forbearance, neglect or delay of any kind on the
part of Franchisor in connection with the enforcement or exercise
of any rights under this Agreement will affect or diminish
Franchisor's right to strictly enforce and take full benefit of
each provision of this Agreement at any time, whether at law for
damages, in equity for injunctive relief or specific performance,
or otherwise. No custom, usage or practice with regard to this
Agreement by you or Franchisor's other franchisees will preclude
the strict enforcement of this Agreement in accordance with its
literal terms. No waiver by Franchisor of performance of any
provision of this Agreement will constitute or be implied as a
waiver of Franchisor's right to enforce that provision at any
future time.
22.5 Entire Agreement; Amendments.
This Agreement, together with any written related agreements
and all Exhibits, constitutes the entire understanding and
agreement of between you and Franchisor and supersedes all prior
understandings, whether oral or written, pertaining to this
Agreement, License, System or Outlet. No interpretation, change,
termination or waiver of any provision of this Agreement, and no
consent or approval under this Agreement, will be binding upon
you or Franchisor or effective unless in writing signed by you
and Franchisor's President or Vice President, except that a
waiver need be signed only by the party waiving.
22.6 Severability.
If any term or provision of this Agreement or the
application thereof to any person, property or circumstances will
to any extent be invalid or unenforceable, the remainder of this
Agreement will be unaffected and will remain in full force and
effect and each term and provision will be valid and enforced to
the fullest extent permitted by law. Should this prove
impractical, Franchisor will have the option of terminating this
Agreement upon written notice to you.
22.7 Governing Law.
This Agreement has been made and accepted in the State of
Colorado and it will be interpreted in accordance with and
governed by the laws of the State of Colorado and any applicable
federal and state franchise laws. You hereby consent to
jurisdiction in Jefferson County, Colorado.
22.8 Arbitration.
Except as specifically otherwise provided in this Agreement,
and in the event that you or Franchisor seeks injunctive relief
under this Agreement, each of us agree that any and all disputes
between us, and any claims by either of us that cannot be
amicably settled, will be determined solely and exclusively by
arbitration in accordance with the then existing rules of the
American Arbitration Association at its Colorado office, subject
to the following:
A. You and Franchisor will select one arbitrator, and the
two so designated will select a third arbitrator. If either
of us will fail to designate an arbitrator within 7 days
after arbitration is requested, then a single arbitrator
will be selected by the American Arbitration Association
upon application of either you or Franchisor. Arbitration
proceedings will be conducted in accordance with the rules
then prevailing of the American Arbitration Association at
its Colorado office. Judgment upon an award of the majority
of the arbitrators will be binding, and will be entered in a
court of competent jurisdiction.
B. Nothing herein contained will bar the right of you or
Franchisor to obtain injunctive relief against threatened
conduct that would violate this Agreement and cause loss or
damages.
22.9 Notices.
All notices and other communications provided for in this
Agreement must be in writing and will be delivered in person or
mailed by certified or other receipted mail, or by Federal
Express or U.S. Express Mail for overnight delivery if to you, at
your address or, if to Franchisor at our address, Attention:
Chief Operating officer. you or Franchisor, by such notice, may
change the address to which notices will be sent. Notices
delivered in person will be deemed given when delivered and
mailed notices will be deemed given 3 days after mailing if by
certified or other receipted mail or 1 day after mailing if by
Federal Express or U.S. Express Mail. If you are a corporation
or more than 1 individual, then you will authorize 1 natural
person as correspondent with authority to bind you.
22.10 Certain References.
References to weeks and months mean calendar weeks and
calendar months. References to persons mean legal entities as
well as natural persons. Whenever the pronoun "he" or "his" is
used herein, it is refers to masculine, feminine and neuter
genders and also singular and plural. Except as otherwise
specifically set forth in this Agreement, this Agreement will
inure to the benefit of and be binding on you and Franchisor, our
respective heirs, executors, administrators, personal
representatives, successors and assigns.
22.11 Acknowledgment
YOU ACKNOWLEDGE THAT YOU HAVE CONDUCTED AN INDEPENDENT
INVESTIGATION OF THE SUPERIOR CARPET CARE SYSTEM AND RECOGNIZE
THAT THE BUSINESS VENTURE CONTEMPLATED BY THIS AGREEMENT INVOLVES
BUSINESS RISK AND WILL BE LARGELY DEPENDENT UPON THE ABILITY OF
YOU AS AN INDEPENDENT BUSINESS PERSON. THE FRANCHISOR EXPRESSLY
DISCLAIMS THE MAKING OF, AND YOU ACKNOWLEDGE THAT YOU HAVE NOT
RECEIVED, ANY WARRANTY OR GUARANTEE, EXPRESSED OR IMPLIED AS TO
THE POTENTIAL VOLUME, PROFITS, OR SUCCESS OF THE BUSINESS VENTURE
CONTEMPLATED BY THIS AGREEMENT.
YOU ACKNOWLEDGE THAT YOU HAVE RECEIVED A COPY OF THE
COMPLETE SUPERIOR CARPET CARE FRANCHISE AGREEMENT AT LEAST 5
BUSINESS DAYS PRIOR TO THE DATE ON WHICH THIS AGREEMENT WAS
EXECUTED. YOU FURTHER ACKNOWLEDGE THAT YOU RECEIVED THE
DISCLOSURE DOCUMENT REQUIRED BY THE FEDERAL TRADE COMMISSION,
ENTITLED, "UNIFORM FRANCHISE OFFERING CIRCULAR" AT LEAST 10
BUSINESS DAYS PRIOR TO THE DATE ON WHICH THIS AGREEMENT WAS
EXECUTED.
YOU ACKNOWLEDGE THAT YOU HAVE READ AND UNDERSTAND THIS AGREEMENT;
AND THAT SUPERIOR CARPET CARE FRANCHISE SYSTEMS, INC. HAS
ACCORDED YOU AMPLE TIME AND OPPORTUNITY AND HAS ENCOURAGED YOU TO
CONSULT WITH ADVISORS OF YOUR OWN CHOOSING ABOUT THE POTENTIAL
BENEFITS AND RISKS OF ENTERING INTO THIS AGREEMENT.
This entire Agreement, including corrections, changes, and
all attachments and addendum's, will only be binding upon
Franchisor when executed or initialed by Franchisor's President
or vice-president.
You and Franchisor, intending to be legally bound, have duly
executed, sealed, and delivered this Agreement in triplicate this
22 day of April 2001.
_______________________________ /s/ Xxxxxx Xxxx
Witness
Franchisee, Individually
_______________________________ /s/ Xxxxxxx Xxxx
Witness
Franchisee, Individually
and/or as an officer or
partner of
______________________________
Attest:
By:______________________________
(signature)
_______________________________
Title:___________________________
Secretary of Company
A __________________ Corporation
____________________ Partnership
Superior Carpet Care Franchise Systems, Inc.
_______________________________ _________________________________
Witness President
_______________________________ _________________________________
Witness Date
PERSONAL GUARANTEES
We, the undersigned, in order to induce Franchisor to enter
into this Franchise Agreement, hereby, jointly and severally,
personally guarantee performance of this Agreement in its
entirety and specifically, but without limitation thereto, the
monetary obligation of the Franchisee, as well as the
confidentiality and non-competition provisions as if each of us
were the Franchisee.
GUARANTORS:
__________________________ /s/ Xxxxxx Xxxx
Witness ----------------
Date: 04-22-01
__________________________ /s/ Xxxxxxx Xxxx
Witness ----------------
Date: 04-22-01
__________________________ ___________________________
Witness
Date:____________________
__________________________ ___________________________
Witness
Date:____________________
__________________________ ___________________________
Witness
Date:____________________
__________________________ ___________________________
Witness
Date:____________________
Addendum
Pursuant to the Franchise Agreement the following protected
territory has been assigned that are represented by zip codes for
the Denver Metro area and have been agreed by both Superior
Carpet Care Franchise Systems, Inc. and franchisee this 22 day of
April, 2001.
80127, 80123, 80128, 80120, 80121, 80122, 80111, 80112, 80016,
80138, 80107, 80134, 80166, 80106, 80118, 80104, 80124, 80126,
80135, 80125, 80130.
/s/ Xxxxxx X. Xxxx
-------------------
Superior Carpet Care Franchise Systems, Inc.
Franchisee
