Article 11. RENEWAL, TERMINATION, REPURCHASE, MODIFICATION AND ASSIGNMENT OF THE FRANCHISE AGREEMENT AND RELATED INFORMATION
11.1 Renewal. As stated in article 10.
11.2 Termination by Franchisee. You may terminate the franchise agreement at any time by indicating so by certified mail, in writing with two weeks notice. All proprietary menu items and signs must be removed and dues paid to date of termination.
11.3 Franchisor’s Termination Rights After Failure to Cure. The conditions under which we may terminate, subject to a thirty (30) day notice to cure, unless otherwise specified, include:
1. The attachment of any involuntary lien of $1,000.00 or more upon any of your business assets or property, which lien is not promptly removed.
2. Conduct of the franchised business in such a manner so as to affect, materially and adversely, your goodwill or reputation or your products and services.
3. Default by you of any provision of the franchise agreement or under any other agreement between you and us not subject to earlier termination as agreed by the parties.
4. Any purported assignment, transfer, or sublicense of the franchise, or any right hereunder, without our prior written consent.
5.Failure to make timely payment to us of any and all sums payable to us pursuant to the franchise agreement after five (5) days’ written notice of such failure to pay.
6. Failure to make timely payments upon any obligation of yours, upon which we are acting as a guarantor or default upon or a breach of any provision of any promissory note or other evidence of indebtedness or any agreement relating thereto.
7. Failure to cure a default under the franchise agreement, within ten (10) business days after receipt of notice thereof, which default materially impairs the goodwill associated with our trade names, trademarks, service marks, logotypes or other commercial symbols.
8. Failure to pay for or conduct any audit required by us or failure to secure and maintain the required insurance, including but not limited to public liability and worker’s compensation insurance after ten (10) days’ written notice requiring such deficiency to be cured.
9. Failure to supply reports on gross sales receipts and business activities or other information required in such reports, including but not limited to, advertising performed and results thereof.
10. Failure to use the techniques, training, and methods promulgated by our manuals
or attend seminar sessions required by us which are limited to one required session per calendar year.
11. Failure to put your full efforts into the franchised business of at least 20 hours per week or, in your excused absence, to have the franchised business managed by someone who has the proper training and aptitude in the procedures and systems as prescribed by us.
12. Failure to keep true and accurate business records and books in accordance with our procedures or failure to make available those items deemed necessary for inspection or provide federal and state income tax returns as requested by us or upon discovery of a deficit of two percent (2%) or more in any audit of your business.
13. Failure to maintain the standards of good conduct and appearance designated by us for the success of the franchise in order to assure continuity of quality, appearance and professionalism.
14. Failure to maintain confidential any information designated as confidential by us.
15. Operating any business center from a permanent base point location other than the
location address approved herein by us.
16. Personally operating in another franchisee’s territory after notice to cease and desist.
|
17. Failure to participate in any approved cooperative advertising group. |
|
18. Failure to pass our training or to open the business within the scheduled time after |
completing training and and securing an approved location.
11.4 Franchisor’s Termination Rights Without Notice. If during the period in which the
franchise is in effect, there occurs any of the following events which is relevant to the franchise, immediate notice of termination without an opportunity to cure, shall be deemed reasonable:
1. Insolvent or all or a substantial part of the assets thereof are assigned to or for benefit the of any creditor, or you admit your inability to pay your debts as they become due.
2. You abandon the franchise by failing to operate the business for 5 consecutive days during which time are required to operate the business under the terms, under the facts to conclude that you do not intend to continue to operate the franchise, unless such failure is due to fire, flood, earthquake or other similar causes beyond your control;
3. We and you agree in writing to terminate the franchise.
4. You make any material misrepresentations relating to the acquisition or operation of the franchise or you engage in conduct which reflects materially and unfavorably upon the operation and reputation of the franchise system.
5. You fail, for a period of 10 days after notification of noncompliance, to comply with any federal, state or local law or regulation applicable to the operation of the franchise.
6. You, after curing any failure in accordance with Article 11.3, above, engage in the same conduct or noncompliance whether or not such conduct or noncompliance is corrected after notice.
7. You repeatedly fail to comply with one or more requirements of the franchise agreement whether or not corrected after notice.
8. The franchise business or business premises of the franchise are seized, taken over or foreclosed by a governmental official in the exercise of his duties, or seized, taken over or foreclosed by a creditor, lienholder or lessor, provided that a final judgment against you remains unsatisfied for thirty (30) days (unless supersedes or other appeal bond has been filed); or a levy of execution has been made upon the license granted by the franchise agreement or upon any property used in the franchised business, and it is not discharged within five (5) days of such levy.
9. You are convicted of a felony or any other criminal misconduct which is relevant to the operation of the franchise.
10. You fail to pay any franchise fees or other amounts due to us or our affiliate within five (5) days after receiving written notice that such fees are overdue.
11. We make a reasonable determination that continued operation of the franchise by you will result in an imminent danger to public health or safety.
11.5. Obligations of Franchisee After Termination. In the event of termination of the franchise agreement for any reason:
1. You lose all rights to all fees paid and may no longer use our trademarks, service marks, trade name, copyrights, systems, manuals, displays, your telephone numbers or any other property connected with the franchise.
2. You must immediately cease use of all trade names, systems, service marks, trade
marks, training manuals, and other proprietary property of ours which must be
returned to us immediately upon written notice.
3. We have the right to enter the premises of the franchised location and to recover and remove training material and all other proprietary property of ours.
4. Any amounts due or owing to us by you including unpaid royalties and fees remaining on the unexpired portion of your franchise agreement when terminated by you without our permission shall be paid immediate.
5. You, in exiting the franchise agreement, agree to assign all right, title and interest to all of your business telephone numbers upon termination, for any reason, of your franchise and to execute any further documents or instruments or instructions necessary to further effect such transfer.
6. You, after termination of the franchise agreement, will have no interest in the franchised business and all rights and privileges are terminated.
7. All Confidential Manuals and Systems must be returned to us by you within 24 hours after notice.
11.6 Franchisor's Right of First Refusal. We have the right of first refusal exercisable within thirty (30) days after receipt of notice by us from you of the proposed sale or assignment, in which we may repurchase the franchise at any time that you attempt to transfer to any other person or entity except a qualified spouse or child. This also includes a transfer by will or intestate upon the death of a sole proprietorship, partner or shareholder. Any attempt to transfer the assets and/or business without assigning the franchise agreement to the potential purchaser shall constitute a default and a breach of the franchise agreement.
The purchase price is determined by the amount of a bona fide offer from a third party in
the event of a sale or transfer. Such repurchase price will recognize goodwill and other
intangibles associated with the normal sale of a going business if same is included in the bona fide offer of a third party.
On any termination due to your default or breach of the Franchise Agreement or an attempted cancellation by you, we shall have the right, at our option, for thirty (30) days after such termination, to purchase your interest in all or a portion of equipment, inventory, supplies or fixtures at a purchase price equal to the fair market value of such items. If the parties do not agree to any such purchase price within such thirty (30) day period, such prices shall be set by an independent appraiser designated by us
11.7 Provisions of Applicable Law. The provisions herein shall be subordinated to and conformed with the provisions of any valid applicable law or regulation affording you any more favorable rights or remedies.
11.8 Franchisee Assignment. You may not sell, assign or transfer, in whole or in part, your interest in the franchise agreement without first obtaining our written consent, which consent will not be unreasonably withheld subject to our rights set forth herein. We will require, as a condition to any transfer, that you deliver to us the complete financial statements of the proposed transferee, and make payment in full for all obligations outstanding or accruing to us through the date of such sale, assignment or transfer. You must pay us a transfer fee if any, and the transferee (new Franchisee) must assume your complete obligations under the franchise agreement and complete our training as a condition precedent to our approval. The new Franchisee’s net worth must be sufficient enough, in our sole discretion, to pay all current liabilities out of current assets and to have a reserve necessary for the continued operation of the franchise
11.9 Transfer of Franchise Agreement and Death of Franchisee. A transfer or attempt to transfer your interest in this franchise agreement, without our written consent and the payment of the transfer fee, constitutes abandonment of this franchise agreement by you. If you, a sole proprietor, or a partner or a shareholder of a corporation dies, your estate may sell the franchise to a transferee acceptable to us within three (3) months after the death of the original franchisee. If the franchise is stalled in probate for more than three (3) months, we have the right to place our personnel in your area and all necessary support systems required to maintain the franchise as we deem necessary on a cost plus twenty percent (20%) basis to the deceased franchisee’s estate
11.10 Resignation, Removal, Non-Performance. The resignation, removal, non-performance, death or permanent disability of you or your designated manager is treated as a proposed assignment by you of your rights and obligations, and you or your estate must promptly request approval of a replacement franchisee or designated manager.
11.11 Current Standards on Transfer. The purchaser or assignee will be required to update the franchised business to our then current standards and will be required to fulfill all training and testing requirements at the assignee’s or purchaser’s expense for travel, lodging and meals. The new owners may be required to participate in our training program.
11.12 Assignment by Franchisor. This franchise agreement may be assigned in whole or
in part by us without your consent or prior approval and such assignment shall not modify or diminish your obligations hereunder.