EXHIBIT 10.2 FRANCHISE AGREEMENT

 

                                                                    EXHIBIT 10.2

                                   REZcity.com

                                  REZcity Plus

                   A Division of Rezconnect Technologies, Inc.

 

 

                               FRANCHISE AGREEMENT

 

 

                       EXHIBIT B TO THE OFFERING CIRCULAR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                     THIS CONTRACT IS SUBJECT TO ARBITRATION

                     ---------------------------------------

 

 

 

 

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                                TABLE OF CONTENTS

 

 

I.     GRANT.................................................................2

 

II.    TERRITORY.............................................................2

 

III.   TERM AND RENEWAL......................................................3

 

IV.    BUSINESS LOCATION.....................................................4

 

V.     TRAINING AND ASSISTANCE...............................................5

 

VI.    USE OF SYSTEM AND MARKS...............................................6

 

VII.   OPERATIONS MANUAL.....................................................7

 

VIII.  CONFIDENTIAL INFORMATION..............................................7

 

IX.    MODIFICATION OF THE SYSTEM............................................8

 

X.     ADVERTISING...........................................................8

 

XI.    PAYMENTS TO FRANCHISEE................................................9

 

XII.   BILLING, ACCOUNTING AND RECORDS.......................................9

 

XIII.  STANDARDS OF QUALITY AND PERFORMANCE.................................10

 

XIV.   FRANCHISOR'S OPERATIONS ASSISTANCE...................................11

 

XV.    INSURANCE............................................................12

 

XVI.   COVENANTS............................................................14

 

XVII.  DEFAULT AND TERMINATION..............................................15

 

XVIII. RIGHTS AND DUTIES OF PARTIES UPON EXPIRATION OR TERMINATION..........17

 

XIX.   TRANSFERABILITY OF INTEREST..........................................18

 

XX.    DEATH OR INCAPACITY OF FRANCHISEE....................................20

 

XXI.   RIGHT OF FIRST REFUSAL...............................................21

 

XXII.  INDEPENDENT CONTRACTOR AND INDEMNIFICATION...........................21

 

XXIII. NON-WAIVER...........................................................22

 

XXIV.  NOTICES..............................................................22

 

XXV.   COST OF ENFORCEMENT OR DEFENSE.......................................23

 

XXVI.  APPROVALS............................................................23

 

XXVII. ENTIRE AGREEMENT.....................................................23

 

XXVIII.SEVERABILITY AND CONSTRUCTION........................................24

 

XXIX.  APPLICABLE LAW.......................................................24

 

XXX.   ARBITRATION..........................................................25

 

XXXI.  FORCE MAJEURE........................................................26

 

XXXII. FRANCHISEE DEFINED; GUARANTY.........................................26

 

XXXIII.CAVEAT...............................................................26

 

 

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XXXIV. ACKNOWLEDGMENTS......................................................26

 

EXHIBITS

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A. MAP OF TERRITORY B. COMMISSION SCHEDULE

C. GUARANTY AND ASSUMPTION OF OBLIGATIONS D. PROMISSORY NOTE

 

 

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                          RezConnect Technologies, Inc.

 

                               FRANCHISE AGREEMENT

 

     This  Franchise  Agreement  (this  "Agreement"),  made  this  ____  day  of

___________,  20___ by and  between  RezConnect  Technologies,  Inc.,  a company

operating  under the laws of the State of New York,  and  having  its  principal

place of business  at 560 Sylvan  Avenue,  Englewood  Cliffs,  New Jersey  07632

(hereinafter    referred   to   as   "RezCity.com"   or    "Franchisor"),    and

__________________________     an     individual/partnership/corporation/limited

liability  company  established in the State of  ____________,  whose  principal

address   is   __________________________________________________   (hereinafter

referred to as "Franchisee").

 

                              W I T N E S S E T H:

 

         WHEREAS,  Franchisor has developed a system  ("System"),  identified by

the Mark "RezCity.com" relating to the establishment,  development and operation

of a business specializing in the sale of Internet based marketing tools such as

banner  advertisements  on the home page and calendar  pages of the  REZcity.com

website,  content licensing,  creating websites with unlimited pages featuring a

shopping cart order system and other forms of Internet Advertising.  In addition

to the services  described,  the  franchisee  can elect to operate a consignment

business  online and  provide  an auction  model  through  the eBAY  Marketplace

(Hereby  described  as REZcity  Plus).  We all provide  tools such as  real-time

reservations,  confirmations  and appointment  scheduling,  business-to-consumer

negotiating  of retail  products and services.  Other  services  include  search

engine submission and domain name site  registration.  All of these services are

designed for small to medium sized businesses and local community organizations.

Our travel  services  feature  online 24/7  reservations/bookings  for Airlines,

Hotels,  Cars,  Limos,  Tours and Cruises products with over 55 bookable engines

("Services")

         WHEREAS,  the  distinguishing  characteristics  of the System  include,

without limitation,  the RezCity.com home page located at http://www.rezcity.com

featuring  "city  guides"  for over fifty  three  thousand  (53,000)  cities and

communities;  the  proprietary  Internet  marketing  package which  includes the

Services, the RezCity.com Confidential Operations Manual ("Manual"); methods for

recruiting,  hiring and training  employees;  inventory,  cost controls,  record

keeping,  all of  which  may be  changed,  improved  and  further  developed  by

Franchisor from time to time; and

 

         WHEREAS,  Franchisor  is the owner of the  right,  title and  interest,

together  with all the  goodwill  connected  thereto,  in and to the  trademarks

"RezConnect.com"  and "RezCity.com" and other trademarks,  domain names, service

marks and trade  dress,  associated  logos,  commercial  symbols,  trade  names,

trademarks,  service  marks  and  trade  dress  as are  now,  or in the  future,

designated as an integral part of the System (the "Mark[s]"); and

 

         WHEREAS,  Franchisee  understands  and  acknowledges  the importance of

Franchisor's high and uniform  standards of quality,  operations and service and

the necessity of operating the  Franchised  Business in strict  conformity  with

Franchisor's standards and specifications; and

 

         WHEREAS,  Franchisor  is the licensee of certain  proprietary  software

from  411Web.com,  Inc.,  with the  right to  sub-license  the  software  to its

franchisees; and

 

         WHEREAS,  Franchisor  expressly  disclaims the making of and Franchisee

acknowledges that it has not received nor relied upon any warranty or guarantee,

express or  implied,  as to the  revenues,  profits  or success of the  business

venture contemplated by this Agreement. Franchisee acknowledges that it has read

this Agreement and Franchisor's  Uniform Franchise Offering Circular and that it

has no knowledge of any representation by Franchisor or its officers, directors,

shareholders,  employees or agents that are contrary to the  statements  made in

 

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Franchisor's Uniform Franchise Offering Circular or to the terms hereof.

 

         NOW,  THEREFORE,  the parties, in consideration of the undertakings and

commitments of each party to the other set forth in this Agreement, hereby agree

as follows:

 

I.             GRANT

               -----

 

         A     Franchisor  hereby grants to Franchisee,  subject to the terms

and conditions  hereof, the right and license to operate a business offering the

Services  to  local  businesses,   community  organizations,   not-for-profit's,

merchants and professionals within their franchised territory.

         B     In  consideration  of the  payments  received  and the  mutual

covenants  contained in this Agreement,  Franchisor hereby grants to Franchisee,

and  Franchisee  hereby  accepts,  a  license  for  the  territory   hereinafter

described.  Franchisor  hereby  grants  to  Franchisee,  and  Franchisee  hereby

accepts,   the  right,   license  and  privilege  of  using   "RezCity.com"  and

"RezConnect.com"  and  other  Marks of  Franchisor  solely  and only upon and in

connection with activities  authorized under this Agreement.  Franchisee  agrees

not to make or authorize any use, direct or indirect, of the Marks for any other

purpose or in any other way.  Franchisee  acknowledges that Franchisor may grant

other  licenses  for the use of the Marks or  utilize  the  Marks in any  manner

whatsoever subject to the provisions of this Agreement.

 

II.            TERRITORY

               ---------

 

         A     The  territory  granted  shall be as  described  on  Exhibit A

("Territory").  During this  Agreement  term,  Franchisor  will not establish or

license any other person or entity to provide Internet  advertising  services or

other related services  operating under the RezCity.com  trademark and utilizing

the System within the Territory; provided, however, that Franchisor shall retain

the right:

 

               1.  to establish  other  Franchises at  any  location  outside of

Franchisee's   Territory,   as  Franchisor,   in  its  sole  discretion,   deems

appropriate;

 

               2.  to establish,  and license  others  to  establish  businesses

under other systems using other proprietary marks, which businesses may offer or

sell services and products  which are  competitive  with or different from those

services and products offered by the Franchised  Business,  and which businesses

may be located  within or outside the  Territory;  Rezconnect  Technology  which

consists of a Net-to-Phone-to-Net application and WEB 2 Web applications are and

will be used by various  companies and websites which may compete  directly with

the franchisee in his market or on the Internet.  We are not providing exclusive

use of the  applications to Franchisees but will not offer our technology  using

REZcity platform other than thru the Franchisee.

 

               3.  to   contract   with   sales  organizations  and other  Sales

Consultant(s)  to allow the Sales  Consultants  and its sales force to engage in

the sale of Internet advertising including the Services; provided, however, that

Sales Consultants shall not be licensed to utilize the RezCity.com  trademark as

its  principal  trade name under  which it  operates,  but may be  permitted  to

identify itself as a "RezCity.com-Authorized Dealer"; provided further, that the

Franchisee  shall receive a commission based upon the sale of Services and other

Internet   advertising  by  each  Sales  Consultant  occurring  in  Franchisee's

Territory in accordance with Section V of this Agreement.  Sales organization is

optional  and  not  required  for  franchisee  to  accept,   unless  already  in

marketplace and all deals will continue.

 

         B     Upon  execution  of   this  Agreement ,  Franchisee  shall  pay a

franchise      fee       ("Franchise       Fee")      to      Franchisor      of

___________________________________  DOLLARS  ($_________).  Said  Franchise Fee

shall be deemed fully earned and non-refundable upon execution of this Agreement

 

 

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as consideration  for expenses  incurred by Franchisor in furnishing  assistance

and services to Franchisee and for Franchisor's lost or deferred  opportunity to

grant this  franchise  to other  third  parties,  except as may be  specifically

provided in this Agreement and/or any exhibit attached hereto.

 

         The initial  franchise  fee is based on a per unit sale.  A unit can be

defined  as a town or city with a  population  of 25,000 or less.  For a town or

city with 25,000 or less in population,  the franchise fee is $1,500.  For towns

or cities greater than 25,000 in population,  a surcharge of $0.06 per person in

population is charged.  For example, if a town or city has 15,000 in population,

the franchise  fee would be $1,500;  For a town with 30,000 in  population,  the

franchise fee would be $1,800. The franchise fee is due and payable  immediately

upon execution of the Franchise  Agreement.  The population is based on the most

current U.S. Census Bureau statistics. In the event a Franchisee selects REZcity

Plus, they are required to purchase a minimum of three (3) contiguous units at a

minimum cost of $4,500.

 

         Upon the commencement of Franchisee's  Franchised Business,  Franchisee

shall pay to  Franchisor a "Web Hosting Fee"  totaling One Hundred Fifty Dollars

($150.00) for each  franchised  unit.  The Web Hosting Fee is an annual fee, due

from Franchisee to Franchisor on each  anniversary  year of the signed franchise

Agreement.  The Web  Hosting  Fee will  increase  each year (5%),  to  reimburse

Franchisor  for its costs,  including  labor,  maintenance  and  communications,

related to web hosting.  If Franchisee  does not pay  re-occurring  hosting fee,

franchisee will be in default of the Franchise Agreement.

 

         C     Franchisee  acknowledges  that  because  complete and detailed

uniformity  under many  varying  conditions  may not be possible  or  practical,

Franchisor specifically reserves the right and privilege, at its sole discretion

and as it may  deem in the  best  interests  of all  concerned  in any  specific

instance,   to  vary  standards  for  any  System   franchisee  based  upon  the

peculiarities of the particular site or circumstance,  population of trade area,

density of population,  business  potential,  existing business practices or any

other  condition  which  Franchisor  deems to be of importance to the successful

operation of such  franchisee's  business.  Franchisee  shall not be entitled to

require  Franchisor  to  disclose  or  grant  to  Franchisee  a like or  similar

variation hereunder.

 

III.           TERM AND RENEWAL

               ----------------

 

         A     This  Agreement  shall be effective and binding for an initial

term of five (5) years from the date of its execution.

 

         B     Franchisee shall have the right to renew this franchise at the

expiration  of the  initial  term  of  the  franchise  for  two  (2)  additional

successive  terms of five (5) years  each,  provided  that all of the  following

conditions have been fulfilled:

 

               1.  Franchisee  has,  during the entire  term of this  Agreement,

substantially complied with all its provisions;

 

               2.  Franchisee  has given  notice of  renewal  to  Franchisor  as

provided below;

 

               3.  Franchisee has satisfied all monetary  obligations owed by

Franchisee to  Franchisor,  or any affiliate of  Franchisor,  and has timely met

these obligations throughout the term of this Agreement;

 

               4.  Upon  renewal,   Franchisee   has   executed    Franchisor's

then-current  form of the Franchise  Agreement or has executed renewal documents

at Franchisor's  election (with  appropriate  modifications  to reflect the fact

that the Franchise Agreement relates to the grant of a renewal franchise), which

 

 

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Franchise  Agreement  shall  supersede this  Agreement in all respects,  and the

terms of which may differ from the terms of this  Agreement  including,  without

limitation,  a  different  percentage  Sales  Commission;   provided,   however,

Franchisee shall not be required to pay the then-current  initial  Franchise Fee

or its equivalent; and

 

               5.  Franchisee  has  complied  with   Franchisor's   then-current

qualifications and training requirements.

 

         C     If   Franchisee   desires  to  renew  this  franchise  at  the

expiration of this Agreement, Franchisee shall give Franchisor written notice of

its  desire to renew at least six (6)  months,  but not more  than  twelve  (12)

months,  prior to the expiration of the initial term of this  Agreement.  Within

thirty  (30) days after its  receipt of such  timely  notice,  Franchisor  shall

furnish Franchisee with written notice of Franchisee's right to obtain a renewal

franchise.  If the notice  indicates that Franchisor  will permit  Franchisee to

obtain a renewal  franchise,  Franchisee's  right to obtain a renewal  franchise

will be  contingent on continued  full  compliance  with this  Agreement and any

other  agreement   between   Franchisee  and  Franchisor   and/or   Franchisor's

affiliates.  If,  during the term of this  Agreement,  Franchisee  has failed to

substantially  comply  with  this  Agreement,  Franchisor  may  refuse  to grant

Franchisee a renewal agreement.  Franchisor will provide notice which states the

reasons for Franchisor's  decision.  If Franchisor determines that Franchisee is

not  eligible  to  obtain  a  renewal  franchise,  but that  the  nature  of the

noncompliance  may be cured so that  Franchisor is willing to consider  granting

Franchisee a renewal franchise,  Franchisor will notify Franchisee  accordingly.

Franchisee will be eligible for a renewal  franchise if Franchisee has cured the

noncompliance within thirty (30) days of Franchisor's notice of noncompliance to

Franchisee.

 

IV.            BUSINESS LOCATION

               -----------------

 

         A     Franchisee  must locate the business office for the Franchised

Business from a premises  which is located  within the  Territory  ("Premises").

Franchisee's  acceptance  of a  franchise  for  the  operation  of a  Franchised

Business  at  the  location  of  the  Premises  is  based  on  Franchisee's  own

independent   investigation  of  its  suitability  for  a  Franchised  Business.

Franchisee  may  establish  the office for the  Franchised  Business  within the

majority owner's residence  (subject to local zoning laws).  Franchisor does not

evaluate the  location.  If a Franchisee  selects  REZcity  Plus,  Franchisee is

required to lease a storage  facility that is located  within the same territory

as the Franchised Business.

 

         B     Franchisee  agrees, at its expense,  to do or cause to be done

the following within ninety (90) days after the date of this Agreement:

 

               1.  obtain all required building,  utility,  sign, health, and

business  permits and licenses and any other required  permits and licenses,  if

any;

 

               2.  construct all required  improvements to the Premises,  and

decorate  Franchisee's  Premises in compliance  with layouts and  specifications

approved by Franchisor, if any;

 

               3.  purchase  and  install  all  required   computer   equipment,

furniture, furnishings and signs;

 

               4.  purchase the opening inventory of office supplies; and

 

               5. hire personnel required for Franchisee's  Franchised Business,

if any.

 

         C     Franchisee must not open the  Franchised  Business  and  commence

business until:

 

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               1. all of the  obligations  pursuant to the other  provisions  of

Section IV. of this Agreement have been fulfilled;

 

               2.  Franchisor  has received a fully  executed form of collateral

assignment of telephone numbers and listings, if required;

 

               3.  Franchisee  and its personnel have  satisfactorily  completed

          initial training;

 

         .........4. Franchisee has furnished Franchisor with certification that

all required building,  utility,  sign, health,  sanitation,  business and other

permits  and  licenses  have  been  obtained  from any  applicable  governmental

authority,  including any  certificate  of occupancy and approvals  necessary to

operate a business (if any); and

 

         .........5.  Franchisor has been furnished with copies of all insurance

policies  required  by this  Agreement,  or such  other  evidence  of  insurance

coverage and payment of premiums as Franchisor may request.

 

         D........Franchisee  must comply with these  conditions and be prepared

to open the  Franchised  Business  within one  hundred  twenty  (120) days after

signing  this  Agreement  and only after  having  satisfactorily  completed  the

initial training program as specified in Section V.

 

V.             TRAINING AND ASSISTANCE

               -----------------------

 

         A     Franchisor shall make training available to Franchisee and its

manager,   who  shall   successfully   complete  each   required   training  and

familiarization  course  conducted.  Initial training shall cover aspects of the

operation of a Franchised  Business,  and shall be conducted in three (3) phases

("Phase[s] I - III"):

 

                    

         Phase I          This  Phase is  a self-study  course  lasting  several

                          days depending upon Franchisee's  technical background

                          and time  spent  each  day  reviewing  the  materials.

                          Franchisee  must pass a proficiency  examination  over

                          the  Internet  via  an  online  tutorial   program  to

                          successfully complete Phase I.

 

         Phase II         For  REZcity:  This Phase lasts twelve (12) hours over

                          several  weeks online.  Franchisee  may elect to visit

                          REZcity.com  Corporate  Headquarters,   or  any  other

                          location that the Franchisor operates from including a

                          location selected by the Area  Representative,  if one

                          exits in  franchisee's  market for in-class  training.

                          In-class  training is  recommended  but not mandatory.

                          This Phase is designed to provide  Franchisee  with an

                          understanding  of  products  and  services  as well as

                          sales and public relations skills.

 

                          For REZcity Plus: This Phase lasts eighteen (18) hours

                          over several  weeks  online.  Franchisee  may elect to

                          visit REZcity.com Corporate Headquarters, or any other

                          location that the Franchisor operates from including a

                          location selected by the Area  Representative,  if one

                          exists in franchisee's  market for in-class  training.

                          In-Class  training is  recommended  but not mandatory.

                          This  Phase   begins   with   twelve   (12)  hours  of

                          REZcity.com  training and is followed by an additional

                          six (6) hours of training on the auction program.

 

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         Phase III        Prior to beginning  operation,  Franchisor or its Area

                          Representative    shall   provide    Franchisee   with

                          counseling  and offer its  experience and knowledge on

                          pertinent  issues  Franchisee has in establishing  the

                          Franchised  Business.  Franchisor  shall be  available

                          during  normal  business  hours and can be  reached by

                          fax, telephone and/or the Internet.

 

         If Franchisee