EXHIBIT 10.3
REZcity.com
REZcity Plus
A Division of Rezconnect Technologies, Inc.
AREA REPRESENTATIVE AGREEMENT
EXHIBIT C TO THE OFFERING CIRCULAR
THIS CONTRACT IS SUBJECT TO ARBITRATION
---------------------------------------
<PAGE>
TABLE OF CONTENTS
I.
GRANT...................................................................2
II. DEVELOPMENT
TERRITORY...................................................2
III. DEVELOPMENT FEE AND
SCHEDULE............................................3
IV.
TERM....................................................................5
V. PAYMENTS TO AREA
REPRESENTATIVE.........................................6
VI. TRAINING AND OPERATING
ASSISTANCE.......................................8
VII. AREA REPRESENTATIVE'S
OBLIGATIONS.......................................9
VIII. USE OF SYSTEM AND
MARKS................................................12
IX. RELATIONSHIP OF THE
PARTIES............................................13
X.
INSURANCE..............................................................14
XI. TRANSFERABILITY OF
INTEREST............................................16
XII. RESTRICTIONS CONCERNING
COMPETITIVE BUSINESSES.........................18
XIII. DEFAULT AND
TERMINATION................................................19
XIV. RIGHTS AND OBLIGATIONS OF
THE PARTIES UPON EXPIRATION OR TERMINATION...21
XV. FRANCHISOR'S REMEDIES
UPON TERMINATION OR EXPIRATION...................22
XVI.
NOTICES................................................................22
XVII. ENTIRE
AGREEMENT.......................................................23
XVIII. APPLICABLE
LAW.........................................................23
XIX. SETTLEMENT OF
DISPUTES.................................................24
XX. COST OF ENFORCEMENT OR
DEFENSE.........................................25
XXI. SEVERABILITY AND
CONSTRUCTION..........................................25
XXII.
DEFINITIONS............................................................26
XXIII.
CAVEAT.................................................................26
XXIV.
ACKNOWLEDGMENTS........................................................26
EXHIBITS
--------
A. MAP OF DEVELOPMENT
TERRITORY
B. GUARANTY AND ASSUMPTION OF
OBLIGATIONS
<PAGE>
28
RezCity.com
REZcity Plus
A Division of RezConnect Technologies, Inc.
AREA REPRESENTATIVE AGREEMENT
This Area Representative Agreement (this "Agreement"), made this
____
day of ___________, 20___ by and dbetween 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
"Area
Representative").
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 and auction model through the eBAY Marketplace.
(Herein referred to as "REZcity Plus
Franchise") We also
provide tolls 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 to be
sold to small to medium sized businesses, community
organizations and not-for-profit organizations. Our travel services feature
online 24/7 reservations/bookings for
Airlines, Hotels,
Cars, Limos, Tours and
Cruise products with over 55
book able engines; and
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 trademark
"RezCity.com" and
"RezConnect.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, Franchisor is
willing to grant Area
Representative the right
to serve as a special agent
enabling Area
Representative to
locate and recruit
potential franchisees known
as "Individual Franchisees" as well as "REZcity Plus
Franchisees" and to provide support services to Individual Franchisees and
REZcity Plus Franchises within the geographical area under the terms and
conditions contained in this
Agreement; and
WHEREAS, Area
Representative
desires to act as a special agent for
Franchisor within the geographical
area enabling Area
Representative to
offer
franchises for, and to
develop, support,
and provide
services to,
Individual
<PAGE>
Franchises and REZcity Plus
Franchises within the
geographical under the
terms
and conditions contained in
this Agreement; and
WHEREAS, Area
Representative
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 Area
Representative 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. Area
Representative 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 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 Area
Representative,
subject to
the terms and conditions
hereof, a license to
offer, negotiate,
establish
and
develop RezCity.com
Individual Franchises and REZcity Plus Franchises within
the
territory hereinafter
described.
The Area
Representative shall recruit persons
and entities to act as
franchisees
within the
Development
Territory and
will
perform initial training and supervise the development and operations of
Individual Franchises and REZcity Plus Franchises within the Development
Territory in compliance with
the terms and conditions of this Agreement.
B In
consideration
of the payments received and the mutual
covenants contained in this Agreement, Franchisor hereby grants to Area
Representative, and Area Representative hereby accepts, a license for the
Development Territory hereinafter described. Franchisor hereby grants to
Area
Representative, and Area Representative
hereby accepts the
right, license
and
privilege of using
"RezCity.com," "REZconnect.com," "HaggleWithUs.com" and
other
Marks of Franchisor solely and only upon and in connection with activities
authorized under this
Agreement, including
the right to sublicense the Marks to
Individual Franchisees in the
Development Territory hereinafter described. Area
Representative agrees not to make or authorize
any use, direct or indirect, of
the Marks for any other purpose or in any other way. Area Representative
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.
DEVELOPMENT TERRITORY
---------------------
The Development Territory of the Area Representative Franchise granted
shall be as described on
Exhibit A (hereinafter
the "Development
Territory").
During this Agreement
term, Franchisor will not establish or
license any other
area representatives to act as a special agent to provide sales or support
services to franchisees
within the Development
Territory;
provided, however,
that Franchisor shall retain
the right:
2
<PAGE>
A to
establish
Individual
Franchises
and REZcity Plus
Franchises, at any location inside and outside
of the Development Territory, as
Franchisor, in its sole
discretion, deems
appropriate; provided,
however, that
Franchisor shall not establish nor grant territorial rights to any business
providing Internet
advertising services,
online auction
services and any other
services which may conflict
with any territorial
rights previously
granted by
its Area Representative to
Individual Franchisees;
B to
establish additional
area representatives
outside of
the
Development Territory as
Franchisor deems appropriate in its sole discretion;
C to
specifically
approve
the grant of any RezCity.com
Individual Franchises or
REZcity Plus Franchises. Such approval shall be
within
the sole discretion of
Franchisor;
D to
establish or license additional area representatives
within
the Development Territory if Area Representative fails to comply with the
Development Schedule
contained in Paragraph IV. of this Agreement; and
E 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
Area Representative shall receive a commission based
upon the sale of Services
by each Sales Consultant occurring in Area Representative's Development
Territory in accordance with
Section V.
III.
DEVELOPMENT FEE AND SCHEDULE
----------------------------
A........As
consideration for
the license granted herein, Area
Representative shall pay to
Franchisor, upon
execution of this Agreement, a fee
of _____________________________
DOLLARS ($_________)
("Development Fee"). The
Development Fee is fully
earned and nonrefundable for the granting of the rights
as Area Representative for
the Development Territory.
At Franchisor's
option, the initial fees for an Area
Representative
Franchise shall be 10% of the sum of the Franchise Fees for Individual
Franchises that the Area Representative has available in the Development
Schedule in this Agreement.
Franchisor anticipates
that the Development Fee for
an Area Representative will range from $30,000 to $500,000. Franchisor will
permit Area Represenstative to pay 50% of the gross
revenues earned from its
territory whether from
franchise sales or product or service commissions that
it
receives. If at the end of three (3) years
there remains a balance due on
the
Sales Agreement, Area Representative has the right to pay the balance
in full
and retain the remaining
territory or return
the unsold territory to Franchisor
without further
obligation.
In order to calculate the
Area Representative
Fee, multiply the number of towns
or cities within the
designated geographic area by the minimum initial
franchise
fee of $1,500 and then add to
that total the amount of additional fees in excess
of this minimum, which is calculated by multiplying $0.06 by the number of
people in each of the towns
or cities that are above 25,000 in population. Then
add this extra surcharge to
the total revenue potential and multiply this amount
by 10% with the minimum Area
Representative Fee
being $30,000. For
example, if
the designated geographic area has 300 towns or cities as
shown in the REZcity
data base on-line, then the
basic fee would be $450,000 (300 X $1500). If 100 of
those towns or cities
contained a population
in excess of 25,000 for a total of
1,000,000 collectively in
excess , then that amount would be multiplied by $0.06
per person, adding that result of $60,000 ($0.06 X 1,000,000) to the base
revenue of $60,000,
arriving at a gross
fee potential of $500,000. That amount
would then be multiplied by
10%, resulting in an initial Area Representative Fee
of $51,000, but since the minimum initial Area
Representative
Fee is
$30,000,
3
<PAGE>
Area Representative would be pay the minimum or
$30,000 in this
example.
The
Franchisor then would permit
the Area
Representative to pay
the balance of the
fee ($21,000) over three years by permitting Franchsior to deduct 50% off
all
fees that it pays to Area
Representative , until
the amount is paid in full. If
Area Representative does not pay the
balance within the three year period, Area
Representative shall have the right to pay the
balance in full and
retain the
remaining territory or return the unsold
territory to
Franchisor
and have no
further
obligations.
B
The Development Fee is in addition to the Individual
Franchise
fee required pursuant to any Individual Franchise Agreement which Area
Representative executes.
Nothing in this Agreement prohibits Area Representative
from owning an Individual RezCity.com Franchised Business or REZcity Plus
Franchised Business as long as all of the
requirements for owning an Individual
RezCity.com Franchised Business or REZcity Plus Franchise Business are met.
Should Area Representative
receive Franchisor's
approval to develop and operate
one (1) or more RezCity.com
Individual Franchised
Businesses in the Development
Territory, such development shall be commenced only upon
Franchisor's
prior
written approval and Area Representative shall pay to Franchisor the
then-current Individual Franchise Fee for each such
additional franchise,
in
addition to the Development Fee as provided in Paragraph III.A. of this
Agreement.
C
The Area Representative acknowledges and agrees that a
material provision of this Agreement is
that the following number of Individual
Franchisees must be opened and continuously operating in the Development
Territory during the term of this
Agreement in
accordance
with the
following
Development Schedule
("Development Schedule"):
As an Area
Representative, you
will, in turn, receive 40% of the
initial Franchise Fee ("Sales
Commission") paid by each Individual Franchisee in
your Development Territory within 30 days after such Fees are received by
Franchisor.
In addition, Area
Representative will
receive a 10% commission on the
net revenue earned on billings from the sale
of Products and Services and other
Internet advertising including REZcity Plus auction sales which
occurs within
the Development Territory excluding revenues that
the franchisee earns from the
on-line travel agency located
on the local portal.
Under the terms of the Area Representative Agreement, the
Development Fee is fully
earned and non-refundable under any circumstances.
Except as stated above, the initial fees are uniform to all
franchisees
under this
offering.
<TABLE>
<CAPTION>
<S>
<C>
<C>
------------------------------------
--------------------------------------
--------------------------------------
Number of Franchises
Cumulative Number of
Required to be Opened and
Franchises Required to be
Continuously Operating for
Opened and
Continuously
Business in the Development
Operating for Business in the
Year
Territory during the Year
Development Territory
------------------------------------
--------------------------------------
--------------------------------------
After the 3rd
20% of the Towns must be sold
20% of the towns
sold or 20% of
the
or 20% of the
total franchise fee total franchise fee potential as
potential as
described
in the described in the addendum of the
addendum of the agreement
agreement
------------------------------------
--------------------------------------
--------------------------------------
4
<PAGE>
------------------------------------
--------------------------------------
--------------------------------------
Number of Franchises
Cumulative Number of
Required to be Opened and
Franchises Required to be
Continuously Operating for
Opened and
Continuously
Business in the Development
Operating for
Business in the
Year
Territory during the Year
Development Territory
------------------------------------
--------------------------------------
--------------------------------------
After the 5th
20% of the Towns must be sold
40% of the Towns must be sold
or revenue earned
or revenue earned
------------------------------------
--------------------------------------
--------------------------------------
After the 10th
20% of the Towns must be sold or 60%
of the towns must be sold or
20% of the total franchise fee
60% of the total
franchise
fee
potential as described in the
potential as described
in the
agreement
agreement
------------------------------------
--------------------------------------
--------------------------------------
</TABLE>
The year period shall be determined from the date of this
Agreement, so
that the first year of the
development schedule
set forth above shall be twelve
(12) months from the date
this Agreement is executed.
D. The Area
Representative
represents that it has
conducted its
own
independent investigation and
analysis of the prospects for the establishment of
Individual Franchises and REZcity Plus Franchises within the Development
Territory, approves of the foregoing
development
schedule as being
reasonable
and viable and recognizes
that failure to
achieve the results
described in the
foregoing Development Schedule constitutes a
material breach of this Agreement,
and in that event,
Franchisor
shall have the right
to terminate this Agreement
as provided herein. Termination of this Agreement as a result of the Area
Representative's failure to meet the Development
Schedule set forth above shall
not affect the Individual Franchise Agreements of the franchisees who are
operating Individual Franchises in the Development
Territory;
however, upon
termination, all rights granted to the Area
Representative under this Agreement
shall forthwith revert to
Franchisor.
IV.
TERM
----
This Agreement
shall be effective and binding from the date of its
execution, and the term of this license shall continue for ten (10) years
thereafter, unless sooner terminated as herein provided. At the end of said
term, Area Representative may renew its license for one
successive term of ten
(10) years as a Area
Representative:
A. At
least sixty (60)days prior to expiration of the term,
executes
the form of Area Representative Agreement then in use by Franchisor, which
agreement may contain terms
materially
different from those
in this Agreement;
provided that Area
Representative shall not be required to pay a new
Development
Fee and the Development
Territory will not be altered;
B. Has
substantially complied with all provisions of this Agreement
during the initial
term, including the payment on a timely
basis of all
fees
due;
C. I s not
in default or under notification of breach of this
Agreement at the time it
gives notice of intent to renew;
D.
Executes a general release, in a form satisfactory to
Franchisor,
of any and all claims against Franchisor and its affiliates, and their
respective shareholders,
officers, directors, employees, and agents, arising out
of or relating to this
Agreement; and
E. Has
agreed on a new Development Schedule for the additional
term.
5
<PAGE>
V.
PAYMENTS TO AREA REPRESENTATIVE
-------------------------------
A. During
the term of this
Agreement, Area
Representative shall be
paid a commission, as set forth in this Section, based on a percentage of
initial franchise fees paid by Individual
or REZcity Plus
Franchisees for
the
purchase of Individual Franchises or REZcity Plus
Franchises("Sales
Services
Commission") to be located within the Development Territory, subject to
fulfillment of the following
conditions:
1. Individual
and REZcity Plus Franchisee executes a Franchise
Agreement with Franchisor, and an initial franchise fee has been paid to
and
actually received by
Franchisor (Franchisor shall not be deemed to have
received
any fees paid into escrow,
if applicable, until such fees actually have been
remitted to
Franchisor);
2. The sale for
which the initial
franchise fee has been
paid
is not a resale of any
existing Individual or REZcity Plus Franchise or any
interest in such a business;
and
3. Area
Representative
has complied with all of its other
obligations under this Agreement with respect
to such sale and has verified the
same to Franchisor
in writing in a form
prescribed
by Franchisor; provided,
however, that Area Representative shall not be entitled to any Sales
Services
Commission with respect to
any Individual or REZcity Plus Franchises established
in the Development Territory in connection with which Area Representative
performed no sales
services.
B.
Franchise Sales Commissions shall be an amount equal to forty
percent (40%) of the total
initial franchise fees paid to Franchisor and will be
payable to Area
Representative within twenty (20) days after the franchise
sales
conditions have been
fulfilled. Area
Representative shall not receive any Sales
Services Commissions for any businesses
owned and operated by Franchisor or its
affiliates or designees in
the Development Territory, if any.
C. If,
during the term of
this Agreement, an
Individual or REZcity
Plus Franchisee located within the Development
Territory or an
interest in the
business is resold to a different franchisee and the sale results in the
execution of a Franchise
Agreement and the
payment of a transfer fee, then Area
Representative will not be
paid a commission.
D.
Franchisor shall pay to Area Representative, within twenty (20)
days after the end of each
period determined by Franchisor, a ten percent (10%)
commission for the sale of
each Product Services,
eBAY Product
Auctions, and
other Internet advertising services actually received by Franchisor
from each
Individual and REZcity Plus
Franchisee,
Sales Consultant or directly from
the
end user located in the Development Territory during the applicable period
pursuant to their Franchise
Agreement ("Sales Commissions") excluding online
travel agency
sales.
Notwithstanding the foregoing:
1. If Area
Representative
has failed to conduct
the
periodic
inspections described in Paragraph
VII.E.13. and to file a written report or
failed to perform,
in any material respect, with respect to one (1) or
more
Individual or REZcity Plus
Franchisees located in the Development Territory, the
other services described in Section VII. be
provided to Franchisees located in
the Development Territory
during any applicable month, Area Representative shall
not be entitled to receive
commissions based upon sales of Services with respect
to such Franchisees for the period during which reports or services were
not
provided.
6
<PAGE>
2. Area
Representative
shall not be
entitled to share in or
receive any Sales Commissions paid to Franchisor by Franchisees in the
Development Territory prior to the time Area Representative completes the
initial Area Representative training program and commences
full performance of
the services of Area
Representative.
3. Area
Representative
shall not be
entitled to share in or
receive any Sales
Commissions
paid to Franchisor by Franchisees that would
otherwise be payable by any
Franchisor
owned business from
any business in the
Development Territory that was opened or
operated under a
Franchise
Agreement
entered into prior to the
effective date of this Agreement.
E. All
payments under
this
Paragraph
shall
immediately
and
permanently cease after the expiration or termination of this Agreement,
although Area Representative shall receive all amounts which have
accrued to
Area Representative as of the
effective date of expiration or termination.
F.
Franchisor's payments
to Area Representative
shall be based
on
amounts actually collected
from Individual and REZcity Plus Franchisees, not on
payments accrued, due or owing. In the event of termination of a Franchise
Agreement for an Individual or REZcity Plus
Franchise within the Development
Territory under circumstances
entitling Franchisee
to the return of all or part
of the initial franchise fee or other fees (or in the event
that Franchisor
becomes legally obligated or decides to return part or all of the initial
franchise fee or other fees),
Franchisor may deduct the portion of the amount to
be returned to Franchisee in
the same proportion as Area Representative shared
in the initial franchise fee or other fees from any future
amounts owed Area
Representative. Franchisor shall apply any
payments received from an Individual
or REZcity Plus Franchisee to any past due
indebtedness
of that Individual
or
REZcity Plus Franchisee for purchases from Franchisor or its affiliates,
interest or any other
indebtedness of that
Individual Franchisee
to Franchisor
or its affiliates. To the
extent that such payments are applied to an Individual
Franchisee's overdue
payments, Area
Representative shall be entitled to its pro
rata share of such payments,
less its pro rata
share of the costs of collection
paid to third
parties.
G. Area
Representative shall
not be allowed to set off amounts owed
to Franchisor for fees or other amounts due
under this Agreement
against any
monies owed to Area Representative by Franchisor, which right of set off
is
hereby expressly waived by
Area Representative.
Franchisor shall be
allowed to
set off against amounts owed to Area Representatives for commissions or
other
amounts due under this Agreement any monies owed to Franchisor by Area
Representative, including setting off amounts owed to Area Representative
against monies owed to
Franchisor for
commissions on sales
services which were
paid to Area Representative
before a Franchisee
failed to successfully complete
Franchisor's initial training
program.
H. Area
Representative recognizes that from time to time hereafter,
Franchisor may change or
modify the System including, without limitation, the
adoption and use of new or
modified Marks or copyrighted materials, new computer
hardware and software,
equipment or new
techniques and that Area Representative
will accept and use for the
purpose of this
Agreement any such
changes in
the
System as if they were part
of this Agreement at
the time of execution
hereof.
Area Representative will make
such expenditures as such changes or modifications
in the System may reasonably
require. Area
Representative shall
not change the
System in any way without
written permission of Franchisor.
I.
Franchisor or
Franchisor's
representative shall
make
periodic
visits to the Franchised
Business for an
additional fee of $150 per day and all
travel expenses for the purposes of
consultation,
assistance
and guidance
of
Area Representative in various aspects of the operation and
management of the
Franchised Business.
Franchisor and
Franchisor's
representatives who visit the
Franchised Business may prepare, for the benefit of both
Franchisor
and Area
Representative, written reports with respect to such visits outlining any
suggested changes or improvements in the
operations of the Franchised Business
7
<PAGE>
and detailing any defaults in
such operations
which become evident
as a result
of any such visit. A copy of any such written report may be provided to
Area
Representative.
VI.
TRAINING AND OPERATING ASSISTANCE
---------------------------------
A. Franchisor shall make training available to Area Representative,
who
shall successfully complete
such training and familiarization course conducted.
Said training program shall cover aspects of the sale and operation of
RezCity.com Franchised Business, and of the RezCity.com
Area Representative
franchise and conducted in
three (3) phases ("Phase[s] I - III"):
PhaseI This Phase is a
self-study
course lasting several days
depending upon Area
Representative's
technical
background
and time spent each day reviewing materials.. Area
Representative must pass a proficiency examination over the
Internet via an online
tutorial program to successfully
complete Phase I.
PhaseII
This Phase
lasts three (3) business days and Area
Developers must attend a mandatory training at
REZcity.com's
corporate headquarters in Englewood Cliffs, NJ or at
another
location Franchisor
designates. Area
Developers will learn
about the REZcity Franchise Program, The REZcity Plus
Franchise Program,
how to sell
the franchise and how to
support franchises
once they are
operational in the chosen
territory.
PhaseIII Prior
to beginning
operation, Franchisor
shall provide
Area Representative with counseling and offer its
experience
and knowledge on pertinent issues Area Representative has
in
setting up the Area
Representative
Franchise.
Franchisor
shall be available
during normal business
hours and can be
reached by fax, telephone and/or the Internet.
All expenses of attendance at such program by Area Representative and
its employees including, without limitation, travel, and room and board
expenses, shall be the sole
responsibility of Area Representative.
B.
Franchisor will make
available a telephone line which Area
Representative may use to communicate
with Franchisor during normal business
hours to request advice
regarding sales matters, business or technical issues.
C.
Franchisor may provide and may require that previously trained
and experienced area
representatives
or their managers or
employees attend and
successfully complete refresher training programs or seminars; provided,
however, that attendance will
not be required at more than two (2) such programs
in any calendar
year.
D.
Franchisor will loan
to Area Representative
during the term
of
the franchise one (1) copy of
the Confidential
Operations Manual ("Confidential
Operations Manual" or "Manual") containing mandatory and suggested
specifications, standards, operating procedures and rules
prescribed from time
to time by Franchisor for Individual Franchises which shall also include a
module and information
relative to the Area
Representative.
The Confidential
Operations Manual contains proprietary information of Franchisor and
shall be
kept confidential by Area
Representative
both during the term
of the Franchise
and subsequent to the expiration or termination of the Area Representative
Agreement. Franchisor shall have the right to add to and
otherwise modify
the
Confidential Operations Manual from time to time to reflect changes in the
specifications, standards, operating procedures and rules prescribed by
Franchisor, provided that no such addition or modification shall alter Area
Representative's fundamental
status and rights under this Agreement.
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<PAGE>
E. The
Confidential Operations Manual shall at all times remain
the
sole property of Franchisor
and shall promptly ("promptly" herein defined as
within fifteen [15] days) be
returned upon the
expiration or other
termination
of this Agreement.
F. Area
Representative
shall at all times
insure that its copy
of
the Confidential Operations Manual is kept current and
up-to-date, and in
the
event of any dispute as to
the contents of the Confidential Operations Manual,
the terms of the master copy
of the Confidential Operations Manual maintained by
Franchisor at Franchisor's
home office shall be controlling.
VII.
AREA REPRESENTATIVE'S OBLIGATIONS
---------------------------------
A. Within
two (2) months from
the date of this Agreement, or as
otherwise approved in writing
by Franchisor, Area Representative, at its option,
shall have acquired and taken occupancy of an office premises ("Premises")
within the Development
Territory. If approved by Franchisor, the Premises may
be
an office located in Area
Representative's
principal residence.
Additionally,
Area Representative shall have by such time acquired a
business telephone
and
hired such staff as may be
reasonably necessary to operate the business.
B. Area
Representative
shall solicit and identify prospective
Franchisees for RezCity.com Franchised Businesses to be located within the
Development Territory. Area Representative will submit completed forms and
reports to Franchisor as
prescribed by Franchisor from time to time, including
applications and other pre-opening assistance forms and reports related to
prospective franchisees'
personal qualifications and evaluations.
C. In
accordance with Area
Representative's
obligation to
provide
the initial training and support services in the Development
Territory,
Area
Representative covenants and
agrees as follows:
1. The
Area Representative shall provide the training,
services, supervision
and assistance for all Franchised
Business in the Development Territory in strict compliance
with the terms of the
Franchise Agreement signed by each
Individual and REZcity
Plus Franchisee in the
Development
Territory. The Area Representative is required to set-up
the
site for initial
training of each new
franchisee
that is
sold in their territory and will follow our training
procedures as to the
day to day items to be covered. It is
agreed that in the early stages of development we will
allow
the Area Representative to send the Franchisee to
REZcity.com's
corporate headquarters
training sessions,
either online
or in New Jersey. It is up to us to
decide
when the Area
Representative should
start doing
training
within development territory.
2. The Area
Representative shall,
at all times during the term
of this Agreement,
require each Individual and REZcity Plus
Franchisee within the Development Territory to be
developed,
operated and managed in accordance with Franchisor's
Manuals
and the terms of the
Franchise Agreement signed by each
Individual and REZcity
Plus Franchisee in the
Development
Territory.
3. The
Area Representative shall keep accurate records
concerning all
transactions
and communications between
Franchisor, the Area
Representative and all
Individual and
REZcity Plus
Franchisees relating
to the operation of
the
franchises in the Development Territory, and Franchisor's
duly authorized
representative
shall have the right to
examine and copy all such records during reasonable
business
hours. All
such records shall be maintained and made
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<PAGE>
available to
Franchisor
for at least five (5)
years after
expiration or termination of this Agreement.
4. On or before
the fifteenth
(15th) of each month,
the Area
Representative shall furnish Franchisor with monthly
written
reports
regarding the
operation
of the RezCity.com
Franchised
Businesses
located within
the Development
Territory in the form and manner prescribed by Franchisor
in
writing.
5. The Area
Representative
will make any changes
specified by
Franchisor to the Manuals, technical data, System, signs,
advertising materials
and the Franchise Agreement upon
receiving written
notice from Franchisor. No changes to
these materials
may be made by the Area Representative
without the prior written approval of Franchisor. No
changes
to these materials
may be made by the
Area
Representative
without the prior written approval of Franchisor, which may
be withheld by Franchisor in its sole discretion.
Franchisor
will make any necessary changes or suggest changes to Area
Representative who will not bear any expense.
6. Franchisor
shall have the right to: (i) approve all Internet
advertising and use of the Services and other services to
be
offered for
sale by the Area Representative and its
franchisees; (ii) determine and approve standards of
quality
for all services and Internet advertising sold by the Area
Representative and its franchisees. All such approvals must
be in writing by Franchisor.
7. Area
Representative
shall provide guidance
in implementing
advertising and
marketing programs, operating and sales
procedures, and
bookkeeping
and accounting programs for
Individual and REZcity Plus Franchisees.
8. Upon the
reasonable request of an Individual or REZcity Plus
Franchisee, Area
Representative
shall provide telephone
consultation
regarding the
continuing
operation
and
management of the Franchised Business and advice regarding
advertising services,
product quality
control and customer
relations issues.
9. Area
Representative
shall provide advice
and assistance to
Individual and REZcity Plus Franchisees in connection
with
developing and improving the Franchised Business.
10. Area
Representative shall
provide access to advertising and
promotional materials
developed by
Franchisor from time to
time.
11. Area
Representative shall,
at Franchisor's written request,
establish an advertising cooperative for all Individual
and
REZcity Plus Franchises located in the Development
Territory
using forms and procedures supplied by Franchisor.
12. Area Representative shall ascertain through field audits,
review and inspections
that each Individual
Franchisee
in
the Development
Territory has complied
satisfactorily with
all of the terms and conditions of the Franchise Agreement,
specifications,
standards, operating
procedures,
and the
Franchisee's Manual and shall promptly notify Franchisee,
in
writing, with a copy
and evaluation report to Franchisor of
any deficiencies;
provided, however Area Representative
understands and
acknowledges
that
its inspections and
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<PAGE>
reports are advisory only and that Franchisor shall have
(i)
all of the rights to inspect and ascertain compliance of
all
Individual Franchisees
as if this
Agreement were not in
effect; (ii) the sole
right to send
notices of default
to
Individual Franchisees; (iii) the sole right to terminate
an
Individual Franchise
Agreement for failure to cure such
defaults (if an
opportunity to cure is
granted); and
(iv)
the sole right to take any legal action with respect to
any
violation of a Franchise Agreement. If Area Representative
believes that any
Individual or REZcity Plus Franchisee in
the Development Territory has breached a Franchise
Agreement
with Franchisor,
Area Representative shall document in
writing all facts related to the alleged breach and request
in writing that Franchisor investigate such alleged
breach.
If, as a result of
Franchisor's
investigation,
Franchisor
determines that there
is a breach by
Individual or REZcity
Plus Franchisee of its Franchise Agreement with
Franchisor,
Franchisor may take such action as it deems appropriate.
13. Area
Representative
acknowledges that it is being delegated
certain
responsibilities of
Franchisor under the Franchise
Agreement to Franchisees in the Development Territory. The
responsibilities to
Franchisees are to be performed by Area
Representative as
described in this Agreement or as set
forth in the
Manual or other reasonable standards and
specifications provided by Franchisor from time to time,
and
the responsibilities
to Franchisees will not materially
change during
the term of this Agreement. In providing
services to Franchisees of Franchised Businesses located in
the Development Territory, Area Representative shall in
all
respects comply
with the terms and conditions of any
Franchise Agreement or
other agreement
in effect between
Franchisee and Franchisor. Area Representative
understands,
however, that its
rights as an Area Representative are only
by virtue of this Agreement and that it is not in any
manner
a party, third
party beneficiary, or holder of any other
right or title to or
interest in any
Franchise
Agreement.
Similarly, no
Individual
or REZcity Plus
Franchisee is
a
third party
beneficiary
of this Agreement of any other
agreement
between Franchisor and Area Representative. Area
Representative
agrees that
it may not under any
circumstances sell any products, services or other items
to,
or collect
any money for any reason from, Franchisees
without Franchisor's prior written consent.
D. Area
Representative
shall at all times give prompt,
courteous
and efficient service to Individual and REZcity Plus Franchisees in the
Development Territory. Area Representative shall, in all dealings with
franchisees, prospective franchisees, and the public, adhere to the highest
standards of honesty,
integrity, fair dealing and ethical conduct.
E.
Area
Representative shall
secure and maintain in force all
required licenses,
permits and
certificates relating
to Area
Representative's
activities under this Agreement and operate in full compliance with all
applicable laws, ordinances and regulations.
Area Representative
acknowledges
being advised that many jurisdictions have enacted laws concerning the
advertising, sale, renewal, and termination of, and continuing relationship
between parties to, a
franchise agreement,
including, without
limitation, laws
concerning disclosure requirements. Area Representative agrees promptly to
become aware of, and to
comply with,
all such laws and
legal requirements
in
force in the Development
Territory and to
utilize only Offering
Circulars that
Franchisor has approved for
use in the applicable jurisdiction.
F. Area
Representative
shall notify Franchisor in writing
within
five (5) days after the commencement of any action, suit, arbitration,
proceeding, or investigation, or the issuance of any order,
writ,
injunction,
award, or decree, by any court, agency, or other governmental agency which
11
<PAGE>
concerns the operation or financial condition of Area Representative's
franchise, or any Individual or REZcity Plus Franchisee in the De
