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Exhibit
10.14
FORM OF
FRANCHISE
AGREEMENT
(GENERAL INSURANCE
SPECIALIST)
THIS AGREEMENT made and entered
into this
day of
, 200 (which with all exhibits and
addenda shall be referred to herein as the “Agreement”)
by and between Brooke Franchise Corporation, a Missouri
Corporation, having its principal place of business at Overland
Park, Kansas referred to hereafter as “Brooke”; and,
, a/an
, whose offices and primary place of
business is located at
,
.
The proprietorship, partnership,
corporation or other Person referenced above is referred to
hereafter as “Franchise Agent”.
WITNESSETH:
WHEREAS, Franchise Agent is
primarily in or may enter the business of selling, servicing and/or
delivering property and casualty policies from the agency offices
referenced above, but may also offer other financial services such
as life insurance, health insurance, banking, lending and
investment services on a brokerage basis through other franchise
agents specializing in those areas or on a brokerage basis through
Brooke; and
WHEREAS, Brooke is primarily in
the business of providing certain services and assistance to
businesses selling insurance; however, Brooke is in or may enter
the business of selling, servicing and/or delivering other Policies
and may provide certain services and assistance to businesses
selling same; and
WHEREAS, Franchise Agent and
Brooke desire to associate together effective
,
, for the purpose of Brooke providing certain services and
assistance to Franchise Agent with respect to Franchise
Agent’s business;
NOW THEREFORE, in consideration
of the mutual promises set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. DEFINITIONS OF TERMS USED IN THIS
AGREEMENT:
For purposes of this Agreement, the
following terms shall have the following meanings unless the
context clearly requires otherwise:
1.1 Agency Bill Policies: Any
Policies for which a Franchise Agent is responsible for all or any
part of premium or fee billing and collection.
1.2 Agent of Record: Person
designated on Company’s records as the agent or
representative regarding a specific Policy and the owner of all
Sales Commissions.
1.3 Company: A company issuing,
brokering, selling or making a market for Policies and which has a
contract with Brooke. (For the purposes of this definition,
“Brooke” shall include a parent, subsidiary or
affiliate of Brooke).
1.4 Company Billings: Statements
or billings received by Brooke from Companies for amounts due
Brooke from Companies and for amounts due Companies from
Brooke.
1.5 Customer Account: A Person
who has a Policy purchased from, serviced, renewed or delivered
through Franchise Agent. Customer Accounts shall be owned by
Franchise Agent or a Subagent.
1.6 Direct Bill Policies: Any
Policies for which a Company is responsible for premium or fee
billing and collection.
1.7 Franchise Agent Account: An
account on Brooke’s ledgers to which Brooke records amounts
due Brooke from Franchise Agent and amounts due Franchise Agent
from Brooke.
1.8 Gross Premiums: Total
premium, fees or other amounts due from the sale, renewal, service
or delivery of Policies including the corresponding Sales
Commissions.
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1.9 Insurance, Investment, Banking
and/or Credit Services: Insurance services include but are not
limited to the sale, renewal, service or delivery of insurance
policies, annuities, insurance brokering services, insurance
customer services, risk management services and insurance related
consulting or advisory services. Investment services include, but
are not limited to, the sale, renewal, service or delivery of
mutual funds, stocks, bonds, notes, debentures, real estate
services, investment customer services, and investment related
consulting, and financial, investment, or economic advisory
services. Banking services include any banking service Franchise
Agent is allowed to perform under federal and/or state laws. Credit
services include, but are not limited to, origination or brokerage
of loans or mortgages, credit customer services, and credit related
consulting or advisory services. At any point in time, Insurance,
Investment, Banking and Credit Services shall be limited to those
services then offered by Brooke.
1.10 Net Premium: Gross Premiums
on Agency Billed Policies less the corresponding Sales
Commissions.
1.11 Other Receipts: Deposits
made to the Receipts Trust Account that are not Sales Commissions.
Such receipts may include but are not limited to: Profit Sharing
Commissions; Net Premiums, advertising reimbursements, proceeds
from sale of personal money orders; Gross Premiums for Direct
Billed Policies (e.g. on line payments); loan proceeds; Company
refunds; supplier refunds; and vendor refunds.
1.12 Person: Any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company,
institution or other entity.
1.13 Policies: Any and all
insurance services, policies, coverages or products sold, renewed,
serviced or delivered through Franchise Agent to any Person.
Policies include, but are not limited to, any and all Insurance,
Investment, Banking or Credit Services, or policies, coverages or
products associated therewith sold, renewed, serviced or delivered
through Franchise Agent to any Person.
1.14 Profit Sharing Commissions:
Commissions or fees which are generally not associated with the
sale of a specific Policy through Franchise Agent. Profit Sharing
Commissions are typically contingent upon factors such as sales
volume, premium volume, profitability and other special concessions
negotiated by Brooke. Profit Sharing Commissions include, but are
not limited to, payments identified by the Companies as profit
sharing commissions, contingency commissions, advertising
allowances, prizes, override commissions, expense reimbursements
and bonus commissions.
1.15 Receipts Trust Account: An
account established and owned by Brooke, but controlled by a
trustee, to which premiums, fees, Sales Commissions and Other
Receipts received by Franchise Agent or Brooke from Companies or
customers shall be deposited and from which Brooke, or its
designee, makes regular withdrawals by Electronic Funds Transfer.
(For the purposes of this definition, “Brooke” shall
include a parent, subsidiary or affiliate of Brooke.)
1.16 Return Commissions: Direct
Bill Policy commissions that are unearned because Policy premium or
fee was reduced or Policy canceled.
1.17 Sales Commissions:
Commissions paid by Companies to Brooke or assigned by Franchise
Agent to Brooke for the sale, renewal, service or delivery of a
specific Policy through Franchise Agent. Sales Commissions are not
normally contingent upon factors such as Brooke’s loss ratio,
premium volume, sales volume or special concessions negotiated by
Brooke. For the purposes of this Agreement, Sales Commissions shall
specifically exclude Profit Sharing Commissions and other similar
payments. However, Sales Commissions shall specifically include
amounts paid by Brooke pursuant to a bonus plan, the terms of which
are defined by Brooke in its sole discretion and for which Brooke
makes no representation regarding future payments or Franchise
Agent’s eligibility. Sales Commissions shall also include any
consulting fees, advisory fees, placement fees, service fees,
renewal fees, or any similar payments paid on or related to any
Customer Account by any Person. (For the purposes of this
definition, “Brooke” shall include a parent, subsidiary
or affiliate of Brooke.)
1.18 Subagent: A Person which has
entered or may enter into a Subagent Agreement with Franchise
Agent.
1.19 Subagent Agreement : An
agreement entered into by and between Subagent and Franchise Agent
and approved by Brooke pursuant to which Subagent is allowed vested
ownership rights in Customer Accounts coded to Subagent and
Franchise Agent performs certain accounting and processing services
for Subagent.
2. OBLIGATIONS TO BE PERFORMED BY
BROOKE:
2.1 As of the effective date of this
agreement, Brooke shall provide services with respect to accounting
for and processing of Policies for Franchise Agent. Brooke may
provide other services as may be agreed upon by Brooke and
Franchise Agent from time to time. Furthermore, certain duties and
obligations of Brooke set forth in this Agreement may be performed
by a subsidiary or an affiliate of Brooke.
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2.2 Brooke shall account for all Sales
Commissions on Direct Bill Policies issued, renewed, endorsed,
changed, serviced, delivered or canceled on behalf of Customer
Accounts. Brooke shall credit Franchise Agent Account for Sales
Commissions received by Brooke from Companies for Customer Accounts
in the amounts indicated on the appropriate Company Billing. Brooke
shall debit Franchise Agent Account for Return Commissions due to
Companies by Brooke for Customer Accounts in the amounts indicated
on the appropriate Company Billing.
2.3 (a) Brooke shall account for all Net
Premiums on Agency Bill Policies issued, renewed, endorsed,
changed, serviced, delivered or canceled on behalf of Customer
Accounts. Brooke shall debit Franchise Agent Account for Net
Premiums due to Companies by Brooke for Customer Accounts in the
amounts indicated on the appropriate Company Billing. Brooke shall
credit Franchise Agent Account for Net Premiums returned to Brooke
from Companies for Customer Accounts in the amounts indicated on
the appropriate Company Billing. Brooke has the absolute right to
and is fully vested in all Net Premiums. Franchise Agent has no
right, title or interest in such amounts. (b) Brooke shall credit
Franchise Agent Account for Agent Billed Policy premiums received
from any insured or other Person for a Customer Account. At
Brooke’s option, Brooke may defer any such credit for Agent
Billed Policy premiums until a corresponding charge is made to
Franchise Agent Account for Net Premiums in accordance with
subparagraph 2.3 (a).
2.4 Brooke shall calculate and credit
Franchise Agent Account monthly for amounts due Franchise Agent by
Brooke. Amounts due Franchise Agent shall be Eighty-five percent
(85%) of any Sales Commissions from Companies for Customer
Accounts.
2.5 Subject to the prior approval of the
insurance company involved, Brooke shall endorse Brooke’s
errors and omissions insurance policy to provide errors and
omissions insurance coverage for Franchise Agent. Brooke shall
calculate and debit Franchise Agent Account for Franchise
Agent’s share of the errors and omissions insurance policy
premium. Brooke may adjust said policy premium to maintain a
Franchise Agent deductible fund. Brooke shall calculate Franchise
Agent’ share of said errors and omissions insurance policy
premium by dividing the estimated annual commissions received on
Customer Accounts by the total estimated annual commissions
received by Brooke from all Companies. However, Franchise
Agent’s share of Brooke’s annual policy premium shall
not be less than the minimum annual premium that is set from time
to time by Brooke. Franchise Agent has the responsibility to
provide Brooke with copies of those documents which Brooke deems
necessary for errors & omissions documentation. Franchise Agent
must also be a member of the state independent agents association
to be eligible for errors and omissions coverage and may be
required to participate in errors and omissions loss control
seminars. If Franchise Agent fails to participate, Franchise Agent
may be assessed an additional amount for errors and omissions
coverage.
2.6 Brooke will pay for 50% of
advertising that is pre-approved by Brooke and shall be reimbursed
by Franchise Agent for Franchise Agent’s share of payments
made to advertisers on behalf of Franchise Agent.
2.7 Brooke shall account for and debit
Franchise Agent Account monthly for any other supplies or services
provided by Brooke to Franchise Agent if previously agreed upon by
Brooke and Franchise Agent. Franchise Agent acknowledges that,
pursuant to this paragraph, Brooke provides Franchise Agent with
additional services and retains additional commissions when
Policies are sold, renewed, serviced or delivered through Franchise
Agent through a Brooke subsidiary or affiliate which provides such
Policies to agents on a brokerage or non-exclusive basis and when
agency listing or consulting services of a Brooke subsidiary or
affiliate are utilized.
2.8 Brooke shall forward a record of
Franchise Agent Account to Franchise Agent on or about the 15th day
of each month. Upon written notice to Franchise Agent, Brooke may
change the date on or about which statements are
forwarded.
2.9 Brooke, or its designee, shall pay
to Franchise Agent, by electronic funds transfer, the credit
balance recorded on the Franchise Agent Account on or about the
20th day of each month. If Franchise Agent has not paid to Brooke,
or its designee, the debit balance recorded on the Franchise Agent
Account by the 20th day of each month, then Brooke, or its
designee, shall withdraw the amount of any such debit balance from
Franchise Agent’s checking account using an electronic funds
transfer. Upon written notice to Franchise Agent, Brooke may change
the date on or about which Franchise Agent’s account is
credited or debited.
2.10 Brooke shall provide Franchise
Agent with a rules and procedures manual that has been adopted by
Brooke and shall provide Franchise Agent with notice of any changes
made by Brooke to said manual from time to time.
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2.11 Brooke shall provide Franchise
Agent with a unique written list of Companies that have been
approved for Franchise Agent use by Brooke and shall provide
Franchise Agent with notice of any changes made by Brooke to said
list from time to time. Franchise Agent acknowledges that changes
to the list of Companies may be made by Brooke at its sole and
absolute discretion.
2.12 Brooke shall provide Franchise
Agent with a unique written list specifying Franchise Agent
authority for binding Companies to Policies or coverages and shall
provide Franchise Agent with notice of any changes made by Brooke
to said list from time to time.
2.13 Unless otherwise agreed in writing
by Brooke, Franchise Agent shall do business under the name
“Brooke Financial Services” or “Brooke Insurance
and Financial Services”. Therefore Brooke permits the use of
its trade names, trademarks, service marks, logotypes, commercial
symbol and promotional materials for the purpose of advertising
such relationship. Brooke does not represent or guarantee that
Franchise Agent will have exclusive use of such name, that such
name is available for use in Franchise Agent’s market and/or
that there are no competing names or uses. If such name is not
available for use, Franchise Agent shall do business under a name
mutually agreed upon by the parties.
2.14 Brooke shall provide Franchise
Agent full and complete access to Brooke’s records of
Customer Accounts provided that it shall be upon reasonable advance
request and during such times and upon such conditions as shall not
unreasonably impair the operations of Brooke.
2.15 Brooke shall license Franchise
Agent to use Brooke’s proprietary Document Manager system
provided that Franchise Agent purchase, license, install and
maintain all software and hardware, other than Brooke’s
proprietary Document Manager programs, which may be required to use
the Document Manager system and provided that Franchise Agent not
sell, lease or authorize the use of the Document Manager programs
to anyone else and provided that Franchise Agent not configure,
program or change any Document Manager programs. Franchise Agent
can only access customer information through the Document Manager
system via the Internet. Franchise Agent, its owners, officers,
directors, employees and independent contractors agree to release,
defend, indemnify and hold Brooke harmless for and from any and all
claims, losses, liabilities, damages or expenses (including, but
not limited to reasonable attorneys’ fees, court costs, and
costs of investigation) of any kind or nature whatsoever incurred
by Franchise Agent, its owners, officers, directors, employees and
independent contractors resulting from an interruption in Internet
services or from any unauthorized use of or access to Customer
Account information through the Internet. This release, defense,
indemnification and hold harmless shall survive the termination of
this Agreement.
3. OBLIGATIONS TO BE PERFORMED BY
FRANCHISE AGENT:
3.1 Upon the signing of this Agreement,
Franchise Agent shall pay to Brooke an initial nonrecurring and
nonrefundable set up fee of One Hundred Twenty-Five Thousand and
No/100 Dollars ($125,000.00), the receipt of which is acknowledged,
following which Franchise Agent shall do business under the name
“Brooke Financial Services” or “Brooke Insurance
and Financial Services”, unless otherwise approved in writing
by Brooke.
3.2 Franchise Agent shall provide
competent and qualified personnel for the sale, renewal, service
and delivery of Policies and to serve as liaison or contact with
Customer Accounts. Franchise Agent agrees to submit an application
(in a form approved by Brooke) for any licensed individuals
Franchise Agent wishes to hire or contract. Brooke shall be
entitled to approve or disapprove such applications in its sole
discretion. As a property and casualty insurance specialist,
Franchise Agent acknowledges that the primary financial service
offered by it will be property and casualty insurance; however,
Franchise Agent may also offer other financial services such as
life insurance, health insurance, banking, lending and investment
services on a brokerage basis through other franchise agents
specializing in those areas or on a brokerage basis through Brooke.
Brooke may require Franchise Agent to participate in additional
training and/or meet additional qualifications to offer life and
health insurance, investment, banking and/or credit services.
Further, Franchise Agent acknowledges that this Agreement may need
to be amended to accommodate the sale of policies and services
outside Franchise Agent’s specialization.
3.3 On or before the effective date of
this Agreement, Franchise Agent shall, subject to prior approval of
the Companies involved, change the Agent of Record for all existing
Customer Accounts to Brooke (for the purposes of this subparagraph,
“Brooke” shall include a subsidiary or affiliate of
Brooke).
3.4 After the effective date of this
Agreement, Franchise Agent shall process all applications for
Policies exclusively through the facilities of Brooke.
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3.5 Franchise Agent shall make Brooke
(for the purposes of this subparagraph, “Brooke” shall
include a subsidiary or affiliate of Brooke) the Agent of Record
for all Policies sold, renewed, serviced or delivered through
Franchise Agent with an effective date for coverage after the
effective date of this agreement, unless prior written approval is
obtained from Brooke. If a Company refuses to make Brooke the Agent
of Record for all Policies sold, renewed, serviced or delivered
through Franchise Agent, then Franchise Agent shall assign all
Sales Commissions and Profit Sharing Commissions associated with
such Policies to Brooke. Franchise Agent agrees and acknowledges
that by making Brooke the Agent of Record, all Sales Commissions
and Profit Sharing Commissions are assigned to Brooke for
accounting and distribution to Franchise Agent Account pursuant to
this Agreement. Franchise Agent appoints Brooke as its attorney in
fact to endorse or deposit checks made payable to Franchise Agent
by customers, Companies or master general agents. Franchise Agent
also agrees to obtain from its producers or Sub Agents an
appointment of Brooke as attorney in fact to endorse or deposit
checks made payable to such producers or subagents by customers,
Companies or master general agents.
3.6 Franchise Agent shall apply for
issuance of Direct Bill Policies if payment of premiums in this
manner is permitted by the Company providing coverages. Franchise
Agent shall obtain specific approval of Brooke prior to submitting
any application for issuance of an Agency Bill Policy. Brooke may
at its discretion require Franchise Agent to provide documentation
substantiating Franchise Agent’s inability to procure Direct
Bill Policy coverage prior to Brooke approving Franchise
Agent’s placement of an Agency Bill Policy. If Brooke
requests such documentation and Franchise Agent fails to provide
it, subject to applicable law, Brooke reserves the right to cancel
or require Franchise Agent to cancel the corresponding Agency Bill
Policy(ies). Furthermore, if Brooke approves the use of a supplier
that issues Agency Bill Policies or the placement of an Agency Bill
Policy, Brooke may require that the full premium payment be
deposited and receipted to the Receipts Trust Account prior to such
policy being issued on a fully earned premium basis.
3.7 Franchise Agent shall be solely
responsible for the collection of all Agency Bill Policy premiums
from Customer Accounts, which amounts shall be made payable to
Brooke Corporation. Franchise Agent agrees that if premiums on
Agency Bill Policies are uncollected and past due for a period of
over 60 days, Brooke may cancel or require Franchise Agent to
cancel the associated Agency Bill Policy and Brooke will apply net
proceeds to the Franchise Agent Account. Franchise Agent shall not
have authority to endorse or deposit such payments to its own
account. Franchise Agent appoints Brooke as its attorney in fact to
endorse or deposit checks made payable to Franchise Agent by
customers, Companies or master general agents. Franchise Agent also
agrees to obtain from its producers or Sub Agents an appointment of
Brooke as attorney in fact to endorse or deposit checks made
payable to such producers or Sub Agents by customers, Companies or
master general agents. Brooke shall establish a Receipts Trust
Account to which all premiums, fees, Sales Commissions and Other
Receipts from Companies or customers shall be deposited and from
which Brooke, or its designee, makes regular withdrawals by
Electronic Funds Transfer. Franchise Agent acknowledges that it is
solely responsible for return of credits it receives which are due
Customers and agrees that it will pay Customers any credits due
them within thirty (30) days of the date such amount has been
credited to its Franchise Agent Account.
3.8 Franchise Agent shall be responsible
for payment to Brooke of all Agency Bill Policy net premiums and
Direct Bill Policy return commission resulting from Customers
Accounts.
3.9 Franchise Agent authorizes Brooke to
retain Fifteen percent (15%) of any Sales Commissions from
Companies under contract with Brooke for Customer Accounts;
Franchise Agent shall pay its share of: errors and omissions
insurance policy premiums; cost for motor vehicle reports, clue
reports, association membership dues, and rating software, which
may be calculated by Brooke by dividing the estimated annual
commissions received on Customer Accounts by the total estimated
annual commissions received by Brooke from all Companies or in some
instances, from all Companies in Franchise Agent’s state;
postage and express mail charges; appointment and licensing fees;
and fees for any other supplies and services provided by Brooke if
previously agreed upon by Franchise Agent and Brooke.
3.10 If Franchise Agent has not paid to
Brooke, or its designee, the debit balance recorded on the
Franchise Agent Account by the 20th day of each month, then
Franchise Agent authorizes Brooke, or its designee, to withdraw the
amount of such debit balance from Franchise Agent’s checking
account using an electronic funds transfer. Without waiving any
other rights Brooke may have pursuant to this Agreement, if
Franchise Agent fails to pay amounts due Brooke when due, Brooke
may at its discretion charge interest on unpaid amounts at a rate
not to exceed the maximum rate allowed by law until such amounts
are paid. Brooke may at its sole discretion allow Franchise Agent
additional time to pay amounts Franchise Agent owes Brooke;
however, in such event, Brooke may still charge Franchise Agent
interest until such amounts are paid.
3.11 Franchise Agent shall be
responsible for providing to Brooke any information regarding
Franchise Agent or Franchise Agent’s owners, officers,
employees and independent contractors that may be required from
Brooke by any self regulatory organization, governmental agency or
any Company. Franchise Agent shall be responsible for ensuring that
Franchise Agent and Franchise Agent’s owners, officers,
employees and independent contractors comply with all federal,
state, local and
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Company requirements including but not
limited to the sales practices, education and licensing
requirements of all governmental agencies and any Company.
Franchise Agent shall provide evidence satisfactory to Brooke that
Franchise Agent and Franchise Agent owners, officers, employees and
independent contractors have complied with such requirements. If
Franchise Agent does not comply with the terms of this paragraph,
it is cause for immediate termination of this Agreement without any
liability on or against Brooke.
3.12 Franchise Agent shall abide by and
conform to the rules and procedures adopted from time to time by
Brooke. Franchise Agent acknowledges that said rules and procedures
include, among other requirements, a requirement that Franchise
Agent provide Brooke with copies of all Policy applications and all
other records or documents originated, received or processed by
Franchise Agent which are related to Customer Accounts, Policies or
Franchise Agent’s business. Franchise Agent acknowledges the
importance of complete and timely transmittal of all records and
documents and agrees to submit in a timely manner to Brooke all
such records and documents.
3.13 Franchise Agent shall apply for
coverages only with the Companies that are authorized for Franchise
Agent’s use from time to time by Brooke. Franchise Agent
acknowledges that Brooke, in its sole and absolute discretion,
shall decide which Companies Franchise Agent may use.
3.14 Franchise Agent shall abide by and
conform to the conditions and limits of authority for binding
Companies to insurance and other coverages which are set forth from
time to time by Brooke.
3.15 Franchise Agent shall obtain the
prior written consent of Brooke before using Brooke’s trade
names, trademarks, service marks, logotypes or commercial symbols
on any advertising literature, promotional materials, signs or
business forms that are not provided by Brooke.
3.16 Immediately upon termination of
this Agreement for what
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