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
--------
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 selects in-house training, all expenses of attendance at
the initial
training by Franchisee and its employees including, without
limitation,
travel, and
room and board expenses, shall be the sole
responsibility of Franchisee. If Franchisee selects online training,
the only
expense associated is a long distance telephone call into the
conference line.
B As
part
of ongoing assistance,
Franchisor will make
available
a telephone line which Franchisee 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
Franchisees
or their managers or employees
attend and successfully complete refresher training programs
or seminars; provided online or in-house.
VI.
USE OF SYSTEM AND MARKS
-----------------------
A
Franchisee
acknowledges
that the
name "REZcity.com" and
"REZconnect.com"" and
the Marks licensed
hereunder are owned by Franchisor and
Franchisee further acknowledges that valuable goodwill is attached
to such trade
names, trademarks and
service marks and that
Franchisee will use
same only in
the manner and to the extent specified by this Agreement.
B
Franchisee acknowledges, and will not c ontest, Franchisor's or
any affiliate's
exclusive ownership
and rights to each and every aspect of the
System. Franchisee's
right to market the
System and establish
the Franchised
Businesses is
specifically
limited to the Territory, and is subject to the
supervision and
control of
Franchisor
as provided
herein. Said right shall
terminate upon the expiration or termination of this Agreement.
C
Franchisee
acknowledges that
Franchisor's
Marks constitute a
significant aspect
of the System. Without Franchisor's written approval,
Franchisee agrees that
such Marks will not be used as the name, or part of any
name, of any
corporation,
partnership or any
entity of
proprietorship
under
which Franchisee
transacts business.
Franchisee's use of the Marks are subject
to the control and approval of Franchisor in every other
respect.
D If
a claim is
asserted by others of a prior use of the Marks
with respect to a similar business within the Territory,
Franchisor may
require
Franchisee to
participate
in the defense of such claims, at Franchisor's
expense. Franchisee shall give written notice to Franchisor within
five (5) days
of acquiring knowledge
concerning the use by others within the Territory of the
same or confusingly similar names and Marks.
E
If
Franchisor
at any time, in its
sole discretion,
determines
that it is advisable for Franchisee to modify or discontinue use of any Marks,
and/or use one or more
additional
or substantive trade names, trademarks,
service marks or other commercial symbols, Franchisee agrees to
comply therewith
within a reasonable time after notice thereof by Franchisor.
F
Franchisee shall
not establish a Website on the
Internet using
any domain
name containing the words "REZconnect.com,"
"RezCity.com,"
"Ezdropoff.com" or any
variation thereof
without prior written consent from
Franchisor. Franchisor
retains the sole right
to advertise on the Internet and
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create a Website
using the RezCity domain names (Including: rezcity.com,
rezity.biz, rezcity.net, rezcity.tv). Franchisee acknowledges that
Franchisor is
the owner of all
right, title and interest in and to such domain names as
Franchisor shall
designate in the Manual. Franchisor retains the right to
pre-approve
Franchisee's use of
linking and framing between Franchisee's Web
pages and all other
Websites. If requested
by Franchisor,
Franchisee
shall,
within five (5) days,
dismantle any frames and links between Franchisee's Web
pages and any other Websites.
G If
you are a REZcity Plus Franchisee, you cannot own an
auction site from eBAY or any other provider or sell goods on behalf
of a third
party under any
condition. Violation
of this prohibition
will be grounds
for
immediate termination of the Franchise Agreement.
VII.
OPERATIONS MANUAL
-----------------
A
While this
Agreement is
in effect, Franchisor will loan to
Franchisee one (1)
copy of the Manual containing mandatory and suggested
specifications,
standards, operating
procedures and rules prescribed from time
to time by Franchisor
for a Franchised
Business and
information
relative to
other obligations of
Franchisee. Franchisor
shall have the right to add to and
otherwise modify
the Manual from time to time to reflect changes in the
specifications,
standards,
operating procedures
and rules prescribed by
Franchisor for a
Franchised
Business, provided that no such addition or
modification shall alter Franchisee's fundamental status and rights
under this
Agreement. Franchisor
may make such
additions or
modifications without
prior
notice to Franchisee.
Franchisee shall immediately, upon notice, adopt any such
changes.
B
The Manual shall,
at all times, remain the sole property of
Franchisor and shall
promptly be returned upon the expiration or termination of
this Agreement.
Franchisee shall not make any disclosure, duplication or other
unauthorized use of manner any portion of the Manual.
C
The Manual contains
proprietary
information of
Franchisor and
shall be kept
confidential by
Franchisee both during the term of the franchise
and subsequent to the expiration or termination of this Agreement. Franchisee
shall at all times
ensure that its copy of the Manual be available on the
Premises in a current and up-to-date manner. At all times that the
Manual is not
in use by authorized personnel, Franchisee shall maintain the
Manual in a locked
receptacle on the
Premises, and shall only grant authorized personnel, as
defined in the Manual,
access to the key or combination of such receptacle. In
the event of any
dispute as to the
contents of the
Manual, the terms of the
master copy of the Manual maintained by Franchisor at Franchisor's
headquarters
shall be controlling.
VIII.
CONFIDENTIAL INFORMATION
------------------------
A Franchisor
possesses
certain
proprietary confidential
information consisting
of methods, techniques, formats, specifications,
procedures,
information, systems,
methods of business
management,
sales and
promotion techniques,
and knowledge of and experience in operating a Franchised
Business (the
"Confidential
Information").
Franchisor
shall disclose the
Confidential
Information in the training program, the Manual, and in guidance
furnished to
Franchisee during this
Agreement's
term. Franchisee shall not
acquire any interest in the Confidential Information, other than the right to
utilize it in
performing its duties
during the term of this Agreement, and
Franchisee
acknowledges that
the use or duplication of the Confidential
Information in any other business venture would constitute an unfair method of
competition.
Franchisee
acknowledges and
agrees that the Confidential
Information is
proprietary,
includes
Franchisor's
trade secrets, and is
disclosed to
Franchisee
solely on the condition that Franchisee (and its
shareholders,
partners, members and
managers, if
Franchisee is a corporation,
partnership or limited
liability company)
does hereby agree that it: (a) shall
not use the
Confidential
Information in any
other business or
capacity; (b)
shall maintain the
absolute
confidentiality of the
Confidential
Information
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during and after the
term of this
Agreement; (c) shall
not make
unauthorized
copies of any portion of the Confidential Information disclosed in written or
other tangible form; and (d) shall adopt and implement all
reasonable procedures
prescribed from
time to time by
Franchisor
to prevent unauthorized use or
disclosure of the Confidential Information. All ideas, concepts, techniques or
materials concerning
the Franchised Business, whether or not protectable
intellectual property
and whether created by or for Franchisee or its owners or
employees, must
be promptly disclosed to Franchisor and will be deemed
Franchisor's sole
and exclusive property, part of the System and works
made-for-hire for Franchisor. To the extent any item does not
qualify as a "work
made-for-hire" for
Franchisor, Franchisee
shall assign ownership of that item,
and all related
rights to that
item, to Franchisor and must sign whatever
assignment or other documents Franchisor requests to show ownership or to
help
Franchisor obtain intellectual property rights in the item.
B
Franchisor reserves
the right to
require Franchisee to have
each of its shareholders, officers, directors, partners, employees,
members, and
managers, and, if
Franchisee is an individual, Franchisee's spouse, execute a
non-disclosure and non-competition agreement in a form approved by
Franchisor.
IX.
MODIFICATION OF THE SYSTEM
--------------------------
Franchisee 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 Franchisee 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. Franchisee will make
such expenditures as
such changes or modifications in the System may reasonably
require. Franchisee
shall not change the System in any way without written
permission of Franchisor.
X.
ADVERTISING
-----------
A If
you are an individual Franchisee, you have the option to
make expenditures on
advertising within
your territory.
You may use your
own
advertising materials subject to the approval of the Franchisor.
Franchisor may
provide guidelines for
conducting local
advertising and promotional programs,
and any deviations
from such guidelines shall be approved by Franchisor in
writing prior to use.
B As
a REZcity Plus
Franchisee,
you must contribute 1% of your
gross revenue to the REZcity.com National Advertising Fund. There
are no REZcity
Plus Franchisees in the network that do not contribute to this
Fund. We estimate
that during the coming
fiscal year, about 35%
of the Funds money will be spent
on media, 20% on the production of advertising materials, 20% on public
relations, 10% on
sponsorships and 15%
on administration.
REZcity Corporate
Headquarters does not have to spend a specified amount of
Advertising Fund money
on advertising in your geographic area. We will prepare an annual
accounting for
the Fund. You may
review upon
request once a year. The report will not be
audited. Most of the money in the Advertising Fund will be spent
during the year
in which it is
contributed. Any
unspent money will be
retained in the account
for use during the following year. This goes into the OC at Item 11
not here.
C
Franchisee is
required to advertise continuously
in the
classified or Yellow Pages of the local telephone directory.
Franchisee shall do
so under the listings
"Internet Services" or such other listings as deemed
appropriate by Franchisor. When more than one (1) Franchised
Business serves a
metropolitan area,
classified
advertisements
shall
list all Franchised
Businesses
operating within
the distribution area of such classified
directories. Each
franchisee
shall contribute its equal share in the
cost of
such advertisement.
If required, Franchisee agrees to execute an agreement
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assigning such directory listing to Franchisor,
utilizing a form
prescribed by
Franchisor, which
shall become effective upon termination or expiration of this
Agreement.
D
With respect
to any promotional materials or advertising
permitted hereunder,
Franchisee shall not
use in advertising or any other form
of promotion, the copyrighted materials, trademarks, copyrights, service marks
or commercial symbols of Franchisor without appropriate (C) or (R)
registration
marks or the designations TM or SM where applicable.
XI.
PAYMENTS TO FRANCHISEE
----------------------
A
Unless
Franchisor and
Franchisee agree in
writing otherwise
for a specific account, Franchisor shall pay to Franchisee,
within fifteen
(15)
days after the end of each calendar month and according to the schedule as
contained in Exhibit B to this Agreement, fees for the sale of each Service
or
other Internet
advertising services
which are actually
received by Franchisor
from each franchisee,
Sales Consultant or directly from the end user based upon
sales within
Franchisee's
Territory (as delineated in Exhibit A) ("Sales
Commissions").
Notwithstanding the foregoing:
1. If Franchisee has
failed to perform in any material
respect
any material
requirements under the
terms of this Agreement, Franchisee shall
not be entitled to receive Sales Commissions until such deficiencies have
been
corrected to Franchisor's reasonable satisfaction.
2. Franchisee shall
not be entitled to share in or receive any
Sales Commissions
based upon fees paid
to Franchisor in the Territory prior to
the time Franchisee
completes the initial
training program and
commences full
operations of the Franchised Business.
B All payments under this Paragraph shall immediately and
permanently cease
after the expiration or termination of this Agreement,
although Franchisee
shall receive all
amounts which have accrued to Franchisee
as of the effective date of expiration or termination.
C
Franchisor's payments
to Franchisee shall be based on amounts
actually collected,
not on payments
accrued, due or owing. Franchisor shall
apply any payments received from to any past due indebtedness owed
to Franchisor
or its affiliates.
D.
Franchisee 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 Franchisee by Franchisor, which right
of set off is hereby expressly waived by Franchisee. Franchisor
shall be allowed to set off against amounts owed to Franchisee
for Sales Commissions
or other amounts due
under this Agreement
any monies owed to Franchisor.
E.
All Merchant fees and any third party charges to handle billing
are deductible from
monies owed franchisee
based on
reasonable
industry standards.
XII.
BILLING, ACCOUNTING AND RECORDS
-------------------------------
A
During the term of
this Agreement,
Franchisor or its
agent,
will handle all of the billing and invoicing for the advertising services and
sales of Services through the Franchised Business. Franchisor will exercise all
reasonable efforts as
it considers
appropriate to collect
amounts due for the
Services or sales of other products or services performed in conducting the
Franchised Business.
Franchisor
may, in its
discretion,
compromise,
settle,
discount, factor,
write-off,
assign to collection
agencies or pursue
through
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<PAGE>
legal action,
all amounts due for
Services provided through the Franchised
Business. After
applying amounts owed
by Franchisee to Franchisor, Franchisor
will pay to Franchisee
the commissions
as specified in this
Agreement and any
other agreement between Franchisee and Franchisor on a monthly
basis. Franchisor
will withhold
amounts due it under
this Agreement
(or any other
agreement).
Franchisor will pay
such amount to Franchisee by the fifteenth (15th) day of
each month based on the collections Franchisee has received for the
immediately
preceding month.
The date shall automatically be extended until the next
business day if the fifteenth (15th) day of the month is a holiday,
Saturday or
Sunday.
Franchisor will
simultaneously
send Franchisee financial reports
(electronically or otherwise) detailing the revenues billed and the
amounts that
are applied
as a setoff. Although Franchisor will try to collect all
receivables, there is
no assurance or guarantee as to the timing of collection
or the ultimate success of collection. Franchisor shall have no
obligation other
than to exercise its standard procedures for collection of amounts due. Some
accounts are more reputable and creditworthy than others. Franchisor does not
warrant the timing or
collectability
of any amounts owed by anyone even if
Franchisor originally offered the account to Franchisee.
B
During the term of
this Agreement,
Franchisee shall maintain
and preserve for the time period specified in the Manual, full, complete and
accurate books,
records and accounts in accordance with the standard accounting
system prescribed
by Franchisor in the Manual or otherwise in writing.
Franchisee shall
retain during the term of this
Agreement and for three (3)
years thereafter
all books and
records related to the Franchised Business
including, without limitation, invoices, payroll records, check
stubs, sales tax
records and returns, cash receipts and disbursement journals, general ledgers,
state and federal income tax returns, and any other financial
records designated
by Franchisor or as required by law.
C
Franchisee shall
supply
to Franchisor, or its designated
agent, on or
before the fifteenth (15th) day of the following calendar
month/quarter, in a
form approved by Franchisor, a balance sheet as of the end
of the last preceding
calendar month/quarter
and an income
statement for such
calendar month/quarter
and Franchisee's fiscal year-to-date. Additionally,
Franchisee shall, at
its expense, submit to
Franchisor within
forty-five (45)
days of the end of each fiscal year during the term of this
Agreement, a
profit
and loss statement
for such fiscal year
and a balance sheet as of the last day
of such fiscal year,
prepared on a accrual
basis including all adjustments
necessary for fair presentation of the financial statements.
D
Franchisor or its
designated agent(s)
shall have the right,
at
all reasonable times,
to examine and copy, at its expense, the books, records
and tax returns of Franchisee. In addition, Franchisor shall have the right
to
interview clients,
employees, vendors
and/or suppliers.
Franchisor shall also
have the right, at any
time, to have an independent audit made of Franchisee's
books, at Franchisor's expense.
XIII.
STANDARDS OF QUALITY AND PERFORMANCE
------------------------------------
A
Franchisee understands
every detail of the
operation of the
Franchised Business is important, not only to Franchisee,
but to Franchisor
and
other franchisees
in order to (i) develop and maintain high and uniform
operating standards;
(ii) increase the demand for the Services, other services
and products offered by Franchised Businesses; and (iii) increase
the viewership
and consumer awareness of local sites within the RezCity.com home
page.
B
Franchisee agrees to comply with all requirements set forth in
this Agreement, the
Manual and other written policies supplied to Franchisee by
Franchisor. Mandatory specifications, standards, operating procedures
and rules
prescribed from
time to time by Franchisor in the Manual or otherwise
communicated to
Franchisee
in writing
shall constitute provisions of this
Agreement as if fully set forth herein. All references herein to this
Agreement
10
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shall include
all such mandatory specifications, standards and operating
procedures and rules.
Franchisee shall comply with the entire System including,
but not limited to, the provisions of this Paragraph XIII.
C
Franchisee
recognizes that the
operation of a RezCity.com
business involves heavy emphasis on sales soliciting and marketing.
In addition,
if Franchisee is a franchisee operating in a metropolitan market, Franchisee
understands there is additional emphasis on developing,
managing and
soliciting
Sales Consultants.
D
Franchisee shall
offer
for sale and use at the Franchised
Business all types of
advertising and
Internet products and
related services
that Franchisor
from time to time
authorizes
and shall not offer
for sale or
sell or provide
through the Franchised Business or the Premises which it
occupies any other
category of services,
supplies, merchandise, products or
accessories or use
such Franchised
Business for any purpose other than the
operation of a
RezCity.com Franchised
Business in full
compliance
with this
Agreement and the Manual.
E
The Franchised
Business
shall,
at all times, be under the
direct supervision of
Franchisee. Franchisee
understands
that the
Franchised
Business may be operated on a part-time or full-time basis.
Full-time means
the
expenditure of at least thirty-five (35) hours per week, excluding vacation,
sick leave, etc. I
F
Franchisee shall
secure
and maintain in force all required
licenses, permits and
certificates relating
to the operation of the Franchised
Business and shall operate the Franchised Business in full compliance with all
applicable laws, ordinances and regulations including, without limitation, all
government regulations.
G
All advertising
and promotional activities by Franchisee
in
any medium
shall be conducted in a dignified manner and shall accurately
promote, describe and
otherwise represent
the type, quality and other features
of the services and related support activities.
H
Franchisee shall
use only such client forms, invoices and
standardized contracts, as are approved by Franchisor.
Franchisee shall
obtain
such forms from Franchisor or from suppliers Franchisor has
approved. Copies
of
all client contracts
and invoices issued by
Franchisee
shall be submitted
to
Franchisor on a daily basis.
I
Franchisee shall
notify Franchisor
in writing within five (5)
days of the commencement of any action, suit or proceeding,
and of the
issuance
of any order, writ,
injunction, award or
decree of any court,
agency or other
governmental instrumentality,
including
action
against
professional
services/credentials
of any employee
associated
with Franchisee, which may
adversely affect
the operation or financial condition of the Franchised
Business.
XIV.
FRANCHISOR'S OPERATIONS ASSISTANCE
----------------------------------
A
Franchisor or
Franchisor's
representative shall
make periodic
visits to the Franchised Business for the purposes of
consultation,
assistance
and guidance of Franchisee in various aspects of the operation and
management of
the Franchised
Business at the
request of the
Franchisee. The fee
associated
with Franchisor
visiting Franchisee is
$150 per day plus all travel expenses.
Franchisor and Franchisor's representatives who visit the Franchised
Business
may prepare, for the benefit of both Franchisor and Franchisee,
written reports
with respect to such visits outlining any suggested
changes or
improvements in
the operations
of the Franchised Business 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 Franchisee.
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B
Franchisor may
conduct research and testing to determine the
feasibility of
new programs, market trends and the marketability of new
programs. Franchisee
agrees to cooperate
and participate in
such research and
testing programs by
test marketing new programs and/or services at Franchisee's
Franchised Business
and by providing
Franchisor with timely
reports and other
relevant information regarding research and testing programs.
Franchisee agrees
to make reasonable efforts to sell any products and services
comprising the new
program.
XV.
INSURANCE
---------
A
Franchisee shall
procure, at its sole
expense, and maintain
in
full force and effect during the term of this Agreement,
an insurance policy
or
policies protec
