FRANCHISE AND ASSET SALE AGREEMENT

Exhibit 10.3

FRANCHISE AND ASSET SALE AGREEMENT

This Franchise and Asset Sale Agreement (this “Agreement”) by and among The Princeton Review, Inc., a Delaware corporation (“Parent”), TPR SoCal, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Parent (“Merger Sub II”), and Paul Kanarek (“Kanarek”), an individual residing in the State of California, is hereby made and entered into as of June 11, 2008. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Merger Agreement (as hereinafter defined). The foregoing parties are sometimes referred to herein each individually as a “Party” and, collectively, as the “Parties.”

W I T N E S S E T H

WHEREAS, Merger Sub II desires to purchase from Kanarek, and Kanarek desires to sell to Merger Sub II, (a) that certain The Princeton Review Franchise Agreement governing franchises located in the California counties of Fresno, San Luis Obispo and Kern, dated as of September 30, 2005, by and between Parent and Kanarek, as amended by and together with the Addendum to such The Princeton Review Franchise Agreement, dated as of September 30, 2005, and any and all addenda or agreements related thereto among Parent and Kanarek (the “CA Counties Franchise Agreement”), (b) that certain The Princeton Review Franchise Agreement governing franchises located in New Mexico, dated as of September 30, 2005, by and between Parent and Kanarek, as amended by and together with the Addendum to such The Princeton Review Franchise Agreement, dated as of September 30, 2005, and any and all addenda or agreements related thereto among Parent and Kanarek (the “NM Franchise Agreement”), and (c) that certain The Princeton Review Franchise Agreement governing franchises located in Utah, dated as of September 30, 2005, by and between Parent and Kanarek, as amended by and together with the Addendum to such The Princeton Review Franchise Agreement, dated as of September 30, 2005, and any and all addenda or agreements related thereto among Parent and Kanarek, each as amended or supplemented to date (the “UT Franchise Agreement,” and together with the CA Counties Franchise Agreement and the NM Franchise Agreement, the “Franchise Agreements”), in accordance with the terms and conditions set forth in this Agreement;

WHEREAS, in connection with the purchase of the Franchise Agreements by Merger Sub II, Merger Sub II desires to purchase from Kanarek, and Kanarek desires to sell to Merger Sub II, the goodwill associated with the businesses of the franchises which exploit the Franchise Agreements (collectively, the “Franchise Businesses”), in accordance with the terms and conditions set forth in this Agreement;

WHEREAS, in connection with such purchase and sale of the Franchise Agreements and goodwill, Kanarek desires to enter into a noncompetition agreement in favor of Parent;

WHEREAS, the Parties desire to set forth their understanding with respect to certain other covenants and agreements of Kanarek;

WHEREAS, Parent has entered into an Agreement and Plan of Reorganization, dated as of June 11, 2008, by and among Parent, TPR SoCal I, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub I”), Merger Sub II, The Princeton Review of Orange County, Inc., a California corporation (“Orange”), and Kanarek (the “Merger Agreement”), pursuant to which Merger Sub I will merge with and into Orange, with Orange surviving the merger, followed by a merger of the surviving corporation of the foregoing merger with and into Merger Sub II, with Merger Sub II surviving the merger, subject to the terms and conditions of the Merger Agreement (collectively, the “Merger”);

WHEREAS, Parent, Merger Sub II and Kanarek each desire that this Agreement (collectively, the transactions, covenants and agreements contemplated by this Agreement are the “Kanarek Transactions”) be effective as of the Kanarek Closing (as hereinafter defined).

NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

Section 1. Purchase and Sale of Assets.

(a) Purchased Assets. In accordance with the terms and conditions set forth in this Agreement, at the Kanarek Closing, Merger Sub II shall purchase, and Kanarek shall sell, convey, assign, transfer and deliver to Merger Sub II, free and clear of any Liens (as hereinafter defined), except for any Permitted Liens (as hereinafter defined), by appropriate instruments of conveyance reasonably satisfactory to Parent, the Franchise Agreements, all assets, properties, rights, titles and interests of every kind or nature owned, leased, licensed or otherwise held by Kanarek (including indirect and other forms of beneficial ownership) as of the Kanarek Closing, and in any case, belonging to or intended to be used in the Franchise Businesses, whether tangible, intangible, real or personal and, wherever located, including, but not limited to, those assets set forth on Exhibit A hereto (the “Purchased Assets”), and excluding those assets set forth in Section 1(b), below (the “Excluded Assets”).

(b) Excluded Assets. Kanarek shall retain no assets related to the Franchise Businesses.

(c) Assumed Liabilities; Excluded Liabilities. In accordance with the terms and conditions set forth in this Agreement, at the Kanarek Closing, Merger Sub II shall assume and shall agree to pay, defend, discharge and perform as and when due and performable only the obligations under the Franchise Agreements arising after the Kanarek Closing (the “Assumed Liabilities”). Notwithstanding the foregoing sentence, Kanarek shall retain, and shall be responsible for paying, performing and discharging when due, and neither Merger Sub II nor Parent or any Affiliate thereof shall assume or have any responsibility for, all Liabilities of Kanarek as of the Kanarek Closing other than the Assumed Liabilities (the “Excluded Liabilities”). For the avoidance of doubt, Excluded Liabilities shall include, without limitation, (i) any and all debts, obligations and other liabilities (whether absolute, accrued, contingent, fixed or otherwise, or whether known or unknown, or due or to become due or otherwise) associated with the wage and hour class action case titled Tiu & Campbell v. The Princeton Review, Inc., including, but not limited to the amount to be paid by Kanarek with respect to the Franchise Businesses in settlement of such case, and (ii) any Tax liabilities of Kanarek, whether or not attributable to or resulting from the transactions contemplated by this Agreement.

(d) Franchise Agreements. The covenants, obligations and agreements of Kanarek set forth in the Franchise Agreements of any type which are, by their terms, intended to survive transfer of the Franchise Agreements shall survive and remain in full force and effect, including, but not limited to, those set forth in Section 10.2.2, Section 11, Section 13.3 (except with respect to Section 13.2 of the Franchise Agreements), Section 13.4, Section 18.1, Section 18.2, Section 18.3, Section 18.4, Section 18.5, Section 19.2 and Section 21.7 (collectively, the “Franchise Agreements Surviving Provisions”). Notwithstanding that Section 13.2 and 18.6, by the terms of the Franchise Agreements, survive transfer of the Franchise Agreements, such sections of the Franchise Agreements shall not so survive.

(e) Waiver of Consent Requirements. Parent hereby waives the requirements of Section 14.1 of the Franchise Agreements to the extent that they apply to the transactions contemplated by this Agreement.

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(f) Allocation. The allocation of the Kanarek Purchase Price and Assumed Liabilities (and any other amounts properly treated as additional purchase price for Tax purposes) among the tangible and intangible assets of Kanarek associated with the Franchise Businesses and the Noncompete Agreement is attached hereto as Exhibit B (the “Purchase Price Allocation”). The Purchase Price Allocation shall be binding on Parent and Kanarek. Parent shall timely prepare IRS Form 8594 based on the Purchase Price Allocation and deliver a copy of such form to Kanarek for Kanarek’s approval, which shall not be unreasonably withheld, conditioned or delayed. Parent and Kanarek agree to timely file the agreed upon form with each relevant Taxing Authority and to refrain from taking any position on a Tax Return or otherwise inconsistent with such form and the Purchase Price Allocation; provided, however, that (i) nothing contained in this Section 1(f) shall prevent Parent from settling any proposed deficiency or adjustment by any governmental authority with respect to any Parent Tax Return based upon or arising out of the Purchase Price Allocation, and Parent shall not be required to litigate before any court, any proposed deficiency or adjustment by any governmental authority with respect to any Parent Tax Return challenging such Purchase Price Allocation, and (ii) nothing contained in this Section 1(f) shall prevent Kanarek from settling any proposed deficiency or adjustment by any governmental authority with respect to any Kanarek Tax Return based upon or arising out of the Purchase Price Allocation, and Kanarek shall not be required to litigate before any court, any proposed deficiency or adjustment by any governmental authority with respect to any Kanarek Tax Return challenging such Purchase Price Allocation.

(g) Sales and Transfer Taxes. Kanarek and Parent shall each pay fifty percent (50%) of all applicable sales and transfer Taxes (or any similar Taxes) and all recording and filing fees that may be imposed, assessed or payable by reason of the operation or as a result of this Agreement, including, without limitation, the sale and purchase of the Purchased Assets.

(h) Tax Matters.

(i) Kanarek Tax Returns. Subject to Section 1(h)(iii) below, Kanarek will prepare and file all Tax Returns of the Franchise Businesses (including Tax Returns required to be filed after the Kanarek Closing) to the extent such Tax Returns include or relate to the operations of the Franchise Businesses or the use or ownership of the Purchased Assets attributable to any taxable period ending on or before the end of the day on which the Kanarek Closing occurs and any portion of a Straddle Period (as hereinafter defined) ending at the end of the day on which the Kanarek Closing occurs (the “Franchise Businesses Tax Returns”). The Franchise Businesses Tax Returns shall be true, complete and correct and prepared in accordance with applicable law. Kanarek will make all payments for Taxes required with respect to the Franchise Businesses Tax Returns.

(ii) Parent Tax Returns. Parent will be responsible for the preparation and filing of all Tax Returns it is required to file with respect to Parent’s ownership or use of the Purchased Assets attributable to any taxable period or portion of a period that begins after the end of the day on which the Kanarek Closing occurs (the “Parent Tax Returns”). The Parent Tax Returns shall be true, complete and correct and prepared in accordance with applicable law. Parent will make all payments for Taxes required with respect to the Parent Tax Returns.

(iii) Straddle-Period Taxes. In the case of any real or personal property Taxes (or other similar Taxes) attributable to the Purchased Assets for which Taxes are reported on a Tax Return covering a period commencing before the end of the day on which the Kanarek Closing occurs and ending thereafter (any such period, a “Straddle Period,” and any such tax, a “Straddle Period Tax”), any such Straddle Period Tax shall be prorated between the Franchise Businesses and Parent on a per diem basis. The party required by law to pay any such Straddle Period Tax (the “Paying Party”) shall file the Tax Return related to such Straddle Period Tax within the time period prescribed by law and shall

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timely pay such Straddle Period Tax. To the extent any such payment exceeds the obligation of the Paying Party hereunder, the Paying Party shall provide the other Party (the “Non-Paying Party”) with notice of payment, and within ten (10) business days of receipt of such notice of payment, the Non-Paying Party shall reimburse the Paying Party for the Non-Paying Party’s share of such Straddle Period Taxes.

Section 2. Franchise Agreements; Guaranties.

(a) Fees. The Franchise Businesses’ obligation with respect to fees of any type under the Franchise Agreements, payable to Parent as of 11:59 p.m. on the date of the Kanarek Closing shall survive sale of the Franchise Agreements until such fees are paid in full. To the extent that fees payable under the Franchise Agreements can be determined as of the Kanarek Closing, such amounts shall be included as part of the Kanarek Closing Adjustment (as hereinafter defined). To the extent that fees payable under the Franchise Agreements cannot be determined as of the Kanarek Closing, following the Kanarek Closing, Kanarek shall provide a statement and remit payment of such outstanding fees, payable in compliance with the Franchise Agreements, within thirty (30) days of the Kanarek Closing.

(b) Guaranties. Effective as of the Kanarek Closing, notwithstanding anything to the contrary in the Guaranties, the Guaranties are hereby terminated in their entirety and shall be of no further force or effect.

Section 3. Noncompete Agreement. In consideration of and as a material inducement to Parent’s payment to Kanarek of the Kanarek Purchase Price in connection with the purchase and sale of the Purchased Assets, Kanarek hereby agrees to execute, deliver and be bound by the noncompetition agreement attached hereto as Exhibit C (the “Noncompete Agreement”). The provisions of the Noncompete Agreement are intended to conform to the provisions of Section 16601 of the California Business and Professions Code. Notwithstanding anything to the contrary herein, the Noncompete Agreement shall be construed under and be governed in all respects by the laws of the State of California, without giving effect to the conflict of laws principles of California law. Kanarek understands and agrees that the Noncompete Agreement is a material inducement to Parent’s purchase of the Purchased Assets and assumption of the Assumed Liabilities.

Section 4. Kanarek Purchase Price. In accordance with the terms and conditions set forth in this Agreement, at the Kanarek Closing, in exchange for the actions, covenants and agreements of Kanarek described in Sections 1 through 3 of this Agreement, including the agreement to purchase the Purchased Assets, Parent shall (a) pay $1,753,871 less the Kanarek Closing Adjustment (as hereinafter defined) (the “Kanarek Purchase Price”) to Kanarek by delivery of cash by wire transfer of immediately available funds pursuant to instructions provided by Kanarek and (b) assume the Assumed Liabilities. The “Kanarek Closing Adjustment” shall mean fees payable under the Franchise Agreements that can be determined as of the Kanarek Closing, if any. The Purchased Assets shall be sold, assigned, transferred, conveyed and delivered by Kanarek and shall be purchased, acquired and accepted by Merger Sub II in consideration for the Kanarek Purchase Price.

Section 5. Closing. The closing of the Kanarek Transactions (the “Kanarek Closing”) shall be held at the offices of Goodwin Procter LLP, Exchange Place, 53 State Street, Boston, Massachusetts, at 10:00 a.m. on a date that is as soon as practicable following satisfaction (except to the extent waived in accordance with Section 8) of all conditions to the obligations of the Parties to consummate, or cause the consummation, of the Kanarek Transactions and the taking of all other actions (other than those that by their terms are to be satisfied or taken, or waived, at or after the Kanarek Closing) set forth in Section 8, or on such other date, and at such other time or place, as the Parties may mutually agree in writing.

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Section 6. Representations of Parent and Merger Sub II. Each of Parent and Merger Sub II has all requisite corporate power and authority to execute and deliver this Agreement, to consummate the transactions contemplated hereby and to perform its obligations hereunder. The execution and delivery by each of Parent and Merger Sub II of this Agreement and the consummation by them of the transactions contemplated hereby have been duly authorized by all necessary corporate or limited liability company action, as the case may be, on the part of each of them, and no other proceedings on the part of each of Parent and Merger Sub II shall be necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by each of Parent and Merger Sub II, and assuming due execution and delivery by the other Parties hereto, constitutes their valid and binding obligation, enforceable against them in accordance with its terms, subject to the effect of applicable bankruptcy, insolvency, reorganization, moratorium or other similar federal or state laws affecting the rights of creditors and the effect or availability of rules of law governing specific performance, injunctive relief or other equitable remedies (regar