REMEDY INTELLIGENT STAFFING, INC. EARLY RENEWAL ADDENDUM TO FRANCHISE AGREEMENT FOR EXISTING FRANCHISEESFranchise Agreement |
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EXHIBIT 10.48
REMEDY
INTELLIGENT STAFFING, INC.
EARLY
RENEWAL
ADDENDUM TO
FRANCHISE AGREEMENT
FOR EXISTING
FRANCHISEES
This Early Renewal Addendum to
Franchise Agreement for Existing
Franchisees ("ADDENDUM") is made effective as of _____________,
200__,
("EFFECTIVE DATE"), through _______, 200__, by and between Remedy
Intelligent
Staffing, Inc., a California corporation and wholly-owned subsidiary of
RemedyTemp, Inc., having its principal place of business at 101 Enterprise,
Aliso Viejo, California 92656 ("FRANCHISOR"), and
_____________________________________________________________________________,
(residing at / having its principal place of business at) _____________________
__________________________("FRANCHISEE") with reference to the
following facts:
RECITALS
WHEREAS, Franchisor and Franchisee
previously entered into a Remedy
Intelligent Staffing, Inc. Franchise Agreement dated ______________________
[NOTE: INSERT DATE.] (the "INITIAL AGREEMENT").
WHEREAS, The expiration date of the
Initial Agreement is, or was, on:
_________________ [NOTE: COMPLETE THIS BLANK BY DETERMINING THE DATE ON WHICH
THE CURRENT TERM OF THE INITIAL AGREEMENT EXPIRES.] (the "ORIGINAL
EXPIRATION
DATE").
WHEREAS, Franchisor and Franchisee
have mutually agreed to terminate the
Initial Agreement prior to the Original Expiration Date, and have entered into
on this date a new form of Remedy Intelligent Staffing, Inc. Franchise
Agreement
(the "FRANCHISE AGREEMENT").
WHEREAS, Franchisor and Franchisee
desire to make certain modifications to
the Franchise Agreement to reflect both Franchisee's status as an existing
franchisee of Franchisor, and that the Franchise Agreement is being entered
into
as a renewal of franchise rights.
NOW, THEREFORE, Franchisor and
Franchisee agree as follows:
1. TERMINATION OF INITIAL AGREEMENT
AND EFFECTIVENESS
OF RENEWAL
Franchisor and Franchisee
acknowledge and agree that the Franchise
Agreement shall become effective as of the Effective Date. At the time this
Addendum and the Franchise Agreement become effective, the Initial Agreement
shall terminate and, except for Franchisee's outstanding obligations
thereunder,
shall no longer be of any force or effect, and the franchise rights and
obligations thereafter shall be governed solely by the Franchise Agreement and
this Addendum.
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2. GENERAL
RENEWAL CHANGES
Franchisor and Franchisee agree
that the following changes will be made to
the Franchise Agreement to reflect that it is for the renewal of an existing
Remedy Franchised Business. Unless otherwise defined herein, all capitalized
terms shall have the same meaning as set forth in the Franchise Agreement.
2.1 The third "WHEREAS" clause of the Franchise Agreement shall be
deleted in
its entirety; and the following shall be substituted in lieu thereof:
"WHEREAS, Franchisee
wishes to continue to operate its Remedy
Franchised Business, and adopt the
terms set forth in this Agreement."
2.2 In Section 1 of the Franchise Agreement, "DEFINITIONS," the
definition for
"Calculation Year" shall be deleted in its entirety; and the
following shall be
substituted in lieu thereof:
"CALCULATION YEAR"
shall mean, for the first Calculation Year, the
twelve (12) calendar month period
beginning on the Effective Date, and,
for subsequent Calculation Years,
each consecutive twelve (12) month
period thereafter during the term
of this Agreement."
2.3 In Section 1 of the Franchise Agreement, "DEFINITIONS," in the
definition
for "Franchisor's Share," is deleted in its entirety; and the
following will be
substituted in lieu thereof:
"FRANCHISOR'S
SHARE" shall be an amount of money, paid to
Franchisor, equal to the sum of:
(i) Franchisor's Split of the Adjusted
Gross Margin Dollars, determined
according to the Gross Margin Schedule
set forth in Section 5.6, (ii)
eight percent (8%) of Direct-Hire Billings
during an Accounting Period, (iii)
Franchisor's Split of Subcontractor
Profit during an Accounting Period,
and (iv) eight percent (8%) of
Temporary-to-Hire Conversion Fees
during an Accounting Period.
2.4 In Section 1 of the Franchise Agreement, "DEFINITIONS," the
definition for
"Gross Margin Floor" shall be deleted in its entirety; and
"Gross Margin Floor"
shall mean the Gross Margin Floor as set forth in the Gross Margin Schedule
elected by Franchisee pursuant to Section 2.5 of this Addendum.
2.5 In Section 1 of the Franchise Agreement, "DEFINITIONS," the
definition for
"Gross Margin Schedule" shall be deleted in its entirety; and
"Gross Margin
Schedule" shall mean the schedule of Gross Margin Tiers, dollar amounts,
Franchisor's Split, Franchisee's Split, Gross Margin Floor and Adjusted Gross
Margin Dollar application as set forth in Attachment A or Attachment B hereto,
as the case may be. In connection therewith:
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A. At the time Franchisor and
Franchisee enter into this Addendum,
Franchisee shall elect, by checking the appropriate box [ONLY ONE BOX SHOULD BE
CHECKED], one of the following in connection with the Gross Margin Schedule to
be applied to the Franchise Agreement:
[ ] Gross Margin Schedule A, attached hereto as
Attachment A; or
[ ] Gross Margin Schedule B, attached hereto as
Attachment B.
B. Once selected, Franchisee shall
have no right to change from one Gross
Margin Schedule to the other except as provided below:
1. So long as Franchisee is not
then in default of the Franchise
Agreement, Franchisee shall have one (1) option, exercisable only during the
third or fourth Calculation Year following the Effective Date, to change from
the Gross Margin Schedule selected pursuant to Section 2.5.A (either Gross
Margin Schedule A or Gross Margin Schedule B) to the other Gross Margin
Schedule; provided, that Franchisee must deliver a duly completed and executed
notice of exercise of option, in the form of Attachment E, to Franchisor no
later than ninety (90) days prior to the end of the second or third (as
applicable) Calculation Year following the Effective Date. The new Gross Margin
Schedule will become effective at the beginning of the next Calculation Year
(either the third or fourth (as applicable) Calculation Year following the
Effective Date) and shall remain effective until the termination or expiration
of the Franchise Agreement, unless changed pursuant to Section 2.5.B.2. below.
2. So long as Franchisee is
not then in default of the Franchise
Agreement, and Franchisee has renewed its Franchise Agreement pursuant to
Section 4.2 of the Franchise Agreement, Franchisee shall have one (1) option,
exercisable only during the seventh or eighth Calculation Year following the
Effective Date, to change from its then-current Gross Margin Schedule (either
Gross Margin Schedule A or Gross Margin Schedule B) to the other Gross Margin
Schedule; provided, that Franchisee must deliver a duly completed and executed
notice of exercise of option, in the form of Attachment E, to Franchisor no
later than ninety (90) days prior to the end of the sixth or seventh (as
applicable) Calculation Year following the Effective Date. The new Gross Margin
Schedule will become effective at the beginning of the next Calculation Year
(either the seventh or eighth (as applicable) Calculation Year following the
Effective Date) and shall remain effective until the termination or expiration
of the Franchise Agreement.
2.6 The definition of "Initial Term" in Section 1 of the Franchise
Agreement,
under the heading "DEFINITIONS" shall be revised to mean the period
of time from
the Effective Date until the fifth (5th) anniversary of the Original Expiration
Date, and the language of Section 4.1 of the Franchise Agreement shall be
amended to reflect this revised Initial Term.
2.7 In Section 1 of the Franchise Agreement, "DEFINITIONS," in the
definition
for "Technology Fee," is deleted in its entirety; and the following
will be
substituted in lieu thereof:
"TECHNOLOGY FEE" means a
monthly fee paid to Franchisor each Accounting
Period in the amount of Two Hundred
thirty Six Dollars ($236) for the
first Location of the Franchised
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Business, and One Hundred Dollars ($100)
for each additional Location of
the Franchised Business.
2.8 Section 4 of the Franchise Agreement, "TERM AND RENEWAL," shall
be
supplemented by the addition of the following new Section 4.5:
4.5. OPTIONS UPON EXPIRATION OF
RENEWAL TERM.
4.5.1. Request for Additional
Renewal. If, at the end of the term of the
Renewal Agreement, Franchisee
desires to obtain an extra renewal period of
five (5) years (an "EXTRA
RENEWAL TERM") and timely applies with
Franchisor therefor as described
below, then the terms of this Section 4.5
will apply. If Franchisee makes a
written request to Franchisor for an
Extra Renewal Term, no earlier than
five hundred forty (540) days and no
later than three hundred sixty
(360) days prior to the end of the term
under the Renewal Agreement,
Franchisor may, without any obligation, offer
a new Renewal Agreement (the
"EXTRA RENEWAL AGREEMENT") to Franchisee
prior to three hundred fifteen
(315) days before expiration of the term of
the Renewal Agreement. The terms of
the Extra Renewal Agreement,
including, without limitation, the
financial terms and conditions which
provide for the compensation to
both Franchisor and Franchisee, shall be
the same as the terms set forth in
Franchisor's then-current form of
franchise agreement for a new
Remedy franchise, except that, under the
Extra Renewal Agreement: (i) the
provisions applicable to further renewals
shall not apply, (ii) no initial or
renewal franchise fee shall be charged
to Franchisee, and (iii) the
Territory shall remain the same. If
Franchisee does not desire to
obtain an Extra Renewal Term, if Franchisee
does not timely apply therefor, or
if Franchisor offers such Extra Renewal
Agreement and Franchisee does not
enter into such Extra Renewal Agreement
within forty-five (45) days after
such offer, then the Renewal Agreement
will expire in accordance with its
terms and Franchisee will continue to
be bound by all its obligations
which survive thereunder (including, but
not limited to, the provisions of
the Renewal Agreement related to
noncompetition, confidentiality,
and customer lists).
4.5.2. Request for Purchase of Franchised
Business.
(a) If, as of two hundred
seventy (270) days prior to the expiration
of the term of the Renewal
Agreement, (i) Franchisee has timely applied
for an Extra Renewal Agreement
pursuant to Section 4.5.1, but Franchisor
has not offered an Extra Renewal
Agreement to Franchisee, (ii) Franchisee
is not then in default of the
Renewal Agreement, and (iii) Franchisee
demonstrates to Franchisor's
satisfaction that Franchisee has conducted in
good faith a diligent search within
the past twelve (12) months for a
prospective third-party buyer but
has not received a bona fide offer to
acquire the Franchised Business,
then Franchisee may request that
Franchisor consider a purchase of
the assets of the Franchised Business by
delivering to Franchisor a purchase
consideration request, in the form
attached to the Early Renewal
Addendum to the Franchise Agreement as
Attachment F (a "PURCHASE
CONSIDERATION REQUEST"), no later than one
hundred eighty (180) days prior to
expiration of the term of the Renewal
Agreement.
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(b) If Franchisee timely
delivers such Purchase Consideration
Request in accordance with Section
4.5.2.(a) above, Franchisor may either
(i) engage in discussions with
Franchisee for the purchase of the
Franchised Business, or (ii) notify
Franchisee that it will not consider
such purchase. If within thirty
(30) days after receipt of the Purchase
Consideration Request Franchisor
fails to engage in purchase discussions
or notifies Franchisee that it will
not consider such purchase, the
Renewal Agreement will expire in
accordance with its terms, and Franchisee
will continue to be bound by all
its obligations which survive thereunder,
including, without limitation, the
provisions of the Renewal Agreement
related to confidentiality and
customer list obligations; provided,
however, that Franchisee will not
continue to be bound by the post-term
non-competition provision of the
Renewal Agreement.
(c) If Franchisor elects to
engage in discussions with Franchisee
with respect to a potential
purchase, Franchisor and Franchisee shall
engage in such discussions for a
sixty (60) day period after Franchisor's
receipt of the Purchase
Consideration Request (the "DISCUSSION PERIOD"),
and Franchisor and Franchisee shall
each conduct and submit to the other
party a valuation of the assets of
the Franchised Business at least ten
(10) days prior to the end of the
Discussion Period. If the parties cannot
agree upon the terms of such
purchase during the Discussion Period, then
if Franchisor's valuation of the
Franchised Business is (i) equal to or
greater than eighty percent (80%)
of Franchisee's most recent valuation of
the Franchised Business submitted
to Franchisor in writing (the
"FRANCHISEE VALUATION"),
Franchisee may elect within five (5) business
days after expiration of the
Discussion Period, at Franchisee's sole cost
and expense, to submit Franchisor's
valuation and the Franchisee Valuation
to an independent third party
valuation firm (the "VALUATION FIRM"), or
(ii) less than eighty percent (80%)
of the Franchisee Valuation, either
party may elect to terminate
discussions related to the potential purchase
and the Renewal Agreement will
expire in accordance with its terms and
Franchisee will continue to be
bound by all its obligations which survive
thereunder (including, but not
limited to, the provisions of the Renewal
Agreement related to
noncompetition, confidentiality, and customer lists).
(d) If pursuant to clause (i)
of Section 4.5.2.(c), Franchisee
timely submits written notice of
its election to submit to a Valuation
Firm, then within fifteen (15) days
after receipt of such notice,
Franchisor and Franchisee shall
mutually agree upon a Valuation Firm. If
Franchisor and Franchisee cannot
mutually agree upon a Valuation Firm
within this time period, the
Renewal Agreement will expire in accordance
with its terms and Franchisee will
continue to be bound by all its
obligations which survive
thereunder (including, but not limited to, the
provisions of the Renewal Agreement
related to noncompetition,
confidentiality, and customer
lists). Promptly after selection of the
Valuation Firm, the parties will provide
the Valuation Firm with the
Franchisee Valuation and
Franchisor's valuation of the assets of the
Franchised Business. Each party
agrees to allow the Valuation Firm
reasonable access to inspect such
records, financial statements and other
documents and information it deems
necessary to conduct its valuation. The
Valuation Firm will determine the
value of the Franchised Business as soon
as practicable but in no event
later than thirty (30) days after
engagement. All costs and expenses
of the Valuation Firm will be borne
solely by Franchisee.
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(e) If the Valuation Firm's
determination of the value of the assets
of the Franchised Business (the
"FIRM VALUATION") is less than ninety
percent (90%) of the Franchisee
Valuation, then Franchisor, in its sole
discre






