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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, fina
