Franchise Disclosure Agreement

FRANCHISE DISCLOSURE AGREEMENT

This Franchise Disclosure Agreement ("Agreement") is made effective as of by and between Franchisor Name: , an entity of type , with principal place of business at , and Franchisee Name: , an entity of type , with principal place of business at . Franchisor and Franchisee are sometimes referred to herein individually as a "Party" and collectively as the "Parties."

RECITALS

WHEREAS, Franchisor owns and operates a system for the operation of franchised businesses under the trade name, marks and service marks described in Exhibit A, and has developed and continuously improved certain methods of operation, standards, specifications and procedures for the operation of such businesses (the "System"); and

WHEREAS, Franchisee desires to obtain the right to operate a franchised business using the System and Franchisor's marks, and Franchisor is willing to grant such rights to Franchisee subject to the terms and conditions of this Agreement and the Franchise Disclosure Document delivered concurrently with this Agreement; and

WHEREAS, the Parties intend by this Agreement to set forth their mutual rights and obligations with respect to the grant and operation of the franchise described herein.

NOW, THEREFORE

In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties agree as follows:

1. DEFINITIONS

For purposes of this Agreement, the following defined terms shall have the meanings set forth below: "Business" means the franchised operation to be conducted by Franchisee under the System; "Territory" means the geographic area described in Section 6; "Net Receipts" means gross revenues received by Franchisee from the operation of the Business less only the following sales discounts and refunds actually allowed and taken and excise taxes paid that are based on gross receipts and imposed on and measured by sales prices.

2. GRANT

Subject to the terms and conditions of this Agreement, Franchisor grants to Franchisee, and Franchisee accepts, a limited, non-exclusive (or exclusive if box checked ), non-transferable license to operate a franchised Business using the System and the marks identified in Exhibit A at a location approved in writing by Franchisor. The license granted does not convey ownership of the System or any right to modify the System without Franchisor's prior written consent.

3. TERM AND RENEWAL

The initial term of this Agreement shall be years commencing on the Commencement Date: . Renewal shall be governed by Franchisor's then-current renewal policy and shall be conditioned upon Franchisee's compliance with the terms of this Agreement and payment of any renewal fees established by Franchisor.

4. FRANCHISE FEE; ROYALTIES; ADVERTISING

4.1 Initial Franchise Fee. Franchisee shall pay to Franchisor an initial, non-refundable franchise fee in the amount of due upon execution of this Agreement. This fee grants the license and access to the System and training described herein.

4.2 Ongoing Royalties. Franchisee shall pay a continuing royalty equal to of Net Receipts, payable monthly on or before the day following the end of each calendar month, together with a written statement of Gross Receipts and Net Receipts for such month.

4.3 Advertising Fund. Franchisee shall contribute to a national and/or regional advertising fund (the "Advertising Fund") an amount equal to of Net Receipts, payable on the same schedule as royalties. Franchisor may apply contributions to cooperative advertising, marketing, and brand development in its discretion consistent with the fund's governing rules.

5. TRAINING AND SUPPORT

Franchisor shall provide initial training for Franchisee and such employees as Franchisor may require at Franchisor's designated training facility located at:

Franchisor shall provide ongoing operational support, field visits, and updates to the System. Franchisee acknowledges that failure to attend required training or to implement required updates may constitute a material breach of this Agreement.

6. TERRITORY

Franchisor grants Franchisee the right to operate the Business within the Territory described below. Franchisor does not guarantee exclusivity unless expressly set forth below.

Franchisee is granted exclusive rights within the Territory subject to the conditions set forth in Section 6 and any performance criteria established by Franchisor.

7. STANDARDS AND OPERATIONS

Franchisee shall operate the Business in strict conformity with Franchisor's then-current standards, specifications, manuals and policies, including quality control standards, customer service requirements, hours of operation, and pricing policies where required by Franchisor. Franchisor may from time to time prescribe reasonable changes to System standards, and Franchisee shall implement such changes within the time period specified by Franchisor.

8. RECORDS; AUDIT; REPORTING

Franchisee shall keep complete and accurate books and records of its operations in accordance with generally accepted accounting principles and shall permit Franchisor or its agents to inspect and audit those records upon reasonable notice during normal business hours. If an audit reveals an underpayment of amounts due to Franchisor, Franchisee shall promptly pay the deficiency plus interest at the lesser of 1.5% per month or the maximum rate permitted by law and reimburse Franchisor's reasonable audit expenses if the underpayment exceeds .

9. CONFIDENTIALITY AND INTELLECTUAL PROPERTY

Franchisee acknowledges that the System contains trade secrets and confidential information owned by Franchisor. Franchisee shall not disclose, misuse, or permit unauthorized use of any such information. Franchisor grants Franchisee a limited, revocable license to use Franchisor's trademarks, service marks and proprietary materials solely in connection with the operation of the Business in accordance with this Agreement. All goodwill derived from Franchisee's use of the marks shall inure to Franchisor's benefit.

10. TRANSFER AND CHANGE OF CONTROL

Franchisee shall not assign, mortgage, transfer, encumber or otherwise dispose of this Agreement, any rights hereunder, or an interest in the Business, including by sale of a controlling interest in Franchisee, without Franchisor's prior written consent, which shall not be unreasonably withheld for a bona fide transfer meeting Franchisor's then-current criteria. Any purported transfer without consent shall be void and constitute grounds for termination.

11. TERMINATION

Either Party may terminate this Agreement upon material breach by the other Party following written notice and the expiration of any applicable cure period set forth in this Agreement. Franchisor may terminate immediately upon certain breaches specified in the Franchise Disclosure Document or hereunder, including unauthorized transfer, insolvency of Franchisee, or willful and material failure to comply with operational standards. Termination shall be without prejudice to any remedies available at law or in equity.

12. POST-TERMINATION OBLIGATIONS

Upon termination or expiration of this Agreement, Franchisee shall cease all use of Franchisor's marks and proprietary materials, remove all signage, and comply with Franchisor's post-termination obligations, including the de-identification of the Business and disposition of inventory as directed by Franchisor. Franchisee shall remain liable for any amounts due through the date of termination.

13. INDEMNIFICATION AND INSURANCE

Franchisee shall indemnify, defend and hold harmless Franchisor and its affiliates from and against any and all claims, liabilities, losses and expenses arising out of Franchisee's operation of the Business, except to the extent caused by Franchisor's gross negligence or willful misconduct. Franchisee shall maintain commercial general liability, product liability, and other insurance coverages in amounts and with carriers acceptable to Franchisor and shall deliver certificates of insurance upon request.

14. REPRESENTATIONS AND WARRANTIES

Each Party represents and warrants that it has the full power and authority to enter into this Agreement and perform its obligations. Franchisee further represents that Franchisee has reviewed the Franchise Disclosure Document and acknowledges the accuracy of the information provided to the best of Franchisee's knowledge.

15. DISPUTE RESOLUTION

The Parties agree to attempt in good faith to resolve disputes arising under this Agreement by negotiation. If unresolved, disputes shall be submitted to binding arbitration administered by a neutral forum under the commercial arbitration rules selected by the Parties. The arbitration award shall be final and binding and may be entered as a judgment in any court of competent jurisdiction. Notwithstanding the foregoing, either Party may seek injunctive relief in a court of competent jurisdiction to protect intellectual property or confidentiality rights.

16. NOTICES

All notices, demands or communications required or permitted under this Agreement shall be in writing and shall be deemed given when delivered personally, sent by nationally recognized overnight courier, or three business days after deposit in the United States mail, postage prepaid, certified mail, return receipt requested, to the addresses below or to such other address as a Party may designate by written notice to the other Party.

17. AMENDMENTS; WAIVER

No amendment or modification of this Agreement shall be valid or binding unless in writing and signed by both Parties. No waiver by either Party of any breach or default shall be deemed a waiver of any other breach or default.

18. GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of , without regard to its conflict of laws principles.

19. SEVERABILITY

If any provision of this Agreement is held to be invalid, illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall remain in full force and effect, and the Parties shall endeavor in good faith to replace the invalid provision with a valid provision that most closely approximates the Parties' original intent.

20. ENTIRE AGREEMENT

This Agreement, together with the Franchise Disclosure Document and any exhibits and addenda expressly incorporated herein, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, representations and understandings of the Parties, whether written or oral.

21. COUNTERPARTS

This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Signatures transmitted by facsimile or electronic image shall be treated as original signatures for all purposes.

22. MISCELLANEOUS

The Parties acknowledge that they have had the opportunity to seek independent legal counsel, have read and understand the terms and conditions of this Agreement, and agree to be bound thereby. Headings used in this Agreement are for convenience only and shall not affect interpretation.

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