Franchise Operation Plan Agreement

FRANCHISE OPERATION PLAN AGREEMENT

This Franchise Operation Plan Agreement ("Agreement") is entered into as of by and between Franchisor Name: , a business organized as Corporation LLC Other with principal place of business at , and Franchisee Name: , a business organized as Individual Partnership LLC with principal place of business at .

RECITALS

WHEREAS, Franchisor owns and operates a system for the operation of franchised businesses under the trade name and proprietary marks described in Section 6 (the "System"), and has developed methods, standards and procedures for the operation of the System; and

WHEREAS, Franchisee desires to obtain the right to operate a franchised business using the System and Franchisor desires to grant such rights to Franchisee on the terms and conditions set forth in this Agreement; and

WHEREAS, the parties intend by this Agreement to set forth the operational plan, obligations, fees, standards and remedies applicable to the franchise relationship.

NOW, THEREFORE

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

1. GRANT OF FRANCHISE

1.1 Grant. Subject to the terms of this Agreement, Franchisor grants to Franchisee, and Franchisee accepts, the non-exclusive/non-transferable (select applicable) Non-exclusive Exclusive franchise right to operate a franchised business within the territory described as: (the "Territory") for the Term set forth in Section 3.

2. OPERATION PLAN AND OPENING

2.1 Operational Plan. Franchisee shall prepare and deliver to Franchisor an operation plan that complies with Franchisor's System standards, including projected opening date, staffing, equipment and local marketing. Franchisee's initial opening date is .

3. TERM

3.1 Term. The initial term of this Agreement shall commence on the Effective Date and continue for years, unless earlier terminated as provided herein. Franchisee may request renewal subject to Franchisor's then-current renewal criteria and payment of renewal fees.

4. FEES; PAYMENTS

4.1 Initial Franchise Fee. Franchisee shall pay to Franchisor an initial franchise fee in the amount of upon execution of this Agreement, non-refundable except as expressly provided herein.

4.2 Royalties. Franchisee shall pay a continuing royalty equal to of gross sales, payable monthly within days after month end. "Gross sales" shall include all revenue derived from the franchised operation except returns and sales taxes.

4.3 Advertising Fund. Franchisee shall contribute of gross sales to the national advertising fund and spend locally an additional of gross sales for local promotions.

5. STANDARDS; OPERATIONS

5.1 Compliance with Standards. Franchisee shall at all times operate the franchised business in strict conformity with the System standards, operating manuals, specifications and other directives provided by Franchisor. Franchisor reserves the right to modify such standards in its reasonable discretion, provided that modifications are applied uniformly to similarly situated franchisees.

5.2 Training and Personnel. Franchisor shall provide initial training as described in the operation plan. Franchisee shall ensure that managers and employees complete required training and maintain records evidencing such training.

6. INTELLECTUAL PROPERTY; LICENSE

6.1 License. Subject to Franchisee's compliance with this Agreement, Franchisor grants Franchisee a limited, non-exclusive license to use Franchisor's trademarks, service marks, trade dress, operating manuals and copyrighted materials solely in connection with the operation of the franchised business within the Territory.

6.2 Ownership. Franchisee acknowledges Franchisor's exclusive ownership of the intellectual property and agrees not to contest, dilute or impair Franchisor's rights. Franchisee shall take no action that would adversely affect Franchisor's rights, including adopting confusingly similar marks.

7. RECORDS; AUDIT; REPORTING

7.1 Books and Records. Franchisee shall keep accurate books of account and records related to the franchised business and shall provide Franchisor with access to such records upon reasonable notice for inspection and audit. Franchisor may appoint an independent auditor to verify compliance with royalty and reporting obligations, and Franchisee shall cooperate fully.

8. INSURANCE; INDEMNIFICATION

8.1 Insurance. Franchisee shall maintain comprehensive general liability, property and other insurance in amounts and coverages reasonably required by Franchisor and proof of such insurance shall be delivered to Franchisor prior to opening and upon renewal.

8.2 Indemnification. Franchisee shall indemnify, defend and hold harmless Franchisor, its affiliates, officers and employees from and against any and all claims, liabilities, losses, costs and expenses (including reasonable attorneys' fees) arising out of Franchisee's operation of the franchised business, except to the extent directly caused by Franchisor's gross negligence or willful misconduct.

9. TRANSFER; ASSIGNMENT

9.1 Transfer. Franchisee shall not assign or transfer its rights or obligations under this Agreement, or sell or transfer any interest in the franchised business, without Franchisor's prior written consent, which consent shall not be unreasonably withheld if the transferee meets Franchisor's then-current financial and operational criteria. Any purported assignment in violation of this Section shall be void.

10. TERMINATION; REMEDIES

10.1 Termination for Cause. Franchisor may terminate this Agreement upon written notice if Franchisee materially breaches any provision of this Agreement and fails to cure such breach within the time specified in written notice, or immediately upon insolvency or bankruptcy of Franchisee.

10.2 Remedies. Upon termination, Franchisor shall have all remedies available at law or in equity, including injunctive relief, recovery of unpaid fees, and the right to require Franchisee to cease use of all intellectual property and return confidential materials. Franchisee's obligations that by their nature survive termination shall continue in effect.

11. CONFIDENTIALITY

11.1 Confidential Information. Franchisee acknowledges that Franchisor's confidential information, including trade secrets, operating procedures, customer lists and pricing strategies, is proprietary. Franchisee shall maintain such information in confidence and shall not disclose or use it except as required to operate the franchised business in accordance with this Agreement.

12. LIABILITY; LIMITATION

12.1 Limitation of Liability. Except for liability arising from fraud, willful misconduct or breaches of Section 6 (Intellectual Property) and Section 11 (Confidentiality), neither party shall be liable to the other for consequential, incidental, special or punitive damages; Franchisor's aggregate liability under this Agreement shall not exceed the fees paid by Franchisee during the preceding twelve (12) months.

13. NOTICES

13.1 Notices. All notices required or permitted under this Agreement shall be in writing and delivered by personal delivery, nationally recognized overnight courier, or certified mail, return receipt requested, to the addresses set forth below or to such other address as either party designates by notice in writing.

14. AMENDMENTS; WAIVER

14.1 Amendments. No amendment, modification or waiver of any provision of this Agreement shall be effective unless made in writing and signed by both parties.

14.2 Waiver. No waiver of any breach shall operate as a waiver of any subsequent breach. The failure of a party to insist upon strict performance of any provision shall not be deemed a waiver of such provision.

15. GOVERNING LAW; DISPUTE RESOLUTION

15.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the state identified below, without regard to conflict of law principles. State:

15.2 Dispute Resolution. The parties shall attempt in good faith to resolve disputes by negotiation. If unresolved, disputes shall be submitted to binding arbitration in the county of the Franchisor's principal place of business, in accordance with the rules selected by the parties, and judgment upon the award rendered by the arbitrator may be entered in any court of competent jurisdiction.

16. ENTIRE AGREEMENT; SEVERABILITY

16.1 Entire Agreement. This Agreement, together with exhibits, schedules and operation plan documents referenced herein, constitutes the entire agreement between the parties with respect to the subject matter and supersedes all prior agreements and understandings, whether written or oral.

16.2 Severability. If any provision of this Agreement is held invalid or unenforceable, the remaining provisions shall remain in full force and effect and the parties shall negotiate in good faith to replace the invalid provision with a valid provision that approximates the parties' original intent.

17. MISCELLANEOUS

17.1 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

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