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.
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:
2
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
3
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.
4
(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.
5
(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
discretion, may elect either (i) to purchase the Franchised Business for
the Firm Valuation or (ii) not to purchase the Franchised Business; and if
Franchisor elects not to purchase the assets of the Franchised Business
pursuant to clause (ii) of this paragraph, 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).
(f) If the Firm Valuation is equal to or greater than ninety percent
(90%) of the Franchisee Valuation, then Franchisor, in its sole
discretion, may elect either (i) to purchase the assets of the Franchised
Business for the lesser of (a) the Firm Valuation and (b) the Franchisee
Valuation, or (ii) not to purchase the assets of the Franchised Business,
and if Franchisor elects not to purchase the assets of the Franchised
Business pursuant to clause (ii) of this paragraph, the Renewal Agreement
will expire in accordance with its terms and Franchisee will continue to
be bound by 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 any post term non-competition
provision of the Renewal Agreement.
(g) If the valuation process described in this Section 4.5.2 extends
beyond the term of the Renewal Agreement, then the Renewal Agreement will
expire in accordance with its terms and the valuation process will come to
an end upon the expiration of the Renewal Agreement, unless the parties
agree in writing to extend the term of the Renewal Agreement until the
completion of such valuation process.
2.9 In Section 5 of the Franchise Agreement, "FEES," Section 5.1, "Initial
Franchise Fee," shall be deleted in its entirety and shall have no further force
or effect.
2.10 If Franchisee selects Gross Margin Schedule A pursuant to Section 2.5 of
this Addendum, Section 5 of the Franchise Agreement, "FEES," in Section 5.6.2,
"Franchisee Split Bonus," shall be amended to delete in its entirety the last
sentence beginning with the word, "Notwithstanding," and the following shall be
substituted in lieu thereof:
Notwithstanding the foregoing, or anything herein to the contrary, under
no circumstances shall Franchisee's Split be increased above seventy-two
percent (72%) by application of the bonus percentage as set forth in the
chart below. For example, if Franchisee's Split according to the Gross
Margin Schedule was 72% (Tier 13), and a Gross Margin Percentage of 28%
entitled Franchisee to a bonus of 2%, Franchisee's Split will not be
increased under such circumstances, as Franchisee's Split already is above
72%.
If Franchisee selects Gross Margin Schedule B pursuant to Section 2.5 of this
Addendum, Section 5.6.2 of the Franchise Agreement shall remain unchanged.
6
2.11 Notwithstanding the provisions of Section 5.6.2 of the Franchise Agreement,
the initial Franchisor's Split and Franchisee's Split during the first
Calculation Year under the Franchise Agreement shall be the same Franchisor's
Split and Franchisee's Split percentages applicable to the Franchised Business
at the time of the Effective Date.
2.12 Section 6 of the Franchise Agreement, "COMMENCEMENT AS A REMEDY
FRANCHISEE," shall be deleted in its entirety and shall have no force or effect.
2.13 In Section 7 of the Franchise Agreement, "TRAINING," Sections 7.1, 7.2 and
7.3 shall be deleted in their entirety and shall have no force or effect.
2.14 In Section 9 of the Franchise Agreement, "ADDITIONAL SERVICES TO BE
PROVIDED BY FRANCHISOR," Section 9.1 shall be deleted in its entirety and shall
have no force or effect.
2.15 Section 18 of the Franchise Agreement, "ADVERTISING AND BRAND DEVELOPMENT"
shall be amended to delete the first paragraph of Section 18.1 in its entirety,
and the following shall be substituted in lieu thereof:
Franchisee will be required to participate in Franchisor's brand
development fund for the System (the "BRAND DEVELOPMENT FUND"). Franchisee
shall be required to contribute to the Brand Development Fund an annual
amount equal to 0.10% of Gross Billings for each Calculation Year, up to a
maximum of Seven Thousand Dollars ($7,000) for each Calculation Year, and
such contribution shall be deducted each Accounting Period from
Franchisee's Share as set forth in Section 5.2. The Brand Development Fund
shall be administered by Franchisor, or its designee, as follows:
2.16 In Section 21 of the Franchise Agreement, "COMPUTERIZED MANAGEMENT AND
OPERATIONAL SYSTEM," the first sentence in Section 21.4, beginning with "At
Franchisee's expense," shall be deleted in its entirety and the following shall
be substituted in lieu thereof.
Franchisee shall purchase, install and maintain the Computer System
(including internet access) at the Location of the Franchised Business.
2.17 In Section 23 of the Franchise Agreement, "TERMINATION," Section 23.2(xv)
shall be deleted in its entirety and shall have no force or effect.
3. STRATEGIC NATIONAL ACCOUNT CUSTOMERS
3.1 Conversion From National Account Customers to Strategic National Account
Customers. All customers of the Franchised Business that were deemed to be
"National Account Customers" under the Initial Agreement may remain customers of
the Franchised Business, but shall be deemed Strategic National Account
Customers under the Franchise Agreement ("CONVERTED ACCOUNTS"). The billings
from the Franchised Business for Converted Accounts shall not be
7
included with the billings from other Temporary Employment customers of the
Franchised Business. Franchisor's Split and Franchisee's Split on billings from
Converted Accounts shall continue to be determined in the same manner as set
forth under the Initial Agreement (e.g., using billed hours to determine
Adjusted Gross Margin Dollars rather than billed dollars) for so long as such
calculation is more advantageous to Franchisee than if calculated under the
terms of the Franchise Agreement. If at any time Franchisee's Share as
calculated under the Franchise Agreement would be greater with respect to
Converted Accounts than Franchisee's Share as calculated under the Initial
Agreement, Franchisee's Share and Franchisor's Share on billings from Converted
Accounts thereafter and forevermore shall be determined in accordance with the
Franchise Agreement. Franchisor's Split and Franchisee's Split on billings from
all Strategic National Account Customers of the Franchised Business acquired
after the Effective Date shall be determined in accordance with the Franchise
Agreement.
3.2 Strategic National Account Customers and Gross Margin Floor. Notwithstanding
anything to the contrary contained in the Franchise Agreement, all billings from
Strategic National Account Customers shall not be included with billings from
other Temporary Employment clients and customers of the Franchised Business for
purposes of determining the Gross Margin Floor. Billings from Strategic National
Account Customers and Converted Accounts shall be included in total Adjusted
Gross Margin Dollars for purposes of calculating Franchisor's Split and
Franchisee's Split under the Gross Margin Schedule.
4. TADI CUSTOMERS
If any clients or customers of the Franchised Business are classified by
Franchisor as a target account discount incentive customer or client (a "TADI
ACCOUNT"), Franchisee shall, subject to the terms contained in the Amendment
appended hereto as Attachment C, be eligible to retain such accounts by entering
into and complying with Attachment C.
5. SPLIT CALCULATION GUARANTEE
By entering into the First Year Split Calculation Guarantee Amendment
appended to this Agreement as Attachment D, Franchisee shall be eligible to
receive a guarantee from Franchisor that during the first Calculation Year of
the Franchise Agreement, Franchisee's Split of Adjusted Gross Margin Dollars
shall be calculated in the manner more advantageous to Franchisee as between the
terms of the Initial Agreement and Franchise Agreement.
6. MISCELLANEOUS
6.1 Remainder of Franchise Agreement. This Addendum constitutes an integral part
of the Franchise Agreement between the parties hereto, and the terms of this
Addendum shall be controlling with respect to the subject matter hereof. Except
as modified or supplemented by this Addendum, the terms of the Franchise
Agreement are hereby ratified and confirmed.
8
6.2 Entire Agreement. This Addendum and the Franchise Agreement referred to
herein, constitute the entire, full and complete agreement between the parties
hereto relating to the subject matter hereof, and supercede all prior
agreements, understandings, or representations, oral or written, including any
that may have existed between the Franchisee and Franchisor. The parties
acknowledge that they were not induced to enter into this Addendum as the result
of, or in reliance upon, any other agreement, understanding, or representation.
[Signature page follows]
9
IN WITNESS WHEREOF, the parties hereto have executed this Addendum
effective as of the day and year first written above.
"FRANCHISOR" "FRANCHISEE"
REMEDY INTELLIGENT STAFFING, INC. _____________________________________
By: ___________________________________ By: __________________________________
Name: _________________________________ Name: ________________________________
Title: ________________________________ Title: _______________________________
10
ATTACHMENT A
GROSS MARGIN SCHEDULE A
GROSS
ADJUSTED FRANCHISEE'S FRANCHISOR'S MARGIN
TIER GROSS MARGIN DOLLAR RANGE(1) SPLIT SPLIT FLOOR(2)
- -------- ---------- ---------------------- ------------ ------------ --------
Tier 1 $ - $ 249,999 60% 40% 21%
Tier 2 250,000 399,999 61% 39% 21%
Tier 3 400,000 549,999 62% 38% 21%
Tier 4 550,000 674,999 63% 37% 21%
Tier 5 675,000 799,999 64% 36% 21%
Tier 6 800,000 899,999 65% 35% 21%
Tier 7 900,000 999,999 66% 34% 21%
Tier 8 1,000,000 1,099,999 67% 33% 21%
Tier 9 1,100,000 1,249,999 68% 32% 21%
Tier 10 1,250,000 1,399,999 69% 31% 21%
Tier 11 1,400,000 1,599,999 70% 30% 21%
Tier 12 1,600,000 1,999,999 71% 29% 21%
Tier 13 2,000,000 and above 72% 28% 21%
NOTES:
- ------------------
1. The dollar amounts reflected in the Gross Margin Schedule shall be subject
to annual adjustment in accordance with the terms of Section 5.6 of the
Franchise Agreement.
2. The Gross Margin Floor for all Adjusted Gross Margin Dollars earned by the
Franchised Business up to and including Tier 13 shall be a Gross Margin
Percentage of 21%.
11
ATTACHMENT B
GROSS MARGIN SCHEDULE B
GROSS
ADJUSTED MARGIN DOLLAR FRANCHISEE'S FRANCHISOR'S MARGIN
TIER GROSS RANGE(1) SPLIT SPLIT FLOOR(2)
- -------- ---------- ------------- ------------ ------------ --------
Tier 1 $ - $ 249,999 60% 40% 21%
Tier 2 250,000 399,999 61% 39% 21%
Tier 3 400,000 549,999 62% 38% 21%
Tier 4 550,000 674,999 63% 37% 21%
Tier 5 675,000 799,999 64% 36% 21%
Tier 6 800,000 899,999 65% 35% 21%
Tier 7 900,000 999,999 66% 34% 21%
Tier 8 1,000,000 1,099,999 67% 33% 21%
Tier 9 1,100,000 1,249,999 68% 32% 21%
Tier 10 1,250,000 1,399,999 69% 31% 21%
Tier 11 1,400,000 1,599,999 70% 30% 21%
Tier 12 1,600,000 1,899,999 70% 30% 20%
Tier 13 1,900,000 2,199,999 70% 30% 19%
Tier 14 2,200,000 and above 70% 30% 18%
NOTES:
- ----------------
1. The dollar amounts reflected in the Gross Margin Schedule shall be subject
to annual adjustment in accordance with the terms of Section 5.6 of the
Franchise Agreement.
2. The Gross Margin Floor for all Adjusted Gross Margin Dollars earned by the
Franchised Business up to and including Tier 11 shall be a Gross Margin
Percentage of 21%, and for Tiers 12-14, the Gross Margin Floor shall be
determined in accordance with the Gross Margin Schedule.
12
ATTACHMENT C
AMENDMENT TO FRANCHISE AGREEMENT FOR TADI ACCOUNTS
This Amendment to the Franchise Agreement for TADI Accounts ("AMENDMENT")
is made as of _____________, 200__, by and between Remedy Intelligent Staffing,
Inc., a California corporation ("FRANCHISOR"), and __________________________, a
_____________________ ("FRANCHISEE"), in connection with the execution by
Franchisor and Franchisee of the Remedy Intelligent Staffing, Inc. Franchise
Agreement dated _____________, 20__ (the "FRANCHISE AGREEMENT"). All capitalized
terms used herein and not otherwise defined shall have the same meaning as set
forth in the Franchise Agreement.
RECITALS
A. Prior to entering into the Franchise Agreement, Franchisor and
Franchisee were parties to a previous Remedy Intelligent Staffing, Inc.
franchise agreement for the operation of the Franchised Business dated
_________________________ (the "INITIAL AGREEMENT").
B. Franchisee was previously granted the right service certain clients and
customers deemed by Franchisor to be target account discount incentive customers
or clients ("TADI ACCOUNTS").
C. Franchisor is willing to permit Franchisee, and Franchisee wishes, to
retain the right to service TADI Accounts in connection with the Franchised
Business, under the terms set forth in this Amendment.
Franchisor and Franchisee hereby agree as follows:
1. No new TADI Accounts will be created or granted, and Franchisee shall only be
entitled to service TADI Accounts in connection with the Franchised Business
under the Franchise Agreement that Franchisee serviced in connection with the
franchised business operated under the Initial Agreement.
2. The billings from TADI Accounts shall not be included in, or used to
calculate, Adjusted Gross Margin Dollars obtained with billings from other
Temporary Employment clients and customers of the Franchised Business.
3. TADI Accounts will not be subject to the Gross Margin Floor.
4. Franchisor's Split and Franchisee's Split on billings from TADI Accounts
shall continue to be determined in the same manner as set forth under the
Initial Agreement (e.g., using billed hours to determine Adjusted Gross Margin
Dollars rather than billed dollars) for so long as such calculation is more
advantageous to Franchisee than if calculated in accordance with the terms of
the Franchised Agreement. If at any time Franchisee's Share of billings from
TADI Accounts would be higher if calculated in accordance with the terms of the
Franchise Agreement than in accordance with the Initial Agreement, Franchisee's
Share and Franchisor's Share on billings
13
from TADI Accounts thereafter and forevermore shall be determined in accordance
with the terms set forth in the Franchise Agreement.
5. During the term of the Franchise Agreement, Franchisee shall be entitled to
continue to service each TADI Account and receive the benefits of having such
client or customer classified as a TADI Account until such time as: (a)
Franchisee does not provide any Temporary Employees to such TADI Account for a
period of six (6) consecutive Accounting Periods; or (b) Franchisee's Share
calculated from the billings from a TADI Account is no greater than if such
account were not classified as a TADI Account. If either of the conditions in
(a) or (b) above occur, the account to which the condition applies shall no
longer be deemed a TADI Account, and although Franchisee may continue to service
such account as a client or customer of the Franchised Business, the billings
from such client or customer shall be treated and calculated in the same manner
as for any typical Temporary Employment client or customer of the Franchised
Business under the Franchise Agreement.
The parties hereto have executed this Amendment effective as of the day and year
first written above.
"FRANCHISOR" "FRANCHISEE"
REMEDY INTELLIGENT STAFFING, INC. _____________________________________
By: ___________________________________ By: __________________________________
Name: _________________________________ Name: ________________________________
Title: ________________________________ Title: _______________________________
14
ATTACHMENT D
FIRST YEAR SPLIT CALCULATION GUARANTEE AMENDMENT
This First Year Split Calculation Guarantee Amendment ("AMENDMENT") is
made as of _____________, 200__, by and between Remedy Intelligent Staffing,
Inc., a California corporation ("FRANCHISOR"), and __________________________, a
________________________ ("FRANCHISEE"), in connection with the execution by
Franchisor and Franchisee of the Remedy Intelligent Staffing, Inc. Franchise
Agreement dated _____________, 20__ (the "FRANCHISE AGREEMENT"). All capitalized
terms used herein and not otherwise defined shall have the same meaning as set
forth in the Franchise Agreement. Franchisor and Franchisee hereby agree as
follows:
1. Franchisor and Franchisee have entered into the Franchise Agreement between
October 1, 2005 and September 30, 2006.
2. During the first Calculation Year of the Franchise Agreement (the "SPLIT
GUARANTEE PERIOD"), Franchisee's Split shall be calculated from Gross Billings
in the manner more advantageous to Franchisee as between the terms of the
previous franchise agreement between Franchisor and Franchisee for the operation
of the Franchised Business (the "INITIAL AGREEMENT") and the Franchise
Agreement. During the Split Guarantee Period, Franchisee's Split shall be
calculated in accordance with the Gross Margin Schedule under the Franchise
Agreement; but if, at the end of the Split Guarantee Period, it is determined by
Franchisor that Franchisee's Split calculation on Gross Billings would have been
higher if calculated under the Initial Agreement than as calculated under the
Franchise Agreement, then Franchisor shall refund to Franchisee any applicable
amounts that Franchisee would have received if Franchisee's Split was calculated
during the Split Guarantee Period in accordance with the terms of the Initial
Agreement.
3. This Amendment shall expire at the end of the Split Guarantee Period, and all
of the terms of the Franchise Agreement shall thereafter apply without regard to
this Amendment.
The parties hereto have executed this Amendment effective as of the day and year
first written above.
"FRANCHISOR" "FRANCHISEE"
REMEDY INTELLIGENT STAFFING, INC. _____________________________________
By: ___________________________________ By: __________________________________
Name: _________________________________ Name: ________________________________
Title: ________________________________ Title: _______________________________
15
ATTACHMENT E
FORM OF ELECTION TO CHANGE GROSS MARGIN SCHEDULE
Pursuant to that certain Franchise Agreement (the "Franchise Agreement")
and that certain Early Renewal Addendum to Franchise Agreement for Existing
Franchisees ("Early Renewal Addendum"; and together with the Franchise
Agreement, the "Agreement"), each dated __________, and each between Remedy
Intelligent Staffing, Inc. and _____________ ("Franchisee"), Franchisee elects
to change the Gross Margin Schedule applicable to the Agreement as set forth
below. All capitalized terms not otherwise defined herein have the meanings
given such terms in the Agreement.
Franchisee elects to change from Gross Margin Schedule ____ [insert "A" or
"B"] to Gross Margin Schedule ___ [insert Gross Margin Schedule to take effect]
in accordance with Section 2.5 of the Early Renewal Addendum. Franchisee
understands that this election shall only be effective if Franchisee has
complied in all respects with the terms and conditions of Section 2.5 of the
Early Renewal Addendum and is not in default under the Agreement.
FRANCHISEE
__________________________
By: ______________________
Name: ____________________
Title: ___________________
Date: ____________________
16
ATTACHMENT F
PURCHASE CONSIDERATION REQUEST
Reference is made to that certain Franchise Agreement (the "Franchise
Agreement") and that certain Early Renewal Addendum to Franchise Agreement for
Existing Franchisees ("Early Renewal Addendum"; and together with the Franchise
Agreement, the "Agreement"), each dated as of __________, and each by and
between Remedy Intelligent Staffing, Inc., a California corporation
("Franchisor"), and _____________, a _____________ ("Franchisee"). Franchisee
hereby requests that Franchisor consider a purchase of its Franchised Business
pursuant to Section 2.8 of the Early Renewal Addendum.
In connection with such request:
1. Franchisee represents and warrants that it has performed its
obligations under the Agreement and is not in default under the
Agreement; and
2. Franchisee has included with this Purchase Consideration Request the
following information (the "Business Information"):
i. [Financial and other information]
ii. [_________________________________]
Franchisee represents and warrants that the financial information included
herewith has been prepared in accordance with generally accepted
accounting principles consistently applied, and fairly presents the
condition (financial and otherwise) of the Franchisee and the Franchised
Business. The Business Information does not contain any misstatement of a
material fact or omit to state a material fact necessary to prevent the
statements made therein from being misleading.
Franchisee:
_______________________
By: ___________________
Name: _________________
Title: ________________
Date: _________________
17