Exhibit 10.37
Location: HOTELADDRESS1
HOTELADDRESS2
ID Number: IDNUMBER
Date:
---------------
LICENSE AGREEMENT
between
BEST FRANCHISING, INC.
and
ENTITYNAMECAPS
TABLE OF CONTENTS
PAGE
1. THE LICENSE......................................................................................1
A. The Hotel...................................................................................1
B. The Hotel System............................................................................1
2. GRANT OF LICENSE.................................................................................2
3. YOUR RESPONSIBILITIES............................................................................2
A. Operational and Other Requirements..........................................................2
B. Performance of the Work.....................................................................4
C. Upgrading of the Hotel......................................................................4
D. Fees........................................................................................4
E. No Right to Offset..........................................................................6
4. OUR RESPONSIBILITIES.............................................................................6
A. Training....................................................................................6
B. Services....................................................................................6
C. Consultation on Operations, Facilities and Marketing........................................6
D. (1) Best Reservations Corp..............................................................6
(2) Use of Marketing/Reservation Contributions..........................................6
E. Application of Manual.......................................................................7
F. Other Arrangements..........................................................................7
G. Inspections/Compliance Assistance...........................................................7
5. PROPRIETARY RIGHTS...............................................................................7
A. Ownership of the Hotel System and Proprietary Marks.........................................7
B. Trademark Disputes..........................................................................8
C. Protection of Name and Marks................................................................8
6. RECORDS AND AUDITS...............................................................................9
A. Monthly Reports.............................................................................9
B. Preparation and Maintenance of Records......................................................9
C. Audit.......................................................................................9
D. Annual Financial Statements.................................................................9
7. INDEMNITY AND INSURANCE.........................................................................10
A. Indemnity..................................................................................10
B. Insurance..................................................................................11
8. TRANSFER........................................................................................12
A. Transfer by Us.............................................................................12
B. Transfer by You............................................................................12
C. Transfers of the License or Equity Interest in You Upon Death..............................14
D. Registration of a Proposed Transfer of Equity Interests....................................14
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E. Non-Waiver of Claims........................................................................14
F. Our Right of First Refusal..................................................................14
G. No Right of First Refusal...................................................................15
9. CONDEMNATION AND CASUALTY........................................................................15
A. Condemnation................................................................................15
B. Casualty....................................................................................15
C. Extensions of Term..........................................................................15
10. TERMINATION......................................................................................16
A. Expiration of Term..........................................................................16
B. Defaults....................................................................................16
C. De-identification of Hotel Upon Termination or Expiration of this Agreement
................................................................................................19
D. Payment of Liquidated Damages...............................................................20
11. RENEWAL..........................................................................................21
A. Requirements................................................................................21
B. Alternative Process.........................................................................21
12. RELATIONSHIP OF PARTIES..........................................................................22
A. No Agency Relationship......................................................................22
B. Your Notices to Public Concerning Independent Status........................................22
C. Use of the Best Name........................................................................22
13. MISCELLANEOUS....................................................................................22
A. Severability and Interpretation.............................................................22
B. Binding Effect..............................................................................22
C. Exclusive Benefit...........................................................................23
D. Entire Agreement............................................................................23
E. Our Withholding of Consent..................................................................23
F. Notices.....................................................................................24
G. Descriptive Headings........................................................................24
H. Management of the Hotel.....................................................................24
I. Guest Room Rates............................................................................24
J. Attorneys' Fees.............................................................................24
14. SPECIAL STIPULATIONS.............................................................................24
A. Conditional Opening.........................................................................24
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GUARANTY OF LICENSEE
ATTACHMENT A
ATTACHMENT B
ATTACHMENT C
GUARANTY BY HAWTHORN SUITES FRANCHISING, INC.
STATE - SPECIFIC AMENDMENTS
LICENSE AGREEMENT
This license agreement ("Agreement" or "License Agreement"), dated
______________, 20___, is entered into by and between Best Franchising, Inc., a
Georgia corporation having an address at 13 Corporate Square, Suite 250,
Atlanta, Georgia 30329 ("we," "our," "us" or "Licensor"), and ENTITYNAMECAPS, a
ENTITYTYPE, having an address at ENTITYADDRESS ("you," "your" or "Licensee"). In
consideration of the following mutual promises, the parties agree as follows:
1. THE LICENSE.
We have the exclusive right to license a unique concept and system (the
"Hotel System") to establish and operate "mid-level economy" hotels under the
names "Best Inns," "Best Suites," "Best Inns & Suites," "Best Hotel" and "Best
Hotel & Suites" and certain brand extensions thereof (collectively, "Hotels" or
"Best Hotels"). Before signing this Agreement, you read our Offering Circular
for Prospective Franchisees ("UFOC") and independently evaluated and
investigated the risks of investing in the hotel industry generally and
purchasing a Best franchise specifically, including such factors as current and
potential market conditions, owning a franchise and various competitive factors.
Following your investigation, you wish to enter into this Agreement to obtain a
license to use the Hotel System to operate a BRAND hotel located at
HOTELADDRESS1, HOTELADDRESS2 (the "Hotel").
A. THE HOTEL. The Hotel includes all structures, facilities,
appurtenances, furniture, fixtures, equipment, entry, exit and parking areas
located on the real property identified on Attachment A hereto or any other real
property we approve for Hotel expansion, signage or other facilities. You agree
not to make any material changes to the Hotel without our prior written consent,
which consent shall not be unreasonably withheld, including, but not limited to,
any change in the number of rooms or suites at or to be constructed as part of
the Hotel ("Guest Rooms").
B. THE HOTEL SYSTEM. We have designed the Hotel System so that the
public associates the Hotels with high quality standards. The Hotel System
includes, without limitation: (i) the tradenames, trademarks, and service marks
"Best Inns," "Best Suites," "Best Inns & Suites," "Best Hotel" and "Best Hotel &
Suites" and such other tradenames, trademarks, and service marks we hereafter
designate for use with the Hotel System (collectively, the
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"Proprietary Marks"); (ii) prototypical architectural plans, designs and
layouts, including, without limitation, site, floor, roof, plumbing, lobby,
electrical and landscape plans; (iii) a national toll free number system for
central reservation referrals, as renovated by us from time to time
(collectively, the "CRS"); (iv) the national Best directory (the "National
Directory"); (v) management, personnel and operational training programs,
materials and procedures; (vi) standards and specifications for operations,
marketing, construction, equipment and furnishings described in our confidential
manuals, as amended by us from time to time (collectively, the "Manual"); and
(vii) marketing, advertising and promotional programs.
2. GRANT OF LICENSE.
We hereby grant to you a license (this "License") to use the Hotel
System to build or convert and operate the Hotel in accordance with the terms of
and commencing on the date of this Agreement and terminating as provided in
Paragraph 10 (the "License Term"). During the License Term, neither we nor any
of our affiliates or franchisees will develop or license any Best Hotels within
the area described in Attachment B (the "Territory"). This Agreement does not
limit our right, or the rights of our parent, subsidiaries or affiliates, (i) to
use or license others to use any part of the Hotel System outside the
Territory; (ii) to conduct other business activities under, or license others to
use, hospitality brands that are not part of the Proprietary Marks, whether
outside or within the Territory, even if the other brands or business activities
compete with the Hotel and/or the Hotel System; or (iii) to use or license
others to use the Hotel System within the Territory to replace any previously
executed Best Hotel license agreement.
3. YOUR RESPONSIBILITIES.
A. OPERATIONAL AND OTHER REQUIREMENTS. During the License Term,
you agree to:
(1) maintain the Hotel in first class condition and in a
clean, safe and orderly manner;
(2) provide efficient, courteous, and high-quality
service to the public while maintaining a high moral
and ethical standard and atmosphere at the Hotel;
(3) operate the Hotel twenty-four (24) hours a day, every
day;
(4) strictly comply in all respects with our requirements
concerning:
(a) the Hotel System, the Manual and all other
policies and procedures we communicate to
you;
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(b) our quality standards and the types of
services, products and amenities you may
use, promote or offer at the Hotel;
(c) your use of the Proprietary Marks and
display, style and type of signage;
(d) directory and reservation service listings
of the Hotel; and
(e) your participation in all of our marketing,
reservation service, advertising, Internet,
computer, training and operating programs,
including a property management system that
interfaces with the CRS or any other central
reservation system we adopt;
(5) execute our then-current Software License Agreement,
including payment of a $1,500 software license fee,
to participate in, connect with and use the CRS;
(6) except as provided in Paragraph 4E, adopt all changes
we make to the Hotel System;
(7) strictly comply with all governmental requirements,
including: (i) the payment of taxes; (ii) the filing
and maintenance of trade or fictitious name
registrations; and (iii) the filing and maintenance
of all licenses and permits to operate the Hotel;
(8) permit our representatives to inspect the Hotel at
any time and provide them free lodging during the
inspection period;
(9) not use the Hotel or the Hotel System to promote a
competing business or other lodging facility;
(10) use your best efforts to create a favorable response
to the names "Best Inns," "Best Suites," "Best Inns &
Suites," "Best Hotel" and "Best Hotel & Suites" and
the names of any brand extensions we develop;
(11) promptly pay to us and/or our parent, subsidiaries
and affiliates when due all royalties and fees owed
under this Agreement;
(12) use your best efforts to treat the Manual and any
other information or materials we designate, as
confidential ("Confidential Materials") and not
duplicate, circulate or distribute any Confidential
Materials to any unauthorized person;
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(13) use best efforts to require each employee who will
have access to any Confidential Materials to keep the
Confidential Materials confidential; and
(14) conduct your advertising in a dignified manner. At
our request, you agree to submit to us all
advertising and promotional materials and immediately
discontinue your use of any materials we reasonably
reject.
B. PERFORMANCE OF THE WORK. As a primary inducement for us to enter
into this Agreement, you agree to perform the work listed on Attachment C (the
"Work") in strict accordance with our specifications.
C. UPGRADING OF THE HOTEL. If at any time the Hotel falls below the
quality standards set forth in the Manual, we may require you to upgrade or
renovate the Hotel to reach acceptable standards. Your failure to upgrade or
renovate the Hotel promptly after we notify you to do so may result in our
issuing a quality default notice which could lead to our terminating this
Agreement.
D. FEES.
(1) For each month (or part of a month) during the
License Term, beginning with the date the Hotel opens
for business (the "Opening Date"), you shall pay to
us by the tenth (10th) day of the following month:
(a) a "Royalty Fee" equal to the following
percentages of Gross Room Revenues (as
defined in Paragraph 3D(2)) of the Hotel:
(i) three percent (3%) during the first
twelve (12) month period following the
Opening Date ("Year 1"); (ii) four percent
(4%) during the twelve (12) month period
following Year 1 ("Year 2"); and five
percent (5%) for each month after Year 2
until the expiration or sooner termination
of this Agreement.
(b) a "Marketing/Reservation Contribution"
("Contribution") equal to two and one-half
percent (2.5%) of Gross Room Revenues of the
Hotel from the Opening Date until the
expiration or sooner termination of this
Agreement. Beginning in Year 3, we may, at
any time, increase your Contribution only
if: (i) we simultaneously increase the
Contributions of all other licensees whose
agreements contain fee provisions similar to
this Paragraph 3D; and (ii) at least
sixty-six percent (66%) of the open Best
Hotels (one
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vote per open Hotel) agree to such an
increase; and
(c) any sales, gross receipts, personal property
or similar tax imposed on us and calculated
solely on any payment required under this
Agreement, unless the tax is an optional
alternative to an income tax otherwise
payable by us.
(2) "Gross Room Revenues" shall mean gross receipts
attributable to or payable for the rental of Guest
Rooms, including, without limitation, the net
proceeds of use and occupancy and business
interruption, rent loss, or similar insurance held by
you with respect to the Hotel. However, insurance
proceeds are included in Gross Room Revenues only if
you actually receive them. Gross Room Revenues do not
include gratuities to employees or service charges
levied in lieu of such gratuities which are payable
to employees, or any taxes or fees collected by you
for transmittal to any taxing authorities.
(3) If we require, you agree to make your monthly
payments to a designated bank account by telegraphic
transfer, automatic debit arrangement, or other means
we specify. We will pay for the cost of connection to
such telegraphic or automatic debit service. If an
automatic debit or similar arrangement is utilized
and funds are insufficient to cover your payment
obligation, any amounts unpaid on or before the due
date shall be deemed overdue. If any payment is
overdue, in addition to the overdue amount, you shall
pay us interest on the overdue amount from the due
date until paid in full at the lesser rate of one and
one-half percent (1.5%) per month or the maximum rate
permitted by law. Our ability to charge interest on
all overdue amounts shall be in addition to any other
remedies we may have as a result of your failure to
make payments when due.
(4) You agree to pay us a $2,500.00 fee each time you
apply to us to add any Guest Rooms to the Hotel.
(5) Subject to our requirements and at your own expense,
you may conduct local and regional marketing and
advertising programs. You shall pay us reasonable
fees for optional advertising materials you order
from us for these programs.
(6) You will participate in any global distribution
system connected to the CRS and pay applicable
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commissions to travel agents. You agree to pay: (i)
all commissions and fees for reservations you accept
through any sources (including the Internet), whether
processed through us, the CRS, third party
reservation systems, or billed directly to you; and
(ii) CRS related telephone and equipment charges.
E. NO RIGHT TO OFFSET. Licensee acknowledges and agrees that it will
not, for any reason, withhold payment of any Royalty Fees, Contributions or any
other fees or payments due Licensor pursuant to this Agreement. Licensee will
not have the right to withhold or offset any liquidated or unliquidated amounts,
damages or other monies allegedly due Licensee by Licensor against any Royalty
Fees, Contributions or any other fees due Licensor under this Agreement.
4. OUR RESPONSIBILITIES.
A. TRAINING. We provide initial training prior to the Opening Date.
During the License Term, we will provide both required and optional training
programs. We are responsible for the cost of instruction and you are responsible
for all travel, lodging and other training expenses, including reasonable
charges for training materials. If any training is held at your Hotel, you agree
to provide our representatives with free lodging.
B. SERVICES. Provided you are in full compliance with your obligations
under this Agreement, you shall have access to the CRS, listings in advertising
publications and the National Directory.
C. CONSULTATION ON OPERATIONS, FACILITIES AND MARKETING. On an ongoing
basis, you may consult with us in connection with Hotel operations, including
suppliers for fixtures, furnishings, signs and other equipment.
D. (1) BEST RESERVATIONS CORP. By executing this Agreement,
you agree to become a member of Best Reservations
Corp. (the "Fund"), an Illinois not-for-profit
corporation with a Board of Directors which we
control. The Fund holds the Contributions and for
administrative convenience, we collect the
Contributions before passing them on to the Fund.
(2) USE OF MARKETING/RESERVATION CONTRIBUTIONS. The Fund
will use the Contributions to pay for: (i)
advertising, promotion, publicity, market research
and other marketing programs; (ii) maintaining and
producing the National Directory, our Internet site,
and the CRS; and (iii) our overhead relating directly
to national and local marketing and reservations. Our
overhead is limited to costs associated with the
financial management of the Contributions and the
salaries and benefits of
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certain individuals who work for our reservation or
marketing departments. We will neither profit
financially from nor use the Contributions to pay for
marketing directly related to our sale of franchises.
The Fund is not obligated to spend funds for
marketing or reservation services exceeding the
Contributions received from licensees using the Hotel
System. If the Fund has a surplus of Contributions at
the end of any taxable year, all expenditures in the
following taxable year(s) shall be made first out of
earnings accumulated from previous years' surplus
contributions, next out of current year earnings from
surplus contributions, and finally from current year
Contributions. Upon your written request, we will
provide you with an annual statement regarding
Contributions.
E. APPLICATION OF MANUAL. All Best Hotels must comply with the terms of
the Manual, although we may permit limited exceptions based on local conditions
or special circumstances. Each change in the Manual will be explained to you at
least thirty (30) days prior to its effective date. Any change to the Manual
which, in our reasonable discretion, would cause a substantial investment by you
will not be effective unless approved by sixty-six percent (66%) of the open
Best Hotels. Each open hotel shall have one vote and approval of sixty-six
percent (66%) of the open hotels will be required to implement the change.
Notwithstanding the foregoing, changes to the Manual which relate to guest
security and/or life/safety issues are not subject to the approval of you or
other licensees even if substantial investments are required.
F. OTHER ARRANGEMENTS. We may arrange for development, marketing,
operations, administration, technical and support functions, facilities,
services and/or personnel with any other entity and may use any facilities,
programs, services and/or personnel used in connection with the Hotel System in
connection with our other business activities, even if our other business
activities compete with the Hotel or the Hotel System.
G. INSPECTIONS/COMPLIANCE ASSISTANCE. We have the right to inspect your
Hotel at any time, with or without notice to you, to determine if the Hotel is
in compliance with the Hotel System and the standards set forth in the Manual.
If the Hotel fails to comply with either, we may, at our option and at your
cost, require you to correct the deficiencies within the reasonable time we
establish.
5. PROPRIETARY RIGHTS.
A. OWNERSHIP OF THE HOTEL SYSTEM AND PROPRIETARY MARKS. You acknowledge
and shall not contest, either directly or indirectly, either during the License
Term or thereafter: (i) our exclusive right to both use and grant licenses to
use the Hotel System and
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any element(s) or component(s) thereof; (ii) that we are the owner or exclusive
licensee of all right, title and interest in and to the Proprietary Marks
together with the goodwill they symbolize; or (iii) the validity or ownership of
the Proprietary Marks. All improvements and additions to or associated with the
Hotel System made by you or anyone else and all goodwill arising from your use
of the Proprietary Marks shall inure to our benefit and become our property.
Upon expiration or termination of this Agreement, no monetary amount shall be
attributed to any goodwill associated with your use of the Hotel System or
portion thereof.
B. TRADEMARK DISPUTES. We have the sole right to handle third
party disputes concerning the use of all or any part of the Hotel System, and
you shall, at your reasonable expense, extend your full cooperation to us in all
matters relating to the operation of the Hotel. All recoveries made as a result
of disputes with third parties regarding use of the Hotel System or any part
thereof belong solely to us. We are not required to initiate lawsuits against
alleged imitators or infringers and may settle any dispute in our discretion.
You shall not initiate any lawsuit or proceeding against alleged imitators or
infringers or any other lawsuit or proceeding to enforce or protect the Hotel
System without our prior written consent.
C. PROTECTION OF NAME AND MARKS. Consistent with their
ownership rights and rights to use the Proprietary Marks, both parties to this
Agreement shall use their reasonable best efforts to protect and maintain the
Proprietary Marks and their distinguishing characteristics. You agree: (i) to
execute any documents we request to obtain or maintain protection for the
Proprietary Marks; (ii) to use the Proprietary Marks only in connection with the
operation of your Hotel and only as we instruct; and (iii) that your
unauthorized use of the Proprietary Marks shall constitute both an infringement
of our rights and a material breach of your obligations under this Agreement.
You must notify us immediately, in writing, if you have any actual or
constructive knowledge of any infringement or challenge to your use of the
Proprietary Marks or any unauthorized use or possible misuse of either the
Proprietary Marks, the names "Best Inns," "Best Suites" or "Best Hotel" or any
Confidential Materials.
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6. RECORDS AND AUDITS.
A. MONTHLY REPORTS. By the third (3rd) day of each month, you agree to
prepare and submit to us a statement for the previous month, certified by your
chief financial or principal accounting officer, listing Gross Rooms Revenue,
other revenues generated at the Hotel, room occupancy rates, reservation data,
the amounts currently due under Paragraph 3D and other information we deem
useful in connection with the Hotel System (the "Data"). The statement shall be
in such form and detail as we may reasonably request, shall be our property and
may be used by us for all reasonable purposes. We will not knowingly provide
Data on your Hotel as an inducement to develop other hotel brands in your market
area, although you understand that some of the Data may be compiled into
information we provide to prospective licensees.
B. PREPARATION AND MAINTENANCE OF RECORDS. You agree to: (i) prepare on
a current basis in a form satisfactory to us, (and preserve for at least four
(4) years), complete and accurate records concerning Gross Rooms Revenue and all
financial, operating, marketing and other aspects of the Hotel; and (ii)
maintain an accounting system which fully and accurately reflects all financial
aspects of the Hotel, including, but not limited to, books of account, tax
returns, governmental reports, register tapes, daily reports, profit and loss
and cash flow statements, balance sheets and complete quarterly and annual
financial statements. We reserve the right to require you to grant us
independent access to your computer system to permit us to obtain sales
information, occupancy information and other data that we find useful for the
Hotel System.
C. AUDIT. We or our agents may, at any time, examine and copy, all
books, records, and tax returns related to your Hotel and, at our option,
require an independent audit. If an inspection or audit reveals that you have
understated payments in any report to us, you shall immediately pay us the
amount understated, in addition to interest from the date such amount was due
until paid, at the lesser of one and one-half percent (1.5%) per month or the
maximum rate permitted by law. In this event, we may also require that all of
your future annual financial statements be audited at your expense by an
independent certified public accounting firm you select and we approve. If an
inspection or audit discloses an underpayment to us of five percent (5%) or more
of the total amount owed during any six (6) month period, you shall, in addition
to paying the understated amount with interest, reimburse us for our costs and
expenses in connection with the inspection or audit, including legal and
accounting fees. These remedies supplement any others we may have under this
Agreement.
D. ANNUAL FINANCIAL STATEMENTS. Upon our request, not later than ninety
(90) days after the end of your fiscal year, you must provide us with complete
financial statements for such year certified by your chief financial or
principal accounting officer to be true and correct and prepared in accordance
with generally
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accepted accounting principles consistently applied. Any false certification
shall be a material breach of this Agreement. Upon our request from time to time
you also agree to provide us with operating statistics for the Hotel.
7. INDEMNITY AND INSURANCE.
A. INDEMNITY. You agree that nothing in this Agreement authorizes
either party to make any contract, agreement, warranty or representation on the
other's behalf, or to incur any debt or other obligation in the other's name,
and that neither party shall assume liability for, or be deemed liable as a
result of any such action, or by reason of any act or omission of the other
party or any claim or judgment arising therefrom.
(1) You agree to indemnify, defend and hold harmless us,
our parent, affiliates, subsidiaries and our
respective, officers, directors, agents, employees,
successors and assigns (the "Indemnified Parties")
against, and to reimburse the Indemnified Parties
for, any and all claims or actions arising or
alleging to arise directly or indirectly from, as a
result of, or in connection with, your operation of
the Hotel, including, but not limited to, claims
alleging either intentional or negligent conduct,
acts or omissions by you or us relating to the
operation of the Hotel or the Hotel System, as well
as the costs, including attorneys' fees, of defending
against said claims or actions. We reserve the right
to defend any such claim or action against us. You
agree that this indemnity will survive the expiration
or termination of this Agreement. You have no
obligation to indemnify us if a court of competent
jurisdiction makes a final decision not subject to
further appeal that we or our employees directly
engaged in willful misconduct or intentionally caused
the property damage or bodily injury that is the
subject of the claim. You shall notify us immediately
(but not later than five (5) days following your
receipt of notice) of any claim, action or potential
claim or action naming any Indemnified Party as a
defendant or potential defendant (the
"Indemnification Notice"). The Indemnification Notice
shall include copies of all correspondence or court
papers relating to the claim or action.
(2) We shall indemnify you and hold harmless your parent,
affiliates, subsidiaries and respective officers,
directors, agents, and employees against all claims
against you arising as a result of, or in connection
with, a material breach by us which is adjudicated by
a court of competent jurisdiction
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to be the sole cause of the claim, as well as the
cost of defending the claim.
(3) If you fail to comply with this Paragraph 7A, we may
retain attorneys and defend any claim, action or
alleged claim or action at your sole expense. You
agree that our obligations hereunder are exclusively
to you, and no other party may rely on, enforce, or
obtain relief for breach of such obligations.
B. INSURANCE. During the License Term, you shall comply with the
insurance requirements of any applicable law, lease or mortgage covering the
Hotel and our specifications regarding amounts and types of insurance. Prior
to the Opening Date, and thereafter on an annual basis and/or each time you
change the terms of your insurance policy or carrier, you shall provide us
with certificates of insurance which: (i) evidence your liability insurance,
its amounts and the amount of your deductible; (ii) name Best Franchising,
Inc. and U.S. Franchise Systems, Inc. as additional insureds; (iii) state
that your policy may not be canceled, amended or permitted to lapse or expire
without thirty (30) days prior written notice to us. At a minimum, such
certificates must be provided to us prior to construction or renovation of
the Hotel and prior to the authorized Opening Date of the Hotel. All
insurance policies shall be written on a fully insured basis. Deductibles and
self insurance retentions are subject to our prior approval. At the minimum,
you agree to maintain or cause to be maintained (as applicable) the following
insurance underwritten by an insurer we approve:
(1) employer's liability and workers' compensation
insurance as prescribed by applicable law;
(2) comprehensive general and automobile liability
insurance (with products, completed operations and
independent contractors coverage), all on an
occurrence basis, with single-limit coverage for
personal and bodily injury and property damage of at
least $5,000,000.00 per occurrence which can be met
by a combination of primary liability and umbrella
liability policies. You also agree to cause your
general contractor to maintain comprehensive general
liability insurance of at least $5,000,000.00 per
occurrence naming Best Franchising, Inc. and U.S.
Franchise Systems, Inc. as additional insureds; and
(3) Dram Shop/Liquor liability insurance, in the same
amounts provided above and naming the same additional
insureds, if you serve alcohol of any kind at the
Hotel. If you begin serving alcohol at any time
during the License Term, you agree to notify us
immediately and provide us with a revised
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certificate of insurance evidencing Dram Shop/Liquor
liability insurance coverage.
8. TRANSFER.
A. TRANSFER BY US. We have the right to transfer or assign our rights
or obligations under this Agreement to any person or entity and our interests
will bind and inure to the benefit of any transferee, successor or assignee.
B. TRANSFER BY YOU. You agree that the rights and duties created by
this Agreement are personal to you and that we have granted this License in
reliance on the business skill, financial capacity and character of you and your
partners, shareholders or members. You may mortgage the Hotel to any financial
institution without our consent if you remain the mortgagor of the Hotel. Except
as provided in Paragraph 8B(1), neither you, any successor to your interest, nor
any individual, partnership, corporation, or other legal entity which directly
or indirectly owns any interest in this License or in you shall sell, assign,
transfer, convey or otherwise encumber any direct or indirect interest in this
License, the Hotel or the assets of the Hotel without our prior written consent.
(1) A transfer of less than a fifty percent (50%) equity
interest in you which does not transfer Control (as
defined below), does not require our consent if you
notify us in writing within thirty (30) days of the
transfer.
(2) A transfer which alone or combined with previous or
simultaneous transfers changes Control of the
License, you, the Hotel, or greater than fifty
percent (50%) of the Hotel's assets requires our
prior written consent.
We may require any or all of the following as conditions
of our consent to a transfer:
(a) your compliance with all terms of this
Agreement;
(b) the transferee entity or individual, and all
shareholders, partners or members of the
transferee (collectively, the "Transferee"),
shall meet our then-current qualifications
for new licensees;
(c) the Transferee shall execute our
then-standard forms of license agreement and
other applicable agreements for new Hotel
System licensees (which will include
then-current fees and Contributions),
provided, however, Transferee's fees
(including but not limited
12
to all fees under Paragraphs 3D(1)(a) and
3D(1)(b)), shall not be less than the fees
you are obligated to pay at the time of the
transfer under this Agreement;
(d) any new general manager retained by the
Transferee completes our initial training
program;
(e) the Hotel shall be upgraded within the time
period we set to conform to the then-current
standards and specifications for hotels
operating under the Hotel System;
(f) you or the Transferee must pay us a
$5,000.00 transfer fee unless the transfer
is to the spouse, issue, parent, or sibling
of your partner(s) or shareholder(s), or
from one partner or shareholder to another.
If the Transferee requests approval of a
term exceeding the remainder of the License
Term, the Transferee must pay our
then-current application fee, prorated for
the time period exceeding the License Term;
(g) you execute a general release, in a form
satisfactory to us, of any and all claims by
you against us and our officers, directors,
shareholders, and employees;
(h) the Transferee executes a written
assignment, in a form satisfactory to us,
assuming and agreeing to discharge all of
your obligations under this Agreement; and
(i) you execute all documents we request
evidencing your agreement to remain liable
for all obligations to us and our parent,
subsidiaries and affiliates prior to the
transfer.
(3) "Control" or "Controlling" shall mean the direct or
indirect possession of the power to direct or cause
the direction of the management and policies of any
person or legal entity.
(4) Except as otherwise provided herein, any purported
assignment or transfer without our prior written
consent is null and void, constitutes a material
breach of this Agreement, enables us to terminate
this Agreement without providing you an opportunity
to cure and allows us to seek both injunctive relief
and monetary damages.
13
(5) If you are an individual, you may transfer this
License without paying a transfer or application fee
if: (i) you retain at least twenty-five percent (25%)
ownership; (ii) we receive your request and
supporting documentation before the Opening Date; and
(iii) the Transferee meets our then-current standards
for new licensees.
C. TRANSFERS OF THE LICENSE OR EQUITY INTEREST IN YOU UPON DEATH. Upon
the death or mental incompetency of you or a person Controlling you, the
executor, administrator, or personal representative ("Representative") of such
person shall transfer within three (3) months his interest to a third party
subject to our approval and the conditions set forth in Paragraph 8B. In the
case of transfer by devise or inheritance, if the heirs or beneficiaries can not
meet the conditions of Paragraph 8B, the Representative shall have six (6)
months from the death or mental incompetency to dispose of the interest, subject
to the transfer provisions of this Agreement, after which time we may terminate
this Agreement.
D. REGISTRATION OF A PROPOSED TRANSFER OF EQUITY INTERESTS. Securities
in you or your affiliates may be offered to the public only with our prior
written consent. All materials required by federal or state law for the sale of
any interest in you or your affiliates shall be submitted to us for review prior
to distribution or filing with any government agency, including any materials to
be used in any offering exempt from registration under federal or state
securities laws. No offering by you or your affiliates shall imply or state (by
use of the Proprietary Marks or otherwise) that we are participating as an
underwriter, issuer or your representative. You agree to pay us a non-refundable
fee equal to the greater of $5,000.00 or our costs and expenses of reviewing
each proposed offering including, without limitation, attorneys' fees. You
acknowledge that we may require changes to your offering materials and a full
indemnification from all participants in the offering before issuing our
consent.
E. NON-WAIVER OF CLAIMS. Our consent to a transfer is not a waiver of:
(i) any claims we may have against you; or (ii) our right to demand strict
compliance by the Transferee with the terms of this Agreement.
F. OUR RIGHT OF FIRST REFUSAL. If any party holding any direct or
indirect interest in you or in all or substantially all of the Hotel's assets
desires to accept a bona fide offer from a third party to purchase the interest,
you agree to notify us and provide whatever documentation relating to the offer
we require. If the third party purchaser wishes to remove the Hotel from the
Hotel System, we have the right and option, exercisable within thirty (30) days
after we receive written notification, to inform you that we intend to purchase
the seller's interest on the same terms and conditions offered by the third
party. If we elect to purchase the seller's interest, closing will occur within
ninety
14
(90) days from the date of our notice to the seller. If we elect not to purchase
the seller's interest, any material change thereafter to the terms of the offer
shall constitute a new offer subject to our same rights of first refusal as in
the case of the third party purchaser's initial offer. Our failure to exercise
this option is not a waiver by us of any other provision of this Agreement. If
the consideration, terms, and/or conditions offered by the third party purchaser
are such that we may not reasonably be required to furnish the same
consideration, terms, and/or conditions, then we may purchase the interest for
the reasonable cash equivalent. If the parties cannot agree within thirty (30)
days on the reasonable cash equivalent of the consideration, terms, and/or
conditions offered by the third party purchaser, an independent appraiser whose
determination shall be binding will be designated by us at our expense to
determine the reasonable equivalent cash consideration.
G. NO RIGHT OF FIRST REFUSAL. If a third party meeting our then-current
qualifications offers to purchase the Hotel and wishes to keep the Hotel in the
Hotel System, we shall have no right of first refusal.
9. CONDEMNATION AND CASUALTY.
A. CONDEMNATION. You shall immediately notify us of any proposed taking
of the Hotel by eminent domain. If a taking occurs, we shall use reasonable
efforts (but shall not be obligated) to transfer this Agreement to a location
selected by you and approved by us within four (4) months of the taking. If we
approve the new location and you subsequently open a new hotel at the new
location within two (2) years of the taking, the new hotel shall be deemed to be
the Hotel licensed hereunder. If a taking occurs and the new hotel does not
become the Hotel licensed hereunder (or if it is evident to us that such shall
be the case), this Agreement will terminate, but you will not pay us any
liquidated damages.
B. CASUALTY. If the Hotel is damaged by fire or casualty, you shall
repair the damage in accordance with our standards. If the damage or repair
requires closing all or any portion of the Hotel, you shall: (i) notify us
immediately; (ii) commence reconstruction within four (4) months of closing; and
(iii) reopen for continuous business operations as soon as practicable (but in
any event within twenty-four (24) months after closing of the Hotel and not
without providing us at least ten (10) days advance notice of the proposed
reopening date). If the Hotel is not reopened in accordance with this Paragraph
9B, this Agreement will terminate and you shall pay us liquidated damages (see
Paragraph 10D), provided, however, that your payment of liquidated damages shall
not exceed the amount of any insurance proceeds you receive.
C. EXTENSIONS OF TERM. The License Term will be extended for the period
the Hotel is not operating as a result of fire or other casualty. You are not
required to make any payments pursuant
15
to Paragraph 3D while the Hotel is closed by reason of condemnation or casualty
unless you receive insurance proceeds.
10. TERMINATION.
A. EXPIRATION OF TERM. This Agreement will expire without notice twenty
(20) years from the authorized Opening Date, subject to its earlier termination
as set forth herein. You acknowledge the difficulty of determining our damages
if this Agreement terminates prior to its expiration. You also acknowledge that
the liquidated damages set forth in Paragraph 10D represent the best estimate of
our damages arising from any termination of this Agreement prior to its
expiration. Subject to Paragraph 11A, upon the expiration of the License Term,
you shall comply with our de-identification procedures as set forth in Paragraph
10C of this Agreement or in the Manual.
B. DEFAULTS.
(1) DEFAULT WITH OPPORTUNITY TO CURE.
(a) If you fail to comply with or violate any
provision of this Agreement, the Manual or
any Hotel System standard, unless this
Agreement, applicable law or any default
notice we send to you provides otherwise,
you shall have thirty (30) days from your
receipt of a written default notice to
remedy such default (the "Cure Period"). If
any default remains uncured after the Cure
Period expires, this Agreement shall
terminate automatically without further
notice to you, effective immediately upon
the expiration of the Cure Period.
Alternatively, instead of considering this
Agreement automatically terminated upon the
expiration of the Cure Period, we may
suspend your access to the CRS or remove
your Hotel from our advertising publications
or the National Directory until your default
is cured to our satisfaction.
(b) If we issue you two (2) written default
notices within any twelve (12) month period,
the Cure Period in the second written
default notice shall be ten (10) days,
unless applicable law provides otherwise.
(c) In any judicial or other proceeding in which
the validity of our termination of this
Agreement is contested, we may cite and rely
upon all of your defaults or violations of
this Agreement, not solely the defaults or
violations referenced in any written default
notice sent to you.
16
(d) Any notice of termination or suspension of
services we issue to you shall not relieve
you of your obligations that survive
termination of this Agreement, including,
but not limited to, its de-identification,
indemnification and liquidated damages
provisions.
(e) If you fail to provide us with a copy of the
recorded deed, an executed lease for at
least the License Term or other evidence
satisfactory to us of your Control of the
Hotel on or before commencement of
construction or renovation, we may issue you
a default notice which may lead to us
terminating this Agreement.
(f) If you default on any terms of the Software
License Agreement referred to in Paragraph
3A.
(2) DEFAULT WITHOUT OPPORTUNITY TO CURE (IMMEDIATE
TERMINATION BY US). This Agreement shall terminate
immediately without notice to you if:
(a) you, or any guarantor of your obligations (a
"Guarantor"), shall: (i) not pay its debts
as they become due; (ii) admit its inability
to pay its debts; or (iii) make a general
assignment for the benefit of creditors;
(b) you, or any Guarantor, commence or consent
to any case, proceeding or action seeking:
(i) reorganization, arrangement, adjustment,
liquidation, dissolution or composition of
you or your debts under any law relating to
bankruptcy, insolvency, reorganization or
relief of debtors; or (ii) appointment of a
receiver, trustee, custodian or other
official for any portion of its property;
(c) you, or any Guarantor, take any corporate or
other action to authorize any of the actions
set forth above in Paragraphs 10B(2)(a) or
10B(2)(b);
(d) any case, proceeding, or other action
against you or any Guarantor is commenced
seeking an order for relief against it as
debtor, or seeking reorganization,
arrangement, adjustment, liquidation,
dissolution or composition of it or its
debts under any law relating to bankruptcy,
insolvency, reorganization or relief of
debtors, or seeking appointment of a
receiver, trustee,
17
custodian or other official for it or for
any portion of its property, and such case,
proceeding or other action: (i) results in
an order for relief against it which is not
fully stayed within seven (7) business days
after the entry thereof; or (ii) remains
undismissed for forty-five (45) days;
(e) an attachment remains on all or any part of
the Hotel or your or any Guarantor's assets
for thirty (30) days;
(f) you or any Guarantor fail, within sixty (60)
days of the entry of a final judgment
against you or any Guarantor in any amount
exceeding $50,000.00, to discharge, vacate
or reverse the judgment, or to stay
execution of it, or if appealed, to
discharge the judgment within thirty (30)
days after a final adverse decision in the
appeal;
(g) you cease to operate the Hotel at the
location designated on Attachment A or under
the Proprietary Marks, or lose possession or
the right to possession of all or a
significant part of the Hotel, except as
otherwise provided herein;
(h) you contest in any court or proceeding
either all or any portion of our ownership
of the Hotel System or the validity of any
of the Proprietary Marks;
(i) you transfer your rights under this
Agreement in violation of Paragraph 8;
(j) you fail to identify the Hotel to the public
as a Best Hotel;
(k) any action is taken to dissolve or liquidate
you or any Guarantor, except due to death;
(l) you or any of your principals or Guarantors
is, or is discovered to have been, convicted
of a felony or any other offense likely to
reflect adversely upon us, the Hotel System,
or the Proprietary Marks, including, but not
limited to, any violation of laws or
regulations relating to discrimination,
equal employment or equal opportunity;
(m) you knowingly maintain false books and
records of account or knowingly submit false
or misleading reports or information to us,
18
including any information you provide or
fail to provide to us on your franchise
application or otherwise;
(n) you disclose the contents of any
Confidential Materials to any unauthorized
person or fail to exercise reasonable care
to prevent such disclosure; or
(o) in our discretion, we determine a threat or
danger to public health or safety results
from the construction, maintenance or
operation of the Hotel, such that an
immediate shutdown of the Hotel is necessary
to avoid a substantial liability or loss of
goodwill to the Hotel System.
Notwithstanding the foregoing, if we
determine, in our discretion, that both the
threat of danger to public health or safety
is eliminated and the reopening of the Hotel
will not cause a substantial loss of
goodwill to the Hotel System within six (6)
months of the termination of this Agreement,
we will reinstate the Agreement on identical
terms and conditions.
C. DE-IDENTIFICATION OF HOTEL UPON TERMINATION OR EXPIRATION OF THIS
AGREEMENT.
(1) Within ten (10) days of the effective date of
termination or expiration of this Agreement, as the
case may be, you agree to de-identify the Hotel by
taking whatever action we deem necessary to ensure
that the Hotel is no longer identified as a hotel
within the Hotel System and no use is made of any
part of the Hotel System at or in connection with the
Hotel or otherwise. Among the actions you must take
to de-identify the Hotel, you agree to: (i) return
the Manual and all other proprietary materials to us;
(ii) remove all items identifying the Hotel System;
(iii) change the telephone listing for the Hotel;
(iv) remove all items bearing the Proprietary Marks
(including all signage) from the Hotel; (v) cancel
all fictitious or assumed name or equivalent
registrations relating to your use of the Proprietary
Marks; (vi) immediately stop answering the telephone
in any way that would lead a prospective customer to
believe that the Hotel is affiliated with the Hotel
System; and (vii) permit our representative to enter
the Hotel to conduct inspections on a periodic basis
until de-identification is completed to our
satisfaction. Until de-identification is completed to
our satisfaction, you agree to maintain a conspicuous
sign at the registration desk in a form
19
we specify stating that the Hotel is no longer
associated with the Hotel System. You acknowledge
that the de-identification process intends to
immediately alert the public that the Hotel is not
affiliated with the Hotel System.
(2) If you fail to comply with all of the
de-identification provisions of Paragraph 10C(1)
within the permitted ten (10) day period, you agree
to: (i) pay a royalty fee of $5,000.00 per day until
de-identification is completed to our satisfaction;
and (ii) permit our representative to enter the Hotel
to complete the de-identification process at your
expense.
(3) You agree to pay all our costs and expenses of
enforcing these de-identification provisions,
including, but not limited to, all attorneys' fees.
Nothing contained herein limits our rights or
remedies at law or in equity should you not complete
the de-identification procedures within the permitted
ten (10) day period, including, but not limited to,
our right to seek and obtain an injunction to remove
or cause to be removed, at your sole cost and
expense, all signage from the Hotel.
D. PAYMENT OF LIQUIDATED DAMAGES. If this Agreement terminates after
the first twenty-four (24) months of Hotel operations and prior to its
expiration for any reason other than as set forth in Paragraphs 9A or 9B, you
agree to pay us liquidated damages as set forth below. Your payment of
liquidated damages to us shall not be considered a penalty for your breaching
this Agreement, but rather a reasonable estimate of our damages and lost future
fees we would have received from you under the Agreement. You acknowledge that
your obligation to pay us liquidated damages is in addition to, not in lieu of,
your obligations to pay any amounts then due to us and comply with the
de-identification provisions of Paragraph 10C. You agree to pay us liquidated
damages in a lump sum within thirty (30) days following the date of termination,
based on the average occupancy rate at the Hotel for the twelve (12) months
preceding the termination ("Occupancy Rate") as follows:
(1) if the Occupancy Rate was below fifty percent (50%),
you shall pay no liquidated damages;
(2) if the Occupancy Rate was fifty percent (50%) to
fifty-nine and nine-tenths percent (59.9%), you agree
to pay us an amount equal to twelve (12) months of
all fees under Paragraph 3D(1)(a), unless you give us
twelve (12) months prior written notice and your
Occupancy Rate meets the criteria of this
20
Paragraph 10D(2), in which case you shall pay no
liquidated damages;
(3) if the Occupancy Rate was sixty percent (60%) to
sixty-nine and nine-tenths percent (69.9%), you agree
to pay an amount equal to twenty-four (24) months of
fees under Paragraph 3D(1)(a); and (4) if the
Occupancy Rate was seventy percent (70%) or greater,
you agree to pay an amount equal to thirty-six (36)
months of fees under Paragraph 3D(1)(a).
If this Agreement terminates at any time between its execution and the
end of the first twenty-four (24) months of the operation of the Hotel, you
agree to pay us liquidated damages equal to the greater of: (i) $2,000.00
multiplied by the number of approved Guest Rooms; or (ii) thirty-six (36)
multiplied by the average monthly fees required under Paragraph 3D(1)(a).
11. RENEWAL.
A. REQUIREMENTS. Upon your written submission of our then-current form
of renewal application at least 180 days prior to this Agreement's expiration
date, we shall grant you a ten (10) year renewal term if, in our discretion, the
following criteria are satisfied:
(1) you pay a non-refundable fee equal to one-half of the
then-current franchise application fee;
(2) you received passing Quality Assurance Scores (as defined in
the Manual) during the preceding three (3) year period;
(3) you agree to upgrade the Hotel to meet our then-current
criteria for the Hotel System; and
(4) you have a favorable operating and payment history.
Notwithstanding the foregoing, if an independent third party chosen by
us determines that the location of the Hotel is inappropriate or obsolete for
the brand we shall not be required to renew your license. We will accept or
reject your written renewal request within thirty (30) days of its receipt by
us. You agree to execute our then-current form of license agreement to
effectuate any renewal.
B. ALTERNATIVE PROCESS. If we determine that you do not meet the above
criteria, you may apply to renew this Agreement for a ten year term by
submitting an application at least 120 days prior to the expiration of the
License Term with a non-refundable renewal fee equal to our then-current
franchise application fee. We will evaluate your application based on your
operating history, the location of the Hotel and your agreement to upgrade the
Hotel.
21
If we accept your application, you will execute our then-current form of license
agreement.
12. RELATIONSHIP OF PARTIES.
A. NO AGENCY RELATIONSHIP. You are an independent contractor. Neither
party is the legal representative or agent of, or has the power to obligate the
other for any purpose. The parties have a business relationship defined entirely
by the express provisions of this Agreement. No partnership, joint venture,
affiliate, agency, fiduciary or employment relationship is intended or created
hereby.
B. YOUR NOTICES TO PUBLIC CONCERNING INDEPENDENT STATUS. You shall take
such steps as we require to minimize the chance of a claim being made against us
for any occurrence at the Hotel, or for acts, omissions or obligations of you or
anyone affiliated with you or the Hotel. Such steps may include giving notice in
private or public rooms or on advertisements, business forms and stationery,
making clear to the public that we are not the owner or operator of the Hotel
and are not accountable for events occurring at the Hotel.
C. USE OF THE BEST NAME. You shall not use the word "Best" or any
similar words in your entity or trade name, internet domain name, or in
connection with any web site, nor authorize or permit such use by anyone else.
You shall not use the word "Best" or any other name or mark associated with the
Hotel System to incur any obligation or indebtedness.
13. MISCELLANEOUS.
A. SEVERABILITY AND INTERPRETATION. The remedies provided in this
Agreement are not exclusive. If any provision of this Agreement is held
unenforceable, void or voidable, all remaining provisions shall continue in full
force and effect unless deletion of the provision(s) materially frustrates the
purpose of the parties or makes performance commercially impracticable. If any
provision requires interpretation, such interpretation shall be based on the
reasonable intention of the parties without interpreting any provision in favor
of or against any party hereto by reason of the drafting of the party or its
position relative to the other party.
B. BINDING EFFECT. This Agreement is valid when executed and accepted
by us at our office in Atlanta, Georgia. It is made and entered into in the
State of Georgia and shall be governed and construed under and in accordance
with the laws of the State of Georgia without regard to its conflict of law
principles. You acknowledge that you have sought, voluntarily accepted, and
become associated with us at our headquarters in Atlanta, Georgia. The choice of
law designation permits but does not require that all lawsuits or proceedings
concerning this Agreement be filed in the State of Georgia.
22
C. EXCLUSIVE BENEFIT. This Agreement is exclusively for the benefit of
the parties hereto and shall not create liability to any third party, unless
otherwise set forth herein. No agreement between us and any third party is for
your benefit.
D. ENTIRE AGREEMENT. This is the entire Agreement between the parties
relating to the Hotel. Neither we nor any person on our behalf has made any
representation to you concerning this Agreement, the Hotel or the Hotel System
that is not set forth herein or in our UFOC. No change in this Agreement shall
be valid unless in writing signed by both parties. No failure to require strict
performance or to exercise any right or remedy hereunder shall preclude
requiring strict performance or exercising any right or remedy in the future.
This Agreement may be executed in multiple copies, each of which will be deemed
an original.
E. OUR WITHHOLDING OF CONSENT. Our consent, wherever required, may be
withheld if any default by you exists under this Agreement. Prior to any
deviation by you from any material term of this Agreement, you must obtain our
prior written consent.
23
F. NOTICES. All notices given under this Agreement shall be in writing,
delivered by any means which provides written evidence of the date received.
Notices shall be deemed given at the date and time receipt is evidenced, to the
respective parties at the following addresses unless and until a different
address is designated by written notice to the other party:
Notices to us: Best Franchising, Inc. Notices to you:
ENTITYNAMECAPS
13 Corporate Square, Suite 250
PCADDRESS1
Atlanta, Georgia 30329 PCADDRESS2
Attention: Doug Shaw Attention:
PCNAME
Vice President
Franchise Administration
We reserve the right to notify both your lender and any or all of your members,
partners or shareholders in the event we issue any notice under this Agreement.
G. DESCRIPTIVE HEADINGS. The headings in this Agreement are for
convenience only and shall not control or affect the meaning or construction of
any provision.
H. MANAGEMENT OF THE HOTEL. You must at all times retain and exercise
direct management control over the business of the Hotel. You shall not enter
into any lease, management agreement or other similar arrangement for the
operation of the Hotel or any part thereof with any independent entity without
our prior written consent, which consent shall not be unreasonably withheld.
I. GUEST ROOM RATES. You shall establish room rates for the Hotel which
must be submitted to us before the deadline for the next National Directory.
With the exception of special event periods, you agree not to charge any rate
exceeding the rate published in the current edition of the National Directory.
J. ATTORNEYS' FEES. If we are a party to any action or proceeding
concerning this Agreement, your operation of the Hotel or due to your actions or
omissions, you will be liable to us for reasonable attorneys' fees and court
costs we incur in such action or proceeding regardless of whether such action or
proceeding proceeds to judgment. Additionally, if you withhold any amounts due
to us, and we are required to commence an action or proceeding to recover such
amounts and we prevail, you shall reimburse us our costs of collecting such
amounts including reasonable attorneys' fees, court costs and expenses.
14. SPECIAL STIPULATIONS
A. CONDITIONAL OPENING. Prior to the authorized opening of the Hotel as
a BRAND, you must submit satisfactory evidence of
24
termination of the current franchise agreement in accordance with applicable
legal requirements.
[SIGNATURES TO FOLLOW ON NEXT PAGE]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first stated above.
LICENSEE:
ENTITYNAMECAPS
By:
-----------------------------------------
SIGNEENAME
SIGNEETITLE
Attest/Witness:
-----------------------------
(Any other corporate officer or notary
public with seal)
LICENSOR:
BEST FRANCHISING, INC.
By:
-----------------------------------------
Doug Shaw
Vice President, Franchise Administration
Attest:
-------------------------------------
25
GUARANTY
As an inducement to Best Franchising, Inc. ("we," "our" or "us") to
execute that certain license agreement (including any future amendments thereto)
with ______________ ("Licensee") dated as of _______________, a copy of which is
attached hereto, (collectively, the "License Agreement"), the undersigned
(individually, a "Guarantor" and collectively, the "Guarantors"), jointly and
severally, hereby unconditionally warrant to us and our parent, successors and
assigns that all representations of Licensee contained in both the License
Agreement and the application submitted in connection therewith are true and
correct. The Guarantors also jointly and severally guarantee the timely payment
and performance of all of Licensee's obligations under the License Agreement.
Upon notice from us that Licensee is in default under any of the terms
of the License Agreement, the Guarantors shall cure any monetary default within
five (5) business days from such notice and immediately perform all other
obligations of Licensee under the License Agreement. Without affecting the
obligations of the Guarantors under this Guaranty, we may without notice to the
undersigned extend, modify or release any indebtedness or obligation of the
Licensee, or settle, adjust or compromise any claims against the Licensee. The
Guarantors waive notice of amendment of the License Agreement and notice of
demand for payment or performance by the Licensee. The Guarantors expressly
acknowledge that their joint and several obligation to cure all defaults and
guaranty the performance of Licensee shall survive the termination of the
License Agreement.
Upon the death of a Guarantor, the estate of such Guarantor shall be
bound by this Guaranty but only for defaults and obligations hereunder existing
at the time of death. The obligations of the surviving Guarantors shall continue
in full force and effect.
This Guaranty constitutes a guaranty of payment and performance and not
of collection, and each of the Guarantors specifically waives any obligation we
may have to proceed against the Licensee on any money or property held by the
Licensee or by any other person or entity as collateral security, by way of set
off or otherwise. The Guarantors further agree that this Guaranty shall continue
to be effective or be reinstated, as the case may be, if at any time payment or
any of the guaranteed obligations is rescinded or must otherwise be restored or
returned by us upon the insolvency, bankruptcy or reorganization of the Licensee
or any Guarantor, all as though such payment has not been made.
Our failure to enforce all or any portion of our rights under this
Guaranty shall not constitute a waiver of our ability to do so at any point in
the future.
Guarantor hereby specifically waives any rights that may be conferred
by Official Code of Georgia Annotated Sections 10-7-23 and 10-7-24 or any
similar provision of the applicable law of any other state.
IN WITNESS WHEREOF, each of the undersigned has signed this Guaranty as
of ____________, the date of the License Agreement.
Witnesses: Guarantors:
-------------------------------------
GUARANTOR1, Legal Signature
Notarized (with seal):
-------------------------------------
GUARANTOR2, Legal Signature
ATTACHMENT A
THE HOTEL
FACILITIES (PARAGRAPH 1):
SITE --- AREA AND GENERAL DESCRIPTION: A BRAND hotel located at
HOTELADDRESS1
HOTELADDRESS2
NUMBER OF APPROVED GUEST ROOMS: ROOMS
NUMBER OF SUITES INCLUDED: None
OWNERSHIP OF LICENSEE (PARAGRAPH 8):
ENTITYNAMECAPS 100%
ATTACHMENT B
TERRITORY
PROPERTYNAME/#IDNUMBER
The Territory is defined as that area bordered by:
ATTACHMENT C
THE WORK
You acknowledge that every detail of the Hotel System is important to
us and other licensees operating under the Hotel System to develop and maintain
the standards and public image of the Hotel System. You agree to strictly comply
with the details of the Hotel System, as set forth in the Manual or otherwise in
writing. The following constitutes the development schedule for the Hotel.
A. Conversion of an Existing Facility
1) You agree to renovate the Hotel in strict accordance
and within the time frames set forth on the attached
property improvement plan ("PIP"). If requested by
us, you agree to submit renovation plans for the
Hotel for our approval. If we require you to submit
renovation plans, renovations shall not begin until
we approve the renovation plans in writing. Once we
approve the renovation plans, you agree not to make
any subsequent changes without our prior written
consent. Our approval of your renovation plans is
exclusively for the purpose of ensuring compliance
with our then-current standards. Your failure to
renovate the Hotel in strict accordance with the PIP
and within the specified time frames shall constitute
a material breach of this Agreement and may lead to
us issuing a default notice and subsequently
terminating this Agreement. Commencement of
renovation shall mean the beginning of any site work
at the Hotel.
2) The Hotel shall be ready to open for business not
later than six (6) months from the date hereof,
unless otherwise provided in the PIP ("Completion
Date"). Within ten (10) days of the Completion Date
you shall ask us to conduct a final inspection, which
we shall promptly conduct. You shall not open for
business prior to our written authorization to do so,
and you agree to open within ten (10) days of our
authorization. We will not authorize you to open the
Hotel unless and until you are in full compliance
with all terms of this Agreement. Prior to the
authorized Opening Date of the Hotel, you must submit
to us written certification that the Hotel is in
compliance with the approved plans and specifications
prepared by the architect and that the Hotel was
constructed in compliance with Hotel standards, and
is in compliance with all applicable local
jurisdictional requirements.
B. New Development
1) You shall submit preliminary plans (the "Plans"),
including site layout and outline specifications
within three (3) months from the date of this
Agreement.
2) You shall submit to us complete working drawings and
specifications for the Hotel, including its proposed
equipment, furnishings, facilities and signs, with
such detail and containing such information as we
require within five (5) months from the date of this
Agreement. The Plans shall conform to our
then-prevailing Hotel System standards. Construction
shall not begin until we have approved the Plans in
writing. Following our approval of your Plans, you
shall make no changes to the Plans without our prior
written consent, which consent will not be
unreasonably withheld. If during the course of
construction changes in the Plans are required, you
shall notify us immediately. Your failure to
construct the Hotel in strict accordance with the
Plans we approve in writing shall constitute a
material breach and may lead to our issuing a default
notice and subsequently terminating this Agreement.
Our approval of the Plans is intended exclusively to
ensure compliance with our then-current standards.
3) Construction shall commence within seven (7) months
from the date of this Agreement. You shall notify us
within (5) days of commencement of construction,
which shall mean commencement of any site work at the
Hotel. Construction shall continue uninterrupted
(unless interrupted by force majeure) until
completion of the Hotel. The term "force majeure"
shall mean an act of God, war, civil disturbance,
government action, fire, flood, accident, hurricane,
earthquake or other calamity, strike or other labor
dispute.
4) The Hotel shall be ready to open for business within
twelve (12) months from the date hereof ("Completion
Date"). Within ten (10) days of the Completion Date
you shall ask us to conduct a final inspection, which
we shall promptly conduct. You shall not open for
business prior to our written authorization to do so,
and you agree to open within ten (10) days of our
authorization. We will not authorize you to open the
Hotel unless and until you are in full compliance
with all terms of this Agreement. Prior to the
authorized Opening Date of the Hotel, you must submit
to us written certification that the Hotel is in
compliance with the approved plans and specifications
prepared by the architect and that the Hotel was
constructed in compliance with Hotel standards, and
is in compliance with all applicable local
jurisdictional requirements.
GUARANTY
THIS GUARANTY (the "Guaranty") is executed as of ____________________,
20__ by HAWTHORN SUITES FRANCHISING, INC. (the "Guarantor") in favor of
_____________________________________ ("Licensee").
WHEREAS, Best Franchising, Inc, a Georgia corporation ("Company"), an
affiliate of Guarantor, is the franchisor under that certain Best Franchising,
Inc. License Agreement, dated as of _______________, 20___, between Company and
Licensee (the "License Agreement"); and
WHEREAS, in order to provide assurance to Licensee that the Company
will fulfill its obligations to Licensee under the License Agreement, Guarantor
is willing to execute this Guaranty.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by guarantor, the Guarantor agrees
as follows:
1. GUARANTY. Guarantor hereby guarantees to Licensee the full and
prompt performance of Company's obligations to Licensee arising under the
License Agreement. Guarantor agrees that if Company does not perform the
obligations required to be performed thereunder, then upon written notice from
Licensee, Guarantor will perform or cause to be performed such unperformed
obligations as required by the License Agreement.
2. NO WAIVER BY LICENSEE. No delay or failure of Licensee in the
exercise of any right, power or remedy shall operate as a waiver thereof, and no
single or partial exercise by Licensee of any right, power or remedy shall
preclude any further exercise thereof or the exercise of any other right, any
power or remedy.
3. PLACE OF EXECUTION; GOVERNING LAW. Guarantor acknowledges that this
Guaranty was delivered in Georgia, and shall be governed and construed in
accordance with Georgia law (excluding the laws of conflicts).
4. MODIFICATIONS. This Guaranty may not be changed orally, and no
obligation of Guarantor can be released or waived by Licensee or any officer or
agent of Licensee, except by a writing signed by a duly authorized officer of
Licensee.
5. NOTICES. Any and all notices, elections or demands permitted or
required to be made under this Guaranty shall be in writing, signed by the party
giving such notice, election or demand, and shall be mailed by registered or
certified United States mail, postage prepaid, or otherwise delivered to the
other party at the address set forth below, or at such other address within the
continental United States of America as the addressee may hereafter designate in
writing. The effective date of such
Page 1 of 2
notice, election or demand shall be the date of delivery. For the purposes of
this Guaranty:
(a) The address of Licensee is:
-------------------------------------
-------------------------------------
(b) The address of Guarantor is:
Hawthorn Suites Franchising, Inc.
13 Corporate Square
Suite 250
Atlanta, Georgia 30329
6. SUCCESSORS AND ASSIGNS. The provisions of this Guaranty shall bind
Guarantor and its successors and assigns and shall benefit Licensee and its
successors and assigns.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date
first written above.
HAWTHORN SUITES FRANCHISING, INC.
By:
------------------------------
Name:
----------------------------
Title:
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Page 2 of 2
AMENDMENT TO BEST FRANCHISING, INC.
LICENSE AGREEMENT
REQUIRED BY THE STATE OF CALIFORNIA
In recognition of the requirements of the California Franchise
Investment Law Sections 31000 through 31516, and the California Franchise
Relations Act, California Business and Professions Code Sections 20000 through
20043, the License Agreement, for Best Franchising , Inc. (the "Agreement"), in
connection with the offer and sale of franchises for use in the State of
California, shall be amended to include the following:
1. Paragraph 8B(2)(g) of the Agreement, under the heading
"Transfer," shall be amended by inserting a comma at the end thereof and adding
thereafter "excluding only such claims you may have under the California
Franchise Investment Law and the California Franchise Relations Act."
2. If any of the provisions of the Agreement concerning
termination is inconsistent with either the California Franchise Relations Act
or with the Federal Bankruptcy Code (concerning termination of the Agreement
upon certain bankruptcy-related events), then said laws shall apply.
3. The Agreement requires that it be governed by Georgia law.
This requirement may be unenforceable under California law.
4. Each provision of this Amendment shall be effective only to
the extent, with respect to such provision, that the jurisdictional requirements
of the California law applicable to the provision are met independently without
reference to this Amendment.
[SIGNATURES ON FOLLOWING PAGE]
Page 1 of 2
IN WITNESS WHEREOF, the parties hereto have duly executed,
sealed and delivered this California Amendment to the License Agreement on the
same date as the License Agreement was executed.
US
BEST FRANCHISING, INC.
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Licensor
By:
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Title:
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Licensee
By:
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Title:
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By:
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Title:
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Page 2 of 2
AMENDMENT TO BEST FRANCHISING, INC.
LICENSE AGREEMENT
REQUIRED BY THE STATE OF HAWAII
In recognition of the requirements of the Hawaii Franchise
Investment Law, Hawaii Rev. Stat. Sections 482E-1, ET seq., the License
Agreement for Best Franchising, Inc., in connection with the offer and sale of
licenses for use in the State of Hawaii, shall be amended to include the
following:
1. Paragraph 8B(2)(g) of the Agreement, under the heading
"Transfer," shall be amended by inserting a comma after the word "employees" and
adding thereafter "excluding only such claims as you may have under the Hawaii
Franchise Investment Law."
2. Paragraph 13 of the Agreement, under the heading
"Miscellaneous," shall be amended by the addition of the following sentence,
which shall be considered an integral part of this Agreement:
The general release language contained in
the Agreement shall not relieve Licensor or any other person,
directly or indirectly, from liability imposed by the Hawaii
Franchise Investment Law.
3. The Hawaii Franchise Investment Law provides rights to
Licensee concerning nonrenewal, termination and transfer of the Agreement. If
any of the provisions of the License Agreement concerning termination are
inconsistent with the Hawaii Franchise Investment Law, then said law shall
apply.
4. Each provision of this Amendment shall be effective only to
the extent, with respect to such provision, that the jurisdictional requirements
of the Hawaii Franchise Investment Law are met independently without reference
to this Amendment.
IN WITNESS WHEREOF, the parties hereto have duly executed,
sealed, and delivered this Hawaii amendment to the License Agreement on the same
date as the License Agreement was executed.
BEST FRANCHISING, INC.
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Licensor
By:
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Title:
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Licensee
By:
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Title:
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By:
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Title:
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Page 1 of 59
AMENDMENT TO BEST FRANCHISING, INC.
LICENSE AGREEMENT
REQUIRED BY THE STATE OF ILLINOIS
In recognition of the requirements of the Illinois Franchise
Disclosure Act of 1987, Ill. Comp. Stat. Sections 705/1 to 705/44, the parties
to the attached Best Franchising, Inc. License Agreement (the "Agreement") agree
as follows:
1. Paragraph 8B(2)(g) of the Agreement, under the heading
"Transfer," shall be amended by inserting a comma at the end thereof and adding
thereafter "except with respect to claims arising under the Illinois Franchise
Disclosure Act of 1987."
2. Paragraph 10 of the Agreement, under the heading
"Termination," shall be supplemented by the addition of the following new
Paragraph 10E, which shall be considered an integral part of the Agreement:
E. If any of the provisions of this Paragraph 10 concerning
termination are inconsistent with Section 19 of the Illinois
Franchise Disclosure Act of 1987, then said Illinois law shall
apply.
3 Paragraph 13B of the Agreement, under the heading
"Miscellaneous," shall be amended by inserting a comma at the end of the second
sentence and adding thereafter "except with respect to claims arising under the
Illinois Franchise Disclosure Act of 1987."
4. This Agreement requires that it be governed by Georgia law.
To the extent that such law conflicts with the Illinois Franchise Disclosure
Act, the Act will control.
5. Each provision of this Amendment shall be effective only to
the extent, with respect to such provision, that the jurisdictional requirements
of the Illinois Franchise Disclosure Act of 1987 are met independently without
reference to this Amendment.
IN WITNESS WHEREOF, the parties hereto have duly executed,
sealed, and delivered this Illinois amendment to the License Agreement on the
same date as the License Agreement was executed.
BEST FRANCHISING, INC.
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Licensor
By:
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Title:
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Licensee
By:
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Title:
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By:
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Title:
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Page 1 of 59
AMENDMENT TO BEST FRANCHISING, INC.
LICENSE AGREEMENT REQUIRED
BY THE STATE OF INDIANA
In recognition of the requirements of the Indiana Franchise
Disclosure Law, Indiana Code Sections 23-2-2.5-1 to 23-2-2.5-51, and the Indiana
Deceptive Franchise Practices Act, Indiana Code Sections 23-2-2.7-1 to
23-2-2.7-7 (the "Act"), the parties to the attached Best Franchising, Inc.
Agreement (THE "Agreement") agree as follows:
1. Paragraph 7 of the Agreement, under the heading "Indemnity
and Insurance," shall be amended by the addition of the following sentence,
which shall be considered an integral part of this Agreement:
The general release language contained in this License shall
not relieve the Licensor or any other person, directly or
indirectly, from liability imposed by the Indiana Franchise
Disclosure Law and the Indiana Deceptive Practices Act.
2. Paragraph 8B(2)(g) of the Agreement, under the heading
"Transfer," shall be amended by inserting a comma after the word "employees" and
adding thereafter "excluding only such claims as you may have under the Indiana
Franchise Disclosure Law and the Indiana Deceptive Practices Act."
3. Paragraph 13B of the Agreement, under the heading
"Miscellaneous," shall be amended by inserting a comma at the end of the second
sentence and adding thereafter "except with respect to any cause of action which
arises under the Indiana Franchise Disclosure Law or the Indiana Deceptive
Franchise Practices Act."
4. Paragraph 13 of the Agreement, under the heading
"Miscellaneous," shall be amended by the addition of the following sentence:
Notwithstanding anything to the contrary in this provision,
Licensee does not waive any right under the Indiana Franchise
Disclosure Law or the Indiana Deceptive Practices Act with
regard to any prior representations made in the UFOC furnished
to Licensee.
5. With respect to the Agreement, any reservation of right to
any specified remedy or limitation of the remedies available to either party is
prohibited pursuant to the Indiana Franchise Disclosure Law, Indiana Code
Section 23-2-2.7-1(10).
6. Indiana law provides rights to Licensee concerning
nonrenewal and termination of the Agreement. To the extent the Agreement
contains a provision that is inconsistent with the Indiana law, Indiana law will
control.
7. Any indemnification under the Agreement excludes
indemnification for liability caused by Licensee's proper reliance on and use of
the System or materials provided by Licensor to Licensee which Licensee does not
alter or claims based upon Licensor's gross negligence or willful misconduct.
8. Nothing in the Agreement shall abrogate or reduce any
rights you have under Indiana law.
Page 1 of 2
9. Each provision of this Amendment shall be effective only to
the extent, with respect to such provision, that the jurisdictional requirements
of the Indiana Franchise Disclosure Law, Indiana Code Sections 23-2-2.5-1 to
23-2-2.5-51, and the Indiana Deceptive Franchise Practices Act, Indiana Code
Sections 23-2-2.7-1 to 23-2-2.7-7, are met independently without reference to
this Amendment.
IN WITNESS WHEREOF, the parties hereto have duly executed,
sealed, and delivered this Indiana amendment to the License Agreement on the
same date as the License Agreement was executed.
BEST FRANCHISING, INC.
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Licensor
By:
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Title:
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Licensee
By:
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Title:
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By:
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Title:
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Page 2 of 2
AMENDMENT TO BEST FRANCHISING, INC.
LICENSE AGREEMENT
REQUIRED BY THE STATE OF MARYLAND
In recognition of the requirements of the Maryland Franchise
Registration and Disclosure Law, Md. Code Bus. Reg. Sections 14-201 through
14-233, the License Agreement for Best Franchising, Inc., in connection with the
offer and sale of licenses for use in the State of Maryland, shall be amended to
include the following:
1. Paragraph 8B(2)(g) of the Agreement, under the heading
"Transfer," shall be amended by inserting a comma after the word "employees" and
adding thereafter "excluding only such claims as you may have under the Maryland
Franchise Registration and Disclosure Law (Md. Code Bus. Reg. Sections 14-201
through 14-233)."
2. Paragraph 13B of the Agreement, under the heading
"Miscellaneous," shall be amended by inserting a comma at the end of the second
sentence and adding thereafter "except for claims arising under the Maryland
Franchise Registration and Disclosure Law."
3. Paragraph 13 of the Agreement, under the heading
"Miscellaneous," shall be amended by the addition of the following paragraphs,
which shall be considered an integral part of this Agreement:
J. The general release language contained in this Agreement
shall not relieve Licensor or any other person, directly or
indirectly, from liability imposed by the Maryland Franchise
Registration and Disclosure Law (Md. Code Bus. Reg. Sections
14-201 through 14-233).
K. The foregoing acknowledgments are not intended to, nor
shall they, act as a release, estoppel or waiver of any
liability incurred under the Maryland Franchise Registration
and Disclosure Law.
4. Each provision of this Amendment shall be effective only to
the extent, with respect to such provision, that the jurisdictional requirements
of the Maryland Franchise Registration and Disclosure Law (Md. Code. Bus. Reg.
Sections 14-201 through 14-233) are met independently without reference to this
Amendment.
[SIGNATURES ON FOLLOWING PAGE]
Page 1 of 2
IN WITNESS WHEREOF, the parties hereto have duly executed,
sealed, and delivered this Maryland amendment to the License Agreement on the
same date as the License Agreement was executed.
BEST FRANCHISING, INC.
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Licensor
By:
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Title:
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Licensee
By:
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Title:
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By:
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Title:
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Page 2 of 2
AMENDMENT TO BEST FRANCHISING, INC.
LICENSE AGREEMENT
REQUIRED BY THE STATE OF MINNESOTA
In recognition of the requirements of the Minnesota Franchises
Law, Minn. Stat. Sections 80C.01 through 80C.22, and of the Rules and
Regulations promulgated thereunder by the Minnesota Commissioner of Commerce,
Minn. Rules Sections 2860.0100 through 2860.9930, the parties to the attached
Best Franchising, Inc. License Agreement (the "Agreement") agree as follows:
1. Paragraph 5 of the Agreement, under the heading
"Proprietary Rights," shall be amended by the addition of the following
language:
D. The Minnesota Department of Commerce requires that Licensor
indemnify Licensee against liability to third parties
resulting from claims by third parties that Licensee's use of
Licensor's trademark infringes trademark rights of the third
party. Licensor does not indemnify against the consequences of
Licensee's use of Licensor's trademark except in accordance
with the requirements of this Agreement, and, as a condition
to indemnification, Licensee must provide notice to Licensor
of any such claim within 10 days and tender the defense of the
claim to Licensor. If Licensor accepts the tender of defense,
Licensor has the right to manage the defense of the claim
including the right to compromise, settle or otherwise resolve
the claim, and to determine whether to appeal a final
determination of the claim.
2. Paragraph 7 of the Agreement, under the heading "Indemnity
and Insurance," shall be amended by the addition of the following sentence,
which shall be considered an integral part of this Agreement:
The general release language contained in the License shall
not relieve the Licensor or any other person, directly or
indirectly, from liability imposed by the Minnesota Franchise
Law.
3. Paragraph 8B(2)(g) of the Agreement, under the heading
"Transfer," shall be amended by inserting a comma after the word "employees" and
adding thereafter "excluding only such claims as you may have under the
Minnesota Franchises Law and the Rules and Regulations promulgated thereunder by
the Minnesota Commissioner of Commerce."
4. Paragraph 8 of the Agreement, under the heading "Transfer,"
shall be amended by the addition of the following paragraph:
H. Minnesota law provides licensees with certain transfer
rights. In sum, Minn. Stat. Section 80C.14 (subd. 5) currently
requires, except in certain specified cases, that consent to
the transfer of the license not be unreasonably withheld.
5. Paragraph 10 of the Agreement, under the heading
"Termination," shall be amended by the addition of the following paragraph:
E. Minnesota law provides licensees with certain termination
rights. In sum, Minn. Stat. Section 80C.14 (subds. 3 and 5)
currently require, except in certain specified cases, that a
licensee be
Page 1 of 2
given 90 days notice of termination (with 60 days to cure) and
180 days notice of non-renewal of this Agreement, and that
consent to the transfer of the license not be unreasonably
withheld.
6. To the extent that the provision in the fifth sentence of
Paragraph 10D, with respect to the lump sum payment by Licensee, is a liquidated
damages provision in violation of Minnesota Rule 2860.4400J, such provision
shall be deleted from this Agreement.
7. Paragraph 13 of the Agreement, under the heading
"Miscellaneous," shall be amended by the addition of the following sentence,
which shall be considered an integral part of this Agreement:
The general release language contained in the Agreement shall
not relieve Licensor or any other person, directly or
indirectly, from liability imposed by the Minnesota Franchise
Law.
8. Paragraph 13 of the Agreement, under the heading
"Miscellaneous," shall be amended by the addition of the following sentence,
which shall be considered an integral part of the Agreement:
Minn. Stat. Sec 80C.21 and Minn. Rule 2860.4400J prohibit us
from requiring litigation to be conducted outside Minnesota.
Nothing in the UFOC or the Agreement can abrogate or reduce
any of your rights provided for in Minnesota Statutes, Chapter
80C, or your rights to any procedure, forum or remedies
provided for by the laws of the jurisdiction.
9. Each provision of this Agreement shall be effective only to
the extent, with respect to such provision, that the jurisdictional requirements
of the Minnesota Franchises Law or the Rules and Regulations promulgated
thereunder by the Minnesota Commissioner of Commerce are met independently
without reference to this Addendum to the Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed,
sealed, and delivered this Minnesota Amendment to the License Agreement on the
same day as the License Agreement was executed.
BEST FRANCHISING, INC.
-----------------------------------------
Licensor
By:
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Title:
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Licensee
By:
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Title:
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By:
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Title:
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Page 2 of 2
AMENDMENT TO BEST FRANCHISING, INC.
LICENSE AGREEMENT
REQUIRED BY THE STATE OF NEW YORK
In recognition of the requirements of the General Business Law
of the State of New York, Article 33, Sections 680-695, the License Agreement
for Best Franchising, Inc., in connection with the offer and sale of licenses
for use in the State of New York, shall be amended to include the following:
1. Notwithstanding any provision of the License Agreement, all
rights enjoyed by Licensee and any causes of action arising in its favor from
the provisions of Article 33 of the General Business Law of the State of New
York and the regulations issued thereunder shall remain in force, it being the
intent of this proviso that the non-waiver provisions of the General Business
Law of the State of New York Sections 687.4 and 687.5 be satisfied.
2. Paragraph 7A(1) of the License Agreement is hereby modified
by adding the following sentence after the initial sentence thereof: "However,
you shall not be required to indemnify for any claims arising out of a breach of
this Agreement by, or other civil wrong of, the Licensor."
3. No new or different requirements imposed on you as a result
of any changes made by Licensor to its Manual or otherwise shall place an
unreasonable economic burden on you.
4. Notwithstanding any provision of the License Agreement to
the contrary, Licensor will not transfer and assign its rights and obligations
under the License Agreement unless the transferee will be able to perform the
Licensor's obligations under the License Agreement, in Licensor's good faith
judgment, so long as it remains subject to Article 33 of the General Business
Law of the State of New York.
5. Notwithstanding Paragraph 13B of the License Agreement, the
choice of law provision should not be construed as a waiver of any right
conferred upon you by the provisions of Article 33 of the General Business Law
of the State of New York.
6. Each provision of this Amendment shall be effective only to
the extent, with respect to such provision, that the jurisdictional requirements
of the General Business Law of the State of New York are met independently
without reference to this Amendment.
[SIGNATURES ON FOLLOWING PAGE]
Page 1 of 2
IN WITNESS WHEREOF, the parties hereto have duly executed,
sealed, and delivered this New York amendment to the License Agreement on the
same date as the License Agreement was executed.
BEST FRANCHISING, INC.
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Licensor
By:
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Title:
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Licensee
By:
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Title:
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By:
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Title:
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Page 2 of 2
AMENDMENT TO BEST FRANCHISING, INC.
LICENSE AGREEMENT
REQUIRED BY THE STATE OF NORTH DAKOTA
In recognition of the requirements of the North Dakota
Franchise Investment Law, N.D. Cent. Code Sections 51-19-01 through 51-19-17,
and the policies of the office of the State of North Dakota Securities
Commission, the parties to the attached Best Franchising, Inc. License Agreement
(the "Agreement") agree as follows:
1. Paragraph 7 of the Agreement, under the heading "Indemnity
and Insurance," shall be amended by the addition of the following sentence,
which shall be considered an integral part of the Agreement:
The general release language contained in this Agreement shall
not relieve Licensor or any other person, directly or
indirectly, from any liability imposed by the North Dakota
Franchise Investment Law.
2. Paragraph 8B(2)(g) of the Agreement, under the heading
"Transfer," shall be amended by inserting a comma after the word "employees" and
adding thereafter "excluding only such claims as Licensee may have under the
North Dakota Franchise Investment Law."
3. To the extent that Paragraph 10D, with respect to the lump
sum payment by Licensee, is a liquidated damages provision in violation of North
Dakota Franchise Investment Law, N.D. Cent.
Code Section 51-19-09(1)(a)(9), such provision shall be deleted from this
Agreement.
4. Paragraph 13B of the Agreement, under the heading
"Miscellaneous," shall be amended by inserting a comma at the end of the second
sentence and adding thereafter "except with respect to claims arising under the
North Dakota Franchise Investment Law."
5. Each provision of this Amendment shall be effective only to
the extent, with respect to such provision, that the jurisdictional requirements
of the North Dakota Franchise Investment Law, N.D. Cent. Code Sections 51-19-01
through 51-19-17, are met independently without reference to this Amendment.
[SIGNATURES ON FOLLOWING PAGE]
Page 1 of 2
IN WITNESS WHEREOF, the parties hereto have duly executed,
sealed, and delivered this North Dakota amendment to the License Agreement on
the same day as the License Agreement was executed.
BEST FRANCHISING, INC.
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Licensor
By:
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Title:
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Licensee
By:
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Title:
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By:
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Title:
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Page 2 of 2
AMENDMENT TO BEST FRANCHISING, INC.
LICENSE AGREEMENT REQUIRED
BY THE STATE OF RHODE ISLAND
In recognition of the requirements of the Rhode Island
Franchise Investment Act, Sections 19-28.1-1 through 19-28.1-34, the parties to
the attached Best Franchising, Inc. Agreement (the "Agreement") agree as
follows:
1. Paragraph 13 of the Agreement, under the heading
"Miscellaneous," shall be amended by the addition of the following new
paragraph:
J. Section 19-28.1-14 of the Rhode Island Franchise Investment
Act provides that "A provision in a franchise agreement
restricting jurisdiction or venue to a forum outside this
state or requiring the application of the laws of another
state is void with respect to a claim otherwise enforceable
under this Act."
2. This Agreement requires that it be governed by Georgia law.
To the extent that such law conflicts with Rhode Island Franchise Investment Act
it is void under Sec. 19-28.1-14.
3. Licensee is required in this Agreement under certain
circumstances to execute a release of claims that might violate the Act or a
rule or order under the Act. Such release shall exclude claims arising under the
Rhode Island Franchise Investment Act.
4. Each provision of this Amendment shall be effective only to
the extent, with respect to such provision, that the jurisdictional requirements
of Rhode Island Franchise Investment Act, Sections 19-28- 1.1 through
19-28.1-34, are met independently without reference to this Amendment.
IN WITNESS WHEREOF, the parties hereto have duly executed,
sealed, and delivered this Rhode Island amendment to the License Agreement on
the same date as the License Agreement was executed.
BEST FRANCHISING, INC.
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Licensor
By:
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Title:
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Licensee
By:
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Title:
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By:
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Page 1 of 1
AMENDMENT TO BEST FRANCHISING, INC.
LICENSE AGREEMENT
REQUIRED BY THE STATE OF SOUTH DAKOTA
In recognition of the requirements of the South Dakota
Franchises for Brand-Name Goods and Services Law, S.D. Codified Laws Sections
37-5A-1 to 37-5A-87, the parties to the attached Best Franchising, Inc. License
Agreement (the "Agreement") agree as follows:
1. To the extent the provision in the fifth sentence of
Paragraph 10D, with respect to the lump sum payment by Licensee, is a liquidated
damages provision in violation of South Dakota Codified Laws Section 53-9-5,
such provision shall be deleted from this Agreement.
2. Paragraph 13B of the Agreement, under the heading
"Miscellaneous," shall be amended by the addition of the following sentence:
Notwithstanding the above, this provision shall be void with
respect to any cause of action which is otherwise enforceable
in the State of South Dakota.
3. Paragraph 13 of the Agreement, under the heading
"Miscellaneous," shall be amended by the addition of the following language:
J. Notwithstanding anything to the contrary in this Agreement,
all issues relating to franchise registration, employment law,
covenants not to compete, and other matters of local concern
shall be governed by the laws of the State of South Dakota,
but as to contractual and all other matters, the Agreement and
all provisions of the Agreement will be and remain subject to
the application, construction, enforcement and interpretation
under the governing laws of Georgia.
K. Notwithstanding anything to the contrary herein, nothing in
this Agreement shall be deemed to constitute a waiver of
compliance with any provision of the South Dakota Franchises
for Brand-Name Goods and Services Act.
4. Regardless of the terms of the Agreement concerning
termination, if Licensee fails to meet performance and quality standards or
fails to make any payments under the Agreement, Licensee will be afforded thirty
(30) days' written notice with an opportunity to cure the default before
termination.
5. Pursuant to S.D.C.L. 37-5A-86, any acknowledgment,
provision, disclaimer or integration clause or a provision having a similar
effect in the Agreement does not negate or act to remove from judicial review
any statement, misrepresentation or action that would violate the South Dakota
Franchise Law (S.D.C.L. 37-5A), or any administrative regulations promulgated
thereunder.
6. Any provision that provides that the parties waive their
right to claim punitive, exemplary, incidental, indirect, special or
consequential damages may not be enforceable under South Dakota law.
7. Each provision of this Amendment shall be effective only to
the extent, with respect to such provision, that the jurisdictional requirements
of the South Dakota Franchises for Brand-Name Goods and Services Law are met
independently without reference to this Amendment.
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IN WITNESS WHEREOF, the parties hereto have duly executed,
sealed, and delivered this South Dakota amendment to the License Agreement on
the same day as the License Agreement was executed.
BEST FRANCHISING, INC.
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Licensor
By:
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Title:
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Licensee
By:
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Title:
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Page 2 of 2
AMENDMENT TO BEST FRANCHISING, INC.
LICENSE AGREEMENT
REQUIRED BY THE STATE OF WASHINGTON
In recognition of the requirements of the Washington Franchise
Investment Protection Act, Wash. Rev. Code Sections 19.100.010 through
19.100.940, the License Agreement for Best Franchising, Inc. ("BFI"), in
connection with the offer and sale of licenses for use in the State of
Washington, shall be amended to include the following:
1. The State of Washington has a statute, RCW 19.100.180,
which may supersede the License Agreement in your relationship with BFI,
including the areas of termination and renewal of your license. There also may
be court decisions which may supersede the License Agreement in your
relationship with BFI, including the areas of termination and renewal of your
license.
2. In the event of a conflict of laws, the provisions of the
Washington Franchise Investment Protection Act, Chapter 19.100 RCW shall
prevail.
3. A release or waiver of rights executed by a licensee or a
transferor shall not include rights under the Washington Franchise Investment
Protection Act, except when executed pursuant to a negotiated settlement after
the Agreement is in effect and where the parties are represented by independent
counsel. Provisions such as those which unreasonably restrict or limit the
statute of limitations period for claims under the Act, or rights or remedies
under the Act such as a right to a jury trial, may not be enforceable.
4. Transfer fees are collectable to the extent that they
reflect Licensor's reasonable estimated or actual costs in effecting a transfer.
5. Each provision of this Amendment shall be effective only to
the extent, with respect to such provision, that the jurisdictional requirements
of the Washington Franchise Investment Protection Act, Wash. Rev. Code Sections
19.100.010 through 19.100.940, are met independently without reference to this
Amendment.
IN WITNESS WHEREOF, the parties hereto have duly executed,
sealed, and delivered this Washington amendment to the License Agreement on the
same date as the License Agreement was executed.
BEST FRANCHISING, INC.
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Licensor
By:
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Title:
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Licensee
By:
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Title:
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By:
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Title:
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