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Exhibit 10.18
No. _________________
FRANCHISE AGREEMENT made this _______ day of ________, 19___, effective
________________ 19___, between ROTO-ROOTER CORPORATION ("Company") of West
Des Moines, Iowa, and ___________________________________________ ("Franchisee")
of___________________________________________________________________________.
(address)
WITNESSETH:
WHEREAS, Company has developed methods and techniques known as the
Roto-Rooter System for performing sewer, drain and pipe cleaning services and
for selling such services to the public (the "Roto-Rooter System"); and
WHEREAS, Company presently owns and has registered as a trademark and
service mark the Roto-Rooter emblem and the following marks: "Roto-Rooter",
"Razor Kleens", "There's Only One" and "And Away Go Troubles Down the Drain"
(the "Marks"); and
WHEREAS, Franchisee has represented to Company that Franchisee wishes
to use the Roto-Rooter System and the Marks in selling to the public and in
performing sewer, drain and pipe cleaning services only within the territory
described herein and that Franchisee will perform and sell sewer, drain and
pipe cleaning services within that territory to the satisfaction of Company
and in accordance with the standards of performance and other terms and
conditions set forth in this Agreement.
NOW THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. LICENSE AND FRANCHISE
On the terms and subject to the conditions of this Agreement, Company
hereby grants to Franchisee, and Franchisee hereby accepts, a license and
franchise to use the Marks in connection with the advertising, performance and
sale of sewer, drain and pipe cleaning services ("Services") in accordance
with the methods and techniques disclosed by Company to Franchisee
(collectively, the "System") solely within the geographic market area
described in Paragraph 2 of this Agreement (the "Territory"). The Company
further grants to Franchisee, and Franchisee hereby accepts, a license and
franchise to utilize confidential, proprietary materials ("Confidential
Materials") in connection with the advertising and sale of sewer,drain and
pipe cleaning services under the Marks. These Confidential Materials shall
include video tapes, manuals, reports and any other information supplied by
Company to Franchisee, and identified as Confidential Materials, which relate
to the System and are intended to assist Franchisee in the promotion and
operation of its sewer, drain and pipe cleaning business. Franchisee may also,
but shall not be required to, use the Marks in connection with septic tank
cleaning services, plumbing repair services, pipe inspection services, and
such other services, if any, which the Company shall hereafter expressly
authorize in writing. To the extent such services are offered by Franchisee
under authority of Company, all such services shall be
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included with the definition of Services as set forth above and referred to
throughout this Agreement. During the term of this Agreement, Company agrees
that neither it nor its affiliate will grant an additional license or franchise
for the purpose of conducting sewer, drain and pipe cleaning services using
the Marks within the Territory, or perform Services identified by the Marks in
the Territory. The license and franchise granted herein applies only to the use
of the Marks in the solicitation and sale of the Services using the System
within the Territory and does not apply to any other service marks or any
trademark of Company or its affiliates or the use of any Marks in connection
with the sale of any other product or service. Company reserves all rights not
expressly licensed to Franchisee herein with respect to the Marks, the Services
or any products or any other trademarks or services, anywhere in the world,
including but not limited to the rights of Company and its affiliates to (i)
provide or license Services or any other services under different trademarks
and trade names; (ii) use the Marks to provide or license other services; and
(iii) develop, manufacture, license, distribute, market or sell products in any
channel of distribution under the Marks or different trademarks and trade
names, whether or not the products are the same or similar to products sold by
Franchisee.
2. FRANCHISE TERRITORY
The license and franchise described in Paragraph 1 of this Agreement
is granted to Franchisee on the condition that Franchisee will assume
responsibility for selling to the public and performing the Services using the
System identified by the Marks and only in the following described Territory:
(the "Territory") and on the condition that Franchisee will sell and perform
such Services in accordance with the terms and conditions set forth in this
Agreement.
As express conditions for the grant of this franchise, during the term
of this Agreement Franchisee shall:
(a) Actively and continuously advertise and promote within the Territory
the System and the Marks. Company reserves the right to direct Franchisee
to modify or discontinue advertisements that Company believes to present a
risk of misleading prospective customers as to the authorized service area
or authorized Services of Franchisee, and Franchisee shall promptly comply
with any such directive.
(b) Actively and continuously sell and solicit sales only within the
Territory of Services using the System in conjunction with and identified
by the Marks.
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Franchisee shall not render Services in conjunction with or identified by
the Marks at any location outside the Territory; provided that Franchisee
may perform Services in the Territory of another franchisee only as a
subcontractor to the other franchisee for a particular job which is billed
by the other franchisee.
(c) Render Services which are to be performed pursuant to the System.
(d) Maintain office and service facilities for use by Franchisee in
connection with the sale of Services. Franchisee shall notify Company of
the address, telephone and facsimile transmission number of each such
location established under this Agreement.
(e) Comply at all times with the service standards set forth in paragraph 6
of this Agreement.
3. TERM
This Agreement shall become effective on ______________, 19___, and
shall expire on ______________, 19___, unless terminated earlier under the
provisions of paragraphs 12 or 13 of this Agreement.
4. FRANCHISE AND LICENSE FEES
(a) For the franchise granted by this Agreement and the right to use
the System and the Marks, Company acknowledges receipt from Franchisee of an
initial fee of $__________________.
(b) Franchisee shall pay to Company at its offices in West Des
Moines, Iowa, in advance on the first day of each month a monthly franchise
fee (the "Monthly Franchise Fee"). Timely payment of the Monthly Franchise Fee
is a material condition to this Agreement. During the first 12 months of the
term of this Agreement the Monthly Franchise Fee shall be $____________ (the
"Base Monthly Franchise Fee"). Thereafter, the Monthly Franchise Fee shall be
an amount equal to the Base Monthly Franchise Fee adjusted in accordance with
the following formula.
Effective on each anniversary of this Agreement, Company will adjust
the Monthly Franchise Fee paid by Franchisee in proportion to the increase or
decrease in the U.S. Consumer Price Index For All Urban Consumers (U.S. All
City average; 1982-84 = 100) (the "Index") during the preceding calendar year.
Company shall make each adjustment computation by multiplying the
Base Monthly Franchise Fee by a fraction, the numerator of which is the Index
for December of the most recently completed calendar year and the denominator
of which is the Index for the month of December of the calendar year next
preceding the year in which this Agreement became effective. Each adjustment
shall be rounded up or down to the nearest figure evenly divisible by $5.00.
If an Index figure is not available before an applicable adjustment
date, Company will use an estimate of the Index until the official Index figure
becomes available.
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If the Index is discontinued or modified, the most nearly equivalent Index
published by the U.S. government will be used to compute the Monthly Franchise
Fee.
5. ASSISTANCE TO FRANCHISEES
During the term of this Agreement:
(a) Company shall provide to Franchisee those management, engineering
and research services, and advice concerning the System, the use and
display of the Marks, and Franchisee's operation of the business
operated hereunder which Company makes available to its franchisees
generally from time to time and provide advice and instructions to
Franchisee with respect to proper use of the System and the Marks.
(b) Company shall spend each year a total amount of not less than 15% of
the total monthly franchise fees it receives from all franchisees during
the preceding year for market research, for advertising and promotion of
the Marks and the Services on a national scale, and for the development
and production of advertising and promotional material to be available
to all franchisees in promoting sales of Services under the Marks.
6. SERVICE STANDARDS
Franchisee acknowledges that nationwide uniform standards of service
are vital to the protection of the System and the Marks and necessary to
assure that the public receives the kind and quality of service it associates
with the System and the Marks. Franchisee therefore agrees that it will fully
comply with each of the following requirements in all of its operations as a
Franchisee under this Agreement:
(a) Provide prompt and courteous service at all times during normal
working hours and, additionally, provide an emergency service that will
adequately meet the public need for such service within the Territory.
Company may establish and Franchisee shall honor performance standards
for operation of the franchised business, and rendering the Services to
customers. Company will consult its franchisees before promulgating
performance standards.
(b) Maintain reasonable standards of cleanliness. Keep all machines in
good working order and clean. Keep all service personnel in uniform and
easily identifiable as bona fide Roto-Rooter service personnel in
accordance with the then existing Mark identification policies of the
Company. All service vehicles shall be painted white or such other
color as specified by Company and all such vehicles must be kept neat
and clean and identified as Roto-Rooter service vehicles in accordance
with the then-existing Mark identification policies of Company.
(c) On every job, take all necessary precautions to protect furnishings,
interior and exterior walls, lawns, gardens, etc., and clean working
area thoroughly upon completion of the job.
(d) Whenever possible, offer and honor a guarantee for the Services
performed.
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(e) Conduct business in a manner which will reflect favorably at all times
on Company, its franchisees and its Marks and engage in no act or practice
with the intent or effect of disparaging or impairing the goodwill of any
of the Marks.
(f) Refrain from any misleading or unethical practice in performing,
soliciting or advertising Services rendered under this Agreement.
(g) Provide, upon request of Company in order to allow Company to monitor
the quality of services provided and the maintenance of service standards,
a listing of the names, addresses and telephone numbers of customers
served during a recent time period (not to exceed 30 days) specified by the
Company.
(h) Permit Company to enter Franchisee's premises and vehicles to inspect
them to assure compliance with the terms of this Agreement. Franchisee
shall cooperate and assist in any such inspection, and shall meet with
Company's representatives at Franchisee's principal place of business in
the Territory to review the results of inspections or other matters Company
wishes to discuss with Franchisee.
(i) Provide sales and advertising expenditure data as may be reasonably
requested including an annual report of sales of the franchised business.
Each year Franchisee shall submit to the Company by February 15 a
report of the sales of the franchised business for the preceding calendar
year. The first such report shall be submitted for the calendar year in
which the effective date of this Agreement falls. The report shall state
total sales for the franchised business and separate category sales for
sewer and drain cleaning, plumbing, and a category that includes all other
sales.
The report shall be verified by the Franchisee and signed by the
Franchisee or its authorized officer and shall be on a form prescribed by
the Company. Franchisee shall maintain its sales records in a manner that
permits the separate reporting categories to be reported and verified.
7. ADVERTISING BY FRANCHISEES
Franchisee acknowledges that regular and continuous local advertising
of the System and the Marks is vital to the success of a Roto-Rooter
franchise.
(a) Franchisee shall place advertisements or listings in the principal
telephone directories (including the Yellow Pages portion thereof) covering
and distributed in the Territory. In those instances where such telephone
directories are usually and customarily distributed both within and without
the Territory, all of Franchisee's advertisements therein shall specify
Franchisee's Territory in not less than eight point type size. Franchisee
shall not place advertisements or listings in telephone directories which
are usually and customarily distributed only outside the Territory.
(b) An "Agreement Year" is the 12 month period commencing on the effective
date of this Agreement and each successive 12 month period thereafter
commencing on the anniversary of the Agreement.
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(c) During each Agreement Year, Franchisee shall expend for advertising
conducted during such Agreement Year not less than the following minimum
amounts on media broadcasting or display costs for advertising the System
and the Marks on television, radio or outdoor billboards. Franchisee may
expend up to two thousand dollars ($2,000) of its minimum advertising
expenditure requirement each Agreement Year on advertising the System and
the Marks via direct mail, in newspapers or shoppers of general
distribution, on benches, in transit advertising and on stadium, ballpark
and race track signs. The formula used to compute the minimum amounts is
two and one-half cents (2.5 cents) per person for Agreement Years which
begin in 1995; two and six-tenths cents (2.6 cents) per person for
Agreement Years which begin in 1996; two and seven-tenths cents (2.7
cents) per person for Agreement Years which begin in 1997; two and
seven-tenths cents (2.7 cents) per person for Agreement Years which begin
in 1998; and two and eight-tenths cents (2.8 cents) per person for
Agreement Years which begin in 1999. Neither production or other costs,
nor expenditures for other forms of advertising may be applied to satisfy
these requirements:
Agreement Years Which Minimum Expenditure
Begin in the Calendar Per Agreement
Year Set Forth Below Year
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1995 $_______
1996 $_______
1997 $_______
1998 $_______
1999 $_______
(d) Franchisees with more than one Roto-Rooter sewer and drain cleaning
franchise may at their option combine the minimum advertising requirements
for their territories and allocate the expenditures among their territories
without regard to the minimum for any single territory. If Franchisee
chooses to combine the minimums, the total amount so expended must equal or
exceed the sum of the minimums for the combined territories.
If Franchisee desires to combine a territory for which no minimum has been
established, Company will establish a minimum for such territory using the
same method used under this Agreement to establish the minimum for the
Territory.
(e) If Franchisee does not expend the required minimum amounts in the manner
and amounts set forth in Paragraph 7(c) of this Agreement, Franchisee shall
within 14 days after the end of the applicable Agreement Year without
demand therefor remit to Company an amount equal to the difference between
the amount required to be expended and the amount actually expended. The
total amount so remitted shall be expended by Company in the manner and for
the advertising, research, promotional, development or production purposes
described in Paragraph 5(b) of this Agreement.
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(f) Franchisee shall submit at the times and in the manner prescribed by
Company, documentation satisfactory to Company that Franchisee has engaged
in the advertising and made the advertising expenditures required by this
Paragraph 7.
(g) Company reserves the right to approve in advance all advertising
(including programs, media, materials and content) of the System and Marks
and to establish rules, standards and procedures regarding the content,
form and manner of advertising the System and Marks. Nothing in this
Agreement entitles Company to interfere with Franchisee's independent
pricing discretion.
8. USE OF TRADEMARKS AND SERVICE MARKS
Franchisee shall use the Marks only in the manner or manners and
places prescribed or authorized by Company and only in connection with the
sale and performance of Services expressly authorized by Company in writing.
Franchisee shall promote and identify the Services in the Territory and only
in the Territory and shall not use the Marks in connection with the sale or
lease of unauthorized products or services.
Upon receipt of notice from Company that the Marks are being used in
an unauthorized manner, Franchisee shall immediately cease such unauthorized
use. Franchisee shall not alter or add to the form or content of said Marks
in any manner nor use the mark "Roto-Rooter" or any colorable imitation thereof
in any corporate or trade name. Upon receipt of prior written consent of
Company and fulfillment by Franchisee of other conditions as specified by
Company, Franchisee may include "Roto-Rooter" as part of a fictitious name
filing required by state law. Franchisee shall not file for or acquire any
registration (state or federal) for the Marks or any trademark or service mark
(or variation thereof) confusingly similar to the Marks. Company reserves the
right to alter or replace the principal identifying characteristics of the
franchised business, including the trade dress and principal trademark and
service mark identification of the Services and of the business franchised
hereunder, but will not withdraw the license to use the "Roto-Rooter" trademark
pursuant to this provision. Company will consult its franchisees before
implementing substantial changes in the trade dress of the System. Franchisee
shall implement such changes upon notice from Company. Franchisee shall
prominently identify itself in its offices and on its forms and advertisements
as an independent business operated under license from Company in such form and
content as Company may direct.
Franchisee shall advise Company, from time to time, of all uses by
others of names, symbols and devices comprising, consisting of, or similar to
the name "Roto-Rooter" or any of the Marks, including any variations or
colorable imitations thereof. Company shall solely determine whether such uses
are unauthorized uses and whether action should be commenced to curtail such
uses. All lawsuits and actions for trademark infringement or dilution and/or
unfair competition shall be brought only by Company; however, if requested by
Company, Franchisee shall consent to be joined as a party in any lawsuit or
action and lend his full cooperation and assistance in the preparation and
prosecution of such lawsuit or action. Company shall reimburse Franchisee for
all reasonable out-of-pocket expenses incurred by Franchisee at the request of
the Company in regard to the foregoing. Franchisee shall not institute any
legal action alleging infringement of Company's Marks. Franchisee is
specifically prohibited from charging other entities with infringement and from
initiating suit for infringement or dilution of Company's Marks.
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9. ROTO-ROOTER MACHINES
Company agrees to make available to Franchisee for purchase during
the term of this Agreement the current Roto-Rooter brand equipment and parts
line (the "Machines") as needed by Franchisee, at prices and upon terms of
sale then prevailing, for cash or upon such terms of credit, as Company shall
determine. Franchisee agrees that the Machines and the Marks associated with
the System will be used only in conjunction with the Services performed under
the terms of this Agreement.
10. FINANCIAL STANDARDS
Franchisee agrees, during and after the term of this Agreement, to
indemnify and hold Company, its parent corporation and their respective
officers, agents and employees harmless from and against all loss or damage,
liability, cost and expense arising in contract, tort or otherwise out of, in
connection with, in relation to, or as a result of a violation of this
Agreement by Franchisee and from all claims and damages, causes of action or
suits asserted by any third person, firm, corporation or government entity
caused by, resulting from or in any way arising or growing out of or in
connection with the operation of Franchisee's business which is the subject of
this Agreement or otherwise (including the use by Franchisee of the System,
the Marks, the Machines, or the operation of any other business conducted by
Franchisee).
11. INSURANCE
It is understood and agreed that the protection of the goodwill of
the System and the Marks and the financial security of Franchisee and Company
requires the existence of public liability insurance coverage for Franchisee.
Franchisee therefore shall procure and maintain in full force and effect
Commercial General Liability insurance coverage (including premises/operations
coverage, products/completed operations coverage and contractual liability
coverage) and comprehensive Motor Vehicle Liability insurance coverage
(including hired and non-owned motor vehicle coverage) in the name of
Franchisee, with Company named as an Additional Insured, at Franchisee's sole
cost and expense in no less than the following amounts:
Bodily Injury $500,000 each person
$500,000 each occurrence
Property Damage $250,000 each occurrence
or
A single limit policy $500,000 each occurrence
in the amount of no
less than
Franchisee shall furnish Company at any time upon Company's request
certificates evidencing such insurance containing an endorsement that the
policy may not be cancelled without thirty (30) days' advance written notice
to Company.
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12. TERMINATION BY FRANCHISEE
This Agreement may be terminated by Franchisee at any time during the
term of this Agreement by delivery of written notice of termination (which
shall be irrevocable) to Company sixty (60) days before the effective date of
such termination. If Franchisee abandons the franchise granted herein by
failing to conduct the business franchised hereunder for any continuous
period of 10 or more days (except as caused by strike, casualty or Acts of
God), this Agreement shall expire automatically by mutual consent on the tenth
day after Franchisee ceased or suspended operation. Immediately upon such
termination or expiration, Franchisee shall comply with the post-termination
or expiration provisions of Paragraph 13 of this Agreement.
13. TERMINATION BY COMPANY
To the extent permitted by law, this Agreement may be terminated by
Company for cause upon sixty (60) days' notice (or such longer period of
notice as shall be required by applicable law) to Franchisee as hereinafter
provided. Although not limited to such, any of the following acts of default by
Franchisee to the extent permitted by applicable law shall be cause for
termination of this Agreement by Company:
(a) If any monies payable by Franchisee to Company pursuant to this
Agreement or otherwise are not paid in full as and when due. In addition,
and to the extent permitted by law, Company shall have the right and option
to charge and Franchisee shall pay a delinquency fee on any sums not paid
when due at the rate of 1.5% per month on the unpaid balance due until paid
in full.
(b) If there shall be filed by or against Franchisee, in any court, a
petition in bankruptcy, or for reorganization or relief under any provision
of the Federal Bankruptcy Act, or if a receiver or trustee of the business
of the Franchisee is appointed, or if an attachment or writ is issued
against the Franchisee which affects the business of the Franchisee, and
such receivership, trusteeship, attachment or writ shall not be dissolved
or discharged within thirty (30) days from the date of filing thereof, or if
Franchisee shall be adjudicated bankrupt or insolvent or shall make an
assignment for the benefit of creditors.
(c) If Franchisee or its principal shareholder is convicted of any felony.
(d) If there is a lapse of insurance, or nonpayment of insurance premiums
therefor, as required in Paragraph 11 hereof.
(e) If Franchisee fails to use its best efforts in developing and promoting
the sales of Services in the Territory.
(f) If Franchisee makes or attempts to make a transfer, in violation of
Paragraph 14, of an interest in this Agreement or of an ownership interest
in Franchisee.
(g) If Franchisee should use or advertise any of the Marks except in
accordance with Company's prescribed methods of use or advertisement
thereof.
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(h) In the event Franchisee performs Services outside the Territory; except
that Franchisee may perform Services in the Territory of another franchisee
only as a subcontractor to the other franchisee for a particular job which
is billed by the other franchisee.
(i) If Franchisee defaults in the performance of any other provision of
this Agreement whether or not listed in this Paragraph 13.
Company shall notify Franchisee in writing of the acts or conduct
constituting cause for termination of this Agreement. Franchisee shall have
thirty (30) days after receipt of such notice to cure to the reasonable
satisfaction of Company any such default which, upon cure, shall have the
effect of voiding such notice of termination. In the event Franchisee is in
default hereunder and Company has previously delivered a notice of default to
Franchisee two (2) times in any consecutive six (6) month period, whether
cured or not, Company, in addition to any other rights or remedies it may have,
shall have the right and option to terminate this Agreement forthwith without
further notice to Franchisee. Notice of termination may be delivered together
with or at any time after a notice of default, subject to an applicable right
(if any) to cure the noted default(s). Notices under this Paragraph are
effective when sent in accordance with Paragraph 18.
Upon termination of this Agreement by Company pursuant to this Paragraph
13, Company shall repurchase from Franchisee at a fair market value at the time
of termination any unused cable, part, equipment and supplies (other than
expendable supplies such as stationery, invoices and business cards) which
Franchisee purchased from Company; provided, that Company may offset against
payment of such repurchase price any and all amounts owed by Franchisee to
Company. Immediately upon termination or expiration of this Agreement, either
under the provisions of this Paragraph or those of Paragraph 12, Franchisee
shall cease using the System and shall cease using or displaying the Marks and
shall discontinue any representation or suggestion, either directly or
indirectly, that it is or was formerly a franchisee or authorized user of the
System or the Marks. Franchisee shall also immediately cancel any fictitious
name filing using any of the Company's service marks or trademarks, including
the "Roto-Rooter" mark or any name or mark confusingly similar thereto. Upon
termination or expiration of this Agreement, Franchisee shall promptly remove
the Marks from the Machines and all other items of property in the possession
of Franchisee. If Franchisee disposes of a Machine, vehicle or other equipment
to anyone other than another Roto-Rooter franchisee, Franchisee shall remove
all Marks from the Machine before such disposition; if a Machine, vehicle
or other equipment is transferred to an employee for continued use in the
franchised business, Franchisee shall condition such transfer on the employee's
obligation to remove the Marks before making any further disposition thereof
(except to Franchisee or another Roto-Rooter franchisee).
14. ASSIGNMENT OF RIGHTS BY FRANCHISEE
(a) Franchisee shall not sell, assign, transfer, delegate, pledge, grant a
security interest in, or encumber this Agreement or any right or interest
herein or hereunder, or transfer or allow the direct or indirect transfer of
any ownership interest in Franchisee, or suffer or permit any such sale,
assignment, transfer or encumbrance to occur by operation of law, without the
prior written consent of
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Company. Franchisee shall not grant a lien or security interest in this
Agreement or any interest herein without Company's prior written consent, which
shall not be unreasonably withheld but may be conditioned upon Franchisee's
guarantee of the transferee's performance of this Agreement. Any sale,
transfer, assignment or encumbrance of this Agreement or of any rights herein
or hereunder, or in Franchisee except in accordance with the terms and
conditions as hereinafter provided, constitutes a breach of this Agreement and
shall permit Company to terminate this Agreement forthwith.
(b) On condition that Franchisee is not in default hereunder, Company
shall not unreasonably withhold or delay its written consent to a proposed
transfer governed by Paragraph 14(a).
(c) As an express condition to obtaining the written consent of Company,
Franchisee must furnish to Company:
(i) True and complete copies of the proposed sale, assignment, transfer,
delegation or other agreement, in the final and complete form in which it is
to be signed by both parties thereto, pursuant to which such sale,
assignment, transfer or encumbrance is proposed to be made.
(ii) Information concerning the proposed purchaser, assignee or transferee
which establishes to the satisfaction of Company that such party is
qualified and has the resources necessary to be a successful franchisee of
Company and has no legal or business interest that conflicts or potentially
conflicts with the interests of Company or the Roto-Rooter System. Company
will not disapprove a transfer to a plumber merely because the proposed
transferee is a plumber.
(iii) An agreement by the proposed purchaser, assignee or transferee, in
form and substance satisfactory to Company, under the terms of which the
proposed purchaser, assignee or transferee assumes all obligations of
Franchisee pursuant to Franchisee's outstanding service guarantees and
agrees to honor and fulfill all such guarantees for all customers involved.
(iv) A Release Agreement, on a form furnished by Company and signed by
Franchisee, under which Franchisee releases all claims which Franchisee may
then or in the future have against Company or its agents, employees or
licensees which arise out of or which result from this Agreement.
(v) An administrative fee in an amount equal to 1-1/2% of the total sale
price, but in no event less than $400 or more than $3,000. For purposes of
this paragraph, "total sale price "means the present value (discounted at
10% per annum) of all consideration exchanged including but not limited to
debt assumed, covenants not to compete, consulting agreements or the
equivalent for all of the assets transferred except interests in real
estate.
(vi) A counterpart to the Guaranty at the foot of this Agreement signed by
each principal shareholder of the new franchisee if it is a corporation.
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(d) Upon the death of Franchisee, or of a majority stockholder of
Franchisee if Franchisee is a corporation, all rights under this Agreement will
inure to the benefit of the person or persons who are entitled to receive a
distribution of all or a portion of Franchisee's (or such majority
stockholder's) rights under this Agreement pursuant to Franchisee's (or such
majority stockholder's) Last Will and Testament or, if Franchisee dies
intestate, pursuant to the laws of descent and distribution of the State
having primary jurisdiction over Franchisee's (or such majority stockholder's)
estate, such person or persons being hereinafter referred to as "heirs". The
heirs may then continue to operate the business contemplated in this Agreement
provided they meet the requirements of subparagraphs (b) and (c) above, or,
in the alternative, the heirs may sell, assign and transfer all of their
rights pursuant to this Agreement provided they comply with above provisions
relating to a sale, transfer or assignment of this Agreement by Franchisee.
The heirs must use their best efforts to conclude the probate or transfer this
Agreement.
15. RIGHT TO RENEW FRANCHISE
(a) On the expiration of this Agreement and provided Franchisee is
not then in default under the terms of this Agreement, Company shall offer
Franchisee the right to enter into a new franchise agreement with Company upon
the terms and conditions as then offered to other franchisees whose franchise
agreements are being renewed. Company further reserves the right to make
reasonable revisions of the terms of its future franchise agreements (including
renewals hereof) as it deems appropriate.
(b) The new franchise agreement will be mailed by Company to the last
known address of Franchisee by ordinary or such certified mail as Company may
determine, at least sixty (60) days prior to the expiration of this Agreement,
and Franchisee will have until the expiration date of this Agreement to
accept the new franchise agreement and return fully executed copies thereof to
Company.
16. OWNERSHIP, MANAGEMENT AND COVENANT NOT TO COMPETE
Company has entered into this Agreement in reliance upon the representation
of Franchisee that during the term of this Agreement the following persons
will be the owners and in active and full-time charge of the business of
Franchisee conducted pursuant to the terms of this Agreement:
Name and Address Ownership Percentage Title
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Franchisee expressly acknowledges and agrees that Company has developed
and established extensive goodwill in the System and the Marks and that in
order to protect such goodwill, together with the other legitimate business
interests of Company, Franchisee, including, if appropriate, each of its
owners as listed above, agrees that during the term of this Agreement he will
not, directly or indirectly,
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whether as an owner, sole proprietor, partner, stockholder, consultant,
employee, agent or otherwise, engage in, assist, or have any financial
interest in any other business entity which is engaged in the residential
sewer, drain and pipe cleaning services business within the Territory and, to
the extent permitted by law, within the counties (or parishes) in or adjacent
to such Territory.
17. COMPLIANCE WITH LAWS
Franchisee shall be solely responsible for the conduct of its business
and for compliance with all laws, statutes, ordinances, orders or codes of any
public or governmental authority pertaining to Franchisee and its business
operated pursuant hereto and for the payment of all taxes, permits, licenses
and registration fees and other charges or assessments arising out of the
establishment and operation of Franchisee's business.
18. NOTICE
Any notice given pursuant to this Agreement is effective and sufficient
(whether or not actually received) if in writing and personally delivered, or
deposited in the United States mail, registered or certified, postage prepaid,
or if by wire or cable, when placed with a telegraph or cable company for
transmission, or by facsimile or overnight express carriers, duly addressed as
follows:
If to Company: Roto-Rooter Corporation
300 Ashworth Road
West Des Moines, Iowa 50265
Attention: President
and a copy to: Chemed Corporation
2600 Chemed Center
Cincinnati, Ohio 45202-4726
Attention: Secretary
If to Franchisee:
At the address as set forth on Page One.
Any party may change the address to which notices are to be sent by
notifying the other party hereto in the manner as hereinabove provided.
19. SEVERABILITY
If any part or provision of this Agreement is held or declared invalid by a
court of competent jurisdiction, such holding or declaration shall affect only
that particular part or provision of this Agreement and all other parts or
provisions of this Agreement shall continue in full force and effect.
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20. GENERAL PROVISIONS
Headings in this Agreement are inserted solely for the purpose of
convenience of reference and are not to be construed as part of the Agreement.
This Agreement, when accepted in West Des Moines, Iowa, by an
authorized officer of Company, constitutes the entire Agreement and
understanding between the parties and no other representation, promise or
agreement, oral or otherwise, shall be of any force or effect.
This Agreement sets forth the entire agreement and understanding of
the parties in respect of the transactions contemplated hereby and supersedes
all prior agreements, arrangements and understandings related to the subject
matter hereof. No representation, promise, inducement or statement of intention
has been made by Company or Franchisee which is not embodied in this Agreement.
Neither Company nor Franchisee has relied upon, or shall be bound by or liable
for, any alleged representation, promise, inducement or statement of intention
not so set forth.
This Agreement may be assigned in its entirety by Company to its
parent corporation, any corporation affiliated with either Company or its
parent corporation or to any successor in interest to the business of Company.
All terms, covenants, representations, warranties and conditions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable
by, the parties hereto and their respective successors and permitted assigns.
The parties stand hereunder solely in the relationship of licensor
and licensee. The parties are not and shall not be regarded as fiduciaries and
this Agreement does not create any relationship of special trust and
confidence. Franchisee is not and shall not hold itself out as the agent,
employee or partner of the Company.
Subject to Paragraphs 12 and 13 above, this Agreement may be amended,
modified, superseded or cancelled and any of the terms, covenants,
representations, warranties or conditions hereof may be waived only by a
written instrument executed by both Company and Franchisee. The failure of
either party at any time or times to require performance of any provisions
hereof shall in no manner affect its right at a later time to enforce the
same. No waiver by either party of any condition or breach of any term,
covenant, representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed to be or
construed as a further or continuing waiver of any such condition or breach or
a waiver of any other condition or breach of any other term, covenant,
representation or warranty of this Agreement.
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IN WITNESS WHEREOF, the parties have executed or caused this Agreement to be
duly executed, all as of the day and year first above written.
ROTO-ROOTER CORPORATION
By _________________________________________
(Signature and Title) -- Authorized Officer
If Franchisee is an Individual:
Franchisee:
_______________________________
Name
If Franchisee is a Partnership:
Franchisee:
________________________________
Partner, jointly and severally
________________________________
Partner, jointly and severally
If Franchisee is a Corporation:
Franchisee:
________________________________
Name of Corporation
By______________________________
Authorized Officer
________________________________
Title
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GUARANTY
--------
To Be Executed By Principal Stockholder(s) If Franchisee Is a Corporation.
The undersigned, principal stockholder(s) of the above Franchisee, for
value received, hereby absolutely and unconditionally guarantee(s) full
performance and payment when due of all of Franchisee's obligations to Company
pursuant to the above Agreement.
___________________________________
___________________________________
___________________________________
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