EXHIBIT 10.18
FORM OF PARTICIPATING INDEPENDENT
BROKER FRANCHISE AGREEMENT
HOMELIFE REALTY SERVICES, INC.
(A Member of the International HomeLife Network)
PARTICIPATING INDEPENDENT BROKER FRANCHISE AGREEMENT
(For Use In The State Of California Only)
This Agreement is made this ______________ day of _______________________,
19__, between HOMELIFE REALTY SERVICES, INC., a Delaware corporation
("HOMELIFE"), with head office address at 4100 Newport Place, Suite 730, Newport
Beach, California, 92660, and __________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(the "PARTICIPATING INDEPENDENT BROKER") with head office address situated at
_______________________________________________________________________________.
RECITALS:
1. HomeLife and its Affiliates have developed a business plan (the "Plan")
for the establishment and operation of real estate brokerage offices
operating with a uniform business format, methods, and designs, including
methods for obtaining listing for properties, for soliciting prospective
buyers of properties, for selling, buying, or leasing properties, and for
providing referral through its National and International Referral Service,
Pursuant to the Plan, independent real estate brokers can maintain
independence of operation while obtaining many of the benefits available to
an international network.
2. Participating Independent Brokers who are authorized to operate under
the Plan and the services they offer under the Plan are identified by the
trademarks and service marks listed in Part I of Schedule "A" attached hereto
and by such other additional or substitute trade names, trademarks, service
marks, symbols, graphics and logotypes as the HomeLife companies may develop
and designate for use from time to time (collectively, the "Marks").
HomeLife has the right to grant franchises to operate under the Plan and the
Marks in the United States.
3. The Participating Independent Broker is currently engaged in, or desires
to be engaged in, the real estate brokerage business and wishes to utilize
the Plan and operate under the Marks. HomeLife is willing to grant the
Participating Independent Broker the right to do so subject to the terms of
this Agreement.
Therefore, HomeLife and the Participating Independent Broker agree as
follows:
ARTICLE 1.00 - GRANT AND TERM
1.01 Subject to the provisions of this Agreement, HomeLife grants to the
Participating Independent Broker a non-exclusive or exclusive franchise as
set forth in Schedule "E", to operate a real estate brokerage business (the
"Business") using the Plan and the Marks . The term of the franchise is five
(5), seven (7), Ten (10) years, commencing on the date that this Agreement is
signed by HomeLife (each such year being herein called a contract year).
1.02 (a) The Business will be located at the office described in Part II of
Schedule "A" annexed hereto (the "Office").
(b) The Participating Independent Broker may relocate the Office to
another location within the same general market area, provided that the
Participating Independent Broker first obtains the written approval of
HomeLife as to the exact location of the proposed relocated office, which
approval shall not be unreasonably withheld.
(c) The Office shall at all times be under the supervision of a person
who is duly qualified under the provisions of all applicable laws of the
state in which the Office is located. The Participating Independent Broker
agrees to keep HomeLife informed at all times of the identity of the Office
Manager and shall cause such Manager to devote his full time and attention to
the Business being conducted from such Office.
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1.03 (a) If at any time, and from time to time, during the term of this
Agreement the Participating Independent Broker should establish any
additional office from which the Business will be conducted, then, unless
such office was established by reason of a relocation as provided for in
Article 1.02 hereof, the Participating Independent Broker shall enter into a
new franchise agreement upon the terms and conditions then in effect for a
new franchisee, save and except for the license fee, which shall be Five
Thousand ($ 5,000.00) Dollars for each additional office.
(b) The right to open such additional office shall be subject to the
prior written approval of HomeLife, which approval will not be unreasonably
withheld.
1.04 The Participating Independent Broker may renew the franchise granted to
it for one renewal term of five (5), seven (7), ten (10) further contract
years provided that: (i) the Participating Independent Broker gives at least
six (6) months prior written notice of its intent to renew to HomeLife; (ii)
the Participating Independent Broker has complied with all of its obligations
under this Agreement throughout the initial term; and, (iii) the
Participating Independent Broker signs HomeLife's then-current form of
Participating Independent Broker Agreement for the State of California (which
may contain different business and financial terms from this Agreement) and
pays to HomeLife a renewal fee of Five Hundred ($500.00) Dollars.
ARTICLE 2.00 - OBLIGATIONS OF HOMELIFE
HomeLife agrees that, so long as this Agreement remains in force:
2.01 HomeLife will continue to develop public recognition of its identity and
maximize public awareness of HomeLife and its participating independent
brokers by means of advertising and promotional campaigns in accordance with
Article 6.00.
2.02 At no charge to the Participating Independent Broker, HomeLife will
provide advice and consultation with representatives of HomeLife with respect
to the Plan, including advice and guidance regarding recruiting, community
marketing, selling, financial and office management techniques, and such
other operational procedures as HomeLife may from time to time develop for
use in connection with the Plan.
2.03 In order to provide efficient administrative and professional services
to the customers of all participating independent brokers, HomeLife will
operate, in accordance with procedures specified by HomeLife from time to
time, a National and International Referral Service. The National and
International Referral will maintain a toll free telephone number in order
to facilitate the participation of the Participating Independent Broker in
the service. HomeLife reserves the right to charge a reasonable fee for the
Referral Service.
2.04 (a) HomeLife will make available to the Participating Independent
Broker equipment, supplies, selling, promotional and marketing materials,
including sales kits and point of sale promotional materials, and other
materials used in connection with the Business. The Participating
Independent Broker may purchase such materials from HomeLife, or, from any
source approved in writing by HomeLife. The Participating Independent Broker
shall not alter, amend or modify such materials without the prior written
consent of HomeLife. HomeLife will, from time to time, provide to the
Participating Independent Broker a list of approved suppliers.
(b) The Participating Independent Broker may make such purchases from
non-approved suppliers provided that the quality standards established by
HomeLife are maintained at all times. If the Participating Independent
Broker, with the written approval of HomeLife, desires to make such purchases
from non-approved suppliers, the Participating Independent Broker shall, upon
request, provide HomeLife with descriptions and specifications or samples for
examination and testing to ensure that the products and materials meet the
quality standards established by HomeLife.
2.05 HomeLife will, from time to time, make available to the Participating
Independent Broker, at the Broker's own expense, the opportunity to place
advertisements in HomeLife's advertising section of those publications in the
Participating Independent Broker's regional area in which HomeLife runs
advertisements. The cost of running the
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HomeLife advertising section will be borne proportionately by all HomeLife
offices running advertisements in the section, based on the ratio of the
number and length of advertisements placed by each Participating Independent
Broker to the total number and length of advertisements appearing in
HomeLife's advertising section. The Participating Independent Broker will be
billed directly by the publication, and shall make prompt payment to such
publication.
2.06 HomeLife will maintain an ongoing basic training program for sales
representatives and introductory management training courses. HomeLife will
not charge tuition, a course fee, or similar fee, for such training but
reserves the right to charge a reasonable fee for training manuals and
materials. The Participating Independent Broker will be responsible for all
other costs incurred in attending such training, including transportation,
lodging, and meals. The Participating Independent Broker may at its option
enroll any or all of its employees in such programs. Basic training will
take place at such locations as HomeLife may from time to time designate.
Over and above the basic training provided by HomeLife, HomeLife may:
(i) engage, at its option, the services, programs, staff and materials
provided by one or more nationally or internationally recognized sales
training organizations; and
(ii) engage and utilize the programs, staff and facilities of recognized
colleges, universities, accredited educational and professional institutions,
to provide additional advanced training to the Participating Independent
Broker's sales representatives and management. If the Participating
Independent Broker chooses to avail itself of the foregoing programs, it
shall be responsible for the payment of such tuition, course fees and related
costs as may be billed to it by HomeLife for its participation in these
programs and for the costs incurred to attend such programs, including
transportation, lodging, and meals.
2.07 HomeLife may, from time to time, make available to its Participating
Independent Brokers annual national or international conventions,
motivational seminars, pre-licensing programs, advanced IC & I training
programs, computer workshops, and so forth, and various regional or national
newspapers or magazines. In the event the Participating Independent Broker,
at its option, chooses to participate in, or subscribe to, the foregoing
programs and publications, it shall be responsible for the payment of such
reasonable charges as may be established in advance and billed by HomeLife.
2.08 On request of the Participating Independent Broker, HomeLife will, at a
reasonable cost, supply the Participating Independent Broker with a standard
accounting and bookkeeping system for use in the Business. However, the
Participating Independent Broker need not purchase or use such accounting and
bookkeeping system. In addition, HomeLife will provide its management and
business planning system to the Participating Independent Brokers.
2.09 If, during the term of this Agreement, any securities of HomeLife, or
any successor of HomeLife, are proposed to be distributed by way of public
offering, then HomeLife will, subject to applicable law and to the
requirements of the underwriters, use its best efforts to reserve and
allocate a portion of the securities to allow for the purchase thereof by
HomeLife's participating independent brokers. The Participating Independent
Broker, if not then in default under this Agreement or a subsequent renewal
agreement will be entitled to subscribe for a pro rata share of such
allocated portion of shares in accordance with the terms of HomeLife's public
offer, based on the ratio of the number of Offices then owned and operated by
the Participating Independent Broker to the total number of Offices then
owned and operated by HomeLife and all its non-defaulting participating
independent brokers.
2.10 The Participating Independent Broker agrees that HomeLife may appoint an
agent or area representative for a geographic area in which the Business is
located and may delegate to such agent or area representative the performance
of any or all of HomeLife's obligations to the Participating Independent
Broker under this Agreement. The delegation of these obligations will not,
however, relieve HomeLife of its obligations under this Agreement. HomeLife
will notify the Participating Independent Broker in writing of the identity
of any agent or area representative to whom such obligations are delegated
and the scope of the obligations to be performed by such agent or area
representative.
ARTICLE 3.00 OBLIGATIONS OF THE PARTICIPATING INDEPENDENT BROKER
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The Participating Independent Broker agrees that, so long as this Agreement
remains in force:
3.01 It will ensure that, subject only to applicable law, all signs used in the
conduct of the Business conform to the specifications as established from time
to time by HomeLife as to size, location, construction, art work, lettering,
color, content and overall appearance. The Participating Independent Broker
shall display, at its Office premises, a sign indicating that the Marks are
trade marks of HomeLife and that the Participating Independent Broker is a
franchisee of HomeLife. All stationery, advertising material, or similar
documents, utilizing the marks shall clearly indicate that the Office is
independently owned and operated pursuant to a franchise from HomeLife.
3.02 It shall be a corporation and shall operate throughout the term of this
Agreement as a corporation. The Participating Independent Broker shall at all
times maintain its corporate registration in good standing in the state of its
incorporation and shall be fully qualified to do business in all jurisdictions
in which it operates the Business. The Participating Independent Broker shall
amend its corporate charter to change its name to one which incorporates the
name "HomeLife..." or such other Mark as HomeLife may designate. The
Participating Independent Broker shall only use its full registered name in the
conduct of the Business, which is approved in writing by HomeLife, and will not
change its name without the prior written consent of HomeLife. For the purposes
of ensuring compliance with Article 7.02(a), the Participating Independent
Broker shall, within thirty (30) business days following any request in writing
by HomeLife sign and deliver to HomeLife, undated, but otherwise in form
suitable for registration, articles or certificates of amendment under the laws
of the jurisdiction of its incorporation, changing its name to one not utilizing
the Marks or any part thereof.
3.03 It will secure and maintain in good standing all required licenses, permits
and certificates relating to the operation of the Business, including, without
limitation, all registrations and licenses required to be maintained under
applicable state law regulating the real estate and business brokerage
industries. It will operate the Business in compliance with all applicable
federal, state, and municipal laws, ordinances, and regulations, in compliance
with the by-laws and Code of Ethics of any local Board of Realtors, and
otherwise in compliance with the highest ethical standards of the real estate
industry.
3.04 It will not engage in any business or advertising practice, or any other
conduct which may be injurious to, or in conflict with, the Business, HomeLife,
the Plan, or to the goodwill associated with the Marks and will immediately
cease all use of any advertising and/or promotion which is at any time
disapproved by HomeLife. All advertising and/or promotion by the Participating
Independent Broker will be completely factual and will conform to the highest
ethical standards of advertising. The Participating Independent Broker will
actively promote the HomeLife name in its local market area. The Participating
Independent Broker will submit any proposed advertising or promotional material
to HomeLife and will obtain HomeLife's written approval prior to the use thereof
by the Participating Independent Broker. It is expressly understood that
HomeLife shall not, by virtue of its approval of any proposed advertising or
promotional material, assume any responsibility for the contents thereof.
3.05 The Participating Independent Broker acknowledges that the National and
International Referral service is an integral part of the Plan and is necessary
to assure superior client services and to permit all participating independent
brokers to realize the capabilities and benefits which result from participating
in a national and international real estate organization, and therefore, the
Participating Independent Broker will process all referrals through the National
and International Referral Service.
3.06 It will maintain with reputable insurers, at its own expense, insurance
coverage of such type and in such amounts as HomeLife may reasonably specify
from time to time in writing. Such insurance shall fully protect HomeLife (as
an additional named insured) and the Participating Independent Broker against
loss or damage, including property damage and any liability occurring in
conjunction with the operation of the Office and the Business. HomeLife reserves
the right to require the Participating Independent Broker to obtain errors and
omissions and professional liability insurance naming HomeLife and its
Affiliates and their respective officers and directors as additional insured.
This provision shall not limit the Participating Independent Broker's right to
obtain such insurance on its own behalf or in amounts and coverage's which
exceed those which may be required by HomeLife. If the Participating
Independent
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Broker fails to maintain any required insurance or fails to pay any insurance
premiums, HomeLife may, at its option, obtain such insurance or pay such
premiums on behalf of and for the account of the Participating Independent
Broker, and the Participating Independent Broker agrees to reimburse HomeLife
upon demand for all amounts so paid. HomeLife will not be liable to the
Participating Independent Broker, in whole or in part, for any claims arising
out of the Participating Independent Broker's errors or omissions or
professional liability, irrespective of any insurance which the Participating
Independent Broker may have obtained. The indemnification provisions of
Article 9.01 of this Agreement shall apply to any claims against HomeLife
involving alleged errors or omissions or professional liability by the
Participating Independent Broker.
3.07 It will comply, within a reasonable time period, and in any event not later
than thirty (30) days from the date of receipt thereof from HomeLife, with the
requirements of all written memoranda from time to time issued by HomeLife for
use by its Participating Independent Brokers, setting forth the guidelines to be
used in updating, modifying or improving the operation of the Business. The
Participating Independent Broker agrees that HomeLife shall have the right ,
from time to time, to add to, modify or otherwise change the Plan, including,
without limitation, the adoption and use of new or substituted trade marks,
service marks, trade names, graphics and logotypes (any such tradenames,
trademarks, service marks, graphics and logotypes being included in the meaning
of "Marks"), new products or services and new techniques, and the Participating
Independent Broker agrees to implement and use all such additions and changes at
its own cost, unless otherwise specified by HomeLife.
3.08 Upon written notice from HomeLife, the Participating Independent Broker
shall direct any duties and obligations due to HomeLife under this Agreement to
the agent or area representative designated by HomeLife pursuant to Article 2.10
of this Agreement. Such duties and obligations may include the Participating
Independent Broker's obligations under Article 3.00 and the payment of the
service fees and advertising contributions provided for in Articles 4.02, parts
of 1 and 2 of Schedule "B", parts of 1 and 2 of Schedule "C", and 6.02 of this
Agreement.
ARTICLE 4.00 - FEES AND REPORTS
4.01 The Participating Independent Broker agrees to pay to HomeLife, a
franchise fee in the amount of TWELVE THOUSAND FIVE HUNDRED
Dollars ($ 12,500.00 ), which fee will be
deemed fully earned and non-refundable. See Schedule D for payment
arrangements.
4.02 The Participating Independent Broker shall pay to HomeLife a monthly
royalty fee and a monthly advertising contribution as follows:
(i) The amount of the monthly royalty fee and the monthly advertising
contribution shall be determined in accordance with the tables in Parts 1 and 2
of Schedule "B", Parts 1 and 2 of Schedule "C . If the term of this Agreement
starts other than on the first day of a month then the amount of the fee and
contribution for the first month shall be reduced proportionately, as necessary,
to account for the number of days during the month that this Agreement is in
effect.
As provided in the table in Part 1 of Schedule "B", Part 1 of Schedule "C",
the monthly fee is never less than $375.00
(ii) At any time and from time to time after the first contract
year, HomeLife shall have the right to increase any of the amounts in
Schedule "B" and Schedule "C" (including the $375.00 minimum fee), provided
that such increase shall be applied to all Participating Independent Brokers
whose Franchise Agreements have been in force for at least twelve (12)
calendar months at the time of increase. This right shall not be exercised
more frequently than semi-annually, and any increase shall not exceed 2% of
the monthly service fee and advertising contribution being paid at the time
of the increase. Schedule "B" and Schedule "C" shall be deemed to be
automatically amended to reflect the increased amounts.
4.03 All amounts due and owing to the franchisor under the terms of the
agreement and as per attached schedules and addendum's, including, without
limiting the generality of the foregoing:
(a) initial franchise fees;
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(b) $375.00, minimum, monthly fees (W/FIXED DOLLAR OPTION);
(c) 3.5% Royalty Fees up to $1,000,000.00 in Gross Commission Income and
1% Royalty Fees thereafter (W/PERCENTAGE OF GROSS OPTION);
(d) $375.00 Monthly Minimum Fee(W/PERCENTAGE OF GROSS OPTION);
(e) $375.00, minimum, monthly fees (W/FIXED MONTHLY ROYALTY FEES OPTION);
(f) Advertising contribution of $25.00 per representative, for first 20
representatives, and $2.00 per representative (over 20) thereafter (W/FIXED
DOLLAR OPTION);
(g) 1/2% advertising contribution (W/PERCENTAGE OF GROSS OPTION);
Gross Commission Income (GCI), $125.00 between $100,001.00-$150,000.00
in GCI, $150.00 between $150,001.00-200,000.00 in GCI, $175.00 between
$200,001.00-$300,000.00 in GCI, $200.00 between $300,001.00-$450,000.00 in
GCI, $225.00 between $450,001.00-$600,000.00 in GCI, $250.00 between
$600,001.00-$750,000.00 in GCI, $275.00 between $750,001.00-$900,000.00,
$300.00 between $900,001.00-$1,050,000.00 in GCI, and a minimum monthly
advertising contribution of $400.00 thereafter (W/FIXED MONTHLY ROYALTY FEES
OPTION);
(i) all legal fees and expenses and other collection fees and expenses
incurred by the franchisor in collecting such amounts,
(j) monthly fee of $90.00 per representative for first 45 and $10.00 per
representative thereafter (over 45) (W/FIXED DOLLAR OPTION);
(k) monthly fees of $375.00 for up to $50,000.00 in Gross Commission
Income (GCI), $550.00 between $50,001.00 -$100,000.00 in GCI, $600.00 between
$100,001.00-$150,000.00 in GCI, $650.00 between $150,001.00-$200,000.00 in
GCI, $950.00 between $200,001.00-$300,000.00 in GCI, $1,400.00 between
$300,001.00-$450,000.00 in GCI, $1,800.00 between $450,001.00-$600,000.00 in
GCI, $2,400.00 between $600,001.00-$750,000.00 in GCI, $3,000.00 between
$750,001.00-$900,000.00, $3,600.00 between $900,001.00-$1,050,000.00 in GCI,
and a minimum monthly fee of $4,000.00 thereafter (W/FIXED MONTHLY ROYALTY
FEES OPTION);
will bear interest as follows:
Account overdue less than 30 days: no interest
30 days and over: 1.5% per month
(l) AUDIT-INSPECTIONS: The PARTICIPATING INDEPENDENT BROKER
SHALL permit HOMELIFE at any time during normal business hours to inspect and
audit the business books and records of the PARTICIPATING INDEPENDENT BROKER,
including without limitation, bookkeeping and accounting records, deposit
receipts, financial statement and tax returns. The PARTICIPATING INDEPENDENT
BROKER shall fully cooperate with, representatives of HOMELIFE and independent
accountants hired by HOMELIFE to conduct any such inspection or audit. If any
such inspection or audit disclosures that the PARTICIPATING INDEPENDENT BROKER
has underpaid the Royalty fee and the Advertising contribution, as set forth in
Section 2.0 and Section 3.0 herein by more than 5%, the PARTICIPATING
INDEPENDENT BROKER shall forthwith pay HOMELIFE the amount of such
underpayment, together with all fees, costs and expenses incurred by HOMELIFE in
such inspection and in the collection of such underpaid amounts, and together
with interest of 1.5% per month.
4.04 The Participating Independent Broker shall report to HomeLife on ongoing
basis the name of each sales representative at the time that each is hired or
terminated.
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ARTICLE 5.00 - PROPRIETARY MARKS
5.01 The Participating Independent Broker agrees, with respect to its use of the
Marks to:
(a) Use only the Marks designated by HomeLife, and use them only in the
manner authorized and permitted by HomeLife;
(b) Use the Marks only for the purposes of the Business and only for the
Office authorized thereunder, or in advertising for the Business conducted by
such Office;
(c) Operate and advertise the Business only under such trademark symbol
as is designated by HomeLife, except as otherwise agreed to in writing by
HomeLife, which designation shall include, without prefix, the names
"HOMELIFE" and "HomeLife (name of Participating Independent Broker)";
(d) Operate and advertise the Business and identify itself as the owner
of the Business in conjunction with any use of the Marks, including, but not
limited to, advertisements, signs, forms, and contracts, as well as use at
such conspicuous locations at the Office of the Business as HomeLife may, in
writing, designate. The identification shall be in the form which specifies
the Participating Independent Broker's corporate or legal name, together with
the term "Independently Owned and Operated", or such other identification as
shall be approved by HomeLife;
(e) Execute any documents deemed necessary by HomeLife or its counsel to
obtain protection for the Marks or to maintain their continued validity and
enforceability;
(f) Not directly or indirectly contest the validity of the Marks or
HomeLife's right to use and license others to use the Marks;
(g) Promptly notify HomeLife if litigation involving the Marks is
instituted or threatened against the Participating Independent Broker, and
cooperate fully with HomeLife and its affiliates in defending or settling such
litigation.
5.02 The Plan and Marks were developed by HomeLife Realty Services Inc., a
Canadian Corporation, (affiliate) and licensing rights for the United States are
owned by HomeLife, Inc. an Nevada Corporation ("The Parent"). The use of the
Marks by the Participating Independent Broker pursuant to this Agreement does
not expressly or impliedly give it any ownership interest or other interest in
or to the Marks, except the non-exclusive franchise granted by this Agreement.
Any and all goodwill arising from the Participating Independent Broker's use of
the Marks in its Business will inure solely and exclusively to the benefit of
HomeLife, and upon expiration or termination of this Agreement, no monetary
amount will be assigned or attributable to any goodwill associated with its use
of the Plan or the Marks. The right granted hereunder to the Participating
Independent Broker to use the Marks is nonexclusive. HomeLife has and retains
the rights, among others, (i) to license others to use the Marks, in addition to
those licenses already granted to existing franchisees; (ii) to develop and
establish other plans and systems using the same or similar Marks, or any other
proprietary marks and to grant licenses or franchises thereto without providing
any rights therein to the Participating Independent Broker. HomeLife reserves
the right to substitute different Marks for use in identifying the Plan and the
businesses operating pursuant to the Plan if the Marks can no longer be used in
the United States, or if HomeLife, in its sole discretion, determines that
substitution of different Marks will be beneficial to the Plan.
ARTICLE 6.00 - ADVERTISING FUND
6.01 a) All advertising contributions made by the participating independent
brokers of HomeLife will be administratively segregated on the books and records
of HomeLife to form an advertising fund (the " Advertising Fund"), although such
contributions may be deposited into HomeLife's general operating account and may
be commingled with HomeLife's general operating funds. The determination of the
allocation of the Fund between advertising and promotional campaigns shall be
solely within the discretion of HomeLife. The Advertising Fund will be utilized
by HomeLife to formulate, develop, produce and conduct advertising and
promotional programs which may cover television and radio commercials,
billboards, busboards, commercial prints, merchandising materials, special
promotions, and similar advertising and promotional materials (collectively the
"Advertising Programs") for the benefit of HomeLife and all of its participating
independent brokers. The Participating Independent Broker acknowledges that the
Advertising Programs are intended to maximize general public recognition and
acceptance of HomeLife for the benefit of HomeLife and all of its participating
independent brokers, and HomeLife undertakes no obligation to ensure that any
participating independent broker benefits directly or pro rata from the
placement or conduct of the Advertising
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Programs. All costs and expenses incurred by HomeLife in formulating,
developing, producing and conducting the Advertising Programs will be paid
from the Advertising Fund. In addition, HomeLife will be entitled to be
reimbursed from the Advertising Fund for its administrative and overhead
expenses incurred in connection with the Advertising Programs and the
administration of the Advertising Fund, to a maximum of twenty (20%) per cent
of the total annual contributions made by all participating independent
brokers to the Advertising Fund. Upon request, HomeLife will make available
to the Participating Independent Broker a certificate from its auditors
certifying the Fund has been administered in accordance with the terms
hereof. HomeLife may delegate its responsibilities in connection with the
Advertising Programs to persons of its own choosing, including persons not
dealing at arm's length with HomeLife. Any such person will be entitled to
receive a fee payable out of the Advertising Fund, in respect of the services
rendered in formulating, developing, producing and conducting the Advertising
Programs, in such amount as HomeLife determines, provided that the fees so
paid are competitive with fees generally being charged by advertising
agencies in the market area in question for services of a comparable nature.
b) The Participating Independent Broker acknowledges that in view of the
fact that HomeLife charges low advertising contribution fees, the
participating independent brokers should invest directly their advertising
money to promote themselves in the community where they transact their
business.
6.02 The parties hereto acknowledge and recognize that special and unique
opportunities for state, regional, national, and international advertising
programs such as the World Series, Super Bowl, special magazine editions, and so
forth, may from time to time arise for which the costs are not otherwise
contemplated by Article 6.01 of this Agreement. The Participating Independent
Broker agrees that, in the event such opportunities do arise, upon approval of
two thirds (66.7%) of all participating independent brokers that would benefit
from such an opportunity, a special advertising assessment may be levied against
all participating independent brokers beneficially affected, which assessment
will be paid in addition to the payments required under Article 4.02(b),(d) or
(e). The Participating Independent Broker will pay his proportionate share of
the special advertising assessment, which shall become due and payable within
fifteen (15) days after receipt by the Participating Independent Broker of the
invoice for such special assessment.
ARTICLE 7.00 - TERMINATION
7.01 HomeLife may terminate this Agreement (except for the provisions of
Articles 7.02 and 12.01, which shall continue in full force and effect) at any
time, effective immediately upon receipt by the Participating Independent Broker
of Notice of Termination if (a) the Participating Independent Broker should
default in the payment of any amounts required to be paid by it to HomeLife
under this Agreement and fails to cure such default within fifteen (15) days of
receipt of notice of default from HomeLife; (b) the Participating Independent
Broker defaults in the performance of any of its other obligations under this
Agreement and fails to cure such default within thirty (30) days of receiving
notice of default from HomeLife; (c) the Participating Independent Broker
becomes insolvent or makes an assignment for the benefit of creditors, or a
petition is filed against, and consented to, or the Participating Independent
Broker is adjudicated a bankrupt or insolvent, or a bill in equity or other
proceedings for the appointment of a receiver or other custodian of the
Participating Independent Broker or its Business or assets is filed and
consented to by the Participating Independent Broker, or a receiver or other
custodian (permanent or temporary) of the Participating Independent Broker's
assets or property or any part thereof is appointed by a court of competent
jurisdiction, or a proceeding for a new composition with creditors under any
state or federal law is instituted by or against the Participating Independent
Broker; (d) the license or registration (under the applicable state laws
governing real estate and business brokers) of either the Participating
Independent Broker or the manager of the Office is terminated or expires; or (e)
the Participating Independent Broker ceases, or takes any steps to cease, the
operation of the Business. (f) HomeLife may terminate this agreement (except
for the provisions of Articles 7.02 and 12.01, which shall continue in full
force and effect) at any time subsequent to a thirty (30) day notice provided to
Participating Independent Broker by HomeLife, effective immediately upon receipt
by the Participating Independent Broker of Notice of Termination thereafter if
(a) the Participating Independent Broker fails to produce more than four (4)
sales per month for six (6) consecutive months following a hundred and twenty
(120) day Notice to Cure provided to Participating Independent Broker by
HomeLife.
7.02 Upon the expiration or termination of this Agreement for any reason, the
Participating Independent Broker shall immediately: (a) discontinue its use of
the Marks in any manner and not thereafter use the Marks or any other trade
8
name, trademark, service mark, graphics, or logotype confusingly similar to the
Marks, and, without limiting the generality of the foregoing, the Participating
Independent Broker shall, within seven (7) days of the date of termination or
expiration of this Agreement, change its name to one which does not include the
Marks or any part thereof, and shall not thereafter identify itself to the
public as a former franchisee of HomeLife; (b) return to HomeLife all copies of
any memoranda, bulletins, and advertising matter pertaining to the Business and
all materials bearing the Marks that are in the possession of the Participating
Independent Broker or its employees or agents; (c) return to HomeLife any
costume of characters in Jerome's Magic World, including but not limited to any
Jerome costume or Crock 'n Roll costume, subject to reimbursement of the fair
market value of such costume at the time of return by HomeLife to Participating
Independent Broker; (d) pay all amounts then owing by the Participating
Independent Broker to HomeLife and its affiliates, agents, or independent
representatives under this Agreement; and, (e) indemnify HomeLife against all
losses, damages, costs and expenses incurred by HomeLife as a result of any
claim made by a third person arising out of or in connection with the Business.
7.03 To the extent that the above provisions of this Article 7.00 regarding
termination are inconsistent with the requirements of the California Franchise
Relations Act, the termination provisions of this Article 7.00 are superseded by
the Act's requirements and shall have no force or effect.
ARTICLE 8.00 - TRADE SECRETS AND NONCOMPETITION
8.01 PARTICIPATING INDEPENDENT BROKER may operate, manage or own an interest in
another franchised HOMELIFE real estate brokerage office.
8.02 To protect HOMELIFE trade secrets and the consideration due HOMELIFE under
this Agreement, PARTICIPATING INDEPENDENT BROKER agrees to the following
restrictions:
(a) PARTICIPATING INDEPENDENT BROKER will not operate, manage, have any
ownership interest, directly or indirectly, in any other franchisor's or
independent real estate brokerage office or related business (requiring a real
estate license, business brokers' license, auctioneer's license or securities
broker/dealer license) located within one hundred (100) miles of California.
Indirect interests and activities include, but are not limited to, acting as an
officer or director, or becoming a partner or shareholder, employee, consultant
or sales associate;
(b) If PARTICIPATING INDEPENDENT BROKER is a partnership, this restriction
applies to each partner. If a corporation is a partner, the restriction applies
to the officers, directors, and any shareholder who owns ten (10%) percent or
more of the corporation's securities;
(c) If PARTICIPATING INDEPENDENT BROKER is a corporation, this restriction
applies to the officers, directors, and any shareholder who owns ten (10%)
percent or more of the corporation's securities;
(d) PARTICIPATING INDEPENDENT BROKER will not sell, lease, rent, sublet,
or allow the use of its business when under contract at existing location to
anyone that will operate, manage, have any ownership interest, directly or
indirectly, in any other franchisor's or independent real estate brokerage
office or related business (requiring a real estate license, business brokers'
license, auctioneer's license or securities broker/dealer license) within a two
(2) mile radius of Participating Independent Broker's office. Indirect interests
and activities include, but are not limited to, acting as an officer or
director, or becoming a partner or shareholder, employee, consultant or sales
associate;
8.03 HOMELIFE may give its prior written consent to waive all or part of the
restrictions in Section 8.02 of this Agreement. Any consent may include
reasonable conditions to protect the HOMELIFE trade secrets and HOMELIFE'S
consideration.
ARTICLE 9.00 - CONFIDENTIAL INFORMATION
9.01 Participating Independent Broker shall not, during the term of this
Agreement or thereafter, communicate, divulge or use for the benefit of any
other person, persons, partnership, association or corporation any confidential
information, knowledge or know-how concerning the methods of operation of the
Plan or under the Marks licensed hereunder that may be communicated to
Participating Independent Broker or of which they are appraised in connection
9
with the operation of the Plan and under the Marks under the terms of this
Agreement. Participating Independent Broker shall divulge such confidential
information only to such of Participating Independent Broker's employees and
agents as must have access to it in order to conduct the Business. Any and all
information, knowledge, know-how and techniques used in or related to the Plan
or under the Marks that HomeLife communicates, in writing or otherwise to
Participating Independent Broker including, but not limited to, the House by
Mouse system software, the Virtual Assistant system software, plans and
specifications, marketing information and strategies, site evaluation and
selection techniques, information related to the finances, operating results and
expiration dates and license agreements between HomeLife and Participating
Independent Broker, and such other information HomeLife designates as
confidential, shall be deemed confidential for purposes of this agreement.
Participating Independent Broker shall not at ant time without HomeLife's prior
written consent, copy, duplicate, record or otherwise reproduce such materials
or information, in whole or in part, nor otherwise make the same available to
any unauthorized person. This covenant shall be perpetually binding upon
Participating Independent Broker.
9.02 If Participating Independent Broker or any management or personnel of
Participating Independent Broker develops any new concept, process, literature,
or improvement in the operation or promotion of the Business on information
provided to them by HomeLife or otherwise developed for the use of the Plan or
Marks, Participating Independent Broker agrees to promptly notify HomeLife and
provide HomeLife with all necessary information concerning same, without
compensation. Participating Independent Broker acknowledge that any such
concept, process, literature, or improvement shall become the property of
HomeLife and HomeLife may utilize or disclose such information to other
licensees as it determines to be appropriate. If, however, Participating
Independent Broker or any management or personnel of Participating Independent
Broker develops any new concept, process, literature, or improvement in the
operation or promotion of the Business independently, not based on or related to
any information provided to them by HomeLife or otherwise developed for use in
the Plan, such concept, process, or improvement shall remain the property of
Participating Independent Broker. Participating Independent Broker shall
provide HomeLife with all necessary information concerning same, and HomeLife
may utilize or disclose such information to other licensees as it determines to
be appropriate.
9.03 Participating Independent Broker acknowledges that any failure to comply
with the requirements set forth in this Section 9.00 shall constitute a material
event of default under Section 7.__ and will cause HomeLife irreparable injury
for which no adequate remedy at law may be available, and Participating
Independent Broker accordingly agrees to the issuance of an injunction(s)
prohibiting any conduct by Participating Independent Broker in violation of the
terms of this Section 9.00. Participating Independent Broker agrees to pay all
expenses (including court costs and reasonable attorneys' fees) incurred by
HomeLife in enforcing this Section 9.00 (including obtaining specific
performance, injunctive relief, or any other equitable or other remedy available
to HomeLife for any violation of the requirements of this Section 9.00).
ARTICLE 10.00 - ASSIGNMENT
10.01 This Agreement is personal to the Participating Independent Broker and
may not be assigned by the Participating Independent Broker, nor may the assets
or shares of the Business be transferred or encumbered, or diluted by
reorganization, transfer, issuance of securities, or otherwise, without in each
case obtaining the prior written consent of HomeLife, which consent will not be
unreasonably withheld. HomeLife may, however, in its sole discretion, require
any, or all, of the following as conditions of its consent: (a) that the
assignee be able to satisfy HomeLife's educational, managerial, and business
standards; satisfactory qualifications regarding moral character, business
reputation, and credit rating; meet requirements for aptitude and ability to
conduct the Business; and have satisfactory financial and capital resources;
(b) that the Participating Independent Broker not be in default of any provision
of this Agreement; (c) that the Participating Independent Broker execute a
mutual general release (exclusive of the obligations referred to in subparagraph
(f), below), in a form prescribed by HomeLife, excluding only such claims as the
Participating Independent Broker may have under the California Franchise
Investment Law or the California Franchise Relations Act; (d) that the assignee
sign HomeLife's then current form of Participating Independent Broker Franchise
Agreement (which may contain different business and financial terms from this
Agreement), for a term ending upon the expiration
10
of this Agreement. The Participating Independent Broker shall pay a transfer
fee of Five Hundred ($500.00) Dollars; (e) that there are satisfactory
personal guarantees for the performance of the assignee's obligations under
the Participating Independent Broker Franchise Agreement; (f) that the
Participating Independent Broker remain liable for all of the obligations to
HomeLife in connection with the Business prior to the effective date of the
assignment, and execute any and all instruments reasonably requested by
HomeLife to evidence such liability; and (g) that the Participating
Independent Broker represent and warrant to HomeLife and the assignee that it
has complied with all laws and regulations in connection with the assignment,
including, without limitation, any applicable bulk sales law.
10.02 HomeLife may assign all or any part of its rights under this
Agreement, provided that any transferee shall agree in writing to assume all
obligations undertaken by HomeLife in this Agreement relating to the rights
assigned. Upon such assignment and assumption, HomeLife shall be under no
further obligation with respect to the matters assigned, but shall continue to
be liable for any breaches of this Agreement by it prior to the effective date
of assignment.
ARTICLE 11.00 - MEDIATION AND ARBITRATION
11.01 MEDIATION.
THE PARTIES AGREE TO SUBMIT ANY CLAIM, CONTROVERSY OR DISPUTE ARISING OUT
OF OR RELATING TO THIS AGREEMENT (AND EXHIBITS) OR THE RELATIONSHIP CREATED BY
SUCH AGREEMENT TO NON-BINDING MEDIATION PRIOR TO FILING SUCH CLAIM, CONTROVERSY
OR DISPUTE IN A COURT. THE MEDIATION SHALL BE CONDUCTED THROUGH EITHER AN
INDIVIDUAL MEDIATOR OR A MEDIATOR APPOINTED BY A MEDIATION SERVICES ORGANIZATION
OR BODY, EXPERIENCED IN THE MEDIATION OF RESIDENTIAL OR COMMERCIAL REAL ESTATE
DISPUTES, AGREED UPON BY THE PARTIES AND, FAILING SUCH AGREEMENT WITHIN A
REASONABLE PERIOD OF TIME AFTER EITHER PARTY HAS NOTIFIED THE OTHER OF ITS
DESIRE TO SEEK MEDIATION OF ANY CLAIM, CONTROVERSY OR DISPUTE (NOT TO EXCEED
(15) DAYS), THROUGH THE AMERICAN ARBITRATION ASSOCIATION IN ACCORDANCE WITH ITS
RULES GOVERNING MEDIATION, AT HOMELIFE'S CORPORATE HEADQUARTERS IN NEWPORT
BEACH, CALIFORNIA. THE COSTS AND EXPENSES OF MEDIATION, INCLUDING COMPENSATION
AND EXPENSES OF THE MEDIATOR, SHALL BE BORNE BY THE PARTIES EQUALLY. IF THE
PARTIES ARE UNABLE TO RESOLVE THE CLAIM, CONTROVERSY OR DISPUTE WITHIN NINETY
(90) DAYS AFTER THE MEDIATOR HAS BEEN APPOINTED, THEN THE DISPUTE SHALL
AUTOMATICALLY BE REFERRED TO ARBITRATION UNDER SECTION 11.02 BELOW, UNLESS THE
CLAIM, CONTROVERSY OR DISPUTE IS EXCLUDED FROM ARBITRATION UNDER SECTION
11.02(c) BELOW. NOTWITHSTANDING THE FOREGOING, THE PARTIES MAY BRING AN ACTION
(1) FOR MONIES OWED, (2) FOR INJUNCTIVE OR OTHER EXTRAORDINARY RELIEF, OR (3)
INVOLVING THE POSSESSION OR DISPOSITION OF, OR OTHER RELIEF RELATING TO, REAL
PROPERTY IN A COURT HAVING JURISDICTION AND IN ACCORDANCE WITH SECTION 11.02(f)
BELOW, WITHOUT SUBMITTING SUCH ACTION TO MEDIATION.
11.02 ARBITRATION.
(a) EXCEPT AS PROVIDED IN THIS AGREEMENT, HOMELIFE AND PARTICIPATING
INDEPENDENT BROKER AGREE THAT ANY CLAIM, CONTROVERSY OR DISPUTE ARISING OUT OF
OR RELATING TO PARTICIPATING INDEPENDENT BROKER'S OPERATION OF THE MARKET CENTER
UNDER THIS AGREEMENT (AND EXHIBITS) INCLUDING, BUT NOT LIMITED TO, THOSE
OCCURRING SUBSEQUENT TO THE TERMINATION OR EXPIRATION OF THIS AGREEMENT, THAT
CANNOT BE AMICABLY SETTLED AMONG THE PARTIES OR THROUGH MEDIATION SHALL, EXCEPT
AS SPECIFICALLY SET FORTH HEREIN AND IN SECTION 11.02 (c), BE REFERRED TO
ARBITRATION IN ACCORDANCE WITH THE RULES OF ARBITRATION OF THE AMERICAN
ARBITRATION ASSOCIATION, AS AMENDED. IF SUCH RULES ARE IN ANY WAY CONTRARY TO
OR IN CONFLICT WITH THIS AGREEMENT, THE TERMS OF THIS AGREEMENT SHALL CONTROL.
ONLY CLAIMS, CONTROVERSIES OR DISPUTES INVOLVING PARTICIPATING INDEPENDENT
BROKER AND NO CLAIMS FOR OR ON
11
BEHALF OF ANY OTHER FRANCHISEE OR SUPPLIER MAY BE BROUGHT BY PARTICIPATING
INDEPENDENT BROKER HEREUNDER.
(b) HOMELIFE AND PARTICIPATING INDEPENDENT BROKER SHALL EACH SELECT ONE
ARBITRATOR. IF THE PARTY UPON WHOM THE DEMAND FOR ARBITRATION IS SERVED FAILS
TO SELECT AN ARBITRATOR WITHIN FIFTEEN (15) DAYS AFTER THE RECEIPT OF THE DEMAND
FOR ARBITRATION, THEN THE ARBITRATOR SO DESIGNATED BY THE PARTY REQUESTING
ARBITRATION SHALL ACT AS THE SOLE ARBITRATOR TO RESOLVE THE CONTROVERSY AT HAND.
THE TWO ARBITRATORS DESIGNATED BY THE PARTIES SHALL SELECT A THIRD ARBITRATOR.
IF THE TWO ARBITRATORS DESIGNATED BY THE PARTIES FAIL TO SELECT A THIRD
ARBITRATOR WITHIN FIFTEEN (15) DAYS, THE THIRD ARBITRATOR SHALL BE SELECTED BY
THE AMERICAN ARBITRATION ASSOCIATION OR ANY SUCCESSOR THERETO, UPON APPLICATION
BY EITHER PARTY. ALL OF THE ARBITRATORS SHALL BE EXPERIENCED IN THE ARBITRATION
OF RESIDENTIAL OR COMMERCIAL REAL ESTATE DISPUTES. THE ARBITRATION SHALL TAKE
PLACE AT HOMELIFE'S CORPORATE HEADQUARTERS IN NEWPORT BEACH, CALIFORNIA. THE
AWARD OF THE ARBITRATORS SHALL BE FINAL AND JUDGMENT UPON THE AWARD RENDERED IN
ARBITRATION MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF. THE COSTS
AND EXPENSES OF ARBITRATION, INCLUDING COMPENSATION AND EXPENSES OF THE
ARBITRATORS, SHALL BE BORNE BY THE PARTIES AS THE ARBITRATORS DETERMINE.
(c) NOTWITHSTANDING THE ABOVE, THE FOLLOWING SHALL NOT BE SUBJECT TO
ARBITRATION:
(1) DISPUTES AND CONTROVERSIES ARISING FROM THE SHERMAN ACT, THE
CLAYTON ACT OR ANY OTHER FEDERAL OR STATE ANTITRUST LAW;
(2) DISPUTES AND CONTROVERSIES BASED UPON OR ARISING UNDER THE LANHAM
ACT, AS NOW OR HEREAFTER AMENDED, RELATING TO OWNERSHIP OR VALIDITY OF THE
TRADEMARKS;
(3) DISPUTES AND CONTROVERSIES BASED UPON THE NONPAYMENT OF MONEY BY
PARTICIPATING INDEPENDENT BROKER HEREIN, UNLESS HOMELIFE, AT ITS OPTION, ELECTS
TO SUBMIT SUCH MATTER TO ARBITRATION; AND
(4) DISPUTES AND CONTROVERSIES RELATING TO ACTIONS TO OBTAIN
POSSESSION OF THE PREMISES OF THE MARKET CENTER UNDER LEASE OR SUBLEASE.
(d) IF HOMELIFE SHALL DESIRE TO SEEK SPECIFIC PERFORMANCE OR OTHER
EXTRAORDINARY RELIEF INCLUDING, BUT NOT LIMITED TO, INJUNCTIVE RELIEF UNDER THIS
AGREEMENT AND ANY AMENDMENTS THERETO THEN ANY SUCH ACTION SHALL NOT BE SUBJECT
TO ARBITRATION AND HOMELIFE SHALL HAVE THE RIGHT TO BRING SUCH ACTION AS
DESCRIBED IN SECTION 11.02(f).
(e) IN PROCEEDING WITH ARBITRATION AND IN MAKING DETERMINATIONS HEREUNDER,
THE ARBITRATORS SHALL NOT EXTEND, MODIFY OR SUSPEND ANY TERMS OF THIS AGREEMENT
OR THE REASONABLE STANDARDS OF BUSINESS PERFORMANCE AND OPERATION ESTABLISHED BY
HOMELIFE IN GOOD FAITH. NOTICE OF OR REQUEST TO OR DEMAND FOR ARBITRATION SHALL
NOT STAY, POSTPONE OR RESCIND THE EFFECTIVENESS OF ANY TERMINATION OF THIS
AGREEMENT.
EXCEPT AS STATED ABOVE, WITH RESPECT TO ALL CLAIMS SET FORTH ABOVE IN
SECTION 11.02(c) AND (d) OR WHICH, AS A MATTER OF LAW OR PUBLIC POLICY
CANNOT BE SUBMITTED TO ARBITRATION, PARTICIPATING INDEPENDENT BROKER
AND THE
12
CONTROLLING PRINCIPALS HEREBY IRREVOCABLY SUBMIT THEMSELVES TO
THE JURISDICTION OF THE STATE COURTS OF ORANGE COUNTY, CALIFORNIA AND
THE NINTH DISTRICT FEDERAL COURT. PARTICIPATING INDEPENDENT BROKER
AND THE CONTROLLING PRINCIPALS HEREBY WAIVE ALL QUESTIONS OF PERSONAL
JURISDICTION FOR THE PURPOSE OF CARRYING OUT THIS PROVISION.
PARTICIPATING INDEPENDENT BROKER AND THE CONTROLLING PRINCIPALS HEREBY
IRREVOCABLY AGREE THAT SERVICE OF PROCESS MAY BE MADE UPON ANY OF THEM
IN ANY PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE
RELATIONSHIP CREATED BY THIS AGREEMENT BY ANY MEANS ALLOWED BY
CALIFORNIA OR FEDERAL LAW. PARTICIPATING INDEPENDENT BROKER AND THE
CONTROLLING PRINCIPALS FURTHER AGREE THAT VENUE FOR ANY LEGAL
PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT SHALL BE
ORANGE COUNTY, CALIFORNIA; PROVIDED, HOWEVER, WITH RESPECT TO ANY
ACTION (1) FOR MONIES OWED, (2) FOR INJUNCTIVE OR OTHER EXTRAORDINARY
RELIEF OR (3) INVOLVING POSSESSION OR DISPOSITION OF, OR OTHER RELIEF
RELATING TO , REAL PROPERTY, HOMELIFE MY BRING SUCH ACTION IN ANY
STATE OR FEDERAL DISTRICT COURT WHICH HAS JURISDICTION. WITH RESPECT
TO ALL CLAIMS, CONTROVERSIES, DISPUTES, OR ACTIONS, THIS AGREEMENT
SHALL BE INTERPRETED AND CONSTRUED UNDER CALIFORNIA LAW (EXCEPT FOR
CALIFORNIA CHOICE OF LAW RULES).
11.03 GENERAL.
(a) No right or remedy conferred upon or reserved to HomeLife or
Participating Independent Broker by this Agreement is intended to be, nor shall
be deemed, exclusive of any other right or remedy herein or by law or equity
provided or permitted, but each shall be cumulative of every other right or
remedy.
(b) Nothing herein contained shall bar HomeLife's right to obtain
injunctive relief against threatened conduct that will cause it loss or damages,
under the usual equity rules, including the applicable rules for obtaining
restraining orders and preliminary injunctions.
(c) Participating Independent Broker and HomeLife acknowledge that the
parties' agreement regarding applicable state law and forum set forth in
Sections 11.01 and 11.02 above provide each of the parties with the mutual
benefit of uniform interpretation of this Agreement and any dispute arising out
of the parties' relationship hereto. Each of Participating Independent Broker
and HomeLife further acknowledge the receipt and sufficiency of mutual
consideration for such benefit.
(d) Participating Independent Broker and HomeLife acknowledge that the
execution of this Agreement occurred in California and further acknowledge that
the performance of certain obligations of Participating Independent Broker
arising under this agreement, including but not limited to the payment of monies
due hereunder and the satisfaction of certain training requirements of HomeLife,
shall occur in California.
ARTICLE 12.00 - GENERAL
12.01 The Participating Independent Broker understands and agrees that
nothing in this Agreement authorizes it to make any contract, agreement,
warranty or representation on behalf of HomeLife, its Affiliates, agents or area
representatives or to incur any debt or other obligation in the name of
HomeLife, its Affiliates, agents or area
13
representatives. HomeLife and its Affiliates, agents and area representatives
will in no event assume liability for, or be deemed liable hereunder, as a
result of any such action. Furthermore, neither HomeLife nor its Affiliates,
agents or area representatives will be liable by reason of any act, error or
omission of the Participating Independent Broker in its conduct of the Business
or for any claim or judgment arising therefrom against the Participating
Independent Broker or HomeLife or its Affiliates, agents or area
representatives. The Participating Independent Broker shall indemnify and hold
HomeLife, its Affiliates, agents and area representatives and their respective
officers, directors, stockholders and employees harmless against any and all
claims arising directly or indirectly from, as a result of or in connection
with the Participating Independent Broker's operation of the Business, as well
as the costs, including attorney's fees, of defending against them.
12.02 The parties are independent contractors and the Participating
Independent Broker has no authority to bind HomeLife, or any person or
corporation with whom HomeLife may at any time or times enter into an
association for the provision of products, benefits or services to the
Participating Independent Broker in any manner whatsoever; or, to assume any
obligation, express or implied, for or on behalf of, or in the name of,
HomeLife. This Agreement shall not be construed to constitute the Participating
Independent Broker as a partner, joint venture, agent, employee or
representative of HomeLife for any purpose. The Participating Independent
Broker agrees to use its own name in obtaining and signing contracts and in
making purchases, so that the transaction clearly indicates that it is acting on
its own behalf and not on behalf of HomeLife.
12.03 If any provision of this Agreement is invalid, illegal, or incapable
of being enforced by reason of any rule of law or public policy, such provision
shall be severed from this Agreement. All provisions of this Agreement are
severable, and this Agreement shall be interpreted and enforced as if all
completely invalid or unenforceable provisions were not contained herein, and
partially valid and enforceable provisions shall be enforced to the extent that
they are valid and enforceable. If any applicable and binding law or the public
policy of any jurisdiction requires a greater prior notice of termination or
refusal to renew this Agreement than is required hereunder, or the taking of
some other action not required hereunder, or if under applicable and binding law
or the public policy of any jurisdiction any provision of this Agreement or any
specification, standard or operating procedure prescribed by HomeLife is invalid
or unenforceable, the prior notice or other actions required by such law or rule
shall be substituted for the notice requirements hereof, and such invalid or
unenforceable specification, standard, or operating procedure shall be modified
to the extent required to be valid and enforceable. Such modifications to this
Agreement shall be effective only in such jurisdiction and shall be enforced as
originally made and entered into in all other jurisdictions. All other
provisions of this Agreement shall nevertheless remain in full force and effect.
No provision of this Agreement shall be deemed to be dependent upon any other
provision, unless expressly so stated in this Agreement.
12.04 HomeLife may by written instrument unilaterally waive any obligation
of, or restriction upon, the Participating Independent Broker under this
Agreement. No acceptance by HomeLife of any payment by the Participating
Independent Broker and no failure, refusal or neglect of HomeLife to exercise
any right under this Agreement or to insist upon full compliance by the
Participating Independent Broker of its obligations under this Agreement will
constitute a waiver of any provisions of this Agreement. The Participating
Independent Broker agrees that it will not, on the grounds of alleged
non-performance by HomeLife of any of its obligations under this Agreement,
withhold payment of any monthly service fee, advertising contribution, or other
amount due to HomeLife under the terms of this Agreement.
12.05 All notices, requests, demands, or other communications ("Notices")
required or permitted to be given by one party to the other shall be given by
prepaid registered or certified mail, return receipt requested, or by such other
method as provides written evidence or receipt, including confirmed delivery fax
addressed to the other party, or personally delivered to the other party, at the
address for it set forth on the first page of this Agreement or at such other
address as may be given by one party to the other in writing from time to time.
12.06 This Agreement, including its Schedules, constitutes the entire
Agreement between the parties with respect to the matters herein and supersedes
all previous Agreements and understandings between the parties. THE
PARTICIPATING INDEPENDENT BROKER ACKNOWLEDGES THAT HOMELIFE HAS MADE NO
14
REPRESENTATIONS, WARRANTIES, PROMISES OR INDUCEMENTS, DIRECT OR INDIRECT,
EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE CONCERNING THIS AGREEMENT, THE
BUSINESS, OR CONCERNING ANY OTHER MATTER, EXCEPT AS EXPRESSLY SET OUT IN THIS
AGREEMENT.
12.07 THE PARTICIPATING INDEPENDENT BROKER ACKNOWLEDGES THAT HE HAS RECEIVED
THE SIGNING COPIES OF THIS AGREEMENT AT LEAST FIVE (5) BUSINESS DAYS PRIOR TO
THE DATE ON WHICH HE ACTUALLY SIGNED THIS AGREEMENT.
12.08 THE PARTICIPATING INDEPENDENT BROKER ACKNOWLEDGES THAT IT RECEIVED THE
DISCLOSURE DOCUMENT REQUIRED BY THE FEDERAL TRADE COMMISSIONS' TRADE REGULATION
RULE ON FRANCHISING AT LEAST TEN (10) BUSINESS DAYS PRIOR TO THE DATE ON WHICH
THIS AGREEMENT WAS EXECUTED.
15
GUARANTY
Each undersigned Guarantor (hereinafter "Guarantor"), jointly and severally,
covenants, promises and agrees to pay or cause to be paid all monies which
become payable by PARTICIPATING INDEPENDENT BROKER under this Agreement. Each
Guarantor adopts each and every covenant to be performed by PARTICIPATING
INDEPENDENT PROGRAM and agrees with HOMELIFE to perform and observe all such
covenants. HOMELIFE entering into this Agreement with PARTICIPATING INDEPENDENT
BROKER constitutes consideration for this Guaranty. The receipt and sufficiency
of this consideration is acknowledged by the signature of the Guarantor.
WITNESS:
Individual Guarantor
----------------------------------------
Name (Typed or Printed)
----------------------------------------
Signature
----------------------------------------
Name (Typed or Printed)
----------------------------------------
Signature
----------------------------------------
Name (Typed or Printed)
----------------------------------------
Signature
DATED THIS______ DAY OF__________________, 199__.
HOMELIFE REALTY SERVICES, INC.
________________________________ By:___________________________________
Witness
Title:__________________________________
16
DATED THIS______ DAY OF__________________, 199__.
PARTICIPATING INDEPENDENT BROKER
_________________________________ By:___________________________________
Witness
Title:__________________________________
_________________________________ By:___________________________________
Witness
Title:__________________________________
_________________________________ By:___________________________________
Witness
Title:__________________________________
_________________________________ By:___________________________________
Witness
Title:__________________________________
17
ACCEPTANCE
HOMELIFE REALTY SERVICES, INC., a Delaware corporation
By: ____________________________________________________
Title:__________________________________________________
Dated: _________________________________________________
18
SCHEDULE "A" TO FRANCHISE AGREEMENT
PART I - MARKS
Application Application Registration
Trademark Number Date Number & Date
- --------- ------ ---- -------------
HOMELIFE 628161 11/03/86 1,499,886
08/09/88
HOMELIFE (Design) 610000 07/17/86 1,622,830
11/13/90
HOMELIFE REALTY
SERVICES 73/628165 11/03/86 1,622,832
11/13/90
IT'S WHAT EVERYONE'S
LOOKING FOR 74/029587 02/16/90 1,689,472
05/19/92
BLUEPRINT TO BUYING
REAL ESTATE 74/085456 08/06/90 Pending
BLUEPRINT TO BUYING
A HOME 74/162913 05/02/91 1,790,657
08/31/93
BLUEPRINT TO CORPORATE
RELOCATION 74/085493 08/03/90 Pending
BLUEPRINT TO SELLING
REAL ESTATE 74/085457 08/06/90 Pending
BLUEPRINT TO SELLING
YOUR HOME 74/162839 05/02/91 1,798,139
10/12/93
FOCUS 20/20 74/085458 08/06/90 Pending
FOCUS 20/20 AND DESIGN 74/085454 08/06/90 1,693,490
06/09/92
FAMILY HOMELIFE REALTY
SERVICES 810079 06/29/89 1,642,990
FAMILY HOMELIFE REALTY
SERVICES AND DESIGN 810077 06/29/89 1,629,423
12/25/90
FAMILY LIFE HR AND DESIGN 610003 07/17/86 1,460,306
10/06/87
GNOMELIFE 74/133566 01/25/91 1,746,039
01/12/93
19
PART I - MARKS
APPLICATION APPLICATION REGISTRATION
TRADEMARK NUMBER DATE NUMBER & DATE
- --------- ------ ---- -------------
GNOMELIFE AND DESIGN 74/133567 01/25/91 1,746,040
01/12/93
JEROME 74/133564 01/25/91 1,705,378
08/04/92
JEROME AND DESIGN 74/133572 01/25/91 1,751,527
02/09/93
JEROME THE GNOME 74/133565 01/25/91 1,751,526
02/09/93
HIGHER STANDARDS
AND DESIGN 74/248921 02/24/92 1,754,192
02/23/93
PART II - LOCATION OF OFFICE
Address: ____________________________
City: ____________________________
State: California
Zip Code: ___________________________
Tel. #: ___________________________
Fax #: ___________________________
The Franchisee shall be open and operating not later than
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SCHEDULE "B" TO FRANCHISE AGREEMENT
ROYALTY FEES AND ADVERTISING CONTRIBUTIONS
FIXED DOLLAR OPTION
PART 1: MONTHLY ROYALTY FEES
Service Fee per Number of Representatives
Representative* Licensed in the Month
--------------- --------------------------
$90.00 each First 45
$10.00 for each additional More than 45
over the 45
* A minimum fee of $375.00 is payable if the fee calculated in accordance
with the table would be less than $375.00 for the month.
PART 2: MONTHLY ADVERTISING CONTRIBUTIONS
Advertising Contribution Number of Representatives
Representative Licensed in the Month
------------------------- -------------------------
$25.00 each First 20
$2.00 for each additional More than 20
over the 20
The minimum fee of $375.00 is payable if the fee calculated in accordance with
the table would be less than $375.00 for the month.
Payment of Monthly Royalty Fee, in the amount of $
___________________________________ per month, and the Monthly Contribution to
the Advertising Fund, in the amount of $_________________ per month shall
commence on ___________________________, and shall continue thereafter in
accordance with the terms of this Agreement and the Schedules thereto.
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SCHEDULE "C" TO FRANCHISE AGREEMENT
ROYALTY FEES AND ADVERTISING CONTRIBUTIONS
FIXED MONTHLY ROYALTY FEES OPTION
PART 1: MONTHLY ROYALTY FEES (FIXED)
The Fixed Royalty Fees are a fixed monthly payment based upon the previous
years Gross Commission Income (GCI) per franchised location as calculated below.
These fees will be due on the first day of the month. Payments received after
the tenth of the month will be deemed late, and assessed interest in accordance
with the maximum permitted by usury laws. Any late payment will bear interest
from the date due until paid.
Level GCI Monthly Fee Yearly
Total
1 $ 0 - 50,000 $ 375 $ 4,500
2 $ 50,001 - 100,000 $ 550 $ 6,600
3 $ 100,001 - 150,000 $ 600 $ 7,200
4 $ 150,001 - 200,000 $ 650 $ 7,800
5 $ 200,001 - 300,000 $ 950 $11,400
6 $ 300,001 - 450,000 $1,400 $16,800
7 $ 450,001 - 600,000 $1,800 $21,600
8 $ 600,001 - 750,000 $2,400 $28,800
9 $ 750,001 - 900,000 $3,000 $36,000
10 $ 900,001 - 1,050,000 $3,600 $43,200
11 $ 1,050,001 & Over $4,000 $48,000
PART 2: FIXED ADVERTISING FEES
The Fixed Advertising Fees are a fixed monthly payment based upon the
previous years Gross Commission Income (GCI) per franchised location as
calculated below. These fees will be due on the first day of the month.
Payments received after the tenth of the month will be deemed late, and assessed
interest in accordance with the maximum permitted by usury laws. Any late
payment will bear interest from the date until paid.
Level GCI Monthly Fee Yearly
Total
1 $ 0 - 50,000 $ 100.00 $ 1,200
2 $ 50,001 - 100,000 $ 100.00 $ 1,200
3 $ 100,001 - 150,000 $ 125.00 $ 1,500
4 $ 150,001 - 200,000 $ 150.00 $ 1,800
5 $ 200,001 - 300,000 $ 175.00 $ 2,100
6 $ 300,001 - 450,000 $ 200.00 $ 2,400
7 $ 450,001 - 600,000 $ 225.00 $ 2,700
8 $ 600,001 - 750,000 $ 250.00 $ 3,000
9 $ 750,001 - 900,000 $ 275.00 $ 3,300
10 $ 900,001 - 1,050,000 $ 300.00 $ 3,600
11 $1,050,001 & Over $ 400.00 $ 4,200
Payment of Monthly Royalty Fee, in the amount of $ _____________per month, and
the Monthly Contribution to the Advertising Fund, in the amount of
$______________ per month shall commence on ___________________, and shall
continue thereafter in accordance with the terms of this Agreement and the
Schedules thereto.
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SCHEDULE "D" TO FRANCHISE AGREEMENT
AMOUNT OF INITIAL FRANCHISE FEE: $12,500.00
Payment of the Initial Franchise Fee, in the amount of $ ______________
was be paid in full ______________________ in cash/check (No.
__________________).
OR
Payment of the Initial Franchise Fee, in the amount of $________________ will
be paid according to the following schedule and shall commence on
________________________, and shall continue thereafter in accordance with the
terms of this Agreement and the Schedules thereto.
Interest rate is 8 (%) percent.
PAYMENT UPON SIGNING: $ ___________________________________
Date second installment is due: Amount of second Installment: $_________
Date third installment is due: Amount of third Installment: $ ________
Date fourth installment is due: Amount of fourth Installment: $_________
Date fifth installment is due: Amount of fifth Installment: $_________
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SCHEDULE "E" TO FRANCHISE AGREEMENT
EXCLUSIVE AREA OR TERRITORY
The Franchisor may grant to the Franchisee an exclusive geographic area
in which no other HomeLife franchise office shall be located without the
expressed consent of the Franchisee. However, the exclusive area will not
apply to, or exclude the establishment and operation of a "Target Market
Location Franchise." Notwithstanding the prior granting of any exclusivity to
any Franchisee, the Franchisor or designee, shall have the right to place a
"Target Market Location Franchise" within any pre-existing exclusive area
only after offering the Franchisee who owns that exclusive area the First
Right of Refusal to purchase the "Target Market Location Franchise." The
First Right of Refusal must be exercised within thirty (30) days of written
notice given by the Franchisor to the Franchisee. Franchisee's failure to
exercise the First Right of Refusal within the above thirty (30) days shall
automatically allow Franchisor the right to grant the "Target Market Location
Franchise" to another Franchisee.
A "Target Market Location Franchise," or a Franchisee employing less
than 19 sales representatives will not be granted, or be entitled to, any
exclusive area or territory. A Franchisee may elect not to be granted an
exclusive area or territory.
The size of the exclusive area or territory shall be the distance
specified in the following table measured from the Franchisee's approved
location. The exclusive area or territory is contingent upon the Franchisee
maintaining the required number of sales representatives specified in the
table below.
MINIMUM EXCLUSIVITY TABLE
Number of Sales Exclusive Area, Within
Representatives Following Distance
Employed by From Franchisee's
Franchisee Location
--------------- ----------------------
1 - 18 No exclusive area
19 - 28 1/4 mile
29 - 39 1/2 mile
40 or more 1 mile
The Franchisor has the right to configure the above distance from
Franchisee's location by way of different shapes of boundaries, which may
vary, but will be to the satisfaction of the Franchisee. The exclusive area
will be granted for six months, commencing from the date of the agreement.
To maintain this exclusivity for the balance of the Franchise Agreement, the
Franchisee must maintain the minimum number of sales representatives
required. If after six months, due to a decrease in sales representatives,
Franchisee falls below minimum exclusivity standards for the size of the
designated area, the Franchisee shall have an additional six months upon
receipt of written notice by Franchisor to bring sales representatives to
minimum exclusivity standards. Upon failure to meet these minimum exclusivity
standards, Franchisor may elect, at its sole discretion, to decrease or
eliminate the exclusive area or territory in accordance with the Minimum
Exclusivity Table.
THE FRANCHISEE ACKNOWLEDGES, UNDERSTANDS, AND ACCEPTS THAT THE
FRANCHISOR CAN NOT CONTROL NOR PROJECT THE NUMBER OF SALES AGENTS WITHIN ANY
FRANCHISE OFFICE REGARDLESS OF THE SIZE OF THE AREA OR TERRITORY.
The initial exclusive area shall be detailed in Schedule "E" Exclusive
Boundary Description, and will follow the spirit of the Minimum Exclusivity
Table.
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Notwithstanding the above terms and conditions for an Exclusive Area or
Territory, Franchisor has the right to grant different size exclusive
territory in a rural and non-metropolitan area and to Franchisees with more
than one office, which will be outlined for the Franchisee in Schedule "E"
Exclusive Area Boundary Description.
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SCHEDULE "E" TO FRANCHISE AGREEMENT
EXCLUSIVE AREA BOUNDARY DESCRIPTION
26