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Franchise Agreement
Franchise Agreement
Important Notice: This
document is composed for reference purposes only.
It does not carry any liabilities or legal responsibility.
All terms and conditions should subject to completed
and signed documents.
Topic Page
I. GRANT OF FRANCHISE AND LICENSE
1.1 Grant of Franchise
II. FRANCHISED SANJIU TCM MEDICAL
CENTRE
2.1 Franchised Sanjiu TCM Medical
Centre
2.2 Territory
2.3 Construction and Renovation
III. TERM OF FRANCHISE AGREEMENT
3.1 Term
3.2 Renewal
3.3 Form and Manner of Renewal
3.4 Conditions Precedent to Renewal
3.5 Non-Applicability of Renewal
Provision
3.6 Notice Required by Law
IV. PAYMENTS BY FRANCHISEE
4.1 Initial Franchise Fee
4.2 Continuing Royalty
4.3 Advertising Fee
4.4 Other Payments to Company
4.5 Gross Sales
4.6 Reporting
4.7 Payments
4.8 Application of Funds
4.9 Interest on Late Payments
4.10 Audit Expenses
V. TRADEMARKS
5.1 Non-ownership of Trademarks
5.2 Use of Trademarks
5.3 Non-Use of Trade Name
5.4 Use of other Trademarks
5.5 Defense of Trademarks
5.6 Prosecution of Infringers
5.7 Modification of Trademarks
5.8 Acts in Derogation of the Trademarks
5.9 Prohibition Against Disputing
Company's Rights
5.10 Assumed Name Registration
VI. ADVERTISING AND PROMOTION BY
FRANCHISEE
6.1 General
6.2 Local Advertising
6.3 Co-Op Advertising
6.4 Telephone Numbers and Directory
Advertising
6.5 Promotional Campaigns
6.6 Advertising Fund
VII. OPERATION OF THE BUSINESS
7.1 Products
7.2 Commitment of Time
7.3 Operations Manua
7.4 Insurance
7.5 Books and Records
7.6 Right of Inspection
7.7 Compliance with Laws
7.8 Suggested Prices
7.9 Cash Registers
VIII. OTHER SERVICES OF THE COMPANY
8.1 Training and Supervision
8.2 Reporting Forms
IX. ASSIGNMENT AND RIGHT OF FIRST
REFUSAL
9.1 Assignment by Company
9.2 Assignment by Franchisee
9.3 Franchisee Information
9.4 Right of First Refusal
9.5 Corporate or Partnership Franchisee
X. NON-COMPETITION
10.1 Genera
10.2 Personnel
XI. DEFAULT AND TERMINATION
11.1 Termination with Notice
11.2 Termination without Notice
(a) Abandonment
(b) Bankruptcy and Insolvency
(c) Death or Incapacity of Franchisee
(d) Knowing Underreporting
(e) Repeated Defaults
(f) Misrepresentation
(g) Violation of Law
11.3 Cross Default
11.4 Notice Required By Law
XII. FURTHER OBLIGATIONS AND RIGHTS
OF THE
PARTIES UPON TERMINATION OR EXPIRATION
12.1 Company's Rights
12.2 Termination Without Prejudice
12.3 Telephone Numbers
XIII. ARBITRATION
13.1 General
XIV. GENERAL CONDITIONS AND PROVISIONS
14.1 Relationship of Franchisee
to Company
14.2 Indemnity by Franchisee
14.3 Company's Right To Cure Defaults
14.4 Waiver and Delay
14.5 Survival of Covenants
14.6 Successors and Assigns
14.7 Joint and Several Liability
14.8 Governing Law
14.9 Entire Agreement
14.10 Titles For Convenience
14.11 Gender
14.12 Severability
14.13 Counterparts
14.14 Fees and Expenses
14.15 Notices
XV. SUBMISSION OF AGREEMENT
15.1 General
XVI. ACKNOWLEDGMENT
16.1 General
UNIT FRANCHISE AGREEMENT
THIS FRANCHISE AGREEMENT ("Agreement")
is made and entered into this__________ day of
_______________, 20 ___________(the "Execution
Date"), by and between SANJIU E-TECH CORPORATION,
a Canadian corporation, located at 3570 Victoria
Park Ave., North York, Ontario, Canada, ("Company"),
and located at _____________________________________("Franchisee")
with reference to the following facts:
A. Company has developed and is continuing to
develop certain training, management and marketing
techniques and other procedures and methods of
operation (the "System") used in connection
with the development, operation and maintenance
of Sanjiu TCM Medical Centres operated under the
Trademarks, as defined below, featuring and such
other authorized menu items as Company may authorize
or direct from time to time (the "Franchised
Business").
B. Company is the owner of certain proprietary
and other property rights and interests in and
to the "SANJIU E-TECH CORPORATION" name
and such other trademarks, trade names, service
marks, logotypes, insignias, trade dress and designs
which Company may from time to time authorize
or direct Franchisee to use in connection with
the Franchised Business (the "Trademarks").
C. Franchisee desires to obtain a franchise and
license to use the Company's System and Trademarks
in conjunction with the operation of one (1) "SANJIU
E-TECH CORPORATION" Sanjiu TCM Medical Centre
(the "Sanjiu TCM Medical Centre"), and
Company desires to grant to Franchisee said franchise
and license in accordance with the terms and conditions
of this Agreement, and the Operations Manual (as
defined below) pertaining thereto.
WHEREFORE IT IS AGREED
I. GRANT OF FRANCHISE AND LICENSE
1.1 Grant of Franchise
Company hereby grants to Franchisee and Franchisee
hereby accepts, a license to use and display the
Trademarks, and the right to use the System, in
connection with the operation of one (1) Sanjiu
TCM Medical Centre at, and only at, the location
described below upon the terms and subject to
the provisions of this Agreement and all ancillary
documents thereto, during the term hereof.
II. FRANCHISED SANJIU TCM MEDICAL
CENTRE
2.1 Franchised Sanjiu TCM Medical
Centre
(a) The Franchised Business shall be located
at the following address , __________________
(the "Location").
(b) If the Location is leased by Franchisee:
(i) The lease shall be subject to Company's prior
approval, a true and correct copy of which shall
be delivered to Franchisor prior to Franchisee's
execution thereof. Following approval by Company,
and execution by Franchisee, a fully executed
copy of said lease shall be promptly delivered
to Company.
(ii) Franchisee shall duly and timely perform
all of the terms, conditions, covenants and obligations
imposed upon him under the lease.
(iii) The lease shall contain such terms as may
be required by the Operations Manual (as defined
in paragraph 7.3 below) and shall provide that
it may not be modified or amended without Company's
prior written consent which shall not be unreasonably
withheld, and that Company shall be provided with
copies of all such modifications or amendments.
2.2 Territory
For so long as this Agreement shall remain in
effect, Company shall not operate or grant a franchise
to any other entity to operate a Franchised Business
within the territory set forth on Exhibit "A,"
which is attached hereto and incorporated herein
by this reference (the "Territory").
2.3 Construction and Renovation
(a) If at the time of execution of this Agreement
the Sanjiu TCM Medical Centre has not been constructed,
or if the building at the Location has been constructed
but does not comply with Company's standards in
effect for new SANJIU TCM Medical Centres at the
time of the execution of this Franchise Agreement,
Franchisee shall at his sole cost and expense
promptly cause the Sanjiu TCM Medical Centre and
Location to be constructed, equipped and improved
in accordance with such standards. Promptly following
the execution hereof, but in any event prior to
the renovation or construction of the Sanjiu TCM
Medical Centre and Location, the Company shall
provide Franchisee with copies of Company's specifications
for the design and layout of the Sanjiu TCM Medical
Centre and required building, fixtures, equipment,
furnishings, decor, and signs. Franchisee shall,
in all respects, comply with all such specifications
and criteria unless Company shall, in writing,
agree to modifications thereof. Such modifications
will customarily be made only if required by zoning
or similar laws, landlord requirements, unique
plot problems or similar matters. Franchisee shall
employ architects and general contractors of his
own selection, and at his sole cost and expense,
to prepare such architectural, engineering and
construction drawings and site plans, and to obtain
all permits and approvals, required to construct,
remodel, renovate, and/or equip the Sanjiu TCM
Medical Centre and Location. When completed, said
Sanjiu TCM Medical Centre and Location shall in
all respect comply with the Company's specifications
therefor.
(b) Franchisee shall commence construction or
renovation, as the case may be, as soon as possible
but in no event later than two (2) months after
the date of execution of this Agreement.
(c) Subject only to causes beyond the reasonable
control of Franchisee, such as, by way of illustration,
strikes, material shortages, fires and other acts
of God, which Franchisee could not by the exercise
of due diligence have avoided, Franchisee shall
complete construction or renovation, as the case
may be, of the Sanjiu TCM Medical Centre and all
improvements therein, including installation of
all fixtures, signs, equipment and furnishings
as soon as possible but in no event later than
three (3) months after commencement thereof. At
all times prior to Franchisee commencing the operation
of the Franchised Business, Company shall have
the right to inspect and examine the premises
and any fixtures, signs, furnishings and equipment
for the purpose of insuring compliance with Company's
standards and specifications.
(d) Franchisee agrees that the operation of the
Franchised Business by Franchisee shall commence
not later than six (6) months following the date
of the execution hereof.
(e) The time periods for the commencement and
completion of construction and the installation
of fixtures, signs, machinery and equipment as
referred to in this Paragraph 2.3 are of the essence
of this Agreement.
(f) If Franchisee fails to perform his obligations
contained in this Paragraph 2.3, the Company may
deem the Franchisee's failure to so perform his
obligations as aforesaid to constitute a material
breach of this Agreement, in which event the Company
shall notify Franchisee to such effect. If the
Franchisee cures such default within fifteen (15)
days after Company's notice of the material breach
specified in Company's notice, which time shall
be of the essence of this Agreement, such default
shall be deemed cured. If, however, Franchisee
fails to cure such default within said fifteen
(15) day period, then in such event this Agreement
shall be deemed terminated without any further
notice.
III. TERM OF FRANCHISE AGREEMENT
3.1 Term
(a) Unless sooner terminated
in accordance herewith, and subject to paragraphs
3.1(b) below, the term of this Agreement (the
"Term") shall commence on the date that
the Franchised Sanjiu TCM Medical Centre shall
be opened for business and shall expire ten (10)
years thereafter.
(b) Notwithstanding paragraph
3.1(a), if this Agreement is executed by Franchisee
in connection with Franchisee's purchase of an
existing Franchised Business, the Term hereof
shall be equal to the then remaining term of the
franchise agreement which relates to the Franchised
Business so purchased.
3.2 Renewal
(a) Subject to paragraph 3.4,
Franchisee shall have the right, but not the obligation,
following the expiration of the Term hereof, to
enter into a new franchise agreement in the form
then generally being offered to prospective "SANJIU
E-TECH CORPORATION" franchisees in the state
in which the Sanjiu TCM Medical Centre is located,
as modified pursuant to paragraph 3.2(b) hereof
(the "Renewal Franchise Agreement")
for a term equal to ten (10) years, or the duration
of Franchisee's right to occupy the Location,
whichever is less. The term of such new franchise
agreement shall commence upon the date of expiration
of the Term hereof.
(b) Notwithstanding anything
herein contained to the contrary, the Renewal
Franchise Agreement, if executed by the parties
hereto, shall differ, and be modified, from Company's
then-current form of Franchise Agreement in the
following respects:
(i) Franchisee shall not
be required to pay any Initial Fee (as defined
in paragraph 4.1 below); and
(ii) All reference to a renewal
term contained in the Renewal Franchise Agreement
shall be deleted and Franchisee shall have no
further right of renewal.
3.3 Form and Manner of Renewal
If Franchisee desires to exercise its right to
enter into the Renewal Franchise Agreement (the
"Renewal Right"), it shall do so in
the following manner:
(a) Not less than eight (8)
months nor more than twelve (12) months prior
to the expiration of the Term of this Agreement,
Franchisee shall request from Company in writing
a copy of its then-current Offering Circular (including
its then-current franchise agreement).
(b) Within thirty (30) days
after receipt of Franchisee's said written request,
Company shall deliver to Franchisee a copy of
its Offering Circular and two (2) copies of its
Renewal Franchise Agreement and promptly upon
receipt of same Franchisee shall, in writing,
acknowledge receipt thereof by executing and returning
to Company the form prescribed in said Offering
Circular.
(c) No sooner than ten (10)
business days but no more than twenty (20) business
days after Franchisee receives Company's then-current
Offering Circular and said copies of the Renewal
Franchise Agreement, Franchisee shall execute
two (2) copies of said Renewal Franchise Agreement
and return same to Company.
(d) If Franchisee shall fail
to perform any of the acts, or deliver any of
the notices required pursuant to the provisions
of subsections (a), (b) or (c) of this paragraph
3.3, in a timely fashion, such failure shall be
deemed an election by Franchisee not to exercise
his right and option to enter into the Renewal
Franchise Agreement, and such failure shall cause
Franchisee's said right and option to automatically
lapse and expire.
(e) Provided that Franchisee
shall have exercised his Renewal Right, in the
form and manner herein described, and shall have
complied with all of the conditions contained
in paragraph 3.4 hereof, Company shall execute
the Renewal Franchise Agreement executed by Franchisee
and shall, promptly at the expiration of the Term
hereof, deliver one (1) fully executed copy of
the Renewal Franchise Agreement to Franchisee.
3.4 Conditions Precedent to
Renewal
Franchisee's right to enter into the Renewal
Franchise Agreement, in accordance with the provisions
of Section 3.2 hereof, is conditioned upon Franchisee's
fulfillment of each and all of the following conditions
precedent:
(a) At the time Franchisee
notifies Company of its election to renew pursuant
to paragraph 3.3(a) above and at all times from
such notification to the time of the commencement
of the term of the Renewal Franchise Agreement,
Franchisee shall have fully performed all of his
obligations under this Agreement, the Operations
Manual and under all other agreements which may
during said period be in effect between Franchisee
and Company.
(b) Franchisee shall have
not committed two (2) or more events constituting
default during any twenty-four (24) month period
during the Term of this Agreement, whether or
not such defaults were cured.
(c) Franchisee shall have
obtained the right to continue to occupy the Sanjiu
TCM Medical Centre following the expiration of
the Term hereof.
(d) Prior to the expiration
of this Agreement, Franchisee shall have remodeled
and renovated the Sanjiu TCM Medical Centre to
conform to the Company's then current standards
and specifications for remodelled Sanjiu TCM Medical
Centres, which have been approved by Company within
twelve (12) months of the date of the expiration
of this Agreement.
3.5 Non-Applicability of Renewal
Provision
If Franchisee has executed this Agreement as
a Renewal Franchise Agreement, Paragraphs 3.2,
3.3, and 3.4 hereof shall not be applicable, and
Franchisee shall have no further right to renew
upon the expiration of the Term hereof.
3.6 Notice Required by Law
If applicable law requires that Company give
notice to Franchisee prior to the expiration of
the Term, this Agreement shall remain in effect
on a month to month basis until the Company has
given the requisite notice required by such applicable
law. Notwithstanding anything to the contrary
contained herein, if Company is not offering new
franchises, is in the process of revising, amending
or renewing its form of franchise agreement or
offering circular, or is not lawfully able to
offer Franchisee its then-current form of franchise
agreement, at the time Franchisee advises Company
pursuant to paragraph 3.3(a) hereof that Franchisee
desires to renew, Company may, in its sole subjective
discretion, (i) offer to renew this Agreement
upon the same terms set forth herein for a renewal
term determined in accordance with paragraph 3.2
hereof, or (ii) offer to extend the Term hereof
on a month to month basis following the expiration
of the Term hereof for as long as it deems necessary
or appropriate so that it may lawfully offer its
then-current form of franchise agreement.
IV. PAYMENTS BY FRANCHISEE
4.1 Initial Franchise Fee
(a) Unless the Franchise Agreement
is executed in connection with the renewal or
transfer of an existing franchise, Franchisee
shall pay to Company the sum of Three Thousand
Dollars ($3,000) as an initial franchise fee (the
"Initial Fee"), payable upon the execution
of this Agreement. Except as herein expressly
provided this fee is not refundable in whole or
in part, and shall be deemed fully earned upon
the execution hereof.
(b) If Franchisee has executed
this Franchise Agreement in connection with a
transfer of an existing franchisee's Franchised
Business, no Initial Fee shall be payable, however,
Franchisee shall pay Company a transfer fee in
the amount of two thousand dollars ($2,000) which
is intended to cover the Company's administrative
costs and expenses associated with the transfer,
and, in addition, a training fee in the amount
of three thousand dollars ($3,000) unless transferee
is then an existing Franchisee of Company and
has satisfactorily completed Company's training
program.
4.2 Continuing Royalty
Subject to paragraph 4.2(b) below, Franchisee
shall pay to Company a continuing royalty (the
"Continuing Royalty") equal to five
percent (5%) of Franchisee's Gross Sales for the
products supplied by SANJIU and 1.5% (1.5%) of
Franchisee's Gross Sales for the products other
than supplied by SANJIU, as hereinafter defined,
in accordance with paragraph 4.7 below.
4.3 Advertising Fee
In addition to all other payments provided for
herein, the Franchisee shall pay to Company, concurrently
with the submission of Franchisee's Royalty payment
as described in paragraph 4.2 above, an Advertising
Fee in an amount equal to two percent (2%) of
the Franchisee's Gross Revenues, which shall be
contributed to the Company's Advertising Fund,
which shall be administered in accordance with
Section 6.6 below.
4.4 Other Payments to Company
In addition to all other payments provided herein,
Franchisee shall pay to Company, or its subsidiaries,
affiliates or designees, as applicable, promptly
when due:
(a) The amount of all sales
taxes, use taxes, personal property taxes and
similar taxes, imposed upon Franchisee and required
to be collected or paid by Company on account
of goods or services furnished by the Franchisee
by sale, lease or otherwise or on account of royalties
or initial franchise fees collected by Company
from Franchisee.
(b) All amounts advanced by
Company or which Company has paid, or for which
Company has become obligated to pay on behalf
of Franchisee for any reason whatsoever.
(c) All sums due on account
of the purchase of products or services supplied
by Company or any affiliate of Company to Franchisee.
4.5 Gross Sales
Gross Sales are divided into two categories
a. Products and services supplied by SANJIU and
bear the name of, or related to "SANJIU".
b. Products and service, not supplied by, or related
to "SANJIU", but approved by SANJIU,
to be sold in the centers.
The term "Gross Sales of (a) " as used
herein shall mean all sums received or receivable
by Franchisee, directly or indirectly, from or
in connection with the operation of the Franchised
Business, including revenues generated from any
and all sources on account of the sale of products,
and from the rendering of services of any kind
or nature, at or from the Sanjiu TCM Medical Centre,
or under, or in any way connected with the use
of, the Trademarks, whether for cash, credit,
or barter.
The term "Gross Sales of (b)"as used
herein shall mean all sum received or receivable
by Franchisee, directly from or in connection
with the products which carry brand name other
than SANJIU and under, or in any way not connected
with the use of, the SANJIU Trademarks.
There shall be deducted from Gross Sales for
purposes of said computation (but only to the
extent that they have been included) the amount
of all sales tax receipts or similar tax receipts
which, by law, are chargeable to customers, if
such taxes are separately stated when the customer
is charged, and the amount of any actual refunds,
rebates, over-rings, and allowances given to customers
in good faith.
4.6 Reporting
(a) On Monday of each week
during the Term hereof, Franchisee shall submit
a weekly sales report, on a form prescribed by
Company, reporting all Gross Sales for the preceding
week. In addition, on or before the tenth (10th)
day of each month during the Term hereof, simultaneously
with Franchisee's Royalty payment, Franchisee
shall submit a monthly sales summary signed by
Franchisee, on a form prescribed by Company, reporting
all Gross Sales for the preceding month, and such
additional financial information as Company may
from time to time request. (Such reports are hereinafter
referred to as "Weekly Sales Reports",
"Monthly Sales Reports", or collectively
as "Gross Sales Reports").
(b) On or before the thirtieth
(30th) day following each calendar quarter during
the Term hereof, Franchisee shall submit to Company
financial statements for the preceding quarter,
including a balance sheet and profit and loss
statement, prepared in the form and manner by
the Company and in accordance with generally accepted
accounting principles.
(c) Within sixty (60) days
following the end of each of calendar year, Franchisee
shall submit to Company an unaudited annual financial
statement prepared in accordance with generally
accepted accounting principles, and in such form
and manner prescribed by Company, which shall
be certified by Franchisee to be accurate and
complete.
4.7 Payments
(a) On or before the tenth
(10th) day of each month during the Term hereof,
all at one time, Franchisee shall pay Company
the full amount of:
(i) the Continuing Royalty
due to Company for the preceding month;
(ii) the Advertising Fee
due to Company for the preceding month; and
(b) Company shall have the
right, but not the obligation, at any time during
the Term hereof, to require Franchisee to instruct
its bank to pay the amounts identified in this
Section 4.7 directly to Company from Franchisee's
account, by such automatic payment mechanism as
Company may reasonably designate and upon the
terms and conditions set forth herein. Upon Company's
written notice of such election, Franchisee shall
so instruct its bank.
4.8 Application of Funds
If Franchisee shall be delinquent in the payment
of any obligation to Company hereunder, or under
any other agreement with Company, Company shall
have the absolute right to apply any payments
received from Franchisee to any obligation owed,
whether under this Agreement or otherwise, notwithstanding
any contrary designation by Franchisee as to application.
4.9 Interest on Late Payments
If Franchisee shall fail to pay to Company the
entire amount of Franchisee's Royalty Fee, Advertising
Fee, or any other sums owed to Company, promptly
when due, Franchisee shall pay to Company, in
addition to all other amounts which are due but
unpaid, interest on the unpaid amounts, from the
due date thereof, at the rate of one and one-half
percent (1-1/2%) per month, or the highest rate
allowable under applicable law, whichever is less.
4.10 Audit Expenses
If Company should cause an audit to be made and
the Gross Sales as shown by Franchisee's records
for any reporting period should be found to be
understated by more than two percent (2%), Franchisee
shall be responsible for and shall immediately
pay to Company the cost of such audit (in addition
to all amounts which are due but unpaid); otherwise,
the cost of such audit shall be paid by Company.
V. TRADEMARKS
5.1 Non-ownership of Trademarks
Nothing herein shall give Franchisee any right,
title or interest in or to any of the Trademarks,
except a mere privilege and license during the
term hereof, to display and use the same according
to the terms and conditions herein contained.
5.2 Use of Trademarks
(a) Subject to paragraph 5.7,
Franchisee agrees that the Franchised Business
herein licensed and franchised shall be named
"SANJIU " without any suffix or prefix
attached thereto and that Franchisee shall use
and display such of the Company's Trademarks and
such signs, advertising and slogans as Company
may from time to time prescribe or approve.
(b) Upon expiration or sooner
termination of this Agreement, Company may, if
Franchisee does not do so, execute in Franchisee's
name and on Franchisee's behalf, any and all documents
necessary in Company's judgment to end and cause
the discontinuance of Franchisee's use of the
Trademarks and Company is hereby irrevocably appointed
and designated as Franchisee's attorney-in-fact
so to do.
5.3 Non-Use of Trade Name
If Franchisee is a corporation or general or
limited partnership, it shall not use Company's
Trademarks, or Company's trade name, or any words
or symbols which are confusingly similar thereto,
as all or part of Franchisee's name.
5.4 Use of Other Trademarks
Franchisee shall not display the trademark, service
mark, trade name, insignia or logotype of any
other person, firm or corporation in connection
with the operation of the Franchised Business
without the express prior written consent of Company,
which may be withheld in its sole subjective discretion.
5.5 Defense of Trademarks
In the event that Franchisee receives notice,
or is informed, of any claim, suit or demand against
Franchisee on account of any alleged infringement,
unfair competition, or similar matter on account
of its use of the Trademarks in accordance with
the terms of this Agreement, Franchisee shall
promptly notify Company of any such claim, suit
or demand. Thereupon, Company shall take such
action as it may deem necessary and appropriate
to protect and defend Franchisee against any such
claim by any third party and shall indemnify Franchisee
against any loss, costs or expenses incurred in
connection therewith. Franchisee shall not settle
or compromise any such claim by a third party
without the prior written consent of Company.
Company shall have the sole right to defend, compromise
or settle any such claim, in its discretion, at
Company's sole cost and expense, using attorneys
of its own choosing, and Franchisee agrees to
cooperate fully with Company in connection with
the defense of any such claim. Franchisee may
participate at its own expense in such defense
or settlement, but Company's decisions with regard
thereto shall be final.
5.6 Prosecution of Infringers
In the event that Franchisee shall receive notice
or is informed or learns that any third party,
which he believes to be unauthorized to use the
Trademarks, is using the Trademarks or any variant
thereof, Franchisee shall promptly notify Company
of the facts relating to such alleged infringing
use. Thereupon, Company shall, in its sole discretion,
determine whether or not it wishes to take any
action against such third person on account of
such alleged infringement of the Trademarks. Franchisee
shall have no right to make any demand against
any such alleged infringer or to prosecute any
claim of any kind or nature whatsoever against
such alleged infringer for or on account of such
infringement.
5.7 Modification of Trademarks
From time to time, in the Operations Manual or
in directives or bulletins supplemental thereto,
Company may add to, delete or modify any or all
of the Trademarks. Franchisee shall use, or cease
using, as may be applicable, the Trademarks, including
but not limited to, any such modified or additional
trade names, trademarks, service marks, logotypes
and commercial symbols, in strict accordance with
the procedures, policies, rules and regulations
contained in the Operations Manual or in written
directives issued by Company to Franchisee, as
though they were specifically set forth in this
Agreement.
5.8 Acts in Derogation of the
Trademarks
Franchisee agrees that the Trademarks are the
exclusive property of Company and Franchisee now
asserts no claim and will hereafter assert no
claim to any goodwill, reputation or ownership
thereof by virtue of Franchisee's licensed and/or
franchised use thereof, or otherwise. Franchisee
agrees that it will not do or permit any act or
thing to be done in derogation of any of the rights
of Company in connection with the same, either
during the Term of this Agreement or thereafter,
and that it will use the Trademarks only for the
uses and in the manner licensed and/or franchised
hereunder and as herein provided.
5.9 Prohibition Against Disputing
Company's Rights
Franchisee agrees that he will not, during or
after the Term of this Agreement, in any way dispute
or impugn the validity of the Trademarks licensed
hereunder, or the rights of Company thereto, or
the rights of Company or other franchisees of
Company to use the same, both during the Term
of this Agreement and thereafter.
5.10 Assumed Name Registration
In the event that Franchisee is required to do
so by any statute or ordinance, Franchisee shall
promptly upon the execution of this Agreement
file with applicable government agencies or offices,
a notice of its intent to conduct its business
under the name "SANJIU E-TECH CORPORATION".
Promptly upon the expiration or termination of
this Agreement for any reason whatsoever, Franchisee
shall promptly execute and file such documents
as may be necessary to revoke or terminate such
assumed name registration, and if Franchisee shall
fail to promptly execute and file such documents
as may be necessary to effectively revoke and
terminate such assumed name registration, Franchisee
hereby irrevocably appoints Company as his Attorney-in-fact
to do so for and on behalf of Franchisee.
VI. ADVERTISING AND PROMOTION
BY FRANCHISEE
6.1 General
Franchisee shall conduct all local advertising
and promotion in accordance with such provisions
with respect to format, content and media as are
from time to time contained in the Operations
Manual. No advertising material may be used by
Franchisee without Company's prior written approval.
6.2 Local Advertising
In addition to the advertising fees required
to be paid by Franchisee pursuant to paragraphs
4.3 and 6.4 hereof, Franchisee shall expend not
less than two percent (2%) of its Gross Sales
during each semi-annual period for local advertising
relating to Franchisee's Sanjiu TCM Medical Centre.
6.3 Co-op Advertising
(a) The Company shall have
the right at any time, and from time to time,
to create Co-op Advertising Regions. If and when
Company creates a Co-op Advertising Region for
the region in which the Franchised Business is
located, Franchisee shall become a subscriber
and member thereof, and participate therein, in
accordance with the Subscription Agreement and
By-laws of such Co-op Advertising Region. The
size and content of such regions, when and if
established by the Company, shall be binding upon
Franchisee and all other "SANJIU E-TECH CORPORATION"
franchisees similarly situated who are required
by the terms of their franchise agreements to
so participate. At all meetings of such Co-op
Advertising Region each participating Franchisee,
and Company, shall be entitled to one (1) vote
for each of its "SANJIU " Sanjiu TCM
Medical Centres located within such Co-op Advertising
Region. At any time upon reasonable notice, twenty
percent (20%) of the eligible member votes, a
majority of the directors, or Company by itself,
may call a meeting of all members of a Co-op Advertising
Region. Except as provided in paragraph 6.3(b),
and except for any amendment of the Certificate
of Incorporation or By-laws of the Co-op Advertising
Region (which shall require the affirmative vote
of the Company), all matters concerning operation
of a Co-op Advertising Region shall be decided
by majority vote, provided that a quorum is present,
and such vote shall bind all members of said region,
including Company. For purposes hereof, a quorum
shall consist of members entitled to cast at least
50% of the total number of votes in such Cooperative
Advertising Region.
(b) Upon the approval of at
least a majority of the votes represented by all
of the members of the Co-op Advertising Region,
the Co-op Advertising Region members may vote
to require each member to contribute up to, but
not greater than__________, percent (_____ %)
and not less than one percent (1%) of the Gross
Sales of all of such member's "SANJIU E-TECH
CORPORATION" Sanjiu TCM Medical Centres in
said Co-op Advertising Region for a regional co-op
advertising program or programs. In the event
of approval of such additional regional advertising
contributions as aforesaid, each franchisee, including
Franchisee, and Company, shall contribute to the
Co-op Advertising Region in accordance with said
vote.
(c) Expenditures made by Franchisee
pursuant to any Co-op Advertising Region program,
in accordance with paragraph 6.3, shall be credited
against Franchisee's local advertising requirement
described in paragraph 6.2 above.
6.4 Telephone Numbers and Directory
Advertising
(a) Franchisee shall at its
sole expense subscribe for and maintain throughout
the term hereof one (1) or more telephone numbers,
which shall be listed in the white pages and,
at Franchisee's option, in the yellow pages of
the telephone directory or directories servicing
Franchisee's Territory and such adjacent or nearby
areas as Company may designate. In all advertising
placed by Franchisee in which such listed number(s)
appear, there shall not appear any other telephone
numbers subscribed for by Franchisee personally
or in the conduct of any other business.
6.5 Promotional Campaigns
From time to time during the term hereof, Company
shall have the right to establish and conduct
promotional campaigns on a national or regional
basis, which may by way of illustration and not
limitation promote particular products or marketing
themes. Franchisee agrees to participate in such
promotional campaigns upon such terms and conditions
as the Company may establish. Franchisee acknowledges
and agrees that such participation may require
Franchisee to purchase point of sale advertising
material, posters, flyers, product displays and
other promotional material. Nothing herein shall
be construed to require Franchisee to charge any
prices for the good and services offered at Franchisee's
Sanjiu TCM Medical Centre other than those determined
by Franchisee in his sole and absolute discretion.
6.6 Advertising Fund
(a) Company administratively
segregates on its books and records all advertising
fees received from Franchisee and all other franchisees
of Company. Company will similarly contribute
to the Advertising Fund for each Franchised Business
that Company operates, the amount that Company
would be required to contribute if it were a franchisee.
(b) If less than the total
of all contributions to the Advertising Fund are
expended during any fiscal year, such excess may
be accumulated for use during subsequent years.
If Company advances money to the Advertising Fund,
Company will be entitled to be reimbursed for
such advances.
(c) Advertising Fund revenues
will be expended for national, regional, or local
advertising, public relations or promotional campaigns
or programs designed to promote and enhance the
image, identity or patronage of franchised subfranchised
and Company-owned "SANJIU E-TECH CORPORATION"
businesses. Such expenditures may include, without
limitation (a) conducting marketing studies, and
the production and purchase of advertising art,
commercials, musical jingles, print advertisements,
point of sale materials, media advertising, outdoor
advertising art, vehicle decals, and direct mail
pamphlets and literature; and (b) a payment to
Company or its affiliates, for internal expenses
incurred in connection with the operation of its
advertising department, if any, and the administration
of the Advertising Fund; provided, however, that
Company shall not allocate more than fifteen percent
(15%) of all such Advertising Fund contributions
to said internal expenses incurred by Company
or its affiliates. Actual direct costs incurred
by Company or its affiliates for the production
of advertising shall not be subject to or included
in said Fifteen percent (15%) limitation. Company
shall determine, in its final and subjective discretion,
exercised in good faith, the cost, media, content,
format, style, timing, allocation and all other
matters relating to such advertising, public relations
and promotional campaigns. Nothing herein shall
be construed to require Company to allocate or
expend Advertising Fund Contributions so as to
benefit any particular franchisee or group of
franchisees on a pro rata or proportional basis
or otherwise. Any additional advertising shall
be at the sole cost and expense of Franchisee,
subject to the provisions set forth herein in
Article VII.
(d) Upon written request,
Company shall furnish to Franchisee within one
hundred twenty (120) days after the end of each
calendar year, a report for the preceding year,
prepared and certified correct by an officer of
the Company containing the calculations of the
amount which Company actually expended during
such calendar year and the amount remaining which
shall be carried over for use during the following
year(s).
VII. OPERATION OF THE BUSINESS
7.1 Products
(a) Company may, from time
to time throughout the Term hereof in its sole
subjective discretion, require that Franchisee
use, offer and/or promote, and maintain in stock
at the Sanjiu TCM Medical Centre in such quantities
as are needed to meet reasonably anticipated consumer
demand, specifications and/or formulas ("Proprietary
Products"). Franchisee shall purchase Proprietary
Products only from Company or its designees. Company
shall not be obligated to reveal such specifications
and/or formulas of such Proprietary Products to
Franchisee, non-designated suppliers, or any other
third parties.
(b) Company may designate
health food products, Chinese medicine, Chinese
medicine formulae, medical equipment and instrument
and equipment, fixtures, furnishings, equipment,
uniforms, supplies, forms and other products and
equipment other than Proprietary Products which
Franchisee may or must use and/or offer and sell
at the Sanjiu TCM Medical Centre ("Non-Proprietary
Products"). Franchisee may, but shall not
be obligated to, purchase such Non-Proprietary
Products from Company, if Company supplies same.
Franchisee may use, offer or sell only such Non-Proprietary
Products that Company has expressly authorized,
or that were purchased or obtained from Company
or a supplier designated or approved by Company
pursuant to subparagraph (c) below.
(c) Franchisee may purchase
authorized Non-Proprietary Products from (i) Company,
(ii) suppliers designated by Company, or (iii)
suppliers selected by Franchisee and approved
in writing by Company prior to Franchisee making
such purchase(s). With respect to each such supplier
designated or approved by Company, such supplier
shall have demonstrated to the reasonable satisfaction
of Company:
1. Its ability to supply a Non-Proprietary Product
meeting the specifications of Company, which may
include, without limitation, specifications as
to brand name, contents, quality, and compliance
with governmental standards and regulations, and
2. Its reliability with respect to the consistent
quality of its products or services. In the event
that Franchisee should desire to procure any authorized
Non-Proprietary Products from a supplier other
than Company or a supplier previously approved
or designated by Company, Company shall, upon
request of Franchisee, furnish to Franchisee specifications
for such Non-Proprietary Products if such are
not contained in the Operations Manual. Franchisee
shall thereafter deliver written notice to Company
of his desire to seek approval of such supplier,
which notice shall (i) identify the name and address
of such supplier, (ii) contain such information
as may be requested by Company or required to
be provided pursuant to the Operations Manual,
and (iii) identify the authorized Non-Proprietary
Products desired to be purchased from such supplier.
The Company may thereupon request that the proposed
supplier furnish Company at no charge with product
samples, specifications and such other information
as Company may require. Should Company not deliver
to Franchisee, within thirty (30) business days
after it has received such notice and all information
and other items requested by Company in order
to evaluate the proposed supplier, a written statement
of disapproval with respect to such supplier,
it shall be deemed that such supplier is approved
by Company as a supplier of the authorized Non-Proprietary
Products described in such notice until such time
as Company may subsequently withdraw such approval.
As a further condition of such approval, Company
may require such supplier to agree in writing
(i) to provide from time to time upon Company's
request free samples of any Non-Proprietary Product
it intends to supply to Franchisee, and (ii) to
faithfully comply with Company's specifications
for applicable Non-Proprietary Products sold by
it, and (iii) that it shall sell any Non-Proprietary
Product bearing the Company's Trademarks only
to franchisees of Company and only pursuant to
a Trademark License Agreement in form prescribed
by Company. Franchisee shall reimburse Company
for all product testing costs paid by Company
to third parties in determining whether to approve
a supplier selected by Franchisee.
3. Company may, from time to time, authorize
Franchisee to test market products and/or services
in connection with the operation of the Franchise
Business. Franchisee agrees to cooperate with
Company in connection with the conduct of such
test marketing programs and agrees to comply with
the Company's rules and regulations established
from time to time in connection herewith.
7.2 Commitment of Time
During the Term of this Agreement, Franchisee,
or a manager acceptable to Company, shall, except
as otherwise expressly agreed to by Company in
writing, devote his part-time/full time and best
efforts to the operation of the Franchised Business.
If Franchisee is a corporation or a general or
limited partnership, such Franchisee shall select
a full time manager acceptable to Company in its
sole discretion to devote his or her part-time/full-time
and best efforts to the Franchised Business. It
is understood and agreed by the parties hereto
that the Franchised Business shall be operated
during such minimum hours and days established
by Company from time to time, but in any event
during not less than the hours and days during
which other Sanjiu TCM Medical Centres in Franchisee's
vicinity are typically open and operating. If
Franchisee operates more than one (1) Sanjiu TCM
Medical Centre, Franchisee shall devote his part-time/full
time efforts to all such Sanjiu TCM Medical Centres,
collectively, and shall employ a part-time/full
time manager, acceptable to Company, to supervise
each such Sanjiu TCM Medical Centre.
7.3 Operations Manual
(a) Franchisee shall operate
the Franchised Business in strict compliance with
the standard procedures, policies, rules and regulations
established by Company and incorporated in Company's
operations manual(s) as same may be amended and
revised from time to time, including all bulletins,
supplements and ancillary manuals (collectively
referred to herein as the "Operations Manual").
The subject matter of the Operations Manual may
include, without limitation, matters such as:
forms, information relating to product and menu
specifications, cash control, purchase orders,
general operations, labor schedules, personnel,
Gross Sales reports, payroll procedures, training
and accounting; safety and sanitation; design
specifications and color of uniforms; display
of signs and notices; authorized and required
equipment and fixtures, including specifications
therefor; Trademark usage; insurance requirements;
lease requirements; decor; standards for management
and personnel, hours of operation; yellow page
and local advertising formats; standards of maintenance
and appearance of the Sanjiu TCM Medical Centre.
(b) Company shall have the
right to modify the Operations Manual at any time
and from time to time by the addition, deletion
or other modification to the provisions thereof.
All such modifications shall be equally applicable
to all similarly situated franchisees who are
required by their franchise agreements to comply
therewith, and no such modification shall alter
Franchisee's fundamental status and rights under
this Agreement. Modifications in the Operations
Manual shall become effective upon delivery of
written notice thereof to Franchisee unless a
longer period is specified in such written notice.
The Operations Manual, as modified from time to
time as hereinabove provided shall be an integral
part of this Agreement and reference made in this
Agreement, or in any amendments, exhibits or schedules
hereto, to the Operations Manual shall be deemed
to mean the Operations Manual kept current by
amendments from time to time. Upon the execution
of this Agreement, Company shall furnish to Franchisee
one (1) copy of the Operations Manual, unless
Franchisee purchased the Franchised Business from
an existing franchisee or entered into this Agreement
as a Renewal Franchise Agreement. Upon the expiration
or termination of this Agreement for any reason
whatsoever, Franchisee shall immediately return
the Operations Manual to Company. Franchisee shall
not make, or cause or allow to be made, any copies
or reproductions of all or any portion of the
Operations Manual without Company's express prior
written consent.
7.4 Insurance
Company shall prescribe minimum standards and
limits for certain types of insurance coverage
to be purchased by Franchisee, in order to standardize
insurance coverage and afford Franchisee and Company
protection against insurable risks, including
but not limited to business interruption coverage,
and Franchisee shall purchase such insurance promptly
after execution hereof and in any event prior
to commencing construction of the Sanjiu TCM Medical
Centre and keep same in full force and effect
during the entire Term and any extensions of this
Agreement, amending said insurance from time to
time as necessary in order to remain in compliance
with Company's standards and specifications. Said
standards and limits shall be established in Company's
Operations Manual. If Franchisee fails or refuses
to purchase insurance conforming to the standards
and limits prescribed by Company, Company may
obtain, through agents and insurance companies
of its own choosing, such insurance as is necessary
to meet such standards. Payments for such insurance
shall be made by Franchisee. Nothing contained
herein shall be construed or deemed to impose
on Company any duty or obligation to obtain or
maintain any specific forms, kinds or amounts
of insurance for or on behalf of Franchisee, or
as an undertaking or representation by Company
that such insurance as may be obtained by Franchisee
or by Company for Franchisee will insure Franchisee
against any or all insurable risks of loss which
may or can arise out of, or in connection with,
the operation of the Franchisee's Business. Franchisee
may obtain, on Franchisee's own behalf, and at
Franchisee's own cost and expense, such insurance
as Franchisee may from time to time desire, in
addition to that obtained on Franchisee's behalf
by Company, or as may be required herein. All
insurance as may be obtained by Company for Franchisee
may be amended, cancelled, terminated or modified
at any time upon ten (10) days written notice
to Franchisee. All insurance purchased by Franchisee
shall name Company as an additional assured, and
shall provide that Company be given at least ten
10 days prior written notice of any termination,
amendment, cancellation, or modification thereof.
Franchisee shall promptly provide Company with
certificates of insurance evidencing such coverage
no later than ten (10) days after the purchase
of the insurance required herein, and throughout
the term and any extension hereof evidencing continued
coverage.
7.5 Books and Records
(a) Franchisee covenants and
agrees that he shall keep and maintain during
the term hereof full, complete and true records
of all revenues and all expenditures in the form
and manner as specified or directed by Company
in its Operations Manual or otherwise. All financial
records must be kept by Franchisee for a minimum
of five (5) years or such longer period as may
be prescribed by law.
(b) Franchisee shall, from
time to time, deliver to Company such reports
and information as Company shall reasonable require.
All such requirements shall be specified in the
Operations Manual.
7.6 Right of Inspection
Company shall have the right from time to time,
and without prior notice to Franchisee, to send
representatives to the Sanjiu TCM Medical Centre,
to inspect Franchisee's operations, business methods,
service, management, Financial Records and administration,
and to determine the quality thereof and the faithfulness
of Franchisee's compliance with the provisions
of this Agreement and the Operations Manual, and
Franchisee shall cooperate fully with Company
and its representatives and agents with respect
to such inspections. Franchisee shall permit Company
and its representatives or agents to copy, examine
or audit, physically or by electronic or other
methods, with or without notice, the computers,
books of accounts, bank statements, check stubs,
customer invoices, documents, records, papers,
and federal, state and local tax return records
("Financial Records") of Franchisee
at any time or times. Upon fifteen (15) days prior
notice, Franchisee shall deliver all Financial
Records to Company or its representatives at such
location as Company may designate. Upon Company's
request, Franchisee shall permit Company and its
representatives and agents to temporarily remove
such Financial Records to the offices of Company
or such representatives or agents for copying,
review, and/or audit. Company shall bear the cost
of all such inspections, provided that if any
such inspection discloses that Franchisee has
failed to comply with any provision of this Agreement
or the Operations Manual in a manner that would
permit Company to terminate this Agreement if
uncured, the direct costs of such inspections
shall be borne by Franchisee.
7.7 Compliance with Laws
Franchisee shall operate the Franchised Business
in strict compliance with all applicable laws,
rules and regulations of all governmental authorities,
shall comply with all applicable wage, hour, and
other laws and regulations of the federal, state
or local governments (including any and all licensing
requirements), and shall prepare, file and retain
all necessary tax returns, and pay promptly all
taxes imposed upon Franchisee or upon Franchisee's
Franchised Business or property. Franchisee shall
timely file all fictitious business name statements
and similar submissions required by any law, rule
or regulation of any federal, state, or local
government in connection with Franchisee's use
of the Company's Trademarks.
7.8 Suggested Prices
Company may advise Franchisee, from time to time,
as to the various suggested prices. Company and
Franchisee hereby agree that any such list or
schedule of prices furnished to Franchisee by
Company is by way of recommendation only, and
is not to be construed as binding or mandatory
upon Franchisee.
7.9 Cash Registers
Subject to paragraph 7.5(b), Franchisee shall
cause all sales to be registered upon an electronic
non-resettable cash register of the type and having
the characteristics specified by Company, and
shall provide to Company access to permit reading
of the running total of said cash register at
any time or times at Company's sole discretion.
Franchisee shall repair all malfunctions immediately
and shall follow Company's policies and procedures
as established from time to time during any period
during which the cash register is not fully operational.
Franchisee shall provide Company with the serial
number of each such cash register prior to using
same and shall keep and preserve all cash register
tapes, tape readings, and other mechanical or
electronic recordations of cash register readings,
for a period of five (5) years or such longer
period as may be prescribed by the Internal Revenue
Code, or any rules or regulations promulgated
pursuant thereto, or any applicable state law,
rule or regulation.
VIII. OTHER SERVICES OF THE
COMPANY
8.1 Training and Supervision
(a) Unless the Franchisee
is an existing franchisee of the Company at the
time this Agreement is executed, at no extra charge,
Company shall provide initial training in the
Company's System and methods of operation to one
(1) person who shall be the manager of the Sanjiu
TCM Medical Centre, and:
(i) in the case of a corporate
or partnership Franchisee, to a shareholder or
general partner selected by Franchisee and approved
by Company pursuant to paragraph 8.3 hereof; and
(ii) in the case of a sole
proprietor who will not also be the manager of
the Sanjiu TCM Medical Centre, to such sole proprietor.
(b) The initial training program
shall consist of
(i) two (2) weeks of training
at a Company-owned or a franchised SANJIU E-TECH
CORPORATION Sanjiu TCM Medical Centre designated
by the Company,
(ii) one (1) week of training
at Franchisee's Sanjiu TCM Medical Centre prior
to the opening of the Sanjiu TCM Medical Centre
and
(iii) one (1) week of training
at Franchisee's Sanjiu TCM Medical Centre following
the opening thereof.
Company will pay no compensation for any services
performed by such trainee(s), and Franchisee shall
pay all travel and living expenses incurred by
such trainee(s).
(c) Each Sanjiu TCM Medical
Centre manager employed by Franchisee shall attend
the Company's training program, unless waived
by the Company by reason of such manager's prior
training and qualifications. If Company trains
any additional managers or other personnel after
the initial training provided pursuant to Section
8.1(a), Franchisee shall pay the Company's standard
training fees then in effect. The Franchisee,
in all cases, shall bear all travel and living
expenses incurred by such trainee(s), and Company
shall pay no compensation for any services performed
by such trainee(s) in connection with such training
program.
(d) Company may, from time
to time, at its discretion, make available to
Franchisee additional training courses or programs
during the term of this Agreement. Company shall
have the right to make attendance by Franchisee
or the manager of the Sanjiu TCM Medical Centre
mandatory with respect to certain of such courses
and optional with respect to other such training
courses. Company shall make no charge for mandatory
training courses but may, in its discretion, establish
charges applicable to all franchisees similarly
situated, for optional training courses. With
respect to either mandatory or optional training
courses, Franchisee shall pay all transportation
costs, food, lodging and similar costs incurred
in connection with attendance at such courses.
The time and place of both mandatory and optional
training courses shall be at Company's sole discretion.
(e) Company may, from time
to time, at its discretion, cause its field representatives
to visit Franchisee's Sanjiu TCM Medical Centre
for the purpose of rendering advice and consultation
or training, with respect to the Sanjiu TCM Medical
Centre, its operation and performance, and compliance
by Franchisee with the Operations Manual. If provided
at the Franchisee's request, the Company may require
the Franchisee to pay such training charges as
may be then in effect, and to reimburse Company
for all transportation costs, food, lodging and
similar costs incurred by Company and its personnel
in connection with such training.
(f) Franchisee shall have
the right to inquire of Company's headquarters
staff, its field representatives and training
staff with respect to problems relating to the
operation of the Sanjiu TCM Medical Centre, by
telephone or correspondence, and Company shall
use its best efforts to diligently respond to
such inquiries, in order to assist Franchisee
in the operation of the Sanjiu TCM Medical Centre.
8.2 Reporting Forms
Company will furnish to Franchisee the standard
reporting forms and charts of accounts that are
required to be used by Franchisee.
IX. ASSIGNMENT AND RIGHT OF
FIRST REFUSAL
9.1 Assignment by Company
Company shall have the right to assign this Agreement,
and all of its rights and privileges hereunder
to any other person, firm or corporation without
Franchisee's prior consent; provided that, in
respect to any assignment resulting in the subsequent
performance by the assignee of the functions of
Company, the assignee shall expressly assume and
agree to perform such obligations.
9.2 Assignment by Franchisee
(a) This Agreement has been
entered into by Company in reliance upon and in
consideration of the singular personal skill,
qualifications and trust and confidence reposed
in Franchisee or, in the case of a corporate or
partnership franchisee, the principal officers
or partners thereof who will actively and substantially
participate in the ownership and operation of
the Franchised Business. Therefore, neither Franchisee's
interest in this Agreement nor any of its rights
or privileges shall be assigned, transferred,
shared or divided, voluntarily or involuntarily,
by operation of law or otherwise, in any manner,
without the prior written consent of Company and
subject to Company's right of first refusal as
provided for in subparagraph 9.4 of this Article
IX. Notwithstanding anything herein to the contrary,
in the event of the death or legal incapacity
of Franchisee or, if Franchisee is a corporation,
a stockholder owning 20 percent (20%) or more
of the Franchisee's capital stock or voting power,
or if Franchisee is a general or limited partnership,
(i) a general partner, or (ii) a limited partner
owning 20 percent (20%) or greater interest in
the voting power, property, profits or losses
of the partnership, the transfer of Franchisee's
interest in this Agreement or the transfer of
such stockholder's or partner's voting power,
stock or partnership interest to his heirs, personal
representatives or conservators, as applicable,
shall require Company's written consent, but shall
not give rise to Company's right of first refusal
hereunder, although such right shall apply as
to any proposed transfer or assignment by such
heirs, personal representatives or conservators.
(b) Should Company not elect
to exercise its said right of first refusal, or
should such right of first refusal be inapplicable,
as herein provided, Company's consent to such
assignment shall not be unreasonably withheld;
provided, however, that the Company may impose
any reasonable condition(s) to the granting of
its consent. Without limiting the generality of
the foregoing, the imposition of any or all of
the following conditions to its consent to any
such assignment shall be deemed to be reasonable:
(i) that the assignee (or
the principal officers, shareholders, directors
or general partners of the assignee in the case
of a corporate or partnership assignee) demonstrate
that he has the skills, qualifications and economic
resources necessary, in Company's judgment, reasonably
exercised, to own and operate the Franchised Business
contemplated by this Agreement, and by all other
agreements between the Company and such assignee,
and all agreements proposed to be assigned to
such assignee.
(ii) that the assignee expressly
assumes in writing for the benefit of Company
all of the obligations of Franchisee under this
Agreement;
(iii) that the assignee
shall have completed the Company's training program
been to Company's satisfaction, exercised in good
faith;
(iv) that as of the date
of any such assignment, the assignor shall have
fully complied with all of its obligations to
Company, whether under this Agreement or any other
agreement, arrangement or understanding with Company;
(v) that unless Company agrees
otherwise in writing the assignee shall execute
Company's franchise agreement then being offered
to prospective franchisees of Company (except
that the assignee shall not be obligated to pay
the Initial Fee and the Term thereof shall expire
on the stated expiration date of this Agreement)
and assignor shall assign to the assignee the
lease or sublease for the Sanjiu TCM Medical Centre
and all other agreements relating to the Franchised
Business;
(vi) that the lessor, if
any, of the Location shall have consented to the
assignment of the Location lease;
(vii) that the assignee
shall have delivered to Company a letter from
an independent certified public accountant unaffiliated
with Franchisee acknowledging, among other things,
that such accountant has reviewed the terms of
the proposed assignment, transfer or sale with
the prospective assignee;
(viii) that Franchisee
expressly agree in writing to comply with the
non-competition covenants set forth in Article
X hereof and with all other post-termination obligations
contained herein; and
(ix) that the assignee shall pay to Company a
transfer fee equal to Five Thousand Dollars ($5,000)
which is reasonably required to cover Company's
expenses relating to said assignment, and a training
fee of Five Thousand Dollars ($5,000), unless
assignee is an existing Franchisee who has satisfactorily
completed Company's training program.
(c) If Franchisee is a corporation,
or a limited or general partnership, each of the
following shall be deemed to be an assignment
of this Agreement within the meaning of this Section,
(i) the death or legal incapacity of any shareholder
owning twenty percent (20%) or more of the capital
stock or voting power of Franchisee; (ii) if Franchisee
is a general or limited partnership, the withdrawal,
death or legal incapacity of a general partner,
or a limited partner owning twenty percent (20%)
or more of the voting power, property, profits
or losses, of the partnership, or the admission
of any additional general partner or transfer
by any general partner of its interest in the
property, management or profits and/or losses
of the partnership; (iii) the issuance of any
securities by Franchisee which itself or in combination
with any other transaction(s) results in the shareholders
or partners existing as of the Effective Date,
as applicable, owning less than eighty percent
(80%) of the outstanding shares or voting power
of a corporate Franchisee, or of the voting power
or interests in the property, profits or losses
of a limited partnership; (iv) the transfer of
twenty percent (20%) or more in the aggregate
of the capital stock or voting power of Franchisee,
by operation of law or otherwise; and (v) any
merger, stock redemption, consolidation, reorganization
or recapitalization involving Franchisee.
(d) Franchisee shall not in
any event have the right to pledge, encumber,
hypothecate or otherwise give any third party
a security interest in this Agreement in any manner
whatsoever without the express prior written permission
of Company, which permission may be withheld for
any reason whatsoever in Company's sole subjective
judgment.
9.3 Franchisee Information
Company shall have the right, but not the obligation,
to furnish any prospective assignee with copies
of all financial statements which have been furnished
by Franchisee to Company in accordance with this
Agreement during the three (3) year period prior
to the date of the approval of the proposed assignment,
transfer or sale is sought. Company shall also
have the right to advise any prospective assignee
of any uncured breaches or defaults by assignor
under this Agreement, or any other agreement relating
to the Franchised Business proposed to be assigned,
transferred, or sold. Company's approval of such
proposed transaction shall not, however, be deemed
a representation or guarantee by Company that
the terms and conditions of the proposed transaction
are economically sound or that, if the transaction
is consummated, the assignee will be capable of
successfully conducting the Franchised Business
and no inference to such effect shall be made
from such approval.
9.4 Right of First Refusal
Except as expressly provided in paragraph 9.2
to the contrary, any assignment of this Agreement,
or any interest herein, shall be subject to Company's
right of first refusal with respect thereto. Company's
said right of first refusal shall be exercised
in the following manner:
(a) Franchisee shall deliver
to Company a complete copy of a fully executed
Agreement, together with all exhibits thereto,
and setting forth all of the terms and conditions
of the proposed assignments. Additionally, Franchisee
shall deliver to Company all available information
concerning the proposed assignee, including but
not limited to, information concerning the employment
history, financial condition, credit history,
skill and qualifications of the proposed assignee
and, in the case of a partnership or corporate
assignee, of its partners and shareholders as
applicable.
(b) Within ten (10) days after
Company's receipt of such notice (or if Company
shall request additional information, within twenty
(20) days after receipt of such additional information),
Company may either consent or withhold its consent
to such assignment, in accordance with paragraph
9.2 of this Article IX, or, at its option, accept
the assignment to itself or to its nominee upon
the terms and conditions specified in the notice.
Company may substitute an equivalent sum of cash
for any consideration other than cash specified
in said notice.
(c) If Company shall elect
not to exercise its said right of first refusal
and shall consent to such assignment, Franchisee
shall, subject to the provisions of paragraph
9.2 of this Article IX, be free to assign this
Agreement to such proposed assignee on the terms
and conditions specified in said notice. If, however,
Company elects not to exercise its said right
of first refusal and the terms shall be materially
changed, or if more than ninety (90) days shall
pass without such assignment occurring, such changed
terms or lapse of time shall be deemed a new proposal
and Company shall again have such right of first
refusal with respect thereto.
9.5 Corporate or Partnership
Franchisee
(a) If Franchisee is a corporation
or limited partnership, there is set forth below
the name and address of each shareholder or partner
in Franchisee:
NAME ADDRESS NUMBER OF SHARES
OR PERCENTAGE
INTEREST
(b) If Franchisee is a corporation
or general partnership, there is set forth below
the name and address of each director or general
partner, as applicable, of Franchisee:
NAME ADDRESS
(c) The address where Franchisee's
Financial Records, and corporate or partnership
records, as applicable, are maintained is:
(d) If Franchisee is a corporation
or partnership, there is set forth below the names,
and addresses and titles of Franchisee's principal
officers or partners who will be devoting their
full time to the Franchised Business of Franchisee:
NAME ADDRESS
(e) Franchisee shall notify
Company in writing within ten (10) days of any
change in the information set forth in subparagraphs
(a) through (d) above.
(f) If Franchisee is a corporation
or partnership, each of the shareholders or partners,
as applicable, of Franchisee shall, by executing
this Agreement, fully, unconditionally and irrevocably
guarantee the performance by Franchisee of all
of its obligations hereunder. In addition, Franchisee,
if a corporation, shall cause all of its shareholders
upon Company's request to execute the Company's
standard form of Corporate Guarantee.
X. NON-COMPETITION
10.1 General
(a) During the term hereof,
neither Franchisee, nor any officer, director
shareholder, or general partner of a corporate
or partnership franchisee, shall either directly
or indirectly, own, operate, advise, be employed
by, or have any interest in any Sanjiu TCM Medical
Centre that features or other food products featured
by "SANJIU E-TECH CORPORATION" Sanjiu
TCM Medical Centres within the county in which
the Sanjiu TCM Medical Centre is located, or at
or within an area within ten (10) miles from the
Location or any "SANJIU E-TECH CORPORATION"
Sanjiu TCM Medical Centre, during the term of
this Agreement, unless Company shall consent thereto
in writing.
(b) During the one (1) year
period after the expiration or termination hereof,
for any reason, neither Franchisee, nor any officer,
director, shareholder or general partner of a
corporate or partnership franchisee, shall, either
directly or indirectly, own, operate, advise,
be employed by, or have any interest in any Sanjiu
TCM Medical Centre that features Traditional Chinese
Medicine Medical Center or other single herbal
extract tea products featured by "SANJIU
E-TECH CORPORATION" Sanjiu TCM Medical Centres
within the County in which the Sanjiu TCM Medical
Centre is located, or at or within an area within
ten (10) miles from the Location or any then existing
"SANJIU E-TECH CORPORATION" Sanjiu TCM
Medical Centre, without the Company's prior written
consent. In applying for such consent, Franchisee
will have the burden of establishing that any
such activity by it will not involve the use of
benefits provided under this Agreement or constitute
unfair competition with Company or other franchisees
of the Company.
(c) The parties have attempted
in Section 10.1(a) and 10.1(b) above to limit
the Franchisee's right to compete only to the
extent necessary to protect the Company from unfair
competition. The parties hereby expressly agree
that if the scope or enforceability of Section
10.1(a) or 10.1(b) is disputed at any time by
Franchisee, a court or arbitrator, as the case
may be, may modify either or both of such provisions
to the extent that it deems necessary to make
such provision(s) enforceable under applicable
law. In addition, the Company reserves the right
to reduce the scope of either, or both, of said
provisions without the Franchisee's consent, at
any time or times, effective immediately upon
notice to Franchisee.
10.2 Personnel
(a) During the term of this
Agreement, Franchisee shall not, without the prior
written consent of Company, directly or indirectly:
(i) employ or attempt to
employ any person who at that time is employed
by Company or any other franchisee, including,
without limitation, any Sanjiu TCM Medical Centre
manager or assistant Sanjiu TCM Medical Centre
manager ("Personnel");
(ii) employ or attempt to
employ any Personnel who within six (6) months
prior thereto had been employed by Company or
any other franchisee; or
(iii) induce or attempt
to induce any Personnel to leave his or her employment
with Company or any other franchisee.
(b) The prohibitions set
forth in paragraph 10.2(a) above shall also apply
during the one (1) year period after the expiration
or termination of this Agreement.
XI. DEFAULT AND TERMINATION
11.1 Termination with Notice
Company shall have the right to terminate this
Agreement only for "cause". "Cause"
is hereby defined as a material breach of this
Agreement. Company shall exercise its right to
terminate this Agreement upon notice to Franchisee
upon the following circumstances and in the following
manner:
(a) Except with respect to
Franchisee's failure to pay any of the sums due
Company hereunder, or except as herein expressly
provided, Company may terminate this Agreement
only upon fifteen (15) days prior written notice
to Franchisee, setting forth the material breach
complained of. If Franchisee shall cure said breach,
prior to the end of such period, Company's said
right to terminate this Agreement shall cease;
provided, however, that if, because of the nature
of said breach, Franchisee shall be unable to
cure the same within said fifteen (15) day period,
Franchisee shall be given such additional time
as shall be reasonably necessary within which
to cure said breach, upon the condition that Franchisee
shall, upon receipt of such notice from Company
immediately commence to cure such breach and continue
to use his best efforts to do so.
(b) With respect to any default
by Franchisee of his obligation to pay any sums
due Company under this Agreement, Company may
terminate this Agreement upon not less than ten
(10) days prior written notice of such default.
If Franchisee shall cure said default prior to
the end of such period, Company's said right to
terminate shall cease.
(c) The description of any
default in any notice served by Company hereunder
upon Franchisee shall in no way preclude Company
from specifying additional or supplemental defaults
in any action, arbitration, hearing or suit relating
to this Agreement or the termination thereof.
(d) Any default by Franchisee
of its obligations under any Advertising Cooperative
Subscription Agreement or any other agreement
between Company and Franchisee shall be deemed
to also constitute a breach of this Agreement.
11.2 Termination Without Notice
Company shall have the right to terminate this
Agreement without prior notice to Franchisee upon
the occurrence of any or all of the following
events, each of which shall be deemed an incurable
breach of this Agreement:
(a) Abandonment-In the event
Franchisee shall abandon the Franchised Business.
For purposes of this Agreement, "abandon"
shall refer to (i) Franchisee's failure, at any
time during the term of this Agreement, to keep
the Business open and operating for business for
a period of five (5) consecutive days, except
as provided in the Operations Manual, (ii) Franchisee's
failure to keep the Franchised Business open and
operating for any period after which it is not
unreasonable under the facts and circumstances
for Company to conclude that Franchisee does not
intend to continue to operate the franchise, unless
such failure to operate is due to fire, flood,
earthquake or other similar causes beyond Franchisee's
control, (iii) failure to actively and continuously
maintain and answer Franchisee's telephone.
(b) Bankruptcy and Insolvency-In
the event that: (i) Franchisee shall be adjudicated
bankrupt or judicially determined to be insolvent
(subject to any contrary provisions of any applicable
state or federal laws), shall admit to his inability
to meet his financial obligations as they become
due, or shall make a disposition for the benefit
of his creditors; (ii) Franchisee shall allow
a judgment against him in the amount of more than
One Thousand Dollars ($1,000) to remain unsatisfied
for a period of more than thirty (30) days; (iii)
if the Franchised Business or the Sanjiu TCM Medical
Centre are seized, taken over or foreclosed by
a government official in the exercise of his duties,
or seized, taken over, or foreclosed by a creditor
or lienholder provided that a final judgment against
the Franchisee remains unsatisfied for thirty
(30) days (unless a supersedeas or other appeal
bond has been filed); (iv) if a levy of execution
of attachment has been made upon the license granted
by this Agreement or upon any property used in
the Franchised Business, and it is not discharged
within five (5) days of such levy or attachment;
(v) if Franchisee permits any mechanics lien to
attach to the Sanjiu TCM Medical Centre or to
any equipment; (vi) allows or permits any judgment
to be entered against Company or its subsidiaries
or affiliated corporations, arising out of or
relating to the operation of Franchisee's Franchised
Business; or (vii) is convicted of any felony,
or any criminal misconduct relevant to the operation
of the Franchised Business.
(c) Assignment, Death or
Incapacity-If Franchisee shall purport to sell,
assign, transfer or encumber in whole or in part
the Franchised Business, without the prior written
consent of Company; provided, however, that on
written request and on condition that the Franchised
Business continues to be operated in conformity
with this Agreement, (i) upon the death or legal
incapacity of a Franchisee who is an individual,
Company shall allow up to six (6) months after
such death or legal incapacity for the heirs,
personal representatives, or conservators (the
"Heirs") of Franchisee either to enter
into a new Franchise Agreement upon Company's
then current form (except that no initial franchise
fee or transfer fee shall be charged), if Company
is subjectively satisfied that the Heirs meet
Company's standards and qualifications, or if
not so satisfied to allow the Heirs to sell the
Franchised Business to a person approved by Company,
or (ii) upon the death or legal incapacity of
a stockholder owning twenty percent (20%) or more
of the capital stock or voting power of a corporate
Franchisee, or a general or limited partner owning
twenty percent (20%) or more of the property,
voting power, or profits or losses of a Franchisee
which is a partnership, Company shall allow a
period of up to six (6) months after such death
or legal incapacity for the Heirs to seek and
obtain Company's consent to the transfer or assignment
of such stockholders or partners stock or partnership
interest to the Heirs or to another person acceptable
by Company. If said Heirs fail, within said six
(6) month period, either to enter into a new franchise
agreement, receive Company's consent, or sell
or assign to a buyer approved by Company, as provided
above, this Agreement shall thereupon automatically
terminate.
(d) Knowing Underreporting-If
an audit or investigation conducted by Company
pursuant to paragraph 4.5 hereof discloses that
Franchisee has knowingly understated his Gross
Revenues or withheld the reporting of same as
herein provided.
(e) Repeated Defaults-If
Franchisee shall default in any material obligation
as to which Franchisee has previously received
a notice of default from Company within the preceding
twelve (12) months, such repeated course of conduct
shall itself be grounds for termination of this
Agreement without further notice or opportunity
to cure.
(f) Misrepresentation-If
Franchisee makes any material misrepresentations
relating to the acquisition of the Franchised
Business or if Franchisee engages in conduct which
reflects materially and unfavorably upon the operation
and reputation of the Franchised Business or System.
(g) Violation of Law-If Franchisee
fails, for a period of ten (10) days after having
received notification of noncompliance from Company
or any governmental or quasi-governmental agency
or authority, to comply with any federal, state
or local law or regulation applicable to the operation
of the Franchised Business.
11.3 Cross-Default
Any default by Franchisee under the terms and
conditions of this Agreement or any other agreement
between Company and Franchisee, which is so material
as to permit Company to terminate this Agreement
or said other agreement, or a default by Franchisee
of his obligations to any Advertising Cooperative
of which he is a member, shall be deemed to be
a default of each and every said agreement. Furthermore,
in the event of termination, for any cause, of
this Agreement or any other agreement between
the parties hereto, Company may, at its option,
terminate any or all said agreements.
11.4 Notice Required By Law
Notwithstanding anything to the contrary contained
in this Article XI, in the event any valid, applicable
law or regulation of a competent governmental
authority having jurisdiction over this Agreement
and the parties hereto shall limit Company's rights
of termination hereunder or shall require longer
notice periods than those set forth above, this
Agreement shall be deemed amended to conform to
the minimum notice periods or restrictions upon
termination required by such laws and regulations.
Company shall not, however, be precluded from
contesting the validity, enforceability or application
of such laws or regulations in any action, arbitration,
hearing or dispute relating to this Agreement
or the termination thereof.
XII. FURTHER OBLIGATIONS AND RIGHTS OF THE PARTIES
UPON TERMINATION OR EXPIRATION
12.1 Company's Rights
In the event of expiration or termination of
this Agreement, whether by reason of default,
lapse of time, or other cause, Franchisee shall:
(i) forthwith discontinue the use of the Trademarks;
(ii) not thereafter operate or do business under
any name or in any manner that might tend to give
the general public the impression that he is operating
a business as a franchisee of Company and shall
promptly take such action as Company may direct
to prevent any possible confusion in the mind
of the public as to Franchisee's non-affiliation
with Company, including but not limited to, repainting
the Franchised Business premises and fixtures
in a color scheme dissimilar to that of Company's,
removal of signage, advertising, exterior building
treatments and neon strips, and other fixtures
and furnishings that might tend to cause the public
to associate Franchisee with Company or its franchisees
or the System; (iii) immediately return the Operations
Manual and all other manuals, bulletins, instruction
sheets, and supplements and copies thereof to
Company; (iv) cause the telephone numbers and
all related telephone directory listings to be
assigned to Company, or its designee, or terminate
all such telephone numbers and listings, as we
required by Company pursuant to 12.4 below (v)
return all unused Proprietary Products, upon receipt
of which Company shall repurchase same from Franchisee
at Franchisee's actual cost therefore, subject
to Company's right of set-off for any amounts
any which remain due but unpaid to Franchisee
to Company; and (vi) not thereafter use, in any
manner, or for any purpose, directly or indirectly,
any of Company's trade secrets, trade dress, recipes,
procedures, techniques, or materials acquired
by Franchisee by virtue of the relationship established
by this Agreement, including, without limiting
the generality of the foregoing, (a) all manuals,
bulletins, instruction sheets, and supplements
thereto, (b) all forms, advertising matter, marks,
devices, insignia, slogans and designs used from
time to time in connection with the Franchised
Business (c) all Product lists, specifications
or standards, and (d) all Trademarks or trade
names now or hereafter applied for or granted
in connection therewith.
12.2 Termination Without Prejudice
The expiration or termination of this Agreement
shall be without prejudice to the rights of Company
against Franchisee and such expiration or termination
shall not relieve Franchisee of any of its obligations
to Company existing at the time of expiration
or termination or terminate those obligations
of Franchisee which, by their nature, survive
the expiration or termination of this Agreement.
It is expressly understood and agreed that the
promises and agreements of Franchisee contained
in this Agreement, are also for the benefit of
Company's subsidiaries, affiliates and designees,
and any of them may, in their own names, exercise
all rights and remedies necessary or desirable
to protect or enforce their respective interest,
including, without limitation, obtaining injunctive
relief to enforce the obligations of Franchisee
set forth in this Agreement.
12.3 Telephone Numbers
Franchisee acknowledges that there will be substantial
confusion in the mind of the public if, after
the expiration or termination of this Agreement,
Franchisee continues to use the telephone number
listed in the yellow pages of the phone directory
under the name "SANJIU E-TECH CORPORATION,"
or any other name confusingly similar thereto.
Therefore, Franchisee agrees that within seven
(7) days after the expiration or termination of
this Agreement for any reason whatsoever, Franchisee
shall upon Company's request execute all documents
necessary or proper in Company's judgment to transfer
the right to use and control the telephone number(s)
pertaining to the Franchised Business to Company
or its designee and will direct the telephone
company servicing the Franchised Business to transfer
the telephone number(s) listed for the Franchised
Business in the then-current yellow pages and
white pages of the telephone directory, to Company
or to such person and at such location as Company
shall direct. If Franchisee shall not promptly
so direct the telephone company, Franchisee hereby
irrevocably appoints Company as his Attorney-in-fact
to do so on his behalf and in his name, and hereby
expressly authorizes the telephone company to
make such transfer and agrees to hold the telephone
company harmless on account of any such transfer.
XIII. ARBITRATION
13.1 General
Any controversy or claim arising out of or relating
to this Agreement, or any breach thereof, including,
without limitation, any claim that said Agreement,
or any part thereof, is invalid, illegal or otherwise
voidable or void, or the enforcement of any right
or obligation which by its nature survives the
expiration or termination hereof, shall be submitted
to arbitration before and in accordance with the
Commercial Rules of Arbitration of the American
Arbitration Association and judgment upon the
award may be entered in any court having jurisdiction
thereof; provided, however, that this clause shall
not be construed to limit Company from bringing
any action in any court of competent jurisdiction
for injunctive or other provisional relief as
Company deems to be necessary or appropriate to
compel Franchisee to comply with his obligations
hereunder or to protect the Trademarks. Such arbitration
shall take place in . This arbitration provision
shall be deemed to be self-executing, and in the
event that either party fails to appear at any
properly noticed arbitration proceeding, an award
may be entered against such party notwithstanding
said failure to appear.
XIV. GENERAL CONDITIONS AND
PROVISIONS
14.1 Relationship of Franchisee
to Company
It is expressly agreed that the parties intend
by this Agreement to establish between Company
and Franchisee the relationship of franchisor
and franchisee. It is further agreed that Franchisee
has no authority to create or assume in Company's
name or on behalf of Company, any obligation,
express or implied, or to act or purport to act
as agent or representative on behalf of Company
for any purpose whatsoever. Neither Company nor
Franchisee is the employer, employee, agent, partner
or co-venturer of or with the other, each being
independent. Franchisee agrees that he will not
hold himself out as the agent, employee, partner
or co-venturer of Company. All employees hired
by or working for Franchisee shall be the employees
of Franchisee and shall not, for any purpose,
be deemed employees of Company or subject to Company
control. Each of the parties agrees to file its
own tax, regulatory and payroll reports with respect
to its respective employees and operations, saving
and indemnifying the other party hereto of and
from any liability of any nature whatsoever by
virtue thereof.
14.2 Indemnity by Franchisee
Franchisee hereby agrees to protect, defend and
indemnify Company, and all of its part, present
and future shareholders, direct and indirect parent
companies, subsidiaries, affiliates, officers,
directors, employees, attorneys and designees
and hold them harmless from and against any and
all costs and expenses, including attorneys' fees,
court costs, losses, liabilities, damages, claims
and demands of every kind or nature on account
of any actual or alleged loss, injury or damage
to any person, firm or corporation or to any property
arising out of or in connection with Franchisee's
operation of the Franchised Business pursuant
hereto.
14.3 Company's Right To Cure
Defaults
In addition to all other remedies herein granted
if Franchisee shall default in the performance
of any of its obligations or breach any term or
condition of this Agreement or any related agreement,
Company may, at its election, immediately or at
any time thereafter, without waiving any claim
for breach hereunder and without notice to Franchisee,
cure such default for the account and on behalf
of Franchisee, and the cost to Company thereof
shall be due and payable on demand and shall be
deemed to be additional compensation due to Company
hereunder and shall be added to the amount of
compensation next accruing hereunder, at the election
of Company.
14.4 Waiver and Delay
No waiver by Company of any breach or series
of breaches or defaults in performance by Franchisee,
and no failure, refusal or neglect of Company
to exercise any right, power or option given to
it hereunder or under any other franchise agreement
between Company and Franchisee, whether entered
into before, after or contemporaneously with the
execution hereof (and whether or not related to
the Sanjiu TCM Medical Centre) or to insist upon
strict compliance with or performance of Franchisee's
obligations under this Agreement, any other franchise
agreement between Company and Franchisee, whether
entered into before, after or contemporaneously
with the execution hereof (and whether or not
related to the Sanjiu TCM Medical Centre) or the
Operations Manual, shall constitute a waiver of
the provisions of this Agreement or the Operations
Manual with respect to any subsequent breach thereof
or a waiver by Company of its right at any time
thereafter to require exact and strict compliance
with the provisions thereof.
14.5 Survival of Covenants
The covenants contained in this Agreement which,
by their terms, require performance by the parties
after the expiration or termination of this Agreement,
shall be enforceable notwithstanding said expiration
or other termination of this Agreement for any
reason whatsoever.
14.6 Successors and Assigns
This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of
Company and shall be binding upon and inure to
the benefit of Franchisee and his or their respective
heirs, executors, administrators, successors and
assigns, subject to the restrictions on assignment
contained herein.
14.7 Joint and Several Liability
If Franchisee consists of more than one person
or entity, or a combination thereof, the obligations
and liabilities of each such person or entity
to Company are joint and several.
14.8 Governing Law
This Agreement shall be construed in accordance
with the laws of the state of .
14.9 Entire Agreement
This Agreement contains all of the terms and
conditions agreed upon by the parties hereto with
reference to the subject matter hereof. No other
agreements oral or otherwise shall be deemed to
exist or to bind any of the parties hereto and
all prior agreements, understandings and representations
are merged herein and superseded hereby. Franchisee
represents that there are no contemporaneous agreements
or understandings between the parties that are
not contained herein. No officer or employee or
agent of Company has any authority to make any
representation or promise not contained in this
Agreement or in any Offering Circular for prospective
franchisees required by applicable law, and Franchisee
agrees that he has executed this Agreement without
reliance upon any such representation or promise.
This Agreement cannot be modified or changed except
by written instrument signed by all of the parties
hereto.
14.10 Titles For Convenience
Article and paragraph titles used in this Agreement
are for convenience only and shall not be deemed
to affect the meaning or construction of any of
the terms, provisions, covenants, or conditions
of this Agreement.
14.11 Gender
All terms used in any one number or gender shall
extend to mean and include any other number and
gender as the facts, context, or sense of this
Agreement or any article or paragraph hereof may
require.
14.12 Severability
Nothing contained in this Agreement shall be
construed as requiring the commission of any act
contrary to law. Whenever there is any conflict
between any provisions of this Agreement or the
Operations Manual and any present or future statute,
law, ordinance or regulation contrary to which
the parties have no legal right to contract, the
latter shall prevail, but in such event the provisions
of this Agreement or the Operations Manual thus
affected shall be curtailed and limited only to
the extent necessary to bring it within the requirements
of the law. In the event that any part, article,
paragraph, sentence or clause of this Agreement
or the Operations Manual shall be held to be indefinite,
invalid or otherwise unenforceable, the indefinite,
invalid or unenforceable provision shall be deemed
deleted, and the remaining part of this Agreement
shall continue in full force and effect.
14.13 Counterparts
This Agreement may be executed in any number
of counterparts, each of which shall be deemed
to be an original and all of which together shall
be deemed to be one and the same instrument.
14.14 Fees and Expenses
Should any party hereto commence any action or
proceeding for the purpose of enforcing, or preventing
the breach of, any provision hereof, whether by
arbitration, judicial or quasi-judicial action
or otherwise, or for damages for any alleged breach
of any provision hereof, or for a declaration
of such party's rights or obligations hereunder,
then the prevailing party shall be reimbursed
by the losing party for all costs and expenses
incurred in connection therewith, including, but
not limited to, reasonable attorneys' fees for
the services rendered to such prevailing party.
All sums which are due but unpaid to Company or
Franchisee shall bear interest from the date due
at the highest rate permissible by applicable
law.
14.15 Notices
Except as otherwise expressly provided herein,
all written notices and reports permitted or required
to be delivered by the parties pursuant hereto
shall be deemed so delivered at the time delivered
by hand, one (1) business day after transmission
by facsimile or other electronic system, or three
(3) business days after placement in the Canada
or United States Mail by Registered or Certified
Mail, Return Receipt Requested, postage prepaid
and addressed as follows:
To COMPANY: SANJIU E-TECH CORPORATION.
3570 Victoria Park Ave,
North York, Ontario,
Canada
Facsimile No. 416-497-6339
To FRANCHISEE: _________________________
________________________________________
_________________________________________
Facsimile No. ___________
Any party may change his or its address by giving
ten (10) days prior written notice of such change
to all other parties.
XV. SUBMISSION OF AGREEMENT
15.1 General
The submission of this Agreement does not constitute
an offer and this Agreement shall become effective
only upon the execution thereof by Company and
Franchisee. THIS AGREEMENT SHALL NOT BE BINDING
ON COMPANY UNLESS AND UNTIL IT SHALL HAVE BEEN
ACCEPTED AND SIGNED BY THE PRESIDENT OF COMPANY.
THIS AGREEMENT SHALL NOT BECOME EFFECTIVE UNTIL
AND UNLESS FRANCHISEE SHALL HAVE BEEN FURNISHED
BY COMPANY WITH ALL DISCLOSURE DOCUMENTS, IN WRITTEN
FORM, AS MAY BE REQUIRED UNDER OR PURSUANT TO
APPLICABLE LAW, FOR REQUISITE TIME PERIODS.
XVI. ACKNOWLEDGMENT
16.1 General
Franchisee, and its shareholders and partners,
as applicable, jointly and severally acknowledge
that they have carefully read this Agreement and
all other related documents to be executed concurrently
or in conjunction with the execution hereof, that
they have obtained the advice of counsel in connection
with entering into this Agreement, that they understand
the nature of this Agreement, and that they intend
to comply herewith and be bound hereby.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed as of the first
date set forth above.
ACCEPTED on this____________________________ day
of
____________________, 20. ___________
COMPANY:
SANJIU E-TECH CORPORATION, INC.,
a ______________________________________________corporation
By ________________________________________________
Its __________________________________________________
FRANCHISEE:
_____________________________________________________
By __________________________________________________
Its ___________________________________________________
____________________________________________________
an Individual
____________________________________________________
an Individual
____________________________________________________
an Individual
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