This Franchise Agreement ("Agreement") is made and effective this [Date],
BETWEEN: Kathy’s Family, LLC (the "Franchisor"), a company organized and existing under the laws of the State of Ohio, with its head office located at:
P.O. Box 21721
Willoughby Hills, OH
AND: Persons Name (the "Franchisee"), an individual with his main address located at OR a company organized and existing under the laws of the State Washington, with its head office located at:
WHEREAS, Franchisor and certain of its Affiliates own, operate and franchise Kathy’s Family globally which, among other things, rent, sell and market personal body care products to the general public and
WHEREAS, Franchisor and certain of its Affiliates acquire, produce, license, market and sell personal care body products and
WHEREAS, Franchisee is willing to purchase on a per Location (the terms initially capitalized in this Agreement and not otherwise defined herein shall have the respective meanings set forth in Paragraph 18 of this Agreement) basis the entire Kathy’s Family product line; and
WHEREAS, Franchisor is willing to provide various marketing, advertising and promotional services and activities in support of Franchisee;
NOW, THEREFORE, based on the above premises and in consideration of the covenants and agreements contained herein, and intending to be legally bound, the parties agree hereto as follows:
1. AGREEMENT TERM
The term of this Agreement shall be for the period one year commencing as of the date of this Agreement. Each year of the Term, as measured from the date of this Agreement, is a "Contract Year."
1.1 CONTRACT RENEWAL
Franchisor reserves the right to refuse renewal of the contract if following sales achievements are not met:
Fiscal years, beginning on the date of this contract:
Y1 and Y2 to meet annual sales of at least $250,000
Y3 and Y4 to meet annual sales of at least $500,00
Y5 and Y6 to meet annual sales of at least $1,000,000
No annual fee, in whole or part, will be refunded if this agreement is terminated.
The territory for purposes of this Agreement with respect to Kathy’s Family products shall be the State of Washington, including and not limited to existing customers, new customers, retail or individual and internet sales specific to franchisee (the "Territory"). The State of Washington shall be the Franchisee’s exclusive territory.
3. REVENUE SHARING
Revenue terms shall consist of purchasing Kathy’s Family products at wholesale pricing, as listed in paragraph 4.1 of this agreement. No percent of Franchisee profits to be distributed to the Franchisor.
4. FRANCHISOR COMMITMENTS
Beginning as of the date of this Agreement for State of Washington located in the United States within 12 calendar months hereafter, Franchisee agrees as follows:
The following purchasing requirements shall apply to all Locations and Participating Franchises:
A. Initial franchise fee of $3,950; non-refundable.
B. Products shall be purchased from Franchisor per Addendum A pricing sheet.
C. Current customer list for the State(s) listed in this agreement can be purchased at the cost of $25.00 per name.
D. Franchisor provides no compensation for Franchisee’s facilities, equipment, business and liability insurance, or any other requisites required to execute this agreement.
The parties acknowledge and agree that Franchisee shall be invoiced for products ordered with a flat rate shipping cost of $3.00 per box, shipping carrier fees, customer names, as mentioned in paragraph 4.1 section C, and Sales leads, as mentioned in paragraph 4.3, of this agreement, payable to Franchisor within 30 days of invoice receipt. Payment exceeding 30 days shall incur a monthly interest charge of 3% of the monthly balance.
Franchisor shall pay to Franchisee, as liquidated damages, an amount equal to invoiced amount for each unit, which Franchisor failed to deliver or arrived damaged.
Refunds are available for existing customer leads that do not purchase within 90 days and sales leads that are not valid, i.e. no longer in business or disconnected phone service. These refunds will be reflected in monthly invoices from Franchisor.
Invoicing between the Franchisor to the Franchisee shall be restricted to products, customer names and sales leads. All invoices between the Franchisee and their sales channels are contained between these two parties.
Franchisor will refund New 1st orders that are not paid in full by the franchisee’s customer, within 90 days of invoice.
With respect to advertising of products, Franchisee agrees to consult with Franchisor and to keep Franchisor reasonably appraised of its marketing plans and activities. Franchisor shall have the right to approve such plans, and Franchisee shall provide a timely opportunity for said approval by Franchisor. Franchisor shall exercise its approval rights in a timely and reasonable manner.
Sales scripts are provided as part of this agreement by Franchisor.
Sales leads can be purchased by the Franchisee from the Franchisor at a cost of $0.05 per lead.
Franchisor reserves the right to alter, change, revise, or any other modifications to the Kathy’s Family brand, packaging, logos, images or any related materials.
4.4 Participating Franchises
Under no circumstances is the Franchisee allowed to enter into any other Participating franchise agreement, without the expressed written consent of the Franchisor.
Franchisee shall exercise good faith commercially reasonable efforts to maximize revenue on the sale of Kathy’s Family products. At all times during the entire agreement period.
4.6 Packing and Shipping
Franchisor will be solely responsible for making all products ready for consumer purchase and for shipping the products from its distribution center to Franchisee’s Locations.
The purchase requirements set forth in Paragraph 3 shall not be subject to any returns by Franchisee. Franchisor will exchange defective or damaged products. Defective products shall mean those that are mechanically defective, mispackaged, physically blemished or contain extraneous material. Franchisee shall report defective or damaged products to Franchisor promptly following discovery of such defect or damage.
5.1 Marketing Support
Franchisor provides no marketing support to the Franchisee in this agreement.
Franchisee will fax orders daily, as available.
At no cost or expense to Franchisor, Franchisee will provide to Franchisor, access to all Franchisee sales information and customers, in such form as may be reasonably specified by Franchisor from time to time, as requested by Franchisor.
Within 60 calendar days following the end of each Contract Year, the parties shall meet and in good faith review the terms of this Agreement. Should no agreement be reached between the parties with respect to adjusting or amending the terms of the Agreement, the then current terms of the Agreement shall remain in full force and effect. Within the 60 calendar days following the end of the agreement Term, either party may give 2 months notice to terminate the Agreement. If such notice is given by either party, from such notification forward, Franchisee shall have no right or obligation to purchase additional products under this Agreement and Franchisor shall be relieved of any right or obligation to sell products to Franchisee under this Agreement.
The following transactions or occurrences shall constitute material events of default (each an "Event of Default") by the applicable party (the "defaulting party") hereunder such that, in addition to and without prejudice to or limiting any other rights and remedies available to the non-defaulting party at law or in equity the non-defaulting party may elect to immediately and prospectively terminate this Agreement at the sole discretion of the non-defaulting party by giving written notice thereof to the other party at any time after the occurrence of an Event of Default setting forth sufficient facts to establish the existence of such Event of Default.
8.1 Material Breach
A material breach by a party of any material covenant, material warranty, or material representation contained herein, where such defaulting party fails to cure such breach within 30 calendar days after receipt of written notice thereof, or within such specific cure period as is expressly provided for elsewhere in this Agreement; or
8.2 Insolvency and/or Bankruptcy
A party makes an attempt to make any arrangement for the benefit of creditors, or a voluntary or involuntary bankruptcy, insolvency or assignment for the benefit of creditors of a party or in the event any action or proceeding is instituted relating to any of the foregoing and the same is not dismissed within 60 calendar days after such institution; or
8.3 Failure to Make Payment
A failure by either party to make payment of any monies payable pursuant to this Agreement, as and when payment is due. Except as otherwise provided herein, no termination of this Agreement for any reason shall relieve or discharge any party hereto from any duty, obligation or liability hereunder which was accrued as of the date of such termination.
Upon termination of this agreement, whether by expiration, failure to renew, breach, or any other form of termination, as outlined in this agreement, Franchisee shall surrender all customer information, whether active or inactive, to Franchisor. Franchisee shall cease all communications with all customers, whether active or inactive, for a period of four years. Franchisee may not enter into any agreement with any Franchisor’s competitors, or produce or manufacture similar or competing products of Franchisor for a period of seven years from the date of this agreement.
9. PUBLIC DISCLOSURE AND CONFIDENTIALITY
9.1 Public Disclosure
Each party agrees that no press release or public announcement relating to the existence or terms of this Agreement (including within the context of a trade press or other interview or advertisement in any media) shall be issued without the express prior written approval of the other party hereto.
9.2 Confidential Information
During the Term and for a period of 12 months thereafter, Franchisee and Franchisor shall hold, and shall cause each of their directors, officers, employees and agents to hold in confidence the terms of this Agreement (including the financial terms and provisions hereof and all information received pursuant to, or developed in accordance with, this Agreement) specifically including but not limited to the Franchisor. Franchisee and Franchisor hereby acknowledge and agree that all information contained in, relating to or furnished pursuant to this Agreement, not otherwise known to the public, is confidential and proprietary and is not to be disclosed to third parties without the prior written consent of both Franchisee and Franchisor. Neither Franchisee nor Franchisor shall disclose such information to any third party (other than to officers, directors, employees, attorneys, accountants and agents of Franchisee and Franchisor or the affiliates of either, who have a business reason to know or have access to such information, and only after each of whom agrees to being bound by this paragraph) except:
a. To the extent necessary to comply with any Law or the valid order of a governmental agency or court of competent jurisdiction or as part of its normal reporting or review procedure to regulatory agencies or as required by the rules of any major stock exchange on which either party's stock may be listed; provided, however, that the party making such disclosure shall seek, and use reasonable efforts to obtain, confidential treatment of said information and shall promptly, to the greatest extent practicable, notify the other party in advance of such disclosure;
b. As part of the normal reporting or review procedure by its parent Franchisee, its auditors and its attorneys;
c. To the extent necessary to obtain appropriate insurance, to its insurance agent or carrier, that such agent or carrier agrees to the confidential treatment of such information; and
d. To actual or potential successors in interest, provided, however, that such person or entity shall have first agreed in writing to the confidential treatment of such information.
10. NO RIGHT TO USE NAMES
a. Neither Franchisee nor Locations nor Participating Franchises shall acquire any right to use, nor shall use any copyrights, trademarks, characters or designs owned or controlled by Franchisor or any of its Affiliates, including without limitation, the names Kathy’s Family or any related product name under Kathy’s Family line alone or in conjunction with other words or names, in any advertising, publicity or promotion, either express or implied, without Franchisor's prior consent in each case, and in no case shall any Franchisee or Location advertising, publicity, or promotion, express or imply any endorsement of the same.
b. Franchisee shall not acquire any right to use, nor shall use the Kathy’s Family or any related product name under Kathy’s Family alone or in conjunction with other words or names, or any copyrights, trademarks, characters or designs of the same in any advertising, publicity or promotion, either express or implied, without Franchisor's prior consent in each case, and in no case shall any Franchisee advertising, publicity, or promotion, express or imply any endorsement of the same.
c. Neither Franchisee nor Locations nor Participating Franchises shall acquire any right to use, nor shall use any copyrights, trademarks, characters or designs owned or controlled by Franchisor or any of its Affiliates, including without limitation, the names Kathy’s Family or any related product name under Kathy’s Family line, in the event this agreement is terminated or expired, unless a separate agreement is generated between the Franchisor and Franchisee.
This Agreement and the rights and licenses granted hereunder are personal and neither party shall have the right to sell, assign, transfer, mortgage, pledge nor hypothecate (each an "Assignment") any such rights or licenses in whole or in part without the prior written consent of the non-assigning party, nor will any of said rights or licenses be assigned or transferred to any third party by operation of law, including, without limitation, by merger or consolidation or otherwise; provided, however, that an Assignment pursuant to or resulting from a sale of all or substantially all of the assets or all or a majority of the equity of Franchisee to any Person or Persons or any other form of business combination, such that the Franchisee business as currently existing remains substantially intact, including, without limitation, a sale to the public, shall not require such consent so long as such Assignment is not to competing product entity; and provided further that any Assignment by (i) Franchisee, to competing product entity or (ii) Franchisor to any Affiliate of Franchisor. In the event that Franchisee or Franchisor assigns its rights or interest in or to this Agreement in whole or in part, the assigning party will nevertheless continue to remain fully and primarily responsible and liable to the other party for prompt, full, complete and faithful performance of all terms and conditions of this Agreement.
12. FRANCHISOR'S REPRESENTATIONS AND WARRANTIES
Franchisor represents and warrants that:
a. It is a corporation organized and existing under the laws of Ohio with its principal place of business in the United States;
b. The undersigned has the full right, power and authority to sign this Agreement on behalf of Franchisor;
c. The execution, delivery and performance of this Agreement does not and will not, violate any provisions of United States articles or certificates of incorporation and bylaws, or any contract or other Agreement to which Franchisor is a party;
d. There is no broker, finder or intermediary involved in connection with the negotiations and discussions incident to the execution of this Agreement, and no broker, finder, agent or intermediary who might be entitled to a fee, commission or any other payment upon the consummation of the transactions contemplated by this Agreement;
e. This Agreement has been duly executed and delivered and constitutes a legal, valid and binding obligation, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereinafter in effect, affecting the enforcement of creditors' rights in general and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.
13. FRANCHISEE'S REPRESENTATIONS AND WARRANTIES
Franchisee represents and warrants that:
a. It is a corporation organized and existing under the laws of the Washington with its principal place of business in the United States;
b. The undersigned has the full right, power and authority to sign this Agreement on behalf of Franchisee;
c. There is no broker, finder or intermediary involved in connection with the negotiations and discussions incident to the execution of this Agreement, and no broker, finder, agent or intermediary who might be entitled to a fee, commission or any other payment upon the consummation of the transactions contemplated by this Agreement;
d. This Agreement has been duly executed and delivered and constitutes the legal, valid and binding obligation of Franchisee enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereinafter in effect, affecting the enforcement of creditors' rights in general and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law; and
e. The execution, delivery and performance of this Agreement does not, and will not, violate any provisions of Franchisee's articles or certificates of incorporation and bylaws, or any contract or other Agreement to which Franchisee is a party.
14. FORCE MAJEURE
The duties and obligations of the parties hereunder may be suspended upon the occurrence and continuation of any "Event of Force Majeure" which inhibits or prevents performance hereunder, and for a reasonable start-up period thereafter. An "Event of Force Majeure" shall mean any act, cause, contingency or circumstance beyond the reasonable control of such party (whether or not reasonably foreseeable), including, without limitation, to the extent beyond the reasonable control of such party, any governmental action, nationalization, expropriation, confiscation, seizure, allocation, embargo, prohibition of import or export of goods or products, regulation, order or restriction (whether foreign, federal or state), war (whether or not declared), civil commotion, disobedience or unrest, insurrection, public strike, riot or revolution, lack or shortage of, or inability to obtain, any labor, machinery, materials, fuel, supplies or equipment from normal sources of supply, strike, work stoppage or slowdown, lockout or other labor dispute, fire, flood, earthquake, drought or other natural calamity, weather or damage or destruction to plants and/or equipment, commandeering of vessels or other carriers resulting from acts of God, or any other accident, condition, cause, contingency or circumstances including (without limitation, acts of God) within or without the United Staes. Neither party shall, in any manner whatsoever, be liable or otherwise responsible for any delay or default in, or failure of, performance resulting from or arising out of or in connection with any Event of Force Majeure and no such delay, default in, or failure of, performance shall constitute a breach by either party hereunder. As soon as reasonably possible following the occurrence of an Event of Force Majeure, the affected party shall notify the other party, in writing, as to the date and nature of such Event of Force Majeure and the effects of same. If any Event of Force Majeure shall prevent the performance of a material obligation of either party hereunder, and if the same shall have continued for a period of longer than 30 days, then either party hereto shall have the right to terminate this Agreement by written notice to the other party hereto.
Each party (the "Indemnifying Party") shall indemnify and hold the other party and its affiliates and their respective employees, officers, agents, attorneys, stockholders and directors, and their respective permitted successors, licensees and assigns (the "Indemnified Party(ies)") harmless from and against (and shall pay as incurred) any and all claims, proceedings, actions, damages, costs, expenses and other liabilities and losses (whether under a theory of strict liability, or otherwise) of whatsoever kind or nature
("Claim(s)") incurred by, or threatened, imposed or filed against, any Indemnified Party (including, without limitation, (a) actual and reasonable costs of defense, which shall include without limitation court costs and reasonable attorney and other reasonable expert and reasonable third party fees; and (b) to the extent permitted by Law, any fines, penalties and forfeitures) in connection with any proceedings against an Indemnified Party caused by any breach (or, with respect to third party claims only, alleged breach) by the Indemnifying Party of any representation, term, warranty or agreement hereunder. Neither party shall settle, compromise or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened Claim in respect of which the Indemnified Party is entitled to indemnification hereunder (whether or not the Indemnified Party is a party thereto), without the prior written consent of the other party hereto; provided, however, that the Indemnifying Party shall be entitled to settle any claim without the written consent of the Indemnified Party so long as such settlement only involves the payment of money by the Indemnifying Party and in no way affects any rights of the Indemnified Party.
No remedy conferred by any of the specific provisions of this Agreement is intended to be exclusive of any other remedy which is otherwise available at law, in equity, by statute or otherwise, and except as otherwise expressly provided for herein, each and every other remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity, by statute or otherwise and no provision hereof shall be construed so as to limit any party's available remedies in the event of a breach by the other party hereto. The election of any one or more of such remedies by any of the parties hereto shall not constitute a waiver by such party of the right to pursue any other available remedies.
A. "Affiliate" shall mean an entity in which either party has a controlling interest.
B. "Franchise" shall mean all Franchisee Locations which Franchisee informs Franchisor are Franchises.
C. "Laws" shall mean all international, federal, national, state, provincial, municipal or other laws, ordinances, orders, statutes, rules or regulations.
D. "Location" shall mean any Location in the United States or Canada, which, at any time during the Term of this Agreement, is wholly owned and/or operated by Franchisee, whether or not such Location is operated under the "Franchisee" trademarks. Should Franchisee undertake to own or operate outlets different than the outlets it has traditionally operated, such as by way of example, kiosks, carts, "Locations within a Location", "rack jobbing" operations or vending machines, the parties shall negotiate in good faith to agree upon terms for the inclusion of such retail outlets in this Agreement.
E. "New Franchisee Location" shall mean a Location which Franchisee or any of its Franchisees or Affiliates first owns or operates after the commencement date of this Agreement, excluding Franchisee's acquisition of franchised Franchisee Locations.
F. This Agreement shall not constitute any partnership, joint venture or agency relationship between the parties hereto. The parties shall be considered independent contractors.
G. This Agreement, together with the attached Exhibit A, embodies the entire understanding of the parties with respect to the subject matter hereof and may not be altered, amended or otherwise modified except by an instrument in writing executed by both parties.
H. The headings in this Agreement are for convenience of reference only and shall not have any substantive effect.
I. All rights and remedies granted to the parties hereunder are cumulative and are in addition to any other rights or remedies that the parties may have at law or in equity.
J. Should any non-material provision of this Agreement be held to be void, invalid or inoperative, as a matter of law the remaining provisions hereof shall not be affected and shall continue in effect as though such unenforceable provision(s) have been deleted herefrom.
K. Unless otherwise indicated, all dollar amounts referenced herein shall refer to and be paid in USD dollars.
L. No waiver of any right under or breach of this Agreement shall be effective unless it is in writing and signed by the party to be charged.
M. Franchisee hereby consents to and submits to the jurisdiction of the Franchisor and any action or suit under this Agreement may be brought in any Court with appropriate jurisdiction over the subject matter established.
N. None of the provisions of this Agreement is intended for the benefit of or shall be enforceable by any third parties.
O. This Agreement may be executed in separate counterparts each of which shall be an original and all of which taken together shall constitute one and the same Agreement.
P. All notices shall be in writing and either personally delivered, mailed first-class mail (postage prepaid), sent by reputable overnight courier service (charges prepaid), or sent by transmittal by any electronic means whether now known or hereafter developed, including, but not limited to, email, facsimile, telex, or laser transmissions, able to be received by the party intended to receive notice, to the parties at the following addresses:
Kathy’s Family, LLC
P.O. Box 21721
Willoughby Hills, OH
20. GOVERNING LAW
This Agreement shall be governed by, and construed under, the laws of State of Ohio.