Canada Master Franchise Agreement by Megadox

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									MASTER FRANCHISE AGREEMENT FOR CANADA
               [Franchisor]
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                                                           TABLE OF CONTENTS

GRANT ....................................................................................................................................................................3
TERM, RENEWAL AND DEVELOPMENT OF THE TERRITORY.................................................................4
FEES .......................................................................................................................................................................5
DUTIES OF [Franchisor] ........................................................................................................................................6
DUTIES OF MASTER FRANCHISEE ..................................................................................................................8
CONSTRUCTION OF LEASEHOLD IMPROVEMENTS ............................................................................... 11
PROPRIETARY MARKS ...................................................................................................................................... 12
CONFIDENTIAL MANUALS AND INFORMATION ................................................................................... 14
ADVERTISING ..................................................................................................................................................... 15
INSURANCE ......................................................................................................................................................... 17
ACCOUNTING AND RECORDS ...................................................................................................................... 18
TRANSFER OF INTEREST .................................................................................................................................. 19
DEFAULT AND TERMINATION ...................................................................................................................... 20
OBLIGATIONS UPON TERMINATION OR EXPIRATION .......................................................................... 22
COVENANTS........................................................................................................................................................ 24
MASTER FRANCHISEE AS A CORPORATION ............................................................................................. 25
TAXES, PERMITS AND INDEBTEDNESS ....................................................................................................... 25
INDEPENDENT CONTRACTOR; INDEMNIFICATION; THIRD PARTY RIGHTS ................................. 26
MISCELLANEOUS............................................................................................................................................... 26
APPLICABLE LAW; DISPUTE RESOLUTION ................................................................................................ 27
EFFECTIVE DATE; GOVERNMENTAL APPROVALS .................................................................................. 28

ATTACHMENTS & EXHIBITS
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                            MASTER FRANCHISE AGREEMENT
                                            FOR CANADA

THIS AGREEMENT is made and entered into on [franchise agreement date] by and between [Franchisor]
(“[Franchisor]”), a corporation organized under the laws of the Province of [province], and [MASTER
FRANCHISEE], a company incorporated under the laws of the Province of [province] (“Master
Franchisee”).

WHEREAS:

A.     [Franchisor], as the result of the expenditure of time, skill, effort, and money, has developed and
       owns a unique and distinctive system relating to the establishment and operation of [description
       of franchise business], [using the unique operating system and tools developed and maintained
       by [Franchisor] to [description] and using the proprietary software program designed by
       [Franchisor] and made available to its franchisees to assist in the management of the franchise
       business (“System”);

B.     The distinguishing characteristics of the System include without limitation a distinctive design
       and layout, and training management, and promotional assistance, in connection with the
       establishment and ongoing operation of [franchise business] Centres, all of which may be
       changed, improved, and further developed by [Franchisor] from time to time;

C.     [Franchisor] identifies the System, in the Province(s) of [provinces] (“Territory”), by means of
       certain trade names, trademarks, logos, and indicia of origin, including the mark [TRADE
       MARK] and such other trade names and trademarks as are now designated or may hereafter by
       designated by [Franchisor] in writing, for use in connection with the System (“Proprietary
       Marks”);

D.     Master Franchisee wishes to obtain the right and license to use the Proprietary Marks and the
       exclusive right to grant franchises to other persons (“Franchisees”) to establish and operate
       [franchise business] Centres using the Proprietary Marks and System (“[Franchisor] Centres) in
       the Territory; and wishes to receive the training and other assistance provided by [Franchisor] in
       connection therewith; and

E.     Master Franchisee understands and acknowledges the importance of [Franchisor]‘s high
       standards of quality, appearance, and service, and the necessity of operating the [Franchisor]
       Centres in conformity with [Franchisor]‘s standards and specifications.

NOW, THEREFORE, the parties agree as follows:

1.     GRANT

1.1     [Franchisor] grants to Master Franchisee the right, in the Territory, and Master Franchisee
accepts the obligations, pursuant to the terms and conditions of this Agreement, and in accordance with
the development schedule described in Section 2.3 hereof:

       (a)     The right and license to use the Proprietary Marks in connection with the business to be
               conducted by Master Franchisee pursuant to the provisions of this Agreement: and

       (b)     To license Franchisees (“FRANCHISEE(S)”) to establish and operate Franchised Centres
               pursuant to a separate Franchise Agreement for each such Franchised Centre unit as
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                described in Section 2 hereof. Master Franchisee owned centres, and Franchised Centres
                shall be referred to collectively in this agreement ([Franchisor] Centre(s)”); and

1.2     Except as otherwise described in Section 2.8 hereof, neither [Franchisor] nor any affiliate of
[Franchisor] shall establish or operate, or franchise any entity to establish or Operate, a business using the
Proprietary Marks and System at any location within the Territory.

1.3     Master Franchisee expressly acknowledges and agrees that the rights granted hereunder are non-
exclusive. [Franchisor] shall retain the right among others, for itself or through any affiliate, and in any
manner and on any terms and conditions [Franchisor] deems advisable, and without granting Master
Franchisee any rights therein:

        (a)     To own acquire, establish and/or operate, and license others to establish and operate,
                businesses using the Proprietary Marks, or other Proprietary Marks, and System outside
                the Territory (which business may solicit customers inside the Territory);

        (b)     To own, acquire, establish and/or operate, and license others to establish and operate,
                businesses under other Proprietary Marks, or other systems, provided such businesses
                are not similar to or related to the business carried out at the [Franchisor] Centres, at any
                location within or outside the Territory; and

        (c)     To sell or distribute, at retail or wholesale directly or indirectly, or license others to sell or
                distribute, any products which bear any Proprietary Marks, including the Proprietary
                Marks, outside the Territory.

                (i)      In the event that [Franchisor] wishes to sell or distribute products which bear
                         any of the Proprietary Marks within the Territory through channels of
                         distribution that are different from [Franchisor] Centres, [Franchisor] shall so
                         advise Master Franchisee, and [Franchisor] and Master Franchisee agree that
                         they will in good faith negotiate the manner in which such products may be sold
                         or distributed in [province(s)] and an equitable apportionment of the benefits
                         resulting from the sale and distribution of such products.

2.      TERM, RENEWAL AND DEVELOPMENT OF THE TERRITORY

2.1    Except as otherwise provided herein, the term of this Agreement shall commence on the Effective
Date described in Section 21 hereof and shall expire ten (10) years from the date of its execution.

2.2      Master Franchisee may, at its option renew this Master Franchise Agreement for additional terms
of ten (10) years each, subject to the following preconditions:

        (a)     Master Franchisee shall give [Franchisor] written notice of Master Franchisee’s election
                to renew no fewer than twelve (12) months prior to the end of the then-current term;

        (b)     Master Franchisee shall not be in default of any provision of this Agreement or any other
                Agreement between Master Franchisee and [Franchisor] or [Franchisor]‘s affiliates and
                Master Franchisee shall have complied with all such Agreements throughout the term of
                this Agreement.

2.3     Master Franchisee undertakes that there shall be open and in operation no fewer than the
minimum cumulative number of [Franchisor] Centres described in the “Minimum Cumulative Number
of [Franchisor] Centres Open and in Operation” in the Development Schedule attached as Exhibit A
hereto; provided however that Master Franchisee shall have at least one (1) Master Franchisee-owned
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Centre in operation for at least three (3) months prior to entering into a Franchise Agreement with any
Franchisee, unless otherwise approved by [Franchisor]. The first [Franchisor] Centre opened for business
in the Territory in accordance with the foregoing will hereinafter be referred to as the “Pilot Centre.”

2.4    Each [Franchisor] Centre, including any [Franchisor] Centre established and operated by the
Master Franchisee in accordance with the provisions of Section 1.2 hereof, shall be established and
operated pursuant to a unit franchise agreement (“Franchise Agreement”) prepared by [Franchisor].

2.5     [Franchisor] shall provide Master Franchisee with an executed copy of each Franchise Agreement
within fourteen (14) days of execution.

2.6     Master Franchisee shall provide [Franchisor] with the date of opening of each [Franchisor]
Centre at least thirty (30) days prior to opening.

2.7       Master Franchisee’s failure to adhere to the Development Schedule shall result in a loss of the
exclusivity provided in Section 1.3 hereof. In such event [Franchisor] shall thereafter have the right itself
to establish and operate, or to grant others the right to establish and operate, [Franchisor] Centres under
the System and the Proprietary Marks in the Territory, provided however that this Agreement shall
otherwise continue in effect and Master Franchisee’s other rights and obligations hereunder shall remain
in full force and effect.

3.      FEES

3.1     Master Franchisee shall pay to [Franchisor] an initial Master Franchisee fee of [franchise fee]
Dollars ($                     ) payable as follows:

                               Dollars ($              ) upon the execution of each Franchise
        Agreements with [Franchisor] Centre franchisees, until the full [franchise fee] Dollars ($
              ) is paid.

3.2     In addition to the fees described in Section 3.1, Master Franchisee shall pay [Franchisor]:

                                   percent (        %) of each and every initial franchise fee paid by each
        Franchisee to Master Franchisee shall be paid to [Franchisor] upon the execution of each
        Franchise Agreement for each [Franchisor] Centre except for the initial Pilot Centre for which no
        portion of the initial franchise fee shall be payable to [Franchisor].

3.3      Master Franchisee shall pay to [Franchisor] monthly, during the term hereof, an ongoing royalty
fee in the amount of               percent (       %) of the Gross Sales of all [Franchisor] Centres subject
to Section 13.3 hereof. [Franchisor] shall receive and account for all royalties from all Franchisees and
retain its                percent (        %) and forward the balance, representing          percent       (
         %) of Gross sales, to the Master Franchisee’s bank account via automatic electronic transfer.

3.4     Master Franchisee shall require all Franchisees to pay a royalty of                   percent (     %)
of Gross Sales at any Franchised Centre and the Pilot Centre, directly to [Franchisor].

3.5      “Gross Sales” shall mean revenue from the sale of all products and services and all other income
or consideration of every kind and nature, received by the [Franchisor] Centres, as appropriate, whether
for cash or credit and regardless of collection in the case of credit, less: (i) any sales taxes or other taxes
collected by Franchisees from its customers and thereafter paid directly to the appropriate taxing
authority.
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3.6     Master Franchisee shall, during the term hereof cause Franchisees and the Pilot Centre to pay
        percent (       %) into the national advertising fund. Such fund will be managed on behalf of all
Franchisees by [Franchisor].

3.7      All payments by Master Franchisee to [Franchisor] shall be made without any deduction for any
taxes, except that Master Franchisee shall in a timely fashion deduct and pay to the appropriate taxing
authorities, on behalf of [Franchisor], any amount which Master Franchisee is required to withhold under
any laws in the Territory on payments made by Master Franchisee to [Franchisor] Master Franchisee
shall transmit, in a timely fashion to [Franchisor] official receipts for payment of all taxes withheld. If
Master Franchisee fails to withhold or pay such taxes, it shall indemnify [Franchisor] for the full amount
of such taxes and for any loss or liability occasioned by Master Franchisee’s failure to withhold as
required by law, including, but not limited to, any penalties, interest, and expenses incurred by
[Franchisor]. All other taxes imposed on payments by Master Franchisee to [Franchisor], including, but
not limited to, value-added taxes, consumption taxes, and sales taxes, which may be imposed now or in
the future under the laws of the Territory or any taxing authority therein, shall be Master Franchisee’s
sole responsibility, and Master Franchisee shall transmit such taxes to the appropriate fiscal authorities.
Such taxes shall not affect Master Franchisee’s obligation to make payments to [Franchisor] as required
under this Agreement.

3.8      In the event that any governmental authority having jurisdiction in the Territory imposes
restrictions on the transfer of funds or currency to places outside of the Territory, [Franchisor], in its sole
discretion, shall have the option to require that Master Franchisee deposit all payments required under
this Master Franchise Agreement to a designated account in the Territory, and that payment of such
accumulated amounts be made to [Franchisor].

4.      DUTIES OF [Franchisor]

4.1     [Franchisor] shall offer an initial training program, in [city], [province], to such individuals
described in Section 5.2 hereof. Such training shall consist of a minimum of two (2) weeks at
[Franchisor]‘s reasonable discretion in the areas of franchise sales and marketing, site selection, store
layout and design, store development, coordination of products and services, franchisee training and
support, and on-going marketing, merchandising and product development.

        (a)      [Franchisor] shall at its own cost and expense, provide on-site training of not more than
                 ten (10) days within the Territory at the Pilot Centre. Such training will consist of
                 equipment operations, marketing, store policies and daily operation.

        (b)      [Franchisor], when requested by Master Franchisee and upon reasonable notice to
                 [Franchisor], provide an initial training program to each of the first      Franchisees or
                 a designated employee of each such Franchisees. Such training (i) shall take place in
                 [city], [province], unless otherwise approved by [Franchisor]; (i) shall be for such
                 duration as and similar in content to the training provided to franchisees in other areas of
                 Canada: (iii) shall be appropriate for operations within the Territory.

        (c)      In the event of such training by [Franchisor], Master Franchisee shall pay [Franchisor] a
                 fee which has been pre-approved by [Franchisor], for providing training instructions,
                 and materials, All other expenses incurred during such initial training will be the
                 responsibility of Master Franchisee or Franchisees.

4.2    [Franchisor] shall loan to Master Franchisee for the duration of this Agreement one copy of
[Franchisor]’s Operating Manual, and such other manuals as [Franchisor] may develop and issue, all of
which are collectively referred to as the “Manual”, which shall document the system.
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4.3      [Franchisor] shall make available, at no charge to Master Franchisee, standard plans (in the form
of “blue-line drawings”), costing and specifications provided to all franchisees for the construction of the
interior design and layout of [Franchisor] Centres.

4.4       If requested by Master Franchisee and at no cost to Master Franchisee, [Franchisor] shall offer
such assistance to Master Franchisee, as [Franchisor] deems reasonable and necessary, in selecting the
initial site for the Pilot Centre. In the event that a [Franchisor] employee is required by Master Franchisee
to provide an on-site evaluation for subsequent sites, Master Franchisee shall pay [Franchisor] a fee of
[per diem] Dollars ($       ) per day for such employees of [Franchisor] providing such site selection
assistance plus reasonable expenses, including, without limitation, the cost of transportation, meals, and
lodging. Master Franchisee acknowledges and agrees that [Franchisor]‘s approval of a site is not, and
shall not be construed as, a guarantee or assurance that such Centre will be profitable or successful.

4.5     [Franchisor] shall assist in developing, at no cost to Master Franchisee, a grand opening
promotional kit consisting of a variety of items, such as a grand opening banner and camera-ready items
and slicks for Master Franchisee’s use in preparing grand opening invitations, printed materials, and
promotional flyers.

4.6     [Franchisor] shall assist in the development of shipping labels and forms and other
miscellaneous supplies required in the daily operation of a [Franchisor] Centre.

4.7     [Franchisor] shall provide, at no charge to Master Franchisee, such initial and continuing advise
and assistance to Master Franchisee in the operation and promotion of the business licensed hereunder as
a reasonable and appropriate.

4.8     [Franchisor] shall conduct, when and as frequently as it deems advisable, inspections of the
business premises of [Franchisor] Centres in the Territory and evaluations of Master Franchisee’s
operations, in order to assist Master Franchisee and to maintain the System’s standards of quality
appearance, and service.

4.9     [Franchisor] shall provide Master Franchisee with the name of the vendor of the computer
system and proprietary software currently used within the [Franchisor] System.

4.10     [Franchisor] shall make available to Master Franchisee, as and when developed, all new or
improved products, services, methods and procedures developed by [Franchisor] for use by its
franchisees. Moreover, Master Franchisee acknowledges that the System must continue to evolve in order
to reflect the changing market, to meet new changing consumer demands and in order to benefit from
new knowledge and experience acquired by [Franchisor] with regard to improved techniques, products
and operations of the System, Accordingly, Master Franchisee agrees that [Franchisor] may from time to
time hereafter, upon notice, acting reasonably and taking into account commercial usages and practices in
the Territory and, in particular, the impact of such changes on Franchisees, modify the System including,
without limitation, the adoption and use of new and modified products, as well as new techniques and
methodologies. Accordingly, and provided that such modifications will not result in Master Franchisee
being in conflict with or be otherwise in breach of any rule or law or statutory provisions and regulations
in force from time to time in the Territory, Master Franchisee agrees to accept, all such modifications to
the System and to implement same within the Territory within a reasonable time frame. [Franchisor]
shall have the right to modify the Manual from time to time in order to reflect such modifications to the
System.

4.11    Master Franchisee shall from time to time submit for review by [Franchisor] any modifications
which it proposes to make to the System to the extent that such modifications are necessary to comply
with applicable laws, ordinances, rules, regulations, administrative orders, decrees and policies of any
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government authority within the Territory, [Franchisor] agrees to incorporate all such modifications and
to make all changes to the Manual in order to reflect each such modification to the system.

4.12    In addition, Master Franchisee may, from time to time submit for review and approval by
[Franchisor] any modifications which it proposes to make to the System to the extent such modifications
may be necessary to comply with current commercial usage, custom, practice and market characteristics
within the Territory, [Franchisor] agrees to consider each such proposed modification within a
reasonable time after there is a submission to [Franchisor]. However, Master Franchisee acknowledges
the importance of maintaining, to the extent possible, the uniformity of the System. Accordingly,
[Franchisor] shall have full discretion in approving or disapproving such proposed modification,
provided [Franchisor] exercises such discretion in good faith as set forth above and no such proposed
medications shall be effective without the prior written consent of [Franchisor]. [Franchisor] agrees to
make all changes to the Manual in order to reflect modifications to the System that it has so approved.
Master Franchisee further acknowledges and agrees that the System and Manual are and shall at all times
remain the sole and exclusive property of [Franchisor].

4.13    Master Franchisee acknowledges and agrees that the System and the Manual as well as any and
all modifications made thereto by Master Franchisee are and shall at all times remain the sole and
exclusive property of [Franchisor].

4.14    [Franchisor] shall make available to Master Franchisee, as and when developed, a copy of its
advertising and promotional materials and art work on an “as is” basis.

5.      DUTIES OF MASTER FRANCHISEE

5.1     Master Franchisee understands and acknowledges that every detail of the System and the
[Franchisor] Centres is essential to Master Franchisee, [Franchisor], Franchisees and other System Master
Franchisees and Franchisees in order to: (i) develop and maintain quality operating standards (ii) increase
the demand for the products and services sold by all Master Franchisees and franchisees operating under
the System; and (iii) protect [Franchisor]‘s reputation and goodwill. Master Franchisee shall maintain
[Franchisor]’s high standards with respect to facilities, services, products, and operations.

5.2       Persons designated by Master Franchisee shall attend and complete to [Franchisor]’s satisfaction,
the initial training program offered by [Franchisor] in [city], [province]. Each such person shall be fluent
in the English language. [Franchisor] shall provide training, instructors, and other materials without
charge, and Master Franchisee shall be responsible for any and all other expenses incurred during the
initial training program.

5.3      Master Franchisee shall employ a trainer fluent in the English language who shall complete, to
[Franchisor]’s satisfaction, [Franchisor]’s training program. Such trainer shall provide training to Master
Franchisee and Franchisee’s employees at such Pilot Centre or other reasonable location as Master
Franchisee shall designate. When one (1) [Franchisor] Centre has been established in the Territory,
Master Franchisee shall, at its sole cost and expense, provide equipment and commence operation of a
training program, using such trainer or replacement trainer which will obtain the same results in training
to [Franchisor]’s training program in the [city], [province], for the purpose of providing training as
required under each franchise Agreement. From time to time [Franchisor] may conduct an audit of the
Master Franchisee’s training program. If [Franchisor], in its sole and substantive judgment, determines
there are deficiencies in Master Franchisee’s training program, Master Franchisee shall take such action as
is required by [Franchisor] to correct such deficiencies, including replacing the Master Franchisee’s
trainer. Master Franchisee shall upon [Franchisor]’s request, timely furnish to [Franchisor] its training
records demonstrating compliance with the training requirements in this Section.
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5.4     Master Franchisee shall adapt and translate if necessary for use in the Territory materials
[Franchisor] provides to Master Franchisee, including without limitation materials provided pursuant to
Section 4.5 and 4.6 hereof.

5.5     Master Franchisee shall cause each Franchisee to use and occupy the premises of each
[Franchisor] Centre solely for the operation of the business franchised hereunder; to refrain from using or
permitting the use of any such premises for any other purpose or activity, and shall require that each
[Franchisor] Centre be open and in normal operation for at least such minimum hours and days as
[Franchisor] may specify in the Manual or otherwise in writing, and as may be required by the lease for
the premises of each [Franchisor] Centre.

5.6      To insure that the highest degree of quality and service is maintained, Master Franchisee shall
cause each Franchisee to operate their [Franchisor] Centres in strict conformity with such methods,
standards and specifications as may from time to time be prescribed in the Manual or otherwise in
writing. Master Franchisee shall cause its franchisees to refrain from: (a) deviating from such standards,
specifications, and procedures without [Franchisor]’s prior written consent; and (b) otherwise operating
in any manner which reflects adversely on the Proprietary Marks or the System.

        (a)     Master Franchisee shall cause each Franchisee to purchase and install, at each
                Franchisee’s expense, and to maintain in sufficient supply and use at all times, only such
                fixtures, furnishings, equipment signs and supplies which conform to standards and
                specifications as set forth in the Manual or otherwise in writing; and to refrain from using
                non-conforming items.

        (b)     Master Franchisee shall cause each Franchisee to sell or offer for sale only such products
                and services as have been expressly approved for sale in the Manual or otherwise in
                writing; shall require Franchisees to discontinue selling, any products or services which
                are not provided for in the Manual and shall require [Franchisor] Centres to refrain, from
                offering any unapproved products or services

        (c)     Master Franchisee acknowledges and agrees that [Franchisor] may, from time to time
                revise the Manual to incorporate System changes as described in Sections 4.10., 4.11 and
                4.12 of this Agreement. Master Franchisee shall require all Franchisees to implement such
                changes in Franchised Centres and complete their implementation within such time as
                [Franchisor] may reasonably specify.

5.7      Master Franchisee shall cause each Franchisee to purchase all products, equipment, supplies and
materials used or sold from suppliers (including manufactures, wholesales and distributors) who have
the ability to meet [Franchisor]‘s reasonable standards and specifications for such items; who possess
adequate quality controls and capacity to supply Master Franchisee’s needs promptly and reliably; whose
approval would enable the System, in [Franchisor]‘s reasonable opinion, to take advantage of
marketplace efficiencies; and who have been approved by [Franchisor] in the Manual or otherwise in
writing or otherwise not thereafter disapproved.

5.8     Master Franchisee shall protect the integrity of the System and Proprietary Marks in the
Territory, including without limitation, by fulfilling all of its obligations imposed on it in its capacity as
Franchisor under each Franchise Agreement, by supervising the manner in which the Trade Marks are
used and the System is implemented and otherwise take all such steps, including, where reasonable and
appropriate, the commencement and diligent prosecution of legal proceedings at its sole cost and
expense, as may be necessary to cause each Franchised Centre in the Territory to observe and perform in
a timely fashion all of its obligations under each relevant Franchise Agreement.
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5.9     Master Franchisee shall maintain a sufficient number of qualified personnel including persons
qualified and experienced to train and supervise Franchisees in the operation of a [Franchisor] Centre, as
well as office facilities, accounting services and the like, within the Territory all of which shall be devoted
to the performance of Master Franchisee’s obligations under this Agreement and to perform all of the
services required to be performed by Master Franchisee pursuant to each Franchise Agreement.

5.10    Master Franchisee shall cause each [Franchisor] Centre in the Territory to be established and
operated pursuant to a Franchise Agreement previously approved by [Franchisor], including all
[Franchisor] Centres operated by an Affiliate or Master Franchisee. In the event that Master Franchisee
wishes to grant to a Franchisee the right to operate more than one [Franchisor] Centre, Master Franchisee
shall nevertheless cause each such Franchisee to enter into a Franchise Agreement for each [Franchisor]
Centre.

5.11      In dealing with Franchisees and otherwise conducting its business, Master Franchisee shall
comply with all applicable laws and regulations in the Territory, including those applicable to the
solicitation of prospective franchisees and the offering and grant of franchisees by Master Franchisee.

5.12    [Franchisor] shall have the right at all reasonable times to inspect the premises from which
Master Franchisee conducts its business. Furthermore, [Franchisor] shall have the right accompanied at
all times by Master Franchisee, to inspect [Franchisor] Centres and the equipment and fixtures therein
and the products and services being sold and generally to investigate the manner in which Franchisees
are conducting their business; in the event of any such inspections, Master Franchisee and its employees
shall cooperate fully and use its best efforts to cause Franchisees and their employees to cooperate fully
with [Franchisor].

5.13    Master Franchisee shall furnish [Franchisor] with a copy of any executed lease for each
[Franchisor] Centre within ten (10) days after execution thereof.

5.14    Master Franchisee shall furnish to [Franchisor] within three (3) days after receipt thereof, a copy
of any notice alleging Master Franchisee’s or any Franchisee’s failure to comply with any law, ordinance,
or regulation.

5.15     Master Franchisee and Franchisees shall have the right to advertise and sell all products and
services at any prices Master Franchisee or the Franchisees may determine , in the sole and absolute
discretion of each such party, and shall in no way be bound by any price which may be recommended or
suggested by [Franchisor].

5.16    In dealing with prospective Franchisees, Master Franchisee shall:

        (a) Carefully screen and evaluate prospective Franchisees pursuant to the standards prescribed
               by [Franchisor]; and

        (b)      For each Franchisee, Master Franchisee shall, at its sole expense, fulfill all its duties, and
                 enforce all the terms and conditions, under each Franchise Agreement, including,
                 without limitation, to:
                 (i)     Provide site selection counseling and assistance, on site inspections, site
                         evaluations, and site recommendations, without any guarantee that any Centre
                         will be profitable or successful;
                 (ii)    Provide initial training required, and optional training programs, seminars and
                         workshops;
                 (iii)   Assist in review of contracts and leases, and furnish advise to Franchisee
                         concerning lease negotiations, if applicable;
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                (iv)     Provide to Franchisees standard plans (in the form of “blue-line drawings”) and
                         specifications for the construction of the interior design and layout of the
                         Franchised Centre (adapted by Master Franchisee for use in the Territory as
                         required in Section 6.1 hereof), advise and consult with the Franchisee regarding
                         the construction and/or renovation of the Franchised Centre, conduct on-site
                         inspections during construction and/or renovation, and ensure upon completion
                         of construction and/or renovation that construction and/or renovation has been
                         completed in accordance with the plans and specifications;
                (v)      Upon completion of construction and/or renovation, inspect the Franchised
                         Centre to confirm that it has been equipped in accordance with approved plans
                         and specifications;
                (vi)     Provide a Manual and all updates thereto, translated into the required language
                         or languages of the Territory;
                (vii)    Furnish the grand opening promotional program and the initial set of business
                         forms , shipping and product labels, and other miscellaneous supplies adapted
                         for use in the Territory;
                (viii)   Provide such opening assistance, and other assistance as designated by
                         [Franchisor];
                (ix)     Visit each Franchised Centre in the Territory once each quarter during the term
                         of the relevant Franchise Agreement and any renewals thereof, in order to
                         provide continuing assistance as reasonably determined by Master Franchisee,
                         inspect the premises of such [Franchisor] Centre to determine whether
                         Franchisee’s continued operation is in conformity with [Franchisor]‘s
                         procedures, standards and specifications, and verify compliance by Franchisee
                         and Franchisee’s employees with all applicable laws, rules, regulations, and
                         procedures;
                (x)      Monitor and submit to [Franchisor], at [Franchisor]’s request, written reports on
                         such forms and at such times as [Franchisor] may request and, upon
                         [Franchisor]’s request, promptly take all steps necessary to remedy any and all
                         matters reasonably requested by [Franchisor] and as would a reasonable and
                         responsible Franchisor, including without limitation:
                         A.      Any apparent deficiencies and problems concerning the uniformity and
                                 quality of service provided by the Franchisee;
                         B.      Any apparent opportunities for the Franchisee to improve its
                                 performance;
                         C.      Any apparent deviations from [Franchisor]’s operating procedures,
                                 standards, and specifications provided for in the Manual or from proper
                                 usage of the Proprietary Marks; and
                         D.      Any apparent violations of applicable laws, rules or regulations.

6.      CONSTRUCTION OF LEASEHOLD IMPROVEMENTS

6.1     Master Franchisee shall, at its expense, modify the blue-line drawings described in Section 4.3
hereof for use in the Territory including adaptation to applicable national and local laws regulations, and
ordinances.
                                                   - 12 -


6.2      Master Franchisee shall employ a qualified architect or engineer to prepare final plans and
specifications for constructing the premises for [Franchisor] Centres based upon the plans and
specifications furnished by [Franchisor] and adapted by Master Franchisee.

6.3    Master Franchisee shall submit to [Franchisor] final plans for the Pilot Centre and not proceed
with any construction until [Franchisor]’s written approval has been received.

6.4      Master Franchisee shall prepare or shall cause its Franchisees to prepare final plans and
specifications based on the standard plans and specifications for constructing the premises for
[Franchisor] Centres approved by [Franchisor] and will not permit any Franchisee to deviate, from any
final plans and specifications without Master Franchisee’s prior written approval.

6.5     Master Franchisee shall not open the Pilot Centre for business without the written authorization
of [Franchisor], which authorization may be conditional upon Master Franchisee’s strict compliance with
the specifications of the approved final plans.

7.      PROPRIETARY MARKS

7.1     [Franchisor] represents with respect to the Proprietary Marks that:

        (a)     Application has been made for registration of the Proprietary Marks identified in Exhibit
                B hereto. Master Franchisee acknowledges and agrees that [Franchisor] may be unable to
                obtain registration of some or all of the Proprietary Marks for which application has been
                made and further acknowledges and agrees that, if [Franchisor] is unable to obtain any
                such registrations, [Franchisor] shall incur no liability therefor to Master Franchisee,
                except as provided for in Sections 7.2 and 7.3 herein;

        (b)     [Franchisor] shall take all steps reasonably necessary to preserve and protect the validity
                of the Proprietary Marks; and

        (c)     [Franchisor] shall permit Master Franchisee to use the Proprietary Marks only in
                accordance with the System and the standard and specifications attendant thereto which
                underlie the goodwill associated with and symbolized by the Proprietary Marks.

7.2     With respect to Master Franchisee’s use of the Proprietary Marks, Master Franchisee agrees that:

        (a)     Master Franchisee shall use only the Proprietary Marks designated by [Franchisor], and
                shall use them only in the manner authorized and permitted by [Franchisor];

        (b)     Master Franchisee shall not apply to register any of the Proprietary Marks or any
                trademarks or service marks confusingly similar to the Proprietary Marks in any country
                in the world;

        (c)     Master Franchisee shall use the Proprietary Marks for the purpose of carrying on its
                business and in conjunction with the operation of the Centres and in conjunction with
                advertising and marketing for [Franchisor] Centres;

        (d)     Unless otherwise authorized or required by [Franchisor], Master Franchisee shall operate
                the business licensed hereunder and cause Franchisees to operate and advertise the
                [Franchisor] Centres only under the name “[Franchisor],” without prefix or suffix;

        (e)     Master Franchisee shall identify itself as an independent entity at the premises at which it
                carries on hereunder in conjunction with any use of the Proprietary Marks and shall
                                         - 13 -


      place a written notice to such effect, in a form approved by [Franchisor], in a
      conspicuous location on such premises;

(f)   Master Franchisee’s right to use the Proprietary Marks is limited to such uses as are
      authorized under this Agreement, and any unauthorized use thereof shall constitute and
      infringement;

(g)   Master Franchisee shall not use the Proprietary Marks to incur any obligation or
      indebtedness on behalf of [Franchisor];

(h)   Master Franchisee shall promptly execute any documents deemed necessary by
      [Franchisor] or its affiliates to obtain protection for the Proprietary Marks or to maintain
      their continued validity and enforceability, including, without limitation, executing such
      registered user agreement(s) as [Franchisor] shall request;

(i)   Master Franchisee shall promptly notify [Franchisor] of any suspected unauthorized use
      of, or any challenge to the validity or use of, the Proprietary Marks. Master Franchisee
      acknowledges that [Franchisor] shall have the sole right to direct and control any
      administrative proceeding or litigation involving the Proprietary Marks, including any
      settlement thereof. [Franchisor] agrees to consult with Master Franchisee with respect to
      responding to each infringement or violation. [Franchisor] shall have the right, but not
      the obligation, to take action against uses by others that may constitute infringement of
      the Proprietary Marks. [Franchisor] shall defend Master Franchisee and any Franchisee
      against any third party claim, suit, or demand arising out of Master Franchisee’s or
      Franchisee’s use of the Proprietary Marks. If Master Franchisee and any Franchisee have
      used the Proprietary Marks in accordance with this Agreement and the Franchisee’s
      Franchise Agreement, as appropriate, the cost of such defense, including the cost of any
      judgment or settlement, shall be borne by [Franchisor]. If Master Franchisee or any
      Franchisee has not used the Proprietary Marks in accordance with this Agreement, and
      the Franchise Agreement and the Franchisee’s Franchise Agreement, as appropriate, the
      cost of such defense, including the cost of any judgment or settlement, shall be borne by
      Master Franchisee or such Franchisee. In the event of any litigation relating to Master
      Franchisee’s or a Franchisee’s use of the Proprietary Marks, Master Franchisee or such
      Franchisee shall execute any and all documents and do such acts as may in the opinion of
      [Franchisor]’s counsel, be necessary to carry out such defense or prosecution including,
      but not limited to, becoming a nominal party to any legal action. Except to the extent that
      such litigation is the result of Master Franchisee’s or a Franchisee’s use of the Proprietary
      Marks, [Franchisor] agrees to reimburse Master Franchisee or such Franchisee for its out
      of-pocket litigation costs in cooperating with [Franchisor] with respect to the litigation;
      and

(j)   Notwithstanding the foregoing, if [Franchisor] declines to institute legal proceedings,
      Master Franchisee may institute legal proceedings at its sole cost and expense provided,
      however that such proceedings do not detract from or compromise the quality or
      integrity of the Proprietary Marks and System. [Franchisor] shall always be free, at its
      own cost and expense, to subsequently join in any pending proceedings. Master
      Franchisee agrees that any relief (such as, injunctive) other than the monetary one which
      is requested to protect the Proprietary Marks shall be sought for and on behalf of and
      shall be designated to the benefit of [Franchisor]. “Legal Proceedings” as used herein
      shall include demand letters, negotiation and settlement of disputes, as well as the filing
      of formal legal actions with a court of proper jurisdiction.
                                                   - 14 -


        Under no circumstances shall Master Franchisee have the authority to settle or compromise a
        matter which in any way mitigates, lessens, or restricts [Franchisor]’s ownership in the
        Proprietary Marks or [Franchisor]’s right to use the Proprietary Marks without [Franchisor]’s
        written approval and any action which does shall be a breach of this Agreement.

7.3    Master Franchisee shall not use the Proprietary Marks as part of its corporate or other legal
names.

7.4     Master Franchisee expressly understands and acknowledges that:

        (a)     The Proprietary Marks are valid and serve to identify the System and those who are
                franchised under the System; and

        (b)     During the term of this Agreement and after its expiration or termination, Master
                Franchisee shall not directly or indirectly contest the validity or ownership of the
                Proprietary Marks, nor take any other action which may tend to jeopardize [Franchisor]’s
                rights therein, or [Franchisor]’s right to use and to license others to use the Proprietary
                Marks; and

        (c)     Master Franchisee’s use of Proprietary Marks does not give Master Franchisee any
                ownership interest or other interest in or to the Proprietary Marks other than the license
                granted by this Agreement; and

        (d)     Any and all goodwill arising from Master Franchisee’s use of the Proprietary Marks shall
                enure solely and exclusively to the benefit of [Franchisor]. Upon expiration or
                termination of this Agreement, no monetary amount shall be assigned as attributable to
                any goodwill associated with Master Franchisee’s use of the System or Proprietary
                Marks; and

        (e)     Except as specified in Section 1.3 hereof, [Franchisor] shall have and retains the rights
                among others: (a) to use the Proprietary Marks themselves in connection with selling
                products and services; (b) to grant other licenses for the Proprietary Marks, in addition to
                those licenses already granted; and (c) to develop and establish other systems using the
                Proprietary Marks, similar to Proprietary Marks, or any other Proprietary Marks, and to
                grant licenses or Master Franchises thereto without providing any rights therein to
                Master Franchisee; and

        (f)     [Franchisor] reserves the right to substitute different Proprietary Marks for use in
                identifying the System and the businesses operating thereunder in the Territory if the
                Proprietary Marks cannot be used, or if [Franchisor], in its sole discretion, determines
                that substitution of different Proprietary Marks in the Territory will be beneficial to the
                System. In such circumstances, the use of the substituted Proprietary Marks shall be
                governed by the terms of this Agreement, and [Franchisor] shall not compensate Master
                Franchisee for such substitution and shall bear only the cost of modifying Master
                Franchisee and Franchisees signs, printed materials and advertising materials to conform
                to [Franchisor]’s new Proprietary Marks. Master Franchisee shall promptly implement
                any such substitution.

8.      CONFIDENTIAL MANUALS AND INFORMATION

8.1     In order to protect the reputation and goodwill of [Franchisor] and to maintain high standards of
operation under the Proprietary Marks and the System, Master Franchisee shall conduct its business in
accordance with the Manual, one copy of which (in the English language), Master Franchisee
                                                   - 15 -


acknowledges receipt. Master Franchisee shall treat the Manual, and the information contained therein,
as confidential, and shall use all reasonable efforts to maintain such information as secret and
confidential. Except for provision of the Manual to Franchisees and key employees who require access to
the Manual for the purpose of discharging their responsibilities, Master Franchisee shall not at any time
copy, duplicate, record or otherwise reproduce the foregoing materials, in whole or in part, nor otherwise
make the same available to any unauthorized person. The Manual and any translation or adaptation
thereof including any copyright therein shall at all times remain the sole property of [Franchisor].

8.2      Master Franchisee shall translate the Manuals into any required language for use in the Territory,
and, prior to any use, shall promptly provide a copy of such translation to [Franchisor] for [Franchisor]’s
approval. Master Franchisee may propose changes in the Manual to conform the Manual to the laws and
customs of, and market characteristics in, the Territory; provided, however, that no changes may be made
without [Franchisor]’s prior written approval. Master Franchisee shall pay all costs and expenses in
translating and adapting the Manual for use in the Territory. [Franchisor] shall use its best efforts to
approve or disapprove all changes in the Manual and any translation thereof prepared by Master
Franchisee within thirty (30) days of receipt of such changes or translation.

8.3      Master Franchisee shall ensure that its Manual is kept current; and, in the event of any dispute as
to the contents of the Manual, the terms of the master copy of the Manual maintained by [Franchisor] (in
the English language) shall be controlling.

8.4      Except as specifically authorized herein, Master Franchisee shall not, during or after the term
hereof, communicate, divulge, or use for the benefit of any other person, persons, partnership,
association, or corporation, any confidential information, knowledge, or know how concerning the
methods of operation of any [Franchisor] Centre which may be communicated to Master Franchisee or of
which Master Franchisee may be apprised by virtue of Master Franchisee’s operation to those employees
of Master Franchisees and Franchisees who must have access to it in order to perform their
responsibilities. Any and all information, knowledge, know-how, and techniques, which [Franchisor]
designates as confidential, shall be deemed confidential for purposes hereof. The foregoing undertaking
shall not apply to any such information, knowledge, know-how and techniques which Master Franchisee
can demonstrate was in the public domain at the time of disclosure of such information to Master
Franchisee by [Franchisor] or subsequently thereafter becoming public knowledge.

8.5      Master Franchisee acknowledges that any failure to comply with the requirements of this Section
8 will cause [Franchisor] irreparable injury for which no adequate remedy at law may be available, and
Master Franchisee agrees that [Franchisor] may seek, and Master Franchisee agrees to pay, all court cost
and reasonable attorneys’ fees incurred by [Franchisor] in obtaining, without posting, a bond, an order
for injunctive or other legal or equitable relief with respect to the requirements of this Section 8.

8.6      Master Franchisee shall require and obtain execution of confidentiality covenants similar to those
set forth in Section 8.4 hereof, as required pursuant to Section 15.7 hereof.

9.      ADVERTISING

Recognizing the value of advertising and promotion, and the importance of the standardization of
advertising and promotional programs to the furtherance of the goodwill and public image of the System,
the parties agree as follows:

9.1     [Franchisor] shall create and administer a System-wide advertising fund (“National Advertising
Fund”) for the Territory. Each month, each [Franchisor] Centre will contribute              percent         (
        %) of Gross Sales (“Advertising contribution”) to the System-wide fund. Except as otherwise
described herein, [Franchisor] shall utilize the Advertising contribution as described in Section 9.5 hereof.
                                                   - 16 -


9.2          Master Franchisee shall also ensure that all [Franchisor] Centres in the Territory contribute
             percent ( %) of Gross Sales to a local advertising fund (“Cooperative”) as described in
Section 9.6 hereof.

9.3      All Advertising and promotion by Master Franchisee and Franchisees shall be conducted in a
dignified manner, conform to such standards as [Franchisor] shall establish in the Manual or otherwise in
writing. Master Franchisee shall submit to [Franchisor] (in the manner prescribed in Section 19) samples
of all advertising and promotional plans and materials used by Master Franchisee or any Franchisee not
previously approved by [Franchisor] within seven (7) days of first use. Master Franchisee and such
Franchisees may continue use of such plans or materials, unless [Franchisor] prohibits further use of such
materials effective immediately upon receipt of written notice by Master Franchisee.

9.4     In addition to the advertising expenditure required in Section 9.1 hereof, immediately preceding
and following the opening of each [Franchisor] Centre in the Territory, Master Franchisee shall required
each Franchisee to conduct an initial local advertising and promotion program. Master Franchisee shall
require that each Franchisee spend the equivalent of at least                     Dollars ($
        ) for such program.

9.5       All [Franchisor] Centres shall, at their expense, in accordance with any standards established in
the Manual, and in addition to its expenditures for advertising required by Section 9.1 hereof, obtain
listings in the principal telephone directory serving each area in which a [Franchisor] Centre is located. In
the event that more than one [Franchisor] Centre is located within the geographic area served by the
principal telephone directory, then, in such event, the [Franchisor] Centre shall join with the [Franchisor]
Centre or such other [Franchisor] Centres in a single directory listing of all such [Franchisor] Centres and
pay the pro-rata share of the cost of such listing.

9.6     Master Franchisee shall establish, maintain, and administer a Cooperative Fund in the Territory
and shall forthwith advise [Franchisor] of the establishment of such Cooperative Fund. The following
provisions shall apply to the Cooperative Fund:

        (a)     The Cooperative Fund, all contributions thereto and any earnings thereon, shall be used
                exclusively to meet any and all costs of maintaining, administering, directing,
                conducting, and developing the preparation of advertising, marketing, public relations,
                and/or promotional programs and materials, and any other activities which Master
                Franchisee believes will benefit the System in Territory, including, among other things,
                the costs of preparing and conducting advertising campaigns in various media;
                preparation of direct mail advertising; market research; employing advertising and/or
                public relations agencies to assist therein; purchasing promotional items; conducting and
                administering in-store promotions; providing promotional and other marketing materials
                and services to the businesses operating under the System; and point-of-purchase
                materials;

        (b)     Master Franchisee shall direct all advertising and promotional programs, with approval
                of [Franchisor], regarding the creative concepts, materials, and media used in such
                programs, and the placement and allocation thereof;

        (c)     All payments of the Cooperative Fund shall be made by [Franchisor] Centres by separate
                cheque payable to the [Franchisor] Cooperative Fund. All sums paid to the Cooperative
                Fund shall be maintained in an account separate from the other monies of Master
                Franchisee, and shall not be used to defray any expenses of Master Franchisee, except for
                such reasonable cost, and overhead, if any, as may be incurred in activities reasonably
                related to the administration or direction of the advertising programs and the
                Cooperative Fund, including, among other things, costs of personnel for creating and
                                                  - 17 -


                implementing advertising, promotional, and marketing programs. The Cooperative Fund
                and any earnings thereon shall not otherwise enure to the benefit of Master Franchisee,
                Master Franchisee shall maintain separate bookkeeping accounts for the Cooperative
                Fund; and

        (d)     A statement of the operations of the Cooperat
								
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