AREA DEVELOPMENT AGREEMENT
AREA DEVELOPMENT AGREEMENT
THIS AREA DEVELOPMENT AGREEMENT (this “Agreement”) is made and entered into this __________day of 2022 (“Effective Date”), by and between CHISOR Franchising, LLC, a Texas limited liability company, (“Franchisor”) and ______________(“Developer”).
RECITALS
A. WHEREAS, Franchisor has developed and administers a system that provides various techniques and methods, various trade secrets, copyrights, confidential and proprietary information and other intellectual property rights (the “System”) for the establishment and operation of a distinctive Physical therapy practice or for the management of such practice (the “Business” or “Practice”) of which is identified by the “100% PT” trade name and other trademarks and service marks licensed hereunder (the “Marks”).
B. WHEREAS, the System includes the Marks and trade secrets, proprietary methods, information and procedures for the establishment and operation and or management of a Physical therapy Practice, including, without limitation, confidential manuals (collectively, the “Manual”), methods, equipment, furniture and fixtures, marketing, advertising and sales promotions, cost controls, accounting and reporting procedures, personnel management, distinctive interior design and display procedures, and color scheme and decor.
C. WHEREAS, Franchisor has licensed from 100%, Inc., a Colorado corporation (“Licensor” and owner of the Marks) the rights to the Marks for use in connection with its franchise program which Franchisor grants to qualified persons who are willing to undertake the required investment and effort, a license to establish and manage a 100% Physical therapy Practice (the “Business” or the “Practice”.)
D. WHEREAS, Developer has applied for a license to establish and manage multiple 100 % Physical therapyfranchises.
NOW, THEREFORE, the parties, in consideration of the undertakings and commitments of each party to the other set forth in this Agreement, hereby agree as follows:
1. GRANT
(a) Franchisor hereby grants to Developer, pursuant to the terms and conditions of this Agreement, the right to purchase, establish and operate or manage the 100% Physical therapy franchises within the territory described in Exhibit A attached hereto and incorporated by this
reference (“Designated Territory”).
(b) Developer shall be bound by the Development Schedule (“Development Schedule”) set forth in Exhibit B. Time is of the essence to this Agreement. Each Business shall be established and operated pursuant to a separate franchise agreement (“Franchise Agreement”) to be entered into by Developer and Franchisor. Each Franchise Agreement shall be in Franchisor’s then-current form of the Franchise Agreement which may different than the initial Franchise Agreement, provided (i) the royalty fee of $2,500 per month and (ii) territory protection, shall remain as set forth in this Agreement and for the term of each Franchise Agreement entered into under the Schedule of Development. Developer acknowledges and agrees that all Franchise Agreements entered into in connection with the Businesses are independent of this Agreement.
(c) This Agreement is not a Franchise Agreement, and Developer shall have no right to use the Marks in any manner by virtue hereof or to engage in the business of offering, selling or distributing goods or services under the Marks or the System in any manner. All such rights, as applicable will be provided by the Franchise Agreements.
(d) Developer shall have no right under this Agreement to license others or to sell franchises to operate a business or use the System or the Marks.
2. NO EXCLUSIVITY
(a) Developer receives no exclusive rights to the Designated Territory under this Agreement.
(b) During the term of this Agreement, Franchisor reserves the right to:
(i) establish and operate, and allow others to establish and operate, a Business using the Marks and the System, anywhere inside or outside the Designated Territory, on such terms and conditions as Franchisor deems appropriate but not for Physical therapyservices;
(ii) establish and operate, and allow others to establish and operate, Competitive Businesses that may offer products and services which are identical or similar to products and services offered by the Businesses, under trade names, trademarks, service marks and commercial symbols different from the Marks;
(iii) establish, and allow others to establish, other businesses and distribution channels (including, but not limited to, temporary facilities and Internet-based facilities), wherever located or operating and regardless of the nature or location of the customers with whom such other businesses and distribution channels do business, that operate under the Marks or any other trade names, trademarks, service marks or commercial symbols that are the same as or different from Marks, and that sell products and/or services that are identical or similar to, and/or competitive with, those that our franchisees customarily sell;
(iv) acquire the assets or ownership interests of one or more businesses providing products and services similar to those provided at a franchisee Business and franchising, licensing or creating similar arrangements with respect to these businesses once acquired, wherever these businesses (or the franchisees or licensees of these businesses) are located or operating (including in the Designated Territory);
(v) be acquired (whether through acquisition of assets, ownership interests or otherwise, regardless of the form of transaction), by a business providing products and services similar to those provided at the Business, or by another business, even if such business operates, franchises and/or licenses competitive businesses in the Designated Territory; and
(vi) engage in all other activities not expressly prohibited by this Agreement.
3. DEVELOPMENT AND FRANCHISE FEE
(a) As consideration for the rights and options granted herein, Developer shall pay to Franchisor a development fee. The Development Fee is to be paid simultaneously with the execution of this Agreement. The Development Fee is non- refundable, save as may be expressly contained herein or in any Franchise Agreement.
(b) The Development Fee is based upon the number of franchises you agree to develop and operate as set forth in Exhibit B. Upon payment by Developer the fee shall be fully paid with no addition fee or franchise fees required during the Term.
(c) Developer shall submit a separate application for each Franchise to be established within the area selected by Developer. Upon approval, a separate Franchise Agreement shall be executed for each franchise acquired under this Agreement. Upon the execution of each Franchise Agreement, the terms and conditions of such Franchise Agreement shall control the establishment and operation of such franchise. The latest date that each Franchise Agreement is to be signed is set forth in Exhibit B.
(d) Upon termination of this Agreement, and prior to completion of the Development Schedule in Exhibit B, Developer shall be entitled to refund of the Development Fund for any and all franchises not developed by the Developer.
4. DEVELOPMENT SCHEDULE
(a) Developer agrees to have open and in operation at the end of each development period set forth on the Development Schedule in Exhibit B, the cumulative number of franchised Businesses set forth on such Schedule. Developer shall at all times after the opening of a franchised Business continuously maintain it in operation under its Franchise Agreement for the balance of the term applicable to each such Franchise Agreement.
(b) Developer shall execute the then-current form of the Franchise Agreement for the applicable franchised Business and comply with its terms subject to those items that remain the same throughout the term of each Franchise Agreement as described in Sec 1(b).
Franchisor shall execute each Franchise Agreement only if (i) Developer is in compliance with all
requirements and obligations of this Agreement and all other agreements between Franchisor and
Developer including all franchise agreements, and (ii) Developer is in strict compliance with all of
Developer’s respective obligations under each Franchise Agreement, including, without limitation, its
financial obligations and obligation to operate each Business in compliance with the System. In order to
meet the Development Schedule, the Franchise Agreement must be executed by Developer and
Franchisor, and the Business to be operated under such Franchise Agreement must be open for business
as set forth in Exhibit B.
5. TERM
The term of this Agreement and all rights granted hereunder to Developer shall expire on the date of
Franchisor’s and Developer’s execution of the Franchise Agreement for the last Business to be
established pursuant to the Development Schedule.
6. DEVELOPER’S DUTIES
Developer shall perform the following obligations:
(a) Developer shall comply with all terms and conditions set forth in this Agreement.
(b) Developer shall comply with all of the terms and conditions of each Franchise Agreement. However, Developer will not be required to attend the initial franchisee training conducted by Franchisor in connection with the second or any subsequent Business.
(c) At any time during this Agreement, if Franchisor reasonably believes that Developer needs assistance in managing its locations, it can require Developer to engage a district manager, approved by Franchisor, to oversee the development and operation of the Businesses.
(d) Developer shall at all times preserve in confidence any and all materials and information furnished or disclosed to Developer by Franchisor, and Developer shall disclose such information or materials only to such of Developer’s employees or agents who must have access to it in connection with their employment. All of Developer’s employees or agents who must have access to such information or materials shall be required to execute nondisclosure agreements in the form acceptable to Franchisor. Developer shall not at any time, without Franchisor’s prior written consent, copy, duplicate, record or otherwise reproduce such materials or information, in whole or in part, nor otherwise make the same available to any unauthorized person.
(e) Developer shall return to Franchisor all manuals and other confidential information that Developer received from Franchisor in the course of operating the Businesses when Developer leaves the System.
7. PROPRIETARY MARKS/CONFIDENTIALITY
Notwithstanding any provision to the contrary under this Agreement, the parties agree that this Agreement does not grant Developer any right to use the Marks or to use any of Franchisor’s confidential information. Further, the parties agree that this Agreement does not grant Developer any copyright or patent rights which Franchisor now owns or may hereinafter own. Rights to the Marks, confidential information or copyrights and Developer is granted only those rights the Franchise Agreements.
8. DEFAULT AND TERMINATION
(a) The rights granted to Developer in this Agreement have been granted in reliance on Developer’s representations and warranties, and strictly on the conditions set forth in this Agreement, including the condition that Developer strictly complies with the Development Schedule.
(b) Developer shall be deemed in default under this Agreement, and all rights granted herein to Developer shall automatically terminate without notice: (i) if Developer is adjudicated bankrupt, becomes insolvent, commits any affirmative action of insolvency or files any action or petition of insolvency, or if a receiver (permanent or temporary) of Developer’s property or any part thereof is appointed by a court of competent authority or if Developer makes a general assignment for the benefit of Developer’s creditors; (ii) if a final judgment remains unsatisfied of record for thirty (30) days or longer (unless supersedeas bond is filed); (iii) if execution is levied against Developer’s business or property situated within and forming any franchise, or (iv) if suit to foreclose any lien or mortgage against Developer’s premises or equipment, situated within and forming any franchise, is instituted against Developer and not dismissed within thirty (30) days or is not in the process of being dismissed; provided, however, that Franchisor reserves the right to be named as trustee or receiver in any voluntary petition for bankruptcy or insolvency filed by Developer.
(c) Any of the following events shall constitute a default under this Agreement when Developer does any of the following:: (a) fails to enter into Franchise Agreements with Franchisor pursuant to this Agreement on or before the dates set forth on the Development Schedule; (b) fails to comply with any other term or condition of this Agreement; (c) makes or attempts to make a transfer or assignment of this Agreement in violation of this Agreement or (d) fails to comply with the terms and conditions of any individual Franchise Agreement with Franchisor or of any other agreement to which Developer and Franchisor are parties. Upon any such default, Franchisor, in Franchisor’s discretion, may issue notice upon Developer, demanding Developer remedy the breach within 10 days, failure of which Franchisor may do any one or more of the following:
(i) Terminate this Agreement and all rights granted hereunder to Developer effective immediately upon receipt by Developer of written notice from Franchisor;
(ii) Reduce the number of franchises that have not yet signed a Franchise Agreement; or
(iii) Exercise any other rights and remedies that Franchisor may have.
(d) In the event that Franchisor is: (i) adjudicated bankrupt, becomes insolvent, commits any affirmative action of insolvency or files any action or petition of insolvency, or if a receiver (permanent or temporary) of Franchisor’s property or any part thereof is appointed by a court of competent authority or if Franchisor makes a general assignment for the benefit of Franchisor’s creditors; (ii) commences or is in the process of dissolution or winding up; or (iii) is suspected and/or confirmed to be engaging in criminal activity; Developer shall have the right to either (i) terminate the agreement with immediate effect; or (ii) Sell the development rights to a third-party without prior approval from the Franchisor notwithstanding any other provision in this agreement.
(d) Upon termination of this Agreement, all remaining rights and obligations granted Developer to establish Businesses under this Agreement shall automatically terminate and Franchisor shall have no obligation to return any of the remaining Development Fee to Developer. Developer shall have no right to establish or operate any Business for which a Franchise Agreement has not been executed by Franchisor. Notwithstanding the above, the Developer must continue to comply with the terms and conditions of each Franchise Agreement and shall control in determining whether any default exists under such Franchise Agreement. Developer shall be entitled to refund of the Development Fund for any and all franchises not developed by the Developer.
(f) No right or remedy herein conferred upon or reserved to the Parties is exclusive of any other right or remedy provided or permitted by law or equity.
9. TRANSFERABILITY
(a) Developer acknowledges that Franchisor maintains a staff to manage and operate the franchise system and that the members of the staff can change as employees come and go. Developer represents that Developer has not signed this Agreement in reliance on any particular owners, directors, officers or employees remaining with Franchisor in that capacity. Franchisor may change Franchisor’s ownership or form and/or assign this Agreement and any other agreement to a third party without restriction.
(b) Developer understands and acknowledges that the rights and duties set forth in this Agreement are personal to Developer and are granted in reliance upon Developer’s personal qualifications. Developer has represented to Franchisor that Developer is entering into this Agreement with the intention of complying with its terms and conditions and not for the purpose of resale of the developmental rights hereunder.
(c) Neither Developer, nor any of Developer’s owners without Franchisor’s prior written consent, by operation of law or otherwise, shall sell, assign, transfer, convey, give away or encumber to any, person entity or partnership, any or all of their ownership interest in Developer or Developer’s interest in this Agreement or offer, permit or suffer the same to be sold, assigned, transferred, conveyed, given away or encumbered in any way to any person, entity or partnership.
Any purported assignment of any of Developer’s or any of the owners’ rights herein, not having the aforesaid consent, shall be null and void and shall constitute a material default hereunder. Any assignment or transfer may only be made if the proposed assignees or transferees: (i) are of good moral character and have sufficient business experience, aptitude and financial resources, (ii) otherwise meet Franchisor’s then applicable standards for developers, (iii) are willing to assume all of Developer’s obligations hereunder and to execute and be bound by all provisions of Franchisor’s then-current form of the Area Development Agreement for a term, at Franchisor’s sole option (a) equal to the remaining term hereof or (b) equal to the terms set forth in its then current form of Area Development Agreement; and (iv) willing to assume all of Developer’s obligations under each and every Franchise Agreement Developer entered with Franchisor.
As a condition to granting Franchisor’s approval of any such assignment or transfer, Franchisor may require Developer or the assignee or transferee to pay to Franchisor, Franchisor’s then-current assignment fee to defray expenses incurred by Franchisor in connection with the assignment or transfer, legal and accounting fees, credit and other investigation charges and evaluation of the assignee or transferee and the terms of the assignment or transfer. If the then-current Area Development Agreement does not contain such a fee, then the fee shall be the same as set forth in then-current Franchise Agreement. Franchisor shall have the right to require Developer and Developer’s owners to execute a general release of Franchisor and Franchisor’s owners, directors, officers, successors fix and assigns, in form and content satisfactory to Franchisor as a condition to Franchisor’s approval of the assignment of this Agreement or ownership of Developer.
(d) If Developer or its owners shall at any time determine to sell the rights under this Agreement or any of Developer’s ownership interests in Developer or any of Developer’s assets (except in the ordinary course of business), Developer or Developer’s owners shall obtain a bona fide, executed written offer from a responsible and fully disclosed purchaser and shall submit an exact copy of such offer to Franchisor, which shall, for a period of fifteen (15) days from the date of delivery of such offer, have the right, exercisable by written notice to Developer or Developer’s owners, to purchase such rights under this Agreement or such ownership interests for the price and on the terms and conditions contained in such offer, provided that Franchisor may substitute cash for any form of payment proposed in such offer and that Franchisor shall have not less than sixty (60) days to close with Developer’s cooperation. If Franchisor does not exercise this right of first refusal, Developer or Developer’s owners, as applicable, may complete the sale of such interest in this Agreement or such ownership interest, subject to Franchisor’s approval of the purchaser as provided in this Section, provided that if such sale is not completed within ninety (90) days after delivery of such offer to Franchisor, Franchisor shall again have the right of first refusal provided herein as to any further offers to purchase by 3rd parties.
(e) In addition to the right of first refusal, Developer must give Franchisor ninety (90)
days’ written notice prior to its offering for sale or transfer a full or partial interest in Developer or its ownership of this Agreement by Developer or any of Developer’s owners. The parties acknowledge that one of the reasons for this subsection is to enable Franchisor to comply with any applicable state or federal franchise disclosure laws. Developer agrees to indemnify and hold Franchisor harmless for Developer’s failure to comply with this Subsection.
(f) No sale, assignment, transfer, conveyance, encumbrance or gift of any interest in this Agreement or in the rights granted thereby, shall relieve Developer and the owners, of the obligations of the covenants not to compete with Franchisor contained in this Agreement except where Franchisor shall expressly authorize in writing.
10. COVENANTS
(a) Developer acknowledges that Franchisor has granted Developer the rights under this Agreement in consideration of and reliance upon Developer’s agreement to deal exclusively with Franchisor. Developer therefore agrees that, during this Agreement’s term, neither Developer, any of Developer’s owners, nor any of their immediate family will:
(i) have any direct or indirect interest as an owner – whether of record, beneficially, or otherwise – in a Competitive Business, wherever located or operating (except that equity ownership of less than five percent (5%) of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange will not be deemed to violate this Subsection);
(ii) perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, wherever located or operating; recruit or hire any person then employed, or who was employed within the immediately preceding twenty-four (24) months, at another franchisee’s Business or operated by Franchisor, any of Franchisor’s affiliates, or by a franchisee, without obtaining the employer’s prior written permission;
(iii) divert or attempt to divert any actual or potential of a Business to a Competitive Business; or
(iv) engage in any other activity which might injure the goodwill of the Marks and/or the System.
The term “Competitive Business” means any business (other than a franchised Business) principally offering products and services substantially similar to the products and services then being offered by the majority of the System’s franchisees.
(b) Developer and its owners covenant that, except as otherwise approved in writing by Franchisor, they shall not, for a period of two (2) years after the expiration or termination of this Agreement, regardless of the cause of termination, either directly or indirectly, for itself, or through, on behalf of or in conjunction with any person, entity maintain, engage in, consult with or have any interest in any Competitive Business within the Designated Territory or within a twenty-five (25) mile radius of any other System franchisee’s Business in operation or under construction on the later of the date of termination or expiration of this Agreement or on the date on which all persons restricted by this subsection begin to comply with this Subsection, provided this section shall not reduce the size of any protected territory, if any, of any of the franchises under this Agreement.
(c) Each of the foregoing covenants shall be construed as independent of any other covenant or provision of this Agreement. If all or any portion of a covenant in this Section is held unreasonable or unenforceable by a court or agency having valid jurisdiction in a final decision, which cannot be appealed, to which Franchisor is a party, Developer expressly agrees to be bound by any lesser covenant subsumed within the terms of such covenant that imposes the maximum duty permitted by law, as if the resulting covenant were separately stated in and made a part of this Section 10.
(d) Developer understands and acknowledges that Franchisor shall have the right, in its sole discretion, to reduce the scope of any covenant set forth in Section 10(a) or 10(b) of this Agreement, or any portion thereof, without Developer’s consent, effective immediately upon receipt by Developer of written notice, and Developer agrees that Developer shall comply with any covenant as so modified, which shall be fully enforceable notwithstanding the provisions of Section 16 hereof.
(e) Franchisor shall have the right to require all of Developer’s (and its owners unless such owner is signing this Agreement) personnel performing managerial or supervisory functions and all personnel receiving special training from Franchisor to execute similar covenants in a form satisfactory to Franchisor.
(f) In addition to the foregoing covenants, Developer shall be bound by and comply with the covenants contained in each Franchise Agreement executed by Franchisor and Developer.
11. NOTICES
All written notices permitted or required to be delivered by the provisions of this Agreement, shall be deemed so delivered on the date when hand delivered: one (1) day after sending with a commercial delivery service which guarantees next day delivery; three (3) days after placed in the U.S. mail by Registered or Certified Mail, Return Receipt Requested, postage prepaid; or upon personal service, and addressed to (or served upon) the party to be notified at its most-current principal business address of which the notifying party has been notified.
12. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
(a) It is understood and agreed by the parties that this Agreement does not create a fiduciary relationship between them, that nothing in this Agreement is intended to constitute either party an agent, legal representative, subsidiary, joint venturer, partner, employee or servant of the other for any purpose whatsoever. Each party to this Agreement is an independent contractor, and neither shall be responsible for the debts or liabilities incurred by the other.
(b) Developer understands and agrees that nothing in this Agreement authorizes Developer to make any contract, agreement, warranty or representation on Franchisor’s behalf or to incur any debt or other obligation in Franchisor’s name and that Franchisor assumes no liability for, nor shall Franchisor be deemed liable by reason of, any act or omission of Developer in Developer’s conduct of the Businesses or any claim or judgment arising therefrom. Developer shall indemnify and hold Franchisor harmless against any and all such claims directly or indirectly from, as a result of or in connection with Developer’s operations or under any Franchise Agreement, as well as the costs, including attorneys’ fees, of defending against them.
(c) Developer acknowledges that because complete and detailed uniformity under many varying conditions may not be possible or practical, Franchisor specifically reserves the right at Franchisor’s sole discretion and as it may deem in the best interests of all concerned in any specific instance, to vary standards for any developer based upon the peculiarities of the particular location or circumstance, business potential, population of trade area, existing business practices or any other condition which Franchisor deems to be of importance to the successful operation of Developer’s business under any Franchise Agreement; provided that Franchisor gives Developer at least 90 days prior notice. Developer shall not be entitled to require Franchisor to disclose or grant to Developer a like or similar variation hereunder to that which may be accorded to any other developer.
13. APPROVALS
(a) Whenever this Agreement requires Franchisor’s prior approval or consent, Developer shall make a timely written request to Franchisor therefor, and, except as otherwise provided herein, any approval or consent granted shall be effective only if in writing.
(b) Franchisor makes no warranties or guarantees upon which Developer may rely and assumes no liability or obligation to Developer or any third party to which it would not otherwise be subject, by providing any waiver, approval, advice, consent or services to Developer in connection with this Agreement or by reason of any neglect, delay or denial of any request therefore.
14. NON-WAIVER
No failure by Franchisor to exercise any power reserved to Franchisor in this Agreement or to insist upon compliance by Developer with any obligation or condition in this Agreement, and no custom or practice of the parties at variance with the terms hereof, shall constitute a waiver of Franchisor’s rights to demand exact compliance with the terms of this Agreement. Waiver by Franchisor of any particular default shall not affect or impair Franchisor’s right in respect to any subsequent default of the same or of a different nature, nor shall any delay, forbearance or omission by Franchisor to exercise any power or right arising out of any breach or default by Developer of any of the terms, provisions or covenants of this Agreement, affect or impair Franchisor’s rights, nor shall the same constitute a waiver by Franchisor of any rights hereunder or rights to declare any subsequent breach or default.
15. SEVERABILITY AND CONSTRUCTION
(a) Each provision of this Agreement shall be deemed severable from the others.
(b) Nothing in this Agreement shall confer upon any person or legal entity other than the parties hereto and such of their respective successors (and assigns as may be contemplated by Section 9) hereof, any rights or remedies under or by reason of this Agreement.
(c) All captions in this Agreement are intended solely for the convenience of the parties and none shall be deemed to affect the meaning or construction of any provision hereof.
(d) This Agreement may be executed in duplicate and each copy so executed shall be deemed an original.
(e) Nothing contained herein shall be deemed a waiver of any rights Developer may have to rely on information contained in the franchise disclosure document.
16. ENTIRE AGREEMENT
This Agreement constitutes the entire, full and complete agreement between the parties concerning the subject matter and supersedes all prior agreements. However, nothing contained herein shall be deemed a waiver of any rights Developer may have to rely on information contained in the franchise disclosure document to which it is attached. No amendment, change or variance from this Agreement shall be binding on either party unless mutually agreed to by the parties and executed by themselves or their authorized officers or agents in writing.
17. SUPERIORITY OF FRANCHISE AGREEMENT
For each Business developed in the Designated Territory, a separate Franchise Agreement shall be executed, and any individual franchise fee as set forth in each such Franchise Agreement shall not apply to Developer unless otherwise set forth in this Agreement. It is understood and agreed by Developer that any and all Franchise Agreements executed in connection with this Agreement within the Designated Territory are independent of this Agreement. The continued existence of any such Franchise Agreement shall not depend on the continuing existence of this Agreement. If any conflict shall arise in connection with this Agreement and any Franchise Agreement executed within the Designated Territory, the latter shall have precedence and superiority over the former.
18. ENFORCEMENT
(a) No right or remedy conferred upon or reserved to Franchisor or Developer by this Agreement is intended to be, nor shall be deemed, exclusive of any other right or remedy herein or by law or equity provided or permitted, but each shall be cumulative of every other right or remedy.
(b) Nothing in this Agreement bars Franchisor’s right to obtain specific performance of the provisions of this Agreement and injunctive relief against threatened conduct that will cause Franchisor, the Marks and/or the System loss or damage, under customary equity rules, including applicable rules for obtaining restraining orders and preliminary injunctions (subject to Franchisor’s obligation to arbitrate the underlying claim if required by this Agreement). Both Parties agree that the other Party may obtain such injunctive relief in addition to such further or other relief as may be available at law or in equity. Both Parties agree that the other Party will not be required to post a bond to obtain injunctive relief.
19. DISPUTE RESOLUTION
For the purposes of this Section, “Developer” shall be deemed to include its owners, affiliates and its respective employees, and “Franchisor” shall be deemed to include Franchisor, its parent, and its affiliates.
(a) Mediation, Mandatory Binding Arbitration, and Waiver of Court Trial.
Developer and Franchisor believe that it is important to resolve any disputes amicably, quickly, cost effectively and professionally and to return to business as soon as possible. Developer and Franchisor have agreed that the provisions of this Section support these mutual objectives and, therefore, agree as follows:
(i) Claim Process. Any litigation, claim, dispute, suit, action, controversy, or proceeding of any type whatsoever, including any claim for equitable relief or involving Developer and Franchisor on whatever theory and/or facts based, and whether or not arising out of this Agreement, (“Claim”) will be processed in the following manner: Developer and Franchisor each expressly waiving all rights to any court proceeding, except as expressly provided below at Section 19(a)(iv).
(a) First, discussed in a face-to-face meeting held within thirty (30) days after either Developer or Franchisor give written notice to the other proposing such a meeting.
(b) Second, if not resolved, submitted to non-binding mediation. Developer and Franchisor will split the costs, and each will bear their own expenses of any mediation. Any mediation/arbitration will be conducted by a mediator/arbitrator experienced in franchising. Any party may be represented by counsel and may, with permission of the mediator, bring persons appropriate to the proceeding. If both Developer and Franchisor do not want to participate in mediation, then they may proceed to arbitration as provided below.
(c) Third, submitted to and finally resolved by binding arbitration before a single arbitrator in Collin County Texas, and in accordance with the arbitration rules of the American Arbitration Association or its successor. Judgment on any preliminary or final arbitration award will be final and binding and may be entered in any court having jurisdiction.
(ii) Confidentiality. The parties to any meeting/mediation/arbitration will sign confidentiality agreements, excepting only public disclosures and filings as are required by law.
(iii) Fees and Costs. The parties will bear their own fees and costs, including
attorneys’ fees; provided that for matters not settled through agreement of the parties, the arbitrator may assess all, or any portion, of the fees and costs incurred in connection with any arbitration against the party who does not prevail.
(iv) Disputes Not Subject to the Mediation/Arbitration Process. Claims or disputes relating primarily to (a) the validity of the Marks and/or any intellectual property licensed to Developer, and (b) injunctive relief for health and safety issues and violations, may be subjected to court proceedings, at Franchisor’s sole election; provided that only the portion of any claim or dispute relating primarily to the validity of the Marks and/or any intellectual property licensed to Developer and requesting equitable relief shall be subject to court action, and any portion of such claim seeking monetary damages will be subject to the Claim Process outlined above.
(v) Intentions of Developer and Franchisor. Developer and Franchisor mutually agree that, notwithstanding any contrary fix provisions of state, federal or other law, and/or any statements in Franchisor’s Franchise Disclosure Document required by a state or the Federal government as a condition to registration or for some other purpose:
(a) all issues relating to arbitration and/or the enforcement of arbitration-related provisions of this Agreement will be decided by the arbitrator (including all Claims that any terms were procured by fraud or similar means) and governed only by the Federal Arbitration Act (9 U.S.C. § 1 et seq.) and the federal common law of arbitration and exclusive of state statutes and/or common law;
(b) all provisions of this Agreement shall be fully enforced, including (but not limited to) those relating to arbitration, waiver of jury trial, limitation of damages, venue, choice of laws, and shortened periods in which to bring Claims;
(c) Developer and Franchisor intend to rely on federal preemption under the Federal Arbitration Act (9 U.S.C. § 1 et seq.) and, as a result, the provisions of this Agreement will be enforced only according to its terms; and
(d) the terms of this Agreement (including but not limited to this Section) shall control with respect to any matters of choice of law. Nothing in this or any related agreement, however, is intended to disclaim the representations Franchisor made in the Franchise Disclosure Document it furnished to Developer.
(b) Venue.
Without in any way limiting or otherwise affecting the obligations of Developer and Franchisor under Section 14(a) above, Developer and Franchisor agree that any litigation will be brought in a court of competent jurisdiction in Collin County Texas.
(c) Terms Applicable to Proceedings, Waiver of Trial by Jury, Certain Claims, and Class Action Rights.
With respect to any arbitration, litigation or other proceeding of any kind, Developer and Franchisor:
(i) knowingly waive all rights to trial by jury; and
(ii) will pursue any proceeding on an individual basis only, and not on a class-wide or multiple plaintiff basis.
(d) Limitations on Claims.
Neither party may make claims for emotional distress, whether negligent or intentional, nor punitive damages.
(e) Periods in which to Make Claims.
No arbitration, action or suit (whether by way of claim, counter-claim, cross-complaint, raised as an affirmative defense, offset or otherwise) by either Developer or Franchisor will be permitted against the other, whether for damages, rescission, injunctive or any other legal and/or equitable relief, in respect of any alleged breach of this Agreement, or any other Claim of any type, unless such party commences such arbitration proceeding, action or suit before the expiration of the earlier of:
(i) One (1) year after the date on which the state of facts giving rise to the cause of action comes to the attention of, or should reasonably have come to the attention of such party; or
(ii) Two (2) years after the initial occurrence of any act or omission giving rise to the cause of action, whenever discovered.
The above periods may begin to run, and will not be tolled, even though the claiming party was not aware of the legal theories, statutes, regulations, case law or otherwise on which a claim might be based. If any federal, or state law provides for a shorter limitation period than is described in this Section, then such shorter period will govern. The time period for actions for indemnity shall not begin to run until the indemnified party(ies) have been found liable and any time for appeals has run in the underlying action.
(f) Severability of Provisions.
Each provision of this Agreement, and any portion of any provision, is severable (including, but not limited to, any provision related to dispute resolution).
(g) Choice of Laws.
Developer and Franchisor agree on the practical business importance of certainty as to the law applicable to their relationship and its possible effect on the development and competitive position of the System. Therefore, Developer and Franchisor also agree that, except with respect to the applicability of the Federal Arbitration Act, 9 U.S.C. § 1 et seq., and the effect of federal pre-emption of state law by such Act, and except to the extent governed by the United States Trademark Act and other federal laws and as otherwise expressly provided in this Agreement all other matters, including, but not limited to respective rights and obligations, concerning Developer and Franchisor, will be governed by, and construed and enforced in accordance with, the laws of the state of Texas.
20. DEVELOPER DEFINED AND GUARANTY
References to “owner” mean any person holding a direct or indirect ownership interest (whether of record, beneficially, or otherwise) or voting rights in Developer (or a transferee), including, any person who has a direct or indirect interest in Developer (or a transferee) or this Agreement and any person who has any other legal or equitable interest, or the power to vest in himself or herself any legal or equitable interest, in their revenue, profits, rights, or assets. “Person” means any natural person, corporation, limited liability company, general or limited partnership, unincorporated association, cooperative, or other legal or functional entity. Unless otherwise specified, all references to a number of days shall mean calendar days and not business days.
21 VIRGINIA
The parties acknowledge and agree that the first franchise being sold is to be located in the state of Virginia and the owner of Developer is a resident of such state and such sale and Franchise Agreement will be considered to have been made and entered into immediately before this Agreement is effective, but will be subject to its terms thereafter.
22 FORCE MAJEURE
For the purposes of this Agreement, “Force Majeure” means an event which could not reasonably have been avoided by a diligent party in the circumstances, which is beyond the reasonable control of a party and which makes a party’s performance of its responsibilities hereunder impossible or so impractical as reasonably to be considered impossible in the circumstances and includes, but is not limited to, war, riots, civil disorder, earthquake, storm, flood or adverse weather conditions, strikes, lockouts or other industrial action, terrorist acts, confiscation or any other action by government agencies.
(i) Force Majeure shall not include any event which is caused by the negligence or intentional action of a Party or such Party’s subcontractors or agents or employees, or by a failure to observe good professional practice.
(ii) Force Majeure shall not include insufficiency of funds or failure to make any payment required hereunder.
(iii) The failure of a Party to fulfil any of its obligations hereunder shall not be considered to be a breach of, or default under, this Agreement insofar as such inability arises from an event of Force Majeure, provided that the Party affected by such an event has taken all reasonable precautions, due care and reasonable alternative measures, all with the objective of carrying out the terms of this Agreement.
(iv) A Party affected by an event of Force Majeure shall take all reasonable measures to remove such Party’s inability to fulfil its obligations hereunder with a minimum of delay. The Parties shall take all reasonable measures to minimize the consequence of any event of Force Majeure.
(v) A Party affected by an event of Force Majeure shall notify in writing the other Party of such event as soon as possible, and in any event not later than five (5) days following the occurrence of such event, providing evidence of the nature and cause of such event, and shall similarly give notice of the restoration of normal conditions as soon as possible.
(vi) Not later than fourteen (14) days after a Party, as a result of an event of Force Majeure, has become unable to discharge a material portion of its obligations, the Parties shall consult with each other with a view to agreeing on appropriate measures to be taken in the circumstances, including termination of this Agreement by either Party.
23. ACKNOWLEDGMENTS
Developer acknowledges:
- That Developer has independently investigated this franchise opportunity and recognizes that, like any other business, the nature of the business of 100% Physical therapyconducts may, and probably will, evolve and change over time.
(b) That an investment in the franchise involves business risks that could result in the loss of a significant portion or all of Developer’s investment.
(c) That Developer’s business abilities and efforts are vital to Developer’s success and the success of Developer’s business.
(d) That Developer has not received from Franchisor, and is not relying upon, any representations or guarantees, express or implied, as to the potential volume, sales, income, or profits of a franchised Business, that any information Developer has acquired from other franchisees regarding their sales, profits, or cash flows was not information obtained from Franchisor, and that Franchisor makes no representation about that information’s accuracy.
(e) That Developer has represented to Franchisor, to induce Franchisor’s entry into this Agreement, that all statements Developer has made and all materials Developer has given Franchisor are accurate and complete and that Developer has made no misrepresentations or material omissions in obtaining the franchise.
(f) That Developer has read this Agreement and Franchisor’s franchise disclosure document which includes the Franchise Agreement and understands and accepts that this Agreement’s terms and covenants are reasonably necessary for Franchisor to maintain Franchisor’s high standards of quality and service, as well as the uniformity of those standards at each franchise location, and to protect and preserve the goodwill of the Marks.
(g) That Franchisor has not made any representation, warranty, or other claim regarding this franchise opportunity, other than those made in this Agreement and Franchisor’s franchise disclosure document, and that Developer has independently evaluated this opportunity, including by using Developer’s business professionals and advisors, and has relied solely upon those evaluations in deciding to enter into this Agreement.
(h) That Developer has been afforded an opportunity to ask any questions Developer has and to review any materials of interest to Developer concerning this franchise opportunity.
(i) That Developer has been afforded an opportunity, and has been encouraged by Franchisor, to have this Agreement and all other agreements and materials Franchisor has given or made available to Developer reviewed by an attorney and has either done so or elected not to do so.
(j) That Developer has a net worth which is sufficient to make the investment in the franchise opportunity represented by this Agreement, and Developer will have sufficient funds to meet all of Developer’s obligations under this Agreement.
[Remainder of Page Intentionally Left Blank – Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement in duplicate on the day and year first above written.
FRANCHISOR:
CHISOR Franchising, LLC
a Texas limited liability company
_________________________________
DEVELOPER:
(If DEVELOPER IS A CORPORATION, LIMITED LIABILITY COMPANY, OR PARTNERSHIP):
By: _____________________________
Title: ________________________
[Name]
Dated: _______________________
By: _____________________________
Title: ________________________
[Name]
Dated: ________________________
EXHIBITS
A. DESCRIPTION OF TERRITORY
B. DEVELOPMENT SCHEDULE
C. GUARANTY.
EXHIBIT A
DESCRIPTION OF DESIGNATED TERRITORY TO
AREA DEVELOPMENT AGREEMENT
DESIGNATED TERRITORY
Developer has been granted an area within which it may search for suitable locations which is the United States and is referred to as the “Search Area.” This is not an exclusive area. Developer has no right to open a location within another’s franchisee’s protected territory. Once a location is determined Developer will have the protective rights for each such location (“Location”) as follows (“Designated Territory”).
During the Development Period, Franchisor will not (i) grant anyone the right to open a 100% Physical therapyfranchise or (ii) open a business substantially similar to a 100% Physical therapyfranchise, in the area which consist of a five (5) mile radius around each such franchised Location, provided Developer is meeting its Development Schedule and not in breach of this Agreement or any of its Franchise Agreements. This Location and the protected area is the “Designated Territory. Such protection shall extend for the Term of each franchise sold under this Agreement.
FRANCHISOR:
CHISOR Franchising, LLC
a Texas limited liability company
_________________________________
DEVELOPER:
(If DEVELOPER IS A CORPORATION, LIMITED LIABILITY COMPANY, OR PARTNERSHIP):
By: _____________________________
Title: ________________________
[Name]
Dated: _______________________
By: _____________________________
Title: ________________________
[Name]
Dated: ________________________
DEVELOPER:
(If DEVELOPER IS AN INDIVIDUAL AND NOT A
LEGAL ENTITY):
_____________________________________
[Signature]
_____________________________________
[Print Name]
_____________________________________
[Dated]
_____________________________________
[Signature]
_____________________________________
[Print Name]
_____________________________________
[Dated]
EXHIBIT B
DEVELOPMENT AND FEE SCHEDULE TO
AREA DEVELOPMENT AGREEMENT
At the dates set forth below, Developer is obligated to have open and in operation the number of 100% Physical therapy Businesses within the area described in Exhibit A:
Date Development Period Commences is the Effective Date of this Agreement.
Date Development Period Ends: Eighty Four (84) months after the Development Period Commences.
The total number of 100% Physical therapyBusinesses Developer is obligated to have open and in operation by the Dates shown below (Sometimes referred to as the “Development Schedule”)
Total locations/Franchises: Ten (10)
NO. OF LOCATION DATE TO OPEN AND COMMENCE OPERATIONS.
First , Twelve (12) months after Development Period Commences
Second Eight Months after the end of the initial 12 month period (the 20th month)
Third-Ten Eight Months after the end of the prior period (28th month) the third business must be opened and the 4th through the 10th business must be opened no later than every 8 months following the end of the prior period, with the 10th business opened no later than the 84th month. So the months that the businesses much be open are the 12th, 20th, 28th, 36th, 44th, 52nd, 60th, 68th, 76th, and 84th. Any period in which a business is opened before the end of that particular period will not extend any following period.
Development Fee: $350,000 which includes $35,000 for each of the 10 franchises
Development Fee Payable on date of this Agreement.
FRANCHISOR:
CHISOR Franchising, LLC
a Texas limited liability company
_________________________________
DEVELOPER:
(If DEVELOPER IS A CORPORATION, LIMITED LIABILITY COMPANY, OR PARTNERSHIP):
By: _____________________________
Title: ________________________
[Name]
Dated: _______________________
By: _____________________________
Title: ________________________
[Name]
Dated: ________________________
DEVELOPER:
(If DEVELOPER IS AN INDIVIDUAL AND NOT A
LEGAL ENTITY):
_____________________________________
[Signature]
_____________________________________
[Print Name]
_____________________________________
[Dated]
_____________________________________
[Signature]
_____________________________________
[Print Name]
_____________________________________
[Dated]
EXHIBIT C
GUARANTY AND ASSUMPTION OF OBLIGATIONS TO
AREA DEVELOPMENT AGREEMENT
THIS GUARANTY AND ASSUMPTION OF OBLIGATIONS is given this _________ day
of ____________, 2022, by _________________________________________________.
In consideration of, and as an inducement to, the execution of that certain Area Development Agreement (the “Agreement”) on this date by Chisor Franchising, LLC (“Franchisor”) and each of the undersigned personally and unconditionally: (a) guarantees to Franchisor and Franchisor’s successors and assigns, for the term of the Agreement and afterward as provided in the Agreement, that (“Developer”) will punctually pay and perform each and every undertaking, agreement, and covenant set forth in the Agreement and (b) agrees to be personally bound by, and personally liable for the breach of each and every provision in the Agreement, both monetary obligations and obligations to take or refrain from taking specific actions or to engage or refrain from engaging in specific activities, including the non-competition, confidentiality, transfer, and arbitration requirements.
Each of the undersigned consents and agrees that: (1) his or her direct and immediate liability under this Guaranty will be joint and several, both with Developer and among other guarantors; (2) he or she will render any payment or performance required under the Agreement upon demand if Developer fails or refuses punctually to do so; (3) this liability will not be contingent or conditioned upon Franchisor’s pursuit of any remedies against Developer or any other person; and (4) this liability will not be diminished, relieved, or otherwise affected by any extension of time, credit, or other indulgence which Franchisor may from time to time grant to Developer or to any other person, including, without limitation, the acceptance of any partial payment or performance or the compromise or release of any claims, none of which will in any way modify or amend this Guaranty, which will be continuing and irrevocable during the term of the Agreement.
Each of the undersigned waives: (i) all rights to payments and claims for reimbursement or subrogation which any of the undersigned may have against Developer arising as a result of the undersigned’s execution of and performance under this Guaranty; and (ii) acceptance and notice of acceptance by Franchisor of his or her undertakings under this Guaranty, notice of demand for payment of any indebtedness or non-performance of any obligations hereby guaranteed, protest and notice of default to any party with respect to the indebtedness or nonperformance of any obligations hereby guaranteed, and any other notices to which he or she may be entitled.
Each of the undersigned represents and warrants that their spouse is also a signatory to this Guaranty and if not, it has obtained the consent of Franchisor. Guarantor acknowledges that even if his or her spouse does not sign this Guaranty he or she may still be obligated on the same basis as that person’s spouse who signs.
Notwithstanding any limitation on recovery of the following costs and expenses, if Franchisor is required to enforce this Guaranty in a judicial or arbitration proceeding, and prevails in such proceeding, Franchisor shall be entitled to reimbursement of Franchisor’s costs and expenses, including, but not limited to, reasonable accountants’, attorneys’, attorneys’ assistants’, arbitrators’, and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses, and travel and living expenses, whether incurred prior to, in preparation for, or in contemplation of the filing of any such proceeding.
Guarantor agrees to be personally bound by the arbitration obligations under Section 19 of the Agreement, including, without limitation, the obligation to submit to binding arbitration the claims described in Section 19 of the Agreement in accordance with its terms including the law to be applied and location of any arbitration or other hearing.
IN WITNESS WHEREOF, each of the undersigned has affixed his or her signature and has agreed to be bound by its terms.
GUARANTOR(S):
_________________________________
Signature:
_________________________________
Name:
_________________________________
Signature:
_________________________________
Name:
The undersigned, as the spouse of the Guarantor indicated below, acknowledges and consents to the guaranty given herein by his/her spouse. Such consent also serves to bind the assets
of the marital estate to Guarantor’s performance of this Guaranty.
__________________________________
Name of Guarantor
__________________________________
Name of Guarantor’s Spouse
__________________________________
Signature of Guarantor’s Spouse
__________________________________
Name of Guarantor
__________________________________
Name of Guarantor’s Spouse
__________________________________
Signature of Guarantor’s Spouse
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