Legal Question in Business Law in Florida

Dear LAWGURU:

I received the following answer to the question, "How do i terminate a recently signed franchise agreement with Furniture Medic in Florida?"

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1 Answers from Attorneys

Diane Downs

DMD Law, P.A.

Boca Raton, FL

It depends on what provisions are on the franchise agreement and what you agreed to when you signed and when it was signed (the date). Without this information, giving you advise is impossible. You need to have an attorney review the agreement for you and explain to you your options.

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I will be more specific with my question in order to generate a response with greater detail:

I am researching my options prior to consulting an attorney practicing Franchise Law in the state of Florida. The Standardized Franchise Agreement (SFA) used by Furniture Medic (a subsidy of The ServiceMaster Company LLC) is copied below for reference, and may also be accessed at:

http://www.freefranchisedocs.com/furniture-medic-Franchise-Agreement.php.

Sections VIII and IX of the SFA pertains to Violation, Termination, Expiration and Non-renewal. The Agreement appears to address rights from the franchisor's perspective, while focusing on obligations of the franchisee. Do the Federal Trade Commission and/or State of Florida outline conditions/provisions for legally dissolving this type of standardized agreement on the part of the franchisee when such conditions/provisions are not included in the Franchise Agreement (or any other documentation) and if so, how do I access that information?

Thank you.

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Standard Furniture Medic Franchise Agreement:

EXHIBIT G

FURNITURE MEDIC FRANCHISE AGREEMENT

THIS FURNITURE MEDIC FRANCHISE AGREEMENT is signed this_____day of _

_______day of_______________, 20___by and between

FURNITURE MEDIC LIMITED PARTNERSHIP

By its general partner

FM Medic L.L.C.

3839 Forest Hill-Irene Road

Memphis, Tennessee 38125

(hereinafter referred to as "FM")

AND

_, 20 , and effective this

doing business as a

under the name

("dba name")

E-mail Address

(hereinafter the "Franchisee")

RECITALS:

WHEREAS FM has developed a system (hereinafter referred to as the "System") for the marketing of furniture repair products and other furniture repair services (hereinafter referred to as the "Franchised Services"); and

WHEREAS FM has created substantial goodwill associated with its trade name, trademarks, service marks, insignias, and logos,

both as presently existing and as FM may hereafter designate (hereinafter collectively referred to as the "Commercial

WHEREAS Franchisee desires to obtain the right to use the Commercial Symbols in conjunction with the operation of a mobile and/or fixed location furniture repair, restoration, and refinishing business (the "Franchised Business") and desires to obtain experience and know-how with respect to the sale of the Franchised Services and the System; and

WHEREAS Franchisee acknowledges that Franchisee has fully reviewed this Agreement and obtained own advisors prior to executing this Agreement; and

Symbols"); and

tdvice and counsel from its

maintain the uniform high

WHEREAS Franchisee acknowledges the importance of the Commercial Symbols and the need to standards of quality, appearance and service associated therewith and

recognizes the necessity of operating the Franchised Business in accordance with the provisions of this Agreement and all of the standards and specifications of the System.

NOW THEREFORE, the parties hereby agree as follows:

ARTICLE I: GRANT OF RIGHT

A- Subject to the terms and conditions hereof, FM hereby grants to Franchisee and the Franchisee undertakes the obligation, upon the terms and conditions contained in this Agreement, the non-exclusive right (hereinafter referred to as the "License") to use the Commercial Symbols and solely in connection with the Franchised Business, the Franchisor's System, as it may be changed, improved ind further developed from time to time in conjunction with the sale of Franchised Services in the territory described in the attached as Exhibit A-l (hereinafter referred to as the 'Territory"). The term 'Territory" shall refer specifically to the Territory granted to the Franchisee by this Agreement. The Franchisee expressly acknowledges and agrees that this license relates solely to the license specified herein and does not grant the Franchisee any rights not specifically contained in this Agreement. The Franchisee understands and agrees that other franchisees have been and will be licensed to operate similar businesses that utilize the FM system within the Territory and elsewhere. Franchisee understands that other franchisees may be parties to agreements containing more or different rights than contained in this Agreement.

The Franchisee will operate the Franchised Business within the Territory at the office location set forth in the introductory portion of this Agreement. The franchisee may relocate to another office location within the Territory if the Franchisee notifies FM in writing of any change in

FM Agmt +3/2006

the location of the Franchised Business within ten (10) days prior to any such relocation.

The license includes the right to conduct a furniture repair, restoration and refinishing business including, but not limited to. Precision Repair, Moving Claims Repair, French Polishing, Magic Strip with Flow Over System and Restoration Refinishing, Motion Furniture Repair, Upholstery Repair, Polyester Repair and Recaning.

B. FM hereby grants Franchisee the non-exclusive License to operate the Franchised Business within the Territory, subject to the terms of Article V and the following provisions:

1. The Franchisee shall use its own judgment in determining which promotion, marketing and /or advertising methods it desires to utilize in the solicitation of customers in the Territory subject to Article V.H. of this Agreement;

2. The number of Licenses which have a designated territory in the Territory at any given time is determined by dividing the current population of the Territory by 100,000 and rounding to the nearest whole number to the quotient. The Territory will be determined by FM. The number of Licenses authorized within the Territory as the designated territory may vary from time to time and may not remain constant. Other pre existing franchisees may have greater rights or restrict Franchisee's rights to perform the Franchised Services. FM shall have the exclusive right to locate Licenses within the Territory and unrestricted right to engage directly or indirectly in the Territory or elsewhere in the distribution of services under the Trade Mark or other marks licensed herein.

3. The Franchisee may not market the Franchised Business or solicit an account or business outside the Territory

C. FM hereby grants Franchisee the non-exclusive right to service sales calls (hereinafter referred to as "National Account Sales Calls") from those National Accounts either inside or outside Franchisee's Territory under terms and conditions of the agreement between FM and each National Account the number of which may be added to from time to time. Such non-exclusive right shall be governed by the terms and conditions as set forth throughout this Agreement.

D. FM may service accounts for the benefit of FM in areas available per Article I.B. (2).

E. As used in Article I.C, the term "National Account Sales Calls" shall be defined as all customer service calls generated through or as a result of any National Account.

ARTICLE II: TERM AND RENEWAL

A. Initial Term Except as otherwise provided in this Agreement, the term of this Agreement and the License granted hereunder shall be for a period of five (5) years from the effective date hereof. .Thereafter, this Agreement shall continue on a month-to-month basts ("Extension'"). subject to Franchisor's approval. Franchisor may terminate the Extension atany lime upon written notice to Franchisee.

B. Renewal FM shall renew the license to operate the Franchised Business at no additional monetary consideration for an additional consecutive five (5) year term, provided that by the end of the term of this Agreement:

1. Franchisee has not given FM written notice of its election not to renew. Such notice must be given not less than two (2) months, nor more than four (4) months, prior to the end of the term of this Agreement.

2. Franchisee shall have delivered to FM written notice, at least three (3) months, but not more than six (6) months, before the expiration of this Agreement, of Franchisee's election to renew this Agreement;

3. Franchisee executes the then current form of franchise agreement. The then current form of franchise agreement shall supersede this Agreement in all respects and terms, and may contain commitments which differ from the terms of this Agreement, including, without limitation, an increased Continuing Service Fee;

4. Franchisee shall execute a release in a format designated by FM;

5. Franchisee has not received four (4) or more written notices, signed by an officer of FM, of a material breach of this Agreement from FM during the term of this Agreement, whether the breaches were corrected within the prescribed cure period after receipt of written notice of the breach;

6. All monetary obligations then due and owing by the Franchisee or its affiliates related to the Franchised Business have been satisfied prior to renewal; and

7. Franchisee has agreed, in writing to operate the Franchised Business in accordance with FM's then current standards and specifications.

ARTICLE III: INITIAL AND CONTINUING FEES

A. Initial Franchise Fee. Upon submission of this Agreement for execution by FM, the Franchisee shall pay to FM the Initial License Fee of Twenty-Four Thousand Five Hundred and xx/00 dollars (524,500) unless this is a Renewal Franchise agreement, a Conversion Franchise agreement, or a discounted second license. A renewing franchise, having already paid an initial franchise fee, pays no additional initial franchise fee. A Conversion franchisee or an existing franchisee adding an additional license pays the appropriate discounted franchise fee agreed upon and approved by FM.

B. Training Supplies Fee. In the event Franchisee requires more than one individual to attend training. Franchisee agrees to pay a Training Supply Fee of $750.00 per additional trainee(s) upon execution of this Agreement by Franchisee which covers the various training materials provided to the additional persons attending training and other expenses for two weeks. Franchisee will pay an additional $500.00 fee for each additional person attending sales training. If additional trainees) attend the third week the cost is $1,300 per additional trainee. The Initial Franchise Fee and Training Supplies Fee are fully earned and nonrefundable upon execution of this Agreement by FM, unless this is the purchase of a new license or transfer of an existing license to a new owner, in which case, Franchisee shall receive a refund of $ 1,000 of the Initial Franchise Fee if Franchisee attends the first National Convention after execution of this Agreement.

I C. Alternative Reporting-e^Payment Methods. The Franchise will report If FM implgments-a-program-for^t-the-reportittg-of Gross Service

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2

Sales and monthly Royally Service Fees including the Software fees and National Ad Fund contributions ("Monthly Fees") due via wire transmission as outlined in Article 111. The Franchisee agrees to pay ^-and/of-

automatic funds transfer from the Franchisee's bank account to FM's bank account^einwth^tizatiofi-to-eharge-pFaB j-hifiee-ered-it-ijardr-the. The Authorization for Electronic Transfer of Funds which Franchisee must sign for Royalty and NAF Fees payment is attached as Exlubit B. If Franchisee

fails to have sufficient funds available to pay anv Royalty and NAF_Fees, interest and delinquency fees, applied to Franchisee's account as

outlined in Paragraph V.F. In addition. Franchisee agrees to pay any expense incurred by Franchisor, including cos

s and attorney's fees, for the

collection of such Monthly Fees.__Fraiwhis�&w^�eHiply4i^i4ie4mplemeBtation-^md^

may berequested-by-FM. -FM-wiH give-at-least-three (3) months prior written notice to die Franchisee of the lmplementation-ef-any-sueh

alternative reporting or payment program. D. Royalty Fees.

Sales up to $500,000 by the >e paid at 2% or $250 (if all

1. The Franchisee shall pay a Royalty Fee of the larger of $250 per month or Seven percent (7%) of Gross tenth (10th) day of the month following the month in which the Gross Sales are made. Royalty Fee will combined fees fall below the minimum) whichever is greater for certain Identified Non-Core services. Certain Identified Non-Core Services are: Reupholstery, Furniture Manufacturing, Cabinet Manufacturing, Furniture Parts Fabrication, Construction, and Carpentry Services, and Hardwood Flooring Installation. Should the minimum monthly Royalty Fee pe the larger of the two fee amounts due during the first 90 days after completion of training, (the "Grace Period") the Franchisee shall pay a Royalty Fee based only on actual Gross Sales. Once Gross Sales exceed $500,000.00 in a calendar year, the Royalty Fee shall be reduced to 5% thereafter for the remainder of the calendar year. This initial minimum fee waiver shall not apply to transfer, renewal, or amended agreements. Moreover, the initial minimum Royalty Fee waiver does not affect or in any way alter the Franchisee's obligation to pay all monthly Royalty Fees for services performed by the Franchisee during the Grace Period or before the completion of training..

2. "Gross Sales," as used in this Agreement, shall be defined as the total of sales invoices or other items billed to the customer, less any bad debt, sales tax or credits allowed to the customer. Any bad debt adjustment or other restatement of Gross Sales must be taken within twelve (12) months of the invoice date and documented to FM's satisfaction.

3. Except as prohibited by applicable local, state or federal laws, FM reserves the right to apply any amount FM receives from or on behalf of Franchisee to Royalty Fees and/or supply account amounts then due and owing.

E. Advertising Fund Contribution.

1. In addition to other fees and charges provided for herein, Franchisee shall pay to FM an Advertising Fund Contribution (hereinafter referred to as "A. F. Contribution") of the larger of Fifty dollars ($50.00) or one percent (1%) of Gross Sa es as defined above. Should the minimum monthly A. F. Contribution be the larger of the two fee amounts due during the first 90 days after completion of training, (the "Grace Period"), the Franchisee shall pay an Ad Fund Contribution based only on actual Gross Sales. This initial minimum fee waiver shall not apply to transfer, renewal, or amended agreements.

2. FM shall spend contributions accumulated in the Advertising Fund on national, regional or local media and other market techniques or programs designed to communicate the Franchised Services to the public, including advertising support for the National Account Program whether or not Franchisee participates in the National Account Program. In addition, these funds may also be expended by FM in its discretion for market research and development, test or target marketing, the conducting of surveys, creative and production costs, employee salaries related to advertising and marketing, reimbursement to FM or ServiceMaster Consumer Services for reasonable accounting, administrative and legal expenses associated with the Advertising Fund, or for other purposes deemed appropriate to enhance and promote the general recognition of the System and Commercial Symbols.

3. The specific use of the Advertising Fund for the purposes set forth herein shall be determined and budgeted by FM as deemed necessary. The parties hereby acknowledge and understand that funds of the Advertising Fund may be expended in any territory (national, regional or local) without any requirement thai expenditures of the Fund be apportioned on the amount of contributions by Franchisee, or by other formula or system.

F. Date Due: .Interest. All monthly payments iequired by this Aiticle II shall be paid to FM by the 10th day of each month for the preceding calendar month, and shall be submitted to FM. Any payment or import not actually received by FM on or before, such date shall be deemed overdue if not postmarked at least one (1) day prior to the due date. If any payment owed to FM for any outstanding amount is overdue, the Franchisee shall pay FM, in addition to the overdue amount, interest on such amount from the date it was due until paid at the rate of one and one-half percent (1-1/2%) per month or the maximum rate permitted by law, whichever is less. If any fee report is overdue, the Franchisee shall pay to FM a delinquency fee of $50.00 per delinquent fee report. Entitlement to such interest and/or the delinquency fee shall be in addition to any other remedies FM may have. The Franchisee understands that FM may, at FM's discretion, assign the payment of such fees and the submission of the monthly reports to a third party.

G. Qp.gning Package. The Franchisee shall acquire an Opening Package as designated by FM needed to make the Franchised Business operational. The Franchisee must purchase such Opening Package from FM at a cost Twelve Thousand Five Hundred Dollars ($12,500.00), plus any applicable sales tax, shipping and handling charges. Neither a Franchisee renewing his license nor an existing Franchisee adding an additional license is required to purchase anothtT Opening Package. A Conversion Franchise may have product; and equipment that meet product and equipment standards of FM and with FM approval may not be required to purchase the entire Opening Package.

H. Kits. Kits will be presented to Franchisee from time to time to expand the Franchised Services. These kits ire optional and are priced individually. However, the Franchisee shall be prohibited from p(.Tforming any additional Franchise Services until the special kit for such services is purchased and the Franchisee is certified to perform the Services represented by the kit.

I. Service Vehicle Detail Package. The Franchisee shall purchase and install a logo package ("Detail Package") on the service vehicle which

meets FM's standards and specifications unless this is a Renewal Franchisee agreement. A Renewal Franchisee identified its service vehicle.

J. h------National Account Fees. Each National Account agreement governs the amount charged for work done b

FM Agmt +3/2006

will have already properly

y the Franchisee under the

specific National Account, and Franchisee agrees to be bound by such.

K. .Franchisee May Not Withhold Payments. The Franchisee, shall not withhold any payments whatsoever due to the Franchisor. No endorsement or statement on anv check or payment of any sum less than the full sum due to the Franchisor shall be construed as an acknowledgment of payment in lull or an accord and satisfaction, and the Franchisor may accept and case such check or payment without prejudice to tis right to recover the balance due or pursue anv other remedy provided herein or by law. The Franchisor may apply anv payments made, by the Franchisee against .any past due indebtedness of the Franchisee as the Franchisor, may see fit. The Franchisor may set off against anv sums payable to the Franchisee hereunder anv unpaid amounts due from the Franchisee to the Franchisor.

ARTICLE IV: OBLIGATIONS OF FM

A. Pre-Operatine FM shall be obligated to:

1. designate the Territory; and

2. provide the initial training, training supplies and orientation; and

3. make available to Franchisee an Opening Package for the Franchised Business; and I 4. give Franchisee access to SOR-finsupport.com via a confidential password.

B. Training FM shall provide one (1) person with training including:

| 1. Providing the loan of operations and marketing materials including access to and the ServiceMaster Complete On-

Line Resource ("SCOR") website for the term of this Agreement, and sales and training aids, including a home study program, deemed advisable by FM from time to time. FM shall provide, from time to time updated information and revisions to such materials as new and improved methods, systems, and procedures are adopted; and

2. Providing a training program relating to the Franchised Services and the System consisting of a mandatory Pre-Academy course of study which must be passed before Franchisee may attend the two-week Academy at FM headquarters in Memphis, Tennessee, or other locations as deemed appropriate by FM. The cost of this training is included in the Initial Franchisee Fee and covers one (1) individual. Additional individuals may be trained but will be accepted on a "space available" basis at Franchisee's expense. At the end of this initial training, Franchisee will be tested. If Franchisee fails the test, Franchisee must re-attend training within 6 months at his or her own expense. Those Franchisees who successfully pass the test will be required to attend a third week of training in 90 to 120 days, the cost of which is included in the Initial Franchisee Fee for the first attendee. The cost for each additional attendee is $ 1,300 for the third week.

3. Any further additional training shall be available at the request of Franchisee, in which personnel of FM for the then current rate per

day, plus expenses to include travel, lodging and meals, will train at the sole discretion of FM.

Upon the written request of a Franchisee and approval by FM, a Franchisee's Manager (non-owner) may attend the training academy and other training as set forth above. The Franchisee will be responsible for all training fees for this non-owner manager to attend.

Franchisee will be responsible for all travel and living expenses incurred in obtaining training except as set forth above.

C. On-Going Training

1. FM shall at its sole discretion make available to Franchisee additional training in furniture repair technique and business operations for the Franchised Business granted to Franchisee after business operations have begun and at mutually agreeable times when requested by Franchisee in writing. Such training will be at a location and time designated by FM or by other reasonable medium

2. FM shall provide at its sole discretion periodic training and communications to upgrade the skills of Franchisee, including training at conventions and seminars, at locations to be determined by FM. Franchisee shall pay travel and daily living expenses incurred to attend the training and seminars.

3. FM may charge a reasonable fee for these additional training sessions to offset costs.

D. On-Going Support. National Account Sales Calls Allocation.

1. All National Account Sales Calls shall be allocated to FM, who, in turn, shall allocate such National Account Sales Calls to its franchisees or other vendors at its sole unrestricted discretion.

2. FM may, at its sole discretion, allocate to Franchisee National Account Sales Calls outside Franchisee's Territory and may allocate National Account Sales Calls to others inside Franchisee's Territory

3. FM may, at its sole discretion enter into National Account Agreements with any National Account at any time and agrees to notify Franchisee of the terms and conditions of such new National Account Agreements.

4. FM may, at its sole discretion, terminate any National Account Agreement and shall notify Franchisee of such termination.

5. FM may apply National Account revenue to any delinquency in Franchisee's fees.

6. FM may remove access to National Accounts when a franchisee is in default under the contract.

E. Advertising Approval. FM shall review all advertising materials submitted by Franchisee and shall approve or deny use of such advertising materials at FM's sole discretion.

F. Approved Suppliers. FM shall provide supplies and equipment needed to operate the Franchised Business or shall provide approved suppliers from which Franchisee may purchase supplies and equipment needed to operate the Franchised Business.

G. Violations By Other Franchisees. In connection with FM's duties under this Agreement, the Franchisee understands and agrees that FM shall not be responsible to the Franchisee for violations by another franchisee of FM of any agreement between FM and such other franchisee.

H. Franchise Council. FM shall convene the Franchise Council ("FC") no less than two times per year. The FC shall be made up of Franchisees in good standing under the Franchise Agreement, with members appointed by the current members of the FC, as the term of each

| FM Agmt 43/2006

4

existing member expires, with FM only able to reject such appointments because of lack of good standing under the agreement by the appointee.

ARTICLE V: FRANCHISEE'S OBLIGATIONS

In consideration of the License granted herein, Franchisee agrees and covenants as follows:

A. Approved Products and Services. Subject to the provisions of Article V, the Franchisee shall use or offer for sale in Franchisee's Franchised Business only those Franchised Services and products that FM deems to be consistent with and beneficial to the System. All purchases from FM are shipped F.O.B. Carol Stream, IL, and invoices for such products are payable in thirty (30) days.

B. Service Vehicle. Franchisee shall acquire a van (or other appropriate vehicle) that is properly identified in accordance with the Identity PaokngeGuideliney; or as approved by Home Office, as a service vehicle meeting FM specifications, suitable for carrying supplies and equipment to the customer's home or business, shall maintain the service vehicle according to the standards established by FM from time to time and shall make all sales calls using Franchisee's service vehicle. If a service vehicle is taken out of service or sold to someone other than another Furniture Medic franchisee, franchise must dc-identify the vehicle.

C. Performance Responsibility The Franchisee covenants that during the term of this Agreement except as otherwise approved in writing by FM, the Franchisee and its officers, managers and employees sliall devote their full time, energy and best efforts to the management and operation of the Franchised Business. Unless otherwise specified the term "Franchisee" as used in this Article V shall include, collectively and individually, all managers, employees, officers, directors, shareholders and/or members of the Franchisee, and of any corporation or other entity directly or indirectly controlling the Franchisee, if the Franchisee is a corporation, limited liability company or other similar legal entity, the general partners and any limited partner (including any corporation and the officers, directors and shareholders of a corporation which controls, directly or indirectly, any general or limited partner), if the Franchisee is a partnership. The Franchisee makes this commitment with the understanding that the application of the Franchisee's best efforts is required for the benefit of the Franchisee as well a? the entire FM franchise network. At a minimum:

1. The Franchisee shall use a telephone line dedicated to the operation of the Franchised Business and shall maintain a person, an answering service, or forward all business calls to a cellular phone which is answered live at all times during business hours;

2. The Franchisee shall contract with an ISP (Internet Service Provider) for a high-speed internet connection^ where available.

3. The Franchisee (or its employees) shall devote a minimum of forty (40) hours per week to the operation of the Franchised Business;

4. The Franchisee shall hold itself solely responsible for the quality and results of the Franchised Services performed under this Agreement maintaining a continuous responsibility with respect to such services performed even after the termination of this Agreement; and

5. The Franchisee shall hold itself responsible for the successful operation of the Franchised Business and be directly responsible to FM under the terms and conditions of this Agreement. |

6. The Franchisee shall support the national programs instituted by FM to generate service sales including, but not limited to, the promotion of the ServiceMaster Family of Brands, ServiceMaster.com web site, prompt and courteous response to information, and service requests, and compliance with requirements established by FM to implement and maintain such programs.

7. The Franchisee shall maintain a clean and safe place of business in compliance with all applicable laws, and with the Occupational Safety and Health Act standards. The Franchisee sliall conduct its operation of the Franchised Business under this Agreement on sound business principles.

8. The Franchisee will, at its expense, comply with all applicable federal, state, city, local and municipal

regulations pertaining to the operation of the Franchised business, including all laws relating to employee; and all applicable state and federal environmental laws. The Franchisee will, at its expense, be absolutely and exclusively responsible for determining the licenses and permits required by law for the Franchised Business, for obtaining and qualifying for all such licenses and permits, and for complying with all applicable laws.

9. The Franchisee shall check on a daily basis, Franchisee's e-mail mailbox assigned by Franchisor and Fran misor's proprietary websites

such as FMSupport.com for communications between Franchisee. Franchisee shall keep the password issued to Franchisee for access to Franchisor's website confidential at all times. 10. The Franchisee shall comply with all reasonable requirements of Franchisor to measure Franchisee's customer satisfaction with the services provided by Franchisee under this Agreement, and to participate in all programs of Franchisor designed to review and improve the process of operating the Franchised Business.

Commercial Symbols. As to the use of the Commercial Symbols, the Franchisee agrees as follows:

1. To use only the Furniture Medic name with a proper identifier when soliciting or carrying out Franchised Services and to display the required Commercial Symbols, on all vehicles, uniforms and equipment used in carrying out Franchised Services and to maintain neat and clean uniforms for use of all personnel associated with directly soliciting or carrying out Franchised Services.

2. To adopt and use the licensed Commercial Symbols as prescribed by FM and in accordance with usage guidelines published bv FM from time to time and on .

3. To place on all forms and stationery -in small but readable letters, a notation that the Franchise is "An in dependent business licensed to serve you by Furniture Medic Limited Partnership"

4. Not to contest FM's non-exclusive license to you of the FM Commercial Symbols, other trademarks, service marks and logos developed by FM and its affiliates;

5. Not to attempt to register any of the Commercial Symbols or other trademarks, service marks or logos developed by FM and its affiliates for use in the Franchised Business in any state or other government organization;

6. Not to incorporate using in the name of that corporation the Commercial Symbols or other trademarks, service marks or logos or any derivatives of any such marks developed by FM or its affiliates for use in the Franchised Business.

7. Not to have displays, advertising, literature, business cards, signs or any other promotional or identifying literature or business name portraying the Commercial Symbols or trademark or service mark developed by FM or its affiliate; for use in the Franchised Business, alone without an immediately adjacent identifier as to product, business name or service. The franchisee agrees to provide

laws, ordinances, rules and

D.

FM Agmt +3/2006

and advertise its services only under the d/b/ii name listed on page 1 of this agreement, except for identification of the Furniture Medic, van as set forth on . on SCOR, and published by FM. The Franchise d/h/a name shall comply with the guidelines as published by FM and on fmsupport.com and SCOR..

8. To immediately notify FM of any unauthorized use or legal action involving the Commercial Symbols or the System and cooperate in FM's prosecution or defense of any such action which shall be at FM's sole discretion. FM shall defend the Franchisee in any such infringement action.

9. To immediately cease using or immediately modify any of the Commercial Symbols if so directed by FM. Any expense incurred for such cessation or modification shall be at the expense of Franchisee.

10. That any goodwill associated with the licensed Commercial Symbols inures exclusively to FM's benefit and that, upon expiration or termination of this Agreement and the license granted in this Agreement, no monetary amount shall be assigned as attributable to any goodwill associated with the Franchisee's use of the Commercial Symbols.

11. Not to establish a Web site on the Internet using any domain name or an e-mail address containing the words "Furniture Medic" or "Furniture Medic.Com" or any variation thereof without the prior written approval of FM.

12. That FM shall have the right to review the substance and content of Franchisee's Web page and Franchisee agrees to immediately delete any material which improperly uses FM's trademarks or logos, or contains, in FM's sole discretion, derogatory or inappropriate material.

13. That FM retains the right to pre-approval of Franchisee's use of linking and framing between Franchisee's Web pages and all other Web sites and to dismantle any frames and links between Franchisee's Web page and any other Web sites within five (5) days, if and as requested by FM.

E. Software Requirements, Franchisee shall purchase and use software as required by FM or as set forth on . on the ServiceMaster Complete On-Line Resource ("SCOR") website or otherwise in writing. .Franchisee agrees that FM shall have the right, at its sole discretion, to change the monthly rate of the Software service fee from time to time.

F. fmsupport.com and ServiceMaster Complete On-Line Resource Website f "SCOR")

1. In order to protect the reputation and goodwill of FM and to maintain uniform standards of operation under the Commercial Symbols, the Franchisee shall conduct the Franchised Business in accordance with the guidelines, standards and specifications as set forth on and SCOR . Franchisee shall receive a confidential password for access to fmsupport.com and SCOR and agrees to limit its use to the Franchisee and employees of the Franchisee.

2. Any training or other similar materials on loan from FM shall at all times remain the sole property FM.

3. FM may from time to time revise the contents of and SCOR. and the Franchisee expressly agrees to comply with the new terms and conditions set forth on and SCOR.

G. Quality Control. Franchisee agrees:

1. To meet all operational standards and quality control standards established by FM.

2. To keep updated in training under the standards set forth by FM and to complete additional training as may be required by FM.

3. To permit the Franchisor or its agents, at any reasonable time, to enter the Franchisee's business premises for the purpose of conducting Quality Assured and other inspections and to remove from the premises samples of any inventory items without payment for such items, in amounts reasonable^ necessary for testing by the Franchisor or an independent certified laboratory to determine whether the samples meet the Franchisor's then-current standards and specifications.

4. Franchisee will utilize 'Tell Furniture Medic" surveys (or the then-current customer survey system) with its customers.

H. Advertising. Franchisee agrees to use only advertising or promotional materials, including telephone listings approved by FM in writing prior to their use.

I. Corporate Promotion. Franchisee agrees to allow FM to use Franchisee's name or picture of Franchisee including employees thereof at any time during this Agreement for the purpose of any publication, brochure or advertisement. Further, FM shall have the right to distribute and/or publish the Gross Sales for the Franchised Business without compensation or prior consent of Franchisee.

J. Accounting Responsibility. Franchisee agrees to pay for all equipment and supplies purchased from FM or other suppliers within the time allowed by this Agreement and to make any reports when requested which are related to this Agreement.

K. Payments. Franchisee agrees to make all payments due FM, including but not limited to Royalty Fees and A. F. Contributions, within the time allowed.

L Insurance. The Franchisee shall, at its expense, procure prior to providing the services licensed under this Agreement, and maintain in full force and effect during the term of this Agreement, an insurance policy or policies insuring the Franchisee and FM, and their respective, parents. partners, affiliates, subsidiaries, successors and assigns and their respective officers, directors, employees, agents and partners, against any loss, liability, personal injury, death, or property damage or expense whatsoever from theft, vandalism, malicious mischief, and the perils included in the extended coverage endorsement arising or occurring upon or in connection with the Franchised Business. The Franchisee shall furnish FM with proof of coverage prior to commencing business, and of continued coverage during the term of this agreement. Such policies shall be written by an insurance company satisfactory to FM and shall include, at a minimum the following:

1. Workers' compensation and occupational disease insurance as well as such other insurance as may be required by statute or rule of the state in which the Franchisee operates the Franchised Business.

2. Comprehensive general liability insurance, including product liability coverage, with minimum limits of $1,000,000 per occurrence.

3. Business automobile liability coverage for both owned and non-owned vehicles, with minimum limits of $1,000,000 bodily injury and property damage.

4. Such additional coverage and higher policy limits as may reasonably be specified for all franchisees from time to time by FM.

5. All other insurance required by applicable state or federal law.

FM Agmt 4-3/2006

6

All insurance policies procured and maintained by the Franchisee will name FM, its parents^ partners, affiliates,

subsidiaries, successors and

assigns and its officers, directors, employees, agents and partners, -as an additional insured (except Workers' compensation policy), will contain endorsements by the insurance companies waiving all rights of subrogation against FM, and will stipulate that IJM will receive copies of all notices of cancellation, non-renewal or coverage reduction or elimination at least thirty (30) days prior to the effective date of such cancellation, non-renewal or coverage change.

M. Resale. Franchisee agrees to comply with the resale procedure established by FM prior to any sale of the. License to another party as provided for in the provisions of Article VD of this License.

N. Franchised Services. To offer and perfonn only authorized Franchised Services for which Franchisee is certified by FM unless otherwise approved by FM in writing.

O. Location. Franchisee agrees to operate or conduct its Franchised Business from a single location from which it may operate as many crews, teams, sales forces and vehicles as desired. All personnel operating under the Franchised Business shall be under the direct control and supervision of Franchisee and be using Franchisee's business name. Franchisee shall not expand its operations tt more than one (1) location within the territory without the prior express written consent of FM which shall take into consideration the effect s uch expansion may have on other Franchisees within the Territory. Any permission to expand operations to more than one location within the Territory will be upon such terms and conditions as are mutually agreeable to both FM and Franchisee. Franchisee shall not open a retail service location without FM's prior written consent.

P. Operation Setup. Franchisee agrees that no later than thirty (30) days after the completion of training, the Franchised Business will become operational within the Territory including the following:

1. Except as set forth in Article V.C a business telephone will be installed, maintained and answered with the full approved Franchised Business name during regular business hours.

2. A listing of the applicable Franchised Business name will be made in the next business telephone director^.

Q. Training and Retraining.

1. Franchisee shall be required to successfully complete the FM Pre-Academy study program as well as the two-week training program provided by FM no later than six (6) months from the date of execution by Franchisee of this Agreement as set forth in Article XIII.R(4). FM reserves the right to cancel the scheduled Academy if less than six-felfour (4) people are scheduled to attend until the next scheduled Academy, but still within the six (6) month period after the execution by Franchisee of this Agreement. Further, FM recommends any employees, partners or agents who render services in the Franchised Business complete the training program. If the officer or manager so trained is replaced by another officer or manager, the Franchisee agrees to have the replacement officer or manager attend and complete the FM Academy, at the Franchisee's cost and expense, within three (3) months after replacement. The Franchisee, its managers or other employees, as designated by the Franchisor, shall attend and complete to the Franchisor'!; satisfaction, such other training programs as the Franchisor may require on SCOR or otherwise in writing. All expenses incurred for any training including, without limitation, training fees (if applicable) and the cost of travel, room, board and wages, shall be borne by the Franchisee.

2. Franchisee and employees, partners or agents of Franchisee who render Franchised Services may be Irequired to take additional training under the provisions of Article V.G. Franchisee and all employees, partners or agents who render services in the Franchised

Business are required to keep updated in training, and shall successfully complete a training course for Service at least once every calendar year. The initial training will fulfill the training requirement for the Agreement is dated. In subsequent calendar years, the training must be updated by December 31 of each can be obtained by two (2) methods:

a. The Franchisee, employee, shareholder or officer, partner or agent must attend an authorized trainin selected by FM; or

b. The Franchisee, employee, shareholder or officer, partner or agent can attend the National Convention.

each authorized Franchised calendar year in which this year. This updated training

session given at a location

R. Goodwill. Franchisee acknowledges that any and all goodwill associated with the Commercial Symbols and the System inures exclusively

to the benefit of FM and upon termination of this Agreement no monetary amount shall be attributable to Franchisee with Franchisee's use thereof.

for any goodwill associated

S. Confidentiality. Franchisee shall not directly or indirectly, reveal the contents of any FM trade secrets, manual, Pre-Academy program, training manual, bulletin, franchise operation, promotional plan, newsletter, report, electronic data, password or publication except to Franchisee's employee(s), partners) or agent(s) who require such information to fulfill their duties. The Franchisee sliall at all times treat as confidential, and require its employees and agents to treat as confidential: fmsupport.com, SCOR, FM ! the information contained therein and all other aspects of the FM System, and shall use all reasonable efforts to maintain fmsupport.com, SCOR and FM System as secret and confidential.

T. Competition.

1. As long as this Agreement is in force, Franchisee and its principals, employees, partners), officers and. agent(s) and their spouses agree not to engage in or have any financial interest in, either as officer, agent, employee, director, stockholder, owner or partner, or in any other capacity, any business which performs any service conducted by FM or its franchisees under the terms and conditions of this Agreement, Franchisee may hold for investment purposes, up to five percent (5%) of the outstandit g stock of any competitive corporation whose stock or securities are publicly held or traded.

2. For a period of two (2) years following the later of expiration or termination of this Agreement for any reason, or from the date of Franchisee's last use of FM's trade marks, trade names , trade dress or systems in any manner, Franchisee and its principals, employees, partners) officers, agent(s) and their spouses agree not to engage in or have any financial interest in, either as officer, agent, employee, director, stockholder, owner or partner, or in any other capacity, any business which performs any wood restoration,

FM Agmt 4-2/2006

refinishing, upholstery repair, wood or wood laminate flooring, cabinet manufacturing, installation or repair service conducted by FM or its franchisees under the terms and conditions of this Agreement, within an area extending 75 miles from the outer perimeter of an area to include the county or counties in which the Franchised Business is conducted. Franchisee may hold for investment purposes, up to five percent (5%) of the outstanding stock of any competitive corporation whose stock or securities are publicly held or traded.

U. Sources of Supplies.

1. To safeguard the integrity of the System and Commercial Symbols, the Franchisee shall purchase from FM or from sources approved by FM all supplies which the Franchisee proposes to use in the operation of the Franchised Business.

2. If the Franchisee wishes to utilize sources of supplies which have not been approved by FM, the Franchisee shall first submit to FM | documentation as follows:

a. product specifications,

b. product components,

c. product performance history,

d. product samples, and

e. any other relevant factors which the Franchisee deems appropriate.

3. FM will then evaluate the usage of the proposed product. Consideration will be given to the technical, wear, and performance properties of any such proposed item. FM shall be free to consider various additional factors to evaluate the suitability of products offered by alternative suppliers. FM may weigh such considerations as design, appearance, product reliability, durability, the manufacturer's warranties, quality control methods, and financial ability to stand behind its products, and other relevant information which FM deems important to the welfare of the FM franchise network. FM will notify the Franchisee in writing of its decision

| regarding the proposed product within 60 days of receipt of the request from Franchisee.

V. Standardized Dress. The Franchisee and all employees shall, when making sales presentations or providing the Franchised Services, wear the proper FM image attire, including a Furniture Medic Staff Shirt with logo.

W. Use of Franchisee Information. The Franchisee agrees to give FM and those acting under its authority the right to reasonably and fairly use the Franchisee's (or, if applicable, the Franchisee's officers' and directors') name, photograph or biographical material in any publication, circular or advertisement related to the business of FM or the Franchisee in any place for an unlimited period without compensation.

X. Personnel Management. Franchisee shall:

1. properly train its employees,

2. comply with all federal, state, and local laws regulating its work force. The Franchisee shall pay all contributions, taxes, and assessments on payrolls or other charges under all applicable federal, state, and local laws, including withholding from wages from its employees where required. The Franchisee shall comply with all federal, state, local laws and regulations regarding compensation, hours of work or other conditions of employment including, but not limited to, all laws and regulations regarding minimum compensation, overtime pay, Title VII, equal employment opportunities or any other similar requirement; and

Z. National Account Program Obligations. Payments for National Account work may be paid to franchisee through an electronic funds transfer system requiring franchisee to establish an automated clearing house (ACH) account with Home Office.

1. Franchisee agrees to service National Account Sales Calls under terms and conditions agreed to between FM and each National Account.

2. Franchisee acknowledges that National Account Agreements shall be entered into or terminated between FM and any given National Account at the sole discretion of FM.

3. Franchisee acknowledges and agrees that FM may allocate National Account Sales Calls in Franchisee's Territory to other franchisees.

4. Franchisee agrees to have high-speed Internet service on a separate telephone line with e-mail capability.

AA. Corporate Franchisee. The Franchisee agrees that its authorization to operate as a corporation shall be conditioned on the following requirements:

1. Its principal officers and shareholders and their spouses shall at all times be personally bound by the terms of this Agreement.

2. Each stock certificate of the Franchisee shall have conspicuously endorsed upon its face a statement in a form satisfactory to FM that it is held subject to this Agreement, and that any assignment or transfer of the stock certificate is subject to all restrictions imposed upon assignments by this Agreement;

3. Certified copies of the Franchisee's Articles of Incorporation, By-Laws, and other governing documents, including the resolutions of the Board of Directors authorizing entry into this Agreement, shall be promptly furnished to FM.

AB. Stock Ownership. If the Franchisee is a corporation, then the individuals named in Article XHI.S shall remain the owners of not less than sixty-seven percent (67%) of the total voting capital stock of the corporate Franchisee during the entire term of this Agreement, with the effective unencumbered right to vote the capital stock. The loss or surrender of the ownership or effective unencumbered right to vote the capital stock, by any means whatever, shall constitute a breach of the terms of this Agreement.

ARTICLE VI: ACCOUNTING AND RECORDS

A. Record Maintenance and Reporting.

1. Franchisee shall record income and expenses, calculate taxes and determine profitability in accordance with Generally Accepted Accounting Principles ("GAAP").

2. Franchisee shall submit to FM on a monthly basis, in conjunction with the submission of monthly payments due FM, standard reports as may be required by FM including, but not limited to:

a. Invoices from all Franchised Services performed including National Account Sales Call sales invoices; and invoices for subcontracted work;

| FM Agmt 43/2006

8

b. A monthly summary of National Account Sales Call:; that have been contracted or a statement that no National Account Sale Calls

have occurred during the month. FM shall have the right to distribute and/or publish the monthly sales reports for the Franchised Busines i without compensation to or the prior consent of the Franchisee.

3. The Franchisee shall, at its expense, submit to FM, upon request, within thirty (30) days after request, a complete income statement and balance sheet or copies of the annual and interim financial statements prepared by the auditors or accountants of the Franchisee. Each shall be signed by the Franchisee attesting that it is true and correct.

4. The Franchisee shall, at its expense, submit to FM upon request, within ninety (90) days after request, a complete financial statement for the preceding calendar year, including both a profit and loss statement and a balance sheet certified by an independent public accountant, all federal, state or other tax returns, together with such other information in such form as FM may reasonably require.

B. Customer Information. Franchisee must also keep accurate lists of all customers and supplies.

C.

D.

Retention of Records,

1. Franchisee agrees to keep all such records available for a period of seven (7) years following the year for which they were kept.

2. Termination of this Agreement shall not alter Franchisee's obligation to retain records for said seven (7) year period.

Right To Audit Franchisee's Records.

1. FM or its designated agents shall have the right at all reasonable times to examine, at its expense, the books, records, and tax returns of the Franchisee and any other business in which the Franchisee or its principal owners have a financial interest. In connection with any such examination, the Franchisee will execute IRS Form 4506, or other similar form, authorizing FM to obtain the applicable tax returns of the Franchisee, at the request of FM. FM shall also have the right, at any time, to have an independent audit made at its cost of the books of the Franchisee. If an audit or inspection is caused by Franchisee's failure to prepare or forward required reports or if an audit or inspection should reveal that payments have been understated in any report to FM, then the Franchisee shall immediately pay to FMjthe amount understated and interest from the date such amount was due until paid, at one and one-half percent (1-1/2%) per month or the maximum rate permitted by law, whichever is less. If an audit or inspection discloses an understatement of five percent (5%) or more, the Franchisee shall reimburse FM for any and all costs and expenses connected with the audit or inspection including, without limitation travel, lodging, wage expense and reasonable accounting and attorneys' fees. The remedies set forth in this Article shall be in addition to any other remedies FM may have and shall survive termination of this Agreement.

ARTICLE VII: TRANSFERABILITY OF INTEREST

A, Franchisee's Right To Transfer. I. Franchisee understands and acknowledges that the rights and duties created by this Agreement are personal to Franchisee (or, in the

case of a corporate or partnership Franchisee, to the Franchisee's principalis]), and that FM has entered into this Agreement with Franchisee in reliance upon individual or collective character, skill, aptitude, attitude, business ability, and financial capacity of Franchisee. Accordingly, the Franchisee shall not sell, assign, transfer, convey, give away, pledge, mortgage or otherwise encumber any interest in this Agreement without the prior written consent of the Franchisor. Any purported assignment or transfer, by operation of law or otherwise, with )ut the prior written consent of the Franchisor, shall be null and void and shall constitute a material breach of this Agreement.

B. Approval Procedure. 1. FM shall not unreasonably withhold its consent to a transfer of any interest in this Agreement or the Franchised Business; provided,

however, that prior to the time of transfer, the Franchisee has fulfilled the terms of the transfer policy of FM then in effect. FM may, in its sole discretion, as part of the transfer policy require that:

a. All of the Franchisee's accrued monetary obligation to FM and all other outstanding obligation related to the Franchised Business shall have been satisfied;

b. Franchisee shall have executed a general release, in a form satisfactory to FM, of any and all claims against FM, its affiliates, subsidiaries, parents, partners, their officers, directors, shareholders, agents and employees, in their corporate and individual capacities including, without limitation, claims arising under any federal, state and local laws, rules and ordinances;

c. The transferee does not, and does not intend to, own, operate or be involved in any business that competes directly or indirectly with or is similar to the Franchised Business;

d. The transferee shall demonstrate to FM's satisfaction that it meets FM's managerial and business standards, possesses a good moral character, business reputation, and credit rating; has the aptitude and ability to conduct the Franchised Business (as may be evidenced by prior related business experience or otherwise); and has adequate financial resources and capital to operate the Franchised Business;

e. The transferee shall execute (and/or, upon the Franchisor's request, cause all interested parties to execute) the then-current standard Franchise Agreement and such other ancillary agreements as the Franchisor may require for transfer of the Franchised Business; |

f. At the transferee's expense and upon such other terms and conditions as FM may reasonably require, the transferee (or if the transferee is a corporation, the transferee's officer or manager) or managerial employees of transferee acceptable to FM must have successfully completed FM's training program then in effect for new franchisees. Except as set forth in Section VI1.C, Franchisee or the transferee must pay FM the then-current transfer, training, and processing fees to complete the transfer.

g. If this is transfer of an existing business, transferee agrees to purchase the then current Opening Package of those items therein not included in the sale of the business. The transferee must upgrade equipment and products consistent with those set forth in the Opening Package and must have acquired a service vehicle pursuant to Section V.B of this Agreement;

h. The transferor, agrees that for a period of not less than two (2) years, commencing on the effective date of the transfer, neither Transferor nor any member of Transferor's immediate family nor any partners) or shareholders) of Franchisee shall have any direct or indirect interest as a disclosed or beneficial partner, shareholder or franchisee in any mobile or fixed location furniture or wood care business within an area extending 75 miles from the outer perimeter of an area to include the county or counties

FM Agmt 4-3/2006

in which the Franchised Business is conducted.

i. Transferor must enter into an agreement with FM providing that all obligations of the transferee to make installment payments

of the purchase price or interest thereon to Franchisee shall be subordinate to the obligations of the transferee to pay Royalty

| Fees, ArFrAdvenising Fund Contributions, and obligations for purchases from FM and approved suppliers authorized to furnish

supplies and products to FM franchisees.

j. Transferor and transferee will be responsible for the transfer of material assets; any missing assets will be replaced at

transferee's expense. k. The Transferee does notrund-doesnot-intend to, own, operate or be involved-in any business that competes-directly or-indirectly with or-is-siroilar-to the Franchised-Business;

It-----The Transferor must make provision for the continued operations of the business in the interim period between transfer of the

business and the transferee's successful completion of the transfer. | ml. FM must approve the material terms and conditions of such transfer, including without limitation, that the price and terms of

payment are not so burdensome as to affect adversely the continuation of the Franchised Business. | Hin. All obligations imposed on Franchisee by this Agreement must be assumed by the transferee.

C. Transfer to a Spouse or Child. In the event of a transfer of a controlling interest in the Franchised Business or License governed by the terms of Section VII.B.1 of this Agreement where the transferee is the spouse or child of Franchisee, the transfer fee, set forth in Section VD.B.l.f, shall not be assessed.

D. Transfer Upon Death or Disability. Upon Franchisee's death or permanent dis

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