Motor Lodge License and Franchise Agreement
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Motor lodge license and franchise agreement.
_________ Company
Motor Lodge License Agreement (“Agreement”)
Dated _________, 19__ between _________ Company, a [state] corporation (“licensor”), and _________, a _________(resident, corporation, partnership) (“licensee”), whose address is _________.
The Parties Agree as Follows:
1. The license. Licensor owns, operates and licenses a system (the “System”) designed to provide a distinctive, high quality accommodations service to the public under the name “_________ Motor Lodge.” High standards established by licensor are the essence of the system. Future investments may be required under this agreement. Licensee has independently investigated the risks of the business and has read licensor’s “franchise disclosure document.” Licensor has made no representation not fully set forth below. Aware of the relevant facts, licensee desires to enter into this agreement in order to obtain a license to be a participant in the system in the operation of a motor lodge (the “Motor Lodge”) located at _________(the “premises”).
Licensor hereby grants to licensee a nonassignable, nonexclusive license (the “license”) to be a participant in the system at the Motor Lodge, but only in accordance with this agreement and only during the “license term” beginning with the date of this agreement and terminating under Section 15 (Term and Termination). The license applies to the specified location and no other. This agreement does not limit licensor’s right to use or license the system or to engage in or license any business activity at any other location.
2. The Motor Lodge. The Motor Lodge comprises all structures, facilities, appurtenances, furniture, fixtures, equipment, and entry, exit, parking and other areas from time to time located on the land identified on the plot plan most recently acknowledged by licensor in anticipation of this agreement, or located on any land from time to time approved by licensor for additions, signs or other facilities. The Motor Lodge now includes the facilities listed on attachment A to this agreement. No significant change in the Motor Lodge may be made without licensor’s approval. Redecoration and minor structural changes that comply with licensor’s stated standards and specifications will not be considered significant. Licensee represents that it is entitled to possession of the Motor Lodge during the entire license term without restrictions that would interfere with anything contemplated in this agreement.
3. The system. The system at present includes the service mark “_________ Motor Lodge,” and/or such other service marks and such copyrights, trademarks and similar property rights as may be designated from time to time by licensor to be part of the system; a reservation network, advertising, publicity and other marketing programs and materials; training programs and materials; standards, specifications, policies, procedures and other requirements as stated or referred to in this agreement and from time to time in licensor’s manuals and publications as modified from time to time including, without limitation, licensor’s “Standards of Operation, Lodges”, and “Architectural and Design Standards, Lodges and Hotels” (the “manuals”); and programs for inspecting the Motor Lodge and consulting with licensee. Licensor may improve and change the system and its component parts from time to time for the intended purpose of making it more effective, efficient, economical or competitive, or adapting it to new conditions, materials or technology, or enhancing the reputation or public acceptance of the _________ name, or better serving the traveling public. Licensor shall have the right to modify, alter or change its trademarks, service marks, trade names, trade dress, logotypes and commercial symbols from time to time and licensee agrees to adopt and use them as altered, modified or changed upon licensor’s request.
4. Standards. During the license term, licensee will operate the Motor Lodge as part of the system and will maintain a high moral and ethical standard and atmosphere at the Motor Lodge; maintain the Motor Lodge in a clean, safe and orderly manner; provide efficient, courteous and high-quality service to the public in strict accordance with the system; operate the Motor Lodge 24 hours a day every day; comply in all respects with the manuals; comply with licensor’s reasonable requirements as to (i) the types of services and products that may be used, promoted or offered at the Motor Lodge, (ii) the types of services and products that, to supplement services listed on attachment “A,” must be used, promoted or offered at the Motor Lodge, (iii) display _________ approved signage, (iv) directory listings of the Motor Lodge, (v) training of persons to be involved in the operation of the Motor Lodge, and (vi) the procedures needed in serving customers, comply with all governmental requirements, pay all taxes, and maintain all governmental licenses and permits necessary to operate the Motor Lodge in accordance with the system; permit inspection of the Motor Lodge by licensor’s representatives at any reasonable time and give them free lodging for such time as may be reasonably necessary to complete their inspections; promote the Motor Lodge on a local or regional basis subject to licensor’s restrictions as to form and content (which may require prior approval); insure that no part of the Motor Lodge or the system is used to further or promote a competing business; use every reasonable means to encourage use of _________ facilities everywhere by the traveling public; and in all respects use licensee’s best efforts to reflect credit upon and create favorable public response to the name “_________.”
5. Facilities. During the license term, licensee will at all times maintain the Motor Lodge in first-class condition. The licensee will refurbish and renovate the premises, including the replacement of furniture, fixtures and equipment, at reasonable times or upon the request of the company, which request shall not be unreasonably made nor less frequently made than once every 7 years. The licensee will refurbish, renovate or replace all signs at reasonable times or upon the request of the company, which request shall not be unreasonably made nor less frequently made than once every 10 years.
6. Communication system. Understanding that the _________ Communication System (“Communication System”) is an integral part of the system, licensee agrees to pay and perform all obligations imposed by licensor from time to time relative to the use of the Communication System, including payment to licensor of all fees and charges (“Communication System payments”) specified by licensor for such use. Failure by licensee to pay or perform any of such obligations shall constitute a default under Section 15(a) of the License Agreement. It is understood that licensor shall have the right, in its discretion and at any time, to modify the Communication System in whole or in part or to abandon it completely.
7. Fees. For each month (or part of a month) during the license term, licensee will pay to licensor by the 10th of the following month:
(a) a royalty of 5% of the gross revenues attributable to or payable for rental of guest rooms at the Motor Lodge (“gross rooms revenue”), gross revenues being subject to no deductions except for sales and room taxes, and
(b) a “Marketing Contribution” of 1% of Gross Rooms Revenue (but no less than ____¢ per guest room per night), this Contribution being subject to change by licensor from time to time if either approved by the Board of Directors of the “NOC” (the _________ Motor Lodges National Operators Council or successor sanctioned as such by licensor) or approved by a majority vote (which shall be counted on the basis of one Motor Lodge, one vote) of NOC members present and voting at the annual NOC meeting or at a meeting called for that purpose upon at least 45 days’ notice from licensor, and
(c) such Communication System Payments as are established by licensor from time to time.
Licensee will not sacrifice gross rooms revenue in order to further any business activity other than by normal trade discounts and other similar normal trade practices. A standard initial fee will be charged upon approval of any guest rooms to be added to the Motor Lodge. Additional royalties may be charged on revenues from any activity if it is added at the Motor Lodge by mutual agreement and (i) it is not now offered at System motor lodges generally and is likely to benefit significantly from or be identified significantly with the _________ name or other aspects of the system or (ii) it is designed or developed by or for licensor. Also, charges may be made for optional products or services accepted by licensee from licensor either in accordance with current practice or as developed in the future.
Each payment under this Section shall be accompanied by the monthly statement referred to in Section 11 (Records and Audits). Licensor may apply any amounts received under this section to any amounts due under this section. Amounts not paid when due, in addition to being in breach of this agreement, will accrue interest beginning on the first day of the month following the due date at 11/2 per month but not to exceed the maximum interest permitted by applicable law.
8. National Operator’s Council (NOC). Licensee is eligible for membership in the NOC and is entitled to vote at its meetings on the basis of one Motor Lodge, one vote. The purposes of the NOC will be to consider and discuss, and make recommendations on, common problems relating to the operation of system motor lodges. Licensor will seek the advice and counsel of the NOC board of directors and its various committees.
Recognizing that the NOC must function in a manner consistent with the best interests of the System, the parties will use their best efforts to cause the governing rules of the NOC to be consistent with these interests and this agreement.
9. Licensor’s responsibilities. Licensor will conscientiously seek to maintain high standards of quality, cleanliness, appearance and service at all motor lodges using the system so as to promote, protect and enhance the public image and reputation of the _________ name and to increase the demand for the services offered by the system. Limited exceptions may be made based upon local conditions or special circumstances.
During the license term, licensor will use reasonable efforts to furnish a reservation service to the Motor Lodge and will make available to licensee at no charge consultation and advice in connection with operations and marketing.
During the license term, licensor will continue to specify and provide required and optional training programs. A charge may be made for required training services, and travel, lodging and other expenses of licensee and its employees will be borne by licensee. Reasonable charges may be made for training materials.
The marketing contribution will be used by licensor exclusively for costs associated with national and international advertising, promotion, publicity, market research and other marketing programs and related activities relating to the system. The Communications System payments will be used by licensor exclusively for costs associated with the Communications System. Licensor will, with respect to its own “_________ Motor Lodges,” make available and use for the same purposes marketing and Communications System funds computed on the basis generally applicable to licensees of the system.
Local and regional marketing programs and related activities may be conducted by licensee, alone or in conjunction with other licensees of the system, but only at licensee’s expense and subject to licensor’s specifications as to form and content (which may require prior approval). Reasonable charges may be made for optional advertising materials ordered or used by licensee for such programs and activities.
10. Proprietary rights. The licensee will not contest licensor’s unrestricted and exclusive ownership of the system or its right to grant licenses of the system. All improvements and additions whenever made to or associated with the System by the parties or anyone else, and all service marks, trademarks, copyrights, and service mark and trademark registrations at any time used, applied for or granted in connection with the system, shall inure to the benefit of and become the property of licensor.
Licensor will have the sole right and responsibility to handle disputes with third parties concerning use of all or any part of the System, and licensee will, at its reasonable expense, extend its full cooperation to licensor in all such matters. Licensor need not initiate suit against imitators or infringers and may settle any dispute by grant of a license or otherwise. Licensee will not initiate any suit or proceeding against imitators or infringers, or any other suit or proceeding to enforce or protect the system. Both parties will make every effort consistent with the foregoing to protect, maintain, and promote the name “_________” and its distinguishing characteristics, and the other service marks, trademarks, slogans, etc., associated with the system, as standing for the system.
The parties will comply with each other’s reasonable requirements concerning confidentiality of information.
11. Records and audits. All revenues of the Motor Lodge, including gross rooms revenue, will be permanently recorded as reasonably required by licensor. By the 10th of each month, licensee will submit to licensor a statement reflecting the computation of the amounts then due under Section 7 (Fees). The statement will include information for the preceding month as to gross rooms revenue, other revenues generated at the Motor Lodge, rooms sold or occupied, reservation data and other information that may be useful in connection with marketing and other legitimate functions of licensor. The statement will be in such form and detail as licensor may reasonably require from time to time.
Licensee will, in a manner and form satisfactory to licensor, prepare on a current basis (and preserve for no less than 4 years), complete and accurate records concerning gross rooms revenue and all financial, operating, marketing and other aspects of the Motor Lodge, and maintain an accounting system which fully and accurately reflects all financial aspects of the Motor Lodge and its business. Such records shall include but not be limited to books of account, tax returns, governmental reports, register tapes, daily reports, and complete quarterly and annual financial statements (profit and loss statements, balance sheets and cash flow statements).
If there is a question as to gross rooms revenue, licensor may require licensee to have the relevant amounts computed and certified as accurate by a certified public accountant. During the License Term and for 2 years afterward, licensor and its authorized agents will have the right to verify information required under this agreement by requesting, receiving, inspecting and auditing, at all reasonable times, any and all records referred to above wherever they may be located (or elsewhere if reasonably requested by licensor). If any such inspection or audit discloses a deficiency in any payments due under this agreement, licensee shall immediately pay the deficiency. In addition, if the deficiency in any payment for any 12-month period is willful or exceeds 5% of the correct amount and is not offset by overpayments, licensee shall also immediately pay to licensor the entire cost of the inspection and audit, including but not limited to travel, lodging, meals, salaries and other expenses of the inspecting or auditing personnel. If the audit discloses an overpayment, licensor will immediately refund it to licensee.
12. Insurance and indemnity. During the license term, licensee will comply with all insurance requirements of any lease or mortgage covering the Motor Lodge, and will in any event maintain:
(a). employer’s liability and workers’ compensation insurance as prescribed by applicable law, and
(b). in states having a dram shop act, dram shop insurance naming licensor as an additional insured, and
(c). comprehensive general liability insurance (with products, completed operations, independent contractors and escalators coverage) and comprehensive automobile liability insurance, all on an occurrence basis naming licensor as an additional insured and underwritten by any reputable insurance carrier approved by licensor, with single-limit coverage for personal and bodily injury and property damage of at least $5,000,000 for each occurrence in the case of a Motor Lodge containing no more than 2 stories and at least $10,000,000 in the case of a Motor Lodge containing more than 2 stories. The types and amounts of insurance required may be established, modified or increased by the licensor from time to time but in no event more frequently than once in any calendar year.
(d). Licensee agrees during the license term to procure, carry and pay for fire, extended coverage and vandalism and malicious mischief insurance, insuring the construction, improvements, and completed buildings upon the described premises for no less than 80% of their full insurable replacement cost. In the event of a loss the proceeds of any such insurance shall be used to repair or restore the buildings in accordance with paragraph 14 of this agreement. The insurance policy carrying the required coverage under this agreement shall provide that the insurer waives any right of subrogation against the licensor. Licensee waives any right of recovery against the company for any direct or indirect loss occurring to the licensed premises.
In connection with all significant construction at the Motor Lodge during the license term, licensee will cause the general contractor to maintain with a reputable insurer comprehensive general liability insurance (with products, completed operations and independent contractors coverage) in at least the amount of $5,000,000 with licensor named as an additional insured.
Simultaneously with this agreement, annually and each time a change is made in any insurance or insurance carrier, licensee will furnish to licensor a certificate of the insurance carrier as to the term and coverage of the insurance in force, the persons insured, and the fact that the coverage may not be cancelled, altered or permitted to lapse or expire without 30 days’ advance written notice to licensor.
Licensee will indemnify licensor against, hold it harmless from, and promptly reimburse it for, any and all payments of money (fines, damages, legal fees, expenses, etc.) by reason of any claim, demand, tax, penalty, or judicial or administrative investigation or proceeding (even where licensor’s negligence is alleged) arising from any claimed occurrence at the Motor Lodge or any act, omission or obligation of licensee or anyone associated or affiliated with licensee or the Motor Lodge. At the election of licensor, licensee will also defer licensor against same. In any event, licensor will have the right, through counsel of its choice, to control any matter to the extent it could directly or indirectly affect licensor financially. Licensee will also reimburse licensor for all expenses reasonably incurred by licensor to protect itself from, or to remedy, defaults under this agreement.
13. Transfer, control. The license is personal in nature. Any purported transfer of it (by operation of law or otherwise) not specifically authorized pursuant to this section will be void and will also be a breach of this agreement. The license may not be the subject of a security interest, lien, levy, attachment or execution. Licensee will at all times retain and exercise management control over the Motor Lodge and its business except as may be otherwise approved by licensor. The licensee agrees that licensee’s interest in this agreement is nontransferable and may not be pledged, sold, hypothecated, assigned or transferred except as provided below. Any attempted pledge, sale, hypothecation, assignment or transfer of licensee’s interest in this agreement without the company’s written consent as provided below shall be void and confer no rights upon any third person.
The licensee will not sell, transfer, assign, lease or sublet, nor offer to sell, transfer, assign, lease or sublet any interest in the licensed premises or any part of them, or in the business conducted in them, or in the building, equipment or furnishings located on them, or any interest in licensee whether a partnership, corporation or otherwise without in each instance offering the same to licensor, exclusively, at a stated price, and on stated terms. Licensee shall also provide licensor with all information requested by licensor reasonably necessary to consider such offer, including but not limited to, complete financial statements of licensee for the immediately preceding 48 months, a copy of the offer, and a copy of any correspondence and agreements pertaining to or arising out of the offer. The price and terms which are offered to licensor shall be the same and on as favorable terms of payment as may be offered to or by any other person, and in no event will the premises be sold, transferred, assigned or leased or sublet to any other for a lesser price or on more favorable terms than those which were offered to licensor, without first reoffering the premises to licensor at the more favorable price and terms. The failure of licensor to purchase, lease or sublet the described premises when offered same pursuant to the provisions of this Section shall not operate as a waiver of the requirement that an offer must be made to licensor on any future sales, transfers, assignments, leases or sublettings, it being the intention that licensor shall have a right of first refusal as to any and all transactions during the term of this agreement.
In the event that the licensor exercises its right of first refusal under this section, within 60 days after determination of all relevant terms and receipt of all of the information requested by licensor as set forth below, the licensee will, simultaneously with the sale, transfer, assignment, leasing or sub-letting of licensee’s interest in the premises to licensor, pay all outstanding indebtedness due licensor and enter into an agreement with licensor terminating this license agreement.
In the event that licensor does not exercise its right of first refusal within 60 days after determination of all relevant terms as set forth above, the licensee may sell, transfer, assign, lease or sublet the premises to the party having made the offer upon which the right of first refusal is based but the same may be sold, transferred, assigned, leased or sublet as a _________ Motor Lodge only upon the condition that: (a) the licensee is not in default in any respect under this license agreement; (b) all indebtedness under this agreement or otherwise due and payable to licensor is paid in full; (c) the proposed purchaser, transferee, assignee, lessee or sublessee of the licensee’s interest is acceptable in every respect to the licensor as a substitute licensee; and (d) the proposed transferee, with licensee’s consent, applies for a new license agreement to replace the license for the balance of its term. Licensor will process the application in good faith and in accordance with procedures and criteria (and requirements regarding fees, upgrading of facilities, credit, market feasibility, etc.) then being applied by licensor in issuing new licenses to use the System. If the application is approved, licensor and the transferee will, upon surrender of the license, enter into a commitment agreement to govern the Motor Lodge until the time specified in it for the new license agreement to be entered into if the transferee fulfills specified upgrading and other requirements by that time to bring the premises in full accordance with the company’s then current standards. The new license agreement will be on the standard form, and contain the standard terms (except for duration), then being used to license new motor lodges under the System.
In the event that the proposed substitute licensee is unacceptable to the company, or the licensee or the proposed substitute licensee neglects or refuses to comply with each of the conditions set forth in this Section, the licensee may not sell, transfer, assign lease or sublet the premises as a _________ Motor Lodge and if sold, transferred, assigned, leased or sublet for another purpose the provisions of this agreement with respect to compensation and the use of the premises and with respect to the removal of trade names, trademarks and other identification shall apply.
In no event shall the licensee offer the premises or any interest in them, or any interest in licensee whether a partnership, corporation or otherwise, or in the business conducted on them, or in the equipment or furnishings on them, or sell or transfer at public auction, nor at any time shall such an offer be made to the public to sell, transfer, assign, lease or sublet, through the medium of advertisement, either in the newspapers or otherwise, without first having obtained in writing the permission of the Company to such advertisement or publication.
If licensee is a natural person, the license will pass to the person’s estate at death if adequate provision has been made for management of the Motor Lodge by the estate and if the estate promptly advises licensor and assumes licensee’s obligations under this agreement in writing. The estate may, with licensor’s consent which will not be unreasonably withheld, transfer the license to any one of the following if the transferee assumes licensee’s obligations under this agreement in writing: licensee’s spouse, parent, sibling, niece, nephew, descendant, or spouse’s descendant. Licensee may, if a natural person, transfer the license to a corporation entirely owned by licensee after guaranteeing, in licensor’s usual form, the performance of the transferee’s obligations under this agreement. No transfer fees will be charged and no deficiency inspection of the Motor Lodge will be made in connection with any transfer under this paragraph.
If licensee is not a natural person, it represents that its equity is directly and (if applicable) indirectly owned as shown on attachment A. This section will be applied by looking through or disregarding direct, indirect and intervening ownership interests in licensee to the extent deemed appropriate by licensor in order to ascertain from time to time the ultimate or beneficial ownership of licensee’s equity by natural persons or publicly-held entities. Such ultimate or beneficial interests are referred to in this section as “equity interests.” The transfer, creation or elimination of an equity interest, by operation of law or otherwise, will be a breach of this agreement unless specifically authorized below.
If an equity interest is owned by a natural person, it may pass to the person’s estate at death if adequate provision has been made for management of the Motor Lodge and if the estate promptly advises licensor. The estate may, with licensor’s consent which will not be unreasonably withheld, transfer the equity interest to one or more of the following if the transferees assume in writing, on a continuing basis, the decedent’s guarantee, if any, of licensee’s obligations under this agreement: licensee’s spouse, parent, sibling, niece, nephew, descendant, spouse’s descendant. Equity interests may also be transferred, created or eliminated with licensor’s consent, which will not be unreasonably withheld, if after the transaction:
(a) no more than 49% of licensee’s equity will have changed hands since licensee first became a party to this agreement, or
(b) no more than 80% of licensee’s equity will have changed hands since licensee first became a party to this Agreement, and none of licensee’s equity will be held by other than those who held it when licensee first became a party to this agreement.
In computing these percentages, licensor’s reasonable judgment will be final if there is any question as to how to define “equity” or how to compute relative equity interests, the principal considerations being (1) direct and indirect power to exercise control over the affairs of licensee, (2) direct and indirect right to share in its profits, and (3) amounts directly or indirectly exposed at risk in its business (but general partners will not be distinguished from limited partners in computing the percentages). No transfer fees will be charged and no deficiency inspection of the Motor Lodge will be made in connection with any change in equity under this paragraph.
Publicly-traded equity interests that have been previously registered under federal securities law may be transferred without licensor’s consent if (i) just before the proposed transfer the transferor owns less than 25% of licensee’s equity, (ii) just after the proposed transfer the transferee will own less than 25% of licensee’s equity, and (iii) the transfer is exempt from registration under federal securities law. Such equity interests may be transferred with licensor’s consent which may not be unreasonably withheld, if the transfer is exempt from registration under federal securities law. Each time such registration of licensee’s securities or other equity interests is desired (on an initial public offering and subsequently), licensor’s consent will be required, but it may not be unreasonably withheld if requested at least 45 days before the effective date of the registration and licensee makes arrangements satisfactory to licensor to pay all costs which licensor incurs in connection with such registration. Also, licensee and the other participants in the registration must fully indemnify licensor in connection with the registration, furnish to licensor all information requested by it, avoid any implication that licensor is participating in or endorses the offering, and use licensor’s service marks and trademarks only as directed by licensor.
Any other proposed transfer, creation or elimination of an equity interest will be treated as a proposed transfer of the Motor Lodge requiring an application by licensee for a new license agreement as described earlier in this section.
Licensor’s rights under this agreement are freely transferable.
14. Condemnation and casualty. Licensee shall, at the earliest possible time, give licensor full notice of any proposed taking by eminent domain. If licensor agrees that the Motor Lodge or a substantial part of it is to be taken, licensor will give due and prompt consideration to transferring the license to a nearby location selected by licensee as promptly as reasonably possible and in any event within four months of the taking. If the location is accepted and the transfer authorized by licensor and if licensee opens a new Motor Lodge at the location in accordance with licensor’s specifications within 2 years of the closing of the old Motor Lodge, the new Motor Lodge will be deemed to be the Motor Lodge licensed under this agreement. If a condemnation takes place and a new Motor Lodge does not, for whatever reason, become the Motor Lodge under this agreement in strict accordance with this Section (or if it is reasonably evident that such will be the case), the license will terminate upon notice by licensor to licensee.
If the Motor Lodge is damaged by fire or other casualty, licensee will expeditiously repair the damage. If the damage or repair requires closing the Motor Lodge, licensee will immediately notify licensor, will repair or rebuild the Motor Lodge in accordance with licensor’s standards, will commence reconstruction within four months after closing, and will reopen the Motor Lodge for continuous business operations as soon as practicable (but in any event within 24 months after closing of the Motor Lodge, giving licensor ample advance notice of the date of reopening). If the Motor Lodge is not reopened in accordance with this paragraph, the license will forthwith terminate.
Nothing in this section will extend the license term but licensee shall not be required to make any payments pursuant to Section 7 (Fees.) for periods during which the Motor Lodge is closed by reason of condemnation or casualty.
15. Term and termination. The license will be in effect for a term of 20 years from the date of this agreement and will terminate without notice upon expiration of the term, subject to earlier termination as stated below. The parties recognize the difficulty of ascertaining damages resulting from premature termination of the license, and have provided for liquidated damages which represent their best estimate as to the damages arising from the circumstances in which they are provided. The license may be replaced by a new license agreement as provided in Section 13 (Transfer, control) and the license may terminate as provided in Section 14 (Condemnation and casualty), in both cases without liquidated damages.
(a). Termination by notice from licensor. Upon written notification from the licensor that the licensee is in default of any of its obligations under this agreement, licensee shall have 30 days to cure such default. If such default cannot, despite licensee’s best efforts, be cured within 30 days, licensee shall have a reasonable time to cure such default provided that licensee shall have commenced such cure within the 30-day period and diligently pursues its completion. A reasonable time shall be determined by licensor in its sole judgment. If licensee has not cured the default within the 30-day period or such extended time as licensor may deem reasonable, the license will terminate on the termination date specified in a notice by licensor to licensee (without any further notice unless required by law), provided that (i) the notice is mailed at least 30 days (or longer if required by law) in advance of the termination date, and (ii) the notice reasonably identifies one or more breaches of the licensee’s obligations. In any judicial proceeding in which the validity of termination is at issue, licensor will not be deemed to have waived any other defaults of licensee nor limited to the reasons set forth in any notice sent under this section.
(b). Termination without notice. Unless licensor promptly after discovery of the relevant facts notifies licensee to the contrary in writing, the license will immediately terminate without notice (or at the earliest time permitted by applicable law) if:
(1) Licensee becomes insolvent or is unable to pay its debts as they become due, licensee is adjudicated a bankrupt, or files a petition or pleading under the federal bankruptcy law or under any other state or federal bankruptcy or insolvency laws, or an involuntary petition is filed with respect to licensee under any such laws and is not dismissed within 60 days after it is filed, or a permanent or temporary receiver or trustee for the motor lodge or all or substantially all of licensee’s property is appointed by any court, or any such appointment is acquiesced in, consented to, or not opposed through legal action, by licensee, or licensee makes a general assignment for the benefit of creditors or makes a written statement to the effect that licensee is unable to pay its debts as they become due, or a levy, execution, or attachment remains on all or a substantial part of the Motor Lodge or of licensee’s assets for 30 days, or licensee fails, within 60 days of the entry of a final judgment in any amount exceeding $50,000 to discharge, vacate or reverse the judgment, or to stay execution of it, or if appealed, to discharge the judgment within 30 days after a final adverse decision in the appeal, or
(2) Licensee loses possession or the right to possession of all or a significant part of the Motor Lodge except as otherwise provided in Section 14 (Condemnation and casualty), or
(3) Licensee contests in any court or proceeding licensor’s ownership of the System or any part of it, or the validity of any service marks or trademarks associated with licensor’s business, or
(4) A breach of Section 13 (Transfer, control) occurs, or
(5) Any action is taken toward dissolving or liquidating licensee, if it is a corporation or partnership, except for death of a partner, or
(6) Licensee is, or is discovered to have been, convicted of a felony (or any other offense if it is likely to adversely reflect upon or affect the Motor Lodge, the system or licensor in any way).
(c). Posttermination. Licensee will take whatever action is necessary to assure that no use is made of any part of the system at or in connection with the Motor Lodge after the license term ends. This will involve, among other things, physical changes of distinctive system features of the Motor Lodge to preclude any possibility of confusion on the part of the public as to the change in the status of the Motor Lodge. Anything not done in this regard within 30 days after termination may be done at licensee’s expense by licensor or its agents who may enter upon the premises of the Motor Lodge for that purpose.
If the license terminates pursuant to (a) or (b) above, licensee will promptly pay licensor (as liquidated damages for the premature termination only, and not as a penalty or as damages for breaching the agreement or in lieu of any other payment) a lump sum equal to the average monthly total amounts required under Section 7 (Fees) during the 24-calendar months of operation preceding the termination times 60 months or the number of months which would have remained in the license term but for the termination, whichever is less.
16. Extension of license. During the 17th year of the license term, licensee may apply for a commitment to extend the license. Upon payment of the then standard renewal fees, licensor will process the application in good faith and in accordance with procedures and criteria (and requirements regarding upgrading of facilities, credit, market feasibility, etc.) then being applied by licensor in issuing new licenses to use the system. If the application is approved, the parties will enter into a commitment agreement to extend the license term, upon expiration, for a specified time (up to 10 years) if licensee fulfills specified upgrading and other requirements within a specified time. The commitment agreement will permit continued operation of the motor lodge during its term. The new license agreement will be on the standard form then being used to license new motor lodges under the system and it will replace this agreement. However, it will call for payments at the same rates as those required in this agreement, until the extension takes effect.
The extension will be subject to fulfilling the conditions specified in the commitment agreement and will be governed by the new license agreement except that the payments required will be those in effect when licensee first applied for the extension under this section.
17. Relationship of parties. Licensee is an independent contractor. Neither party is the legal representative or agent of, or has the power to obligate (or has the right to direct or supervise the daily affairs of) the other for any purpose, and no partnership, joint venture, agency, fiduciary or employment relationship is intended or created by reason of this agreement.
Licensee will take such steps as are necessary and such steps as licensor may from time to time reasonably request to minimize the chance of a claim being made against licensor for anything that occurs at the Motor Lodge, or for acts, omissions or obligations of licensee or anyone associated or affiliated with licensee or the Motor Lodge. Such steps may, for example, include giving notice in guest rooms, public rooms and advertisements, on business forms and stationery, etc., making clear to the public that licensor is not the owner or operator of the Motor Lodge and is not accountable for what happens at the Motor Lodge. Unless required by law, licensee will not use the words “_________”, or any similar words in its corporate, partnership, or trade name nor authorize or permit such use by anyone else.
18. Nonaffiliation. The licensee shall not, without the express prior written consent of licensor, which consent may be withheld in licensor’s sole discretion, associate or affiliate the _________ Motor Lodge contemplated in this agreement in any manner with any organization, company or group, other than the primary purpose of which, either express or implied, is to set standards for motels or hotels and/or to request or require its members to refer business to other members of that organization, company or group. The licensee shall use its best efforts to promote the system and to refer all business which cannot be reasonably accommodated by the licensed motor lodge to other _________ Motor Lodges whenever possible.
19. Recording. The parties agree that this license agreement shall not be recorded in its entirety in any recording office unless the recording of the License Agreement in its entirety shall be required by applicable law, in which event a duly and fully executed counterpart copy of this license agreement, in recordable form, shall be forthwith recorded in the appropriate recording office at the expense of licensee.
In the event that this license agreement shall not be required to be recorded in its entirety, then licensor and licensee will execute an instrument, recordable in form, setting forth the term, and such other information as may be necessary to constitute a declaration of license agreement, and such other information as licensor shall determine and the instrument shall then be recorded in the appropriate recording office at the expense of licensee. Licensee agrees that it will comply with the requirements of the appropriate recording office in which this license agreement or such other instrument is to be recorded in order that the plan attached to this agreement or to be attached to such other instrument shall be acceptable for recording.
20. Miscellaneous. The remedies provided in this agreement are not exclusive, and its provisions are severable. It will be governed by _________ law. It is exclusively for the benefit of the parties and it may not give rise to liability to a third party. No agreement between licensor and anyone else is for the benefit of licensee. Neither party will interfere with contractual relations of the other. The section headings in this agreement will not affect its interpretation.
This is the entire agreement (and supersedes all previous agreements) between the parties relating to the Motor Lodge. No change in this agreement will be valid unless in writing signed by both parties. No failure to require strict performance or to exercise any right or remedy under this agreement will preclude requiring strict performance or exercising any right or remedy in the future. Licensor’s consent, wherever required, may be withheld if any default by licensee exists under this agreement.
Notices will be effective under this agreement only when they are reduced to writing and delivered personally or mailed by certified mail to the appropriate party at its address first stated above or to such person and at such address as may be designated by notice hereunder. Approvals and consents by licensor will not be effective unless evidenced by a writing duly executed on behalf of licensor.
In witness of which, the parties have executed this agreement as of the date first stated above.
Licensee:
Licensor:
_________ _________ Company
By: _________ By: _________
Name: _________ Name: _________
Title: _________ Title: _________
Attest: _________ Attest: _________
GuarantyAs an inducement to _________ Company (“licensor”) to execute the above agreement, the undersigned, jointly and severally, unconditionally warrant to licensor and its successors and assigns that all of licensee’s representations in the agreement are true and guarantee that all of licensee’s obligations under the above agreement, including any amendments to it whenever made (the “agreement”), will be punctually paid and performed.
Upon default by licensee or notice from licensor, the undersigned will immediately make each payment and perform each obligation required of licensee under the Agreement. Without affecting the obligations of the undersigned under this guaranty, licensor may without notice to the undersigned extend, modify or release any indebtedness or obligation of licensee, or settle, adjust or compromise any claims against licensee. The undersigned waive notice of amendment of the agreement and notice of demand for payment or performance by licensee.
Upon the death of an individual guarantor, the estate of such guarantor will be bound by this guarantee but only for defaults and obligations under this guarantee existing at the time of death, and the obligations of the other guarantors will continue in full force and effect.
In witness of which, each of the undersigned has signed this guaranty as of the date of the above agreement.
Witnesses: Guarantors:
_________ _________(Seal)
_________ _________(Seal)
_________ _________(Seal)