exv10w3






Exhibit 10.3




PLANET BEACH INTERNATIONAL, L.L.C.




MASTER FRANCHISE AGREEMENT FOR




TERRITORY




	 	 	 	 	 
	 
	 

	 	 

Master Franchisee
	 	 
	 
	 	 	 	 
	 

	 	                                                             , 2008	 	 






 









 






TABLE OF CONTENTS




	 	 	 	 	 
	1. CERTAIN DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	2. DEVELOPMENT RIGHTS AND OBLIGATIONS
	 	 	6	 
	A. GRANT OF DEVELOPMENT RIGHTS
	 	 	6	 
	B. TERRITORIAL RIGHTS OF MASTER FRANCHISEE
	 	 	6	 
	C. DEVELOPMENT OBLIGATIONS
	 	 	7	 
	D. EXTENSION OF DEVELOPMENT TERM
	 	 	8	 
	E. GUARANTEE INDEMNITY
	 	 	9	 
	3. GUIDANCE AND ASSISTANCE
	 	 	9	 
	A. INITIAL TRAINING
	 	 	9	 
	B. CONTINUING TRAINING
	 	 	10	 
	C. CONTINUING GUIDANCE AND SUPPORT BY FRANCHISOR
	 	 	10	 
	D. OPERATIONS MANUALS
	 	 	11	 
	E. FRANCHISOR’S ON-SITE ASSISTANCE
	 	 	11	 
	F. PRODUCT AND OPERATIONS DEVELOPMENT
	 	 	12	 
	G. COMPUTER SOFTWARE, HARDWARE AND TECHNOLOGY
	 	 	12	 
	4. GRANT, SUPPORT AND SUPERVISION OF FRANCHISES
	 	 	13	 
	A. UNIT FRANCHISE AGREEMENTS
	 	 	13	 
	B. AREA REPRESENTATIVE RIGHTS
	 	 	14	 
	C. CORPORATE LOCATIONS
	 	 	15	 
	D. SYSTEM STANDARDS
	 	 	15	 
	E. PRODUCTS AND SUPPLIES; INTERNATIONAL VENDOR PROGRAM
	 	 	15	 
	F. OBLIGATIONS TO FRANCHISEE TO ENSURE AND ENFORCE FRANCHISEE COMPLIANCE WITH SYSTEM STANDARDS
	 	 	16	 
	G. FAILURE TO MEET OBLIGATIONS
	 	 	18	 
	5. OTHER OBLIGATIONS OF MASTER FRANCHISEE
	 	 	19	 
	A. SENIOR EXECUTIVE
	 	 	19	 
	B. SITE SELECTION, FRANCHISEE SELECTION/RECRUITMENT
	 	 	19	 
	C. INSURANCE
	 	 	20	 
	D. RECORDS AND REPORTS
	 	 	20	 
	E. GOVERNMENTAL APPROVALS
	 	 	22	 
	F. COMPLIANCE WITH LEGAL REQUIREMENTS AND GOOD BUSINESS PRACTICES
	 	 	22	 
	G. COMPLIANCE WITH U.S. AND OTHER ANTI-TERRORIST AND RELATED LAWS, REGULATIONS, ETC
	 	 	23	 
	6. INITIAL AND CONTINUING FEES
	 	 	24	 
	A. DEVELOPMENT FEE
	 	 	24	 
	B. INITIAL FRANCHISE FEES, NOTIFICATION OF RECEIPT BY FRANCHISOR AS A CONDITION PRECEDENT TO
OPENING OF FRANCHISE
	 	 	25	 
	C. ROYALTIES
	 	 	25	 
	D. ADVERTISING FUND CONTRIBUTIONS
	 	 	26	 
	E. DESIGN FEE
	 	 	26	 






i 









 






	 	 	 	 	 
	F. TECHNOLOGY FEES
	 	 	26	 
	G. WITHHOLDING TAXES
	 	 	26	 
	H. CURRENCY OF PAYMENT
	 	 	27	 
	I. INTEREST ON LATE PAYMENTS
	 	 	28	 
	J. STAMP DUTIES
	 	 	28	 
	K. PROOF OF AMOUNTS DUE
	 	 	28	 
	7. MARKETING
	 	 	28	 
	8. EXCLUSIVE RELATIONSHIP
	 	 	29	 
	9. INDEPENDENT CONTRACTORS/INDEMNIFICATION
	 	 	30	 
	A. INDEPENDENT CONTRACTORS
	 	 	30	 
	B. TAXES
	 	 	30	 
	C. INDEMNIFICATION
	 	 	30	 
	10. MARKS
	 	 	31	 
	A. GOODWILL AND OWNERSHIP OF THE MARKS
	 	 	31	 
	B. LIMITATIONS ON MASTER FRANCHISEE’S USE OF THE MARKS
	 	 	31	 
	C. NOTIFICATION OF INFRINGEMENT AND CLAIMS
	 	 	32	 
	D. MODIFY/DISCONTINUANCE OF USE OF MARKS
	 	 	32	 
	E. REGISTRATIONS; LICENSE AGREEMENTS
	 	 	32	 
	11. TRANSFER
	 	 	33	 
	A. BY FRANCHISOR
	 	 	33	 
	B. BY MASTER FRANCHISEE
	 	 	33	 
	C. DEATH OR DISABILITY OF MASTER FRANCHISEE
	 	 	34	 
	D. NO RIGHT TO ENGAGE IN SECURITIES OFFERING
	 	 	35	 
	E. FRANCHISOR’S RIGHT OF FIRST REFUSAL
	 	 	35	 
	12. TERMINATION OF AGREEMENT
	 	 	36	 
	A. BY MASTER FRANCHISEE
	 	 	36	 
	B. BY FRANCHISOR
	 	 	36	 
	13. RIGHTS AND OBLIGATIONS UPON TERMINATION OR EXPIRATION
	 	 	38	 
	A. MARKS AND DE-IDENTIFICATION
	 	 	38	 
	B. FRANCHISE AGREEMENTS
	 	 	39	 
	C. CONTINUING OBLIGATIONS
	 	 	40	 
	14. NON-COMPETITION AND CONFIDENTIALITY
	 	 	40	 
	A. CONFIDENTIALITY AND NON-DISCLOSURE
	 	 	40	 
	B. NON-COMPETITION
	 	 	41	 
	C. AREA DEVELOPMENT FRANCHISEES/UNIT FRANCHISEES
	 	 	42	 
	15. ENFORCEMENT
	 	 	42	 
	A. INFORMAL DISPUTE RESOLUTION
	 	 	42	 
	B. ARBITRATION
	 	 	43	 
	C. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS
	 	 	43	 
	D. WAIVER OF OBLIGATIONS
	 	 	44	 
	E. RIGHTS OF PARTIES ARE CUMULATIVE
	 	 	45	 
	F. WAIVER OF PUNITIVE DAMAGES AND JURY TRIAL
	 	 	45	 
	G. LIMITATION OF CLAIMS
	 	 	45	 
	H. COSTS AND LEGAL FEES
	 	 	45	 
	I. GOVERNING LAW/CONSENT TO JURISDICTION
	 	 	46	 
	J. BINDING EFFECT
	 	 	46	 






ii 









 






	 	 	 	 	 
	K. CONSTRUCTION
	 	 	46	 
	L. GOVERNING LANGUAGE
	 	 	46	 
	M. FORCE MAJEURE
	 	 	47	 
	16. NOTICES, REPORTS, PAYMENTS AND ADDRESS FOR SERVICE
	 	 	47	 
	17. INDEPENDENT ADVICE
	 	 	48	 
	18. THIRD PARTY RIGHTS
	 	 	48	 






	 
	EXHIBIT A —  DEVELOPMENT AREA

	EXHIBIT B —  DEVELOPMENT SCHEDULE

	EXHIBIT C —  OWNERSHIP INTERESTS

	EXHIBIT D — FEE PAYMENTS

	EXHIBIT E —  MARKS

	EXHIBIT F —  NON-DISCLOSURE AGREEMENTS

	EXHIBIT G —  GUARANTEE

	EXHIBIT H —  INTERNATIONAL VENDOR PROGRAM

	EXHIBIT I —  FORM OF AFFILIATE ADDENDUM







iii 









 






PLANET BEACH INTERNATIONAL, L.L.C.

MASTER FRANCHISE AGREEMENT

FOR

TERRITORY




     THIS AGREEMENT (“Agreement”) is made and entered into this       day of                      2008, by and
between Planet Beach International, L.L.C. a limited liability company organized under the laws of
the State of Louisiana, U.S.A. with its principal place of business at 5161 Taravella Road Marrero,
LA 70072, U.S.A. (“Franchisor”), and                                                             , a corporation organized under the laws
of                                                              and with its principal place of business at
                     
                                                
                                (“Master Franchisee”).



PREAMBLES




     Franchisor has expended considerable time, effort and money in developing and in obtaining and
acquiring knowledge about the conduct of a business for the operation of the PLANET BEACH®
business. Franchisor’s business operates under distinctive trademarks, business formats, systems,
methods, procedures, designs, layouts, standards and specifications for the maintenance of a common
identity and reputation of the PLANET BEACH® business, all of which Franchisor may improve, further
develop or otherwise modify from time to time (the “System” as further defined below). Franchisor
grants to qualified persons rights to license, develop and operate the System and to franchise
other Persons to use the System in defined geographic areas (“master franchises”). Master
Franchisee has applied to Franchisor for a master franchise for the Development Area (defined
below). Master Franchisee’s application has been approved by Franchisor in reliance upon all
representations made by Master Franchisee. Master Franchisee agrees that during the term of this
Agreement, it will at all times faithfully, honestly and diligently perform its obligations
hereunder and will continuously exert its best efforts to promote and enhance the development and
operation of PLANET BEACH® businesses within the Development Area.



     In this Agreement, Planet Beach International, L.L.C. is referred to as “Franchisor,” “PBI,”
“us,” “we” or the possessive “our” and the Master Franchisee is referred to as “you”, the “Master
Franchisee” or the possessive “your”.



1. CERTAIN DEFINITIONS




     For purposes of this Agreement, the terms listed below have the meanings indicated. Other
terms used in this Agreement are defined and construed in the context in which they occur.



     “Affiliate” - any Person that directly or indirectly owns or controls, that is directly
or indirectly owned or controlled by, or that is under common ownership or control with another
Person.



     “Area Representative Franchise” - business operations licensed by Persons subject to an
Area Representative Agreement for the right to develop and operate, as well as recruit Unit



 









 




Franchisees to develop and operate Unit Franchises within a specific geographic area within the
Development Area.




     “Area Representative Franchisee” - One or more Person(s) that is/are a party to an Area
Representative Agreement with Master Franchisee for the right to develop and operate an Area
Representative Franchise.



     “Competitive Business” - an enterprise, Person or business that: (a) operates a Similar
Business or offers products or services similar to those offered by PLANET BEACH® businesses; or
(b) grants or has granted franchises or licenses, or establishes or has established partnerships or
joint ventures, for the development and/or operation of an enterprise or business described in the
foregoing clause (a).



     “Confidential Information” - any know-how and trade secrets (whether or not judicially
recognized as a trade secret), and all other information not generally known, that is or was
developed and/or is owned by Franchisor or any of it Affiliates, or their officers, directors,
employees, agents, representatives, master franchisees, franchisees and Unit Franchisees, including
but not limited to all operating manuals, customer information and other documentation, including
those on the subjects of management and administration, field operation, purchasing, marketing and
all other information Franchisor or its Affiliates provides to or makes available to Master
Franchisee and its Owners, in any form or by any method, for the use in the operation of an PLANET
BEACH® business under this Agreement or any Unit Franchise Agreement.



     “Control” – possession (through one or more intermediaries) of the power to direct or cause
the direction of, the management or policies of another entity, whether through ownership of voting
interest, by contract or otherwise.



     “Controlled Franchisee” - a legal entity that Master Franchisee Controls, or in which
Master Franchisee has a Controlling Interest.



     “Controlling Interest” - if a Person is a partnership, corporation or other form of
limited liability company, the ownership of twenty percent (20%) or more of the voting interests of
such Person will constitute a controlling interest. A trustee of a trust shall be deemed to hold
one hundred percent (100%) of the voting interests of the trust and each beneficiary of a trust
shall be deemed to hold his proportionate share of the voting interest of the trust or, if such
interest is indeterminate, one hundred percent (100%) of the voting interests of the trust.



     “Corporate Location” – a PLANET BEACH® business operated by a Franchisee in which Master
Franchisee has Control and at least a 51% equity interest.



     “Country” - the country constituting the Development Area or each country or portion of
a country in which a part of the Development Area is situated.



 









 





     “Data Protection Laws” - the laws protecting the fundamental rights and freedoms of
natural persons and, in particular, their right to privacy with respect to the processing of
Personal Data.



     “Development Area” - the geographic area or areas described on Exhibit A to this
Agreement.



     “Development Period” - each period of time defined as a Development Period on
Exhibit B to this Agreement.



     “Development Rights” - the right and license of the System to operate and grant
Franchises for the development and operation of PLANET BEACH® businesses.



     “Development Schedule” - the minimum number of the PLANET BEACH® businesses that must be
open and in operation at the end of each Development Period in each of the geographic areas which
comprise the Development Area, as set forth on Exhibit B to this Agreement.



     “Development Term” - the term of this Agreement and, once approved, the period during
which Master Franchisee is authorized to grant Franchises, which will commence on the Effective
Date and will expire, unless terminated sooner in accordance with the terms of this Agreement, on
the fifteenth (15th) anniversary of the Effective Date. The Development Term includes any
extension or renewal of the Development Term which is exercised in accordance with Section 3.D.



     “Dollars” and “$”- the legal currency of the United States of America.



     “Effective Date” - the date an authorized officer of Franchisor executes this
Agreement.



     “Franchise” - the right to develop and operate a PLANET BEACH® business within the
Development Area and to use the Marks and the System in the operation thereof.



     “Franchise Agreement” - the revised form of Franchisor’s Unit Franchise Agreement and/or
Area Representative Agreement (including all exhibits, ancillary documents and guarantees attached
thereto) which has been drafted and amended by counsel in the Country as necessary to comply with
legal requirements for the commercial operation of the PLANET BEACH® business in the Development
Area and approved by Franchisor pursuant to provisions detailed in Section 5.A and 5.B of this
Agreement.



     “Franchisee” – any or all Unit Franchisees and Area Representative Franchisees.



     “Gross Sales” - the total of all sales and revenue derived from the operation of any and
all Unit Franchises within the Development Area including, but not limited to, the sale of all
goods and services sold at or from the site of a Unit Franchise or elsewhere, or through or by
means of the business conducted by a Unit Franchise and the sale of products or services in
connection with the placement or servicing by a Unit Franchise, whether in cash or credit



 









 




transactions, but excluding sales, value added or service taxes actually collected from customers
and paid to the appropriate taxing authority and all customer refunds and credits.




     “Legal Requirements” - any and all applicable laws, ordinances, regulations, rules,
administrative orders, decrees and policies of any government, governmental agency or department
pertaining to the formation and performance of this Agreement, including, but not limited to, the
governments of the Country and the United States.



     “Marks” - the trademarks, service marks, logos and other commercial symbols set forth on
Exhibit E to this Agreement which Franchisor authorizes Master Franchisee to use and
sublicense to Unit Franchisees to identify the Franchise and Products offered by such, including
the marks, and associated logos and slogans. Such trademarks, service marks, logos and other
commercial symbols are subject to modification and discontinuance and may include additional or
substitute trademarks, service marks, logos and commercial symbols as provided in this Agreement.



     “Master Franchise Business” - means all of Master Franchisee’s activities related to
soliciting and recruiting new franchisees and facilitating the license, development and operation
of PLANET BEACH® businesses in the Development Area pursuant to this Agreement.



     “Master Franchisee Affiliated Unit” - a Unit Franchise owned and operated by an
Affiliate of Master Franchisee.



     “Offering Fee” - Franchisor’s reasonable costs and expenses associated with reviewing a
proposed offering, including, without limitation, legal and accounting fees and salaries of
Franchisor’s personnel and its professional advisors.



     “Operations Manual” - means any confidential operating manuals and other written
materials (including materials provided online or through other electronic media) covering the
proper operating and marketing techniques of the Master Franchise Business, Unit Franchises and any
other PLANET BEACH® business.



     “Owners” - all Persons or entities holding Ownership Interests (defined below) in Master
Franchisee and all Persons or entities who have other direct or indirect property rights in Master
Franchisee or this Agreement (the Persons or entities who are Owners as of the date of this
Agreement are listed on Exhibit C to this Agreement).



     “Ownership Interest” - a direct or indirect, disclosed or undisclosed, legal or
beneficial ownership or property right, including, without limitation: (a) in relation to a
company, the ownership of shares in the company; (b) in relation to a partnership, the ownership of
a general or limited partnership interest; or (c) in relation to a trust, the ownership of the
beneficial interest of such trust.



 









 





     “Permanent Disability” - any physical, emotional or mental injury, illness or incapacity
which would prevent a Person from performing the obligations set forth in this Agreement or in the
Guaranty attached hereto as Exhibit G for at least 90 consecutive days and from which
condition recovery within 90 days from date of determination is unlikely. Permanent Disability will
be determined by a licensed practicing physician selected by Franchisor upon examination of the
individual; or if the individual refuses to submit to an examination, then such individual will be
automatically deemed permanently disabled as of the date of the refusal for the purposes of this
Agreement. The costs of the examination required to determine Permanent Disability will be paid by
Franchisor.



     “Person” - an individual (and the heirs, executors, administrators or other legal
representatives of an individual), corporation, general or limited liability partnership, limited
liability company, trust, association or other business or legal entity.



     “Personal Data” – any information relating to an identified or identifiable natural person; an
identifiable person is one who can be identified, directly or indirectly, in particular by
reference to an identification number or to one or more factors specific to his or her physical,
physiological, mental, economic, cultural or social identity.



     “PLANET BEACH® business” - a business, identified by the Marks and operated in
accordance with the System pursuant to a valid Franchise Agreement with Franchisor or Master
Franchisee.



     “Products” - all products and services which Franchisor authorizes for sale by Unit
Franchises.



     “Proprietary Products” – include all Products identified by the Marks, any private label
Products developed by Franchisor or its affiliates and any Products prepared according to
Franchisor’s confidential or trade secret formulas.



     “Prospectus” - statutory prospectus (preliminary or final), a private placement
memorandum or any similar document that a company may use to convey information about a public
offering or private placement of equity or debt securities.



     “Restricted Persons” - (1) Owners who have a direct or indirect Controlling Interest in
Master Franchisee; (2) Affiliates of Master Franchisee; and (3) the officers, directors and
management personnel of Master Franchisee and its Affiliates.



     “Royalty” or “Royalty Fees” - means the monthly fees payable by you to us based on a
percentage of the revenues payable by Unit Franchisees to you under Unit Franchise Agreements, or
payable by Corporate Locations or Master Franchise Affiliated Units as provided in Exhibit
D, Section 4.2.



     “Securities Offering” - public offering or private placement of any equity or debt
securities or any securities convertible into or exchangeable for equity securities by Master
Franchisee or, if any of the proceeds of the offering are to be invested in or loaned to Master



 









 




Franchisee, or if the Prospectus, and Affiliate or any other person uses in connection with
offering mentions Franchisor or describes the relationship between Franchisor and Master
Franchisee.




     “Similar Business” - means any enterprise or entity that offers, is otherwise involved
in, or deals with any tanning or spa services.



     “System” - means the then-current PLANET BEACH® System, which includes the Marks, System
Standards, Operations Manual and other Confidential Information developed and embodying
Franchisor’s commercial experience and business processes for the licensing, development and
operation of PLANET BEACH® businesses, including the goodwill associated with the System.



     “System Standards” - means the then-current standards, requirements and specifications
for the development, construction and operation of PLANET BEACH® businesses, which may include
standards relating to design, construction, signage, furniture, fixtures, equipment, use of the
Marks, business techniques, methods of operation, procedures, supplies, Confidential Information,
quality, service, marketing, advertising, sales promotion programs, training, and insurance, which
are contained in the Operations Manual.



     “Unit Franchise” - business operations licensed by Persons subject to a Unit Franchise
Agreement with Master Franchisee for the development and operation of an PLANET BEACH® business
within the Development Area, including all Franchises operated by Affiliates of Master Franchisee.



     “Unit Franchisee” - one or more Person(s) that is/are party to a Unit Franchise
Agreement with Master Franchisee for the development and operation of a Unit Franchise.



     “United States” and “U.S.” - the United States of America.



     “VAT” - Value Added Tax and any similar tax replacing it or adding to it.



2. DEVELOPMENT RIGHTS AND OBLIGATIONS




     A. GRANT OF DEVELOPMENT RIGHTS



          Subject to the terms and conditions of this Agreement, Franchisor hereby grants to Master
Franchisee the Development Rights within the Development Area during the Development Term. Master
Franchisee may not directly operate Unit Franchises, but may operate PLANET BEACH® businesses
through Affiliates. All Unit Franchisees and Area Representative Franchisees, including Master
Franchisee’s Affiliates, must execute a Franchise Agreement for each Franchise. The rights granted
to Master Franchisee by this Agreement are limited to the Development Area and Master Franchisee
agrees that it is not hereby granted any rights to franchise, and that it will not, operate or
grant Franchises for PLANET BEACH® businesses outside of the Development Area.







 









 








     B. TERRITORIAL RIGHTS OF MASTER FRANCHISEE



          Except as hereinafter provided, and provided that Master Franchisee is in full compliance with
this Agreement, Franchisor and its Affiliates will not operate or grant Franchises or Development
Rights for PLANET BEACH® businesses within the Development Area during the Development Term. After
the termination of this Agreement or expiration of the Development Term, Franchisor and its
Affiliates shall have the right to operate and grant Franchises and Development Rights for PLANET
BEACH® businesses within the Development Area, subject only to the territorial rights granted to
Area Representative Franchisees and/or Unit Franchisees prior to the termination of this Agreement
or expiration of the Development Term.




          Franchisor expressly reserves the right: (1) to establish or operate, and license others to
establish or operate, PLANET BEACH® businesses, at any location outside the Development Area,
notwithstanding the proximity of said business to your Development Area; (2) outside the
Development Area, to market, sell, or distribute, or to license or contract with others to market,
sell or distribute, any products or services of any kind, including products or services similar to
those offered by the PLANET BEACH® businesses, to any person, organization, or public or private
entity, using the Marks or other trade-marks, through alternative channels of distribution,
including through Franchisor’s website, catalogues and direct mail solicitations; (3) within the
Development Area, to develop and operate, directly or indirectly, other businesses offering
products of services, similar to the products or services offered by the PLANET BEACH® business,
but under different marks; (4) within and outside the Development Area, to advertise and promote
the PLANET BEACH® business, System and Marks wherever Franchisor deems appropriate; and (5) outside
the Development Area, to offer, sell, and provide and to grant other Persons the right to offer,
sell and provide any products and service of any kind under the Marks or other trademarks; and (6)
within or outside the Development Area to develop and establish other businesses and systems using
the trademarks and service marks other than the Marks for any products and services.




     C. DEVELOPMENT OBLIGATIONS



          1. Immediately following the Effective Date of this Agreement, Master Franchisee shall
(a) engage counsel in the country to prepare the Franchise Agreement in accordance with Section
5.A; (b) cause an Affiliate to enter into a Unit Franchise Agreement and open a Corporate Location
within one year of the Effective Date of this Agreement; (c) commence a franchise sales, marketing
and development program for the Development Area; and (d) cause Franchisees to have open and in
operation within the Development Area the number of Unit Franchises agreed upon in the manner and
within each of the “Development Periods” specified in the Development Schedule. Master Franchisee
acknowledges and recognizes that the Development Periods and Development Schedule within the
Development Area are fair and reasonable for the development of Unit Franchises in the Development
Area and are an accurate reflection of market demand without over saturation of Franchisor
proprietary services offered under the System.




          2. Master Franchisee shall not enter into a Franchise Agreement with any third-party
Franchisee until (i) a proper form of the Unit Franchise Agreement and/or Area Representative
Agreement has been drafted by counsel of the Country pursuant to the terms of




 









 







Section 5.A and 5.B of this Agreement; and (ii) at least one Corporate Location is open and
operating pursuant to a Unit Franchise Agreement and System Standards. At all times throughout the
Development Term, Master Franchisee shall have open and in operation at least one Corporate
Location.




          3. The sale of any Unit Franchises in excess of the minimum number required in any time period
shall be credited to the subsequent time period.




          4. Master Franchisee may request an extension of any Development Period in which Master
Franchisee is required to have PLANET BEACH® businesses open and in operation. If granted, each
extension will be for an additional sixty (60) days beginning on the expiration of the applicable
Development Period, including any previous extensions. No more than three (3) extensions of any
Development Period will be permitted during the Development Term. No extension of any Development
Period shall, however, affect the duration of the Development Term, the development obligations and
time of any subsequent Development Period or any of Master Franchisee’s other obligations under
this Agreement. To obtain the extension, Master Franchisee must notify Franchisor in writing at
least thirty (30) days prior to the expiration of the applicable Development Period, provide a
detailed explanation for the delay and request Franchisor to consider granting Master Franchisee an
extension. Franchisor has no obligation to grant any extension. If Franchisor elects to grant the
extension, Franchisor may require Master Franchisee to pay an extension fee of $7,500.




          5. If Master Franchisee is unable to meet the Development Schedule solely as the result of
Force Majeure (as defined in Section 16.M), the Development Periods shall be extended by the amount
of time during which Force Majeure shall exist, provided that if any such Force Majeure shall
continue for a period in excess of six (6) months, Franchisor may terminate or rescind this
Agreement in accordance with Section 16.M.




     D. EXTENSION OF DEVELOPMENT TERM



          1. Upon expiration of the initial Development Term, if Master Franchisee has substantially
complied with all of the terms of this Agreement during the Development Term, and any subsequent
terms, including, without limitation, the Development Schedule, subject to the terms of this
Section 3.D, Master Franchisee shall have the option to extend this Agreement for two (2)
additional terms of ten (10) years each provided that:




               (a) Master Franchisee shall give Franchisor written notice of its request for an extension of
the Development Term not less than six (6) months and not more than eighteen (18) months prior to
the expiration of the Development Term.



               (b) Master Franchisee agrees to further develop PLANET BEACH® businesses in the Development
Area in accordance with a development schedule to be mutually established by the parties;



               (c) Master Franchisee is not in default of this Agreement and any other agreement between
Master Franchisee and Franchisor;



 









 





               (d) Master Franchisee is current with respect to all monetary obligations, including amounts
owing to Franchisor and its Affiliates;



               (e) Master Franchisee must enter into a new master franchise agreement which may contain terms
and conditions materially different from this Agreement, but consistent with Franchisor’s
then-current commercial policies; provided, however, that Master Franchisee will pay a renewal fee
of Fifty Thousand Dollars (US$50,000.00) to Franchisor upon execution of the new master franchise
agreement for the renewal rights in place of the Development Fee.



               (f) Master Franchisee and each Owner must, execute and deliver to Franchisor a general release
(in a form prescribed by Franchisor) of all claims against Franchisor and its Affiliates, and each
of their respective officers, directors, shareholders, partners, agents, representatives,
independent contractors, servants and employees in their corporate and individual capacities,
including claims arising under this Agreement and under any applicable law, rules or regulations;
and



               (g) Master Franchisee and any of its managers must be in compliance with Franchisor’s
then-current qualification and training requirements.



          2. If Master Franchisee fails to satisfy the conditions set forth in this Section 3.D, Master
Franchisee’s Development Rights and all other rights granted under this Agreement shall be deemed
to have expired and Franchisor shall have the right to operate and grant Franchises and Development
Rights for the PLANET BEACH® business in the Development Area, subject only to territorial rights
previously granted to Area Representative Franchisees and/or Unit Franchisees. In such a case NO
compensation of any kind shall be due to Master Franchisee, and Master Franchisee agrees to
transfer to Franchisor all records and files relevant to the operations of the PLANET BEACH®
business and all Area Representative Franchisees and/or Unit Franchises in the Development Area,
and all files, in paper, disc and electronic form as requested by Franchisor, within 10 days of the
expiration of this Agreement and Master Franchisee shall ensure that all such records and files can
be transferred to Franchisor in accordance with applicable Data Protection Laws.




     E. GUARANTEE INDEMNITY



          It is a condition precedent of this Agreement that each Owner specified by Franchisor (each a
“Guarantor”) enters into the Guarantee and Indemnity at Exhibit G to guarantee the
performance of Master Franchisee obligations under this Agreement.




3. GUIDANCE AND ASSISTANCE




     A. INITIAL TRAINING



          Within six (6) months of the Effective Date of this Agreement, and at least thirty (30) days
prior to the opening of Master Franchisee’s first Corporate Store, Franchisor will






 









 







provide initial training and Senior Executive (defined in Section 6.A) and all of its appropriate
personnel, as designated by Franchisor, must, at Master Franchisee’s expense, comply with all of
the initial training requirements prescribed by Franchisor which may include the training programs
defined below.




          1. Master Franchisee/Senior Executive Training.




               (a) Master Franchising Initial Training. Master Franchisee must successfully attend
and participate in the Master Franchising Initial Training program which is currently a five (5)
day program. This program will be conducted at the Franchisor’s corporate headquarters in Marrero,
Louisiana.



               (b) Planet Beach University Online Certification Program. Master Franchisee must
successfully complete the Planet Beach University Online, an online training program, prior to
attending Franchisee School and/or any other training programs.



               (c) Franchisee School. Master Franchisee must attend Franchisee School which is
currently a six (6) day program. In its sole discretion Franchisor may lengthen the duration of
Franchisee School by one or more consecutive days.



               (d) Onsite Grand Opening Training. Master Franchisee must successfully attend and
participate in the Grant Opening Training Program. This consecutive five (10) day program will be
conducted at the Master Franchisee’s first corporate store.



          2. Master Franchisee agrees to be responsible for all travel, living expenses and compensation
for its employees/managers who attend all such initial training programs. Franchisor will not
charge Master Franchisee any additional tuition-based training fee for any training required,
unless otherwise provided in this Agreement. Additional representatives of Master Franchisee may
also attend such initial training program if desired by Master Franchisee, without tuition,
however, Master Franchisee will be responsible to assume all other expenses as set forth in the
preceding sentence.




     B. CONTINUING TRAINING



          Franchisor has the right to require Master Franchisee to attend, but is not obligated to
provide, additional training at Franchisor’s corporate headquarters, or at such other location
specified by Franchisor, consisting of (i) two (2) additional training programs during the first
year of this Agreement and (ii) one (1) program for each year of the Development Term thereafter.
The additional training programs shall not exceed five (5) days of training for approximately eight
(8) hours each day. Master Franchisee will not be required to pay any tuition fees for the
additional training programs; provided that Master Franchisee shall be responsible for all travel
and living expenses incurred by its representatives in connection with their attendance at such
training programs. Master Franchisee will be assigned a direct point of contact. Master
Franchisee will have weekly scheduled calls with key executives of Franchisor from the date of the
Signature Date until the Master Franchisee’s flagship Planet Beach location






 









 







opens. Upon opening of the flagship location there will be monthly scheduled calls with Planet
Beach International, LLC staff.




     C. CONTINUING GUIDANCE AND SUPPORT BY FRANCHISOR



          Franchisor may provide, if it deems necessary in its sole discretion, ongoing advice and
guidance to Master Franchisee concerning the development, operation and franchising of the PLANET
BEACH® business. In connection with such assistance, Franchisor may furnish written and other
materials and various of its personnel to communicate the System to Master Franchisee. Franchisor
personnel shall be available for periodic consultation with personnel of Master Franchisee by
telephone, email, facsimile transmission and correspondence. Upon Master Franchisee’s reasonable
request, Franchisor, if it deems it necessary in its sole discretion, may send personnel to the
Development Area for further consultation and advice at Master Franchisee’s sole cost and expense.




     D. OPERATIONS MANUALS



          Franchisor shall loan to Master Franchisee or provide access to a copy of its Operations
Manual for the development and operation of the PLANET BEACH® business used in the United States
(or, at the option of Franchisor, a country with a language or culture that is the same as or
similar to the language or culture of the Development Area). Master Franchisee may from time to
time submit for review and approval by Franchisor any modifications to the System and System
Standards that Master Franchisee believes to be necessary to comply with the legal requirements of
the Development Area or for the commercial success of the PLANET BEACH® business operated in the
Development Area. Franchisor agrees to consider such proposed modifications in good faith and to
notify Master Franchisee in writing of Franchisor’s acceptance or rejection of such modifications,
specifying the reasons for any rejections. Modifications to the System and System Standards shall
be reflected in the Operations Manuals for the Development Area. If necessary, Master Franchisee
shall cause the Operations Manual to be translated into the principal commercial language of the
Development Area at a time to be determined or approved by Franchisor. The cost of such translation
shall be borne by the Master Franchisee. Master Franchisee acknowledges that the Operations Manual,
the copyright therein, and any translations thereof, shall be the property of Franchisor and agrees
to assign any copyright interest it may otherwise have to Franchisor. Prior to having any persons
(whether employees or independent parties) translate any materials, Master Licensee must enter into
a binding written agreement with such persons sufficient to transfer to Franchisor (either directly
or through Master Franchisee) all intellectual property rights in or to such translations, to waive
any moral rights that such person may have in or to such translations, and to maintain the
confidentiality of the Operations Manual and its translation. Any translation of the Operations
Manual shall be subject to the confidentiality and other provisions of this Agreement applicable to
the Operations Manual. Except for providing access to one (1) copy of the Operations Manual to
each Unit Franchisee and Area Representative Franchisee, Master Franchisee agrees that it will not
copy or disclose any part of the Operations Manual to any Person other than its employees who have
a need to know the contents of the Operations Manual.







 









 








     E. FRANCHISOR’S ON-SITE ASSISTANCE



          Assistance in Opening Prototype Facility. Franchisor may, if it deems it necessary,
at its own reasonable costs and sole discretion of time and timeframe, provide on-site advice,
guidance and support in connection with the opening and initial operations of Master Franchisee’s
first Corporate Location referred to in Section 3.A of this Agreement.




     F. PRODUCT AND OPERATIONS DEVELOPMENT



          1. New Products. Master Franchisee will authorize Unit Franchisees to sell new
Products and advise Area Representative Franchisees and Unit Franchisees of modifications or
additions to operating procedures for the development and operation of the PLANET BEACH® business
that Franchisor develops and designates for use by the PLANET BEACH® business franchisees. If
Franchisor in its sole discretion deems it necessary, Franchisor will provide training to Master
Franchisee concerning such new Products and operating procedures at times and places designated by
Franchisor.




          2. Innovations. Master Franchisee agrees to disclose to Franchisor all ideas,
concepts, methods, techniques, products and services relating to the development and operation of
the PLANET BEACH® business conceived or developed by Master Franchisee and its Affiliates, Area
Representative Franchisees and Unit Franchisees. In order that Master Franchisee, Franchisor and
all of its other franchisees may all benefit from the free interchange of ideas Master Franchisee
agrees to grant, and to ensure that its Affiliates, Area Representative Franchisees, and Unit
Franchisees grant to the Franchisor, its Affiliates and other network members: (a) a royalty free
license to use any non-patentable improvements in the System; and (b) a non-exclusive license at an
agreed fair price of all rights in any improvement in the System which is capable of being patented
and that are created by Master Franchisee, its Affiliates, Area Representative Franchisees or Unit
Franchisees.




     G. COMPUTER SOFTWARE, HARDWARE AND TECHNOLOGY



          1. Computer System. Master Franchisee must purchase and use any computer system that
Franchisor or its Affiliates develops or selects for the Business, including all future updates,
supplements and modifications (the “Computer System”). In the future, the computer software
package developed for use in PLANET BEACH® businesses may include proprietary software. Master
Franchisee may be required to license the proprietary software from Franchisor, an Affiliate or a
third party and also may be required to pay a software licensing or user fee in connection with
their use of the proprietary software. All right, title and interest in the software will remain
with the licensor of the software. The computer hardware component (including the security system)
of the Computer System must conform to specifications Franchisor develops. Franchisor reserves the
right to designate a single source from whom the Computer System must be purchased. Master
Franchisee acknowledges and agrees that Franchisor will have full and complete access to
information and data entered and produced by the Computer System.







 









 








          2. Participation in Internet Web Sites or Other Online Communications. Master
Franchisee must, at its expense, participate in Franchisor’s PLANET BEACH® web site, any
intranet or extranet system Franchisor may develop or other online communications as Franchisor may
require. Franchisor has the right to determine the content and use of the PLANET BEACH®
web site and any intranet or extranet system Franchisor may develop and will itself and may
not allow its Franchisees to establish the rules under which licensees may or must participate.
Master Franchisee may not separately register any domain name or operate a separate web site
containing any of the Marks without Franchisor’s prior written consent. Franchisor retains all
rights relating to its web site and any intranet or extranet system it may develop and may alter or
terminate the web site, intranet or extranet system. Master Franchisee’s general conduct on the
web site, intranet and extranet system or other online communications and, specifically, Master
Franchisee’s use of the Marks or any advertising is subject to the provisions of this Agreement.
Master Franchisee acknowledges that certain information related to its participation in the web
site, intranet or extranet system may be considered Confidential Information, including access
codes and identification codes. Master Franchisee’s right to participate in the web site, intranet
and extranet system, or otherwise use the Marks or System on the internet or other online
communications, will terminate when this Agreement expires or terminates.




          3. Franchisee Use of Technology. Master Franchisee must ensure that each Unit
Franchisee and Area Representative Franchisee uses the Computer System and participates in the
internet websites or other online communications and is bound by obligations equivalent to those
that apply to Master Franchisee in Section 4.G.1 and 4.G.2.




4. GRANT, SUPPORT AND SUPERVISION OF FRANCHISES




     A. UNIT FRANCHISE AGREEMENTS



          Within (30) days after execution of this Agreement, Franchisor shall furnish to Master
Franchisee its then-current version of its unit franchise agreement or form of subfranchise
agreement. Within thirty (30) days of Master Franchisee’s receipt of Franchisor’s unit franchise
agreement or subfranchise agreement, Master Franchisee shall engage, in writing, counsel from the
Country for the purpose of updating and revising Franchisor’s unit franchise agreement (including
all exhibits, ancillary documents and guarantees attached thereto) to be in total compliance with
the laws and other legal requirements of the Development Area. Master Franchisee must obtain
Franchisor’s written approval of the Unit Franchise Agreement and may not at any time grant any
franchise except pursuant to a Franchise Agreement in a form approved by Franchisor. The Unit
Franchise Agreement shall include a provision for the novation of the obligations and rights of the
Master Franchisee to the Franchisor in the event of the termination of this Agreement or expiration
of the Development Term, such novation to be exercised at Franchisor’s sole discretion and such
other provisions as Franchisor determines necessary or desirable to protect its interests and the
interest of the PLANET BEACH® System. Similarly, Franchisor shall have the option, exercisable in
its sole discretion, to be a named a party to the Unit Franchise Agreement or a third-party
beneficiary to the Unit Franchise Agreement.







 









 








          Master Franchisee shall submit, in English, for Franchisor’s review, both a black-lined and a
clean copy of the Unit Franchise Agreement which complies with the laws of Development Area at
least fifteen (15) days before the opening of its first Corporate Location as described in Section
2.C of this Agreement. Franchisor shall not be liable to any party under any provision of the
revised Unit Franchise Agreement (including all exhibits, ancillary documents and guarantees
attached thereto) that is used by Master Franchisee in the Development Area, except as otherwise
provided in this Agreement. Master Franchisee assumes all costs and responsibility for engaging
counsel in the Country in the time and manner expressed in this Section, and agrees to indemnify
Franchisor for any default under this Section.




          From time to time, Master Franchisee shall also submit, in English, for Franchisor’s review
and approval any modifications to such Franchise Agreement that Master Franchisee believes to be
necessary to comply with legal requirements or for the commercial operations of the PLANET BEACH®
business in the Development Area. Master Franchisee does hereby assign to Franchisor any copyright
ownership interest Master Franchisee may acquire in the future to the Unit Franchise Agreement or
any modifications thereto, as well as any copyright ownership interest Master Franchisee may
acquire in the future in any translation(s) of the Unit Franchise Agreement. Franchisor does hereby
grant to Master Franchisee a non-exclusive license to use the Unit Franchise Agreement developed
pursuant to this Section 5.A during the term of this Agreement.




     B. AREA REPRESENTATIVE RIGHTS



          In the event that Master Franchisee decides to grant area representative rights within the
Development Area, Franchisor will supply Master Franchisee with a copy of its then-current area
representative agreement upon Master Franchisee’s written request. Within thirty (30) days of
Master Franchisee’s receipt of Franchisor’s area representative agreement for the United States,
Master Franchisee shall engage, in writing, counsel from the Country for the purpose of updating
and revising Franchisor’s area representative agreement (including all exhibits, ancillary
documents and guarantees attached thereto) to be in total compliance with the laws and other legal
requirements of the Development Area. Master Franchisee must obtain Franchisor’s written approval
of the revised Area Representative Agreement and may not at any time grant any area representative
rights except pursuant to an Area Representative Agreement in a form approved by Franchisor. The
Area Representative Agreement shall include provision for the novation of the obligations and
rights of Master Franchisee to the Franchisor in the event of the termination of this Agreement or
expiration of the Development Term, such novation to exercised in Franchisor’s sole discretion, and
such other provisions as Franchisor determines necessary or desirable to protect its interests and
the interests of the PLANET BEACH® System. Similarly, Franchisor shall have the option, exercisable
in its sole discretion, to be a party to the Area Representative Agreement or named third-party
beneficiary to the Area Representative Agreement.




          Master Franchisee shall submit, in English, for Franchisor’s review, both a black-lined and a
clean copy of the Area Representative Agreement which complies with the laws of Development Area at
least fifteen (15) days before granting Area Representative rights. Franchisor shall not be liable
to any party under any provision of the revised Area Representative






 









 







Agreement (including all exhibits, ancillary documents and guarantees attached thereto) that is
used by Master Franchisee in the Development Area, except as otherwise provided in this Agreement.
Master Franchisee assumes all costs and responsibility for engaging counsel in the Country in the
time and manner expressed in this Section, and agrees to indemnify Franchisor for any default under
this Section.




          From time to time, Master Franchisee shall also submit, in English, for Franchisor’s review
and approval any modifications to such franchise agreement that Master Franchisee believes to be
necessary to comply with legal requirements or for the commercial operations of the PLANET BEACH®
business in the Development Area. Master Franchisee does hereby assign to Franchisor any copyright
ownership interest Master Franchisee may acquire in the future to the Area Representative Agreement
or any modifications thereto, as well as any copyright ownership interest Master Franchisee may
acquire in the future in any translation(s) of the Area Representative Agreement. Franchisor does
hereby grant to Master Franchisee a non-exclusive license to use the Area Representative Agreement
developed pursuant to this Section 5.B during the term of this Agreement.




     C. CORPORATE LOCATIONS



          Any PLANET BEACH® business Master Franchisee develops for its own account must be developed
and operated through an Affiliate, joint venture (in corporate or other form) or partnership with
one or more individuals or entities (a “Master Franchise Affiliated Unit”). In addition, the
rights of such affiliates, joint ventures and partnerships to use the System and the Marks in the
development and operation of PLANET BEACH® businesses must be: (1) granted pursuant to Franchise
Agreements which must include the Corporate Location Addendum attached hereto as Exhibit I;
and (2) subject to all terms and conditions of this Agreement.




     D. SYSTEM STANDARDS



          Master Franchisee acknowledges and agrees that the development and operation of the Master
Franchise Business PLANET BEACH® businesses in accordance with System Standards is the essence of
this Agreement and is essential to preserve the goodwill of the Marks related to the PLANET BEACH®
business. Therefore, Master Franchisee agrees that in order to maintain the identity and
reputation of the PLANET BEACH® System and to maintain the uniformly high standards amongst
franchisees carrying on business under the Marks in accordance with System Standards and to protect
Franchisor, Master Franchisee and the network of franchisees carrying on the PLANET BEACH® business
the goodwill and the demand for the Products sold, supplied or provided in the PLANET BEACH®
business under the Marks, the Master Franchisee will, at all times during the term of this
Agreement comply with, and cause Area Representative Franchisees and Unit Franchisees to develop,
maintain and operate in compliance with, each and every System Standard, as periodically modified
and supplemented by Franchisor in its discretion during the term of this Agreement. Master
Franchisee hereby agrees that System Standards prescribed from time to time in the Operations
Manual, or otherwise communicated to Master Franchisee, Area Representative Franchisees and Unit
Franchisees in writing, constitute provisions of this Agreement and Franchise Agreements. All






 









 







references to this Agreement and Franchise Agreements shall include all System Standards as
periodically modified.




     E. PRODUCTS AND SUPPLIES; INTERNATIONAL VENDOR PROGRAM



          1. Authorized Products and Services. Master Franchisee must require its
subfranchisees to offer from their respective PLANET BEACH® businesses, only those services and
products that Franchisor has approved in writing. Franchisor has the right to revise the list of
approved products and services from time to time based upon Franchisor’s evaluation of various
factors, which may include customer demand, geographic location, technological developments, and
other market or economic factors.




          2. Approved Supplies and Suppliers. Franchisor will furnish Master Franchisee with
lists of approved supplies or approved suppliers from time to time. Master Franchisee must ensure
that its subfranchisees use only approved equipment, products, fixtures, signs, marketing
materials, trademarks items and other items (collectively “approved supplies”) in the PLANET BEACH®
businesses. Approved supplies will include Proprietary Products and non-proprietary products.
Franchisor has the right to approve the manufacturer of approved supplies. Master Franchisee
acknowledges and agrees that certain approved supplies may only be available from one source, and
Franchisor or its affiliates may be that source. ALTHOUGH APPROVED BY FRANCHISOR, FRANCHISOR AND
ITS AFFILIATES MAKE NO WARRANTY AND EXPRESSLY DISCLAIM ALL WARRANTIES, INCLUDING WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO PRODUCTS, EQUIPMENT
(INCLUDING WITHOUT LIMITATION ANY REQUIRED COMPUTER SYSTEMS), SUPPLIES, FIXTURES, FURNISHINGS OR
OTHER APPROVED ITEMS.




          3. International Vendor Program. Master Franchisee and Franchisor agree to split
rebates provided by vendors of approved supplies and any product or service used in the operation
of the PLANET BEACH® business in the Development Area in accordance with the terms of Franchisor’s
International Vendor Program which is attached hereto as Exhibit H and may be modified by
Franchisor from time to time.




          4. Distribution by Master Franchisee. Master Franchisee understands and acknowledges
that nothing in this Agreement or in the International Vendor Program grants Master Franchisee any
rights to manufacture or distribute any approved supplies. Master Franchisee or its Affiliates may
distribute non-proprietary products to its subfranchisees provided Master Franchisee and its
Affiliates comply with all applicable legal requirements. Master Franchisee may only manufacture
or distribute Proprietary Products if manufacturing or distribution rights are granted by
Franchisor or its Affiliates pursuant to a separate agreement negotiated between the parties and
provided that provided that Master Franchisee can comply with all legal requirements and can meet
Franchisor’s quality and other requirements.







 









 








     F. OBLIGATIONS TO FRANCHISEE TO ENSURE AND ENFORCE FRANCHISEE COMPLIANCE WITH SYSTEM STANDARDS



          To ensure that the System Standards as set forth more fully in the preceding paragraph are
met, Master Franchisee agrees to undertake the following obligations:




          1. Training. Master Franchisee is responsible for training its employees and all Unit
Franchisees and Area Representative Franchisees. Master Franchisee shall designate a Person who is
fluent in English to serve as Master Franchisee’s certified trainer/manager in the Development
Area. Such Person shall be obligated to have successfully completed all phases of training
provided by Franchisor in order to become certified to train others in the Development Area. Prior
to the effectiveness of any Franchise Agreement, Master Franchisee shall ensure that at least one
representative of that PLANET BEACH® business has successfully completed all phases of training
provided by Master Franchisee. Master Franchisee must also provide new Unit Franchisees with five
(5) days of on-site training within the first two (2) weeks that that Unit Franchisee’s PLANET
BEACH® business is opened. Master Franchisee must also perform a three (3) day on-site follow-up
training session within the third month of a PLANET BEACH® business’s operation.




          2. Enforcing Franchisee Compliance. Franchisor has created and developed special
procedures, standards and methods for operating and maintaining the PLANET BEACH® businesses, which
System Standards are incorporated in Franchisor’s confidential Operations Manual, as it may be
amended from time to time or otherwise in writing. Master Franchisee shall ensure that each PLANET
BEACH® business within the Development Area is developed and operated solely in accordance with
Franchisor’s requirements and specifications as set forth in the Operations Manual including
through inspections and secret shoppers as required by Franchisor policies and procedures, which
may be changed from time to time. In each instance, Master Franchisee shall ensure that each PLANET
BEACH® business does not engage in deceptive, misleading or unethical practices or conduct that may
have a negative impact on the reputation and goodwill of Franchisor, Franchisees or the System.




          3. Supervision. Master Franchisee, or its duly authorized representative, must
provide supervision to all Franchisees within the Development Area. Such supervision shall
include, but not be limited to, on-site supervision during the period of time prior to the opening
of each Franchise; general assistance, advice and consultation to Franchisees with regard to
entering into negotiations and agreements within the Development Area for Franchisee services;
review of proposed leases and contracts; consultation and assistance with regard to grand opening
of each Franchise; providing supplemental training and assistance of all material aspects of the
operation of a PLANET BEACH® business, as needed, in accordance with Franchisor’s requirements;
periodic and regular telephone calls or visits to monitor operations of the Franchisees, continuous
advisory services to Franchisees, ongoing training and updates for all Franchisees within the
Development Area. Master Franchisee agrees to perform such duties pursuant to Franchisor’s
requirements herein described and in accordance with the System, the Operations Manual or otherwise
in writing, all of which may be changed from time to time by Franchisor.







 









 








          4. Advisement. Master Franchisee must advise all Franchisees within the Development
Area of problems arising out of the operation of any PLANET BEACH® business as disclosed by
periodic reports submitted to Master Franchisee or Franchisor by a Franchisee, or by inspections
conducted by Master Franchisee or Franchisor of the Franchisees within the Development Area.
Master Franchisee must provide each PLANET BEACH® business within the Development Area with such
assistance in connection with the operation of such PLANET BEACH® business as is reasonably
determined to be necessary by Franchisor. Operational assistance may consist of advice and
guidance with respect to: (i) proper utilization of procedures developed for a PLANET BEACH®
business with respect to operations and management, recruitment of personnel, advertising and
promotion, compliance with regulations and related activities as approved by Franchisor; (ii)
additional services authorized for Franchisees within the Development Area; (iii) purchase of
equipment, furniture, fixtures, products, inventory, materials, and supplies; (iv) the institution
of proper administrative bookkeeping, accounting, inventory control, supervisory and general
operating procedures for the effective operation of a PLANET BEACH® business; (v) advertising and
promotional programs; (vi) marketing and negotiating technique to be employed when dealing with
prospective customers, clients and vendors; and (vii) maintenance of the PLANET BEACH® business
premises.




          5. Regional Seminars. Not less than once every 12 months, Master Franchisee will
arrange for and conduct regional seminars within the Development Area for all Franchisees within
the Development Area. Such seminars shall include training and general advisory assistance for the
PLANET BEACH® business within the Development Area and Master Franchisee shall notify Franchisor in
writing at least four (4) weeks prior to conducting such regional seminars.




          6. Franchisee Reports. Master Franchisee must make contact with all Franchisees
within the Development Area for the purpose of consultation, assistance and guidance of Franchisees
and managers of each PLANET BEACH® business, and Master Franchisee or its representatives will
prepare, for benefit of both Master Franchisee and Franchisor, written reports regarding these
regular contacts outlining any suggested changes or improvement in the operations of the PLANET
BEACH® business and detailing any defaults in such operations which become evident as a result of
any such contact, and a copy of each such written report must be provided to both the Franchisee or
its manager and Franchisor.




          7. Franchisee Reviews. Not less than once every three (3) months, Master Franchisee
must conduct management and financial reviews with each PLANET BEACH® business in the Development
Area. As a part of these reviews an evaluation form, which form will be mutually approved by
Franchisor and Master Franchisee, will be completed by each Franchisee to determine if Master
Franchisee is satisfactorily performing its duties and obligations under the Development Terms of
this Agreement. Master Franchisee will remit the management and financial review form, together
with the Master Franchisee evaluation forms to Franchisor within 10 days after its receipt of such
reviews.




          8. Franchisee Advertising Standards. Master Franchisee shall establish and revise, as
necessary, standards, specifications and programs for local advertising, marketing and promotion to
be conducted by Franchisees in their respective trading areas, including: (i) required level of
local marketing expenditures; (ii) type of promotional and advertising activity; and (iii) a






 









 







schedule for such activities. Master Franchisee agrees that each franchised location must produce
a local Ms. Planet Beach promotion annually and send a representative to compete for the applicable
regional Ms. Planet Beach competition. At the Master Franchisee’s cost, the winners of the
regional Ms. Planet Beach competitions will be sent to the Ms. Planet Beach International
competition held annually at the Planet Beach convention to compete for the Ms. Planet Beach
International Title.




     G. FAILURE TO MEET OBLIGATIONS



          In the event Master Franchisee fails to perform any of these duties or any other obligations
pursuant to this Agreement, Franchisor has the right, but not the obligation, to perform said
duties or obligations. Master Franchisee hereby agrees to pay Franchisor the sum of $100.00US per
day for each representative of Franchisor for its services in connection therewith together with
any expenses incurred by Franchisor in so performing, including travel, meals and lodging expenses.
In the event Franchisor performs duties for the Master Franchisee, the Master Franchisee shall
also remit a higher portion of any royalty payments or other payments owed to Franchisor in an
amount 20% greater than the amount agreed upon in Section 7.C.




5. OTHER OBLIGATIONS OF MASTER FRANCHISEE




     A. SENIOR EXECUTIVE



          Concurrently with the execution of this Agreement, Master Franchisee agrees to designate an
individual, who shall be a managing partner, shareholder or senior manager of Master Franchisee, to
act as the “Senior Executive” of Master Franchisee. Master Franchisee agrees to notify Franchisor
fifteen (15) days in advance of the desired appointment and qualifications of the proposed Senior
Executive. Franchisor reserves the right to disapprove of any such appointment; in which case,
Master Franchisee shall not appoint that particular individual. The Senior Executive shall exert
his full-time efforts to the franchising, development and operation of the Master Franchise
Business and shall not engage in any other business or other activity, directly or indirectly, that
requires any significant management responsibility or time commitments or that may otherwise
conflict with Master Franchisee’s obligations hereunder. The Senior Executive shall attend and
complete to Franchisor’s satisfaction such training programs as Franchisor shall prescribe (which
may be conducted in whole or in part at one or more of the offices of Franchisor in the United
States). If the relationship of the Senior Executive with Master Franchisee terminates, or if the
proposed Senior Executive fails to satisfactorily complete such training programs, Master
Franchisee agrees to promptly designate a replacement Senior Executive, who shall satisfactorily
complete such training programs. The Senior Executive must speak, read and write the English
language fluently. Master Franchisee acknowledges that its success is not dependent on the
approval or disapproval of any particular Senior Executive.




     B. SITE SELECTION, FRANCHISEE SELECTION/RECRUITMENT



          Master Franchisee shall be solely responsible for identifying and selecting any prospective
Franchisee for the timely execution of the Franchise Agreement. Master Franchisee will cause all
sales efforts made by it or under its direction to be courteous and dignified, and in a






 









 







professional, ethical and responsible manner and in accordance with all applicable Legal
Requirements. Master Franchisee shall deliver an original executed copy of each Franchise
Agreement to Franchisor within 14 calendar days of its execution. At its own expense, Master
Franchisee shall cause the Franchise Agreement to be prepared and effectively signed by each
Franchisee in English, unless otherwise permitted by Franchisor, and shall take all steps necessary
to cause each Franchisee to comply with the in-term and post-term provisions of the Franchise
Agreement. A Franchisee shall have 180 days to submit a proposed territory within the Development
Area to Master Franchisee. Master Franchisee shall ensure that the business site conforms to local
ordinances and building codes, guide Franchisee in obtaining permits, constructing and decorating
the premises and purchasing or leasing equipment, signs, fixtures and supplies. Franchisor does
not provide assistance with the business site nor approve such site.




          As set forth more fully in Section 8, Master Franchisee agrees to create and develop local
advertising and promotional programs for the purpose of recruiting prospective franchisees within
the Development Area and agrees to implement the use of such advertising and promotional programs
immediately. The advertising and promotional programs shall be submitted to Franchisor approval
prior to the beginning of such program. For the first three (3) years of this Agreement, Master
Franchisee agrees to expend not less than Twenty Thousand Dollars ($20,000.00US) per year on
advertising and promotional programs for the purpose of recruiting new franchises. If, at the end
of the three (3) year period, Master Franchisee is in compliance with its Development Schedule,
this requirement will be waived for each Development Period during which Master Franchisee is in
compliance with the Development Schedule provided that Master Franchisee shall continue use its
best efforts to recruit prospective franchisees during any period such minimum expenditure is
waived.




     C. INSURANCE



          Master Franchisee must maintain all insurance be required by law in connection with its
business as the Master Franchisee, and must further maintain comprehensive general liability
coverage. In the event that Master Franchisee owns and operates any PLANET BEACH® business , Master
Franchisee must maintain all insurance required under the applicable Franchise Agreements.




          In connection with all areas of liability coverage, Master Franchisee must submit as proof of
such insurance a fully paid insurance policy naming Franchisor and any other parties designated by
Franchisor as additional insured parties, to Franchisor for Franchisor’s prior approval before
commencing the business contemplated hereunder. Any proposed changes in the insurance policies must
be submitted to Franchisor for its prior approval. Master Franchisee must furnish to Franchisor a
copy of the then prevailing insurance policies with assurances that the specified insurance is in
full force and effect; that the insurance covers Master Franchisee, Franchisor and other designated
parties as their respective interest may appear, and that said insurance policies will not be
cancelled or modified by the insurer without written notice to Franchisor at least thirty (30) days
prior to the proposed cancellation or modification including, but not limited to, products
liability, property damage, personal injury, owned and non-owned automobile and contractual
liability, with a combined single limit of at least $3,000,000US or such larger amount as
Franchisor may reasonably require. It is acknowledged by the parties that Master Franchisee will
obtain






 









 







insurance denominated in United States Dollars. The Master Franchisee must review the insurance
policy on an annual basis and ensure that it adjusted as necessary to maintain a cover valued at
the aforementioned $3,000,000US (or such larger amount as the Franchisor reasonably required).




     D. RECORDS AND REPORTS



          Master Franchisee agrees to maintain and preserve at its Owner office, full, complete and
accurate records and reports pertaining to the development and operation of Area Representative
Franchisees, Unit Franchises and the performance by Master Franchisee of its obligations under this
Agreement, including, but not limited to, records and information relating to: franchisee
applications, site reports, inspection and supervisory reports relating to the operation of Area
Representative Franchises, Unit Franchisees, copies of Franchise Agreements for each PLANET BEACH®
business, records reflecting the financial condition and performance of Master Franchisee, Area
Representative Franchisees and Unit Franchisees, records of the receipts and expenditures of the
National Marketing Fund (defined below) and such other records and reports as periodically may be
prescribed by Franchisor. Franchisor and/or its agents shall have the right to inspect, audit and
make copies or extracts of such records and reports and Master Franchisee agrees to fully cooperate
with any such inspection or audit during regular business hours. Franchisor will give Master
Franchisee ten (10) days prior written notice of any such inspection or audit. Franchisor shall
have the right, at any time, during normal business hours, to inspect the premises of any Area
Representative Franchisee or Unit Franchise for the purpose of monitoring an Area Representative
Franchisee’s and/or Unit Franchisee’s compliance with its Area Representative Agreement, Unit
Franchise Agreement and Master Franchisee’s compliance with the terms of this Agreement.




          In addition to the reports required in connection with the operation and franchising of the
PLANET BEACH® business, Master Franchisee shall deliver to Franchisor in the form periodically
prescribed by Franchisor and in a true, accurate and timely manner: (i) by the twentieth (20th) day
of each month, a report of the number of Unit Franchises operating during the immediately preceding
month; (ii) within thirty (30) days of the end of each quarter of Master Franchisee‘s financial
year, a profit and loss account for such quarter and a report disclosing Master Franchisee’s net
worth as of the end of such quarter; (iii) within ninety (90) days after the end of Master
Franchisee’s financial year, a financial year-end balance sheet for Master Franchisee and a profit
and loss account for such financial year reflecting all year-end adjustments, and a statement of
changes in financial condition on a basis consistent with generally accepted accounting principles
of the Country (until such time as the accounting principles and standards of the International
Accounting Standards Committee are adopted by the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board, and thereafter on a basis consistent with
the principles and standards adopted by the International Accounting Standards Committee); and upon
request by Franchisor, Master Franchisee’s most recent audited annual financial statements; (iv)
not less than sixty (60) days prior to the end of each Development Period, a business and
development plan for the succeeding Development Period, including plans for sales of Franchises,
development of Franchises and capital and operating budgets; (v) within sixty (60) days following
the end of each Development Period, an analysis of Master Franchisee’s compliance with the
development plans for the previous Development Period; (vi) not less than sixty (60) days prior to
the end of





 











 





each financial year of Master Franchisee, a marketing plan and budget describing the proposed
marketing activities and expenditures for the National Marketing Fund (as defined hereinafter) for
the succeeding financial year; (vii) within sixty (60) days following the end of each financial
year of Master Franchisee, a report of the receipts and disbursements of, and advertising,
promotion, public relations, market research and other marketing programs and activities undertaken
by, the National Marketing Fund (as defined hereinafter) during the preceding year; such other
data, reports, information, financial statements and supporting records relating to Area
Representative Franchisee and/or Unit Franchisees and Gross Sales of the PLANET BEACH® business as
Franchisor periodically prescribes. Each such report and financial statement furnished by Master
Franchisee shall be verified as correct and signed by Master Franchisee in the manner prescribed by
Franchisor. Master Franchisee shall immediately report to Franchisor any events or developments
which may have a significant or material adverse impact on the performance of Master Franchisee
under this Agreement or the goodwill associated with the Marks. Master Franchisee shall ensure
that all information to be provided to Franchisor pursuant to this Section can be provided to
Franchisor in compliance with the Data Protection Laws and/or where such use is not permitted under
the Data Protection Laws, to notify Franchisor of such.



          Furthermore, Master Franchisee shall, at its own cost, visit Franchisor offices in Marrero,
Louisiana located in the United States or at such other location as shall be mutually determined by
Franchisor and Master Franchisee, at least once a year, to inform Franchisor’s officers of Master
Franchisee’s progress toward complying with the terms of this Agreement. During this visit, Master
Franchisee shall establish a level of Marketing Fund expenditures to be made by Franchisees in the
Territory that is acceptable to Franchisor, and will discuss any other yearly business plans
regarding the development of the Development Area detailed in the preceding paragraph.



     E. GOVERNMENTAL APPROVALS


          Master Franchisee agrees to execute any and all instruments and documents, render such
assistance, and otherwise cooperate with Franchisor, in order to obtain all governmental approvals
necessary, in the opinion of Franchisor’s counsel, to comply with the Legal Requirements,
including, without limitation, obtaining visas for Franchisor personnel. At its option, Franchisor
shall have the right to submit, or to require Master Franchisee to submit, this Agreement and/or
any Franchise Agreement to any governmental entity or agency (the “Agency”) for registration or
approval of any clause thereof in the event Franchisor determines such registrations or approvals
are necessary in order to comply with the Legal Requirements. Master Franchisee shall not submit
any application or registration concerning this Agreement without the express prior written
approval of Franchisor. If the Agency requires that any amendments be made to this Agreement
and/or the Franchise Agreement as a condition to such approval or registration and such amendments
are acceptable to Franchisor, Franchisor will deliver to Master Franchisee for execution an
addendum to this Agreement and/or the Franchise Agreement, or other appropriate documents, to
reflect such amendments.



 









 








     F. COMPLIANCE WITH LEGAL REQUIREMENTS AND GOOD BUSINESS PRACTICES.


          1. Master Franchisee shall secure and maintain in force in its name all required licenses,
permits, and certificates relating to the conduct of its business pursuant to this Agreement.
Master Franchisee shall at all times comply with Legal Requirements including any Legal
Requirements applicable to franchise sales and privacy. All advertising by Master Franchisee shall
be completely factual and conform to high standards of ethical advertising. Master Franchisee shall
in all dealings with Franchisor, public officials and other third parties adhere to high standards
of honesty, integrity, fair dealing and ethical conduct. Master Franchisee agrees to refrain from
any business or advertising practice which may be injurious to the business of Franchisor or Master
Franchisee and the goodwill associated with the Marks and the PLANET BEACH® business. Master
Franchisee shall notify Franchisor in written form within five (5) days of being served with any
proceedings, court action or suit, or being served with any order, injunction, award, decree or
complaint of any court, agency, or other governmental instrumentality, which may adversely affect
the operation or financial condition of Master Franchisee or a Unit Franchisee.


          2. Master Franchisee shall at all times comply with and shall ensure that its Affiliates, Area
Representative Franchisees, Unit Franchisees, officers and employees shall comply with the Data
Protection Laws and with other applicable Legal Requirements including without limitation:



               (a) ensuring all electronic and hard copy materials containing Personal Data can be sent to
Franchisor in the United States in compliance with the Data Protection Laws;



               (b) obtaining appropriate consents from customers and prospective customers of Master
Franchisee, Area Representative Franchisees and Unit Franchisees so that Franchisor may if it
wishes use such information for marketing, market research or any other purpose notified in writing
to Master Franchisee and/or where such use is not permitted under the Data Protection Laws to
notify Franchisor of such; and



               (c) Master Franchisee agrees not during the term of this Agreement to enter in to any
transaction or arrangement which would bring the network of PLANET BEACH® businesses in the
Development Area within the meaning of a pyramid promotional scheme or similar concept as provided
in any applicable consumer protection laws; and



               (d) Master Franchisee further agrees that it will at the date of this Agreement be registered
for VAT with any and all applicable government agencies in the Development Area and shall not
during the term of this Agreement cease for any reason to be registered for VAT, and it will timely
and properly file all required tax returns and pay all required taxes. In addition the Master
Franchisee will ensure that at all times whilst they are parties to a Franchise Agreement or Area
Representative Agreement (as applicable) Unit Franchisees, Affiliates of Master Franchisee and Area
Representative Franchisees will timely and properly file all required tax returns and pay all
required taxes, and will register and remain registered for VAT with the applicable government
agency. Failure by Master Franchisee to



 









 





comply with any aspect of this sub-paragraph will be a material breach that allows Franchisor
the right to terminate this Agreement immediately.




     G. COMPLIANCE WITH U.S. AND OTHER ANTI-TERRORIST AND RELATED LAWS, REGULATIONS, ETC.


          1. Anti Terrorism. Master Franchisee acknowledges that Franchisor is an American
franchisor and certifies that neither Master Franchisee nor its Owners, employees or anyone
associated with Master Franchisee is listed in the Annex to Executive Order 13224
http://www.treasury.gov/offices/enforcement/ofac/sanctions/terrorism.html).


          Master Franchisee agrees not to hire or have any dealings with a person listed in the Annex.
Master Franchisee certifies that it has no knowledge of information that, if generally known, would
result in Master Franchisee, its Owners, employees, or anyone associated with Master Franchisee
being listed in the Annex to Executive Order 132234. Master Franchisee agrees to comply with
and/or assist Franchisor to the fullest extent possible in Franchisor’s efforts to comply with the
Anti-Terrorism Laws (as defined below). In connection with such compliance, Master Franchisee
certifies, represents, and warrants that none of its property or interests are subject to being
“blocked” under any of the Anti-Terrorism Laws and that Master Franchisee and its Owners are not
otherwise in violation of any of the Anti-Terrorism Laws. Master Franchisee is solely responsible
for ascertaining what actions must be taken by Master Franchisee to comply with all such
Anti-Terrorism Laws, and Master Franchisee specifically acknowledges and agrees that Master
Franchisee’s indemnification responsibilities as provided in Section 10.D of this Agreement pertain
to Master Franchisee’s obligations under this Section 6.G. Any misrepresentation by Master
Franchisee under this Section or any violation of the Anti-Terrorism Laws by Master Franchisee, its
Owners, or employees shall constitute grounds for immediate termination of this Agreement and any
other agreement Master Franchisee has entered into with Franchisor or one of Franchisor’s
affiliates in accordance with the terms of Section 13.B of this Agreement. As used herein,
“Anti-Terrorism Laws” means Executive Order 13224 issued by the President of the United States, the
Terrorism Sanctions Regulations (Title 31, Part 595 of the U.S. Code of Federal Regulations), the
Foreign Terrorist Organizations Sanctions Regulations (Title 31, Part 597 of the U.S. Code of
Federal Regulations), the Cuban Assets Control Regulations (Title 31, Part 515 of the U.S. Code of
Federal Regulations), the USA PATRIOT Act, and all other present and future federal, state and
local laws, ordinances, regulations, policies, lists and any other requirements of any Governmental
Authority (including, without limitation, the United States Department of Treasury Office of
Foreign Assets Control) addressing or in any way relating to terrorist acts and acts of war.


          2. Foreign Corrupt Business Practices. Franchisor has entered into this Agreement
with Master Franchisee on the basis of its and its Owners and any Affiliate’s experience,
reputation and qualifications, including their reputation for ethical business conduct and
compliance with applicable laws. Master Franchisee agrees that it, its Owners and Affiliates will
each maintain this ethical conduct and avoid any activity that might result in a violation of the
U.S. Foreign Corrupt Practices Act or any other applicable anti-competition law. Master Franchisee
and each of its Owners and Affiliates affirm that it has not and agrees that it will not, in
connection with the Business, or in connection with any business transactions involving Franchisor,
make or promise to make any payment or transfer anything of value, directly or



 









 








indirectly, to (i) any governmental official or employee (including employees of government
corporations); (ii) any political party, official of a political party or candidate (or to an
intermediary for payment to any of the foregoing); or (iii) to any other person or entity if such
payment or transfer would violate the laws of the country in which made or the laws or the United
States of America. It is the intent of the parties that no payments or transfers of value shall be
made which have the purpose or effect of public or commercial bribery, or acceptance of or
acquiescence in extortion, kickbacks, money laundering or other unlawful or improper means of
obtaining or retaining business.




6. INITIAL AND CONTINUING FEES




     The fees shall consist of five (5) types of payments as described in subsections lettered A
through E below.



     A. DEVELOPMENT FEE


          Concurrently with the execution of this Agreement, Master Franchisee shall pay to Franchisor
the sum set forth in Section 1 of Exhibit D hereof as a nonrefundable development and System
license fee (“Development Fee”), which shall be fully earned by the Franchisor upon the execution
of this Agreement.



     B. INITIAL FRANCHISE FEES, NOTIFICATION OF RECEIPT BY FRANCHISOR AS A CONDITION PRECEDENT TO
OPENING OF FRANCHISE


          1. Unit Franchise Fee. Master Franchisee agrees to pay to Franchisor the sum set
forth in Section 2 of Exhibit D hereof as a Unit Franchise Fee for the license of the System in
connection with a Franchise Agreement for the operation of PLANET BEACH® business in the
Development Area. The Unit Franchise Fee varies depending on the number of Franchises granted to a
Franchisee, with Franchises being sold in the following “packs”: (i) one Franchise; (ii) three
Franchises; (iii) five Franchises; and (iv) ten Franchises. If the license is not exercised and the
PLANET BEACH® location is not open then Master Franchisee agrees to pay to Franchisor the Unit
Franchise Fee set forth in Section 2 of Exhibit D. There is no Initial Franchisee Fee payable to
Franchisor for the resale or transfer of an existing, opened PLANET BEACH® business.


          2. Initial Area Rights Fee. Similarly, Master Franchisee agrees to pay to Franchisor
the sum set forth in Section 3 of Exhibit D for the sale of Area Representative Rights to an Area
Representative Franchisee.


          3. Payment. The Unit Franchise Fee shall be fully earned by Franchisor upon execution
of a Unit Franchise Agreement. Master Franchisee shall wire the Unit Franchise Fee to Franchisor
within ten (10) days of Master Franchisee receiving said funds. Likewise, in the event that Master
Franchisee sells development rights within the Development Area, Master Franchisee agrees to pay to
Franchisor the sum set forth in Section 2 of Exhibit D hereof as a fee, which shall be fully earned
by Franchisor upon execution of an Area Representative Agreement.



 









 








These fees shall also be wired to Franchisor within ten (10) days after the execution of an
Area Representative Agreement,



          4. Notification of Receipt by Franchisor as a Condition Precedent to Opening
Franchise. Upon the later to occur of (i) receipt of the Unit Franchise Fee and (ii)
satisfaction of all other conditions for opening the PLANET BEACH® business set forth in this
Agreement and the applicable Franchise Agreement to be sent via registered mail or it equivalent to
Franchisor’s corporate headquarters, Franchisor will issue, in writing, a notice to Master
Franchisee indicating that it has received the Unit Franchise Fee, that all other conditions for
opening a PLANET BEACH® business have been satisfied and that the applicable Franchise may be
opened for business.



     C. ROYALTIES


          You must pay us the percentage of the Gross Sales for each Unit Franchise in the Development
Area immediately preceding month as defined in Section 3 of Exhibit D hereof by the 15th
day of each month for the preceding calendar month. You must pay us the Royalty on the total Gross
Sales regardless of whether you actually collect such amount from your Unit Franchisees.



     D. ADVERTISING FUND CONTRIBUTIONS


          Master Franchisee is responsible for setting up its own National Marketing Fund as set forth
more fully below in Section 8 as the “NMF”. As such, Master Franchisee does not have an obligation
to remit the payments set forth in Section 8 to Franchisor, but all marketing and promotional
expenditures are subject to the discretion and approval of Franchisor as set forth therein.



     E. DESIGN FEE


          Franchisor reserves the right to require that Master Franchisee obtain the design work for
each Planet Beach location from Franchisor. Master Franchisee will pay Franchisor’s then-current
Design Fee (“Design Fee”) (currently $2,500US) for the design work Franchisor provides for each
location. Master Franchisee acknowledges and agrees that the amount of the Design Fee may increase
over the Term of the Agreement. Franchisor agrees that changes to the Design Fee will be on a
basis that, in its sole opinion, is consistent with modifications to the Design Fee charged to
similarly situated franchisees, provided that the Design Fee may vary by region to account for any
regional, legal, market or vendor differences.



     F. TECHNOLOGY FEES


          Master Franchisee agrees to pay Franchisor’s then-current Technology Fee (currently $199.95US
per month) to Franchisor or its designee in accordance with Franchisor’s then current policy
regarding such Technology Fees. Master Franchisee agrees and acknowledges that it will also pay
the then current Technology Fee for each Unit Franchise (including Corporate Locations) in the
Territory in accordance with Franchisor’s Technology



 









 








Fee policy. Franchisor agrees that changes to the Technology Fee will be on a basis that, in its
sole opinion, is consistent with modifications to the Technology Fee charged to similarly situated
franchisees, provided that the Technology Fee may vary by region to account for any regional,
legal, market or vendor differences. Master Franchisee acknowledges and agrees that Franchisor may
increase the monthly Technology Fee by up to 5% each year to take into account any increased costs
associated with new or improved technology used in the System.




     G. WITHHOLDING TAXES


          In the event that any amounts payable by Master Franchisee to Franchisor hereunder are subject
to withholding or other taxes that Master Franchisee is required to deduct from such payments,
Master Franchisee shall make payment to Franchisor in the amount required by this Agreement without
the reduction or deduction for such withholding or other taxes. Consequently, all payments to
Franchisor hereunder shall be increased to the extent necessary to provide Franchisor with the same
net amount it would have received had no such taxes been applicable to such payment. For example,
if a payment of one thousand US dollars ($1,000.00US) is due to Franchisor, and if a withholding
tax of ten percent (10%) is applicable under the laws of the Country, then the amount due to
Franchisor shall be increased to one thousand one hundred and eleven US dollars ($1,111.00US), the
applicable tax rate of ten percent (10%) shall be applied to that amount, the resulting tax of one
hundred and eleven US dollars ($111.00US) shall be deducted by Master Franchisee and remitted to
the appropriate tax authority in the Country, and one thousand US dollars ($1,000.00US) shall be
remitted by Master Franchisee to Franchisor. Master Franchisee agrees to promptly deliver to
Franchisor receipts of applicable governmental authorities for all such taxes withheld or paid.
Master Franchisee shall be responsible for and shall indemnify and hold Franchisor and its
Affiliates harmless against any penalties, interest and expenses incurred by or assessed against
Franchisor or its Affiliates as a result of Master Franchisee’s failure to withhold such taxes or
to timely remit them to the appropriate taxing authority. Master Franchisee agrees to fully and
promptly cooperate with Franchisor to provide Franchisor timely a tax certificate or government
receipt for any taxes withheld or paid in respect of payments hereunder (for example, the $111.00US
in the foregoing example) and to provide such information and records and complete and file with
the tax authority such forms or declarations as Franchisor may request in connection with any
application by Franchisor to any taxing authority with respect to tax credits, exemptions or
refunds available for any withholding or other taxes paid or payable by Master Franchisee and with
respect to any information request from or tax audit by a taxing authority with respect to Master
Franchisee or the Master Franchise Business. The parties agree to use their mutual commercially
reasonable efforts to secure any exemption from or reduced rate of withholding tax with respect to
any payments under this agreement, and to provide the other party or applicable Government
Authority such information or tax forms as required to secure any such exemption or reduced rate of
withholding tax.



     H. CURRENCY OF PAYMENT


          Payments by Master Franchisee to Franchisor hereunder shall be made in United States Dollars
unless otherwise specified by Franchisor. All payments hereunder to be calculated



 









 








in the currency of the Country and converted into Dollars for payment to Franchisor shall be
converted at the spot currency rate announced by CITIBANK as of 10:00 a.m. Eastern USA time on the
date payment is transmitted; provided, however, that, in the event a payment is transmitted after
the date payment is due, the currency exchange rate used shall be the rate as of the date payment
was due or the rate as of the date the payment is transmitted, whichever rate produces the larger
amount in the currency of payment. All payments shall be submitted electronically (e.g. bank
transfer) or as otherwise directed by Franchisor to a bank of Franchisor’s choosing located in the
United States or elsewhere. Master Franchisee shall execute all agreements and consents reasonably
necessary to effectuate electronic payment. Master Franchisee shall pay for all costs related to
the transfer of funds to Franchisor. Master Franchisee shall use its best endeavors to obtain any
consents or authorizations which may be necessary in order to permit timely payments in U.S.
Dollars of all amounts payable hereunder. If at any time, any legal restriction is imposed upon
the purchase of U.S. Dollars or the transfer to or credit of a non-resident company with payments
in U.S. Dollars, Master Franchisee shall notify Franchisor immediately. While such restrictions
are in effect, Franchisor may require payment in any currency designated by Franchisor that is
available to Master Franchisee or, at Franchisor’s option, may require Master Franchisee to deposit
all amounts due but unpaid as a result of such a restriction in any type of account, in any bank or
institution in the Country designated by Franchisor, or in the form of products or services
available to Master Franchisee or its Affiliate at the actual cost of such products or services to
Master Franchisee or its Affiliate. Franchisor shall be entitled to all interest earned on such
deposits. If payment is made in products or services, Master Franchisee agrees to deliver such
products or services to Franchisor or its designated agent or shipper within the Development Area.
All costs incurred by Master Franchisee in complying with this Subsection H shall be the
responsibility of Master Franchisee.




     I. INTEREST ON LATE PAYMENTS


          Failure by Master Franchisee to timely remit the monthly payments and any related monthly
reports will result in a late fee such amount being a genuine pre-estimation of the loss suffered
by Franchisor as a result of such a failure by Master Franchisee) in the amount of $100.00US plus
interest. All amounts which Master Franchisee owes to Franchisor or its Affiliates under this
Agreement or any related agreement shall bear interest after the due date at the rate of one and
one-half percent (1.5%) above the prime interest rate as charged by the Bank of Territory
capitalized monthly in arrear on the balance due and calculated on and with effect from the due
date for payment up to and including the date of actual payment, unless such rate is higher than
the highest legal rate permitted by applicable law, in which case, the rate payable shall be the
highest legal rate permitted by law. Such interest shall be payable in the same currency as the
debt on which interest accrues. Master Franchisee acknowledges that this Subsection I shall not
constitute Franchisor’s agreement to accept such payments in place of such debts or a commitment by
Franchisor to extend credit to, or otherwise finance Master Franchisee’s business operated pursuant
to this Agreement. Master Franchisee acknowledges that its failure to pay all such amounts when due
shall constitute grounds for termination of this Agreement notwithstanding the provisions of this
Subsection I.



 









 








     J. STAMP DUTIES


          If required by law of the Development Area, Master Franchisee shall within the time prescribed
by applicable law, submit an executed copy of this Agreement to each governmental agency within the
Country responsible for the assessment of stamp duty or comparable duties or taxes for the purposes
of assessing or obtaining an opinion as to the stamp duty payable on or in respect of this
Agreement and Master Franchisee agrees to pay all stamp duties and comparable duties and taxes
(including any penalties for late payment) assessed to be payable on or in respect of this
Agreement.



     K. PROOF OF AMOUNTS DUE


          If required by law of the Development Area, a certificate issued under the hand of the current
President or Vice President of the Franchisor, stating the amount due at the date of the
certificate as well as any interest due calculated in accordance with the terms of Subsection 7.I
shall be conclusive proof of the amount and interest calculated thereon due at the time of the
certificate. It shall not be necessary for the Franchisor to prove the appointment of the person
signing, his/her signature, his/her authority so to sign or the amount(s) and interest rate stated
in the certificate.



7. MARKETING




     As previously set forth in Subsections 5.E and 6.B, Master Franchisee shall establish and
revise, as necessary, standards, specifications and programs for both national and local
advertising, marketing and promotion to be conducted by Franchisees in their respective trading
areas, including: (i) required level of local marketing expenditures; (ii) type of promotional and
advertising activity; and (iii) a schedule for such activities.



     Master Franchisee shall establish a National Marketing Fund (the “NMF”), and collect monthly
marketing fees from all Franchisee’s in the Development Area to maintain the NMF. The NMF shall
fund, among other things, the regional competitions. Master Franchisee agrees that (i) it will hold
annual regional Ms. Planet Beach competitions for the Country, (ii) it will cause each franchised
location must produce a local Ms. Planet Beach promotion annually and send a representative to
compete for the applicable regional Ms. Planet Beach competition, and (iii) it will produce a
contestant from each of the regional competitions to participate at the annual Ms. Planet Beach
International competition in the United States.



     For both NMF expenditures and those expenditures dealing with franchisee recruitment, Master
Franchisee shall submit to Franchisor for prior approval all sales, promotional, and advertising
and other materials, which relate to recruiting new Franchisees or for proposed use by a Franchisee
to attract patrons. Franchisor shall use reasonable endeavors to respond within said ten (10) days
period and shall not unreasonably withhold or delay approval. If Franchisor does not approve such
material and programs within such period, such material shall be deemed disapproved and Master
Franchisee shall not use such materials in any manner. Franchisor will have the sole right to
formulate and make policy decisions concerning every aspect of sales, promotions, advertising and
other programs.



 









 





8. EXCLUSIVE RELATIONSHIP




     Master Franchisee acknowledges and agrees that Franchisor would be unable to protect the
Confidential Information against unauthorized use or disclosure and would be unable to encourage a
free exchange of ideas and information among owners of the PLANET BEACH® business if master
franchisees, franchisees and their management personnel were permitted to engage in, have Ownership
Interests in or perform services for Competitive Businesses. Master Franchisee further
acknowledges that the restrictions contained in this Section will not hinder its activities or
those of the Restricted Persons under this Agreement or otherwise. Franchisor has entered into
this Agreement with Master Franchisee on the express condition that with respect to the development
and operation of PLANET BEACH® businesses and other businesses engaged in the production and sale
of the Products, Master Franchisee and the Restricted Persons will deal exclusively with
Franchisor. Master Franchisee therefore agrees that during the term of this Agreement, Master
Franchisee and Restricted Persons shall not directly or indirectly engage in any Competitive
Business in a territory where it would compete with one or more of the PLANET BEACH® business
activities or with Franchisor and Master Franchisee shall procure that all such Restricted Persons
as specified by Franchisor enter into a Non Disclosure Agreement in the appropriate form as set out
in Exhibit F and Master Franchisee shall take such steps at its own expense as Franchisor may
require in order to enforce the said Non Disclosure Agreement and/or restrain any breach of its
terms. Notwithstanding the above, Master Franchisee will be allowed to obtain Products from other
PLANET BEACH® businesses where such Products conform with the Franchisor’s then current standards
for such Products. For the purposes of this Section, the phrase “directly or indirectly engage in
any Competitive Business” shall include, without limitation: (a) the ownership of a direct or
indirect interest in a Competitive Business, if such Ownership Interest confers upon Master
Franchisee or a Restricted Person the power to influence the economic conduct of such Competitive
Business; and (b) the performance of services as a director, officer, manager, employee,
consultant, representative, agent or otherwise for any Competitive Business.



9. INDEPENDENT CONTRACTORS/INDEMNIFICATION




     A. INDEPENDENT CONTRACTORS


          The parties are independent contractors. In executing and implementing this Agreement and
performing their respective obligations hereunder, the parties intend and agree that nothing in
this Agreement is intended to or shall create a partnership, joint venture, agency or any other
legal entity or employment relationship between them. Neither party is or is intended to be the
agent, legal representative, partner, subsidiary, joint venturer or employee of the other. Neither
party has the authority to bind or commit the other party to any contract or obligation whatsoever,
and neither party shall represent or hold itself out as having any right or authority to do so.
This Agreement does not reflect or create a fiduciary relationship or a relationship of special
trust or confidence. Neither party has, is entitled to or shall hold itself out as having, the
authority to use the offices, facilities or any fixed place of business of the other as its office,
facility or fixed place of business, and neither party shall constitute any such office, facility
or fixed place of business of the other as its permanent establishment.



 









 







          Master Franchisee shall conspicuously identify itself in all dealings with others as a master
franchisee or sub-franchisor of the PLANET BEACH® business and shall conspicuously and prominently
place such other notices of independent ownership and operation on such forms, business cards,
stationery, and other materials as Franchisor may require from time to time.



B. TAXES



          Franchisor shall have no liability for and shall not bear any sales, value added, use,
service, stamp duty, occupation, excise, gross receipts, income, withholding, property, payroll,
custom duties, or other taxes, whether levied or imposed on any amounts payable under this
Agreement, or upon Master Franchisee, one or more of Master Franchisee’s properties, or upon
Franchisor, in connection with the business conducted by Master Franchisee (except any taxes that
Franchisor is required by law to collect from Master Franchisee with respect to purchases from
Franchisor). Payment of all taxes (except for said taxes levied on purchases from Franchisor)
shall be the responsibility of Master Franchisee.



     C. INDEMNIFICATION


          Master Franchisee agrees to indemnify, defend and hold Franchisor, its Affiliates, and their
respective shareholders, directors, officers, employees, agents, and their respective successors
and assignees, harmless against and to reimburse them for all claims causes of action, costs,
expenses, loss, liability, damages, interest, penalties or obligations arising from or relating to
Master Franchisee’s obligations pursuant to this Section 10, any and all taxes described in
Subsection 7.F, the operation of Master Franchisee’s business pursuant to this Agreement, the
breach by any of the Restricted Persons of any provisions of this Agreement applicable to such
Restricted Persons, the direction and administration of the Marketing Fund, the operation or
termination of any Area Representative Franchise or Unit Franchise, or the transfer of any interest
in this Agreement, an Area Representative Agreement, Franchise Agreement, or an Ownership Interest
in Master Franchisee, to the extent that such claims, causes of action, costs, expenses, loss,
liability, damages or obligations do not arise from the negligence or wrongful conduct of
Franchisor. For purposes of this indemnification, “claims” shall mean and include all obligations,
actual and consequential damages, and costs incurred in the defense of any claim against
Franchisor, including without limitation reasonable accountants’, attorneys’, attorney assistants’,
arbitrators’ and expert witness fees, costs of investigation and proof of facts, court costs, other
litigation expenses, and travel and living expenses. Franchisor shall have the right to defend any
such claim against it in such manner as Franchisor deems appropriate. This indemnity shall
continue in full force and effect subsequent to and notwithstanding the expiration or termination
of this Agreement.



 









 








10. MARKS




     A. GOODWILL AND OWNERSHIP OF THE MARKS


          Master Franchisee acknowledges that Master Franchisee’s right to use the Marks is derived
solely from this Agreement and is limited to granting Franchises in the Development Area in
accordance with the terms hereof. Any unauthorized use of the Marks by Master Franchisee shall
constitute a breach of this Agreement and an infringement of the rights of Franchisor in and to the
Marks. Master Franchisee acknowledges and agrees that all usage of the Marks by Master Franchisee,
Area Representative Franchisees and Unit Franchisees and any goodwill established by such use by
Master Franchisee, Area Representative Franchisees and/or Unit Franchisees shall inure to the
exclusive benefit of Franchisor and that this Agreement does not confer any goodwill or other
interests in the Marks upon Master Franchisee (other than the right to grant Franchises in
compliance with this Agreement). All provisions of this Agreement applicable to the Marks shall
apply to any other trademarks and commercial symbols hereafter authorized for use by and licensed
to Master Franchisee by Franchisor. Master Franchisee agrees that neither Master Franchisee agrees
to not, and to ensure that its Affiliates do not, use or attempt to register, any other trademarks,
service marks or other commercial symbol for use in connection with the development, operation or
franchising of Similar Businesses or Competitive Businesses.


          Master Franchisee will not (i) infringe or harm Franchisor’s exclusive ownership and rights to
each and every aspect of the System or (ii) represent that it has acquired any ownership interest
in an of the Marks. In the event that Master Franchisee takes any action challenging Franchisor’s
and its Affiliates’ use or rights to the Marks, Franchisor shall be entitled to terminate this
Agreement immediately by serving notice on Master Franchisee. Master Franchisee’s rights to use
the Marks will terminate upon the expiration or termination of the Agreement for any reason
whatsoever.



     B. LIMITATIONS ON MASTER FRANCHISEE’S USE OF THE MARKS


          Master Franchisee shall not use the Marks as part of any corporate or trade name or with any
prefix, suffix, or other modifying words, terms, designs, or symbols, or in any modified form, nor
may Master Franchisee use any Mark in connection with the performance or sale of any unauthorized
services or products or in any other manner not expressly authorized in writing by Franchisor. All
Marks shall be displayed in the manner prescribed by Franchisor.



     C. NOTIFICATION OF INFRINGEMENT AND CLAIMS


          Master Franchisee shall immediately notify Franchisor by telephone, and thereafter, in written
form, of any apparent infringement of or challenge (actual or threatened) to Master Franchisee’s or
a Unit Franchisee’s use of any Mark, or claim by any Person of any rights in any Mark or a
confusingly or deceptively similar trademark or service mark. Master Franchisee shall not
communicate with any Person other than its counsel, Franchisor and Franchisor’s counsel with
respect to any such infringement, challenge or claim. Franchisor shall have sole discretion to
take such action as it deems appropriate in connection with any such



 









 








infringement, challenge or claim, and shall have the right to control any settlement, litigation,
arbitration or administrative proceeding arising therefrom. Master Franchisee agrees to execute
any and all instruments and documents, render such assistance, and do such acts and things as may,
in the opinion of Franchisor’s counsel, be necessary or advisable to protect and maintain the
interests of Franchisor in the Marks. Franchisor will reimburse Master Franchisee for reasonable
expenses incurred and paid by Master Franchisee in complying with requirements imposed by this
Subsection C.




     D. MODIFY/DISCONTINUANCE OF USE OF MARKS


          If it becomes advisable at any time in Franchisor’s sole judgment for Master Franchisee and
one or more Area Representative Franchisees and/or Unit Franchisees to modify or discontinue use of
any Mark and/or for Master Franchisee or any Area Representative Franchisee and/or Unit Franchisee
to use one or more additional or substitute trademarks or service marks, Master Franchisee agrees
to immediately comply with and require such Area Representative Franchisees and/or Unit Franchisees
to immediately comply with Franchisor’s directions to modify or otherwise discontinue the use of
such Mark, and/or use one or more additional or substitute trademarks, logos or commercial symbols.
In such an event such modified, additional or substitute trademarks, logos or commercial symbols
will be governed by the terms of this Agreement. Franchisor will have no obligation to compensate
or reimburse Master Franchisee, Area Representative Franchisee or Unit Franchisees for any
expenditures made by them to modify or discontinue the use of a Mark or to adopt substitutes for
discontinued Marks, including, without limitation, any expenditures relating to advertising or
promotional materials, and no obligation to reimburse Master Franchisee, Area Representative
Franchisees or Unit Franchisees for any loss of goodwill of their businesses related to a
discontinued Mark. If such Marks must be modified, Franchisor will provide a phase in period
of not less than six (6) months to incorporate the modification.



     E. REGISTRATIONS; LICENSE AGREEMENTS


          Only Franchisor has the right to register the Marks with any and all trademark registration
authorities. Master Franchisee may not register the Marks or any similar Marks with any trademark
authority anywhere in the world. Master Franchisee shall at the request and expense of Franchisor
do all acts and execute all documents necessary or desirable in Franchisor’s sole discretion for
establishing Master Franchisee as a user of the Marks hereunder and, where required, for the
registration of Master Franchisee’s permitted use with governmental agencies. Following such
request, Master Franchisee shall not be entitled to exercise any of the rights granted by this
Agreement until Master Franchisee has executed and delivered such documents to Franchisor. Any
license agreement shall be in form and substance acceptable to Franchisor.



11. TRANSFER




     A. BY FRANCHISOR



          This Agreement is fully assignable or novateable by Franchisor and shall inure to the benefit
and/or burden of any assignee or novatee or other legal successor to the interests of



 









 





Franchisor herein. Master Franchisee acknowledges and agrees that Franchisor may assign or novate
any or all of its rights and/or obligations under this Agreement to an Affiliate or an unaffiliated
third party. Franchisor agrees that it will only assign or novate any obligations under this
Agreement, to a Person that is capable of performing this Agreement or discharging such obligations
and whom Franchisor in good faith believes intends to perform this Agreement or discharge such
obligations. In the event Franchisor novates or assigns any rights and/or obligations as
aforesaid, Franchisor may direct Master Franchisee to make payments due to Franchisor hereunder
directly to the novatee or assignee.



          Specifically, and without limitation to the foregoing, Master Franchisee expressly affirms and
agrees that Franchisor may sell its assets, its Marks, or its System outright to a third party; may
go public; may engage in a private placement of some or all of its securities; may merge, acquire
other corporations, or be acquired by another corporation; may undertake a refinancing,
recapitalization, leveraged buy out or other economic or financial restructuring; and, with regard
to any or all of the above sales, assignments and dispositions, Master Franchisee expressly and
specifically waives any claims, demands or damages arising from or related to the loss of said
Marks (or any variation thereof). Nothing contained in this Agreement requires Franchisor to remain
in the business or to offer the same products and services, whether or not bearing the Marks, in
the event that Franchisor exercises its rights hereunder to assign or novate its rights and/or
obligations under this Agreement.



     B. BY MASTER FRANCHISEE


          Master Franchisee understands and acknowledges that the rights and duties created by this
Agreement are personal to Master Franchisee and Owners and that Franchisor has entered into this
Agreement in reliance upon the individual or collective character, skill, aptitude, attitude,
business ability and financial capacity of Master Franchisee and Owners. Therefore, neither this
Agreement, a Controlling Interest in Master Franchisee, nor any Franchise Agreement may be
transferred, in a single transfer or a series of transfers, without the prior written approval of
Franchisor. Any such transfer without such approval shall constitute a breach hereof and shall
convey no rights to or interests in this Agreement or any Franchise Agreement. Master Franchisee
agrees to reimburse Franchisor for all reasonable expenses incurred by Franchisor in evaluating and
approving a proposed transfer. As used in this Agreement, the term “transfer” shall include,
without limitation, whether voluntary or involuntary, direct or indirect; an assignment, novation,
sale, gift or pledge; the grant of a mortgage, charge, lien or security interest including, without
limitation, the grant of a collateral assignment; a merger or consolidation, or issuance of
additional Ownership Interests or redemption of Ownership Interests; a sale of voting interests of
securities convertible to voting interests, or an agreement granting the right to exercise, or
control the exercise, of voting rights of any holder of an Ownership Interest; and a transfer that
occurs as a result of divorce, insolvency, corporate or partnership dissolution, or upon death, by
will, intestate succession or by declaration of, or transfer to, a trust.


          Franchisor will not unreasonably withhold or delay its consent to the transfer of any interest
in the Master Franchisee; provided, however, that prior to the time of the transfer, Franchisor
may, in its sole discretion require that: (i) the transferee demonstrate to Franchisor’s



 









 








satisfaction that it meets Franchisor’s requirements that existed under the original Agreement and
have the adequate financial resources and capital to manage the Development Area; (ii) transferee
must submit to Franchisor an application in the form prescribed by Franchisor; (iii) transferee or
transferee’s manager must complete any training course then in effect for Master Franchisee, at
transferee’s expense and upon such other terms and conditions as Franchisor may reasonably require;
(iv) except in the case of a transfer to a corporation formed solely for the convenience of
ownership, a transfer fee of 10% of Franchisor’s then-current Master Franchise Fee shall be paid to
Franchisor by Master Franchisee; (v) Master Franchisee and its Owners execute a general release,
in a form prescribed by Franchisor, of all claims against Franchisor, it Affiliates and its
officers, developers, agents, and employees; and (vi) at Franchisor’s sole option, the transferee
must either (A) execute Franchisor’s then-current Master Franchise Agreement (which may contain
different royalty rates, fees and marketing contributions) and all other agreements and legal
instruments and documents (including guarantees) then customarily used by Franchisor in the grant
of master franchises or (B) undertake in writing, in a form acceptable to Franchisor, to assume all
of Master Franchisee’s rights and obligations under this Agreement.




     C. DEATH OR DISABILITY OF MASTER FRANCHISEE


          In the event of the death or Permanent Disability of the Master Franchisee, the spouse or
personal representative of Master Franchisee may, on request in writing to Franchisor made within
90 days of such death or Permanent Disability, continue to act as Master Franchisee under this
Agreement for a period of 1 year from the date such request is received by Franchisor to the
expiration of the aforesaid 1 year period, provided that the spouse or personal representative of a
deceased or incapacitated Master Franchisee, as the case may be, must file with Franchisor an
application for a master franchise agreement.


          If application is made to Franchisor for a master franchise agreement, Franchisor agrees to
authorize the person designated in such application to become a Master Franchisee under this
Agreement for the balance of the term hereof provided that such person substantially meets
Franchisor’s qualifications to become an Master Franchisee under the terms of this Agreement and
this Agreement is not in default. No transfer fee will be required upon transfer of this Agreement
to the surviving spouse, heirs, beneficiaries or devisee of Master Franchisee. Except as provided
in this Agreement, if the representative fails to take the steps stated above, Franchisor will
automatically assume the rights of the Master Franchisee one year after the death or permanent
disability of the Master Franchisee. During any transition period to an heir or
successor-in-interest, the Master Franchise Business still must be operated in accordance with the
terms and conditions of this Agreement and Franchisor reserves all rights related to default and
termination.



     D. NO RIGHT TO ENGAGE IN SECURITIES OFFERING


          The Master Franchisee must not, and must ensure that its Affiliates or Owners do not engage in
a Securities Offering without the prior written consent of Franchisor (whether or not Franchisor’s
consent is otherwise required). Franchisor’s consent will be conditioned upon (i) its verification
that the Prospectus does not state or imply (by use of the Marks or otherwise) that Franchisor is
sponsoring or otherwise participating in the Securities Offering or that Franchisor will receive
any part of the proceeds from the Securities Offering, and (ii) its receipt



 









 








of a legal opinion from Franchisor’s counsel satisfactory to Franchisor stating (a) that the
Prospectus and the conduct of the Securities Offering comply in all material respects with the laws
of each country from which an offer of securities originates or into which an offer of securities
is directed, and (b) that neither the conduct nor the consummation of the Securities Offering will
result in a violation of any of the laws, rules or regulations referenced Section 6 of this
Agreement. To obtain Franchisor’s consent, Master Franchisee must submit the required legal
opinion and a complete copy of the Prospectus to Franchisor prior to the time the Prospectus is
filed with a government agency or official or, if an exempt Securities Offering is contemplated,
prior to the delivery of the Prospectus to any prospective investor. Franchisor will have thirty
(30) days after its receipt of the Prospectus and the required legal opinion either to provide its
consent or to advise Master Franchisee of the deficiencies that must be corrected prior to
Franchisor providing its consent. Franchisor will have no obligation to provide its consent until
all deficiencies it notes have been corrected. Master Franchisee, the Owners and the other
participants in a Securities Offering will fully indemnify Franchisor in connection with the
offering. For each proposed Securities Offering, Master Franchisee will pay Franchisor an offering
fee equal to Franchisor’s reasonable cost and expenses associated with reviewing a proposed
offering, including, without limitation, legal and accounting fees and salaries of Franchisor’s
personnel and its professional advisors.




     E. FRANCHISOR’S RIGHT OF FIRST REFUSAL


          If Master Franchisee or an Owner shall at any time determine to sell or transfer a Controlling
Interest in this Agreement, substantially all the assets of Master Franchisee, the Franchise
Agreements or a Controlling Interest in the Master Franchisee or one of its Owners, Master
Franchisee will, and will ensure that its Owners will, obtain a bona fide, executed written offer
and earnest money deposit (in the amount of five percent (5%) or more of the offering price) from a
qualified, responsible and fully disclosed purchaser and a true and complete copy of the offer (and
any proposed ancillary agreements) shall immediately be submitted to Franchisor. The offer must
apply only to this Agreement, the assets of Master Franchisee, the Franchise Agreements or a
Controlling Interest in Master Franchisee or such Owner and may not include the purchase of any
other property or rights. Franchisor shall have the right, exercisable by written notice delivered
to Master Franchisee or Owners within thirty (30) days from the date of delivery of an exact copy
of such offer to Franchisor, to purchase such interests for the price and on the terms and
conditions contained in such offer, provided that Franchisor may substitute cash or marketable
securities of equal value for any form of payment proposed in such offer. Franchisor’s credit
shall be deemed equal to the credit of any proposed purchaser. Franchisor shall have not less than
ninety (90) days to prepare for closing. If Franchisor does not exercise its right of first
refusal, Master Franchisee or Owners may complete the sale to such purchaser pursuant to and on the
exact terms of such offer, subject to Franchisor’s approval of the transfer as otherwise provided
in Section 12, provided that if the sale to such purchaser is not completed within one hundred
twenty (120) days after delivery of such offer to Franchisor, or there is a material change in the
terms of the sale, Franchisor shall have an additional right of first refusal for thirty (30) days
on the terms and conditions applicable to the initial right of first refusal, except that
Franchisor shall have the option, exercisable in its sole discretion, to substitute any of the
modified terms of purchase for those contained in the original offer.



 









 








12. TERMINATION OF AGREEMENT




     A. BY MASTER FRANCHISEE


          If Master Franchisee is in full compliance with this Agreement and Franchisor materially
breaches this Agreement, Master Franchisee may terminate this Agreement effective sixty (60) days
after delivery of written notice of termination if Master Franchisee gives written notice of such
breach to Franchisor and Franchisor does not cure such breach within sixty (60) days after delivery
of notice of such breach; or, if such breach cannot reasonably be cured within sixty (60) days
after delivery of notice of such breach, Franchisor does not undertake within sixty (60) days after
delivery of such notice, and continue until completion, reasonable endeavors to cure such breach.
Any termination of this Agreement by Master Franchisee other than as provided in this Subsection A
shall be deemed a termination by Master Franchisee without cause.



     B. BY FRANCHISOR


          The rights, licenses and territorial exclusivity granted to the Master Franchisee under this
Agreement have been granted in reliance on Master Franchisee’s representations and assurances,
among others, that the conditions and obligations set forth in this Agreement will be met and
performed in a timely manner.


          The rights, licenses and territorial exclusivity may be terminated or rescinded without the
need of obtaining any judicial or administrative judgment, ruling, arbitration award or resolution
of any kind, immediately upon written notice to Master Franchisee, which shall be deemed an
incurable default of this Agreement (in the understanding that the termination or rescission of
this Agreement shall become effective immediately upon delivery of the written notice of
termination to Master Franchisee), and Master Franchisee will no longer have any of the rights
created by this Agreement, upon the happening of any of the following events:


          1. In the event that Master Franchisee is adjudicated bankrupt, becomes insolvent (as revealed
by its records or otherwise), or if Master Franchisee files a voluntary petition for commercial
insolvency or suffers a permanent or temporary court-appointed receivership or examinership of
substantially all of Master Franchisee’s property, makes a general assignment for the benefit of
creditors or suffers the filing of a voluntary or involuntary bankruptcy petition which is not
dismissed within one year after filing;


          2. If Master Franchisee is dissolved;


          3. If the Master Franchisee fails to comply with the Development Schedule set forth in this
Agreement and such default is not cured within 30 days after Master Franchisee receives notice of
such default;


          4. If Master Franchisee fails to cause each Franchise Agreement to be executed in accordance
with Sections 5 and 6;



 









 







          5. If Master Franchisee or any Owner has made a material misrepresentation or omission in its
application for master license rights or with respect to its representations and agreements
contained in Section 6;


          6. If Master Franchisee or any of its Owners is convicted by a trial court of or pleads guilty
or not guilty to an indictable offence, or to any other crime or offence, or engages in any
misconduct that may adversely affect the reputation of Master Franchisee, its Owners or PLANETS
BEACH® businesses or the goodwill or reputation associated with the Marks or the System;


          7. If Master Franchisee, any of its Owners, Affiliates or a Guarantor is listed by the United
States or United Nations as being a terrorist, financier or terrorism, or otherwise restricted from
doing business in or with the United States;


          8. If the System, Master Franchisee or its Owners make any unauthorized use, disclosure of, or
duplication of any Confidential Information or copyrighted works, or makes any unauthorized use of
the Marks or the trade dress (decoration or image) of any PLANET BEACH® business;


          9. Master Franchisee or its Owners violate the restrictions of Section 15 of this Agreement
relating to the non-competition and confidentiality covenants;


          10. Master Franchisee makes a transfer in violation of Section 12 of this Agreement;


          11. Master Franchisee fails to make any monetary payments to Franchisor in accordance with the
terms of this Agreement within ten (10) days of notice of such failure provided to Master
Franchisee;


          12. Master Franchisee fails, on three (3) or more separate occasions within any period of
twelve (12) consecutive months to comply with the terms of this Agreement, whether or not such
failures to comply are corrected after notice thereof is delivered to Master Franchisee;


          13. Master Franchisee or any of its Owners commit a material default under the terms of any
other agreement with Franchisor, or its Affiliates and such default continues beyond any cure
period after receipt of notice of such as provided in such other agreement;


          14. Master Franchisee or any of its Owners commit an event of default under the terms of any
loan or financing documents that results in the loss of any rights with respect to any material
assets of Master Franchisee or in any PLANETS BEACH® business;


          15. Master Franchisee fails to comply with any other provision of this Agreement, and does not
correct such failure within thirty (30) days after written notice of such failure is delivered to
Master Franchisee; provided that, in relation to any default that cannot be reasonably corrected
within such thirty (30) days period, Franchisor shall not exercise its right to terminate or
rescind this Agreement if Master Franchisee has continuously and diligently



 









 








undertaken, and continues to utilize all best endeavors to bring itself into full compliance with
this Agreement within such thirty (30) day period and furnishes proof acceptable to Franchisor upon
its request of such endeavors and the date on which full compliance was or will be achieved; or



          16. If there is not substantial compliance with Section 5.F and 75% of the Franchisees provide
a written petition to Franchisor that the Master Franchisee is not substantially providing the
franchise support as outlined in their individual Franchise Agreement of which the Master
Franchisee has direct control, Franchisor will immediately give written notice of such substantial
non-compliance. Upon receipt of such notice of non-compliance and Franchisee petition the Master
Franchisee will have ninety (90) days or such time as is reasonable to cure such defaults.


          The events of default and grounds for termination described in this Section will be
independent and in addition to any other grounds for termination and remedies contained elsewhere
in this Agreement or in any individual Franchise Agreement executed between Franchisor and the
Master Franchisee. Upon termination or expiration of this Agreement, the Master Franchisee will not
have further rights to receive any portion of any fees paid by Franchisees pursuant to any
Franchise Agreement, and Franchisor will have complete and exclusive rights to the franchise and
royalty fees collected from each PLANET BEACH® business within the Development Area should it
obtain an assignment or novation of all of Master Franchisee’s rights under this Agreement in
accordance with Section 14 of this Agreement. No right or remedy herein conferred upon or reserved
to Franchisor is exclusive of any other right or remedy provided or permitted by law or equity.



13. RIGHTS AND OBLIGATIONS UPON TERMINATION OR EXPIRATION




     A. MARKS AND DE-IDENTIFICATION


          Master Franchisee agrees, and will ensure that its Owners agree, that after the termination or
expiration of this Agreement (including transfer, novation or assignment of this Agreement), for
any reason, it or they shall:


          1. Not directly or indirectly at any time or in any manner identify itself or any business as
a current or former franchisee, licensee or dealer of, or as otherwise associated with, Franchisor,
or directly or indirectly use any of the Marks, any colourable imitation thereof or confusingly
similar marks or other indicia of a PLANET BEACH® business, or the System, including Confidential
Information, in any manner or for any purpose, or utilize for any purpose any trade name,
trade-mark or other commercial symbol that suggests or indicates a connection or association with
Franchisor or its Affiliates or franchisees;


          2. Within a period of ten (10) days return to Franchisor all signs, Operations Manuals,
brochures, advertising materials, forms, invoices and other materials containing any Marks or
otherwise identifying or relating to the System or the operation of a PLANET BEACH® business and
allow Franchisor, without liability, to remove all such items from the Master Franchisee’s offices;



 









 







          3. Within ten (10) days take such action as may be required to cancel all trade name or
equivalent registrations relating to its use of any Marks;


          4. Within ten (10) days notify the appropriate telephone company, all telephone directory
listing agencies of the termination or expiration of Master Franchisee’s right to use any telephone
numbers and any regular, classified or other telephone directory listings associated with any Marks
and domain name registry with respect to any domain name associated with the Marks and authorize
transfer of the same to or at the direction of Franchisor. Master Franchisee agrees to execute
updated letters of direction to telephone companies, telephone directory listing agencies, and
domain name registries directing termination and/or transfer of Master Franchisee’s right to use
telephone numbers or domain names associated with the Marks, which Franchisor may hold until
termination or expiration hereof. Master Franchisee acknowledges that as between Franchisor and
Master Franchisee, Franchisor has the sole right to and interest in all telephone numbers,
directory listing and domain names associated with any Marks. Master Franchisee authorizes
Franchisor, and hereby appoints Franchisor and any officer of Franchisor as its attorney in fact,
to direct the appropriate telephone company and all listing agencies or domain name registries to
transfer the same to Franchisor or at is direction, should Master Franchisee fail or refuse to do
so, and the appropriate telephone company and all listing agencies and domain name registry may
accept such direction of this Agreement or Master Franchisee’s letter of direction held by
Franchisor as conclusive of the exclusive rights of Franchisor in such telephone number and
directory listings and domain names and its authority to direct their transfer;


          5. Comply with the confidentiality and non-competition obligations set forth in Section 15 of
this Agreement; and


          6. Furnish to Franchisor, within thirty (30) days after the effective date of termination or
expiration, evidence satisfactory to Franchisor of Master Franchisee’s compliance with the
foregoing obligations.



B. FRANCHISE AGREEMENTS



          In addition to, and not in lieu of the rights of Franchisor and the obligations of Master
Franchisee under this Section, if Master Franchisee terminates this Agreement without cause or
Franchisor terminates this Agreement in accordance with its terms, Master Franchisee agrees to
novate to Franchisor or its designee, at the option of Franchisor, all of its rights and
obligations under those Area Representative Agreements or Unit Franchise Agreements designated by
Franchisor. Franchisor shall give Master Franchisee written notice of its exercise of this option
within sixty (60) days of the effective date of termination of this Agreement. If Franchisor
exercises the option provided for in this Subsection B, it shall have ninety (90) days from the
date of the notice exercising such option to designate the Franchise Agreements to be novated and
prepare for closing of this termination. The Franchise Agreements transferred, as designated by
Franchisor, shall be novated to Franchisor without cost or charge and free and clear of any liens,
charges and encumbrances. Neither Franchisor nor its designee shall under any circumstances assume
or be liable for any obligation for performance or obligation or liability for default or
non-performance of Master Franchisee under the particular Franchise Agreement or this Agreement (or
on any other basis) that arose prior to the effective date of the novation. Therefore,



 









 








Master Franchisee and its Owner(s) shall be liable for any obligation for performance or obligation
or liability for default or non-performance under any Franchise Agreement of Franchisor or its
designee that arises before and after the effective date of novation.



          If Franchisor does not exercise its novation option with respect to one or more Franchise
Agreements, Master Franchisee shall cause Area Representative Franchisee and/or Unit Franchisees
whose Area Representative Agreement or Unit Franchise Agreement are not novated to Franchisor to
cease all use of the Marks and the System as provided in Subsection A of this Section.



C. CONTINUING OBLIGATIONS



          All obligations of Franchisor and Master Franchisee which expressly or by their nature survive
the termination of this Agreement or the expiration of the Development Term shall continue in full
force and effect subsequent to and notwithstanding its expiration or termination and until they are
satisfied in full or by their nature expire.



14. NON-COMPETITION AND CONFIDENTIALITY




     A. CONFIDENTIALITY AND NON-DISCLOSURE


          Master Franchisee acknowledges that it will receive valuable training regarding the operation
of a PLANET BEACH® business, and Confidential Information which is beyond the present skills,
experience and knowledge of Master Franchisee and its Owners and Master Franchisee’s employees.
The Confidential Information provide by Franchisor in connection with this Agreement constitutes
valuable, essential, necessary and indispensable information that Master Franchisee requires and
needs in order to perform under this Agreement. Master Franchisee and Restricted Persons shall, at
all times during the term hereof and thereafter, use their best endeavors to preserve the
confidentiality of all Confidential Information. Master Franchisee shall use Confidential
Information only in connection with the rights granted to it under this Agreement. Disclosure and
access to Confidential Information shall be limited to Master Franchisee and to other Persons,
including Area Representative Franchisees and/or Unit Franchisees, who need the Confidential
Information to perform their obligations pursuant to this Agreement, an Area Representative
Agreement or a Unit Franchise Agreement and who have signed a confidentiality agreement in the form
attached as Exhibit F hereof. Each party undertakes to the other to take all steps that
are necessary from time to time to ensure compliance with the provisions of this Section 15.A by
its employees, agents and subcontractors. In addition, Master Franchisee shall not disclose the
financial terms of this Agreement to any person or persons except to its professional advisors for
legitimate business purposes.


          The obligations of confidentiality under this Section 15.A shall not apply where:




	 	(a)	 	the receiving party is subject to an obligation to disclose the
information under law, or the information is required to be disclosed by any
competent regulatory authority, by notice or otherwise; or




 









 












	 	(b)	 	the information is already in the receiving party’s possession
other than as a result of a breach of this Section 15.A; or






	 	(c)	 	the information is in the public domain other than as a result
of a breach of this Section 15.A.





     B. NON-COMPETITION


          Master Franchisee acknowledges and will ensure that its Owners acknowledge, that it and they
will receive valuable training regarding the operation and maintenance of PLANET BEACH® businesses,
and Confidential Information which is beyond the present skills, experience and knowledge of Master
Franchisee, any Owner and Master Franchisee’s employees. The Confidential Information provided by
Franchisor in connection with this Agreement constitutes valuable, essential, necessary and
indispensable information that Master Franchisee requires and needs in order to perform under and
offer the goods and services described in this Agreement, each and every restriction imposed on
Master Franchisee and its Owners in this Section constitutes measures necessary to maintain the
identity, integrity and reputation of the System.


          Consequently, Master Franchisee and each Owner shall not, during the Development Term have any
interest as an owner, partner, director, officer, employee, consultant, investor, shareholder,
licensor, licensee, lender, representative or agent, or in any other capacity, in any Competitive
Business: (i) in the Development Area, or (ii) within 5 kilometers of the perimeter of any Assigned
Area (Assigned Areas meaning any assigned territory in which Master Franchisee or its Affiliate
previously operated a Franchise, or in which any Unit Franchisee operates a Franchise).


          Further, Master Franchisee and each Owner shall not for a period of two (2) years following
the expiration or early termination of this Agreement, or with respect to an Owner, commencing when
such Owner ceases to meet the definition of Owner under this Agreement, have any interest as an
owner, partner, director, officer, employee, consultant, investor, shareholder, licensor, licensee,
lender, representative or agent, or in any other capacity, in any Competitive Business:




	 	(i)	 	which operates or is part of a chain or franchise of a
Competitive Business in the Development Area or any part of the Development
Area; or






	 	(ii)	 	without prejudice to the generality of the foregoing, within
0.3 kilometers of the perimeter of any Planet Beach Unit Franchise premises in
the Development Area;




          Master Franchisee further covenants that for the period of two (2) years after the expiration
or termination for any reason of this Agreement (howsoever arising) the Master Franchisee and each
Owner shall not whether itself or together with any other person, firm or company in any capacity
whatsoever save as authorized hereunder directly or indirectly solicit customers or former
customers of the Business (former customers being persons who have been customers of the Business
in the Development Area within the year prior to expiration or termination.



 









 







          Nothing contained in this Section, however, shall restrict Master Franchisee and the Owners
from (i) holding a 5% Ownership Interest in a Similar Business where neither Master Franchisee nor
any Owners have the power to influence the economic conduct of such Similar Business, or (ii)
participating in any trade associations or organizations involving Similar Businesses.


          The parties acknowledge and agree that the covenant contained in Section is a reasonable
limitation as to time, space, geographic area and scope of activity and does not impose a greater
restraint than is necessary to protect the goodwill (reputation) or other business interests of
Franchisor. Subject to the terms of this Agreement, if all or any portion of the covenant
contained in this Section is held unreasonable or unenforceable by a court or agency having valid
jurisdiction in an unappealed decision to which Franchisor is a party, Master Franchisee expressly
agreed, and will ensure that the Owners expressly agree to be bound by the lesser covenant subsumed
within the terms of the covenant that imposes the maximum duty permitted by law, as if the
resulting covenant were separately stated in and made part of this Section.



     C. AREA DEVELOPMENT FRANCHISEES/UNIT FRANCHISEES


          Master Franchisee shall use reasonable commercial and legal endeavors to cause its Area
Representative Franchisees and Unit Franchisees to comply with the non-competition and
confidentiality restrictions in the Area Representative Agreements and Unit Franchise Agreements.



15. ENFORCEMENT




     A. INFORMAL DISPUTE RESOLUTION


          Prior to filing any judicial or arbitration proceeding, except as provided in Subsection 16.B,
the party intending to file such a proceeding shall be required to notify the other party in
writing of the existence and the nature of the dispute. Franchisor and Master Franchisee each
agree that within fifteen (15) business days of the other party’s receipt of such notice, the Chief
Executive, Chief Operating Officer or other senior executive officer of both Franchisor and Master
Franchisee shall meet at Franchisor’s corporate offices in Marrero, Louisiana for a minimum of two
(2) eight (8) hour days in order to attempt to resolve the dispute amicably. If such informal
dispute resolution attempts prove to be unsuccessful, the notifying party may initiate a judicial
or arbitration proceeding as described in Subsection B of this Section 16.



     B. ARBITRATION


          Subject to Subsection A of this Section 16, all controversies, disputes or claims arising
between the Franchisor, its Affiliates, and their respective officers, directors, shareholders,
partners, agents, employees and attorneys (in their representative capacity) and Master Franchisee
(and its Owners and the guarantors of this Agreement) arising out of or related to the relationship
of the parties hereto, this Agreement or any provision hereof, any



 









 








Franchise Agreement or any related agreement, the validity of this Agreement or any provision
hereof or any System Standard relating to the establishment or operation of PLANET BEACH® shall be
submitted for arbitration to be administered in accordance with the rules and procedures of
arbitration of the International Chamber of Commerce (ICC) in Marrero, Louisiana on demand of
either party. Such arbitration proceedings shall be conducted before a panel of three (3) neutral
arbitrators and, except as otherwise provided in this Agreement, shall be conducted in accordance
with the then-current commercial arbitration rules of the ICC for international arbitration. All
arbitration proceedings shall be conducted in Marrero, Louisiana. All matters within the scope of
the Federal Arbitration Act of the United States (9 U.S.C. §§1 et seq.) shall be governed by it.
The arbitrators shall have the right to award or include in their award any relief which they deem
proper in the circumstances, including without limitation, money damages (with interest on unpaid
amounts from date due), specific performance, injunctive relief, legal fees and costs in accordance
with Subsection H of this Section 16, provided that the arbitrators shall not have the authority to
award exemplary, punitive or special damages. The award and decision of the arbitrators shall be
conclusive and binding upon all parties hereto and judgment upon the award may be entered in any
court of competent jurisdiction. The parties further agree to be bound by the provisions of any
applicable limitation on the period of time in which claims must be brought under applicable law or
this Agreement, whichever is less. The parties further agree that in connection with any such
arbitration proceeding, each shall submit or file any claim which would constitute a compulsory
counterclaim (as defined by Rule 13 of the United States Federal Rules of Civil Procedure) within
the same proceeding as the claim to which it relates. Any such claim which is not submitted or
filed as described above shall be barred. Master Franchisee and Franchisor agree that arbitration
shall be conducted on an individual, not a class-wide basis and that no arbitration proceeding
conducted pursuant to this Agreement shall be consolidated with any other arbitration proceeding
involving Franchisor and any other Person, corporation, partnership or entity.



          Notwithstanding anything to the contrary contained in this Subsection B or Subsection A Master
Franchisee and Franchisor each have the right in a proper case to obtain temporary restraining
orders and temporary or preliminary injunctive relief from a court of competent jurisdiction,
provided, however, that the parties agree to contemporaneously submit their dispute for arbitration
on the merits as provided herein. The provisions of this Subsection B are intended to benefit and
bind certain third party non-signatories and will continue in full force and effect subsequent to,
and notwithstanding the expiration of, the Development Term or the termination of this Agreement.



     C. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS


          All provisions of this Agreement are severable and this Agreement shall be interpreted and
enforced as if all completely invalid or unenforceable provisions were not contained herein and
partially valid and enforceable provisions shall be enforced to the extent valid and enforceable.
To the extent that the post-termination restrictive covenant set forth in Subsection 15.B is deemed
unenforceable by virtue of its scope in terms of geographic area, activity prohibited or length of
time, but may be made enforceable by reductions of any of them, Master Franchisee and the
Franchisor agree that same shall be enforced to the fullest extent permissible under the laws and
public policies applied in the jurisdiction in which enforcement is



 









 








sought. If any applicable and binding law or rule of any jurisdiction requires a greater prior
notice of the termination of this Agreement than is required hereunder or the taking of some other
action not required hereunder, or if under any applicable and binding law or rule of any
jurisdiction, any provision of this Agreement or any specification, standard or operating procedure
prescribed by the Franchisor is invalid or unenforceable, the prior notice and/or other action
required by such law or rule shall be substituted for the comparable requirements hereof, and
Franchisor shall have the right, in its sole discretion, to modify such invalid or unenforceable
provision, specification, standard or operating procedure to the extent required to be valid and
enforceable. Such modifications to this Agreement shall be effective only in such jurisdiction and
shall be enforced as originally made and entered into in all other jurisdictions.




     D. WAIVER OF OBLIGATIONS


          The Franchisor and Master Franchisee may by written instrument unilaterally waive any
obligation of or restriction upon the other under this Agreement. No acceptance by the Franchisor
of any payment by Master Franchisee or any other Person or entity and no failure, refusal or
neglect of the Franchisor or Master Franchisee to exercise any right under this Agreement or to
insist upon full compliance by the other with its obligations hereunder shall constitute a waiver
of any provision of this Agreement. Franchisor makes no warranties or guarantees upon which Master
Franchisee may rely, and assumes no liability or obligation to Master Franchisee, by granting any
waiver, approval, or consent to Master Franchisee, or by reason of any neglect, delay, or denial of
any request therefore. Any waiver granted by Franchisor shall be without prejudice to any other
rights Franchisor may have, will be subject to continuing review by Franchisor, and may be revoked,
in Franchisor’s sole discretion, at any time and for any reason, effective upon delivery to Master
Franchisee of ten (10) days’ prior written notice. Franchisor and Master Franchisee shall not be
deemed to have waived or impaired any right, power or option reserved by this Agreement (including,
without limitation, the right to demand exact compliance with every term, condition and covenant
herein, or to declare any breach thereof to be a default and to terminate this Agreement prior to
the expiration of its term), by virtue of any custom or practice of the parties at variance with
the terms hereof; any failure, refusal, or neglect of Franchisor or Master Franchisee to exercise
any right under this Agreement or to insist upon exact compliance by the other with its obligations
hereunder, including, without limitation, any System Standard; any waiver, forbearance, delay,
failure, or omission by Franchisor to exercise any right, power, or option, whether of the same,
similar or different nature, with respect to any PLANET BEACH® business or any franchise agreement;
or the acceptance by Franchisor of any payment from Master Franchisee after any breach of this
Agreement.


          Neither Franchisor nor Master Franchisee shall be liable for loss or damage or deemed to be in
breach of this Agreement if its failure to perform its obligations results from any of the
following and is not caused or exacerbated by the non-performing party: compliance with any law,
ruling, order, regulation, requirement, or instruction of any government or any department or
agency thereof; acts of God; or acts of war or insurrection. Any delay resulting from any of said
causes or occurrences shall extend performance accordingly or excuse performance, in whole or in
part, as may be reasonable, except that said causes shall not excuse payment of amounts owed at the
time of such occurrence or payment of Royalty Fees thereafter.



 









 








     E. RIGHTS OF PARTIES ARE CUMULATIVE


          The rights of Franchisor and Master Franchisee hereunder are cumulative and no exercise or
enforcement by Franchisor or Master Franchisee of any right or remedy hereunder shall preclude the
exercise or enforcement by Franchisor or Master Franchisee of any other right or remedy hereunder
or which Franchisor or Master Franchisee is entitled by law to enforce.



     F. WAIVER OF PUNITIVE DAMAGES AND JURY TRIAL


          Master Franchisee hereby waives to the fullest extent permitted by law, any right to or claim
for any punitive, exemplary or special damages against Franchisor and agrees that in the event of a
dispute between them, except as otherwise provided herein, Master Franchisee shall be limited to
the recovery of any actual damages sustained by it. Franchisor and Master Franchisee irrevocably
waive trial by jury in any action, proceeding or counterclaim, whether at law or in equity, brought
by either of them.



     G. LIMITATION OF CLAIMS


          Except with regard to Master Franchisee’s obligations to pay to Franchisor Unit Franchise
related Initial Franchisee Fees, Royalty Fees and other payments due to Franchisor and/or its
Affiliates pursuant to this Agreement, any and all claims arising out of or relating to this
Agreement or the relationship of Master Franchisee and Franchisor shall be barred unless an
arbitration proceeding is commenced within one (1) year from the date Franchisor or Master
Franchisee knew or, exercising reasonable diligence should have known, of the facts giving rise to
such claims.



     H. COSTS AND LEGAL FEES


          If Franchisor or Master Franchisee is required to enforce this Agreement in a judicial or
arbitration proceeding, the party prevailing in such proceeding shall be reimbursed by the other
party for its costs and expenses, including without limitation reasonable attorneys’ fees (for
attorneys and legal assistants), accountants’ fees, and expert witness fees, costs of investigation
and proof of facts, court costs, other litigation expenses and travel and living expenses, whether
incurred prior to, in preparation for or in contemplation of the filing of any such proceeding. If
the Franchisor is required to engage legal counsel in connection with any failure by Master
Franchisee to comply with this Agreement, Master Franchisee shall reimburse Franchisor for any of
the above-listed costs and expenses incurred by it. If and when Franchisor takes any action in a
competent court on any matter related in any way to this Agreement, any cost order granted in favor
of Franchisor will be deemed to be between attorney and own client.



     I. GOVERNING LAW/CONSENT TO JURISDICTION


          Master Franchisee and Franchisor agree that, except to the extent governed by the United
States Federal Arbitration Act (9 U.S.C. §§1 et seq.), the United States Trademark Act of 1946
(Lanham Act, 15 U.S.C. Section 1051 et seq.) or other federal law, this Agreement and the



 









 








relationship of the parties hereto shall be governed by the internal laws of the State of
Louisiana, United States, except that the internal laws of the State of Louisiana’s choice of law
and conflict of law rules shall not apply. Master Franchisee and Franchisor agree that any action
against Master Franchisee arising out of or relating to this Agreement seeking an order pursuant to
Subsection 16.B or the enforcement of an arbitration award may be brought in a state or federal
court of general jurisdiction in the State of Louisiana. Franchisor may file an action seeking an
order pursuant to Subsection 16.B or to enforce any arbitration award, judgment or order in any
such court or in any court located in the Country. Master Franchisee irrevocably submits to the
jurisdiction of such courts and waives any objection it may have to either the jurisdiction or
venue of such courts.




     J. BINDING EFFECT


          This Agreement is binding upon the parties hereto and their respective executors,
administrators, heirs, assigns, novatees and successors in interest, and shall not be modified
except by written agreement signed by both Master Franchisee and Franchisor.



     K. CONSTRUCTION


          The preambles and exhibits are a part of this Agreement, which constitutes the entire
agreement of the parties, and, except for Franchise Agreements, there are no other oral or written
understandings or agreements between Franchisor and Master Franchisee relating to the subject
matter of this Agreement. The headings of the several sections and subsections hereof are for
convenience only and do not define, limit or construe the contents of such sections or subsections.
The term “Master Franchisee” as used herein is applicable to one or more Persons, a corporation or
a partnership, as the case may be, and the singular usage includes the plural and the masculine and
neuter usages include the other and the feminine. If two or more Persons are at any time Master
Franchisee hereunder, whether or not as partners or joint venturers, their obligations and
liabilities to Franchisor shall be joint and several. This Agreement may be executed in multiple
copies, each of which shall be deemed an original. In this Agreement reference to Irish or English
statutes or statutory provisions include those statutes or statutory provisions as amended extended
consolidated re-enacted or replaced from time to time and to any order regulations instruments or
other subordinate legislation and to any former statute or statutory provision replaced (with or
without modification) by the statute or statutory provision referred to except to the extent that
any amendment or modification enacted after the date of this Agreement would increase or extend the
liability of any party to this Agreement.



     L. GOVERNING LANGUAGE


          This Agreement and the Operations Manual originally will be written in the English language,
and all questions of interpretation of this Agreement or the Operations Manual shall be resolved by
reference to the same as written in English.



 









 








     M. FORCE MAJEURE


          If a party’s default under this Agreement (other than Master Franchisee’s obligations with
respect to insurance and indemnification, and to pay all fees and other amounts due to Franchisor
and its affiliates under this Agreement or any other agreement between either of them and Master
Franchisee), is caused in whole or in part by a force majeure, such default and any right of the
other party to terminate this Agreement for such default is suspended for as long as the default is
reasonably caused by such force majeure. Any suspension is effective only from the delivery of a
notice of the force majeure to the other party stating the party’s intention to invoke the force
majeure. However, if such suspension continues for longer than six months and such default still
exists, either party has the right to terminate this Agreement upon 30 days notice to the other
party. Neither party shall consider the termination as being due to the default of the other
party. Events of force majeure are those that cannot be prevented, avoided or removed by the party
invoking the force majeure despite the exercise of reasonable diligence, including acts of God,
actions of the elements, lockouts, strikes, wars, riots, civil commotion, and acts of governmental
authorities, (not including a governmental authority’s delaying or refusing to grant building
permits, licenses and other permissions and approvals), and except as specifically provided for
elsewhere in this Agreement.



     16. NOTICES, REPORTS, PAYMENTS AND ADDRESS FOR SERVICE


          All written notices, reports, payments and address for service permitted or required to be
delivered by the provisions of this Agreement or of the Operations Manual shall be deemed so
delivered at the time delivered by hand, one (1) business day after transmission by facsimile,
telecopy or other electronic system (evidenced by a machine generated receipt), five (5) business
days after being placed in the hands of a commercial courier service for express delivery or ten
(10) business days after placement with a government mail service by Registered or Certified Mail
(or the equivalent), Return Receipt Requested, postage prepaid. All such notices, reports and
payments shall be addressed to the parties as follows:



	 	 	 	 	 	 	 	 	 	 	 
	 	 	If to Franchisor:	 	 	 	PLANET BEACH INTERNATIONAL, L.L.C.  
	 	 	 	 	 	 	5161 Taravella Road	 	 
	 	 	 	 	 	 	Marrero, LA 70072	 	 
	 	 	 	 	 	 	Attention: Nina Rabito	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	If to Master Franchisee:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	  
	 	 
	 

	 	 	 	 	 	  
	 	 
	 

	 	 	 	 	 	  
	 	 
	 

	 	 	 	 	 	Attention:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 





     A change by any party with respect to the address for delivery of all such notices and reports
must be delivered in writing to the other party within ten (10) business days of any such change in
address. Any required payment or report not actually received by Franchisor during regular
business hours on the date due (or postmarked by government postal authorities at least two (2)
days prior thereto) will be deemed delinquent. For purposes of this Agreement, the terms “Business
Day” shall exclude Saturdays, Sundays and official holidays.



 









 





17. INDEPENDENT ADVICE




     You acknowledge that in giving you advice, assisting you to establish this master franchise
business, recommending equipment and materials and assessing your suitability for the business, we
have based our recommendations on experience actually obtained in practice but that we do not give
any guarantee or warranty with regard to such matters or generally in connection with the sales
volume, profitability or any other aspect of the Business. You acknowledge that your decision to
enter into this Agreement has been taken solely on the basis of your personal judgment and
experience having taken independent advice. Accordingly, you acknowledge that no representation,
warranty, inducement or promise express or implied had been made by us or relied upon by you in
entering into this Agreement. Nothing in this Section or any other Section in this Agreement
excludes or limits either parties’ liability for fraud or fraudulent misrepresentation.



18. THIRD PARTY RIGHTS.




     Except where expressly provided to the contrary, this Agreement is not intended to be for the
benefit of, and shall not be enforceable by, any person who is not named at the date of this
Agreement as a party to it, or any person who claims rights under applicable law or otherwise and
neither party can declare itself a trustee of the rights under it for the benefit of any third
party. The parties to this Agreement reserve the right to rescind or vary this Agreement without
the consent of any third party who is expressly entitled to enforce this Agreement. The Master
Franchisee acknowledges that its breach of this Agreement may cause loss or damage to Franchisor’s
Affiliates. Master Franchisee agrees that notwithstanding this Section, such loss or damage shall
be deemed to be the loss of Franchisor and may be recovered by Franchisor.



THE NEXT PAGE IS THE SIGNATURE PAGE




 









 








     IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement in multiple
counterparts on the day and year first above written.



	 	 	 	 	 
	SIGNED in the presence of.	 	PLANET BEACH INTERNATIONAL L.L.C.
	 
	 	 	 	 
	 
	 
	 	 	 	 
	WITNESS

	 	By:	 	 
	 

	 	 	 	 
	Printed Name:

	 	Its:	 	 
	 

	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 
	 	 	Location: United States
	 
	 	 	 	 
	WITNESS
	 	 	 	 
	Printed Name:
	 	 	 	 
	 
	SIGNED in the presence of.	 	MASTER FRANCHISEE:
	 
	 
	 	 	 	 
	 
	 
	 	 	 	 
	WITNESS

	 	By:	 	 
	 

	 	 
	 	 
	Printed Name:

	 	Its:	 	 
	 

	 	 
	 	 
	 

	 	Date:	 	 
	 

	 	 
	 	 
	 	 	Location:	 
	 
	 	 	 	 
	WITNESS
	 	 	 	 
	Printed Name:
	 	 	 	 






 









 






EXHIBIT A




TO THE MASTER FRANCHISE AGREEMENT

BY AND BETWEEN

PLANET BEACH INTERNATIONAL, L.L.C.

AND



 





DATED                      2008




DEVELOPMENT AREA



     The Development Area referred to in Section 2 of the captioned agreement shall be the
geographic area described as follows:



Territory




	 	 	 	 	 	 	 
	PLANET BEACH INTERNATIONAL, L.L.C.	 	Master Franchisee	 
	 
	By:
	 	 	By:	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its:
	 	 	Its:	 	 
	 
	 	 	 	 	 	 	 	 







 









 






EXHIBIT B




TO THE MASTER FRANCHISE AGREEMENT



BY AND BETWEEN



PLANET BEACH INTERNATIONAL, L.L.C.



AND



 





DATED                      2008




DEVELOPMENT SCHEDULE



	 	 	 	 	 	 	 	 	 
	 	 	Minimum Number of	 	 
	 	 	Unit Franchises to	 	Cumulative Number of Unit
	 	 	be developed during	 	Franchises in Operation
	Development Period	 	the Development	 	at the end of the
	Conclusion Date	 	Period	 	Development Period
	Effective Date

	 	 	0	 	 	 	0	 
	Year 1

	 	 	1	 	 	 	1	 
	Year 2

	 	 	2	 	 	 	3	 
	Year 3

	 	 	4	 	 	 	7	 
	Year 4 and every
year thereafter

	 	 	4	 	 	11 (4 additional per year)







     One (1) is the minimum number of Unit Franchises to be developed during the development
period in year one, and two (2) is the minimum number of Unit Franchises to be developed during the
development period in year 2. Four (4) units will be required for the third and every year
thereafter until market saturation. The parties shall meet on an annual basis to assess market
saturation after 25 Unit Franchises are developed and to review this Development Schedule, and to
determine whether any amendments to this Schedule are necessary or desirable.



     Each Development Period begins on the anniversary of the Effective Date of this Agreement and
ends on the day prior to the following anniversary of the Effective Date. For purposes of
determining compliance with the Development Schedule, only the Franchised Units actually open or in
active stages of development, including site selection as of the last day of the Development Period
will be counted toward the number of Franchised Units required to be open and continuously
operating for the applicable period. PLANET BEACH INTERNATIONAL, L.L.C. MASTER FRANCHISEE



	 	 	 	 	 	 	 
	PLANET BEACH INTERNATIONAL, L.L.C.	 	MASTER FRANCHISEE	 
	 
	By:
	 	 	By:	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its:
	 	 	Its:	 	 
	 
	 	 	 	 	 	 	 	 








 









 






EXHIBIT C




TO THE MASTER FRANCHISE AGREEMENT

BY AND BETWEEN



PLANET BEACH INTERNATIONAL, L.L.C.



AND



 





DATED                      2008

OWNERSHIP INTERESTS




     Master Franchisee represents and warrants that it is duly organized and validly existing in
good standing under the laws of the jurisdiction of its incorporation or organization, is qualified
to do business in all jurisdictions in which its business activities or the nature of properties
owned by Master Franchisee requires such qualification, and has the corporate or other authority to
execute, deliver and carry out all of the terms of this Agreement.



     Master Franchisee further represents and warrants that all Owners and their interests in
Master Franchisee are completely and accurately listed on this Exhibit C and that Master
Franchisee will execute such revised Exhibits C as may be necessary during the term of this
Agreement to reflect any changes in the information contained in the original Exhibit C
such that this Exhibit C at all times accurate reflects the ownership of Master Franchisee.



     1. Ownership Structure. Master Franchisee is a corporation, limited liability
company, partnership or other entity, Master Franchisee and its Owners represent and warrant that
the Ownership structure of Master Franchisee is as follows:



	 	 	 	 	 
	Name of Owner, Shareholder
Member or Partner

	 	 
	 	Percentage Of Total

Ownership Interest
	 
	 	 	 	 
	 

	 	 	 	___%
	 
 
	 	 	 	 
	 
	 	 	 	 
	 
 

	 	 	 	___%
	 
	 	 	 	 
	 
 

	 	 	 	___%
	 
	 	 	 	 
	 
 

	 	 	 	___%






Master Franchisee, its Owners, shareholders, members or partners listed above (the “Named Persons”)
are not named and will not be named as “Specially Designated Nationals” or “Blocked Persons” as
designated by the United States Department of the Treasury’s Office of Foreign Asset Control. The
Named Persons are not and will not become controlled by, or act




 









 








directly or indirectly on behalf of, the governmental authorities of any country that is subject to
a United States embargo. No governmental entity, official of an international organization,
political party or official of any political party, or candidate for public office has any direct
or indirect ownership interest in the Named Persons or in the respective revenues or profits.




DATED:                     




	 	 	 	 	 
	 

	 	MASTER FRANCHISEE:	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:  	 	 
	 

	 	 	 	 
 
	 

	 	Its:	 	 
	 
	 

	 	 	 	 
 
	 

	 	 
 OWNER	 
	 

	 	Print Name:	 
	 

	 	 	 	 
 
	 

	 	 
 OWNER	 
	 

	 	Print Name:	 
	 

	 	 	 	 
 
	 

	 	 	 
	 

	 	OWNER	 
	 

	 	Print Name:	 
	 

	 	 	 	 
 
	 

	 	 
 OWNER	 
	 

	 	Print Name:	 
	 

	 	 	 	 
 





 









 






EXHIBIT D




TO THE MASTER FRANCHISE AGREEMENT



BY AND BETWEEN



PLANET BEACH INTERNATIONAL, L.L.C.



AND



 





DATED                      2008




FEE PAYMENTS



1. The Development Fee referred to in Subsection 7.A of this Agreement shall be $80,000US
Franchisor acknowledges receipt of Master Franchisee’s deposit of $30,000US. Accordingly, the
remaining amount of the Development Fee payable on the Execution Date is $50,000US.




2. The Unit Franchise Fee referred to in Subsection 7.B of this Agreement shall be Nine Thousand
Dollars ($9,000US) upon the sale of each individual Unit Franchise within the Development Area and
are due at the earlier of once the funds are cleared or on signing of the Unit Franchise Agreement.
For each “Three-Unit” pack, which refers to the sale of three units to one Unit Franchisee at the
same time, the Unit Franchise Fee referred to in Subsection 7.B of this Agreement shall be Thirteen
Thousand Dollars ($13,000US) in the aggregate. For each “Five-Unit” pack, which refers to the sale
of five units to one Unit Franchisee at the same time, the Unit Franchise Fee referred to in
Subsection 7.B of this Agreement shall be Fifteen Thousand Dollars ($15,000US) in the aggregate.
Finally, for each “Ten-Unit” pack, which refers to the sale of ten units to one Unit Franchisee,
the Unit Franchise Fee referred to in Subsection 7.B of this Agreement shall be Twenty Five
Thousand Dollars ($25,000US) in the aggregate.




3. In the event Area Representative Rights are given, the Unit Franchise Fee referred to Section
7.B of this Agreement shall be Nine Thousand Dollars ($9,000US).




4. The Royalty Fees referred to in Subsection 7.C of this Agreement shall be 1.8% of the Gross
Sales of the Franchises within the Development Area.




	 	 	 	 	 	 	 
	PLANET BEACH INTERNATIONAL, L.L.C.	 	MASTER FRANCHISEE	 
	 
	By:
	 	 	By:	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its:
	 	 	Its:	 	 
	 
	 	 	 	 	 	 	 	 






 









 






EXHIBIT E




TO THE MASTER FRANCHISE AGREEMENT



BY AND BETWEEN



PLANET BEACH INTERNATIONAL, L.L.C.



AND



 





DATED                      2008




TRADEMARKS




     As of the date of this Agreement, Master Franchisee shall be authorized to use the following
Marks in connection with the franchising of the PLANET BEACH® business pursuant to this Agreement:



	 	 	 	 	 
	MARK

	 	COUNTRY
	 	APPLICATION NO.
	 

	 	 
	 	 





 









 






EXHIBIT F




PART A



NON-DISCLOSURE AGREEMENT TO BE USED BY MASTER FRANCHISEE

(DIRECTORS, OFFICERS, AGENTS, PRINCIPAL OR AFFILIATE)



Date:




     I am a director, officer, agent, principal or affiliate of                                          (the
“Master Franchisee”), who is the                      master franchisee of the PLANET BEACH® franchise
system (the “System”).



     I acknowledge that in the course of my exposure to the System, I will have access to certain
Confidential Information (defined below) about the System’s methods of establishing, developing,
operating and maintaining PLANET BEACH® businesses, which is confidential and not available to the
public in general.



     I understand that a great amount of time and money has been spent to develop the Confidential
Information and I acknowledge that competitive business interests of the Master Franchisee and
other franchisees, master franchisees and the franchisor of the System (“Franchisor”) could be
severely and irreparably damaged if the Confidential Information revealed to me were to be
disclosed to any third person, become available to the public in general, or be used by me to
compete with the Master Franchisee or other franchisees, master franchisees or the Franchisor.



In consideration of obtaining access to the Confidential Information, I agree as follows:





	1.	 	“Confidential Information” means information or material relating to the System that is not
generally available, known or used by others, or the utility or value of which is not
generally known or recognized as standard practice, including operations manuals, technical
manuals, financial data, software, training programs, techniques, processes, ideas, concepts,
customer and supplier information.






	2.	 	I will not directly or indirectly disclose to any third party or use for myself any
Confidential Information which I have learned or may learn in the future, except as necessary
to perform my duties in relation to the Master Franchisee. I agree that these restrictions
will apply indefinitely in the future and will only cease with respect to particular
Confidential Information when that Confidential Information becomes publicly available through
no fault of mine.






	3.	 	While I am a director, officer, agent, principal or affiliate of the Master Franchisee, and
for a period of one (1) year from the date I cease to be a director, officer, agent, principal
or affiliate of the Master Franchisee, I will not:






	 	(a)	 	use, advise on the use of, or in any manner knowingly enter
into or be employed in any business which uses any of the Confidential
Information; or




 









 






	 	(b)	 	directly or indirectly hire or solicit for hire any current or
former employee of the Master Franchisee or of any other franchisee, master
franchisee or the Franchisor or encourage any such employee to leave his or her
employment.






	4.	 	My obligations under this Agreement bind me and my heirs and assigns or novatees and are for
the benefit of the System, the Master Franchisee, other franchisees, master franchisees and
the franchisor of the System and their successors and assigns or novatees. My obligations
under this Agreement are in addition to all other obligations I have under the law. Master
Franchisee and Franchisor shall each have the right to enforce the terms of this Agreement.






	5.	 	I acknowledge that the System, Master Franchisee, other franchisees, master franchisees and
the franchisor of the System will suffer irreparable harm if I violate or breach the promises
I have made in this Agreement. I also acknowledge that the restrictions set out in this
Agreement are reasonable in order to protect the legitimate business interests of Master
Franchisee and Franchisor. I agree that my failure to adhere to the restrictions contained in
those clauses will constitute unfair competition to Master Franchisee and Franchisor and I
acknowledge the difficulty of accurately determining the tangible and intangible damages which
Master Franchisee and Franchisor will suffer if I breach any of those restrictions.
Accordingly, I agree to the granting without prior notice (to the extent that applicable
notice requirements may be waived) of temporary and permanent injunctions against any such
breach, and to indemnify Master Franchisee and Franchisor for all costs and expenses
(including all legal fees and other expenses on a full indemnity basis in accordance with
accounts actually rendered) incurred by Master Franchisee and Franchisor in seeking to obtain
such injunctions or maintaining the same, or obtaining any other relief.






	6.	 	If any item or provision contained in this Agreement or any part thereof (in this clause
called the “offending provision”) shall be declared or become unenforceable invalid or illegal
for any reason whatsoever, the other terms and provisions of this Agreement shall remain in
full force and effect as if this Agreement had been executed without the offending provision
appearing herein.






	7.	 	While the restrictions above are considered by both me and Master Franchisee and Franchisor
to be reasonable in all the circumstances it is agreed that if such restrictions shall taken
together be judged to go beyond what is reasonable in all the circumstances for the protection
of Master Franchisee and Franchisor but would be judged reasonable if part or parts of the
wording thereof were deleted the said restrictions shall apply with words deleted.






	8.	 	This Agreement and all rights and obligations of the parties hereunder will be governed by,
and construed and interpreted in accordance with the laws of the State of Louisiana and the
parties submit to the non exclusive jurisdiction of the state or federal courts of
Louisiana.






 











 






	9.	 	All written notices and address for service permitted or required to be delivered by the
provisions of this Agreement shall be deemed so delivered at the time delivered by hand, one
(1) business day after transmission by facsimile, telecopy or other electronic system
(evidenced by a machine generated receipt), five (5) business days after being placed in the
hands of a commercial courier service for express delivery or ten (10) business days after
placement with a government mail service by Registered or Certified Mail (or the equivalent),
Return Receipt Requested, postage prepaid. All such notices shall be addressed to the parties
as follows:





	 	 	 
	If the Franchisor:

	 	Planet Beach International, L.L.C.
	 

	 	5161 Taravella Rd.
	 

	 	Marrero, Louisiana 70072
	 

	 	Attention: Nina Rabito






	 	 	 	 	 
	If to Master Franchisee:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	Attention	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	If to director, officer, agent, principal or
	 	 	 	 
	 	 	 
	affiliate of Master Franchisee:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	Attention	 	 
	 

	 	 	 	 






	10.	 	A change by any party with respect to the address for delivery of all such notices must
be delivered in writing to the other parties within ten (10) business days of any such
change in address. For purposes of this Agreement, the term “business day” shall exclude
Saturdays, Sundays and public holidays.




IN WITNESS WHEREOF, the undersigned has entered into this Agreement as of the date shown above the
undersigned’s signature.




	 	 	 	 	 
	DATED:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 	 	 
	Signature	 	 
	 
	 	 	 	 
	 
	 	 	 
	Print Name	 	 






 









 





PART B




NON-DISCLOSURE AGREEMENT TO BE USED BY MASTER FRANCHISEE

(EMPLOYEES)


Date:




     I am an employee of                                                       
                   
                            (the “Master Franchisee”), who is
the                      master franchisee of the PLANET BEACH® franchise system (the “System”).



     I acknowledge that in the course of my exposure to the System, I will have access to certain
Confidential Information (defined below) about the System’s methods of establishing, developing,
operating and maintaining PLANET BEACH® businesses, which is confidential and not available to the
public in general.



     I understand that a great amount of time and money has been spent to develop the Confidential
Information and I acknowledge that competitive business interests of the Master Franchisee and
other franchisees, master franchisees and the franchisor of the System (“Franchisor”) could be
severely and irreparably damaged if the Confidential Information revealed to me were to be
disclosed to any third person, become available to the public in general, or be used by me to
compete with the Master Franchisee or other franchisees, master franchisees or the Franchisor.


In consideration of obtaining access to the Confidential Information, I agree as follows:





	1.	 	“Confidential Information” means information or material relating to the System that is not
generally available, known or used by others, or the utility or value of which is not
generally known or recognized as standard practice, including operations manuals, technical
manuals, financial data, software, training programs, techniques, processes, ideas, concepts,
customer and supplier information.
	 
	2.	 	I will not directly or indirectly disclose to any third party or use for myself any
Confidential Information which I have learned or may learn in the future, except as necessary
to perform my duties in relation to the Master Franchisee. I agree that these restrictions
will apply indefinitely in the future and will only cease with respect to particular
Confidential Information when that Confidential Information becomes publicly available through
no fault of mine.
	 
	3.	 	While I am an employee of the Master Franchisee, and for a period of six (6) months from the
date I cease to be an employee of the Master Franchisee, I will not:






	 	(a)	 	use, advise on the use of, or in any manner knowingly enter
into or be employed in any business which uses any of the Confidential
Information; or
	 
	 	(b)	 	directly or indirectly hire or solicit for hire any current or
former employee of the Master Franchisee or of any other franchisee, master
franchisee or the




 









 






	 	 	 	franchisor of the System or encourage any such employee to leave his or her
employment.






	4.	 	My obligations under this Agreement bind me and my heirs and assigns and are for the benefit
of the System, the Master Franchisee, other franchisees, master franchisees and the Franchisor
and their successors and assigns. My obligations under this Agreement are in addition to all
other obligations I have under the law. Master Franchisee and Franchisor shall each have the
right to enforce the terms of this Agreement.
	 
	5.	 	I acknowledge that the System, Master Franchisee, other franchisees, master franchisees and
the Franchisor will suffer irreparable harm if I violate or breach the promises I have made in
this Agreement. I also acknowledge that the restrictions set out in this Agreement are
reasonable in order to protect the legitimate business interests of Master Franchisee and
Franchisor. I agree that my failure to adhere to the restrictions contained in those clauses
will constitute unfair competition to Master Franchisee and Franchisor and I acknowledge the
difficulty of accurately determining the tangible and intangible damages which Master
Franchisee and Franchisor will suffer if I breach any of those restrictions. Accordingly, I
agree to the granting without prior notice (to the extent that applicable notice requirements
may be waived) of temporary and permanent injunctions against any such breach, and to
indemnify Master Franchisee and Franchisor for all costs and expenses (including all legal
fees and other expenses on a full indemnity basis in accordance with accounts actually
rendered) incurred by Master Franchisee and Franchisor in seeking to obtain such injunctions
or maintaining the same, or obtaining any other relief.
	 
	6.	 	If any item or provision contained in this Agreement or any part thereof (in this clause
called the “offending provision”) shall be declared or become unenforceable invalid or illegal
for any reason whatsoever, the other terms and provisions of this Agreement shall remain in
full force and effect as if this Agreement had been executed without the offending provision
appearing herein.
	 
	7.	 	While the restrictions above are considered by both me and Master Franchisee and Franchisor
to be reasonable in all the circumstances it is agreed that if such restrictions shall taken
together be judged to go beyond what is reasonable in all the circumstances for the protection
of Master Franchisee and Franchisor but would be judged reasonable if part or parts of the
wording thereof were deleted the said restrictions shall apply with words deleted.
	 
	8.	 	This Agreement and all rights and obligations of the parties hereunder will be governed by,
and construed and interpreted in accordance with the laws of Territory and the parties submit
to the non exclusive jurisdiction of the Territory courts.
	 
	9.	 	All written notices and address for service permitted or required to be delivered by the
provisions of this Agreement shall be deemed so delivered at the time delivered by hand, one
(1) business day after transmission by facsimile, telecopy or other electronic system
(evidenced by a machine generated receipt), five (5) business days after being placed in




 









 






	 	 	the hands of a commercial courier service for express delivery or ten (10) business days
after placement with a government mail service by Registered or Certified Mail (or the
equivalent), Return Receipt Requested, postage prepaid. All such notices shall be addressed
to the parties as follows:





	 	 	 
	If the Franchisor:

	 	Planet Beach International, L.L.C.
	 

	 	5161 Taravella Rd.
	 

	 	Marrero, Louisiana 70072
	 

	 	Attention: Nina Rabito






	 	 	 	 	 
	If to Master Franchisee:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	Attention	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	If to employee of Master Franchisee:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	Attention	 	 
	 

	 	 	 	 






A change by any party with respect to the address for delivery of all such notices must be
delivered in writing to the other parties within ten (10) business days of any such change
in address. For purposes of this Agreement, the term “business day” shall exclude
Saturdays, Sundays and public holidays.


IN WITNESS WHEREOF, the undersigned has entered into this Agreement as of the date shown above the
undersigned’s signature.




	 	 	 	 	 
	DATED:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 	 	 
	Signature	 	 
	 
	 	 	 	 
	 
	 	 	 
	Print Name	 	 






 









 





EXHIBIT G




GUARANTEE AND INDEMNITY

FOR OBLIGATIONS UNDER

THE MASTER FRANCHISE AGREEMENT



     In consideration of Planet Beach International, L.L.C., a corporation organized under the laws
of the State of Louisiana, U.S.A. with its principal place of business at 5161 Taravella Rd.,
Marrero, Louisiana, U.S.A. (the “Franchisor”) entering into a Franchise Agreement dated the [          ] day
of [               ] 200 [ ] (the “Franchise Agreement”) with [   
       ] of [             
  ] (the “Franchisee”) at the request of [      
              ]
(the “Guarantor”), being the [shareholder/director] of the Franchisee, the Guarantor enters into
this guarantee and indemnity (the “Guarantee”) on the following terms:


Scope Of Guarantee





	1.	 	The Guarantor hereby irrevocably and unconditionally (and where there is more than one
Guarantor, jointly and severally):






	 	(i)	 	guarantees to the Franchisor the due and prompt payment by the Franchisee of
all monies which are now or shall at any time be due owing or incurred by the
Franchisee under or in connection with the Franchise Agreement together with all
commission, fees, charges, legal costs and other costs and expenses, including any tax
liability incurred by the Franchisor under or in connection with the Franchise
Agreement; and
	 
	 	(ii)	 	undertakes to perform or to procure the performance and observance by the
Franchisee of any and all obligations contained in any document evidencing, securing,
renewing, extending or pertaining to the Franchise Agreement.






	2.	 	As a separate and primary obligation, the Guarantor irrevocably and unconditionally (and
where there is more than one Guarantor jointly and severally) agrees to indemnify, keep
indemnified and hold harmless the Franchisor from and against all costs (including the costs
of enforcement), expenses, liabilities (including any tax liability), losses, damages, claims,
demands, proceedings or legal costs (on a full indemnity basis) and judgments awarded against
the Franchisor or which the Franchisor incurs or suffers as a result of the breach, error,
fault, negligence, act or omission of the Franchisee under or in connection with the Franchise
Agreement or as a result of the Franchisee not having the legal capacity to enter into any of
the obligations or liabilities under the Franchise Agreement.
	 
	3.	 	If any sum payable by the Guarantor under this Guarantee is not paid when due then, without
prejudice to the Franchisor’s other rights under this Guarantee, that sum shall bear interest
from the due date until payment is made in full, both before and after judgment, at the rate
provided in the Franchise Agreement.




 









 











Liability Of Several Guarantors





	4.	 	Where there is more than one guarantor under this Guarantee:






	 	(i)	 	the term “Guarantor” in this Guarantee refers to each of the Guarantors and
to all of them;
	 
	 	(ii)	 	their obligations as Guarantor are joint and several;
	 
	 	(iii)	 	the Franchisor may enforce this Guarantee against all or any of them;
	 
	 	(iv)	 	any notice or demand may be served on all of them by serving on any one of
them;
	 
	 	(v)	 	this Guarantee remains binding on the other Guarantors, even if:






	 	(a)	 	any Guarantor failed to enter into this Guarantee;
	 
	 	(b)	 	this Guarantee is not binding on any Guarantor; or
	 
	 	(c)	 	the Franchisor shall release any Guarantor from liability
under this Guarantee.





Performance on demand





	5.	 	The Guarantor must fulfil its obligations under this Guarantee as soon as the Franchisor
demands that it does so. There is no limit to the number of times the Franchisor can make a
demand.





Guarantor Not Discharged





	6.	 	This Guarantee is a continuing obligation and shall remain in full force and effect until all
(but not partial) sums payable by and the obligations of the Franchisee referred to in
paragraph 1 above have been irrevocably paid and discharged in full. If the Guarantor is an
individual, this Guarantee remains security against the Guarantor and his curator or legal
guardian and his estate shall remain liable in respect of this Guarantee following the
Guarantor’s death or mental incapacity until the Franchisor releases him in writing.
	 
	7.	 	The obligations of the Guarantor under this Guarantee shall not be terminated, reduced,
discharged or otherwise affected by anything which as a matter of law would otherwise
terminate, reduce, discharge or otherwise affect them, including:






	 	(i)	 	the granting of any indulgence or extension of time by
the Franchisor to the Franchisee, the Guarantor or any other person;
	 
	 	(ii)	 	the Franchisor’s neglect or failure to enforce any
covenants in the Franchise Agreement against the Franchisee or waiver of any
breaches or defaults under the Franchise Agreement;




 









 












	 	(iii)	 	the total or partial release of liability of the
Franchisee or of a Guarantor by the Franchisor;
	 
	 	(iv)	 	the entry into any arrangement, composition or compromise
relating to the Franchise Agreement between the Franchisor and the
Franchisee and/or any other person;
	 
	 	(v)	 	the variation of any provision of the Franchise Agreement
between the Franchisor and the Franchisee;
	 
	 	(vi)	 	the Franchisee’s liability under the Franchise Agreement
being or becoming invalid, illegal or unenforceable, including through any
act, omission or legislation;
	 
	 	(vii)	 	any security held or taken at any time by the Franchisor
being void, voidable, defective or unenforceable;
	 
	 	(viii)	 	the disclaimer of the Franchise Agreement following the Franchisee’s
insolvency;
	 
	 	(ix)	 	any change in the constitution, name or style or death or
bankruptcy, liquidation, insolvency, administration or winding up of the
Franchisee, the Franchisor, the Guarantor or any other person; or
	 
	 	(x)	 	the Franchisee granting any security or other rights to
the Franchisor (or any other person);
	 
	 	(xi)	 	any amendment of the terms on which any security or other
rights are granted to the Franchisor, any step being taken in connection
with any security or other rights (to enforce them, to release them or to do
anything else) or any omission to take any step by the Franchisor in
connection with any security or other rights which could or should have been
taken;
	 
	 	(xii)	 	any act, omission, matter or thing which although could
affect the liability of a surety, would not affect liability of a principal
debtor, or which, but for this provision, might operate to exonerate,
discharge, reduce or extinguish the Guarantor’s liability under this
Guarantee.





Additional security





	8.	 	This Guarantee is in addition to and is not prejudiced by and does not prejudice any other
security, right or remedy held by or available to the Franchisor at any time whether against
the Guarantor, the Franchisee or any other person. If the Franchisor holds any other security
for or right in respect of all or any of the monies hereby guaranteed, the Franchisor need not
resort to that other security or right before enforcing its rights against the Guarantor under
this Guarantee.




 









 











No interference with Franchisor’s rights





	8.1	 	The Guarantor agrees that, until all debts and liabilities due or incurred by the Franchisee
to the Franchisor under the Franchise Agreement have been paid in full (the “Debts”), it will
not:






	 	(i)	 	hold the benefit of any security (including any guarantee or indemnity) in
respect of any liability it might incur under this Guarantee;
	 
	 	(ii)	 	take any step against the Franchisee (or any co-surety) in respect of any
liability the Guarantor might incur under this Guarantee (for example, the Guarantor
will not attempt, whether on the basis of subrogation or otherwise, to claim
reimbursement of any payment, to exercise a right of set-off, indemnity or
contribution in respect of any payment or to enforce any security);
	 
	 	(iii)	 	exercise any right it might have, whether on the basis of subrogation or
otherwise, to share in any security held by the Franchisor in respect of any Debts;
or
	 
	 	(iv)	 	in any insolvency proceedings (or analogous proceedings) affecting the
Franchisee (or any co-surety), submit any proof or other claim or rank as a creditor
in competition with the Franchisor (or with any trustee or agent acting on its
behalf).






	8.2	 	Clause 8.1 applies whatever the amount of the Debts at the relevant time and regardless of
whether the Guarantor has been notified before then of any change in the amount of the Debts.
	 
	8.3	 	Despite the prohibition in clause 8.1 where the Franchisor instructs the Guarantor in writing
to take any of the steps referred to in that clause, the Guarantor must take such steps , in
accordance with the Franchisor’s written instructions. The Franchisor will not be liable for
any costs incurred by the Guarantor in doing so.
	 
	8.4	 	Clause 8.5 applies where:






	 	(a)	 	at any time, the Guarantor holds the benefit of any security or receives
any money or other property or rights:






	 	(i)	 	in breach of clause 8.1; or
	 
	 	(ii)	 	as a result of taking any action under clause 8.3; and






	 	(b)	 	at any time after the Franchisor makes a demand under clause 5, the
Guarantor receives any money or other property or rights from the Franchisee.






	8.5	 	Until the Debts have been paid in full, the Guarantor must hold the relevant property for the
benefit of the Franchisor, to be applied in or towards paying the Guarantor’s liabilities
under this Guarantee. If, at any time, the aggregate amount of the property required to be
held for the benefit of the Franchisor under this clause 8.5 would




 









 






	 	 	otherwise exceed the amount of the Guarantor’s liabilities under this Guarantor at that
time, this clause 8.5 will not apply with regard to the excess amount.





Miscellaneous





	9.	 	All payments to be made by the Guarantor to the Franchisor under this Guarantee shall be made
on the due date and in same day funds and to such account as the Franchisor shall specify and
shall be made (a) without set-off, counterclaim or condition; (b) in the currency such payment
was due as provided in the Franchise Agreement and (c) free and clear of, and without
deduction for or on account of, any present or future taxes, levies, duties, charges, fees or
deductions of any nature unless the Guarantor is required by law or regulation to make any
such deduction or withholding, in which event such payment shall be increased by such amount
as may be necessary to ensure that the Franchisor receives a net amount, which, after such
deduction or withholding, is equal to the full amount which the Franchisor would have received
had such payment not been subject to such deduction or withholding. The Guarantor shall
indemnify the Franchisor against any liability of the Franchisor in respect of such deduction
and withholding and shall promptly supply the Franchisor with copies of applicable tax
receipts.






	10.	 	Any release, settlement, discharge or arrangement between the Guarantor and the Franchisor is
conditional upon no assurance, security or payment by any person to the Franchisor being void,
set aside or ordered to be refunded for any reason whatever including under any enactment,
decree or regulation relating to bankruptcy, liquidation or insolvency. If the aforesaid
condition is not fulfilled, the Franchisor may enforce this Guarantee subsequently as if such
release, settlement, discharge or arrangement had not occurred and any such assurance,
security or payment had not been made or given.





Partial invalidity





	11.	 	If any provision of this Guarantee is illegal, invalid or unenforceable in any respect under
the law of any jurisdiction, this does not affect:
	 
	11.1	 	the legality, validity or enforceability of the other provisions of this Guarantee; or
	 
	11.2	 	the legality, validity or enforceability of the affected provision under the law of any other
jurisdiction.




12. All payments due under this Guarantee shall be made in US Dollars. If any amounts payable under
this Guarantee are paid in any currency other than that in which they are due, they shall be
converted into the due currency at the rate of exchange in Territory quoted by the Bank of
Territory at the close of business on the day in which the Franchisor is in receipt of the cleared
funds. If following conversion, the amount of such payment actually received by the Franchisor
falls short of the amount due, the Guarantor shall fully indemnify hte Franchisor against the
amount of such shortfall. 13. For the purpose of this Guarantee, a certificate or statement signed
by or on behalf of the Franchisor or the Franchisor’s legal representatives relating to any sum of
money claimed by the Franchisor to be due from the Franchisee under the Franchise Agreement, or
relating to the performance of any obligation of the Franchisee under the Franchise






 









 







Agreement, is prima facie evidence of the amount or obligation claimed and the facts stated
therein.



14. This Guarantee is binding and enforceable on the Guarantor and his or her executors and
administrators.



15. This Guarantee is in favour of the Franchisor and its successors, assigns and novatees.




Suspense account



16. The Franchisor may, at any time, credit to a suspense account any money received by it under
this Guarantee pending its application towards paying the liabilities of the Guarantor.




Exercise of powers as directors and/or shareholders of Franchisee



17. The Guarantor agrees and undertakes to exercise his or her powers as director or shareholder of
the Franchisee as the case may be to ensure the Franchisee’s compliance with the terms and
conditions of the Franchise Agreement.



Notice18. Any notice, demand or communication in connection with this Guarantee shall be in writing
and may be delivered by hand, first class pre-paid post or facsimile addressed to the recipient at
its registered office or its address or facsimile number as the case may be stated above (or such
other address or facsimile number as may be notified in writing from time to time). The notice,
demand or communication shall be deemed to have been duly served, if delivered by hand, when left
at the proper address for service, if given or made by first class prepaid post, 48 hours being
posted or in the case of airmail, 14 days after being posted, if given by facsimile, at the time of
transmission, provided that a confirming copy is sent by pre-paid post to the other party within 24
hours after transmission. Where in the case of delivery by hand or transmission by facsimile, such
delivery or transmission occurs either after 4:00pm on a business day or on a day other than a
business day, service shall be deemed to occur at 9:00am on the next following business day (such
times being local time at the address of the recipient). For the purposes of this clause,
business day means a day when banks are open for business in Territory and the State of Louisiana.




Entire Contract



19. This Guarantee contains all the express provisions agreed on by the Parties with regard to the
subject matter of the Guarantee, and supersedes and novates in its entirety any previous
understanding or agreements among the Parties in respect thereof and the Parties waive the right to
rely on any alleged provision not expressly contained in this Guarantee.




Governing Law and Jurisdiction



20. This Guarantee shall be governed by and construed in accordance with the laws of Territory and
each of the parties hereto irrevocably submits to the non-exclusive jurisdiction of the Territory
courts.





 












 





	 	 	 
	EXECUTED as a deed this day of

	 	200[   ]
	 
	 	 
	 

	 	 
	 

	 	 
	in the presence of:
	 	 
	 
	 	 
	Witness signature:
	 	 
	 
	 	 
	 


	 	 
	 

	 	Spouse of Guarantor, who hereby consents to
the granting of this Guarantee by the
Guarantor
	Witnesses:
	 	 
	1.
	 	 
	 
	 	 
	2.
	 	 
	 

	 	 
	 

	 	 





	 	 	 	 
	Signature of Franchisor
	 
	 	 
	SIGNED as a deed on behalf of PLANET BEACH
INTERNATIONAL L.L.C. a company incorporated in
Louisiana, by [full names of persons signing,
being persons who, in accordance with the laws of
that territory, are acting under the authority of
the company:
	 
	 	 
	 

	 	Authorised signatory
	 	 	 
	 
	 	 
	 

	 	Authorised signatory
	 	 	 





 









 






EXHIBIT H

INTERNATIONAL VENDOR PROGRAM




     Franchisor and Master Franchise agree that any rebates from suppliers attributable to
subfranchisees in the Development Area will be shared between Franchisor (or its affiliates) and
Franchisee as set forth on the attached spreadsheet. Franchisor has the right to update the
International Vendor Program from time to time provided that: (1) any rebates for local suppliers
determined by Master Franchisee may be retained in full by Master Franchisee and (2) any rebates
provided by Franchisor’s suppliers attributable to subfranchisees in the Development Area will be
will be split in accordance with the following percentages: 40% to Franchisor (or its affiliates)
and 60% to Master Franchisee.



     All vendors, suppliers and products are subject to approval by Franchisor pursuant to Section
5.E.



PBFC Acknowledgement



Planet Beach Franchising Corporation (“PBFC”) agrees and acknowledges that any rebates attributable
to subfranchisees in the Development Area that it receives from suppliers will be shared with
Franchisee as set forth in this Exhibit H.



PLANET BEACH FRANCHISING CORPORATION




	 	 	 	 	 
	By:
	 	 

	 	 
	 	 	 
	 	 
	Name:	 	 
	 	 	 
	 	 
	Title:
	 	 

	 	 
	 	 	 
	 	 
	Date:
	 	 

	 	 
	 	 	 
	 	 









 









 








EXHIBIT I

AFFILIATE ADDENDUM

TO

FRANCHISE AGREEMENT



This Affiliate Addendum (“Addendum”) is by and between [insert Master Licensee’s entity name], a
[jurisdiction & entity type] (“Subfranchisor”) and [insert affiliate’s entity name], a
[jurisdiction & entity type] (“Franchisee”) and is effective as of the date of the Franchise
Agreement. All terms not defined herein have the meaning ascribed to them in the Franchise
Agreement.




Recitals




     WHEREAS, Franchisor has the exclusive right within the territory of Territory to use and to
license others the right to establish and operate PLANET BEACH® businesses pursuant to a
Master Franchise Agreement between Subfranchisor and Planet Beach International, LLC, a Louisiana
limited liability company (“Licensor”) dated                                          (“Master License”);



     WHEREAS, Subfranchisor and Franchisee have entered into a Franchise Agreement for the
establishment of a PLANET BEACH® business dated                                          (“Franchise
Agreement”).



     WHEREAS, Franchisee is an affiliate of Franchisor.


NOW THEREFORE, in consideration of the foregoing and of the covenants and considerations stated in
this Addendum, the parties agree as follows:





	1.	 	Franchisee acknowledges and agrees that its default under the Franchise Agreement may
constitute a default of Subfranchisor under the terms of the Master License and result in
termination of the Master License.
	 
	2.	 	Franchisee acknowledges and agrees that if the Master License is terminated, Licensor has the
right to (a) terminate the Franchise Agreement or (b) terminate the Franchise Agreement and
require Franchisee to execute Licensor’s then-current form of Franchise Agreement; provided
that Licensor has the right to reduce the term of the Franchise Agreement to the remainder of
the term of the Franchise Agreement.
	 
	3.	 	Licensor is a third party beneficiary of this Addendum.
	 
	4.	 	Except as amended herein, the Franchise Agreement will be construed and enforced in
accordance with its terms.





[Signature Page Follows]







 









 







Each of the undersigned hereby acknowledges having read and understood this Addendum and consents
to be bound by all of its terms.




	 	 	 	 	 	 	 
	 	 	 	 	SUBFRANCHISOR:
	 
	 	 	 	 	 	 
	SIGNED in the presence of.
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	By	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:
	 


	 	 	 	 	 	 
	WITNESS
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	FRANCHISEE:
	 
	 	 	 	 	 	 
	SIGNED in the presence of.	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	By	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:
	 


	 	 	 	 	 	 
	WITNESS