Document:

Exhibit 10.8

 

 

 

FRANCHISE AGREEMENT

 

 

EXHIBIT C-1

 

 

FRANCHISE AGREEMENT

 

TABLE OF CONTENTS

 

	
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  Definitions

  	
   

  	
   

  
	
  1.

  	
   

  	
  Grant Of Franchise

  	
   

  	
   

  
	
  2.

  	
   

  	
  Term Of The Agreement; Performance Obligations

  	
   

  	
   

  
	
  3.

  	
   

  	
  Territory

  	
   

  	
   

  
	
  4.

  	
   

  	
  Application Fee; Initial Franchise
  Fee; Processing Fee

  	
   

  	
   

  
	
  5.

  	
   

  	
  Royalty Fees

  	
   

  	
   

  
	
  6.

  	
   

  	
  Advertising And Marketing

  	
   

  	
   

  
	
  7.

  	
   

  	
  Telephone Numbers And
  Telephone Book Advertising

  	
   

  	
   

  
	
  8.

  	
   

  	
  Other Fees - Terms Of Payment

  	
   

  	
   

  
	
  9.

  	
   

  	
  Our Operating Assistance

  	
   

  	
   

  
	
  10.

  	
   

  	
  New Franchise Agreement

  	
   

  	
   

  
	
  11.

  	
   

  	
  Training And Convention

  	
   

  	
   

  
	
  12.

  	
   

  	
  Confidential Information

  	
   

  	
   

  
	
  13.

  	
   

  	
  Operating Requirements

  	
   

  	
   

  
	
  14.

  	
   

  	
  Service Marks

  	
   

  	
   

  
	
  15.

  	
   

  	
  Records And Financial Reports

  	
   

  	
   

  
	
  16.

  	
   

  	
  Audits And Inspections

  	
   

  	
   

  
	
  17.

  	
   

  	
  Insurance

  	
   

  	
   

  
	
  18.

  	
   

  	
  Your Covenants

  	
   

  	
   

  
	
  19.

  	
   

  	
  Covenants For Your Employees

  	
   

  	
   

  
	
  20.

  	
   

  	
  Termination

  	
   

  	
   

  
	
  21.

  	
   

  	
  Assignment Generally

  	
   

  	
   

  
	
  22.

  	
   

  	
  Assignment To An Entity

  	
   

  	
   

  
	
  23.

  	
   

  	
  Transfer Without Change Of
  Effective Control

  	
   

  	
   

  
	
  24.

  	
   

  	
  Transfer Of Effective Control

  	
   

  	
   

  
	
  25.

  	
   

  	
  Right Of First Refusal

  	
   

  	
   

  
	
  26.

  	
   

  	
  Death Or Disability

  	
   

  	
   

  
	
  27.

  	
   

  	
  Indemnification

  	
   

  	
   

  
	
  28.

  	
   

  	
  Contract Interpretation And
  Enforcement

  	
   

  	
   

  

 

	
   

  	
   

  	
  Schedule A -
  Territory

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule B -
  The Franchisee

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule C -
  Guaranty of Franchisee’s Undertakings

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule D - Special Stipulation (if applicable) - Wal-Mart
  Seasonal

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule E - Special Stipulation (if applicable) - K-Mart Seasonal

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule F - Special Stipulation (if applicable) - Kroger Seasonal

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule G - Special Stipulation (if applicable) - Meijer Seasonal

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule H - Special Stipulation (if applicable) - Rent-A-Center
  Seasonal

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule I - Special Stipulation (if applicable) - Bi-Lo Seasonal

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule J - Special Stipulation (if applicable) – Bruno’s
  Seasonal

  	
   

  	
   

  

 

ii

 

This
Franchise Agreement is entered into by Jackson Hewitt Inc. as Franchisor and                       
as Franchisee.

 

DEFINITIONS.  Words
and phrases used frequently in this Agreement will have the meaning indicated:

 

“Accelerated Check Refund” or  “ACR” means a
method of obtaining a taxpayer’s refund utilizing electronic filing and a
temporary bank deposit account.

 

“ACH” means
Automated Clearinghouse, a method of payment in which you authorize us to debit
monies from your account to ours, or you authorize a third party holding monies
due to you to send the monies directly to our account instead of yours.

 

“Affiliated Companies” or “Affiliate(s)” means any person that,
directly or indirectly, controls, is controlled by, or is under common control
with, the referenced party.

 

“Affinity Location” means a tax preparation location not open to the general public but only
to a select group such as a business, organization, labor union or government
employer.

 

“Agreement” or “Franchise Agreement”
means this document, all its attachments, exhibits, stipulations and schedules
and written modifications under Section 28.10 whenever made.

 

“Assisted Direct Deposit” or “ADD” means a method of obtaining a
taxpayer’s refund utilizing electronic filing and a direct deposit into a
temporary bank account and then into the taxpayer’s own bank account.

 

“Financial Products” means Refund Anticipation Loans, Accelerated Check Refunds, Assisted
Direct Deposits and any other similar or substitute products we offer.

 

“Financial Products Payment File” means the electronic file
transmitted to us from the Financial Products Bank that contains your fees for
tax preparation and Financial Products application fees.

 

“Code” means the
Internal Revenue Service Code of 1986, as amended and all its Treasury
regulations, and any replacement federal tax law and related regulations
enacted during the term of this Agreement.

 

“Collateral Agreements” means any and all agreements related to the Territory (i) you have
with us, such as notes, releases, Software License Agreement, Security
Agreement, with National Accounts for operation of a ranchise Business stipulations,
(ii) any agreements with any third party for any program we or our
affiliates sponsor or arrange, (iii) any agreement with an affiliate, and (iv) any
agreement you have with one of our current or former franchisees.

 

“Competing Tax Business” means any business that offers tax return preparation, electronic filing,
Financial Products or other services that are the same or similar to those
offered by Jackson Hewitt Tax Service businesses.

 

“Effective Date” means
the date designated as such on the Signature Page of this Agreement.

 

“EFIN” means the
Electronic Filing Identification Number required by the IRS for each electronic
filer for each separate location where tax return preparation services are
offered.

 

“Franchisee” means
the individual or entity inserted in the space above and on Schedule B.

 

“Franchised Business” means your Jackson Hewitt Tax Service business operated under this
Agreement.

 

“Gross Volume of Business” means the total revenue and other consideration from the Franchised
Business, including revenue from returns prepared for individuals and entities,
past year returns, electronic transmission only returns, electronic filing, Financial
Products, Tax Course, and other products or services offered through the
Franchised Business, excluding only discounts you allow and sales taxes you
must collect and pay.  Items such as
credit card fees and other service fees shall not be considered as a discount. “Bad
debt” shall be considered as a discount.

 

“Gross Volume Report” or “GVR” means the periodic report you send us that
describes your Gross Volume of Business.

 

“Guarantor” means
any person who signs the Guaranty of Franchisee’s
Undertakings found after this Agreement.

 

1

 

“IRS” means the
Internal Revenue Service and its successors.

 

“Jackson Hewitt Tax Service business” means a tax return preparation business
operating under the Marks and using the Operating System that we, or any of our
Affiliates, own and operate or license any other person or entity to own and
operate.

 

“Kiosk” means a
tax return preparation office, including an Affinity Location, that does not
have a distinct postal address and which is imbedded within another business,
retail store or retail facility.  A Kiosk
may be located at an Affinity or National Account Location.

 

“Location(s)” means
the places where we authorize you to operate tax return preparation offices or
Processing Centers or such other locations as specified from time to time in
the Manual.

 

“Manual” means our confidential Jackson Hewitt Operating
Manual to which we provide you with access during the term of this Agreement,
and that contains the required policies and procedures for the operation of the
Franchised Business, and includes all specifications contained in the “Information
Library” on our intranet site, or such substitute database as we may use, and
all supplemental bulletins, memoranda, revisions and replacements.

 

“Marks” means the
service marks “Jackson Hewitt®” and “Jackson Hewitt Tax Service®”
and any other trademarks, service marks, trade dress and logos designated in
the Manual for use in connection with Jackson Hewitt Tax Service businesses.

 

“Marks Standards”
means standards specified in the Manual for interior and exterior Mark-bearing
signs, advertising, and other items and the use of these items in the
Franchised Business.

 

“National Account”
means those entities specified in the Manual with whom we make arrangements to
operate or permit our Franchisees to operate the Franchised Business in a place
open to the general public.

 

“Network” means
the nationwide network of company-owned and franchised locations that operate
Jackson Hewitt Tax Services business.

 

“Off Season”
means the period beginning on the first day after the last date that individual
federal income tax returns are due without extension and ending on January 7
of the following year.

 

“Office(s)” means
the locations where we authorize you to prepare tax returns for customers and
includes both Standard Offices and Kiosks.

 

“Operating Standards” means the standards specified in the Manual for customer service, hours,
required products and services, employee training, processing and tax
preparation services.

 

“Operating System”
means the plan and system as updated and revised from time to time for
preparing, checking and electronically filing income tax returns using our
software, accounting methods, merchandising, equipment selection, advertising,
promotional techniques, personnel training and quality standards that feature
the Marks and includes all our proprietary materials, our Operating Standards,
Marks Standards, and Technology Standards.

 

“Processing Center” means any site at which you error check, process and transmit tax
returns.

 

“Refund Anticipation Loan” or “RAL” means a loan secured by a
taxpayer’s anticipated tax refund.

 

“Standard Office” means
a tax return preparation office located at a distinct postal address such as a
storefront or office that is not imbedded within another business or facility.

 

“Tax Course”
means the tax preparation courses we may require each Franchisee to conduct
each year that complies with all our specifications and with all applicable
laws and regulations.

 

“Tax Season” means
the period beginning on January 8 and ending on the last date that
personal federal income tax returns are due under the Code without extension or
the next business day if this day falls on a weekend or federal holiday.

 

“Technology Standards” means the standards specified in the Manual for technology to be used in
the Franchised Business, including the telecopier, telephone communications
services, the bulletin board system, the Jackson Hewitt Intranet, computer
hardware and software, records maintenance, marketing data, accounting, and
budgeting programs.

 

2

 

“Territory” means
the area listed on Schedule A in which you may operate the Franchised
Business, and which is categorized as a “Standard Territory,”
a “Mid-Market Territory” or a “Small Market Territory.”  In
absence of any designation by the parties in Schedule A, the Territory
shall be deemed a Standard Territory.

 

“We”, “us” or “our” means Jackson Hewitt Inc., a Virginia corporation,
the Franchisor, our successors and assigns.

 

“You”, “your” or “yourself” means the Franchisee named above.

 

1.  GRANT OF FRANCHISE

 

1.1.  Grant.  We grant you the right, and you assume the obligation, to own and operate
a Jackson Hewitt Tax Service business solely at Offices located in the
Territory, subject to and in accordance with the terms and conditions of this
Agreement.  Neither we nor any of our
Affiliates will operate or license others to operate a Jackson Hewitt Tax
Service business located in the Territory, except as provided in Sections 3.2
and 3.7-3.9 below.

 

1.2.  Number of Locations.  You must open at least one office,
either a Kiosk or a Standard Office, in the Territory by the start of the first
Tax Season after the Effective Date of this Agreement.  During the second Tax Season, and all Tax
Seasons and Off Seasons thereafter, you must maintain at least one Standard
Office.  You must maintain at least a
minimum level of service, as specified in the Operating Standards, from one
Standard Office during each Off Season after the second Tax Season.  You must maintain such Processing Center(s)
as specified in the Operating Standards. 
Once you open a Kiosk, you may not discontinue operating the Kiosk for
any subsequent Tax Season without our consent, which will not be unreasonably
withheld or delayed if the closure criteria in the Manual are met, unless you
are unable to rent space in the National Account or Affinity Location where the
Kiosk previously operated.

 

2.  TERM OF THE AGREEMENT;
PERFORMANCE OBLIGATIONS

 

2.1.        Term.  The term of this Agreement is ten (10) years
beginning on the Effective Date.

 

2.2.        Subsequent Terms.

 

2.2.1                     At the end of the term of this
Agreement, we will offer you the opportunity to sign a new franchise agreement
for our then-current subsequent term if we still offer franchises for the
Franchised Business and you meet the other criteria contained in paragraph 10
of this Agreement, and follow the renewal procedures therein.

 

2.2.2               If the law in your state requires us to
give you notice of a decision not to permit you to sign a new franchise
agreement for our then-current term, or you have not signed a new franchise
agreement before the expiration date but you continue to operate the Franchised
Business thereafter, this Agreement shall remain in effect beyond its term, but
only on a month to month basis until we either give you the required notice, you
execute our then-current franchise agreement, or this Agreement is terminated.

 

2.3.  Performance Standards.

 

2.3.1                   Initial Performance.  You must
prepare 500 or more federal income tax returns in the Territory in your second
Tax Season.  If you do not prepare at
least 500 federal income tax returns in your second Tax Season, you must (i) submit
to us a business improvement plan by June 1 following your second Tax
Season that we approve, which approval will not be unreasonably withheld or
delayed, (ii) implement the business improvement plan, and (iii) prepare
600 or more federal income tax returns in the Territory in your third Tax
Season and fourth Tax Season.  We may
require you to open a second Standard Office or Kiosk as part of the business
improvement plan.  If you do not satisfy
all of these conditions, we may, in our discretion, terminate this Agreement
for cause by written notice to you given after May 1 following your third
Tax Season and fourth Tax Season.

 

2.3.2                   Continuing Performance. You must prepare 1,000 or more federal income
tax returns in the Territory in your fifth Tax Season and each Tax Season after
that.  If you prepare more than 600
federal income tax returns and fewer than 1,000 federal income tax returns in
the fifth or any

 

3

 

subsequent Tax Season, you must (i) submit to us a
business improvement plan by June 1 following such Tax Season that we
approve, which approval will not be unreasonably withheld or delayed, (ii) implement
the business improvement plan, and (iii) prepare 1,000 or more federal
income tax returns in the Territory in your next Tax Season.  If you do not satisfy all of these
conditions, we may, in our discretion, terminate this Agreement for cause by
written notice to you given between May 1 and September 1 following
that Tax Season.

 

2.3.3                   Minimum Performance.  If you
prepare fewer than 600 federal income tax returns in the Territory in any Tax
Season beginning with your fifth Tax Season, we may, in our discretion, terminate
this Agreement for cause by written notice to you given between May 1 and September 1
following that Tax Season.

 

2.3.4                   For Mid-Market Territories, all tax return
preparation numerical requirements set forth in paragraph 2.3 are reduced by
33%, and for Small Market Territories those requirements are reduced by 60%.

 

3.  TERRITORY

 

3.1.  Your Territory.  The area within which you may operate the Franchised Business is
described on Schedule A to this Agreement. 
You may not operate the Franchised Business at any location outside the
Territory.  You expressly acknowledge and
agree that we can operate or grant a license to others to operate a Jackson
Hewitt Tax Service business at any location outside the Territory.

 

3.2.  Competition.  We may commercialize and distribute or license or sublicense others to
commercialize and distribute our proprietary software in the Territory through
other channels of distribution using the name “Jackson Hewitt” and the Marks or
using other trademarks and service marks to identify the software.

 

3.3.  Business Outside the
Territory.  You may not locate your Franchised Business
office or Processing Center at any location outside the Territory.  You may perform the authorized services in
your Territory for customers who reside outside the Territory, but you may not
travel outside your Territory to perform tax preparation or other services
authorized by this Agreement.

 

3.4.  Advertising Outside Your
Territory.  You may advertise your Franchised Business in any
media of general distribution where such advertising cannot be limited to the
Territory, but if you advertise or market your Franchised Business outside your
Territory, all such advertising and marketing and its proposed distribution
must be approved in advance by us in writing, and must contain the addresses
and telephone numbers of all franchised offices that we determine are in your
media market.

 

3.5.  Additional Purchases.  We are
under no obligation to permit you to purchase other Jackson Hewitt franchises
or additional Territories.  We can
decline your application for any additional Territories for any reason or no
reason.  We may require you to execute a
general release of any and all claims against us in consideration for our grant
of any additional Territory.

 

3.6.  No Other Rights.  There are no other rights between
you and us or between you and our Affiliated Companies concerning the
Territory.

 

3.7.  Affinity Locations.  We may undertake a
supplemental marketing program to encourage non-retail enterprises such as
businesses, non-profit organizations, labor unions and educational institutions
(“Group Customers”) to authorize the Franchised Business to be established on a
temporary basis (an “Affinity Location”) in space controlled by the Group
Customer but not open to the general public. 
An Affinity Location may only serve customers affiliated with the Group
Customer who have access to the Affinity Location by virtue of their
affiliation.

 

3.8.  National Accounts.  We may
enter an arrangement with other entities to authorize the Jackson Hewitt Tax
Service business to be established on a temporary basis in space controlled by
the National Account entity that is open to the general public.

 

3.9.  Operating at a National
Account or Affinity Location.

 

3.9.1                     You
are free to pursue Affinity and National Account Locations in your Territory as
a Kiosk location.  You must apply for our
consent to create an Affinity Location in your Territory, which consent will
not be unreasonably withheld or

 

4

 

delayed
so long as your application meets the criteria, if any, in the Operating
Standards for Affinity Locations.

 

3.9.2                     If we secure
the opportunity to operate an Affinity or National Account Location in your
Territory, and you are in full compliance with this Agreement and all
Collateral Agreements, we will advise you of this opportunity. Unless otherwise
specified, you have 10 days after you receive our written notice of the
opportunity to give us a written reply that you will operate the Franchised
Business in the Affinity or National Account Location.  If we do not receive the written
reply in time, or you fail to carry out your commitment to operate, we (or an
entity in which we or an Affiliate of ours owns at least a ten percent (10%)
voting equity interest) may operate a Jackson Hewitt Tax Service business at
the Affinity or National Account Location. 
We (or such affiliate) can also operate a Jackson Hewitt Tax Service
business in any Affinity or National Account Location in your Territory if you
are in default of this Agreement or any Collateral Agreement or if an Affinity
or National Account has asked us to replace you because you are not meeting
their customer service standards.

 

3.9.3                     If we (or our affiliate) actually operate the
Franchised Business in any Affinity or National Account Location in your
Territory, we are not obligated to offer you the opportunity to operate in that
Affinity or National Account Location in your Territory during any subsequent
Tax Seasons.  We will maintain the tax
return information and databases, customer files and the right to continue to
service customers generated as a result of our operation of the Franchised
Business in an Affinity or National Account Location in your Territory for all subsequent
years after we (or our affiliate) operate any such location.

 

3.10.  National Account and Affinity Location Fees.

 

3.10.1              If
we secure the opportunity to operate an Affinity Location in your Territory,
offer such opportunity to you, and you reply to
the effect that you will undertake to open the Franchised Business in an
Affinity Location, you must meet the customer service obligations and timetable
imposed by the Group Customer.  In such
case, you will separately identify returns prepared at the Affinity Location
and will pay an “Affinity Service Fee” equal to three percent (3%) of the Gross
Volume of Business generated by the Affinity Location, at the same time as your
Royalties are due under Section 5.2. 
The Gross Volume of Business from the Affinity Location will be added to
the Gross Volume of Business from all of your other locations for the purpose
of computing your royalty and advertising and marketing Fees.

 

3.10.2              If you communicate your commitment to us that you
will operate in a National Account Location and you subsequently do not operate
the Franchised Business in the Location, and we are not able to open a Jackson
Hewitt Tax Service business from that National Account Location, you must pay
us the National Account rental or license fees for that Location for the entire
Tax Season.  We may collect these fees
from your Financial Products Payment File.

 

4. APPLICATION FEE;
INITIAL FRANCHISE FEE; PROCESSING FEE

 

4.1.  Application Fee.  You must pay a Five Hundred Dollar ($500.00) application fee per
Territory when you submit your application. 
You must submit an application for each Territory.  The application fee is not refundable.

 

4.2.  Initial Franchise Fee.  The initial franchise fee is Twenty-five Thousand Dollars
($25,000.00).  If, however, the Territory
is a Mid-Market Territory, the initial franchise fee is Sixteen Thousand Five
Hundred Dollars ($16,500.00) and if the Territory is a Small Market Territory,
then the initial franchise fee is Ten Thousand Dollars ($10,000).

 

4.3.  Processing Fee.  If we disclose to you the identity of a party that owns or operates a
Competing Tax Business in your Territory and you acquire the Competing Tax
Business directly or indirectly through a business that you own, you must pay
us, immediately after the closing, a Processing Fee of Seven Thousand Five
Hundred Dollars ($7,500.00).  This fee is
not refundable.

 

5

 

We
may require you to sign a confidentiality agreement to obtain the name of the
Competing Tax Business or its owner.

 

4.4.  Renewal of the Franchised Business.

 

(a) So long as there
is no Transfer of Effective Control as described in paragraph 24 of this
Agreement, you will pay no renewal, application or initial franchise fee at the
expiration of the term of the Franchise Agreement and each subsequent term, if
you satisfy the “Exemption Condition” defined below and you decide to continue
the Franchised Business as described in paragraph 2.2.  If you do not satisfy the Exemption
Condition, you must pay a “Renewal Fee” of $5,000.00 per Territory each time
the term and each subsequent term expires to continue the Franchised
Business.  This Renewal Fee amount shall
be fixed and supersedes any different renewal or similar fee we charge under
the franchise agreement form in effect at the time of any renewal.

 

(b) The Exemption
Condition will be satisfied if the Franchised Business prepares an annual
average of at least 1,200 annual federal income tax returns in the Territory
during the two Tax Seasons preceding the expiration of the applicable term.

 

(c) We are under no
obligation to offer renewal of the Franchised Business in the Territory to you
at the end of the term or any subsequent term if the Franchised Business
prepares annual average of less than 1,000 annual federal income tax returns in
the Territory (670 for a Mid-Market Territory and 400 for a Small Market)
during the two Tax Seasons preceding the expiration of the applicable term.

 

5.  ROYALTY
FEES

 

5.1.  Royalties. During the term of this Agreement, you must pay
us royalty fees equal to fifteen percent (15%) of your Gross Volume of
Business.

 

5.2.  Royalty Payment Schedule.  The
royalty fees are due and payable according to the following schedule or on
such other schedule specified in the Manual:

 

(a) Semi-Monthly Payments.  From January 1 through April 15,
you must pay royalties on the 5th and the 20th of the month for the
Gross Volume of Business generated during the preceding half month.  For the period from April 16 through April 30,
you must pay royalties on the following May 5th.

 

(b) Monthly Payments. 
From May 1 through December 31, your royalty payment is due on
the 5th of each month for the Gross Volume of Business generated during the
prior month.

 

6.  ADVERTISING AND MARKETING

 

6.1.  Advertising and Marketing Fee.  During the term of this Agreement, you must
pay us advertising and marketing fees equal to six percent (6%) of your Gross
Volume of Business to support national, regional and local advertising.  The advertising and marketing fees are due
and payable on the same schedule as the royalty fees.  We may change these fees on thirty (30) days’
notice to account for any changes in expenses in connection with our
advertising and marketing program. 
Notwithstanding the language contained in the prior sentence, we agree
to limit any increases in these fees to two percent (2%) over the term of this
Agreement and to one percent (1%) in any twelve month period.

 

6.2.  Advertising and Marketing
Program.

 

6.2.1                     We and our Affiliated Companies may use the
advertising and marketing fees to prepare, produce, conduct and place
advertising and promotional programs in any media they or we select, including
any Internet-like system or protocol, and any joint marketing with any
Affiliated Companies in connection with Jackson Hewitt Tax Service businesses
or any other businesses in which we and our Affiliated Companies may be
involved from time to time.  We have the
sole discretion to determine the nature and type of media placement, the
allocation of advertising in each market, and the content of any advertising
copy or other materials and programs.

 

6.2.2                     We and our Affiliated Companies may also use
these funds to conduct market research, public relations, and for the costs of
accounting for the advertising funds. 
All costs of the development, production and distribution of these
programs, and the conduct of market research, public relations and customer
surveys, and the proportionate share of overhead and compensation of the
employees who

 

6

 

devote time and render services in the development of
advertising or the administration of the monies, and any direct or indirect
costs will be paid from the advertising and marketing fees.  We and our Affiliated Companies may hire and
pay from the advertising and marketing fees any advertising agency, public
relations firm and similar source to formulate, develop, produce, conduct and
place the advertising, promotional programs and materials.  We are not obligated to segregate, separately
account for, or conduct an audit of the advertising and marketing fees.

 

6.2.3                     We may establish and disband advertising councils
or advertising cooperatives if in our sole judgment it will benefit the
Network. You must abide by the rules and guidelines that we may establish
from time to time in the Manual regarding such councils or cooperatives.

 

6.2.4                     We spend the advertising monies in the manner,
timing and placement that in our sole judgment promotes general public
awareness of the Marks and benefits the Jackson Hewitt Network, including
advertising targeted to the sale of franchises. 
You do not become a third party beneficiary to any contract we enter
into with respect to advertising by paying the advertising and marketing fees.

 

6.2.5                     We may spend in any fiscal year an amount greater
or less than the aggregate contributions for that fiscal year.  We may carry over any deficits or surpluses
in advertising and marketing fees from year to year and we are under no
obligation to refund any unspent advertising and marketing fees to you when
this Agreement is terminated or expires. 
We do not ensure that you will benefit directly or on a pro rata basis from any advertising or marketing, or that
any advertising will be conducted in your Territory.  We do not ensure that any expenditures made
by us in any geographic area will be proportionate or equivalent to the
contribution made from the Franchisees operating in that geographic area.

 

6.2.6                     You and we agree that our rights and obligations
with respect to the advertising and marketing fees and all related matters are
governed solely by this Agreement, and that this Agreement and the advertising
and marketing fees are not in the nature of a “trust”, “fiduciary relationship”
or similar special relationship, and is only an ordinary commercial
relationship between independent businesspersons for their independent economic
benefit.

 

6.2.7                     All advertising, promotional, and
marketing activities conducted by you in your local market area shall be subject
to our prior approval. You must send us
specimens of all local advertising, promotional and marketing plans and
samples of all local advertising materials not prepared or previously approved
by us or our designated agents by certified
mail, return receipt requested, facsimile, overnight delivery service or any
other means of confirmed delivery for our prior review and approval
(except with respect to prices to be charged). 
If you no not receive written disapproval thereof within fifteen (15)
business days after the date of receipt by us, such plans and materials shall
be deemed approved.  If any plans or
materials previously approved by us are later disapproved, you shall
discontinue their use promptly upon notice from us.

 

6.3. Advertising Required by New Franchisees.

 

6.3.1                     You
must spend $5,000 to advertise and market your business in the Territory during
your first Tax Season, in addition to the advertising and marketing fees
described above, unless you purchase an existing Franchised Business that has
operated one full Tax Season during the immediately prior Tax Season. You can
place this advertising and marketing or you can have us place it for you.  If you place the advertising required by this
paragraph, you must send us all proposed advertising for our prior approval and
provide us with whatever proof we require that you have met your obligations
under this paragraph.  This requirement
applies whenever you sign a franchise agreement for a new Territory.

 

6.3.2                     You must submit your proposed advertising plan in
writing to us no later

 

7

 

than November 1. 
If we do not receive your advertising and marketing plan by that date,
we will place this advertising for you, and you must pay the $5,000 cost when
billed.

 

6.3.3                     If, with our prior written approval, you change
your franchised Territory from the Territory described on Schedule A, to a
Territory that does not contain existing Franchised Businesses (as determined
by us), you must spend $5,000 as described above in the new Territory, even if
you previously conducted this advertising in your original Territory.

 

6.4.  Advertising Approval.  If you intend to use any advertising or promotional program or material
that contains our Marks, you must obtain our prior written consent before using
it.  You must send us specimens of any
such advertising or promotional items, by certified mail, return receipt
requested, facsimile, overnight delivery service or any other means of
confirmed delivery for our prior review and approval.  We have fifteen (15) days to review your
materials and notify you of our decision. 
We have the absolute right to use any advertising or promotional item
you develop in any way we choose, for any purpose we determine, without payment
to you of any kind.

 

6.5.  Available Advertising
Material.  We may provide to you newspaper mats, television
and radio commercial tapes, merchandising materials and other items.

 

6.6.  Promotional Payments.  If we
receive any promotional allowance or rebate from any provider of goods or
services, you hereby assign any interest in any such payment, rebate or
promotional allowance to us.

 

6.7.  Internet.  You must abide by our Technology Standards in connection with all use of
and advertising on the Internet.  You may
not establish an Internet Web Site, a Home Page for the Franchised
Business or conduct any Internet advertising without our prior written approval
of its appearance and its content.  You
may not advertise or promote your Franchised Business by unsolicited e-mail
advertising without our prior written approval, which we grant or withhold in
our sole and absolute discretion. You may not use our Marks in any domain name
without our prior written approval.

 

7. TELEPHONE
NUMBERS AND TELEPHONE BOOK ADVERTISING

 

7.1                               Telephone numbers and listings. You must obtain separate telephone numbers for all franchised locations
and maintain both white and yellow page listings for such numbers.  Your procurement and use of your telephone
numbers, listings, and any display advertisements must comply with the
Manual.  You may not transfer, assign, or
disconnect any telephone numbers used in connection with the Franchised
Business without our prior written consent.

 

7.2                               Transfer of Telephone Number. You hereby appoint us your attorney-in-fact to transfer any telephone
numbers used or advertised in connection with the Franchised Business on the
records of the issuing and listing telephone companies.

 

8.  OTHER FEES - TERMS OF PAYMENT

 

8.1.  Electronic Filing Fee.  You must pay us a fee of Two Dollars ($2.00) for every federal tax return
you file electronically.  This fee is due
and payable on the same schedule as the royalty fee.  We may increase this fee upon thirty (30)
days’ notice to pass through any fee or fee change charged by the IRS or any
state taxing authority.

 

8.2.  Transfer Fee.  If a transfer results in the transfer of a 49% or more interest or of
control of the ownership of the Franchised Business, you must pay us a transfer
fee equal to $5,000 per Territory transferred, regardless whether it is a
Standard, Mid-Market or Small Market Territory.

 

8.3.  Fee for New Agreement.  To obtain a new franchise agreement upon the expiration of this
Agreement, you must pay us the Renewal Fee per Territory specified in paragraph
4.4, if any, regardless whether it is a Standard, Mid-Market or Small Market
Territory.

 

8.4.  Interest on Late
Payments.  You must pay interest at the simple daily
equivalent rate of eighteen percent (18%) per year or the highest legal rate of
interest permitted by law, whichever is less, on any amounts owed to us that
are more than five (5) days overdue.

 

8.5.  Amendment Fee.  If you
amend this Agreement or any additional franchise agreement, you must pay the
applicable amendment fee, depending upon the number of territories being

 

8

 

amended:
one Territory: $250, two to five Territories: $500, or six or more Territories:
$650.

 

8.6.  Direct Deposit User or
License Fees.  If the IRS or any state tax authority imposes any
fees in connection with electronic filing, you must pay all such fees in a
timely manner.  You must provide us with
any proof we require that you are current with these fees.

 

8.7.  Late Gross Volume Report
Fee.  You must pay us a fee of $50 per office per Gross
Volume Report filing period for each Gross Volume Report filed after its due
date.

 

8.8.  Application of Payments.

 

8.8.1                     We have the right to apply payments we receive
from you, even to amounts you owe to another franchisee or on behalf of another
franchisee, in any way we choose.  We may
also deduct any monies you owe us from any amounts we agree to pay you, or from
any monies owed to you that come to us first, such as performance incentives (including
rebates), your Financial Products Payment File and National Account fees.

 

8.8.2                     We may also require you to authorize us to debit
your bank account via ACH for any amounts owed to any Affiliated Companies or
us.

 

8.9.  Method of Payment.  We may
require you to pay fees under this Agreement or any Collateral Agreement to us
via ACH if you default in making any payment to us twice in any Tax Season or
once if you receive written notice of default and you fail to cure within any
time permitted under paragraph 20.2.  You
must then complete all required forms and pay any fees we designate by ACH.

 

8.10.  Fee Disputes.  If you
dispute any fee or charge we assess, you may not withhold the fee, instead you
must first pay the disputed fee and then resolve the dispute with us.

 

8.11.  Charges for Technical
Assistance.  You must pay us an hourly technical assistance
fee as set in our Manual, presently $50 per hour plus reasonable expenses, for
any technical assistance made necessary by your failure to comply with our
Operating System or with the Manual, including but not limited to, any
unapproved modifications you made or authorized to your processing system,
operating unapproved software, operating our software on unapproved hardware,
failing to backup or maintain a current database, or for any technical
assistance that results from a request to extract information.  We reserve the right to refuse to provide any
such technical assistance for any reason whatsoever.

 

8.12.  Customer Refunds. 
If we determine that your
customers should receive refunds of tax preparation fees and/or Financial
Products fees, we will refund these fees and bill you for these amounts.

 

8.13.  Accounting Fees.  We charge
$25 per item for every returned check. 
We will provide you with up to 5 copies of invoices, checks or statements
for no charge.  For copies 6 through 10,
we charge $5; for copies 11 through 15, $10; for copies 15 through 20,
$20.  For each additional multiple of 5
copies, add an additional $5.00.

 

9.  OUR OPERATING ASSISTANCE

 

9.1.  Federal Tax &
Processing Software.  During the term of this Agreement, we provide
you with access to our most current individual federal tax return preparation,
processing and receipt journal software for the Franchised Business.  You may not use or have installed on
computers used in the Franchised Business any other federal or state personal
income tax return preparation or electronic filing software without our prior
written permission.

 

9.2.  State Tax Software.  During
the term of this Agreement, we provide you with any state tax preparation
software and electronic filing programs that we in our sole discretion elect to
develop and offer.

 

9.3.  Training.  We provide
Franchisee Initial Training, Update Training, Regional Training and Workshops
and such other programs described in this Agreement or similar or substitute
training programs.

 

9.4.  Manual.  We
provide confidential access to our Manual via any method we select.  The Manual may be supplemented by periodic
downloading, operating bulletins, e-mail, and similar memoranda that together
with the Manual contain the mandatory and suggested procedures, specifications
and rules that we prescribe for the Franchised Business.

 

9

 

9.5.  Advertising Assistance.  We will assist you in the development of
local sales promotion and advertising programs. 
This assistance will include advice about the recommended form and
content of your advertising programs.  We
cannot guarantee and we do not warrant any specific level of success from any
particular advertising advice or program.

 

9.6.  Tax Advice and Support.  We provide tax preparation and processing
advice for individual state and federal income tax returns during our normal
business hours or as we otherwise specify.  
We are free to limit the support we provide if you operate our software
on any unapproved hardware, you fail to purchase any additional software we
require, or as set forth in the Manual.

 

9.7.  Location Selection and Approval.  Although the primary responsibility for
selecting locations for the Franchised Business falls on you, we must review
and approve the location of your selections before you sign any leases.  You may not open locations or relocate your
Franchised Businesses to new addresses within the Territory without our prior
written consent.  Our consent will not be
unreasonably withheld or delayed, but will be based on our criteria and
guidelines.  Our approval of the location of your selections is not a guaranty or
warranty of any kind, either express or implied, that your Franchised Business
will be successful at any given site, that the locations are suitable for the
Franchised Business, or that your proposed locations comply with the Americans
With Disabilities Act, local building codes, fire codes, or any other law or
ordinance applicable to the proposed locations or to the Franchised
Business.  Further, in the
event that we allow you to operate at a location outside your Territory as a
result of incorrect address data furnished to us by or on behalf of you or your
landlord, upon discovery of any such error, you must vacate the location in
question and turn over to us or our designee the customer files and related
computer databases as well as all future rights to solicit such customers
without receiving compensation therefore. 
If another Franchisee erroneously locates in your Territory, upon
discovery of such error, you likewise agree to accept the abandonment of such
location, the turnover to you of the customer files, related computer
databases, and future right to solicit such customers in full satisfaction of
all claims related to the location of such office.  We have a reasonable time to correct such
error.

 

9.8.  Advice and Guidance.  We provide reasonable
operating assistance and guidance as we determine to be necessary for the
operation of the Franchised Business, including new developments and
improvements in our Operating System and business methods.  We do not guarantee or warrant any specific
level of success from any particular advice or assistance.  We reserve the right to limit advice and
guidance if you operate our software on unapproved hardware or you fail to
purchase and use any required software.

 

9.9.  Group Purchasing.  We provide the opportunity
for you to participate, on the same basis as other franchisees, in group
purchasing programs for products, supplies, insurance, and equipment, which we
or our affiliates may from time to time develop, on terms that we alone
determine.  We and our affiliates have the
right to set up exclusive dealing arrangements with selected vendors and
receive payments from those vendors for any preferred vendor designation.

 

9.10.  Supply Sources.  We may advise you about possible sources for
equipment, inventory and other products and services for the Franchised Business.

 

9.11.  Meetings and Seminars.  We may provide you with
additional group training and communications that we in our sole discretion
determine.  We may charge fees for any
additional training programs and group seminars.

 

9.12.  Newsletters and Bulletins.  We will provide you with newsletters and
bulletins as we develop them from time to time but we may discontinue these
items at any time without notice.

 

9.13.  Financial Products.  We will provide you with the ability to offer
Financial Products if they are available on terms acceptable to us and if you
are in full compliance with the terms of this Agreement and all Collateral
Agreements.  We are not obligated to
provide Financial Products, but if we do, you must offer them.  We may withhold Financial Products from you
if the Financial Products provider or we determine that your loan default rate
is unacceptable.  We have the sole right
to select the lender(s) from whom you may offer Financial Products, and you may
not offer Financial Products from any source other than as we designate.

 

9.14.                     Authorized
and Additional Services and Products. 
If you are in full compliance with this Agreement and all Collateral
Agreements, we will

 

10

 

provide you with all the
products and services then authorized to be offered by Jackson Hewitt Tax
Service businesses.  You must offer, or
facilitate the sale of, only those products and services that are authorized by
us.  You must obtain those products or
services from us or from a third-party that we designate.  We may add additional authorized services and
products that you must offer, and we may discontinue any services or products
that we presently offer.  We may
introduce, add, or delete products or services without incurring any liability
to you.  If you want to offer additional
services or products as part of your Franchised Business, then you must get our
prior written approval, which we may withhold at our sole discretion.

 

9.15.                     Fees Charged
for Products and Services.  We have
the right, from time to time, to designate the types of products or services to
be offered to customers at no charge, as described in our Manual, or otherwise
in writing.  With respect to your offer
and sale of all other products and services, you will have the sole discretion
as to the prices that you charge to customers.

 

10.  NEW FRANCHISE AGREEMENT

 

10.1.  New Agreement.  Before the expiration of this Agreement, you
may request a new franchise agreement for our then-current term if: (a) you
are not in default of the existing Franchise Agreement or Collateral Agreement;
(b) you prepared an average of at least 1,000 (670 for a Mid-Market
Territory and 400 for a Small Market Territory) paid federal income tax returns
in the Territory during the last two Tax Seasons preceding the expiration of
this Agreement; (c) you are displaying our then-current signs and
promotional materials; (d) your location meets our then-current
requirements for equipment and furnishings; (e) you release us from any
and all claims against us; and (f) you pay the fees specified in paragraph
8.3 above.

 

10.2.  Notice of
New Agreement.  You must
notify us of your intention to execute a new franchise agreement for our
then-current additional term by giving us written notice not less than six (6) or
more than twelve (12) months before the expiration of the existing franchise
agreement.  If you fail to notify us
within the time specified in this paragraph, this Agreement will expire
automatically without further notice or the opportunity to sign a new Agreement
on the expiration date found on the Signature Page.

 

10.3.  Execution
and Form of New Agreement.

 

10.3.1              To execute a new
franchise agreement, you must sign our then-current form of franchise agreement
and all other agreements that we require new franchisees to sign.

 

10.3.2              Our then-current
franchise agreement may provide for higher royalties, advertising fees,
transfer fees, electronic filing fees and other fees not included in this
Agreement, different performance standards, and terms and conditions materially
different from the terms of this Agreement. 
Your right to continue with the Renewal Fees specified in paragraph 4.4
will be included in any new franchise agreement.

 

10.3.3              You must return
your fully signed new franchise agreement and new Agreement Fee set forth in
paragraph 8.3 herein by the date we specify, which will be a date thirty (30)
days from the date of the letter that accompanies the new franchise
agreement.  If we do not receive your new
franchise agreement and other required documents within thirty (30) days, your
franchise agreement will expire automatically, without further notice or the
opportunity to sign a new franchise agreement, on the expiration date found on
the Signature Page.

 

11.  TRAINING AND CONVENTION

 

11.1.  Franchisee
Initial Training.  You must
attend and successfully complete our Franchisee Initial Training programs by
the next scheduled training class after the Effective Date. You must attend
another Franchisee Initial Training after your first Tax Season, or whenever
our training guidelines require it.  We
currently offer Franchisee Initial Training at our training facility in
Parsippany, New Jersey.  This program is
designed and presented by our National Headquarters training staff.  We may change any aspect of this training
program at any time, including its location.

 

11.2.   Employee Training.  If you hire a manager to
manage your Franchised Business, your manager must attend and successfully
complete Franchisee Initial Training.  We
may, at our sole option, require any of your initial or subsequent management
employees to attend and satisfactorily

 

11

 

complete all or part of
any of our training programs.

 

11.3.  Regional
Training and Workshops.  You
must attend one or more of our Regional Training or Workshops as required by
our training guidelines.

 

11.4.  Update Training.  You must attend our annual update-training
program as required by our training guidelines.

 

11.5.  Additional
Training.  We may, at our sole
option, require you to attend our existing training classes or to attend any
supplemental or additional training programs that we may develop and offer from
time to time.

 

11.6.  Fees and Costs for Training.  We do not presently charge
any tuition for training but we may do so at any time by establishing uniform
fees for all or some training programs. 
You must pay all costs and expenses associated with attending any of our
training programs, including, but not limited to, transportation expenses, room
and board, and any fees we impose, and wages for any of your employees who
attend.

 

11.7.  Annual Convention.  You must attend at your expense our Annual
Convention at the location and time which we specify each year.  Further, you must pay our attendance fee for
the Annual Convention, regardless of whether you attend or not, which such fee
will be set each year and imposed equally on all franchisees.

 

11.8.  Place and Manner of Training.  We reserve the right to
specify where and in what manner we offer training.  The delivery of training can be in any place
and in any fashion we specify, such as live in person, Intranet or CD-ROM.

 

12.
CONFIDENTIAL INFORMATION

 

12.1.  The
Manual.  We currently provide
you with confidential access to our Manual via Intranet, but we can provide the
Manual in any format we select.  You must
use the specified processing computer to access the Manual.  The Manual is our sole property.  The Manual contains the mandatory standards,
specifications and requirements of the franchised system that we prescribe from
time to time to ensure the quality and uniformity of the services offered under
the Marks.  The entire contents of the
Manual plus our mandatory specifications, procedures and rules prescribed
from time to time will constitute provisions of this Agreement just as if they
were written on these pages.

 

12.2.  Modifications
to Manual.

 

12.2.1              We have the
right, in our sole judgment, to modify the Manual to maintain the quality and
uniformity of the Operating System, to change, modify, delete, supplement or
enhance our Operating System or any of our procedures, or to change, maintain
or enhance the Operating System or the Marks or to enhance the reputation,
efficiency, and quality of the system or the goodwill associated with our
Marks, or to adapt the system to new conditions, materials or technology, or
better serve the public, or to meet competition, even if these changes and
improvements require you to incur expenses. We may also change within the Manual
the dates stated within this Agreement related to EFINS, performance, Tax
Season, and other items if legal or competitive changes necessitate such a
change.

 

12.2.2              You must keep
the Manual in current and up-to-date condition by timely downloading or inserting
any updates.  If there is a dispute about
the contents of the Manual, the then-current terms of the master copy available
for download will control.

 

12.3.  Trade Secrets and Proprietary Information.

 

12.3.1              You agree that
the following are our trade secrets and confidential and proprietary
information: the identities of the customers served by the Franchised Business,
(including their names, addresses, phone numbers, social security numbers and
financial and tax information), tax return copies (whether on disk, in a
database, in any other computer data storage media, or on paper), customer
lists, mailing labels, W-2s, 1099s, 8453s, work in progress, all “books” and “archives”
program disks, bookkeeping files, Financial Products applications and other Financial
Products related documents, any other documents related to services performed
on behalf of customers, the contents of the Manual and all of the operating
procedures, specifications, standards and rules that we

 

12

 

prescribe
for the franchised system, our training materials, our software described in
paragraphs 9.1 and 9.2, any and all other software we provide to you, and any
other or different items so designated in the Manual.  You must maintain, both during and after the
term of this Agreement, absolute confidentiality of such items.  You may give this information to your
employees only to the extent necessary for the operation of the Franchised
Business in accordance with this Agreement. 
You may not use this information in any other business or in any other
way not authorized by us in advance in writing.

 

12.3.2              You acknowledge
that the unauthorized use or disclosure of our trade secrets, confidential and
proprietary information will cause irreparable injury and that damages are not
an adequate remedy.  You promise that you
will not at any time, without our prior written approval, disclose, use, permit
the use of, copy, duplicate, record, transfer, transmit or otherwise reproduce
our software or other trade secret, confidential or proprietary information, in
any form or by any means, in whole or in part, or otherwise make it available
to any unauthorized person, entity or source.

 

12.4.  Customers. 
You acknowledge that after the termination, for any
reason, including by approved or unapproved sale of any part of the Franchised
Business, or expiration of this Agreement, we or our designee are free to
contact and serve the customers from your former Franchised Business to offer
to sell them tax return preparation, electronic filing and any other services
we then offer.

 

13.  OPERATING REQUIREMENTS

 

13.1.  Locations.  You are solely responsible for selecting
locations for the Franchised Business. 
However, you must comply with the procedures specified in the Manual to
obtain our approval for the location of your selections before you sign any
lease or license for a location.  Our
approval of the location of your selections will be based upon our then
existing criteria.

 

13.2.  Office Appearance.  In order to maintain a
uniform and professional appearance, your offices must comply with our
appearance standards in the Manual.

 

13.3.  Opening. 
You must comply with the pre-opening activity
deadlines set forth in the Manual.  You
must open your Franchised Business and be fully operational for Tax Season on
the January 8 next following the Effective Date of this Agreement, and you
must be open and fully operational on January 8 of all subsequent Tax
Seasons.  You may open a location only if
the location meets the opening standards set forth in the Operating Standards.

 

13.4.  EFIN.  By
no later than January 8 of your first Tax Season, you must receive EFINs
from the IRS and each state tax authority for the state(s) in which the
Territory is located, if such states(s) offer electronic filing, to file tax
returns electronically from every
location you operate.  You must continuously maintain the
right to file tax returns electronically from the IRS and all applicable state
tax authorities at all your locations throughout the term of this Agreement.  You hereby
authorize the IRS and any state tax authority to disclose to us the reasons for
any EFIN denial or suspension and to provide us with copies of all EFIN
application materials, suspension and denial notices.

 

13.5.  Minimum Hours.  You must be open such hours as we specify in
the Manual.

 

13.6.
Location Employees.  Since
you are an independent contractor, you have the sole right to select, hire and
discharge your employees.  You are
responsible for all decisions regarding hiring, firing, training, supervising,
disciplining, scheduling and paying wages to and withholding and paying taxes
for your employees.  Neither you, nor
your manager or your employees shall be considered or represented as our
employees or agents.

 

13.7.  Contracts With Others.  Neither you, nor your
manager or your employees are authorized to enter into any contract or
Agreement with any third party on our behalf.

 

13.8.   Fictitious Name.

 

13.8.1              You agree not to
use “JH”, “JHI”, “JTAX” “Jackson Hewitt”, or such other names as we may specify
as any part of the legal name of the Franchisee.  Once established,

 

13

 

you
may not change your Franchisee name without our advance written consent.

 

13.8.2              You agree to
adopt “Jackson Hewitt Tax Service”, “Jackson Hewitt Premier Tax Service”, or
such other name as we may specify, as your trade or fictitious name.  Unless not required by your local law, you
agree to file and maintain a Fictitious or Assumed Name Certificate or
comparable instrument and furnish to us evidence of such filing as specified in
our Manual.

 

13.9.  Independently Owned.  You must use in a posting
at each of your locations, in your business cards, and such other or substitute
ways as we may specify, in the Manual, the name of the legal entity that owns
the Franchised Business and the statement that your entity is independently
owned and operated.  You must enter into
all business bank accounts, purchase orders, leases, utility arrangements and
all other contracts and agreements in your entity’s legal name.  You may not use “Jackson Hewitt Inc.”, “Jackson
Hewitt” “Jackson Hewitt Tax Service”, “Jackson Hewitt Premier Tax Service”, or
any similar name to enter into any such arrangement or contract with third
parties.

 

13.10.  Furniture, Equipment, Software and Supplies.  To maintain uniformity and customer service
standards, you must furnish and equip and upgrade your locations in accordance
with the rules, specifications, and standards contained in the Manual and that
we develop from time to time.  If you do
not have on site anything required by a National Account, we can order this for
you and you must pay the cost when billed. 
You must purchase new computers, software, (including, but not limited
to, new Operating System software and virus scanning software), other equipment
and signs if at any time we update or change our Marks, our furniture and
location appearance requirements, or our computer requirements.

 

13.11.  Compliance
with Our Business Methods and Requirements.  To maintain the uniformity and integrity of
services offered under our Marks, you must operate your business in full
compliance with all our rules, specifications, standards and procedures,
including, but not limited to, those found in the Manual and any other
materials we provide.  You agree to make
repairs or replacements or upgrades, as we require to conform to our Operating
System.  We will not approve your
application to purchase an additional Territory if you do not comply with all
our then-current Operating System standards.

 

13.12.  Signs.  You must purchase and display signs that we
specify and approve including signs required by a National Account.

 

13.13.  Tax Course. 
After your first Tax Season, and every year during the
term of this Agreement, we may require that you conduct in the Territory a Tax
Course as specified in the Manual.

 

13.14.  Customer Service.

 

13.14.1       We reserve the right to
establish customer service assistance programs that we deem appropriate for the
benefit of the Network’s customers.

 

13.14.2       You must conduct your
Franchised Business in accordance with all rules, procedures and specifications
that apply to customer service and that are designed to ensure the quality and
uniformity of the services offered under the Marks.  These customer service standards include, but
are not limited to, payment of any penalty and interest incurred by a customer
that results from any mistake you made (we make this determination), and
providing a refund to any dissatisfied customer without delay or complaint.

 

13.14.3       Your obligation to pay
penalty and interest for your tax return preparation errors continues even
after the expiration or termination of this Agreement for any reason, including
the sale of the Franchised Business or a majority of its assets.

 

13.14.4       You must conduct your
Franchised Business in a manner that reflects favorably on you, our affiliates,
our Network, and us.  You must protect
the good name, goodwill and reputation of the Marks, and avoid all deceptive,
misleading and unethical practices.

 

13.15.              Internal Revenue
Service Laws, Regulations and Requirements. 
You must learn about and comply with all the federal, state and
municipal rules and regulations that affect your tax preparation, electronic
filing, Financial Products, operations and advertising.

 

14

 

13.16.              Government
Regulations.  You must secure and
maintain in full force and effect all government required licenses, permits and
certificates.  You must operate your
Franchised Business, including offering Tax Courses, in compliance with all
applicable state, federal and local laws and regulations. You are solely
responsible for ensuring that your offices comply with the Americans with Disabilities
Act, with any similar state law, and with any local law or ordinance that
applies to your office locations.

 

13.17.  Permits and Certificates.  If we request them, you must send us copies
of all the permits and certificates required by law to open and operate the
Franchised Business.

 

13.18.  Public Figures.  You may not, without our
prior written approval, use or employ any public figure or any other person to
represent or advertise or promote your Franchised Business.

 

13.19.  Best Efforts. 
You must use your best efforts to recommend, promote
and encourage the use of all products and services offered by the Franchised
Business.

 

13.20.  Guaranty.  If you are a corporation, limited liability
company, partnership or any other type of entity, we may require that all of
your owners sign the Guaranty of Franchisee’s Undertakings, attached hereto as Schedule C,
in which case your owners will personally guarantee, and will be personally
bound by, the obligations under this Agreement.

 

14. 
SERVICE MARKS

 

14.1.  Ownership and Usage.  You acknowledge that we or one of our
Affiliates is the sole owner of the names “Jackson Hewitt®”, “Jackson Hewitt
Tax Service®”, “Jackson Hewitt” and design and all other Marks used in
connection with Jackson Hewitt Tax Service businesses, including the Franchised
Business, and that we have exclusive rights or license to use the Marks, and to
license and sublicense the use of the Marks. 
Your right to use the Marks arises solely from this Agreement, and you
may only use the Marks according to the rules that we prescribe from time
to time.  Using our Marks in any way
after termination or expiration of this Agreement constitutes
infringement.  You further acknowledge
that all the goodwill associated with our Marks belongs to us, and that when
this Agreement is terminated or expires, you will receive no compensation for
goodwill.  You may not use the Marks
except in the manner we specify in this Agreement and the Manual.

 

14.2.  Infringement.  You must notify us immediately if you become
aware of any infringement or challenge to our rights to the Marks.  You may not communicate directly or
indirectly concerning any infringement with anyone other than our attorneys or
us.  We have the sole right to take
whatever action we deem appropriate, and we have the exclusive right to control
any litigation, any Patent and Trademark Office proceeding, or other
administrative proceeding concerning the Marks. 
You must execute all instruments and documents, render assistance and do
all things that, in our or our attorney’s opinion, are necessary and advisable
to protect and maintain our interests in the Marks.

 

14.3.  Indemnification.  We will reimburse you for
any expenses you incur to protect the Marks if you act at our written
direction.  We will not reimburse you for
any expenses you incur if you act without our prior written approval.  We are under no obligation to take any
affirmative action in response to infringement of the Marks, or to reimburse
you for your own defenses.

 

14.4.  Replacement or New Marks.

 

14.4.1              We may, in our
sole discretion, select one or more new or modified or replacement Marks for
use by the entire Network in the Franchised Business, in addition to, or in
lieu of, any previously designated Marks, which you must adopt and use.  Any expenses you incur as a result of any
such Network change (replacing signs, stationery, advertising brochures, or
other material bearing the Marks) are your sole responsibility and you are not
entitled to any compensation from us.

 

14.4.2              If we change or
modify our Marks, you must replace your signs and other items bearing the Marks
within the time frame specified at the time of any such change.

 

15.
RECORDS AND FINANCIAL REPORTS

 

15.1.  Forms and Records.  You are required to use the
forms and reports specified in the Manual in the operation of the Franchised
Business.  These forms and reports must
be submitted to us in the format

 

15

 

and frequency and by the
means we specify in the Manual.

 

15.2.  Credit Reports.  You must submit financial
statements to us within thirty (30) days of our request, in the form we
specify, that fairly represent your financial position and that of the
Guarantors.  You hereby authorize us to obtain updated credit reports on you at any
time during the term of this Agreement.

 

15.3.  Record Maintenance.  You must maintain for at least four (4) years
from the date generated, the original, full and complete records, including,
but not limited to, copies of all prepared returns computer records, bank
statements, accounts, books, data, licenses and contracts that reflect all
aspects of your Franchised Business. 
These records do not include the records you must return to us under
other provisions of this Agreement.

 

16.  AUDITS AND INSPECTIONS

 

16.1  Right to Audit.  We have the right, but not
the obligation, during business hours, without prior notice, to audit and
inspect your locations, all other places associated with the Franchised
Business, and your business and financial records and information, including,
but not limited to, documents related to EFIN applications, EFIN suspensions or
denials, computer databases and hard drives, other computer file data storage
media, receipts, work in progress, receipts, bank statements, checks,
checkbooks, deposit records, your own tax return, paper customer tax returns
and related items such as W-2’s, 1099’s, 8453’s, and Financial Products
applications and other Financial Products related documents, in order to ensure
the quality and uniformity of the services offered under the Marks, and to
ensure you have met all obligations contained in this Agreement and all
Collateral Agreements.  We may perform
all or part of an audit by asking you to send documents or items to us and you
must send to us at your expense all documents and items we request within the
time set forth in any such request.

 

16.2  Access to Information.  You grant us permission to
enter, access or electronically enter any computers found or used in your
locations to conduct these audits and inspections, and you must assist us in
any way we request.  If we find any
deficiencies, you agree to correct them immediately.  Except as to mail audits, these audits and
inspections will be made at our expense unless they are necessary because you
fail to comply with this Agreement, you fail to allow us full access to all
records that you are required to maintain, or we find that you underreported at
any location your Gross Volume of Business by two percent (2%) or more during
two or more reporting periods.  These
expenses may include, but are not limited to, travel expenses and room and
board for the designees who conduct the audit.

 

16.3  Obligations upon Termination or
Expiration.  Our right
to audit and your obligation to cooperate with any audit does not end with the
termination or expiration of this Agreement or the transfer or sale of the
Franchised Business, but continues for the period for which records must be
maintained in paragraph 15.3.

 

17. 
INSURANCE

 

17.1.  Insurance Policies.  During the term of this Agreement, you must
maintain the insurance coverage specified in the Manual.  We may change the amount of insurance and add
additional kinds of insurance coverage as we decide are necessary to protect
the Network.  This insurance does not
relieve you of any liability to us under the indemnity provision found in this
Agreement or in any other Agreement with us.

 

17.2.  Proof of Insurance.  You must provide us with proof of the
insurance coverage required by this Agreement before you open your franchised
locations.  Your policies must name us,
our affiliates, any National Account or Affinity Location if your sites are in
National Account or Affinity Locations, and anyone else so specified in the
Manual, as additional insureds and be endorsed to give all additional insureds
thirty (30) days prior written notice of any cancellation, termination or
change.

 

18. 
YOUR COVENANTS

 

18.1.  In Term Competition.  During the term of this
Agreement, neither you nor any of your Affiliates, shareholders, partners,
members or other persons who have a direct or indirect legal or beneficial
interest in you (collectively, “Owners”) may, directly or indirectly, be
employed by, advise, assist, own, engage in, operate, purchase, invest in
(except to purchase stock in a publicly traded company listed on a national
stock exchange), franchise, lend money to, lease or sublease to or from, agree
to sell or sell all or a majority of the assets of the Franchised Business to,
or have any other interest in, whether financial or otherwise,

 

16

 

any other business,
wherever located, which is a Competing Tax Business as defined herein.

 

18.2.  Covenant Not to Compete.  For a period of two (2) years after the
earlier of (1) the effective date of termination for any reason, or (2) expiration
of this Agreement, or (3) the date of the sale of the Franchised Business
or a majority of its assets, neither you nor any of your Owners may directly or
indirectly prepare or electronically file individual income tax returns, teach
tax courses, offer Financial Products or own, engage in, operate, manage,
purchase, invest in (except to purchase stock in a publicly traded company
listed on a national stock exchange), franchise, lend money to, lease or
sublease to, or agree to sell or sell all or a majority of the assets of the
Franchised Business to any Competing Tax Business as defined herein, within the
Territory or within an area ten (10) miles outside the boundaries of the
Territory.  We may assign this covenant
to any transferee.

 

18.3.  Covenant Against Recruiting or Hiring Our
Employees.  During the
term of this Agreement and for a period of one (1) year after the earlier
of (1) the effective date of termination for any reason, or (2) expiration
of this Agreement, or (3) the date of the sale of the Franchised Business
or a majority of its assets, neither you nor any of your Owners may, without
our prior written permission, during the below-mentioned employees’ employment
with us or our Affiliates, as applicable, and for a period of one (1) year
after they leave such employment, solicit, recruit, or hire, for a job position
entailing tax preparation, tax preparation management or supervisory duties, or
tax preparation instruction duties, within the boundaries of any
Territory,  which you own or owned within
the one (1) year prior to such earlier date, any of our or our Affiliates’
employees whose duties with us or our Affiliates include(d) management of
or over company-owned or franchised stores, franchisee training, tax
preparation software writing or debugging, tax return processing software
writing or debugging, electronic filing of tax returns, tax return processing,
processing support, tax return preparation, or tax return preparation advice or
support.

 

18.4.  Covenant Not To Solicit.  For a period of two (2) years
after the earlier of (1) the Effective Date of termination for any reason,
or (2) expiration of this Agreement, or (3) the date of the sale of
the Franchised Business or a majority of its assets, neither you nor any of
your Owners may directly or indirectly solicit any person who is, on such
earlier date, or within one (1) year prior to such date, was a customer of
the Franchised Business, to sell or offer to sell them any product or service
offered by the Franchised Business, including but not limited to, individual
income tax return preparation, electronic filing of tax returns, tax courses or
Financial Products.

 

18.5.  Covenant to Protect Trade Secrets.  Both during and after the
term of this Agreement, neither you nor your Owners shall, directly or
indirectly, communicate or give to any other person or entity, for your own or
the benefit of any other person or entity, without our prior written approval,
any of our proprietary trade secrets, knowledge or know-how that we consider
confidential as provided in paragraph 12.3.

 

18.6  Injunctive Relief.  If you or any of your
Owners violate any of the covenants described above, we are entitled to
preliminary and permanent injunctive relief and all monies and other
consideration you received as a result of any violation of these covenants, as
well as all other damages.  These
provisions are not exclusive remedies, but cumulative to any and all other
remedies available to us in law or equity.

 

18.7  Reasonableness of Restrictions.  You acknowledge that the
restrictions contained in these covenants are reasonable and necessary to
protect us and our franchised system, and that they will not impose any undue
hardship on you since you have other skills, experience or education that will
afford you the opportunity to derive income from other endeavors.

 

18.8  Independence of Covenants.  You agree that these
covenants are independent of any other in this Agreement, and that you agree to
be bound by an unappealed final decision of any court with jurisdiction
upholding any part of these covenants, and that you will not raise as a defense
to these covenants, any claim you may have against us.

 

19.  COVENANTS FOR YOUR EMPLOYEES

 

You must sign agreements
with all your employees by which they agree not to use or disclose to any third
party or entity any of our trade secrets and proprietary information as
described in paragraph 12.3.  We may
provide a suggested contract clause for your use in this regard.

 

17

 

20. 
TERMINATION

 

20.1.  Termination by You.  You may terminate this
Agreement only if we consent in writing, or if we are in breach of a material
provision, and we do not cure this breach within thirty (30) days after
receiving written notice from you via certified mail, return receipt requested
addressed to our “Legal Department” describing the breach in full detail and
the proposed remedial action requested.  
This termination will not relieve you of any obligation under this
Agreement or any Collateral Agreements.

 

20.2.  Termination by Us.  We may terminate this Agreement for good
cause.  Good cause includes, but is not
limited to, the defaults listed below.

 

This Agreement will
terminate immediately upon delivery of termination notice to your last known
address if:

 

(a) you make any
material misrepresentation on the franchise application or on any written
report you provide to us; or,

 

(b) you, your
manager or employees fail to attend or successfully complete any of our
required training programs; or,

 

(c) you fail to
qualify with the IRS, or any state tax authority where your offices are
located, to file tax returns electronically at all your locations within the
Territory by January 8 of your first Tax Season, or you lose the right to
file tax returns electronically with the IRS or any state tax authority for any
of your locations within the Territory at any time thereafter; or,

 

(d) you fail to open
any location required herein by the date specified in this Agreement or our
Manual; or,

 

(e) you discontinue
the active conduct of the Franchised Business in the Territory for more than
two (2) consecutive days during the Tax Season or more than two (2) consecutive
weeks during the Off Season; or,

 

(f) you underreport
at any location in the Territory your Gross Volume of Business by two percent
(2%) or more during two (2) or more reporting periods whether or not you
subsequently rectify the deficiency; or,

 

(g) you fail to
fully cooperate with any audit or inspection conducted pursuant to paragraph
16; or,

 

(h) you fail to meet
the Performance Standards set forth in this Agreement; or,

 

(i) you conduct any
advertising in another Franchisee’s Territory that does not meet our
requirements for such advertising, or you conduct any unapproved advertising
anywhere more than one time; or,

 

(j) you or any of your
Owners violates any of the covenants found in paragraph 18 of this Agreement;
or,

 

(k) you fail on three (3) separate
occasions during any one (1) year period to comply with any one or more
provisions of this Agreement, any Collateral Agreement or any Manual provision,
regardless of whether these failures were corrected after notice; or,

 

(l) you or any of your
Owners transfer or attempt to transfer your interest in this Agreement, or a
controlling interest in the Franchisee entity, without our prior written
consent, or you or any of your Owners fail to comply with our transfer
requirements contained in paragraphs 21 through 25 of this Agreement; or,

 

(m) you plead guilty,
plead no contest, or are convicted of any felony or any criminal offense
related to the Franchised Business, including tax fraud or tax evasion; or,

 

(m-1) a person owning a
five percent (5%) or more interest in you is convicted of, or pleads guilty or
no contest to, a criminal offense related to the Franchised Business (or any
related business such as an accounting practice), including, but not limited
to, tax fraud or tax evasion, and within thirty (30) days after notice is delivered,
the other interestholders do not remove the person with the criminal plea or
conviction and replace him or her with a new interestholder that we approve.

 

(n) you become insolvent,
make an assignment for the benefit of creditors, are unable to pay debts as
they come due, or a petition in bankruptcy is filed by or against you; or,

 

(n-1) any person owning a
five percent (5%) or more interest in you makes an assignment for the benefit
of creditors, is unable to pay his or her debts as they become due, or a
petition under any

 

18

 

bankruptcy chapter is
filed by or against such interestholder, and within thirty (30) days after
notice is delivered, the other interestholders do not remove the
insolvent/bankrupt person from any management role and replace him or her with
a new interestholder that we have approved; or,

 

(o) you fail to notify us
within the time and manner provided by this Agreement that you want to sign a
new franchise agreement, or you fail to comply with all the requirements to
sign a new franchise agreement.  In such
event, this Agreement will terminate immediately, without notice or the
opportunity to cure, on its expiration date.

 

We have the right to
terminate this Agreement immediately upon expiration of the listed cure period
if:

 

(p) you fail to comply
with minimum hours requirements at any location within the Territory within one
(1) day after delivery of notice during the Tax Season, or five (5) days
after delivery of notice during the Off Season; or,

 

(q) you fail to close any
locations you establish outside your Territory and remove all signs from those
locations within three (3) days after delivery of notice; or,

 

(r) you fail to send us
within five (5) days after delivery of written notice your Gross Volume
Report; or,

 

(s) you fail to pay any
sums due under this or any Collateral Agreement within five (5) days after
delivery of notice; or,

 

(t) you fail, within
three (3) days after delivery of notice, to stop any activity designed to
solicit another franchisee’s customers, or you fail to transfer any telephone
numbers used in connection with any location established in another franchisee’s
territory, to that franchisee, and pay all fees associated with that number up
to the date of transfer; or,

 

(u) you commit any act
within or without the Franchised Business that would tend, in our opinion, to
reflect poorly on the goodwill of our name or any of our Marks, Operating
System, or the Network, and you fail to cease this activity or cure this breach
within five (5) days after delivery of notice; or,

 

(v) you fail to
comply with any other provision of this Agreement, any Collateral Agreement,
any Manual provision applicable to the Territory, or any law or regulation
pertaining to the Franchised Business within the Territory, and you do not
rectify the violation within five (5) days after written notice is
delivered.

 

20.3.  Obligations after Termination or Expiration.  After the expiration or termination for any
reason, including the sale of the Franchised Business or a majority of its
assets, you must comply with all the following obligations:

 

(a) immediately pay
all amounts owed under this Agreement and all Collateral Agreements; and,

 

(b) immediately pay
all money due and owing to third parties in connection with the Franchised
Business; and,

 

(c) return to us
without retaining any copies, the originals and all copies of all trade secret,
confidential and proprietary materials as defined in paragraph 12.3 and provide
access to us or our designee to remove all copies of any such items from your
offices, hard drive and to delete them from any other computer data storage
media; and,

 

(d) return to us or
destroy at your expense and according to our direction, all literature, sign
facings, unused advertising materials bearing the Marks; and,

 

(e) stop all use of
our Marks and any colorable imitation of them in any business; and,

 

(f) notify the
telephone company and all listing agencies and advertising directories where
the numbers are listed, that you no longer have the right to use any telephone
numbers, listings, and advertisements used with our Marks, authorize on
appropriate documents the transfer of all such telephone numbers, listings and
advertisements to us or our designee, and deliver to us a copy of such
documents of transfer; and,

 

(g) immediately
cease identifying yourself as a present or former Jackson Hewitt Franchisee or
franchise owner; and,

 

(h) comply with the
post-term covenants found in paragraph 18 of this Agreement, and with any other
covenant that requires your performance after you are no longer our Franchisee;
and,

 

19

 

(i) cancel all
fictitious or assumed name filings; and,

 

(j) return to us or our
designee on demand, at your sole expense, all leased equipment from any leasing
program we or our affiliates arrange or sponsor, with such equipment in good
working condition with all its databases and software installed and
operational.

 

21.  ASSIGNMENT  GENERALLY

 

21.1.  Assignment by Us.  This Agreement is fully assignable by us.

 

21.2.  Assignment by You.  This Agreement and the franchise it grants is
personal to you, and you may only transfer or assign this Agreement, the
franchise, or any stock or interest in an entity owing the franchise, with our
prior written approval, and according to the provisions described in paragraphs
22 to 24 below.  You may not grant a lien
or security interest in this Agreement or in the accounts receivable of the
Franchised Business to any other person or entity.  We reserve the absolute right to disapprove
any proposed transfer, transferee, shareholder, interestholder or partner that
does not meet our standards.

 

22.  ASSIGNMENT TO AN ENTITY

 

If you meet the following
conditions, you may assign this Agreement without payment of an initial
franchise fee to an entity in which you hold at least a 51% controlling
interest in the entity if:

 

(a) you actively
manage the entity and the Franchised Business; and,

 

(b) the entity is
newly organized and its activities are confined exclusively to acting as our
Franchisee under this Agreement; and,

 

(c) the entity
submits the entity papers we request, and executes our required documentation
and returns it to us within 30 days from the date we sent it; and,

 

(d) you execute our
standard guaranty in which you, and all the other entity officers, directors
and shareholders/interestholders agree to remain personally liable for all
obligations found in this Agreement; and,

 

(e) you pay the
applicable amendment fee; and,

 

(f) you execute a
general release; and,

 

(g) you are in full
compliance with this Agreement and with all Collateral Agreements.

 

23.
TRANSFER WITHOUT CHANGE OF EFFECTIVE CONTROL

 

Your franchise is
personal to you and may not be sold or transferred without our prior written
approval, but we will permit a transfer of less than a controlling interest in
any Franchisee, subject to the following conditions:

 

(a) you provide the
transferee with our most current disclosure document; and,

 

(b) you are in full
compliance with this Agreement and with all Collateral Agreements; and,

 

(c) you comply with
any of our other transfer requirements; and,

 

(d) you execute a
general release; and,

 

(e) the prospective
transferee is not operating any business that competes with the Franchised
Business; and,

 

(f) you pay the
applicable amendment fee; and,

 

(g) you and your
transferee execute our required documentation and return it to us within 30
days from the date we sent it.  If we do
not receive your signed amendment paperwork within 30 days, we may assume that
you do not wish to amend.

 

24.  TRANSFER OF EFFECTIVE CONTROL

 

24.1.  Requirements. 
If we believe that the proposed transfer when
aggregated with all previous transfers results in the transfer of effective
control of the ownership or operation of the Franchised Business, in addition
to the provisions contained in paragraphs 21 to 23 above, you must comply with
the following provisions:

 

(a) you give us
written notice of the proposed transfer, and provide us with complete details
of all transfer terms, including the proposed transferee’s name, address,
financial qualifications, and business experience for the last five years; and,

 

(b) the proposed
transferee completes our application, meets our then-current standards for

 

20

 

franchisees and
successfully completes our required training; and,

 

(c) the proposed
transferee executes our then-current franchise agreement for our then-current
term, and executes all other Agreements we customarily require of new
franchisees; and,

 

(d) the transfer fee
as specified in paragraph 8.2 above is paid to us; and,

 

(e) the transferee
agrees to assume and honor any contractual and legal commitments arising from
or relating to the Franchised Business before the date of the transfer,
including, but not limited to, bills for the telephone number and for Yellow Pages advertising
used in the Franchised Business, and equipment leased through any program we
arrange or sponsor; and,

 

(f) the transferee
agrees to assume any and all penalty and interest liability your customers
incur because of mistakes you made while preparing any customers’ tax returns
up to $150 for any one taxpayer and you agree to remain liable for all penalty
and interest that exceeds $150; and,

 

(g) the transferee
completes our required training programs to our satisfaction; and,

 

(h) you execute a
general release.

 

24.2  No Waiver of Claims.  When we consent to a
transfer, we are not waiving any claims we have against you or our right to
demand that you strictly comply with this Agreement including post termination
covenants in this Agreement.

 

24.3.  Sale of Assets to Competitor Not Permitted.  Unless we give you our prior written approval,
you may not directly or indirectly transfer or sell all, substantially all or
any portion of the Franchised Business or its assets to any Competing Tax
Business unless at least two (2) years have passed after the expiration or
termination, for any reason, of this Agreement and we elect not to exercise our
right of first refusal.

 

24.4.  Sale of Assets without Transfer of Franchise
Not Permitted.  Unless
we give you our prior, written approval, you may not transfer or sell
substantially all the assets of the Franchised Business to anyone who will not use
them in the operation of the Franchised Business.

 

25.  RIGHT OF FIRST REFUSAL

 

If under any of the
provisions of paragraph 24 you propose to sell your ownership interest in the
Franchised Business or a majority of its assets, you must give us a copy of the
offer along with all documents expected to be signed either by you or the
transferee.  We have thirty (30) days
after we receive those documents to exercise our right to purchase the
Franchised Business or its assets on the same terms contained in the offer,
except that we do not have to match any non-monetary provision.  We may substitute cash for any form of
payment, and we may substitute a creditworthy substitute purchaser.  If we do not exercise our right of first
refusal, you may accept the bona fide offer, subject to our prior approval of
the person or entity you propose as a new Franchisee as provided in this
Agreement, and subject to the prohibitions found in paragraphs 21 through 24
above.

 

26.  DEATH OR DISABILITY

 

26.1.  Interim Management.  In the event of your death
or disability of any kind which impairs the smooth management, operation or
customer service of any of your locations, we have the right at any time to
install appropriate personnel of our choosing, even those of another franchisee,
to manage or operate the Franchised Business and you agree to pay us or our
designee reasonable compensation for such services.

 

26.2.  Long-term Disability.  If you are unable to actively participate in
the operation of the Franchised Business for a period of sixty (60) days, and
such inability impairs the smooth management, operation or customer service at
any of your locations, You must within one hundred eighty (180) days of the
commencement of such disability either (1) engage and install appropriate
management personnel who attends and passes our next available training
required at the time for new franchisees; or (2) assign this Agreement to
a buyer subject to paragraphs 21 and 23-25 herein; or else we have the right to
terminate this Agreement at the conclusion of the one hundred eighty (180) day
period.

 

26.3.  Death. 
Within one hundred eighty (180) days of your death,
your Executor, or your other lawful successor in interest may transfer your
interest in this Agreement by will, shareholder agreement or other appropriate
instrument, subject to paragraphs 21 and 23-25 herein.  No transfer fee need be paid on this
transfer.  If no such transfer

 

21

 

has been approved by us
within the one hundred eighty (180) day period, we have the right to terminate
this Agreement at the conclusion of the one hundred eighty (180) day period.

 

27.  INDEMNIFICATION

 

If we or any of our
current or former affiliates, assigns, subsidiaries, officers, directors,
employees, agents or successors are subjected to any claim, demand, penalty, or
become a party to any suit or other judicial or arbitration or administrative
proceeding or investigation (whether formal or informal), or enter into any
settlement, by reason of any claimed act or omission by you, your customers,
your current or former employees, your officers or directors, or agents, by
reason of any act or omission occurring in the Franchised Business, or by any
act or omission with respect to the Franchised Business, you shall indemnify,
defend, and hold us, our current and former affiliates, assigns, subsidiaries,
officers, directors, employees, agents and successors harmless against all
judgments, arbitration awards, pre-suit investigation costs, settlements, penalties
and expenses, including attorneys’ fees, court costs, and other expenses of the
litigation, arbitration, or administrative proceeding.  You must give us notice of any action, suit,
proceeding, claim, demand, inquiry, or investigation as soon as possible.  We may voluntarily, but under no
circumstances are we obligated to, assume the defense or settlement of the
proceeding or claim. We have the sole discretion to choose our own attorneys,
and to consent to judgment or agree to settlement, if we so choose.

 

28.
CONTRACT INTERPRETATION AND ENFORCEMENT

 

28.1.  Governing Law.  We accept this Agreement in
the State of New Jersey.  In any action,
suit, or claim (whether in court or arbitration) by or against you or us
(including our present or former agents and employees, our affiliates, and our
affiliates’ present or former agents and employees), which in any way arises
out of or relates to your franchise relation with us, including, but not
limited to, any and every aspect of the process of entering into the franchise
relation, this Agreement, any guaranty or other Collateral Agreements with us
or our Affiliates, our performance in connection with the franchise relation,
any termination, rescission, cancellation, or nonrenewal of the franchise
relation, and conduct post-termination or post-expiration of this Agreement,
only New Jersey law except that the New Jersey Franchise Practices Act shall
not apply to any franchisee whose assigned location is outside the State of New
Jersey (without reference to conflicts of law provisions therein), including
New Jersey statutes of limitation and repose, shall apply to all claims
asserted, whether sounding in tort, contract or otherwise.

 

You and we agree that in
any suit pending in any state or county court in New Jersey that involves you,
us, our present or former agents and employees, or our Affiliates or our
Affiliates’ current or former agents or employees, deposition transcripts and
affidavits may be used by any party in support of a Motion for Summary
Judgment.

 

28.2.
 Jurisdiction.  You consent to venue and
personal jurisdiction in all litigation brought by us or our Affiliates against
you, which in any way arises out of or relates to your franchise relation with
us, including, but not limited to, any and every aspect of entering into the
franchise relation, this Agreement, any guaranty or other Collateral Agreements
with us or our Affiliates, our performance in connection with the franchise
relation, any termination, rescission, cancellation or nonrenewal of the franchise
relation, and conduct post-termination or post-expiration of this Agreement, in
the following courts:  (a) the state
or county court of any city or county where we have our principal place of
business, (presently, Morris County, New Jersey); and, (b) the United
States District Court nearest to our principal place of business, (presently
the District of New Jersey, Newark Division).

 

28.3.                     Venue.

 

28.3.1                  You agree that in all litigation
brought against us, our present or former agents and employees, our Affiliates,
or our Affiliates’ present or former agents and employees, for any reason that
arises out of or relates to your franchise relation with us, including, but not
limited to, any and every aspect of the process of entering into the franchise
relation, this Agreement, any Guaranty or other Collateral Agreements with us
or our Affiliates, our performance in connection with the franchise relation,
any termination, rescission, cancellation or nonrenewal of the franchise
relation, and conduct post-termination or post-expiration of this Agreement,
such action shall be brought and venue shall be proper only in the following
courts and no others:

 

22

 

(a) for
cases where federal jurisdiction would not exist if the case were brought in
federal court, the state or county court of any city or county where we have
our principal place of business (presently, Morris County, New Jersey); and, (b) for
all other cases, the United States District Court nearest to our principal
place of business (presently the District of New Jersey, Newark Division).

 

28.3.2              In the event the
above forum selection clause is declared void or unenforceable, and any motion
we bring to change or transfer venue to a court sitting in New Jersey is
unsuccessful, then you must submit any and all suits, claims and actions
against us, our present or former agents and employees, or our Affiliates or
our Affiliates’ present or former agents and employees, and including any
action contesting the validity of this arbitration provision, as described in
the above paragraph, to arbitration in the city or county where our principal
place of business is located (presently, Morris County, New Jersey) or as near
thereto as possible, with the American Arbitration Association, in accordance
with its rules and regulations; provided, however, that if the forum
selection aspect of this arbitration clause is also declared void or
unenforceable, then you must submit all suits, claims and actions against us as
described in the above paragraph, to arbitration with the American Arbitration
Association at a location nearest You.

 

28.3.3              You
must arbitrate every claim or controversy on an individual basis, and you may
not consolidate any part of your claim with that of any other franchisee or
former franchisee.

 

28.3.4              In any arbitration
proceeding pursuant to this Agreement, the parties shall allow and participate
in discovery in accordance with the Federal Rules of Civil Procedure.  Unresolved discovery disputes may be brought
to the attention of the Chair of the arbitration panel and disposed of by him
or her.

 

28.4.  Agent for Service of Process.  We appoint the entities found in Exhibit B
as our agents for service of process. 
You appoint:

 

 

 

 

as your true and lawful
agent, to receive service of process in any litigation or arbitration arising
under this Agreement and all Collateral Agreements.  Service upon your agent has the same force
and validity as if personal service had been obtained on you, provided that we
send you notice of service and a copy of the matter served, via certified mail,
or overnight delivery service, addressed to you at the address specified on the
Signature Page of this Agreement or any other address you have given us.  If
you want to change your agent for service of process after the Effective Date
of this Agreement, you must notify us by certified mail, return receipt
requested, addressed to our Legal Department.

 

28.5.  Waiver of Jury Trial.  In any action
or suit brought by or against you or us (including our present or former agents
and employees, our Affiliates, and our Affiliates’ present or former agents and
employees), that in any way arises out of or relates to your franchise relation
with us, including but not limited to, any and every aspect of the process of
entering into such relation, this Agreement, any guaranty or other Collateral
Agreements with us or our Affiliates, our performance in connection with the
franchise relation, any termination, rescission, cancellation or nonrenewal of
the franchise relation, and conduct post-termination or post-expiration of this
Agreement, you and we agree that in the event that such action is resolved
through a court proceeding, such action shall be tried to a court without a
jury.

 

28.6.  Waiver of Punitive Damages.  You and we hereby waive to the fullest extent
permitted by law, any right or claim for punitive or exemplary damages against
the other party (including any claims against our present or former agents and
employees, our Affiliates, and our Affiliates’ present or former agents and
employees), as to any action, suit or claim (whether in court or before any
other tribunal) that arises out of or relates to your franchise relation,
including, but not limited to, any and every aspect of the process of entering
into the franchise relation, this Agreement, any guaranty or other Collateral
Agreements with us or our Affiliates, our performance in connection with the

 

23

 

franchise relation, any
termination, rescission, cancellation or nonrenewal of this franchise relation,
and conduct post-termination or post-expiration of this Agreement.  However, our Affiliates and we are entitled
to punitive and exemplary damages, and any other rights and remedies provided
by law, if you infringe any of the Marks.

 

28.7.  No Class Actions.  You agree that for our Network to function
properly, we cannot be burdened with the costs of litigating network-wide
disputes.  You agree that any dispute
between you and us is unique as to its facts, and you shall not institute, join
or participate in any class action against us or our Affiliates.

 

28.8.  Construction and Severability.

 

28.8.1              All references
in this Agreement to the singular shall apply to the plural where it applies.

 

28.8.2              If any part of
this Agreement is declared invalid, this decision shall not affect the validity
of any other part, which shall remain in full force and effect.

 

28.9.  Notices. 
All written notices permitted or required by the terms
of this Agreement or the Manual, shall be deemed delivered when actually
received or when delivered if delivered by hand, telefax, or three
(3) days after having been placed in the U.S. mail or one (1) day
after having been left with an overnight delivery service or one (1) day
after being sent by our e-mail system. 
Notices to us shall be addressed “Attention: Vice President – Franchise
Administration and Compliance” at our current home office business address or
to you at the most current address of which we have been notified in
writing.  If you refuse to sign for or
accept any notice as provided above, or you have moved without giving us a good
address, notice will be effective by any means described above to whatever
addresses we have on the date of attempted delivery.

 

28.10.  Scope and Modification of this
Agreement.  This Agreement constitutes the entire understanding
and agreement between the parties and supersedes all earlier and
contemporaneous representations, under-standings, oral and written agreements
about us, all of the subject matters in this Agreement, and the Franchised
Business, including, but not limited to, any and all oral or written
representations concerning cost or profitability.  No modification or change to this Agreement
shall have any effect unless it is in writing and signed by you and our
authorized representative.

 

28.11.  Waiver. 
No waiver by us of any breach or series of breaches of
this Agreement shall constitute a waiver of any additional breach or waiver of
the performance of any of your obligations under this Agreement, and no custom
or practice of the parties that varies from this Agreement shall prevent us
from demanding strict compliance with any term of this Agreement.  Our acceptance of any payment from you or our
failure, refusal or neglect to exercise any right under this Agreement to
insist upon full compliance with your obligations under this Agreement, or with
any specification, standard or operating procedure or rule, will not constitute
a waiver of any provision of this Agreement.

 

28.12. Independent
Contractors  You acknowledge that you are an independent
contractor and that no principal-agent, partnership, employment, joint venture
or fiduciary relation exists between you and us.  You are solely liable for any damages to any person
or property arising directly or indirectly out of the operation of your
Franchised Business.  You are solely
liable for any taxes levied on you, utility obligations, contractual and other
obligations.  You are not authorized to
make any contract, warranty or representation, or incur any obligation on our
behalf.  This Agreement is solely a
license to use our Marks in a tax return preparation business using our
Operating System.

 

28.13.  Survival of Obligations.  The obligations in this Agreement that by
their terms require or may require performance after the expiration or
termination of this Agreement, including contract interpretation and governing
law, any personal guaranty, post-termination covenants, and indemnities, remain
enforceable after the expiration or termination, for any reason, of this
Agreement, including the sale of the Franchised Business or a majority of its
assets.

 

28.14.  Damages for Service Mark Infringement and
Other Violations.

 

28.14.1       If you violate our
federal or common law trademark or service mark rights, our right to injunctive
relief shall not preclude our recovery of money damages from you as provided by
federal, state or common law.

 

24

 

28.14.2       We or our designee may obtain
without bond, temporary and permanent injunctions and orders of specific
performance to enforce our exclusive rights in our Marks, to enforce your
post-termination or expiration obligations, to prevent an unauthorized
assignment or transfer of your franchise, to prevent the unauthorized use or
disclosure of our trade secret, proprietary or confidential information, and to
prohibit any act or omission by you or your employees that constitutes a
violation of any law or regulation, is dishonest or misleading to any current
or prospective customers of the Franchised Business, constitutes a danger to
any other Franchisees, employees, customers, or to the public, or that may
impair the goodwill of our Marks.

 

28.15.  Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be considered an original.

 

28.16.  Effective Date.  This Agreement is effective on the date we
indicate on the Signature Page, only after acceptance and execution by our
authorized representative at our principal place of business.

 

28.17.  Force Majeure.  We shall not be responsible or liable for
delay or failure in the performance of this Agreement, if such delay or failure
is due to any cause beyond our control, such as, but not limited to, strikes,
scarcity of labor, fires, floods, storms, earthquakes, explosions, accidents,
breakage of computers, scarcity of materials, fuel or transportation, and
delays or defaults caused by public carriers that cannot reasonably be forecast
or provided against, embargoes, governmental regulations or orders, perils of
navigation, acts of public enemies, mobs or rioters and acts of God.

 

28.18      Remedies. 
Remedies specified in this Agreement are cumulative
and do not exclude any remedies available at law or in equity.  The non-prevailing party will pay all costs
and expenses, including reasonable attorneys’ fees and court costs, incurred by
the prevailing party to enforce this Agreement or any Collateral Agreement
including collection of amounts owed under this Agreement or a Collateral
Agreement.

 

28.19                  Acknowledgment.

 

28.19.1       You
acknowledge that we and our agents have not made any warranty, or guaranty,
express or implied, as to the potential volume, profit, income, or the likely
success of your franchise, or as to the quality of software, advertising,
support, the Operating System, the business contemplated by this Agreement, or
any other matter.  You acknowledge
that you have conducted an independent investigation about the franchise
described in this Agreement and in the Offering Circular, and you recognize
that it involves business risks, and that the success of this venture is
largely dependent upon your business ability, market conditions and laws and
regulations.  You acknowledge that our
attorneys, accountants or other advisers have not advised or represented you in
connection with this Agreement.  You acknowledge that no salesperson has made any
promise or provided any information to you about projected sales, revenues,
income, profits or expenses from the Assigned Area except as stated in Item 19
of the Uniform Franchise Offering Circular or in a writing that is attached to
this Agreement.

 

28.19.2       You acknowledge that in
granting this franchise, we have relied on the representations contained in
your application, and that you represent that all information contained in the
application, and in any accompanying materials is true and correct and contains
no misleading statements or any material omissions.

 

28.19.3       You acknowledge that
you have read this Agreement and our Offering Circular and that you have been
given the opportunity to clarify any provision that you do not understand.  The terms, conditions, and promises contained
in this Agreement are necessary to maintain our high standards of customer
service, and to maintain the uniformity of those standards at all locations.

 

28.19.4       You
acknowledge that we have provided you with our franchise

 

25

 

Offering
Circular no later than the earlier of the first personal meeting held to
discuss the sale of this franchise, ten (10) business days before
execution of this Agreement, or ten (10) business days before you gave us
any money or other consideration.

 

28.19.5       You
acknowledge that we provided you with a copy of this Agreement and all related
documents, with all material terms filled in, at least five (5) business
days before you signed them or paid us any consideration.

 

 

[Balance of page intentionally
left blank]

 

26

 

SIGNATURE PAGE - FRANCHISE
AGREEMENT - SOLE PROPRIETOR

 

YOU REPRESENT THAT YOU
HAVE READ THIS AGREEMENT AND OUR UNIFORM FRANCHISE OFFERING CIRCULAR IN
THEIR ENTIRETY, AND THAT YOU HAVE BEEN GIVEN THE OPPORTUNITY TO CLARIFY ANY
PROVISIONS AND INFORMATION THAT YOU DID NOT UNDERSTAND, AND TO CONSULT WITH AN
ATTORNEY OR OTHER PROFESSIONAL ADVISER. 
YOU FURTHER REPRESENT AND WARRANT THAT YOU UNDERSTAND THE TERMS,
CONDITIONS, AND OBLIGATIONS OF THIS FRANCHISE AGREEMENT AND AGREE TO BE BOUND
BY THEM.

 

The parties have signed
and sealed this Agreement below.

 

 

	
   

  	
  JACKSON
  HEWITT INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  SEAL

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FRANCHISEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/

  	
  SEAL

  
	
   

  	
  Signature of
  Sole Proprietor

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print Name of
  Sole Proprietor

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Home Address of
  Sole Proprietor

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Home Telephone
  No. of Sole Proprietor

  
	
   

  	
   

  
	
   

  	
  Your Entity
  No. (if known):

  
	
   

  	
   

  
	
   

  	
   

  
	
  The Effective
  Date of this Agreement is:

  	
   

  	
  .

  
	
   

  	
   

  	
   

  
	
  This Agreement
  expires at midnight on:

  	
   

  	
  .

  
						

 

 

SIGNATURE PAGE - FRANCHISE AGREEMENT - PARTNERSHIP

 

YOU REPRESENT THAT YOU
HAVE READ THIS AGREEMENT AND OUR UNIFORM FRANCHISE OFFERING CIRCULAR IN
THEIR ENTIRETY, AND THAT YOU HAVE BEEN GIVEN THE OPPORTUNITY TO CLARIFY ANY
PROVISIONS AND INFORMATION THAT YOU DID NOT UNDERSTAND, AND TO CONSULT WITH AN
ATTORNEY OR OTHER PROFESSIONAL ADVISER. 
YOU FURTHER REPRESENT AND WARRANT THAT YOU UNDERSTAND THE TERMS,
CONDITIONS, AND OBLIGATIONS OF THIS FRANCHISE AGREEMENT AND AGREE TO BE BOUND
BY THEM.

 

The parties have signed
and sealed this Agreement below.

 

	
   

  	
  JACKSON
  HEWITT INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  SEAL

  
	
   

  	
  Title:

  

 

	
  FRANCHISEE:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name of
  Partnership

  	
   

  
	
   

  	
   

  
	
  /s/

  	
  SEAL

  	
  /s/

  	
  SEAL

  
	
  Signature of
  General Partner

  	
  Signature of
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Print Name of
  General Partner

  	
  Print Name of
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Home Address of
  General Partner

  	
  Home Address of
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Home Telephone
  No. of General Partner

  	
  Home Telephone
  No. of General Partner

  
	
   

  	
   

  
	
  /s/

  	
  SEAL

  	
  /s/

  	
  SEAL

  
	
  Signature of
  General Partner

  	
  Signature of
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Print Name of
  General Partner

  	
  Print Name of
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Home Address of
  General Partner

  	
  Home Address of
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Home Telephone
  No. of General Partner

  	
  Home Telephone
  No. of General Partner

  
	
   

  	
   

  
	
   

  	
  Your Entity
  No. (if known):

  	
   

  	
   

  
	
   

  	
   

  
	
  The Effective
  Date of this Agreement is:

  	
   

  	
  .

  
	
   

  
	
  This Agreement
  expires at midnight on:

  	
   

  	
  .

  
								

 

 

SIGNATURE PAGE - FRANCHISE AGREEMENT - CORPORATION

 

YOU REPRESENT THAT YOU
HAVE READ THIS AGREEMENT AND OUR UNIFORM FRANCHISE OFFERING CIRCULAR IN
THEIR ENTIRETY, AND THAT YOU HAVE BEEN GIVEN THE OPPORTUNITY TO CLARIFY ANY
PROVISIONS AND INFORMATION THAT YOU DID NOT UNDERSTAND, AND TO CONSULT WITH AN
ATTORNEY OR OTHER PROFESSIONAL ADVISER. 
YOU FURTHER REPRESENT AND WARRANT THAT YOU UNDERSTAND THE TERMS, CONDITIONS,
AND OBLIGATIONS OF THIS FRANCHISE AGREEMENT AND AGREE TO BE BOUND BY THEM.

 

The parties have signed
and sealed this Agreement below.

 

	
   

  	
  JACKSON
  HEWITT INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  SEAL

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FRANCHISEE:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print Name of
  Corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  SEAL

  
	
   

  	
  Signature of Authorized
  Representative

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print Name of
  Authorized Representative

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title of
  Authorized Representative

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Home Address of
  Authorized Representative

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Home Telephone
  No. of Authorized Representative

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Your Entity
  No. (if known):

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
							

 

	
  The Effective
  Date of this Agreement is:

  	
   

  	
  .

  
	
   

  	
   

  	
   

  
	
  This Agreement
  expires at midnight on:

  	
   

  	
  .

  

 

 

SIGNATURE PAGE - FRANCHISE AGREEMENT - LIMITED
LIABILITY COMPANY

 

YOU
REPRESENT THAT YOU HAVE READ THIS AGREEMENT AND OUR UNIFORM FRANCHISE
OFFERING CIRCULAR IN THEIR ENTIRETY, AND THAT YOU HAVE BEEN GIVEN THE
OPPORTUNITY TO CLARIFY ANY PROVISIONS AND INFORMATION THAT YOU DID NOT
UNDERSTAND, AND TO CONSULT WITH AN ATTORNEY OR OTHER PROFESSIONAL ADVISER.  YOU FURTHER REPRESENT AND WARRANT THAT YOU
UNDERSTAND THE TERMS, CONDITIONS, AND OBLIGATIONS OF THIS FRANCHISE AGREEMENT
AND AGREE TO BE BOUND BY THEM.

 

The
parties have signed and sealed this Agreement below.

 

	
   

  	
  JACKSON HEWITT INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  SEAL

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  

 

FRANCHISEE:

 

 

	
   

  	
   

  	
   

  	
   

  
	
  Print Name of Limited Liability Company

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/

  	
  SEAL

  	
  /s/

  	
  SEAL

  
	
  Signature of Member

  	
   

  	
  Signature of Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Print Name of Member

  	
   

  	
  Print Name of Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Home Address of Member

  	
   

  	
  Home Address of Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Home Telephone No. of Member

  	
   

  	
  Home Telephone No. of Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/

  	
  SEAL

  	
  /s/

  	
  SEAL

  
	
  Signature of Member

  	
   

  	
  Signature of Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Print Name of Member

  	
   

  	
  Print Name of Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Home Address of Member

  	
   

  	
  Home Address of Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Home Telephone No. of Member

  	
   

  	
  Home Telephone No. of Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Your Entity No. (if known):

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The Effective Date of this Agreement is:

  	
  .

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  This Agreement expires
  at midnight on:

  	
  .

  	
   

  	
   

  
								

 

 

SCHEDULE A

 

Your Territory

 

This Territory shall be deemed
a:

 

 

 

(insert “Standard
Territory,”  “Mid-Market Territory” or
“Small Market Territory”)

 

 

In absence of a designation by
the parties, the Territory shall be deemed a Standard Territory.

 

 

 

 

If the Territory described above
includes any street, road, boulevard, highway or other transportation artery,
that street, road, boulevard or other transportation artery includes all U.S.
Postal addresses established by the U.S. Postal Service on either side of that
street, road, boulevard, highway or other transportation artery, even if the
physical site of the address is not located at the curbside, but instead is
located back off from the street, road, boulevard, highway or other
transportation artery, or is located in a shopping center that is back off from
or removed from the street, road, boulevard, highway or other transportation
artery.

 

 

SCHEDULE B

 

The Franchisee

 

List the names and
addresses of each person owning an interest in this Agreement and the
percentage of each person’s interest:

 

 

 

 

 

Attach
certified copies of the Articles of Incorporation or Organization or such
copies that prove to our satisfaction that your Articles were accepted by the
state where filed.

 

 

SCHEDULE C

 

GUARANTY OF FRANCHISEE’S UNDERTAKINGS

 

In consideration of, and
as an inducement to Jackson Hewitt Inc. (“Jackson Hewitt”), to execute the
Franchise Agreement dated
                                                           ,
between                          ,
the Franchisee, and Jackson Hewitt, the undersigned Guarantor(s) guarantee(s)
that Franchisee will timely and fully perform each and every provision,
covenant, payment, agreement and undertaking found in the Franchise Agreement,
the Software License Agreement, the Security Agreement, any Release, any Note,
any agreement with a third party for any program arranged or sponsored by
Jackson Hewitt (the “liabilities”), and any other Collateral Agreement with
Jackson Hewitt.  This guarantee is
absolute, irrevocable, and continuing, and covers any and all present or future
obligations, including all post-termination obligations.  In addition, Guarantors agree to comply
personally with all the following covenants: In Term Competition; Covenant Not
to Compete; Covenant Against Recruiting or Hiring Our Employees; Covenant Not
to Solicit; Covenant to Protect Trade Secrets, Indemnification, and any other
covenants which by their terms require performance after the termination of the
Franchise Agreement.  The obligations of
the Guarantor(s) shall survive any expiration or termination of the Franchise
Agreement or this Guaranty, including the sale of a majority of the assets of
the Franchised Business.

 

Guarantor(s)
acknowledge(s) that Jackson Hewitt, its successors and assigns, may from time
to time, without notice to Guarantor(s), do any or all of the following:
(a) resort to Guarantor(s) for payment of any liabilities, whether or not
it or its successors have resorted to any property securing any of the
liabilities, or proceed against any of the Guarantor(s) or against any party
primarily or secondarily liable on any of the liabilities covered by this
guaranty; (b) release or compromise any liability of any Guarantor(s), or
the liability of any party who is primarily or secondarily liable on any of the
liabilities covered by this guaranty; (c) extend, renew or credit any of
the liabilities for any period (whether or not the original period);
(d) alter, amend or exchange any of the liabilities; or, (e) give any
other form of indulgence, whether under the Franchise Agreement or not.

 

Guarantor(s) waive(s)
presentment, demand, notice of dishonor, protest, nonpayment and all other
notices whatsoever, including, but not limited to, notice of acceptance, notice
of all contracts and commitments, notice of the existence or creation of any
liabilities under the Franchise Agreement, and of its amount and terms, and
notices of all defaults, disputes or controversies between it and Franchisee
resulting from the Franchise Agreement or otherwise, and the settlement,
compromise or adjustment of any liabilities.

 

Any waiver, extension of
time or other indulgence granted from time to time by Jackson Hewitt or its
agents, successors or assigns with respect to the Franchise Agreement or this
guaranty shall in no way modify or amend this guaranty, which shall be continuing,
absolute, unconditional and irrevocable. Guarantor(s) authorize(s) Jackson
Hewitt to order updated credit reports on Guarantor(s) at any time without
notice.  All Guarantor(s) are jointly,
severally and primarily liable.

 

Guarantor(s) waive(s) any
defense(s) arising by reason of any disability, insolvency, lack of authority
or power, death, insanity, minority, dissolution or any other defense of
Franchisee, any Guarantor(s), or any other surety or Guarantor of the
obligations of the Franchise Agreement.

 

In witness whereof, each
Guarantor has executed and sealed this guaranty under seal effective on the
date of the Franchise Agreement.

 

	
  /s/

  	
  SEAL

  	
   

  	
  /s/ 

  	
  SEAL

  
	
  Signature of
  Guarantor

  	
   

  	
  Signature of
  Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
  Address

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Home Telephone
  No.

  	
   

  	
  Home Telephone
  No.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/

  	
  SEAL

  	
   

  	
  /s/ 

  	
  SEAL

  
	
  Signature of
  Guarantor

  	
   

  	
  Signature of
  Guarantor

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
  Address

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Home Telephone
  No.

  	
   

  	
   

  	
  Home Telephone
  No.Exhibit 10.26

 

CONSULTING AGREEMENT
(the “Agreement”) dated as of May 10, 2005 (the “Effective Date”) by and
between, JACKSON HEWITT INC., a Virginia
corporation (the “JH”) and Perb Fortner (“Mr.
Fortner” or the “Consultant”).

 

WHEREAS, the Company has accepted the retirement and resignation of Mr.
Fortner from active service with Jackson Hewitt Tax Service Inc. (“JHTS”) and
its subsidiaries, including JH (collectively, the “Company”).

 

WHEREAS, Mr. Fortner had immediately prior to his retirement and resignation
served the Company in the role of Executive Vice President, Operations and had
been involved in certain ongoing Company projects.

 

WHEREAS, JH desires to continue its business relationship with Mr.
Fortner by retaining Mr. Fortner as a consultant to perform consulting services,
providing the Company with guidance and advice from time to time in connection
with its franchise operations and other specific projects, and Mr. Fortner is
willing to perform such services, upon the terms and conditions herein.

 

NOW, THEREFORE, in
consideration of the foregoing and the mutual covenants hereinafter set forth,
the parties hereto have agreed, and do hereby agree, as follows:

 

1.                                       Retention; Duties.

 

(a)                                  Subject to the
terms and conditions set forth herein, JH hereby retains the Consultant, and
the Consultant hereby accepts such retention, to act as a consultant with
respect to providing the Company guidance and advice in the areas of its
franchise operations, including technology matters, and other related business matters
and projects, from time to time during the term of this Agreement as the
Company may designate as directed by the Company’s Chief Executive Officer.  In particular, Consultant agrees to attend
and fully participate in the Company’s annual Franchisee Convention in Las
Vegas, Nevada (the “Convention”) as directed by the Company.  The Consultant shall remain available, via
telephone, facsimile and e-mail, during the term of this Agreement.

 

(b)                                 Consultant
agrees to travel on prearranged Company business at the direction of the
Company, including the Convention. Company shall provide reimbursement for all
reasonable, customary and necessary travel expenses.

 

(c)                                  Consultant
shall be reimbursed for reasonable and customary business expenses while
performing work at the direction of JH, subject to prior approval of expenses
and upon submission of satisfactory documentation.  Expenses to be reimbursed in accordance with
JH policies.

 

(d)                                 Consultant
shall be available to perform his consulting duties from

 

1

 

corporate headquarters in Parsippany, New Jersey through July 31,
2005, unless JH instructs otherwise.

 

(e)                                  Consultant
shall devote the number of hours set forth below during the term of this
Agreement:

 

(i) Effective Date through July 31, 2005, Consultant shall provide
forty (40) hours per week of service, with the exception of the week of the
Convention, at which Consultant shall be present at Convention and available
and working at all times needed from June 3, 2005 to June 9, 2005;

 

(ii) August 1, 2005 through the Term (as defined below),
Consultant shall provide up to twenty (20) hours per week of service as
projects warrant and as directed by the JH.

 

2.                                       Term. 
The term of this Agreement shall commence as of the Effective Date and
continue until October 31, 2006 (the “Term”)  .

 

3.                                       Compensation.

 

(a)                                  As
compensation for his services provided hereunder, JH shall pay the Consultant
at the rate of $20,000 (twenty thousand dollars) per month.  Consultant shall not be required to submit an
invoice for services rendered on a monthly basis.  JH shall pay the Consultant in accordance
with the Company’s normal payroll practices.

 

(b)                                 To
facilitate Consultant’s duties hereunder, the Company hereby makes a gift of
the Consultant’s laptop and cellular phone. 
Consultant shall not be entitled to take Consultant’s laptop until all
information currently residing on it has been reviewed by Human Resources and
the Company has determined what is appropriate to remain on the laptop to
further Consultant’s role for the benefit of the Company.  Consultant shall be responsible for ongoing
charges for the cellular phone, except in accordance with paragraph 1(c) above.

 

4.                                       Independent Contractor.  The relationship created hereunder is that of
the Consultant acting as an independent contractor.  It is expressly acknowledged and agreed that
the Consultant shall have no authority to bind the Company to any agreement or
obligation with any third party.

 

5.                                       Representations and Warranties and Covenants of the
Consultant.  The
Consultant hereto, hereby represents and warrants to the Company:

 

(a)                                  he
has the power and authority to execute and deliver this Agreement and to
perform the duties and responsibilities contemplated hereby;

 

2

 

(b)                                 that
neither the execution of this Agreement nor performance hereunder will (i)
violate, conflict with or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under the terms, conditions or provisions of any
contract, agreement or other instrument or obligation to which he is a party,
or by which he may be bound, or (ii) violate any order, judgment, writ,
injunction or decree applicable to him.

 

6.                                       Representations and Warranties of the Company.  The Company hereby represents and warrants to
the Consultant:

 

(a)                                  it
is a corporation duly organized validly existing and in good standing under the
laws of the state of incorporation and it has qualified to do business as a
foreign corporation in the jurisdictions, if any, outside of such state, in
which it does business and is required to so qualify;

 

(b)                                 it
has full corporate power and authority to execute and deliver this Agreement
and to perform the duties and responsibilities contemplated hereby;

 

7.                                       Confidentiality And Non-Competition.

 

(a)  Unless otherwise required by
law or judicial process, Consultant shall keep confidential all confidential
information known to Consultant concerning the Company, whether obtained during
his course of employment, consultancy or otherwise, until such information is
publicly disclosed by the Company or otherwise becomes publicly disclosed other
than through Consultant’s actions; provided, that Consultant shall provide
notice to the Company in advance of any disclosure required by law or judicial
process in a timely manner to permit the Company to oppose such compelled
disclosure.

 

(b)  Consultant agrees that during the Term and
for a period of six months after the Term, he shall not, directly or
indirectly, as a principal, officer, director, employee or in any other
capacity whatsoever, without the prior written consent of the Company, engage
in, or be or become interested or acquire any ownership of any kind in, or
become associated with, or make loans or advance property to any person engaged
in or about to engage in, any business activity that is in competition with any
of the businesses then engaged in by the Company, including operating a tax
preparation business, whether as a franchisor, franchisee, independent or
otherwise, except as a franchisee of the Company if the Company agrees in
writing.  Consultant acknowledges that
the Company’s business is national in scope and as such the geographic
restriction of this provision is the United States and that such geographic
restriction is necessary and appropriate. 
Nothing in this Agreement shall prevent Consultant from making or
holding any investment in any amount in securities traded on any national
securities exchange or traded in the over the counter market, provided said
investments do not exceed one percent (1%) of the issued and outstanding stock
of any one such corporation.

 

3

 

(c)  With respect to the matters set forth in Section 7,
the Company shall be entitled to seek equitable relief, including injunctions
or specific performance, in addition to the other remedies available to it.

 

8.                                       Taxes. 
Consultant shall be
responsible for all taxes.  The Company
shall, if it determines appropriate, deduct from all amounts payable under this
Agreement all federal, state, local and other taxes required by law to be
withheld with respect to such payments.

 

9..                                    Assignment.  This Agreement shall not be assigned by the
Company or the Consultant without the prior written consent of the other.

 

10.                                 Notices.  Any notice required or permitted to be given
pursuant to this Agreement shall be deemed to have been duly given when
delivered by hand or sent by certified or registered mail, return receipt
requested and postage prepaid, overnight mail or telecopier as follows:

 

	
  If to the Company:

  	
   

  	
  Jackson Hewitt Inc.

  
	
   

  	
   

  	
  c/o Jackson Hewitt Tax Service Inc.

  
	
   

  	
   

  	
  7 Sylvan Way

  
	
   

  	
   

  	
  Parsippany, New Jersey 07054

  
	
   

  	
   

  	
  Telephone: (973) 496- 3929

  
	
   

  	
   

  	
  Telecopier: (973) 496-2810

  
	
   

  	
   

  	
  Attention: General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If to the Consultant:

  	
   

  	
  Perb Fortner

  
	
   

  	
   

  	
  1 Concord Lane

  
	
   

  	
   

  	
  Morristown, New Jersey 07960

  

 

or at such other address as any party shall designate by notice to the
other party given in accordance with this Paragraph 10.

 

11.                                 Governing Law.  This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New Jersey
applicable to agreements made and to be performed entirely in New Jersey. This
Agreement and any dispute arising under or relating to any provision of this
Agreement shall be governed by and construed in accordance with the laws of the
State of New Jersey.  Venue for any
action arising out of this Agreement shall only be brought in the federal
courts in the county of Morris, New Jersey, or if such court does not have
jurisdiction, such other court having jurisdiction in New Jersey.  The parties waive any right to a jury
trial.  Each party shall pay its or his
own expenses in connection with all matters arising under or relating to any
provision of this Agreement.

 

12.                                 Waiver of Breach; Partial Invalidity.  The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.

 

4

 

If any provision, or part thereof, of this Agreement shall be held to
be invalid or unenforceable, such invalidity or unenforceability shall attach
only to such provision and not in any way affect or render invalid or
unenforceable any other provisions of this Agreement, and this Agreement shall
be carried out as if such invalid or unenforceable provision, or part thereof,
had been reformed, and any court of competent jurisdiction or arbiters, as the
case may be, are authorized to so reform such invalid or unenforceable
provision, or part thereof, so that it would be valid, legal and enforceable to
the fullest extent permitted by applicable law.

 

13.                                 Entire Agreement.  This Agreement constitutes the entire
agreement between the parties and there are no representations, warranties or
commitments except as set forth herein. 
This Agreement supersedes all prior agreements, understandings, negotiations
and discussions, whether written or oral, of the parties hereto relating to the
transactions contemplated by this Agreement, with the exception of any
non-compete, non-solicit or confidentiality agreement between Mr. Fortner and
the Company, which agreement shall survive Mr. Fortner’s retirement from active
employment in accordance with its own terms, and any other agreement entered
into on or after the date hereof shall survive according to their own terms. This
Agreement may be amended only by a writing executed by the parties hereto.

 

IN WITNESS WHEREOF,
the Consultant and the Company have executed or have caused to be duly
executed, this Agreement as of the day and year above written.

 

	
   

  	
   

  	
  JACKSON HEWITT INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Michael D. Lister

  	
   

  
	
   

  	
   

  	
   

  	
  Michael D. Lister, Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ Perb Fortner

  	
   

  
	
   

  	
   

  	
   

  	
  Perb Fortner, Consultant

  

 

5

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