1. AR Fees
   1. One Time Fees
      1. Area Representative Fee: $375,000 upon signing the agreement​​.
      2. Initial Marketing Fee: $5,000 due upon signing the agreement​​.
      3. Unit Franchise Training Fee: $16,950 per person attending the initial training program​​.
      4. AR Training Fee: $9,950 per person attending the AR training program​
   2. Recurring Fees
      1. Royalty Fee: $1,950 monthly​​.
      2. Technology Fee: $1,950 annually, first payment due upon signing​​.
      3. Advertising Fund Fee: Up to $500 monthly​​.
      4. Conference Registration Fee: $1,800 annually​​.
   3. Other Fees
      1. Late Fees: 18% of the amount owed if payment is late​​.
      2. Interest on Delinquent Payments: 1.5% per month on overdue amounts​​.
2. Individual Fees
   1. Initial Franchise Fee
      1. Total Amount: $75,000
      2. AR’s Share: 50% of the initial franchise fee
      3. Calculation: 50% of $75,000 = $37,500
      4. Reference: Section 6.1 License Fees .
   2. Monthly Royalty Fee
      1. Total Amount: $1,950 per month
      2. AR’s Share: 50% of the monthly royalty fee for Franchisees that enter into a Franchise Agreement after the Effective Date
      3. Calculation: 50% of $1,950 = $975 per month
      4. Reference: Section 6.2 Continuing Fees .
   3. Additional Fees for Franchisees
      1. Technology Fee:
         1. Amount: $1,950 annually
         2. Purpose: Contributes to the creation, maintenance, and development of the intranet site and other technology used in the Franchise System.
         3. Payment: The first annual payment is due upon signing the agreement, with subsequent annual payments due by November 30th each year.
         4. Reference: Item 5.4 Technology Fee .
      2. Advertising Fund Fee:
         1. Amount: Up to $500 monthly
         2. Purpose: Supports regional, multi-regional, national, and global advertising, marketing, and public relations programs.
         3. Payment: Due on the first day of each month.
         4. Reference: Item 5.5 Advertising Fund Fee .
   4. Training Fees:
      1. Franchisee Training Fee: $16,950 per person attending the initial training program.
      2. AR Training Fee: $9,950 per person attending the AR training program.
      3. Reference: Item 5.3 Training Fees .
   5. Conference Registration Fee:
      1. Amount: Not to exceed $1,800 annually per person
      2. Purpose: Covers costs associated with the annual national and/or regional conferences.
      3. Payment: The first annual payment is due upon signing the agreement, with subsequent annual payments due annually.
      4. Reference: Item 5.6 Conference Registration Fee .
   6. Summary of AR's Earnings from Individual Franchise Coaches
      1. Initial Franchise Fee: $37,500 per new franchise coach.
      2. Monthly Royalty Fee: $975 per month per franchise coach.
      3. No Share: AR does not receive a direct share from the Technology Fee, Advertising Fund Fee, Training Fees, or Conference Registration Fee, but these fees contribute to the overall franchise system's support and development.
3. Term of the Contract
   1. The relevant section can be found in Article 4 of the Area Representative Franchise Agreement:
      1. Initial Term: 10 years.
      2. Successor Terms: Up to two additional consecutive terms of 10 years each.
      3. Renewal: $50,000 plus applicable taxes is required for each Successor Term.
   2. Table 16: Termination by Franchisor – Automatic Termination Without Notice The Area Representative (AR) will be in default, and all rights granted under this Agreement will automatically terminate without notice if any of the following events occur:
      1. Details of Table 16: Default and Termination
      2. Termination by Franchisor – Automatic Termination Without Notice
      3. The Area Representative (AR) will be in default, and all rights granted under this Agreement will automatically terminate without notice if any of the following events occur:
      4. Bankruptcy or Insolvency: AR, AR Business, or the related business is adjudicated as bankrupt or insolvent.
      5. Assignment for Benefit of Creditors: All or a substantial part of the assets are assigned to creditors.
      6. Bankruptcy Filing: A bankruptcy petition is filed and not dismissed within 60 days.
      7. Appointment of Receiver: A bill for the appointment of a receiver or other custodian is filed and consented to by the AR.
      8. Custodian Appointment: A receiver or custodian for AR's assets is appointed by a court.
      9. Composition with Creditors: Proceedings for a composition with creditors are instituted.
      10. Dissolution: AR is dissolved (if AR is an entity).
      11. Execution Levied: Execution is levied against AR's property.
      12. Sale After Levy: Real or personal property of the AR Business is sold after levy by governmental body, sheriff, marshal, or constable.
   3. Termination by Franchisor Upon Notice – No Opportunity to Cure The AR will have materially breached the Agreement, and the Franchisor may terminate the Agreement without an opportunity to cure if:
      1. Cessation of Operations: AR ceases to operate the AR Business or abandons the relationship with the Franchisor.
      2. Failure to Begin Operations: AR does not begin operating the AR Business within 60 days after the Effective Date.
      3. Material Misrepresentation: AR or AR's Owners make a material misrepresentation or omission.
      4. Felony or Fraud: AR or Owners are convicted of or plead to a felony, fraud, or crime involving moral turpitude.
      5. Unauthorized Assignment: AR or Owners make or attempt an unauthorized assignment of the agreement.
      6. Non-Compete Violation: AR violates the non-compete covenant during the Agreement term.
      7. Concealment of Revenues: AR conceals revenues or falsifies records.
      8. Unauthorized Use of Marks: AR or affiliates apply for a trademark registration of any Mark without authorization.
      9. Multiple Defaults: AR receives two or more default notices within a 12-month period.
      10. Misrepresentation to Government: AR makes a willful misrepresentation to any government entity.
      11. Interference with Contracts: AR interferes with Franchisor's contractual relations with other franchisees or clients.
      12. Unethical Conduct: AR or its Owners engage in unethical conduct affecting the Franchisor's reputation.
      13. Unlawful Statements: AR or its representatives make illicit statements, including threats or abuse.
      14. Legal Violations: AR violates any federal, state, or local law applicable to the AR Business and does not correct it within 30 days.
      15. Non-Payment: AR fails to pay any amounts owed to Franchisor or its affiliates and does not correct within 10 days of notice.
      16. Cross-Default: Any other agreement between Franchisor and AR is terminated before its term expires.
      17. Failure to Comply: AR fails to comply with any other provision of the Agreement or System Standards and does not correct within 30 days of notice​​​​​​.
4. Obligations to Maintain the Agreement
   1. Sales and Opening Goals:
      1. 3 Franchises a year
      2. Must meet and maintain specific sales and opening goals as outlined in Exhibit C of the agreement. Failure to meet these goals can result in termination of the agreement, loss of territorial rights, or additional fees​​.
      3. During each contract year of the agreement, the Area Representative must ensure that at least three franchisees sign a Franchise Agreement and open a FocalPoint Franchised Business in the franchised territory during the contract year.
      4. If the Area Representative fails to meet these minimum goals each year, the Franchisor will give written notice and an opportunity to cure the deficiency within sixty (60) days of the date of the notice.
      5. If the Area Representative does not cure the failure within the sixty-day cure period, the Franchisor may terminate the Area Representative Agreement immediately without offering any additional opportunity for cure.
      6. The Franchisor may also exercise any of the rights specified in Section 8.1 of the agreement during the period that the Area Representative is in default of the Minimum Goal obligation​
   2. Compliance:
      1. Adherence to all system standards and modifications as prescribed by Franchisor. This includes operational procedures, marketing guidelines, and use of trademarks and proprietary information​​​​.
      2. Operational Procedures:
         1. Procedures, Methods, and Techniques: The AR must follow specific procedures, methods, and techniques for services performed under the agreement. This includes maintaining consistency and quality across all operations​​​​.
      3. Marketing Guidelines:
         1. Sales, Marketing, Advertising, and Promotional Programs: ARs must comply with prescribed marketing and advertising standards, which include the use of approved materials and media. This also covers social media usage, ensuring it aligns with the brand's guidelines and values​​​​.
         2. Participation in Market Research and Testing: ARs are required to participate in market research and testing programs as determined by the Franchisor. This may also include participation in advisory councils and other collaborative efforts to enhance the franchise system​​​​.
      4. Use of Trademarks and Proprietary Information:
         1. Use and Display of Marks: ARs must properly use and display the trademarks at their offices, on vehicles, forms, paper products, and other supplies. This ensures brand consistency and recognition​​​​.
         2. Authorized Products and Services: Only products, services, materials, and supplies approved by the Franchisor can be offered. Any new products or services must receive written approval before being introduced​​​​.
      5. Staffing and Training:
         1. Staffing Levels and Employee Standards: The AR is responsible for maintaining appropriate staffing levels and ensuring that employees meet the qualifications, training, dress, and appearance standards set by the Franchisor. While the AR has control over employee selection and management, they must adhere to the overall standards prescribed​​​​.
         2. Training Requirements: Both initial and ongoing training programs must be completed by the AR and their employees as mandated by the Franchisor. This ensures that everyone is up-to-date with the latest operational standards and practices​​​​.
      6. Modifications to System Standards:
         1. Adaptability to Changes: The franchise system, including standards and methods, is subject to change to adapt to new technologies, competitive circumstances, and market trends. The AR must comply with any such modifications, additions, deletions, or substitutions made by the Franchisor to the system standards and methods​​​​​​.
         2. Implementation of Changes: The AR must implement and maintain these changes within their operations and ensure that all franchisees in their territory also comply​​​​.
      7. Record Keeping and Reporting:
         1. Bookkeeping and Data Processing: The AR must follow the prescribed bookkeeping, accounting, and data processing systems. Regular reports on sales, revenue, financial performance, and other relevant data must be submitted to the Franchisor as required​​​​.
      8. General Compliance:
         1. Legal Compliance: The AR must operate in strict compliance with all applicable laws, rules, and regulations. This includes maintaining all necessary licenses and permits, adhering to wage and hour laws, and ensuring tax obligations are met​​.
         2. Manual Compliance: The AR must comply with the contents of the manual provided by the Franchisor, including any updates. This manual contains all mandatory specifications, standards, operating procedures, and rules that must be followed​​.
   3. Training:
      1. AR Training Program:
         1. The Area Representative (AR) or their Business Manager must attend the AR Training Program before opening the AR Business.
         2. The training program lasts approximately 3 days and can be conducted in-person or online, at the Franchisor's discretion.
         3. AR must notify the Franchisor in writing of the individual attending the training at least 10 days before the program begins.
         4. The AR Training Fee is $9,950 and must be paid upon signing the agreement. This fee covers the training but not travel and living expenses, except for supplied food and reasonable lodging if the training is in-person.
         5. The AR Training Program includes subjects such as overview, marketing, DISC training, support, and selling franchises, totaling 20 hours of classroom training​​.
      2. Franchisee Training Program:
         1. AR and their Business Manager must also attend the Franchisee Training Program.
         2. This training program lasts approximately 6 days and includes subjects such as the foundation, DISC, coaching technique, prospecting, presenting & selling, and technology, totaling 42 hours of classroom training.
         3. The Franchisee Training Fee is $16,950 and covers the initial training but not travel and living expenses, except for supplied food and reasonable lodging if the training is in-person​
   4. Technology and Advertising Contributions:
      1. Regular contributions to the technology and advertising funds as specified in the agreement​​.
      2. Technology Fee:
         1. AR must pay an annual Technology Fee of $1,950, which contributes to the creation, maintenance, and development of the Intranet site and other technology used in the Franchise System.
         2. The first annual payment is due upon signing the agreement, with subsequent annual payments due by November 30th each year.
         3. The Franchisor reserves the right to increase the Technology Fee annually based on the costs incurred for technology development and maintenance​​.
      3. Advertising Fund Fee:
         1. AR must contribute to the Advertising Fund monthly, with the fee not exceeding $500 per month. This fee supports regional, multi-regional, national, and global advertising, marketing, and public relations programs.
         2. The Advertising Fund covers the preparation and production of various marketing materials and electronic media, development and maintenance of an e-commerce website, and other promotional activities​​​​.
   5. Reporting and Record-Keeping:
      1. Submission of regular reports and maintenance of accurate business records as required by Franchisor​​.
      2. AR must submit a monthly marketing report, coaching status report, and sales revenue report by the seventh day of the succeeding month.
      3. The Franchisor may require additional periodic reports (weekly, monthly, semi-annual) as necessary.
      4. Within 120 days after the end of each fiscal year, AR must provide annual financial statements certified to be true and correct, and the Franchisor may require these statements to be audited by an independent CPA.
      5. All books and records must be maintained in accordance with generally accepted accounting principles (GAAP) and preserved for at least six years after the fiscal year to which they relate​
      6. Upon termination or expiration of the agreement, AR must immediately cease using the Franchisor's marks and proprietary information.
      7. AR is prohibited from operating or doing business in a way that suggests they are still associated with FocalPoint.
      8. AR must return all materials, including manuals, forms, advertising materials, and any items bearing the Franchisor's marks.
      9. AR must cancel any assumed names or registrations containing the Franchisor's marks within 15 days. If AR fails to do so, the Franchisor has the right to execute the necessary documents on AR's behalf.
      10. AR must comply with non-compete covenants, refraining from engaging in any competing business activities within specified territories and for a defined period​
   6. Post-Termination Obligations:
      1. Discontinuation of use of Franchisor's marks and proprietary information, and compliance with non-compete clauses upon termination or expiration of the agreement​​.
      2. Upon termination or expiration of the agreement, AR must immediately cease using the Franchisor's marks and proprietary information.
      3. AR is prohibited from operating or doing business in a way that suggests they are still associated with FocalPoint.
      4. AR must return all materials, including manuals, forms, advertising materials, and any items bearing the Franchisor's marks.
      5. AR must cancel any assumed names or registrations containing the Franchisor's marks within 15 days. If AR fails to do so, the Franchisor has the right to execute the necessary documents on AR's behalf.
      6. AR must comply with non-compete covenants, refraining from engaging in any competing business activities within specified territories and for a defined period​
5. Revenue Streams
   1. License Fees
      1. Percentage of Franchise Fee: The AR receives 50% of the total amount of each Franchise Fee paid to the Franchisor by a new Franchisee for the operation of a FocalPoint Franchised Business located within the AR’s territory.
      2. Timing of Payment: This License Fee is paid to the AR within 30 calendar days after the Franchisor receives and accepts the Franchise Fee.
   2. Continuing Fees
      1. Percentage of Royalty Fees: The AR receives a portion of the franchise royalty fees paid by the Franchisee to the Franchisor. The specific percentages are:
      2. 50% for Franchisees that enter into a Franchise Agreement after the Effective Date of the AR Agreement.
      3. 25% for Franchisees that entered into a Franchise Agreement before the Effective Date but are serviced by the AR after the Effective Date.
      4. Monthly Payments: These Continuing Fees are paid to the AR on a monthly basis, on the tenth (10th) day of each month, for the preceding calendar month.
   3. Additional Considerations
      1. Reduction for Third-Party Costs: The License Fees and Continuing Fees may be reduced by the Franchisor to cover the costs for third-party franchise broker services, discounts, referral fees, and internal or external sales representative services used to sell the franchises.
      2. Compliance with Conditions: The AR must meet specific conditions, including conducting monthly evaluations and submitting required reports, to be eligible for these payments.
6. Sale of AR Franchise
   1. Private Sale:
      1. The AR has the right to transfer their franchise to another party, subject to the Franchisor's approval and compliance with the conditions outlined in the agreement.
      2. The prospective transferee must meet the Franchisor's qualifications and agree to assume the obligations of the AR Agreement.
   2. Sale Back to the Company:
      1. The AR may also sell their franchise back to the Franchisor under certain conditions specified in the agreement.
      2. The terms of the buyback, including the price and any conditions, will be mutually agreed upon by the AR and the Franchisor.
   3. Conditions for Transfer
      1. Approval by Franchisor: Any transfer requires the prior written approval of the Franchisor, which will not be unreasonably withheld.
      2. Qualifications of Transferee: The new owner must meet the Franchisor's standards for ARs, including financial stability and operational capability.
      3. Assumption of Obligations: The transferee must assume all obligations under the existing AR Agreement.
      4. Transfer Fee: A transfer fee may be required as stipulated in the agreement.
   4. Relevant Sections in the Contract
      1. Area Representative Franchise Disclosure Document (FDD):
      2. Transfer provisions are typically found under the "Transfer of Interest" or similar heading.
      3. Look for clauses that discuss the conditions and process for transferring the franchise.
   5. Area Representative Franchise Agreement:
      1. Detailed conditions for transfer are often outlined in a specific section titled "Transfer" or "Assignment."
      2. This section will include the necessary approvals, qualifications of the transferee, and any associated fees.
      3. Area Representative Franchise Disclosure Document (FDD): Look for sections related to "Transfer of Interest" or similar.
      4. Area Representative Franchise Agreement: Review the section titled "Transfer" or "Assignment" for detailed conditions and procedures.