Proforma Franchise Disclosure Document 2009

Transcription

FRANCHISE DISCLOSURE DOCUMENT
PFG VENTURES, L.P.
An Ohio Limited Partnership
8800 E. Pleasant Valley Road
Cleveland, Ohio 44131
800-825-1525
[email protected]
www.proforma.com
We offer Franchises for the operation of businesses specializing in the sale and distribution of printed
business products and services, including business forms, commercial printing, specialty advertising items and
related business supplies.
The total investment necessary to begin operation of a Proforma franchise is from $4,730 to $38,695. This
includes a $19,500 fee for a Start-Up Franchise, which fee must be paid to the franchisor or to its affiliate.
This disclosure document summarizes certain provisions of your franchise agreement and other information
in plain English. Read this disclosure document and all accompanying agreements carefully. You must receive the
disclosure document at least 14 calendar-days before you sign a binding agreement with, or make any payment to,
the franchisor or an affiliate in connection with the proposed franchise sale or grant. Note, however, that no
governmental agency has verified the information contained in this document.
The terms of your contract will govern your franchise relationship. Don’t rely on the disclosure document
alone to understand your contract. Read all of your contract carefully. Show your contract and this disclosure
document to an advisor, like a lawyer or accountant.
Buying a franchise is a complex investment. The information in this disclosure document can help you
make up your mind. More information on franchising, such as “A Consumer’s Guide to Buying a Franchise,” which
can help you understand how to use this disclosure document is available from the Federal Trade Commission. You
can contact the FTC at 1-877-FTC-HELP or by writing to the FTC at 600 Pennsylvania Avenue, NW, Washington,
D.C. 20580. You can also visit the FTC’s home page at www.ftc.gov for additional information. Call your state
agency or visit your public library for other sources of information on franchising.
There may also be laws on franchising in your state. Ask your state agencies about them.
Issuance Date: May 13, 2009
Control No: PFG-US05132009-ED2
© 2009 PFG Ventures, L.P. All Rights Reserved
STATE COVER PAGE
Your state may have a franchise law that requires a franchisor to register or file with a state franchise administrator
before offering or selling in your state. REGISTRATION OF A FRANCHISE BY A STATE DOES NOT MEAN
THAT THE STATE RECOMMENDS THE FRANCHISE OR HAS VERIFIED THE INFORMATION IN THIS
DISCLOSURE DOCUMENT.
Call the state franchise administrator listed in Exhibit F for information about the franchisor or about franchising in
your state.
MANY FRANCHISE AGREEMENTS DO NOT ALLOW YOU TO RENEW UNCONDITIONALLY AFTER
THE INITIAL TERM EXPIRES. YOU MAY HAVE TO SIGN A NEW AGREEMENT WITH DIFFERENT
TERMS AND CONDITIONS IN ORDER TO CONTINUE TO OPERATE YOUR BUSINESS. BEFORE YOU
BUY, CONSIDER WHAT RIGHTS YOU HAVE TO RENEW YOUR FRANCHISE, IF ANY, AND WHAT
TERMS YOU MIGHT HAVE TO ACCEPT IN ORDER TO RENEW.
Please consider the following RISK FACTORS before you buy this franchise:
THE FRANCHISE AGREEMENT REQUIRES YOU TO RESOLVE DISPUTES WITH US BY LITIGATION
ONLY IN OHIO. OUT-OF-STATE LITIGATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE
SETTLEMENT FOR DISPUTES. IT MAY ALSO COST YOU MORE TO LITIGATE WITH US IN OHIO
THAN IN YOUR OWN STATE.
THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.
We use the services of one or more FRANCHISE BROKERS or referral sources to assist us in selling our
franchise. A franchise broker or referral source represents us, not you. We pay this person a fee for selling
our franchise or referring you to us. You should be sure to do your own investigation of the franchise.
Effective Date: See the next page for state effective dates.
ii
STATE EFFECTIVE DATES
The following states require that the Franchise Disclosure Document be registered or filed with the state, or be
exempt from registration: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North
Dakota, Rhode Island, South Dakota, Virginia, Washington and Wisconsin.
This Franchise Disclosure Document is registered, on file or exempt from registration in the following states having
franchise registration and disclosure laws, with the following effective dates:
California
04/15/09; as amended 05/21/09
Hawaii
04/07/09; as amended 05/26/09
Illinois
04/06/09; as amended 05/18/09
Indiana
04/09/09; as amended 05/13/09
Maryland
06/09/09
Michigan
04/07/09; as amended 05/13/09
Minnesota
04/15/09; as amended 05/19/09
New York
05/01/09; as amended 06/26/09
North Dakota
05/11/09; as amended 07/08/09
Rhode Island
06/18/09
South Dakota
04/13/09; as amended 05/13/09
Virginia
05/15/09; as amended 05/29/09
Washington
04/24/09; as amended 05/18/09
Wisconsin
04/06/09; as amended 05/18/09
In all other states, the effective date of this Franchise Disclosure Document is the issuance date of May 13, 2009.
iii
TABLE OF CONTENTS
1.
THE FRANCHISOR AND ANY PARENTS, PREDECESSORS, AND AFFILIATES
1
2.
BUSINESS EXPERIENCE
3
3.
LITIGATION
4
4.
BANKRUPTCY
6
5.
INITIAL FEES
6
6.
OTHER FEES
7
7.
ESTIMATED INITIAL INVESTMENT
11
8.
RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
13
9.
FRANCHISEE’S OBLIGATIONS
16
10.
FINANCING
17
11.
FRANCHISOR’S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING
19
12.
TERRITORY
33
13.
TRADEMARKS
34
14.
PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION
36
15.
OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE
BUSINESS
36
16.
RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL
36
17.
RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION
37
18.
PUBLIC FIGURES
44
19.
FINANCIAL PERFORMANCE REPRESENTATIONS
44
20.
OUTLETS AND FRANCHISEE INFORMATION
54
21.
FINANCIAL STATEMENTS
61
22.
CONTRACTS
61
23.
RECEIPTS
61
EXHIBITS
A.
B-1.
B-2.
C.
D.
E.
F.
G.
H.
I.
STANDARD FRANCHISE AGREEMENT FOR A PROFORMA FRANCHISED BUSINESS
(INCLUDING STATE-SPECIFIC ADDENDA TO FRANCHISE AGREEMENT FOR THE STATES
CALIFORNIA, ILLINOIS, INDIANA, MINNESOTA, NORTH DAKOTA AND WASHINGTON)
AUDITED FINANCIAL STATEMENT FOR THE CALENDAR YEARS ENDING DECEMBER
2008 AND 2007.
AUDITED FINANCIAL STATEMENT FOR THE CALENDAR YEARS ENDING DECEMBER
2007 AND 2006.
LIST OF FRANCHISE OWNERS CURRENTLY IN OPERATION
RECEIVABLES AND SECURITY AGREEMENT
SOFTWARE LICENSE AND SUPPORT AGREEMENT
LIST OF STATE FRANCHISE LAW ADMINISTRATORS/AGENTS TO RECEIVE SERVICE
PROCESS
LITIGATION INVOLVING FREDERICK DELUCA AND PETER BUCK
BROKERS
GUARANTEES OF PERFORMANCE BY PFG PROPERTIES LTD. OF PFG VENTURES, L.P.
iv
OF
31,
31,
OF
1.
THE FRANCHISOR AND ANY PARENTS, PREDECESSORS, AND AFFILIATES
To simplify the language in this disclosure document, “we” or “us” means PFG Ventures, L.P., the
franchisor. “You” means the individual, corporation or partnership who buys the franchise. If the franchisee will
operate through a corporation or partnership, “you” also includes the franchisee’s owners or partners.
Our principal business address is 8800 E. Pleasant Valley Road, Cleveland, Ohio 44131 and our telephone
number is 800-825-1525.
Our affiliates include our general partners and parents, Proforma, Inc. (“Proforma, Inc.”) and ProVenture,
Inc. (“ProVenture”), which own and control us. Proforma, Inc. is also our predecessor. Proforma, Inc. is an Ohio
corporation incorporated on May 12, 1981. The principal business address of Proforma, Inc. is 8800 E. Pleasant
Valley Road, Cleveland, Ohio 44131 and its telephone number is 800-825-1525.
ProVenture is a Florida
corporation incorporated on November 15, 1993. The principal business address of ProVenture is 336 Bic Drive,
Milford, CT 06460 and its telephone number is 800-888-4848. We have no other affiliates.
The principal business addresses of our agents for service of process are shown on Exhibit F.
We conduct business under the name “PFG Ventures, L.P.,” “PFG Ventures,” “PFG Ventures, L.P. d/b/a
Proforma,” “PFG Ventures, L.P. dba Proforma,” and “Proforma.” We are an Ohio limited partnership organized on
December 30, 1999, that previously operated as an Ohio joint venture partnership from December 3, 1993 until
December 30, 1999. References to “we” include both the joint venture and the limited partnership.
We have not operated any Proforma franchises. We offer franchises for the operation of businesses
specializing in the sale and distribution of printed business products and services, including business forms,
commercial printing, specialty advertising items and related business supplies. We have no other business activities.
Your business will operate a Proforma franchise offering the sale and distribution of printed business
products and services, including business forms, commercial printing, specialty advertising items and related
business supplies in primarily a business-to-business atmosphere. Additionally, you will operate a business using
the PROFORMA service marks, associated logos and symbols (“Licensed Marks”). (In the remainder of this
disclosure document when we refer to “you,” we will assume that you are a Franchisee. “You” or “Franchise
Owner” refers to your partners, shareholders and any other persons or entities directly or indirectly awarded a
Proforma Franchise or owning an interest in your Proforma Franchised Business.)
We will license you to use our trade name, Proforma®, our Licensed Marks and business systems (the
“Proforma System”) for the operation of a business specializing in the sale and distribution of business products and
services, including business forms, commercial printing, specialty advertising items, and related business supplies
(“Franchised Business”). You will find details of the Proforma System in our Confidential Operations Manual
(“Manual”) which we will lend to you for your use throughout the term of the Franchise. Because the scope of
products and services desired by Proforma customers changes over time, we may modify the Proforma System and
the nature and extent of products and services which you may offer under the Licensed Marks. You may operate
your Franchised Business from your home. However, you may purchase or lease a commercial establishment for
the business. We will call the place from which you operate your Franchised Business your “Premises.”
The Proforma System includes accounting methods, advertising, marketing and promotional techniques,
preferential vendor relationships, volume purchasing power, account acquisition programs, customer appointment
setting programs, personnel recruiting, training and other matters related to the maintenance of uniform quality
1
standards and to the efficient operation and supervision of businesses operated under the Proforma System. To the
extent that we authorize it, the Proforma System includes the right to offer and sell products and services on the
Internet. You may only offer products or services which we approve (“Products and Services”). A major benefit of
the Proforma System is that we invoice your customers, pay your vendors, including us, from amounts we collect
from customers on your behalf, assist in the identification of vendors who can fill your customers’ needs, provide
you reports, and perform certain other bookkeeping and record keeping functions on your behalf.
The market for your services consists of businesses and other organized groups seeking to increase its
marketing, advertising, and otherwise brand awareness in the marketplace. The market is very well developed and
highly competitive. You will compete with other national, regional and local distributors and manufacturers of
printed business products and services, including business forms, commercial printing, specialty advertising items
and related business supplies. Your ability to compete in this market will depend in large part on your personal
capabilities as a business person, general economic conditions, geographical area and competitive factors. Your
affiliation with the Proforma System will not guarantee you a successful or profitable business operation.
Proforma, Inc., our predecessor, conducted a business similar to the businesses we are offering to franchise
from 1978 to 1995. They also granted franchises similar to those offered in this disclosure document from 1985
through January 1994. We never offered franchises in any other line of business. Although ProVenture has never
offered franchises or sold items to our Franchise owners, its shareholders, Dr. Peter Buck and Mr. Frederick
DeLuca, are the founders of Doctor’s Associates Inc. (“DIA”), the franchisor of the SUBWAY® restaurant system.
We disclose the following companies that now offer or have offered franchises as DAI’s affiliates because Dr. Peter
Buck and Mr. Frederick DeLuca, the founders of DAI, invested in them, directly or indirectly: Cajun Joe’s
Development Corp., which formerly offered franchises for restaurants featuring fried and roasted chicken; Bajio
Mexican Grill, a Delaware limited liability company, formed on June 24, 2005, that sells franchises for Mexican and
Southwestern cuisine style restaurants in the United States under the trade name and service mark BAJIO™; and MD
Pizza, LLC, a Delaware limited liability company, formed on December 7, 2006, that establishes and operates
restaurants featuring specialty pizzas, breadsticks, and chicken wings under the trade name and service mark
MAMA DELUCA’S®. Other than Proforma, Inc., we have no affiliates who offered franchises of any kind.
Although Mr. DeLuca and Dr. Buck are investors in ProVenture, and indirectly in us, ProVenture delegated
to Proforma full responsibility concerning the operation of our business relating to offering franchises and servicing
you. Mr. DeLuca and Dr. Buck have no role in the management of our franchising activities. Proforma will
consider any advice offered by Mr. DeLuca and Dr. Buck; however, they have no duty to advise us in any way.
Also, neither Proforma, Inc. nor we have any duty to follow their advice if it is offered. Thus, you should not rely
upon Dr. Buck’s or Mr. DeLuca’s involvement with us as a factor to consider when deciding whether to become a
Proforma Franchise Owner.
Your Franchised Business will be subject to the same laws that apply to businesses generally. We are
unaware of any laws or regulations that apply specifically to the operation of a Proforma Franchised Business. If
you intend to operate your business from your home, we suggest you determine whether any zoning laws may
restrict your right to do so.
2
2.
BUSINESS EXPERIENCE
Founder & Co-Chief Executive Officer : Gregory P. Muzzillo
PFG Ventures, L.P., Cleveland, Ohio, 2001 – present. Mr. Muzzillo has worked from his home office near Detroit,
Michigan during the last five years.
Co-Chief Executive Officer: Vera Muzzillo
PFG Ventures, L.P., Cleveland, Ohio, 2001-Present. Ms. Muzzillo has worked from her home office near Detroit,
Michigan during the last five years.
President & Chief Operating Officer: Brian F. Smith
PFG Ventures, L.P., Cleveland, Ohio, 2005 – Present; PFG Ventures, L.P., Cleveland, Ohio, Chief Operating
Officer, 1999-2005; Mr. Smith worked in Cleveland, Ohio during the last five years.
Chief Technology Officer: Kevin L. Ameche
PFG Ventures, L.P., Cleveland, Ohio, 2005 – Present; Wolcott Systems Group, Fairlawn, Ohio, Director of Business
Development, 2001-2005; Mr. Ameche worked in Fairlawn and Cleveland, Ohio during the last five years.
Chief Marketing Officer: Deanna L. Castello
PFG Ventures, L.P., Cleveland, Ohio, 2009 – Present; PFG Ventures, L.P., Cleveland, Ohio, Director of Marketing
Services, 2005 – 2009; Press of Ohio, Brimfield, Ohio, Director of Marketing, 2005; PFG Ventures, L.P.,
Cleveland, Ohio, Manager of Marketing Services, 2003–2005; Ms. Castello worked in Cleveland during the last five
years.
Vice President of Business Development and Regional Success Coach: Frank A. Ciraci
PFG Ventures, L.P., Cleveland, Ohio, 2006 – Present; PFG Ventures, L.P., Cleveland, Ohio, Vice President of
Strategic Supplier Relations, 2006 - 2007; PFG Ventures, L.P., Cleveland, Ohio, Vice President of Purchasing,
2006; General Motors Corporation, Warren, Michigan, Commodity Manager, Global Purchasing & Supply Chain,
2005-2006; General Motors Corporation, Warren, Michigan, Global Business Process Manager, WorldWide
Purchasing, 2001-2005. Mr. Ciraci worked in Warren, Michigan during the last five years.
Chief Financial Officer: Jeffrey L. Elliott
PFG Ventures, L.P., Cleveland, Ohio, 2005 – Present; PFG Ventures, L.P., Cleveland, Ohio, Director of Finance,
2004–2005; PFG Ventures, L.P., Cleveland, Ohio, Controller, 2002–2004; Mr. Elliott worked in Cleveland the last
five years.
Chief Credit and Administrative Officer: Robert P. Kimble
PFG Ventures, L.P., Cleveland, Ohio, 2006 – Present; PFG Ventures, L.P., Cleveland, Ohio, Credit Manager, 20012005; Mr. Kimble worked in Cleveland, Ohio during the last five years.
3
General Counsel: Douglas A. Kordel
PFG Ventures, L.P., Cleveland, Ohio 2003 – Present; Mr. Kordel worked in Cleveland, Ohio the last five years.
Chief Business Development Officer, North American Major Accounts: Gregory W. McCurley
PFG Ventures, L.P., Cleveland, Ohio, 2005 - Present; PFG Ventures, L.P., Cleveland, Ohio, Chief Business
Development Officer, 2004-2005; Standard Register, Nashville, Tennessee, Regional Sales Manager, 2000-2004;
Mr. McCurley worked in Cleveland, Ohio and Nashville, Tennessee during the last five years.
Chief Vendor Development Officer: Nancy K. Ross
PFG Ventures, L.P., Cleveland, Ohio, 2009 – Present; PFG Ventures, L.P., Cleveland, Ohio, Director of Vendor
Development, 2005 – 2009; PFG Ventures, L.P., Cleveland, Ohio, Manager of Vendor Development, 1998–2005;
Ms. Ross worked in Cleveland the last five years.
REGIONAL SUCCESS COACHES
In certain areas, we have contracted with one or more regional success coaches to assist us in recruiting and
providing support services to our Franchise Owners. For their services rendered to us, they receive compensation
based upon the fees we collect from Franchise Owners.
Lollipop Solutions, Inc. d/b/a Proforma Universal Sales Associates
Robert Newth; Lollipop Solutions, Inc., Overland Park, KS; President and Sole Shareholder, 2002 Present. Mr. Newth worked in Overland Park, KS the last five years.
Lollipop Solutions, Inc. d/b/a Proforma Universal Sales Associates (“Lollipop”) is a Kansas corporation
located at 6240 W. 135th Street, Suite 200, Overland Park, KS 66223, (913) 647-5253. Lollipop is authorized by us
to recruit and provide continued assistance to its Franchise Owners in the start-up and operation of their businesses.
We pay a referral fee to each Franchise Owner, employee or PLP (see Item 8) who refers a person to us
who acquires a franchise. Additionally, if a Franchise Owner, employee or PLP refers two or more people in a
calendar year who acquire franchises, they may qualify for a prize to be determined by us. Our current referral fee
structure is outlined below. We may change or cancel this program at any time.
Number Of Referrals That Acquire A Franchise
Within A Calendar Year
1
2
3 and each additional referral thereafter
3.
Referral Fee
$3,500
$5,000
$7,500
LITIGATION
Except for the actions described below, there is no litigation that must be disclosed in this disclosure
document.
4
Pending Actions
PFG Ventures, L.P. DBA Proforma vs. PMG Partners, et al, (Court of Common Pleas, Cuyahoga County, Ohio,
Case No. CV-08-651234, Filed February 19, 2008).
In February 2008, we filed a complaint against a former franchisee, PMG Partners, LLC, and its owners and
guarantors, David Hyman and Patricia Wiley-Hyman, for a balance due and owing totaling approximately $78,000,
together with damages, interest, costs and attorneys fees. Relief is being sought for breach of contract, unjust
enrichment, conversion, tortious interference with business relations, and negligent misrepresentation. In April
2008, the defendants counterclaimed against us alleging breach of contract and the covenant of good faith and fair
dealing, negligence, unconscionable franchise agreements, unjust enrichment, violations of the Florida Franchise
Act, Fla Stat. § 817.416 (misrepresentation in the sale or establishment of a franchise), violations of the Florida
Deceptive and Unfair Trade Practices Act §§ 501.201 et. seq (unfair methods of competition, unconscionable acts or
practices, and unfair or deceptive acts or practices in the conduct of any trade or commerce), and the Florida Sale of
Business Opportunity Act § 559.80, et. seq. The defendants are seeking a jury trial and judgment in excess of
$25,000 for each count, together with damages, interest, costs, expenses, disbursements and attorneys’ fees. The
case is still pending.
Kristin L. Hollis vs. Paul’s Advertising, Inc. DBA Proforma Promotional Group, Thomas VanRens and PFG
Ventures, LP, (State of Wisconsin, Circuit Court of Waukesha County, Case No. 08-CV-04647, Filed December 29,
2008).
In December, 2008, plaintiff brought suit against her employer and our former franchisee, Paul’s Advertising, Inc.
DBA Proforma Promotional Group, and its owner, Thomas VanRens, along with PFG Ventures, L.P. as franchisor.
Plaintiff alleges breach of contract against Paul’s Advertising and VanRens for unpaid commissions exceeding
$75,000, promissory estoppel, statutory wage claim in violation of §§ 109.013, 109.11(2)(a) and (3), and 109.03(6)
against Paul’s Advertising and VanRens; and for conversion, civil theft under Wis. Stat. § 895.446, conspiracy,
unjust enrichment, breach of constructive trust, and for an accounting against all defendants; and piercing the
corporate veil against VanRens. Plaintiff sought a jury trial and damages, attorneys fees, interest and costs. Plaintiff
also brought a motion for temporary injunction enjoining the defendants from making any payment or disposing of
any asset or property until a bond sufficient to cover a judgment has been posted. In January, 2009, the court denied
plaintiff's motion for temporary injunction as to PFG Ventures and Thomas VanRens, and granted plaintiff's motion
for temporary injunction as to Paul's Advertising. Inc. Default judgment was taken against Defendant Paul's
Advertising, Inc. D/B/A Proforma Promotional Group on February18, 2009 in the sum of $75,000, plus increased
wages of 50% in the amount of $37,500, plus costs and interest. On January 26, 2009, Thomas VanRens filed a
Chapter 7 Bankruptcy Case (In the United States Bankruptcy Court, Eastern District of Wisconsin, Case No. 0920800-pp) naming Kristine Hollis and PFG Ventures, L.P. as creditors. On February 26, 2009, Paul’s Advertising,
Inc. DBA Proforma Promotional Group also filed a Chapter 7 Bankruptcy Case (In the United States Bankruptcy
Court, Eastern District of Wisconsin, Case No. 09-22255-svk) naming Kristine Hollis and PFG Ventures, L.P. as
creditors. All three cases are still pending.
Litigation Against Franchisees Commenced in the Past Fiscal Year
Case Information:
PFG Ventures, L.P. vs. Walter S. King et al., Court of Common Pleas, Cuyahoga
County, Ohio, Case No. CV-08-680740. Filed December 31, 2008.
PFG Ventures, LP vs. Brandon Cruz Wyman, et al., Court of Common Pleas,
Cuyahoga County, Ohio, Case No. CV-08-648024. Filed January 22, 2008.
PFG Ventures, L.P. DBA Proforma vs. Chad L. Curtis, et al, Court of Common Pleas,
Cuyahoga County, Ohio, Case No. CV-08-667757, Filed August 13, 2008.
PFG Ventures, L.P. DBA Proforma vs. William Steve Robinson, Court of Common
Pleas, Cuyahoga County, Ohio, Case No. CV-08-670471, Filed September 15, 2008.
Reason for Litigation:
1, 2
1
1
1
Reason for Litigation Key Code:
1: Collection of monies due and owing PFG Ventures, L.P.
2: Enforcement of non-solicitation provision contained in the franchise agreement.
5
As noted in Item 1, neither Dr. Peter Buck nor Mr. Frederick DeLuca is an officer, director, general partner,
or an employee of ours. They are investors in ProVenture, Inc., a general partner with Proforma, Inc. They were
personally sued because of their involvement with other franchisors. Although we are not required to disclose this,
we have elected to detail their relevant litigation experience in Exhibit G. Other than these actions, no litigation is
required to be disclosed in this Item.
4.
BANKRUPTCY
No bankruptcies are required to be disclosed in this franchise disclosure document.
5.
INITIAL FEES
If you meet our qualifications as a Start-Up Franchise Owner, you must pay us an initial franchise fee of $19,500
no later than the day before you begin our initial training program. Start-Up Franchise Owners have a business
background in industries other than business forms, commercial printing and/or specialty advertising. For those with
relevant industry experience (defined below) or those who qualify as a conversion franchise (defined below), the initial
franchise fee for a Proforma Franchise is waived. Relevant Industry Experience and Conversion Franchise Owners are
more fully described below.
Start-Up Franchise Owners may receive a refund of their initial franchise fees if during the 15-month period after
the Effective Date of the Franchise Agreement, we have collected sales amounts from their customers:
Collected Sales Exceeding
Refund Amount
$100,000
$200,000
$300,000
$6,500
$13,000
$19,500
No part of the initial fee is refundable, except as is described above. Any refund shall be payable after the
fifteen-month (15) period. The refunds are not prorated. Below are examples of how the refund applies:
Example #1: After the 15-month period from the Effective Date from the Agreement, if you had Collected
Sales of $90,000, then your refund would be $0.
Sales of $165,000, then your refund would be $6,500.
Relevant Industry Experience
You have “Relevant Industry Experience” and your initial franchise fee for a Proforma Franchise will be
waived if: (a) in your role as a representative or employee of a company which primarily sold business forms,
commercial printing and/or specialty advertising during the 12 consecutive months before you sign an Agreement,
you can prove that you sold at least $300,000 of those products; or (b) you were in a role as a sales representative,
sales employee, or direct sales support employee of a company that primarily sold business forms, commercial
printing and/or specialty advertising for at least three years within the previous five years.
6
Conversion Franchise Owner
You are a “Conversion Franchise Owner” and your initial franchise fee for a Proforma Franchise will be
waived if you have a controlling interest in an existing business that primarily sells business forms, commercial
printing and/or specialty advertising that has been in operation for at least 12 consecutive months before signing an
Agreement, and you can prove that sales of those products during that period were at least $300,000 according to the
company’s most recent tax return or financial statement.
The initial franchise fee does not apply to current Franchise Owners who are renewing their Agreement
during this time period.
6.
OTHER FEES
(1)
(2)
(3)
(4)
TYPE OF FEE
AMOUNT
DUE DATE
REMARKS
6% - 8%
The earlier of (i) when
Service Fee (Notes 1)
We retain fees from amounts we collect for you.
collected from
Customer, or (ii) 120
days from the
customer invoice date
Marketing Fund
.5% - 1%
(Notes 1, 2)
The earlier of (i) when
We retain fees from amounts we collect for you.
collected from
Customer, or (ii) 120
days from the
customer invoice date
Communication and
$100.00 per month
25th of the month
The voice message box is accessed through an
Technology Support
“800” line hook-up, voice mail, E-mail usage and
(Note 5)
ProOfficeSM incremental support.
Supplier Rebates,
100% of Amount
Commissions &
Received
Due on receipt
You must pay to the Marketing Fund all
allowances, payments and other consideration you
Consideration
receive from suppliers or others for cooperative
marketing, services or warranties.
Insurance Costs (Note 3)
$300-$1,000
Prior to the
Comprehensive general liability coverage for your
per year
commencement of
Franchised Business. The insurance coverage must
your Franchised
have a minimum of $500,000 general liability and
Business
list “PFG Ventures, L.P., 8800 East Pleasant Valley
Road, Cleveland, OH 44131” as an additional
insured. Also, workers’ compensation, Employer’s
liability, content coverage, general casualty loss and
business interruption, if required, per our standards
in the Manual.
7
(1)
(2)
(3)
(4)
TYPE OF FEE
AMOUNT
DUE DATE
REMARKS
Interest on Late Payments
Long Distance Payments
15% per annum
Our cost of
5 days after missing
If 15% exceeds top lawful rate, we will charge the
any payment
highest rate permitted by law.
10th of the month
To be charged at our discretion.
making/receiving
calls on your behalf
Payments to Third Parties
Cost of products
35-45 days after
We invoice your customers, pay your suppliers,
(Note 4)
you order
manufacturer’s invoice
including us, with collections from customers, and
date
remit the balance to you.
30 days after training
Cost of meals and additional training materials
Supplemental Training
Cost of meals and
Fee
additional training
during the training week for each attendee.
materials
Miscellaneous Fees:
10% of the vendor
When payment is
Due when you pay more than $500 directly to a
Direct Vendor Payment
invoice amount or
made
vendor without our prior approval.
Upon our demand
If you collect from a customer any payments which
Charge
a minimum of $100
Payment Conversion Fee
3 times amount you
collect
the Agreement requires to be paid directly to us,
and if you fail to immediately notify us and forward
the payment to us on demand, you must pay us
triple the gross amount you collected.
Account Acquisition Fee
An amount equal to
After you notify us
See Item 17.d. for details. Not applicable if you
(Note 6)
24 times the
and before termination
and your guarantors agree for one (1) year to cease
average monthly
is effective
selling products and/or services (to your former
service fee you
customers) that are the same or similar to products
owed us during the
and/or services we offer, and if you sign a general
24 months before
release. If this is a Renewal Agreement, only those
the Termination
customers identified on your original Schedule 1 of
Date.
your initial franchise agreement shall be included
on the Renewal Agreement’s Schedule 1.
Except as may be otherwise specified above, we impose all the fees in this table and you pay the fees to us. These
fees, recurring fees, and assessments are non-refundable. The chart is only a summary. The Agreement contains a
detailed explanation of your rights and duties.
NOTES:
(1) Stated fees are percentages of your Gross Volume of Business. “Gross Volume of Business” means the gross
amount of all billings made by, on behalf of, or through the Franchised Business, or in connection with the
Licensed Marks, regardless of whether the sales or billings were performed in compliance with the Agreement.
8
The Gross Volume of Business excludes only shipping costs, sales taxes or similar taxes that by law you must
collect. Below is a schedule of the monthly service and marketing fees you will pay us.
Monthly Sales Amount
Service Fee
Marketing Fee
Total
$0-$50,000
8.00%
1.00%
9.00%
$50,001-$100,000
7.00%
0.75%
7.75%
$100,001+
6.00%
0.50%
6.50%
Collected
The Total Service Fee paid to us is based on a weighted averaged determined by the Monthly Sales Amount
Collected.
Example #1: Monthly Sales Amount Collected is $40,000.00*
Sales Volume Collected
Service Fee
Marketing Fee
$0-$50,000
8.00%
1.00%
$50,001-$100,000
7.00%
0.75%
$100,001+
6.00%
0.50%
Weighted Average of Total Service Fee: 9.00%
Total
9.00%
7.75%
6.50%
Service Fee Paid
$3,600 (9% x $40,000)
$0
$0
$3,600 (total fees on $40,000)
Service Fee
Marketing Fee
$0-$50,000
8.00%
1.00%
$50,001-$100,000
7.00%
0.75%
$100,001+
6.00%
0.50%
Total
9.00%
7.75%
6.50%
Service Fee Paid
$4,500 (9% x $50,000)
$2,325 (7.75% x $30,000)
$0
$6,825 (total fees on $80,000)
Service Fee
Marketing Fee
$0-$50,000
8.00%
1.00%
$50,001-$100,000
7.00%
0.75%
$100,001+
6.00%
0.50%
Total
9.00%
7.75%
6.50%
Service Fee Paid
$4,500 (9% x $50,000)
$3,875 (7.75% x $50,000)
$5,200 (6.5% x $80,000)
$13,575 (total fees on
$180,000)
* The above examples are for illustrative purposes only. They are not presented as actual or projected scenarios.
We make no guarantee as to the total service fee you will pay to us. Based on your monthly sales amount
collected, your actual total service fees may be higher or lower than the examples listed above.
If you are a Conversion Franchise Owner, for the first 6 months following the Business Commencement Date,
your Service Fees will be 4% and your Marketing Fee will be 0.5%, regardless of sales volume collected.
Thereafter, your fees shall be the same as are described above. We collect our Service Fees and Marketing Fees
upon the earlier of (i) when the customer pays, or (ii) 120 from the customer invoice date (as provided for in the
Manual).
(2) We, or a designated agent or affiliate, will spend the marketing fee in accordance with the terms of Paragraph 9,
page 4, of the Agreement. Neither Proforma, Inc. nor we are obliged to contribute any amount to the Fund. We
have no advertising cooperative.
(3) At your own expense and before beginning your Franchised Business, you must procure and maintain in full
force and effect throughout the term of the Agreement, comprehensive general liability insurance covering the
9
operation of the Franchised Business and the types of insurance enumerated when your circumstances as
described in the Manual warrant it: Workers’ Compensation insurance, employer’s liability insurance, content
coverage, general casualty loss and business interruption insurance. The insurance coverage must have a
minimum of $500,000 general liability and list “PFG Ventures, L.P., 8800 East Pleasant Valley Road,
Cleveland, OH 44131” as an additional insured. We estimate that the insurance will cost you between $300
and $1,000 per year. The actual cost may be more or less than our estimate.
(4) In the ordinary course of business, we will send invoices to your customers, pay suppliers for products you have
ordered from money we have collected from your customers, deduct amounts to which we are entitled, and
remit the balance to you. Except as described in this disclosure document, we do not impose or collect any
other fee of any nature whatsoever on behalf of any third parties. We will bill your customers and contact those
who have not paid us within 38 days of the invoice billing date. Thereafter, we will consult with you about
choosing a collection agency or about taking other collection action. You are liable to us for the amount owed
under the terms of this Agreement on each invoice. Although we may in good faith settle or adjust disputes or
claims directly with your customers without affecting your liability to us, we will not sue to collect from any of
your customers without your written approval. If your customer does not pay the invoice within 75 days of the
invoice billing date, we reclaim the product costs out of your net proceeds.
(5) Support fees collected will cover costs associated with the voice message box, voice mail, e-mail and servicing
the ProOfficeSM operating system (“ProOfficeSM”). We will supply support fees accounting information to the
Owner Advisory Council (“OAC”) on an annual basis. These fees are subject to change at any time upon 30
days advance notice.
(6) At any time following the Effective Date, you may terminate this Agreement without cause by giving us at least
60 days prior written notice, and by paying us all amounts you owe us, plus an Account Acquisition Fee if you
desire to service any or all of the customers not listed on Schedule 1 of your Franchise Agreement. The
Account Acquisition Fee shall also apply if we terminate the Agreement. The Account Acquisition Fee is an
amount equal to 24 times the average monthly service fee you owed us during the most recent 24 months of the
Agreement (regardless of whether you owned your franchise for a full 24 months or whether you have signed a
Renewal Agreement) on all sales to customers which are not listed in Schedule 1 of your Franchise Agreement.
The Account Acquisition Fee shall not be due and owing to us if you and your guarantors execute (i) an
agreement in form and substance acceptable to us whereby you agree for one (1) year that you will cease selling
products and/or services that are in the same or similar products and/or services offered by us (or by our
franchise owners) to each and every one of your customers not listed in Schedule 1, and (ii) a general release of
all claims against us. If this is a Renewal Agreement, only those customers identified on your original Schedule
1 of your initial franchise agreement shall be included on this Renewal Agreement’s Schedule 1. Otherwise,
you may terminate this Agreement only if we have committed two or more material breaches of our obligations
under this Agreement within a calendar year, and have failed to cure such breach within 60 days after you have
10
provided us with written notice to cure each such breach; provided, however, the Account Acquisition Fee is
still due and owing to us.
7.
ESTIMATED INITIAL INVESTMENT
YOUR ESTIMATED INITIAL INVESTMENT
(1)
(2)
Amount
Type of Expenditure
Initial Franchise Fee:
(3)
Method of
Payment
(4)
When Due
(5)
To Whom
Payment is to
be Made
Us
Lump Sum
Day before your initial training.
$0 -$4,000
Lump Sum
Pre-Opening
Third Party
$30 - $200
Lump Sum
Pre-Opening
Third Party
$700- $3,000
Lump Sum
Pre-Opening
Third Party
$0 - $2,000
Lump Sum
Pre-Opening
Third Party
$0 - $1,500
Lump Sum
Pre-Opening
Third Party
/Us
$1,000 - $2,000
As Incurred
As Incurred
Third Party
$0 - $495
Lump Sum
30 days after training
$3,000 - $6,000
As Incurred
As Incurred
Start-Up
$19,500
Relevant Industry
Experience
$0
Conversion Franchise
(NOTE 1)
Computer Hardware
(NOTE 2)
Internet Service Provider
And Anti-Virus Software
(NOTES 2, 3)
Equipment, Fixtures, Fixed
Assets and Stationery
(NOTE 4)
First Month
Pre-Opening
Lease, Rent & Security
Deposit
(NOTE 5)
Utility Deposits,
Insurance, Licenses
(NOTE 6)
Travel, room and board for
initial training
(NOTE 7)
Supplemental Training Fee
(NOTE 7)
Additional Funds
Incurred during the initial
phase, which usually lasts
3-6 months.
(NOTE 8)
TOTAL:
$0
Start-Up
$24,230 - $38,695
Relevant Industry
Experience
$ 4,730 - $19,195
Conversion Franchise
$ 4,730 - $19,195
11
Us
Third Party
These projections are estimates of the total investment required of a Proforma Franchise Owner based on
projected expenditures. There is no guarantee your investment or expenses will actually be the same as or similar to
these if you are awarded a Proforma Franchise. Your actual investment and expenditures may vary considerably
from the projections depending upon many factors including inflation, geographical area, your capabilities, and
whether you are a Start-Up Franchise Owner, have Relevant Industry Experience or are a Conversion Franchise
Owner. We do not finance any part of your initial investment. No payments are refundable except as described in
Item 5.
NOTES:
(1) The initial franchise fee for a Start-Up Franchise Owner is $19,500 which may be refunded in whole or part, as
described in Item 5. If you have “Relevant Industry Experience” or are a “Conversion Franchise” as defined in
Item 5, and otherwise meet our qualifications, we will not charge you an initial franchise fee.
(2) The hardware specifications are an IBM compatible Pentium processor with a minimum processor speed of
300mhz and a minimum of 32mb of RAM. The software specifications are Microsoft® Windows®
95/98/NT/2000/ME/XP operating system; MacAfee® or Norton AntiVirus™ for Windows®; and WinFax™
Pro version 10.0 for Windows®, and we recommend Microsoft® Office 97 or higher, or Microsoft® Office
Professional.
ProOfficeSM can be networked via Windows NT®, Novell NetWare® or Windows®
95/98/NT/2000/ME/XP. Data integrity is your responsibility. Your computer system should include a backup
unit or backup capabilities. So long as the hardware is compatible with the software, you may obtain the
hardware from any source.
(3) You must subscribe to an Internet Service Provider (“ISP”) and maintain this service during the term of the
Agreement. The connection speed is recommended at 56k bps or higher. A high speed connection is preferred.
(4) To facilitate ongoing communications between us and you, customers and vendors, you must obtain a facsimile
machine, a voice message box from us and an electronic mail (e-mail) address from Proforma for use in the
Franchised Business. The estimate includes the price of a facsimile machine, the use and installation of a voice
message box and service of an ISP. You may purchase a facsimile machine for $500 or less. ISPs charge $15
or more per month. The charge for an email account, additional email accounts and a voice message box are
included in the monthly Communication & Technology Support Fee of $100.00. Additional voice message
boxes are $10.00 each. The voice message box is accessed through an “800” line hook-up. You will receive a
bill for any charges associated with rental. However, we may reduce the amounts you otherwise would be
billed for usage costs if we provide significant training or support to you through the voice mail system. The
Manual contains these programs and other support services for which charges may be waived. You must, at all
times, maintain one published telephone line exclusively dedicated to the Franchised Business, and one
telephone line exclusively dedicated for use with a facsimile machine. We recommend you initially purchase at
least 500 business cards, 500 letterhead, 500 envelopes, and 25 sheets each of mailing and shipping labels to
commence operating your Franchised Business.
12
(5) You normally commence operating your Franchised Businesses from a home-based office space. Some may
choose initially to operate this business from a leased office space. You will typically commence operating the
business yourself as the sole employee, and hire additional staff as the volume of business or your knowledge of
the Franchise System warrants it.
(6) You must procure and maintain in full force and effect throughout the term of the Agreement, comprehensive
general liability insurance covering the operation of the Franchised Business, and as the business warrants,
content coverage, general casualty loss and business interruption insurance, employer’s liability and worker’s
compensation insurance. See Item 6, Note 3 above.
(7) You must pay for all costs of travel, meals, additional training materials, and lodging incurred during initial
training. We cannot estimate in this document your travel or living costs during training, given the many
variables involved.
The above estimates do not include living expenses for you or your family or any
employees that you may bring to training, or debt service relating to launching the Franchised Business. You
should have sufficient cash reserves to cover living expenses for at least 6 to 12 months.
(8) During the initial phase of operating your Franchised Business you may require access to additional funds to
pay expenses until your business generates sufficient cash flow to pay them. The initial phase usually lasts 3-6
months and requires a minimum of $3,000-$6,000 in additional funds. Because no one can promise you when
or whether you will generate any amount of revenue, we urge you to have access to additional funding in case
you need it. If you are affiliating an operating business with a Proforma Franchise, your initial phase may be
shorter and the additional funds you require may be less than is normal for other Franchise Owners.
8.
RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
Except as noted below, you will not be required by the Agreement or any other document to purchase or
lease from us or our designee any real estate, services, supplies, products, fixtures, equipment, inventory, or other
goods relating to the operation of the Franchised Business. None of our officers owns an interest in any approved
suppliers.
We have the right to bar you from using or selling items which do not comply with our standards of quality
and utility. You must rent a “voice message box” from our supplier and pay us each month as part of the monthly
Communication and Technology support charge of $100.00; each additional voice message box is $10.00 each.
These fees are the charges we incur on your behalf for this service. You will receive, at no charge, one e-mail
account. You must use this e-mail account for the Franchised Business. Each additional email account is at no
initial cost and is part of the monthly Communication and Technology Support Fee. The features will be provided
through Proforma. The provider is subject to change at any time without notice. Standard mailbox size is 50mb.
You must use ProOfficeSM software and the hardware we prescribe within 15 days of the Commencement Date of
the Agreement.
13
We are currently in development of a new system (“New System”) to replace ProOfficeSM. The New
System may or may not be ultimately rolled out to all Franchise Owners. Upon the development and roll out of the
New System, we will require you to use the New System and execute a license agreement at that time. The New
System’s anticipated roll out date is 2010. You may incur additional costs, including licensing costs, to use the New
System. Under either ProOfficeSM or the New System, if we determine that revisions are appropriate, we may
require you, following at least 30 day’s notice, to use them. The Agreement does not contain any limitation on the
frequency or cost associated with these changes.
However, we will not require you to undertake any of these
changes unless all similarly situated Franchise Owners are subject to substantially the same requirement.
Until October, 2008, we charged a ProOfficeSM System Operating Charge of $2,500 for all new Franchise
Owners, and our total revenues from ProOfficeSM fees (all of our previous “required purchases”) was $113,000
which amounted to 0.50% of our total revenue of $22,106,500. We took this information from our most recent
audited financial statements, Exhibit B-1. We no longer charge the ProOfficeSM System Operating Charge.
You may only use business stationery, business cards, marketing materials, advertising materials, printed
materials, packaging or forms that meet our standards and specifications. You may offer to customers all products
and services we may approve, and only those which meet and which are not subsequently disapproved as meeting
our quality standards and specifications.
Standards and specifications for products and services sold through your Franchised Business may include
minimum standards for delivery, performance, warranties, product design and appearance, customer service and
other restrictions. You may purchase products meeting these standards and specifications from any source, although
we believe open account financing may be more readily available to you from our approved suppliers than from
others. All supplies or materials, products or services you purchase or sell must always meet the standards specified
in the Manual, and must be purchased from suppliers that we have approved. Except as specified in the Manual, no
Franchise Owner is an approved supplier. Any supplier, however, who is able to provide products meeting our
standards and specifications is, in effect, an approved supplier.
We may modify our standards when we determine that the quality or performance of a product or the
production capacity of a vendor is likely to lead to customer and/or your dissatisfaction. We have no formal process
for modifying standards. We do not charge fees to evaluate products or vendors. We benefit from offering an array
of good products and vendors. We expect to change our standards and to disapprove a product, or supplier in only
limited circumstances.
Some vendors who regularly provide Products and Services to our Franchise Owners contribute to a
program we designed and administered to support the sale of their Products and Services through Franchise Owners.
These vendors, whom we call “Preferred Limited Partners” (“PLPs”), contribute payments to our “PLP Resource
Center” (“PLPRC”) in the expectation that you will more aggressively support sales of their Products and Services.
The PLPRC is used to promote the Proforma System (including the credit insurance program) and the PLPs’
Products and Services only.
We administer the PLPRC to support your sales. You do not contribute to the PLPRC, nor do you have
any voice in how the contributions are spent. We do not audit the PLPRC; nor are independent financial statements
prepared for your review. However, we share unaudited financial statements of the PLPRC with the Treasurer of
the OAC; but for competitive reasons, we will not make them available to you. The Agreement neither obliges us to
14
create, operate or administer the PLPRC; nor gives you any rights or interest in it. We may change or end the
PLPRC at any time without incurring any obligations to you.
PLPs contribute to the PLPRC an annual fee and/or a variable fee averaging 2% to the PLPRC. This
percentage amount is based on what is purchased by you from a PLP. Moreover, they agree to make their best
pricing available to our Franchise Owners and agree not to raise prices to Franchise Owners to recoup their
contributions. PLPs are approved suppliers to whom we provide special communications, opportunities and other
forms of access to you. You are not required to do business with PLPs. On occasion, our Franchise Owners
complete a survey for us to determine their level of satisfaction with the performance of the current PLPs in our
program. This information may be shared with our Franchise Owners. You must contribute up to 1% of your Gross
Volume of Business to our marketing fee for the purpose of a marketing fund (“Marketing Fund” or “Fund”) as
described in Item 11. The Fund also receives revenues from vendors who purchase advertisements in our newsletters
and direct mail programs, and it may receive rebates paid by some vendors based upon Franchise Owners’ sales
volumes as prescribed in Paragraph 5(e), Page 3, of the Agreement. We do not have “company-owned units” and
we do not contribute to the Fund, although we may do so.
You must procure and maintain in full force throughout the term of the Agreement the insurance coverage
described in Item 6, Note 3, and Item 7, Note 6, of this disclosure document, and in our Manual from insurers. The
insurance coverage must have a minimum of $500,000 general liability and list “PFG Ventures, L.P., 8800 East
Pleasant Valley Road, Cleveland, OH 44131” as an additional insured. We approve all major national insurance
companies and we are only likely to revoke approval of a carrier if a major insurance rating company publishes a
report expressing doubts about the company’s soundness or ethics.
You may only own, operate or participate in Internet or worldwide web sites or home pages offering our
Products and Services which we furnish or which we approve. There will be charges for approved e-commerce
services we provide you that will be outlined in the Manual.
If you choose to have a web page which is a part of our web site, we may charge you a fee to cover direct
and indirect costs of making the site available to you which will be outlined in the Manual.
Although we do not sell any items to you that you are required to purchase, other than the voice message
box discussed above, you must place orders for all products ordered for your customers through our System directly
with the appropriate manufacturers. You select the vendors and the prices you wish to charge; we facilitate the
accounts payables and accounts receivables, assist with the collection from your customers, and remit net proceeds
to you.
We will allocate to ourselves on a monthly basis from payments we receive from your customers, the price
of the products shipped to your customers, as well as all amounts you owe us. As a result of our use of this System,
we are able to help new Franchise Owners establish credit and obtain the benefit of negotiated prices based upon
system-wide purchases. Our volume purchasing may enable you to obtain volume pricing for products you purchase
from certain vendors. You will not receive any material benefits beyond those related to each transaction if you
purchase from our approved vendors.
You must direct all customers of the Franchised Business to pay us directly for all products and services
you sell them. We have negotiated agreements with many potential suppliers who will ship products to you or your
customers on credit. As a result of the purchasing power of the entire Proforma franchise network, and certain
15
commitments we have made to the suppliers, many suppliers will not require payment until 30 days following
shipment. To facilitate and enhance the relationship with such suppliers, we issue invoices to your customers and
may advance payment on your behalf to the supplier before the customer has paid you or us. We often do this to
receive “prompt payment discounts,” which we are entitled to keep under the terms of the Agreement. These
discounts have historically helped defray the credit costs we pay to our vendors and they may in the future, generate
a small net profit for us.
You must agree to participate in and be bound by the decisions of the Owner Advisory Council (“OAC”)
and/or the decisions of any association of Proforma Franchise Owners or any cooperative established and operated
pursuant to standards prescribed or approved by us. Only if we give our assent to a decision of the OAC, a
franchisee association or cooperative, will the decision bind you. We are not aware of any Proforma Franchise
Owners’ association or cooperatives. All Franchise Owners automatically have the right to vote for members of the
OAC at our Annual Convention (or as we may otherwise determine in our sole discretion), which is currently
limited to ten (10) elected Franchise Owner representatives. The OAC provides us with advice on issues affecting
most aspects of the Proforma System. We value the OAC’s advice, but we are not obliged to follow it. The OAC
may be modified or eliminated at any time. Four OAC members comprise our Marketing Committee, which advises
us on uses of the Fund. Item 11 contains more information about the Fund.
Except for the voice message box, email services and ProOfficeSM described above, neither we nor anyone
affiliated with us is the only approved supplier for products meeting our standards and specifications. Except as
described in this disclosure document neither we, nor persons affiliated with us, derive other revenue from your
purchases of goods from approved suppliers or as a result of any required purchases or leases. We derive revenue
from prompt payment or volume discounts, rebates and/or promotions, based on your purchases. During 2008, we
received $742,600 (3.4% of our 2008 total revenues) from those sources. The PLPRC receives payments collected
from PLPs, as well as all volume discounts, rebates and promotional payments we receive because of our Franchise
Owners’ purchases. During 2008, payments to the PLPRC were $2,115,300 or 9.6% of our total revenues of
$22,106,500. You will not receive any material benefits beyond those related to each transaction if you purchase
from our approved vendors.
9.
FRANCHISEE’S OBLIGATIONS
This table lists your principal obligations under the franchise and other agreements. It will help you
find more detailed information about your obligations in these agreements and in other items of this
disclosure document.
Obligation
a. Site selection and acquisition/lease
Section in
Agreement
2a
Disclosure
Document Item
11, 12
b. Pre-opening purchases/leases
7g, 7h
5, 7, 8
c. Site development and other pre-opening requirements
Not Applicable
Not Applicable
d. Initial and ongoing training
4a, 4b, 7d
11
e. Opening
7d
11
f. Fees
5
5, 6, 7, 10
16
Obligation
g. Compliance with standards and policies/operating manual
Section in
Agreement
1b, 1c, 1d, 2a, 2b, 6a,
Disclosure
Document Item
7, 8, 11
7, 8
h. Trademarks and proprietary information
1c, 6, 8
13, 14
i. Restrictions on products/services offered
1d, 2b, 7a, 7b, 8
8, 16
j. Warranty and customer service requirements
7, 13
16
k. Territorial development and sales quotas
2, 13a(iii)
12
l. Ongoing product/service purchases
7
8, 16
m. Maintenance, appearance, and remodeling requirements
Not Applicable
Not Applicable
n. Insurance
15
6, 7, 8
o. Advertising
4a ii, 4b, 5f, 7i, 9
6, 11
p. Indemnification
17
Not Applicable
q. Owner’s participation/management/staffing
7d
15
r. Records and reports
7, 10
Not Applicable
s. Inspections and audits
10
Not Applicable
t. Transfer
12
17
u. Renewal
Not Applicable
Not Applicable
v. Post-termination obligations
11, 14
17
w. Non-competition covenants
11
17
x. Dispute resolution
19, 21
17
y. Other (describe)
Not Applicable
Not Applicable
10.
FINANCING
The Agreement authorizes us to invoice your customers, collect your account receivables, and pay your
suppliers and certain other fees from the receivables we collect. You receive the balance after paying suppliers, our
fees and other amounts to which you have agreed to pay us.
Sometimes we advance funds on your behalf to pay your suppliers before we have received payment from
your customers. To facilitate these advances, we have obtained a line of credit from an institutional lender, which
requires the pledging of all of your receivables as collateral for all advances made pursuant to this line of credit.
Your liability under the Receivables and Security Agreement is limited to the sum of all advances we have made on
your behalf, and all fees you owe us under the Agreement. We reserve the right to change lenders and/or modify the
terms of our financing arrangements at any time.
At our discretion, we may advance money on your behalf to pay vendors for products before we have
received payment from your customers.
The Manual currently provides that if we have not received the
corresponding customer payment within 75 days of the customer invoice date, any money we advanced on your
behalf to pay vendors for products is immediately due and owing, and we have the right to deduct any vendor
payments from your net proceeds. Therefore, we will require you to satisfy our credit requirements before we grant
you a franchise. We also will require you to provide us with a personal guaranty (“Personal Guaranty”), and we
may require you to provide us with additional collateral if we agree to advance payments on your behalf. Any costs
17
we incur to prepare, file, perfect or to foreclose on the collateral must be paid by you. If in our opinion your
personal assets are inadequate security for credit we may extend to you or to your Franchised Business, we also may
require a Personal Guaranty from your spouse or from another credit worthy person. (See Guaranty of Franchise
Owner’s Undertakings.) If your marital status changes, we may require you to obtain a new Guaranty of Franchise
Owner’s Undertaking which you and a Guarantor will be required to execute.
We do not assume any liability or obligation to advance funds on your behalf.
The financing document, Exhibit D, is titled “Receivables and Security Agreement” (“Receivables
Agreement”). Pursuant to the Receivables Agreement:
a.
You sell us your accounts receivables. Additionally, you must grant to our lender a first priority security
interest in all your accounts receivable to secure amounts we owe the lender because of advances we have made on
your behalf and fees you owe us under the Franchise Agreement. You must also grant to us a subordinated security
interest in all of your accounts receivable, inventory and other assets to secure payment and performance of all of
your obligations owed to us;
b.
The sale of and the granting of a security interest in your accounts receivable will be recorded on UCC
Standard Forms 1 and 2, and filed with the Secretary of State or any other entity as the laws of your jurisdiction
permit for the recordation of security interests. You agree to appoint us as your attorney-in-fact to sign UCC
financing statements and other documents on your behalf to evidence and to perfect the security interests described
above;
c.
You agree to sell and we agree to buy at the gross invoice amount, but subject to actual collection, all of
your accounts receivable arising out of the Franchised Business. As payment for your accounts receivable, we agree
to remit to you the net proceeds of the amounts we collect from your customers. “Net Proceeds” equals gross
collections, less payments made to your suppliers, less prompt pay discounts taken by us, and less payments due to
us pursuant to the Agreement or other agreements you have with us;
d.
If a customer pays you directly, we deem that the entire amount you receive as held in trust for us as our
property. You must immediately turn over to us the check or other form of payment you have received. Your
failure to do so or to provide us with complete information about the relevant transactions is a basis for termination
of your Franchise and imposes upon you a duty to pay us three times the amount you have failed to send us;
e.
You irrevocably appoint us or our designee as your attorney-in-fact, to endorse in your name any notes,
acceptances, checks, drafts, money orders, or other remittances, invoices, freight, or express bills or bills-of-lading,
storage receipts, warehouse receipts, or other instruments or documents in respect to the accounts receivable; to sign
your name to drafts against you, assignments, or verifications of the receivables and notices to your customers; to
change your post office address if you cease business, breach or terminate the Agreement, breach the Receivables
Agreement, or if for any reason we feel insecure about your ability or willingness to honor the Receivables
Agreement;
f.
If you discontinue operating the Franchised Business, we may purchase your remaining accounts
receivable; and
g.
The Receivables Agreement terminates when the last of the following events to occur has occurred:
i.
You have paid us for the accounts receivable;
ii.
We have performed our collection obligations with respect to the accounts receivable; and
18
iii.
You have repaid us any sums the Receivables Agreement, the Franchise Agreement or any other
agreement we have with you requires you to pay us.
You are not required to pay any factoring or finance charges in connection with the Receivables
Agreement.
11.
FRANCHISOR’S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING
Except as listed below, Proforma is not required to provide you with any assistance.
Pre-Opening Assistance
Listed below is the assistance we provide you. Before you begin operating a Proforma franchise, we will
provide you with the following (we will also make them available to similarly situated Proforma Franchise Owners):
a.
One week of training, two and one-half days of which are mandatory, in the operation of the Franchised
Business with emphasis on the Proforma Selling System. Subject to the availability of space in training classes, you
may attend as many training sessions as you deem necessary to acquire competence in the operation of the
Franchised Business. We may conduct training at a site designated by us and offer a frequent schedule of training
sessions at our support center. We will provide and pay only for the training instructors, facilities and required
training materials, and you will pay all other costs and living expenses incurred during and in connection with the
training. All future “Paragraph” references will be to the Agreement.
b.
One set of the Manual (Paragraph 4a(ii), page 2);
c.
One set of the Proforma Success University Training Binder© (Paragraph 4a(iii), page 2);
d.
One set of the Proforma Success System© (Paragraph 4a(iv), page 2);
e.
ProOfficeSM software (or its successor system); and
f.
Start Up Package (Paragraph 4a(vi), page 2).
During the 12 months following your Commencement Date, we will provide you our then-current “Start
Up Package.” We may change or modify the Start-Up Package as we deem appropriate. The Start Up Package
currently consists of the following:
1. An initial Marketing Start Up Package designed to target potential customers and increase credibility
with existing customers. The Marketing Start Up Package we offer (which is subject to change) includes:
•
Owner Store Credit in the sum of $150.00.
•
Owner Store Freight Credit, estimated at $60.00.
•
Collateral Start Up Kit, which includes 25 Promotional Products Catalogs, 1 ProCase, 25
General Capability Brochures/Folders, 25 Directory of Products & Services Brochures, and
10 Proforma V-Mailcards.
•
Marketing Tool Kit, which includes three of each available marketing collateral piece,
specialty catalog (Holiday and Golf) and annual Promotional Products Catalog. Additionally,
one of each presentation folder and shipping envelope, as well as a copy of the Visual Identity
Standards Guide and other branding items associated with the franchise system.
2. Up to three hours of telephonic training in the use of our contact management and marketing database
software.
3. Up to five hours of telephonic business and cash flow planning consultation.
19
4. Upon completing training, you will be assigned a Success Coach who will work with you through a
twelve-week transition period. This transition period is an integral part of acquainting you with the various
resources and programs designed to help you grow your business. We may change or cancel this program at any
time without any liability to you.
Ongoing Assistance
During the term of the Agreement, we will provide you with the following (we will also make them
available to similarly situated Proforma Franchise Owners):
a.
Marketing and sales techniques designed to assist you to create, maintain and grow relationships with new
and existing customers.
b.
Our standard sales service support program, including telephone consultation with you concerning sales
and marketing strategies, sourcing, and other vendor related information and services related to customer needs, as
well as answers to manufacturers’ and customers’ questions regarding orders.
c.
Invoicing your customers, paying your suppliers, including us, from cash receipts of the Franchised
Business, and paying net receipts to you on a twice monthly basis, all in accordance with Paragraphs 4 (page 2), 5
(page 2) and 7 (page 2) of the Agreement.
d.
Monthly reports reflecting your gross billings, receipts, outstanding customer account balances and other
statistical information which will reflect the monthly sales of the Franchised Business.
e.
Advertising and marketing materials for our standard fees.
f.
Cash flow analysis.
We may also offer other services as well. There may be a cost for some of these services. Such cost may
change from time-to-time, and these services may be changed, modified, or canceled at any time without any
liability to you. Such services currently include: Prospect and lead identification programs; appointment setting
programs; sales presentation tools; sales and marketing literature; sales and customer service staff recruitment
program; product importing assistance; personalized catalogs, merger and acquisition support programs; website
marketing programs; North American Major Account programs; product knowledge and selling skills training
programs; personal business success coach programs; credit insurance; ideas network; and recognition programs.
We may delegate some or all of the obligations outlined above to third parties. However, we will be liable
to you for fulfilling the obligations of the Agreement.
Marketing Fund (“Marketing Fund” or “Fund”)
We will withhold from amounts we collect on your behalf monthly marketing fees up to 1% of your prior
month’s Gross Volume of Business (Paragraph 5(b), page 2 of the Agreement). These amounts become a part of the
Fund.
We may use the Fund for any expense reasonably related to marketing materials, public relations,
promotional activities, branding, positioning in the marketplace, market research, including the cost of promoting
Proforma and our Products and Services on the Internet, salaries, agencies, equipment and associated overhead.
We are not obligated to provide you or any other Franchise Owner with marketing which benefits you
directly or proportionately to your (or their) contributions. However, we do make available to you certain strategic
20
marketing programs subsidized by contributions to the Fund. The actual programs offered vary based in part on
recommendations of the OAC.
Materials and programs offered to you fall into different funding categories: fully funded (made available at
no additional cost to you); partially funded (made available to you at a discounted price); and underwritten (Fund
financially underwrites development and production expense, and you purchase without Fund subsidy). With
approval of our OAC or other group of Franchise Owners described in Item 8, we may spend the Fund for projects
other than marketing as described above.
You may use marketing materials, which you develop only after we have given you written approval to use
them. All marketing material must adhere to our standards published in Proforma’s Visual Identity Standards
Guidelines Manual.
We have complete discretion over how we spend the Fund, subject to the conditions described above.
However, we regularly consult the OAC about uses of the Fund. The Agreement does not require this practice and
is subject to change. Although the OAC serves in an advisory capacity only, and we have the legal right to
discontinue consulting with it, we have worked with the OAC to develop the present system because we believe it
has well served the needs of the Proforma System.
We do not have local or regional marketing cooperatives. If any are ever established, you may be required
to participate in their activities. We have not formulated any policies or procedures for use by a cooperative. If we
decide to form one or more cooperatives, and to require your participation, we will notify you of our requirements at
that time.
We administer the Fund in consultation with the OAC. We make monthly reconciliation of the Fund and
we provide detailed reports each month to the OAC Membership. You may obtain information concerning the Fund
on Proforma’s intranet, or by contacting your OAC representative.
During the calendar year ending December 31, 2008, we spent the proceeds of the Fund in the following
way:
Production of brochure, selling materials, promotional items, catalogs
27%
Business and Lead generation programs, marketing services,
list rental, database services, direct mail
38%
Marketing Customer research, fund oversight, trade associations,
office and other expenses
35%
The Fund is utilized to implement, research, market development, direct mail and printed materials for our
Franchise Owners.
Except as described above, we are not obliged to spend any amount on marketing in the area where you
will operate your Franchised Business. At year’s end, any unexpended sums in the Fund remain there. We pay
income taxes on the interest earned by the Fund. The Fund will pay for taxes if the Fund is subject to taxes. We
only account for how we spend the resources of the Fund in the manner described above. We devote none of the
Fund to projects which are principally designed to solicit the sale of Franchises.
21
Besides the Fund we operate, the PLPRC described in Item 8 promotes our Franchise Owners’ businesses.
The Agreement neither gives you any rights or interest in the PLPRC, nor imposes any duties on us relating to it.
We may change or end the PLPRC at any time.
Credit Insurance Program
We provide to you, free of charge, a credit insurance program that applies to all customer accounts with a
balance greater than $3,500. The PLPRC (see Item 8) funds the credit insurance program. Subject to eligibility
requirements, there are two types of coverage provided under the credit insurance program: (i) Blanket CoverageCustomer accounts with a balance greater than $3,500 and less than $90,000 are provided with coverage up to 85%
of the invoiced amount, and (ii) Named Coverage-Customer accounts currently at or expected to exceed $90,000 are
provided with coverage up to 90% of the invoiced amount. The minimum claim allowed is $3,500 (on a per
customer basis) and the maximum claim allowed is determined by the insurance carrier on a case-by-case basis (on a
per customer basis). Insurance coverage must be applied for prior to the shipment of a customer order. All claims
under the credit insurance program must be filed within 120 days from the invoice due date. Insolvency claims must
be filed immediately, but no more than 90 days after the date of insolvency. Subject to the insurance carrier and/or
our decision, eligibility requirements include, but are not necessarily limited to, trade references, bank references,
credit reports, financial statements, and payment experience of a given customer. Eligibility requirements may
change from time to time without notice.
Any customer account under $3,500 is not covered by any credit insurance program provided by us.
Failure to follow the established eligibility requirements may deem your credit insurance application and/or
coverage void, incomplete or ineffective. Your utilization of the credit insurance program creates no obligation,
duty, or liability on our part.
The Agreement neither obligates us to create, operate, maintain, or administer the credit insurance program.
We may change or cancel this credit insurance program at any time in our sole discretion without any obligation to
you.
Computer Systems
You must acquire from us a sublicense to use and utilize ProOfficeSM software (which includes
ProSMART) and compatible computer hardware in operation of your Franchised Business.
ProOffice
SM
You must use
to electronically communicate your customer purchase orders and vendor billing information to us.
ProOfficeSM was developed by Proforma.
You only may acquire ProOfficeSM from us. The monthly cost for Communication and Technology
Support is $100.00 a month, which includes ProOfficeSM incremental support. The fees are subject to change at any
time upon 30 days advanced notice.
We are not required to develop revisions of ProOfficeSM. We are currently in development of a new system
(“New System”) to replace ProOfficeSM. The New System may or may not be ultimately rolled out to all Franchise
Owners. Upon the development and roll out of the New System, we will require you to use the New System and
execute a license agreement at that time. The New System’s anticipated roll out date is 2010. If we complete a roll
out of the New System, we are not required to develop revisions to the New System. You may incur additional
22
costs, including licensing costs, to use the New System. Under either ProOfficeSM or the New System, if we
determine that revisions are appropriate, we may require you, following at least 30 day’s notice, to use them. The
Agreement does not contain any limitation on the frequency or cost associated with these changes. However, we
will not require you to undertake any of these changes unless all similarly situated Franchise Owners are subject to
substantially the same requirement.
We do not intend to authorize the use of any other comparable software program in the near future.
Under ProOfficeSM (and the New System) we have independent access to the information that will be
generated or stored. We may access this generated or stored information for any reason whatsoever. There are no
contractual limitations of our right to access the information.
ProOfficeSM is a web-based application and typically operates on an IBM compatible, Pentium compatible
computer with a minimum of 300 mhz with 32mb of RAM. The software specifications are Microsoft® Windows®
95/98/NT/2000/ME/XP operating system; MacAfee® or Norton AntiVirus™ for Windows®; and WinFax™ Pro
version 10.0 for Windows®, and we recommend Microsoft® Office 2003 or higher, or Microsoft® Office
Professional. ProOfficeSM can be networked via Windows NT®, Novell NetWare® or Windows®
95/98/NT/2000/ME/XP. So long as the hardware is compatible with the software, you may obtain the hardware
from any source.
We may disable ProOfficeSM or the New System without liability to you after notifying you of a default or
upon the termination of your Agreement.
Paragraph 7, page 3 of the Agreement, contains your obligations pertaining to the hardware and software.
Except as stated above, we are not obligated to assist you in obtaining hardware, maintenance or updates for your
system.
Confidential Operations Manual
The table of contents of our Confidential Operations Manual is below. We reserve the right to modify the
Manual at any time.
Table of Contents (3 pages)
The Proforma System (1 page)
Vision Statement
Mission Statement
Business Plan
Values
Franchise Owner Code of Ethics (1 page)
Network Relations (2 pages)
Referral Programs (1 page)
Proforma Resources (1 page)
Relationship Manager
Success Coach
Collection Specialist
Accounts Payable Team
23
Help Team
Franchise Development
Legal Department
Chief Business Development Officer
PhoneMail Administrator
Cash Application Specialist
Order Processing Department
Supervisor of Office Administration
Marketing Team
Vendor Relations Department
Franchise Owner Development
Proforma Intranet
Compliance Manager
Controller
Promotional Products Manager
Franchise Agreement Compliance (6 pages)
PFG Ventures, L.P. Franchise Agreement
Franchise Agreement – Summary Pages (summary)
Schedule 1 (Summary)
The Proforma Franchise Agreement – Table of Contents (Summary)
Parties and Recitals (Summary)
Grant of Franchise (summary)
Term and Renewal (Summary)
Operating Assistance (Summary)
Fees and Payments (Summary)
Licensed Marks (Summary)
Standards of Operation (Summary)
Confidential Operations Manual (Summary)
Advertising and Marketing (Summary)
Statements and Records (Summary)
Covenants (Summary)
Transfer and Assignment of Agreement (Summary)
Default and Termination (Summary)
Post Term Obligations (Summary)
Insurance (Summary)
Taxes, Permits and Indebtedness (Summary)
Indemnification and Independent Contractor (Summary)
Written Approvals, Waivers, and Amendments (Summary)
Enforcement (Summary)
24
Notices (Summary)
Governing Law; Waiver of Jury Trial (Summary)
Severability; Construction; Merger and Integration (Summary)
Acknowledgements (Summary)
Transfer of Business
Operating Violations
On-Hold Status
Default and Termination
Franchise Agreement Renewal Procedure (1 page)
Notification
Pre-Renewal Information/ Documentation
Sales and Marketing Information (1 page)
Sales and Marketing Fund Overview (SAM FUND)
PLP Fund
Infrastructure (7 pages)
Office Location
Telephone System
Telephone Communications
Facsimile Communications
E-Mail Communications
Incoming Mail
Outgoing Communications
Overnight Packages
Office Equipment
Furniture
Electrical Outlets
Safe Deposit Box
Computer System
Filing Cabinet
Shelving Units
Account Maintenance File
Open Order File
Closed Order File
Financial Reports
Hiring Employees
New Hire Sourcing
Business Legal Structure (2 pages)
Business Entity
Minority Business Enterprise
25
Proforma Business Name
Tax Identification Number
Government Registration
Government Licenses
Bank Accounts
Electronic Funds Transfers
Authorization to Charge Sales Tax
Insurance (1 page)
General Business Liability
Credit Insurance
General Casualty Loss and Business Interruption Insurance
Worker’s Compensation
Health Insurance Coverage
Dental Insurance
Proforma Operations and Training Materials (4 pages)
Vendor Sourcing Guide Reference
Proforma Publications and Periodicals
Artwork
Satellite Office Resources
Ordering Marketing Brochures and Printed Items
Extended Absence from Office
The Business Plan
The Annual Plan
The Monthly Plan
The Weekly Plan
Graphics Standards
Vendors (5 pages)
The Vendor
Proforma Preferred Limited Partners (PLP)
Establishing Credit with Vendors
Paper Merchant
Typesetter
Graphic Designer
Warehousing
Proforma Bank Warehousing
Bulk Warehousing
Pick and Pack Warehousing
Promotional Products
Promotional Product Samples
26
Maintaining Good Relationships with Vendors
Order Entry/Operational Procedures (8 pages)
Preparing Quotes
Reviewing Quotes
Determining the Selling Price
Mark Up
Gross Margin
Net Margin
Quick Calculations
Promotional Products/Discount Codes
Service Fees
Service Fee Exceptions
Service Fee Rebates
Typesetting
Graphic Design
Proofs
Presenting Proposals
Proposal Information
Order Acceptance
Customer Credit
Customer Tax Status
Order Processing (5 pages)
Entering the Order
Purchase Order Instructions Required Fields
Completing the Purchase Order
Checking the Purchase Order
Order File
Open Orders Reports
Information Contained on the Open Orders Report
Order Acknowledgements
Order Changes or Cancellations
Expediting Orders
Processing the Vendor Invoices
Handling Customer Complaints
Order Processing Department (2 pages)
Processing Orders
Customer Bills/Invoices
Verifying Receipt/Processing of Customer Bills and Vendor Payment
Errors in Customer Billing and Vendor Payment Data
27
Adjusting Customer Billing and Vendor Payment Data
Reference Information for A Proforma Invoice
Remittance Advice Section
Closed Orders
Accounts Receivable (5 pages)
Remittance Information
U.S. Lock Box Instructions
U.S. Wire Instructions
Canadian Deposit Instructions
Canadian Lock Box Instructions
Canadian Wire Instructions
Application of Customer Payments
Money on Account
Credit Card Payments
Accounts Receivable Collection Policy
Vendor Cost Reclaims
Net Proceeds Dates, Reports and Deposits
Net Proceeds Report Explanation
Account Receivable Aging Report Explanation
Sales Report Explanation
Technology (2 pages)
ProOfficeSM
ProSMART
ProOMS
ProMAIL
ProformaINET
Proforma Success Network
ProPORTAL
On-Line Company Stores
ProGRAPHICS
Help Team
Business Development (4 pages)
Listening
Questioning
High Impact Questions
Feature & Benefits Presentation
Handling Objections
Selling Skills Model
Effective Proposals
28
Closing
Closing Techniques
Training and Recognition (1 page)
Policies for Proforma's Training Programs Include:
Recognition
Proforma Industry Achievements and Rankings
Glossary (1 page)
Relationship Manager
Success Coach
Collection Specialist
Accounts Payable Team
Help Team
Chief Franchise Development
Legal Department
Chief Business Development Officer
PhoneMail Administrator
Cash Application Specialist
Order Processing Department
Supervisor of Office Administration
Marketing Team
Vendor Relations Department
Franchise Owner Development
Proforma Intranet
Compliance Manager
Controller
Promotional Products Manager
The Owner Advisory Council Overview (1 page)
OAC Officers 2007 – 2008
Regional Representation 2007-2008
Proforma Owner Advisory Council Bylaws (3 pages)
Article I – Name
Article II – Objectives
Article III – Membership
Section 1 – Eligibility
Section 2 – Representative
Article IV – Officers
Section 1 – Election of Officers
Section 2 – Term of Office
Section 3 – Duties of the Officers
29
Section 4 – Council Regional Officers
Section 5 – Termination and/or Removal from Office or Membership
Article V – Committees
Article VI – Meetings
Article VII – Expenses
Article VIII – Communications
Article IX - Amendments
Location
We will neither select nor approve a site or area for the operation of your Franchised Business. However,
we may restrict where, to whom and by what media you may sell Products and Services.
Projected Commencement Date
You must commence business under the Agreement within 45 days of the Effective Date of the Agreement.
Such time may be needed to complete your pre-operating requirements such as initial training, setting up an office,
obtaining business supplies and complying with state and local licensing requirements.
Training
Before giving you the authorization to start operating the Franchised Business, we will provide you with
one week of initial instruction in the operation of a Proforma Franchised Business. The first two and one-half days
of this training are mandatory, while you may attend the remainder of the week at your discretion. The training
takes place at either our Cleveland, Ohio Support Center or in another location we select. We offer initial training at
least once each month.
We presently employ Elizabeth Nesic, Manager of Training and Coaching, to supervise initial training of
you and/or your designated employees. In-the-field experience of our instructors that is relevant to the subjects they
teach, and which is relevant to our operations, is from 3 to 20 years. Other members of our staff are likely to
participate in our training. Our training staff is subject to change. Subject to the availability of space in training
classes, you may attend as many initial training sessions as you deem necessary to acquire competence in the
operation of the Franchised Business. All expenses incurred in initial training, including the cost of travel, room,
board and wages of the person receiving this training, will be borne by you. We will provide and pay only for the
training instructors, facilities and required training materials. The first two and one-half days of the initial training
by Proforma is mandatory for all new Franchise Owners. Your attendance at the remainder of the training week is
highly encouraged, but at your discretion.
A summary of our initial training program follows:
TRAINING PROGRAM
Subject
The Proforma Selling System
Hours of Classroom
Training
12 hours
Hours of On-The-Job
Training
N/A
– Prospecting techniques,
proposals, closing techniques
30
Location
Cleveland, Ohio
Subject
Hours of Classroom
Training
Hours of On-The-Job
Training
Location
and pricing. Analysis of
customers, what they offer and
how the Proforma Success
System© provides necessary
tools to plan, execute and
evaluate. Features six-step
method for sales calls. Do
things right; do the right
things.
Proforma products –
5 hours
N/A
Cleveland, Ohio
2.5 hours
N/A
Cleveland, Ohio
6 hours
N/A
Cleveland, Ohio
7 hours
N/A
Cleveland, Ohio
information regarding core
products, including business
forms production, envelope
mfg., design, commercial
printing, promotional products
and overview of the company
store programs.
Financial Systems and
Operations – Introduction to
financial systems and
operating procedures to
customer billing, accounts
receivables and payables.
Financial reports provided to
you.
ProOffice System/Use –
An overview of the
ProOfficeSM operating system
and its use, from contact
management to inventory
management. Each Franchise
Owner will generate a RFQ,
proposal, purchase order and
billing.
Marketing – An overview of
Proforma marketing strategy
and all the materials that are
used.
31
The primary instructional materials used during initial training include the following: for class are the
Proforma Success System©, Proforma Success University Training Binder©, and the Operations Manual. These
binders include text and supporting materials for the sessions covered in the school. These materials describe the
financial, administrative and operational, and sales and marketing aspects of the Proforma System. The Proforma
Success System© and the Proforma Success University Training Binder© will be the dominant focus of the class
week; the Operations Manual describes the operating systems and other relevant information about the Proforma
System, operating procedures and the OAC.
Product Sourcing Guides for Printing and Promotional Products illustrate how to identify and contact
sources for items you sell.
The Proforma Start Up Package:
During the 12 months following your Commencement Date, we will provide you our then-current “Start
Up Package.” We may change or modify the Start-Up Package as we deem appropriate. The Start Up Package
currently consists of the following:
a. An initial Marketing Start Up Package designed to target potential customers and increase credibility
with existing customers. The Marketing Start Up Package we offer (which is subject to change) includes:
•
Owner Store Credit in the sum of $150.00.
•
Owner Store Freight Credit, estimated at $60.00.
•
Collateral Start Up Kit, which includes 25 Promotional Products Catalogs, 1 ProCase, 25 General
Capability Brochures/Folders, 25 Directory of Products & Services Brochures, and 10 Proforma
V-Mailcards.
•
Marketing Tool Kit, which includes three of each available marketing collateral piece, specialty
catalog (Holiday and Golf) and annual Promotional Products Catalog. Additionally, one of each
presentation folder and shipping envelope, as well as a copy of the Visual Identity Standards
Guide and other branding items associated with the franchise system.
b. Up to three hours of telephonic training in the use of our contact management and marketing database
software.
c. Up to five hours of telephonic business and cash flow planning consultation.
d. In addition to training, we offer continuing education webinars designed to provide Proforma Franchise
Owners with additional information about our programs and the selling process. Webinars are offered in both live
and pre-recorded formats. A series of webinars designed to orientate your sales representatives is also available.
e. Upon completing training, you will be assigned a Success Coach who will work with you through a
twelve-week transition period. This transition period is an integral part of acquainting you with the various
resources and programs designed to help you grow your business. We may change or cancel this program at any
time without any liability to you.
If you desire to transfer your rights and duties under the Agreement, the proposed transferee must complete
to our satisfaction the training currently required of similarly situated Proforma Franchise Owners.
32
You may request on-site training and/or assistance at any time. At our option, we will provide it at your
sole cost and expense (including our costs and expenses). The Agreement does not require us to provide on-site
training.
Although the Agreement does not require us to do so, we currently offer our Franchise Owners the
following training programs:
Regional Business Meetings
Offered once per year, these two-day programs include product, sales, operational training and discussions
of operational issues, with a focus on training issues. Our Preferred Limited Partners (PLP’s) typically participate in
a vendor showcase. The registration fee in 2009 was $65.00 per person. In 2009, we offered seven regional
meetings located throughout the United States and in Canada.
Annual Convention
Offered at a different site each year, lasting 3-4 days, the agenda includes product, sales and operational
training, various roundtable discussions, recognition banquet, vendor showcase and other events.
In 2009,
registration fees are $390 for the first participant and $350 for each additional guest. Franchise Owners who are
new to the Proforma system, and have not attended any previous convention, may attend their first annual
convention then for a registration fee of $195.
12.
TERRITORY
You will not receive an exclusive territory. You may face competition from other franchise owners, from
outlets that we own, or from other channels of distribution or competitive brands that we control.
The Proforma Franchise is a non-exclusive license only, and does not grant you any exclusive market area
or territorial rights. The only restrictions on customers we may enforce on you or other Franchise Owners are as
follows:
a.
We have an account protection resolution policy (that we may amend from time-to-time) that may
restrict where or to whom or by what media you may sell products and/or services you are authorized to sell through
the Franchised Business (“Products and Services”).
b.
We reserve the right, in our sole discretion, and in accordance with the standards, policies and/or
procedures that we may specify in the Manual, to grant you and other Franchise Owners the exclusive right to sell to
and to service customers you or they have developed, and to restrict you and them from soliciting certain
prospective customers.
c.
We may restrict your teleprospecting, Internet and direct mail marketing activities to certain
potential customers located in areas defined by designated Postal Zip Codes. We may restrict your use of the
Internet to promote your business to sites which we own, prescribe or approve. Subject to our other rights in this
Item 12, we will not deprive you of your right to continue selling Products or Services to an entity which was your
exclusive customer prior to our implementation of a marketing restriction;
d.
We may terminate your Agreement if your Gross Volume of Business averages less than $1,000
per month during the first 6 months following the Effective Date of the Agreement, or less than $50,000 for any 6month period thereafter;
33
e.
We may award Franchises to persons in any location we deem advisable. We may in the future
authorize all Franchise Owners to offer products and services from retail store locations. Neither you nor any other
Franchise Owner may establish a Proforma retail store without our prior written approval, which will be subject to
such conditions as we believe are prudent.
We reserve the right for us and any affiliate to use other channels of distribution, such as the Internet,
catalog sales, telemarketing, or other direct marketing sales to sell products and/or services in competition with you.
We and our affiliates may operate a business similar to the Franchised Business at any locations we deem advisable,
and this business(es) may be permitted to use the Proforma System and the Licensed Marks. Neither we nor any
other affiliate operates a business under the System. However, we have provided direct sales and service support to
large volume accounts in the past and we may enter into similar arrangements in the future.
Presently, we have no formulated plans to operate or franchise the operation of any business selling under
different trade names or trademarks, goods or services similar to those offered for sale by you. However, we and
our affiliates, retain all rights to establish, acquire, merge with and operate other franchises or company-owned or
operated outlets selling similar or different products or services under a different trade name, trademark or service
mark in the future.
Our current policy is to establish at least one Franchise Owner per every 5,000 businesses in any market in
an effort to gain at least a 10% share of that market’s revenue associated with the Franchised Business. We expect
to make exceptions to that policy in situations, which, in our sole judgment, merit these exceptions.
13.
TRADEMARKS
We offer you the right to operate a business under the name “Proforma®.” You also may use other current
or future trademarks or Licensed Marks to operate your Franchised Business. By trademarks we mean trade names,
service marks, logos and slogans we authorize you to use in connection with operating your Franchised Business.
The trademark (Licensed Mark) listed below was registered on the Principal Register of the United States
Patent and Trademark Office, registration date of September 14, 1982, Registration Number of 1,208,208, by
Proforma, Inc., our predecessor and affiliate, which in the Limited Partnership Agreement creating PFG Ventures
has given us the right to sublicense the mark to our Franchise Owners.
Proforma®
Registration Date: September 14, 1982; Registration No.: 1,208,208.
Every use of the “Proforma®” service mark or trade name as an identifier of the Franchised Business must
be in conjunction with a suffix or other words or phrases more specifically identifying the Franchised Business, and
the exact format must be approved in advance by us, e.g., “Proforma® Speed Service.”
You only may use Proforma® as a domain name or other identifier of an Internet site or web page with our
prior written approval, which we may withhold. Proforma, Inc. claims common law rights with respect to the
registered service marks listed above arising from its, or its related parties’, exclusive use of such marks from their
date of first use. All affidavits of use required to be filed to maintain registration of the Licensed Marks listed above
have been timely filed.
34
You only may use our Licensed Marks in a manner we have approved in our Manual. You may not use the
Licensed Marks in your corporate name or to promote or to identify your business on the Internet without our prior
approval of such use.
There are presently no effective determinations of the United States Patent and Trademark Office, the
Trademark Trial & Appeal Board, the trademark administrator of any state, or any court affecting our Licensed
Marks. Nor are there any pending infringements, opposition or cancellation proceedings or any pending material
litigation involving our Licensed Marks.
No agreements are currently in effect which would significantly limit our rights with respect to any of these
trademarks, service marks or trade names in any manner material to you.
We are not obliged by the Agreement or any other document to protect any or all rights which you have to
use the trademarks and service marks listed above or to protect you against any claims of infringement or unfair
competition with respect to the same. The Agreement does not provide for any form of compensation or payment to
you, if you lose your right to continue to use our Licensed Marks. You must promptly notify us of any claim,
demand or cause of action that we or Proforma, Inc. may have based upon or arising from any unauthorized attempt
by any person or legal entity to use the Licensed Marks, any colorable variation of it, or any other mark, name or
indicia in which we or Proforma, Inc. have or claim a proprietary interest. You must assist us, upon request and at
our or Proforma, Inc.’s expense, in taking this action, if any, as we and/or Proforma, Inc. may deem appropriate to
halt these activities; but you may take no action nor incur any expenses on our or Proforma, Inc.’s behalf without
our prior written approval. If we or Proforma, Inc. undertake the defense or prosecution of any litigation relating to
the Licensed Marks, you must sign any and all documents and to do those acts and things as may, in our opinion, be
reasonably necessary to carry out this defense or prosecution.
You must operate and advertise only under the name or names designated by us for use by similar
Proforma Franchise Owners; to adopt and use the Licensed Marks solely in the manner prescribed by us; to refrain
from using PROFORMA® or any confusingly similar name in your corporate name; to refrain from using the
Licensed Marks to perform any activity or to incur any obligation or indebtedness in such a manner as may, in any
way, subject us or Proforma, Inc. to liability; to observe all laws with respect to the registration of trade names and
assumed or fictitious names, to include in any application a statement that your use of the Licensed Marks is limited
by the terms of your Agreement, and to provide us with a copy of this application and other registration
document(s); to observe these requirements with respect to trademark and service mark registrations and copyright
notices as we may require, including affixing “SM,” “TM,” or “R” adjacent to all of these Licensed Marks (thus,
SM, TM, or ®) in any and all uses of them; and to utilize any other appropriate notice of ownership, registration and
copyright as we may require. Your use of any sign advertising the Franchised Business will be subject to our prior
written approval.
In addition, you must agree that any principal trademark and service mark(s) you use on literature,
contracts, promotional and advertising materials will be in compliance with standards and specifications we publish
in the Manual or any other document. It will also be in lettering at least as prominent in size and style as your
corporate or trade name.
We reserve the right, in our sole discretion, to designate one or more new, modified or replacement
Licensed Marks for use by you and you must use it or them in addition to or in lieu of any previously-designated
35
Licensed Marks. You will not be entitled to any compensation as a result of the discontinuation of any of the
Licensed Marks. Any expenses or costs associated with your use of any such new, modified or replacement
Licensed Marks will be your sole responsibility.
We have no actual knowledge of any infringing uses of our principal trademark or service marks which
could materially affect your use of them in this state or in any other state.
14.
PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION
We own no rights in or licenses to any patents or copyrights which are material to the Franchise, except we
claim a copyright interest in our Agreement and other contractual forms, our Manual, Success System binder,
training materials, franchise sales brochures, advertisements, promotional materials, disclosure document, and other
written materials.
Although we have not filed an application for a copyright registration for our Manual and certain training
materials, we claim common law copyright protection and that the information in the Manual and materials is our
trade secret.
You may never – during the term or after the franchise agreement is terminated, for any reason whatsoever
or no reason – reveal any of our confidential information to another person or use it for any other person or business.
You may not copy any of our confidential information or give it to a third party except as we authorize. All persons
affiliated with you must sign a confidentiality agreement that we approve. Our confidential information includes
information, about products, services, equipment, technologies and procedure relating to the Franchised Business,
systems of operation, programs, standards, techniques, requirements, specifications, the Manual, this disclosure
document, the franchise agreement, any other agreements relating or pertaining to the Franchised Business,
customer names and addresses, prospective customer names and addresses, billings, reports, marketing plans,
business plans, methods of advertising and promotions, instructional materials, and other matters. Paragraph 8, page
4 of the Agreement, explains restrictions on your use and dissemination of this information to anyone except those
who work for you (including, employees, independent contractors, representatives, or agents) and who have signed a
confidentiality agreement that contains an indefinite term.
15.
OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE
BUSINESS
You must initially operate and manage the Franchised Business yourself. At no time may you hire or retain
a person to operate or manage the Franchised Business without first giving us written notice, and obtaining our
written consent. Our consent may be unreasonably withheld at our sole discretion. You must also provide any
individual whom we approve with the training we require. Any person you hire to operate your Franchised Business
must sign the confidentiality agreement with an indefinite term as specified in Paragraph 8, page 4 of the
Agreement.
16.
RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL
You only may advertise Products and Services on the Internet through web sites which we approve, which
may be limited to web sites controlled by us or our affiliates.
36
Paragraph 11, page 5 of the Agreement, prohibits you from engaging in any business similar to a Proforma
Franchise without our prior written approval. If we have authorized you to engage in another business which sells
products or services which, pursuant to Paragraph 11(b), page 5 of the Agreement, become a part of the Proforma
System after you became a Franchise Owner, we may require you either to merge your other business into the
Franchised Business and pay fees on the incremental increase in business you experience as a part of the Franchised
Business, or to dispose of your ownership interest (above 5%) and to discontinue working in this business.
Paragraph 2(b), page 1 of the Agreement, authorizes us to restrict where or to whom or by what media you
may sell products and/or services. Unless required by law, rule or regulation, if we impose a restriction, we will
allow you to continue servicing customers you were servicing when the restriction became effective.
For one year following the termination of the Agreement, Paragraph 11(c), page 5 of the Agreement,
precludes you from selling any products or services similar to those sold in our System to customers of your
Franchised Business and from contacting vendors or suppliers of your former Franchised Business on behalf of a
third party not expressly exempted from this restriction.
According to Paragraph 7, page 3 of the Agreement, you must comply with all Proforma System rules,
regulations, policies and standards which are by their terms mandatory, including those contained in the Manual.
You must operate and maintain the Franchised Business solely in the manner and pursuant to the standards
prescribed in the Agreement, in the Manual or in other written materials, which we provide you.
17.
RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION
This table lists important provisions of the Franchise and related Agreements. You should read
these provisions in the Agreements attached to this disclosure document.
THE FRANCHISE RELATIONSHIP
a.
Provision
Length of the franchise
Section in
Franchise or
Other Agreement
3
term
Summary*
The Agreement becomes effective when we sign it and its term
extends until either party terminates the Agreement as provided for
in the Agreement.
b. Renewal or extension of
3
the term
The Agreement becomes effective when we sign it and its term
extends until either party terminates the Agreement as provided for
in the Agreement.
c. Requirements for
Not Applicable
Not Applicable
franchisee to renew or extend
d. Termination by franchisee
13(e)
At any time following the Effective Date, you may terminate this
Agreement without cause by giving us at least 60 days prior
written notice, and by paying us all amounts you owe us, plus an
37
Provision
Section in
Franchise or
Other Agreement
Summary*
Account Acquisition Fee if you desire to service any or all of the
customers not listed on Schedule 1 of your Franchise Agreement.
The Account Acquisition Fee is an amount equal to 24 times the
average monthly service fee you owed us during the most recent
24 months of the Agreement (regardless of whether you owned
your franchise for a full 24 months or whether you have signed a
Renewal Agreement) for all your customers not listed on Schedule
1 of your Agreement. The Account Acquisition Fee shall not be
due and owing to us if you and all your Guarantors (i) agree for
one (1) year (in form and substance acceptable to us) to cease
selling products and/or services to your former customers that are
in the same or similar products and/or services offered by us (or by
our franchise owners) to each and every customer not listed on
Schedule 1, and (ii) if you and all your Guarantors sign a general
release of all claims against us. If this is a Renewal Agreement,
only those customers identified on your original Schedule 1 of
your initial franchise agreement shall be included on this Renewal
Agreement’s Schedule 1. Otherwise, you may terminate this
Agreement only if we have committed two or more material
breaches of our obligations under this Agreement within a calendar
year, and have failed to cure such breach within 60 days after you
have provided us with written notice to cure each such breach.
e. Termination by franchisor
Not applicable
Not applicable.
without cause
f. Termination by franchisor
13(a)
We may only terminate for good cause.
with cause
g. “Cause” defined:
curable defaults
13(a) & (c)
Collecting money from customers without immediately
transferring it to us; not paying money owed us under the
Agreement within 10 days after we give you notice to cure; your
non-performance or breach of any obligation, term, condition,
warranty or certification of the Agreement and your failure to cure
the breach within 10 days after we give you notice to cure; if you
do not operate your Franchised Business as specified in the
Manual. If you operate your business in a way which is
inconsistent with the Licensed Marks, or if you use the Licensed
Marks in a way which we have not approved, and do not cure all
deficiencies within 10 days after we give you notice to cure. Any
38
Provision
Section in
Franchise or
Other Agreement
Summary*
notice will be deemed to have been given you two days after the
date of the correspondence.
h. “Cause” defined:
13(b)
Non-curable defaults
Not commencing business within 45 days after we sign the
Agreement; not paying money owed us under the Agreement
within 10 days after we give you notice to cure; making false
statements or reports to us; violating Transfer requirements; two or
more defaults or violations in one calendar year; abandonment of
the Franchised Business; your conviction of a felony, crime of
moral turpitude, or other crime related to operation of the
Franchised Business; your insolvency or incapacity; your, or your
guarantor’s, default on any other agreement with us; your nonperformance or breach of any covenant, obligation, term,
condition, warranty or certification of the Agreement and your
failure to cure the breach within 10 days after we give you notice
to cure; less than $1,000 per month during the first 6 months after
the Effective Date of this Agreement or less than $50,000 for any
6-month period thereafter; if your Agreement is a Renewal
Agreement pursuant to Line 7 of the Summary Pages and your
Gross Volume of Business averages less than $50,000 for any six
month period, which may include the last 6 months of your prior
franchise agreement; if you do not operate your Franchised
Business as specified in the Manual and if you do not cure a
deficiency within 10 days after we give you notice to cure; if we
receive three or more complaints from actual or potential
customers or vendors concerning your conduct as a Proforma
Franchise Owner during a calendar year; your violation of or
permitting a violation of any confidentiality or nondisclosure
covenant; if you become insolvent, assign your assets for the
benefit of creditors; or if you consent to the initiation of
proceedings to appoint a custodian or receiver of your assets, or if
a custodial or receiver of your assets is assigned. Any notice will
be deemed to have been given you two days after the date of the
correspondence.
i. Franchisee’s obligations on
termination/non-renewal
14
Stop using our Licensed Marks and System in any way; pay us all
you owe us including expenses we incurred because of your
default; payments due us immediately, including, service fees and
marketing fees which we would collect normally when we receive
39
Provision
Section in
Franchise or
Other Agreement
Summary*
payment from customers of your Franchised Business; give us a
list of your employees, clients, customers, client and customer
contacts, their respective addresses and telephone numbers; give us
a statement of all outstanding obligations you have to third parties;
assign to us or our designee all customer accounts or contracts
developed by or for the Franchised Business; transfer your phone
numbers and directory listings to us or our designee; cease using in
advertising or otherwise methods, techniques or procedures
associated with the System. Return to us all copies of the Manual,
Success System©, and the Proforma Success University Training
Binder©, ProOfficeSM (and any successor system) and its
manuals, our trade secrets and confidential materials and all our
other property. You will retain no copy or record of any of the
above, except your copy of this Agreement, any correspondence
between the parties, and any other document which you
reasonably need for compliance with applicable laws.
j. Assignment of contract by
12(a)
franchisor
We may freely transfer our rights and duties under the Franchise
Agreement and the transfer will be binding upon and inure to the
benefit of our successors and assigns.
k. “Transfer” by franchisee –
12(b)
defined
Includes all changes of ownership rights in the Franchise
Agreement, the Franchised Business, its assets or you, the
Franchise Owner.
l. Franchisor approval of
12(b)
transfer by franchisee
Our approval is required for every Transfer; Transfers must follow
the standards and procedures we prescribe in the Agreement and
Manual.
m. Conditions for franchisor
12(c)(d),(e) , (f)
Comply with requirements described in the Agreement and
approval of transfer
(g), (h)
Manual and guaranty your obligations if we so request; notify us
of any transfer of customer accounts prior to the actual transfer;
give us a copy of the executed purchase agreement; you must
complete the transfer within 60 days after we receive the notice of
intent to transfer; give us a first right of refusal to acquire what you
propose to transfer; sign a release of your claims against us.
n. Franchisor’s right of first
12(h)
Before completing a Transfer, you must comply with procedures
refusal to acquire
in the Agreement and Manual which give us a right of first refusal
franchisee’s business
to purchase whatever you propose to Transfer. We may acquire
any interest proposed for a transfer by paying you the material
economic terms of the proposal, less any broker’s commission.
40
Provision
o. Franchisor’s option to
Section in
Franchise or
Other Agreement
Not applicable
Not applicable.
12(i), 12(j) & 12(k)
Regardless of the above, if your designated survivor continues to
Summary*
purchase franchisee’s
business
p. Death or disability of
franchisee
meet our qualifications as a Franchise Owner and desires to
acquire and retain your interest in the Franchise and to continue to
operate the Franchised Business, the designated survivor may do
so if he or she agrees to be bound by this Agreement, guarantees
your obligations to us, completes our initial training program if we
require it, and commences operation of the Franchised Business
within 30 days following your death. If the designated survivor
does not desire to acquire or retain your interest, the designated
survivor will have a reasonable period of time, but no more than
60 days, to make a transfer to a transferee acceptable to us, subject
to the procedures described above. If we have not designated
another party, including a Franchise Owner, to service your
accounts, the designated survivor must, throughout this period,
fulfill all your duties under this Agreement. The designated
survivor’s rights will be subject to and enforceable under the laws
of your state. If you become incapacitated or disabled to the extent
which we conclude interferes with your ability to fulfill your
obligations under this Agreement, at our option we may designate
an individual to fulfill your obligations under this Agreement,
and/or we may require your shareholders, partners, conservator, or
guardian to transfer or sell the rights under this Agreement to a
third party whom we approve. Any transfer of this nature must be
concluded within a reasonable time not to exceed 60 days. If we
appoint a Designee to operate your Franchised Business, unless
your Successor and the Designee agree upon a different formula,
all net proceeds which are generated as a result of sales the
Designee makes, will be split 50/50. All sales taxes and other
business expenses must be paid by the Franchised Business. We
and the Designee may condition appointment of a Designee on
your Survivor’s indemnifying and releasing us and the Designee
from claims arising out of the way the Designee operates the
Franchised Business.
41
Provision
q. Non-competition
Section in
Franchise or
Other Agreement
2(b) & 11(a)
Summary*
We have an account protection resolution policy (that we may
covenants during the term of
amend from time-to-time) that may restrict where or to whom or by
the franchise
what media you may sell products and/or services you are
authorized to sell through the Franchised Business. You may not
engage in any business, similar to the Franchised Business, without
our prior approval; you must devote full time and best efforts to the
operation of the Franchised Business; you may not divert business
of the System to others or disclose confidential information to
others. If you own or work in a business other than the Franchised
Business which sells products or services which are added to the
Proforma System after the Effective Date of your Agreement, we
may require you to discontinue sales of the products or services
through the other businesses, to sell them only through the
Franchised Business (subject to an adjustment on fees), or to
discontinue owning more than 5% of the non-Proforma business, or
discontinue working for it. You may neither solicit nor sell
products to prospects or customers which we designate as exclusive
to other Franchise Owners or franchise applicants.
r.
Non-competition
11(c)
Unless you pay us an Account Acquisition Fee as described in
covenants after the franchise
Paragraph 13(e), page 7 of the Agreement, and comply with Section
is terminated or expires
14, the requirements for one year after the Agreement terminates,
you, your guarantors and your employees may not sell any products
or services which are competitive with those offered through the
Proforma System to anyone who was a customer of your
Franchised Business or another Franchise Owner’s Franchised
Business; contact any vendor or supplier of the Franchised Business
for the purpose of buying products or services on behalf of any
third party, except for vendors and suppliers expressly exempted.
Exempted vendors and suppliers are those with whom you had
transacted business prior to the Effective Date of your Agreement;
provided, however, if the Agreement is a Renewal Agreement
pursuant to Line 7 of the Agreement Summary Pages, then
exempted vendors and suppliers are those with whom you had
transacted business prior to operating your Proforma Franchised
Business.
A Franchise Owner with Relevant Industry Experience or a
Conversion Franchise (as defined in Item 5) may be authorized to
42
Provision
Section in
Franchise or
Other Agreement
Summary*
continue business with accounts served before executing the
Agreement, provided such accounts are identified on Schedule 1 of
the Agreement, if applicable. If this is a Renewal Agreement, only
those customers identified on your original Schedule 1 of your
initial franchise agreement shall be included on this Renewal
Agreement’s Schedule 1.
s.
Modification of the
18(c)
agreement
We may modify the System and our standards through changes to
the Manual or any other document, so long as the modifications do
not conflict with your express rights created by the Agreement. We
may change the Agreement during its term only by mutual
agreement or with the approval of the OAC or a comparable
approved association or cooperative.
t.
Integration/merger clause
22(d)
Only the written terms of the Agreement and this disclosure
document are binding on you and us (subject to state law). We may
agree to terms which differ from what is described in this disclosure
document. In that case, the terms of the final written agreement
shall control. Other statements or promises are not enforceable.
u.
Dispute resolution by
Not applicable
We are not required to arbitrate or mediate claims.
arbitration or mediation
v. Choice of forum
21
Any litigation between you and us will take place in Cuyahoga
County, Ohio unless a valid law in your state prohibits our
requiring you to litigate there.
w. Choice of law
21
The law of the state in which you reside relating to rights of
franchise purchasers governs your rights. Otherwise, our respective
rights and duties shall be governed by the law of Ohio without
regard to its laws pertaining to conflicts of law. That law will
prevail in the event of any conflict of law.
* This is only a summary. Language of the Agreement and associated agreements alone defines your rights and
duties. Please read the agreements thoroughly.
These states have statutes which may supersede the Agreement in your relationship with us including the
areas of termination and renewal of your Agreement: ARKANSAS [Stat. Section 70-807], CALIFORNIA [Bus. &
Prof. Code Sections 20000-20043], CONNECTICUT [Gen. Stat. Section 42-133 e et seq.], DELAWARE [Code, tit.
6, Ch. 25, Sections 2551-2556], HAWAII [Rev. Stat. Section 482E-1], ILLINOIS [815 ILCS 705/1-44], INDIANA
[Stat. Section 23-2-2.7], IOWA [Code sections 523H.1-23H.17], MICHIGAN [Stat. Section 19.854(27)],
MINNESOTA [Stat. Section 80C.14], MISSISSIPPI [Code Section 75/24/51], MISSOURI [Stat. Section 407.400],
43
NEBRASKA [Rev. Stat. Section 87-401], NEW JERSEY [Stat. Section 56:10-1], SOUTH DAKOTA [Codified
Laws Section 37-5A-51], VIRGINIA [Code 13.1-557-574-13.1-564], WASHINGTON [Code Section 19.100.180],
WISCONSIN [Stat. Section 135.03].
18.
PUBLIC FIGURES
No compensation or other benefit is given or promised to a public figure for the use of the public figure in
the name or symbol of the Franchise or for the endorsement or recommendation of the Franchise by the public figure
in advertisement.
You have no rights to use the name of any public figure for purposes of promotional efforts, advertising or
endorsements, except with our prior consent. No public figure is involved in the actual management or control of
us. No public figure has any investment in the franchise operation.
19.
FINANCIAL PERFORMANCE REPRESENTATIONS
The FTC’s Franchise Rule permits a franchisor to provide information about the actual or potential
financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the
information, and if the information is included in the disclosure document. Financial performance information that
differs from that included in Item 19 may be given only if: (1) a franchisor provides the actual records of an existing
outlet that you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for
example, by providing information about possible performance at a particular location or under particular
circumstances.
44
5
STATEMENT OF FRANCHISE OWNERS
GROSS SALES AND GROSS PROFITS
To help you evaluate our franchise opportunity, we have compiled certain Gross Sales, Gross Profit, and
Average Order Size information for the calendar year ending December 31, 2008. We have compiled the
information for each franchise classification based upon information Franchise Owners have reported through our
system. We did not audit this information. We have computed the average Gross Sales, Gross Profit, Gross Profit
Percentage, and Average Order Size for each type of franchise based upon information we have collected in the
ordinary course of business1. You should not rely on this information to predict the sales or profits you could derive
from operating one of our franchises. We will substantiate the data used in preparing this sales/earnings information
described in Item 19 to the prospective franchisee on reasonable request.
We compiled this information only from Franchise Owners whose franchised businesses were in operation
for the entire year. Results from Franchise Owners who either began or terminated their franchise relationship with
us during 2008 are not included2,3,4. All amounts are in U.S. Dollars.
The Gross Profit information was derived by subtracting the reported Cost of Goods Sold from the reported
Gross Sales. From their Gross Profits, Franchise Owners pay us fees and pay all the business, wage and debt service
expenses associated with running their businesses, including any taxes.
Franchise Owners are classified as Start-Up or RIE. A Start-Up Franchise Owner is a Franchise Owner
entering our franchise system without Relevant Industry Experience (defined in Item 5). A RIE Franchise Owner is
a Franchise Owner entering our franchise system with Relevant Industry Experience. RIE includes both Relevant
Industry Experience and Conversion franchises. For a complete description of these categories, please see Item 5 of
this disclosure document.
If you become a Proforma Franchise Owner, your financial results are likely to differ from the
averages presented in the following charts.
1
2.
3.
4.
5.
Information was gained from the sales recorded by our Franchise Owners and vendor payments we advanced on their
behalf in the ordinary course of business.
The tables do not include information on 101 Franchise Owners that began their affiliation with us during 2008.
The tables do not include information on 66 Franchise Owners that were terminated during 2008.
The averages would differ had the results of new and former Franchise Owners been included.
The tables are shown in U.S. dollars unless otherwise noted.
45
Franchises with Gross Sales Greater Than $400,000
(193 Owners Representing 34% of the Franchised Businesses Reported in Item 19)
In calendar year 2008, 193 Franchise Owners in the survey had sales greater than $400,000. These
193 Franchise Owners include 162 RIE Franchise Owners and 31 Start-Up Franchise Owners. This group
represents 34% of the total number of Franchise Owners that were in operation for the entire calendar year of 2008
and reported in item 19.
The reported information does not include the results of 66 Franchise Owners whose affiliation with us
terminated during 2008, including 4 Start-Up Franchise Owners and 62 RIE Franchise Owners. The reported
information does not include the results of 101 Franchise Owners whose affiliation with us began during 2008,
including 8 Start-Up Franchise Owners and 93 RIE Franchise Owners. All amounts are in U.S. Dollars.
FRANCHISES WITH GROSS SALES OVER $400,0001
Total
Start-Up
RIE
Sales Greater than $400,000
193
31
162
Sales Greater than $1 Million
62
5
57
21
--
21
4
--
4
2
--
2
1.
The lower dollar tiers shown above are inclusive of the data in the higher dollar tiers. For example, the 2 Franchise Owners selling more
than $10 Million are included in every other tier.
46
Franchises with Gross Profit Greater Than $100,0002
(260 Owners Representing 49% of the Franchised Businesses Reported in Item 19)
In calendar year 2008, 260 Franchise Owners in the survey had Gross Profit greater than $100,000. These
260 Franchise Owners include 211 RIE Franchise Owners and 49 Start-Up Franchise Owners. This group
represents 49% of the total number of Franchise Owners that were in operation for the entire calendar year of 2008
and reported in item 19.
FRANCHISES WITH GROSS PROFIT OVER $100,0001
Total
Start-Up
RIE
Gross Profit Greater than $100,000
260
49
211
88
11
77
36
2
34
19
--
19
Gross Profit Greater than $1 Million
8
--
8
1.
The lower dollar tiers shown above are inclusive of the data in the higher dollar tiers. For example, the 8 Franchise Owners with Gross
Profit greater than $1 Million are included in every other tier.
2
The Gross Profit figure does not include 42 (8%) Franchise Owners that were in operation for the entire year, but had insufficient
information to complete this section.
47
Franchises with Gross Profit Greater Than 35%
(325 Owners Representing 62% of the Franchised Businesses Reported in Item 19)2
In calendar year 2008, 325 Franchise Owners in the survey had gross profit greater than 35%. These 325
Franchise Owners include 253 RIE Franchise Owners and 72 Start-Up Franchise Owners. This group represents
62% of the total number of Franchise Owners that were in operation for the entire calendar year of 2008 and
reported in item 19.
FRANCHISES WITH GROSS PROFIT OVER 35%1
Total
Start-Up
RIE
Gross Profit Greater than 35%
325
72
253
153
30
123
40
8
32
7
2
5
4
1
3
1.
The lower dollar tiers shown above are inclusive of the data in the higher dollar tiers. For example, the 4 Franchise Owners with Gross
Profit greater than 55% are included in each prior tier.
2
The Gross Profit figure does not include 42 (8%) Franchise Owners that were in operation for the entire year but had insufficient
information to complete this section.
48
Average Order Size by Franchise Owner
(568 Franchise Owners)
The Average (mean) Order Size by Franchise Owner during calendar year 2008 was $8891. The Average
Order Size for a Start-Up Franchise Owner was $799. The Average Order Size for an RIE Franchise Owner was
$904.
AVERAGE ORDER SIZE BY FRANCHISE OWNER
Number of Owners Reported
Total
568
Start-Up
125
Average Order Size
$889
$799
$904
Owners Exceeding Average
288
64
224
50.70%
51.20%
50.56%
% Exceeding Average
RIE
443
Range
$0 – 38,862
$137 - $15,025
$0 - $38,862
Lowest Single Order
$0
$0
$0
Highest Single Order 2
$578,120 3
$132,7503
$578,1203
1.
The average order size was calculated by dividing Gross Sales by the Total Number of Orders for each Franchise Owner.
The Highest Single Order was rounded to the nearest thousand dollars for presentation purposes.
3.
The Highest Single Order was the highest individual order for a Franchise Owner out of a total of 325,924 total orders in calendar year
2008, including 46,165 Start-Up Franchise Owner Orders and 279,760 RIE Franchise Owner Orders.
2.
49
Million Dollar Club Franchises 2
(62 Franchise Owners Representing 11% of the Franchised Businesses Reported in Item 19)
The Average (mean) Gross Sales for our 62 Million Dollar Club Franchise Owners during calendar year
2008 was $2,311,733. These 62 Franchise Owners comprising the Million Dollar Club include 57 RIE Franchise
Owners and 5 Start-Up Franchise Owners that exceeded $1 million dollars in annual gross sales during the calendar
year 2008. This group represents 11% of the total number of Franchise Owners that were in operation for the entire
calendar year of 2008 and reported in Item 19. All amounts are in U.S. Dollars.
FRANCHISES REACHING OVER $1 MILLION IN GROSS SALES
Gross Sales
Average Gross Sales1
Reported (62)
$2,311,733
Number And % Meeting or Exceeding Average
Reported
16 / 26.0%
Range of Gross Sales
Reported
$1,000,860 - $14,692,553
Ranges and Averages of Gross Sales
"Top (20)"
Range
Average
$2,140,396 - $14,692,553
$4,366,751
“Middle (21)”
Range
Average
$1,269,119 - $2,027,387
$1,570,733
“Bottom (21)”
Range
Average
$1,000,860 - $1,241,140
$1,095,573
1.
The averages are calculated by dividing the sum of the sales amounts by the number of Franchises represented. Numbers in parentheses are
the number of Franchises represented in the calculations.
2.
Franchise Owners that had over $1 million in annual sales (U.S. Dollars) in 2008.
3
The Gross Sales figure does not include 1 Canadian Franchise Owner that was eligible for the Million Dollar Club but had sales of less than
$1 Million U.S. Dollars once the respective Gross Sales were converted from Canadian Dollars to U.S. Dollars. The average Gross Sales figure
for this Franchise Owner was $1,022,741, Canadian Dollars..
50
Start-Up Franchises
[Franchise Owners entering the system without Relevant Industry Experience]
The Average (mean) Gross Sales for Start-Up Franchise Owners during calendar year 2008 was $307,403 4.
This includes 117 Start-Up Franchise Owners who were eligible for inclusion in this report.
The reported information does not include the results of 4 Start-Up Franchise Owners whose affiliation
with us terminated during 2008. The reported information does not include the results of 8 Start-Up Franchise
Owners whose affiliation with us began during 2008. All amounts are in U.S. Dollars.
START UP FRANCHISES
1
Averages by Category
Reported (117)
Gross Sales
Gross Profit 2,3
Gross Profit%
$110,788
36.0%
45 / 38%
59 / 50.4%
$307,403
Reported
Ranges
Reported
43 / 37%
$797 - $1,664,440
Ranges and Averages Grouped by Gross Sales
“Top (39)”
Range
$334,663 - $1,664,440
Average
$615,224
Range
Average
“Middle (39)”
$162,341 - $330,465
$235,117
Range
Average
“Bottom (39)”
$797 - $158,460
$71,867
$379 - $605,846
19.2% - 56.4%
$103,231 - $605,846
$222,256
23.4% - 46.9%
36.1%
$46,187 - $134,204
$83,558
22.7% - 49.8%
35.4%
$379 - $59,300
$26,550
19.2% - 56.4%
37.1%
1.
The averages are calculated by dividing the sum of the amounts or percentages reported in each category by the number of Franchises
represented. Numbers in parentheses are the number of Franchises represented in the calculations.
2.
The cost of goods used in determining Gross Profit only includes those amounts we advance to vendors on behalf of the Franchise Owners.
Our Franchise Owners incur other related costs associated with these sales that are not referenced in these amounts.
3.
The Franchise Owner’s net profit is determined by subtracting from the Gross Profit the following items: fees paid to us, the salary paid to
staff and self, rent, insurance and all other overhead costs associated with operating the Franchise.
4
The Gross Sales figure does not include 8 (6%) Start-Up Franchise Owners that were in operation for the entire year but had insufficient
information to complete this section. The Average Gross Sales figure for these 8 Franchise Owners was $116,116 (38% of these 8 Franchise
Owners achieved or exceeded this Average Gross Sales figure).
51
RIE Franchises
[Franchise Owners entering the system with Relevant Industry Experience]
The Average (mean) Gross Sales for RIE Franchise Owners during calendar year 2008 was $553,262 4.
This includes 409 RIE Franchise Owners who were eligible for inclusion in this report.
The reported information does not include the results of 62 RIE Franchise Owners whose
affiliation with us terminated during 2008. The reported information does not include the results of 93 RIE
Franchise Owners whose affiliation with us began during 2008. All amounts are in U.S. Dollars.
RIE FRANCHISES
1
Averages by Category
Reported (409)
Gross Sales
Gross Profit 2,3
$553,262
$191,995
Gross Profit%
34.7%
Reported
Ranges
Reported
107 / 26.2%
$7,567 - $11,726,558
109 / 26.7%
$1,523 - $3,453,740
Ranges and Averages Grouped by Gross Sales
"Top (136)"
Range
$461,730 - $11,726,558 $134,313 - $3,453,740
Average
$1,247,573
$424,219
262 / 64.1%
16.1% - 62.1%
16.5% - 62.1%
35.7%
Range
Average
“Middle (136)”
$197,306 - $459,797
$298,258
$33,919 - $203,910
$109,141
16.1% - 49.6%
36.7%
Range
Average
“Bottom (137)”
$7,567 - $196,597
$117,162
$1,523 - $89,816
$43,716
17.5% - 60.2%
37.2%
1.
The averages are calculated by dividing the sum of the amounts or percentages in each category by the number of Franchises represented.
Numbers in parentheses are the number of Franchises represented in the calculations.
2.
The cost of goods used in determining Gross Profit includes only those amounts we paid to vendors on behalf of these Franchise Owners.
Our Franchise Owners incur other related costs associated with these sales that are not referenced in these amounts.
3
The Franchise Owner’s net profit is determined by subtracting from the Gross Profit the following items: fees paid to us, the salary paid to
staff and self; rent; insurance and all other overhead costs associated with operating the Franchise.
4
The Gross Sales figure does not include 34 (8%) RIE Franchise Owners that were in operation for the entire year but had insufficient
information to complete this section. The Average Gross Sales figure for these 34 Franchise Owners was $785,186 (15% of these 34 Franchise
Owners achieved or exceeded this Average Gross Sales figure).
52
20.
OUTLETS AND FRANCHISEE INFORMATION
Table No. 1
Systemwide Outlet Summary
For years 2006 to 2008
Column 1
Column 2
Column 3
Column 4
Column 5
Outlet Type
Year
Outlets at the Start
of the Year
Outlets at the End
of the Year
Net Change
2006
604
604
0
2007
604
632
+28
2008
632
667
+35
2006
0
0
0
2007
0
0
0
2008
0
0
0
2006
604
604
0
2007
604
632
+28
2008
632
667
+35
Franchised
Company-owned
Total Outlets
Table No. 2
Transfers of Outlets from Franchisees to New Owners (Other than the Franchisor)
Column 1
Column 2
Column 3
State
Year
Number of Transfers
2006
0
2007
1
2008
1
2006
0
2007
1
2008
1
2006
0
2007
0
2008
1
2006
0
2007
0
2008
1
2006
0
2007
2
2008
2
Alabama
Florida
Maine
Wisconsin
Total
53
Table No. 3
Status of Franchised Outlets
Col. 1
Col. 2
State
Year
Alabama
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
Col. 3
Outlets
at
Start
of Year
7
7
8
10
10
10
3
4
3
66
67
74
10
8
9
9
9
7
1
1
1
31
36
38
17
15
16
2
2
0
1
1
1
30
29
36
15
15
16
2
2
2
5
5
5
Col. 4
Col. 5
Col. 6
Col. 7
Outlets
Opened
Terminations
NonRenewals
Reacquired
by
Franchisor
0
0
0
0
2
2
1
0
0
4
8
14
0
1
3
1
0
1
0
0
0
4
6
5
2
2
7
0
0
0
0
0
0
2
9
6
1
2
2
0
0
2
1
0
3
0
0
0
0
1
2
0
1
0
1
0
4
2
0
0
0
1
0
0
0
0
0
4
3
1
0
0
0
1
0
0
0
0
1
2
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
54
Col. 8
Ceased
OperationsOther
Reasons
0
0
2
0
0
1
0
0
0
2
0
7
0
0
0
1
0
0
0
0
0
1
1
3
3
1
2
0
0
0
0
0
0
1
0
1
0
0
0
0
0
0
1
0
0
Col. 9
Outlets
at End
of Year
7
8
7
10
10
10
4
3
3
67
74
78
8
9
11
9
7
8
1
1
1
36
38
38
15
16
21
2
0
1
1
1
1
29
36
40
15
16
17
2
2
4
5
5
7
Col. 1
Col. 2
State
Year
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
Col. 3
Outlets
at
Start
of Year
6
5
7
3
3
3
2
1
1
15
13
15
24
23
25
12
15
14
7
8
7
2
2
2
5
5
5
1
1
1
4
3
3
3
4
3
3
2
2
31
29
28
1
1
1
23
23
23
17
22
23
Col. 4
Col. 5
Col. 6
Col. 7
Outlets
Opened
Terminations
NonRenewals
Reacquired
by
Franchisor
0
2
1
0
0
1
0
0
0
0
3
1
2
3
4
4
1
5
1
1
1
1
0
0
1
1
0
0
0
0
0
0
1
0
1
1
0
0
1
2
1
3
0
0
0
2
3
4
4
3
4
0
0
0
0
0
0
1
0
0
0
0
1
3
1
1
1
1
0
0
2
1
0
1
1
0
1
0
0
0
0
1
0
0
0
1
0
0
0
0
2
1
2
0
0
0
0
0
0
1
2
0
0
0
0
0
0
0
0
0
0
1
0
0
1
1
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
2
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
55
Col. 8
Ceased
OperationsOther
Reasons
1
0
0
0
0
0
0
0
0
0
0
0
0
0
2
0
1
1
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
2
0
0
0
1
1
3
0
0
0
Col. 9
Outlets
at End
of Year
5
7
8
3
3
4
1
1
1
13
15
16
23
25
25
15
14
17
8
7
7
2
2
1
5
5
5
1
1
1
3
3
4
4
3
4
2
2
4
29
28
27
1
1
1
23
23
24
22
23
26
Col. 1
Col. 2
State
Year
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Canada
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
2006
2007
2008
Col. 3
Outlets
at
Start
of Year
2
1
0
47
53
56
3
2
2
4
4
5
21
27
27
7
8
7
0
0
0
14
14
14
42
38
41
6
6
7
1
1
1
13
12
12
12
10
12
2
1
1
17
15
14
0
0
0
43
43
42
Col. 4
Col. 5
Col. 6
Col. 7
Outlets
Opened
Terminations
NonRenewals
Reacquired
by
Franchisor
0
0
0
7
9
8
0
0
0
1
1
1
4
1
4
0
1
1
0
0
1
0
0
1
1
5
7
0
1
0
0
0
0
0
1
1
0
1
0
0
0
0
0
1
2
0
0
0
4
3
3
1
0
0
1
2
1
1
0
1
1
0
0
0
1
0
0
0
0
0
0
0
0
1
1
1
3
0
0
0
0
0
0
0
0
0
0
1
1
0
1
0
1
0
1
0
0
0
0
4
2
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
1
0
0
0
0
0
0
0
0
1
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
2
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
56
Col. 8
Ceased
OperationsOther
Reasons
0
0
0
1
1
2
0
0
0
0
0
1
1
0
1
0
2
0
0
0
0
0
0
1
2
1
2
0
0
0
0
0
0
0
1
1
1
0
0
0
0
0
2
0
1
0
0
0
0
0
6
Col. 9
Outlets
at End
of Year
1
0
0
53
56
62
2
2
1
4
5
4
27
27
28
8
7
7
0
0
1
14
14
13
38
41
45
6
7
6
1
1
1
12
12
12
10
12
12
1
1
0
15
14
14
0
0
0
43
42
39
Col. 1
Col. 2
Col. 3
Col. 4
Col. 5
Col. 6
Col. 7
Col. 8
Col. 9
Outlets
Ceased
Reacquired
Outlets
at
Outlets
NonOperationsYear
Terminations
by
at End
State
Start
Opened
Renewals
Other
Franchisor
of Year
of Year
Reasons
2006
0
0
0
0
0
0
0
Puerto Rico
2007
0
0
0
0
0
0
0
2008
0
0
0
0
0
0
0
2006
1
0
0
0
0
0
1
Virgin Islands
2007
1
0
0
0
0
0
1
2008
1
0
0
0
0
0
1
2006
604
50
25
5
0
20
604
Totals
2007
604
73
31
5
0
9
632
2008
632
101
21
6
0
39
667
* State variances may exist between Outlets at Start of Year and Outlets at End of Year due to Franchisee relocations.
Table No. 4
Status of Company-Owned Outlets
Col. 1
Col. 2
Col. 3
Col. 4
State
Year
Outlets at
Start of
the Year
Outlets
Opened
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
All United
States
All
Canadian
Provinces
Totals
2006
2007
2008
2006
2007
2008
2006
2007
2008
Col. 5
Outlets
Reacquired
from
Franchisee
0
0
0
0
0
0
0
0
0
Col. 6
Col. 7
Col. 8
Outlets
Closed
Outlets Sold
to
Franchisee
Outlets at
End of the
Year
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
* We never have had a company-owned unit. However, our predecessor, Proforma, operated a business similar to
those we franchise in Cleveland, Ohio. Proforma, Inc. sold this unit in July, 1995 and has no intention of opening
additional units.
Table No. 5
Projected Openings As Of December 31, 2008
Column 1
State
Alabama
Alaska
Arizona
Arkansas
California
Canada
Colorado
Connecticut
Delaware
District of Columbia
Florida
Column 2
Franchise Agreements
Signed But Outlet Not
Opened
0
0
0
0
0
0
0
0
0
0
0
Column 3
Projected New
Franchised Outlet In the
Next Fiscal Year
1
1
2
1
4
5
1
1
1
1
4
57
Column 4
Projected New
Company-Owned Outlet
In the Next Fiscal year
0
0
0
0
0
0
0
0
0
0
0
Column 1
State
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Total
1.
Column 2
Franchise Agreements
Signed But Outlet Not
Opened
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Column 3
Projected New
Franchised Outlet In the
Next Fiscal Year
2
1
1
2
4
1
1
2
1
1
3
3
4
2
1
2
1
1
1
1
3
1
3
2
1
5
1
1
4
1
3
1
3
4
1
1
3
2
1
1
1
100
Column 4
Projected New
Company-Owned Outlet
In the Next Fiscal year
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
We never have had a company-owned unit. However our predecessor, Proforma, operated a business
similar to the ones we franchise in Cleveland, Ohio. Proforma, Inc. sold this unit in July 1995 and has no intention
of opening additional units.
2.
No Agreements have been signed by Franchise Owners who were not conducting business. We plan to
open no “company-owned” offices during our 2009 calendar year.
3.
This projection is only an estimate. It neither reflects the number of leads in our possession when the table
was prepared nor the results of any market survey.
58
Current Franchise Owners
Attached to this Disclosure Document as Exhibit C is a list of all Franchise Owners and the addresses and
telephone numbers of their outlets.
Former Franchise Owners
The following lists the name, city and state, and the current business telephone number (or, if unknown, the
last known home telephone number) of every franchise who had an outlet terminated, canceled, not renewed, or
otherwise voluntarily or involuntarily ceased to do business under the franchise agreement during the most recent
completed fiscal year or who has not communicated with us within 10 weeks of the issue date of this disclosure
document. If you buy this franchise, your contact information may be disclosed to other buyers when you
leave the franchise system.
Name
City and State
Telephone
Mouain Alassal
Edmonton, AB
780-628-4427
Loni Radford
Grande Prairie, AB
780-357-1164
Scott Morris
Florence, AL
256-766-8166
Alicia Boykin-Searcy
Birmingham, AL
205-803-4192
Kathleen & Richard Pipenhagen
Chandler, AZ
480-883-6966
Kevin & Robin Schlimgen
Gilbert, AZ
480-350-7239
Aaron Saunders
Paradise Valley, AZ
480-425-0185
Arthur Mole
Surrey, BC
604-589-2234
Leslie Dabney
Livermore, CA
925-960-0610
Dee Murphy
Santee, CA
619-449-6578
Theresa Sgrignoli
Folsom, CA
800-555-5816
Aaron & Diana May
Magalia, CA
888-800-9440
Glenn Cummings
Granite Bay, CA
916-791-9299
Mayank & Neeta Shah
Stevenson Ranch, CA
661-253-1903
John Justice
Apple Valley, CA
760-885-5354
Rick Simpson
Murrieta, CA
951-600-9749
Robert Davis
Clovis, CA
559-287-2693
Patricia Barnes
Dana Point, CA
949-542-3681
Bob Bowers
Bonita, CA
619-434-6696
Adam Rice
Jacksonville Beach, FL
904-685-2420
Dave Kemlage
Orange Park, FL
904-813-6274
Jimmy Tam & Eileen Leung
Hollywood, FL
954-303-3920
Lenthron Whiteside
Avenura, FL
305-932-4968
Joel & Jennifer Lazar
Orlando, FL
800-319-2476
59
Al Silva
Tampa, FL
813-503-0000
Jayne Hubbell
Norcross, GA
770-242-5987
Sonia Wignall
Fayetteville, GA
770-306-5591
Joe Shetley
Salem, IL
618-548-1556
Mark Losiak
Minooka, IL
815-521-4670
Dick Charbonnier
Haverhill, MA
978-373-9795
John Johnson
Holliston, MA
508-429-8744
Rina Wedel
Westborough, MA
508-329-4683
John Vander Kooy
Winnipeg, MB
204-470-3333
Tom Kunkel
Bel Air, MD
410-803-1314
Christine Mann & Charles Ouellette
Milan, MI
734-439-2904
John Geier
Minnetonka, MN
612-978-3970
Joyce Wright
Ashland, MS
800-868-9308
Janie Clayton
Roxboro, NC
336-598-0883
Jim Burris
Matthews, NC
704-841-8934
Pete Lamb
Farmingdale, NJ
732-751-0023
Howard Mayer
Mt. Laurel, NJ
856-722-7529
Peter Hyland
Cherry Hill, NJ
856-751-0500
Chris Ludwig
Milford, NJ
908-995-8828
Chris Coke
Rochester, NY
585-242-2097
Henry Brigham
Camillus, NY
315-468-3700
Tom Dougherty
Rochester, NY
585-224-3710
Brian Allman & Brad Burch
Tallmadge, OH
330-633-0203
Gene Toth
Hudson, OH
330-656-3793
Heidi Kisela
Brookpark, OH
216-862-0578
Henry Dinneen
Tulsa, OK
918-494-2708
Bob Brown
Barrie, ONT
888-476-4776
Elias Korah
Mississauga, ONT
905-268-0135
Adrian Smith
Smiths Falls, ONT
613-283-6013
Melody Campbell
Salem, OR
503-362-2095
Tom Moorhead
Moon Township, PA
412-264-0282
Allen Dugan
Glenside, PA
610-202-4535
Tom Hamer
Mt. Pleasant, SC
843-884-6610
Robert Roberts
Knoxville, TN
865-637-4006
Cindy Pontbriand
Vonore, TN
423-884-3902
Dale & Judy Soderlund
The Woodlands, TX
281-610-4676
John Giordano
Fort Worth, TX
817-207-8531
60
Charles & Kathleen Webster
Keller, TX
817-490-6182
Dallas Anderson
Logan, UT
435-753-7771
Steve Bodley
Roanoke, VA
540-343-1076
Mike & Ann Joyce
Brookfield, WI
262-785-9553
Kimberly Patton
Bluefield, WV
304-327-6644
Purchase of Previously-Owned Franchise
If you are purchasing a previously-owned franchised outlet, we will provide you additional information on
the previously-owned franchised outlet in an addendum to this Disclosure Document.
Confidentiality Clauses
During the last three fiscal years, we have signed confidentiality clauses with current or former franchisees.
Each confidentiality agreement was entered into as part of a settlement of a dispute between us and the current or
former franchisee. In some instances, current and former franchisees sign provisions restricting their ability to speak
openly about their experience with Proforma. You may wish to speak with current and former franchisees, but be
aware that not all such franchisees will be able to communicate with you.
Trademark-Specific Franchisee Organizations
We sponsor an Owners Advisory Council (“OAC”). The Co-Presidents are Mike and Gidget Tracy, 11511
Katy Freeway, Suite 107, Houston, Texas
77079, (832) 448-0770, [email protected] and
[email protected].
21.
FINANCIAL STATEMENTS
Exhibit B-1 is the consolidated Audited Financial Statement of PFG Ventures L.P. and PFG Properties Ltd.
for the calendar years ending December 31, 2008 and 2007. Exhibit B-2 is the consolidated Audited Financial
Statement of PFG Ventures, L.P. and PFG Properties Ltd. for the calendar years ending on December 31, 2007 and
2006. PFG Properties Ltd. guarantees the performance of PFG Ventures L.P. The respective guarantees of
performance are included in Exhibit I.
22.
23.
CONTRACTS
Exhibit A
Standard Franchise Agreement for a Proforma Franchise
Exhibit D
Receivables and Security Agreement
Exhibit E
Software License and Support Agreement
RECEIPTS
The Receipt for Prospective Franchise Owner and the Receipt for Franchisor is located following Exhibit I.
61
PFG VENTURES, L.P.
FRANCHISE AGREEMENT
Exhibit A
Date: _______________
PFG VENTURES, L.P.
PROFORMA FRANCHISE AGREEMENT
SUMMARY PAGES
These pages summarize the attached Franchise Agreement, the details of which will control in the event of any
conflict.
1.
Owner Name:
Owner’s Residence:
Street and Number:
City, State, Zip Code:
Telephone Number:
Facsimile:
E-Mail:
2.
Franchise Owner’s Business Address:
Street and Number
City, State, Zip Code
Telephone Number
Facsimile
____________________________________
E-Mail
3.
Franchise Type:
□
Start-Up Franchise
(Start-Up Franchise Owners have a business background in industries other than business forms, commercial printing
and/or specialty advertising, and are not designated as Relevant Industry Experience or as a Conversion Franchise))
□
Relevant Industry Experience:
(Relevant Industry Experience means that either (a) in your role as a representative or employee of a company which
primarily sold business forms, commercial printing and/or specialty advertising during the 12 consecutive months
before you sign an Agreement, you can prove that you sold at least $300,000 of those products; or (b) you were in a
role as a sales representative, sales employee, or direct sales support employee of a company that primarily sold
business forms, commercial printing and/or specialty advertising for at least three years within the previous five years.)
□
Conversion Franchise:
(Conversion Franchise means that you have a controlling interest in an existing business that primarily sells business
forms, commercial printing and/or specialty advertising which has been in operation for at least 12 consecutive months
before signing an Agreement, and you can prove that sales of those products during that period were at least $300,000
according to the company’s most recent tax return or financial statement.)
ii
4.
5.
Start-Up
Franchise
Relevant
Industry
Experience
Conversion
Franchise
Initial Franchise
Fee:
$19,500
$0
$0
Total Amount Due:
$19,500
$0
$0
Monthly Service and Marketing Fees:
Monthly Sales
Amount
Collected
Service Fee
Marketing Fee
Total
$0-$50,000
8.00%
1.00%
9.00%
$50,001-$100,000
7.00%
0.75%
7.75%
$100,001+
6.00%
0.50%
6.50%
Service Fee
Marketing Fee
$0-$50,000
8.00%
1.00%
$50,001-$100,000
7.00%
0.75%
$100,001+
6.00%
0.50%
Total
9.00%
7.75%
6.50%
Service Fee Paid
$3,600 (9% x $40,000)
$0
$0
$3,600 (total fees on $40,000)
Service Fee
Marketing Fee
$0-$50,000
8.00%
1.00%
$50,001-$100,000
7.00%
0.75%
$100,001+
6.00%
0.50%
Total
9.00%
7.75%
6.50%
Service Fee Paid
$4,500 (9% x $50,000)
$2,325 (7.75% x $30,000)
$0
$6,825 (total fees on $80,000)
Service Fee
Marketing Fee
$0-$50,000
8.00%
1.00%
$50,001-$100,000
7.00%
0.75%
$100,001+
6.00%
0.50%
Total
9.00%
7.75%
6.50%
Service Fee Paid
$4,500 (9% x $50,000)
$3,875 (7.75% x $50,000)
$5,200 (6.5% x $80,000)
$13,575 (total fees on $180,000)
* The above examples are for illustrative purposes only. They are not presented as actual or projected scenarios. We make no
guarantee as to the total service fee you will pay to us. Based on your monthly sales amount collected, your actual total service
fees may be higher or lower than the examples listed above.
If you are a Conversion Franchise Owner, for the first six (6) months following the Business
Commencement Date, your service fees will equal 4% of the Monthly Sales Amount Collected, and
your marketing fee will be 0.5% of the Monthly Sales Amount Collected. Thereafter, you shall pay the
fees prescribed above.
6.
7.
a.
Agreement Effective Date:
________________
b.
Business Commencement Date:
________________
Renewal Agreement:
Yes
iii
No
8.
Person(s) authorized to operate the Franchised Business:
_________________________________________________
(Name)
_________________________________________________
(Address)
_________________________________________________
(City, State and Zip)
_________________________________________________
(Telephone Number)
iv
SCHEDULE 1
FOR FRANCHISE OWNERS WITH RELEVANT
INDUSTRY EXPERIENCE/CONVERSION FRANCHISE
The following is comprised of the customers with over $1,000 in annualized sales of a Franchise Owner with
Relevant Industry Experience or a Conversion Franchise during the 12 months prior to the Effective Date of the
Franchise Agreement. If this is a Renewal Agreement, only those customers identified on your original Schedule 1
of your initial franchise agreement shall be included on this Renewal Agreement’s Schedule 1.
Customer Name
City/State
Sales Volume
v
TABLE OF CONTENTS
1.
PARTIES AND RECITALS
1
2.
GRANT OF FRANCHISE
1
3.
TERM
1
4.
OPERATING ASSISTANCE
2
5.
FEES AND PAYMENTS
2
6.
LICENSED MARKS
3
7.
STANDARDS OF OPERATION
3
8.
CONFIDENTIAL MATERIALS
4
9.
ADVERTISING AND MARKETING
4
10.
STATEMENTS AND RECORDS
5
11.
COVENANTS
5
12.
TRANSFER AND ASSIGNMENT OF AGREEMENT
6
13.
DEFAULT AND TERMINATION
7
14.
POST TERM OBLIGATIONS
8
15.
INSURANCE
8
16.
TAXES, PERMITS, AND INDEBTEDNESS
8
17.
INDEMNIFICATION AND INDEPENDENT CONTRACTOR
9
18.
WRITTEN APPROVALS, WAIVERS, AND AMENDMENT
9
19.
ENFORCEMENT
9
20.
NOTICES
9
21.
GOVERNING LAW; WAIVER OF JURY TRIAL
10
22.
SEVERABILITY; CONSTRUCTION; MERGER AND INTEGRATION
10
23.
ACKNOWLEDGMENTS
10
vi
1.
PARTIES AND RECITALS
a.
This Franchise Agreement (“Agreement”) is made as of ______________________, 20__ , by and
between PFG Ventures, L.P., an Ohio limited partnership, organized under the laws of Ohio, with its principal place
of business at 8800 East Pleasant Valley Road, Cleveland, Ohio 44131 (“We” or “Us”), and
_________________________________________________ (“You” or “Franchise Owner”), with a place of
business at ______________________________________. “You” includes (i) each person who signs a Guaranty of
Franchise Owner’s Undertakings for purpose of the covenants contained in this Agreement and for the purpose of
assuming the Franchise Owner’s compliance with this Agreement, and (ii) each principal if this Agreement is
executed by an entity or partnership.
b.
Our predecessors and we have developed a plan for operating a business, which sells printed
business products and services such as business forms, commercial printing, specialty advertising items and related
business supplies, called the “Proforma System” or “System.” We will modify the System to reflect improvements
in operating procedures that you may use, and in the mix of products and services you may sell to your customers as
a Proforma Franchise Owner.
c.
The use and promotion of our “Licensed Marks,” including Proforma® is a major part of our
System. Our “Confidential Operations Manual” or “Manual” details our System, and contains the requirements and
restrictions, which determine how you may use the System to operate a business using the Licensed Marks
(“Franchised Business”).
d.
As a Proforma Franchise Owner you agree to operate your Franchised Business only in the
manner explained in this Agreement and in the Manual. You and other franchise owners operating under this
Agreement agree to change the way you operate your Franchised Business whenever changes in the Manual require
you to, even if the changes require you to spend money. You also acknowledge that Proforma franchise owners
have signed different franchise agreements at different times, that we have allowed some franchise owners to
conduct business in ways which differ from the standard requirements of our System; and that we will continue to
do so if and when we think it is appropriate. However, such variations will have no effect whatsoever on your rights
and duties as a Proforma Franchise Owner operating under this Agreement.
2.
GRANT OF FRANCHISE
We hereby grant you a Proforma Franchise, which authorizes you, and you alone, to operate a
a.
Proforma Franchised Business. With the exceptions listed below, and except as provided in the Manual, you may
operate your Franchised Business anywhere, and call on any potential customers you wish. You may solicit
business through the Internet using our approved methods. Similarly, we may grant Franchises to whomever we
wish, regardless of where the franchise owners are located or will do business; provided, such a franchise owner
shall be subject to the then-current account conflict resolution policy described in the Manual to protect your
accounts. Our purpose in granting Franchises is to increase the number of customers which buy from the Proforma
System, not to increase the number of franchise owners selling to the same customers.
b.
We have an account protection resolution policy (that we may amend from time-to-time) that may
restrict where or to whom or by what media you may sell products and/or services you are authorized to sell through
the Franchised Business (“Products and Services”).
c.
We may merge with, acquire or start other businesses, which sell similar or dissimilar,
competitive, or non-competitive products and services anywhere and we may take all reasonable steps attendant to
such business combinations without incurring any liability to you. Additionally, we reserve the right for us and any
affiliate to use other channels of distribution, such as the Internet, catalog sales, telemarketing, or other direct
marketing sales to sell products and/or services that are competitive with you, we and our affiliates may operate a
business similar to the Franchised Business at any locations we deem advisable, and this business(es) may be
permitted to use the Proforma System and the Licensed Marks. Neither we nor any other affiliate operates a
business under the System. However, we have provided direct sales and service support to large volume accounts in
the past and we may enter into similar arrangements in the future.
d.
National Account Programs may be established by you or another Franchise Owner. Under
these programs, conditions for dealing with customers having multiple locations may be set by you or the other
franchise owner originating the program. Commissions for these programs are determined by you and the other
franchise owner.
3.
TERM
This Agreement becomes effective when we sign it and its term extends until either party terminates the
Agreement as provided for herein.
1
4.
OPERATING ASSISTANCE
We agree to provide you with no less than the following to help you set up and to operate your Franchised
Business:
a.
Before you commence operating the Franchised Business (the “Commencement Date”), we will
provide you:
i.
Our standard one week training course explaining the basics of operating a Franchised
Business. The first two and one-half days of this training are mandatory, while the remainder of the week is
optional at your discretion. You and your spouse or one partner, along with your employees may attend. We
provide the training instructors, facilities and required training materials; you must pay all other costs, including
meals, travel and living expenses, and any additional materials expenses incurred in connection with the training;
ii.
One set of the Confidential Operations Manual;
iii.
One set of the Proforma Success University Training Binder©;
iv.
One set of the Proforma Success System©;
v.
ProOfficeSM software (or its successor system);
vi.
The then-current “Start Up Package”, which is subject to change at our discretion.
b.
After the Commencement Date, we will provide you the following:
i.
Marketing and Sales techniques designed to assist you to create, maintain and grow
relationships with new and existing customers;
ii.
Our standard sales service support program, including telephone consultation with you
concerning sales and marketing strategies, sourcing and other vendor related information and services related to
customer needs, as well as answers to manufacturers’ and customers’ questions about orders;
iii.
Invoicing of your customers, paying your suppliers, including us, with collections from
your customers; and at our discretion making payments to your suppliers in advance of payment from your
customers; and paying net receipts to you twice monthly. If we have collected less than what is required to pay all
amounts due, we may pay your creditors, including ourselves, in any order or amount we determine is appropriate;
iv.
Monthly reports reflecting your gross billings, receipts, outstanding customer account
balances and other information;
v.
Cash flow analysis; and
vi.
Marketing materials for our standard fees.
c.
We also offer other services as provided for in this subsection c. There may be a cost for some of
these services. Such cost may change from time-to-time, and these services may be changed, modified, or canceled
at any time without any liability to you. Such services currently include: Prospect and lead identification programs;
appointment setting programs; sales presentation tools; sales and marketing literature; sales and customer service
staff recruitment program; product importing assistance; personalized catalogs, merger and acquisition support
programs; website marketing programs; North American Major Account programs; product knowledge and selling
skills training programs; personal business success coach programs; credit insurance; ideas network; and recognition
programs.
d.
We may delegate some of our support obligations to a third party. However, we remain liable to
you for providing services required by this Agreement.
5.
FEES AND PAYMENTS
As partial consideration for being awarded this Franchise, you must pay us the initial franchise fee
a.
in the amount set forth on the Summary Pages. If you are identified as a Start-Up Franchise Owner on the summary
pages, fifteen (15) months from the Effective Date you may be eligible for a cash refund of all or part of your initial
franchise fee (as stated below) if the sales amounts we have collected because of your sales activity.
Refund Amount
$ 6,500
$13,000
$19,500
Collected Sales Exceeding
$100,000
$200,000
$300,000
No part of the initial fee is refundable, except as is described above. Any refund shall be payable after the
fifteen-month (15) period. The refunds are not prorated.
b.
Once you commence business, we will retain from amounts we collect on your behalf the monthly
service fees and the monthly marketing fees described on the Summary Pages, and every other payment or amount
you owe us because of our franchise relationship.
2
c.
We will collect a service charge from you equal to the lesser of the compounded daily equivalent
of 15% per year of all amounts you owe us which are overdue by more than 5 days, or the highest rate then
permitted by applicable law for each day such amount is past due.
d.
“Gross Volume of Business” means the gross amount of all billings made by, on behalf of or
through the Franchised Business or in connection with the Licensed Marks, regardless of whether the bills are
collected, regardless of the form of payment, and regardless of whether the sales or billings were performed in
compliance with this Agreement. The Gross Volume of Business excludes only shipping charges, sales taxes or
similar taxes which by law you must collect.
e.
You must promptly pay to us for deposit in the Marketing Fund (“Fund”), all allowances,
payments and other consideration you receive from suppliers or others for cooperative marketing, services or
warranties.
6.
LICENSED MARKS
You may only use our Licensed Marks for the purpose of operating the Franchised Business, and
a.
in the manner prescribed in the Manual. You may not use the Licensed Marks in your corporate name. You only
may use Proforma® as a domain name or other identifier of an Internet site or web page with our prior written
approval. This Agreement gives you no ownership in the Licensed Marks, or any right to a payment for goodwill
when the Agreement terminates. You may never directly or indirectly commit any act of infringement, or contest or
aid others in contesting the validity of our, or Proforma, Inc.’s, right to use the Licensed Marks, or take any other
action which undermines our rights. Without our approval, you may not link any web page or Internet site bearing
our Licensed Marks to any other web page or Internet site.
b.
You will promptly notify us of any unauthorized attempted use or use of the Licensed Marks, any
variation of them, or any other mark or name in which we claim a proprietary interest. At our expense, you will
assist us in taking any action we decide is appropriate to halt such activities. You will take no action nor incur any
expenses on our behalf without our prior approval.
c.
We may designate new, modified or replacement Licensed Marks for your use, and require you to
use them in addition to or instead of any previously designated Licensed Marks. You must pay your own expenses
associated with implementing required changes.
d.
Every use of the Proforma® service mark or trade name as an identifier of the Franchised
Business must be in conjunction with a suffix or other words or phrases more specifically identifying the Franchised
Business, and the exact format must be approved in advance by us, e.g., “Proforma® Speed Service.”
e.
Proforma, Inc. claims common law rights with respect to the registered service marks arising from
its, or its related parties’, exclusive use of such marks from their date of first use. All affidavits of use required to be
filed to maintain registration of the Licensed Marks listed above have been timely filed.
7.
STANDARDS OF OPERATION
You must always operate the Franchised Business in the way this Agreement and the Manual
a.
prescribe.
b.
All supplies or materials, products or services you purchase or sell must always meet the standards
specified in the Manual, and must be purchased from suppliers which we have approved. Except as specified in the
Manual, no franchise owner or franchise broker is an approved supplier.
c.
You must promptly respond to customer and supplier inquiries or complaints, and you must take
any other action we request to insure positive relations with any of your actual or prospective customers or suppliers
or those of other Proforma franchise owners.
d.
Only you or any individual who we approve may operate the Franchised Business. You must
pay all expenses incurred in such training including, without limitation, the cost of travel, room, board and wages of
the trainee(s). We may charge a meal fee and a materials fee pursuant to the training for your attendees.
e.
You must instruct all your customers to pay us directly for all products and services sold through
the Franchised Business. If you receive a payment from your customers, you must immediately forward the entire
payment to us with an explanation of what you have done, unless you have our advance permission to collect and/or
retain a payment. From receipts we collect from your customers, we will pay in the ordinary course of business
vendors who have supplied products and services to you and your customers. However, if you are in default under
this Agreement, we may apply receipts we collect in any way we deem appropriate to satisfy your obligations to us
or to others, and we may suspend payments to you or your vendors until all your defaults are cured. We will
schedule payments in a manner which is consistent with sound business practices. You must make all payments to
3
suppliers through us. We may retain any prompt payment discount we receive from suppliers as consideration for
our services to you.
f.
If you make any direct vendor payments of $500 or more without our prior approval, you will be
required to pay to us a minimum of $100 or 10% of the vendor invoice amount, whichever is higher.
g.
You must use in your Franchised Business a dedicated business telephone line(s),
software/technology that we may prescribe from time-to-time, and you must subscribe to an E-mail service through
us. All of the foregoing shall be maintained throughout the term of the Agreement.
h.
You must use our proprietary ProOfficeSM software and the hardware we prescribe within 15 days
of the Business Commencement Date of this Agreement.
i.
You will participate in and be bound by the decisions of which we approve, of any Owners
Advisory Council (“OAC”), Franchise Owner association or cooperative established and operated pursuant to
standards we prescribe or approve. Decisions may relate to the sales and marketing fund and assessments for
advertising, annual association dues, financing of accounts receivable, or any other decision we approve.
j.
You are responsible for collecting all accounts of your customers. After notifying you, we may
discontinue sales to or instruct suppliers not to ship to any customer who fails to pay your invoices. At our sole
discretion, we may assist you in collecting accounts of customers; however, you will remain responsible for the
ultimate collection of such accounts and all amounts owed to us under the terms of this Agreement. We will not be
liable for any bad debts, discrepancies and complaints or lost accounts that may result in connection with our
collection efforts. We may in good faith settle or adjust disputes or claims directly with your customers without
affecting your liability to us, and with your written approval we may sue your customers for amounts they owe.
k.
If we implement a successor to the ProOfficeSM system currently in use, you will be required to
use the successor system and execute a license agreement at that time. You may incur additional costs, including
licensing costs, to use the successor system. Under a successor system, if we determine that revisions are
appropriate, we may require you, following at least 30 day’s notice, to use them if the benefits warrant it. The
Agreement does not contain any limitation on the frequency or cost associated with these changes. However, we
will not require you to undertake any of these changes unless all similarly situated franchise owners are subject to
substantially the same requirement.
8.
CONFIDENTIAL MATERIALS
Our Confidential Operations Manual contains trade secrets and confidential information which we
a.
have developed at considerable expense and which we own. You may not disclose the Manual’s contents to anyone
unless they have signed a confidentiality agreement where the term of such an agreement is for an indefinite period.
b.
Our Proforma Success System©; (“Success System”) contains trade secrets and confidential
information which we have developed at considerable expense and which we own. You may not disclose the
Success System’s contents to anyone unless they have signed a confidentiality agreement where the term of such an
agreement is for an indefinite period.
c.
Our Proforma Success University Training Binder© (“Binder”) contains trade secrets and
confidential information which we have developed at considerable expense and which we own. You may not
disclose the Binder’s contents to anyone unless they have signed a confidentiality agreement where the term of such
an agreement is for an indefinite period.
d.
You may not copy or disseminate contents of the Manual, Success System or Binder without our
approval. You must keep these materials current and in a secure place. Unauthorized use or disclosure of the
Manual, Success System, or Binder’s contents will cause irreparable harm to us and the System. Because legal
damages could not adequately compensate us, you agree that a court should enjoin you from any further
unauthorized use or disclosure of the Manual, Success System or Binder or their contents if we sue you.
9.
ADVERTISING AND MARKETING
We will administer and direct all expenses of the Fund in a way we deem best. The Fund consists
a.
of all marketing fees we collect from franchise owners. We may use the Fund for any expenses reasonable and
related to advertising, public relations, promotional activities, market research and lead generation (collectively
“marketing”) including, without limitation, the cost of salaries, agencies, equipment and associated overhead, and
promotion of Proforma and our Products and Services on the Internet.
b.
Although we may use the Fund to provide marketing assistance to individual franchise owners
based, in part, on their contributions to the Fund, we are not obliged to provide you or any franchise owner with
marketing which benefits you directly or in proportion to your contributions. Pursuant to Paragraph 7(i), with
approval of the Proforma Owner’s Advisory Council, we may spend the Fund for projects other than “marketing.”
4
10.
STATEMENTS AND RECORDS
You must maintain for at least three years original and complete records, which accurately
a.
reflect all information we prescribe in the Manual, and you must provide us, upon demand, with any such
information or documents we request. We, or our designee, may examine and audit your records at any reasonable
time.
b.
You must provide us monthly income statements, complete financial statements, and/or your
business and personal tax returns (with all applicable schedules and records) within 30 days of your receipt of our
request.
11.
COVENANTS
a.
During the term of this Agreement, you and your guarantor(s) covenant, individually:
i.
Not to engage in any business similar to the Franchised Business, without our prior
written approval;
ii.
To devote your full-time and best efforts to the operation of the Franchised Business
unless you receive our prior written approval;
iii.
Not to divert or attempt to divert any business or any actual or potential customers of us,
you or other Proforma franchise owners to any competitive business; and
iv.
Not to directly or indirectly sell or promote any products or services to Proforma
franchise owners or Franchise brokers without our prior written approval, which we may unreasonably withhold.
b.
If you own an interest in or work in a business other than your Franchised Business which sells
Products or Services which are added to the Proforma System after the Effective Date, you agree upon us giving you
notice of such change to:
i.
Discontinue sales of such Products and Services through such other business;
ii.
Only sell such Products or Services through the Franchised Business, in which case we
will only assess service fees and marketing fees on any increase in your Gross Volume of Business from sales of
those Products and Services compared with the 12 month period preceding the notice; and
iii.
Discontinue all ownership above a 5% equity interest in such business, and discontinue
working for or on behalf of such business.
c.
For one year after the Agreement terminates:
i.
Unless you have satisfied the requirements of Paragraph 13(e) and Section 14, you will
not contact for the purpose of selling any product or service similar to any Products or Services, any person or
organization which was, at any time during the two-year period prior to such termination, a customer to which you
sold Products or Services, or which you know is a customer of a franchise owner using proprietary information
gained while in our system. “Customer” includes successors of any customer, who reorganized, merged, acquired or
transferred their business;
ii.
You will not contact any vendor or supplier of the Franchised Business for the purpose of
buying any Products or Services on behalf of any third party. This subparagraph ii. does not apply to vendors or
suppliers with whom you had transacted business prior to the Effective Date; provided, however, if this Agreement
is a Renewal Agreement pursuant to Line 7 of the Summary Pages, then subparagraph ii. does not apply to vendors
or suppliers with whom you had transacted business prior to operating your Proforma Franchised Business.
d.
You must execute enforceable confidentiality agreements with all of your employees, independent
contractors, agents and representatives on forms consistent with the laws of your state. Unless otherwise prohibited
by state law, the term of confidentiality shall be indefinite.
e.
Each covenant in this Agreement is to be taken as independent of any other covenant or provision
of this Agreement. If all or any portion of a covenant is held unenforceable by a court or tribunal having valid
jurisdiction in an unappealable final decision to which we are a party, you will be bound by any lesser covenant
imposing the maximum duty permitted by law that is included within the terms of such covenant, as if the resulting
covenant were separately stated in and made a part of this Agreement. The existence of any claim you may have
against us, whether or not arising from this Agreement, will not constitute a defense to our enforcement of the
covenants in this Agreement.
f.
We may reduce the scope of any covenant in this Agreement without your consent, effective
immediately upon your receipt of our notice. You will comply immediately with any covenant as so modified.
g.
If you have Relevant Industry Experience or are a Conversion Franchise, provided we receive all
money you owe us under the Agreement (including, without limitation, amounts owed us under Paragraphs 13 and
14) within 45 days of the termination of this Agreement and you otherwise comply with the covenants prescribed by
Paragraph 13(e) and Section 14, the Customers listed on Schedule 1 will not be subject to Paragraph 11(c).
5
12.
TRANSFER AND ASSIGNMENT OF AGREEMENT
We may freely transfer our rights and duties under this Agreement. The transfer will be binding
a.
upon and inure to the benefit of our successors and assigns. If we conclude such a transfer, the transferee will be
solely liable to you for fulfilling obligations under this Agreement after the transfer. In the course of negotiating a
transfer, we may share such information about our System and our franchise owners as is customary in such
transactions. You agree that you will not act either alone or with others, to interfere with, stop or slow any such
negotiations.
b.
The rights and duties set forth in this Agreement are personal to you and others who own an
interest in the Franchise Owner or the Franchised Business (collectively “you”). We granted you the Franchise in
reliance on your personal character and financial capacity. Accordingly, you may not without our prior consent,
give away, sell, assign, pledge, lease, license, devise or otherwise transfer, either directly or in any other manner,
this Agreement, any of your rights or obligations under this Agreement, or any interest or shares of stock of any kind
or nature in your business or any significant asset of the Franchised Business, including without limitation, any
accounts, customers or clients of the Franchised Business (any such transaction being referred to as a “Transfer”).
We may prohibit a transfer of accounts or other assets of the Franchised Business which does not also involve a
Transfer of the Franchise or which is not a Transfer to another Proforma franchise owner.
c.
You must notify Proforma of any transfer of customer accounts prior to the actual transfer.
d.
A copy of the executed purchase agreement must be submitted to us.
e.
You must complete the transfer of accounts to an existing franchise owner within 60 days after we
receive the notice of any transfer.
f.
You must execute a general release on a form we provide you, of any and all claims you have or
may have against us.
g.
Any Transfer, which does not comply with the terms of this Paragraph, will be null and void.
h.
Before completing a Transfer, you must comply with procedures in the Manual which give us a
right of first refusal to purchase whatever you propose to Transfer. We may require any transferee to guarantee your
obligations under this Agreement or under any new Agreement he enters with us.
i.
Regardless of the above, if your designated survivor, if any, continues to meet our qualifications
as a franchise owner and desires to acquire and retain your interest in the Franchise and to continue to operate the
Franchised Business, the designated survivor may do so if he or she agrees to be bound by this Agreement,
guarantees your obligations to us, completes our initial training program if we require it, and commences operation
of the Franchised Business within 30 days following your death.
i.
If the person authorized to operate your Franchised Business (the “Designee”) becomes
incapacitated to the extent that we determine he or she is unable to conduct normal business functions, or if the
Designee dies, we at our option, may appoint an interim Designee, who may be another franchise owner or your
designated survivor, if any, to operate the Franchised Business for the benefit of your estate until the Franchise has
been transferred to a new franchise owner in compliance with this Paragraph 12, has been terminated, or until we
approve a new Designee to operate the Business for the benefit of your Survivors. Your Survivors include your
estate, others owning an interest in your Franchised Business, including any trust which owns an interest in the
Franchised Business under terms which we have approved, and the beneficiaries of any will or trust you have
established.
ii.
Absent agreement to the contrary, the Designee’s compensation shall equal 50% of the
net proceeds collected from amounts the Designee bills on behalf of your Franchised Business. The Franchised
Business shall be liable for paying sales taxes and all other expenses of the Franchised Business from its share of the
proceeds. A Designee may condition his or her services on the Survivor’s agreement to different compensation or to
an indemnification agreement.
iii.
We have no duty to appoint a Designee. We do not represent or warrant that any
Designee will operate the business in a way which is profitable. We will condition our approval of a Designee on
your successor’s releasing us from liability for acts or omissions of a Designee.
j.
If the Survivor does not desire to acquire or retain your interest, the Survivor will have a
reasonable period of time, but no more than 60 days, to make a transfer acceptable to us, subject to the procedures
described above. Throughout such period, if your Survivor is incapable of operating your Franchised Business, we
may designate someone to operate your Franchised Business (“Designee”) as described in Paragraph 12(i) to
continue operation until the Survivor has fulfilled all your duties under this Agreement.
k.
If you become incapacitated or disabled to the extent which we conclude interferes with your
ability to fulfill your obligations under this Agreement, and your Survivor does not desire to acquire or retain your
interest, at our option we may appoint a Designee to fulfill your obligations under this Agreement, or we may
6
require your shareholders, partners, conservator, or guardian to transfer or sell the rights under this Agreement to a
third party whom we approve. Any such transfer requirement must be concluded within a reasonable time from our
request, not to exceed 60 days.
13.
DEFAULT AND TERMINATION
a.
Without waiving our other legal and equitable rights, we may terminate this Agreement and all
your rights granted in this Agreement, upon the occurrence of any of the following defaults:
i.
If you do not pay any financial obligation created in this Agreement, and if you fail to
cure such nonpayment within 10 days after we give you a notice to cure;
ii.
If you do not perform or if you breach any covenant, obligation, term, condition,
warranty or certification of this Agreement and you fail to cure such non-compliance within 10 days after we give
you a notice to cure;
iii.
a. If you do not commence business within 45 days after we sign the Agreement, or if
your Gross Volume of Business averages less than $1,000 per month during the first six months following the
Effective Date of this Agreement or less than $50,000 for any six month period thereafter, throughout the term of the
Agreement;
b. If this Agreement is a Renewal Agreement pursuant to Line 7 of the Summary Pages,
if your Gross Volume of Business averages less than $50,000 for any six month period throughout the term of the
Agreement, which may include the last six months of your prior franchise agreement.
iv.
If you make, or have made, any materially false statement or report to us in connection
with this Agreement or in our franchise application process;
v.
If you operate the Franchised Business in a manner contrary to or inconsistent with the
Licensed Marks or as specified in the Manual or if you use the Licensed Marks in a way we have not approved, and
you fail to cure all deficiencies within 10 days after we give you a notice to cure;
vi.
If there is any violation of our Transfer requirements contained in this Agreement or in
the Manual;
vii.
If in the same calendar year we send you two or more written notices to cure defaults or
violations of this Agreement, or if we receive three or more written complaints from actual or potential customers or
vendors about your conduct as a Proforma Franchise Owner;
viii.
If you abandon or cease to operate the Franchised Business. Conclusive evidence of
abandonment includes your failure to report any sales to us during any three consecutive month period;
ix.
If you or any person owning an interest in you are convicted of a felony, a crime of moral
turpitude, or any crime or offense relating to the operation of the Franchised Business;
x.
If you or any of your guarantors default in any other agreement with us, and the default is
not cured in accordance with the terms of such other agreement;
xi.
If you violate or permit a violation of any covenant of confidentiality contained in
Paragraph 8 of this Agreement; or
xii.
If you become insolvent, assign your assets for the benefit of your creditors, or if you
consent to the institution of proceedings to appoint a custodian or receiver of all or part of your assets, or if a
receiver, Trustee or other custodian of all or part of your assets is appointed, or if you fail to notify us when you file
either personal and/or business bankruptcy.
b.
If applicable law prescribes a different notice or cure period or good cause standard, it will apply
to a termination of this Agreement.
c.
If you collect any payments from your customers without immediately forwarding the payments to
us with an explanation of what you have done. Unless you have our advance permission to collect and/or retain a
payment, we will consider your act as constituting conversion and theft. In addition to our right to terminate your
Franchise, we will have the right to receive from you three times the amount of the payment which you have
collected. We must receive this amount within 10 days after we give you a notice to cure. You must list any other
violations of this nature that have not been processed through the Proforma System and acknowledge the list as true
and accurate. If we have not received payment in full, we will collect the amount from other payments we receive
from your customers. We may retain those amounts without regard to payments which you owe to your vendors or
others.
d.
In lieu of terminating the Franchise Agreement for a default specified in this Paragraph 13, we
may suspend some or all of the services we provide under this Agreement until you have cured the defaults or we
have terminated your Agreement. The suspension shall become effective two days after the date such suspension
notice is postmarked, unless the receiving party confirms that it has been received earlier. A suspension does not
7
relieve you of your duties under this Agreement. A suspension may also include disabling your ability to access
some or all of ProOfficeSM (or its successor system) and its functionality.
e.
At any time following the Effective Date, you may terminate this Agreement without cause by
giving us at least 60 days prior written notice, and by paying us all amounts you owe us, plus an Account
Acquisition Fee if you desire to service any or all of the accounts not listed on Schedule 1. The Account Acquisition
Fee shall also apply if we terminate the Agreement. The Account Acquisition Fee means an amount equal to 24
times the average monthly service fee you owed us during the most recent 24 months of the Agreement (regardless
of whether you owned your franchise for a full 24 months or whether this is a Renewal Agreement) on sales to all
customers which are not listed on all Schedule 1. The Account Acquisition Fee shall not be due and owing to us if
you and all your guarantors execute (i) an agreement (in form and substance acceptable to us) agreeing that you will
cease selling products and/or services that are in the same or similar products and/or services offered by us (or by
our franchise owners) to each and every customer which is not listed on Schedule 1for at least one (1) year, and (ii) a
general release of all claims against us. If this is a Renewal Agreement, only those customers identified on your
original Schedule 1 of your initial franchise agreement shall be included on this Renewal Agreement’s Schedule 1.
Otherwise, you may terminate this Agreement only if we have committed two or more material breaches of our
obligations under this Agreement within a calendar year, and if we have failed to cure such breach within 60 days
after you have provided us with written notice to cure each such breach.
14.
POST TERM OBLIGATIONS
Upon the termination of this Agreement, you shall immediately:
a.
Cease to be a Proforma Franchise Owner and cease to use the Licensed Marks and the System
in any way;
b.
Pay all you owe us under all agreements, including this Agreement, plus costs and expenses we
incur as a result of your default. Payments due us immediately include, without limitation, service fees and
marketing fees which we otherwise would collect when we receive payments from customers of your Franchised
Business;
c.
Return to us all copies of the Manual, Success System©, Binder, ProOfficeSM (and any successor
system) and its manuals, our trade secrets and confidential materials and all our other property. You will retain no
copy or record of any of the foregoing, except your copy of this Agreement, any correspondence between the
parties, and any other document which you reasonably need for compliance with applicable laws;
d.
Provide us with a complete list of your employees, clients, customers, client and customer
contacts, their respective addresses and telephone numbers, and a statement of all outstanding obligations you may
have to third parties, and assign to us or our designee all customers, orders in process and contracts developed by or
for the Franchised Business;
e.
Take such action as we request to transfer to us or our designee white and yellow page telephone
references and advertisements, and all trade and similar name registrations and business licenses, and to cancel any
interest which you may have in them; and
f.
If this Agreement is terminated because of a default identified in Paragraph 13(c) you must pay us
three times the amount of all payments you have received and not immediately forwarded to us.
15.
INSURANCE
a.
You will, at your expense and prior to the commencement of your Franchised Business, procure
and maintain in full force and effect throughout the term of this Agreement, the types of insurance enumerated in the
Manual in such amounts as we require of you. You must provide us evidence of your coverage in the manner
prescribed in the Manual.
b.
Your procurement and maintenance of such insurance will not relieve you of any liability to us
under any provisions of Paragraph 17 of this Agreement.
16.
TAXES, PERMITS, AND INDEBTEDNESS
You will promptly pay when due any and all federal, state and local taxes, including without
a.
limitation, unemployment and sales taxes, levied or assessed with respect to any services or products furnished
pursuant to this Agreement. In addition, you will promptly pay all accounts or other indebtedness of every kind you
incur in the operation of the Franchised Business.
b.
You will comply with all federal, state and local laws, rules and regulations and timely obtain any
and all permits, certificates and licenses for the full and proper conduct of the Franchised Business.
8
c.
You hereby agree to accept full and sole responsibility for any and all debts and obligations
incurred in the operation of the Franchised Business.
17.
INDEMNIFICATION AND INDEPENDENT CONTRACTOR
You agree to protect, defend, indemnify, and hold us, our affiliates, and our respective partners,
a.
directors, officers, employees and shareholders, jointly and severally, harmless from and against all claims, actions,
proceedings, damages, costs, expenses and other losses and liabilities, consequently, directly or indirectly incurred
(including without limitation attorneys’ and accountants’ fees) as a result of, arising out of , or connected with your
negligent operation of the Franchised Business, or your breach of contract or your wrongful conduct (torts).
b.
This Agreement is not intended to create a fiduciary relationship between us, nor to constitute you
as our agent, legal representative, subsidiary, joint venture, partner, employee or servant for any purpose
whatsoever. You are an independent contractor. You cannot authorize, make any contract, warranty or
representation or create any obligation on our behalf.
WRITTEN APPROVALS, WAIVERS, AND AMENDMENTS
a.
Whenever this Agreement requires our prior approval, you must make a timely written request.
Unless the Agreement specifies a different time period, we will respond with our approval or disapproval within 15
days. If we have not specifically approved a request within such period, our failure to respond will be deemed a
disapproval of your request.
b.
Our failure to exercise any power reserved to us by this Agreement, and any customs or practices
in which we engage which vary from the terms of this Agreement, will not constitute a waiver of our right to
demand your exact compliance with any of the terms of this Agreement or the Manual. You must not consider our
waiver or approval of any particular default or our acceptance of any payments due under this Agreement a waiver
or approval of any preceding or subsequent breach of this Agreement.
c.
We may modify any and all of our standards and criteria for approving or disapproving your
requests, through changes to the Manual and otherwise, so long as such modifications do not conflict with your
express rights created by this Agreement. Otherwise, subject to Paragraph 7(i), no amendment or variance from this
Agreement will be binding on either of us without both parties’ written agreement.
d.
You hereby authorize and consent, on behalf of yourself, your affiliates and employees to accept
any and all communications from us, our affiliates, employees, other franchisees and suppliers, sent via email,
facsimile, telephone or any other method of communication, regardless of whether the communication was
specifically requested or authorized by you, your affiliates or employees. You acknowledge that this Agreement
provides the requisite relationship between you and us so that we may send you communications, without being in
violation of the Telephone Communication Consumer Protection Act, the Do Not Call Registry, the Can-Spam Act,
and any other current or future federal and state laws and regulations which regulate the right of one party to make
communications with another.
18.
19.
ENFORCEMENT
a.
We will be entitled to obtain, without bond, declarations, temporary and permanent injunctions,
and orders of specific performance, to enforce the provisions of this Agreement.
b.
The prevailing party in any litigation or arbitration concerning this Agreement will be entitled to
receive from the non-prevailing party all its costs and expenses of obtaining such relief. This includes, but is not
limited to, court costs and reasonable attorneys’ fees, which the prevailing party may incorporate into the terms of
any judgment, order or relief granted to the prevailing party.
c.
If you prevail in any dispute against us or any of our partners, affiliates, officers, agents,
employees or representatives as a result of any dispute arising out of the Agreement, or the awarding of the
Franchise, the damages awarded you will not exceed the actual amounts you have paid us to acquire and operate the
Franchised Business. Your recovery will be subject to an offset for income you have received from operating the
Franchised Business.
d.
If you sell products to a customer which we have identified as the exclusive customer of another
franchise owner, in addition to other remedies available to us, we may remit the entire net proceeds of all such sales
directly to the franchise owner to whom we have granted exclusive marketing right.
20.
NOTICES
All notices must be written and sent via certified mail, return receipt requested and/or overnight delivery
courier. We will send you notices at the address listed in Paragraph 2 of the Summary Pages unless you have
9
notified us of a different address. Address notices to us using the address listed in Paragraph 1 of this Agreement,
Attention: President and Chief Operating Officer unless we notify you of a different address. Any notice complying
with the provisions hereof will be deemed to have been received two days after the date such notice is postmarked
unless the receiving party confirms it has been received earlier.
GOVERNING LAW; WAIVER OF JURY TRIAL
We accept this Agreement in the State of Ohio. The law of the state in which you reside relating to the
rights of franchise purchasers will govern the Agreement. That law will prevail in the event of any conflict of law.
Otherwise, our respective rights and duties shall be governed by the law of Ohio. You and we consent to exclusive
personal and subject matter jurisdiction, and exclusive venue in Cuyahoga County, Ohio, or in the Federal District
Court for the Northern District of Ohio. Both parties hereby waive their right to trial by jury.
21.
SEVERABILITY; CONSTRUCTION; MERGER AND INTEGRATION
a.
Should any part of this Agreement, for any reason, be declared invalid by a court of competent
jurisdiction, such decision or determination will not affect the validity of any remaining portion, and such remaining
portion will remain in force and effect as if this Agreement had been executed with the invalid portion eliminated.
Provided, however, that in the case of a declaration of invalidity, the provision declared invalid will not be
invalidated in its entirety, but will be observed and performed by the parties to the extent such provision is valid and
enforceable. The parties hereby agree that any such provision will alter and amend to the extent necessary to affect
such validity and enforceability.
b.
This Agreement may be executed in any number of counterparts, each of which when so executed
and delivered will be deemed an original, but such counterparts together will constitute the same instrument.
c.
The headings and captions contained herein are for the purposes of convenience and reference
only. Do not construe them as a part of this Agreement. All terms and words used herein include the number and
gender as the context of this Agreement may require.
d.
This Agreement contains the entire Agreement of you and us concerning its subject matter.
Neither party relies upon any prior written or oral representation or agreement. All such representations and
agreements are merged into and have, to the extent intended, become a part of this Agreement. Only the written
terms of this Agreement are binding on the parties.
e.
Although we may offer services to you and to other Proforma franchise owners now and in the
future which are not prescribed by this Agreement, this Agreement gives you no right to receive such services, and
we will not be liable to you for modifying or eliminating them or for requiring you to pay additional fees for those
services.
22.
23.
ACKNOWLEDGMENTS
You acknowledge that:
a.
A Proforma Franchise involves business risks. Your volume, profit, income and success are
dependent primarily upon your efforts as an independent business operator;
b.
No one associated with us has warranted or guaranteed, expressly or by implication, the potential
volume, profit, income or success of your Franchised Business;
c.
We gave you a Franchise Disclosure Document no later than the earlier of the first personal
meeting held to discuss the sale of a Franchise, 10 business days before the execution of this Agreement, or 10
business days before any payment of any consideration. You have read the Franchise Disclosure Document and
understand it contents;
d.
You have had ample opportunity to consult with Proforma franchise owners and your attorneys,
accountants and other advisors. Our attorneys have not advised or represented you with respect to this Agreement;
and
e.
Our ability to assist you in overcoming operational, financial or other problems depends in
substantial part upon whether you make us aware of such problems. You, therefore, agree to promptly notify us if
you believe that you are unable to meet your obligations arising from this Agreement, if you are unable to satisfy
your expectations or needs relating to the Franchised Business, or if you believe we are not fulfilling our obligations
to you. You agree that we will under no circumstances be liable to you for any loss suffered by you which resulted
from a problem or default which you did not bring to our attention promptly after it arose.
10
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement.
FRANCHISOR:
PFG Ventures, L.P.
By: Proforma, Inc, a General Partner
Witness: ______________________________
By:
_________________________________________
Brian F. Smith
Its:
Chief Financial Officer, Secretary & Treasurer
Date: _________________________________________
FRANCHISE OWNER:
d/b/a Proforma
Witness: _______________________________
By:
_______________________________________
______________________________________
(Print Name)
Title: _______________________________________
Date: _______________________________________
Address: ______________________________
______________________________
Witness: _______________________________
By:
_______________________________________
______________________________________
(Print Name)
Title: _______________________________________
Date: _______________________________________
Address: ______________________________
______________________________
11
GUARANTY OF FRANCHISE OWNER’S UNDERTAKINGS
The Franchisor, PFG Ventures L.P., (‘we” or “us”) and each undersigned Guarantor (“you”) are the parties
to this Guaranty, dated the _______day of _______________________, 20____.
You guaranty that
__________________________, Franchise Owner (“Obligor”) will comply with all the terms of the Franchise
Agreement(s) of this same date and all other agreements incorporated by reference or related to this Agreement
(“Agreement(s)”). You guaranty that the Obligor will perform all the requirements of the Agreement, including the
Obligor’s duty to make timely payments to us for all obligations arising from the Agreement(s). Also, this Guaranty
obligates you to comply with all covenants in the Agreement(s) which are intended to apply to the Obligor and
guarantor(s), including obligation’s contained in Paragraphs 6, 8, 11, 12, 13, 14, 16, 17, 19 and 23 of the Agreement.
Our specification of certain duties does not limit your obligation to guaranty the Obligor’s duty to comply with the
entire Agreement(s) and any agreements incorporated in the Agreement(s) by reference. By signing below, you
represent that you have read and understand the Agreement(s). You understand that without your Guaranty, we
would not enter into the Agreement with the Obligor.
You are responsible to us for all of the Obligor’s violations of the Agreement(s). Either we or any entity or
person who succeeds us as the Franchisor may enforce this Guaranty against you. We may enforce this Guaranty
against you without pursuing any remedy against others who might also be liable to us. We are not required to
pursue remedies against property, which secures your liability or another’s liability prior to pursuing remedies
against you under this Guaranty. The liability or potential liability of others cannot reduce your liability to us. We
alone may decide whether to negotiate with you regarding any claim we have or might have against you under this
Guaranty. Likewise, if another person or entity is also liable or potentially liable to us for the Obligor’s liability,
which you also have guarantied, we may negotiate with that person or entity regarding our claim against them
without notifying you.
We are not required to notify you each time the Obligor either violates the Agreement(s) or otherwise
becomes liable to us under the Agreement(s). We are not required to notify you of disputes between the Obligor and
us. We are not required to notify you of your liability or potential liability before we enforce this Guaranty. You
become liable to us when the Obligor becomes liable to us, without any requirement that we first notify you that you
are or may be liable. By signing this Guaranty, you waive any legal right you may have to any notice or other
communication from us before we enforce this Guaranty against you. Examples of legal rights you might have that
you are waiving by signing this Guaranty are presentment, demand, notice of dishonor, protest and nonpayment.
You agree that you will pay our expenses of enforcing the Agreement(s) against the Obligor and this
Guaranty against you. These expenses will include our reasonable attorneys’ fees if we hire an attorney to enforce
the Agreement or this Guaranty. You cannot modify or amend this Guaranty through our statements or actions.
Modifications or amendments must be by written agreement between you and us or any person or entity that
succeeds us as the Franchisor.
The term “you” as used in this Guaranty refers to each person who signs below to the right of the word
Guarantor. Your liability is joint and several and primary. This means, for example, that you are liable to us as if
1
you were the only person signing this Guaranty with us, regardless of how many other persons sign this Guaranty,
sign the Agreement(s) or otherwise guaranty the Agreement(s). You consent to the exclusive jurisdiction of and
exclusive venue in the Ohio courts or United States Courts situated in Cuyahoga County, Ohio, and you waive your
right to trial by jury.
IN WITNESS WHEREOF, you hereby execute this Guaranty under seal effective as of the date of the
Agreement(s).
_____________________________________
Witness
_____________________________________
(Print Name)
___________________________________________
Guarantor (Franchise Owner)
Address:
Address:______________________________
______________________________
_____________________________________
Witness
_____________________________________
(Print Name)
___________________________________________
Guarantor (Other Responsible Party)
Address:
Address:______________________________
______________________________
2
PFG Ventures
SCHEDULE A
Proforma, Inc. or PFG Ventures, L.P. are the sole and exclusive licensers or sublicensors of the following
service marks and trademarks:
“PROFORMA”
“ProMail”
“Proforma.com”
“It’s Only Natural”
CALIFORNIA RIDER “A” TO FRANCHISE AGREEMENT
BETWEEN PFG VENTURES AND
_____________________________________________
The Franchise Agreement between ______________________________ ("Franchisee" or "You") and PFG Ventures,
L.P. ("Franchisor") dated ________________________ (the "Agreement") shall be amended by the addition of the following
language, which shall be considered an integral part of the Agreement (the "Rider"):
CALIFORNIA LAW MODIFICATIONS
1.
The California Department of Corporations requires that certain provisions contained in franchise documents
be amended to be consistent with California law, including the California Franchise Investment Law, CAL. BUS. & PROF.
CODE Section 31000 et seq., and the California Franchise Relations Act, CAL. BUS. & PROF. CODE Section 20000 et seq.
To the extent that the Agreement contains provisions that are inconsistent with the following, such provisions are hereby
amended:
a.
California Business and Professions Code Sections 20000 through 20043 provide rights to You concerning
non-renewal and termination of the Agreement. The Federal Bankruptcy Code also provides rights to You
concerning termination of the Agreement upon certain bankruptcy-related events. To the extent the
Agreement contains a provision that is inconsistent with these laws, these laws will control.
b.
If the Franchisee is required in the Agreement to execute a release of claims, such release shall exclude
claims arising under the California Franchise Investment Law and the California Franchise Relations Act.
c.
If the Agreement requires payment of liquidated damages that is inconsistent with California Civil Code
Section 1671, the liquidated damage clause may be unenforceable.
d.
If the Agreement contains a covenant not to compete which extends beyond the expiration or termination of
the Agreement, the covenant may be unenforceable under California law.
e.
If the Agreement requires litigation, arbitration, or mediation to be conducted in a forum other than the State
of California, the requirement may be unenforceable under California law.
f.
If the Agreement requires that it be governed by a state's law, other than the State of California, such
requirement may be unenforceable.
2.
Each provision of this Rider shall be effective only to the extent that the jurisdictional requirements of the
California law applicable to the provisions are met independent of this Rider. This Rider shall have no force or effect if such
jurisdictional requirements are not met.
3.
As to any state law described in this Rider that declares void or unenforceable any provision contained in the
Agreement, the Franchisor reserves the right to challenge the enforceability of the state law by, among other things, bringing an
appropriate legal action or by raising the claim in a legal action or arbitration that you have initiated.
IN WITNESS WHEREOF, the parties have duly executed and delivered this Rider to the Agreement on
____________________, _______.
ATTEST:
FRANCHISOR:
PFG Ventures, L.P.
By: Proforma, Inc., Its: General Partner
Witness:
Print Name: __________________________________
Address: __________________________________
__________________________________
By:
Title:
Date:
FRANCHISE OWNER:
Witness:
Print Name: _________________________________
Address:
_________________________________
_________________________________
By:
Title:
Date:
ILLINOIS RIDER “A” TO FRANCHISE AGREEMENT
_____________________________________________
This Rider forms a part of the aforesaid FRANCHISE AGREEMENT, and DISCLOSURE DOCUMENT
dated ________________________, as if the contents hereof were set forth therein.
1.
If any of the provisions of this Agreement are inconsistent with Illinois Franchise Disclosure Act, then the
Illinois Franchise Disclosure Act shall govern the rights and duties of the parties.
2.
Paragraph 22(d) of the Franchise Agreement is so amended to include any and all representation made in
the disclosure document.
3.
This Agreement is subject to the Illinois Franchise Disclosure Act which provides that:
a.
A franchisor may not terminate a franchise prior to the expiration of its term except for “good cause.”
“Good cause” shall include, but not be limited to, the failure of the franchise to comply with any lawful
provision of the franchise or other agreement and to cure such default after being given notice thereof
and a reasonable opportunity to cure such default, which in no event need be more than 30 days.
“Good cause” shall include, but without the requirement of notice and an opportunity to cure,
situations in which the franchisee:
i.
Is adjudicated as bankrupt or insolvent;
ii. Makes an assignment for the benefit of creditors or a similar disposition of the asset of the
franchise business;
iii. Voluntarily abandons the franchise business;
iv. Is convicted of a felony or other crime which substantially impairs the goodwill associated
with the franchisor’s trademark, service mark, trade name, or commercial symbol; or
v.
Repeatedly fails to comply with the lawful provisions of the franchise or other agreement.
b.
Under the Illinois Franchise Disclosure Act, Section 4 states “Any provision in a franchise agreement
that designates jurisdiction or venue in a forum outside of this State is void, provided that a franchise
agreement may provide for arbitration in a forum outside of this state.”
c.
Paragraph 21 of the Franchise Agreement is subject to Section 41 of the Illinois Franchise Disclosure
Act which states that “any condition, stipulation, or provision purporting to bind any person acquiring
any franchise to waive compliance with any provision of this Act or any other law of this State is void”
and therefore, prohibits waiver of a jury trial.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
FRANCHISOR:
PFG Ventures, L.P.
Executed and delivered on:
_________________________
By:
Its:
FRANCHISE OWNER:
__________________________
By:
Its:
.
INDIANA RIDER “A” TO FRANCHISE AGREEMENT
_____________________________________________
dated _____________________________, as if the contents hereof were set forth therein.
1.
The Release provision must comply with Indiana Code 23-2-2.7-1(5).
2.
Under Indiana Code 23-2-2.7-1(10), the Franchisor may not be entitled to injunction without bond.
3.
Any limitation on the amount of damages that may be awarded to the Franchisee pursuant to the settlement
of any dispute arising out of the Franchise Agreement is a "limit on litigation" under IC 23-2-2.7-1(10).
4.
Under IC 23-2-2.7-1(10), the Indiana franchisee must be allowed access to Indiana courts and may not be
required to consent to the jurisdiction and venue of the courts in any other state.
5.
Any waiver of the Franchisee's "right to trial by jury" is prohibited under IC 23-2-2.7-1(10).
6.
In reference to Exhibit D, Sale of Receivables document, Indiana law governs this document under Indiana
Code 23-2-2.7-1(10).
It is the opinion of the Indiana Securities Commissioner that the contractual provision stated above may
be unenforceable pursuant to Section 23-2-2.7-1(10) of the Indiana Code.
We agree pursuant to IC 23-2-2.7-1(2), we will not compete unfairly with you within a reasonable area of
your franchised location.
FRANCHISOR:
PFG Ventures, L.P.
_________________________
By:
Its:
FRANCHISE OWNER:
_________________________
By:
Its:
MINNESOTA RIDER “A” TO FRANCHISE AGREEMENT
_____________________________________________
1.
Whenever the provisions of this Rider “A” conflict with the provisions contained elsewhere in the
Franchise Agreement or the disclosure document, the provisions of this Rider “A” shall prevail to the
extent of such conflict.
2.
The Minnesota Franchise Act will prevail if there is a conflict between the terms of the Franchise
Agreement or the disclosure document and the Minnesota Act. In all other respects, the law of the State of
Ohio shall be deemed controlling.
3.
Minnesota Stat. S80C.21 and Minn. Rule 2860.4400J prohibit us from requiring litigation to be conducted
outside Minnesota. In addition, nothing in the disclosure document or agreement can abrogate or reduce
any rights of the Franchisee as provided for in Minnesota Statutes, Chapter 80C, including the right to
submit matters to the jurisdiction of the courts of Minnesota.”
4.
Minn. Rule 2860.4400 (J) prohibits waiver of a jury trial.
5.
In accordance with Minn. Rule 2860.4400 (J) the franchisee cannot consent to the franchisor obtaining
injunctive relief and the franchisor may seek injunctive relief. In addition, a court will determine if a bond
is required.
6.
With respect to franchises governed by Minnesota law, the franchisor will comply with Minnesota Statute
80C.14, subs. 3, 4 and 5 which requires, except in certain specified cases, that a franchisee be given 90 days
notice of termination (with 60 days to cure) and 180 days notice for non-renewal of the franchise
agreement.
7.
In accordance with Minnesota Stat. Sec. 80C.12 Subd. 1(g), the Franchisor will indemnify the Franchise
against all claims alleging trademark infringement or unfair competition as a direct result of the
Franchisee’s use of the Licenses Marks in the manner prescribed by the Franchisor subject to the following:
a.
The Franchisee must immediately notify the franchisor of any claim of infringement or unfair
competition. The Franchisor and its counsel will decide upon the appropriate response, including
instituting or defending legal action or settling any such claim, and the Franchise Owner must assist
the Franchisor, upon the request and at the Franchisor’s expense in taking such action if any as the
Franchisor may deem appropriate but shall take no action or incur any expenses on the Franchisor’s
behalf without the Franchisor’s prior written approval. If the Franchisor undertakes the defense of
prosecution of any litigation relating to the Licensed Marks, the Franchisee is required to execute any
and all documents and to do such acts and things as may in the opinion of the Franchisor’s legal
counsel, be reasonably necessary to carry out such defense of prosecution. The Franchise Owner must
assist the Franchisor without compensation other than reimbursement for out-of-pocket expenses.
1
MINNESOTA RIDER “A” TO FRANCHISE AGREEMENT CONTINUED
b.
The Franchisor’s liability only relates to acts about which it has had actual notice. The Franchisor
shall not be liable for any claims of infringement of unfair competition arising from uses of the
Licensed Marks prior to its receipt of written notice of a claim of infringement or unfair
competition, or for uses of the Licensed Marks by the Franchise Owner after the Franchisor has
notified the Franchise Owner to discontinue such use.
FRANCHISOR:
PFG Ventures, L.P.
_________________________
By:
Its:
FRANCHISE OWNER:
_________________________
By:
Its:
2
.
NORTH DAKOTA RIDER “A” TO FRANCHISE AGREEMENT
_____________________________________________
1.
The restrictive covenants outlined in Paragraph 11 may be contrary to Section 9-08-06, N.D.C.C.
2.
The Franchise Agreement is hereby amended in Paragraph 13c by deleting the requirements of a franchise
owner to consent to the termination penalties within the intent of Section 51-19-09 of the North Dakota
Franchise Investment Law.
3.
The Franchise Agreement is hereby amended in Paragraph 21 by deleting from the fourth sentence, “you
and” and adding the following statement to the end of the paragraph: “Franchise Owners in the State of
North Dakota consent to exclusive jurisdiction of the Courts of North Dakota, and all Agreements will be
governed by North Dakota law.”
4.
Paragraph 21 of the Franchise Agreement is hereby amended by the addition of this statement: “Franchise
owners in the State of North Dakota are not required to consent to the waiver of a trial by jury.”
5.
Item 17w of the disclosure document is hereby amended by the addition of the words, “All Agreements
will be governed by North Dakota law.”
6.
Item 17d of the disclosure document is hereby deleted in its entirety.
FRANCHISOR:
PFG Ventures, L.P.
_________________________
By:
Its:
FRANCHISE OWNER:
__________________________
By:
Its:
.
RHODE ISLAND RIDER “A” TO FRANCHISE AGREEMENT
_____________________________________________
Paragraph 21 of the Franchise Agreement is subject to § 19-28.1-14 of the Rhode Island Franchise
Investment Act, which provides that “A provision in a franchise agreement restricting jurisdiction or venue
to a forum outside this state or requiring the application of the laws of another state is void with respect to a
claim otherwise enforceable under this Act.”
FRANCHISOR:
PFG Ventures, L.P.
_________________________
By:
Its:
FRANCHISE OWNER:
__________________________
By:
Its:
.
WASHINGTON RIDER “A” TO FRANCHISE AGREEMENT
_____________________________________________
1.
The State of Washington has a statute, RCW 19.100.180 which may supersede the franchise agreement in
your relationship with the franchisor including the area of termination and renewal of your franchise.
There may also be court decisions which may supersede the franchise agreement in your relationship with
the franchisor including the areas of termination and renewal of your franchise.
2.
In any arbitration involving a franchise purchased in Washington, the arbitration site shall be either in the
State of Washington, or in a place mutually agreed upon at the time of the arbitration, or as determined by
the arbitrator.
3.
In the event of a conflict of laws, the provisions of the Washington Franchise Investment Protection Act,
Chapter 19.100 RCW shall prevail.
4.
A release or waiver of rights executed by a franchisee shall not include rights under the Washington
Franchise Investment Protection Act except when executed pursuant to a negotiated settlement after the
agreement is in effect and where the parties are represented by independent counsel. Provisions such as
those which unreasonably restrict or limit the statute of limitations period for claims under the Act, rights
or remedies under the Act such as the right to a jury trial may not be enforceable.
5.
Transfer fees are collectable to the extent that they reflect the franchisor's reasonable estimated or actual
costs in effecting a transfer.
FRANCHISOR:
PFG Ventures, L.P.
_________________________
By:
Its:
FRANCHISE OWNER:
__________________________
By:
Its:
.
B-1
B-2
EXHIBIT C
FRANCHISES CURRENTLY IN OPERATION
(Year End 12/31/08)
State/
Province
Region
Proforma Name
Franchise Owner
Address
City/State/Zip
Telephone
FRANCHISES IN USA
AL
Proforma Business Advantage
David Smith
7 Seminole Drive
Montgomery, AL 36117
(334) 279-0980
AL
Proforma Print It
Robert & Susan Tate
2097 Brook Highland Ridge
Birmingham, AL 35242
(205) 981-3500
AL
Proforma Diversified Solutions
Cathy Moody
12129 Sonneborn Drive
Theodore, AL 36582
(251) 973-2413
AL
Proforma Parr Solutions
Joe McElvy
117 North Lanier Avenue
Lanett, AL 36863
(334) 644-7277
AL
Proforma Prestige Graphics
Carl and Bonnie Brunson
105 LeShawn Cove
Harvest, AL 35749
(256) 417-8452
AL
Proforma Total Print Management
Marc Robillard
4256 Milner Road East
Birmingham, AL 35242
(205) 980-7478
AL
Proforma Printed Images
Mark McGill
121 West Alabama Street, Suite 4 Florence, AL 35630
(256) 766-8166
AR
Proforma Spectrum Graphics
Judy Hunter
152 Mimosa Point, D-7
Hot Springs, AR 71913
(501) 525-8258
AR
Proforma Graphic & Print Solutions
Michael Hughes
7707 T Street #C
Little Rock, AR 72227
(501) 221-2855
AR
Proforma OneStop
Holly Nethers
2201 N. 58th Street
Ft. Smith, AR 72904
(479) 648-1204
AZ
Proforma Desert Sky Graphics
John and Carole Adams
Adams
1926 W. Calle Pacifica
Tucson, AZ 85745
(520) 792-2038
AZ
Proforma Southwest
Teresa & Jeff Bourland
4172 E. Redfield Avenue
Gilbert, AZ 85234
(480) 635-1888
AZ
Proforma Quality Imaging
Frank & Teresa Rochon
1458 E. Silver King Circle
Prescott, AZ 86303
(928) 708-9928
AZ
Proforma BlueSkye Marketing
Connie & Tony Finneman
11337 E Spaulding Avenue
Mesa, AZ 85212
(480) 503-8230
AZ
Proforma Printing & Promotional
Products
Bill Haramija
607 West Willis Place
VAIL, AZ 85641
(520) 275-0174
AZ
Proforma CGE&M
Deborah Owens
1445 N. Morrison Avenue
Casa Grande, AZ 85222
(520) 316-9181
AZ
Proforma DBI
James Schiesser
PO Box 1207
Scottsdale, AZ 85252
(480) 350-9777
AZ
Proforma SunState Business
Solutions
Jason Stevenson
17200 N. Perimeter Drive, Suite
200
Scottsdale, AZ 85255
(480) 304-9600
AZ
Proforma Executive Sales Unlimited
Clinton Keeler
123 Centennial Way, Suite 146
Mesa, AZ 85201
(480) 966-1919
AZ
Proforma Abacus Solutions
Anne Marie Hewitt
203 E. Main Street
Stafford, AZ 85546
(928) 428-9565
CA
Proforma Pacific Systems
Keith Beck
179 Contractors Avenue
Livermore, CA 94551
(925) 443-9911
CA
Proforma Express Graphics
David Anderson
23061 Arroyo Vista
R. Santa Margarita, CA
92688
(949) 246-5624
CA
Proforma Pacific Graphics
Scott LaLoggia
3830 Valley Centre Dr. #705
San Diego, CA 92130
(858) 259-9282
CA
Proforma Unisource
Chris & Linda Palmer
2856 Calle Esteban
San Clemente, CA 92673 (800) 280-8877
CA
Proforma Ware & Associates
Linda Ware
960 E. Bonita Avenue, #3
Pomona, CA 91767
(909) 560-5582
CA
Proforma Print & Promotions
Dennis Sisk
300 Enterprise Street, Suite C
Escondido, CA 92029
(888) 955-8580
CA
Proforma Printing Systems
Dave Kirby
7276 Amethyst Avenue
Alta Loma, CA 91701
(909) 989-7292
CA
Proforma M&A Graphics And
Promotions
Mali & Tom Alwood
3220 S. Higuera, Suite 318
San Luis Obispo, CA
93401
(805) 782-9191
CA
Proforma Printing Solutions
Randall Balt
300 S. Highland Springs Avenue
Banning, CA 92220
(951) 769-7365
CA
Proforma Full Moon Promotions
Eric Nelsen
379 Diablo Road, Suite 108-B
Danville, CA 94526
(925) 831-9405
1 of 21
EXHIBIT C
(Year End 12/31/08)
CA
Proforma Marketing Agency
Bob Michel
379 Diablo Road, Suite 108-C
Danville, CA 94526
(925) 820-3071
CA
Proforma AR PageOne
Rick & Andrea Page
3153 Hwy 128
Calistoga, CA 94515
(707) 942-6322
CA
Proforma Graphic Printsource
Linda Martinelli
2341 Pomona Road, Unit 104
Corona, CA 92880
(951) 256-8540
CA
Proforma Preferred
Jim & Lisa Chapman
14370 Myford Road, Suite 100
Irvine, CA 92606
(714) 389-7630
CA
Proforma Graphix Unlimited
Chuck Branda
25502 Via Juana
Santa Clarita, CA 91355
(661) 287-3949
CA
Proforma OneSource
Vincent Arnold
1109 Kimberly Court
Roseville, CA 95661
(877) 695-3572
CA
Proforma JPC
Victor Matsumura
2119 W. 176th Street
Torrance, CA 90504
(310) 630-8087
CA
Proforma Solutions
Connie Hunter
17011 Beach Blvd., Suite 820
Huntington Beach, CA
92647
(714) 596-4600
CA
Proforma Graphic Concepts &
Solutions
Richard Mestas
1104 Ribbonwood Court
Hemet, CA 92545
(951) 766-5566
CA
Proforma Resources
Myra Lord
1407 Tennessee Street
Vallejo, CA 94590
(707) 647-2007
CA
Proforma Creative Partners
Bob Stonhaus
379 Diablo Road, Suite 108-A
Danville, CA 94526
(925) 743-4053
CA
Proforma Quality Printing
Mercedes Cortez
680 E. Alosta, Suite #102
Azusa, CA 91702
(626) 969-3997
CA
Proforma Print & Data Solutions,Inc.
Kevin Allen
947 Kenston Drive
Clayton, CA 94517
(925) 673-1788
CA
Proforma Pacific West
Craig Levine
1926 Packard Court
Concord, CA 94521
(925) 673-1770
CA
Proforma
Rick Marshall
2698 East Garvey Avenue, South
West Covina, CA 91791
(626) 967-2814
CA
Proforma Printing Plus
Patricia O'Neill
25 Vasquez Avenue
San Francisco, CA 94127 (415) 504-7940
CA
Proforma Mactec Solutions
Lowry McFerrin
484 Lake Park Avenue, #29
Oakland, CA 94610
CA
Proforma Solution For Printing &
Promotions
Beckie Diltz & Judy Butler
5330 Office Center Court, Suite 34 Bakersfield, CA 93309
(661) 633-1117
CA
Proforma American Filing Solutions
Rudolph Ivan Blasich
27728 Almont Way
Romoland, CA 92585
(888) 891-1970
CA
Proforma Print & Marketing
Promotions
Mike Trombly
23151 Verdugo Drive, Suite 108
Laguna Hills, CA 92653
(949) 716-4810
CA
Proforma Color Press
Cindy & David Schmaeling
1860 Eastman Avenue, Unit #104
Ventura, CA 93003
(805) 642-7504
CA
Proforma Kauffman Co.
Paul Kauffman
31190 Saho Court
Temecula, CA 92592
(951) 676-1197
CA
Proforma Marketing Solutions
Brian Thomas
980 Hawthorne Circle
Rohnert Park, CA 94928
(707) 585-9876
CA
Proforma Printing Corporation
Ed Rendl & Nick Derkacz
1560 Brookhollow Drive, Suite 203 Santa Ana, CA 92705
(949) 296-1999
CA
Proforma Marketing Associates
Jeff Pyper
17092 Via Serenidad
Ramona, CA 92065
(760) 788-1174
CA
Proforma True Marketing Group
Heather Mobley & AnneMarie
7 West 41st Avenue, #66
Smith
San Mateo, CA 94403
(415) 552-8841
CA
Proforma Concepts Unlimited
Tracy Gordon
197 Calle La Mountana
Moraga, CA 94556
(925) 385-1640
CA
Proforma OnTrack Promotions
Laury Pitts
25 Calle Mandarina
San Clemente, CA 92673 (949) 218-0768
CA
Proforma Diversified Business
Solutions
Mike Balistreri
1174 Lincoln Avenue #4
San Jose, CA 95125
CA
Proforma Logoimprinter.com
Dawn Sheridan
3941 Park Drive, #20-343
El Dorado Hills, CA 95762 (916) 941-8194
CA
Proforma J.C.L. Print Associates
Jeff Leuchi
555 Peters Avenue, Suite 260A
Pleasanton, CA 94566
(925) 462-7534
CA
Proforma Pepper Promotions
Suzanne Rhodes
14212 Mediatrice Lane
San Diego, CA 92129
(858) 780-9909
CA
Proforma Direct Effect
Jeff & Joy Miller
1665 Arroyo Vista Way
El Dorado Hills, CA 95762 (888) 471-2580
2 of 21
(510) 534-5784
(408) 491-1550
EXHIBIT C
(Year End 12/31/08)
CA
Proforma Star Incentives
Ilene Marshall
8211 Moller Ranch Drive
(925) 461-0799
CA
Proforma Business Designs
Rich Cargile
2843 Hopyard Road, #173
(925) 426-1991
CA
Proforma OnQue
Richard Yerman
3900 Newpark Mall Road, #340
Newark, CA 94560
(510) 505-0304
CA
Proforma 3
Elaine Arthur
30262 Crown Valley Parkway,
B531
Laguna Niguel, CA 92677 (949) 218-3147
CA
Proforma Socially Yours
Mary Lou Granite-Meyer
7120 Golden State Highway
Bakersfield, CA 93308
(661) 410-7763
CA
Proforma Solutions Supplier
Brandon Kennedy
4400 Ashe Road, #209
(661) 617-6117
CA
Proforma Branding Hut
Malissa Barry-Lober
541 3rd Street
Hermosa Beach, CA
90254
(310) 376-3409
CA
Proforma by Kug
David Kugelman
231 Silva Avenue
Marysville, CA 95901
(530) 742-2423
CA
Proforma Moore Promotions
Laura Moore
16 Seacrest Court
Sacramento, CA 95835
(916) 606-2088
CA
Proforma 24/7
Paul Marthaler
2382 Carol View Drive, Suite 311
CA
Proforma Powerful Promotions & Print Jeff Pagano
19 Calle de Arena
CA
Proforma D & D Innovations
Doug Andre
1484 Hartnell Avenue, Suite G
Redding, CA 96002
(530) 223-6520
CA
Proforma Brand Solutions
Mark Borson
951-2 Old County Road, Suite 200 Belmont, CA 94002
(650) 787-7897
CA
Proforma Every Little Detail
Jackie Young
1103 Ferry Circle
Folsom, CA 95630
(916) 730-5294
CA
Proforma Press
Stanley Sloan
1229 Bracebridge Court
Campbell, CA 95008
(408) 370-7900
CA
Proforma FS Solutions
William MacKay
3333 Bowers Avenue, Suite 130
Santa Clara, CA 95054
(408) 490-4919
CA
Proforma Left Coast Promotions
Rebekah Brooks
2071 Amanda Way #12
Chico, CA 95928
(888) 800-9440
CA
Proforma Admore Agency
Samuel & Cecelia Kemper
4908 Ina Court
(661) 330-2481
CA
Proforma Winning Solutions
Kari Wolsky
6363 Christie Avenue, Suite 824
Emeryville, CA 94608
(510) 595-7672
CA
Proforma Paper Blend
Analiza del Rosario
655 N. Azusa Avenue, #231
Azusa, CA 91702
(626) 334-4674
CA
Proforma Smart Solutions
Lilibeth Rutledge
3056 Windmill Canyon Drive
Clayton, CA 94517
(925) 672-6600
CA
Proforma Image Plus
Holger Kasper
8941 Atlanta Ave # 516
92646
(714) 421-4532
CA
Proforma Bear Paw Pacific
Advertising Specialties
Betty Belcourt
18340 Yorba Linda Blvd., #107-402 Yorba Linda, CA 92886
(714) 524-0966
CA
Proforma Square One Promotions
Julie Knox-Gonzalez
7248 Shoshone Avenue, Suite A
Lake Balboa, CA 91406
(818) 342-4320
CA
Proforma FAA Brand
Jamie Fong
850-3 Pointe Pacific Drive
Daly City, CA 94014
(877) 642-0020
(949) 254-5803
Cardiff By The Sea, CA
(760) 889-8917
92007
Rancho Santa Marga, CA
(949) 690-8895
92688
CA
Proforma Surf City Promo
Julie Drake
1718 Pine Street
92648
CA
Proforma Trend
Terry Henson
36431 Rodgers Lane
Yucaipa, CA 92399
(909) 723-6193
CA
Proforma Integrated Systems
Joseph Lahore
25422 Trabuco Road, #105-173
Lake Forest, CA 92630
(949) 597-8836
CA
Proforma Image Innovations
Manuel Lomeli, Jr.
2081 N. Oxnard Blvd. Unit #171
Oxnard, CA 93036
(805) 981-0872
CA
Proforma Impact Marketing
Tony Ward
4421 Camela Street
Yorba Linda, CA 92886
(714) 656-4170
CA
Proforma White Shadow Productions Keith Agran
1527 Felspar Street #6
San Diego, CA 92109
(858) 354-6439
CA
Proforma One Marketing Solutions
Mickey Ha
28422 Constellation Road, Suite
116
Valencia, CA 91355
(213) 820-8241
CA
Proforma Pacific View Printing and
Promotions
Mitchell Tendler
21822 Lassen Street, Suite D
Chatsworth, CA 91311
(818) 734-8291
3 of 21
EXHIBIT C
(Year End 12/31/08)
CA
Proforma Hotwired Marketing
Maher Wareh
2345 N. Glassell Street
Orange, CA 92865
(714) 330-3703
CA
Proforma XTI
Richard Gray
20321 Lake Forest Drive, D7
Lake Forest, CA 92630
(949) 587-0416
(303) 683-0327
CO
Proforma Impact Graphics
David & Janice Thompson
291 W. Phillips Peak
Highlands Ranch, CO
80129
CO
Proforma Alpine Marketing Group
Therese K. Cohen
181 Snaffle Road
Edwards, CO 81632
(970) 926-6221
CO
Proforma Palone & Associates
Tony & Nita Palone
5804 Cole Way
Arvada, CO 80004
(303) 424-2755
CO
Proforma Promotions Plus
Debra & Joseph Adkins
2595 S Lewis Way B114
Lakewood, CO 80227
(303) 987-9488
CO
Proforma 21st Century Promotions
Terry Roth
1123 Pontiac Street
Denver, CO 80220
(303) 321-0449
CO
Proforma Single Source
Chuck Barrett
9181 South Kenwood Court
Highlands Ranch, CO
80126
(303) 791-8738
CO
Proforma Imagery
John & Suzanne Hagen
6455 S. Dallas Court
Englewood, CO 80111
(720) 489-5001
CO
Proforma Resource Group
David Nunn
399 Denali Lane
Montrose, CO 81403
(970) 626-3395
CO
Proforma The Butterfield Company
Scott Butterfield
3558 West 97th Avenue
Westminster, CO 80031
(303) 997-5755
CO
Proforma Big Dog Branding
Chris Morrissey
2201 Dover Drive
Fort Collins, CO 80526
(970) 416-9090
CO
Proforma Altitude Marketing
Brett Noser
239 West Sylvestor Place
Highlands Ranch, CO
80129
(303) 995-8788
CT
Proforma Promotion Consultants
Stephen Garst
1074 Hope Street - Suite 202
Stamford, CT 06907
(203) 322-1507
CT
Proforma Communication Resources Joe McCabe
3 Hillcrest Road
Bethel, CT 06801
(203) 798-8080
CT
Proforma Aposematic Corp.
Juan Rodriguez-Torrent
Two Pomperaug Office Park
Southbury, CT 06488
(203) 568-6443
CT
Proforma S & G Associates
Karen Jacobowitz
53 Summer Lane
North Haven, CT 06473
(203) 985-0249
CT
Proforma GraphicWorks
Debra Smith
238 Great Swamp Road
Glastonbury, CT 06033
(860) 659-0844
CT
Proforma Shoreline Graphics
Carolyn & James Henry
32 Tera Lane
Old Saybrook, CT 06475 (860) 388-0866
CT
Proforma Branding Solutions
Phil Mertz
13 Bettswood Road
Norwalk, CT 06851
(203) 854-9159
CT
Proforma Winning Edge
Ricky Grossman
131 Northford Road
Branford, CT 06405
(203) 488-1447
DE
Proforma Preferred Solutions
Jim Rafte
9 E. Loockerman Street, Suite 316 Dover, DE 19901
(302) 677-1761
FL
Proforma Imaging
Jamie Twigg
824 Palmetto Avenue
Melbourne, FL 32901
(321) 984-5153
FL
Proforma Metro Business Systems
Marc Berkow
8539 Little Swift Circle
Jacksonville, FL 32256
(862) 216-0064
FL
Proforma PrintSource
Daniel Mack
2050 Art Museum Drive, Suite 105 Jacksonville, FL 32207
(904) 398-8500
FL
Proforma Innovative OneSource
Dan Garrett
27550 SR 64
(941) 322-9771
FL
Proforma Communications Group
Brian & Patrick Dinley
1730 South Federal Highway, #274 Delray Beach, FL 33483
FL
Proforma Creative Business Products Larry & Betty Covington
1892 Hickory Lane
Atlantic Beach, FL 32233 (904) 247-1448
FL
Proforma Printing
Dave Eastwood
18520 Grand Avenue
Port Charlotte, FL 33948
(941) 235-1839
FL
Proforma Anchor Printing &
Promotions
Bill & Jane Parsons
3494D Weems Road
Tallahassee, FL 32312
(850) 894-3676
FL
Proforma DSD Creative Solutions
David Dudash
7417 Oakvista Circle
Tampa, FL 33634
(813) 884-5264
FL
Proforma Print Source Unlimited
Chuck Turner
141 Harvey Mill Road
Crawfordville, FL 32327
(850) 926-6070
FL
Proforma Communication Systems
Buz & Patricia Couturier
18361 Plumbago Court, Suite G
Lehigh Acres, FL 33972
(888) 759-1741
4 of 21
Myakka City, FL 34251
(561) 265-0578
EXHIBIT C
(Year End 12/31/08)
FL
Proforma Printing & Promotional
Services
Daniel & Naomi Lawlor
864 Eagle Point Drive
St. Augustine, FL 32092
(904) 825-0500
FL
Proforma Creative Marketing
Robin Ferguson
7651 Gate Parkway, Unit 2308
(904) 807-9905
FL
Proforma S3
Tammy Johnson
221 Eastpark Drive, Suite B
Celebration, FL 34747
(407) 566-8026
FL
Proforma Global Sourcing
Michele Adams
2500 NW 107th Avenue, Suite 204 Doral, FL 33172
FL
Proforma Corporate Promotions
Heather Young & Jeff Bozsoki 4936 Northern Dancer Way
Orlando, FL 32826
(407) 282-4489
FL
Proforma Custom Marketing
Robin Knight
6719 Bellview Pines Place
Pensacola, FL 32526
(850) 944-7515
FL
Proforma Print Media
Colleen & David Blaquiere
12217 Springmoor Three Court
(904) 398-4000
FL
Proforma Sunshine State
Dan McCarthy
8111 Unit A Garden Road
Riviera Beach, FL 33404 (561) 881-8888
FL
Proforma Images
R. Paul Holmes
2311 Arabian Trail
Ormond Beach, FL 32174 (386) 615-3043
FL
Proforma Promotional & Printed
Solutions
Martin Arriola
11248 NW 74th Terrace
Doral, FL 33178
(305) 418-4410
FL
Proforma Flight Line
Robert Harris
8210 SW 55th Court
Davie, FL 33328
(954) 298-8044
FL
Proforma EFM Promotional Products Efrain Morantes
6175 N.W. 167th Street, #G-16
Miami Gardens, FL 33015 (305) 698-8553
FL
Proforma Access Marketing
Gwen Riggins
3907 Karissa Ann Place, East
(904) 880-4936
FL
Proforma Creative Ideas
Polly Gardner
9202 S.E. Pomona Street
Hobe Sound, FL 33455
(772) 546-8946
FL
Proforma Platinum Impressions
Danny Curbelo
13506 Summerport Village Pkwy,
#393
Windermere, FL 34786
(407) 877-9186
FL
Proforma DataPrint
Patrick McCoy
11983 Tamiami Trail N., Suite 114 Naples, FL 34110
(239) 566-1111
FL
Proforma Marketing Group
David Hyman
23257 State Road 7, Suite 209
Boca Raton, FL 33428
(561) 488-4065
FL
Proforma Specialized Marketing &
Print Solutions
Gary Howard
6290 NW 66th Way
Parkland, FL 33067
(954) 444-3197
Naples, FL 34109
(239) 592-0086
(800) 870-8979
FL
Proforma Dynamic Image Solutions
Barbara Scheipe
7955 Airport Road North, Suite
203A
FL
Proforma AdPro
Gerald Wilcox
2880 W. Oakland Park Blvd., #232 Oakland Park, FL 33311
(954) 484-5777
FL
Proforma Waterlilies
Susan Stobo
5034 79 Ave Drive East
Sarasota, FL 34243
(941) 359-0300
FL
Proforma Professionals
Mark Angstreich & Gerald
Muhlenforth
6574 N. State Road 7 #405
Coconut Creek, FL 33073 (954) 323-2367
FL
Proforma Services
George Bell
113 Key Haven Road
Key West, FL 33040
(305) 294-0696
FL
Proforma A.J. Abrams Co.
Alex Abrams
520 Live Oak Street
Maitland, FL 32751
(407) 921-3000
FL
Proforma Smart Marketing
Jennifer Courtney
985 Wellington Court
Dunedin, FL 34698
(352) 359-4044
FL
Proforma Gossett Marketing Group
Danette Gossett
3701 Poinciana Avenue
Coconut Grove, FL 33133 (305) 443-1332
FL
Proforma Corporate Images
Rob Ayers
771 Fentress Boulevard, Suite 10
Daytona Beach, FL 32114 (386) 274-7100
GA
Proforma Direct
Joel & Yvette Crowe
6409 Abercorn Street, Suite D-1
Savannah, GA 31405
(912) 352-7929
GA
Proforma Custom Business Services
Lillian DeAngelo
1059 Triad Court, Suite 4
Marietta, GA 30062
(770) 874-7565
GA
Proforma Business Concepts
Terry Siroky
227 Sandy Springs Place NE, D359
Atlanta, GA 30328
(770) 272-0212
GA
Proforma Custom Graphics
Michael Thompson
95 Pilgrim Way
Newnan, GA 30265
(770) 253-6920
GA
Proforma ABBAgraphics
Jack & Jolynne Sutton
985 Seven Oaks
Jesup, GA 31546
(912) 588.9300
GA
Proforma Corporate Printing
Joe Noonan
3900 Oakcliff Industrial Court
Atlanta, GA 30340
(770) 972-9122
5 of 21
EXHIBIT C
(Year End 12/31/08)
GA
Proforma Sales & Marketing
Consulting
Bill Sisk
7381 Harbor Cove Lane
Stone Mountain, GA
30087
(770) 469-7972
GA
Proforma Business Image Solutions
John Cain
PMB 320 3760 Sixes Road #126
Canton, GA 30114
(770) 720-9011
GA
Proforma RM Hines Group
Randy & Susan Hines
8309 Dunwoody Place
Atlanta, GA 30350
(678) 741-2944
GA
Proforma Resolution Print
Management
Tamara Manny
8665 Wolf Creek Drive
Winston, GA 30187
(678) 838-8832
GA
Proforma BPM
Michael Beckman
8820 Appling Ridge
Cumming, GA 30041
(770) 781-5623
GA
Proforma Wilson Marketing Concepts Chris Wilson
5141 Amsterdam Court, S.W.
Liburn, GA 30047
(678) 380-6869
GA
Proforma At Work
Sophia Hinely
2523 Dering Place NE
Atlanta, GA 30345
(404) 343-1925
GA
Proforma Irvine Group
Bruce Irvine
2607 Vinings Central Drive
Smyrna, GA 30080
(404) 247-2435
GA
Insignia Promotions, LLC
JT Marburger
1825 Old Alabama Road, Suite
108
Roswell, GA 30076
(678) 323-1406
GA
Proforma Power Marketing Solutions
Randolph Nugent
5300 Brookside Place
Roswell, GA 30076
(770) 500-5455
GA
Proforma Brand X
Peter Bolognese
1101 E. Confederate Ave. S.E.
Atlanta, GA 30316
(404) 424-4958
GA
Proforma Turning Point Promotions
Lee & Mark Thompson
6445 Ivey Meadow Lane
Cumming, GA 30040
(770) 888-5450
GA
Proforma Atlantic Gifts
Michael Schnell
1100 Grace Hill Drive
Roswell, GA 30075
(770) 993-5015
GA
Proforma Crown Promotions
Maria Stewart
113 River Forest Drive
Forsyth, GA 31029
(404) 918-1625
GA
Proforma The Art of Promotion
Shelley Pritzkau
1088 E. Confederate Avenue SE
Atlanta, GA 30316
(404) 309-3358
HI
Proforma Favorable Impressions
Milt & LaVerne Yamada
1987 Iwi Way
Honolulu, HI 96816
(808) 576-3442
IA
Proforma Quality Resources
John Carpenter
23669 Highway 92
Columbus, IA 52738
(319) 728-3111
IA
Proforma Xtreme
Jeff Walters
1926 W. 3rd. Street
Cedar Falls, IA 50613
(319) 277-3738
IA
Proforma Hill & Hill Graphics
Jeff Hill
1561 Berryfield Court
Bettendorf, IA 52722
(563) 349-5243
IA
Proforma Streamline
Joshua Mason
1200 12th Street
Marion, IA 52302
(319) 929-1172
ID
Proforma Diversified
Michael & Lynette Peters
760 East King Street #101
Meridian, ID 83642
(208) 344-1117
IL
Proforma Diversified Business
Products
Clyde Burks
9449 S. Kedzie Avenue, Suite 302 Evergreen Park, IL 60805 (773) 239-3800
IL
Proforma Quality Business Services
Bonnie Roth
18582 W. Judy Drive
Gurnee, IL 60031
(847) 356-1959
IL
Proforma Business Products
Jon Short
4215 Maine Trail
Crystal Lake, IL 60012
(815) 455-6850
IL
Proforma Second Wind
Larry Kobischka
10469 Ray Drive
Roscoe, IL 61073
(815) 623-1678
IL
Proforma Customized Graphics &
Promotions
Richard Wilson
532 E. Kenilworth Lane
Schaumburg, IL 60193
(847) 985-9030
IL
Proforma Graphix
Kathy Schatz
1145 Regency Lane
Carol Stream, IL 60188
(630) 289-9012
IL
Proforma Vision Graphics
Joseph & Karen Barnes
3739 Celeste Lane
Naperville, IL 60564
(630) 922-7415
IL
Proforma Trader Graphix
Dennis Manzardo, Jr. and
Dennis Manzardo, Sr.
5470 Fairmont Road
Libertyville, IL 60048
(847) 247-0011
IL
Proforma Century Promotions
George Curran
457 Farnsworth Circle
Barrington, IL 60010
(847) 639-4259
IL
Proforma Business Graphics
Lee Cortese
117 S Cook Street, # 330
Barrington, IL 60010
(847) 550-8217
IL
Proforma Southland Printing &
Graphics
John Kearns
17416 S. Throop Street
East Hazel Crest, IL
60429
(708) 922-9202
IL
Proforma Lakewood
David Siers
42W351 Foxfield Drive
St. Charles, IL 60175
(630) 907-2844
6 of 21
EXHIBIT C
(Year End 12/31/08)
IL
Proforma Business Builders
Jeff Brooke
810 W. Pioneer Parkway
Peoria, IL 61615
(309) 692-6390
IL
Proforma Creative Impressions
Paul Arcivar & James
Kostohrys
740 Thornapple Drive, Suite 206
(877) 394-3968
David Roliardi
1605 Pickwick Lane
Dekalb, IL 60115
(815) 787-2985
Jeffrey Spencer
1444 N. Farnsworth Avenue, #207 Aurora, IL 60505
(630) 236-6212
IL
IL
Proforma Graphic Communication
Solutions
Proforma Corporate Product
Solutions
IL
Proforma Grand Ads
Jeff Bush
108 E. Commercial Street, Suite C Catlin, IL 61817
(217) 427-5422
IL
Proforma DLC & Associates
Donald Cunningham
1124 Oakbrook Ave.
Chatham, IL 62629
(888) 352-8809
IL
Proforma Total Solutions
Bob Raudys
13735 Kickapoo Trail
Homer Glen, IL 60491
(708) 301-4128
IL
Proforma Printed Promotions
Carl Gustafson
420 South Harvard
Villa Park, IL 60181
(630) 782-6206
IL
Proforma Elite - Solutions for
Business
Kerry Multz
33959 N. Shawnee Avenue
Gages Lake, IL 60030
(847) 281-9324
IL
Proforma Eagle Premier
Margaret Hunt
446 Burroughs Road
Columbia, IL 62236
(618) 531-4547
IL
Proforma PPG
Kathy Labbe
158 Dawson Drive
Elgin, IL 60120
(847) 429-9349
IL
Proforma ID Incentive Design
Bruce Kantor
28 E. Piper Lane
Prospect Hts., IL 60070
(847) 808-7878
IL
Proforma Elite Promotions
Lynne Gehrke
18008 S. Wolf Road - Suite 265
Orland Park, IL 60467
(708) 478-8220
IL
Proforma Lakeshore Print &
Promotions
Cristina Ruiz & Mark Adams
133 Walnut Street
Frankfort, IL 60423
(815) 534-5461
IL
Proforma Premiums
Sue Franzen
520 Kingsway Drive
Aurora, IL 60506
(630) 844-3147
IL
Proforma House
Beverly Padratzik
6409 N. Tahoma
Chicago, IL 60646
(773) 467-4566
IL
Proforma Awards Print & Promotions Greg Siebert
15 Ridgefield Road
Montgomery, IL 60538
(630) 897-9848
IL
Proforma Third Coast
Bobby Mitchell
100 N. LaSalle Street, #1910
Chicago, IL 60602
(312) 726-4163
IL
Proforma Synergy Graphics
Rosemary & Kurt Wuckert
36W665 Oak Hill Drive
Dundee, IL 60118
(847) 426-6684
IL
Proforma Commercial Print Group
Kevin Springer
4820 Fesseneva Lane
(630) 460-3492
IL
Proforma McLaughlin Marketing
Concepts
John McLaughlin
303 Larch Drive
Olney, IL 62450
(618) 302-7989
IL
Proforma ProMediAspire
Richard Mitchell
101 W. Illinois Avenue
Morris, IL 60450
(815) 942-0773
IL
Proforma Eagle Printing
John & Laura O'Melia
2957 12th Avenue
Moline, IL 61265
(309) 762-0771
IL
Proforma Innovative Creations
Lisa & Sandi Bye
234 E. Harrison Street
Villa Park, IL 60181
(630) 849-1447
IL
Proforma AAA to ZZZ Signs &
Promotions
Rocco DiDonna
924 Academy Lane
West Chicago, IL 60185
(630) 205-7446
IL
Proforma North Shore Marketing
Barbara Flanagin
1217 Candlewood Hill Road
Northbrook, IL 60062
(847) 800-6973
IL
Proforma Bliss Branding Solutions
Mark Binder
144 Bright Ridge Drive
Schaumburg, IL 60194
(312) 388-7797
IL
Proforma Metoyer & Associates
Ed Metoyer
1 S. Lakewood Court
South Elgin, IL 60177
(847) 707-1139
IN
Proforma Enterprises
Jeff Jellison
14574 Faucet Lane
Fortville, IN 46040
(317) 485-8517
IN
Proforma Premier Printing
Al & Lynn Elskus
10252 Eastwind Court
Indianapolis, IN 46256
(317) 842-9181
IN
Proforma Pace Forms & Graphics
Richard Gerard
725 East Water Street
Hartford City, IN 47348
(765) 348-2615
IN
Proforma One Source Solutions
Janet Womack
10450 Whippoorwill Court
Granger, IN 46530
(574) 675-9220
IN
Proforma
Gary & Pat Thompson
6142 St.Joe Center Road #107
Fort Wayne, IN 46835
(260) 486-2016
7 of 21
EXHIBIT C
(Year End 12/31/08)
IN
Proforma Multi Source
Margaret & Paul Del Re
8524 Glen Scott Lane
(317) 826-8720
IN
Proforma Marketing Technologies
Michael J. Smith
51124 Broken Wood Court
Granger, IN 46530
(317) 348-6490
IN
Proforma Data & Marketing Services
Michael Wheeler
13271 Adams Road
Granger, IN 46530
(574) 277-1375
IN
Proforma Corporate Solutions
Jon Nielsen
51950 Chicory Lane
Granger, IN 46530
(574) 277-3748
IN
Proforma Total Source
Jeff Wells
8521 Allsop Place
Evansville, IN 47725
(812) 437-0888
IN
Proforma Graphic Concepts Group
Michael & Patti Berger
10021 Shadow Woods Drive
Granger, IN 46530
(574) 675-0568
IN
Proforma Innovative Ideas
Mindy Porter, Steve Porter &
Eric Marasco
5172 E. 65th St. Suite 105
(317) 823-9004
IN
Proforma Promotional Marketing
Concepts
Mike Robinson
3256 Waterside Court
Greenwood, IN 46143
(317) 422-8757
IN
Proforma SourceLink
Diana Siela
8312 Norwood Court
Ft. Wayne, IN 46835
(260) 486-2222
IN
Proforma Commercial Print &
Marketing
Phillip Cleaver
10214 Chestnut Plaza Drive, #141 Fort Wayne, IN 46814
(260) 616-1010
IN
Proforma Mark Graphics
Marc Petersen & Jon Nielson
740 E. 6th Street
Mishawaka, IN 46544
(574) 250-0758
IN
Proforma double dog dare
Wanda Zoeller & Susan
Herndon
3204 Creekwood Court
New Albany, IN 47150
(812) 944-8322
KS
Proforma ePromo & Print
John Schulz
3618 N. 112th Street
Kansas City, KS 66109
(913) 721-2595
KS
Proforma Marketing & Promotional
Solutions
Keith Steiniger & Loras Heck
8218 Nieman Road
Lenexa, KS 66214
(913) 685-9098
KS
Proforma Promotionally Yours
Jeff Levy & Jeff Bowles
Overland Park, KS 66221 (913) 814-7802
KS
Proforma Forms & Promotions
Roger Wood
701 Thomas Street
Pittsburg, KS 66762
KS
Proforma Advanced Marketing
Solutions
Alyson & Jason Denton
9814 W. 100th Terrace
Overland Park, KS 66212 (913) 307-0029
KS
Proforma IMA
Danny Seay & Stephen
Robertson
Lenexa, KS 66215
KS
Proforma On Target Marketing
Pamela Feingold
5421 West 104th Street
Overland Park, KS 66207 (913) 381-3388
KY
Proforma Innovative Solutions Group John Black
18 North Fort Thomas Ave., #206B Fort Thomas, KY 41075
(859) 441-2530
KY
Proforma Printing & Marketing
Solutions
Darrell Florence
4324 Clemens Drive
Lexington, KY 40514
(859) 389-7229
KY
Proforma Systems & Solutions
Ted Berg
702 Davenport Drive
Louisville, KY 40245
(502) 254-5373
KY
Proforma Multi-Marketing Services
Dan Fitzgerald
3503 River Bluff Road
Prospect, KY 40059
(502) 228-9869
KY
Proforma Cornerstone Concepts
Jeri & Thomas Marsh
9131 Twin Bridges Road
Alvaton, KY 42122
(270) 781-1324
KY
Proforma Rich Solutions
Ann & Mark Rich
291 N. Hubbards Lane
Louisville, KY 40207
(502) 614-6176
KY
Proforma N & M Communications
Nicole Knasel
357 Taylor Avenue
Bellevue, KY 41073
(859) 291-1350
KY
Proforma Printech
Michael Mills
4928 Buckhorn Court
Burlington, KY 41005
(513) 884-9551
LA
Proforma KRL Color
Kirk Lavigne
1822 Capt Shreve
Shreveport, LA 71105
(318) 868-9200
LA
Proforma Printing Forms & Labels
Brooks Roy
11930 Industriplex Blvd, Suite 16
Baton Rouge, LA 70809
(225) 752-8488
LA
Proforma Key Solutions
Yvette Hymel & Rachel
Zabala
5700 Citrus Boulevard, Suite D
New Orleans, LA 70123
(504) 305-6404
LA
Proforma Promotional Marketing
Consultants
Michelle Vedros
404 Cypress Street
Raceland, LA 70394
(985) 665-0105
MA
Proforma Platinum Group
George King
27 Gretchen Way
Raynham, MA 02767
(508) 821-3826
MA
Proforma Marketing Services
George Heipler
109 Walnut Street
Shrewsbury, MA 01545
(508) 845-9098
8 of 21
(620) 231-1375
(913) 599-5995
EXHIBIT C
(Year End 12/31/08)
MA
Proforma Flag & Banner
David Granoff & Paul Doherty 50 Tower Road
Newton Upper Falls, MA
02464
MA
Proforma Ark Graphics
Robert Boland
35 Eastview Terrace
Marston Mills, MA 02648 (508) 428-3455
MA
Proforma Printing and Promotion
Barry & Mark Resnick
71 Commercial Street, Suite 304
Boston, MA 02109
(617) 464-1120
MA
Proforma Ink
Kevin & Mary Lou O'Connor
11 Huntingdon Road
Lynnfield, MA 01940
(781) 334-2442
MA
Proforma Business Services
Edward J. Bushnell
12 Delwood Road
Chelmsford, MA 01824
(978) 256-9414
MA
Proforma Marketing Impressions
Michael Champoux & Andrew
10 Gloria Way
Tucker
Wilmington, MA 01887
(978) 447-1100
MA
Proforma MatchPrint & Promotions
Laurie Young
27 Manor Lane
Oxford, MA 01540
(508) 987-0072
MA
Proforma InPrint Management
Kevin Montecalvo
5 Perry Way, Suite 16
Newburyport, MA 01950
(978) 463-9200
Pete Pribulick
7 Park Street, Suite 213
Attleboro, MA 02703
(508) 226-0019
Ellen Zeltner
77 Autumn Street
Agawam, MA 01001
(413) 786-9077
5 Bernardo Drive
S. Attleboro, MA 02703
(508) 809-9796
MA
MA
Proforma Customized Business
Products
Proforma Print & Promotional
Solutions
(617) 964-5533
MA
Proforma Spectrum Incentives
Julie Marcus
MA
Proforma SAI
Charles Pizzelli & Frank Keljik 5 Main Street
Franklin, MA 02038
(508) 528-6550
MA
Proforma Concepts & Solutions
Jed Cantor
2 Cedar Street
Woburn, MA 01801
(781) 937-0852
MA
Proforma Creative Precision
Cristine Nigro & Reynold
LeVau
132 Central Street, D18
Foxboro, MA 02035
(508) 543-8668
MA
Proforma Imaging Products
George Parkhurst
4 Blue Heron Lane
Manchester, MA 01944
(978) 526-4007
MA
Proforma Management Solutions
Kevin Lyons
30 Parker Street
Westwood, MA 02090
(781) 326-1350
MA
Proforma At Your Service
David King
1 Mountain Laurel Lane
Lancaster, MA 01523
(978) 800-1540
MA
Proforma The Right Impression
Joyce Corcoran
53 Lancaster Road
North Andover, MA 01845 (978) 258-6544
MA
Proforma Infinite Printing Solutions
Scot Murphy
65 Spear Street
Melrose, MA 02176
(781) 405-8662
MA
Proforma Packaging, Printing &
Promotions
Brian O'Leary
30 Mass Avenue
Norfolk, MA 02056
(508) 528-8065
MA
Proforma Print Design
Thomas Moore
95 Elm Street
Georgetown, MA 01833
(978) 769-5291
MA
Proforma Champion Marketing
Andrew Bernstein
48 Church Street
Mansfield, MA 02048
(617) 933-9939
MA
Proforma B2B Solutions
William Brooks
10 Rolling Meadow Lane
Westford, MA 01886
(800) 342-1105
MD
Proforma Capital Graphics
John & Maria Feuz
4810 Marianne Drive
MT.Airy, MD 21771
(301) 865-1263
MD
Proforma Metro Printing & Promotion Mark Patterson
2976 Penwick Lane #303
Dunkirk, MD 20754
(301) 855-0534
(410) 535-6464
MD
Proforma ABC
Charles Reese
113 Windcliff Road
Prince Frederick, MD
20678
MD
Proforma Handprint Solutions
Reid Hand
322 Main Street
Reisterstown, MD 20136
(410) 833-5532
MD
Proforma Precision Printing Systems
Todd Patrick
11 Freedom Court
Baltimore, MD 21220
(410) 335-7080
MD
Proforma Stewart & Associates
Bruce Copeland
7617 #A Weatherworn Way
Columbia, MD 21046
(410) 312-5050
MD
Proforma DocuPrint Services
Timothy Michienzi
2106 Crossgate Drive
Croston, MD 21114
(301) 858-0704
MD
Proforma JMD Graphics
Jack Dike
310 Buckland Court
Severna Park, MD 21146 (410) 315-7640
MD
Proforma Stevenson & Associates
Mark Stevenson
6 Meadowcroft Court
Montgomer Village, MD
20886
(301) 527-8503
MD
Proforma 100
Jay Embree
804 Ruxshire Drive
Arnold, MD 21012
(410) 757-6313
9 of 21
EXHIBIT C
(Year End 12/31/08)
MD
Proforma The Idea Man
Will Long
4716 Vicky Road
Nottingham, MD 21236
(410) 931-8888
MD
Proforma Global Printing & Design
Holly & Ricardo Ambrose
2 Winters Lane
Baltimore, MD 21228
(410) 788-7500
MD
Proforma Product Promotions
Midge Saint, Katie Interdonato
207 Upshire Circle
& Julie Pulte
Gaithersburg, MD 20878
(301) 258-9729
MD
Proforma One Stop Printing Solutions Margaret Rankin
100 Roesler Road
Glen Burnie, MD 21060
(410) 768-8757
MD
Proforma Happy
Marsha Carmack
6420 Mercantile Drive East, #210
Frederick, MD 21703
(301) 514-8238
MD
Proforma Promolink
David Powell
8975 Henkels Lane, #700
Annapolis Junction, MD
20701
(240) 841-2203
ME
Proforma Print Systems
Shirley Lake
298 Main Street, 3rd Floor
Yarmouth, ME 04096
(207) 767-1679
MI
Proforma Printing Concepts
Sheryl Kendrick
1475 West Delta Drive
Saginaw, MI 48638
(989) 792-1508
MI
Proforma Printing Advantage
Chuck Collini
9571 Edgewood Avenue
Traverse City, MI 49684
(231) 941-7390
MI
Proforma LSSC
Kevin Larkin
2611 Woodbourne Drive
Waterford, MI 48329
(248) 736-8203
MI
Proforma Gust
Bill Gust
1200 N Madison Ave Ste B
Bay City, MI 48708
(989) 892-4878
MI
Proforma JM & P
Mark & Paula Fleming
3820 Victoria Drive
Troy, MI 48083
(248) 528-9239
MI
Proforma Marketing Elements
Tim Rutgers
1975 Leisure Blvd.
Holland, MI 49424
(616) 786-4452
MI
Proforma Bluegum Group
Paul Booker
1243 Breckenridge Way
Portage, MI 49002
(269) 324-2972
MI
Proforma McNay Burton
Eleanor Burton
21805 Oak Drive
Pierson, MI 49399
(616) 866-9526
MI
Proforma Innovative Image Solutions Laura Petcoff
607 Windsor Run
Bloomfield Hills, MI 48304 (248) 758-0530
MI
Proforma Platinum Printing and
Promotions
Suzanne Ashcraft
143 West Tacoma
Clawson, MI 48017
MI
Proforma Image & Design
Carolyn Schena
1790 Squirrel Valley Drive
Bloomfield Hills, MI 48304 (248) 997-8515
MI
Proforma Combined Products
Charles Ely
760 W. Woodmeade Ct. SE
Ada, MI 49301
(616) 285-9460
MI
Proforma Centricity
Jim Richardson
9287 Arrowhead Drive E
Scotts, MI 49088
(800) 806-6256
MI
Proforma Premier Marketing
Mary Ciraci
2448 Lanergan Drive
Troy, MI 48084
(248) 822-5555
MI
Proforma Amplified
Jim Hanika & Anita Shina
21 Kercheval, #234
Grosse Pte Farms, MI
48236
(313) 821-4143
MI
Proforma Infinite Marketing Solutions David Szidik
2471 Forest Meadows Court, SE
Grand Rapids, MI 49546
(616) 974-0350
MI
Proforma Combined Business
Services
Richard Sandell
16118 Silvershore Drive
Fenton, MI 48430
(866) 433-9029
MN
Proforma Omnisource
Jim Anderson
4580 Scott Trail, Suite 202
Eagan, MN 55122
(651) 688-2030
MN
Proforma Millennium Graphics
Jim Yurick
3837 Westin Avenue
St. Paul, MN 55125
(651) 714-1550
MN
Proforma Print Dynamix
Barb Danielson
677 Vista Ridge Lane
Shakopee, MN 55379
(952) 233-5073
MN
Proforma A & M Advertising
Specialties
Andrew & Michael Aho
4315 Cottage Park Road
White Bear Lake, MN
55110
(651) 762-2725
MN
Proforma Marketing Incentives
Mark Ekman
7753 Beech Street NE, Suite 100
Fridley, MN 55432
(763) 502-7664
MN
Proforma QSI
Anna & Tim Hasty
3464 Owasso Street
St. Paul, MN 55126
(651) 484-9533
MN
Proforma NorthStar Marketing
Thomas Stumpf
541 Hawthorne Woods Drive
Eagan, MN 55123
(651) 688-7424
MO
Proforma M & M OneSource
Marilyn & Michael Bryant
656 Shadowridge Drive
Ballwin, MO 63011
(636) 458-1435
MO
Proforma Business Performance
Solutions
David A. Kasprzyk
148 Bright Gem Drive
St. Charles, MO 63304
(636) 300-0555
10 of 21
(248) 341-3814
EXHIBIT C
(Year End 12/31/08)
MO
Proforma Resource One
Richard Bright
17150 Surrey View Drive
Chesterfield, MO 63005
(636) 532-4706
MO
Proforma RGP Creative
Grant Peters
680 Crown Industrial Court, Unit K Chesterfield, MO 63005
(314) 662-2878
MO
Proforma Blue Moon Solutions
Scott Hacker
2233 S Luster Avenue
Springfield, MO 65804
(417) 423-7284
MS
Proforma Media Group
David & Sandy Rickman
3101 N Shiloh Road
Corinth, MS 38834
(888) 266-4881
MT
Proforma InfoSystems
Bruce Cole and Jean GilbertCole
3701 Trakker Trail, Suite 2A/1EW
Bozeman, MT 59718
(406) 586-3440
NC
Proforma PrintPros
Marti Skiba
5031 Furman Place
Charlotte, NC 28220
(704) 529-0889
NC
Proforma Gilpak Enterprises
Todd Gilliam
1811 Old Caroleen Road
Forest City, NC 28043
(864) 621-3232
NC
Proforma Triangle Print Services
Dallas & Lynn King
5716 Dutch Creek Drive
Raleigh, NC 27606
(919) 303-0303
NC
Proforma Office Systems
Michael Aylmore
3827 Chandworth Road
Charlotte, NC 28210
(704) 777-4765
NC
Proforma Business & Advertising
Products
Bill Cleveland
1556-A Union Road
Gastonia, NC 28054
(704) 869-0340
NC
Proforma Coastal Printed Products
Leland Bujalski
3616 Amber Dr.
Wilmington, NC 28409
(910) 452-0660
NC
Proforma Promographix
Don Titka & Kevin Dovel
220 Muirfield Lane
Clayton, NC 27527
(919) 846-1379
NC
Proforma Maverick Marketing
Toni S. Moore
1589 Skeet Club Road, Suite 102
High Point, NC 27265
(336) 882-2834
NC
Proforma Classic Print Solutions
Mark Williams
2628 Tanbridge Road
Charlotte, NC 28226
(704) 365-0882
NC
Proforma WesleyCo
Wesley Buschow
10605 Still Creek Court
Raleigh, NC 27614
(919) 676-7944
NC
Proforma Print Source
Michael Baucom
1408 Christian Ave Suite 33
Durham, NC 27705
(919) 383-2070
NC
Proforma Piedmont Business
Graphics
Allen Wright
1484 Low Bridge Road
Liberty, NC 27298
(336) 824-4356
NC
Proforma Atchley & Associates
Ron Atchley
546 Wallace Road
Ellenboro, NC 28040
(828) 453-9946
NC
Proforma Prime Image
Patrick McDonald
7702 Morrell Lane
Durham, NC 27713
(919) 361-8808
NC
Proforma Whitecap Promotions
Clif Ferrell
7924 Banyan Trail
(910) 338-4216
NC
Proforma 20.20 id
Barbara White
105 Jones Creek Place
Chapel Hill, NC 27516
(919) 370-4208
NC
Proforma Cardinal Promotions
Haynes Willson
607 Runnymede Road
Raleigh, NC 27607
(919) 327-4657
NC
Proforma Triad Marketing Solutions
Mark Helms
6212 Reata Drive
Summerfield, NC 27358
(336) 298-3821
NC
Proforma Integrated Marketing
Concepts
Doug Hobbs & Mark Helms
1609 Crestgate Drive
Waxhaw, NC 28173
(336) 298-3821
NC
Proforma ProfitLink
Julie Schoonover
330 Longbridge Drive
Matthews, NC 28105
(704) 604-9352
NC
Proforma Heberer & Associates
Jack Heberer
8716 Wellsley Way
Raleigh, NC 27613
(919) 848-9816
NC
Proforma Complete Business
Solutions
Narendra Singh
109 Scotlow Way
Morrisville, NC 27560
(919) 601-2438
NC
Proforma Premier Business Solutions Kathy & Wayne Richardson
617 N. 23rd Street
(910) 763-9154
NC
Proforma Paradigm Solutions
Scott Sammons
1213 Culbreth Drive
(910) 392-2611
NC
Proforma Identity Pros
John Keith
11610 Chestnut Hill Drive
Matthews, NC 28105
(704) 845-8373
NC
Proforma Total Print Solutions
Cheryl & Michael Prillaman
2376 Hickswood Road, Suite 102
High Point, NC 27265
(336) 841-5292
NE
Proforma Identity Marketing Group
Mark McCormack
350 N 76th Street
Omaha, NE 68114
(402) 884-7190
NE
Proforma Print and Promotional
Images
Tom Gourlay
5901 S. 58th Street, Suite D
Lincoln, NE 68516
(402) 421-2333
11 of 21
EXHIBIT C
(Year End 12/31/08)
NE
Proforma PSPI
Mary Lemke
3801 S. 191st Street
Omaha, NE 68130
(402) 934-8651
NE
Proforma Business World
Brenda and Mike Schmidt
634 West Second Street
Hastings, NE 68901
(402) 463-9840
NH
Proforma Unlimited
Bill & Janet Cohen
22 Hanover Street, Suite 2
Lebanon, NH 03766
(603) 448-6939
NH
Proforma Prevost & Associates
Stephen Prevost
1 South Browning Court
Pembroke, NH 03275
(866) 233-3809
NH
Proforma Just Ask Print and
Promotions
Jayne Underwood
34 Folly Mill Road
Seabrook, NH 03874
(978) 463-0619
NH
Proforma Piper Printing
Craig & Miami Shufelt
102 E. Bow Street
Franklin, NH 03235
(603) 934-5055
NJ
Proforma Connexions
Joe Caravello
57 Livingston Drive
Belle Mead, NJ 08502
(908) 359-7414
NJ
Proforma Business Resources
Carl Mendenhall
2 Woods Edge Court
Medford, NJ 08055
(609) 654-5820
NJ
Proforma PrintGraphics
Paul Vento
8 Fairfield Crescent
West Caldwell, NJ 07006 (973) 882-1622
NJ
Proforma AYR Graphics & Printing
Carl & John Gamba
320 Chestnut Street
Roselle Park, NJ 07204
(908) 241-8118
NJ
Proforma Industries
Kirk & Nancy Lind
1909 Fairfax Avenue
Cherry Hill, NJ 08003
(856) 751-0500
NJ
Proforma RGK Marketing Impressions Robert G. Koeppl
2517 Route 35, Building C, Suite
103
Manasquan, NJ 08736
(732) 223-7333
NJ
Proforma WTB Enterprises
Kathleen & Timothy Black
164 Sunrise Parkway
Mountainside, NJ 07092
(908) 301-9789
NJ
Proforma Unlimited Resource
David Nettles & Susan
Barosko
38 Hart Avenue
Hopewell, NJ 08525
(609) 466-0807
NJ
Proforma ABF Direct
Susan Freiberg
2 Regulus Drive Suite C
Turnersville, NJ 08012
(856) 256-1900
NJ
Proforma Eldon Associates
David & James Eldon
33 Kings Road
Madison, NJ 07940
(866) 864-5718
NJ
Proforma Spectrum Graphics
Unlimited
Jay Vento & Paul Vento
8 Fairfield Crescent
West Caldwell, NJ 07006 (973) 882-8666
NJ
Proforma Creative Services
Rich Bradley
2 Foxton Drive
Atco, NJ 08004
NJ
Proforma Alliance Printing &
Promotional Services
Joseph DiCesare
50 Division Avenue, Bldg. 3, Suite
Millington, NJ 07946
63
(908) 542-1070
NJ
Proforma Target Promotions
Michael Bryce
706 Heritage Court
Neptune, NJ 07753
(732) 922-9830
NJ
Proforma Specialty Sales
Jim Judd & Bill Ferry
2705 Chestnut Hill Drive
Cinnaminson, NJ 08077
(856) 829-9522
NJ
Proforma Solutions & Ideas
Tom Ikuss
57 Hidden Lake Drive
North Brunswick, NJ
08902
(732) 422-8900
NJ
Proforma Corporate Concepts
Brendan Quinn
30 West Main Street
Maple Shade, NJ 08052
(856) 321-1400
NJ
Proforma Covedata
Al Marien
11 West Passaic Street, Suite 5
Rochelle Park, NJ 07662 (201) 226-0607
NJ
Proforma R & E Graphics
Andy & Julie Fornaro
3 Catawba Lane
Annandale, NJ 08801
(908) 521-0396
NJ
Proforma Corporate Advantage
Craig & Mary Anne Forshey
41 Mecray Lane
Maple Shade, NJ 08052
(856) 905-4505
NJ
Proforma MaKay Printing and
Promotions
Victor Mogell
1000 White Horse Road, Suite 910 Voorhees, NJ 08043
(856) 346-9700
NJ
Proforma Graphic Innovations
David Cimbol
184 S. Livingston Avenue, Suite 9Livingston, NJ 07039
350
(973) 486-8308
NJ
Proforma Garden State Graphics
Dan Stenchever
18 Kimberly Way
River Edge, NJ 07661
(201) 265-0620
NJ
Proforma MOSA Enterprises
John Siracusa
593 Ramapo Valley Road
Oakland, NJ 07436
(201) 746-6194
NJ
Proforma ROI Promotions
Lisa & Rich Mistkowski
51 West Main Street
Chester, NJ 07930
(877) 794-9510
NJ
Proforma DN Associates
Norman Agran
245 Throwbridge Drive
Scotch Plains, NJ 07076
(908) 660-4795
NJ
Proforma Anchor Ink Marketing Group Richard Ciecwisz
183 N. Ensign Drive
Little Egg Harbor, NJ
08087
(609) 296-6100
12 of 21
(856) 753-0200
EXHIBIT C
(Year End 12/31/08)
NM
Proforma One Source Imaging
Jeff & Mary Gregg
3 Camino Del Sol
Corrales, NM 87048
(505) 232-4800
NV
Proforma GPS Global Promotional
Sourcing
Steve Raucher & Brad Hafen
4425 W. Sunset Rd.
Las Vegas, NV 89118
(702) 938-2250
NV
Proforma imPRINTS
Rich White
301 Lingering Lane
Henderson, NV 89012
(702) 836-9700
NV
Proforma Plus
Linda Baker
10411 Bentley Oaks Avenue
Las Vegas, NV 89135
(702) 453-8693
NV
Proforma Diamond Business
Solutions
Scott Diamond
684 Baffin Island Road
Henderson, NV 89011
(702) 445-7076
NY
Proforma SmartByz
Mike Accardi
11 Elizabeth Street
Chappaqua, NY 10514
(914) 238-9613
NY
Proforma Associates
John DiBello
421 South Warren Street, #203
Syracuse, NY 13202
(315) 448-1000
NY
Proforma Think Ink
Russell Howarth
11 Breezeway Lane
Goshen, NY 10924
(845) 294-5686
NY
Proforma Executive Business
Services
Charles Janosick
9 Hope Place
St. James, NY 11780
(631) 862-7555
NY
Proforma DRSolutions
Dan & Trisha Stolfi
254 Village Green Drive
Pt. Jefferson Station, NY
11776
(631) 209-1086
NY
Proforma Products
Tom Peck
215 Washington Street, Ste 217
Watertown, NY 13601
(315) 788-1911
NY
Proforma Diversified Printing
Solutions
Rick LoPresti
127 Dexter Terrace
Tonawanda, NY 14150
(716) 743-9166
NY
Proforma Quest Graphics
Ralph Daino
160 Rome Street
Farmingdale, NY 11735
(631) 501-6955
NY
Proforma DocuCom Services
Mark A. Eller
46 Lanoche Court
Williamsville, NY 14221
(716) 568-2100
NY
Proforma A Trusted Name
Jeff Gerdy
35 Franklin Street
Westfield, NY 14787
(716) 326-7400
NY
Proforma Graphic & Promotional
Solutions
William A. Boesch
50 Park Lane, Suite 102
Highland, NY 12528
(845) 883-0888
NY
Proforma Targeted Solutions
Jim Egan
1254 Surrey Run
East Aurora, NY 14052
(716) 652-9898
NY
Proforma IF Print Services
David & Wilfred Kolko
20 Regency Oaks Boulevard
Rochester, NY 14624
(585) 594-0096
NY
Proforma Business & Promotional
Products
Russell Brooks
422 Sunlit Terrace
Utica, NY 13502
(315) 724-3676
NY
Proforma Strategic Marketing
Damian Giordano
215 Burlington Drive
Manlius, NY 13104
(315) 263-8180
NY
Proforma Chickprint
Michele Brenner & Diane
LaRaja
150th East 44th Street
New York, NY 10017
(212) 682-9811
NY
Proforma Corporate Systems
Tracy Kaye
39 S. Main Street
New City, NY 10956
(845) 634-0500
NY
Proforma Total Business
Julie Waldron
80 Viscount Drive
(716) 689-0344
NY
Proforma Lee's Promotional Products Joseph Guidarelli
1650 Crane Street
Schenectady, NY 12303
(518) 355-1098
NY
Proforma 123 Marketing Solutions
Diane Urmston
3 Daisy Lane
Montgomery, NY 12549
(845) 778-8696
NY
Proforma Business Impressions
Frank Lombardo
7954 Transit Road #343
(716) 408-2700
NY
Proforma M3 Promotions
Ross Levine
505 8th Avenue, Suite 704
New York, NY 10018
(212) 366-5978
NY
Proforma Image Pro Printing
Sandra-leah Barbara
260 North Road
Poughkeepsie, NY 12601 (845) 471-4838
NY
Proforma Brand Yourself
Carlos Canadilla
21024 Emilie Lane
Pleasant Valley, NY
12569
(815) 629-5564
OH
Proforma Business Solutions
Robert & Patricia Brookens
1420 Finch Lane
Milford, OH 45150
(513) 575-9955
OH
Proforma T&L Forms
Larry & Tammie Hollar
139 East Norman Avenue
Dayton, OH 45405
(937) 275-9222
OH
Proforma Maloney & Associates
Brian Maloney
8800 E. Pleasant Valley
Independence, OH 44131 (216) 520-8400
OH
Proforma Steinbacher & Associates
Larry Steinbacher
23 Public Square, Suite 11
Medina, OH 44256
13 of 21
(330) 241-5370
EXHIBIT C
(Year End 12/31/08)
OH
Proforma Sixcom
David Chase
8500 Station Street, Suite 235
Mentor, OH 44060
(440) 974-1147
OH
Proforma Twincorp
Dennis Miers
7444 Foghorn Lane
Northfield Center, OH
44067
(330) 468-0798
OH
Proforma Eclectic Technical Systems Brett Smiley & Burt Keiper
395 Springside Drive
Akron, OH 44333
(330) 867-4799
OH
Proforma Systems Advantage
Bob McPheron
1207 Findlay Road
Lima, OH 45801
(419) 224-8747
OH
Proforma Graphic Services
Bill Hageman, Jeff Skinner &
Jim Shindler
6341 Nicholas Drive
Columbus, OH 43235
(614) 760-5800
OH
Proforma Graphics Group
Mike McManis
5491 Sterling Lakes Circle, Suite
207
Mason, OH 45040
(513) 770-0808
OH
Proforma ASAP
Patrick Lenehan
18615 Detroit Road, #200
Lakewood, OH 44107
(216) 521-0199
OH
Proforma Park Place
Bill Byrne
8800 E. Pleasant Valley Rd., Suite
Cleveland, OH 44131
3126
(216) 520-8400
OH
Proforma Allprint Source
Joe & Dolores Bobo
1558 Coshocton Ave. #8-113
Mt. Vernon, OH 43050
(740) 392-9487
OH
Proforma Mader & Associates
Dave Mader
8495 Bradfords Gate
Olmsted Falls, OH 44138 (216) 299-1809
OH
Proforma CNR Marketing
Ron & Connie Muzechuk
8529 N. Dixie Drive, Suite 325
Dayton, OH 45414
(937) 898-8890
OH
Proforma TCL
Lori Luke
6345 Nicholas Drive
Columbus, OH 43235
(614) 766-1313
OH
Proforma
Al Miano
3029 Silverview Drive
Silver Lake, OH 44224
(330) 688-1424
OH
Proforma Advanced Solutions
Paul J. Hrich
7620 S.O.M. Center Road
Solon, OH 44139
(440) 349-2950
OH
Proforma Specialty Printing
Colleen & Martin Sweeney
1551 Woodhurst
Toledo, OH 43614
(419) 380-5000
OH
Proforma Solutions for Business
Andrew Smith
19668 Progress Drive
Strongsville, OH 44149
(440) 268-7993
OH
Proforma Packaging & Print Solutions Bill M. Lanphier
9117 Brehm Road
Cincinnati, OH 45252
(513) 741-9700
OH
Proforma Target Impressions
David Myklebust
231 Woodedge Circle W.
Powell, OH 43065
(614) 880-0315
OH
Proforma Creative Communications
Glenn Heffner
7200 Bridlewood Drive
Concord, OH 44077
(440) 357-8201
OH
Proforma Faughner Enterprises
Todd Faughner
600 Blackberry Circle
Brunswick Hills, OH
44212
(330) 225-6717
OH
Proforma Graphic Impressions 2
Dennis & Kimberly Gongwer
3966-G Brown Park Drive
Hilliard, OH 43026
(614) 529-0977
OH
Proforma PrintPerfect
John & Carole Satterfield
333 N Portage Path, #37
Akron, OH 44303
(866) 635-0514
OH
Proforma Identity
Liz Haley
9033 Academy View Court
Dayton, OH 45458
(937) 885-4656
OH
Proforma Print & Imaging
Jim Pfaff
6345 Nicholas Drive
Columbus, OH 43235
(614) 766-1650
OH
Proforma Legacy
Phil Yale
27900 Sherwood
Westlake, OH 44145
(216) 520-8400
OH
Proforma PX4
Sue Fancourt
1123 Marion Road
Bucyrus, OH 44820
(419) 562-5680
OH
Proforma Joe Thomas Group
Joe Thomas
13500 Pearl Road, Ste 139-107
Cleveland, OH 44136
(440) 268-0881
OH
Proforma Funk Enterprises
Dennis & Darlene Funk
11476 Hawke Road, Suite A
Columbia Station, OH
44028
(440) 748-9100
OH
Proforma Albrecht & Co.
Fred & Suzette Albrecht
1040 TechneCenter Drive
Milford, OH 45150
(513) 576-9900
OH
Proforma Marketing & Graphics
Carl Wochele
1318 Cherokee Rose Drive
Westerville, OH 43081
(614) 890-1939
OH
Proforma Grafix
John Calardo
5560 Seville Court
Cincinnati, OH 45247
(513) 574-6353
OH
Proforma MCG
Brent Boyd & John Scocozzo
3366 Lake Vista Court
FairField Twp., OH 45011 (513) 894-5711
OH
Proforma Source One
Nick Kumar
20649 Wakefield Circle
Strongsville, OH 44149
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EXHIBIT C
(Year End 12/31/08)
OH
Proforma Custom Promotions
Angie Muhlenkamp
1620 Siegrist-Jutte Rd.
Ft. Recovery, OH 45846
(419) 942-5900
OH
Proforma Network Graphics
Robert Wilson
3060 Wheeling Road, NE
Lancaster, OH 43130
(800) 861-9427
(513) 759-4297
OH
Proforma P.R.E.S.S. Solutions
Mark Clark
5625 Hichitee Court
Liberty Township, OH
45011
OH
Proforma Solution Ventures
Gary Alshouse
31728 Commodore Court
Avon Lake, OH 44012
(440) 242-1658
OH
Proforma Local & Global
Chad Ruddle
3409 Atterbury Street
Cuyahoga Falls, OH
44221
(330) 990-2051
OH
Proforma Strategic Promotions
Julie Rafeedie Haar
905 Meeklynn Drive
Columbus, OH 43235
(614) 783-9613
OH
Proforma one2one solutions
Dave Kleindienst
932 Richmar Drive
Westlake, OH 44145
(216) 832-8300
OH
Proforma Specialized Solutions
Chip Wigton
53 North Park Street
Oberlin, OH 44074
(440) 315-7964
OH
Proforma Higher Power Solutions
Erik Simpson
2848 Aaron Drive
Medina, OH 44256
(330) 350-0624
OH
Proforma Signature Solutions
Michelle Jarus
5755 Norwood Drive
Brook Park, OH 44142
(216) 374-2468
OH
Kapco Promotions
Donna Kellogg
4900 Reed Road, #208
Columbus, OH 43220
(614) 451-9699
OH
Proforma Lamar
Kathryn McClure
12636 Mayfield Road
Chardon, OH 44024
(440) 632-9800
OH
Proforma X-Treme Marketing
Tom Gibson & James
Johnson
916 Lakewood Boulevard
Akron, OH 44314
(330) 350-2915
OH
Proforma Printing Made Easy
Michael Sollenberger
838 Apple Blossom Lane
Orrville, OH 44667
(330) 682-0865
OH
Proforma EchoPress
David Whalen
444 Avon Point Avenue
Avon Lake, OH 44012
(216) 373-7560
OH
Proforma Parkway Solutions
Stephen Gardner
1102 Myers Parkway
Ashland, OH 44805
(419) 289-8716
OH
Proforma Marketing Undefined
Jennifer Stinson
10501 Blacklick Eastern Rd., #500
Pickerington, OH 43147
#113
(614) 296-3722
1532 Bury Road
Oregon, OH 43618
(419) 697-8889
32292 Acacia Court
Avon Lake, OH 44012
(214) 432-8470
Debra Belegrin & Kathleen
Keel
Joe Chandler, Kevin Whalen
& Dotty Parrish
OH
Proforma AdChoice
OH
Proforma Classic Print & Promo
OH
Proforma e-Choice Solutions
Kate Elmquist
106 Bingham Circle
Delaware, OH 43015
(614) 746-5449
OH
Proforma Innovation Suppliers
Gail Perry
6089 Chervil Drive
West Salem, OH 44287
(330) 635-1643
OH
Proforma ESP Graphics
Elisha Rapson
2687 Slessman Drive
Plymouth, OH 44865
(419) 935-4742
OH
Proforma Cross Media Marketing
Milan Chovan
1501 Oak Bluff Road NE
Massillon, OH 44646
(330) 880-4279
OH
Proforma Advanced Print Solutions
Ken Law
14883 South Avenue
Columbiana, OH 44408
(330) 482-4375
OH
Proforma Bevilacque
Marc Bevilacque
8800 E Pleasant Valley
Cleveland, OH 44131
(216) 520-8400
OK
Proforma Faith Marketing Solutions
Rob & Sandra Morriss
714 S. Willis
Stillwater, OK 74074
(405) 533-3563
OR
Proforma All-Source
Kevin Ferrasci O'Malley
9317 SW Umiat
Tualatin, OR 97062
(503) 885-1290
OR
Proforma Spectrum Print Graphics
Bob Workman & Conrad
Marquard
6745 SW Hampton Street, Suite
101
Portland, OR 97223
(503) 924-5740
OR
Proforma Fields & Associates
Andy & Pamela Fields
26583 Coon Road
Monroe, OR 97456
(541) 762-2400
OR
Proforma Prosource Marketing Group Jeff Anderson
1380 N.E. Village Street
Fairview, OR 97024
(503) 669-7313
PA
Proforma Graphic Impressions
Martin Henry
161 Heyer Road
Nazareth, PA 18064
(610) 759-2430
PA
Proforma Bollheimer & Associates
Doug Bollheimer
3204 Glenwood Park Avenue
Erie, PA 16508
(814) 459-6100
PA
Proforma Three Rivers
Todd Veltri
218 North Grandview Drive
Pittsburg, PA 15215
(412) 784-1726
15 of 21
EXHIBIT C
(Year End 12/31/08)
PA
Proforma Group
Howard Booth
7228 Baptist Rd #324
Bethel Park, PA 15102
(412) 531-0101
PA
Proforma Creative Advantages
Valerie Backo
3333 Lamor Road
Hermitage, PA 16148
(724) 962-9660
PA
Proforma JZ Business Forms
Keith Dondey
5015 Hounds Ear Road
Tobyhanna, PA 18466
(570) 894-7784
PA
Proforma Print Marketing
Bob Manning
6 Dickinson Drive, Suite 211
Chadds Ford, PA 19317
(610) 459-4777
PA
Proforma Advanced Graphic Services Walter & JoAnn Bridges
31 Terminal Way
Pittsburgh, PA 15219
(412) 481-5600
PA
Proforma Print & Promotions
Management
Jeff Clements & Tod Herr
1015 Whitemarsh Drive
Lancaster, PA 17601
(717) 519-0600
PA
Proforma Destiny Promotions
James Gallagher
17 East Main Street
Hummelstown, PA 17036 (717) 566-1599
PA
Proforma Marketing & Printing
Bob Allan
4048 Jupiter Drive
Allison Park, PA 15101
(412) 486-4141
PA
Proforma Econo Advertising
Bonnie Swinehart
364 Tucquan Glen Road
Holtwood, PA 17532
(717) 284-2682
PA
Proforma Forsythe Marketing
Duff Forsythe
2575 Hepplewhite Drive
York, PA 17404
(717) 764-9863
PA
Proforma Design Solutions
Ann Bracalielly
410 Laurel Oak Drive
Sewickley, PA 15143
(412) 635-9130
PA
Proforma Graphic Concepts
Daniel Badolato
231 Frederick Street
Hanover, PA 17331
(717) 637-6129
PA
Proforma IdeaWorks
Brian & Edward Zebert
2066 Huber Drive
Quakertown, PA 18951
(215) 538-8065
PA
Proforma Cunningham & Associates
Jack Cunningham
4919 Township Line Road #332
Drexel Hill, PA 19026
(610) 446-1345
PA
Proforma APC
Carol Muller
620 Stone Hill Road
Denver, PA 17517
(717) 484-0884
PA
Proforma Business Services Group
Dana & Rick Groves
175 Strafford Avenue, Suite One
PMB510
Wayne, PA 19087
(610) 687-5222
PA
Proforma Impressions Ink
Lynne Baker
4902 Carlisle Pike, PMB# 296
Mechanicsburg, PA
17050
(717) 975-1996
PA
Proforma LLH Promos
Linda Hershey
1793 Ridge Road
Warriors Mark, PA 16877 (814) 632-8588
PA
Proforma NS Print
Greg Stefanowski
PO Box 262
Richboro, PA 18954
(215) 579-5614
PA
Proforma Vindee Associates
Susan Smiley
1807 W. James Street
Norristown, PA 19403
(610) 630-2114
PA
Proforma Advertising Concepts
Lynn Capestrani
207 Thornwood Drive
Butler, PA 16001
(724) 431-6631
PA
Proforma Digital House
Matt & Tony Winkler
201 South State Street
Newtown, PA 18940
(888) 898-8515
PA
Proforma PersonaOne Marketing
James Atkinson
1330 Pennsylvania Avenue
Oakmont, PA 15139
(866) 801-5671
PA
Proforma Quantum Leap Media
Sherrie Zabinski
17 N. Carolina Avenue
Reading, PA 19608
(610) 670-5373
PA
Proforma Multi-Media Marketing
James Young
141 Warwick Drive
Pittsburgh, PA 15241
(412) 595-7892
SC
Proforma AdMark
Will Quinn & Mike Bell
100 Tower Drive, Unit 16
Greenville, SC 29607
(864) 239-0050
SC
Proforma Print Solutions
Frank & Tina Tartaglia
2280 Andover Way
Mt. pleasant, SC 29466
(843) 856-8443
SC
Proforma Rhino Graphics
Steve Spence
297 Garlington Road Suite A
(864) 234-1055
SC
Proforma Metro Graphix
Tem McFaddin
201 Clamp Road
Blythewood, SC 29016
(803) 333-8174
SC
Proforma CM Design
Chris Dixon
210 West Stone Avenue
(864) 235-5561
SC
Proforma PDS Product Distribution
Specialists
Harold Poel
83 Vincent Drive
Mt. Pleasant, SC 29464
(843) 416-1164
SC
Proforma Red Shirt Marketing
Tim Collins
25 Grey Moss Road
Murrells Inlet, SC 29576
(843) 359-4197
SD
Proforma Friel J. Smith Advertising
Todd Smith
101 E 38th St
Sioux Falls, SD 57105
(605) 332-2245
16 of 21
EXHIBIT C
(Year End 12/31/08)
TN
Proforma Advanced Concepts
Sam Dixon
3819 Buckley Cove
Bartlett, TN 38133
(901) 386-0236
TN
Proforma Larry Horschel
Larry Horschel
103 Bordeaux Court
Smyrna, TN 37167
(615) 223-0711
(901) 529-1291
TN
Proforma ADvantage
Sam & Brandy Thompson
1138 N. Germantown Pkwy, #101Cordova, TN 38016
156
TN
Proforma Printed Images
Mark & Laura McGill
3628 Trousdale Drive, Suite G
Nashville, TN 37204
(615) 315-9300
TN
Proforma Business Printing
John King
373 Piney Flats Rd.
Piney Flats, TN 37686
(423) 571-9161
TN
Proforma DMS
Jerry Thompson
4728 Spottswood Avenue, #325
Memphis, TN 38117
(901) 634-5882
TN
Proforma Crescent
Larry G. Spencer
3103 Williams Street, Suite 3
Chattanooga, TN 37410
(423) 266-2114
TN
Proforma One Stop Marketing
Kurt Wulff
5744 Shelby Drive
Memphis, TN 38141
(901) 367-2966
TN
Proforma Custom Printing Services
Roger Taylor
106 Market Street East
Dyersburg, TN 38024
(731) 287-7676
TN
Proforma DHJ Promotions
Craig Roma
129 Clemson Drive
Oak Ridge, TN 37830
(865) 483-4498
TN
Proforma & More
Clint & E. Ruth Taylor
8109 West Point Drive
Talbott, TN 37877
(865) 475-4213
TN
Proforma Graphic AdVentures
Daniel Sparkes
9217 Shadymill Lane
Knoxville, TN 37922
(865) 357-5702
TN
Proforma Printelligence
Christopher Bosworth
1400 Rosa L Parks Blvd., Suite
430
Nashville, TN 37208
(615) 479-8715
TX
Proforma Horizon Total Source
Troy W. Bevill
408 West Main Street
Whitehouse, TX 75791
(903) 534-9999
TX
Proforma Myco Print Solutions
Mark Myers
7631 U.S. Highway 290 West
Austin, TX 78736
(512) 288-7677
TX
Proforma RGV
Bob & Tresa Jackson
940 Anzalduas Drive
San Benito, TX 78586
(956) 399-4446
TX
Proforma Total Print Source
Lynn Bosquez
6829 Aswan Drive
Corpus Christi, TX 78412 (361) 992-8981
TX
Proforma Infographics
Richard Wilmoth
1502 Tall Timber Drive
Tyler, TX 75703
(903) 530-6220
TX
Proforma Diversified Corporate
Solutions
Luis Ostos
3921 Steck Avenue, Suite A-111
Austin, TX 78759
(512) 452-4414
TX
Proforma Crockett Resources
Doris Crockett
711 Spring Creek Drive
Tyler, TX 75703
(903) 581-8787
TX
Proforma Five Star Printing Solutions Mary E. Smith
2221 Justin Road, Suite 119-316
Flower Mound, TX 75028 (972) 966-8101
TX
Proforma Executive Marketing
Services
Susan Brown
16211 Chris Lane
Tyler, TX 75703
(903) 839-0838
TX
Proforma A-Z Specialties
Tom & Sherry Kennedy
407 N. Cedar Ridge, Suite 140
Duncanville, TX 75116
(972) 709-0015
TX
Proforma Info Pros
Kathleen Brennan
1227 Rosenberg
Galveston, TX 77550
(409) 762-5563
TX
Proforma Design Management
George & Kimberlie Klare
7604 Woodland Dr.
Alvarado, TX 76009
(800) 738-0158
TX
Proforma Promotions Group
Kellie Miller
301 Cypress Street, Suite 530
Abilene, TX 79601
(325) 672-5559
TX
Proforma QuickSilver Promotions
Geoff & Cory Becker
13129 New Boston Bend
Austin, TX 78729
(512) 219-1231
TX
Proforma Printmotions
Jacqui Pettit, Sean Pettit &
Tammy Alexander
7639 Ashton Drive
Houston, TX 77095
(281) 345-7792
TX
Proforma Impact Promotions
Karen Sharp
10924 Grant Road, #235
Houston, TX 77070
(713) 626-9111
TX
Proforma Bishop Graphics
John Bishop
17004 Preston Springs
Houston, TX 77095
(281) 861-9341
TX
Proforma Imaging Solutions
Ted Totah
13518 Butterfly Lane
Houston, TX 77079
(713) 468-9496
TX
Proforma Innovative Concepts
Michelle Boswell
16050 Broadleaf
Texarkana, TX 75503
(903) 223-6906
TX
Proforma Promotionals and Print
Kathy Weyher
5719 Overridge Court
Arlington, TX 76017
(817) 516-8350
17 of 21
EXHIBIT C
(Year End 12/31/08)
TX
TX
Proforma Professional Business
Solutions
Proforma Destination Marketing
Concepts
Bethany Brevard
8305 Bear Creek Drive
Austin, TX 78737
(512) 535-5780
Matt Carnes
2800 Scarborough Court
Grapevine, TX 76051
(817) 722-8811
TX
Proforma Moreau Marketing
Roger Moreau
7423 Estrid Trail, Suite 202
San Antonio, TX 78244
(210) 378-4312
TX
Proforma Focused Solutions
Phil Rigney
4912 Briargrove Lane, Suite 200
Dallas, TX 75287
(800) 507-4871
TX
Proforma Custom Products
Edward Gardere
10 Turtle Rock Ct.
The Woodlands, TX
77381
(281) 362-0521
Mary Alice Griffin
410 North Broadway
China, TX 77613
(409) 752-7121
Matthew & Kasity Briley
2119 Arches Park Drive
Allen, TX 75013
(214) 477-3915
TX
TX
Proforma Promotional Products
Etcetera
Proforma Lone Star Business
Solutions
TX
Proforma Brand Proformance
Gidget & Mike Tracy
11511 Katy Freeway, Suite 120
Houston, TX 77079
(832) 448-0770
TX
Proforma SNAP Marketing
Ann Macaluso
15014 Parkville Drive
Houston, TX 77068
(281) 444-1613
TX
Proforma BrandCentric Solutions
Michael Lazzari
6 Drewdale Court
The Woodlands, TX
77382
(832) 585-0961
TX
Proforma Executive Specialty
Products
Russell & Michelle Rhone
10101 Southwest Freeway, Suite
645
Houston, TX 77074
(281) 343-7555
TX
Proforma Specialty Marketing
Pam Russell
2911 Sunset Point Lane
Carrollton, TX 75007
(469) 939-1678
TX
Proforma FGI
Joe Chandler & Kevin Whalen 2611 Westgrove Drive, Suite 104
(972) 267-9450
TX
Proforma Edge
Keith Cheatham
8128 Dogwood Lane
Irving, TX 75063
(972) 444-9706
TX
Proforma Creative Promotions
Christine Leard
522 Whispering Meadow
Magnolia, TX 77355
(877) 259-0705
TX
Proforma No Limit Promotions
Norma Westphal & Peggy
Gorden
2217 Greenview Drive
(469) 537-1181
TX
Proforma Simonetta Freelance
John Simonetta
18555 Rembrandt Terrace
Dallas, TX 75287
(469) 398-2108
Dallas, TX 75244
(888) 325-4012
TX
Proforma Divine Corporate Supply
Chris Lynn Caldara
13901 Midway Road, Suite 102278
TX
Proforma Complete Marketing
Solutions
Kenneth Marshall
17415 Spicewood Springs
Spring, TX 77379
(281) 826-0460
TX
Proforma Hanson Branding
Sonya Hanson
19903 Park Hollow
San Antonio, TX 78259
(210) 437-3061
TX
Proforma FHG Distributors
Michelle Olivo
736 Liberty Lane
Crowley, TX 76036
(817) 808-1015
TX
Proforma B.O.S.S.
LeNora Elliott
1012 Kenbob Circle
(972) 782-2382
TX
Proforma Premium Print and Promo
James King & Larry Pritchard 407 Longfellow Drive
Highland Village, TX
75077
(317) 786-7250
TX
Proforma Right Choice Branding
John Fugate, Jr.
3514 Jensen Drive
Houston, TX 77026
(281) 888-1190
TX
Proforma Uptown Image Pros
Charlotte Moncrief
14631 Timbergreen Drive
Magnolia, TX 77355
(281) 255-2525
UT
Proforma Business Communications
Paula Bell
P.O. Box 634
New Harmony, UT 84757 (435) 586-7084
UT
Proforma Peak Printing & Promotions Jeffrey Rothchild
341 South Main Street, Suite 205
Salt Lake City, UT 84111 (801) 433-5065
UT
Proforma Image Products
Dean & Kristy Bloxham
960 East 320 North
Logan, UT 84321
(435) 752-5608
UT
Proforma Pro
Chad Johnson
747 West Sagewood Circle
Grantsville, UT 84029
(866) 294-3830
UT
Proforma Advanced Business
Solutions
Fred Kroll
2086 E. Brent Lane
Salt Lake City, UT 84121 (801) 944-1199
UT
Proforma Direct Media
Chet Robinson
286 North 980 East
Lindon, UT 84042
(801) 623-0692
VA
Proforma Integrated Solutions
Heidi Cooper
11961 Grey Squirrel Lane
Reston, VA 20194
(703) 766-0903
VA
Proforma Data Forms
Steve Danko
625 Quail Drive
Bluefield, VA 24605
(276) 322-4442
18 of 21
EXHIBIT C
(Year End 12/31/08)
VA
Proforma Graphic Resources
Rob Palmer
112 Harmony Lane
VA
Proforma Graphic Info Services
Greg Rollins
1895 Billingsgate Circle, Suite 100 Richmond, VA 23238
(804) 740-7914
VA
Proforma Hampton Roads
Tom Enright
4101 Granby Street, #307
Norfolk, VA 23504
(757) 627-7468
VA
Proforma Castellana Enterprises
Chuck Castellana
5935 Woodfield Estates Drive
Alexandria, VA 22310
(703) 971-8821
VA
Proforma Blue Sky
Jim Hamlin
2243 N. Trenton Street
Arlington, VA 22207
(703) 527-3344
VA
Proforma B&C Solutions
Robert M. Bass
325 West Fulton Street
Wytheville, VA 24382
(276) 621-9909
VA
Proforma Business Creations
Larry Peters
6920 McGraw Gap Road
Hot Springs, VA 24445
(540) 962-3716
VA
Proforma Graphic Communication
Systems
Bruno Gora
2106 Stoneheather Road
Richmond, VA 23238
(804) 740-1465
VA
Proforma Premiere Creations
Shawn Chew
1540 Fleetwood Avenue
Norfolk, VA 23502
(757) 457-9714
VA
Proforma John Henry Printing
Charlene & Randy Stanaway
5111 George Washington
Memorial Highway
Yorktown, VA 23692
(757) 898-4400
VT
Proforma Vision Of Success
Alan Rubel
56 Ayers Street
Barre, VT 5641
(802) 479-0961
WA
Proforma Management Systems
Phil Dillon
400 E.Evergreen Blvd., Suite 220
Vancouver, WA 98660
(877) 809-3676
WA
Proforma Business Forms & Graphics Jim Stedman
19818 5th Avenue NW
Shoreline, WA 98177
(206) 546-6028
WA
Proforma Mountainview Printing
Brent & Mary Kok
164 Bay Lyn Drive
Lynden, WA 98264
(360) 318-0414
WA
Proforma Sweet Promotions
Patricia Grant
100 Andover Park W, Suite 150219
Tukwila, WA 98188
(210) 543-2331
WA
Proforma Creative Printing Solutions
Bob Lama
2119 N. Trumpeter Drive
Mount Vernon, WA 98273 (360) 848-7714
WA
Proforma Creative Printing &
Promotions
Warren & Pamela Ernst
2470 Speyers Road
Selah, WA 98942
(509) 698-4023
WA
Proforma Print Management
Michael Bauer
4671 242nd Avenue SE
Issaquah, WA 98029
(425) 392-9308
WA
Proforma Dynamic Marketing
Jan Richardson
3430 Pacific Avenue SE #A6
Olympia, WA 98501
(360) 486-1010
WA
Proforma Good Wood Marketing
Lori Humphrey
3839 E. 17th Street
Spokane, WA 99223
(509) 534-7477
WA
Proforma Graphic Solutions
Gary Crane
6532 148th Place S.W.
Edmonds, WA 98026
(425) 743-5406
WA
Proforma Brand Marketing
Mark Anderson
900 First Avenue South
Seattle, WA 98134
(206) 264-2844
WA
Proforma Pit Crew
Jeffrey Rudnick
11734 Lakeside Avenue N.E.
Seattle, WA 98125
(206) 529-1408
WI
Proforma Technigraphics
Mike Rusk
107 N. Bristol Street
Sun Prairie, WI 53590
(888) 775-4401
WI
Proforma Creative Image Promotions Werner Zahn
W270S2382 Shananagi Lane
Waukesha, WI 53188
(262) 542-1363
WI
Proforma Print Technologies
Scott Johnson
2730 Blackberry Trail
Menomonie, WI 54751
(715) 232-9366
WI
Proforma Bay Business Resources
Rick Minten
1615 Royal Crown Court
Green Bay, WI 54313
(920) 490-0709
WI
Proforma River Lightning Enterprises Joe Howard & Teri Reams
403 Franklin Street
Sauk City, WI 53583
(608) 644-8811
WI
Proforma Promotional Group
Thomas J. Van Rens
1925 Hawthorne Drive
Elm Grove, WI 53122
(262) 649-3150
WI
Proforma Valley Advertising
Garth & Kalyn Bugenhagen
1627 Cass Street
Green Bay, WI 54302
(920) 465-1104
WI
Proforma Originals
Dennis J. & Elizabeth Kaul
212 E Arcade Avenue
Watertown, WI 53098
(414) 559-0868
WI
Proforma IPG
Dave Thoss & Mike Cassity
9000 226th Court, Unit 4A
Salem, WI 53168
(262) 843-2331
WI
Proforma Printworks
John Fugate
115 N. Jackson, Suite B
Janesville, WI 53548
(608) 756-8623
19 of 21
Forest, VA 24551
(434) 525-7688
EXHIBIT C
(Year End 12/31/08)
WI
Proforma Idea Center
Peter Curran
1299 Dolan Drive
Sun Prairie, WI 53590
(608) 834-9228
WI
Proforma Effective Solutions
Timothy Meffert
N173 W20345 Crestview Drive
Jackson, WI 53037
(262) 677-8262
WI
Proforma Advantage Systems
Brian Bridges
4126 N. Newville
Janesville, WI 53545
(608) 754-9980
WI
Proforma abc Printers, Apparel &
Promotions
Ken Johnson
3210 Hall Avenue
Marinette, WI 54143
(715) 735-6410
FRANCHISES IN CANADA
AB
Proforma Print Partners
Ron Bunton
740-4th Avenue South
Lethbridge, ALB T1J 0N9 (403) 380-6354
AB
Proforma NBT
Kin Leong
3318 - 40A Avenue
Edmonton, ALB T6T 1P2 (780) 463-1618
AB
Proforma Superior Graphic Services
Neil & Janice Schiissler
111 132-250 Shawville Blvd. SE
Calgary, ALB T2Y 2Z7
AB
Proforma Jaguar Advertising
Toresa Bardell
#108, 4616-106A Street
Edmonton, ALB T6H 5J5 (780) 238-8514
BC
Proforma Business Forms And
Promotion
Tony DeSouza
6660 122nd Street
Surrey, BC V3W 3R9
(604) 596-6133
BC
Proforma Printing Artik & Co.
Arthur Andryeyev
Suite 200, 4170 Still Creek Drive
Burnaby, BC V5C 6C6
(604) 473-9460
MB
Proforma Print Solutions
Grant Shay
3336 Portage Avenue, Suite 607
Winnepeg, MB R3K 2H9
(204) 897-3792
MB
Proforma The Printsource
Markus Borchert
Suite 303, 35-2855 Pembina Hwy
Winnipeg, MB R3T 2H5
(204) 269-3622
MB
Proforma TouchStone
Bill Forrest
23-845 Dakota Street, #271
Winnipeg, MB R2M 5M3
(204) 254-8299
MB
Proforma Pure Promotions
Kristen Atamanchuk
109 Crawford Avenue
Winnipeg, MB R2H 1X6
(204) 221-0353
ON
Proforma Canada
Frank Capizzano
73 Galaxy Boulevard, Unit 2
Etobicoke, ONT M9W
5T4
(416) 798-4499
ON
Proforma Canada
Doug Underhill
8-400 Steeles Avenue, E, Suite
319
Brampton, ONT L6W 4T4 (905) 861-9944
6 Wendakee Drive
Stoney Creek, ONT L8E
5T1
(905) 643-7649
Grimsby, ONT L3M 1P2
(905) 562-9366
Oakville, ONT L6H 5Z9
(905) 901-0042
(905) 696-8507
ON
Proforma Premium & Print Solutions
David G. Lamb
104-155 Main Street East, Suite
208
1011 Upper Middle Road, Suite
1237
(403) 201-1286
ON
Proforma R J Print
Randy McCann
ON
Proforma GMS GM 707
Gary MacRae
ON
Proforma EVCO
Brian Cole
1087 Meyerside Drive, Unit 3
Mississauga, ONT L5T
1M5
ON
Proforma Alden Promotions
Chris Beesley
70 Denison Street
Markham, ONT L3R 2P5 (905) 944-9922
ON
Proforma Creative Advertising
Donna Ferron
2-15296 Bramalea Road
Caledon, ONT L7C 2P8
(905) 584-5983
ON
Proforma Business Forms & System
Products
Robert Jengle
115 Hillcrest Avenue, #2315
Mississauga, ONT L5B
3Y9
(905) 272-3762
ON
Proforma Creative Concepts
Hugh Maksylewich
18 Bram Court, Uhit 2
Brampton, ONT L6W 3R6 (905) 595-1562
Mississauga, ONT L5L
5M7
Mississauga, ONT L4W
2S5
ON
Proforma Canada
Barbara Sovereign
2199 Burnhamthorpe Rd. West,
Unit 66
ON
Proforma & Art Department
Bruce Van Dieten
5150 Timberlea Boulevard
ON
Proforma Adam Promotions
Ken McDowall
48 Galaxy Boulevard, Unit 408
Toronto, ONT M9W 6C8
(416) 977-0948
ON
Proforma Promotions
Ken Doucet
165-55 Northfield Drive, E
Waterloo, ONT N2K 3T6
(519) 888-0093
ON
Proforma Instant Promotions
Glen Rapoport & Patti
Spadafora
10-83 Galaxy Boulevard
Toronto, ONT M9W 5X6
(905) 738-8100
ON
Proforma Northern Lights Promotions Brad Barrow
2275 Daffodil Court
Oakville, ONT L6J 5Y2
(905) 337-2633
ON
Proforma Partners
2365 South Service Road, #7
Bowmanville, ONT L1C
3E3
(905) 953-1184
ON
Proforma Design, Print & Promotions Steve Daly
218 Silvercreek Pkwy. N., Unit 17AGuelph, ONT N1H 8E8
317
(519) 823-8958
Jim Mathews & Charles
Washer
20 of 21
(519) 758-1639
(416) 720-1387
EXHIBIT C
(Year End 12/31/08)
ON
Proforma Urban Peddler Promotions
Sam & Neil Anderson
172 Dundas Street West
Napanee, ONT K7R 2A4 (613) 354-2534
ON
Proforma Total Graphic Solutions
Rene Boudreau
6-295 Queen St. E. Suite 449
Brampton, ONT L6W 4S6 (905) 454-7344
ON
Proforma Twin Marketing Group
Gabriel Constantin
570 Alden Road, Unit #7
Markham, ONT L3R 8N5 (905) 771-7159
ON
Proforma Dynamic Images
Advertising
Ian & Jeff Lazenby
1815 Ironstone Manor, #12
Pickering, ONT L1W 3W9 (905) 420-7396
ON
Proforma Synergy
Patrick Doyle
1550 Kingston Road, #1126
Pickering, ONT L1V 6W9 (905) 239-0362
ON
Proforma Edge Solutions
Steve Begbie
1011 Upper Middle Road East,
#1340
Oakville, ONT L6H 5Z9
ON
Proforma MSK Graphics
Mike VanderLaan
762 Upper James Street, Suite 217 Hamilton, ONT L9C 3A2
ON
Proforma KW Marketing
Ian McGough
86 Howard Place
Kitchener, ONT N2K 2Z4 (519) 208-9317
ON
Proforma Triple Crown Media
Tim Breadner
27 Elgin Street
Grimsby, ONT L3M 4G7
(905) 309-6214
SK
Proforma Quality Solutions
Buddy Lane
#105 - 418A - 50th Street East
Saskatoon, SK S7K 6L7
(306) 249-2026
Nicholas Tyler
138 Union Mt. Washington, PO
Box 24837
Christiansted, VI 824
(340) 713-0208
(416) 788-1891
(905) 387-9744
FRANCHISES IN VIRGIN ISLANDS
VI
Proforma Hyatt Graphics
21 of 21
EXHIBIT D
RECEIVABLES AND SECURITY AGREEMENT
Agreement this ___ day of ____________________, 20____ is between PFG Ventures, L.P. (hereinafter
referred to as “Franchisor”) and __________________________(hereinafter referred to as “Owner”) and is also in
favor of the Franchise Lender (as hereinafter defined).
PRELIMINARY RECITALS
A.
The Franchisor and the Owner have entered into a Franchise Agreement (as hereinafter defined)
which sets forth the terms of their relationship as it pertains to the “Franchised Business” (as hereinafter defined).
B.
The Franchisor, pursuant to the Franchise Agreement, agrees to invoice Owner’s customers,
collect the Owner’s Receivables (as hereinafter defined), and pay, from the Receivables so collected, the Owner’s
suppliers and certain other fees.
C.
The Franchisor, pursuant to the Franchise Agreement, after collection of the Receivables and
payment of the Owner’s suppliers and other fees, remits the net proceeds to Owner.
D.
From time to time, the Franchisor advances payment on your behalf to the Owner’s suppliers prior
to collection of the Owner’s Receivables; and in order to facilitate such advances and to provide a source of working
capital for Franchisor’s business, the Franchisor desires to borrow and reborrow money from the Franchise Lender.
As a material inducement for making loan(s) to Franchisor, Franchise Lender requires the pledging by Owner of its
Receivables from the Franchised Business to secure the Franchise Lender Debt (as hereinafter defined).
E.
The purpose of this Agreement is to facilitate the prompt payment of the Owner’s suppliers.
In consideration of the foregoing, the Parties agree as follows:
1.
Definitions. As used in this Agreement, the following terms shall have the following meanings:
“Advances” means payment or advances made by Franchisor from time to time on behalf of
Owner to Owner’s suppliers prior to the collection of Owner’s Receivables and shall include
any prompt pay discounts taken by Franchisor in connection with such payments or advances.
“Franchise Agreement” means that certain Franchise Agreement dated ____________, 20____,
between Franchisor and Owner and related agreements, as amended, supplemented, extended or
renewed.
“Franchised Business” means those activities conducted by Owner in association with the name
“Proforma” or otherwise directly related to the use of the Proforma Systems as provided for under
the Franchise Agreement, as well as all activities carried on by Owner, its successors and assigns
following the termination or expiration of the Franchise Agreement.
“Franchise Debt” means any and all indebtedness, fees and other obligations owing from time to
time by the Owner to Franchisor under this Agreement or the Franchise Agreement.
“Franchise Lender” means U.S. Bank, National Association, or its successors or assigns, or any
substitute financial lending institution designated from time to time by Franchisor.
“Franchise Lender Debt” means any and all indebtedness and obligations owing from time to time
by Franchisor to Franchise Lender under loan documents, as amended, supplemented, extended or
renewed; limited, however, to the sum of: (i) all Advances; and (ii) all fees due to Franchisor
under the Franchise Agreement upon collection of outstanding Receivables (other than initial
franchise fees).
1
“Net Proceeds” means the proceeds of the Owner’s Receivables attributed to the Franchised
Business actually collected by the Franchisor.
“Receivables” means all of the Owner’s present and future accounts, contract rights, chattel paper,
general intangibles, notes, drafts, acceptances, chattel mortgages, conditional sales contracts,
bailment leases, security agreements, inventory and other forms of obligations to the Owner now
existing or hereafter arising out of or acquired in the course of operating the Franchised Business,
both during its term and following its cancellation or expiration together with all liens, guaranties,
securities, rights, remedies and privileges pertaining to any of the foregoing, now existing or
hereafter arising, and all increases, substitutions, replacements and additions to the foregoing, and
all proceeds of the foregoing of every type, including cash and non-cash proceeds and returned
and repossessed inventory; provided; however, said term shall not include any receivables
generated by the Owner from activities unrelated to the Proforma System or generated from or
attributed to gains from the sale of assets, rents, royalties, interest, dividends or other passive
activity. The fact that Owner conducts its business in violations of the Franchise Agreement or
continues to conduct such business following the termination or expiration of the Franchise
Agreement shall not exclude such receivables from this definition.
2.
To secure the payment and performance of the Franchise Debt and the Franchise Lender Debt, the
Owner hereby grants to the Franchisor and the Franchise Lender, respectively, a security interest in the Receivables
owned by the Owner; provided, however, that nothing herein shall be deemed to limit or impair Owner’s rights to
receive payments from Franchisor as required under Section 5 of this Agreement. The security interest granted by
the Owner to Franchisor shall be subordinated to the security interest granted by the Owner to the Franchise Lender.
Owner acknowledges that Franchisor has assigned and granted to Franchise Lender a security interest in all of
Franchisor’s rights in the Receivables to secure payment of the Franchise Lender Debt.
3.
The Owner will not, for the term of this Agreement, sell, transfer, pledge, create a security interest
in, or hypothecate any of the Receivables to any person, firm or corporation other than the Franchisor and the
Franchise Lender. The Owner warrants and covenants that the Receivables are and will remain free and clear of all
liens, claims and encumbrances whatsoever, except for those granted to the Franchisor and the Franchise Lender.
4.
Subject to the rights of the Franchise Lender as set forth in this Agreement, the Owner will and
does hereby sell and the Franchisor will and does hereby buy, at the gross invoice amount, but subject to actual
collection, all of the Owner’s Receivables. All such Receivables shall be owned by and payable directly to the
Franchisor, and the Owner hereby assigns and transfers to the Franchisor all of its right, title, and interest in and to
all of the Owner’s Receivables, and will upon the Franchisor’s request, execute and deliver to the Franchisor, in
confirmation of its title thereto, a detailed assignment of the Owner’s Receivables in a manner and form satisfactory
to the Franchisor. The Franchisor shall have the right to give notice of this assignment to the Owner’s customer and
to bring all proceedings for collection in its name and to exercise the Owner’s right of stoppage in transit, replevin,
and reclamation. The Owner agrees, should any remittance be made direct to the Owner, to receive it in trust for the
Franchisor, as the property of the Franchisor, and to immediately turn over to the Franchisor the identical check or
other form of payment so received, and the Owner hereby irrevocably appoints the Franchisor, or any person
designated by the Franchisor, its true and lawful attorney-in-fact, and to endorse the name of the Owner on any
notes, acceptances, checks, drafts, money orders, or other remittances, to endorse the name of the Owner on any
invoice, freight, or express bill or bill of lading, storage receipt, warehouse receipt, or other instrument or document
in respect to the Receivables, to sign the name of the Owner to drafts against the Owner, assignments, or
verifications of the Receivables and notices to the Owner’s customers, to change the post office address of the
Owner in the event the Owner ceases business from bankruptcy or otherwise, or breaches this Agreement, or
breaches or terminates the Franchise Agreement, or if for any reason the Franchisor feels insecure, and to do all
other acts and things necessary to carry out the intent of this Agreement. The authority herein granted the
Franchisor shall remain in full force and effect for so long as this Agreement shall remain in force and until all of the
Receivables transferred to the Franchisor have been paid in full.
5.
As payment for the Receivables, the Franchisor shall remit to the Owner, the Net Proceeds of the
Receivables upon collection by the Franchisor less Advance payments made on your behalf due to the Owner’s
suppliers, and less fees due the Franchisor pursuant to the Franchise Agreement. To the extent there is money
2
due the Owner, payments shall be issued to the Owner by the Franchisor on the 15th day of the month and the last
day of the month. If either the 15th day or the last day of the month occurs on a weekend or holiday the payment
will be issued on the following business day. If the Franchisor has made Advances to or on behalf of the Owner in
excess of the amount it has collected on the Receivables, the Owner shall pay the Franchisor the difference out of
the next payment due to the Owner as described above. In collecting the Receivables, the Franchisor shall be
obligated only to do the following:
a)
b)
c)
Bill the Owner’s customers;
Contact customers who have not paid within 30 days of the invoice billing date; and
Consult with Owner on choosing a collection agency.
The Franchisor agrees not to file suit for collection of a Receivable from a customer of the Owner without
first obtaining written approval from the Owner.
6.
Nothing herein shall be construed as to create an obligation on the part of the Franchisor to make
Advances on behalf of the Owner. Any Advances made by the Franchisor on behalf of the Owner will be at the
discretion of the Franchisor.
7.
The Franchisor shall have the right in good faith to settle or adjust all disputes or claims directly
with the Owner’s customer with respect to the Receivables and to compromise or extend the time of payment for the
Receivables on such terms and conditions as the Franchisor may determine without affecting the liability of the
Owner hereunder. The waiver by the Franchisor of any breach of this Agreement or warranty or representation
herein set forth shall not be construed as a waiver of any subsequent breach. The failure to exercise any rights and
remedies herein provided are cumulative.
8.
Upon the event of the termination of the Franchise Agreement, the Franchisor shall purchase the
Franchised Business’ remaining Receivables. This Agreement shall remain in full force and effect during the term
of the Franchise Agreement and thereafter until: (a) the Franchise Debt and the Franchise Lender Debt shall have
been fully and indefeasibly satisfied and paid in full; and (b) Owner has satisfied all other obligations to Franchisor.
Upon termination of this Agreement, any Receivables not collected by the Franchisor shall be assigned back to the
Owner, provided the Franchisor has obtained the permission of the Franchise Lender.
9.
Upon the request of Franchisor or the Franchise Lender, Owner agrees to execute and deliver to
the Franchisor and the Franchise Lender any and all additional instruments or documents, including without limiting
the generality of the foregoing, security agreements, financing statements and other documents related hereto or
required for the perfection or modification of security interests granted herein, and to do all things which the
Franchisor or the Franchise Lender from time to time may deem necessary or convenient to carry into effect the
provisions of this Agreement. Owner hereby agrees to execute an agreement in substantially the same form as this
Agreement to any successor or replacement Franchise Lender and that this provision is for the benefit of Franchisor
and Franchise Lender. Owner hereby constitutes and appoints Franchisor as its designated agent and Owner’s
attorney-in-fact to execute on behalf of Owner any and all security agreement(s), financing statements or other
documents as authorized hereunder, which appointment, being coupled with an interest, shall be irrevocable during
the term of this Agreement.
10.
This Agreement may not be altered or amended except with the written consent of each of the
parties. This Agreement shall be binding upon and inure to the benefit of the respective heirs, executors,
administrators, and successors of the parties hereto.
11.
A default hereunder shall be deemed to have occurred if Franchisor shall be in default in the
payment or performance of any Franchise Lender Debt or if Owner shall be in default in the payment or
performance of any Franchise Debt. Upon such default, Franchise Lender and Franchisor may exercise any and all
rights and remedies available under the Uniform Commercial Code and applicable laws. Except as otherwise set
forth in the Franchise Agreement, Owner waives notice of granting of any loans or Franchise Lender Debt to
Franchisor, acceptance of this Agreement by Franchise Lender, presentment, demand for payment and notice of
dishonor or default and any other notice to which Owner might, but for this waiver, be entitled.
3
12.
Any notice pursuant to this Agreement shall be sent to the parties hereto at the following
addresses, unless previously changed in writing, in person or by registered or certified mail:
Franchisor:
PFG Ventures, L.P.
8800 East Pleasant Valley Road
Owner:
d/b/a Proforma
Franchise Lender:
U.S. Bank, National Association
1350 Euclid Avenue, Suite 211
13.
This Agreement and the rights, obligations, and duties of each of the parties hereto shall be
construed according to the laws of the State of Ohio.
14.
Wherever in this Agreement the context so requires, the singular shall include the plural.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals this ________day of
__________________, 20_____.
Franchisor:
PFG Ventures, L.P.
By: Proforma, Inc. a General Partner
By:
Brian F. Smith
Its: Chief Financial Officer, Secretary & Treasurer
Franchise Owner:
d/b/a Proforma
By: _________________________________
Its: Owner
4
EXHIBIT E
SOFTWARE LICENSE AND SUPPORT AGREEMENT
FOR PROFORMA FRANCHISE OWNER
THIS SOFTWARE LIMITED LICENSE AGREEMENT (“License Agreement”) entered into this
________day of __________________, 20____, by and between PFG VENTURES, L.P. (“PFG”) an Ohio limited
partnership having principal offices at 8800 East Pleasant Valley Road, Cleveland, Ohio 44131 and the undersigned
Franchise Owner (“Owner”).
WHEREAS, PFG, is granting the right to a limited license for the programs ProOfficeSM, ProSTARSM, ProSmart, Email and ProOms (hereinafter collectively referred to as “ProOfficeSM”) to certain Owners;
WHEREAS, PFG desires to provide Owner with a limited license to operate ProOfficeSM, subject to the terms and
conditions contained in the License Agreement and software support and Owner desires to receive such support for
the Software from PFG;
NOW THEREFORE, in consideration of the covenants hereinafter set forth, PFG and Owner agree as follows:
1.
Definitions. As used in this License Agreement, the following definitions shall apply:
A. “Licensed Documentation” shall mean all documentation, other than ProOfficeSM, related to the Software
supplied hereunder by PFG.
B. “Licensed Product” shall mean collectively the Software and Licensed Documentation.
C. “Licensed Software” or “Software” shall mean all updates and revisions thereto, including the PFG
modified version known as ProOfficeSM, ProSTARSM, ProSmart, e-mail and ProOms, supplied by PFG
during the term hereof and all permitted copies of the foregoing.
2.
Grant. PFG hereby grants to Owner and Owner hereby accepts, a personal, nonexclusive, nontransferable
limited license to use ProOfficeSM during the term hereof and to use the Licensed Documentation during the
term hereof in support of the use of ProOfficeSM. Owner consents to PFG’s disabling the Software following its
receipt of notice of default or termination of the Franchise Agreement from PFG, and PFG shall have no
liability to Owner therefore.
3.
Owner Representation. As of the date of this License Agreement, Owner represents that it has a valid
Franchise Agreement in effect with PFG. Furthermore, the license granted hereunder is only valid and the
Licensed Software will only operate as long as this License Agreement is in effect.
4.
Owner Password and Security. Owner will receive a username and password upon execution of the
Agreement. Owner is responsible for maintaining the confidentiality of the username and password. Owner is
fully responsible for all activities that occur under the username and password. Owner agrees to notify PFG
immediately of any unauthorized use of the username and password or any other breach of security, and ensure
that you exit from the software after each use. PFG cannot and will not be liable for any loss or damage arising
from your failure to comply with this Paragraph 4.
5.
Ownership of Data. PFG claims ownership of the content and data submitted or made available by the Owner
to the Software.
6.
Protection of Licensed Product.
A. The Licensed Product involves invaluable proprietary rights of PFG. Owner acknowledges and agrees that
the Licensed Product and all permitted copies thereof are the exclusive property of PFG and constitutes a
valuable trade secret of PFG. There is no transfer to Owner of any title to or ownership of the Software of
any patent, copyright, trade secret, trade name, trademark, or other proprietary rights related to the
1
Licensed Product. Owner agrees not to remove any trademark, proprietary legend or copyright notices from
the Licensed Product. Owner may not make available or disclose to third parties the Licensed Product or
any portion thereof without the prior written approval of an officer of PFG.
B. Upon any termination, cancellation or expiration hereof, Owner shall immediately return the Licensed
Product and all copies thereof to PFG.
7.
Restrictions of Copying, Modification and Use. Owner may not copy (except for making a backup copy for
safekeeping), translate, rent, lease, sub-lease, license, transfer or otherwise make available the Licensed Product
in any form to any other person or entity, without the prior written approval of PFG.
8.
Services. Owner shall have the sole and exclusive responsibility for the selection, installation and use of the
Licensed Product. PFG shall provide the Owner with technical support and services under the terms and
conditions of this License Agreement.
9.
Limited Warranty. THE LICENSED PRODUCT IS PROVIDED “AS IS” WITHOUT WARRANTY OF
ANY KIND, EITHER EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED TO THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. THE
ENTIRE RISK AS TO THE QUALITY AND PERFORMANCE OF THE LICENSED PRODUCT IS WITH
FRANCHISE OWNER. SHOULD THE LICENSED PRODUCT BE DEFECTIVE, OWNER (AND NOT
PFG) WILL ASSUME THE ENTIRE COST OF ALL NECESSARY SERVICING, REPAIR, OR
CORRECTION.
PFG does not warrant that the Software/Technology will meet your requirements, or that the
Software/Technology is free from all bugs, errors and omissions. PFG may, from time to time, revise the
performance of its Software/Technology and, in so doing, may furnish such revisions to you.
10. Limitations of Liability. IN NO EVENT WILL PFG BE LIABLE TO OWNER FOR ANY DAMAGES,
INCLUDING ANY LOST PROFITS, LOST SAVINGS OR OTHER INCIDENTAL OR CONSEQUENTIAL
DAMAGES ARISING OUT OF THE USE OR INABILITY TO USE THE LICENSED PRODUCT, EVEN IF
PFG HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, OR FOR ANY CLAIM BY
ANY OTHER PARTY.
11. Termination and Cancellation Period. PFG may terminate or cancel this License Agreement and any
License granted to Owner hereunder if:
A. Owner fails to pay PFG any lease payments, license fees, technical support fee or other charges;
B. Owner is in default of any other provision hereof and such default has not been cured within 10 days after
PFG gives Owner notice thereof;
C. Owner is in default of any provision of its Franchise Agreement with PFG; or
D. Owner becomes insolvent or seeks protection, voluntarily or involuntarily, under any bankruptcy law. In
the event of any termination or cancellation hereof or any license granted to Owner hereunder, PFG may
require that Owner cease any further use of the Licensed Product or any portion thereof and immediately
return the Licensed Product and all copies thereof, in whole or in part. PFG’s foregoing rights and remedies
shall be cumulative and in addition to all other rights and remedies available to PFG in law and in equity.
E. In the event of termination of the Agreement, PFG shall immediately cease to provide all services and
support.
F. In the event of termination of the Agreement, the Owner will no longer have access to the system.
12. Software Support Service. For the term of this Agreement, PFG or its designated representative will provide
telephone assistance (“Support”) to Owner in connection with ProOfficeSM. Support includes telephone advice,
2
research, documentation updates, electronic bulletin board access and other assistance, which PFG deems
reasonable, appropriate and necessary to keep the Software operating. Support will be provided only during
PFG’s normal business hours, 8 AM EST to 5:00 PM EST, Monday through Friday, excluding holidays
observed by PFG.
13. Exclusions. Software Support does not include the following:
A. Service or maintenance of equipment including, but not limited to, computers, peripherals, attachments, or
other items that are not software items;
B. Support required due to modifications to the software or equipment made by personnel other than PFG
without receiving PFG’s prior written approval.
14. Owner Responsibilities. Owner will backup their data files on a regular basis (daily backup recommended as a
minimum) and maintain multiple backup sets. There may be times that PFG determines that the best solution to
a problem is to restore data files from the most recent backups, and in that case the Owner will be responsible
for restoring the backup and re-inputting any data since the time of the backup. Regardless of Support or other
services provided by PFG, Owner retains complete and total responsibility for Owner’s Software and
accounting information and data.
15. Revisions. During the term of this Agreement, Software corrections and revisions may periodically be made to
the Software. These revisions will be made available to the Owner at no charge. Owner is required to install and
update these corrections and revisions to the Software.
16. New Developments. PFG may offer newly developed software for use in conjunction with Owner’s existing
Software. Owner will be required to install these new developments to Owner’s existing software.
17. Term. This License is effective upon receipt of the Software and shall terminate if Owner breaches any of the
terms and conditions herein. For the purposes of this License Agreement, both parties further agree that this
Agreement will terminate immediately upon the dissolution of Owner and/or the Agreement with Owner.
Owner agrees that termination of its Franchise Agreement with PFG will also be considered a breach by the
Owner of this License Agreement. Upon such breach, Owner agrees to destroy all copies of the Licensed
Product, in whatever form and media, and certify, in writing, to the discontinuance of the use thereof.
18. Charges to Owner. In consideration for the Support received by Owner, they agree to pay PFG a monthly
Communication & Technology Support Fee of $100.00 (“Monthly Fee”) during the term of this Agreement.
The monthly Communication & Technology Support includes ProOffice, e-mail and ProOms base and
incremental support. Notwithstanding the foregoing, PFG reserves the right to adjust the Monthly Fee upon 30
days written notice to Owner.
19. Invoices and Payment.
A. The Monthly Fee will be invoiced to the Owner on the 25th of the month, or as otherwise determined by
PFG. Owner hereby agrees to permit PFG to charge the Monthly Fee against the Owner’s net proceeds;
B. In the event of non-payment of any invoice or installment when due, PFG reserves the right to suspend or
terminate service until such time as the invoices are paid in full. Suspension is not a default by PFG and
shall not change any Terms and Conditions of this Agreement. Furthermore, Owner is obligated to pay all
charges, which may become due hereunder.
20. Taxes. Owner agrees to pay (or reimburse PFG), in addition to the charges arising under this Agreement, and as
a separate item, all taxes (exclusive of taxes based on net income), however, designated, based on or measured
by the charges set forth in this Agreement, now or hereafter imposed during the term of this Agreement under
the authority of a federal, state or local taxing jurisdiction.
3
21. Disclaimer and Limitation of Liability. Owner’s sole remedy for any claim, whether for breach of contract,
breach of warranty, tort, or PFG’s negligence, arising out of PFG’s performance of this Agreement shall be
limited to the correction of any defective software support service by restoring the software to the condition it
was in as of the last successful backup performed by the Owner immediately prior to the time Owner’s claim
arose. In no event will PFG be liable for incidental, special, consequential, or other damage, including loss of
anticipated profits or other economic loss, arising out of transactions covered by this Agreement.
22. General.
A. No warranties, express or implied, are granted under this Agreement except those which are expressly
granted by law;
B. The effective date of this License Agreement shall be upon execution thereof by Owner and acceptance
thereof by an authorized representative of PFG;
C. This License Agreement is the sole agreement between the parties relating to the subject matter hereof and
supersedes all prior understandings, writings, proposals, representations or communications, both oral or
written, of either party. This License Agreement may be amended in writing and executed by the
authorized representatives of both parties;
D. Owner shall not have the right to assign its rights or obligations under this Agreement without the prior
written consent of PFG;
E. PFG shall not be responsible for delays in performance beyond the reasonable control of PFG, including,
but not limited to, fire, flood, epidemic, strikes, accidents, unusually severe weather, act of God, act of the
Owner, or restriction by civil or military authority;
F. If any provision of the Agreement is determined to be invalid, then such provision shall be considered to be
invalid to that extent, but the remaining provisions shall remain in full force and effect;
G. This License Agreement shall be governed by and construed in accordance with the law of this State of
Ohio, and all disputes shall be resolved in the State of Ohio, County of Cuyahoga. The parties hereto
submit to personal jurisdiction of the state and federal courts located in Cuyahoga County, Ohio;
H. You acknowledge that you have read and understand this License Agreement and agree to be bound by its
terms and conditions. Further, you agree that it expresses the entire agreement between us which
supersedes any prior communications, oral or written, relating to it.
23. Acceptance.
PFG
PFG Ventures, L.P.
By: Proforma, Inc., a General Partner
8800 E. Pleasant Valley Road, Cleveland, Ohio 44131
By:
Brian F. Smith
Title:
Chief Financial Officer, Secretary & Treasurer
Date Accepted:
OWNER
d/b/a Proforma
[address]
Agreed and Accepted By:
Title:
Date Accepted:
4
EXHIBIT F
LIST OF STATE AGENCIES / AGENTS FOR SERVICES OF PROCESS
Listed here are the names, addresses and telephone numbers of the state agencies having responsibility for
franchising disclosure/registration laws. Also listed are state agencies that act as agents for service of process in
those states. If (or when) Proforma is registered to sell franchises in a state listed below, the corresponding agent
will act as Proforma’s agent to receive service of process in that state.
CALIFORNIA
ILLINOIS
MICHIGAN
Department of Corporations
Franchise Division
Consumer Protection Division
320 West 4 Street, Suite 750
Office of Attorney General
Antitrust and Franchise Unit
Los Angeles, CA 90013-2344
500 South Second Street
Michigan Department of
(213) 576-7500
Springfield, IL 62706
Attorney General
(217) 782-1090
670 Law Building
Agent: Illinois Attorney General
Lansing, MI 48913
th
1515 K Street, Suite 200
Sacramento, CA 95814-4052
(916) 445-7205
(517) 373-7117
INDIANA
Agent: Michigan Department
Franchise Section
of Commerce, Corporation
1350 Front Street, Room 2034
Indiana Securities Division
And Security Bureau
San Diego, CA 92101-3697
Secretary Of State
(619) 525-44233
Room E-111
MINNESOTA
Minnesota Department of
71 Stevenson Street, Suite 2100
(317) 232-6681
Commerce
San Francisco, CA 94105
Agent: Indiana Secretary of State
85 7th Place Street, Suite 500
St. Paul, MN 55101
(415) 972-8559
Agent: California Commissioner of
MARYLAND
(651) 296-4026
Corporations
Office of the Attorney General
Agent: Minnesota Commissioner
Maryland Division of Securities
of Commerce
HAWAII
200 St. Paul Place
Commissioner of Securities
Baltimore, MD 21202-2020
NEW YORK
Department of Commerce and
(410) 576-6360
Bureau of Investor Protection
Consumer Affairs
Agent: Maryland Securities
and Securities
Business Registration Division
Commissioner
New York State Dept. of Law
335 Merchant Street, Room 203
120 Broadway, 23rd Floor
Honolulu, HI 96813
New York, NY 10271-0332
(808) 548-2021
(212) 416-8200
Agent: Commissioner of Securities
Agent: New York Secretary of State
Department of Commerce and
Consumer Affairs
1
NORTH DAKOTA
RHODE ISLAND
WASHINGTON
North Dakota Securities Department
Division of Securities
Director of Financial Institutions
State Capitol - Fifth Floor
Suite 232
Securities Division
600 East Boulevard
233 Richmond Street
150 Israel Road, S.W.
Bismarck, ND 58505
Providence, RI 02903
Tumwater, WA 98501
(701) 328-2910
(401) 277-3048
(360) 902-8760
Agent: North Dakota Securities
Agent: Director of Rhode Island
Agent: Washington Director of
Commissioner
Department of Business regulations
Licensing
OREGON
SOUTH DAKOTA
WISCONSIN
Department of Insurance and
Department of Revenue and
Securities and Franchise
Finance
Regulation
Registration
Corporate Securities Section
Wisconsin Securities Commission
Labor and Industries
445 East Capitol Avenue
PO Box 1768
Building
Pierre, SD 57501
Madison, WI 53701
Salem, OR 97310
(605) 773-4823
(608) 266-1064
Agent: Director of Oregon
Agent: Director of South Dakota
Agent: Wisconsin Commissioner
Department of Insurance and
of Securities
Finance
VIRGINIA
State Administrator:
State Corporation Commission
Division of Securities and Retail
Franchising
1300 East Main Street, Ninth Floor
Richmond, VA 23219
(804) 371-9051
Agent for Service of Process:
State Corporation Commission
1300 East Main Street, First Floor
Richmond, VA 23219
(804) 371-9733
Agent: Clerk of the State
Corporation Commission
2
EXHIBIT “G”
LITIGATION
None of the following claims involve us (PFG Ventures, L.P.) or our predecessor, Proforma, Inc., and we are not
required to disclose these lawsuits. We list them only because they involve Mr. Frederick DeLuca and Dr. Peter
Buck who are investors in ProVenture, Inc., a joint venture partner with Proforma.
A. Pending Actions:
1) Sudarshan Sharma, Neelam Sharma, Iftikhar Sheikh, Naushin Sheikh, Michael Aram, Dan Roghany, Navdeep
Kumar Chopra, Rohini Chopra, Kamaljit Brah, Plaintiffs v. Oh Cal Foods, Inc., Doctor’s Associates Inc. (DAI),
Subway Sandwiches & Salads, Inc., Frederick A. DeLuca, Peter H. Buck, and Does 1 through 20, inclusive,
Defendants (Superior Court of California, County of Los Angeles, Case No. BC150986). This action was filed on
May 31, 1996 by 5 sets of franchisees of DAI. All of the Plaintiffs are claiming breach of the covenant of good faith
and fair dealing based on territorial encroachment because the Defendants allowed other franchises to open in close
proximity to their SUBWAY® stores and intentional interference with present and prospective business relations
since they have suffered loss of sales and business due to the proximity of other SUBWAY® stores. In addition, 2
sets of franchisees are claiming breach of the implied covenant of good faith and fair dealing because the
Defendants conducted inaccurate audits, alleged the Plaintiffs were out of compliance, and tried to terminate the
Plaintiffs’ Franchise Agreements. The Plaintiffs are seeking general, specific, exemplary and positive damages in
an undetermined amount, but in an amount in excess of $76 million for all of their claims, attorney’s fees, and costs
of suit. On January 14, 1997 DAI filed demands for arbitration against each plaintiff with the American Arbitration
Association (Sudarshan and Neelam Sharma, AAA No. 12 114 0027 97; Iftikhar and Naushin Sheikh, AAA No. 12
114 0024 97; Michael Aram and Dan Roghany, AAA No. 12 114 0030 97; Navdeep Kumar and Rohini Chopra,
AAA No. 12 114 0031 97; Kamaljit Brah, AAA No. 12 114 0023 97). On January 16, 1997 DAI filed a Petition to
Compel Arbitration and a Motion for a Preliminary Injunction against each plaintiff in the U.S. District Court for the
District of Connecticut (Sharma, Case No. 397CV00109 PCD; Sheikh, Case No. 397CV00110 PCD; Aram and
Roghany, Case No. 397CV00111 PCD; Chopra, Case No. 397CV00112 PCD; Brah, Case No. 397CV00113 PCD).
On October 19, 2001, Michael Aram and Dan Roghany released all parties from all claims in the action. On
February 20, 2002, Sudarshan Sharma and Neelam Sharma released all parties from all claims in the action. On July
19, 2002, Iftikar and Naushin Sheikh released all parties from all claims in the action. The remaining arbitrations
are now pending.
2) David Hollingsworth, Trey Bennett and Loralie Bennett, Karl Spielvogel, George Cooksey and Jane Cooksey,
Jeffrey Farr and Pamela Farr, Ashok Patel and Rita Patel, Brad Weston, Jack Arkis, Rodrigo Gonzalez and Maria
Gonzalez, Chris Liu and Sandra Liu, William McClusker and Marie McClusker, Edward Madgett and Pamela
Madgett, Preet Kiran Johal, Keith Childers and Earl Childers, River Bonhotel and D. Linnette Bonhotel, Robert
Hoder and Jacquelyn Hoder, Craig Sipiora and Nancy Sipiora, George Venetos, Kellliopi Venetos and Jim Venetos
v. Joseph Hart, Kenneth Adam, Lou Dorth, Jr., Richard Kaminsky, Don O’Bresky, Catherine Bauer, Mark Roden,
Richard “Rick” Sender, John Giorgi, Mary Lou Mayfield, David Woods, Donald Rogers, Jana Brands, Inc., James
River Commercial Products, Inc. Solo Cup Company, KraftFoods, Inc., Armour Swift-Eckrich, Inc., Frito-Lay, Inc.,
Nabisco Foods, Inc., Pepsi-Cola Company, Frederick DeLuca, Peter Buck, Cindy Eadie and Franchise World
Headquarters, Inc. (Circuit Court of the Third Judicial Circuit, Madison County, Illinois, Case No. 96-L-000525).
This action was filed August 16, 1996 by franchisees alleging breach of fiduciary duty and civil conspiracy. The
franchisees claim that the Defendants, which include the Subway Franchisee Advertising Trust (“SFAFT”) board
members and selected vendors, gave false information about the expenditures made by SFAFT, used the collected
advertising monies contrary to the interests of the franchisees and failed to use diligence in determining the purpose
for which the advertising funds are expended. Additionally, they assert that the vendors enter into the agreements
whereby they increase the price of products and goods sold to the franchisees and this increase is then transferred to
the SFAFT, Mr. DeLuca, Dr. Buck and/or companies owned by them. The Plaintiffs are seeking $351,600,000 in
actual and exemplary damages, court costs and trial by jury. On September 16, 1996 the Defendants Franchise
World Headquarters Inc., Mr. DeLuca and Dr. Buck filed petitions to arbitrate with the U.S. District Court for the
District of Connecticut. On October 11, 1996 the Defendants moved the Connecticut court to compel arbitration and
to stay the Madison County case. The U.S. District Court for the District of Connecticut granted the Defendant’s
Petition on November 21, 1996, stayed the Madison County case, and ordered the franchisees to arbitrate
individually. On December 2, 1996 the Plaintiffs appealed. On February 5, 1998 the U.S. Second Circuit Court of
Appeals affirmed the District Court’s November 21, 1996 ruling granting the franchisor’s Petitions to Compel
Arbitration. Six franchisees sought to overturn the ruling and appealed it to the United States 2nd Circuit Court of
Appeals, who affirmed. On June 1, 2001 DAI filed applications with the Connecticut Superior Court to compel the
remaining franchisees to arbitrate. The applications were granted on July 2, 2001. Plaintiffs Trey and Loralie
Bennett have since signed a release extinguishing their claims. On February 9, 2007, the Circuit Court of the Third
Judicial Circuit, Madison County, Illinois dismissed the lawsuit for lack of prosecution. The case is stayed pending
the arbitrations.
3) Lela Bishop, Barbara Wingo, Rinda Yeager, Joel Sundquist, Charles Arnold, John Renn, Cynthia Diana Kobos,
Eric Engen, Mark Contreras, Kevin Sagnella, Tom Butler, Pam Dutton, Terry Keller, Salvatore and Dolores Pagano,
Richard Bellon, Paul Meyers, Robert Conly, Joseph Stuckey, Donald Costello, Monica D. Costello, Darrell Costello,
Anthony and Elaine Fasano, and all other We Care Hair® franchisees past or present, similarly situated, Plaintiffs v.
Doctor’s Associates Inc. (DAI), Frederick DeLuca, Peter H. Buck, Franchise World Headquarters Inc., We Care
Hair Development, Inc., John Amico, Sr., Fred Florio, The Barbers, Hairstyling For Men & Women, Inc., We Care
Hair Realty, Inc., Franchise Real Estate Leasing Corp., John F. Amico & Company, WCH, Inc., and J’Ami
International, Inc., Defendants (Circuit Court of the Third Judicial District, Madison County, Illinois, Case No. 97L-231). This action was filed on February 4, 1997 by franchisees claiming breach of fiduciary duties, fraud,
violation of the Illinois Franchise Disclosure Act, Consumer Fraud and Deceptive Business Practices Act violations,
and violation of the Illinois Anti-Trust Statute. The Plaintiffs claim the Defendants made misrepresentations of fact
and material omissions inducing them to execute franchise agreements, that the Defendants did not provide
promised services and assistance to them once they purchased franchises, that the Defendants used the advertising
fund for their own purposes and benefit, and that they required the franchisees to purchase John Amico Hair Care
products even when the franchisees did not use them. They claim that Mr. DeLuca and Dr. Buck had prior
knowledge of the viability of We Care Hair Development, Inc. when they became investors in March, 1991. The
Plaintiffs claim that The Barbers, Hairstyling For Men & Women, Inc. (The Barbers) also had prior knowledge
when they purchased the rights of We Care Hair Development, Inc. in January, 1997 in order to convince the
existing We Care Hair® franchisees into becoming Cost Cutters®franchisees. The Plaintiffs are seeking trial by
jury, actual damages, exemplary damages, attorneys’ fees, treble damages and costs in excess of $28,000,000. On
April 7, 1997 We Care Hair Development Inc. (WCHD) filed demands for arbitration for Plaintiffs Linda Yeager
(AAA Case No. 511140014697), Joel Sundquist (AAA Case No. 511140014497), Kevin Sagnella (AAA Case No.
511140014597), John Renn (AAA Case No. 51110014897), Salvatore and Dolores Pagano (AAA Case No.
unassigned), Cynthia Kobos (AAA Case No. 511140015097), Terry Keller (AAA Case No. 511140015197),
Anthony and Elaine Fasano (AAA Case No. 511140015297), Eric Engen (AAA Case No. 511140015397), Pam
Dutton (AAA Case No. 511140015497), Donald, Monica and Darrell Costello (AAA Case No. 511140015597),
Mark Contreras (AAA Case No. 511140014797), Robert Conley and Joseph Stuckey (AAA Case No.
511140015697), Lela Bishop (AAA Case No. unassigned), Richard Bellon and Paul Meyers (AAA Case No.
511140015897). On April 15, 1997 WCHD filed Petitions to Compel Arbitration in the United States District Court
for the Northern District of Illinois, Eastern Division, against Mark Contreras, Robert Conley, Joseph Stuckey,
Richard Bellon, Paul Meyers, Anthony and Elaine Fasano, Eric Engen, Darrel, Donald and Monica Costello,
Salvatore and Dolores Pagano, Cynthia Kobos, Terry Keller, John Renn, Joel Sundquist and Kevin Sagnella. Each
of these persons filed a Motion to Dismiss Because of Absence of Subject Matter Jurisdiction pursuant to FRCP
12(b)(1) before the U.S. District Court for the Northern District of Illinois, Eastern Division. The complaint has also
been amended to add plaintiffs JoAnn Sundquist, Kanchan Renn, Cathleen Contreras, Patricia Butler, Frances
Bowman, Lynette Keeler, Raymond Green, Barbara Green, Karen Stillwell, Billy Franklin, Michael Castleman,
Michelle Schroer, J.D. Hamilton, Keith Stewart, Charles Bolam, Linda Bolam, Larry Allen, Glen Standard, Tonya
Standard, Betty O’Connor, Robert Lilley, Kevin Baumgartner, Michael Grooms, Traci Swanson, George
Hornbostel, Dixie Hornbostel, Walter Schneider, Arthur Rieger, Mark Johnson, Brenda Johnson, James Warren,
Rod Gebensleben, Stan Cwalinski, Mary Alice Phares, David Helbing, Kerry Helbing and Todd Moser and to claim
that WCHD falsely represented that the average capital required to open and operate a We Care Hair® franchise
through the initial three months of operations would vary from about $50,000 to about $80,000; that DAI, known as
SUBWAY® and WCHD, known as We Care Hair® were operating as a joint venture; that WCHD falsely
represented that the average We Care Hair® franchise would reach a break even point within the first three months of
operation. On August 7, 1999 the Plaintiffs settled with the Defendants The Barbers Hairstyling for Men & Women,
Inc., WCH, Inc., and We Care Hair Realty, Inc. Those Defendants paid $45,000 total to the Plaintiffs, who
dismissed their claims against those Defendants with prejudice. The case is now stayed pending the arbitrations.
On February 13, 2002, the arbitrator in the Kobos matter denied all claims brought by Kobos. In June of 2002, John
and Kanchan Renn executed mutual releases, and settled all their claims for $5,000, with no party admitting liability.
Joel and JoAnn Sundquist also executed mutual releases and settled all their claims for $6,000, with no party
admitting liability, in June of 2002.
4) Jonathan Toppel, Plaintiff v. Lawrence Feldman, and HAIRCOLORXPRESS International, LLC, Defendants
(Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida, Case no. C442330B). This action
was brought on November 25, 2002, by a franchisee of Haircolorxpress (unrelated to DAI or its affiliates) against
Haircolorxpress and Mr. Feldman, who is also a Subway Development Agent. Plaintiff claimed that Defendants
2
made misrepresentations and omissions of material facts, violated the Florida Business Opportunities Act Fla. Stat.
§559.80,et seq., committed fraudulent inducement, breached the HAIRCOLORXPRESS franchise agreement,
violated the Florida Deceptive and Unfair Trade Practices Act, Fla. Stat. §501.201, et seq., and committed negligent
misrepresentation during the sale of two Haircolorxpress franchises to Plaintiff. Plaintiff sought rescission of the
franchise agreements, compensatory damages, costs, expenses, interest and attorneys fees, in an amount in excess of
$500,000. The matter was stayed pending arbitration. On February 25, 2003, Plaintiff filed a Demand for Arbitration
with the American Arbitration Association entitled Jonathan Toppel, Claimant, and Lawrence Feldman and
Haircolorxpress International, LLC, Respondents. Toppel made the same claims in the Arbitration as were made in
the lawsuit.
5) Franklin D. Smith and Stacey V. Smith, Plaintiffs v. Doctor’s Associates Inc., Subway Development Corporation
of Chicagoland, Inc. and Subway Real Estate Corp., Defendants (U.S. District Court for the Northern District of
Illinois, Eastern Division, Case No. 03 C 2878) This complaint was filed on April 29, 2003 by franchisees claiming
the defendants engaged in racial discrimination and retaliation in violation of 42 U.S.C. § 1981 and 42 U.S.C. §
1982 by denying them the opportunity to open a second franchise, a fair and complete site review when they found
out the defendant’s planned to open a new restaurant in their area, fair and accurate monthly inspections of their
restaurant and assistance with landlord disputes. The Plaintiffs are seeking injunctive relief, compensatory damages,
punitive damages and costs. On June 23, 2003 DAI filed a Petition to Compel Arbitration with the U.S. District
Court for the District of Connecticut entitled Doctor’s Associates Inc. v. Franklin D. Smith and Stacey V. Smith
(3:03cv1098 {PCD}). On October 23, 2003 the petition was granted. The arbitration is now pending.
6) Hardip Singh Brah, Parminder Kaur Brah, Jaspal Singh Brah and Ravinder Kaur Brah, 517595 Alberta Ltd.,
541672 Alberta Ltd., 580486 Alberta Ltd., 675920 Alberta Ltd., Subway Operations of Alberta Ltd. and 819966
Alberta Ltd., Plaintiffs v. Subway Franchise Systems of Canada, Ltd., Subway Developments 2000 Inc., Daniel
Mohan, Tim Decaire, Ron Smart and Tim Yeaman, Defendants (Court of Queen’s Bench of Alberta, Judicial
District of Edmonton, Action No. 0203 13961) This claim was brought on July 18, 2002 by franchisees claiming
intentional infliction of emotional suffering, intimidation, unlawful interference with economic interests and breach
of contract. The Plaintiffs believe that Mr. Mohan, a local Development Agent, and his representatives, Mr.
Decaire, Mr. Smart and Mr. Yeaman, marked them out of compliance during inspections, refused to discuss the
areas out of compliance with them, and threatened to terminate their Franchise Agreements causing them to sell
their franchises at substantial financial losses because the plaintiffs are members of the Sikh faith. They also believe
that the franchisor, Subway Franchise Systems of Canada. Ltd. did not properly train their agents with respect to
cultural and religious differences, did not properly monitor the activities of their agents or take appropriate measures
to curb their conduct. The Plaintiffs are seeking damages in the amount of $500,000, punitive damages in the
amount of $50,000, interest, and costs including GST. The case was referred to arbitration. On March 13, 2005 in a
preliminary decision the arbitrator dismissed all claims by plaintiffs 517595 Alberta Ltd., 541672 Alberta Ltd.,
580486 Alberta Ltd., 675920 Alberta Ltd., Subway Operations of Alberta Ltd. and 819966 Alberta Ltd., and claims
concerning three of the Brah’s six stores. In October 2006, the Plaintiffs dropped all claims relating one of their
stores in Edmonton, Alberta, and sold that store.
7) Donna Curry, an individual and Donna Curry as 50% Member of Donuts of Las Vegas, a Limited Liability
Company, Claimant v. Mark Brennan, an individual and Mark Brennan as 50% Member of Donuts of Las Vegas, a
Limited Liability Company, Respondent consolidated with Donuts of Las Vegas, LLC, Claimant v. Donna Curry, an
individual and 50% member of Donuts of Las Vegas, LLC; Donna Curry Investments, Subway Real Estate
Corporation, Does I through V, and Roe corporations VI through X, Respondents (American Arbitration
Association, Las Vegas, Nevada, #79 180 00136 03 ) This arbitration, filed in October 2003, is between co-owners
of Donuts of Las Vegas, Inc., one of whom is a SUBWAY® development agent, and each of whom has claims
against the other. Our development agent seeks to dissolve the business and divide the assets. The co-owner alleges
that our development agent breached her fiduciary duty, interfered with contractual relations and usurped
opportunities belonging to the business. He seeks damages in an undetermined amount, but greater than $10,000.
8) Omar Hadaidi, Plaintiff v. Doctor’s Associates Inc., Cal-Neva Subway Inc., Peter Buck , Frederick DeLuca,
Thomas Fallon, Saeed Lebastchi and Rajendra Mehta, Defendants (United States Bankruptcy Court, District of
Nevada, Reno Division, Case No. 04-53108) This action was filed on November 24, 2004 by a franchisee claiming
fraud, conspiracy to commit fraud, and breach of fiduciary duties. The Plaintiff alleges the Defendants knew that by
letting another franchise open within one mile of his restaurant would cause him financial harm and adversely affect
his business while at the same time increasing the Defendants revenues. The Plaintiff is seeking compensatory
damages in excess of $250,000 to be proven at trial, punitive damages, costs, expenses and relief. The Plaintiff filed
a Demand for Arbitration on April 16, 2005. On October 29, 2008, the Bankruptcy Court dismissed without
prejudice the Plaintiff’s complaint.
3
9) On January 11, 2006, a counterclaim was filed in connection with the arbitration Subway International B.V.,
Claimant v. Frank Curl, Lisa Robinson and David Robinson, Respondents (Arbitration No 50 114 T 00196 05).
Respondents allege that Claimants failed to support them in their stores and made misrepresentations and unilateral
modifications regarding the Development Agent Agreement for their territory in France. Respondents allege that
Claimants breached their contract with Respondents, breached the implied duty of good faith and fair dealing,
committed fraud, negligence, misrepresentation and violations of the Connecticut Unfair Trade Practices Act, and
received unjust enrichment. They are requesting actual, compensatory, consequential and punitive damages, in an
unspecified amount, along with legal fees and the costs of the arbitration.
10) Sharanjit S. Nat, Claimant and Doctor's Associates Inc. ("DAI"), Respondent (ADRC at New Britain, CT, Case
No. 26-0378-06 S). This arbitration was filed by franchisee Claimant, on December 8, 2006, and claims breach of
contract, fraud, and tortious interference with prospective economic advantage. Claimant alleges that DAI conducted
fraudulent compliance inspections, breached the franchise agreement and a subsequent settlement agreement which
was allegedly procured by fraud, and interfered with two prospective sales of his franchise in an attempt by DAI to
wrongfully obtain his store. Claimant seeks contract, general damages in the amount of $250,000, special damages,
interest, costs, expenses and reasonable attorney's fees. On January 11, 2007, DAI filed a Counterclaim alleging that
Nat's claims are frivolous and without merit, and had been adjudicated in a previous arbitration which had been
confirmed by a California court. DAI seeks $70,000 and other appropriate relief. On October 9, 2007, the arbitrator
issued his award finding that DAI’s refusal to consent to the transfer of Claimant’s franchise was a breach of DAI’s
obligation to assist in the sale in “good faith”. The arbitrator awarded the Claimant the $79,000 that DAI previously
received for the sale of Claimant’s terminated franchise, $11,080 for equipment, $1,424 in back rent and $5,744.42
in interest. The arbitrator denied DAI’s counterclaim. On November 7, 2007, DAI filed a petition with Superior
Court of Los Angeles County seeking to vacate the arbitration award on the grounds that the award was contrary to a
previous confirmed arbitration award. On February 20, 2008, the Superior Court confirmed the award. On March 7,
2008, the Claimant filed a petition to confirm the arbitration award which was granted on May 27, 2008. On June
17, 2008, DAI filed a notice of appeal with Court of Appeal of the State of California, Second Appellate District,
Division Three. On January 26, 2009, the Appellate Court affirmed the confirmation of the arbitration award.
11) FRANSISTEM, S.L.(“FSL”), v. Subway International, B.V. (“SIBV”), (Court of First Instance of Coslada, Spain,
filed November 9, 2006) In February, 2004, FSL entered into agreements with SIBV as Area Development Manager
(“ADM”) for Spain and the Development Agent (“DA”) for Madrid, Spain. SIBV terminated the ADM and DA
agreements with FSL on October 25, 2006 for failure to perform. FSL claimed unfair business practices and breach of
good faith and was seeking damages and losses payable in the amount of EUR 1,388,469.60 and client base indemnity
payment in the amount of EUR 228,278.88. SIBV denies the allegations and filed a declinatoria in Spanish Court,
indicating that the proper venue for disputes was arbitration. SIBV filed for arbitration on December 18, 2006. On
September 17, 2007, the Spanish court ruled in favor of SIBV. On January 18, 2008, the parties entered into an
agreement terminating the ADM and DA Agreements. Each party agreed to pay their own expenses and attorney fees
for the Spanish court action. SIBV agreed that it would pay fees charged by the arbitrator. FSL received one hundred
thousand euros. FSL assigned the domain name, www.subwayspain.com, to SIBV’s designee, Doctor’s Associates Inc.
12) Doctor’s Associates Inc., Claimant v. Stephen Correia, Respondent (American Arbitration Association, No. 12
114 E 00345 07, filed June 12, 2007) On July 17, 2007, the franchisee filed a counter-claim in response to the
arbitration. Respondent denied that he breached his franchise agreement and claims that DAI and SREC committed
fraud and breach of contract. Respondent claimed that the Claimant misrepresented that a long-term lease existed
for the location of Claimant’s restaurant, that the Claimant failed to negotiate a long-term lease on the location, that
the Claimant gave the Respondent the wrong address for the new location and that enforcement of the franchise
agreement is unconscionable. Respondent sought damages in excess of $10,000,000 and all other relief just and
proper. On September 24, 2008, the Arbitrator issued his award terminating the Respondent’s franchise agreement
and denying all of his counterclaims. On January 12, 2009, DAI filed Doctor’s Associates Inc., Petitioner v.
Stephen Correia, Respondent, (Supreme Court of the State of New York, County of Queens Index No. 1172/09)
seeking an order confirming the Arbitration Award . On February 17, 2009, the Respondent filed a Verified Answer
with Counterclaims. In his three counterclaims the Respondent seeks damages in the amount of $2,000,000
stemming from his allegation of tortious interference with his negotiation of a new lease with his landlord,
interference with a contract that resulted in a judgment against the Respondent after he was sued by another
Subway® franchisee, and alleged tortious interference with contractual rights with the approved food service
vendor.
13) Jesal Desai, Shapat, Inc. Shapat 2, LLC, Shapat 3, LLC and Patwari, LLC, Plaintiffs v. Doctor’s Associates Inc.
(“DAI) and Subway Real Estate Corp. (“SREC”), Defendants. (Superior Court of New Jersey, Chancery Division,
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Middlesex County). This action was filed October 1, 2007 for temporary restraint and preliminary injunctive relief
to enjoin the enforcement of an arbitration award and termination of Plaintiff’s four SUBWAY® stores. In May
2007, Defendants commenced an arbitration process in the State of Connecticut to terminate four of the Plaintiff’s
franchise agreements for failure to comply with the Operations Manual and failure to pay royalties, advertising
charges and rents. Plaintiff objected to the arbitration process but Defendant proceeded in September 2007 and
obtained an award providing termination of Plaintiff’s four franchise agreements. Plaintiff alleges that all
Defendant’s actions are without good faith and fair dealing and in violation of the New Jersey Franchise Practices
Act. Plaintiff is seeking reformation of the contracts between the parties and voiding the arbitration choice of law,
stay of SREC’s action terminating the Plaintiff’s subleases plus damages, attorney fees and other such relief.
14) Dielli Husen and Subway Development, Inc., Claimant v. Doctor’s Associates Inc. (“DAI”), Respondent.
(American Arbitration Association, Case #26-0428-07S). This action was filed on October 12, 2007 by
Development Agent Dielli Husen and his company claiming violation of Michigan general statutes, tortuous
interference with the sale and assignment of Claimant’s Development Agent Agreements on three separate
occasions, disputing DAI’s payment of bonuses and assessment of penalties against him and disputing the right of
DAI to assess costs and legal fees against him. Claimant is seeking declarations that DAI violated the Michigan
Franchise Investment Law and the Connecticut Unfair Trade Practices Act. Claimant is also seeking adjustment of
the formula used to determine the payment of bonuses and assessment of penalties and damages for the amounts
wrongfully withheld due to the application of the formula, declarations that DAI is not authorized to make
deductions, compensatory and punitive damages plus interest on the amount of the original offers to purchase
Claimant’s Development Agent Agreements. The Relief sought is above $5,000,000 but not above $10,000,000.
15) Leon Batie, Plaintiff v. Subway Real Estate Corporation and Travis Brown, Defendants (U.S. District Court for
the Northern District of Texas, Dallas Division, Case No. 307-CV1415-M). On August 17, 2007, SREC was served
in the above case brought by a former Subway® franchisee in Dallas Texas. Plaintiff seeks a declaratory judgment
that SREC failed effect proper service of process when it filed an eviction action against the Plaintiff. The Plaintiff
also seeks damages from SREC resulting from the alleged violation of the Servicemembers Civil Relief Act and
Wrongful Conversion of Property. Plaintiff seeks compensatory and punitive damages in excess of $5,000,000,
costs of court, reasonable attorneys’ fees and such other relief as the court deems appropriate. On February 15, 2008,
the District Court granted SREC’s Motion to Dismiss. Thereafter, the Plaintiff filed a Motion for Reconsideration
which was granted and reheard SREC’s Motion to Dismiss. On June 24, 2008, the District Court again granted
SREC’s Motion to Dismiss. On September 18, 2008, the Plaintiff refilled the above case in the District Court of
Dallas County, Texas, 101st Judicial District Case No. DC-08-087955-E. The Plaintiff named SREC, Travis Brown,
JP Morgan Chase N.A. and Comerica Bank as Defendants. The Plaintiff is again seeking compensatory damages
and punitive damages in excess of $5,000,000 as well as costs and attorney fees. On October 2, 2008, the Plaintiff
filed his First Amended Petition for Bill of Review in the Justice Court of Dallas County, Precinct 5, Place 1 seeking
to have the Justice Court reopen one of his eviction cases.
16) Solomon A. Oshowole v. Subway Real Estate Corp, Doctor’s Associates Inc. and The Dalton Gang, Inc.
(County Court at Law No. 2, Dallas County, Texas, Case No. CC-07-12875-B) On March 6, 2008, the Plaintiff filed
an Amended Petition adding Doctor’s Associates and the Dalton Gang, a Subway® Development Agent, as parties to
his complaint. The Plaintiff’s allege that SREC, DAI and the Dalton Gang engaged in discriminatory behavior in
violation of 42 U.S.C. §1981 based upon the Plaintiff’s race, color and ethnicity. The Plaintiff also alleges that the
Defendants operated as a joint enterprise, seeks damages for breach the implied covenant of good faith and fair
dealing, breach of contract, tortuous interference with existing and prospective business relations, civil conspiracy,
defamation and business disparagement, fraud and fraudulent inducement, and intentional infliction of emotional
distress. The Plaintiff seeks actual, pecuniary, economic and personal injury damages, attorney’s fees and costs in
an unspecified amount and that the Defendant’s be enjoined from alleged discriminatory conduct against AfricanAmerican franchisees. On April 17, 2008, Defendants DAI and the Dalton Gang filed Petitions to Compel
Arbitration against the Plaintiff in U.S. District Court for the District of Connecticut as Doctor’s Associates Inc. v.
Solomon A. Oshowole, Case No. 3:08CV00583(PCD). On June 23, 2008, the U.S. District Court for the District of
Connecticut granted the Defendant’s Petition to Compel and ordered the Plaintiff to submit any claims to arbitration
on or before July 31, 2008. To date, the Plaintiff has not submitted a Demand for Arbitration.
17) Jeffrey Offutt as a Trustee of the Subway Franchisee Advertising Fund Trust and The Subway Franchisee
Advertising Trust v. Doctor’s Associates Inc. (U.S. District Court for the District of Connecticut, Case No. 3:07CV-00363(AWT) On March 7, 2007, the Plaintiff filed the above case seeking a Declaratory Judgment that the
Trust Agreement between SFAFT and DAI requires DAI to pay all advertising contributions made by SUBWAY®
franchisees to SFAFT rather than any other fund which meets DAI’s guidelines, to void any provision in DAI’s
franchise agreements which states otherwise, and further seek injunctions to enjoin DAI from sending or directing
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franchisees to send those contributions to any advertising fund other than SFAFT. On August 28, 2008, the
Defendant filed a Motion to File Supplemental Answer and Counterclaims and to Add Parties seeking to add as
Counterclaim Defendants the other thirteen (13) Trustees, Ray Burrows, Mike Zwally, Gary Davis, George Estep,
Patti Swierbut, Scott Simpson, Mike McCoy, Debra Odom, Karen Miller, Rick Orwick, Chuck Roy, Andrew
Johnston and Ben Old, and suing them and the Plaintiff solely in their capacity as SFAFT Trustees for acts arising
out of and relating to their management of the Trust for Breach of Fiduciary Duties and Breach of Trust Agreement.
The Defendant seeks a declaratory judgment that the Trustees violated sections of the Trust Agreement and a
judgment that the Trustees are jointly and severally liable for wrongful disbursement of funds to indemnify Dielli
Husen in his suits against DAI and Fred DeLuca. SIBV and DAI have determined to administer international
advertising funds without the services of SFAFT. On September 26, 2008, SFAFT served notice that it is seeking a
preliminary injunction to prevent SIBV and DAI from changing the manner in which international funds are
currently administered. On January 29, 2009, the court granted DAI’s Motion for Leave to File Supplemental
Answer and to add Counterclaim Defendants.
18) Waqas Saleemi and Farooq Sharyar Plaintiff v. Doctor’s Associates Inc., Defendant (Superior Court of the State
of Washington County of Pierce, Case No. C8-2-11956-0). On August 27, 2008, two Subway® franchisees filed the
above action seeking to enjoin Doctor’s Associates from proceeding with an arbitration now pending before the
American Arbitration Association in Connecticut case no. 12 114 E 00457 08. The Plaintiffs’ seek an injunction
enjoining the Defendant from proceeding with the pending arbitration, an order enjoining the Defendant from
conducting the arbitration in Connecticut, an order that Washington state is the proper jurisdiction for the dispute,
judgment against the Defendant at trial including treble damages under the Consumer Protection Act, attorney fees
and cost.
19) WJ Group LLC, Plaintiff v. Hunter Management Company, Inc., Tony Dawe, Ryan Dawe, Shan Peterson,
Roderick Farms LLC, Bajio Leasing LLC, Subway Real Estate Corp., Professional Broker, Q. Reid Hunter,
Defendants (Third Judicial District Court – West Jordan District of Salt Lake County, State of Utah, Case No.
080418401) This claim was brought on October 22, 2008, by a landlord of a building where a Bajio® restaurant was
located against the Bajio franchisee tenants, a real estate broker, two leasing companies, and a Subway® and Bajio®
Development Agent. The Plaintiff believes the Defendants made false representations with respect to property where
the Bajio® restaurant was located and the Defendants defaulted on their obligations arising from the terms of lease
between the parties. The Plaintiff is claiming breach of contract, detrimental reliance, misrepresentation, breach of
warranty, deceptive business practices, unjust enrichment/quantum meruit, negligence, breach of fiduciary duty, and
other unknown causes of action. The Plaintiff is seeking monetary damages against the Defendants for an unknown
amount of monetary damages, interest on the damages, costs and legal fees. In the alternative, the Plaintiff is
seeking a combination of monetary damages and injunctive relief seeking an order that the Defendants find a
replacement tenant for the location.
20) Ibrahim Atwa, Plaintiff v. Doctor’s Associates Inc. and Bobbie Rivers, Defendants (Second Judicial District
County of Bernalillo State of New Mexico, Case No. CV 2008 13294) On December 22, 2008 the Plaintiff filed the
above complaint seeking a Declaratory Judgment and damages for Tortuous Interference with Contract, Breach of
Contract, Breach of Fiduciary Duty and Prima Facia Tort arising out of his sale and transfer of his franchise to
Defendant Rivers. The Plaintiff seeks a Declaratory Judgment that the franchise agreement including the arbitration
clause should not be enforced, an unspecified amount of damages, punitive damages and such other relief as the
Court deems just and proper.
21) Anthony Dawe, Ryan Dawe, Shan Peterson, Roderick Farms, LLC and Verdugo Farms, LLC, Plaintiffs v.
Bajio, LLC, Bajio National, LLC, Hunter Management Group, LLC, Logan C. Hunter, Jason Stowe, Darrell
Gamble, and Salt City Orchards, LLC, Defendants (Fourth District Court of Utah County, State of Utah, Case No.
090400197) On January 27, 2009, the above complaint was served upon the Defendants by the Plaintiffs in
connection with Bajio franchises owned by the Plaintiffs. The Plaintiffs allege that Defendants Bajio and Hunter
failed to provide the Plaintiffs with an Offering Circular prior to the assignment of franchise agreements owned by
Defendant Gamble, that Bajio and Hunter failed to register with the State of Utah in order to sell a business
opportunity or obtain an exemption. The complaint also alleges breach of contract and misrepresentation. The
Plaintiffs seek an order rescinding the franchise agreements and an order that the Defendants pay Plaintiffs the
amount of all their investments and costs in connection with the purchase and operation of the Bajio franchises. In
the alternative the Plaintiffs seek actual, compensatory and punitive damages in an amount to be determined at trial,
interest, costs, expenses and attorney fees and for such other and further relief as the court deems just and equitable.
22) Fernando C. Daher and Daher Alimentos, Ltda., Plaintiffs v.Subway Systems do Brasil Ltda. (“SSB”) And
Fabio de Juarez Marques Junior, Defendants (Fifth Lower Civil Court of Anapolis, Goias, Brazil, Case No.
6
200900075826) This action was filed on January 9, 2009 by franchisees claiming fraud, misrepresentation, and
violations of the Brazilian Franchise Act. The Plaintiffs allege that documents provided by SSB were not translated
into Portuguese and contain provisions that are in violation of the Brazilian Franchise Act and SSB failed to act
when Fabio de Juarez Marques Junior, a Development Agent forged Plaintiff Daher’s signature and denied the
Plaintiffs an opportunity to open a location. The Plaintiffs wish to retain the equipment currently at the restaurant
once all balances are paid and are seeking a declaratory judgment declaring the franchise agreement and conditional
collateral assignment of lease null and void, $200,000 in actual and punitive damages, twenty percent (20%) of all
court costs, and lost profits.
23) Tom Bursian, Plaintiff v. Subway International B.V., Markus Engels, Engels and Horig GbR, Defendants (
District Court of Cologne, Cologne, Germany, Case No. 29 0 248/08. The action was filed on February 12, 2009.
The Defendants have been notified of the above suit filed in a German court by a former franchisee alleging that the
Defendants failed to negotiate with care prior to the signing of the franchise agreement, challenges the franchise
agreement based on malicious misrepresentation prior the Claimant signing the franchise agreement. The Claimant
seeks to revoke the franchise agreement, payment of 193,279.47 EURO plus interest, reimbursement of all future
damages and cost of this proceeding.
B. Civil Actions Which Have Been Settled, Dismissed, Reached Judgment or Withdrawn Prior to Final Judgment:
1) David Breslow (11 114 00363 93), John Castanes (11 114 253 93), Ron Gomez (11 114 00382 93), George Peck
(11 114 00380 93), Rhonda Breault (11 114 00362 93), Catherine Kern (Executrix of the estate of Michael Kern)
(11 114 00373 93), Carole Baker (11 114 00361 93), James Brown (11 114 00364 93), Larry Bryson and Clifton
Pease (11 114 00365 93), Richard and Marcy Cantelmo (11 114 00366 93), Mike Cunningham and Clarice Fujihara
(11 114 00367 93), John Forster (11 114 00370 93), Jed Esposito (11 114 00368 93), William Gray (11 114 00371
93), Richard Hinkle (11 114 00372 93), Mike LeVan (11 114 00375 93), Jim Linton and Maria Rowley (11 114
00376 93), Nelson Niles (11 114 00377 93), Anil Patel (11 114 00378 93), Bharti Patel (11 114 00379 93), Wayne
Sims (11 114 00381), Marilyn Sutton (11 114 00383 93), Ernie and Dixie Tauck (11 114 00384 93), Robert and
Billie Walters (11 114 00385 93), Chun Leon Fong (11 114 00369 93), Dean Kolbinsky (11 114 00374 93), Joyce
Depray (11 114 00189 94), Claimants v. Cajun Joe's Development Corporation (CJDC), Cajun Joe's Real Estate
Corporation (CJREC), Doctor’s Associates Inc. (DAI), Fred DeLuca, Peter Buck, Respondents (American
Arbitration Association (AAA) in Boston, Massachusetts, filed on August 26, 1993). This demand for arbitration
was filed by former Cajun Joe's® franchisees claiming breach of contract, breach of implied duty of good faith and
fair dealing, fraud, unfair and/or deceptive acts or practices and violation of 16 C.F.R. 436, Mass. G.L. c.93A, sec. 9
and 11 and Connecticut Uniform Trade Practices Act Section 42-110a-q. The Claimants alleged that CJDC did not
provide adequate marketing, training, advertising and operating assistance, underestimated the costs of building and
operating the Cajun Joe's® franchise, concealed material facts and non-disclosures and made earnings
representations. The Claimants also claimed that shell corporations held Cajun Joe® store leases, CJDC and DAI
were interrelated and that Mr. DeLuca and Dr. Buck created shell corporations to shield themselves from liability.
On October 6, 1993 the AAA determined that the Claimants could not consolidate the arbitration and on November
30, 1993 they divided the actions up separately and assigned new arbitration numbers to all the claimants as listed
above. All the respondents and claims remained the same. Doctor’s Associates Inc. (DAI), Frederick DeLuca, Peter
Buck and Cajun Joe's Real Estate Corp., Plaintiffs v. Estate of John Castanes, Defendant (Superior Court for Suffolk
County, Massachusetts, Case No. 942755B, filed May 20, 1994). This related action was filed to obtain a judgment
preventing the Defendant from arbitrating against DAI, Mr. DeLuca, Dr. Buck and CJREC who were not parties to
the Franchise Agreement. On March 27, 1995, the Claimants in the arbitration proceeding amended their complaint
and demanded exemplary damages on Count One of their complaint. On April 10, 1995, CJDC filed a petition to
reorganize under Chapter 11 of the U.S. Bankruptcy Code (U.S. Bankruptcy Court for the District of Massachusetts,
Case No. 95-12484). On May 17, 1995, the Bankruptcy Court granted CJDC’s Motion for Preliminary Injunction
prohibiting the Claimants in the arbitration proceeding from pursuing their claims. On August 15, 1996 by Order
Confirmed by the Bankruptcy Court in the CJDC bankruptcy case, an Agreement assigning all of the Claimants’
causes of action in this case to a third party nominee representing Mr. DeLuca, Mr. Buck and DAI became effective.
The nominee purchaser paid the sum of $1,620,000 to be split among the 27 Claimants. The claims were
subsequently waived in the course of the Confirmation of the Bankruptcy Case.
2) D. Craig Knippenberg, Plaintiff v. Subway Restaurants, Inc., Subway Real Estate Corporation, Doctor’s
Associates Inc. (DAI), Franchise World Headquarters, Inc., Defendants (Circuit Court for Alleghany County,
Maryland, Case No. 95-12017-S). This action was filed on July 3, 1995 by a franchisee in response to an eviction
action filed by Subway Real Estate Corporation against him for royalty and advertising fees owed on four
franchises. Mr. Knippenberg claimed DAI and its affiliates breached their contracts when DAI improperly withdrew
and transferred funds from his pre-authorized account. He also claimed breach of the fiduciary relationship and
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intentional misconduct and negligence. In a supplemental complaint filed in December, 1995, Mr. Knippenberg
added claims for breach of agreement to determine and discharge his obligations, reinstitution of proceedings in
breach of an agreement and without notice resulting in the eviction of Mr. Knippenberg from his store, wrongful
interruption of the transfer of his store by requiring payment of additional funds, breach of fiduciary duty because of
a conflict of interest because the Defendant’s agents became potential buyers of the store, committing a pattern of
misrepresentation and recharacterizing the nature of claims for money owed. Mr. Knippenberg sought $225,000
plus $50,000 in exemplary damages and declaratory relief. In June of 1999 an arbitrator’s decision was entered.
Mr. Knippenberg was awarded $7500 and would be allowed to sell his store; if the store was not sold, an appraiser
would be appointed and Subway Restaurants would purchase the store. In September of 2002 DAI paid
Knippenberg $39,934.97. Mutual releases were exchanged, and Knippenberg and DAI terminated all franchise
contracts between them.
3) Ken Fielding, Claimant v. Doctor’s Associates Inc. (DAI), Respondent (American Arbitration Association,
Hartford, Connecticut). This arbitration proceeding was filed in February, 1997 by a Canadian Development Agent
claiming breach of contract, disputing the length of term of the contract, which competing chain’s development he is
contractually obligated to match, DAI’s payment of bonuses to him, the enforceability of DAI’s new development
and lease policies, DAI’s right to assess legal fees and other expenses against him, and whether DAI’s conduct
constitutes unfair trade practice under Connecticut Law. The Development Agent sought damages, legal fees, costs,
interest and Interpretation of Contract. On August 15, 2001, the Arbitrators ruled that DAI was entitled to make
deductions from the Claimant’s compensation for legal fees paid by DAI or its affiliates to enforce leases or
subleases, enforce franchise agreements, enter into settlements, or pay back rent; that the site review and leasing
policies developed by DAI are applicable and enforceable to the Claimant’s territory. The Arbitrators ruled that the
bonuses sought by the Claimant must be paid on an ongoing basis as earned and awarded $486,000 to the Claimant
for back bonuses. The Arbitrator also ruled that the Claimant was entitled to a 40 year contract, and that the Tim
Horton’s chain could not be used for setting contract goals under the Claimant’s contract. The Arbitrators denied all
other demands of the Claimant.
4) Subway Development of South Western Ontario, Ltd. (SDSWO), Claimant v. Doctor’s Associates Inc.(DAI),
Respondent (American Arbitration Association, Hartford, Connecticut). This complaint was filed on October 26,
1995, with subsequent amendments, by Development Agent Patrick Consoli’s corporation, claiming breach of
contract, fraud, misrepresentation, interference with contractual relations, intentional infliction of mental distress,
violation of various applicable state, federal, and provincial disclosure laws and the Connecticut Business
Opportunity Investment Act, damages arising from DAI’s changes to leasing and financing programs, disputing the
right of DAI to assess costs and legal fees against him, disputing the term of the Development Agent Agreement,
disputing DAI’s payment of bonuses to and assessment of penalties against him, seeking to bar Frederick DeLuca
and DAI from owning or operating any aspect of the Subway franchise business, and seeking interpretation of
various contractual terms. The Claimant sought damages in the potential amount of $61,158,437.06, plus interest,
legal fees, exemplary damages, inflation adjustment, and possible future claims. DAI counterclaimed against
SDSWO and Patrick Consoli, seeking substitution of Mr. Consoli as the proper Claimant in the arbitration, a
declaratory award that Mr. Consoli breached the Development Agent Agreement, termination of Mr. Consoli’s
Development Agent Agreement or a declaratory award requiring Mr. Consoli to sell his interest in the Development
Agent Agreement, and compensatory damages. On March 20, 2002, the arbitrators rendered their award. Claimant's
DAA was extended from twenty years to forty years in length; Claimant's assignment of his contract to SDSWO
would be recognized subject to the terms of the DAA; the calculation of store volume requirements under the DAA
shall not include convenience store locations, and claimant would be reimbursed for site review costs up to DAI's
policy of $500 only. All other claims and counterclaims were denied, and no monetary damages were awarded.
5) David S. Butler, Plaintiff v. Hunter Management Company, Q. Reid Hunter, Logan Hunter and B. Shawn Cook,
Defendants (Third Judicial District Court, Salt Lake County, Utah, Case No. 98-0902889, filed March 18, 1998).
This action was filed by a franchisee claiming breach of the covenant of good faith and fair dealing and intentional
interference with prospective economic relations. Mr. Butler claimed that the defendants, agents for Doctor’s
Associates Inc. (DAI), encouraged and allowed other franchisees to open sandwich shops in close proximity to his
own causing a loss of sales and profits as well as interfering with his potential sales and profits. On August 6, 1999
Mr. Butler agreed to sell his two stores to Hunter Management Company for $350,000. Mr. Butler agreed not to reenter the sandwich business for one year. Neither the Hunters nor DAI admitted any liability and mutual releases
were exchanged between all parties.
6) Fresh Alternatives, Inc., Claimant v. Doctor’s Associates Inc. (DAI), Respondent (American Arbitration
Association, Hartford, Connecticut, filed May, 1998). This arbitration was filed by the corporation of a DAI
Development Agent in the State of Minnesota claiming breach of contract and unfair trade practices under the
8
Connecticut Unfair Trade Practices Act (CUTPA). The Claimant was seeking delinquent bonus payments,
exemplary damages, legal fees, costs and a declaratory judgment compelling the Respondent to honor the bonus and
penalty clause of the Development Agent Agreement. On July 8, 1999 the arbitration award was issued; DAI must
honor the bonus and penalty clause and pay delinquent bonus payments to the Development Agents. No punitive
damages were awarded to the Development Agents.
7) Doctor’s Associates Inc. (DAI), Claimant v. Michael Johnson, Respondent (American Arbitration Association in
Hartford, Connecticut, Claim No. 12-114-00014-93, filed on December 10, 1992) DAI filed this action to recover
unpaid royalties owed by
a franchisee and to resolve a dispute with him regarding claimed credits due to a DAI employee's embezzlement of
funds. Michael Johnson, Plaintiff v. Doctor’s Associates Inc. (DAI), Frederick DeLuca, Peter Buck, Franchise
World Headquarters, Inc., Pete Slomianyj, North Carolina Subway Group, Inc., Douglas Bentelle, Sheila Hallett,
Santo Rhodes, Michael Armellino and Nancy Timmons, Defendants (General Court of Justice, Superior Court
Division, Gaston County, N.C., Case No. 93-CVS- 1324) was filed in connection with the arbitration proceeding, on
April 8, 1993. In the court action, Mr. Johnson claimed DAI, its affiliate, employees of its affiliate, and
Development Agent concealed the misappropriation of funds by its employees, were negligent by not investigating
the alleged misappropriations and not using diligence in the hiring of its employees, used duress and fraud in
bringing a forcible detainer action against him and threatening loss of property in order to circumvent arbitration
proceedings, and committed a breach of fiduciary duty by misadministering the funds of the Franchisee Advertising
Fund. On April 14, 1993, Mr. Johnson filed an amended counterclaim to the arbitration action filed with the
American Arbitration Association in Hartford, Connecticut entitled Doctor’s Associates Inc. (DAI), a Florida
Corporation (F/K/A DAI, Connecticut Corporation) Claimant and Counter-Respondent v. Michael Johnson,
Respondent and Counter-Claimant. On February 23, 2000, after the order to arbitrate was final, the parties agreed to
a confidential settlement whereby Mr. Johnson agreed to pay DAI the sum of $37,500 in return for which DAI
permitted the transfer of Mr. Johnson’s restaurant to another franchisee, the parties exchanged mutual releases and
dismissed all pending litigation and arbitration.
8) Jerry Segal, Rene Harrush, Gerald Lev, Subway Development of Alberta Ltd., and Subway Development of
British Columbia Ltd., Claimants v. Doctor’s Associates Inc. and Subway Franchise Systems of Canada, Ltd.,
Respondents (American Arbitration Association, East Hartford, Connecticut, filed on October 1, 1996.) This
arbitration was filed by Canadian Development Agents claiming breach of contract due to the Respondents failure to
pay monies owing to the Claimants as bonuses for the development of SUBWAY® franchises in the provinces of
Alberta and British Columbia. On October 29, 1999 the parties settled their claims. Subway Franchise Systems of
Canada, Ltd. paid Claimants $164,000 (Canadian) and agreed to pay Claimants $1800 (Canadian) each month under
the Alberta Agreement and $1300 (Canadian) each month under the British Columbia Agreement for the balance of
the initial term of each agreement. The Claimants agreed to withdraw their arbitration claims and mutual releases
were exchanged between the parties.
9) Salsand, Inc., Claimant v. Doctor’s Associates Inc. (DAI), Respondent (American Arbitration Association,
Hartford, Connecticut, filed February, 1996.). This arbitration proceeding was filed by a Canadian Development
Agent’s corporation, claiming breach of contract and interference with contractual relations, disputing the right of
DAI to assess costs, legal fees and penalty fees against him, and whether DAI has the right to solely decide whether
a prospective franchisee has the right to purchase a franchise. The Claimant was also seeking to determine whether
the Connecticut Business Opportunity Investment Act applies to the relationship between DAI and the Development
Agent. On November 15, 1999 the Arbitrators handed down their ruling. The award denied all of the Claimant’s
claims except that they granted a declaratory award preventing DAI from deducting from the Claimant’s payments
any amount allegedly incurred for legal fees or to settle any claim against any company other than DAI. On August
1, 2000 the District Court of Connecticut confirmed the arbitration award. DAI filed an arbitration to terminate the
Claimant’s Development Agent contract. On June 1, 2001 the Arbitrator ruled that DAI could terminate the
Claimant’s Development Agent contract for his failure to develop the number of stores required under the contract.
10) Erik J. Hamilton and Hamilton Williams, Inc., Plaintiffs v. Doctor’s Associates Inc., William McClain, and
Michael Stocklin, Defendants (Superior Court of New Jersey, Law Division, Middlesex County, Case No. L 847 97,
filed January 22, 1997.) This action was filed by a franchisee claiming Mr. McClain and Mr. Stocklin, a
Development Agent of DAI and his employee, made misrepresentations of fact in order to induce the franchisee into
signing a franchise agreement. The franchisee also claimed that New Jersey franchise statute N.J.S.A. 56:10-7(b)
was violated when DAI, through its agents and employees Mr. McClain and Mr. Stocklin, prohibited the franchisee
from speaking with the former owner of the franchise before purchasing it. On February 22, 2000, the parties
agreed to settle the case for $54,000, approximately what Mr. Hamilton paid for the restaurant and the franchise
9
agreement. In return Mr. Hamilton agreed to return all signage and equipment, and not to operate a competing
sandwich shop for a period of ten years.
11) CTB Enterprises Inc., d.b.a. Subway Development of the Inland Empire, Claimant v. Doctor’s Associates Inc.,
Respondent (American Arbitration Association, Hartford, Connecticut, filed June 22, 1999) This arbitration
proceeding was filed by the corporation of a DAI Development Agent in the State of California claiming breach of
contract. The Claimant sought damages in the amount of $62,821.36, interest, costs and attorneys fees. DAI
counterclaimed for monies owed by Ms. Baker under her Development Agent Contract, promissory note and
franchise contracts. On January 24, 2000 the arbitrators ruled that the Claimant would not be obligated to pay for
legal costs, settlement costs, and costs of store resales incurred by DAI’s affiliates, but that the Claimant must pay
the amounts owed for royalties, advertising and promissory note payments. The Claimant was ordered to pay to
DAI advertising fees, back royalties, profits made on store resales and monies due under a promissory note, which
totaled $103,866.28. The Claimant received credit for monies DAI deducted to pay legal fees, store resale costs and
lease settlements of its affiliates, and interest, which totaled $100,712.42. DAI received a net payment of $3,153.86
from the Claimant.
12) Subway Development of North West Florida, Claimant v. Doctor’s Associates Inc. (DAI), Respondent
(American Arbitration Association, Hartford, Connecticut, No. 12 114 00199 98). This arbitration was filed on July
9, 1998 by the corporation of a DAI Development Agent in the State of Florida claiming breach of contract and
unfair trade practices under the Connecticut Unfair Trade Practices Act (CUTPA). The Claimant sought delinquent
bonus payments, exemplary damages, legal fees, costs and a declaratory judgment compelling the Respondent to
honor the bonus and penalty clause of the Development Agent Agreement (“DAA”). On June 16, 2000 the
arbitrators presented their findings. The arbitrators denied the Claimant’s demand for a declaratory judgment
compelling the Respondent to apply the bonus and penalty clause of the DAA, let stand DAI’s previous agreement
which pays the Claimant $1,600 per month for the remainder of the DAA and denied the Claimant’s other claims
and requests.
13) Eric E. Hamilton, Claimant v. Doctor’s Associates Inc. (DAI), Respondent (filed with the American Arbitration
Association in Somerset, New Jersey with a request for a hearing to take place in Bridgeport, Connecticut, August
17, 1994). DAI was served with a Demand for Arbitration by a franchisee who claimed breach of contract and fraud
and sought relief in excess of $20,000. On September 13, 1994, DAI filed an answer and counterclaim for unpaid
rent and attorney's fees. On July 17, 2000 the parties agreed to a settlement whereby Mr. Hamilton acknowledged
and paid his rent obligation to Subway Real Estate Corp. and received $41,750 from DAI. In return, Mr. Hamilton
sold back his franchise to DAI, returned all equipment and signed a mutual release.
14) Nicholas C. Jannotta and Carmein Day Blasucci, Co-Executors and Co-Personal Representatives of the Estate
of Victoria Jannotta and Nicholas Jannotta, Plaintiffs v. Subway Sandwich Shops, Inc., Frederick DeLuca, Peter
Buck and Doctor’s Associates Inc. (DAI), Defendants (United States District Court for the Northern District of
Illinois, Case No. 94C 3834, filed June 23, 1994) In this action the Plaintiffs claimed the Defendants committed
fraud, breach of contract, and misrepresentation of fact.
They alleged Subway Sandwich Shops, Inc. was a shell corporation and was used to fraudulently induce the
Plaintiffs to execute a lease. On November 21, 1995 the jury awarded damages in the amount of $328,994 and
exemplary damages in the amount of $10,000,000. On February 14, 1996, the Court denied the Defendant’s motion
to set aside the judgment and granted attorney’s fees in the amount of $196,325.88 to the Plaintiffs. The Defendants
appealed the award of exemplary damages. On September 9, 1997 the U.S. Court of Appeals for the 7th Circuit
vacated the judgment awarding exemplary damages and remanded the case to the District Court for a new trial on
that issue. On October 26, 1998, the jury in Jannotta II returned a verdict in favor of the plaintiff in the amount of
$100,000. On November 4, 1998 the Plaintiff moved for a new trial, reconsideration of the verdict, both of which
were denied, and attorneys’ fees. On August 29, 2000, the U.S. Court of Appeals for the Seventh Circuit upheld the
award of attorneys’ fees in the amount of $132,795.72 for the trial and $26,089.05 for the plaintiffs’ fee in the
appeal.
15) Philip Mesi/Subway Development Corporation of Chicagoland, Claimant v. Doctor’s Associates Inc.,
Respondent (American Arbitration Association, Chicago, Illinois, filed August 26, 1999) This arbitration was filed
by a DAI Development Agent in the State of Illinois. The Claimant claimed he was not responsible for and sought
reimbursement of past and ongoing legal expenses arising form cases involving franchisees and their landlords in his
development territory. He sought a declaration that he was not obligated to pay additional expenses for those cases,
an injunction to stop the deductions, and approximately $400,000 in damages and interest. On September 1, 2000
the arbitrators awarded the Claimant legal fees previously deducted plus interest, totaling $538,558.46.
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16) Patricia F. Mendes, Plaintiff v. Subway Systems Australia Pty Ltd A.C.N. 009 277 034, First Defendant and
Subway Realty Pty Ltd A.C.N. 009 277 374, Second Defendant (District Court of Queensland, District Court
Registry Brisbane, No. D4752/2000, filed November 24, 2000) This action was filed by a franchisee claiming
deceptive conduct, misrepresentation and negligence. Ms. Mendes claimed that Michael Thorpe and John Brice, on
behalf of the First and Second Defendants, represented that ice cream and pastry products were approved as standard
menu items in SUBWAY® restaurants, that the addition of these items to the standard menu would increase her
average weekly sales, and that due to the increase in sales, she would be able to afford a larger location. Ms.
Mendes also claimed that due to these misrepresentations she has suffered damages and loss in excess of $128,000
AUS. Ms. Mendes sought an order varying the terms of the lease between her and the Second Plaintiff relieving her
from liability regarding rent and other charges relating to the extra area added to the premises for the ice cream and
pastry products, as well as an order that the Second Plaintiff compensate her for any adjustment arising from the
order and damages in an unspecified amount, interest and costs. This matter was settled on February 15, 2001. The
Defendants agreed to pay the Plaintiff the sum of $100,000 AUS, the Plaintiff agreed to execute a Notice of
Discontinuance of the District Court Action and the parties agreed to release each other from all they might have
against each other.
17) Paul and Melissa Riise, Rhonda Benton, John Gillon and Sonya Smith, Plaintiffs v. Doctor’s Associates Inc.
(DAI), Subway Restaurants, Inc., Subway Sandwich Shops, Inc., Subway Equipment Leasing Corporation, Subway
Development of North Alabama, Inc., Bernard Frausto, Frederick DeLuca and Peter Buck, Defendants (Circuit
Court of Jefferson County, Alabama, Case No. CV 94-129, filed January 4, 1994). DAI was served with this action
brought by franchisees claiming DAI, its leasing affiliates and local Alabama Development Agent made fraudulent
misrepresentations, committed breach of fiduciary duty, negligence, breach of covenant of good faith and fair
dealing, interfered with business relations and concealed and intentionally did not disclose material facts. The
Plaintiffs sought compensatory and exemplary damages in an undisclosed amount, costs, interest and a trial by jury.
DAI sought to arbitrate the Plaintiffs' claims and to recover over $12,000 in royalty and advertising payments due
under the Franchise Agreement from each franchisee except Rhonda Benton. On March 9, 1994, DAI filed separate
civil actions in the U.S. District Court for the District of Connecticut in order to compel arbitration in Connecticut
pursuant to the Franchise Agreement: DAI, Plaintiff v. Paul and Melissa Riise, Defendants, (Case No. 394CV00371
AHN), DAI, Plaintiff v. Rhonda Benton, Defendant, (Case No. 394CV00372 AHN), DAI, Plaintiff v. John Gillon,
Defendant, (Case No. 394CV00369 JAC) and DAI, Plaintiff v. Sonya Smith, Defendant, (Case No. 394CV00370
AHN). In November, 1995, the Plaintiff John Gillon settled his disputes with DAI for $60,000. On June 20, 1996,
the remaining plaintiffs and DAI agreed to arbitrate their disputes in Atlanta, Georgia; Doctor’s Associates Inc. v.
Paul and Melissa Riise (Case No. 30 E 114 00245 94), Doctor’s Associates Inc. v. Sonya Smith, (Case No. 30 E 114
00243 94), and Doctor’s Associates Inc. v. Rhonda Benton (Case No. 30 E 114 00244 94). The Petition to Compel
Arbitration cases in Connecticut are closed (DAI v. Smith, No. 394CV00370, DAI v. Benton, No. 394CV00372, and
DAI v. Riise, 394CV000371). On June 23, 1997 the arbitration actions in Georgia were closed (DAI v. Paul and
Melissa Riise, No. 30 114 00245 94, DAI v. Sonya Smith, No. 30 114 00243 94, and DAI v. Rhonda Benton, No. 30
114 00244 94). On May 28, 1998 the Court granted the Summary Judgment Motion filed by the Defendant Bernie
Frausto on the former franchisees’ claims against him. On July 26, 2000, the Alabama court where the claims were
originally filed dismissed the action.
18) Bernardo Frausto and Subway Development of North Alabama, Inc. v. Doctor’s Associates Inc., Subway
Restaurants, Inc., Franchise World Headquarters Inc., Subway Sandwich Shops, Inc., Frederick A. DeLuca and
Peter Buck (Circuit Court of Jefferson County, Alabama, Case No. CV 94-129) was filed as a cross-claim in
connection with the above action. Mr. Frausto, a former DAI Development Agent, claimed breach of contract by
DAI for not protecting his interests and not meeting its fiduciary duties to him regarding the above action and other
matters. He claimed that DAI had not complied with the responsibility of transferring funds from the present
Development Agent’s account to him as part of an Assignment of Development Agent Agreement among him, DAI
and the present Development Agent. He also claimed that DAI used these funds for its own use. Mr. Frausto sought
judgment against DAI in an undetermined amount plus $1,000,000 in costs. Two counts were added alleging that
DAI failed to research the claims of the franchisee/plaintiffs and failed to limit his exposure in this suit and provide
him with an exclusive Development Agent Territory for 40 years and Mr. Frausto is demanding $20,000,000 for
each additional count. The parties have settled this matter. The Defendants admitted no liability and paid $100,000
to Mr. Frausto’s Chapter 13 Bankruptcy Trustee. The parties exchanged mutual releases. On May 8, 2000, the U.S.
Bankruptcy Court approved the settlement. On July 26, 2000, the State Court dismissed the matter with prejudice.
19) Monroe Quinn, Plaintiff v. Doctor’s Associates Inc. dba Subway Restaurant, Subway Restaurant, 1105
University Avenue, Berkeley, CA, Defendant (U.S. District Court, Northern District of California, Case No. C 00
1917 WHO, filed May 26, 2000), Yvonne Westbrook, Plaintiff v. Doctor’s Associates Inc., dba SUBWAY
Restaurant, SUBWAY Restaurant, 3205 Lakeshore Avenue, Oakland, CA, Defendant (U.S. District Court, Northern
11
District of California, Case No. C 00 1916 PJH, filed May 26, 2000), Samuel Choi, Plaintiff v. Doctor’s Associates
Inc., dba SUBWAY RESTAURANT, SUBWAY Restaurant, 4496 Broadway Street, Oakland, CA, Defendant (U.S.
District Court, Northern District of California, Case No. C 00 2169 VRW, filed June 19, 2000), Edward Moore,
Plaintiff v. Doctor’s Associates Inc., dba SUBWAY Restaurant, SUBWAY Restaurant, 4013 Telegraph Avenue,
Oakland, CA, Defendant (U.S. District Court, Northern District of California, Case No. C 00 1891 SI, filed May 24,
2000), Darlene King, Plaintiff v. Doctor’s Associates Inc., dba SUBWAY Restaurant, SUBWAY Restaurant, 92
Shattuck Square, Berkeley, CA, Defendant (U.S. District Court, Northern District of California, Case No. C 00 1831
JL, filed May 22, 2000); Marquejante A. Brown, Plaintiff v. Doctor’s Associates Inc., dba, SUBWAY restaurant,
SUBWAY Restaurant, 4300 Macarthur Blvd., Oakland, CA, Defendant (U.S. District Court, Northern District of
California, Case No. C 00 1832 JCS, filed June 6, 2000); Yvonne Westbrook v. Doctor’s Associates Inc., dba
Subway Restaurant, Subway Restaurant, 25040 Hesperian Way, Hayward, CA (Case No. C 004042 PJH, filed
November 1, 2000); Cynthia Wade v. Doctor’s Associates Inc., dba Subway Restaurant, Subway Restaurant, 5970
Mowry Ave., Fremont, CA (Case No. C 004040 WHA, filed November 1, 2000); Eddie King v. Doctor’s Associates
Inc., dba Subway Restaurant, Subway Restaurant, 13501 San Pabli Ave., San Pablo, CA (Case No. C 003056 CAL,
filed on August 24, 2000); Monroe Quinn v. Doctor’s Associates Inc., dba Subway Restaurant, Subway Restaurant,
22549 Second St., Hayward, CA (Case No. C 004041 CRB, filed on November 1, 2000); Cynthia Wade v. Doctor’s
Associates Inc., dba Subway Restaurant, Subway Restaurant, Southland Mall, Hayward, CA (Case No. C 004044
MJJ, filed on November 1, 2000); Eddie King v. Doctor’s Associates Inc., dba Subway Restaurant, Subway
Restaurant, 423 Bush St., San Francisco, CA (Case No. C 003048 VRW, filed on August 24, 2000); Edwin Moore
v. Doctor’s Associates Inc., dba Subway Restaurant, Subway Restaurant, 3800 San Pablo Dam Rd., El Sobrante, CA
(Case No. C 003054 MMC, filed August 24, 2000); Tracey Keyes v. Doctor’s Associates Inc., dba Subway
Restaurant, Subway Restaurant, 2675 Geary Blvd., San Francisco, CA (Case No. C 003052 CRB, filed August 24,
2000); Americans With Disabilities Advocates and George S. Louie v. Doctor’s Associates Inc., dba Subway
Restaurants, Subway Restaurant and Alixeza H. Ghafouri, 1312 Broadway, Oakland, CA (Case No. C 001747 CAL,
filed May 17, 2000); Barnabus Fairfield v. Doctor’s Associates Inc., dba Subway Restaurant, Subway Restaurant &
Corzon A. Malonzo, 1970 Broadway, Oakland, CA (Case No. C 001757 CAL, filed on May 17, 2000); Samuel Choi
v. Doctor’s Associates Inc., dba Subway Restaurant, Subway Restaurant, 1803 E. Capitol Expressway, Silver Creek
Plaza, San Jose, CA (Case No. C 0021173 RMW, filed on November 17, 2000); Benjamin Lamar Smith v. Doctor’s
Associates Inc., dba Subway Restaurant, Subway Restaurant, 10938 San Pablo Ave., El Cerrito, CA (Case No. C
003043 SBA, filed on August 24, 2000); George S. Louie v. Doctor’s Associates Inc., dba Subway Restaurant,
Subway Restaurant, 1510 Fillmore Street, San Francisco, CA (Case No. C 003049 JL, filed on August 24, 2000);
Monroe Quinnv. Doctor’s Associates Inc., dba Subway Restaurant, Subway Restaurant, Auto Mall Expressway,
Fremont, CA (Case No. C 004038 BZ, filed on November 1, 2000); Paulette Van Hook v. Doctor’s Associates Inc.,
dba Subway Restaurant, Subway Restaurant, 10398 San Pablo Ave., El Cerrito, CA (Case No. C 001830 CAL, filed
on May 22, 2000); Paulette Van Hook v. Doctor’s Associates Inc., dba Subway Restaurant, Subway Restaurant,
2138 Hill Top Mall Road, Richmond, CA (Case No. C 003042 CAL, filed on August 24, 2000); Barnabus Fairfield
v. Doctor’s Associates Inc., dba Subway Restaurant, Subway Restaurant, 125 Ellis Street, San Francisco, CA (Case
No. C 003050 SBA, filed on August 24, 2000); Benjamin Lamar Smith v. Doctor’s Associates Inc., dba Subway
Restaurants, Subway Restaurant, 2001 Van Ness Ave., San Francisco, CA (Case No. C 003057 PJH, filed on August
24, 2000); Eddie King v. Doctor’s Associates Inc., dba Subway Restaurant, Subway Restaurant, 900 San Pablo
Ave., Albany, CA (Case No. C 001829 CAL, filed on May 22, 2000); Michael McCrory v. Doctor’s Associates Inc.,
dba Subway Restaurant, Subway Restaurant, 1250 Market Street, San Francisco, CA (Case No. C 001762 CAL,
filed on May 17, 2000); Barnabus Fairfield v. Doctor’s Associates Inc., dba Subway Restaurant, Subway Restaurant,
2315 Cutting Blvd., Richmond, CA (Case No. C 003045 JCS, filed on August 24, 2000); Korusin Ounniyom v.
Doctor’s Associates Inc., dba Subway Restaurant, Subway Restaurant, 517 W. Capitol Expressway, San Jose, CA
(Case No. C 0021174 PVT, filed on November 17, 2000); Yvonne Westbrook v. Doctor’s Associates Inc., dba
Subway Restaurant, Subway Restaurant, 2002 Alum Rock, San Jose, CA (Case No. C 0021176 JW, filed on
November 17, 2000); Saeng Tongvanh v. Doctor’s Associates Inc., dba Subway Restaurant, Subway Restaurant,
3270 N. First St., San Jose, CA (Case No. C 0021175 JF, filed on November 17, 2000); Stephanie Franklin v.
Doctor’s Associates Inc., dba Subway Restaurant, Subway Restaurant, 2375 Market Street, San Francisco, CA (Case
No. C 003055 WHA, filed on August 24, 2000); Frank L. Morris v. Doctor’s Associates Inc., dba Subway
Restaurant, Subway Restaurant, 5650 Geary Blvd., San Francisco, CA (Case No. C 003058 MJJ, filed on August 24,
2000); John Haber v. Doctor’s Associates Inc., dba Subway Restaurant, Subway Restaurant, 1199 Sutter St., San
Francisco, CA (Case No. C 003053 MHP, filed on August 24, 2000); and Annette Barnes v. Doctor’s Associates
Inc., dba Subway Restaurant, Subway Restaurant, 1572 Sycamore Ave., Hercules, CA (Case No. C 003044 MMC,
filed on August 24, 2000). Physically disabled persons who alleged they were unable to access the service counter in
a SUBWAY® restaurant filed the above complaints. The Plaintiffs all claim violation of the Americans with
Disabilities Act alleging the Defendant failed to modify policies and procedures to ensure access for persons with
disabilities, violation of the California Civil Code § 54, et.seq. alleging they were denied full and equal access to the
restaurant, violation of California Civil Code § 51, et. seq. alleging the services and facilities of the restaurant were
12
not equal to and were inferior to those provided to persons with out disabilities, violation of the California Health
and Safety Code § 19955, et. seq. alleging the restaurant denied access to persons with physical disabilities, unfair
business practice and negligence. The Plaintiffs sought declaratory relief, damages in an amount to be determined
by proof, punitive damages, attorney’s fees, costs and trial by jury. Each of the Plaintiffs entered into Settlement
and Dismissal Stipulations with the Defendants, which were filed during February of 2001. DAI paid the Plaintiffs
and their lawyers a total of $140,000. DAI also agreed to modify existing facilities in California over the next five
years.
20) Subway Systems Australia Pty Ltd ACN 009 277 024, Applicant v. Michael John Thorpe, Respondent
(Supreme Court of Queensland, Registry: Brisbane, Number S794 of 2000). The Applicant filed this action on 6
February 2000 requesting that the Respondent stop representing himself as a Development Agent for the Applicant
and stop using the name SUBWAY® either personally or in association with any business or corporate entity with
which he is affiliated except as a franchisee. Applicant also requested that Respondent be restrained from making
disparaging comments and communications concerning Applicant’s reputation, goodwill, business or profitability,
policies, procedures or any other aspect of the SUBWAY® system and from talking about the claims each party may
have against one another to anyone other than his lawyers. This action was filed because of Respondent’s default of
a signed resignation agreement dated 9 June 1999 with Applicant in which Respondent resigned as Development
Agent for Queensland and the Northern Territory. On 18 January 2000, the Supreme Court granted Applicant’s
application. On 6 April 2000, Respondent filed a Defense and Counterclaim against Applicant wherein Respondent
claims that the Development Agent Agreement is a Franchise Agreement under the rule of the Franchising Code of
Conduct. Respondent claims that he transferred his Queensland Development Agent agreement to himself and
another party in early 1999 and that the resignation agreement is invalid because he was not the Development Agent
at the time and he signed it under duress. Respondent seeks damages in excess of 3 million dollars. On April 30,
2001, judgment was entered for the Applicant granting a permanent restraining order against the Respondent. The
Respondent’s Defense and Counterclaim was withdrawn and the Supreme Court awarded costs to the Applicant.
21) Subway Systems Australia Pty Ltd. c/o Doctor’s Associates Inc., Claimant v. Michael Thorpe, Respondent
(American Arbitration Association, Hartford, CT, Case No. 50 T 114 00018 00, filed on January 20, 2000), in
connection with the action listed above. The Claimant filed this action seeking confirmation that the agreement of
resignation the Respondent dated 9 June 1999 was appropriate and terminated his two Development Agent
contracts. Additionally, Claimant sought confirmation that Subway Systems Australia Pty Ltd. or its’ affiliates
owed no money to Respondent under the terms of the Development Agent contracts. On June 21, 2000, the
arbitrator ruled that arbitration was not a proper venue for resolving this issue.
22) Pauline Emily Beutel and Russell Graham Beutel, Plaintiffs v. John Brice, First Defendant, Michael John
Thorpe, Second Defendant, Subway Systems Australia Pty Ltd (“SSA”) ACN009277034, Third Defendant, and
DAAQ Pty Ltd ACN055015364, Fourth Defendant (District Court at Emerald, State of Queensland, Registry
Number 9/2001) On April 8, 2001 The Plaintiff filed this claim for violations of the Trade Practices Act 1974 and
breach of contract. The Plaintiffs claimed the first defendant made representations and earnings claims inducing
them to purchase an existing restaurant that was to be relocated, from the second defendant, and enter into a
financing agreement with the fourth defendant causing damages in the form of lost profits. The Plaintiffs sought
damages in the amount of $228,460 (AUS) and costs. On May 15, 2001 Plaintiffs and defendant Subway Systems
entered into a settlement by which Plaintiffs would receive $30,000 (AUS) upon completion of training and the
subject restaurant at no cost. Plaintiffs and Subway Systems exchanged mutual releases.
23) Lar-Ken Associates, Inc., Claimant v. Doctor’s Associates Inc. (DAI), Respondent (American Arbitration
Association, Hartford, Connecticut) This arbitration proceeding was filed on April 19, 2000 by the corporation of a
DAI Development Agent in the State of California claiming breach of contract. The Claimant alleged DAI had
charged him for expenses, legal fees and lease settlements incurred by affiliates of DAI. The Claimant sought
declaratory relief, damages in the amount of $46,005, interest, costs and expenses and attorney fees. On July 20,
2001 the Arbitrator ruled that DAI could not charge the Claimants for legal fees and expenses, settlements and other
charges attributable to its affiliates. The Arbitrator ruled that DAI must refund such charges already deducted. The
Arbitrator found the Claimant’s failure to pay to DAI a portion of the costs of its own defense in a case brought
against them and DAI by a former franchisee would result in the Claimant’s unjust enrichment and ordered them to
pay one-third of those expenses, $19,099.61 to DAI. All the other claims were denied.
24) Subway Development Corporation, Claimant v. Doctor’s Associates Inc. (DAI), Respondent (American
Arbitration Association, Hartford, Connecticut). This arbitration was filed in May, 1998 by the corporation of a
DAI Development Agent in the State of Minnesota and claimed breach of contract and unfair trade practices under
the Connecticut Unfair Trade Practices Act (CUTPA). The Claimant sought delinquent bonus payments, exemplary
13
damages, legal fees, costs and a declaratory judgment compelling the Respondent to honor the bonus and penalty
clause of the Development Agent Agreement. On July 30, 2001, the parties agreed to a settlement of all claims by
which the DA’s Agreement was modified and extended to June 2030, the DA was paid $179,000 for past bonus
payments and DAI agreed to pay DA $2850 a month for the duration of the Agreement.
25) Amman Ul Haq, Cross-Complainant v. Gurbinder Singh, Kuldip Singh, Doctor’s Associates Inc., Ali Jafari,
Saeed Lebastchi, and Does 1-100, Cross-Cross-Defendants (Superior Court of the State of California, County of
Sacramento, No. 98AS05667). This cross-complaint was filed on October 8, 1999 by a prospective franchisee who
claimed breach of contract, negligent and intentional misrepresentation, negligent and intentional interference with
economic advantage, conspiracy and violation of civil code section 51.8. Mr. Ul Haq claimed that after entering
into an agreement with Gurbinder and Kuldip Singh, he was prevented from purchasing their franchise because he
was unable to pass an English proficiency test. As a result, Gurbinder Singh and Kuldip Singh commenced legal
proceedings against him. Mr. Ul Haq sought economic, general, punitive and/or exemplary damages in an
undetermined amount, loss of future profits and income, costs and attorney’s fees. On August 16, 2001 Ul Haq and
Doctor’s Associates Inc., Ali Jafari, Saeed Lebastchi and CalNeva Subway settled their claims. Ul Haq agreed to
release those Defendants and dismiss his claims against them, and was paid $22,500 in return.
26) Earl Sims, Claimant v. Doctor’s Associates Inc. (DAI) and Frederick A. DeLuca, Respondents (Case No. 12116-0119-88, filed May 13, 1988). DAI’s former Louisiana Development Agent filed this arbitration proceeding
with the American Arbitration Association. Mr. Sims claimed breach of contract, unfair and deceptive practices,
misrepresentation, refusal to pay for services rendered, wrongful deductions and withholding of monies from his
compensation check, seeking $16,000,000. DAI, Subway Sandwich Shops, Inc. and Subway Restaurants, Inc. filed
an involuntary petition in bankruptcy against the Claimant and the arbitration proceeding was stayed. Mr. Sims filed
two other actions: Earl Sims, Subway Development of Louisiana, Inc., Plaintiffs v. Doctor’s Associates Inc. (DAI),
Frederick DeLuca and Subway Restaurant, Inc., Defendants (Civil Judicial District Court for the Parish of Orleans,
Louisiana, Case No. 90-3379) filed on February 16, 1990, and Earl and Dorothy Sims v. Doctor’s Associates Inc.
(DAI), Frederick DeLuca and Subway Sandwich Shops, Inc. (19th Judicial District Court for the Parish of East
Baton Rouge, Louisiana, Case No. 346 485). In these civil actions the Plaintiffs claimed the Defendants violated
Connecticut General Statutes sections 42-110 et seq., Louisiana Revised Statutes 51-1402 et seq., and section 2315
of the Louisiana Civil Code by misrepresenting facts, committing breach of contract and engaging in unfair and
deceptive trade practices. The Plaintiffs also claimed violation of the Bankruptcy Code by Defendants’ withholding
of Plaintiffs’ compensation, causing Plaintiffs economic injury. On May 8, 1996 Mr. Sims, pursuant to an auction
held before the Bankruptcy Court, purchased all right and interest in the above-referenced suits from the Trustee in
Bankruptcy for the sum of $15,000. On February 6, 1997 claims brought by Mr. Sims during the pendency of the
bankruptcy, including Earl Sims, Subway Development of Louisiana, Inc., Plaintiffs v. Doctor’s Associates Inc.
(DAI), Frederick DeLuca and Subway Restaurants Inc., Defendants (Civil Judicial District Court for the Parish of
Orleans, Louisiana, Case No. 90-3379) were consolidated with claims brought by affiliates of DAI against Earl
Sims, Dorothy Sims and other franchisees of stores co-owned with the Sims to collect monies due, Subway
Equipment Leasing Corporation & Subway Restaurants Inc. v. Bonnie Forte, Charles N. Forte, Selena Rankins,
Frank N. Rankins, Dorothy Sims and Earl Sims, Jr. (U.S. District Court for the Eastern District of Louisiana, CA 884957, under a new number 97-31236). On August 20, 2001, the parties agreed to a full settlement. Without
admitting any liability, DAI paid $450,000 to the Sims in return for dismissal of all pending actions and an exchange
of releases.
27) Quality Sandwiches of Ohio, Inc. and Terry Quinn, Plaintiffs v. Doctor’s Associates Inc.(DAI), Defendant
(Court of Common Pleas, Franklin County, Ohio, Case No. 98CVH05 03640, filed May, 11, 1998). A Development
Agent of DAI filed this action claiming fraud and misrepresentation. Plaintiffs claimed that DAI forced him to enter
into a purchase transaction with his Dayton, Ohio franchisee wherein he had to buy a number of stores from the
Dayton franchisee because the franchisee was threatening to file a lawsuit against the Defendant. Plaintiffs claimed
to have relied upon certain representations made by DAI regarding profits and losses resulting from the operations
and/or sale of the properties had not reached a satisfactory agreement with the Defendant regarding the sharing of
losses. Plaintiffs sought compensatory damages in excess of $25,000, exemplary damages in excess of $25,000 and
attorney fees. On October 14, 1998 DAI filed a Demand for Arbitration with the American Arbitration Association,
and a Petition to Compel Arbitration with the U.S. District Court for the District of Connecticut, which was granted
on March 3, 1999. On October 24, 2001 Quinn added a counterclaim to the arbitration, seeking an accounting of his
continuing fee accounts to 1984, disputing the enforceability of DAI’s new development and lease policies, DAI’s
right to assess legal fees and other expenses against him, claiming DAI’s conduct constituted unfair trade practice
under Connecticut Law, and seeking reimbursement for legal fees he had paid in a third party’s lawsuit in a related
matter, damages and exemplary damages. On September 18, 2001, the arbitrator ruled that DAI could not charge
Quinn expenses and fees incurred by companies other than DAI, and awarded Quinn $124,535.23 plus interest;
14
awarded Quinn $25,930.55 as reimbursement for legal fees paid by Quinn in a suit against him by a third party suit
in a related matter; and ordered an accounting of Quinn’s continuing fee accounts from 1/1/98 to date. All other
counterclaims were denied.
28) Homer Thomas, Plaintiff v. Subway Restaurants, Inc, Doctor’s Associates Inc. (Florida), Doctor’s Associates
Inc. (Connecticut), Doctor’s Associates Inc. D.B.A. Subway Restaurants, Inc. (Florida) and Doctor’s Associates Inc.
D.B.A. Subway Restaurants, Inc. (Connecticut), Defendants (Circuit Court of the Seventeenth Judicial Circuit,
Broward County, Florida, Case No. 98-009722-18). This action was filed June 19, 1998 by a franchisee who
claimed violation of civil rights and breach of contract. Mr. Thomas claimed that the Defendants tried to terminate
his lease and begin eviction due to his race and color. Mr. Thomas sought a judgment declaring the defendants
deprived him of his rights, enjoining them from engaging in discriminatory practices and reinstating all contracts
between the Defendants and himself. He also sought compensatory and exemplary damages in excess of $15,000,
costs, interest, attorney’s fees and trial by jury. On April 4, 2002, the parties reached a settlement. Defendants
admitted no liability, Mr. Thomas was paid $100,000, and dropped all claims against all Defendants.
29) Subway International, B.V., Claimant v. David Glover, Respondent/Counterclaimant (American Arbitration
Association, Case No. 50T1140016701, filed October 1, 2001) This Answer and Counterclaim was filed in response
to an original arbitration filed on April 13, 2001 by Subway International, B.V. (“SIBV”) against Mr. Glover, a
Development Agent for SIBV. Mr. Glover claimed he entered into the development agent agreement based on
representations made to him by the respondent. He also claimed that he never received advertising to promote the
restaurants in his market leaving him incapable of developing his territory. Mr. Glover sought a sum in excess of
$1,000,000. On May 30, 2002, the parties entered into a settlement by which Mr. Glover’s DA Agreement was
terminated, the claim of misrepresentation was withdrawn and Mr. Glover and/or his investors are entitled to
purchase five franchises to be located in Mr. Glover’s former territory at a discounted price.
30) Edward Racheo, Claimant v. Doctor’s Associates Inc. (DAI), Respondent (American Arbitration Association,
North Olmstead, Ohio, filed on June 15, 2000) This arbitration proceeding was filed by a franchisee of DAI who
claimed breach of contract and implied covenant of good faith. The Claimant is sought damages in an undisclosed
amount and injunctive relief. On December 6, 2002, the arbitrator ruled that DAI would pay Claimant $44,026, in 36
monthly installments, with interest at 7%.
31) Keith Hick, Plaintiff v. Rottinghaus Company, Inc. and Rusty Rathbun, Defendants (The Eighteenth Judicial
District, District Court, Sedgwick County, Kansas, Civil Department, Case No. 02C 1484) This petition was filed
on April 26, 2002 by a franchisee claiming tortious interference with contract and tortious interference with a
prospective business opportunity. Mr. Hick alleged his Development Agent, Mr. Rathbun, failed to give him proper
notice that a second SUBWAY® restaurant was to open less than 2 miles from his own, and that Mr. Rathbun and
another franchisee acted together to prevent him from opening said SUBWAY® restaurant. Mr. Hick is sought
damages in excess of $1,000,000, pre-judgment and post-judgment interest, costs, and attorney’s fees. The case was
moved to arbitration. On June 8, 2003, the arbitrator filed his award. Hick was awarded $110,648 as damages
representing the diminution in value of his store. Hick’s claim for punitive damages was found to be without merit.
DAI paid the award.
32) Ronald Rothmund and Patricia Rothmund, Plaintiffs v. Doctor’s Associates Inc. (DAI), Frederick DeLuca,
Peter Buck, Subway Development Corporation of Chicagoland, Inc., Phil Mesi, Defendants (Circuit Court, Third
Judicial Circuit, Madison County, Illinois, Case No. 94L799). This action was filed on August 11, 1994 by former
franchisees claiming DAI, its affiliate and local Development Agent committed fraud and violated the Illinois
Franchise Disclosure Act, 805 ILCS 703/1 et seq. and the Illinois Consumer Fraud and Deceptive Practices Act.
They claimed DAI’s Offering Circular, Franchise Agreement and advertising materials made untrue statements of
facts, misrepresentations of facts and omissions. They also claimed that DAI intentionally used unfair methods of
competition and deceptive acts and practices to fraudulently induce them to purchase a franchise. The Plaintiffs
claimed the leasing corporations were shell corporations and the alter egos of DAI and that they were unfairly
evicted from their franchise. They sought a Declaratory Judgment to decide if the arbitration clause in the Franchise
Agreement was invalid and that the Franchise Agreement was void and unenforceable. They sought $360,000 in
actual damages and $60,000,000 in exemplary damages, a trial by jury, costs and attorney’s fees. On August 31,
1994, DAI filed a Petition to Compel Arbitration, DAI, Plaintiff v. Ronald Rothmund and Patricia Rothmund,
Defendants (U.S. District Court, District of Connecticut, Case No. 394CV01456) which was granted. On June 23,
2003, the parties settled all claims. No liability was admitted to, DAI paid Plaintiffs $45,000, and mutual releases
were exchanged
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33) Claude W. Melton, Plaintiff v. Doctor’s Associates Inc., Defendant (District Court in and for Okmulgee
County, Oklahoma, Case No. CJ 2000-360, filed on May 8, 2000) This complaint was filed by a franchisee who
claimed breach of contract and fraud because DAI sold him a restaurant that had liens against its equipment. As a
result, he was forced to close his restaurant when the lienholder picked up the equipment. DAI denied the
allegations contained in the complaint as the agreement between the parties specifically stated that it did not include
the sale of any equipment. Mr. Melton sought $45,000 for breach of contract, actual damages in excess of $10,000,
punitive damages in excess of $10,000 and attorney’s fees. On September 26, 2001 DAI filed a Petition to Compel
Arbitration in the United States District Court for the District of Connecticut, which was granted on November 30,
2001. DAI purchased Mr. Melton’s claims from his bankruptcy proceeding for $15,000. On October 16, 2003 the
case was dismissed with prejudice.
34) Mike (Mushtaq) Kanchwala, Anver Kanchwala, and Azim Hamani v. Doctor's Associates, Inc. (DAI),
Frederick A. DeLuca, Peter H. Buck, JoAnn Bachewicz and Subway Restaurants, Inc. (Circuit Court, Third Judicial
Circuit, Madison County, State of Illinois, Case No. 95L1291). This action was filed on August 28, 1995 by
franchisees claiming DAI, its local Development Agent, and its leasing affiliate committed common law fraud,
breach of contract, breach of covenant of good faith and fair dealing and breach of the Illinois Consumer Fraud and
Deceptive Business Practices Act because DAI’s advertising materials contained misrepresentations. They also
claimed DAI failed to disclose affiliate litigation and evicted franchisees prior to arbitration. The Plaintiffs claimed
that the Offering Circular and Franchise Agreement made untrue statements, omitted material facts and made
misrepresentations of fact. The Plaintiffs sought a Declaratory Judgment to declare the Mutual Release they signed
as part of their transfer was unenforceable. They also sought $2,500,000 in actual damages, $150,000,000 in
exemplary damages, attorney’s fees, costs of suit and a trial by jury. On September 8, 1995, DAI filed a civil action
to compel arbitration, DAI v. Mike (Mushtaq) Kanchwala, Anver Kanchwala and Azim Hemani (U.S. District
Court, District of Connecticut, Case No. 395 CV 01915) and also filed a demand for arbitration on October 2, 1995,
DAI, Claimant v. Mike (Mushtaq) Kanchwala, Anver Kanchwala and Azim Hemani, Respondents (American
Arbitration Association, Hartford, Connecticut, Case No. 12 114 00174 95). On September 29, 2003 the parties
reached a settlement. Neither party admitted any liability, Defendants paid Plaintiffs $15,000, all claims were
withdrawn by all parties and mutual releases were exchanged.
35) Timothy Delaney and Patricia Delaney, Plaintiffs v. Doctor’s Associates Inc., Subway, Inc., Yogesh Dave,
Defendants. (Superior Court of New Jersey, Somerset County, Case No. SOM-L-379-01) This complaint to compel
mediation and arbitration was filed on March 7, 2001 by a franchisee claiming breach of contract, intentional
interference with contractual rights and franchisee’s right to sell his franchise, breach of good faith and fair dealing
and intentional infliction of emotional distress. They alleged the Defendants interfered when they tried to sell their
franchise and discouraged potential buyers. The Delaney’s sought punitive damages, treble damages, compensatory
damages, attorneys’ fees, costs of suit, interest and trial by jury. On October 27, 2003, the Arbitrator in this matter
directed that Respondent Dave pay all administrative fees and the Arbitrator’s compensation totaling $11, 940, and
dismissed all Delaney’s claims, with prejudice and without costs or attorney’s fees.
36) William T. Horner, Plaintiff v. Martin C. Adomat, Defendant (District Court of Harris County, Texas, 55th
Judicial District, Case No. 2003-09364) On February 21, 2003, Mr. Horner, a Development Agent of DAI, filed this
complaint against his partner, Mr. Adomat, also a Development Agent of DAI claiming breach of contract, fraud,
and negligent misrepresentation. Mr. Horner claimed that the two had reached an agreement regarding his purchase
of Mr. Adomat’s interest in their company, Subway Development Corporation of Southeast Texas, L.P. and that Mr.
Adomat refused to sell his interest under the terms of their agreement. Mr. Horner sought an order awarding the
performance of their agreement or actual damages, including lost interest and lost profits, prejudgment interest,
attorneys’ fees, costs and post-judgment interest. On January 2, 2004 the parties settled their lawsuit and a sale of
the interest in their company based on their previous agreement was executed.
37) Subway Development of Central Ontario, Ltd., Claimant v. Doctor’s Associates Inc. (DAI), Respondent
(American Arbitration Association, Hartford, Connecticut). This arbitration was filed in August, 1997 by a
Canadian Development Agent’s corporation claiming breach of contract, misrepresentation, and violation of the
Connecticut Unfair Trade Practices Act. The Claimant also disputed the term of the Development Agent Agreement
and the right of DAI to assess costs, legal fees and penalty fees against him. The Claimant sought compensatory and
exemplary damages in an undisclosed amount, interest, costs and expenses, attorney’s fees and declaratory relief.
On May 20, 2004, the Arbitrators issued a Final Award. Claimant received an award of $30,772.74 for legal fees
and settlement costs that were improperly deducted, and an affirmation that Claimant’s rights to the Development
Agent contract had been transferred to Claimant’s corporation without requiring a transfer fee. None of the five
other claims made by Claimant were granted, and each side bore its own costs and fees.
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38) Interway Produtos Alimenticios Ltda, Bahiasubs Franquias Comércio de Alimentos e Servicos Ltda, Saúde
Alimentos do Brasil Ltda, Jean Jereissati Neto, Masterwest Servicos e Comércio de Alimentos Ltda, Sanduicheria
Quirirm de Santos Ltda and Subs Sands Comércio de Alimentos, Plaintiffs v. Doctor’s Associates Inc. (DAI),
Subway Partners C.V., Frederick A. DeLuca and Peter H. Buck, Defendants (U.S. District Court for the District of
Connecticut, Case No. 3:98CV1839(AHN)). Development Agents of then Master Franchisee in Brazil, HTF – High
Technology Foods Corporation S.A. and its assignee, Subway Brasil Sanduiches e Salads Ltda. (the “Master
Franchisee”), filed this action on September 17, 1998. The Plaintiffs claimed negligence, breach of contract/agency
liability, breach of contract/apparent agency, unjust enrichment, constructive trust and unfair trade practices and
demanded $10,000,000 in actual damages, $100,000,000 in punitive damages, interest, costs of suit, attorney’s fees
and the imposition of a constructive trust. On February 21, 2005, the Plaintiffs withdrew their action against Subway
Partners, C.V., Doctor’s Associates Inc., Frederick A. DeLuca and Peter H. Buck. The case was settled by Subway
Partners C.V., which purchased, for $171,428.57 each, Plaintiffs’ development agent rights, SUBWAY® equipment,
and certain agreements that Plaintiffs would not compete, with SUBWAY® stores. As to Plaintiff, Bahiasubs
Franquias Comércio de Alimentos e Servicos Ltda, an agreement was reached allowing for said Plaintiff to operate
three (3) named food service locations in Brazil. No liability was admitted by any party and full releases were
executed. On February 22, 2005, the Court dismissed the case with prejudice.
39) Ernest W. Crandall and Esther E. Crandall, Plaintiffs v. Tom Vokey and Atlantic Subway Limited and Subway
Franchise Systems of Canada Ltd., Defendants (Supreme Court of Nova Scotia, Kentville, County of Kings, Nova
Scotia, S.K. No. 9543) This action was filed on June 12, 2002 by franchisees claiming breach of contract,
misrepresentation and breach of good faith. The Crandall’s claimed that Mr. Vokey sold them a restaurant
approximately one half mile from another restaurant they own, approved the relocation of the new restaurant and
then failed to negotiate a lease for a new location. The Crandall’s believed they would be relocating the restaurant
and did not renew its sublease, leaving them without a location to operate their franchise. The Crandall’s sought
general damages, special damages, prejudgment interest and costs. On April 7, 2005 Crandalls and defendants
reached a settlement in which the arbitration was dismissed, Crandalls released defendants, and defendants agreed to
buy all the assets of the Crandall’s Subway® restaurant business, for $550,000 (CDN) payable upon the demolition
of the old building it was housed in and completion of a new location.
40) Sandra and Raymond Bickel, Plaintiffs v. Subway Sandwich Shops, Inc., Leonard H. Axelrod, Frederick
DeLuca, Peter Buck, Doctor’s Associates Inc. (DAI), Subway Development of Chicagoland, Inc., Phil Mesi,
Defendants, (Illinois Circuit Court, Third Judicial Circuit, Madison County, Case No. 94-L-1428). This action was
filed on December 16, 1994, by former franchisees who sold their franchises in 1990, claiming the Defendants, as
the franchisor and its local Development Agent, committed fraud, misrepresentation of facts, breach of contract and
willful breach of contract. They claimed DAI’s Offering Circular, Franchise Agreement and advertising materials
made untrue statements of facts, misrepresentations, and had material omissions which induced them to purchase a
franchise. The Bickels claimed that DAI’s affiliate was a shell corporation and the alter ego of DAI. They also
claimed that the Defendants were in violation of their lease agreement with their landlord, who was also in litigation
with DAI [see item 3a(8)]. They claimed that DAI violated radius restrictions that caused them economic damages.
The Bickels also claimed that the arbitration clause in their former franchise agreement and mutual releases signed
by them when they sold their stores were unenforceable and were asking the court to make a Declaratory Judgment
to rule on their validity. They were seeking $40,000,000 in exemplary damages and $600,000 in actual damages
and a trial by jury. The Defendants filed a Demand for Arbitration on January 19, 1995 (American Arbitration
Association, Hartford, CT, No. 12 114 0002095). DAI, Plaintiff v. Sandra Bickel and Raymond Bickel, Defendants
(U.S. District Court, District of Connecticut, Case No. 395 CV 00120). The arbitration was held in April 2003, and
the Arbitrator rendered his award on May 20, 2003. The Arbitrator awarded the Bickels $46,440 in actual damages,
and no punitive damages, which has been paid by DAI. The Bickels sought to vacate the award, and set aside the
injunction in place during the arbitration preventing them from pursuing other parties in the Illinois lawsuit. On
November 17, 2003, the U.S. District Court confirmed the award, and lifted the injunction. Subway Development of
Chicagoland, Inc. appealed the lifting of the injunction and continued the appeal of a default judgment rendered
against them in 1995 to the Illinois Court of Appeals for the Fifth Judicial District. On December 15, 2004, the
default judgment was upheld, but the amount of the award was vacated in its entirety, and remanded to the Madison
County Illinois court for a hearing on damages. On July 26, 2005, the remaining parties and Mr. Bickel reached a
settlement by which Defendants paid Mr. Bickel $595,000, neither party admitted any liability, the parties agreed
not to refile any arbitration or litigation against each other related to this case, the parties exchanged mutual releases
and executed a dismissal. On September 28, 2005 a post judgment motion was denied which was originally filed by
plaintiffs counsel asking to dismiss the case with prejudice.
41) Ashok Kothari, Plaintiff v. Doctor’s Associates Inc. d/b/a SUBWAY®, Defendant (Superior Court, Department
of the Trial Court, Commonwealth of Massachusetts, Case No. 2002-03741) This complaint was filed by a
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franchisee claiming breach of contract, violation of Massachusetts General Laws Chapter 93A Section 11 because of
intentional breach of faith, and unjust enrichment. Mr. Kothari claimed that the Defendant refused to conduct a site
review to determine the impact of opening 2 new restaurants near his existing restaurant. He sought a temporary
injunction preventing the Defendant from opening any restaurants within a three mile radius of his restaurant,
compensatory damages, punitive and or multiple damages, attorney’s fees, interest and costs. On September 5, 2002
DAI moved the case to the U.S. District Court for the District of Massachusetts (Case No.02-11816 LPC). On
January 9, 2003, the court granted DAI’s motion to stay the case pending mediation and arbitration. On January 25,
2006, Mr. Kothari and DAI entered into a settlement pursuant to mediation by which DAI purchased Mr. Kothari’s
franchise and store for $175,000, and mutual releases were exchanged.
42) Gerald Hadelman, Robert Dowell and Dennis Rottinghaus, Plaintiffs v. Fred DeLuca, Subway Franchisee
Advertising Trust (SFAFT), Cindy Eadie, Ken Adams, John Giorgi, Jim Hanson, Terry Hughes, Mary Lou
Mayfield, Joe Hart, Dan O’Bresky, Mark Roden, Rick Sender, Brian Conneran, Bill Humphries and Todd Van
Nispen, Defendants (Superior Court, Judicial District of Ansonia/Milford, Milford, Connecticut, No. CV 970060279-S). In October, 1997, Doctor’s Associates Inc. was advised of this complaint filed by franchisees claiming
breach of fiduciary duty and obligation of good faith and fair dealing, violation of section 42-110b of the
Connecticut Unfair Trade Practices Act and contractual interference with regard to the elections being held for the
SFAFT board. The Plaintiffs are sought declaratory and injunctive relief, interest, costs and expenses, attorney’s
fees, and exemplary damages in an unspecified amount. On January 14, 1998 the parties agreed to arbitrate their
claims before the American Arbitration Association, matter number 12 114 00010 98. On February 4, 1998 the
plaintiff Gerald Hadelman withdrew from the action. On May 7, 1999 the Claimants in the arbitration action
withdrew their claims asserted against SFAFT with DAI remaining as Respondent. On November 20, 2001, the
arbitrators issued their final award, concluding that Mr. DeLuca, on behalf of DAI, improperly interfered with the
election, and that DAI tortiously interfered with the franchisees’ right to seek election, and therefore violated the
Connecticut Unfair Trade Practices Act. The panel awarded the plaintiffs unpaid expenses they had from the
election, punitive damages totaling $300,000, attorney’s fees and costs totaling $150,000, and ordered DAI to
reimburse plaintiff’s AAA fees and arbitrator compensation totaling $107,961. DAI moved in the Connecticut
Superior Court to vacate the award. On June 12, 2003, the Connecticut Superior Court denied the motion to Vacate
the Award, and confirmed it. DAI appealed to the Connecticut Supreme Court. On July 12, 2005, the Connecticut
Supreme Court upheld the arbitrators’ award totaling $450,000, which was paid on November 11, 2005. On August
10, 2005, Plaintiffs made a motion for costs and attorneys fees in the amounts of $1964.19 and $304, 262
respectively. On or about March 30, 2006 DAI satisfied all claims and judgments by paying $167,500 to Plaintiffs.
43) Michael J. LaSalla and Subway Development of Tampa Bay, Inc., Claimants v. Doctor’s Associates Inc.
(DAI), Respondent (American Arbitration Association, Hartford, Connecticut). On June 15, 1998 this arbitration
was filed by a Development Agent of DAI. The Claimants alleged breaches of contract for the Respondents’ alleged
failure to pay monies owed his development agency as bonuses for the development of SUBWAY® franchises, and
for allegedly charging and deducting unauthorized expenditures and extra-contractual charges from his account,
constituting unfair and deceptive trade practices in violation of Connecticut General Statute Section 42-110(a).
Claimants sought declarations ordering DAI to pay contractual bonuses, not deduct charges not authorized by the
contract and damages of $124,400. On June 16, 2000 the arbitrators filed their award. The Claimant’s demand for a
declaratory judgment compelling DAI to apply the bonus and penalty clause of the Development Agent Agreement
(“DAA”) was denied. The arbitrators let stand DAI’s previous agreement which pays the Claimant $1,450 per
month for the remaining term of the DAA. The arbitrators ruled that DAI could not deduct payments due to the
Claimant for lease settlement, rent to landlords or settlement of franchisee or third party claims, or amounts owed by
franchisees to DAI. The arbitrators further granted that an accounting of payments made to DAI by the Marriott
Corporation be made to the Claimant, and that payment of his allocation, if any, be made. Deductions for fees and
other items in the amount of $17,928.94 were to be repaid by DAI. The Claimant’s demand that the modifier should
be raised was granted and DAI was ordered to pay the discrepancy of $13,458.83 to the Claimant. All other claims
and relief were denied. On July 12, 2000, the Claimant filed an action in the Superior Court, State of Connecticut,
entitled Michael J. LaSalla v. Doctor’s Associates Inc. The action sought to vacate the portions of the arbitrator’s
award which upheld DAI’s $1,450 monthly payments to the Claimant and denied a claim for back bonuses, denied
the Claimant’s demand for declaratory judgment that DAI was not authorized to make certain deductions for legal
fees by any affiliate of DAI or any amounts incurred by DAI as an assignee of a sublease except rents or settlements
which include payments in lieu of rent, and denied the monetary awards sought for the denied claims. On June 7,
2002 the Superior Court denied Claimants claims and confirmed the arbitration award. On November 19, 2002,
Claimant filed an arbitration with the American Dispute Resolution Center in Hartford, Connecticut, titled Michael
LaSalla, Claimant and Doctor’s Associates, Inc., Respondent, Case no. 26-13-02. Claimant sought an award
applying the adjusted modifier to his payments retroactively. On May 11, 2004, the arbitrators rendered their award.
They held that the adjusted modifier should be retroactively applied in LaSalla’s territory, and removed eleven
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stores that had closed and later reopened from the modifier calculation. As a result, the arbitrators awarded LaSalla
the sum of $1,096,011 in underpayments and $608,434 in interest. On June 10, 2004 DAI made a Cross Application
to Vacate the Arbitration Award in LaSalla v. Doctor’s Associates Inc. (Superior Court of Connecticut,
Milford/Ansonia Case No. CV-04-0085503-S). On January 6, 2005, the Superior Court granted LaSalla’s motion to
confirm the award and denied DAI’s cross application to vacate the award, which was upheld on appeal. The award
and interest in the amount of $2,387,314.70 was paid in September 2006.
44) Subway Real Estate Corp., Appellant v. Director of Taxation, Appellee (Tax Appeal Court, State of Hawaii,
Appeal No. 99-0145) This matter was an appeal by SREC of the Hawaii general excise tax (“GET”) assessment
issued by the State of Hawaii Department of Taxation for the year 1992. On November 27, 2001, SREC’s Motion
for Summary Judgment was denied. On February 28, 2006 The Supreme Court of the State of Hawaii upheld the
Director of Taxation’s assessment of the GET against SREC. The case was remanded to the Tax Appeal Court for
determination of tax liability. On November 6, 2006 the parties agreed to a settlement by which SREC, on behalf
itself and its affiliates, agreed to pay the Department of Taxation $362,548 in settlement of all claims. SREC agreed
pay taxes on its subleasing activities going forward, and the agreement was not deemed an admission of the merits
of the legal or factual issues involved in the case by either party.
45) Roy W. Pelletier, Claimant v. Doctor’s Associates, Inc. Respondent (American Arbitration Association). On
March 2, 2007 a franchisee brought this claim alleging that DAI committed unfair or deceptive trade practices under
Connecticut Gen. Stat. § 42-110b by its conduct of a sales audit of Claimant’s franchise. Claimant alleged the audit
and DAI’s actions in conducting it caused injury to him and were recklessly indifferent, intentional and wanton
and/or malicious in nature. Claimant sought an order stopping DAI from taking money from Claimant in connection
with the audit, money damages and punitive damages in an unspecified amount, and attorneys’ fees and costs. On
August 3, 2007, the parties entered into a settlement agreement whereby the Claimant withdrew his claim against the
Respondent and was granted a new franchise and that neither side would be responsible for costs or attorney’s fees.
46) Richard Mollison Alborn, Alborn Family Corporation Pty Ltd ACN 808 955 595, Plugmates (AUS) Pty Ltd
ACN 080 955 577 (formerly Rick Alborn & Associates Pty Ltd), Subway Brisbane South Pty Ltd ACN 079 977
932, Shaykar Pty Ltd ACN 076 868 552, Plaintiffs v. Subway Systems Australia Pty Ltd ACN 009 277 034 and
Doctor’s Associates Inc, Defendants (Supreme Court of Queensland, Brisbane Registry, Number 10121 of 2002)
This claim was filed by a franchisee of Subway Systems Australia Pty Ltd, (SSA) DAI’s affiliate in Australia,
claiming deceit, misleading and deceptive conduct, and negligence. Mr. Alborn claims that Michael Thorpe, a
former Development Agent for SSA, and John Brice, a purported investor of Thorpe’s, made misrepresentations on
behalf of the Defendants inducing the plaintiffs to invest money in their company, Subway Development of
Queensland Pty Ltd, as well as to purchase 7 existing franchises and 3 new franchises. Plaintiffs sought aggravated,
exemplary and punitive damages, interest, costs and trial by jury. On October 25, 2007, the parties settled the case
whereby the Defendants paid $1,500,000 in full and final satisfaction of all claims and costs.
47) Wesam S. and Linda Youmaran, Plaintiffs v. Doctor’s Associates Inc. (DAI), Franchise World Headquarters,
Inc., Frederick A. DeLuca, Peter Buck, Subway Restaurants, Inc. (DE), Subway Sandwich Shops, Inc., Subway
Sandwiches and Salads, Inc., Subway Management, Inc., Subway Real Estate Corp., Inc., Subway Leasing
Corporation, Inc., Subway East, Inc., Subway South, Inc., Subway West, Inc., Subway Central, Inc., Subway
Systems, Inc., Subway Development, Inc., Subway Restaurants, Inc. (CT) and Subway Sandwiches, Inc., Subway
Development of America, Inc., Defendants (Circuit Court, Third Judicial Circuit of Madison County, Illinois, Case
No.93-L-1296); Jose Alberto Brenes, Plaintiff v. DAI, Franchise World Headquarters, Inc., Frederick A. DeLuca,
Peter Buck, Subway Restaurants, Inc. (DE), Subway Sandwich Shops, Inc., Subway Sandwiches and Salads, Inc.,
Subway Management, Inc., Subway Real Estate Corp., Inc., Subway Leasing Corporation, Inc., Subway East, Inc.,
Subway South, Inc., Subway West, Inc., Subway Central, Inc., Subway Systems, Inc., Subway Development, Inc.,
Subway Restaurants, Inc. (CT) and Subway Sandwiches, Inc., Subway Development of America, Inc., Defendants
(Circuit Court, Third Judicial Circuit of Madison County, Illinois, Case No. 93-L-1297); Alvaro Guerero and Maria
Guerero, Plaintiffs v. DAI, Franchise World Headquarters, Inc., Frederick A. DeLuca, Peter Buck, Subway
Restaurants, Inc. (DE), Subway Sandwich Shops, Inc., Subway Sandwiches and Salads, Inc., Subway Management,
Inc., Subway Real Estate Corp., Inc., Subway Leasing Corporation, Inc., Subway East, Inc., Subway South, Inc.,
Subway West, Inc., Subway Central, Inc., Subway Systems, Inc., Subway Development, Inc., Subway Restaurants,
Inc. (CT) and Subway Sandwiches, Inc., Subway Development of America, Inc., Defendants (Circuit Court, Third
Judicial Circuit of Madison County, Illinois, Case No. 93-L-1295); Louis Loenneke and Mary Ann Bookout,
Plaintiffs v. DAI, Franchise World Headquarters, Inc., Frederick A. DeLuca, Peter Buck, Subway Restaurants, Inc.
(DE), Subway Sandwich Shops, Inc., Subway Sandwiches and Salads, Inc., Subway Management, Inc., Subway
Real Estate Corp., Inc., Subway Leasing Corporation, Inc., Subway East, Inc., Subway South, Inc., Subway West,
Inc., Subway Central, Inc., Subway Systems, Inc., Subway Development, Inc., Subway Restaurants, Inc. (CT) and
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Subway Sandwiches, Inc., Subway Development of America, Inc., Defendants (Circuit Court, Third Judicial Circuit
of Madison County, Illinois, Case No. 93-L-1294); Julie Shino, Albert Yonan, Jr., Johnson Shino, Albert Yonan and
Leylah Yonan, Plaintiffs v. DAI, Franchise World Headquarters, Inc., Frederick A. DeLuca, Peter Buck, Subway
Restaurants, Inc. (DE), Subway Sandwich Shops, Inc., Subway Sandwiches and Salads, Inc., Subway Management,
Inc., Subway Real Estate Corp., Inc., Subway Leasing Corporation, Inc., Subway East, Inc., Subway South, Inc.,
Subway West, Inc., Subway Central, Inc., Subway Systems, Inc., Subway Development, Inc., Subway Restaurants,
Inc. (CT) and Subway Sandwiches, Inc., Subway Development of America, Inc., Defendants (Circuit Court, Third
Judicial Circuit of Madison County, Illinois, Case No. 93-L-1293). On December 22, 1993, the above actions were
filed by current and former franchisees, who claimed DAI and its affiliates committed common law fraud, breach of
contract, breach of covenant of good faith and fair dealing, violation of the Illinois Franchise Disclosure Act,
violation of the Lanham Act, 15 USC 1125, and violation of the Illinois Consumer Fraud and Deceptive Practices
Act because the leasing corporations are shell corporations and alter egos of DAI. They also claimed that the
Defendants committed fraud, made untrue statements, omitted material facts and made misrepresentations of fact in
the advertising materials, offering circular and Franchise Agreement. In the Youmaran action, the Plaintiffs also
claimed that an unlawful forcible entry and detainer action was filed due to a dispute over funds and in the Shino
action, that they were threatened with eviction. The Plaintiffs sought, for each count, in each action, actual damages
in an amount in excess of $15,000, attorney fees, costs, exemplary damages in excess of $20,000,000 and a trial by
jury. On January 14, 1994 the Plaintiffs amended their complaints to include Philip Mesi and Subway Development
Corporation of Chicagoland as additional Defendants. On March 31, 1994, DAI filed separate actions in the U.S.
District Court for Connecticut to compel arbitration in Connecticut pursuant to the Franchise Agreement: DAI,
Plaintiff v. Wesam and Linda Youmaran, Defendants, (Case No. 394 CV 00515), DAI, Plaintiff v. Jose Brenes,
Defendant, (Case No. 394 CV 00511), DAI, Plaintiff v. Alvaro Guerrero, Defendant, (Case No. 394 CV 00514),
DAI, Plaintiff v. Louis Loenneke and Mary Ann Bookout, (Case No. 394 CV 00517), DAI, Plaintiff v. Julie Shino,
Albert Yonan, Jr., Johnson Shino and Lelah Yonan, Defendants, (Case No. 394 CV 00516). On November 10,
1994, the U.S. District Court ruled that the arbitration clause is enforceable and granted Defendant’s Petition to
arbitrate its claims under the Franchise Agreement. On December 9, 1994, a Permanent Injunction was granted by
the U.S. District Court to prevent further proceedings in any state court actions. On May 5, 1997 the U.S. Court of
Appeals affirmed the District Court’s February 24, 1997 ruling. In April, 1997 the franchisees Julie Shino, Albert
Yonan, Jr., Albert Yonan, Sr., Johnson Shino and Laylah Yonan settled their claims with the franchisor under an
agreement to purchase their existing franchises for a total of $236,100 while the franchisees paid to the franchisor
$146,210 to cure rent defaults, closings costs and royalty and advertising defaults. Both the State Court action filed
in Madison County, Illinois, Case No. 93-L-1293 and the U.S. District Court action, Case No. 394 CV 00516 were
dismissed on April 23, 1997 and the parties agreed to dismiss their arbitration action. Linda and Wesam Youmaran
and Defendants exchanged mutual releases in October of 2001 and dismissed their claims in April of 2002. No
monies were paid by either party to the other. Louis Loenneke and Mary Ann Bookout and Defendants exchanged
mutual releases in November of 2002. No monies were paid by either party to the other. On June 23, 2003, DAI
and Jose Alberto Brenes settled all claims. No liability was admitted to, DAI paid Brenes $20,000, and mutual
releases were exchanged. In February 2008 all the Madison County Illinois cases were dismissed for dormancy.
48) William Hargett, Mary Hargett, Rodrigo Gonzalez, Maria Gonzalez, Ed Madgett, Pam Madgett, Jim Venetos,
Kalliopi Venetos, George Venetos, Michael Aram, Mehran Roghany, Trey Bennett, Loralie Bennett, Kamaljit S.
Brah, Navdeep Kamar Chopra, Rohini Chopra, George Cooksey, Jane Cooksey, Robert Hoder, Jacquelyn Hoder,
Preet Kiran Johal, Chris Liu, Sandra Liu, Bill McCusker, Sr., Marie McCusker, Sam Mercieca, Maryann Mercieca,
Than Myers, Raymond Montclar, Ashok Patel, Rita Patel, Sudarshan Sharma, Neelam Sharma, Iftikhar Sheikh,
Naushin Sheikh, William Holland, Richard Bellon, William O’Brien and Constance O’Brien, and Sharlene Jabush,
and all other Subway franchisees, past or present, similarly situated, Plaintiffs v. Doctor’s Associates Inc., Frederick
DeLuca and Peter H. Buck, Defendants (Circuit Court for the Third Judicial Circuit, Madison County, Illinois, Case
No. 98L410). On July 1, 1998 the State of Illinois notified DAI that a complaint had been filed by current and
former franchisees claiming fraudulent representations and concealment, violation of the Illinois Franchise
Disclosure Act, and the arbitration clauses are void and unenforceable. They claimed that the leasing companies
owned and employed by the Defendants were alter egos of the Defendants and that misrepresentations were made
regarding site selection procedures, lease and sublease arrangements, audits, Development Agent duties, the national
sales campaign and the franchisee advertising fund in the offering circular and franchise agreement. The Plaintiffs
sought $1,495,000 in actual damages, court costs and a judgment declaring the arbitration clauses void and
unenforceable. On June 29, 1998, Plaintiffs Rodrigo Gonzalez, Maria Gonzalez, Ed Madgett, Pam Madgett, Jim
Venetos, Kalliopi Venetos, George Venetos, Michael Aram, Mehran Roghany, Trey Bennett, Kamaljit S. Brah,
Navdeep Kamar Chopra, Rohini Chopra, George Cooksey, Jane Cooksey, Robert Hoder, Jacquelyn Hoder, Preet
Kiran Johal, Chris Liu, Bill McCusker, Sr., Marie McCusker, Sam Mercieca, Maryann Mercieca, Than Myers,
Raymond Montclar, Ashok Patel, Rita Patel, Sudarshan Sharma, Neelam Sharma, Iftikhar Sheikh, Naushin Sheikh,
William Holland, William O’Brien, Constance O’Brien, and Sharlene Jabush dismissed their complaint without
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prejudice. On August 26, 1999 DAI filed Petitions to Compel Arbitration against all remaining plaintiffs, which
were consolidated by the U.S. District Court for the District of Connecticut as Doctor’s Associates Inc. v. Sayed
Qasim, Case No. 3:99CV01653 (PCD). On October 8, 1999 the remaining plaintiffs filed their First Amended
Complaint. The plaintiffs added claims for malicious prosecution and abuse of process. The amounts sought were
amended to in excess of $110,000 actual damages and in excess of $100,000 punitive damages per class plaintiff,
including named plaintiffs, and additionally in excess of $50,000 actual damages and in excess of $2,000,000
punitive damages for the plaintiffs now named in the suit. On October 28, 1999 the U.S. District Court for the
District of Connecticut granted DAI’s Petitions to Compel, and stayed the state court proceedings. On January 16,
2002, the franchisees Than Myers and Raymond Montclar settled their claims against the franchisor. The parties
exchanged Mutual Releases and DAI paid no money to either party. In February of 2008, the Madison County,
Illinois Court dismissed all claims for dormancy.
49) Bueno Conato, LLC, Plaintiff v. Bajio, LLC, Defendant (American Arbitration Association (AAA) in Fresno,
CA, Case No. 77 114 Y 00254 06 JME, filed on July 17, 2006.) This demand for arbitration was filed by a BAJIO®
Area Developer and franchisee alleging Breach of Contract and Breach of Duty of Good Faith. Claimant asserted
Bajio, LLC failed to deliver executable franchise agreements for the Claimant’s second and third stores, had actively
sought to solicit sales for BAJIO® franchises in areas controlled exclusively by the Claimant under an Area
Development Agreement with Bajio, LLC, and had threatened to impose an unreasonable and oppressive
Development Schedule upon the Claimant in an attempt to divest the Claimant of their rights to develop restaurants
in their exclusive areas. Claimant sought $1.0 million dollars, an adjustment to their development schedule
contained in their Area Development Agreement and an order prohibiting Bajio, LLC from selling or attempting to
sell BAJIO® franchises in their exclusive areas. On February 22, 2007, Claimant amended their Demand for
Arbitration by adding new parties and claims in Bueno Conato, LLC, Claimant v. Doctor’s Associates Inc.; Bajio,
LLC; Bajio National, LLC; Bajio Franchising, LLC; Bajio Royalties, LLC; Obregon, LLC; Jason Stowe, Dave
Tuomisto and Logan Hunter, Respondents (American Arbitration Association (AAA) in Fresno, CA, Case No. 77
114 Y 00254 06 JME). They then claimed Breach of Contract, Promissory Estoppel, Breach of the Duty of Good
Faith and Fair Dealing, Assumpsit and Unjust Enrichment, Tortious Interference with Contract, Tortious
Interference with Prospective Economic Relations, Violation of Deceptive Trade Practices Act, Violation of the
Utah Consumer Sales Practices Act, Fraud, Fraudulent Inducement, Conspiracy, Aiding and Abetting, Alter Ego and
Declaratory Relief. Claimant sought actual damages, profits and revenues obtained by Respondents, reimbursement
of expenses, exemplary and punitive damages, attorneys’ fees and interest. On July 17, 2008, Respondent’s received
notice of the arbitrator’s award in which all of the Claimant’s claims were denied and the Respondents were
awarded their attorney’s fees, expenses, and costs in the amount of $844,225.
50) On May 23, 2005, DAI was served in a case entitled Jeanine Sala v. Starbucks Corporation d/b/a Starbucks, et
al, (United States District Court for the Middle District of Florida, Case No. 8:05-CV-00829-JSM-EAJ), and on June
3, 2005 DAI was served in a case entitled Jeanine Sala v. Starbucks Corporation d/b/a Starbucks, et al, (Circuit
Court of the Thirteenth Judicial District, State of Florida, In and For Hillsborough County, Case No. 05-04407).
These cases were brought against DAI and more than fifty other restaurant chains by a consumer who alleges she
was illegally charged sales tax on her purchase of bottled water from the defendants. She sought class action status
on behalf of herself and other persons similarly situated in both suits. The suits both claimed breach of contract,
unjust enrichment, money had and received, violation of the Florida Deceptive Trade Practices Act, unfair business
practices, a declaratory judgment declaring defendants charging of sales tax is unlawful and an injunction forbidding
defendants from charging such tax in the future. The suits sought class certification; unspecified actual damages;
injunctions prohibiting the sales tax being unlawfully charged; pre and post-judgment interest, and attorneys’ fees
and costs. On October 31, 2007, both cases were settled without DAI paying any damages and agreeing to provide
information requested.
51) Candra Kennedy et al., Plaintiff v. Doctor’s Associates Inc. and Tin Trung Ma, Defendant (U.S. District Court
for the Eastern District of Pennsylvania Case No. 07-1504) On April 13, 2007, the Defendants were served in the
above case brought by an alleged customer of a SUBWAY® franchise in Philadelphia, Pennsylvania. Plaintiff
alleged that he received a receipt for his transaction which was in violation of the Fair and Accurate Credit
Transaction Act (“FACTA”) in that the alleged receipt had the credit card account’s last four digits and the
expiration date printed on it. Plaintiff alleged that the Defendants willfully violated FACTA by issuing receipts with
the expiration date and the last four digits of a credit car holder’s account number and further that Plaintiff should be
a class representative on behalf of all customers who received receipts in violation of FACTA at SUBWAY®
restaurants. Plaintiff sought an order appointing himself as the class representative, and that his counsel represents
the class, an award of statutory damages between $100 and $1000 per class member, payment of costs and fees
under FACTA, an order enjoining the Defendants from continuing to violate FACTA and any such other relief as
21
may be necessary, just and proper. On February 1, 2008, the parties settled all claims. DAI paid the Plaintiff
$15,000 and Ma paid the Plaintiff $10,000 in satisfaction of all claims and the case was dismissed with prejudice.
52) On June 17, 2004, Douglas G. Jaffe filed a counter-claim in response to the arbitration Doctor’s Associates Inc.,
Claimant v. Douglas G. Jaffe, Respondent (American Dispute Resolution Center, No. 26-133-04, filed on June 7,
2004). Respondent denied that he breached his franchise agreement or that Claimant has the right to terminate his
franchise. Respondent believed that the Claimant breached the franchise agreement by opening additional
franchises in his area and increasing his contributions to the SUBWAY Franchisee Advertising Fund Trust by 1%
without the required approval of at least 75% of the existing franchises units. Respondent sought damages in excess
of $500,000, a declaration that Claimant cannot open any additional franchises in his area or continue to charge the
additional 1% for the SUBWAY Franchisee Advertising Fund Trust and all other relief deemed appropriate. On
February 8, 2008, the case was settled whereby Jaffe agreed to bring his current franchise into compliance with the
Subway® Operations Manual no later than April 15, 2008 in exchange for permission to open a new Subway® store
in Norvelt, PA. DAI agreed to provide equipment, fixtures and décor in an amount not to exceed $125,000. Jaffe
agreed to release all claims against DAI and the Development Agent
53) Amin Vakil and Motibanoo A. Vakil, Plaintiffs v. Doctor’s Associates Inc., OHCAL Foods, Inc., Ruth Sender,
American Arbitration Association, Inc., and Does 1 through 10, inclusive, Defendants (Superior Court of the State
of California, Los Angeles County, Case No. BC51632) Franchisees filed this complaint on June 4, 2001 in
response to an arbitration filed by DAI with the American Arbitration Association (AAA 12E 1140002301). The
Plaintiffs claimed breach of contract, unfair business practices, interference with contractual relations, common law
unfair competition, and conspiracy. The Plaintiffs also claimed that the arbitration provision of the franchise
agreement is unenforceable under the California Business and Professions Code, Section 20040.5. The Plaintiffs
sought a declaration invalidating the arbitration provision, an order restraining DAI and AAA from pursuing the
Connecticut arbitration, a declaration that there are no grounds for the termination of Plaintiff’s franchises, an order
compelling DAI to arbitrate all disputes and claims with Plaintiff in California, compensatory and punitive damages
to be determined at trial, and costs. On June 11, 2001, DAI filed a Petition to Compel Arbitration in the United
States District Court for the District of Connecticut (No. 3:01CV1078(PCD)) which was granted on August 28,
2001. On February 4, 2003, Plaintiffs amended their arbitration claims by requesting an injunction to keep DAI
from locating an additional Subway® restaurant in their vicinity, and added a claim for fraud regarding that store’s
placement. On January 14, 2005, DAI amended its arbitration demand to seek termination of Plaintiff’s franchise
agreement for failure to remodel the restaurant. This matter was transferred to an arbitration before ADR Services,
Inc. in Los Angeles California. On May 16, 2005, Plaintiffs amended their arbitration claims in Amin Vakil and
Motibanoo A. Vakil Claimants v. Doctor’s Associates Inc., Ohcal Foods, Inc., Ruth Sender Rick Sender, Double R
Double S, Inc. and Does 1through 10 Respondents. They sought declaratory relief on the validity of DAI’s
termination of Plaintiff’s franchise agreements; an injunction to keep DAI from allowing franchisees at a certain
location near Plaintiff’s store from opening; they further alleged breach of the covenant of good faith and fair
dealing, fraud, unfair business practices and conspiracy to commit unfair business practices, and unfair competition
and conspiracy to commit unfair business competition against Respondents. They claimed that the Respondents
(except DAI) misappropriated school lunch accounts for their own unjust enrichment, and harassed them by
unreasonable inspections; committed acts of unfair competition and unfair business practices; that DAI committed
fraud and breach of contract by attempting to terminate them, open stores nearby and authorizing competing
franchises. On June 2, 2008, the parties agreed to settle the above case and DAI bought the Vakils’ two franchises
for $825,000. The Vakils released all Defendants from any and all claims against them.
54) In the Matter of the Arbitration Between Doctor’s Associates Inc., Petitioner v. Sushma Jotwani, Respondent
(Supreme Court of the State of New York, County of Nassau, No. 08-007494) On April 23, 2008, the Respondent
filed a Petition to Vacate and Set Aside Arbitration Award and to Stay Enforcement seeking to prevent the Petitioner
from enforcing an Arbitration Award terminating the Respondent’s Franchise Agreement. The Respondent alleged
that the award was procured by corruption, fraud or misconduct, that she was prejudiced by the partiality of the
arbitrator and that the arbitrator exceeded his power. The Respondent sought the vacation of the Arbitration Award
terminating her Franchise Agreement. On July 29, 2008, the parties entered into a settlement agreement whereby
Jotwani agreed to withdraw her Petition to Vacate and agreed to pay DAI the fees and costs of the Arbitration and
agreed to bring her store into compliance with the Subway® Operations Manual.
55) Toho Co., LTD, Plaintiff v. Doctor’s Associates Inc. d/b/a Subway; Subway Franchisee Advertising Fund Trust
(SFAFT); McCarthy Mambino Bertino, LLC d/b/a MMB, Defendants (U.S. District Court for the Central District of
California, Case No. CV08-02511GPS). This complaint was filed on April 16, 2008 by Plaintiff claiming violation
of the Lanham Act; federal trademark dilution; state trademark dilution, common law unfair competition; unjust
enrichment; and copyright infringement along with a demand for trial by jury. The Plaintiff claimed Defendants
22
intentionally used Plaintiff’s fictional character “Godzilla” inappropriately and without authorization in their
national television commercials. They claimed that Defendants created the commercial intending to copy the
“Godzilla” character for its own commercial advantage. Plaintiff sought injunctive relief, compensatory damages,
and disgorgement of all profits Defendants have gained from the infringement. On August 1, 2008, the parties
settled the case whereby the Defendants agreed to pay the Plaintiffs $400,000 paid by Defendants SFAFT and
MMB.
56) Dayana Freier on behalf of Micah Weishaar, Alexa Weishsaar, Madison Weishaar and Logan Weishaar,
Plaintiff v. Doctor’s Associates Inc. d/b/a Subway, Defendant (United States District Court for the District of
Wyoming Case No. 08-CV-48-B) On February 20, 2008 the Plaintiffs filed the above case in U.S. District Court
alleging discrimination based upon a violation of the Americans with Disabilities Act arising from the alleged
refusal of a Wyoming franchisee to allow a service animal inside his SUBWAY® restaurant. The Plaintiffs sought a
declaratory judgment that the Defendant is in violation of the Americans with Disabilities Act, injunctive relief
requiring the Defendant to make reasonable modifications in policies, practices or procedures, punitive damages in
the amount of $3,500,000, attorney’s fees, costs and litigation expenses, and other such relief as the court deems just
and proper or is allowed under the Americans with Disabilities Act. On April 17, 2008 the Plaintiff’s amended their
complaint to add franchisee Patrick Wagner and an employee at the store Robin Reese as additional Defendants. On
October 8, 2008 the case was dismissed with Defendant Wagner agreeing to reimburse the Plaintiff $825 for costs
incurred in this matter.
57) 9098-8338 Quebec Inc., Demanderesse contre Restaurants Subway Quebec Ltee. Defenderesse (La Cour
Superieure, Province de Quebec, District de Montreal, Chambre Civile No.500-17-005781-058). On May 17, 2005
the above case was filed by a company owned by a franchisee against the company owned by a Development Agent
of Subway Franchise Systems of Canada, Ltd. The case alleged that the Development Agent has not performed a
contract to purchase the assets of franchisee’s Subway® restaurant in Quebec. The suit sought the enforcement of
the contract, $75,000 in damages, interest, costs and fees under article 1619 of the Quebec Civil Code. On October
25, 2008, the parties entered into a settlement agreement whereby the Defendant Development Agent agreed to pay
the Plaintiff $18,500 as a full and final settlement of the claim.
58) Terri S. Dryden and James E. Dryden, Claimants v. Doctor’s Associates Inc., Respondents. On January 11,
2008, DAI was notified that a Demand for Arbitration was to be filed by the Claimants alleging that DAI is
vicariously liable for a Development Agent alleged tortious interference with the sale of the Claimants franchises,
that DAI is liable for defamatory statements made by the Development Agent, and violation of Connecticut Unfair
Trade Practices Act. The Claimants sought unspecified compensatory and punitive damages, attorney fees and costs
and a declaratory judgment seeking non-compensatory damages for reckless and intentional torts. On October 28,
2008, the Arbitrator found in favor of the Claimants on their claims for tortious interference with business
expectancies, violation of the Connecticut Unfair Trade Practices Act and their request for a declaratory judgment
seeking non-compensatory damages for reckless and intentional torts. The Arbitrator awarded the Claimants
$500,000 in compensatory damage, $49,742.50 for attorney fees and $16,346.43 for cost and denied the Claimants’
request for punitive damages which was paid on January 9, 2009.
59) People of the State of California v. Doctor’s Associates Inc., a Florida Corporation, dba Subway Restaurants and
Subway Franchisee Advertising Fund Trust, a Connecticut Common Law Trust (Superior Court of California
County of Marin, Case No. C/V 086219) On December 19, 2008, the District Attorneys for the Counties of Marin,
Sonoma, and Santa Cruz filed a Complaint for Civil Penalties and Equitable Relief against the defendants alleging
violations of California Business and Professions Code Section 17500 for Misleading Statements and Section 17200
for Unlawful Business Practices. The Plaintiffs sought a permanent injunction enjoining the Defendants from
engaging in either of the alleged practices, a civil penalty of $2,500 for each deceptive statement, a civil penalty of
$2,500 for each unlawful business act or practice, reasonable restitution for Defendants’ alleged deceptive
advertising and unlawful business practice. On December 19, 2008, the parties also agreed to a settlement whereby
the Defendants were enjoined from making any false or misleading statements regarding the price of items offered
for sale, making any advertising statements to the public that are inconsistent with menu boards and advertising
materials provided by SFAFT and DAI to Subway restaurants, making any offers, promotions, advertisement or
offering a product or combination of products for sale when such offer is inconsistent with the technical ability of
the POS software licensed to each franchisee. DAI agreed to direct their Development Agents to inspect each
Subway restaurant in California no less than once every six months for the following three years to verify that the
prices charged by the franchisee are in accordance with posted prices advertised, to verify that no advertisement is
inconsistent with the offer set forth in the Subway menu, and to verify that no advertisement is inconsistent with
Subway promotional advertising materials posted by the franchisee unless the franchisee declines to participate in
the promotion and does not post any of the of the Subway advertising materials. DAI also agreed to establish and
23
display a toll-free telephone number for consumer price accuracy complaints. The Defendants agreed to pay
$75,000 for investigative costs, $285,000 in civil penalties, and distribute 142,500 Subway gift cards of a value of
$2.00 to California consumers. All payments were made by Defendant SFAFT.
60) Fouad E. Hazboun, Mohammed Alkiradsi and Subway of Wilson, Inc. Plaintiffs v. Doctor’s Associates Inc.,
Defendant (General Court of Justice, Superior Court Nash County, North Carolina Case No. 07-CVS-1635) On
August 31, 2007, DAI was served in the above case seeking to vacate a prior arbitration award against the Plaintiff,
seeking arbitration to force DAI into accepting a prospective transferee and claiming that DAI has breached a prior
settlement agreement. The Plaintiff’s are seeking the vacation of a prior arbitration award, compensatory and
punitive damages in excess of $10,000. On February 25, 2008, the arbitration award was vacated and the parties
were order to arbitrate all issues in Nash County, North Carolina. On January 13, 2009, the parties settled the case
whereby the Plaintiffs were permitted to sell their two remaining franchises to a buyer of their choice and the new
buyer agreed to remodel both of the franchises within nine months.
61) Jeff Hanlon, et al. Plaintiff v. Doctor’s Associates Inc. d/b/a Subway and Does 1 through 10, inclusive,
Defendants (U.S. District Court for the Western District of Pennsylvania, Case No. 07-1392). On October 19, 2007
DAI was served in the above case brought by an alleged customer of a SUBWAY® franchise in Pittsburgh,
Pennsylvania. Plaintiff alleges that he received a receipt for his transaction which was in violation of the Fair and
Accurate Credit Transaction Act (“FACTA”) in that the alleged receipt had the credit card expiration date printed on
it. Plaintiff alleges that DAI has willfully violated FACTA by issuing receipts with the expiration date and more
than the last five digits of a credit card holder’s account number and further that Plaintiff should be a class
representative on behalf of all customers who received receipts in violation of FACTA at SUBWAY® restaurants.
Plaintiff seeks an order appointing himself as the class representative, and that his counsel represents the class; an
award of statutory damages between $100 and $1000 for each violation under FACTA; an award of punitive
damages under FACTA; payment of costs and fees under FACTA, and any other relief the court deems proper. . On
June 3, 2008, the Credit and Debit Card Reciept Clarification Act of 2007 was enacted which clarified the definition
of willful noncompliance with FACTA and resulted in the dismissal of this case.
62) Patricia C. Puerto, et al Plaintiff v. Subway 33183 Inc. a Florida corporation d/b/a Subway® and Doctor’s
Associates Inc., a Florida Corporation, Defendant (U.S. District Court for the Southern District of Florida, Case No.
08-60486). On April 3, 2008, DAI was served in the above case brought by an alleged customer of a SUBWAY®
franchise in Coral Springs, Florida. Plaintiff alleges that she received a receipt for her transaction which was in
violation of the Fair and Accurate Credit Transaction Act (“FACTA”) in that the alleged receipt had all 16 digits of
the Plaintiff’s credit card number and the card’s expiration date. Plaintiff alleges that DAI has willfully violated
FACTA by issuing receipts with all the digits of the credit card holder’s account number and further that Plaintiff
should be a class representative on behalf of all customers who received receipts in violation of FACTA at
SUBWAY® restaurants. Plaintiff seeks an order appointing himself as the class representative, that her counsel
represent the class, an award of compensatory, statutory, punitive and other legal damages, an award of prejudgment and post-judgment interest to the Plaintiff and the class, attorney fees and costs and other and further relief
as is just and proper. On June 3, 2008, the Credit and Debit Card Reciept Clarification Act of 2007 was enacted
which clarified the definition of willful noncompliance with FACTA and resulted in the dismissal of this case.
63) Subway International, B.V., Claimant v James L. Bryant and Han Jiao, Respondents (American Arbitration
Association, Manhattan, New York #50 181 T 00329 06). On June 15, 2007 a Respondent’s Statement of Defense
and Counterclaim was filed against Claimant for unfair and deceptive practices and for interfering with
Respondent’s contractual relations to sell their Development Agent Agreement for developing SUBWAY®
restaurants in China. Respondents sought in excess of 200,000USD representing the difference between the amount
they received upon the sale of the Development Agent Agreement and the amount called for in the sale contract in
addition to double damages, attorney’s fees and costs. On October 14, 2008, the Arbitrator found that the Claimant
should release to the Respondent 108,224USD, an amount that was received from the new Development Agent
representing the sale price for the territory. This sum had been held in escrow by the Claimant pending the outcome
of this arbitration. The Arbitrator denied the Respondents’ claims for interference with contract and unfair and
deceptive practices.
C. Restrictive Orders
1) In the Matter of: Doctor’s Associates Inc., Respondent (Administrative Proceeding Before the Securities
Commissioner of Maryland, Case No. 2002-0783). On November 4, 2002 DAI and the Maryland Securities Division
agreed to enter into a Consent Order. No hearing, trial or adjudication took place and DAI neither admitted nor
denied any violation of law. Under the Consent Order, the Commissioner concluded that DAI violated §§ 14-214 of
24
the Maryland Franchise Law by selling franchises in Maryland during a brief period when DAI was not registered to
sell franchises and DAI’s exemption from registration had lapsed. Pursuant to the Consent Order the franchisees
were redisclosed, offered rescission of their franchise agreements (which were refused) and DAI sold no further
franchises until it had filed an effective exemption from registration.
2) Settlement Agreement Between the United States of America, and Doctor's Associates Inc. and Subway Real
Estate Corp. (DJ 204-32-44). On July 31, 2007, DAI, SREC and the United States Department of Justice (DOJ)
negotiated a Settlement Agreement on compliance with the Americans with Disabilities Act. No hearing, trial or
adjudication took place and both DAI and SREC denied having violated the ADA. Under the Settlement
Agreement, DAI will continue to design franchisees’ stores to ADA standards. DAI will train field staff and agents,
and retain experts to provide assistance in connection with ADA issues in stores. Field staff and agents will evaluate
stores and advise franchisees to remedy existing ADA issues and for future stores attempt to select sites that are
accessible to the disabled. DAI will fund an interest-free remediation loan program for franchisees to make required
changes. DAI paid $25,000 to the United States Treasury as a civil penalty.
We believe the following statement to be true: Other than these 88 actions, we do not have to disclose any other
litigation in this Disclosure Document.
04/09
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EXHIBIT H
INDEPENDENT BROKER AND REGIONAL SUCCESS COACH DISCLOSURES
The following is supplemental disclosure concerning certain independent brokers and regional success
coaches who assist us in the offering of Proforma Franchised Businesses which may include Franchised Businesses
granted to you. Those listed below may receive a commission, monthly draw, referral fee, and/or franchise
development fee if they participate in the sale of a franchise to you. Those listed do not have the authority to negotiate
the offer of a Franchise Agreement or to otherwise contract or act on our behalf. We will not be bound by any
statements or representations they may make, and we are under no obligation to offer a Franchise Agreement or any
other rights to anyone whom they refer to us.
BROKERS
THE BUSINESS ALLIANCE, INC.
The Business Alliance, Inc. (“The Business Alliance”) is a Georgia corporation located at 100 Hartsfield
Center Parkway, Suite 500, Atlanta, Georgia 30354, (800) 557-4850.
The Business Alliance markets franchise opportunities through electronic and print media for participating
franchisors. The Business Alliance operates through a nationwide network of franchise brokers and other affiliated
offices. Once the referral is made, The Business Alliance does not perform any functions for participating franchisees.
Chief Executive Officer: Daniel Prechtel
Mr. Prechtel is the Chief Executive Officer and Owner of The Business Alliance. Mr. Prechtel started The
Business Alliance in 1999, and has participated in, managed, or consulted in the sale of various franchises since 1999.
Each The Business Alliance Broker has agreed to provide you with information relating to his or her
business background and any litigation or bankruptcy experience at the time he or she refers you to us. We will only
consider our disclosure to you to be complete when you have received this information from a referring broker.
JEFFREY A. CHERKASSKY
Jeffrey A. Cherkassky (“Cherkassky”) is an Independent Contractor operating at 33 Campbell Avenue,
Doylestown, PA 18901, (267) 968-6097.
Mr. Cherkassky has participated in, managed, or consulted in the sale of Proforma franchises since 2009.
Once the referral is made, Mr. Cherkassky does not perform any functions for participating franchisees. He has
agreed to provide you with information relating to his background and any litigation or bankruptcy experience at the
time he refers you to us. We will only consider our disclosure to you to be complete when you have received this
information from him.
THE ENTREPRENEUR AUTHORITY, LLC
The Entrepreneur Authority, LLC (“The Entrepreneur Authority”) is a Texas limited liability company located
at 5800 Granite Parkway, Suite 300, Plano, Texas 75024, (866) 246-2884.
The Entrepreneur Authority markets franchise opportunities through electronic and print media for
participating franchisors. The Entrepreneur Authority operates through a nationwide network of franchise brokers and
other affiliated offices. Once the referral is made, The Entrepreneur Authority does not perform any functions for
participating franchisees.
President: David E. Omholt
David E. Omholt is the President and Owner of The Entrepreneur Authority. Mr. Omholt formed The
Entrepreneur Authority in 2002. Prior to joining The Entrepreneur Authority, Mr. Omholt was an Executive with
Accenture (formerly Andersen Consulting) for 10 years in their Retail Industry consulting practice. There, he helped
clients redesign key business strategies and processes, as well as implement innovative IT solutions in the areas of
Marketing, Merchandising and Pricing.
Each The Entrepreneur Authority Broker has agreed to provide you with information relating to his or her
THE FRANCHISE AUTHORITY, INC.
The Franchise Authority, Inc. (“The Franchise Authority”) is a Texas corporation located at 908 Town &
Country Boulevard, Suite 120, Houston, Texas 77024, (800) 307-0228.
The Franchise Authority markets franchise opportunities through electronic and print media for participating
franchisors. The Franchise Authority operates through a nationwide network of franchise brokers and other affiliated
offices. Once the referral is made, The Franchise Authority does not perform any functions for participating
franchisees.
President, Director and Owner: Robert D. King
Mr. King is President, Director, and Owner of The Franchise Authority, Inc. Mr. King started The Franchise
Authority in 2001, and has participated in, managed, or consulted in the sale of various franchises since 1998.
Each The Franchise Authority Broker has agreed to provide you with information relating to his or her
FRANCHISEINC!, LLC
FranchiseInc!, LLC (“FranchiseInc!”) is an Alabama limited liability company located at 2148 Pelham
Parkway, Building 300, Pelham, Alabama 35124, (800) 961-0420.
FranchiseInc! markets franchise opportunities through electronic and print media for participating franchisors.
FranchiseInc! operates through a nationwide network of franchise brokers and other affiliated offices. Once the referral
is made, FranchiseInc! does not perform any functions for participating franchisees.
President: Robert A. Needham
Robert A. Needham has been the President of FranchiseInc! since 2006. Prior to joining FranchiseInc!, he
was President of FranView, LLC. Mr. Needham has participated in, managed, or consulted in the sale of various
franchises since 2003.
Each FranchiseInc! Broker has agreed to provide you with information relating to his or her business
background and any litigation or bankruptcy experience at the time he or she refers you to us. We will only consider
our disclosure to you to be complete when you have received this information from a referring broker.
2
FRANCHISEOFFICERUSA, INC.
FranchiseOfficerUSA, Inc. (“FranchiseOfficer”) is a Nevada corporation located at 410 Park Avenue, 15th
Floor, New York, New York 10022 (866) 449-5558.
FranchiseOfficer markets franchise opportunities through electronic and print media for participating
franchisors. FranchiseOfficer operates through a nationwide network of franchise brokers and other affiliated offices.
Once the referral is made, FranchiseOfficer does not perform any functions for participating franchisees.
Partner and Chief Operating Officer: Gordon McNulty
Gordon McNulty has been the Partner and Chief Operating Officer of FranchiseOfficer since 2004, and
since that time has participated in, managed, or consulted in the sale of various franchises.
Each FranchiseOfficer Broker has agreed to provide you with information relating to his or her business
KING & KING BUSINESS ADVISORS
King & King Business Advisors (“King & King”) is a Maryland corporation located at 7495 Morgan Road,
Woodbine, Maryland 21797, (410) 303-6378.
King & King markets franchise opportunities through electronic and print media for participating franchisors.
King & King operates through a nationwide network of franchise brokers and other affiliated offices. Once the referral
is made, King & King does not perform any functions for participating franchisees.
President: James M. King
James M. King has been the President since 2005, and since that time has participated in, managed, or
consulted in the sale of various franchises.
Each King & King Broker has agreed to provide you with information relating to his or her business
MASTER FRANCHISE SPECIALISTS LLC
Master Franchise Specialists LLC (“Master Franchise Specialists”) is a Texas limited liability company
located at 3702 Pine Bluff Drive, San Antonio, Texas 78230, (866) 460-8389.
Master Franchise Specialists markets franchise opportunities through electronic and print media for
participating franchisors. Master Franchise Specialists operates through a nationwide network of franchise brokers and
other affiliated offices. Once the referral is made, Master Franchise Specialists does not perform any functions for
participating franchisees.
Chief Executive Officer: Ken Visokey
Ken Visokey has been the Chief Executive Officer of Master Franchise Specialist since 1995, and since that
time has participated in, managed, or consulted in the sale of various franchises.
Each Master Franchise Specialists Broker has agreed to provide you with information relating to his or her
3
ONEDAKOTA, INC.
OneDakota, Inc. d/b/a Executive Franchise Specialists (“OneDakota”) is a South Dakota corporation located
at 710 Prairie Boulevard, Dakota Dunes, South Dakota 57049, (712) 253-2589.
OneDakota markets franchise opportunities through electronic and print media for participating franchisors.
OneDakota operates through a nationwide network of franchise brokers and other affiliated offices. Once the referral is
made, OneDakota does not perform any functions for participating franchisees.
Chief Executive Officer: John d’Auguste
John d’Auguste has been the Chief Executive Officer of OneDakota since 1997, and since that time has
participated in, managed, or consulted in the sale of various franchises.
Each OneDakota Broker has agreed to provide you with information relating to his or her business
TES FRANCHISING, LLC dba THE ENTREPRENEUR’S SOURCE
TES Franchising, LLC dba The Entrepreneur’s Source (“TES”) is a Connecticut limited liability company
located at 900 Main Street South, Building #2, Southbury, Connecticut 06488, (203) 264-2006.
TES markets franchise opportunities through electronic and print media for participating franchisors. TES
Consultants screen prospective franchisees generated by their marketing efforts and then refers them to participating
franchise companies. TES operates through a nationwide network of franchise brokers (Consultants) and other
affiliated offices. Once the referral is made, TES does not perform any functions for participating franchisees.
Chief Executive Officer and President: Terry Powell
Mr. Powell is the Chief Executive Officer of TES. Mr. Powell started the company in 1984 to provide
support and guidance to people seeking to own their own business. Mr. Powell’s career has included being a senior
executive, franchisee and franchisor.
Each TES Broker has agreed to provide you with information relating to his or her business background
and any litigation or bankruptcy experience at the time he or she refers you to us. We will only consider our
disclosure to you to be complete when you have received this information from a referring broker (Consultant).
REGIONAL SUCCESS COACHES
LOLLIPOP SOLUTIONS, INC. d/b/a PROFORMA UNIVERSAL SALES ASSOCIATES
President and Sole Shareholder: Robert Newth
Lollipop Solutions, Inc. d/b/a Proforma Universal Sales Associates (“Lollipop”) is a Kansas corporation
located at 6240 W. 135th Street, Suite 200, Overland Park, KS 66223, (913) 647-5253. Lollipop is authorized by us
to recruit and provide continued assistance to its Franchise Owners in the start-up and operation of their businesses.
4
EXHIBIT I
PFG Properties Ltd. guarantees the performance of PFG Ventures, L.P. The respective guarantees of performance
are attached to this Exhibit I.
STATE ADDENDA
CALIFORNIA ADDENDUM
THESE FRANCHISES HAVE BEEN REGISTERED UNDER THE FRANCHISE INVESTMENT LAW OF THE
STATE
OF
CALIFORNIA.
SUCH
REGISTRATION
DOES
NOT
CONSTITUTE
APPROVAL,
RECOMMENDATION OR ENDORSEMENT BY THE COMMISSIONER OF CORPORATIONS NOR A
FINDING FROM THE COMMISSIONER THAT THE INFORMATION PROVIDED HEREIN IS TRUE,
COMPLETE AND NOT MISLEADING.
OUR WEBSITES, WWW.PROFORMA.COM AND WWW.CONNECTWITHPROFORMA.COM HAVE NOT BEEN
REVIEWED OR APPROVED BY THE CALIFORNIA DEPARTMENT OF CORPORATIONS. ANY COMPLAINTS
CONCERNING THE CONTENT OF THIS WEBSITE MAY BE DIRECTED TO THE CALIFORNIA DEPARTMENT
OF CORPORATIONS AT WWW.CORP.CA.GOV.
HAWAII ADDENDUM
THESE FRANCHISES WILL BE/HAVE BEEN FILED UNDER THE FRANCHISE INVESTMENT LAW
OF THE STATE OF HAWAII. FILING DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION
OR ENDORSEMENT BY THE DIRECTOR OF COMMERCE AND CONSUMER AFFAIRS OR A
FINDING BY THE DIRECTOR OF COMMERCE AND CONSUMER AFFAIRS THAT THE
INFORMATION PROVIDED HEREIN IS TRUE, COMPLETE AND NOT MISLEADING.
THE FRANCHISE INVESTMENT LAW MAKES IT UNLAWFUL TO OFFER OR SELL ANY
FRANCHISE IN THIS STATE WITHOUT FIRST PROVIDING TO THE PROSPECTIVE FRANCHISEE,
OR SUBFRANCHISOR, AT LEAST SEVEN DAYS PRIOR TO THE EXECUTION BY THE
PROSPECTIVE FRANCHISEE OF ANY BINDING FRANCHISE OR OTHER AGREEMENT, OR AT
LEAST SEVEN DAYS PRIOR TO THE PAYMENT OF ANY CONSIDERATION BY THE FRANCHISEE,
OR SUBFRANCHISOR, WHICHEVER OCCURS FIRST, A COPY OF THE DISCLOSURE DOCUMENT,
TOGETHER WITH A COPY OF ALL PROPOSED AGREEMENTS RELATING TO THE SALE OF THE
FRANCHISE.
THIS DISCLOSURE DOCUMENT CONTAINS A SUMMARY ONLY OF CERTAIN MATERIAL
PROVISIONS OF THE FRANCHISE AGREEMENT. THE CONTRACT OR AGREEMENT SHOULD BE
REFERRED TO FOR A STATEMENT OF ALL RIGHTS, CONDITIONS, RESTRICTIONS AND
OBLIGATIONS OF BOTH THE FRANCHISOR AND THE FRANCHISEE.
Our authorized agent to receive service of process in the State of Hawaii is the Hawaii Commissioner
of Securities of the Department of Commerce and Consumer Affairs, 335 Merchant Street, Honolulu, Hawaii
96813.
MICHIGAN ADDENDUM
MICHIGAN NOTICE
THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT
ARE SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWING
PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE
VOID AND CANNOT BE ENFORCED AGAINST YOU.
(a) A prohibition on the right of a franchisee to join an association of franchisees.
(b) A requirement that a franchisee assent to a release, assignment, novation, waiver, or estoppel which deprives a
franchisee of rights and protections provided in this act. This shall not preclude a franchisee, after entering into
a franchise agreement, from settling any and all claims.
(c) A provision that permits a franchisor to terminate a franchise prior to the expiration of its term except for good
cause. Good cause shall include the failure of the franchisee to comply with any lawful provision of the
franchise agreement and to cure such failure after being given written notice thereof and a reasonable
opportunity, which in no event need be more than 30 days, to cure such failure.
(d) A provision that permits a franchisor to refuse to renew a franchise without fairly compensating the franchisee
by repurchase or other means for the fair market value at the time of expiration of the franchisee’s inventory,
supplies, equipment, fixtures, and furnishings. Personalized materials which have no value to the franchisor
and inventory, supplies equipment, fixtures, and furnishings not reasonably required in the conduct of the
franchise business are not subject to compensation. This subsection applies only if: (i) The term of the
franchise is less than 5 years and (ii) the franchisee is prohibited by the franchise or other agreement from
continuing to conduct substantially the same business under another trademark, service mark, trade name,
logotype, advertising, or other commercial symbol in the same area subsequent to the expiration of the franchise
or the franchisee does not receive at least 6 months advance notice of franchisor’s intent not to renew the
franchise.
(e) A provision that permits the franchisor to refuse to renew a franchise on terms generally available to other
franchisees of the same class or type under similar circumstances. This section does not require a renewal
provision.
(f) A provision requiring that arbitration or litigation be conducted outside this state. This shall not preclude the
franchisee form entering into an agreement, at the time of arbitration, to conduct arbitration at a location outside
this state.
(g) A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for
good cause. This subdivision does not prevent a franchisor from exercising a right of first refusal to purchase
the franchise. Good cause shall include, but is not limited to:
i.
The failure of the proposed transferee to meet the franchisor’s then current reasonable qualifications or
standards.
ii. The fact that the proposed transferee is a competitor of the franchisor or subfranchisor.
iii. The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
iv. The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any
default in the franchise agreement existing at time of the proposed transfer.
(h) A provision that requires the franchisee to resell to the franchisor items that are not uniquely identified with the
franchisor. This subdivision does not prohibit a provision that grants to a franchisor a right of first refusal to
purchase the assets of a franchise on the same terms and conditions as a bona fide third party willing and able to
purchase those assets, nor does this subdivision prohibit a provision that grants the franchisor the right to
acquire the assets of a franchise for the market or appraised value of such assets if the franchisee has breached
the lawful provisions of the franchise agreement and has failed to cure the breach in the manner provided in
subdivision (c).
(i) A provision which permits the franchisor to directly or indirectly convey, assign, or otherwise transfer its
obligations to fulfill contractual obligations to the franchisee unless provision has been made for providing the
required contractual services.
THE FACT THAT THERE IS A NOTICE OF THIS OFFERING ON FILE WITH THE
ATTORNEY
GENERAL
DOES
NOT
CONSTITUTE
APPROVAL,
RECOMMENDATION, OR ENDORSEMENT BY THE ATTORNEY GENERAL.
Any questions regarding this notice should be directed to the Consumer Protection Division, Attention:
Franchise, 670 Law Building, Lansing, Michigan 48913.
MINNESOTA ADDENDUM
THESE FRANCHISES HAVE BEEN REGISTERED UNDER THE MINNESOTA FRANCHISE ACT.
REGISTRATION DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION OR ENDORSEMENT
BY THE COMMISSIONER OF COMMERCE OF MINNESOTA OR A FINDING BY THE
COMMISSIONER THAT THE INFORMATION PROVIDED HEREIN IS TRUE, COMPLETE AND NOT
MISLEADING.
THE MINNESOTA FRANCHISE ACT MAKES IT UNLAWFUL TO OFFER OR SELL ANY FRANCHISE
IN THIS STATE WHICH IS SUBJECT TO REGISTRATION WITHOUT FIRST PROVIDING TO THE
PROSPECTIVE FRANCHISEE, AT LEAST 7 DAYS PRIOR TO THE EXECUTION BY THE
PROSPECTIVE FRANCHISEE OF ANY BINDING FRANCHISE OR OTHER AGREEMENT, OR AT
LEAST 7 DAYS PRIOR TO THE PAYMENT OF ANY CONSIDERATION, BY THE FRANCHISEE,
WHICHEVER OCCURS FIRST, A COPY OF THIS PUBLIC OFFERING STATEMENT, TOGETHER
WITH A COPY OF ALL PROPOSED AGREEMENTS RELATING TO THE FRANCHISE.
THIS PUBLIC OFFERING STATEMENT CONTAINS A SUMMARY ONLY OF CERTAIN MATERIAL
PROVISIONS OF THE FRANCHISE AGREEMENT. THE CONTRACT OR AGREEMENT SHOULD BE
REFERRED TO FOR AN UNDERSTANDING OF ALL RIGHTS AND OBLIGATIONS OF BOTH THE
FRANCHISOR AND THE FRANCHISEE.
NEW YORK ADDENDUM
ALTHOUGH THESE FRANCHISES HAVE BEEN ACCEPTED FOR FILING, SUCH FILING
UNDER GENERAL BUSINESS LAW, ARTICLE 33 OF THE STATE OF NEW YORK DOES NOT
CONSTITUTE APPROVAL, RECOMMENDATION OR ENDORSEMENT THE NEW YORK STATE
DEPARTMENT OF LAW THAT THE INFORMATION PROVIDED HEREIN IS TRUE. THE
DEPARTMENT’S REVIEW DID NOT INCLUDE A DETAILED EXAMINATION OF THE MATERIALS
SUBMITTED. A FALSE, INCOMPLETE, INACCURATE OR MISLEADING STATEMENT MAY
CONSTITUTE A VIOLATION OF BOTH FEDERAL AND STATE LAW AND SHOULD BE REPORTED
TO THE FEDERAL TRADE COMMISSION, WASHINGTON D.C. 20580 AND THE NEW YORK STATE
DEPARTMENT OF LAW, BUREAU OF INVESTOR PROTECTION AND SECURITIES, 120
BROADWAY, 23RD FLOOR, NEW YORK, NEW YORK 10271.
GENERAL BUSINESS LAW, ARTICLE 33 OF THE STATE OF NEW YORK MAKES IT
UNLAWFUL TO OFFER OR SELL ANY FRANCHISE WITHOUT FIRST PROVIDING THIS
DISCLOSURE DOCUMENT FOR THE PROSPECTIVE FRANCHISE OWNER AT THE EARLIER OF
(1) THE FIRST PERSONAL MEETING; OR (2) 10 BUSINESS DAYS BEFORE THE SIGNING OF ANY
FRANCHISE OR RELATED AGREEMENT; OR (3) 10 BUSINESS DAYS BEFORE ANY PAYMENT.
1.
The Cover Page of the Disclosure Document is supplemented by the following language:
THE FRANCHISOR MAY, IF IT CHOOSES, NEGOTIATE WITH YOU ABOUT ITEMS
COVERED IN THE PROSPECTUS. HOWEVER, THE FRANCHISOR CANNOT USE THE
NEGOTIATING PROCESS TO PREVAIL UPON A PROSPECTIVE FRANCHISEE TO
ACCEPT TERMS WHICH ARE LESS FAVORABLE THAN THOSE SET FORTH IN THE
PROSPECTUS.
2.
Item 3 of the Disclosure Document is supplemented by the following language:
Except as noted in Item 3 of the Disclosure Document, neither we nor any person identified in
Item 2 of the Disclosure Document, has pending any administrative, criminal or material civil
action (or a significant number of civil actions irrespective of materiality) alleging a violation of
any franchise law, securities law, fraud, embezzlement, fraudulent conversion, restraint of trade,
unfair or deceptive practices, misappropriation of property or comparable allegations.
Neither we nor any person identified in Item 2 of the Disclosure Document, has been convicted of
a felony or pleaded nolo contendere to a felony charge or, within the ten-year period immediately
preceding the date of this Disclosure Document, has been convicted of a misdemeanor or pleaded
nolo contendere to a misdemeanor charge or been held liable in a civil action by final judgment or
been the subject of a material complaint or other legal proceeding if such misdemeanor conviction
or charge or civil action, complaint or other legal proceeding involved a violation of any franchise
law, securities law, fraud, embezzlement, fraudulent conversion, restraint of trade, unfair or
deceptive practices, misappropriation of property or comparable allegations.
Neither we nor any person identified in Item 2 of the Disclosure Document, is subject to any
injunctive or restrictive order or decree relating to franchises or under any Federal, State or
Canadian franchise, securities, antitrust, trade regulation or trade practice law as a result of a
concluded or pending action or proceeding brought by a public agency, is subject to any currently
effective order of any national securities association or national securities exchange, as defined in
the Securities and Exchange Act of 1934, suspending or expelling such person from membership
in such association or exchange; or is subject to a currently effective injunctive or restrictive order
relating to any other business activity as a result of an action brought by a public agency or
department, including, without limitation, actions affecting a license as a real estate broker or sales
agent.
3.
Item 4 of the Disclosure Document is supplemented by the following language:
Neither we, nor any of our affiliates, predecessors, officers, or general partners have within the 10year period immediately before the date of this Disclosure Document: (a) filed as a debtor (or had
filed against it) a petition to start an action under U.S. Bankruptcy Code; (b) obtained a discharge
of its debts under the U.S. Bankruptcy Code; (c) or was a principal officer of a company or general
partner in a partnership that either filed as a debtor (or that had filed against it) a petition to start an
action under U.S. Bankruptcy Code or that obtained a discharge of its debts under the U.S.
Bankruptcy Code during or within 1 year after the officer or general partner held the position with
the company or partnership.
4.
Item 5, “Initial Franchise Fee”, is supplemented by the following language which will be deemed an
integral part thereof:
The initial fee will be made part of our general operating revenue and used to pay for any and all
expenses of operation, including, among other things, training and other services provided to the
franchisees.
5.
Item 17, “Renewal, Termination, Transfer and Dispute Resolution”, is supplemented under the categories
entitled “Termination by You” and “Our Right to Assign Your Franchise Agreement” respectively, by the following
language which will be deemed an integral part thereof:
Any general release required under the Franchise Agreement is limited by the following, “all
rights arising in your favor from the provisions of Article 33 of the General Business Law of the
State of New York and regulations issued thereunder will remain in force; it being the intent of
this proviso that the non-waiver provisions of General Business Law, Sections 687.4 and 687.5 be
satisfied.”
No assignment will be made except to an Assignee who, in our opinion, is willing and able to
assume our obligations under the Franchise Agreement.
6.
As to any state law described in this Addendum that declares void or unenforceable any provision
contained in the Franchise Agreement, the Franchisor reserves the right to challenge the enforceability of the state
law by, among other things, bringing an appropriate legal action or by raising the claim in a legal action or
arbitration that you have initiated.
Franchisor’s authorized agent to receive process in the State of New York is the Secretary of State, 41 State
Street, Albany, NY 12231.
RHODE ISLAND ADDENDUM
The following statement is added to Item 17.w:
Pursuant to § 19-28.1-14 of the Rhode Island Franchise Investment Act, “A provision in a franchise agreement
restricting jurisdiction or venue to a forum outside this state or requiring the application of the laws of another state
is void with respect to a claim otherwise enforceable under this Act.”
VIRGINIA ADDENDUM
ALTHOUGH THESE FRANCHISES HAVE BEEN REGISTERED UNDER THE VIRGINIA RETAIL
FRANCHISING ACT AS AMENDED, REGISTRATION DOES NOT CONSTITUTE APPROVAL,
RECOMMENDATION OR ENDORSEMENT BY THE DIVISION OF SECURITIES AND RETAIL
FRANCHISING THAT THE INFORMATION PROVIDED HEREIN IS TRUE, COMPLETE, ACCURATE
OR NOT MISLEADING.
The following statements are added to Item 17.h:
Pursuant to Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to use undue
influence to induce a franchisee to surrender any right given to him under the franchise. If any provision of the
franchise agreement involves the use of undue influence by the franchisor to induce a franchisee to surrender any
rights given to him under the franchise, that provision may not be enforceable.
RECEIPT
(Your copy to keep)
THIS DISCLOSURE DOCUMENT SUMMARIZES CERTAIN PROVISIONS OF THE FRANCHISE
AGREEMENT AND OTHER INFORMATION IN PLAIN LANGUAGE. READ THIS DISCLOSURE
DOCUMENT AND ALL AGREEMENTS CAREFULLY.
IF PFG VENTURES, L.P. OFFERS YOU A FRANCHISE, IT MUST PROVIDE THIS DISCLOSURE
DOCUMENT TO YOU FOURTEEN (14) CALENDAR DAYS BEFORE YOU SIGN A BINDING AGREEMENT
WITH, OR MAKE A PAYMENT TO, THE FRANCHISOR OR AN AFFILIATE IN CONNECTION WITH THE
PROPOSED FRANCHISE SALE OR GRANT. UNDER MICHIGAN, OREGON, WASHINGTON AND
WISCONSIN LAW, IF APPLICABLE, WE MUST PROVIDE THIS DISCLOSURE DOCUMENT TO YOU
TEN (10) BUSINESS DAYS BEFORE YOU SIGN ANY CONTRACT OR MAKE ANY PAYMENT
RELATING TO THE FRANCHISE RELATIONSHIP. UNDER MARYLAND, OKLAHOMA, NEW YORK
AND RHODE ISLAND LAW, IF APPLICABLE, WE MUST PROVIDE THIS DISCLOSURE DOCUMENT
TO YOU AT THE EARLIEST OF THE FIRST PERSONAL MEETING OR TEN (10) BUSINESS DAYS
BEFORE YOU SIGN ANY CONTRACT OR MAKE ANY PAYMENT RELATING TO THE FRANCHISE
RELATIONSHIP.
IF PFG VENTURES, L.P. DOES NOT DELIVER THIS DISCLOSURE DOCUMENT ON TIME OR IF IT
CONTAINS A FALSE OR MISLEADING STATEMENT, OR A MATERIAL OMISSION, A VIOLATION OF
FEDERAL LAW AND STATE LAW MAY HAVE OCCURRED AND SHOULD BE REPORTED TO THE
FEDERAL TRADE COMMISSION, WASHINGTON, D.C. 20580 AND THE STATE AGENCY LISTED ON
EXHIBIT F.
The franchise seller is ____________________________________________, PFG Ventures, L.P., 8800 East
Pleasant Valley Road, Cleveland, OH 44131, 216-520-8400.
I have received a disclosure document dated May 13, 2009. State registration effective dates are listed on the State
Registrations page of this Disclosure Documents. This Disclosure Document included the following Exhibits:
A.
B-1.
B-2.
C.
D.
E.
F.
G.
H.
I.
Standard Franchise Agreement for a Proforma Franchised Business (including state-specific addenda to
Franchise Agreement for the States of California, Illinois, Indiana, Minnesota, North Dakota and
Washington).
Audited Financial Statement for the calendar years ending on December 31, 2008 and 2007.
Audited Financial Statements for the calendar years ending December 31, 2007 and 2006.
List of Franchise Owners Currently in Operation.
Receivables and Security Agreement.
Software License and Support Agreement.
List of State Franchise Law Administrators/Agents to Receive Service of Process.
Litigation Involving Frederick DeLuca and Peter Buck.
Brokers.
Guarantees of Performance by PFG Properties Ltd. and PFG Ventures, L.P.
Dated: _________________________________
PROSPECTIVE FRANCHISEE:
If a Business Entity:
If an Individual:
Name of Business Entity
(Print Name)
By:
(Signature)
Its:
(Title)
(Print Name)
(Print Name)
(Signature)
2009 PFG Ventures, L.P.
RECEIPT
(Sign Receipt and return to us)
THIS DISCLOSURE DOCUMENT SUMMARIZES CERTAIN PROVISIONS OF THE FRANCHISE
AGREEMENT AND OTHER INFORMATION IN PLAIN LANGUAGE. READ THIS DISCLOSURE
DOCUMENT AND ALL AGREEMENTS CAREFULLY.
IF PFG VENTURES, L.P. OFFERS YOU A FRANCHISE, IT MUST PROVIDE THIS DISCLOSURE
DOCUMENT TO YOU FOURTEEN (14) CALENDAR DAYS BEFORE YOU SIGN A BINDING AGREEMENT
WITH, OR MAKE A PAYMENT TO, THE FRANCHISOR OR AN AFFILIATE IN CONNECTION WITH THE
PROPOSED FRANCHISE SALE OR GRANT. UNDER MICHIGAN, OREGON, WASHINGTON AND
WISCONSIN LAW, IF APPLICABLE, WE MUST PROVIDE THIS DISCLOSURE DOCUMENT TO YOU
TEN (10) BUSINESS DAYS BEFORE YOU SIGN ANY CONTRACT OR MAKE ANY PAYMENT
RELATING TO THE FRANCHISE RELATIONSHIP. UNDER MARYLAND, OKLAHOMA, NEW YORK
AND RHODE ISLAND LAW, IF APPLICABLE, WE MUST PROVIDE THIS DISCLOSURE DOCUMENT
TO YOU AT THE EARLIEST OF THE FIRST PERSONAL MEETING OR TEN (10) BUSINESS DAYS
BEFORE YOU SIGN ANY CONTRACT OR MAKE ANY PAYMENT RELATING TO THE FRANCHISE
RELATIONSHIP.
IF PFG VENTURES, L.P. DOES NOT DELIVER THIS DISCLOSURE DOCUMENT ON TIME OR IF IT
CONTAINS A FALSE OR MISLEADING STATEMENT, OR A MATERIAL OMISSION, A VIOLATION OF
FEDERAL LAW AND STATE LAW MAY HAVE OCCURRED AND SHOULD BE REPORTED TO THE
FEDERAL TRADE COMMISSION, WASHINGTON, D.C. 20580 AND THE STATE AGENCY LISTED ON
EXHIBIT F.
The franchise seller is ____________________________________________, PFG Ventures, L.P., 8800 East
Pleasant Valley Road, Cleveland, OH 44131, 216-520-8400.
I have received a disclosure document dated May 13, 2009. State registration effective dates are listed on the State
Registrations page of this Disclosure Documents. This Disclosure Document included the following Exhibits:
A.
B-1.
B-2.
C.
D.
E.
F.
G.
H.
I.
Standard Franchise Agreement for a Proforma Franchised Business (including state-specific addenda to
Franchise Agreement for the States of California, Illinois, Indiana, Minnesota, North Dakota and
Washington).
Audited Financial Statement for the calendar years ending on December 31, 2008 and 2007.
Audited Financial Statements for the calendar years ending December 31, 2007 and 2006.
List of Franchise Owners Currently in Operation.
Receivables and Security Agreement.
Software License and Support Agreement.
List of State Franchise Law Administrators/Agents to Receive Service of Process.
Litigation Involving Frederick DeLuca and Peter Buck.
Brokers.
Guarantees of Performance by PFG Properties Ltd. and PFG Ventures, L.P.
Dated: _________________________________
PROSPECTIVE FRANCHISEE:
If a Business Entity:
If an Individual:
Name of Business Entity
(Print Name)
By:
(Signature)
Its:
(Title)
(Print Name)
(Print Name)
(Signature)
2009 PFG Ventures, L.P.

Proforma Franchise Disclosure Document 2009

Transcription

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