What constitutes misuse of the Marks that could lead to termination of the Boulder Designs Franchise Agreement?

itions | | the term | | | are met. | | | Provision | Section in the Franchise Agreement | Summary or modify their business relationship with Us, our Affiliate(s) or any other franchisee. | | s. Modification of the | | Sections 9.2 and | The Franchise Agreement can be modified | | agreement | | 22.6 | only by written agreement between you and us. | | t. Integration/merger clause | | Section 22.6 | Only the terms of the Franchise Agreement and all exhibits to the Franchise Agreement are binding (subject to state law). Any representations or promises made outside of the disclosure document and the Franchise Agreement may not be enforceable. | | u. Dispute resolution by arbitration or mediation | | Section 23.7 | Except for actions or claims for injunctive relief or specific performance or relating to the Marks, Trade Secrets or Confidential Information, all disputes must be mediated in McLennan County, Texas. (Subject to state law) | | v. Choice of forum | | Section 23.2 | Litigation must be initiated and maintained in the judicial district in which our principal place of business is located at the time the lawsuit was initiated, currently Waco, Texas. We have the right to seek injunctive relief from any court of competent jurisdiction. (Subject to state law) | | w. Choice of law | | Section 23.1 | Texas law applies (subject to state law), except that disputes over the Marks will be governed by the United States Trademark Act of 1946. | | Section in the | | | | | Franchise | | | | | Summary | | | | | Agreement | | | | | Agreement following a default, your interest in | | | | | the franchise will terminate. | | | | | 5.4, 5.5. | | | | | We can terminate if you fail to develop the | | | | | and 16.2 | | | | | Approved Location within 180 days after the | | | | | Effective Date of the Franchise Agreement. We | | | | | also can terminate for failure to pay the Initial | | | | | Franchise Fee or other amounts due within 10 | | | | | days after receiving written notice; failure to | | | | | have your Internal Manager satisfactorily | | | | | complete any training program; attempted or | | | | | actual transfer of business in violation of the | | | | | Franchise Agreement; misuse of the Marks, or | | | | | other act which impairs the goodwill of any of | | | | | the Marks; material misrepresentation or | | | | | omission in your franchise application; are | | | | | conviction or "no contest" plea to a crime or | | | | | offense that would place them on the sex | | | | | offenders registry, was a violent felony, crimes | | | | | against a human, sexual harassment against an | | | | | employee, domestic abuse charges, animal | | | | | abuse, elderly abuse, substance abuse, DWI or | | | | | DUI, any theft charge or is likely to affect the | | | | | reputation of either party or the Franchised | | | | | Business; disclose, duplicate, or otherwise | | | | | misuse the Manual, Confidential Information | | | | | or the Marks; are adjudicated bankrupt, | | | | | insolvent or make a general assignment for the | | | | | benefit of creditors or to pay any fees due us or | | | | | any Affiliate; receive three or more default | | | | | notices within two years,(or failure on 2 or | | | | | more separate noticed occasions to comply | | | | | with the same obligation in any time-frame); | | | | | continue to violate any health, safety or other | | | | | laws or conduct the Franchised Business in a | | | | | manner creating a health or safety hazard to | | | | | customers, employees or the public; take any | | | | | action reserved to us; fail to comply with | | | | | applicable law after notice; repeatedly breach | | | | | the Franchise Agreement or fail to comply with | | | | | specifications; engaging in wholesale | | | | | transactions without our prior written consent; | | | | | or default under any other agreement between | | | | | you and us(or an Affiliate) such that we (or the | | | | | Affiliate) have the right to terminate the | | | | | agreement. Termination of a Franchise | | | | | Agreement will not automatically result in the | | | | | Sections | | | | | Provision | Section in the Franchise Agreement | Summary | |---------------------------------------------------------------------|------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | Agreements then in-effect between us unless the same material breach constitutes a breach of the other Franchise Agreement and we take separate steps to termination the Franchise Agreement or if we agree in writing to mutually terminate the Franchise Agreement. | | i. Franchisee's obligations on termination/ non renewal | Article 17 | You must: stop operating the Franchised Business; stop using any Confidential Information, the System and the Marks; display a conspicuous sign that you are no longer a Franchisee; deliver to us all information written or electronic regarding contracts, customer lists, and marketing efforts; refrain from any action to reduce the goodwill of you customers or potential customers, towards us or other Franchisees; keep and maintain all business records for a period of 3 years; cancel or assign to us any assumed names; pay all sums owed to us including damages, liquidated damages and costs incurred in enforcing the Franchise Agreement; return the Manual(s) and all other Confidential Information; assign your telephone numbers to us; comply with the covenants not to compete and any other surviving provisions of the Franchise Agreement; and if requested, assign your interest in the Approved Location to us. | | j. Assignment of contract by franchisor k. "Transfer" by | Section 18.1 Section 18.2 | No restrictions on our right to assign our interest in the Franchise Agreement. "Transfer" includes transfer of an interest in | | franchisee – defined | | the Franchise, the Franchise Agreement, the Franchised Business's assets or the Franchisee entity. | | l.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 38–44)