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EXHIBIT 10.2


FRANCHISE LICENSE AGREEMENT


HOMEWOOD SUITES BY HILTON-COLORADO SPRINGS,
COLORADO


TABLE OF CONTENTS


SECTION PAGE NO. - -----------------------------------------------------------------------


1. DEFINITIONS................................................... 1


A. The Hotel................................................. 1
B. The Marks................................................. 1
C. The System................................................ 1
D. The Manual................................................ 2
E. Including................................................. 2
F. License Term.............................................. 2


2. GRANT OF LICENSE.............................................. 2


3. OUR RESPONSIBILITIES.......................................... 2


A. Training.................................................. 2
B. Reservation Services...................................... 3
C. Consultation.............................................. 3
D. Arrangements for Marketing, Etc........................... 3
E. Inspections/Compliance Assistance......................... 3
F. Manual.................................................... 3
G. Equipment and Supplies.................................... 3


4. PROPRIETARY RIGHTS............................................ 4


5. PROPRIETARY MARKS............................................. 4


A. Use of Trade Name......................................... 4
B. Trademark Disputes........................................ 4
C. Web Sites................................................. 4
D. Covenant.................................................. 5


6. YOUR RESPONSIBILITIES......................................... 5


A. Operational and Other Requirements........................ 5
B. Hotel Quality Assurance................................... 9
C. Staff and Management...................................... 9


7. FEES.......................................................... 9


A. Monthly Fees.............................................. 9
B. Determination and Payment of Fees......................... 9
C. Room Addition Fee......................................... 10
D. Other Fees................................................ 10
E. Taxes..................................................... 10
F. Application of Fees....................................... 10


8. RECORDS AND AUDITS............................................ 10


A. Reports................................................... 10
B. Maintenance of Records.................................... 11
C. Audit..................................................... 11
D. Ownership of Information.................................. 11


9. INDEMNITY..................................................... 11


10. RIGHT OF FIRST OFFER INTENTIONALLY DELETED .................. 12


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11. TRANSFER...................................................... 12


A. Our Transfer of This Agreement............................ 12
B. Your Transfer............................................. 12


12. CONDEMNATION AND CASUALTY..................................... 16


A. Condemnation.............................................. 16
B. Casualty.................................................. 16
C. No Extensions of Term..................................... 17


13. TERM OF LICENSE............................................... 17


14. TERMINATION................................................... 17


A. Termination or Suspension by Us On Advance Notice......... 17
B. Immediate Termination by Us............................... 18
C. Liquidated Damages Upon Termination by Us................. 20
D. De-identification of Hotel Upon Termination............... 20
E. Special Termination....................................... 20


15. RELATIONSHIP OF PARTIES....................................... 21


A. No Agency Relationship.................................... 21
B. Notices to Public Concerning Your Independent Status...... 21


16. MISCELLANEOUS................................................. 21


A. Severability and Interpretation........................... 21
B. Controlling Law........................................... 21
C. Exclusive Benefit......................................... 22
D. Entire Agreement.......................................... 22
E. Consent; Business Judgment................................ 22
F. Notices................................................... 23
G. General Release........................................... 23
H. Estoppel Certificate...................................... 23
I. Descriptive Headings...................................... 23
J. Representations and Warranties............................ 23
K. Time...................................................... 23
L. Counterparts.............................................. 23
M. Performance Requirements/Responsibilities................. 23
N. Informational Copies...................................... 23


17. WAIVER OF JURY TRIAL.......................................... 24


ATTACHMENT A - PERFORMANCE CONDITIONS: CHANGE OF OWNERSHIP........ A-1


ATTACHMENT B - RIDER TO FRANCHISE LICENSE AGREEMENT................ B-1


ATTACHMENT C - PRODUCT IMPROVEMENT PLAN


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FRANCHISE LICENSE AGREEMENT


Dated as of the date set forth on the Rider attached hereto as Attachment B (the "Rider") between the licensor entity set forth on the Rider ("we," "us," "our" or "Licensor"), and the licensee entity ("you," "your" or "Licensee"), the name and address of which is set forth on the Rider.


INTRODUCTION


We are a subsidiary of Hilton Hotels Corporation, a Delaware corporation ("HHC"). HHC and its subsidiaries and affiliates (collectively, "Hilton") own, lease, operate, manage and provide various services for a network of hotels, inns, conference centers, time share properties and other operations (the "Network"). HHC and Hilton Hospitality, Inc., a wholly owned subsidiary of HHC, have authorized us to grant licenses to selected, first-class, independently owned or leased hotel properties, to operate under the brand name set forth in the Rider (the "Licensed Brand"). You have expressed an interest in operating the property identified on the Rider under the Licensed Brand. You have confirmed to us that you (i) independently investigated the risks of operating a hotel under the Licensed Brand, including current and potential market conditions, and competitive factors and risks, and have made an independent evaluation of all such matters, and (ii) reviewed our uniform franchise offering circular ("UFOC"). After doing so, you have expressed a desire to enter into a Franchise License Agreement with us to obtain a license to use the Licensed Brand in the operation of a hotel at the address set forth on the Rider.


NOW, THEREFORE, in consideration of the premises and the undertakings and commitments of each party to the other party as set forth in this agreement (the "Agreement"), the parties agree as follows:


1. DEFINITIONS


The following capitalized terms will have the meanings set forth after each term:


a. The Hotel. The Hotel is the property you will operate under this Agreement. The "Hotel" includes all structures, facilities, appurtenances, furniture, fixtures, equipment, and entry, exit, parking and other areas located on the site we have approved for your business, or located on any land we approve in the future for additions, signs, parking or other facilities.


b. The Marks. References to the "Marks" will include the Licensed Brand service marks and all other service marks, copyrights, trademarks, logos, insignia, emblems, symbols, designs, slogans, distinguishing characteristics, trade names, domain names, and all other marks or characteristics associated or used with or in connection with the System (as we define that term in Subparagraph 1c.), and similar intellectual property rights, that we designate from time to time to be used in the System.


c. The System. The "System" is the elements we designate from time to time to identify hotels operating under the Licensed Brand that provide to the consuming public a similar, distinctive, high quality hotel service. "System hotels" means hotels we license to operate under the System and to use the Licensed Brand name. The System currently includes the Licensed Brand and the Marks; access to a reservation service; advertising, publicity and other marketing programs and materials; training programs and materials, standards, specifications and policies for construction, furnishing, operation, appearance and service of the Hotel, and other elements we refer to in this Agreement or in the Manual (as defined in Subparagraph 1.d.) or in other communications to you, and programs for our inspecting the Hotel and


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consulting with you. We may add elements to the System or modify, alter or delete elements of the System at our sole discretion.


d. The Manual. References to the "Manual" will include all written standards and requirements we adopt from time to time for constructing, equipping, furnishing, supplying, operating, maintaining and marketing System hotels, including the Hotel. Changes made in the Manual will apply to System hotels as specified and may not apply to all System hotels. We may set forth these standards and requirements in one or more documents or guides. All of these items, as we modify them from time to time, will be considered the Manual. We will change the Manual from time to time. We will notify you at least thirty (30) days before any change becomes effective. You will be responsible for the costs of complying with the Manual, including any changes.


e. Including. The word "including," whenever used in this Agreement, will mean "including, by way of example, but without limitation."


f. License Term. References to the "License Term" will mean the period from the date of this Agreement through the expiration of this Agreement.


2. GRANT OF LICENSE


We hereby grant to you and you hereby accept a non-exclusive license (the "License") to use the System at, and in connection with the operation of, the Hotel, in accordance with the terms of this Agreement.


This Agreement does not limit our right, or the right of any of our present or future owners, subsidiaries, and affiliated entities (the "Entities"), to own, license or operate any other business of any nature ("Other Businesses"), including a hotel, inn, conference center, time share property, lodging facility or similar business, whether under the Licensed Brand, or as a competitive brand, or otherwise. We reserve the right to engage in any Other Businesses, even if they compete with the Hotel, the System, or the Licensed Brand, whether we start those businesses, or purchase, merge with, acquire, be acquired by, or affiliate with, such businesses. We may also: (a) use or license to others all or part of the System; (b) use the facilities, programs, services and/or personnel used in connection with the System in Other Businesses; and (c) use the System, the Licensed Brand, and the Marks, in the Other Businesses. You acknowledge and agree that you are not acquiring any rights other than the non-exclusive right to use the System to operate the Hotel under the Licensed Brand at the site licensed under this Agreement and in accordance with the terms of this Agreement. You waive and release any claims, demands or damages arising from or related to any of the foregoing activities, and you acknowledge and agree that such activities will not give rise to any liability on our part, including liability for claims for unfair competition, breach of contract, breach of the implied covenant of good faith and fair dealing, or divided loyalty.


The Hotel will be initially known by the trade name set forth in the Rider (the "Trade Name"). We may change the Trade Name and/or the Licensed Brand name and/or any of the Marks at any time at our sole discretion, but we will not change the principal name identified in the Rider. You may not change the Trade Name without our specific written consent. You acknowledge and agree that you are not acquiring the right to use any service marks, copyrights, trademarks, logos, designs, insignia, emblems, symbols, designs, slogans, distinguishing characteristics, trade names, domain names or other marks or characteristics owned by Hilton or the Entities that we do not specifically designate to be used in the System.


3. OUR RESPONSIBILITIES


a. Training. We will specify required and optional training programs and provide these programs at various locations. We may charge you for (i) required training services and materials and (ii) optional training services and materials we provide to you. You are also responsible for all travel, lodging and other expenses you or your employees incur in attending these programs.


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b. Reservation Services. We will, directly or indirectly, furnish you with the Reservation Service (as defined in Subparagraph 6a(15) below). This service will be furnished to you on the same basis as is furnished to other System hotels, subject to the provisions of Subparagraph 14a(3) below.


c. Consultation. We may, from time to time at our sole discretion, make available to you consultation and advice in areas such as operations, facilities, and marketing. We have the right to establish fees in advance for our consultation and advice on a project-by-project basis.


d. Arrangements for Marketing, Etc. Periodically, we or one of the Entities will publish and make available to the traveling public a directory of System hotels, including the Hotel. Additionally, we will include the Hotel, or cause the Hotel to be included in (i) national or regional group advertising of System hotels, and (ii) international, national and regional market programs offered by us or the Entities, subject to and in accordance with the general practice for System hotels.


We will use your Monthly Program Fee (as defined in Subparagraph 7a. below) to pay for various programs to benefit the System, including (i) advertising, promotion, publicity, public relations, market research, and other marketing programs; (ii) developing and maintaining Licensed Brand directories and Internet sites; (iii) developing and maintaining the Reservation Service systems and support; and (iv) administrative costs and overhead related to the administration or direction of these projects and programs. We will have the sole right to determine how we spend these funds, including sole control over the creative concepts, materials and media used in the programs, and the placement and allocation of advertising. We may enter into arrangements for development, marketing, operations, administrative, technical and support functions, facilities, programs, services and/or personnel with any other entity, including our affiliates. You acknowledge that Monthly Program Fees are intended for the benefit of the System, and will not simply be used to promote or benefit any one property or market. We will have no obligation in administering any activities paid by the Monthly Program Fee to make expenditures for you which are equivalent or proportionate to your payments, or to ensure that the Hotel benefits directly or proportionately from such expenditures. We may create any programs and allocate monies derived from Monthly Program Fees to any regions or localities, as we consider appropriate in our sole judgment. The aggregate of Monthly Program Fees paid to us by System hotels does not constitute a trust or "advertising fund" and we are not a fiduciary with respect to the Monthly Program Fees paid by you and other System hotels. We are not obligated to expend funds in excess of the amounts received from System hotels. If any interest is earned on unused Monthly Program Fees, we will use the interest before using the principal. The Monthly Program Fee does not cover your costs of participating in any optional marketing programs and promotions offered by us or Hilton from time to time in which you voluntarily choose to participate. These fees also do not cover the cost of operating the Hotel in accordance with the standards in the Manual.


e. Inspections/Compliance Assistance. We will administer a quality assurance program for the System which may include conducting periodic inspections of the Hotel and guest satisfaction surveys and audits to ensure compliance with System standards. We have the right to inspect the Hotel and its operations at any time, with or without prior notice to you, and to determine if the Hotel is in compliance with the standards and rules of operation set forth in this Agreement and in the Manual. If the Hotel fails to comply with such standards and rules of operation, we may, at our option and at your cost, require an action plan to correct the deficiencies. You must then take all steps necessary to correct any deficiencies within the times we establish. Our approval of an action plan does not waive any rights we may have under this Agreement, nor does it relieve you of any obligations under this Agreement. We will also have the right to place materials required for System and Hilton purposes at the Hotel.


f. Manual. We will issue the Manual to you, and any revisions and updates we may make to the Manual.


g. Equipment and Supplies. We will make available to you for use in the Hotel various purchase, lease, or other arrangements with respect to exterior signs, operating equipment, operating


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supplies, and furnishings, which we or Hilton may have and which we make available to other System hotels.


4. PROPRIETARY RIGHTS


You acknowledge, and will not contest, either directly or indirectly during the License Term or after termination or expiration of this Agreement: (i) our (and/or any Entities') ownership of, rights to and interest in the System, Licensed Brand, Marks and any of their element(s) or component(s), including present and future distinguishing characteristics; (ii) our sole right to grant licenses to use all or any element(s) or component(s) of the System; (iii) that we (and/or the Entities) are the owner of (or the licensee of, with the right to sub-license) all right, title and interest in and to the Licensed Brand and the Marks used in any form and in any design, alone or in any combination, together with the goodwill they symbolize; and (iv) the validity or ownership of the Marks. You acknowledge that these Marks have acquired a secondary meaning which indicates that the Hotel, Licensed Brand and System is operated by or with Hilton's approval. All improvements and additions to, or associated with, the System, all Marks, and all goodwill arising from your use of the System and the Marks, will inure to our benefit and become our property (or the Entities), even if you develop them. At our request, you will promptly assign to us any rights or registrations to the Marks that you may obtain. You acknowledge that you are not entitled to receive any payment or other value from us or any of the Entities for any goodwill associated with your use of the System or the Marks, or any element(s) or component(s) of the System.


5. PROPRIETARY MARKS


a. Use of Trade Name. You will operate under, and prominently display, the Marks in the Hotel. You will not adopt any other names in operating the Hotel that we do not approve. You also will not use any of the Marks, or the word "Hilton", or other Network trademarks, trade names or service marks, or any similar word(s) or acronyms, in (i) your corporate, partnership, business or trade name except as we provide in this Agreement or the Manual, or (ii) any Internet-related name (including a domain name), except as we provide in this Agreement or in the Manual, or (iii) any business operated separate from the Hotel, including the name or identity of developments adjacent to or associated with the Hotel. You agree that any unauthorized use of the Marks will be an infringement of our rights and a material breach of this Agreement.


b. Trademark Disputes. We and you each agree that the protection of the Marks and their distinguishing characteristics as standing for the System is important to all of us. Accordingly, you will immediately notify us of any infringement or dilution of or challenge to your use of any of the Marks and will not, absent a court order or our prior written consent, communicate with any other person regarding any such infringement, dilution, challenge or claim. We will take the action we deem appropriate with respect to such challenges and claims and have the sole right to handle disputes concerning use of all or any part of the Marks or the System. You will extend your full cooperation to us at your expense in these matters. You appoint us as your exclusive attorney-in-fact, to prosecute, defend and/or settle all disputes of this type at our sole discretion. You will sign any documents we believe are necessary to prosecute, defend or settle any dispute or obtain protection for the Marks and the System and assign to us any claims you may have related to these matters. Our decision as to the prosecution, defense and settlement of the dispute will be final. All recoveries made as a result of disputes regarding use of all or part of the System or the Marks will be for our account.


c. Web Sites. You may not register, own, maintain or use any domain names, World Wide Web or other electronic communications sites (collectively, "Site(s)"), relating to the Network or the Hotel or that includes the Marks. The only domain names, Sites, or Site contractors that you may use relating to the Hotel or this Agreement are those assigned or otherwise approved in writing by us. You also agree to obtain our prior written approval concerning any third-party Site in which the Hotel will be listed, and any proposed links between such Site and any other Site(s) ("Linked Sites") and any proposed modifications to same. All Sites containing any of the Marks and any Linked Sites must advertise, promote, and reflect on the Hotel and the System in a first-class, dignified manner. You acknowledge and agree that our right to approve all materials is necessitated by the fact that those materials will include and be linked with our


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Marks. Therefore, any use of the Marks on the World Wide Web, the Internet, or any computer network/electronic distribution, must conform to our requirements, including the identity and graphics standards for all System hotels. Given the changing nature of this technology, we have the right to withhold our approval, and to withdraw any prior approval, and to modify our requirements.


You acknowledge that you may not, without a legal license or other legal right, post on your Site(s) any material in which any third party has any direct or indirect ownership interest (including video clips, photographs, sound bites, copyrighted text, trademarks or service marks, or any other text or image in which any third party may claim intellectual property ownership interests). You also agree to incorporate on your Site(s) any other information we require in the manner we deem necessary to protect our Marks.


Upon the expiration or termination of this Agreement, you agree to irrevocably assign and transfer to us (or to our designee) all of your right, title and interest in any domain name listings and registrations which contain any reference to our Marks, System, Network or Licensed Brand, and will notify the applicable domain name registrar(s) of the termination of your right to use any domain name or Site(s) associated with the Marks or the Licensed Brand, and will authorize and instruct the cancellation or transfer of the domain name to us (or our designee), as directed by us. You will also delete all references to our Marks, System, Network or Licensed Brand from any other Site(s) you own, maintain or operate beyond the expiration or termination of this Agreement.


d. Covenant. You agree, as a direct covenant with Hilton, that you will comply with all of the provisions of this Agreement related to the manner, terms and conditions of the use of the Marks, and the termination of any right on your part to use any of the Marks. You agree that any non-compliance by you with this covenant, the terms of this Agreement, or any unauthorized or improper use of the System or the Marks will cause irreparable damage to us and/or to the Entities. You therefore agree that if you engage in this non-compliance, or unauthorized and/or improper use of the System or the Marks during or after the License Term, Hilton, its successors and assigns, separately or along with us, will be entitled to both temporary and permanent injunctive relief against you from any court of competent jurisdiction, in addition to all other remedies that Hilton or we may have at law. You consent to the entry of such temporary and permanent injunctions. You will be responsible for payment of all costs and expenses, including, reasonable attorneys' fees, which we and/or Hilton and/or the Entities may incur in connection with your non-compliance with this covenant.


6. YOUR RESPONSIBILITIES


a. Operational and Other Requirements. During the License Term, you agree to:


(1) promptly pay to us, or reimburse us for, all amounts due to us and/or Hilton as Monthly Royalty Fees, Monthly Program Fees, and other charges, or for goods or services purchased by you or your agents, including those set forth in Paragraph 7 below;


(2) operate the Hotel twenty-four (24) hours a day every day, except as we may otherwise permit based on special circumstances;


(3) operate, furnish, maintain and equip the Hotel in a clean, safe and orderly manner and in first-class condition in accordance with the provisions of this Agreement and the Manual, and in compliance with all applicable local, state, and federal laws, customs and regulations, including maintaining and conducting your business in accordance with sound business and financial practices;


(4) provide efficient, courteous and high-quality service to the public;


(5) adopt, use and comply with the standards, requirements, services, products, programs, materials, specifications, policies, methods, procedures, and techniques set forth in the Manual, as it may be amended by us from time to time, and keep your Manual current at all times;


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(6) comply with System standards, specifications and requirements regarding the purchase of products and services, including furniture, fixtures, equipment, food, operating supplies, consumable inventories, merchandise for resale to be used at, and/or sold from, the Hotel, in-room entertainment, computer networking, and any and all other items used in the operation of the Hotel (collectively, the "Supplies"), including our specifications for all Supplies. We may from time to time require you to purchase a particular brand of product ("Required Brand"), however, you may purchase this Required Brand from any authorized source of distribution;


(7) comply with System standards, specifica
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