F-7475
STATE OF MINNESOTA
DEPARTMENT OF COMMERCE
REGISTRATION DIVISION
(651) 539-1627
IN THE MATTER OF THE REGISTRATION OF:
CAMP BOW WOW
BEHAVIOR BUDDIES
HOME BUDDIES BY CAMP BOW WOW
By CAMP BOW WOW
FRANCHISING INC
ORDER OF
REGISTRATION
WHEREAS, an a p p l i c a t i o n
Stat.
has been f i l e d pursuant t o Minn.
§80C.04; and
WHEREAS, t h e a p p l i c a n t has c o m p l i e d w i t h the requirements
of r e g i s t r a t i o n ,
NOW,
THEREFORE,
IT IS ORDERED, t h a t t h e r e g i s t r a t i o n be
d e c l a r e d e f f e c t i v e as o f t h e date s e t f o r t h
below.
g^m^i
MIKE ROTHMAN
Commissioner
Department of Commerce
85 7 t h P l a c e East, S u i t e 500
St P a u l , MN 55101
Date: September 18, 2014
dlw
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^
^
^
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UNIFORM FRANCHISE REGISTRATION APPLICATION
^
FILE NO.
(Insert file number of immediately preceding
filing of Applicant)
STATE: Minnesota
FEE: N$400 n$300 D $100 f l NONE
APPLICATION FOR (Check one only):
[X]
INITIAL REGISTRATION OF AN OFFER AND SALE OF FRANCHISES
•
RENEWAL APPLICATION OR ANNUAL REPORT
•
POST-EFFECTIVE AMENDMENT
•
PRE EFFECTIVE MATERIAL AMENDMENT
1.
V \^
\ ^
\
Full legal name of Franchisor:
Camp Bow Wow Franchising Inc.
2.
\^
Name of the franchise offering:
Camp Bow Wow
Behavior Buddies
Home Buddies by Camp Bow Wow
3.
Franchisor's principal business address:
^
8820 W. 116th Cir., UnitD
Broomfield, CO 80021
4.
Name and address of Franchisor's agent in this State authorized to receive service of
process:
Minnesota Commissioner of Commerce
85 Seventh Place East, Suite 500
St. Paul, MN 55101
5.
The states in which this application is or will be shortly on file:
California, Hawaii, Illinois, Indiana, Maryland, Minnesota, New York, North Dakota,
Rhode Island, South Dakota, Virginia, Washington, Wisconsin
US.54264316.01
6.
Name, address, telephone and facsimile numbers, and e-mail address of person to whom
communications regarding this application should be directed:
Brian B. Schnell
Faegre Baker Daniels LLP
2200 Wells Fargo Center
90 South 7th Street
Minneapolis, MN 55402-3901
Telephone: (612)766-7699
Facsimile: (612)766-1600
Email: brian.schnell@faegrebd.com
Certification
I certify and swear under penalty of law that 1 have read and know the contents of this
Application, including the Franchise Disclosure Document with an issuance date of
% / 2,41 14
attached as an exhibit, and that all material facts stated in all those documents
are accurate and those documents do not contain any material omissions. I further certify that 1 am duly
authorized to make this certification on behalf of the Franchisor and that I do so upon my personal
knowledge.
Signed at Broomfield, Colorado on
%k .
2014.
Camp Bow Wow Franchising Inc.
Name: Hei
Ganahl
Title: Chief Executive Officer
Corporate Acknowledgement
STATE OF COLORADO
COUNTY OF BROOMFIELD
)
) ss.
-)
On this / * / day of s<d*i<LA.<&
2014, before me, the undersigned Notary Public,
personally appeared Heidi A. Ganahl, krfown personally to me to be the Chief Executive Officer of Camp
Bow Wow Franchising Inc., and that she, as such officer, being authorized so to do, executed the foregoing
Application for the purposes therein contained, by signing the name of the corporation by herself as such
officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
DIA L GLOSTER
Notary Public
State of Colorado
US.54264316.01
a.
Notary Public
My commission expires: ^"V^
/ ^
FaegreBD.com
Brian Schnell
Partner
+1 612 766 7699
brian.schnell@FaegreBD.coni
FAEGRE B4KER
CANIELS
U S A ' UK » C H I N A
Faegre Baker Daniels LLP
2200 Wells Fargo Center 90 South Seventh Street
Minneapolis Minnesota 55402-3901
Phone+1 612 766 7000
Fax +1 612 766 1600
August 29, 2014
V I A UPS
Bette Peterson
Commerce Analyst Supervisor
Department of Commerce
Registration Division
85 Seventh Place East, Suite 500
St. Paul, M N 55101
Re:
Initial Franchise Registration for:
Camp Bow Wow Franchising Inc. (d/b/a Camp Bow Wow®)
Dear Ms. Peterson:
Faegre Baker Daniels L L P represents Camp Bow Wow Franchising Inc., a franchisor seeking
registration to offer and sell franchises under the Minnesota franchise laws. D.O.G. Development L L C
is a franchisor currently registered to sell franchises in your state. The purpose of this filing is to file a
new registration as a result of a corporate transaction that closed on August 15, 2014.
D.O.G. Development L L C . a Colorado limited liability company, entered into an Asset Purchase
Agreement with V G A Inc. and Vicar Operating Inc., parent companies to Camp Bow Wow Franchising
Inc., a Delaware corporation, for the sale of substantially all of the assets, including, among other items,
all franchise agreements and trademarks, service marks and other intellectual property, that comprise the
D.O.G. Development L L C franchise system and the D.O.G. Development L L C brand (the
"Transaction"). As part of the Transaction, Camp Bow Wow Franchising Inc., the applicant, received
ownership of the trademark and service marks associated with the Camp Bow Wow brand and will
assume all of the franchise agreements for the operation of franchised D.O.G. Development L L C
businesses. Upon closing, Camp Bow Wow Franchising Inc. became the franchisor of the D.O.G.
Development L L C franchise system. D.O.G. Development L L C no longer operates the Camp Bow
Wow franchise business, but Camp Bow Wow Franchising Inc. does. In fact, the franchises offered by
Camp Bow Wow Franchising Inc. are substantially the same as those offered by D.O.G. Development
L L C prior to the Transaction. D.O.G. Development L L C is the predecessor to Camp Bow Wow
Franchising Inc.
To assist you with your review, we have enclosed a marked copy of the new Franchise Disclosure
Document for Camp Bow Franchising Inc. which shows the changes made to the D.O.G. Development
L L C FDD,currently on file with your state. Since this franchise offering is currently on file with your
state, this is similar to an amendment and we hope the review process can be expedited.
BBS:leb
Enclosures us.546#3(,33.0i
August 29, 2014
The following documents are enclosed regarding the initial franchise registration of Camp Bow Wow
Franchising Inc.:
1.
2.
3.
4.
5.
6.
7.
Filing fee check;
Uniform Franchise Registration Application;
Franchisor's Costs and Source of Funds;
Uniform Franchise Consent to Service of Process;
Franchise Seller Disclosure Forms;
Consent of Accountant; and
One CD-ROM and one hard copy of the marked Franchise Disclosure Document.
All the information contained on the CD-ROM is text searchable and is identical to the paper documents
included in the franchise registration application.
Please also consider this letter as our formal request to simultaneously withdraw the franchise
registration for D.O.G. Development L L C , File No. F-4765, effective as of the date of registration
for Camp Bow Wow Franchising Inc.
If you have any questions or comments regarding this application, please feel free to contact me. Thank
you for your assistance in this matter.
Very truly yours,
FAEGRE BAKER DANIELS LLP
Brian B. Schnell
US.54683633.0i
C A M P B O W W O W FRANCHISING INC.
F R A N C H I S O R ' S COSTS AND S O U R C E O F FUNDS
Disclose the Franchisor's total costs for performing its pre-opening obligations to provide
goods or services in connection with establishing each franchisee! business, including real
estate, improvements, equipment, inventory, training and other items stated in the offering:
Category
Costs
Real Estate
$0
Improvements
$0
Equipment
$0
Inventory
$0
Training
55,000
Other (describe)
Location Review
$10,000
Manuals
$500
Opening Assistance
$6,500
Construction Management
$20,000
Site Plans & Blue Prints
$2,500
Site Search & Zoning Assistance
$5,500
Totals
State separately the sources of all required funds:
Initial Fee
US.54681333.01
$50,000
UNIFORM FRANCHISE CONSENT TO SERVICE OF PROCESS
VGA Inc., a corporation, organized under the taws of the State of Delaware (the "Franchisor''), irrevocably
appoints the officers of the States designated below and their successors in those offices, its attorney in those States
for service of notice, process or pleading in an action or proceeding against it arising out of our in connection with
the sale of franchises, or a violation of the franchise laws of that State, and consents that an action or proceeding
against it may be commenced in a court of competent jurisdiction and proper venue within that State by service of
process upon this officer with the same effect as if the undersigned was organized or created under the laws of that
State and had lawfully been served with process in that State. We have checked below each state in which this
application is or will be shortly on file, and provided a duplicate original bearing an original signature to each state.
California:
Commissioner of Business Oversight
Hawaii:
Commissioner of Securities
Illinois:
Attorney General
Indiana:
Secretary of State
Maryland:
Securities Commissioner
Minnesota:
Commissioner of Commerce
New York:
Secretary of State
g ] North Dakota:
Securities Commissioner
[ g Rhode Island:
Director, Department of Business Regulations
[X] South Dakota:
Director of the Division of Securities
[>3 Virginia:
Clerk, Virginia State Corporation Commissions
[X] Washington:
Director of Financial Institutions
[>3 Wisconsin: Administrator, Division of Securities,
Department of Financial Institutions
Please mail or send a copy of any notice, process or pleading served under this consent to:
Mail to:
Copy to:
VGA Inc.
Attention: Legal Dept.
12401 West Olympic Boulevard
Los Angeles, C A 90064-1022
Brian B. Schnell
Faegre Baker Daniels LLP
2200 Wells Fargo Center
90 South 7th Street
Minneapolis, M N 55402-3901
Dated: August 20, 2014
Name: Keith Melman
Title: General Counsel
Corporate Acknowledgement
STATE OF CALIFORNIA
C O U N T Y OF LOS A N G E L E S
)
)ss.
)
On August 20, 2014 before me, Stephen J. Speredelozzi, Notary Public, personally appeared Keith
Melman, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his
signature on the instrument the person, or the entity upon behalf of which the person acted, executed the
instrument.
I certify under P E N A L T Y OF PERJURY under the laws of the State of California that the foregoing paragraph is
true and correct.
WITNESS my hand and official seal.
(
US.5-I6M2W.()1
STEPHEN J. SPEAIDROZZI >
Commission # 2057044
t
Notvy Public-Ctlifornia f
Los Angeles County
|
My Comm. Exflfet Mif 6, 2018^
Independent Auditors' Consent
We agree to the inclusion of our report dated February 28, 2014, with respect to the consolidated balance
sheets of VCA Inc. (formerly VCA Antech, Inc.) and subsidiaries, as of December 31, 2013 and 2012, and
the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows
for each of the years in the three-year period ended December 31,2013 in the Franchise Disclosure Document
issued by Camp Bow Wow Franchising, Inc. dated August 29, 2014. This consent should not be regarded as
in any way updating the aforementioned report or representing that KPMG LLP performed any procedures
subsequent to the date of such report.
K ^ M ^ Q s LLP
Los Angeles, California
August 29,2014
Peterson, Bette (COMM)
From:
Sent:
To:
Subject:
Peterson, Bette (COMM)
Wednesday, September 10, 2014 10:11 A M
brian.schnell@faegrebd.com
Camp Bow Wow, F-7475
Good Morning,
I am in receipt of above mentioned franchise application.
Thank you for the effort but as an initial application It is necessary to send a clean copy, not a black lined.
I did do a cursory review of the document to see if I could spot something that could be corrected before the clean copy
is submitted..
The following should be corrected:
^ 1 . Attachment J refers to Injunctive Relief and the Limitation of Claims. These two subjects should actually be
located in the Franchise Agreement and therefor belong on the Addendum to the Franchise Agreement
[
where there is a signature line..
2. Franchise Agreement Table of Contents... the page numbers do not correlate to the Section, i.e Section 1 is
on page 13 not 10
I will be able to review as soon as I receive the clean copy..
Thank you
Bette Peterson
Commerce Analyst 1
Securities - Enforcement - Registration
Minnesota Department of Commerce
85 7th p i e East, Suite 500, Saint Paul, M N 55101
P: 651-539-1627
bette. peterson@state.mn.us
aC
r
MINNESOTA DEI'ARTM£NTOF
COMMERCE
CONFIDENTIALITY NOTICE: This message is intended only for the use of the individual(s) named above. Information in this email or any attachment may be confidential or otherwise protected from disclosure by state or federal law. Any unauthorized
use, dissemination, or copying of this message is prohibited. If you are not the intended recipient, please refrain from reading
this e-mail or any attachments and notify the sender immediately. Please destroy all copies of this communication.
FaegreBD.com
Brian Schnell
Partner
+1 612 766 7699
brian.schnell@FaegreBD.coni
FAEGRE BAKER
CANIELS
T
T
USA UK CHINA
Faegre Baker Daniels LLP
2200 Wells Fargo Center, 90 South Seventh Street
Minneapolis, Minnesota 55402-3901
Phone+1 612 766 7000
Fax+1 612 766 1600
September 10,2014
V I A UPS
Bette Peterson
Commerce Analyst Supervisor
Department of Commerce
Registration Division
85 Seventh Place East, Suite 500
St. Paul, M N 55101
Re:
Initial Franchise Registration for:
Camp Bow Wow Franchising, Inc. (d/b/a Camp Bow Wow®)
File No. F-7475
Dear Ms. Peterson:
As per your email dated September 10, 2014, enclosed please find a clean FDD for Camp Bow
Wow Franchising, Inc., which includes your requested changes.
Also enclosed is a Consent to Service of Process signed by Camp Bow Wow Franchising. Inc.
Only the Consent to Service of Process signed by the parent company, V C A Inc., was included
with the original filing.
If you have any questions or comments, please feel free to contact me. Thank you for your
assistance in this matter.
Very truly yours,
FAEGRE BAKER DANIELS LLP
Brian B. Schnell
REC_, ^ «
SEP 11 2014
US.54848909.01
MN Dept of Commerce
Mailroom
U N I F O R M F R A N C H I S E CONSENT TO SERVICE OF PROCESS
Camp Bow Wow Franchising, Inc., a corporation, organized under the laws of the State of Delaware (the
"Franchisor"), irrevocably appoints the officers of the States designated below and their successors in those offices,
its attorney in those States for service of notice, process or pleading in an action or proceeding against it arising in
connection with the sale of franchises, or a violation of the franchise laws of that State, and consents that an action or
proceeding against it may be commenced in a court of competent jurisdiction and proper venue within that State by
service of process upon this officer with the same effect as if the undersigned was organized or created under the
laws of that State and had lawfully been served with process in that State. We have checked below each state in
which this application is or will be shortly on file, and provided a duplicate original bearing an original signature to
each state.
California:
Commissioner of Business Oversight
Hawaii:
Commissioner of Securities
Illinois:
Attorney General
Indiana:
Secretary of State
Maryland:
Securities Commissioner
Minnesota:
Commissioner of Commerce
New York:
Secretary of State
M
North Dakota:
Securities Commissioner
(El Rhode Island:
Director, Department of Business Regulations
£3 South Dakota:
Director of the Division of Securities
^ Virginia:
Clerk, Virginia State Corporation Commissions
IEI Washington:
Director of Financial Institutions
^ Wisconsin: Administrator, Division of Securities,
Department of Financial Institutions
Please mail or send a copy of any notice, process or pleading served under this consent to:
Mail to:
Copy to:
Camp Bow Wow Franchising, Inc.
Attention: Heidi A. Ganahl
8820 W. 116th Cir., Unit D
Broomfield, CO 80021
Dated: ^ g p V - S
Brian B. Schnell
Faegre Baker Daniels LLP
2200 Wells Fargo Center
90 South 7th Street
Minneapolis, M N 55402-3901
Camp Bow Wow Franchising, Inc.
,2014
By:.
Name: HeiqiA. Ganahl
Title: ChiefExecutive Officer
Corporate Acknowledgement
STATE OF COLORADO
COUNTY OF BROOMFIELD
)
)ss.
)
On this S ~~ day of
^rwW^, 2014, before me, the undersigned Notary Public, personally
appeared Heidi A. Ganahl, known personally to me to be the Chief Executive Officer of Camp Bow Wow
Franchising, Inc., and that she, as such officer, being authorized so to do, executed the foregoing Application for the
purposes therein contained, by signing the name of the corporation by herself as such officer.
IN WITNESS WHEREOF, I have hereunto set rnvhand and official seal.
GREGORY T. JOLLY
NOTARY PUBLIC - STATE OF COLORADO
Notary Identification #20144027792
My Commission Expires 7/16/2018
US.54831501.01
Notary-Public
My commission expires:
^
/iis{?oi<r
FRANCHISE DISCLOSURE DOCUMENT
Camp B o w Wow Franchising, Inc.
a Delaware corporation
8820 W. 116th Circle, Unit D
Broomfield, Colorado 80021
877-700-BARK
Fax: 303-496-0671
www.cannpbowwow.com
franchisesales(a)campbowwow.com
Camp Bow Wow Franchising, Inc. franchises the right to operate "CAMP BOW WOW®"
businesses offering specialized pet care services through fixed store locations and mobile units,
the retail sale of pet food and merchandise, and related services and products.
The total investment necessary to begin operation of a Camp Bow Wow franchised
business ranges from $339,600 to $708,000. This total investment includes $55,000 that must
be paid to us or our Affiliates.
This Disclosure Document summarizes certain provisions of the Camp Bow Wow®
franchise agreement and other information in plain English. Read this Disclosure Document
and all accompanying agreements carefully. You must receive this Disclosure Document at
least 14 calendar days before you sign a binding agreement with, or make any payment to
us, or an Affiliate, in connection with the proposed franchise sale. Note, however, that no
government agency has verified the information contained in this document
You may wish to receive your Disclosure Document in another format that is more
convenient for you. To discuss the availability of disclosures in different formats, contact the
Franchise Sales Department, at Camp Bow Wow Franchising, Inc., 8820 W. 116th Circle, Unit
D, Broomfield, Colorado 80021, telephone (877) 700-BARK, or www.campbowwow.com.
The terms of your contract will govern your franchise relationship. Do not rely on the
Disclosure Document alone to understand your contract. Read all of your contracts carefully.
Show your contracts 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, like "A
Consumer's Guide to Buying a Franchise," which can help you understand how to use this
Disclosure Document is available through 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,
DC 20580. You can also visit the FTC's home page at www.ftc.gov for additional information on
franchising. 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. You may ask your state agencies
about them.
Issuance Date: August 29, 2014
Camp Bow Wow - 2014 FDD
US.53755407.06
1
STATE COVER PAGE
Your state may have a franchise law that requires a franchise 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 A for information about the
Franchisor, about other franchisors, or about franchising in your state.
MANY FRANCHISE A G R E E M E N T S DO NOT ALLOW YOU TO RENEW
UNCONDITIONALLY AFTER THE INITIAL TERM EXPIRES. YOU MAY HAVE TO SIGN A
NEW A G R E E M E N T WITH DIFFERENT T E R M S AND CONDITIONS IN ORDER TO
CONTINUE TO O P E R A T E YOUR BUSINESS. BEFORE YOU BUY, CONSIDER WHAT
RIGHTS YOU HAVE TO RENEW YOUR FRANCHISE, IF ANY, AND WHAT TERMS YOU
MIGHT HAVE TO A C C E P T IN ORDER TO RENEW.
Please consider the following RISK FACTORS before you buy a franchise:
I.
THE FRANCHISE A G R E E M E N T REQUIRES THAT ALL DISPUTES FIRST BE
MEDIATED IN DENVER, COLORADO. IF A DISPUTE IS NOT RESOLVED BY MEDIATION,
IT MUST BE SETTLED BY ARBITRATION IN DENVER, COLORADO. OUT OF STATE
ARBITRATION MAY F O R C E YOU TO A C C E P T A LESS FAVORABLE SETTLEMENT FOR
DISPUTES. IT MAY ALSO COST YOU MORE TO ARBITRATE WITH US IN COLORADO
THAN IN YOUR HOME STATE.
II.
ANY DISPUTES NOT SUBJECT TO ARBITRATION MUST BE LITIGATED IN
COLORADO. IT MAY COST Y O U MORE TO LITIGATE WITH US IN COLORADO THAN IN
YOUR HOME STATE.
III.
THE FRANCHISE AGREEMENT STATES THAT IT IS GOVERNED BY THE
LAWS OF THE STATE OF COLORADO. COLORADO LAW MAY NOT PROVIDE THE SAME
PROTECTIONS AND BENEFITS AS LOCAL LAW. YOU MAY WANT TO COMPARE THESE
LAWS.
IV.
IMMEDIATE FAMILY MEMBERS OF FRANCHISE OWNERS MUST SIGN A
NONDISCLOSURE AND NON-COMPETITION A G R E E M E N T AND MAY BE REQUIRED TO
SIGN A P E R S O N A L GUARANTEE PLACING THEIR PERSONAL PROPERTY ASSETS AT
RISK.
V.
THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.
We may use the services of 1 or more FRANCHISE B R O K E R S 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 this franchise.
See next page for state effective dates.
Camp Bow Wow - 2014 FDD
US.53755407.06
STATE EFFECTIVE DATES P A G E
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:
STATE
EFFECTIVE DATE
California
Hawaii
Illinois
September 2, 2014
Indiana
September 2, 2014
Maryland
Michigan '
September 2, 2014
Minnesota
New York
North Dakota
Rhode Island
August 29, 2014
South Dakota
September 2, 2014
Virginia
Washington
Wisconsin
Camp Bow Wow - 2014 F D D
US.53755407.06
September 2, 2014
STATE OF ^ H ^ A N
T E S T A T E OF ^ O H ^ A N P R O ^ ^
SO^ET^ES^FRAN^SEOO^^ENTS^FANYOFTHEFO^O^N^PROV^^
A R E i N T H E S E FRANCHISE O O ^ U ^ E N T S ^ T H E P R O T O N S A R E V O I O A N O CANNOT
BE ENFORCED AGAINSTYOO
Each of the f l o w i n g provisions are void and onenforoeabie if contained in any
documents relating foafranohise:
(a)
Aprohibition on the right ofafranchisee to ^oin an association of franchisees.
(h)
A requirement that a franchisee assent to a release, assignment, novation,
waiver,or estoppel which deprivesafranchisee of rights and protections provided in this act
Thissha^notpreciodeafranchisee,a^erenteringintoafranchiseagreement, from settling any
and all claims.
(c)
A provision that permits a franchisor to terminate a franchise before the
expiration of itsterm except f o r g o o d cause Good causeshall include thefailureof the
franchisee to comply with any lawful provision of thefranchise agreement and to cure such
failureafterheinggivenwrittennoticethereofandareasonahleopportunity,whichinnoevent
need he more than 30 days, to cure such failure.
(d)
Aprovision that permitsafranchisor to refuse to renewafranchise without fairly
compensating the franchisee hy 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 theconductof thefranchise
business are not subject to compensation This subsection applies only if: ( ^ t h e t e r m o f t h e
franchiseis less t h a n ^ y e a r s and (ii) the franchisee isprohihited hy thefranchise 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^months advance notice of franchisor's intent not to renewthe franchise
(e)
Aprovisionthatpermitsthefranchisorto refuse to renewafranchise on terms
generally available to other franchisees of the same class or type under similar circumstances.
This section does not requirearenewal provision.
(f)
Aprovision requiringthatarbitrationorlitigation is conducted outside this state.
This shall not preclude the franchisee from entering into an agreement, at the time of arbitration,
to conduct arbitration atalocation outside this state
(g)
Aprovision which permitsafranchisor to refuse to permitatransfer of ownership
of afranchise, exceptforgood cause This subdivision does not preventafranchisorfrom
exercislngaright 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.
Camp Bow Wow
U5^^40706
2014 FOO
(ii)
Thefaotthat the proposed ^ a n s f ^
sobtraoohisor.
^i)
The oow^iogoess of the proposed transferee to agree in wdtiog to
with alilawfol obligations
(iv)
The t a i i o r e o f t h e t r a n o h i s e e o r proposed transtereeto pay any s^ms
owing to the franchisor or to o^re any default in the franchise agreement existing at the time of
the proposed transfer.
(h)
Aprovision that r e t i r e s the franchisee to resell to the franchisor items that are
not ^niqoely identified with thefranchisor Thissohdivision does not prohihita provision that
grants toafranchisoraright of first refusal to purchase the assets ofafranchise on the same
t e r m s a n d c o n d i t i o n s a s a h o n a f i d e t h i r d party willing and able to purchase those assets,nor
does this subdivision prohibit a provision that grantsthefranchisor the right to acquire the
assets o f a f r a n c h i s e f o r t h e marketorappraised valoe of s^ch assets if the franchisee has
breached the lawful provisions of the franchise agreement and has failed to core the breach in
the manner provided in s u b d i v i s i o n s
(i)
Aprovisionwhichpermitsthefranchisortodirectlyorindirectlyconvey,assign,or
otherwise transfer its obligations to fulfill contractual obligations to the francs
provision has been made for providing the required contractual services
The fact that there i s a o o t i c e of this offering on ^ e with the attorney general does
not constitute a p p r o v a l recommendation, or endorsement by the attorney general.
Any questions regarding this notice shooldbe directed to theOepartment of Attorney
General, State of Michigan, 670 Williams Building, Lansing, Michigan 4 6 ^ , telephone (517)
3737117
THE ^ H I ^ A N N O T I O E A P P L I E S O N L Y T O FRANCHISEES
A R E RE^^
I^IIOHIGAN OR L O ^ A T E T H E I R FRANCHISES IN ^IIOHI^AN
Camp Bow Wow
U5^^40706
2014 FOO
T A B L E OF CONTENTS
ITEM 1. THE FRANCHISOR AND ANY PARENTS, P R E D E C E S S O R S AND AFFILIATES... 8
ITEM 2. BUSINESS EXPERIENCE
11
ITEM 3. LITIGATION
13
ITEM 4. BANKRUPTCY
15
ITEM 5. INITIAL F E E S
15
ITEM 6. OTHER F E E S
16
ITEM 7. ESTIMATED INITIAL INVESTMENT
24
ITEM 8. RESTRICTIONS ON S O U R C E S OF PRODUCTS AND SERVICES
29
ITEM 9. FRANCHISEE'S OBLIGATIONS
33
ITEM 11. FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEM AND
TRAINING
35
ITEM 12. TERRITORY
46
ITEM 13. TRADEMARKS
48
ITEM 14. PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION
50
ITEM 15. OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE
FRANCHISED BUSINESS
53
ITEM 16. RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL
54
ITEM 17. RENEWAL, TERMINATION, T R A N S F E R AND DISPUTE RESOLUTION
54
ITEM 18. PUBLIC FIGURES
58
ITEM 19. FINANCIAL P E R F O R M A N C E REPRESENTATIONS
58
ITEM 20. OUTLETS AND FRANCHISEE INFORMATION
64
ITEM 21. FINANCIAL STATEMENTS
76
ITEM 22. C O N T R A C T S
76
ITEM 23. RECEIPTS
77
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EXHIBITS:
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Exhibit G
Exhibit H
Exhibit I:
Camp Bow Wow - 2014 FDD
US.53755407.06
List of State Agencies and Agents for Service of Process
Camp Franchise Agreement (with Attachments)
Financial Statements and Guarantee of Performance
Operations Manual Table of Contents
List of Franchisees
State Specific Addenda to the Disclosure Document
Sample Release of Claims
Sample Pre-Opening Agreement
Receipts
ITE^^
THEFRANCH^ORANOANYPAREN^
To s i m p ^ the language in this Franchise Disclosure Document
D o c u m e n t ^ C a m p Bow Wow F r a n c h i s e
Franchising, l n c , t h e Franchisor. ^ o u ^ m e a n s t h e p e r s o n w h o h u y s a C a m p
franchisedbusiness, and includes your owners it you areahusiness entity.
^Disclosure
BowWow^
The Franchisor
C a m p B o w Wow Franchising, I n c i s a D e l a w a r e corporation formed on July 24,2014.
Our principal place of business is 8 8 2 0 W 116th Circle, Unit D , B r o o m f i e l d , C o ^
telephone is (677) 700-2275 and email address is franchise^camphowwowcom We began
offering and selling franchises in August 2014.
Franchisor's Business Fxoerience and Predecessors
We acquired one hundred percent of the equity interests of our predecessor D.0.0
Development LLC (^D O O Developments on August 16, 2014 On August 16, 2014, D C O
Development was merged with andinto Camp Bow Wow Franchising. D O C Developments
principal place of business was 16620W116th Circle, UnitD,Broomfield,Colorado 60021
In 2003, our predecessor began operating as Camp Bow Wow Branding, LLC^ in
September 2004, ourpredecessorchanged i t s n a m e t o D C O . Development In addition to
offering C B W Franchises, D C O Development also offered separate Flome Buddies hy Camp
Bow W o w ^ franchises (^Flome Buddies Franchises") since 2006. Flome Buddies Franchises also
provideln-Flome Services and DogTrainingServices, but FlomeBuddiesFranchises cannot
provide Camp Services
As of December 31,2013,our predecessors had7Flome Buddies Franchises that operate
on theirown and 37 Flome Buddies Franchisesthatown and operate hoth a Flome Buddies
Franchise and w i t h a C B W Franchise together as complementary services As of December 31,
2012, our predecessor no longer offer separate Home Buddies Franchises. We now require that
all new C B W Franchises offer the Income Services that we identify as mandatory, hut will not
allow any C B W Franchises to offer only In Home Services. All C B W Franchises must offer all
C B W Services
Except as stated above, we do not engage in any other business activities, and have not
offered franchises in any other line of business. Cur agents for service of process are disclosed
in ExhihitA to this Disclosure Document.
Parents and Affiliates
Cur corporate parents are Vicar Operating, Inc and VCA Inc ( ^ C A ' ) The principal
place of business for hothof our corporateparentsis 12401 West Olympic Boulevard, Los
Angeles, California 90064
Our affiliates (or their predecessors) have operated businesses that provide Camp
Services since December 2000. Also, our affiliates (or their predecessors) have operated Home
Buddies Franchises at various times since December 2006. We have three affiliates that must
be disclosed in this Disclosure Document because they may provide products or services to our
C^mp Bow Wow
US^7^706
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^
franchisees: V C A Animal Hospitals, Inc., Antech Diagnostics, Inc. and Vetstreet, Inc.
(collectively, the "Affiliates"). These entities principal place of business is 12401 West Olympic
Boulevard, Los Angeles, California 90064.
The Camp Franchise
We offer the right to operate C B W Franchises which must offer the following services: (i)
dog boarding and day care services at a specially designed pet care facility (collectively,
"Camp Services" also known as Camp Bow Wow®); (ii) dog training services ("Dog Training
Services" also known as Behavior Buddies®); and, (iii) overnight pet care, pet check in
visits, dog- walking, at-home pet excretion cleaning, the retail sale and delivery of pet
food and merchandise, and assorted other pet-related services and products (collectively,
the "In-Home Services" also known as Home Buddies by Camp Bow Wow®). C B W
Franchises include three core service areas:
"Camp Services"
We market Camp Services as
"Camp Bow Wow®"
"Dog Training Services"
We market Dog Training
Services as our "Behavior
Buddies®" program
"In-Home Services"
We market In-Home Services
as our "Home Buddies by
Camp Bow Wow®" program.
Providing dog boarding and day care services at a pet care facility meeting our
design and appearance requirements and at a location that we approve of in
advance, which we refer to in this Disclosure Document as the "Camp Site."
Providing obedience training to pets throughout your Authorized Territory in a
variety of locations, as currently approved in the Operations Manuals.
Providing a variety of services outside of the Camp Sites and in the home of
customers who reside in your Authorized Territory. Mandatory In-Home Services
are pet-related services that you must provide in the customer's home. Mandatory
In-Home Services include overnight pet care, pet check in visits, dog-walking, athome pet excretion cleaning, and the retail sale and delivery of pet food and
merchandise.
In addition to the mandatory In-Home Services that we describe in the chart, all of
which are pet-related services that you must provide in the customer's home, you may
also offer customers a broad variety of optional In-Home Services. Optional In-Home
Services are services that are pet-related, but do not have to be provided in the customer's
home, as well as any other services licensed by us. We regard optional In-Home Services as
an ancillary revenue opportunity enabling you to expand the customer relationships that you
develop by performing mandatory In-Home Services.
You may choose to perform mandatory and optional In-Home Services through
employees or independent contractors (collectively or in the alternative, "Personnel") whom you
hire or retain who meet certain minimum experience requirements that we identify in the
Operations Manuals. If you choose to retain independent contractors, you are solely
responsible for properly classifying them as independent contractors based on your level of
control and other legal tests under applicable law. You must complete a background check on
each Personnel before they may provide any In-Home Services. Furthermore, for Personnel
who are employees, your insurance coverage must be adequate to cover their activities. For
Personnel who are independent contractors, you must require them to provide appropriate
documentation of proper insurance. All Personnel must possess a valid driver's license. You
are responsible for supervising your Personnel who perform mandatory or optional In-Home
Services to ensure that they comply with our standards and requirements in the Operations
Manuals.
Camp Bow Wow - 2014 F D D
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9
We regard petgrooming servioesas an optional Income Servioeeven though the
service is pet related and typioa^ provided in the c u s t o m e r home ^
our franchisees that have chosen to ofter pet groomingservioes do so throughindependent
contractors who own their own grooming equipment and already possess requisite insurance,
licenses and honds. You are solely responsible tor making classification decisions and
determining that the groomer may be properly classified as an independent contractor and has
the appropriate experience, licenses, insurance and equipment to perform grooming services
consistent with our standards in the Operations Manuals.
We do not anticipate that you will need to purchase any special equipment or obtain any
special licensesin order to provideoptional InHomeServices other than toperformoptional
grooming services and optional Bark ^nRide® shuttle services. As for grooming services and
Barken Ride® shuttle services:
D
If you choose to offer grooming services through independent contractors,you
willnot need to purchase any special equipment or obtain any special type of
licenses sincetheindependentcontractor would haveitsownequipmentand
licenses.
D
To offer optional Bark n Ride® shuttle services, you must have a van type
vehicle meeting our specifications fitted with special cages and meeting our
branding specifications. We estimate that the cost to purchaseavan,fabricate
the interior, and add exterior branding elements will be approximately ^35,000.
At this time, we are not aware of any special licenses that your personnel will
need to provide Barken Ride® shuttle services otherthanavalid driver's license.
We do not offer special training instruction in the services that we identify as optional InHome Services.However, before you may offer optional In-Home Services,you must complete
thelnitiallnHomeTraining course that we describe inltem 11,which provides instruction in
mandatory In Home Services. You are responsible for supervising all Personnel who perform
mandatory and optional In Home Services
Collectively,OampServices,OogTraining Services and In-Home Services are referred
to asthe^CBWServicesBYourCBWPranchise must provide all CBW Services
You will provide the Camp Services fromafixed store location ^Camp Site") within the
Authori^edTerritory (defined below in Item 12).You will provide the InHome Services and Oog
Training Services atvarious locations throughout the Authori^edTerritory including custom
homes or places of business, public areas (i e parks), and other locations. You must provide all
CBW Services upon your receipt ofacertificate from us notifying you to hegin providing all C B W
Services, or (ii) within 18 months of the Effective Date of your Franchise Agreement (the
"Operations Deadline")
Each C B W Franchise operates according to our proprietary business system, the
characteristics of which include: (a) requirements, standards and specifications for providing
Camp Services, In Home Services, Dog Training Services, and other goods and services
authori^edforsalehy us; (b)standardsandspecifications for equipment,furniture, fixtures,
interior and exterior design,decor and color schemes,and the general layout o f a C a m p Site;
(c) sales techniques; (d) merchandising and inventory management systems; (e) branding
standards and requirements, (f)promotion, marketing and advertisingmethodologies, and (g)
other general operating procedures (collectively, the ^System"). We may modify the System at
anytime
C^mpBowWow
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10
The System is identified by and inoiodes certain trade names, service marks,
trademarks, icgcs, emblems, trade dress, and indicia ct origin, including the CAMP B C W
WCW® mark and any other trademarks we may now or in the future designate in writing tor use
with the System (collectively,the "Marks")
Youmust operate your C B W Franchise according to our System and sign our standard
Camp Bow Wow® franchiseagreement ("Franchise Agreement^.The Franchise Agreement
providesyouwiththe right and obligation to o p e r a t e a C B W Franchise and ail C B W Services
fromwithinasingleAuthori^edTerritory.
Market and Competition
The market for pet care in general is growing. However, market growth is affected by
general economic conditions, tight credit markets, restrictive business lending conditions,
unemployment levels which may affect the extent of discretionary spending by consumers, and
the presence of competition. As a result of the currenteconomic climate, there may be
additional unforeseen changes in the economy or our industry. The pet care industry is
continually changing and evolving.You willcompetedirectly with other local franchisesand
businesses that sell and offer pet care services from retail locations or mobile units, such as dog
day care, overnight boarding and mobile pet care, in-home pet care providers, groomers,^
trainers, walkers, and retail businesses that sell pet food and merchandise You will also face
normal business risks that could have an adverse effect on your CBW Franchise. The success
of your business will be dependent on your entrepreneurial abilities and focus on customer
service C B W Franchises are not seasonal businesses.
Industrv Soecific Regulations
C B W F r a n c h i s e s a r e s u b ^ e c t t o v a r i o u s federal, state and locallawsand regulations
applicabletoproviding Camp Services, InHomeServices, OogTraining Services andother
authorised products and services, including: zoning and construction laws, public
accommodations laws, kennel and pet sitting licensing laws, noise ordinances, bonding
requirements, health and safety laws, hazardous wasteandenvironmentallaws, fire codes,
smoking rules,employment and workers'compensation laws,federal state and local tax laws,
the Occupational Safety and Health Act, the Americans with Oisabilities Act, and related laws
and regulations.You may need to obtain a zoning varianceor similarentitlement when you
obtain a Camp Site You may also need to obtain a licenseor permit to provide In-Home
Services or OogTraining Services.
Youmust investigate all applicable federal, state, and local laws and regulations, and
your cost to comply with these laws and regulations, with an attorney, financial advisor or both
before p u r c h a s i n g a C B W Franchise from us. Applicable laws andregulations are subject to
change.
IT^2
COSINESS ^ P E R I E N C E
Chief Executive Officer: H e i d i A O a n a h l
Ms.Oanahl has served as our Chief Executive Officer since August 16,2014.From ^une
2003 through August 14, 2014, Ms. Ganahl served as the President and Chief Executive Officer
ofO.O.O.Development in Broomfield,Colorado Ms Ganahl operated two Camp Bow Wow®
dog care businesses from December 2000 to ^une 2003 in Denver and Broomfield,
Camp 8ow Wow
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Colorado. Ms. Ganahl also owned a Camp Bow Wow® dog care facility from December 2006
to June 2008 in Boulder, Colorado.
President: Christina Russell
Ms. Russell has served as our President since August 16, 2014. From September 2009
through April 2014, Ms. Russell served as the Vice President of Operations for Curves
International, Inc., in Waco, Texas.
Chairman of the Board: Robert L. Antin
Mr. Antin has served as Chairman of the Board since July 24, 2014. Mr. Antin is also a
founder of our parent, V C A , and since 1986, has served as VGA's Chairman of the Board, Chief
Executive Officer and Vice President in Los Angeles, California.
Senior Vice President. Assistant Secretary and Director: Neil Tauber
Mr. Tauber has served as our Senior Vice President and Assistant Secretary and a member
of our Board of Directors since July 24, 2014. Mr. Tauber is also a founder of our parent, VCA, and
since 1986, has served as VGA's Senior Vice President of Development in Los Angeles, California.
Director: Arthur J. Antin
Mr. Antin has served as a member of our Board of Directors since July 24, 2014. Mr. Antin
is also a founder of our parent, V C A , and since 1986 has served as VGA's Chief Operating Officer
and Senior Vice President in Los Angeles, California.
Vice President. Chief Financial Officer. Secretary and Treasurer: Thomas W. Fuller
Mr. Fuller has served as our Vice President, Chief Financial Officer, Secretary and
Treasurer since July 24, 2014. Mr. Fuller has also served as Chief Financial Officer of our parent,
VCA, since September 1991 in Los Angeles, California.
Vice President of Development: Renuka Salinger
Ms. Salinger has served as our V i c e President of Development since August 16, 2014.
Ms. Salinger previously held the following positions at D.O.G. Development in Broomfield,
Colorado: (1) Vice President of Development (February 2014 through August 14, 2014), (2) Sr.
Director of Business Development (October 2013 through January 2014), and (3) Director of
Business Development (September 2012 through September 2013).
From January 2012 through August 2012, she was the Business Analyst for USAFunds
NELA Center for Student Success in Portland, Oregon. From September 2011 through
December 2011, she was the intern for Oregon Multnomah County Chair, Jeff Cogen in Portland,
Oregon. She served as Director of Compliance at D.O.G. Development in Broomfield, Colorado
from September 2010 through January 2011, and from April 2008 through January 2011 she
was also D.O.G. Development's Franchise Relations Manager in Boulder, Colorado. From
September 2007 through April 2008, she was D.O.G. Development's Training Coordinator in
Boulder, Colorado.
Camp Bow Wow - 2014 FDD
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12
Con^o^ Rao^We^h
Ms. Welsh has served as our G o o b e r since August 16, 2014 From Aprils
August 14, 2014, she served as Controller at D.O.G. Development Ms Welsh also served as
D O G Development's Aooountlng Manager tromMaroh 2006 through April 2012 All positions
in whioh Ms. Welsh has worked tor D.O.G Development were in Boulder and Broomtield,
Colorado. Sheowned herown Bookkeeping husinesstrom September 2 0 0 6 t o M a r o h 2006
and was the Accounting Manager tor a manufacturing firm in Boulder, Colorado between
January1^andSeptemher2006
^6^3
LEGATION
Litioationlnvolvino the Franchise Relationship in 2014:
D O G D e v e l o o m e n L L L C v S e e More Raws Incand Diane LeFemina ^American Arbitration
Association, Case No 77 144 00060 14)
We tiled this c a s e o n January 24, 2014, with the American Arbitration Association in
D e n v e r , C o l o r a d o , a g a i n s t a t o r m e r t r a n c h i s e e , S e e M o r e R a w s , l n c ^ S M R I " ) , a n d its principal
and individual guarantorotthe franchise agreement's obligations, Diane LaFemina ("Guarantors
We entered intoaFranchise Agreement with SMRI on January 22,2007 SMRI opened
a n d o p e r a t e d a C a m p B o w W o w ^ l o c a t i o n i n S t a t e n Island, New York (the "SMRI Camp") until
September 2012, when the franchisee voluntarily closed the SMRI Camp, stating that it intended
to relocate the SMRI Camp to another locationinStatenlsland We accommodated SMRI's
relocation request and multiple requestsfor accommodations SMRIfailed toreopen by late
2013, despite multiple assurances it would reopen before that time On December 9, 2013, we
notified SMRI and Guarantor of the termination of the Franchise Agreement and reminded both of
their post termination obligations and restrictions SMRI and Guarantor ignored our reminders
and failed to comply We filed the arbitration case to enforce the Franchise Agreement's post
termination obligations and restrictions, and to seek redress for SMRI's and Guarantor's breach of
thoseobligationsand restrictions. Those breachesincludedfailureto return our Confidential
Information andTrade Secrets, failure to deidentify the business premises, and violation of the
non-compete provision of the Franchise Agreement by openingadog day care business known
as " W o o f ^ T a i l s Lodge" (the "Competing Business")
W e f i l e d a motion forinterim measures in thearbitration case, seeking, among other
things, preliminary injunctive relief to enforce the Franchise Agreement's post termination
obligations and restrictions. The motion for interim measures was briefed and scheduled for an
evidentiary hearing in Denver on M a y 1 3 a n d 14,2014^ SMRI filedacounterclaim against us in
the arbitration case, alleging, among other things, that we made material misrepresentations in
the course of the franchise sales process in 2006 concerning expected earnings ofafranchised
Camp Bow Wow® location. SMRI's counterclaim did not mention or acknowledge the Uniform
Franchise Offering Circular ("UFOC") Receipt that it signed, confirming its receipt of our UFOC
that, among other things, expressly disclaimed any representations concerning future earnings
Wedenied SMRI'sallegations and moved to dismiss SMRI'scounterclaim. By order dated May7,
2014, the arbitrator dismissed the counterclaim.
The hearing on our motion for interim measures was rescheduled for J u l y l a n d 2,2014.
On June 30,2014,we received notice that Guarantor filedaChapter7bankruptcy action on that
same day, thereby staying the arbitration case Further action in the case is suspended unless
and until the stay is lifted.
C^pBowWow
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Tony M. Graham v. V C A Antech. Inc. and V C A Animal Hospital, Inc. (District Court for the
Northern District of California Case No. 3:14-CV-02158-MEJ).
On May 12, 2014, an individual client who purchased goods and services from one of
VGA's animal hospitals filed a purported class action lawsuit against VCA. The lawsuit seeks to
assert claims on behalf of the plaintiff and other individuals who purchased similar goods and
services from our animal hospitals and alleges, among other allegations, that we improperly
charged such individuals for "biohazard waste management" in connection with the services
performed. The lawsuit seeks compensatory and punitive damages in unspecified amounts, and
other relief, including attorneys' fees and costs. This case is in an early procedural stage and we
intend to vigorously defend this action.
Litigation Involving the Franchise Relationship in 2013:
J&P Investments. LLC. Vera Mahen. J&P Holdings LLC and Vera's Posh Paws LLC (collectively,
the "Plaintiffs") v. D.O.G. Development LLC and Camp Bow Wow Distribution LLC (collectively,
"Counterclaimants") (District Court of Cleveland County, State of Oklahoma, Case No. CV-20121441-L; United States District Court for the Western District of Oklahoma, Case No. CIV-12-1394W)
This action was originally filed on December 17, 2012 by the Plaintiffs in the District Court
of Cleveland County, State of Oklahoma, but was subsequently removed by Counterclaimants to
the United States District Court for the Western District of Oklahoma.
Plaintiffs operated a Camp Bow Wow® franchised business in Moore, Oklahoma for 6
years. On November 30, 2012, Plaintiff provided us with less than one days' notice that it was
terminating its relationship with us, had sold all of its property to a "third party," and that it would
cease all operations on December 1, 2012. The next day, Plaintiffs new entity, Vera's Posh Paws,
began providing the same services as Camp Bow Wow® and continued to use Counterclaimant s
intellectual property. Plaintiffs alleged that there was no valid contract between the parties.
Effective November 15, 2013, the parties settled the dispute by agreeing that Plaintiff
would pay us $60,000, and that Plaintiff would make physical changes to its current location,
including the layout of the back of house, so as not to infringe Counterclaimants' intellectual
property. Plaintiffs also agreed not to challenge or interfere with Counterclaimants' intellectual
property rights. All contracts between the parties were terminated, and the parties executed a
mutual release, waiver, and covenant not to sue. We agreed to remove any reference to the
former Camp Bow Wow location in Moore, OK from its website.
D.O.G. Development LLC v. D.O.G., Inc., Katherine Bartlino and Kerry Ecklebe (American
Arbitration Association, Case No. 77 114 00291 13)
We filed this action on May 7, 2013 with the American Arbitration Association in Denver,
Colorado against D.O.G., Inc., a former franchisee. The parties entered in to a Franchise
Agreement on September 30, 2005. On January 30, 2013, D.O.G., Inc. permanently abandoned
operation of the Camp Bow Wow franchise and on February 1, 2013, Ms. Bartling, the manager of
D.O.G., Inc., began operating a competing business called "Waggin Tailz Ranch" in the same
location as the franchised business had been operated. The former franchisee failed to insure
that the manager maintained our confidential information she obtained while working for the
franchised business and provided her with our proprietary customer list. The specific claims were
breach of the non-disclosure agreement and breach of the Guaranty on the Franchise Agreement
by Ms. Bartling.
We were awarded $75,000 in money damages against D.O.G., Inc. jointly and severally,
and agreed not to pursue the $75,000 in damages absent a future breach of the settlement
agreement by D.O.G., Inc. The former franchisee was ordered to return all customer lists and
confidential information back to us and permanently enjoined from using our confidential
information and trade secrets. We were also awarded $15,000 in attorney fees.
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Other than the three actions disclosed above, no further litigation is required to be
disclosed in this Item.
8 A ^ ^ ^ Y
No bankruptcy is required to be disclosed in this Item
^ ^ A L F ^ S
You must pay us a lump sum of $50,000 tor your first Authorized Territory (the
"Initial Franchise Fee").
If you choose to purchase additional franchise territories,we o f f e r a 2 5 ^ discount off
of our then current Initial Franchise Fee (the "Discounted Future Franchise Fee"). The
Discounted Future Franchise Fee as of the date of this Disclosure Document is $37,500.
We o f f e r a l O ^ discount off the Initial Franchise Fee for your first AuthorizedTerritory
if you qualify for the FranVet program administered by the International Franchise Association
and have been honorably discharged from the armed forces. The FranVet discounts
cannot be combined with any otherdiscount, and cannot b e a p p l i e d t o t h e p u r c h a s e s of
additional Authorized Territories or the Discounted Future Franchise Fee. The FranVet
discount is notgiven until you openand heginoperatingyourFranchiseBusiness Itwillbe
credited on your bimonthly royalty invoices If the Franchise Agreement is terminatedprior to
opening, this discount is null and void.
You must pay us a lump sum of $5,000 30 days before the time you or your
designated Personnelattendsthe DogTrainer Certification Program (the "DogTrainer Fee").
You may choose to access our proprietary Software (defined below) system before
you begin operations. If you choose to do so, you will pay us the then-current monthly
subscription fee As of the issuance date of this Disclosure Document, the monthly
subscription fee for the Software is $150, hut that is subject to change at Franchisor's
discretion.
The Initial Franchise Fee, Discounted Future Franchise Fee and Dog Trainer Fee
areeach deemed to he fully earned and nonrefundable upon payment to us
Camp Bow Wow
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ITEM 6.
OTHER F E E S
Column 1
Type Of F e e
Column 2
Amount
1
Column 3
Due Date
Column 4
Remarks
7% of Gross Revenues
(defined below) or the
Minimum Monthly Royalty
(defined below).
Twice monthly on the
10th and 25th day of
the month, via
Electronic Funds
Transfer ("EFT).
You must pay the greater of 7% of
Gross Revenues or a Minimum Monthly
Royalty. The Minimum Monthly Royalty
for each individual C B W Service starts
on the earlier of your 7th month of
operations or 18 months after the
effective date of the Franchise
Agreement, if you fail to begin providing
any individual C B W Service by this
time.
1% of Gross Revenues.
Twice monthly on the
10th and 25th day of
the month via EFT.
The Marketing Fee is contributed to the
Advertising Fund which in part is used
to generate brand awareness for the
System.
Local
Advertising
Expense
$2,500.
If we choose to collect
the Local Advertising
Expense, it will be due
twice monthly on the
10th and 25th day of
the month via EFT.
The Local Advertising Expense (defined
below) is an ongoing expense that
begins the month you begin operations.
At our direction, these amounts may be
payable directly to us or a third party
media outlet, and are subject to our
requirements and specifications. You
must submit monthly local advertising
reports to us on request. If we
designate a Regional Advertising Co-op
(defined below), you may be required to
contribute the Local Advertising
Expense to your Regional Advertising
Co-op.
Camp Launch
Advertising
$25,000 minimum
Payable during the preopening period after
you sign the Franchise
Agreement and before
you begin operations.
You must spend a minimum of $25,000
before you open your Camp Site on
advertising and marketing to publicize
your Camp Site to consumers in your
trade area. Generally, you will make
payments to third parties including to
our designated advertising agency, not
to us, for Camp Launch Advertising
expenses. If we feel that your
preparations for grand opening
advertising are insufficient, we may
collect the fee and spend it on your
behalf in your local market to publicize
the opening of your Camp Site.
Royalty F e e
2
Marketing F e e
3
4
You must use our
designated advertising
agency for Camp
Launch Advertising..
Regional
Advertising C o operative
Up to 3% of Gross
Revenues
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Only if we establish a
Regional Advertising
Co-Op and then, twice
monthly on the 10th
and 25th day of the
month via EFT.
16
As of the date of this Disclosure
Document we have not established a
Regional Advertising Co-op, but may do
so in the future.
Columns
^ e o t ^
Columns
Amount
1
Columns
Due Date
Columns
Remark
Late Fees and
Interest
$100 plus interest on late
amounts at
not to
exceed the maximum rate
of interest allowable under
law
A s incurred
Begins to accrue the day after payment
becomes past due
Renewal Fee
$^000
10days before
renewal.
^one
Audit Fee
Cost of audit Cost may
range from $500 $5,000
A s incurred
Payable only if you understate your
Gross R e v e n u e s b y ^ o r m o r e
Indemnification
Amount of claim or
judgment plus reasonable
attorney fees
A s incurred.
You must reimburse us for and defend
us against claims brought against us,
and fortaxes imposed on us, due to
your operations
Transfer Fee^
2 5 ^ ofthe thencurrent
Initial Franchise Fee You
must also pay u s a s a l e s
commission ifwe provide
the buyer Sales
commissions are currently
$7,500
10days before
transfer.
You may only transfer subject to the
satisfaction of certain conditions and
with our priorwritten consent
Cost of
Enforcement or
Oefense
All mystery shopping
costs, audit and
accounting fees, our
employees^ travel costs
and attorneys^ fees.
Upon settlement or
conclusion of claim or
action
You must reimburse us ifwe incur any
expenses in enforcing our rights against
you under any agreement
Additional or
Repeat Initial
Camp Services
Training and
Initial In Home
Trainings
$100 per person per day
A s you hire new
Managers or we
require you or your
Personnel to attend or
repeat Camp Services
Training or Initial In
HomeTraining,
because you are not
meeting our
operational standards
or requirements.
Initial Camp ServicesTraining and
Initial InHomeTraining for you a n d l
other person is included in the Initial
Franchise Fee If you want to send
additional personnel to Initial Camp
Services or Initial InHomeTraining or if
we require that you or your Personnel
repeat training, you will be required to
paythisfee
Cther Additional
Trainings
Varies based on needs
The estimated range of
f e e s i s $ 1 0 0 $2,000, plus
travel expenses The
estimated range of travel
expenses are $ 5 0 $2,000
As incurred
We may require or you may request
additional training This additional
training will be at your expense
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Column 1
Type Of Fee
Column 2
Amount
1
Column 3
Due Date
Column 4
Remarks
Training for the
Dog Trainer
Certification
Program
$5,000.
30 days before you or
the Personnel you
designate attends the
Dog Trainer
Certification Program
and afterwards, as you
certify new Personnel
or we require your
Personnel to retake the
program, because they
did not complete it to
our satisfaction or are
not meeting our
standards.
You, or your designated Personnel,
must become a Certified Dog Trainer by
the Operations Deadline. If you do not
personally provide Dog Training
Services, you will need to employ at
least one Certified Dog Trainer by this
deadline. You must also employ a
Certified Dog Trainer throughout the
term of the Franchise Agreement and
cause a replacement Personnel to
complete the next-available Dog Trainer
Certification Program if the employment
of your Certified Dog Trainer ends. All
Personnel providing Dog Training
Services must first become certified
through our Dog Trainer Certification
Program. Fees for the Dog Trainer
Certification Program may increase in
the future.
Relocation Fee
$10,000.
Upon approval of
relocation request.
Payable only if we approve your request
to relocate your Camp Site. As a
condition of relocation, we will require
you to pay Royalty Fees, Marketing
Fees, and the Local Advertising
Expenses based on an average of the
prior 12 months of Gross Revenue or
the Minimum Monthly Royalty,
whichever is greater, during any period
in which you are unable to operate the
C B W Franchise. Additionally, we may
require you to spend the then-current
minimum amount on Camp Launch
Advertising that we require of new
franchisees to publicize the new Camp
Site.
8
Camp Bow Wow - 2014 FDD
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18
Column 1
, Type Of Fee
Column 2
Amount
1
Column 3
Due Date
Column 4
Remarks
Product or
Supplier Review
Fee
$500 for inspection and
evaluation or testing, for
each new product or
supplier, plus actual costs
of tests.
At time of request.
Payable only if you request that we
review a new supplier or product for use
or sale in your C B W Franchise.
Mandatory
Seminars,
Conventions, or
Programs
You must pay registration
fees plus your travel
expenses, as well as the
travel expenses that your
Personnel incur in
attending these events.
The estimated range of
costs for these expenses is
$500-$2,500 per person
plus materials estimated at
$50. If you do not attend
our periodic franchisee
meeting, or any other
mandatory meeting, you
must pay us the
registration fee plus a
penalty of up to $1,000,
regardless of the cause for
non-attendance.
A s incurred.
We may conduct periodic meetings that
you must attend. System-wide
franchisee meetings are typically held
every 18 months, but we may hold
these meetings annually.
Return Check
Fee
$35 for the first returned
check and $50 for the
second and any additional
return of the same check.
At the time the check is
returned.
We may require you to pay all
subsequent payments by EFT, credit
card or certified funds.
Software
License Fee
Varies based on software
package. The estimated
fees are $300 - $600 per
month.
A s incurred.
We are the service provider for certain
software that you must use to furnish
Camp Services. You will remit fees for
this software directly to us. Currently,
you will remit fees for software to
operate In-Home Services and Dog
Training Services directly to the third
party software provider. We may collect
fees for this software at any time. We
may also collect fees for all required
search engine optimization {"SEO") and
ongoing web-cam system fees for
dispersal to third party vendors at any
time.
PostTermination and
Post-Expiration
Expenses
Costs and expenses
associated with ceasing
operations and deidentifying the Camp Site
and yourself with the C B W
Franchise and System.
Upon termination or
expiration.
Upon termination, expiration, nonrenewal, or transfer of the Franchise
Agreement for any reason, you must
pay for all costs and expenses
associated with ceasing operations and
de-identifying the Camp Site and
yourself with the C B W Franchise and
System and refund in full all
outstanding customer packages. You
must pay back both account credits
and all outstanding balances.
Camp Bow Wow - 2014 FDD
US.53755407.06
19
Columns
T y ^ o f ^
Columns
Amount
1
losuranoe
Columns
DueOate
Columns
Remarks
C05^
Wili vary based on iooation
andoiroumstanoes
As incurred Paid to
the insurance provider
We may modify insurance requirements
periodioaiiy in the Operations Manuai
Maximum
Modernization
Amounts
Op to $50,000 during the
initial term of trie Franchise
Agreement
A s required by us
Paid to third parties or
usorourAtfiliates
We may periodioaiiy require you to
update or upgrade your OBWFranohise
and Camp Site to ourthen-ourrent
standards The Maximum
Modernization Amount (defined beiow)
does not inoiude upgrades to any
oomputersystem^ooststo keep the
OampSite and aiiequipment^easehoid
improvements and furnishings in good
condition, new equipment required to
offer new or modified products or
services, or changes Franchisee
chooses oris required hyanythird party
to make
Management
Fee
The then-current tee we
publish in the Operations
Manual, which currently is
$500 per day Additionally,
you must reimburse us tor
reasonable and actual
overhead expenses
Payable at the same
times as the Royalty
Fee
Payable oniyifweeiectto manage the
C B W Franchise afteradeath or
incapacity that results inachange in
control, orduringacure periodaftera
default ofthe Franchise Agreement
OesignFee
$750 00 tor each design
created tor you in addition
to the initial t w o ^ )
designs that we provide tor
tree
A s incurred
Payable only ifwe create additional
designs afterthe two that we provide
free of charge
^ofes^
(^
You p a y a i l f e e s f o us, or our A f f i x e s , u n l e s s otherwise noted W ^
third partyservioeandproduotproviders Fees paid to us, our Affiliates^ or third p a ^
are nonrefundable under any oiroumstanoesonoep
are uniformly applied. We may change the manner and timing for paying the Royalty
Feeandotherfeesduetous
(^
Gross Revenues^ Rovaltv^Minimum Monthly Royalty
Royalties are based on Gross
Revenues ^GrossReyenues"means the total revenue from all sales of products and
seryices sold or performedby or throughyour C B W Franchise, whether for cash or
credit, including the proceeds of any business interruption insurance, but e^cludes^^)
all sales or service ta^es collected from customers and paid or payable to the
appropriate taking authority^ and, (2) customer refunds and credits made by the C B W
Franchise which are issued pursuant to our standard policies and specifications
(exclusions will not include any fees incurred by you in collecting any funds). You must
pay usaroyalty fee ^Royalty Fee") equal to the greater of ( i ) ^ o f Gross Revenues for
all Approved Rroducts and services (defined below) provided or sold through your CBW
Franchisee or (ii)aminimum monthly royalty for Camp services,Income services and
OogTraining^eryices operations individually, if 7 ^ of your Gross Revenues for each
Camp Bow Wow 2014 FOO
^5^540706
^0
service is less than the amounts in the table below (the "Minimum Monthly Royalty").
The Minimum Monthly Royalty fee begins on the earlier of (i) the 7th month of
operations, or (ii) 18 months after the effective date of the Franchise Agreement, if you
fail to begin providing any individual C B W Service by this time.
Months of Operation
[_ ^"v"*
- <
1
Minimum Monthly R o y a l t y * ,
'
Camp
Services
In-Home
Services
Dog
Training
Services
7th through 12th Months of Operation
$350
$100
$25
13th through 18th Months of Operation
$500
$200
$50
19th through 24th Months of Operation
$750
$300
$100
After the 24th Month of Operations
$2,000
$400
$200
1
The amounts in the chart reflect the Minimum Monthly Royalty, which is payable per
month. Percentage Royalty Fees are paid bi-monthly. We periodically compare, or "true
up," the aggregate percentage Royalty Fees that you pay bi-monthly against the
Minimum Monthly Royalty fee due for the month. If the aggregate percentage Royalty
Fees paid for a month are less than the Minimum Monthly Royalty due for that month,
we will debit your account for the difference through the EFT payment system described
in this Item 6. While we may "true up" the percentage Royalty Fee as frequently as
monthly, we generally "true up" the percentage Royalty Fee twice each year in June and
December. We typically will "true up" the percentage Royalty Fee more frequently than
twice a year if we believe a franchisee is underperforming. In other words, depending on
a franchisee's individual circumstances, we will decide when and how frequently to "true
up" the percentage Royalty Fee against the Minimum Monthly Royalty fee due and may
not "true up" all franchisees at the same time or with equal frequency.
2
We may increase the Minimum Monthly Royalty by 3% after the 37th month of
operations, and upon the expiration of each 12-month period that follows.
The Royalty Fee is presently due on the 10th and 25th day of each month. We require
you to pay the Royalty Fee, and other fees and amounts due to us via EFT or other
similar means. You must comply with our procedures and perform all acts and deliver
and execute all documents necessary for EFT authorization (in the form attached to the
Franchise Agreement or any other form that we may require). If you have not timely
reported your C B W Franchise's Gross Revenues to us for any reporting period, then we
are authorized, at our option, to debit your account for (a) the fees transferred from your
account for the last reporting period for which a report of the C B W Franchise's Gross
Revenues was provided to us or (b) the amount we estimate is due based on information
retrieved from our approved computer system. You must submit a Gross Revenue
report in the form and manner we designate. We may change the manner and timing for
paying the Royalty Fee and other fees due to us.
(3)
Marketing Fee. We have established an Advertising Fund for the common benefit of
System franchisees. Currently, we require you to participate in and contribute 1% of
your monthly Gross Revenues to the Advertising Fund in the same manner as Royalty
Camp Bow Wow - 2014 FDD
US.53755407.06
Fee payments ere made (the "Marketing Fee") These tunds are used to generate
general brand advertising and promotion tor theoverail C a m p B o w W o w ^ franchise
system, website development and maintenance, and administrative costs associated
with our marketing efforts
(^
Local Advertisino Expense
Starting the month you begin operations and each
subsequent month during theterm of the Franchise Agreement,you must spend the
amounts we require on advertising within your Authorized Territory (the "Local
Advertising Fxpense^.The monthly Local Advertising Expense will be ^2,500 We may
require you to pay all oraportion of the Local AdvertisingExpense directly to us, our
designatedadvertisingagency,orthirdpartymediaoutlet We may also require you to
contribute all or a portion of the Local Advertising Expenseto a local or Regional
Advertising C o o p we may designate within yourAuthorizedTerritory. You must send
proofofpaymentoftheLocalAdvertising Expenseto uswithinlOdaysafter the end of
each month. We may collect expenses required for grand openingadvertising
(5)
Transfer Fee. You m u s t o a v a t r a n s f e r f e e of 2 5 ^ of our thencurrent Initial Franchise
Fee for each AuthorizedTerritory you transfer pursuant to our standards,specifications
and approval. If we are involved in helping you sell your C B W Franchise, we also may
c h a r g e a s a l e s c o m m i s s i o n w h i c h m a y b e p a i d t o u s o r a t h i r d party.Sales commissions
as of the date of this Disclosure Document are $7,500 l^lo transfer fee is required if you
transfer your C B W Franchise toabusiness entity in which you own an interest of at least
7 0 ^ , or if you transfer your C B W Franchise to your child, parent, sibling or spouse and
that person otherwise qualifiesforafranchise.
(^
Additional or Repeat Initial C a m o S e r v i c e s T r a ^
not c h a r g e a f e e for Initial Camp ServicesTraining or Initial In^omeTraining for you
and uptoone(1)additional person. You must pay our thencurrent initial training fee if
you wish to have additional persons attendlnitial Camp ServicesTraining or Initialing
FlomeTraining at any time during the term ofthe Franchise Agreement. We may also
require you, your M a n a g e r o r R e r s o n n e l t o r e t a k e training or receive additionallnitial
Camp ServicesTraining or Initial ln^FlomeTraining,if(i) you are not meeting our System
compliance or sales requirements, or (ii) your full time Manager's employment ends, at
your expense.As of the date of thisDisclosureDocument,the fee payable to us for
training additional Personnel is ^100 per day. You will be responsihlefor all travel
expenses for all attendees participating in the Initial Camp ServicesTraining and Initial
In FlomeTraining programs including airfare, lodging, meals, ground transportation, and
personal expenses.
(7)
CtherAdditionalTrainin^. We will provide vou with continuing consultation and advice
as we deem necessary regarding the management and operation of your CBW
Franchise. We will provide ongoing assistance, in our discretion, by telephone,
facsimile, email or intranet communication at no additional cost You must pay our then
current fee if yourequest or we require that you or your Personnel have additional on^
site training, which will be provided subject to the availability of our employees The fees
for this additional training will depend onyour needs, and the amount of training you
desire or we require and will be at your expense as described above.
(S)
DoqTrainer Certification Prooram Thetrainingfee for theDogTrainer Certification
Program is not included in your Initial Franchise Fee. The DogTrainer Certification fee
is currently ^5,000 per person and we may change theDogTrainer Certification Fee at
anytime You will also he responsible for all travel expenses for all Personnel attending
CampBowWow
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^
the Oog Trainer Certification Program inoioding airfare, lodging, meals, ground
transportation and personal expenses By the derations Deadline, you or one of your
Personnel must become a Certified Dog Trainer by completing the Dog Trainer
Certification ProgramtooursatisfactionandbeginofferingDogTraining Services. At all
times during the term of the Franchise Agreement, you or at least one of your Personnel
must perform the duties ofaCertified DogTrainer for your CBW Franchise. If you do
not personally assumethis responsibility, and the employmentof your Certified Dog
Trainerends,andyou no longer haveaCertified DogTrainer on your staff, within^O
days, you or another member of your Personnel must complete the Dog Trainer
Certification Programand pay us the thencurrent DogTraining Fee If you employ or
seel^ to employaCertified DogTrainer who is at the time or was at any time during the
prior^months employed by another franchisee in the System,you must compensate that
franchisee in the S y s t e m a f e e of ^5,000 You must also pay the Franchisor the ^5,000
DogTrainer Certification Fee plus related travel expenses
(^
(10)
Insurance.You must procureand maintain, at your own expense, insurance policies
protecting you, us, ourdesignated Affiliates and our shareholders, officers, directors,
employees and agents against any loss,liability, personal injury, business interruption,
death, property damage, or expense resulting from the operation of your C B W Franchise
and all services you provide and products you sell, as we may require in amounts in the
Franchise Agreement and Operations Manuals (which we may change periodically).
You must also procure and maintain all other insurance required by state or federal law,
including workers compensationinsuranceandunemployment insurance. If you fail to
purchase r e i n s u r a n c e required by the Operations Manuals, w e m a y p u r c h a s e i t on
your hehalf and charge you an administrative fee of up to
of the cost of buying the
insurance for you. We do not represent or warrant that the minimum coverage that we
require will be sufficient for all of your purposes You are solely responsible for
investigatingyourinsuranceneeds and determining if higher coverage limits or other
types of insurance protection are advisable for your business. We may periodically
increase the minimum insurance requirements,estahlish and change deductible limits,
or require that you procure and maintain additional forms of insurance hased on inflation,
general industry standards, our experience with claims, or for other commercially
reasonable reasons. You must comply with any change that we impose within 30 days
after receiving written notice from us explaining the change.
MaximumModernization Amount. W e m a v r e o u i r e v o u to update or upgrade your
CBW Franchise including the Camp Site and v e h i c l e s u s e d t o p r o v i d e l n ^ l o m e
Services and Dog Training Services, during the initial^term of the Franchise
Agreement in an amount not to exceed the Maximum Modernization Amount,
which is ^50,000. The Maximum Modernization Amount does not include (i)
u p g r a d e s t o a n y c o m p u t e r s y s t e m , (ii) the cost to maintain vehicles or Camp
Site and to keep in good condition and repair, equipment, leasehold
improvements and furnishings, (iii) costs associated with new equipment
required tooffer n e w e r modified productsor services, (iv) changesyouchoose
or are required hy any third party to make, or (v) upgrades we require you to
make to the C B W Franchise or Camp Site upon the renewal o f t h e Franchise
Agreement ortransferoftheCBWFranchiseto an unrelated third party
Camp ^ o w W o w
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^
ITEM 7.
ESTIMATED INITIAL INVESTMENT
YOUR ESTIMATED INITIAL INVESTMENT
Column 1
Type of
Expenditure (1) : '
Column 2
Amount L o w
Column 3
A m o u n t High
Column 4
Method
Of Payment
Column 5
When Due
Column 6
To W h o m
Payment
is to be Made
Initial Franchise Fee
(2)
$50,000
$50,000
Lump Sum
Upon signing the
Franchise
Agreement
Us
Dog Trainer Fee
$5,000
$5,000
Lump Sum
30 days before
you or your
designated
Personnel
attends the Dog
Trainer
Certification
Program
Us
Travel and Room
and Board While
Attending Initial
Camp Services
Training, Initial InHome Training and
the Dog Trainer
Certification Program
(3)
$1,000
$10,000
A s Incurred
As Incurred
Airlines, Hotels,
Restaurants, and
other Third
Parties
$324,000
A s Incurred
Before Opening
Contractors and
other Third
Parties
Leasehold
Improvements (4)
$48,000
Equipment, Supplies
and Opening
Inventory (5)
$47,000
$52,000
A s Incurred
Before Opening
Suppliers
Dog Cabins and
Interior Fencing (6)
$60,000
$71,000
As Incurred
Before Opening
Suppliers
Signage (7)
$5,600
$7,000
As Incurred
Before Opening
Suppliers
Computer Hardware
& Software (8)
$14,000
$15,000
As Incurred
Before Opening
Suppliers/Third
Parties/Us
Payroll (9)
$8,000
$17,000
A s Agreed
Before Opening
Third Parties
Rent and Utilities
(10)
$25,000
$43,000
As Agreed
Before Opening
Third Parties
Camp Bow W o w - 2 0 1 4 F D D
US.53755407.06
24
Plans and Permits
(11)
$10,000
$20,000
As Incurred
As Incurred
Third Parties
Professional
Services Expenses
(12)
$7,000
$7,000
As Incurred
As Incurred
Third Parties
Camp Launch
Advertising (13)
$25,000
$25,000
As Agreed
From the
effective date of
the Franchise
Agreement
through to the
day you begin
operations
Third
Parties/Suppliers
Financing Fees (14)
$0
$28,000
As Agreed
Before Opening
Third Parties
Additional Funds for
First 3 months (15)
$34,000
$34,000
As Incurred
Wages - biweekly,
otherwise, as
Personnel,
Suppliers and
Utilities
TOTAL (16)
$339,600
$708,000
Notes:
(1)
Expenditures. The amounts provided in this Item 7 include costs you will incur during
the initial period, which is the time from the date the Franchise Agreement becomes
effective through the end of the first three (3) months of operations, which we describe
as the "initial period." These estimates are based on our experience starting CBW
Franchises. All fees and payments are non-refundable, unless otherwise stated or
permitted by the payee. The amounts provided in this Item 7 are based on the range
of costs for Camps that opened in 2013. The estimates provided for in this Item 7
assume that you will rent the Camp Site from a third party landlord and are build-to-suit
numbers as some franchisees made arrangements with their landlord for the landlord to
assume some of the build-out cost. If you are new to the C B W Franchise, you must
lease your premises for the first 10-year term rather than purchase the real estate. It
does not include costs associated with the acquisition of real estate for a franchisee
that decides to operate a Camp Site from a building it purchases or builds from the
ground up. The costs for rent, fixtures and improvements will vary and may be
significantly higher than projected in this table, based on the square footage, location,
economic climate, market conditions, prevailing interest rates and other financing costs,
the conditions of the property and other physical characteristics of your Camp Site. You
should investigate all of these costs in the area where you wish to establish your CBW
Franchise.
This Item 7 also assumes that you and your Personnel will use a vehicle, , as
described under Item 8 below, to perform mandatory In-Home Services that you or they
already own or have the right to use, and that meets our minimum specifications so
that you can provide mandatory In-Home Services and Dog Training Services
throughout the Authorized Territory. Therefore, we assume you do not need to
Camp Bow Wow - 2014 F D D
US.53755407.06
25
acqoireor lease a vehicle.Per that reason, w e d o net include the cost ot acquiring or
leasingavehicleinthisltemB.
The Item 7 estimates mal^e no allowance tor expenses associated with providing
optional In-Home Services.
^
Initial Franchise Fee.
The Initial Franchise Fee tor your tirst Authorized Territory is
^50,000. The Initial Franchise Fee is due when you sign the Franchise Agreement and
is nonrefundable once paid. We will discount our then-current Initial Franchise Fee tor
anyadditionalAuthorizedTerritoriesyou purchase by
any time after the purchase
of your initial AuthorizedTerritory.There is a l s o a l O ^ discount off the Initial Franchise
Fee if you are eligible for the FranVet program None of these discounts may be
combined with each other or any other discounts, rebates or incentives TheFran^Bet
discount is not given until you open and hegin operating your Franchise Business. It will
be credited on your bi monthly royalty invoices If the Franchise Agreement is terminated
priorto opening, this discount is null and void.
^
Travel and Room and Board while A d d i n g l o ^ C a m o S e ^ o e s T ^ n ^ InHome
Training and the O o o T r a l n e r C e r t l f l o a ^
provide Initial Camp ServloesTralnlng and InHomeTralnlng tor you and up t o 1 other
person. The DogTrainer Fee Is not Included In your Initial Franchise Fee. You must
pay us thethencurrent DogTrainer CertltlcatlonFee tor eachperson who attends the
DogTrainer Certification Program 30 days hetore the program heglns.You must cause
one person designated hy you, which may h e y o u or your Majority Cwner (defined
helow) to complete the Dog Trainer Certification Program and hegln offering Dog
Training Services hy the Operations Deadline. Portions of each tralnlngprogram may
he provided via Wehlnar^however you must also pay all travel and living expenses,such
as airfare, lodging, ground transportation, salaries and benefits, and any other
personal expenses attendees might Incurwhlle attending each training program.
(^
Leasehold Improvements
Leasehold Improvements Include the cost of construction
modifications Incurred by C B W franchisees opening new leased locations In 2013. The
estimates do not Include costs of the two camps where the franchisee hullt their own
building Camp locations ranged In size hetween 5,300 and7,3^0 square feet.The cost
rangellsted Indicates thenet amount paldfor leasehold Improvements after landlord
contributions or allowancesare considered. Theconstructlon modifications commonly
encountered Include: demolition, concrete repair, Insulation, roof repair, doors and
hardware, partition walls, acoustical ceilings, flooring, painting, Installation of fixtures,
cabinets, plumbing, HVAC, electrical, fire alarm, security system, exterior fencing, pea
gravel, as well as the Installation costs for the Interior fencing and fennels Note
that we r e q u l r e y o u t o u s e o u r designated contractors or suppliers for the following
Items: architectural space plan, construction management consulting, flooring,
signage,fencing, kennels,grooming tubs and lohhy furniture. Wemay deslgnatenew
or different mandatory contractors or suppllersfor any build out servlceor product
at any time. The Interior fencing and fennels are equipment that Incorporates
technology subject toapendlng patent application
(5)
Fouloment. Supplies and Ooenlno Inventory. This estimate Includes the cost to
purchase the equipment and supplies necessary to hegln o p e r a t l n g a C B W Franchise
w l t h a C a m p S l t e r a n g e o f 5 , 3 0 0 t o 7 , ^ 0 s q u a r e f e e t , Including furniture,fixtures, limited
retail Inventory to resell to clients, storage containers, poop scoopers, cleaning
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s u p p ^ ^ ^ e a ^ 0 0 ^ 5 , leashed dog food, uniforms, dogoofs, play yard equipment,
wallarf, boarding supplies (beds, bowlsand leashes), magnefsfor vehicles used to
provide In Home Services and Dog Training Services, first aid kits for pets and
humans, direct stop sprays, treat and drink dispensers, duffle hags, poop scoopers, pet
wipes, in-home w e b c a m s y s t e m , office supplies, promotionalitems,forms, and other
supplies we determine are necessary or important Note that we require you to use our
designated suppllersfor Personneland owner apparel, dogcots, play-yardequipment
and wall art. Your initial inventory of retail products will vary depending on the
anticipated sales volume as well as current market prices and the time of year that you
open your COW Franchise. We may change the selection of equipment, supplies and
retail inventory you must provide at any time.
(8)
Poo Cabins This estimate includes the cost to purchase our proprietary dog cabins
andmatching interiorfencing for Camp Sites ranging between 5,300 and7,S^0 square
feet The numberof dog cahinsinstalledatthelocationsin 2013 ranged b e t w e e n ^
and 57. The cost of dog cabins and fencing will vary dependingupon the size of your
CampSite.
(7)
Sionaoe This estimate includes the cost of indoor and outdoor illuminated signage fora
CampSite.
(3)
Computer Hardware and Software. The estimated initial investment includes costs
related t o t h e purchase of specifiedcomputer hardware, softwareand web cameras,
along w i t h a licenseforthesoftware, whichalsoincludes technical support.Thelow
range on this scale assumes that you already ownacomputer system that complies with
ourrequirements. Youmust subscribe to and use the Data Dawg or other s o f t w a r e
program(s) we designate, for the computer management operations of your C B W
Franchise. You will pay us directly the monthly fee for t h e D a t a D a w g programand
youmay also pay other designated vendors As of the issuance date of this Disclosure
Document, the monthly feefor t h e D a t a D a w g program is ^150.However,that cost is
subject to change at our discretion. You must also purchase the web cameras
hardware and routers with Broadband, DSL o r A i r C a r d a c c e s s t o t h e Internet, as well
as search engine optimization and digital newsletter services, from our approved
suppliers. You must provideuswith real time access to certain information The monthly
fee for the web camera system is ^13^ per month and this is paid directly to the web
camera service provider
(^
Favroll This estimate includes the cost of employee oavroll (but notadraw or salary for
you), from time of lease execution and zoning approval to opening.
(10) Rent and utilities This estimate includes the cost of your security deposit and the first
and last months'rent payment Camp Sites are based onaprototype of 8,000 square
feet and the averagegross rent rangesfrom ^ . 0 0 t o ^ 1 1 . 0 0 persquarefoot It is
extremely difficult to estimate Lease (definedbelow)rates or acquisition costs because
of the wide variations that depend upon the square footage, location, economic climate,
prevailing interest rates and otherfinancingcosts, the conditions of theproperty and
other physical characteristicsof your C a m p S i t e . Y o u should investigateallof these
costs In the area where you wish to establish your Camp Site.
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(11) P l a n ^ P e r m i t
This estimates your expenses to draw plans (oonstruotion
documents) tor your leasehold Improvements, obtain permits and zoning tor the Camp
Site The terms and conditions ot all agreements tor the purchase, lease and alteration
ot the property will he negotiated solelyhyyou^however,we require you to Incorporate
certalnprovlslons Into your Lease hy executing an addendum to your lease with your
landlord. The c o s t s t o r l e g a l c o u n s e l o r design professionals to assist with obtaining a
special or conditional use permit are not Included In this estimate.
(12) Protesslonal Service Expenses. This estimate Includes leoal and accounting expenses
tor negotiating your Franchise Agreement, Acquisition Documents or other legal
contracts, and business entity organization expenses during the business entity
formation period.
(13) Camp Launch Advertising. This amount Includes the minimum you must spend between
the effective date of theFranchlse Agreement and the day you begin operations The
estimate Includes paid advertising, proprietary marketing, operations forms, public
relations, advertising agency fees and othercosts associated with the CampLaunch
Advertising All of your Camp Launch Advertising must he handled exclusively
through the advertising agency we designate pursuant to our standards and
specifications We may collect the Camp Launch Advertising In the future or If we feel
you have made Inadequate preparations for opening publicity
(1^) Financing Fees. These fees Include amounts that may be payable for Items lll^e closing
costs a n d S S A loans, financial broker fees and contingency accounts required by the
SBA and Interim Interest The figures provided are just an estimate and the actual fees
will vary depending on your creditworthiness and the financial markets generally.
(15) Additional Funds. Additional Funds Include operating expenses for mandatory programs
during the Initial period of operations (first three months) that are not Included
elsewhere In the Item 7 chart. This Includes Insurance costs Including the cost of
bonding to provide mandatory In Flome Services, the Local Advertising Expense when
youpay this to thlrdpartlesandnot to us, and other ongoing operating expenses for
mandatoryprogramsdescrlhed In this FDD As we note above, Item^does not Include
expensesforoptlonal InHome Servlcesthatyou choosetoprovlde, nor does Item 7
Include an allowance or estimate for fees payable to us
The Additional Funds figures are an estimate. You may Incur additional expenses
during the Initial period of operating y o u r C S W F r a n c h l s e , and we encourage you to
have $100,000 In working capital for your first year of operation. Your actual costs during
this period and afterwards will depend on many different variables, Including how well
you follow our methods and procedures^ your management skills, experience and
business acumens local economic conditions^ the local market for the productsand
services you will provide through your C B W Franchisee the prevailing wage rate^
competition and the sales level reached during the Initial periods of providing the
various services and products through your C B W Franchise. You may need more than
the Additional Funds that weestlmateand should haveaddltlonalfundsavallableto
you to address contingencies during the Initial period and heyond.
(18)
Total Estimated Initial Investment The above chart does not Include any sales, use, or
similar taxes that may be assessed on purchases and leases by state or local
authorities. You should check with your local and state governmental agencies for any
taxes that may be assessed. Also, excluded are ongoing fees payable to us, which we
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caooot estimate since they will he hesed cn your revenue results, and any Interest
payahle to lenders on loans that you may ohtaln In connection with the tranohlse.
Alltiguresin I t e m ^ a r e estimates only We cannot guarantee that you will not have
additional expenses, or other categories ot expenses, to start the C B W Franchise You
should not plan to draw income trom C B W Franchise operations during the Initial period.
You shouldhave additional tunds available inreserve,either In cash or throughahan^
lineotcredlt, or have other assets that you may liquidate or against whichyoumay
borrow, to cover other expenses, losses or unanticipated events during the start up and
development stage or beyond Neither we nor our Attillates otter financing tor any part
ot your Initial investment,as described In Item 10. In estimating what your initial
Investment
expenses will be, you should allow tor inflation, discretionary
expenditures, fluctuating interest rates and other financing costs, the unpredictahlllty
of rising costs, and local marketcondltions, a l l o t which arehighly variablefactors
thatcan result Insuddenand unexpectedlncreases in costs. You must bear all cost
escalations and budget for these contingencies.
ITEM^
R E S T ^ C ^ O N S ON S O U R C E S OF R R O O U C T S A N O SERVICES
You must establish and operate your C B W Franchise In compliance with your Franchise
Agreement and the standards andspecificationscontalnedln our operations manuals for all
three C B W Services required to be provided by your CBW Franchise (the "Operations Manuals^
or "Operation Manual" when referring to only one of the three required C B W Services) which are
confidentlaland provided t o y o u hy u s d u r i n g t h e t e r m o f your Franchise Agreement. Each
CBW Service has Its own Operations Manual which consists of 1 or more manuals, technical
bulletins, andother written materials ordirectlves communicated by u s t h a t w e m a y modify
periodically. You mustprovldetheCampServlces,ln-HomeServices,OogTraining Services,
and all other authorized services andproducts through your CBW Franchise according to our
standards and specifications We may change any standard or specification with 30 days prior
written notice to you.The Operations Manuals may be communicated inaprinted or electronic
format, and are subject to change
We have developed standards and specifications for your equipment, signage, uniforms,
fennels, fencing, supplies, forms, products, services, advertising materials, social media
marketing, andmostotherApproved Products andServices(definedhelow)usedin, sold or
provided through your C B W Franchise In addition, we also have standards and specifications
for the design andconstructionof your Camp Site, Includinghut not limited to furniture and
fixtures.
We, and ourAffiliates, may become an approved supplier orthe exclusive supplier of
any category of Approved Products or Servlcesthatyou must use to operate your CBW
Franchise effective upon written notice to you For any Approved Products or Services (as
defined below) that w e o r our Affiliates sell,you must pay the thencurrent price in effect.
At this time, no officers have an ownership Interest in Camp Bow Wow Franchising, Inc.,
which is currently the only approved supplier for the Oata Oawgsof^wareprogramandthe
DogTrainer Certification Program Our officers may ownanoncontrolling interest in the stock
of designated or recommended suppliers whose shares arepublicly traded
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Approved Prodoots and Services
Yoo may o n i v o ^ e r s e r v i o e s a n d prodoots that are preapproved by ^sthrooghyoor
COW Franchise ("Approved Pro^^
Services^ "Approved Services" or "Approved Products") We wiil p r o v i d e d with a iistot
Approved Products and Services when yoo sign a Franchise Agreement Aii Approved
Products and Services most meet oor standards and specifications, which we wiil provide
directly to yoo or to ourdesignated or approved vendors.in order to (i) better assure the soppiy
andqoaiityot the ApprovedFrodoctsandServices^and(ii) enable os to ta^e advantage ot
marketplace etticiencies as we see tit, yoo most purchase or lease all otyoor r e t i r e d t l x t o ^
equipment, inventory, supplies, merchandise and marketing materials osed in or sold throogh
yoor COW Franchise, In accordance with oor specifications and standards, only trom os or oor
approved suppliers and distribotors. In certain instances,we have deslgnatedasinglesoorce
for these items that yoo most ose. We, and oor Affiliates, may derive revenoe from designated
soppllers.
Yoo most participate in any mandatory promotional or incentive program we reqoire,
inclodlng gift card and loyalty card programs.
Sopplier Approval
If yoo wish to porchase any onapproved item, incloding inventory, or acqoire approved
items from an onapproved supplier, yoo most provide os (i) the name, address and telephone
nomber of the proposed sopplier, (11) a description o f t h e item yoo wish to porchase, (ill)
porchase price of the item, if ^nown,(lv) the then-correntprodoct or sopplier review fee, which is
corrently ^ O O f o r e a c h newprodoctorsopplier,(v)acomplete vendor approval form which
canbefornishedtoyoooponreqoest,and (vi) a sampleof the prodoct for testing porposes.
Ifweincoranycostsfortestingaparticolarprodoctorevaloatinganonapproved sopplierat
yoor reqoest, yoo most reimborse oor reasonable inspection and testing costs, regardless
ofwhether we later approve the Item or sopplier
We will ose oor reasonable best efforts to notify yoo of oor approval of a particolar
sopplier or prodoct within 80 days of receiving all reqoested information We are not reqolred to
approve any particolar sopplier or prodoct. We may hase oor approval ofaproposed Item or
sopplier on considerations relating not only directly to the item or sopplier, bot also indirectly t^
the onlformlty, efficiency, and qoality of operation we deem necessary or desirahle in oor
System a s a w h o l e
W e m a y r e c e i v e p a y m e n t s f r o m s o p p l i e r s o n a c c o o n t of their dealings wlthyoo and
other franchisees and may o s e a l l a m o o n t s w e r e c e i v e w i t h o o t restriction (onlesslnstrocted
otherwise hy the sopplier) for any porposes we deem appropriate.
Cor criteria for approval ofaparticolar sopplier or prodoct will be made available opon
written regoest. If we do not approveaparticolar prodoct or sopplier by the end of 80 days,the
prodoct or sopplier will be deemed disapproved l f y o o a s ^ o s t o a p p r o v e a n e w p r o d o c t , w e
may r e g o l r e y o o t o p o r c h a s e t h e n e w prodoct from oor designatedorapprovedsoppller We
may revoke oor approval of previoosly approved Approved Prodocts or Services or
soppliers when we determine, in oor sole discretion, that those prodocts, service, or soppllers
no longer meet oor standards. Uponrecelpt of writtennotlce of revocation, yoomost cease
porchasing prodocts or services from specified soppliers. Yoo most ose Approved Frodocts and
Services porchased from approved soppllers solely for the operation of yoor COW Franchise
and n o t f o r a n y competitivebosiness porpose. W e m a y designate new mandatory soppliers
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at anytime and all totore porohasesetreqoired Approved Prodootsor Services most he
made trom these designated soppiiers,whioh may he os, or oor Attiiiates
Althoogh w e d o n o t p r e s e n t l y d o s o , we may negotiateporohasing arrangements with
soppliers in the totore VVe do not have any porohasing or distrihotionoo-operatives as ot the
date ot this Oisolosore Ooooment. We do not provide material henetits, like renewing or
granting additional tranohlsestotranohiseeshased on their oseotdesignated orapproved
soppliers.
Comooter Hardware and Software
Yoo mostporohase, or oseaoompoter yoo already own, with oapahlllties to ron oor
oorrent point ot sale andoperational s o t t w a r e p r o g r a m s , a s w e l l a s w e h o a m h a r d w a r e a n d
rooters with Broadband, D S L , o r A l r C a r d a o o e s s t o t h e Internet trom oor approved soppliers
(oolleotlvely,the^ompoter S y s t e m s Yoo most license trom os,and other ot oor designated
soppliers, certain proprietary compoter programs and related materials developed tor o s e i n
the operation ot the C B W Franchise ^Sottware") tor a tee As ot the date ot this
Oisclosore Oocoment, we and Power Fet Sitters,athird party, are the only approved soppliers
tor the Software and yoo most ose the Software provided h y o s (Oata Oawg) and Power Pet
Sitters. The Software licenses Inclode technical sopport. Yoo most also ose oor soppliers of
weh cam, S E C and payment processing eqoipment and services for the processing of all
payments, incloding credit cards and checks. For Software that yoo porchase or license from
third parties, we may derive revenoe on accoont of yoor transactions with them. We will
derive revenoe In the form of Software License Fees on accoont of yoor ose of Oata Oawg. In
the fotore, we may become the only approved sopplierof all Software, webDcam and S E C
services and eqoipment
Advertisino
Yoo most ose oor designated advertising agency for Camp Laonch Advertising related to
the opening of yoor C B W Franchise, which shall he sohject to oor retirements and
specifications Yoo most ose oordesignated soppliers for print and marketing collateral and
promotional items All selfgeneratedadvertisingmaterials most be approved by os in writing
before poblication or ose. Yoo most ose oor reqoired vendors for search engine optimization,
promotional items, banners, printed marketing materials, event eqoipment and digital
newsletters
Insorance
Yoomostporchaseinsorance In the amoonts provided In the Operations Manoals from
an insorance company that is acceptable to os The coverage most inclode hot Is not limited to
comprehensive generalliability, bosinesslnterroption, combined single limit, aotomobile, bodily
injory, all rlsk property damage and all other occorrences against claims of any person,
employee, independentcontractor, costomer, agentor otherwise. Yoor insorance policy most
name os, andoorAffiliates, agents, members, officers, directors, shareholders, a h d a l l o t h e r
parties as additional Insoreds and contain waivers of sohrogatlon so that we are the first payee
of any claim.
CamoSite and Modernization
If yoo are new to the C B W Franchise, yoo most lease the facility from which to provide
t h e C a m p Services If yoo are anexlstlng franchiseeacqolrlng an additional location, we
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3B
reserve the right to reasonably den^
retirements, it we deny yoor request toporohase,theoyoo mostieasethelooatioo We
expressly reserve the right to mal^e exceptions to this retirement tor either tirst tlme
franchisees or tor existing franchisees within oor sole discretion We most approve the
location and lease or porchase terms before yoo execote any lease (the "Leased or
porchase docoments for the Camp Site (collectively, the Lease and porchase docoments
s h a l l b e r e f e r r e d t o a s t h e ^cqoisltionOocoments^ We condition oor approval of yoor Lea
on, among other retirements, yoo and yoor landlord's signing of oor standard form Addendom
toLease,throogh which, amongother things, yoor landlordgrants os the option to assome
yoor rights and obligations onder the Lease if yoo breach the Lease or yoor Franchise
Agreement, or if either expires or is terminated.If yoo porchaseaCamp Site,we reqoire yoo to
enter IntoaRlght of First Refosal and Option Agreement and Leaseback Agreement with os
These agreements grant os the right to acgoire the Camp Site opon termination or expiration of
yoor Franchise Agreement.We will alsoregoireyoo to osespecifled soppliers that provide
services or materials regarding the design and boild oot of yoor Camp Site.
We may reqoire yoo to opdate or opgrade yoor C B W Franchise incloding the Camp Site,
dorlngtheterm ofthe Franchise Agreement in an amoont not to exceeda^50,000 Maxlmom
Modernization Amoont.TheMaxImom Modernization Amoont does not inclode(i)opgrades to
any compoter system, (Ii) the cost to maintain vehicles and the Camp Site and to keep in good
condition and repair, all eqoipment, leasehold improvements and fornishlngs, (iii) costs
associated with neweqoipmentreqoired tooffer new or modified prodocts orservlces, (Iv)
changes yoo choose or are reqoired by any third party to make, or (v)opgrades we regolre yoo
tomal^eopon renewal of theFranchise Agreement or transfer of the CBW Franchise to an
onrelated third party.
OooTrainer Certification Prooram
Yoo, or yoor designated Personnel, most attend and complete the Oog Trainer
Certification Programand begin providing OogTraining Services hy the Operations Oe
A s o f t h e d a t e o t t h i s O l s c l o s o r e Oocoment, w e a r e t h e s o l e a p p r o v e d sopplier of theOog
Trainer Certification Program.
vehicle for Income Services and OooTrainino Services
Yoo,or yoor Personnel,who provide InHome Services and OogTraining Services will
needtotravelthrooghoottheAothorlzedTerritorytoprovidetheseservices.Therefore,yooor
yoor Personnel most o s e a v e h l c l e that meets oor correnthasicregoirements,which may be
changed from time to time. The basic regolrements are corrently that the vehicle he in good
condition andrepair, in working order, andproperlylnsored according to yoor State's motor
vehicle Insorance laws. Inaddition, if yoo are offering pet transportation v i a a B a r k ^ n R l d e ^
shottle, that shottle most meet oor Bark ^n P i d e ^ vehicle regolrements as set oot in the
Operations Manoals
ReooiredPorchases and Leases
Weestimatethatyoorregoired porchasesand leases from o s o r o o r d e s i g n a t e d o r
approvedsoorces, or thosemeetingoor standards andspecifications, will be approximately
7 5 ^ ofyoortotalcosttoestablishaCBWFranchlse and approximately 2 0 ^ ofyoortotal cost of
operatlngaCBW Franchise (not incloding amortization,depreciation,or replacement of worn or
obsolete Improvements,egoipmentorfixtores).We,andoorAffiliates,may earn revenoe a s a
resoltofyoorporchases
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During our fiscal year ending December 31, 2013, our predecessor's affiliate,
FranProp, reported receiving $20,750 in revenue for the provision of site selection and
construction management services to franchisees, which represented 100% of its total revenue
of $20,750.
During our fiscal year ending December 31, 2013, our predecessor received $105.24
of revenue from our direct sale of dog backpack retail products to franchisees, and we
reserve the right to sell other products and services in the future to franchisees. Our
predecessor also received rebates from third party suppliers for kennels (10%), promotional
items (5%), and printed materials (5%) that C B W Franchises bought from them. These
rebates totaled $14,602.82, which was 0.24% of its total revenues of $6,088,564 for its
fiscal year ending December 31, 2013. We may negotiate purchase arrangements with
suppliers and distributors of approved products, and we may receive rebates or payments
on your purchases of those items from approved suppliers. This revenue helps us cover the
cost of administering the negotiated programs.
We may negotiate other purchase arrangements with suppliers and distributors of
approved products, and we may receive rebates or payments on your purchases of those
items from approved suppliers. We also may derive revenue from your purchases of items
from us, or our Affiliates. There are no restrictions on our use of payments received from
approved or designated suppliers derived from their transactions with you or on payments
that we, or our Affiliates, receive from these transactions.
ITEM 9.
F R A N C H I S E E ' S OBLIGATIONS
This table lists your principal obligations under the Franchise Agreement. It will
help you find more detailed information about your obligations in the Franchise
Agreement and in other items of this Disclosure Document.
Obligations
Section In Agreement
Item In
Disclosure
Document
a. Site Selection and acquisition/lease
§§1.1,1.3, 3.1,4.5,7.1(a),(c),&(d),
11.1, 11.3(b), 11.3(e), 14.6, 16.6
11
b. Pre-opening purchases/leases
§§ 6.3(b), 7.1(a), 7.1(c), 7.3, 7.11,8,
11
5, 6 , 7 , 8 , 1 1
c. Site development
requirements
and
other
pre-opening
§§ 4.4(b), 7.1,7.2,7.3,7.8, 7.13,
10.1, 11.1
6. 7,11
d. Initial and ongoing training
§§4.2, 6.2(e) &(f), 7.1,7.3.7.9
11
e. Opening
§§ 7.1,7.2,7.3, 10.1
11
f.
§§1.3, 2.1(g), 2.2, 4, 5.5,5.6. 5.8,
5.10, 6.3(c), (f),&{g),7.1,7.3, 7.7,
10, 11, 14.9, 16.6, 20.4
Fees
g. Compliance
with
policies/Operating Manual
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standards
and
§ § 1 . 1 , 1.2,4.3,4.4, 5 . 6 . 2 , 6 . 3 , 7 . 8 ,
9, 10, 11, 16.1, 16.2, 20.10
33
5, 6,7, 11
6, 8, 11
h. Trademarks and proprietary information
§§ 1.1, 1.2, 3.2(e), 6, 7.1(b), 7.3(k) 9,
13, 14, 15, 16, 19
i.
Restrictions on products/services offered
§§1.2,1.4, 3.2(e), 7, 8, 9,10
j.
Warranty and customer service requirements
§7.30)
1
k. Territorial development and sales quotas
§§7.1,7.2,8
1. Ongoing product/service purchases
§§1.2,7.2, 7.3(c), 7.11, 7.13, 8,
10.10
m. Maintenance,
requirements
appearance
and
remodeling
§§ 1.2, 2.1(e), 7.3(f) & (g), 7.6, 7.7, 8,
14.5(k), 14.5(j), 17.2
n. Insurance
§§ 7.1(d), 11
o. Advertising
§§1.2,1.3,4.5, 5.1, 7.3(c), (e), & (k),
7.13, 9.2(c) & (e), 10
p.
§§ 4.4(c), 5.8, 7.6, 8.3, 11
Indemnification
13, 14
8, 13, 14, 16
None
12
8, 11
11
7.8
6, 11
6
q. Owner's participation/management/staffing
§§ 6.2(g), 7.3(a) & (0,7.6, 7.8,7.9,
7.13
11, 15
r. Records/Reports
§§ 4.4(a) 8(b), 5,7.11,10.3, 11.1(b)
6,11
s. Inspections/audits
§§ 5, 7.3{k), 7.5
6,11
t.
§§13, 14, 15
17
u. Renewal
§2
17
v. Post-termination obligations
§§2.4, 5, 9.1(d), (e),&(f), 11, 13, 16,
19, 21
17
w. Non-competition covenants
§13
17
x. Dispute resolution
§19
17
y. Other - Dog Trainer Certification training
§§1.2, 4.2, 6.3(c), 7.1(f), 16.1(f)
Transfer
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34
5. 11
ITEM^
^NAN^NG
Ne^erw^ooraoyage^orA^^ofoo^o^s^
we may do s o o t h e f o ^ r ^ W e do oot goaraotee yoor note, leases or ot^^
We, a o d o u r A t t l l l a t e s , h a v e n o p a s t o r t o t o r e l n t ^ ^
third party any tinanoiog arrangements We, and ourAttiliates, do oot receive any d ^
indirect payments or other consideration trom any person tor the placement ot financing with
the lender, however, In limited situations and at oor sole discretion, we may finance the renewal
fee as set out in Item 6.
Although we do not provide or assist you in obtaining financing, our brand is approved
for eligihllity for the ^mall Business Ass
franchise offeringis listed on t h e ^ B A Franchise Registry. The 5BA Franchise Registry I s a
listing hosted through FRA^Idata.com of franchise systems whosefranchlsees may receive
faster ^ B A loan processing, hecause the Franchise Agreement has been pre approved by the
5BA. Cur approval for eligibility or inclusion on the ^ B A Franchise Registry list does not
guarantee that you will ohtain financing or that any financing you do obtain will meet with our
approval, or contain favorable or other specific terms
If you plan to finance all or any part of your investment, you must provide us with certain
information so we can determine If the financing arrangement is acceptable to us youmust
secure approved financing ISOdays after the effective date ofthe Franchise Agreement If you
do not obtain reasonably acceptable financing or fail to provide us with this information, we may
require you to pay the minimum monthly Royalty until you satisfy the financing reguirement^^
terminate theFranchise Agreement after your opportunity to cure. Thenon-refundablelnltial
Franchise Fee will be kept by us ifthe Franchise Agreement Is terminated in this manner
ITEM^
F R A N C ^ O R ^ A ^ ^ T A N C ^ A O ^ R T ^ N ^ COMPTER ^ T E M
Except as hstedbelow^ we are not required to provide you with any assistance.
FreooeninoChlloations
We,orourrepresentative, will provide you with the following pre opening assistances
1
Wewllldesignateageographicalarea(the^AuthorizedTerrltory^, specified in
AttachmentAof the Franchise Aoreement.in which youmust locateapropose^ C a m p s i t e
^ou must a c g u i r e t h e C a m p ^ i t e t h r o u g h a l^easeor purchase within 3 6 5 d a y s after the
effective date of theFranchise Agreement Typical C a m p s i t e s are based onaprototype of
6,000 square feet and are usually located in alight industrial or commercial area ^ou may not
relocate or remodel the Camp ^itewithoutour prior written consent.
2.
^ou will operateyour C B W Franchise at the C a m p s i t e selected b y y o u a n d
approved by us. While it is your sole responsibility to ohtainamutually acceptable Campsite,
we may provide assistance in f i n d i n g a C a m p ^ i t e , as we deem reasonable and appropriate
section 6.2(b)of the Franchise Agreement).
3.
Frovlde you with home study materials for all your licensed C B W services
^ o m e ^ t u d y ^ a t e r l a l s ^ ^ e c t l o n 6 ^ e ) ofthe Franchise Agreement)
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4.
provide you with speoitioations tor and designate mandatory and
recommended sources otsuppiytrom which you must purchase furniture, fixtures, supplies,
inventory and merchandise, decorations, and marketing materials necessary for the start
up and ongoing operations of your C B W Franchise. ( 5 e c t l o n 6 ^ h ) , 6 2 ( d ) of the Franchise
Agreement) provide you with access to our confidential andproprietary Operations manuals
at the time of execution of theFranchise Agreement on our intranet s i t e s ^ T h e O o g ^ o u s e B
^The Animal FlouseB s c o u t ' s l ^ o u s e B ^
management system. We will also provide access to the Operations manuals to your
personnel whoapply to u s f o r a c c e s s a n d ofwhom we approve ^ourFersonnel will have
access to limited portions of the Operations manuals onaneedtoknowhasis^ for example your
marketing personnel may only have access to the marketing section ofthe Operations manuals
The tables of contents for the Operations manuals are attached to this Disclosure Oocument at
Fxhihit 0
The Operations manual currently consists of t26 pages. We may amend the
Operations manual periodically in our discretion, and you must comply with any changes. It is
your responsihlllty to know of and keep your staff Informed of all such changes. We provide the
Operations manuals and all changes and updates electronically through email notification and
our intranet systems, The Oog FlouseB The Animal IDIouseB scout's FlouseB The cocker
RoomBand learning management ^oftware'^collectively,intranet 5ystems^). (^ection62(i)
of the Franchise Agreement)
5.
Frovideyouand upto 1 other person with^lnltial Camp ^ervicesTralningB If
you a r e a h u s i n e s s entity, one of the trainees must he the owner withama^ority interest In
the entity (the ^a^orlty Owners.If you have deslgnatedamanager to whom you delegate the
day^ to-day management of the operations of the Camp services (a manager"), the
manager must he the other trainee Initial Camp ServicesTraining willtal^e place in the
Broomfield, Colorado area or other location designated hy us, and must he completed to our
satisfaction at l e a s t s days, hut no sooner than 60 days, before you begin providing
Camp services ^ou are responsihlefor all travel expenses, meals, ground transportation
andother personal expenses incurred by you and any additional Fersonnelattending Initial
Camp ServicesTraining (^ections62(d),(e) and (f),and7BI(d) ofthe Franchise Agreement).
The Initial Camp ServicesTraining program lastsapproxlmately 120 hours The first 12
hours consists of home study using the Initial Camp services Training Flome 5tudy
materials and is not included in thechart below. T h e n e x t 6 4 h o u r s consist of classroom
Instruction and ^hands on' training atalocation designated by us. The classroom and onD
site training is usually conducted at corporate headquarters and our Camp B o w W o w ^
corporate store,but the training course may be held elsewhere in the futureatalocation we
designate. The next 24 hours are onsite training at your Campsite,shortly before you begin
providing Camp services, ^ou and eithera manager or an individual with to whomyou
delegate day^today operations of the Camp must attend the Initial Camp ServicesTraining
program within between 30 and 60 days of providing Camp services, ^ouwillbeprohihited
from providing Camp services untilthe Initial Camp ServicesTraining Frogram is completed.
(^ection7.1(d) of the Franchise Agreement)
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INITIAL C A M P SERVICES TRAINING P R O G R A M
Hours Of
Classroom
Training
Hours of O n the J o b
Training
Marketing
8
10
Camp Bow Wow® corporate store,
headquarters or Via Webinar
Technology
4
10
Camp Bow Wow® corporate store,
headquarters or Via Webinar
Financial
4
5
Camp Bow Wow® corporate store,
headquarters or Via Webinar
General Business
8
10
Camp Bow Wow® corporate store,
headquarters or Via Webinar
Daily Operations
12
20
Camp Bow Wow® corporate store,
headquarters or Via Webinar
Customer Service
12
5
Camp Bow Wow® corporate store,
headquarters or Via Webinar
48
60
Subject
Total
Location
The principal instructional materials are the Operations Manuals. The Initial In-Home
Training and other on-going training will be conducted by trainers under the direction of
Director of Franchise Relations, Brook Brown. Ms. Brown joined our team in March 2012
and has over 15 years of experience developing and administering learning programs for
franchise and corporate environments. In addition to Ms. Brown, the following people assist
in all trainings: Director of Buddies Brands; Laura Roach, who joined our team in November
2011; Director of Operational Compliance, Melanie Moon, who joined our team in May 2011;
and Director of Business Analytics, Damien D'Emic, who joined our team in March 2012.
Our training instructors have an average of at least two years of experience in at least one
particular aspect of providing Camp Services and In-Home Services. We may change or
substitute trainers as necessary and may delegate our duties and share our responsibilities
with regard to training.
You are responsible for making sure that your Personnel are properly trained to
our standards and requirements. The Initial Camp Services Training must be completed to
our satisfaction. Failure to complete the Initial Camp Services Training to our satisfaction and
begin providing Camp Services by the Operations Deadline may, at our option, result in the
termination of your Franchise Agreement. We will provide Initial Camp Services Training to any
Personnel for $100 per day for each person that you cause or we require to participate in
or retake the Initial Camp Services Training. You also must comply with our training
requirements, at your expense, at the midpoint of the initial term of your Franchise Agreement
(5 years) and upon renewal of your C B W Franchise.
6.
We will design and provide you with one web page for the promotion of the
C B W Franchise which will be hosted on our website. We will be the web master, either
directly or through a third party, and have sole discretion and control over all web pages. We
will review and execute, subject to our approval, changes you request to the webpage we
create for you. You are not permitted to maintain an individual website related to your C B W
Franchise, including social networking pages or sites, without our prior written approval.
(Section 6.2(h) of the Franchise Agreement).
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S^S^ectiooAss^anoe
1.
Before e x e o ^ o g a o y A o q u ^ ^
the opportuoify fo review and approve both the Camp Site and the Aoquisifion Dooumenfs
porsoaof fo information you must provide We oonsider faofors iike area demographios,
population, market oonditions, zoning requirements, aooess and exits to and from the proposed
CampSite, oompetitor aotivity and proximity, finanoiai viability of the proposed Aoquisltlon
Documents, oonstruotion terms, traffic patterns of the area as well as sl^e, parking and
other physical characteristics of the proposed Camp Site, in evaluating each proposed Camp
Site. If you or your affiliate will ownthe property on whlchyour Camp Site willbelocated, we
will have the rightof first refusal and option topurchase It. You m u s t d e l l v e r a c o p y o f t h e
signed L e a s e a n d Addendum to Lease, or purchase documentsand Rightof First Refusal
Agreement and Option Agreement and Leaseback Agreement to us simultaneous with
execution of Franchise Agreement. You mustalso agreethat you will not sign oragree to
any modification of the Lease, Lease Addendum, Leaseback Agreement, Right of First Refusal
and Option Agreement or anyotherAcquisltion Documents without our prior written approval.
We h a v e l ^ d a y s from receipt of the Acquisition Document for the proposed Camp Site to either
approve or deny the site. Ifyou do not recelvearesponsewlthinl^days,the proposed Camp Site
should be deemed to be denied I f w e d o n o t a p p r o v e a proposed (oralternate)slteforthe
Camp Site,or If the S65day deadline passes,we may^i) extend the deadline,(ii) require you
topaythe Minimum Monthly Royalty until you f i n d a C a m p Site,(ill) modify the License granted
to you by limiting your right to provide Camp Services, or (Iv) terminate the Franchise
Agreement. Our acceptance of anyAcqulsltlon Document Is n o t a promise or guarantee that
your C B W Franchise will be successful or that the actual costs of the Camp Site build out will
not exceed your budget. (Franchise Agreement Section 6.2(c)).
2.
You must obtain all permits, licenses and entitlements necessary to begin
construction and provideCampServicesfrom your Camp Site within ^Odays after executing the
Acquisition Documents You must also comply with all local ordinances and building codes In
the build out of your Camp Site. We will provide you with design and decor specifications that
we require in order to adapt your Camp Site to our standards You must work with one of our
approved architects. Our architect will provide you with two proposed drawings free of charge If
you require more than two drawings, you will be required to pay us $750.00 for each additional
drawing Oncethearchltecturaland working drawings have beendeveloped and approved
by us and, If applicable, the landlord, you must purchase contracting services for the
construction of the Camp Site. We require you to use our designated contractors and suppliers
for the following Items: architectural space plan, construction management, consulting, floorings
signage, fencing, kennels, web cams, wall art, grooming tubs, lobby furniture, dog cots, outdoor
turf,andplay yard equipment. We may designate new or different mandatory contractors or
suppliers for any service or product at any time The costs for fixtures andlmprovements will
vary based on the square footage, location andother physical characteristics of your Camp
Site You aresolely responslbleforensuring thatthe buildoutof your Camp Sitecomplies
with applicable entitlements, ordinances, building codes, permit requirements, and the
Americans with Disabilities Act (Franchise Agreement Sectlons6.2(b), 7.1(c))
Estimated TlmeofOpeninq
We estimate that the typical length of time between the effective date of the Franchise
Agreement and the time you begin to provide the Services is approximately 12 months. Some
factorsthat may affect this timing are your ability to l o c a t e a C a m p Site,the time to acquire
the Camp Site throughLease or purchase negotiations, your ability to secure any necessary
financing, your ability to comply with local zoning, other state and local requirements and any
necessary licenses or permits, the timing of the delivery and Installation of equipment, supplies
C^mp Sow Wow
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and leasehold improvement ao^
possible oonstrootlon delays, a s w e l l as your availability to a t t e n d e e Initial CampServloes
Training, Initial InHomeTralnlng or the OogTralnerCertltloatlonProgram. Failure to provide
the Services by the Operations Deadline may,at our option,result l n : ^ y o u r obligation to pa
the Minimum Monthly Royalty tor that Service; (II) the termination otthe license to provided
Services; or (III) the termination ot your Franchise Agreement.
FostOoenlno Assistance
Atter opening, we or our representatives will provide you with the following post-opening
assistance:
1
Makearepresentatlve reasonably available to speak with you on the telephone
or via e-mail during normal business hours, as we determine to be necessary to discuss your
operational, marketing, and financial Issues. (Section 6.3(a) otthe Franchise Agreement).
2.
Furnish guidance to you on: (1) methods, specifications, standards,
management and operating procedures used In your OBW Franchise; (2) approved equipment,
products, materials and supplies, fixtures, furnishings and signs; and (3) developing and
Implementing local advertising and promotional programs We will provide this guidance
through the Operations Manuals, which may be communicated through our IntranetSystems,
email, letter correspondence, weblnars, bulletins, O^BOs, written materials, reports and
recommendations, refresher training programs or telephonic consultations at our offices,
through technological means, or at your Oamp Site. (Sections 6.3(b) and (e) of the
Franchise Agreement).
3.
Maintain an Advertising Fund (defined below) for the promotion of all OBW
Services under the OBW Franchise by using the funds collected to develop promotional
and advertlslngprograms and to maintain and develop our website (Section 6.3(d) of the
Franchise Agreement)
^
We may, but are not obligated to, develop and design new Approved
Products and Services for OOW Franchises, Including customer Incentive programs and
private label products like pet food, toys and accessories to be offeredunder the Marks or
any other marks we designate. You must Implement, offerand sell any n e w e r modified
Approved Product orServlce we require (Franchise Agreement 6.3(c)).
5
A representative of ours may visit your OBW Franchise and provide
consulting assistance. You may also request that we send a representative to provide
additional assistance If we provide additional assistance at your request,we must agree In
advanceon the charges you will pay,If any,and the length of the vIslt.The estimated range
of charges for the additional assistance Is $100 $2,000 plus travel, living and personal
expenses The estimated range of travel, living and personal expenses are $50^2,000.
(Franchise Agreement Section 6.3(e)).
6
You must begin to provide In Home Services, Including pet walking, pet
sitting, and I n h o m e p e t c a r e a t t h e t l m e y o u begin toprovldeOampServlces. (Franchise
Agreement Section 7.1(d)-(f)). Before providing InHomeServlces, you oryourdeslgnated
Personnel must complete the initial InHomeTralnlng^ to our satisfaction The Initial In-Ho
Training program lasts approximately 30 hours.The first 5 hours conslstsof home study
using the Initial In HomeTralnlngHome Study Materials The final 25 hours consists of onsltetralnlng In Broomfield, Colorado,or any other location designated hy us.
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INITIAL IN-HOME TRAINING P R O G R A M
Hours Of
Classroom
Training
Hours of On the J o b
Training
Business Development and
Analytics
5
0
Marketing
5
0
Broomfield, C O
Technology
4
0
Broomfield, C O
Financial
2
0
Broomfield, C O
General Business
3
0
Broomfield, C O
Daily Operations
11
0
Broomfield, C O
30
0
Subject
Total
Location
Via the Internet and your
computer
The principal instructional materials are the Operations Manual. The Initial In-Home
Services Training and other on-going training will be conducted by trainers under the direction
of Franchise Relations Manager, Brook Brown, who has over 15 years' experience developing
and administering learning programs for franchise and corporate environments. In addition
to Ms. Brown, the following people assist in all trainings: Director of Buddies Brands, Laura
Roach, who joined our team in November 2011; Director of Operational Compliance, Melanie
Moon, who joined our team in May 2011; and Director of Business Analytics, Damien D'Emic,
who joined our team in March 2012. Our training instructors have all had an average
experience of at least two years of experience in at least one particular aspect of
providing In-Home Services. We may change or substitute trainers as necessary and we may
delegate our duties and share our responsibilities with regard to training.
You are responsible for making sure that your Personnel are properly trained to
our standards and requirements. Failure to complete In-Home Training to our satisfaction
and begin providing In-Home Services at the time you begin to provide Camp Services may,
at our option, result in: (i) your obligation to pay the Minimum Monthly Royalty for In-Home
Services;
(ii) the termination of the license to provide In-Home Services; or (iii) the termination of
your Franchise Agreement. We will provide In-Home Services training to any Personnel for
$100 per day for each person that you cause or we require to participate in or retake the
Initial In-Home Training.
7.
Within between 30 to 90 days before the Operations Deadline, you or
your designated Personnel must successfully complete our Dog Trainer Certification
Program and begin providing Dog Training Services. (Section 7.1(f) of the Franchise
Agreement). The Dog Trainer Certification Program is $5,000 per person. Only Personnel that
have completed the Dog Trainer Certification Program to our satisfaction may provide Dog
Training Services. The Dog Trainer Certification Program lasts approximately 110 hours. The
first 3 hours consists of at home preparation work that must be completed by Personnel
before attending the Dog Trainer Certification Program. Of the remaining 107 hours, 62
hours will include classroom instruction and 45 will include hands-on training. The
classroom training will be held at our offices in Broomfield, Colorado. The hands-on training
will be conducted both at our offices in Broomfield, Colorado and off-site locations within the
Denver, Colorado area.
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DOG TRAINER CERTIFICATION P R O G R A M
Hours Of
Classroom
Training
Hours of On the J o b
Training
Business Development and
Analytics
3
0
Via Internet and your
computer
Behavior Modification
Techniques
2
0
Broomfield, C O and OffSite Training Locations
8
30
Broomfield, C O and OffSite Training Locations
Play Yard Management
5
5
Broomfield, C O and OffSite Training Locations
Dog Training Theory (dog
training philosophy, psychology,
and conditioning)
23
0
Broomfield, C O
Student Teaching, Observation
and Critique
0
10
Dog Training Business
Operations (marketing, finances,
sales, technology, etc.)
21
0
Broomfield, C O
Questions and Answers
3
0
Broomfield, C O
Total
65
45
Subject
Basic Dog Obedience Training
Techniques
Location
Broomfield, C O
The principal instructional materials are the "Behavior Buddies® Dog Training Program
Manual," which is part of the Operations Manuals. The Dog Trainer Certification Program will
be conducted by Nick Fisher, Director of Camp Behavior, and Laura Roach, Director of Buddies
Brands. Mr. Fisher has been in the animal welfare profession for 25 years and has been
training and rehabilitating dogs for more than 8 years. Mr. Fisher joined us in May 2013. Ms.
Roach is a C P D T - K A and has been an obedience instructor for 5 years. She joined us in
November 2011.
You are responsible for making sure that your Personnel are properly trained to our
standards and requirements. If the employment of your Personnel who completed the Dog
Trainer Certification Program ends, you must cease to provide any dog training services. You
must cause another one of your Personnel to successfully complete our Dog Trainer Certification
Program before you continue providing Dog Training Services. You will be charged the thencurrent fees for each of your Personnel to be trained, and the costs for airfare, ground
transportation, lodging, meals and the Personnel's salary and benefits must be paid by you.
Failure to complete the Dog Trainer Certification Program to our satisfaction and begin providing
Dog Training Services by the Operations Deadline, may, at our option, result in: (i) your
obligation to pay the Minimum Monthly Royalty for Dog Training Services; (ii) the termination of
the license to provide Dog Training Services; or (iii) the termination of your Franchise
Agreement.
Camp Bow Wow - 2014 FDD
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Local Advertising
Starting the month you hegin operations and during each month o t t h e term o t t h e
Franchise Agreement, you must spend $2,500 monthly on marketing, promoting, and
advertising your C B W Franchise in your Authorised Territory (the "Local Advertising
Expensed, (Franchise Agreement Section 10.2) We must approve all advertising materials
hetoreuse. It we do not approve advertisingmaterialsyoucreate within 14 days, they will he
deemed disapproved. You may not advertise outside your Authori^edTerritory without our prior
approval (Franchise Agreement Section 10 4) You must provide monthly reports to us
showing the application otyour Local Advertising Expense (Franchise Agreement Section
10 3) The Local Advertising Expense is not applied to the Camp Launch Advertising or
marketing hudget. All o r a portion otthe Local Advertising Expense may he paid directly to
us, our designated advertising agency or third party media outlet. You must spend the
amounts explained ahove on the Local AdvertisingExpense regardless otthe amounts that
other franchisees may spend.
We may estahllsharegional advertising cooperative ("Regional Advertising Coop") In
an advertising market once we helieve there areenough C B W Franchisesoperating in the
market to providea critical mass tor joint advertising and promotion We will determine the
houndarlesotthe Regional Advertising C o o p a n d may modify thehoundaries at any time
effective upon written notice to you We may require that one Regional Advertising Co-op
merge with another Regional Advertising Co op servicing an adjacent advertising market or we
maysuhdividea Regional AdvertisingCooplnto smaller groupings depending on changes in
media penetration and marketing ^ones that traditional media use. (Franchise Agreement
Section 105)
If established, you must direct your Local Advertising Expense to your Regional
Advertising Co op We will not assign you to more than one Regional Advertising Co-op at any
time If one of our principals or an Affiliate of ours owns a C B W Franchise in a Regional
Advertising Co op's market, we or our Affiliate will participate on the same hasis as you do and
contribute to the Regional Advertising Co op at the same rate that our franchisees in that region
contribute Your cooperative advertising fees payable to the Regional AdvertislngCoop will
not exceed 3 ^ of Cross Revenues u n l e s s 6 5 ^ o f t h e ownersof C B W Franchises in your
Regional Advertising Co op approve an Increase or special assessment, in which case you will
be bound by the super-majority decision even if you vote against it As we note above, we will
credit all payments that y o u m a k e t o a R e g i o n a l Advertising C o o p to your Local Advertising
Expense requirement
We will provide each Regional Advertising Co op with standard governing rules that the
members of the Regional Advertising Co op may modify with our prior written approval.
Members may not modify certainrules, like voting rights,our right to approve all advertising in
advance, or your maximum obligation for contributions to the Regional Advertising Co-op. The
members of each Regional Advertising Co op will elect their own leadership and each Regional
Advertising Co op is responsible for Its own administrative expenses The Regional Advertising
Co-op must assign any rights in the materials that it creates to us without compensation so that
we and our other franchisees may use the same materials. EachRegional Advertising Co-op
must prepare monthly andannual financial statements, which do not need to be audited, and
make them available to all Regional Advertising C o o p members and to us We may dissolvea
Regional Advertising Co op, but only if we decide to dissolve all Regional Advertising Co ops at
the same time. For example, we may decide to centralize all group advertising activities in the
Advertising Fund
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No R e g i o n Adverting C o ^ ^
Yoo must e x o l o s ^ y o s e o o r r e ^
^se ot an additional or alternative vendor, written approval rn^st be obtained trom the
appropnateTeam OOO memberandm^st be revested a o o o r d ^
revesting a new vendor. Yoo will be r e t i r e d to pay a $ 5 0 0 t e e t o ^ s t o investigate and
consider eaoh vendor yo^ propose.
Oamo Launch Advertisino
From the elective date otthe Franchise Agreement through to the day yo^ begin
operations, we r e t i r e that yo^ spend $25,OOO on the advertising and marketing ot yoor OBVV
Franchise. VVe corrently r e t i r e yoo to pay the Oamp Launch Advertising to third party vendors,
hot we may collect the Oamp Laonch Advertising trom yoo In the totore.
The Advertising Fond
We have established an advertising tond tor the common benetlt ot the System
("Advertising Fond") Yoo most pay o s a m a r k e t i n g ^
OrossRevenoes. Yoo most pay the Marketing Fee at the same time that yoo pay yoor Royalty
Fee (on thelOth and 25th day ot each month),as applicable, hased on the amoontotOross
Revenoes in the previoos month. We are not reqoired to deposit the Marketing Fee in a
separate bank accoont, commercial accoont or savings accoont; however, oor intent is to
separately accoont tor the Marketing Fee. The Advertising Fond will be administered by os, and
wemayoseaprotessionaladvertlsing agencyormedia boyer to assist os. Yoor contribotion to
the Advertising Fond will be in addition to all other advertising tees or expenses set oot in this
Item 11. The Advertising Fond is not aodited separately trom the overall company aodit
(Franchise Agreement Section 10.6).
We have the sole right to determine how to spend contribotions to the Advertising Fond,
or tonds trom any other advertising program, and the sole aothority to determine the selection ot
theadvertisingmaterialsandprograms Flowever,we will makeagoodtaithettort to expend
the tonds in the general best Interests o t t h e System We may reimborse oorselves, oor
aothori^edrepresentatives or oorAttiliates trom the Advertising Fond tor administrative costs,
Independent aodits, reasonable accoonting, bookkeeping, reportingandlegal expenses, taxes
and all other reasonable direct or indirect expenses that may he incorred by os or oor
aothori^ed representatives and associated with the programs tonded hy the Advertising Fond
We assome no other direct or indirect liahility or obligation to collect amoonts doe to the
Advertising Fond or to maintain, direct or administer the Advertising Fond. Any onosed tonds in
any calendar year will beapplied to thetollowingyear's tonds,and wemay contrlhote or loan
additional tonds to the Advertising Fond on any terms we deem reasonable We will make
available to yoo an annoal accoonting tor the Advertising Fond that shows how the Advertising
Fond proceeds have been spent tor the previoos year Yoo may obtain the annoal accoonting
by providing os wlthawrittenreqoest. (Franchise Agreement SectionslO.7,10.Sand1011).
We may ose the Advertising Fond tor the creation, prodoction and placement ot
commercial advertising; agency costs and commissions; creation and prodoctlonot video, aodio
and writtenadvertisements; administering regional advertising programs, direct mail and other
media advertising; website content creation and development; technical maintenance;inhoose
statt assistance andrelated administrative costs; local promotions;sopportingpoblic relations;
market research; and other advertising and marketing activities, Incloding participating
Camp Bow Wow
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shows A d v e r t i s e may he plaoed in l o o a ^ r ^
pnnL internet direotmai^ radio or television. We may aisoose Advertising Fondoontrihotions
to develop and prepare advertising that we distrihote to oor franchisees tor their
the local media. The advertising may he prepared hy os or ootside soorces We are not
reqolred to spend any amoont or percentage on advertising in the area where yoor CBW
Franchise will he located or within yoor Aothori^ed Territory (defined helow) (Franchise
Agreement Section t0.7 and tO.S).
In o o r f i s c a l y e a r e n d i n g O e c e m h e r 3 ^ 2 0 1 ^ A d v e r t i s i n g Fond contrlhotions were spent
as f o l l o w s : 3 1 ^ o n the prodoction of media p l a c e m e n t ; 4 4 ^ o n media placement; 6 ^ on
costomer loyalty programs; and 2 0 ^ on administrative costs of prodoction and media
placement for C B W Franchises. While we donot anticipate that the Advertising F o n d w l l l h e
osed principally for advertising directed toward the solicitation of franchisees, we may ose these
tonds for pohllc relations,general recognition of oor hrand,the creation andmalntenanceofa
wehsite(a portionof which w l l l h e o s e d to explainthe franchise offerlngandsollcit potential
franchisees), and to inclode notations in any advertisement Indicating the franchise opportonity,
incloding "Franchises AvailahleB Neither we nor oor Affiliates receive payments for providing
goods or services to the Advertising Fond, except for reimhorsement of expenses as described
ahove W e h a v e not formedafranchisee advisory cooncil hot may do so in the fotore If we
formafranchisee advisory cooncil,its porpose will he to serve in an advisory capacity to provide
inpot on advertising and marketing policies and the expenditore of the monies in the Advertising
Fond. We may change or dissolve the franchisee advisory cooncil at any time
Yoo most also pay yoor pro rata share of the cost of directory listing advertisement to he
placed hy o s f o r a l l C B W Franchises in the local market area, asdetermined hy os.lf yoo
operate the only C B W Franchise onder the System in the local market area, yoo will he
responsible for toll payment of the directory listing advertising or other hosiness listing, on^
we determine that placement ofadirectorylistingadvertisement or other boslness listings for
the local market area is not economically jostified. Any amoont yoo pay for the directory listings
will apply toward satisfaction ofyoor Local Advertising Expense regoirement.
Ose of logos, Marks and other name Identification materials most be consistent with oor
approved standards Yoo may not ose oor logos, Marks and other name identification materials
on items to be sold or services to be provided withoot oor prior written approval. We most
approve alladvertising materlalsbeforeose. Ifwedonotapproveadvertislng materials yoo
create or propose withint^ days,they will be deemed disapproved.If we approve promotional
itemsthatwlll he soldthrooghyoor C B W Franchise, thoseitemsmost be incloded in yoor
regolar sales and will he sobject to Royalties Fees, Local Advertising Expense and the
Marketing Fee
Internet Activities
B
W e m a y establish and malntainawebsltethat provides Information aboottheSystem
and the Approved Frodocts and Services offered by franchisees and we will have sole
discretion and control over It. We also have the sole rightto create Interior pages on oor
website(s) that contain information aboot yoor C B W Franchise and other franchised and
companyownedlocations. However, w e r e q o l r e y o o to maintalnthe webpage we create for
yoor C B W Franchise oslngatemplate that we provide, at yoor sole expense
We mostalsopre approve yoor ose of linking and framing between yoor web pages and
allother websites. Y o o a r e n o t p e r m l t t e d t o o s e a n y Markln any domain namethat is not
provided or pre-approved by os. W e w i l l o s e r e a s o n a b l e best efforts to revlewyoor regoest
and respond in writing within 1 4 d a y s f r o m the date we receive all Information reqoestedhy
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os Oor f ^ o r e to o o t ^ y o o i n the specked time frame w^ hedeemedadisapproveiotyoor
reqoest.
Oomooter a s t e r n
Yoo most porohase, o r o s e a o o m p o t e r y o o aireadyowo, withoapabiiitiesto ronoor
oorreot point o t s a i e a n d o p e r a t i o o a i software programs, as w e l i a s w e b o a m hardwareaod
rooters withBroadband or OSLaooess to the internet from oor approved soppiiers Yoo most
porohaseor iioeose, and oseeieotroniopointof-saieand operationaisoftwareprogramsthat
meet oorspeoifioations.Theoorrent reqoired systemsareoaiied Power Pet Sitterand Oata
Oawg,hothofwhioh permit os to receive information in reai time oonoemingsaies and inventor
of yoor OBW Franchise, and provide yoo withdetaiiedinformation necessary toprepare yoor
financial statements, incloding sales and inventory information For example, we may
independently accessyoor electronic Information anddatathroogh the electronic point-of-sale
recording system,and collect a n d o s e yoor electronic information and data in any manner we
chooseto promote the development o f t h e System and thesale of franchises. We ose this
information to access sales information, revenoe reports and royalty reports, as well as to monitor
compliance with staffing retirements and hrand retirements, soch as vaccinations and
overhookings T h e r e i s no contractoal limitation on oor rightto receive information throogh
the electronic point-of-sale recording systems. Flowever, we do not have general access to hard
drives or other software that Is Incloded as part of yoor compoter
Yoo most license from oor soppliers the Software and related materials and porchase or
provide the Oompoter System. The estimated cost to porchase hardware for the Oompoter
System ranges from $0 to $10,000 (the $0 estimate assomes yoo own soitahle compoter
hardware capable of ronning mandatory Software when yoo hoy the franchise) The estimated
sohscrlptlon price of the Software is $3,000 annoally. In addition, yoo may have to periodically
maintain, opdate, opgrade or porchase sopport for the Compoter System. The corrent
estimated periodic maintenance, opdate, opgrade or porchase sopport for the Compoter System
is$1,500
W e m a y revise oor specifications at any time and w e m a y c h a n g e software soppllers.
There are no contractoal limitations on yoor ohligations to opgrade yoor compoter system and
pay for those opgradesor changes. Yoo are solely responsihlefor protecting yoorself from
viroses, compoter hackers, and other commonications and compoter-related problems
IntranetSystems
Yoo most regolarlycheck,review and participate in oor Systemwlde compoter network
Intranet Systems, and any other Intranet systems we create in the fotore relating to the System
We may reqoire that y o o o s e t h e l n t r a n e t Systems to:(i)sobmit reports doe to os onder the
Franchise Agreement; (ii) view and print portions o f t h e Operations Manoal; (iii) download
approved local advertising materials; (Iv)commonicate with o s a n d other franchisees; or (v)
participate in training as we determine We will provide access to oor Intranet Systems to yoor
Personnel. Each of yoor Personnel will have different levels of secority and access to the
information contained in thelntranet Systems. Yoo are responsible for the ose of the Intranet
Systems hy yoor Personnel and for compliance by each of yoor Personnel with oor secority and
access policies. If any access Information Is lost or stolen, or employment of any of yoor
Personnel ends, yoo most promptly notify os.
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ITEM^
TERRITORY
Opoo execution of the Franohise Agreement we will designate a geographic area
throoghoot which yoo most otter the Oamp Services, in come Services, and Oog Training
Services (the "Aothori^edTerritory^^
the "Oamp Site and Aothori^ed Territory Selection Addendom^ on Attachment A to the
Franchise Agreement. Ail ot yoor advertising andmarketing most he distrihotedinmedia that
targets the Aothori^edTerritory.
We define each Aothori^ed Territory according to demographic data, incioding
popoiation density and average income, and other characteristics ofthe sorroonding area,
natoraihoondaries, extent of competition and the amoont and si^e of orhan, sohorhan and
rorai areas within the Aothori^ed Territory We do not represent that each franchisees
Aothori^edTerritory w i i i h e t h e s a m e minimomsi^eor popoiation W e m a y adjost or redefine
the Aothori^ed Territory opon the renewal of yoor Franchise Agreement
Each Aothori^ed
Territory generally hasapopolationof175,000 to 225,000,hot coold he more or iess depending
on the demographics and other characteristics of the Aothori^edTerritory.
T h e O a m p S i t e m o s t he sitoated within the Aothori^ed Territory. Yoo mostohtainoor
approval of the Oamp Site and once we have granted approval, yoo cannot move yoor Oamp
Site withoot oor prior written consent. Oor approval o f a n e w location is hased onavariety of
factors, incloding the demographics and other characteristics, Incloding popoiation density,
average income and other characteristics of the sorroonding area, natoralhoondaries, extent of
competition and the amoont and sl^e of orhan, sohorhan and roral areas within the Aothorl^ed
Territory Ooring any period of closore doe to relocation of yoor Oamp Site, yoo most continoe
to pay monthly Marketing Fees, Royalty Fees and the Local Advertising Expense The Royalty
Fees dorlng this period will he the greater of (i) the monthly average of the preceding 12 months
of operationsof y o o r O B W ^ r a n c h i s e , or(li) the Mlnimom Monthly Royalty Oorapproval of
yoor Oamp Site does not goarantee the soccess of yoor OBW Franchise Yoo will not have any
option, right of first refosal or similar rights to acgoire any additional stores, additional
franchises, orterritorieshyvirtoe of signing the Franchise Agreement.
TheAothori^edTerritorv
Yoo receive an Aothorl^ed Territory in which to develop and operate yoor OBW
Franchise. Except as provided helow,doring the term of the Franchise Agreement,we will not
locate, or license to another franchisee the right to locate, a OBW Franchise within the
Aothori^edTerritory.
Flowever, we reserveforoorselves, oor Affiliatesand otherswhom weaothori^e, the
right toengage in certain activities in yoor Aothori^ed Territory. Becaose we reservethese
rights for oorselves, oor Affiliates and others whom we aothorl^e, yoo will not receive an
exclosive territory These reserved rights Inclode:
(i)
the right to ose, license and franchise the ose of different trademarks or
services markotherthanthe Marks, at any location whether in the Aothori^edTerrltory or In
alternative channels of distrihotlon, in association with operations that are the same as, similar
to,or different than the Oamp Services,In-Home Services or OogTraining Services;
(Ii)
the rightto ose Marks and System to sell Approved Frodocts and
Services throoghother channels of distrlhotioninclodingthelnternet, wholesale distrihotlon^
mall order catalogoe, direct marketing, co^hrandingandother arrangements at any location
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coding
the A o t h o n ^
to,ord^ereottheotheCam^
^
the right tor os and oordesigneesto o s e t h e Merksand System tor
advertising and promotional e t ^
on wehsites, linking, and throogh sooiai media ootiets, regardless ot location;
(iv)
it we aoqoire, or are aoqolred hy, another system that operates
hoslnesses or otters franchises that are the same as or similar to C B W Franchises which are
located within the Aothori^ed Territory, the right to establish, acgolre, operate or license
hosiness concepts onder the newly acqoired or merged system or trademarks, regardless ot
their proximity to yoor Aothorl^edTerritory or their actoal or threatened impact on yoor C B W
Franchise;
(v)
the right to limit the scope o t t h e License tor Camp Services, In
Flome Services or Oog Training Services it yoo do not comply with yoor development
ohligations, or are In detaolt otthe Franchise Agreement and haye not cored;
(vl)
the right to establish and operate, or license any other person the right
to establish and o p e r a t e , a C B W boslness at any otthe following "NonTraditional Locations":
sporting stadiomor similar sports venoe, hotel or resort, amosementparkor other toorlst
attraction, casino, corporate campos, hospital or other healthcare or veterinary facility, colleg
oniversity or other edocational facility, airport or poblic transportation facility located i^^^
ootside the Aothori^edTerrltory,althoogh If the NonTraditional Location agrees to c o n s ^ ^
granting rightstoestahlish and o p e r a t e a C B W b o s i n e s s t o y o o , a s a f r a n c h i s e e , r a t h e r than
operate the location themselves (directly or indirectly throogh some typeof management
company) or have os or an Affiliate operate it asacompanyowned location,we will grant yoo
a30-day right of first negotiation to acgoire the rights to the Non-Traditional Location If the
Non Tradltional Location elects not to offer yoo the right as a franchisee (we have no
obligation or doty to make them offer yoo the right) or yoo do not reach an agreement doring
the 30 day negotiation period, we or an Affiliate have the right to establish and operate the
boslness at the Non Traditional Location or the Non Traditional Location will establish
operate the boslness itself(directly or indirectly); and
(vil)
the right to engage in any activities not expressly prohibited hy the
Franchise Agreement
Yoo may facecompetitionfrom other franchisees, from ootlets that we own, or from
otherchannels of distrihotlon orcompetitlvebrandsthatwe control For example,^CA may
operateormanageanimal hospitals located within the Aothori^edTerritory that offer dog hoarding
services which may or may not otili^e the Marks.
We haveno doty t o p a y yoo any compensationon accoont of hosiness that we, oor
Affiliates, o r o o r licensees condoct within yoor Aothori^ed Territory porsoanttooor reserved
rights
Yoo acknowledge that (i) yoo may compete with other Camp Sites, other C B W
Franchises,and other Flome Boddies Franchlseswhich are now, or which may in thefotore
be, located i n , near or adjacent to yoor Aothori^ed Territory, and (11) these Camp Sites,
CBWFranchlses or Home Boddies Franchises may beowned by os,third parties,or both.
If yoo c h o o s e a Camp Site within an Aothori^edTerrltory thatcontalnsa pre-existing
Home Boddies Franchise, the grant of the C B W Franchise to yoo will not inclode the right to ose
thewordordeslgn Marks: "Home Boddies by Camp Bow Wow®,""HomeBoddles Cams® or
any other marks we may specifically designate for the Home Boddies Franchise system In the
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future. You and the pre-existing Home Buddies Franchise will both have the right to use the
"Behavior Buddies®" Mark.
Your rights to the Authorized Territory as a Franchisee are contingent on achieving
minimum Gross Revenues 7 months after you begin Camp Service operations. If, during any
four months in any 12 consecutive month period, your Gross Revenues do not amount to a level
where you are paying a Royalty Fee equal to or greater than the Minimum Monthly Royalty, we
may (a) impose additional mandatory marketing and training programs to be paid for by you, or
(b) terminate the Franchise Agreement upon notice and opportunity to cure.
Outside of your Authorized Territory, we may use, and license others the right to use, the
Marks and System for the operation of a C B W Franchise anywhere regardless of proximity to
your Authorized Territory and for any other purposes in our discretion.
ITEM 13.
TRADEMARKS
The Franchise Agreement grants you the nonexclusive license and right to use the
Marks that we designate for the System. You must indicate, as explained in the Franchise
Agreement and specified in the Operations Manuals, that you are an independent operator of
the C B W Franchise and you will use only the appropriate and authorized Marks as indicated by
us.
We are the current owner of the Marks and certain other intellectual property, and we
have registered and filed all the required affidavits for the following principal Marks with the
United States Patent and Trademark Office ("USPTO") on the Principal Register:
Mark
Registration Number
Registration Date
A D O G G O N E G O O D TIME
4,141,449
May 15, 2012
A D O G G O N E G O O D TIME
4,141,449
May 15, 2012
3,090,970
May 9, 2006
BEHAVIOR BUDDIES
4,378,499
August 6, 2013
CAMP BOW WOW
2,954,646
May 24, 2005
CAMP B O W W O W
3,364,523
January 8, 2008
C A M P BOW W O W A D O G G O N E G O O D TIME
(and design)
4,188,751
August 14, 2012
HOME BUDDIES BY C A M P B O W W O W
3,681,382
September 8, 2009
3,718,220
December 1, 2009
PREMIER D O G G Y DAY A N D OVERNIGHT C A M P
3,229,856
April 17, 2007
WHERE A DOG CAN BE A DOG.
3,260,511
July 10, 2007
A L L DAY P L A Y S N O O Z E THE NIGHT A W A Y
HOME BUDDIES BY C A M P B O W W O W (and
design)
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WHERE A DOG CAN BE A DOG.
3,260,512
July 10, 2007
W H E R E A D O G C A N B E A DOG.
3,274,782
August 7, 2007
We also have the following pending trademark applications on file with the USPTO
and all Marks below are our principal Marks. Since we do not have federal registration for the
following trademarks, they do not have as many legal benefits and rights as a federally
registered trademark. If our rights to use these trademarks are challenged, you may have to
change to an alternative trademark, which may increase your expenses.
Mark
Serial Number
Application Date
BEHAVIOR BUDDIES BY C A M P B O W W O W
PREMIER D O G TRAINING (and design)
85/598,855
April 16, 2012
H A P P Y HEALTHY PETS, H A P P Y HEALTHY
P E O P L E BY C A M P B O W W O W
86/141,214
December 11, 2013
SCOUT'S CAMP CORRAL
85/969,847
June 25, 2013
85/669,359
July 5, 2012
85/882,158
March 21, 2013
T R A D E D R E S S (design only)
W H E R E Y O U R P E T S C A N S T A Y H A P P Y AT HOME!
We also own and claim common law trademark rights in the trade dress used in our
Camp Site facilities' design and operations, as well as our vehicle design and operations for
Home Buddies Franchises. Our trade dress is distinctive, non-functional and protectable. Our
common law trademark rights and trade dress are also included as part of the Marks. At the
time of this disclosure, we also have a pending federal trademark registration application for our
trade dress.
If you purchase an Authorized Territory where there is a pre-existing Home Buddies
Franchise, the grant of a Camp franchise to you will not include the right to use the following
word or design Marks: "Home Buddies by Camp Bow Wow®," "Home Buddies Cams®" or any
other marks we may specifically designate for the Home Buddies Franchise system. You, and
the pre-existing Home Buddies Franchise, will both have the non-exclusive right to use the "All
Day Play Snooze the Night Away®," "Digs! For Dogs®," "401 K-9®," "Bark 'n Ride®,"
"Behavior Buddies®," and "Woof n Wash®" Marks along with any other marks we may
designate for C B W Franchises, Home Buddies Franchises and their related systems.
You must adhere to our rules and guidelines when you use our Marks. You may not use
any of the Marks alone or with modifying words, designs or symbols, as part of a corporate or
business name or in any form on the Internet, including URLs, domain names, e-mail
addresses, locators, links, metatags or search techniques, except as we license to you. You
must not use any of our Marks, or portions or derivatives of them in the registration of the name
of any entity. Guidelines regarding proper trademark use and notices are in the Operations
Manuals and will be updated periodically. You may not use our Marks with an unauthorized
product or service, or in a manner not authorized in writing by us.
By signing the Franchise Agreement you agree that we own or have the rights to all rights
and title in the Marks and that if you use them in an unauthorized manner that use will be an
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49
i ^ n g e m e o t o f o u r r i g ^ i n a o d t o ^ e M a ^ Y o o a ^ o a g ^ ^ y o o r ose of the Marks
speoifioe^y identified in yoor Freoohise Agreement and any goodw^^^
be to oor
exoiosive benefit Yoo agree to operate yoor COW Franchise in strict o o m p i i a n o e ^ oor high
standards and to comply strictly with aii of oor mandatory specifications, standards and operating
procedores for C B W Franchises, as applicable, that we may change periodically.
Except as we explain in this Item 1S, there are no corrently effective material
determinations of the U S F T C , the Trademark Trial and Appeal Board, the trademark
administrator of any state or any coort, any pending infringement, or cancellation proceedings or
any pending material litigation Involving any of oor Marks that are relevant to the ose of these
Marks There Is no pending material federal or state coort litigation regarding oor ose or
ownership rights in any of oor principal Marks
However,we are aware of similar bosinesses operating onder names similar to oors and
with rights that may or may not be superior to oors in ChioandTexas InMay 200^,we entered
IntoaTrademark Coexistence Agreement,withCECFntertainmentConcepts,LF.,the owner
of the mark " W h e r e a ^ l d can b e a ^ i d B U n d e r the terms of that agreement, we agreed not to
ose oor Mark " W h e r e a O o g can b e a O o g ^ o n certain prodocts and to not distribote these
prodocts throogh oor Camps We know of nosoperior prior rights or Infringing o s e s t h a t w e
believe coold materially affect yoor ose of oor principal trademarks in the state where yoor
franchised boslness will be located.
Yoo most immediately notify os of any potential infringement or challenge to yoor ose of
any Mark, trade dress or oor other Intellectoal property We will take the action that we deem
appropriate or necessary to protect the onaothorlzed ose of oor Marks, trade dress or oor other
Intellectoal property. Yoo agree not to commonicate with any person other than os or oor
attorneys as directed In any claim or challenge. Yoo most folly cooperate in oor defense of any
action for the M a r k s o r o t h e r Intellectoal property, sign any instruments and docoments, and
other actions that may be necessary or helpfol to protect and maintain oor interests. The cost of
d e f e n s e f o r a c l a i m o r c h a l l e n g e w l l l b e p a l d b y o s , h o w e v e r , if the claim or challenge is caused
by yoor wrongfol acts or if yoo ose the Marks i n a m a n n e r inconsistent with oor standards and
specifications, yoomost indemnify os for any damages we incor,incloding all of oor attorneys,
experts or other fees.
Yoo most modify ordiscontinoethe o s e o f a Mark, atyoorexpense, if we modify or
discontinoeitsose. In addition, if we d i s c o n t i n o e t h e o s e o f a M a r k due to oor determination
thatathird party has soperior rights to the Mark, we will not have any ohligation to reimhorse
yoo for any expenditore yoo may have for any discontlnoance, modification, sobstitution, losses
or damages y o o m a y claim; however, we will reimborse yoo for thehard costs of changes to
yoor signage, letterhead, hosiness cards and other similar items.
Yoo shoold onderstandthattherecoold be other hoslnessesosingtrademarks,trade
names, or other commercial symbols similar to oor Marks with soperior rights to oor rights.
Before opening yoor CBW Franchise, yoo should research this possihility, using telephone
directories, trade directories, Internet directories, or otherwise in order to avoid the possibility of
having to change your CBWFranchlse name
ITEM^
FATE^T^COPYR^T^A^OPROPRIETARY^FORMAT^
The information contained in the Operations Manuals, like theTrail Guide and Marketing
Guide, is proprietary, protected a s a t r a d e secret and, although we have not registered it with
Camp Bow Wow
US^7^0706
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^0
^eOn^S^sCopyrig^O^
w e h a v e ^ ^ ^ e d t h e ^ ^
in the Marks, the layoot and content of our adverting mat^^^
ose, as well as the content end format ot any other writings, pictorial w o ^
well as any other works of authorship are protected by copyright and other iaws.We have filed
for federal copyright registration for hoth our corporate wehsite and the version of the website
eligible for use by franchisees However, you are only granted the right to use the version oft^^
website specific toyour C B W Franchise. We grant you the nonexclusive license andright to
use the above-described proprietary and copyrighted information (collectively, "Copyright
Works") solely for use for the operation of the C B W Franchise, but these copyrights remain our
sole property.
There are currently no effective determinations of the Onlted States Copyright Office or
any court regarding any Copyrighted Works of ours, nor are any proceedings pending, nor are
there any currently effective agreements between us and third parties pertaining to the
Copyrighted Works that will or may significantly limit your use of our Copyrighted Works. We
are not obligated under the Franchise Agreement or otherwise to protect or defend our
copyrights We have registered the following copyrighted works with the United States C o p y r ^
Office:
Title
Registration Number
Registration Date
CAMP BOW W O W LOGO
W O O D E N MEDALLION
{Sculpture/3-D Art Work)
V A 1-752-006
December 8, 2010
UNTITLED (Camp Bow Wow
Website) (Literary Work)
TX 7-653-691
January 8, 2013
CAMP BOW WOW PROTOTYPE
DESIGN A & B (Architectural Work)
VA 1-134-014
March 8, 2013
We have filed for registration of the following works with the United States Copyright
Office:
Copyright
Service Request No.
Date Filed
Untitled (Camp Bow Wow Website [Franchisee
Pages])(Literary Work)
1-874653048
January 8, 2013
Dogs Get Nervous Too: A Book About Dog Bite
Prevention
1-1018330041
November 7, 2013
We have registered the following patented works with the United States Patent and
Trademark Office, all of which are protected for 14 years from the date of registration:
Camp Bow Wow - 2014 F D D
US.53755407.06
Patent
Registration No.
Date Registered
Kennel Gate (Log Cabin Design)
0692,621 S
October 29, 2013
Kennel Gate (Picket Fence Design)
0696,473 S
December 24, 2013
Header for a Kennel Gate (Tree Design)
D703,391 S
April 22, 2014
We have filed patent applications for the following works with the United States Patent and
Trademark Office, all of which remain pending as of the date of this document:
Patent
Serial No.
Date Filed
Dynamic Kennel Systems and Methods (Nonprovisional)
13/735,248
January 7, 2013
29/468,352
September 30, 2013
Design for a Kennel Gate
Our Copyright Works, confidential information, trade secrets, other intellectual property
and equipment subject to pending patent applications (collectively, "Intellectual Property") are
our property to be used by you only as described in the Franchise Agreement and Operations
Manuals. You must add, modify or discontinue the use of the Intellectual Property if we instruct
you to do so. We do not have any obligation to reimburse you for any expenditure you may
incur for the discontinuance, modification or substitution of any equipment or otherwise. You
must maintain the confidentiality of our confidential information and trade secrets and adopt
reasonable procedures to prevent unauthorized disclosure of our trade secrets and confidential
information, including the obligation to require that all of your Personnel execute our
nondisclosure and non-competition form.
You must notify us within 3 days after you learn about another's use of language, visual
image or design, or a recording of any kind, that you believe to be identical or substantially
similar to any of our Intellectual Property. You must also notify us within 3 days if someone
challenges your use of our Intellectual Property. We will take whatever action we deem
appropriate to protect our rights in and to the Intellectual Property, which may include payment
of reasonable costs associated with the action. However, we are not required to take affirmative
action in response to any apparent infringement of or challenge to your use of any of our
Intellectual Property or claim by any person of any rights in any of the same. You must not
directly or indirectly contest our rights to any of our Intellectual Property. You may not
communicate in any infringement, challenge or claim with anyone except us, and our counsel.
We will take action we deem appropriate regarding any infringement, challenge or claim, and
the sole right to control exclusively any litigation or other proceeding arising out of any
infringement, challenge or claim under any Intellectual Property. You must sign all instruments
and documents, give the assistance, and do things that may, in the opinion of our counsel, be
necessary to protect and maintain our interests in any litigation or proceeding or to protect and
maintain our interests in the Intellectual Property.
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52
Yoo most dispose to o s ^ i d e a ^ t e ^
and operation otthe CBW Franohisee
term otthe Franchise Agreement. Yoo most grant to os and agree to obtain trom yoor ow^
orFersonneiaperpetoai,exoiosive, royalty tree and worldwide right to ose ideas, teohniqoes
and prodocts concerning the development and operation otyoor CBWFranchlse that yoo or
yoor Fersonnelconceiveordevelopdoring theterm otthe Franchise Agreement In all petrelated prodoct and service businesses that yoo operate. We will have no ohligation to
compensateyoo Inany way tor any idea, concept, method, technigoe or prodoct. Yoo most
agree that yoo will not ose, nor will yoo allow any other person or entity to ose any ot these
Ideas, technigoes or prodocts withoot obtaining oor prior written approval
iTEMI^
O^OAT^TOPAR^CIFATE
^ T H E A C T O A ^ O P E R A T E OFTHE F R A ^ C ^ E O B O ^ E ^
Under the Franchise Agreement, yoo, or yoor Majority Owner, are not obligated to
participate personally In the direct operation ot yoor CBW Franchise, however, yoo are at all
times responsible tor the operations ottheCBW Franchise Yoor Manager may manage the
dayDtoday operations otthe CBW Franchise. The Manager Isnot required to own aneqoity
interest in the franchisee entity^however,the Manager most complete the Initial Camp Services
Training, InHome ServlcesTralnlngand all ongoing tralningprograms to oor satistaction Yoo,
yoor Majority Owner or Manager, most devote toll time and best efforts to the management and
operation ofthe CBW Franchise and most soccessfolly complete oor Initial Camp Services
Training and Initial InHomeTrainingby demonstrating to os appropriate levels of competence
in the sohject matters taoght in these training programs. If yoor Manager's employment Is
terminated, yoo most designate a new Manager who most soccessfolly complete oor Initial
Camp ServicesTraining and InitiallnHomeTrainingwithln 90 days after the termination of the
preceding Manager, onlesswedo not hold InitialCamp ServicesTraining or Initial InHome
Training doring that 90day period, in whichcasethereplacement Manager most attendand
soccessfolly complete the first available training programs
At all times,yoo most keeposadvisedof the identity of yoor Manager Wemaydeal
with the Manager on the daytoday operations of, and reporting regoirementsfor, the CBW
Franchise. Yoomost hire all Personnel of yoor CBW Franchise and are solely responsible for
the terms of their work, training,compensation management and oversight. Weregoireyoo to
obtain confidentiality, noncompete, and exclosivity agreements, in theform approved by os,
from yoor Personnel, incloding yoo and yoor Manager
If yooareabosiness entity, weregolrethateachof yoor officers, directors, partners,
shareholders or members(and,if yoo are anindividoal, immediate family members^^provlde
os with financial information that we may reasonably reqolre, and (ii^ execote oor standard
Ooaranty and Assomption of Franchisee's Obligations and oor l^londisclosore and
noncompetition Agreement (Seeoor^Ooarantyand Assomptionof Franchisee'sObllgations"
which IsAttachmentBtotheFranchiseAgreement, and oor "^ondisclosore and noncompetition
Agreement^which is AttachmentFto the Franchise Agreement.
In signing the Franchise Agreement, yoo acknowledge that the risks, financial and
otherwise, which are inherent with the beginning of any new boslness, are yoors alone. We, as
a matter of policy, will not assist yoo in any decision making process that may affect the
operations of yoor CBW Franchise.The soccess or failure of the CBW Franchise asabosiness
enterprise is dependent on yoor efforts. The porchase ofafranchise shoold not be considered
Camp Bow Wow 2 0 t 4 F O O
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by anyone who is unfamiliar with standard business practices or is unwilling to accept the
responsibilities associated with running a business.
ITEM 16.
RESTRICTIONS ON WHAT THE FRANCHISEE MAY S E L L
You must keep your C B W Franchise open and in normal operation for the minimum
hours and days we may specify in the Operations Manuals. You must refrain from using or
permitting the use of your C B W Franchise for any other purpose or activity at any time, including
the offering of collateral services, without first obtaining our written consent.
You must sell or offer to sell all of the required Approved Products and Services
specified by us, which may be changed from time to time. However, if a particular Approved
Product or Service does not sell well in your Authorized Territory, you may request that you no
longer be obligated to provide the Approved Products or Services. We will respond to your
request within 30 days from the date the request is received. We may deny your request.
You must sell or offer for sale only those Approved Products and Services which are
authorized by us and which meet our standards and specifications. You must follow our
policies, procedures, methods, and techniques. You must sell or offer for sale all types of
Approved Products and Services specified by us. We may change or add to our required
Approved Products and Services at any time, upon prior notice to you. You must discontinue
selling and offering for sale any services or products which we may disapprove in writing at any
time.
Approved Products and Services currently include but are not limited to: (i) Camp
Services; (ii) In-Home Services; (iii) Dog Training Services; (iv) retail sale of pet food and
other products; and (v) assorted other pet-related services and products authorized by us and
specified in the Operations Manuals, which may be updated from time to time. You must begin
offering all Approved Products and Services at the time you begin to provide Camp Services. Our
System has changed over time and our franchisees that have been in the System for a longer
period of time may not have the same license granted to you under the Franchise Agreement.
Accordingly, these franchisees may not be required to provide In-Home Services or Dog Training
Services as you will be required to do under your Franchise Agreement.
ITEM 17.
R E N E W A L , TERMINATION, T R A N S F E R AND DISPUTE RESOLUTION
These tables list important provisions of the franchise and related agreements. You should
read these provisions in the agreements attached to this Disclosure Document.
THE FRANCHISE RELATIONSHIP
Column 1
Provision
a Length of the
franchise term
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Column 3
Summary
Column 2
Section
§2.1
Initial term of Franchise Agreement is 10 years.
54
Column 1
Provision
Column 2
Section
b. Renewal or
extension of the term.
§§2.1,2.2
Franchisees may renew for two additional 10-year terms if certain renewal
conditions are satisfied.
c. Requirements for
franchisee to renew or
extend
§§2.1,2.2
Sign a new and then current Franchise Agreement within 30 days of receipt,
sign a release and new personal guaranty, provide us proof that you have
the right to continue providing all Services from the Camp Site or have found
an alternative location, refurbish the C B W Franchise and Camp Site if
required, take any renewal training courses we require, provide us with at
least 6 months and no more than 9 months prior notice of intent to renew,
satisfy all payment obligations, including the renewal fee, provide us with
requested financial information. You must be in substantial compliance with
the Franchise Agreement during the initial term and not in default at the time
of renewal. We must be offering franchises in the state in which your
Authorized Territory is located at the time of renewal.
Column 3
Summary
The new franchise agreement may contain terms and conditions materially
different from those in your previous franchise agreement, like different fee
requirements and territorial rights.
d. Termination by
Franchisee
§ 16.15
e. Termination by
Franchisor without
cause.
None
f.
Termination by
Franchisor with cause.
16.1, 16.2,
16.3
g. "Cause" defined curable defaults
§§ 16.1, 16.7
You may terminate the Franchise Agreement only if we fail to cure, or fail to
begin to cure, an alleged breach within the cure period we are allowed under
the Franchise Agreement.
N/A
W e may terminate the Franchise Agreement with cause.
We may terminate the Franchise Agreement after providing you a 15- day
cure period if: (i) you fail to pay any monies you owe us, our Affiliates, third
party creditors, third party lienholders, and/or the lessor from whom you are
renting the Camp Site; (ii) you fail to immediately endorse and deliver to us
any payments due to us from any third party that is erroneously made to you;
(iii) you fail to comply with the deadlines provided in the Franchise Agreement
to acquire a Camp Site, financing or complete build out of the Camp Site; (iv)
you conduct yourself in a manner which reflects adversely on the System, the
Marks, or our products; (v) you take any assets or property of the C B W
Franchise for your personal use; (vi) you fail to procure or maintain any
licenses, certifications, or permits necessary for the operation of your C B W
Franchise; (vii) any governmental action is taken against you that results in
any obligation upon us; (viii) any guarantor fails or refuses to deliver to
Franchisor, within 10 days after Franchisor's written request a personal
guaranty or current financial statements; or (ix) you breach any Acquisition
Document or any other agreement material to the C B W Franchise.
We may terminate the Franchise Agreement after providing you a 30- day
cure period if you fail to perform or comply with any one or more of the terms
or conditions of the Franchise Agreement, including but not only if: (i) you fail
to maintain the then-current operating procedures; (ii) you fail to obtain our
prior consent when required; (iii) you make an unauthorized change to the
Camp Site or other equipment; (iv) you fail to maintain a sufficient inventory
level; (v) you fail to personally supervise the C B W Franchise operations or
employ adequate Personnel; or (vi) you are required to pay the Minimum
Monthly Royalty for four (4) months during any 12 month period.
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Column 1
Provision
Column 2
Section
Column 3
Summary
h. "Cause" defined non-curable defaults
§ 16.1, 16.7
The Franchise Agreement will terminate upon written notice without the
opportunity to cure if: (i) you make an assignment for the benefit of creditors,
file a voluntary petition in bankruptcy, are adjudicated bankrupt or insolvent,
file or acquiesce in the filing of a petition seeking reorganization or
arrangement under any federal or state bankruptcy or insolvency law, or
consent to or acquiesce in the appointment of a trustee or receiver for you or
the C B W Franchise; (ii) proceedings have started to have you adjudicated
bankrupt or to seek your reorganization under any state or federal bankruptcy
or insolvency law, and those proceedings are not dismissed within 60 days,
or a trustee or receiver is appointed for you or the C B W Franchise without
your consent, and the appointment is not vacated within 60 days; (iii) you
purport to sell, transfer or otherwise dispose of your interest in the C B W
Franchise in violation of our requirements; (iv) you take part in criminal acts
or misconduct or commit fraud in the operation of the C B W Franchise; (vi)
you make any misrepresentations in the franchise application; (vii) you fail to
start operations within the periods provided; (viii) you receive more than 2
written notices of default within any 12-month period; (ix) you materially
breach any other agreement with us or our Affiliates; (x) you misuse the
Intellectual Property (xi) you violate any health, safety or sanitation law; (xii)
you violate the in-term restrictive covenants of the Franchise Agreement; (xiii)
a lien or writ of attachment or execution is placed against you and is not
released or bonded against within 5 days; (xiv) you abandon the C B W
Franchise; (xv) you offer any unauthorized or unapproved products or
services in the operation of your C B W Franchise; (xvi) you purchase or use
supplies from unapproved suppliers; (xvii) you misuse our proprietary
software; (xviii) you fail to comply with any governmental notice of noncompliance with any law or regulation within the required cure period; (xix)
you fail to comply with any laws or regulations; (xx) any audit reveals that you
have understated your royalty or advertising payments, or your Local
Advertising Expense, by more than 3%, or if you have failed to submit timely
reports and/or remittances for any 2 reporting periods within any 12-month
period; (xxi) any material judgment is obtained against you and not
discharged within 30 days; (xxii) you contest in a court proceeding the validity,
or our ownership, of our Marks; (xxiii) you fail to maintain adequate insurance;
or (ivx) you fail to pay when due or there are inadequate funds in your
account for automatic withdrawal of any amounts owed to Franchisor on 3 or
more occasions in any 12 month period.
i. Franchisee's
obligations on
temnination/nonrenewal
j.
Assignment of
contract by Franchisor
k. 'Transfer by
Franchisee - defined
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9, 11, 13,
16
§ 14.1
Your obligations under the Franchise Agreement include complete cessation
of business, de-identification, nondisclosure of trade secrets, insurance,
indemnification, non-competition, and payments of amounts due. You must
pay back both account credits and outstanding balances.
No restriction on our right to assign under the Franchise Agreement.
Includes transfer of rights under the Franchise Agreement; all or a
§§ 14.2, 14.3,
14.4, 14.5, 14.7, substantial portion of the assets or entity of your C B W Franchise; or if the
franchisee is a business entity, a controlling interest in that business entity.
14.8
Transferee must sign the then-current form of Franchise Agreement, which
may contain materially different terms, upgrade the Camp Site to our thencurrent standards and specifications, take all required training programs, and
be approved by us. Transferees who are related to you and who sign our
then-current form of franchise agreement will receive the full initial term
contained in our then-current offering. We must be paid a transfer fee and, if
applicable, sales commission.
56
Columns
Prov^ion
Columns
Section
Columns
Summary
1 Franch^or approve
offransferby
Fraoch^ee
^ ^ 1 4 ^
We must approve ail transfers
m C o n d o n s for
Franohisor approve of
fransfer
^ ^ 5 ^ 6
Transferee qualifies, no existing defaults or debts, transfer fee paid (as well
as any applicable saies commission), signs the then-current franchise
agreement, which may contain materially different terms, and Transferee
provides us with requested financial information that we approve
Transferee or its designated personnel that we approve complete Camp
ServicesTraining, In-^omeTraining and the Oog Trainer Certification
Program Transferee andTransferorsigna general release as well a s a
personal guaranty All matehal terms of transfer require our approval If you
finance any part ofatransfer, you agree to subordinate yourinterests to
ours You also agree to b e b o u n d by posttermination covenant notto
compete Transferor must update the Camp Site, if applicable, to ourthencurrent standards The C B W Franchise must be kept operational during any
period of transfer
n
Franoh^or^righf
offirsf refuse fo
aoqoireFranoh^ee^
hostess
§144
o FraoohisoBs
option fopurohase
F r a n o h ^ ^ s business
§§144^152
Opon termination or expiration o f t h e Franchise Agreement we have an
option to buy the C B W Franchise and all furniture, fixtures, equipment,
products, accounts and other business assets
p
Oeafh or disability
ofFranohisee
^14^149B
1410
The C B W Franchise may be assigned to your successor provided that the
successor complies with the conditions oftransfer
W e haveahghtoffirst negotiation forthe C B W Franchise
q
Noncompetition
covenants during the
term ofthe franchise
§ ^
OndertheFranchiseAgreement,neitheryou,your owners nor any immediate
family of you or your owners, officers, directors, Personnel, Managers, or
their immediate family can have any direct or indirect interest in any
competitive business, cannot perform services fora competitive business,
and cannot direct or attempt to divert business or employees of ours or other
franchiseesduringthetermoftheFranchise Agreement The in termnon
compete does not apply to your operation of existing C B W Franchises
pursuant to other effective franchise agreements with us
r
Noncompetition
covenants after the
franchiseis
terminated or expires
§13
OndertheFranchiseAgreement, neither you,your owners nor any
immediate family of you or your owners, officers directors, Personnel,
Managers, nor their immediate family, can have any direct or indirect
interestin any competitive business and cannot perform services fora
competitivebusinesswithin(1)theAuthorizedTerritory,(2)anyother
franchisee's authorized territory,or (3) within 25 miles of another
franchisees authorized territory oracompanyowned C B W Franchise for
two years from the date oftermination The posttermination non compete
does not apply to your operation of existing C B W Franchises pursuant to
other effective franchise agreements with us You also cannot divert or
attempt to divert the business or employees of ours or other franchisees for
2yearsfoliowinq termination of the Franchise Aqreement
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Columns
Provi^on
s
Mod^ca^ooof
the agreement
t
integrate
merger clause
Columns
Section
^2012
^206
Choice of Forum
The Franchise Agreement can only be modified hy mutual written
agreementofthe parties, butwe may change the Operations Manuals at
anytime
Only the terms ofthe Franchise Agreement are binding (subject to applicable
state law) No other representations or promises wili be binding Nothing in
the Franchise Agreement or in any other related written agreement is
intended to disclaim representations made in this OisclosureOocument
All disputes must be mediated and, if necessa^, arbitrated in the State of
Colorado, City of Denver, except that Franchisor may seek injunctive andBor
equitable reliefto enforce the Franchise Agreement
u
Olspute resolution
^arbitration or
mediation
v
Columns
Summary
§19
All disputes must be brought in the State of Colorado
Certain states have laws that supersede the choice of forum in the
Franchise Agreement and require thatalawsuit be brought in the state or
federal courts in the franchisee's home state See the State Addendum,
ExhibitF
w
Choice ot Law
§19
Colorado law shall apply to all disputes
Certain states have laws that supersede the choice of law in the Franchise
Agreement See the State Addendum, FxhibitF
ITEMIS
PUBLIO FIGURES
We do oot use any poblio figure to promote our ^anohises
ITEM^
^ A N O I A L P E R F O R M A N C E REPRESENTATIONS
The PTO^sPranohise Rule permitsetra^
potential tinanoiai pertormanoe otits tranohisedand^ortranohisor-owned outlets, It there Isa
reasonable basis tor the information, and If the information is Included In the disclosure
document Pinanoial performance information that differs from that included in Iteml^may be
given only if^^afranchisor provides the actual records of an existing outlet you are considering
buying; or^afranchisorsupplementstheinformation provided inthis Item 1^,for example,by
providing information about possible performanceat a particular location or under particular
circumstances.
Parts I, II and III of this Item show certain OrossRevenue and selected expense
information for OSW Franchises.
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^ data tor tranoh^ee owoed C B W Franot^es has been reported to us by the
traoohisee owner ot the C B W Franchise We have not audited this information nor
independently verified this information.
Written substantiation o f t h e data used in preparing this information wiii he made
available upon reasonable request
F A R T ^ A ^ ^ O R C S S R ^ ^ O F
Fart Isets forth Annual OrossRevenue(definedbeiow) for ail C B W Franchises that
were open and operating for more than 3^ months a n d b e t w e e n ^ a n d ^ m o n t h s a s of
December 3 ^ 2013 The measurement Periods referred to in F a r t l i s the 12 months ending
Oecember31^013
detail of the C B W Franchises in Fartlprovided Camp Services,InHome Services and
Oog Training Services during the Measurement Period as you must provide Some CBW
Franchises provided Camp Services only, while others provided Camp Services with either InHome Services or Oog Training Services, or both The C B W Franchises with results
Included In Fartlare referred to collectively as the r e v e n u e Reporting CBW FranchisesB
The length of time that the Revenue Reporting C B W Franchises have been operating
varies widely. Time In operation isamaterial factor affecting the Annual Oross Revenue o f a
CBWFranchlse The oldest C B W Franchise has been operating continuously for t ^ m o n t h s
as of December 31, 2013 The average length of time that a Revenue Reporting C B W
Franchlsehasbeen in operation as of December 3 1 , 2 0 1 3 i s ^ 0 months.
Additional definitions aoolicable to Fart I;
1.
^Annual OrossRevenue^ means the total Oross Revenue for Camp Services for
each Revenue Reporting C B W Franchise during the Measurement Period. Additionally, Annual
Oross Revenue i n c l u d e s ^ O r o s s Revenue for In-Home Services for the 32 Revenue Reporting
CBWFranchlses that provided InHome Services during the Measurement Period, and (ii)
O r o s s R e v e n u e f o r D o g T r a i n i n g S e r v l c e s f o r t h e ^ 5 Revenue Reporting C B W Franchises that
provided DogTraining Services during the Measurement Period
2
^Average Annual Oross Revenue^for Revenue Reporting CBWFranchlses is
calculated by adding the Annual Oross Revenue of all Revenue Reporting C B W Franchises and
dividing the total by the total number of Revenue Reporting CBWFranchlses.
The tables below show (I) the Average Annual Oross Revenue, as well as the highest
and lowest Annual Oross Revenue, of all Revenue Reporting CBWFranchlses during the
Measurement Period; and (Ii) the Average Annual Oross Revenue, as well as the highest and
lowest Annual Oross Revenue, of Revenue Reporting C B W Franchises in the top 2 5 ^ of all
Revenue Reporting C B W Franchises based on Annual Oross Revenue during the Measurement
Period
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A n n u a l G r o s s Revenue (Unaudited)
Revenue Reporting C B W F r a n c h i s e s
Low
Top 25% Revenue Reporting C B W
Franchises
$738,064
Average
$890,576
Total # of Revenue Reporting C B W
Franchises in Top 25%
30
Total # and % of top 25% Revenue
Reporting C B W Franchises whose Annual
Gross Revenue exceeded the average
12/40%
All Revenue Reporting C B W Franchises
(>36 months of operation)
$288,267
$633,035
Total # of Revenue Reporting C B W
Franchises (>36 months of operation)
102
Total # and % of Revenue Reporting C B W
Franchises whose Annual Gross Revenue
exceeded the average (>36 months of
operation)
49/48%
All Revenue Reporting C B W Franchises
{<36 months and >24 months of operation)
$319,678
$495,086
Total # of Revenue Reporting C B W
Franchises {<36 and >24 months of
operation)
6
Total # and % of Revenue Reporting C B W
Franchises whose Annual Gross Revenue
exceeded the average (<36 and >24
months of operation) .
3/50%
High
$1,242,596
$1,242,496
$656,247
PART II: SELECT E X P E N S E S FOR REPORTING C B W FRANCHISES
Part II sets forth selected expense data for 95 out of 102 CBW Franchises that were
open and operating for more than 36 months and between 24 and 36 months as of
December 31, 2013. We exclude 4 franchisee-owned C B W Franchises from Part II
because although they were open and operating for more than 36 months as of December 31,
2013, they did not submit data to us as required. The "Measurement Period" referred to in
Part II is the 12 months ending December 31, 2013.
Not all of the C B W Franchises in Part II provided Camp Services, In-Home Services
and Dog Training Services during the Measurement Period as you must provide. Some CBW
Franchises provided Camp Services only, while others provided Camp Services with either InHome Services or Dog Training Services, or both. The CBW Franchises whose results are
included in Part II are referred to collectively as the "Expense Reporting C B W Franchises."
Part II sets forth occupancy and hourly labor cost data for the Expense Reporting CBW
Franchises during the Measurement Period.
Additional definitions applicable to Part II:
1.
"Annual Occupancy Expense" means the following costs associated with
occupying the Camp Site during the Measurement Period: rent, utilities and common area
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60
maiotenaoce oharged as well as o t h e ^
landlord under the Lease (which may Include propertyta^lnsurance,andlandlord
expenses,commonly referred to a s ^ N N N ^ o r ^ r l p l e Net")
operating
2
average Annual Occupancy Expense" tor Expense Reporting C B W Franchises
Is calculated by adding the Annual Occupancy Expense ot Expense Reporting C B W Franchises
and dividing the total hythe numherot Expense ReportlngCBW Franchises TheExpense
Reporting C B W Franchises Included In Fart II have an average Camp Site sl^eot approximately
^,500 square teet and are located In a light Industrial or commercial area. Ourlng the
Measurement Ferlod, the Average Annual Occupancy Expense per square toot tor Expense
Reporting C B W Franchises w a s ^ . 2 9 .
3.
"Annual Hourly Labor Expense" means the following costs associated with labor
during the Measurement Ferlod: wages, withholding taxes, and government mandated
employee benefltsfornon managerlalfulltlmeandpart tlmewor^ers. The Annual Hourly Labor
Expense Is Intended to exclude salary and draws paid to Managers and owners, but since we
do not audit the Information provided by our franchisees, It Is possible that some franchisees
may have mistakenly reported Manager and^or owners^ salaries together with the Annual Hourly
Labor Expense
4.
"Average Annual Hourly Lahor Expense Percentage" for Expense Reporting
C B W Franchises Is calculated In two steps: first, by dividing the Annual Hourly Labor Expense
of each Expense Reporting C B W Franchise by the Annual Oross Revenue o f t h e same
Expense Reporting CBWFranchlses and, second, byaddlngthepercentages determined In
step one for the Expense Reporting C B W Franchises and dividing the total by the number of
Expense Reporting CBWFranchlses.
5
^Annual Earnings Before Interest, Taxes, Depreciation and Amortisation
(EBITDA) Plus OwneBsSalary" means the EBITDA (reported gross revenue less totalreported
expenses, plus Interest, tax, depreciation and amortisation expenses) reported hy each
Expense Reporting C B W Franchise plus any reported owners salary. Reported expenses
Include Annual Occupancy Expenses and Annual Hourly Lahor Expensesdescrlhedabove
plus all other reported expenses which may Include marketing, managersalary, merchant
processing tees, royalties, hulldlng repairs and maintenance, supplies and other expenses Not
all C B W Franchises report owner^ssalaryamountsand those a m o u n t s m a y b e l n c l u d e d a s
part of Annual Hourly Labor Expenses,manager salary or Included In some other expense
category
6.
"AverageAnnual Earnings Before lnterest,Taxes,Depredation and Amortisation
(EBITDAS P l u s O w n e r s S a l a r y " f o r Expense Reporting CBW Franchises Is calculated by
adding the EBITDA Plus Owner s Salary of Expense Reporting C B W Franchises and dividing
by the number of Expense Reporting C B W Franchises.
^Average Annual
Earnings Before Interest, Taxes, Depreciation and
Amortisation (EBITDAS P l u s O w n e r s Salary Percentage" for Expense Reporting C B W
Franchises Is calculatedln two steps: first, by dividing the EBITDA Plus Owners Salary of
each Expense Reporting C B W Franchise hythe Annual Oross Revenue of the same Expense
Reporting C B W Franchises; and , second, by adding the percentages determined In step
o n e f o r t h e Expense Reporting C B W Franchises anddlvldlngthetotal h y t h e numherot
Expense Reporting C B W Franchises.
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8.
The tables below show the Average Annual Occupancy Expense, Average
Annual Hourly Labor Expense Percentage, Average Annual Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA) Plus Owner's Salary and Average Annual Earnings
Before Interest, Taxes, Depreciation and Amortization (EBITDA) Plus Owner's Salary
Percentage of (i) all Expense Reporting C B W Franchises >36 months of operation and, <36
months and >24months of operation; and (ii) the top 25% of all Expense Reporting C B W
Franchises in each category based on Annual Gross Revenue. Expense data for all
Expense Reporting C B W Franchises is shown regardless of whether the Expense Reporting
C B W Franchise just provided Camp Services or also provided In-Home Services or Dog
Training Services during the Measurement Period.
Selected Expenses (Unaudited)
Average Annual
Occupancy Expense
Average Annual
Labor Expense %
Average Annual
EBITDA Plus
Owner's Salary
Average Annual
EBITDA Plus
Owner's Pay %
Top 25% Expense Reporting
CBW Franchises
$82,300
36%
$194,744
22%
Total # of Expense Reporting
CBW Franchises in the Top
25%
30
30
30
30
Total # and % of Top 25%
Expense Reporting CBW
Franchises whose expenses
and net income exceeded the
average
16/53%
24/80%
15/50%
17/57%
Average Annual
Occupancy Expense
Average Annual
Labor Expense %
Average Annual
EBITDA Plus
Owner's Salary
Average Annual
EBITDA Plus
Owner's Pay %
All Expense Reporting
CBWFranchlses {>36 months
of operation)
$69,566
36%
$124,194
19%
Total # Expense Reporting
CBW Franchises (>36 months
of operation)
99
99
99
99
Total # Expense Reporting
CBW Franchises whose
expenses and net income
exceeded the average (>36
months of operation)
47/47%
48/48%
46/46%
56/57%
Average Annual
Occupancy Expense
Average Annual
Labor Expense %
Average Annual
EBITDA Plus
Owner's Salary
Average Annual
EBITDA Plus
Owner's Pay %
All Expense Reporting CBW
Franchises (<36 months and
>24 months of operation)
$49,167
33%
$84,371
16%
Total # Expense Reporting
Franchises (<36 months and
>24 months of operation)
6
6
6
6
Camp Bow Wow - 2014 F D D
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62
Total #|jE^pense Reporting
Franchises whose expenses
and EBITDA exceeded the
average (<36 months and >24
months of operation)
3/50%
3/50%
3/50%
3/50%
PART III: SYSTEM-WIDE G R O S S REVENUES
Part III sets forth the aggregate Gross Revenue for all 116 CBW Franchises that were
open and operating for any length of time during the 2013 calendar year and for all 115 CBW
Franchises that were open and operating for any length of time during the 2012 calendar year.
Part III includes C B W Franchises operating less than 18 months as of December 31, 2012 and
December 31, 2013.
All C B W Franchises included in Part III were owned and operated by franchisees except
three that we owned for a portion of 2012 and 2013 and two additional CBW Franchises that we
acquired in 2012. The data reported in Part III includes the Gross Revenues for the period that
we owned and operated these three C B W Franchises.
% Increase In
Gross Revenue
from 2012 to
2013
(Unaudited)
2013
(Unaudited)
2013
(Unaudited)
Gross Revenue
Derived from
Camp Services
Operations
(including retail
sales) ONLY
$69,403,900
120
$63,825,055
116
9%
Gross Revenue
Derived from InHome Services
& Dog Training
Services O N L Y
$2,550,900
67
$1,925,161
58
33%
Consolidated
Gross
Revenue for
Camp
Services, InHome
Services and
Dog Training
Services as
well as Retail
Sales
$71,954,800
Camp Bow Wow - 2014 FDD
US.53755407.06
2012
(Unaudited)
$65,750,216
63
2012
(Unaudited)
9%
A O O ^ O ^ ^ O T E S T O ^ M ^
1.
We iodude ^aochisee^woed
criteria even it the C B W F r a n o h i s e o h ^
C B W Freochises meet^g
the
reporting
2.
Revenues and expenses vary among CBWFranohiseshased on numerous
taotors including location, local competition, economic conditions in a C B W Franchise's
market, and prevailing occupancy and lahor costs.
3
Fart II shows only occupancy and hourly lahor expenses. You will have
other expenses operating your C B W Franchise including tees payable to us under the
Franchise Agreement.
^
We have not audited the revenue and expense data collected trom our
franchisees and used to compile the intormation disclosed In this I t e m l ^ Therefore,while we
helieve that the information provided is substantially accurate, you should conduct an
independent investigation of the costs and expenses you will Incur in operating your
C B W Franchise. Franchiseesor former franchisees listed in the disclosure document may
he one source ofthis information
5
Although this Item 1^ sets out revenue earned and expenses incurred by
existing C B W Franchises, there is no assurance you will do as well.
Cther than theprecedingfinancial performancerepresentatlon, we donot ma^eany
financial performance representations. Your individual financialresults may differ from the
results stated Inthlsfinancialperformancerepresentation. We also do not authorize our
employees or representatives to mal^e any financial performance representations either orally
or in writing. If you are purchasing an existing outlet,however,we may provide you with the
actual recordsot that outlet If you receive any other financial performance information or
projections of your future income, you should report it tothefranchisor's management hy
contactingRachelWelsh, at Camp Bow Wow F r a n c h i s i n g , l n c , S S 2 0 W t t ^ t h Circle, Unit 0,
Broomfield, Colorado 80021, S ^
BOO B A R ^ , the Federal Trade Commission, and the
appropriate state regulatory agencies.
ITE^OD
OUTLETS A ^ O F R A ^ C H ^ E E ^ F O R ^ A T ^
Tabiet^ol
SystemDwideOi^et
Summary
ForYears2011to201^
Coiumnl
Outlet^ype
Column 2
Year
r'
Franchised Outlets
Camp Bow Wow - 2014 F D D
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/
Column 3
Column 4
Outlets at the Start of Outlets at the End of
the Year
the Year
'/
'
-
-
Column 5
Net Change
-Cr
2011
107
111
+4
2012
111
112
+1
2013
112
118
+6
64
\
Company-Owned*
Total Outlets
2011
1
1
0
2012
1
3
+2
2013
3
1
-2
2011
108
112
+4
2012
112
115
+3
2013
115
119
+4
* Note that the table above includes only figures from our predecessor, D.O.G. Development
LLC, prior to the acquisition on August 16, 2014.
Table No. 2
Transfers of Outlets From Franchisees to New Owners
(Other than the Franchisor or an Affiliate)
For Years 2011 to 2013*
Column
1 State
Column
2 Year
Column 3
Number of Transfers
2011
1
2012
0
2013
0
2011
0
2012
0
2013
1
2011
0
2012
1
2013
0
2011
0
2012
1
2013
0
2011
1
2012
2
2013
1
Colorado
California
New Jersey
Pennsylvania
Total
* Note that the table above includes only figures from our predecessor, D.O.G. Development
LLC, prior to the acquisition on August 16, 2014.
Camp Bow Wow - 2014 F D D
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65
!
j
Table No. 3
Status of Franchised
Outlets For Years
2011 to 2013*
.
'
Column 1
State
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
;
Column
2
Column
*> 3
:
Column 4
:
Column 5
Year
Outlets
at Start
of Year
Outlets
Opened
Terminations
2011
2
0
0
2012
2
1
0
2013
3
0
0
2011
1
0
0
2012
1
0
2013
1
2011
•
Reacquired
by
Franchisor
Column 8
Column |
'
9
i
Ceased
Operations
Outlets :
Other
Reasons at End of;
the Year j
I
0
0
1
2
0
0
0
3
0
Column 6
Non0
Renewals
0
0
3
0
0
1
0
0
0
0
1
0
0
0
0
0
1
7
1
1
0
0
0
7
2012
7
0
0
0
0
0
7
2013
7
0
0
0
0
0
7
2011
14
0
0
0
0
0
14
2012
14
0
0
0
1
0
13
2013
13
0
0
0
0
0
13
2011
2
0
0
0
0
0
2
2012
2
0
0
0
0
0
2
2013
2
0
0
0
0
0
2
2011
1
0
0
0
0
0
1
2012
1
0
0
0
0
0
1
2013
1
0
0
0
0
0
1
2011
5
0
0
0
0
0
5
2012
5
0
0
0
0
0
5
2013
5
1
0
0
0
0
6
Camp Bow Wow - 2014 F D D
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Column 7
66
1 >
,;
Column 1
Column
2
State
Year
Column
< 3
Outlets
at Start
of Year
1
Column 4
Outlets ,
Opened
,
Column 5
Terminations
: Column 6
NonRenewals
Column ?
Reacquired
by
Franchisor
Column 8
Column
9
Ceased
Operations Outlets
Other
at End of
Reasons
the Year
.
Georgia
Idaho
Illinois
Indiana
2011
2
0
0
0
0
0
2
2012
2
0
0
0
0
0
2
2013
2
1
0
0
0
0
3
2011
1
0
0
0
0
0
1
2012
1
0
0
0
0
0
1
2013
1
1
0
0
0
0
2
2011
3
0
0
0
0
0
3
2012
3
0
0
0
1
0
2
2013
2
1
0
0
0
0
3
2011
2
0
0
0
0
0
2
2012
2
0
0
0
0
0
2
2
0
0
0
0
0
2
2011
1
0
0
0
0
0
1
2012
1
0
0
0
0
0
1
2013
1
0
0
0
0
0
1
2011
1
0
0
0
0
0
1
2012
1
0
0
0
0
0
1
2013
1
0
0
0
0
0
1
2011
3
0
0
0
0
0
3
2012
3
0
0
0
0
0
3
2013
3
0
0
0
0
0
3
2011
1
0
0
0
0
0
1
2012
1
0
0
0
0
0
1
2013
1
0
0
0
0
0
1
2013
Iowa
Kansas
Louisiana
Maine
,
Camp Bow W o w - 2 0 1 4 F D D
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i
!
!
Column 1
State
Maryland
Massachusetts
Michigan
Minnesota
Missouri
Nebraska
Nevada
New Jersey
Column
2
Year
Column
• 3
1
Column 4
1
Column 5
Column 7 '
Reacquired
by
Column
9
Ceased
Operations Outlets
Other
at End of
Reasons
the Year
Outlets
at Start
Of Year
Outlets
Opened
2011
1
0
0
0
0
0
1
2012
1
0
0
0
0
0
1
2013
1
0
0
0
0
0
1
2011
1
0
0
0
0
0
1
2012
1
0
0
0
0
0
1
2013
1
0
0
0
0
0
1
2011
7
1
0
0
0
0
8
2012
8
0
0
0
0
0
8
2013
8
0
0
0
0
0
8
2011
2
0
0
0
0
0
2
2012
2
0
0
0
0
0
2
2013
2
0
0
0
0
0
2
2011
2
0
0
0
0
0
2
2012
2
0
0
0
0
0
2
2013
2
0
0
0
0
0
2
2011
2
0
0
0
0
0
2
2012
2
0
0
0
0
0
2
2013
2
0
0
0
0
1
1
2011
1
0
0
0
0
0
1
2012
1
0
0
0
0
0
1
2013
1
0
0
0
0
0
1
2011
7
1
0
0
1
0
7
2012
7
0
0
0
0
0
7
2013
7
0
0
0
0
0
7
Terminations
NonRenewals
CmaMf hie
rnincnisor
Camp Bow Wow - 2014 F D D
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Column 8
Column 6
68
;•
Column
2
Year
Column
3
Outlets
at Start
of Year
;
Column 4
Outlets
Opened
Column 5
Terminations
Column 6
NonRenewals
Column 7
Reacquired
by
Franchisor
Column
9
Ceased
Operations Outlets
Other
a t E n d of
Reasons
the Year
Column 8
:
2011
1
0
0
0
0
0
1
Column 1:
2012
1
0
0
0
0
0
1
State
2013
1
0
0
0
0
0
1
2011
5
0
0
0
0
0
5
2012
5
0
0
0
0
0
5
2013
5
1
1
0
0
0
5
2011
5
1
0
0
0
0
6
2012
5
1
0
0
0
0
6
2013
6
1
0
0
0
0
7
2011
7
0
0
0
0
0
7
2012
7
0
0
0
0
0
7
2013
7
1
0
0
0
0
8
2011
3
0
0
0
0
0
3
2012
3
1
1
0
0
0
3
2013
3
0
0
0
0
0
3
2011
4
0
0
0
0
0
4
2012
4
1
0
0
0
0
5
2013
5
0
0
0
0
0
5
2011
3
0
0
0
0
0
3
2012
3
0
0
0
0
0
3
2013
3
0
0
0
0
0
3
2011
2
0
0
0
0
0
2
2012
2
0
0
0
0
0
2
2013
2
0
0
0
0
0
2
New Mexico
New York
North Carolina
Ohio
Oklahoma
Pennsylvania
South Carolina
Tennessee
Camp Bow Wow - 2014 FDD
US.53755407.06
69
Column 1
State
Texas
Utah
Wisconsin
Total
Column
2
Column
3
Column 4
Column 5
Column 8
Column 7
Column 6
Column
9
Ceased
Operations Outlets
Other
at End of
Reasons
the Year
Terminations
NonRenewals
Reacquired
by
Franchisor
2
0
0
0
0
8
8
1
0
0
0
0
9
2013
9
0
0
0
0
0
9
2011
1
0
0
0
0
0
1
2012
1
0
0
0
0
0
1
2013
1
0
0
0
0
0
1
2011
1
0
0
0
0
0
1
2012
1
0
0
0
0
0
1
2013
1
0
0
0
0
0
1
2011
107
6
1
0
1
0
111
2012
111
4
1
0
2
0
112
2013
112
7
0
0
0
1
118
Year
Outlets
at Start
of Year
Outlets
Opened
2011
6
2012
* Note that the table above includes only figures from our predecessor, D.O.G. Development
LLC, prior to the acquisition on August 16, 2014.
Table No. 4
Status of Company-Owned
Outlets For
Years 2011 to 2013*
1
.
Column 3
Column 1
State
Arizona
Column 2
Column 5
Column 4
Column 7
Column 8
Outlets
Outlets Sold to
Franchisees
Outlets at End
of the Year
Outlets at
Start of
Year
Outlets
Opened
Outlets
Reacquired
from
Franchisees
2011
1
0
0
1
0
0
2012
0
0
0
0
0
0
2013
0
0
0
0
0
0
Year
Camp Bow Wow - 2014 F D D
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:
Column 6
70
Closed
I
Column 1
Column 4
Outlets at
Start of
Year
Outlets
Opened
Outlets
Reacquired
from
Franchisees
State
2011
0
0
2012
0
2013
Column 7
Column 8
Closed
Outlets Sold to
Franchisees
Outlets at E n d
of the Year
0
0
0
0
0
1
0
0
1
1
0
0
0
0
1
2011
0
0
0
0
0
0
2012
0
0
1
0
0
1
2013
1
0
0
0
1
0
2011
0
0
1
0
0
1
2012
1
. 0
0
0
0
1
2013
1
0
0
1
0
0
2011
1
0
1
1
0
1
2012
1
0
2
0
0
3
2013
3
0
0
1
1
1
Year
;
Illinois
New Jersey
Total
1
Outlets
: '.
Colorado
:=
Column 6
Column 2
:
•:
Column 5
Column 3
* Note that the table above includes only figures from our predecessor, D.O.G. Development
LLC, prior to the acquisition on August 16, 2014.
Table No. 5
Projected Openings as of December 31, 2013*
:i
•
<
:
,
i
;
Column 4
Column 2
Column 3
Franchise Agreements
Signed But Outlets Not
Opened
Projected New
Franchised Outlets in the
Next Fiscal Year
Projected New
Company-Owned
Outlets in the Current
Fiscal Year
California
1
1
0
Colorado
1
1
0
Georgia
1
1
0
Louisiana
1
1
0
Nevada
1
1
0
Column 1
State
.
Camp Bow Wow - 2014 F D D
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71
1
i
; .:
;
1
:
Column 4
Column 2
Column 3
Franchise Agreements
Signed But Outlets Not
Opened
Projected New
Franchised Outlets in the
Next Fiscal Year
Projected New
C om pa ny-Owned
Outlets in the Current
Fiscal Year
New Jersey
2
2
0
New York
2
2
0
Rhode Island
1
1
0
South Carolina
1
1
0
Virginia
1
1
0
Wisconsin
1
1
0
Total
13
13
0
Column 1
Slate
* Note that the table above includes only figures from our predecessor, D.O.G. Development
LLC, prior to the acquisition on August 16, 2014.
A list of Franchisees current as of the issuance date of this Disclosure Document with
names, addresses, and telephone numbers is attached as Exhibit E. Also on Exhibit E is a list
of the names, city and state, and last known business telephone numbers or email for
franchisees who had an outlet terminated, cancelled, not renewed, or otherwise voluntarily or
involuntarily ceased to do business under a franchise agreement during for the period
January 1, 2013 through August 29, 2014, or who have not communicated with us within 10
weeks of the 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.
During the last three fiscal years, some current and former franchisees have signed
provisions restricting their ability to speak openly about their experience with the Camp Bow
Wow® franchise System. You may wish to speak with current and former franchisees, but be
aware that not all franchisees will be able to communicate with you.
We do not know of any franchisee organizations formed or associated with the franchise
system or us.
Camp Bow Wow - 2014 FDD
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72
OUTLETS A N D FRANCHISEE INFORMATION
STAND-ALONE HOME BUDDIES
Table No. 1*
System-wide Outlet
Summary For Years 2011 to
2013**
'
;
'
'
Column 3
Column 4
Outlets at the End of
the Year
Column 5
Column 1
Column 2
Outlet Type
Year
Outlets at the Start
of the Year
2011
9
11
+2
2012
11
8
-3
2013
8
7
-1
2011
0
0
+0
2012
0
0
+0
2013
0
0
+0
2011
9
2012
11
8
-3
2013
8
7
-1
Franchised Outlets
Company-Owned
Total Outlets
Net Change
11
+2
* The information in this table represents Stand-Alone Home Buddies only
** Note that the table above includes only figures from our predecessor, D.O.G. Development
LLC, prior to the acquisition on August 16, 2014.
Table No. 2*
Transfers of Outlets From Franchisees to New
Owners (Other than the Franchisor or an
Affiliate)
For Years 2011 to 2013**
Column 1
Column 2
State
Year
Number of Transfers
2011
0
2012
0
2013
0
Total
-
Columns
* The information in this table represents Stand-Alone Home Buddies only.
Camp Bow Wow - 2014 F D D
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73
i
** Note that the table above includes only figures from our predecessor,
Development LLC, prior to the acquisition on August 16, 2014.
D.O.G.
Table No.3* Status of Franchised
Outlets For Years 2011 to
2013**
1
Column
2
Column 1 ;
State
California
District of
Columbia
Florida
Kentucky
Massachusetts
Washington
Wisconsin
Year
Column 3
Outlets at
Start of
Year,
Column
: 4
Column 5
Column 6
Column 7
Column 8
Column 9
Outlets at
E n d ofthe
Year
Outlets
Opened
Terminations
NonRenewals
Reacquired
by
Franchisor
Ceased
Operations
Other
Reasons
2011
3
2
0
0
0
0
5
2012
5
0
1
0
0
0
4
2013
4
0
0
0
0
1
3
2011
1
0
0
0
0
0
1
2012
1
0
0
0
0
0
1
2013
1
0
0
0
0
0
1
2011
3
0
0
0
0
2
1
2012
1
0
0
0
0
0
1
2013
1
0
0
0
0
0
1
2011
0
1
0
0
0
0
1
2012
1
0
0
0
0
1
0
2013
0
0
0
0
0
0
0
2011
0
1
0
0
0
0
1
2012
1
0
0
0
0
1
0
2013
0
0
0
0
0
0
0
2011
1
1
0
0
0
0
2
2012
2
0
0
0
0
0
2
2013
2
0
0
0
0
0
2
2011
1
0
0
0
0
1
0
2012
0
0
0
0
0
0
0
2013
0
0
0
0
0
0
0
Camp Bow Wow - 2014 F D D
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-
i
:
;
74
Total
2011
8
6
0
0
0
3
11
2012
11.
0
1
0
0
2
8
2013
8
0
0
0
0
1
7
* The information in this table represents Stand-Alone Home Buddies only.
** Note that the table above includes only figures from our predecessor, D.O.G.
Development LLC, prior to the acquisition on August 16, 2014.
Table No. 4*
Status of Company-Owned
Outlets* For Years 2011 to
2013**
' ' '
Column 1
Total
1
Column 6
Outlets
Opened
Outlets
Reacquired
from
Franchisees
Column 7
Outlets
Closed
Outlets Sold to
Franchisees
Column 8
Outlets at End
of the Year
0
0
0
0
0
0
2012
0
0
0
0
0
0
2013
0
0
0
0
0
0
Column 4
Year
Outlets at
Start of
Year
2011
Column 2
State
'
Column 5
Column 3
* The information in this table represents Stand-Alone Home Buddies only.
** Note that the table above includes only figures from our predecessor, D.O.G.
Development LLC, prior to the acquisition on August 16, 2014.
Table No. 5*
Projected Openings as of December 31, 2013**
i
u
Column 1
State
Total
;
. :
Column 2
Column 3
CcWm.4
yj
Franchise Agreements
Signed But Outlets Not
Opened
Projected New
Franchised Outlets in the
Next Fiscal Year
Projected New
Company-Owned
Outlets in the Current
Fiscal Year
|
j
j
J
0
0
0
r
-
/
* The information in this table represents Stand-Alone Home Buddies only.
** Note that the table above includes only figures from our predecessor, D.O.G. Development
LLC, prior to the acquisition on August 16, 2014.
A list of Franchisees current as of the issuance date of this Disclosure Document with
names, addresses, and telephone numbers is attached as Exhibit E. Also on Exhibit E is a list
Camp Bow W o w - 2 0 1 4 F D D
US.53755407.06
75
of the names, oify and state, and last known business telephone numbers or email tor
franchisees who had an outlet terminated, cancelled, n
involuntarilyceasedtodo business underafranchiseagreementduring the period Januarys,
2013throughAugust29,2014,orwhohave not communicated with us within 10weeks of the
date of this OisclosureOocument. If you buy this franchise,your contact information may be
disclosed to other buyers when you leave the franchise system.
Ourlng the last threefiscalyears,somecurrent and former franchiseeshavesigned
provisions restricting their ability tospeak openly about their experience with the Oamp Bow
Wow® franchise System, ^ou may wish to speak with current and former franchisees, but be
aware that not all franchisees will be able to communicate with you
We do not know of any franchisee organizations formed or associated with the franchise
system or us
ITEM^
F I N A N O ^ L STATEMENTS
Attached to the OisclosureOocument as ExhlbltOare the audited financial statements
for our p a r e n t , ^ O A , f o r the fiscal years ended Oecember^t, 2013,2012 and 20t1, and
unaudited financial statements for the six month period ended June 30^ 2014, together with
the independent auditor s report.
^ O A absolutely and unconditionally guarantees our duties and obligations under this
A g r ^ m ^ n t ^ s r^pr^sente^ on the Guarantee of Performance on ExhlbitOto the Oisclosure
Oocument.
ITEM 22.
CONTRACTS
Attached as exhibits to this Disclosure Document are the following agreements
proposed for use in our offering of franchises:
•
Exhibit B: Form of Camp Franchise Agreement:
•
•
Attachment A to Camp Franchise Agreement: Camp Site and Authorized
Territory Selection Addendum
Attachment B to Camp Franchise Agreement: Guaranty and Assumption
of Franchisee's Obligations
•
Attachment C to Camp Franchise Agreement: Statement of Franchisee
•
Attachment D to Camp Franchise Agreement: Collateral Assignment of
Telephone Numbers, Telephone Listings, Internet Addresses and Social Media
Pages)
•
Attachment E to Camp Franchise Agreement: Nondisclosure and
Noncompetition Agreement
Camp Bow Wow - 2014 F D D
US.53755407.06
76
•
Attachment F to Camp Franchise Agreement: Addendum to Lease and Small
Business Administration Rider
•
Attachment G to Camp Franchise Agreement: Right of First Refusal and Option
Agreement
•
Attachment H to Camp Franchise Agreement: Camp Bow Wow® Leaseback
Agreement and Small Business Administration Addendum
•
Attachment I to Camp Franchise Agreement: Data Dawg Subscription Services
Agreement
•
Attachment J to Camp Franchise Agreement: State Specific Addenda to Camp
Franchise Agreement and Small Business Administration Addendum
•
Attachment K to Camp Franchise Agreement: Authorization Agreement for
Prearranged Payments (Direct Debits)
Exhibit F: State Specific Addenda to the Disclosure Document
Exhibit G: Sample Release of Claims
Exhibit H: Sample Pre-Opening Agreement
ITEM 23.
RECEIPTS
Exhibit I to this Disclosure Document contains copies of the acknowledgement of receipt
of this Disclosure Document. One copy is for your records and the other copy is to be signed
and returned to us.
Camp Bow Wow - 2014 FDD
US.53755407.06
77
C A M P BOW WOW FRANCHISING, INC.
EXHIBIT A
LIST OF STATE AGENCIES
AND A G E N T S FOR SERVICE OF P R O C E S S
Camp Bow Wow-2014 FDD
Exhibit A - List of State Agencies
US.53755407.06
EXHIBIT A
LIST OF STATE ADMINISTRATORS AND
A G E N T S FOR SERVICE OF P R O C E S S
STATE
S T A T E ADMINISTRATOR
AGENT FOR
SERVICE OF P R O C E S S
CALIFORNIA
Department of Business
Oversight
Business Oversight
Commissioner
1 Sansome, Suite 600
San Francisco, C A 94104
(415) 972-8559
320 West 4th Street
Los Angeles, C A 90013-2344
1-866-275-2677
HAWAII
Commissioner of Securities ofthe State
of Hawaii
Business Registration Division
Dept. of Commerce & Consumer Affairs
Securities Compliance Branch
335 Merchant Street, Room 203
Honolulu, HI 96813
(808) 586-2744
Commissioner of Securities ofthe
State of Hawaii
Business Registration Division
Dept. of Commerce & Consumer
Affairs
Securities Compliance Branch
335 Merchant Street, Room 203
Honolulu, HI 96813
(808) 586-2744
ILLINOIS
Franchise Division
Office of the Attorney General
500 South Second Street
Springfield, IL 62706
(217) 782-4465
Illinois Attorney General
Same Address
INDIANA
Securities Commissioner
Indiana Securities Division
302 West Washington Street,
Room E 111
Indianapolis, IN 46204
(317) 232-6681
Indiana Secretary of State
201 State House
200 West Washington Street
Indianapolis, IN 46204
MARYLAND
Office of the Attorney General
Securities Division
200 St. Paul Place
Baltimore, MD 21202
(410) 576-7044
Maryland Securities Commissioner
same address
MICHIGAN
Michigan Department of Attorney
General
Consumer Protection Division
G. Mennen Williams Building, First Floor
525 W. Ottawa Street
Lansing, Michigan 48913
(517) 373-1140
Michigan Department of Commerce
Corporations and Securities Bureau
Same Address
MINNESOTA
Minnesota Department of Commerce
85 7th Place East, Suite 500
St. Paul, MN 55101
(651)29^4026
Minnesota Commissioner of
Commerce
Same Address
Camp Bow Wow - 2014 FDD
Exhibit A - List of State Agencies
US.53755407.06
A-l
AGENT FOR
SERVICE OF P R O C E S S
STATE
S T A T E ADMINISTRATOR
NEW Y O R K
Bureau of Investor Protection and
Securities
New York State Department of Law
120 Broadway, 23rd Floor
New York, NY 10271
(212)416-8???
NORTH DAKOTA
North Dakota.Securities Department
600 East Boulevard, Fifth Floor
Bismarck, ND 58505
(701)328-4712
North Dakota Securities
Commissioner
Same Address
RHODE ISLAND
Division of Securities
John O. Pastore Complex Bldg. 69-1
1511 Pontiac Ave.
Cranston, Rl 02920
(401)426-9500
Director of the Rhode Island
Department of Business Regulation
1511 Pontiac Ave.
Cranston, Rl 02920
SOUTH DAKOTA
Department of. Labor and Regulation
Division of Securities
445 E. Capitol
Pierre, SD 57501-3185
(605) 773-4823
Director of South Dakota Division of
Securities
Same Address
VIRGINIA
State Administrator
Division of Securities and Retail
Franchising
1300 East Main Street
Richmond, V A 23219
(804) 371-9051
Clerk of the State Corporation
Commission
1300 East Main Street
1 Floor
Richmond, VA 23219
WASHINGTON
Department of Financial Institutions
Securities Division
150 Israel Road S W
Tumwater, WA 98501
(360) 902-8760
Director, Dept. of Financial Institutions
Securities Division
Same Address
WISCONSIN
Commissioner of Securities
201 W. Washington
Avenue, Suite 300
Madison, Wl
53703
(608) 266-1365
Commissioner of Securities
Same Address
Camp Bow Wow - 2014 FDD
Exhibit A - List of State Agencies
US.53755407.06
A-2
Secretary of State
of New York
41 State Street
Albany, New York 12231
(518) 473-2492
sl
C A M P BOW WOW FRANCHISING, INC.
EXHIBIT B
FORM OF C A M P FRANCHISE A G R E E M E N T
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
C A M P B O W WOW FRANCHISING, INC.
EXHIBIT B
C A M P FRANCHISE A G R E E M E N T
License # :
Territory #:
Franchisee:
Guarantors:
Date Initial Franchise Fee Paid:
Effective Date:
;
Camp Site:
City
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-l
State
TABLE OF CONTFMTR
Section
Page
1.
GRANT OF LICENSE
10
2.
TERM OF THE A G R E E M E N T AND LICENSE
11
3.
AUTHORIZED TERRITORY
12
4.
FEES
14
5.
ACCOUNTING, R E C O R D S , AUDITS AND LATE PAYMENT CHARGES
16
6.
SERVICES AND ASSISTANCE
18
7.
FRANCHISEE'S DUTIES, OBLIGATIONS AND OPERATING STANDARDS
20
8.
P U R C H A S E OF EQUIPMENT, INVENTORY AND SUPPLIES
28
9.
MARKS AND COPYRIGHTED WORKS
30
10.
ADVERTISING AND PROMOTION
33
11.
INSURANCE AND INDEMNITY
35
12.
RELATIONSHIP
37
13.
RESTRICTIVE COVENANTS
38
14.
ASSIGNMENT
40
15.
OPTION TO P U R C H A S E
16.
DEFAULT AND TERMINATION
46
17.
CONDEMNATION AND CASUALTY
54
18.
NOTICES
54
19.
DISPUTE RESOLUTION
55
20.
MISCELLANEOUS
57
21.
COVENANTS, REPRESENTATIONS, WARRANTIES AND
ACKNOWLEDGEMENTS
60
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
RIGHT OF FIRST REFUSAL
B-2
44
ATTACHMENTS:
A.
Camp Site and Authorized Territory Selection Addendum
B.
Guaranty and Assumption of Franchisee's Obligations
C.
Statement of Franchisee
0.
Collateral Assignment of Telephone Numbers, Telephone Listings, Internet Addresses
and Social Media Pages
E.
Nondisclosure and Noncompetition Agreement
F.
Addendum to Lease and Small Business Administration Rider
G.
Right of First Refusal and Option Agreement
H.
Leaseback Agreement and Small Business Administration Addendum
1.
Software License Agreement
J.
State Specific Addenda and Small Business Administration Agreement
K.
Electronic Funds Transfer Authorization
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-3
CAMPFRANCH^EAOREEMENT
THIS C A M P FRANCHISE A G R E E M E N T is made ^
WOWPRANCHISlNO^NC,aOelaware^
Broomtield, Colorado 80021 ^ P r a o c h i s o ^ and
Located at
tbat the Franchisor signs below (the ^E^tec^veOate^
and between C A M P BOW
,
a
^Franchisees on the date
RECITALS
W H E R E A S , Franchisor has developed a system tor establishing, operating and
promotinghoslnessesotteringavarletyot Camp Services (detinedbelow), InHome Services
(defined below), Oog Training Services(detlned helow^, and related Servlces(detined below^
and Prodocts(detlned below) under the ^Camp Bow VVow^^trademark(collectlvely,a^Camp^
W H E R E A S , Franchisor Is engaged In t^e business otgrantlng franchises to operate
Camps^
W H E R E A S , Franchisee desires to enter Into an agreement wlt^ Franchisor to obtain the
right to operateaCamp using t^e operating system developed hyFranchisor,t^e distinguishing
cbaracterlstlcs of w^lch Include: (a^ standards and specifications for offering and selling
authorized Products and Services^ (b) standards and specifications for tbe equipment, furniture
and fixtures necessary to operateaOamp^(c)interior and exterior designs,decor, and color
scbemesforaOampSite(definedbelow^(d) sales techniques and methods for Internet usages
(e^accesstocustomdesigned softwarefor operating aCamp^ (f) merchandising, marketing,
advertising, and inventory management systems^and,(g) general procedures for operatinga
Camp (collectively, the ^ SystemB as further defined helow^
W H E R E A S , Franchisor and Its franchiseesuse various tradenames, trademarks and
service marks owned by its Affiliate(defined below^, including, without limitation, the^Camp
Bow VVow^B^Home Buddies by Oamp Bow
below) In connection with tbe Systems
W H E R E A S , Franchiseehas applied toFrancbisor forafranchise to operateaCamp,
and such application bas been approved upon the representations made tbereln^
W H E R E A S , Francbisee acknowledges tbehenefits to be derived fromheing identified
witb the System, and also recognizes tbe value of the Marks and the continued uniformity of
image to Franchisee, Francbisor, and other franchisees of Francbisor. Franchisee bereby
acknowledges that adherence to the terms of this Agreement(definedbelow^ and the standards
and specifications ofFranchisor are essential to the operation of its Camp and the Systems and,
W H E R E A S , Francbiseeis aware of the foregoing and is desirous of obtaining the right
t o u s e the System and inassociationtberewith,tberighttousetbeMarks,and wishes t o b e
assisted, trained, and licensed to operateaCamppursuant to theprovlsions and within the
Authorized Territory (defined below^ specified in this Agreement, sub^ectto the terms and
conditions contained in this Agreement.
NOW THEREFORE, in consideration of the foregoing recitals and tbe mutual promises,
the parties agree as follows:
Camp Sow Wow 2014 FOO
ExhibitS^Fraochi^e Agreement
0^375540706
8^
OEFIN^ONS
For tbe purposes of this A g r e e m e ^
^ ^ e ^ ^ t o L e a s e ^ ^ m e a n s F r a o o h i s o r ' s standard form a d d e n d
as AttaobmentF,and,if applioahle, the Small Business A d m i n s
Franohisee and its landlord are required toe^eoute, providing Franchisor wltb certain rights
upon the hreach or termination of tbe Lease (defined helow^ or this Agreement
^ r e e ^ e o t ^ means this agreement and all attachments, addenda and e^hihits
hereto.
^ A^hate^ ^ means any person or Business Entity (defined helov^ tbat controls, is
controlled hy, or is in common control witb, Franchisor or Franchisee.
^ A c ^ o i s i t ^ O o c ^ e n t s ^ means e i t h e r ^ Franchisee's Lease (deflnedhelow) and
Franchisor's standard form Addendum to Lease and the SBA Rider thereto^ or (11)
Franchisee's purchase contract, and Franchisor'sstandardform Rigbtof First Refusaland
Option Agreement andLeasehack Agreement and the SBA Addendum thereto,for tbe Oamp
Site
^ s m e s s E ^ t y ' ' ^ m e a n s a c o r p o r a t i o n , limited liahility company, p a r t n e r s h i p , ^
liahility partnership, trust or otber type of legal entity whicb, under law, may enter into
in its own name
^Oamp L a ^ o c h A d v e r t i s l ^ ^ means the advertising, marketing and promotion
Franchisee is required to conduct during the Oamp Launch Period (defined helow^ The Oamp
Launch Advertising is ^25,000.
^OampLaooch Ferlod'^tbeperlod oftimetbate^tendsfromtbe
Agreement to the commencement of operations.
execution ofthis
^ O a ^ p R e c e r ^ s " ^ m e a n s all records,documents,databases and tbe like (wbetber in
print, electronic or otber form^, including all names, addresses, phone numbers, e-mail
addresses,and purchase records of customers,vendor records and all other records contained
in databases created and maintained hy Franchisee pertaining to tbe Oamp, Including but not
limited to, customers, employees, vendors and otber service professionals
^ O a m p S c o ^ f ' ^ m e a n s one or more of Franchisee's Personnel (defined below) who will
he dedicated to marketing and promoting the Services and Products oftbe Oamp.
^'Oamp Services^ ^ are specialized services for dogs consisting of dog day care,
boarding, batbing,tberetail sale of pet food and merchandise,and assortedother petrelated
services and products provided from the Oamp Site.
^ O a ^ p Site" ^ means tbe premisesfrom whicb Franchisee will provide the Oamp
Services, or any other location as may be mutually agreed upon between Franchisor and
Franchisee in writing.
CampSowWow 20t4FOO
E x h ^ i t S ^ F r a n c h ^ e Agreement
US^7^0706
85
^ C e ^ e ^ Oog Trained ^ means Franobisee or its designated Personnel who
suooesstully completes theOogTrainerOertitioation Program(detlnedhelow)toPranoblsor's
satisfaction and reoelvesaOogTralnlngOerlltloate^detlnedhelow^
^ O h a ^ e o ^ O o o t r o ^ ^ m e a n s a t r a n s a o t l o n or series ot related transactions tbat result
I n t h e s a l e o t a l l o r s u h s t a n t l a l l y a l l o t the assets o t t b e O a m p It P r a n c h l s e e l s a Business
Entlty^OhangeotOontrol^also means: (^atransactlon or series ot related transactions that
result In a transfer of 1 0 ^ or more of the outstanding voting power of Franchisee or
Franchisee's Affiliate, whether voluntarily or hy operation of law or due to a merger or
consolldatlon^ll^achangelntbe person Identified on tbe Effective Oate as tbe Majority
or(lll)tbe right to appoint, o r c a u s e t o he appointed, ama^orltyof the directors, officers or
managers oftbe Business Entity
^ O o m p e t ^ v e B o s ^ e s s ^ m e a n s any business offering services or products similar to
Oamp Services, Income Services, OogTralnlng Services, grooming,or any other Products or
Services authorized or offered for sale by System franchisees during theTerm (defined helow^
oranyRenewalTerms (defined helow^ of this Agreement
^ O o o ^ e ^ a i ^ t e r m a t i o ^ ^ means Francblsor's Trade Secrets (defined below^,
standards and specifications for offering, selling and providing tbe Services and Products,
copyrighted materials, price marketing ml^es related to Products and Services sold by Oamps,
tbe Operations Manuals (as defined below), all databases (wbetber In print, electronic, or otber
form), marketing techniques and Internet advertising strategies, and other methods, tecbnl^ue
and know how concerning the performance of Services of tbe Oamp wblcb may be
communicated to Franchisee or of which Franchisee may be apprised by virtue of Franchisee's
operatlonoftbeOamp Any and all Information, knowledge, know^how,tecbnl^ues, and otber
data wblcb Franchisor designates as confidential wlllbe deemed Oonfidential Information for
purposes of this Agreement In addition, Franchisee acknowledges and agrees that all
customer Information, Including customer names and addresses, credits extended to customers,
discounts given to customers, and custon^r p u r c h a s e
also constitute Franchisor's Oonfidential Information. All customers of tbe Oamp are
Franchisor's customers and Franchisor owns all right, title and Interest In tbe Customer Lists.
copyrighted Materlals''^means all materials,Including but not limited to,all a r ^
and designs,created by Francblsor,and used wltb the Marks or In association with tbe Oamp.
^Oog T r a c e r Oertiticate" D means the certificate provided to Francblsee or Its
designated Personnel,uponcompletlon ofthe OogTralner Certification Program to Francblsor's
satisfaction In Its sole discretion.
^Oog Trainer Certification"
means tbe dog training certification Franchisee or Its
designated Personnel Is regulred to obtain In order to provide Oog Training Services hy
completing the Oog Trainer Certification Program to Franchisor's satisfaction, In Its sole
discretion.
^Oog Trailer Certification Program" D means Franchisor's training program tbat
FrancblseeorFrancblsee'sPersonnelwIllattend In order to be qualified to provide OogTralnlng
Services
^ O o g T r a i o i o g S e r v i c e s " ^ a r e specialized dog training andhehavlor services offered
through Francblsee's Camp
Camp Sow Wow 2014^00
Exh^SDFraoohiseAgreeme^
U5^7^0706
8-6
^ a o c h ^ e ^ Hoo^e B ^ d i e ^ ^ means a separate tranobise ettenng in wbich
franchisees provide only specialized in come and mobile s e r v ^
CampServlces^developed hy Franchisor under t b e b r a n d n a m e ^ H o ^ e B o d i e s hyCan^p
BowWew^B
^Fraochise^s S y s t e m o r ^ S y s t e m ^ ^ meansB(a^ standards andspecifications for
providing CampServices, InHomeServices, OogTraining Services andotherFroducts and
ServicesauthorizedforsalehY Franchisor's franchisees, incloding the OogTralnerOertlfic^^^^
Programs (^standards and specifications for tbee^uipment,furniture,andfl^tures, and the
general layout o f a C a m p Site and vehicles used to provide Income Services and OogTraining
Services^c^ interior and exterior designs, decor and color scbemes^d) sales technl^ues^e)
merchandising, marketing, advertising, and inventory managementsystems^ and, (f^ general
procedures for operatingaretail pet care business (the ^System'^ Franchisor reserves tbe right
to modify tbe System at any time Franchisor also basthe sole rlgbttoenforce andgrant
variances from the System.
^ r o s s R e v e ^ e ' ^ m e a n s t h e t o t a l o f a l l receipts derived from all sales of Products or
Services at or througb tbe Camp or througb tbe Camp's Personnels insurance claims for lost
profits to the e^tentaclaim is paid hythe insurers and all other products and services sold or
provided hy or through Franchisee, tbe Camp, whether thereceiptsareevidenced hycasb,
credit, checks, gift certificates, scrip, paymentcoupons, traded services, property orother
means of exchange Gross Revenue does not include:
(t^
tbe amount of any ta^ imposed by any federal, state, municipal or otber
governmental authority directly on sales collected from customers, provided tbat
the amount of any such ta^ is sbown separately and in fact paid by Francblsee to
tbe appropriate governmental authority^ and,
(2)
customer refunds and credits made hy tbe Camp which are issued pursuant to
Francblsor'sstandard policy and specifications (exclusions will not includeany
fees incurred in collecting funds^.
All barter and e^cbange transactions for wblcb Franchisee furnisbes Services or
Productsine^changeforgoodsorservicesto he providedto Franchisee byavendor, supplier
or customer will be valued at the full retail value of the goods or services provided to
Franchisee. GrossPevenues will be deemedreceivedbyFrancbisee at the time tbe Services
or Products from whicb they were derived, delivered or rendered or at tbe time tbe relevant sale
takes place, whichever occurs first,regardless of whether final payment (e.g.collection o n a
customer's personal cbeck^ actually bas been received hy Francblsee Gross Revenues
consisting of property or services will be valued at the retail prices applicable and in effect at the
time that tbey are received.
^ n c a p a c i t y " ^ means the inability due to medical reasons to devote full time and
attention t o d u t i e s o f a M a n a g e r d u e t o a c a u s e t h a t c o n t i n u e s f o r a t least O O d a y s i n tbe
aggregate during any rolling 12 calendar montb period during tbe Term, based upon the
examination and findings o f a p b y s l c i a n selected byahospital located within 20 miles of tbe
CampSite, as mutually selectedby Franchisor and Franchisee Aperiod of Incapacity shall
continue without interruption unless and until the person suffering the Incapacity resumes bis or
ber duties onafull time basis for 30 consecutive days.
Camp Sow Wow 20t4FOO
ExhibitS^Franoh^e Agreement
U5^7^0706
87
^ H o ^ e S e r v e s " ^ means ^ the d e w i n g services that Franchisee is licensed
hereunder and required to provide: pe^waiking, inhcme petsittin^at^hcme pet excretion
cleaning t h e r e t a i i s a i e a n d delivery c t p e t t c c d and merchandise, andassorted other pet
related services and products^ a n d ^ t b e t o l l o w l n g services that Francblsee has the option t^
provide: grooming, pet transportation via a Bark n Ride^ shuttle (only it operated in
accordance witb requirements provided in Operations Manuals^, ottDsite pet hoarding at tbe
home ot Franchisee's Personnel (provided sucb person becomes certitied by Franchisor in
accordance with the requirements provided in the Operations Manual which include a
background cbeck performed by Franchisee and certltication otproper insurance), and any
other Services licensed hy Franchisor
^ t i a l O a n ^ p S e r v i c e s T r a ^ n g ^ m e a n s t b e t r a i n i n g program provided by F r a n c b ^
thatFranchiseeorFrancbisee'sMa^orityOwner, and Manager,will attend in order to ^ualit^ to
provide Oamp Services.
^ t i a l I n ^ o ^ e T r a ^ n g ' ^ m e a n s tbe trainingprogram provided by F ^
Franchisee or Francblsee's Majority Owner, and Manager, will attend in order to ^ualit^to
provide Income Services
^ t e l l e c t ^ Property" ^ means collectively, the Marks, Oonfidential Information,
Oopyrlgbted Materials, Trade Secrets, patents or equipment subject to a patent pending
application.
^Lease^'^means any lease agreement (whetheroralorwrltten) under whicb tbe rigbt to
occupy the Oamp Site has been obtained, including witbout limitation, any offer to lease, or
license agreement, and any amendment made thereto from time to time. If Francblsee Is not
purchasingits Oamp Site, Franchisee must maintainacurrent,written lease agreement at all
times througbouttbeTerm and may not rely on or act pursuant to any holdover provision in tbe
Lease witbout the prior written consent of Franchisor.
^Leasehac^ A g r e e m e o t ' ^ m e a n s Francbisor'sstandardform Leaseback Agreement
attached hereto as AttachmentFI and, if applicable, the SBA Addendum tbereto, that Francblsee
is required to execute if it purchases property for the Oamp Site. Tbe Leaseback Agreement
provides Franchisor certain rights upon hreacb or termination of this Agreement or the
Leaseback Agreement
^ L o c a l L a w s " ^ m e a n s t b e laws ofthe state in which tbe Oamp Site is located
^ a ^ o r ^ O w o e r " ^ m e a n s , if Franchisee i s a B u s i n e s s Entity,tbe person who o w n s a
majority interest in tbe Business Entity Ifthere is no majority interest owned by one person, tbe
Majority Owner sball be the person appointed hy all oftbe owners oftbe Francblsee
^ a ^ a ^ s ^ o r ^ O p e r a t i o o s Manoals)' ^ means, but is not limited to, ^
directives, books, pamphlets, bulletins, memoranda, order forms, packing slips, invoices, l e t t e r
e mail, Internet or Intranet data, or other publications, documents, software programs, OVOs,
transmittances or communications, In whatever form (including electronic form^ prepared by or
on bebalf of Franchisor for use by franchisees generally or for Franchisee in particular, setting
fortb information, advice and standards, general requirements, huildDout requirements,
mandatory suppliers or vendors, dog trainer requirements, marketing information and
procedures, operating procedures, instructions or policies relating to the operation of the Oamp
o r t h e operation of franchises,as it may be added to, deleted or otberwise amended by
CampSowWow 20t4FOO
E x h i b i t B D ^ a o ^ s e Agreement
^537^07^
8^
Franchisor from time to time. TbeManueis, as amended trom time to time, are incorporated
into the Franchise Agreement as ittoiiy set torth herein.
^Mar^s' ^ shaii mean the trademarks ^Oamp Bow W e w ^ B ^ o m e B ^
Bow W e w ^ B a n d ^ B e h a v i o r B o d d i e s ^ " t o t h e e ^ e n t o t Franchisor's rights to tbe same,
together with soch other trade names, trademarks, symhois,iogos, distinctive names, service
marks, certification marks, iogodesigns,trade dress,insignia or otherwise wbich may he
designated hy Franchisor trom time to time as part of the System for use hy Franchisees. The
rigbts to aii soch Marks as are now, or wilibereafter he,designated as part oftbe System wiii he
owned e^ciosiveiy by Franchisor or its Affiliate and wiii he osedfor the benefit of Francbisor,its
Affiliate and Franchisor's franchisees to identity to tbe pobiic tbe soorce of the F r o d o ^
Services marketed
^ p e r a t i o o s O e a d ^ e ^ ^ m e a n s t h e d e a d i i n e by whicb Franchisee most begin to offer
(i) C a m p S e r v i c e s a t t h e C a m p S i t e a n d ( i i ) i n c o m e Services and OogTrainingServices
throogboot the AothorizedTerritory. The Operations Deadline is the earlier o f ^ t h e da
Franchisee receivesacertificatefromFranchisor to beglnprovlding Oamp Services or (ii) 18
months afterthe Effective Oate.
^Fersonoel' ^ means collectively or in tbe alternative the employees or independent
contractors that work for Franchisee.
^Frelim^ary Approval' ^ means Francbisor's acceptance of the Oamp Site, sob^ect to
zoning approval and satisfaction of otber state and local retirements and sob^ect to
Franchisor's FinalApproval (defined below) ofFranchisee'sAc^oisltionOocoments
^ F r e ^ i s e s O e a ^ h o e ' ' ^ means 365 days after the Effective Oate hy which time
Franchisee most have received Freliminary Approval and Final Approval (defined below^ from
Franchisor on theproposedOamp Site and ( i ^ e ^ e c o t e d a L e a s e a n d Franchisor's standard
form Addendum to Lease,or (ii^e^ecotedaporcbase contract and closed on tbe porcbase of
tbe Oamp Site, and e^ecotedFranchisor's standard formRigbt of First Refosal and Option
Agreement attacbedbereto as AttachmentOandLeaseback Agreement attached bereto as
Attachment H,fortbe Oamp Site approved by Franchisor in accordance witbSection^BI below
^ F r o d ^ c t s ' ^ m e a n s a l l prodocts, goods and mercbandise that Francbisoraotborizes for
sale throogh the Oamp
^Right o^ First R e ^ s a l ' ^ means Franchisor's standard formrlght of first refosal and
option agreement attached bereto as Attachment O, that Franchisee is r e t i r e d to execote if
Franchisee purchases property for the Oamp Site The Right of First Refosal provides
Franchisor witb the right of first refosal and option to porchase the Oamp Site property opon
certain conditions contained tberein.
^ e r v i c e s ' ' ^ m e a n s collectively the Oamp Services, InHome Services and OogTrainin^
Services as well as any other services licensed bereonder by Francblsor.
^ T r a d e S e c r e t s " ^ m e a n s a l l information, incloding allformolas, patterns, compilations,
programs, devices, metbods,techni^oes or processes related to the System tbat both derives
Independent economic valoe,actoal or potential,fromnot being generally known to, and not
being readily ascertainable by proper means by otber persons who can obtain economic value
from its disclosore or ose and is the sob^ect of efforts that are reasonable under the
circomstances to maintain its secrecy.
Camp Sow^Wow 2014 FOO
E ^ b i t S ^ ^ a n o h i s e Agreement
^5^^0706
8^
T r a o s ^ ^ m e a n s a ^ansactionor series of related trensaotions that,dlreotly or
indireoti^ voiontari^ iovoiootariiy or by operation of law: ^ r e s u i t i n t b e s a i e ^ s u b f r a n o b i s e ,
merger,oonveyanoe, sbaring, subdivision, assignment,transfer, pledge, gift,enoumbranoe or
alienationofany interestintbis Agreementortberigbt t o u s e tbe System or any portion or
oomponents^ii^ involves tbe offer to seil securities ofaFranobisee tbat i s a B u s i n e s s Entity
pursuant toatransaotion subject to registration under federal or state seouritiesiaws or by
private placement pursuant to a written offering memorandums (iil^ results in a Cbange of
Controls or (iv^ a disposition of a substantial portion of tbe assets of tbe Erancblsor or
Francblsee outside tbe ordinary course of business. For purposes of illustration, Transfer
includes, witbout l i m i t a t i o n : ^ an orderdissolvlng tbe marriageof a Francblsee tbat i s a n
individual^b) tbe issuance of additional equity or voting interests o f a B u s l n e s s Entity r e s u l t s
in a C b a n g e o f Controls (c^ afinancial restructuring or recapitalization tbat Issecured by a
sufficient number of equity or voting interests o f a B u s i n e s s Entity sucb tbat,if foreclosed upon,
would resultinaObangeofControl^ or (d^ tbe deatb or Incapacity of Francblsee if an individual
o r a n y person owning enougb equity or voting interests of a Business Entity to result i n a
Obange of Control.
^Wehsite" ^ means an interactive electronic document contained in a network of
computers linked by communications software, Including, witbout limitation, tbe Internetand
World Wide Web borne pages
1
ORANT OF LICENSE
1.1
Subject to all tbe terms and conditions of tbis Agreement, Francblsor grants to
Franchisee, and Francbiseeaccepts,fortbeTerm (defined below^ of tbis Agreement tbe rigbt
and license (^Llceose^ to develop and operateaCamp using tbe Marks and System upon tbe
terms and conditions of tbis Agreement witbin tbe ^Aothorlzed Territory" identified in
AttacbmentAbereto Francblsee will provide tbe Products and Camp Services from tbe Camp
Site. Francbiseewill also provide In^HomeServlcesand DogTraining Services tbrougbout tbe
entire AutborizedTerritory
12
Francblsee recognizes tbat variations and additions to tbe System may be
required from time to time in order to preserve or enhance tbe System Francbisor expressly
reserves the right to add to, subtract from, revise, modify or change tbe System or any part
tbereof from time to time, and Franchisee agrees to promptly accept and comply witb any sucb
addition, subtraction, revision, modification or cbangeat Francblsee's expense, subject to tbe
terms of S e c t i o n s
13
Franchisee recognizes tbat the rights tbat are granted to Francblsee are for tbe
specific Camp Site and AutborizedTerritory defined in Section31 below and on AttacbmentA
hereto, andcannotbetransferred to analternativeCamp Site orAutborizedTerritory, witbout
tbe prior written approval of Franchisor If Francblsee elects to move or relocate tbe Camp Site
at any time during tbeTerm,Franchisee will submit information about tbe proposed Camp Site
to Franchisor for approval pursuant to the terms of Sections.1(a^ and otber provisions of tbis
Agreement and will simultaneously pay Franchlsorarelocation fee of FiveThousandDollars
(^5,000) Flowever, Franchisee will not be required to pay tbe ^5,000 relocation fee if
Francbiseeis forced to relocate tbe C a m p S i t e due t o a F o r c e M a ^ e u r e E v e n t as definedin
Section200below.During any period of Camp closure due to relocation not related toaforced
relocation due t o a F o r c e Majeure Event,Francbisor may require Franchisee to pay the Royalty
Fee based on tbe greater o f : ^ t h e average of tbe prior12 months Oross Revenues,or (ii) the
Minimum Monthly Royalty, as well as the Marketing Fee (defined below^ hased on the average
Camp Sow Wow 2014 FOO
ExhibitS^Fraoch^eAgreemeot
U55^40706
8^0
o f t b e phor 12 months Gross Revenues, and it Frenobisor oolleots tbe Looel Advertising
Expense, tbeLooei Advertising Expense Frenobisor may aiso require Frenobisee to expend
tbe Gamp Launob Advertising to promote tbe new Gamp Site location.
14
Tbis Agreement authorizes Franchisee to engage only in tbe sale ot authorized
Productsand Services to customers in the AutborizedTerritory subject to the requirements ot
tbis Agreement and the GperationsManuai Nothing in this Agreement givesFrancbisee tbe
right to otter or sell Products or Services ot any kind, including, without limitation, a u t b o ^
cards, by mall order, catalog sales or comparable metbods or trom any Internet site or engage
in retailor wholesale salesordistribution. Theterm ^retailor wbolesale salesordistribution"
meansthe direct or indirect sale ot Products or Services to consumer or to thirdparties tor
turtber distribution through any trade metbod or channel In tbe future, It Francblsor implements
as pari of tbe System an on-line ordering system wbereby customers can place orders for pick
up at the Gamp Site, Francblsor shall offer tbe sameprogram to Franchisee on comparable
terms, subject to Franchisee'scompliance with tbis Agreement
2
TERM O F T H E A O R E E M E N T A N O LICENSE
21
This Agreement and the Licensegranted s b a l l c o m m e n c e a s o f the Effective
Oate and payment of the Initial Franchise Fee by Francblsee. This Agreement and the License
granted sballcontinueforaperiodoflOyears, beginning from tbe date tbat Franchisee's Gamp
Site opens (the^Ter^^, subject to termlnationpursuant to the provisions of tbis Agreement.
Franchisee shall have the option to renew tbe Agreement for two (2) additional 10 year terms
(each a ^Reoewai T e r ^ , subject to Franchisee's compliance witb the following renewal
conditions:
(a^
Franchisee has been In substantial compliance witb tbe Agreement
tbroughouttheTermand is not in default at tbe time of renewals
(b)
Franchisee has provided Franchisor witb written notice of intent to renew
not less t b a n 6 montbs or more tban12montbs before expiration of tbeTerm. If Francblsee
plans to relocate the Gamp Site, Franchisee must provide Franchisor witb eighteen (IS^montbs
of notice of intent to renew Failure to give timely notice of Francbisee'sintentiontorenew will
be deemed an election not to renew tbis Agreement and tbe Licensed
(c)
Franchisee has satisfied all payment obligations
Franchisor'sAffiliatesandtoFrancbisee'sapproved and designated suppliers^
to
Francblsor,
(d)
Franchisee bas demonstrated to Francblsor's satisfaction that Francblsee
has tbe rigbttoprovlde Gamp Services from tbe Gamp Site for the durationoftheRenewal
Term, or, If Francblsee is unable toprovide the Gamp Services from the tbencurrent Gamp
Site,thatFranchiseehassecuredasubstitutelocationwbicb Franchisor has approved in writing
In conformance witb Sectlon71(a^
(e^
Franchisee upgrades tbe Gamp Site to Franchisor's tben current
standards, including all computer and systems (wblcb will notcounttowardstbe Minimum
ModernizationAmountsetforth in S e c t i o n ^ . ^ Franchisee provides proof that it has obtained
and maintained all necessary licenses and permitstocontinueoperation oftbe Gamp^ and
participates in any renewal training or restraining program as required by Francblsor
(f^
Franchisee or its owners have (i^ satisfied Franchisor's tben current
training requirements, atFranchisee'se^pense, (^provided Franchisor with any reasonably
Camp Sow Wow 2014 FOO
Exh^itSDFraooh^e Agreement
0^^40706
811
^ o e s t e d f i o a o c ^ ioformatio^ ^i) e^ecoted a oewpersonal g ^ r a n ^ and ( ^ e ^ e c ^ e d a
general release lo a form saflsfaofory to Franchiser of all claims Franchisee may have
against Franchiser, Its Affiliates and tbelr respective officers, directors, memhers,
shareholders, agents, and employees, whether In their Boslness Entity or Individual capacities^
(g^
Franchisee has paid a renewal fee In the amoont of ^10,000 (tbe
^ReoewalFee^and,
(h^
Franchisee has compiled witb any reasonable r e v e s t s hy Francblsor to
negotlateanew territory definitions and
(1^
At the time of renewal, Franchisor Is offering francblses In tbe state wbere
the Gamp Site Is located
22
Torenew, Franchisee most execote Francblsor'sthencorrent form of Franchise
Agreement, wblcb will sopersedethls Agreement and may contain materlallydlfferent terms
Incloding withoot limitation retiring thepayment of additional or different fees to Franchisor.
Notwithstanding tbe above, Francblsee shall not he r e t i r e d to pay the Initial Francblse Fee
stated In tbe new Francblse Agreement, bot will Instead pay the Renewal Fee provided In
Section 2 B I ^ of this Agreement
IN FRANGFIISGR'S SOLE OETERMINATIGN,
FRANCHISEE'S FAILURE TG DELIVER THE FRANCHISE AGREEMENT, FERSGNAL
G L I A R A N T Y A N O R E L E A S E REQUIRED BY THIS SECTION 2, WITHIN 30 DAYS AFTER
FRANCHISOR DELIVERS THEM T G FRANCHISEE FGR EXECUTION WILL BE DEEMED AN
ELECTION B Y F R A N O H I S E E N O T T G R E N E W
^3
If Franchisor I s l n t h e p r o c e s s of revising,amending or renewing Its Franchise
Disclosore Docoments or registration to sell franchises In tbe state where tbe Gamp Is located,
or, onder Local Laws, cannot lawfolly offer Francblsee Its tbenDcorrent form of Franchise
Agreement at the tlmeFrancblsee delivers thenotlce of renewal, Francblsor may, Inltssole
discretion,offer to extend tbe terms and conditions of this Agreement onacalendarmontbto^
calendarmontbbaslsfollowlngthee^plratlon of tbeTerm forama^lmom period of t2montbs
from the expiration date of this Agreement so that Franchisor may have the time to attempt to
lawfolly offer Itsthen^corrent form of Franchise A g r e e m e n L I f ^ Francblsor Isgrantlng new
franchises for new Camps In tbe United States at tbe time when Francblsee Is permitted to
renew, and (II) Franchisee has otherwise satisfied tbe conditions for renewal and Is In
compliance wltb the provisions ofthls Agreement, and If, after t2montbs, Francblsor still cannot
lawfolly offer Its then corrent form of Francblse Agreement In tbe state wbere tbe Aotborlzed
Territory l s l o c a t e d , t h e p a r t l e s s h a l l b e d e e m e d t o h a v e extended this Agreement for tbe
remainder ofthe RenewalTerm
2.4
If any renewal condition Is not timely satisfied, tbis Agreement will empire on tbe
lastdayoftheTermwIthootforthernotlcefrom Franchisor provided,however, Franchisee will
remain obligated to comply with allprovlslons of this Agreement wblcb expressly, or by their
natore,sorvlvethe expiration ortermlnatlon of this Agreement
S
A U T H O R E D TERRITORY
Except as otherwise provided In this Agreement, for so long as Francblsee compiles witb
all o f t h e obligations contained In this Agreement, neither Francblsor nor anyAfflllate will
establish or license to anotber person or Boslness Entity tbe rlgbt to establish a Camp
oslng tbe Marks licensed to Francblsee wltbln tbe Aotborlzed Territory, as described In
AttachmentAofthlsAoreement.dorlnotbeTerm Upon selection by Francblsee and approval
Camp Sow Wow 20t4FOO
E x t ^ t S D F r a o o t ^ o Agreement
^^7^0706
8^2
by Franobisoroftbe Camp Site porsoaotto Se^ion
Franchisor w^ provide tbe tinai
description ot tbe A o t b o r i z e d T e r ^ ^
Territory and provide Camp Services trom tbe approved Camp Site. Franchisee most ottering
HomeServicesand DogTraining Services soieiy witbin and tbroogboot tbe AotborizedTem^^
Francbisee most not move tbe Camp Site witbootFrancbisor'spriorwritten consent
31
Francbisor and its Attiiiates retain tbe e^ciosive right, among others:
(a)
to ose, license and franchise the ose ot different trademarks or service
marksotherthantbe Marks,at any location whether in tbe AothorizedTerritory or in a i t e r n a ^
channels of distrihotlon, in association witb operationstbat are the same as, similar to, or
different tban tbe Camp Services,InHome Services or DogTraining Services^
(b)
to offer or grant others the right to offer the Services or Frodocts, otber
services or prodocts, whetber oslng tbe Marks or otber trademarks or service marks, throogh
alternative cbannels of distrihotlon, incloding withoot limitation, wbolesalers, retail ootlets or
otber distrihotlon ootlets (otber than Camps oslng the Marks^, or by Internet commerce (eD
commerce), mail order or otberwise, at any location whether inside or ootside the Aotborized
Territory^
(c^
to ose any websites otilizingadomain name incorporating one or more of
the words ^Camp' andBor ^Bow Wow" and^or 'Home noddies' and^or e d d i e s " and^or
b e h a v i o r " orsimilarderivativesthereof Franchisor retains tbe sole rlgbt to marketon the
Internet and ose tbe Marks on tbe Internet, incloding all ose ofWebsites, domain names,ORL's,
social media sites, directory addresses, metatags, linking, advertising and co branding and
other arrangements Franchisee may not independently marketon the Internet, or ose any
domain name, address, locator, link, metatag or search tecbni^oe, witb words or symbols
similar to tbeMarks or otherwise establisb any presence on tbe Internet withoot Franchisor's
prior written approval. Francblsor intends tbat any Franchisee Website be accessed only
tbroogb Francbisor's home page. Franchisee will provide Franchisor witb content for
Franchisor'slnternet marketing, and will sign Internet andintranetosage agreements, if any.
Franchisee's Internet marketing will be solely for tbe porpose of poblicizlng the Services and not
for the sale of Frodocts. Franchisor retains tbe right to approve any linking or other ose of its
Websites
(d^
in the event Franchisor or its Affiliates ac^oire, or are ac^oired by,
another company or system that operates or offers moltiplefrancbisesonderacommon name,
that offer services and prodocts tbat are the same as or similar to tbe Services andFrodocts
offered by Camps, wblcb may be located within or ootside of the Aotborized Territory,
Franchisor or Its Affiliates may establish, ac^oire, operate or license soch stores or retail ootlets
onder tbe newly ac^oired or merged system or trademarks, regardlessoftbeir proximity to
Franchisee'sAotborizedTerritory or their actoalorthreatened Impact on Franchisee's Camp^
to limit tbe s c o p e o f t h e License If there i s a Franchised Home Boddies sold or operating
witbin the Aotborized Territory as o f t h e date of this Agreement. If there is another socb
Franchised Home Boddies, the License granted hereonder will not inclode tbe rlgbt for
Franchisee to provide InHome Services within the AotborlzedTerrltory,and Francblsee will not
be granted the rlgbt ose the Home Boddies by Camp Bow Wow^, Home Boddies C a m ^ ,
and otber Marks osed by Franchised Home Boddies, as directed by Franchisor
Notwithstanding the above, Franchisee and any pre-existing Franchised Home Boddies will both
bave tbe right to ose the ^Behavior Boddies^" Mark^
Camp BowWow 2014 FOO
ExhibitBDFranoh^e Agreement
0^7^40706
^
^
(e)
to limit the soope ot the License tor eny individoei service granted
hereonder(4e Camp S e r v i c e s , i n c o m e Services or DogTraining Services) it ^
notcompiy witb its obligations set tortb In S e c t l o n 7 ^ ( a ^ o r i t F r a n c b i s e e i s i n detaoltwitb
respect to tbe provision o t a n y particolar Service and bas not cored socb detaolt witbin tbe
applicable periods
(t^
to establish and operate, or license any otber person tbe rlgbt to establisb
andoperate, a G a m p at any otthe following ^on^Tradltlonal Locations^ sporting s^^^^
similar sports venoe, botel or resort, amosement park or other toorlst attraction, casino,
corporate campos, hospital or other healthcare or veterinary tacility, college, oniversity or otber
edocational tacility, airport or poblic transportation tacility located inside or ootside the
AothorizedTerrltory,altboogbittbeNonTraditional Location agrees to consider grant^^^
toestabllshand o p e r a t e a O a m p to Franchisee, ratber than operate the location themselves
(directly or Indirectly tbroogb some type ot management company) or bave Francblsor or an
Attillateoperateitasacompany^owned location,Franchisor will grant y o o a ^ O d a y rlgbt ot first
negotiationtoac^oiretherigbtstotbeNon Traditional Location. IftbeNonDTradltional Location
elects not to offer Franchisee the right (Franchisor has no obligation or doty to make tbem offer
Francblsee tbe right) or Franchisee does not reach an agreement doring tbe 30 day negotiation
period, Franchisoror an Affiliate havetbe right toestablisband operatetbe boslness at tbe
Non Traditional Location or the Non^Tradltional Location will establish and operate the b
Itself (directly or indirectly^ and
(g^
^
to engage in any other activity not expressly probibited in tbis Agreement
FEES
4BI
In consideration of tbe francbise License granted to Francblsee, Franchisee will
pay Franchisor tbe Initial Franchise Fee set fortb In A t t a c b n ^
lompsom via cashleBscbeck, money order or wire transfer at tbe time Franchisee e^ecotes this
Agreement. Tbe Initial Francbise Fee is folly earned and non refondable opon payment by
Franchisee to Francblsor.
4.2
By the Operations Deadline, Francblsee most complete tbe Dog Trainer
Oertification Program to Francbisor's satisfaction. Franchisee most pay Franchisor tbethen^
corrent fee for the Dog Trainer certification Program 30 days prior to attendance o f t h e
program As o f t b e date of tbis Agreement tbe corrent Dog Trainer certification fee is Five
Tboosand Dollars (^5,000^ for each trainee The DogTrainer Oertificationfee Isfolly earned
and nonrefondable opon payment by Francblsee to Franchisor.
43
Franchisee will pay to Franchisoramonthly royalty ( r o y a l t y Fee") e^oal to the
greater of (1^7^ of OrossRevenoes collectively for each Service provided andProdoct sold
throogh the Oamp^or (11^ tbe mlnimom monthly royalty providedin tbe table below for Oamp
Services,In^HomeServicesand DogTraining Services individoally,if 7 ^ of Franchisee's Oross
Revenoes for each socb service is less than tbe amoonts set forth in tbe table (tbe ^Mmimom
Monthly R o y a l ^ ^ . T h e Minimom Monthly Royalty fee begins on the earlier of (i^the^tbmont^
of operations,or (ii^lSmontbs after tbe Effective Date,If Franchisee has not begon operations
of any individoal Service by tbis date. If Francblsee is r e t i r e d to pay the MlnimomMonthly
Royalty foranyfoor (4^ montbsdorlnganyconsecotive 12monthperiod, Francblsor willhave
therlghtto: (a)imposeaddltionalmandatory marketing and trainlngprogram to he paid for by
Francblsee and directed by Franchisor ontil Franchisee's sales reach tbe r e t i r e d levels, or (b)
terminate tbe Agreement opon notice and opportonity to core onder Section t6.3(f^.
Camp Sow Wow 20t4FOO
E x h i b i t S ^ F r a o ^ e Agreement
^5375^706
8^4
Min imum Monthly Royalty
Months of Ooeration
th
th
7 through 1 2 Months of Operation
th
,h
13 through 18 Months of Operation
th
th
19 Through 2 4 Months of Operation
th
2 5 and Subsequent Months of Operations*
Camp Services
In-Home Services
Dog Training
Services
$350
$100
$25
$500
$200
$50
$750
$300
$100
$2,000
$400
$200
*We reserve the right to increase the Minimum Monthly Royalty by 3% after the 37th month, and
upon the expiration of each 12-month period that follows.
4.4
The Royalty Fee is payable to Franchisor in halves, on the 10th and 25th day of
each month and is payable through the entire Term of the Agreement after Franchisee begins
operations. Franchisor has the right to change the frequency with which Royalty Fees must be
paid at any time. Franchisee must not subordinate its obligation to pay the Royalty Fee or any
other fee or charge hereunder to any other obligation.
(a)
Each Royalty Fee payment must be accompanied by a statement of the
previous period's Gross Revenues on a form and in a manner approved by Franchisor as set
forth in Section 5.
(b)
Franchisee must maintain a separate bank account for the deposit of all
Gross Revenues generated by the Camp and must deposit all revenues from operation of the
Camp into one bank account within three (3) days of receipt by Franchisee, including cash,
checks, and credit card receipts. Before commencing operations, Franchisee must provide
Franchisor with Franchisee's bank name, address and account number, and a voided check
from the bank account. Franchisee will remit fees and other amounts due to Franchisor
hereunder via electronic funds transfer ("EFT") or other similar means utilizing a Franchisor
approved computer system or otherwise pursuant to the procedures set forth in the Manual from
time to time. The EFT authorization form is attached hereto as Attachment K. Franchisee must
make funds available to Franchisor for withdrawal by electronic transfer no later than the due
date for payment thereof. If Franchisee has not timely reported the Gross Revenues to
Franchisor for any reporting period, then Franchisor will be authorized, at Franchisor's option, to
debit Franchisee's account in an amount equal to (i) the fees transferred from Franchisee's
account for the last reporting period for which a report of the Gross Revenues was provided to
Franchisor as required hereunder or (ii) the amount due based on information retrieved from
Franchisor's approved computer system.
(c)
If any sales, income, excise, use, privilege or similar tax or assessment is
imposed or levied by any taxing authority based on the payments of royalties by Franchisee
under this Agreement, Franchisee must, in addition to all payments due to Franchisor, pay such
tax, levy or assessment directly or reimburse Franchisor for the payment of such amount. This
provision does not apply to any federal or Colorado income taxes imposed on Franchisor, or
those state taxes that Franchisor can take as a credit against its federal or Colorado income
taxes.
4.5
If Franchisee relocates the Camp Site or Authorized Territory at any point during
the Term, Franchisee will pay Franchisor monthly Marketing Fees (defined below), the Local
Advertising Expense (defined below), and Royalty Fees during the relocation period. The
Royalty Fees due during this period will be the greater of (i) the monthly average of Royalty
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-l 5
Fees paid to Fraochisordunog
12 months o t e p e r a t i e ^ e r ^ t h e
Minimum M o n t h i y R o y a ^ a s a p p i i o a b i e The Marketing F e e w i i i h e h a s e d o n t h e m o n t h i y
average ot Royalty F e e s p a i d to Franchisor during the immediately preceding 1 2 m o n t h s o t
operations. Franchisor may also require that Franchisee expend the Gamp Launch Advertising
to promote the opening otthe new Gamp Site location.
5
A C C O O N T ^ R E C O R O ^ A O O I T S A N O LATE PAYMENT C H A R T S
5BI
Franchisee's accounting and recording system must include data collection and
tracking mechanisms reflecting each operational aspect otthe Gamp including uniform reports
and chartsotaccount together with such additional information as Franchisor may request.
Franchiseemust use the accounting system requlredhy Franchisor, if any,unless otherwise
approved in writing Franchisee will prepare and suhmit to Franchisor on a current hasis,
complete and accurate records concerning all financial, marketing and other operating aspects
of the Gamp conducted under this Agreement. Franchisee's records must include tax returns,
daily reports, statements of Gross Revenues^to he preparedeach monthforthepreceding
month), profit and loss statements (to he prepared at least quarterly), and balance sheets (to he
prepared at least quarterly). Each report must Include not only thefinancial resultsforthe
immediately preceding accounting period, hut also cumulative information for the calendar year^
toDdate.Each report must hesuhmitted to Franchisor within 10 daysafterthe end of each
accounting period provided ahove. Franchisor will have the right to retrieve financial, customer,
vendor, inventory and any other operational information for Franchisee's Gamp through
Franchisor's required computer system at any time, electronically or other remote means and
Franchisee hereby grants Franchisor authority to do so Franchisee will promptly comply with
Franchisor's request for any additional information.
5.2
Franchisee must keep its financial books and records as Franchisor may from
time to time direct In the Manual or otherwise, including the retention of all invoices, order form^
payrollrecords,cash register tapes, check records, bankdeposltrecelpts, sales tax records,
refunds, cash disbursements, journals and general ledgers. Franchisee will advise Franchisor
of the location of all original documents and will not destroy any records witbout the prior written
consent ofFranchisor
5.3
Franchisee will submit to Franchisor, current financial statements and other
reports as Franchisor may reasonably request to evaluate or compile research and performance
data on any operational aspect of the Gamp.Gn or before May 15 of each year,Franchisee will
provide Franchisor withacopy of its federal tax return forthe previous tax year.
54
All reports submitted to Franchisor pursuant to this Agreement must be
executed by Franchisee o r a d u l y authorized representative of Franchisee, certifying that the
Information provided in such report is true and correctand that no material fact has been
omitted which is necessary In ordertomakethe information disclosed not misleading.
5.5
F r a n c b i s e e a g r e e s t o k e e p a l l r e c o r d s a n d reports f o r ^ y e a r s from tbe date
such r e c o r d s a r e c r e a t e d F r a n c h i s o r o r Franchisor's authorized agent will havetbe rightto
request, receive, Inspectandaudit a n y o f t h e records referred to above wherever they may be
located Should any inspectionor audit discloseadeflclency in thepaymentof any Royalty
Fee, Marketing Fee, or other amounts required to be paid under this Agreement, Franchisee will
immediately pay the deficiency to Franchisor, witbout prejudice to any other remedy of
FranchisorunderthisAgreement In addition, if the deficiency for any audit period disclosesa
deficiency in the amount of any Royalty Fee, Marketing Fee, or other amounts due by 3 ^ or
more, Franchisee will also immediately pay to Franchisor the entire cost of the Inspection or
Camp Sow Wow 20t4FOO
ExhibitSDFranor^e Agreement
U5^7^0706
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audit i n c h i n g
personoei.
^ a v ^ l ^
5^
Fraoohisee understands and agrees that its taiiure to repo^ Gross
any period wiii prevent Franchisor trom debiting Franchisee's account with the appropriate
amount ot Royalty Fees, Marketing Fees and other tees due to Franchisor under this
Agreement in that event, Franchisee authorizes Franchisor to debit its operating account in the
amount ot 1 2 0 ^ otthe last payment ot Royalty Fees andMarketing Fees paid to Franchisor
together with late tees and interest permitted hy this Agreement. Unless Franchlseenotities
Franchisor in writing withinSdaysatter Franchisor debits Franchisee's account ot an error in
the amount otthe tees that Franchisor debited in accordance with this Section5^,Franchisee
will be barred trom challenging the amount so debited atalater date. Flowever, it at any time
Franchisor discovers the amount that Franchisor debited trom Franchisee's operating account
are less than the amounts actually due to Franchisor based on the Gamp's actual Gross
Revenues tor the relevant period, Franchisor may Immediately debit Franchisee's account tor
the balance. It theamounts which Francbisordebitstrom Franchisee'saccountexceed the
amounts actually due toFranchlsor tor tbe relevant period,Franchisor willcredit the excess to
the next payment ot Royalty Fees and Marketing Fees due tromFranchlsee. Nothinglnthis
S e c t i o n s isintended to excuse Franchisee's obligation to report Gross Revenues tor any
period inatimely and accurate tashion.
5.7
The records required under this Sectlon5pertain only to Franchisee'soperation
otthe Gamp.Franchisor will have no right to inspect, audit or copy the recordsot any unrelated
business activity Franchisee may have Franchisee will keep the booksand records otthe
Gamp separate trom the recordsot any unrelated business or personal activity.
5.S
Toencourage prompt payment and submission ot reports and to cover the costs
and expenses involved in handling and processing late payments, Franchisee will also pay,
u p o n d e m a n d , a l a t e interest charge o t 1 S ^ per annum, not to exceed the maximum rate ot
interestallowable by l a w o n all paymentsdueto Franchisorduring the period ottime said
payments are due and unpaid,plusalate payment or report charge in the amount o t ^ O O per
periodoverdue.Franchisee also will pay, upon demand,to Francbisorareturn check tee in the
a m o u n t o t ^ 5 0 0 t o r t h e t i r s t l n s t a n c e t h a t a c h e c k i s r e t u r n e d a n d ^50.00 tor each additional
time the same check is returned. Franchisee acknowledges that this Section 5.S will not
constitute Franchisor's agreement to accept such payments atter they are due oracommitment
by Franchisor toextend credit to, or otherwise tinanceFranchisee'soperationottheGamp.
Further, notwithstanding tbe provisions ot this Section
Franchisee acknowledges tbat failure
t o p a y a l l s u c h amounts whendue will constitute grounds tor default and terminationot this
Agreement.
5.0
Franchisee hereby authorizes Franchisor to make reasonable inquiries of
Franchisee's bank, suppliers and trade creditors concerning the Gamp and bereby directs such
personsand companies to provide to Franchisor such information and copies of documents
pertaining to the Gamp as Franchisor may request.
5.tO
Franchisor may implement a mystery shopper program to perform mystery
shopper visits at tbe Gamp Site or other locations where the Services are provided Franchisee
will pay the reasonable fees of any thirdparty mystery shopper supplier either directly to the
mystery shoppercompany or Franchisor, at Franchisor'selection Franchlseewill cooperate
fully with Franchisor's inspections and any mystery shopper program that Franchisor
implements. Franchisee, on behalf of itself and, as applicable, its directors, officers, managers,
Camp Sow Wow 20t4FOO
^hibitS^Fraoot^se Agreement
^^540706
8^7
employees, oonsoltaots, representatives and agents, hereby waives any olalm tbat any
Inspections or recordings violate any person's rlgbtsotphvaoy.
5BI1
Francblsee acknowledges and agrees tbat Francblsor, at all times duringand
atter tbe termination, expiration or cancellation ot tbis Agreement,bas tbe rlgbt to access t^^
Camp Recordsot tbe Camp,and may utilize,transfer, copy or analyze socb Oamp Records as
Franchisor determines to be in tbe best interest ot tbe System.
S.
SERVICES ANO A S S I S T A N C E
^Bl
Franchisor or its representative shall otter Franchisee initial and continuing
services,as Franchisor deems necessary or advisable in turtheringFranchlsee's Camp or the
System as a whole, and in connection with protecting the Marksand goodwill ot Franchisor
Unless material, failure by Francblsor to provide any particular service, either initial or
continuing,will not excuse Franchisee from any of its ohligations underthis Agreement.
^2
Initial services provided by Franchisor before Franchisee beglnsto provide
Camp Services shall include:
(a)
Designating tbe Authorized Territory
proposed Camp Site as oftbe Effective Date.
if Franchisee has identified a
(b)
Frovlding Franchisee witbin five days of tbe Effective Date, advice
r e g a r d i n g t b e s e l e c t i o n o f a C a m p S i t e a n d its general design specifications and construction,
as well a s a l i s t of required and approved suppliers and supplies and materials used In the build
out ofthe Camp Site and Products offered for sale by the Camp.
(c)
Reviewing Franchisee's Acquisition Documents
amendments, modifications and renewals) fortbe Camp Site for approval
(and
any
ongoing
(d)
FrovidingFranchisee witb advice regarding the purchasing or leasing of
approved equipment, fixtures, furnishings, signs, products, materials and supplies necessary for
the buildout o f t b e Camp S i t e a n d commencementof operationsafter Franchiseereceives
Final Approval of the Camp Site that Franchisee will have to buy from third^party suppliers.
(e)
Providing Franchisee with home study and homework materials which
must be completedby Franchisee and all of its Personnel who participate in the Initial Camp
Services Training, In Home Services Training and the Dog Trainer Certification Program,
respectively ^ H o ^ e S ^ d y M a t e r l a l s " )
(f)
Conducting the Initial Camp Services Training and Initial Income
ServicesTraining for Franchisee or its Majority Owner,as applicable,and one other person who
must be Franchisee's Manager (^laoager") or other person to whom Franchisee delegates the
daytoday operationsof tbe Camp, in the Broomfield, Colorado areaor any other location
designated by Franchisor.lnitial Oamp ServicesTraining and Initial In-Home ServlcesTra^^
will take place at least 30 days, but no more than^Odays, before Franchisee begins operations
of Camp Services Initial Camp ServicesTraining and Initial InHome Training may not be
provided at the same time.
(g)
Conducting the Dog Trainer Certification Program for Franchisee or
Franchisee's designated Personnel in the Broomfield, Colorado area or other area designated
byFranchisor.AfterthetlmeFranchiseefirstbeginsto provide DogTraining Services,it must
Camp Oow Wow 2014 FOO
^t^itSDFranohise Agreement
0^375540706
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em^oy^^a^ooe^Ge^^
any time doriog the Term, the empioymeot et Freochisee^ Certitied Oeg Trainer ends,
Franohisee must within^Odays, cause another one ot its Personnel to s ^
the OogTrainerCertitioation Program h e ^
The
OogTrainerCertitioationProgram will he held at times designated hyPranohisor,hut at least
t w i o e a y e a r . Franchisee must pay the O o g T r a i n e r C e r t i t i c a t l o n F e e ^ O d a y s i n advance ot
such training and will he responsible tor all travel, living and other expenses incurred hy its
PersonnelwhilesuchpersonattendstheOogTrainer Certltication Program.
(h)
Conducting an on-site training program tor Franchisee and its statt, at the
Camp Site as part otthe Initial Camp ServicesTraining immediately prior to the commencement
ot operations.
(i)
FrovidingFranchisee during the Term,access to the Manual and all
updates to the Manual on restricted intranet systems called the ^The Oog House, ^The Animal
HouseB^Scout'sHouseB^The Locker P o o m B a n d ^Scout's Academy" which Is our learning
managementsystem^collectlvely, IntranetSystems") The Manual willcontain requiredand
suggested specitications, standards, operating procedures andrules prescrihedtromtimeto
timehyFranchlsorasturtherstipulated in this Sections Franchisee must monitor and access
the Intranet S y s t e m s o n a t l e a s t a w e e k l y h a s i s a n d its own email account on at leastadally
basis tor any updates to the Manuals Franchisor will also provide the Operations Manuals,
or portions thereof, to Franchisee's employees who apply tor access and who are
approved by Franchisor. Any password or other digital Identiticatlon necessary to access tbe
Manuals on the Intranet Systems wlllbe deemed tobeFranchisor's proprietary intormation,
subject to all restrictions herein. Each ot Franchisee's Personnel will have different levels ot
security and access to the information contained in the Intranet Systems Franchisee is
responsible for tbe use of the Intranet Systems by its Personnel and for compliance breach of
its Personnel with Franchisor'ssecurity and access policies. If any access Information is lost or
stolen, or employment of any of Franchisee's Personnel ends, Franchisee must promptly notify
Francblsor. Any required specitications, standards, operating procedures or rules contained in
the Manuals exist to protect Franchisor's interests in tbe System and the Marks and not for the
purpose of establishing any control or duty to take control over those matters reserved to
Franchisee. Franchlseewill operate t h e C a m p pursuant t o t h e Manuals, asamended from
t i m e t o t i m e F a i l u r e t o c o m p l y w i t h t h e s t a n d a r d s s e t f o r t h in the Manuals will constitutea
breach of this Agreement. Franchisor will have the right to add to, and otherwise modify, the
Manuals from time to time to reflectchangesin authorized Products andServices, business
image or tbe operation ofthe Camp Franchisee covenants to accept, implement and
adopt any such modifications at its own cost^ provided, however, no such addition or
modification shall alter Franchisee's fundamental status and rights under this Agreement
Franchisee hereby acknowledges that tbe Manuals are loaned to Franchisee and
Franchisee's approved Personnel, and will at all times remain the sole and exclusive
property of Franchisor Franchisee may not at any time copy, distribute, post, publicize or
disseminate through any means, any part o f t h e Manuals unless approved in writing by
Franchisor. The Manuals and other writings communicated to Franchisee will constitute
material provisions of this Agreement as fully set forth herein.
^
Providing Franchisee with a webpage or splash page on Franchisor's
Website. Franchisee will be solely responsible for maintenance and updates to such webpage
or splash page and will maintain and update the same at least monthly and in accordance with
Franchisor's policies, specifications and standards.
Camp Sow Wow 2 0 t 4 F O O
^ ^ t S D ^ o o t ^ e Agreement
0^7^0706
8^
^3
As of the date of this A g r e e m e ^ t b e services provided hy Franchisor or its
representatives to Franchisee after Franchisee hegins to provide Carnp Services s h a i i ^
(a)
Making a representative reasonahiy avaiiahie to speak with Franchisee
on the telephone or via e maii doring normal hosiness hoors, as Franchisor determines is
necessarytodiscossFranchisee'soperations and marketing.
(h)
Fornishing goidance to Franchisee on: (t) methods, specifications,
standards, management and operating procedores osed in theCamp^ and,(^developing and
implementing local advertising and promotional programs Franchisor will provide soch
goidance throogh the Manoals, holletins, videotapes, compoter diskettes, written materials,
reports and recommendations, refresher training programs or telephonic consoltatlons as
Franchisor deems necessary.
(c)
Developing and designing newFrodocts, Services,operationsmethods,
programs or othen^isefor the System, asFranchisor deems necessary. Franchisee will pay
any fees associated withthetralningfor or implementationof soch newFrodocts, Services,
operations methods or programs and mostoffer for sale a l l s o c h n e w F r o d o c t s or Services
developed as reqoiredhy Franchisor.
(d)
Maintaining the Advertising Fond, as set forth in SectionslO.^ throogh
10.0 helow, and oslng these tonds to develop promotional and advertising programs for Camps
and to develop and maintain Franchisor's Wehsite
(e)
Visiting Franchisee's Camp at least o n c e a y e a r and providing consolting
assistance. Franchisee may also reqoest that Franchisor send a representative to provide
forther assistance heyond the annoal visit. If Franchisor provides additional assistance at
Franchisee's reqoest, Franchisor may charge Franchiseeafee.
^4
Franchisor Is not obligated to perform services set forth In this Agreementto
Franchisee's particolar level of satisfaction. All training will he sohject to the availahility of
Franchisor and Its agents. Training may not he provided in contigooos time periods.
7
F R A N C H I S E E S O U T ^ S , O B L A T I O N S A N O O F E R A T I N O STANDARDS
7.1
DevelopmentoftheCampSite,Training and Operations Deadlines:
(a)
Camo Site Acooisition Franchlseewill satisfy the Premises Deadline as
provided in this Section 7.1(a). BeforetheFremlsesDeadline, Franchisee will:(1) identifya
proposed Camp Site^ and, (2) provide Franchisor in a form specified hy Franchisor: (i) a
description of the proposed CampSite^ and (ii) any other Information and materials Franchisor
may reqoire,for Franchisor review Franchisor willose its reasonable hest efforts to respond
within 14 days to provide Franchisee with its written Preliminary Approval or disapproval of the
proposed Camp Site based on the information sobmitted by Franchisee If Franchisor does not
respond witbin this time, theproposedCamp Site wlllbe deemed disapproved If Franchisor
provides Preliminary Approval, Franchisee will promptly sobmltto Franchlsora copy o f t h e
proposed final version of the AcqoisitionDocoments If Franchisee is not porchasing its Camp
Site, Franchisee most maintain acorrent, written leaseagreementatalltimesthrooghootthe
Term and may not rely on or act porsoant to any holdover provision in the Lease withoot the prior
writtenconsentofFranchisor Franchisor will ose its reasonable best efforts to respond within
14 days to provide Franchisee with written final approval or disapproval of tbe Camp Site based
on its acceptance or disapproval of tbe Acqoisition Docoments (^Final Approval"). If
Camp Bow Wow 2014^00
Ex^bitBDFranohise Agreement
0^^40706
B^O
Franchisor does not respond within this time, the proposed Acquisition Documents wiii he
deemed disapproved. itFranchisorprovidesFinai Approval, Franchisee wiii enter into such
agreements and wiii not thereafter aiter or modity the AcquisitionDocuments Franchisee wiii
deiiveracopy otthe signed Acquisition Documents to Franchisor within 10days ot execution.
it Franchisor does not provide Freiiminary Approval ot the proposed Camp Site or Final
Approval otthe Acquisition Documents, the proposed Camp Site or Acquisition Documents will
he deemed disapproved. It Franchisor's disapproval is hased on terms in the Acquisition
Documents, Franchisee may renegotiate the Acquisition Documents until they meet with
Franchisor's satisfaction, in its sole discretion. Flowever, no opportunity to renegotiate the
Acquisition Documents will extend the Premises Deadline If Franchisor's disapproval is hased
o n a n y other factor, Franchlseewill locate analternativeCamp Site andohtain Franchisor's
Final Approval on or heforethe Premises Deadline Noopportunity to select an alternative
Camp Site will extend the Premises Deadline If Franchisee fails to satisfy the Premises
Deadline, Franchisor m a y : ^ e x t e n d the Premises Deadline,(ii) require Franchisee to pay the
Minimum Monthly Royalty for Camp Services until Franchise hegins to provide Camp Services^
(iii) modify the licensegranted underthis Agreement hy rescinding Franchisee'slicenseto
provide the Camp Services, or (iv) terminate the Agreement pursuant to Section t^.
(b)
Financlno Deadline For any Franchisee who will finance any part of the
Investment cost necessary to commence operations, Franchisee must provide Franchisor in the
form specified hy Franchisor: (t) a description of any proposed financing, which must he
reasonably acceptable to Franchisor, and (2) any other information and materials that
Franchisor may require. Franchisor will have to days to provide Franchisee with Its approval or
disapprovalofthe proposed financing.If Franchisor does not providearesponse to Franchisee
witbin the 14-day period, Franchisee's proposed financing will be deemed disapproved. If
approved, Franchisee will take steps necessary to secure such financing at the earlier of: (1)180
daysatterthe Effective Date,or(ii)15days prior to tbe execution of any Acquisition Documents
(the ^Finaocing Deadline") If Franchisee fails to comply with the Financing Deadline,
Franchisor may (i) require Franchisee to pay tbe Minimum Monthly Royalty for Camp Services
until Franchisee satisfies the requirements of this Section71(b),or (ii) terminate the Agree
pursuant to Section 1^2(c) Franchlseewill n o t g r a n t a n y l e n d e r a s e c u r i t y Interest inthe
Marks, or any material or equipment incorporating the Intellectual Property except as provided
in S e c t i o n s ^ Franchisee will at all times maintain sufficient working capital as may be s e t t e r
in the Operations Manuals to comply with its obligations underthis Agreement. Franchisor
reserves the rightto request an affidavit ofworking capital from Franchisee at any time.
(c)
Build out
Within 00 days of executing the Acquisition Documents,
Franchisee must: (i) obtain from one of Franchisor's approved architects, architectural and
worklngdrawingsforthe b u i l d o u t o f the Camp Site andapproval from Franchisor and, if
applicable, its landlord, for the same^(ii) obtain all permits, licenses and entitlements nec^^^
to begin construction, with the exception of the certificate of occupancy which must be obtained
on or before the Operations Deadlines and (iii) commence construction of the Camp Site using
Franchisor's approved and required suppliers of Products and Services, including without
limitation suppliers ofconstruction management, flooring, signage, fencing, kennels, web cams,
wall art,groomlng tubs, lobby furniture, dogcots and play yard equipment. Franchiseemust
comply with thedirectivesprovided inthe Manuals a n d a l l local ordinances, building codes,
permit requirements and tbe Americans with Disabilities Act in the build out of the Camp Site
Franchisee must complete the build out of the Camp Site to Franchisor's satisfaction on or
before the Operations Deadline If Franchisee fails to complete the build out by the Operations
Deadline, Franchisor may:(i) extend the Operations Deadline for Camp Servlces,(ii) require
Camp SowWow 2014 FOO
^ h i b i t B D ^ a ^ i s e Agreement
US5^40706
^
Franch^ee to pay the Minimum
provideCampServioe^ ( ^ modify the License granted underthis Agreement hy rescinding
Franchisee's Licenseto provide the Gamp Services^ o r ^ t e r m i n a t e the Agreement pursuant to
Section t^
(d)
Gamo Services Deadline
Franchisee wiii satisfy ail pre opening
conditions to providing the Gamp Services to Franchisor's satisfaction in its soie discretion, an
commence operations o f t h e Gamp Services on or hefore the Operations Deadline Within
between 3 0 t o ^ 0 d a y s h e f o r e t h e G p e r a t i o n s D e a d i i n e , Franchiseeorits Majority Gwner,as
appiicahle, and one other person who must he Franchisee's Manager or other person to whom
Franchisee delegates the dayto day operations of the Gamp, must complete the initial Gamp
ServicesTraining to Franchisor's satisfaction In its sole discretion. Franchisee is prohibited
from providingGamp Services until: (i^all AcquisitionDocumentshavebeensignedandthe
buildout of the Gamp Site has been completed and approvedhy Franchisor (Ii) all amounts
due to Franchisor and Franchisee's suppliers have been paid^ (iii) Franchisor has been
furnished withcopies of alllnsurancepolicies and certificates requiredby Section 11 ofthis
Agreements and (iv) F r a n c h l s e e b a s r e c e i v e d a Gertificatefrom Franchisor toprovide Gamp
Services. Franchisee will beglnprovidingGamp Services at the Gamp Site immediately after
Franchisor provides Franchisee with the Gertlficate If Franchisee fails to meet the Operations
Deadline with respect to Gamp Services, Franchisor may (i) extend the Operations Deadline for
Gamp Services^ (ii) require Franchisee to pay tbe Minimum Monthly Royalty for Gamp Services
until Franchisee begins to provide Gamp Services^ or (Iii) terminate the Agreement in
accordance with Section 1^1(n).
(e)
In Home Services Deadline
Franchisee will satisfy all conditions to
providing the In Home Services to Franchisor's satisfaction in its sole discretion, and commence
operations o f t h e InHome Services throughout tbe Authorized Territory on the Operations
Deadline. Within between 30 to ^0 days before theOperations Deadline, Franchisee orits
Majority Owner,as applicable, a n d o n e other person who must be Franchisee'sManager or
other person to whom Franchisee delegates the day to day operations of the In Home Services,
must complete all Home Study Materials and the Initial In Home Training program to
Franchisor's satisfaction In its sole discretion. Franchisee is prohibited from providing In-Home
Services until it bas completed the Initial In-H^
and Franchisee bas received a Gertlficate from Franchisor to provide In Home Services
Franchisee will begin providing In Home Services throughout the Authorized Territory
Immediately after Franchisor provides Franchisee with the Gertlficate If Franchisee fails to
meettbeGperatlonsDeadlinewithrespectto In Home Services, Franchisor may terminate the
Agreement in accordance with Section 1^.1(n)
(f)
DoqTraininoServlces Deadline. Franchisee will satisfy all conditions to
providing the Dog Training Services to Franchisor's satisfaction in Its sole discretion, and
commence operations of the DogTrainingServices throughout the Authorized Territory on or
before the Operations Deadline Within between 30 to 00 days before the Operations Deadline,
Franchisee or Franchisee's designated Personnel must complete all Home^Study Materials and
the Dog Trainer Gertiflcation Program to Franchisor's satisfaction in its sole discretion.
Franchisee Is prohibited from providing DogTraining Services until it has satisfied this trai^^^
condition and has received a Gertlficate from Franchisor to provide Dog Training Services
Franchisee will begin providing Dog Training Services throughout the Authorized Territory
Immediately after receiving the Gertlficate If at any time during tbeTerm,the employment with
Franchisee'sGertified DogTrainer ends,Franchisee must, within 00 days,cause another one of
its Personnel to becomeaOertifiedDogTralnlngby completing the DogTrainer Gertiflcation
Camp Sow Wow 20t4FOO
^ibitSDFraoohi5e Agreement
^537^0706
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Program t o F r a n c h ^ o ^ s a t ^
^Pranoh^ee fails to meet the
Operations Deadline with respeotto Dog Training Services, Franchisor may: (i) extend the
Operations Deadline with respect to Dog Training Services and provideadditional or repeat
training at Franchisee's expensed (ii) limit the Licensegranted hereunder with respect to Dog
Training Services^ii) require F r a n c h i s e e s
Services until the time Franchisee hegins to provide D
Agreement in accordance with Section 1 ^ ( n ) .
(g)
Franchisor's determination to require Franchisee to pay the Minimum
Monthly Royalty tee in Sections 7BI(a) (d), (t) ahove, will not preclude Franchisor trom
exercising any ot its other rights under this Agreement, including without limitation, the r ^
Franchisorto terminate this Agreement at any time after any applicable cure period expires
(h)
Onooino Trainino. A t t h e m i d p o i n t o f t h e T e r m ( 5 y e a r s ) a n d o t h e n ^ i s e
throughout the Term, Franchisee its Majority Owner, or Personnel may he required to
participate In ongoing,supplemental or repeat training programs, at anytime as required hy
Franchisor. Franchisee must pay all c o s t s o f such ongoing, supplemental or repeat training
programs, including without limitation fees for such programs, subscriptions, Internet based
memberships, tutorials, videos as well as all travel and living expenses for itself and each of its
Personnel
(i)
EmolovmentlnterferencewlthOertifiedDoqTrainers During the term of
this Agreement, Franchisee may not employ or seek to employ, directly or indirectly, any person
who is at the time or was at any time during the prior^months employed asaOertifled Dog
Trainer by another franchisee in the System or Its affiliates, unless Franchisee compensates
tbat franchisee in the System or its affiliatesa fee of $5,000. Franchisee mustalso pay
Franchisor the Dog Trainer Oertlfication fee identified In Section 4.2 plus related travel
expenses. Franchisee acknowledges and agrees that any franchisee from whomaOertlfied
D o g T r a i n e r i t h i r e s i n violationof this subparagraph w i l l b e a t h i r d p a r t y beneficiary ofthis
provision, but only to the extent they may seek compensation from Franchisee.
72
Franchisee will,consistent with the terms of this Agreement,dlligently develop
tbe O a m p a n d use its best effortsto market, promoteand provideall ofthe Servlcesand
Products.
7.3
Subject to the terms of this Agreement, during tbeTerm,Franchisee will comply
with all present and future standards, specifications, processes, policies, procedures and
requirements ofFranchisor regarding tbe operation ofthe Oamp and use ofthe Marks and must
comply with the following requirements:
(a)
Franchisee or its Manager must devote full time efforts to
management and operation of the Oamp^
tbe
(b)
Franchiseeorits Majority Owner, as applicable, and oneother person
who must be Franchisee's Manager or other person to whom Franchisee delegates the day to
day operations o f t h e Oamp, must attend all mandatory conferences at such locations as
Franchisor may reasonably designate, and Franchisee will pay all salary and other expenses of
persons attending, Including any conferencefees, travel, payroll, meals, living and personal
expenses. If Franchisee has entered into more than one franchise agreement with Franchisor,
Franchisee w i l l c a u s e a t l e a s t o n e person representing eachfranchise agreement toattend
each mandatory conference as provided in this Section7.3.Franchisee shall not be required to
attend more than two mandatory conferences per year. If Franchisee fails to attend such
Camp Sow Wow 2014^00
ExhibitSDFrenohise Agreement
US^^07^
8-23
mandator p r o g r a m s w ^ o ^ o b ^ o ^ g F r a n c h ^ o ^ p h o r w ^ e n consent F r a o o h ^ e e ^ be
required to make up tbe p ^ e m ^ f p o ^ b ^ ^ a ^ m e end
wiii be obeyed tbe oonterenoe registration tee p i u s e p e n a i t y o t up to O n e T b e ^ ^
^ , 0 0 0 ) tor eeob program Franobisee or its representative taiis to attends
(0)
Franobisee m u s t o t t e r t o r s a i e o n a o o n t i n u i n g basisin tbe Authorized
Territory and at tbe Camp Site alirequiredServioes and Products, and any new Services or
Productsintroduced i n t o t b e S y s t e m a t t b e t i m e a n d intbemanner required by Prancbisor
Franchisee wiii not provide any Service or Product except witbin tbe AutborizedTerritory,or in
limited circumstances at otber locations as approved by Franchisor in advance, sucb as special
events tor promoting or marketing the Camp Franchisor will provide Franchisee witb at least 30
days prior written notice ot any new required Service or Product introduced into tbe System. All
equipment, products, supplies, tools and otber items necessary to otter tor sale the Services or
Products must beacquired, installed and utilized at the time and in tbe manner required by
Franchisor. The marketing ot new Services and Products must begin at the Camp as
reasonably required by Franchisors
(d)
Franchisee may not otter tor sale trom tbe Camp or within the Authorized
Territory any Service or Product, unless Franchisee receives the prior written consent ot
Franchisors
(e)
Franchisee must use at tbe Camp only advertising and promotional
materials, services, equipment, tools, inventory, products, signage, supplies and uniforms that
meet Franchisor's standards and specitications and only in the manner and during the period
specified hy Franchisor
(f)
Franchisee must maintain the Camp and everything related to the Camp
in good condition andmust keep the Camp clean, neat and sanitary. All Personnel must be
clean and neat in appearance and wear Franchisor mandated uniforms at all times Franchisee
agrees to repair, refinish, repaint, replace,andotherwise remodel the Camp, including without
limitation, the signs, furnishings, fixtures, decor, and any other tangible part or property of the
Camp at Franchisee'ssole expense at such times as Franchisor may reasonably direct
(g)
Franchisee may not make any alterations to the Camp or Camp Site that
materially affectsthe imageof the C a m p e x c e p t a t Franchisor's request orapproval, andall
alterations must strictly conform to specifications and requirements established or approved by
Franchisor
(h)
The Camp and the Services provided andProducts sold by Franchisee
must comply with all applicable federal, state and Local Laws, ordinances, rules, zoning
regulations and other requirements including those laws applicable to (a) Camp Services, In
HomeServlces, DogTraining Services, and allotherauthorized Productsand Services^ and, (h)
all consumer protectlonlawsandregulations.Franchisee must obtain all business licenses and
permits required by federal, state and local laws, ordinances, rules and regulations before
operating its Camp and meet and comply with all zoning and state and local ordinances
required to operate the Camp at t h e C a m p Site. Franchisee acknowledges andagrees that it
conducted an independent investigation into all applicable laws and regulations with the
assistance of an attorney or other qualified advisor before entering into this Franchise
Agreements
(1)
Franchisee must promptly pay all debts and taxes and other obligations
arising In connection witb the Camp when due, including without limitation, the payment of fees,
Camp Bow Wow 2014 FOO
E x ^ i t B D F r a n o h ^ e Agreement
^53755407^
B^4
^ feder^ s t a ^ county and local taxes and any and all accounts payable or otber
Indebtedness Incurred by Francblsee related to tbe operation ottbeOamp^
^
Francblsee wllluseltsbestettorts to ensure customer satlstactlon^use
good taltbln all dealings witb customers, potential customers, reterral sources, suppliers and
creditors^ respond to customer complaints Inacourteous,prompt and professional manners use
Its bestettortsto promptly and talrly resolve customer disputes Inamutually agreeable manned
and take sucb actions as Francblsordeems necessary orapproprlate to resolve customer
disputes^
(k)
Francblsee will ensure tbat all advertising, labeling, packaging and otber
materials associated witb tbe Services and Products are not talse or misleading and tully
conform to all applicable laws and regulations. Francblsee agrees tbat all Products or Services
promoted or rendered under tbe Marks,and all uses oftbe Marks pursuant bereto,sball be o f a
natureandquallty conforming t o a n y a n d a l l s t a n d a r d s a p p r o v e d o r d l c t a t e d by Francblsor
Francblsor bas tbe rlgbt to ensure tbe nature and quality of tbe Services and Products offered
by Francblsee under tbe Marks conform to standards approved or dlctatedby Francblsor and
a r e m a l n t a l n e d a t a l e v e l wblcb reflects tbeblgbstandards of Francblsor, Including bavlng
Francblsor's duly authorized representatives Inspect Francblsee's Products and tbe rendering of
tbe Services, at mutually convenient tlmes^
(1)
Francblsee will acquire, maintain and upgrade computer, Information
processing and communication systems, Including all applicable hardware, software and
Internet and otber network access providers, web-cams and Website vendors, as prescribed In
tbe Manuals
(m)
Francblsee will comply witb all terms andpay all fees tbat may be due
underasoftware license agreement for any and all software Francblsee Is required to use In tbe
operation of Its Camp as prescribed by Franchisors
(n)
Francblsee will develop and operate the Camp pursuant to
the
OperatlonsManuals, Includlngall directives, requirements, standards, methods of operations,
systems, modifications, additions, deletions and changes made to tbe Operations Manuals tbat
may b e m a d e f r o m t l m e t o t l m e during tbeTerm, however communlcatedlncludlng, but not
limited to Intranet systems, email, fax, video, verbal or mall^ and,
(o)
Franchlseeand Its Personnel whoprovlde InFlome Servlcesand Oog
Training S e r v l c e s m u s t u s e a v e h l c l e t h a t m e e t s Franchisor's basic requirements The vehicle
must be In good condition and repair and In working order Branding magnets must be placed
on the vehicle at all times Franchisee or Its Personnel provide In Flome Services or Oog
Training Services. Franchisor may change the requirements and specifications for the vehicle
used to provide such services at any time.
7.4
In prescribing standards, specifications, processes, procedures, or requirements
under Sections.3 or any other provision of this Agreement, Franchisor may provide suggestions
to Franchisee In determining the prices to he charged by Franchisee for the Services or
Products. Franchisor, however, shall not have control over the day-to-da^ managerial
operations of the Camp, and Franchisee will be free to establish Its own prices
7.5
Franchisee expressly authorizes Francblsor and Its representatives, at any
reasonable time,and without prior notice to Franchisee,to enter tbe Camp Site orother
locations where Services are rendered or Products are sold, and conduct regular Inspections of
Camp Sow Wow 2014^00
E x ^ t B D F r a n o t ^ e Agreement
US^^0706
8^5
the Camp end Franchisees methods ot operation Sooh inspections may inoiode withoot
limitation, osingdigitai andother monitoringservioes to observe and record discissions with
Franchisee's employees, observe costomer interaction and the rendering ot Services, and the
review ot Franchisee's books and records (incloding, withoot limitation, data stored on
Franchisee's boslness compoter and point-ot-sale cash control system) in order to verify
compliance with this Agreement and the Operations Manoal. Franchisor will have the right to
discoss with any Personnel, all matters that may pertain to compliance with this Agreement and
with Franchisor's standards, specitications, retirements and procedores and to have any
Service performed by any Personnel. Franchisor may, in its sole discretion, reqoire any
Personneltocompleteorre completeanytrainlng reasonably deemed necessary by Franchisor
atFranchisee'scost.
Fallore to repair or maintain the Oamp Site and the tangible property ot the Oamp in
accordance with Franchisor's standards will constitote a breach otthis Agreement.Withoot
waiving its right to terminate this Agreement tor soch reason, Franchisor may notify
Franchisee in writing specifying the action to be takenby Franchisee to correct the repair or
maintenance deficiency. If Franchisee fails or refoses to initiate a bona fide program to
completeany reqoired repair, maintenance orcorrective work within 30 days after receiving
Franchisor's written notice, Franchisor shall have the right, in addition to all other remedies, to
enter the Oamp Site and complete the reqolred repair, maintenanceor corrective workon
Franchisee's hehalf.Franchisor shall have no liability to Franchisee for any work performed. If
Franchisor elects toperformreqolredrepair, maintenance or corrective work,or replace non
conforming property with conforming property, Franchisee will be invoiced for labor and
materials, p l o s a 2 5 ^ s e r v i c e c h a r g e a n d an amoontsofficienttoreimhorse Franchisor for
Franchisor's actoal costs to sopervise, perform and inspect the work and procore any
replacement items, incloding withoot limitation, labor,materials,transportation, lod
contractor fees and other direct expenses, all ofwhlch shall be doe and payable opon receipt of
invoice.
7^
From time to time asFranchisorreqoires, Franchisee willimplement items of
modernization and replacement of eqoipment and related items of the Oamp, incloding withoot
limitation the Oamp Site and any vehicle osed toprovide In-Home Services or OogTrainlng
Services,to conform to the then-corrent standards for new Oamps.Themaximomcomolative
amoont that Franchisee willbereqolred to spenddoringtheinitialTerm of this Agreement is
$50,000 (the ^Maximom Modern^atioo A r n o l d " )
The Maximom Modernization Amoont
does not inclode:(l)opgrades to any compoter system,(ii) the cost to maintain vehicles or the
Oamp Site and to keep in good condition and repair, all eqoipment, leasehold
improvements and fornishingsas provided in Section 7.3(f), (III) costsassociated with new
eqoipment reqoired to offer new or modified Prodocts or Services as provided in Section
7 3(c), (iv) changes Franchisee chooses or is reqoired by any third party to make, or (v)
opgrades Franchisor reqolres Franchisee to make opon the renewal of the Franchise
Agreement in accordance witb Section 2 o r a s a condition totransferof the Oamp t o a n
onrelated third party In accordance witb Section t4.
77
Franchisee most become a member of soch trade associations or
organizations which,in the reasonable opinion of Franchisor,areosefol in the operation of the
Oamp. The costs of participating in soch trade associations will be borne by Franchisee
Nothing in this Section 7.7 limits Franchisee's freedom to^oin any franchise or franchisee
association of its choosing.
7S
As partofthe Initial Oamp ServicesTraining, Initial InHomeTralnlng and Oog
Trainer Oertlfication Program, Franchisor will provide training on the compoter programs
Camp Sow Wow 20t4FOO
ExhibitS^Fraoot^ Agreement
^537^0706
826
oecessa^toope^^eOamp F ^ c h ^ e w ^ ^ a ^ m e s h ^
operas soch c o m p o s s t e r n s , o o d e ^ a n d how to
^ t e m ^ a n d F ^ o h i s o ^ p r o p n e t a ^ database mana^^
withoot s t a t i o n ^TheOo^
ioo^ng
Franohisee aoknowiodges and understands that oompoter systems are
viroses, hogs, power disroptions, oommonioation iine disroptions, internet aooess tailores,
internetoontenttaiiores,datereiated problems and attacks hyhaokers andotberonaotborized
introders. Franchisor does not goarantee that intormation or commonication systems
soppiied by Franchisor or its soppliers wiiinot be voinerabie to these problems. Franchisee
acknowledges and agrees that Franchisee is solely responsible tor protecting itselt trom
these problems. Franchisee most also take reasonable steps to verity tbat Franchisor's
soppllers, lenders, landlords, costomers and governmental agencies on whicb Franchisee
relies, are reasonably protected. This may Inclode taking reasonable steps to secore
Franchisee's systems, incloding, bot not limited to, firewalls, access code protection, anti
viros systems and ose otbackop systems
7.0
Franchisee will acqoire, maintain andopgrade hardware, software, Information
processing and commonication systems, andlnternet and other network access providers, as
prescrihedinthe Manoalsandasmodified periodically by Franchisor. Franchisee will enter into
and comply with separate software or other license agreements that Franchisor or its designee
ose In connection with the System, incloding the Oata OawgSohscrlption Services Agreement
attached hereto at Attachment I.
Franchisee will otilize Franchisor's reqoired software,
proprietarydatabasemanagementand intranet systems as the exclosive meansfor tracking
and malntainingcostomer,vendorand lead information,and for soch other oses as prescribed
by Franchisor periodically In the Manoal. Franchisor will provide access to the intranet systems
to Franchisee's Personnel as provided In S e c t i o n a l ) Each of Franchisee's Personnel will
have different levels of secority and access to the information contained in the intranet systems.
Franchisee Is responsible for the ose of tbe intranet systems by Its Personnel and for
compliance by each of its Personnel with Francbisor'ssecority and access policies. If any
access information i s l o s t o r stolen, o r e m p l o y m e n t o f a n y of Franchisee's Personnel ends,
Franchlseemostpromptly notify Franchisor. Twice eachmonthor soch other time period as
reqoired by Franchisor, F r a n c h l s o r w i l l ^ a c c e s s a l l s a l e s a n d royalty data throogh reporting
featores in tbe mandatory software programs, and (ii) Instigate an aotomatic draft on
Franchisee's bank a c c o o n t v l a E F T f o r Royalty Fees, Marketing Fees andifapplicable,tbe
Local AdvertisingExpense owed. Franchisee will engage in search engine optimization for its
Website, as directed by Franchisor.
7BI0
Franchisee will at all times maintain an active and fonctionlng email accoont at
which Itcanrecelveemails from Franchisor and will check the accoont at least once each day
If available, Franchlseewill maintain an emailaccoonton Franchisor's proprietary database
management and intranet system. Franchisee acknowledges and agrees that Franchisor may
provide, by means ofemail,mandatory System opdates and changes to the Operations Manoal
Incloding changes to policies and standards.
7Blt
Franchisee will e m p l o y a O a m p Scoot at all times doring tbeTerm Franchisee
may perform thefonctions of the OampScoot only before the execotionof the Acqoisition
Oocoments. After execotion of the AcqoisitionOocoments, Franchisee will caose another one
of ItsPersonneltoperformtheOampScootfonctions. This Oamp Scoot will devote at least
forty (40) hoors per week to the performance of the Oamp Scoot fonctlonsontil Franchisee
obtains fromFranchisor written notification tbat theOamp's Oross Pevenoes are eqoal to or
greater than its losses (the ^rea^eveo'') After the time tbat the Breakeven is achieved, and fo^
Camp 8ow Wow 2014 FOO
E x ^ i t ^ D F r a n o h ^ Agreement
^^5540706
8-27
therem^oderof^eTe^^eGam^
effons Ifat any time donng tbeTerm tbe
Fraoobisee to ceose tbe Camp Scoot to devote additional time to p e r t o ^
tonotions.
7t2
Franobiseemostpe^ormabaokgroondobeokoneaobPersonneiitbiresaod
most ensore tbat any soob Personnel exeootesFranobisor's standard tormNondisoi^^
Noncompetition Agreement in tbe torm provided by Francblsor Fortber, Franchisee most
ensore tbat all Personnel performing Oog Training Services andBor Income Services are
bonded in tbe amoont and manner reqoired In tbe Operations Manoals
S
P U R C H A S E OF E O U I P M E N T ^ N V E N T O R Y A N O S U P P L E S
SBI
Franchisee acknowledges andagrees tbat Franchisee's obligations set tortbin
this Agreement and the Operations Manoal are reasonable and necessary tor tbe operation ot
theOamp and tomaintainonltormitythrooghoot tbe System Franchisee most adhere to the
standards and specitications set forth in tbis Agreement and tbe Operations Manoals and any
revisions or amendments to the same (incloding, withoot limitation, standards and specifications
for the Services and all reqoired soppliers, sopplies and eqoipment osed in tbe Oamp incloding,
architectoral and constroctlon management services, inventory items and merchandise,
marketing materials, displays, signage, fornitore,flxtores,eqoipment, compoter hardware and
software, and sopplies). Franchisee most ose signs, fornisbings,sopplies,fixtores,eqoipment
and inventory tbat comply with Francblsor'stbencorrent standardsand specificationswbich
Franchisor establishes from time to time, witbin 30 days of written notice to Franchisee.
Franchisor basthe right to change Franchisor's standards and specificationsin Franchisor's
sole discretion. Franchisee acknowledges that Franchisee may incor an increased cost to
complywith soch changes at Franchlsee'sexpense.
5.2
Pecognizing that preservation of the System depends opon Prodoct and Service
onlformlty and the maintenance of Franchisor'strade dress,Franchisee agrees to only porchase
architectoral and constroctlon management services, inventory items and merchandise,
marketing materials, displays, signage, fornitore, fixtores, eqoipmentand sopplies, compoter
hardware and software, and other eqolpment from Franchisor or from approved or designated
soppliers as Franchisor will specify, from time to time, in the Operations Manoals and otherwise
in writing Franchiseehereby acknowledges that Franchisor, Franchisor's Affiliate o r a t h l r d
party may be one of several, or the only, approved sopplier of any Item or service, Incloding
withoot limitation site selection and constroctlon management services. Franchisee forther
acknowledges and agrees that Franchisor or Franchisor's Affiliates have the right to realizea
profitonany items that Franchisor, Franchisor's Affiliates or Franchisor's approvedsoppliers
sopply to Franchisee.
5.3
In theevent Franchisee wishesto porchaseany onapproved item, incloding
inventory, oracqoire approved items from an onapproved sopplier, Franchisee most complete
and provide FranchisorwithFranchisor'stben-correntstandard form vendor reqoest incloding (i)
thename, address and telephonenomber of theproposedsopplier, (ii)a descriptionofthe
ItemFranchisee wishes to porchase,(iii) the porchase price of tbe item,(iv)a sample of the
item, and (v) the thencorrent prodoctor sopplier review fee, which a s o f thedate ofthis
Agreement is $500 for each new prodoct or sopplier. If Franchisor Incors any costs in
connection with testing a particolar prodoct or evaloating an onapproved sopplier at
Franchisee's reqoest, Franchisee most reimborse Franchisor for Franchisor's reasonable
testing costs, regardless ofwhether Franchisor sobseqoentlyapprovesthe item or sopplier
Nothing in the foregoing will be constroed to reqolre Franchisor to approve any particolar
Camp Sow Wow 2014 FOO
ExhibitS^Fraooh^e Agreement
05^^40706
8^
s o p p ^ Franoh^or may base F r a o c h ^ o ^
cons^era^onsrela^gnotoolyd^e^ytotbe^emorsop^
o n ^ o r m ^ e^dency, and qoa^y of operation Franobisor deems necessary or desirable in
Franobisor's System a s a w b o i e . Franobisor bas tbe rigbt to receive payments trom suppliers
on accoont ottbeirdeaiings witb Francbiseeand otber franchisees and to oseaiiamoonts
Franchisor receives witboot restriction unless instructed otberwise by the soppiier) for any
porposes Franchisor deems appropriate. Nothing herein wiiireqoire Franchisor to approve any
soppliers f o r a g i v e n i t e m . Franchisor may revokeFranchisor's approval of particolar Frodocts
or soppliers when Franchisor determines, in Franchisor's sole discretion, that soch Frodocts or
soppliers no longer meet Franchisor's standards Opon receipt of written notice of soch
revocation, Franchisee most cease porchasing and oslng socb Frodocts or sopplier.
Franchisee most ose Frodocts porchased from approved soppliers solely In connection with the
operation of the Gamp and not for any competitive boslness porpose.
5.4
Franchisor may establish boslness relationships, from time to time, with
soppliers who may prodoce, among other things,certain items,fornishlngs, sopplies,fixtores,
eqoipment and inventory according to Franchisor's proprietary standards and specifications or
private label goods which Franchisor has aothorized and prescribed for sale by System
franchisees. Franchisee recognizesthat soch Frodocts areessentialtotheoperation ofthe
Gamp and to the System generally. Franchisee forther recognizes that Franchisee's fallore to
pay soch system Soppliers may interfere with soch soppliers'willingness to sopply the System
which may resolt in other System franchisees'inability to obtain the Frodoct or ability to obtain
tbe Frodoct only on lessfavorablecredit terms.Accordingly, Franchlseewill pay allsystem
soppliers as and when doe
5.5
Franchisee will offer for sale all Frodocts and Services that Franchisor
prescribes and only those Frodocts and Services that Franchisor prescribes. Franchisee may
not offer any other prodocts for sale, rent,or lease withoot having received Franchisor's prior
written aothorization Franchisee will at all times maintain sofficient levels of inventory as
specifiedintheGperationsManoal, to adeqoately satisfy consomer demand. Franchlseewill
also offer and sell all private label Frodocts that Franchisor may now or in the fotore designate
for sale by System franchisees at Franchisee's expense. Soch items may inclode, withoot
limitation, pet food, toys and other Frodocts.
S5
TosecoreFranchisee'sperformance onder this Agreement, Franchiseehereby
grants toFranchlsorasecorlty interest in and to all of Franchisee's tangible andlntanglble
property osed to operate the Gamp. Franchisor shall record appropriate financing statements to
protectandperfectitsrightsasasecored party. Except with Franchisor's prior written consent,
which it shall not onreasonably withhold, Franchisee will not grant any person or Boslness Entity
asecorltyinterestin Franchisee's tangible or intangible assets of the Gamp.Franchisor agrees
to sobordinate its secority interest if reqoestedbya lender providing financing to Franchisee
provided that soch lender: (i) agrees toprovideFranchisor witb writtennoticein the case of
Franchisee's defaolt at tbe same t i m e t h a t t h e l e n d e r s e r v e s F r a n c h l s e e w i t h s o c h notice of
defaolt^ii) provides Franchisor the right, bot not the obligation, to core the defaolt onder th^
loan or financing agreement^lii) notifies Franchisor if the lender assigns its Interest in the loan
orfinancingtoathlrd party,who tbe lender most reqo^^
providesFranchlsorwithacopyoftheloanorfinancing docoments which may not be materially
modified at any time withoot Franchisor's prior written consent so that Franchisor may confirm
that any changes do not materially Impair its rights provided in this S e c t i o n S ^ a n d ( v ) does not
take a primary secority interest In Franchisor's Intellectoal Property or any eqolpment or
materials bearing the Intellectoal Property It will be Franchisee's obligation to ensore
CampSowWow 2014^00
E x t ^ i t S D ^ n ^ s e Agreement
^^7^706
82^
loan or ^nanoing agreements
waiver otFranohlsoBshghts In this SeotlonS^.
0
MARIANO OOPYR^HTEOWO^S
OBI
Franohisee acknowledges and agrees that:
(a)
Franchisor (or Its Attlllate) Is the owner o t a l l right, title and interest,
together with all the goodwill otthe Intellectoal Property. Franchisee torther acknowledges t^^
the Marks designate the origin or sponsorship ot the System, Gamp, and Frodocts and
Services, and that Franchisor desires to protect the goodwill otthe Marks and to preserve and
enhance the valoe otthe Intellectoal Property^
(h)
All GopyrlghtedMaterials created hy Franchisee or any other person or
Boslness Entity retained or employed hy Franchisee are works made tor hire within the meaning
otthe United States Copyright Act and are the property ot Franchisor, who will he entitled to ose
and license othersto ose theCopyrighted Materials onencomhered hy moral rights.Tothe
extentthe Copyrighted Materials are networks made tor hire or rights in the Copyrighted
Materials do not aotomaticallyaccroe to Franchisor, Franchisee Irrevocahly assigns and agrees
to assign to Franchisor, Its soccessors and assigns, the entire right, title and Interest in
perpetoitythrooghoot the world in and to any and all rights, incloding all copyrights and related
rights, In sochCopyrighted Materials, which Franchlseeand theaothorotsochCopyrighted
Materials warrant and represent as heing created hy and wholly original with the aothor.Tothe
extent soch assignment is not permissible onder applicable law, Franchisee grants Franchisor
an exclosive, perpetoal and royalty tree right to ose, and license the ose ot, any Copyrighted
Materials created by or on behaltot Franchisee Where applicable, Franchisee agrees to obtain
any other assignments ot rights in tbe Copyrighted Materials trom another person or Boslness
Entity necessary to ensoreFranchisor's right in the CopyrightedMaterials as reqoiredln this
SectiongBI(b^
(c)
Franchisee will never dlspote, contest or challenge, directly or indirectly,
the validity or entorceahility otthe Marks or CopyrightedMaterials or Franchisor's ownership ot
the Intellectoal Property, nor coonsel, procore or assist anyone else to do the same, nor will it
take any action that is Inconsistent with Franchisor's ownership otthe Intellectoal Property, nor
will it represent tbat it has any right, title or interest in thelntellectoal Property other than
expressly granted by this Agreement. Any onaothorized ose otthe Intellectoal Property by
Franchisee will constitoteabreachot this Agreement and an infringement ot Franchisor's and
its Attiliate'srightsinand to the Intellectoal Property^
(d)
Franchisor may decide to apply to register or to register any trademarks
or copyrights with respect to the Services, Prodocts and any other prodocts and services and
the Copyrighted Materials Failore ot Franchisor to obtain or maintain in ettect any soch
applicationorregistration is n o t a b r e a c h o t this Agreement Franchisee will not, before or after
termination or expiration of the Agreement: (i) register or apply to register any of the Marks or
any trademark, service mark, or logo confoslngly similar thereto or any Copyrighted Materials,
anywhere in the world, (ii) ose any Mark with any prefix, soffix, or other modifying words, terms
designs or symbols (other than logos licensed to Franchisee onder this Agreements or, (ill) ose
any Mark as part ofadomain name or electronic address maintained on the Internet, the World
Wide Web, or any other similar proprietary or common carrier electronic delivery systems
(e)
Upon Franchisor's reqoest, Franchisee will cooperate folly, both before
and after termination or expiration of this Agreement and at Franchisor's expense, in confirming,
Camp Sow Wow 2014 FOO
ExhibitS^Franchise Agreement
^5^540706
8^0
pe^e^og, prese^og, andehfo^og F ^ c h ^ o B s ^ ^ i o t h e ^ e ^ c ^ P r o p e r i n o ^ n g
bot oot Umitod to, exeootiog and de^enng to Fraooblsor soob dooomeots as Fraoobisor
reasonably reqoests tor any soobporpos
attorney, a n d o o p l e s o t o o m m e r o l a l d o o o m e n t s s b o w i n g s a l e a n d a d v e r t l s l n g o t t b e S e r v ^ ^
and Prodoots and otber prodoots and services Francblsee bereby Irrevocably appoints
Francblsor as Its attorney-ln-tact tor tbe porpose ot executing socb docoments^
(t)
All osage o t t b e Intellectoal Property by Francblsee and any goodwill
established by Francblsee's ose ot tbe Intellectoal Property will Inore to tbe exclosive benetlt ot
Francblsor. Tbis Agreement does not center any goodwill or otber Interests In tbe Intellectoal
Property to Francblsee opon expiration or termination ottbe Agreements
(g)
FPANGHISOP MAKES NO PEPPFSFNTATION OP WAPPANTY,
E ^ P P E S S O P IMPLIED, AS TO THE OSE, E^OLOSIVE OWNERSHIP, VALIDITY O P
ENFORCEABILITY O F T H E INTELLEOTOALPPOPEPTY^
(b)
Wltboot limiting tbe generality ot anything else contained herein,
Francblsee will not transfer or otben^lse, pledge asasecorlty,encomber or otben^lse attempt
to dispose ottbe Intellectoal Property^ and,
(I)
0.2
Franchisor's trade dress Is distinctive, non-tonctlonal and protectable.
Franchisee acknowledges and agrees that:
(a)
Franchisee's right to ose thelntellectoalProperty Is derlvedsolely trom
this Agreement. Franchisee may only ose the Intellectoal Property In Its operation otthe Oamp
and only In compliance with this Agreements
(b)
Franchisee will not ose any Marks or portion otany Marks as part o t a
corporate or tradename,or with any pretlx,sottlx or other modifying words,terms,designs or
symbols, or In any modified form. Franchisee will obtain soch flctltloos or assomed name
registrations as may be reqolred by Franchisor or onder applicable law^
(c)
Franchisee will not ose any Marks or portions of any Marks for the
porpose of advertising, promotion or marketing throogh online soclalmedla^lnclodlng social
networking sites, blogs, Image sharing sites and any other form of Internet
hased
commonication) wltboot prior written consent from Franchisor and will follow all of Franchisor's
directives as to advertising or marketing throogh social media ootlets^
(d)
Franchisee will safegoard and maintain the repotatlon and prestige of the
Intellectoal Property and will not do anything that woold tarnish tbe Image of or adversely affect
the valoe, repotatlon or goodwill associated with the Intellectoal Property Franchisee will not
anything that woold dllote, directly or Indirectly,the valoe ofthe goodwill attached to the
Intellectoal Property, nor coonsel, procore or assist anyone else to do the same^
(e)
Franchisee will ose the Marks and Copyrighted Materials only In lettering,
logos, print styles, forms and formats, Incloding hot not limited to, advertising and promotional
materials, Invoices, signage, boslness checks, boslness cards, Invoices, stationery and
promotlonalltems soch as clothing, pens and mogs, etc., which have been pre-approved by
Franchisor porsoanttothls Agreement, and promptly follow Instroctlons regarding the Marks
and Copyrighted Materials as provided In the Manoal and otherwise given by Franchisor from
timetotime^ and,
Camp Sow Wow 2014 FOO
E x t ^ t S D ^ a n o h ^ e Agreement
L^7^40706
83t
(f)
Fraooh^or s e n s e s the oghtstoFrenchised Home B o d i e s t o o s e t h e
Home O o d l e s by Oamp Bow
the operation otsoohtreoob^ed b l e s s e s It there e x ^ t s a F r a ^ ^
AothorizedTerritory as ottbe date ot tbis Agreement or the date tbat F r a n o h ^
Approvai,^Franobiseewiii not be grantedaiioense to ose tbe Home Boddies by Oamp B
W o w ^ or Home Boddies Oamp^ trademarks, and (ii) Franohisee and the pre existing
Franohised Home Boddies wiii have tbe rightto ose tbe ^Behavior B o d d i e s ^ " trademark
0.3
Franohisee acknowledges and agrees that:
(a)
It Franchisor determines that the ose ot the Intellectoal Property in
connection with the Services, Frodocts, other prodocts and services otthe Oamp will infringe or
potentially infringe opon the rights ot any third party, or it otherwise becomes advisable at any
tlmefor Franchisor to modify or discontinoe ose o f t h e Intellectoal Property o r a n y portion
tbereof, then opon notice from Franchisor, Franchisee will immediately terminate or modify soch
ose In the manner prescribed hyFranchisor.Franchisor may reqoire Franchisee to ose one or
more additional or sobstitote trade names, trademarks, service marks or other commercial
symbols orcopyrighted materials.If the change In ose of the Intellectoal Property Is doe to
Franchisor'sdetermination of a third party'ssoperior rights, then Franchisorshall reimborse
Franchisee for tbe tangible cost of compliance with this regolrement (soch as the cost of new
signage, printing newletterhead and boslness cards), bot Franchisee will have n o r l g h t s o f
damages, offset,or right to terminate this Agreement a s a r e s o l t thereof and Franchisor will
have no liability or obligation whatsoever with respect to Franchisee's modification or
discontlnoance ofany Intellectoal Property^ and,
(b)
Franchisee will notify Franchisor Immediately, bot in no case In more than
3 d a y s a f t e r r e c e i v i n g n o t i c e o f a n y c l a i m , demand or caose of action based oponor arising
from any attempt by any otber person or Boslness Entity to ose the Intellectoal Property or any
colorable imitation tbereof Opon receipt of timely notice of an action, claim or demand agai^^^
Franchisee relating to the Intellectoal Property, Franchisor will have the sole right,bot not the
doty, to defend or settle any soch action. Franchisor will have the sole right to contest or bring
action against any third par^ regarding the third party's ose of any of the Intellectoal P r o p e r
Franchisor will control all actions bot not he obligated to take any action In any defense or
prosecotion of any litigation relating to the Intellectoal Property or components of the Sys
ondertaken by Franchisor,Franchisee will cooperate with Franchisor, execote any and all
docoments, and take all actions as may be desirable or necessary in the opinion of Franchisor's
coonsel, to carry oot soch defense or prosecotion.
0.4
IfFranchiseedorlngtheTermoranyPenewalTerms,conceives of or develops
any improvements or additions to tbe System, Intellectoal Property, Website or any other
inventions, conceptions,developments, discoveries, worksofaothorship, docoments or other
information pertaining to or relating to tbe System or the Oamp, methods of operations, or any
new trade names, trade or service marks, logos or commercial symbols related to the System or
Oamp or any advertising and promotional ideas, inventions, or knowhow related to the System
or Oamp (collectively, the improvements''), Franchisee will folly disclose the
Franchisor, withoot disclosore of the Improvements to others, and will obtain Franchisor's
written approval before oslng soch Improvements All soch Improvements will become the
property of tbe Franchisor and may be osed by Franchisor and all other franchisees withoot any
obligation to Franchlseefor royaltiesor other fees.Franchiseewillassign and does hereby
assigntoFranchisor, all right, title and interest in and to the Improvements, incloding the n^^
grant sohllcenses to any soch Improvement To the extent that soch assignment Is not
Camp 8ow Wow 20t4FOO
Ext^it8DFrao^seAg^meot
^537^0706
832
permiss^e onder a p p ^ c a b ^
endroya^freenghttoos^end^
10.
A O V E R T ^ N O A N O PROMOTION
101
Oonng the Oamp Laonch Period, Pranohisee wiii spend the Oamp Laonoh
Advertising on opening advertising and promotion as weii as a grand opening event.
Advertising and marketing doring the Oamp Laonoh Period and Franchisee's tirst year ot
operations wiii he soh^eotto Franchisor's retirements and specitications (in addition tothe
approval described heiow)
10.2
Fach month doring theTermatter Franchisee begins operations,Franchisee wiii
spend tbe toiiowing amoonts on advertising within the Aothorized Territory (the ^Decal
Adver^ismgExpeose") The Local AdvertisingExpense will be $^,500 All advertising and
marketing created or placed to satisfy the Local AdvertisingExpense retirement will he
sob^ectto Franchisor's retirements and specitications. Franchisor reserves the right to collect
the Local Advertising Expense inthe same manner as tbe collection ot Royalty Fees,directly
tromFranchlsee tor dispersal to local advertising or media placements at any time doring the
Term
10.3
Ooring the Term, Franchisee will tornisb Franchisor with an accoonting ot
Franchisee's previoos month's expenditores tor advertising and promotion o n a t o r m approved
by Franchisor.
10.4
Franchisee will only ose Franchisor approved advertising materials and
placements Franchisee will obtain Franchisor's prior written consent and follow its standards
and specifications, in establishing or maintaining any VVebsite, splash page, linking, framing
other presenceon the Internet throogh any Website, social networking site orotherwlse In
connection with theoperation o f t h e Oamp, Incloding wltboot limitation, Facebook, Linkedln,
MySpace,Plaxo, Twitter and YooTobe Franchisee will not ose any Mark or portion thereof, In
any domain name on tbe Internet, other than as provided or approved by Franchisor. If
Franchisor does not provide certain specific types of print or other advertising materials,
Franchisee may develop soch materials for its own ose, at its own cost, bot most first sobmit
prototypes, examples, proofs or other soch samples of these materials to Franchisor for
approval before ose. Franchisorshall ose reasonable best effortstoapproveor disapprove
Francblsee's reqoest to ose selfDgenerated advertising materials, and linking or framing
between Franchisee's web pages and otherWebsites in writing within 14 days after Franchisee
sobmltssoch reqoestsand materialsfor review If Franchisor takes no action, theadvertising
materials will he deemed not approved hy Franchisor Franchisor may make available to
Franchisee advertising and promotion materials for the Oamp that are osed by Franchisor and
other franchisees Franchisee most pay dopllcation costs of any advertising or promotion
material provided by Franchisor Franchisee may notadvertise ootside its AothorizedTerritory
withoot Franchisor's priorwrltten approval
10 5
Franchisor may establish a regional advertising cooperative ^Regional
Advertising Oo^op' ) Franchisor will determine the boondaries of the Regional Advertising Oo^
op and may modify the boondaries at anytime effective opon written notice to Franchisee
Franchisor may reqolre that one Regional Advertising Oo op merge with another Regional
Advertising Oo op servicing an adjacent advertising market or Franchisor may sobdivide a
Regional Advertising O o o p i n t o smaller groopings If established, Franchiseemost direct its
Local Advertising E x p e n s e s t o t h e Regional Advertising Ooop.Franchisor will provideeach
Regional Advertising OoDopwithstandardgoverning roles that themembers of the Regional
Camp Sow Wow 20t4FOO
Exh^tS^FranohisoAg^ment
05537^0706
833
A d v e ^ n g GoDop may modify w^h prior approvaifrom Fraoohisor. Members may oof modify
oertaio roies, like vofiog rigbfs, Fraoobisor's rigbf fo approve aii advertising in advance, or
Franobisee's maximum obligation for contributions to tbe Regional Advertising Co-op. Tbe
members of eacb Regional Advertising Co-op will elect tbeir own leadership and eacb Regional
Advertising Co op is responsible for Its own administrative expenses Tbe Regional Advertising
Co-op most assign any rights in tbe materials tbat it creates to Franchisor wltboot compensation
so that Franchisor and other franchisees may ose the same materials. Each Regional
Advertising Co op most prepare monthly and annoal financial statements in accordance with
Section 5, which need not be aodited, and make them available to all Regional Advertising Co
op memhersand to Franchisor.Franchisor may dissolvea Regional Advertising C o o p , bot
only if Franchisordecides to dissolve allRegional Advertising Co-ops at thesame time.No
Regional Advertising Co ops exist at tbis time.
10.^
Franchisee will payaMarketing Fee ^Mar^etiog Fee") for an advertising fond
^Advertising Fond") The Marketing Fee for the Term o f t h e Agreement is 1 ^ of Gross
Revenoes. Franchisor has the right to increase the amoont of the Marketing Fee for any
Renewal Term Franchisee will remit the Marketing Fee on the tOth and 25th day of each
month (or soch other period reqoired by Franchisor) for the preceding month or portion via EFT
The Marketing Fee is in addition to Franchisee's Local Advertising Expense and is
nonrefondable.
10.7
Franchisor reserves the right to ose the Marketing Fees In the Advertising Fond
to develop, prepare and place advertising (incloding broadcast, print or other media) for ose by
francbiseesgenerallyoronbehalfoftheentireSystem,or on behalf ofaparticolar region,that
may not inclode Franchisee or Franchisee's Aotborized Territory. Franchisee acknowledges
that tbe Advertising Fond is intended to maximize the general brand recognition of the System
Francblsor isnot obligated to expend the Advertising Fond,or the eqoivalent or proportionate
amoont of the Marketing Fees paid by Franchisee, on Franchisee's bebalf or for its benefit
tO.S
Franchisor will have sole right to determine how to spend contribotions to the
Advertising Fond, or fondsfromany otber advertising program,anddiscretionovertheactoal
advertising materials and programs. Franchisor anticipates that the Advertising Fond will not he
osed principally for advertising directed toward the solicitation of franchisees,bot r e s e r v e s ^
right to ose these tonds for poblic relations, general recognition of the brand, the creation and
maintenance o f a W e b s i t e (a portion of which will be osed to explain the franchise offering and
solicit potential franchisees, and to Inclode notations In any advertisement Indicating the
franchise opportonity, incloding withoot limitation, ^Franchises Available"). Franchisor (or a
representative designated by Franchisor) will administer the Advertising Fond All payments to
the Advertising Fond most be spent on advertising, poblic relations, Website development and
maintenance, market research, promotion, marketing of Frodocts and Services provided by
Franchisor, ootside vendors, marketing agencies, and administration ofthe Advertising Fond,
Incloding bot not limited to, salaries, overhead, administrative, accoonting, collection, legal cost^
and expenses. The AdvertlsingFond will he maintained by Franchisor inaseparate accoont.
An annoal onaodited financial statement of the Advertising Fond, at the expense of tbe
AdvertlsingFond, shall be available120 days after Franchisor's fiscal year end to Franchisee
for review onceayear opon written reqoest.
10.0
The Advertising Fond may be terminated at any time by Franchisor. In the
event that tbe Advertising Fond Is terminated, any remainingbalance in the Advertising Fond
will be expended as provided for In Section 10.S or retorned to Franchisee onaprorata basis
Camp Sow Wow ^014 FOO
ExhibitS^Fraooh^ Agreement
U^75^706
834
1010 Franch^ee w^ fo^y p a l p a t e ^ ^ prom^onal campaion^ phze 0 0 0 ^ 5 ,
specie o^ers and other proora^
otoewServioes, Prodootsor other marketioo programs direotedor approved hy Fraoohisor^
whioh are presohhed trom time to time hyFraoohisor. Praoohiseewiiiheresponsihietorthe
o o s t s o t s o o h partioipatioo^aithoogh Praoohisor may authorize oertainoosts to he applied to
Pranohisee'sLooal Advertising Expense ohligations set t o r t h i o S e o t i o o l O ^ Pranohlseemay
ohoose to honor disooont or payment ooopons,gittoertltioates or other authorized promotional
otters ot Eranohlsorat Eranohisee's sole oost, and onlessotherwise specified in writing hy
Eranohisor, Eranohlsee's honor otthe same will not in any way decrease or otherwise serve as
acredit towards the satlstactionot the Local Advertising Expenseprovided infection 1 0 ^ o r
the Franchisee's Marketing Eee described in Section 1 0 ^ . Franchisee will maintain an
adequate sopply ot marketing hrochores, pamphlets and promotional materials as may he
required hyEranchisortrom time to time.
1011 With the exception ot any negligence on the part ot Franchisor, Franchisor (and
any designee ofFranchisor) will have no direct or indirect liahility or ohligation to Franchisee or
the Advertising Fond orotherwlse with respect to the management, maintenance, direction,
administration or othen^ise of the Advertising Fond. Franchisee and Franchisor agree that their
rights and ohligations with respect to the Advertising Fond and all related matters are governed
solely hy this Agreement andneither this Agreement nor the AdvertlsingFond createsatrost,
fidoclary relationship or similar arrangement.
11
INSURANCE ANO INOEMNITY
111
(a)
Franchlseewill, opon commencementof theTerm, porchaseand at all
times maintain in foil force and effect insorance policies, in soch amoonts and on soch terms, as
prescribed by theManoal,and asreqoired by any lender or landlord, from an insorance
company acceptable to Franchisor. Insorance coverage most inclode bot is not limited to
comprehensive general liability, boslness interroptlon, combined single limit, aotomobile,
onemploymentand workers compensation insorance, insorance reqolred b y t h e t e r m s o f any
Lease or lender,bodilyin^ory and all-risk property damage insorance and all other occorrences
against claims of any person, employee, independent contractor, costomer, agent or otherwise
in an amoont per occorrence of not less than soch amoont set forth in the Manoal. Franchisor
may periodically increase the minlmom insorance reqolrements, establish or change dedoctible
limits, and reqoire that Franchisee procores and maintains additional forms of insorance.
Franchisee mostcomply with all changes within 3 0 d a y s Franchisordoes not represent or
warrant that the minlmom insorance coverage reqolred will be sofficient for all of Franchisee's
porposes.
(b)
All insorance policies most insore Franchisee, Franchisor, Franchisor's
Affiliates, and Franchisor and Franchisor's Affiliates'respective officers, directors, shareh^^^
employees, independent contractors, agents, memhers, and all other parties designated hy
Franchisor, as additional named insoreds against any liability which may accroe against them
becaose of the ownership, maintenance or operation by Franchisee of the Camp. The policies
m o s t a l s o s t i p o l a t e t h a t F r a n c h i s o r w i l l r e c e i v e a ^ O d a y prior written notice of any change or
cancellation, and most contain a waiver or sohrogatlon in Franchisor's favor. Original or
doplicate copies of all insorance policies, certificates of insorance, or other proof of insorance
acceptabletoFranchisor, inclodingoriginal endorsements effecting the coveragereqoiredby
this Section, most be fornished to Franchisor together with proof of payment withintO days of
Issoance thereof and after each of the following events: (i) at all policy renewal periods, no less
often than annoally, and (ii) at all instances of any change to, addition to, or replacement of any
Camp Sow Wow 2014 FOO
Exhi^tSDFranor^e Agreement
0^375540706
^35
insurance. T h e o e ^ c a t e s a n d e n d o r s e m e o t s ^
person authorized hy that insurer to hind coverage on its hehait
Aii oertitioates and
endorsements are soh^eot to approval hy Franchisor. Franchisor reserves the right to reqoire
complete, certitied copies ot ail required insorance policies at any time
(c)
In the event Franchisee tails to ohtain the reqolred insorance and to keep
the s a m e i n toll torce and ettect, Franchisor may, hot will not heohligated to, porchase
insorance on Franchisee's hehait trom an insorance carrier ot Franchisor's choice, and
Franchisee will reimhorse Franchisor tor the toll cost ot soch insorance,along withareasonahle
service charge ot op to
the cost ot soch insorance to compensate Franchisor tor the time
and ettort expended to secore soch insorance,within5days otthe date Franchisor delivers an
invoice detailing soch costs and expenses to Franchisee. Notwithstanding the toregoing,tailore
ot Franchisee to ohtain insorance constitotes a material hreach otthis Agreement entitling
Franchisor toterminatethisAgreementorexerclseanyoracomhlnation otthe otherdetaolt
remedies set torth in S e c t l o n l ^ o t this Agreement Franchisee will also procore and pay tor all
other insorance reqolred hy state or federal law Franchisor reserves the right to modify
minlmom insorance reqolrements at any time hyopdating the Manoals and advising Franchisee
in writing.
11.2
All liahility insorance policies procored and maintained hy Franchisee in
connection with the Camp will reqoire the insorance company to provide and pay for attorneys
to defend any legal actions, lawsoits, or claims hrooght against Franchisee, Franchisor,
Franchisor's Affiliates and their respective officers,directors, agents, shareholders, memhers,
employees and all other Boslness Entities or indlvidoals designated hy Franchisor as additional
insoreds
11.3
Franchlseewill,doring theTerm and afterthetermination or expiration ofthe
Franchise Agreement, indemnify Franchisor and its Affiliates and their respective officers,
directors, shareholders, employees, agents, memhers, andindependentcontractors, and hold
them harmlessagalnst all claims, demands, losses, damages (incloding ponitive damages),
costs, soits, Lodgments, penalties, expenses (incloding reasonable attorneys'fees and amoonts
paid in settlement or compromise) and liahilities of any kind, whether or not oltimately
determined to he merltorioos (and incloding damages soffered hy Franchisee or any of its
property) (collectively, d a m a g e s ' ) for which they are held liable, or which they incor (Inclode
attorney and client costs,travel, investigation, andliving expenses of employees and witness
fees) in any litigation or proceeding asaresolt of or arising oot of:
(a)
Franchisee's operation of the Camp incloding the ose, condition, or
constroctlon, eqoipping, decorating or maintenance of the Camp Site and other Camp facilities,
tbe provisionof Frodoctsand Serviceslncloding, bot not limited to, CampServices, InFlome
Services, andOogTralning Services, and the sale of any other Frodocts or Services throogh
theCamp^
(h)
Franchisee's hreach of this Agreement, or any other agreement between
the parties, or any breach of any AcqoisitlonDocoment or other Instromenthy whicb the right to
occopy the Camp Site is held, by Franchisees
(c)
any In^ory torn or loss of property of, any person in, or on, Franchisee's
CampSite^
(d)
Franchisee'staxes,liabilities,costs or expenses of Its Camp^
Camp 8owWow 2014 FOO
Exh^^DFranchiseA^emeot
^5^540706
836
(e)
any negligent or wllltol act or omission ot Franohisee, its Personnel,
agents, servants, contractors or others tor whom It Is, In law, responsible^
(t)
any advertising or promotional material distributed, broadcasted or in any
way disseminated by Franchisee, or on its hehait onless socb material bas been produced, or
approved in writing, by Franchisors
(g)
libel,slander or any otber torm otdetamationotFranchlsor, the System or
any franchisee or developer operating onder the System, by Franchisee or hy any ot
Franchisee's principals^ and,
(h)
any claims broogbt in connection with Franchisee's operation ot the
Gamp incloding withoot limitation any claims ot Franchisee's Personnel, clients or governmental
aothority.
12
PELATiONSHIP
12BI
Franchisee acknowledgesthat it is an Independentcontractorand is not an
agent,sobsidiary,servant, partner, ^ointventorer,or employee ot Franchisor tor any porpose
and no training or sopervlsion given by, or assistance trom Franchisor will be deemed to negate
socbindependence. Neither party is liable or responsible tor the other's debts or obligations.
Franchlsorand Franchisee agreethat no partnership, tidoclary relationship, ^ointventore, or
employment relationship exists between them Franchisee will conspicooosly identify itselt in all
dealings with the poblic a s a s o l e operator that is an individoal or Boslness Entity separate trom
Franchisor and will place the notices ot independent ownership reqolred by Franchisor on signs,
torms,stationery,advertising andother materials conspicooosly in its place ot boslness andin
relevant commonications, and will state that Franchisor has no liability tor the Gamp being
condocted by Franchisee The parties agree that Franchisee has no aothority to create or
assomein Franchisor's name or on hehait otFranchlsor,any obligation,express or implied,or
to a c t o r p o r p o r t t o a c t a s a g e n t o r representative on hehait ofFranchisor tor any porpose
whatsoever. Franchisee agrees that it will not hold Itself oot as the agent, employee, sobsidiary,
servant, partner or co ventorer of Franchisor. All Personnel hired by or working for Franchisee
will be the Personnel of Franchisee and shall not, for any porpose, be deemed to be employees
or Independent contractors of Franchisor or sob^ect to Franchisor control. Each party agrees to
file itsown tax, regolatory, and payroll reports with respect to itsrespective Personneland
operations, saving and indemnifying the other party from any related liability whatsoever.
12.2
Neither party will make any express or Implied agreements, representations,
goarantees or warranties or incor any debt (except by Franchisor in advertising or otherwise as
provided herein) In the name of, or on behalf of tbe other party. Neither party will be obligated
by, nor have any liability for, any agreements, representations, goarantees or warranties or debt
incorred or made by the other (except by Franchisor in advertising as provided herein) nor will
Franchisor be liable for any damages to any person or property directly or indirectly, arising oot
o f t h e operation of Franchisee's Gamp, whether caosed by Franchisee's negligentorwlllfol
action or failore to act
12.3
Franchisor will have no liability for Franchlsee'sobllgationsto pay any third
parties, incloding withoot limitation, any Prodoct vendors, or any valoe added, sales, ose,
service, occopation, excise, Gross Pevenoes, income, property, or other tax levied opon
Franchisee, Franchisee's property, the Gamp Site, Gamp or opon Franchisor in connection with
Camp 8ow Wow ^014 FOO
Exhibit^DFranohise Agreement
U5^7^0706
837
the sales made or hosiness c o o d o ^
hy law to oolleot trom Fraoohlsee with respeot to porohases trom Fraoohlsor)
1S
R E S T R ^ V E COVENANTS
13BI
Fraoohlsee acknowledges and agrees that:
(a)
Franchisee's entire knowledge otthe operation otthe Camp, the System,
and the concepts and methods ot promotion tranchlsedhereonder,that It has now or ohtalns in
thetotore,lsderlvedtrom Franchisor's Contidential Intormation andTrade Secrets. Franchise
torther acknowledges and agrees that allot the Contldentlal Intormation andTrade Secrets are
the sole property otFranchlsor,representvaloahle assets ot Franchisor and that Franchisor has
the right to ose the Contldentlal Intormation andTrade Secrets In any manner It wishes at any
time. Franchlseewill not acqoire any Interest In the Contldential Intormation other than the
license to otllize the same In the AothorlzedTerrltory In con^onctlon with the pertormanceot Its
doties porsoant to this Agreement doring theTerm^
(h)
Ooring theTerm, any RenewalTerms, and anytime thereafter Incloding
any period after termination or expiration ofthis Agreement, Franchisee, and Franchisees'
owners, Managers,and Personnel who have access to the Confidential Information ahdTrade
Secrets agree that t h e y : ^ ) will not ose the ConfldentlallnformatlonorTrade Secrets in any
other hosiness or capacity or for their own heneflt^2) will maintain the ahsolote confidentiality of
the OonfidentiallnformatlonahdTradeSecrets^^wlll not make onaothorlzed copies of any
portion of the ConfldentlallnformatlonorTrade Secrets^ a n d ^ w l l l adopt and Implement all
reasonable procedores Franchisor periodically reqolres to prevent onaothorized ose or
disclosore of the Confidential Information or Trade Secrets Incloding reqoirlng Personnel,
Managers, training class attendees, Franchisee's owners and spooses who have access to the
Confidential InformatlonandTradeSecretstoexecotesochnondisclosore and noncompetition
agreements as Franchisor may reqoire periodically, and provide Franchisor, at Franchisor's
reqoest, with signed copies of each of those agreements^ and,
2
Notwithstanding the foregoing, the restrictions on the disclosore and ose of the
Oonfidential Information will not apply to the following: (a) Confidential Information in the po
domain other than hy Franchisee or its owners',Managers' or Personnels' hreach ofthis
Agreement (h) Confidential Information in Franchlsee'spossessionfreeof any ohligation of
confidence at the time It was commonicated to Franchisees or (c) the disclosore o f t h e
Confidential Information in ^odlclal or administrative proceedings to the extent that Franchisee
legally compelled to disclose the Information, If Franchisee has notified Franchisor hefore
disclosore and osed Franchisee's best efforts, and afforded Franchisor the opportonity, to ohtain
an appropriate protective order or otber assorance satisfactory to Franchisor of confidential
treatment for tbe information reqolred to be so disclosed.
Franchisee covenants and agrees that:
(a)
Ooring tbeTerm ofthlsAgreement, neither Franchisee or Franchisee's
officers, directors, principals, Personnel or Managers, nor any member of the immediate family
of the parties above may, directly or indirectly, for themselves or throogh, o n b e h a l f o f , o r in
con^onction with any otber person or cosiness Fntity:^own,maintain,engage in,be employed
a s a n officer, director, or principal of, offer consoltation oradvice to, lend money to, extend
credit to, goarantee the debts or obligations of, or have any interest In any other hosiness that
operates or grants licenses or franchises for the operation of Competitive Boslness^ or (ii)
employ or seek to employ any person who is at that time employed by Franchisor, Franchisor's
Camp Sow Wow ^014 FOO
^ibitSDF^noh^Ag^meot
O^3^^706
8^
A b a t e s or any other System
iodooesooh person to leeve his or her e m ^
wiii noteppiy to Franchisee's operation ot another Camp onder a then etteotive franchise
agreement with Franchisor
(h)
F o r a p e r i o d o t ^ y e a r s after the expiration andnonrenewai,Transferor
termination of this Agreement, regardless of the caose, neither Franchisee, Franchisee's
officers, directors, principals, or Fersonnelor Managers, norany memherofthe Immediate
family of Franchisee or Franchisee's officers, directors, principals, Personnel or Managers may,
directly or indirectly, for themselves or throogh, o n h e h a l f o f , o r in con^onctlon with any other
person, partnership orcorporatlon: (i^own, maintain, engage in, h e e m p l o y e d a s a n o f f l c e r ,
director, or principal of, offer consoltation or advice to, lend money to, extend credit to,
goarantee the dehts or ohligations of, or have any interest in any other hosiness that operates
or grants licenses or franchises for the operation of Competitive Boslness within the Aothorized
Territory,a25 mile radios of the AothorizedTerritory, or within 25 miles of any Franchisor or
Affiliate owned Camps, Home Boddies Franchises, or any other franchisee's aothorized
territory^ (ii) solicit hoslnessfromcostomers of Franchlsee'sformerCampor contact any of
Franchisor's soppliers, vendors or costomersfor any Competitive Boslness porposes or (iii)
solicit any of Franchisor's employees,or the employees of Franchisor's Affiliates or any other
System franchisee to discontinoe employment, provided that this Sectlon1S 3(h) will not apply
to Franchisee's operationof another Camp or HomeBoddles Franchise onder another theneffective franchise agreement with Franchisor
134
If any person restricted hy this Section 13refoses to volontarily comply with the
foregoing ohligations,the^year period descrihed ahove will commence with the entry of any
order ofacoort enforcing this Sectlon13and will he tolled for any period of noncompliance
13.5
The parties have attempted In Section133ahove to limit Franchisee's right to
compete only to the extent necessary to protect Franchisor from onfair competition The
covenantssetforthinthisSection13are independent of the other covenants and provisions of
this Agreement If any provision In this Section 13 Is void or onenforceahle onder Colorado law,
hot wooldhe enforceable as written or as modifiedonder Local Laws,the parties agree that
soch Local Laws shall govern any dlspote concerning or involving the constroctlon,
interpretation,validity or enforcement ofthe provisions ofthis Section 13,hot only with respect
to those soh^ects Franchisee expressly aothorizes Franchisor to conform the scope of any void
or onenforceahle covenant in order to conform it to Local Laws. Franchisee expressly agrees to
he hoondhy any modified covenant conforming to the Local Laws as if originally stated In this
Agreement FPANCHISFE E ^ F P E S S L Y A C K N O W L E O G E S THAT IT F C S S F S S F S SKILLS
ANO ABILITIES O F A G E N E P A L N A T O F ^
SOCH SKILLS CONSFOOENTLY, E N F C P C E M E N T O F T H E C C V E N A N T S S E T F C P T H
A B O V E W I L L NOT OEFPIVE FRANCHISEE O F T H E A B I L I T Y T C E A P N A L I V I N G
13.^
Nothing in this Section 13 will prevent any active officer of Franchisee or
member of Franchisee's family either Individoally or collectively,from owning not more t h a n a
total of 5 ^ of tbe stock of any Competitive Boslness, which is sob^ect to the reporting
retirements of the O S Secoritiesand Exchange A c t o f 1034, provided that Francbiseeis
otherwise not actively involved in the management or operation of that boslness and does not
serve that boslness in any capacity otherthanasashareholder.
13.7
Franchisor most be protected against the potentialfor onfair competition by
Francblsee's ose of Franchisor's Intellectoal Property in direct competition with Franchisor.
Franchisee forther acknowledges that Franchisor woold not have entered into this Agreement or
Camp Sow Wow 2014 FOO
Exh^itBDFraochise Agreement
0^75540706
83^
shared the lote^ectoal Freperty and other intormatioo with Franohisee ahseot Franchisee's
agreement to striotiyoompiy with the provisions ot this Section tS Franchisee acknowledges
that as a Franchisee ot Franchisor, it wiii have access to Franchisor'strade Secrets and
Gontidentiai intormation a n d t h e r e t o r e h e i n a o n i q o e p o s i t i o n t o o s e t h e s p e c i a i knowledge
gained asatranchlsee. Franchisee acknowledges thatahreach otthe covenants contained in
this Section 13 will he deemed to threaten immediate and substantial Irreparable In^ry to
Franchisor. Accordingly and notwithstanding Section 10, Franchisee agrees tbat Franchisor will
havetbe right, withoot prior noticeto Franchisee, to obtain immediateln^onctivereliet withoot
limiting any other rights or remedies and withoot postingabond.
1^S
In the event that Franchisee is not an Individoal,this Section 13will also apply to
the otticers, directors, owners, immediately tamily memhers, partners, trostees, benetlclaries
and principals ot Franchisee, Franchisee,andany persons controlled hy,controlling,or onder
common control with Franchisee.
14
ASSIGNMENT
141
Franchlsorwlll havetbe righttoTransterall orany part ot Franchisor's assets,
Incloding withoot limitation the Intellectoal Property, and Franchisor's interest in, and n^^
obligations onder this Agreement In Franchisor's sole discretion. Franchisee expressly and
specitically waives any claims, demands or damages against Franchisor arising trom or related
toanysochTranster
14 2
Franchisee onderstands and acknowledges that the rights and dotles set torth In
this Agreement are personal to Franchisee (or its owners, it Franchisee i s a B o s i n e s s Entity),
and Franchisor has entered into this Agreement in reliance opon Franchisor's perception otthe
individoal or collective character, skill, aptitode,attitode, boslness ability and tinanc^
otFranchisee(or its owners, ItFranchiseelsaBosinessFntity) Accordingly,this Agreement,
Franchisee's rights and interests hereonder,the property and assets owned and osed hy
Franchisee in connection with the Gamp and any shares, stock, membership or Interest In any
Boslness Entity bavingacontrolllng Interest In the Gamp,shall not be volontarily or involontah^^^
directly or indirectly sold, pledged, assigned, transferred, shared, sobdivided, sob tranchlsed,
encombered or transferred in any way (Incloding,withoot limitation,in the event otthe death ot
Franchisee If Franchisee is an Individoal), in whole or in part, in any manner whatsoever withoot
theprior wrlttenapproval of Franchisor andcompllancewithall terms of this Section 14. Any
onaothorized Transferorotherconveyance, by operation of law orotherwlse, incloding any
assignment by a trostee in bankroptcy, o r a n y attempt to d o s o , will b e a material defaolt
hereonder, will be deemed void and will entitle Franchisor to immediately terminate this
Agreement
143
With and after each validTransfer of tbis Agreement porsoanttothls Section 14,
the transferee or transferees of Franchisee will be deemed to be Franchisee and will be boond
by and l i a b l e f o r a l l o f Franchisee's prior, existing andfotore obligations ^Transferee") No
interest bolder in any Boslness Entity whlchbecomesaFranchiseeafteraTransfer will have
any rights onder this Agreement by reason of his, her or its stock ownership, membership
interest or partnership interest.
144
If Franchiseeatany timedeterminestosell, in wholeor in part, theGamp,
Franchisee shall notify Franchisor In writing that it may porsoe soch potential sale and Franchisor
shallhavethlrty(30) days from the receipt of soch notice to provide Franchisee with written
notice that it intends to enter into good faith negotiations with Franchisee.IfFranchlsor exercises
soch option then Franchisor and Franchisee shall negotiate exclosively, reasonably and in good
Camp Sow Wow 2014 FOO
Ex^bitS^Franohi^ Agreement
0^7^40706
^40
^ h c o n c e m i o g the terms of
negotiate with aoy third party ( s o b ^
Franohisor's right ot tirst retosai set torth helow). it Franohisee obtains a hona tide, executed,
written otter tor the Gamp (together with and including ail real or personal property,
leasehold improvements and other assets used hy Franchisee in its Gamp) trom a
responsible, arms'length, and tully dlsclosedpurchaser ^ F o r c h a s e O ^ e r " ) . Franchlseewill
submit an exact copy o t s o c h Purchase Gtterto Franchisor within tive (5) days ot receipt.
Franchisor then will havearigbtot tirst refusal to purchase the Gamp as provided in S e c t i o n s
14.5
NoTransfer of this Agreement wlllbe approvedhy Franchisor or be effective
unless and until all the following conditions are satisfied:
(a)
Franchisee being then in full compliance with this Agreement and paying
to Franchisor and third party creditors all outstanding debts or amounts owing^ and submitting to
Franchisor all required reports and statements^
(b)
Transferee executes Franchisor's then current Franchise Agreement
(which willsupersede this Agreement andmay contain provisions sobstantiallydifferent from
those contained herein,includingahigher royalty and greater expenditores for advertising and
promotion than areprovided hereonder, and such other docoments thencostomarily used by
Franchisor to grant franchises), all other docoments as may be reasonably reqoested by
Franchlsorand paying to Franchisoratransferfeeintheamoontoftwentyfive percent (25^) of
the corrent Initial Franchise Fee for soch A o t h o r i ^
shall not be obligated to pay theTransfer Fee if Transferee I s a Boslness Entity of which
Franchisee i s a Majority Gwner, o r a c h i l d , parent, siblingor spouse of Franchisee^Pelated
Transferees. PelatedTransferees will pay all training costs to be determlnedby Franchisor at
the time of Transfer. With the exception o f a Related Transferee, Transferees execoting
Franchisor's then corrent form of Franchise Agreement will receive tbe toll Initial term contained
In socb agreement. Franchisee acknowledges and agrees that, if Franchisor is involved in
locating a porchaserfor Franchisee's Gamp, Franchisor will be entitled to receive a sales
commission in addition to tbe Transfer Fee. As of the date of tbis Agreement, tbe sales
commission is $7,500,bot is sob^ect to change at anytime^
(c)
Franchisee's execotlonofageneral release of Franchisor, incloding its
officers, directors, agents, employeesand Affiliatesfrom soch parties' obligations onder the
Agreement inaform satisfactory to Franchisor
(d)
Franchisorapprovesthe material terms and conditions of sochTransfer,
incloding withoot limitation, that the price and terms of payment are not so bordensome as to
adverselyaffecttheTransferee's hosiness as Franchisee ofFranchisor
(e)
If Franchlsee(and its transferring owners)finances any partof the sale
priceof the transferred interest, Franchlseeand i t s o w n e r s a g r e e t h a t a l l obligations of the
Transferee onder any promissory notes, agreements or secority interests will be sobordinate to
theTransferee's obligation to pay fees and other amoonts doe to Franchisor and its Affiliates
and otherwise to comply with this Agreements
(f)
The parties to the proposed transaction will have entered Intoabinding
agreement sob^ectonly t o t h e rightsof Franchisor setoot in Section 15 Franchisor will be
fornishedacopy of this binding agreement, and soch agreement will be subject to Franchisor's
approval in writing. Franchisee most advise each prospectiveTransferee of this provision and
the other terms ofthis Agreements
Camp Bow Wow ^014 FOO
E ^ b i t S D F r a o o ^ e Agreement
U5^7^0706
B^U
(g)
Franchisee (and its transferring owners) executes an assomption ot
Franchisee's ohiigations, Franchisor's standard torm Nondisciosore and Noncompetition
Agreement, andapersonai guaranty in forms similar to those provided on AttachmentsBandE,
in favor ofFranchisor and theTransferee with terms the same as those set forth herein^
(h)
The proposed Transferee wiii have demonstrated to Franchisor's
satisfaction that it, he or she wiii meet in aii respects Franchisor's standards appiicahie to new
franchisees regarding experience, personal reputation, financial health, willingness and a h ^
devote Its, his or her foil time and h e s t e f f o r t s t o t h e o p e r a t i o n o f t h e C a m p , and any other
conditions Franchisor may reasonably apply in evaloating new franchisees Franchisor most he
provided all information ahoottheproposedTransfereeasFranchisormay reasonably reqolred
(i)
Transferee, orTransferee'sMa^orityOwner,andone other person who
most be Transferee's intended Manager or other person to whom Transferee intends to
delegate the daytoday operations ofthe Gamp, (i) completes the next available Initial Gamp
ServicesTraining,Initial InHomeTraining program,and DogTrainer Gertiflcation Frogram
the date ofTransfer^ and,(ii) pays any related training fees in accordance with this Agreements
^)
Franchisee will opgrade the Gamp to Franchisor's then-corrent standards
before the Gamp is transferred to the newTransferee Incloding withoot limitation the Gamp Site
and any vehicles osed to provide the InFlome Services or DogTraining Services^ and,
(k)
Franchisee agrees to keep the Gamp in toll operation pending the
consommation of the Transfer and the satisfaction of all conditions to the Transfer. If
Franchiseeisonahleoronwilllng to keep the Gamplnoperationdoring this tlmeperlod, then
Franchisor will havetbe rightto temporarily operate the Gamp opon the same terms and
conditions set forth in Section t^4(a)ontil soch time as theTransfer has been finalized and the
Transferee has taken overthe operation ofthe Gamp.
NoTransfer toaTransferee who directly or indirectly has an interest InaGompetitive Boslness
will be permitted
t4.^
Notwithstanding anything to the contrary in this Agreement, if Franchisee is an
individoal, then Franchisor shall, opon Francblsee's compliance with soch retirements as may
from time to time be prescribed by Franchisor (incloding the obtaining of all necessary approvals
tothe a s s i g n m e n t o f L e a s e s , i f a n y , o f t h e Gamp Site),consent toaTransfer of Franchisee's
right, title, andinterest in and tothis Agreement t o a B o s i n e s s E n t i t y w h i c h i s at l e a s t ^ O ^
owned and controlled by Franchisee,sohject to the following (provided that sochTransfer shall
in noway release Franchiseefrom any liability onderthis Agreement):
(a)
Franchisee most be in compliance with this Agreements
(b)
GontemporaneooslywitbsochTransfereachowner of theTransferee's
Boslness Entity most sign the NondisclosoreandNoncompetition Agreement, andapersonal
ooaranty in forms similar to those provided on AttachmentsBandE:
(c)
No shares or interest In the capital of soch Boslness Entity shall be issoed
nor shall Franchiseedirectly or indirectly, volontarily or involontarily, hy operation of l a w o r
otherwise, Transfer any soch shares or interest or offer or attempt to do so or permit the same
to he done withoot Franchisor'sprlor written consents and,
Camp Bow Wow ^014 FOO
^ i b i t B ^ F r a n o h ^ e Agreement
^537^40706
(d)
The e^cles of inoorpo^on, a^oles of orgeo^efioo, operaf^g
egreemeof,pa^e^ipagreemeof,shareho^eragreeme^^^
shall provide fhafifsoh^eofives or h o s ^
as provldedfor In fhls Agreement and reolfefhaffhelssoanoeandTransfer of any shares,
membership Interest, partnership Interestorother Interest Is restricted hythe terms ofthis
Agreement, and copies thereof will he furnished to Franchisor opon request.
147
If Franchisee IsaBuslness Entity,each shareholder, memher,or partner of the
Business Entity whlchls granted therlghts to serve as the Franchisee hereunder shall h e a
party toashareholders'agreement, operating agreement or partnership agreement which will
provide, Inter alia, that upon any dissolution of the Business Entity, or opon any divorce decree
among the parties who are also shareholders, memhersor partners, that ownershlpof the
shares, membership Interest or partnership Interest will be transferred to the shareholder,
member or partner for agreed upon consideration, which has primary responsibility for sales and
marketing activities,typically theFresldent,followlngany soch dissolution or decree. Theform
and content ofthe shareholders' agreement, operating agreementor partnersblpagreement
most be approved by Franchisor heforeexecotlon Franchlsee'sfallore to comply with this
Section 14.7wlllconstltoteamaterlal defaolt of this Agreement.
14S
Sohject to the provisions of this Section 14,IfaTransferoccors doe to the death
or Incapacity ofaFranchlsee that Isanatoral person,or, If Franchisee IsaBoslness Entity,any
personownlngenoogheqoltyorvotlng Interests of tbe Boslness Entity to resolt InaChange of
Control, the spoose, heirs, execotor or personal representative of the deceased or Incapacitated
person, or the Franchisee's remaining shareholders, memhers, partners or owners, as
appropriate to the clrcomstance (collectively, "Successors shall have 00 days from the date of
deathto(l)qoallf^tbemselvestobecomeafrancblsee by satisfying the reqolrements of Section
1 4 ^ o r ( l l ) complete theTransfer of the Interest toaqoallfled,approved thirdparty^ In either (I)
or (II), the Soccessor most satisfy all o f t h e condltlonsand obtain Franchisor's consent to
completetheTransfer. A t t b e e n d o f t h e OOday period, IftheSoccessor has not obtained
Franchisor's consent to complete theTransfer, Franchisor may, at Its election, terminate this
Agreement
14.0
Immediately following the date of death or Incapacity, If the Soccessor Is onable
to demonstrate to Franchisor's reasonable satisfaction thatthe Soccessor has thefinancial
ability and boslness sklllstooperate the C a m p l n accordancewlththereqolrementsofthls
Agreement, or Franchisee's Soccessor has not satisfied the conditions of Section 14 5 to
Franchisor's satisfaction, In Its sole discretion, doring the Interim period ontll the S o ^
abletoobtaln Franchisor's consent to complete theTransfer, Franchisor shall have tbe absolote
right to occopy the Camp Site and assome day-to-day management of all aspects of the Camp
for the accoont of Franchisee. In addition to receiving the fees doe to Franchisor onder this
Agreement, Franchisee wlllpay Franchisor (l)amanagement fee In the then-corrent amoont
pobllshed In the Manoal, and (II) for all of Its direct costs and expenses In rendering
management services. The Soccessor's failore or refosal to cooperate with Franchisor's right to
m a n a g e t h e C a m p doring thelnterlm period reqolred by this Section 14.0shallconstltotea
material hreach ofthis Agreement. If Franchlsorelectstotemporarlly o p e r a t e t h e C a m p o n
behalf of Franchisee, Franchisee will Indemnify and hold Franchisor harmless from any and all
claims arising from the acts and omissions ofFranchisor and Its employees and representatives
In the manner provided In S e c t l o n H . 3 .
14.10 The parties recognize that Franchisor's right to manage the Camp Is primarily
Intended to facilitate an orderly transition of ownership wlthmlnlmaldlsroptlon to the Camp's
contlnooos operation. Franchisor shall manage the Camp only ontll the Soccessor obtains
Camp SowWow ^014 FOO
Exh^tS^Fraooh^e Agreement
U 5 ^ ^ ^
8^3
Franchisor consent to t h e T r a ^
Camptor longer than OOdays By motoalagreementot Franchlsorand theSoccessor, the
period ot Franchisor's rnanagernentrnay he extended tor longer than 00 days, hot In no event
shall It extend heyond one year trom the date ot death or Incapacity It the Soccessor cannot
ohtain Franchisor's consent toaproposedTransteree hythe end ot one year, Franchisor may
termlnatethlsAgreement Doring thetlme that Franchisor manages the Camp,Franchisorshall
periodically dlscoss the statosot the Camp'soperatlons and financial resolts with the Soccessor
andprovlde soitahle corrent Intormation ahoot the Camp's performance as the Soccessor may
reasonably reqoire. If the Soccessor does not ohtain Franchisor's consent to the Transfer,
within 00 days ofthe death or Incapacity, Franchisor will have the right to terminate this
Agreement and to take possession of Its IntellectoalFroperty, Incloding withoot limitation
eqolpment or sopplies hearing the Marks or trade dress that had heen osed In relation to the
operation of the Camp and Camp Site, and remove the same from the Camp Site.
t4Blt
Any attempt hy Franchisee to Transfer any of Its rights or Interest onder
this Agreement or the License, withoot having received Franchisor's prior written consent, will
constltoteahreach of this Agreement. However, If Franchisee dies and his or her personal
representative does not desire to sell the Camp, and If onder Local Laws Franchisee's
Interest In the Camp, License and Agreement are dlstrlhotahle to heirs or legatees who are
memhers of his or her Immediate family and who otherwise woold qoallfy as assignees, then
soch attempted assignment hy operation of law will not he deemed In violation o f t h i s
Agreement,provldedthat soch heirs or legatees accept the conditions Imposed on otherwise
permitted assignees
15
O F T I O N T O F O R C H A S E ^ R ^ H T O F FIRST REFOSAL
15BI
Onless otherwise explicitly provided hy this Agreement, Franchisor will he
entitled to exercise the rights provided In this Section Immediately opon:
(a)
The expiration withoot renewal, or the termination for any reason, of
theLlcense or this Agreements or,
(h)
The receipt hy Franchisor o f a c o p y o f a F o r c h a s e C f f e r .
15^
Opon any event described In Section 15.1, Franchisor will havetbe option
to porchase all of Franchisee's rights, title and Interest In the Camp (together with and
Incloding all real or personal property, leasehold Improvements and other assets osed by the
Franchisees the Camp and at tbe Camp Site).
15.3
The porchase price for tbe assets of the Camp and Camp Site will be sohject
to Section 154: (I) the Fair Market Valoe (asfortherdeflned below) If Section 151(a) Is
applicable^ or (ll) the price specified In tbe Forcbase Offer received hy Franchisee If
Section 151(b) Is applicable.
15 4
If Franchisor elects to exercise any option to porchase provided In this
Section 15, Francblsor will have the right to set off all amoonts doe from Franchisee onder the
Agreement or any other agreements between the parties, any commissions or fees payable
to any broker, agent or other Intermediary and the cost o f t h e appraisal, If any, against
any payment. lfSectlon15.1(b)lsappllcahle,Franchlsorwlll also havetbe right to sobstitote
cash for any other form of consideration specified In the Forcbase Offer and to pay In toll the
entire porchase price at the tlmeof closing, and Franchisor shall not be reqolred, hy exercise
of Its right of first refosal, to perform obligations of the proposed transferee which are merely
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ioc^e^tothe^ans^^^
^ d e r s f e e s t o be paid by tbe proposed transferee to Franobiseeorto any principal ot
Franobisee). Fortbermore,any agreement to sei^assign, transfer or otben^ise dispose ottbe
Franobisee's rigbts, titie and interest in tbe Gamp wiii be made expressly sobieotto tbe
Franobisor'srigbtsgranted berein.
15.5
Franobisor will notify Franchisee of its intention to exercise or not exercise
its rigbtsto purchase ("Netice o ^ ^ t e o t ^ witbin ^0 daysfoliowing an eventdescribed in
Section 15Bl(a) or witbin 30 days following an event described in Section t5Bi(b). If
Section 15.1(a) appliesBtbe Notice of intent wili specify tbe assets to be purchased (tbe
Option Property") Opon delivery of socb Notice of intent, Francbisorand Franchisee wili
establish tbe Forcbase Frice (defined below) for tbe GptlonFroperty,execote the porchase
and sale agreement in form and sobstance acceptable to the parties, and proceed to
consommate and close tbe transaction porsoantto Itsterms.TheGption Property will be
conveyed free and clear of all liens, secority interests or otber monetary encombrances and
matters of recordacceptableto Franchisor.
15 8
Tbe porchase price for the Option Property (^Porchase Price") will he
determined as follows. The Porchase Price will be the ^Fair Market Valoe" which is the amoont
awillingboyerwoold pay andawilling seller woold accept foracomparable transaction ( e g ,
porchase and sale of comparable property), both having reasonable knowledge of the relevant
facts and being free from doress and coercion In calcolating the Fair Market Valoe, all relevant
factors wlllbe takeninto accoont, incloding thenatore, location, condition, and qoallty of the
Option Property and any improvements, and any concessions commonly being offered for
comparable transactions Witbin thirty (30) days after Franchisee's receipt o f t h e Notice,
Franchisee will give Franchisor writtennotice of Franchisee's good faith, best estimate of the
Fair Market Valoe to be osed for the ensoing transaction (the^Porchase Price Notice"). If
Franchisor Ingoodfaithdisagrees with Franchisee's calcolatlon of thePorchaseFrice, it may
give Franchisee written notice of Franchisor's disagreement, setting forth Franchisor's
determination of tbe Porchase Price not later than thirty (30) days after receipt of the Porchase
Price Notice. Franchisor's failore to contest Franchisee's calcolation o f t h e Porchase Price
within soch thirty (30) day period will be deemed to be Franchisor's acceptance and waiver of
any objection to Franchisee's determination of thePorchase Price. If Franchisor timely notifies
Franchisee of Franchisor's disagreement,Franchisee and Franchisor thereafter will negotiate in
good faith to reach agreement on the Porchase Price If Franchisee and Franchisor fail to agree
on soch amoont within thirty (30) days after Franchisor has notified Franchisee of Franchisor's
disagreement, the Porchase Price will he determined as follows. Within ten (10) days after the
end of soch thirty (30) day period, Franchisee and Franchisor shall each select an independent
third party MAI appraiser, e a c h o f w h o m most haveat least five (5)years'commercial real
estate appraisal experience in the area where the Option Property Is located If either party fails
to timely appoint soch appraiser,the Fair Market Valoe will be the amoont initially determined hy
the party who does appoint soch an appraiser Fach appraiser appointed shall be directed and
reqolred todetermine the Fair Market Valoe within thirty (30) daysafterappointment.Fach
appraiser shall sobmit his appraisal to botbFranchlseeandFranchisorcontemporaneoosly in
writing. It the lower appraisal is not less than ninety percent (00^) of the higher appraisal, the
average of the two (2) appraisals will he the Fair Market Valoe for the porposes of this Section.
If the lower appraisal is less than ninety percent (OO^o) of the higher appraisal, the Fair Market
Valoe will be determined byathird independent MAI appraiser, who shall be selected by the two
(^) appraisers previoosly appointed Soch appraiser most have at least five (5) years
commercial real estate appraisal experience in the area In which the Option Property is located.
If the two (^) appraisers are onable to appoint the third appraiser within fifteen (15) days, the
third appraisershall be selected byasinglearbitrator, appointed onder the American A r b i t r a l
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^appo^e^the^dap^
oonso^ngw^h the other a p p ^ s e ^ w ^ o t h ^ (30^
Sooheppraiser
shell suhmit its eppraisal to hoth Frenohiseeeod Franohisoroootemporeoeousiyio writing It
sooheppraisai i s o o t g r e e t e r t h a o t h e higher or iess then theiowerot the t w o ^ p r e v i o o s
appreiseis, theemoont determined h y t h e third appraiser wiii h e t h e Fair Market Vaioe tor
purposes otthis Seotion. it the amount determined h y t h e third appraiser does not oome
between the t w o ^ p r e v i o o s appraisals,the Fair Market Vaioe wiii he the average otthe
olosest otthe three appraisals. Eaoh party will pay the oosts otthe appraiser It appointed, halt
otthe oostot the third appraiser (it any), and halt o t t h e other oosts, it any, incurred in
oonneotion with the appraisal. Faoh party will hear its own attorneys'tees, it any, and tees ot
other advisors or consultants. It Franchisor declines to exercise Its rights under this Section or
provide Franchisee with the Notice ot Intent, within the 30 or 80 day period described ahove, as
applicable, Franchisee may thereafter sell or dispose otthe assets (I) to any third party in the
e v e n t o t a s a l e u n d e r S e c t i o n 1 5 B I ( a ) , s ^ e c t , however, to Franchisee's strict compliance with
S e c t i o n 1 8 S b e l o w regarding the return and discontinued use otthelntellectoal Property, (or
any assets identified hythe Marks),or (ii) to the third party identified in the Purchase Otter l^
eventofasaleunderSection15BI(h),but not atalower price nor on more favorable terms than
set forthin the Porchase Offer,if any, or theNotice of Intent and subject to the prior written
permission of Franchlsorand satisfaction of theotherconditionstoasslgnment set forth in
Section 14. If thesale to such third party purchaser is notcompleted within 00 daysafter
Franchisor delivers the Notice of Intent to Franchisee, Francblsor will again have the right of first
refusal herein provided. Franchisee acknowledges and agrees that any sale under Section
t5BI(b) is subject to Franchisee's strict compliance with Section 1 8 S a n d the sale of assets t o a
third party will not inclode the assets tbat are considered Franchisor's property.
15.7
If Franchisor provides Franchisee with its Notice of Intent to exercise its rights
under this Section 15, tbe purchase and sale contemplated in this Section will be consummated
a s s o o n a s possible. In theevent Franchisor IspurchaslngtheassetspursuanttoSectlons
151(a),following the delivery o f a N o t i c e of Intent as specified in Section15.5, Franchisor or
Franchisor's designee w i l l h a v e t h e I m m e d i a t e r i g b t t o t a k e p o s s e s s i o n o f t h e O a m p a n d t o
operate and develop the Oamp for the exclusive benefit ofFranchisor or its designee.
1S
O E F A O L T A N O TERMINATION
1S1
This Agreementwill terminate, at Franchisor's sole discretion, (sob^ect tothe
provisions of applicable Local Laws governing franchise termination and renewal) immediately
upon written notice and without any opportunity to core, if:
(a)
Franchisee or its Majority Owner,makes an assignment for the benefit of
creditors,filesavolontary petition in bankruptcy, lsad^odicatedhankroptorinsolvent,filesor
acqoiesces in the filing ofapetitlon seeking reorganization or arrangement onder any federal or
state bankroptcy or insolvency law, or consents to or acqoiesces in the appointment ofatrostee
or receiver for Itself or the Oamp^
(b)
Proceedings are commenced to have Franchisee ad^odlcated as bankropt
or to seek the Franchisee's reorganization onder any state or federal bankroptcy or insolvency
law, and soch proceedings are not dismissed within sixty (80) days,oratrustee or receiver is
appointed for Franchisee or the Oamp without tbe Franchlsee'sconsent,and the appointment is
not vacated within 80 days^
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(c)
Fraoch^ee attempts to s e ^ T r a n s ^ ^
initselt orthe C a m p ^ ^ o l a t t o o o t Section t4or15^
(d)
Franchisee or its principals violate any provision hereot pertaining to
Intellectoal Property, misose ot Franchisor's proprietary sottware, or disclosore to any
onaothorized person the contents ot any part otthe O p e r a s
orTrade Secrets^
(e)
Franchisee or its principals have made any material misrepresentation or
omission in the application to heatranchisee or in operating asaFranchisee or have committed
traod or misrepresentation in connection with the application tor or in the operation otthe Camp^
(t)
Franchisee volontarily or otherwise abandons the Camp. The term
^abandon" Inclodes any condoct which Indicates a desire or intent to close the Camp or
discontlnoeprovidinglnHomeServices,CampServices,DogTraining Services,or the otter or
sale ot any other material aothorizedFrodocts or Services In accordance with the terms otthis
Agreement and will apply in any event Franchisee tails to operate the Camp In accordance with
the System t o r a p e r l o d o t t w o ^ o r more consecotlve days withoot Franchisor's prior written
approval
(g)
Any material Lodgment (or several Lodgments whichin the aggregate are
material) is obtained against Franchisee andremainsonsatistied or ot record tor 30 days or
longer or it execotion is levied against tbe Camp or any otthe property osed in the operation ot
the Camp and is not discharged within5days^
(h)
Franchisee or any ot Its otticers, directors, shareholders, memhers,
managers, general partnersorgoarantorsplead no contest toatelony charge,or engage in any
criminal condoct or miscondoct in the operation ot theCamp^
(i)
Franchisee recelvestrom Franchisor,doringanyconsecotive l^month
period,2or more notices otdetaolt(whetheror not the notices relate to the same or different
defaolts and whether or not each defaolt is timely cored by Franchisees
^)
Franchisee sobmits on 3 or more occasions doring tbeTerm a report,
financial statement, tax retorn, schedole or other information or sopporting record which
onderstates its Gross Pevenoe by more thanS^o, onless Franchisee demonstrates that soch
onderstatementresolted from an inadvertent errors
(k)
Franchisee fails, or refoses, to sobmit any report, financial statement, tax
retorn, schedoleorother information or sopporting recordsreqoired herein, or sobmits soch
reportsmorethan5dayslateon2ormoreoccasionsdoring any 12 month period onless doe to
circomstances heyond the control ofFranchlsee^
(I)
Franchisee sells or offers for sale any onaothorized merchandise, prodoct
or service (Incloding dog training withoot first completing the DogTrainer Certification P
to Franchisor'ssatlsfaction), engages in any onaothorlzed boslness or practiceor sells any
onaothorizedprodoctorserviceonderthe Marks or onderaname or mark which is confoslngly
similar to the Marks^
(m)
Franchisee contests in any coort or proceeding the validity of, or
Franchisor'sownershipofthe Intellectoal Property^
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(n)
F ^ o c h ^ e e ^ s t o s a t t s ^ t h e O p e ^ o n s O e a d l i o e w ^ respect to any
ind^doel Service llcensedhereonder^e Camp Services, inHcme Services or OcgTraining
Services^
(o)
Franchisee or its principalsrnaterialiyhreachany other agreement with
Franchisor or any ot Franchisor's Attiiiates, or threaten any materiai hreach ot any soch
agreements
(p)
Franchisee violates any health, satety or sanitation law, ordinance or
regulation or operates the Camp in a manner that presents a health or satety hazard to
costomers, their pets, Franchisee's Personnel, or the general pohlic, as determined hy
Franchisor in its ahsolote discretions
(q)
Franchisee porchases or oses sopplies, signs, tornishings, tixtores,
eqoipment or Inventory trom an onapproved sopplier, or misoses or makes onaothorized ose ot
any proprietary software Franchisor may develop tor ose in connection with the Systems
(r)
Franchisee tails to maintain insorance or to repay Franchisor tor
Insorance paid tor hy It, or otherwise tails to adhere to the insorance retirements set torth in
this Agreementorthe Operations Manoals
(s)
Franchisee tails to comply with any federal, state or local law, ordinance,
zoning variance or regolation within 10days after heing notified of non-compliance, onless the
violation involves pohlic health or safety^
(t)
An animal dies doe to the negligence or Intentional act of Franchisee or its
Manager,lts owners,agents or Personnels or,
(o)
Any misrepresentatlononder S e c t i o n s , any violation of Antiterrorism
Laws or any other law hy Franchisee,its Manager,its owners,agents or Personnel.
18.2
Franchisor will have the right, at its option,to^sospend performance of certain
or all of its services to Franchisee doring the time period Franchisee is in defaolt ofthis
Agreement onder this Section 18 2^11) limit the license granted hereonder or (III) terminate
Agreement and all rights granted to Franchisee hereonder, (sohject to the provisions of
appllcahle Local Laws governing franchise termination andrenewal), effective oponreceipt of
notice hy Franchisee and w i t h a 1 5 d a y opportonity to core,opon the occorrence of any of the
following events:
(a)
Franchisee fails or refoses to pay, or there are insofficient tonds in
Franchisee's hank accoont to cover payment to Franchisor,on or hefore the date payment is
doe, Royalty Fees, MarketingFees or any other amoonts payable to Franchisor,Franchisor's
Afliliates, any System sopplier or vendor, or any third party creditors, Incloding landlord or lessor
fromwhomFranchiseelsleasing Camp Site location,and soch defaolt continoesforaperiod of
5daysafterwrittennoticeofthedefaoltisgivenhy Franchisor to Franchisees
(h)
Franchiseefails to immediately endorseand deliver to Franchisorany
payments doe to Franchisor from any third party that are erroneoosly made to Franchisees
(c)
Franchisee fails to comply with the Premises Deadline, Financing
Deadline, and holld oot retirements as provided In Sectlons7.1(a^c^
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(d)
Fraoch^ee c o n d o r ^ e ^ n a m ^ ^
exerc^e of F r a n o h ^ o ^ reasooahle h o s ^ e s s ^ d g m e o ^ impa^s the goodw^ or repofa^oo
assoo^edw^aoyaspeotoffheSy^^Prodoo^ Servesorfh^
(e)
Franohisee fakes f o r ^ o w n p o r s o o a l ose any assets or p r o p e r of fho
Camp, inoioding employee faxes, FIG^insoranoe or benefits^
(f)
Franohisee failsfo prooore or maintain any iioenses, oertifioations, or
permits necessary forthe operation ofthe Camp^
(g)
Franohisee or any Business Entity which owns or has the right to ose the
reai property from which the Camp is operated defaoits onder any term of the Acqoisition
Oocoments, or any other agreement material to the Camp and soch defaoit is not cored within
the time specified in soch Lease, porchase ioan or other material agreement
(h)
Any government action is taken against Franchisee that resolts in any
ohligation opon Franchisor that in Franchisor's soie Lodgment is oneconomical, not in the hest
interests of Franchisor, or wooid resoit in Franchisor having an onintended relationship or
ohligations
(i)
An animal is inured doe to the negligence or intentional act of Franchisee
or its Manager,its owners,agents or Personnel or,
^
Anygoarantorfailsorrefosestodeiiverto Franchisor, within 10days after
Franchisor's written r e q o e s L ^ e v i d e n c e of execotion of the personal goaranty attached hereto
at FxhihitB, or (ii) provide Franchisor with corrent financial statements as may from time to time
he reqoestedhy Franchisor.
18.3
in addition to its rights to terminate this Agreement in accordance with Sections
18.1 and18^ahove,FranchisorwiilhavetherighttoterminatethisAgreement(soh^ecttoany
Local Lawstothecontrary, whereLocai Lawsshail prevail), effective opon 3 0 d a y s written
notice to Franchisee, if Franchisee breaches any other provision of this Agreement and fails to
core the defaolt doring soch 30 day period. In that event, this Agreement wili terminate withoot
forther notice to Franchisee, effective opon expiration o f t h e 30day period if Franchisee
believes that the defaolt cannot he cored within SO days, Franchisee may apply to Franchisor for
additionaitimetocompletethecore The length of the additional core period,if any,aliowed by
Franchisor most be statedinwritingsigned by Franchisor. The additional core period, if any,
shall, in Franchisor's estimation, be sofficient in doration to enableareasonable person acting
diligently to complete the core within the extended period. If Franchisor grants an extension and
if Franchisee does not complete the reqoired core within the extended core period, termination
of this Agreement shall be effective at the close of hosiness on the last day of the extended core
period withoot forther notice from Franchisor. Oefaolts onder this Section183will inclode,bot
not be limited to, the following:
(a)
Franchisee fails to maintain the then corrent operating procedores,
retirements or standards established by Franchisor as set forth herein, in the Manoal or
otherwise commonicated to Franchisees
(b)
Franchiseefails, refoses or neglects to ohtain Franchisor's prior written
approval or consent as reqolred hy this Agreements
Camp Sow Wow ^014 FOO
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(o)
Fraooh^ee m a k e s a n onaotho^ed c h a n g e t o t h e C a m p Site orother
equipment or material osed in r e l ^
(d)
Fraoohisee teiis to maintain sottioient ieveis ot Prodoot inventory to
adequately meet consumer demands
(e)
Franohiseetaiis, asdetermined hy Franchisor in our sole discretion, to
personally sopervisethe dayto-day operation otthe Gamp or tails to empioyasotticientnumh^^
otqualitied, competent Personnels or,
(t)
Franchisee is required to pay the Minimum Monthly Royalty setout in
Section 4.3 ahove during any to^r (4) months in any 12 consecutive month period. (This
Section 183(t) wili not apply to the payment ot Minimum Monthly Royalty tees doringaperiod in
which Franchisee is relocating the Gamp Site with Franchisor approval).
18.4
In addition to Franchisor's right to terminate this Agreement, and not in lieu ot
suchright,or any other rights,Franchisor may have against Franchisee,^ponatail^re to cure
any detect within the applicable time period(itany), Franchisor will have the toilowingright^^
hut not the ohligation:
(a)
to enter upon the Gamp Site and exercise complete authority with respect
to the operation otthe Gamp and all Services provided through the Gamp until such time as
Franchisor determines, in Franchisor's solediscretion that thedetault has heen cured, and
Franchisee is otherwise in compliance with this Agreement. In the event Franchisor exercises
therights described in this Section, Franchisee must reimburse Franchisor tor ail reasonable
costs ot doing business during Franchisor's period ot operation including bot not limited to costs
associated with payroll, insurance, utilities, advertising, marketing, rent, mortgage payment
sopplies, tbe cost ot Franchisor's personnel and their travel, tood and lodging accommodations,
as well as the daily management tee published in the Operations Manoals. Ooring any period ot
Franchisor management, ail ot Franchisee's Personnel will remain onder the employ ot
Franchisee and will not become the Personnel ot Franchisor It Franchisor ondertakes to
operate tbe Gamp porsoantto this Section, Franchisee will indemnity and hold Franchisor (and
Franchisor's representative(s) and employees) harmlesstrom and against any tines, claims,
soitsor proceedingsthat may a r i s e o o t o t Franchisor's operationot the Oampinaccordance
with Section 113 Franchisor will also have the right to retain any profits doringits period ot
o p e r a t i o n o t t h e O a m p a n d c h a r g e F r a n c h i s e e a r e a s o n a b l e management tee provided inthe
Operations Manoals and,
(h)
to limit the scope ot the License tor any individoal service granted
hereonder (ie InFlome Services or OogTraining Services) it Franchisee does not complete the
training necessary to otter any soch service granted hereonder to Franchisor's satisfactions or it
Franchisee is in defaolt with respect to the provision of any particolar Service and has not cored
soch defaolt within the applicable period.
18.5
No endorsement or statement on any check or payment of any som less than
the foil som doe to Franchisor wili be constroed as an acknowledgment ot payment in foil or an
accord and satisfaction,andFranchisor may accept and cash soch check or payment withoot
pre^odice to its right to recover the balance doe or porsoe any other remedy provided herein or
by law.Franchisormay apply any payments made by Franchisee against any past doe
indebtedness of Franchisee as Franchisor may see fit Franchisor may setoff againstany
payment doe to Franchisee hereonder any ootstanding debts of Franchisee to Franchisor,and
Camp Sow Wow 2014 FOO
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may, at Franohisee o ^ o n , ^
Franohisee.
18.8
Franohisee wiii pay within 5 days ot the etteotive date ot termination or
expiration otthe Franchise Agreement aii amounts owed to Franchisor, the iandiord otthe
Gamp Site or other premises used in the Camp (it appiicahie) and Franchisee's trade and other
creditors which are then unpaid.
18 7
it Franchisee, or any Business Entity in which Franchisee (or any ot its
shareholders, memhers, owners, managers or partners)hasacontroiiing equity interest,isa
franchisee pursuant to another Franchise Agreement with Franchisor, or any other agreements
default onder this Agreement wiii constitoteadetauit onder soch other agreement and vice
versa, with like remedies available to Franchisor If such other agreement ceases to he valid,
binding and in full force and effect for any reason, then Franchisor may at its option terminate
this Agreement and this Agreement will be forthwith surrendered by Franchisee and terminated,
and likewise should this Agreement cease to be valid, binding, or in toll force and effect for any
reason, Franchisor may at its option terminate the other agreement and the other agreement will
be forthwith surrendered and terminated. In the event that there is more than one Franchisee,
o r i f Franchisee shoold consistof more t h a n o n e l e g a l Boslness Entity, Franchisee'sliability
hereonder will be both^oint and several A breach hereof by one soch Boslness Entity or
Franchisee will be deemed to beabreach by both or all.
18.8
Opon termination or expiration o f t h i s Agreement, Franchisee wili take tbe
following action:
(a)
immediately cease operating the Camp or otherwise offering Camp
Services, In Flome Services, Oog Training Services, or any other aothorized Frodocts or
Servlcesand pay a i l a m o u n t s d o e t o Franchisor, its Affiliates, and approved or designated
soppliers within five days of soch termination or expiration
(b)
Refrain from, directly or indirectly, at any time or in any manner,
identifying itseiforany hosiness asacorrent franchisee or aothorized licensee of Franchisor or
its Affiliates^ refrain from osing any Mark, any colorable imitation thereof, or o ^
C a m p i n a n y manner or for any porpose, or otilizing for any porpose any tradename,trade
mark, service markorothercommerciai symbol that soggests or indicatesa connection or
association with Franchisor or its Affiliates^ discontinoe the ose of all signs, stroctores, forms of
advertising, social media postings, telephone listings, facsimile nomhers, e mail addresses, the
Manoal, and all materials, Frodocts and Services of any kind which are identified or associated
with tbe System and immediately retorn all these materials and Frodocts to Franchisors
(c)
Immediately tornover to Franchisor alimateriais, incioding the Manoai,
Costomer Lists, records, files, instroctlons, hrocbores, advertising materials, agreements,
Confidential Intormation, Trade Secrets and any and all other materials provided by Franchisor
to FranchiseeorcreatedbyathirdpartyforFranchisee relating to the operation of the Camp (ail
of which are acknowledged to be Franchisor's property and not sob^ect to any porchase options
onder Section 15). Onder no circomstances will Franchisee retain any printed or electronic
copies o f t h e Manoal, Confidential Information or Trade Secrets or portions thereof opon
expiration orterminationofthis Agreement^
(d)
Franchisee hereby acknowledgestbat all telephonenombers, facsimile
nomhers and Internet addresses and listings osed in the operation of the Camp constitote
assets of theCamp^ and opon termination or expiration of this Agreement, Franchisee will take
Camp Sow Wow 2014 FOO
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U5^7^40706
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sooh action w ^ o ^ d a y s to cao^^
Franchisor allot F r a n c h i s e e s ^
tacsimile nomhers andlnternet addresses andlistings and will notity all services pr^^
listing agenciesotthetermlnatlon or expiration ot Franchisee's rightto o s e a n y telephone
nomher and Internet and e mail addresses, and any regolar, classified or other telephone
dlrectorylisting associated with the Marks and to aothorlzeatranster otthe same to or at the
direction ot Franchisor Franchisee acknowledges as between Franchisor and Franchisee,
Franchisor has the solerights to, and Interestin, all telephone nomhers, tacsimllenomhers,
directory listings andlnternet addresses and listings osed hy Franchisee to promote the Camp
and associated with the Marks and thos are not sohject to any porchase option onder Section
15. Franchiseehereby irrevocably appoints Franchisor, with toll powerotsohstltotlon, as its
troe and lawtolattorney^in-tact, whicb appointment is coopled with an interests to execote soch
directions and aotborlzatlonsas may benecessary or prodentto accomplish thetoregoing.
AttachmentDevidences soch appointment:
(e)
Make no representation nor state that Franchisee is in any way approved,
endorsed or licensed by Franchisor or associated or identified with Franchisor or the System in
any manners
(f)
Immediately take all steps necessary to amend or terminate any
registration or filing of any d ^ a or boslness name or fictitloos name or any other registration or
filing containing the Marks so as to delete the Marks and all references to anything associated
with the System. If,wlthln 30 days after termination or expiration of this Agreement Franchisee
has not taken all steps necessary to amend or terminate any registration or filing of any
boslness name o r d ^ a or any other registration or filing containing the Marks, Franchisee
hereby irrevocably appoints Franchisor as Franchisee's troe and lawfol attorney for Franchisee,
and in Franchisee's name, place and stead and on Franchisee's behalf, to take action as may
be necessary to amend or terminate all registrations and filings, this appointment being coopled
with an Interest to enable Franchisor to protect the Systems
(g)
Frovlde Franchisor the option to porchase as set forth in Sectlont5^
(h)
Comply with the restrictive covenants contained In this Agreement,
incloding the provisions of Section 13^
(i)
Comply with the indemnlficationcovenants contained in this Agreement,
incloding the provisions of S e c t i o n l ^ a n d ,
^
Comply with the inspection rights granted to Franchisor onder Sections
of this Agreement foraperlod of six years after termination or expiration.
18 0
Franchisor shall give Franchisee written notice of its election to accept an
asslgnmentofthe Lease or Leaseback Agreement within 15 days after the effective date of
termination or expiration of this AgreemenLFrancbisor's failore to timely notify Franchisee shall
signify its decision notto accept an asslgnmentofthe L e a s e o r Leaseback Agreement If
Franchisor gives notice that It will accept an assignment of the Lease, Franchisee will promptly
vacate t h e C a m p Site asreqoired hythe AddendomtoLease or Leaseback Agreement,as
applicable, and leave the premises and all fixtores and eqolpment, in good wording order,
condition and repair Franchisor's right to accept an assignment of the Lease is independent of
Franchisor's right to acqoire the physical assets in the Camp Site on the terms of this
Agreement
Camp Sow Wow 2014^00
E x t ^ i t S D ^ a n o t ^ e Agreement
0^7^40706
8^2
18.10
^immed^e^a^^m^^
toremove^d^aysoftheMa^^^
System, Franoh^or may enter the Gamp Site and any other l o c a t e
provided to etteotsooh removal. In this event, Franchisor w^ not be o h a r ^
he aoooontahle or required to pay tor any such items ot personal property.
1811 Termination or expiration otthis Agreement will not atteot,modity or discharge
any claims, rights, causes ot action or remedies which Franchisor may have against Franchisee,
whether such claims or rights arise hetore or atter termination or expiration. In any proceeding
in whichthe validity otthetermination otthis Agreement is at issoe, Franchisor will not he
limited t o t h e reasonsset torth in any notice ot termination ordetault given to Franchisee.
Franchisor's rights hereunder are cumulative a n d n o exercise or enforcement hy Franchisor ot
any right or remedy hereunder will preclude the exercise or enforcement ot any ot its rights or
remedies herein contained, orto which it is entitled hy law
18.12 Allohligatlonsofthe parties heretowhichexpressly or hy their naturesurvlve
the expiration or termination of this Agreement will continue in full force and effect
notwithstandingsuch expiration or termination In particular,hut without limiting the generality
of the foregoing, the provisions of Sections 8, 0 , 1 1 , 13,15, 18, 10, 20 and Section 21, hereof
will survive termination or expiration of this Agreement
18.13 In the event that this Agreement expires or is terminated for any reason
whatsoever andFranchisor is the lender onder any loan agreement ^Loan") or the holder of
any promissory note ( " N ^ e ^ or the holder of any personal property, security lnterest,chatte^
mortgage, debenture or mortgage of any nature whatsoever ^Security merest") from
Franchisee concerning assets used at any time hy Franchisee in the Gamp or which are
situated at the Gamp Site, soch Loan, Note or Security Interest will, opon the effective date of
termination orexplration, immediately becomefolly d o e a n d p a y a b l e a s t o a l l principaland
Interest so loaned and secored.
1814 Nothing herein will prevent Franchisoror Franchiseefrom seeking in^onctive
relief to prevent irreparable harm, in addition to all other remedies. If it Is necessary for
Franchisor toseekprelimlnary or permanent in^onctive relief, Franchisor may d o s o w i t h o o t a
bond
1818 Franchisee may terminate this Agreement by written notice to Franchisor for any
reason constltotinggoodcaose, provided termination Is accomplishedin accordance with tbe
retirements of this Agreement Any attempt by Franchisee to terminate this Agreement except
on the groonds, or according to the procedores, stated in this Agreement shall be void. Good
caose means tbat Franchisor has committed a material and sobstantial breach of this
Agreement that It has not cored within the period allowed hy this Agreement. Franchisees
written notice most specify with particolarity the matters cited to be in defaolt and provide
Franchisor wlthaminlmom of 30 days in which to core the defaolt. Additional time to core most
be provided as is reasonable onder the circomstances ifadefaolt cannot reasonably be cored
within the minlmom 30^ay period. Franchisee's written notice oftermination ofthis Agreement
for good caose shall not excose Franchisee trom continuing to perform its obligations onder this
Agreement doring the core period or entitle Franchisee to a refond of any money that
Franchisee has paid to Franchisor or Franchisor's Affiliates porsoantto this Agreement
1818 TFIF PARTIES A G K N G W L F O G F T F I A T I N THE EVENT T H F T F R M S G F THIS
A G R E E M E N T R E G A R O I N G T E R M I N A T I G N G R E ^ F I R A T I G N A R E INCONSISTENT VVITH
Camp Sow Wow
FOO
ExhibitS^Fraoohise Agreement
0^75540706
853
APP^GABLESTATEORFEOERALLAWSOGH LAWSHALLGOVERNFRANCH^E^S
RIGHTS R E G A R O ^ G T E R M ^ A ^ G N OR E ^ R A ^ O N O
17
OONOEMNATIONANOOASOALTY
17BI
Franchisee will p r o m p t advise Franchisor opon F r a n c e
of defaolt or termlnatlononder Franchisee's AoqolsltlonOoooments, and will prom^^
Franchlsoracopy offhenoflce. Franchisee wlllalso give Franchisor notice of any proposed
taking of the Oamp Site or any portion thereof throogh the exercise of the power of eminent
domain attheearllest posslhletlme. If theOamp Site orasohstantlalpart thereof Is t o h e
taken, the Oamp Site may he relocated within the Aothorlzed Territory, or elsewhere with
Franchisor's written approval porsoant to Franchisor's relocation procedores. If Franchisee
o p e n s a n e w hosiness as provided ahove at another location porsoantto Franchisor's standards
and general specifications within one year of the closing of the old Oamp Site, the new Oamp
Site will he deemed to he the Oamp Site llcensedonder this Agreement. Ifacondemnatlon,
Leasetermlnatlonor mortgage defaolt t a k e s p l a c e a n d a n e w O a m p S l t e d o e s n o t , f o r any
reason, hecome the Oamp Site as provided In this Section 17.1, then this Agreement will
terminate opon notice hy Franchisor
17 2
If the Oamp Site or any other Oamp facility Is damaged, Franchisee will
expedltloosly repair thedamage. If thedamage or repair reqolres closing theOamp, or the
cessation of the offering of any Service Licensed hereonder, Franchisee will Immediately notify
Franchisor In writing, and will:
(a)
Relocate the Oamp Site as provided In Sectlon17.1^or,
(h)
Repair or reholld the Oamp Site or other Oamp facility porsoant to
Franchisor's then existing standards and general specifications, reopen and commence the
provision ofthe Oamp Services as soon as practicable (hot In any event within 12 months after
closing the Oamp Site),giving Franchisor 30 days advance notice ofthe date of reopening.
If the Oamp Site Is not (or, In the opinion of Franchisor cannot he) reopened porsoant to
thlsSectlon 17.2, or relocated porsoantto Section 171, Franchisor will havetheoptlon to
modify the License granted onder this Agreement hy rescinding Franchisee's license to provide
the Oamp Services, or terminate the Agreement porsoant to Section 18.3.
17.3
T h e T e r m will not he extended hy any Interroptlon In the Oamp's operations,
except for an act of God that resolts In the Oamp Site or Oamp helng closed not less than 80
days nor more t h a n l S O days. Franchisee most apply for any extension within thirty 30 days
following the reopenlngof the Gamp Site No event doring theTerm will excose Franchisee
from paying Royalty Fees, Marketing Fees or the Local Advertising Expense as provided In this
Agreement
1S.
NOTICES
18.1
All notices doe to Franchisee onder this Agreement will he delivered hy
Franchisor (a) personally (h) via overnight O F S , FedEx, or other coorler serviced (c) via fax or
emails or (d) via registered or certified mall oslng the contact Information helow All notices doe
toFranchlsorwIllhedellveredhy Franchisee vlareglstered mall to the address llstedhelow
Any party may at any time give notice In writing to any other party of any change of address.
Camp Sow Wow ^014 FOO
^ x h ^ t S ^ F r a n o t ^ e Agreement
^^7^0706
854
ToFranohiso^
Gamp Bow Wow Franch^og, Ino
^ O W I ^ G I ^ O n l t O
B r o o m s , Colorado 80021
Attn: Heidi Ganahl
ToFraochisee:
Attention:
Email:
Fax:
10
OISPOTE RESOLUTION
101
This dlspote resolution provision applies to, governs and provides the exoloslv^
method tor resolving any and all disputes and olalms hy and against all parties and their
Attlllates, successors, owners, managers, ottloers, directors, employees, Personnel, agents, and
representatives as to claims arising out ot or relating to this Agreement, Its terms, the parties'
dealings with one another under this Agreement, the parties' dealings with one another
generally, or ot alleged violation ot any applicable law or regulation, except as stated helow (a
^Olspute^.Thls dlspote resolution provision will survive the termination orexplration otthis
Agreement
10.2
Mediation All partleslnvolved In a Olspoteshall tlrstsuhmltthe Olsputeto
mediation to he administered hythe American Arbitration Association onder Its mediation roles
then In ettect.The mediation shall be conducted at theottlcesot the American Arbitration
Association In Oenver,Golorado, or soch other location agreedon byallpartles Any party to
this Agreement may Initiate medlatlonbywrlttenreqoest to all other parties. Eachpartythat
recelvesawrltten reqoest tor mediation most respond,In writing,within t h r e e ^ h o s l n e s s days
ot receipt ot the reqoest and state oneqolvocally whether that party will participate In mediation
Ealloretorespondconstltotesawalverotthe rightto medlateandpermltsthereqoestlng party
to proceed as set torth herein. Absent rare, exceptional circomstances, the mediation shall be
condoctedandcompleted within tortytlve(48)days otthe written reqoest tor mediation. The
parties shall participate In good talth In the entire mediation, Incloding the mediation conference,
with the Intention ot resolving the dlspote. The parties shall each send at least one
representative to the mediation conference who has aothority to enter Intoabinding contract on
that party's behalf and on behalf of all principals of that party who are reqolred by the terms of
thepartles'settlementtobepersonallyboond by It.Tbe parties recognize and agree,however,
that the mediator's recommendations and decision shall not he binding on the parlies
Notwithstanding theforegolng agreementto mediate, Franchisor shall havetbe right, at Its
election,to seek, In arbitration oracoort of competent ^orlsdlctlon,the Issoance of Injunctive
other eqoltable relief to protect and enforce Its rights onder this Agreement withoot waiting for
completion of mediation and withoot waiving mediation. Oompletlon of mediation shall be a
condition precedentto Initiation ofan arbitration proceeding.
10 3
Arbitration. If the parlies are onable to reach resolotlon of any Olspote throogh
mediation as provldedlnSectlon 1 0 ^ a b o v e , any Olspote shall be governed and exclosively
resolved by final and binding arbitration administered by the American Arbitration A s s o c l a ^ ^
Camp Sow Wow 2014 FOO
E x h ^ S ^ F r a o o h ^ e Agreement
05^7^407^
8^5
Therequ^menttoa^^eaoy^
o^lm by Fraoch^ee or any p e r s o n
of Franob^e^ooooern^g tbe entry ^o,performaooe onder, or ter^^
or any otber agreement entered into by Franobisor, or its subsidiaries or Attiiiates, and
Franobisee, any oiaim against a past or present employee, ottioer, director, member,
shareholder or agentotFranobisor, any olaim o t b r e a o b o t this Agreement, and any claims
arising onder state or federal l a w s . ^ e r s o n s i o p r ^ t y " with or claiming through,on beba
or in tbe right of Franchisee include but are not limited to, spouses and otber family members,
heirs, executors, representatives, successorsand assigns Subject tothis Section 10.S, the
right and doty ofthe parties tothis Agreement toresolve any dispotesby arbitration will be
governed exclosively by the Federal Arbitration Act, and arbitration will take place accor^^^
the Commercial Arbitration Roles of the American Arbitration Association in effect as of the d^^^
the demand for arbitration is filed.
10.4
Exceptions to Mandatory Arbitration Retirement Franchisor, in its sole
discretion, ispermitted to porsoe claims in a c o o r t o f competent^orisdiction in t h e S t a t e o f
Colorado that involve (a) Franchisee's misose of any of the Intellectoal Property or the System,
hosiness concept or any issoe involving in^onctive relief against Franchisee or any issoes
related to disclosore or misose of Confidential information, Trade Secrets or patents^ (b)
Franchisor'senforcementof its rights onder this Agreement and any agreement attached
hereto. The parties expressly consent to personal ^orisdiction and venoe in the State of
Colorado and agree that soch coorts wili have exclosive ^orisdiction over any soch issoes not
sob^ect to arbitration and that Colorado law will apply.
10 5
Arbitration Procedores. The arbitration hearing will be held at the offices of the
American Arbitration Association in Denver, Colorado, or soch other location a s t h e parties
agree The arhitrationhearing will he condocted h y a s i n g l e arbitrator who hasaminimom of
five (5) years of experience in franchise law T h e f e e s ofthe arbitrator and the American
Arbitration Association will be divided eqoaily between the parties. The arbitrator will have no
aothority to amend or modify the terms of this Agreement. The award of the arbitrator will be
final andbinding on tbe parties andmay be enforcedby Lodgment or order of the state and
federal coortslocatedinOenver,Colorado The parties'written discovery rights in arbitration
shall be limited to reqoests for prodoction of docoments (incloding electronically stored
information).The parties'deposition rights^
representatives of each party not toexceed 4 hoors perdeposition, and (^ depositions of
experts, if any, limited t o 4 h o o r s per deposition Whether depositions of nonparties wiiibe
allowed wiii be decided by the arbitrator in his or her sole discretion.Thearbitratorhas the
discretiontomodifythesediscoveryrigbtsoponashowingofgoodcaose.The prevailing party
in any arbitration or action in coort to confirm or enforce an arbitration award shall be entitled t^
recover, in addition to all other remedies or damages, its reasonable attorney's fees, arbitration
costs and coort costs.
108
Tothe extent permitted by applicable law,no issoe of fact or law will be given
preclosive or collateral estoppel effect in any arbitration hereonder,except to the extent soch
issoe may have been determined in another proceeding between Franchisor and Franchisee or
any person in privity with orclaiming throogh, inthe rightof o r o n behalf of Franchisee or
Franchisor
10.7
The parties agree that all proceedings, whether in mediation, arbitration, or
litigation,willhe condocted on an individoal, n o t a c l a s s w i d e basis, and that any proceeding
between Franchisee, its principals or goarantors, and Franchisor, its Affiliates or Personnel may
Camp Sow Wow ^014 FOO
ExhibitSDFraoot^e Agreement
^537^0706
8^6
not be c o n s o r t e d w ^ a o y o t b e r p r o c e e d s between F r a n o b ^ e r a n d a n y o t b e r p e ^ o n e r
Business Entity
lOS
N E T H E R FRANGHiSOR NOR ITS A F F ^ A T E ^ SOPPLiERS, VENOORS,
C E N S O R S OR AGENTS WILL BE
ANYiNOl0ENTA4OONSEO0ENTiA4E^EMRLAR^F0NiTiVE,ORS^
ARISING O O T O E O R R E ^ T E O T O T H i S AGREEMENT E V E N i E THEY HAVE BEEN
A O V I S E O G E THE POSSIBILITY G E S O G H O A M A G E S THE A G G R E G A T E LIABILITY GE
ERANGHISOR ANO E R A N O H I S G R ' S A E E I L I A T E S , S O R R L I E R S , VENDORS, LIOENSORS
AND AGENTS TO E R A N G H I S E E E O R ALL DAMAGES, LOSSES, A N O O A O S E S O E A O T I O N
(WHETHER IN OONTRAOT, TORT (INOLODINGNEGLIGENOE), OR OTHERWISE) SHALL
NOT E ^ G E E D THREE (3) TIMES THE INITIAL ERANGHISEEEE
10.0
Erenoblso^s otticers, directors, sberebolders, agents and employees are
express tblrd party benetlclaries o t t b e provisions ottbls Agreement, Including tbe dispute
resolution provisions set tortb In tbis Section 10, eacb bavlng aotborlty to specifically enforce
rlgbt to mediate or arbitrate claims asserted against sucb person(s) by Franchisee.
1010 If Franchisor m a k e s a d e c l s l o n b a s e d opon Its reasonable business ^dgment,
neltberamedlator,arbltratornora^udge shall substitute his or her judgment for tbe Lodgment so
exercised by Francblsor The fact tbatamedlator or ^odge might reachadlfferent decision than
the one made by Franchisor Is n o t a b a s l s for finding that Franchisor made Its decision without
the exercise of reasonable business judgment Franchisor's duty to exercise reasonable
business Lodgment In making certain decisions does not restrict or limit Franchisor's rlgbt onder
this Agreement to make other decisions based entirely on Franchisor's sole discretion as
permitted by this Agreement.Francblsor's sole discretion means that Franchisor may consider
any set of facts or circumstances that It deems relevant In renderlngadeclslon.
20
MISOELLANEOOS
201
Sob^ect to Franchisor's rights onder tbe trademark laws and the parties' rights
onder the Federal Arbitration Act, tbe parties'rights onder this Agreement and their relationship
Is governed by, and will be Interpreted In accordance with, the laws (statotory and otherwise) of
the State of Golorado.
202
Whenever this Agreement provides that Franchisor hasacertaln right, that right
Is absolote and the parties Intend that Franchisor's exercise of that right will not be sob^ect to
any limitation or review Franchisor has the right to operate, administrate, develop, and change
the System In any manner that Is not specifically and expressly precloded by the provisions of
this Agreement.
20.3
All provisions o f t h i s Agreement are severable and this Agreement will be
Interpreted and enforced as If all completely Invalid or onenforceahle provisions were not
contained herein^ all partially valid and enforceable provisions will be enforced to the extent that
they are valid and enforceable.
20.4
Notwithstanding Section 10, If either party Instltotes an arbitration or legal
proceeding, andprevalls entirely or Inpart In any action at law or In eqolty against the other
party based entirely or In part on the terms of this Agreement, the prevailing party will be entitled
to recover from tbe losing party, In addition to any Lodgment, reasonable attorneys'fees, coort
costs and all ofthe prevailing party'sexpenses In connection with any action at law.
Camp Sow Wow 2014^00
^ t ^ t S D ^ a n o t ^ e Agreement
^537^0706
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20.5
No ^ o r e , forbearance n e g ^
oonoeofion wifb fbeeoforoemeof o r e x e r o i s e o f a o y ngbfs ooderfbis Agreement w^affeof or
dimimsb Franob^or's rlgbt to strictly enforce and take toll benetlt o t e a c b provision ottbls
Agreement at any time, wbetber at law tor damages, In equity tor In^onctlve relief or specific
performance, o r o t b e n ^ l s e . N o c o s t o m , usage, or practice witb regard totbls Agreement by
Francblsee or Francblsor's otber franchisees will preclude tbe strict enforcement of tbis
Agreement pursuant to Its literal terms. No waiver by Francblsor of performance of any
provisionof tbis Agreement will constitute or b e l m p l l e d a s a w a l v e r o f F r a n c b l s o r ' s r l g b t to
enforce tbat provision at any foture time. No Interpretation, change, termination or waiver of any
provision of tbis Agreement, and no consent or approval onder tbis Agreement, shall be binding
upon Franchlseeor Franchisor, or effective onless In writing signed by Franchlseeand an
execotlveof Franchisor's witb aothority to execotethesame, except thata waiver need he
signed only hy tbe party waiving. Franchisor's acceptance of any payments made by
Franchisee aftera breach ofthis Agreement shall not be, nor be constroed as, a waiver by
Franchisor of any breach by Franchisee of any term, covenant or condition of this Agreement
20.8
This Agreement, together w l t h a n y a n d a l l e x h l b l t s , attachments or addenda,
constltotestheentlre onderstandlng and agreement between Franchlseeand Franchlsorand
sopersedes all prior onderstandlngs, whether oral or written, pertaining to this Agreement,
License, System or Camp. Nothing In this Agreement or any related agreement Is Intended to
disclaim the representations Francblsor made In Franchisor's Franchise Disclosore Oocoment.
20 7
The headings of the sections hereof are for convenience only and do not define,
llmltorconstroe thecontentsof soch Sectlonsorother Sections Theterm ^Franchisee^as
osed herein Is applicable to one or more persons,oraBoslness Entity,as the case may be,and
the slngolarosage (where applicable) Inclodes the ploral and the mascollne and neoterosages
(where applicable) Inclode tbe other and the feminine.The term ^Lease" will Inclodeasohlease
and renewal or extension o f a L e a s e or soblease.
20.S
When calcolatlng the date opon which or the time within which any act Is to be
done porsoant to this Agreement, the date which Is the reference date In calcolatlng soch period
w l l l b e e x c l o d e d ^ l f t h e l a s t d a y o f s u c h period Isanonboslness day,the period In qoestlon will
end on the next boslness day. Time will be of the essence of this Agreement and of every part
thereof.
20.0
Neither party hereto will be liable for any loss or damage doe to any delay In the
doe performance of the terms hereof (except for the payment of money) hy reason of strikes,
lockoots and other labor relations,fires,rlots,wars,embargoes,and civil commotion,or acts of
God (^Force Majeure Eveot") Any soch delay will extend performance only so long as soch
event Is Inprogress except soch Force Ma^eore Event willnot affect or changeFranchlsee's
obligation to pay Royalty Fees, Marketing Fees, and If applicable the Local Advertising
Expense, when doe Notwithstanding the foregoing, If there Is a Force Ma^eore Event,
Franchisor may elect to waive the Royalty Fees and Marketing Fees doring the period of delay
caosed by the Force Ma^eore Event or soch shorter period.
20.10 Franchisee wlllexecote and dellversoch forther Instroments, contracts, forms
and other docoments, and will perform soch forther acts, as may be necessary or desirable, to
carry oot, complete and perform all terms, covenants and obligations herein contained.
Franchisee hereby Irrevocably appoints Franchisor as Its attorney, and hereby empowers It to
execote soch Instroments regarding the Marks for and In Franchisee's name In order to give toll
effect to Sections 0 , 1 1 , 14, a n d 1 8 of this Agreement Franchisee hereby declares that the
powers of attorney herein granted may be exercised doring any Incapacity on Its part.
Camp Sow Wow ^014 FOO
E x h ^ t S D F r a n o t ^ Agreement
05537^40706
8^
20.11 The c o v e n a n t a g r e e m e o ^ ^ m s ^
shell he hiding upon, and shell Inure t o t h e h e n e f l t e ^ thesuccessors, assigns, helrsend
personal representatives efthe paries hereto.
20.12 This Agreement may only he modified or amended hy a written doooment
executed hy Franohisee and Franchisor. Franohisee acknowledges that Franchisor may modify
the System, Its standards and specifications and operating and marketing techniques set forth In
the Operations Manual unilaterally under any conditions and to the extent In which Franchisor
deems necessary to protect, promote, or Improve the Marks, and the quality of the System, hut
under no circumstances will sochmodlflcatlonshemade arbitrarily withoot such determinations
Notwithstanding anythlngln this Agreement to the contrary, Franchisor will have the right
unilaterally to reduce the scope of any covenants of Franchisee contalnedln this Agreement
upon notice to Franchisee, whereupon Franchisee will comply therewith as so modified.
201S From time to time, Franchisor will have the right to delegate the performance of
any portion or all of Its obligations and dotles hereunder to third parties, whether the same are
agents of Franchisor or Independent contractors which Franchisor has contracted with to
provide such services. Franchisee agrees In advance to any such delegation by Franchisor of
any portion or all of Its obligations and dotles hereonder. Franchisee also acknowledges that It
Is notathlrdpartybeneflclaryofanyagreementbetween Francblsor and any agent to whom It
has delegated any of Its obligations or dotles hereonder.
2014 Francblsee's spoose and all partners Inallmltedpartnersblp,shareholders Ina
corporate franchisee,or members ofallmlted liability company owning more thanaten percent
(10^) Interest In Franchisee, as well as all general partners and managing memhers, and their
spooses hereby personally and oncondltlonally goarantee withoot notice, demand or
presentment, the payment of all of Franchisee's monetary obligations onder this Agreement and
any otber agreement between Franchisee and Franchisor or Franchisor's Affiliates, as If each
were an original party to this or any other agreement In his or her Individoal capacity. All soch
personal goarantors forther agree to be hoondhy tbe restrictions opon Franchisee's activities
oponTransfer,termlnatlon or expiration andnonrenewal of this Agreement as If each were an
original party to this Agreement In his or her Individoal capacity All soch personal goarantors
andthelrspoosesmostexecoteacontlnolng personal goaranty In the form attached hereto as
Attachments.
2015 Franchisee agrees that folflllment of any and all of Franchisor's obligations
written In this Agreement or hased on any oral commonlcatlons which may be roled to be
binding Inacoort of law will be Franchisor's sole responsibility and none of Franchisor's agents,
representatives, nor any Indlvldoals associated with Francblsor will be personally liable to
Franchisee for any reason. Francblsee agrees that nothing that Francblsee believes
Francblsee has been told by Franchisor or Franchisor's representatives will be binding onless It
Is written In this Agreement. Oo not sign this Agreement If there Is any qoestlon concerning Its
contents or any representations made.
20.18 In the event of an amblgolty or Ifaqoestlon of Intent or Interpretation arises, this
Agreement will be constroed as If drafted jointly by all of tbe parties, and no presomptlons or
hordens of proof will arise In favor of any party by vlrtoe o f t h e authorship of any of the
provisions of this Agreement
^ 0 1 7 E ^ O F F T FOR A N Y OMITFO WARRANTY FOR TFIF FRANOFIISOR
SOFTWARE F R O V I O F O I N A T T A O F I M F N T I T F I E F R A N O H I S O R S Y S T F M ^ F R O O O O T S A N O
Camp Sow Wow 20t4FOO
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ANO ANY
S E R V E S ARE
FAOLTS, A N O W I T H O O T W A R R A N T S O F A N Y KINO F R A N C H ^ ^
OTHER W A R R A N T S ^ R R 5 S S A N 0 I M R ^ 0 , I N O L 0 O I N O , BOT NOT LIMIT^^
IMRLIEO W A R R A N T S OF M E R O H A N T A B ^ T Y ^ I T N E S S F O R A R A R T I O O ^ R R O R R O ^ ^ ^
OOIFTFN^OYMFNT^OOA^TYOFINFOR
RROOOOTS ANO SFRVIOFS OF THIRO FARTY FROVIOFRS A R E FROVIOEO AS IS,
WITHOOT WARRANTIES O F A N Y KINO N O O R A L O R WRITTEN INFORMATION OR
AOVIOE OIVEN BY FRANCHISOR OR ITS AOTHORIZEO REPRESENTATIVES SHALL
C R E A T E ANY OTHER WARRANTIES OR IN ANY WAY INCREASE THE SCORE OF
FRANCHISOR'S OBLIGATIONS ONOER THIS AGREEMENT
21
COVENANTS^ R E F R E S E N T A T I O N S ^ W A R R A N T I E S A N O A C ^ O W L E O O E M E N T S
Franchisee c o v e n a n t represents and warrants as follows and acknowledges that
Franchisor Is relying opon soch covenants, representations and warranties In making Its
decision to enter Into this Agreement
211
Franchisee acknowledges that:
(a)
(I) It has received the Franchise Olsclosore Oocoment not less than
toorteen (14) calendardays, and (II) a completed copy otthis Agreement not lessthan 7
calendar days hetore signing this Franchise Agreement doring which time Franchisee has had
ample time to read, has read, and onderstands the Franchise Olsclosore Oocoment, this
Agreement, and all related agreements with Franchisors
(h)
Franchisor has advised Franchisee to ohtain Independent legal and
accoonting advice with respect to this Agreement and the transactions arising oot otthis
Agreements
(c)
Franchisee has had an adeqoate opportonity to he advised hy legal,
accoonting and other professional advisors ot Its own choosing regarding all pertinent aspects
ofthe Gamp,Franchlsorand this Agreements
(d)
Franchlseehascondoctedan Independent
contemplated hy this Agreement
Investlgatlonofthehoslness
(e)
Franchisee recognizes that the System may evolve and change over time
and that Franchisor may Imposechangestothe System that Franchisor helleves, In Itssole
discretion, will heneflt Camps generally and strengthen consomer awareness of, and confidence
In, the Marks Franchisee Is aware that Franchisor cannot predict the natore of fotore changes
tothe System orthe amoontofFranchlsee'sfotorelnvestmenttoadoptfotore changes^ and,
(f)
offer to Franchisee.
The sohmlsslon of this Agreement to Franchisee does not constitote an
21.2
Franchisee Is financially and otherwise ahle to accept the risks associated with
developing and operating the Gamp Franchisor makes no goaranty or warranty that
Franchisee will he ahleto secore theflnanclng reqolred and provided In Section 71(h) or a
GampSltereqolredand provided In Sections.1(a) of this Agreement.
Camp Sow Wow 2014 FOO
Exh^tBDFraooh^eAgroement
055^40706
860
21.3
^ 5 ^ e m e ^ m a d e b y F r a n c h ^ e e i 0 W ^
f o r ^ i s C o c h i s e were, to the bestow
otthe date otthis Agreement and no meteheiintormation or taothesheen omitted whiohis
necessary in order to make the intormation disoiosed not misleading.
21.4
Franohisee agrees and acknowledges that it has not heen induced to enter into
thisAgreementinreiianceopon^norasaresoltot, any statements,representations,warran^^
conditions, covenants, promises or inducements, whatsoever, whether oral or written, and
whetherdirectly related t o t h e contents hereotorcollateral thereto, made hy Franchisor, its
otticers, directors, agents, employees or contractors except as provided herein. Franchisee
acknowledges that t h e L i c e n s e i s h e i n g g r a n t e d i n reliance upon theintormationsupplied to
Franchisor in Franchisee's application torthe License.
21.5
This entire Agreement, incloding corrections, changes, attachments and
addenda, will only he binding upon Franchisor when executed or initialed hy Franchisor's
authorized representative.
21.8
Franchisee has not received or relied opon any promise, representation,
guaranty or warranty, express or implied, ahoot the potential volume, revenoes, profits or
soccess otthe hosiness ventore contemplated hy this Agreement, or any other statement made
in contradiction to the intormation provided in the Franchise Olsclosore Oocoment
21.7
Franchisee acknowledges that other franchisees, whether corrent or totore, may
operate onder different forms of franchise agreements, and conseqoently, that Franchisor's
ohligations and rights with respect to other franchisees may differ materially.
^1S
Each ofthe ondersigned parties warrants that it has the toll aothority to sign and
execotethis Agreement and thatthe person execoting this Agreementas, o r o n hehait of,
Franchisee, and eachpersonexecotingapersonal goaranty of Franchisee's obligations, i s a
Onited States citizen oralawfol resident alien of the United States. If Franchisee i s a B o s ^
Entity the person execoting this Agreement on behalf of soch Bosiness Entity warrants to
Franchisor, both individoaliy and in its capacity as partner, officer, manager, member or
shareholder, that all of the partners, officers, members, managers or shareholders, as
applicable, have read and approved this Agreement incloding any restrictions which this
Agreement places opon the rights to transfer their interest in the partnership or Boslness Entity.
If Franchisee i s a B o s i n e s s Entity,Franchisee onderstands that it isamaterial obligation of this
Agreement that it remain doiy organized and in good standing for as long as this Agreement is
in effect.
210
Franchisee has not signed this Agreement in reliance on any shareholder,
director,officer,agent or employee remaining with Franchisor in that capacity.
2110 Franchisee represents that none of the property or interests of Franchisee or its
owners is sob^ect to being blocked onder,and Franchisee's and its owners are not otherwise in
violation of any law incioding, withoot limitation,Anti-TerrorismLaws Additionally, Franchisee
agrees to comply witb and assist Franchisor to the tollest extent possible in Franchisor's efforts
to comply with AntiDTerrorismLaws In connection with soch compliance, Franchisee certifies,
represents and warrants that no assets owned by Franchisee or any person who isagoarantor
of Franchisee's obligations to Franchisor are now, or are sob^ect to being, ^blocked" onder any
AntiTerrorism Laws and that Franchisee and each person who isagoarantor of Franchisee's
obligations is not otherwise in violation of any Anti Terrorism Laws. Any violation of, or
Camp Sow Wow ^ 0 t 4 F O O
ExhibitS^FranohiseAg^meot
^537^0706
861
"blocking" of assets under, any Anti-Terrorism Laws shall constitute a material breach of this
Agreement and grounds for immediate termination without an opportunity to cure.
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-62
IN WITNESS W H E R E O F , the parties have executed this Agreement as ofthe
Effective Date.
FRANCHISEE:
FRANCHISOR:
[FILL IN NAME IN C A P S FOR INDIVIDUAL1
C A M P BOW WOW FRANCHISING, INC.,
a Delaware corporation
[Print name of individual who is signing],
Individually
By:
Date:
Printed Name:
Its:
Date:
OR:
(if a Business Entity)
[FILL IN COMPANY NAME IN CAPS]
By:
Printed Name:
Its:
Date:
[Signature Page to Camp Franchise Agreement 2014]
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-63
ATTAOHMENTA
TOCAMPFRANCH^EAOREEMENT
^ M P ^ ^ O ^ ^ ^
Gamp Bow Wow F r a n c h ^ n ^ Ino. ^ F r a n c h ^ o ^ and
^ Franch^ee^
havens
day of
,20
entered Into that certain "Gamp Franchise
Agreement" (the ^Agreemeot^ tor the operation o t a Gamp Bow Wow^ franchised hosiness
("Gamp") and desire to supplement Its terms, as follows:
1
C A M P SITE A N O T E R R ^ O R Y . The Gamp Site will he:
theAuthorlzedTerrltorywIIIhe:
,and
.
2.
A G G E F T A N G E GF G A M F S^TE. Franchisee acknowledges and agrees that (t)
Franchisor's acceptance ot the AuthorlzedTerrltory and Gamp Site,hy Its execution hereof, does
notconstltuteaguarantee,recommendation or endorsement of the AuthorlzedTerrltory,or Gamp
Site, or the success of the Gamp whlchls solely dependent uponFranchlsee's abilities as an
Independent hoslnessoperator^ (2) Franchisor's acceptance or approvalof the Authorized
Territory or Gamp Site does not constltutearepresentatlon or warranty that Franchisee will he
ahle to ohtain any zoning or other entitlements necessary to provide the Gamp Services at the
Gamp Slte^ and, (S) Franchisor has compiled with Its obligations under the Agreement to assist
Franchisee by providing Franchisee criteria for the Gamp Site,and evaluatedandapproved the
Gamp Site and Acquisition Documents hased on Information provided by Franchisee
3
INITIAL FRANCHISE F E E The Initial Franchise Fee l s $
4.
M I S G E L L A N E G U S . In the event ofaconfllct between the terms of the Agreement and
tbetermsofthls Gamp SlteandAuthorlzedTerrltory Selection Addendum,the terms of this Gamp
SlteandAuthorlzedTerrltorySelectlonAddendumwIllcontroI.Exceptasamended hereby,all the
other terms and conditions of the Agreement are ratified and confirmed All capitalized terms not
otherwise deflnedln this Gamp Site and AuthorlzedTerrltory Selection Addendum,will have the
same meaning provided to such terms In the Agreement
IN WITNESS W H E R E G F , the parties hereto, Intending to be legally bound hereby, have
duly executedanddellvered t h l s G a m p S l t e and AuthorlzedTerrltory Selection Addendum tbe
date and year first written above.
FRANGHISGR:
FRANCHISEE:
CAMFBGWWGWFRANCHISING,INC
^ N A M E G F ENTITY GRINOIVIDOA^
^
^
FrlntedName:
FrlntedName:
Title:
Title:
Camp Bow Wow 2014^00
Exh^tB^Fraooh^e Agreement
U5^^0706
864
ATTACHMENTS
TOCAMPFRANCH^EAGREEMENT
GOARANTY ANO ASSUMPTION OF F R A N C H ^ E E ^ O B ^ G A T ^ N S
In oonslde^lon o^ and a s a n I n d u c e m e n t s the execution ctthatcertaln ^Oamp
Franchise Agreement" tor the operation c t a O a m p Bow W c w ^ t r a n c h l s e d ^
executedhetween
^a
^Fraochlsee") and Oamp Bow Wow Franchising,Inc^aOelaware corporation ( " F r a o c h i s o ^
on
201
(the "Agreements each otthe undersigned
herehy personally and unconditionally, jointly and severally enter Into this guaranty
(Guaranty"),and:
I
Guarantee to Franchisor and Its successors and assigns,tor theTerm otthe Agreement,
Including renewalsthereot, that Franchlseewill punctually pay and pertormeach and every
undertaking, agreement and covenant set torth In the Agreement and,
^
Agree to he personally hound hy,and personally llahle tor the hreach ot, each and every
provlslonlnthe Agreement, Includinghut not limited to the terms o t S e c t l o n s t ^ (restrictive
covenants) and 10(dlsputeresolutlon)otthe Agreement
E a c h o ^ t h e o o d e r s l g n e d waives the ^ l l o w i o g :
3.
Acceptance and notice otacceptancehy Franchisor otthe toregolng undertakings
4.
Notice ot demand tor payment ot any Indebtedness or nonpertormance ot any
obligations hereby guaranteed^
5
Protest and notice ot detault to any party with respect to the Indebtedness or
nonpertormance ot any obligations hereby guaranteed^
8.
Any rlgbt he or she may have to require that any action be brought against Franchisee or
anyotherpersonasacondltlonotliability^ and,
7
Any and all other notices and legal or equitable defenses to which he or she may be
entitled.
Each otthe oodersigned consents andagrees that:
8
His or her direct and Immediate liability under this guaranty will he ^olnt and several^
0.
He or she will render any payment or performance required under the Agreement upon
demand IfFranchlsee falls or refuses punctually to do so^
10
Suchllablllty will not be contingent or conditioned upon pursuit hy Franchisor of any
remedies against Franchisee or any other persons
II
Sucb liability will not be diminished, relieved or otherwise affected by any extension of
time, credit or other Indulgence which Franchisor may from time to time grant to Franchisee or
to any other person, Including without limitation the acceptance of any parllal payment or
performance, or the compromise or release of any claims, none of which will In any way modify
Camp 8ow Wow 2014 F O O
E x t ^ t B D F r a n o ^ e Agreement
U^7^40706
^
or amend this Guaranty, which will be continuing and irrevocable during the Term, including
renewals thereof;
12.
He or she will be bound by the restrictive covenants, confidentiality provisions and
indemnification provisions contained in the Agreement;
13.
The restrictive covenant and dispute resolution provisions contained in Sections 13 and
19 of the Agreement, respectively, and the costs and attorneys' fees provision contained in
Section 20.4 of the Agreement will govern this Guaranty and such provisions are incorporated
into this Guaranty by this reference; and,
14.
The failure or refusal of any guarantor to deliver to Franchisor, within 10 days after
Franchisor's written request: (i) evidence of execution of this Guaranty, or (ii) to provide
Franchisor with current financial statements as may from time to time be requested by
Franchisor, will constitute a default under the Franchise Agreement.
Each o f t h e undersigned represents and warrants that:
15.
The Franchisee is a:
• Individual • Partnership • Corporation • Limited Liability Company • Other
16.
If Franchisee is a Business Entity, it was formed under the laws of the State of
and is owned by the following individuals:
Name
Percentaqe
Ownership
Address
17.
Each of the undersigned has carefully read this Guaranty and all other related
documents to be executed concurrently or in conjunction with the execution hereof, has
obtained the advice of counsel in connection with entering into this Guaranty, understands the
nature of this Guaranty, and intends to comply herewith and be bound hereby.
18.
All capitalized terms not otherwise defined in this Guaranty, will have the same meaning
provided to such terms in the Agreement.
[Signatures
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
on following
B-66
page]
IN WITNESS WHEREOF, each of the undersigned has affixed his or her signature
effective on the same day and year as the Guaranty was executed.
GUARANTOR:
WITNESS:
Signature
Signature
Printed Name
Printed Name
Home Address
Home Address
Home Telephone
Home Telephone
Business Telephone
Business Telephone
Date
Date
[Signature
Page to Guaranty and Assumption
Camp Bow Wow -2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-67
of Franchisee's
Obligations]
ATTACHMENT C
TO C A M P FRANCHISE AGREEMENT
STATEMENT OF FRANCHISEE
[Note: Dates and Initials Must be Provided Below in the
Prospective Franchisee's Own Handwriting]
In order to make sure that no misunderstanding exists between you, the Franchisee, and
us, CAMP BOW W O W FRANCHISING, INC. (also called "CBW," "Franchisor" or "we") and
to make sure that no violations of law might have occurred, and understanding that we are
relying on the statements you make in this document, franchise application, and the Franchise
Agreement, you assure us as follows:
A.
The following dates are true and correct:
Date
Initials
1.
, 201
The date on which I, the Franchisee,
received a Franchise Disclosure
Document regarding the Camp.
2.
, 201
The date on which I, the Franchisee,
signed
the
"Camp
Franchise
Agreement."
3.
, 201
The earliest date on which I, the
Franchisee, made a payment to
Franchisor or its Affiliates.
B.
Representations:
1.
No oral, written, visual or other promises, agreements, commitments,
representations, understandings, "side agreements," options, right-of-first-refusal or otherwise
have been made to or with me with respect to any matter (including but not limited to
advertising, marketing, Camp Site location, operational, marketing or administrative assistance,
exclusive rights or exclusive or protected franchise territory or otherwise), nor have I relied in
any way on the same, except as expressly set forth in the Camp Franchise Agreement or an
attached written Addendum signed by me and Franchisor, except as follows:
(If none, you should write NONE in your own handwriting and initial.)
2.
No oral, written, visual or other promises, agreements, commitments,
representation, understandings, "side agreements" or otherwise which expanded upon or were
inconsistent with the Franchise Disclosure Document or the Camp Franchise Agreement or any
attached written addendum signed by me and an officer of Franchisor, were made to me by
any person or entity, nor have I relied in any way on the same, except as follows:
Camp Bow Wow-2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-68
^ n o n e , you should w r i t e N O N ^
3.
Exoeptas stated lo Item 10 o t t h e Frenohlse Disclosure Oooumeot, oooral,
written, visual or other claim or representation (Including hut not limited to charts, tahles,
spreadsheets or mathematical calculations to demonstrate actual or possible results hased o n a
combination ot variables, such as multiples ot price and quantity to reflect Gross Revenues, or
otherwise) which stated orsuggested a specific level or range of actualor potential sales,
Income, expenses, profits, cash flow, tax effects or otherwise (or from whlch such Items might
be ascertained) from Gamps,was made to me by any person or entity,nor havelrelled In any
way on the same, except as follows:
(If none, you should write NONE in your own handwriting and initial.)
4.
No contingency, prerequisite, reservation or otherwise exists with respect to any
matter (including but not limited to my obtaining financing, or my fully performing any of my
obligations), nor have I relied in any way on the same, except as expressly set forth in the Camp
Franchise Agreement or any attached written Addendum, Exhibit or Attachment signed by me
and Franchisor:
(If none, you should write NONE in your own handwriting and initial.)
5.
The individuals signing for Franchisee constitute all of the executive officers,
partners, shareholders, investors and principals. Each of such individuals has reviewed the
Franchise Disclosure Document and all exhibits and carefully read, discussed, understand and
agree to the Camp Franchise Agreement, each attached written Addendum, Exhibit, Attachment
and any personal guaranties.
6.
I have had an opportunity to consult with an independent professional advisor,
such as an attorney or accountant, before signing any binding documents or paying any sums,
and Franchisor has strongly recommended that I obtain such independent advice. I have also
been strongly advised by Franchisor to discuss my proposed purchase of a Camp with any
existing C B W franchisee before signing any binding documents or paying any sums and
Franchisor has supplied me with a list of all existing franchisees.
7.
I understand that a) entry into any business venture necessarily involves some
unavoidable risk of loss or failure; b) while the purchase of a franchise may improve the
chances for success, the purchase of a Camp license or any other franchise is a speculative
investment; c) investment beyond that outlined in the Franchise Disclosure Document may be
required to succeed; d) there exists no guaranty against possible loss or failure in this or any
other business; and e) the most important factors in the success of any Camp, including the one
to be operated by me, are my personal business skills, which include marketing, sales and
management, and require sound judgment and extremely hard work.
8.
If there are any matters inconsistent with the statements in this document or if
anyone has suggested that you sign this document without all of its statements being true,
correct and complete, immediately inform Franchisor (Phone: (877) 700-BARK) and our Chief
Executive Officer.
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06 .
B-69
9.
You understand and agree that we do hot furnish, or authorize our salespersons,
brokers or others to furnish any oral or written information concerning actual or potential sales,
costs, income, expenses, profits, cash flow, tax effects or otherwise (or information from which
such items might be ascertained), from franchise or non-franchised units, that no such results
can be assured or estimated, and that actual results will vary from unit to unit.
10.
You understand and agree to all of the foregoing and represent and warrant that
all ofthe above statements are true, correct and complete.
11.
All capitalized terms not otherwise defined in this Statement of Franchisee, will
have the same meaning provided to such terms in the Camp Franchise Agreement.
12.
This Statement of Franchisee is not intended to limit any rights you may have
under Local Laws.
PROSPECTIVE FRANCHISEE:
[Name of Franchisee]
By:
Printed Name:
Its:
Date:
REVIEWED BY FRANCHISOR
By:
Its:
Date:
Camp Bow Wow-2014 FDD
Exhibit B - Franchise Agreement
US.53755407,06
B-70
ATTACHMENTO
TO C A M P FRANCHISE A G R E E M E N T
C O L L A T E R A L ASSIGNMENT OF TELEPHONE NOMBERS^
TELEPHONE LISTINGS^NTERNETAOORESSESANOSOCIALMEOIAPAGES
F O R V A L O E RECEIVED
^F^nchls^ he^y
assigns to Gamp Bow Wow Fraochisiog, Ino, aO^awareoorpor^^^
those
certain telephone numbers and regular, classified or other telephone directory listings
(collectively, the "Telephone Nomhers and Listings^, (2) those certain Internet Wehslte
addresses ("ORLs^,and (3) social media pages (Facehook,Twltter,YouTuhe,lmage sharing
sites, hlogs and any other Intormation sharing wehslte or page communicated through the
Internet, world wide weh, text messages or other terms ot wireless or computer generated
communication or messaging) using or Incorporating the Marks or other Confidential Intormation
(collectively, ^Social Media Pages") wherever located, associated with F r a n c h i s o r ' s ^
service marks and used from time to time In connection with the operation of the Gamp within
the Authorized Terrltorydeflned In the"Gamp Franchise Agreement" This Assignment Isfor
collateral purposes only and, except as specified herein, Franchisor will have no liahility or
obligation of any kind whatsoeverarlslng f r o m o r l n connection with this Assignment, unless
Franchisor notifies the telephone company, social media sites or the listing agencies with which
Franchlseehasplacedtelephonedlrectory listings (all such entitles are collectively referred
herein as Telephone Company"), Francblsee's Internet service provider ("ISP") or Social
Media Page hosts to effectuate the assignment pursuant to the terms hereof.
Opon termination or expiration of the Camp Franchise Agreement (without renewal or
extension), Franchisor will have the right and Is hereby empowered to effectuate the assignment
o f t h e Telephone Numbers, Listings, ORLs, and Social Media Pages, and In such event
Franchisee will have no further right, title or Interest In theTelephone Numbers,Listings, ORLs,
and Social Media Pages and will remalnllahle to theTelephone Company, ISP and all other
service provldersforall p a s t d u e f e e s owing totheTelephone Company, I S P a n d allother
service providers on or hefore tbe effective date ofthe assignment hereunder
Franchisee agrees and acknowledges that as between Franchisor and Franchisee, upon
termination or expiration of the Gamp Franchise Agreement, Franchisor will have the sole right
to and Interest In the Telephone Numbers, Listings, LIRLs and Social Media Pages, and
Francblseeappolnts Franchisor as Franchlsee'strueand lawfulattorneyDln-facttodlrectthe
Telephone Company, ISP and all otber service providers toasslgn same to Franchisor, and
execute such documents and take sucb actions as may be necessary to effectuate the
assignment Opon such event, Franchisee will Immediately notify theTelephone Company,the
ISP and any Social Media Page hosts to assign theTelephone Numbers, Listings, ORLs and
Social Media Pages to Franchisor If Franchisee falls to promptly direct the Telephone
Company,ISP,Social Media Page hosts or any other service provider to assign theTelephone
Numbers, Listings, ORLs and Social Media Pages to Franchisor, Franchisor will have the right
todlrecttheTelephoneCompany, ISP,Social Media Page hosts and any other service provider
to effectuate the assignment contemplated hereunder to Franchlsor.The parties agree that the
Telephone Company, ISP and Social Media Page hosts may accept Franchisor's written
direction,the Gamp Franchise Agreement orthls Collateral Assignment ofTelephone Numbers,
Telephone Listings, Internet Addresses and Social Media Pages as conclusive proof of
Franchisor's exclusive rights In and t o t h e Telephone Numbers, Listings, O R L s a n d Social
Media Pages upon such termination orexplration and that such assignment will be made
automatically and effective Immediately uponTelephoneGompany's,ISP's and Social Media
Page host's receipt of such notice from Franchisor or Franchisee The parties further agree that
Camp Sow Wow 2014 FOO
Exh^SDFraoo^Ag^meot
^^75540706
871
if the Telephone Company, ISP or Social Media host requires that the parties execute the
Telephone Company's, ISP's or Social Media host's assignment forms or other documentation
at the time of termination or expiration of the Camp Franchise Agreement, Franchisor's
execution of such forms or documentation on behalf of Franchisee will effectuate Franchisee's
consent and agreement to the assignment. The parties agree that at any time after the date
hereof they will perform such acts and execute and deliver such documents as may be
necessary to assist in or accomplish the assignment described herein upon termination or
expiration of the Camp Franchise Agreement.
ASSIGNEE:
ASSIGNOR:
C A M P BOW WOW FRANCHISING, INC.,
a Delaware corporation
[FRANCHISEE NAME],
a
By:
By:
Printed Name:
Printed Name:
Its:
Its:
Date:
Date:
A C C E P T E D AND A G R E E D TO B Y :
(Company Authorized Representative):
Printed Name of Representative
Printed Name of Company
Date
[Signature Page of Collateral Assignment of
Telephone Numbers, Telephone Listings, Internet Addresses and Social Media Page]
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-72
ATTAOHMENTE
TOCAMPFRANCH^EAGREEMENT
N O N O ^ C L O S O R E A N O N O N C O M P E T ^ O N AGREEMENT
This Noodiso^sure and Noooompetttton A g r e e m e n t s
Sethis
deyot
,201
hy
and
hetweeo
Gamp
Frenohis^g,ioo,eOeiew^
Onit
0,
Broomtieid,
Geioredo
end
who resides or has a prinoipai piaoe ot
^Assooiate")
Bew
Wow
hosiness
a
at
REGiTALS
A.
The Gompany is engaged in the hosiness otseiiingtranohises tor the operation
o t a hosiness ottering speoiaiized services tor pets, inoioding: (i) speoiaiized dog services
consisting ot day care,hoarding,and hathing oot otatixed store iooation;(ii)petwaiking,p
sitting, dog training,athome pet excretion cleaning, and inhome care ot pets and piants;(iii)
the retail saie and delivery ot pet tood and merchandise; (iv) grooming and ott-site pet hoarding
at t h e h o m e o t employees or independent contractors; (v)Gptional In-Home Services that are
pet-related, hot not need to he provided in the costomers home;and(vi) any other services
licensed hyGompany onder thehrandnames Gamp Bow Wow^, Home Boddies hy Gamp
Bow Wow^, and Behavior B o d d i e s ^ osing the Gompany'sSystemin association with the
Marks (defined heiow) as more completely described in that certain "Gamp Franchise
Agreement" (collectively, a "Gamp"). The Gamp is operated onder the Gompany's
trademarks Gamp Bow Wow^, Home Boddies hy Gamp Bow Wow^, Behavior Boddies^
and other service marks, trademarks, logo types, trade dress, designs, and other
commercial symbols (collectively, the "Marks");
B
The Gompany, or its attiliate, has developed metbods tor establishing, operating
and promoting Gamps porsoant to tbe Gompany's distinctive boslness formats, plans, methods,
data, processes, sopply systems, marketing systems, formolas,techniqoes, designs, layoots,
operatingprocedores, Marks andinformationandknow-how of the Gompany and sochother
Gonfidentiallnformation (defined below) andTrade Secrets (defined below) as may be forther
developed from time to time by the Gompany;
G
TheGompany and itsaffiliates haveestablished sohstantiaigoodwilland an
excellent repotatlon with respect to the qoality of its System, which goodwill and repotation have
been and will continoe to be of major benefit to the Gompany;
0.
Associate desiresto become involved with the Gompany orafranchisee of the
Gompany in the capacity of an officer, partner, director, agent, manager, employee,
independent contractor, Store Manager (defined below), beneficial owner of the Gamp, or is an
immediatefamily member of a principal owning an interest in the Gamp, and will become
privileged astocertainGonfidential Information andTradeSecrets(defined below) Associate
may or may not have signed the Franchise Agreement or Goaranty and Assomption of
Franchisee's Gbiigations form; and,
E.
Associate and the Gompany have reached an onderstandlng
nondisclosorehyAssociateofGonfidential InformationandTrade Secrets and
noncompetition by Associate with the Gompany and other franchisees of
Associate agrees t o t h e t e r m s of this Agreement aspartial consideration for
Camp Bow Wow 2014 FOO
Exhi^BD^anohi^Ag^eme^
05537^40706
B73
with regard to
withrespect to
the Gompany.
theGompany's
w^ingness to allow A s s o c i ^
tranohlsee otthe Gompany oslng the G o ^
NOW THEREFORE, In consideration ot the toregolng, the motoal promises contained
herein and othergood and valoahle consideration, the recelptand sottlclencyot which are
acknowledged, Associate and the Gompany, Intending legally to he hoond, agree as follows:
1.
Getlnltlons.
(a)
"Associated shall mean the Individual or entity described on page 1 otthis
Agreement and the Associate's Store Managers, otticers, henetlclal owners, directors,
employees, Personnel, Independent contractors, partners, memhers, principals and Immediate
family memhers
(h)
"Competitive Business" as osed In this Agreement means any hosiness
operating In competition with or similar to the Gamp; provided, however, Associate will not he
prohlhltedfromownlng not more thanatotal of 5 ^ of the stock of any company which Is sohject
to the reporting reqolrements o f t h e O S Secoritiesand Exchange Act of19S4
(c)
"Gontidentiai intormation"shall mean withoot limitation, all knowledge, knowhow, standards, formolas, methods and procedores related to the establishment and operation
o f t b e Gamp and Inclodes all records pertaining to costomers, soppllers and otber service
provldersof, or related In any way to, t h e G a m p Incloding, withoot limitation, alldatabases
(whether In print, electronic or other form); all costomer names, addresses, phone nomhers, e
mall addresses, and porchase records; manoals; promotional and marketing materials;
marketing strategies; Interior design plans; operational standards; and any other data and
Information which tbe Gompany or Its affiliates designates as confidential Incloding all
Information contained In the Company's Operations Manoal, which may be provided as one or
more separate manoals, written Instructional goldes, GO Rom or other commonlcatlons from the
Gompany or Its affiliates, which may be changed or sopplemented from time to time.
(d)
"FranchiseAgreement"shall mean that certaln"Gamp Franchise Agreement"
between Gompany and
dated
as
amended or renewed from time to time
(e)
Agreement.
(f)
'Authorized Territory"
shall have the meaning defined In the Franchise
"Term" shall have the meaning defined In the Franchise Agreement
(g)
"Trade Secret(s)" shall mean Information, Incloding a formola, pattern,
compilation, program, device, method, technlqoe or process related t o t h e Camp that both
derives Independent economic valoe, actoal or potential, from not being generally known to, and
Camp Sow Wow 2014^00
E x h ^ t S D F r a n ^ e Agreement
U5^^0706
8^4
oot being reediiyesoerteinabieby p r o p e r s
vaioetrom itsdisoiosore or ose end i s t b e sobjeototettortstbat
oiroomstanoes to maintain its seoreoy
are reasonable onder tbe
(b)
"Store Managed sbaii mean tbe manager designated to direct tbe operations ot
tbe Gamp witb wbiob Associate is attiiiated.
2
Gontidentiai intormation and Trade Secrets
Associate and tbe Gompany
acknowledge tbat tbe Gontidentiai intormation and Trade Secrets wbicb are developed and
otilized in connection witb tbe operation ottbe Gamp constitotes oniqoe and exclosive property
ottbe Gompany or its attiliates. Associate acknowledges tbat any onaotborized disclosore or
ose ottbe Gontidential Intormation and TradeSecretswoold be wrongtol and woold caose
irreparable injory and barm to tbe Gompany and its attiliates Associate tortber acknowledges
tbat tbe Gompany oritsattiliatesbave expended a great amoont ot ettortand money in
obtaining and developing tbe Gontidential Intormation andTrade Secrets,tbat tbe Gompany or
its attiliates bave taken nomeroos precaotions to goard tbe secrecy ot tbe Gontidential
Intormation andTrade Secrets, and tbat it woold be very costly tor competitors to acqoire or
doplicate tbe Gontidential Intormation andTrade Secrets.
3.
Nondisclosore ot Gontidential Intormation andTrade Secrets.Oorino tbeTerm ot
tbe Francbise Agreement and t o r a p e r i o d o t ^ y e a r s a t t e r tbe expiration or termination ottbe
Francbise Agreement (onless socb intormation is a Trade Secret in wblcb case tbe
retirements in tbis Section^will remain in place tor as long as socb intormation constitotesa
Trade Secret), Associate will not at any time, poblisb, disclose, divolge or in any manner
commonicate to any person, tirm, corporation, association, partnership or any otber entity
whatsoever or ose,directly or indirectly,tor its own benetit or tor tbe benefit otany person,tirm,
corporation or otber entity otber than tor the ose otthe Gompany or the Gamp, any ottbe
Gontidential Intormation or Trade Secrets ot tbe Gompany or its attiliates.lt any person
restricted by this FaragraphSretoses to volontarily
yearperiod described above will commence with tbe entry otany order otacoort enforcing this
Faragrapb^and will be tolled for any period of noncompliance
4.
Fxceotions to Oisclosin^ Gontidential Information.
Notwithstanding the
foregoing,the restrictions on the disclosore and ose ofthe Gontidential Information willnot
to the following: (a) information that was in the poblic domain before being commonicated to the
Associate throogh no faoit of the Associate; (b) information that entered the poblic domain after
it was commonicated to the Associate throogh no faolt of the Associate; (c) information that was
in the Associate's possession free of any obligation of confidence at the time it was
commonicated to the Associate; or (d) the disclosore ofthe Gontidential Information in jodicial or
administrative proceedings to the extent tbat the Associate is legally compelled to disclose the
information, if the Associate has notified the Gompany hefore disclosore and osed the
Associate's best efforts, andafforded the Gompany the opportonity, to obtain anappropriate
protective order or otber assorance satisfactory to the Gompany of confidential treatment for the
information required to be so disclosed.
5
NoncomoetitionGovenant Associate acknowledges that the Gomoanv most be
protected against the potentialfor onfair competition by Associate's o s e o f theGonfidential
Information and Trade Secrets in direct competition with the Gompany Associate forther
acknowledges that the Gontidential Information and Trade Secrets wooid not have been
divolged to the Associate absent tbe Associate's agreement to strictly comply with the
provisions of this Agreement Associate therefore agrees that other than the Gamp licensed
Camp Sow Wow 2014^00
ExhibitS^Fraooh^ Agreement
05^7^0706
^75
under the F r a o o h i s e A g r e e m e o ^ A ^
the Freoohise Agreement:
(i)
have aoy direct or indirect interest as a disciesed or heneticiai owner in a
Competitive Business;
(ii)
perform services as a manager, officer, heneficiai owner, director, principal,
employee, partner, memher,consultant, representative, agentor otherwiseforaCompetltive
Business; or,
(ill)
divert or attempt to divert any business related to, or any customer or account of
the Camp, the Company's business, the business of any affiliate of the Company or any other
franchisee's business, by direct inducement orotherwlse, or divert or attempt to divert the
employment of any employee or independent contractor of the Company or anotber franchisee
licensed by Company,to any Competitive Business by any direct inducement or otben^ise.
8.
Post-Termination Covenant Not toComoete. Opon termination or expiration of
the Franchise Agreement for any reason, Associate agrees that, for a period of 2 years
commencing on the effectivedate oftermination orexplration o f t b e Franchise Agreement,
Associate will not have any direct or indirect interest (through any immediate family member of
Associate or Its beneficial owners or otherwise) a s a d i s c l o s e d o r beneficial owner,investor,
partner, director, officer, manager, employee, consultant, representative or agent or in any other
capacity in any Competitive Business, located or operating: (a)intheAuthorizedTerritoryor
any other franchisee's AutborizedTerritory;(b)
witbin 25 miles of any Company or Company's affiliate owned Camp or any other franchisee's
AuthorizedTerritory. If any personrestrlctedhythisFaragraph^refuses to voluntarily comply
with the foregoing obligations,the2year period described above will commence with the entry
of any order of a court enforcing this Paragraph 8 and will be tolled for any period of
noncompliance
The restrictions of this Sectlon^will not be applicable to the ownership of shares o f a
class of s e c u r i t i e s l i s t e d o n a s t o c k e x c h a n g e or tradedon the over-the-counter market that
represent 5 ^ or less ofthe number of shares ofthat class ofsecurlties Issued and outstanding
The parties have attempted in this Agreement to limit the Associate's right to compete
only to the extent necessary to protect the Company from unfair competition The parties
hereby expressly agree that if the scope of enforceability of the provision of S e c t i o n s 5 a n d 8
are disputed at any time by the Franchisee or Associate, a court or arbitrator may modify
S e c t i o n s 5 a n d 8 t o t h e e x t e n t that i t d e e m s n e c e s s a r y t o m a k e such provisions enforceable
under applicable law TFIF ASSOCIATE F ^ P P F S S L Y A C K N C W L F O O F S THAT THE
ASSOCIATE P O S S E S S E S SKILLS A N O A B I L I T I E S O F A O E N E P A L N A T O P E A N O HAS
OTHEP OPPOPTONITIES TO EXPLOIT SLIOH SKILLS C O N S E O 0 E N T L Y , E N F O P C E M E N T
O F T H E C O V E N A N T S S E T F O P T H ABOVE W I L L N O T OEPPIVE ASSOCIATE OF THE
ABILITYTOEAPNALIVINO
7.
Iniunction. Associate hereby acknowledges and agrees that in the event of any
breach or threatened hreach of this Agreement, the Company will be authorized and entitled to
s e e k , f r o m a n y courtofcompetentjurisdictlon, preliminary and permanent Injunctiverelief In
addition to any other rights or remedies to which the Company may beentitled.Associate
agrees that the Company may obtain suchinjunctiverelief,witboutpostlngabond or bonds.
Associate's sole remedy, in the event of the entry of such injunctive relief, will be dissolution of
Camp Sow Wow 2014 FOO
ExhibitS^Fraoo^e Agreement
U5^7^40706
sooh^oo^ve^^ifw^^
for damages by reason of the w r o n g s
waived hyAssooiafe in any litigation arbitration or other proceeding oonoemiog tbe enf^
any requested injunction against Associate, Associate, for value, voluntarily waives such
defenses as Associate might otherwise have under the law of the jurisdiction in which the matter
is being litigated,arbitrated or otherwise relating to any claimed "prior hreacb"^
Gompany; it being specifically understood and agreed between tbe parties that no action or lack
of action on the part of the Gompany will entitle or permit tbe Associate to disclose any sucb
Gontidential Information andTradeSecrets in any circumstances
8
Effect of Waiver The waiver by Associate or tbe G ^ m p ^ n y ^ f ^ b r ^ b ^ f ^ n y
provision of tbis Agreement willnot operate or be construedasawaiver of any subsequent
hreacb tbereof.
0
BindlnoEffect Tbis Agreement will he bindingupon and inure to tbe benefit of
Associate and tbe Gompany and their respective heirs, executors, representatiyes, successors
and assigns.
10.
Entire Aoreement. This instrumentcontains tbe entire agreement of Associate
and the Gompany relating to the matters set forth berein It may not be changed verbally, but
only by an agreement in writing, signed by the party against whom enforcement of any waiver,
change, modification, extension or discbarge is sought
11^
Governino Law. Tbis instrument will be governed byandconstruedunderthe
laws ofthe State of Golorado.
12
jurisdiction and Venue
In tbe event o f a breach or threatened breach by
Associate ofthisAgreement, Associate hereby Irrevocably submits to thejurisdiction ofthe state
and federal courts of Golorado, and irrevocably agrees that personal jurisdiction and venue for
any action or proceeding will be in tbe state and federal courts of Golorado Both parties waive
any objection to the jurisdiction of these courts or to personal jurisdiction and yenue in the state
and federal courts of Golorado Notwithstanding the foregoing,in the event that the laws o f ^
state where the Associate resides prohibit the aforesaid designation of jurisdiction and venue,
then such other state'slaws will control.
18
Severability
If any provision o f t h i s Agreement shall he held, declared or
pronounced void, yoidable, invalid, unenforceable or inoperative for any reason, hy any court of
competent jurisdiction, government authority or otherwise, such holding, declaration or
pronouncement will not affect adversely any other provisions ofthis Agreement which will
otherwise remain in full force and effect
^
^
Attorneys'Eees. In any action at law or in equity to enforce any ^ f t b ^ p r ^ i ^ ^
or rights under this Agreement, the unsuccessful party in such litigation, as determined by the
court i n a f i n a l judgment or decree,will pay the successful party or parties all costs,expenses
and reasonableattorneys'fees Incurred therein by such party or parties(including without
limitation such costs,expenses and fees on any appeals), and if such successful party wili
recover judgment in any such action or proceeding, such costs, expenses and attorneys'fees
will he included as part of such judgment
18
GaoitalizedTerms All c a p i t a l i z e d ^ ^
will have the same meaning provided in the Franchise Agreement.
Camp Sow Wow 2014 FOO
ExhibitS^Fraoohise Agreement
U5^7^407^
8^77
IN WITNESS W H E R E O F , the parties have signed this Agreement on the date first
above written.
COMPANY:
ASSOCIATE(S):
C A M P BOW WOW FRANCHISING, INC.
[FRANCHISEE NAME]
By:
By:
Printed Name:
Printed Name:
Title:
Title:
Date:
Date:
[ASSOCIATE NAME]
Printed name, individually
Date
[ASSOCIATE NAME]
Printed name, individually
[Signature
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
Page to Nondisclosure
B-78
and Noncompetition
Agreement]
Date
ATTACHMENTS
TOCAMPFRANCHISEAGREEMENT
AOOENOOM TO L E A S E
This Addendum to Lease, dated
entered into hy and among
L
essor")
("Lessee^andOamp
Bow Wow F r a n c h i s i n g , i n o,. a, a ^
, 201
(the "Addendum^ is
, a
RECITALS
A
dated
Lessor and Lessee have entered or are ahout to enter intoaiease agreement,
(the "Leased, pertaining to the premises located at
^
(the
"premises")
B
Lessor acknowledges that Lessee intends to operateatranchise store trom the
Premises pursuant to that certain ^Camp Franchise Agreement" (the "Franchise A g r e e m e n t
with Franchisor u n d e r t h e n a m e " C a m p B o w W o w ^ " o r o t h e r n a m e designated hy Franchisor
(the "Camp")
C.
Lessor and Lessee now desire to modity the Lease hy execution ot this
Addendum, to provide certain rights to Franchisor pursuant to the terms and conditions
contained herein.
0.
Lessor and Lessee acknowledge that execution otthis Addendum hy all parties
isamaterial and essential part otthe consideration tor Franchisor's willingness to enter into the
Franchise Agreement and continue its franchise relationship with Lessee.
F.
Lessor acknowledges that this Lease Addendum is supported hy good and
valuable consideration,thereceipt and sutticiencyotwhichisacknowledgedhy Franchisor, in
t h e t o r m o t Franchisor's willingnessto enter into and continueits franchise relationship with
Lessee, which is the basis for the Lease between lessor and Lessee.
F.
The Parties acknowledge that, at the time tbis Agreement is being executed, the
precise locationofthefranchised businessmay not yet be established; however,ali parties
agree this Agreement constitutesavalid,bindingand enforceable agreement notwithstanding
the lack o f a p r e c i s e location at tbe time of execution, and that Franchisor shall prepare and
submitaLocation Designation to this Agreement to all parties onceaprecise location is known,
at which time the Location Designation will be integrated as part of this Agreement.
AGREEMENT
N O V ^ T H E R E F O R E , i t i s h e r e b y mutuailycovenanted andagreed between Lessor,
Lessee and Franchisor as follows:
1
Premises.
Poos Allowed on Premises. Lessee will be permitted to keep animals on the
Camp Bow Wow 2014 FOO
ExhibitSDFraoohi^e Agreement
US5^40706
B-^
2
A o o r o v e d O s ^ Lessee w^ have the right to use the Premises for dog day care
and hoarding, dog hathing, dog training and the retail saieot pet products as weii as tor
other iawtui purpose.
3.
Aoorovaiot Lease and Lease Modifications Lessee andLessor covenant and
agree that they and their affiliates wiii not enter into any separate Lease or iease-type document
or agreement that providesfor or contemplatesthe operation hy Lessee orits affiliatesof a
C a m p a t t h e Premises without priorwrltten approval of Pranchisor.Lessee will notamend,
assign, sublease, renew, terminateorotherwise modify the Lease without Pranchisor'sprior
written consent, which will not he unreasonably withheld, conditioned or delayed Any
amendment, assignment, sublease, renewal, termination or other modification o f t h e Lease
without Pranchisor's prior wrlttenapproval, will constituteamaterlal event of default under the
Franchise Agreement and will be null and void and of no force or effect.
4
Pemodelino and Oecor. Lessor agrees that Lessee will have the right to
remodel, equip, paint and decorate the interior of tbe Premises and to display such proprietary
marks and signs on the interior and exterior of the Premises as Lessee is reasonably required to
do pursuant to the Franchise Agreement or directives hy Franchisor and any successor
franchise agreement under which Lessee may operate a Camp at the Premises
Notwithstanding the ahove, Lessee will not make any modifications that compromise the
structural integrity ofthe Premises.
5.
Lessor Access. Except in the case of an emergency. Lessor or its aoent will not
enterthePremiseswithoutthe presence of Lessee or Lessee'sagent
6.
Noise and Nuisance. Any noise, disturbance or nuisance from barkino docs will
not constituteadefauit or grounds for terminationunder the Lease. Lessor will not take any
action against Lessee, including but not limitedtothe imposition ofafine,default, termination,
eviction or other sanction against L e s s e e f o r a n y noise, disturbanceor nuisance related to
barking dogs.
7
Pules and Peoulations. Lessor will not make any Pule or Regulation that
interferes with Lessee's intended use of the Premises or renders Lessee unable to conduct its
business in the ordinary course without modification to the Premises.
5
Contingencies If L e s s e e i s unableto obtain entitlements necessary todevelop
or operate tbe business contemplated under the Lease or in the Franchise Agreement
(including, but not limited to, zoning, building permitsoroccupancy certificates), Lessee may
elect to terminate the Lease hy providing Lessor with written notice within fifteen (15) days of
Lessee's determination of tbe same Llpon such termination, Lessor will be entitled to retain any
deposit paid under the Lease as liquidated damages, and both parties will thereafter he
released from ail obligations under the Lease. The parties acknowledge tbat Lessor's damages
are difficult to ascertainand agreethat theamountoftheliquidateddamages representsa
reasonabieestimate of Lessor's damages. Lessor expressly waives theremedies of specific
performance and additional damages.
9
Assumption of Lease by Franchisor.
(a)
Franchisor will havetbe r i g b t t o a s s u m e a l l o f L e s s e e ' s r i g h t , title and interest
in theLease,without first obtaining Lessor's or Lessee's consent, at any time during the term
o f t h e L e a s e , includinganyextensions or renewals thereof,immediatelyupon(1)Franchisor's
termination of the Franchise Agreement, (2) Franchisor's notice to Lessee of an event of default
Camp Sow Wow 2014 FOO
Exhi^tSDFranct^e Agreement
^537^40706
880
under the Franchise A g r e e m e n t t o
eppiicehiecurepenod tor a n e v e n t e t d e t a u i t that isaooompanied hyanopportunitytooure
under the Franchise Agreement, (4) Lessee's detauit under the terms o t t h e Lease, or (5)
terminationot t h e L e a s e tor any reason (coiiectiveiy referred to as the "Triggering Events") in
the event Lessor initiatesanyot the Triggering Events, it shaii promptly notify Franchisor
within five (5) days o f t h e initiation of such Triggering Event inthe eventof termination of
the Lease for any reason, Franchisorshall havethe opportunity to reviveand assumethe
Lease under the procedure set forth helow Lessee herehy absolutely and unconditionally
assigns all of its right, title and interest in the Lease to Franchisor, effective upon the
occurrence of any of theTriggering Eventsand upon Franchisor's noticeof itsexerciseof its
rightto assumethe Lease. Notwithstanding the ahove, no assumption will he effective until
such time as Franchisor gives Lessor written notice of its exercise of its right to assume and
Lessor delivers possession of the Premises to Franchisor.Franchisor must provide Lessor with
notice of its intent to assume the Lease within thirty (30) days of Franchisor's receipt of notice of
the occurrenceof aTriggering Event Franchisor will havethe right, at any time until Lessor
delivers possession of the Premises,to rescind its assumption, hyprovidingLessor with written
notice of rescission. Nothing contained herein will (i) constitute acceptance of such assumption
hy Franchisor, (ii) he deemed to render Franchisor a party to the Lease, or guarantor
thereof, or (iii) create any liahility or ohligation of Franchisor unless and until the Lease is
assumed in writing hy Franchisor, in the event of any assumption, Lessee will remain liable
for its responsibilities and obligations under the terms of the Lease including, witbout limitation,
amounts owed to Lessor. Franchisor agrees to observe and perform all of the terms,
conditions and agreements on the part of Lessee after the date of Franchisor's assumption
of the Lease Notwithstanding the above, Franchisor's righttoassume the Lease will not be
conditioned and Franchisor will not be required to cure Lessee'sdefaults, if any, under the
Lease, nor will Franchisor be obligated to perform or discharge any obligation, duty or liability of
the Lessee under the Lease, including, without limitation, paying rent o r a n y other financial
obligation that i s d u e a n d unpaid under the Leasefor any time period prior to Franchisor's
assumption of the Lease andLandlord's delivery of possession of the Premises toFranchisor
(b)
Franchisor may assign t h e L e a s e t o a n e w or different franchisee than Lessee
without Lessor's consent, provided that thenew franchisee meets or exceeds the reasonable
financial condition of other similarly situated Camp Bow Wow^ franchisees ("Fmancial
Standards"). Lessor agrees that Franchisor will be fully released from any and all liability under
the Lease and this Lease Addendum upon such reassignment; however, Franchisor will continue
to have the same rights hereunder witb regard to any new franchiseeBassignee. If Lessor
reasonably withholds consent t o t h e new franchisee because itdoes not meet the Financial
Standards test and Franchisor does not take,or has not taken, an assignment of the Lease
pursuant to SectionO(a), Lessor will, within five (5) days after Franchisor's request, recapture
possession of the Premises, at which timeFranchisor will befully and forever released from
any liability under the Lease and this Lease Addendum.
(c)
Lessee will and does herehy agree to indemnify, defend and bold harmless
Franchisor against and from any and all liability, loss, damage, cost or expense (including
reasonable attorney's fees) that Franchisor may or might incur under the Lease or tbis
Addendum, and against and from any and all claims and demands whatsoever that may be
asserted against Franchisor by reason of any alleged obligation or undertaking on Franchisor's
part to perform or discharge any of the terms, covenants or agreements contained in the Lease
or this Addendum.
Camp Sow Wow 2014^00
ExhibitS^Fraoohi^e Agreement
^537^0706
^
10
Franchisor l o ^ e c t o ^ P r o p e r and De ^ e n ^ c ^ o o Opon the expiration,
oanoeiiation or termination otthe Lease or Franchise Agreement, neither Lessee nor Lessor w^^^
retain any right, titie or interest in Franchisor
its Operations Manuals (and aii directives and suhmanuaiscontained therein), trademarks,
trade dress, patents or copyrighted materials or any equipment or materials hearing the same
(intellectual Property") Opon the expiration, cancellation or termination otthe Lease or the
Franchise Agreement,Lessor will cooperate with and allow Franchisor to enter the Premises,
without heing guilty ot trespass and without incurring any liahility to Lessor or Lessee, to remove
allinteilectualProperty,or any material hearing the Intellectual Property. Opon the expiration,
cancellation or termination otthe Lease or the Franchise Agreement, Lessor will cooperate with
and allow Franchisor to enter the Premises to accomplish de-identitication, at Franchisor's
expense,otthe Premises asaOamp.Franchisor shall haveaperiodot thirty (SO) days trom its
receiptotnotice otthe expiration, cancellation orterminationotthe Lease or the Franchise
Agreementto provideLessor with written n o t i c e o t i t s i n t e n t t o e n t e r t h e Premises a n d d e identity the Premises. Lessoragreesthat Franchisor's de identitication actions may include the
action items listed on Schedule 1 to this Agreement, in the event Franchisor exercises its
option under the Franchise Agreement to purchase the assets ot Lessee, then Lessor will permit
Franchisor to remove all such assets heing purchased hy Franchisor trom the Premises.
Franchisor will repair any damage to the Premises caused hy Franchisor in removing its
Intellectual Property, removing purchased assets or performing de-identitication within thirty (30)
days ot Lessor's written notification ot such damage In the event Franchisor tails to remove its
Intellectual Property, or any equipment or material hearing the Intellectual Property, w i ^
(30) days of the expiration, cancellation or termination of the Lease, Lessor may dispose of the
same without liahility to Franchisor. Lessor and Lessee acknowledge and agree that the
foregoing rights of Franchisor are material and, if violated or refused, subject Franchisor to
irreparable, continuing injury which warrants the issuance of temporary, preliminary and
permanent injunctive relief.
11.
Limitation on Ose. Lessor covenants during theTerm o f t h e Lease(defined
below) notto allow the P r e m i s e s o r a n y otherspace inthe building complex in which the
Premises are located to be used b y a p e r s o n or entity whose Primary Business (defined below)
is the provision of services related to dog care, dog boarding, dog training, bathing or the retail
sale of dog food and merchandise and assorted other pet related services and products
(collectively,the^Servlces") "Term of the Lease"shall be defined as thelnitialLeaseTerm,
together with the term of any renewal options and the term of Franchisor'sassumption if any, of
Lessee'sright, titleand interestin the L e a s e ( a s set forth in paragraphO herein) "Primary
Business" shall he defined a s a b u s i n e s s that derives ten percent (10^) or more of its gross
sales from the sale of the Services collectively or individually Franchisor agrees that the Lessor
shall have the right to lease other space in the building complex where the Premises are located
toaveterinarianpractice without violating tbis provision;provided, however,the Lessor agrees
to include in its lease with any such veterinarian practice an express restriction that prohibits the
veterinarian tenant and any of its owners, employees or affiliates from engaging in or providing
any of the same services as those provided by the Oamp, including, hut not limited to, dog day
care and boarding, dog bathing, dog training and the retail sale of pet products. This provision
does not prohibit the veterinarian tenant from providing actual licensed professional veterinary
services necessary for the medicalneeds of its clients. In event Lessor wrongfully refuses to
allow Lessee to exercise its option to extend the Leasefor an additional term or Lessor
Camp 8ow Wow 20t4FOO
E^bitSD^aooh^Ag^emeot
U5^7^07^
8^
w r o n g l y ^ m i n a t e s the L e a s e d
oo use otthe Premises shell continue
allow Lessee's exercise otthe extension option or Lessor's wroogtulte^^^
In the event Lessor contests the issue ot whether it wrongtully terminated or wrongfully
exerclseottheextensionoption,thetwo^yearrestrictlon period shall commence on the date
a judgmentorarhltration award is Issued finding against Landlord on those Issues. Lessor
agrees that the foregoing restrictions and limitations on use of the Premises are reasonable and
are material and essential parts of the consideration for Pranchisor's issuance of the Franchise
Agreement to the Lessee, Its continuation of Its franchise relationship with Lessee, and
Franchisor's approval and execution o f t h i s Addendum. Lessor further acknowledges and
agrees that any violation of such restrictions and limitations on use of the Premises would cause
irreparable Injury to Franchisor and would entitle Franchisor to seek and ohtain injunctive r e l ^
on an emergency, preliminary andpermanent basis,without being required to p o s t a h o n d or
provide any other form of security.
12
Oefault and Notice
(a)
Lessor will promptly give Lessee and Franchisor simultaneous written notice
of any default or otherevent that, with noticeor passageof time (or both), would or could
constitute a default under the Lease and^or cause termination o f t h e Lease Franchisor will
haveanadditlonalthlrty(30)daysafterthedateoftheeventofdefaultorexplratlonof Lessee's
cure period (whichever islater)to (I) exerclseitsrlght, but notobligation,to cure the default;
or (Ii) exercise Its right to accept or obtain an assignment under SectlonO Franchisor's failure or
refusal to cure anevent of default by Lessee will not affect Franchisor's right to assume the
Lease as provided herein
(b)
All notices, demands or other communications under this Addendum will be in
writing andany a n d a l l s u c h Items will be deemed t o b a v e h e e n duly delivered upon personal
delivery; or as oftbe third business day after mailing by Llnited States mall, certified, return
receipt requested, postageprepaid;or on the business day immediately following deposit with
Federal Express or a similar overnight courier service that provides evidence of receipt;
addressed as follows:
ToFranchisor:
Gamp BowWow Franchising, Inc.
Attn Heidi Ganahl
SS20W118thGircle,LlnitO
Oroomfleld, Golorado
ToFranchisee:
Attn:
To Lessor:
Attn:
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-83
Any party hereto may c h a o g e i t s a d d ^
notice otsooh new address Lessor a g r e e s ^
change in Lessor'smaiiing address to which notices should he sent
13.
Consideration: No Liahility.
(a)
Lessor herehy acknowledges that the provisions ot this Addendum are
required pursuant to the Franchise Agreement under which Lessee plans to operate its
business and that Lessee wouldnot lease the Premises without Lessor agreeing to he hound
hythe terms otthis Addendum.
(h)
Lessor turther acknowledges that Lessee is not an agent or employee ot
Franchlsorand Lessee has no authority or power to act torpor to create any liahility on hehait
ot, or to in any way hind Franchisor or any attiliateot Franchisor, and that Lessor has entered
into this Addendum with tuil understanding that it creates no duties, ohligations or liahilities ot
or against Franchisor or any attiiiate ot Franchisor For purposes otthis Addendum, an
"attiliate" reters to any person, corporation, tirm, partnership, limited liahility company,
association or other entity controlling, controlled hy or under common control with the person or
entity in question or any individual or entity that controls such person or entity.
14.
Amendments No amendmentor variation otthe termsot the L e a s e o r t h i s
Addendum to the Lease will he valid unless made in writing and signed hythe parties hereto.
1S
Peattirmationot Lease. Except as amended or moditied herein, all otthe terms,
conditions and covenants otthe Lease will remain in tuil torce and ettect In the event otany
contlict between the terms otthis Addendum and the Lease, the terms otthis Addendum wili
control.
18.
Dispute Pesolution In the event any dispute arises between Lessor,Lessee and
F r a n c h i s o r , o r a n y o t t h e m , t h a t i s r e l a t e d in any manner to this Addendum, its terms,or the
parties'dealingswitheach otber underthis Addendum(a"Oispute^, such Dispute shall he
exclusively determined as follows
(a)
Mediation.AllpartiesinvolvedinaDispute shall submit the Dispute to mediation
to beadministered hythe American Arbitration Association under its mediation rules then in
ettect.
The mediation shall be conducted at the offices of the American Arbitration
Association inDenver,Colorado, or such other location agreed on by all parties. Any party to
tbis Addendummay initiate mediationbywrittenrequest to all otber parties Each party that
receivesawrittenrequestformediation must respond,in writing,within three (3) business days
of receipt of the request and state unequivocally whether that party will participate in
mediation. Failure to respond constitutes a waiver o f t h e rightto mediate and permitsthe
requestingparty to proceed as set forthherein Absent rare, exceptional circumstances, the
mediation shall be conducted and completed within forty-five (48) days of tbe written
request for mediation. Notwithstanding theforegolng agreement to mediate, Franchisorshall
have the right,at its election,to seek, in arhitration(under Section 18(b) below) o r a c o u r t of
competentjurisdiction,the issuance of injunctive and other equitable relief to protect and enforce
its rights under this Agreement witbout waiting for completion of mediation and without
waiving mediation.
(b)
Arbitration.
In the event the parties'dispute is not fully and finally resolved by
mediation, such dispute shall be exclusively determined and resolved by bindingarbitration
administered by the American Arbitration Association under its commercial arbitration rules
then in effect The arbitration shall be conducted hyasingle arbitrator The arbitration hearing
Camp Bow Wow 2014^00
Ext^tB^Fraoohise Agreement
US^7^0706
884
be conducted et tbe ottices ot tbe American Arbitration Association in Denver,
Goiorado, or sucb otber location agreed on by aii parties Tbe parties' written discovery
rigbts in arbitration sbaii be limited to requests tor production ot documents (including
electronicallystoredintormation^ Tbe parties'depositionrigbts in arbitration sball be limited to
(^depositionsottworepresentativesoteacb party not to e x c e e d ^ b o u r s per deposition, and
(2) depositions ot experts,it any, limited t o ^ b o u r s per deposition Wbetber depositions ot nonparties wiii be allowed will be decided by tbe arbitrator in bis or ber sole discretion. Tbe
arbitrator bas tbe discretion to modity tbese discovery rigbtsuponasbowingot good cause.
Tbe arbitration award may be contirmed and enforced by tbestate and tederalcourtsln tbe
jurisdiction wbere tbe Property Is located.Tbe prevailing party In any arbitrationor action in
court to confirm or enforce an arbitration award sball be entitled to recover,in addition to all
otber remedlesordamages, its reasonable attorney'sfees, arbitrationcosts and court costs
Notwltbstandlng tbe toregoingagreement to arbitrate, Francblsor sball bave tbe rlgbt, at its
election, to seek, In a court of competent jurisdiction, tbe issuance of injunctiveand otber
equitable relief to protect and enforce Its rlgbts under tbis Agreement witbout waiting for
completion of mediatlonand witbout waiving arbitration
(c)
All parties acknowledge and expressly agree tbat, notwitbstanding tbe
foregoing Dispute Resolution provisions, Francblsor bas tbe rlgbt to pursue any claim to enforce
tbe terms and provisions of Section t1 (Limitation onOse),includingarequest for injunctive
relief, in a court of competent jurisdiction witbout violating or waiving Its rlgbt torequire
mediation or arbitration of disputes as set fortb berein.
17.
Gounteroarts: Facsimile Aseparate copy of tbis Addendum may be signedby
eacb party, separately, and wben eacb party bas executed at l e a s t o n e c o p y bereof, sucb
c o p l e s t a k e n t o g e t b e r w i l l b e d e e m e d t o b e a f u l l and complete agreement between tbe parties
a n d a s i n g l e document. Any signaturebereonmay be transmittedby facsimile macbine and
sucb signature will be valid and accepted for all purposes bereof.
1S.
GoverninoLaw
Tbis Addendum will be governed by, and construed and
enforced pursuant to, tbe laws governing tbe Lease.
19
Severabilitv. If any term, section or otber provision of tbis Addendum will, for any
reason, be beld to beinvalid or unenforceable, tbeinvalidity or unenforceability of sucb term,
section or otber provision will not affect any of tbe remaining provisions of tbis Addendum
20
Successors and Assions. Tbis Addendum will be blndino upon and inure to tbe
benefit of tbe parties bereto and tbeir respective permitted successors and assigns
21.
FurtberGooperation. Lessee and Lessoreacb furtberagree to execute upon
requestof Francblsor any andall instruments requested by Franchisor tocarry out tbeterms
andconditlonsoftbisAddendumortbeasslgnmentandassumption intended bereby.
22.
Authority. Tbe execution and delivery of this Addendum to Lease by the
signatories hereof on bebalf of eacb party, has been duly authorized by each party and is
binding and enforceable against eacb party pursuant to its terms.
Camp Sow Wow 2014^00
ExhibitSDFranot^e Agreement
US^^0706
885
IN TESTIMONY W H E R E O F , witness the signatures of the parties hereto as of the day,
month and year first written aboveLESSOR:
By:
Title:
TENANT:
By:
Title:
FRANCHISOR:
Camp Bow Wow Franchising, Inc.
a Delaware corporation
By:
Title:
[SIGNATURE PAGE TO ADDENDUM TO LEASE]
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-86
O
^
O
^
^
^
^
^
M
^
^
Francbiso^^^desigoe^is^
i d e n t i ^ g the Premises a s a G a m p :
1
Pestasignonthedoorthetthe^ce^
Bow Wow with any questions at 720^59 2251oriote^cemphew^
2
Pemoveiogo^hours^oontaot intormation trom tront door.
3.
Pemove Gamp Bow Wow iogo sign insert trom any monument signs, and
exterior signage and return to GBW corporate.
4.
Pemove and retain tor pick up hy Franchisor ANY item with the Gamp Bow Wow,
Home Buddies or Behavior Buddies iogo or with any ot our trademarks on them including Scout,
signage, tioor mats, wood logo disc, etc
5.
Pemove aii iog trim in the Gamp (including iog trim around frontdoor, desk, data
poles,aillog trim on and aroundiohhy and throughout Gamp (horderot dry erase hoards,log
shelves,gates,etc)
8
Pemove
and
hold
tor
Franchisor
to
pick
up
the
following
equipment^decor^suppiies. if third-party liens exist on the assets, provide Franchisor with
contact information for lienholders. If landlord holds liens, contact Franchisor to negotiate
purchase of assets pursuant to franchise and lease agreements), items to he removed and
held for pick up hy Franchisor include:
a.
GBWspecificequipment^supplies-Lohhyartwork,retaillog shelving, log
cahinets, directional signage, emergency supply mailhoxes, dry erase hoards, hoarding card
holders on cahins, leash holders in lohhy;
h.
Log Fireplace, Furniture and Shelving in Lohhy;
c
Log Oog Beds and Mats;
d.
Puppy playground equipment;
e.
Outside play area shade sails and^or shade structures;
f
KurandaGots and Plush Mats;
g
KongToysforGampfireTreats;
h.
Gleaning Supplies and Dispensing System;
i
Weh Gamera Server and Software;
j.
Ooggy Op System Server and Monitors;
k.
One Oog One Pools;
Camp Bow Wow 2014 FOO
Exhi^BDFranoh^e Agreement
US5^40706
B ^
I.
Cabins (if Priefert in Franchisor's proprietary sage green color, or Gator).
7.
Repaint the entire lobby in a color approved by Franchisor and distinctively
different from Franchisor's Sage Green.
8.
Replace Van Gough flooring in lobby.
9.
Significantly alter the front desk layout to remove check in/check out areas, gates
and signs, and data poles so that it looks nothing like Franchisor's unique front desks.
10.
Significantly alter the back warehouse area layout in a manner approved by
Franchisor to remove the quadrant approach, any four way gates, dividers in play areas and
layout of kennels.
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407,06
B-88
S B A RIDER RELATING TO L E A S E ADDENDUM
THIS RIDER ("Rider") is made and entered into on
, 20
, by and between
, a
("Lessor"),
("Lessee") and Camp Bow Wow Franchising, Inc. ("Franchisor")RECITALS:
Lessor, Lessee and Franchisor entered into a Lease and Addendum to Lease on
, 20 , ("Lease Addendum") for the Premises defined in the Lease and Lease
Addendum. Lessee and Franchisor have entered into a Franchise Agreement for the same
Premises. Lessee has obtained from a lender a loan (Loan) in which funding is provided with the
assistance of the United States Small Business Administration (SBA). SBA requires the execution of
this Rider as a condition for obtaining the SBA assisted financing.
NOW, THEREFORE, in consideration of the mutual promises below, and for good and
valuable considerations in .hand paid by each of the parties to the others, the receipt and sufficiency
of which the parties acknowledge the parties agree as follows:
1.
The Franchise Agreement is in full force and effect, and Franchisor has sent no official notice
of default to Tenant under the Franchise Agreement that remains uncured on the date hereof.
2.
Sections 9(a) and 11 of the Lease Addendum are modified to delete the reference to
including any extensions or renewals thereof," from the first sentence of Section 9(a) and
"together with the term of any renewal options" from the second sentence of Section 11.
3.
This Rider automatically terminates on the earliest to occur of the following: (i) a termination
occurs under the Franchise Agreement; (ii) the Loan is paid; or (iii) SBA no longer has any
interest in the Loan.
IN WITNESS WHEREOF, the parties hereto have duly signed and executed this Addendum
as of the day and year first above written.
FRANCHISOR:
LESSOR:
CAMP BOW WOW FRANCHISING, INC.
By:
Print Name:
By:
Print Name:
Title:
Title:
LESSEE:
By:
Print Name:
Title:
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-89
ATTACHMENT G
TO C A M P FRANCHISE AGREEMENT
RIGHT OF FIRST R E F U S A L AND OPTION AGREEMENT
This RIGHT OF FIRST REFUSAL AND OPTION AGREEMENT (this "Agreement"),
dated as of this
day of
, 20 , is entered into between
("Grantor"), and Camp Bow Wow Franchising, Inc., a Delaware corporation ("Grantee").
Recitals
W H E R E A S , Grantee is the franchisor of Camp Bow Wow® franchise businesses as
provided in that certain "Camp Franchise Agreement" (as it may be amended from time to time,
the "Franchise Agreement") with Grantor, or its affiliate, as the Franchisee under the Franchise
Agreement (the "Franchisee");
W H E R E A S , Grantor is the owner of certain improved real property commonly known as
and legally described on Exhibit A attached
hereto and made a part hereof (the "Property");
W H E R E A S , Grantor, or its affiliate, operates or intends to operate a Camp Bow Wow®
franchised business on the Property pursuant to the Franchise Agreement;
W H E R E A S , this Agreement is a material and essential part of Grantee's continuing
efforts to protect its business interests as franchisor and the integrity of the trademarks, trade
dress, trade secrets and proprietary information associated with and used by Grantee in its
franchising activities;
W H E R E A S , Grantee would not have entered into the Franchise Agreement with
Franchisee without Grantor granting Grantee a right of first refusal and option to purchase the
Property on the terms and conditions provided for herein;
W H E R E A S , Grantor and Grantee acknowledge that execution of this Agreement by all
parties is a material and essential part of the consideration for Grantee's willingness to enter
into the Franchise Agreement and continue its franchise relationship with Franchisee;
W H E R E A S , Grantor acknowledges that this Agreement is supported by good and
valuable consideration, the receipt and sufficiency of which is acknowledged by Grantor, in the
form of Grantee's willingness to enter into and continue its franchise relationship with
Franchisee; and.
W H E R E A S , Grantor and Grantee acknowledge that, at the time this Agreement is being
executed, the precise location of the franchised business may not yet be established; however,
all parties agree this Agreement constitutes a valid, binding and enforceable agreement
notwithstanding the lack of a precise location at the time of execution, and that Grantee shall
prepare and submit a Location Designation to this Agreement to all parties once a precise
location is known, at which time the Location Designation will be integrated as part of this
Agreement.
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-90
Agreement
NOW,THEREFORE,iocons^a^
setforth below, Grantor and Graotee hereby agree as fo^ows:
1
Riobtot First Retusal
a
Grantor bereby grants Grantee tbe rlgbt ottlrst refusal to porobase
tbeFroperty (tbe ^ g b t " ) , upon tbe terms and under tbe conditions set tortb be
Section t it Grantor Intends to enter Into an agreement to sell, transfer, assign or
otberwise dispose of all of tbe Property, or any Interest tberein (tbe "Offered Interests
bona fide tblrd party purchaser (tbe"Purcbaser^, Grantor will first makeawrltten offer
( t b e " G f f e r ^ t o s e l l sucb Gfferedlnterest to Grantee at tbe same price and on tbe same
terms as offered totbe Purchaser (the "Offer Terms'^ Tbe Offer will state the name
oftbe Purchaser and the proposed purchase price, and will be accompanied by a
copy o f t h e offer from or to the Purchaser After receipt of tbe Offer,Grantee will have
tbe P l g h t f o r a period of thirty (80) days (the "Exercise Period") to elect In writing to
purchase the Offered Interest. Any agreement to sell, assign, transfer or otherwise
dispose of an Gfferedlnterest will be made subject to the Plght granted herein.
h
If Grantee timely exercises Its Plght and elects to purchase the
Offered Interest, Grantor Is required to sell the Offered Interest to Grantee, and
Grantee Is required to purchase the Offered Interest on the OfferTerms, except that the
closing d a t e o f G r a n t o r ' s s a l e t o G r a n t e e s h a l l b e c o m p l e t e d w I t h l n s l x t y (80) days after
the closing date, Ifany, specified In the OfferTerms. In the event the OfferTerms did not
Includeaspeclfledcloslng date, closing of Grantor's sale to Grantee shallbe completed
within sixty (80) days of Grantee's written election to purchase the Offered Interest.
c
If Grantee does not timely electto purchase the Offered Interest,
Grantor may transfer the Offered Interest to the Purchaser,lf and only If such transfer Is
based on t h e s a m e O f f e r T e r m s a n d sucbtransfer Is completed within ninety (OO)days
of expiration of tbe Exercise Period. In the event o f a c h a n g e In the OfferTerms("Pevlsed
Offer Terms"), Grantor Is required to submit a new written Of^er to sell the Offered
Interest to Grantee on the Pevlsed Offer Terms, In which case the procedures and
timing set forth In Section 1(a) shall apply If tbe s a l e t o Purchaser Is not completed
wltbln 00 days after Grantee delivers the Notice of Intent to Grantor,Grantee will again
have the right of first refusal herein provided,In which case the procedures and tlmlngsset
forth In Sectlonl(a) shall apply.
d.
If the offer from the thirdparty Purchaser Is for consideration other
than c a s h o r c a s h plus deferred payments of cash, Granteemayexerclselts Plght and
elect to pay the cash equivalent of such other consideration. Grantor and Grantee will
attempt toagree uponsuch cash equivalent. If, within thirty (80) d a y s a f t e r t h e d a t e o f
the exercise of the Plght hy Grantee, Grantee and Grantor have not agreed upon such cash
equivalent,the determination ofthe cash equivalent of such other noncash consideration
shall exclusively be determined by an arbitration proceeding In Oenver, Golorado,
according tothe commercial arbitration rules and procedures of the American Arbitration
Association then In effect. The arbitration shall be administered by the American
Arbitration Association and conducted b y a s o l e arbitrator and the arbitration hearing ^^^^
he conducted In Oenver, Golorado The arbitrator will determine the cash equivalent
without regard t o t h e l n c o m e t a x c o n s e q u e n c e s t o G r a n t o r a s a r e s u l t o f receiving cash
rather than other consideration. The determination o f t b e arbitrator will be final and
Camp Bow Wow 20t4FOO
Ex^tSDFraoot^eAg^meot
05^7^40706
^
biding on the parties Onoe a tinai arbitration award is issued, the purchase wiii then he
oiosed within thirty (80) days o t t h e date o t t h e tinai award, and payment made on the
same terms set torth in the otter trom the Otteree, adjusted tor the cash equivaient. Absent
an agreement between tbe Grantee and Grantor,suob closing date sbaii not be delayed
based on either party seeking reconsideration, moditication or reviewot thearbitration
award by the arbitrator or any other tribunal.
2
Gotion
a.
Grantor hereby grants to Grantee the irrevocable right, privilege and
option to purchase the Property on the terms and conditions set tortb herein (the "Gption^.
Grantee will havethe power toexercisetheGption upon the expirationot tbe Franchise
Agreement without renewal, or termination o t t h e Francbise Agreement tor any reason
( t h e " T r i g g e r m g E v e n t s ^ T b e G p t i o n may be exercised by Grantee witbin 8 0 d a y s o t a
Triggering Event by delivering to Grantor, a written statement signed by Grantee
exercising tbe Gption (tbe "Noticed Opon delivery ot such Notice,Grantor andGran^
establish tbe Purchase Frice (defined below) tor the Gption Property, execute tbe purchase
and sale agreement in torm and substance acceptable to Grantee, and proceed to
consummate and close tbe transaction contemplated by the Gption pursuant to Its
terms The Property will be conveyed hy Special Warranty Oeed tree and clear o t a l l liens,
security interestsor other monetary encumbrancesand mattersotrecord acceptableto
Grantee Any agreement to sell, assign, transfer or otherwise dispose o f t h e Property
o r a n y portion thereof w i l l b e m a d e expressly subject to tbeGption granted herein.
b
The purchase price for the Property under the Gption ("Purchase
Price") will be determined as follows. The Purchase Price will be the "Fair Market Value"
which i s t b e amounta willing buyer would pay and a willing seller would accept f o r a
comparable transaction (e.g., purchase and sale of comparable property), both having
reasonable knowledge o f t h e relevant factsand beingfreefrom duressand coercion. In
calculating the Fair Market ^alue, all relevant factors will be taken into account, including
the nature, location, condition, and quality of the Property and any improvements, and
any concessionscommonly being offeredforcomparabletransactions Within thirty (80)
days after Grantor's receipt o f t h e Notice, Grantor will give Grantee written notice of
Grantor's good faith, bestestimate of t h e F a i r M a r k e t ^ a l u e t o h e u s e d for the ensuing
transaction (the "Purchase Price Notice") If Grantee in good faith disagrees witb
Grantor's calculation of the Purchase Price, it may give Grantor written notice of Grantee's
disagreement, setting forth Grantee'sdetermination ofthe Purchase Price not later than
thirty (80)days after receiptof the Purchase Price Notice. Grantee'sfaiiureto contest
Grantor's calculation o f t h e Purchase Price within such thirty (80) day period will be
deemed to be Grantee's acceptance and waiver of any objection to Grantor's determination
of the Purchase Price, if Grantee timely notifies Grantor of Grantee's disagreement,
Grantor andGrantee thereafter willnegotiatein good faith to reach agreementonthe
Purchase Price if Grantor and Grantee fail to agree on such amount within thirty (80) days
after Grantee hasnotified Grantorof Grantee's disagreement, the PurchasePrice willhe
determinedas follows. Within ten (10) days after the end of such thirty (80)day period,
Grantor and Grantee shall each select an independent third party MAlappraiser,eachof
whom must have at least five (8) years' commercial real estate appraisal experience in
tbe area where the Property is located. If either party fails to timely appoint such
appraiser,theFair Market ^alue will be the amount initially determined by the party who
does appoint such an appraiser.Fach appraiser appointedshail he directed and required to
determine the Fair Market ^Balue within thirty (80) days after appointment. Each appraiser
shall submit his appraisal to both Grantor and Grantee contemporaneously in writing, if
Camp BowWow 2014^00
Ex^itBDFranchise Agreement
0^^0706
^
the lower apprelsal Is not less then ninety percent ( O O ^ e t the hlgherepprelsal, the
average ot the t w e ^ a p p r e l s a l s w l l l h e t h e Fair Market ^Balue tor thepurposes otthis
Sections It the lower appraisal Is less than ninety percent (90^) otthe higher appraisal,
the Fair Market ^alue will he determined hy athlrd Independent MAI appraiser, whoshall
he selected h y t h e t w o (^appraisers previously appointed. Soch appraiser most have at
least tlve (5) years commercial real estate appraisal experience In the area In which the
Property Is located l t t h e t w o ( 2 ) appraisers are onahle to appoint the third appraiser
within tltteen (t5) days, the third appraiser shall he selected hy a single arbitrator,
appointed onder the American Arbitration Association's commercial arbitration roles tor the
sole porpose ot appointing the third appraiser It appointed, the third appraiser shall
Independently determine the Fair Market ^aloe, wltboot consoltlng with the other
appraisers, within thirty (80) days atter appointment. Soch appraiser shall sobmit Its
appraisal to both Grantor and Grantee contemporaneoosly In writing It soch appraisal Is not
greater than the higher or less than the lower o t t h e two (2) previoos appraisals, the
amoont determlnedby the third appraiser will be the Fair Market ^aloe tor porposes otthis
S e c t l o n ^ l t the amoont determined hythe tblrd appralserdoes notcome between the
two (2) previoos appraisals, the Fair Market ^Baloe will be the average otthe two (2)
closest otthe three appraisals. Fach party wlllpay the costs ottbe appraiser It appointed,
halt otthe cost ottbe third appraiser (It any),and halt otthe other costs, It any,Incorred In
connection with the appraisal. Fach party will bear Its own attorneys' tees, Itany, and
tees ot other advisors or consoltants
8
Term.The term ot the Ploht and the Gotlon will beoln as otthe date tlrst set
torth above, and will end opon t h e e n d o t t h e T e r m o r renewal terms otthe Franchise
Agreement
Franchisee's termination, or attempted termination, ot the Franchise
Agreement shall not terminate the Plght orthe Gption granted onder this Agreement
^.
Notices All notices given hereonder will be In writing, will be deemed to
have heen dolydellvered opon (I) h a n d d e l l v e r y ; o r ( l l ) a s o t t h e t h l r d boslness day atter
mailing by
U.S. mall, certified, retorn receipt reqoested, postage prepaid; or (III) as ot 12:00 Noon on
the Immediately following boslness day after deposit with Federal F x p r e s s o r a similar
overnight coorler service that provides evidence of receipt; or (Iv) If sent via facsimile as of
the date and time received as evidenced byafacslmlletransmlsslon receipt addressed as
follows:
If Intended for Grantor,to:
Attn:_
Phone:
Fax:
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-93
I f ^ e o d e d for G r a n t e e s
Camp Bow Wow
Franohi^ng^oo
S ^ O W I ^ C ^
OnlfO
B r o o m e d , Colorado
80021
Attn: Heidi Ganahl
Phono:7202502208
Fax: 808^08 087^
Either party may change Its address for the giving of nofloehynofloe hereonder hy
providing written notice of the address change to the other party.
5.
Title to the Frooertv: Aothorlzatlon Grantor represents and warrants to
Grantee that good and marketable fee simple title to the Property Is folly vested In
Grantor, Grantor Is doly aothorlzed and empowered to execote and perform this
Agreement, and the execotlon hereof will not resolt In any hreach ot, or constitote a
defaolt onder, any contract or agreement to which Grantor Isaparty
8
OlspotePesolotlon. In the event any dlspote arises between the parties to
this Agreement that Is related In any manner to this Agreement,lts terms, or the parties'
dealings with each other onder this Agreement (a "Dlspote"), soch Dlspote shall be
exclosively determined as follows.
(a)
Mediation. All parties InvolvedlnaDlspote shall sobmit the Dlspote
to mediation to be administered by the American Arbitration Association onder Its
mediation roles then In effect The mediation shall be condocted atthe offices o f t h e
American Arbitration Association located In Denver, Colorado, or soch other location
agreed on hy tbe parties Any party to this Addendom may Initiate mediation by written
reqoest to all otber parties Each party that receives a written reqoest for mediation
most respond, In writing, within three (8) boslness days of receipt o f t h e reqoest and
state oneqolvocally whether that party will participate In mediation Eallore to respond
constltotesawalverofthe rightto medlateand permitsthe reqoestlng party to proceed as
set forth herein Absent rare, exceptional circomstances, the mediation shall be
condocted andcompletedwlthlnforty^flve^8) days of the wrlttenreqoest for mediation.
Notwithstanding theforegolng agreementto mediate, Grantee shall havethe rlght,at Its
election, to seek, In arbitration (onder Section 8(b) below) or a coort of competent
jorlsdlctlon, the Issoanceof Injonctlveand othereqoltable relief to protect and enforcelts
rlgbts onder this Agreement withoot waiting for completion of mediation and withoot
waiving mediation.
(b)
Arbitration
In the event the parties' Dlspote Is not folly and finally
resolved by mediation, soch Dlspote shall be exclosively determined and resolved by
binding arbitration administered by the American Arbitration Association onder Its
commercial arbitration roles then In effect Thearbitration shall be condocted h y a s i n g l e
arbitrator. The arbitration bearing shall be condocted at the offices of the American
Arbitration Association In Denver, Colorado, or soch otber location agreed on hy the
parties The parties'written discovery rlgbts In arbitration shall he limited to 20 reqoestsfor
prodoction of docoments (Incloding electronically stored Information) The parties'
deposltlonrlghts In arbitration shall be limited to (1) depositions of two representat^
Camp Sow Wow 2014 FOO
Exh^tS^Franohise Agreement
05^540706
894
eachpartyoottoexceed^hoo^^^
lim^to^hoo^perdepos^^
be
deeded by tbe a r b ^ o r i o b ^ or ber sole disore^ooTb^
tbe dlsoretlonto
modity tbese discovery rlgbts opoo a sbowlng otgood oeose Tbe exclusive torm tor
contlrmatloo o t t b e arbitration award Is tbe state and federal courts located In Denver,
Golorado. Tbe prevailing party In any arbitration or action In court to confirm or enforce an
arbitration award sball be entitled to recover, In addition to all otber remedlesordamages,
Its reasonable attorney's fees, arbitration costs and coort costs. Notwitbstanding tbe
foregoing agreement to arbitrate,Grantee sballbave tbe rlgbt, at Its election,to seek, Ina
court ot competent jurisdiction, tbe Issuance of Injunctive and otber editable relief to prot^^^
and enforce Its rlgbts under tbis Agreement witbout waiting for completion of mediation and
witbout waiving arbitration
(c)
All parties acknowledge and expressly agree tbat, notwithstanding
tbe foregolngDIspoteResolutlonprovlslons, Grantee bas tbe rlgbt to pursue any claim to
enforce tbe terms and provisions of tbis Agreement, Including a request for Injunctive
relief, In a court of competent jurisdiction witbout violating or waiving Its rlgbt to require
mediation or arbitration of disputes as set fortb berein.
7.
Miscellaneous
(a) Tbis Agreement may not beamended, modified, waived or revoked
except byawrltten Instrument signed by t b e p a r t y t o b e charged wltbsucbamendment,
modification, waiver or revocation
(b) Tbis Agreement wlllbeblndlng u p o n a n d w l l l l n u r e t o t b e b e n e f l t o f
tbe parties bereto and tbelr respective permitted successors and assigns.
(c) Tbis Agreement will be governed by and construed and Interpreted
according to tbe laws of tbe State of Golorado
(d) Tbis Agreement may be recorded by Grantee In tbe real property
records of tbe county where tbe Property Is located
(e) This Agreement may he executed In counterparts, eacb of wblcb when
so executed will be deemed to be an original and all of wblcb taken together will
constitute one and the same Instrument
(f)
Grantor expressly acknowledges and agrees there may be occasions
during the course of this agreement where Grantee may need to communicate with third
parties whohave Interests In connection with the Property, such as lenders and other
secured parties Grantor agrees that Grantee may engage In such communications
without any liability to or complaint from Grantor.
(g) Grantee may assign Its rights and obligations In this Agreement to an
affiliate at any time without tbe prior approval of Grantor Por purposes otthis paragraph, an
"afflllate"shall mean a corporate affiliate, parent or subsidiary of Grantee, or any joint
ventureorother entity In which Grantee oracorporate affiliate, parentorsubsldlaryof
Grantee malntalnsacontrolllng Interest The provlslonsof this Agreement, Including all
Camp SowWow 2014 FOO
E x h ^ S D F r a o o ^ s e Agreement
05^75540706
8^5
benefits and burdens, will run with the land and each of the benefits and burdens of this
Agreement will inure to and be binding upon the parties, their heirs, executors,
administrators, personal representatives, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first set forth above.
GRANTEE:
CAMP B O W W O W FRANCHISING, INC.,
a Delaware corporation
By:.
Name:
Title
Camp Bow Wow-2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-96
RIGHT OF FIRST R E F U S A L AND OPTION AGREEMENT
EXHIBIT A
Insert Legal Description ofthe Property
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-97
ATTACHMENT H
TO C A M P FRANCHISE A G R E E M E N T
C A M P BOW WOW® L E A S E B A C K AGREEMENT
THIS C A M P BOW WOW® L E A S E B A C K A G R E E M E N T ("Lease"), is dated
(the "Effective Date") and is by and between:
, a
("Landlord"):
a
("Tenant"): and Camp Bow Wow Franchising, Inc., a Delaware
corporation ("Franchisor") as follows:
20
RECITALS
W H E R E A S , Tenant intends to operate a Camp Bow Wow® franchised business from the
Premises (defined below) pursuant to that certain "Camp Franchise Agreement" with Franchisor
(the "Franchise Agreement");
W H E R E A S , Landlord and Tenant are the same, affiliates or related entities;
W H E R E A S , Tenant's Franchise Agreement requires Landlord and Tenant to enter into this
Lease in order to (i) formally document the lease relationship between Landlord and Tenant, (ii)
preserve the Premises as a Camp Bow Wow® branded franchise location, and (iii) to provide
certain rights to Franchisor, all pursuant to the terms and conditions ofthis Lease;
W H E R E A S , Landlord and Tenant acknowledge that execution ofthis Lease by all parties is
a material and essential part of the consideration for Franchisor's willingness to enter into the
Franchise Agreement and continue its franchise relationship with Tenant;
W H E R E A S , Landlord acknowledges that this Lease is supported by good and valuable
consideration, the receipt and sufficiency of which is acknowledged by Franchisor, in the form of
Franchisor's willingness to enter into and continue its franchise relationship with Tenant, which is
the basis for the Lease between Landlord and Tenant; and
W H E R E A S , Landlord, Tenant and Franchisor acknowledge that, at the time this Lease is
being executed, the precise location of the franchised business may not yet be established;
however, all parties agree this Lease constitutes a valid, binding and enforceable agreement,
notwithstanding the lack of a precise location at the time of execution, and will be supplemented
by a Location Designation, provided by Franchisor, once Franchisor is notified by Landlord or
Tenant that a precise location has been established.
AGREEMENT
NOW T H E R E F O R E , for and in consideration of the covenants and agreements herein
contained, Landlord and Tenant hereby agree as follows:
1.
Defined Terms. The following terms shall have the definitions:
a.
"Premises" - Approximately,
square feet of space located at
;
, [as shown on Exhibit A attached
hereto], together with the Parking Lot (defined below) and all other improvements located
on such property and any and all appurtenant rights relating thereto subject to all
easements, covenants, restrictions and other encumbrances of record.
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-l
b.
"Term" - Ten (10) years, commencing on the later to occur of (i) the
Effective Date of the Franchise Agreement, or the (ii) date that Landlord Substantially
Completes (defined below) the Landlord's Work (defined below) (the "Commencement
Date").
c.
"Lease Year" - The twelve-month period beginning on the Effective Date
and ending 365 days thereafter, and each successive 365 day period thereafter.
d.
"Use" - Tenant will have the right to use the Premises for dog day care and
boarding, bathing, training, grooming and the retail sale of pet products, in accordance with
the terms and conditions ofthe Franchise Agreement.
e.
"Security Deposit" - shall mean two months of Base Rent, at the Base
Rent rate on the Commencement Date, due at the time of execution of this Lease to be
kept by Landlord in accordance with the provisions of Section 4(d).
f.
'Default Rate" - An annual rate of interest equal to seven percent (7%).
g.
"Parking Lot" - The parking lot adjacent to the Premises in which Tenant
shall be allotted
of parking spaces.
h.
"Tenant's Share" % of the Operating Cost (defined below) for
the Premises, as determined pursuant to Section 5. Tenant's Share for the entire year in
which the Term of this Lease begins is estimated to be
.
2.
Lease of Premises. Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, the Premises for the duration of the Term, on the terms and conditions set forth in
this Lease.
3.
Term and Renewal Option: The Term of this Lease shall be as set forth in Section
1(b), unless sooner terminated as provided herein. Tenant will have the right and option to renew
this Lease for two (2) additional five (5) year periods by providing written notice to Landlord no
earlier than nine (9) months and no later than four (4) months prior to the expiration of the initial
Term or immediately preceding option term under the same terms, conditions and covenants
contained in this Lease.
4.
Rent and Security Deposit.
a.
Tenant shall pay a rent to Landlord in monthly installments, in advance, on
the first day of each and every calendar month during the Term of this Lease (the "Base
Rent") in the amounts and for the periods as set forth below:
Lease Period
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
Annual Base Net Rent/SF
Monthly Base Net Rent
$
$
$
$
$
$
$
$
B-2
^
^
^
^
^
^
^
^
b
The Base Rent is payable on tbe Cemmenoement Oate and shall be
prorated tor the remaining days In tbe oale^^
oooursltltooours on any day otbertban tbe tlrst day otthe month. Except as expressly set
tortb In this Lease tothe contrary, all payments ot Base Rent shall he paid Inadvance,
wltboot notice, set ott or deduction, In lawtul money otthe United States, at tbe address ot
Landlord set tortb above, or at sucb other place as Landlord may trom time to time
designate In writing. In the event any monies due under tbis Lease are not paid wltbln 10
days otthe date wben due,alatecbarge In an amount equal to 5 ^ ot the tben delinquent
lnstallment(the "LateOharge^ shall be Imposed witb respect to the tben dellnquent Rent
and payable to Landlord wltbln s e v e n ^ d a y s o t written assessment.
c.
In addition to the Base Rent, Tenant sball pay Landlord In monthly
Installmentsslmultaneously with payments ot Base Rent,Tenant's Sbareottbemonthly
Operating Oost(detlned below).
d
Tenant shall keep tbe Security Oeposlt on deposit witb Landlord at all times
during t h e T e r m o t t b l s L e a s e a s security tor the taltbtulpertormance otall tbe terms,
conditions a n d c o v e n a n t s o t tbis Lease. It, at anytlmedurlng theTerm, Tenant Is In
detault In the performance otany provision hereot beyond tbe expiration otany notice and
cure periods,Landlord may apply the Security Depositor so much thereof as necessary,In
payment of any Base Rent or any otber sums due under this Lease, or In payment of the
reasonable damages Incurred by Landlord by reason ofTenant's default. In sucb event,
Tenantshall,onwrlttendemand of Landlord,forthwith remit to Landlordasufflclent amount
to restore tbe Security Deposit to Its original amount. Tbe Security Deposit sball be
refunded toTenant wltbln thirty (30) days ofthe end of theTerm,upon the full performance
of this Lease. Landlord shallhave the right to commingle the Security Deposit wlthlts
other funds. LandlordshalldellvertheSecurlty Deposit to the purchaser of Landlord's
Interest In the Premises In the event such Interest Is sold, and thereupon, Landlord shall be
discharged from further liability with respect to the Security Deposit
5
Ooeratlno Oosts: Adlustment
a
Theterm "Operating Oost'shall mean an amount per calendar year,whlch
represents the operating cost for the Premises listed In Section 5(a)(1), but shall exclude
the Items listed In Section 5(a)(ll):
(I)
TheOperatlng Oost shall Include: (l)servlces provided directly by
Landlord In connection with the operation, maintenance or rendition of other
services to or for the Premises; (II) to the extent not separately metered, billed, or
furnished, all charges for utilities and services furnished to the Premises set forth In
Section 8 below, together wlthany taxes o n s u c h utilities; (lll)allmarketbased
premiums for commercial property, casualty, general liability, holler, flood,
Camp Sow Wow 2014^00
E x h ^ t S D ^ a n o h ^ e Agreement
US^7^0706
83
earthquake, t e ^ o r t s m a n d ^
to the P r e m i s e ^ ^ a n y capital
tothe Premiseswhioh are necessitated hyaohange in applloahle law ("Requ^^
Capital E ^ p e n s e ^ o r whichare designed to r e d u c e t h e O p e r a t l n g C o s t ^ C o s t
Saving Capital i m p r o v e m e n t s ^ t h e c o s t o t s u c h Required Capital Expenses or
Cost Saving Capital Improvements shall he reasonahly amortized hy Landlord over
the usetul lite ot the Improvement, In accordance with generally accepted
accounting prlnciples^v)Taxes(detlned helow); and (vi) dues,tees or other costs
and expenses, ot any nature, due and payable to any association to whicb
Landlord,as ownerottbeRremlses, i s a m e m h e r o r o t b e r w i s e b e l o n g s a n d that
governs or controls any aspect ottbe ownership and operation ottbe Premises.
(Ii)
The tollowing expenses and costs sball be excluded trom tbe
Operating Costs tor the Premises: Costs Incurred in connection witb tbe original
construction o t t h e Premises; depreciation, interest and principal payments on
mortgagesand otherdebt costs; any amountsattrlbutable to tbe maintenance,
repair or replacement otthe Premises thatTenant Is not otben^ise required to make
in accordance with Section 12; costs tor which tbe Landlord Is reimbursed by
insurance proceeds; costs associated witb operating ot tbe business ot tbe
Landlord as a separate entity, a s t h e same aredlstlngulshed trom the costot
operating the Premises; the wages and benefits otany executive or other employee
ot Landlord; tines, penalties, and interestlncurred a s a resultotthe Landlord's
negligence, Inability, or unwillingness to make payments when due; any expense
resulting trom any violation ot law by Landlord or its agents, contractors, employees
or invitees; and Landlord's general overhead and administrative expenses, the cost
otstructuralrepairs, repairs to the Parking Lot,and capital improvements to the
Premises
h.
The term "Taxes" shall mean (i) all governmental taxes, assessments, tees
and charges ot every kind or nature (other than Landlord's Income taxes), whether general,
special, ordinary or extraordinary, due or assessed at any time or trom time to time, during
the Term and any extensions thereof, in connection with the ownership, leasing, or
operation o f t b e Premises; and (ii) any reasonable expenses Incurred by Landlord in
contesting such taxes or assessments, or the assessed value of the Premises. In addition,
Tenant shall be solely responsihlefor tbe payment of any and all taxes on Tenant's
property.
c.
Landlord shall, prior to the beginning of each calendar year of this Lease,
compute an estimate of Operating Costs for such calendar year. Tenant shall have the
right to inspect all documents reflecting any part of the Operating Costs and the
calculations of any amount payable, and Landlord shall provide accounting records
supporting its itemized statements and calculations of Operating Costs and the amounts
due upon request byTenant Upon receiptofwritten notice thereof,Tenant shall pay to
Landlord, in monthly installments simultaneously with payments of Base Pent, one^twelfth
ofTenant's Share ofsuch Operating Cost estimate. Landlord shall,within ninety (00) days
atter the expiration of each calendar year, calculate the actual amount of Operating Costs
fortbepreviouscalendaryear, and shall provldethesametoTenant,together with paid
invoices or receipts if available. IftheamountofOperatingCostsactually paid byTenant
during any Lease Year is less thanTenant's actual ultimate liability for Operating Oosts for
thatparticularLeaseYear,Tenantshall pay the deficiency within 30 days ot Landlord's
written demand therefore IftheamountofOperating Costs actually paid byTenant during
agiven LeaseYear exceedsTenant's actual liability for such LeaseYear, the excess shall
Camp Sow Wow 2014^00
ExhibitS^FranohiseAg^me^
US^7^0706
B^
b e c r e d ^ d against the O p e n i n g Costs nextdoe tromTenantdunng theimmediateiy
subsequent Lease Year, except that in the event that sooh excess is paid hy
the tinai LeaseYear, then upon the expiration ot theTerm,Landlord shaii payTenant the
then^appiicahie excess promptly atter determination thereof
(c)
ItTenant disputes the calculation ot Operating Costs,Tenant shall give
Landlord written notice ot such dispute within ninety (90) days atter receiptotnotice trom
Landlord otthe matter giving rise to the dispute. Promptly atter the receipt ot such written
notice,Landlord shall causeto he madeacompleteauditotLandlord's records relating to
the matterin dispute h y a t i r m o t independent certitied public accountants The costot
such audit shall be borne byTenant unless such audit discloses an error which overstated
Operating Costs by more than two percent (2^) otthe amount determined by the audit, in
whicb event Landlord shall bear the c o s t o t such audit it such audit reveals that tbe
amount previously determined by Landlord was incorrect,acorrection shall be made and
either Landlord shall promptly returntoTenantanyoverpaymentorTenant shall promptly
pay to Landlord any underpayment that was based on such incorrect amount.
Notwithstanding tbe pendency o t a n y dispute hereunder,Tenantshall make payments
based upon Landlord'sdeterminationorcalculationintoan escrow account to be disbursed
upon determination otthe Operating Costs.
8.
Utilities. On or betore tbe Commencement Oate, Landlord shall turnish or cause to
beturnished or installed atthe Premises the tollowing services: (i)aheating and air conditions
system (H^AC), (ii) domestic running water, (iii) electricity (itnot separately metered tor the
Premises), (iv) septic or sewer, (v) trash removal, and (vi) it applicable, snow removal Costs tor
such utility expenses shall be calculated as part otTenant's Share otthe Operating Costs. Tenant
shalldirectly contractand pay tor all utilities not otberwise provided by Landlord serving the
Premises,including,but not limited to gas,steam,tuel oil,electricity (it separately metered),^
usage (it separately metered), and telephone and communications systems.
7
Use
a.
Tenantshall use and occupythe Premises a s a C a m p Bow Wow® franchise
tacility in accordance with the Ose provided in Sectionl(d) above. Tenant shall not use or
permit the Premises to be used tor any purpose prohibited by the certificate ot occupancy
issued for tbe Premises, the laws of tbe United States or the state in which the Premises
are located, or the ordinances or regulations of the County and City in which the Premises
.are situated
b
Except asprovided above, in the event that any governmental or quasi
governmental authority shall bereatter at any time declare by notice, violation, order or in
any other mannerwbatsoever that the Premises are,or Use of the Premises, is in violation
o t a n y permit, certificate of occupancy, statute, ordinanceorother requirement of law
applicable to the Premises, Tenant shall, within ten (tO) days atter receipt of written notice
of such violation, cure or contest such notice, violation, order or other requirement of law
applicable to the Premises (or tor such period, as may be reasonably required to cure or
contest such notice, violation, order or other requirement of law applicable to the Premises
if it is of s u c h a n a t u r e that it cannot be cured or contested within such 10Dday period,
provided tbatTenant commences to cure or contest such notice,violation,order or other
requirement of law applicable to the Premises within such 10^day period and proceeds with
reasonable diligencethereatterto cure or contest such notice, violation, order or other
requirement of law applicable to thePremises) IfTenant fails to contest or cure such
Camp Sow Wow 2014^00
Exh^S^Franoh^eAg^me^
US^7^0706
B5
matter Landlord
provide F ^
oore or oontestsooh matter as was given toTen^^
8
OoletEnlovmenL Landlord oovenantsand agrees that oponTenantttmely paying
all amoonts due hereonder and observing and performing all the terms, covenants and conditions
otthis Lease, Tenant shall not he dlstorhed In Its possession otthe Premises hy Landlord or any
other person lawtolly claiming throogh or onder Landlord.
9
Access to Premises Except In the case ot an emergency,Landlord or Its agent will
not enter the Premises withoot thepresenceotTenantorTenant's agent. It Landlord wishes to
enter the Premises to examine, or show them to prospective porchasers, mortgagees or lessees
and t o m a k e a n d p e r t o r m soch cleaning, maintenance, repairs or alterations asLandlordmay
reasonably deem necessary or desirable tor tbe satety, Improvement or preservation ot the
Premises, Landlord shall provldeTenant witb twenty toor (24) hoors advance written notice.
Tenant shall grant Landlord socb access provided In the opinion otTenant, tbat any socb access
does not In any way endanger tbe satety or health otthe animals located In tbe Premises. It soch
access Interferes with Tenant's boslness so as to render Tenant onable to operate wltboot
significant hindrance, In Tenant's sole discretion, the Base Pent and Tenant's Share o f t h e
Operating Cost shall abate doring soch period.
10
Landlord's Work; Acceptance ofthe Premises
a.
If Landlord performs any work with regard tothe Premises prior tothe
Commencement Oate, LandlordshallSobstantlallyCompletethe work tothe Premises
reqolred to be done by Landlord, If any, as specified In Exhibit B attached hereto
("Landlord's Work").
All of Landlord's Work shall he performed In a good and
workmanlike manner with new, first qoallty materials In compliance with all applicable laws
andreqolrementsofErancblsor. Por porposes of this Lease,"Substantially Complete"
shall mean that Landlord has completed all work necessary to obtain a certificate of
occopancy, has provided Tenant with evidence of lien waivers completed by all of
Landlord'scontractors,andtbe Premises are ready for occopancy
b.
With the exception of all latent defects, defects In the original constroctlon of
the Premises, and any Landlord'sWork to beperformed, Tenant agrees tbatTenant Is
familiar with the condition of tbe Premises, and accepts the foregoing on a n " A S I S " basis
11^
Alterations byTenant
a.
Tenant will have the right to remodel, eqolp, paint and decorate the Interior
ofthe Premises and to display soch proprietary marks and signs on the Interior and exterior
o f t h e P r e m l s e s a s T e n a n t Is reqolred t o d o porsoant t o t h e Pranchlse Agreementor
directives by Pranchlsor and any soccessor franchise agreement onder wblchTenant may
operate the Camp Bow Wow® franchised boslness at the Premises (collectively, "Tenant
Work").
Notwithstanding tbe ahove, Lessee will not make any modifications that
compromise the stroctoral Integrity ofthe Premises
b.
In the completion of any Tenant Work, Tenant shall comply with all
applicable laws, ordinances and regolatlons, and Tenant shall on reqoest deliver to
Landlord certificates Issoed by applicable Insorance companies evidencing that workmen's
compensation, poblic liability Insorance and property damage Insorance, all In amoonts and
with companies, a n d o n f o r m s reasonably satisfactory to Landlord, are In toll force and
effectand maintained byallcontractorsandsobcontractors engaged byTenant to perform
Camp Sow Wow 2014^00
E x t ^ t B D F r a n o t ^ e Agreement
0^3^40706
8^
s o o h w o ^ Each such o e r t ^ o a t e s b ^ p r o v i d e d
days ^iorwrttten oottoe to Landlord and Franchisor
o
Except as otherwise provided in Section 20(h^ aii articles ot personal
property, and all movable fixtures, machinery
movable partitions ownedor installed byTenant at its sole expense (and witb respect to
wbich no credit or allowance was granted toTenanthyLandlord)in tbe Premises sball
remain tbe property otTenant and may be removed byTenant at any time,provided that
Tenant, at its expense, shall repair any damage to tbe Premises caused by sucb removal.
Subject to Section 20(b),Landlord may elect to requireTenant to remove ail or any part ot
the property above described at tbe expiration or termination otthis Lease, in wblcb event
sucb removaishallbedoneatTenant'sexpense,andTenant sball,at its expense,repair
any damage to the Premises caused by sucb removal. Landlord will not takeasecurity
interest in any otTenant's personal property or Erancbisor's Intellectual Property (defined
below).
12.
Maintenance and Peoairs.
a
Except for the maintenance, repairs and replacements Landlord is required
t o m a k e p u r s u a n t t o S e c t i o n s 10(a) and 12(b) of tbisLease, Tenant shailmaintain tbe
interiorof tbe Premises and thefixtures and improvements therein in reasonablegood
condition, ordinary wearand tearexcepted. Tenant shall comply witb all provisionsof
S e c t i o n H a n d Section 13of this Lease in connection with sucb maintenance,repairs and
replacements IfTenant talis to make any repairs, restorations or replacements required,
Landlord may (i) make such repairs, restorations, or replacements a t t h e reasonable
expense o f T e n a n t w h i c h s h a l l beduefromTenantwitbintbirty (SO) days of receiptof
written notice from Landlord
b.
Subjectto Section 5(a), Landlord shall be responsihlefor maintenance,
repairs and replacements of tbe following: exterior plumbing and electric, boilers, sprinkler
systems, roof, foundation, structural walls, sky lights, Parking Lot, landscaping, drainage,
garage doors, subfloor, piles, sewer or septic systems, and H^AC system (heyond
standardmaintenanceie filter replacement). Landlord sball also be obligated to ensure
tbe Premises comply with all laws, orders, or regulations, including but not limited to the
Americans With Oisabilities Act, wbich (a) relate to the design or construction o f t h e
Premises, (b) relate to tbe structural portions of tbe Premises, or (c) may require structural
alterations, changes, repairs or additions, all of which shall be the obligation of Landlord at
its sole cost and expense. If Landlord fails to make any repairs, restorations or
replacements required of Landlord hy tbis Lease, Tenant or Francblsor may (but without
any obligation) (i) make sucb repairs, restorations, or replacementsattbe reasonable
expense of Landlord and such expense sballbe due within tbirty (30) days of receipt by
Landlord ofwritten notice byTenant or Franchisor.
13.
Mechanic's Liens
a.
Tenant shall pay or cause to be paid or provideabond for all costs for work
done by it or caused to be done by it on the Premises ofacharacter which will or may
result in liens onLandlord's interest therein andTenant will keep the Premises free and
clearotallmechanic'sliens,and other liens on account of work done forTenant or persons
claiming under it. Tenant shall indemnify and hold Landlord harmless against any liability,
loss, damage, costs or expenses, including reasonable attorney's fees, on account of any
claims of any nature whatsoever, includingclaimsof liens of laborers or materialmenor
Camp Sow Wow 20t4FOO
ExhibitS^Fraoot^eA^eomont
US^7^0706
87
o^er5forworkpertormedfo4
o^imingonderTenent
or m a t e r s or sop^ies t o m b e d t o T e n a n t o r persons
b
Should any llensbefiled orreoordedagainstthe P r e m i s e s o r a n y aotton
affeottng the title thereto he oommenoed due to Tenant's contracts with third parties,
Tenant shall give Landlord written notice thereof Tenant shall thereafter cause such liens
to he removed of record within ten days atter filing Ifaflnal judgment establishing the
validity or existence o f a l l e n for any amount Is entered,Tenant shall pay and satisfy the
same at once.
14
Casualty.
a
Tenant shall give prompt notice to Landlord of (a) any fire or other casualty
or damage to the Premises or any part thereof If the Premises are damaged hy fire or
other insured casualty, Landlord shall repair the damage and restore and rebuild the
Premises (except Tenant's personal property) with reasonable dispatch atter the
adjustment of the Insurance proceeds attributable to such damage Landlord shall use Its
diligent, good faith efforts to make such repair or restoration promptly and In such manner
asnotto unreasonably Interfere wlthTenant'sLlse and occupancy of the Premises.
b
If the Premises shall be totally destroyed hy fire or other casualty, or if the
Premises shall be so damaged by fire or other casualty that (in the reasonable opinion o f a
reputable contractor or architect designated by Landlord): (i) Its repairer restoration
requires more thanlSO days or (ii) sucb repair or restoration requires the expenditure of
more than ( a ) S O ^ o f t h e f u l i i n s u r a b l e value of the Premises immediately prior to the
casualty, Landlord andTenant shall each have the option to terminate this Lease (by so
advising tbe other, in writing) within 1 0 d a y s atter suchcontractor or architectdelivers
written notice of its opinion to Landlord andTenant. Additionally,if the damage is less than
theamountstated in (ii) above, but more than 1 0 ^ o f t h e f u l l insurable valueof the
Premises; and occurs during the last two years of theTerm,then either party shall have the
option to terminate this Lease pursuant to tbe notice and within the time period established
pursuant to the immediately preceding sentence. In the event ofatermination pursuant to
either of the preceding two (2) sentences, the termination sball be effective as of the date
upon whicb either Landlord orTenant, a s t h e case may be,isdeemed to have received
timely written notice from the other terminating this Lease pursuantto the preceding
sentence
c.
Provided that any damage to tbe Premises is not caused by, or is not the
result of acts or omissions byTenant orTenant's agents or invitees, if (i) the Premises is
damaged by fire or other casualty thereby causing the Premises to be inaccessible, or (ii)
the Premisesarepartiallydamagedbyfireorothercasualty,the Base Pent andTenant's
Share of the Operating Costs shall be proportionally abated to the extent of any actual loss
of use of tbe Premises byTenant for the period of time until the Premises are restored to
their state immediately prior to the casualty or damage.
15
Eminent Oomain.
a.
If any portionofthe P r e m i s e s o r a n y rightof access, ingressoregress
thereto shall he taken by right of eminent domain or shall be conveyed in lieu of any such
taking, which shall render the Premises untenantable, then this Lease may be terminated
atthe option ofeither Landlord orTenant, exercised by either party giving written notice to
tbe other of such termination within thirty (30) days atter sucb taking or conveyance Upon
Camp Sow Wow 2014 FOO
Exhi^SD^anoh^A^emeol
^5375540706
8-8
sooh termin^on Base Rent and all other sums payable hereunder shall be duly
apportioned as o t t b e date ot suoh taking or oonveyanoe
Tenant thereupon shall
surrender to Landlord the Premises and all Interest therein under this Lease, and Landlord
may reenterand take possession otthe Premises and removeTenanttheretrom,subjeot
to Seotion 20(b) It neither party exerolses the option to terminate this Lease, Landlord
shall make an equitable adjustment otthe Base Pent and other sums payable byTenant
torthetenantahle portion otthe Premises.
b
In the event otany taking or oonveyanoe described above, Landlord shall
receive the entire award or consideration tor tbe lands and improvements so taken and
Tenant hereby waivesall claims against Landlord and assigns to Landlord all claims
against the condemnortor or on account o t o r incident to such taking or conveyance,
exceptthatTenant and Pranchlsor may separately claim and recovertrom the condemnor,
(i) the value otany personal property otTenant or Pranchisor,respectively,which either
such party was entitled to remove pursuant to this Lease and (ii) any relocation expenses
that are separately awardable.
t8
Indemnity
a.
Landlord hereby indemnities, detendsandholdsTenantand its respective
attiliates,owners,partners,members,directors,otticers,invitees,successors,independent
contractors, agents and employees (collectively, "Tenant Indemmfied Parties") harmless
trom and against any and all Losses (defined below) arising trom or in connection with any
or allot: (a) the conduct or management otthe Premises,or any work or alterations done
byTenant, including Landlord's Work, or any condition created byLandlord in or about the
PremisesduringtbeTermorduringthe period ottime,itany,prior to the Commencement
Oate and atter theTerm; (b) any act, omission or negligence ot Landlord or its agents; (c)
any accident, injury or damage whatsoever occurring in, at or upon tbe Premises and
caused by Landlord or its agents; (d) any breach by Landlord otany or allot its warranties,
representations and covenants underthis Lease; (e) thecreation o r e x i s t e n c e o t a n y
Hazardous Materials (defined below) in, at, on or under the Premises, it and to the extent
brought t o t h e P r e m i s e s o r c a u s e d by Landlord o r a n y party within Landlord's control
before,during or after tbeTerm; and (f) any violation or alleged violation by any or all of
Landlord or its agents of any law (collectively,"Landlord's indemnified Matters"). Incase
any action or proceeding is brought againstTenant or theTenant Indemnified Parties by
reason ofanyofLandlord's Indemnified Matters,Landlord,upon notice fromTenant, shall
resist and defend such action or proceeding by counsel reasonably satisfactory to, or
selectedby,Tenant. The provisions of this Section18(a) shall survive the expiration or
termination ofthis Lease
b
Tenant hereby indemnifies, defends, and holdsLandiordand its owners,
partners, members, directors, officers, agents and employees (collectively, "Landlord
Indemnified P a r t i e s " ) h a r m l e s s f r o m a n d a g a i n s t any a n d a l l Losses (defined below)
arising from or in connection with any or all of (a) any work or alterations done including
theTenantWork,oranyconditioncreatedbyanyorallofTenantandTenant'sagentsinor
about the Premises during theTerm; (b) any act,omission or negligence of any or all of
TenantandTenant'sagents;(c)anyaccident,injuryordamagewhatsoeveroccurringin,at
o r u p o n t h e P r e m i s e s a n d c a u s e d by any or all ofTenantorTenant's agents; (d)any
breach byTenant of any or all of its warranties,representations and covenants under this
Lease; (e) any actions necessary to protect Landlord's interest underthis Lease in a
bankruptcy proceeding or other proceeding under the Bankruptcy Oode; and (f) any
violation or alleged violation by any o r a l l of Tenant and Tenant's agents o t a n y law
Camp Sow Wow 2014 FOO
ExhibitSDFraooh^e Agreement
^5375540706
8^
( c o ^ o t t v e ^ "Tenants i n d e m o ^ e d M a ^ e r s ^
lo case any action or proceeding is
brought against any or allot Landlord a n d ^
any otTenant's Indemnified Matters,Tenant, upon notice trorn any or allot Landlord,shal^
resistand defend such action or proceeding by coonsel reasonably satisfactory to, or
selected by,Landlord. The provisions ofthis Section 18(b) shall survive tbe expiration or
termination ofthis Lease or tbe early termination ofTenant'srigbt to occupy the Premises.
c
Tbe term "Losses" sball mean all claims, demands, expenses, actions,
judgments, damages (actual, but not consequential), penalties, fines, liabilities, lo^^^
every kind and nature, suits, administrative proceedings, costs and fees, including, witbout
limitation, attorneys' and consultants' reasonablefeesand expenses, and tbe costsof
cleanup, remediation, removaland restoration,thatareinany way related to any matter
covered by the foregoing indemnity.
17.
Tenant's Insurance. At all times during theTerm,Tenant sball,at its own expense,
maintain (i) public liability insurance for claims for personal injury or death and property
damage with limits of not less than ^1,080,000 combined single limit of liability plus
umbrella coverage of not less than ^2,000,000; and (ii) fire and extended coverage
insurance on all ofTenant's personal property to the extent of at least 00 percent of their
insurable value. All sucb policies described in tbis subsection shall name Landlord as an
additional insured and shall be witb insurance companies and on forms reasonably
satisfactory to Landlord. Tenant shall, prior toTenant's occupancy of thePremises and
thereafter at Landlord's request,furnish Landlord with certificates of all insurance to be
maintained byTenant and with evidence of payment of the premiums thereon. All such
policies shall containaclause or endorsement to the effect that they may not be terminated
oramendedduring theTerm ofthis Leaseexceptafterthirty(80)days' written notice
thereofto Landlord and Franchisor.
1S
Landlord's Insurance. Atalltimesduring theTerm, Landlord shall maintain public
liability insurance for claims for personal liability or death and property damage with limits
of not less than ^1,000,000. Landlord, with respect to all structures and improvements on
the Premises, including Landlord^provided leasehold improvements, shall, during theTerm
of tbisLease, carry full and adequate insurance underaso^calledall^risk policy,which
shall include but not be limited to coverage for the full replacement value of the Premises
and all of Landlord's personalproperty thereon. Landlord's insurance shall also include
rental valueinsurancefortheprotectionof Landlord, which insurance shallprovide for
payment of net rental and other charges due hereunder foraminimum period of one (1)
year followingacasualty,suchpolicy providing that payments will be made to Landlord
regardless ofwhether this Lease is terminated asaresult of such casualty
10.
Assignment and Sublettino
a.
Tenant shall have the right to assign all of its right, title and interest in the
Lease to Franchisor or its successor or designated affiliate,at any time during theTerm,
including any extensions or renewals thereof, without first obtaining Landlord's consent
Franchisor or its successor or designated affiliate, will also have the right to assume or
a s s i g n t h i s L e a s e t o a t h i r d p a r t y t r a n c h i s e e , a t a n y t i m e d u r i n g t h e T e r m , including any
renewal term, within thirty (80) days of expiration, default, cancellation or termination
L e a s e o r Franchise Agreement, without first obtaining Landlord'sorTenant'sconsent.
Tenant hereby absolutely and unconditionally assigns theLease toFranchisor effective
upontheoccurrenceof(1)termination ofthe Franchise Agreement,(2) Landlord'snotice to
Tenant ofTenant's default under this Lease,or (8) termination ofthis Lease However,
Camp Sow Wow 2014 FOO
Ex^bitBDFraochise Agreement
US^7^0706
8^0
T e n a n t assignment onder sooh oircomstanoes (i) wili not oonstitote Franohisor's
aooeptanoeotsooh assignment or Franohisor's assomption otthe Lease in the absenoeot
an attirmativeBwrittenaooeptanoe or assomption hyFranohisor,(ii) wiii not he deemed to
render Franohisoraparty to the Lease or goarantor thereof and (iii) wiii not oreate any
iiahiiity or obligation otFranohisor onless andontil the L e a s e i s assomed in writing hy
PranohisorandLandlord delivers possession otthe Premises to Pranohisor. Pranohisor
will havethe right, at any time ontil Landlord delivers possession otthe Premises, to
resoinditsexeroise otthe option to assome the Lease,hyprovidingLandlord with written
notioe. Atter its assomption, Pranohisor will observe the terms, conditions and agreements
on the partotTenantto be performed onder the Lease. Tenant will remain liable tor its
responsibilities and obligations onder the t e r m s o t ^
amoonts owed to Landlord
Pranohisor's right to take an assignment will not be
oonditionedand Pranohisorwillhaveno obligation to oore any detaolt or to perform or
disohargeany doty or liability onder this Lease, inoloding, withoot limitation, paying any
amoonts owed to Landlord prior to the date ofthe assomption,or exercising any other of its
rigbtshereonderand nothing herein shall make Pranohisor or its designated affiliatea
goarantor hereof Landlord agrees to provide Pranohisor with written notice of any notice
ofdefaoltortermination Landlord providestoTenantonderthis Lease and to provide soch
noticetoPranchisoratthesametime notice is provided to theTenant.
b
Upon the termination of the Franchise Agreement or within thirty (SO) days
of Landlord's notice toTenant ofTenant's defaolt onder or termination of this Lease,or at
any time after Pranchisor provides Landlord with notice of acceptance of Tenant's
assignment andPranchisor's assomption of the Lease,Pranchisor may assign this Lease
t o a t h i r d p a r t y franchisee withoot Landlord's consent. Pranchisor will be folly released
from any and all liability onder this Lease opon soch reassignment; however, Pranchisor
will continoe to have the same rights onder tbis Lease with regard to any new franchisee
IfPranchisordoes not provide Landlord witb notice of acceptance ofTenant'sassignment
or Pranchisor's assomption of the Lease,Landlord will,opon the thirtieth(30th) day after
the termination ofthe Lease,recaptore the Premises.
c
Tenant will.and does hereby agree to indemnify, defend and hold harmless
Pranchisor against and from any and all liability, loss, damage, cost or expense (incloding
reasonable attorney's fees) that Pranchisor may incor onder this Lease, and against and
from any and all claims and demands whatsoever that may be asserted against Pranchisor
by reason o t a n y alleged obligation or ondertaking on Pranchisor's part to perform or
discharge any o f t h e terms, covenants or agreements contained in this Lease. The
provisions ofthis Section tO(c) shall sorvive the expiration ortermination ofthis Lease.
d
Landlord acknowledgesand agreesthat Pranchisor hasmadesignificant
investment in the Gamp Oow Wow® hosiness concept and that Pranchisor has an ongoing
and integral interest in the continoed operation of the same on the Premises b y a p a r t y
approved by Pranchisor. Landlord andTenant therefore will not assign,soblet or otherwise
grant any other party an interest in this Lease o r a n y interest toall o r a n y partof the
Premises, or to softer or permit the Premises or any part thereof to be occopied by others,
withoot the prior written consent of Pranchisor which may be granted or withheld in its sole
and absolote discretion Landlord also agrees not to allow any other space in the boilding
complex in which the Premises are located doring theTerm,any renewal terms and for two
(2)yearsfollowingthetermination ofthe Lease,to be osed b y a p e r s o n or entity whose
Primary Bosiness(defined below) i s t b e provision of services related to petcare, dog
boarding, dog training, bathing or the retail sale ofdog food and merchandise and assorted
otherpetrelated servlcesand prodocts (collectively,the "Services"). "Primary business"
Camp Sow Wow 2014 FOO
ExhibitSDFraooh^A^eem^t
OS53^40706
^U
sha^ be defined a s a b o s i n e s s that d ^
trom tbe saieet tbe Services ceiiectiveiy or i n d i v i d u a l Any suob attempted assignment,
subletting, oroonveyanoe otanotber interest witbout FranobisoBs prior writtenoonsent
sbaii be void and sbaii confer no rights whatsoever on any party
Landlord andTenant
acknowledge and agree that the foregoing provision and its restrictions are material terms
and,in their absence,Franchisor would not be willing to issueaFrancbise Agreement to
Tenant. Landlord andTenantfurtberacknowledgeand agreethat Franchisor will suffer
irreparable, continuinginjury in the event the foregoing provision andits restrictions are
violated, and that Franchisor shall be entitled to seek and obtain temporary, preliminary
and permanent injunctive relief in the event of any such violation.
e.
Notwithstanding anything to the contrary herein, nothingunder this Lease
shall make Franchisororitsaffiliates liable underthisLease,oraguarantor hereof, and
shall not create any obligation ofFranchisor or its designated affiliate
20
Surrender and Holdover.
a
On the lastdayoftheTerm,orupon an earliertermination ofthis Lease: (a)
Tenant shall quit and surrender the Premises to Landlord "broom clean" and in reasonable
good condition, ordinary wear and tear excepted Except as otherwise provided in Section
20(h) below,TenantshallremoveallofTenant's personal property from the Premises and
shall surrender to Landlord any and all keys, access cards, computer codes or any other
items used to access the Premises.
b.
Opon the expiration, cancellation or termination of the Lease or Franchise
Agreement, neitherTenant or Landlord will retain any right, title or interest in Franchisor's
intellectual property, including but not limited to its Operations Manual (and all directt^^
and subDmanuals contained therein), trademarks, tradeDdress, patents or copyrighted
materials or any equipment or materials bearing the same ("Intellectual Property"). Upon
the expiration, cancellation or termination o f t h e Lease o r t h e Franchise Agreement,
Landlord will cooperate with and allow Franchisor toenter the Premises, without being
guiltyof trespass and witbout incurring any liability to landlord orTenant,to remove all
Intellectual Property, or any material bearing the Intellectual Property Opon the expiration,
cancellation or termination of the Lease or the Franchise Agreement, Landlord will perform
all de identification actions included in Schedule 1 hereto, at its expense, and shall
complete such actions within thirty (30) days, in the event Landlord fails or refuses to
complete the deidentification actions within thirty (30) days, Landlord shall allow
Franchisor to enter the Premises to accomplish de identification, in wbich case all expense
incurred by Franchisor,including the reasonable value of the time of its personnel,shall be
charged to and reimbursed by Landlord within ten (10) days ofwritten notice from
Franchisor in the event Franchisor exercises its option under the Franchise Agreement to
purchase the assets ofTenant,thenLandlord will permit Franchisor to remove all such
assets being purchased by Franchisor from the Premises. Franchisor will repair any
d a m a g e t o t h e Premises caused by Franchisor in removing its Intellectual Property or
removing purchased assets witbin thirty (30) days of Landlord's written notification of sucb
damage, in the event Franchisor fails to remove its Intellectual Property, or any equipment
or material bearing the Intellectual Property, within thirty (30) days o f t h e expiration,
cancellation or termination of tbe Lease, Landlord may dispose of the same without liability
toFranchisor. Landlord andTenant acknowledge and agree that tbe foregoing rightsof
Franchisor are material and, if violated or refused, subject Franchisor to irreparable,
continuing injury which warrants the issuance of temporary, preliminary and permanent
injunctive relief
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E x h ^ i t B D F r a o o h ^ e Agreement
US5^40706
812
b.
^ T e n a n t or any party claiming through or undertenant shaii remain or
continue to he in possessionot the Premises or any part thereof atter the termination ot
this Lease, andLandiord continues to accept Base Pent and Operating Cost payments,
T e n a n t o r s u c h party or hoth shaii he deemed to h e a month to month tenantot the
Premises on aii the terms and conditions otthis Lease, except that the Base Pent shaii he
1 1 0 ^ otthe amount otthe Base Pent tor the tinai Lease Year
21
Suhordination.
a.
This Lease is subordinate to the Franchise Agreement and aii mortgages
and other encumbrances that may now or hereafter attect aii or any portion otthe Premises
and to aii renewals, modifications, consolidations, replacementsand extensionstbereof
This clause shall be self operative and no further instrument or subordination shall be
required in order to effectuate it Tenant covenants and agrees nevertheless, to execute
and deliver promptly any certificate or other assurance in confirmation of such
subordination reasonably requested by any mortgagee
b
Landlord andTenanteachagreeandacknowledgethatthis Lease is also
subordinate and subject to the terms and conditions set forth in that certain "Rightof First
Refusal and Option Agreement" between Landlord and Franchisor. Opon the exercise of
Franchisor's right to purchase the Premises as set forthin the Right of First Refusal and
Option Agreement, this Lease sball terminate and no longer encumber the Premises.
22.
Representations and Warranties.
a.
Landlord represents and warrants to Tenant that Landlord has no
knowledge o t a n y (l) hazardous or toxic materials, wastes or substances ("Hazardous
Materiais^which are located in orwhich have beentreated,stored,generated or disposed
of upon the Premises;or(ii) violation of any state, federal or local law enacted for the
protection of tbe environment or the safety of workers at the Premises, or (iii) any present
violations of applicable federal, state, or local laws or regulations, including all laws related
to toxic and Hazardous Materials.
b
Landlord represents, covenants and warrants (i) that it has lawful title to the
Premises and has full right, power and authority to enter into this Lease, and (ii) that in the
construction of the Premises, the Parking Lot and all other improvements on or adjacent to
the Premises owned hy Landlord, as well as the Landlord'sWork shall comply withall
applicable laws, ordinances and regulations of governmental authorities having jurisdiction
thereof.
23.
Tenant's Oefault. The following shall constitute defaults ofTenant hereunder:
a.
Tenant fails to pay when due any installment of Base Rent, Operating Oost
o r a n y o t h e r s u m payable byTenanthereunder, andTenant talis to remedy such failure
within ten (10) days atter Landlord givesTenant and Franchisor written notice specifying
such failure;
b.
Tenant neglects or fails to perform or observe any of the other covenants
herein andTenantfailstoremedysucb default within thirty (30) days atter Landlord gives
Tenant and Franchisor written notice specifying such failure (or within such period as may
be reasonably required to cure such default if it is of such nature that it cannot be cured
CampSowWow 2014^00
E x t ^ i t S ^ F ^ o o h i s e Agreement
U5^7^0706
w ^ i o a t h i r t y (30) day period
ouresoohdefau^
o.
This Lease or the Premises or any part thereof shaii he taken upon
execution or hy other process otiaw directed againstTenant, or shaii he taken opon or
suhject to any attachment at the instance otany creditor ot or ciaimant againstTenant, and
such, attachment shaii not he discharged or disposed ot within ninety (00) days atter the
ievy thereof;
d
Tenant's Franchise Agreement with Pranchisor is terminated for any reason;
e.
Tenant (i) m a k e s a n assignment of aii orasuhstantiai partof Tenant's
property for the henefitof creditors; ( i i ) a p p i i e s f o r o r c o n s e n t t o o r acquiesces inthe
appointment o f a receiver, trustee or liquidator of aii or a suhstantiai part ofTenant's
property or of the P r e m i s e s o r o f T e n a n t ' s i n t e r e s t i n this Lease; (iii)fiiesa voluntary
petition in bankruptcy or a petition or an answer seeking reorganisation under any
bankruptcy or insolvency law or an arrangement with creditors, or takes advantage of any
insolvency l a w o r f i l e s a n answeradmitting the material allegations o f a petition filed
againstTenant in any bankruptcy, reorganisation or insolvency proceedings;
L
Theentry of acourtorder,judgmentor decree without theapplication or
consent of Tenant, approving a petition seeking reorganisation of Tenant under any
bankruptcy or insolvency law or appointlngareceiver,trustee or liquidator ofTenant or of
allorasubstantial part ofTenant's property or of the Premises or ofTenant's interest in
this Lease,or adjudicatingTenant as bankrupt or insolvent, and such order,judgment or
decree shall not be vacated, set aside or stayed within ninety (00) days from the date of
entry;
g.
The Guaranty guaranteeingTenant'sperformance of tbisLease attached
bereto or any other guaranty of this Lease at any time after its execution and delivery for
any reason ceases to he in full force and effect or is declared to be null and void, or the
validity or the enforceability thereof is contested by any party thereto, or any party thereto
denies liability or obligation thereunder; or,
b
Any guarantor of this Lease becomes subject to an "order for relief" within
themeaningoftheLinitedStatesBankruptcyGode,filesapetition in bankruptcy,or suffers
amaterial adverse change in its financial condition
24
Landlord's Remedies
Subject to Pranchisor's notice and assumption rights
provided berein,IfTenant defaults under this Lease as set forth in Section 23 and does not cure
thesamewithinfifteen(15) days unless otherv^iseprovided, Landlord shall have thefoliowing
rights and remedies in addition to all other remedies at law or equity:
a
if Pranchisor does not take or effect an assignment upon the termination of
tbis Lease in accordance with Section 10,this Lease shall terminate andTenant shall quit
and surrender to Landlord the Premises as set forth in Section 20. Tenant shall remain
liable to Landlord for all Base Pent accrued and unpaid and other sums due hereunder to
tbe date of termination of this Lease plus 2 5 ^ of the remainder of the Base Pent due for
the extent of theTerm Subject to Pranchisor's rights provided in Section 20(b),Landlord
may remove tbe effects of any and ail such persons (forcibly, if necessary) without being
deemed guilty of any manner of trespass and without prejudice to any remedies for arrears
of Base P e n t o r Operating Oost, or precedingbreachof covenants. If Landlord takes
Camp Sow Wow 2014 FOO
ExhibitSDFraochiso Agreement
0^7^40706
8^4
possession L a n d e d 5 ^
f e o f f o r sooh term o r t e r m s ^
as Landlord may deem advisable, provided tbat Landlord sball ose oommeroially
reasonable ettorts to mitigate Landlord's damages No soob re entry or repossession ot
tbe Premises sball relieveTenantot its liability and obligation onder tbis L e a s e , o n l e s s a
written release is given toTenant by Landlord Opon tbe oooorrenoeotsoob reentry or
repossession, Landlord sball be entitled to tbe amoont ottbe monthly Base Pent, and any
otber soms,wbiob woold bepayable hereonder it soobreentry or repossessionbadnot
oooorred, less the net proceeds, itany, otany reletting ottbe Premises atter dedooting the
tollowingexpenses in connection withsooh reletting, incloding bot withoot limitation, all
repossession costs, brokerage commissions, reasonable attorney's tees. Landlord's
expenses will not inclode any amoonts tor alteration costs. Tenant shall pay soch amoont
to Landlord on tbe days on which tbe Base Pent or any otber soms doe hereonder woold
bave been payable hereonder it possessionbad not been retaken Notwithstanding the
provisions otthis Section 24(a) or any other provision ottbis Lease to the contrary,
Landlord shall ose commercially reasonable ettorts to mitigate its damages.
b.
ItTenantdetaolts in making any payment reqolred to be made byTenant
(other tban payments ot Base Pent) or shall detaolt in performing any other obligations ot
Tenant onder thisLease(atterapplicablecoreperiod), Landlordmay, b o t s h a l l n o t b e
obligated to, make soch payment or on bebaltotTenant
All s o m s s o expended hy
Landlord witb interesttbereon atthe Oetaolt Pate sball be repaid byTenant to Landlord.
No soch payment or expenditore by Landlord shall be deemedawaiverotTenant'sdetaolt
nor shall it attect any other remedy ot Landlord by reason ot socb detaolt.
25
Landlord's Oetaolt it Landlord detaolts in the performance ot any ot its obligations,
covenants and warranties hereonder and socb defaolt continoesforaperiod of thirty (SO) days
atter written notice tbereof to Landlord fromTenant specifying the natore of socb defaolt, or soch
additional period as Landlord may reasonably reqoire to core tbe same, Tenant may, at its option,
core the same on behalf of Landlord, whereopon tbe reasonable cost of soch coring plos interest
tbereon at tbe Oefaolt Pate sball be immediately doe and payable toTenant from Landlord opon
written demand therefore byTenant. Pailore of Landlord to reimborseTenant shall entitleTenant
to dedoct tbe costs thereof from tbe next sobseqoent Base Pent and Operating Cost payments
doe hereonder Landlord's obligations hereondermayalsobeenforced byTenant by specific
performance or injonctive relief as applicable
28
Statement of Performance. Eacb party shall from time to time, execote and deliver
to tbe other,witbin twenty (20) days f o l l o w i n g a w r ^
that tbis Lease is in foil force and effect, and onmodified (or specifying any modifications), that the
reqoesting party is not in defaolt hereonder (or specifying any alleged defaolts by the reqoesting
party), and any forther information aboot this Lease or the Premises whicb the reqoesting party
may reasonably reqoest.
27
Oisoote Pesolotion. in the event any dlspote arises between Pranchisor and
Landlord and^orTenant,that is relatedin any manner to tbis Lease, its terms,or tbe parties'
dealings w i t h e a c b o t h e r onder t b i s L e a s e ( a " O i s p o t e " ) , socb O i s p o t e s b a l l b e exclosively
determined as follows.
(a)
Mediation A l l p a r t i e s i n v o l v e d i n a O i s p o t e shall sobmit theOispote to
mediation to be administered by tbe American Arbitration Association onder its mediation
roles tben in effect if the scope of the dispote is limited to Landlord and Prancbisor, tbe
mediation sball be condocted at tbe offices of tbe American Arbitration Association tbat are
Camp Sow Wow 2014 FOO
E ^ b i t S ^ F r a o o h ^ e Agreement
05^7^40706
closed to the^catton of t h e P r e m i s e s it the soope otthe dispote iooiodesparties in
addition to Lendiord aod Pranohisor (tor exampie, Tenant and^or its soooessor), the
mediation shaii he oondooted a t t h e o t t i o e s o t t h e American Arbitration Association in
Oenver, Coiorado Any party to this Lease may initiate mediationbywrittenrequest to aii
other parties. Each partythatreceivesawrittenrequesttormediation must respond,in
writing, within three (3) business days ot receipt otthe request and state unequivocal^
whether that party wiii participate in mediation Paiiure to respond constitutesawaiverot
the rightto mediate and permitsthe requesting party to proceed as set torth herein.
Absent rare, exceptionai circumstances, the mediation shaii be conducted and completed
witbin tortytive (45) days o t t h e written request tor mediation. Notwithstanding the
foregoing agreement to mediate, Pranchisor shaii have the right, at its election, to seek, in
arbitration (underSection 27(b) below) oracourt of competent jurisdiction,the issuan^^
injunctive and otherequitable relief to protectand enforce its rights underthis Lease
without waiting for completion of mediation and without waiving mediation.
(b)
Arbitration in the event the parties'Dispute is not fully and finally resolved
by mediation, such dispute sball be exclusively determined and resolved hy binding
arbitration administered by the American Arbitration Association under its commercial
arbitration rules then in effect Thearbitration shall beconducted hyasingle arbitrator, if
the scope of the dispute is limited to Landlord and Pranchisor, the arbitration hearing shall
be conducted at the offices of the American Arbitration Association that are closest to the
location ofthe Premises, ifthe scope oftbe dispute includes parties in addition to Landlord
and Pranchisor (for example, Tenant and^or its successor), the arbitration hearing shall be
conducted at the offices ofthe American Arbitration Association in Oenver, Oolorado The
parties'written discovery rights in arbitration shall be limited to requests for production of
documents (including electronicallystored information)
Theparties'depositionrightsin
arbitration shall be limited to (t) depositions of two representatives of each party not to
exceed4hours per deposition,and (2) depositions of experts, if any,limited to4hours per
deposition. Wbetberdepositionsof nonparties will beallowed will bedecided h y t h e
arbitrator in his or ber sole discretion. The arbitrator has the discretion to modify these
discovery rights uponashowing of good cause. The arbitration award may be confirmed
and enforced by the state and federal courts in the jurisdiction where the Premises is
located. The prevailing party in any arbitration or action in court to confirm or enforce an
arbitration award shall be entitled to recover,in addition to all other remedies or damages,
its reasonable attorney's fees, arbitration costs and court costs. Notwithstanding the
foregoing agreement to arbitrate, Pranchisor shall have the right, at its election, to seek, in
acourtofcompetentjurisdiction, the issuanceofinjunctiveand otherequitable relief to
protect and enforce its rights under tbis Lease without waiting for completion of mediation
and witbout waiving arbitration.
(c)
All parties acknowledge and expressly agree that, notwithstanding the
foregoing Dispute Pesolutionprovisions, Pranchisor has the right to pursue any claim to
enforce the terms and provisions of this Lease,includingarequest for injunctive relief, i n a
court of competent jurisdiction witbout violating or waiving its right to require mediation or
arbitration ofdisputes as set fortb herein.
2S.
Miscellaneous
a
Time. Time is ottbe essence under this Lease, if the time for performance
hereunder falls o n a S a t u r d a y , S u n d a y o r a d a y that is recognised asaholiday in the state
in which the Premises are located, then such time shall he deemed extended to tbe next
daythatisnotaSaturday,Sundayorbolidayin said state.
Camp SowWow 2014^00
ExhibitSDFraochise Agreement
U^37^0706
b
Waiver The faiiore of either party to seek r ^
upon the strict pertormanoeot, any covenant or oonditioo otthis Lease shaii not preveota
subsequent act, which wouid have originaiiyconstitutedavioiation,tromhaving aii the
t o r c e a n d e t t e c t o t a n originai violation. The receipt hyeitherparty o t a n y sums due
hereunderwith knowledge otthe hreach otany covenant otthis Lease shaii not he deemed
awaiverot such hreach. Except as set torth in this Lease,no provisions otthis Lease shall
he deemed to have heen waived hy either party hereto unless such waiver is in writing
signed hy such party and pre-approved in writing hy Franchisor.
c
Waiver o t T r i a i h y ^ l u r v
L A N O L O R O A N O T E N A N T , HEREBY WAl^BE
TRIAL B Y ^ O R Y I N A N Y A C T I O N OR FRGGEEOING BROUGHT BY ANY
THIS L E A S E W l T H R E S R E O T T O T H l S L E A S E , T H E P R E M I S E S O R A N Y OTHER
RELATEO MATTER NOT IN^BOL^INO PRANOHISOR
d
Attorneys'Pees In theeventeitherpartytilesan arbitration demand o r a
suit to enforce this Lease or any provisions containedherein,the prevailingparty in sucb
arbitration or suit will be entitled to recover, in addition to all other remedies or damages,
reasonable attorneys'fees and court costs incurred in such arbitration or suit
e.
Merger
Landlord, Tenant and their respective agents have made no
representations, warranties, agreements or promises with regard to the Premises except
as expressed herein The entire contract of the parties is contained herein, and there are
no promises, agreements, representations, warranties, conditions or understandings, either
oral or written, between them, otber than as are herein set forth. No agreement shall be
effective to modify this Lease, in whole or in part, unless such agreement is pre approved
inwriting by Pranchisor,set in writing,and signed hythe party against whom enforcement
is sought.
f.
Oounteroarts^Pacsimile. Aseparate copy of this Lease may be signedby
each party, separately, and when each party has executed at least one copy hereof, such
copies taken together will be deemed to be a full and complete, single document
agreement between tbe parties. Any signaturebereonmay be transmittedby facsimile
machine and such signature will be valid and accepted for all purposes hereof.
g.
Oovernino Law. This Lease will be governed by, and construed and
enforced pursuant to tbe laws of tbe State of Oolorado.
h
Severability. If any term, section or other provision of this Lease is, for any
reason, held to be invalid or unenforceable, the invalidity or unenforceability of such term,
section or provision will not affect any of the remaining provisions of this Lease.
i.
Successors and Assigns. The covenants, conditions and agreements
contained inthisLeasesball bind and inure to the benefit of Landlord andTenant and tbeir
respective heirs, executors, administrators and successors.
j
Notice
i.
Any notice, demand or communication concerning the.Lease by
Landlord, Tenant or Pranchisor shall be in writing and shall be deemed sufficiently
given or rendered ifdelivered(i) on the day ofdelivery if by personal delivery to the
receiving party or any of its officers; (ii) three days after heing sent by United States
certified or registered mail, return receipt requested, postage prepaid, addressed to
Camp Sow Wow 2014 FOO
ExhibitSDF^oh^Ag^m^t
U5^7^40706
8^7
the appropnate p a r t n e r (ii^one ( ^ h o s i n e s s day atter h a v i n g h e e n s e n t h y a
nattooallyrecogo^ed overnight courier. Addresses tor theTenant and Landlord
shall he as provided ahove, and in the case ot Franchisor to Attn. Rachel Welsh,
Gamp Bow Wow Franchising, Inc.,
W. 1t6th Circle, Suite 0, Broomtleid,
Colorado S002t
ii
Landlord a n d T e n a n t s h a l l promptly hut in no lessthan t h r e e s
days, provide Franchisor with written notice o t a l l eventsotdetaolt onder this
Lease.
k.
Brokers.
Each party represents and warrants that no brokers have
negotiated this Lease or are entitled to any commission in connection herewith.
I.
Captions The captions in this Lease are solely tor convenience and tor the
purpose ot referencing sections, in no way do the captions define, limit, describe or
construe the contents of such sections or theintent or scope of tbisLease or any part
thereof.
m.
Recording. This Lease shall not be recorded, but at Tenant's option and
expense,the parties shall execote and record,amemorandum of this Lease in the office
Clerk and Recorder for the coonty in which the Premises are located.
n
Rules and Reoolations. Landlord will not make any role or regoiation
affectingtheFremisesthatinterfereswithTenant's intended Use or rendersTenant onable
to condoct its hosiness in the ordinary coorse withoot modification to the Premises or its
boslness practices.
^ W I T N E S S W H E R E G F , L a n d l o r d andTenant have doly execoted this Lease as of the
day and year first above written.
LANDLORD:
TENANT:
By:
By:
Printed
Name:
Printed
Name:
Date:
Date:
FRANCHISOR:
For purposes of approval only:
CAMP BOWWOW FRANCHISING, INC.,
a Delaware corporation
By:
Name:
Date:
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-18
GUARANTY
The undersigned hereby guarantees the payment of Base Rent, all other payments and
performance of Tenant's obligations under that certain "Camp Bow Wow® Leaseback
Agreement" dated
, 20
by and between
, a
and
, a
. This is a continuing
and unlimited guaranty and shall remain in full force and effect throughout the Term of the
Lease and for so long as a tenancy relationship exists between the parties, should it be
extended beyond the initial Term by renewal, extension or hold over (even on a month-to-month
basis). If more than one guarantor signs below, then the guaranty herein is to be joint and
several between all guarantors.
GUARANTOR 1:
Printed Name:.
Date:
GUARANTOR 2:
Printed Name:.
Date:
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-19
EXHIBIT A
Premises
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-20
EXHIBIT B
Landlord's Work
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-21
O ^ O ^ ^ ^ ^ ^ M ^ ^
L a n d e d w^pertorm the
asaCemp:
1.
Postern
the deor that the l o c ^
Bow Wow with any questions at 720 259 2251orinte^oemphowwow^^
2.
Remove iogo^hours^oontaot intormation trom tront door
8.
Remove Camp Bow Wow iogo sign insert trom any monument signs, and
exterior signage and return to C B W corporate
4.
Remove and retain tor pick up hy Franchisor ANY item with the Camp Bow Wow,
Home Buddies or Behavior Buddies iogo or with any ot our trademarks on them including Scout,
signage, tioor mats, wood iogo disc, etc
5
Remove aii iog trim in the Camp (including log trim around tront door, desk, data
poles, all log trim on and around lohhy and throughout Camp (horderot dry erase hoards, log
shelves,gates,etc)
8
Remove
and
hold
tor
Franchisor
to
pick
up
the
tollowing
equipment^decor^supplies. it third party liens exist on the assets, provide Franchisor with
contact intormation tor lienholders it landlord holds liens, contact Franchisor to negotiate
purchase otassets pursuant totranchiseand
leaseagreements).ltemstoheremovedand
held tor pick up hy Franchisor include:
a
C B W specific equipment^supplies Lohhy art work, retail log shelving, log
cahinets, directional signage, emergency supply mailhoxes, dry erase hoards, hoarding
card holders on cahins, leash holders in lohhy;
h.
Log Fireplace, Furniture and Shelving in Lohhy;
c.
Log Oog Beds and Mats;
d.
Fuppy playground equipment;
e.
Outside play area shade sails and^or shade structures;
L
Kuranda Cots and Flush Mats;
g.
KongToystorOamptireTreats;
h
Cleaning Supplies and Dispensing System;
i.
Weh Camera Server and Sothvare;
^
Ooggy Lip System Server and Monitors;
k.
One Oog One Fools;
Camp 8ow Wow 2014^00
Exh^8^Frano^oAg^meot
^^7^0706
^
I.
Cabins (if Priefert in Franchisor's proprietary sage green color, or Gator).
7.
Repaint the entire lobby in a color approved by Franchisor and distinctively
different from Franchisor's Sage Green.
8.
Replace Van Gough flooring in lobby.
9.
Significantly alter the front desk layout to remove check in/check out areas, gates
and signs, and data poles so that it looks nothing like Franchisor's unique front desks.
10.
Significantly alter the back warehouse area layout in a manner approved by
Franchisor to remove the quadrant approach, any four way gates, dividers in play areas and
layout of kennels.
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-23
S B A ADDENDUM RELATING TO
C A M P BOW WOW® L E A S E B A C K AGREEMENT
THIS ADDENDUM (Addendum) is made and entered into on
_, 20
, by and
between
a
("Landlord"),
,a
("Tenant") and Camp Bow Wow Franchising, Inc.
("Franchisor").
RECITALS:
Landlord, Tenant
and Franchisor
entered defined
into a Leaseback
Agreement
on
20 , ("Leaseback
Agreement")
for the Premises
in the Leaseback
Agreement.
Tenant and,
Franchisor have entered into a Franchise Agreement for the same Premises. Tenant has obtained
from a lender a loan (Loan) in which funding is provided with the assistance of the United States
Small Business Administration (SBA). SBA requires the execution of this Addendum as a condition
for obtaining the SBA assisted financing.
NOW, THEREFORE, in consideration of the mutual promises below, and for good and
valuable considerations in hand paid by each of the parties to the others, the receipt and sufficiency
of which the parties acknowledge, the parties agree as follows:
1. The Franchise Agreement is in full force and effect, and Franchisor has sent no official notice
of default to Tenant under the Franchise Agreement that remains uncured on the date hereof.
2. Section 4 represents the amount that the Franchisor would pay directly to the lender if the
Franchisor assumed the lease - therefore, the amount of rent would be the loan payment or
the amount to keep the loan current whichever is greater.
3. Section 10.a of the Leaseback Agreement is modified to delete the reference to
including any extensions or renewals thereof," from the first sentence of Section 10.a and
"including the renewal term," from the second sentence of Section 10.a.
4. Notwithstanding Section 21.b of the Leaseback Agreement, the parties to this Addendum
acknowledge and agree that in the event the parties have executed this Addendum as part
of an SBA Loan, (i) Franchisor's Right of First Refusal does not apply to a partial transfer of
ownership in Franchisee, and (ii) Franchisor's right to purchase under the Option
Agreement is null and void.
5. This Addendum automatically terminates on the earliest to occur of the following: (i) a
termination occurs under the Franchise Agreement; (ii) the Loan is paid; or (iii) SBA no longer
has any interest in the Loan.
[Signatures
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
on Following Page]
B-24
IN WITNESS WHEREOF, the parties hereto have duly signed and executed this Addendum
as of the day and year first above written.
FRANCHISOR:
LANDLORD:
C A M P BOW WOW FRANCHISING, INC.
By:
Print Name:
By::
Print Name:
Title:
Title:
TENANT:
By:
Print Name:
Title:
[Signature Page to SBA Addendum Relating to Camp Bow Wow® Leaseback
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-25
Agreement]
ATTACHMENT I
TO C A M P FRANCHISE A G R E E M E N T
DATA DAWG
Subscription Services Agreement
This Subscription Services Agreement ("Agreement") is entered into as of the Effective Date
below by and between Camp Bow Wow Franchising, Inc., a Delaware corporation ("CBW"),
Data Dawg ("Data Dawg") and the entity listed below ("Subscriber").
Effective Date:
The date that Data Dawg executes this Agreement, provided below.
End Date:
Expiration without renewal or termination ofthe Franchise Agreement.
Subscriber Name:
Subscriber Address:
Subscriber Primary
Contact:
Name:
Phone:
Email:
Subscription Fee:
$150.00 per month.
Data Dawg provides computer database management service for data collection,
tracking and administration purposes that include, without limitation: point of sale; customer and
pet reservations and information; C R M ; vendor information; inventory management; invoicing;
marketing and promotions; customer donations; employee administration; financial and general
business reporting; data storage; as well as general business administration, accounting, and
reporting relating to the operation of a Camp Bow Wow® franchised business (the "Services")
through the web site located at https://www.cbwsoft.com (the "Site"). Subscriber is required to
enter into this Agreement in accordance with a franchise agreement between C B W and
Subscriber, through which Subscriber has been granted the right to operate a Camp Bow
Wow® franchised business (the "Franchise Agreement").
This Agreement consists of the following, all of which are incorporated in and made a
part of this Agreement: (1) this cover page; (2) the following Terms and Conditions; and (3) all
other Data Dawg documents referenced in the Terms and Conditions. Unless otherwise
amended as provided herein, this Agreement will exclusively govern all access by Subscriber to
and use of the Services and the Site. This Agreement is the complete and exclusive
understanding and agreement between the parties, and supersedes any oral or written
proposal, agreement or other communication between the parties and any other agreement
Subscriber may have with any third party, regarding access to and use of the Services or Site.
Except as provided in Section 10, this Agreement may be amended or modified at any time by
Data Dawg upon written notice to Subscriber. Any waiver or failure to enforce any provision of
this Agreement on one occasion will not be deemed a waiver of any other provision or of such
provision on any other occasion.
Camp Bow Wow-2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-26
This Agreement may be executed in one or more counterparts, duplicate originals, or
facsimile versions, each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
The parties have read and agree to be bound by this Agreement as of the Effective
Date.
FOR DATA DAWG:
Camp Bow Wow Franchising, Inc.,
a Delaware corporation
FOR SUBSCRIBER:
Name of Entity or Individual
Sianed:
Sianed:
Name:
Name:
Title:
Title:
Date:
Date:
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-27
Terms and C o o d ^ o n s
L
DEFINITIONS Terms osed in this Agreement wili have the detlnltions given in this
Agreement 04 if ^ot defined In this Agreement, will have their plain English meaning as
commonly Interpreted in the United States.
2.
TERM This Agreement is entered into as of the Effective Oate and will take effect opon
the date Sohscriher tirst logs into the Site throogh the Accoont (defined helow) and will continoe
ontil the End Oate, onless earlier terminated hy Oata Oawg as provided helow (the "Term").
SD
SUBSORIFTION Sohject to this Agreement and Oata Oawg's then corrent access and
ose policies for the Services,doring theTerm Oata Oawg will provide Sohscrlherwithallmited
right t o a c c e s s and osethe Services, solely In connection with Sohscrlher's operations of its
Oamp Bow Wow® franchised hosiness in accordance with the Franchise Agreement.
Sohscrlher's rights are personal, non exclosive, nonDtransferahle and non sohllcensahle By
a c c e s s i n g o r o s i n g a n y of the Services, Sohscriher agrees t o h e hoondhy the terms of this
Agreement. Sohscriher onderstands that Oata Oawg may from time to time opdate, change or
revise the Services or the Site, and that all soch opdates, changes and revisions will he deemed
part ofthe Services and Site for all porposes ofthis Agreement.
4.
AOOESS TO THE SERVICES The rights granted to Sohscriher onder this Agreement
entitle Sohscriher to access the Services throogh an on-line login accoont ("Accoont"). On or
hefore (i) thirty (30) days prior to Sohscrlher's Oamp Bow Wow® franchise store opening, or (ii)
the time that Sohscriher attends the initial training program for Oamp Bow Wow® franchisees,
Sohscriher will provide Oata Oawg with a written reqoest foraccess t o t h e Accoont.Within
three(3)daysofsoch reqoest, Oata Oawg will provide Sohscriher withaoser identification and
password for Sohscriher.Sohscrlher will have the ahillty to create an onlimltednomher of oser
identifications and passwords (collectively, an "Accoont 10") for access to the Site. Each
Accoont 10 Is personallnnatoreandmay he osed only hythe single designated employee or
service provlderof SohscriheBs to which it is assigned (each soch individoal is hereinafter
referred to a s a " U s e r " ) . Sohscriher will only provide Accoont IOs to Sohscriher'sUsers who
have a legitimate hosiness porpose need to accessthe Site (le employees, bookkeepers,
accoontants, or third party homan resoorceadminlstrators). Sohscriher will limiteach User's
accesstotheAccoontand Site in accordance with pre set levels of secority access established
by OataOawgsoch that each User will only beable access the specific areas of the Accoont
and Site that it most In order to perform servicesfor Sobscrlber.Sobscriber will be solely
responsible for determining the level of preset Site access for each User.Sobscriber is solely
responsible for all ose of the Services and Site by each User and for compliance hy each User
withthetermsofthisAgreementand Oata Oawg's then corrent access and ose policies for the
Services and the Site. Sohscriher will ensore the secority and confidentiality of each Accoont 10
and wlllimmediately terminate Accoont 10s opon (i)knowledgeofalost, stolen or otherwise
compromised oser identification or password; or (ii) the termination of employment of any of its
personnel,Independent contractors or vendors Sohscriher will notify Oata Oawgimmedlately if
Sohscriher believes that any Oonfidential Information (defined below) or Oata Oawglnformation
(defined below) has been accessed withoot aothori^ation or misappropriated by any party
Sohscriher acknowledges that it is folly responsible for all liabilities and damages incorred
throogh ose of each Accoont 10 (whether lawfol or onlawfol) and that any transactions
completed throogh any Accoont or onder any Accoont 10 will be deemed to have been lawfolly
completed by Sohscriher. In no event will Oata Oawg be liable for the foregoing obligations or
the failore by Sohscriher tofolfill soch obligations Sohscriher will be solely responsible, at
Sobscrlber's own expense, for acqoiring, Installing and maintaining all hardware, software and
Camp Sow Wow 20t4FOO
ExhibitSDFranohise Agreement
^5537^0706
8^
other e q ^ p m e o t ^ a t ^ o e o e s s a ^ ^
the Services a^d Site.
^
TrammgandSuppo^
8.1
Sohject to end in accordance with this Agreement, Oata Oawg wiii ose
commerciaiiyreasonahieettorts to provide Sohscriher with training and sopport r e ^
implementation, ose, and operation otthe Services and Site. Aii soch training and sopport wiii
he provided in accordance with Oata Oawg's then corrent policies. Oata Oawg will provide
training and sopport only to Sohscriher, or Sohscriher's designated employee (i.e. its Manager),
and will have no ohligation to provide sopport directly to (or respond to any sopport reqoests
relating to) any Oser, costomer ot Sohscriher or any other third party. Notwithstanding the
ahove,Oata Oawgmay contact any costomer ot Sohscriher or any other third party to tacilitate
the operation otthe Services, Site or the delivery ot sopport or other services relating to the
Services as may he deemed necessary hy Oata Oawg.
S.
O O N F i O E N T i A L ^ For porposes ot this Agreement, "Oenfidential Intormation"
means all proprietary knowledge, data, trade secrets, know how, marketing methodologies,
operations manoals, methods ot operations, design plans and retirements, copyrights,
trademarks, patents and patent applications, operational systems, intormation relating to OBVV
franchisees, costomers and vendors, methods ot franchise sales, hosiness information, Oata
Oawg Information (defined helow) and all other information disclosed or made available onder
thisAgreementthatrelatestotheTechnology (defined helow),the provision or receipt of the
Services,or that is d e s i g n a t e d h y O B W or Oata Oawg as confidential whether disclosed or
made available verhallyor in writing. For the avoidance of doobt,the Services, Technology,
and Oata Oawg Information are the Oonfidential Information of Oata Oawg. Sohscriher will
protect Oata Oawg's Oonfidential Information with the degree of care that it oses to protect its
own confidential information of like natore, bot in no case less than reasonable care. Sohscriher
will not at any time doring or after t h e T e r m : ( t ) disclose any Oonfidentiallnformation to any
third party; (2) permit any third party to examine and/or make copies of any reports, docoments
orelectronic datacontainingany Oonfidential lnformation;or(8) ose any of the Oonfidential
Information for any reason other than for the porposes set forth in this Agreement if Sohscriher
is reqolred to disclose Oata Oawg's Oonfidential Information porsoant to any statote, regoiation,
order, sobpoena or docoment discovery reqoest, it will fornish written notice of soch disclosore
to Oata Oawg as soon as practicable in order to affordOata Oawg the opportonity to s e e k a
protective order and Sohscriher will reasonably cooperate in soch efforts
T.
OWNERSHIF
^t
For porposes of this Agreement,"IFR"means any and all intellectoalproperty
rights, proprietary rights, rights of poblicity, rights of privacy, and any and all other legal ^^^^
protecting data, information or intangible property throoghoot the world, incloding, withoot
limitation, copyrights, trademarks, service marks, trade secrets, patent rights, moral h^^
sol generis rights in databases, and contract rights
^.2
Oata Oawg retains all right, title and interest, incloding, withoot limitation, all
in and to the Site, Services, Technology, Oata Oawg Information, and any additions,
improvements, opdates, and modifications thereto. Sohscriher acknowledges that Sohscriher is
not receivingany ownership interest i n o r to any of the foregoing, a n d n o right or license is
granted toSobscriber to ose soch IFRapartfrom Sobscriber'sright to access theServices
onder this Agreement. The Oata Oawg name, logo and the prodoct and service names
Camp SowWow ^014 FOO
E^bitSDFranchi5eA^ement
055375^0706
a s s o o ^ e d w ^ the S e r v e s are tt^^
right e r ^ e n s e i s granted to Sohschher to ose them.
8
OATAANO^FORMA^ON
8Bt
Data Dawg intormation Aii data, intormation and other content provided hy
Sohscriher throoghthe o s e o t t h e Sitethrooghthe Servicesremains owned hy Data Dawg
("Data Dawg informations Sohscriher wiii ose commerciaiiyreasonahiemeasores to ensore
that the Data Dawg intormation is reiiahie. Sohject to this Agreement, Sohscriher may access,
store, display and print the Data Dawg intormation (withoot moditication) soieiy tor the porpose
ot operating its Camp Bow Wow® tranchised hosiness as provided in the Franchise Agreement
Except as expressly provided in this Agreement, Sohscriher will not, and will not permitany
Oser to: (i)alter,modity,reprodoce, create derivative works otthe Data Dawglntormation;(^
distrihote,sell, resell, lend, lease, license, sohlicense or transfer t h e D a t a D a w g Intormation,
incioding, withoot limitation, providing ootsoorcing, service horeao, commercial hosting,
applicationservice provider or online services to thirdparties;or (iii) aiter,ohscore or remove
any copyright,trademark or any other notices that are provided on or in connection with the
Data Dawg Intormation.
S^
Sohscriher intormation Sohscriher will he solely responsihle tor all data,
intormation and other content entered hy it throogh the Services into the Site, incloding, withoot
limitation, alipersonailyidentitiahleintormation relating to Sohscriher,Osers, and Data Dawg
Intormation ("Sohscriher intormation"). Sohscriher grants to Data Dawg all right, title and
interest in and to the Sohscriher intormation. Data Dawg herehy grants Sohscriher a nonD
exclosive right and iicenseto osethe Data Dawg Intormation and theSohscriherlntormation
doring the term o t t h e Franchise Agreement in connection with the marketing, sales and
operation otSohscriher's Camp Bow Wow® franchised hosiness. Sohscriher represents and
warrants that to t h e h e s t o f its knowledge, none of the Sohscriher Information: (a) infringes,
misappropriates or violates any IFF, right of privacy or right of pohlicity of any third party, or is
defamatory, harmfol to minors, ohscene or pornographic; (h) contains any viroses or
programmingrootines intended to damage, sorreptitioosly intercept or expropriate any system,
dataorpersonalinformation; or (c) isfalse, misleading or inaccorate Data Dawg will not he
responsihle or liahie for any deletion, correction, destroction, damage, loss or failore to store or
h a c k o p a n y Sohscriher Information Data Dawg may take remediaiaction if any Sohscriher
Information violates this Section
provided that Data Dawg is onder no ohligation to review
any Sohscriher Information for accoracy or potential liahility Sohscriher represents and
warrants t o D a t a D a w g that Sohscriher has ailnecessaryright,title, interest andconsent to
enter the Sohscriher Information into the Site and to transfer soch interest to Data Dawg for any
porposes whatsoever incloding, withoot limitation, the delivery of emails and other
commonications to costomers of Sohscriher Sohscriher will defend, indemnify and hold
harmless Data Dawg from any and all losses, costs, damages, liahilities or expenses (incloding
withootiimitationreasonahieattorney'sfees) incorred orarisingfromanyclaimhyathird party
arising ootof or relating t o t h e Sohscriher Informationor t h e o s e thereof hy Data Dawg in
providing the Services.
9.
RESTRiCTiONS Sohscriher acknowledges thatthe Services,Site and databases,
software, hardwareandothertechnology osedhy o r o n hehait of Data Dawg toprovide the
Services and operate the Site (the "Technology") and their stroctore, organisation, and
onderlying data, intormation and soorce code constitote vaioahle trade secrets and Confidential
Information of Data Dawg. Sohscriher will not, and will not permit any Oser or third party to: (1)
access or ose the Services or Site, in whole or in part,except as expressly provided in this
Camp Sow Wow ^014 FOO
ExhibitS^Fraooh^ Agreement
0^75540706
830
Agreeme^^a^mod^rep^
^d^bo^se^rese^^
access or ose the S e r v i c e s , c o d i n g , w ^ o u t ^ t a t t o ^ p ^
hosting, eppiicaticn service provider or co iioe services to
Services, oraccessthereto, avaiiahietoany third party; (4) reverseengineer, disassemhie,
decornpiie, or otherwise attempt to derive the soorce code or method ot operation o t o r any
trade secrets embodied in the Services or theTechnoiogy (except to the extent the restriction ot
any ot the toregoing is prohibited hyappiicahieiaw); (8) attempt to circomvent or overcome any
technoiogicai protection measores intended to restrict access to any portion ot the Site,
Services orTechnoiogy; or (8) interfere in any mannerwith the operation or hosting otthe Site,
Services orTechnoiogy, or attempt to gain onaothori^edaccess to the Site or the Services.
Sohscriher wiii not aiiow any access to or ose otthe Services by anyone other than Sobscriber's
aothori^ed Users, and any soch ose wiii be consistent with the terms, conditions and restrictions
set torth in this Agreement.
10.
F E E S A N O P A Y M E N T . S o b s c r i b e r agrees to pay Oata Oawg the sobscription tees set
torth on the initiai page otthis Agreement ("Fees"). Sohscriher grants Oata Oawg the right to
directiy withdraw aii payments ot tees doe to Oata Oawg onder this Agreement throogh
electronic tonds transfer trom Sobscriber's bank accoont as tortber aothori^ed in the Franchise
Agreement,or exhibit thereto. Fees wiii be withdrawn in halves,twice monthly or soch other
periodasreqoired by Oata Oawg Except asspecified herein, a l l F e e s w i l l h e d e e m e d f o l l y
earnedand non refondable once paid to Oata Oawg Until paid in foil, all past doe amoonts will
bear an additionalchargeofthe lesser of o n e a n d o n e ^ h a l f p e r c e n t ( 1 ^ ^ ) permonthorthe
maximom amoont permitted onder applicable law Oata Oawg may change the Fees doe onder
this Agreement annoally, effective ^anoary 1st of each year or at any time Oata Oawg provides
new services or fonctionality throogh the Accoont or Site, by posting the changes to the Site or
otherwise notifying Sohscriher throogh the Services or e-mail commonication. All Fee changes
will take effect on the first day of the month immediately following the month in which notice of
the fee change was sent by Oata Oawg to Sohscriher if Oata Oawg reqoires ose of collection
agencies, attorneys or coorts of law for collection on any Sohscriher Accoont, Sohscriher will be
responsihlefor those expenses. Sohscriher will be responsibleforall ose, sales, andother
taxes imposed on the Services provided onderthis Agreement.
11
TERMINATION ANO SUSPENSION This Agreement will immediately terminate
withoot notice to Sohscriher opon the termination or expiration withoot renewal of the Franchise
Agreement. This Agreement may beterminated by Oata Oawg (1) opon notice toSobscriber
fromOata Oawg following any breachby Sohscriher of this Agreement;or(2)in accordance
with Section 14below. Withoot limiting OataOawg's right toterminate this Agreement, Oata
Oawgmay immediately and sospend access to the Site or Services,with or withoot notice to
Sohscriher, opon any actoal, threatened or sospected breach of this Agreement, the Franchise
Agreement or applicable law Upon termination orexplration of this Agreement for any reason:
(a) all rights andsobscriptions granted to Sohscriher onder this Agreement will terminate;(b)
Sohscriher will immediately cease all ose of and access to the Site and Services;(c) all Fees
then owed will become immediately doe and payable; and (d) Sohscriher will immediately retorn
to Oata Oawg,the Oata Oawglnformation,Accoont lOs,Oonfidential Information,Oata Oawg's
IFR and all other informationrelated to this Agreement in Sobscriber's possession or control.
Sections 8, ^ , 0 , 1 0 , 11, 13, 14, 15, 18 and 1^ will sorvive any expiration or termination of this
Agreement.
Camp 8ow Wow 2014 FOO
E x h ^ t 2 3 D F r a n o h ^ e Agreement
US5^40706
8^
12.
LIMITEO WARRANTY. Oata Oawg represeotsaod w a r r a n t o Subscnberthat Oata
Oawg w^l use commeroia^ reasonable
^
to tbe Services and Site.
1^
OlSOLAiMER NOTWITHSTANOINO THE EOREOOINO, SOBSORIBER REMAINS
S O L E L Y A N O E N T I R E L Y R E S P O N S I B L E E O R S O B S O R I O E R ' S O O M R L I A N O E WITH, ANO
WILL O E E E N O , l N O E M N l E Y A N O H O L O HARMLESS OATA O A W O E R O M ANO AOAINST
ANY OL^IMS ARISING E R O M A N Y A O T O A L OR ALLEOEO VIOLATION 8 Y S 0 B S 0 R 1 8 E R
OR ANY OSER OE, ALL LAWS, REGULATIONS ANO OROINANGES REGAROING
SOOSGRIBER'S COSINESS ANO OSE OE ANO AGGESS TO THE SERVIOES BY
S0BS0R18ER O R A N Y OSER E ^ G E R T A S E ^ R R E S S L Y S E T E O R T H IN SECTION 12, THE
S I T E S A N O S E R V I G E S ^ A N O A L L O A T A O A W G INFORMATION RROVIOEO THROOGH THE
SITE ANO SERVICES) A R E RROVIOEO TO SOBSGRIBERSTRIGTLY "AS 1 S " A N 0 "AS
A V A 1 L A 8 L E " A N 0 OATA OAWG ANO ITS R R O V I O E R S E ^ R R E S S L Y O I S G L A I M A N Y A N O
ALL WARRANTIES A N O R E R R E S E N T A T I O N S O E A N Y ^ I N O WITH R E G A R O T O A N Y
S O ^ E G T MATTER OE THIS A G R E E M E N T , WHETHER EXPRESS, 1MRL1EO OR
STATOTORY,1NGL001NG, WITHOOT LIMITATION,ANY WARRANTIES O E E 1 T N E S S E O R A
RART100LARRORROSE,MERGHANTA81L1TY, TITLE OR NON INFRINGEMENT NO ORAL
OR WRITTENINFORMATION OR AOV1GE GIVEN 8Y OATA 0 A W G , 1 T S EMPLOYEES,
0 1 S T R ^ O T O R S , O E A L E R S , OR A G E N T S WILL 1NGREASE THE SOOFE OF, OR CREATE
ANY NEWWARRANT1ES IN A 0 0 1 T l O N T 0 , T H E WARRANTIES EXPRESSLY SET FORTH
IN SECTION 12 S O B S O R 1 0 E R A C ^ N O W L E O G E S T H A T 1 T HAS NOT ENTEREO INTO THIS
A G R E E M E N T IN RELIANOE OPON ANY W A R R A N T Y O R R E P R E S E N T A T I O N EXCEPT
T H O S E E ^ P R E S S L Y S E T F O R T H IN SECTION 12
14.
INOEMNITY. Oata Oawg will, at Its expense, detend Subscriber against any claims
brougbtagalnstSubscrlberbyatblrdpartytbatclalmstbe
use by Subscriber ottbe Services
onder tbis Agreement infringes any copyright, trade secret or trademark hgbt in addition, Oata
Oawg will pay any damages tbatacourt finally awards against Subscriber Inalltlgatlon based
on any sucb claim. Tbe foregoing obligation of Oata Oawg under tbis Section 14 Is conditioned
uponSubscrlberprovldlngOata Oawg wltb:(1)notlce of any sucb claim wltbln 10 days after
Subscriber receives written notice tbereof;(2) sole control over tbe defense and settlement of
sucb claim; and (3) reasonable assistance (at Oata Oawg's expense) In tbe defense and
settlement of sucb claim. If Subscriber is, or OataOawg reasonably believes Subscriber may
be, enjoined fromuslng tbe Services, OataOawg, at Oata Oawg's option and expense, may
procure tbe rlgbt for Subscriber to continue using tbe Services, replace or modify tbe Services
so tbat tbey become noninfringing, or provide Subscrlbera refund o t a l l pre-paid amounts
applicable to sucb Services (If any) and terminate tbis Agreement witb respect to sucb Services.
Notwithstanding tbe foregoing, tbis Sectlon14 will not extend to any claim arising out of or In
connection wltb any: (I) portion of the Services or any otber service or product of any tblrd party
not provided by Oata Oawg as part of tbe Site and Services; (ll) Subscriber Information; or (111)
u s e o f t b e S l t e o r S e r v l c e s o t b e r t h a n as permitted bytbls Agreement.THlS SECTION 14
STATES O A T A O A W G ' S ENTIRE LIABILITY FOR INFRINGEMENT OR MISAPPROPRIATION
GLAIMS RELATING TO T H I S A G R E E M E N T ANO THE SITEANO SERVICES
1^
LIMITATION ON LIABILITY IN NO E V E N T W I L L O A T A O A W G BE LIABLE FOR ANY
INOIRECT, INCIOENTAL, SPECIAL, EXEMPLARY OR CONSEOOENTIAL OAMAGES,
HOWEVER GAOSEO,ONOER ANY T H E O R Y O F L l A B l L l T Y , W H E T H E R IN GONTRACT,
STRIGT LIABILITY OR TORT (INGLOOING NEGLIGENCE OR OTHERWISE), ARISING IN
ANY WAY IN OONNECTION WITH OR OOT OF THE OSE OF THE SITE, SERVICES (OR
ANY O A T A O A W G INFORMATION P R O V I O E O T H R O O G H T H E S I T E O R SERVICES), EVEN
CampSowWow 20t4FOO
E x h ^ t B ^ F ^ n ^ e Agreement
0^75540706
IF DATA DAWG HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES,
INCLUDING, WITHOUT LIMITATION, ANY LOSS OF DATA, OPPORTUNITY, REVENUES OR
PROFITS, BUSINESS INTERRUPTION, OR PROCUREMENT OF SUBSTITUTE GOODS OR
SERVICES. DATA DAWG'S TOTAL CUMULATIVE LIABILITY IN CONNECTION WITH THIS
A G R E E M E N T AND ALL SERVICES PROVIDED UNDER THIS AGREEMENT, WHETHER IN
CONTRACT OR TORT OR OTHERWISE, WILL NOT EXCEED THE FEES PAID TO DATA
DAWG HEREUNDER IN THE 3 MONTHS PRECEDING ANY SUCH INITIAL O C C U R R E N C E
OF LIABILITY (OR, IF NO SUCH F E E S HAVE BEEN PAID, $100). SUBSCRIBER A G R E E S
THAT THE FEES REFLECT THE ALLOCATION OF RISK SET FORTH IN THIS AGREEMENT
AND A C K N O W L E D G E S THAT DATA DAWG WOULD NOT ENTER INTO THIS AGREEMENT
WITHOUT THESE LIMITATIONS ON ITS LIABILITY. IN JURISDICTIONS WHERE
LIMITATION OF LIABILITY FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES IS NOT
PERMITTED, DATA DAWG'S LIABILITY IS LIMITED TO THE MAXIMUM EXTENT
PERMITTED BY LAW.
16.
DATA PRIVACY. Subscriber expressly consents to the use and disclosure of personally
identifiable and other data and information as described in Data Dawg's then-current privacy
policy. Notwithstanding anything in the privacy policy, Data Dawg will own and have the right to
collect, extract, compile, synthesize, and analyze any personally identifiable data or information
resulting from the use and operation of the Services under this Agreement. Data Dawg may
use all such information and data for any lawful business purpose without a duty of accounting
to Subscriber.
17.
G E N E R A L . This Agreement will be governed by the laws of the State of Colorado,
without regard to or application of conflicts of law rules or principles. The parties explicitly
disclaim the application of the United Nations Convention on the Sale of Goods. Any action or
lawsuit related to this Agreement must be brought exclusively in either the Federal or State
Courts for the City and County of Broomfield, Colorado (or the courts having jurisdiction over
those courts), and each party hereby irrevocably submits and waives any objection to the
exclusive jurisdiction and forum of such courts. If any provision of this Agreement is held to be
unenforceable, that provision will be removed to the extent necessary to comply with the law,
and will be replaced by a provision that most closely approximates the intent and economic
effect of the original to the extent consistent with the law, and the remaining provisions will
remain in full force. The prevailing party in any lawsuit or proceeding arising from or related to
this Agreement will be entitled to receive its costs, expert witness fees and reasonable
attorneys' fees, including costs and fees on appeal. Neither this Agreement nor any rights or
obligations of Subscriber hereunder may be assigned by Subscriber (in whole or in part and
including by sale, merger or operation of law) without the prior written approval of Data Dawg.
Any assignment in violation of the foregoing will be null and void. Data Dawg may assign this
Agreement to any party that assumes Data Dawg's obligations hereunder. The parties hereto
are independent parties, not agents, employees or employers of the other or joint venturers, and
neither acquires hereunder any right or ability to bind or enter into any obligation on behalf of
the other.
[End of Data Dawg Subscription
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-33
Services
Agreement]
ATTACHMENT J
TO C A M P FRANCHISE A G R E E M E N T
STATE SPECIFIC ADDENDA
TO C A M P FRANCHISE A G R E E M E N T AND
S M A L L BUSINESS ADMINISTRATION ADDENDUM
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B-34
AOOENOOMTO
CAMP BOWWOW
PRANOHISEAOREEMENTPORTHE
STATE OP O A ^ P O R N I A
This Addendum pertainsto frenchisessoid in the Stete otOaiiternie end is tor the
purposeotoompiying with Oaiitornia statutesand reguietiens Notwithstanding anything that
may he oontainedin the hody otthe Agreement to the contrary,the Pranohise Agreement is
amended as toiiows:
t
The Franchise Agreementoontainsaoovenant not to compete whiohextends
heyond the term otthe franchise. This provision may not he entorceahie under Oaiitornia iaw
2.
The Franchise Agreement provides tor termination upon hankruptcy. This
provision may not he entorceahie under tederai bankruptcy iaw (t1 O.S.OA SectionlOt and
toiiowing)
S
The Franchise Agreement requires appiication ot the iaws ot the State ot
Ooiorado. This may not he entorceahie in the State otOaiitornia.
4.
The Franchise Agreement requires you to signagenerai release otciaims it you
renewortransteryourtranchiseOaiitornia Corporations Oode Section 81512 voidsawaiverot
your rights under the Franchiseinvestment Law (Caiitornia Corporations Oode Sections 8100
through 81818). Business and Professions Code Section 20010 voidsawaiver otyour rights
under the Franchise Peiations A c t ( B u s i n e s s a n d Professions Code Sections 20000 through
20048)
8. in aii other respects, the Franchise Agreement wiii he construed and enforced
according to its terms
Each of the undersigned herehy acknowledges having read and understood this
Addendum and consents to he hound hy all of its terms
Franchisee Initials
Camp Bow Wow 2014^00
ExhibitB^Fraochise Agreement
^537^0706
Franchisor Initials
B ^
AOOENOUMTO
CAMP BOWWOW
PRANOH^EAOPEEMENTPOPTHE
STATE OP ^ N O I S
This Addendum pertains to ^ a o c h i s e s s o ^ ^ t b e State of i l l ^
ot oompiying with iiiinois statutes and regulations Notwithstanding anything that may he
contained in the hody otthe Franchise Agreement to the contrary, the Pranohise Agreement is
amended as toiiows:
1.
Section^otthe Franchise Agreement is amended hy adding the toiiowing;
2.2
^ m o i s Law Your riohts upon nonrenewal may heattected hy Illinois
law, S ^ l L O S 7 0 5 ^ a n d 705/20
2
Section 18 otthe Franchise Agreement is amended hy adding the tollowing:
^moisLaw
The conditions under which your franchise can he
terminated may he affected hy Illinois law, S15lLOS705t/10and rule20080S
8.
is added:
Section 20.1of the Franchise Agreement is deleted in its entirety, and in its place
20.1 This Agreement shall he interpreted under the laws of the State of Illinois
excepttotheextentgoverned hythe United StatesTrademark Act of1048(Lanham Act,
1 8 0 S O . S e c t i o n 1 0 5 1 e^se^.). Litigation governed hythe Illinois Franchise Oisciosure
Act will take place in the State of Illinois. Any provision in the Franchise Agreement that
designates jurisdiction, limitationon actions, or v e n u e i n a f o r u m outside the State of
Illinois is amended to state that Illinois iaw governs the franchise relationship
The governing law clause contained in the Franchise Agreement may not he enforceahle
under Illinois law This governing iaw clause shall not he construed to negate the application of
the Illinois Franchise Oisciosure Act in all situations to which it is applicahie.
^OONTlNLiFSONNFXTPAOF^
Camp Sow Wow 2014^00
ExhibitS^F^o^eAgreeme^
^^7^0706
836
4.
The first sentence of Article 20.6 of the Franchise Agreement is amended to add
to the first sentence as follows:
...and there are no other
understandings between the parties.
agreements,
promises,
representations
or
5.
In all other respects, the Franchise Agreement will be construed and enforced
according to its terms.
Each of the undersigned hereby acknowledges having read and understood this
Addendum and consents to be bound by all of its terms.
Franchisee Initials
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
Franchisor Initials
B-37
AOOENOUMTO
CAMP BOWWOW
PRANOHISEAOREEMENT
POR THE
STATE OP INOIANA
This Addendum applies to Indian
ot Indiana and is tor the purpose ot oomplying with Indiana statutes and regulations.
Notwithstanding anything that may he contained in the hodyot the Pranohise Agreement to the
contrary, the Pranchlse Agreement is amended as tollows:
1.
The parties expressly agree that to the extent any provision in the
Pranchlse Agreement that contlicts with the Indiana Deceptive Practices Act (the "Indiana A ^
the parties herehy amend the Franchise Agreementto the extent necessary to cause the
Franchise Agreement to contorm to the Act
2
The parties expressly agree that (i) no general release given hy
Franchisee under any the Franchise Agreement shall operate to release, assign, waive or
extinguish any liahility arising under the Indiana Act; (II) no provision in the Franchise
Agreement shall limit Franchisee's right to sue in court tor violations otthe Indiana Act; (III) no
provision In the Franchise Agreement which is intended to prevent Franchisee trom relying on
any statement or representation made hetore Franchisee signs the Franchise Agreement shall
he applied or extend to statements contained in the Disclosure Document delivered to
FranchiseehetoreFranchisee'sexecutlonotthe Franchise Agreement;and(iv)no provision
which is t o u n d t o h e a l l q u l d a t e d d a m a g e s provision under Indiana law shall he entorceahle
against Franchisee.
8.
Notwithstanding anything to the contrary contained in the Franchise
Agreement, Franchisee shall have no duty to indemnity Franchisor tor any liahility that
Franchisor may s u s t a i n a s a resultot Franchisee's proper reliance o n o r use o t a n y o t the
procedures or materials turnishedhy Company or tor liahility solely attrihutahle to Franchisor's
negligence.
In all other respects, the Franchise Agreement will he construed and enforced according
to its terms.
Each ot the undersigned herehy acknowledges having read and understood this
Addendum and consents to he hound hy allot its terms..
Franchisee Initials
Camp Bow Wow 2014FOO
E x h ^ i t B D F r a n o h ^ Agreement
^537^0706
Franchisor Initials
B-^
AOOENOOMTO
CAMP BOWWOW
PRANOHISEAOREEMENT
POR THE
STATE O P M A R Y L A N O
This A d d e n d u m a p p ^ s t o Maryiaod residents and to franchises t o h e i o c a t e d inthe
State ot Maryland e n d i s tor the purpose otoompiying with Maryland statutes andregoiations
Notwithstanding anything that may he contained in the hody otthe Franchise Agreement to the
contrary, the Franchise Agreement is amended as follows:
1
Any provision in the Franchise Agreement, including Sections 2,14 and 15, or in
the StatementofFranchisee,thatconstitutesageneraireleaseofclaims is amended to provide
that, pursuantto O O M A P 0 2 0 2 0 S 1 8 i , t h e g e n e r a l release required asacondition of renewal,
sale,and/orassignment/transfershailnotapplytoany liahility under theMarylandFranchise
Registration and Oisciosure Law
2.
The Franchise Agreement isamended to providethat Franchisee may hring a
lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Oisciosure
Law.
S.
TheFranchise Agreement is amended toprovide that any claims arising under
theMaryland Franchise Registration and Oisciosure Law must he brought within t h r e e ^ y e a r s
afterthe date ofthe Franchise Agreement.
4
Section 21 of the Franchise Agreement is amended to provide that these
representations are not intended to nor shall they act a s a r e l e a s e , estoppel or waiver of any
liahility under the Maryland Franchise Registration and Oisciosure Law.
5.
The Franchise Agreement provides for termination upon bankruptcy. This
provisionmaynotbeenforceableunderFederalbankruptcyLaw(110.SOASec 1 0 1 , e ^ e ^
8.
The Statement of Franchisee is amended to provide that ail representations
requiring prospectivefranchisees to assent toarelease,estoppel or waiver of liability arenot
intended to nor shall they act asarelease,estoppel or waiver of any liability incurred under the
Maryland Franchise Registration and Oisciosure Law.
7.
in all other respects,theFranchise Agreement willhe construed and enforced
according to its terms.
Fach of the undersigned hereby acknowledges having read and understood this
Addendum and consents to be bound by all of its terms.
Franchisee Initials
Camp Sow Wow 2014^00
ExhibitSDFranohise Agreement
US^7^0706
Franchisor Initials
83^
AOOENOOMTO
CAMP BOWWOW
PRANOHISEAOREEMENTPORTHE
STATE OP MINNESOTA
This Addendum pertainstefrenchisessoid inthe S t r e e t Minnesotaand i s t o r t h e
purpose ot compiling with Minnesota statutes andreguiations. Notwithstanding anything that
may he contained in the hody ot the Franchise Agreement to the contrary, the Franchise
Agreement is amended as toiiows:
1
Franchisor wiii undertake the defense ot any ciaimot infringement hy third parties
invoicing the OAMP BOW W O W Mark and Franchisee wiii cooperate with the defense in any
reasonahiemanner prescribed hy Franchisor with any directcostof such cooperation t o h e
home hy Franchisor
2.
Minnesota iaw provides franchisees with certain termination and nonrenewal
rights As of the date of this Franchise Agreement, M i n n . S t a t . S e c . S 0 O B i 4 , S u h d S , 4 a n d 5
require, except in certain specified cases, that a franchisee he given 90 days' notice of
termination (with 80 days to cure) and tSO days' notice for nonrenewal ofthe Franchise
Agreement.
8.
Nothing in the Franchise Agreement can abrogate or reduce any of Franchisee's
rights as provided for in Minnesota Statutes, Chapter 80C, or Franchisee's rights to any
procedure, forum, or remedies provided for hythe lawsof thejurisdiction. inaddition, Minn
Stat. ^ 8 0 C . 2 t and Minn. rule2880.4400J prohibit Franchisor from requiring litigation to be
conducted outside Minnesota
4.
Minnesota Puie28804400OprohibitsFranchisorsfrom requiring franchisees to
assent to ageneral release. The Franchise Agreement ismodifiedaccordingiy,totheextent
required by Minnesota law.
8.
IftheFranchiseAgreementrequiresthatPranchisee must consent to Franchisor
obtaining injunctive relief, the Franchise Agreement shall be amended to provide that,
pursuant to Minn. Pule 28804400J, Franchisee cannot give such consent; provided,
however, nothing shall prevent Franchisor fromapplyingtoaforum for injunctive relief
8.
If theFranchise Agreement contains a limitations period for bringing claims
against Franchisor which is shorter than thelimitationsperiod providedundertheMinnesota
Act, the Franchise Agreement shall be modified to conform to the Minnesota Act
7.
In all other respects, the Franchise Agreement will beconstrued andenforced
according to its terms.
Each of the undersigned hereby acknowledges having read and understood this
Addendum and consents to be hound by all of its terms.
Franchisee initials
Camp Sow Wow 2014^00
Exh^BDFrano^eAg^me^
0^7^40706
Franchisor initials
8^0
AOOENOUMTO
CAMP BOWWOW
PRANOHISEAOREEMENTPOPTHE
STATE OP NORTH O A ^ O T A
This Addendum pertains to ^anohises sold in the State of Nort^
purpose otoompiying with North Oakota statutes and regulations Notwithstanding anything
that may he contained In the hody ot the Pranohlse Agreement to the contrary, the Pranohlse
Agreement Is amended as tollows:
t.
The Sections ot the Franchise Agreement requiring that you sign a general
release,asaconditlonot renewal and or assignment, may not he entorceahle as they relate to
releases otthe North Oakota Franchise Investment Law.
2
TheFranchise Agreement and Nondisclosure and Non^Oompetition Agreement
contalnacovenant not to compete which may not he entorceahle under North Oakota law.
S.
T h e s e c t l o n o t t h e Franchise Agreement requiring resolutlonot disputes t o h e
outside North Oakota may not he entorceahle under Section 51 1909 otthe North Oakota
Franchise Investment Law, and are amended accordingly to the extent required hy law.
4
The sections otthe Franchise Agreement relating to choice otlaw,may not he
entorceahleunderSection51^19^9ottheNorthOakotaFranchlse Investment Law, and are
amended accordingly to the extent required hy law.
5.
The section otthe Franchise Agreement requiring tranchiseestoconsentto a
waiver ot trial hyjury, may not he entorceahle under Section 51^19^09 ottheNorth Oakota
Franchise Investment Law, and are amended accordingly to the extent required hy law
S.
Section 1 S 7 o t the Franchise Agreement that requires Franchisee to consent to
awalverot exemplary and punitive damages shall not he entorceahle in North Oakota
7
The sections ot theFranchise Agreement requiring Franchisee to agree to the
mediation or arhitrationot disputes atalocation that is remote trom the site ot Franchisee's
huslnessarenotentorceahle The parties shall mutually agree uponasite in North Oakota tor
any mediation required hythe Franchise Agreement.
Except asamended herein, the Franchise Agreement will heconstrued and enforced
pursuant to its terms.
Each of the undersigned herehy acknowledges having read and understood this
Addendum and consents to he hound hy all of Its terms.
Franchisee Initials
CampSowWow 2014^00
E x h i b i t S ^ F ^ n c h i s e Agreement
US537^0706
Franchisor Initials
8^
AOOENOOMTO
FRANCH^EAGREEMENTFORTHE
STATE OF RHOOEISLANO
This Addeodom pertains to
^
purpose otoomplying with Rhode isiandstetutesendregoiations Notwithstendinganyt^
that may he contained in the hody otthe Franchise Agreement to the contrary, the F r a ^
Agreement is amended as toiiows:
t
Thesections otthe Franchise Agreement restricting jorisdictionor venoe t o a
torom ootside the state ot Rhode isiand or requiring the appiication otthe iaws ot another s^^^^
is void with respect t o a c i a i m otherwise entorceahie under Section t 9 2 S B i 1 4 otthe Rhode
isiand Franchise investmentAct This provision shaii not change the parties'agreement as to
the location ot mediation asreqoired hythe Franchise Agreement
2.
Except as amended herein, the Franchise Agreement wiii he constroed and
enforced porsoant to its terms.
Each ot the ondersigned herehy acknowledges having read and onderstood this
Addendom and consents to he hoondhy allot Its terms.
Franchisee Initials
Camp Sow Wow 2014 FOO
ExhibitS^Franohise Agreement
^537^40706
Franchisor Initials
^
8^
AOOENOOMTO
CAMP BOWWOW
PRANOHISEAOREEMENTPOPTHE
STATE OP SOUTH OA^OTA
This Addendum pertains to ^anchises sold in the State of Sooth Oak^^
purpose otoompiying with South Oakota statutes and regoiations Notwithstanding anything
thatmayheoontained inthe hody ot the Pranohise Agreement to the oontrary, the Franchise
Agreement is amended as toiiows:
t.
Notwithstanding anything t o t h e contrary inthe Franchise Agreement,theiaw
regarding franchise registration, empioyment, covenants not to compete, and other matters ot
iocai concern shaii he governed hythe iaws ofthe State of South Oakota
2.
Franchisee shaii not he r e t i r e d to suhmit to venue or forum ootside the State of
South Oakota for any ciaims that Franchisee may have under the South Oakota Franchises for
Brand NameOoods and Services Law.
8.
Except as amended herein, the Franchise Agreement wiii he constroed and
enforced porsoant to its terms.
Each of the ondersigned herehy acknowledges having read and onderstood this
Addendum and consents to he hound hy aii of its terms
Franchisee initials
Camp Sow Wow 2014^00
Exhi^SDFraoohiseA^omeot
US^7^0706
Franchisor Initials
AOOENOOMTO
CAMP BOWWOW
PRANOHiSEAOPEEMENTPORTHE
STATE OPWASHINOTON
This Addendum pertains to franchises soid in the State of Washington a n d i s for the
porpose of oompiying with Washington statutes and regoiations Notwithstanding anything that
may he contained in the hody o f t h e Franchise Agreement to the contrary, the Franchise
Agreement is amended as foiiows:
1
in the event o f a c o n f i i c t of iaws,the provisions of the WashingtonFranchise
investment Protection Act, OhapterlOBiOOPOW shaii prevail
2.
Areieaseorwaiverofrightsexecuted hythe Franchisee shaii not inciode rights
undertheWashington Franchise investment Protection Actexceptwhen executed pursuanttoa
negotiated settlement after the agreement is in effect and where the parties are represented hy
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 asaright to
ajurytrial may not he entorceahle.
8.
Notwithstanding anything contrary in the Franchise Agreement, any transfer fees
payable hy Franchisee in connection with an assignment of the Franchise Agreement shall he
limited to Franchisor's reasonable estimated oractual costs in approving and processing a
transfer application
4
in any arbitration involvingafranchisepurchased in Washington,the arbitration
site shall be either in the state of Washington,or i n a p l a c e mutually agreed upon at the time of
the arbitration, or as determined by the arbitrator.
5
in all other respects, theFranchise Agreement willhe construed and enforced
according to its terms
Fach of the undersigned hereby acknowledges having read and understood this
Addendum and consents to be bound by all of its terms
Franchisee Initials
Camp 8ow Wow 2014 FOO
Ex^PitSDF^ohiseAg^omeol
U^7^407^
Franchisor initials
^
AOOENOOMTO
CAMP BOWWOW
PRANOHISEAOREEMENTPORTHE
UN^EOSTATESSMALLBOS^ESSAOM^STRA^ON
TH^AOOENOOMTOOAMPBOWWOWPPANOH^PAOPEEMENTPOPTHE
ONITEO STATES SMALL BUSINESS AOMINISTPATION I s m ^ a n d e ^ e d l ^ o o o
20
,
by Oamp Bow WowPranoblslog,
a Delaware corporation
("Prancbisor^
and
, a
("Prancbisee") (tbe "Addendum^, as follows:
PEOITALS
W H E P E A S , Prancbisor and Erancblsee entered Into tbat certain "Oamp Erancblse
Aoreement"asottbedatebereot(tbe"ErancblseAgreement")lnwblcbErancblsee bas agreed
among otber tblngs,to (I) develop and operateaOamp using tbe Marks and System wltbln tbe
AutborlzedTerrltory Identified In tbe Erancblse Agreement; (ll)otter and sell tbe Products an
provide Oamp Services from tbe Oamp Site; and (III) provide In Home Services and Oog
Training Services tbrougbout tbe entire AutborlzedTerrltory.
W H E P E A S , Inconnectlon wltbenterlng Into tbe Erancblse Agreement, Erancblseebas
o b t a l n e d a l o a n f o r purposes of developing andoperatlng tbe Oamp fromalender In wblcb
funding Is provided witb tbe assistance of tbe United States Small Business Administration (tbe
"SBA"). In tbis Addendum, tbeloan tbat Erancblsee bas obtalnedls referred to as t b e " S B A
Loan;"
W H E P E A S , tbe SBA requires tbe execution of tbis Addendum as a condition for
obtaining tbe SBA assisted financing; and
W H E P E A S , Erancblsor and Erancblsee wlsb to amend tbe Erancblse Agreement In
order to satisfy tbe SBA's lending conditions In accordance witb tbe terms and conditions of tbls
Addendum
AOPEEMENT
N O W , T H E P E E O P E , I n conslderatlonoftbe mutual promises below, and for otber good
and valuable consideration, tbe receipt and sufficiency of wblcb tbe parties bereby
acknowledge, tbe parties agree as follows:
Camp 8ow Wow 2014 FOO
Exh^t^DF^ot^A^emeot
^53^40706
8^5
1.
^Fraoohisor must operate theCamp
Franchise Agreement, Franchisor
hy mutual agreement otthe parties tor additional o o n s e o o t i v e O O ^ a y p e ^
p e r i o d o t o n e y e a r Additionally, during theperiod that Franohisor operates t h e C a m p u n d e r
S e o t i o n s l ^ O , 1 4 ^ 0 o r 1 8 ^ a ) otthe Franchise Agreement, Franchisor will periodioallydi^^
the status otthe Camp with the Franohisee or its representatives or heirs.
2
It the Franchise Agreement is terminated and the Camp Site or its contents are to
hesold underSection 15ot the Franchise Agreement and the parties are unahie to agree as to
a purchase priceand terms, the tair market v a i u e o t s u c h premises and property shall he
determined hy three appraisers chosenin the tollowing manner: Franchisee shaii select one,
Franchisorshailselectone, and t h e t w o a p p r a i s e r s s o c h o s e n shall selectathird appraiser
The decision otthe majority otthe appraisers so chosen shall he conclusive. Fachparty shall
hear the cost and tees otthe appraiser selected hy it, and the cost otthe third appraiser shall he
shared equally hythe parties.
S.
Section15to Franchise Agreement is amended to give Franchisee the right and
option, in its sole discretion, hut not the ohligation, to sell its reai estate to the Franchisor or any
ot Franchisor's Attiliates, as the case may he, upon termination or expiration otthe Franchise
Agreement Franchisor may havetheoptlon to lease the Fremisestrom Franchiseetorthe
remainder otthe Franchisee's term(excluding additional renewals) tor tair market value.
4
Section 10.10 is amended to provide that Franchisor may not exercise
reasonahie business judgment in its approval otany sale,assignment or transfer ot interest hy
the Franchisee where consent otthe Franchisor is required
5.
Any capitalized terms in this Addendumthatarenotdetined in this Addendum
shall have the same meaning assigned to them in the Franchise Agreement and the definitions
in the Franchise Agreement are herehy incorporated hy reference.
8
Except as amended or modified herein, ail of the terms, conditions and
covenants of theFranchise Agreement will remain infull force and effect In the event of any
conflict between t h e t e r m s o f this Addendumand the Franchise Agreement, theterms ofthis
Addendum will control
7.
This Addendum automatically terminates on the earliest to occur of the following:
(i)aTerminationoccursundertheFranchiseAgreement;(ii)theSBALoanispaid;or(iii)SBA
no longer has any interest in the S B A Loan
Camp Sow Wow 2014 FOO
ExhibilSDFranoh^eAgreemeol
0^75540706
^46
IN WITNESS W H E R E O F , the parties hereto have duly signed and executed this
Addendum as of the day and year first above written.
FRANCHISOR:
FRANCHISEE:
Camp Bow Wow Franchising, Inc.,
a Delaware corporation
By:
Print Name:
By:
Title:
Heidi Ganahl, C E O
OR
By:
Rachel Welsh, Controller
[Signature
Page to Addendum to Camp Bow Wow Franchise Agreement
for the United States Small Business
Administration]
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B^7
Please fill out; sign and fax to 303-496-0675 (Rachel Welsh)
ATTACHMENT K
TO FRANCHISE A G R E E M E N T
BY AND BETWEEN C A M P BOW WOW
FRANCHISING, INC. AND
("FRANCHISEE")
AUTHORIZATION A G R E E M E N T FOR P R E A R R A N G E D PAYMENTS
(DIRECT DEBITS)
The undersigned depositor ("Depositor") hereby authorizes Camp Bow Wow Franchising,
Inc. ("Company") to initiate debit entries and/or credit correction entries to the undersigned's
checking and/or savings account(s) indicated below and the depository designated below
("Depository") to debit such account pursuant to Company's instructions.
Depositor Branch
Address City, State, ZIP Code
Bank Transit Number
Account Number
This authority is to remain in full force and effect until Depository has received joint written
notification from Company and Depositor of the Depositor's termination of such authority in such
time and in such manner as to afford Depository a reasonable opportunity on which to act. If an
erroneous debit entry is initiated to Depositor's account, Depositor shall have the right to have
the amount of such entry credited to such account by Depository, if (a) within fifteen (15)
calendar days following the date on which Depository sent to Depositor a statement of account
or a written notice pertaining to such entry or (b) forty-five (45) days after posting, whichever
occurs first, Depositor shall have sent to Depository a written notice identifying such entry,
stating that such entry was in error and requesting Depository to credit the amount thereof to
such account. These rights are in addition to any rights Depositor may have under federal and
state banking laws.
Depositor:
Depository
JPMorgan Chase
2696 South Colorado Blvd
Denver, CO 80222
By:
Title:
Date:
By:
Cashin White
Title: V P Business Banking
Date: January 5, 2014
Camp Bow Wow - 2014 FDD
Exhibit B - Franchise Agreement
US.53755407.06
B^8
C A M P BOW WOW FRANCHISING, INC.
EXHIBIT C
FINANCIAL STATEMENTS AND
G U A R A N T E E OF P E R F O R M A N C E
Camp Bow Wow - 2014 FDD
Exhibit C - Financial Statements and Guarantee of Performance
US.53755407.06
V C A Antech, Inc. and Subsidiaries
Index to Consolidated Financial Statements
Page
Management's Annual Report on Internal Control Over Financial Reporting
Reports of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31. 2013 and 2012
Consolidated Statements of Income for the Years Ended December 31. 2013. 2012 and 2011
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2013.
2012 and 2011
;
Consolidated Statements of Stockholders' Equity for the Years Ended December 31. 2013.
2012 and 2011
Consolidated Statements of Cash Flows for the Years Ended December 31. 2013. 2012 and 2011
Notes to Consolidated Financial Statements
Schedule I — Condensed Financial Information of Registrant
Schedule II — Valuation and Qualifying Accounts
2
3
5
6
1
8
9
Ii
47
IL
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our
internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of our consolidated financial statements for external reporting purposes in accordance with
generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management has carried out an evaluation, under the supervision and with the participation of our ChiefExecutive
Officer and Chief Financial Officer, of the effectiveness of our internal control over financial reporting as of December 31,
2013. In performing this evaluation, management used the criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO) in Internal Control — Integrated Framework (1992). Based on our assessment of internal
control over financial reporting, our management has concluded that, as of December 31, 2013, our internal control over
financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
The effectiveness of our internal control over financial reporting as of December 31, 2013 has been audited by KPMG
LLP, an independent registered public accounting firm, as stated in their report, which is included below.
February 28, 2014
/s/
ROBERT L. ANTIN
Robert L. Antin
Chairman of the Board, President and
ChiefExecutive Officer
/S/
TOMAS W. FULLER
Tomas W. Fuller
Chief Financial Officer, Principal Accounting
Officer, Vice President and Secretary
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
VCA Antech. Inc.:
We have audited the accompanying consolidated balance sheets of VCA Antech. Inc. and subsidiaries as of December 31,
2013 and 2012, and the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows
for each ofthe years in the three-year period ended December 31,2013. In connection with our audits ofthe consolidated financial
statements, we also have audited financial statement schedules I and II. These consolidated financial statements and financial
statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of V C A Antech, Inc. and subsidiaries as of December 31, 2013 and 2012, and the results of their operations and their
cash flows for each ofthe years in the three-year period ended December 31, 2013, in conformity with U.S. generally accepted
accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
We also have audited, in accordance with the standards ofthe Public Company Accounting Oversight Board (United
States), the internal control over financial reporting of V C A Antech, Inc. as of December 31, 2013, based on criteria established
in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), and our report dated February 28, 2014 expressed an unqualified opinion on the effectiveness of the
internal control over financial reporting of V C A Antech, Inc.
/s/
Los Angeles, California
February 28, 2014
K P M G LLP
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
VCA Antech, Inc.:
We have audited the internal control over financial reporting of VCA Antech, Inc. as of December 31,2013, based on criteria
established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Management of VCA Antech, Inc. is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an
opinion on the Company's internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control
over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation
offinancialstatements in accordance with generally accepted accounting principles, and that receipts and expenditures ofthe
company are being made only in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control overfinancialreporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, VCA Antech, Inc. maintained, in all material respects, effective internal control overfinancialreporting as
of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee
of Sponsoring Organizations ofthe Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated balance sheets of VCA Antech, Inc. and subsidiaries as of December 31, 2013 and 2012, and the
related consolidated statements of income, comprehensive income, stockholders' equity, and cashflowsfor each of the years in
the three-year period ended December 31, 2013, and our report dated February 28, 2014, expressed an unqualified opinion on
those consolidatedfinancialstatements.
Isl KPMG LLP
Los Angeles. California
February 28, 2014
V C A Antech, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except par value)
December 31,
2013
2012
Assets
Current assets:
Cash and cash equivalents
Trade accounts receivable, less allowance for uncollectible accounts of $17,702
and $16,546 at December 31, 2013 and 2012, respectively
Inventory
Prepaid expenses and other
Deferred income taxes
,
Prepaid income taxes
Total current assets
,
Property and equipment, net
Goodwill
\
Other intangible assets, net
Notes receivable
Deferred financing costs, net
Other...Z
$
125,029" $
$
59,900
55,067
25,417
28,907
15,434
309,754
448,366
1,330,917
86,671
3,454
2,987
55,632 '
2,237,781 $
20,061
243,529
403,444
1,291.231
94,823
6,080
4,232
48,241
2,091,580
51,087 $
36,962
57,337
58,762
204,148
568,558
.100,099
36,758
909,563
39,002
39,416
49,893
57,131
185,442
591,641
75,846
37,267
890,196
^1...^.."....^^
Total assets
687435
55,912
51,456"
"25,086
— —
Liabilities and Equity
Current liabilities:
Current portion of long-term debt
Accounts payable
Accrued payroll and related liabilities
Other accrued liabilities
Total current liabilities.
Long-term debt, less current portion
Deferred income taxes
Other liabilities
Total liabilities
Commitments and contingencies
Redeemable noncontrolling interests
Preferred stock, par value $0,001, 11,000 shares authorized, none outstanding
VCA Antech, Inc. stockholders equity:
Common stock, par value $0,001, 175,066 shares authorized, 88,508 and 88,372
shares outstanding as of December 31, 2013 and December 31,2012,
respectively
$
....
10,678
"
6,991
1
Additional paid-in capital
Retained earnings
Accumulated other comprehensive (loss) income
Total VCA Antech, Inc. stockholders' equity...
Noncontrolling interests
Total equity
Total liabilities and equity
89
" " 384,721 "
" 928,720
$
(6,190)
1,307,340
10.200
1.317,540
2,237,781 $
The accompanying notes are an integral part of these consolidated financial statements.
5
88
390,359
791,209
1,847
1,183,503
10,890
1,194,393
2,091,580
VCA Antech, Inc. and Subsidiaries
Consolidated Statements of Income
(In thousands, except per share amounts)
2013
$
Direct costs
Gross profit
Selling, general and administrative expense
Impairment of goodwill and other long-lived assets
Net loss on sale of assets
Operating income
Interest expense
Interest income
:
Debt retirement costs
Business combination adjustment gain
Other expense (income)
Income before provision for income taxes
Provision for income taxes
Net income
Net income attributable to noncontrolling interests
For the Years Ended December 31,
2012
1,803,369 $ '
1,393,989"
409,380
157,911 '
—
— —
249,014
18,928 "
...
$
$
$
Weighted-average shares outstanding for basic earnings per share
Weighted-average shares outstanding for diluted earnings per
share
90
230,375
87,453
142,922
5,411
137,511
1.55
1.53
88,621
89,663
374,974
157,155
123,573
1,310
92,936
177020
"7
(379)
—
—
$
$
$
1
1,485,361
1,146,904
338,457
121,112
21,310
382"
195,653
17,485
—
(5,719)
2,764
(488)
. 82,591
. " 31,875 "
50,716
5,165
45,551 $
0.52 $
0.51 $
87.681
118"
175,887
76.027
99,860
4,455
95,405
1.10
1.09
86,606
88,671
87,394
The accompanying notes are an integral part of these consolidated financial statements.
6
2011
1,699,642 $
1,324,668 "
VCA Antech, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(In thousands)
2013
For the Years Ended December 31,
2012
Net i n c o m e ( ' L . . _ Z Z Z Z ; : Z I Z . Z L Z 2 Z I Z I Z . Z 7 Z I Z Z 1 4 2 , 9 2 2 $
Other comprehensive income:
Foreign currency translation adjustments^
(7,999)
Other comprehensive"(loss) "income
(7,999)
Total comprehensive l n c o m ^ L L . / . i i ^ ^ ^ Z % _ _ L - .
_ 134,923
Comprehensive income attributable to noncontrolling interests '....
5,449
Comprehensive income attributable to VCA Antech, inc.Z_._. $
129,474 $
0
(1)
50,716 $
2011
99,860
_
1,429
M29
52,1145 _
5,165
46,980 $
Includes $3.3 million, $2.5 million and $2.0 million for 2013, 2012 and 2011, respectively, related to redeemable and
mandatorily redeemable noncontrolling interests.
The accompanying notes are an integral part of these consolidated financial statements.
7
319
( )
(319)
99,541
4,455
95,086
VCA Antech, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
(In thousands)
Common Stock
Shares
. Balances, December 31,2010
86,179
Amount
Additional
Paid-in
Capital
$
$
86
347,848
Retained
Earnings
$
Net income (excludes $1,555 and
$450 related to redeemable and
mandatorily redeemable
noncontrolling interests, respectively)
Other comprehensive loss
Distribution to noncontrolling
interests
Purchase of noncontrolling interests...
Share-based compensation
Issuance of common stock under
stock incentive plans
Stock repurchases
Excess tax benefitfromstock options.
Tax shortfall and other from stock
options and awards
Balances, December 31,2011
"—
—'
—
—
—
—
—
—
—
—
" 263 "
—
—
—
731
1
(114)
—
—
—_
10,773™
Distribution to noncontrolling
interests
Share-based compensation
Issuance of common stock under
stock incentive plans
Issuance of common stock for
acquisitions_...............,.......„.......... _..^
Stock repurchases
Excess tax benefitfromstock options.
Tax shortfall and otherfromstock
options and awards
Balances, December 31,2012
10,561
Total
$ 1,009,485
2,450
97,855
" ' '
(319)
—
"(3W)
—
' —
—
(1,952)
(1,952)
" "(985)
Z. 10,773
9^)
$
—
—
3,998
(2,673)
—
—
—_
—
—
—
—
—
745,658
418
10,074
_
2,648
1,708
—
—
86,796
87
361,715
—
—
—
—
1,429
—
—
—
—
—
14,087
—
—
—
—
1,506
1
9,532
—
_
10,500
—,
—
—
<8~216) '
(202)
45,551
473
Noncontrolling
Interests
_
95,405
—
Net income (excludes $962 and
$1,555 related to redeemable and
mandatorily redeemable
noncontrolling interests, respectively)
Other comprehensive income
650,253
Accumulated
Otber
Comprehensive
Income (Loss)
$
737
" —"
(1,832)
:
2,868 "
1,708
(202)
1,117,952
48,199
1,429
_ —
(1,832)
14,087
—
—
9,533
—
—
—
—
—
—
—
—
—
10,500
(8,216)
_
:
"(403)
3,999
(2,673)
" 2,868
—
—
—
—
—
(127)
88,372
88
390,359
791,209
1,847
10,890
1,194,393
Net income (excludes $1,233 and
$2,003 related to redeemable and
mandatorily redeemable
noncontrolling interests, respectively)
—
—
—
137,511
—
2,175
139,686
Other comprehensive loss (excludes
$44 related to mandatorily
redeemable noncontrolling interests)..
—
—
—
Formation of noncontrolling interests.
—
—
—
—
—
—
—
_
—
—
—
—
_
(785)
T4J04
—
—
—
—
—"
Distribution to noncontrolling
interests
Purchase of noncontrolling interests ...
Share-based compensation
Issuance of common stock under
stock incentive plans
Stock repurchases
Excess tax benefitfromstock options.
Tax shortfall and other from stock
options and awards
Balances, December 31,2013
(127)
(8,037)
1,559
2
17,231
—
—
(1,423)
(1)
(39,366)
—
—
3,446
—
—
—
—
—
88.508
—
$
89
384,721
—
—
(268)
$
$
928,720
$
(6,190) $
The accompanying notes are an integral part of these consolidatedfinancialstatements.
8
(9
3,336
(8,043)
" 3,336
(1,886)
(1,886)
(4,309)
(5,094)
14,104
17,233
—
—
__(3W7)
3,446
—
(268)
10,200
$ 1,317,540
VCA Antech, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
2013
For the Years Ended December 31,
2012
2011
Cashflowsfrom operating activities:
$
Adjustments to reconcile net income to net cash provided by
operating activities:
Impairment of goodwill and other long-lived assets
Depreciation and amortization
.Amortization of debt issue costs
Provision for uncollectible accounts
Debt retirement costs
Business combination adjustment gain
Net loss on sale of assets
Share-based compensation
Deferred income taxes
Excess tax benefitsfromexercise of stock options
Other
-—
142,922
$
50,716
—
77,409
1,245
7,360
•—
—
2,455
14,104
18,064
(3,446)
l..".7..~..L..". _ . %
Changes in operating assets and liabilities:
Trade accounts receivable
Inventory, prepaid expenses and other assets
Accounts payable and other accrued liabilities
Accrued payroll and related liabilities
Income taxes
Net cash provided by operating activities
Cash flows from investing activities:
Business acquisitions, net of cash acquired
~~
Real estate acquired in connection with business acquisitions
Property and equipment additions
Proceeds from sale of assets
o^.7Z77.77.7.77.7».7..7Z77717777.1Z7....77.77Z7Z7.»
Net cash used in investing activities
^
(37?)" " "
123,573
""76,227 "
1,278
6,396 "
—
—-Q-
"
l5,719y
1,310
14,087
"(33^
" (2,868) '
(584) "
567988
1,445
6/742
2J64~
—'
"382"
10,773
19,552
(17708)
7
'(637)
(11,048)
(7,134)
557
6,502
7,759
256,372
1,640
(10,329)
3,640
7,181
4,103
237,253
(14,107)
(12^97)
(5,415)
4,583
816
191,051
(52,688)
(5,328)
(73^70)
7,096
AMI)
(126,731)
(134,916)
(5,337)
(76,807)
115
(2,313)
(219,258)
(205,794)
The accompanying notes are an integral part of these consolidated financial statements.
9
99,860
S "
(1,900)
(63,485)
"465
(596)
(271,310)
V C A Antech, Inc. and Subsidiaries
Consolidated Statements of Cash Flows - (Continued)
(In thousands)
2013
Cash flows from financing activities:
Repayment of debt
For the Years Ended December 31,
2012
(41,129)
—
Proceeds from the issuance of long-term debt....
Payment of financing costs
Proceeds from revolving credit facility
Repayment of revolving credit facility
Distributions to noncontrolling interest partners
Purchase of noncontrolling interests
Proceeds from issuance of common stock under stock
incentive plans
(60,775)
50,000
(122)
50,000
(50,000)
—
—
—
(%866)
_(6,58lj_
Excess tax benefits from exercise of stock options
Stock repurchases
Other
Net cash (used in) provided by financing activities..
Effect of currency exchange rate changes on cash and cash
equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
$
2011
(98,990)
150,000
(21944)
50,000
(50,000)
77 (^Pl^ 7
—
3,999
17,233
3,446 ~
(39,367)
(749)
(72,013)
(2^78)
(13,534)
(819)
47,004
(1,034)
56,594
68.435
125,029 $
303
4,784
63,651
68,435
$
(220)
(33,475)
97,126
63,651
61,481
$
15,088"
55,660"
9,533
2,868
(8=159)
1,708
A^)
Supplemental disclosures of cash flow information:
$
$
"
16,422- ^
61,825
$
Supplemental schedule of non-cash investing and financing
activities:
Detail of acquisitions:'
$
Fair value of pre-existing investment in AVC
Noncontrolling interest
Cash paid for acquisitions, net of acquired cash,
Assumed debt
Issuance of common stock for acquisitions
Contingent consideration
Holdbacks ..".Z
. . . Z ....
Liabilities assumed
....
75,445 $
—
" (6,936)" "
(52,688)
$
(2^60)" J
—
(1^85)
(L092)
11,084 $
$
21,668
220,526 $
(11,850)
(8,161)
(134,916)
(25,915)
(10,500)
""(1,306)""" "
(3,475)"
24,403 $
Other non-cash items:
$
-
The accompanying notes are an integral part of these consolidated financial statements.
10
$
254,781
—
—
"(203,996)
(26,048)
—
(560)
(1,500)
22,677 •
-
-
^CAAn^h,Inland ^ub^ar^
^o^tocon^datedFrnan^^tements
L
The Company
Ourcomp^^CAAm^^^CA^isaD^aw^corpo^^
Cahforni^^areanamm^heahhca^
Hospha^ve^inary diagnostic labo^ories^^
^strcc^
Our animal hospitals otfcrafuii range ofgeneral mcdicai and surgical
hospitalstreatdiscasesand injuries, provide pharmaceutical products and pcrtbrmavaricty
health examinations, diagnostic testing, vaccinations, spaying, neutering and dental care At Decern
or managed 609 animal hospitals thtoughout^l states and four Canadian provinces
^eoperateafullservice veterinary diagnostic laboratory network serving all 50 states and certain a ^
lahorator^ network provides sophisticated testing and consulting services used hy veterinarians in the detecti^^
evaluation, monitoring, treatment and prevention ofdiseases and other conditions aftecting animals At Decemher^l,2^
operated 56 laboratories ofvarious sizes located strategically throughout the united States and Canada.
Our ^edicalTechnology business sells digital radiography and ultrasound imaging equipment, provides education an
training on the use ofthat equipment, provides consulting and mobile imaging services, and sells software and ancillary
services to the veterinary market.
Our vetstreet business provides online and print communications, professional education, marketing solutions
veterinary community and an ecommerce platform for independent animal hospitals.
2.
Summary of^gnifieantAceoun^n^ Policies
^
^ ^ ^ ^ ^ ^ ^ ^ ^ ^
Our consolidatedfinancialstatements have been prepared in accordance with accounting principles generally accepted in
the united States ^OAAP^), and include the account
control, certainfifty-percentowned subsidiaries where we possess the power to direct or cause the direction of management
and policies and certain veterina^ medical groups to which we provide services as discussed helow ^e have eliminated a
intercompany transactions and balances in consolidation.
^e provide management and other administrative services to certain veterinary^ practices in states and Canadian
provinces with laws, rules and regulations which require that veterinary medical practices be owned by licensed vet^^^
and that corporations which are not owned by licensed veterinarians refrain from providing, or holding themselves out^
providers ofveterinary medical care In these states and Canadian provinces, we provide management and other administratis^
servicestotheveterinarymedicalpractices At December^l,2013,we operated 176 animal hospitals in 15ofthesest^^^
52 animal hospitals in four Canadian provinces, under management agreements w
management agreements, the veterinary medical practices are each solely responsible for all aspects ofthe practice of
veterinary medicine, as defined by their respective state or province.
behave determined that the veterinary medical practices are variable interest entities as defined by the Pina
Accounting Standards Board ^PASB^), and that we haveavariable interest in those entities through our management
agreements.^e also determined that our variable interests in these veterinary medical practices, in aggregate wit^
interests held by our related parties, provide us with the power to direct the activities ofthese practices that most si^^
impact their economic performance and obligate us to absorb losses that could potentially be significant or the right to rece^
benefits from the veterinary medical practices that could potentially be significant. Based on these determinate^
consolidated the veterinary medical practices in our consolidatedfinancialstatements.
^
^ ^ ^ C ^ ^ ^ ^ B T ^ ^ ^ ^ ^
Assets and liabilities are translated intol^.Sdollars at the exchange rate at the balance sheet date, w
expenses are translated into LiS. dollars at the average exchange rate fbrthe reporting period.
11
^CAAntec^Inc ^ d ^ u b ^ d i a r ^
^otes to Conso^atedFioanc^ Statement (Contmued)
2.
nummary of^gn^caotAccoootmg P o l i c e cootiooed
Tran^afionadju^ments are mcludedmaccumu^d other com^
and tosses are reeordedinthe results of operations
^
^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^
The preparation ofour consolidatedfinaneiatstatements in conformity with OAA^
assumptions that aftect the reported amounts ofassets and liahilities and disclosureof contingent assets and
liahilities at the date of our consolidatedfinancialstatements and our reported amountsof revenue and expense during th^
reporting period. Actual results could difler from our estimates Amounts subject to significant judgment and estimates
include, hut are not limited to, collectahilityofreceivahles, cashflows used in the evaluation ofimpairm
flows used in the evaluation ofimpairmentoflong-lived assets, valuation allowance on deferred tax assets, esfi^
redemption value ofmandatorily redeemable partnership interests and inputs used for computing stock-hasedcompensat^^
^
^ ^ ^ ^ ^ ^ ^ ^ ^ C ^ ^ ^ ^ ^ ^
^e recognize revenue, barring other facts, when the following revenue recognition criteria are met:
persuasive evidence ofasales arrangement exists^
delivery ofgoods has occurred or services have been rendered^
thesalespriceorfee isfixedor determinable^ and
collectability is reasonably assured.
Revenue is reported net ofsales discounts and excludes sales taxes,
^e generally recognize revenue and costs as follows:
Tor non contractual services provided by our business units, at the time services are rendered.
Tor the sale ofmerchandise, when delivery ofthe goods has occurred.
Torservicesunderdefinedsupportand maintenance contracts, onastraight-line basis over the contractual period,
recognizing costs as incurred^ these services include, but are not limited to, technical support, when-and if
available product updates for software and extended warranty coverage
Tor the sale of our digital radiography imaging equipment and ultrasound imaging equipment sold onastandalone
basis, at the time title and risk ofloss transfers to the customer, which is generally upon delivery or upon
installation and customer acceptance ifrequired per the sale arrangement.
Torthe sale ofremindercards, when shipment has occurred^
^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^
^e account for revenue for certain bundled products and services as follows:
Sales arrangement consideration is allocated at the inception ofthe arrangement to ail deliverables using the
relative selling price method, whereby any discount in the arrangement is allocated proportionally to each
deliverable on the basis ofeach deliverables selling price. The selling price for each deliverable is based on
12
^CAAntec^Ioc ^ d S u b ^ d i a r ^
Notes to Cooso^datedFmanc^ Statements (Con^nued)
2.
nummary of^gn^eantAeeonntmgPo^es^eootioned
vendo^specificoh^ive evidence ^ S O E ^ i f a v a i ^
^estimated seeing price ^ES^^^
^SOEoffairvaiue is based on the price fbrthose products and services when soidsepa^^^
established hy management with the relevant authorityBTPEofseihng price is the p ^
competitors largely interchangeable products or services in stand-alone sales to similarly situated cn^^
ESP is generally calculated based upon multiple factors that vary depending upon the unique facts and
circumstances related to each deliverable l^ey external and internal factors considered in d e v e ^
include prices charged by us for similar arrangements, historical pricing practices and the nature ofthe produce
addition, when developing ESPs, we may consider other factors as appropriate, including the pricing of
competitive alternatives if they exist, and productspecific business ohjectives.^e exercise significant judgmem
evaluate the relevant facts and circumstances in calculating the ESP ofthe deliverables in our arrangements.
Digital radiography (^OP^ imaging equipment and all ofits related computer equipment, our p r o p ^
se^ices in addition to any other computers sold with our proprietary^ sofiware are accounted for under thePASB^saccoum^^
guidance related to multiple deliverable transactions.
^ e do not currently have ^ S O E for our OR imaging equipment as units are not sold onastand-alone basis without the
related support packages. As this is also true for our competitors, TPEofselling price is also unavai^^
ESP to allocate the arrangement consideration related to our OR imaging equipment.
In domestic markets we have ^ S O E for our post contract customer support (^PCS^ as the support package is sol^
standalone basis. Our PCS agreements normally includeawarranty on the receptorplate and technical support
elements. In foreign markets however, we do not have ^SOE or TPE on the receptor plate warranties, accordingly we use the
ESP
In certain transactions we sell our ultrasound imaging equipment and related services together with our OR imaging
equipment and related services ln these transactions, we account for each item under its respective literatu^^
revenue based upon the relative selling prices.
In certain transactions with pharmaceutical companies we sell subscriptions to our portal products together with other
marketing related servicesB^e account tor these arrangements under the multiple deliverable account
with the arrangement consideration allocated using the relative selling prices
^ ^ ^ ^ v ^ ^
^ e defer revenue for certain transactions as follows:
^ e defer revenue tor pre-paid services such as our consulting, marketing, education services or PCS and recognize
that revenue onastraight-line basis over the contract period or as the services are provided depending on the
nature ofthe service.
^edeferrevenue for PCS provided as part ofthe purchase ofequipment and software and recognize that revenue
onastraight-line basis over the PCS period.
^ e defer revenue when we lack persuasive evidence ofasales agreement and recognize that revenue only when
that evidence exists.
13
V C A Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
2.
Summary of Significant Accounting Policies, continued
As a result of these policies, we have deferred revenue and costs at December 31, 2013 and 2012 consisting ofthe
following (in thousands):
_
rw ~.
a
Q
^
™™..„0)
2013
.
"
"
—
-
-
—
Deferred fixed-priced support or maintenance contract revenue
Other deferred revenue^
Total deferred revenue
Less current portion included in other accrued liabilities
Long-term portion of deferred revenue included in other liabilities
Current portion of deferred costs included in prepaid expenses and other....
Long-term portion of deferred costs included in other assets
Total deferred costs Z..7
".
„7.~ "."....".„.."..".7..
7.77..
(3)
$
2012
811 $
" 3,854
6,578
11,243
'""T 1,190'
$
$
$
53 $
502 $
698
1,200 $
735
3,383
" 6,828
10,946
10,81 r
135
709;
1,099"
1.808
Represents amounts received for sales arrangements that include equipment, hardware, software and PCS. See above
discussion for the accounting guidance pertaining to revenue recognition — multiple-deliverable transactions.
Represents amounts received in advance for services.
Represents costs related to warranties, equipment and hardware included in deferred equipment revenue.
Customer Loyalty Programs
We record reductions to revenue related to customer incentive programs, which include various forms of cash
consideration. Incentives may be provided in the form of credits, coupons or loans and are earned by clients upon entering into
an agreement to purchase products or services in future periods while maintaining defined volume purchase or utilization
levels. These incentives are capitalized and recognized as a reduction to revenue over the term ofthe customer agreement. We
monitor customer purchases over the term of their agreement to assess the realizability of our capitalized customer acquisition
costs. For the years ended December 31, 2013, 2012 and 2011, we did not have any impaired customer acquisition costs.
e.
Direct Costs
Direct costs are comprised of all service and product costs, including but not limited to, salaries of veterinarians,
technicians and other hospital-based, laboratory-based personnel, and content-development personnel, transportation and
deliver)' costs, facilities rent, occupancy costs, supply costs, depreciation and amortization, certain marketing and promotional
expenses and costs of goods sold.
/
Cash and Cash Equivalents
We consider only highly liquid investments with original maturities of less than 90 days to be cash equivalents. We
maintain balances in our bank accounts that are in excess of FDIC insured levels.
g.
Inventory
Our inventory consists primarily of finished goods and includes imaging equipment, pet food and products and medical
supplies. It is valued at the lower of cost or market using the first-in, first-out method and is adjusted for estimated
obsolescence and written down to net realizable value based upon estimates of future demand, technology developments and
market conditions.
14
V C A Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
2.
Summary of Significant Accounting Policies, continued
h.
Property and Equipment
Property and equipment is recorded at cost. Equipment held under capital leases is recorded at the lower ofthe present
value ofthe minimum lease payments or the fair value of the equipment at the beginning ofthe lease term.
We develop and implement new software to be used internally, or enhance our existing internal software. We develop the
software using our own employees and/or outside consultants. We capitalize software development costs when application
development begins, it is probable that the project will be completed, and the software will be used as intended. We expense
costs associated with preliminary project stage activities, training, maintenance and all other post implementation stage
activities as we incur these costs. The capitalized costs are amortized over the expected useful lives of the software. Costs
related to upgrades or enhancements of existing systems are capitalized if the modifications result in additional functionality.
Depreciation and amortization are recognized on the straight-line method over the following estimated useful lives:
Buildings and improvements
Leasehold improvements
Furniture and equipment
Software
Equipment held under capital leases
5 to 40 years
Lesser of lease term or 15 years
3 to 10 years
3 to 10 years
5 to 10 years
Depreciation and amortization expense, including the amortization of property under capital leases, in 2013, 2012 and
2011 was $56.5 million, $53.5 million and $43.6 million, respectively.
Property and equipment at December 31, 2013 and 2012 consisted of (in thousands):
2013
^$
Land
Building and improvement
^
Leasehold improvements
Furniture and equipment
Software
Buildings held under capital leases
Equipment held under capital leases
Construction in progress
Total property and equipment
Less — accumulated depreciation and amortization
Total property and equipment, net
^$
58,545 $
142,099
176,487 ~
272,820
42,524
59,555
" 8 3 5 "
9,999
762,864
(314,498)
448,366 $
2012
56,162
137,614
140,944'
243,429
32,676
30,550
~84<r
35,683
677,907
(274,463)
403,444
Accumulated amortization on buildings and equipment held under capital leases amounted to $13.7 million and $10.5
million at December 31, 2013 and 2012, respectively.
/'. Operating leases
Most of our facilities are under operating leases. The minimum lease payments, including predetermined fixed
escalations ofthe minimum rent, are recognized as rent expense on a straight-line basis over the lease term as defined in the
FA SB's accounting guidance pertaining to leases. The lease term includes contractual renewal options that are reasonably
assured based on significant leasehold improvements acquired. Any leasehold improvement incentives paid to us by a landlord
are recorded as a reduction of rent expense over the lease term.
15
VCAAntec^Inc ^ d s u b ^ d i a r ^
Notes to Conso^da^Fmanc^ Statement (Contmued)
2.
SommaryofS^^eaotAeeouotmgPo^es,eontiooed
^
Ooodwifi represents the excess oftheconsideration^ans^edo^^
acquired and hahititiesassumedmahusinesseomhination.
Impairment testing for goodwill is performed at the reporting unit ievei.^
level helow an operating segment(also known asacomponent) In accordance with theFASB's accounting guidance p e ^
to goodwill and other intangihles, we have determined that we have four reporting units: Animal Hospitals
Technology and Vetstreet. Annually or sooner ifcircumstances indicate an impairment may exist, we estimate the fair val^^
each ofour reporting units and compare their estimated fair value against the net hook value ofthose reporting units to
determine ifour goodwill is impaired.
The recognition and measurement ofagoodwill impairment loss involves eitheraqualitative assessment of the fair value
of each reporting unit oramore detailed quantitative two-step process.We have not presently elected to rely onaqu
assessment, accordingly we measure our goodwill for impairment hased upon the two step process. Step one compares the fair
value ofthe reporting unit to its carrying value. Ifthe casing value exceeds the fair value, there isapotential impair
step two must he performed. Step two compares the carrying value ofthe reporting unit's goodwill to its implied fair v^^^
the fair value ofthe reporting unit less the fair value
Ifthe casing value ofgoodwill exceeds its implied fairvalue, the excess is required to he recorded as an impairm^
We recorded impairment charges in 20l2related to our Vetstreet reporting unit and in 2011 related to our Medical
Technology reporting unit. Tor additional inforrnation related to goodwill impairment, see N o t e ^ ^ ^
Our estimated reporting unit fair values are calculated using valuation methods consisting primarily of discount^^
flow techniques, and market comparahles,w'here applicable. These valuation methods involve the use of significant
assumptions and estimates such as t^recasted growth rates, valuation multiples, the weighted-average cost of c a p ^
premiums Consumer spending hahits for our business are afiectedhy,among other things, prevailing economic conditions
levelsofemployment,salariesand wage rates, consumer confidence and consumer perception of economic conditions.We
believe these factors have and may continue to impact consumer spending for our products and services. Deterioration in
consumer spending habits for our business would negatively impact the value ofour reporting units and could result in
additional goodwill impairment Any potential impairment charge could be material and would he refiected as expense in our
consolidated statements ofincome.We provide no assurance that forecasted growth rates, valuation multiples, and discou
rates will not deteriorate in the near term We will continue to analyze changes to these assumptions in future
We
adopted the end ofOctober as our annual impairment testing date Our Octoher^l,2013 impairment test indicated that^
value of each reporting unit exceeded its casing amount and therefore step two of the two step impairment test was
unnecessary Our October3I,20l2impairment test, however, indicated that we hada$99.5 million goodwill impairment
related to our Vetstreet reporting unit Our determination in 20l2that the fair value ofthe reporting unit was less t^^
value was based upon changes in our estimate offorecasted cashflowsrelated to changes in both our overall business strategy
and the overall competitive environment The Vetstreet and MedicalTechnoiogy reporting units are each included in the
Others catego^ ofour disclosures in Note 1 5 , ^ ^ ^ ^ ^ ^ .
16
VCA Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
2.
Summary of Significant Accounting Policies, continued
k. Other Intangible Assets
In addition to goodwill, we have amortizable intangible assets at December 31, 2013 and 2012, as follows (in thousands):
2013
Gross
Carrying
Amount
Non-contractual customer
relationships
...
Covenants not-to-compete
Favorable lease asset
Technology
Trademarks
Client lists
Total
$
' "
...
...
$
2012
Accumulated
Amortization
109,842 $
(41,895) $
8",843
14,661)
""(4,373)
7,458
5,240
"(3,015)
(4J94)
13,115
" 608
"(305)
(42)
50
(58,485) $
145,156 $
Net
Carrying
Amount
67,947
4J82
~ 3.085
2,225
8,92 i '
303
8
86,671
Gross
Carrying
Amount
$
110,404
12,707
7,228
6,588
12,494
956
""
50
"
$
150,427
Accumulated
Amortization
Net
Carrying
Amount
73,799
(77357)""" " 5,350
3,362"
13,866)"
(4,179)
2,409
" (3,001)
" 9,493
"'386
"(570)"
" 24"
(26) "
(55,604)
$
94.823
$
$
(36,605) $
The recoverability ofthe carrying values of all intangible assets with finite lives is re-evaluated when events or changes
in circumstances indicate an asset's value may be impaired. We perform a quarterly review of identified intangible assets to
determine if facts and circumstances indicate that the useful life is shorter than we had originally estimated or that the carrying
amount of assets may not be recoverable. If such facts and circumstances exist, we assess recoverability by comparing the
projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against
their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of
those assets. Ifthe useful life is shorter than originally estimated, we accelerate the rate of amortization and amortize the
remaining carrying value over the new shorter useful life.
Our October 31, 2012 impairment test indicated that we had a $22.9 million intangible asset impairment related to noncontractual customer relationships, technology, trademarks and contracts related to Vetstreet. Our determination in 2012 that
the fair value ofthe intangible assets was less than carrying value was based upon changes in our estimate offorecasted cash
flows related to changes in both our overall business strategy and the overall competitive environment as mentioned above. The
fair values of the impaired intangibles were calculated utilizing valuation methods consisting primarily of discounted cash flow
techniques, and market comparables, where applicable. The impairment is included under the caption "Impairment of goodwill
and other long-lived assets" in our consolidated income statement.
Amortization is recognized on the straight-line method over the following estimated useful lives:
Non-contractual hospital customer relationships
Non-contractual laboratory customer relationships
All other non-contractual customer relationships
Covenants not-to-compete
Favorable lease asset
Technology
Trademarks
Contracts
Client lists
5 years
20 to 25 years
3 to 10 years
2 to 25 years
1 to 18 years
5 to 7 years
2 to 10 years
6 years
3 years
17
V C A Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
2.
Summary of Significant Accounting Policies, continued
The following table summarizes our aggregate amortization expense related to other intangible assets (in thousands):
2013
Aggregate amortization expense
$
For the Yean Ended December 31,
2012
20,934
$
22,731
$
2011
13,391
:
The estimated amortization expense related to intangible assets for each ofthe five succeeding years and thereafter at
December 31. 2013 is as follows (in thousands):
2014
:.....:.....„...;.:...::........
2015.........'....
2o\L'.'z.:..::'.^
2017
2018
_.iz.i:.._..z.i:..v.z
Thereafter
:
.'.
-.Z
$
21,342
"_ _
_2
z..:z:.zz....z..z:z.z: z z z ~
:
Total
/.
:
I
$
"
J 8,999
15,689
"9,321
"5,649
15,671
86.671
Income Taxes
We account for income taxes under the FA SB's accounting guidance on income taxes. In accordance with the guidance,
we record deferred tax liabilities and deferred tax assets, which represent taxes to be recovered or settled in the future. We
adjust our deferred tax assets and deferred tax liabilities to reflect changes in tax rates or other statutory tax provisions. We
make judgments in assessing our ability to realize future benefits from our deferred tax assets, which include operating and
capital loss carry forwards. As such, we have a valuation allowance to reduce our deferred tax assets for the portion we believe
will not be realized. Changes in tax rates or other statutory provisions are recognized in the period the change occurs. We also
assess differences between our probable tax bases and the as-filed tax bases of certain assets and liabilities.
We account for unrecognized tax benefits also in accordance with the FA SB's accounting guidance on income taxes
which prescribe a minimum probability threshold that a tax position must meet before a financial statement benefit is
recognized. The minimum threshold is defined as a tax position that is more likely than not to be sustained upon examination
by the applicable taxing authority, including resolution of any related appeals or litigation, based solely on the technical merits
ofthe position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than 50% likely of
being realized upon ultimate settlement. We did not have any unrecognized tax benefits at December 31, 2013 and 2012.
m.
Notes Receivable
Notes receivable are financial instruments issued in the normal course of business and are not market traded. The
amounts recorded approximate fair value and are shown net of valuation allowances. There were no valuation allowances
recorded as of December 31, 2013 and December 31, 2012. The notes bear interest at rates varying from 2.6% to 8.0% per
annum.
n.
Deferred Financing Costs
Deferred financing costs are amortized using the effective interest method over the life of the related debt. Accumulated
amortization of deferred financing costs was $1.2 million and $1.3 million at December 31, 2013 and 2012, respectively.
18
VCAAntec^Inc ^ Subsidiary
Notes to Cousoiidated^inauciai Statements (Cuutiuued)
2.
Summary ofSignifieaotAeeouotiogPoiieies^eootiooed
^
^ ^ ^ ^ ^ ^ ^ ^ ^ B ^ ^ ^
The casing amount repo^edmour consolidated balance sheets
aeeonnts payable and accrued liabilities approximates fait value because ofthe 1^
financial Instruments. Ourpollcy Is to place out cash and cash equlvalentslnhlghly-ratedfinancl^^
institutions.which we believe mitigates our credit risk Concentration of credit risk w ^
limited due to the diversity ofour customer base.We routinely review the collection of out accounts receivable and main^
allowance for potential credit losses, but historically have not experienced any significant losses related to an individu^
customer or groups of customersinageographic area.
Our operations depend, in some cases, on the ability of single source suppliers oralimited number of suppliers, to deliver
products and supplies onatimelyhasis.We have in the past experienced, and may in the future experience, shortages of or
difliculties in acquiring products and supplies in the quantities and of the quality needed. Shortages i n ^
products and supplies for an extended period of time could haveanegative impact on our operating results.
^
^ ^ ^ ^ ^ ^ ^ ^ ^ ^
Marketing and advertising costs are expensed as incurred. Total marketing and advertising expense included in dire^
costs amounted to $25.4million,$253million and ^
advertising expense included in selling, general and administrative expense amounted to $5.9 million, $7.6 m ^ ^
million for2013,20l2and20l4respectively.
^.
B ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^
We useacombinationofinsurance and selfinsurance with highretention or high-deductible provisions fora^^
risks, including workers'compensation, general liability, property insurance and our group h e a l t h s
Liabilities associated with these risks are estimated based on an undiscounted basis by considering historical c
experience, demographic factors, severity actors and other actuarial assumptions
B:
^
^
^
^
^
^
^
We accrue the cost ofbasic product warranties included with the sale ofour digital radiography imaging equipment and
our ultrasound imaging equipment at the time we sell these units to our customers. Our warranty costs are primarily for our
assistance in helping our customers resolve issues with the warranties they have with the original equipment manufacture^
estimate our warranty costs based on historical warranty claim experience.Accrued warranty costs at December3L20l3
20l2wereapproximately$73,000and $70,000, respectively.
19
V C A Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
2.
Summary of Significant Accounting Policies, continued
s.
Calculation of Earnings per Share
Basic earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding
during the period. Diluted earnings per share is calculated by dividing net income by the weighted-average number of common
shares outstanding after giving effect to all potentially dilutive common shares outstanding during the period. Basic and diluted
earnings per share were calculated as follows (in thousands, except per share amounts):
2013
137.511
$
Weighted average common shares outstanding:
Basic
Effect of dilutive potential common stock:
Stock options
Non-vested shares and units
Diluted...I
7...r......7.............27...
—
u
Z
Basic earnings per common share
Diluted earnings per common share
$
$
For Years Ended December 31,
2012
,
$
45,551
$
2011
95,405
88,621
87,681
86,606
305 "
737 '
89,663
1.55 $
1.53 $
479
511
88,671
0.52
0.51
560
228
87,394
1.10
1.09
$
$
For the years ended December 31, 2013, 2012 and 2011, potential common shares of 43,300, 1.0 million and 1.2 million,
respectively, were excluded from the computation of diluted earnings per share because their inclusion would have had an antidilutive effect.
/.
Share-Based Compensation
We account for share-based compensation in accordance with FASB's accounting guidance on stock compensation.
Accordingly, we measure the cost of share-based payments based on the grant-date fair value of the equity instruments and
recognize the cost over the requisite service period, which is typically the vesting period.
Our company's share-based employee compensation plans are described further in Note 10, Share-Based Compensation.
u.
Acquisitions
We account for acquisitions based upon the provisions of the FASB's accounting guidance on business combinations.
Accordingly, acquisitions are accounted for at fair value under the acquisition method of accounting. Acquisition costs are
expensed as incurred; noncontrolling interests are valued at fair value at the acquisition date; and changes in deferred tax asset
valuation allowances and income tax uncertainties after the acquisition date generally affect income tax expense.
v.
Litigation
We are party to various claims and lawsuits arising in the normal course of business. We closely monitor these claims and
lawsuits and frequently consult with our legal counsel to determine whether they may, when resolved, have a material adverse
effect on our financial position or results of operations and accrue and/or disclose loss contingencies as appropriate.
w.
Corrections
During 2013, we recorded a $2.8 million immaterial out-of-period non-cash physical inventory adjustment in our Animal
Hospital business segment which resulted in a debit to inventory and a credit to direct costs.
During 2012, we recorded a $3.1 million immaterial out-of-period adjustment to depreciation expense related to our
acquired capital leases, which resulted in a debit to depreciation expense and a credit to property and equipment, net.
20
VCAAnt^^aodSub^a^
Notes to Consolidated F i n a n c e Statements (Condoned)
2.
SnmmaryofSignifieantAeeonnting Policies, eontinned
Ouring^l^werecordedanimma^ri^ou^o^periodadjustmem
cost^ce^amequipmem sales goverr^
eo^eefionresultedinthereeogmfionof^Omillionofpre^^
eostsmourMedioalTeehnology operating segment that should have been
We have analyzed the Impact ofeaehofthese items and concluded that none ofthe adjustments would he materials
individual period, taking into account the requirements ofthe Securities and Exchange Comm^^
BulletinNoi08, Considering the EffectsofPrio
In accordance with the relevant guidance, we evaluated the materiality of errors ftomaquantitative and qualitati^^
Based on such evaluation,we concluded that correcting the errors would not have hadamaterial impact on any individual prior
periodpresentedinthe20l3Eorm l O ^ n o r would it have aflected the trend offinancial results As provided hyS
error correction did not require the restatement ofthe consolidated financial statements for prior periods.
3.
delated PartyTransaetions
^
^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ r ^ B ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ C ^ ^ ^ ^ ^
On February I,2012, we acquiredlOO% interest in ThinkPets, Inc., for$2l million, paya
shares o f V C A common stock and$l0.5 million in cash. The number of shares o f V C A common stock were determined based
on the daily volume weighted-average closing sales price ofthe V C A common stock for thelOconsecutive trading days ending
on the trading day immediately preceding the acquisition. At the time ofthe acquisition, Bob Antin, our CEO and Ch
the Board, owned 54% ofthe common stock ofThinkPets, and served asadirectorofThinkPets, and ArtAntin, our Chi^^
Operating Officer, owned 8% ofthe common stock ofThinkPets
^
^ ^ ^ ^ ^ ^ ^ ^ ^
Prank Reddick joined our company asadirectorinPebrua^ 2002 and isapartner in the law firm ofAkinOump Strauss
H a u e r ^ P e l d , L E P ^ A k i n ^ . Akin provided legal services to us during 2013, 20l2and 2011.The amount paid by our company
to Akin for these legal services was approximately $375,000, $551,000 and $16mi1lion in 2013,2012and 2 0 1 1 , ^
^
T ^ ^ ^ ^ ^ ^ ^ ^ l ^ ^ ^ ^
In 2006, we entered intoapharmacy distribution agreement with Strategic Pharmaceutical Solutions, Inc. ( ^
astartup pharmacy distribution company. Pursuant to the termsofthis agreement we are entitled to one representa^^
VetSource Board ofl^irectors. lender the agreement w^e promote the use ofVetSource as the preferred provider of
pharmaceutical products to V C A animal hospitals. The agreement hasafiveyear term and will renew for one year terms un^
either party provides written notice oftermination to the other party at least 120 days prior to expiration ofthe
term The amount paid by our company to VetSource for pharmaceutical products was $130million,$l3lmillion and $2^^^
million in 2013,20l2and 2011,respectively.We own 39.3% of the outstanding preferred stock ofVetSource.
On October24, 2013,we entered intoa$1.2 million revolving credit agreement with VetSource in the form of
promissory note. Our commitment under the revolving credit agreement is to loan up to $471,600, equitable to our 39.3% pro
ratashare in VetSourceAsofOecember3l,2013,we loaned VetSource $275,000.
21
VCA Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
4.
Acquisitions
Our acquisition strategy includes the acquisition of animal hospitals, animal hospital chains, laboratories or related
businesses. In accordance with that strategy, we acquired the following:
For the Years Ended December 31,
2013
Animal hospitals:
Acquisitions \ excluding AVC in 2012 and BrightHeart in 2Ol|....
0
0
..IZ...ZZ^ ..Z7Z_ .ZZZ.Z^.Z
Laboratories:
Acquisitions
Acquisitions relocated into our existing laboratories
New facilities
Total
(l)
35
~ ~"—^"~
BrightHeart *
Z .
New facilities
Acquisitions relocated into our existing animal hospitals
Sold, closed or merged...^...." . . Z Z..Z....Z..7....7.7.IZ....I..
2011
20
AvewZZZZ.ZZ7ZZIZ
Total....
2012
~
"
'— ""
—
(2)
"(18)
18
TT'"
"
1
(6)
"(6)
9
—
(3)
(11)
—
68
13_
1
—
—
1
1
(1)
2
1
—
2
3
2
—
"
Associate Veterinary Clinics (1981) LTD ("AVC") was acquired on January 31, 2012 and BrightHeart Veterinary Centers
("BrightHeart") was acquired on July II, 2011.
22
V C A Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
4.
Acquisitions, continued
Animal Hospital and Laboratory Acquisitions, excluding AVC and BrightHeart
The following table summarizes the aggregate consideration, including acquisition costs, paid by us for our acquired
animal hospitals and laboratories, excluding AVC and BrightHeart, and the allocation of the purchase price (in thousands):
For Years Ended December 31,
2013
Consideration:
" Cash..!..."
Assumed debt.
Holdback .......
Contingent consideration
Fair value of total consideratioi
Allocation of the Purchase Price:
'$"
52,688
2,360
1,092
1,285
57,425
$
~"
0
$
Noncontrolling interest
$
Total
(1)
$
T"
$
Identifiable intangible assets
Goodwil] C.......^.„.7.
^...„..7~...1~Z
Notes payable and other liabilities assumed
2012
14,779"
15,001
457665"
(11,084)
64,361 $
(6,936)
57,425 $
2011
78,629 ~$
—
34,243'
2,425
1,306
82,360
1,500
79
35,822
$
37515$
14,718
64,253
"
(126)
82,360 $
—
82,360
$
—;•
1,237
6,414"
28,171
—
35,822
".
35,822
We expect that $15.0 million, $60.4 million and $26.4 million ofthe goodwill recorded in 2013, 2012 and 2011,
respectively, will be fully deductible for income tax purposes.
In addition to the purchase price listed above are cash payments made for real estate acquired in connection with our
purchase of animal hospitals totaling $5.3 million, $5.3 million and $1.9 million in 2013, 2012, and 2011, respectively.
2012 AVC Investment
On January 31, 2012, we increased our investment in AVC by approximately CDN $81 million (approximately US $81
million) becoming the sole non-veterinarian shareholder of AVC. At the time of the additional investment. AVC operated 44
animal hospitals in three Canadian provinces, ofTering services ranging from primary care, to specialty referral services and 24hour emergency care. This investment and planned additional investments in AVC will facilitate our continued expansion in the
Canadian market. At the time of the investment, AVC had annualized revenue of approximately CDN $95 million
(approximately US $95 million). Our consolidated financial statements reflect the operating results of AVC since January 31,
2012.
23
VCA Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
4.
Acquisitions, continued
The following table summarizes the total investment and final allocation of the investment in AVC (in thousands):
Consideration:
cash
...i.7..zz.Lii........z.7...z
$
48,819
25,915
74,734
Assumed debt
Fair value of total consideration transferred
$
Allocation of the Purchase Price:
$
11,694 •
25,170
"79,707"
"(2ll826)
94,745
$
(11,850)
74,734
" ™ $
0
Identifiable intangible assets '.
(2)
Gw)dwill ..........7...7.7...7I....
Other liabilities assumed
(8,161)
Noncontrolling interest
Fair value of pre-existing investment in AVC.
Total
(I)
Identifiable intangible assets include customer relationships, trademark and covenants-not-to-compete. The weightedaverage amortization period for the total identifiable intangible assets is approximately six years. The customer-related
intangible assets weighted-average amortization period is approximately five years. The trademark weighted-average
amortization period is approximately ten years. The covenants-not-to-compete weighted-average amortization period is
approximately three years.
(2)
We expected that $362,000 of the goodwill recognized would be fully deductible for income tax purposes.
2011 BrightHeart Acquisition
On July 11, 2011, we acquired 100% ofthe membership interests of BrightHeart for approximately $50 million in cash.
BrightHeart operates nine animal hospitals, eight of which focus on the delivery of specialty and emergency medicine. The
acquisition increased our level of market recognition in areas where we had an existing market presence. Our consolidated
financial statements reflect the operating results of BrightHeart since July 11, 2011.
24
V C A Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
4.
Acquisitions, continued
The following table summarizes the final purchase price and the final allocation ofthe purchase price (in thousands):
Consideration:
Cash
$
Assumed debt
"..
23,490
"26,048
Contingent consideration
481
Fair value of total consideration transferred
_$
50,019 <
$
18,921
Allocation of the Purchase Price:
Tangible assets
0
Identifiable intangible assets*
2
Goodwill* '
8,796
.'
39,806
Other liabilities assumed
(17,504)
Total
<1)
(2)
$
50,019"
Identifiable intangible assets primarily include customer relationships. The weighted average amortization period for
both the total identifiable intangible assets and the customer-related intangible assets is approximately five years.
We expected that $38.8 million of the goodwill recognized would be fully deductible for income tax purposes.
25
VCA Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
4.
Acquisitions, continued
Other A cquisitions
2012 ThinkPets, Inc. ("ThinkPets")
On February 1, 2012, we acquired 100% interest in ThinkPets for $21 million , payable by delivery of 473,389 shares of
VCA common stock and $10.5 million in cash. We intend to combine the operations of ThinkPets with our Vetstreet business,
which we expect will improve the products and services it offers to clients of both companies. Our consolidated financial
statements reflect the operating results ofThinkPets since February 1, 2012.
The following table summarizes the total purchase price and the final allocation of the investment in ThinkPets (in
thousands):
Consideration:
Cash
Issuance of common stock for acquisitions
Holdback
Fair value of total consideration transferred
_
.
$
7,468
10,500
1,050
19,018
$'
Allocation of the Purchase Price:
Tangible assets
Identifiable intangible assets
$
2,093
7,221
01
2
Goodwin' '...
.!!....Z^.!.....!...^
'
" I2J55
Other liabilities assumed
Total. '.
(2.451)
!...„..„...
I.
~.;.LZ'..'..7.'...'.1.."'"$
19,018
(i)
Identifiable intangible assets include customer relationships, contracts and trademarks. The weighted average
amortization period for the total identifiable intangible assets is approximately eight years, for the customer-related
intangible assets approximately nine years, for the technology approximately four years, and for the trademarks
approximately two years.
(2)
We expected that $821,000 of the goodwill recognized would be fully deductible for income tax purposes.
Our ThinkPets business is reported within our "All Other" category in our segment disclosures combined with our
Medical Technology and Vetstreet operating segments.
2011 MediMedia Animal Health, LLC ("Vetstreet")
On August 9, 2011, we acquired 100% ofthe ownership interests of Vetstreet, a provider of online and printed
communications, professional education and marketing solutions to the veterinary community. The acquisition of Vetstreet
expanded the breadth of our product offerings to the veterinary community. We acquired Vetstreet for a final purchase price of
$146.4 million, net of cash acquired. The following table summarizes the final purchase price and final allocation of the
purchase price (in thousands):
26
VCA Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
4.
Acquisitions, continued
Consideration:
Cash.
146,420
Allocation of the Purchase Price:
Tangible assets
Identifiable intangible assets
;
$
01
ooodw:^..' ~ ILZ 7.;.7..;.z.zzir.z~.ii'.i
L
8,565
45,810
96,149
(4~T04)
:
r
Other liabilities assumed
Total
$
146,420
()) Identifiable intangible assets include customer relationships, technology, trademarks, non-compete agreements and
contracts. The weighted average amortization period for the total identifiable intangible assets is approximately nine
years, for the customer-related intangible assets approximately ten years, for the technology and trademarks
approximately seven years, for the non-compete agreements approximately two years and for the contracts
approximately eight years.
(2)
We expected that all ofthe goodwill recognized would be fully deductible for income tax purposes.
Our Vetstreet business is reported within our "All Other" category in our segment disclosures combined with our Medical
Technology operating segment.
Pro Forma Information (unaudited)
The following unaudited pro formafinancialinformation for the years ended December 31, 2013 and 2012 presents,
(i) the actual results of operations of our 2013 acquisitions and (ii) the combined results of operations for our company and our
2013 acquisitions as if those acquisitions had been completed on January 1, 2012, the first day of the comparable prior annual
reporting period. The pro formafinancialinformation considers principally (i) our company'sfinancialresults, (ii) the
unaudited historical financial results of our acquisitions, and (iii) select pro forma adjustments to the historicalfinancialresults
of our acquisitions. Such pro forma adjustments represent principally estimates of (i) the impact of the hypothetical
amortization of acquired intangible assets, (ii) the recognition of fair value adjustments relating to tangible assets,
(iii) adjustments reflecting the new capital structure, including additional financing or repayments of debt as part ofthe
acquisitions and (iv) the tax effects of the acquisitions and related adjustments as if those acquisitions had been completed on
January 1, 2012. The unaudited pro forma financial information is not necessarily indicative of what our consolidated results of
operations would have been had we completed the acquisition at the beginning of the comparable prior annual reporting period.
In addition, the unaudited pro formafinancialinformation does not attempt to project the future results of operations of
our company:
Revenue
Net Income
(Unaudited)
(In thousands):
Actual from acquisition date to December 31, 2013
2013 supplemental pro forma from January 1, 2013 to December 31, 2013 .
2012 supplemental pro forma from January 1, 2012 to December 31, 2012 .
(1)
(1)
(1)
12,615
1,837,872
1,819,693
1,350
138,621
47,385
2013 supplemental pro forma net income was adjusted to exclude $869,000 of acquisition-related costs incurred in 2013.
2012 supplemental pro forma net income was adjusted to include these charges.
27
V C A Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
5.
Goodwill
The following table presents the changes in the carrying amount of our goodwill for 2013 and 2012 (in thousands):
Animal
Hospital
Laboratory
All Otber
Total
Balance as of December 31, 201 f
$
Accumulated Impairment losses
Subtotal
Goodwill acquired
1,035,401
$
96,810
1,035,401
96,810
143,926
34
$
126,706
"
" (2L310)
Goodwill impairment
Foreign translation adjustment
1,281
0
Other L.71„.....L..lI..l....l....
$
1,258,917
"
(24310)
105,396
1,237,607
12,155
156,115
(99,501)
(99,501)
(1,028)
(4^288)
17
1,298
(3,260)
Balance as of December 31. 2012
Goodwill
1,177,348
~~
96,86r
Accumulated Impairment losses
(120,811)
Subtotal
1,177,348
Goodwill acquired
(i
(5^651)
:.
"
'
"(120,811)
17,022
96,861
50
45,615
Foreign translation adjustment
other >..:.
1,412,042'
1377833"
1,291,231
45,665
(5,691)
(40)
(731)
443
(288)
Balance as of December 31,2013
Goodwill
1,216,581
96,871
138,276
Accumulated Impairment losses
Subtotal
(1)
1,451,728
(120,811)
(120,811)
$
1,216,581
$
96,871
$
17,465
$
1,330,917
In 2013, "Other" primarily includes measurement period adjustments and a write-off related to a sale of an animal
hospital. In 2012, "Other" includes acquisition-price adjustments, which consist primarily of an adjustment related to
capital leases and buy outs of noncontrolling interest partners.
Goodwill Impairment Charges
2012 Charge
Impairment testing for goodwill is performed at least annually. We perform our annual impairment test as of October
31st. Goodwill is also tested for impairment between annual tests if an event occurs or circumstances change that would more
likely than not reduce the fair value of a reporting unit below its carrying value.
We performed our annual test of goodwill as of October 31, 2012 for all of our reporting units. We determined that each
of our reporting unit's fair value exceeded their respective carrying values with the exception of our Vetstreet reporting unit.
Management ultimately determined that there was impairment to Vetstreet's goodwill primarily due to (i) less than anticipated
financial performance for fiscal 2012, including with respect to revenue and operating cash flow, and (ii) new revenue and
operating profit growth projections that were significantly lower than previous projections. Accordingly, we recorded a $99.5
million impairment charge during the fourth quarter of 2012.
Revenue and operating profit growth projections were lowered as a result of continued operational delays in part due to
our upgrading and migration of Vetstreet's information technology systems from their former parent to ours. Corporate data
center. Additionally, we have changed Vetstreet's overall business strategy to better accommodate the needs of the veterinary
community. The projected cash flows under our revised strategy were significantly lower than under our
28
VCA Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
5.
Goodwill, continued
previous plan. Finally, our revised forecast reflected the impact of new well-capitalized entrants to this business which resulted
in increased competition.
The impairment test for goodwill uses a two-step approach, which is performed at the reporting unit level. Step one
compares the fair value of the reporting unit to its carrying value including goodwill. If the carrying value exceeds the fair
value, there is a potential impairment and Step two must be performed. Step two compares the carrying value ofthe reporting
unit's goodwill to its implied fair value (i.e., the fair value of the reporting unit less the fair value of the unit's assets and
liabilities, including identifiable intangible assets). If the carrying value of goodwill exceeds its implied fair value, the excess is
recorded as an impairment.
In performing Step one of the impairment test, we estimated the fair value of the reporting unit using a combination of
the income and market approaches with greater emphasis placed on the income approach, for purposes of estimating the total
enterprise value.
The income approach is based on a discounted cash flow analysis and calculates the fair value of the reporting unit by
estimating the after-tax cash flows attributable to the reporting unit and then discounting the after-tax cash flows to a present
value, using a weighted average cost of capital ("WACC"). The WACC utilized in our analysis using the income approach was
15.5%. The WACC is an estimate ofthe overall after-tax rate of return required for equity and debt holders of a business
enterprise. The reporting unit's cost of equity and debt was developed based on data and factors relevant to the economy, the
industry and the reporting unit. The cost of equity was estimated using the capital asset pricing model ("CAPM"). The CAPM
uses a risk-free rate of return and an appropriate market risk premium for equity investments and the specific risks of the
investment. The analysis also included comparisons to a group of guideline companies engaged in the same or similar
businesses. The cost of debt was estimated using the current after-tax average borrowing cost that a market participant would
expect to pay to obtain its debtfinancingassuming a target capital structure.
The market approach is based on the guideline publicly traded company method to determine the fair value of the
reporting unit. Due to the significant lack of guideline public companies, little weight was given to this approach. Under this
method, market multiples ratios were applied to the reporting unit's earnings with consideration given to our size, product
offerings, growth, and other relevant factors compared to those of the guideline companies. The guideline companies selected
were engaged in the same or a similar line of business as us. Market multiples were then selected based on consideration of
risk, growth, and profitability differences between us and the guideline companies. The selected market multiples were then
multiplied by our October 31, 2012 revenue to arrive at an estimate of fair value.
Based on the above analysis, it was determined that the carrying value of the Vetstreet reporting unit including goodwill
exceeded the fair value ofthe reporting unit, requiring us to perform step two of the goodwill impairment test to measure the
amount of impairment loss, if any.
In performing step two of the goodwill impairment test, we compared the implied fair value of the reporting unit's
goodwill to its carrying value of goodwill. This test resulted in a non-cash, goodwill impairment charge of $99.5 million ($60.6
million after-tax), which was recognized during the three months ended December 31, 2012. This charge had no impact on our
cash flows or our compliance with debt covenants.
The fair value estimates used in the goodwill impairment analysis required significant judgment. The Company's fair
value estimates for purposes of determining the goodwill impairment charge are considered Level 3 fair value measurements.
We based our fair value estimates on assumptions that we believe to be reasonable but that are inherently uncertain,
including estimates of future revenues and operating margins and assumptions about the overall economic climate and the
competitive environment for our business. Our estimates assumed that revenues would decline into the foreseeable future.
There can be no assurance that our estimates and assumptions will prove to be accurate predictions ofthe future. If our
assumptions regarding business plans, competitive environments or anticipated operating results are not correct, we may be
required to record goodwill impairment charges in future periods.
29
VCA Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
6.
Other Accrued Liabilities
Other accrued liabilities consisted of the following (in thousands):
As of December 31,
2013
Deferred revenue
„
Accrued health insurance
^Deferred rent..
..„..„„. _
Accrued other insurance
Miscellaneous accrued taxes
Accrued workers' compensation
Holdbacks and eam-outs
Customer deposits
Accrued consulting fees
Accrued lease payments
_
$
....._.._.„....._.._....„.
(1)
:Other
7.
10,811
6,409
3^604
3,799
3,485
3,570
3,599
3,140
3,114
888
15,626
14^712
58,762 $
57,131
7..Z..;.3I../.Z.ZZ.ZZ.Z%7.ZZIZZZZr.ZZZ.ZZZ»ZZJZ."
(l)
2012
11,190 $
5,479
_ _ _ 4,331
_
4,381
2,804
3,267
3,040 "~
3,075
3,028
2,547
Includes property, sales, and use taxes.
Long-Term Obligations
Long-term obligations consisted ofthe following at December 31, 2013 and 2012 (in thousands):
2013
2012
Notes payable, maturing in 2016, secured by assets,
variable interest rate (1.92% and 1.96% at 2013 and
556,914
Revolving line of credit, maturing in 2016, secured by
_
Notes payable matures in 2014, secured by assets and
stock of certain subsidiaries, with interest rate of
10.0%
Total debt obligations
Less — current portion
$
230
557,144 "
62,501
619,645
(51,087)
568.558 $
592,422
_
266
592,688
37,955
630,643
(39,002)
591.641
The annual aggregate scheduled maturities of our long-term obligations for the five years subsequent to December 31,
2013 are presented below (in thousands):
30
V C A Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
7.
Long-Term Obligations, continued
Debt
Obligations
2014
2015..........
2016.™.....
2017.......!..
2018.."
Thereafter.
$
TotaC...
$
47,574
51,289
458,281
—
—
—
557,144
Capita) Lease
Obligations
$
'
$
3,515
""3,419
3,171
3,490
3,805
45,101
62,501
Total
$
$
51,089
54J08
461,452"
" 3,490
37805 "
45,101^
619,645
Senior Credit Facility
In August 2010, we entered into a new senior credit facility with various lenders for $600 million of senior secured credit
facilities with Bank of America, N.A. as the syndication agent and Wells Fargo Bank, N.A. as the administrative agent,
collateral agent, issuing bank and swing line lender. At the time of entering into the senior credit facility, it included $500
million of senior term notes and $100 million revolving credit facility, which may be used to borrow, on a same-day notice
under a swing line, the lesser of $10 million and the aggregate unused amount of the revolving credit facility then in effect. In
connection with this transaction, we paid financing costs in the amount of $9.1 million, of which $2.1 million, or $1.3 million
after tax were recognized as part of income from continuing operations, the remainder was capitalized as deferred financing
costs.
In August 2011, we amended and restated our existing senior credit facility to allow for additional senior term notes in
the amount of $100 million and an additional $25 million aggregate principal amount of revolving commitments. Bank of
America, N.A. and JP Morgan Chase Bank, N.A. are co-syndication agents for the amended senior credit facility, while Wells
Fargo, N.A. remains the administrative agent, collateral agent, issuing bank and swing line lender. The amended senior credit
facility called for $581.3 million in senior term notes and a $125 million revolving credit facility. The funds borrowed from the
additional senior term notes were used to repay in full, amounts borrowed in connection with the acquisition of Vetstreet on
August 9, 2011. The terms ofthe amended and restated senior credit facility are discussed below in this footnote. In connection
with the amendment we incurred $2.9 million in financing costs, of which approximately $865,000 were recognized as part of
income from continuing operations and approximately $2.0 million was capitalized as deferred financing costs. In addition, we
expensed $1.1 million of previously capitalized deferred financing costs associated with lenders who exited the syndicate on
the amendment date or those that were determined to be extinguished.
On January 25, 2012, we executed an amendment (the "First Amendment") to our Amended and Restated Credit and
Guaranty Agreement entered into as of August 16, 2011 (our "Senior Credit Facility"). On January 24, 2012, we issued new
term loans in the aggregate principal amount of $50.0 million. The First Amendment replenished the aggregate principal
amount of uncommitted incremental facilities by $50.0 million, permitting us to request up to an aggregate principal amount of
$100.0 million in uncommitted incremental facilities. The funds borrowed from the Incremental Facility were used to fully
repay amounts borrowed to fund an additional investment in AVC on February 1, 2012. In connection with the First
Amendment we incurred $122,000 in financing costs, of which approximately $47,000 were expensed as a component of
selling, general and administrative expenses and $75,000 were capitalized as deferred financing costs.
Interest Rate.
option, on either:
In general, borrowings under the senior term notes and the revolving credit facility bear interest, at our
the base rate (as defined below) plus the applicable margin. The applicable margin for a base rate loan is an amount
equal to the applicable margin for Eurodollar rate (as defined below) minus 1.00%; or
the adjusted Eurodollar rate (as defined below), plus a margin of 1.75% (Level II, see table below), per annum until the
date of delivery of the compliance certificate and the financial statements, for the period ended December 31, 2013, at
which time the applicable margin will be determined by reference to the leverage ratio in effect from time to time as set
forth in the following table:
31
VCA Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
7.
Long-Term Obligations, continued
Level
I
II
III.
IV
Applicable Margin for
Eurodollar Rate Loans
Leverage Ratio
.*
r.....".r....7.
> 2.50:1.00
< 2.50:1.00 and > 1.75:1.00
Z . . . < 1.75:1.00 and >T0O:lToO
< 1.00:1.00
_
"~"
"
Applicable Revolving
Commitment Fee %
2.25%
1.75%
1.50%
1.25%
^
0.50%
0375%
" 0.25%
0.20%
The base rate for the senior term notes is a rate per annum equal to the greatest of Wells Fargo Bank, N.A. ("Wells
Fargo") prime rate in effect on such day, the Federal funds effective rate in effect on such day plus 0.5% and the adjusted
Eurodollar rate for a one-month interest period commencing on such day plus 1.0%. The adjusted Eurodollar rate is defined as
the rate per annum obtained by dividing (1) the rate of interest offered to Wells Fargo on the London interbank market by (2) a
percentage equal to 100% minus the stated maximum rate of all reserve requirements applicable to any member bank of the
Federal Reserve System in respect of "Eurocurrency liabilities."
Maturity and Principal Payments. The Amended and Restated senior term notes mature on August 19. 2016. Principal
payments on the senior term notes are paid quarterly in the amount of (i) $11.8 million for the two years beginning on
December 31. 2013 and (ii) $15.8 million for the three quarters prior to maturity, at which time the remaining balance is due.
The following table sets forth the remaining scheduled principal payments for our senior term notes (in thousands):
2014
Senior term notes
$
47,344
2015
$
51,289 $
2016
458,281
2017
$
2018
— $
The revolving credit facility has a per annum commitment fee determined by reference to the Leverage Ratio in effect
from time to time as set forth in the table above and is applied to the unused portion of the commitment. The revolving credit
facility matures on August 19, 2016. Principal payments on the revolving credit facility are made at our discretion with the
entire unpaid amount due at maturity. At December 31, 2013, we had no borrowings under our revolving credit facility.
Guarantees and Security. We and each of our wholly-owned subsidiaries guarantee the outstanding debt under the
senior credit facility. These borrowings, along with the guarantees of the subsidiaries, are further secured by substantially all of
our consolidated assets. In addition, these borrowings are secured by a pledge of substantially all of the capital stock, or similar
equity interests, of our wholly-owned subsidiaries.
Debt Covenants. The senior credit facility contains certain financial covenants pertaining to fixed charge coverage and
leverage ratios. In addition, the senior credit facility has restrictions pertaining to capital expenditures, acquisitions and the
payment of cash dividends on all classes of stock. At December 31, 2013, we had afixedcharge coverage ratio of 1.77 to 1.00,
which was in compliance with the required ratio of no less than 1.20 to 1.00, and a leverage ratio of 1.81 to 1.00, which was in
compliance with the required ratio of no more than 3.00 to 1.00.
32
V C A Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
8.
Fair Value
Current fair value accounting guidance includes a hierarchy that is intended to increase consistency and comparability in
fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are
used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants
would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs
reflect a reporting entity's pricing based upon their own market assumptions. The current guidance establishes a three-tiered
fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:
Level 1.
Observable inputs such as quoted prices in active markets;
Level 2. Inputs, other than quoted prices, that are observable for the asset or liability, either directly or indirectly.
These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar
assets or liabilities in markets that are not active; and
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop
its own assumptions.
Non-Recurring Assets
Non-financial assets and non-financial liabilities measured on a non-recurring basis are accounted for in accordance with
FASB's guidance on fair value measurement.
At December 31, 2013, we did not have any material applicable non-recurring measurements of non-financial assets or
non-financial liabilities.
During the quarter ended December 31, 2012, our Vetstreet goodwill was written down to its implied fair value resulting
in an impairment charge of $99.5 million, which was included in earnings in the period. Our Vetstreet goodwill balance as of
December 31, 2012 was $8.8 million. Additionally, during the quarter ended December 31, 2012, our Vetstreet long-lived assets
were written down to their estimated fair value resulting in an impairment charge of $22.9 million, which was included in
earnings in the period. Our Vetstreet long-lived assets balance as of December 31, 2012 was $28.7 million. Both the implied
fair value of goodwill and the estimated fair value of long-lived assets were calculated using Level 3 inputs.
Fair Value of Financial Instruments
The FA SB accounting guidance requires disclosure of fair value information about financial instruments, whether or not
recognized in the accompanying consolidated balance sheets. Fair value as defined by the guidance is the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. The fair value estimates of financial instruments are not necessarily indicative of the amounts we might pay or receive in
actual market transactions. The use of different market assumptions and/or estimation methodologies may have a material
effect on the estimated fair value amounts.
Cash and Cash Equivalents. These balances include cash and cash equivalents with maturities of less than three
months. The carrying amount approximates fair value due to the short-term maturities of these instruments.
Receivables, Less Allowance for Doubtful Accounts, Accounts Payable and Certain Other Accrued Liabilities.
their short-term nature, fair value approximates carrying value.
Due to
Long-Term Debt. The fair value of debt at December 31, 2013 and December 31, 2012 is based upon the ask price
quoted from an external source, which is considered a Level 2 input.
The following table reflects the carrying value and fair value of our variable-rate long-term debt (in thousands):
Asof December 31,
2013
Carrying
Value
^Variable-rate long-term debt
„
$
556,914
33
2012
Fair
Value
$
556,914 $
Carrying
Value
592,422 $
Fair
Value
592,422
:
VCA Antech, Inc. and Sub^diar^
Notes to Consolidated Financial Statements (Cnntinncd)
9.
dividends and Share repurchase Program
^ v ^ ^
We have not paid cash dividends on our com^
future in addition, our senior credit faeiiitypiaees limitations on our ahihty to pay cash
in respect of our common stock. Speciflcaiiy, our amended and restated senior credit facility datedAugusti6,20itpr^^
from declaring, ordering, paying, or setting apart any sum for any dividends or other distributions on account of
any class ofstock, other than dividends payable solely in shares ofstock to holders ofsuch class ofstock. Any future
determination as to the payment ofdividends will depend on our results ofoperations,financialcondition, capital r e ^
and other factors deemed relevant by our Board ofDirectors, including the Ceneral Corporation Law ofthe State o f ^
which provides that dividends are only payable out ofsurplus or current net profits
^^^^^^^^^^^^^
fnApril, our Board ofDirectorsauthorizedanew share repurchase program, authorizing us to repurchase up to $1250
million ofour common shares from time to time in open market purchases, pursuant to trading plans established in accordance
w^ith SEC rules or through privately negotiated transactions.The extent and timing of our repurchases will depend up
conditions, our cash requirements to fund the long-term growth investments in our business and other corporate considera^^
The repurchases will be funded by existing cash balances and by our revolving credit facility. The share repurchase progra
has no expiration date The repurchase program may be suspended or discontinued at any time
10.
Share-Based Compensation
^ ^ B ^ ^ ^ ^ ^
At December^l,2013,there were stock options, nonvested shares and restricted stock units outstanding under our
existingstockincentiveplans We maintain three plans: thel996 Stock Incentive Plan; the 2001 Stock 1^^
2006 Equity Incentive Plan ("2006 Plan"). New options and other stock awards may only be granted under the 2006 Plan. ^
December3l,2013,the sum of the shares previously issued pursuant to awards under the 2006 Plan and the shares of common
stock remaining available for future issuance under the 2006 Plan to our employees, directors, consultants and those of our
affiliates is7,789,532shares.The number of shares of common stock remaining available for future issuance under t^^
Plan may increase by any shares ofcommon stock underlying prior outstanding options that expire, are forfeited, c^^
terminate for any reason without having heen exercised in full. The number ofshares available for issuan^^
2013 was 1,713,732 Outstanding options and nonvested shares granted under our planstypicallyvest over periods^
from three to six years, and outstanding optionstypicallyexpire between five and ten years from the date of grant
34
V C A Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
10.
Share-Based Compensation, continued
Stock Option Activity
A summary of our stock option activity for 2013 is as follows (in thousands, except weighted-average exercise price and
weighted-average remaining contractual term):
WeightedAverage
Exercise
Price
Stock
Options
Outstanding at December 31, 2011
~„..*7.
Granted
Exercised
Expired
Forfeited/Canceled
Outstanding at December 31, 2012
Granted
Exercised
Expired
Forfeited/Canceled
Outstanding at December 31, 2013
Exercisable at December 31, 2013
Vested and expected to vest at December 31, 2013..
3,776
462'
1966)
(1,039)
(52)
2.181
(1,043)
(36)
~ (71)"
1,031
294
1.014
16.92
18.94
9.87
23.68
18.91
17.20"
16.73
30.70
16.06
17.28
17.06
17.30
WeightedAverage
Remaining
Contractual
Term
(Years)
Aggregate
Intrinsic
Value
3.1
$
8.399
3.7
$
14.516
3.7
3.7
$
$
4,212
14,246
There were no stock options granted during 2013. We granted 462,229 and 894,000 stock options during 2012 and 2011,
respectively, which had an estimated weighted-average grant date fair value of approximately $5.48 and $5.21, respectively.
The aggregate intrinsic value of our stock options exercised during 2013, 2012 and 2011 was $11.4 million, $9.9 million and
$5.6 million, respectively. The actual tax benefit realized on options exercised during 2013, 2012 and 2011 was $4.5 million,
$3.9 million and $2.2 million, respectively. The total fair value of options vested during 2013, 2012 and 2011 was $1.8 million,
$3.1 million and $2.2 million, respectively.
The following table summarizes information about the options outstanding at December 31, 2013 (in thousands, except
per share amounts and the weighted-average remaining contractual life):
Options Outstanding
Options Exercisable
Exercise Price
Outstanding
Weighted-Avg.
Remaining
Contractual
Life
$15.98-$18.94
1,031,119
3.7
Weighted-Avg.
Exercise Price
Exercisable
Weighted-Avg.
Exercise Price
$17.28
294,422
$17.06
At December 31. 2013, there was $3.4 million of total unrecognized compensation cost related to our stock options. This
cost is expected to be recognized over a weighted-average period of over 2.2 years.
35
V C A Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
10.
Share-Based Compensation, continued
Calculation of Fair Value
The fair value of our options is estimated on the date of grant using the Black-Scholes option pricing model. We amortize
the fair value of our options on a straight-line basis over the requisite service period. There were no options granted during
2013. The following weighted-average assumptions were used to determine the fair value of those options granted during 2012
and 2011:
For Years Ended
December 31,
Expected volatility'
Expected dividends
Expected term
Risk-free rate^
2012
" " " Z 3 4 . 1 %
—%
4.4 years
0.62%
0
(2)
2011
39.0%
—%
4.3 years
0.79%
(1)
We estimated the volatility of our common stock on the date of grant based on both historical and implied volatility.
(2)
The expected term represents the period of time that we expect options to be outstanding. We estimated the expected
term based upon the weighted-average of our historical experience.
(3)
The risk-free interest rate is based on the implied yield in effect at the time of option grant on U.S. Treasury zero-coupon
issues with equivalent remaining terms.
We use historical data to estimate pre-vesting option forfeitures. We recognize share-based compensation only for those
awards that we expect to vest.
The compensation cost charged against income for stock options was $1.8 million, $1.5 million and $1.6 million for
2013,2012 and 2011, respectively. The corresponding income tax benefit recognized in the income statement was $687,000,
$603,000 and $636,000 for 2013, 2012 and 2011, respectively.
Non-Vested Shares
Additionally, under our 2006 Plan, we have issued non-vested stock awards in our common stock to certain employees
and members of our Board of Directors. The outstanding non-vested stock awards to employees and executives generally vest
in three or four equal annual installments starting with the first anniversary of the grant date. The non-vested stock awards to
members of our Board of Directors generally vest in equal annual installments over three years from the date of grant. A
summary of our non-vested stock activity for 2013 and 2012 is as follows (in thousands, except weighted-average fair value per
share):
Grant Date
WeightedAverage Fair
Value Per Share
Shares
Outstanding at December 31, 2011.
Granted
Vested..
Forfeited/Canceled
!Outstanding at December 31, 2012
Granted
Vested.......lL.l..i.._
Forfeited/Canceled
Outstanding at December 31, 2013
36
1,516 $
400 $
(457) $
(8)$"
20.76
19~23
22.17
1.451
211
(477)
(2)
1,183
19.90
2977
20.18
18.78
21.56
$
$
$
$
$
19:63
V C A Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
10.
Share-Based Compensation, continued
During 2013, we granted 211,462 shares of non-vested common stock. Of these awards, 199,410 shares were granted to
employees and 12,052 shares were granted to our non-employee directors. The awards to employees will vest in equal annual
installments over four years. The shares awarded to our non-employee directors will vest in three equal annual installments.
Total compensation expense related to non-vested stock awards was $8.8 million, $11.4 million and $9.1 million in 2013,
2012 and 2011, respectively. The corresponding income tax benefit recognized in the income statement was $3.4 million, $4.4
million and $3.6 million for 2013, 2012 and 2011, respectively. As of December 31, 2013, there was $16.6 million of
unrecognized compensation cost related to these non-vested shares that will be recognized over a weighted-average period of
2.8 years.
Restricted Stock Unit Activity
Pursuant to the terms ofthe 2006 Equity Incentive Plan, we have also granted performance-based restricted stock units
("RSUs") to our executive officers representing the right to receive one share of common stock. These RSUs will be earned
upon achievement ofthe applicable performance criteria during the performance periods and in accordance with the specific
equity performance award agreement they were issued from. Assuming achievement of the required performance conditions
and continued service through each vesting date, these awards will generally vest in equal annual installments over four years
from the date of grant.
A summary of our RSU award activities for 2013 is as follows (in thousands, except weighted-average fair value per
share):
Grant Date
WeightedAverage Fair
Value Per Unit
Units
Outstanding at December 31, 2011
Granted
Vested/Paid out
Forfeited/Canceled
Outstanding at December 31, 2012
Granted
Vested/Paid out
Forfeited/Canceled
83
308
r...„....„..„l...l..Z..~ I L ™ . . . . 7 Z . 7 . Z Z " " ( 8 3 )
]
_
7.........7!
308
.'.
292
.'7
.'.
.7.
(38)
—
Outstanding at December 31, 2013
562
$
22.90
$
18.94
% " " " 22.90"
$
_~
$
18.94
$ "
"27.78
$
""
18.94
$
_
$
23.54
Total compensation cost charged against income, related to RSU awards was $3.5 million and $1.2 million for 2013 and
2012, respectively. The corresponding income tax benefit recognized in the income statement was $1.4 million and $468,000
for 2013 and 2012, respectively. There was no compensation cost charged against income related to RSUs in 2011. As of
December 31, 2013, there was $9.2 million of total unrecognized compensation cost related to our RSU awards. This cost is
expected to be recognized over a weighted-average period of over 3.5 years.
There were 292,478 and 307,989 performance based RSUs granted to our executive officers in 2013 and 2012,
respectively. The RSUs earned upon achievement of performance goals are further subject to vesting where an aggregate of
25% of RSUs earned will vest in four equal annual installments starting on the applicable anniversary date. There were no
RSUs granted in 2011.
37
VCA Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
11.
Commitments and Contingencies
a. Leases
We operate many of our animal hospitals from premises that are leased under operating leases with terms, including
renewal options, ranging from five to 35 years. Certain leases include fair-value purchase options that can be exercised at our
discretion at various times within the lease terms.
The future minimum lease payments on operating leases at December 31, 2013 are as follows (in thousands):
2014
.„..„
2015
2016. ...Z. . 7
2017
2018 i
Thereafter
^
~...L..Z .~.lL„.„^^^
Z.. ~.Z. \.ZZ......ZZZ'..Z.
„...„
.„
„
$
69,353
ZZ.ZZ. '
' 68,466
r
z.
^....„..„....7..„.
i ZZ
z z z.:.
!
ZZ.Z..
~ZZ Z^.Z.ZZ.Z.
zz... zz::z...::...z.. ...z........z...z."67,338
72.Z.Z1..17ZZ^^Z7iZ..._.L[ZLL....
65,946
ZZZZZZZ.ZZ
...ZZ....zZZZZZZ.ZZz..733,705
Total
$
1,073,783
Rent expense totaled $67.6 million, $66.0 million and $55.2 million in 2013, 2012 and 2011, respectively. Rental income
totaled $1,049,000, $955,000 and $920,000 in 2013, 2012 and 2011, respectively.
b. Purchase Commitments
Under the terms of certain purchase agreements, we have aggregate commitments to purchase approximately $13.5
million of products and services through 2016.
c. Earn-out Payments
We have contractual arrangements in connection with certain acquisitions, whereby additional cash may be paid to
former owners of acquired companies upon attainment of specified financial criteria as set forth in the respective agreements.
The amount to be paid cannot be determined until the earn-out periods have expired and the attainment of criteria is
established. If the specified financial criteria are attained, we will be obligated to pay an additional $2.6 million.
In accordance with business combination accounting guidance, contingent consideration, such as earn-out agreements,
are recognized as part of the consideration transferred on the acquisition date. A liability is initially recorded based upon its
acquisition date fair value. The changes in fair value are recognized in earnings where applicable at each reporting period. The
fair value is determined using a contractually stated formula using either a multiple of revenue or Earnings Before Interest, Tax,
Depreciation and Amortization ("EBITDA"). The formulas used to determine the estimated fair value are level 3 inputs. The
changes in fair value were immaterial to our consolidated financial statements taken as a whole. We recorded $2.2 million and
$1.5 million in eamout liabilities as of December 31, 2013 and 2012, respectively, which are included in other accrued
liabilities in our consolidated balance sheets.
'
d/ Holdbacks
In connection with certain acquisitions, we withheld a portion of the purchase price, or the holdback, as security for
indemnification obligations of the sellers under the acquisition agreement. The amounts withheld are typically payable within a
12-month period. The total outstanding holdbacks at December 31, 2013 and 2012 were $886,000 and $2.2 million,
respectively, and are included in other accrued liabilities.
We paid $2.4 million, $2.7 million and $1.8 million in 2013, 2012 and 2011, respectively, to sellers for the unused portion
of holdbacks.
38
VCA Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
11.
Commitments and Contingencies, continued
e. Other Contingencies
On May 29, 2013, a former veterinary assistant at one of our animal hospitals filed a purported class action lawsuit
against us in the Superior Court of the State of California for the County of Los Angeles, titled Jorge Duran vs. VCA Animal
Hospitals, Inc., et. al. The lawsuit seeks to assert claims on behalf of current and former veterinary assistants employed by us
in California, and alleges, among other allegations, that we improperly failed to pay overtime wages, improperly failed to
provide proper meal and rest periods, and engaged in unfair business practices. The lawsuit seeks damages, statutory penalties,
and other relief, including attorneys' fees and costs.
Additionally, on July 12, 2013, an individual who provided courier services with respect to our laboratory clients in
California filed a purported class action lawsuit against us in the Superior Court of the State of California for the County of
Santa Clara - San Jose Branch, titled Carlos Lopez vs. Logistics Delivery Solutions, LLC, Antech Diagnostics, Inc., et. al.
Logistics Delivery Solutions, LLC, a co-defendant in the lawsuit, is a company with which Antech has contracted to provide
courier services in California. The lawsuit seeks to assert claims on behalf of individuals who were engaged by Logistics
Delivery Solutions, LLC to perform such courier services and alleges, among other allegations, that Logistics Delivery
Solutions, and Antech Diagnostics improperly classified the plaintiffs as independent contractors, improperly failed to pay
overtime wages, and improperly failed to provide proper meal and rest periods. The lawsuit seeks damages, statutory penalties,
and other relief, including attorneys' fees and costs.
We are vigorously defending these lawsuits. Because these lawsuits are in the initial stages, the financial impact to us. if
any, cannot be estimated.
We have certain contingent liabilities resulting from litigation and claims incidental to the ordinary course of our
business. We believe that the probable resolution of such contingencies will not have a material adverse effect on our
consolidated financial position, results of operations, or cash flows.
12.
Income Taxes
The provision for income taxes is comprised of the following (in thousands):
2013
Federal:
Current
Deferred
$"
"..
.'
State:
Current..
:~ Deferred
Foreign:
Current
' Deferred
$
39
For the Yean Ended December 31,
2012
54,915
16,150
71,065
$ "
5U342 $
(27,103)
24,239
11,156
3,017
14,173
9,896
(5,081)
4,815
3,318
(1,103)
2,215
87,453 $
4X)35 " .
(1.214)'
2,821
31,875 $
2011
45/765
17,330
63,095
10,710
2,222"
12,932
-
—
76,027
-
VCA Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
12.
Income Taxes, continued
The net deferred income tax assets (liabilities) at December 31, 2013 and 2012 are comprised ofthe following (in
thousands):
December 31,
2013
Current deferred income tax assets:
Accounts receivable
State taxes
.Z
Other liabilities and reserves
Other assets
Inventory
Valuation allowance
Total current deferred income tax assets
Non-current deferred income tax (liabilities) assets:
Net operating loss carryforwards
Write-down of assets
Start-up costs .
Other assets
Intangible assets
Property and equipment
Share-based compensation
Valuation allowance...;
$
6,598 $
4,333
14,298
7,042
K547
(4,911)
28,907 $
6,085
2,471 .
9,716
7,119
1.275
(4,08^
22,579
28,111 $
—
—
27,287
(12&451)
29[8dr
$
$
2012
"
" "(2W)
6,226
(8,&79)
$
1,222
~335~
24~955
(107,112)
(221649)
- 7J77
(9.779)
(75,846)
(100,099) $
At December 31, 2013, we had Federal net operating loss ("NOL") carryforwards of approximately $68.5 million,
comprised mainly of acquired NOL carryforwards. These NOLs expire at various dates through 2032. The utilization of NOL
carryforwards to reduce taxable income is subject to certain statutory' limitations. Events that cause such a limitation include,
but are not limited to, a cumulative ownership change of more than 50% over a three-year period. We believe that some of our
acquisitions caused such a change of ownership and, accordingly, utilization of the NOL carryforwards may be limited in future
years. Accordingly, the valuation allowance is principally related to subsidiaries' NOL earn-forwards. The change in valuation
allowance in 2012 is related to investment-related loss carryforwards which expired in 2012. We believe that it is more likely
than not that the benefit from the remaining net deferred tax assets will be realizable.
Our effective tax rate was 38.9%, 41.2% and 44.3% in 2013, 2012 and 2011, respectively.
A reconciliation of the provision for income taxes to the amount computed at the Federal statutory rate is as follows:
For Yean, Ended December 31,
2013
Federal income tax at statutory rate
State taxes, net of Federal benefit
Goodwill impairment
AVC gain
—
Foreign rate differential
Miscellaneous
~
2012
35.0%
4.2
—
~—
(0.4)
0.1
38.9%
......7.
'
35.0%
4.1
4.6
" (2.6)
"(1.1)
1.2
41.2%
2011
~
35.0%
4.9
4.3
*— "
—
0.1
44.3%
We are regularly audited by federal and state tax authorities. The statute is generally open for four years for state audits.
We are currently under IRS audit for the 2011 taxable year.
40
V C A Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
13.
Noncontrolling Interests
We own some of our animal hospitals in partnerships with noncontrolling interest holders. We consolidate our
partnerships in our consolidated financial statements because our ownership interest in these partnerships is equal to or greater
than 50.1 % and we control these entities. We record noncontrolling interest in income of subsidiaries equal to our partners'
percentage ownership ofthe partnerships' income. We also record changes in the redemption value of our redeemable
noncontrolling interests in net income attributable to noncontrolling interests in our consolidated income statements.
Noncontrolling interest in income of subsidiaries was $5.4 million, $5.2 million and $4.5 million in 2013, 2012 and 2011,
respectively. In addition, we reflect our noncontrolling partners' cumulative share in the equity of the respective partnerships as
either noncontrolling interests in equity, mandatorily reedemable noncontrolling interests in other liabilities, or redeemable
noncontrolling interests in temporary equity (mezzanine) in our consolidated balance sheets. At December 31, 2013 and 2012,
noncontrolling interest was $10.2 million and $10.9 million, respectively.
a.
Mandatorily Redeemable Noncontrolling
Interests
The terms of some of our partnership agreements require us to purchase the partner's equity in the partnership in the
event of the partner's death. We report these redeemable noncontrolling interests at their estimated redemption value, which
approximates fair value and classify them as liabilities due to the certainty of the related event. Estimated redemption value is
determined using either a contractually stated formula or a discounted cash flow technique, both of which are used as an
approximation of fair value. The discounted cash flow inputs used to determine the redemption value are level 3 and include
forecasted growth rates, valuation multiples, and the weighted average cost of capital. We recognize changes in the obligation
as an interest cost in the consolidated income statement.
The following table provides a summary of mandatorily redeemable noncontrolling interests included in other liabilities
in our consolidated balance sheets (in thousands):
mandatorily
redeemable
Noncontrolling
Interests
Income
Statement
Impact
8^^asofDe^m^34^0
450
Redemption value change
557
-
1,007
800
Formation ofnoneontroihng interests
Distribution to noneontroiling interests
(424)
Adjustment to noneontroiiing interests
1,223
BaianeeasofDeeemher3i,20ii
$
Noneontrotiing interest expense
Redemption vaiue change
505
$
Noncontrofimg imprest expense
$
B
3,111
1,555
37
1,592
Formation of noneontroiiing interests
8,161
Distribution to noneontrohing interests
" (1,714)
Currency translation adjustment
(103)
Balance as ofDecember^t,2012
$
Noncontrolling interest expense
$
Redemption value change
11,047
2,003
74
2,077
Formation of noncontrolling interests
80
Z^O?)
Purchase of noncontrolling interests
Dissolution ofnoncontrolling interests
(357)
Distribution to noncontrolling interests
0,833)
Currency translation adjustment
44
Balancers ofDecember342013
$
41
9,355
V C A Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
13.
b.
Noncontrolling Interests, continued
Redeemable Noncontrolling
Interests
We also enter into partnership agreements whereby the noncontrolling interest partner is issued certain "put" rights.
These rights are normally exercisable at the sole discretion of the minority partner. We report these redeemable noncontrolling
interests at their estimated redemption value and classify them in temporary equity (mezzanine). We recognize changes in the
obligation in net income attributable to noncontrolling interests.
The following table provides a summary of redeemable noncontrolling interests (in thousands):
Income
Statement
Impact
Balance as of December 31, 20J0 . ...„.7......1......V7....
Noncontrolling interest
Redemption value change
Formation of noncontrolling interests
Distribution to noncontrolling interests
Balance as of December 31,2011
Redeemable
Noncontrolling
Interests
1
r
$
Noncontrolling interest
Redemption value change
Distribution to noncontrolling interests
Balance as of December 31, 2012
$
Noncontrolling interest
Redemption value change
, Formation of noncontrolling interests
Distribution to noncontrolling interests
Balance as of December 31, 2013
$
14.
5,799
840
716
1,556
510
(901)
6,964
806
.156
-
1.146
87
...........7;...
"
1
962
(935)
6,991
1,233
3,601
(1.147)
10,678
401(k) Plan
In 1992, we established a voluntary retirement plan under Section 401(k) of the Internal Revenue Code. The plan covers
all employees with at least six months of employment with our company and provides the annual matching contributions by us
at the discretion of our Board of Directors. Our expense for matching contributions to our voluntary retirement plan
approximated $1.6 million, $1.5 million and $1.0 million in 2013, 2012 and 2011, respectively.
42
VCA Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
15.
Lines of Business
Our reportable segments are Animal Hospital and Laboratory. Our Animal Hospital segment provides veterinary services
for companion animals and sells related retail and pharmaceutical products. Our Laboratory segment provides diagnostic
laboratory testing services for veterinarians, both associated with our animal hospitals and those independent of us. Our other
operating segments included in "All Other" in the following tables are our medical technology business, which sells digital
radiography and ultrasound imaging equipment, related computer hardware, software and ancillary services to the veterinary
market and our Vetstreet business, which provides online and printed communications, professional education, marketing
solutions to the veterinary community and an ecommerce platform for independent animal hospitals. These operating segments
do not meet the quantitative requirements for reportable segments. Our operating segments are strategic business units that
have different services, products and/or functions. The segments are managed separately because each is a distinct and different
business venture with unique challenges, risks and rewards. We also operate a corporate office that provides general and
administrative support services for our other segments.
The accounting policies of our segments are the same as those described in the summary of significant accounting
policies included in Note 2, Summary of Significant Accounting Policies. We evaluate the performance of our segments based
on gross profit and operating income. For purposes of reviewing the operating performance of our segments, all intercompany
sales and purchases are generally accounted for as if they were transactions with independent third parties at current market
prices.
43
V C A Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
15.
Lines of Business, continued
The following is a summary o f certain financial data for each of our segments (in thousands):
Animal
Hospital
Laboratory
A l l Other
Corporate
Eliminations
Total
2013
s
External revenue
Intercompany revenue
1,417,908
1"
290,583
'$"
2T654
1,417,908
344,831
112,740
1,208,781"
180,952
74,139
209,127
163,879
38,601
Selling, general and administrative expense
'34,133
"^1,915
Operating income (loss) before charges....
Net loss (gain) on sale of assets
174,994
131,964
Total revenue
Direct costs
Gross profit
Operating income (loss)
Depreciation and amortization
Capital expenditures
Total assets at December 31, 2013
2012
External revenue
2,853
$
$
$
$
1.854,609
$
" 1,331.314
172.141
57,748
54,116
$ '
Intercompany revenue
10,251
$
$
11,148
S
"247,591
$
132,041
—
1,803,369
(58,922)
(328)
$
7,909 $
4,288 $
96^45" ~$
$
3,284 $
5,908 $
•~77~153~ "$
(58,594)
— $'
(1,783)
(2,190)
s
"(37,877)
$
2,237/781*
~ 2,306
$
1,699,642
327,801
112,960
176,040
74,253
189,111
151,761
38,707
Selling, general and administrative expense
30,826
29,660
37,879
Operating income (loss) before charges....
158,285
122,101
828
(58,790)
(4,605)
1,216
—
122,357
—
713
(14)
717
(106)
—
—
Depreciation and amortization
Capital expenditures
\.
$
$
$
Total assets at December 31, 2012
2011
v
$
Total revenue
Direct costs
, Gross profit
Selling, general and administrative expense
Operating income (loss) before charges
, Total assets at December 31,2011
55,651
1,150,120
s
;
(122,246)
244,551
272,468
10,141
8,334
_
—
_
9,582
$
$
3,198
$
$
5,921
"s
9,695
S
T'
98,159
T
" 127,963
$
61,736
5
(58,684)
1,150,120
316,797
80,430
970,310
173,007
59,459
179,810
143,790
20,971
24,342
27,864
19,136
49,770
155,468
115,926
1,835
—
21,310
21
115,905
45,753
$
$
$
1,439,103
s
232,423
40,319
10,111
6,082
44
27
$
$
$
$
1,699,642
(67,828)
1,324,668
(4,605)
374,974
157,155
.
217,819,
123,573
1,310
(27,671)
$
$
$
$
2,091,580
1,037
$
1.485,361 !
(4,605)
0^29)
(2,794)
92,936
76,227
76,807
—
(63,023)
(61,986)
1,485,361
(55,872)
1,146,904
(6,114)
338,457
121,112
(49,770)
(6,114)
217,345
—
—
—
21,310
7
s
(49,777)
5,022
$
"$
$
2,853
202,187
73^70
—
(19,502)
6,448
$~"
— $ '
—
—
—
—
18,694
155,141
77,409 •
(72,433)
—
58,790
44,329
327
$
$
$
$
$
$
$
122,115
249.014
(74,739)
—
—
Goodwill impairment
Net loss on sale of assets
Operating income (loss)
Capital expenditures
54,835
$
$
$
' 1,648,578
External revenue
Intercompany revenue
: Depreciation and amortization
156,356
2,455"
$
$
(2,227)
1,142,203
Operating income (loss)
' 157,91 r
251,469
_
1,331,314
Impairment of goodwill and other longlived assets
;Net loss (gain) on sale of assets
409,380
(2,227)
22,344
Total revenue
~ 1,393,989"!
— "
7
1,803,369
(72,110)
52,395
Direct costs
Gross profit
$
(2,227)
5,660
90,616" "$'
275,406
3,192
(75,302)
(69,883)
58,922
5,653
~
$
—
—
—
—
""'"sT^r
(77)
$
$
$
$
$
91,686 "
54,248
*—
7,299
142,793
s
s
(6,114)
$
$
(2,097)
(1,317)
(21,138)
382
$
$
$
$
195,653
56,988
63,485
1,995,368
V C A Antech, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
15.
Lines of Business, continued
The table below lists our revenue by geographic area for fiscal 2013, 2012 and 2011 (in thousands):
Revenue*
_
_
United States..^..^.....
_
-
.
Canada
2013
2012
_
$_ 1,671,170
_ _
$ 1,589,588
Z
Total
2011
$
1,474,294
132,199
110,054
11,067
$ 1,803,369
$ 1,699,642
$ 1,485,361
•Revenues are determined based on the location of the customer. Long-lived assets were not disclosed, as the amounts attributable to the Canadian operations
are immaterial, as compared to total consolidated long-lived assets.
16.
Selected Quarterly Financial Data (Unaudited)
Quarterly Results
The following table sets forth selected unaudited quarterly results for the eight quarters commencing January 1, 2012 and
ending December 31, 2013 (in thousands):
2013 Quarter Ended
Sept30
Jun. 30
(1)
Dec 31
Revenue
$ 435,453
Gross profit....
$ " 87,486
Operating
income (loss)
$_ 45,923
Net income (loss) ~ $ 25,728
Net income (loss)
attributable to
V C A Antech, Inc. $ 24,717
Basic earnings
(loss) per
common share
$
0.28
Diluted earnings
(loss) per
common share
$_
0.28
Mar.31
(1)
Dec. 31^'
2012 Quarter Ended
Sept 30
Jun. 30
Mar. 31<5)
(4t
$ 464,055 $ 465,255_ $ 438,606
$ 110,677" $ 114,294 " $ ' 96,923
$ 418,192 $ 433,613
$ 81,80?' $ 99,181
$ 438,372
$100,607
$ 409,465
$ 93,379
$ 72,039 $ _ 75,701
$' 4 1 , 9 1 1 $ 43,460
$ 55,351
$ ' 31^823
$ (83,553) $
$ (57,025) $
61,186 $_ 61,498^ $ 53,805_
3 5 , 6 4 2 $ 35,778 $" 36321
$
40,647
$
41,662
$^ 30,485
$ (58,051) $
34,037
$
34,320
$
$
0.46
$
0.47
$
0.34
$
(0.66) $
0.39
$
0.39
$
0.41
$
0.45 _$ _ 0.46
$
0.34
$
(0.66) $
0.38
$
0.39
$
0.40
35,245_
(1)
Included in the third quarter is a non-cash physical inventory adjustment in our Animal Hospital business segment which
resulted in a $2.8 million credit adjustment to direct costs, or $0.02 per diluted share.
(2)
Included in the first quarter we recorded a write-down to net realizable value of $1.8 million, or $0.01 per diluted share,
related to a vacant property that was held for sale and accrued costs totaling $2.0 million, or $0.01 per diluted share
related to a vacant leased property.
(3)
Included in 2012 fourth quarter operating income is a $123.6 million, non-cash goodwill and long-lived asset impairment
charge, or $0.90 per diluted share. The charge is primarily related to our Vetstreet reporting unit, see Note 5, Goodwill.
(4>
Included in 2012 second quarter gross profit is a $3.1 million depreciation expense adjustment, or $0.02 per diluted
share, related to acquired capital leases.
( 5 )
Included in 2012 first quarter net income is a $5.7 million business combination adjustment gain, or $0.06 per diluted
share, related to the acquisition of AVC, see Note 4, Acquisitions.
45
VCAAn^^^aodSub^aries
Notes to conso^datedFmanc^ Statements (Contmued)
16.
Selected QoarteriyFmaoe^^ata^oaodite^eootmoed
Although not readily detectab^ because ofthe impact ofacquis^^
In particular, ourAnimal Hospital and Laboratory revenue historically has heen gtea^
the tirst and fourth quarters.
Thedemandforourveterinary services is significantly higher during warmer months because pets spendagreater amount
oftime outdoors, where they are more likely to be injured and are more susceptible to disease and parasites. In addit^^
veterinary services may be affected by levels ofinfestationoftleas,heartworms and ticks, and th^
substantial portion ofour costs for our veterinary services are fixed and do not vary with the level of demand. Consequently,
our operating income and operating margins generally have been higher for the second and third quarters than that experienced
in the first and fourth quarters.
46
VCA Antech, Inc. and Subsidiaries
Schedule I — Condensed Financial Information of Registrant
VCA Antech, Inc. (Parent Company)
Condensed Balance Sheets
(In thousands)
December 31,
2013
Assets:
Investment in subsidiaries
"$
$
Stockholders' equity:
Common stock
Additional paid-in capital
Retained earnings
Accumulated other comprehensive (loss) income
$
—
-• • -
—
$
2012
1,208,080 $ "
99^60"
1,307,340 $
" 1,078,606"
~ ~ 1047897""
1,183,503
89 $ '
384,721
928,720 " ' "
(6,190)
88'
"~ 390,359
" 791,209
1,847
1.183.503
1,307.340
$
The accompanying notes are an integral part of these condensed financial statements.
See accompanying Report of Independent Registered Public Accounting Firm.
' 47
V C A Antech, Inc. and Subsidiaries
Schedule I •— Condensed Financial Information of Registrant — (Continued)
V C A Antech, Inc. (Parent Company)
Condensed Statements of Income
(In thousands)
For the Years Ended December 31,
2013
Revenue
Direct costs
Gross profit
Selling, general and administrative expense
Loss on sale of assets
,
Operating income
,
Interest income, net
Equity interest in income of subsidiaries
Income before provision for income taxes.
Provision for income taxes
Net income
Net income attributable to noncontrolling interests
Net income attributable to V C A Antech, Inc
$_
-
$$
2012
2
$
2011
—
....
~..
—
—
—
—
I -
rr
137,511
137,511
45,551
45,551
" 95,405
95,405
137,511
45,551
95,405
137,511
$
45,551
The accompanying notes are an integral part of these condensed financial statements.
See accompanying Report of Independent Registered Public Accounting Firm.
48
$
$
95,405
V C A Antech, Inc. and Subsidiaries
Schedule I — Condensed Financial Information of Registrant — (Continued)
V C A Antech, Inc. (Parent Company)
Condensed Statements of Cash Flows
(In thousands)
For the Years Ended December 31,
2013
2012
2011
Cash flows from operating activities:
Net income
„
Adjustments to reconcile net income to net cash used in operating activities:
$
137,511
$
45,551
$
95,405
...
Equity interest in earnings of subsidiaries
(137,511)
Increase in intercompany receivable
Net cash used in operating activities
(45,551)
(95,405)
—
—
(3,999)
—
—
(3,999)
Cash flows provided by investing activities:
Other
Net cash used in investing activities
(17,233)
(9,533)
(17,233)
(9,533)
-—
Cash flows provided by financing activities:
Proceeds from issuance of common stock under stock option plans
17,233
9,533
3,999
Net cash provided by financing activities
17,233
9,533
3,999
Increase (decrease) in cash and cash equivalents
—
—
—
Cash and cash equivalents at beginning of year
—
Cash and cash equivalents at end of year
$
—
—
$
The accompanying notes are an integral part of these condensed financial statements.
See accompanying Report of Independent Registered Public Accounting Firm.
49
—
—
$
—
V C A Antech, Inc. and Subsidiaries
Schedule I — Condensed Financial Information of Registrant — (Continued)
V C A Antech, Inc. (Parent Company)
Notes to Condensed Financial Statements
Note 1.
Guarantees
The borrowings under the senior credit facility are guaranteed by VCA Antech, Inc. ("VCA") and its wholly-owned
subsidiaries. Vicar Operating, Inc. ("Vicar"), a wholly-owned subsidiary of VCA, may borrow up to $125 million under a
revolving line of credit under the senior credit facility. V C A s guarantee under the senior credit facility is secured by the assets
of its wholly-owned subsidiaries in addition to a pledge of capital stock or similar equity interest of its wholly-owned
subsidiaries.
See Note 7, Long-Term Obligations, in our accompanying consolidated financial statements of this annual report on Form
10-K for a five-year schedule of debt maturities.
Note 2.
Dividends from Subsidiaries
The senior credit facility has restrictions on the ability of Vicar and its consolidated subsidiaries to transfer assets in the
form of cash, dividends, loans or advances to V C A . In 2013, 2012 and 2011, VCA did not receive any cash dividends from its
consolidated subsidiaries.
See accompanying Report of Independent Registered Public Accounting Firm.
50
V C A Antech, Inc. and Subsidiaries
Schedule II — Valuation and Qualifying Accounts
(In thousands)
Additions
Charged to
Charged to
Costs and
Other
Expenses
Accounts
Balance at
Beginning of
Period
Balance
at End
of Period
0
Other *
_
Year ended December .31, 2013
Allowance for uncollectible
accounts* *
2
Year ended December 31,201_2
Allowance for uncollectible
accounts^
Year ended December 31, 2011
Allowance for uncollectible
accounts^
Write-offs
$
16,546
$
_
_
1
$^
'
14,978
$
$
13,801
_
$
7,360
$
—
$
(6,325) $
_
6,396
•
$
6,742
$
—
$
121
_
$
17,702
"_
(5,134) $
~
—
$
(6,178) $
306
$
16,546
613
$
14,978
'
<l)
"Other" changes in the allowance for uncollectible accounts include allowances acquired with animal hospitals and
laboratory acquisitions.
(2)
Balance includes allowance for trade accounts receivable and notes receivable.
See accompanying Report of Independent Registered Public Accounting Firm.
51
PARTI
FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
VCA Inc. and Subsidaries
Condensed, Consolidated Balance Sheets
(Unaudited)
(In thousands, except par ralue)
June 30,
2014
December 31,
2013
Assets
Current assets:
Cash and cash equivalents
Trade accounts receivable, less allowance for uncollectible accounts of $17,771 and $17,702
. at June 30, 2014 and December 31, 2013, respectively
Inventory
122,535 $
65,979
42,483
39,921
Prepaid expenses and other
Deferred income taxes
Prepaid income taxes
Total current assets
Property and equipment, net
Goodwill
Other intangible assets, net
Notes receivable
Deferred financing costs, net
Other
28,908
9,369
59,900
55,067
25,417
28,907
15,434
309,195
309,754
445,199
1,355,396
82,746
448,366
1,330,917
86,671
3,454
2,987
55,632
3,199
2,383
61,120
Total assets
125,029
$
2,259,238
$
2,237,781
$
50,808
43,827
61,192
$
51,087
36,962
57,337
58,762
Liabilities and Equity
Current liabilities:
Current portion of long-term debt
Accounts payable
Accrued payroll and related liabilities
Other accrued liabilities
Total current liabilities
Long-term debt, less current portion
Deferred income taxes
Other liabilities
Total liabilities
Commitments and contingencies
Redeemable noncontrolling interests
53,168
208,995
542,978
204,148
100,219
36,505
100,099
36,758
888,697
909,563
10,984
10,678
87
346,792
89
384,721
1,008,347
928,720
568,558
Preferred stock, par value $0,001, 11,000 shares authorized, none outstanding
VCA Inc. stockholders' equity:
Common stock, par value $0,001, 175,000 shares authorized, 87,414 and 88,508 shares
outstanding as of June 30,2014 and December 31,2013, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
(6,852)
(6,190)
Total VCA Inc. stockholders' equity
1,348,374"
1,307,340"
Noncontrolling interests
Total equ ity
Total liabilities and equity
$
11,183
10,200
1,359,557
1,317,540
2,259,238
$
The accompanying notes are an integral part of these condensed, consolidated financial statements.
1
2,237,781
VCA Inc. and Subsidiaries
Condensed, Consolidated Income Statements
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
June 30,
2014
Revenue
$
Direct costs
Gross profit
Selling, general and administrative e^ense
Net loss (gain) on sale or disposal of assets
Operating income
Interest expense, net
Other expense (income)
Income before provision for income taxes
2014
2013
2013
489,472 $
369,057
465,255 $
350,961
938,979
717,113
120,415
39,931
578
114,294
221,866
81,371
(643)
211,217
78,869
1,296
79,906
75,701
141,138
8,197
(10)
131,052
9,965
39,023
(430)
4,030
43
Provision for income taxes
Net income
Six Months Bided
June 30,
5,658
(18)
$
903,861
692,644
(27)
75,833
28,925
70,061
26,601
132,951
51,128
121,114
46,908
1,324
43,460
81,823
1,798
2,196
75,283
3,136
45,831
Net income attributable to noncontrolling interests
Net income attributable to VCA Inc.
$
45,584 $
41,662 $
79,627
$
72,147
Basic earnings per share
$
0.52 $
0.47 $
0.90
$
0.82
Diluted earnings per share
$
0.51
0.46
0.89
$
0.81
$
$
Weighted-average shares outstanding for basic earnings per share
88,041
88,509
88,188
88,455
Weighted-average shares outstanding for diluted earnings per
share
89,191
89,653
89,312
89,531
The accompanying notes are an integral part of these condensed, consolidated financial statements.
2
VCA Inc. and Subsiifiarics
Condensed, Consolidated Statements of Comprehensive Income
(Unaudited)
(In thousands)
Three Months Ended
June 30,
Net income^)
Other comprehensive income:
Foreign currency translation adjustnxnts
Other comprehensive gain (loss)
Total comprehensive income
Comprehensive income attributable to noncontrolling interests(')
Comprehensive income attributable to VCA Inc.
(1)
Six Months Bided
June 30,
2014
2013
2014
2013
$ 46,908
$ 43,460
$ 81,823
S 75,283
4,809
(3,597)
(712)
(6,341)
4,809
(3,597)
(712)
(6,341)
51,717
1,702
39,863
1,798
81,111
68,942
2,146
3,136
$ 50,015
$ 38,065
$ 78,965
$ 65,806
Includes approximately $1.2 million and $1.9 million of net income related to redeemable and mandatorily redeemable
noncontrolling interests for the six months ended June 30,2014 and 2013, respectively.
The accompanying notes are an integral part of these condensed, consolidated financial statements.
3
VCA Inc. andSuhsidaries
Condensed, Consolidated Statements of Equity
(Unaudited)
(In thousands)
Common Stock
Additional
Paid-in
Shares Amount Capital
Balances, December 31,2012
88,372 $
88 $ 390,359 $ 791,209 $
Net income (excludes $928 and
$992 related to redeemable
and mandatorily redeemable
noncontrolling interests,
respectively).
Other comprehensive loss
Distribution to noncontrolling
interests
Purchase ofnoncontrolling
interests
Share-based compensation
Issuance of common stock
under stock incentive plans
Stock repurchases
Excess tax benefitfromstock
options
Retained
Earnings
Accumulated
Other
Comprehensive Noncontrolling
Income
Interests
— -
1,847 $
72,147
10,890
1,216
(6,341)
(469)
7,419
(4,082)
(4,551)
7,419
4,181
(7,956)
771
Balances, June 30,2013
88,605 $
89 S 394,304 $ 863,356 $
(4,494)
Balances, December 31,2013
Net income (excludes $417 and
$739 related to redeemable
and mandatorily redeemable
noncontrolling interests,
respectively).
88,508
89
(6,190) $
$ 384,721
—
Other comprehensive loss
(excludes $30 related to
mandatorily redeemable
noncontrolling interests).
73,363
(6,341)
(850)
771
$
$1,194,393
(850)
4,180
(7,956)
560
(327)
Total
$ 928,720 $
79,627
(662)
7,174
$1,260,429
10,200
$1,317,540
1,040
80,667
(20)
(682)
Dissolution of noncontrolling
interests
933
933
Distribution to noncontrolling
interests
(970)
(970)
30
8,571
—
30
—
8,571
467
—
467
(49,089)
—
(49,091)
Purchase of noncontrolling
interests
Share-based condensation
Issuance of common stock
under stock incentive plans
Stock repurchases
377
(1,471)
(2)
Excess tax benefitfromstock
options
Balances, June 30,2014
2,092
87,414 -$
S2
$ ^46,792
2,092
$1,008,347 $
(6,852) $
11,183
The accompanying notes are an integral part of these condensed, consolidated financial statements.
4
$1,359,557
VCA Inc. and Subsidiaries
Condensed, Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Six Months Encfed
June 30,
2014
2013
Cashflowsfromoperating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Amortization of debt issue costs
Provision for uncollectible accounts
Net (gain) loss on sale or disposal of assets
Share-based compensation
Deferred income taxes
Excess tax benefitfromexercise of stock options
Other
Changes in operating assets and liabilities:
Trade accounts receivable
Inventory, prepaid expense and other assets
Accounts payable and other accrued liabilities
Accrued payroll and related liabilities
Income taxes
$
81,823 $
75,283
39,797
604
37,739
626
3,364
1,296
7,419
2,868
2,612
(643)
8,571
—
(2,092)
(53)
(771)
(384)
(8^45)
(6,610)
(17,709)
(470)
4,329
1,171
3,816
8,062
1,886
12,595
128,113
128,071
Business acquisitions, net of cash acquired
Real estate acquired in connection with business acquisitions
(29,271)
(1493)
(21,835)
(510)
Capital expenditures
Proceeds from sale or disposal of assets
(27,979)
4,456
55
(33,095)
595
(1,042)
(54,232)
(55,887)
(26J18)
(17,442)
(2,259)
(326)
467
(%234)
Net cash provided by operating activities
Cash flows from investing activities:
Other
Net cash used in investing activities
Cashflowsfromfinancing activities:
Repayment of debt
Distributions to noncontrolling interest partners
Purchase of existing noncontrolling interests
Proceeds from issuance of common stock under stock option plans
Excess tax benefitfromexercise of stock options
Repurchase of common stock
Other
Net cash used in financing activities
Effect of currency exchange rate changes on cash and cash equivalents
(Decrease) increase in cash and cash equivalents
2,092
(49,091)
(5,030)
4,181
771
(7,956)
(838)
(99)
(76,173)
(27,809)
(202)
(540)
(2,494)
43,835
Cash and cash equivalents at beginning of period
125,029
Cash and cash equivalents at end of period
-j
122,535 "5
The accompanying notes are an integral part of these condensed, consolidated financial statements.
5
68,435
112,270
VCA Inc. and Subsidiaries
Condensed, Consolidated Statements of Cash Flows - Continued
(Unaudited)
(In thousands)
Six Months Ended
June 30,
2014
2013
Supplemental disclosures of cash flow information:
7,491
42,950
Interest paid
Income taxes paid
Supplemental schedule of noncash investing andfinancingactivities:
Detail of acquisitions:
Fair value of assets acquired
Noncontrolling interest
Cash paid for acquisitions, net of acquired cash
Assumed debt
Contingent consideration
Holdbacks
$
$
32,836 $
(1,705)
(29,271)
(736)
(374)
(750)
8,145
30,082
26,473
(3,600)
(21,835)
(46)
(460)
Other Liabilities assumed
532
.Other noncash items:
Capital lease additions
—
$
The accompanying notes are an integral part of these condensed, consolidated financial statements.
6
21,668
VCA Inc. andSuhsidaries
Notes to Condensed, Consnlidated^nanciai Statements
June30^I4
(Unaudited)
L
Nature of Operations
Oureo^an^VCAIne^VCA^^^
are an anin^lhea^eareeon^any with the l o w i n g four operate
diagnostic iahoratories(^horato^), veterinary n^diealteehnoiogy^^
segn^nts are aggregated into two teportahiesegn^nts^Anin^i Hospital and "^hora^^
Vetstreet operating segn^nts are eornhined in o u r ^
fo unaudited condensed, consolidated finaneial statements.
Ouranin^lhospitais offerafuli rangeofgenerai nodical and surgical services for con^anionanir^
hospitals treat diseases and injuries,provide phartt^ceutical products and perfbrmavar^
including health exan^ations,diagnostic testing, vaccinations,spaying, neutering and dental care.A^
operated or managed 612animal hospitals throughout^lstates and four Canadian provinces.
Weoperateafull-serviceveterinaiy diagnostic laboratory networkserving all 50 states and certain a ^
laboratory network provides sophisticated testing and consulting services used by veterinarians in the de^^
evaluation, n^nitoring, treatment and prevention ofdiseases and other conditions af^ctinganin^^
operated 59 laboratories ofvarioussi^s located strategically throughout the United States and Canada.
Our ^edicalTechnology business sells digital radiography and ultrasound imaging equipn^nt, provides educari^
trainingontheuseofthatequiprnent,provides consulting and nubile imaging services^ and sells sofrw^^
services to the veterinary market.
Onr Vetstreet business provides sevemldif^rent services to the veterinary con^unity including,on^
con^unications,professional education,n^rketing solutions andahon^ delivery platform
The practiceofveterinary medicine is subject to seasonal fluctuation.In particular, demand fbrvet^^
significantly higherduring the warmern^nths because pets spendagreateran^untoftime outdoors where
likely to be injured and are more susceptible to disease and parasites.In addition,useofveterinaiyse^
levels offlea infestation, heartworms and ticks,and the numberof daylight hours.
2.
Basis ofPresentation
Our accompanying unaudited,condensed,consolidated financialstatements have been prepared in accordance with
generally accepted accounting principles in the United States ( ^ ^ A P " ) for interim f i n a n c i a l ^
with the rules and regulations ofthe United States Securities and Exchange C o n ^ s i o n ^ S ^
include allofthe disclosures required by OAAPfbrannuall^ancial statements as pem^ttedundera
regulations. In the opinion ofn^nagernent,allnormalrecurring adjustments considered necessary fbrafa^
been inclndedThe results of operations forthe three andsixn^nths ended June 30,2014are not ne^^^
results to be expected forthefullyearendingDecember^l,2014. Eorfurther inform
financialstatements and notes thereto included in our 2013 Annual Report on Form 10-^.
The preparation ofourcondensed^ consolidated financial staten^nts in accordance with OAAR requires rr^nager^
make estimates and assumptions that affect the an^unts reported in our condensed,consolidated financial^
notes thereto Actualresults could differ fromthose estimates
VCA Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)
June 30,2014
(Unaudited)
3.
Goodwill andOther Intangible Assets
Goodwill
The following table presents the changes in the carrying amount of our goodwill for the six months ended June 30,2014
(in thousands):
Animal
Hospital
Laboratory
All Other
Total
Balance as of December 31,2013
$
Goodwill
Accumulated impairment losses
Subtotal
$
96,871
Balance as of June 30,2014
Goodwill
Accumulated impairment losses
$
Subtotal
(603)
(U676)
(3)
—
1,241,063
—
96,868
—
1,241,063
138,276 $
(120,811)
96,871
—
26,761
Other (0
$
—
1,216,581
Goodwill acquired
Foreign translation adjustment
(')
1,216,581
—
$
96,868
1,451,728
(120,811)
17,465
—
1,330,917
26,761
(606)
(1,676)
—
—
1,476,207
(120,811)
138,276
(120,811)
$ •
1,355,396
17,465 $
"Other" primarily includes immaterial measurement period adjustments and an immaterial write-off related to the sale of
an animal hospital.
Other Intangible Assets
Our acquisition related amortizable intangible assets at June 30, 2014 and December 31,2013 are as follows (in
thousands):
As ofJune 30,2014
Gross
Carrying
Amount
Non-contractual customer
relationships
Covenants not-to-compete
$
110,968
8,672
9,552
Accumulated
Amortization
$
(47,822) $
(4,461)
As ofDeceinber31,2013
Net
Carrying
Amount
63,146
4,211
Gross
Carrying
Amount
$
109,842
Accumulated
Amortization
$
(41,895) $
Net
Carrying
Amount
67,947
8,843
(4,661)
7,458
13,115
(4J73)
(4,194)
. 4,182
3,085
8,921
608
Trademarks
12,987
(4,663)
(4,696)
Contracts
Technology
608
5,240
(346)
4,889
8,291
262
(3,293)
1,947
5,240
(305)
(3,015)
303
2,225
—
50
(42)
8
Favorable lease assets
Client lists
—
—
Total
$
148,027
$
(65,281) $
82,746 $
145,156
$
(58,485) $
86,671
VCA Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)
June 30,2014
(Unaudited)
3.
Goodwill and Other Intangible Assets, continued
The following table summarizes our aggregate amortization expense related to acquisition related intangible assets (in
thousands):
Three Months Fhded
June 30,
2014
Aggregate amortization expense
$
5,227
Six Months Bided
June 30,
2013
$
5,521
2014
$
2013
10,374
$
10,565
The estimated amortization expense related to acquisition related intangible assets for the remainder of 2014 and each of
the succeeding years thereafter, as of June 30,2014, is as follows (in thousands):
Remainder of 2014
$
10,655
2015
2016
2017
19,719
16,777
10,420
2018
Thereafter
6,824
18,351
'
Total
4.
$
82,746
Acquisitions
The table below reflects the activity related to the acquisitions and dispositions of our animal hospitals and laboratories
during the six months ended June 30, 2014 and 2013, respectively:
Six Months Ended
June 30,
2014
Animal Hospitals:
Acquisitions
Acquisitions, merged
Sold, closed or merged
Net increase (decrease)
2013
10
(2)
(5)_
6
(1)
(9)_
3
(4)
—
1
3
—
3
1
Laboratories:
Acquisitions
Created
Net increase
VCA Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)
June 30,2014
(Unaudited)
4.
Acquisitions, continued
Animal Hospital Acquisitions
The purchase price allocations for the acquisitions in the table below are preliminary. However, adjustments, if any, are
not expected to be material. The measurement periods for purchase price allocations do not exceed 12 months from the
acquisition date. The following table summarizes the aggregate consideration for our independent animal hospitals acquired
during the six months ended June 30, 2014 and 2013, respectively, (in thousands):
Six Months Bided
June 30,
2014
2013
Consideration:
Cash
Assumed debt
Holdbacks
$
29,271
$
736
750
374
Eamout contingent consideration
Fair value of total consideration transferred
21,835
—
460
46
$
31,131
$
22,341
$
1,195
$
2,548
Allocation of the Purchase Price:
Tangible assets
Identifiable intangible assets
Goodwill 0)
Other liabilities assumed
Fair value of assets acquired
$
32,836
$
31,131
(532)
$
25,941
$
22,341
(1,705)
Noncontrolling interest
Total
(')
2,946
20,979
4,880
26,761
—
(3,600)
We expect that $16.3 million and $20.2 million of the goodwill recorded for these acquisitions, as of June 30, 2014 and
2013, respectively, will be fully deductible for income taxpurposes.
In addition to the purchase price listed above, we made cash payments for real estate acquired in connection with our
purchase of animal hospitals totaling $1.5 million for the six months ended June 30, 2014. There were $0.5 million in cash
payments made for real estate for the six months ended June 30,2013.
10
VCA Lie. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)
June 30,2014
(Unaudited)
5.
Other Accrued Liabilities
Other accrued liabilities consisted ofthe following (in thousands):
As of June 30,2014
Deferred revenue
As of December 31,2013
11,438
4,234
4,027
4,048
Accrued health insurance
Deferred rent
Accrued other insurance
Miscellaneous accrued taxesO)
Accrued workers' compensation
Holdbacks and eamouts
Customer deposits
Accrued consulting fees
Accrued lease payments
Other
4,135
4,513
2,930
1,393
3,217
1,983
11,190
5,479
4,331
4,381
2,804
3,267
3,040
3,075
3,028
2,547
11,250
15,620
53,168 $
58,762
0) Includes property, sales and use taxes.
6.
Fair Value Measurements
Fair Value of Financial Instruments
The FASB accounting guidance requires disclosure of fair value information about financial instruments, whether or not
they are recognized in the accompanying condensed, consolidated balance sheets. Fair value as defined by the guidance is the
price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
atthe measurement date. The fair value estimates of financial instruments are not necessarily indicative ofthe amounts we
might pay or receive in actual market transactions. The use of different market assumptions and/or estimation methodologies
may have a material effect on the estimated fair value amounts.
Cash and Cash Equivalents. These balances include cash and cash equivalents with maturities of less than three
months. The carrying amount approximates fair value due to the short-term maturities of these instruments.
Receivables, Less Allowance for Doubtful Accounts, Accounts Payable and Certain Other Accrued Liabilities. Due to
their short-term nature, fair value approximates carrying value.
Long-Term Debt. The fair value of debt at June 30, 2014 and December 31,2013 is based upon the ask price quoted from
an external source, which is considered a Level 2 input.
The following table reflects the carrying value and fair value of our variable-rate long-term debt (in thousands):
As ofJune 30,2014
Carrying
Value
Fair
Value
As ofDecember31,2013
Carrying
Value
Fair
Value
Variable-rate long-term debt
$
533,242
$
533,242
$
556,914
$
556,914
At June 30,2014, we did not have any material applicable nonrecurring measurements of nonfinancial assets and
nonfmancial liabilities.
11
VCA Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)
June 30,2014
(Unaudited)
7.
Calculation of Earnings per Share
Basic earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding
during the period. Diluted earnings per share is calculated by dividing net incorre attributable to VCA Inc. by the weightedaverage number of common shares outstanding, after giving effect to all dilutive potential common shares outstanding during
the period. Basic and diluted earnings per share were calculated as follows (in thousands, except per share amounts):
Three Months Ended
June 30,
2014
2013
Net income attributable to VCA Inc.
$
Six Months Ended
June 30,
2014
2013
45,584 $
41,662 $
79,627
88,041
88,509
88,188
88,455
265
885
321
823
260
864
298
778
89,191
89,653
89,312
89,531
$
72,147
Weighted-average common shares outstanding:
Basic
Effect of dilutive potential common shares:
Stock options
Nonvested shares and units
Diluted
Basic earnings per share
$
0.52
$
0.47
$
0.90
$
0.82
Diluted earnings per share
$
0.51
$
0.46
$
0.89
$
0.81
There were no potential common shares excludedfromthe computation of diluted earnings per share for the three months
ended June 30,2014. For the three months ended June 30,2013, potential common shares of 12,909 were excludedfromthe
computation of diluted earnings per share because their inclusion would have had an antidilutive effect.
There were no potential common shares excludedfromthe computation of diluted earnings per share for the six months
ended June 30, 2014. For the six months ended June 30,2013, potential common shares of26,987 were excludedfromthe
computation of diluted earnings per share because their inclusion would have had an antidilutive effect.
8.
Lines of Business
Our reportable segments are Animal Hospital and Laboratoiy. Our Animal Hospital segment provides veterinaiy services
for companion animals and sells related retail and pharmaceutical products. Our Laboratory segment provides diagnostic
laboratory testing services for veterinarians, both associated with our animal hospitals and those independent of us. Our other
operating segments included in "All Other" in the following tables are our Medical Technology business, which sells digital
radiography and ultrasound imaging equipment, related computer hardware, software and ancillary services to the veterinary
market and our Vetstreet business, which provides online and printed communications, professional education, marketing
solutions to the veterinary community and an ecommerce platform for independent animal hospitals. These operating segments
do not meet the quantitative requirements for reportable segirents. Our operating segments are strategic business units that
have different services, products and/or functions. The segments are managed separately because each is a distinct and
different business venture with unique challenges, risks and rewards. We also operate a corporate office that provides general
and administrative support services for our other segments.
The accounting policies of our segments are essentially the same as those described in the summary of significant
accounting policies included in our 2013 Annual Report on Form 10-K. We evaluate the performance of our segments based on
gross proband operating incon^ ^
sales and purchases are genera^ accounted fo^
prices.
The segn^ntinfbttnation presented inciudesareclassification to elin^ate disc
were previous^ allocated to the Aii Other operating segn^ntfromEiintinations in the priotyeatfinan
betterrepresentthecorresponding discounts and thus the operating results of ourstandaione entities.These changes in
segn^ntreporting only revised the presentation within the table helowand did not intact our condensed,consoli^
financialstatements forany period presented.
12
VCA Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)
June 30,2014
(Unaudited)
8.
Lines of Business, continued
The following is a summary of certain financial data for each of our segments (in thousands):
Animal
Hospital
Laboratory
All Other
Corporate
Eliminations
Total
Three Months Ended
June 30,2014
External revenue
Intercompany revenue
Total revenue
$
Direct costs
Gross profit
Selling, general arid
administrative expense
Operating income (loss) before
sale or disposal of assets
Net loss (gain) on sale or
disposal of assets
Operating income (loss)
$
386,776
—
81,320
14,635
386,776
95,955
323,440
46,863
23,712
16,064
63,336
49,092
7,648
—
9,864
8,281
7,411
14,375
53,472
40,811
237
(14,375)
97
74
414
53,058
$
$
$
2,563 ~
1,304 $
$
$
Capital expenditures
Three Months Ended
June 30,2013
External revenue
Intercompany revenue
$
15,110
8,119
$
365,205
Direct costs
Gross profit
Selling, general and
administrative expense
$
(7)
40,818 $
Depreciation and amortization
Total revenue
$
76,949
20,457
3,255
$
140 $
—
$
—
—
—
919 $
(17,890)
489,472
—
.(16,971)
(17,310)
489,472
339
120,415
369,057
39,931
80,484
339
578
(14,449) $
2,004
920
$
$
826
1,333
$
$
22,229
5,243
$
—
—
$
$
79,906
(473). $
(316) $
20,030
11,360
339
(19,524)
465,255
—
18,049
—
—
(18,652)
(18,184)
465,255
350,961
45,226
9,423
—
(468)
114,294
8,720
7,965
8,041
14,297
51,393
37,261
1,382
(14,297)
1
(270)
$
—
14,281
365,205
305,092
91,230
46,004
27,472
60,113
872
$
39,023
Operating income (loss) before
sale or disposal of assets
(468)
75,271
Net (gain) loss on sale or
disposal of assets
Operating income (loss)
$
51,553
$
37,262
$
1,381
$
(14,027) $
(468) $
75,701
Depreciation and amortization
$
14,684
$
$
11,326
$
$
$
(446) $
(363) $
19,500
$
1,937
1,039
735
Capital expenditures
2,590
1,818
(160)
0)
$
1,306
(430)
$
$
15,126
VCA Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)
June 30,2014
(Unaudited)
8.
Lines of Business, continued
Animal
Hospital
Laboratory
All Other
Corporate
Intercompany
Dim! nations
Total
Six Months Ended
June 30,2014
External revenue
Intercompany revenue
$
738,364
—
$
156,103
28,386
$
42,658
9,175
$
—
—
$
1,854
$
(37,561)
938,979
—
Total revenue
Direct costs
738,364
626,228
184,489
92,366
51,833
—
(35,707)
938,979
34,216
717,113
112,136
92,123
17,617
—
—
(35,697)
Gross profit
Selling, general and
administrative expense
Operating income (loss) before
sale or disposal of assets
Net loss (gain) on sale and
disposal of assets
(10)
221,866
18,992
16,299
15,759
30,321
—
81,371
93,144
75,824
1,858
(30,321)
(10)
140,495
582
(78)
75,902 $
Operating income (loss)
$
92,562
$
Depreciation and amortization
$
29,852
$
21,187
5,098
3,285
$
Capital expenditures
Six Months Ended
June 30,2013
External revenue
Intercompany revenue
$
$
$
705,820
$
150,588
27,977
$
—
Total revenue
Direct costs
705,820
Gross profit
Selling, general and
administrative expense
Operating income (loss) before
sale ordisposalofassets
Net loss (gain) on sale and
disposal of assets
$
(60)
—
2,945
$
4,140
1,678
$
$
1,645
2,744
$
$
45,856
10,139
$
—
$
(30,261) $
(643)
(10) $
141,138
(938) $
39,797
(915) $
27,979
1,597
$
(38,116)
903,861
—
—
(3t519)
(35,676)
903,861
692,644
(843)
211,217
—
—
600,508
178,565
90,874
55,995
36,938
105,312
87,691
19,057
—
17,045
15,970
16,955
28,899
_
78,869
88,267
71,721
2,102
(28,899)
(843)
132,348
3
(270)
1,569
Operating income (loss)
$
86,698
$
(6)
71,727 $
Depreciation and amortization
$
28,071
.$
25,767
$
$
5,097 $
3,736 $
$ 1,880,805
$
Capital expenditures
(1,087)
—
2,099
$
3,902
2,372
s
1,554
$
1,946
$
$
87,548
$
133,975
$
(28,629) $
1,296
(843) $
131,052
(885) $
(726) $
37,739
33,095
At June 30,2014
Total assets
At December 31,2013
261,786
$
(104,876) $ 2,259,238
Total assets
$ 1,854,609
$
247,591
$
14
96,245
$
77,153
$
(37,817) $ 2,237,781
VCA^andSu^idaries
No^toCondense^Cons^ida^dBnanci^S^men^ (Continue
^^30^014
(Unaud^
9.
Commitment and Contingencies
Wehave certain eommitn^ntsine^ding operating leases,debase a
are discussed in detail in onr consolidatedfinancialstaten^nts and notes thereto included^
lO-^Wealsohavecontingencies as follows:
a.
^ ^ ^ ^ ^ ^
Wehave contractual artangen^nts in connection with certain acquisitions,wherehy additional cash may he paid t^
fbtn^t owners ofacquiredcon^anies upon attainn^ntofspecifiedfinancialcriteria as set forth in the re^
The an^unt to he paid cannot he detertnined until the eatn-out periods have expired and the attainn^ntofcriteriai^
established.Ifthe specifiedfinancialcriteria are attained,we will he obligated to pay an additional $T9nti^
In accordance with business combination accounting guidance, contingent consideration, such as earn-out agreen^nt^^
are recognized as partofthe consideration transferred on the acquisition date pliability is initially reco
acquisition date fair value.The changes in fairvalue are recognized in earnings where applicable for each reporti^^
fair value is detertninedusingacontractually stated fbrn^la using eitheramuftipleofrevenue or Ea
Taxes,DepreciationandAn^rtization^T^fTDA^The formulas used to determine
Thechanges in fairvaluewereimn^terial to our condensed, consolidatedfinancialstatementswhen taken asawhole.We
recorded $l6million and $2.2 million in earnout liabilities as ofJune 30,20l4andDecember3l,^
included in other accrued liabilities in ourconsolidated balance sheets
^
^ ^ ^ ^ ^ ^
On May 29,20l3,afbrt^rvetermaiy assistant at one of our^^
us in the SuperiorCourt ofthe StateofCalifomiaforthe County o f f ^ s Angeles,titled
Inc., et.al. The lawsuit seel^ to assert claims on behalfofcurrent and fortt^rveterinary assistants e ^
and alleges, an^ng other allegations, that we in^roperly failed to pay regular and overtin^ wages, imprope
propern^al and rest periods, and engaged in unfairbusiness practices. The lawsuit seel^ damages, statutory penalties,and
other reliefs including attor^eys'fees and costs.On May7,20^
clain^ ofthe complaint, including the claims for failure to pay regular and overtin^ wages.^
defend against the renaming claims in this action Atthistin^, we are unable to estimate the reasonably p
ofpossible loss,but do not believe losses,if any,wouldhavean^terial effect on ourresults of operations orf^^
taken asawhole.
On July 16,2014, two additional formerveterinaryassi
SuperiorCourt ofthe StateofCalifbmiaforthe County o f l ^ s Angeles,titled f^^imb^
Vicar Operating,Inc., etalThe lawsuit seel^ to assert clain^ on behalfofcurrentandformerveterinaryassistant^^
assistants, and client service representatives employed by us in California, and alleges, an^ng other al^^^
in^roperly failed to pay regular and overtin^ wages, improperly failed to provide proper meal and re^
topay reporting tin^pay,indroperly failed to reimburse for certain business-related e ^
practices.The lawsuit seeks dan^ges,statutory penalties,and otherrelief^ including attomeys'fees and costs^
expect that these two actions will be consolidated with, orrelated before the san^judge hearing, the Dura
ahove.Atthis time,we are unable to estimate the reasonably possible loss orrangeofpossible loss,but do not believe losses,
ifany,would haveamaterial efiect on ourresultsofoperationsorfinancial position taken asawhole
On Julyl2,2013, an individual who provided courier services with respect to our laboratory clients in California
purportedclass action lawsuit against us in the SuperiorCourtofthe State ofCalifbmiafbrtheCoun
Jose Branch, titled Carlos l^pezvs.f^gistics Delivery Solutions, fLC, Antech Diagnosri^^
Solutions,f^,aco-del^ndant in the lawsuit, isacon^any with which Antech has contracted to provide co^^^^
Califor^ia.The lawsuit seeks to assert claims on behalfofindividuals who were engaged by logistics ^
to perform such courier services and alleges, among other allegations, that Logistics Delivery Solutions and Antech
Diagnostics improperly classified the plaintiffs as independent contractors, improperly failed to pay overtime wages, and
improperly failed to provide proper meal periods. The lawsuit seeks damages, statutory penalties, and other relief, including
attorneys' fees and costs. We filed our answer to the complaint on September 13,2013. Written discovery is currently ongoing.
We filed a motion for summary judgment on July 18,2014, and the motion is scheduled for hearing on October 3, 2014.
15
VCA Inc. andSuhsidaries
Notes toCondensed,ConsoiidatedBnanciaiStatements (Continued)
June^^4
(Unaudited)
9.
ComnutmentsandContingeneies^eontinued
This ease remains in an early preeedural stage and we are vigorouslydefend^
estimate the reasonably possible loss orrangeofpossible loss,hnt do not helieve losses,if any^
on ourresults of operations orfinaneial position taken asawhole.
On May 12,2014, an individual client who purchased goods and services fromoneofouranin^lhospitals
purported class action lawsuit against us in the United States District Court fbrthe Northern
M.Crahamvs. VCA Antech, Inc. and VCA Anin^l Hospitals, h^c. The lawsuit seel^ to assert clain^ on b e h a ^
andotherindividuals who purchasedsimilargoods and services fromouranin^l hospitals and alleges,an^ngothe
allegations,that we improperly charged such individuals tor^biohazard waste n^nagement" in connec^^^
performed. The lawsuit seel^ compensatory and punitive damages in unspecified an^unts, and other relief ^
attomeys't^es and costs.This case is in an early procedural stage and we intend to vigorously defend this action.At this tin^
we are unable to estimate the reasonably possible loss orrangeofpossible loss,but do not believe losses,if any,wou1dhavea
material effect on our results ofoperations orfinancialposition taken asawhole
In addition to the lawsuits described above, we are party to ordinary routine legal proceedings and clain^ incidentals
ourbusiness,but we are not currentlyaparty to any legal proceeding that we believe would haveamaterialadverseef^ct on
ourfinancialposition
c.
^ r ^ C ^ ^ ^ ^
On May 9, 2014, we entered intoalong-termproductsupplyagreernentwithAbaxis,Inc,an^dical products con^
n^nufacturingpoint-of^are blood analysis systen^ to purchase equipment fbrplacen^nt in the m^
anin^l hospitals located in North An^rica. As such, under the tem^
approximately $2.0mi1lionofproducts through December^l, 2014.
On May 14,2014, the headquarters of our MedicalTechnology business in Carlsbad, California was severely damaged by
wildfires There were no injuries to personnel. However, thefirecaused severe dan^getoasubstantial portionofthe
Wehave worked diligently to satisfy custon^rrequirements and to prevent supply disruptions.Wema^^
insurance coverage for both property damage and business inter^^
2014, we recorded approximately $l81mi1lion in estimated losses in connection with this event, primari^
property damage This an^unt is included in operating e^enses in our condensed, consolidated incon^staten^
the related insurance recovery ofthe same amount.Wehave received insurance proceeds to date of$50mi1lion As ofJ^^
2014, we have recorded receivables of$131mi1lion from expected insurance recoveries Wecontinue to assess d^
insurance coverage and we currently do not expect our losses to exceed the applicable insurance coverage.
10.
IncomeTaxes
TheeffectivetaxrateofincomeattributabletoVCA fbrthe three andsixn^nths ended June 30,20l4was 38^^
39.1^, respective1y,as compared to 3 8 ^ f o r t h e year ended December31,2013
16
VCA Inc. and Subsidaries
Notes to Condensed, Consolidated Financial Statements (Continued)
June 30,2014
(Unaudited)
11. Noncontrolling Interests
We own some of our animal hospitals in partnerships with noncontrolling interest holders. We consolidate our
partnerships in our condensed, consolidated financial statements because our ownership interest in these partnerships is equal
to or greater than 50.1% and we control these entities. We record noncontrolling interest in income of subsidiaries equal to our
partners' percentage ownership ofthe partnerships' income. We also record changes in the redemption value of our
redeemable noncontrolling interests in net income attributable to noncontrolling interests in our condensed, consolidated
income statements. We reflect our noncontrolling partners' cumulative share in the equity ofthe respective partnerships as
either noncontrolling interests in equity, mandatorily redeemable noncontrolling interests in other liabilities, or redeemable
noncontrolling interests in temporary equity (mezzanine) in our condensed, consolidated balance sheets.
a.
Mandatorily Redeemable Noncontrolling Interests
The terms of some of our partnership agreements require us to purchase the partner's equity in the partnership in the
event of the partner's death. We report these redeemable noncontrolling interests at their estimated redemption value, which
approximates fair value and classify them as liabilities due to the certainty ofthe related event. Estimated redemption value is
determined using either a contractually stated formula or a discounted cash flow technique, both of which are used as an
approximation of fair value. The discounted cash flow inputs used to determine the redemption value are Level 3 and include
forecasted growth rates, valuation multiples, and the weighted average cost of capital. We recognize changes in the obligation
as interest cost in our condensed, consolidated statements of income.
The following table provides a summary of mandatorily redeemable noncontrolling interests included in other liabilities in
our condensed, consolidated balance sheets (in thousands):
Mandatorily
Redeemable
Noncontrolling
Interests
Income
Statement
Impact
Balance as ofDecember3],2012
Noncontrolling interest expense
Redemption value change
£
11,047
992
1,000
8
Purchase ofnoncontrolling interests
(658)
Dissolution ofnoncontrolling interests
(357)
Distribution to noncontrolling interests
(976)
Currency translation adjustment
(498)
Balance as of June 30,2013
S
Balance as of December 31,2013
Noncontrolling interest expense
Redemption value change
Distribution to noncontrolling interests
Currency translation adjustment
Balance as of June 30,2014
9,558
9,355
739
237
976
(679)
(30)
9,622
VCA Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)
June 30,2014
(Unaudited)
11. Noncontrolling Interests, continued
b.
Redeemable Noncontrolling Interests
We also enter into partnership agreements whereby the minority partner is issued certain "put" rights. These rights are
normally exercisable at the sole discretion ofthe minority partner. We report these redeemable noncontrolling interests at their
estimated redemption value and classify them in temporary equity (mezzanine). We recognize changes in the obligation in net
income attributable to noncontrolling interests in our condensed, consolidated statements of income.
The following table provides a summary of redeemable noncontrolling interests (in thousands):
Income
Statement
Impact
Balance as of December 31, 2012
Redeemable
Noncontrolling
Interests
s
551
377
Noncontrolling interest expense
Redemption value change
Formation ofnoncontrolling interests
Distribution to noncontrolling interests
Balance as of June 30,2013
6,991
928
3,600
(408)
11,111
10,678
Balance as of December 31, 2013
Noncontrolling interest expense
Redemption value change
Formation ofnoncontrolling interests
Purchase of noncontrolling interests
Distribution to noncontrolling interests
Balance as of June 30, 2014
589
(172)
417
855
(356)
(610)
10,984
18
VCA L ^ andSuhsidaries
NotestoCnndense^ConsoiidatedFlnancial Statements (Continued)
June^2014
(Unaudited)
12.
ReeentAeeountingFronouneements
^May20^theEinaneialAeeounting Standards Board (FASB) issued g u i ^
Codification (ASC) Section ^B^RevenuefromContraets with Cust^
Recognition" and create n^difications to various othettevenue accounting standards f o t s ^
industries The guidance in this update is intended to ciarity the principles fbtrecogn
revenue standard for U.S C ^ A P and Intemation
and weaknesses in revenue requiren^nts,providean^rerohustfi^n^workfbraddressing revenue issues,and in^^
con^arahiiityofrevenue recognition practices across entities, industries,jurisdiction
The new accounting guidance wiiirequirecon^anies torecognizerevenuewhen ittranst^rs promised goods orservices
to custon^rs in an an^unt that reflects the consideration to which the cornpany expects to he entitied in exch^^^
goods orservices.This update createsafive-stepn^dei that r e q u ^
tern^ofthecontract(s)whichinciude(i)identifying the contract(s)with the c u s t o m
ohiigations in the contract, (iii)deterntining the transaction price, (iv)aiiocating
performance ohiigations,and(v)recognizingrevenuewhen each performance obligation is sari^^
eitherfuflretrospective adoption,meaning the standard is applied to aiiofthe periods presented, ormod^^^
adoption,n^aning the standard is applied only to the n^st current period presented in the financialstatemen^
The updated guidance is ef^ctiveforannual reporting periods beginning afierDecember 15,2016, inclu^^
periods within thatreportingperiodEarly adoption is not permitted Accordingly,wewilladopt the newpre^
accounting standard at the beginning offiscalyear2017BWewillfurtherstudy the in^lica^
evaluate the expected intact on the consolidated financial staten^nts and evaluate the n^thodofadopt^
lnAprii2014,theTASBissued new accounting guidance which includes an^ndments that change the criteria for
reporting discontinued operations in Subtopic205-20and requires entities to provide additionaldis^^
transactions that do not n^et the discontinued-operations criteria. Therevisedguidance will change how entities id^^^^
disclose information about disposal transactions underU S.CAAR
TheTASB issued the Accounting Standards Update(ASl^ to provide n^re decision-useful infbrma^^^^
elevate the threshold foradisposal transaction to qualify asadiscontinued operation (since too many disposa
were qualifying as discontinued operations underexistingguidance)Underthe new guidance, only d^^^
strategic shift in operations that has orwillhaveamajor intact on an entity'soperationsorfinancia^
presented as discontinued operations UndercurrentU.S GAAR,an entity is prohibited ftomre
operation ifrt has certain continuing cash flows or involven^nt with the con^onentafterthedisposalThe new gui^^
eliminates these criteria TheASU alsorequiresentities toreclassifyassets and l i a b i l ^
comparativeperiods presented in the statementoffinancialposition.
The ASU is ef^ctive prospectively fbralldisposals(except disposals classified as held forsa^
orcomponents initially classified as held forsale in periods beginning on orafter December 15, 201^^
permitted This guidance is not expected tosignificantly intact our consolidated financialstate^
19
VCA Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)
June 30,2014
(Unaudited)
13.
Subsequent Event
On August 1, 2014, we entered into an agreement to acquire the franchise business of D.O.G. Development, LLC, which
franchises the right to operate dog boarding and day care services, in addition to other ancillary services, principally under the
trademark Camp Bow Wow®. As of June 30,2014, there were over 125 Camp Bow Wow® franchise locations operating in 37
states and one Canadian province. The acquisition, which is anticipated to close in the third quarter of 2014, will expand our
participation in the dog boarding and day care service segment of the pet health industry and will allow us to, directly and
indirectly, serve more pet owners on a more frequent basis.
20
GUARANTY OF PERFORMANCE
For value received, VCA Inc., a Delaware corporation (the "Guarantor"), located at 12401
West Olympic Boulevard, Los Angeles, California 90064, absolutely and unconditionally
guarantees to assume the duties and obligations of Camp Bow Wow Franchising, Inc., located at
8820 W. 116 Circle, Unit D, Broomfield, Colorado 80021 (the "Franchisor"), under its
franchise registration in each state where a franchise is registered by the Franchisor, and under its
Franchise Agreement identified in its 2014 Franchise Disclosure Document, as it may be
amended, and as that Franchise Agreement may be entered into withfranchiseesand amended,
modified or extended from time to time. This guarantee continues until all such obligations of
the Franchisor under itsfranchiseregistrations and the Franchise Agreement are satisfied or until
the liability of Franchisor to itsfranchiseesunder the Franchise Agreement has been completely
discharged, whicheverfirstoccurs. The Guarantor is not dischargedfromliability if a claim by a
franchisee against the Franchisor remains outstanding. Notice of acceptance is waived. The
Guarantor does not waive receipt of notice of default on the part of the Franchisor. This
guarantee is binding on the Guarantor and its successors and assigns.
th
th
The Guarantor signs this Guaranty of Performance in Los Angeles, California, on the 16 day of
August, 2014.
GUARANTOR
VCA Inc.
By:
Name: Bob Antin
Title: Chief Executive Officer
C A M P BOW WOW FRANCHISING, INC.
EXHIBIT D
OPERATIONS M A N U A L S T A B L E OF CONTENTS
Camp Bow Wow - 2014 FDD
Exhibit E - List of Franchisees
US.53755407.06
Camp Bow Wow®
Operations Manual
Camp Bow Wow 2014 FDD
Exhibit D - Operations Manuals
DEFINITION OF A N OPERATIONS M A N U A L
3
C A M P B O W W O W OVERVIEW
3
01 T H E C A M P B O W WOW® S T O R Y
3
02 T H E C O N C E P T - O U R 4 IN 1 B R A N D
The Concept
Camp Bow Wow "The Camp"
Behavior Buddies Program
Home Buddies Program
Bow Wow Buddies Foundation
The Corporate Support
What You Can Expect from Camp Bow Wow
Site Selection & AcquisitionA.ease
Pre-Opening Purchases/Leases
Site Development & Other Pre-Opening Requirements
Initial & Ongoing Training
Opening
Compliance with Standards & Policies
Products/Services Offered
Maintenance, Appearance & Remodeling Requirements
Advertising
Inspections/Audits
What Camp Bow Wow Expects From You
Enthusiasm and Energy
Dedication and Hard Work
Community Involvement
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03 FINANCIAL REQUIREMENTS
Financial Reporting
Chart of Accounts
Franchisee Insurance Requirements
8
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04 SITE S E A R C H A N D ZONING
Site Search Criteria and Considerations
General Site Search Criteria
Franchisor Right to Cure
Required Camp Bow Wow Franchisor Addendum for All Franchisee Leases
9
9
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10
OPERATIONS TRAIL GUIDE
11
01 OPERATIONS " H O T LIST"
Camp:
Employees:
Campers:
11
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02 C A M P B O W W O W S T A N D A R D O P E R A T I O N S
General Operations Information
Responsibility to Clients
Responsibility to Your Campers
Responsibility to Your Camp Team
Responsibility to Your Camp
Camp Evaluations
Hours of Operation
The Dog House
Camp Bow Wow 2014 FDD
Exhibit D - Operations Manuals
13
13
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14
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14
Approved CBW Vehicle for Transporting Dogs
Camp Bow Wow Email System
Owner Email
Camp Email
Additional Email Accounts
Camp Bow Wow Operating Software
Camp Safety
Emergency Procedures (also refer to Campsite Safety and Emergency Procedures)
Safety Equipment
Provide Ongoing Training
Dress Code
Camp Phones/Cell Phones/Music Players
Camp Counselor to Camper Ratio
Personnel Stress Management
Supply Storage
Food Storage
Tools for Effective Communication
Communications Binder
Front Desk Manual Binder
Camp Communications - White Boards
Camp Team Meeting
Camp Inventory Lists
Material Safety Data Sheets (MSDS) Binder
Camp Bow Wow® Dog House
Camp Team's Responsibilities
Selling Retail Items
Camper Cams
Cleaning and Camp Maintenance
Required Daily Check Lists -AM &PM and Sample Timeline of Duties
End of Night Closing Procedures-Sales
Count Your Campers
Cleaning Procedures
Camper Safety
Spartan Cleaning Products Dilution Ratios
Front Lobby & Office Areas
Cabin Deep Cleaning
Cabin Cleaning (Camper III or Injured)
Play Equipment, Pools & Privacy Slats Cleaning/Sanitization
Outdoor Play Areas /Privacy Slats
"Poop" Patrol
Pea Gravel
- K9 Grass
Indoor Play Areas & Common Areas
Break Room/Restroom
Smoke Detectors
Alarm System
Maintenance Procedures
Front Lobby
Camper Cabins
Play Equipment
Pup Pools
Indoor and Outdoor Fencing
Indoor Play Area Floors
General Maintenance
Holidays
Camp Bow Wow 2014 FDD
Exhibit D - Operations Manuals
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03 C A M P B O W W O W N E W C A M P E R INTERVIEW
Behavior Evaluation Overview
Scheduling "Interview Day" Reservations
Interview Day
Guardian/Certified Camp Counselor Interview Process
Energy Levels
New Camper Interview
Follow Up With Guardian
Successful Camper Interview
Camper Transferring From another Facility
Interview with a Client that is Not Successful
If Unacceptable Behavior Occurs During Interview Day, a Decision Must be Made
Scheduling Reservations
Scheduling Day & Overnight Camp Reservations - The Client
Scheduling Camp Reservations - Over Phone or In Person
Scheduling Camp Reservations - from Website or Voicemail
Checking In and Out Campers
Guardian Stress
Quick Release Collars and Nametag Required
Checking Day Campers in and Out
Sfeps for Checking-ln Day Campers
Sfeps for Checking-Out Day Campers
Camper's Feeding and Medications
Importance of Feeding Campers as Guardians Specify
Food Allergies
Campers Who Are Not Eating Well
Feeding Versus Not Feeding Campers with Upset Stomachs
Dealing with Campers who are Food and/or Treat Aggressive
Administering Medications Properly
Administering Medication Assignment
Administering Medication Techniques
Steps for Bathing & Nail Trimming Campers
Bathing
Nail Trimming
Camper Medical Conditions
Not Allowed:
Monitor Closely:
Signs of Camper Illness or Injury
Look for signs of illness and injuries
Act quickly once you identify an illness or injury. Follow these steps:
Vaccinations
Disease Outbreak
Camper's Mental Well Being and Safety
Provide Mental Stimulation for Overnight Campers
Show Your Campers Attention and Affection
Individual Cabin Safety (Cabin Aggressive Dogs)
Handling/Moving Campers
Separating Campers to Ensure Safety and Re-evaluating Play Groups
Knowing When to Give Them a Break
04 P L A Y G R O U P DYNAMICS A N D P L A Y Y A R D MONITORING
Play Group Dynamics
Game Categories
Prey & Chasing (Hunting)
Mock Fighting
The Role of Play Behavior
Camp Bow Wow 2014 FDD
Exhibit D - Operations Manuals
24
:..24
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Unstable Energy
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PlayYard Monitoring
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Camper Interaction Awareness
Camper Stress Management
Dog Fights
43
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05TEACUPPUPCPEPA^CNALSTANOARDS
Camper Lounge
Tea Cup Pup Lounge
^oo^P^s^Spec^a^s
Tea Cup Pup Play Yard
Yar^P^s^Spec^ca^s
Tea Cup Pup Approved Fixtures and Supplies
Tea Cup Pup Lounge Cleaning Requirements
Tea Cup Pup Monitoring
PlayYard Equipment
Toys
FoodorTreats
Sitting Down^PlcklngupDogslntheTea Cup Lounge
HandllngTechnlques
Apparel in PlayYards
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PREMIERCUSTCMERSERVICE
55
01 PREMIER C U S T O M E R SERVICE M A D E SIMPLE
55
0 2 S I X S T E P S TO ACHIEVING E X C E L L E N T C U S T O M E R SERVICE
55
03 T I P S C N CLIENT P R C B L E M S C L V I N G
Don't ^ght Back
Listen
58
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04TURNYCURDISGRUNTLEDCLIENTSINTCHAPPYREFERRALCLIENTELE
1 F l n d a w a y to resolve the complaint talrly then stick to yourword
2 Follow upon your client's complaints to be sure thatthelr needs were properly met
3 Treat them as your most highly valued client
Client Problem Solving Situations
C8m^8owWow2014F00
ExhibitO^Dperatioos Manuals
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C A M P L E SAFETY ANO E M E R C E N C Y P R C C E O O R E S
Emergency Action Plan
84
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CAMPERNEALTNTRAILG^OE
88
OICANINE DISEASES
Bicat
Bcrdeteiia ^Canine Coughs
Distemper
Dog Warts
Fieas
88
68
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Ciardia
72
Heartwcrm
Hcckwcrm
Hot Spots
D^mod^ tic Mange
Parvovirus
Ringworm
Roundworm
Tapeworm
72
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02CAMFERFIRSTAID
Symptoms andTreatments tor Canine Injuries and ^nesses
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H ^ N G YOOR P A C ^ TRAIL GOIOE
88
01 I N T E R V I E W S A N O HIRING YOOR O A M R T E A M
Federal and State Employment R e g u ^ i o n s
OisonminationlnHlhng
Validating Right to Work in the united States
Employee Oontidentiality and Non compete Agreement ^NOA^
Age Requirements
BehaviorDbased Interviewing
88
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8e^a^or^er^e^r^GoaBs
Types ot Interview Questions
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Goo^Q^es^o^ T^e Groans
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02THEINTERVIEWGOIOE
Legal vs Illegal Questions
Practice Writing Interview Questions
Conducting the Interview
Interview Oo's and Oon^ts
Probing Techniques
l^eys to Listening
Your Gut Feeling
Practice Interviews with Your ManagementTeam
Assessing Responses
93
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Interviewer's Responsibilities
98
The Successful Interview
InterviewsTell Only Fart ot Story
Red Flags
98
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08dG8OESGRIPTIGNS
98
Roles ot^lob Descriptions in Disability Oiscrimination Gases
Preparation ot^ob Descriptions
Have applicant review job description
Review Applications
98
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Check References
Making another
Turn down call
98
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Cam^Bow Wow 2014
ExhibitO^Dperatioos Manuals
CERT^EOCAMPCOONSELORPROGRAM®
100
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BOWWOWBOOOIESFOONOA^ONFOSTEROOG PROGRAM
111
01 FOONOATION O V E R S E W
111
02HOWTOSETORAFOSTEROOGPROGRAMATYOORCAMP
What to look tor when o h o o s ^ g a R e s o u o ^ h e l t o r
Foster Oog Reqolrements
New Foster Interview
Energy Levels
follow up with Rescue Group or Shelter
The Adoption Process
111
111
111
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113
OPERATIONS M A N O A L A T T A C H M E N T S LIST
Gamp BowWow-MarketlngTrall Guide
Gamp B o w W o w ^ T h a l Guide Gamp Specitications
Oamp B o w W o w ^ T r l a l Guide Supply Intormation
Home Buddies by Gamp Bow W o w ^ Operations Manual
Behavior BuddlesSM Operations Manual
OallyOheckllstAMShltt last updated 12^21^12
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Timeline otOutles last updated 1 2 ^ 1 2
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^m^BowWow2014FOO
^ I b l t O D O p e r a t ^ s Manuals
BEHAVIOR BUDDIES®
OPERATIONS MANUAL
Camp Bow Wow 2014 FDD
Exhibit D - Operations Manuals
Table of Contents
Behavior Buddies Introduction
What You Can Expect From Camp Bow Wow
What Camp Bow Wow Expects from You
Offering of Dog Training Services
Insurance Requirements
Training Referrals
Behavior Buddies Training Program
Training Certification Details
Training Offerings
Behavior Buddies Program Fees and Payment Options
Trainer Certification Fees
j
First Certified Behavior Buddies Trainer at Location
Second Certified Behavior Buddies Trainer at Location
Third Certified Behavior Buddies Trainer at Location
Payment for Behavior Buddies Training Fee
Monthly payments for training fee
Waived Training Fee
Re-Certification for Trainers Certified Prior to January 2012
Trainer Contracts
Trainer Compensation
Training Methodology
Training Expectations
Training Tools
Permitted Tools
Prohibited Tools
Behavior Buddies Training Manual and Curriculum
Use of the Training Manual
Age and Vaccination Requirements
Age Requirements
Vaccination Requirements
Classroom Tools and Regulations
Aggressive Dogs in Group Classes
Unaltered Dogs in Group Classes
Classroom Tools
Paperwork Requirements
Registration Form
Payments by Phone
Commission Reporting Form
Classroom Paperwork
Class Binder Organization
Classroom Paperwork Organization
Marketing Materials and Promotional Items
Classroom Handouts
Miscellaneous Handouts
Graduation Certificates
Clickers
Camp Bow Wow 2014 FDD
Exhibit D - Operations Manuals
1
1
1
2
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2
3
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D-10
Calendar
P e r s o n Web
Use of Behavior Boddies Marketmg and Promo^onal M a t e r s
Approved l^ogos
AppendixADForms
Commission Reporting Form
Reqoest BasedToois Approval Form
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17
IB
P r e m i e r In Home
P e t fiare
Home Buddies Blueprint for Success
Camp Bow Wow 2014 FDD
Exhibit D - Operations Manuals
D-12
Table of Contents
Welcome to the Wonderful World of In-Home Pet Care
10
Welcome to Home Buddies by Camp Bow Wow
11
Your Home Buddies Blueprint for Success
12
Responsibilities o f a Home Buddies Franchisee
13
Your Dedicated Corporate Team
14
Setting Up Your Home Buddies
16
Sample Buddies Brand Manager Job Description
17
Business License
18
Trade Name Registration
18
Employer Registration - Unemployment Insurance
18
Bank Account
18
Accountant/Bookkeeper
19
Insurance
19
Insurance Company Options:
20
Liability Insurance and Bonding
21
Insurance Requirements
21
Setting up your software ••••••••••••••••••••••(•••••••(•••••••••••••••••••••(••••••^^••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••(•2 3
QuickBooks
24
Office Set Up
24
Home Buddies Office Location
24
Communication Methods
24
Phones
24
Communication to Make Your Home Buddies Premier
24
Email
:
25
Service Offerings
26
Approved Services
27
Prohibited Services
29
Selecting Your Service Rates
29
The Home Buddies Advantage
29
Service Rates and Employee Pay
30
Overnight Stays
31
Mileage Surcharge
32
Mobile Transport
32
Van Specifications
32
Van Conversion
33
Van Photos
33
Mobile Grooming
37
Van and Grooming Trailer Wraps
38
Wrap Vendor
38
Introduction
40
Staffing
40
Camp Bow Wow 2014 FDD
Exhibit D - Operations Manuals, •
D-13
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Email Service Requests
Reservation Confirmation
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Conductingthe Initial Consultation
Understandingthe Pets inYour Care
Survey the Area
Client Expectations
ClientWelcome Packet
Other People with Access to the Home
Red Flags
BeaTrue Buddy
VaccinationsDPets^Humans
Performing the ^oh
Additional Responsibilities
Safety and Preparedness
Personal Safety
Home Buddies Care l^it
HandlingPets
Administering Medications
Pet Illness or In^nry
PetTirstAidandCPR
Home Buddies Safety and Emergency Procedures
Emergency Procedures
Hazard Assessment
Camp BowWow 2014^00
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Caregiver Pay
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Place Ad and Review Applications
PlacingYour A d v o c a t i o n s
Review Applications Received
Interview Process andTechniqnes
DfferingAPosition or Turning Candidate Down
Marketing and AdvertisingDlntrodoction
Sources o f N e w Costomers
Camp Oversow
Marketing and Advertising
Marketing Trail Cnide
LCMP^Local Camp Marketing Professionals
Local Marketing
Outside Sales
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Client ProhlemSolving Situations
Role Playing Scenarios
Introduction
Home Buddies Rules
Personal pets
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Tips for Avoiding Dog-Waiking insurance Claims
In Home Pet Care and Dog Walking Claim Examples
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C A M P BOW WOW FRANCHISING, INC.
EXHIBIT E
LIST OF FRANCHISEES A S
OF A U G U S T 29, 2014
Camp Bow Wow - 2014 FDD
Exhibit E - List of Franchisees
US.53755407.06
Camp Bow Wow Franchising, Inc.
LIST OF FRANCHISEES A S OF AUGUST 29, 2014
Franchisee
O P E N UNITS
Address
Phone
Michelle Ellis *
8550 N. 91 Ave., Suite 55
Peoria AZ 85345
623-773-2275
Heather Owen *
1050 N. El Mirage Road
Building I #111
AvondaleAZ 85323
623-925-8998
Linda Burkett*
16725 N Oracle Blvd.
Tucson AZ 85739
520-742-6476
Jeff Kosecki
1403 South West 14th Street
Bentonville AR 72712
479-268-4120
Paul Berkovitz
29348 Roadside Drive
Agoura Hills CA 91301
818-889-2267
Mark & Connie Garrett
1677 N Marshall Ave., Suite A
El Cajon C A 92020
619-448-9663
Michael & Lisa Haight *
42192 Sarah Way
Temecula C A 92590
951-587-2267
Kris & Tim Hanna
1431 North Daly Street
Anaheim C A 92806
714-533-2267
Arlette & Matthew Woods 9263 Bendel Place
Elk Grove C A 95624
916-685^590
Kimberly Simons
220 Calle Pintoresco
San Clemente C A 92672
949-218-7387
Arlette & Matthew
Woods
6430 Preston Ave., Suite F
Livermore C A 94550
925^56-3294
Camp Bow Wow C012
LLC*
13101 West 43rd Drive
Golden C O 80403
303-271-9663
Aaron & Leslie Buche *
4103 South Mason Street
Fort Collins C O 80525
970-266-9247
Camp Bow Wow - 2014 FDD
Exhibit E - List of Franchisees
US.53755407.06
E-l
Franchisee
O P E N UNITS
Address
Phone
CeCe Campbell & Janet
Hardie
11480 North Cherokee Street
UnitP
Northglenn C O 80234
303-254-9247
JoAnn Crouch
2125 South Jasmine
Denver C O 80222
303-300-8284
April Dempster
1221 South Cherokee St.
Denver C O 80223
303-282-5484
Deanna Drury
18985 Base Camp Road
Monument C O 80132
719-632-9247
Dave Foley
8121 South Grant Way
Littleton C O 80122
303-797-2267
Sue Ryan & Rob Gellar
3631 Pearl Street
Boulder C O 80301
303-442-2261
Gina McCloud *
10325 South Progress Way
Parker C O 80134
303-805-9739
Alex & Nick Stadlin *
4295 Northpark Drive
Colorado Springs CO 80907
719-260-9247
Alex & Nick Stadlin *
1020 Ford Street
Colorado Springs C O 80915
719-573-9247
Jan Stokes
1705 West 10th Ave.
Broomfield C O 80020
303^69-9972
Danielle Streamo *
3645 Brighton Blvd
Denver C O 80216
303-996-0411
Daphne Tasker
500 1st Street
Castle Rock CO 80104
303-814-8108
John & Gladys Caro *
581 Hope Street
Stamford CT 06907
203-504-2288
Tami Sarra *
1145 John Fitch Blvd.
South Windsor CT 06074
860-372-4787
Camp Bow Wow - 2014 FDD
Exhibit E - List of Franchisees
US.53755407.06
E-2
Franchisee O P E N
UNITS
Address
Phone
John Lewis & Laurie
Williams *
301 Ruthar Drive
Newark DE 19711
302-738-2267
Barbara Cardin
4624 North Grady Ave. Tampa
FL 33614
813-870-2267
Doris & Terry Darga
12218 Balm Riverview Road
Riverview FL 33579
813-672-2267
Bill & Dana Starck
2101 17th Street
Sarasota FL 34234
941-336-2267
Melissa & Jim Taketa
8505-1 Baymeadows Road
Jacksonville FL 32256
904-732-9663
Dominic & Isel Tiziano *
3382 Mercantile Ave
Naples FL 34104
239-352-2275
Jen O'Brien
17266 Toledo Blade Drive
9941-875-9410
Port Charlotte, FL 33954
Jeffrey Hahn *
1795 Buford Highway
Duluth G A 30097
678-265-3436
Peter Harris *
1755 Grasslands Parkway
Alpharetta G A 30004
678-807-8505
Kris, Kelly, and Maureen
Sigman *
12916 Hwy. 92, Suite 120
770-675-3445
Woodstock, GA30188
Elizabeth & Greg
Peterson *
3430 South T.K. Avenue Boise
ID 83705
208-331-5091
Linda Ciprella
6046 Roosevelt Road
Oak Park IL 60304
708-848-2267
Gina & Paul Stroh *
129 Corporate Drive
Swansea IL 62226
618-234-9247
Tom and Carolyn Brown *
3107 West Route 120
McHenry IL 60051
815-385-7297
Michele Alexander
489 Gradle Drive
Carmel IN 46032
317-580-0446
Camp Bow Wow - 2014 FDD
Exhibit E - List of Franchisees
US.53755407.06
E-3
Franchisee O P E N
UNITS
Address
Phone
Beth Bauer
5950 West Raymond Street
Indianapolis IN 46241
317-244-4229
Nicole Pizzini & Shawn
Mercer *
860 N 20th Avenue
Hiawatha IA 52233
319-393-3647
Brenda & Carl Heppenstall
1150 West 151st Street Suite D Olathe
KS 66061
913-322-2267
Phil and Drew Detlefs *
7195 Pecue Lane
225-810-3647
Baton Rouge, LA 70817
Nancy Purvis *
2731 Tchoupitoulas Street New
Orleans LA 70130
504-891-3647
Jason Dalton
14279 Highway 1085
Covington LA 70433
985-892-9364
Suzette Fowler
114 Eunice Street
Lafayette LA 70508
337-237-3647
Gary & Jill Mansir*
49 Blueberry Road
Portland ME 04102
207-541-9247
Eric Neumann & Michel
Domingues
7165 Oakland Mills Road
Columbia MD 21046
410-964-2275
Sally Winters
244 Maple Street
Bellingham MA 02019
508-966-4111
Ron Brunick
4322 Central Parkway
Hudsonville Ml 49426
616-896-9663
Anthony Caruso *
19795 East 9 Mile Road St
Clair Shores Ml 48080
586-445-9663
Paul & Cheryl Grogan
3829 South Old US23 Brighton
Ml 48114
810-227-5487
Cindi Morris
4150 40th Street
Kentwood Ml 49512
616-977-9247
Barbara Patton
522 State Circle Ann
Arbor Ml 48108
734-623-2275
Camp Bow Wow - 2014 FDD
Exhibit E - List of Franchisees
US.53755407.06
E-4
Franchisee O P E N
UNITS
Address
Phone
Ann & Bob Roth
4373 Plant Drive
Commerce Township Ml 48390
248-242-8000
Ann & Bob Roth
1300 Souter Dr.
Troy Ml 48083
248-883-9247
Sue Rutowski, Linda
Ward, Sue Nara, Patricia
McDonald
6374 Sashabaw Road
Clarkston Ml 48346
248-620-9663
Jeffrey & Diana Hall
14305 Ewing Avenue South
Burnsville MN 88306
952-736-9919
April & Nick Netley
2067 East Center Circle
Plymouth MN 86441
763-383-9685
Danielle Magers
1000 West Sunset
Springfield MO 65807
417-882-9247
Shannon and Brian
Wilson
1010 S E Hamblen Road Lee's
Summit MO 64081
816-246-7833
Colleen Clark & Tom
Ryan
6620 South 40th Street Lincoln
NE 68616
402^74-0663
Chad & Mari Rodrigues
6176 S.Valley View Blvd.
Las Vegas NV 80118
702-255-2267
Michelle Bryson & Heidi
Duffy
3 Esterbrook Lane, Suite 280
Cherry Hill NJ 08003
886-651-9663
Sherri Hayes & Randy
DeFazio
10 West Chimney Rock Road
Bridgewater NJ . 08805
732-808-0888
Kevin & Louise McKeown
231 Bakers Basin Road
Lawrenceville NJ 08648
600-680-3647
Michael Monks
95 Greenwood Avenue, Suite B
Midland Park NJ 07432
201-882-0186
Fred & Laura Perla
284 Old Deal Road Eatontown
NJ 07724
732-728-9663
Anita Sahoo
910 Wigwam Parkway, Suite
110, Henderson, NV 89014
702-476-3647
Camp Bow Wow - 2014 FDD
Exhibit E - List of Franchisees
US.53755407.06
E-5
Franchisee O P E N
UNITS
Address
Phone
Chris and Jennifer Senft
288 Lincoln Blvd
Middlesex NJ 08846
732-560-3647
Roman Shabashkevich
53 Midland Avenue Elmwood
Park NJ 07407
201-707-3647
Bryan Smith
3228 Los ArbolesNE
Albuquerque NM 87107
805-881-3647
John Sinclair
660 Portland Street
902^31-3647
Dartmouth, Nova Scotia B2W
6A3
Samuel Dearth *
136 Railroad Ave., Albany, NY
12206
518-301-2777
Dave Levine and Doug
Kesselman
174 Miller Place
516-595-7297
Hicksville NY11801
Kathy Fiume
101 Rt. 304
Nanuet NY 10954
845-507-0068
Mark & Nannette Luczak *
231 Grand Island Blvd.
Tonawonda NY 14180
716-877-9247
Mark & Nanette Luczak
31 North America Dr., West
Seneca, NY 14224
716-677-9247
Stephen Neagus
4716 Austell Place
Long Island City NY 11101
718-302-0663
Lee Wilson & Dana
Slingerland *
88 Mushroom Blvd.
Rochester NY 14623
885-613-0247
Paola Bedoya
6207 Chimney Center Blvd.
Greensboro NC 27400
336-323-3133
Neil Bleau *
107 Woodwinds Industrial Court Gary
NC 27511
010-466-4235
Neil Bleau *
1710 Page Road Ext Durham
NC 27703
010-321-8071
Camp Bow Wow - 2014 FDD
Exhibit E - List of Franchisees
US.53755407.06
E-6
Franchisee O P E N
UNITS
Address
Phone
James Daniel *
4900 Chastian Avenue
Charlotte NC 28217
704-527-3647
James Daniel
8638 Crown Crescent Court
Charlotte, North Carolina 28227
704-708-0663
Jeff & Cassie Scofield
8010 Myint Lane, #10
Concord NC 28027
704-260-0055
Jeff Vaughn
4310 Bennett Memorial Road
Durham NC 27705
010-309-4050
Roxanne Jancsik *
14411 Foltz Parkway
Strongsville OH 44140
440-572-3200
Stephanie McMillion *
863 Bradley Road
Westlake OH 44145
440-800-0100
Carol Neckel
4055 Creek Road
Cincinnati OH 45242
513-745-0850
Ron & Donna Novak
23380 Aurora Road Bedford
Heights OH 44146
440-786-3647
Mike Paquette
1403 Main Street Cuyahoga
Falls OH 44221
330-023-0663
Camp Bow Wow OH 21
LLC *
31 Alpha Park
Highland Heights OH 44143
440-440-1364
Lori & Kevin Thelen
8100 Nike Drive
Hilliard OH 43026
614-827-2267
Tiffany Bea I
801 Centennial Blvd.
Edmond OK 73013
405-380-7207
Amy & Brian Walters
142 South 147th East Avenue Tulsa
OK 74116
018-437-3647
Amy & Brian Walters
14002 S. Grant St.
Bixby OK 74008
018-943-6400
Ken & Wendy Doyle
470 Business Park Lane
Allentown PA 18100
610^36-2267
Camp Bow Wow - 2014 FDD
Exhibit E - List of Franchisees
US.53755407.06
E-7
Franchisee O P E N
UNITS
Address
Phone
Melea Strimple
971 Killarney Drive
Pittsburgh PA 15234
412-886-2267
Jordan & Barbara Murray
710 Trumbull Drive
Pittsburgh PA 15205
412-276-9247
Jordan & Barbara Murray
2327 Babcock Blvd.
Pittsburgh PA 15237
412-931-9247
Jordan & Barbara Murray
1325 Washington Blvd
Pittsburgh PA 15206
412-362-7829
Frank & Christine
Ellington
1016 Taylor Street
Columbia S C 20201
803-748-4644
Melinda & Robert
Hoover
602 Airport Road, Suite A
Greenville SC \206O7
864-220-1223
Thomas Hudson
1745 Clements Ferry Rd
Charleston SC 20402
843-216-2278
Dennis Diffee
2121 Whitten Road
Memphis TN 38133
001-373-8757
Nancy Purvis & Steve
Lassiter *
470 Craighead Street
Nashville TN 37204
616-388-2278
George Agamemnon
1800 Irving Blvd.
Dallas TX 78207
214-747-3647
Stephen & Michelle
Martin
13730 Floyd Circle
Dallas TX 76243
214-575-0663
Frank & Tamara
Wetegrove *
13000 IH-35
Austin TX 78728
512-670-2275
Stacey Copeland *
819 E. Highway 67 Duncanville
TX \75137
072-206-0663
Lee & Kristl Franklin *
27616 Commerce Oaks Dr.
Oak Ridge North TX 77385
832^82-2200
Linda Grady & Amy Petrie
760 S. MacArthur Blvd., Suite 233
Coppell, TX 78010
072-303-2267
Camp Bow Wow - 2014 FDD
Exhibit E - List of Franchisees
US.53755407.06
E-8
Franchisee OPEN
UNITS
Address
Phone
Frank & Tamara
Wetegrove *
1193111931 Jones Maltsberger Rd.
San Antonio, TX 78216
210-826-9060
Frank & Tamara
Wetegrove *
5811 Rocky Point
San Antonio, TX 78249
210^96-9969
Jennifer & Al Zuniga *
300 Anders Lane
Kemah, TX 77568
281-334-2267
Sharon Opfermann
478 West 3600 South Salt
Lake City, UT 84115
8O1-288-2278
Kelly Ingui & Kathy Ward
1707 Paramount Ct.
Waukesha, Wl 83186
262-547-0663
* Indicates Co-branded; Franchisee operates both a Camp Bow Wow and Home Buddies
Business
Camp Bow Wow - 2014 FDD
Exhibit E - List of Franchisees
US.53755407.06
E-9
Camp B o w Wow Franchising, Inc.
LIST OF FRANCHISEES NOT YET OPERATIONAL
A S OF AUGUST 29, 2014
Franchisee
Not Yet Operational
Franchise City
Contact Information
Lidia Lou, Simon Chong,
Angela Huang
Irvine C A
lidia.lou@gmail.com
Craig and Alex Wilson
Denver C O
rajama3@aol.com
Roger & Darla Spinnato
Atlanta, G A
djspinnato@bellsouth.net
Kathy, Richard, Elizabeth,
and Sarah Stone
Athens G A
Kathy@stone85.com
Jeffrey Hahn
Gainesville, GA
Jeff.hahn@campbowwowusa.com
Herb Dyer
Metairie LA
hdyerla@aol.com
Jackie Basas
Sterling Heights Ml
jacqueline217@yahoo.com
Michael Gelencher
Morristown NJ
mgelencher@optonline.net
Guy and Barbara Sorbo
Freehold NJ
gsorbot @verizon.net
Kevin & Louise McKeown
East Brunswick NJ
louisemckeown@verizon.net
Dave Levine and Doug
Kesselmen
Manahsset NY
hurk24@aol.com
Wes Skorski & Paul Butler
Cranston Rl
wes@skorski.us
Gerry & John Leighton
Myrtle Beach S C
johncleighton@icloud.com
Stacey Copeland
Arlington TX
stacey.copeland@campbowwow.com
Jose & Joan Morillo
Houston, TX
jfmorillo@gmail.com
Frank & Tamara Wetegrove San Antonio, TX
frankdwtx@gmail.com
Lauren, Carol, Michael &
Richard Rosenthal
Alexandria V A
Iaurenschuster2002@yahoo.com
Brett Ippolite
Milwaukee Wl
ippoliteb@gmail.com
Camp Bow Wow - 2014 FDD
Exhibit E - List of Franchisees
US.53755407.06
E-10
Camp Bow Wow Franchising, Inc.
LIST OF FRANCHISEES WHO HAVE LEFT THE SYSTEM
A S OF AUGUST 29, 2014
Other than as noted below there are no Franchisees who have had a franchise
terminated, cancelled, not renewed or otherwise voluntarily or involuntarily ceased to do
business under the Franchise Agreement from January 1, 2013 to August 20, 2014, or who
have not communicated with us within 10 weeks of the 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.
Franchisee
Address
Phone
Vera Mahen *
Moore OK
Diane LaFemina *
Staten Island, NY
vmahen@cox.net
Medicmom22@aol.com
Katherine Bartling *
Omaha, NE
kbartling@hotmail.com
Camp Bow Wow NJ01
LLC
Lacy, NJ
info@campbowwowusa.com
Amy Ryan *
Chagrin Falls, OH
amy@ryannet.com
'Franchisee was terminated.
Camp Bow Wow - 2014 F D D
Exhibit E - List of Franchisees
US.53755407.06
E-ll
Camp Bow Wow Franchising, Inc.
PREVIOUS OWNER INFORMATION
A S OF A U G U S T 29, 2014
NONE
Camp Bow Wow - 2014 FDD
Exhibit E - List of Franchisees
US.53755407.06
E-l 2
Camp Bow Wow Franchising, Inc.
LIST OF STAND-ALONE HOME BUDDIES FRANCHISEES A S OF A U G U S T 29, 2014
Franchisee Open Units
Address
Phone
Marcy & Matt Piasecki
La Jolla, CA
619-889-7767
Sacramento, CA
916-969-6932
Brian Long
San Francisco CA
415 440-7387
Glen & Kelly Hatchell
Tampa, FL
813-936-7387
Elishia Beatty
Washington DC
202 680-8870
Brenda & Rick Veldink
Vancouver, WA
360-834-2275
Jay and Gina Cornwall
Bellevue WA
425464-0663
Laura Hudson
Lesemann
and
Anne
Camp Bow Wow Franchising, Inc.
LIST OF STAND A L O N E HOME BUDDIES FRANCHISEES
WHO A R E NOT Y E T OPERATIONAL A S OF A U G U S T 29, 2014
NONE
Camp Bow Wow Franchising, Inc.
LIST OF STAND-ALONE HOME BUDDIES FRANCHISEES
WHO HAVE LEFT THE S Y S T E M A S OF A U G U S T 29, 2014
Tony Vasi
Newport Beach CA
tony_vasi@yahoo.com
David Loignon
Louisville KY
dloignon@gmail.com
Karen Brewer
Boston MA
karenbrewer@veri2on.net
G retch en & Agustin Rexach
Burbank CA
gretchen.rexach@gmail.com
Camp Bow Wow - 2014 FDD
Exhibit E - List of Franchisees
US.53755407.06
E-13
Camp B o w Wow Franchising, Inc.
LIST OF CO-BRANDED HOME BUDDIES FRANCHISEES
WHO A R E NOT YET OPERATIONAL A S OF AUGUST 29, 2014
Franchisee
NOT Y E T OPERATIONAL
Address
Phone
Lidia Lou, Simon Chong, and
Angelina Huang
Irvine, CA
305-297-5659
Craig & Alex Wilson
Denver, C O
706-660-8655
Kris, Kelly, and Maureen
Sigman
Woodstock, G A
770-676-3445
Kathleen, Richard, Sarah, and
Elizabeth
Athens, GA
770-882-4888
Jacqueline Basas
Sterling Heights, Ml
720-200-2243
Barbara and Guidon Sorbo
Freehold NJ
732^40-3514
Michael Gelencher & Nancy
Griffin
Morristown NJ
073-060-6842
Louise & Kevin McKeown
East Brunswick, NJ
732-207-6884
Anita Sahoo
Henderson, NV
702-686-1108
Mark & Nanette Luczak
West Seneca, NY
716-877-9247
Jordan & Barbara Murray
Pittsburgh PA (2 locations)
412-931-9247
Paul Butler & Wes Skorski
Cranston Rl
860-670-6874
Gerry & John Leighton
Myrtle Beach, S C
609-923-6990
George Agamemnon
Dallas TX
214-747-3647
Carol, Lauren, Richard, and
Michael Rosenthal
Alexandria, VA
202-300-8734
Brett Ippolite
Milwaukee, Wl
262-408-8686
Camp B o w Wow Franchising, Inc.
LIST OF C O - B R A N D E D FRANCHISEES
Camp Bow Wow - 2014 FDD
Exhibit E r- List of Franchisees
US.53755407.06
E-14
WHO HAVE LEFT THE HOME BUDDIES S Y S T E M A S OF AUGUST 29, 2014 BUT
REMAIN IN THE C A M P BOW WOW SYSTEM
Randy DeFazio & Sherri
Hayes
Bridgewater NJ
732-805-0888
Sue Ryan & Rob Gellar
Boulder C O
303-442-2261
Brenda Heppenstall
Olathe KS
013-322-2267
Roman Shabashkevich
Elmwood Park NJ
201-707-3647
Shannon & Brian Wilson
Lee's Summit MO
816-246-7833
Nancy Purvis
Nashville TN
615-385-2275
Chad & Mari Rodrigues
Las Vegas, NV
702-255-2267
Matthew & Arlette Woods
Elk Grove, C A
016-685-4500
Camp Bow Wow - 2014 FDD
Exhibit E - List of Franchisees
US.53755407.06
E-l 5
C A M P BOW WOW FRANCHISING, INC.
EXHIBIT F
STATE-SPECIFIC ADDENDA
Camp Bow Wow - 2014 FDD
Exhibit F - Addenda
US.53755407.06
EXH^TF
STATE L A W AOOENOA TO
ERANOHISEOISOLOSORE OOCOMENT
^ F O ^ A
THE CALIFORNIA ERANCHISE INVESTMENT LAW R E O O I R E S T H A T A C O ^
ALL RROROSEO A G R E E M E N T S R E L A T I N O T O T H E SALE O F T H E FRANCHISE 8E
DELIVERED WITH THE UNIFORM FRANCHISE OISCLOSLIRE OOCOMENT
Inaddltlootothelo^matlon disclosed In Item^
Neither the Company noraoy person Identified In Item 2 otthis Onltorm Franchise
Disclosore Document Is sohject to any corrently effective order of any national securities
association or national securities exchange, as defined In the Securities Exchange Act of 1034,
15 LI.S.C.A. 7 8 a e t seq., suspending orexpelllng such personsfrom membership In
such association or exchange.
In addition to the Information disclosed In I t e m t ^
a.
The Franchise Agreement contains a covenant notto compete which
extends heyond the term of the franchise. This provision may not he enforceahle under
California law.
h.
The Franchise Agreement provides for termination upon bankruptcy. This
provision may not beenforceableunderfederalbankruptcy law^11 LI.S.C.A. Section
101 and following)
c.
The Franchise Agreement requires application of the laws of the State of
Colorado. This may not be enforceable In the State of California
d
The Franchise Agreement requires yoo to sign a general release of
claims If you renewor transfer your franchise. California CorporatlonsCode Section
31512 voids a walverof your rights under the Franchise Investment Law^Callfornla
Corporations Code Sections 3100 through 31518) Business and Professions Code
Section 20010voldsawalverofyourrightsunderthe Franchise Relations Act EBusiness
and Professions Code Sections 20000 through 20043)
e
California Business and Professions Code Sections 20000 through 20043
provide rlghtstothefranchlseeconcernlng termination or non-renewal ofafranchise. If
thefranchlseagreementcontalnsaprovlslon that Islnconslstent withthe law, thelaw
will control
SECTION 31125 OF THE CALIFORNIA FRANCHISE INVESTMENT LAW REOOIRES
OS TO GIVE TO Y O 0 A D I S C L O S 0 R E DOCUMENT APPROVED BY THE COMMISSIONER
OF THE DEPARTMENT OF BUSINESS OVERSIGHT BEFORE W E A S K YOO TO CONSIDER
A M A T E R I A L MODIFICATION O F Y O O R F R A N C H I S E A G R E E M E N T
Camp Oow Wow 2 0 1 4 ^ 0 0
E x ^ F ^ ^ e n d a
U ^ ^ 0 7 0 6
^17
OORWEBS^^WWWCAMPBO^
REVIEWED OR ARRROVEO BY THE O A ^ F O R ^ A
OVERSIGHT
OERARTMENT
OF
BOSINEBS
ANYOOMRLA^TSOONOERNINOTHEOONTENTOFTHISWEBSITEMAYBE
OIREOTEO TO THE OALIFORNIA OERARTMENT OF BUSINESS OVERSIGHT AT
WWWOBOGAGOV
Item 1 7 o f ^ O I S G L O S U R E O O G U M E N T Is amended by a d d l o g ^ e f o l ^ ^
Tbe tollowing sboold be added to Provision F ot Item 17 ot tbe OISGLOSURE
OOGUMENT^
Illinois law may atfeot tbe conditions onder wblob we may terminate tbe Franchise
A g r e e m e n t ^ t 5 I L G S 7 O 5 ^ 0 a n d Role 200808
Tbe tollowing shoold be added to Provision I ot Item 17 ot the OISGLOSURE
OOGUMENT^
llllnolslawmay attect yoor rights opon nonrenewal, 818 ILGS 708B10and 708B20
Specifically, Illinois law reqolresthatatranchlsorglveatranchlsee8months notice ot Its
^
not to renew the franchise Illinois law sopersedes any confllctlngprovlslon In Sectlon2ot the
Franchise Agreement
Porsoantto Illinois l a w 8 1 8 I L G S 708^10 and Role Section 200808, any provision In the
Franchise Agreement that designates jorlsdlctlon or venoe Inaforom ootside Illinois Is void with
respect to any action which Is otherwise enforceable In Illinois, except that the Franchise
Agreement may provldeforarbltratlonootslde Illinois Inaddition, Illinois law will govern the
Franchise Agreement
INOIANA
The Indiana Securities Olvlslon reqolres the following specific dlsclosores to be made to
prospective Indiana franchisees^
1
I n d l a n a h a s a s t a t o t e , the Indiana OeceptlvePractlces Act ^the^Act^, which
makes It onlawfol forafranchise agreement with an Indiana resident or nonresident who will
operateafranchlseln Indiana to contain any of the following provisions^
a.
Reqolrlng goods, supplies, Inventories, or services to be porchased
exclosively from the franchisor or sources designated by the franchisor where the goods,
supplies, Inventories, or services of comparable quality are available from sources other than
thosedeslgnated by thefranchisor However, the publication by thefranchisor of a llstof
approved suppliers of goods, supplies, Inventories, or service orthe requirement that soch
goods, sopplies, Inventories, or services comply with specifications and standards prescribed by
the franchisor does not constitote the Improper designation o f a s o u r c e nor doesareasonable
right of the franchisor to disapprove a sopplier constitute an Improper designation. This
paragraph does not apply to goods, supplies, Inventories, or services that are manufactured or
trademarkedby,orfor,the franchisor
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b
l o w i n g the ^anch^or to ^
sohstant^y i d e o t ^ to that ot the tranoh^oe within the exoiosive territory granted the
tranohiseehy the tranohise agreement, or, it n^
tranohisor to compete ontairiy with the tranohiseewithinareasonabie area
o
Aiiowing sobstantiai modification ot the franchise agreement hy the
franchisorwithootthe consent in writing ofthe franchisee.
d.
Aiiowing thefranchisor toohtain money, goods, services, o r a n y other
henefitfrom any other person with whom thefranchiseedoeshusiness, on accoontof, or in
relation to, the transaction between the franchisee and the other person, other than for
compensation for services rendered hy the franchisor,oniess the benefit is promptly accounted
for and transmitted to the franchisee.
e
Requiring the franchisee to prospectively assent to a release,
assignment, novation, waiver,or estoppel which purports to relieve any person fromliability to
be imposed by Indiana law or requiring any controversy between the franchisee and the
franchisor to be referred t o a n y person, if referral would be binding on thefranchisee This
paragraph does not apply to arbitration before an independent arbitrator
f.
Allowing f o r a n increasein prices of goodsprovided by thefranchisor
which the franchisee had ordered for private retail consumers before the franchisee's receipt of
an official price increase notification A s a l e s contract signed byaprivate retail consumer shall
constitute evidence of each order. Price changes applicable to new models ofaproduct at the
time of introduction o f s u c h new models shall not be considered a price increase. Price
increases caused by conformity to state or federal law, or the revaluation of the United States
dollar in the case of foreign made goods, are not subject to this paragraph.
g.
Permitting unilateral termination o f t h e franchise if such termination is
without good cause or in bad faith. Good cause within the meaning of this paragraph includes
any material violation of the franchise agreement
h.
Permitting thefranchisortofail to renewafranchise without good cause
or in bad faith.This paragraph shall not prohibitafranchise agreement from providing that the
agreement is not renewable meets certain conditions specified in the agreement.
i.
Pequiringafranchisee to covenant not to compete with the franchisor for
aperiod longer than t h r e e ^ y e a r s or in an area greater than the exclusive area granted hythe
franchise agreement or,in the absence of an exclusive area provision in the agreement, an area
of reasonable size, upon termination of or failure to re the franchise.
Limiting litigation brought for breach of the agreement in any manner
whatsoever.
k.
Requiring the franchisee to participate in any (i) advertising campaign or
contest; (ii) promotional campaigns; (iii) promotional materials; or (iv) display decorations or
materials, in each case at any expense to the franchisee that is indeterminate, determined by a
third party, or determined by a formula, unless the franchise agreement specifies the maximum
percentage of gross monthly sales or the maximum absolute sum that the franchisee may be
required to pay.
Camp Bow Wow - 2014 F D D
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US.53755407.06
F-19
1.
Req^ringa^och^eetoeote^
withany ^ d e m o ^ c ^ o o f o r ^ b ^ c a o s e d b y t h e ^ a n c h i s e e ^ p r o p e r ^ a n c e o o o r o s e o f
procedures or m a t e r s p r o v ^
m.
Requ^ogafranohisee to eoterioto an agreement r e s e r v e the right to
injunctive reiiet and any s p e c i e damages to the tranohisor^iimiting the remed^^
either party without henetitot appropriate process or recognizing the adequacy or inadequacy ot
any remedy under the agreement.
2
it is uniawtui tor any franchisor who has entered into any franchise agreement
withatranchiseewhoiseitheraresidentotindianaoranonresidentoperatingatranchisein
indiana to engage in any ot the toiiowing acts and practices in relation to the agreements
a.
Coercing the franchisee to^
(1)
Crderoracceptdeiivery of any goods, supplies, inventories, or
services which are neither necessary to the operation of the franchise,required hythe franchise
agreement,required hy law, nor voluntarily ordered hythe franchisee
(2)
Order or accept delivery o t a n y goods offered for sale h y t h e
franchisee which includes modifications or accessories which are not included in the hase price
ofthose goods as puhlicly advertised hythe franchisor
(3)
Participate in an advertising campaign or contest, any promotional
campaign, promotional materials, display decorations, or materials at an expense to the
(4)
franchisee over and ahove the maximum percentage of gross
monthly sales or the maximum absolute sum required to he spent hythe franchisee provided
for in the franchise agreement; and ahsentamaximum expenditure provision in the franchise
agreement, no such participation may he required; or
(5)
Enter into any agreement with the franchisor or any designee of
the franchisor, or do any other act prejudicial to the franchisee, hy threatening to cancel or fail to
renew any agreement between the franchisee and the franchisor. Notice in good faith to any
franchisee of the franchisee's violation of the terms or provisions ofafranchise or agreement
does notconstituteaviolation ofthis paragraph
h.
Refusing or failing to deliver in reasonahie quantities and within a
reasonabletimeafterreceiptofanorderfromafranchiseeforanygoods,supplies,inventories,
or services which the franchisor has agreed to supply to the franchisee, unless the failure is
caused by acts or caused beyond the control of the franchisor.
c.
Oenyingthe surviving spouse, heirs,or estate o f a d e c e a s e d franchisee
the opportunity to participate in the ownership of the franchise under a valid franchise
agreement forareasonable time after the death of the franchisee, provided that the surviving
spouse,heirs,or estate maintains all standards and obligations ofthe franchise
d.
Establishingafranchisor-owned business that is substantially identical to
that of the franchisee within the exclusive territory granted thefranchisee by the franchise
agreement, or if no exclusive territory is designated, competing unfairly with thefranchisee
withinareasonable area However,afranchisor shall not be considered to be competing when
operatingabusiness either temporarily forareasonable period of time,or i n a b o n a fide retail
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o p e r a s w h i c h ^ ^ s ^ e to an^
ioabooat^oro^ooship^w^oh^
su^oottolossiothobusioessopo^onandoanroasooab^expootto^^
soohbu^noss on reasooablo terms aodoond^oos.
e.
O^orimioatiog onta^yamong i t s t r a o o ^ s o e s o r u n r e a s o o a b ^ t ^ o g o r
retosiog to oomply with any terms otatraoohiso agreement.
t
Obtaining money, goods, servioes,or any other benefit tromanyother
person with whom the franohisee does business, on aoooontot, or in relation to, the transaction
between the franohisee and the other person, other than compensation for services rendered by
the franchisor,oniess the benefit is promptly accounted for and transmitted to the franchisee.
g.
increasing prices of goods provided by the franchisor which the
franchisee had ordered for retail consumers before the franchisee's receipt ofawritten official
price increase notification Price increases caused by conformity t o a s t a t e or federal law,the
revaluation ofthe United States dollar in the case offoreignmade goods or pursuant to the
franchise agreement are not subject to this paragraph.
h.
Using deceptive advertising or engagingin deceptive acts in connection
with the franchise orthe franchisor's business.
3
Pegardlessofanything set forth in the Franchise Agreement,you do not waive
any right under Indiana statutes withregard to prior representations made in the Franchise
OisclosureOocument
4
The Franchise Agreement is amended toprovide that i t w i l l b e governedand
construed in accordance with the laws of the State of Indiana.
5
Each provision of the Franchise Agreement which is unlawful pursuant to the Act
is deemed to be amended by the parties to conform with the Act
MARIANO
Item^of the Oisciosure Oocument is amended to provide that we will defer the payment
o f t h e initialfranchisefee and other initial paymentsowed by franchisees with locations in
Maryland to the Franchisor until the Franchisor has fulfilled its pre opening obligations u^^^
FranchiseAgreementand you are ready to open your OBWFranchise
Item 17oftheOisclosureOocument is amended to provide that pursuant to OOMAP
02 02 08B161, the general release required as a condition of renewal, sale, andBor
assignment^transfer shall not apply to any liability under the Maryland Franchise R e g i s t r a r
and Oisciosure Law.
Item 17of the Oisciosure Oocument is amended to state that you may bringalawsuit in
Maryland for claims arising under the M a r y ^
claims arising under the Maryland Franchise Registration and Oisciosure Law must be brought
within three years after the grant of the franchise.
Item t 7 o f the Oisciosure Oocument is hereby amended to the extent required under the
Maryland Franchise Registration and Oisciosure Laws Amongother things, you may sue in
Camp 8ow Wow 2014^00
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Mary^od f o r o ^ m s a r i ^ n g onder the Maryland Franchise Registrationand Olsclosore Law,
except tor claims reqolred to be sobmitted to arbitration
The Franchise Agreement provides tor termination opon bankroptcy. This provision may
not be enforceable onder Federal Bankroptcy L a w ^ 1 0 S C A S e c 1 0 t , e t s e q )
All representations reqoiringaprospective franchisee to assent toarelease,estoppel or
waiver of any liability are not intended to, nor shallthey act as,arelease, estoppel or waiver of
any liability oncored onder the Maryland Franchise Registration and Olsclosore Law.
M^N^TA
Minn BtaL Sec.
and Minn Role Part ^
litigation to be condocted ootside Minnesota. In addition, nothing in the Olsclosore Oocoment
can abrogate or redoce any of yoor rights as provided for in Minnesota Statotes, Chapter
or yoor rights to any procedore,forom,or remedies provided for by the laws ofthejorisdiction
The Olsclosore Oocoment is amended to state that we will comply with Minnesota
Statote80CBl4sobdivisions 3, 4, and 5, which reqoire, except in certain specific cases, that yoo
be given 00 days' notice of termination (with 00 days to core) and 1 8 0 d a y s ' n o t i c e f o r n o n
renewal ofthe Franchise Agreement.
Rorsoantto Minnesota Statote80C t2sobdivisions 1(g), to the extent reqolred by law,
the Olsclosore Oocoment is amended to state that we will protect yoor right to ose the
trademark, service mark, trade name, logo or other commercial symbol or indemnify yoo
fromany loss, costs or expenses arising oot of any claim, soit or demand regarding the ose of
oor tradename
Minnesota Role 2880.4400O prohibits os from reqoiring yoo to assent to a general
release The Olsclosore Oocoment is modified accordingly, to the extent reqolred by Minnesota
law
Minn Stat Sec 80C 2t declares void any condition, stipolation or provision porporting
to b i n d a p e r s o n to waive compliance with the Minnesota franchise law (Minn. Stat Sections
OOC Ot to 80C 22 and the roles promolgatedthereonder (collectively, the ^Minnesota Act''). T^
the extent that any of the contracts that yoo sign with os containageneral release, or reqoire
yoo to signageneral release a t a l a t e r date,in favor of os or oor affiliates,the general release
willnotoperatetoextingoishclaimsarisingonder,or relieve any person from liability imposed
by the Minnesota Act.
The Minnesota Act protectsyoor right toreqoire that the venoe of anydispotenot
sobject to binding arbitration be in Minnesota and that Minnesota law govern all contracts with
os It forthermore protects yoor right toajory trial.Tothe extent any contract that yoo sign with
os is inconsistent with theMinnesota Act, the contract shall be modified to conform with the
Minnesota Act.
If any contract that yoo sign with os reqoires yoo to consent to oor obtaining injonctive
relief, the contract shall be amended to provide that, porsoantto Minn Role 28804400^,
Franchisee cannot give soch consent; provided, however, nothing shall prevent os from
applying toaforom for injonctlve relief
Camp 8ow Wow 2 0 1 4 ^ 0 0
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Ifaoy cootract that you sign with us oootaios a limitations period tor bringing claims
against us which is shorter than the limitations^^
contract shall he modified to conform to the Minnesota Act.
TheMinnesota Act prohibits us trom refusing to renewafranchise tor the purpose ot
converting your business to an operation that will be owned by Company or one of our affiliates.
N^WY^
^
Thefoliowing informationis required by NewYork's General B u s i n e s s L a w ( N Y G e n
Bus ^880 et seq (Consol 200t) (the ^New York Franchise Law") and supplements the
information in this Oisciosure OocumenL
Item^of the Oisciosure Oocument is modified to read as follows^
Neitherwe^ourpredecesso^apersonidentified in I t e m ^ o r an affiliate offering Camp
BowWowfranchiseshasanadministrative,criminal or civil action pending against it alleginga
felony; a violation ot franchise, antitrust or securities law; fraud, embezzlement, fraudulent
conversion, misappropriationof property; unfair or deceptivepractices or comparable civil or
misdemeanor allegations; or other significant litigation.
Neitherwe,ourpredecessor,aperson identified in Item 2,or an affiliate offering Camp
Bow Wow franchises has been convicted o f a f e l o n y or pleadednolo contendere t o a f e l o n y
charge or within the ten year period immediately preceding the application for registration, has
been convicted o t o r pleaded nolo contendere to a misdemeanorcharge or has been the
s u b j e c t o f a c i v i l a c t i o n a l l e g i n g a violationof afranchise, antifraudorsecuritieslaw;fraud,
embezzlement fraudulent conversion or misappropriation ot property, or unfair or deceptive
practices or comparable allegations
Neither we,our predecessor,aperson identified in Item 2,or an affiliate offering Camp
Bow Wow franchises is subject toacurrently effective injunctive or restrictive order or decree
relatingtothefranchise,orunderafederal,StateorCanadianfranchise, securities, antitrust,
trade regulation or trade practice law, resulting from a concluded or pending action or
proceeding brought hy a public agency; or is subject to any currently effective o r d e r o t a n y
national securities association or national securities exchange, as defined in the Securities and
Exchange Act of t034, suspending or expelling such person form membership in such
association orexchange; o r i s subject to a currently effective injunction or restrictiveorder
relating to any business activity as a result of an action brought by a public agency or
department, Including without limitation, actionaffectinga l i c e n s e a s a realestatebrokeror
sales agent.
Item^of the Oisciosure Oocument is modified to read as follows^
Neither we,our affiliate,its predecessor,offlcers or generalpartner during the ten year
period immediately before the date of the Oisciosure Oocument^a) filed as debtor (or had filed
against it)apetition to start an action under the O.S Bankruptcy Code (b)obtainedadischarge
of its debts under the bankruptcy code; or (c)wasaprincipal officer o f a c o m p a n y o r a g e n e r a l
partner inapartnership that either filed a s a d e b t o r (or had filed against it)apetition to start an
action under theU.B.Bankruptcy Code or that obtainedadischarge of its debts under t h e O S
Bankruptcy Code during or within t year after the officer or general partner of the franchisor
held this position in the company or partnership
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lo Item 17, the summary accompaoyiog p r o t o n (d), with regard to the Franchise
Agreement shaii he supplemented by the addition otthe tollowing languages
You may terminate the agreement on any grounds avaiiahiehy iaw.
in item 17, the summary accompanying p r o v i s i o n a l s supplemented hythe addition ot
thetollowing language atthe end otthe summary^
No assignment will he made except to an assignee who in the good taith judgment otthe
Franchisor is willing and ahle to assume our ohligations under your Franchise Agreement
In Item 17,the summary accompanying provision (w) is supplemented hythe addition ot
the tollowing language at the end otthe summary^
The toregoing choice ot law shouldnot he consideredawaiver otany right conferred
upon you hythe General Business Law otthe State otNewYork, Article 33.
Revisions to the Operations Manual will not unreasonably increase your ohligations or
place an excessive economic burden on your operations
The NewYork Franchise Law makes it unlawful toratranchisor to requireatranchisee
to assent toarelease,assignment, novation,waiver or estoppel which would relieveaperson
from any duty or liability imposed hy the NewYork Franchise Law
NORTHOAKOTA
Sections of the Disclosure Document requiring that you signageneral release,estoppel
or waiver asacondition of renewal and or assignment, may not he enforceable as they relate to
releases ofthe North Dakota Franchise Investment Law.
The Franchise Agreement, NonDisclosure and Noncompetition Agreement, containa
covenant not to compete which may not be enforceahle under North Dakota law
Sections of the Disclosure Document requiring resolution ofdisputes to be outside otthe
stateot North Dakota may not be enforceahleunder Section 51 1 0 O 0 o f t h e North Dakota
Franchise Investment Law, and are amended accordingly to the extent required by law.
Sections of the Disclosure Document relating to choice of law, may not be enforceahle
under Section 51 1900 o f t h e North Dakota Franchise Investment Law, and areamended
accordingly to the extent required by law
Sectionsofthe Disclosure Document requiring youto consent toawaiver of trial by jury,
may not be enforceable under Section 5110 00 of the North Dakota Franchise Investment Law,
and are amended accordingly to the extent required by law
Any provision requiring Franchisee to agree to the mediation or arbitration of disputes at
alocation that is remote from the site of Franchisees business is not enforceable.
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^24
R H ^ ^ B ^
^ e m 1 7 o f t h e D ^ o s u r e Document
v e n u e t o a t o r u m outside the stateot Rhode c a n d o r requiring t^^
another state is void under Section 1 9 2 8 ^ 14 otthe Rhode Island Franchise investment Act
with respecttoaclaim otherwise entorceahie under such Act.
^TH^A^TA
The toiiowlng intormation is required hy South Dakota^ Franchises tor Brand Name
Goods and Services Law ( S O Goditied L a w s ^ 6 8 (2008^ (^South Dakota Law^ and
supplements the intormation in this Oisciosure OocumenL
Item t 7 i s supplemented hythe addition ot the toilowing language immediately atter the
Oespiteanythingtothecontrary in thetahie, the iaw regarding tranchiseregistration,
employment, covenants not to compete, and other matters ot local concern wiii he governed hy
t h e l a w s o t t h e S t a t e o t South Dakota. Any nonhinding mediation willhe conductedata
mutually agreed upon site You are not required to suhmit to venue oratorum outside the State
ot South Dakota tor any claims you may have under the South Dakota Franchises tor Brand
Name Goods and Services Law ( S D G o d i t i e d L a w s ^ 5 B (2008)
ltem8ottheFranchise Disclosure Document shall he amended as tollows^The Virginia
State GorporationGommission'sDivisionot Securities and RetailFranchising requires us
todeter payment otthe initial franchise tee and other initial payments owed hytranchisees to the
franchisor until thefranchisor has completed its pre-opening ohligationsunderthe Franchise
Agreement
Any provision in any of the contracts that you sign with us that provides tor termination ot
the franchise upon the bankruptcy o f t h e franchisee may not he enforceahle under federal
bankruptcy l a w ( 1 1 0 S G 101 e t s e q )
In recognition o f t h e restrictionscontained in Section 1 8 1 8 0 4 of the Virginia Retail
Franchising Act, the following statements are added to the intormation that we disclose in Item
17h ofthe Disclosure DocumentB
1
Pursuant toSection 18.1 884 oftheVirginiaRetailFranchising Act, it is
unlawfulfor a franchisor to cancel a franchise without reasonable cause.If any groundsfor
detault or termination stated in the Franchise Agreement do not constitute treasonable causeB
as that term may be defined in theVirginia Retail Franchising Act or the laws ot Virginia,that
provision may not be enforceahle.
2
Pursuant to Section 18 1 884 otthe Virginia Retail Franchising Act, it is
unlawfultorafranchisorto use undue influence to induceatranchisee to surrender any right
given to him under the franchise It any provision of the Franchise Agreement involves the use
otundue influence hythetranchisortoinduceafranchiseetosurrenderanyrightsgiven to him
under the franchise, that provision may not be enforceable
^
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W A ^ ^ N
TheS^eotWas^ogton h a s a s ^ u ^
which may supersede the
provisions otthe contracts that you ^
areas ot termination and renewal otyour franchise. There may aisohe court decisions which
may supersede the provisions otthe contracts that you enter into with us.
intheeventotacontiictotiaws^theprovisionsottheWashington Franchise investment
Protection Act, ChaptertOtOO ROW (the^Act^ the provisions otthe
Areiease or waiver ot rights executedhyatranchisee shaii not include rights under the
Act except when executed pursuant toanegotiated settlement atter the agreement isinettect
and where the parties are represented hy independent counsel. Provisions such as those which
unreasonably restrict or limit the statute ot limitations period tor claims under the Act,righ^
remedies under the Act such a s a r i g h t t o a j u r y trial may not he entorceahle
Transfer tees are collectahletothe extent that they reflect thetranchisor'sreasonahle
estimated or actual costs in eftectingatranster
In any arbitration involvingafranchisepurchased in Washington,the arbitration site shall
be either inthe state of Washington, or i n a p l a c e m u t u a l l y agreed upon at the time of the
arbitration,or as determined hythe arbitrator.
Franchisees InWashington will signaseparate addendum to the Franchise Agreement
attached as part otFxhihi^l to the Franchise Agreement.
W^CO^N
The Wisconsin Fair Dealership Law ^Wisconsin Law") applies to most, it not all franchise
agreements and prohibits the termination, cancellation, nonrenewal or substantial change of
thecompetitive circumstances of adealershipagreementwithoutgood cause. The Wisconsin
Law turther provides that at least 00 days prior written notice ofthe proposed termination,
cancellation,nonrenewal or substantial change must he given to the dealer. The WisconsinLaw
gives the dealer 80 days to cure the deficiency andif the deficiency is timely cured,the notice
i s v o i d . T h e Wisconsin L a w m a y supersede andcontrol the terms otyour relationship with us
withrespect to these subject matters. To the extent that any provisionof any contract that you
enter into with us pertaining to your franchise rights is inconsistent with the Wisconsin Law, the
Wisconsin Lawwill control.
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C A M P B O W WOW FRANCHISING, INC.
EXHIBIT G
S A M P L E R E L E A S E OF CLAIMS
Camp Bow Wow - 2014 FDD
Exhibit G - Sample Release of Claims
US.53755407.06
SAMPLERELEASEOFO^MS
T H ^ ^ A O U R R E N T F O R M T H A T ^ S O B J E C T T O CHANGE O V E R T I M E
F o r a n d i n c o n s i d e ^ o o o f the A g ^ m e o t s arid covenant d e s ^
helow, Camp
BowWowFraoohisio^^c (^anchiso^aod
f r a n c h i s e e s enter into this
Release otCiaims^Agreement")
RECITALS
A.
Franchisor and Franchisee entered into a
Franchise Agreement dated
(the ^Franchise Agreements
B.
^NGTE^ Oescrihed the circomstances relating tothe released
Camp
C.
Sohject to and as addressed with greater speciticity in the terms and conditions
set torth helow, Franchisor and Franchisee now desire to settle any and all disputes that may
exist between them relating to the Franchise Agreement
A ^ ^ N T
1
C o n s i d e r a t i o n ^ N G T E ^ Oescrihe the consideration paid j
23
^NCTE^ Detail otherterms and conditions otthe released
4.
Release of Claims hy Franchisor. In consideration ot, and only opon toll
payment o t ^ t o Franchisor, and the other terms and conditions otthis Agreement, the receipt
and sotticiency ot which is herehy acknowledged, Franchisor, tor itseltand tor e a c h o t i t s
atfiliated corporations, sohsidiaries, divisions, insorers, indemnitors, attorneys, soccessors and
assigns, together with all ot its past and present directors, otticers, employees, attorneys,
agents, assigns and representatives does herehy release and torever discharge Franchisee and
each ot his heirs, execotors, soccessors and assigns ot and trom any and all actions, soits,
proceedings, claims (incloding, hot not limited to, claims tor attorney's tees), complaints,
jodgments, executions, whether llqoidated or onliqoidated, known or unknown, asserted or
unasserted, absolute or contingent, accrued or not accrued, disclosed or undisclosed, related to
the Franchise Agreement This release does not releaseFranchisee trom any obligations he
may have underthis Agreement
5
R e l e a s e o f Claims hy Franchisee. In considerationot the other terms and
conditionsot this Agreement, the recelptand sutticiencyot which is herehy acknowledged,
Franchisee, tor himselt and tor each ot his heirs, executors, administrators, insurers, attorneys,
agents, representatives, successors and assigns, does herehy release and torever discharge
Franchlsorand e a c h o t itsrespective attiliated corporations, subsidiaries, divisions, Insurers,
indemnitors, attorneys, successors, and assigns, together with all ot their pastand present
directors, otticers, employees, attorneys, agents, assigns and representatives in their capacities
as such, ot and trom any and all actions, suits, proceedings, claims (incloding, bot not limited to,
claims tor attorneys'tees but excluding claims under the Maryland Franchise Registration and
Oisciosure Law), complaints, charges, judgments, executions, whether liquidated or
unliquidated, known or unknown, asserted or onasserted, absolote or contingent, accroed or not
accroed, related to the Franchise Agreement.
Oamp Bow Wow 2014^00
Ext^tGDSampio Release of Ciaims
US^7^07^
CI
8.
Reservation of Claims Against Non-Settling Parties. Pranohisor and
Pranohisee expressly reserve their right and oiaims against any non settiing persons,
tirms, corporations or other entities tor whatever portionorperoentagetheir damages are
toondtohe attrihutahie to the wrongtoi conduct ot said non settiing parties.
7.
Entire Agreement. This Agreement constitotes the entire agreement
between the parties relative to the sohject matter contained herein, and all prior
onderstandlngs, representations and agreements made hy and between the parties
relativetothecontents contained in this Agreement are merged into this Agreement.
8
Voluntary Natore of Agreement.The parties acknowledge and agree that
they have entered into this Agreement volontarily and withoot any coercion. The parties
torther represent that they have had the opportonity to consolt with an attorney ot their own
choice,that they have read theterms otthis Agreement, and that they tolly onderstand
and volontarily accept the terms
0
Governing L a w a n d Jorisdiction. This Agreement willhe constroedand
enforced porsoant to the law otthe stateot
.
10.
Attorneys^ Pees. All rightsand remedies onderthis Agreement shall be
comolative and none shall exclode any other right or remedy allowed by law. In the event
o t a breach otthis Agreement that reqoires one otthe parties to enforce the terms and
conditionsot this Agreement, the nonprevailing party shall pay the prevailing party's
attorneys' tees and costs incorred by reason ofthe hreach.
Oated^
201^
C A M P O G W W G W P R A N C H I S I N G , INC
By:
Its:
Dated:
201_
FRANCHISEE:
By:
Its:
Camp Bow Wow - 2014 FDD
Exhibit G - Sample Release of Claims
US.53755407.06
G-2
C A M P B O W WOW FRANCHISING, INC.
EXHIBIT H
S A M P L E PRE-OPENING AGREEMENT
Camp Bow Wow - 2014 FDD
Exhibit H - Sample Pre-Opening Agreement
US.53755407.06
Sample Pre-Opening Agreement
THIS IS A CURRENT F O R M THAT IS S U B J E C T TO CHANGE OVER TIME.
This
Pre-Opening Agreement (the "Agreement") is made this
day of
, 201
, by and between Camp Bow Wow Franchising, Inc., a Delaware
corporation, located at 8820 W. 116 Circle, Unit D, Broomfield, CO 80021 ("CBW") and
, a
with a place of business at
("Franchisee").
th
:
BACKGROUND
to
W H E R E A S , Franchisee and C B W entered into that "Camp Franchise Agreement" on
(the "Franchise Agreement"), through which Franchisee obtained the license
develop and operate a Camp Bow Wow® franchise business to be located at
(the "Franchised Business");
W H E R E A S , Franchisee wishes to develop or operate the Franchised Business outside of
DOG's standards; and,
W H E R E A S , the parties wish to explicitly release C B W from any liability arising out of
Franchisee's decision to operate outside of Franchisor's recommended standards and to allow
Franchisee to open the Franchised Business pursuant to the terms and conditions of this
Agreement.
AGREEMENT
NOW T H E R E F O R E , in consideration of the mutual agreements, covenants and promises
contained in this Agreement and for mutual consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. ITEM 1: Describe what Franchisee wishes to do
2. Franchisee
Acknowledgement.
Franchisee
acknowledges
that
by
, it may be foregoing good and valuable business and income
opportunities. Franchisee further acknowledges that C B W strongly recommended
. Because Franchisee is choosing to proceed against
C B W s recommendation, Franchisee hereby assumes all liability for any cause of action
stemming from its failure to comply with C B W s standard operating procedures. C B W is not
in any way liable for Franchisee's compliance with its operating standards. Franchisee
acknowledges and understands that DOG and any of C B W s representatives and/or agents
with whom Franchisee has met have not made and are not making any guarantees as to
the extent of Franchisee's success in Franchisee's Franchised Business, and have not and
are not in any way representing or promising any specific amounts of earnings or profits in
association with Franchisee's Franchised Business.
3. Release of CBW. Except as otherwise set forth in this Agreement, Franchisee releases,
acquits and forever discharges C B W and its present and former officers, employees,
shareholders, directors, agents, servants, representatives, affiliates, successors and
assigns (the " C B W Representatives") from all obligations, claims, debts, demands,
Camp Bow Wow - 2014 FDD
Exhibit H - Sample Pre-Opening Agreement
US.53755407.06
H-1
c o v e o a n ^ c o n ^ a ^ promise^agreemen^ ^ b ^ e ^ c o s ^ a t t o r o ^ s t e e ^ a ^ o o s o r
causes of action what5oeve4 whether koown or unknown w ^
or in conjunction with any other person, persons, partnership or corporation, has, h
ciaims to have against the C B W Representatives arising out otor related to the otter,saie
and operation ot the FranchisedBusiness,and the parties'rights or ohiigations under the
Franchise Agreement, or claims arising trom any additional standards followed hy
Franchiseethatarenottound in CBWsOperations Manuals.
4
Indemnitication Franchisee herehy agrees to indemnity and hold C B W and its directors,
shareholders, otticers, employees and agents harmless trom any and all liahilities, losses,
suits, claims, demands, costs, tines and actions otany kind or nature whatsoever to which
it will or may hecome liahie tor, including claims directly or indirectly arising out ot, in whole
or inpart:(a)Franchisee's hreach otthis Agreement,the Franchise Agreement,or any
other agreement between the parties, or any hreach o t a L e a s e or other instrument hy
which the right to occupy the Franchised Business is held hy F r a n c h i s e e a t a n y injury to,
or loss ot property ot, any person in, or on, Franchisee's Franchised Business; (c)
Franchisee's taxes, liahilities, costs or expenses ot its Business; (d) any negligent or willful
act or omission of Franchisee, its employees, agents, servants, contractors or others tor
whom they are, In law, responsihle; (e) any advertising or promotional material distributed
or in any way disseminated by Franchisee, or on its behalf unless such material has heen
produced, or approved in writing by Franchisor; or (g) any matter arising out of additional
standards and^or requirements agreed to by Franchisee that are not found in C B W s
Operations Manuals.
5
Amendments. No amendment or variation otthe terms otthis Agreement or the Franchise
Agreement shall be valid unless made in writing and signed by the parties hereto.
6
Reaftlrmationot Franchise Aoreement. Except as amended or modifiedherein,all of the
terms, conditions and covenants of the Franchise Agreement shall remain in full force and
effect and areincorporated hereinby reference and m a d e a p a r t of this Agreement as
though copied herein infull. If there i s a c o n t l i c t h e t w e e n t h e termsot theFranchise
Agreement and this Agreement, the terms ofthis Agreement shall control
7
Attorneys'Fees In any action at law or in equity to enforce any otthe provisions or rights
under this Agreement, the unsuccessful party in such litigation, as determined by the court
inafinal judgment or decree,shall pay the successful partyor parties all costs,expenses
and reasonable attorneys'tees incurred therein by such party or parties (including without
limitation such costs, expenses and fees o n a n y appeals), andif such successfulparty
shall recover judgment in any such action or proceeding, such costs, expenses and
attorneys'tees shall be included as part ofsuch judgment
8
Choice of Law.
Colorado.
This Agreement shall be construed under the laws o f t h e State ot
9. Beverahilitv.
If any provision of this Agreement or application to any party or
circumstances shall he determined hy any court of competent jurisdiction to be invalid and
unenforceable to any extent,theremainder of this Agreement or the applicationof such
provision to such person or circumstances, other than those as to which it Is so determined
invalid or unenforceable, shall not he affected thereby, and each provision hereof shall be
valid and shall be enforced to the fullest extent permitted by law.
Camp Bow Wow 2014 FOO
Exh^t^^Samp^PreOpeningA^emeot
US^7^40706
^2
10. Captions. The captions in this Agreement are solely for the convenience and for the
purpose of referencing sections. In no way do the captions define, limit, describe or
construe the contents of such sections or the intent or scope of this Agreement or any part
thereof.
11. Counterparts. This Agreement may be executed in several counterparts, each of which
shall constitute an original, but all of which shall be taken together and shall constitute one
and the same agreement. Facsimile transmission of any signed original document and the
retransmission of any signed facsimile transmission, shall be the same as delivery of the
original signed document.
IN WITNESS W H E R E O F , the parties hereto, intending to be legally bound, have duly
executed and delivered this Amendment on the date first written above.
C A M P BOW WOW FRANCHISING, INC.
By:
Its:
FRANCHISEE:
By:
Its:
Member, Individually
Member, Individually
Camp Bow Wow - 2014 FDD
Exhibit H - Sample Pre-Opening Agreement
US.53755407.06
H-3
C A M P BOW WOW FRANCHISING, INC.
EXHIBIT I
RECEIPTS
Camp Bow Wow - 2014 FDD
Exhibit I - Receipts
US.53755407.06
RECENT
^oorCopyj
This O ^ o s o r e D o o o m e o t summarizes provisions ofth^
iotormatiooinpiaiolaoguago Road this OisolosoreOooumeotaod aii agreements oarotu^
it we otter yooatraoohise,we must provide this OisolosoreDoooment to you fourteen
(t4) oaiendardays hetore you signabinding agreement with,or makeapayment to,us or our
attiiiate in connection with the proposed franchise saie, or sooner it required hyappiioahie state
iaw
iowa,NewYork and Rhode isiand require that we give you this Oisciosure Oocument at
the eariier otthe tirst personal meeting or tO business days hetore the execution otthe
franchise or other agreement or the payment of any consideration that relates to the franchise
relationship.
Michigan requires that we give you this Oisciosure Oocument at least 10 business days
or 14 calendar days before the execution otany binding franchise or other agreement or the
payment of any consideration, whichever occurs first
If we d o n o t deliver this OisclosureOocument on time or if this OisclosureOocument
containsafalse or misleading statement, oramaterial omission,aviolationot federal and state
law may have occurred and should be reported to the FederalTrade Commission,Washington,
O C 20580 and the state agencies listed in ExhihitA
The franchisor and the name,principal business address and telephone numherot each
franchise seller offering the franchise are as follows:
Fraochisor:
Camp B o w W o w Fraochisiog^ncD,
aOelaware corporation
8820W11^Circle,UnitO
Broomfield, Colorado 80021
877700BARK
Franchise Sellers:
^
^
FleidiGanahl,8820 W 118^ Circle, Unit O, Broomfield, Colorado
80021
Rachel W e l s h , 8 8 2 0 W 1 1 8 ^ Circle, OnitO,Broomfield,Colorado
80021
(720)280 2240
(720)280 1448
^
Renuka Salinger, 8820 W
Colorado 80021
118th Circle, Unit O, Broomfield,
(720)280 2208
^
Christina Russell, 8820 W
Colorado 80021
118^ Circle, Unit O, Broomfield,
(720)280 2284
Issuance Oate: August 20, 2014
Oamp Bow Wow 2014^00
E^it^Reoeip^
US^7^0706
We authorize the respective state agencies identified on Exhibit A to receive service of
process for us in the particular state.
I have received a Disclosure Document dated August 29, 2014 that included the following
Exhibits on the date above my signature:
Exhibit A: List of State Agencies/Agents for Service of Process
Exhibit B: Camp Franchise Agreement (with Attachments)
Exhibit C: Financial Statements and Guarantee of Performance
Exhibit D: Operations Manual Table of Contents
Exhibit E: List of Franchisees
Exhibit F: State Specific Addenda to the Disclosure Document
Exhibit G: Sample Release of Claims
Exhibit H: Sample Pre-Opening Agreement
Exhibit I: Receipts
Date:
Signature of Prospective Franchisee:
Printed Name:
Camp Bow Wow - 2014 FDD
Exhibit I - Receipts
US.53755407.06
RECENT
^orCop^
This Oisolosore Oocoment s o m m a ^ e s p r o v i s i o n s o f ^
information in piainiangoago. Road this Oisoiosoro Oocoment and aii agreements oarotoii^
if we otter yooafranchise,we most provide this Oisciosore Oocoment to yoo toorteen
(14) caiendardays hetore yoo signahinding agreement with,or makeapayment to,os or oor
affiliate in connection with the proposed franchise saie, or sooner it reqoiredhyappiicahie state
iaw.
iowa, New York and Rhode island reqoire that we give yoo this Oisciosore Oocoment at
the earlier of the first personal meeting or 10 hosiness days hefore the execotlon ofthe
franchise or other agreement or the payment of any consideration that relates to the franchise
relationship
Michigan reqoires that we give yoo this Olsclosore Oocoment at least 10 hosiness days
or 14 calendar days hetore the execotlon ot any hinding franchise or other agreement or the
payment of any consideration, whichever occors first
If we do not deliver this Olsclosore Oocoment on time or if thisOisclosoreOocoment
containsafalse or misleading statement, oramaterial omission,aviolationot federal and state
law may have occurred and shoold he reported to the FederalTrade Commission,Washington,
O C 2 0 5 8 0 and the state aoencies listed in ExhihitA
The franchisor and the name, principal hosiness address and telephone nomherot each
franchise seller ottering the franchise are as follows:
Franchisor:
Camp B o w W o w F r a n c h i s i n g , inc.,
aOelaware corporation
^ 0 W 1 1 0 ^ Circle, OnitO
Broomfield, Colorado 80021
877700BARK
Franchise Seiiers:
O
^
O
O
H e i d i G a n a h l , 0 8 2 0 W 118^ Circle, OnitO, Broomfield, Colorado
80021
Rachel W e l s h , 8 8 2 0 W 1 1 8 ^ Circle, OnitO,Broomfield,Colorado
80021
Renoka Salinger, 8820 W 118th Circle, Unit O, Broomfield,
Colorado 80021
Christina Rossell, 8820 W 118^ Circle, Unit O, Broomfield,
Colorado 80021
Issuance Oate: Aogost 20, 2014
Camp 8ow Wow 2014 FOO
Exhibiti^Reoeip^
US^7^40706
(720)2802240
(720)280 1448
(720)280 2208
(720)280 2284
We authorize the respective state agencies identified on Exhibit A to receive service of
process for us in the particular state.
I have received a Disclosure Document dated August 29, 2014 that included the following
Exhibits on the date above my signature:
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
A: List of State Agencies/Agents for Service of Process
B: Camp Franchise Agreement (with Attachments)
C: Financial Statements and Guarantee of Performance
D: Operations Manual Table of Contents
E: List of Franchisees
F: State Specific Addenda to the Disclosure Document
G: Sample Release of Claims
H: Sample Pre-Opening Agreement
I: Receipts
Date:
Signature of Prospective Franchisee:
Printed Name:
Return this copy to us -- you mail the executed original to us at the above address; fax us a
signed copy of this receipt to the fax number shown above; or pdf the signed copy as an
attachment to an e-mail directed to
Camp Bow Wow - 2014 FDD
Exhibit I - Receipts
US.53755407.06