advance franchise agreement

8/8/2019 Advance Franchise Agreement

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TABLE OF CONTENTS Page

I. FRANCHISEE'S ACKNOWLEDGEMENT OF BUSINESS RISK ANDABSENCE OF GUARANTEE . . . . . . . . . . . . . . . 2

II. FRANCHISEE'S ACKNOWLEDGEMENT CONCERNING RECEIPTAND THOROUGH EVALUATION OF AGREEMENT . . . . . . . 3

III. ACTUAL, AVERAGE, PROJECTED OR FORECASTED FRANCHISE SALES, PROFITS OR EARNINGS . . . . . . . . . . . . 3

IV. INDEPENDENT CONTRACTOR

A. Franchisee is an Independent Contractor . . . . 4

B. Franchisor is Not in a Fiduciary Relationshipwith Franchisee . . . . . . . . . . . . . . . . 4

V. FRANCHISE GRANT . . . . . . . . . . . . . . . . . 5

VI. EXCLUSIVE RIGHT OR TERRITORY . . . . . . . . . . . 5

VII. TERM AND RENEWAL OF AGREEMENT

A. Term . . . . . . . . . . . . . . . . . . . . . 5

B. Renewal . . . . . . . . . . . . . . . . . . . . 6

VIII. FRANCHISEE'S INITIAL INVESTMENT . . . . . . . . . 6

IX. FRANCHISEE'S INITIAL FRANCHISE FEE

A. Time Limit for Starting Business . . . . . . . 7

B. Cooperation Required . . . . . . . . . . . . . 8

C. Initial Franchise Fee . . . . . . . . . . . . . 8

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O. Maintain Uniform Operating Standards . . . . . 17

P. Internet and Web Site . . . . . . . . . . . . 18

Q. Telephone Number of Business . . . . . . . . . 18

R. Disclose Discoveries and Ideas to Franchisor . 18

S. Permit Franchisor to Enter Business . . . . . . 18

T. Additional Requirements for CorporateFranchisee . . . . . . . . . . . . . . . . . . 19

U. Site Selection . . . . . . . . . . . . . . . . 20Page

V. Training . . . . . . . . . . . . . . . . . . . 21

V. Miscellaneous . . . . . . . . . . . . . . . . . 22

XIII. SPECIFIC OBLIGATIONS OF FRANCHISEE RELATING TOINSURANCE

A. Overall Coverage Required . . . . . . . . . . . 23

B. Insurance Carrier Must be Approved byFranchisor . . . . . . . . . . . . . . . . . . 23

C. No Limitations on Coverage . . . . . . . . . . 24

D. Franchisee Must Provide Evidence ofCoverage to Franchisor . . . . . . . . . . . . 25

E. Franchisor May Procure Insurance Coverage . . . 26

XIV. SPECIFIC OBLIGATIONS OF FRANCHISEE RELATING TOACCOUNTING AND RECORDS

A. Bookkeeping, Accounting and Records . . . . . . 25

B. Franchisor's Right to Audit . . . . . . . . . . 25

C. Reporting of Gross Revenues . . . . . . . . . . . 26

D. Submission of Financial Statements . . . . . . 26

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E. Disclosure of Financial Statements . . . . . . 27

F. Accounting Equipment . . . . . . . . . . . . . 27

XV. SPECIFIC OBLIGATIONS OF FRANCHISEE RELATING TOUSE OF NAMES AND MARKS

A. Names and Marks are Owned by Franchisor . . . . 27

B. Franchisee is Licensed to UseNames and Marks . . . . . . . . . . . . . . . . 28

C. Franchisee Will Not Challenge Franchisor'sRights in its Names and Marks . . . . . . . . . 29

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XVI. SPECIFIC OBLIGATIONS OF FRANCHISEE RELATINGTO CONFIDENTIALITY OF PROPRIETARY INFORMATION

A. Franchisee Will Learn Proprietary Matters . . . 31

B. Franchisee's Employees Will Not DiscloseProprietary Information . . . . . . . . . . . . 32

C. Injunctive Relief is Available to

Franchisor . . . . . . . . . . . . . . . . . . 32

D. Franchisor's Patent Rights and Copyrights . . . 32

XVII. SPECIFIC OBLIGATIONS OF FRANCHISEE RELATINGTO TAXES, PERMITS AND LAWSUITS

A. Franchisee Must Notify Franchisor ofLawsuits . . . . . . . . . . . . . . . . . . . 32

B. Franchisee Must Comply with Laws . . . . . . . 32

C. Franchisee Must Pay Taxes Promptly . . . . . . 33

D. Franchisee May Contest Tax Assessment . . . . . 33

XVIII. SPECIFIC OBLIGATION OF FRANCHISEE RELATING TOINDEMNIFICATION . . . . . . . . . . . . . . . . . 33

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XIX. MISCELLANEOUS COVENANTS OF FRANCHISEE

A. Covenants are Independent . . . . . . . . . . . 34

B. Franchisee Will Not Compete Against

Franchisor . . . . . . . . . . . . . . . . . . 34

C. Exception to Covenant Not to Compete . . . . . 35

D. Franchisee Will Not Divert Business . . . . . . 35

E. Franchisor is Entitled to Injunctive Relief . . 35

F. Covenants are Enforceable Independentof Claims . . . . . . . . . . . . . . . . . . . 35

G. No Right of Set-Off . . . . . . . . . . . . . . 35

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XX. OBLIGATIONS OF ADVANCE REALTY: SUPERVISION,ASSISTANCE OR SERVICES

A. The Training Program . . . . . . . . . . . . . 36

B. Site Selection . . . . . . . . . . . . . . . . 38

C. Business Layout and Design . . . . . . . . . . 38

D. Post-Training Assistance . . . . . . . . . . . 39

E. Operations Manual . . . . . . . . . . . . . . . 39

F. Selecting Supplies . . . . . . . . . . . . . . 40

G. Recommended Price Schedules . . . . . . . . . . 40

H. Advertising and Promotion . . . . . . . . . . . 40

XXI. VARYING STANDARDS . . . . . . . . . . . . . . . . 41

XXII. SALE OF FRANCHISE

A. Assignment by Franchisee . . . . . . . . . . . 41

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B. Assignment by Franchisor . . . . . . . . . . . 43

C. Transfer Upon Death or Mental Incapacity . . . 43

D. Sale of Franchised Business . . . . . . . . . . 45

XXIII. TERMINATION OF FRANCHISE

A. Impact of Statutes upon FranchiseAgreement . . . . . . . . . . . . . . . . . . . 45

B. By Franchisor . . . . . . . . . . . . . . . . . 46

C. Termination of Franchise Without Cure . . . . . 46

D. Termination of Franchise With Cure . . . . . . 49

E. By Franchisee . . . . . . . . . . . . . . . . . 49

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XXIV. FRANCHISEE'S OBLIGATIONS UPON TERMINATION OREXPIRATION

A. Franchisee Shall Cease Using Names andMarks . . . . . . . . . . . . . . . . . . . . . 49

B. Franchisee Shall Cease Operating Business . . . 50

C. Franchisee May Not Adopt ConfusinglySimilar Names or Marks . . . . . . . . . . . . 50

D. Franchisee Shall Cancel Assumed Names andTransfer Phone Numbers . . . . . . . . . . . . 50

E. Franchisee Must Return Manual and OtherMaterials . . . . . . . . . . . . . . . . . . . 51

F. Franchisor May Purchase Inventory andEquipment . . . . . . . . . . . . . . . . . . . 51

G. Franchisee Must Pay Monies Owed toFranchisor . . . . . . . . . . . . . . . . . . 51

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XXV. ENFORCEMENT

A. Franchisee May Not Withhold Payments DueFranchisor . . . . . . . . . . . . . . . . . . 52

B. Severability and Substitution of ValidProvisions . . . . . . . . . . . . . . . . . . 52

C. Arbitration . . . . . . . . . . . . . . . . . . 52

D. Rights of Parties Are Cumulative . . . . . . . 53

E. Judicial Enforcement, Injunction andSpecific Performance . . . . . . . . . . . . . 53

F. Construction . . . . . . . . . . . . . . . . . 53

G. Maryland Law Applies . . . . . . . . . . . . . 54

H. Attorney Fees . . . . . . . . . . . . . . . . . 54

I. Binding Effect . . . . . . . . . . . . . . . . 54

J. There Are No Unwritten Agreements . . . . . . . 54

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K. Entire Agreement . . . . . . . . . . . . . . . 54

L. Force Majeure . . . . . . . . . . . . . . . . . 55

XXVI. APPROVALS AND WAIVERS . . . . . . . . . . . . . . 55

XXVII.AUTHORITY . . . . . . . . . . . . . . . . . . . . 56

XXVIII.NOTICES . . . . . . . . . . . . . . . . . . . . . 56

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ADVANCE REALTY SOLUTIONS, INC.

FRANCHISE AGREEMENT

PARTIES

THIS AGREEMENTis made by and between ADVANCE REALTYSOLUTIONS, INC, a Maryland Corporation, hereinafter known as

ADVANCE REALTY or "Franchisor" and the persons signing asFranchisee or Guarantors and referenced to herein individuallyor collectively as "Franchisee," to evidence the agreement andunderstanding between the parties as follows:

RECITALS

WHEREAS, Franchisor has developed, operates and has theright to license a system or business program, includingexpertise for conducting and operating a business under the markADVANCE REALTY; and

WHEREAS, Franchisor has developed expertise (includingconfidential information) and a unique, distinctive andcomprehensive system (the "System") for the establishment andoperation of a franchised business offering:

ADVANCE REALTY for the promotion and identification of themark, ADVANCE REALTY and stylized logo for residential andcommercial real estate brokerage at ADVANCE REALTY locations andother locations at the discretion of the licensee (the ADVANCE

REALTY hereinafter referred to as a Franchise Location or"Business"); and

WHEREAS, Franchisor has devised a uniform system for theestablishment and operation of ADVANCE REALTY, including adistinctive exterior and interior design; uniform standards,specifications, and procedures for operations; procedures forquality control; training and ongoing operational assistance;recruiting; advertising and promotional programs; and otherrelated benefits for use of Franchisee under the Names andMarks, all of which may be changed, improved, and further

developed by ADVANCE REALTY SOULTIONS, INC from time to time; and

WHEREAS, ADVANCE REALTY identifies its System by means ofcertain trade names, service marks, trademarks, internetaddress, web sites, logos, emblems, trade dress and otherindicia of origin, including but not limited to the markADVANCE REALTY, www.AdvanceRealtyUSA.com and such other tradenames, service marks, trademarks and trade dress as are now

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designated (and may hereafter be designated by ADVANCE REALTY inwriting) for use in connection with its System (the "Names andMarks").

WHEREAS, ADVANCE REALTY continues to develop, use, and

control the use of such Names and Marks to identify for thepublic the source of services and products marketed there underand under its System, and to represent the System's highstandards of consistent quality, appearance, and service.

WHEREAS, Franchisor has established substantial goodwilland business value in its Names and Marks, expertise and System;and

WHEREAS, Franchisee desires to obtain a franchise fromFranchisor for the right to use the "Names and Marks" and theexpertise for operating a ADVANCE REALTY and to obtain thebenefits and knowledge of Franchisor's System including, butwithout limitation, business design, operating methods, productpreparation, advertising, sales techniques and materials, signs,personnel management, control systems, bookkeeping andaccounting methods, and in general a style, method and procedureof business operation utilizing the Names and Marks as aFranchisee of Franchisor; and

WHEREAS, Franchisee recognizes the benefits to be derivedfrom being identified with and licensed by Franchisor andFranchisee understands and acknowledges the importance of

ADVANCE REALTY high standards of quality, cleanliness,appearance, and service and the necessity of operating theBusiness in conformity with ADVANCE REALTY standards andspecifications.

NOW, THEREFORE, in consideration of the foregoing recitalsand other good and valuable consideration, the receipt andsufficiency of which is hereby mutually acknowledged, theparties hereto, intending to be legally bound, do hereby agreeas follows:

I. FRANCHISEE'S ACKNOWLEDGEMENT OF BUSINESS RISK ANDABSENCE OF GUARANTEE

Franchisee (and each partner or shareholder if Franchiseeis a partnership or corporation) hereby represents that he orshe has conducted an independent investigation of ADVANCEREALTY's business and System and recognizes that the businessventure contemplated by this Agreement involves business risks

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and that its success will depend upon Franchisee's abilities asan independent businessperson. Franchisor expressly disclaimsthe making of, and Franchisee acknowledges that it has notreceived any warranty or guarantee, express or implied, as tothe potential volume, profits or success of the business

contemplated by this Agreement.

II. FRANCHISEE'S ACKNOWLEDGEMENTS CONCERNING RECEIPT ANDTHOROUGH EVALUATION OF AGREEMENT

Franchisee acknowledges having received, read, andunderstood this Agreement, including the Uniform FranchiseOffering Circular and attachments thereto. Franchisee furtheracknowledges that Franchisor has accorded Franchisee ample timeand opportunity to consult with independent legal counsel andother advisors of its own choosing concerning the potentialbenefits and risks of entering into this Agreement. Franchiseeacknowledges that it has received a completed copy of thisAgreement, attachments referred to herein, and agreementsrelating hereto, if any, at least five (5) business days priorto the date on which this Agreement was executed. Franchiseefurther acknowledges that it has received the disclosuredocument required by the Trade Regulation Rule of the FederalTrade Commission, entitled "Information For ProspectiveFranchisees Required By The Federal Trade Commission," at leastten (10) business days prior to the date on which this Agreementwas executed.

Franchisee acknowledges that it has read and understandsthis Agreement, the Attachments hereto, and any agreementsrelating thereto, and that Franchisee has been advised by arepresentative of ADVANCE REALTY to consult with an attorney oradvisor of Franchisee's own choosing about the potentialbenefits and risks of entering into this Agreement prior to itsexecution.

Franchisee acknowledges that any statements, oral orwritten, by ADVANCE REALTY or its agents preceding the executionof this Agreement were for informational purposes only and do

not constitute any representation or warranty by ADVANCE REALTY.The only representations, warranties and obligations of ADVANCEREALTY are those specifically set forth in the Uniform FranchiseOffering Circular and this Agreement. Franchisee must not relyon, and the parties do not intend to be bound by, any statementor representation not contained therein.

Franchisee acknowledges that ADVANCE REALTY will not

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It is understood and agreed by the parties hereto thatthis Agreement does not establish a fiduciary relationshipbetween them, and that nothing in this Agreement is intended toconstitute either party an agent, legal representative,

subsidiary, joint venture, partner, employee, or servant of theother for any purpose whatsoever.

It is understood and agreed that nothing in thisAgreement authorizes Franchisee, and Franchisee shall have noauthority, to make any contract, agreement, warranty, orrepresentation on behalf of ADVANCE REALTY, or to incur any debtor other obligation in ADVANCE REALTY name; and that ADVANCEREALTY shall in no event assume liability for, or be deemedliable hereunder or there under as a result of any such action;nor shall ADVANCE REALTY be liable by reason of any act oromission of Franchisee in its conduct of the Business or for anyclaim or judgment arising there from against Franchisee orADVANCE REALTY .

V. FRANCHISE GRANT

Franchisor hereby grants to Franchisee, upon the terms andconditions herein contained and subject to the LicenseAgreement, the right, license, and privilege, and Franchiseehereby accepts a franchise under the terms and conditions setforth herein for the right to operate a Business at the Locationset forth in Section VI. (the "Accepted Location"), with the

right to use solely in connection therewith ADVANCE REALTY,Names and Marks, its advertising and merchandising methods, andFranchisor's System, as they may be changed, improved andfurther developed from time to time only at the AcceptedLocation as set forth in Section VI. and provided the Franchiseeshall adhere to the terms and conditions hereof.

VI. EXCLUSIVE AREA OR TERRITORY

The Franchise Location(s) shall be: within the State of__________________in the county/city(s)of _____________________

The exact accepted location is:

_________________________________________________________________

(If accepted location is not selected prior to the signing ofthis agreement, by the parties, then it shall be entered at alater date, under the terms of this agreement.)

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Franchisee shall not relocate the Business without theexpress prior written consent of ADVANCE REALTY. During the termof this Agreement, ADVANCE REALTY shall not establish, norlicense another party or entity to establish, a ADVANCE REALTY

within a circle around the accepted location which has a three(3) mile diameter with the accepted location as its centerpoint. Other than office location the territory is notexclusive.

VII. TERM AND RENEWAL OF AGREEMENT

A. Term

The Franchise herein granted shall be for a term offive (5) years from the date of execution and acceptance (the"Effective Date") of this Franchise Agreement (the "Agreement")by ADVANCE REALTY and subject to earlier termination as hereinprovided.

B. Renewal

Franchisee may, at its option, renew this Franchisefor one (1) additional period of five (5) years, if Franchisoris still offering franchises at that time, and further subjectto the following conditions, all of which must be met prior torenewal:

1. Franchisee shall give ADVANCE REALTY writtennotice of its election to renew not less than six (6) monthsprior to the end of the then current term;

2. Franchisee must not be in default under anyprovision of the Agreement, any amendment hereof or successorhereto, or any other agreement between Franchisor andFranchisee, and Franchisee shall have complied with all theterms and conditions of all such agreements during the termsthereof;

3. Franchisee shall complete to Franchisor'ssatisfaction such maintenance and renovation of the Business asFranchisor may reasonably require in writing;

4. Franchisee shall have satisfied all monetaryobligations owed by Franchisee to Franchisor, and shall havetimely met these obligations throughout the previous term;

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5. Franchisee shall execute, before the renewalterm, ADVANCE REALTY's then-current form of Agreement, whichagreement shall supersede this Agreement in all respects, andthe terms of which may differ from the terms of this Agreement.Franchisor shall charge Franchisee a renewal fee of ten (10%) of

the then existing franchise fee for new franchises offer beADVANCE REALTY;

6. Franchisee shall comply with Franchisor'sthen current qualification and training requirements; and

7. Franchisee must execute a general release,in a form prescribed by Franchisor, of any and all claimsagainst Franchisor and its affiliate, and their respectiveofficers, directions, agents and employees, except that suchrelease shall not act as a release, estoppel or waiver of anyliability incurred under the Maryland Franchise Registration Lawand so long as , if such release is not in conflict with anyother local, state or federal laws.

VIII. FRANCHISEE'S INITIAL INVESTMENT

The Franchisee's initial investment will vary dependingupon the size of the Business, its geographical location,leasehold improvements required, the number of Businessesselected by the Franchisee, and other factors.

Franchisee hereby certifies that he or she has reviewed the

above-estimated start-up costs as detailed in the UniformFranchise Offering Circular and has sufficient cash resourcesavailable to meet said expenses. These start-up costs are inaddition to the franchise fee.

IX. FRANCHISEE'S INITIAL FRANCHISE FEE

A. Time Limit for Starting Business

Franchisee shall obtain the leasehold improvement,equipment, supplies, training, personnel and all other items

necessary for the Business in accordance with the provisions andrequirements of Section XII hereof and shall open the Franchisefor business within three (3) months of the date of execution ofthis Franchise Agreement (the "Opening Date"); provided,however, that Franchisee shall have the right to substitute adifferent site, if such different site is acceptable toFranchisor, within thirty (30) days of execution of thisAgreement. Franchisor may grant Franchisee one thirty (30) day

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extension past the three (3) months allotted within which toopen the Business.

Provided that the Franchisee has made full andcomplete application for all building permits, licenses, and all

other permits required to open a ADVANCE REALTY, within 60 daysof the execution date of this agreement, Franchisor may agree togrant up to three (3) thirty (30) day extensions to obtain allnecessary permits if the delay was due to causes beyond thereasonable control of Franchisee, which agreement of ADVANCEREALTY will not be unreasonably withheld. Franchisee must submitdocumentation of the status of the application(s) ten (10) daysprior to the date of each thirty (30) day extension requested.Upon the grant of such extension(s) by ADVANCE REALTY theOpening Date will be commensurately extended.

Should the Franchisee be unable to obtain allnecessary permits and licenses during the stated period andextension time period or periods as a result of causes beyondthe reasonable control of Franchisee (unless the requirement forthe issuance of such permits and licenses is waived in writingby Franchisor), this Agreement shall be deemed terminated uponwritten notice from either Franchisee or Franchisor to theother, without the necessity of further action by either partyor further documentation. Upon such termination, ADVANCE REALTYshall retain twenty five (25%) percent of the Franchise Fee as aTermination Fee, seventy five (75%) of the Franchise Fee will berefunded to the Franchisee within thirty (30) days of the notice

by Franchisor of the termination of this Agreement.

During the term of this Agreement, the AcceptedLocation shall be used exclusively for the purpose of operatinga franchised ADVANCE REALTY. In the event the building shall bedamaged or destroyed by fire or other casualty, or be requiredto be repaired or reconstructed by any governmental authority,Franchisee shall commence the required repair or reconstructionof the building within ninety (90) days from the date of suchcasualty or notice of such governmental requirement (or suchlesser period as shall be designated by such governmental

requirement) and shall complete all required repair orreconstruction as soon as possible thereafter, in continuity,but in no event later than one hundred eighty (180) days fromthe date of such casualty or requirement of such governmentalnotice. The minimum acceptable appearance for the restoredbuilding will be that which existed just prior to the casualty;however, every effort should be made to have the restoredbuilding include the then-current image, design and

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specifications of new entry ADVANCE REALTY Unit. If the buildingis substantially destroyed by fire or other casualty, Franchiseemay, with Franchisor's agreement and upon payment of an amountequal to twenty five percent (25%) of all insurance proceeds asa consequence of such casualty to ADVANCE REALTY as a royalty,

terminate this Agreement in lieu of Franchisee's reconstructingthe building.

It is understood and agreed that, except as expresslyprovided herein, this franchise is non-exclusive and includes noright of Franchisee to sub-franchise.

B. Cooperation Required

Franchisee shall cooperate reasonably with Franchisorto ensure that the various actions occur which are necessary toobtain acceptance by Franchisor of the Business location. Inparticular, Franchisee shall furnish any pertinent informationas may be reasonably requested by Franchisor regardingFranchisee's business and finances.

C. Initial Franchise Fee

By executing this Agreement, Franchisee agrees tobecome a Franchisee and pay an initial franchise fee in theamount of twenty two thousand five hundred ($22,500) dollars fora single ADVANCE REALTY Franchise the "Initial Franchise Fee,"(seventeen thousand five hundred ($17,500) dollars if the

franchise agreement is executed before December 31, 2004), whichis due upon execution of this Agreement and receipt of which ishereby acknowledged by ADVANCE REALTY. The Initial FranchiseFee shall be paid in a lump sum in U.S. funds and shall bedeemed fully earned and nonrefundable in consideration ofadministrative and other expenses incurred by ADVANCE REALTY ingranting this franchise and for ADVANCE REALTY lost or deferredopportunity to franchise others, except as described above inSection IX.A.

D. Time Limit for Approving Franchisee

Franchisor, within thirty (30) days of payment of theInitial Franchise Fee provided in Section IX.C. above, willapprove or disapprove the Franchisee's application for afranchise. If Franchisee is disapproved, the Initial FranchiseFee provided in Section IX.C. above will be refunded in full.

X. OTHER FEES

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A. Base Royalty Fees

In addition to the Initial Franchise Fee described in Item IXabove, the following recurring or isolated payments are required

to be made by the Franchisee. The Franchisee pays to ADVANCEREALTY SOULTIONS, INC a Base Royalty Fee of five (5%) percent ontotal Gross Revenues of the Franchised Business.

As used in this Agreement, "Gross Revenue" shallinclude all revenue from any source received by the Business,whether for cash or credit and regardless of collection in thecase of credit, and income of every kind and nature related tothe Business including insurance proceeds and/or condemnationawards for loss of sales, profits or business; provided,however, that "Gross Revenues" shall not include revenues fromany sales taxes or other add on taxes collected from customersby Franchisee for transmittal to the appropriate taxingauthority, (the retail value of any complimentary services ortrade-outs or credit card discounts from Gross Revenues up to amaximum of 2% of Gross Commissions in the aggregate), and theamount of cash refunds to, and coupons used by customers,provided such amounts have been included in Gross Commissions.The brokerage of residential and commercial real estate outsideof the Franchise location is by written approval of ADVANCEREALTY only. Should ADVANCE REALTY approve such sales inwriting, these sales will be included in computing GrossRevenues.

The Royalty Fee is uniform as to all persons currentlyacquiring a Franchise, nonrefundable, and is not collected onbehalf of nor paid to any third party. The Royalty Fee shall bepayable by the Franchisee and actually received by ADVANCEREALTY within ten (10) days from the end of each month.

Any payment or report not actually received by ADVANCEREALTY on or before the specified date shall be deemed overdue.If any payment is overdue, in addition to the right to exerciseall rights and remedies available to ADVANCE REALTY under this

Agreement, Franchisee shall pay ADVANCE REALTY, in addition tothe overdue amount, interest on such amount from the date it wasdue until paid at the lesser of the rate of eighteen (18%)percent per annum and the maximum rate allowed by the laws ofthe State in which Franchisees business is located or anysuccessor or substitute law (hereinafter the "Default Rate"),until paid in full.

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B. National Advertising Fees

Franchisee shall not be required at this time tocontribute to a National Advertising Fund. We reserve the right,in the future, at our discretion to institute, maintain and

administer, when established, a central advertising fund (theFund) for such advertising or public relations programs as we,in our sole discretion, may deem appropriate to promote ADVANCEREALTY. When initiated the maximum contribution will be onepoint five (1.5%) percent of monthly gross revenue. We willdirect all such programs, and will have sole discretion over thecreative concepts, materials, and endorsements and media used insuch programs, and the placement or allocation of such programs.We reserve the right to determine in our sole discretion thecomposition of all geographic territories and market areas forthe implementation and development of such programs.

Franchisor shall oversee all advertising andpromotional programs and shall have the sole discretion toapprove or disapprove the creative concept, materials and mediaused in such programs, and the placement and allocation thereof.Franchisee agrees and acknowledges that Franchisor undertakes noobligation in administering the Advertising Funds to makeexpenditures for Franchisee which is equivalent or proportionateto its contribution, or to insure that Franchisee benefitsdirectly or pro-rata from advertising or promotion conductedunder any Advertising Fund.

C. Local Advertising Plan and Expenditures

1. Local Advertising Plan

Franchisee agrees to create a local advertisingand marketing plan by which Franchisee shall place localadvertising in any media it desires, provided that suchadvertising conforms to the standards and requirements ofFranchisor as set forth in Franchisor's Manual or otherwisedesignated by Franchisor. Franchisee shall not advertise the

Business in connection with any other business, except withFranchisor's prior written approval. Franchisee shall obtainFranchisor's prior approval of all unapproved advertising andpromotional plans and materials that Franchisee desires to usethirty (30) days before the start of any such plans. Franchiseeshall submit such unapproved plans and materials to Franchisor(by personal delivery or through the mail, return receiptrequested). Franchisee shall not use such plans or materials

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until they have been approved by Franchisor and shall promptlydiscontinue use of any advertising or promotional plans andmaterial upon the request of Franchisor. Any plans or materialssubmitted by Franchisee to Franchisor which have not beenapproved or disapproved in writing, within thirty (30) days of

receipt thereof, by Franchisor, shall be deemed approved.

2. Local Advertising Expenditures

During the term of this Agreement, Franchiseeshall spend a minimum of two thousand ($2000) dollars per monthin the first year and three thousand ($3000) dollars per montheach year thereafter on local advertising and promotion;provided, however, that Franchisor shall have the right toapprove or disapprove any advertising proposed for use byFranchisee.

D. Grand Opening Expenditures

Franchisee shall expend, prior to the beginning of thethird month of operation of Franchisee's Business, a minimum ofFive Thousand dollars ($5000) for advertising and promotionalitems, which advertising and promotional items must be used oremployed prior to commencement, or during the first three monthsof operation of the Franchisee's Business. Franchisor mayadvise Franchisee regarding the preparation and placement ofsuch advertising and promotional items. At least one day-long

"open house" must be held where Franchisee invites prospectivecustomers and agents to visit the Business to verify all Systemsare in order and for additional training of staff.

XI. FINANCING ARRANGEMENTS

Franchisee hereby acknowledges that financing is theresponsibility of the Franchisee. ADVANCE REALTY does notfinance or guarantee the obligations of the Franchisee. TheFranchise Fee is due and payable upon execution of thisAgreement and as set forth in Section IX.C. of this Agreement.

There are no waivers of defense by the Franchisee in eitherthe Franchise Agreement or other documents evidencingobligations to ADVANCE REALTY.

XII. GENERAL OBLIGATIONS OF FRANCHISEE

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A. Follow Operations Manual and Directives ofFranchisor

Franchisee agrees that use of Franchisors System and

adherence to the Operations Manual (the "Manual"), and toFranchisor's standardized design and specifications for decor ofthe Business and uniformity of equipment, layouts, signs, andother incidents of the Business, are essential to the image andgoodwill thereof. Franchisee shall cooperate and assistFranchisor with any customer or marketing research program whichFranchisor may institute from time to time. Franchisee'scooperation and assistance shall include, but not be limited to,the distribution, display and collection of customer commentcards, questionnaires, and similar items. In order to furtherprotect the System and the goodwill associated therewith,Franchisee shall:

1. Operate the Business and use the OperationsManual solely in the manner prescribed by Franchisor;

2. Comply with such requirements respecting anyservice mark, trade name, trademark, or copyright protection andfictitious name registrations as Franchisor may, from time totime, direct;

3. Follow the methods of marketing, service,and presentation so as to conform to the specifications and

standards of Franchisor in effect from time to time;

4. Use only such supplies, equipment, andproducts so as to conform to Franchisor's specifications ineffect from time to time;

5. Provide from the Business all servicesspecified by Franchisor and not provide or offer to provide anyother services of any kind or character without first obtainingthe express approval of Franchisor, which shall be at the fulldiscretion of ADVANCE REALTY who shall have the sole right of

decision in regards to all products to be sold in the FranchiseBusiness. Franchisor shall have the right to not approve anyservice for any reason whatsoever or for no reason whatsoever.

6. Discontinue selling or offering any serviceFranchisor may, in its absolute discretion, delete from itsstandards and specifications for any reason whatsoever or forno reason whatsoever.

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7. Maintain in sufficient supply, and use atall times, only such products, materials, supplies, service,standards of cleanliness, health and sanitation and methods ofservice as conform to ADVANCE REALTYs standards and

specifications; and to refrain from deviating there from byusing non-conforming items or methods without ADVANCE REALTYsprior written consent.

8. Purchase such equipment, supplies, orproducts as may be required by ADVANCE REALTY, for theappropriate handling and selling of any services that becomeapproved for offering in the System.

9. Permit ADVANCE REALTY or its agents, at anyreasonable time, to remove from the Business samples of itemwithout payment therefore, in amounts reasonably necessary fortesting by ADVANCE REALTY or an independent laboratory todetermine whether said samples meet ADVANCE REALTY then-currentstandards and specifications. In addition to any other remediesit may have under this Agreement, ADVANCE REALTY requiresFranchisee to bear the cost of such testing if the supplier ofthe item has not previously been approved by ADVANCE REALTY, orif the sample fails to conform to ADVANCE REALTY specifications.

10. Not to install or permit to be installed onor about the Business premises, without ADVANCE REALTY priorwritten consent, any fixtures, furnishings, signs, equipment, or

other improvements not previously approved as meeting ADVANCEREALTY standards and specifications.

11. Employ a sufficient number of real estateagents, employees and maintain sufficient listing inventories asnecessary to operate the Business at its maximum capacity asprescribed or approved by ADVANCE REALTY and to comply with allapplicable Laws with respect to such real estate agents andemployees.

12. Not engage in any trade practice or other

activity or sell any service, product or literature whichADVANCE REALTY determines to be harmful to the goodwill or toreflect unfavorably on the reputation of Franchisee or ADVANCEREALTY, the Business, or the services and products sold thereat; or which constitutes deceptive or unfair competition, orotherwise is in violation of any applicable laws. The abovelimitations are closely related to the business image, purposeand marketing strategy of the System, and therefore any change

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there from would fundamentally change the nature of the business.

B. Operate Franchised Business Only

Franchisee shall use the System and the Names andMarks provided to Franchisee by Franchisor for the operation ofthe Business and shall not use them in connection with any otherline of business or any other activity. Neither Franchisee, norany of its employees, may conduct any business at the Businessother than that authorized pursuant to this Agreement, withoutthe prior written approval of Franchisor. Neither Franchisee,nor any of its employees, may conduct any activity at theBusiness or in connection therewith which is illegal or whichcould result in damage to the Names and/or Marks or thereputation and goodwill of Franchisor.

C. Comply With Laws

Franchisee shall comply with all federal, state andlocal laws and regulations, and shall obtain and at all timesmaintain any and all permits, certificates, or licensesnecessary for full and proper operation of the Businessfranchised under this Agreement. Franchisors standards mayexceed any and all of the requirements of said laws.

D. Maintain Confidentiality of Proprietary

Information

Neither Franchisee nor any of its partners, officers,directors, agents, or employees shall, except as required in theperformance of the duties contemplated by this Agreement,disclose or use at any time, whether during the terms of thisAgreement or thereafter, any information disclosed to or knownby Franchisee or any such person as a result of this Agreement.Such information, includes, but shall not be limited to,information conceived, originated, discovered, or developed byFranchisee or by any employee of Franchisee which is not

generally known in the trade or industry about Franchisor'sproducts, services, or licenses, including information relatingto discoveries, ideas, manufacturing, purchasing, accounting,engineering, marketing, merchandising or selling.

E. Maintain and Renovate Business

Franchisee shall at all times maintain the Business in

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a clean, orderly condition and in first class repair andcondition in accordance with all maintenance and operatingstandards set forth in the Manual. Franchisee shall make, atFranchisee's expense, all additions, repairs, replacementsimprovements and alterations that may be determined by

Franchisor to be necessary so that the facilities which areviewed by the public will conform to the System's image, as maybe prescribed by Franchisor from time to time. Franchisee shallundertake and complete such additions, repairs, replacements,improvements and alterations within the time and under the termsand conditions which may be reasonably specified by Franchisor.

F. Maintain Competent Staff

Franchisor will create and make available toFranchisee training programs and other selected trainingmaterials as Franchisor deems appropriate. Franchisee shallmaintain a fully trained competent staff capable of renderingcourteous quality service in a manner in keeping with thestandards set by Franchisor.

G. Open Business Within Time Limit

Within forty five (45) days after execution of thisAgreement, Franchisee must sign a lease for a Business location.Franchisee shall have obtained Franchisor's approval to open andshall have opened the Business and commenced operations. Time

is of the essence. Prior to opening, Franchisee shall completeto Franchisor's satisfaction all preparations of the Business,in accordance with specifications set forth in the Manual, andas required by local governmental agencies, including theinstallation of fixtures, furnishings, and equipment and theacquisition of supplies and inventory.

H. Operate Business in Strict Conformity toRequirements

Franchisee shall operate the Business in strict

conformity with such standards, techniques, and procedures asFranchisor may from time to time prescribe in the Manual, orotherwise in writing, and shall not deviate there from withoutFranchisor's prior written consent. Franchisee further agreesto offer its customers all residential and commercial realestate sales listings and brokerage which Franchisor may, fromtime to time, prescribe, to offer its customers only thoseresidential and commercial real estate sales listings and

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brokerage which meet Franchisor's standards of quality and whichFranchisor has approved in writing to be offered in connectionwith the Business's operations, and to discontinue offering anyproducts or services which Franchisor may, in its solediscretion, disapprove in writing at any time.

I. Use Approved Supplies and Products

1. To insure the consistent high quality anduniformity of "ADVANCE REALTY", Franchisee shall purchase allequipment, inventory, and other supplies, products, andmaterials used in the operation of "ADVANCE REALTY asFranchisor may specify from time to time, solely from supplierswho demonstrate to Franchisor's continuing satisfaction anability to meet Franchisor's standards and specifications. Inapproving any supplier, Franchisor may consider factors such asthe supplier's financial strength, quality control, and capacityto supply Franchisee's needs promptly and reliably. Allsuppliers must be approved in writing by Franchisor and notthereafter disapproved. If Franchisee desires to purchase theitems from an unapproved supplier, Franchisee shall submit toFranchisor a written request for such approval. Franchisorshall have the right to require, as a condition of its approval

and review, that its representatives be permitted to inspect thefacilities of the proposed supplier and that the proposed itembe delivered to Franchisor or its designee for testing. Thecost of such inspection and testing shall be paid by Franchiseeor supplier, and Franchisor shall not be liable for damage to orfor the return of any sample. Franchisor reserves the right tore-inspect the facilities and to review any service or productof any approved supplier and to revoke any approval if thesupplier fails to continue to meet Franchisor's high standards.

2. Franchisor reserves the right to require

Franchisee to purchase designated proprietary items andproducts, and products bearing the Names and Marks, as specifiedin the Manual from time to time, from Franchisor or its relatedor affiliated entities or from sources designated or approved byFranchisor, to the extent permitted by law.

J. Use Approved Equipment

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In operating the Business, Franchisee shall obtainequipment, signs, furnishings, supplies and fixtures inaccordance with the standards and specifications recommended byFranchisor or that will continue to be recommended byFranchisor.

K. Full-Time Manager Required

Franchisee agrees to maintain a competent,conscientious, trained staff, including at least one (1) fullytrained, full-time Manager and to take such steps as arenecessary to ensure that its employees preserve good customerrelations.

L. Use Approved Signs

Franchisee shall purchase or lease, subject to localbuilding codes and regulations, such signs that provide maximumdisplays of the Names and Marks of Franchisor. Upon renewal ofthis Agreement, Franchisee shall be totally responsible forobtaining and equipping the Business with the signage that isapproved for use by Franchisor at the time of the renewal ofthis Agreement. The color, size, design and location of saidsigns shall be as specified and/or approved by ADVANCE REALTYand shall include the internet address www.AdvanceRealtyUSA.com.Franchisee shall not place additional signs, posters or otherdcor items in, on or about the Accepted Location without theprior written consent of ADVANCE REALTY.

M. Dress Code

Franchisee shall require its employees and real estateagents to wear, at a minimum, business casual attire whileworking at the Business and such other dress code policy thatADVANCE REALTY shall prescribe from time to time, as set forthin the Manual.

N. Maintain Regular Business Hours

Franchisee shall keep the Business open and in normaloperation during normal business hours for its geographicalregion, for seven (7) days per week, fifty two (52) weeks peryear, with minimum hours of 9:00 A.M. to 8:00 P.M. Monday toFriday and 9:00 A.M. to 5:00 P. M. Saturday and Sunday, exceptholidays unless otherwise authorized in writing by ADVANCEREALTY (subject to local ordinances or lease restrictions, ifany). Such minimum hours and days of operation may be changed

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as ADVANCE REALTY may from time to time specify in the Manual.If Franchisee operates the Business in a mall or similarfacility, then Franchisee shall keep the Business open when themall or similar facility is open to the general public, unless awaiver of hours is granted by the mall.

O. Maintain Uniform Operating Standards

Franchisee understands and acknowledges that everydetail of the design and operation of the Business is importantto Franchisee, Franchisor and other franchisees in order todevelop and maintain uniform operating standards, to increasethe demand for the residential and commercial real estate saleslistings and brokerage sold by the Business under the System,and to protect Franchisor's reputation and goodwill.

P. Internet and Web Site

Franchisee understands and agrees that the AdvanceRealty internet address and web site, www.AdvanceRealtyUSA.comwill be used by the Franchisee for marketing, research andotherwise as the Franchisor may from time to time specify. Theinternet address and Web site developed by Advance Realty forthe Business constitute an important part of the System and issubject to the restrictions of this Agreement. Accordingly,Franchisee shall not change the use any other internet addressor web site for the Business without prior notice and written

approval by Franchisor. Franchisee shall advertise andpublicize the internet address and web site for the Business inthe manner prescribed by Franchisor in this agreement and theManual.

Q. Telephone Number of Business

Franchisee understands and agrees that the telephonenumber(s) for the Business constitute a part of the System andis subject to the restrictions of this Agreement. Accordingly,Franchisee shall not change the telephone number(s) for the

Business without prior notice and written approval byFranchisor. Franchisee shall advertise and publicize thetelephone number(s) for the Business in the manner prescribed byFranchisor.

R. Disclose Discoveries and Ideas to Franchisor

Franchisee shall promptly disclose to Franchisor all

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discoveries, inventions or ideas, whether patent able or not,relating to Franchisor's business, which are conceived or madeby Franchisee or any partner, officer, director, agent, oremployee of Franchisee solely or jointly with others, during theterm of this Agreement, whether or not Franchisor's facilities,

materials, or personnel are utilized in the conception or makingof such discoveries or ideas. Franchisee hereby acknowledgesand agrees that all such discoveries, inventions or ideas arethe exclusive property of Franchisor, and that Franchisor shallhave no obligation to Franchisee with respect thereto. Thepurpose of this clause is to ensure that ideas for improvementsto the System that may be generated by franchisees within theSystem will be distributed to the other franchisees as a benefitof belonging to the System.

S. Permit Franchisor to Enter Business

Franchisee shall permit Franchisor and its agents orrepresentatives to enter the Business at any reasonable time forthe purpose of conducting inspections, shall cooperate fullywith Franchisor's representatives in such inspections byrendering such assistance as they may reasonably request, and,upon notice from Franchisor or its agents, and without limitingFranchisor's other rights under this Agreement, shall take suchsteps as may be deemed necessary to immediately correct anydeficiencies detected during such inspections. In the eventFranchisee fails or refuses to correct immediately anydeficiency detected during such inspection, Franchisor shall

have the right to make or cause to be made such changes as maybe required, at the expense of Franchisee, which expenseFranchisee agrees to pay upon demand. The foregoing shall be inaddition to any other remedies Franchisor may have pursuant tothis Agreement.

T. Additional Requirements for Corporate Franchisee

If Franchisee is or becomes a corporation, limited orgeneral partnership or other organization or entity, thefollowing requirements shall apply:

1. Franchisee shall confine its activities tothe establishment and operation of the Business.

2. Franchisee's Certificate or Articles ofIncorporation and Bylaws (or comparable governing documents)shall at all times provide that its activities are confinedexclusively to operation of the Business and that the issuance,

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redemption, purchase for cancellation and transfer of votingstock, or other ownership interest therein, is restricted by theterms of this Agreement. Franchisee shall furnish ADVANCEREALTY promptly upon request copies of Franchisee's Articles ofIncorporation, Bylaws, and other governing documents, and any

other documents ADVANCE REALTY may reasonably request and anyamendments thereto, from time to time.

3. Franchisee shall maintain a current list ofall owners of record and beneficial owners of any class ofvoting stock of Franchisee and shall furnish such list toFranchisor upon request.

4. Franchisee shall maintain stop transferinstructions against the transfer on its record of any equitysecurities (voting or otherwise) except in accordance with theprovisions of Article XV. All securities issued by Franchiseeshall bear the following legend, which shall be printed legiblyand conspicuously on each stock certificate or other evidence ofownership interest:

THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE TERMSAND CONDITIONS OF A FRANCHISE AGREEMENT WITH ADVANCE REALTYSOULTIONS, INC DATED . REFERENCE IS MADE TOSAID AGREEMENT AND TO THE RESTRICTIVE PROVISIONS OF THEARTICLES AND BYLAWS OF THIS CORPORATION.

5. All shareholders of Franchisee shall jointly

and severally guarantee Franchisee's performance hereunder andshall bind themselves to the terms of this Agreement, provided,however, that the requirements of this Section XII.T. shall notapply to any corporation registered under the SecuritiesExchange Act of 1934 (hereinafter known as a "Publicly-HeldCorporation").

6. If Franchisee is or becomes a partnership,Franchisee shall furnish ADVANCE REALTY promptly upon request acopy of its partnership agreement and any other documents theFranchisor may reasonably request, and any amendments thereto,

from time to time.

7. Franchisee shall maintain a current list ofall general and limited partners and all owners of record andall beneficial owners of any class of voting stock of Franchiseeand shall furnish the list to ADVANCE REALTY promptly uponrequest, from time to time.

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8. Each individual who or entity which holds aten percent (10%) or greater ownership or beneficial ownershipinterest in Franchisee, directly or indirectly, (including eachindividual holding a fifty (50%) or greater interest in anypartnership or corporation which has a ten percent (10%) or

greater interest in Franchisee) shall enter into a continuingguaranty agreement under seal, in the form attached hereto asExhibit A, as such form may be amended or modified by ADVANCEREALTY, from time to time (if such guaranty agreement is to beexecuted subsequent to the date hereof in accordance with theterms of this Franchise Agreement).

U. Site Selection

Franchisee assumes all costs, liability, expense, andresponsibility for locating, obtaining, and developing a sitefor the Business to be established under the Franchise Agreementand for constructing and equipping the Business at such site.Franchisee shall not make any binding commitment to aprospective vendor or lessor of real estate with respect to theAccepted Location for the Business unless such Accepted Locationis accepted in accordance with the procedure herein set forthand which provides, without limitation, for (a) thirty (30) daysprior written notice of any default there under specifying suchdefault and the right (but with no obligation) of Franchisor tocure any such default within said period, and (b) approval ofADVANCE REALTY as an assignee of Franchisee's interest thereunder.

FRANCHISEE ACKNOWLEDGES THAT ADVANCE REALTY ACCEPTANCE OF APROSPECTIVE SITE AND THE RENDERING OF ASSISTANCE IN THESELECTION OF A SITE DOES NOT CONSTITUTE A REPRESENTATION,PROMISE, WARRANTY, OR GUARANTEE BY ADVANCE REALTY THAT ANADVANCE REALTY OPERATED AT THAT SITE WILL BE PROFITABLE OROTHERWISE SUCCESSFUL.

Before commencing the Construction of the Business, Franchisee,at its expense, shall comply, to ADVANCE REALTYs satisfaction,with all of the following requirements:

1. Franchisee shall submit a site plan toADVANCE REALTY, including a footprint of the proposed building,and architectural, and signage drawings for approval by ADVANCEREALTY. Franchisee, at its option, may use any architectengineer, or space planner currently used by ADVANCE REALTY toprepare detailed plans and specifications for the Business;

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2. Franchisee shall use a qualified generalcontractor or construction supervisor to oversee theConstruction of the Business and completion of all improvements,and Franchisee shall submit to ADVANCE REALTY a statementidentifying the general contractor or construction supervisor;

and

3. Franchisee shall obtain all licenses,permits and certifications required for lawful construction andoperation of the Business including, without limitation,building, zoning, access, parking, driveway access, sign permitsand licenses, and shall certify in writing to ADVANCE REALTYthat all such permits, licenses and certifications have beenobtained. Franchisee shall obtain all health, life safety, andother permits and licenses required for operation of theBusiness and shall certify that all such permits and licenseshave been obtained prior to the Opening Date.

4. Franchisee shall cause such Construction tobe performed only in accordance with the site plan, and plansand specifications, approved by ADVANCE REALTY, and no changeswill be made to said approved plans and specifications, or thedesign thereof, or any of the materials used therein, or tointerior and exterior colors thereof, without the expresswritten consent of ADVANCE REALTY.

V. Training

Prior to Franchisee's opening of the Business to thepublic, Franchisee and at least one (1) management personnel ofFranchisee (or, if Franchisee is a corporation or partnership, aprincipal of Franchisee) shall complete to ADVANCE REALTYssatisfaction the management training program offered by ADVANCEREALTY. At ADVANCE REALTYs option, key personnel subsequentlyemployed by Franchisee shall also complete to ADVANCE REALTYssatisfaction, the management training program. ADVANCE REALTYmay, at its discretion, make available additional trainingprograms, seminars, as well as refresher courses to Franchiseeand/or Franchisee's designated individual(s) from time to time.

ADVANCE REALTY may, at any time, discontinue management trainingand decline to certify Franchisee and/or Franchisee's designatedindividual(s) who fail to demonstrate an understanding of themanagement training acceptable to ADVANCE REALTY. If Franchiseeor Franchisee's designated individual's management training isdiscontinued by ADVANCE REALTY, Franchisee shall have thirty(30) days to present an alternative acceptable candidate formanagement training to ADVANCE REALTY. If Franchisee's new

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candidate does not adequately complete the management training,then ADVANCE REALTY has the option of terminating thisAgreement. ADVANCE REALTY shall provide instructors and trainingmaterials for all required training programs; and Franchisee orits employees shall be responsible for all other expenses

incurred by Franchisee or its employees in connection with anytraining programs, including, without limitation, the cost oftransportation, lodging, meals, and wages.

In addition to the training that will occur atFranchisors principle offices, ADVANCE REALTY offers trainingto assist franchisees at their business location. Franchiseeshall give Franchisor not less than thirty (30) days notice ofwhen training should begin. In order for training to begin,Franchisee shall have received a Certificate of Occupancy andany necessary equipment computer software and supplies shall befunctioning and available. This Training shall consist of twodays on site. This training will assist in the setup and openingof the Business, following up on the classroom training and thetotal cost of travel, food and lodging of the trainer will bepaid by ADVANCE REALTY.

W. Miscellaneous

Franchisee shall give ADVANCE REALTY advance writtennotice of Franchisee's intent to institute legal action againstADVANCE REALTY, specifying the basis for such proposed action,and shall grant ADVANCE REALTY thirty (30) days from receipt of

said notice to cure the alleged act upon which such legal actionis to be based.

XIII. SPECIFIC OBLIGATIONS OF FRANCHISEE RELATING TO

INSURANCE

A. Overall Coverage Required

Franchisee shall procure, prior to opening theBusiness, and shall maintain in full force and effect during theterm of this Agreement at Franchisee's expense, an insurancepolicy or policies protecting Franchisor, and the officers,

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directors, partners, and employees of both Franchisor andFranchisee against any loss, liability, personal injury, death,property damage, or expense whatsoever arising or occurring uponor in connection with operating the Business. Franchisor shallbe named as an additional insured on all such policies.

Prior to the opening of the Business andthereafter at least thirty (30) days prior to the expiration ofany such policy or policies, Franchisee shall deliver to ADVANCEREALTY certificates of insurance evidencing the proper coveragewith limits not less than those required hereunder. Allcertificates shall expressly provide that not less than thirty(30) days prior written notice shall be given to ADVANCE REALTYin the event of material alteration to termination, non-renewal,or cancellation of, the coverages evidenced by suchcertificates.

B. Insurance Carrier Must be Approved by Franchisor

Such policy or policies shall be written by aninsurance company rated A-minus or better, in Class 10 orhigher, by Best Insurance Ratings Service and satisfactory toADVANCE REALTY in accordance with standards and specificationsset forth in the Manuals or otherwise in writing, from time totime, and shall include, at a minimum (except as additionalcoverages and higher policy limits may be specified by ADVANCEREALTY from time to time), the following initial minimumcoverage:

1. (i) Commercial General Liability Insurance,including coverage for products-completed operations,contractual liability, personal and advertising injury, firedamage, medical expenses, having a combined single limit forbodily injury and property damage of $1,000,000 per occurrenceand $1,000,000 in the aggregate (except for fire damage andmedical expense coverage, which may have different limits of notless than $250,000 for one fire and $5,000 for one person,respectively); plus (ii) non-owned automobile liabilityinsurance and, if Franchisee owns, rents or identifies any

vehicles with any Names and Marks or vehicles are used inconnection with the operation of the Business, automobileliability coverage for owned, non-owned, scheduled and hiredvehicles having limits for bodily injuries of $300,000 perperson and $300,000 per accident, and property damage limits of$100,000 per occurrence; plus (iii) excess liability umbrellacoverage for the general liability and automobile liabilitycoverage in an amount of not less than $1,000,000 per occurrence

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and aggregate. All such coverages shall be on an occurrencebasis and shall provide for waivers of subrogation.

2. Franchisee shall also maintain comprehensivecrime and blanket employee dishonesty insurance in an amount of

not less than $500,000.

3. All-risk property insurance, including theftand flood coverage (when applicable), written at replacementcost value covering the building, improvements, furniture,fixtures, equipment and inventory. Coverage shall be written ina value which will cover not less than eighty (80%) percent ofthe replacement cost of the building and one hundred (100%)percent of the replacement cost of the contents of the building.

4. Employer's Liability and Worker'scompensation Insurance, as required by state law.

5. Business interruption insurance of not lessthan Fifty Thousand Dollars ($50,000) per month for loss ofincome and other expenses with a limit of not less than six (6)months of coverage.

Franchisee's obligation to obtain and maintain,or cause to be obtained and maintained, the foregoing policy orpolicies in the amounts specified shall not be limited in anyway by reason of any insurance which may be maintained byADVANCE REALTY, nor shall Franchisee's performance of that

obligation relieve it of liability under the indemnityprovisions set forth in Section XVIII. of this Agreement.

C. No Limitations on Coverage

Franchisee's obligations to obtain and maintain theforegoing insurance policies in the amounts specified shall notbe limited in any way by reason of any insurance which may bemaintained by Franchisor, nor shall Franchisee's performance ofthat obligation relieve it of liability under the indemnityprovisions set forth in this Agreement. Franchisee may maintain

such additional insurance as it may consider advisable.

D. Franchisee Must Provide Evidence of Coverage toFranchisor

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Upon obtaining the insurance required by thisAgreement and on each policy renewal date thereafter, Franchiseeshall promptly submit evidence of satisfactory insurance andproof of payment to Franchisor, together with, upon request,

copies of all policies and policy amendments and endorsements.The evidence of insurance shall include a statement by theinsurer that the policy or policies will not be cancelled ormaterially altered without giving at least thirty (30) days'prior written notice to Franchisor.

E. Franchisor May Procure Insurance Coverage

Should Franchisee, for any reason, fail to procure ormaintain the insurance required by this Agreement, as describedfrom time to time by the Manual or otherwise in writing,Franchisor shall have the right and authority (but noobligation) to procure such insurance and to charge same toFranchisee, which charges, together with a reasonable fee forFranchisor's expenses in so acting, shall be payable byFranchisee immediately upon notice from Franchisor.

XIV. SPECIFIC OBLIGATIONS OF FRANCHISEE RELATING TOACCOUNTING AND RECORDS

A. Bookkeeping, Accounting and Records

Franchisee shall maintain during the term of this

Agreement, and shall preserve for a minimum of three (3) years,full, complete accurate records of sales, payroll, and accountspayable in accordance with the standard accounting systemdescribed by Franchisor in the Manual or otherwise specified inwriting.

B. Franchisor's Right to Audit

ADVANCE REALTY or its designated agents shall have theright, at all reasonable times, to examine and copy, at ADVANCEREALTY expense, the books, records, and tax returns of

Franchisee and the Business. ADVANCE REALTY shall also have theright, at any time, to have an independent audit made of thebooks of the Business. If an inspection should reveal that anypayments to Franchisor have been understated in any report toADVANCE REALTY, then Franchisee shall immediately pay to ADVANCEREALTY the amount understated upon demand, in addition tointerest on such amount from the date such amount was due untilpaid, at the Default Rate, calculated on a daily basis. If an

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inspection discloses an understatement in any payment toFranchisor of two percent (2%) or more, Franchisee shall, inaddition, reimburse ADVANCE REALTY for any and all costs andexpenses relating to the inspection (including, withoutlimitation, travel, lodging and wage expenses and reasonable

accounting and legal costs), and, at Franchisor's discretion,submit audited financial statements prepared, at Franchisee'expense, by an independent certified public accountantsatisfactory to ADVANCE REALTY. If an inspection discloses anunderstatement in any payment to Franchisor of four percent (4%)or more, such act or omission shall constitute grounds forimmediate termination of this Agreement, as set forth in SectionXXIII. hereof. The foregoing remedies shall be in addition toany other remedies ADVANCE REALTY may have pursuant to thisAgreement and as provided at law and in equity.

C. Reporting of Gross Revenues

Franchisee shall submit to ADVANCE REALTY during theterm of this Agreement, after the opening of the Business, (a) aroyalty report, on a one (1) month accounting period basis inthe form prescribed by ADVANCE REALTY from time to time,accurately reflecting all Gross Revenues during each precedingone month accounting period, and such other data or informationas ADVANCE REALTY may require, from time to time, said report tobe received by Franchisor within ten (10) days from the date ofexpiration of each such one (1) month accounting period; and (b)profit and loss statements, balance sheets and trial balances

prepared in accordance with generally accepted accountingprinciples, consistently applied, for each accounting period, tobe received by Franchisor within fifteen (15) days after thedate of expiration of each period covered by the report, (c)copies of all tax returns relating to sales at the Business tobe received by Franchisor within ten (10) days of the end of thetax reporting period, and (d) such other data or information asADVANCE REALTY may require, from time to time.

D. Submission of Financial Statements

Franchisee shall, at its expense, submit to ADVANCEREALTY, within thirty (30) days of the end of each calendarquarter during the term of this Agreement, on forms prescribedby ADVANCE REALTY, a financial statement, which may beunaudited, for the preceding quarter, including both an incomestatement and balance sheet. Each financial statement shall besigned by Franchisee or by Franchisee's Treasurer or Chief

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Financial Officer, attesting that the statement is true andcorrect. Franchisee shall also, at its expense, submit toFranchisor within sixty (60) days of the end of each fiscal yearof Franchisee during the terms of this Agreement, a completefinancial statement for said fiscal year, including, without

limitation, both an income statement and balance sheet, whichmay be unaudited, together with such other information in suchform as Franchisor may require. Franchisee shall also submit toFranchisor the current financial statement and other forms,records, reports, information, and data as Franchisor mayreasonably designate, in the form, and at the times and theplaces reasonably required by ADVANCE REALTY, upon request, andas specified from time to time in the Manual or otherwise inwriting.

E. Disclosure of Financial Statements

Franchisee hereby grants permission to ADVANCE REALTYto release to Franchisee's landlord, lenders or prospectivelandlords or lenders, any financial and operational informationrelating to Franchisee and/or the Business; however, ADVANCEREALTY has no obligation to do so.

F. Accounting Equipment

Franchisee shall follow and adhere to the dailyaccounting and reporting procedures as required by ADVANCEREALTY, from time to time, and shall purchase accounting and

reporting computer software and hardware. The computer softwareand hardware to be used in the Business shall possess severalimportant features in order to facilitate the operation andinternal accounting control of the Business.

XV. SPECIFIC OBLIGATIONS OF FRANCHISEE RELATING TOUSES OF NAMES AND MARKS

A. Names and Marks are Owned by Franchisor

Franchisor warrants with respect to the proprietary

Names and Marks that:

1. ADVANCE REALTY has a service mark and hasapplied for the granted the exclusive right to use the Names andMarks to establish ADVANCE REALTY in the United States.

2. Franchisor is taking and will take suchsteps as are reasonably necessary to preserve and protect the

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6. Franchisee shall not use the Names and Marksto incur any obligations or indebtedness on behalf of Franchisor;

7. Franchisee shall not use the Names and Marksor any part thereof as part of its corporate or other legal name;

8. Franchisee shall comply with Franchisor'sinstructions in filing and maintaining the requisite trade nameor fictitious name registration, and shall execute any documentsdeemed necessary by Franchisor or its counsel to obtainprotection for the Names and Marks or to maintain theircontinued validity and enforceability; and

9. In the event any litigation involving theNames and Marks is instituted or threatened against Franchisee,Franchisee shall promptly notify Franchisor and shall cooperatefully with Franchisor in defending such litigation.

10. During the term of this Agreement and anyrenewal hereof, Franchisee shall identify itself as the owner ofthe Business in conjunction with any use of the Names and Marks,including, but not limited to, on invoices, order forms,receipts, and contracts, as well as at such conspicuouslocations on the premises of the Business as ADVANCE REALTY maydesignate in writing. The form and content of suchidentification shall comply with standards set forth in theManual.

C. Franchisee Will Not Challenge Franchisor's RightsIn Its Names and Marks

Franchisee expressly understands and acknowledges that:

1. As between the parties hereto, Franchisor isthe owner of all right, title, and interest in and to the Namesand Marks and the goodwill associated with and symbolized bythem;

2. The Names and Marks are valid and serve to

identify the System and those who are franchised under theSystem;

3. Franchisee shall not directly or indirectlycontest the validity or the ownership of the Names and Marks;

4. Franchisee's use of the Names and Markspursuant to this Agreement does not give Franchisee any

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ownership interest or other interest in or to the Names andMarks, except the non-exclusive Franchise granted herein;

5. Any goodwill arising from Franchisee's useof the Names and Marks in its Business under the System shall

inure solely and exclusively to Franchisor's benefit, and uponexpiration or termination of this Agreement and the Franchiseherein granted, no monetary amount shall be assigned asattributable to any goodwill associated with Franchisee's use ofthe System or the Names and Marks;

6. Franchisor reserves the right to substitutedifferent Names and Marks for use in identifying the System, theBusiness and other franchised businesses operating there under;and

7. Franchisee hereby agrees not to register orattempt to register the Names and Marks in Franchisee's name orthat of any other firm, person or corporation.

8. The right and license of the Names and Marksgranted hereunder to Franchisee is nonexclusive, and ADVANCEREALTY thus has and retains the rights, among others:

a. To use the Names and itself inconnection with selling residential and commercial real estatesales listings and brokerage;

b. To grant other licenses for the Namesand Marks, in addition to those licenses already granted toexisting franchisees; and

c. To develop and establish other systemsusing similar Names and Marks, or any other proprietary marks,and to grant licenses or franchises thereto at any location(s)whatsoever without providing any rights therein to Franchisee.

9. Franchisee understands and acknowledges thatFranchisor has the unrestricted right to engage, directly or

indirectly, through its or their employees, representatives,licensees, assigns, agents and others, at wholesale, retail andotherwise, in the production, distribution and sale of productsbearing the Names and Marks licensed hereunder or other names ormarks, including without limitation, products included as partof the System. Franchisee shall not under any circumstancesengage in any wholesale trade or sale of System products forresale.

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XVI. SPECIFIC OBLIGATIONS OF THE FRANCHISEE RELATING TOCONFIDENTIALITY OF PROPRIETARY INFORMATION

A. Franchisee Will Learn Proprietary Matters

Franchisee acknowledges that he or she will obtainknowledge of proprietary matters, techniques and businessprocedures or Franchisor that are necessary and essential to theoperation of the Business, without which information Franchiseecould not effectively and efficiently operate such business,including, without limitation, knowledge regarding the System,the layout of the Business and the Manual. Franchisee furtheracknowledges that such proprietary information was not known toFranchisee prior to execution of this Agreement and that themethods of Franchisor are unique and novel to the System. Asused herein, "Proprietary Information" shall mean confidentialinformation concerning:

1. Persons, corporations or other entitieswhich are, have been or become Franchisees of the System and anyinvestors therein;

2. Persons, corporations or other entitieswhich are, have been or become customers of the Business;

3. The terms of and negotiations relating topast or current Franchise Agreements with respect to the System;

4. The operating procedures of the System,including without limitation: distinctive management,bookkeeping and accounting systems and procedures, advertising,promotional and marketing methods, personnel hiring and trainingprocedures, the manufacturers, suppliers and uses of equipment,and lists of vendors and suppliers;

5. The economic and financial characteristicsof the System and Franchisees, including without limitation:pricing policies and schedules, profitability, earnings and

losses, and capital and debt structures;

6. The services and products offered tocustomers of Businesses, including, without limitation, thescope of services performed and services refused; and

7. All documentation of the information listedin Sections XVI.A.1. through XVI.A.7. hereof, including,

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without limitation, the Manual. During the term of thisAgreement and for a period of five (5) years following theexpiration or termination of this Agreement, Franchisee agreesnot to divulge, directly or indirectly, any ProprietaryInformation, without the prior written consent of Franchisor.

Nothing contained herein shall be construed so as to requireFranchisor to divulge any secret processes, formulas, or thelike.

B. Franchisee's Employees Will Not DiscloseProprietary Information

The Franchisee may disclose Proprietary Informationonly to such of its employees, agents and representatives asmust have access to it in order to operate the Business.Franchisee shall obtain from each such employee, representativeor agent, an agreement that such person shall not during thecourse of his employment, representation, or agency withFranchisee, or for a period of five (5) years thereafter, use,divulge, disclose or communicate, directly or indirectly, in anyform or manner, to any person, firm or corporation, any of theProprietary Information of Franchisor.

C. Injunctive Relief is Available to Franchisor

Franchisee acknowledges that any failure to complywith the requirements of this Section XVI will cause Franchisorirreparable injury, and Franchisor shall be entitled to obtain

specific performance of, or an injunction against any violationof, such requirements; Franchisee waives any requirements forthe posting of any bond(s) relating thereto. Franchisee agreesto pay all court costs and reasonable attorneys' fees incurredby Franchisor in obtaining specific performance of, or aninjunction against, violation of requirements of this SectionXVI. The foregoing remedies shall be in addition to any otherlegal or equitable remedies which Franchisor may have.

D. Franchisor's Patent Rights and Copyrights

Franchisor does not own rights in or to any patentsthat are material to the Franchise. However, Franchisor intendsto obtain copyright protection for the Manual and certainmarketing, sales, and operations literature. Furthermore,Franchisor claims rights to certain trade secrets andconfidential information as discussed above.

XVII. SPECIFIC OBLIGATIONS OF FRANCHISEE RELATING TO

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TAXES, PERMITS AND LAWSUITS

A. Franchisee Must Notify Franchisor of Lawsuits

Franchisee shall notify Franchisor in writing within

five (5) days of notice of the commencement of any action, suit,or proceeding against Franchisee, and of the issuance of anyinquiry, subpoena, order, writ, injunction, award or decree ofany court, agency, or other governmental instrumentality, whicharises out of, concerns, or may affect the operation orfinancial condition of the Business, including, withoutlimitation, any criminal action or proceedings brought byFranchisee against its employees, customers, or other persons.

B. Franchisee Must Comply With Laws

Franchisee shall, at Franchisee's expense, comply withall federal, state and local laws, rules, regulations andordinances and shall timely obtain and shall keep in force asrequired throughout the term of this Agreement all permits,certificates and licenses necessary for the full and properconduct of the Business, including, without limitation, anyrequired permits, licenses to do business, fictitious nameregistrations, sales tax permits, and fire clearances.

C. Franchisee Must Pay Taxes Promptly

Franchisee shall promptly pay when due all taxes

levied or assessed, including, without limitation, unemploymentand sales taxes, and all accounts and other indebtedness of anykind incurred by Franchisee in the conduct of the Business.Franchisee shall pay Franchisor an amount equal to any salestax, gross receipts tax or similar tax imposed on Franchisorwith respect to any payments to Franchisor required under thisAgreement, unless tax is credited against income tax otherwisepayable by Franchisor.

D. Franchisee May Contest Tax Assessments

In the event of any bona fide dispute as to anyliability for taxes assessed or other indebtedness, Franchiseemay contest the validity or the amount of the tax orindebtedness in accordance with procedures of the taxingauthority or applicable law. However, in no event shallFranchisee permit a tax sale or seizure by levy of execution orsimilar writ or warrant, or attachment by a creditor to occuragainst the premises of the Business, or any improvements

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thereon.

XVIII. SPECIFIC OBLIGATION OF FRANCHISEE RELATING TOINDEMNIFICATION

Franchisee understands and agrees that nothing in thisAgreement authorizes Franchisee to make any contract, agreement,warranty or representation on Franchisor's behalf, or to incurany debt or other obligation in Franchisor's name. Franchiseefurther understands and agrees that Franchisor shall in no eventassume liability for, or be deemed liable hereunder as a resultof, any such action, or by reason of any act or omission ofFranchisee in its conduct of the Business or any claim orjudgment arising there from against Franchisee. Franchiseeshall indemnify and hold Franchisor and Franchisor's officers,directors, shareholders and employees harmless against any andall claims arising directly or indirectly from, as a result of,or in connection with, Franchisee's operation of the Business,as well as the cost, including attorney's fees, of defendingagainst same.

XIX. MISCELLANEOUS COVENANTS OF FRANCHISEE

A. Covenants are Independent

The parties agree that each covenant herein shall beconstrued to be independent of any other covenant or provisionof this Agreement. If all or any portion of the covenants inthis Agreement is held to be unenforceable or unreasonable by acourt or agency having competent jurisdiction in any finaldecision to which Franchisor is a party, Franchisee expresslyagrees to be bound by any lesser covenant subsumed within theterms of such covenant that imposes the maximum duty permittedby law, as if the resultant covenant were separately stated in

and made a part of this Agreement.

B. Franchisee Will Not Compete Against Franchisor

Franchisee specifically acknowledges that, pursuant tothis Agreement, Franchisee will receive valuable specializedtraining and confidential information, including, withoutlimitation, information regarding the operational, sales,

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promotional and marketing methods and techniques of ADVANCEREALTY and the System. Franchisee covenants that, during theterm of this Agreement, except as otherwise approved in writingby ADVANCE REALTY, Franchisee shall not, either directly orindirectly, for itself, or through, on behalf of, or in

conjunction with, any person, persons, or legal entity, employor seek to employ any person who is at that time employed byADVANCE REALTY or by any other franchisee or affiliate ofADVANCE REALTY, or otherwise directly or indirectly induce suchperson to leave his or her employment.

Franchisee covenants that, except as otherwiseapproved in writing by ADVANCE REALTY, Franchisee shall not,during the term of this Agreement and for a continuousuninterrupted period commencing upon the expiration ortermination of this Agreement, regardless of the cause fortermination, and continuing for two (2) years thereafter, eitherdirectly or indirectly for itself, or through, on behalf of, orin conjunction with, any person, persons, or legal entity, own,maintain, operate, engage in, be employed by, or have anyinterest in any business featuring the overall ADVANCE REALTYconcept, with similar decor or similar service to ADVANCE REALTYwithin a five (5) mile radius of the business locationdesignated hereunder, or within a five (5) mile radius of anyother ADVANCE REALTY in existence or planned as of the time oftermination or expiration of this Agreement, as identified inthe Franchise Offering Circular of ADVANCE REALTY in effect asof the date of expiration or termination of this Agreement.

C. Exception to Covenant Not to Compete

Section XIX.B. hereof shall not apply to ownership byFranchisee of less than a five percent (5%) beneficial interestin the outstanding equity securities of any Publicly-HeldCorporation.

D. Franchisee Will Not Divert Business

During the term of this Agreement and for a period of

two (2) years following the expiration or termination of thisAgreement, Franchisee covenants that it will not, eitherdirectly or indirectly, for itself, or through, on behalf of, orin conjunction with any person, persons, or legal entity:

1. Divert or attempt to divert business orcustomers of the Business with which or with whom Franchisee hashad contact during the term of this Agreement to any competitorby direct or indirect inducement or otherwise; or

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2. Do or perform, directly or indirectly, anyother act injurious or prejudicial to the goodwill associatedwith the Names and Marks or the System or both; or

3. Induce, directly or indirectly, any personwho is at that time employed by Franchisor or by any otherFranchisee of Franchisor, to leave his or her employment. Theprovisions of this Section XIX.D. shall apply only in thegeographical area lying within the exclusive territory of theBusiness.

E. Franchisor Is Entitled to Injunctive Relief

Franchisee acknowledges that any failure to complywith the requirements of this Section XIX. will cause Franchisorirreparable injury for which no adequate remedy at law may beavailable, and Franchisee hereby accordingly consents to theissuance by a court of competent jurisdiction of an injunctionprohibiting any conduct by Franchisee in violation of the termsof this Section XIX. and waives any requirement for the postingof any bond(s) relating thereto. Franchisor may further availitself of any legal or equitable rights and remedies which itmay have under the Agreement or otherwise.

F. Covenants Are Enforceable Independent of Claims

Franchisee expressly agrees that the existence of any

claim it may have against Franchisor, whether or not arisingfrom this Agreement, shall not constitute a defense to theenforcement by Franchisor of the covenants of this Section XIX.Franchisee further agrees that Franchisor shall be entitled toset off any amounts owed by Franchisor to Franchisee against anyloss or damage to Franchisor resulting from Franchisee's breachof this Section XIX.

G. No Right of Set-Off

Franchisee expressly agrees that the existence of any

claims it may have against ADVANCE REALTY, whether or notarising from this Agreement, shall not constitute a defense tothe enforcement by ADVANCE REALTY of the covenants in thisSection XIX. Franchisee agrees to pay all damages, costs andexpenses (including reasonable attorney's fees) incurred byADVANCE REALTY in connection with the enforcement of thisSection XIX.

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XX. OBLIGATIONS OF ADVANCE REALTY: SUPERVISION, ASSISTANCEOR SERVICES

ADVANCE REALTY shall provide the Franchisee with thefollowing assistance and services:

A. The Training Program

1. ADVANCE REALTY will provide a trainingprogram concerning the operation of the Business consisting ofFive (5) days of training at a location to be designated byFranchisor and two (2) days of trainer at the franchisee AdvanceRealty location. The training session will begin approximatelythirty (30) days or more before the opening of the Business.The on site tra

advance franchise agreement

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