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The franchise offered is for the operation of an income tax preparation business under the
name Happy Tax®. The franchised business is designed to initially be operated from a franchisee’s
home but, with our permission, you may later operate from a storefront.
The total investment necessary to begin operation of a Franchised Business ranges from
$23,400 - $29,000. This includes $20,000 which must be paid to the Franchisor or affiliate.
This disclosure document summarizes certain provisions of your Franchise Agreement
and other information in plain English. Read this disclosure document and all accompanying
agreements carefully. You must receive this disclosure document at least 14 calendar days before
you sign a binding agreement with or make any payment to the franchisor or an affiliate in
connection with the proposed franchise sale. 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 Kermit
Raphael Uregar at 350 Lincoln Road, Miami Beach, Florida 33139, 844-426-1040.
The terms of your franchise agreement will govern your franchise relationship. Don’t rely
on the disclosure document alone to understand your franchise agreement. Read all of your
franchise agreement carefully. Show your contract and this disclosure document to an advisor,
like a lawyer or an accountant.
Buying a franchise is a complex investment. The information in this disclosure document
can help you make up your mind. More information on franchising, such as “A Consumer’s Guide
to Buying a Franchise,” which can help you understand how to use this disclosure document, is
available from the Federal Trade Commission. You can contact the FTC at 1-877-FTC-HELP or
by writing to the FTC at 600 Pennsylvania Avenue, NW, Washington, D.C. 20580. You can also
visit the FTC’s home page at www.ftc.gov for additional information. Call your state agency or
visit your public library for other sources of information on franchising.
There may also be laws on franchising in your state. Ask your state agencies about them.
Issuance Date: September 15, 2016.
FRANCHISE DISCLOSURE DOCUMENT
HAPPY TAX FRANCHISING, LLC
350 Lincoln Road
Miami Beach, Florida 33139
Telephone: (844) 426-1040
Email: [email protected]
Website: www.happytax.com
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STATE COVER PAGE
Your state may have a franchise law that requires a franchisor to register or file with a state
franchise administrator before offering or selling in your state. REGISTRATION OF A FRANCHISE
BY A STATE DOES NOT MEAN THAT THE STATE RECOMMENDS THE FRANCHISE OR
HAS VERIFIED THE INFORMATION IN THIS DISCLOSURE DOCUMENT.
Call the state franchise administrator listed in Exhibit A for information about the franchisor
or franchising in your state.
MANY FRANCHISE AGREEMENTS DO NOT ALLOW YOU TO RENEW
UNCONDITIONALLY AFTER THE INITIAL TERM EXPIRES. YOU MAY HAVE TO SIGN A
NEW AGREEMENT WITH DIFFERENT TERMS AND CONDITIONS IN ORDER TO
CONTINUE TO OPERATE YOUR BUSINESS. BEFORE YOU BUY, CONSIDER WHAT RIGHTS
YOU HAVE TO RENEW YOUR FRANCHISE, IF ANY, AND WHAT TERMS YOU MIGHT
HAVE TO ACCEPT IN ORDER TO RENEW.
Please consider the following RISK FACTORS before you buy this franchise:
1. THE FRANCHISE AGREEMENT REQUIRES YOU TO RESOLVE DISPUTES
WITH US BY MEDIATION OR LITIGATION ONLY IN THE STATE OF FLORIDA. OUT OF
STATE MEDIATION OR LITIGATION MAY FORCE YOU TO ACCEPT A LESS
FAVORABLE SETTLMENT FOR DISPUTES. IT MAY ALSO COST YOU MORE TO
MEDIATE OR LITIGATE WITH US IN FLORIDA THAN IN YOUR HOME STATE.
2. THE FRANCHISE AGREEMENT STATES THAT FLORIDA LAW GOVERNS
THE AGREEMENT AND THIS LAW MAY NOT PROVIDE YOU WITH THE SAME
PROTECTIONS AND BENEFITS AS YOUR LOCAL LAW. YOU MAY WANT TO COMPARE
THESE LAWS.
3. THE FRANCHISOR HAS BEEN IN EXISTENCE FOR A SHORT PERIOD OF
TIME, SINCE DECEMBER 13, 2014. THEREFORE, THERE IS ONLY A BRIEF OPERATING
HISTORY TO ASSIST YOU IN JUDGING WHETHER OR NOT TO MAKE THIS
INVESTMENT.
4. THE FRANCHISOR HAS A LIMITED OPERATING HISTORY. THE
FRANCHISOR’S FINANCIAL RESOURCES MAY NOT BE ADEQUATE TO FUND THE
FRANCHISOR’S PRE-OPENING OBLIGATION TO EACH FRANCHISEE AND PAY
OPERATING EXPENSES.
5. THE FRANCHISE AGREEMENT DOES NOT GRANT YOU AN EXCLUSIVE
TERRITORY. YOU MAY FACE COMPETITION FROM OTHER FRANCHISEES, FROM
OUTLETS THAT WE OWN, OR FROM OTHER CHANNELS OF DISTRIBUTION OR
COMPETITIVE BRANDS THAT WE OWN.
6. THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.
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STATE EFFECTIVE DATES
The following states require that the Franchise Disclosure Document be registered or filed with
the state, or be exempt from registration: California, Hawaii, Illinois, Indiana, Maryland,
Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia,
Washington and Wisconsin.
This Franchise Disclosure Document is registered, on file or exempt from registration in the
following states having franchise registration and disclosure laws, with the following effective
dates:
California
Hawaii
Illinois
Indiana
Maryland
Michigan
Minnesota
New York
North Dakota
Rhode Island
South Dakota
Virginia
Wisconsin
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TABLE OF CONTENTS
ITEM PAGE
ITEM 1. THE FRANCHISOR AND ANY PARENTS, PREDECESSORS AND
AFFILIATES .......................................................................................................... 1 ITEM 2. BUSINESS EXPERIENCE .................................................................................... 3 ITEM 3. LITIGATION .......................................................................................................... 4
ITEM 4. BANKRUPTCY ..................................................................................................... 4 ITEM 5. INITIAL FEES........................................................................................................ 5 ITEM 6. OTHER FEES ......................................................................................................... 5 ITEM 7. ESTIMATED INITIAL INVESTMENT ................................................................ 9
ITEM 8. RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES ................. 11 ITEM 9. FRANCHISEE’S OBLIGATIONS ...................................................................... 14
ITEM 10 FINANCING......................................................................................................... 15 ITEM 11. FRANCHISOR’S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS
AND TRAINING.................................................................................................. 16 ITEM 12. TERRITORY ........................................................................................................ 22 ITEM 13. TRADEMARKS ................................................................................................... 24
ITEM 14. PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION ............... 25 ITEM 15. OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE
FRANCHISED BUSINESS.................................................................................. 26 ITEM 16. RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL ....................... 27 ITEM 17. RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION.. 28
ITEM 18. PUBLIC FIGURES ............................................................................................... 31
ITEM 19. FINANCIAL PERFORMANCE REPRESENTATIONS .................................... 31 REGULATORY AGENCIES. .............................................................................. 31
ITEM 20. OUTLETS AND FRANCHISEE INFORMATION ............................................ 34
ITEM 21. FINANCIAL STATEMENTS .............................................................................. 38 ITEM 22. CONTRACTS ....................................................................................................... 38
ITEM 23. RECEIPTS ............................................................................................................ 38
Exhibit A State Administrators and Agents for Service Of Process
Exhibit B Franchise Agreement
Exhibit C Exhibits to Franchise Agreement:
1. Principal Trademarks
2. ACH Authorization
3. Retail Rider
4. Telephone Number Assignment Agreement
5. Confidentiality, Non-Use and Non-Competition Agreement Form
6. State Addenda to The Franchise Agreement
Exhibit D Confidential Operating Manual Table of Contents
Exhibit E List of Current and Former Franchisees
Exhibit F Financial Statements
Exhibit G List of Area Representatives
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Exhibit H General Release
Exhibit I Promissory Note
Exhibit J State Addenda to Disclosure Document
Exhibit K Receipts
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ITEM 1. THE FRANCHISOR AND ANY PARENTS,
PREDECESSORS AND AFFILIATES
To simplify the language in this disclosure document, “we,” “us” or “our” means Happy
Tax Franchising, LLC, the “Franchisor.” “You” means the individual, corporation, limited liability
company or partnership who buys the franchise, the “Franchisee.” If Franchisee is a corporation,
limited liability or partnership, then “you” also includes Franchisee’s shareholders, members or
partners.
The Franchisor
We are a Florida Limited Liability Company formed on December 13, 2014. We do
business under the name “Happy Tax®.” Our principal business address is 350 Lincoln Road,
Miami Beach, Florida 33139.
Our agents for service of process in the states whose franchise laws require us to name a
state agency as agent for service of process are shown on Exhibit A.
Our Parents, Predecessor and Affiliates
We do not have a parent or any predecessors.
We have an affiliate, Happy Tax Brands, LLC, a New York limited liability company,
formed on February 10, 2016, which holds the principal trademarks used in this franchise. We
have an affiliate, Happy Tax Mobile, LLC, a New York limited liability company, formed on
January 12, 2016, which offers Sales Representatives the opportunity to source tax return
information in exchange for a commission. The principal place of business of both of these
affiliates is 175 Huguenot Street, Suite 200, New Rochelle, New York 10801.
The Franchise Offered
We offer franchises for the right to establish and operate a Happy Tax® income tax
preparation business using the Principal Trademarks (defined below) and System initially from the
franchisee’s home. Later, we may allow you to operate from a storefront, if you meet the
requirements, pay to us the $10,000 Retail Franchised Business fee, and sign and comply with the
Retail Rider found at Exhibit C3 to the Franchise Agreement. We refer to the business offered
here as the “Franchised Business.” The System includes our proprietary technology, tools, support
and resources. Franchisees are not required to be accountants or income tax return preparers. We
have a virtual back office staffed with dedicated certified public accountants (CPAs) or other
qualified tax professionals who will prepare each income tax return sourced by you or your
Independent Contractors.
You will be responsible for conducting sales and marketing programs and providing
exceptional customer service. You will not prepare income tax returns.
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Market Conditions
We are an income tax return preparation business, which primarily attracts customers
from the middle and low income brackets. The market for income tax preparation services is
developed. The business is seasonal with most of the customer flow occurring from late January
through the middle of April each year. You will face competition from national, regional, and
local tax return preparation and accounting businesses. You may also face competition from online
income tax preparation services and nonprofit tax preparation assistance groups.
Industry Regulations
The Internal Revenue Code and associated regulations govern many aspects of the
preparation and electronic filing of tax returns. You cannot file tax returns electronically unless
you obtain an electronic filing identification number (“EFIN”) from the Internal Revenue Service
(“IRS”) and you must comply with all IRS regulations regarding EFINs including, but not limited
to, IRS Publication 3112. If you or a firm in which you have been a principal were assessed
a tax preparer penalty, convicted of a crime, failed to file a tax return or pay taxes, or cannot
pass an IRS background suitability check, you may not be able to obtain an EFIN. The
electronic filing of tax returns is essential to this business. If you cannot obtain an EFIN, you
cannot operate this franchise.
Federal laws and IRS rules and regulations govern various aspects of the Franchised
Business including, but not limited to: (i) accuracy of returns prepared; (ii) eligibility to
participate in the IRS electronic filing program; (iii) tax preparer due diligence requirements;
(iv) retention of tax returns prepared; and (v) eligibility, registration and licensing of tax return
preparers. You will be required to comply with any and all applicable IRS licensing and
continuing education requirements although, currently no licensing or continuing education is
required.
The Federal Trade Commission’s Safeguards Rule requires that tax preparers use
physical, administrative, and technological means to safeguard confidential customer data. The
federal Gramm Leach Bliley Act requires that tax preparers advise customers of what type of
confidential data is collected, the use of the data, and what safeguards are in place to protect it.
Certain states also have privacy laws including, but not limited to, laws requiring client
notification for certain data security breaches.
States also have laws and regulations governing the preparation of state tax returns. Most
states have regulations regarding the electronic filing of tax returns. However, many states
accept federal suitability testing for electronic filing. Some states, including California,
Maryland and Oregon, impose certain standards and state licensing requirements on tax
preparers. You are required to ensure that you and any employees that you may hire are in
compliance with all state, federal and local licensing requirements and standards.
You will be required to comply with any applicable disclosure and/or licensing
requirements in your state including the payment of any associated fees or bonds if any are
required. You should consult your lawyer concerning all federal, state, and local laws, regulations,
and ordinances that may affect the Franchised Business. You are responsible for following all
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applicable laws and should investigate application of these laws further.
Prior Business Experience
We have offered franchises in the non-registration states since April 2015.
Since December 2015, we have also operated a business similar to the one being franchised.
Since January 2016, our affiliate, Happy Tax Mobile, has offered an Independent Contractor
Program through which Sales Representatives may source tax returns for us in exchange for a
payment of 40% of the revenue from the tax returns generated paid to them as a commission.
Since March 2016 we have begun testing an Accounting/Bookkeeping Service, “Happy Tax
Accounting,” and if you source clients to us, we will pay to you a portion of the revenue the client
pays to us.
Since September 2015, we have offered Area Representative franchises in the non-
registration states, pursuant to a separate Franchise Disclosure Document. Area Representatives
offer and sell franchises on our behalf in designated geographic areas and may offer limited
operational support to franchisees in their area. We make disclosures related to Items 2, 3, 4, and
11 concerning Area Representatives in Exhibit G to this disclosure document.
ITEM 2. BUSINESS EXPERIENCE
Mario Costanz: Chief Executive Officer and President
Mario Costanz has served as our Chief Executive Officer and President since our formation
in December 2014. From December 2009 to December 2014, Mr. Costanz served as the Director
of Operations for the following area developers in the Liberty Tax Service franchised system:
Valarie-Ann Kelly, an individual, Hudval Ventures, LLC, NJ Empire, LLC and 2020 Development
LLC. Hudval Ventures, LLC, NJ Empire, LLC and 2020 Development LLC operated their area
developer businesses in Mamaroneck, New York.
Kermit Uregar: COO and Director of Operations
Kermit Uregar has served as our Chief Operating Officer since our formation in December
2014. From February 2009 to November 2014, he served as CEO of Real Easy Fitness. From
September 2012 to April 2014, Mr. Uregar served as Owner and Operator of Liberty Tax Offices
in Flushing and Woodside, New York. From August 2011 to August 2013, Mr. Uregar served as
Owner and Producer of Gym Shorts, an Off-Broadway Show in New York. Since 2011, Mr. Uregar
has served as a Board Member of Mensen Academy.
Melissa Salyer, Executive Vice President of Franchise Opportunities
Melissa Salyer has served as our Executive Vice President of Franchise Opportunities since
May 2016. From July 2015 to the present, Ms. Salyer has also served as the owner of Franchise
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Sales Consulting in Virginia Beach, Virginia. From February 2009 until July 2015, Ms. Salyer
served as a Franchise Development Representative for JTH Tax, Inc. in Virginia Beach, Virginia.
Joseph Sparacio, Vice President; Company Stores
Joseph Sparacio has served as our Vice President; Company Stores since April 2015. He
served as a regional manager for Hudval Ventures, LLC from December 2009 to April 2014,
during which he oversaw its operation of a tax preparation service business in Phoenix, Arizona.
Isabella Uregar, Director of Human Resources
Isabella Uregar has served as the Director of Human Resources since April 2015. She
served as a Human Resources professional for City University of New York (CUNY) in New York
City from March 2003 to present.
Elizabeth Martins, Assistant Director of Operations
Elizabeth Martins has served as our Assistant Director of Operations since April 2015. She
served as medical receptionist for Dr. Robert Cristofaro in Purchase, New York from November
2014 to present. She previously served as a Sales Associate for Ahold U.S.A., Inc. in Westport,
Connecticut from June 1997 to November 2014.
Marcus Slater, Director of Digital Design & Marketing
Marcus Slater has served as our Director of Digital Design & Marketing since August 2016.
From January 2009 until August 2016, Mr. Slater served as the President of Canvas Ink Design in
Gallatin, Tennessee.
Jason Jimenez, Director of Strategic Initiatives
Jason Jimenez has served as our Director of Strategic Initiatives since August 2016. From
March 2013 to the present, Mr. Jimenez has also served as the President and CEO of Redstone
Business Holdings, LLC in Houston, Texas. From January 2011 to the present, Mr. Jimenez has
also served as the Chair and Founder of IRG LLC in Houston, Texas. From November 1999 to
the present, Mr. Jimenez has served as the President and CEO of Jason Jimenez Insurance Agency,
Inc. in Houston, Texas.
ITEM 3. LITIGATION
No litigation is required to be disclosed in this Item.
ITEM 4. BANKRUPTCY
No bankruptcy information is required to be disclosed in this Item.
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ITEM 5. INITIAL FEES
You shall pay to us an initial franchise fee of $20,000.
Military- If you were honorably discharged from the United States Armed Forces, we will
discount the initial franchise fee by twenty percent (20%) to the first 10 franchisees who utilize
this discount.
After 10 franchises are granted under the military discount, we may grant financing at 7%
interest over a 3 year term at 7% APR of up to 50% of the initial franchise fee. Whether, and to
what extent we grant financing will depend on your perceived business acumen, creditworthiness,
and availability of funds.
The initial franchise fee is fully earned when paid and is nonrefundable.
ITEM 6. OTHER FEES
Name of Fee1 Amount Due Date Remarks Royalty2 20% of Gross Revenues for
the first 100 income tax
returns prepared during each
May 1 – April 30; 15% of
Gross Revenues for the next
400 income tax returns
prepared during each May 1
– April 30; 10% of Gross
Revenues for all subsequent
income tax returns prepared
during each May 1 – April
30. We charge a Minimum
Royalty of $4,000 for your
first Tax Season; $6,000 for
your second Tax Season and
$8,000 for each Tax Season
after your second.
Daily via
ACH or Fee
Intercept
Note 2 below defines
Gross Revenues. A “Tax
Season” is the period
from May 1 to April 30
in each calendar year.
See Franchise
Agreement, Section 4.2.
Local Advertising
Marketing and
Promotional
Expenditures3
$1,000; except you must
spend $2,000 your first
Tax Season
Per Tax
Season See Franchise
Agreement, Section 4.3.
Advertising Fund
Contribution4 $1,000 for the first Tax
Season in which you
contribute to the Advertising
Fund; 2% of Gross Revenues
for each subsequent Tax
Season
Thirty days
prior to the
start of the
Tax Season
To be used for social
media and other forms of
advertising as we elect.
See Franchise
Agreement, Section 4.3.
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Name of Fee1 Amount Due Date Remarks Preparation Fee5
$25 per each simple income
tax return; $35 per each mid-
level income tax return; and
$55 per each complicated
income tax return
As Incurred We determine
complexity level of tax
return by the forms and
schedules included per
criteria set forth in our
Operations Manual. See
Franchise Agreement,
Section 4.5(a).
Transfer Fee
(a) All transfers except
as provided in (b). (b) Transferee is an
entity controlled and
owned by current
Franchisee or upon
Franchisee’s death or
disability to a spouse,
parent or child.
$2,000
No charge
Upon transfer
See Franchise
Agreement, Section
4.5(b).
Audit Fee6 Costs and expenses As Incurred See Franchise Agreement
(“FA”), Sec. 4.5(c).
Technology Support and
Development Fee7 Currently $0. We may charge
$650 per year, which may be
increased each year by 10%
As Incurred Paid to us or a third-party
provider. See FA, Sec.
4.5(d).
Independent Contractor
Onboarding Fee $250 per Independent
Contractor subject to group
discounts if prepaid as
follows:
10 Independent Contractors-
$1,500 total fee
20 Independent Contractors-
$2,500 total fee
50 Independent Contractors-
$3,500 total fee
At the time
you sign up to
bring on
Independent
Contractors
You may engage
Independent Contractors
(“IC”) to work for you to
source tax returns. We
onboard the IC’s onto
our platform by giving
them access to our
training, marketing and
user logins for our
technology. See FA,
Sec. 4.5(e).
Late Fee $5 per day As Incurred Payable for each failure
to make a timely
payment of any sum due
to us. See FA, Sec.
4.5(f). Retail Franchised
Business Fee8 $10,000 As Incurred You pay this fee to be
able to operate in a Retail
Location. See FA, Sec.
4.5(g).
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Name of Fee1 Amount Due Date Remarks Interest and Penalties Varies At time of
payment of
interest and
penalties
If a customer incurs
interest and penalty for
erroneous tax preparation
and we conclude that the
error was in your input of
data to us, then you must
pay us any interest and
penalties incurred by the
customer if you fail to
reimburse the customer
and we do so. See FA,
Sec. 4.5(h). Attorney Fees The amount of attorney fees
we actually incur
When
incurred
Payable to us if we are
the substantially
prevailing party in
litigation between us or
you sue an Area
Representative. See FA,
Secs. 20.10 and 20.13
Indemnification The amount of any claim,
obligations, expenses, or
damages including costs and
attorney fees arising from
liability or loss we incur
from your Franchised
Business or your breach of
the Franchise Agreement.
As Incurred See FA, Sec. 7.11.
Notes:
1) All fees are uniformly imposed, collected by and payable to us and are nonrefundable.
2) Each Tax Season, you must pay us the greater of the Minimum Royalty or Royalties based on your
Gross Revenues. If at the end of the Tax Season, the Royalties paid to us are less than the Minimum Royalty
due for that Tax Season, you must pay us the difference upon five (5) business days from our written notice
to you.
“Gross Revenues” means all revenues that Franchisee derives or receives directly or indirectly from the
operation of the Franchised Business, excluding only sales and use taxes, and also includes the full amount
of the recommended price for tax returns, even if Franchisee discounts the price or handles the return for
free, except as we may otherwise specify in the Operations Manual.
3) We require that you spend a minimum of $2,000 your first Tax Season and $1,000 per Tax Season
thereafter on local advertising, marketing and promotional programs (“Local Advertising”).
4) We have not established an Advertising Fund as of the date of this disclosure document. However,
if we do, we may require you to contribute to the Advertising Fund.
5) The Preparation Fee is paid to us to have our team of CPAs or other tax professionals prepare each
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income tax return processed by you. We may increase the Preparation Fee upon written notice.
6) If we audit the Franchised Business and it is determined that you underestimated your Gross
Revenues in any report by two percent (2%) or less, then you must pay within fifteen (15) days of written
notice, the underreported amount. If it is determined that you underestimated Gross Revenues in any report
by more than two percent (2%), then you must pay within fifteen (15) days of written notice, the
underreported amount along with the cost of conducting the audit, including travel, lodging, meals, wages,
expenses, accountant fees, and attorneys’ fees.
7) We currently do not charge a technology support and development fee but we may do so in the
future. If charged, the technology support and development fee would be used to maintain the internal
franchisee intranet, the Happy Tax® website, our back office proprietary software applications and to
incorporate information relating to your Franchised Business on the Happy Tax® website.
8) If you would like to operate a Retail Franchised Business, if we permit, you must also sign our
Retail Rider (Exhibit C3).
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ITEM 7. ESTIMATED INITIAL INVESTMENT
YOUR ESTIMATED INITIAL INVESTMENT
Type of Expenditure Estimated Amount
Low – High
Method of
Payment When Due To Whom
Payment is Made
Initial Franchise Fee1 $20,000 Check or
Electronic
Transfer
At signing of Franchise
Agreement To us
Insurance Deposits and
Premiums2 $300 - $500 Check Before opening Insurance
company
Pre-opening Travel
Expense (Optional)3 $0 - $1,500 Credit card Before opening Airline, hotel,
restaurants
Local Advertising $2,000 Check or
credit card During your first Tax
Season Third parties
Professional Fees4 $500 - $3,000 Check or
credit card Before opening Attorneys,
accountants
Printing, Stationery and
Office Supplies5 $100 - $500 Check or
credit card Before opening Third-party
providers
Additional Funds – 3
Months6 $500 - $1,500 Check or
credit card After opening Various
Total8 $23,400 - $29,000
*None of the fees in the above chart which are payable to us are refundable. Whether any such fees which
are paid to third parties are refundable would depend upon the policies of the third parties.
Notes:
1) You shall pay to us an initial franchise fee of $20,000. We also offer a military discount as described
in Item 5.
We may grant financing over a 3 year term at 7% APR of up to 50% of the initial franchise fee.
Using a loan of $10,000 payable in 36 monthly payments at 7% APR, your estimated monthly
payments would be $308.77.
2) This estimate is for the cost of deposit in order to obtain the minimum required insurance. You should
check with your local carrier for actual premium quotes and costs, the actual cost of the deposit and about any
additional insurance you may want to carry. The cost of coverage will vary based upon the area in which your
Franchised Business will be located, your experience with the insurance carrier, the loss experience of the
carrier and other factors beyond our control.
3) This estimate is for the cost for you (or your Operating Principal) to attend an optional one day hands-
on training session with our executives. If you exercise this option, you will be responsible for all costs
associated with attending the hands-on training session. Your costs will depend on your point of origin,
method of travel, class of accommodation and living expenses (food, transportation, etc.). Because the hands-
on training session is optional, it is not included in the total cost reported in this Item 7.
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4) These fees are representative of the costs for engagement of professionals such as attorneys and
accountants for the initial review and advisories consistent with the start-up of a Franchised Business.
5) The low figure is primarily for printing a start-up order of flyers and other printed materials bearing
the Principal Trademarks and a supply of office materials.
6) This is an estimate of the amount of additional operating capital that you may need to operate your
Franchised Business during the first three (3) months after commencing operations. This estimate also
includes such items as additional advertising, marketing and/or promotional activities, bank charges,
miscellaneous supplies, state tax and license fees, and other miscellaneous items. You may choose to visit
customers at locations other than your home. To provide services at those locations, you may need access
to a vehicle, which may be your personal vehicle or a vehicle belonging to another person or a friend. These
items are by no means all inclusive of the extent of the expense categorization. The expenses you incur during
the initial start-up period will depend on factors such as the local economic and market conditions, as well as
whether your Franchised Business is located in a new or mature market and your business experience. This
estimate is based upon the historical experience of our executives in opening income tax preparation
businesses in New York, New Jersey, Massachusetts, Arizona and Florida.
7) Your costs may vary based on a number of factors including but not limited to the geographic area in
which you open, local market conditions, the time it takes to build sales and your skills at operating a business.
We strongly recommend that you use these categories and estimates as a guide to develop your own business
plan and budget and investigate specific costs in your area.
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ITEM 8. RESTRICTIONS ON SOURCES OF PRODUCTS AND
SERVICES
The Goods or Services Required to be Purchased or Leased:
Advertising Material:
You must use our pre-approved advertising templates, use our designated vendor, or receive
our approval for advertising material.
Bank Products:
We may enter into arrangements with third parties to provide financial products to customers.
If we enter into such arrangements, you must provide any financial products that we specify.
Computer Hardware and Software:
You must use a current generation iPad or similar tablet along with our proprietary
software. The iPad or similar tablet will have Internet capabilities and a data plan, which you will
be required to pay for on an ongoing basis. If you eventually sign a Retail Rider and later operate
the Franchised Business from a storefront, you will need to purchase an additional number of
current generation iPads or other similar tablets.
Additionally, we may, but currently do not, require franchisees to purchase specific
computer hardware, software and information or communications systems which meet our criteria
for design, function and capabilities and to require you to utilize specific Internet service providers
or communications software and other information technology. We do not require you to obtain a
separate computerized point of sale register system.
Furniture, Fixtures, and Equipment:
You must purchase furniture, fixtures, equipment, and signs pursuant to our specifications
or from our designated vendors.
Income Tax Preparation:
You must use us to prepare income tax returns that you source.
Insurance Coverage:
You must obtain insurance coverage for the Franchised Business in nature and amounts
specified in the Manual, name us as an additional insured, and provide proof of coverage to us.
Local Advertising:
All business stationery, business cards, advertising plans and materials, marketing plans
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and materials, public relations programs, sales materials, signs, decorations and paper goods (such
materials whether created by Franchisor, Franchisee or any third-party are collectively defined as
“Advertising Materials”), use of Social Media Platforms, Social Media Materials, and other items
we designate must bear the Principal Trademarks in the form, color, location and manner we
prescribe. In addition, all your advertising, marketing and promotional activities in any medium as
well as your Social Media Platform usage must be conducted in a dignified manner and must
conform to the standards and requirements in the Confidential Operating Manual or otherwise
approved by us in writing. You must obtain our approval (i) before you use any Advertising
Materials and Social Media Materials if we have not prepared or approved such Advertising
Materials or Social Media Materials; and (ii) before you initially use any Social Media Platform.
See Item 11 for additional information.
Website:
The location and telephone number of your Franchised Business will be posted on our
website, which is maintained by us or our supplier. You will also be given a separate web-page on
our website dedicated to your Franchised Business. You may not establish or maintain any other
website for your Franchised Business or use the Principal Trademarks or other proprietary
information in any way other than as provided in the Franchise Agreement, including on the
Internet. You will have no rights to market any products or services on the Internet without our
permission and it is unlikely at this time that such permission will be granted.
Whether the Franchisor or its Affiliates are Approved Suppliers
We are an approved supplier of advertising material and furnish one tablet computer to
you. You must also use our team of tax professionals for income tax preparation. In addition, we
maintain the website on which you will be provided a web page.
Officer Interest in Suppliers
Our officers, Mario Costanz, Kermit Uregar, and Melissa Salyer, own an interest in us.
How the Franchisor Grants and Revokes Approval of Alternative Suppliers
We do not have written criteria for approving suppliers and hence such criteria are not
available to you. If you want to independently source any goods or services from someone other
than one of our Suppliers, you must obtain our prior approval. We do not promise to evaluate or
approve proposed suppliers, designers, vendors, manufacturers, printers, contractors and/or
distributors (“Proposed Suppliers”) and we may decline to do so. If we elect to evaluate a Proposed
Supplier, the Proposed Supplier must complete a questionnaire and provide us with adequate
information and product samples, in our discretion. We consider the following factors in our
evaluation: (1) whether the products and customer service provided by the Proposed Supplier meet
our specifications and standards; (2) the reputation of the Proposed Supplier for quality and
reliability; (3) the frequency and method of delivery; (4) competitiveness of pricing offered; and
(5) whether the products add anything to the range of products offered or are redundant of existing
approved products. There are currently no other criteria for approval of Proposed Suppliers. We
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will not charge a fee to evaluate Proposed Suppliers. If we agree to evaluate a Proposed Supplier,
we will provide you with notice of the approval or disapproval within thirty (30) days after we
receive all of the information and samples we require. We may revoke approval of any Supplier
for reasonable cause upon written notice to you.
Issuance and Modification of Specifications
We issue and modify specifications and standards to franchisees or approved suppliers
through the Operations Manual or other written directives.
Franchisor Revenue from Required Purchases or Leases
In the fiscal year ended April 30, 2016, we rebated all tax return preparation fees from our
franchisees and did not receive any revenue from franchisees from requires purchases or leases.
Proportion of Required Purchases and Leases to all Purchases and Leases
We estimate that your required purchases and leases to all purchases and leases by you of
goods and services will be approximately 25-35% in establishing thee Franchised Business and
70-90% in operating the Franchised Business.
Supplier Payments to the Franchisor
We currently do not receive payments from Suppliers as a result of purchases by our
franchisees; however, we may do so in the future.
Purchasing or Distribution Cooperatives
There currently are no purchasing or distribution cooperatives.
Supplier Purchase Arrangements
We may negotiate purchase arrangements on behalf of franchisees with suppliers,
including price terms.
Material Benefits to Franchisees
We do not provide material benefits to you based on your purchase of particular products
or services or use of particular suppliers. However, we can terminate your franchise agreement if
you do not comply with our supplier standards. In addition, you must be in compliance with your
franchise agreement in order to be eligible to renew it.
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ITEM 9. FRANCHISEE’S OBLIGATIONS
This table lists your principal obligations under the Franchise Agreement and other
agreements. It will help you find more detailed information about your obligations in these
agreements and in other items of this disclosure document.
Obligation
Section in Franchise
Agreement
Item in FDD
a. Site selection and
acquisition/lease
Ex. C5, Section 2 Item 11
b. Pre-opening purchases/leases Section 4.3; 5 and 7 Items 5, 6, 7 and 8
c. Site development and other pre-
opening requirements
Ex. C5, Section 7
Item 11
d. Initial and ongoing training
Section 6.2; Ex C5 Section
7.15
Item 11
e. Opening
Section 7.1
Item 11
f. Fees Sections 4 and 20 Items 5, 6, 7 and 11
g. Compliance with standards and
policies/Confidential Operating
Manual
Sections 7, 8, and 11; Ex.
C5, Section 7.14 Items 8 and 11
h. Principal Trademarks and
proprietary information Section 1 and 11 Items 1, 11, 13 and 14
i. Restrictions on
products/services offered Section 7.13 Items 8 and 16
j. Warranty and customer service
requirements Section 14.2 Item 17
k. Territorial development and
sales quota Section 2 Items 1 and 12
l. Ongoing product/service
purchases
Section 4, 5, and 7; Ex. C5,
Section 7.15 Items 8 and 16
m. Maintenance, appearance and
remodeling requirements
Section 7, Ex. C5, Section
3.2, 7.15 Not Applicable
n. Insurance Section 7.10 Items 7 and 8
o. Advertising Sections 4.3, 5 and 12 Items 8, 11, and 12
p. Indemnification Sections 7.11 Item 6 and 14
q. Owner’s participation/
management/staffing
Section 7.3
Item 15
r. Records and reports Section 7 Item 11
s. Inspections and audits Section 4 and 7
Item 6
15
Obligation
Section in Franchise
Agreement
Item in FDD
t. Transfer Section 10 Item 17
u. Renewal Section 3 Item 17
v. Post termination obligations Section 9, 12, and 14 Item 17
w. Non-competition covenants Section 9 Item 17
x. Dispute resolution Section 21 Item 17
ITEM 10 FINANCING
We may grant financing over a 3 year term at 7% APR of up to 50% of the initial franchise
fee. Whether, and to what extent we grant financing will depend on your perceived business
acumen, creditworthiness, and availability of funds. The following table summarizes the
financing we may offer you for the Initial Franchise Fee.
Item Financed Initial Franchise Fee
Source of Financing Us
Down Payment Minimum of 50% of Initial Franchise Fee
Amount Financed Up to 50% of Initial Franchise Fee
Interest Rate/Finance Charge 7% per annum (including finance charges)
Period of Repayment 36 months
Security Required None
Whether a Person Other than the Franchisee
Must Personally Guarantee the Debt
If the franchisee is an entity, its owners must
personally guarantee the debt
Prepayment Penalty None
Liability Upon Default Accelerated obligation to pay the entire amount
due, interest rate increases to 10% per annum, pay
our court costs and attorney fees incurred in
collecting the debt, and termination of the
franchise.
Waiver of Defenses or Other Legal Rights Waiver of right to jury trial; waiver of
presentment, notice of non-payment, protest and
notice of protest.
We do not currently offer any other financing. We do not have any past or present
practice to sell, assign or discount to any third party, any note, contract or other instrument
signed by you, but we reserve the right to do so. Neither we nor any affiliated entity currently
receive any consideration for placing financing with any third-party lender, but we may do so
in the future.
We do not guarantee notes, leases or your other obligations to third parties.
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ITEM 11. FRANCHISOR’S ASSISTANCE, ADVERTISING, COMPUTER
SYSTEMS AND TRAINING
Except as listed below, we are not required to provide you with any assistance.
Pre-Opening Obligations:
1. We will provide an initial training program as described below, for you (or your
Operating Principal), at no additional charge to you. (Franchise Agreement Section 6.2)
2. We will provide you access to our Confidential Operating Manual. (Franchise
Agreement Section 6.1)
Pre-Opening Optional Assistance:
1. We may conduct advertising, marketing, promotional and/or public relations
activities and make approved Advertising Materials available to you. (Franchise Agreement
Section 5.1)
2. We may provide you with an initial list of Suppliers. (Franchise Agreement Section
6.3)
Post-Opening Assistance:
During the operation of your Franchised Business:
1. We will have our team of tax professionals prepare each income tax return sourced
by you. (Franchise Agreement Section 6.4)
2. We will invite you to attend any meetings with our personnel and other Happy Tax®
franchisees if and when these meetings occur. (Franchise Agreement Section 6.4)
Post-Opening Optional Assistance:
1. We may provide periodic guidance regarding the operation the Franchised
Business. (Franchise Agreement Section 6.4)
2. We may provide you leads from our website. (Franchise Agreement Section 6.4)
Advertising Fund:
We may institute, maintain and administer a separate fund for advertising, marketing,
promotional or public relations programs and for using Social Media Platforms as we may deem
necessary or appropriate to enhance, promote and protect the goodwill and public image of the
System (“Advertising Fund”). We will direct all such programs with sole discretion over all
operational and advertising decisions, including: (1) the creative concepts, materials,
endorsements and media used in connection with such programs (which may include television,
radio, print and Internet advertising, maintenance of a website as well as the use of Social Media
Platforms, as funds permit); (2) the source of the advertising, marketing, promotional or public
17
relations efforts (which may be in-house or through an outside agency located locally, regionally
or nationally); (3) the placement and allocation of such programs (which will be local, regional or
national); and (4) the composition of all geographic territories and market areas for the
development and implementation of such programs.
Generally, the Advertising Fund may be used in any of the following ways: (1) to create
and implement Advertising Materials and Social Media Materials, in any form that we may
determine; (2) to assist franchisees in developing Advertising Materials and Social Media
Materials and using Social Media Platforms; (3) in connection with radio, television, print, Internet
advertising, other forms of production and media as well as Social Media Platforms; (4) to review
any and all locally produced Advertising Materials and Social Media Materials; (5) for website
design and maintenance and to conduct search engine optimization; (6) to use Social Media
Platforms and develop Social Media Materials; (7) to conduct market research; (8) to undertake
sponsorships; (9) to pay related retainers; (10) to conduct customer surveys, customer interviews
and to retain mystery shoppers to conduct inspections of the System as well as competitors; (11)
to retain celebrities for endorsement purposes; (12) to pay for membership dues to associations;
(13) to establish a third-party facility to customize Advertising Materials and Social Media
Materials; and (14) to reimburse us and/or our affiliates for salaries, overhead and administrative
expenses relating to administration of the Advertising Fund.
The amount of the Advertising Fund Contribution shall equal $1,000 for the first Tax
Season in which Franchisee contributes to the Advertising Fund and two percent (2%) of Gross
Revenues for Franchisee’s previous Tax Season for each Tax Season thereafter (“Advertising Fund
Contribution”). Franchisor may at any time reduce or increase Franchisee’s Advertising Fund
Contribution rate. We are not required to spend any amount on advertising, marketing or
promotional programs or Social Media Platforms in any geographic area or to spend pro rata with
your individual Advertising Fund Contribution. The unused portion of the Advertising Fund in
any Tax Season or earnings on sales of Advertising Materials and Social Media Materials will be
applied to the following Tax Season’s Advertising Fund. There is no requirement for the
Advertising Fund to be independently audited. Once established, we will make an unaudited
annual account available to you once a year if you send us a written request within 120 days after
our fiscal year ends.
We and any company and/or affiliate owned locations are not required to contribute to the
Advertising Fund. If we or company and/or affiliate owned locations decide to contribute or loan
funds to the Advertising Fund, those contributions will be made on any terms we deem reasonable.
If we or company and/or affiliated owned locations make contributions, we may decide to reduce
these contributions are cease contributions altogether.
We may discontinue the Advertising Fund but we will not do so until all the monies in the
Advertising Fund have been expended. We have no fiduciary duty with respect to Advertising
Fund proceeds. We are administering the Advertising Fund as an accommodation to franchisees
and the System only.
We have not established the Advertising Fund yet. Thus, no funds have been contributed
toward an Advertising Fund. We will not use any monies from the Advertising Fund to principally
solicit new franchise sales. However, we may include language in all advertising indicating that
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franchises are available, with our contact information.
Local Marketing and Advertising:
For all franchisees during your first Tax Season, we require you to spend $2,000 on Local
Advertising expenditures. For each subsequent Tax Season, we require you to spend a minimum
of $1,000 during each Tax Season on Local Advertising expenditures. We do not mandate that you
spend a particular amount in any given month either before or during the Tax Season. Upon
request, you must submit an itemized report documenting proof of expenditures to us, in a form
we may require. Upon discovery of your non-compliance with your Local Advertising
requirements, we may require you to spend the difference between the amount required and the
amount you actually spent on Local Advertising, as we require, which may include contributing
to the Advertising Fund, if established. All marketing will be conducted as set forth in an approved
annual marketing plan. We may increase the minimum Local Advertising requirement if we
determine that to be in the best interests of the System. Costs and expenditures you incur for any
of the following do not count towards your required Local Advertising expenditures: (1) salaries
and expenses of your employees, including salaries or expenses for attendance at advertising
meetings or activities; (2) expenditures relating to the use of Social Media Platforms and/or the
development and/or use of Social Media Materials; and (3) seminar and educational costs and
expenses of your employees.
All Advertising Materials, Social Media Materials, use of Social Medial Platforms and
other items we designate must: (i) bear the Principal Trademarks in the form, color, location and
manner we prescribe; (ii) must be conducted in a dignified manner; and (iii) must conform to the
standards and requirements that we state in the Confidential Operating Manual or otherwise
approved by us in writing.
You must obtain our prior approval before: (i) you use any Advertising Materials or Social
Media Materials if we have not prepared or approved such Advertising Materials or Social Media
Materials; and (ii) you initially use any Social Media Platform. You must submit all unapproved
Advertising Materials, Social Media Materials and requests to use Social Media Platforms to us in
writing, normally via email. We will approve or disapprove your request within ten (10) days after
submission. If you do not receive written approval within ten (10) days after submission of your
request, your request is deemed denied. We may withhold our approval for any reason or no reason
at all. We may revoke our prior approval for any reason or no reason at all. You must promptly
discontinue use of any Advertising Material, Social Media Material and/or Social Media Platform,
whether or not previously approved, on notice from us. We may require you to stop, revise, delete
or remove any objectionable Social Media Material from any Social Media Platform, as
determined by us including any previously approved Social Media Material. We may access your
Social Media Platform accounts to stop, revise, delete or remove any objectionable Social Media
Material from any Social Media Platform, as determined by us, including any previously approved
Social Media Material. You are required to give us your usernames, passwords, account
information and all other information we may require to access your Social Media Platforms
accounts upon your initial use of a Social Media Platform and immediately upon our request.
You may request permission to use a Social Media Platform on an ongoing basis on a
specified theme or topic related to the Franchised Business. In the event we grant such consent,
19
individual entries of Social Media Material on that pre-approved topic would not require our pre-
approval unless we withdraw our consent.
You will not employ any person to act as your representative in connection with local
promotion of the Franchised Business in any public media without our prior written approval.
Advertising Cooperative:
We do not require you to participate in a local or regional advertising cooperative.
Advertising Council:
There is currently no advertising council composed of franchisees that advises us on
advertising policies.
Opening and Site Selection:
Initially, we will not normally provide you with any site selection assistance as you will
work from your home.
If we later approve you to work from a Retail Location, we will work with you to mutually
agree upon a Territory prior to entering into a Retail Rider. If we do not agree upon a Territory,
we will not enter into a Retail Rider. You must select the site within the Territory for your Retail
Location, subject to our consent. We do not generally own the premises and lease it to you. You
must use our site selection criteria in locating and proposing a site to us. We will then review your
submission and reply to you within 30 calendar days on whether your proposed site is approved
or not. We consider the following factors in determining whether to approve a site or not:
economic conditions of the general area, demographic data, visibility, access, size, parking, and
other factors we deem pertinent. If you and we can not agree on a site, you can continue to look
for a site or, if you fail to open by your Commencement Date, we can terminate your Franchise
Agreement.
It typically requires 60-90 days between signing a Retail Rider and opening a Retail
Location. Factors that affect this time period include: the time to locate an approved site and enter
into a lease, obtaining any needed permits or licenses, performing any needed repairs or
renovations to the premises, and installing furniture, equipment, and signage.
Computer Hardware and Software:
We provide to you one current generation iPad or similar tablet loaded with our proprietary
software, after you have paid at least 50% of the initial franchise fee and you and we have signed the
Franchise Agreement.
You must use our proprietary back office software application that features our platform
for internal communications between franchisees and our team of tax professionals, allow for the
secure delivery of income tax information between franchisees and our tax professionals, and
integrated video for web chats. We may charge a fee for your access to the proprietary back office
20
software application. If charged, the fee will be $650 per Tax Season. We may increase this fee by
10% each Tax Season.
We may direct the source from which you will obtain your computer hardware and
software, including administrative software and accounting software for your computer and
systems. We may change that requirement at any time.
You are not currently required to obtain a separate computerized point of sale register
system.
You are not required to purchase any other computer systems or software to begin
operating the Franchised Business.
If you eventually sign a Retail Rider and later operate the Franchised Business from a
storefront (“Retail Location”), you must then purchase additional iPads or similar tablets (each
being the most current generation), printers, and other computer hardware and software. The cost
of purchasing the required minimum number of iPads or similar tablets, printers and other
computer hardware and software is between $10,000 and $20,000. Each iPad or similar tablet
must have Internet capability and you must give us access to your records via the Internet. You
will be required to upgrade your iPads or other tablets every three years to satisfy our then current
standards and requirements. We do not require you to enter into any other maintenance, updating,
upgrading or support contracts. If you choose to purchase maintenance service, the cost of that
service may range between $1,000 and $3,000 per year.
You must maintain, upgrade and update hardware, software and Internet service providers
or other communications systems, as we determine without limitation, at your expense. We may
reasonably specify computer, information and communications systems and to require you to
utilize specified Internet service providers or communications software. You are solely responsible
for protecting yourself from viruses, computer hackers and other computer-related problems and
you may not sue us for any harm caused by such computer-related problems.
We reserve the right to have independent access to the information that will be generated
or stored in your computer system. Such information will be in the nature of customer tax
information and your business operational information. There are no contractual limitations on
our right to access this information.
Confidential Operating Manual:
Exhibit D contains the Table of Contents to our Confidential Operating Manual along with
the page count per chapter. The Manual contains 96 pages.
21
Initial Training Program:
TRAINING PROGRAM
Subject Hours of Classroom
Training
Hours of On the
Job Training
Location
Foundation:
Software and Core
Values
3 2 Webinar
Policies: Rules and
Regulations
2 2 Webinar
Customer Service 2 2 Webinar
Procedures 3 1 Webinar
Management 2 1 Webinar
Marketing 18 2 Webinar
Totals 30 10
We make the initial training program available as often as is needed. You must complete
each mandatory webinar within 30 days of becoming a franchisee
Training will be under the supervision of Mario Costanz or Kermit Uregar. Training may
also be conducted by other qualified guest lecturers for specific training courses.
Mr. Costanz has served as a Director of Operations for a tax preparation business from
2009 to 2014. He has seventeen years of experience as an entrepreneur, twelve years of experience
in the tax business, twelve years of experience with each subject taught in the training program
and has been with the Franchisor since its inception in 2014.
Mr. Uregar has over three years of experience in managing the operations of a tax
preparation business. He has over three years’ experience with each subject taught in the training
program and he has been with the Franchisor since April 2015.
The materials used for either training program may include the Confidential Operating
Manual, checklists, quizzes, other handouts, software applications, product samples and/or hands-
on materials.
There is no charge to attend initial training, but if you attend our optional live 1-day hands
on training with our executives, you must pay for any travel, transportation, lodging, and other
expense you incur to attend.
You (or your Operating Principal if you are a legal entity) must attend and successfully
22
complete initial training to our satisfaction.
If you later enter into a Retail Rider with us, we require you to complete to our satisfaction
the following additional training.
ADDITIONAL TRAINING IF YOU ENTER INTO A RETAIL RIDER
Subject Hours of Classroom
Training
Hours of On the
Job Training
Location
Recruiting, Hiring
and Training
Employees
10 5 Webinar
Site Selection 5 2 Webinar
Office Setup 3 2 Webinar
Employee
Management
Systems
2 1 Webinar
Totals 20 10
We reserve the right to require further additional training or refresher courses.
ITEM 12. TERRITORY
Franchisees who operate a Franchised Business receive the right to operate the Franchised
Business out of their home.
Franchisees who operate a Retail Location pursuant to a Retail Rider, will receive a radius
based territory of approximately 50,000 in population. We use population data from the U.S.
Census Bureau or another source we deem reliable to determine population data.
A franchisee who operates a Franchised Business may relocate the Franchised Business if
s/he moves his/her residence.
A franchisee who operates a Retail Location may not relocate the Retail Location without
our approval. We consider the following factors in approving your relocation: if you are in
compliance with the Franchise Agreement, you have paid all monies to us and our affiliates, the
proposed location meets our site selection criteria and you comply with our lease requirements.
We do not grant you options, rights of first refusal, or similar rights to acquire additional
franchises.
Franchisees will not receive a protected territory. You may face competition from other
franchisees, from outlets that we own, or from other channels of distribution or competitive brands
that we control.
23
As to franchisees who operate a Retail Location, during the term of the Retail Rider, we
will not establish either a company-owned or franchised storefront retail outlet selling the same or
similar goods or services under the same or similar trademarks as the Principal Trademarks in your
Territory; however, we or our affiliates or franchisees may operate non-storefront outlets selling
the same or similar goods or services under the same or similar trademarks as the Principal
Trademarks in your Territory.
All franchisees are permitted to advertise, solicit sales, and accept business from customers
located anywhere, except franchisees under a Retail Rider may not advertise or solicit sales in
another territory under a Retail Rider without our prior written permission. All franchisees may
perform work for customers anywhere. Franchisees must advertise and solicit sales using channels
of distribution as permitted in the Manual. Presently, franchisees may not advertise through the
Internet, catalogs and telemarketing. We, our company-owned stores, affiliates and our franchisees
may accept business from customers residing anywhere.
We, our company-owned stores, our affiliates may:
(a) Sell products and services under any trade name, trademark or service mark
(including the Principal Trademarks) anywhere through any alternative channel of distribution,
including but not limited to the Internet;
(b) Develop, implement and participate in a co-branding program located
anywhere or regardless of whether any co-branded business is franchised or company-owned and
regardless of which trade names, trademarks, or service marks are used in connection with the co-
branded business, including but not limited to the Principal Trademarks.
We are not required to pay you for our solicitation or acceptance of orders. We also reserve
for ourselves and our affiliates all rights not exclusively granted to you.
We and/or our affiliates may establish a business that does not utilize the Principal
Trademarks anywhere, including within your Territory, if applicable. Neither we nor our affiliate
currently operate, franchise or have plans to operate or franchise a business under a different
trademark that sells or will sell goods or services similar to those that you will offer.
Although we do not have any current plans to do so, we may acquire a competing income
tax preparation business, whether franchised or not. We may operate the competing income tax
business, regardless of where it is located. We are not required to offer you any right to acquire a
competing income tax preparation business
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ITEM 13. TRADEMARKS
We grant you the right to operate your Franchised Business under the name “Happy Tax®”
and to use all of the Principal Trademarks identified below in the operation of your Franchised
Business.
Trademark Principal or
Supplemental
Register of the
USPTO
Registration/
Serial Number
Registration
Date
Principal
4715771
April 7, 2015
Principal 86575560 Pending
Principal 3799154 June 8, 2010
All required affidavits for the Principal Trademarks have been filed. We intend to file
renewal applications for the Principal Trademarks.
There are currently no effective determinations of the USPTO, the Trademark Trial and
Appeal Board, or any state trademark administrator or any court; or any pending infringement,
opposition, or cancellation proceeding in which we unsuccessfully sought to prevent registration
of a trademark in order to protect a trademark licensed by the franchisor. There are no pending
material federal or state court litigation regarding our use or ownership rights in a trademark.
Happy Tax Brands, LLC currently owns the Principal Trademarks and licenses to us the
rights to use the Principal Trademarks and to sublicense the Principal Trademarks to our
franchisees. The license is effective April 7 2015, is of a perpetual duration and there are no
limitations as to our use of the Principal Trademarks.
Happy Tax initiated a trademark infringement action on February 18, 2016 against Wal-
Mart Stores, Inc. (Civil Action No. 7:16-cv-01260—CS) in the Southern District of New York.
The action was amicably resolved via a confidential agreement. The agreement is perpetual in
25
duration and may not be cancelled or modified without the mutual agreement of Happy Tax and
Wal-Mart Stores, Inc. The agreement preserves Happy Tax’s ownership, use, and licensing of its
trademarks in connection with tax preparation services and also preserves its potential or existing
franchisees’ use of its trademarks for tax preparation services. The agreement also preserves
Happy Tax’s right to enforce its trademarks in connection with retail use against third-parties.
There are no other currently effective agreements that significantly limit our right to use or
license the use of our Proprietary Marks.
If you learn of any claim against you for alleged infringement, unfair competition, or
similar claims against you arising out of your use of the Principal Marks you must promptly notify
us. We are not obligated but intend to protect your right to use the Principal Marks.
You are obligated to notify us of the use of, or claims of rights to, a trademark identical to
or confusingly similar to a Principal Trademark licensed to you. We are not required to take
affirmative action when notified of these uses or claims.
We have the sole right to control any administrative proceedings or litigation involving a
Principal Trademark licensed by us to you. The Franchise Agreement does not require us to
participate in your defense or indemnify you for expenses or damages if you are a party to an
administrative or judicial proceeding involving a Principal Trademark licensed by us to you or if
the proceeding is resolved unfavorably to you. We may modify or change the Principal Trademarks
and compel you to accept and adopt such modifications or changes at your expense. We will not
reimburse you for any of your expenses in modifying or changing your use of the Principal
Trademarks.
We do not know of any superior prior rights or infringing uses that could materially affect
your use of our Marks anywhere.
ITEM 14. PATENTS, COPYRIGHTS AND PROPRIETARY
INFORMATION
Our Chief Executive Officer, Mario Costanz, has filed the non-provisional patent
application listed below and licenses the rights to use the system evidenced in the non-provisional
patent application and to sublicense the system to our franchisees.
1. Title of Patent Application: System and Method for Efficient Processing of Tax
Preparation Services by Centralized and Distributed Tax Resources
Application Number: 62/145,165
Filing Date: April 9, 2015
Type of Patent: Process
The above referenced non-provisional patent application relates to a system and method
for the efficient collection of tax information by franchisees for preparation by our CPAs or other
tax professionals. During the term of the Franchise Agreement, and subject to and in accordance
with the terms of that agreement, you are granted the right to use the patent pending system.
26
There are currently no effective material determinations of the USPTO regarding the non-
provisional patent application. There is no pending material federal or state court litigation
regarding our use or ownership rights in the non-provisional patent application.
There is no agreement which limits the use of the non-provisional patent application. We
know of no patent that could materially affect franchisees.
We claim copyright protection covering various materials used in our business and the
development and operation of your Franchised Business including the Confidential Operating
Manual, Advertising Materials, Social Media Materials and similar materials. We have not
registered these materials with the U.S. Registrar of Copyrights but we are not required to do so.
There are no currently effective determinations of the U.S. Copyright Office or any court or any
pending litigation or other proceedings, regarding any copyrighted materials. No agreement limits
our rights to use or allow franchisees to use the copyrighted materials. We know of no superior
rights or infringing uses that could materially affect your use of the copyrighted materials.
The Franchise Agreement requires you to notify us of the use of or claims of rights to the
copyrighted materials or patent pending system. We will take affirmative action as we deem
necessary when notified of these uses or claims. We will remain in control of any such proceeding.
We will indemnify and hold you harmless for any expense associated with a claim made against
you relating to the use of the copyrighted materials or patent pending system by you, unless the
claim is based upon your misuse of the copyrighted materials or the patent pending system. We
may modify or change the copyrighted materials or the patent pending system and compel you to
accept and adopt such modifications or changes at your expense.
If you or your Owners develop any new concept, process, product or improvement in
operating or promoting the Franchised Business, you must promptly notify us and provide us with
any information, samples or instructions we request without charge. Such new concept, process,
product or improvement will become our exclusive property if we approve it for use in the System.
We may then freely distribute such concept, process, product or improvement to other franchisees
without compensation to you.
ITEM 15. OBLIGATION TO PARTICIPATE IN THE ACTUAL
OPERATION OF THE FRANCHISED BUSINESS
You (or your Operating Principal if you are a legal entity) must personally supervise the
day-to-day activities of the Franchised Business. You (or your Operating Principal if you are a
legal entity) must complete our training program.
For franchisees who operate a Franchised Business from a Retail Location, we may permit
you (or your Operating Principal) to not personally supervise the operations of the Franchised
Business provided that you employ a full-time manager who must be responsible on an exclusive
basis for the on-premises supervision of the daily operations of the Franchised Business. Any
person serving in the role of manager must successfully complete our training program. The
manager must be reasonably qualified to run an operation of this nature, as determined by us, but
need not be an Owner of the Franchisee. If no manager is appointed, then you or your Operating
Principal must supervise the day-to-day activities of the Franchised Business.
27
If you are a legal entity, we require that you appoint an Operating Principal who will serve
as principal contact with us. The Operating Principal will be the only individual that we will deal
directly with and whose instructions or directions we will address. You may not replace the
Operating Principal without our prior written consent.
If you are a legal entity, each shareholder, partner or member must personally guarantee
your obligations under the Franchise Agreement, as applicable, and also agree to be personally
bound by, and personally liable for any breach of the Franchise Agreement, as applicable.
Before you grant access to the Confidential Operating Manual or any other confidential
information, you must have each employee or independent contractor sign a confidentiality
agreement (Exhibit C5) in which he/she agrees to the confidentiality of the information, agrees not
to use any information for his/her own benefit and agrees not to compete.
ITEM 16. RESTRICTIONS ON WHAT THE FRANCHISEE MAY
SELL
You must offer and sell all products and services that we periodically require as described
in this disclosure document, in the Franchise Agreement or the Manual. You may not offer and
sell any products or services that we have not specifically authorized. We may periodically
eliminate certain products or services, or add additional products or services, in either case in our
sole discretion and without the necessity of further notice to you. There are no limits on our right
to make changes to the authorized goods and services sold by franchisees.
You will not engage in any activities that divert any business or customers to non-affiliated
locations, including those owned by you. For the duration of your franchise agreement and for
two years thereafter, you may not offer competitive services in the states and territories of the
United States unless you receive our prior written consent. You will not use your Franchised
Business for the sale or promotion of any items that promote illegal activity or any other product
or service that we decide in our sole discretion may offend an appreciable segment of the public
or may adversely affect the public’s acceptance, favorable reputation or extensive goodwill
associated with Happy Tax® name, brands and Principal Trademarks.
28
ITEM 17. RENEWAL, TERMINATION, TRANSFER AND DISPUTE
RESOLUTION
THE FRANCHISE RELATIONSHIP
This table lists certain important provisions of the Franchise Agreement and related
agreements. You should read these provisions in the agreements attached to this disclosure
document.
Provision
Section in
Franchise
or Other
Agreement
Summary
a. Length of the
franchise term
Section 3;
Ex. C3,
Section 3
Three (3) Tax Seasons for a non-Retail Location; five (5)
Tax Seasons for a Retail Location.
b. Renewal or
extension of the
term
Section 3;
Ex. C3,
Section 3
The franchise may be renewed for additional successive
terms.
c. Requirements
for Franchisee to
renew or extend
Section 3;
Ex. C3,
Section 3
(i) Franchisor offers franchises in the geographic area in
which the Franchised Business is located; (ii) Franchisee is
in compliance with this Agreement; (iii) Franchisee
executes Franchisor’s then-current franchise agreement,
which may be materially different from this Agreement,
including but not limited to the fee structure and other
material terms; (iv) Franchisee and its Owners execute a
General Release; (iv) Franchisee notifies Franchisor of its
desire to renew this franchise not more than nine (9) months
and not less than six (6) months before this Agreement
expires;
If you have signed the Retail Rider, you must also comply
with any remodeling requirements that Franchisor may
specify in the Manual.
d. Termination by
Franchisee Section 14 You may terminate the Franchise Agreement by engaging
in an approved transfer and on any grounds available at law.
e. Termination by
Franchisor without
cause
Not
applicable We will not terminate without cause.
f. Termination by
Franchisor with
cause
Section 14 We may terminate for cause.
g. “Cause”
defined –curable Section
Any breach of the Franchise Agreement or Operations
Manual which does not allow for immediate termination, is
29
Provision
Section in
Franchise
or Other
Agreement
Summary
defaults 14.3 grounds to terminate upon written notice and a 30 day
opportunity to cure.
h. “Cause”
defined – non-
curable defaults
Section
14.2
(i) Failure to pass initial training; (ii) Failure to timely open
for business; (iii) Insolvency; (iv) Abandonment; (v) Three
or more negative complaints or reviews for bad service
within a thirty (30) day period; (vi) Material
misrepresentation or omission in acquiring the franchise or
operating the Franchised Business; (vii) Underreporting
Gross Revenues; (viii) Criminal conviction; (ix) Dishonest
or unethical conduct; (x) Repeated breaches of the
Franchise Agreement or Operations Manual.
i. Franchisee’s
obligations on
termination/
nonrenewal
Section
14.4; Ex.
C3, Section
9.1(d)
Obligations include: (i) cease operating; (ii) pay monies
owed; (iii) discontinue use of our Principal Trademarks;
(iv) cancel fictitious names; (v) cease use of and return our
Confidential Information; comply with post termination
non-compete duties; (vi) provide customer and employee
information; and if you have signed a Retail Rider, do not
allow another tax service to occupy your former premises
and assist us, if we request, in obtaining possession of your
premises.
j. Assignment of
contract by
Franchisor
Section
10.1
We may assign the Franchise Agreement to an assignee
who agrees to remain bound by its terms.
k. “Transfer” by
Franchisee defined Section 10
Includes the sale, assignment, gift, conveyance, pledge,
mortgage or other encumbrance of any interest in the
Franchise Agreement.
l. Franchisor
approval of
transfer by
Franchisee
Section
10.2
You must obtain our prior written consent before
transferring any interest in the franchise.
m. Conditions for
Franchisor
approval of
transfer
Section
10.3
Conditions include: (i) notifying us of the proposed transfer
and providing us with the terms of the proposed transfer;
(ii) transferee must possess sufficient business experience
and financial resources to operate the Franchised Business;
(iii) you must be in compliance with the Franchise
Agreement; (iv) transferee must not be a competitor; (v)
transferee must satisfactorily complete our initial training;
(vi) transferee shall sign our then current Franchise
Agreement; (vii) you or transferee pays our transfer fee;
(viii) you sign a General Release; (ix) You provide us any
purchase documents we may request.
30
Provision
Section in
Franchise
or Other
Agreement
Summary
n. Franchisor’s
right of first refusal
to acquire
Franchisee’s
business
Section 11
Within thirty (30) days after notice, we have the option to
purchase the transferred interest on the same terms and
conditions offered by a third-party except for transfers
among current owners of franchisee or to a legal entity
wholly owned by you.
o. Franchisor’s
option to purchase
Franchisee’s
business
Section 14
Other than assets on termination, nonrenewal. or right of
first refusal, we have no right or obligation to purchase your
business.
p. Death or
disability of
Franchisee
Section 10
Upon death or permanent disability of you (or your
Operating Principal if you are an entity) a distributee must
be approved by us or interests must be transferred to
someone approved by us within six (6) months after death
or notice of permanent disability.
q. Non-
competition
covenants during
the term of the
franchise
Section 9
and Exhibit
C6
You and each Guarantor shall not directly or indirectly: (i)
divert or attempt to divert any actual or potential business
or customer of Happy Tax® to any Competitor; (ii) take any
action injurious or prejudicial to the goodwill associated
with the Principal Trademarks and the System; (iii)
Employ or seek to employ any person who is then
employed or who was employed within the immediately
preceding twenty-four (24) months, by Franchisor or any
Happy Tax® franchisee without obtaining the employer's
prior written permission; or (iv) Offer income tax
preparation services, for a fee or charge, except through the
Franchised Business.
r. Non-
competition
covenants after the
franchise is
terminated or
expires
Section 9;
Exhibit C6
(Section
9.1(d))
You and your Owners are prohibited for two (2) years from
the latter of the termination or expiration of the Franchise
Agreement or transfer of the Franchised Business from
directly or indirectly, offer income tax preparation services,
for a fee or charge: (i) at the location of the Franchised
business; (ii) within ten (10) miles of the location of the
Franchised Business; (iii) within ten (10) miles of the
location of any other Happy Tax® location owned or in
operation by Franchisor, its affiliates or franchisees of
Franchisor or its affiliate.
If you have signed the Retail Rider, you also agree not to,
directly or indirectly, sell, assign, lease or transfer the
Franchised Business location (“Premises”) to any person or
entity that franchisee knows or has reason to know intends
31
Provision
Section in
Franchise
or Other
Agreement
Summary
to offer, operate, or allow another person or entity to offer
income tax preparation at the Franchised Business location,
and must cooperate in transferring possession of the
Premises to us or our designee if we request.
s. Modification of
the Franchise
Agreement
Sections 6,
7 and 17
You must comply with the Confidential Operating Manual
as amended from time to time. The Franchise Agreement
may not be modified unless mutually agreed to in writing.
t. Integration/
merger clause Section 17
Only the terms in the franchise agreement are binding
(subject to federal or state law). Any representations or
promises made outside the disclosure document and
franchise agreement may not be enforceable. No claim in
any franchise agreement(s) is intended to disclaim the
express representations made in this Franchise Disclosure
Document.
u. Dispute
resolution by
arbitration or
mediation
Section 20,
Exhibit C6
Arbitration only applies as may be provided in State
Addenda. You must first submit any claims against us to
mediation before filing suit.
v. Choice of
forum Section 20 Litigation must be in Miami, Florida, subject to state law.
w. Choice of law Section 20 Florida law governs, subject to state law.
ITEM 18. PUBLIC FIGURES
We do not use any public figures to promote our System.
ITEM 19. FINANCIAL PERFORMANCE REPRESENTATIONS
The FTC’s Franchise Rule permits a franchisor to provide information about the actual or
potential financial performance of its franchised and/or franchisor-owned outlets, if there is a
reasonable basis for the information and if the information is included in the disclosure document.
Financial performance information that differs from that included in Item 19 may be given only
if: (1) a franchisor provides the actual records of an existing outlet you are considering buying; or
(2) a franchisor supplements the information provided in this Item 19, for example, by providing
information about possible performance at a particular location or under particular circumstances.
The table below shows the sales price, preparation fee, royalty, and net income before
expenses of income tax services at our three price points while you are in the 20% royalty range:
32
Tax Return
Complexity (Note
1)
Sales Price
(Note 2)
Preparation Fee
(Note 3)
Royalty
(Note 4)
Net Income
(Note 5)
Simple $200 $25 $40 $135
Mid-Level $300 $35 $60 $205
Complex $500 $55 $100 $345
The table below shows the sales price, preparation fee, royalty, and net income before
expenses of income tax services at our three price points while you are in the 15% royalty range:
Tax Return
Complexity (Note
1)
Sales Price
(Note 2)
Preparation Fee
(Note 3)
Royalty
(Note 4)
Net Income
(Note 5)
Simple $200 $25 $30 $145
Mid-Level $300 $35 $60 $220
Complex $500 $55 $100 $370
The table below shows the sales price, preparation fee, royalty, and net income before
expenses of income tax services at our three price points while you are in the 10% royalty range:
Tax Return
Complexity (Note
1)
Sales Price
(Note 2)
Preparation Fee
(Note 3)
Royalty
(Note 4)
Net Income
(Note 5)
Simple $200 $25 $20 $155
Mid-Level $300 $35 $30 $235
Complex $500 $55 $50 $395
Notes Applicable to all 3 Tables Above:
Note 1: We price the preparation of income tax returns based on the complexity of the
return, which relates to which forms and schedules were used to prepare the return. We state the
criteria for simple, mid-level, and complex income tax returns in our Operations Manual.
Note 2: We recommend pricing of $200, $300, and $500 respectively for simple, mid-
level, and complex income tax returns.
Note 3: As we disclose in Item 6, we charge preparation fees of $25, $35, and $55 for
simple, mid-level, and complex tax returns, respectively, for our tax professionals to prepare
income tax returns that you upload into our system.
Note 4: We base the royalty here on our highest rate of 20%. However, as we disclose in
Item 6, our royalty rate decreases to 15% for tax returns 101-500 that you prepare in a year and to
10% for tax returns in excess of 500 in a year.
33
Note 5: Net Income states your net income after the preparation fee and royalties. You
would still have other expenses in operating this franchise.
These figures are only estimates of what we think you may earn. There is no assurance
you will do as well. If you rely upon our figures, you must accept the risk of not doing as well.
We will make available to you written substantiation of the financial performance
representation upon reasonable request.
Other than the preceding financial performance representation, Happy Tax Franchising,
LLC does not make any financial performance representations. We also do not authorize our
employees or representatives to make any such representations either orally or in writing. If you
are purchasing an existing outlet, however, we may provide you with the actual records of that
outlet. If you receive any other financial performance information or projections of your future
income, you should report it to the franchisor's management by contacting Mario Costanz, 350
Lincoln Road, Miami Beach, Florida 33139, 844-426-1040, the Federal Trade Commission and
the appropriate state regulatory agencies.
34
ITEM 20. OUTLETS AND FRANCHISEE INFORMATION
Table No. 1
Systemwide Outlet Summary
For Fiscal Years ending April 30, 2014 to April 30, 2016
Outlet Type Year Outlets at the
Start of Year
Outlets at the
End of Year
Net Change
Franchised 2014 0 0 0
2015 0 0 0
2016 0 15 15
Company
Owned
2014 0 0 0
2015 0 0 0
2016 0 1 1
Total Outlets 2014 0 0 0
2015 0 0 0
2016 0 16 16
Table No. 2
Transfers of Outlets From Franchisees to New Owners (Other than Franchisor)
For Fiscal Years ending April 30, 2014 to April 30, 2016
State Year Number of Transfers
All States 2014 0
2015 0
2016 0
Total 2014 0
2015 0
2016 0
35
Table No. 3
Status of Franchise Outlets
For Fiscal Years ending April 30, 2014 to April 30, 2016
State Year Outlets
at Start
of Year
Outlets
Opened
Termin
ations
Non-
Renewals
Reacquired
by
Franchisor
Ceased
Operations-
Other
Reasons
Outlets at
End of
Year
Arizona 2014 0 0 0 0 0 0 0
2015 0 0 0 0 0 0 0
2016 0 1 0 0 0 0 1
California 2014 0 0 0 0 0 0 0
2015 0 0 0 0 0 0 0
2016 0 2 0 0 0 0 2
Florida 2014 0 0 0 0 0 0 0
2015 0 0 0 0 0 0 0
2016 0 2 0 0 0 0 2
Georgia 2014 0 0 0 0 0 0 0
2015 0 0 0 0 0 0 0
2016 0 1 0 0 0 0 1
Illinois 2014 0 0 0 0 0 0 0
2015 0 0 0 0 0 0 0
2016 0 1 0 0 0 0 1
Nevada 2014 0 0 0 0 0 0 0
2015 0 0 0 0 0 0 0
2016 0 2 0 0 0 0 2
New York 2014 0 0 0 0 0 0 0
2015 0 0 0 0 0 0 0
2016 0 2 0 0 0 0 2
Ohio 2014 0 0 0 0 0 0 0
2015 0 0 0 0 0 0 0
2016 0 1 0 0 0 0 1
South
Carolina
2014 0 0 0 0 0 0 0
2015 0 0 0 0 0 0 0
2016 0 1 0 0 0 0 1
Texas 2014 0 0 0 0 0 0 0
2015 0 0 0 0 0 0 0
2016 0 2 0 0 0 0 2
Total 2014 0 0 0 0 0 0 0
2015 0 0 0 0 0 0 0
2016 0 15 0 0 0 0 15
36
Table No. 4
Status of Company-Owned Outlets
For Fiscal Years ending April 30, 2014 to April 30, 2016
State Year Outlets
at Start
of Year
Outlets
Opened
Outlets Re-
acquired from
Franchisees
Outlets
Closed
Outlets Sold
to
Franchisees
Outlets
at End
of Year
New
York
2014 0 0 0 0 0 0
2015 0 0 0 0 0 0
2016 0 1 0 0 0 1
Total 2014 0 0 0 0 0 0
2015 0 0 0 0 0 0
2016 0 1 0 0 0 1
Table No. 5
Projected Openings as of April 30, 2016
State
Franchise Agreements
Signed But Outlet Not
Open
Projected New
Franchised
Outlets in the
Next Fiscal Year
Projected New
Company-Owned
Outlets in the
Next Fiscal Year
Alabama 1 4 0
Alaska 0 4 0
Arizona 1 4 0
Arkansas 0 4 0
California 0 4 0
Colorado 0 4 0
Connecticut 0 4 0
Delaware 0 4 0
D. of Columbia 0 4 0
Florida 0 4 0
Georgia 1 4 0
Hawaii 0 4 0
Idaho 0 4 0
Illinois 0 4 0
Indiana 0 4 0
Iowa 0 4 0
Kansas 0 4 0
Kentucky 0 4 0
Louisiana 1 4 0
Maine 0 4 0
Maryland 0 4 0
37
Massachusetts 0 4 0
Michigan 0 4 0
Minnesota 0 4 0
Mississippi 0 4 0
Missouri 1 4 0
Montana 0 4 0
Nebraska 0 4 0
Nevada 1 4 0
New Hampshire 0 4 0
New Jersey 1 4 0
New Mexico 0 4 0
New York 0 4 0
North Carolina 0 4 0
North Dakota 0 4 0
Ohio 0 4 0
Oklahoma 0 4 0
Oregon 0 4 0
Pennsylvania 0 4 0
Rhode Island 0 4 0
South Carolina 0 4 0
South Dakota 0 4 0
Tennessee 0 4 0
Texas 3 4 0
Utah 0 4 0
Vermont 0 4 0
Virginia 0 4 0
Washington 0 4 0
West Virginia 0 4 0
Wisconsin 0 4 0
Wyoming 0 4 0
TOTALS 10 200 0
Exhibit E contains a list of all the names of all current and former franchisees and the
addresses and telephone numbers of each Franchised Businesses.
Exhibit E also contains a list of the names, city and state, and current business telephone
number, or if unknown, the last known home telephone number of every franchisee who had an
outlet terminated, canceled, not renewed, or otherwise voluntarily or involuntarily ceased to do
business under the franchise agreement during our most recently completed fiscal year or who
have not communicated with us within 10 weeks of the Issuance Date of this Disclosure Document.
If you buy a Franchised Businesses, your contact information may be disclosed to other buyers
when you leave this System.
During the last three fiscal years, no current or former franchisees have signed
confidentiality clauses that restrict them from discussing with you their experiences as a franchisee
38
in our franchise system.
We do not know of any trademark-specific franchisee organization associated with the
System.
ITEM 21. FINANCIAL STATEMENTS
Exhibit F contains our audited financial statements for our fiscal years ending April 30,
2016 and 2015.
The franchisor has not been in business for three years or more and cannot include all the
financial statements required by the Rule for its last three fiscal years.
ITEM 22. CONTRACTS
The following agreements are attached to this disclosure document:
Exhibit B Franchise Agreement
Exhibit C Exhibits to Franchise Agreement:
1. Principal Trademarks
2. ACH Authorization
3. Retail Rider
4. Telephone Number Assignment Agreement
5. Confidentiality, Non-Use and Non-Competition Agreement Form
6. State Addenda to The Franchise Agreement
Exhibit H General Release
ITEM 23. RECEIPTS
Exhibit K contains two copies of our Receipt.
1
EXHIBIT A
AGENTS FOR SERVICE OF PROCESS/STATE ADMINISTRATORS
State State Administrator Agent for Service of Process
California Department of Business
Oversight
Division of Corporations
320 West 4th Street
Los Angeles, CA 90013
1515 K Street, Suite 200,
Sacramento, CA 95814
1-866-275-2677
Department of Business
Oversight
Division of Corporations
320 West 4th Street
Los Angeles, CA 90013
Connecticut The Banking Commissioner
The Department of Banking,
Securities and Business
Investment Division
260 Constitution Plaza
Hartford, CT 06103-1800
Phone Number (860) 240-8299
The Banking Commissioner
The Department of Banking,
Securities and Business
Investment Division
260 Constitution Plaza
Hartford, CT 06103-1800
Phone Number (860) 240-8299
Hawaii Department of Commerce and
Consumer Affairs
Business Registration Division
Securities Compliance Branch
335 Merchant Street
P.O. Box 40
Honolulu, HI 96810
(808) 586-2722
Commissioner of Securities of the
State of Hawaii
Department of Commerce and
Consumer Affairs
Business Registration Division
Securities Compliance Branch
335 Merchant Street
P.O. Box 40
Honolulu, HI 96810
Illinois Office of Attorney General
Franchise Division
500 South Second Street
Springfield, IL 62706
(217) 782-4465
Illinois Attorney General
Office of Attorney General
Franchise Division
500 South Second Street
Springfield, IL 62706
Indiana Secretary of State, Securities
Division
302 West Washington Street,
Room E-111
Indianapolis, IN 46204
(317) 232-6681
Secretary of State, Securities
Division
West Washington Street, Room
E-111
Indianapolis, IN 46204
Kentucky Kentucky Attorney General
700 Capitol Avenue
Frankfort, Kentucky 40601-3449
(502) 696-5300
2
Maryland Office of the Attorney General
Securities Commissioner
200 St. Paul Place
Baltimore, MD 21202
(410) 576-6360
Maryland Securities
Commissioner
200 St. Paul Place
Baltimore, MD 21202-2020
Michigan Department of Attorney General
Consumer Protection Division –
Franchise Unit
525 W. Ottawa Street
G. Mennen Building
Lansing, MI 48913
(517) 373-7117
Department of Attorney General
525 W. Ottawa Street
G. Mennen Building
Lansing, MI 48913
Minnesota Minnesota Commissioner of
Commerce
85 7th Place East, Suite 500
St. Paul, MN 55101-2198
(651) 296-4026
Minnesota Commissioner of
Commerce
85 7th Place East, Suite 500
St. Paul, MN 55101-2198
Nebraska Nebraska Department of Banking
and Finance
1200 N Street-Suite 311
Post Office Box 95006
Lincoln, Nebraska 68509
(402) 471-3445
New York Office of the New York State
Attorney General
Investor Protection Bureau
Franchise Section
120 Broadway, 23rd Floor
New York, New York 10271-
0332
(212) 416-8236 Phone
Attention: New York Secretary of
State
New York Department of State
One Commerce Plaza
99 Washington Avenue, 6th Floor
Albany, New York 12231-0001
(518) 473-2492 Phone
North Dakota Securities Commissioner
North Dakota Securities
Department
600 East Boulevard Avenue
State Capital, Fifth Floor, Dept.
414
Bismarck, ND 58505-0510
(701) 328-4712
Securities Commissioner
North Dakota Securities
Department
600 East Boulevard Avenue
State Capital, Fifth Floor, Dept.
414
Bismarck, ND 58505-0510
Rhode Island Department of Business
Regulation
Securities Division
John O. Pastore Complex
1511 Pontiac Avenue, Bldg. 69-1
Cranston, RI 02920
(401) 462-9588
Department of Business
Regulation
Securities Division
John O. Pastore Complex
1511 Pontiac Avenue, Bldg. 69-1
Cranston, RI 02920
(401) 462-9588
3
South Dakota Department of Labor and
Regulation
Division of Securities
124 South Euclid, Suite 104
Pierre, SD 57501
(605) 773-4823
Department of Labor and
Regulation
Division of Securities
124 South Euclid, Suite 104
Pierre, SD 57501
Texas Secretary of State
Statutory Document Section
P.O. Box 12887
Austin, TX 78711
(512) 475-1769
Utah Department of Commerce
Division of Consumer Protection
160 East 300 South
Salt Lake City, Utah 84111-0804
(801) 530-6601
Virginia State Corporation Commission
Division of Securities and Retail
Franchising
1300 E. Main Street, 9th Floor
Richmond, VA 23219
(804) 371-9051
Clerk of the State Corporation
Commission
1300 East Main Street, 1st Floor
Richmond, VA 23219
Washington Securities Administrator
Washington State Department of
Financial Institutions
150 Israel Rd., SW
Tumwater, WA 98501
(360) 902-8760
Securities Administrator
Washington State Department of
Financial Institutions
150 Israel Rd., SW
Tumwater, WA 98501
Wisconsin Wisconsin Department of
Financial Institutions
345 West Washington Avenue
Madison, WI 53703
(608) 266-8557
Wisconsin Department of
Financial Institutions
345 West Washington Avenue
Madison, WI 53703
4
EXHIBIT B
FRANCHISE AGREEMENT
HAPPY TAX FRANCHISING LLC
TABLE OF CONTENTS
ITEM PAGE
1. GRANT OF FRANCHISE AND LICENSE .......................................................................... 1
2. LOCATION ............................................................................................................................ 1
3. TERM AND RENEWAL ....................................................................................................... 3
4. PAYMENTS TO FRANCHISOR .......................................................................................... 3
5. ADVERTISING AND MARKETING ................................................................................... 7
6. DUTIES OF FRANCHISOR .................................................................................................. 8
7. DUTIES OF FRANCHISEE................................................................................................... 9
8. CONFIDENTIAL INFORMATION .................................................................................... 12
9. RESTRICTIVE COVENANTS ............................................................................................ 13
10. ASSIGNMENT AND TRANSFERS ............................................................................... 14
11. RIGHT OF FIRST REFUSAL TO ACQUIRE FRANCHISEE’S BUSINESS ............... 16
12. INTELLECTUAL PROPERTY ....................................................................................... 17
13. RELATIONSHIP OF THE PARTIES ............................................................................. 18
14. DEFAULT AND TERMINATION .................................................................................. 20
15. WAIVER AND DELAY .................................................................................................. 20
16. INJUNCTION ................................................................................................................... 20
17. INTEGRATION OF AGREEMENT ................................................................................ 21
18. NOTICES .......................................................................................................................... 21
19. MISCELLANEOUS ......................................................................................................... 21
20. GOVERNING LAW ......................................................................................................... 22
21. GUARANTEE .................................................................................................................. 23
22. SURVIVAL ...................................................................................................................... 24
EXHIBITS
C1. Principal Trademarks
C2. ACH Authorization
C3. Retail Rider
C4. Telephone Number Assignment Agreement
C5. Confidentiality, Non-Use and Non-Competition Agreement form
C6. State Addenda to the Franchise Agreement
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FRANCHISE AGREEMENT
This Franchise Agreement (“Franchise Agreement” or “Agreement”) is made and entered into
this ___ day of ____________ _____ (“Effective Date”), between Happy Tax Franchising, LLC,
a Florida limited liability company with its principal office at 350 Lincoln Road, Miami Beach,
Florida 33139 (“Franchisor”), and ____________________________________ (“Franchisee”)
whose principal address is __________________________________________.
RECITALS
WHEREAS, Franchisor has expended time, skill, effort and money to develop a distinctive
franchise program relating to the establishment and operation of an income tax preparation
business under the name Happy Tax® (the “System”);
WHEREAS, Franchisee desires to operate and develop a Happy Tax® franchised business
(the “Franchised Business”);
NOW THEREFORE, in consideration of the mutual undertakings, the parties agree as
follows:
1. GRANT OF FRANCHISE AND LICENSE
1.1 Grant
Subject to the terms and conditions of this Agreement, Franchisor grants to Franchisee the
right and license, and Franchisee accepts the right and obligation, to operate a Franchised Business
under the Principal Trademarks (identified on Exhibit C1), in accordance with the System and the
provisions of this Agreement from the principal address specified above (the “Location”).
2. LOCATION
2.1 Location
(a) Franchisee shall operate its Franchised Business from its home unless and until
Franchisee requests and Franchisor approves operation from a Retail Outlet pursuant to the Retail
Rider attached here as Exhibit C3.
(b) Franchisee may relocate its Franchised Business if Franchisee or the Operating
Principal changes its residence.
(c) All franchisees are permitted to advertise, solicit sales, and accept business from
customers located anywhere, and perform work for customers anywhere. Franchisee must
advertise and solicit sales using channels of distribution as permitted in the Manual.
(d) Franchisees will not receive a protected territory. You may face competition from
other franchisees, from outlets that we own, or from other channels of distribution or competitive
brands that we control.
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As to franchisees who operate a Retail Location, during the term of the Retail Rider, we
will not establish either a company-owned or franchised storefront retail outlet selling the same or
similar goods or services under the same or similar trademarks as the Principal Trademarks in your
Territory; however, we or our affiliates or franchisees may operate non-storefront outlets selling
the same or similar goods or services under the same or similar trademarks as the Principal
Trademarks in your Territory.
All franchisees are permitted to advertise, solicit sales, and accept business from customers
located anywhere, except franchisees under a Retail Rider may not advertise or solicit sales in
another territory under a Retail Rider without our prior written permission. All franchisees may
perform work for customers anywhere. Franchisees must advertise and solicit sales using channels
of distribution as permitted in the Manual. Presently, franchisees may not advertise through the
Internet, catalogs and telemarketing. We, our company-owned stores, affiliates and our franchisees
may accept business from customers residing anywhere.
We, our company-owned stores, our affiliates may:
(i) Sell products and services under any trade name, trademark or service mark
(including the Principal Trademarks) anywhere through any alternative channel
of distribution, including but not limited to the Internet;
(ii) Develop, implement and participate in a co-branding program located anywhere
or regardless of whether any co-branded business is franchised or company-
owned and regardless of which trade names, trademarks, or service marks are
used in connection with the co-branded business, including but not limited to
the Principal Trademarks.
We are not required to pay you for our solicitation or acceptance of orders. We also reserve
for ourselves and our affiliates all rights not exclusively granted to you.
We and/or our affiliates may establish a business that does not utilize the Principal
Trademarks anywhere, including within your Territory, if applicable. Neither we nor our affiliate
currently operate, franchise or have plans to operate or franchise a business under a different
trademark that sells or will sell goods or services similar to those that you will offer.
Although we do not have any current plans to do so, we may acquire a competing income
tax preparation business, whether franchised or not. We may operate the competing income tax
business, regardless of where it is located. We are not required to offer you any right to acquire a
competing income tax preparation business
2.2 Franchisor Rights
Franchisor and its affiliates reserve the right to engage and license others to engage in any
activities not expressly prohibited in this Agreement.
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3. TERM AND RENEWAL
3.1 Initial Term
The term of this Agreement shall commence on the Effective Date and shall expire on the
July 31st immediately following the completion of the third Tax Season. A “Tax Season” shall
mean the period of January 1st to April 30th.
3.2 Renewal
Franchisee shall have the right to enter into another three (3) year franchise agreement for
this franchise at the expiration of the initial term, provided that the following conditions have been
fulfilled:
(i) Franchisor offers franchises in the geographic area in which the Franchised Business is
located;
(ii) Franchisee is in compliance with this Agreement;
(iii) Franchisee executes Franchisor’s then-current franchise agreement, which may be
materially different from this Agreement, including but not limited to the fee structure
and other material terms;
(iv) Franchisee and its Owners execute a General Release; and
(v) Franchisee notifies Franchisor of its desire to renew this franchise not more than nine (9)
months and not less than six (6) months before this Agreement expires.
4. PAYMENTS TO FRANCHISOR
4.1 Initial Franchise Fee
(a) You shall pay to us an initial franchise fee of $20,000.
(b) Military- If you were honorably discharged from the United States Armed Forces,
we will discount the initial franchise fee by twenty percent (20%) to the first 10 franchisees who
utilize this discount.
After 10 franchises are granted under the military discount, we may grant financing at 7%
interest over a 3 year term at 7% APR of up to 50% of the initial franchise fee. Whether, and to
what extent we grant financing will depend on your perceived business acumen, creditworthiness,
and availability of funds.
(c) The initial franchise fee is fully earned when paid and is nonrefundable.
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4.2 Royalty
(a) During the term of this Agreement, Franchisee shall pay to Franchisor a continuing
fee (“Royalty”) for each Tax Season in an amount equal to the greater of: (i) twenty (20%) percent
of Gross Revenues generated from the first one hundred (100) income tax returns prepared for the
Franchised Business in each May 1 – April 30 time period; fifteen (15%) percent of Gross
Revenues from the next four hundred (400) income tax returns prepared for the Franchised
Business in each May 1 – April 30 time period; and ten (10%) percent of the Gross Revenues from
all subsequent income tax returns prepared for the Franchised Business in the May 1 – April 30
time period; or (ii) the Minimum Royalty, specified in Section 4.2(b) below. Gross Revenues is
defined in Section 4.7.
(b) The Minimum Royalty shall be $4,000 for the first Tax Season, $6,000 during the
second Tax Season and $8,000 for each subsequent Tax Season.
(c) If at the end of a Tax Season, the Royalties paid to Franchisor for such May 1 –
April 30 time period are less than the Minimum Royalty due for that Tax Season, Franchisee shall
pay Franchisor the difference upon five (5) business days from Franchisor’s written notice to
Franchisee.
(d) The “Tax Season” for the Minimum Royalty in Section 4(b) above shall be based
on how long a Happy Tax outlet has operated in the Territory by any franchisee. For example, if
the franchise is transferred to a new owner after three Tax Seasons, the Territory is next in its
fourth Tax Season. If the franchise agreement for the Territory is renewed after three Tax Seasons,
the Territory is in its fourth Tax Season during the first year of the renewal franchise agreement.
(e) Reverse Royalty. If we offer or make available third party offers to customers of
your Franchised Business of other products or services, and your customers purchase any such
products or services, we will pay you a reverse royalty of 20% of any monies we earn from such
sales, and pay or credit you the revenue within 30 days of the end of the month in which we
received the monies.
4.3 Local Advertising; Advertising Fund Contribution
(a) For Franchisee’s first Tax Season, Franchisee shall be required to spend $2,000 on
local advertising, marketing and promotional programs (“Local Advertising”).
(b) For each subsequent Tax Season, Franchisee shall spend a minimum of $1,000 per
Tax Season on Local Advertising.
(c) This required Local Advertising expenditure must be spent according to an
approved annual marketing plan submitted to Franchisor. Costs and expenditures Franchisee
incurs for any of the following are excluded from Franchisee’s required Local Advertising: (i)
salaries and expenses of Franchisee’s employees, including salaries or expenses for attendance at
advertising meetings or activities; (ii) expenditures relating to the use or development of Social
Media; (iii) seminar and educational costs and expenses of Franchisee’s employees.
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(d) Franchisor reserves the right to establish a separate fund for advertising, marketing,
and promotional programs including Social Media Platforms (“Advertising Fund”). If Franchisor
establishes an Advertising Fund, Franchisor may require Franchisee to contribute to the
Advertising Fund (an “Advertising Fund Contribution”). The amount of the Advertising Fund
Contribution shall equal $1,000 for the first Tax Season in which Franchisee contributes to the
Advertising Fund and two percent (2%) of Gross Revenues for Franchisee’s previous Tax Season
for each Tax Season thereafter. Franchisor may at any time reduce or increase Franchisee’s
Advertising Fund Contribution rate. Franchisor may terminate (and if terminated, reinstate) the
Advertising Fund. If Franchisor terminates the Advertising Fund, Franchisor will distribute all
unspent monies to its Franchisees and affiliates in proportion to their respective Advertising Fund
Contributions during the preceding twelve (12) month period.
4.4 Payment of Royalty, Advertising Fund Contributions and Other Fees
(a) Royalty and other monies owed to Franchisor shall be paid daily. Royalty payments
shall be calculated based on the Gross Revenues of the Franchised Business for the previous day.
(b) Advertising Fund Contributions (if required) shall be paid thirty (30) days prior to
start of the subsequent Tax Season.
(c) All fees are payable to Franchisor or the Advertising Fund by ACH, as directed in
the ACH Authorization attached as Exhibit C2, or such other method as Franchisor shall designate
in the Manual or otherwise. In addition, if monies flow through Franchisor or a third party first,
such as a credit card process company, Franchisor reserves the right to have monies owed to it
deducted first, then the balance remitted to Franchisee.
4.5 Other Fees and Payments
(a) Preparation Fee
You must pay to us a Preparation Fee t o cover the costs incurred to prepare income
tax returns by our CPAs or other qualified tax professionals. Currently, the Preparation Fee is:
$25 per each simple income tax return; $35 per each mid-level income tax return; and $55
per each complicated income tax return. We may increase the Preparation Fee upon thirty
(30) days' written notice to you. The criteria for what constitutes a simple, mid-level, or
complicated income tax return is provided in the Manual. You must pay these fees for any
returns you submit to us to complete, even if we are unable to complete them or the customer
does not pay.
(b) Transfer Fees
In the event of any transfer of the Franchise Agreement and Franchised Business, the
Franchisee shall pay a $2,000 transfer fee. Transfer fees are due upon request for approval of the
transfer and are nonrefundable,
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(c) Audit Fees
(i) If Franchisee fails to furnish any items requested by Franchisor as part of
any audit, Franchisee shall pay the cost of conducting the audit, including without limitation,
travel, lodging, meals, wages, expenses and accounting and legal fees incurred by Franchisor.
(ii) If Franchisee understates Gross Revenues in any report or statement by:
(1) two percent (2%) or less, Franchisee will be required to immediately
pay Franchisor the underreported amount within fifteen (15) days of written notice of the amount
due;
(2) more than two percent (2%), Franchisee will be required to
immediately pay Franchisor the underreported amount along with the cost of conducting the audit,
including without limitation, travel, lodging, meals, wages, expenses and accounting and legal fees
incurred by Franchisor within fifteen (15) days of written notice.
(d) Technology Support and Development Fee
Franchisee may be required to pay a technology support and development fee to Franchisor
or its designated third-party. If the fee is instituted, the fee shall be $650 per Tax Season. Franchisor
reserves the right to increase this fee on thirty (30) days’ written notice to Franchisee. If Franchisor
determines to increase this fee, the fee shall not increase by more than ten percent (10%) in any
Tax Season. If instituted, this fee shall be due thirty (30) days prior to subsequent Tax Season.
(e) Independent Contractor Onboarding Fee
You may engage Independent Contractors (“IC”) to work for you to source tax returns. We onboard
the IC’s onto our platform by giving them access to our training, marketing and user logins for our
technology. You pay to us the following fees for this option:
$250 per Independent Contractor subject to group discounts if prepaid as follows:
10 Independent Contractors- $1,500 total fee
20 Independent Contractors- $2,500 total fee
50 Independent Contractors- $3,500 total fee
(f) Late Fee
In the event Franchisee fails to make timely payment to Franchisor of any sums due,
Franchisee shall pay Franchisor a late fee of $5 for each day said sums are not paid to Franchisor.
(g) Retail Franchised Business Fee
After the completion of its first Tax Season, Franchisee shall have the option of opening a
Happy Tax® retail franchised business, provided that Franchisee has complied with the terms of
this Agreement at all times, the exercise of such option shall require Franchisee to (i) execute the
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then-current Retail Rider to this franchise agreement and (ii) pay a fee in the amount of $10,000.
(h) Interest and Penalties
If an error is made in tax preparation, we will in good faith determine if the fault was with
the customer, Franchisee, or the tax professionals we engage to prepare tax returns. If the fault
was with the customer, we or you may, but are not obligated to pay any interest and penalty
assessed as a customer courtesy. If the fault was with Franchisee, Franchisee shall pay the interest
and penalty to the customer and if it does not do so, Franchisor may do so and charge the amount
to Franchisee and withdraw the amount from Franchisee’s bank account via ACH. If the fault was
with our tax professionals, Franchisor will pay the interest and penalty.
4.6 Application of Payments
Franchisee acknowledges and agrees that Franchisor may apply payments received to
amounts due and payable in the order Franchisor determines, in its sole discretion.
4.7 Gross Revenues
“Gross Revenues” means all revenues that Franchisee derives or receives directly or
indirectly from the operation of the Franchised Business, excluding only sales and use taxes, and
also includes the full amount of the recommended price for tax returns, even if Franchisee
discounts the price or handles the return for free, except as we may otherwise specify in the
Operations Manual.
5. ADVERTISING AND MARKETING
5.1 Franchisor Advertising
(a) Franchisor may, in its sole discretion, conduct advertising, marketing, promotional
or public relations activities in local, regional and national print publications as well as use Social
Media (meaning dissemination of information through electronic means such as blogs, Facebook,
Twitter, and Instagram) (“Advertising Materials”) to promote the System.
(b) Franchisor may design, update, and host the Happy Tax® website which may
contain a separate webpage dedicated to the Franchised Business. Franchisor will approve or
disapprove and execute any and all changes to the website dedicated to the Franchised Business.
The website and its content will be updated based upon Franchisor’s judgment of what is
appropriate; all changes, deletions and additions are at Franchisor’s sole discretion.
(c) Franchisor shall make available approved Advertising materials for use by
franchisees.
(d) If Franchisee wishes to use Advertising Materials, including Social Media
Materials or any form of electronic advertising not made available by Franchisor, it must obtain
prior written approval from Franchisor.
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(e) Franchisee’s Advertising Materials must be conducted in a dignified manner and
conform to Franchisor’s standards as stated in the Manual or otherwise.
(f) Franchisee is required to give Franchisor its usernames, passwords, account
information and all other information Franchisor may require in connection with Franchisee’s use
of social media upon Franchisee’s initial use of a social media platform and immediately upon
Franchisor’s request. Franchisor may access Franchisee’s Social Media Platform accounts to stop,
revise, delete, or remove any objectionable Advertising, in Franchisor’s including previously
approved Advertising.
(g) Franchisee may not establish or maintain any website for the Franchised Business.
Nor may Franchisee use the Principal Trademarks or Franchisor’s other Intellectual Property on
the Internet other than in accordance with the System Standards.
6. DUTIES OF FRANCHISOR
6.1 Confidential Operating Manual
(a) Franchisor will provide Franchisee access to its Confidential Operating Manual as
well as any other related materials, in written or electronic form (collectively, the “Manual”) to
provide guidance in the operation of the Franchised Business. Franchisor may amend the Manual
from time to time to adjust for legal, technological, or competitive changes or to attempt to improve
in the marketplace.
(b) Franchisee agrees that the contents of the Manual are confidential and that
Franchisee will not disclose the Manual in whole or in part, to any person except to Franchisee’s
employees as required for the operation of the Franchised Business. Franchisee shall not copy,
duplicate, record or otherwise reproduce the Manual in whole or in part.
6.2 Training Program
(a) Franchisee or if Franchisee is an entity, its managing shareholder, member, or
partner who owns a majority of the voting and ownership interests in the Franchisee entity, (the
“Operating Principal”), agrees that Franchisee (or its Operating Principal) will complete, to
Franchisor’s satisfaction, Franchisor’s initial training program. The initial training program may
be conducted via webinar, other electronic means, or in person, as Franchisor selects. For the
Franchisee’s first Franchised Business only, Franchisee shall have the option of attending an
optional one day hands-on training session with the Franchisor’s executives. If Franchisee
exercises this option, the session will be scheduled for a mutually convenient date and time and
Franchisee (or its Operating Principal) shall pay for all travel, lodging, and meals to attend this
session.
(b) If Franchisor determines that Franchisee (or its Operating Principal) has not
completed initial training to Franchisor’s satisfaction, Franchisor may terminate this Agreement
and retain the initial franchise fee.
(c) The initial training program will consist of approximately five (5) calendar days
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of training for Franchisee (or its Operating Principal). The initial training program shall be
completed within one hundred eighty (180) days of this Agreement and at least twenty (20) days
prior to opening the Franchised Business.
(d) Franchisor reserves the right to require Franchisee (or its Operating Principal)
attend training courses that Franchisor either periodically chooses to provide or otherwise may
require for such Franchisee or (its Operating Principal). Such additional or supplemental training
may be provided electronically and must be completed to Franchisor’s satisfaction.
6.3 Suppliers
(a) Franchisor may require Franchisee to purchase certain goods or services from
designated or approved suppliers (“Suppliers”) as specified in the Manual. Such Suppliers may
include Franchisor and its affiliates.
(b) Franchisor may provide Franchisee with a list of Suppliers and approved products,
as revised from time to time.
(c) In the event that Franchisee wants to independently source any products or services
necessary to operate the Franchised Business from a party other than a Supplier, Franchisee must
obtain Franchisor’s prior written approval.
6.4 Operation and Sales Support
Franchisor shall provide the following assistance and services:
(a) Franchisor shall cause its tax professionals to prepare each income tax return that
Franchisee processes, in accordance with the procedures set forth in the Manual.
(b) Franchisor may, in its sole discretion, provide Franchisee with periodic guidance
regarding the operation of the Franchised Business. This periodic guidance may be provided
individually or in a group setting and may be provided in person or electronically.
(c) Franchisor shall invite Franchisee to attend any meetings with Franchisor personnel
and other Happy Tax® franchisees if and when such meetings occur in Franchisor’s sole discretion.
(d) Franchisor may, in its sole discretion, provide Franchisee with leads obtained from
Happy Tax® website, at no cost to Franchisee.
7. DUTIES OF FRANCHISEE
7.1 Commencement of Operations
Franchisee shall commence operation of the Franchised Business no later than January 1st
following the Effective Date (“Commencement Date”).
7.2 Compliance with the Manual
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Franchisee agrees to conduct the Franchised Business in accordance with the Manual, as
Franchisor may modify from time to time, as well as other written directives that Franchisor may
issue.
7.3 Management Requirements
If Franchisee is a legal entity, it must appoint an Operating Principal who will serve as
principal contact with Franchisor. The Operating Principal will be the only individual that
Franchisor will deal directly with and whose instructions or directions Franchisor will address.
Franchisee may not replace the Operating Principal without Franchisor’s prior written consent.
The Franchised Business shall at all times be under the direct, on-premises supervision of
Franchisee (or its Operating Principal) who has completed all required training to Franchisor’s
satisfaction.
7.4 Authorized Products and Services
Franchisee shall offer such products and services as we specify. Franchise may not offer
other products or services or conduct any joint marketing intended to promote another business in
connection with the Franchised Business, except with our prior written permission.
7.5 Franchisor’s Right to Inspect and Audit the Franchised Business
(a) Franchisor has the right to conduct an audit, with or without prior notice, of the
Franchised Business and its related electronic and paper books, records, documents and
information. Franchisor has the right to conduct an audit in person, electronically, or require
Franchisee to send requested items to Franchisor, at Franchisee’s expense, within seven (7)
calendar days of any such request.
(b) Franchisee agrees to cooperate in any such audit.
(c) Franchisor shall have the right to remotely access Franchisee’s Computer System
and Franchisee agrees to cooperate with such access.
7.6 Retention of Records
Franchisee must maintain all financial, sales, accounts, books, data, licenses, contracts,
product supplier invoices, management reports and records for a period of seven (7) years or longer
as required by government regulations.
7.7 Reporting Requirements
(a) Franchisee report by the 5th of each month to Franchisor the Gross Revenues
derived from Franchisee’s operation of the Franchised Business for the previous month.
(b) Franchisee shall also submit annual balance sheets and profit and loss statements
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to Franchisor within one hundred twenty (120) days after the end of Franchisee’s fiscal year.
(c) Franchisor may vary the nature and timing of required reports in the Manual.
7.9 Computer Software and Hardware
Franchisee must obtain, maintain, utilize, update, and upgrade such Computer equipment,
software, email account(s), and internet access as Franchisor specifies (“Computer System”).
7.10 Insurance
(a) Franchisee must obtain and maintain insurance coverage for the Franchised
Business as required by law and as specified in the Operations Manual.
(b) All of the policies must name Franchisor, its affiliates and the respective officers,
directors, shareholders, members, partners, agents, representatives, independent contractors,
servants and employees of Franchisor and its affiliates as additional insureds and must include a
waiver of subrogation in favor of all parties.
(c) Franchisee must provide Franchisor with written proof as required by Franchisor
of Franchisee’s purchase of the above required insurance policies no later than the business day
before Franchisee intends to open the Franchised Business. Franchisee must provide Franchisor
with proof of Franchisee’s continued insurance coverage no later than thirty (30) days before the
expiration of Franchisee’s insurance policies. In the event that Franchisee fails to purchase the
required insurance, Franchisor may, in its sole discretion, pay for the required insurance policies
on behalf of Franchisee and charge Franchisee for Franchisor’s expenditures in paying for
Franchisee’s required insurance policies.
7.11 Indemnification
Franchisee shall indemnify, defend and hold harmless Franchisor, its affiliates and the
respective members, shareholders, officers, directors, employees, agents, successors and assignees
of Franchisor and its affiliates (the “Indemnified Parties”) against and reimburse any one or more
of the Indemnified Parties for all claims, obligations, expenses, and damages, including costs and
attorney fees, arising directly or indirectly from the operation of the Franchised Business or
Franchisee’s breach of this Agreement.
7.12 Licensing, Taxes and Compliance with Laws
(a) Franchisee agrees to comply with all local, state, and federal laws and regulations
applicable to the Franchised Business, including licensure and the filing and payment of all taxes
and tax filings and reports.
(b) Franchisee shall be solely responsible for paying all sales, income, and other taxes
imposed upon with respect to operation of the Franchised Business.
7.13 Approved Products and Services
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Franchisee agrees to sell and offer for sale only those products and services approved by
Franchisor from the Franchised Business location. Franchisee must offer all goods and services
that Franchisor requires in this Agreement or otherwise in writing. Franchisee must discontinue
offering any goods and services that Franchisor discontinues.
8. CONFIDENTIAL INFORMATION
8.1 Restriction on Use of Confidential Information
(a) Franchisor possesses (and will continue to develop) certain knowledge, know-how,
methods, procedures, and trade secrets, which are valuable and not generally known or readily
available to third parties regarding: (i) the Franchisor, its affiliates and any subsidiaries; and (ii)
the development, management and operation of Happy Tax® franchised businesses, which
Franchisor and its affiliates consider proprietary (collectively “Confidential Information”).
(b) Franchisee will not directly or indirectly disclose, publish, disseminate, or use
Franchisor’s Confidential Information except as authorized in this Agreement or the Manual.
Franchisee may use Franchisor’s Confidential Information to perform Franchisee’s obligations
under this Agreement, but in doing so will only allow dissemination of Franchisor’s Confidential
Information on a need-to-know basis and only to those individuals that have been informed of the
proprietary and confidential nature of such Confidential Information.
8.2 Customer Data
(a) “Customer Data” means any and all information about Customers that may be
collected in connection with the preparation of tax returns, including, but not limited to, name,
telephone number, address and email address. Customer Data shall be considered Confidential
Information for purposes of this Agreement.
(b) Franchisor retains all rights, title, and interest in and to the Customer Data,
including, all intellectual property rights.
(c) Franchisee may use the Customer Data, however, during the Term of this
Agreement as permitted by this Agreement or the Manual.
8.3 Return of Confidential Information
Upon termination or expiration of this Agreement, Franchisee will return to Franchisor all
of Franchisor’s Confidential Information embodied in tangible form, and will destroy, unless
otherwise agreed, all other sources that contain or reflect any such Confidential Information.
Notwithstanding the foregoing, Franchisee may retain Confidential Information as needed solely
for legal, tax, and insurance purposes, but the information retained will remain subject at all times
to the confidentiality restrictions of this Agreement.
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9. RESTRICTIVE COVENANTS
9.1 Covenants
(a) In Term. During the term of this Agreement, in the United States, Franchisee and
each of its Owners and Guarantors shall not directly or indirectly:
(1) Divert or attempt to divert any actual or potential business or customer of
Happy Tax® to any Competitor;
(2) take any action injurious or prejudicial to the goodwill associated with the
Principal Trademarks and the System;
(3) Employ or seek to employ any person who is then employed or who was
employed within the immediately preceding twenty-four (24) months, by Franchisor or any Happy
Tax® franchisee without obtaining the employer's prior written permission; or
(4) Offer income tax preparation services, for a fee or charge, except through
the Franchised Business.
(b) Post Term. During the two year period following the later of: (i) the termination
or expiration of this Agreement (regardless of the cause for termination or expiration); or (ii) the
Transfer of the franchise, Franchisee and each of its Owners and Guarantors shall not directly or
indirectly, offer income tax preparation services, for a fee or charge:
(1) at the location of the Franchised Business;
(2) within ten (10) miles of the location of the Franchised Business;
(3) within ten (10) miles of the location of any other Happy Tax® location
owned or in operation by Franchisor, its affiliates or franchisees of Franchisor or its affiliates.
(c) Non-Disparagement. Franchisee agrees that at no time will it disparage Franchisor
or its officers, members, agents, employees, and franchisees.
9.2 Waiver of Bond
Franchisee agrees that if Franchisor is forced to bring suit to enforce this Section 9,
Franchisee agrees to waive any requirement that Franchisor post bond to obtain a temporary or
permanent injunction to enforce these duties.
9.3 Definitions
(a) The term "Competitor” means: (i) any business involving the establishment or
operation of an income tax preparation business; or (ii) any business granting franchises or licenses
to others to operate an income tax preparation a business (other than a Franchised Business
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operated under a franchise agreement with Franchisor).
(b) The term “Owner” means any individual or entity that has any direct or indirect
ownership in Franchisee.
9.4 Procurement of Additional Covenants
Franchisee acknowledges and agrees to require and obtain the execution of the
Confidentiality, Non-Use and Non-Competition Agreement Form attached as Exhibit C6, from all
of the following persons: (i) before employment or any promotion, all personnel Franchisee
employs who have received or will receive training from Franchisor or from Franchisee; and (ii)
Franchisee’s Owners.
9.5 Severability, Modification, and Independence
If any covenant or provision of Section 9 is determined to be overbroad, void or
unenforceable, in whole or in part, it shall first be narrowed by the court, if possible, to the
maximum legal extent permitted, but if no such narrowing is permitted or can render the
provision enforceable, then the provision is deemed severed and removed from this agreement
and shall not affect or impair the validity of any other covenant or provision. Further, these
obligations are considered independent of any other provision in this agreement and the
existence of any claim or cause of action by either party to this agreement against the other,
whether based upon this agreement or otherwise, shall not constitute a defense to the
enforcement of these obligations.
10. ASSIGNMENT AND TRANSFERS
10.1 By Franchisor
Franchisor may assign this Agreement to an assignee who agrees to remain bound by its
terms. Franchisor will not permit a sub-license of the Agreement.
10.2 By Franchisee
(a) This Agreement (nor any interest in this Agreement), the Franchised Business or
substantially all of its assets, nor any ownership interest in Franchisee (regardless of its size), nor
any ownership interest in any of Franchisee’s Owners (if any Owner is a legal entity) may be
transferred without Franchisor’s prior written approval, which may be withheld for any reason in
its sole discretion, subject to the provisions in this Section 10. Any transfer without Franchisor’s
consent is a breach of this Agreement and shall be considered void and of no effect.
(b) The term “transfer” means to sell, assign, gift, pledge, mortgage or encumber
either voluntarily or by operation of law any interest in: (i) this Agreement or the rights created
thereunder; (ii) all or substantially all of the assets of the Franchised Business; or (iii) any
direct or indirect interest in the ownership of Franchisee.
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10.3 Conditions for Approval of Transfer by Franchisee
(a) To effectuate any proposed transfer, Franchisee must comply with all of the
following conditions either before or concurrently with the effective date of the transfer:
(i) Franchisee shall first notify Franchisor in writing of the proposed transfer
and set forth a complete description of the terms of the proposed transfer including the prospective
transferee’s name, address, telephone number, financial qualifications and previous five (5) years’
business experience. Franchisor or its assignees may within thirty (30) days after receipt of such
notice, exercise a right of first refusal to purchase the interest being offered by Franchisee pursuant
to the provisions of Section 11 herein;
(ii) transferee (and its owners if transferee is an entity) has sufficient business
experience, aptitude and financial resources to operate the Franchised Business and must meet all
of Franchisor’s then-current standards and requirements for becoming a Happy Tax® franchisee;
(iii) Franchisee is in compliance with this Agreement;
(iv) neither the transferee nor its owners (if the transferee is an entity) or
affiliates have an ownership interest (direct or indirect) in or perform services for a Competitive
Business;
(v) transferee (or its operating principal) and any other personnel required by
Franchisor completes Franchisor’s training program to Franchisor’s satisfaction at transferee’s
own expense;
(vi) transferee shall (if the transfer is of this Agreement) or Franchisee shall (if
the transfer is of a controlling ownership interest in Franchisee or one of its Owners), execute
Franchisor’s then-current form of franchise agreement and related documents, the provisions of
which may differ materially from those contained in this Agreement for a term equal to the
remaining term of this Agreement or in Franchisor’s sole discretion, the then-current term offered
to new franchisees. If the latter, Franchisee shall pay Franchisor the then-current franchise fee and
agree to comply in all respects with all of Franchisor’s requirements;
(1) Franchisee or the transferee pays Franchisor the Transfer Fee.
However, no Transfer Fee will be due for: a transfer to the surviving spouse, parent or child of
Franchisee or an Owner upon the death or disability of Franchisee or an Owner;
(2) a transfer to an entity in which Franchisee: (i) maintains
management control; and (ii) owns and controls one hundred percent (100%) of the equity and
voting power of all issued and outstanding ownership interests, provided that (a) such entity
conducts no other business other than the Franchised Business; (b) all of the assets of the
Franchised Business are owned by that single entity; and (c) the Franchised Business is conducted
only by that single entity. Further, the transferee entity must expressly assume all of Franchisee’s
obligations under this Agreement and Franchisee must agree to remain personally liable under this
Agreement as if the transfer to this entity did not occur;
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(vii) Franchisee (and its Owners) signs a General Release in a form we specify;
(viii) Franchisor, in its sole discretion, has determined that the terms of the
transfer, including, but not limited to, price, method and the extent of financing will not adversely
affect the transferee's operation of the Franchised Business;
(b) Franchisee agrees to provide to Franchisor any Purchase Agreements and other
documents related to any proposed transfer that Franchisor may request.
10.4 Death or Disability of Franchisee
(a) Transfer Upon Death or Disability
Upon the death or disability of Franchisee (or its Operating Principal), the representative
of Franchisee (or its Operating Principal) must transfer Franchisee’s (or its Operating Principal’s)
interest in this Agreement to a third-party (which may be the heirs, beneficiaries or devisees of
Franchisee or its Operating Principal). That transfer must be completed within six (6) months from
the date of death or disability and is subject to all of the terms and conditions in this Section 10.
Failure to transfer Franchisee’s interest in this Agreement or the Operating Principal’s ownership
interest within this time period is a breach of this Agreement. The term “disability” means a mental
or physical disability, impairment or condition that is reasonably expected to prevent or actually
does prevent Franchisee or the Operating Principal from supervising the management and
operation of the Franchised Business.
(b) Operation Upon Death or Disability
Upon the death or disability of Franchisee (or its Operating Principal), the executor,
administrator, conservator, guardian or other personal representative of the Franchisee (or the
Operating Principal) must within fifteen (15) days from the date of death or disability, appoint a
manager or new Operating Principal. The manager or new Operating Principal must complete
Franchisor’s standard training program at Franchisee’s sole expense.
11. RIGHT OF FIRST REFUSAL TO ACQUIRE FRANCHISEE’S BUSINESS
11.1 Franchisor’s Right of First Refusal
(a) If Franchisee receives and desires to accept a signed, bona fide offer to purchase or otherwise
transfer the Franchise Agreement or any interest in it, Franchisee shall grant Franchisor the
option (the "Right of First Refusal") to purchase the Franchised Business as provided here:
(i) Within thirty (30) days of receipt of the offer, Franchisee shall offer the Right of First
Refusal to Franchisor by notice in writing, including a copy of the signed offer to
purchase which Franchisee received (“Notice”). Franchisor shall have the right to
purchase the Franchised Business or interest in the Franchised Business at and for the
price and upon the terms set out in the Notice, except that Franchisor may substitute
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cash for any non-cash form of payment proposed and Franchisor shall have 60 days
after the exercise of Franchisor’s Right of First Refusal to close the said purchase.
Should Franchisor wish to exercise its Right of First Refusal, Franchisor will notify
Franchisee in writing within 15 days from receipt of the Notice. Upon the giving of
such notice by Franchisor, there shall immediately arise a binding contract of purchase
and sale at the price and upon the terms contained in the Notice.
(ii) If Franchisor does not exercise its Rights of First Refusal, Franchisee may transfer the
Franchised Business or ownership interest therein according to the terms set forth in
the Notice, provided that Franchisee satisfies the conditions in Section 10.3 above and
completes the sale within 90 days from the day on which Franchisor received the
Notice. If Franchisee does not conclude the proposed sale transaction within the 90-
day period, the Right of First Refusal granted to Franchisor shall continue in full force
and effect.
(b) This right of first refusal shall not apply to transfers among Franchisee’s current Owners or to
a legal entity wholly owned by Franchisee.
12. INTELLECTUAL PROPERTY
12.1 Ownership of the Principal Trademarks, Copyrights, and Patents
Franchisee acknowledges and agrees that (i) Franchisor and its affiliates are the
owners or licensees of the Principal Trademarks, (ii) that Franchisor and its affiliates claim
copyright protection in certain material used in the System and in the development and
operation of Franchised Businesses, including the Manual, Advertising Materials, Social
Media Materials and similar materials whether created by Franchisor, any franchisee of
Franchisor /or any third-party (“Copyrighted Information”) and (iii) Franchisor or its
affiliates are licensees to certain patent pending technology (“Patents”) (Collective ly the
“Intellectual Property”). Franchisor is authorized to license to Franchisee the limited right
to use the Intellectual Property.
12.2 Use of Intellectual Property
(a) Franchisee shall use the Intellectual Property solely in conjunction with the
Franchised Business as designated by Franchisor in the Manual, including:
(b) Franchisee shall not use any Intellectual Property: (i) as part of any corporate
or trade name; (ii) in connection with the sale of any unauthorized product or service; (iii) as
part of any domain name, homepage, electronic address or otherwise in connection with a
website (unless in connection with Franchisor’s website); or (iv) in any other manner not
expressly authorized in the Manual or otherwise in writing by Franchisor.
12.3 Unauthorized Use of Intellectual Property
(a) Franchisee shall immediately notify Franchisor in writing of any apparent
infringement or challenge to Franchisee’s use Intellectual Property and of any claim by any
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person of any right in the Intellectual Property of which Franchisee becomes aware.
(b) Franchisee shall immediately notify Franchisor in the event that any third-party
makes a claim against Franchisee alleging that Franchisee’s use of the Intellectual Property
infringes upon the rights of such third-party. Franchisor is not obligated to protect your right
to use our Marks.
13. RELATIONSHIP OF THE PARTIES
Franchisee and Franchisor are and will be independent contractors and nothing in this
Agreement is intended to make either party a special agent, joint venture partner, partner or
employee of the other for any purpose. Franchisee agrees to identify itself conspicuously in all
dealings as the owner of the Franchised Business under a franchise granted by Franchisor.
14. DEFAULT AND TERMINATION
14.1 Termination by Franchisee
Franchisee may terminate this Agreement by not renewing or by transferring the
Franchised Business as specified in this Agreement.
14.2 Automatic Termination without the Opportunity to Cure
Franchisor may terminate this Agreement immediately upon providing written notice
without the opportunity to cure for any of the following reasons:
(a) Franchisee (or its Operating Principal) does not complete initial training to the
satisfaction of Franchisor in its sole discretion;
(b) Franchisee does not commence operating the Franchised Business by the January1st
immediately following the Effective Date of this Agreement;
(c) Franchisee is insolvent, meaning unable to pay bills as they become due in the ordinary
course;
(d) Franchisee abandons or fails actively and continuously to operate the Franchised
Business for a period in excess of three (3) consecutive days except when active
operation is not reasonably possible, such as because of a natural disaster;
(e) Franchisee has received three or more negative complaints or reviews for bad service
within a thirty (30) day period;
(f) Franchisee (or any of its Owners) makes any material misrepresentation or omission
in acquiring the franchise or operating the Franchised Business;
(g) Franchisee underreports Gross Revenues by two percent (2%) or more in any report
on three (3) or more occasions within a thirty-six (36) month period during the term
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of this Agreement, whether or not Franchisee subsequently rectifies such deficiency;
(h) Franchisee underreports Gross Revenues by more than five percent (5%) in any
report during the term of this Agreement, whether or not Franchisee subsequently
rectifies such deficiency;
(i) Franchisee (or any of its Owners) is convicted by a trial court or pleads no contest to
a felony, a crime of moral turpitude, or any other crime or offense relating to the
operation of the Franchised Business;
(j) Franchisee (or any of its Owners) engages in any dishonest or unethical conduct
which in Franchisor’s opinion adversely affects the reputation of the Franchised
Business or the goodwill associated with the Principal Trademarks.
(k) Franchisee (or any of its Owners): (i) fails on three (3) or more separate occasions
within a twelve (12) consecutive month period to comply with this Agreement or the
Operations Manual, whether or not such failures are corrected after Franchisor’s
delivery of notice; or (ii) fails on two (2) or more separate occasions within any six
(6) consecutive month period to comply with the same obligation, whether or not
such failures are corrected after Franchisor’s delivery of notice;
14.3 Termination by Franchisor upon Notice and the Opportunity to Cure
Franchisor may terminate this Agreement by written notice to Franchisee if Franchisee
violates any other obligation under this Agreement, any other agreement between the parties, or
the Operations Manual, or fails to pay any monies owed to the Franchisor, and fails to correct the
breach after being served notice and a thirty (30) day opportunity to cure.
14.4 Franchisee’s Obligations on Termination or Expiration
On termination or expiration of this Agreement Franchisee shall:
(a) Immediately cease operating the Franchised Business;
(b) Pay to Franchisor, its affiliates or Suppliers within fifteen (15) days after the
effective date of termination or expiration of this Agreement all sums owed to Franchisor, its
affiliates, or Suppliers which are then unpaid;
(c) Not directly or indirectly at any time or in any manner identify itself or in any
business as a current or former Happy Tax® franchisee or as one of Franchisor’s current or former
franchisees;
(d) Cease using any Principal Trademark, or trademark confusingly similar for any
purpose.
(e) Cancel all fictitious or assumed names or equivalent registrations relating to its use
of any of the Principal Trademarks within fifteen (15) days of termination or expiration;
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(f) Cease use of and return to Franchisor (at no charge or cost to Franchisor) within
thirty (30) days all Intellectual Property, copies of the Confidential Information, Advertising,
forms and other materials containing any of the Principal Trademarks or otherwise identifying or
relating to the Franchised Business;
(g) Franchisee may retain its copy of this Agreement, any correspondence between the
parties and any other document which Franchisee reasonably needs for compliance with any
applicable provision of law;
(h) Franchisee and its Owners and employees shall comply with the duties contained
in Section 9 of this Agreement, which shall survive termination and expiration of this Agreement.
(i) Franchisee shall allow Franchisor to utilize the Assignment of Telephone and
Website Listings and Advertisements attached as Exhibit C4 hereto;
(j) Franchisee shall authorize and not interfere with the transfer of Franchisee’s
telephone, facsimile and other numbers, telephone directory listings, email addresses, domain
names, Internet and website directory listings, Social Media Platform accounts and other media in
which the Franchised Business is listed or the Principal Trademarks displayed to Franchisor;
(k) Franchisee shall provide Franchisor with a complete list of employees and
customers of the Franchised Business, together with their respective contact information and a
complete list of any outstanding obligations Franchisee may have to any third parties;
(l) Franchisee shall give to Franchisor, within thirty (30) days after the expiration or
termination of this Agreement, evidence satisfactory to Franchisor of Franchisee’s compliance
with these obligations.
14.5 Right to Purchase Franchised Business
Upon termination or expiration of this Agreement, Franchisor shall have the option of
acquiring the Operating Assets of the Franchised Business, at the book value of such assets with
no value attributable to goodwill, which the parties agree belongs solely to Franchisor. Franchisor
may, in its sole discretion, deliver cash, notes payable monthly in no less than five (5) years or
some combination of each as payment for the assets of the Franchised Business.
15. WAIVER AND DELAY
The failure of either party to enforce any one or more of the terms or conditions of this
Agreement shall not be deemed a waiver of such terms or conditions or of either party's rights
thereafter to enforce each and every term and condition of this Agreement.
16. INJUNCTION
Franchisee agrees that any non-compliance by Franchisee with the terms of this
Agreement, any breach of its covenants of Section 9, or any unauthorized or improper use of the
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Happy Tax® System or the Principal Trademarks by Franchisee, will cause irreparable damage to
Franchisor and other Happy Tax® franchisees. Franchisee and its Owners consent to the entry of
an injunction procured by Franchisor or its affiliates prohibiting any conduct by Franchisee and its
Owners in violation of the terms of this Agreement, covenants or restrictions of Section 9, or any
unauthorized or improper use of the Happy Tax® System or the Principal Trademarks without the
need of a bond. Injunctive relief is in addition to all other remedies which Franchisor may have at
law.
17. INTEGRATION OF AGREEMENT
17.1 Integration of Agreement
This Agreement, including the exhibits, and all ancillary agreements executed
contemporaneously with this Agreement is the entire agreement between the parties. This
Agreement supersedes all other prior oral and written agreements and understandings between the
Parties with respect to the subject matter of this Agreement. Nothing in this or in any related
agreement, however, is intended to disclaim the representations Franchisor made in the franchise
disclosure document furnished to Franchisee.
17.2 No Oral Modification
No modifications to this Agreement will have any effect unless such modification is in
writing and signed by Franchisor and Franchisee. Franchisor may, however, modify the provisions
of the Manual, without Franchisee’s consent.
18. NOTICES
18.1 Notices
Any notice required or permitted to be given under this Agreement must be in writing;
must be delivered to the other party personally, by certified mail (and return receipt requested,
postage prepaid) or by documented overnight delivery with a reputable carrier and will be effective
on the date that delivery is documented to have been first attempted. Any notice to Franchisor will
be addressed to Franchisor at:
Happy Tax Franchising, LLC
350 Lincoln Road
Miami Beach, Florida 33139
Attn: CEO
We may also give any such notice to you in the same manner at the address indicated on
the first page of this Agreement, or such other more current address as we may have for you. We
may also give notice to you by e-mail.
19. MISCELLANEOUS
19.1 Counterparts
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This Agreement may be executed in multiple counterparts, each of which will be considered
an original and all of which together will constitute one and the same instrument.
19.2 Severability
If any covenant or provision in this Agreement is determined to be void or unenforceable,
in whole or in part, it shall be deemed severed and removed from this Agreement and shall not
affect or impair the validity of any other covenant or provision of this Agreement.
19.3 Similar Agreements
Franchisor makes no warranty or representation that all Happy Tax® franchise agreements
issued by Franchisor contain terms substantially similar to those contained in this Agreement.
Further, Franchisee agrees and acknowledges that Franchisor may, in its reasonable business
judgment, waive or modify comparable provisions of other franchise agreements granted to other
Happy Tax® franchisees in a non-uniform manner.
20. GOVERNING LAW
20.1 Governing Law
This Agreement is effective upon its acceptance in Florida by our authorized officer.
Except as to claims governed by federal law, Florida law governs all claims that in any way relate
to or arise out of this Agreement or any of the dealings of the parties (“Claims”). However, no
laws regulating the sale of franchises or governing the relationship between franchisor and
franchisee shall apply unless the jurisdictional requirements of such laws are met independently
of this paragraph.
20.2 Jurisdiction and Venue
You and we agree that venue and jurisdiction for any Claims shall be proper solely in the state
and federal court nearest to our corporate headquarters, presently located in Miami, Florida
20.3 Waiver of Trial by Jury
In any trial between any of the parties as to any Claims, you and we agree to waive our
rights to a jury trial and instead have such action tried by a judge.
20.4 Class Action Waiver
Franchisee further agrees that it will bring any Claims, if at all, individually and not be joined
with the claims of any other person or entity. Franchisee shall not bring, join, or participate in a
class action as to any Claims.
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20.5 Punitive Damages
As to any Claims, you and we agree to waive our rights, if any, to seek or recover punitive
damages.
20.6 Limitation of Actions
You agree to bring any Claims against us, if at all, within one (1) year of the occurrence of
the facts giving rise to such Claims, and that any action not brought within this period shall be
barred as a claim, counterclaim, defense, or set-off.
20.7 Prior Notice of Claims
As a condition precedent to commencing an action for a Claim, you must notify us within
thirty (30) days after the occurrence of the violation or breach, and failure to timely give such
notice shall preclude any claim for damages.
20.8 Internal Dispute Resolution
You must first bring any Claim to our CEO, after providing notice as set forth in Section 20.7
above. You must exhaust this internal dispute resolution procedure before you may bring your Claim
before a third party.
20.9 Mediation
Before you may bring any Claim against us in court, you agree to try for a period of 60 days
to mediate such claim before a mutually agreed to mediator in the city or county where our
headquarters are located. If we can not mutually agree on a mediator, you and we agree to use the
mediation services of the American Arbitration Association (“AAA), and split any AAA and mediator
fees equally.
20.10 Attorney Fees
If we are the substantially prevailing party as to any claims, you agree to reimburse our costs
and attorney fees incurred in pursuing or defending the claims.
20.11 Third Party Beneficiaries
Our officers, directors, members, shareholders, agents, and employees are express third
party beneficiaries of the terms of the governing law provisions contained herein.
20.12 Survival
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All of the covenants contained in this agreement that may require performance after the
termination or expirations of this agreement will survive any termination or expiration of this
agreement.
20.13 Area Representatives
If you are or become in a territory under an Area Representative, you agree not to bring any
Claims against the Area Representative. If you breach this clause, you agree to reimburse us or
the Area Representative for any legal fees and costs incurred in defending such Claims.
21. GUARANTEE
The signature of each and every person as Franchisee or on behalf of the Franchisee on the
signature page below also constitutes their personal joint and several guarantee to perform each
and every obligation in this Agreement.
22. SURVIVAL
All of the covenants contained in this Agreement that may require performance after the
termination or expiration of this Agreement will survive any termination or expiration of this
Agreement.
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FRANCHISEE:
If an entity:
__________________________________________
(Name of Entity)
By:_______________________________________
(Signature)
Its:_______________________________________
(Print Title/Print Name)
Percent Ownership:__________________________
By:_______________________________________
(Signature)
Its:_______________________________________
(Print Title/Print Name)
Percent Ownership:__________________________
By:_______________________________________
(Signature)
Its:_______________________________________
(Print Title/Print Name)
Percent Ownership:__________________________
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If an individual:
__________________________________________
(Signature)
__________________________________________
(Print Name)
__________________________________________
(Signature)
__________________________________________
(Print Name)
FRANCHISOR: Happy Tax Franchising, LLC
By: ______________________________________
Mario Costanz, CEO
FRANCHISE AGREEMENT
EXHIBIT C1
PRINCIPAL TRADEMARKS
Principal Trademarks:
1. Smile, It’s Time to File word mark
Registration No. 3,799,154
Registered June 8, 2010
US Patent and Trademark Office
2. Happy Tax word mark
Registration No. 4,715,771
Registered April 7, 2015
US Patent and Trademark Office
3. Happy Tax Service word mark plus design
Serial No. 86,575,560
Filing Date March 25, 2015
US Patent and Trademark Office
The Principal Trademarks are owned by Happy Tax Brands, LLC. Franchisor has
been given a perpetual license to use and to license to its franchisees the use of the Principal
Trademarks.
FRANCHISE AGREEMENT
EXHIBIT C2
ACH AUTHORIZATION
Please complete the following with your banking information and attach a voided check:
Company Name:_________________________________________________________
Name of Financial Institution:______________________________________________
Address of Financial Institution:____________________________________________
Routing Number:________________________________________________________
Account Number:________________________________________________________
I hereby authorize Happy Tax Franchising LLC (“Franchisor”) and the financial institution
named above to initiate entries to my checking or savings accounts as identified above in
accordance with the terms of my Franchise Agreement and, if necessary, to initiate
adjustments for any transactions credited in error. This authority will remain in effect until
I notify either Franchisor or the above-named financial institution in writing to cancel it in
such time as to afford a reasonable opportunity to act on such instructions. I can stop
payment of any entry by notifying the above-named financial institution at least 3 days
before my account is scheduled to be charged. I can have the amount of an erroneous
charge immediately credited to my account for up to 15 days following issuance of my
statement by the above-referenced financial institution or up to 60 days after deposit,
whichever occurs first.
Signature: _____________________________________________________
Printed Name of Person Signing: ___________________________________
Title (if any):___________________________________________________
Application Date: _______________________________________________
Telephone Number: _____________________________________________
Applicant’s Address: ____________________________________________
______________________________________________________________
FRANCHISE AGREEMENT
EXHIBIT C3
RETAIL RIDER
WHEREAS, the parties previously entered into a Franchise Agreement dated
__________________________ (“Franchise Agreement”);
WHEREAS Franchisee now desires to operate its Happy Tax® Franchised Business
from a retail outlet location (“Retail Location”) and pursuant to Section 4.5(f) of the
Franchise Agreement has paid to Franchisor the $10,000 Retail Franchised Business Fee;
WHEREAS, Franchisor is agreeable to allow Franchisee to operate from a Retail
Location;
NOW THEREFORE, the parties agree that the Franchise Agreement is modified as
follows:
2. LOCATION – The following language replaces the current Section 2:
2.1 Location
(iii) Franchisee shall operate its Franchised Business from a Retail Location
located within the Territory defined in Schedule 1 here (“Territory”).
(iv) Franchisee may relocate its Franchised Business if Franchisor approves
and the new location is in the Territory.
(v) All franchisees are permitted to advertise, solicit sales, and accept business
from customers located anywhere, except franchisees under a Retail Rider may not
advertise or solicit sales in another territory under a Retail Rider without our prior written
permission. All franchisees may perform work for customers anywhere. Franchisee must
advertise and solicit sales using channels of distribution as permitted in the Manual.
(vi) Franchisor will not establish either a company-owned or franchised outlet
selling the same or similar goods or services under the same or similar trademarks as the
Principal Trademarks in the Franchisee’s Territory; however, Franchisor may permit other
franchisees to operate non-retail outlets selling the same or similar goods or services under
the same or similar trademarks as the Principal Trademarks in the Franchisee’s Territory.
2.2 Franchisor Rights
Franchisor and its affiliates reserve the right to engage and license others to engage
in any activities not expressly prohibited in this Agreement.
3. TERM AND RENEWAL - The following language replaces the current
Section 3:
3.1 Initial Term
The term of this Agreement shall commence on the Effective Date of this Retail Rider
and shall expire on the July 31st immediately following the completion of the fifth Tax
Season. A “Tax Season” shall mean the period of January 1st to April 30th.
3.2 Renewal
Franchisee shall have the right to enter into another five (5) year franchise
agreement for this franchise at the expiration of the initial term, provided that the following
conditions have been fulfilled:
(vi) Franchisor offers franchises in the geographic area in which the Franchised
Business is located;
(vii) Franchisee is in compliance with this Agreement;
(viii) Franchisee executes Franchisor’s then-current franchise agreement, which may
be materially different from this Agreement, including but not limited to the fee
structure and other material terms;
(ix) Franchisee and its Owners execute a General Release, the present form of which
is contained in Exhibit C3;
(x) Franchisee notifies Franchisor of its desire to renew this franchise not more than
nine (9) months and not less than six (6) months before this Agreement expires;
and
(xi) Franchisee complies with any remodeling requirements that Franchisor may
specify in the Manual.
6. DUTIES OF FRANCHISOR - the following language is added to the end of
the current Section 6:
6.5 Site Selection Assistance
Franchisor shall provide site selection guidelines to Franchisee to assist Franchisee
in selecting a site for its Retail Locations. Franchisor shall also approve or disapprove of
any proposed site within 10 calendar days of submission of the required site selection
information from Franchisee to Franchisor.
7. DUTIES OF FRANCHISEE - the following Section 7.3 is added to the current
Section 7.3 and the following Sections 7.14 - 7.16 are added to the current Section 7:
7.3 Management Requirements
Franchisee (or its Operating Principal) may employ a full-time manager who must
be responsible on an exclusive basis for the on-premises supervision of the daily
operations of the Franchised Business. Any person serving in the role of manager must
successfully complete Franchisor’s training program. The manager must be reasonably
qualified to run an operation of this nature, as determined by Franchisor, but need not be
an Owner of the Franchisee. If no manager is appointed, then Franchisee or its Operating
Principal must supervise the day-to-day activities of the Franchised Business.
7.14 Site Selection
Franchisee agrees to select a site for its Retail Location using site selection criteria
from Franchisor and submit to Franchisor information on any proposed site in accordance
with the Franchisor’s site selection criteria. Franchisee may not sign a lease, purchase, or
begin operations from any site until the site is approved by Franchisor.
Additionally, any lease that Franchisee enters into for the Retail Location must
include a clause or Addendum that we provide or approve pursuant to which the right of
possession under the lease for the Retail Location automatically transfers to the Franchisor
upon termination, expiration, or nonrenewal of the Franchise Agreement, unless we
expressly waive our transfer rights at such time.
7.15 Furniture and Equipment
Franchisee must design, furnish, equip the site, and use signage, as specified by
Franchisor.
7.16 Additional Retail Training
Franchisee agrees to attend and successfully complete additional training that
Franchisor may reasonably require to learn further skills for the operation of a Retail
Location and do so within 30 days of the Effective Date of this Agreement.
9. RESTRICTIVE COVENANTS- the following is added to the current Section
9.1:
9.1 Covenants
(d) Protection of Premises. Franchisee agrees that for a period of two years
following the expiration, termination or transfer of this Agreement, franchisee will not,
directly or indirectly, sell, assign, lease or transfer the Franchised Business location
(“Premises”) to any person or entity that franchisee knows or has reason to know intends
to offer, operate, or allow another person or entity to offer income tax preparation at the
Franchised Business location.
Further, Franchisee must honor any lease clause or Addendum pursuant to which the right
of possession under the lease for the Retail Location automatically transfers to the
Franchisor upon termination, expiration, or nonrenewal of the Franchise Agreement, unless
we expressly waive our transfer rights at such time. If no such lease clause or Addendum
is in place, if requested by Franchisor, Franchisee agrees to use its best efforts to assist in
the assignment, sub-lease, or other transfer of the possession of the Premises to Franchisor
or its designee.
Except as modified above, the Franchise Agreement remains in full force and effect.
FRANCHISEE:
If a corporation or other entity:
__________________________________________
(Name of Corporation or Other Entity)
By:_______________________________________
(Signature)
Its:_______________________________________
(Print Title/Print Name)
If an individual:
__________________________________________
(Signature)
__________________________________________
(Print Name)
__________________________________________
(Signature)
__________________________________________
(Print Name)
FRANCHISOR:
Happy Tax Franchising, LLC
By:_______________________________________
Mario Costanz, CEO
Effective Date: _____________________________
Schedule 1
Territory Description
The territory description under Section 2.1 (a) of the Retail Rider shall be as
follows:
FRANCHISE AGREEMENT
EXHIBIT C4
TELEPHONE NUMBER ASSIGNMENT AGREEMENT
THIS TELEPHONE NUMBER ASSIGNMENT AGREEMENT is made between
Happy Tax Franchising LLC (“Franchisor,” "we," “us,” or “our”) and the franchisee
named below (“Franchisee,” “you” or “your”).
BACKGROUND
A. The parties are entering into a Happy Tax Franchise Agreement
(“Agreement”).
B. As a condition to signing the Franchise Agreement, we have required that
you appoint us Attorney in Fact, to take effect upon the expiration or termination of the
Agreement, as to the telephone numbers, listings, and advertisements (collectively
“Listings”) relating to your Happy Tax Franchise.
TELEPHONE NUMBER ASSIGNMENT
Upon expiration or termination of the Agreement for any reason, Franchisee’s
right of use of the Listings shall terminate. In the event of termination or expiration of
the Agreement, Franchisee agrees to pay all amounts owed in connection with the
Listings, and to immediately at Franchisor’s request, (i) take any other action as may be
necessary to transfer the Listings to Franchisor or Franchisor’s designated agent, (ii)
install and maintain, at Franchisee’s sole expense, an intercept message, in a form and
manner acceptable to Franchisor on any or all of the Listings; (iii) disconnect the
Listings; and/or (iv) cooperate with Franchisor or its designated agent in the removal or
relisting of the Listings
Franchisee agrees that Franchisor may require Franchisee to “port” or transfer to
Franchisor or an approved call routing and tracking vendor all Listings.
DURABLE POWER OF ATTOTRNEY
Appointment as Attorney in Fact. For value received, Franchisee hereby
irrevocably appoints Franchisor as Franchisee’s attorney-in-fact, to act in Franchisee’s
place, for the purpose of assigning any Listings. This appointment gives to us full power
to receive, transfer or assign to us or our designee or take any other actions required of
Franchisee under the Agreement. Franchisee grants Franchisor full authority to act in any
manner proper or necessary to the exercise of the foregoing powers, including full power
of substitution and execution or completion of any documents required or requested by
any telephone or other company to transfer such Listings and Franchisee ratifies every act
that Franchisor may lawfully perform in exercising those powers. This power of attorney
shall be effective for a period of two (2) years from the date of expiration, cancellation or
2
termination of Franchisee’s rights under the Agreement for any reason. Franchisee
declares this power of attorney to be irrevocable and renounces all rights to revoke it or to
appoint another person to perform the acts referred to in this instrument. This power of
attorney shall not be affected by the subsequent incapacity of Franchisee. This power is
created to secure performance of a duty to Franchisor and is for consideration.
Miscellaneous. The validity, construction and performance of this Assignment
is governed by the laws of the State in which we are located (currently Florida). All
our rights survive the termination, expiration or non-renewal of the Agreement and inure to
our benefit and to the benefit of our successors and assigns.
FRANCHISEE: Happy Tax Franchising LLC
By:__________________________ By:____________________________
Mario Costanz, CEO
By:__________________________ Date:__________________________
FRANCHISE AGREEMENT
EXHIBIT C5
CONFIDENTIALITY, NON-USE AND NON-COMPETITION AGREEMENT
FORM
AGREEMENT, dated this_____ day of ____________, _____, by and between
(“Franchisee”) having an address at
and ___________________ having an address at (“Recipient”),
W I T N E S S E T H:
WHEREAS, Franchisee is principally engaged in the business of operating an
income tax preparation business under the name Happy Tax® pursuant to a franchise
agreement with Happy Tax Franchising, LLC (“Franchise Agreement”);
WHEREAS, Recipient is an individual or enterprise who is about to be employed
by Franchisee, has entered into some form of contractual relationship with Franchisee or
is considering the same; and
WHEREAS, during the course of the relationship between Franchisee and
Recipient certain information, knowledge, know-how, methods and procedures some of
which constitute trade secrets under applicable law has been and/or will be provided to and
received by Recipient regarding: (i) the Franchisor, its affiliates and its subsidiaries; (ii)
the development, management and operation of Happy Tax® franchised businesses,
including without limitation: (a) training and operations materials and manuals; (b)
methods, formats, specifications, standards, systems, procedures, sales and marketing
techniques, knowledge and experience used in developing and operating the System; (c)
Advertising Materials, Social Media Materials and use of Social Media Platforms; (d)
database material, customer lists, records, files, instructions and other proprietary
information; (e) identity of suppliers and knowledge of supplier discounts, specifications,
processes, procedures and equipment, contract terms, pricing for authorized products,
materials, supplies and equipment; (f) computer software or similar technology which is
proprietary to Franchisor or its affiliates, including without limitation digital passwords
and identifications and any source code, as well as data, reports and other printed materials;
(g) knowledge of the operating results and financial performance of the System other than
the Franchised Business; and (h) graphic designs and related intellectual property
(collectively “Confidential Information”) which Franchisor and its affiliates consider
proprietary.
NOW, THEREFORE, for One Dollar ($1.00) and other good and valuable
consideration, receipt of which is hereby acknowledged the parties hereto agree as follows:
1. Acknowledgment
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(a) Recipient acknowledges that Recipient has been and/or will be given access
to the Confidential Information during the course of the relationship between Franchisee
and Recipient.
(b) Recipient acknowledges that (i) Franchisor and its affiliates own all right,
title and interest in and to the System; (ii) the System consists of trade secrets, Confidential
Information and know-how that gives the Franchisor and its affiliates a competitive
advantage; (iii) the Franchisor and its affiliates have taken all measures necessary to protect
the trade secrets, Confidential Information and know-how comprising the System; (iv) all
Confidential Information now or hereafter provided or disclosed to Franchisee regarding
the System is disclosed in confidence; (v) Recipient has no right to disclose any
Confidential Information to anyone who is not an employee, agent or independent
contractor of Franchisee; (vi) Recipient will not acquire any ownership interest in the
System; and (vii) Recipient’s use or duplication of the System or any part of the System in
any other business would constitute an unfair method of competition, for which Franchisor
would be entitled to all legal and equitable remedies, including injunctive relief without
posting a bond.
2. Non-Disclosure and Return of Confidential Information
(a) Recipient on his or her own behalf and, if a corporation, limited liability
company or partnership on behalf of its officers, directors, shareholders, members,
partners, employees, agents, subsidiaries and affiliates, pledges and agrees that for a period
commencing on the date of the Franchise Agreement and continuing thereafter, in the
absence of prior written consent by Franchisee: (i) will keep all Confidential Information
in strict confidence; (ii) will not communicate or disclose Confidential Information to any
unauthorized person or entity and will only disclose those parts of the System that
Franchisee directs; (iii) will not use the Confidential Information for any purpose other
than as directed by and needed for Franchisee’s use; (iv) will inform its professional and
financial advisors, subsidiaries and affiliates of the confidential nature of the Confidential
Information; (v) will not reproduce or use the Confidential Information; (vi) will have a
system in place to ensure that its employees, agents and independent contractors keep
confidential Franchisor’s trades secrets and Confidential Information and, if requested by
Franchisor or Franchisee, Recipient shall obtain from those of Recipient’s employees
designated by Franchisor an executed Confidential Disclosure Agreement in the form
prescribed by Franchisor; and (vii) at the request of Franchisee, Franchisor and/or its
affiliates will cause its employees to execute Confidentiality, Non-Use and Non-
Competition Agreements Form in this form.
(b) Confidential Information provided by Franchisor, its affiliates and/or
Franchisee to Recipient or its professional and financial advisors, or to any of its
subsidiaries or affiliates and their respective professional and financial advisors in the
course of the parties’ relationship shall be returned to Franchisee immediately upon
termination or expiration of Recipient’s relationship with Franchisee. Recipient,
Recipient’s subsidiaries, affiliates, professional advisors and financial advisors shall not
retain any book, record, report, design, plan, material, copy, note, abstract, compilation,
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summary, extract or other reproduction, whether in paper or electronic form, of the
Confidential Information and shall not retain any copy, note or extract of such Confidential
Information, except as the parties hereto may agree in writing.
3. Covenants
(a) Recipient acknowledges that Franchisee has entered into the relationship
described above in consideration of and reliance upon Recipient's agreement to deal
exclusively with Franchisee; to maintain the confidentiality of all of the Confidential
Information; to refrain from using any Confidential Information in any manner not
permitted by Franchisor, its affiliates and/or Franchisee in accordance with Section 2
above; and to protect and preserve the goodwill of the Franchisor.
(a) Recipient further acknowledges and agrees that (i) pursuant to its
relationship with Franchisee, it will have access from the Franchisor, its affiliates and/or
Franchisee to valuable trade secrets, specialized training and Confidential Information
regarding the development, operation, management, purchasing, sales and marketing
methods and techniques of the System; (ii) the System and the opportunities, associations,
and experience established by Franchisor and acquired by Recipient pursuant to its
relationship with Franchisee are of substantial and material value; (iii) in developing the
System, Franchisor and its affiliates have made and continue to make substantial
investments of time, technical and commercial research and money; (iv) the Franchisor
would be unable to adequately protect the System and its trade secrets and Confidential
Information against unauthorized use or disclosure and would be unable to adequately
encourage a free exchange of ideas and information about Happy Tax® franchisees if
recipients were permitted to hold interests in Competitive Businesses; and (v) restrictions
on Recipient’s right to hold interest in or perform services for, Competitive Businesses will
not unreasonably or unnecessarily hinder Recipient’s activities.
(b) Accordingly, Recipient covenants and agrees that during the term of the
Recipient’s relationship with Franchisee and for an uninterrupted period of two (2) years
after the later of: (i) the termination or expiration of Recipient’s relationship with
Franchisee (regardless of the cause for termination or expiration); or (ii) the date of a final
non-appealable judgment or order of any court, arbitrator, panel of arbitrators or tribunal
that enforces this Section 3, Recipient and each of its Owners shall not directly or indirectly
for itself or through on behalf of or in conjunction with any person, firm, partnership
corporation or other entity in any manner whatsoever:
(i) Divert or attempt to divert any actual or potential business or
customer of Happy Tax® to any competitor or otherwise take any action injurious or
prejudicial to the goodwill associated with the Principal Trademarks and the System;
(ii) Employ or seek to employ any person who is then employed or who
was employed within the immediately preceding twenty-four (24) months, by Franchisor,
its affiliates, Franchisee or any Happy Tax® franchisee or develop, or otherwise directly or
indirectly induce such person to leave his or her employment without obtaining the
4
employer's prior written permission; or
(iii) Own, maintain, develop, operate, engage in, franchise or license,
make loans or gifts to or have any direct or indirect interest in or render services as a
director, officer, manager, employee, consultant, representative, or agent or give advice to
any Competitive Business (except that equity ownership of less than five percent (5%) of
a Competitive Business whose stock or other forms of ownership interest are publicly
traded on a recognized United States stock exchange will not be deemed to violate this
subsection).
(d) During the term of the Recipient’s relationship with Franchisee, there is no
geographical limitation on these restrictions, meaning that Recipient and each of its Owners
shall not engage in the conduct referred to in subsections 3(c)(1), (2) and (3) at any location.
During the two year period following the later of: (i) the termination or expiration of the
Recipient’s relationship with Franchisee (regardless of the cause for termination or
expiration); or (ii) the date of a final non-appealable judgment or order of any court,
arbitrator, panel of arbitrators or tribunal that enforces this Section 3, these restrictions shall
apply:
(i) at the location of the Franchisee’s Franchised Business;
(ii) within ten (10) miles of the Franchisee’s Franchised Business;
(iii) within ten (10) miles of any other Happy Tax® location owned, in
operation, under development or to be developed by Franchisor, its affiliates or franchisees
of Franchisor and/or its affiliates on the date of this Agreement;
(e) Recipient covenants not to engage in any activity, which might injure the
goodwill of the Principal Trademarks or the System at any time. This provision shall
survive termination of the Recipient’s relationship with Franchisee.
(f) Recipient and its Owners expressly acknowledge that they possess skills
and abilities of a general nature and have other opportunities for exploiting these skills.
Consequently, the enforcement of the covenants made in this Section 3 will not deprive
Recipient or its Owners of their personal goodwill or ability to earn a living.
(g) Recipient and its Owners agree and acknowledge that each of the covenants
contained herein are reasonable limitations as to time, geographical area and scope of
activity to be restrained and do not impose a greater restraint than is necessary to protect
the know-how, reputation, goodwill and other legitimate business interests of Franchisor
and its affiliates, including but not limited to: (i) maintaining the confidential nature of the
Confidential Information; (ii) preserving the Franchisor’s ability to develop franchisees at
or near the Franchisee’s location, within the geographic boundaries of the restrictive
covenant described above in subsection 3(d)(1), (2), (3), (4) and (5); (iii) preventing
potential customer confusion; (iv) protecting other franchisees from competition from
Recipient; and (v) protecting the System as a whole including the franchisee network. If
5
any provision of this Confidentiality, Non-Use and Non-Competition Agreement Form
(including any sentences, clauses, or any part thereof) shall be held contrary to law or
incomplete or unenforceable in any respect, the remaining provisions shall not be affected
but shall remain in full force and effect; any invalidated provisions shall be severed and
this Agreement modified to the extent necessary to render it valid and enforceable.
(h) Franchisor, its affiliates and Franchisee shall have the right, in its sole
discretion to reduce the scope of any covenant contained in this Section 3 effective
immediately upon Recipient’s receipt of written notice and Recipient agrees to comply
forthwith with any covenants as so modified which will be enforceable notwithstanding
the provisions of Section 6.
4. Enforcement
Recipient and its Owners acknowledges that violation of the covenants contained
in this Agreement would result in immediate and irreparable injury to Franchisee,
Franchisor and its affiliates for which no adequate remedy at law will be available.
Accordingly, Recipient and its Owners hereby consent to the entry of an injunction
procured by Franchisee, Franchisor and/or its affiliates prohibiting any conduct by
Recipient and its Owners in violation of the terms, covenants and/or restrictions of this
Agreement without the need of a bond. Recipient and its Owners expressly agrees that it
may conclusively be presumed in any legal action that any violation of the terms of these
terms, covenants and/or restrictions was accomplished by and through my unlawful
utilization of the Confidential Information. Further, Recipient and its Owners expressly
agree that any claims Recipient may have against Franchisee, Franchisor and/or its
affiliates will not constitute a defense to the enforcement of the terms, covenants and/or
restrictions set forth in this Agreement by Franchisee, Franchisor and/or its affiliates.
Recipient and its Owners further agree to pay all costs and expenses (including attorneys’
fees, experts’ fees, court costs and all other expenses of litigation) incurred by Franchisee,
Franchisor and/or its affiliates in connection with the enforcement of the terms, covenants
and/or restrictions of this Agreement.
5. Definitions
(a) As used herein, (with respect to Recipient) "subsidiaries" means any and all
corporations, limited liability companies, partnerships, trusts or other entities controlling,
controlled by or under common control with Recipient. As used herein, (with respect to
Recipient) "affiliates" means with respect to a corporation, limited liability company or
partnership (i) any employee, agent, officer, director, shareholder, member or partner or
(ii) any corporation, limited liability company, partnership, trust or other entity controlling,
controlled by or under common control with such corporation, limited liability company,
partnership or any person described in (i) above, or (iii) any employee, agent, officer,
director, trustee, general partner, or ten percent (10%) shareholder or member of any person
or entity described in (ii) above, or (iv) any person who is a member, other than as a limited
partner with any person described in (i) and (ii) above in a relationship of joint venture,
general partnership or similar form of unincorporated business association. For purposes
6
of these definitions, the term "control" shall mean the control or ownership of ten percent
(10%) or more of the beneficial interest in the person or entity referred to.
(b) The term "Competitive Business" means: (i) any business involving the
establishment and/or operation of an income tax preparation business, or (ii) any business
granting franchises or licenses to others to operate such a business (other than a Franchised
Business operated under a franchise agreement with Franchisor).
(c) The term “Owner” means any individual or entity (including all spouses,
partners, members or shareholders of such individual or entity) that has any direct or
indirect ownership interest of five percent (5%) or more in Recipient (or at such later time
as they assume such status), whether or not such interest is of record, beneficially or
otherwise. The term “Owners” shall also include individuals, partners, members and
shareholders and (spouses of such individuals, partners, members and shareholders) with
an ownership interest of five percent (5%) or more in any partnership, corporation or
limited liability company that holds a controlling interest in the Recipient entity.
6. Miscellaneous.
(a) Franchisee, Franchisor and its affiliates make no representations or
warranties as to the accuracy or completeness of the Confidential Information provided to
Recipient and shall not be liable, directly or indirectly, to Recipient or any of Recipient's
subsidiaries or affiliates as a result of any use of the Confidential Information by or on
behalf of Recipient and/or its subsidiaries or affiliates. Recipient specifically waives any
and all claims for any loss or damage suffered by it due to its use of the Confidential
Information and agrees to indemnify and hold Franchisee, Franchisor and its affiliates
harmless for any claims made against Franchisee, Franchisor and/or its affiliates based
upon Recipient's provision of the Confidential Information to third parties.
(a) If all or any portion of the covenants not to compete set forth in this
Agreement are held unreasonable, void, vague or illegal by any court or agency with
competent jurisdiction over the parties and subject matter, the court, arbitrator or agency
will be empowered to revise and/or construe the covenants to fall within permissible legal
limits, and should not by necessity invalidate the entire covenants. Recipient and its
Owners acknowledge and agree to be bound by any lesser covenant subsumed within the
terms of this Agreement as if the resulting covenants were separately stated in and made a
part of this Agreement.
(c) This Agreement shall be binding upon and shall inure to the benefit of
Franchisee and Recipient and their respective subsidiaries, affiliates, successors and
assigns.
(d) This Agreement shall be governed by the laws of the State of Florida
without recourse to Florida (or any other) choice of law or conflicts of law principles.
(e) This Agreement contains the complete understanding of Recipient and
7
Franchisee with respect to the Confidential Information and this Agreement shall not be
amended without the prior written consent of the parties.
(f) Recipient acknowledges that Franchisor and its affiliates are third-party
beneficiaries under this Agreement and may enforce this Agreement. Recipient further
acknowledges that: (i) a copy of this Agreement is being delivered to Franchisor; (ii)
Franchisor is relying on the parties’ compliance with this Agreement; and (iii) this
Agreement may not be amended, or terminated nor any rights or obligations of Recipient
waived hereunder without the prior written consent of the Franchisor.
(g) This Agreement may be executed in counterparts and each copy so executed
and delivered shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.
Recipient:
Franchisee:
By:
Its:
FRANCHISE AGREEMENT
EXHIBIT C6
STATE ADDENDA TO THE FRANCHISE AGREEMENT
AMENDMENT TO THE
FRANCHISE AGREEMENT
FOR USE IN CALIFORNIA
If any of the terms of the Franchise Agreement are inconsistent with the terms below, the terms below
control.
Sections 14.2 and 14.3 are deleted and in their place are substituted the following:
14.2 Termination by Us Without Right to Cure. We may terminate this Agreement
without notice and the opportunity to cure for any of the following reasons:
(a) The franchisee or the business to which the franchise relates has been judicially
determined to be insolvent, all or a substantial part of the assets thereof are assigned to or for the
benefit of any creditor, or the franchisee admits his or her inability to pay his or her debts as they
come due;
(b) The franchisee abandons the franchise by failing to operate the business for five
consecutive days during which the franchisee is required to operate the business under the terms of
the franchise, or any shorter period after which it is not unreasonable under the facts and
circumstances for the franchisor to conclude that the franchisee does not intend to continue to
operate the franchise, unless such failure to operate is due to fire, flood, earthquake, or other
similar causes beyond the franchisee’s control;
(c) The franchisor and franchisee agree in writing to terminate the franchise;
(d) The franchisee makes any material misrepresentations relating to the acquisition of the
franchise business or the franchisee engages in conduct which reflects materially and unfavorably
upon the operation and reputation of the franchise business or system;
(e) The franchisee fails, for a period of 10 days after notification of noncompliance, to
comply with any federal, state, or local law or regulation, including, but not limited to, all health,
safety, building, and labor laws or regulations applicable to the operation of the franchise;
(f) The franchisee, after curing any failure in accordance with Section 14.3 engages in the
same noncompliance whether or not such noncompliance is corrected after notice;
(g) The franchisee breaches the franchise agreement three or more times in a 12-month
period, whether or not corrected after notice;
(h) The franchised business or business premises of the franchise are seized, taken over, or
foreclosed by a government official in the exercise of his or her duties, or seized, taken over, or
foreclosed by a creditor, lienholder, or lessor, provided that a final judgment against the franchisee
remains unsatisfied for 30 days (unless a supersedeas or other appeal bond has been filed); or a
levy of execution has been made upon the license granted by the franchise agreement or upon any
property used in the franchised business, and it is not discharged within five days of such levy;
(i) The franchisee is convicted of a felony or any other criminal misconduct which is
relevant to the operation of the franchise;
(j) The franchisee fails to pay any franchise fees or other amounts due to the franchisor or
its affiliate within five days after receiving written notice that such fees are overdue; or
(k) The franchisor makes a reasonable determination that continued operation of the
franchise by the franchisee will result in an imminent danger to public health or safety.
10.3 Termination by Us with Opportunity to Cure. We may terminate this Agreement,
after sending you notice and a 60 day opportunity to cure, for any other breach of this
Agreement.
FRANCHISEE: Happy Tax Franchising LLC
By:__________________________ By:____________________________
Mario Costanz, CEO
By:__________________________ Date:__________________________
AMENDMENT TO THE
FRANCHISE AGREEMENT
FOR USE IN ILLINOIS
If any of the terms of the Franchise Agreement are inconsistent with the terms below, the
terms below control.
1. Illinois law governs the Franchise Agreement.
2. You agree to bring any claim against us, including our present and former employees
and agents, which in any way relates to or arises out of this Agreement, or any of the dealings of
the parties hereto, solely in arbitration before the American Arbitration Association in the city or
county where our National Headquarters office is located.
3. 815 ILCS 705/41 provides as follows: “Sec. 41. Waivers void. Any condition,
stipulation, or provision purporting to bind any person acquiring any franchise to waive
compliance with any provision of this Act or any other law of this State is void.”
FRANCHISEE: Happy Tax Franchising LLC
By:__________________________ By:____________________________
Mario Costanz, CEO
By:__________________________ Date:__________________________
AMENDMENT TO THE
FRANCHISE AGREEMENT
FOR USE IN MARYLAND
If any of the terms of the Franchise Agreement are inconsistent with the terms below, the terms below
control.
1. Any claims arising under the Maryland Franchise Registration and Disclosure Law
must be brought within 3 years after the grant of the franchise.
2. A franchisee may bring a lawsuit in Maryland for claims arising under the Maryland
Franchise Registration and Disclosure Law.
3. A general release required as a condition of renewal, sale, and/or assignment/transfer
shall not apply to any liability under the Maryland Franchise Registration and Disclosure Law.
4. All representations requiring prospective franchisees to assent to a release, estoppel
or waiver of liability are not intended to nor shall they act as a release, estoppel or waiver of any
liability incurred under the Maryland Franchise Registration and Disclosure Law.
FRANCHISEE: Happy Tax Franchising LLC
By:__________________________ By:____________________________
Mario Costanz, CEO
By:__________________________ Date:__________________________
AMENDMENT TO THE
FRANCHISE AGREEMENT
FOR USE IN MINNESOTA If any of the terms of the Franchise Agreement are inconsistent with the terms below, the terms below
control.
Minn. Stat. §80C.21 and Minn. Rule 2860.4400(J) prohibit the franchisor from requiring
litigation to be conducted outside Minnesota, requiring waiver of a jury trial, or requiring the
franchisee to consent to liquidated damages, termination penalties or judgment notes. In
addition, nothing in the Franchise Disclosure Document or agreements can abrogate or reduce
(1) any of the franchisee’s rights as provided for in Minnesota Statutes, Chapter 80C, or (2)
franchisee’s rights to any procedure, forum, or remedies provided for by the laws of the
jurisdiction.
With respect to franchises governed by Minnesota law, the franchisor will comply with Minn.
Stat. Sec. 80C.14 Subds. 3, 4, and 5 which require (except in certain specified cases), that a
franchisee be given 90 days’ notice of termination (with 60 days to cure) and 180 days’ notice
for non-renewal of the franchise agreement and that consent to the transfer of the franchise
will not be unreasonably withheld.
The franchisor will protect the franchisee’s rights to use the trademarks, service marks, trade
names, logotypes or other commercial symbols or indemnify the franchisee from any loss,
costs or expenses arising out of any claim, suit or demand regarding the use of the name.
Minnesota considers it unfair to not protect the franchisee’s right to use the trademarks. Refer
to Minnesota Statutes 80C.12, Subd. 1(g).
Minnesota Rules 2860.4400(D) prohibits a franchisor from requiring a franchisee to assent
to a general release.
The franchisee cannot consent to the franchisor obtaining injunctive relief. The franchisor
may seek injunctive relief. See Minn. Rules 2860.4400J.
Also, a court will determine if a bond is required.
Any Limitations of Claims section must comply with Minnesota Statutes, Section 80C.17, Subd. 5.
FRANCHISEE: Happy Tax Franchising LLC
By:__________________________ By:____________________________
Mario Costanz, CEO
By:__________________________ Date:__________________________
AMENDMENT TO THE
FRANCHISE AGREEMENT
FOR USE IN NORTH DAKOTA
If any of the terms of the Franchise Agreement are inconsistent with the terms below, the terms below
control.
1. You are not required to sign a general release upon renewal of the franchise agreement.
2. The franchise agreement is amended to also provide as follows:
“Covenants not to compete are generally considered unenforceable in the State of North
Dakota.”
3. The provisions concerning choice of law, jurisdiction and venue, jury waiver, and waiver of
punitive damages are hereby deleted and in their place is substituted the following language:
“You agree to bring any claim against us, including our present and former employees,
agents, and affiliates, which in any way relates to or arises out of this Agreement, or any of
the dealings of the parties hereto, solely in arbitration before the American Arbitration
Association.”
4. North Dakota law governs any cause of action arising out of the franchise agreement.
5. Any requirement in the Franchise Agreement that requires you to pay all costs and expenses
incurred by us in enforcing the agreement is void. Instead, the prevailing party in any enforcement
action is entitled to recover all costs and expenses including attorney's fees.
FRANCHISEE: Happy Tax Franchising LLC
By:__________________________ By:____________________________
Mario Costanz, CEO
By:__________________________ Date:__________________________
AMENDMENT TO THE
FRANCHISE AGREEMENT
FOR USE IN RHODE ISLAND
If any of the terms of the Franchise Agreement are inconsistent with the terms below, the terms below
control.
1. If the franchise agreement contains any provisions that conflict with the Rhode Island
Franchise Investment Act, the provisions of this Addendum shall prevail to the extent of such
conflict.
2. Any provision in the franchise agreement restricting jurisdiction or venue to a forum
outside of Rhode Island is void with respect to a claim otherwise enforceable under the Rhode Island
Franchise Investment Act.
3. Any provision in the franchise agreement requiring the application of the laws of a
state other than Rhode Island is void with respect to a claim otherwise enforceable under the Rhode
Island Franchise Investment Act.
4. The Rhode Island Franchise Investment Act stipulates that you cannot release or
waive any rights granted under this Act. Any provision of this franchise agreement, which constitutes
a waiver of rights granted under the Act, is superseded.
5. You agree to bring any claim against us, including our present and former employees
and agents, which in any way relates to or arises out of this Agreement, or any of the dealings of the
parties hereto, solely in arbitration before the American Arbitration Association.
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment on
the dates noted below, to be effective as of the Effective Date of the Franchise Agreement.
FRANCHISEE: Happy Tax Franchising LLC
By:__________________________ By:____________________________
Mario Costanz, CEO
By:__________________________ Date:__________________________
SOUTH DAKOTA ADDENDUM
TO THE FRANCHISE AGREEMENT
If any of the terms of the Franchise Agreement are inconsistent with the terms below, the terms below
control.
1. The Franchise Agreement is clarified to also indicate that 50% of the initial franchise fee
and 50% of royalties are deemed paid for the use of our Marks and 50% are deemed paid
for our training, support, and franchise system.
FRANCHISEE: Happy Tax Franchising LLC
By:__________________________ By:____________________________
Mario Costanz, CEO
By:__________________________ Date:__________________________
AMENDMENT TO THE FRANCHISE AGREEMENT
FOR USE IN WISCONSIN
If any of the terms of the Franchise Agreement are inconsistent with the terms below, the
terms below control.
1. If the Franchise Agreement contains any provision that conflict with the Wisconsin
Fair Dealership Law, the provisions of this Addendum shall prevail to the extent of
such conflict.
2. The Franchise Agreement is amended to also include the following language:
With respect to franchises governed by Wisconsin law, the Wisconsin Fair
Dealership Law applies to most, if not all, franchise agreements and prohibits the
termination, cancellation, non-renewal or the substantial change of the competitive
circumstances of a dealership agreement without good cause. That Law further
provides that 90 days prior written notice of a proposed termination, etc. must be
given to the dealer. The dealer has 60 days to cure the deficiency and if the
deficiency is cured, the notice is void.
FRANCHISEE: Happy Tax Franchising LLC
By:__________________________ By:____________________________
Mario Costanz, CEO
By:__________________________ Date:__________________________
EXHIBIT D
CONFIDENTIAL OPERATING MANUAL TABLE OF CONTENTS
EXHIBIT E
LIST OF CURRENT AND FORMER FRANCHISEES
AS OF APRIL 30, 2016
CURRENT FRANCHISEES
The following is a list of the names of all current franchisees and the address and telephone number
of each of their outlets.
Arizona
Crystal Hernandez 21677 W Pima St, Avondale AZ 85326 623-889-1363
California
Chris Wood 605 Colusa Ave, El Cerrito CA 94530 415-420-2889
Adrian Esparza 5525 East Avenue T10, Palmdale CA 93552 661-433-3794
Florida
Jason Stuber, VSTR, LLC, 1835 Nectarine Trail, Claremont FL 34714 407-421-7594
Yvonne Walker 1517 Forest Hills Road, Jacksonville FL 32208 904-502-8156
Georgia
Sherwin Gloston 508 Windsong Circle, Augusta GA 30907 706-254-9158
Illinois
James Bucaro, The Tax Guys 2763 E. Country Lake Rd, Arlington Heights IL 60004 847-767-
4583
Nevada
Jamey Hill, J L Hill Group LLC 7808 Natures Song St, Las Vegas NV 89131 702-563-5577
Felipe Garcia 1833 Resistol Dr, Reno NV 89521 775-303-4760
New York
Arnrai (Ray) Banks 212 Fishkill Avenue, Beacon NY 12508 845-275-2667
Norman Leon 187-32 Linden Blvd, St Albans NY 11412 347-355-8846
Ohio
Thomas Few 536 Stonebridge Blvd, Pickerington OH 43147 614-940-6138
South Carolina
Pamela Butler 113 W Casperton Drive, Columbia SC 29223 803-261-8769
Texas
Shana Ortega 144 W. 2nd, Hereford TX 79045 806-517-5773
Constance Fields PO Box 773, Leander TX 78646 512-584-1814
FRANCHISE AGREEMENT SIGNED BUT OUTLET NOT YET OPEN
Alabama
Franchesca Ross Jones 1970 Mitchell Creek Road, Wetumpka AL 36093 334-549-4176
Arizona
Irma Murcia 10640 N 28th Dr. C-103, Phoenix AZ 85029 623-206-1228
Georgia
Beverly Ellis 2929 Landrum Drive SW H49, Atlanta GA 30311 678-637-8982
Louisiana
Tiffany Cahee 240 N Pine St, Lafayette LA 70501 337-591-4952
Missouri
Robert Reffell 3941 North Grand Ave, Kansas City MO 64116 832-889-7722
Nevada
Nicole Hammond 3700 Plum Blossom Court, Las Vegas NV 89129 702-782-2389
New Jersey
Lamin Ceesay 485 Bergen Ave, Jersey City NJ 7304 917-500-5717
Texas
Averie Hatton 4415 Sorsby Drive, Houston TX 77047 281-814-5031
Freeman Ngumezi 14503 Stone Park Rd, Missouri City TX 77489 713-487-5193
Jennifer Lancaster PO Box 1363, Waco TX 76703 214-605-8970
FORMER FRANCHISEES
The following is a list of the names, city and state, and current business telephone number, or if
unknown, the last known home telephone number of every franchisee who had an outlet
terminated, canceled, not renewed, or otherwise voluntarily or involuntarily ceased to do business
under the franchise agreement during our most recently completed fiscal year or who have not
communicated with us within 10 weeks of the Issuance 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.
NONE
EXHIBIT F
HAPPY TAX FRANCHISING, LLC
FINANCIAL STATEMENTS
EXHIBIT G
LIST OF AREA REPRESENTATIVES
The following constitutes disclosures about our Area Representatives as to Items 2, 3, 4,
and 11:
Item 2- Business Experience
Florida:
Dora Cuyler, Area Representative. Ms. Cuyler has served as an Area Representative for us
in Florida since August 2016. From May 2014 to the present, Ms. Cuyler has also served
in Franchise Sales Consulting in Virginia Beach, Virginia. From May 2015 to May 2016,
Ms. Cuyler served as a Franchise Sales Representative for Liberty Tax Service in Virginia
Beach, Virginia. From May 2013 to May 2015, Ms. Cuyler served as Franchise Sales
Support for Liberty Tax Service in Virginia Beach, Virginia. From February 2011 to May
2014, Ms. Cuyler served as a Tax Preparer/Marketing Manager for Liberty Tax Service in
Virginia Beach, Virginia.
Mary Fonts, Area Representative. Ms. Fonts has served as an Area Representative for us
in Florida since August 2016. From October 1989 until the present, Ms. Fonts has served
as the President of Fonts Income Tax Service Corp. in New York. From March 2015 until
the present, Ms. Fonts has served as President of Fonts Enterprise in Minnesota. From
September 2015 to January 2016, Ms. Fonts served as Communication Courses Support
for Landmark Communication in Minnesota. From July 2011 until May 2012, Ms. Fonts
served as a Project Manager for Landmark Education in Minnesota. From October 2006
until June 2012, Ms. Fonts served in varying Spanish bi-lingual roles for the Richfield
Public Schools in Minnesota.
New Jersey:
Anthony LoCascio, Area Representative. Mr. LoCascio has served as an Area
Representative for us, as the Managing Member of Anthony LoCascio Consulting, LLC,
in New Jersey since June 2016. From 1981 to the present, Mr. LoCascio has also served
as the President and owner of Anthony LoCascio Consulting, LLC in New Jersey.
Ohio:
Thomas Few, Area Representative. Mr. Fink has served as an Area Representative for us,
as the Managing Member of Fusion Insurance & Financial Services, LLC, in Ohio since
April 2016. From November 2015 until the present, Mr. Few has also served as a Happy
Tax unit franchise owner in Pickerington, Ohio. From January 2016 until the present, Mr.
Few has served as an Independent Contractor for Lincoln Heritage in Pickerington, Ohio.
From January 2014 to December 2015, Mr. Few served as an Independent Contractor for
Symmetry Financial in Pickerington, Ohio. From September 2011 to December 2014, Mr.
Few served as a Consultant for Dedicated Technologies in Columbus, Ohio.
Item 3- Litigation
In the matter of the Applications and/or Licenses of Anthony Locascio, Stipulation
No. 2008-0048-S (State of New York Insurance Dept.). On March 19, 2008, Anthony
Locascio paid a $250 fine to the New York Insurance Department for failing to notify them,
in violation of New York insurance laws, within 30 days of the settlement of In the matter
of: Proceedings by the Commissioner of Banking and Insurance, State of New Jersey, to
fine Anthony Locascio, Reference No. 8058196, wherein on October 18, 2005, Mr.
Locascio paid a $2,500 fine to the New Jersey Department of Banking to resolve a claim
that he submitted an annuity application to American Skandia Life Assurance Corporation
over the telephone and not in New Jersey, as represented. Locascio claimed that the
violation was not willful or intentional and he waived his right to a hearing on the matter.
Other than the foregoing, there is no litigation related to Area Representatives
required to be disclosed in this item.
Item 4- Bankruptcy
There is no bankruptcy related to Area Representatives required to be disclosed in
this item.
Item 11- Franchisor’s Assistance, Advertising, Computer Systems, and Training
Area Representatives may assist in operational support of unit franchisees.
EXHIBIT H
GENERAL RELEASE
THIS RELEASE is made and given by _____________________________________________,
(“Releasor”) with reference to the following facts:
1. Releasor and Happy Tax Franchising LLC (Releasee) are parties to one or more franchise
agreements.
2. The following consideration is given:
_______ the execution by Releasor of a successor Franchise Agreement or other
renewal documents renewing the franchise (the “Franchise”); or
_______ Releasor’s consent to Releasee’s transfer of its rights and duties under the
Franchise Agreement; or
_______ Releasor’s consent to Releasee’s assumption of rights and duties under the
Franchise Agreement; or
_______________________________________________________ [insert description]
3. Release- Franchisee and all of Franchisee’s guarantors, members, employees, agents,
successors, assigns and affiliates fully and finally release and forever discharge Releasee,
its past and present agents, employees, officers, directors, members, Franchisees,
successors, assigns and affiliates (collectively “Released Parties”) from any and all claims,
actions, causes of action, contractual rights, demands, damages, costs, loss of services,
expenses and compensation which Franchisee could assert against Released Parties or any
of them up through and including the date of this Release.
4. THIS IS A SPECIFIC RELEASE GIVING UP ALL RIGHTS WITH RESPECT TO THE
TRANSACTIONS OR OCCURRENCES THAT ARE BEING RELEASED UNDER
THIS AGREEMENT.
5. California Releasor- You represent and warrant that YOU EXPRESSLY WAIVE ANY
AND ALL RIGHTS AND BENEFITS UNDER CALIFORNIA CIVIL CODE §1542,
which provides as follows:
A general release does not extend to claims which the creditor does not
know or suspect to exist in his or her favor at the time of executing the
release, which if known by him or her must have materially affected his or
her settlement with the debtor.
6. The above Release shall not apply to any liabilities arising under the California Franchise
Investment Law, the California Franchise Relations Act, Indiana Code § 23-2-2.5.1
through 23-2-2.7-7, the Maryland Franchise Registration and Disclosure Law, Michigan
Franchise Investment Law, Minnesota Franchise Act, North Dakota franchise laws, and
the Rhode Island Investment Act.
Franchisee: Happy Tax Franchising LLC
By:_______________________________ By:_______________________________
Mario Costanz, CEO
Printed Name:_______________________ Date:______________________________
Title:______________________________
EXHIBIT I
PROMISSORY NOTE
Maker(s): (Name) of (Address)
(the "Maker")
Payee: Happy Tax Franchising, LLC of 350 Lincoln Road, Miami Beach, FL
33139 (the "Payee")
Principal Amount: $ USD
FOR VALUE RECEIVED, Maker agrees as follows:
1. The Maker promises to pay to the Payee at such address as may be provided in writing to
the Maker, the principal sum of ________________ dollars ($__________), with interest
payable on the unpaid principal at the rate of ten percent (7%) per annum, compounded
monthly.
2. This Note will be repaid as follows:
[insert repayment terms].
3. Payment shall be made by wire transfer or other method agreed upon by Payee. However,
pursuant to Payee’s ACH or Credit Card Authorization, Payee is authorized to initiate
entries on Maker’s checking or savings accounts or credit or debit card, as identified in the
ACH or Credit Card Authorization, and if necessary, to initiate adjustments for any
transactions credited in error. Maker hereby authorizes Payee to initiate entries on Maker’s
checking or savings accounts or credit or debt card for the purposes of paying the principal
and interest due herein and to initiate adjustments for any such transactions, as necessary.
4. Maker represents and warrants to Payee that this Note is being made in consideration for
granting a Happy Tax franchisee to Maker. Maker further represents and warrants to
Payee that the execution of this Note and the performance of the obligations stated herein
have been duly authorized by all necessary action in accordance with all applicable
law.
5. At any time while not in default under this Note, the Maker may pay the outstanding
principal and interest then owing under this Note to the Payee without further bonus or
penalty.
6. It shall be deemed to be a default of this Note if (i) Maker shall become insolvent,
meaning unable to pay bills in the ordinary course as they become due; (ii) Maker shall
admit in writing its inability to pay its debts as they mature; or (iii) Maker shall fail to
make any payment due under this Note. If the Maker defaults under this Note, then the
Payee may declare the principal amount owing and interest due under this Note at that
time to be immediately due and payable.
7. All costs, expenses and expenditures including, and without limitation, the costs and
attorney fees incurred by the Payee in enforcing this Note as a result of any default by the
Maker, will be added to the principal then outstanding and will immediately be paid by
the Maker. In the case of the Makers default and the acceleration of the amount due by
the Payee all amounts outstanding under this Note will bear interest at the rate of ten
percent (10%) per annum from the date of demand until paid.
8. If any term, covenant, condition or provision of this Note is held by a court of competent
jurisdiction to be invalid, void or unenforceable, it is the parties' intent that such
provision be reduced in scope by the court only to the extent deemed necessary by that
court to render the provision reasonable and enforceable and the remainder of the
provisions of this Note will in no way be affected, impaired or invalidated as a result.
9. This Note shall be construed in all respects and enforced according to the laws of the
State of Florida. Maker hereby irrevocably and unconditionally agrees that it shall bring
any claim arising out of related to this note solely in a Florida state court in Miami, Florida
or the United States District Court in Dade County, Florida. Maker waives the right to
trial by jury on any claims between the parties.
10. This Note will endure to the benefit of and be binding upon the respective heirs,
executors, administrators, successors and assigns of the Makers and the Payee. The
Maker waives presentment for payment, notice of non-payment, protest and notice of
protest. Nothing herein shall limit Payee’s right to assign, transfer, sell or give this Note or
the right to receive principal and/or interest due hereunder to a third party.
11. The rights and remedies of Payee as provided herein shall be cumulative and concurrent,
and may be pursued singly, successively or together against Maker, at the sole discretion
of Payee; and the failure to exercise any such right or remedy shall in no event be
construed as a waiver or release of the same. Payee shall not by any act of omission or
commission be deemed to waive any of its rights or remedies under this Note unless such
waiver is in writing and signed by Payee, and then only to the extent specifically set forth
therein; and a waiver of one event shall not be construed as continuing or as a bar to or
waiver of such right or remedy on a subsequent event.
12. The obligations to make the payments provided for in this Note are absolute and
unconditional and not subject to any defense, set-off, counterclaim, rescission,
recoupment or adjustment whatsoever.
13. This Note constitutes the entire understanding of the parties and supersedes all prior
negotiations, commitments, representations and undertakings of the parties with respect
to the subject matter hereof. This Note may not be changed orally, but only by an
agreement in writing signed by Maker and Payee.
IN WITNESS WHEREOF, the Maker(s) has duly affixed his/her signature under seal on
this day of .
Signature of Maker Signature of Maker
Printed Name of Maker Printed Name of Maker
EXHIBIT J
STATE ADDENDA TO DISCLOSURE DOCUMENT
ADDITIONAL DISCLOSURES FOR THE
FRANCHISE DISCLOSURE
DOCUMENT OF HAPPY TAX
FRANCHISING, LLC.
The following are additional disclosures for the Franchise Disclosure Document of
Happy Tax Franchising, LLC required by various state franchise laws. Each provision of these
additional disclosures will only apply to you if the applicable state franchise registration and
disclosure law applies to you.
CALIFORNIA
As to franchises governed by the California Franchise Investment Law, if any of the terms of the
Disclosure Document are inconsistent with the terms below, the terms below control.
The “Risk Factors” on the second page of the Disclosure Document are amended to also include
the following:
THE CALIFORNIA FRANCHISE INVESTMENT LAW REQUIRES THAT A COPY OF ALL
PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE BE
DELIVERED TOGETHER WITH THE FRANCHISE DISCLOSURE DOCUMENT.
Item 3 of the Disclosure Document is amended by adding the following paragraph:
Neither we nor any person or franchise broker in Item 2 of this disclosure document is subject to
any currently effective order of any national securities association or national securities
exchange, as defined in the Securities Exchange Act of 1934, 15 U.S.C.A. 78a et seq.,
suspending or expelling these persons from membership in this association or exchange.
Item 17 of the Disclosure Document is amended by adding the following paragraphs:
California Business and Professions Code Sections 20000 through 20043 provide rights to the
franchisee concerning termination, transfer, or non-renewal of a franchise. If the franchise
agreement contains a provision that is inconsistent with the law, the law will control.
Item 17.g. of the Disclosure Document is modified to state that, in addition to the grounds for
immediate termination specified in Item 17.h., the franchisor can terminate upon written notice
and a 60 day opportunity to cure for a breach of the Franchise Agreement.
Item 17.h. of the Disclosure Document is modified to state that the franchisor can terminate
immediately for insolvency, abandonment, mutual agreement to terminate, material
misrepresentation, legal violation persisting 10 days after notice, repeated breaches, judgment,
criminal conviction, monies owed to the franchisor more than 5 days past due, and imminent
danger to public health or safety.
The franchise agreement requires application of the laws of Florida. This provision may not be
enforceable under California law.
The franchise agreement contains a covenant not to compete which extends beyond the
termination of the franchise. This provision may not be enforceable under California law.
SECTION 31125 OF THE FRANCHISE INVESTMENT LAW REQUIRES US TO GIVE TO
YOU A DISCLOSURE DOCUMENT APPROVED BY THE COMMISSIONER OF
CORPORATIONS BEFORE WE ASK YOU TO CONSIDER A MATERIAL
MODIFICATION OF YOUR FRANCHISE AGREEMENT.
YOU MUST SIGN A GENERAL RELEASE OF CLAIM IF YOU RENEW OR TRANSFER
YOUR FRANCHISE. CALIFORNIA CORPORATIONS CODE §31512 VOIDS A WAIVER
OF YOUR RIGHTS UNDER THE FRANCHISE INVESTMENT LAW (CALIFORNIA CODE
§§31000 THROUGH 31516). BUSINESS AND PROFESSIONS CODE §20010 VOIDS A
WAIVER OF YOUR RIGHTS UNDER THE FRANCHISE RELATIONS ACT (BUSINESS
AND PROFESSIONS CODE §§20000 THROUGH 20043).
Our website is located at www.HappyTax.com
OUR WEBSITE HAS NOT BEEN REVIEWED OR APPROVED BY THE CALIFORNIA
DEPARTMENT OF BUSINESS OVERSIGHT. ANY COMPLAINTS CONCERNING THE
CONTENT OF THIS WEBSITE MAY BE DIRECTED TO THE CALIFORNIA
DEPARTMENT OF BUSINESS OVERSIGHT AT www.dbo.ca.gov.
.
HAWAII
As to franchises governed by the Hawaii Franchise Investment Law, if any of the terms of the
Disclosure Document are inconsistent with the terms below, the terms below control.
THESE FRANCHISES HAVE BEEN FILED UNDER THE FRANCHISE INVESTMENT LAW
OF THE STATE OF HAWAII. FILING DOES NOT CONSTITUTE APPROVAL,
RECOMMENDATION OR ENDORSEMENT BY THE DIRECTOR OF COMMERCE AND
CONSUMER AFFAIRS OR A FINDING BY THE DIRECTOR OF COMMERCE AND
CONSUMER AFFAIRS THAT THE INFORMATION PROVIDED HEREIN IS TRUE,
COMPLETE AND NOT MISLEADING.
THE FRANCHISE INVESTMENT LAW MAKES IT UNLAWFUL TO OFFER OR SELL ANY
FRANCHISE IN THIS STATE WITHOUT FIRST PROVIDING TO THE PROSPECTIVE
FRANCHISEE, OR SUBFRANCHSIOR, AT LEAST SEVEN DAYS PRIOR TO THE
EXECUTION BY THE PROSPECTIVE FRANCHISEE OF ANY BINDING FRANCHISE OR
OTHER AGREEMENT, OR AT LEAST SEVEN DAYS PRIOR TO THE PAYMENT OF ANY
CONSIDERATION BY THE FRANCHISEE, OR SUBFRANCHISOR, WHICHEVER OCCURS
FIRST, A COPY OF THE DISCLOSURE DOCUMENT, TOGETHER WITH A COPY OF ALL
PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE.
THIS DISCLOSURE DOCUMENT CONTAINS A SUMMARY ONLY OF CERTAIN
MATERIAL PROVISIONS OF THE FRANCHISE AGREEMENT. THE CONTRACT OR
AGREEMENT SHOULD BE REFERRED TO FOR A STATEMENT OF ALL RIGHTS,
CONDITIONS, RESTRICTIONS AND OBLIGATIONS OF BOTH THE FRANCHISOR AND
THE FRANCHISEE.
Registered agent in the stat authorized to receive service of process:
Commissioner of Securities of the State of Hawaii
Department of Commerce and Consumer Affairs
Business Registration Division
Securities Compliance Branch
335 Merchant Street, Room 203
Honolulu, HI 96813
ILLINOIS
As to franchises governed by the Illinois Franchise Disclosure Act, if any of the terms of the
Disclosure Document are inconsistent with the terms below, the terms below control.
1. Item 17.u. is modified to provide that dispute resolution is by arbitration.
2. Item 17.v. is modified to provide that arbitration shall take place in the location of
our corporate headquarters.
3. Item 17.w. is modified to provide that Illinois law applies.
4. Any condition, stipulation, or provision of the Franchise Agreement purporting to
bind you to waive compliance with any provision of the Illinois Franchise Disclosure Act or any
other law of the State of Illinois is void.
5. The conditions under which your Franchise Agreement can be terminated and your
rights upon nonrenewal may be affected by Sections 19 and 20 of the Illinois Franchise Disclosure
Act.
MARYLAND
As to franchises governed by the Maryland Franchise Registration and Disclosure Law, if any of the
terms of the Disclosure Document are inconsistent with the terms below, the terms below control.
1. Item 17.b. is modified to also provide, “The general release required as a condition of
renewal, sale, and/or assignment/transfer shall not apply to any liability under the Maryland
Franchise Registration and Disclosure Law.
2. Item 17.u. is modified to also provide, “A franchisee may bring a lawsuit in Maryland
for claims arising under the Maryland Franchise Registration and Disclosure Law.”
3. Item 17.v. is modified to also provide, “Any claims arising under the Maryland
Franchise Registration and Disclosure Law must be brought within 3 years after the grant of the
franchise.”
NOTICE REQUIRED BY STATE OF MICHIGAN
THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE
SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWING
PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE
VOID AND CANNOT BE ENFORCED AGAINST YOU.
Each of the following provisions is void and unenforceable if contained in any documents
relating to a franchise:
(a) A prohibition on the right of a franchisee to join an association of franchisees.
(b) A requirement that a franchisee assent to a release, assignment, novation, waiver, or
estoppel which deprives a franchisee of rights and protections provided in this act. This shall not
preclude a franchisee, after entering into a franchise agreement, from settling any and all claims.
(c) A provision that permits a franchisor to terminate a franchise prior to the expiration of its
term except for good cause. Good cause shall include the failure of the franchisee to comply with
any lawful provision of the franchise agreement and to cure such failure after being given written
notice thereof and a reasonable opportunity, which in no event need be more than 30 days, to cure
such failure.
(d) A provision that permits a franchisor to refuse to renew a franchise without fairly
compensating the franchisee by repurchase or other means for the fair market value at the time of
expiration of the franchisee’s inventory, supplies, equipment, fixtures, and furnishings. Personalized
materials which have no value to the franchisor and inventory, supplies, equipment, fixtures, and
furnishings not reasonably required in the conduct of the franchise business are not subject to
compensation. This subsection applies only if: (i) the term of the franchise is less than 5 years and
(ii) the franchisee is prohibited by the franchise or other agreement from continuing to conduct
substantially the same business under another trademark, service mark, trade name, logotype,
advertising, or other commercial symbol in the same area subsequent to the expiration of the franchise
or the franchisee does not receive at least 6 months advance notice of franchisor’s intent not to renew
the franchise.
(e) A provision that permits the franchisor to refuse to renew a franchise on terms generally
available to other franchisees of the same class or type under similar circumstances. This section does
not require a renewal provision.
THIS MICHIGAN NOTICE APPLIES ONLY TO FRANCHISEES WHO ARE
RESIDENTS OF MICHIGAN OR LOCATE THEIR FRANCHISES IN MICHIGAN.
(f) A provision requiring that arbitration or litigation be conducted outside this state. This
shall not preclude the franchisee from entering into an agreement, at the time of arbitration, to conduct
arbitration at a location outside this state.
(g) A provision which permits a franchisor to refuse to permit a transfer of ownership of a
franchise, except for good cause. This subdivision does not prevent a franchisor from exercising a
right of first refusal to purchase the franchise. Good cause shall include, but is not limited to:
(i) The failure of the proposed transferee to meet the franchisor’s then-current
reasonable qualifications or standards.
(ii) The fact that the proposed transferee is a competitor of the franchisor or
subfranchisor.
(iii) The unwillingness of the proposed transferee to agree in writing to comply
with all lawful obligations.
(iv) The failure of the franchisee or proposed transferee to pay any sums owing to
the franchisor or to cure any default in the franchise agreement existing at the time of the proposed
transfer.
(h) A provision that requires the franchisee to resell to the franchisor items that are not
uniquely identified with the franchisor. This subdivision does not prohibit a provision that grants to
a franchisor a right of first refusal to purchase the assets of a franchise on the same terms and
conditions as a bona fide third party willing and able to purchase those assets, nor does this
subdivision prohibit a provision that grants the franchisor the right to acquire the assets of a franchise
for the market or appraised value of such assets if the franchisee has breached the lawful provisions
of the franchise agreement and has failed to cure the breach in the manner provided in subdivision
(c).
(i) A provision which permits the franchisor to directly or indirectly convey, assign, or
otherwise transfer its obligations to fulfill contractual obligations to the franchisee unless provision
has been made for providing the required contractual services.
The fact that there is a notice of this offering on file with the attorney general does not
constitute approval, recommendation, or endorsement by the attorney general.
Any questions regarding this notice should be directed to the Department of Attorney
General, State of Michigan, 670 G. Mennen Williams Building, 525 West Ottawa, Lansing,
Michigan 48913, telephone (517) 373-7117.
MINNESOTA
As to franchises governed by the Minnesota franchise laws, if any of the terms of the Disclosure
Document are inconsistent with the terms below, the terms below control.
Minn. Stat. §80C.21 and Minn. Rule 2860.4400(J) prohibit the franchisor from requiring
litigation to be conducted outside Minnesota, requiring waiver of a jury trial, or requiring the
franchisee to consent to liquidated damages, termination penalties or judgment notes. In
addition, nothing in the Franchise Disclosure Document or agreements can abrogate or reduce
(1) any of the franchisee’s rights as provided for in Minnesota Statutes, Chapter 80C, or (2)
franchisee’s rights to any procedure, forum, or remedies provided for by the laws of the
jurisdiction.
With respect to franchises governed by Minnesota law, the franchisor will comply with Minn.
Stat. Sec. 80C.14 Subds. 3, 4, and 5 which require (except in certain specified cases), that a
franchisee be given 90 days’ notice of termination (with 60 days to cure) and 180 days’ notice
for non-renewal of the franchise agreement and that consent to the transfer of the franchise
will not be unreasonably withheld.
The franchisor will protect the franchisee’s rights to use the trademarks, service marks, trade
names, logotypes or other commercial symbols or indemnify the franchisee from any loss,
costs or expenses arising out of any claim, suit or demand regarding the use of the name.
Minnesota considers it unfair to not protect the franchisee’s right to use the trademarks. Refer to
Minnesota Statutes 80C.12, Subd. 1(g).
Minnesota Rules 2860.4400(D) prohibits a franchisor from requiring a franchisee to assent to
a general release.
The franchisee cannot consent to the franchisor obtaining injunctive relief. The franchisor
may seek injunctive relief. See Minn. Rules 2860.4400J.
Also, a court will determine if a bond is required.
The Limitations of Claims section must comply with Minnesota Statutes, Section 80C.17, Subd. 5.
NEW YORK
As to franchises governed by the New York franchise laws, if any of the terms of the Disclosure
Document are inconsistent with the terms below, the terms below control.
INFORMATION COMPARING FRANCHISORS IS AVAILABLE. CALL THE STATE
ADMINISTRATORS LISTED IN EXHIBIT A OR YOUR PUBLIC LIBRARY FOR SOURCES
OF INFORMATION. IF YOU LEARN THAT ANYTHING IN THE DISCLOSURE
DOCUMENT IS UNTRUE, CONTACT THE FEDERAL TRADE COMMISSION AND NEW
YORK STATE DEPARTMENT OF LAW BUREAU OF INVESTOR PROTECTION AND
SECURITIES 120 BROADWAY, 23RD FLOOR NEW YORK, N.Y. 10271
THE FRANCHISOR MAY, IF IT CHOOSES, NEGOTIATE WITH YOU ABOUT ITEMS
COVERED IN THE DISCLOSURE DOCUMENT. HOWEVER, THE FRANCHISOR CANNOT
USE THE NEGOTIATING PROCESS TO PREVAIL UPON A PROSPECTIVE FRANCHISEE
TO ACCEPT TERMS WHICH ARE LESS FAVORABLE SET THOSE SET FORTH IN THIS
PROSPECTUS.
We represent that this prospectus does not knowingly omit any material fact or contain any untrue
statement of a material fact.
1. Item 3 of the Disclosure Document is amended as follows:
Other than as described in this Item, neither the franchisor, its predecessor, any of their officers, nor
any person identified in Item 2, nor an affiliate offering franchises under the franchisor’s principal
trademark:
A. Has an administrative, criminal or civil action pending against that person
alleging: a felony, a violation of a franchise, antitrust or securities law, fraud, embezzlement,
fraudulent conversion, misappropriation of property, unfair or deceptive practices or comparable
civil or misdemeanor allegations, including pending actions, other than routine litigation incidental
to the business, which are significant in the context of the number of franchisees and the size,
nature or financial condition of the franchise system or its business operations.
B. Has been convicted of a felony or pleaded nolo contendere to a felony charge
or, within the ten-year period immediately preceding the application for registration, has been
convicted of or pleaded nolo contendere to a misdemeanor charge or has been the subject of a civil
action alleging: violation of a franchise, antifraud or securities law, fraud, embezzlement,
fraudulent conversion or misappropriation of property, or unfair or deceptive practices or
comparable allegations.
C. Is subject to a currently effective injunctive or restrictive order or decree
relating to the franchise, or under a Federal, State or Canadian franchise, securities, antitrust, trade
regulation or trade practice law, resulting from a concluded or pending action or proceeding
brought by a public agency, or is subject to any currently effective order of any national securities
association or national securities exchange, as defined in the Securities and Exchange Act of 1934,
suspending or expelling such person from membership in such association or exchange; or is
subject to a currently effective injunctive or restrictive order relating to any other business activity
as a result of an action brought by a public agency or department, including, without limitation,
actions affecting a license as a real estate broker or sales agent
2. Item 4 of the Disclosure Document is amended to also provide:
Neither the franchisor, its affiliate, its predecessor, officers, or general partner during the 10-year
period immediately before the date of the offering circular: (a) filed as debtor (or had filed against
it) a petition to start an action under the U.S. Bankruptcy Code; (b) obtained a discharge of its debts
under the bankruptcy code; or (c) was a principal officer of a company or a general partner in a
partnership that either filed as a debtor (or had filed against it) a petition to start an action under the
U.S. Bankruptcy Code or that obtained a discharge of its debts under the U.S. Bankruptcy Code
during or within 1 year after the officer or general partner of the franchisor held this position in the
company or partnership.
3. Item 5 of the Disclosure Document is amended to also state that the initial franchise
fee is used for selling, initial training, Manual development, and franchisee support costs.
4. Item 17.d. of the Disclosure Document is amended to also provide that you may
terminate the franchise agreement on any grounds available by law.
5. Item 17.j. of the Disclosure Document is amended to also provide: “However, no
assignment will be made except to an assignee who, in good faith and judgment of the franchisor, is
willing and financially able to assume the franchisor’s obligations under the franchise agreement.”
6. Item 17.w. of the Disclosure Document is amended to also provided that the
foregoing choice of law should not be considered a waiver of any right conferred upon the
franchisor or upon the franchisee by Article 33 of the General Business Law of the State of New
York.
NORTH DAKOTA
As to franchises governed by the North Dakota franchise laws, if any of the terms of the Disclosure
Document are inconsistent with the terms below, the terms below control.
Restrictive Covenants: To the extent that covenants not to compete apply to periods after the term
of the franchise agreement, they are generally unenforceable under North Dakota law.
Applicable Laws: North Dakota law will govern the franchise agreement.
Waiver of Trial by Jury: Any waiver of a trial by jury will not apply to North Dakota Franchises.
Waiver of Exemplary & Punitive Damages: Any waiver of punitive damages will not apply to
North Dakota Franchisees.
General Release: Any requirement that the franchisee sign a general release upon renewal of the
franchise agreement does not apply to franchise agreements covered under North Dakota law.
Enforcement of Agreement: Any requirement in the Franchise Agreement that requires the
franchisee to pay all costs and expenses incurred by the franchisor in enforcing the agreement is
void. Instead, the prevailing party in any enforcement action is entitled to recover all costs and
expenses including attorney's fees.
RHODE ISLAND
As to franchises governed by the Rhode Island Franchise Investment Act, if any of the terms of the
Disclosure Document are inconsistent with the terms below, the terms below control.
Item 17.m. of the Disclosure Document is revised to provide:
Section 19-28.1-14 of the Rhode Island Franchise Investment Act prohibits a franchisee to be
restricted in choice of jurisdiction or venue. To the extent any such restriction is purported to
be required by us, it is void with respect to all franchisees governed under the laws of Rhode
Island.
Item 17.w. of the Disclosure Document is revised to provide:
Rhode Island law applies.
.
VIRGINIA
As to franchises governed by the Virginia Retail Franchising Act, if any of the terms of the
Disclosure Document are inconsistent with the terms below, the terms below control.
1. The following language is added to the end of the "Summary" section of Item
l7(e), entitled Termination by Franchisor Without Cause:
Pursuant to Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful
for a franchisor to cancel a franchise without reasonable cause. If any grounds
for default or termination stated in the Franchise Agreement does not constitute
''reasonable cause," as that term may be defined in the Virginia Retail Franchising
Act or the laws of Virginia, that provision may not be enforceable.
WISCONSIN
As to franchises governed by the Wisconsin Fair Dealership Law, if any of the terms of the
Disclosure Document are inconsistent with the terms below, the terms below control.
1. Item 17 is modified to also provide,
If the franchise agreement contains any provisions that conflict with the Wisconsin Fair
Dealership Law, the provisions of this Addendum shall prevail to the extent of such
conflict.
With respect to franchises governed by Wisconsin law, the Wisconsin Fair Dealership
Law applies to most, if not all, franchise agreements and prohibits the termination,
cancellation, non-renewal or the substantial change of the competitive circumstances of a
dealership agreement without good cause. That Law further provides that 90 days prior
written notice of a proposed termination, etc. must be given to the dealer. The dealer has
60 days to cure the deficiency and if the deficiency is cured, the notice is void.
Happy Tax Franchising, LLC
2
EXHIBIT K
RECEIPT
This disclosure document summarizes certain provisions of the franchise agreement and other
information in plain language. Read this disclosure document and all agreements carefully.
If Happy Tax Franchising, LLC offers you a franchise, it must provide this disclosure document
to you 14 calendar-days before you sign a binding agreement with, or make a payment to, the
franchisor or an affiliate in connection with the proposed franchise sale.
New York and Rhode Island require that we give you this Disclosure Document at the earlier of
the first personal meeting or 10 business days before the execution of the franchise or other
agreement or the payment of any consideration that relates to the franchise relationship.
Michigan requires that we give you this Disclosure Document at least 10 business days before
the execution of any binding franchise or other agreement or the payment of any consideration,
whichever occurs first.
Iowa requires that we give you this Disclosure Document at the earlier of the first personal
meeting or 14 calendar days before you sign a binding agreement with, or make a payment to,
the franchisor or an affiliate in connection with the proposed franchise sale.
If we do not deliver this disclosure document on time or if it contains a false or misleading
statement, or a material omission, a violation of federal law and State law may have occurred and
should be reported to the Federal Trade Commission, Washington, D.C. 20580 and the state
agency listed on Exhibit A.
The franchisor is Happy Tax Franchising, LLC, 350 Lincoln Road, Miami Beach, Florida 33139.
Its telephone number is 844-426-1040.
Issuance Date: September 15, 2016
The franchise sellers for this offering are both of the following as well as any Area Representative
entered below:
X Mario Costanz, Happy Tax Franchising, LLC, 350 Lincoln Road, Miami Beach, Florida 33139;
844-426-1040;
X Melissa Salyer, Happy Tax Franchising, LLC, 350 Lincoln Road, Miami Beach, Florida 33139;
844-426-1040;
____; ______________________ [name]; ___________________________________________
[address and telephone number]
Happy Tax Franchising, LLC authorizes the respective state agencies identified on Exhibit A to
receive service of process for it in that particular state.
Happy Tax Franchising, LLC
3
I have received a Franchise Disclosure Document with an issuance date of September 15, 2016.
This Disclosure Document included the following Exhibits:
Exhibit A State Administrators and Agents for Service Of Process
Exhibit B Franchise Agreement
Exhibit C Exhibits to Franchise Agreement:
1. Principal Trademarks
2. ACH Authorization
3. Retail Rider
4. Telephone Number Assignment Agreement
5. Confidentiality, Non-Use and Non-Competition Agreement Form
6. State Addenda to The Franchise Agreement
Exhibit D Confidential Operating Manual Table of Contents
Exhibit E List of Current and Former Franchisees
Exhibit F Financial Statements
Exhibit G List of Area Representatives
Exhibit H General Release
Exhibit I Promissory Note
Exhibit J State Addenda to Disclosure Document
Exhibit K Receipts
Date: Disclosee: ______________________
(Do Not Leave Blank)
Printed name: ___________________
Disclosee: ______________________
Printed name: ___________________
TO BE RETURNED TO:
You may return the signed receipt by signing, dating, and mailing it to Happy Tax Franchising,
LLC at 350 Lincoln Road, Miami Beach, Florida 33139.
1
EXHIBIT K
RECEIPT
This disclosure document summarizes certain provisions of the franchise agreement and other
information in plain language. Read this disclosure document and all agreements carefully.
If Happy Tax Franchising, LLC offers you a franchise, it must provide this disclosure document
to you 14 calendar-days before you sign a binding agreement with, or make a payment to, the
franchisor or an affiliate in connection with the proposed franchise sale.
New York and Rhode Island require that we give you this Disclosure Document at the earlier of
the first personal meeting or 10 business days before the execution of the franchise or other
agreement or the payment of any consideration that relates to the franchise relationship.
Michigan requires that we give you this Disclosure Document at least 10 business days before the
execution of any binding franchise or other agreement or the payment of any consideration,
whichever occurs first.
Iowa requires that we give you this Disclosure Document at the earlier of the first personal meeting
or 14 calendar days before you sign a binding agreement with, or make a payment to, the franchisor
or an affiliate in connection with the proposed franchise sale.
If we do not deliver this disclosure document on time or if it contains a false or misleading
statement, or a material omission, a violation of federal law and State law may have occurred and
should be reported to the Federal Trade Commission, Washington, D.C. 20580 and the state
agency listed on Exhibit A.
The franchisor is Happy Tax Franchising, LLC, 350 Lincoln Road, Miami Beach, Florida 33139.
Its telephone number is 844-426-1040.
Issuance Date: September 15, 2016
The franchise sellers for this offering are both of the following as well as any Area Representative
entered below:
X Mario Costanz, Happy Tax Franchising, LLC, 350 Lincoln Road, Miami Beach, Florida 33139;
844-426-1040;
X Melissa Salyer, Happy Tax Franchising, LLC, 350 Lincoln Road, Miami Beach, Florida 33139;
844-426-1040;
____; ______________________ [name]; ___________________________________________
[address and telephone number]
Happy Tax Franchising, LLC authorizes the respective state agencies identified on Exhibit A to
receive service of process for it in that particular state.
2
I have received a Franchise Disclosure Document with an issuance date of September 15, 2016.
This Disclosure Document included the following Exhibits:
Exhibit A State Administrators and Agents for Service Of Process
Exhibit B Franchise Agreement
Exhibit C Exhibits to Franchise Agreement:
1. Principal Trademarks
2. ACH Authorization
3. Retail Rider
4. Telephone Number Assignment Agreement
5. Confidentiality, Non-Use and Non-Competition Agreement Form
6. State Addenda to The Franchise Agreement
Exhibit D Confidential Operating Manual Table of Contents
Exhibit E List of Current and Former Franchisees
Exhibit F Financial Statements
Exhibit G List of Area Representatives
Exhibit H General Release
Exhibit I Promissory Note
Exhibit J State Addenda to Disclosure Document
Exhibit K Receipt
Date: Disclosee: ______________________
(Do Not Leave Blank)
Printed name: ___________________
Disclosee: ______________________
Printed name: ___________________
TO BE RETURNED TO:
You may return the signed receipt by signing, dating, and mailing it to Happy Tax Franchising,
LLC at 350 Lincoln Road, Miami Beach, Florida 33139.
