FRACHISE AGREEMET

KNOW ALL MEN BY THESE PRESENTS:

This agreement made and executed by and between:

RCGS FOOD & BEVERAGE ENTERPRISES, a company existing under Philippines laws with
principal office at #18 DAYTONA ST. VILLAGE EAST, CAINTA, RIZAL 1900, and represented by
its proprietor RANDOLPH CHARLES GARDINER SUGUITAN II, hereinafter referred to as the
FRANCHISOR.

-and-

VALYCRIS CORPORATION, a corporation existing under Philippines laws with principal office at
#17 GENERAL DE JESUS ST., HEROES HILLS, QUEZON CITY 1104, and represented by its
chairman and owner ANTHONY PETER DARIO CRISOLOGO, hereinafter referred to as the
FRANCHISEE.

WHEREAS, the FRANCHISOR is a duly organized business entity under the domestic laws of the
Republic of the Philippines and is engaged in the restaurant business and franchising.

WHEREAS, the FRANCHISOR has spent time, money, and effort in obtaining and developing
knowledge of and expertise in the burger restaurant business, which he wishes to expand.

WHEREAS, the FRANCHISOR wishes to expand the Provision of his Burger Restaurant Business,
referred to as Services, and is willing to grant to the FRANCHISEE the rights set out herein.

WHEREAS, the FRANCHISOR hereby agrees to enter into a FRANCHISE Agreement with the
FRANCHISEE in the setup of a franchise outlet, particularly under the product name H.I.D.
BURGERS , referred to as the Brand, according to the preferred area of the FRANCHISEE,
referred to as the Premises, subject to the availability of the commercial areas, without prejudice to
any proposal by the FRANCHISOR deemed best for the FRANCHISEES interest;

NOW, THEREFORE, for and in consideration of the foregoing premises, the parties have agreed to
strictly comply with the following terms and conditions, to wit:


1. Rights Granted

The Franchisor grants to the Franchisee during the period of this Agreement and subject to the
terms and conditions hereof the rights to carry on the Business in accordance with this
Agreement from the Premises, to utilize the Services and to use the Brand.

2. Term

This agreement shall be effective for a period of FIVE (5) years. The commencement of the
FIVE (5) year period shall be reckoned from the date of opening of the Franchise outlet.
Opening Date: _________________

3. Renewal

If the Franchisee gives written notice of his desire to renew the Agreement, then provided that
at the time such notice is given this Agreement is valid and subsisting and the Franchisee shall
not be in breach of his obligations under this Agreement, the Franchisor and the Franchisee
will enter into a new standard Agreement in such form as is currently being offered to new
Franchisees at that time, to operate from the date of the expiry of this Agreement.

4. Franchisors Obligations

The Franchisor shall:

a. Assist the Franchisee to establish and efficiently operate the Business from the Premises
and to provide him with the standard business operating Manual, which copyright shall at
all times remain the property of the Franchisor;

b. Give the Franchisee such reasonable continuing assistance and advice as the Franchisor
considers necessary for the efficient running of the Business.

c. Ensure that the Manual shall be kept up to date with any alterations and/or improvements
in or to the operation of the Business.
d. Not to set-up another Franchise outlet within the Five Hundred Meter (500) radius of the
FRANCHISEES designated location. Exemptions to this are outlets located within
buildings, schools and malls.

e. Keep abreast the FRANCHISEE on the continuous development of products or Services
and transfer thereof, including product development, for the benefit of the
FRANCHISEE.

f. Shall assist in the initial hiring and training of the needed manpower of the
FRANCHISEEs franchise outlet. However, it is not the responsibility of the
FRANCHISOR to hire all the needed personnel all throughout the duration of this
agreement. All wages and mandatory benefits shall be borne by the FRANCHISEE.

g. Shall assist the FRANCHISEE in the formulation of a local marketing plan.

5. Franchisees obligations concerning the Brand

a. The Franchisor authorizes the Franchisee to use the Brand solely for the purpose of
promoting the Business and any usage will be in accordance with the reasonable
directions of the Franchisor;

b. The Franchisee undertakes not to do anything to prejudice or damage the goodwill in the
Brand or the reputation of the Franchisor.

c. If the Franchisee becomes aware of any infringement of the Brand by any other party
trading with a similar or identical Brand, the Franchisee shall immediately notify the
Franchisor thereof in writing;

d. The Franchisee shall use only the Brand in connection with the Services;

e. The Franchisee shall comply with all reasonable requirements from time to time laid
down by the Franchisor as regards the use and presentation of the Brand;

f. The Franchisee shall ensure that any items of equipment regularly used by the Franchisee
in carrying out the Services, shall carry such words devices and/or designs and in such
prominence and color, as may be specified by the Franchisor;

6. The Franchisees obligations concerning the Equipment

The Franchisee agrees that, in order to protect the Franchisors intellectual property rights and
maintain the common identity and reputation of the Services, it shall comply with quality
specifications laid down for the Equipment.





7. The Franchisees general obligations

In order to maintain the uniform high standards of the Services, and to protect the Franchisors
intellectual property rights and maintain the common identity and reputation of the franchise
network, the Franchisee hereby agrees;

a. To carry on the Business under the Brand and no other name;

b. To be responsible in maintaining the Premises in accordance to the FRANCHISORS
standard of operations. FRANCHISEE shall be responsible for all modifications,
upgrades, and maintenance needed by the outlet based upon the FRANCHISORs
recommendation.

c. Not to carry on the Business from any location other than the Premises without the
Franchisors prior written consent.

d. To commence the business from the opening date of ________________ and to carry it
on as a legally and economically independent party.

e. To provide the Services from the Premises at least 12 hours daily from Monday to Sunday
or depending on what schedule the Franchisor and Franchisee agree to implement.

f. To use his best endeavors and the highest standards in all matters connected with the
Business and to carry on the business diligently and in a manner in all material respects to
the reasonable satisfaction of the Franchisor and as may be reasonably required by the
Franchisor from time to time in accordance with its image and reputation;

g. To ensure that all personnel employed by him in the Business shall at all times be clean
and tidily clothed in any designated clothing or otherwise. The Franchisee shall ensure
that they comply with all of the Franchisors requirements as regards cleanliness,
clothing, appearance or demeanor;

h. To ensure that all his employees are trained by the Franchisor before actually working in
the business;

i. To permit the Franchisor and or his agent without any further or other authority or notice,
to speak to customers and the Franchisees staff about the Services being provided by the
Franchisee;

j. To comply with all reasonable requirements consistent with the terms of this Agreement
as are from time to time notified by the Franchisor for the efficient conduct of the
Business;

k. To insure with a major reputable insurance company in an adequate sum against all
normal and reasonably foreseeable risks relating to the conduct of the Business including
product liability arising from negligence or other acts or omissions by the Franchisee or
any person for whom the Franchisee is responsible and cover all public and employees
liability and death of or injury to any customer or any other person or damage to any
motor vehicle used by the Franchisee and provide copies of such insurance policies and
proof of premium payments to the Franchisor upon its request and the Franchisee will
provide to each insurer full and complete information relevant to or which may be
required in respect of any insurance policy and, ensure that he does nothing which in any
way invalidates it;

l. To clearly indicate on all literature and correspondence and by way of a prominently
displayed notice board at the Premises the fact that it is an independent franchisee of the
franchisor and is in no other way connected with it.

m. To indemnify and keep indemnified the Franchisor from and against all loss damage or
liability suffered by it as a result of the Franchisees acts or omissions.

8. Franchise Fee

The Franchise Fee shall be FIVE HUNDRED THOUSAND PESOS (Php 500,000.00),
exclusive of all other expenses (i.e. Construction, Equipment, Setup, etc.) for the
establishment and operation of one (1) Franchise outlet. FRANCHISE FEE IS NON-
REFUNDABLE. All other expenses for construction, equipment, setup, etc will be shouldered
by the FRANCHISEE.

9. Gross Revenue Sharing

a. Seven Percent (7%) of the GROSS REVENUES per month (exclusive of VAT) shall be
given to the FRANCHISOR to serve as Management, Quality Assurance, Marketing, and
Royalty Fee.

b. Percentage share of the FRANCHISOR shall be deposited by the FRANCHISEE every 1
st

Monday of the Month or to be collected by the designated Franchise Officer of the
FRANCHISOR upon the latters option.

10. Stocks and Supplies

All stocks, supplies, or direct material and/or additional equipment needed by the
FRANCHISEE can only be bought from the FRANCHISOR or its accredited suppliers, upon
due notice to the FRANCHISOR.

11. Right of First Option

The FRANCHISEE shall be given the right of first option to select the location of another
franchise in the same location.

12. Transferability of Franchise

The FRANCHISEE may assign or transfer the franchise provided the transferee possesses all
the qualifications set by the FRANCHISOR as determined by the latter. This right shall be
exercised by the FRANCHISOR before termination of the contract expiration of Franchise
Agreement.

a. Transfer of Location
b. Transfer of Right

13. Franchisees Accounts

The Franchisee shall maintain proper books of account relating to the business and shall
employ a Chartered/Certified Accountant to prepare annual accounts for the business and the
Franchisee shall supply the Franchisor:

a. Within thirty days after the end of each financial year with an audited certificate as to the
Franchisees gross turnover during such period calculated in accordance with this
Agreement;

b. Within ninety days after the end of each financial year with a certified copy of the audited
profit and loss accounts and balance sheet of the Franchisees Business and such other
accounting and financial information relating to it as may reasonably be required by the
Franchisor;

c. The Franchisee shall provide to the Franchisor any certificates etc. set out in (a) and (b)
above which shall be prepared after the termination of this Agreement but which shall
relate to any financial period of the Franchisee which falls in whole or in part within the
period of this Agreement.

14. Audit

a. The Franchisor or its Auditor or authorized representative shall be entitled to inspect and
audit the books of account and all supporting documentation of the Franchisee relating to
the Franchisees Business at anytime during business hours in respect of the whole or any
part of the period of this Agreement and within six months after the receipt by the
Franchisor of the audited accounts for the year or other period of this Agreement up to the
termination or surrender of this Agreement or sale or transmission of the Franchisees
Business to a new Franchisee by the Franchisor giving written notice to the Franchisee
such inspection or audit to be during reasonable business hours;

b. If the audit (or any other periodic inspection not being a full audit) shows that the
accounting of the Franchisee as to the calculation of the payments due under this
agreement, and/or any other financial matter is incorrect, the Franchisee undertakes
promptly to rectify the defect in the amount accounted for and/or the accounting system
defect as the case may be.

15. Waiver

The failure of the Franchisor to exercise any power given to it hereunder or to insist upon
strict compliance by the Franchisee with any obligation hereunder and no custom or practice
of the parties shall constitute any waiver of any of the Franchisors rights under this
Agreement. Waiver by the Franchisor of any particular default by the Franchisee shall not
affect or impair the Franchisors rights in respect of any subsequent default of any kind by the
Franchisee nor shall any delay by or omission of the Franchisor to exercise any rights arising
from any default of the Franchisee affect or impair the Franchisors rights in respect of the
said default or any default of any kind.

16. Severability

If any item or provision contained in this Agreement or any part thereof (in this Clause called
the offending provision) shall be declared or become unenforceable invalid or illegal for any
reason whatsoever including but not detracting from the generality of the foregoing a decision
by the competent domestic court, or any statutory or other bye-laws or regulations or any other
requirements having the force of law the other terms and provisions of this Agreement shall
remain in full force and effect as if this Agreement had been executed without the offending
provision appearing herein. In the event that the exclusion of any offending provisions shall in
the opinion of the Franchisor adversely affect either the Franchisors right to receive payment
of fees or remuneration by whatever means payable to the Franchisor or the Franchisors
Marks and Known-How methods of the business then the Franchisor shall have the right to
terminate this Agreement on thirty days notice in writing to the Franchisee.

17. Warranties

The Franchisee shall make no statements representations or claims and shall give no
warranties to any customer or potential customers in respect of the Business save such as may
have been specifically authorized by the Franchisor such authority to be given in writing at the
relevant time. The Franchisee hereby undertakes with the Franchisor to keep it fully and
effectively indemnified against all claims demands losses expenses and costs which the
Franchisor may incur as a result of any breach by the Franchisee of this provision or of any
other provision contained in this Agreement.

18. Improvements

a. The Franchisee shall use all reasonable endeavors to conceive and develop new and
improved methods of carrying out the Services and improvements in the apparatus
operating procedure and other additions or modifications to the Services. The Franchisee
agrees to disclose fully any Improvements to the Franchisor and the Franchisor shall
determine the feasibility and desirability of incorporating them into the relevant Services.
Any non-patentable Improvement approved by the Franchisor may be used by the
Franchisor and all Franchisees of the Franchisor without any obligation to the Franchisee
for royalties or otherwise;

b. The Franchisee shall give the Franchisor the right of first refusal at a fair price (to be
fixed by an appropriate independent arbitrator in the event of disagreement) of all rights
in any Improvement which is capable of being patented.

19. Force Majeure

This Agreement shall be suspended during the period and to the extent of such period that the
Franchisor reasonably believes any party to this agreement is prevented or hindered from
complying with its obligations under any part of it, by any cause beyond its reasonable control
including but not restricted to strikes, war, civil disorder, and natural disasters. If such a period
of suspension exceeds 180 days, then the Franchisor shall upon giving written notice to the
Franchisee, be able to require that:

a. All money due to the Franchisor shall be paid immediately, and
b. The Franchisee shall immediately cease trading, until further notice from the Franchisor.

20. Termination of Contract

The Franchise Agreement may be terminated only after TWO (2) years of operation. The
FRANCHISOR has the sole authority to terminate the agreement even on the earlier date. The
right of the FRANCHISOR to terminate the agreement may arise only if the FRANCHISEE
violates any or all standard operating procedures set forth on this contract, in particular
payment of royalty fees or other accounts due to the former. The termination shall be done
after thirty (30) days notice of termination. If the FRANCHISEE wishes to terminate this
agreement prior to the franchise period, he/she shall be charged TWO HUNDRED FIFTY
THOUSAND PESOS (PHP 250,000.00) unless the FRANCHISEE exercised his option under
paragraph 15 which is a mandatory requirement before any termination be undertaken.

21. Post-Contract Clause

Within three (3) years after the expiration of the term of this agreement, the FRANCHISEE
undertakes not to engage in similar business of the FRANCHISOR.

22. Venue

Any and all action or actions arising or in connection with the foregoing agreement shall be
filed exclusively at the proper courts of Quezon City.

23. Other matters

All other matters not covered by this agreement shall be subject to the agreement in writing by
the parties.
























IN WITNESS WHEREOF, the parties have hereunto signed this instrument this ____day of
___________________20__.



By:

FRANCHISOR:

___________________________________
RADOLPH CHARLES GARDIER SUGUITA II
Proprietor RCGS Food and Beverage Enterprises



FRANCHISEE:

___________________________________
ATHOY PETER DARIO CRISOLOGO
Chairman and Owner - VALYCRIS Corporation




Signed in the Presence of:

__________________________ __________________________
WITNESS WITNESS