FRANCHISE AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This Agreement is entered into this 28th

___ day of _______________
NOVEMBER 2022 in the City of
___________________,
CALAMBA, LAGUNA by and between:

REGASCO Franchise Corporation a domestic corporation organized and

existing under and by virtue of Philippine laws, with principal office address at 13th floor
strata 100, Emerald St., Brgy San Antonio, Ortigas Center, Pasig City represented
herein by its Corporate Secretary, Lesley Yiu, hereinafter referred to as the
“FRANCHISOR”;

-and-

CAROL S. HERNANDEZ & NILO SARMIENTO, of legal age, Filipino, with

residential address at PUROK 6, BRGY. PANSOL, CALAMBA CITY, LAGUNA, with principal
office address at PUROK 6, BRGY. PANSOL, CALAMBA CITY, LAGUNA. Hereinafter referred
to as the “FRANCHISEE”;

WITNESSETH: That –

WHEREAS, Franchisor, over a period of time and as the result of the expenditure of
time, skill, effort and money, has developed and owns a unique system ("System"),
identified by the mark "REGASCO" relating to the establishment, development and
operation of a LPG business specializing in LPG products;

WHEREAS, Franchisor has the absolute right to use, and likewise the right to
license third parties to use, the trademark and service mark “REGASCO”, associated
logos and commercial symbols, and such other trade names, trademarks and service marks as
are now designated (and may be designated in writing by Franchisor) as an integral part of
the System (the "Mark(s)"); and

WHEREAS, Franchisor grants to qualified parties the right to operate REGASCO -

(_______________)
PANSOL authorized and approved by Franchisor utilizing Franchisor's System
and Marks.

WHEREAS, FRANCHISEE desires to establish a business engaged in selling of

LPG, FRANCHISOR’S distinct BUSINESS in conformity with FRANCHISOR’s
procedures and business methods, and to benefit from the goodwill inherent in
FRANCHISOR’s trademarks;

WHEREAS, Franchisee understands and acknowledges the importance

of Franchisor's high and uniform standards of quality, operations, and service and the
necessity of operating the franchised branch in strict conformity with Franchisor's
standards and specifications;

WHEREAS, Franchisee is made aware and agrees that the franchised branch will
only realize its full business potential if Franchisee attends to all the conditions
narrated hereinafter, especially the training required by the Franchisor and devotes
substantial personal attention to the management of the franchised branch and operates
the same strictly in accordance with Franchisor’s standards;

WHEREAS, Franchisee understands that, like any other business, profit is not
guaranteed by the Franchisor.

NOW, THEREFORE, for and in consideration of the foregoing premises and the
mutual covenants and stipulations stated hereunder, the parties hereby agree as follows:

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 SECTION ONE
GRANT OF FRANCHISE

FRANCHISOR licenses and grants in favor of FRANCHISEE the right to use

FRANCHISOR’s registered name, “REGASCO”, and the trademarks, service marks, names
and symbols associated with FRANCHISOR’s registered name and system of operation
(hereinafter, the “Marks”) in connection with the selling of FRANCHISOR’S products
bearing and/or identified with the Marks (hereinafter, the “AUTHORIZED PRODUCTS”),
as well as the right to use FRANCHISOR’s method and system of operating it’s franchised
branch, which FRANCHISOR has developed, as such system presently exists, including any
modifications thereto as may hereafter be implemented (hereinafter, the “System”).

SECTION TWO
TERM AND RENEWAL OF FRANCHISE

a. This Franchise Agreement shall commence on the date of signing of this Agreement
and shall continue for a period of FIVE (5) years unless sooner terminated as provided for in
this Agreement.

b. Any intention by FRANCHISEE to renew this Agreement for another term of FIVE
(5) years may be made by submitting a prior written request for such extension not later than
NINETY (90) days before the expiration of the original FIVE - (5) year term. It shall be
understood, however, that any such extension shall be approved at the sole and exclusive
discretion of FRANCHISOR, which approval shall be based on FRANCHISEE’s record of
sales performance and compliance with the Systems and FRANCHISOR’s standards. In case
of renewal, FRANCHISEE shall pay FRANCHISOR a Renewal Fee of _______________ 25%
only of the current Franchise Fee.

c. Franchisee may pre-terminate this Franchise Agreement after two (2) years from the
date of signing of this Agreement. In case of pre-termination, Franchisee guarantees and
understands that the payment of his/her package is already forfeited in favor of the Franchisor
and that Franchisor may operate on the premise where the franchise supposedly conducted
its operation, for the remaining years. Any pre-termination of this Agreement prior to two (2)
years of its effectivity, is considered a breach of this Agreement, and the FRANCHISEE is
liable for actual penalty in the amount of P50,000 or the equivalent amount of the expenses
incurred by the FRANCHISOR for the branch of the FRANCHISEE, whichever is higher
(e.g. restoration, additional stocks, advertising materials, etc.) without prejudice to other
damages FRANCHISOR may avail before any appropriate Courts.

SECTION THREE
LOCATION AND LEASE OF UNIT

PANSOL
a. FRANCHISEE shall operate its Franchised Branch in ________________________.
(“Franchised Branch”)

b. The use of the Franchise in any other location other than that specified herein shall
constitute an unauthorized use of the Franchise and FRANCHISOR may terminate this
Agreement.

c. Should FRANCHISOR decide to offer the establishment of a new branch within the
one to two kilometer radius of FRANCHISEE store, FRANCHISEE shall have the first
option to avail of the new franchise provided it shall be made in writing within thirty (30)
days from announcement of said offer and, provided further, that FRANCHISEE shall meet
the requirements for the grant of the franchise set by FRANCHISOR. Failure by Franchisee
to exercise the right of first option gives Franchisor the right to offer the site to third parties or
open up a company owned branch.

d. The FRANCHISEE must only get clients and/or customers within five (5) kilometer
radius of the FRANCHISEE store. In consideration of other FRANCHISEES, should there
be two or more FRANCHISEES operating within five (5) kilometer radius of each other,
subject FRANCHISEES and FRANCHISOR will execute Agreement stating the areas of
operation of subject FRANCHISEES. In case of refusal of either FRANCHISEE involved to

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enter in said Agreement stating the areas of operation, or to follow said Agreement,
FRANCHISOR may use it as a ground for termination of FRANCHISEE’s Franchise
Agreement.

e. If the lease for the site of the Franchised Branch expires or terminates without fault of
FRANCHISEE, or if the site is destroyed, condemned or otherwise rendered unusable, or
otherwise as may be mutually agreed upon in writing by FRANCHISOR and
FRANCHISEE, FRANCHISOR shall grant permission for relocation of the Franchised Unit
at a location and site acceptable to FRANCHISOR. Any such relocation shall be at
FRANCHISEE’s sole expense and FRANCHISOR shall have the right to charge
FRANCHISEE for any and all reasonable costs incurred by FRANCHISOR.
FRANCHISOR shall suspend the term of the Franchise Agreement for thirty days for the
construction of the new branch. If after the said period, FRANCHISEE fails to open for
business for whatever reason, FRANCHISOR may terminate the Franchise Agreement, even
without notice.

f. FRANCHISOR’s approval of the site through lease shall be conditioned upon

inclusion in the lease of terms acceptable to FRANCHISOR, and at the latter’s option, for
the lease contract to contain a provision reserving to FRANCHISOR the right, at
FRANCHISOR’s election, to receive an assignment of the leasehold interest, during or upon
termination of the grant of franchise.

g. Nothing in the foregoing shall be deemed as a representation or warranty, expressed

or implied, by FRANCHISOR as to the marketability or suitability of the site approved by
FRANCHISOR or as to the potential success of the business in the approved branch site.

h. FRANCHISEE understands that any default under the lease contract shall
automatically constitute a default in this Agreement.

i. FRANCHISEE understands that it will shoulder the payment of utilities (electricity,

water, etc.) for the operation of the franchised store, inclusive of the period of its renovation,
if applicable.

SECTION FOUR
CONSTRUCTION OF FRANCHISED BRANCH

a. FRANCHISOR shall provide guidelines on the design of the franchised branch.

FRANCHISEE shall be responsible for translating standard design to the branch and the
construction. Only the authorized contractor of the Franchisor will construct/renovate the
franchised branch.

b. All permits and licenses required for the construction and operation of the Franchised
Branch shall be for the account and responsibility of FRANCHISEE. FRANCHISEE shall
see to it that a duly signed lease contract, copy furnished FRANCHISOR, is in place and the
required deposits to LESSOR have been paid prior to the start of the business operations,
proof of said deposit may be required from the LESSOR.

c. All permits and licenses required for engaging in the business of selling LPG must be
acquired by the FRANCHISEE. Once acquired, the FRANCHISEE has to submit the
original permits and licenses to the FRANCHISOR for safekeeping, prior to operation of said
Franchised Branch.

d. The FRANCHISEE must submit to FRANCHISOR all original copies of permits and
licenses required to engage in selling LPG. In case there is a need for renewal, the
FRANCHISEE must acquire new permits and licenses six (6) months prior to the expirations
of the existing licenses and permits. The FRANCHISEE guarantees that it will not operate
the Franchised Branch after its permits and licenses expired, consequently, FRANCHISEE
allows the FRANCHISOR to close the store once the latter discovers the expired permits and
licenses, even without notice. Operation of FRANCHISEE without the permits and licenses
being renewed is a ground for termination of this Franchise Agreement.

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 SECTION FIVE
FEES

a. Franchise Fee . In consideration of the foregoing grant of the license to use the
trademark and business systems of FRANCHISOR, FRANCHISEE shall pay
FRANCHISOR a one-time and non-refundable Franchise Fee in the amount of
FIVE HUNDRED THOUSAND pesos (Php_________________),
500,000.00 net of any applicable tax
under the following schedule

1. 30% upon signing of the Memorandum of Agreement and submission of the draft of
the Franchise Agreement. This shall be non-refundable but deductible from the
Franchise Fee.

2. The 70% balance to be paid upon signing of the Franchise Agreement.

b. Security Deposit. Upon signing/execution of the Franchise Agreement,

FRANCHISEE shall pay the amount of Fifty Thousand Pesos (Php 50,000.00) which amount
shall be held by FRANCHISOR during the term hereof as non-interest bearing, and
refundable Security Deposit. Within thirty (30) days after termination of this Agreement, this
Security Deposit shall be refunded to FRANCHISEE after deducting any unpaid fee, cost of
damages, accounts receivable and other claims of FRANCHISOR from FRANCHISEE.
Parties agree that nothing in the foregoing shall be construed as limiting claims of
FRANCHISOR from FRANCHISEE to the amount of the Security Deposit.

c. Royalty Fee. Upon commencement of the operations of the Franchised Branch,

FRANCHISEE shall pay FRANCHISOR a royalty fee equivalent to 5% of Monthly Net
Sales.

The Royalty Fee shall be paid on or before every 5th of the month together with the
Royalty Fee Report.

For purposes of this Agreement, the term “Net Sales” shall mean the total amount of
all sales for cash or on credit whether or not payment is received for such sales made in or
from all operations of the Franchised Branch by virtue of this Agreement, less VAT and
Municipal Taxes remitted to the government.

d. Upon full payment of the Franchise Fee, the FRANCHISEE shall receive,

1. All the initial inventory included in the attached list.

2. Permits and Licenses for the operation of the Franchise Store under the name of the
FRANCHISOR for a period of six (6) months, from the execution of this Agreement.
The FRANCHISEE needs to secure permits and licenses under its name within said
period.
3. Installation of CCTV Camera for the Franchised store
4. LPG Accessories (Please refer to the attached list)
5. Renovation of the Franchised Branch
6. Franchisor will only train the branch head and rider of the Franchisee for One (1)
month, reckoned from the date of execution of this Franchise Agreement.
7. Franchisor will assign its existing employees (branch head and rider) to the Franchisee’
branch for One (1) month, but ten (10) days prior to end of said one (1) month, the
FRANCHISEE guarantees that it will employ its own branch head and rider.
8. Upon another agreement between the parties, the FRANCHISEE will have the option
to purchase from the FRANCHISOR, the latter’s existing motor vehicle and “kolong”
for a depreciated value, to further its Franchised Branch

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 SECTION SIX
SOFT AND GRAND OPENING

a. FRANCHISEE shall conduct soft opening/dry run activities prior to the grand
opening of the Franchised Branch. Its objectives are to simulate daily branch operations to
determine operational efficiency and to create awareness and establish goodwill among
potential customers.

b. FRANCHISEE shall launch a grand opening of the branch only after

FRANCHISOR has assessed, in the exercise of its own independent discretion, that its
operational systems are at par with the standards set by FRANCHISOR and consistent with
the “REGASCO” image.

c. FRANCHISEE shall allocate a budget appropriate to the event. FRANCHISOR

shall provide advisory assistance for the grand opening activities.

d. FRANCHISOR shall send an opening team consisting of Branch Head and a Rider
who shall be assigned for _________
30 DAYS to the Franchised Branch, said 30 ________
DAYS is reckoned
from the date of execution of this Franchise Agreement. The opening team will assist and
guide the Franchisee in the opening of the Franchised Branch. It shall also make a written
assessment of the status of the Franchised Branch at the end of the period, which shall be
discussed with the FRANCHISOR and FRANCHISEE. The products to be rendered by the
opening team shall be free of charge; however, FRANCHISEE shall shoulder the other
expenses incurred by the opening team, such transportation costs, meals and board and
lodging. FRANCHISEE is however mandated to employ a Branch Head and a Rider within
ten (10) days prior to the end of the first (1st) month of the Franchised Branch, reckoned from
the date of execution of this Agreement.

e. One (1) month after the execution of this Agreement, the said Franchised Branch is
officially turned over to the Franchisee. (“Turnover Period”) With that, the Franchised
Branch must be operated already by the employees of the Franchisee. Otherwise, this is
considered a ground for termination of this Agreement.

SECTION SEVEN
RECRUITMENT AND HIRING

a. FRANCHISEE shall hire and select its personnel based on the written guidelines in
the hiring and selection of personnel provided by FRANCHISOR. Prior to its decision to
formally hire an applicant, FRANCHISEE shall forward the applicant’s papers to
FRANCHISOR for its comments/recommendations. All employees shall sign and execute
Non-Compete and Non-Disclosure Agreements upon hiring, in the form to be provided by
the FRANCHISOR.

b. Nothing herein shall be construed to mean that an employment relationship exists

between FRANCHISOR and FRANCHISEE’s personnel. No employee of FRANCHISEE
shall be deemed an employee of FRANCHISOR, and each employee shall be so notified.
FRANCHISOR shall have no liability for any payments or any taxes related thereto to be
made to employees of FRANCHISEE. FRANCHISEE shall be solely liable for all payments
and/or any taxes related thereto to be made to its employees including, without limitation,
severance pay, Social Security taxes, annual holiday pay, sick leave entitlements, and long
service leave.

c. Ten (10) days prior to Turnover Period of the Franchised Branch, FRANCHISEE
guarantees and understands that it must employ its own branch head and rider for its
Franchised Branch. Otherwise, this is considered a ground for termination of this Agreement.

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 SECTION EIGHT
TRAINING OF FRANCHISEE AND PERSONNEL

a. FRANCHISOR shall train FRANCHISEE for fourteen (14) days in all phases of
COMPANY’s operations prior to the opening of the Franchised Branch.

b. The Branch Head and Rider of Franchisee shall undergo a combination of

classroom and in-store training for a period of Seven (7) days, which must be done within the
first (1st) month of the Franchised Branch, reckoned from the date of execution of this
Franchise Agreement.

c. The initial training is free of charge. Other expenses such as meals, allowances,
transportation costs, and board and lodging shall however be shouldered by FRANCHISEE.

d. Any addition of personnel to the prescribed maximum number of trainees on the

date of the training or subsequent thereto shall be subject to training fees in an amount to be
fixed by FRANCHISOR.

e. Initial training is compulsory and would require completion. If a FRANCHISEE

fails to qualify and does not complete the training program, FRANCHISOR will have the
option to manage the Franchised Branch with corresponding management fee until
FRANCHISEE qualifies and completes the training program.

SECTION NINE
ONGOING SUPPORT AND ASSISTANCE

a. FRANCHISOR shall maintain a bona fide interest in the success of the

FRANCHISEE’s business during the term of this Agreement and shall therefore provide the
following:

1. Regular reports of improvement in business methods developed by FRANCHISOR

and other FRANCHISEES.

2. Assistance to FRANCHISEE in planning local advertising.

3. A continuing training program for compulsory attendance by the employees of

FRANCHISEE. The corresponding fees, costs and other expenses shall be for the sole
account of the FRANCHISEE.

4. Periodic field/site visits as provided for in the Operating Manual defined under
Section Eleven hereunder. FRANCHISOR shall advise FRANCHISEE of problems
arising out of the operation of the franchised branch based on the results of this
field/site visits.

5. Information on new methods of operation and new products;

SECTION TEN
HANDS ON MANAGEMENT

a. The FRANCHISEE shall personally manage the Franchised Branch with the
following recommended daily hours:

First Year - 3 hours/morning and afternoon

Second Year - 2 hours/morning and afternoon

Third Year to Fifth Year - 1 hour/morning and afternoon

b. The requirement of personal management established herein shall, as understood

and agreed by the parties, entail FRANCHISEE’S exercise of his best personal efforts and
devotion to the success of the Franchised Branch consistent with the spirit of this Agreement.
Personal management shall include, but shall not be limited to hands-on store supervision,

6
personal presence at the Franchised Branch during opening, closing, and peak hours; constant
inspection of the branch to ensure the highest standards of sanitation, cleanliness, and general
pleasant appearance; frequent inspection of business operations to ensure compliance with
approved methods of operations and; the preservation of order in the premises.

SECTION ELEVEN
OPERATIONS MANUAL

a. FRANCHISOR has created a standard operations manual (hereinafter referred to

as the “Operations Manual”), the terms and conditions of which are hereby incorporated by
reference and made an integral part of this Agreement.

b. FRANCHISEE hereby covenants that the operation of its Franchised Branch and
the use of the license herein granted shall be done in strict conformity with the Operations
Manual and this Agreement.

c. FRANCHISEE understands and agrees that the system of FRANCHISOR is

constantly being modified and improved in order to keep up with dynamics of the business
and to meet the demands and exigencies in the system of operations. FRANCHISEE
covenants to conduct its operations in strict conformity with any future modifications in or
amendments to the Operations Manual, designed solely to promote FRANCHISEE’s
business, and uniformly enforced on all other similarly situated FRANCHISEES.

d. The Operations Manual contains trade secrets and other confidential information
vital to the operations of the business of FRANCHISOR. Such Operations Manual shall at
all times remain the property of FRANCHISOR and shall be returned thereafter upon the
expiration or termination of this Agreement. Photocopy or any form of reproduction shall not
be allowed; only FRANCHISOR may reproduce the Operations Manual. All information
received by FRANCHISEE in the course of this Agreement and all the contents of the said
Operations Manual shall be kept by the FRANCHISEE in the strictest confidence and shall
not be revealed to any and all unauthorized parties. A violation of this provision shall be
considered a substantial breach of the Agreement which shall entitle FRANCHISOR to
cancel and terminate this Agreement.

SECTION TWELVE
AUTHORIZED PRODUCTS

A complete basic products identified with FRANCHISOR shall be found in the

Operations Manual which shall be kept up to date by the introduction and/or inclusion of
products that may be developed by FRANCHISOR. These are the only products that may be
available for sale in the Franchised Branch.

SECTION THIRTEEN
RESTRICTION ON SALE OF OTHER PRODUCTS

a. Because the national goodwill inherent in FRANCHISOR’s trademarked system

depends on the consumer’s identification of the said trademark with high quality products,
and because all products available at the Franchised Branch tend to be identified by the
consumer as FRANCHISOR’s trademarked products, FRANCHISEE shall not offer
products other than FRANCHISOR’s authorized products without first obtaining the prior
written approval of FRANCHISOR.

b. In case of breach of this section, the FRANCHISEE understands and acknowledges

that the FRANCHISOR may revoke this Franchise Agreement immediately upon notice, and
the FRANCHISEE is also liable for liquidated damages which amounts to Fifty Thousand
Pesos (P50,000) per cylinder (which was not purchased from Franchisor and/or its authorized
suppliers), and damages which may be sought before the proper courts. Due to the strictness
of the applicable laws, FRANCHISEE acknowledges and understands that the immediate
revocation of this franchise agreement, in case of breach of this section, is just.

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 SECTION FOURTEEN
PURCHASE OF SUPPLIES BEARING TRADEMARK

a. FRANCHISOR reserves the right to supply FRANCHISEE with its supplies from
its authorized suppliers. All these supplies must come from FRANCHISOR’s authorized
suppliers.

b. FRANCHISEE shall observe the procedures for ordering and pick-up of supplies
from FRANCHISOR as written in the Operations Manual.

c. FRANCHISEE shall issue a dated check upon pick up of supplies ordered from the
COMPANY ‘s authorized supplier/s.

d. FRANCHISOR shall notify the FRANCHISEE in case of change of supplies

bearing Franchisor’s trademark. Said change shall become effective immediately.

e. In case FRANCHISEE will get new LPG cylinders and/or LPG accessories from
FRANCHISOR, outside the initial products included in the attached list, FRANCHISEE will
be able to purchase it based on its retail price, with discount, as determined by
FRANCHISOR.

f. In case the FRANCHISEE would offer Cylinder Trust Agreement (“CTA”) to its
customers, the LPG cylinders that will be subjected to said CTA will only be the LPG
cylinders brought by the FRANCHISEE from FRANCHISOR’s authorized suppliers.
Consequently, this CTA is under the account of the FRANCHISEE.

SECTION FIFTEEN
COMPLIANCE WITH THE ENTIRE SYSTEM

a. FRANCHISEE acknowledges that every component of the System is important to

the FRANCHISOR and to the operation of the Franchised Branch, including service
procedures, equipment and maintenance, quality assurance; and uniformity of branch and
service.

b. FRANCHISOR shall have the right to periodically inspect the Franchised Branch
at any reasonable time to ensure that its operation is in compliance with the standards and
policies of the System.

c. FRANCHISEE shall comply with the System, which shall include, but not limited
to, the following:

1. Purchase of supplies from FRANCHISOR’s authorized suppliers.

2. Must consistently follow the service quality of FRANCHISOR’s products.

3. Adhere to the suggested retail prices (SRP) for products.

4. Shall use only the approved supplies for branch products.

5. Consistently follow the prescribed standards of Quality, Service, and

Cleanliness as indicated in the Standard Franchise Business System of the
Operations Manual.

6. Comply with all business policies, practices and procedures imposed by

FRANCHISOR.

7. Follow the standard look and design for all Franchised Branches.

8. Shall not make any alteration, conversion or addition to the branch lay-out or
design, equipment without the prior written consent of FRANCHISOR.

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 9. May remodel, modernize and redecorate the premises to bring the branch up
to the current standards of COMPANY. FRANCHISEE shall replace worn-
out or obsolete equipment, fixtures and signs; repair the exterior and interior of
the Branch; and purchase and install new or modified equipment or fixtures.
FRANCHISEE shall undertake minor renovations every two years and
conduct yearly repainting. All improvements shall be for the account of the
FRANCHISEE but should be done with approval of FRANCHISOR.

10. Comply with purchasing and sales targets set by FRANCHISOR from time to
time.

11. Shall make prompt payment of all purchases from the

FRANCHISOR/authorized supplier/s.

12. Maintain reasonable standards of customer service in the Franchised Branch.

13. FRANCHISEE’s employees should wear the prescribed uniforms of

FRANCHISOR.

14. Ensure that all Franchised Branch management and staff undergo, complete
and pass the training program/s provided by FRANCHISOR.

15. Maintain confidentiality of all materials and disclosures relevant to the

operation of the Franchised Branch.

16. Comply with the reporting and auditing requirements set by the
FRANCHISOR.

17. Comply with all national and local laws, ordinances and regulations affecting
the operation of the Branch.

SECTION SEVENTEEN
LICENSES AND PERMITS

a. Within twenty (20) days from date of the execution hereof, FRANCHISEE shall
obtain from any local, regional, or national governmental agency all applicable approvals,
permits and licenses which shall be necessary or advisable to the execution of this Agreement
and the consummation of the transactions provided for hereunder.

b. The FRANCHISEE shall shoulder the necessary expenses for the renewal of
required licenses and permits of the Franchised branch.

c. The FRANCHISEE must submit to FRANCHISOR all original copies of permits

and licenses required to engage in selling LPG. In case there is a need for renewal, the
FRANCHISEE must acquire new permits and licenses six (6) months prior to the expirations
of said permits and licenses. Otherwise, it is considered a ground for termination or non-
renewal of this Agreement.

d. The FRANCHISEE guarantees that it will not operate the Franchised Branch after
its permits and licenses expired, consequently, FRANCHISEE allows the FRANCHISOR to
close the Franchised Branch and/or terminate this Agreement, once FRANCHISOR
discovers the expired permits and licenses, even without notice.

e. The FRANCHISEE acknowledges and understands that it will shoulder the

necessary expenses for the proper turnover of the Franchised Branch. (e.g. taxes)

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 SECTION EIGHTEEN
INSURANCE

FRANCHISEE shall maintain, at its sole expense a Fire Insurance and a

Comprehensive General Liability Insurance. Such insurance shall be secured from a
reputable company which shall provide sufficient coverage as required by FRANCHISOR,
and shall insure both FRANCHISOR and FRANCHISEE as primary beneficiaries to the
extent of their respective interests. FRANCHISOR shall be furnished with certificates of such
insurance together with evidence showing that the premiums thereof have been paid within
five (5) days prior to the opening of the Franchised Branch. Non-submission thereof shall
mean failure on the part of FRANCHISEE to secure the proper insurance which shall then
authorize FRANCHISOR to obtain the necessary insurance on behalf of the FRANCHISEE.
In which case, FRANCHISEE shall be liable to pay FRANCHISOR any and all expenses
related to the procurement of such insurance.

SECTION NINETEEN
INDEMNITY OF FRANCHISOR

FRANCHISEE shall hold FRANCHISOR free and harmless against any and all
claims, actions, proceedings, damages, and liabilities, including attorney’s fees, arising from
or connected with the operation of the Franchised Branch, except those arising from
FRANCHISOR’s non-fulfillment of its responsibilities under this Agreement and/or those
arising from third party suits brought about by the use of the Marks. FRANCHISEE shall
notify in writing the FRANCHISOR of any suit or claim filed against the latter involving this
Agreement within five (5) working days from knowledge thereof. In the event that
FRANCHISOR shall be held liable for any such damage, FRANCHISEE shall indemnify
and reimburse FRANCHISOR for the full amount of such liability.

SECTION TWENTY
MARKETING SUPPORT FUND

a. FRANCHISEE shall, in addition to the other fees and charges under this
Agreement, pay on a monthly basis an amount equivalent to 2% of Net Sales to the Marketing
Support Fund (MSF). The Fund shall be used to promote, advertise, and market the brand
and the entire system nationwide. The Marketing Support Fund shall not be used for
advertising that benefits only individual FRANCHISEE.

b. FRANCHISEE shall also allocate 1% of Net Sales for marketing and promotional
activities that will benefit his/her particular branch. The Franchisor, however gives final
approval to the marketing, promotional activities and the tools since trademarks are used in
these activities. The Franchisors’ approval should be in written form. Failure to seek
approval by Franchisee shall be subject to notice to cure procedures. Franchisees are to
liquidate usage of LBMF on a monthly basis. If there are remaining amounts at the end of
the year, Franchisor will have the option to demand the transfer to the MSF.

SECTION TWENTY-ONE
DESIGN AND APPEARANCE

FRANCHISOR shall have the option to implement changes in the general design and
appearance, as well as proprietary marks, of the Franchised Branch to which all
FRANCHISEES must comply. FRANCHISEE shall be required to budget for capital
expenditures in remodeling/refurbishing the Franchised Branch to reflect the then current
image or look of the FRANCHISOR’s name and mark. These branches shall undertake
refurbishing or renovation when the FRANCHISEE sees the need to renovate or refurbish,
or upon notice of the FRANCHISOR, when the latter sees that the branch gives a negative
impression to REGASCO trademarks. Failure of FRANCHISEE to comply this provision is
considered a ground for termination of this Agreement.

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 SECTION TWENTY-TWO
ASSIGNMENT BY FRANCHISEE

a. Sale or Assignment. FRANCHISOR has entered into the Franchise Agreement

upon its reliance of the FRANCHISEE’s qualifications and its commitment to open and
operate the Franchised Branch and the rights herein granted to the FRANCHISEE are
personal to FRANCHISEE. Consequently, FRANCHISEE may not sell, assign or otherwise
transfer any rights granted under this agreement or any interest in the franchise hereby granted
prior to opening the Franchised Branch and at any time subsequent thereto, except as may be
authorized by FRANCHISOR as elsewhere provided herein. Any unauthorized sale,
assignment or transfer shall not be binding upon FRANCHISOR nor shall it relieve
FRANCHISEE of its obligations hereunder or under any other related agreements with
FRANCHISOR.

b. Sub-Franchising. FRANCHISEE shall have no rights whatsoever to sub-franchise

the franchise hereby granted or any interest therein. Assignment of an interest hereunder to
an individual, partnership, corporation or other business entity shall be deemed as sub-
franchising and shall be considered a material breach of this Agreement, consequently, a
ground for termination of this Agreement.

c. Authorized Transfers. At any time subsequent to the opening of the Franchised

Branch, FRANCHISEE may be allowed by FRANCHISOR to sell, assign or otherwise
transfer its rights under this Agreement, together with its interest in the franchise hereby
granted subject to the performance of each of the following conditions to the satisfaction of
FRANCHISOR:

1. FRANCHISEE gives FRANCHISOR at least thirty (30) days prior written

notice of its intention to effect any such transfer.

2. The transferee meets the financial and other qualifications of a new

FRANCHISEE in accordance with FRANCHISOR’s standards in effect at the
time of such written notice to the FRANCHISOR.

3. The transferee agrees with FRANCHISOR in writing to assume all of

FRANCHISEE’s obligations hereunder and to be bound by the terms,
conditions and other provisions in this Agreement.

4. FRANCHISOR receives full reimbursement for its expenses in connection

with the transfer.

5. FRANCHISEE pays all fees and trade obligations due to FRANCHISOR as

of the date of transfer by FRANCHISEE. FRANCHISEE pays also the transfer
fees that will be used mainly for training the new FRANCHISEE.

6. FRANCHISEE returns the Operations Manual and other operating procedure

documents.

7. FRANCHISEE executes a General Release of FRANCHISOR from any and

all claims for liabilities pertaining to the Franchise Agreement.

d. If FRANCHISEE is a corporation or partnership, the sale or transfer of the

controlling stock or general partnership in such corporation or partnership, whether in a single
transaction or a series of transactions, shall be deemed a transfer hereunder and shall therefore
be subject to the provisions hereof.

e. Interim Operation of Franchised Branch. FRANCHISOR shall have the right and
option to take over and operate the Franchised Branch in the following cases to wit:

1. FRANCHISEE can no longer operate due to death or disability. However,

such FRANCHISOR’S operation shall not exceed 12 months in the event that
a new FRANCHISEE has not been chosen.

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 2. Transferee or assignee of the Franchised Branch is still on training.

3. Transferee or assignee of the Franchised Branch is still undergoing full

qualification process.

f. Right of First Refusal. FRANCHISEE shall not sell, assign or otherwise transfer its
rights under this agreement or its interest in the franchise hereby granted without first offering
in writing to sell the same to FRANCHISOR under identical terms and conditions, including
price and manner of payment which shall be recited in a bona fide written offer received by
the FRANCHISEE, a copy of which shall be furnished to FRANCHISOR. FRANCHISOR
shall have thirty (30) days following the receipt of FRANCHISEE’s written offer to accept or
reject the same.

g. Non-Competition. During the effectivity of this Agreement and within two (2) years
after its termination, FRANCHISEE shall not, without the prior written consent of
FRANCHISOR, directly or indirectly, engage in or acquire any financial or beneficial
interest, including interest in corporations, partnerships, or trusts, unincorporated
associations and joint ventures in, or become a landlord for, any business employing or using
the concepts and records closely similar to the products and System of FRANCHISOR.

h. Shareholders Personally Bound. The provisions of this Agreement shall be binding

upon and enforceable against each shareholder of FRANCHISEE.

SECTION TWENTY-THREE
COMPANY NAME AND MARK

a. Acknowledgment. FRANCHISEE acknowledges and understands that

FRANCHISOR is required by law to prevent the unauthorized use of its tradename,
registered trademark or its copyright, and shall accordingly abide by the provisions hereunder:

b. Names. FRANCHISEE shall not use the words “REGASCO”, “SUPREME

KALAN GAZ” “BOSSING GAS”, and/or “ENER GAS”, or any stylistic or colorable
variation thereof as part of the name of any corporation, partnership, or other business entity
in which FRANCHISEE owns or holds another interest or as a trade name or assumed name
of any such business entity: Provided, that FRANCHISEE may, if required by law, file an
assumed name or similar certificate to the effect that it is operating the Franchised Branch
under the REGASCO name.

c. Usage. FRANCHISEE shall use the REGASCO name, Marks and trade assets in
strict compliance and in a manner tending to promote the goodwill and image of COMPANY
and in a manner consistent with the standards of quality established by FRANCHISOR.

d. Symbol. FRANCHISEE shall not use or allow the use of FRANCHISOR’s

registered logograph or its tradename or registered trademarks in any promotional material,
advertisement, display, business form on either printed articles, graphic materials without
affixing the symbol thereto in the manner required by law.

e. Form. FRANCHISEE shall, at all times, use the FRANCHISOR’s name and mark
in the precise form described by FRANCHISOR and shall observe reasonable directions
regarding representation of the FRANCHISOR’s name and mark and the manner of its
display and use. FRANCHISEE shall submit to FRANCHISOR all paper goods and
advertising and promotional materials not furnished by FRANCHISOR for approval prior to
their use.

f. Other Specifications. FRANCHISEE shall not use the trade name and registered
trademarks on any goods and products other than in compliance with specifications issued
from time to time by FRANCHISOR and with such other quality control measures as
FRANCHISOR may adopt to promote and defend the goodwill associated with the
REGASCO name and mark.

g. Infringements. FRANCHISEE shall not knowingly permit and shall promptly

report to FRANCHISOR any unauthorized use of the FRANCHISOR’s name and Marks

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by any person or the use by any person of TRADENAME, TRADEMARK, SERVICE
MARK OR SYMBOL which may be construed as an infringement of the FRANCHISOR’s
name and mark or any act amounting to unfair competition. FRANCHISOR reserves the
exclusive right to make the final determination of infringement or other unlawful use and to
conduct all legal proceedings relating to the FRANCHISOR’s name and mark. If
FRANCHISOR decides to take action or if a third party commences action against
FRANCHISOR, FRANCHISEE agrees to cooperate with FRANCHISOR in
FRANCHISOR’s prosecution or defense of any such action. FRANCHISEE agrees to be
named a party in any such action if so requested by FRANCHISOR, provided, however, that
the prosecution or defense of any such action shall be at the sole cost and expense of
FRANCHISOR. FRANCHISOR will not be obligated to reimburse FRANCHISEE for
FRANCHISEE’s costs, expenses, attorneys’ fees, and damages or otherwise suffered or
incurred by FRANCHISEE arising out of any such (or other) action and/or any related
matter.

h. Admissions. At no time shall FRANCHISEE make any written or oral admissions,

nor shall FRANCHISOR be bound by any such admissions, which are made in contravention
of this Article, that the COMPANY trademark is in any way invalid or infringes the rights of
any person or is open to any other form of attack, but shall promptly notify FRANCHISOR
of any allegation of invalidity or infringement of which FRANCHISEE becomes aware of.

SECTION TWENTY-FOUR
ACCOUNTING REPORTS

a. Submission. FRANCHISEE shall submit to FRANCHISOR the following

accounting reports on duly accomplished forms provided by FRANCHISOR with respect to
FRANCHISEE’s operations, to wit:

a. On a Monthly Basis
1. Monthly Sales Report
2. Monthly Inventory Report
3. Profit and Loss Statement
4. Balance Sheet
5. Royalty Fee & Marketing Fee Report

b. On a Yearly Basis, one month after filing with the BIR

1. Audited Financial Statement

Any considerable or repeated delays or failure in the submission of the required

accounting reports by FRANCHISEE shall be considered a material breach constituting a
ground for termination of this Agreement.

b. FRANCHISEE agrees that FRANCHISOR or any of its authorized agents or

auditors retained by FRANCHISOR may, during reasonable hours of business days, conduct
a special audit of FRANCHISEE’s records and books of accounts relating to the operation of
the COMPANY Franchised Branch. If such audit establishes that the Statement of Gross
Sales and/or the report on purchase of stocks have incorrectly stated the FRANCHISEE’s
declaration by two percent (2%) or more, FRANCHISOR shall penalize FRANCHISEE for
such inaccuracy by bearing the cost of such audit.

c. Records. FRANCHISEE shall maintain complete and accurate records and books
of accounts relating to the operation of the COMPANY Franchised Branch, and shall permit
the authorized representatives of FRANCHISOR to inspect during reasonable hours of
business days such records including its sales, income, gross receipts, tax returns including
VAT returns to insure that they are prepared in accordance with generally accepted
accounting principles within the required period and that the returns are duly filed with the
Bureau of Internal Revenue. If FRANCHISEE, at any time, is required to furnish any lender,
lessor, government agency or other person, audited financial statements with respect to its
Franchised Branch operations; FRANCHISEE shall concurrently furnish FRANCHISOR a
copy of such audited financial statements.

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 SECTION TWENTY-FIVE
PROTECTION OF TRADE ASSETS

FRANCHISOR’s method of formulating and preparing COMPANY’S products are

valuable trade secrets, and FRANCHISEE hereby covenants not to reveal the contents of the
Operations Manual or any other information relating to the operation of the System.

SECTION TWENTY-SIX
RELATIONSHIP OF PARTIES

FRANCHISEE is and shall be considered an independent contractor with entire

control and direction of its entire business operations, subject only to the condition and
obligations established by this Agreement. FRANCHISEE’s business is separate and apart
from any other business that may be operated by FRANCHISOR. Neither party to this
Agreement shall make any representations tending to create an apparent agency,
employment, or partnership. Neither party will have authority to act for the other in any
manner to create obligations or debts binding on the other, and neither party shall be
responsible for any obligations or expenses whatsoever of the other. Neither FRANCHISEE
nor any person performing any duties or engaged in any work on the premises on the request
of FRANCHISEE shall be deemed an employee or agent of FRANCHISOR.

SECTION TWENTY-SEVEN
ATTORNEY’S FEES

In the event that any action is filed in relation to this Franchise Agreement, the
unsuccessful party in the action shall pay to the successful party, in addition to all of the sums
that either party may be required to pay, a reasonable sum for the successful party’s attorney’s
fees.

SECTION TWENTY-EIGHT
DEFAULT AND TERMINATION

a. Events of Defaults for immediate termination of this Agreement. Each of the

following circumstances and occurrences shall constitute an event of default under this
Agreement.

Any of the following events of default shall result in the immediate termination of the
Franchise Agreement upon receipt of the notice of default, to wit:

1. FRANCHISEE’s unauthorized disclosure of FRANCHISOR’s trade secrets

and other confidential information;

2. Abandonment of the business for a period of five (5) consecutive days or a

shorter period with intent by FRANCHISEE not to continue the operation;

3. Low sales of the FRANCHISEE, as determined by the FRANCHISOR

4. Failure of the FRANCHISEE to secure and/or renew the required permits and
licenses for the operation of its Branch, within the period provided.

5. Insolvency or bankruptcy of FRANCHISEE, without need of judicial

decision/order.

6. Failure of the FRANCHISEE to comply with Section Three, paragraph (d).

7. FRANCHISEE is convicted of a crime involving moral turpitude or any crime

under the Revised Penal Code;

8. FRANCHISEE has received two (2) notices of default within a one (1) year
period irrespective of whether or not the defaults were cured;

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 9. FRANCHISEE engages in unauthorized business or sells unauthorized
products

10. FRANCHISEE transfers the Franchise without the written approval/consent

of the FRANCHISOR.

11. FRANCHISEE’s failure to seek approval of FRANCHISOR as required by

this Agreement;

12. Failure of the FRANCHISEE submit required accounting reports on a monthly

or yearly basis.

13. Mutual decision of the Parties.

Termination on the abovementioned grounds does not prejudice the right/s of the
FRANCHISOR to seek unpaid balance or any other monetary liabilities against the
FRANCHISEE.

b. Events of Defaults for termination of this Agreement. In case an event of

default shall occur under any one of the following circumstances and FRANCHISEE
continues to fail and refuses to correct or cure such event of default, FRANCHISOR shall
have the right to terminate this Agreement by serving written notice of such termination
within thirty (30) days prior to the effective date of termination, unless sooner cured or
corrected by FRANCHISEE within the said thirty (30) day period, to wit:

1. Failure to meet standards on upkeep and maintenance of the Franchised

Branch;

2. Failure of its employees to wear proper uniforms during operating hours of

FRANCHISEE’s store.

3. FRANCHISEE fails to comply with the provisions of the Operations Manual;

4. FRANCHISEE violates any term of the Lease Agreement with the LESSOR;

5. FRANCHISEE violates any other agreements with the FRANCHISOR.

c. Obligation of FRANCHISEE upon Termination and/or Expiration of this

Agreement. Upon expiration or termination of this Agreement, FRANCHISEE shall be
obliged to undertake the following, to wit:

1. Take appropriate action to remove the FRANCHISOR’s Marks from the

premises of the building, including appropriate alterations of the building exterior and interior
and FRANCHISEE shall cancel any advertising related to FRANCHISEE's use of the Marks.

If FRANCHISEE upon request fails or omits to make such changes or causes them to
be made, FRANCHISOR shall have the right to enter the Franchised Branch of
FRANCHISEE without being deemed guilty of trespass or any other unlawful act, and shall
have the right to make such changes or cause them to be made at the expense of
FRANCHISEE and of which expense FRANCHISEE shall pay on demand.

2. Deliver to the FRANCHISOR all proprietary materials such as signs,

advertising materials and the Operations Manual.

3. Cease to publicly identity him as a former FRANCHISEE or to use the Marks

or any trademarks of FRANCHISOR.

4. Pay to the FRANCHISOR all accounts payable.

5. Settle all accounts payable to the LESSOR of the site.

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 Should FRANCHISOR decide not to exercise its right to purchase this Franchised
Branch at book value, FRANCHISEE shall be allowed to sell its Franchised Branch assets to
any third party, minus the trademarks and proprietary materials of FRANCHISOR which
shall be removed and disposed of properly in accordance with the recommended
procedures/means made by FRANCHISOR.

d. Survival of Covenants. Notwithstanding the expiration or termination of this

Agreement for any reason whatsoever, all covenants and agreements to be performed and/or
observed by the FRANCHISEE under this Agreement or which by their nature survive the
expiration or termination of this Agreement, including without limitation, those set out in
Sections Twenty-Two, Twenty-Three, Twenty-Five and Twenty-Seven hereof shall survive
any such expiration or termination.

e. Low Sales. In case of low sales, which is determined by the FRANCHISOR, the
PARTIES agree that the FRANCHISOR may immediately terminate this Franchise
Agreement upon notice to the FRANCHISEE.

SECTION TWENTY-NINE
FINAL PROVISIONS

a. Entire Agreement: Amendment. This Agreement shall constitute the entire

agreement of the parties with respect to the subject matter hereof and shall supersede any prior
expression of intent or undertaking with respect to this transaction. This Agreement may be
amended only by an instrument in writing signed by the party or parties bound or burdened
by such amendments.

b. Waiver and Cumulative Rights The failure or delay by FRANCHISOR to require

performance by FRANCHISEE of any provisions of this Agreement shall not affect the
former’s rights to require performance of such provision unless and until such performance
has been effectively waived by FRANCHISOR in writing. Furthermore, each and every right
granted to either party hereunder or under any other document or instrument delivered
hereunder or in connection herewith, or is granted to either party under the law or in equity,
or by any other subsequent agreement, shall be cumulative and may be exercised from time
to time.

c. Separability. If any section, subsection, paragraph, term or provision of this

Agreement is determined to be illegal, invalid or unconstitutional by any court of competent
jurisdiction or by any government regulatory authority having jurisdiction thereof, such
determination shall have no effect on the validity of any other section, subsection, paragraph,
term or provision of this Agreement, all of which will remain in full force and effect for the
term of the Agreement.

d. Notices. All notices or demands required or permitted under this Franchise

Agreement shall be in writing and shall be deemed delivered seven (7) days after such notices
or demands are delivered by mail, return receipt requested, at the address as provided in the
introduction of this Franchise Agreement or to such other address as either party may, from
time to time, designate.

e. Status and Parties. The COMPANY franchise is not intended to create and shall
not be interpreted as creating a partnership, joint venture, agency, employment, master and
servant or similar relationship between FRANCHISOR and FRANCHISEE and no
representation to the contrary shall be binding upon either party.

f. Binding Effect. This Franchise Agreement shall be binding upon and inure to the
benefit of FRANCHISOR and FRANCHISEE and, subject to the pertinent provisions hereof,
their respective successors, assigns, executors, heirs and authorized personal representatives.

SECTION THIRTY
GOVERNING LAW, VENUE AND ARBITRATION

a. Governing Law. The terms and provisions of this Agreement shall be interpreted
in accordance with and governed by the laws of the Philippines.

16
 b. Venue and Arbitration. In the event of litigation, the venue shall be the proper
court in the place where FRANCHISOR has its principal office. Notwithstanding the
foregoing, all controversies, disputes or claims between FRANCHISOR and FRANCHISEE
arising out of or related to: (1) this Agreement or any other agreement between the parties or
any provision of such agreements; (2) the relationship of the parties hereto; (3) the validity of
this Agreement or any other agreement between the parties or any provision of such
agreements; or (4) any part of the System, shall be submitted for final and binding arbitration
in accordance with the Procedure of Arbitration of the Arbitration Law of the Philippines and
the venue of arbitration shall be in Pasig City.

SECTION THIRTY-ONE
ACKNOWLEDGEMENT

FRANCHISEE acknowledges that:

1. It has conducted an independent investigation regarding the franchised

business;

2. No representation or guaranty has been made by FRANCHISOR as to the

future profitability of the branch and business;

3. The franchise business involves financial risk and that its success depends on
FRANCHISEE’s hands-on management;

4. FRANCHISEE hereby represents that he has received a copy of this

Agreement and has had an opportunity to consult with its attorney with respect thereto prior
to its execution hereof;

5. The term of this Franchise Agreement is for five (5) years. FRANCHISOR has
made no guarantee or representations as to the renewal of this Agreement or grant of a new
Franchise upon expiration.

IN WITNESS WHEREOF, the parties have hereunto affixed their signatures on the
date and place first above-written.

____________________________ ___________________________
LESLEY YIU FRANCHISEE
Corporate Secretary

SIGNED IN THE PRESENCE OF:

__________________________ ___________________________

17
 ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES)

) S.S.

BEFORE ME, A Notary Public for and in the City of _____________ personally
appeared:

NAME GOV’T ISSUED I.D. DATE/PLACE

ISSUED

LESLEY YIU __________________

___________________

all known to me as the same persons who executed the foregoing document, and they
acknowledged to me that the same is their free and voluntary act and deed and of the entities
they are representing.

WITNESS my hand and seal this _____ day of _______________ 2022 at the City of
__________________________.

Doc. No. _____;

Page No. _____; NOTARY PUBLIC
Book No. _____;
Series of 2022.

18
 ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES)

) S.S.

BEFORE ME, A Notary Public for and in the City of _____________ personally
appeared:

NAME VALID GOV’T I.D. DATE/PLACE ISSUED

(Franchisee)_____________ __________________ ___________________

all known to me as the same persons who executed the foregoing document, and they
acknowledged to me that the same is their free and voluntary act and deed and of the entities
they are representing.

WITNESS my hand and seal this _____ day of _______________ 2022 at the City of
__________________________.

Doc. No. _____;

Page No. _____; NOTARY PUBLIC
Book No. _____;
Series of 2022.

19