"Escrow Agreement" - Maryland

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ESCROW INSTRUCTION SHEET
A.
The Franchisor must return a fully executed copy of the escrow agreement, with
original signatures, to the Division before its registration will be made effective.
B.
The Franchisor must also provide to the Division in writing, the name of the bank,
the name, address and telephone number of the person(s) at the bank who may be contacted for
information regarding the escrow account, and the account number. Any changes to this
information should be immediately provided to the Division.
C.
Funds in the escrow account will only be released upon completion by the
Franchisor of its pre-opening obligations to the Franchisee. Requests for the release of escrowed
funds should be in writing and should be sent to the Division. The Franchisor should state in the
request the exact amount of the funds to be released. The Division must receive written
certification from the Franchisee whose funds are to be released to the Franchisor. Such
certification should state the amount of funds to be released, and that the Franchisor* s
preopening obligations to the Franchisee have been satisfied.
D.
Please refer to Regulation 02.02.08.08 of the Code of Maryland Regulations,
entitled Escrow Condition, for additional information on the operation of escrow accounts.
Regulation 02.02.08.08 can also be found at
5200.05 in The Business Franchise Guide
published by Commerce Clearing House.
R/form s/franchise/EscrowAgreem ent
ESCROW INSTRUCTION SHEET
A.
The Franchisor must return a fully executed copy of the escrow agreement, with
original signatures, to the Division before its registration will be made effective.
B.
The Franchisor must also provide to the Division in writing, the name of the bank,
the name, address and telephone number of the person(s) at the bank who may be contacted for
information regarding the escrow account, and the account number. Any changes to this
information should be immediately provided to the Division.
C.
Funds in the escrow account will only be released upon completion by the
Franchisor of its pre-opening obligations to the Franchisee. Requests for the release of escrowed
funds should be in writing and should be sent to the Division. The Franchisor should state in the
request the exact amount of the funds to be released. The Division must receive written
certification from the Franchisee whose funds are to be released to the Franchisor. Such
certification should state the amount of funds to be released, and that the Franchisor* s
preopening obligations to the Franchisee have been satisfied.
D.
Please refer to Regulation 02.02.08.08 of the Code of Maryland Regulations,
entitled Escrow Condition, for additional information on the operation of escrow accounts.
Regulation 02.02.08.08 can also be found at
5200.05 in The Business Franchise Guide
published by Commerce Clearing House.
R/form s/franchise/EscrowAgreem ent
ESCROW AGREEMENT
This Escrow Agreement, made this _______ day of ___________________, ______,
by ____________________________________________________, organized under the laws of the
State of _______________________________________, (hereinafter referred to as “Franchisor”) and
_________________________________organized under the laws of the State of __________________,
(hereinafter referred to as “Bank”).
WHEREAS, the Franchisor desires to offer and sell franchises in the State of Maryland, and
WHEREAS, it is the discretion of the Securities Commissioner of the State of Maryland as
Administrator of the Maryland Franchise Registration and Disclosure Law, to require an escrow of
franchise fees, and
WHEREAS, in order to conform to the procedures for arranging an escrow account, the
Franchisor desires to enter into an Escrow Agreement with the Bank, pursuant to which franchise fees are
to be held in escrow for the purpose of complying with the Maryland Franchise Registration and
Disclosure Law,
NOW, THEREFORE, with the foregoing recitals hereinafter incorporated by reference and made
a part hereof, it is agreed as follows:
1.
The Franchisor shall, until release of escrowed funds as hereinafter provided,
deposit with the Bank, all monies obtained from each franchisee who either is a resident of the
State of Maryland or contracts to operate the franchised business within the State of Maryland.
2.
All funds delivered by the Franchisor to the Bank will be placed in a separate
account indicating account name and account number as follows:
(Account Name)_______________________________________________________
(Account Number)_____________________________________________________
3.
The Bank shall pay out funds, plus interest if any, from the Escrow Account only
upon the occurrence of one of the following conditions:
a.
A written notice from the Securities Commissioner stating that he or she
takes no exception to the release of such funds to _____________________________________.
b.
Upon written notice from the Securities Commissioner, the Bank shall
return the deposited franchise fee to a specific franchisee.
c.
The Bank shall pay funds into court or disburse or deliver them in
accordance with any order of any court of competent jurisdiction.
4.
The Franchisor will supply the Bank with the name and address of each
franchisee, together with the amount of the deposit that represents each franchisee’s franchise
fee, and the Bank will retain records containing the same information.
5.
Any funds deposited in the Escrow Account pursuant to this Escrow Agreement
shall be invested and kept invested by the Bank in obligations of the United States, or a savings
account or savings accounts of the Bank, or money market funds of or available to the Bank and
to which the Bank or an affiliate is investment advisor or provides other services and receives
reasonable compensation for such services, provided such money market funds are rated AAAm
by Standard and Poor’s and Aaa by Moody’s Investor Services, or U.S. Treasury Bills, Notes or
Bonds until such funds are to be disbursed as provided in Paragraph 3 hereof. All interest
received and any increment thereon shall be added to the funds so deposited in the Escrow
Account and shall be distributed as provided in Paragraph 3 hereof.
6.
The Securities Commissioner may inspect the records of the Bank, insofar as they
relate to this Escrow Agreement, for the purpose of determining compliance with and
conformance to the provisions of this Escrow Agreement. At the Securities Commissioner’s
discretion, statements indicating status of escrow shall be furnished by the Bank to the Securities
Commissioner.
7.
The Franchisor shall pay to the Bank reasonable compensation for expenses
incurred and services rendered by the Bank under this Escrow Agreement.
8.
The Bank shall have no duty to determine the propriety of any deposit or
disbursement of funds. Additionally, the Bank shall have no duty to the Franchisor, the
Securities Commissioner, any franchisee or any other party except as expressly stated in this
Escrow Agreement. The Franchisor does hereby indemnify the Bank from any and all costs,
claims and expenses, including attorneys’ fees, which may be incurred by or which may accrue
to the Bank relating to the opening or maintenance of any account established under this Escrow
Agreement.
9.
All proceeds deposited pursuant to this Escrow Agreement shall not be subject to
any liens or charges by the Bank, or judgments or creditor’s claims against the Franchisor.
10.
The Franchisor shall give each franchisee a copy of this Escrow Agreement prior
to collecting any funds from that franchisee.
11.
The Bank’s duties under this Escrow Agreement shall terminate upon final
distribution of all monies deposited as provided hereunder.
12.
This Escrow Agreement is governed by the Laws of the State of Maryland
IN WITNESS WHEREOF, each party has caused this Escrow Agreement to be signed
and executed, and its corporate seal hereto affixed, in its name by its proper and fully authorized
officer or officers on the day and year first above written.
ATTEST:
_________________________ By: ______________________________________________
(Typed N am e of Signator)
(Position)
(Business Address)
____________________________________
(Business Phone)
ATTEST:
_________________________ By: ______________________________________________
(Typed N am e of Signator)
(Position)
(Business Address)
____________________________________
(Business Phone)
R/form s/franchise/EscrowAgreem ent