UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) May 27, 2014
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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ITEM 8.01 OTHER EVENTS
On May 27, 2014, Fresh Healthy Vending International, Inc. (the “Company”) entered into a non-binding Letter of Intent (the “LOI”) with Robert Jewel, a proposed Master Franchisee (the “Proposed Master Franchisee”), that outlines the intent of the parties to negotiate and enter into a master franchisee agreement by which the Company will grant exclusive master franchisee rights to a territory encompassing all of Australia to Mr. Jewel.
The terms of the LOI provide for the Company to receive:
·
A non-refundable down payment of $25,000;
·
An additional payment of $225,000 not later than 60 days after executing master franchisee agreement, subject to due diligence;
·
A further payment of $250,000 within 18 months of signing master franchisee agreement;
·
Franchise fees of $500 per unit sold; and
·
On-going royalties in the amount of one percent (1%) of sub-franchisee sales.
According to the LOI, the Proposed Master Franchisee will have the right to appoint and sell sub-franchises in Australia for an initial term of 10 years, subject to attaining certain enumerated performance targets. Completion of this proposed transaction is subject to various conditions including, without limitation, additional due diligence, board and regulatory approvals, and negotiating, preparing and entering into a definitive development or master franchisee agreement. No assurance can be given that these conditions will be satisfied or that this proposed transaction will close.
The above summary is qualified in its entirety by reference to the LOI, filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
On May 29, 2014, the Company issued a press release announcing that it had entered into a letter of intent to grant the Company's first international master franchise for Australia. A copy of that press release is attached to this Form 8-K as exhibit 99.2
ITEM 9.01
FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
Exhibit No.
Description
10.7
Letter of Intent between Fresh Healthy Vending International, Inc. and Robert Jewel.
99.1
Press release dated May 29, 2014 regarding Letter of Intent to Grant First International Master Franchise for Australia.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: May 30, 2014
Fresh Healthy Vending International, Inc.
/s/ ALEX KENNEDY
By: Alex Kennedy
Chief Executive Officer and Chief Financial Officer
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Fresh Healthy Vending
Offer to Purchase
Terms & Conditions Australia
Date:
Thursday, May 22, 2014
Name:
Bobby Jewell
Address:
2/150 Old South Head Road
Bellevue Hill, NSW 2023, Australia
Market Definition:
Australia
Parties.
Fresh Healthy Vending International of 9605 Scranton Road #801 San Diego, CA 92121
and;
Bobby Jewell of 2/150 Old South Head Road Bellevue Hill NSW 2023 / his nominated company ___________________________________________ - TBC (Master Franchisee)
1.
Grant of Franchise. Master Franchisee and Fresh Healthy Vending will enter into a Development Agreement ("Agreement") pursuant to which Fresh Healthy Vending will grant to Master Franchisee the right to operate Fresh Healthy Vending business in the Territory.
2.
Term of agreement. Ten (10) years, additional ten (10) year options as long as Master Franchisee is in compliance with the Franchise Agreement and subject to executing the then-current Franchise Agreement.
3.
Development Schedule
The development schedule is based on 150 (10) unit franchises being opened by the Master Franchisee in the first ten (10) years as outlined below.
Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
No of Machines | 150 | 300 | 450 | 600 | 750 | 900 | 1050 | 1200 | 1350 | 1500 |
4.
Development Fee.
Master Franchisee will pay to Fresh Healthy Vending a Five hundred thousand dollar (US $500,000) Development Fee for exclusivity to operate within the territory being Australia. Payment Terms
a)
Twenty Five Thousand Dollars ($25,000) down payment (non-refundable) upon signing of a letter of intent. This down payment will allow the Master Franchisee 60 days to complete his due diligence. The down payment will cover registration of the trademark and any other documents with the appropriate governmental authorities, engagement of local counsel and travel of Fresh Healthy Vending personnel to the territory as required or needed.
b)
On or before the sixtieth day, signing of the master franchisee agreement along with a payment of two hundred and twenty five thousand dollars ($225,000) will be required to secure the rights to the territory. Note: any sub franchisees appointed within the due diligence period will be given the opportunity to subsidize the development fee.
c)
Within 18 months of signing the Master Franchisee Agreement the remaining two hundred and fifty thousand dollars ($250,000) will be due to Fresh Healthy Vending International
1.
Sub-franchising in relation to Master Franchise Agreement
This Agreement allows the Master Franchisee to sub-franchise subject to certain mutually agreeable performance targets. The Master Franchisee may charge $12,000 per unit franchise with an additional $1,000 franchisee fee per unit and remit $500 back to Fresh Healthy Vending for each unit sold.
2.
Royalties
a)
Master Franchisee will pay a royalty of 1% of gross turnover on company owned units
b)
Master Franchisee will collect a royalty of 6% from sub franchisees and remit 1% to Fresh Health Vending International.
1.
Other Fees and Costs
See attached financial model.
2.
Term of operation of each sub franchise
10 years from opening, extendable for one additional term of 5 years. Upon expiration Master Franchisee may grant further extensions of 5 years each provided a new Master-Franchise Agreement has been entered into between the Parties.
3.
Training.
Fresh Healthy Vending International will provide Master Franchisee Training of no less than (2) weeks in San Diego, CA, USA, at no additional charge for Master Franchisee personnel prior to opening the first Fresh Healthy Vending Franchise. This excludes flights and accommodation in San Diego, CA.
4.
Opening Support.
Fresh Healthy Vending or its nominated distributor in Australia shall provide on-site operational support for a minimum of two (2) weeks during the opening of each of the first three (3) Fresh Healthy Vending franchises in the Territory by The Master Franchisee.
5.
Ongoing Support.
Fresh Healthy Vending will provide ongoing support on all aspects of the business including but not limited to: On-going provision of management, operational, technical advice and guidance through telephone or electronic communication, video conferencing and corporate portal. Ongoing update of operations manual as and when deemed necessary. Ongoing market research and introduction of new products, promotions and marketing ideas. Guidance on staffing required, site required, technology required, and vehicles required.
6.
Registration Costs.
Fresh Healthy Vending shall bear the expense of registering their trademarks with the appropriate governmental authorities.
13.
Amounts Payable in U.S. Currency.
All amounts due Fresh Healthy Vending as described herein shall be paid in United States Dollars.
14.
Translation.
Master Franchisee shall be responsible for translating and adapting for use in the Territory all operating materials, sales literature, and advertising materials, etc. All such translations and adaptations shall be subject to the approval of Fresh Healthy Vending.
15.
Territory Website.
Master Franchisee shall be responsible for any translation, conversion or local interpretation of the Website into local language, used in the Territory to advertise, market, and promote Fresh Healthy Vending. All translations, conversions, or interpretations of the Website for use in the Territory shall be subject to the approval of Fresh Healthy Vending.
16.
Due Diligence
The Offer is conditional for 60 days after the date of signing by both parties so the purchaser’s can complete their Due diligence investigation.
17.
Good Faith
By executing and returning this letter Fresh Healthy Vending Internationals agrees that for 60 days from the date of execution of this letter it will work in good faith with the purchasers to complete the transactions contemplated by the Offer.
Signed on behalf of the Investor:
Signature:
/s/ Robert Jewell
Print Name:
Robert Jewell
Position:
Director
This Offer to invest is accepted by the Brand owner / Franchisor:
Signature:
/s/ Nicholas Yates
Print Name:
Nicholas Yates
Position:
Vice President
Contact: Christine Takara
Fresh Healthy Vending
Christine.takara@freshvending.com
888.902.7558
FOR IMMEDIATE RELEASE
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Fresh Healthy Vending International, Inc. enters letter of intent to grant first international master franchise for Australia
When executed, the proposed Development Agreement will open Company's initial high growth foreign market and add long term, enhanced margin revenue sources
San Diego, Calif. (May 29, 2014) – Fresh Healthy Vending International, Inc. (OTC Markets: VEND), the leading healthy vending franchisor in North America, entered into a non-binding Letter of Intent (“LOI”) with a proposed Master Franchisee partner exclusively to sell and develop not less than 150 sub-franchises, each having at least 10 units, across all of Australia over the next 10 years.
The terms of the LOI provide for VEND to receive
·
a non-refundable down payment of $25,000,
·
an additional payment of $225,000 not later than 60 days after executing master franchisee agreement, subject to due diligence,
·
a further payment of $250,000 within 18 months of signing master franchisee agreement,
·
franchise fees of $500 per unit sold, and
·
on-going royalties in the amount of 1 percent of sub-franchisee sales.
“Since re-structuring our business model in early 2013, we believe Fresh Healthy Vending has been on the fast-track for advancement and achievement,” said Nick Yates, founder of the Company. “Since then, we have launched two of the industry’s most innovative products, the Fresh Touch Machine and the Fresh Micro Market, grown our corporate division that owns and operates machines and vending routes, and now, just six months later, with the help of our international broker Global Franchise Partners (“GFP”), we’ve signed our first international LOI with a proposed Master Franchisee partner in Australia, a territory that we anticipate to be an ideal foreign growth market for Fresh Healthy Vending's branded expansion.”
Late last year, Australia climbed to fourth in the Organisation for Economic Co-operation and Development’s ranking of advanced nations with the largest proportion of obese citizens (28.3 percent), behind the U.S., Mexico and New Zealand. The country also ranked 19th place in terms of overweight children in developing nations.
Fresh Healthy Vending’s proposed Master Franchisee partner, Bobby Jewell, is a chef and author, and has been a restaurateur to one of Sydney’s oldest and most famous restaurants, Tharen’s, established in 1979.
“Around the world, Australia projects the image of a sporty, outdoorsy place full of fit people and open spaces," said Jewell. "But experts say unprecedented affluence, along with a culture of convenience, growing portion sizes and an increasingly sedentary lifestyle, have made one in two Australians overweight and turned the country into one of the most obese in the world. In addition to having the incessant desire to address these unnerving statistics, it was truly the combination of the seamless franchise business model articulated by Nick Yates for Fresh Healthy Vending, combined with the superb professionalism of GFP, bringing this opportunity together to fit my business needs, that sealed the deal for me.”
“Being based in Australia, we were adamantly motivated to locate and secure a well qualified Master Franchisee partner who encompasses all that Fresh Healthy Vending stands for as a brand, along with a strong entrepreneurial spirit, and topped off with the ambition and character to be the face of Fresh Healthy Vending, Australia," stated David Newport, GFP’s head of global sales. “Bobby Jewell has the dedicated, confident skill-set to lead and run Fresh Healthy Vending’s Master Franchisee program in Australia.
Once the proposed Development Agreement has been signed, Jewell intends to retain Civic Managed Services, a 30-year veteran in the Australian retail / franchising industry, to provide his new enterprise with services such as strategic direction and planning, marketing, accounting, finance and management reporting, IT support, franchise support, documentation and compliance, purchasing and procurement, and even warehousing and distribution.
“In conjunction with the experienced team at Civic Managed Services, we intend to assist with operational infrastructure, and aid in running the backend of the business," said Newport. "That way, Bobby can focus his efforts of sharing and marketing Fresh Healthy Vending's progressive concepts with potential sub-franchisees in cities and communities across Australia. We are very proud to have a creative advisory role and a helping marketing hand in Fresh Healthy Vending’s initial foreign expansion, and we will continue seeking out potential other country transactions that can replicate the Company's U.S.A. franchise model. We’re finding that the Fresh Healthy Vending team has built a very attractive, portable model that is transferable to additional countries throughout the world. Currently, we have a robust list of prospective Master Franchisee partners who are eager to import and develop this concept in their countries, and we are equally committed to helping them do so.”
For more information on Fresh Healthy Vending, the franchise program, or to receive a free healthy vending machine in your school or business, visit www.freshvending.com or call toll free 888-902-7558.
About Fresh Healthy Vending
Fresh Healthy Vending, based in San Diego, California, is North America’s leading healthy vending franchisor. Fresh Healthy Vending pioneered the concept of vending machines stocked with tried-and-tested fresh, healthy snack options and capitalizes on a growing market of health conscious consumers. The Company has appointed more than 230 franchisees throughout the United States, Canada, Puerto Rico and the Bahamas and actively looks to partner with like-minded entrepreneurs whom share its vision.
The Company offers three different vending options: The Healthy Vending Combo snack and drink machine, the Healthy Vending Touch - a 46” 3D interactive touch screen vending machine, and the Fresh Micro Market.
The Company has installed machines in more than 2,500 schools, universities, hospitals, community centers, military bases, airports, fitness facilities, YMCAs, libraries and many other locations.
Fresh Healthy Vending believes that it is currently the only vending company providing a comprehensive integrated business model that:
1.
Has an integrative focus on securing qualified locations for vending machine placement on behalf of franchisees;
2.
Has an in-house products department which creates specialized menus specific to each location;
3.
Has a corporate owned machine division to provide an independent revenue stream separate from franchise sales;
4.
Provides franchisees with best practices obtained and enhanced by experience of directly operating machines and managing routes;
5.
Delivers a one of a kind franchise coaching program to assist franchisees with developing their healthy vending business using the company’s Steps to Success Program.
Fresh Healthy Vending’s stock is traded through the .
For more information on Fresh Healthy Vending, the Franchise Program, or to receive a free healthy vending machine in your school or business, visit www.freshvending.com or call toll free 888-902-7558.
Cautionary note on forward-looking statements
Except for historical information contained in this release, statements in this release may constitute forward-looking statements regarding assumptions, projections, expectations, targets, intentions or beliefs about future events that are based on management's belief, as well as assumptions made by, and information currently available to, management. While the Company believes that expectations are based upon reasonable assumptions, there can be no assurances that goals, results and strategy will be realized. Numerous factors, including risks and uncertainties, may affect actual results and may cause results to differ materially from those expressed in forward-looking statements made by the Company or on its behalf. In addition to statements, which explicitly describe risks and uncertainties, readers are urged to consider statements labeled with such terms as "believes," "belief," "expects," "intends," "feels," “anticipates," "proposes," "proposed," or "plans" to be uncertain and forward-looking. More detailed information on these and additional factors that could affect Fresh Healthy Vending's actual results are described in Fresh Healthy Vending's filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K for the fiscal year ended June 30, 2013 and those referenced in its Forms 10-Q filed for the quarterly periods ended September 30, 2013, December 31, 2013 and March 31, 2014. All forward-looking statements in this news release speak only as of the date of this news release and are based on Fresh Healthy Vending's current beliefs and expectations. Fresh Healthy Vending undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
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