Exhibit 10.18
Buffalo Wild Wings(R)
Area Development Agreement
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Developer
Effective Date:
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(To be completed by Us)
TABLE OF CONTENTS
SECTION PAGE
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RECITALS......................................................................1
1. DEFINITIONS..............................................................1
2. GRANT OF DEVELOPMENT RIGHTS..............................................2
3. DEVELOPMENT FEE..........................................................4
4. DEVELOPMENT SCHEDULE.....................................................4
5. TERM.....................................................................6
6. YOUR DUTIES..............................................................6
7. DEFAULT AND TERMINATION..................................................7
8. RIGHTS AND DUTIES OF PARTIES UPON TERMINATION OR EXPIRATION..............8
9. TRANSFER................................................................10
10. MISCELLANEOUS...........................................................10
APPENDICES
A. DEVELOPMENT TERRITORY
B. DEVELOPMENT SCHEDULE
BUFFALO WILD WINGS(R)
AREA DEVELOPMENT AGREEMENT
This Area Development Agreement is made this day of , 20
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between BUFFALO WILD WINGS INTERNATIONAL, INC., an Ohio corporation with its
principal business located at 0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxxx,
Xxxxxxxxx 00000 ("we" or "us") and , a(n)
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whose principal business address
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is ("developer" or "you"). If the developer is a corporation, partnership or
limited liability company, certain provisions of the Agreement also apply to
your owners and will be noted.
RECITALS
A. Our parent company has developed a unique system for operating video
entertainment oriented, fast casual restaurants that feature chicken wings,
sandwiches, unique food service and other products, beverages and services using
certain standards and specifications;
B. Many of the food and beverage products are prepared according to
specified recipes and procedures, some of which include proprietary sauces and
mixes;
C. Our parent company owns the Buffalo Wild Wings(R) Trademark and other
trademarks used in connection with the Operation of a Buffalo Wild Wings
restaurant;
D. Our parent company has granted to us the right to sublicense the right
to develop and operate Buffalo Wild Wings restaurants;
E. You desire to develop and operate several Buffalo Wild Wings restaurants
and we, in reliance on your representations, have approved your franchise
application to do so in accordance with this Agreement.
In consideration of the foregoing and the mutual covenants and
consideration below, you and we agree as follows:
DEFINITIONS
1. For purposes of this Agreement, the terms below have the following
definitions:
A. "Menu Items" means the chicken wings, sandwiches and other products
and beverages prepared according to our specified recipes and procedures,
as we may modify and change from time to time.
B. "Principal Owner" means any person who directly or indirectly owns
a 10% or greater interest in the developer when the developer is a
corporation, limited liability company, a partnership, or a similar entity.
In addition, if the developer is a partnership entity, then each general
partner is a Principal Owner, regardless of the percentage ownership
interest. If the developer is one or more individuals, each individual is a
Principal Owner of the developer. You must have at least one Principal
Owner.
C. "Restaurants" means the Buffalo Wild Wings Restaurants you develop
and operate pursuant to this Agreement.
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D. "System" means the Buffalo Wild Wings System, which consists of
distinctive food and beverage products prepared according to special and
confidential recipes and formulas with unique storage, preparation, service
and delivery procedures and techniques, offered in a setting of distinctive
exterior and interior layout, design and color scheme, signage, furnishings
and materials and using certain distinctive types of facilities, equipment,
supplies, ingredients, business techniques, methods and procedures together
with sales promotion programs, all of which we may modify and change from
time to time.
E. "Trademarks" means the Buffalo Wild Wings Trademark and Service
Xxxx that have been registered in the United States and elsewhere and the
trademarks, service marks and trade names set forth in each Franchise
Agreement, as we may modify and change from time to time, and the trade
dress and other commercial symbols used in the Restaurants. Trade dress
includes the designs, color schemes and image we authorize you to use in
the operation of the Restaurants from time to time.
GRANT OF DEVELOPMENT RIGHTS
2. The following provisions control with respect to the rights granted
hereunder:
A. We grant to you, under the terms and conditions of this Agreement,
the right to develop and operate (___) Buffalo Wild Wings
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Restaurants (the "Restaurants") within the territory described on Appendix
A ("Development Territory").
B. You are bound by the development schedule ("Development Schedule")
set forth in Appendix B. Time is of the essence for the development of each
Restaurant in accordance with the Development Schedule. Each Restaurant
must be developed and operated pursuant to a separate Franchise Agreement
that you enter into with us pursuant to Section 4.B below.
C. If you are in compliance with the Development Schedule set forth on
Appendix B, we will not develop or operate or grant anyone else a franchise
to develop and operate a Buffalo Wild Wings Restaurant business in the
Development Territory prior to the earlier of (i) the expiration or
termination of this Agreement; (ii) the date on which you must execute the
Franchise Agreement for your last restaurant pursuant to the terms of the
Development Schedule or (iii) the date on which the Designated Area for
your final Restaurant under this Agreement is determined, except (a) for
the Special Sites defined in Section 2.D below; (b) in the event that the
Development Territory covers more than one city, county or designated
market area, the protection for each particular city, county or designated
market area shall expire upon the earliest of (1) any of the foregoing
events or (2) the date when the Designated Area for your final Restaurant
to be developed in such city, county or designated market area under this
Agreement is determined; or (c) as otherwise provided in this Agreement.
Notwithstanding anything in this Agreement, upon the earliest occurrence of
any of the foregoing events (i) the Development Territory shall expire and
(ii) we will be entitled to develop and operate, or to franchise others to
develop and operate, Buffalo Wild Wings restaurants in the Development
Territory, except as may be otherwise provided under any Franchise
Agreement that has been executed between us and you and that has not been
terminated. At the time you execute your final Franchise Agreement under
the Development Schedule, you must have an Authorized Location for your
final Restaurant.
D. The rights granted under this Agreement are limited to the right to
develop and operate Restaurants located in the Development Territory, and
do not include (i) any right to sell products and Menu Items identified by
the Trademarks at any location or through any other
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channels or methods of distribution, including the internet (or any other
existing or future form of electronic commerce), other than at Restaurants
within the Development Territory, (ii) any right to sell products and Menu
Items identified by the Trademarks to any person or entity for resale or
further distribution, or (iii) any right to exclude, control or impose
conditions on our development or operation of franchised, company or
affiliate owned restaurants at any time or at any location outside of the
Development Territory. You may not use any the words Buffalo, Wild or Wings
or any of the other Trademarks as part of the name of your corporation,
partnership, limited liability company or other similar entity.
You acknowledge and agree that (i) we and our affiliates have the
right to operate or franchise within the Designated Area one or more
facilities with limited sitting, which shall not be video entertainment
oriented, fast casual restaurants, selling, for dine in or take out, all or
some of the Menu Items, using the Trademarks or any other trademarks,
service marks or trade names, without compensation to any franchisee; (ii)
we and our affiliates have the right outside of the Development Territory
to grant other franchises or operate company or affiliate owned Buffalo
Wild Wings restaurants and offer, sell or distribute any products or
services associated with the System (now or in the future) under the
Trademarks or any other trademarks, service marks or trade names or through
any distribution channel or method, all without compensation to any
developer; and (iii) we and our affiliates have the right to operate and
franchise others to operate restaurants or any other business within and
outside the Development Territory under trademarks other than the Buffalo
Wild Wings Trademarks, without compensation to any developer, except that
our operation of, or association or affiliation with, restaurants (through
franchising or otherwise) in the Development Territory that compete with
Buffalo Wild Wings restaurants in the video entertainment oriented, fast
casual restaurant segment will only occur through some form of merger or
acquisition with an existing restaurant chain.
In addition, we and our affiliates have the right to offer, sell or
distribute, within the Development Territory, any frozen, pre-packaged
items or other products or services associated with the System (now or in
the future) or identified by the Trademarks, or any other trademarks,
service marks or trade names, except for Prohibited Items (as defined
below), through any distribution channels or methods, without compensation
to any developer. The distribution channels or methods include, without
limitation, grocery stores, club stores, convenience stores, wholesale,
hospitals, clinics, health care facilities, business or industry locations
(e.g. manufacturing site, office building), military installations,
military commissaries or the internet (or any other existing or future form
of electronic commerce). The Prohibited Items are the following items that
we will not sell in the Development Territory through other distribution
channels or methods: any retail food service Menu Items that are cooked or
prepared to be served to the end user or customer for consumption at the
retail location. For example, chicken wings cooked and served to customers
at a grocery store or convenience store would be a Prohibited Item, but the
sale of frozen or pre-packaged chicken wings at a grocery store or
convenience store would be a permitted form of distribution in the
Development Territory.
Further, you acknowledge that certain locations within the Development
Territory are by their nature unique and separate in character from sites
generally developed as Buffalo Wild Wings restaurants. As a result, you
agree that the following locations ("Special Sites") are excluded from the
Development Territory and we have the right, subject to our then-current
Special Sites Impact Policy, to develop or franchise such locations: (1)
military bases; (2) public transportation facilities; (3) sports
facilities, including race tracks; (4) student unions or other similar
buildings on college or university campuses; (5) amusement and theme parks;
and (6) community and special events.
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E. This Agreement is not a Franchise Agreement and you have no right
to use in any manner the Trademarks by virtue of this Agreement. You have
no right under this Agreement to sublicense or subfranchise others to
operate a business or restaurant or use the System or the Trademarks.
DEVELOPMENT FEE
3. You must pay a Development Fee as described below:
A. As consideration for the rights granted in this Agreement, you must
pay us a "Development Fee" of $ , representing one-half of the
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Initial Franchise Fee for each Restaurant to be developed under this
Agreement. The Initial Franchise Fee for the first Restaurant is
$ . The Initial Franchise Fee for the second Restaurant is
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$ . The Initial Franchise Fee for each subsequent Restaurant is
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$ .
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The Development Fee is consideration for this Agreement and not
consideration for any Franchise Agreement, is fully earned by us upon
execution of this Agreement and is non-refundable. The part of the Initial
Franchise Fee that is included in the Development Fee is credited against
the Initial Franchise Fee payable upon the signing of each individual
Franchise Agreement. The balance of the Initial Franchise Fee for the first
Restaurant must be paid at the time of execution of this Agreement,
together with the execution by you of the Franchise Agreement for the first
Restaurant. The total amount to be paid by you at the time of execution of
this Agreement pursuant to this Section, including both the Development Fee
and the balance of the Initial Franchise Fee for your first Restaurant is
$ . The balance of the Initial Franchise Fee for each subsequent
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Restaurant is due as specified in Section 3.B.
B. You must submit a separate application for each Restaurant to be
established by you within the Development Territory as further described in
Section 4. Upon our consent to the site of your Restaurant, a separate
Franchise Agreement must be executed for each such Restaurant, at which
time the balance of the Initial Franchise Fee for that Restaurant is due
and owing. Such payment represents the balance of the appropriate Initial
Franchise Fee, as described above in Section 3.A. Upon the execution of
each Franchise Agreement, the terms and conditions of the Franchise
Agreement control the establishment and operation of such Restaurant.
DEVELOPMENT SCHEDULE
4. The following provisions control with respect to your development rights
and obligations:
A. You are bound by and strictly must follow the Development Schedule.
By the dates set forth under the Development Schedule, you must enter into
Franchise Agreements with us pursuant to this Agreement for the number of
Restaurants described under the Development Schedule. You also must comply
with the Development Schedule requirements regarding (i) the restaurant
type to be developed and the opening date for each Restaurant and (ii) the
cumulative number of Restaurants to be open and continuously operating for
business in the Development Territory. If you fail to either execute a
Franchise Agreement or to open a Restaurant according to the dates set
forth in the Franchise Agreement, we, in our sole discretion, may (i)
require that you hire a franchise development expert with recognized
experience in developing franchises in a similar line of business to ours
or (ii) immediately terminate this Agreement pursuant to Section 7.B.
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B. You may not develop a Restaurant unless you have notified us of
your intention to develop the Restaurant at least 30 days prior to the date
set forth in the Development Schedule by which you must execute a Franchise
Agreement for the particular Restaurant and all of the following conditions
have been met (these conditions apply to each Restaurant to be developed in
the Development Territory):
1. Your Submission of Proposed Site. You must find a proposed
site for the Restaurant which you reasonably believe to conform to our
site selection criteria, as modified by us from time to time, and
submit to us a complete site report (containing such demographic,
commercial, and other information and photographs as we may reasonably
require) for such site.
2. Our Consent to Proposed Site. You must receive our written
consent to your proposed site. We agree not to unreasonably withhold
consent to a proposed site. If we have developed a proprietary site
evaluation system, prior to granting our consent to a site, you must
have the site evaluated by our proprietary site evaluator software.
This software will be licensed to us by a third party provider. You
are required to pay a fee to such provider for each site you ask us to
consider for final evaluation. The fee is between $500 to $850 per
site. In approving or disapproving any proposed site, we will consider
such matters as we deem material, including demographic
characteristics of the proposed site, traffic patterns, competition,
the proximity to other businesses, the nature of other businesses in
proximity to the site, and other commercial characteristics (including
the purchase or lease obligations for the proposed site) and the size
of premises, appearance and other physical characteristics. Our
consent to a proposed site, however, does not in any way constitute a
guaranty by us as to the success of the Restaurant.
3. Your Submission of Information. You must furnish to us, at
least 30 days prior to the earliest of (i) the date set forth in the
Development Schedule by which you must execute a Franchise Agreement
or (ii) the actual date in which the Franchise Agreement would be
executed, a franchise application for the proposed Restaurant,
financial statements and other information regarding you, the
operation of any of your other Restaurants within the Development
Territory and the development and operation of the proposed Restaurant
(including, without limitation, investment and financing plans for the
proposed Restaurant) as we may reasonably require.
4. Your Compliance with Our Then-Current Standards for
Franchisees. You must receive written confirmation from us that you
meet our then-current standards for franchisees, including financial
capability criteria for the development of a new Restaurant. You
acknowledge and agree that this requirement is necessary to ensure the
proper development and operation of your Restaurants, and preserve and
enhance the reputation and goodwill of all Buffalo Wild Wings
restaurants and the goodwill of the Trademarks. Our confirmation that
you meet our then-current standards for the development of a new
Restaurant, however, does not in any way constitute a guaranty by us
as to your success.
5. Good Standing. You must not be in default of this Agreement,
any Franchise Agreement entered into pursuant to this Agreement or any
other agreement between you or any of your affiliates and us or any of
our affiliates. You also must have satisfied on a timely basis all
monetary and material obligations under the Franchise Agreements for
all existing Restaurants.
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6. Execution of Franchise Agreement. You and we must enter into
our then-current form of Franchise Agreement for the proposed
Restaurant. You understand that we may modify the then-current form of
Franchise Agreement from time to time and that it may be different
than the current form of Franchise Agreement, including different fees
and obligations. You understand and agree that any and all Franchise
Agreements will be construed and exist independently of this
Agreement. The continued existence of each Franchise Agreement will be
determined by the terms and conditions of such Franchise Agreement.
Except as specifically set forth in this Agreement, the establishment
and operation of each Restaurant must be in accordance with the terms
of the applicable Franchise Agreement.
C. You acknowledge that you have conducted an independent
investigation of the prospects for the establishment of Restaurants within
the Development Territory, and recognize that the business venture
contemplated by this Agreement involves business and economic risks and
that your financial and business success will be primarily dependent upon
the personal efforts of you and your management and employees. We expressly
disclaim the making of, and you acknowledge that you have not received, any
estimates, projections, warranties or guaranties, express or implied,
regarding potential gross sales, profits, earnings or the financial success
of the Restaurants you develop within the Development Territory.
D. You recognize and acknowledge that this Agreement requires you to
open Restaurants in the future pursuant to the Development Schedule. You
further acknowledge that the estimated expenses and investment requirements
set forth in Items 6 and 7 of our Uniform Franchise Offering Circular are
subject to increase over time, and that future Restaurants likely will
involve greater initial investment and operating capital requirements than
those stated in the Uniform Franchise Offering Circular provided to you
prior to the execution of this Agreement. You are obligated to execute all
the Franchise Agreements and open all the Restaurants on the dates set
forth on the Development Schedule, regardless of (i) the requirement of a
greater investment, (ii) the financial condition or performance of your
prior Restaurants, or (iii) any other circumstances, financial or
otherwise. The foregoing shall not be interpreted as imposing any
obligation upon us to execute the Franchise Agreements under this Agreement
if you have not complied with each and every condition necessary to develop
the Restaurants.
TERM
5. Unless sooner terminated in accordance with Section 7 of this Agreement,
the term of this Agreement and all rights granted to you will expire on the date
that your last Buffalo Wild Wings Restaurant is scheduled to be opened under the
Development Schedule.
YOUR DUTIES
6. You must perform the following obligations:
A. You must comply with all of the terms and conditions of each
Franchise Agreement, including the operating requirements specified in each
Franchise Agreement.
B. You and your owners, officers, directors, shareholders, partners,
members and managers (if any) acknowledge that your entire knowledge of the
operation of a Buffalo Wild Wings Restaurant and the System, including the
knowledge or know-how regarding the specifications, standards and operating
procedures of the services and activities, is derived from information we
disclose to you and that certain information is proprietary, confidential
and
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constitutes our trade secrets. The term "trade secrets" refers to the whole
or any portion of know-how, knowledge, methods, specifications, processes,
procedures and/or improvements regarding the business that is valuable and
secret in the sense that it is not generally known to our competitors and
any proprietary information contained in the manuals or otherwise
communicated to you in writing, verbally or through the internet or other
online or computer communications, and any other knowledge or know-how
concerning the methods of operation of the Restaurants. You and your
owners, officers, directors, shareholders, partners, members and managers
(if any), jointly and severally, agree that at all times during and after
the term of this Agreement, you will maintain the absolute confidentiality
of all such proprietary information and will not disclose, copy, reproduce,
sell or use any such information in any other business or in any manner not
specifically authorized or approved in advance in writing by us. We may
require that you obtain nondisclosure and confidentiality agreements in a
form satisfactory to us from the individuals identified in the first
sentence of this paragraph and other key employees.
C. You must comply with all requirements of federal, state and local
laws, rules and regulations.
D. If you at some time in the future desire to make either a public or
a private offering of your securities, prior to such offering and sale, and
prior to the public release of any statements, data, or other information
of any kind relating to the proposed offering of your securities, you must
secure our written approval, which approval will not be unreasonably
withheld. You must secure our prior written consent to any and all press
releases, news releases and any and all other publicity, the primary
purpose of which is to generate interest in your offering. Only after we
have given our written approval may you proceed to file, publish, issue,
and release and make public any said data, material and information
regarding the securities offering. It is specifically understood that any
review by us is solely for our own information, and our approval does not
constitute any kind of authorization, acceptance, agreement, endorsement,
approval, or ratification of the same, either expressly or implied. You may
make no oral or written notice of any kind whatsoever indicating or
implying that we and/or our affiliates have any interest in the
relationship whatsoever to the proposed offering other than acting as
Franchisor. You agree to indemnify, defend, and hold us and our affiliates
harmless, and our affiliates' directors, officers, successors and assigns
harmless from all claims, demands, costs, fees, charges, liability or
expense (including attorneys' fees) of any kind whatsoever arising from
your offering of information published or communicated in actions taken in
that regard.
E. If neither you, your Principal Owner, nor any other person in your
organization possesses, in our judgment, adequate experience and skills to
allow you to locate, obtain and develop prime locations in the Development
Territory to allow you to meet your development obligations under this
Agreement, we can require that you hire or engage a person with those
necessary skills.
DEFAULT AND TERMINATION
7. The following provisions apply with respect to default and termination:
A. The rights and territorial protection granted to you in this
Agreement have been granted in reliance on your representations and
warranties, and strictly on the conditions set forth in Sections 2, 4 and 6
of this Agreement, including the condition that you comply strictly with
the Development Schedule.
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B. You will be deemed in default under this Agreement if you breach
any of the terms of this Agreement, including the failure to meet the
Development Schedule, or the terms of any Franchise Agreement or any other
agreements between you or your affiliates and us or our affiliates. All
rights granted in this Agreement immediately terminate upon written notice
without opportunity to cure if: (i) you become insolvent, commit any
affirmative action of insolvency or file any action or petition of
insolvency, (ii) a receiver (permanent or temporary) of your property is
appointed by a court of competent authority, (iii) you make a general
assignment or other similar arrangement for the benefit of your creditors,
(iv) a final judgment remains unsatisfied of record for 30 days or longer
(unless supersedeas bond is filed), (v) execution is levied against your
business or property, (vi) suit to foreclose any lien or mortgage against
his premises or equipment is instituted against you and not dismissed
within 30 days, or is not in the process of being dismissed, (vii) you fail
to meet your development obligations set forth in the Development Schedule
attached as Appendix B, (viii) you fail to comply with any other provision
of this Agreement and do not correct the failure within 30 days after
written notice of that failure is delivered to you, or (ix) we have
delivered to you a notice of termination of a Franchise Agreement in
accordance with its terms and conditions.
RIGHTS AND DUTIES OF PARTIES UPON TERMINATION OR EXPIRATION
8. Upon termination or expiration of this Agreement, all rights granted to
you will automatically terminate, and:
A. All remaining rights granted to you to develop Restaurants under
this Agreement will automatically be revoked and will be null and void. You
will not be entitled to any refund of any fees. You will have no right to
develop or operate any business for which a Franchise Agreement has not
been executed by us. We will be entitled to develop and operate, or to
franchise others to develop and operate, Buffalo Wild Wings restaurants in
the Development Territory, except as may be otherwise provided under any
Franchise Agreement that has been executed between us and you and that has
not been terminated.
B. You must immediately cease to operate your business under this
Agreement and must not thereafter, directly or indirectly, represent to the
public or hold yourself out as a present or former developer of ours.
C. You must take such action as may be necessary to cancel or assign
to us or our designee, at our option, any assumed name or equivalent
registration that contains the name or any of the words BUFFALO, WILD or
WINGS or any other Trademark of ours, and you must furnish us with evidence
satisfactory to us of compliance with this obligation within 30 days after
termination or expiration of this Agreement.
D. You must assign to us or our designee all your right, title, and
interest in and to your telephone numbers and must notify the telephone
company and all listing agencies of the termination or expiration of your
right to use any telephone number in any regular, classified or other
telephone directory listing associated with the Trademarks and to authorize
transfer of same at our direction.
E. You must within 30 days of the termination or expiration pay all
sums owing to us and our affiliates, including the balance of the Initial
Franchise Fees that we would have received had you developed all of the
Restaurants set forth in the Development Schedule. In addition to the
Initial Franchise Fees for undeveloped Restaurants, you agree to pay as
fair and reasonable liquidated damages (but not as a penalty) an amount
equal to $50,000 for each
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undeveloped Restaurant. You agree that this amount is for lost revenues
from Continuing Fees and other amounts payable to us, including the fact
that you were holding the development rights for those Restaurants and
precluding the development of certain Restaurants in the Development
Territory, and that it would be difficult to calculate with certainty the
amount of damage we will incur. Notwithstanding your agreement, if a court
determines that this liquidated damages payment is unenforceable, then we
may pursue all other available remedies, including consequential damages.
All unpaid amounts will bear interest at the rate of 18% per annum or
the maximum contract rate of interest permitted by governing law, whichever
is less, from and after the date of accrual. In the event of termination
for any default by you, the sums due will include all damages, costs, and
expenses, including reasonable attorneys' fees and expenses, incurred by us
as a result of the default. You also must pay to us all damages, costs and
expenses, including reasonable attorneys' fees and expenses, that we incur
subsequent to the termination or expiration of this Agreement in obtaining
injunctive or other relief for the enforcement of any provisions of this
Agreement.
F. If this Agreement is terminated solely for your failure to meet the
Development Schedule and for no other reason whatsoever, and you have
opened at least 50% of the total number of Restaurants provided for in the
Development Schedule, you may continue to operate those existing
Restaurants under the terms of the separate Franchise Agreement for each
Restaurant. On the other hand, if this Agreement is terminated under any
other circumstance, we have the option to purchase from you all the assets
used in the Restaurants that have been developed prior to the termination
of this Agreement. Assets include leasehold improvements, equipment,
furniture, fixtures, signs, inventory, liquor licenses and other
transferable licenses and permits for the Restaurants.
We have the unrestricted right to assign this option to purchase. We
or our assignee will be entitled to all customary warranties and
representations given by the seller of a business including, without
limitation, representations and warranties as to (i) ownership, condition
and title to assets; (ii) liens and encumbrances relating to the assets;
and (iii) validity of contracts and liabilities, inuring to us or affecting
the assets, contingent or otherwise. The purchase price for the assets of
the Restaurants will be determined in accordance with the post-termination
purchase option provision in the individual Franchise Agreement for each
Restaurant (with the purchase price to include the value of any goodwill of
the business attributable to your operation of the Restaurant if you are in
compliance with the terms and conditions of the Franchise Agreement for
that Restaurant). The purchase price must be paid in cash at the closing of
the purchase, which must take place no later than 90 days after your
receipt of notice of exercise of this option to purchase, at which time you
must deliver instruments transferring to us or our assignee: (i) good and
merchantable title to the assets purchased, free and clear of all liens and
encumbrances (other than liens and security interests acceptable to us or
our assignee), with all sales and other transfer taxes paid by you; and
(ii) all licenses and permits of the Restaurants that may be assigned or
transferred. If you cannot deliver clear title to all of the purchased
assets, or in the event there are other unresolved issues, the closing of
the sale will be accomplished through an escrow. We have the right to set
off against and reduce the purchase price by any and all amounts owed by
you to us, and the amount of any encumbrances or liens against the assets
or any obligations assumed by us. You and each holder of an interest in you
must indemnify us and our affiliates against all liabilities not so
assumed. You must maintain in force all insurance policies required
pursuant to the applicable Franchise Agreement until the closing on the
sale.
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G. All of our and your obligations that expressly or by their nature
survive the expiration or termination of this Agreement will continue in
full force and effect subsequent to and notwithstanding its expiration or
termination and until they are satisfied or by their nature expire.
TRANSFER
9. The following provisions govern any transfer:
A. We have the right to transfer all or any part of our rights or
obligations under this Agreement to any person or legal entity.
B. This Agreement is entered into by us with specific reliance upon
your personal experience, skills and managerial and financial
qualifications. Consequently, this Agreement, and your rights and
obligations under it, are and will remain personal to you. You may only
Transfer your rights and interests under this Agreement if you obtain our
prior written consent and you transfer all of your rights and interests
under all Franchise Agreements for Restaurants in the Development
Territory. Accordingly, the assignment terms and conditions of the
Franchise Agreements shall apply to any Transfer of your rights and
interests under this Agreement. As used in this Agreement, the term
"Transfer" means any sale, assignment, gift, pledge, mortgage or any other
encumbrance, transfer by bankruptcy, transfer by judicial order, merger,
consolidation, share exchange, transfer by operation of law or otherwise,
whether direct or indirect, voluntary or involuntary, of this Agreement or
any interest in it, or any rights or obligations arising under it, or of
any material portion of your assets, or of any interest in you.
MISCELLANEOUS
10. The parties agree to the following provisions:
A. You agree to indemnify, defend, and hold us, our affiliates and our
officers, directors, shareholders and employees harmless from and against
any and all claims, losses, damages and liabilities, however caused,
arising directly or indirectly from, as a result of, or in connection with,
the development, use and operation of your Restaurants, as well as the
costs, including attorneys' fees, of defending against them ("Franchise
Claims"). Franchise Claims include, but are not limited to, those arising
from any death, personal injury or property damage (whether caused wholly
or in part through our or our affiliates active or passive negligence),
latent or other defects in any Restaurant, or your employment practices. In
the event a Franchise Claim is made against us or our affiliates, we
reserve the right in our sole judgment to select our own legal counsel to
represent our interests, at your cost.
B. Should one or more clauses of this Agreement be held void or
unenforceable for any reason by any court of competent jurisdiction, such
clause or clauses will be deemed to be separable in such jurisdiction and
the remainder of this Agreement is valid and in full force and effect and
the terms of this Agreement must be equitably adjusted so as to compensate
the appropriate party for any consideration lost because of the elimination
of such clause or clauses.
C. No waiver by us of any breach by you, nor any delay or failure by
us to enforce any provision of this Agreement, may be deemed to be a waiver
of any other or subsequent breach or be deemed an estoppel to enforce our
rights with respect to that or any other or subsequent breach. This
Agreement may not be waived, altered or rescinded, in whole or in part,
except by a writing signed by you and us. This Agreement together with the
application form
10
executed by you requesting us to enter into this Agreement constitute the
sole agreement between the parties with respect to the entire subject
matter of this Agreement and embody all prior agreements and negotiations
with respect to the business. You acknowledge and agree that you have not
received any warranty or guarantee, express or implied, as to the potential
volume, profits or success of your business. There are no representations
or warranties of any kind, express or implied, except as contained in this
Agreement.
D. Except as otherwise provided in this Agreement, any notice, demand
or communication provided for must be in writing and signed by the party
serving the same and either delivered personally or by a reputable
overnight service or deposited in the United States mail, service or
postage prepaid, and if such notice is a notice of default or of
termination, by registered or certified mail, and addressed as follows:
1. If intended for us, addressed to General Counsel, Buffalo Wild
Wings International, Inc., 0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000,
Xxxxxxxxxxx, Xxxxxxxxx 00000;
2. If intended for you, addressed to you at
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or at ; or,
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in either case, to such other address as may have been designated by
notice to the other party. Notices for purposes of this Agreement will
be deemed to have been received if mailed or delivered as provided in
this subparagraph.
E. Any modification, consent, approval, authorization or waiver
granted in this Agreement required to be effective by signature will be
valid only if in writing executed by the Principal Owner or, if on behalf
of us, in writing executed by our President or one of our authorized Vice
Presidents.
F. The following provisions apply to and govern the interpretation of
this Agreement, the parties' rights under this Agreement, and the
relationship between the parties:
1. Applicable Law and Waiver. Subject to our rights under federal
trademark laws, the parties' rights under this Agreement, and the
relationship between the parties, is governed by, and will be
interpreted in accordance with, the laws (statutory and otherwise) of
the state in which your first Restaurant is located. You waive, to the
fullest extent permitted by law, the rights and protections that might
be provided through the laws of any state relating to franchises or
business opportunities, other than those of the state in which your
first Restaurant is located.
2. Our Rights. Whenever this Agreement provides that we have a
certain right, that right is absolute and the parties intend that our
exercise of that right will not be subject to any limitation or
review. We have the right to operate, administrate, develop, and
change the System in any manner that is not specifically precluded by
the provisions of this Agreement, although this right does not modify
the express limitations set forth in this Agreement.
3. Our Reasonable Business Judgment. Whenever we reserve
discretion in a particular area or where we agree to exercise our
rights reasonably or in good faith, we will satisfy our obligations
whenever we exercise Reasonable Business Judgment in making our
decision or exercising our rights. Our decisions or actions will be
deemed to be the result of Reasonable Business Judgment, even if other
reasonable or even arguably
11
preferable alternatives are available, if our decision or action is
intended, in whole or significant part, to promote or benefit the
System generally even if the decision or action also promotes our
financial or other individual interest. Examples of items that will
promote or benefit the System include, without limitation, enhancing
the value of the Trademarks, improving customer service and
satisfaction, improving product quality, improving uniformity,
enhancing or encouraging modernization and improving the competitive
position of the System.
G. Any cause of action, claim, suit or demand allegedly arising from
or related to the terms of this Agreement or the relationship of the
parties that is not subject to arbitration under Section 10.M must be
brought in the Federal District Court for the District of Minnesota or in
Hennepin County District Court, Fourth Judicial District, Minneapolis,
Minnesota. Both parties irrevocably submit themselves to, and consent to,
the jurisdiction of said courts. The provisions of this Section will
survive the termination of this Agreement. You are aware of the business
purposes and needs underlying the language of this subparagraph, and with a
complete understanding, agree to be bound in the manner set forth.
H. All parties hereby waive any and all rights to a trial by jury in
connection with the enforcement or interpretation by judicial process of
any provision of this Agreement, and in connection with allegations of
state or federal statutory violations, fraud, misrepresentation or similar
causes of action or any legal action initiated for the recovery of damages
for breach of this Agreement.
I. You and us and our affiliates agree to waive, to the fullest extent
permitted by law, the right to or claim for any punitive or exemplary
damages against the other and agree that in the event of any dispute
between them, each will be limited to the recovery of actual damages
sustained.
J. If you are a corporation, partnership, limited liability company or
partnership or other legal entity, all of your Principal Owners must
execute the form of undertaking and guarantee at the end of this Agreement.
Any person or entity that at any time after the date of this Agreement
becomes a Principal Owner must execute the form of undertaking and
guarantee at the end of this Agreement.
K. You and we are independent contractors. Neither party is the agent,
legal representative, partner, subsidiary, joint venturer or employee of
the other. Neither party may obligate the other or represent any right to
do so. This Agreement does not reflect or create a fiduciary relationship
or a relationship of special trust or confidence.
L. In the event of any failure of performance of this Agreement
according to its terms by any party due to force majeure will not be deemed
a breach of this Agreement. For purposes of this Agreement, "force majeure"
shall mean acts of God, State or governmental action, riots, disturbance,
war, strikes, lockouts, slowdowns, prolonged shortage of energy supplies or
any raw material, epidemics, fire, flood, hurricane, typhoon, earthquake,
lightning and explosion or other similar event or condition, not existing
as of the date of signature of this Agreement, not reasonably foreseeable
as of such date and not reasonably within the control of any party hereto,
which prevents in whole or in material part the performance by one of the
parties hereto of its obligations hereunder.
M. Except as qualified below, any dispute between you and us or any of
our or your affiliates arising under, out of, in connection with or in
relation to this Agreement, the parties'
12
relationship, or the business must be submitted to binding arbitration
under the authority of the Federal Arbitration Act and must be arbitrated
in accordance with the then-current rules and procedures and under the
auspices of the American Arbitration Association. The arbitration must take
place in Minneapolis, Minnesota, or at such other place as may be mutually
agreeable to the parties. The decision of the arbitrators will be final and
binding on all parties to the dispute; however, the arbitrators may not
under any circumstances: (i) stay the effectiveness of any pending
termination of this Agreement; (ii) assess punitive or exemplary damages;
or (iii) make any award which extends, modifies or suspends any lawful term
of this Agreement or any reasonable standard of business performance that
we set.
Before the filing of any arbitration, the parties agree to mediate any
dispute that does not include injunctive relief or specific performance
actions covered below, provided that the party seeking mediation must
notify the other party of its intent to mediate prior to the termination of
this Agreement. Mediation will be conducted by a mediator or mediation
program agreed to by the parties. Persons authorized to settle the dispute
must attend any mediation session. The parties agree to participate in the
mediation proceedings in good faith with the intention of resolving the
dispute if at all possible within 30 days of the notice from the party
seeking to initiate the mediation procedures. If not resolved within 30
days, the parties are free to pursue arbitration. Mediation is a compromise
negotiation for purposes of the federal and state rules of evidence, and
the entire process is confidential.
Nothing in this Agreement bars our right to obtain injunctive relief
against threatened conduct that will cause us loss or damages, under the
usual equity rules, including the applicable rules for obtaining
restraining orders and preliminary injunctions. Furthermore, we and our
affiliates have the right to commence a civil action against you or take
other appropriate action for the following reasons: to collect sums of
money due to us; to compel your compliance with trademark standards and
requirements to protect the goodwill of the Trademarks; to compel you to
compile and submit required reports to us; or to permit evaluations or
audits authorized by this Agreement.
The prevailing party in any action or proceeding arising under, out
of, in connection with, or in relation to this Agreement, any lease or
sublease for the Restaurant or Authorized Location, or the business will be
entitled to recover its reasonable attorneys' fees and costs.
N. During the term of this Agreement, neither we nor you may employ or
seek to employ, directly or indirectly, any person who is at the time or
was at any time during the prior 6 months employed in any type of
managerial position by the other party or any of its subsidiaries or
affiliates, or by any franchisee in the system, unless the violating party
compensates the former employer for all losses and expenses incurred in
losing and replacing the employee up to a maximum of $25,000, plus
attorneys' fees and expenses. This subparagraph will not be violated if (i)
at the time we or you employ or seek to employ the person, the former
employer has given its written consent or (ii) we employ or seek to employ
the person in connection with the transfer of the Restaurant(s) to us or
any of our affiliates. The parties acknowledge and agree that any
franchisee from whom an employee was hired by you in violation of this
subparagraph shall be a third-party beneficiary of this provision, but only
to the extent that they may seek compensation from you.
O. We will designate the "Effective Date" of this Agreement in the
space provided on the cover page. If no Effective Date is designated on the
cover page, the Effective Date is the date when we sign this Agreement.
13
IN WITNESS WHEREOF, the parties have executed the foregoing Agreement as of
the dates written below.
DEVELOPER: FRANCHISOR
, BUFFALO WILD WINGS INTERNATIONAL, INC.
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a
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Date: Date:
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By: By:
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Its: Its:
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Witness:
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(Please type or print)
Signature:
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Date:
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By:
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Its:
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Witness:
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(Please type or print)
Signature:
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14
PERSONAL GUARANTEE AND AGREEMENT TO BE BOUND
PERSONALLY BY THE TERMS AND CONDITIONS
OF THE AREA DEVELOPMENT AGREEMENT
In consideration of the execution of the Area Development Agreement by us,
and for other good and valuable consideration, the undersigned, for themselves,
their heirs, successors, and assigns, do jointly, individually and severally
hereby become surety and guarantor for the payment of all amounts and the
performance of the covenants, terms and conditions in the Area Development
Agreement, to be paid, kept and performed by the developer, including without
limitation the arbitration and other dispute resolution provisions of the
Agreement.
Further, the undersigned, individually and jointly, hereby agree to be
personally bound by each and every condition and term contained in the Area
Development Agreement and agree that this Personal Guarantee will be construed
as though the undersigned and each of them executed an Area Development
Agreement containing the identical terms and conditions of this Area Development
Agreement.
The undersigned waives: (1) notice of demand for payment of any
indebtedness or nonperformance of any obligations hereby guaranteed; (2) protest
and notice of default to any party respecting the indebtedness or nonperformance
of any obligations hereby guaranteed; and (3) any right he/she may have to
require that an action be brought against the developer or any other person as a
condition of liability; and (4) notice of any changes permitted by the terms of
the Area Development Agreement or agreed to by the developer.
In addition, the undersigned consents and agrees that: (1) the
undersigned's liability will not be contingent or conditioned upon our pursuit
of any remedies against the developer or any other person; and (2) such
liability will not be diminished, relieved or otherwise affected by the
developer's insolvency, bankruptcy or reorganization, the invalidity, illegality
or unenforceability of all or any part of the Area Development Agreement, or the
amendment or extension of the Area Development Agreement with or without notice
to the undersigned.
It is further understood and agreed by the undersigned that the provisions,
covenants and conditions of this Guarantee will inure to the benefit of our
successors and assigns.
DEVELOPER:
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PERSONAL GUARANTORS:
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Individually Individually
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Print Name Print Name
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Address Address
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City State Zip Code City State Zip Code
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Telephone Telephone
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Individually Individually
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Print Name Print Name
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Address Address
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City State Zip Code City State Zip Code
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Telephone Telephone
APPENDIX A
DESCRIPTION OF DEVELOPMENT TERRITORY
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DEVELOPER: FRANCHISOR
, BUFFALO WILD WINGS INTERNATIONAL, INC.
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By: By:
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Its: Its:
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By:
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Its:
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APPENDIX B
DEVELOPMENT SCHEDULE
You acknowledge and agree that a material provision of the Area Development
Agreement is that the following number of Buffalo Wild Wings Restaurants must be
opened and continuously operating in the Development Territory in accordance
with the following Development Schedule:
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Date by Which Cumulative number of
Franchise Date by Which the Restaurants Required to
Agreement Must be Restaurant Must be be Open and Continuously
Signed and Site Opened and Operating for Business in
Approval Request Continuously the Development
Restaurant Restaurant Must be Submitted Operating for Territory as of the Date in
Number Type to us Business in the Territory Preceding Column
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1 Date of this Agreement 1
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2 2
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For purposes of determining compliance with the above Development Schedule,
only the Restaurants actually open and continuously operating for business in
the Development Territory as of a given date will be counted toward the number
of Restaurants required to be open and continuously operating for business.
DEVELOPER: FRANCHISOR
, BUFFALO WILD WINGS INTERNATIONAL, INC.
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By: By:
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Its: Its:
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By:
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Its:
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BUFFALO WILD WINGS(R)
DEVELOPER INCENTIVE PACKAGE ADDENDUM
This Addendum is appended to, and made a part of, the BUFFALO WILD WINGS
Area Development Agreement, dated (the "Development Agreement"),
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between BUFFALO WILD WINGS INTERNATIONAL, INC. ("we" or "us") and
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("you"). Capitalized terms not defined in this Addendum have
----------------
the meanings given to them in the Development Agreement. In the event of any
conflict between the terms of this Addendum and those in the Development
Agreement, the terms of this Addendum will control.
The Development Agreement is hereby amended as follows:
1. Development Fee. The Development Fee will be $ . There will be
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no Initial Franchise Fee charged for the Restaurants you develop under this
Addendum.
2. Waiver of Continuing Franchise Fee. Subject to the terms and conditions of
this Addendum and of the Development Agreement, for each Restaurant you
open on time in accordance with the Development Schedule, we will waive the
Continuing Fee otherwise due under the Franchise Agreement for each
Restaurant for the first 12 months of operation. If you fail to open a
Restaurant on time, we will not waive the Continuing Fee for that
Restaurant, or for any future Restaurants opened under this Addendum.
Further, if you default under the Franchise Agreement for a Restaurant
within the first 12 months of operation for any reason whatsoever, you must
pay the Continuing Fee for that Restaurant from the date we issue you
written notice of default, even though you may subsequently cure the
default.
3. Additional Term. If you fully comply with the Development Schedule during
the initial term of the Development Agreement, we will extend the term for
an additional year(s), subject to earlier termination as provided in
----
Section 7 of the Development Agreement. During this extension, you will
have the option to develop and operate as many additional Restaurants
within the Designated Territory as you choose, subject to the terms and
conditions of the Development Agreement and this Addendum. All additional
Restaurants for which you exercise your option must be open prior to the
expiration of the additional term. We will not charge you an Initial
Franchise Fee for these additional Restaurants; however, you must pay the
Continuing Fee for each Restaurant from the date of opening.
4. Development and Training Staff. Within 6 months after the date of this
Addendum, you must employ and maintain for the remaining term of this
Addendum a full-time development executive, who satisfactorily meets our
development executive requirements. Your development executive will be
responsible to . supervise the development process for your Restaurants. To
qualify for the position, your development executive must, at a minimum,
have prior experience in developing a similar number of restaurants or
lodging facilities over a similar development period. You must replace your
development executive if he is unable to perform the functions necessary to
satisfy your obligations under this Addendum and the Development Agreement.
Prior to opening your eighth Restaurant under this Addendum you must
employ, and maintain for the remaining term of this Addendum, a
professional training executive, who has completed to our satisfaction our
training requirements and otherwise meets our training executive standards.
Your training executive also must attend and successfully complete any
ongoing training we may require. Your training executive will be
responsible for supervising the training of your employees and the opening
of your Restaurants. You must replace your professional training executive
if he is unable to perform the functions necessary to satisfy your
obligations under this Addendum and the Development Agreement.
5. Training Facilities. One of the first 3 Restaurants you develop must
contain facilities, approved by us, adequate for the proper training of
employees who work at your Restaurants (a "Training Store"). You must have
one approved Training Store for each 12 Restaurants you develop under the
Development Agreement and this Addendum. Once developed, a Training Store
must remain open for the remaining term of the Development Agreement.
It is the intention of the parties that, by the time you open your fourth
Restaurant under the Development Agreement and this Addendum, you will be
self-sufficient with respect to the training of your Restaurant employees
and the opening of your Restaurants. You agree, at your cost, to acquire
the facilities and personnel and to take such other actions as are
necessary to accomplish these goals. We will have no obligation to provide
any initial training or opening assistance for the fourth and subsequent
Restaurants you open under this Addendum.
6. Management Structure. Prior to the opening of your fourth Restaurant, you
must submit and receive our approval for your regional operational
management structure for all Restaurants to be opened under this Addendum.
7. Site Selection. We have the right to require you to use a site selection
model or tools, including any software, designated by us in the selection
of sites for your Restaurants. You must pay all costs and fees associated
with your use of a designated site selection model or tools.
8. Compliance Month Bank. To assist you in remaining in compliance under the
Development Schedule, you will have a bank of months to cover a late
opening of a Restaurant. You will begin with a credit of months. For
---
each month that you open a Restaurant prior to the scheduled opening date,
one month will be added to your bank. Partial months are credited and
deducted as half months. If any Restaurant is opened after its scheduled
opening date, months will be deducted from your bank and, provided that you
have a sufficient number of months available in your bank to cover the
number of months that you are late in opening your Restaurant, you will
still be deemed to, be in compliance with your Development Schedule. For
example, if you begin with 10 months in your Compliance Month Bank and you
open your first Restaurant two months early but your Second Restaurant two
weeks after the scheduled opening date, your Compliance Month Bank will
contain 111/2months from which you may draw upon if any future Restaurants
open after the scheduled opening date.
9. Press Release. We may hire, at our own cost, a public relations firm to
prepare an article on you and the execution of the Development Agreement to
be released in such publications as we deem appropriate. You agree to be
interviewed and otherwise assist us and the firm we hire in the preparation
of the article. Prior to any public release, we will send you a copy of the
article for your approval. You will have 10 days from the date we send you
the article to raise any objections to it. You will not be entitled to any
compensation for the preparation or use of the article. Furthermore, you
and your Principal Owner hereby release us and our affiliates of all and
any claims arising out of or relating to the article, its content, use or
publication.
IN WITNESS WHEREOF, the parties have executed this Addendum as of the date
first written above.
DEVELOPER: FRANCHISOR
, BUFFALO WILD WINGS INTERNATIONAL, INC.
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By: By:
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Its: Its:
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By:
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Its:
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