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CONSENT AGREEMENT
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This CONSENT AGREEMENT (hereinafter the "CONSENT AGREEMENT") is made in
Dublin, Ohio, as of the date set forth below, by and among WENDY'S
INTERNATIONAL, INC., an Ohio corporation (hereinafter "WENDY'S"); WENDY'S OF
WEST MICHIGAN LIMITED PARTNERSHIP (the "PARTNERSHIP"); MCC FOOD SERVICE INC.
("MCCFS"); MERITAGE HOSPITALITY GROUP INC. ("MERITAGE"); MHG FOOD SERVICE INC.
("FOOD SERVICE"); MERITAGE CAPITAL CORP. ("MCC"); XXXXXX X. XXXXXXXX, XX. and
XXXXXXXXXXX X. XXXXXX (together, the "PRINCIPALS"); the Principals, Food
Service, MCC, MCCFS and Meritage are collectively referred to herein from time
to time as the "NEW GUARANTORS."
WHEREAS, Wendy's and the Partnership are parties to various Unit
Franchise Agreements and Restaurant Franchise Agreements for the franchise and
Licensed Rights to the Wendy's Old Fashioned Hamburgers Restaurants located as
set forth on Exhibit A attached hereto and incorporated herein by reference (the
"PARTNERSHIP RESTAURANTS"); and
WHEREAS, Wendy's and the Partnership are also parties to a completed
Development Agreement dated August 23, 1978 for the Franchised Area of Ottawa
County, Michigan, for which a right of first refusal is the only developmental
right remaining and which expires December 31, 2000; and
WHEREAS, the aforementioned franchise agreements for the Partnership
Restaurants, the right of first refusal under the Development Agreement, and any
and all amendments and modifications to these agreements are hereinafter
collectively referred to as the "EXISTING PARTNERSHIP FRANCHISE AGREEMENTS"; and
WHEREAS, Wendy's, the Partnership and others are parties to two (2)
Restaurant Franchise Agreements and a New Unit Franchise Agreement for the
franchise and Licensed Rights to the three (3) Wendy's Old Fashioned Hamburgers
Restaurants located as set forth on Exhibit B attached hereto and incorporated
herein by reference (the "CO-FRANCHISED RESTAURANTS"); and
WHEREAS, the franchise agreements associated with the three (3)
Co-franchised Restaurants and any and all amendments and modifications to these
agreements are hereinafter collectively referred to as the "CO-FRANCHISED
FRANCHISE AGREEMENTS"; and
WHEREAS, the New Guarantors have presented evidence to Wendy's that (1)
Food Service is a subsidiary of Meritage which currently owns a controlling
interest (54%) of the limited partnership interest in the Partnership; (2) MCCFS
is a subsidiary of MCC; and (3) the Principals own a controlling interest in
Meritage and 100% of MCC; and
WHEREAS, Food Service desires to exercise certain rights which it
claims as the 54% owner of the limited partnership interest of the Partnership
under the Amended and Restated Agreement of Limited Partnership dated July 31,
1986 (the "PARTNERSHIP AGREEMENT") so as
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to replace the general partner of the Partnership and appoint MCCFS as the new
general partner of the Partnership; and
WHEREAS, the parties desire to obtain Wendy's prior written consent and
waiver of any right of first refusal with respect to the changes in the
Partnership; and
WHEREAS, in connection with Wendy's consent and waiver, Wendy's and the
Partnership must execute the new Wendy's Unit Franchise Agreement in the form
which is attached hereto as Exhibit C and which is incorporated herein by
reference to replace the Existing Partnership Franchise Agreements (collectively
the "NEW PARTNERSHIP FRANCHISE AGREEMENTS"); and
WHEREAS, the New Guarantors have agreed to sign Wendy's standard
guaranty agreement as provided herein (except for certain modifications
applicable to Meritage) for all obligations to Wendy's and its subsidiaries
under the Existing Partnership Franchise Agreements, the New Partnership
Franchise Agreements, the Co-franchised Franchise Agreements and this Consent
Agreement; and
WHEREAS, Wendy's has agreed that the Co-franchised Franchise Agreements
shall remain in full force and effect and shall not be modified by this Consent
Agreement; and
WHEREAS, Wendy's is willing to grant its consent and waive any right of
first refusal subject to certain terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein, the parties, intending to be legally bound, mutually
agree as follows:
1. Wendy's hereby consents to and waives its right of first refusal in the
replacement of the general partner in the Partnership, making MCCFS the
sole general partner of the Partnership. Wendy's consent and waiver are
subject to, and in reliance upon, the following terms, conditions,
representations and warranties:
A. The Partnership and the New Guarantors warrant, represent and
agree that, subject to Wendy's consent, (1) MCCFS shall be the
sole general partner of the Partnership, (2) Wendy's of West
Michigan, Inc., Xxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxx, III, and
Xxxxxxx X. Xxxxxxx (collectively the "MICHIGAN PARTIES") have
no interest or rights with respect to the Existing Partnership
Franchise Agreements; and (3) the Partnership is the sole
franchisee under the Existing Partnership Franchise
Agreements. Said parties further warrant, represent and agree
that all other actions legally necessary to effectuate these
changes have been duly completed.
B. The Partnership and the New Guarantors warrant, represent and
agree as follows:
(1) MCC is owned 100% by the Principals.
(2) MCCFS is owned 100% by MCC
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(3) The Partnership is owned as follows:
a) The sole General Partner is MCCFS
b) Limited Partnership Interests - 54% Food Service
- 46% Others
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100%
(4) Food Service is a subsidiary of Meritage
C. The Partnership and the New Guarantors warrant, represent and
agree that the Partnership, Food Service, Meritage, MCCFS and
MCC are duly-organized entities, in good standing, and are
either registered or authorized to do business in the State of
Michigan. The Partnership and the New Guarantors further
warrant, represent and agree that the activities of the
Partnership and of MCCFS are currently, and shall remain,
limited solely to the ownership and operation of Wendy's Old
Fashioned Hamburgers Restaurants.
D. Notwithstanding the replacement of the Existing Partnership
Franchise Agreements with the New Partnership Franchise
Agreements as described in Paragraph 1(I) herein, the
Partnership agrees to be and to remain liable for all
obligations of "Franchise Owner" or "Franchisee," as those
terms are defined in the Existing Partnership Franchise
Agreements, which obligations arose or accrued up to the
effective date of this Consent Agreement. The Partnership also
agrees to perform all unperformed and partially-performed
terms and conditions of the Existing Partnership Franchise
Agreements which were to be performed up to the effective date
of this Consent Agreement. The Partnership agrees that any
failure to comply with such provisions of the Existing
Partnership Franchise Agreements shall constitute a default of
the New Partnership Franchise Agreements and this Consent
Agreement. The New Guarantors agree that their obligations
shall jointly and severally apply to all obligations of the
Partnership under both the Existing Partnership Franchise
Agreements and the New Partnership Franchise Agreements, as
well as the Co-franchised Franchise Agreements (subject to
certain limitations by the guaranty of Meritage as provided
herein).
E. The Partnership and the New Guarantors acknowledge and agree
that the obligations referenced in Exhibit D must be paid or
otherwise resolved to Wendy's satisfaction or Wendy's may
elect not to execute this Consent Agreement. However,
execution of this Consent Agreement by Wendy's shall not
constitute and is not intended as a waiver of any amounts
outstanding. Notwithstanding the Partnership's execution of
the New Partnership Franchise Agreements as described in
Paragraph 1(I) hereof, the Partnership and the New Guarantors
shall have responsibility for all obligations to Wendy's, its
subsidiaries and any advertising cooperatives under the
Existing Partnership Franchise Agreements, which obligations
arose or have accrued up to the effective date of this Consent
Agreement (subject to certain limitations on the guaranty of
Meritage as provided herein).
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F. The Partnership shall pay to Wendy's contemporaneously with
the execution and return of this Consent Agreement a transfer
fee of $10,000, which shall be nonrefundable.
G. It is acknowledged and agreed that Wendy's reserves all of its
rights with respect to the Michigan Parties; and nothing
herein is intended as a waiver of any rights Wendy's or its
subsidiaries may have with respect to the Michigan Parties.
H. The Partnership warrants, represents and agrees that it is in
substantial compliance with all provisions of the Existing
Partnership Franchise Agreements and the Co-franchised
Franchise Agreements up to the effective date of this Consent
Agreement.
I. The Partnership agrees to execute contemporaneously herewith
two (2) copies of the New Partnership Franchise Agreements in
the form attached as Exhibit C for each of the Partnership
Restaurants listed on Exhibit A. The Partnership further
agrees that except as otherwise specifically provided herein,
the Existing Partnership Franchise Agreements are hereby
superseded and replaced in their entirety with the New
Partnership Franchise Agreements which are incorporated herein
by reference. The New Partnership Franchise Agreements shall
govern the parties' relationship with respect to the
Partnership Restaurant(s) commencing as of the effective date
of this Consent Agreement with a new term of twenty (20)
years. Except as specifically set forth herein, upon the
complete execution of this Consent Agreement and the New
Partnership Franchise Agreements, the Existing Partnership
Franchise Agreements shall be of no further force or effect.
The Partnership and the New Guarantors warrant, represent and
agree that they have reviewed the New Partnership Franchise
Agreements, acknowledge that they differ from many of the
Existing Partnership Franchise Agreements, and except as may
be set forth herein, warrant and represent that as of the
effective date of this Consent Agreement, they are in
substantial compliance with all provisions of the New
Partnership Franchise Agreements (including, without
limitation, the provisions contained in Section 16 therein)
and this Consent Agreement.
J. The Co-franchised Franchise Agreements shall not be modified
by this Consent Agreement (except that the general partner of
the Partnership shall be MCCFS pursuant to the rights of Food
Service under the Partnership Agreement). All terms and
conditions of the Co-franchised Franchise Agreements shall
remain in full force and effect, and the franchisees shall
remain as currently set forth in the Co-franchised Franchise
Agreements.
K. The New Guarantors hereby jointly and severally agree to
execute Wendy's Guaranty for all obligations and covenants of
the Partnership under the Existing Partnership Franchise
Agreements, New Partnership Franchise Agreements, the
Co-franchised Franchise Agreements, and under this Consent
Agreement. Said Guaranty shall be in the form attached hereto
as Exhibit E and made a part
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hereof, to be executed contemporaneously with the execution of
this Consent Agreement, except that Meritage shall execute the
modified Guaranty attached as Exhibit F. The New Guarantors
shall individually comply with the noncompetition and
confidentiality provisions of the New Partnership Franchise
Agreements and their failure to do so shall constitute a
default under the New Partnership Franchise Agreements .
L. The Partnership and the New Guarantors warrant, represent and
agree that, except as otherwise provided herein, the
Partnership Restaurants shall be operated only by the
Partnership, and that the Partnership has the legal right to
possession of the Partnership Restaurant premises.
M. The Partnership agrees that an operator approved by Wendy's
shall maintain an equity interest in the business or
sufficient economic incentives as Wendy's deems reasonable.
That operator shall serve as an officer of the Partnership and
shall attend such training program as Wendy's may require. The
Partnership understands that such training shall occur in such
place and for such time period as Wendy's may designate from
time to time.
N. The Partnership agrees to deliver to Wendy's contemporaneously
with the execution and return of this Consent Agreement, a
certificate of insurance specifically covering each of the
Partnership Restaurants under the New Partnership Franchise
Agreements, which certificate complies with the insurance
provisions of the New Partnership Franchise Agreements,
includes the street locations on the front or back of the
certificate (or attached to it as an exhibit), and names the
Partnership as the insured and Wendy's as additional insured.
O. The Partnership acknowledges that the Partnership has voted in
favor of the 1997 WNAP increase, and hereby agree to comply
with the terms of the memorandum and ballot previously
executed by the Partnership which shall be applicable to the
New Partnership Franchise Agreements.
P. The Partnership and the New Guarantors acknowledge and agree
that they have received and reviewed a copy of Wendy's
transaction policy dated April 1, 1994, as amended November 4,
1994, as amended from time to time for the Wendy's System (the
"TRANSACTION POLICY") and agree to comply with the provisions
therein.
2. Except as otherwise specifically set forth in this Consent Agreement,
the Partnership and the New Guarantors agree as follows:
A. It is acknowledged and agreed that the 46% of limited
partnership interests in the Partnership which is owned by
parties other than Food Service may be freely transferred,
pledged, hypothecated, or encumbered without Wendy's consent
or waiver of its right of first refusal, provided, however,
Food Service shall retain at least 54% of the limited
partnership interest in the Partnership as
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a control block interest (the "PARTNERSHIP CONTROL BLOCK").
Except as otherwise specifically set forth herein, any effort
to transfer, hypothecate, or encumber in any way, voluntarily,
by operation of law or otherwise, any portion of this
Partnership Control Block shall require a transfer of the
entire 54% Partnership Control Block; such transfer shall be
subject to Wendy's right of first refusal and prior written
consent, which shall not be unreasonably withheld subject to
compliance with the New Partnership Franchise Agreements, this
Consent Agreement and Wendy's Transaction Policy. The
principals and any controlling persons (20% or more) of any
approved owner of the Partnership Control Block must be
approved in writing by Wendy's and serve as guarantor(s).
Under no circumstances shall a lender or institution (or any
of its affiliates) be acceptable to Wendy's as the owner of
the Partnership Control Block.
B. Except as otherwise specifically set forth herein, there shall
be no direct or indirect change in the structure or ownership
of the Partnership Control Block, MCC, MCCFS or the New
Partnership Franchise Agreements and, except as otherwise
specifically set forth herein, no interest in the Partnership
Control Block, MCC, MCCFS or the New Partnership Franchise
Agreements shall be pledged, hypothecated, assigned or
otherwise transferred, voluntarily, by operation of law or
otherwise, without in each instance Wendy's prior written
consent and waiver of its right of first refusal as described
in Paragraph 13 of the New Partnership Franchise Agreements,
provided, however, Wendy's consent shall not be unreasonably
withheld subject to the terms of the New Partnership Franchise
Agreements, this Consent Agreement, and Wendy's Transaction
Policy.
C. Except as otherwise provided herein, any new or replacement
general partners of the Partnership shall be subject to
Wendy's prior written consent which shall not be unreasonably
withheld, provided that (i) such general partner agrees to
serve as a guarantor and the transaction (and such party)
complies with Wendy's requirements under the New Partnership
Franchise Agreements, this Consent Agreement and Wendy's
Transaction Policy; (ii) the individual principals of that
general partner who directly or indirectly hold 20% or more
voting or equity interest in that general partner shall be
approved by Wendy's and shall serve as guarantors pursuant to
Wendy's guaranty agreement (which shall include (without
limitation) compliance with the noncompetition and
confidentiality provisions of the New Partnership Franchise
Agreements); and (iii) any new or replacement general partner
(and its principals who are serving as guarantors) shall own
51% of the limited partnership units of the Partnership as a
new partnership control block which shall be restricted as
provided herein (except as otherwise specifically set forth
herein).
D. Any limited partner of the Partnership that directly or
indirectly holds, acquires or is transferred 20% or more of
the limited partnership units shall be required to serve as
guarantor pursuant to Wendy's guaranty agreement (which
includes
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compliance with the confidentiality and noncompetition
provisions of the New Partnership Franchise Agreements). Any
person or entity owning 20% or more of any entity which is a
guarantor shall also be subject to the noncompetition and
confidentiality provisions of the New Partnership Franchise
Agreements. If such a limited partner, person or entity fails
to comply, it shall constitute a default under the New
Partnership Franchise Agreements in addition to any other
remedies Wendy's may have.
E. The Partnership and the New Guarantors warrant and agree that
except as provided in Paragraph 3 below, there has not been as
of this date and there shall not be in the future any change
in the structure of the Partnership or the Partnership
Agreement which materially affects the rights or obligations
of limited partners or of the general partner without Wendy's
prior written consent, which shall not be unreasonably
withheld subject to the terms of this Consent Agreement, the
New Partnership Franchise Agreements and Wendy's Transaction
Policy.
F. It is acknowledged that Great American Life Insurance Company
("GALIC") holds a security interest in the Partnership Control
Block. This security interest shall not itself constitute a
violation of this Consent Agreement; provided, however, in the
event GALIC (or any successor or assignee) takes any action
under its security agreements or other documents to exercise
any control over or receives any rights or benefits with
respect to the Partnership Control Block (or any units
comprising that Partnership Control Block), or the
Partnership, then such shall be deemed a transfer of the
Partnership Control Block for purposes of this Consent
Agreement, and GALIC shall comply with the terms of this
Consent Agreement, the Partnership shall be deemed to be in
default of the New Partnership Franchise Agreements. In such
event, Wendy's may in its sole discretion issue notice of
default with thirty (30) days to cure. The Partnership and the
New Guarantors warrant, represent and agree that they have
given notice of these restrictions to GALIC and nothing in the
agreements between GALIC and the Partnership (and/or the New
Guarantors) is intended to (nor shall) supersede or in any way
restrict Wendy's rights hereunder.
3. It is the intent of the Partnership and the New Guarantors to
restructure the Partnership within twelve (12) months of the date
hereof, such that all or substantially all of the 46% interest
currently owned by others shall be acquired by Food Service, the
Partnership shall be dissolved, and the assets (including the New
Partnership Franchise Agreements) shall be owned by a successor limited
partnership with MCCFS as general partner. Provided this acquisition,
dissolution and transfer of assets all occur within twelve (12) months
of the date hereof, Wendy's hereby consents to such action subject to
the following conditions:
A. Written notice shall be given to Wendy's at least thirty (30)
days prior to the effective date of such acquisition.
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B. The Partnership, the successor Limited Partnership, and the
New Guarantors shall execute a General Release of All Claims
similar to Exhibit G.
C. The Partnership, the successor Limited Partnership, and the
New Guarantors shall each execute an indemnity covering all
aspects of the transaction (including without limitation, the
rights of the limited partners and the rights of the Michigan
Parties).
D. Wendy's shall have the right to review, include its disclaimer
in, and provide comments on (which comments may be included in
the disclaimer), any materials provided to any limited
partner, or investor, in connection with this transaction
within a reasonable time (not less than 30 days) prior to the
delivery of such materials to such parties.
E. There shall be no material adverse financial impact on the
Partnership as a result of this transaction.
F. Promptly after the transaction, the parties acknowledge in
writing that (1) the franchisee is the successor limited
partnership with limited partnership units owned 90% or more
by Food Service; (2) MCCFS is the sole general partner; and
(3) all of the New Guarantors continue their liability under
the guarantees and under the New Partnership Franchise
Agreements, the Co-franchised Franchise Agreements and this
Consent Agreement.
4. The Partnership and the New Guarantors agree that within twelve (12)
months of the date of this Consent Agreement they shall have addressed
and resolved to Wendy's reasonable satisfaction any and all interest
that any of the Michigan Parties may have or may claim in the
Co-franchised Franchise Agreements or the Co-franchised Restaurants and
shall obtain their authorization to remove them as signatories to the
Co-Franchised Franchise Agreements, so that the Partnership is clearly
named as the sole franchisee under the Co-franchised Franchise
Agreements and has exclusive control over said restaurants and
agreements. The Partnership and the New Guarantors will cooperate with
Wendy's to ensure that these three (3) agreements and restaurants are
subject to the same agreements and conditions as the Partnership
Restaurants and shall execute such documentation, including, without
limitation, franchise agreements, indemnities and releases, etc. as
Wendy's may reasonably require.
5. Notwithstanding the Transaction Policy or anything contained in the New
Partnership Franchise Agreements, the Partnership and the New
Guarantors, and any affiliates of these entities shall be prohibited
from directly or indirectly acquiring any existing Wendy's restaurants
or developing new restaurants outside of the existing DMA (as defined
in the New Partnership Franchise Agreement) of Grand Rapids
/Kalamazoo/Battle Creek unless this provision is waived by Wendy's in
its sole and absolute discretion. The parties acknowledge and agree
that this restriction includes the direct or indirect acquisition of a
material interest (equity or voting) in any entity which itself has a
material interest in Wendy's restaurants or in assets related to the
operation of Wendy's restaurants outside of the existing markets. The
parties further acknowledge and agree that Wendy's has made numerous
accommodations to deal with the unique structure of Franchisees (and
their controlling entities), certain security interests in the
Principal Control Block and the inability of the general partner to
hold
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51% equity in the business. In consideration of these matters, the
parties further acknowledge and agree that the restrictions and
limitations imposed herein by Wendy's are reasonable, necessary and
appropriate considering all of the facts involved as an alternative to
full compliance with Wendy's transaction policy. The Partnership and
the New Guarantors agree that they shall not commence or participate in
any negotiations in violation of this provision without first obtaining
Wendy's waiver, which may be given in Wendy's sole and absolute
discretion. The Partnership shall be permitted to develop new Wendy's
restaurants and convert competitive units located exclusively in the
existing markets (defined as the DMAs as referenced in the New
Partnership Franchise Agreements) in which the Partnership already
operates Wendy's restaurants subject to Wendy's standard expandability
criteria and site standards, however, it is acknowledged that Wendy's
has a vested interest in limiting this structure to those current
markets. The Partnership shall take such action as is necessary to
properly communicate this restriction to its management personnel and
to the extent appropriate, to its investors.
6. Consistent with Wendy's Transaction Policy, 25% of the net free cash
flow of the Partnership will be retained and reinvested in the Wendy's
business. In addition, the Partnership must have a 1.10 Fixed Charge
Coverage (FCC) Ratio after any distributions, dividends, loans,
pledges, or other investments, and Wendy's will use such distributions
in its FCC calculation of financial expandability. Failure to achieve
and maintain the 1.10 FCC ratio will cause the franchise to be deemed
unexpandable.
7. Wendy's and the Partnership hereby modify each of the New Partnership
Franchise Agreements for those Restaurants listed on Exhibit H to
include the following provision:
A. During the initial term of the New Partnership Franchise
Agreements and provided the Partnership is satisfying Wendy's
then-existing criteria for expansion and development, the
Partnership shall have a right of first refusal to develop
additional Wendy's Old Fashioned Hamburgers Restaurants within
an area determined by drawing a circle around each of the
Partnership Restaurants, which circle shall have the
Restaurant as its center and shall include either a population
of twenty thousand (20,000) persons or a radius of three (3)
miles, whichever is smaller (the "RIGHT OF FIRST REFUSAL
AREA"). For purposes of this paragraph, the twenty thousand
person population shall be computed by using the larger of (i)
the number of individuals residing or employed in the area
between the hours of 8:00 a.m. and 5:00 p.m. on Monday through
Friday, inclusive, or (ii) the residential population of the
area.
B. This right of first refusal shall be conditioned upon the
following:
(1) If, at any time or from time to time during the
initial term of those New Partnership Franchise
Agreements, Wendy's determines that it is desirable
to operate itself or grant rights to others to
operate an additional Wendy's Old Fashioned
Hamburgers Restaurant in the Right of First Refusal
Area, and provided the Partnership is then expandable
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and approved by Wendy's to develop additional Wendy's
Old Fashioned Hamburgers Restaurants in accordance
with Wendy's then existing criteria for expansion,
then subject to the terms of all subsections
contained within this Paragraph 7, the Partnership
shall have a right of first refusal to obtain the
developmental rights for an additional Wendy's Old
Fashioned Hamburgers Restaurant upon such terms and
conditions as are then determined by Wendy's. In such
case, Wendy's shall advise the Partnership in writing
of the terms and conditions for the acquisition of
the developmental rights for an additional Wendy's
Old Fashioned Hamburgers Restaurant. The Partnership
must notify Wendy's in writing within thirty (30)
days of the receipt of such notice whether the
Partnership wishes to acquire the developmental
rights for the additional Wendy's Old Fashioned
Hamburgers Restaurant. If the Partnership does not
exercise this right of first refusal, Wendy's may,
within one hundred eighty (180) days from the
expiration of the thirty (30) day period, grant the
developmental rights for an additional Wendy's Old
Fashioned Hamburgers Restaurant to any other person
or persons on the same terms and conditions or
Wendy's itself may elect to develop and construct
such additional Wendy's Old Fashioned Hamburgers
Restaurant.
(2) If Wendy's owns the proposed site, Wendy's shall
present to the Partnership the right of first refusal
for that specific site. In those instances in which
Wendy's does not own the site, Wendy's shall not be
required to present to the Partnership the
opportunity to develop the same site as may be
proposed. Therefore, the Partnership will have no
right of first refusal or any other right to develop
any specific site controlled by a prospective or
existing franchisee. In such event, the Partnership
may be required to locate a comparable alternative
site within the trade area, and Wendy's cannot assure
the Partnership that there will be other comparable
sites available. Notwithstanding anything contained
in all subsections within this Paragraph 7 to the
contrary, if the subject site is the only acceptable
site in the trade area and that site is not owned by
Wendy's or contractually available to the
Partnership, Wendy's shall be free to proceed with
development itself or franchising of that site to a
third party.
(3) It is understood and agreed that this right of first
refusal shall relate only to "TRADITIONAL
RESTAURANTS." A Traditional Restaurant means a
free-standing Restaurant on a public street having
its own parking facilities. Examples of those
restaurants which are not Traditional Restaurants and
which, therefore, may in Wendy's sole discretion be
developed by Wendy's or which Wendy's may franchise
to a third party, include, without limitation,
Restaurants and other food service facilities which
are situated in, or a part of, shopping malls; retail
centers; airports; hospitals; museums; train, subway
and other rail and bus stations; government/military
offices and office complexes; stadiums; amusement
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parks; zoos; convention centers; car and/or truck
stops or travel centers; gasoline or convenience
stores; or educational institutions or facilities.
The determination of what is or is not a Traditional
Restaurant as defined in this paragraph is within
Wendy's sole reasonable discretion. the Partnership
assumes all risk that the development and operation
of non-Traditional Restaurants by Wendy's or any
third parties may impact the Partnership's desire or
ability to thereafter develop additional Wendy's Old
Fashioned Hamburgers Restaurants pursuant to the
right of first refusal.
(4) It is understood and agreed that if the Partnership
elects to exercise the right of first refusal in
accordance with the provisions contained within all
subsections of this Paragraph 7, and thereafter fails
to develop a Wendy's Old Fashioned Hamburgers
Restaurant in accordance with such election, then the
right of first refusal granted in this Paragraph 7
shall be terminated in its entirety as to all of the
Restaurants under the New Partnership Franchise
Agreements and shall be of no further force or
effect. Such termination shall be effective upon the
expiration of a cure period of thirty (30) days (or
such longer period as may be required by applicable
state law) pursuant to a Notice of Default issued by
Wendy's. It is further understood and agreed that if
any of the New Partnership Franchise Agreements
pertaining to the Restaurants are terminated, then
this right of first refusal and the terms of this
Paragraph 7 shall also be terminated and of no
further force or effect.
8. The Partnership and the New Guarantors hereby agree to separately
execute a General Release of All Claims in the form attached hereto as
Exhibit G contemporaneously with the execution of this Consent
Agreement.
9. The Partnership and New Guarantors acknowledge that they are aware of
the obligation to become a member of the local advertising cooperative,
have investigated the structure and requirements of that cooperative,
and understand and agree to the obligations of cooperative members.
10. The Partnership and New Guarantors warrant, represent and agree that
the terms and conditions of this Consent Agreement modify the New
Partnership Franchise Agreements (but do not modify the Co-franchised
Franchise Agreements) and are hereby incorporated therein; any breach
of the terms or conditions of this Consent Agreement by the Partnership
or the New Guarantors shall constitute a material default under the New
Partnership Franchise Agreements subject to such notice and cure
periods as are provided for therein or by law.
11. All parties understand that Wendy's may in the future approve offerings
and transfers under different terms, conditions and policies existing
at that time. Wendy's consent and waiver here shall not be relied upon
in future transactions as limiting Wendy's position or the conditions
associated with Wendy's consent and/or waiver of its right of first
refusal.
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12. The Partnership and the New Guarantors acknowledge and agree that
Wendy's has no knowledge of, and makes no warranties with respect to,
the accuracy of any representations or warranties made by the
Partnership and the New Guarantors to each other in connection with
this transfer, and Wendy's assumes no obligation in this regard.
13. Wendy's and the Partnership agree that the official mailing address of
the Partnership under the New Partnership Franchise Agreements shall be
as follows:
Wendy's of West Michigan Limited Partnership
c/o MCC Food Service, Inc.
00 Xxxxx Xx., X.X.
Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attn: President
All parties agree that notice to the Partnership shall constitute
notice to each of the New Guarantors.
A. The official mailing address of the Co-franchised Franchise
Agreements shall remain as currently set forth therein,
provided, however, Wendy's agrees to also send notice to the
Partnership at the address referenced above. The current
mailing address for the Co-franchised Franchise Agreements is
acknowledged to be as follows:
The Ledyard Building
000 Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, XX 00000
14. The Partnership and the New Guarantors acknowledge and agree that in
connection with the transfers of interest described herein, except as
may be specifically set forth in this Consent Agreement, Wendy's has
not consented to the collateral assignment of any interest in the
Partnership or the New Partnership Franchise Agreements, and the
Partnership specifically warrants and represents that no such security
interest exists except as may be specifically set forth or permitted in
this Consent Agreement. The Partnership and the New Guarantors further
acknowledge and agree that any such future collateral assignment to any
third party under any promissory note, loan agreement or other
documentation, except as may be specifically set forth or permitted in
this Consent Agreement, shall be specifically subject to the terms of
the New Partnership Franchise Agreements, and shall require Wendy's
prior written consent.
A. The Partnership warrants and represents that the prior
collateral assignment as referenced in the Consent to
Collateral Assignment dated December 12, 1986 has been
terminated in its entirety and the collateral has been
released.
15. In addition to the indemnity provision of the New Partnership Franchise
Agreements, The Partnership and the New Guarantors hereby jointly and
severally agree to
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13
indemnify, defend and hold Wendy's, its successors, assigns, officers,
directors, and employees harmless from any and all claims, judgments,
actions or expenses (including reasonable attorney fees), arising out
of or otherwise connected with (1) the past ownership, maintenance or
operation of the Restaurants (including the Partnership Restaurants and
the Co-franchised Restaurants); (2) the interest of any other party in
the Partnership, Food Service, Meritage, MCCFS, MCC or the New
Partnership Franchise Agreements; (3) the interest of any of the
Michigan Parties in the Co-franchised Restaurants, the Co-franchised
Franchise Agreements, the Partnership, the Existing Partnership
Franchise Agreements or the New Partnership Franchise Agreements; or
(4) any matter connected with Wendy's consent and waiver as contained
herein or the revisions and ownership changes as referenced herein, to
which Wendy's consents (as applicable) but assumes no responsibility
for effectuating. This indemnity shall be binding upon any successors
of the Partnership or any of the New Guarantors as a contingent claim.
16. The Partnership warrants and represents that no real estate/financing
arrangements with Wendy's or any subsidiary exist. All parties
acknowledge and agree that Wendy's consent in this Consent Agreement is
not intended to provide, and shall not be construed as providing,
Wendy's consent (or the consent of any subsidiary of Wendy's) with
regard to any other right or interest other than Wendy's consent to the
transfer and ownership changes as provided herein. Any other consent
(related to any real estate interest of any Wendy's affiliate, for
example) must be separately obtained pursuant to any controlling
agreements.
17. The Partnership and the New Guarantors hereby warrant and represent
that the financial and other information which has been provided by the
Partnership and the New Guarantors to Wendy's in connection with this
transaction is true and accurate. Wendy's is relying upon the accuracy
of that information in consenting to this transaction. The Partnership
and the New Guarantors agree that any material misrepresentation as to
the capitalization, financial structure, credit worthiness or
background of the Partnership or the New Guarantors or of the material
terms associated with the changes in ownership described herein may be
deemed by Wendy's to be a default of the New Partnership Franchise
Agreements, in addition to any other rights or remedies Wendy's may
have.
18. The parties understand and acknowledge that Wendy's consent and/or
waiver in no way constitutes an acknowledgment, undertaking or
representation by Wendy's as to the financial viability of this
purchase, any approval of the monetary terms of this purchase, or the
earnings potential of the Partnership Restaurants. The parties each
acknowledge and represent that they are sophisticated and experienced
in such business dealings, they have carefully reviewed and evaluated
this transaction using independent professional financial and legal
advisors and have in no way relied upon Wendy's consent and/or waiver
as an appraisal or indication of the earnings potential of the
Restaurants.
19. The Partnership and the New Guarantors hereby acknowledge the receipt
of Wendy's Uniform Franchise Offering Circular at the earlier of the
first personal meeting with
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14
Wendy's regarding this Consent Agreement or ten (10) business days
prior to the execution of this Consent Agreement. Said parties further
acknowledge the receipt of a final copy of this Consent Agreement at
least five (5) business days prior to the execution hereof.
20. The parties agree that if they fail to execute and return this Consent
Agreement to Wendy's within twenty-one (21) days of the receipt hereof,
this Consent Agreement may not be executed by Wendy's and the terms and
conditions contained herein shall not otherwise be binding upon Wendy's
without such execution.
21. Nothing contained in any documentation between the Partnership and the
New Guarantors (and affiliated parties of said entities), is intended
to conflict with the terms and conditions of this Consent Agreement or
the New Partnership Franchise Agreements as defined herein (and where
applicable, the Existing Partnership Franchise Agreements) as to the
rights of Wendy's and the obligations of the parties to Wendy's, or to
impose additional requirements or restrictions on Wendy's except as may
be specifically set forth herein. Except as otherwise provided for
herein, all terms and conditions of the New Partnership Franchise
Agreements shall remain in full force and effect, and the terms and
conditions of this Consent Agreement are intended to supplement those
provisions contained in the New Partnership Franchise Agreements. In
the event of a conflict between the New Partnership Franchise
Agreements and this Consent Agreement, the terms and conditions of the
this Consent Agreement will control.
A. ALL PARTIES ACKNOWLEDGE AND AGREE THAT AS TO WENDY'S AND THE
RIGHTS OF WENDY'S, THE NEW PARTNERSHIP FRANCHISE AGREEMENTS
AND THIS CONSENT AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO.
22. If any material provision or restriction contained herein is void under
federal, state or local law, or held unenforceable and against public
policy, the parties shall negotiate in good faith to give each party
the benefit of its bargain consistent with the intent and rights of the
parties.
23. This Consent Agreement sets forth the entire understanding between the
parties concerning the subject matter of this Consent Agreement and
incorporates all prior negotiations and understandings. There are no
covenants, promises, agreements, conditions or understandings, either
oral or written, between the parties relating to the subject matter of
this Consent Agreement other than those set forth herein. No
representation or warranty has been made by or on behalf of any party
to this Consent Agreement (or any officer, director, employee or agent
thereof) to induce the other party to enter into this Consent Agreement
or to abide by or consummate any transactions contemplated by any terms
of this Consent Agreement, except representations and warranties, if
any, expressly set forth herein. No alteration, amendment, change or
addition to this Consent Agreement shall be binding upon either party
unless in writing and signed by the party to be charged. The submission
of any
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15
unexecuted copy of this Consent Agreement shall not constitute an offer
to be legally bound by any provision of the document submitted, either
currently or in the future; and no party shall be bound by this Consent
Agreement until it is fully executed and delivered by all parties.
IN WITNESS WHEREOF, this Consent Agreement is effective as of the date
it is executed by Wendy's International, Inc.
WENDY'S INTERNATIONAL, INC.
BY: /s/ W. Xxxxxxx Xxxx
--------------------------------------------
TITLE: Vice President-Franchise Development
--------------------------------------
DATE: May 16, 1997
---------------------------------
WENDY'S OF WEST MICHIGAN LIMITED
PARTNERSHIP
BY: /s/ Xxxxxxxxxxx X. Xxxxxx
--------------------------------------------
TITLE: Chairman and CEO of MCC
Food Service Inc.- General Partner
--------------------------------------
MERITAGE HOSPITALITY GROUP INC.
BY: /s/ Xxxxxxxxxxx X. Xxxxxx
--------------------------------------------
TITLE: President and CEO
--------------------------------------
MHG FOOD SERVICE INC.
BY: /s/ Xxxxxxxxxxx X. Xxxxxx
--------------------------------------------
TITLE: President
--------------------------------------
MERITAGE CAPITAL CORP.
BY: /s/ Xxxxxxxxxxx X. Xxxxxx
--------------------------------------------
TITLE: President
--------------------------------------
(SIGNATURE LINES CONTINUED ON NEXT PAGE)
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16
MCC FOOD SERVICE INC.
BY: /s/ Xxxxxxxxxxx X. Xxxxxx
--------------------------------------------
TITLE: Chairman and CEO
--------------------------------------
/s/ Xxxxxx X. Xxxxxxxx, Xx.
-------------------------------------
XXXXXX X. XXXXXXXX, XX., INDIVIDUALLY
/s/ Xxxxxxxxxxx X. Xxxxxx
-------------------------------------
XXXXXXXXXXX X. XXXXXX, INDIVIDUALLY
Franchise:__________
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17
EXHIBIT A
DODGSON/XXXXXX
WENDY'S OLD FASHIONED HAMBURGERS RESTAURANTS
STORE NO. RESTAURANT LOCATION
#19-001 000 Xxxx Xxxxxxxx, Xxxxxxxxx, XX
#00-000 2814 Xxxxxxx, Xxxxxxxxx, XX
#00-000 0000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx, XX
#00-000 0000 00xx Xxxxxx, X.X., Xxxxx Xxxxxx, XX
#19-005 000 X. Xxxxxxxx Xxxxxx, Xxxxxx Xxxxx, XX
#00-000 0000 Xxxxxxxx Xxxxxx, X.X. Xxxxx Xxxxxx, XX
#00-000 0000 00xx Xxxxxx, X.X., Xxxxxxx, XX
#00-000 0000 Xxxx Xxxx Xxxxxx, Xxxxxxxxx, XX
#00-000 0000 Xxxxx Xxxxxx, Xxxxxxxx, XX
#00-000 0000 Xxxxxx Xxxxxx, X.X., Xxxxxx, XX
#00-000 0000 00xx Xxxxxx, X.X., Xxxxx Xxxxxx, XX
#00-000 0000 X. Xxxxxxxx Xxxxxx, Xxxxxxx, XX
#00-000 0000 X. Xxxxxxxx, Xxxxxxxxx, XX
#00-000 0000 X. Xxxxx, Xxxxxxxx, XX
#00-000 0000 Xxxxxxxxxx, X.X., Xxxxx Xxxxxx, XX
#00-000 0000 Xxxxxxx Xxxxx, Xxxxxxxxxx, XX
#232-001 000 Xxxxx Xxxxxx, Xxxxx Xxxxx, XX
#232-002 000 X. 0xx Xxxxxx, Xxxxxxx, XX
#232-003 00000 Xxxxx Xxxxxx, Xxxxxxx, XX
#746-001 0000 X 00, Xxxxxxxxx, XX
#747-001 000 X. Xxxxxxxxx, Xxx Xxx, XX
#983-001 000 00xx Xxxxxx, X.X., Xxxxxxxxxxx, XX
#0000-000 0000 Xxxxxxx Xxxx, Xxxxxx Xxxxx, XX
18
EXHIBIT B
CO-FRANCHISED RESTAURANTS
STORE NO. RESTAURANT LOCATION
#1695-001 000 Xxxxxx Xxxxxx, Xxxxx Xxxxxx, XX
#0000-000 0000 X. Xxxxx Xxxx, Xxxxx Xxxxxx, XX
#0000-000 0000 Xxxx Xxxxxxxx Xxxxx, X.X., Xxxxxx, XX
19
EXHIBIT C
WENDY'S INTERNATIONAL, INC.
UNIT FRANCHISE AGREEMENT
TABLE OF CONTENTS
PAGE
----
RECITALS..............................................................................................1
1. GRANT.................................................................................................2
2. TERM AND RENEWAL......................................................................................2
3. DUTIES OF FRANCHISOR..................................................................................3
4. FEES..................................................................................................4
5. SITE DEVELOPMENT AND CONSTRUCTION OF THE RESTAURANT...................................................5
6. DUTIES OF FRANCHISEE..................................................................................7
7. PROPRIETARY MARKS.....................................................................................10
8. CONFIDENTIAL OPERATING MANUAL.........................................................................12
9. CONFIDENTIAL INFORMATION..............................................................................13
10. ACCOUNTING AND RECORDS................................................................................13
11. ADVERTISING...........................................................................................15
12. INSURANCE.............................................................................................19
13. TRANSFER OF INTEREST..................................................................................20
14. DEFAULT AND TERMINATION...............................................................................26
15. OBLIGATIONS UPON TERMINATION OR EXPIRATION............................................................29
16. COVENANTS.............................................................................................31
17. CORPORATE AND PARTNERSHIP FRANCHISEES.................................................................33
18. TAXES, PERMITS, AND INDEBTEDNESS......................................................................34
19. INDEPENDENT CONTRACTOR AND INDEMNIFICATION............................................................35
20. NON-BINDING MEDIATION.................................................................................36
21. APPROVALS AND WAIVERS.................................................................................37
22. NOTICES...............................................................................................37
23. ENTIRE AGREEMENT......................................................................................37
24. SEVERABILITY AND CONSTRUCTION.........................................................................38
25. JOINT AND SEVERAL OBLIGATION..........................................................................38
26. APPLICABLE LAW........................................................................................39
27. ACKNOWLEDGMENTS.......................................................................................40
20
EXHIBIT C
INDEX
OF
DEFINED TERMS
We have provided this Index for your convenience. The following terms are
defined in the Wendy's Unit Franchise Agreement on the pages noted:
PAGE
----
Advertising Contribution....................................................................................... 15
Affiliate...................................................................................................... 38
Agreement...................................................................................................... 1
Approved Location.............................................................................................. 2
Cooperative.................................................................................................... 16
DMA............................................................................................................ 32
Franchised Business............................................................................................ 2
Franchisee..................................................................................................... 1
Franchisor..................................................................................................... 1
Franchisor Entities............................................................................................ 36
Gross Sales.................................................................................................... 5
Guarantors..................................................................................................... 38
Guaranty....................................................................................................... 38
Local advertising and promotion................................................................................ 16
Manual......................................................................................................... 2
Minimum Royalty................................................................................................ 5
Operator....................................................................................................... 7
Owners......................................................................................................... 21
Permits........................................................................................................ 6
Premises....................................................................................................... 29
Proposed Franchisee............................................................................................ 21
Proprietary Marks.............................................................................................. 1
Restaurant..................................................................................................... 2
System......................................................................................................... 1
Technical Assistance Fee....................................................................................... 4
Transaction Policy............................................................................................. 22
WNAP........................................................................................................... 4
21
EXHIBIT C
WENDY'S INTERNATIONAL, INC.
UNIT FRANCHISE AGREEMENT
THIS UNIT FRANCHISE AGREEMENT (the "Agreement") is made and entered
into ______________________, 19____, between WENDY'S INTERNATIONAL, INC., an
Ohio corporation"), with offices at 0000 Xxxx Xxxxxx Xxxxxxxxx Xxxx, Xxxxxx,
Xxxx 00000 ("Franchisor), and __________________________________________________
________________________________________________________________________________
_________________________________________________________________("Franchisee").
WITNESSETH:
WHEREAS, Franchisor, as the result of the expenditure of time, skill,
effort, and money, has developed and owns a distinctive format and system
relating to the establishment and operation of Wendy's Old Fashioned Hamburgers
restaurants featuring, among other things, hamburgers, chili, salads, French
fries, assorted chicken and other sandwiches, and other food and beverages (the
"System");
WHEREAS, the distinguishing characteristics of the System include,
without limitation, distinctive exterior and interior design, decor, color
scheme, and furnishings; menu items prescribed by Franchisor; uniform standards,
specifications, and procedures for operations; quality and uniformity of
products and services offered; procedures for management and inventory control;
training and assistance; and advertising and promotional programs; all of which
may be changed, improved, and further developed by Franchisor from time to time;
WHEREAS, Franchisor identifies the System by means of certain trade
names, service marks, trademarks, logos, emblems, and indicia of origin,
including but not limited to the marks "WENDY'S", and "WENDY'S OLD FASHIONED
HAMBURGERS," and such other trade names, service marks, and trademarks as are
now designated (and may hereinafter be designated by Franchisor in writing) for
use in connection with the System (the "Proprietary Marks");
WHEREAS, Franchisor continues to develop, use, and control the use of
such Proprietary Marks in order to identify for the public the source of
services and products marketed thereunder and under the System, and to represent
the System's high standards of quality, appearance, and service;
WHEREAS, Franchisee desires to enter into the business of operating a
Wendy's Old Fashioned Hamburgers restaurant under Franchisor's System and wishes
to obtain the rights to operate such business from Franchisor for that purpose,
as well as to receive the training and other assistance provided by Franchisor
in connection therewith;
WHEREAS, Franchisee understands and acknowledges the importance of
Franchisor's high standards of quality, cleanliness, appearance, and service,
and the necessity of operating the business franchised hereunder in conformity
with Franchisor's standards and specifications; and
NOW, THEREFORE, the parties, in consideration of the undertakings and
commitments of each party to the other party set forth herein, hereby agree as
follows:
22
EXHIBIT C
1. GRANT
-----
1.1. Franchisor hereby grants to Franchisee, upon the terms and
conditions herein contained, the right, and Franchisee undertakes the
obligation, to operate the Wendy's Old Fashioned Hamburgers restaurant as
described") in accordance with this Agreement and the standards and procedures
set forth in Franchisor's Operating," as described in Section 8 hereof), and to
use solely in connection therewith, the Proprietary Marks and the System, as
they may be changed, improved, and further developed from time to time, only at
the approved location as provided in Section 1.2. hereof.
1.2. The street address of the location approved hereunder is:________
_______________________________________________________________________________
(the "Approved Location"). Franchisee shall not relocate the Franchised Business
without the express prior written consent of Franchisor.
1.3. Franchisee expressly acknowledges that this franchise is
non-exclusive. Franchisee shall only be permitted to operate from the Approved
Location, to sell approved food and beverage products to retail customers for
consumption on the premises or for personal carry-out consumption. Franchisor
shall retain the right, among others, to use, and to license others to use, the
System and the Proprietary Marks for the operation of restaurants at any
location; and to use and license to others the use of these and other
proprietary marks in connection with the operation at any location of
restaurants or any other business which are the same as, similar to, or
different from the Restaurant, on any terms and conditions as Franchisor deems
advisable, and without granting Franchisee any rights therein.
2. TERM AND RENEWAL
----------------
2.1. Except as otherwise provided herein, the term of this Agreement
shall expire twenty (20) years from the date hereof.
2.2. Upon the expiration of the term set forth in Section 2.1,
Franchisee may, at its option, renew the rights and obligations to operate the
Restaurant for one (1) additional consecutive term of ten (10) years, provided
that prior to the expiration of the initial term, the Franchisee has met the
following conditions:
2.2.A. Franchisee shall give Franchisor written notice of
Franchisee's election to renew not less than twelve (12) months nor more than
eighteen (18) months prior to the end of the initial term;
2.2.B. Franchisee shall make or provide for, in a manner
satisfactory to Franchisor, such renovation and modernization of the Restaurant
as Franchisor may require, including, without limitation, renovation of the
exterior facade, signs, interior furnishings, fixtures, and decor, to reasonably
reflect the then-current standards and image of the System;
2.2.C. Franchisee shall have satisfied all monetary obligations
owed by Franchisee to Franchisor and its affiliates (as defined in Section 24.4
hereof) and shall not be in default of any provision of this Agreement, any
amendment hereof or successor hereto, or any other agreement between Franchisee
and Franchisor or its affiliates; and, in the reasonable judgment of Franchisor,
Franchisee shall have substantially and timely complied with all the terms,
conditions and
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23
EXHIBIT C
obligations of such agreements during the terms thereof and with
the operating standards prescribed by the Franchisor during the term of this
Agreement;
2.2.D. Franchisee shall present evidence satisfactory to
Franchisor that Franchisee has the right to remain in possession of the Approved
Location for the duration of the renewal term;
2.2.E. Franchisee shall execute Franchisor's then-current form of
renewal franchise agreement (and any Guarantor as defined in Section 25.2 shall
execute Franchisor's then-current guaranty agreement), which renewal franchise
agreement shall supersede this Agreement in all respects, and the terms of which
may differ from the terms of this Agreement, including, without limitation, a
higher percentage royalty fee and advertising contribution; provided, however,
that Franchisee shall pay, in lieu of a technical assistance fee or other
initial fee, a renewal fee in an amount to be specified by Franchisor, which
amount shall not be greater than twenty-five percent (25%) of the then-current
Technical Assistance Fee, or similar initial fee, charged to franchisees;
2.2.F. Franchisee and any Guarantors shall execute a general
release, in a form prescribed by Franchisor, of any and all claims against
Franchisor and its affiliates, and their respective officers, directors, agents,
and employees; and
2.2.G. Franchisee shall comply with Franchisor's then-current
training requirements and all other conditions required of franchisees renewing
their agreements at that time.
3. DUTIES OF FRANCHISOR
--------------------
3.1. Prior to the date of opening of the Restaurant, if the Restaurant
is Franchisee's first restaurant operating under the System, Franchisor shall
make available to Franchisee, or Franchisee's "Operator" (as defined in Section
6.2 hereof), and Franchisee's initial management employees and restaurant crew
(as such personnel positions are defined in the Manual), an initial training
program at a location designated by Franchisor. If, however, Franchisee or
Franchisee's Operator owns, or has an ownership interest in, another restaurant
operating under the System, Franchisee shall be required to provide an initial
training program to such persons, in accordance with Franchisor's
specifications, and subject to Franchisor's review and approval of such
training. If the Restaurant is Franchisee's first restaurant operating under the
System, Franchisor shall be responsible for the cost of certain instruction and
materials related to the initial training of the Franchisee or Franchisee's
Operator, subject to the terms set forth in Sections 6.3 and 6.4 of this
Agreement. Franchisee shall be responsible for the cost of training its
management and crew. Franchisor shall make available such other ongoing training
as it may, from time to time, deem appropriate.
3.2. Franchisor shall make available, at no charge to Franchisee,
prototypical plans and specifications for the construction of a standard Wendy's
restaurant and for the exterior and interior design and layout, fixtures,
furnishings, equipment, and signs. Franchisee shall adapt, at Franchisee's
expense, the prototypical plans and specifications to the Approved Location,
subject to Franchisor's approval, as provided in Section 5.2.B hereof, except
that Franchisor will not unreasonably withhold approval of special plans and
specifications, prepared at Franchisee's expense, when the Approved Location
will not accommodate Franchisor's prototypical plans and specifications,
provided that such plans and specifications conform to Franchisor's general
design criteria.
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24
EXHIBIT C
3.3. Franchisor shall conduct, as it deems advisable, periodic
inspections of the Restaurant and the Restaurant premises during the period of
construction and improvement to determine whether Franchisee is complying with
the approved plans and specifications for the Restaurant.
3.4. Franchisor shall inspect and approve the Restaurant for opening
prior to the opening of the Restaurant. Franchisee shall not commence operation
of the Restaurant until receiving such approval from Franchisor.
3.5. Franchisor shall provide, as Franchisor deems advisable,
pre-opening and opening supervision and assistance, which may include, at
Franchisor's sole discretion, having a representative of Franchisor present at
the opening of the Restaurant.
3.6. Franchisor shall provide Franchisee, on loan, one copy of the
Manual. The Manual shall be deemed to include a multi-volume manual describing
Franchisor's operating standards, as well as bulletins, updates, revisions,
policy statements and amendments thereto, which may be issued by Franchisor from
time to time.
3.7. Franchisor shall provide to Franchisee an initial set of reporting
forms for use in the operation of the Franchised Business. Franchisor may, from
time to time, make available to Franchisee, at Franchisee's expense, additional
forms and standardized reporting and bookkeeping systems, including computer
software and electronic data transmission systems for point of sale reporting.
3.8. Franchisor shall conduct, and may authorize others to conduct, as
it deems advisable, periodic inspections of the Restaurant, and evaluations of
the products sold and services rendered by the Franchised Business.
3.9. Franchisor shall provide, as it deems advisable, periodic and
continuing advisory assistance to Franchisee as to the operation, merchandising,
and promotion of the Restaurant.
3.10. Franchisor shall have the right to review and approve or
disapprove all advertising and promotional materials which Franchisee proposes
to use, pursuant to Section 11.7 hereof.
3.11. Franchisor or its designee shall maintain a system-wide
advertising program, administered by The Wendy"), to the extent required and as
specifically set forth in Section 11 hereof.
3.12. Franchisor may make available to Franchisee, from time to time,
bulletins, brochures, and reports regarding the System, and operations under the
System.
4. FEES
----
4.1. Franchisee has paid to Franchisor a Technical Assistance Fee
("Technical Assistance Fee") of Twenty-five Thousand Dollars ($25,000), receipt
of which is hereby acknowledged by Franchisor. The Technical Assistance Fee
shall be fully earned and shall be nonrefundable in consideration of
administrative and other expenses incurred by Franchisor in granting the rights
in this Agreement and for Franchisor's lost or deferred opportunity to grant
these rights to other parties.
-4-
25
EXHIBIT C
4.2. Each month during the term of this Agreement, Franchisee shall pay
Franchisor a royalty fee in an amount equal to the greater of (a) four percent
(4%) of the gross sales of the Restaurant, as defined in Section 4". The Minimum
Royalty shall be One Thousand Dollars ($1,000) per month, provided, however, the
Minimum Royalty may be increased by Franchisor, in Franchisor's sole discretion,
and not more frequently than once every five (5) years, by an amount equal to
the percentage change in the Consumer Price Index, all Urban Consumers (1982-84
= 100) published by the U. S. Department of Labor, Bureau of Labor Statistics,
or any successor index, for the period from January 1, 1994 through December
31st of the year immediately prior to Franchisor's notice of its intention to
increase the Minimum Royalty. Franchisee's obligation to pay the monthly royalty
fee shall commence on the earlier of the date the Restaurant opens for business,
or the scheduled opening date as set forth in Section 5.3.
4.3. During the term of this Agreement, Franchisee shall pay, on a
monthly basis, such advertising fees and contributions as set forth in Section
11.1 hereof.
4.4. Except as otherwise specified herein, all monthly payments
required by this Section 4 and by Section 11 hereof shall be paid by the
fifteenth (15th) day of each month based on the gross sales for the preceding
month, and shall be delivered to Franchisor, in the manner specified by
Franchisor, together with any reports or statements required under Section 10.3.
hereof. Franchisor reserves the right to require payment of any and all fees by
means of electronic, computer, wire, or automated transfer or bank clearing
services, and Franchisee agrees to undertake all action reasonably necessary to
accomplish such transfers. Any payment or report not actually received by
Franchisor on or before such date shall be deemed overdue. If any payment is
overdue, Franchisee shall pay Franchisor, in addition to the overdue amount, a
late fee of One Hundred Dollars ($100.00), plus interest on the overdue amount
from the date it was due until paid, at the (i) rate determined from time to
time by Franchisor or (ii) the maximum rate permitted by law, whichever is less.
Entitlement to such interest shall be in addition to any other remedies
Franchisor may have.
4.5. As used in this Agreement, "gross sales" shall include all revenue
from the sale of all services and products and all other income of every kind
and nature related to the Franchised Business or premises, including proceeds of
any business interruption insurance policies, and the sale of any promotional or
premium items, whether for cash or credit, and regardless of collection in the
case of credit, but shall not include (i) any sales taxes or other taxes
collected from customers by Franchisee for transmittal to the appropriate taxing
authority, (ii) the amount of refunds made to customers, and (iii) any amounts
from coupon or discount programs approved by Franchisor for which Franchisee is
not reimbursed.
5. SITE DEVELOPMENT AND CONSTRUCTION OF THE RESTAURANT
---------------------------------------------------
5.1. Franchisee shall demonstrate to Franchisor's satisfaction that
Franchisee has the right to possession of the Approved Location. If Franchisee
will occupy the premises from which the Franchised Business is conducted under a
lease, Franchisor reserves the right to require Franchisee to submit such lease
to Franchisor for its written approval prior to the execution thereof. All
leases, without regard to Wendy's review, shall include the following
provisions, and such other provisions as Franchisor may reasonably require:
5.1.A. A provision which prohibits Franchisee from subleasing or
assigning all or any part of its occupancy rights without Franchisor's prior
written consent;
-5-
26
EXHIBIT C
5.1.B. A provision requiring that the lessor shall provide to
Franchisor any and all notices of default under Franchisee's lease;
5.1.C. A provision giving Franchisor (subject to the reasonable
consent of lessor) the right to enter the premises to make modifications
necessary to protect the Proprietary Marks or the System or to cure any default
under this Agreement or under the lease; and Franchisor shall repair any damage
caused to the premises in making any such modifications; and
5.1.D. A provision whereby lessor consents to any assignment of
Franchisee's leasehold interest to Franchisor, as agreed to by Franchisee and
Franchisor.
5.2. Before commencing any construction of the Restaurant, Franchisee,
at its expense, shall comply, to Franchisor's satisfaction, with all of the
following requirements:
5.2.A. Franchisee shall employ a qualified, licensed architect or
engineer who is reasonably acceptable to Franchisor to prepare, for Franchisor's
approval, preliminary plans and specifications for site improvement and
construction of the Restaurant based upon the prototypical plans and
specifications furnished by Franchisor;
5.2.B. Franchisee shall be responsible for obtaining all necessary
permits, licenses, variances and approval"), pertaining to the building,
occupancy, signs, utilities, curb cuts, driveways, zoning, use, environmental
controls and any other Permits which are necessary to permit the construction
and use of a Wendy's restaurant which may be required by state or local laws,
ordinances, or regulations. After having obtained such Permits, Franchisee shall
submit to Franchisor, for Franchisor's approval, final plans for construction
based upon the preliminary plans and specifications. Once approved by
Franchisor, such final plans shall not thereafter be changed or modified without
the prior written permission of Franchisor;
5.2.C. Franchisee shall obtain all permits and certifications
required for the lawful construction and operation of the Restaurant and shall
certify in writing to Franchisor that all such permits and certifications have
been obtained; and
5.2.D. Franchisee shall employ a qualified, licensed and bonded
general contractor to construct the Restaurant and to complete all improvements.
Franchisee shall obtain and maintain in force during the entire period of
construction the insurance required under Section 12.4. of this Agreement.
5.3. Franchisee shall construct, furnish, and open the Restaurant
according to the provisions of Section 5.2 hereof, and Franchisee shall open the
Restaurant not later than _______________________, 19____. Time is of the
essence. Prior to opening for business, Franchisee shall comply with all
pre-opening requirements set forth in this Agreement, the Manual, and elsewhere
in writing by Franchisor.
5.4. Franchisee shall provide at least fourteen (14) days prior written
notice to Franchisor of the date on which Franchisee proposes to first open the
Restaurant for business. If Franchisee has five (5) or fewer restaurants
operating under the System, Franchisee shall not open the Restaurant without
Franchisor's representative present unless Franchisor has specifically waived
this requirement in writing for the Approved Location. In the event that
Franchisor cannot provide its representative on the date that Franchisee
proposes to first open the Restaurant for business, then Franchisee may be
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EXHIBIT C
required to reschedule such opening to a date on which the Franchisor's
representative can be in attendance.
6. DUTIES OF FRANCHISEE
--------------------
6.1. Franchisee understands and acknowledges that every detail of the
Franchised Business is important to Franchisee, Franchisor, and other
franchisees in order to develop and maintain high operating standards, to
increase the demand for the services and products sold by all franchisees, and
to protect Franchisor's reputation and goodwill.
6.2. An individual designated by Franchisee (the "Operator") shall
supervise the operation of the Restaurant at all times throughout the term of
this Agreement. The Operator and any replacement Operator shall be first
approved by Franchisor, and shall demonstrate to Franchisor's satisfaction (at
the time of approval and on a continuing basis) that he satisfies Franchisor's
educational, managerial, and business standards, and has the aptitude and
ability to conduct, operate, and supervise the Franchised Business. Any person
designated as the Operator shall maintain such ownership of a beneficial
interest in Franchisee as Franchisor may specify.
6.3. Prior to the opening of the Restaurant, Franchisee (or, if
Franchisee is a corporation, partnership or other business entity, the Operator,
previously approved by Franchisor) and Franchisee's initial management employees
and restaurant crew shall attend and successfully complete, to Franchisor's
satisfaction, the training program or programs offered by Franchisor. Any
management persons subsequently employed by Franchisee shall also attend such
training programs as required by Franchisor. Franchisee and Franchisee's
management employees involved in the operation of the Restaurant shall also
attend such refresher courses, seminars, and other training programs as
Franchisor may reasonably require from time to time.
6.4. Franchisor shall be responsible for the cost of instructors and
materials associated with the initial training program for Franchisee or
Franchisee's Operator if the Restaurant is Franchisee's first restaurant
operating in the System, however, Franchisee may be required to bear the cost of
other required and optional training courses, materials, seminars, and programs
for Franchisee, Franchisee's Operator as well as Franchisee's management and
crew. Franchisee shall always be responsible for any and all expenses incurred
by Franchisee and Franchisee's employees in connection with any training
courses, seminars, and programs, including, without limitation, the costs of
transportation, lodging, meals, wages, and worker's compensation insurance.
6.5. In connection with the opening of the Restaurant, Franchisee shall
conduct, at Franchisee's expense, such grand opening promotional and advertising
activities as Franchisor may require.
6.6. Franchisee shall use the Restaurant premises solely for the
operation of the Franchised Business hereunder; shall keep the business open and
in normal operation for such hours and days as Franchisor may from time to time
specify in the Manual or as Franchisor may otherwise approve in writing; and
shall refrain from using or permitting the use of the Restaurant or the
Restaurant premises for any other purpose or activity at any time without first
obtaining the written consent of Franchisor.
6.7. Franchisee agrees to maintain a competent, conscientious, trained
staff in sufficient numbers as required by Franchisor so that Franchisee may
promptly service customers, including at
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EXHIBIT C
least one manager on duty at all times, and to take such steps as are necessary
to ensure that its employees preserve good customer relations and comply with
such dress code as Franchisor may prescribe. Franchisee acknowledges and agrees
that Franchisee shall be solely responsible for all employment decisions and
functions, including, without limitation, those related to hiring, firing,
establishing wages and hour requirements, disciplining, supervising, and record
keeping.
6.8. Franchisee shall meet and maintain the highest health standards
and ratings applicable to the operation of the Restaurant. Franchisee shall
furnish to Franchisor, within five (5) days after receipt thereof, a copy of all
inspection reports, warnings, citations, certificates, or ratings resulting from
inspections of the Restaurant conducted by any federal, state or municipal
agency.
6.9. Franchisee shall at all times maintain the Restaurant in a high
degree of sanitation, repair, and condition, and in connection therewith shall
make such additions, alterations, repairs, and replacements thereto as may be
required for that purpose (but no others without Franchisor's prior written
consent), including, without limitation, such periodic repainting or replacement
of signs, furnishings, equipment, and decor as Franchisor may reasonably direct.
6.10. At Franchisor's request, which shall not be more often than once
every five (5) years, Franchisee shall refurbish the Restaurant at its expense
to conform to the building design, trade dress, color schemes, and presentation
of the Proprietary Marks in a manner consistent with the image then in effect
for new restaurants under the System, including, without limitation, remodeling,
redecoration, structural changes, and modifications to existing improvements and
equipment.
6.11. To insure that the highest degree of quality and service is
maintained, Franchisee shall operate the Restaurant in strict conformity with
such methods, standards, and specifications as Franchisor may from time to time
prescribe in the Manual or otherwise in writing. Franchisee agrees:
6.11.A. To maintain in sufficient supply, and to use and sell at
all times when the Restaurant is open for business, ingredients, products,
materials, supplies, and paper goods as conform to Franchisor's written
standards and specifications, and to refrain from deviating therefrom by the use
or offer of any non-conforming items, without Franchisor's prior written
consent;
6.11.B. To sell or offer for sale only such menu items, products,
services and related items, including without limitation, promotional and
premium items, as have been expressly approved for sale in writing by
Franchisor; to sell or offer for sale all required menu items and products
utilizing such preparation standards and techniques as specified by Franchisor;
to refrain from any deviation from Franchisor's standards and specifications
without Franchisor's prior written consent; and to discontinue selling and
offering for sale any menu items, products, or services which Franchisor may, in
its discretion, disapprove in writing at any time. Franchisee shall have sole
discretion as to the prices to be charged to customers;
6.11.C. To purchase and install, at Franchisee's expense, all
fixtures, furnishings, equipment, decor, and signs as Franchisor shall specify;
and to refrain from installing or permitting to be installed on or about the
Restaurant premises, without Franchisor's prior written consent, any fixtures,
furnishings, equipment, decor, signs, or other items not previously approved by
Franchisor in writing; and
6.11.D. To refrain from installing or permitting to be installed
any vending machine, game or coin operated device, unless first approved in
writing by Franchisor. If approved by
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EXHIBIT C
Franchisor, revenues associated with such operation shall be included in gross
sales for the purposes of this Agreement.
6.12. Franchisee shall purchase all food items, ingredients, supplies,
materials, and other products used or offered for sale at the Restaurant solely
from suppliers (including manufacturers, distributors, and other sources) who
demonstrate, to the continuing reasonable satisfaction of Franchisor, the
ability to meet Franchisor's then-current standards and specifications for such
items; who possess adequate quality controls and capacity to supply Franchisee's
needs promptly and reliably; and who have been approved in writing by Franchisor
prior to any purchases by Franchisee from any such supplier, and have not
thereafter been disapproved. If Franchisee desires to purchase any products from
an unapproved supplier, Franchisee shall submit to Franchisor a written request
for such approval. Franchisee shall not purchase from any supplier until, and
unless, such supplier has been approved in writing by Franchisor. Franchisor
shall have the right to require that Franchisor or its agents be permitted to
inspect the supplier's facilities, and that samples from the supplier be
delivered, either to Franchisor or to an independent laboratory designated by
Franchisor for testing. A charge not to exceed the reasonable cost of the
inspection and the actual cost of the test shall be paid by Franchisee or the
supplier. Franchisor may also require that the supplier comply with such other
requirements as Franchisor may deem appropriate, including payment of reasonable
continuing inspection fees and administrative costs. Franchisor reserves the
right, at its option, to reinspect from time to time the facilities and products
of any such approved supplier and to revoke its approval upon the supplier's
failure to continue to meet any of Franchisor's then-current criteria. Nothing
in the foregoing shall be construed to require Franchisor to approve any
particular supplier, nor to require Franchisor to make available to prospective
suppliers, standards and specifications for formulas that Franchisor, in its
sole discretion, deems confidential.
6.13. Without limiting the requirements set forth in this Section 6,
Franchisee shall comply with Franchisor's requirements and specifications
concerning the quality, service, and cleanliness of the Restaurant, the products
and services sold, offered for sale, or provided at the Restaurant, and the
operation of the Restaurant under the System, as those requirements may be
specified by Franchisor in this Agreement, in the Manual, or otherwise in
writing.
6.14. Franchisee shall permit Franchisor or its agents, at any
reasonable time, to remove samples of food or non-food items from Franchisee's
inventory, or from the Restaurant, without payment therefor, in amounts
reasonably necessary for testing by Franchisor or an independent laboratory to
determine whether said samples meet Franchisor's then-current standards and
specifications. In addition to any other remedies it may have under this
Agreement, Franchisor may require Franchisee to bear the cost of such testing if
the supplier of the item has not previously been approved by Franchisor or if
the sample fails to conform with Franchisor's specifications.
6.15. Franchisee grants Franchisor and its agents the right to enter
upon the Restaurant premises at any time for the purpose of conducting
inspections with or without prior notice. Franchisee shall cooperate with
Franchisor's representatives in such inspections by rendering such assistance as
they may reasonably request; and, upon notice from Franchisor or its agents and
without limiting Franchisor's other rights under this Agreement, Franchisee
shall take such steps as may be necessary to immediately correct any
deficiencies detected during any such inspection. Inspections shall not be
limited to physical inspections of the Restaurant premises but may also include
any visit by Franchisor's representative for the purpose of assessing
Franchisee's operating systems or overall compliance with this Agreement.
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EXHIBIT C
6.16. Franchisee shall require all advertising and promotional
materials, signs, decorations, paper goods (including disposable food
containers, napkins, menus, and all forms and stationery used in the Franchised
Business), and other items which may be designated by Franchisor to bear the
Proprietary Marks in the form, color, location, and manner prescribed by
Franchisor.
6.17. Franchisee shall implement and adhere to all changes, additions,
and refinements in the System, as may be prescribed by Franchisor from time to
time, including, without limitation, the providing of new or different products
or services at or from the Restaurant. Franchisee shall promptly undertake all
action and make such expenditures as are necessary to implement such changes,
including, without limitation, acquiring and installing new equipment, modifying
leasehold improvements at the Restaurant, and hiring and training additional
personnel.
6.18. Franchisee shall comply with all other requirements set forth in
this Agreement.
7. PROPRIETARY MARKS
7.1. Franchisor represents with respect to the Proprietary Marks that:
7.1.A. Franchisor has the right to use and license others to use
the Proprietary Marks; and
7.1.B. All reasonable steps have been and will be taken to
preserve and protect its rights in and the validity of the Proprietary Marks.
7.2. With respect to Franchisee's use of the Proprietary Marks pursuant
to this Agreement, Franchisee agrees that:
7.2.A. Franchisee shall use only the Proprietary Marks designated
by Franchisor, and shall use them only in the manner authorized and permitted by
Franchisor;
7.2.B. Franchisee shall use the Proprietary Marks only for the
operation of the Franchised Business and only at the Approved Location, or in
Franchisor-approved advertising for the business conducted at or from the
Approved Location;
7.2.C. Unless otherwise authorized or required by Franchisor,
Franchisee shall operate and advertise the Franchised Business only under the
names "WENDY'S" or "WENDY'S OLD FASHIONED HAMBURGERS," without prefix or suffix;
7.2.D. During the term of this Agreement and any renewal hereof,
Franchisee shall identify itself as the owner of the Franchised Business in
conjunction with any use of the Proprietary Marks, including, but not limited
to, uses on invoices, order forms, receipts, and contracts, as well as the
display of a notice in such content and form and at such conspicuous locations
at the Restaurant as Franchisor may designate in writing;
7.2.E. Franchisee's right to use the Proprietary Marks is limited
to such uses as are authorized under this Agreement, and any unauthorized use
thereof shall constitute an infringement of Franchisor's rights;
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EXHIBIT C
7.2.F. Franchisee shall not use the Proprietary Marks to incur any
obligation or indebtedness on behalf of Franchisor;
7.2.G. Franchisee shall not use the Proprietary Marks as part of
its corporate or other legal name; and
7.2.H. Franchisee shall comply with Franchisor's instructions in
filing and maintaining any requisite trade name or fictitious name
registrations, and shall execute any documents deemed necessary by Franchisor or
its counsel to obtain protection for the Proprietary Marks or to maintain their
continued validity and enforceability.
7.3. With respect to actual or potential litigation concerning the
Proprietary Marks:
7.3.A. Franchisee shall promptly notify Franchisor of any
unauthorized use of the Proprietary Marks or marks confusingly similar thereto
as well as any challenge to the Proprietary Marks. Franchisee acknowledges that
as between Franchisor and Franchisee, Franchisor has the sole right to direct
and control any administrative proceeding or litigation involving the ownership
or validity of the Proprietary Marks, including any settlement thereof.
Franchisor has the right, but not the obligation, to take action against uses by
others that may constitute infringement of the Proprietary Marks;
7.3.B. Provided Franchisee has used the Proprietary Marks in
accordance with this Agreement, Franchisor will defend Franchisee at
Franchisor's expense against any third-party claims, suits, or demands related
to Franchisee's use of, or right to use the Proprietary Marks; and
7.3.C. In the event Franchisor undertakes the defense or
prosecution of any litigation relating to the Proprietary Marks, Franchisee
agrees to execute any and all documents and to do such acts and things as may,
in the opinion of counsel for Franchisor, be necessary to carry out such defense
or prosecution, including but not limited to becoming a nominal party to any
legal action. Except to the extent that such litigation is the result of
Franchisee's use of the Proprietary Marks in a manner inconsistent with the
terms of this Agreement, Franchisor agrees to reimburse Franchisee for its
out-of-pocket costs in doing such acts and things, except that Franchisee shall
bear the salary costs of its employees, and Franchisor shall bear the costs of
any judgment or settlement.
7.4. Franchisee expressly understands and acknowledges that:
7.4.A. The Proprietary Marks are valid and serve to identify the
System and those who are authorized to operate under the System;
7.4.B. Franchisee shall not directly or indirectly contest the
validity or ownership of the Proprietary Marks;
7.4.C. Franchisee's use of the Proprietary Marks pursuant to this
Agreement does not give Franchisee any ownership interest or other interest in
or to the Proprietary Marks, except the rights specifically granted by this
Agreement;
7.4.D. Any and all goodwill arising from Franchisee's use of the
Proprietary Marks in its franchised operation under the System shall inure
solely and exclusively to the benefit of Franchisor and its subsidiaries, and
upon transfer, expiration or termination of this Agreement and the
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EXHIBIT C
license herein granted, no monetary amount shall be assigned as attributable to
any goodwill associated with Franchisee's use of the System or the Proprietary
Marks;
7.4.E. The right to use the Proprietary Marks granted hereunder to
Franchisee is non-exclusive, and Franchisor thus has and retains the rights,
among others:
7.4.E.1. To use the Proprietary Marks in connection with
selling products and services;
7.4.E.2. To grant other rights with respect to the
Proprietary Marks, in addition to those already granted to existing
franchisees; and
7.4.E.3. To develop and establish other systems using the
same or similar Proprietary Marks, or any other proprietary marks, and to grant
licenses, sublicenses, franchises, or other rights thereto without providing any
rights therein to Franchisee.
7.4.F. Franchisor reserves the right to substitute different
Proprietary Marks for use in identifying the System and the businesses operating
thereunder if the currently used Proprietary Marks can no longer be used, or if
Franchisor, in its sole discretion, determines that substitution of different
Proprietary Marks will be beneficial to the System. Franchisee agrees to comply
with Franchisor's instructions regarding the substitution of different
Proprietary Marks. Franchisor shall not have any obligation to reimburse
Franchisee for any expenditures made by Franchisee to modify or discontinue the
use of any Proprietary Xxxx or to adopt additional or substitute marks,
including, without limitation, any expenditures relating to advertising,
promotional materials or signage.
8. CONFIDENTIAL OPERATING MANUAL
-----------------------------
8.1. In order to protect the reputation and goodwill of Franchisor and
to maintain high standards of operation under Franchisor's Proprietary Marks,
Franchisee shall conduct its business in accordance with the Manual, which may
consist of more than one volume. Franchisee acknowledges having received on loan
from Franchisor one copy of such Manual for the term of this Agreement.
8.2. Franchisee shall at all times treat the Manual, any other manuals
created for or approved for use in the operation of the Franchised Business, and
the information contained therein, as confidential, and shall use all reasonable
efforts to maintain such information as secret and confidential. Franchisee
shall not at any time copy, duplicate, record, or otherwise reproduce the
foregoing materials, in whole or in part, nor otherwise make the same available
to any unauthorized person.
8.3. The Manual shall at all times remain the sole property of
Franchisor and shall at all times be kept in a secure place on the Restaurant
premises.
8.4. Franchisor may from time to time revise, update, and supplement
the contents of the Manual through various methods, including without
limitation, the issuance of amendments, policy statements, and bulletins, in
printed or electronically transmitted form, and Franchisee expressly agrees to
make corresponding revisions to its copy of the Manual and to comply with each
new or changed standard.
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EXHIBIT C
8.5. Franchisee shall at all times maintain the Manual at the
Restaurant and insure that the Manual is kept current and up to date; and, in
the event of any dispute as to the contents of the manual, the terms of the
master copy of the Manual maintained by Franchisor at Franchisor's home office
shall be controlling.
9. CONFIDENTIAL INFORMATION
------------------------
9.1. Franchisee shall not, during the term of this Agreement or
thereafter, communicate, divulge, or use for the benefit of any other person,
persons, partnership, association, or corporation any confidential information,
knowledge, or know-how concerning the methods of operation of the business
franchised hereunder which may be communicated to Franchisee or of which
Franchisee may be apprised by virtue of Franchisee's operation under the terms
of this Agreement. Franchisee shall divulge such confidential information only
to such of its employees as must have access to it in order to operate the
Franchised Business. Any and all information, knowledge, know-how, and
techniques which Franchisor designates as confidential shall be deemed
confidential for purposes of this Agreement, including, but not limited to,
marketing plans, development strategies, and financial plans, except information
which Franchisee can demonstrate came to its attention prior to disclosure
thereof by Franchisor; or which, at or after the time of disclosure by
Franchisor to Franchisee, had become or later becomes a part of the public
domain, through publication or communication by others who were lawfully in
possession of such information and were under no obligation to maintain its
confidentiality.
9.2. Franchisee agrees to take all steps necessary to ensure that the
Owners, any Guarantor, the Operator, Restaurant manager, co-manager and
supervisor and any other personnel having access to any confidential information
related to the Restaurant, the Franchisor or the Franchised Business also comply
with the requirements of Section 9.1 above. Franchisor may direct that
Franchisee require its Owners, any Guarantor, Operator, Restaurant manager,
co-managers, and supervisors, and any other personnel having access to any
confidential information from Franchisor, to execute covenants that they will
maintain the confidentiality of information they received in connection with
their employment by or relationship with Franchisee, during, and after
termination or expiration of, such employment or relationship. Such covenants
shall be in a form satisfactory to Franchisor, including, without limitation,
specific identification of Franchisor as a third-party beneficiary of such
covenants with the independent right to enforce them, and Franchisee shall
provide copies of such executed covenants to Franchisor upon Franchisor's
request.
9.3. Franchisee acknowledges that any failure to comply with the
requirements of this Section 9 will cause Franchisor irreparable injury, and
Franchisee agrees to pay all court costs and reasonable attorney's fees incurred
by Franchisor in obtaining specific performance of, or an injunction against
violation of, the requirements of this Section 9.
10. ACCOUNTING AND RECORDS
----------------------
10.1. Franchisee shall maintain during the term of this Agreement, and
shall preserve for at least four (4) years from the dates of their preparation,
full, complete, and accurate books, records, and accounts in accordance with
generally accepted accounting principles and in the form and manner prescribed
by Franchisor from time to time in the Manual or otherwise in writing.
10.2. Franchisee shall prepare and maintain a business plan and
operating budget in the manner prescribed by Franchisor, reflecting such
information as Franchisor may specify, which may
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EXHIBIT C
include, without limitation, operational data, personnel expense information,
factors related to the costs of goods sold, capital expenditures, and revenue
projections. Franchisee shall submit such business plan and operating budget to
Franchisor at such times and places and in such form as may be prescribed by
Franchisor.
10.3. Franchisee shall submit to Franchisor, no later than the
fifteenth (15th) day of each month during the term of this Agreement, in a
format and manner specified by Franchisor, monthly royalty and gross sales
reports, and such other reports as Franchisor may require. Franchisor reserves
the right to require Franchisee to submit copies of all state sales tax returns
for the Franchised Business to Franchisor.
10.4. Franchisee shall, at its expense, provide to Franchisor, in a
format specified by Franchisor, and in accordance with generally accepted
accounting principles, a complete annual financial statement (including, without
limitation, a profit and loss statement, cash flow statement and balance sheet),
on a review basis, prepared by an independent certified public accountant
satisfactory to Franchisor, within ninety (90) days after the end of each fiscal
year of the Franchised Business showing the results of operations of the
Franchised Business and the results of operations for any entity affiliated with
the Franchised Business during said fiscal year. Franchisor reserves the right
to require Franchisee to provide, at Franchisee's expense, an audited annual
financial statement, prepared by an independent certified public accountant
satisfactory to Franchisor.
10.5. Franchisor reserves the right to require Franchisee, at
Franchisee's expense, to provide to Franchisor, in a format specified by
Franchisor, quarterly or semi-annual financial statements (as described in
Section 10.4 above), certified by an officer or accountant of Franchisee (and if
specifically required by Franchisor, certified by an independent certified
public accountant), and such other information as Franchisor may reasonably
specify, showing the results of operations of the Franchised Business and the
results of operations for any entity affiliated with the Franchised Business
during said period. Franchisee shall submit such reports within forty-five (45)
days following the end of each quarter or six-month period of each fiscal year
of the Franchised Business during the term hereof.
10.6. Franchisee shall also submit to Franchisor, for review or
auditing, such other forms, reports, records, information, and data as
Franchisor may reasonably require, including but not limited to financial
statements of each Franchisee and each Guarantor, in the form and at the times
and places reasonably required by Franchisor, upon Franchisor's request and as
specified from time to time in the Manual or otherwise in writing. Franchisor
reserves the right to require each Franchisee and each Guarantor to submit their
respective federal and state income tax returns to Franchisor for review.
Franchisee agrees that Franchisor may, and specifically grants Franchisor the
right to, divulge any and all information submitted by Franchisee pursuant to
this Section 10 or otherwise pertaining to Franchisee to third-party financing
or lending sources being considered by Franchisee.
10.7. Franchisor or its designated agents shall have the right at all
reasonable times to examine and copy, at Franchisor's expense, the books,
records, and tax returns of Franchisee. Franchisor shall also have the right, at
any time, to have an independent audit made of the books of Franchisee. If an
inspection should reveal that any payments to Franchisor or any affiliate have
been understated in any report to Franchisor, or if Franchisee fails to expend
any monies required under this Agreement, then Franchisee shall immediately pay
the amount understated, or expend the amount required, upon demand by
Franchisor. In addition, Franchisee shall pay interest on the understated amount
from the date such amount was due until paid, at the rate to be determined by
Franchisor from time to time, or the maximum rate permitted by law, whichever is
less. If an inspection discloses an
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EXHIBIT C
understatement in any report of two percent (2%) or more, or an underpayment of
required expenditures (including, without limitation, royalties due pursuant to
the Agreement) of two percent (2%) or more, Franchisee shall, in addition,
reimburse Franchisor for any and all costs and expenses connected with the
inspection (including, without limitation, travel, lodging and wage expenses,
and reasonable accounting and legal costs). The foregoing remedies shall be in
addition to any other remedies Franchisor may have.
11. ADVERTISING
-----------
Recognizing the value of advertising, and the importance of the
standardization of advertising programs to the furtherance of the goodwill and
public image of the System, the parties agree as follows:
11.1. Franchisor shall have the right to require Franchisee to expend
on advertising and promotion, or to participate in and contribute for the
purpose of advertising and promotion, each month during the term of this
Agreement, an amount, in the aggregate, equal to four percent (4%) of
Franchisee's gross sales during the preceding month (the "Advertising
Contribution"), or such greater amount as provided for in Section 11.2 hereof,
all in such manner as Franchisor may direct from time to time, subject to the
following:
11.1.A. For so long as WNAP (or any successor entity
designated by Franchisor) is in existence as an advertising and promotional fund
for the System, Franchisee shall contribute to WNAP on a monthly basis such
amount as may be specified by Franchisor from time to time in the Manual or
otherwise in writing, which amount shall not be less than fifty percent (50%) of
the Advertising Contribution, nor greater than seventy-five percent (75%) of the
Advertising Contribution;
11.1.B. Franchisee shall spend, for the purpose of local
advertising and promotion, on a monthly basis, such amounts as may be specified
by Franchisor from time to time in writing, which amounts shall not be less than
twenty-five percent (25%) of Franchisee's Advertising Contribution. Franchisee's
expenditures for local advertising and promotion shall be made in accordance
with Section 11.3 hereof; and
11.1.C. If an advertising and marketing Cooperative (as
defined in Section 11.4) is established for Franchisee's region, Franchisor may
specify the amount that Franchisee shall contribute to the Cooperative each
month; provided, however, that Franchisee's contribution to the Cooperative
shall be credited towards satisfaction of the obligations required by Section
11.1.B hereof, and shall be made in accordance with the provisions set forth in
Section 11.4 hereof.
11.2. Franchisor reserves the right (i) to increase the Advertising
Contribution specified in Section 11.1 at any time to an amount not in excess of
five percent (5%) of Franchisee's gross sales, (ii) to change the contributions
to WNAP outside the range specified in Section 11.1.A, and (iii) to reduce the
minimum expenditures specified in Section 11.1.B; provided, however, that
Franchisor may require any of such changes only upon obtaining an affirmative
vote representing seventy-five percent (75%) or more of all restaurants in the
United States operating in the System (whether operated by Wendy's or by its
franchisees and excepting those restaurants under any franchise agreements with
Wendy's which have been terminated).
11.3. All local advertising and promotion by Franchisee shall be in
such media, and of such type and format as Franchisor may approve; shall be
conducted in a dignified manner; and, shall
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EXHIBIT C
conform to such standards and requirements as Franchisor may specify.
Franchisee shall not use any advertising or promotional plans or materials
unless and until Franchisee has received written approval from Franchisor,
pursuant to the procedures and terms set forth in Section 11.7 hereof.
11.3.A. As used in this Agreement, spending on "local
advertising and promotion" which may be credited toward Franchisee's Advertising
Contribution as set forth under Section 11.1.B. shall be advertising and
promotion related directly to the Restaurant, and shall consist only of the
following: (i) advertising and media - the direct costs of measurable media for
television, radio, newspaper and print, outdoor (billboard or transit), yellow
pages and direct mail, including space or time charges, agency planning,
selection, placement and production; the direct costs of in-store materials,
including window signs, counter signs and other promotional signs; (ii)
promotions - the direct costs of market-wide efforts to stimulate trial,
increase frequency of purchase or increase average amounts of purchase,
including direct advertising costs and costs incurred for planning and execution
of same; (iii) direct out-of-pocket expenses - the directly related expenses
incurred by an advertising cooperative approved by Wendy's and related to the
cost of advertising and marketing for agency travel expense, postage, shipping,
meeting room charges, telephone and photocopying, and (iv) such other activities
and expenses as Franchisor in its sole discretion may specify.
11.3.B. Franchisor may specify the types of expenditures and
costs which shall not qualify as "local advertising and promotion." Franchisee
understands and agrees that the definition of local advertising and promotion
set forth above shall not, however, include, and Franchisee shall not include in
its report of the amounts expended on advertising and promotion, any costs or
expenses incurred by Franchisee in connection with any of the following: (i)
incentive programs, including the cost of honoring coupons; (ii) market-wide or
other research that is not conducted by a professional marketing research firm
approved in writing by Franchisor; (iii) food costs incurred in, or price
reductions associated with, any promotion; (iv) salaries and expenses of any
employees of Franchisee, including salaries or expenses for attendance at
advertising meetings or activities; (v) charitable, political or other
contributions or donations; (vi) press parties or other expenses of publicity
other than those associated with the grand opening or re-opening of the
Restaurant; (vii) in-store materials consisting of fixtures or equipment; (viii)
any entertainment or related expenses for travel, meals and the like; (ix) any
fees paid to parties who are not professional consultants, counselors or
advisors previously approved in writing by Wendy's in marketing, advertising,
public relations, promotion or associated efforts; (x) seminar and educational
costs and expenses of employees of Franchisee; (xi) specialty items (such as tee
shirts, premiums, pins and awards) unless such items are part of a market-wide
advertising program and the cost of such items is not recovered by the
promotion; and (xii) such other items as Wendy's shall reasonably determine in
its discretion.
11.3.C. Franchisee understands and acknowledges that the
required contributions and expenditures are minimum requirements only, and that
Franchisee may, and is encouraged by Franchisor to, expend additional funds for
local advertising and promotion, where appropriate.
11.4. Any regional advertising pertaining to the Franchised Business,
and any local advertising which Franchisor may specify as inconsistent with the
provisions of Section 11.3 pertaining to individual restaurant advertising and
promotion, shall be conducted by and through a regional advertising cooperative
("Cooperative") established or required to be established by Franchisor for that
purpose. Franchisor shall have the right, in its discretion, to designate any
geographical area for purposes of establishing a Cooperative, and Franchisee
agrees to take appropriate steps to establish and participate in such
Cooperative if required to do so by Franchisor. If a Cooperative for the
geographic area in which the Restaurant is located has been established at the
time Franchisee commences operations hereunder, Franchisee shall immediately be
bound by the obligation to become a member of
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EXHIBIT C
such Cooperative under the terms of the then-existing Cooperative agreement. If
a Cooperative for the geographic area in which the Restaurant is located is
established during the term of this Agreement, Franchisee shall immediately
become a member of such Cooperative, and take all steps necessary to become such
member. In no event shall Franchisee be required to be a member of more than one
Cooperative with respect to the Restaurant. The following provisions shall apply
to each such Cooperative:
11.4.A. Each Cooperative shall be organized and governed in a form
and manner approved by Franchisor in writing, and shall commence operations on a
date specified by Franchisor. Any disputes arising among or between Franchisee,
other franchisees in the Cooperative, and/or the Cooperative, shall be resolved
by Franchisor, whose decision shall be final and binding on all parties;
11.4.B. Each Cooperative shall be organized for the exclusive
purpose of administering regional advertising programs, and developing, subject
to Franchisor's approval, standardized promotional materials for use by the
members in local advertising and promotion;
11.4.C. No advertising or promotional plans or materials may be
used by a Cooperative or furnished to its members without the prior approval of
Franchisor, pursuant to the procedures and terms as set forth in Section 11.7.
hereof;
11.4.D. Franchisee shall submit its required contribution to the
Cooperative at such times as determined by the Cooperative, but no later than
the last day of each month on gross sales for the preceding calendar month,
together with such other statements or reports as may be required by Franchisor,
or by the Cooperative with Franchisor's prior written approval;
11.4.E. Franchisor shall, for each of the restaurants operated by
Franchisor under the System which are located in a geographic area for which a
Cooperative has been established, make contributions to the applicable
Cooperative on the same basis as assessments required of comparable franchisees
who are members of such Cooperative; and
11.4.F. Franchisor, in its sole discretion, may grant to any
franchisee an exemption for any length of time from the requirement of
membership in a Cooperative, or from the requirement to pay all or a portion of
the contribution (described in Section 11.1.B.) to the Cooperative upon written
request of such franchisee stating reasons supporting such exemption.
Franchisor's decisions concerning such request for exemption shall be final. If
an exemption is granted to a franchisee, such franchisee shall be required to
expend an amount equal to the exempted portion of the contribution for local
advertising in accordance with and as may be required in Sections 11.1.B and
11.3 hereof.
11.5. To the extent permitted by the organizational and operational
documents of WNAP, WNAP shall be maintained and administered by Franchisor or
its designee, as follows:
11.5.A. Franchisor or its designee shall direct all advertising
programs, with sole discretion over the concepts, materials, and media used in
such programs and the placement and allocation thereof. Franchisee agrees and
acknowledges that WNAP is intended to maximize general public recognition,
acceptance, and use of the System; and that Franchisor and its designee are not
obligated, in administering WNAP, to make expenditures for the benefit of
Franchisee which are equivalent or proportionate to Franchisee's contribution,
or to ensure that any particular franchisee benefits directly or pro rata from
expenditures by WNAP;
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EXHIBIT C
11.5.B. WNAP, all contributions thereto, and any earnings
thereon, shall be used exclusively to meet any and all costs of maintaining,
administering, directing, conducting, and preparing advertising, marketing,
public relations and promotional programs and materials, and any other
activities which Franchisor believes will enhance the image of the System,
including, among other things, the costs of preparing and conducting media
advertising campaigns; direct mail advertising; marketing surveys and other
public relations activities; employing advertising or public relations agencies
to assist therein; purchasing promotional items, conducting and administering
visual merchandising, point of sale, and other merchandising programs; and
providing promotional and other marketing materials and services to the
restaurants operated under the System. WNAP may also be used to provide rebates
or reimbursements to franchisees for local expenditures on products, services,
or improvements, approved in advance by Franchisor, which products, services, or
improvements Franchisor deems, in its sole discretion, will promote general
public awareness and favorable support for the System;
11.5.C. Franchisee shall contribute to WNAP by checks made
payable to WNAP. All sums paid by Franchisee to WNAP shall be maintained in an
account separate from the other monies of Franchisor and shall not be used to
defray any of Franchisor's expenses, except for such reasonable costs and
overhead, if any, as Franchisor may incur in activities reasonably related to
the administration, direction, and implementation of WNAP and advertising
programs for franchisees and the System, including, among other things, costs of
personnel for creating and implementing advertising, merchandising, promotional
and marketing programs and administration of WNAP funds. WNAP and its earnings
shall not otherwise inure to the benefit of Franchisor. Franchisor or its
designee shall maintain separate bookkeeping accounts for WNAP;
11.5.D. Franchisor shall, for each of the restaurants
operated by Franchisor under the System, make contributions to WNAP on the same
basis as assessments required of comparable franchisees within the System;
11.5.E. It is anticipated that all contributions to and
earnings of WNAP shall be expended for advertising and promotional purposes
during the taxable year within which the contributions and earnings are
received. If, however, excess amounts remain in WNAP at the end of such taxable
year, all expenditures in the following taxable year(s) shall be made first out
of accumulated earnings from previous years, next out of earnings in the current
year, and finally from contributions;
11.5.F. The contributions to and earnings of WNAP are not
and shall not be an asset of Franchisor. A statement of the operations of WNAP
as shown on the books of Franchisor shall be prepared annually by an independent
public accountant selected by Franchisor and shall be made available to
Franchisee; and
11.5.G. Although WNAP is intended to be of perpetual
duration, Franchisor has the right to terminate WNAP and not to designate a
successor entity. WNAP shall not be terminated, however, until all monies in
WNAP have been expended for advertising and promotional purposes.
11.6. Franchisor shall make available to Franchisee from time to time,
at Franchisee's expense, advertising plans and promotional materials, which may
include newspaper mats, coupons, merchandising materials, sales aids,
point-of-purchase materials, special promotions, direct mail materials,
community relations programs, and similar advertising and promotional materials.
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EXHIBIT C
11.7. For all advertising and promotional plans which require
Franchisor's approval prior to use, as set forth in Sections 11.3 and 11.4
hereof, Franchisee or the Cooperative, where applicable, shall submit samples of
such plans and materials to Franchisor (by means described in Section 21
hereof), for Franchisor's prior written approval at least forty-five (45) days
in advance of their anticipated usage, if such plans and materials have not been
prepared or previously approved by Franchisor. If written approval is not
received by Franchisee or the Cooperative from Franchisor within fifteen (15)
days of the date of receipt by Franchisor of such samples or materials,
Franchisor shall be deemed to have disapproved them.
11.8. Franchisee shall honor all coupons, discounts, and gift
certificates as reasonably specified by Franchisor and in accordance with
procedures specified by Franchisor in the Manual or otherwise in writing.
12. INSURANCE
---------
12.1. Prior to the commencement of any activities or operations
pursuant to this Agreement, Franchisee shall procure and maintain in full force
and effect during the term of this Agreement, at Franchisee's expense, the
following insurance policy or policies in connection with the Restaurant or
other facilities on the Restaurant premises, or by reason of the construction,
operation, or occupancy of the Restaurant or other facilities on the Restaurant
premises. Such policy or policies shall be written by an insurance company or
companies reasonably satisfactory to Franchisor, and shall include, at a minimum
the following (with such coverages and policy limits as may reasonably be
specified from time to time by Franchisor in the Manual or otherwise in
writing):
12.1.A. Comprehensive general liability insurance including
contractual liability;
12.1.B. All risk property insurance with full replacement
cost limits which are sufficient to satisfy any co-insurance clause contained in
the policy;
12.1.C. Business automobile liability insurance, including
bodily injury and property damage coverage for all owned, non-owned and hired
vehicles;
12.1.D. Product liability coverage;
12.1.E. Commercial umbrella liability insurance;
12.1.F. Statutory workers' compensation insurance and
employer's liability insurance, as well as such other disability benefits type
insurance as may be required by statute or rule of the state in which the
Restaurant is located.
12.1.G. Franchisor reserves the right to require Franchisee
to obtain and maintain business interruption insurance, with such coverage and
policy limits as Franchisor may reasonably specify, provided (a) that Franchisor
provide six (6) months prior written notice of the requirement to Franchisee,
and (b) that Franchisor requires such insurance of other franchisees operating
under this form, or similar forms of franchise agreements, which include the
requirement to obtain business interruption insurance; and
12.1.H. Franchisor reserves the right to require other
insurance and endorsements pursuant to Franchisor's then-existing policies.
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EXHIBIT C
12.2. Certificates evidencing the insurance required by Section 12.1
hereof shall name Franchisor, and each of its affiliates, directors, agents, and
employees (as may be specified by Franchisor) as additional insureds and in the
case of property insurance, such parties shall be named as their interest may
appear. These certificates shall expressly provide that any interest of said
parties shall not be affected by any breach by Franchisee of any policy
provisions for which such certificates evidence coverage.
12.3. All policies listed in Section 12.1 (unless otherwise noted
below) shall contain such endorsements as may be provided in the Manual from
time to time. Franchisor may, from time to time, and in its sole discretion,
make such changes in minimum policy limits and endorsements as it may determine;
provided, however, changes shall apply to franchisees of Franchisor who are
similarly situated. Notwithstanding the foregoing, Franchisor reserves the right
to require Franchisee to maintain insurance (of such types, and in such amounts
as Franchisor may specify) to reflect any particular circumstances or situations
affecting Franchisee or the Restaurant.
12.4. In connection with all significant construction, reconstruction,
or remodeling of the Restaurant during the term hereof, Franchisee will cause
the general contractor, its subcontractors, and any other contractor, to effect
and maintain at general contractor's and all other contractor's own expense,
such insurance policies and bonds with such endorsements as are set forth in the
Manual or otherwise in writing, and which are written by insurance or bonding
companies satisfactory to Franchisor.
12.5. Franchisee's obligation to obtain and maintain the foregoing
policy or policies in the amounts specified shall be through primary insurance
coverage and shall not be limited in any way by reason of any insurance which
may be maintained by Franchisor, nor shall Franchisee's performance of that
obligation relieve it of liability under the indemnity provisions set forth in
Section 19.4. of this Agreement.
12.6. All public liability policies may be required by Wendy's to
contain a provision that Franchisor, although named as additional insured, shall
nevertheless be entitled to recover under said policies on any loss occasioned
to Franchisor or its servants, agents, or employees by reason of the negligence
of Franchisee or its servants, agents, or employees.
12.7. At least thirty (30) days prior to the time any insurance is
first required to be carried by Franchisee, and thereafter at least thirty (30)
days prior to the expiration of any such policy, Franchisee shall deliver to
Franchisor, certificates of insurance evidencing the proper coverage with limits
not less than those required hereunder. All certificates shall expressly provide
that no less than thirty (30) days' prior written notice shall be given
Franchisor in the event of material alteration to, or cancellation of, or
non-renewal of the coverages evidenced by such certificates. Such prior written
notice shall be sent to Franchisor by certified mail as provided in Section 22
hereof. Attached to the certificate shall be a copy of the endorsement amending
that clause in the policy which relates to other insurance and confirming that
all coverage is primary insurance and that Franchisor's insurance is applicable
only after all limits of Franchisee's policy are exhausted.
13. TRANSFER OF INTEREST
--------------------
13.1. Franchisor's Right to Transfer. Franchisor shall have the right
to transfer or assign this Agreement or all or any part of its rights or
obligations under this Agreement to any person or
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EXHIBIT C
legal entity. Franchisee agrees that, from the date of such assignment, the
assignee of Franchisor shall be solely responsible for those obligations of
Franchisor which have been assigned to said assignee arising thereafter under
this Agreement.
13.2. Prohibitions to Transfer. Franchisee understands and acknowledges
that Franchisor has entered into this Agreement in reliance on the business
skill, financial capacity, and personal character of Franchisee and any
Guarantor (or if Franchisee or Guarantor is a business entity, the owners of any
direct or indirect interest in Franchisee or Guarantor). If Franchisee or any
Guarantor is a corporation, partnership, or other business entity, all owners of
any direct or indirect interest in Franchisee or any Guarantor are set forth in
Exhibit A ("Owners"), which Exhibit shall be amended upon any change in the
direct or indirect ownership of that Franchisee or any Guarantor (as approved by
Franchisor). Accordingly, without the prior written consent of Franchisor:
13.2.A. Neither Franchisee nor any Owner shall transfer, pledge,
or otherwise encumber this Agreement, any of the rights or obligations of
Franchisee under this Agreement, any direct or indirect interest in Franchisee,
or any material asset used in the Franchised Business;
13.2.B. Franchisee shall not issue any securities; and
13.2.C. Guarantor shall not violate the provisions of the Guaranty
(as referenced in Section 25) regarding transfers of interest.
Further, no transfer of interest shall be effective unless and until
the transferor has first offered to sell such interest to Franchisor pursuant to
Section 13.4 hereof.
13.3. Conditions to Transfer. Franchisor shall not unreasonably
withhold the consent required by Section 13.2; however, Franchisor shall have
the absolute right to require any or all of the following (among others) as
conditions of its consent:
13.3.A. Prior to the proposed transfer, Franchisee and the
Proposed Franchisee (for purposes of this Agreement, the term "Proposed
Franchisee" shall include all individuals and entities, which after the proposed
transfer, will be franchisees under this Agreement or under any successor
Agreement) shall demonstrate to Franchisor's satisfaction that subsequent to the
transfer, the Proposed Franchisee, the Owners of Proposed Franchisee (if the
Proposed Franchisee is a corporation, partnership or other business entity) and
any guarantors of the Proposed Franchisee, will (i) meet Franchisor's
educational, managerial, and business standards; (ii) possess good moral
character, business reputations, and credit ratings; (iii) have the aptitude and
ability to conduct the Franchised Business (as may be evidenced by prior related
business experience or otherwise); (iv) have the organizational, managerial and
financial structure and resources to conduct the Franchised Business properly,
taking into account such factors as (among others) the number of Wendy's
restaurants and market areas involved and their geographic proximity; (v) comply
with Franchisor's ownership requirements relative to the control of the Proposed
Franchisee and the Franchised Business; (vi) comply with Franchisor's
restrictions relative to involvement in any business which competes with the
Franchised Business; and (vii) have adequate financial resources and capital to
operate the business, all in such manner, in accordance with such standards and
upon satisfaction of such conditions as indicated from time to time by
Franchisor's Transaction Policy, the current copy of which Franchisee
acknowledges having received and which is incorporated into this Agreement by
reference ("Transaction Policy"), and other written policies adopted and
announced by the Franchisor;
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EXHIBIT C
13.3.B. Transfers to existing franchisees (or to owners of
franchisees) in the System may be subject to conditions materially different
from or in addition to conditions with respect to other transfers, which
conditions may be set out from time-to-time in Franchisor's Transaction Policy
adopted and announced by Franchisor. Franchisor reserves the right to disapprove
a transfer based upon (without limitation) any of the following: (i) the current
geographic scope and proximity of the buyer's operations; (ii) the physical and
operational condition, opportunities and obligations present in the buyer's
existing Wendy's market(s) and Wendy's restaurants; (iii) the penetration level
of Wendy's restaurants in buyer's existing market(s); and (iv) the period of
time since buyer last acquired restaurants and the extent to which buyer has
properly assimilated those restaurants into its organization and eliminated
issues arising from or related to such previous acquisition. Franchisor reserves
the right to disapprove any proposed transfer the result of which would be, in
the sole opinion of Franchisor, a disproportionately large ownership of Wendy's
restaurants by the Proposed Franchisee compared with the number of restaurants
operated by all franchisees in the System;
13.3.C. All of Franchisee's accrued monetary obligations and all
other outstanding obligations of Franchisee to Franchisor and its affiliates
shall have been fully satisfied, including, without limitation, compliance with
all covenants, undertakings, performance, and operating standards required by
this Agreement, any amendment hereof or successor hereto, or any other agreement
between Franchisee and Franchisor or its affiliates;
13.3.D. If Franchisor requests, the Franchisee or Proposed
Franchisee, at their own expense, shall modify the Restaurant to conform to the
then-current standards and specifications of System restaurants, and shall
complete the modifications prior to the transfer or within the time subsequent
to the transfer specified by Franchisor;
13.3.E. If Franchisee or Proposed Franchisee is a corporation,
partnership, or other business entity, Franchisor may require that any
individuals who are liable under this Agreement as Franchisees or Guarantors
shall together own not less than fifty-one percent (51%) of any Franchisee or
Proposed Franchisee and have fifty-one percent (51%) voting control of any
Franchisee or Proposed Franchisee;
13.3.F. Employees of the Franchised Business shall successfully
complete any training programs then in effect for such employees under the
System, on such terms and conditions as Franchisor may reasonably require;
13.3.G. Franchisor shall receive a transfer fee of Five Thousand
Dollars ($5,000), or such greater amount as may be necessary to reimburse
Franchisor for its legal, accounting, and other expenses incurred in connection
with the transfer;
13.3.H. The Franchisee, the Proposed Franchisee, all Guarantors of
the obligations of Franchisee, and all guarantors of the obligations of the
Proposed Franchisee under this Agreement or any successor agreement shall have
executed a general release under seal, in a form satisfactory to Franchisor, of
any and all claims against Franchisor and its past and present officers,
directors, shareholders, subsidiaries, affiliates, and employees, in their
corporate and individual capacities, including, without limitation, claims
arising under federal, state, and local laws, rules, and ordinances, arising
prior to the effective date of Wendy's written consent;
13.3.I. The Proposed Franchisee shall execute the standard form
franchise agreement then being offered to new System franchisees, and such other
ancillary agreements as Franchisor may require for the Franchised Business,
which agreements shall supersede this Agreement
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EXHIBIT C
in all respects, and the terms of which agreements may differ from the terms of
this Agreement, including, without limitation, a higher percentage royalty rate
and advertising contribution; provided, however, that the Proposed Franchisee
shall not be required to pay any initial franchise fee;
13.3.J. Notwithstanding the execution of the standard form
franchise agreement by the Proposed Franchisee pursuant to Section 13.3.I,
Franchisee, the Proposed Franchisee, any Guarantors of the obligations of the
Franchisee, and any guarantors of the Proposed Franchisee shall be and remain
liable following the effective date of the transfer for all obligations of
Franchisee to Franchisor under this Agreement which arose in connection with the
Franchised Business prior to the effective date of the transfer (including any
obligation to indemnify the Franchisor), and shall execute any and all documents
reasonably requested by Franchisor to further evidence such liability; and
13.3.K. Franchisor has the absolute right to require any Owners or
other parties having an interest in Franchisee, the Proposed Franchisee, the
Premises or the Franchised Business to execute Wendy's Guaranty agreement as
referenced in Section 25.2.
13.4. WENDY'S RIGHT OF FIRST REFUSAL. In the event Franchisee or any
Owner desires to accept any bona fide offer from a third party to directly or
indirectly purchase all or any part of the Franchisee's or an Owner's ownership
interest in Franchisee as shown in Exhibit A, any interest in the Franchise
Agreement, or any asset material to the operation of the Franchised Business,
the seller shall notify Franchisor in writing of each such offer, and shall
provide to Franchisor such information and documentation relating to the offer
and the prospective purchaser as Franchisor may require, including, but not
limited to, all material information provided to the prospective purchaser by
the seller. Franchisor shall have the right and option, exercisable within
forty-five (45) days after receipt by Franchisor of all such written
notification and all other information required by Franchisor, to send written
notice to the seller that Franchisor intends to purchase the seller's interest
on the same terms and conditions as those offered by the prospective purchaser.
The information to be supplied by the seller and required by Franchisor shall be
accompanied by (i) a written representation and warranty from seller that seller
has provided Franchisor with all of the information required under this Section
13.4, and that such information is true, accurate, and complete; and (ii) if the
seller is not an individual, an appropriate resolution of the seller's board of
directors (or other applicable owners, investors, or the like) approving the
proposed sale, or other evidence satisfactory to Franchisor of seller's intent
to consummate the transaction. Further, if Franchisor elects to exercise its
option hereunder, notwithstanding anything in the offer, Franchisor shall be
entitled to conduct due diligence of the scope customary for transactions of the
type proposed in the offer for a period of not less than sixty (60) days,
commencing upon the date of Franchisor's notice to the seller of Franchisor's
election to purchase pursuant to this Section. Further, in the event Franchisor
elects to exercise its option hereunder, the offer shall not contain any
provision or condition, the effect of which would be to increase the cost to, or
otherwise change the economic terms imposed on Franchisor, as a result of the
substitution of Franchisor for the prospective purchaser, or as a result of
compliance with the procedures set forth herein with respect to Franchisor's
right of first refusal. In the event that Franchisor elects to exercise its
option hereunder, closing on such purchase must occur within the later of: (i)
sixty (60) days from the date of notice to the seller of the election to
purchase by Franchisor, (ii) such period as may have been provided in the offer
or (iii) such period as may be necessary to conduct due diligence as provided
herein. Any material change in the terms of any offer shall constitute a new
offer subject to the same rights of first refusal by Franchisor as in the case
of the initial offer, and notice of any such material change shall be provided
in writing by the seller promptly to Franchisor. Failure of Franchisor to
exercise the option afforded by this Section 13.4. shall not constitute a waiver
of any other provision of this Agreement, including all of the requirements of
this
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=========
Section 13, with respect to a proposed transfer. Seller shall not execute
any contract or accept any offer to purchase any interest, unless the provisions
of this Section 13.4 have been satisfied.
13.4.A. In the event the consideration, terms, and
conditions offered by a third party are such that Franchisor may not reasonably
be required to furnish the same consideration, terms, and conditions, then
Franchisor may purchase the interest proposed to be sold for the reasonable
equivalent in cash. If the parties cannot agree within a reasonable time on the
cash consideration, an independent appraiser shall be designated by Franchisee
from a list of three independent appraisers selected by Franchisor, and that
appraiser's determination shall be binding.
13.5. SECURITY INTERESTS. Franchisee shall neither grant nor permit the
existence of any security interest in this Agreement, in the securities of any
corporation, partnership or other business entity which is a Franchisee (or
which directly or indirectly controls a Franchisee), or in any of the tangible
assets material to the operation of the Franchised Business, including, without
limitation, the premises of the Franchised Business, except with the prior
written consent of the Franchisor. Franchisor may require (among other
conditions) the right and option to be substituted as obligor to the secured
party and to cure any default of Franchisee, except that any acceleration of
indebtedness due to Franchisee's default shall be void. Franchisor may also
require compliance with any policy statements adopted and announced by
Franchisor relative to such security interests. Franchisor reserves the right to
review and approve the terms of any security agreement or other document
granting a security interest in assets described in this Section 13.5, which
approval shall be in writing.
13.6. OFFERING MATERIALS. All materials required by federal or state
law for any direct or indirect offer or sale of securities of Franchisee shall
be submitted to Franchisor for review and consent, prior to their being filed
with any government agency; and any materials to be used in any exempt offering
shall be submitted to Franchisor for review and consent prior to their use. No
such materials shall imply (by use of the Proprietary Marks or otherwise) that
Franchisor is participating as an underwriter, issuer, or offeror of
Franchisee's or Franchisor's securities. Any review by the Franchisor of the
offering materials or the information included therein will be conducted solely
for the benefit of the Franchisor to determine conformance with the Franchisor's
internal policies, and not to benefit or protect any other person. No investor
should interpret such review by the Franchisor as an approval, endorsement,
acceptance, or adoption of any representation, warranty, covenant, or projection
contained in the materials reviewed; and the offering documents shall include
legends and statements as Franchisor may specify, including but not limited to
legends and statements which disclaim Franchisor's liability for, or involvement
in, the transaction described in the offering documents. Franchisee and the
other participants in the offering must agree in writing to fully indemnify
Franchisor in connection with the offering in the form prescribed by Franchisor.
For each proposed offering, Franchisee shall pay Franchisor a non-refundable fee
of Ten Thousand Dollars ($10,000), or such greater amount as may be necessary to
reimburse Franchisor for its reasonable costs and expenses associated with
reviewing the proposed offering, including, without limitation, legal and
accounting fees. Franchisee shall give Franchisor written notice at least sixty
(60) days prior to the date of commencement of any offering covered by this
Section 13.6. Any such offering shall be subject to Franchisor's right of first
refusal, as set forth in Section 13.4 hereof and shall comply with the
Franchisor's Transaction Policy and other written policies adopted and announced
by Franchisor from time to time.
13.7. CONTRACTS RELATED TO THE FRANCHISED BUSINESS. Any lease,
management agreement, or other agreement to which Franchisee will be a party
which would have the effect of transferring any material asset or control of all
or any part of the operations of the Franchised Business to any third party must
first be approved by Franchisor in writing, which approval may be denied if such
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agreement is on terms materially different from those which would result from an
arms-length negotiation or where fees payable are determined by Franchisor to be
excessive. Any such agreement and any party who, as a result of such agreement,
either directly or indirectly is involved in the ownership of the assets or in
the operations of the Franchised Business, must meet such standards and
conditions as may have been established by Franchisor at the time Franchisor's
consent is requested.
13.8. BANKRUPTCY. If Franchisee or any Owner files for protection under
the U.S. Bankruptcy Code, as amended, and if, for any reason, this Agreement is
not terminated pursuant to Section 14 and is to be assumed by, or assigned to,
any person or entity who has made a bona fide offer to accept an assignment of
this Agreement as contemplated by the United States Bankruptcy Code, then notice
to Franchisor of such proposed assignment or assumption shall be required. Such
notice shall be given to Franchisor within twenty (20) days after receipt by
Franchisee of such proposed assignee's offer to accept assignment of the
Franchisee's rights and obligations under this Agreement, and, in any event, at
least ten (10) days prior to the date application is made to a court of
competent jurisdiction for authority and approval to enter into such assignment
and assumption. Such notice shall include the following: (i) the name and
address of the proposed assignee, (ii) all of the terms and conditions of the
proposed assignment and assumption, and (iii) the adequate assurance to be
provided to Franchisor to assure the proposed assignee's future performance
under this Agreement, including, without limitation the assurance referred to in
Section 365 of the Bankruptcy Code and the satisfaction of the preconditions to
transfer set forth in Section 13.3. of this Agreement. Franchisor shall
thereupon have the prior right and option, to be exercised by notice given at
any time prior to the effective date of such proposed assignment and assumption,
to accept an assignment of this Agreement to Franchisor itself, upon the same
terms and conditions and for the same consideration, if any, as in the bona fide
offer made by the proposed assignee, less any brokerage commissions or other
expenses which may be saved by Franchisee, as a result of the exercise by
Franchisor of the rights and options granted herein. Nothing in this paragraph
shall cause Franchisor to be liable for the payment of any brokerage commissions
or other expenses as a result of the exercise of Franchisor's rights and options
hereunder, without Franchisor's separate written consent.
13.8.A. For purposes of any assumption or assignment of this
Agreement pursuant to Bankruptcy Code Section 365, "adequate assurance of future
performance" shall mean that specific evidence shall be given to Franchisor that
any proposed assignee of this Agreement can and will comply with all operational
and other performance requirements, and with all conditions, obligations,
duties, covenants, and requirements of a franchisee under (i) this Agreement,
(ii) the standard form renewal franchise agreement then being offered to System
franchisees, (iii) such other ancillary agreements as Franchisor may require,
and (iv) any of Franchisor's policies describing franchisees' duties,
obligations, conditions, covenants, or performance requirements. Additionally,
adequate assurance of future performance shall mean that any proposed assignee
shall meet Franchisor's then current standards for transfers pursuant to Section
13.3 hereof.
13.9. DEATH OR INCAPACITY. Upon the death or mental incapacity of any
Franchisee or Owner, Franchisor agrees not to unreasonably withhold its consent
to a transfer of the interest held by such person. The personal representative
of such Franchisee or Owner shall have a reasonable time to dispose of such
person's interest in the Franchised Business or in Franchisee subject to and in
accordance with the provisions and conditions of this Section 13 of the
Agreement, specifically including the prior written consent of the Franchisor.
During this time period, Franchisee (or Franchisee's personal representative)
shall at all times remain in compliance with Section 6.2 (regarding an approved
Operator) and with all other terms and conditions of this Agreement.
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EXHIBIT C
13.10. MATERIALITY. Franchisee acknowledges and agrees that each
condition referenced in this Section 13 is necessary to assure compliance with
the obligations hereunder by Franchisee or the Proposed Franchisee.
13.11. NONWAIVER. Franchisor's consent to a transfer of interest shall
not constitute a waiver of any claims Franchisor may have against any Franchisee
or Owner, nor shall it be deemed a waiver of Franchisor's right to require exact
compliance with any of the terms of this Agreement by the Proposed Franchisee.
14. DEFAULT AND TERMINATION
-----------------------
14.1. Franchisee shall be deemed to be in default under this Agreement,
and all rights of Franchisee shall automatically terminate, without notice to
Franchisee, upon the occurrence of any of the following events:
14.1.A. Franchisee or any Guarantor shall make a general
assignment for the benefit of creditors;
14.1.B. Franchisee or any Guarantor shall (i) cause, permit or
acquiesce in, an order for relief under the U. S. Bankruptcy Code entered with
respect to Franchisee or any Guarantor, or (ii) commence a voluntary case or
proceeding under, the Bankruptcy Code (Title 11, United States Code) or any
other applicable bankruptcy, insolvency, reorganization, receivership,
arrangement or readjustment of debt or other similar law now or hereafter in
effect, or (iii) consent to the entry of an order for relief in an involuntary
proceeding or to the conversion of an involuntary proceeding to a voluntary
proceeding under any such law, or (iv) consent to the appointment of, or the
taking of possession by a receiver, trustee, or other custodian (as defined in
the Bankruptcy Code) for all or a substantial part of its property or the
property of the Franchised Business, or (v) adopt any resolution or otherwise
authorize action to approve any of the foregoing through its Board of Directors
or otherwise;
14.1.C. An involuntary petition shall be commenced against
Franchisee or any Guarantor under the Bankruptcy Code or any other applicable
bankruptcy, insolvency, reorganization, receivership, arrangement or
readjustment of debt or other similar law now or hereafter in effect, which
proceeding is not dismissed or vacated within sixty (60) days thereafter; or a
decree or order of a court having jurisdiction in the premises for appointment
of a receiver, liquidator, sequestrator, trustee, custodian or other officer
having similar powers over Franchisee, or Guarantor shall have been entered; or
an interim receiver, trustee or other custodian of such Franchisee or any
Guarantor or of all or a substantial part of the property of Franchisee or any
Guarantor shall have been appointed;
14.1.D. If Franchisee or any Guarantor is dissolved;
14.1.E. If execution is levied against any material asset of
Franchisee's business or property, or the business or property of any
Guarantor; or
14.1.F. If any real or personal property which comprises all or a
material part of the Franchised Business or the Restaurant shall be sold after
levy thereupon by any sheriff, marshal, constable or other person so authorized
under local, state or federal law.
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EXHIBIT C
14.2. Upon the occurrence of any of the following events, Franchisee
shall be deemed to be in default and Franchisor may, at its option, terminate
all rights of Franchisee hereunder, without affording Franchisee any opportunity
to cure the default, effective immediately after five (5) days from the mailing
of notice by Franchisor (except as otherwise specified below) or upon receipt of
notice by Franchisee, whichever is earlier:
14.2.A. If Franchisee at any time ceases to operate or otherwise
abandons the Franchised Business, or loses the right to possession of the
Restaurant premises, or otherwise forfeits the right to do or transact business
in the jurisdiction where the Restaurant is located; provided, however, that if,
through no fault of Franchisee, the premises are damaged or destroyed by an
event such that repairs or reconstruction cannot be completed within ninety (90)
days thereafter, then Franchisee shall have thirty (30) days after such event in
which to apply for Franchisor's approval to relocate or reconstruct the
Restaurant, which approval shall not be unreasonably withheld;
14.2.B. If Franchisee, Guarantor, Owner or Operator is convicted
of a felony, a crime involving moral turpitude, or any other crime or offense
that Franchisor believes is reasonably likely to have an adverse effect on the
System, the Proprietary Marks, the goodwill associated therewith or Franchisor's
interest therein;
14.2.C. If an immediate threat or danger to public health or
safety results from the construction, maintenance, or operation of the
Restaurant, in which event the termination shall become effective immediately
upon sending of notice by Franchisor;
14.2.D. If Franchisee or any Owner purports to transfer, pledge or
encumber any rights or obligations under this Agreement, any direct or indirect
interest in Franchisee, or any material asset of the Franchised Business without
Franchisor's prior written consent, contrary to the terms of Section 13 of this
Agreement;
14.2.E. If Franchisee fails to comply with the covenants in
Section 16.2. hereof or fails to obtain execution of the covenants required
under Section 16.5 hereof;
14.2.F. If, contrary to the terms of Sections 8 or 9 hereof,
Franchisee discloses or divulges the contents of the Manual or other
confidential information provided to Franchisee by Franchisor;
14.2.G. If Franchisee knowingly maintains false books or records,
or submits any false reports (including, but not limited to, information
provided as part of Franchisee's application) to Franchisor;
14.2.H. If Franchisee repeatedly is in default under Section 14.3
hereof for failure to substantially comply with any of the requirements imposed
by this Agreement, whether or not cured after notice, or if Franchisee commits
the same default again within a six-month period of the previous default,
whether or not cured after notice; or
14.2.I. If Franchisee or any Guarantor shall become insolvent or
if suit to foreclose any lien or mortgage against any material asset comprising
part of the Franchised Business or the Restaurant premises or equipment is
instituted and not dismissed within thirty (30) days.
14.3. Except with respect to events of default described at Sections
14.1 and 14.2 of this Agreement, or any subsections thereof, the consequences of
which are also described at Sections 14.1 and 14.2, upon any default by
Franchisee which is described at this Xxxxxxx 00.0, Xxxxxxxxxx may, at
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EXHIBIT C
=========
its option, terminate all rights of Franchisee hereunder, by giving written
notice of default to Franchisee stating the nature of such default at least
thirty (30) days prior to the effective date of termination; provided, however,
that Franchisee may avoid termination of Franchisee's rights hereunder by
immediately initiating a remedy to cure such default and curing it to
Franchisor's satisfaction within the thirty-day period (or within such shorter
time period as Franchisor may reasonably specify), and by promptly providing
proof thereof to Franchisor. If any such default is not cured within the
specified time, or such longer period as applicable law may require, at the
option of Franchisor, Franchisee's rights under this Agreement shall terminate
without further notice to Franchisee, effective immediately upon the expiration
of the thirty (30) day period or such longer period as applicable law may
require. Except as provided in Sections 14.1 and 14.2 hereof, defaults which
result in termination of Franchisee's rights under this Agreement only after the
expiration of the cure periods as set forth in this Section 14.3 include, but
are not limited to, the following:
14.3.A. If Franchisee fails to comply with any of the requirements
imposed by or pursuant to this Agreement (such as the Manual or various policy
statements of Franchisor) or any other agreement with Franchisor or its
affiliates related to the Franchised Business or fails to carry out the terms of
this Agreement in good faith, or if any Guarantor fails to comply with any of
the requirements imposed by or pursuant to the Guaranty as defined in Section
25.2;
14.3.B. If Franchisee fails, refuses, or neglects to promptly pay
any monies owing to Franchisor or its affiliates when due, or to submit the
financial or other information required by Franchisor under this Agreement;
14.3.C. Except as provided in Section 14.2.C hereof, if Franchisee
fails to maintain or observe any of the standards or procedures prescribed by
Franchisor (i) in this Agreement or any other agreement with Franchisor or its
other affiliates related to the Franchised Business, (ii) in the Manual, (iii)
pursuant to Franchisor's Transaction Policy or any of Franchisor's other
policies, whether or not written, which describe Franchisee's duties,
obligations, conditions, covenants, or performance requirements, or (iv) in
other written documentation, including, without limitation, the requirements and
specifications concerning the (a) quality, services, and cleanliness of the
Restaurant; (b) the products and services sold or provided at the Restaurant, or
the operation of the Restaurant; and (c) any other operational and other
performance requirements;
14.3.D. Except as provided in Section 14.2.D hereof, if Franchisee
fails, refuses, or neglects to obtain Franchisor's prior written approval or
consent as required by this Agreement;
14.3.E. If Franchisee misuses or makes any unauthorized use of the
Proprietary Marks or otherwise materially impairs the goodwill associated
therewith or Franchisor's rights therein;
14.3.F. If Franchisee fails to construct and open the Restaurant
within the time limits, and according to the requirements, as provided in
Section 5 of this Agreement;
14.3.G. If Franchisee or the Operator, fails to complete, to
Franchisor's satisfaction, the initial or any subsequent training program, as
provided in Section 6.3. of this Agreement;
14.3.H. If Franchisee engages in any business or markets any
service or product under a name or xxxx which, in Franchisor's opinion, is
confusingly similar to the Proprietary Marks;
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EXHIBIT C
14.3.I. If Franchisee fails to implement or adhere to new or
changed System requirements, fails to implement and offer new products and
services as may be specified by Franchisor, or fails to undertake such actions
as are necessary to implement such new or changed System requirements;
14.3.J. If an approved transfer of an interest in Franchisee is
not effected by Franchisee within a reasonable time, as required by Section 13
hereof; or
14.3.K. If a final material judgment against Franchisee or any
Guarantor remains unsatisfied or of record for thirty (30) days or longer
(unless a supersedeas bond is filed).
15. OBLIGATIONS UPON TERMINATION OR EXPIRATION
------------------------------------------
Upon expiration of this Agreement or upon termination of Franchisee's
rights hereunder, all rights granted hereunder to Franchisee shall forthwith
terminate, and;
15.1. Franchisee shall immediately cease to operate the Franchised
Business, and shall not thereafter, directly or indirectly, represent to the
public or hold itself out as a present or former franchisee of Franchisor.
15.2. Franchisee shall immediately and permanently cease to use, in any
manner whatsoever, any confidential methods, procedures and techniques
associated with the System, the Proprietary Marks, "WENDY'S" and "WENDY'S OLD
FASHIONED HAMBURGERS," and all other Proprietary Marks and distinctive forms,
slogans, signs, symbols, and devices associated with the System. In particular,
Franchisee shall cease to use, without limitation, all signs, advertising
materials, displays, stationery, forms, and any other articles which display the
Proprietary Marks.
15.3. Franchisee shall take such action as may be necessary to cancel
any of its assumed names or equivalent registrations which contain the
Proprietary Marks "WENDY'S" and "WENDY'S OLD FASHIONED HAMBURGERS" or any other
service xxxx or trademark of Franchisor, and Franchisee shall furnish Franchisor
with evidence satisfactory to Franchisor of compliance with this obligation
within five (5) days after expiration of this Agreement, or termination of
Franchisee's rights hereunder.
15.4. Franchisee shall, at Franchisor's option, assign to Franchisor
any interest which Franchisee has in any lease or sublease for the Restaurant or
the Restaurant premises ("Premises") at fair market value (if the lease or
sublease has a positive market value as further described in Section 15.4.B). In
the event Franchisee owns the fee interest in the Restaurant or Premises,
Franchisor shall also have the option to purchase Franchisee's fee interest in
such Restaurant and/or Premises at fair market value. Franchisee shall
immediately upon termination provide Franchisor with such information as may be
necessary to enable Franchisor to evaluate such option. The terms of such
option(s) shall be as follows:
15.4.A. Franchisor shall provide Franchisee notice of its
preliminary interest in exercising any of such options within thirty (30) days
after expiration of this Agreement or termination of Franchisee's rights
hereunder. Within sixty (60) days after the date of such notice, Franchisor and
Franchisee shall each select one (1) appraiser and notify the other party of its
designee. Each appraiser selected by the parties shall be instructed to meet
with the other within thirty (30) days after selection
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EXHIBIT C
=========
for the purpose of selecting a third appraiser to serve with them. If the two
(2) appraisers cannot agree on the selection of the third appraiser within
forty-five (45) days after the selection of the last of them, then the president
or chairman of the board of realtors of the county in which the Restaurant is
located shall be requested to select the third appraiser. Each appraiser
selected as described above must have received the M.A.I. designation and must
be actively engaged in appraisal work in the county in which the Restaurant is
located. The three (3) M.A.I. appraisers shall determine the "fair market value"
of the lease, sublease, Restaurant or Premises and notify both the Franchisor
and the Franchisee of the "fair market value" determined by them. If the three
(3) appraisers cannot collectively agree on the "fair market value" of the
Restaurant or Premises, then the average of the two (2) closest of the three (3)
values established by the three (3) appraisers shall be deemed the "fair market
value";
15.4.B. For the purposes of this section, "fair market
value" shall have the meaning customarily used by M.A.I. appraisers. In the case
of a lease or sublease, however, the "fair market value" shall be equal to the
amount by which the value of the lease or sublease (due to favorable rent
structure or the location of the Premises) exceeds the value of other average,
comparable leases or subleases for comparable premises in the immediate vicinity
of the Restaurant;
15.4.C. If after the determination of "fair market value" as
provided herein Franchisor wishes to actually exercise any of its options herein
provided, Franchisor shall provide Franchisee notice of its intent to exercise
such option(s) within thirty (30) days after the determination of "fair market
value," and each party shall bear one half (1/2) of the cost of the appraisals.
If Franchisor elects to exercise any option herein provided, it shall have the
right to set off all amounts due from Franchisee, and one-half (1/2) of the cost
of the appraisals, against any payment therefor. If Franchisor elects not to
exercise its option as herein provided, Franchisor shall bear the cost of all of
the appraisals; and
15.4.D. The closing of any assignment or purchase pursuant
to this Section 15.4 shall take place no later than sixty (60) days after the
determination of the "fair market value" as provided above. The interest
assigned to or purchased by Franchisor must be free and clear of all liens,
conditions and restrictions, and must be conveyed by documents reasonably
satisfactory to Franchisor.
15.5. In the event Franchisor does not elect to exercise its option to
acquire the lease or sublease for the Restaurant and the Premises, or purchase
the Premises, as provided for in Section 15.4, Franchisee shall make such
modifications or alterations to the Premises operated hereunder (including,
without limitation, the changing of the telephone number) immediately upon
expiration of this Agreement or termination of Franchisee's rights hereunder as
may be necessary to distinguish the appearance of said Premises from that of
other restaurants under the System, and shall make such specific additional
changes thereto as Franchisor may reasonably request for that purpose. In the
event Franchisee fails or refuses to comply with the requirements of this
Section 15, Franchisor shall have the right to enter upon the Premises where
Franchisee's Franchised Business was conducted, without being guilty of trespass
or any other tort, for the purpose of making or causing to be made such changes
as may be required, at the expense of Franchisee, which expense Franchisee
agrees to pay upon demand.
15.6. Franchisee agrees, in the event it continues to operate or
subsequently begins to operate any other business, not to use any reproduction,
counterfeit, copy, or colorable imitation of the Proprietary Marks, either in
connection with such other business or the promotion thereof, which is likely to
cause confusion, mistake, or deception, or which is likely to dilute
Franchisor's rights in and
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EXHIBIT C
=========
to the Proprietary Marks, and further agrees not to utilize any designation,
description or representation which falsely suggests or represents an
association or connection with Franchisor.
15.7. Franchisee shall promptly pay all sums owing to Franchisor and
its affiliates. In the event of termination of Franchisee's rights hereunder for
any default of Franchisee, such sums shall include all damages, costs, and
expenses, including reasonable attorneys' fees, incurred by Franchisor as a
result of the default, which obligations shall give rise to and remain, until
paid in full, a lien in favor of Franchisor against any and all of the personal
property, furnishings, equipment, signs, fixtures, and inventory owned by
Franchisee and on the premises operated hereunder at the time of default.
15.8. Franchisee shall pay Franchisor all damages, costs, and expenses,
including reasonable attorneys' fees, incurred by Franchisor subsequent to the
expiration of this Agreement or termination of Franchisee's rights hereunder in
obtaining injunctive or other relief for the enforcement of any provisions of
this Section 15.
15.9. Franchisee shall immediately deliver to Franchisor the Manual,
and all other manuals, records, and instructions containing confidential
information, all of which are acknowledged to be the property of the Franchisor.
15.10. Franchisor shall have the option, to be exercised within thirty
(30) days after termination of Franchisee's rights hereunder, to purchase from
Franchisee any or all of the furnishings, equipment, signs, fixtures, supplies,
or inventory of Franchisee related to the operation of the Franchised Business,
at Franchisee's cost or fair market value, whichever is less. If the parties
cannot agree on a fair market value within a reasonable time, an independent
appraiser shall be designated by Franchisor, and his determination shall be
binding. If Franchisor elects to exercise any option to purchase herein
provided, it shall have the right to set off all amounts due from Franchisee,
and one-half (1/2) of the cost of the appraisal, if any, against any payment
therefor.
15.11. Franchisee shall comply with the covenants contained in
Section 16.3. of this Agreement.
16. COVENANTS
---------
16.1. Franchisee covenants that during the term of this Agreement
except as otherwise approved in writing by Franchisor, Franchisee (or the
approved Operator) shall devote full time and best efforts to the management and
operation of the Franchised Business.
16.2. Franchisee specifically acknowledges that, pursuant to this
Agreement, Franchisee will receive valuable specialized training and
confidential information, including, without limitation, information regarding
the operational, sales, promotional, and marketing methods and techniques of
Franchisor and the System. Franchisee covenants that, except as otherwise
approved in writing by Franchisor, neither the Franchisee, nor any party
controlling, controlled by or under common control with Franchisee, nor the
Operator, nor any Owner, nor any Guarantor having a direct or indirect interest
in or business association with the Franchisee or the Franchised Business shall,
during the term of this Agreement, either directly or indirectly, for
themselves, or in conjunction with any person, persons, partnership, or
corporation:
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EXHIBIT C
16.2.A. Divert or attempt to divert any business or customer of the
Franchised Business or of any restaurant under the System to any competitor, by
direct or indirect inducement or otherwise, or do or perform, directly or
indirectly, any other act injurious or prejudicial to the goodwill associated
with Franchisor's Proprietary Marks and the System;
16.2.B. Own, maintain, advise, help, invest in, make loans to, operate,
engage in, be employed by, have any interest in, participate in any capacity in,
or be connected in any manner (by franchising or otherwise) with, any business
which is, or is intended to be, either of the following:
16.2.B.1. Any quick-service restaurant located within the
Designated Market Area of the Restaurant, as defined by the Xxxxxxx Ratings
Service, or in the event that the Xxxxxxx Ratings Service is no longer in the
business of rating viewership of television advertising or otherwise materially
alters its determination of Designated Market Area, then such comparable market
area as defined by a replacement ratings service selected by Franchisor ("DMA");
or
16.2.B.2. Any quick-service restaurant selling chicken sandwiches
or hamburgers or products similar to Franchisor which is located within a
three-mile radius of the Restaurant, or within a three-mile radius of any
restaurant operating under the System.
16.3. Franchisee covenants that, except as otherwise approved in
writing by Franchisor, neither the Franchisee, nor any party controlling,
controlled by or under common control with the Franchisee, nor the Operator, nor
any Owner, nor any Guarantor having a direct or indirect interest in or business
association with the Franchisee or the Franchised Business shall, for a
continuous uninterrupted period commencing upon the expiration or termination of
this Agreement, regardless of the cause for termination, and continuing for two
(2) years thereafter, either directly or indirectly, for themselves or in
conjunction with any persons, partnership, or corporation, own, maintain,
advise, help, invest in, make loans to, operate, engage in, be employed by, have
any interest in, participate in any capacity in, or be connected in any manner
(by franchising or otherwise) with, any business which is a quick service
restaurant which offers chicken sandwiches, hamburgers or food similar to that
offered for sale from the Restaurant, and is, or is intended to be, located
within the DMA in which the Restaurant is located.
16.4. Sections 16.2.B. and 16.3. hereof shall not apply to ownership by
Franchisee of less than two percent (2%) beneficial interest in the outstanding
equity securities of any publicly-held corporation. The term "publicly-held
corporation" as used in this Agreement means a corporation with securities
registered under the Securities Exchange Act of 1934.
16.5. Franchisee agrees to take all reasonable steps and to use its
best efforts to ensure that no person directly or indirectly involved in the
operation, management or ownership of the Franchised Business or the Restaurant
shall violate this Section 16. In addition, Franchisor may direct that
Franchisee require and obtain execution of covenants similar to those set forth
in this Section 16 (including covenants applicable upon the termination of a
person's relationship with Franchisee) from any or all persons directly or
indirectly involved in the operation, management or ownership of the Franchised
Business or the Restaurant, and from any person described or identified in the
second sentence of Section 16.2 of this Agreement. Every covenant required by
this Section 16.5. shall be in a form satisfactory to Franchisor, including,
without limitation, specific identification of Franchisor as a third-party
beneficiary of such covenants with the independent right to enforce them.
Failure by Franchisee to obtain execution of a covenant required by this Section
16.5. shall constitute a default under Section 14.2.E. hereof.
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16.6. The parties agree that each of the foregoing covenants shall be
construed as independent of any other covenant or provision of this Agreement.
If all or any portion of a covenant in this Section 16 is held unreasonable or
unenforceable by a court or agency having valid jurisdiction in an unappealed
final decision to which Franchisor is a party, Franchisee expressly agrees to be
bound by any lesser covenant subsumed within the terms of such covenant that
imposes the maximum duty permitted by law, as if the resulting covenant were
separately stated in and made a part of this Section 16.
16.7. Franchisee understands and acknowledges that Franchisor shall
have the right, in its sole discretion, to reduce the scope of any covenant set
forth in Sections 16.2. and 16.3. in this Agreement, or any portion thereof,
without Franchisee's consent, effective immediately upon receipt by Franchisee
of written notice thereof; and Franchisee agrees that it shall comply forthwith
with any covenant as so modified, which shall be fully enforceable
notwithstanding the provisions of Section 23 hereof.
16.8. Franchisee expressly agrees that the existence of any claims it
may have against Franchisor, whether or not arising from this Agreement, shall
not constitute a defense to the enforcement by Franchisor of the covenants in
this Section 16. Franchisee agrees to pay all costs and expenses (including
reasonable attorneys' fees) incurred by Franchisor in connection with the
enforcement of this Section 16.
16.9. Franchisee acknowledges that Franchisee's violation of the terms
of this Section 16 would result in irreparable injury to Franchisor for which no
adequate remedy at law may be available, and Franchisee accordingly consents to
the issuance of an injunction prohibiting any conduct by Franchisee in violation
of the terms of this Section 16.
17. CORPORATE AND PARTNERSHIP FRANCHISEES
-------------------------------------
17.1. A Franchisee or Owner which is a corporation shall comply with
the following requirements throughout the term of the Agreement unless otherwise
approved in writing by Franchisor:
17.1.A. Franchisee's charter shall at all times provide that its
activities are confined exclusively to operating Wendy's Old Fashioned
Hamburgers restaurants;
17.1.B. Franchisee shall promptly furnish to Franchisor copies of
Franchisee's Articles of Incorporation, Bylaws, any other documents Franchisor
may reasonably request, and any and all amendments thereto, including the
resolution of the Board of Directors authorizing entry into this Agreement;
17.1.C. Exhibit A shall at all times contain the names and show
the direct or indirect interest of each Owner in the Franchisee throughout the
term of this Agreement. Each Owner at the time of execution of this Agreement
shall have executed an agreement to be bound by the provisions of Section 9,
Section 13 and Section 16 and each new Owner shall execute such an agreement;
17.1.D. Franchisee shall maintain stop-transfer instructions
against the transfer on its records of any equity securities; and shall issue no
securities upon the face of which the following printed legend does not legibly
and conspicuously appear:
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EXHIBIT C
The transfer of ownership of shares represented by this
Certificate is subject to the terms and conditions of a
Franchise Agreement with Wendy's International, Inc. dated
_________________, 19__. Reference is made to the provisions
of the said Franchise Agreement and to the Articles and Bylaws
of this Corporation.
17.1.E. The requirements of Section 17.1.D shall not apply to a
publicly-held corporation. If Franchisee is a corporation with securities
registered under the Securities and Exchange Commission Act of 1934, Franchisee
shall furnish to Franchisor copies of all communications sent to the Owners of
Franchisee.
17.2. A Franchisee or Owner which is a partnership or other business
entity shall comply with the following requirements throughout the term of this
Agreement unless otherwise approved in writing by Franchisor:
17.2.A. Franchisee's partnership agreement or other governing
agreement shall at all times provide that its activities are confined
exclusively to operating Wendy's Old Fashioned Hamburgers restaurants;
17.2.B. Franchisee shall promptly furnish to Franchisor its
partnership agreement or other governing agreement and any other documents which
Franchisor may reasonably request and any and all amendments thereto;
17.2.C. Exhibit A shall at all times contain the names and show
the direct or indirect interest of each Owner throughout the term of this
Agreement. Each Owner at the time of execution of this Agreement shall have
executed an agreement to be bound by the provisions of Section 9, Section 13 and
Section 16 and each new Owner shall also execute such an agreement;
17.2.D. The partnership agreement or other governing agreement
shall contain a restriction on the transfer of any ownership interest without
the prior written consent of Franchisor and waiver of its right of first
refusal; and
17.2.E. The requirements of Section 17.2.D shall not apply to a
partnership registered under the Securities and Exchange Commission Act of 1934
and otherwise approved by Franchisor. If Franchisee is a limited partnership
with securities registered under the Securities Exchange Act of 1934, Franchisee
shall furnish to Franchisor copies of all communications sent to the limited
partners of Franchisee.
18. TAXES, PERMITS, AND INDEBTEDNESS
--------------------------------
18.1. Franchisee shall promptly pay when due all taxes levied or
assessed, including, without limitation, unemployment and sales taxes, and all
accounts and other indebtedness of every kind incurred by Franchisee in
conducting the Franchised Business. Franchisee shall pay Franchisor an amount
equal to any sales tax, gross receipts tax, or similar tax (other than income
tax) imposed on Franchisor with respect to any payments to Franchisor or WNAP
required under this Agreement, unless the tax is credited against income tax
otherwise payable by Franchisor or WNAP.
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18.2. In the event of any bona fide dispute as to Franchisee's
liability for taxes assessed or other indebtedness, Franchisee may contest the
validity or the amount of the tax or indebtedness in accordance with procedures
of the taxing authority or applicable law; however, in no event shall Franchisee
permit a tax sale or seizure by levy of execution or similar writ or warrant, or
attachment by a creditor, to occur against the premises of the Franchised
Business, or any improvements thereon.
18.3. Franchisee shall comply with all federal, state, and local laws,
rules, and regulations, and shall timely obtain any and all permits,
certificates, or licenses necessary for the full and proper conduct of the
Franchised Business, including, without limitation, licenses to do business,
health certificates, fictitious name registrations, sales tax permits, and fire
clearances.
18.4. Franchisee shall notify Franchisor in writing within five (5)
days of the commencement of any action, suit, or proceeding, and of the issuance
of any citation, order, writ, injunction, award, or decree of any court, agency,
or other governmental instrumentality, which may adversely affect the operation
or financial condition of the Franchised Business.
19. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
------------------------------------------
19.1. It is understood and agreed by the parties hereto that this
Agreement does not create a fiduciary relationship between them, that Franchisee
shall be an independent contractor, and that nothing in this Agreement is
intended to constitute either party an agent, legal representative, subsidiary,
joint venturer, partner, employee, or servant of the other for any purpose
whatsoever. As an independent contractor, Franchisee shall be responsible for
the hiring of employees and the working conditions of employees in the
Restaurant, the payment of all business expenses and taxes and all purchasing
decisions (subject to Franchisor's quality control standards and approval as set
forth in this Agreement and the Manual).
19.2. During the term of this Agreement and any extensions hereof,
Franchisee shall hold itself out to the public as an independent contractor
operating the business pursuant to a franchise from Franchisor. Franchisee
agrees to take such action as may be necessary to do so, including, without
limitation, exhibiting a notice of that fact in a conspicuous place in the
Restaurant, the content of which Franchisor reserves the right to specify.
19.3. It is understood and agreed that nothing in this Agreement
authorizes Franchisee to make any contract, agreement, warranty, or
representation on Franchisor's behalf, or to incur any debt or other obligation
in Franchisor's name; and that Franchisor shall in no event assume liability
for, or be deemed liable as a result of, any such action; nor shall Franchisor
be liable by reason of any act or omission of Franchisee in its conduct of the
Franchised Business or for any claim or judgment arising therefrom against
Franchisee or Franchisor.
19.4. Franchisee shall indemnify and hold Franchisor, and Franchisor's
officers, directors, and employees harmless against any and all claims arising
directly or indirectly from, as a result of, or in connection with Franchisee's
operation of the Franchised Business, as well as the costs, including attorneys'
fees, of defending against them.
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20. NON-BINDING MEDIATION
---------------------
20.1. All controversies, disputes and claims between Franchisor, its
affiliates, subsidiaries, and their shareholders, officers, directors and agents
(collectively the "Franchisor Entities"), or any of them, on the one hand, and
Franchisee, its affiliates, subsidiaries, Guarantors, Owners, partners,
officers, directors and agents, or any of them, on the other hand, arising out
of or related to this Agreement, the Restaurant or the Franchised Business shall
be subject to non-binding mediation pursuant to the terms of this Section 20.
Except as specified in Section 20.5, no litigation may be commenced between such
parties prior to the mediation termination date, as defined in Section 20.4, on
any claim which is subject to non-binding mediation hereunder, whether or not
the mediation has been commenced. The commencement or pendency of litigation
shall not stay non-binding mediation required hereunder, and non-binding
mediation required hereunder shall not stay any litigation commenced in
conformity with Section 20.5. Mediation under this Section 20 is not intended to
alter or suspend the rights or obligations of the parties under this Agreement
or to determine the validity or effect of any provision of this Agreement, but
is intended to provide the parties with an opportunity to amicably and
expeditiously resolve disputes in a cost-effective manner on mutually acceptable
terms and conditions.
20.2. The non-binding mediation provided for hereunder shall be
commenced by the party demanding mediation (the "complainant") by giving written
notice of the demand for mediation (the "demand") to the party with whom
mediation is sought (the "respondent"). The demand shall specify with reasonable
particularity the matter or matters on which non-binding mediation is being
sought. A copy of the demand shall be given by the complainant simultaneously to
Franchisor if Franchisor is not a complainant or a respondent.
20.3. Non-binding mediation hereunder shall be conducted by a mediator
or mediation program designated by Franchisor in writing (the "designation"), or
by such mediator as complainant and respondent may otherwise agree to.
Franchisor shall send the designation to complainant and respondent within a
reasonable time after its receipt of the demand.
20.4. Non-binding mediation hereunder shall be concluded within sixty
days of the giving of the demand or such longer period as may be mutually agreed
to in writing by the parties to the mediation (the "mediation termination
date"). All aspects of the mediation process shall be treated as confidential,
shall not be disclosed to others, and shall not be offered or admissible in any
other proceeding or legal action whatever. Complainant and respondent shall each
bear its own costs of mediation, and each shall bear one-half the cost of the
mediator and mediation service.
20.5. If Franchisee is more than forty-five (45) days past due in any
of its payments to any of the Franchisor Entities, none of the Franchisor
Entities shall be required to seek or to participate in mediation of any matter
or dispute under this Section 20 (although they reserve the right to require
mediation), and any of the Franchisor Entities shall be free to commence or to
pursue litigation at any time. None of the Franchisor Entities shall be required
to seek or to participate in mediation of any matter or dispute relating to the
indemnification or insurance provisions of this Agreement (although they reserve
the right to require mediation). Nothing in this Section 20 shall prevent any
party from instituting or pursuing litigation at any time to preserve the status
quo, protect the Proprietary Marks, protect the health or safety of the public,
or avoid irreparable harm.
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21. APPROVALS AND WAIVERS
---------------------
21.1. Whenever this Agreement requires the prior approval or consent of
Franchisor, Franchisee shall make a timely written request to Franchisor
therefor, and such approval or consent must be obtained in writing.
21.2. Franchisor makes no warranties or guarantees upon which
Franchisee may rely, and assumes no liability or obligation to Franchisee, by
providing any waiver, approval, consent, or suggestion to Franchisee in
connection with this Agreement, or by reason of any neglect, delay, or denial of
any request therefor.
21.3. No delay, waiver, omission, or forbearance on the part of
Franchisor to exercise any right, option, duty, or power arising out of any
breach or default by Franchisee under any of the terms, provisions, covenants,
or conditions hereof, shall constitute a waiver by Franchisor to enforce any
such right, option, duty, or power as against Franchisee, or as to subsequent
breach or default by Franchisee. Subsequent acceptance by Franchisor of any
payments due to it hereunder shall not be deemed to be a waiver by Franchisor of
any preceding breach by Franchisee of any terms, provisions, covenants, or
conditions of this Agreement.
22. NOTICES
-------
Any and all notices required or permitted under this Agreement shall be
in writing and shall be personally delivered, sent by certified, registered
mail, or by other means, including any recognized overnight delivery service,
which afford the sender evidence of delivery or of attempted delivery, to the
respective parties at the following addresses unless and until a different
address has been designated by written notice to the other party:
Notices to Franchisor: Wendy's International, Inc.
--------------------- 0000 Xxxx Xxxxxx-Xxxxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Franchise Legal Department
Notices to Franchisee: _____________________________________
---------------------- _____________________________________
_____________________________________
_____________________________________
Any notice by a means which affords the sender evidence of delivery, or
attempted delivery, shall be deemed to have been given at the date and time of
mailing or sending of such notice.
23. ENTIRE AGREEMENT
----------------
This Agreement and the documents referred to herein constitute the
entire, full, and complete Agreement between Franchisor and Franchisee
concerning the subject matter hereof, and supersede all prior agreements, no
other representations having induced Franchisee to execute this Agreement.
Except for those permitted to be made unilaterally by Franchisor hereunder, no
amendment, change, or variance from this Agreement shall be binding on either
party unless mutually agreed to by the parties and executed by their authorized
officers or agents in writing.
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EXHIBIT C
24. SEVERABILITY AND CONSTRUCTION
-----------------------------
24.1. Except as expressly provided to the contrary herein, each
portion, section, part, term, or provision of this Agreement shall be considered
severable; and if, for any reason, any section, part, term, or provision herein
is determined to be invalid and contrary to, or in conflict with, any existing
or future law or regulation by a court or agency having valid jurisdiction, such
shall not impair the operation of, or have any other effect upon, such other
portions, sections, parts, terms, or provisions of this Agreement as may remain
otherwise intelligible; and the latter shall continue to be given full force and
effect and bind the parties hereto; and said invalid portions, sections, parts,
terms, or provisions shall be deemed not to be a part of this Agreement.
24.2. Except as expressly provided to the contrary herein, nothing in
this Agreement is intended, nor shall be deemed, to confer any rights or
remedies upon any person or legal entity other than Franchisee, Franchisor,
Franchisor's officers, directors, and employees, and such of Franchisee's and
Franchisor's respective successors and assigns as may be contemplated (and, as
to Franchisee, permitted) by Section 13 hereof.
24.3. Franchisee expressly agrees to be bound by any promise or
covenant imposing the maximum duty permitted by law which is subsumed within the
terms of any provision hereof, as though it were separately articulated in and
made a part of this Agreement, that may result from striking from any of the
provisions hereof any portion or portions which a court may hold to be
unenforceable in a final decision to which Franchisor is a party, or from
reducing the scope of any promise or covenant to the extent required to comply
with such a court order.
24.4. For purposes of this Agreement, an "affiliate" of any party to
this Agreement means any person, corporation, partnership, or other business
entity that directly, or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such party, and, with
respect to Franchisor, the term "affiliate" shall also include, without
limitation, WNAP, and any advertising cooperative operating under the System.
24.5. All captions in this Agreement are intended solely for the
convenience of the parties, and none shall be deemed to affect the meaning or
construction of any provision hereof.
25. JOINT AND SEVERAL OBLIGATION
----------------------------
25.1 If more than one person or entity is a named Franchisee under this
Agreement, such persons' liability under this Agreement shall be deemed to be
joint and several and all references in the Agreement to "Franchisee" shall
include all Franchisees individually and collectively.
25.2 Franchisor may require certain parties (the "Guarantors") to
guarantee all obligations of Franchisee by executing a Guaranty in the form
attached hereto as Exhibit B ("Guaranty"). In the event of the death of any
Guarantor, Franchisor may require replacement guarantees sufficient to provide
Franchisor with the same protection as it had originally bargained for.
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EXHIBIT C
26. APPLICABLE LAW
--------------
26.1. This Agreement takes effect upon its acceptance and execution by
Franchisor in Ohio, and shall be interpreted and construed under the laws of the
State of Ohio. In the event of any conflict of law, the laws of Ohio shall
prevail, without regard to, and without giving effect to, the application of
Ohio conflict of law rules. If, however, any provision of this Agreement would
not be enforceable under the laws of Ohio, and if the Restaurant is located
outside of Ohio and such provision would be enforceable under the laws of the
state in which the Restaurant is located, then such provision shall be
interpreted and construed under the laws of that state. Nothing in this Section
26.1. is intended by the parties to subject this Agreement to any franchise or
similar law, rule, or regulation of the State of Ohio or of any other state to
which it would not otherwise be subject.
26.2. Section 20 of this Agreement provides for non-binding mediation
of certain disputes between the parties hereto. Subject to Section 20,
Franchisee and any Guarantor may pursue any claim they may assert against any of
the Franchisor Entities in an individual action, which shall not be joined or
combined in any manner with any action or claim of any other franchisee against
any of the Franchisor Entities. Neither Franchisee nor any Guarantor will join
together with any other franchisee of Franchisor in bringing any litigation
against any of the Franchisor Entities; nor will Franchisee or any Guarantor
maintain any claim against any of the Franchisor Entities in a class action,
whether as a representative or as a member of a class or purported class; nor
will Franchisee or any Guarantor seek to consolidate, or consent to the
consolidation of, all or any part of any litigation by either of them against
any of the Franchisor Entities with any other litigation against any of the
Franchisor Entities. Any action brought by Franchisee or any Guarantor against
any of the Franchisor Entities in any court, whether federal or state, shall be
brought only within the state and judicial district in which Franchisor has its
principal place of business. Any action brought by any of the Franchisor
Entities against Franchisee or any Guarantor in any court, whether federal or
state, may be brought within the state and judicial district in which Franchisor
has its principal place of business. Franchisee and any Guarantor hereby waive
all questions of personal jurisdiction or venue for the purpose of carrying out
this provision.
26.3. No right or remedy conferred upon or reserved to Franchisor or
Franchisee by this Agreement is intended to be, nor shall be deemed, exclusive
of any other right or remedy herein or by law or equity provided or permitted,
but each shall be cumulative of every other right or remedy.
26.4. Franchisor, Franchisee and any Guarantor irrevocably waive trial
by jury in any action, proceeding, or counterclaim, whether at law or in equity,
brought by Franchisor against Franchisee or Guarantor on the one hand, or by
Franchisee or Guarantor against any of the Franchisor Entities on the other
hand, whether or not there are other parties in such action or proceeding. Any
and all claims and actions arising out of or relating to this Agreement, the
relationship of Franchisee and Franchisor, or Franchisee's operation of the
Restaurant, brought by Franchisor against Franchisee or Guarantor on the one
hand, or by Franchisee or Guarantor against any of the Franchisor Entities on
the other hand, shall be commenced within two (2) years from the occurrence of
the facts giving rise to such claim or action, or such claim or action shall be
barred.
26.5. Franchisor, Franchisee, and any Guarantor hereby waive to the
fullest extent permitted by law any right to or claim of any punitive or
exemplary damages against the other and agree that in the event of a dispute
between them each shall be limited to the recovery of any actual damages
sustained by it.
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EXHIBIT C
26.6. Nothing herein contained shall bar Franchisor's right to obtain
injunctive relief against threatened conduct that will cause it loss or damages,
under the usual equity rules, including the applicable rules for obtaining
restraining orders and preliminary injunctions.
27. ACKNOWLEDGMENTS
---------------
27.1. Franchisee acknowledges that it has conducted an independent
investigation of the business franchised hereunder, recognizes that the business
venture contemplated by this Agreement involves business risks, and that its
success will be largely dependent upon the ability of Franchisee and if a
corporation, partnership, or other business entity, its Owners as independent
business persons. Franchisor expressly disclaims the making of, and Franchisee
acknowledges that it has not received, any warranty, guarantee or
representation, express or implied, as to the potential volume, profits, or
success of the business venture contemplated by this Agreement.
27.2. Franchisee acknowledges that it received a copy of the complete
Wendy's International, Inc. Unit Franchise Agreement, the Exhibit(s) thereto,
and agreements relating thereto, if any, at least five (5) business days prior
to the date on which this Agreement was executed or any initial franchise fee
paid. Franchisee further acknowledges that it received the disclosure document
required by the Trade Regulation Rule of the Federal Trade Commission entitled
"Disclosure Requirements and Prohibitions Concerning Franchising and Business
Opportunity Ventures" at least ten (10) business days prior to the date on which
this Agreement was executed or any initial franchise fee paid.
27.3. Franchisee acknowledges that it has read and understood this
Agreement, the attachment(s) hereto, and agreements relating thereto, if any,
and that Franchisor has accorded Franchisee ample time and opportunity to
consult with advisors of Franchisee's own choosing about the potential benefits
and risks of entering into this Agreement. Franchisor encourages Franchisee to
obtain independent professional assistance (both legal and financial) in
connection with its review of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement which shall be effective on the date of Wendy's execution as set
forth above.
WITNESS: WENDY'S INTERNATIONAL, INC.
-------------------------------------
Franchisor
________________________________ By:__________________________________
Name:________________________________
Title:_______________________________
WITNESS: _____________________________________
Franchisee
________________________________ By:__________________________________
Name:________________________________
Title:_______________________________
Date:________________________________
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EXHIBIT C
EXHIBIT A
OWNERSHIP ACKNOWLEDGMENT
------------------------
Franchisee hereby acknowledges that a partnership, joint venture,
corporation, or other business entity ("Business Association") is included as a
Franchisee or Guarantor as defined in the Wendy's Unit Franchise Agreement to
which this Ownership Acknowledgment is attached. As a material part of the
Wendy's Unit Franchise Agreement, Franchisee hereby warrants, acknowledges and
represents that the information set out below is complete and accurate, and
Franchisee agrees that any change in the structure of the Business
Association(s) shall be in accordance with the terms and conditions of the
Wendy's Unit Franchise Agreement.
(A) The following list includes the names of each person who owns a
voting or equity interest in ______________________________ (a Franchisee or
Guarantor), and the percentage of the total authorized shares or interest which
each person owns in that Business Association, showing a total of 100%. If more
than one Business Association is a Franchisee or Guarantor, the Supplemental
Ownership Acknowledgment on the back of this page has been used to set out that
ownership.
NAME PERCENTAGE OF VOTING PERCENTAGE OF EQUITY
INTEREST OWNED INTEREST OWNED
(IF DIFFERENT FROM VOTING INTEREST)
(B) If any of the owners of the Franchisee or Guarantor [as listed in
(A) above] are also Business Associations, the following list includes the name
of each person who owns a voting or equity interest in
______________________________ ______________________ (an owner of the
Franchisee or Guarantor) and the percentage of the total authorized shares or
interest which each person owns in that Business Association, showing a total of
100%. If more than one Business Association is an owner of the Franchisee or
Guarantor, the Supplemental Ownership Acknowledgment on the back of this page
has been used to set out that ownership.
NAME PERCENTAGE OF VOTING PERCENTAGE OF EQUITY
INTEREST OWNED INTEREST OWNED
(IF DIFFERENT FROM VOTING INTEREST)
FRANCHISEE
-----------------------
-----------------------
62
EXHIBIT C
EXHIBIT A
SUPPLEMENTAL OWNERSHIP ACKNOWLEDGMENT
-------------------------------------
FOR
---
------------------------------------
A. NAME PERCENTAGE OF PERCENTAGE OF EQUITY
VOTING INTEREST OWNED
INTEREST OWNED (IF DIFFERENT FROM VOTING INTEREST)
B. NAME PERCENTAGE OF PERCENTAGE OF EQUITY
VOTING INTEREST OWNED
INTEREST OWNED (IF DIFFERENT FROM VOTING INTEREST)
63
EXHIBIT C
EXHIBIT B
GUARANTY
========
As an inducement for and in consideration of the granting of franchise
and Licensed Rights for the Wendy's Old Fashioned Hamburgers Restaurants to be
located at _________________________________________________ to
______________________ _____________________ (hereinafter "Franchisee") pursuant
to the terms and conditions of the _______________ Franchise Agreements dated
______________________ (hereinafter the "Franchise Agreement"),
______________________________ (hereinafter "Guarantors") hereby jointly and
severally unconditionally guarantee all of the obligations, terms and conditions
of the Franchise Agreements on behalf of Franchisee under the Franchise
Agreement. Guarantors hereby further agree to pay all costs and expenses,
including, without limitation, all court costs and reasonable attorneys fees and
legal expenses, paid or incurred by Wendy's International, Inc. or its
subsidiaries (collectively, "Wendy's") in endeavoring to enforce, or of
prosecuting any action with respect to, any of the terms and conditions of the
Franchise Agreements, any promissory note, agreement, document or instrument
entered into by Franchisee and delivered to Wendy's, and pertaining to the
Franchise Agreement as defined herein.
Guarantors hereunder are either financially interested in Franchisee or
will receive other benefits as the result of the Guarantors' promise herein.
Guarantors agree that in the event of a breach of any promise or
obligation under the Franchise Agreements by Franchisee, Guarantors shall
perform as if Guarantors were personally and fully liable thereon. Such
guarantee shall continue until and unless Wendy's has, in writing, specifically
released Guarantors from such guarantee. In the event of the death, incapacity,
bankruptcy, dissolution or insolvency of Guarantors, or any of them, or if
Guarantors (or any of them) dispose of all or substantially all of their assets,
then, in addition to any other rights and remedies, Wendy's reserves the right
to require a replacement guarantor(s) (i) with a net worth comparable to the net
worth of Guarantors on the date of execution of this Guaranty, (ii) who executes
Wendy's then-current Guaranty; and (iii) who is otherwise acceptable to Wendy's.
The Guarantors independently agree to be bound by and comply with the
provisions, covenants and requirements contained in Sections 9, 13, 16, 20 and
26 of the Franchise Agreements.
Except as otherwise provided herein, this Guaranty shall be a
continuing, absolute and unconditional Guaranty, irrespective of (i) the absence
of any attempt by Wendy's to enforce the provisions of the Franchise Agreements
as to Franchisee, or (ii) any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor. The
obligations of Guarantors hereunder are independent of the obligations of
Franchisee under the Franchise Agreements, and separate action or actions may be
brought and prosecuted against Guarantors, whether action is brought against
Franchisee or whether Franchisee, its successors or assigns are joined in any
such action or actions. Guarantors hereby waive any right to
64
EXHIBIT C
require Wendy's to: (i) proceed against Franchisee, (ii) proceed against or
exhaust any security from Franchisee or (iii) pursue any remedy in Wendy's power
whatsoever.
The Guarantors further agree that this Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time the payment of
Franchisee's obligations, or any part thereof, to Wendy's, or fulfillment of any
other term or condition under the Franchise Agreements is rescinded or must
otherwise be returned or undone by Wendy's upon the insolvency, bankruptcy or
reorganization of Franchisee or otherwise, all as though such payment to Wendy's
had not been made.
Wendy's is hereby authorized, without notice or demand and without
affecting the liability of Guarantors hereunder, to, from time to time, (i)
change, modify or otherwise amend the provisions of the Franchise Agreements,
(ii) change, modify or otherwise amend the terms of any promissory note, or
other agreement, document or instrument pertaining to the Franchise Agreements
and now or hereafter entered into by Franchisee and delivered to Wendy's, (iii)
accept partial payment, or partial performance by Franchisee under the Franchise
Agreements, or under any promissory note, other agreement, document or
instrument pertaining to the Franchise Agreements and now or hereafter entered
into by Franchisee and delivered to Wendy's; and (iv) settle, release, waive,
compromise, extend, collect or otherwise liquidate part or all of the
obligations due Wendy's under the Franchise Agreements or under any other
agreement, document, promissory note or instrument pertaining thereto, all
without affecting or impairing the obligations of Guarantors hereunder.
Guarantors agree that notice to the Franchisee will constitute notice
to Guarantors.
Guarantors hereby waive any benefit of, and any right to participate
in, any security or collateral given to Wendy's to secure payment of any
obligations due Wendy's under the Franchise Agreements, or any other liability
of Franchisee to Wendy's. Guarantors further agree that any and all claims of
Guarantors against Franchisee, any indorser or any other guarantor of all or any
part of any obligations under the Franchise Agreements, or against any of their
respective properties, whether arising by reason of any payment by Guarantors to
Wendy's pursuant to the provisions hereof, or otherwise, shall be subordinate
and subject in right of payment to the prior payment, in full, of all
obligations under the Franchise Agreements, all reasonable costs of collection
(including reasonable attorneys' fees and legal expenses) and any other
liabilities or obligations owing to Wendy's by Franchisee, which may arise
either with respect to or on any note, instrument, document, item, agreement or
other writing heretofore, now or hereafter delivered to Wendy's. Guarantors also
waive all setoffs and counterclaims and all presentments, demands for
performance, notices of nonperformance, protests, notices of protest, notices of
dishonor, and notices of acceptance of this Guaranty. Guarantors further waive
all notices of the existence, creation or incurring of new or additional
indebtedness, arising either from loans extended to Franchisee or otherwise, and
also waives all notices that the obligations under the Franchise Agreements, or
any portion thereof, and/or any interest on any instrument or document
evidencing all or any part of any loan indebtedness is due, notices of any and
all proceedings to collect from the makers, any indorser or any other guarantor
of all or any part of any other indebtedness, or from anyone else, and, to the
extent
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65
EXHIBIT C
permitted by law, notices of exchange, sale, surrender or other handling of any
security or collateral given to Wendy's to secure payment of the obligations
under the Franchise Agreements, or any other indebtedness.
No delay on the part of Wendy's in the exercise of any right or remedy
under the Franchise Agreements shall operate as a waiver thereof, and no single
or partial exercise by Wendy's of any right or remedy under the Franchise
Agreements shall preclude any further exercise thereof, nor shall any
modification or waiver of any of the provisions of this Guaranty be binding upon
Wendy's, except as expressly set forth in a writing duly signed and delivered on
Wendy's behalf by an authorized officer or agent of Wendy's. Wendy's failure at
any time or times hereafter to require strict performance by Franchisee, its
successors and assigns, or Guarantors of any of the terms and conditions
contained in the Franchise Agreements, any promissory note, security agreement,
agreement, guaranty, instrument or document now or at any time or times
hereafter executed by Franchisee and delivered to Wendy's relative to the
Restaurants which are the subject of the Franchise Agreements as defined herein
shall not waive, affect or diminish any right of Wendy's at any time or times
hereafter to demand strict performance thereof and such right shall not be
deemed to have been waived by any act or knowledge of Wendy's, its agents,
officers or employees, unless such waiver is contained in an instrument in
writing signed by an officer or agent of Wendy's and directed to Franchisee,
specifying such waiver. No waiver by Wendy's of any default shall operate as a
waiver of any other default or the same default on a future occasion, and no
action by Wendy's permitted hereunder shall in any way affect or impair Wendy's
rights or the obligations of Guarantors under this Guaranty.
This Guaranty shall be binding upon Guarantors and upon the successors
and assigns, heirs and legal representatives of Guarantors and shall inure to
the benefit of Wendy's and its successors and assigns. If any of Guarantors are
a corporation, partnership or other business entity (referred to in this
paragraph as the "Business Association Guarantors"), such Business Association
Guarantors represent that they have accurately completed the Ownership
Acknowledgment attached as Exhibit A to the Wendy's Unit Franchise Agreement.
The Business Association Guarantors also agree that without the prior written
consent of Wendy's, there shall be no sale, resale, pledge, assignment, transfer
or encumbrance of any voting stock of, or other ownership interest in, the
Business Association Guarantors, which would, alone or together with other
related, previous, simultaneous or proposed transfers, result in a change of
"control" of the Business Association Guarantors within the meaning of the
Securities Exchange Act of 1934 and the regulations thereunder. If the Business
Association Guarantors request but Wendy's does not grant such consent, then the
Business Association Guarantors may propose a replacement guarantor(s), which
replacement guarantor(s) must (i) have a net worth comparable to the net worth
of the Business Association Guarantors on the date of execution of this
Guaranty, (ii) execute Wendy's then-current Guaranty, and (iii) be otherwise
acceptable to Wendy's. All references herein to Franchisee shall be deemed to
include its successors and assigns, including, without limitation, a receiver,
trustee or debtor in possession of or for Franchisee. All references to the
singular shall be deemed to include the plural where the context so requires.
-3-
66
EXHIBIT C
This Guaranty has been delivered and accepted at and shall be deemed to
have been made at Columbus, Ohio. This guaranty shall be interpreted, and the
rights and liabilities of the parties hereto determined, in accordance with the
local laws of the State of Ohio. Guarantors consent to the personal jurisdiction
of the courts of the State of Ohio and the federal courts located in Ohio so
that Wendy's may xxx Guarantors in Ohio to enforce this agreement. The
Guarantors agree not to claim that Ohio is an inconvenient place for trial. At
Wendy's option, the venue (location) of any suit to enforce this agreement may
be in Franklin County, Ohio.
Wherever possible each provision of this Guaranty shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Guaranty shall be prohibited by or invalid under such law,
such provisions shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the remaining
provisions of this Guaranty.
IN WITNESS WHEREOF, this Guaranty has been duly executed by Guarantors
this ____ day of __________________, 19___.
------------------------------------------
ADDRESS:
----------------------------------
------------------------------------------
ADDRESS:
----------------------------------
-4-
67
EXHIBIT D
DODGSON/XXXXXX
SUMMARY OF OBLIGATIONS
AS OF APRIL 25, 1997
19 232 746 747 983 1011 1695 1844 2020 TOTALS
Royalty (3/97) 54,029.84 9,285.36 3,909.16 3,073.60 4,307.32 3,548.00 1,031.44 2,764.64 3,339.28 85,288.64
WNAP (3/97) 33,768.68 5,803.36 2,443.23 1,921.00 2,692.08 2,217.50 644.65 1,727.90 2,087.05 53,305.45
Gift Certificates (1,168.00) (1,168.00)
TOTALS 86,630.52 15,088.72 6,352.39 4,994.60 6,999.40 5,765.50 1,676.09 4,492.54 5,426.33 137,426.09
68
GUARANTY
========
As an inducement for and in consideration of the granting of Wendy's
consent to the transfer of certain interests related to the New Unit Franchise
Agreements ("FRANCHISE AGREEMENTS") for the Wendy's Old Fashioned Hamburgers
Restaurants as referenced on the attached Exhibit A (the "RESTAURANTS") and with
respect to WENDY'S OF WEST MICHIGAN LIMITED PARTNERSHIP (the "FRANCHISEE"),
XXXXXX X. XXXXXXXX, XX., XXXXXXXXXXX X. XXXXXX, MHG FOOD SERVICE INC., MCC FOOD
SERVICE INC., AND MERITAGE CAPITAL CORP. (hereinafter collectively referred to
as "GUARANTORS") hereby jointly and severally unconditionally guarantee all of
the obligations, terms and conditions of the Franchise Agreements on behalf of
Franchisee. Guarantors hereby further agree to pay all costs and expenses,
including, without limitation, all court costs and reasonable attorneys fees and
legal expenses, paid or incurred by Wendy's International, Inc. or its
subsidiaries (collectively, "WENDY'S") in endeavoring to enforce, or of
prosecuting any action with respect to, any of the terms and conditions of the
Franchise Agreements, any promissory note, agreement, document or instrument
entered into by Franchisee and delivered to Wendy's, and pertaining to the
Franchise Agreements as defined herein.
Guarantors hereunder are either financially interested in Franchisee or
will receive other benefits as the result of the Guarantors' promise herein.
Guarantors agree that in the event of a breach of any promise or
obligation under the Franchise Agreements by Franchisee, Guarantors shall
perform as if Guarantors were personally and fully liable thereon. Such
guarantee shall continue until and unless Wendy's has, in writing, specifically
released Guarantors from such guarantee. In the event of the death, incapacity,
bankruptcy, dissolution or insolvency of Guarantors, or any of them, or if
Guarantors (or any of them) dispose of all or substantially all of their assets,
then, in addition to any other rights and remedies, Wendy's reserves the right
to require a replacement guarantor(s) (i) with a net worth comparable to the net
worth of Guarantors on the date of execution of this Guaranty, (ii) who executes
Wendy's then-current Guaranty; and (iii) who is otherwise acceptable to Wendy's.
Without limitation, the Guarantors independently agree to be bound by
and comply with the provisions, covenants and requirements contained in Sections
9, 13, 16, 20 and 26 of the Franchise Agreements, as well as any warranty,
representation or agreement of Guarantors set forth in the Consent Agreement to
be executed contemporaneously herewith (the "CONSENT AGREEMENT").
Except as otherwise provided herein, this Guaranty shall be a
continuing, absolute and unconditional Guaranty, irrespective of (i) the absence
of any attempt by Wendy's to enforce the provisions of the Franchise Agreements
as to Franchisee, or (ii) any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor. The
obligations of Guarantors hereunder are independent of the obligations of
Franchisee under the Franchise Agreements, and separate action or actions may be
brought and prosecuted against
69
Guarantors, whether action is brought against Franchisee or whether Franchisee,
its successors or assigns are joined in any such action or actions. Guarantors
hereby waive any right to require Wendy's to: (i) proceed against Franchisee,
(ii) proceed against or exhaust any security from Franchisee or (iii) pursue any
remedy in Wendy's power whatsoever.
The Guarantors further agree that this Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time the payment of
Franchisee's obligations, or any part thereof, to Wendy's, or fulfillment of any
other term or condition under the Franchise Agreements is rescinded or must
otherwise be returned or undone by Wendy's upon the insolvency, bankruptcy or
reorganization of Franchisee or otherwise, all as though such payment to Wendy's
had not been made.
Wendy's is hereby authorized, without notice or demand and without
affecting the liability of Guarantors hereunder, to, from time to time, (i)
change, modify or otherwise amend the provisions of the Franchise Agreements,
(ii) change, modify or otherwise amend the terms of any promissory note, or
other agreement, document or instrument pertaining to the Franchise Agreements
and now or hereafter entered into by Franchisee and delivered to Wendy's, (iii)
accept partial payment, or partial performance by Franchisee under the Franchise
Agreements, or under any promissory note, other agreement, document or
instrument pertaining to the Franchise Agreements and now or hereafter entered
into by Franchisee and delivered to Wendy's; and (iv) settle, release, waive,
compromise, extend, collect or otherwise liquidate part or all of the
obligations due Wendy's under the Franchise Agreements or under any other
agreement, document, promissory note or instrument pertaining thereto, all
without affecting or impairing the obligations of Guarantors hereunder.
Guarantors agree that notice to the Franchisee will constitute notice
to Guarantors.
Guarantors hereby waive any benefit of, and any right to participate
in, any security or collateral given to Wendy's to secure payment of any
obligations due Wendy's under the Franchise Agreements, or any other liability
of Franchisee to Wendy's. Guarantors further agree that any and all claims of
Guarantors against Franchisee, any indorser or any other guarantor of all or any
part of any obligations under the Franchise Agreements, or against any of their
respective properties, whether arising by reason of any payment by Guarantors to
Wendy's pursuant to the provisions hereof, or otherwise, shall be subordinate
and subject in right of payment to the prior payment, in full, of all
obligations under the Franchise Agreements, all reasonable costs of collection
(including reasonable attorneys' fees and legal expenses) and any other
liabilities or obligations owing to Wendy's by Franchisee, which may arise
either with respect to or on any note, instrument, document, item, agreement or
other writing heretofore, now or hereafter delivered to Wendy's. Guarantors also
waive all setoffs and counterclaims and all presentments, demands for
performance, notices of nonperformance, protests, notices of protest, notices of
dishonor, and notices of acceptance of this Guaranty. Guarantors further waive
all notices of the existence, creation or incurring of new or additional
indebtedness, arising either from loans extended to Franchisee or otherwise, and
also waives all notices that the obligations under the Franchise Agreements, or
any portion thereof, and/or any interest on any instrument or document
evidencing all or any part of any
-2-
70
loan indebtedness is due, notices of any and all proceedings to collect from the
makers, any indorser or any other guarantor of all or any part of any other
indebtedness, or from anyone else, and, to the extent permitted by law, notices
of exchange, sale, surrender or other handling of any security or collateral
given to Wendy's to secure payment of the obligations under the Franchise
Agreements, or any other indebtedness.
No delay on the part of Wendy's in the exercise of any right or remedy
under the Franchise Agreements shall operate as a waiver thereof, and no single
or partial exercise by Wendy's of any right or remedy under the Franchise
Agreements shall preclude any further exercise thereof, nor shall any
modification or waiver of any of the provisions of this Guaranty be binding upon
Wendy's, except as expressly set forth in a writing duly signed and delivered on
Wendy's behalf by an authorized officer or agent of Wendy's. Wendy's failure at
any time or times hereafter to require strict performance by Franchisee, its
successors and assigns, or Guarantors of any of the terms and conditions
contained in the Franchise Agreements, any promissory note, security agreement,
agreement, guaranty, instrument or document now or at any time or times
hereafter executed by Franchisee and delivered to Wendy's relative to the
Restaurants which are the subject of the Franchise Agreements as defined herein
shall not waive, affect or diminish any right of Wendy's at any time or times
hereafter to demand strict performance thereof and such right shall not be
deemed to have been waived by any act or knowledge of Wendy's, its agents,
officers or employees, unless such waiver is contained in an instrument in
writing signed by an officer or agent of Wendy's and directed to Franchisee,
specifying such waiver. No waiver by Wendy's of any default shall operate as a
waiver of any other default or the same default on a future occasion, and no
action by Wendy's permitted hereunder shall in any way affect or impair Wendy's
rights or the obligations of Guarantors under this Guaranty.
This Guaranty shall be binding upon Guarantors and upon the successors
and assigns, heirs and legal representatives of Guarantors and shall inure to
the benefit of Wendy's and its successors and assigns. All references herein to
Franchisee shall be deemed to include its successors and assigns, including,
without limitation, a receiver, trustee or debtor in possession of or for
Franchisee.
If any of Guarantors are a corporation, partnership or other business
entity (referred to in this paragraph as the "BUSINESS ASSOCIATION GUARANTORS"),
in addition to any restrictions contained in the Franchise Agreements and the
Consent Agreement, such Guarantors 'agree that without the prior written consent
of Wendy's, there shall be no sale, resale, pledge, assignment, transfer or
encumbrance of any voting stock of, or other ownership interest in, the Business
Association Guarantors, which would, alone or together with other related,
previous, simultaneous or proposed transfers, result in a change of "control" of
the Business Association Guarantors within the meaning of the Securities
Exchange Act of 1934 and the regulations thereunder. If the Business Association
Guarantors request but Wendy's does not grant such consent, then the Business
Association Guarantors may propose a replacement guarantor(s), which replacement
guarantor(s) must (i) have a net worth comparable to the net worth of the
Business Association Guarantors on the date of execution of this Guaranty, (ii)
execute Wendy's then-current Guaranty, and (iii) be otherwise acceptable to
Wendy's.
-3-
71
This Guaranty has been delivered and accepted at and shall be deemed to
have been made at Columbus, Ohio. This guaranty shall be interpreted, and the
rights and liabilities of the parties hereto determined, in accordance with the
local laws of the State of Ohio. Guarantors consent to the personal jurisdiction
of the courts of the State of Ohio and the federal courts located in Ohio so
that Wendy's may xxx Guarantors in Ohio to enforce this agreement. The
Guarantors agree not to claim that Ohio is an inconvenient place for trial. At
Wendy's option, the venue (location) of any suit to enforce this agreement may
be in Franklin County, Ohio.
Wherever possible each provision of this Guaranty shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Guaranty shall be prohibited by or invalid under such law,
such provisions shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the remaining
provisions of this Guaranty. All references to the singular shall be deemed to
include the plural and all references to the plural shall be deemed to be
singular where the context so requires.
IN WITNESS WHEREOF, this Guaranty has been duly executed by Guarantors
this ____ day of __________________, 1997.
-------------------------------------
XXXXXX X. XXXXXXXX, XX., Individually
ADDRESS:
------------------------------
--------------------------------------
XXXXXXXXXXX X. XXXXXX, Individually
ADDRESS:
------------------------------
--------------------------------------
MHG FOOD SERVICE INC.
By:
-----------------------------------
Title:
--------------------------------
ADDRESS:
------------------------------
--------------------------------------
(SIGNATURE LINES CONTINUED ON NEXT PAGE)
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72
MCC FOOD SERVICE INC.
By:
-----------------------------------
Title:
--------------------------------
ADDRESS:
------------------------------
--------------------------------------
MERITAGE CAPITAL CORP
By:
-----------------------------------
Title:
--------------------------------
ADDRESS:
------------------------------
--------------------------------------
-5-
73
EXHIBIT A
WENDY'S OLD FASHIONED HAMBURGERS RESTAURANTS
STORE NO. RESTAURANT LOCATION
#19-001 000 Xxxx Xxxxxxxx, Xxxxxxxxx, XX
#00-000 2814 Xxxxxxx, Xxxxxxxxx, XX
#00-000 0000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx, XX
#00-000 0000 00xx Xxxxxx, X.X., Xxxxx Xxxxxx, XX
#19-005 000 X. Xxxxxxxx Xxxxxx, Xxxxxx Xxxxx, XX
#00-000 0000 Xxxxxxxx Xxxxxx, X.X. Xxxxx Xxxxxx, XX
#00-000 0000 00xx Xxxxxx, X.X., Xxxxxxx, XX
#00-000 0000 Xxxx Xxxx Xxxxxx, Xxxxxxxxx, XX
#00-000 0000 Xxxxx Xxxxxx, Xxxxxxxx, XX
#00-000 0000 Xxxxxx Xxxxxx, X.X., Xxxxxx, XX
#00-000 0000 00xx Xxxxxx, X.X., Xxxxx Xxxxxx, XX
#00-000 0000 X. Xxxxxxxx Xxxxxx, Xxxxxxx, XX
#00-000 0000 X. Xxxxxxxx, Xxxxxxxxx, XX
#00-000 0000 X. Xxxxx, Xxxxxxxx, XX
#00-000 0000 Xxxxxxxxxx, X.X., Xxxxx Xxxxxx, XX
#00-000 0000 Xxxxxxx Xxxxx, Xxxxxxxxxx, XX
#232-001 000 Xxxxx Xxxxxx, Xxxxx Xxxxx, XX
#232-002 000 X. 0xx Xxxxxx, Xxxxxxx, XX
#232-003 00000 Xxxxx Xxxxxx, Xxxxxxx, XX
#746-001 0000 X 00, Xxxxxxxxx, XX
#747-001 000 X. Xxxxxxxxx, Xxx Xxx, XX
#983-001 000 00xx Xxxxxx, X.X., Xxxxxxxxxxx, XX
#0000-000 0000 Xxxxxxx Xxxx, Xxxxxx Xxxxx, XX
#0000-000 000 Xxxxxx Xxxxxx, Xxxxx Xxxxxx, XX
#0000-000 0000 X. Xxxxx Xxxx, Xxxxx Xxxxxx, XX
#0000-000 0000 Xxxx Xxxxxxxx Xxxxx, X.X., Xxxxxx, XX
74
EXHIBIT F
MERITAGE GUARANTY
=================
As an inducement for and in consideration of the granting of Wendy's
consent to the transfer of certain interests related to the New Unit Franchise
Agreements ("FRANCHISE AGREEMENTS") for the Wendy's Old Fashioned Hamburgers
Restaurants as referenced on the attached Exhibit A (the "RESTAURANTS") and with
respect to WENDY'S OF WEST MICHIGAN LIMITED PARTNERSHIP (the "FRANCHISEE"),
MERITAGE HOSPITALITY GROUP, INC. (hereinafter referred to as "GUARANTOR") hereby
jointly and severally with the other New Guarantors as defined in the Consent
Agreement executed contemporaneously herewith (the "CONSENT AGREEMENT")
unconditionally guarantees all of the financial obligations of the Partnership
to Wendy's or its subsidiaries (collectively "WENDY'S") under the Franchise
Agreements, including without limitation, those obligations arising directly or
indirectly from indemnities, or any claims or damages thereunder, as well as
royalty and advertising fees ("FINANCIAL OBLIGATIONS"). Guarantor hereby further
agrees to pay all costs and expenses, including, without limitation, all court
costs and reasonable attorneys fees and legal expenses, paid or incurred by
Wendy's in endeavoring to enforce, or of prosecuting any action with respect to,
any of the Financial Obligations, any promissory note, agreement, document or
instrument entered into by Franchisee and delivered to Wendy's, and pertaining
to the Franchise Agreements as defined herein.
Guarantor hereunder is financially interested in Franchisee and will
receive other benefits as the result of the Guarantor's promise herein.
Guarantor agrees that in the event of a breach of any of the Financial
Obligations by Franchisee, Guarantor shall perform as if Guarantor was
personally and fully liable thereon. Such guarantee shall continue until and
unless Wendy's has, in writing, specifically released Guarantor from such
guarantee. In the event of the bankruptcy, dissolution or insolvency of
Guarantor, or if Guarantor disposes of all or substantially all of its assets,
then, in addition to any other rights and remedies, Wendy's reserves the right
to require a replacement guarantor (i) with a net worth comparable to the net
worth of Guarantor on the date of execution of this Guaranty, (ii) who executes
a Guaranty in substantially the same form; and (iii) who is otherwise acceptable
to Wendy's.
Without limitation, the Guarantor independently agrees to be bound by
and comply with the provisions, covenants and requirements contained in Sections
9, 16, 20 and 26 of the Franchise Agreements, as well as any warranty,
representation or agreement of Guarantor set forth in the Consent Agreement.
Except as otherwise provided herein, this Guaranty shall be a
continuing, absolute and unconditional Guaranty, irrespective of (i) the absence
of any attempt by Wendy's to enforce the provisions of the Franchise Agreements
as to Franchisee, or (ii) any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor. The
obligations of Guarantor hereunder are independent of the Financial Obligations
of Franchisee under the Franchise Agreements, and separate action or actions may
be brought and
-7-
75
EXHIBIT F
prosecuted against Guarantor, whether action is brought against Franchisee or
whether Franchisee, its successors or assigns are joined in any such action or
actions. Guarantor hereby waives any right to require Wendy's to: (i) proceed
against Franchisee, (ii) proceed against or exhaust any security from Franchisee
or (iii) pursue any remedy in Wendy's power whatsoever.
The Guarantor further agrees that this Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time the payment of
Franchisee's Financial Obligations, or any part thereof, to Wendy's is rescinded
or must otherwise be returned or undone by Wendy's upon the insolvency,
bankruptcy or reorganization of Franchisee or otherwise, all as though such
payment to Wendy's had not been made.
Wendy's is hereby authorized, without notice or demand and without
affecting the liability of Guarantor hereunder, to, from time to time, (i)
change, modify or otherwise amend the provisions of the Franchise Agreements,
(ii) change, modify or otherwise amend the terms of any promissory note, or
other agreement, document or instrument pertaining to the Franchise Agreements
and now or hereafter entered into by Franchisee and delivered to Wendy's, (iii)
accept partial payment, or partial performance by Franchisee under the Franchise
Agreements, or under any promissory note, other agreement, document or
instrument pertaining to the Franchise Agreements and now or hereafter entered
into by Franchisee and delivered to Wendy's; and (iv) settle, release, waive,
compromise, extend, collect or otherwise liquidate part or all of the
obligations due Wendy's under the Franchise Agreements or under any other
agreement, document, promissory note or instrument pertaining thereto, all
without affecting or impairing the obligations of Guarantor hereunder.
Guarantor agrees that notice to the Franchisee will constitute notice
to Guarantor.
Guarantor hereby waives any benefit of, and any right to participate
in, any security or collateral given to Wendy's to secure payment of any
Financial Obligations, or any other liability of Franchisee to Wendy's.
Guarantor further agrees that any and all claims of Guarantor against
Franchisee, any indorser or any other guarantor of all or any part of the
Financial Obligations, or against any of their respective properties, whether
arising by reason of any payment by Guarantor to Wendy's pursuant to the
provisions hereof, or otherwise, shall be subordinate and subject in right of
payment to the prior payment, in full, of all obligations under the Franchise
Agreements, all reasonable costs of collection (including reasonable attorneys'
fees and legal expenses) and any other liabilities or obligations owing to
Wendy's by Franchisee, which may arise either with respect to or on any note,
instrument, document, item, agreement or other writing heretofore, now or
hereafter delivered to Wendy's. Guarantor also waives all setoffs and
counterclaims and all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, and notices
of acceptance of this Guaranty. Guarantor further waives all notices of the
existence, creation or incurring of new or additional indebtedness, arising
either from loans extended to Franchisee or otherwise, and also waives all
notices that the Financial Obligations, or any portion thereof, and/or any
interest on any instrument or document evidencing all or any part of any loan
indebtedness is due, notices of any and all proceedings to collect from the
-2-
76
EXHIBIT F
makers, any indorser or any other guarantor of all or any part of any other
indebtedness, or from anyone else, and, to the extent permitted by law, notices
of exchange, sale, surrender or other handling of any security or collateral
given to Wendy's to secure payment of the Financial Obligations, or any other
indebtedness.
No delay on the part of Wendy's in the exercise of any right or remedy
under the Franchise Agreements shall operate as a waiver thereof, and no single
or partial exercise by Wendy's of any right or remedy under the Franchise
Agreements shall preclude any further exercise thereof, nor shall any
modification or waiver of any of the provisions of this Guaranty be binding upon
Wendy's, except as expressly set forth in a writing duly signed and delivered on
Wendy's behalf by an authorized officer or agent of Wendy's. Wendy's failure at
any time or times hereafter to require strict performance by Franchisee, its
successors and assigns, or Guarantor of any of the terms and conditions
contained in the Franchise Agreements, any promissory note, security agreement,
agreement, guaranty, instrument or document now or at any time or times
hereafter executed by Franchisee and delivered to Wendy's relative to the
Restaurants which are the subject of the Franchise Agreements as defined herein
shall not waive, affect or diminish any right of Wendy's at any time or times
hereafter to demand strict performance thereof and such right shall not be
deemed to have been waived by any act or knowledge of Wendy's, its agents,
officers or employees, unless such waiver is contained in an instrument in
writing signed by an officer or agent of Wendy's and directed to Franchisee,
specifying such waiver. No waiver by Wendy's of any default shall operate as a
waiver of any other default or the same default on a future occasion, and no
action by Wendy's permitted hereunder shall in any way affect or impair Wendy's
rights or the obligations of Guarantor under this Guaranty.
This Guaranty shall be binding upon Guarantor and upon the successors
and assigns, and legal representatives of Guarantor and shall inure to the
benefit of Wendy's and its successors and assigns. All references herein to
Franchisee shall be deemed to include its successors and assigns, including,
without limitation, a receiver, trustee or debtor in possession of or for
Franchisee.
This Guaranty has been delivered and accepted at and shall be deemed to
have been made at Columbus, Ohio. This guaranty shall be interpreted, and the
rights and liabilities of the parties hereto determined, in accordance with the
local laws of the State of Ohio. Guarantor consents to the personal jurisdiction
of the courts of the State of Ohio and the federal courts located in Ohio so
that Wendy's may xxx Guarantor in Ohio to enforce this agreement. The Guarantor
agrees not to claim that Ohio is an inconvenient place for trial. At Wendy's
option, the venue (location) of any suit to enforce this agreement may be in
Franklin County, Ohio.
Wherever possible each provision of this Guaranty shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Guaranty shall be prohibited by or invalid under such law,
such provisions shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the remaining
provisions of this Guaranty. All references to the singular shall be deemed to
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77
EXHIBIT F
include the plural and all references to the plural shall be deemed to be
singular where the context so requires.
IN WITNESS WHEREOF, this Guaranty has been duly executed by Guarantor
this ____ day of __________________, 1997.
MERITAGE HOSPITALITY GROUP, INC.
By:__________________________________________
Title:_______________________________________
ADDRESS:_____________________________________
_____________________________________________
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78
EXHIBIT F
EXHIBIT A
WENDY'S OLD FASHIONED HAMBURGERS RESTAURANTS
STORE NO. RESTAURANT LOCATION
#19-001 000 Xxxx Xxxxxxxx, Xxxxxxxxx, XX
#00-000 2814 Xxxxxxx, Xxxxxxxxx, XX
#00-000 0000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx, XX
#00-000 0000 00xx Xxxxxx, X.X., Xxxxx Xxxxxx, XX
#19-005 000 X. Xxxxxxxx Xxxxxx, Xxxxxx Xxxxx, XX
#00-000 0000 Xxxxxxxx Xxxxxx, X.X. Xxxxx Xxxxxx, XX
#00-000 0000 00xx Xxxxxx, X.X., Xxxxxxx, XX
#00-000 0000 Xxxx Xxxx Xxxxxx, Xxxxxxxxx, XX
#00-000 0000 Xxxxx Xxxxxx, Xxxxxxxx, XX
#00-000 0000 Xxxxxx Xxxxxx, X.X., Xxxxxx, XX
#00-000 0000 00xx Xxxxxx, X.X., Xxxxx Xxxxxx, XX
#00-000 0000 X. Xxxxxxxx Xxxxxx, Xxxxxxx, XX
#00-000 0000 X. Xxxxxxxx, Xxxxxxxxx, XX
#00-000 0000 X. Xxxxx, Xxxxxxxx, XX
#00-000 0000 Xxxxxxxxxx, X.X., Xxxxx Xxxxxx, XX
#00-000 0000 Xxxxxxx Xxxxx, Xxxxxxxxxx, XX
#232-001 000 Xxxxx Xxxxxx, Xxxxx Xxxxx, XX
#232-002 000 X. 0xx Xxxxxx, Xxxxxxx, XX
#232-003 00000 Xxxxx Xxxxxx, Xxxxxxx, XX
#746-001 0000 X 00, Xxxxxxxxx, XX
#747-001 000 X. Xxxxxxxxx, Xxx Xxx, XX
#983-001 000 00xx Xxxxxx, X.X., Xxxxxxxxxxx, XX
#0000-000 0000 Xxxxxxx Xxxx, Xxxxxx Xxxxx, XX
#0000-000 000 Xxxxxx Xxxxxx, Xxxxx Xxxxxx, XX
#0000-000 0000 X. Xxxxx Xxxx, Xxxxx Xxxxxx, XX
#0000-000 0000 Xxxx Xxxxxxxx Xxxxx, X.X., Xxxxxx, XX
79
EXHIBIT G
GENERAL RELEASE OF ALL CLAIMS
=============================
This GENERAL RELEASE OF ALL CLAIMS is made this _____ day of
__________________, 1997. In consideration for the willingness on the part of
Wendy's International, Inc., an Ohio corporation ("WENDY'S"), to consent to the
change in ownership as set forth in the Consent Agreement, between Wendy's and
the undersigned, to be executed contemporaneously herewith (the "CONSENT
AGREEMENT"), and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the undersigned, individually and
collectively, hereby unconditionally RELEASE, DISCHARGE and ACQUIT Wendy's, its
past and present shareholders, officers, directors, employees, successors,
assigns, agents, and subsidiaries from any and all liabilities, claims, damages,
demands, costs, indebtedness, expenses, debts, indemnities, compensation, suits,
controversies, actions and causes of action of any kind whatsoever, whether
developed or undeveloped, known or unknown, fixed or contingent, regarding or
arising out of any franchise agreement or any and all Wendy's Old Fashioned
Hamburgers Restaurants (including without limitation those Restaurants listed on
Exhibit A and Exhibit B to the Consent Agreement), whether currently or
previously owned or operated by the undersigned or any of them, which the
undersigned or any of them individually or collectively has asserted, may have
asserted or could have asserted against Wendy's (or any of the aforementioned
related parties) at any time up to the date of this GENERAL RELEASE OF ALL
CLAIMS, including specifically, claims under the Xxxxxxx and Xxxxxxx Acts and
the anti-trust Laws of the United States. This GENERAL RELEASE OF ALL CLAIMS
shall survive the assignment or termination of any of the franchise agreements
or other documents entered into by and between Wendy's and any of the
undersigned. This GENERAL RELEASE OF ALL CLAIMS is not intended as a waiver of
those rights of the undersigned which cannot be waived under applicable state
franchise laws.
WITNESS: WENDY'S OF WEST MICHIGAN
LIMITED PARTNERSHIP
BY ITS GENERAL PARTNER
By:
----------------------------- -----------------------------------
Title:
--------------------------------
----------------------------- --------------------------------------
XXXXXX X. XXXXXXXX, XX., INDIVIDUALLY
----------------------------- --------------------------------------
XXXXXXXXXXX X. XXXXXX, INDIVIDUALLY
(SIGNATURE LINES CONTINUED ON NEXT PAGE)
80
EXHIBIT G
MERITAGE HOSPITALITY GROUP INC.
By:
----------------------------- -----------------------------------
Title:
--------------------------------
MERITAGE CAPITAL CORP.
By:
----------------------------- -----------------------------------
Title:
--------------------------------
MHG FOOD SERVICE INC.
By:
----------------------------- -----------------------------------
Title:
--------------------------------
MCC FOOD SERVICE INC.
By:
----------------------------- -----------------------------------
Title:
--------------------------------
-2-
81
EXHIBIT H
RIGHT OF FIRST REFUSAL RESTAURANTS
STORE NO. RESTAURANT LOCATION
#19-001 000 Xxxx Xxxxxxxx, Xxxxxxxxx, XX
#00-000 2814 Xxxxxxx, Xxxxxxxxx, XX
#00-000 0000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx, XX
#00-000 0000 00xx Xxxxxx, X.X., Xxxxx Xxxxxx, XX
#19-005 000 X. Xxxxxxxx Xxxxxx, Xxxxxx Xxxxx, XX
#00-000 0000 Xxxxxxxx Xxxxxx, X.X. Xxxxx Xxxxxx, XX
#00-000 0000 00xx Xxxxxx, X.X., Xxxxxxx, XX
#00-000 0000 Xxxx Xxxx Xxxxxx, Xxxxxxxxx, XX
#00-000 0000 Xxxxx Xxxxxx, Xxxxxxxx, XX
#00-000 0000 Xxxxxx Xxxxxx, X.X., Xxxxxx, XX
#00-000 0000 00xx Xxxxxx, X.X., Xxxxx Xxxxxx, XX
#00-000 0000 X. Xxxxxxxx Xxxxxx, Xxxxxxx, XX
#00-000 0000 X. Xxxxxxxx, Xxxxxxxxx, XX
#00-000 0000 X. Xxxxx, Xxxxxxxx, XX
#00-000 0000 Xxxxxxxxxx, X.X., Xxxxx Xxxxxx, XX
#00-000 0000 Xxxxxxx Xxxxx, Xxxxxxxxxx, XX
#232-001 000 Xxxxx Xxxxxx, Xxxxx Xxxxx, XX
#232-002 000 X. 0xx Xxxxxx, Xxxxxxx, XX
