EXHIBIT 10.21
MASTER FRANCHISE AGREEMENT
BETWEEN:
KENTUCKY FRIED CHICKEN PTY. LIMITED
AND
XXXXXXX FOODS INTERNATIONAL
PTY. LIMITED
AGREEMENT dated day of 1996
BETWEEN: KENTUCKY FRIED CHICKEN PTY LIMITED, A.C.N. 000 587 780 having its
registered office at 00 Xxxxxxxxxx Xxxx, Xxxxxxx Xxxxxx, XXX, 0000
("PRI")
AND: XXXXXXX FOODS INTERNATIONAL PTY. LIMITED, ARBN 000 000 000, a Nevada
corporation having its principal executive office at 00000 Xxxx
Xxxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, 00000 and its registered
Australian office at 00 Xxxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx,
0000 ("Franchisee")
BACKGROUND FACTS:
PRI and Franchisee have agreed to vary the terms of their franchise relationship
on the following terms and conditions.
THE PARTIES AGREE:
1. DEFINITIONS
1.1 In this Agreement, unless the context requires otherwise:
"CO-OP AGREEMENT DATE" means the date of execution by Franchisee of the
agreement establishing the National Ad Co-op.
"CPI INDEXED" means adjusted in line with the percentage increase in the
Consumer Price Index (All Groups - Sydney) from the Effective Date.
"DEVELOPMENT AGREEMENT" means the development agreement executed by the
parties contemporaneously with this Agreement.
"EFFECTIVE DATE" means the earlier of the date of execution of this
Agreement or 30 September, 1996.
"FORMER FRANCHISE AGREEMENTS" means the agreements documenting the pre-
existing franchise arrangements between PRI and Franchisee in respect of
the Outlets.
"FRANCHISE AGREEMENT" means a franchise agreement in the form of the
agreement set out in Schedule 3.
"NATIONAL AD CO-OP" means the national advertising co-operative which PRI
intends to establish after the Effective Date.
"OUTLETS" means the 93 KFC outlets listed in Schedules 1 and 2.
1.2 All other capitalised terms in this Agreement will have the meanings
specified in Schedule A of the Franchise Agreement.
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2. PAYMENT
In consideration of the rights and benefits granted by PRI under this
Agreement, Franchisee will pay to PRI the sum of $A836,000 on the date of
execution of this Agreement. The operation of this Agreement is subject to
and conditional upon this payment.
3. FRANCHISE AGREEMENTS
3.1 As from the Effective Date, PRI will grant to Franchisee and Franchisee
will accept 93 single-site franchises to operate the Outlets on the terms
and conditions of the Franchise Agreement.
3.2 Upon the execution of this Agreement, a Franchise Agreement will be deemed
to have been executed in respect of each Outlet. Schedule B of the
Franchise Agreement will be deemed to be completed in respect of each
Outlet as follows:
(a) the Outlet address will be as specified in Schedule 1 or Schedule
2 (whichever is applicable);
(b) the Term and the Renewal Term will be as specified in Schedule 1
or Schedule 2 (whichever is applicable); and
(c) the Date of Grant will be the Effective Date.
3.3 The Franchise Agreement for each Outlet will be deemed to be amended as set
out in Clauses 4, 5, 6 and 7 for the currency of its term.
4. ADVERTISING CONTRIBUTIONS
Notwithstanding the provisions of Clause 6.1 of the Franchise Agreement:
(a) The operation of Clauses 6.1(a) and 6.1(b) of the Franchise
Agreement will be suspended between the Effective Date and the earlier
of the Co-Op Agreement Date and 1 February 1996 and, during this
suspension period, Franchisee will continue to spend, on local
advertising and promotions, the amount currently spent by Franchisee
on local and national advertising and promotions; and
(b) As from the Co-Op Agreement Date, Clause 6.1(a) of the Franchise
Agreement will be deleted.
5. TRANSFER FEE
Notwithstanding the Transfer Fee payable under the Franchise Agreement for
each Outlet, in the event of a PRI approved sale by Franchisee of its
interests under one or more of the Franchise Agreements prior to 30
September, 2019, the Transfer Fees payable by Franchisee to PRI will be as
follows:
(a) in the event of a sale prior to 1 December, 1996: $35,000 per
Outlet up to a total cumulative cap of $2.5 million; or
(b) in the event of a sale on or after 1 December, 1996 and prior to
30 September, 2019: $35,000 CPI Indexed per Outlet up to a total
cumulative cap of $3.5 million CPI
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Indexed.
6. COMPETITIVE BUSINESS APPROVALS
6.1 PRI acknowledges that, as a result of the ownership, operation and
licensing of a number of existing "Sizzler" and "The Italian Oven"
restaurants in Australia by one or more of Franchisee's Affiliated
Companies, Franchisee may directly or indirectly have an interest or be
engaged in businesses involving the preparation, marketing or sale of food
products covered by Clause 13(a) of the Franchise Agreement.
6.2 Pursuant to Clause 13(a) of the Franchise Agreement, as from the Effective
Date, the following approvals will apply:
(a) PRI approves the current involvement of Franchisee's Affiliated
Companies in the existing Sizzler Restaurants in Australia and waives
any right under Clause 13(a) to disapprove any preparation, marketing
or sale of food products in connection with the ownership, operation,
licensing and/or management by Franchisee and/or its Affiliated
Companies of any new Sizzler Restaurants in Australia, or the
alteration, remodelling or repositioning of any existing Sizzler
Restaurants in Australia, provided that such new or altered,
remodelled, or repositioned restaurants do not predominantly involve
the preparation, marketing or sale of any one of the following food
types (each a "Designated Product"): pizza and pasta collectively;
chicken; Mexican; or burgers.
For the purpose of this provision, a "Sizzler Restaurant" is any
restaurant operated in whole or in part under the "Sizzler" xxxx
(including but not limited to Sizzler Steak Seafood, Salad, Sizzler
Cafe, Sizzler Express, Sizzler Flame Grill), whether or not in
association with other marks, provided that the association with the
other marks is not of itself covered by Clause 13(a) of the Franchise
Agreement.
For the purpose of this provision, a Sizzler Restaurant shall not
be "predominantly" involved in the preparation, marketing or sale of a
Designated Product so long as gross sales of that Designated Product
do not exceed 50% of the gross food sales, excluding beverage sales,
of that restaurant.
(b) PRI grants Franchisee a 3 year limited approval in respect of its
current involvement in Australia in the "The Italian Oven" business,
on the basis that Franchisee agrees to divest its interest in that
business to an entity other than an Affiliated Company within 3 years
from the Effective Date. Franchisee acknowledges that if Franchisee
has failed to so divest its interest in that business within 3 years
from the Effective Date, Franchisee will be in breach of the Franchise
Agreement and any new franchise agreements and, without prejudice to
any other rights and remedies PRI may have, it will be PRI's intention
to terminate all franchise agreements relating to the new KFC outlets
opened by Franchisee from the Effective Date.
7. UPGRADES
In the event of PRI requiring Franchisee, pursuant to Clause 4 of the
Franchise Agreement, to implement an upgrade or renovation of the Outlets
which is similarly to be implemented by PRI across any KFC outlets operated
by PRI in Australia, PRI will not require any such upgrade or renovation to
be implemented by Franchisee across the Outlets within a period which
involves a rate of implementation faster than the rate of implementation by
PRI across any PRI company-
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operated stores.
8. TACO XXXX
During the currency of the Development Agreement, subject to Franchisee not
being in default of any term or condition of the Franchise Agreement or the
Development Agreement, Franchisee will have a first right of refusal in
respect of TACO XXXX in Queensland as follows:
(a) PRI will not itself commence developing, or franchise to a third
party the right to develop, TACO XXXX in Queensland without first
offering to Franchisee in writing the right to develop TACO XXXX under
the terms of PRI's then current franchise agreement and/or development
agreement, including the then current fees applicable to the type of
development opportunity being offered;
(b) Franchisee will have 90 days from its receipt of the written offer
to accept the offer by executing and delivering to PRI the franchise
agreement and/or development agreement and any other documents
required by PRI;
(c) If Franchisee fails to accept PRI's offer pursuant to paragraph
(b), PRI will be entitled itself or by franchise to a third party to
pursue the development of TACO XXXX in Queensland.
9. DUAL-BRANDED OUTLETS
During the currency of the Development Agreement, subject to Franchisee not
being in default of any term or condition of the Franchise Agreement or the
Development Agreement, PRI will give Franchisee 90 days notice before
opening any "dual-branded" outlet under the KFC and PIZZA HUT brands in
Queensland.
10. TERMINATION AND RELEASE OF FORMER FRANCHISE AGREEMENTS
The parties agree that the Former Franchise Agreements will be terminated
with effect on and from the Effective Date. Each party hereby releases and
forever discharges the other party from and against all actions, claims,
damages and liabilities which it may have against the other party arising
out of the Former Franchise Agreements, provided that PRI's release of
Franchisee is subject to and conditional upon payment by Franchisee of all
fees and other amounts payable by Franchisee to PRI in respect of the
Outlets up to and including the Effective Date.
11. TERM AND TERMINATION OF THIS AGREEMENT
11.1 The term of this Agreement will commence on the Effective Date and will
continue until the expiration or termination of the last operative
Franchise Agreement in respect of an Outlet, unless earlier terminated
pursuant to Clause 11.2.
11.2 PRI may terminate this Agreement by notice to Franchisee effective
immediately upon receipt if any of the following events occur:
(a) Franchisee breaches any term or condition of this Agreement; or
(b) any of the Franchise Agreements in respect of the Outlets or any other
franchise agreement between PRI and Franchisee is terminated for any
reason.
11.3 The provisions of Clauses 5, 6 and 7 will survive the expiration of this
Agreement, and Clauses
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6.1 and 6.2 (a) will survive the termination of this Agreement, in respect
of and during the currency of the Franchise Agreements between PRI and
Franchisee still in existence at the time of expiration or termination.
12. TRANSFER
12.1 Except as specified in Clause 12.2, Franchisee may not transfer or assign
this Agreement to any other party without PRI's prior written approval,
which may be withheld in PRI's sole discretion.
12.2 In the event of an approved transfer by Franchisee of all the KFC outlets
operated by Franchisee to a single transferee in a single transaction,
Franchisee may transfer this Agreement, subject to compliance by Franchisee
with, and PRI granting approval pursuant to, Clause 14 of the Franchise
Agreement.
13. MISCELLANEOUS
13.1 Nothing in this Agreement applies to any KFC outlet developed by Franchisee
pursuant to the Development Agreement, or renewed by PRI after the
Effective Date and during the currency of the Development Agreement, except
Clauses 5, 6 and 7.
13.2 This Agreement, the Development Agreement and the Franchise Agreements
constitute the entire agreement between the parties with respect to their
subject matter and supersede all prior negotiations, agreements or
understandings.
13.3 This Agreement will inure to the benefit of PRI, its successors and assigns
and may be transferred or assigned by PRI to any party without Franchisee's
prior approval.
13.4 The terms and conditions of this Agreement may be changed only in writing
signed by both parties.
13.5 This Agreement will be governed by and construed in accordance with the law
of New South Wales and the parties submit to the non-exclusive jurisdiction
of the courts of New South Wales.
13.6 The currency of the amounts referred to in this Agreement will be
Australian dollars.
13.7 References to clauses and schedules are to clauses and schedules of this
Agreement and the Schedules form part of this Agreement.
13.8 Any notice or other communication required or permitted under this
Agreement will be in writing and properly addressed to the addressee at the
address specified in this Agreement (or any other address notified by the
addressee) and will be deemed received by the addressee on the earlier of
the date of delivery, the date of transmission if sent by facsimile with
receipt confirming completion of transmission, or 3 days after the date of
posting if sent by pre-paid security or registered post.
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EXECUTED AS AN AGREEMENT
THE COMMON SEAL of KENTUCKY )
FRIED CHICKEN PTY LIMITED was )
affixed in the presence of: )
/s/ Xxxx /s/ Xxxxx Xxxxxx
--------------------------- ---------------------------
Secretary Director
THE COMMON SEAL of )
XXXXXXX FOODS INTERNATIONAL )
PTY. LIMITED was affixed in )
the presence of: )
/s/ Xxxxx X. Xxxxxx /s/ Xxxxx Xxxxxxx
-------------------------- ---------------------------
Secretary President
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SCHEDULE 1 - 63 OUTLETS
OUTLET TERM RENEWAL TERM
MACKAY, Nebo Rd & Xxxxxx Xxxxxx 00 years commencing on the Date of Grant Nil
MT ISA, Xxxxxx & Xxxxxxx Xxxxxxx 00 years commencing on the Date of Grant Nil
CABOOLTURE, Morayfield Rd,
Morayfield 23 years commencing on the Date of Grant Nil
BUNDABERG, 000 Xxxxxxxx Xxxxxx 23 years commencing on the Date of Grant Nil
TOOWOOMBA 3, Ruthuen & Stennar 23 years commencing on the Date of Grant Nil
Streets
CAIRNS, Martyn & Mulgrave Roads 23 years commencing on the Date of Grant Nil
XXXXXXXXXX 0 (XXXXXXX), Xxxxxx Xx &
Xxxxxxx Xxxxxx 00 years commencing on the Date of Grant Nil
IPSWICH (BOOVAL), Xxxxxxxx Xx &
Xxxxxxx Xx 00 years commencing on the Date of Grant Nil
XXXXX CITY, Cnr. Wembley & Xxxxx
Roads, Woodridge 23 years commencing on the Date of Grant Nil
TOOWOOMBA 2 (WILSONTON), Xxx.
Xxxxxx & Xxxx Xxxxxxx 00 years commencing on the Date of Grant Nil
NERANG (GOLD COAST), Hinkler Drive 22 years commencing on the Date of Grant Nil
SPRINGWOOD, Xxxxxx St & Pacific
Highway 22 years commencing on the Date of Grant Nil
TOWNSVILLE 3 (CRANBROOK), Cnr. Xxxx 22 years commencing on the Date of Grant Nil
River Rd & Xxxxx Street, Cranbrook
STRATHPINE, Xxx Xxxxxxx & Xxxxxxxx
Xxxxx 00 years commencing on the Date of Grant Nil
ROCKHAMPTON 2 - STH, Xxx Xxxxxx &
Xxxxxx Xxxxxxx 00 years commencing on the Date of Grant Nil
INNISFALL, 121 Edit Street 22 years commencing on the Date of Grant Nil
EARLVILLE (CAIRNS 2), 000 Xxxxxxxx Xx 00 years commencing on the Date of Grant Nil
REDBANK, Redbank Plaza Shopping 22 years commencing on the Date of Grant Nil
Centre
ANNERLEY, 000-000 Xxxxxxx Xx 21 years commencing on the Date of Grant Nil
MAROOCHYDORE, Cnr Aerodrome & First 21 years commencing on the Date of Grant Nil
Ave
CLAYFIELD, Sandgate Rd 21 years commencing on the Date of Grant Nil
NAMBOUR, Cnr Xxxxxx & Arundel Drive 21 years commencing on the Date of Grant Nil
KEDRON, Gympie & Xxxxxxxxx Streets 21 years commencing on the Date of Grant Nil
XXXXXX, Xxxxx Highway 21 years commencing on the Date of Grant Nil
BRASSALL, 00 Xxxxxx Xxxxxx, Xxxxxxxx 21 years commencing on the Date of Grant Nil
LOGANLEA (MARSDEN), 00 Xxxxxxxx
Xxxx Xx 00 years commencing on the Date of Grant Nil
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SCHEDULE 1 - 63 OUTLETS
BROWNS PLAINS, Grand Plaza Shopping
Centre, 25 Browns Plains Rd 21 years commencing on the Date of Grant Nil
BEENLEIGH, Xxxxxxxxx Xxxxx Xxxx Xx 00 years commencing on the Date of Grant Nil
WYNNUM, Cnr. Wynnum Rd & Capri Lane 20 years commencing on the Date of Grant Nil
XXXXXXXXX, 00 Xxxxxx Xx 20 years commencing on the Date of Grant Nil
ROCKHAMPTON 1 (NORTH), Xxxxxxxxx 20 years commencing on the Date of Grant Nil
Drive
GREENSLOPES, Xxxxx Xx 20 years commencing on the Date of Grant Nil
WARWICK, Cnr. Wood & Gay Streets 20 years commencing on the Date of Grant Nil
SUNNYBANK, Mains Road & XxXxxxxxxx
Street 20 years commencing on the Date of Grant Nil
GYMPIE, Cnr Xxxxxxx & Xxxxxxx
Streets 20 years commencing on the Date of Grant Nil
DALBY, Cnr. Drayton & Xxxxxxx
Xxxxxxx 00 years commencing on the Date of Grant Nil
TOWNSVILLE (HERMIT PARK), Charters
Towers Rd 19 years commencing on the Date of Grant Nil
GROVERLY, 161 Xxxxxx Parade 19 years commencing on the Date of Grant Nil
XXXXXX XXXXX, Xxxxxx Xxxxx & Xxxx
Xxxxxxx 00 years commencing on the Date of Grant Nil
MARGATE (REDCLIFFE), Xxxxx Xxxxxx 00 years commencing on the Date of Grant Nil
BENOWA, Benowa Gds, Shop Ctr, Cnr,
Benowa & Ashmore Rds 19 years commencing on the Date of Grant Nil
CENTENARY, Centenary Shop, Ctr. 000
Xxxxxxxxx Xx, Xx Ommaney 19 years commencing on the Date of Grant Nil
ROMA, Cnr. Xxxxxxx & Xxxxxx Streets 19 years commencing on the Date of Xxxxx Xxx
XXXXXXXXX, Xxxxx Xx. Xxxxxxxxx 00 years commencing on the Date of Grant Nil
SMITHFIELD, Xxx XxXxxxxx & Xxxxxxx
Xxxx Xxx, Xxxxxxxxxx, Xxxxxx 00 years commencing on the Date of Grant Nil
DEAGON, 8 Xxxxx Street 18 years commencing on the Date of Grant Nil
AYR, 000 Xxxxx Xxxxxx 18 years commencing on the Date of Grant Nil
CAPALABA, Xxx. Xxx Xxxxxxxxx Xx &
Xxxxxxx Xxxxxx 00 years commencing on the Date of Grant Nil
TOOWOOMBA 1, Cnr. Xxxxxxxx & Xxxx
Streets 18 years commencing on the Date of Grant Nil
CALOUNDRA, 00 X Xxxxxx Xxxx 00 years commencing on the Date of Grant Nil
MORNINGSIDE, 000 Xxxxxx Xx 18 years commencing on the Date of Grant Nil
XXXXXX, 00 Xxxxxxx Xxxxxx 18 years commencing on the Date of Grant Nil
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EMERALD, Emerald Vil Shop Ctre. Xxx
Xxxx Xx & Xxxxxxxx Xx 00 years commencing on the Date of Grant Nil
RUNAWAY BAY, Runaway Bay Shop Centre 18 years commencing on the Date of Grant Nil
KALLANGUR, Anzac Ave 17 years commencing on the Date of Grant Nil
PALM BEACH, The Pines Shopping
Centre, Elanora 17 years commencing on the Date of Grant Nil
ACACIA RIDGE, Cnr. Beaudesert Rd &
X'Xxxxxxx Street 17 years commencing on the Date of Grant Nil
BEAUDESERT, Brisbane Street 17 years commencing on the Date of Grant Nil
MAREEBA, 000 Xxxxxx Xxxxxx 17 years commencing on the Date of Grant Nil
COOLANGATTA, Showcase Shop. Ctr.
Marine Parade 17 years commencing on the Date of Grant Nil
MACKAY 2 (MT PLEASANT), Xx.
Xxxxxxxx Xxxxxxxx Xxxxxx, Xxxxxxx
Xxxxxx 17 years commencing on the Date of Grant Nil
DECEPTION BAY, Xxx Xxxx & Xxxxxxxxx
Xxx Xxxxx 00 years commencing on the Date of Grant Nil
MT. XXXXXXX, Xxxxx Xxxx & Xxxxxxxxx
Xxxxxx 00 years commencing on the Date of Grant Nil
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SCHEDULE 3 - FRANCHISE AGREEMENT
OUTLET TERM RENEWAL TERM
KENMORE, 000 Xxxxxxx Xx 8 years commencing on the Date of Grant 12 years
XXXXX, Xxxx Xxxxx Xxx, & Xxx Xxxxxx 0 years commencing on the Date of Grant 12 years
BILOELA, 00 Xxxxxxxxx Xxxx 8 years commencing on the Date of Grant 12 years
HERVEY BAY, Cnr. Torquay Road &
Xxxxxx Streets 8 years commencing on the Date of Grant 12 years
XXXXXXXXX, 0 Xxxxx Xxxxxx 8 years commencing on the Date of Grant 12 years
EVERTON PARK, Cnr. Strathpine &
Xxxxxxx 8 years commencing on the Date of Grant 12 years
HELENSVALE, Xxx 00, Xxxxxxx Xxxxx 0 years commencing on the Date of Grant 11 years
MERMAID BEACH, 2505-2516 Gold Coast
Highway 9 years commencing on the Date of Grant 11 years
CHARTERS TOWERS, 00 Xxxx Xxxxxx 9 years commencing on the Date of Grant 11 years
INDOOROOPILLY 0, Xxxxxxxxx & Xxxxxx
Xxxxx 9 years commencing on the Date of Grant 11 years
KINGAROY, Cnr Young & Xxxxxx Streets 9 years commencing on the Date of Grant 11 years
MARYBOROUGH, Xxx Xxxxxx & Xxxxx
Xxxxxxx 0 years commencing on the Date of Grant 11 years
NOOSA, 5 Sunshine Beach Rad 10 years commencing on the Date of Grant 10 years
SURFERS PARADISE, Pacific Highway 10 years commencing on the Date of Grant 10 years
MORANBAH, Moranbah Fair Shopping
Centre, Moranbah 10 years commencing on the Date of Grant 10 years
YEPPOON, Xxx. Xxxxxxxx Xx &
Xxxxxxxx Xxxx 00 years commencing on the Date of Grant 10 years
SUNNYBANK XXXX XXXXX, Xxxx 000,
Xxxxxxxxx Xxxxx. Cnr. Mains &
XxXxxxxxxx 10 years commencing on the Date of Grant 10 years
AUSTRALIA FAIR, Aust Fair Shop
Ctr., Southport, Gold Coast 10 years commencing on the Date of Grant 10 years
XXXXXXXXXX, Xxxxxxx Xxx & Xxxxxxx
Xxxx 00 years commencing on the Date of Grant 9 years
TRANSIT CENTRE, Xxxx 0.00, X
Xxxxxxxxx, Xxxx Xxxxxx, Xxxxxxxx 11 years commencing on the Date of Grant 9 years
CAPALABA, Xxxxxxx X/X, Xxxx X0,
Xxxxxxxx, Xxxxxxx Xxx Xxxx 11 years commencing on the Date of Grant 9 years
WATERFRONT PLACE, Xxxx 0,
Xxxxxxxxxx Xx, Xxxxx Xxxxxx,
Xxxxxxxx 11 years commencing on the Date of Grant 9 years
ROBINA, Xxxx XX0.00 Xxxxxx Xxxx
Xxxxxx, Xxxxxx Xxxxxxx, Xxxxxx 11 years commencing on the Date of Grant 9 years
KANGAROO POINT, 0000 Xxxx Xxxxxx 11 years commencing on the Date of Grant 9 years
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SCHEDULE 3 - FRANCHISE AGREEMENT
XXXX CENTRE, Cinema Xxx Xxxx Xxx,
Xxxxxx Xxxxxx, Xxxxxxxx 00 years commencing on the Date of Grant 8 years
XXXXXX XXXXX, Xxxx 000, X'xxxx Xxxx
Xxxx. Xxxx Xxxxx Xx, Xxxxxxxxxx 00 years commencing on the Date of Grant 8 years
EARLVILLE FOOD COURT, Earlville
Shopping Centre, Earlville 12 years commencing on the Date of Grant 8 years
INDOOROOPILLY 2, Xxxx 000, X/X
Xxxxxxxxx Xxxx Xxx, 000 Xxxxxxx
Xxxx 12 years commencing on the Date of Grant 8 years
PACIFIC FAIR, Xxxx 000, Xxx Xxxx
Xxxxxx - Xxxxxxxxxx Xxx, Xxxxxxxxxx 12 years commencing on the Date of Grant 8 years
TOOMBUL, Xxxx 000, Xxxxxxxxx
Xxxxxxxx Xxxxxx, Xxxxxxxx Xxxx 12 years commencing on the Date of Grant 8 years
