EXHIBIT 10.7
CHURCHS CHICKEN
DEVELOPMENT AGREEMENT
(EXCLUSIVE)
BETWEEN
AFC ENTERPRISES, INC.
AND
------------------------------
Dev. Agr. No.:_______________
No. Options:_________________
Date:________________________
AFC Enterprises, Inc.
CHURCHS CHICKEN
DEVELOPMENT AGREEMENT
(Exclusive)
TABLE OF CONTENTS
X. XXXXX..................................................... 2
II. DEVELOPMENT FEE........................................... 3
III. DEVELOPMENT SCHEDULE...................................... 3
IV. FRANCHISED UNIT OPENINGS.................................. 3
V. DEFAULT AND TERMINATION................................... 6
VI. TRANSFERABILITY OF INTEREST............................... 7
VII. CONFIDENTIAL INFORMATION.................................. 11
VIII. COVENANTS................................................. 11
IX. NOTICES................................................... 13
X. NON-WAIVER................................................ 13
XI. INDEPENDENT CONTRACTOR AND INDEMNIFICATION................ 14
XII. APPROVALS................................................. 14
XIII. ACKNOWLEDGMENT............................................ 15
XIV. SEVERABILITY AND CONSTRUCTION............................. 15
XV. ENTIRE AGREEMENT AND APPLICABLE LAW....................... 16
EXHIBIT A - DEVELOPMENT SCHEDULE..................................... 18
EXHIBIT B - TERRITORY................................................ 19
EXHIBIT C - FRANCHISE AGREEMENT...................................... 20
AFC ENTERPRISES, INC.
CHURCHS CHICKEN
DEVELOPMENT AGREEMENT
(Exclusive)
THIS AGREEMENT (the "Agreement"), made this ______ day of
__________________________, 19___, by and between AFC ENTERPRISES, INC. (f/k/a
America's Favorite Chicken Company), a Minnesota corporation, with its principal
place of business at Xxx Xxxxxxxxx Xxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 30328-
5352, U.S.A. ("Franchisor") and ______________________________________________
_____________ ("Developer").
WITNESSETH:
WHEREAS, Franchisor owns a unique system for opening and operating
restaurants ("CHURCHS Restaurant(s)") specializing in the preparation,
merchandising, advertising and sale of fried chicken and other quick-service
menu items developed and owned by Franchisor (the "CHURCHS System" or the
"System");
WHEREAS, the distinguishing characteristics of the CHURCHS System
include, without limitation, the names "CHURCHS" and "CHURCHS Chicken"; the
distinguishing characteristics of which include, without limitation, uniform and
distinctive building designs, interior and exterior layouts, trade dress,
equipment layout standards and specifications, development and maintenance of
sources of supply, operating procedures for sanitation and maintenance, food and
beverage storage procedures, service procedures, and secret food preparation
recipes and batter mixes, standards and specifications for equipment, equipment
layouts, products, operating procedures and management programs, all of which
may be changed, improved and further developed by Franchisor from time to time;
WHEREAS, Franchisor identifies the CHURCHS System by means of certain
trade names, service marks, trademarks, logos, emblems, and indicia of origin,
including, but not limited to, the marks "CHURCHS" and "CHURCHS Chicken" and
such other trade names, service marks, and trademarks as are now, or may
hereafter, be designated by Franchisor for use in connection with the System
("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 in the CHURCHS System and to represent
the CHURCHS System's high standards of quality, appearance, and service;
1
WHEREAS, Developer wishes to be assisted, trained and licensed by
Franchisor as a CHURCHS developer and franchisee and licensed to use, in
connection therewith, the CHURCHS System;
WHEREAS, Developer understands the importance of the CHURCHS System
and CHURCHS high and uniform standards of quality, cleanliness, appearance, and
service, and the necessity of opening and operating Developer's CHURCHS
Restaurants in conformity with the CHURCHS System; and
WHEREAS, Developer wishes to obtain the right to develop CHURCHS
Restaurants ("Franchised Units") in the area described in this Agreement and to
use the CHURCHS System in connection with those Franchised Units;
NOW, THEREFORE, the parties hereto agree as follows:
X. XXXXX
1.01. Franchisor hereby grants the Developer, subject to the terms and
conditions of this Development Agreement and as long as Developer shall not be
in default of this Agreement or any other development, franchise or other
agreement between Developer and Franchisor, development rights to obtain
franchises to establish and operate ________ Franchised Units, and to use the
Church's System solely in connection therewith, at specific locations to be
designated in separate franchise agreements ("Franchise Agreements"), executed
as provided in Section 3.01. hereof, and pursuant to the schedule set forth in
Exhibit A to this Agreement ("Development Schedule"). Each Franchised Unit
---------
developed pursuant hereto shall be located in the area described in Exhibit B
---------
hereto "(Development Area").
1.02. Subject to the terms and conditions herein, Franchisor shall neither
establish nor license anyone other than Developer to establish a Franchised Unit
in the Development Area until sixty (60) days after the commencement of
operations of the final Franchised Unit under this Agreement, without
Developer's prior written consent.
1.03. Each Franchised Unit for which a development right is granted
hereunder shall be established and operated pursuant to a Franchise Agreement to
be entered into between Developer and Franchisor in accordance with Section
3.01. hereof.
1.04. This Agreement is not a franchise agreement, and does not grant the
Developer any right to use Franchisor's Proprietary Marks or the Church's
System, but merely sets forth the terms and conditions under which Developer
will be entitled to obtain a franchise agreement.
1.05. Developer shall have no right under this Agreement to license others
under the Proprietary Marks or to use the Church's System.
2
II. DEVELOPMENT FEE
In consideration of the development rights granted herein, Developer has
paid to the Franchisor upon execution of this Agreement a non-refundable
development fee of __________________________________ Dollars ($_____________)
which development fee has been fully earned by Franchisor for administrative and
other expenses incurred by Franchisor and for the development opportunities lost
or deferred as a result of the rights granted Developer herein.
III. DEVELOPMENT SCHEDULE
3.01. Developer shall exercise each development right granted herein only
by executing a Franchise Agreement for each Franchised Unit for a site accepted
by the Franchisor in the Development Area as hereinafter provided. Developer's
right to execute such a Franchise Agreement shall be contingent upon Developer's
continuous performance of all of the terms and conditions of this Agreement and
any other development, franchise or other agreements between Developer and
Franchisor. The Franchise Agreement for each Franchised Unit developed pursuant
to this Agreement shall be in the form of the Franchise Agreement attached
hereto as Exhibit C.
3.02. Recognizing that time is of the essence in this Agreement, Developer
agrees to exercise the development rights granted hereunder in the manner
specified in Section IV hereof and to satisfy the Development Schedule. Failure
by Developer to adhere to the Development Schedule shall constitute a default
under this Agreement, as provided in Section 5.03. hereof.
3.03. In addition to the development fee required by Section II hereof,
Developer shall pay (i) an initial franchise fee for each Restaurant developed
hereunder in the amount of Fifteen Thousand Dollars ($15,000) upon execution of
a Franchise Agreement for each such Franchised Unit, all of which amount shall
be non-refundable and fully earned by Franchisor upon execution of the Franchise
Agreement for a Franchised Unit.
IV. FRANCHISED UNIT OPENINGS
4.01. Developer shall submit a proposed site for each Franchised Unit for
acceptance by Franchisor. Franchisor shall, provided there exists no default by
Developer under this Agreement or any other development, franchise or other
agreement between Developer and Franchisor, evaluate each site proposed and
shall promptly, but not more than thirty (30) days after receipt of Developer's
proposal, send to Developer written notice of acceptance or non-acceptance of
the site. Site acceptance does not assure that a Franchise Agreement will be
executed. Execution of the Franchise Agreement is contingent upon Developer
purchasing or leasing the proposed site and securing acceptance of the final
plans and specifications as provided below.
3
4.02. Within ninety (90) days after notice of Franchisor's site
acceptance, Developer shall:
A. Submit, in writing to Franchisor, satisfactory proof to
Franchisor that Developer:
(i) owns the accepted site;
(ii) has leased the accepted site for a term which, with
renewal options, is not less than the initial term of the Franchise
Agreement; or
(iii) has entered into a written agreement to purchase or to
lease the accepted site on terms provided herein, subject only to
obtaining necessary governmental permits. If Developer leases the
accepted site, the lease must provide: (a) that, in the event Developer
defaults under or otherwise ceases operating the Franchised Unit at the
accepted site during the term of the lease, Franchisor shall have the
right, at its option, to assume Developer's position under the lease;
(b) that, in the event Developer defaults under the lease, notice of
the default shall immediately be forwarded to Franchisor; and (c) that
Franchisor shall have the right, upon default under the lease or other
cessation of operation at the accepted site, to make the modifications
and alterations to the Franchised Unit set forth in Section 16.01.D. of
the Franchise Agreement. The proof required by this Section includes,
but is not limited to, submission of executed copies of all leases and
deeds, as well as all governmental approvals if effectiveness of the
leases or deeds is conditioned thereon.
B. Submit to Franchisor, and obtain Franchisor's written approval
of, the final and complete plans and specifications for the
construction (or renovation) and decoration of the Franchised Unit,
which must be in conformity with Franchisor's standards and
specifications for Franchised Units, as set out in the current
Confidential Operating Standards Manual (as defined in the Franchise
Agreement) or otherwise in writing (hereinafter, the "Construction
Plans"). The final Construction Plans shall include, but are not
limited to, floor plans, equipment layouts, decor, and interior and
exterior elevations.
C. Execute the Franchise Agreement and pay all fees required
thereunder. If Developer is a partnership, each general partner
shall, and if Developer is a corporation, each stockholder holding a
beneficial interest of five percent (5%) or more of the securities
with voting rights of Developer or any corporation directly or
indirectly controlling Developer shall, guarantee the performance of
the Franchise Agreement by executing the Franchisor's Franchise
Agreement Guarantee form. Franchisor shall not approve the final
4
construction plans until the Franchise Agreement is executed and all
fees are paid by Franchisee.
4.03. Developer shall procure the insurance coverage provided for in
Section XI of the Franchise Agreement, prior to commencement of construction of
a Franchised Unit, and shall maintain such insurance coverage throughout the
term of the Franchise Agreement.
4.04. No more than thirty (30) days after the Franchisor approves
Developer's Construction Plans, Developer shall commence construction or
renovation of the Franchised Unit. If commencement of construction or
renovation is delayed by a cause beyond the reasonable control of Developer, the
date upon which commencement of construction or renovation is to begin may be
extended by obtaining written approval of Franchisor.
4.05. Upon commencement of construction or renovation of the Franchised
Unit, Developer shall notify Franchisor on such form as Franchisor may
prescribe.
4.06. Developer shall have completed construction or renovation and
commenced operation of the Franchised Unit within one-hundred eighty (180) days
from execution of the Franchise Agreement as provided in Section 4.02.C. hereof.
Franchisor may, in its sole discretion, extend this period to address unforeseen
construction delays, not within the control of Developer. Nothing herein shall
be deemed to relieve Developer of the obligation of complying with the
Development Schedule.
4.07. At least ten (10) days prior to the proposed commencement of
operation of each Franchised Unit, Developer shall notify Franchisor of such
proposed opening. If the Franchised Unit is Developer's first Franchised Unit
opened hereunder, Franchisor shall provide a representative to be present at the
opening. The Franchised Unit shall not be opened unless such representative is
present. Should commencement of operation of the Franchised Unit be delayed by
the failure of Franchisor to provide such a representative, the date upon which
commencement of operation of the Franchised Unit is required pursuant to Exhibit
A of this Agreement, shall be extended until such time as such assistance is
provided by Franchisor.
V. DEFAULT AND TERMINATION
5.01. The rights granted to Developer in this Agreement have been granted
based upon Developer's representations and assurances, among others, that the
conditions set forth in Sections III and IV of this Development Agreement will
be met by Developer in a timely manner.
5.02. Developer shall be deemed to be in default under this Agreement, and
all rights granted herein shall automatically terminate without notice to
Developer, if Developer shall become insolvent or make a general assignment for
the benefit of creditors; if a petition in bankruptcy is filed by Developer or
such a petition is filed against Developer and not opposed
5
by Developer; or if Developer is adjudicated bankrupt or insolvent; or if a
receiver or other custodian (permanent or temporary) of Developer's assets or
property, or any part thereof, is appointed by any court of competent
jurisdiction; or if proceedings for a composition with creditors under the
applicable law of any jurisdiction should be instituted by or against Developer;
or if a final judgment remains unsatisfied or of record for thirty (30) days or
longer (unless a supersedeas bond is filed); or if Developer is dissolved; or if
execution is levied against Developer's property or business; or if suit to
foreclose any lien or mortgage against the premises or equipment of any
Franchised Unit developed hereunder is instituted against the Developer and not
dismissed within thirty (30) days; or if the real or personal property of any
Franchised Unit developed hereunder shall be sold after levy thereupon by any
sheriff, marshall, or constable.
5.03. If Developer fails to comply with the Development Schedule or any
other terms of this Agreement, or fails to obtain Franchisor's approval of a
site or construction plans and specifications prior to commencement of
construction, or fails to comply with any terms or conditions of any franchise
agreement covering a Franchised Unit established hereunder, or any other
agreement between Developer or any affiliate of Developer and Franchisor or any
affiliate of Franchisor, such action shall constitute a default under this
Development Agreement. Upon such default, Franchisor, in its discretion, may,
effective immediately upon the mailing of written notice by Franchisor to
Developer, do any one or more of the following:
A. Terminate this Agreement and all rights granted hereunder
without affording the Developer any opportunity to cure the default;
B. Reduce the number of Franchised Units which Developer may
establish pursuant to Section 1.01 of this Agreement;
C. Terminate the territorial exclusivity granted Developer in
Section 1.01 hereof or reduce the area of territorial exclusivity
granted Developer hereunder;
D. Withhold evaluation or approval of site proposal packages and
refuse to permit the opening of any Franchised Unit then under
construction or otherwise not ready to commence operations; or
E. Accelerate the Development Schedule set forth in Exhibit A
hereto.
In addition to the foregoing, Franchisor shall be entitled to pursue any
other remedies available hereunder or at law or in equity.
5.04. Upon termination of this Agreement, Developer shall have no right to
establish or operate any Franchised Unit for which a Franchise Agreement has not
been executed by Franchisor and delivered to Developer at the time of
termination; and Franchisor shall be entitled to establish, and to license
others to establish, Franchised Units in the Development Area, except
6
as may be provided under any other agreement which is then in effect between
Franchisor and Developer.
5.05. A default in the Development Schedule under this Development
Agreement shall not constitute a default under any existing Franchise Agreement
between the parties hereto.
VI. TRANSFERABILITY OF INTEREST
6.01. Transfer by Franchisor. This Agreement shall inure to the benefit
----------------------
of the successors and assigns of Franchisor. Franchisor shall have the right to
transfer or assign its interest in this Agreement to any person, persons,
partnership, association, or corporation. If Franchisor's assignee assumes all
the obligations of Franchisor hereunder and sends written notice of the
assignment so attesting, Developer agrees promptly to execute a general release
of Franchisor, and any affiliates of Franchisor, from claims or liabilities of
Franchisor under this Agreement.
6.02. Transfer by Developer. Developer understands and acknowledges that
---------------------
the rights and duties set forth in this Agreement are personal to Developer, and
that Franchisor has granted this Agreement in reliance on Developer's business
skill and financial capacity. Accordingly, neither (i) Developer, nor (ii) any
immediate or remote successor to Developer, nor (iii) any individual,
partnership, corporation or other legal entity which directly or indirectly owns
any interest in the Developer or in this Development Agreement, shall sell,
assign, transfer, convey, donate, pledge, mortgage, or otherwise encumber any
direct or indirect interest in this Agreement or in Developer without the prior
written consent of Franchisor. Any purported assignment or transfer, by
operation of law or otherwise, not having the written consent of Franchisor,
shall be null and void, and shall constitute a material breach of this
Agreement, for which Franchisor may then terminate without opportunity to cure
pursuant to Section 5.03. of this Agreement. Notwithstanding anything in this
Agreement to the contrary, Developer understands and acknowledges that
individual development rights to obtain franchises to establish and operate
Franchised Units may not be transferred except in connection with a transfer of
this Development Agreement, together with all remaining development options due
to be developed under this Agreement, in accordance with the conditions set
forth herein.
6.03. Conditions for Consent. Franchisor shall not unreasonably withhold
----------------------
its consent to any transfer referred to in this Section hereof for the remainder
of the term hereof, when requested; provided, however, that prior to the time of
transfer:
A. Developer shall not be in default of the Development Schedule;
B. The transfer must be in conjunction with a simultaneous transfer to the
same transferee of all Franchised Units operated by Developer under the
Churchs System within the same DMA('s) as the remaining development
----------------------------
options;
-------
7
C. All of Developer's accrued monetary obligations to Franchisor and its
subsidiaries and affiliates shall have been satisfied;
D. Developer shall have agreed to remain obligated under the covenants
contained in Sections VII and VIII hereof as if this Agreement had been
terminated on the date of the transfer;
E. The transferee must be of good moral character and reputation, in the
reasonable judgment of the Franchisor;
F. The transferee shall have demonstrated to the Franchisor's
satisfaction, by meeting with the Franchisor or otherwise at Franchisor's
option, that the transferee's qualifications meet the Franchisor's then
current criteria for new developers;
G. The parties must execute a written assignment, in a form satisfactory
to Franchisor, pursuant to which the transferee shall assume all of the
obligations of the individual or entity which is the transferor under this
Agreement and pursuant to which Developer shall generally release any and
all claims it might have against Franchisor as of the date of the
assignment;
H. The transferee must, at Franchisor's option, execute the then-current
form of Development Agreement and such other then-current ancillary
agreements as Franchisor may reasonably require. The then-current form of
Development Agreement may have significantly different provisions,
provided, however, that Exhibits A and B hereto shall be Exhibits A and B
to such development agreement;
I. If the transferee is a partnership, the partnership agreement shall
provide that further assignments or transfers of any interest in the
partnership are subject to all restrictions imposed upon assignments and
transfers in this Agreement;
J. Developer shall, at Franchisor's option and request, execute a written
guarantee of the transferee's obligations under the Agreement, which such
guarantee shall not exceed a period of three (3) years from the date of
transfer; and
K. The Developer or the transferee shall have paid to Franchisor a
transfer fee of Five Thousand Dollars ($5,000), to cover Franchisor's
administrative expenses in connection with the transfer, but no development
fees shall be charged by Franchisor for a transfer. If the transferee is a
corporation formed by Developer for the convenience of ownership and in
which the Developer is the sole shareholder, no transfer fee shall be
required.
8
6.04. Grant of Security Interest. Developer shall grant no security
--------------------------
interest in this Agreement unless the secured party agrees that, in the event of
any default by Developer under any documents related to the security interest,
(i) Franchisor shall be provided with notice of default and be given a
reasonable time within which to cure said default, (ii) Franchisor shall have
the right and option to be substituted as obligor to the secured party and to
cure any default of Developer or to purchase the rights of the secured party
upon payment of all sums then due to such secured party, except such amounts
which may have become due as a result of any acceleration of the payment dates
based upon the Developer's default, and (iii) such other requirements as
Franchisor, in its sole discretion, deems reasonable and necessary to protect
the integrity of the Proprietary Marks and the Church's System.
6.05. Death or Mental Incapacity. Upon the death or mental incapacity of
--------------------------
any person with an interest in this Agreement or in Developer, the executor,
administrator, or personal representative of such person shall transfer his
interest to a third party approved by Franchisor within twelve (12) months after
such death or mental incapacity. Such transfer, including, without limitation,
transfer by devise or inheritance, shall be subject to the same conditions as
any inter vivos transfer. However, in the case of transfer by devise or
----- -----
inheritance, if the heirs or beneficiaries of any such person are unable to meet
the conditions in this Section VI, the personal representative of the deceased
Developer shall have a reasonable time, but no more than eighteen (18) months
after the death of the Developer, to dispose of the deceased's interest in this
Agreement and the business conducted pursuant hereto, which disposition shall be
subject to all the terms and conditions for assignments and transfers contained
in this Agreement. If the interest is not disposed of within twelve (12) or
eighteen (18) months, whichever is applicable, Franchisor may terminate this
Agreement pursuant to Section 5.03. hereof.
6.06. Right of First Refusal. Any party holding any interest in this
----------------------
Agreement or in Developer, and who desires to accept any bona fide offer from a
---- ----
third party to purchase such interest, shall notify Franchisor in writing of
such offer within ten (10) days of receipt of such offer, and shall provide such
information and documentation relating to the offer as Franchisor may require.
Franchisor shall have the right and option, exercisable within thirty (30) days
after receipt of such written notification, to send written notice to the seller
that Franchisor intends to purchase the seller's interest on the same terms and
conditions offered by the third party. In the event that Franchisor elects to
purchase the seller's interest, closing on such purchase must occur within sixty
(60) days from the date of notice to the seller of the election to purchase by
Franchisor. Any material change in the terms of any offer prior to closing
shall constitute a new offer subject to the same rights of first refusal by
Franchisor as in the case of an initial offer. Failure of Franchisor to
exercise the option afforded by this Section 6.06. shall not constitute a waiver
of any other provisions of this Agreement, including all of the requirements of
this Section VI, with respect to a proposed transfer.
In the event the consideration, terms, and/or conditions offered by a third
party are such that Franchisor may not reasonably be required to furnish the
same consideration, terms, and/or conditions, then Franchisor may purchase the
interest in this Agreement, Developer, or
9
Developer's business proposed to be sold for the reasonable equivalent in cash.
If the parties cannot agree within a reasonable time as to the reasonable
equivalent in cash of the consideration, terms, and/or conditions offered by the
third party, an independent appraiser shall be designated by Franchisor, and his
determination shall be binding upon the parties.
6.07. Offerings by Developer. Securities or partnership interests in
----------------------
Developer may be offered to the public, by private offering or otherwise, only
with the prior written consent of Franchisor, which consent shall not be
unreasonably withheld. All materials required for such offering by federal or
state law shall be submitted to Franchisor for review prior to their being filed
with any governmental agency; and any materials to be used in any exempt
offering shall be submitted to Franchisor for review prior to their use. No
offering of such securities shall imply (by use of the Proprietary Marks or
otherwise) that Franchisor is participating in the underwriting, issuance, or
offering of securities by Developer or Franchisor; and Franchisor's review of
any offering shall be limited solely to the subject of the relationship between
Developer and Franchisor. Developer and the other participants in the offering
must fully indemnify Franchisor in connection with the offering. For each
proposed offering, Developer shall pay to Franchisor a non-refundable fee of
Five Thousand Dollars ($5,000), or such greater amount as is necessary to
reimburse Franchisor for its reasonable costs and expenses associated with
reviewing the proposed offering, including, without limitation, legal and
accounting fees. Developer shall give Franchisor written notice at least thirty
(30) days prior to the date of commencement any offering or other transaction
covered by this Section 6.07.
10
VII. CONFIDENTIAL INFORMATION
7.01. Developer 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 construction and methods of operation of
any Franchised Unit which may be communicated to Developer, or of which
Developer may be apprised, by virtue of Developer's operation under the terms of
this Agreement. Developer shall divulge such confidential information only to
such employees of Developer as must have access to it in order to exercise the
development rights granted hereunder and to establish and operate the Franchised
Units pursuant to the Franchise Agreement and as Developer may be required by
law, provided, Developer shall give Franchisor prior written notice of any such
required disclosure immediately upon receipt of notice by Developer in order for
Franchisor to have the opportunity to seek a protective order or take such other
actions as it deems appropriate under the circumstances.
7.02. Any and all information, knowledge, and know-how, including, without
limitation, drawings, materials, equipment, recipes, prepared mixtures or blends
of spices or other food products, and other data, which Franchisor designates as
confidential, and any information, knowledge, or know-how which may be derived
by analysis thereof, shall be deemed confidential for purposes of this
Development Agreement, except information which Developer can demonstrate came
to Developer's attention prior to disclosure thereof by Franchisor or which, at
the time of disclosure thereof by Franchisor to Developer, had become a part of
the public domain, through publication or communication by others or which,
after disclosure to Developer by Franchisor, becomes a part of the public
domain, through publication or communication by others.
7.03. Developer shall require all of Developer's employees, as a condition
of their employment, to execute an employment agreement, as provided in writing
by Franchisor, prohibiting them during the term of their employment, or
thereafter, from communicating, divulging, or using for the benefit of any
person, persons, partnership, association, or corporation any confidential
information, knowledge, or know-how concerning the methods of operation of the
franchised business which may be acquired during the term of their employment
with Developer. A duplicate original of each such agreement shall be provided
to Franchisor upon execution.
VIII. COVENANTS
8.01. Developer specifically acknowledges that, pursuant to this
Agreement, Developer 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. Developer covenants that, during the term of this
Agreement, except as otherwise approved in writing by Franchisor, Developer
(who, unless
11
otherwise specified, shall include for purposes of this Section VIII,
collectively and individually, all officers, directors and holders of a
beneficial interest of five percent (5%) or more of the securities with voting
rights of Developer, and of any corporation directly or indirectly controlling
Developer, if Developer is a corporation, and the general partners and any
limited partners, including any corporation and the officers, directors and
holders of beneficial interests of five percent (5%) or more of the securities
with voting rights, of a corporation which controls, directly or indirectly, any
general or limited partner, if Developer is a partnership) shall not, either
directly or indirectly, for Developer or through or on behalf of, or in
conjunction with, any person, persons, partnership, or corporation:
A. Divert or attempt to divert any business or customer of the
Franchised Units to be developed hereunder to any competitor by
direct or indirect inducements or otherwise, or to do or perform,
directly or indirectly, any other act injurious or prejudicial to
the goodwill associated with Franchisor's Proprietary Marks and the
System;
B. Employ or seek to employ any person who is at the time employed
by Franchisor or by any other Church's franchisees or otherwise, or
directly or indirectly induce such person to leave his or her
employment; or
C. Own, maintain, operate, engage in, or have an interest in any
fast food (either takeout, on premises consumption, or a combination
thereof) restaurant that specializes in the sale of chicken
("Chicken Restaurant"); provided, however, that the term "Chicken
Restaurant" shall not apply to any business operated by Developer
under a franchise agreement with Franchisor or an affiliate of
Franchisor.
8.02. Developer covenants that, except as otherwise approved in writing by
the Franchisor, Developer shall not, either directly or indirectly, for itself
or through or on behalf of, or in conjunction with, any person, persons,
partnership or corporation, during the term hereof or for two (2) years
following expiration or termination of this Agreement, regardless of the cause
for termination, own, maintain, engage in, or have an interest in any Chicken
Restaurant which is located within a radius of ten (10) miles of the location of
any restaurant under the Church's System which is in existence as of the date of
expiration or termination of this Agreement.
8.03. At Franchisor's request, Developer shall require and obtain
execution of covenants similar to those set forth in this Section VIII
(including covenants applicable upon the termination of a person's relationship
with Developer) from all officers, directors, and holders of a direct or
indirect beneficial ownership interest of five percent (5%) or more in
Developer. Every covenant required by this Section 8.03. 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 Developer to obtain execution
of a covenant required by this Section 8.03. shall constitute a material breach
of this Agreement.
12
IX. NOTICES
Any and all notices required or permitted under this Agreement shall be in
writing and shall be delivered by any means which will provide evidence of the
date received 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: Franchise Department
AFC Enterprises, Inc.
Six Xxxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
cc: Legal Department
Notices to Developer: _________________________________
_________________________________
_________________________________
Attention: ______________________
All written notices and reports permitted or required to be delivered by
the provisions of this Agreement shall be addressed to the party to be notified
at its most current principal business address of which the notifying party has
been notified and shall be deemed so delivered (i) at the time delivered by
hand; (ii) one (1) business day after sending by telegraph, facsimile or
comparable electronic system; or (iii) if sent by registered or certified mail
or by other means which affords the sender evidence of delivery, on the date and
time of receipt or attempted delivery if delivery has been refused or rendered
impossible by the party being notified.
X. NON-WAIVER
No failure of Franchisor to exercise any power reserved to it in this
Agreement, or to insist upon compliance by Developer with any obligation or
condition in this Agreement, and no custom or practice of the parties at
variance with the terms hereof, shall constitute a waiver of Franchisor's right
to demand exact compliance with the terms of this Agreement. Waiver by
Franchisor of any particular default shall not affect or impair Franchisor's
right with respect to any subsequent default of the same or of a different
nature, nor shall any delay, forbearance, or omission of Franchisor to exercise
any power or rights arising out of any breach or default by Developer of any of
the terms, provisions, or covenants of this Agreement, affect or impair
Franchisor's rights, nor shall such constitute a waiver by Franchisor of any
rights hereunder or right to declare any subsequent breach or default.
Subsequent acceptance by Franchisor of any payments due to it shall not be
deemed to be a waiver by Franchisor of any preceding breach by Developer of any
terms, covenants, or conditions of this Agreement.
13
XI. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
11.01. It is understood and agreed by the parties hereto that this
Agreement does not create a fiduciary relationship between them, that Developer
is 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.
11.02. Developer shall hold itself out to the public to be an independent
contractor operating pursuant to this Agreement. Developer agrees to take such
actions as shall be necessary to that end.
11.03. Developer understands and agrees that nothing in this Agreement
authorizes the Developer to make any contract, agreement, warranty, or
representation on Franchisor's behalf, or to incur any debt or any other
obligation in Franchisor's name, and that Franchisor shall in no event assume
liability for, or be deemed liable hereunder as a result of, any such action or
by reason of any act or omission of Developer, or any claim or judgement arising
therefrom. Developer shall indemnify and hold Franchisor and Franchisor's
officers, directors, shareholders, and employees, harmless against any and all
such claims arising directly or indirectly from, as a result of, or in
connection with Developer's activities, as well as the cost, including
attorney's fees, of defending against such claims.
11.04. Developer shall indemnify and hold Franchisor harmless for all
costs, expenses, or losses incurred by Franchisor in enforcing the provisions
hereof or in upholding the propriety of any action or determination by
Franchisor pursuant to this Agreement, or arising in any manner from Developer's
breach of or failure to perform any covenant or obligation hereunder, including,
without limitation, reasonable attorney's fees incurred by Franchisor in
connection with any litigation relating to any aspect of this Agreement, unless
Developer shall be found, after due legal proceedings, to have complied with all
of the terms, provisions, conditions and covenants hereof.
XII. APPROVALS
12.01. Whenever this Agreement requires the prior approval of Franchisor,
Developer shall make a timely written request to Franchisor therefor, and,
except as may otherwise be expressly provided herein, any approval or consent
granted shall be in writing.
12.02. Franchisor makes no warranties or guaranties upon which Developer
may rely, and assumes no liability or obligation to Developer or any third party
to which Franchisor would not otherwise be subject, by providing any waiver,
approval, advice, consent, or services to Developer in connection with this
Agreement, or by reason of any neglect, delay, or denial of any request
therefor.
14
XIII. ACKNOWLEDGMENT
13.01. Developer acknowledges that the success of the business venture
contemplated by this Agreement involves substantial business risks and will be
largely dependent upon the ability of Developer as an independent businessman.
Franchisor expressly disclaims the making of, and Developer acknowledges not
having received, any warranty or guaranty, expressed or implied, as to the
potential volume, profits, or success of the business venture contemplated by
this Agreement.
13.02. Developer acknowledges that Developer has received, read, and
understands this Agreement, the exhibits hereto, and agreements relating hereto,
if any; and the Franchisor has accorded Developer ample time and opportunity to
consult with advisors of Developer's own choosing about the potential benefits
and risks of entering into this Agreement.
13.03. Developer acknowledges that Developer has received a complete copy
of this Agreement, the exhibits hereto, and agreements relating hereto, if any,
at least five (5) business days prior to the date upon which this Agreement was
executed. Developer further acknowledges that Developer has received the
Uniform Franchise Offering Circular 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.
XIV. SEVERABILITY AND CONSTRUCTION
14.01. Except as expressly provided to the contrary herein, each portion,
section, part, term, and/or provision of this Agreement shall be considered
severable; and if, for any reason, any section, part, term, and/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, or have any other effect
upon, such other portions, sections, parts, terms, and/or provisions of this
Agreement as may remain otherwise intelligible, and the latter shall continue to
be given full force and effect to bind the parties; and said invalid portions,
sections, parts, terms, and/or provisions shall be deemed not to be part of this
Agreement.
14.02. Except as has been expressly provided to the contrary herein,
nothing in this Agreement is intended, nor shall be deemed, to confer upon any
person or legal entity other than Developer, Franchisor, Franchisor's officers,
directors, and employees, and Developer's and Franchisor's respective successors
and assigns as may be contemplated (and, as to Developer, permitted) by Section
VI hereof, any rights or remedies under or by reason of this Agreement.
15
14.03. Developer expressly agrees to be bound by any covenant or promise
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 will hold to be unreasonable and
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 court order.
14.04. 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 the provisions hereof.
14.05. All provisions of this Agreement which, by their terms or intent,
are designed to survive the expiration or termination of this Agreement, shall
so survive the expiration and/or termination of this Agreement.
14.06. This Agreement may be executed in multiple originals and each copy
so executed deemed an original.
XV. ENTIRE AGREEMENT AND APPLICABLE LAW
15.01. This Agreement, the documents referred to herein, and the exhibits
hereto, constitute the entire, full, and complete agreement between Franchisor
and Developer concerning the subject matter hereof and supersede any and all
prior agreements. 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.
15.02. APPLICABLE LAW. This Agreement takes effect upon its acceptance
and execution by Franchisor and shall be interpreted and construed under the
laws of the State of Georgia which laws shall prevail in the event of any
conflict of law (without regard to, and without giving effect to, the
application of Georgia choice of law or conflict of law rules); provided,
however, that if the covenants in Article VIII of this Agreement would not be
enforceable under the laws of Georgia, then such covenants shall be interpreted
and construed under the laws of the State in which the Developer operates the
Franchised Units developed hereunder, or in the State where Developer is
domiciled if Developer, at such time, is not operating any Franchised Units.
Nothing in this Section XV is intended by the parties to subject this Agreement
to any franchise or similar law, rule, or regulation of the State of Georgia to
which this Agreement would not otherwise be subject.
15.03. The parties agree that any action brought by Developer against
Franchisor in any court, whether federal or state, shall be brought within such
state and in the judicial district in which Franchisor has its principal place
of business. Any action brought by Franchisor against
16
Developer in any court, whether federal or state, may be brought within the
state and in the judicial district in which Franchisor has its principal place
of business. Developer hereby waives all questions of personal jurisdiction or
venue for the purpose of carrying out this provision.
15.04. No right or remedy herein conferred upon or reserved to Franchisor
is exclusive of any other right or remedy herein, or by law or equity provided
or permitted; but each shall be cumulative of any other right or remedy provided
in this Agreement.
15.05. 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.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed, sealed, and delivered this Agreement in multiple
originals as of the day and year first above-written.
AFC ENTERPRISES, INC. DEVELOPER:
By:____________________________ By:____________________________
Title:_________________________ Title:_________________________
17
EXHIBIT A
DEVELOPMENT SCHEDULE
CUMULATIVE
NUMBER OF NUMBER OF
FRANCHISED FRANCHISED
RESTAURANTS RESTAURANTS
TO BE OPENED AND TO BE OPEN AND IN
IN OPERATION DATE OPENED OPERATION
------------ ----------- ---------
TO BE INITIALED BY BOTH PARTIES:
FRANCHISOR: ________ DEVELOPER: _______
18
EXHIBIT B
DESCRIPTION OF DEVELOPMENT AREA
-------------------------------
(THE FOLLOWING ARE SPECIFICALLY EXCLUDED FROM THE DEVELOPMENT AREA: MILITARY
BASES, PUBLIC TRANSPORTATION FACILITIES, TOLL ROAD PLAZAS, UNIVERSITIES,
RECREATIONAL THEME PARKS AND THE INTERIOR-STRUCTURAL CONFINES OF SHOPPING
MALLS).
TO BE INITIALED BY BOTH PARTIES
19
EXHIBIT C
FRANCHISE AGREEMENT
-------------------
20
