EX-10.28
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v178863_ex10-28.htm
EXHIBIT
10.28
FRANCHISE
DEVELOPMENT AGREEMENT
(Non-exclusive/Exclusive)
THIS
FRANCHISE DEVELOPMENT AGREEMENT
(“Agreement”) is made and entered into this ___ day of __________, 20___, by and
between EL POLLO LOCO, INC.,
a Delaware corporation, with its principal place of business at 0000
Xxxxxx Xxxx, Xxxxx 000, Xxxxx Xxxx, Xxxxxxxxxx 00000 (referred to herein as “El
Pollo Loco” or “Franchisor”) and ________________________________, with its
principal place of business at _____________________________________
(“Developer”).
RECITALS
A. Franchisor
owns certain proprietary and other property rights and interests in and to the
“El Pollo Loco” trademark and service xxxx, and such other trademarks, service
marks, logo types, insignias, trade dress designs and commercial symbols as
Franchisor may from time to time authorize or direct Developer to use in
connection with the operation of an “El Pollo Loco” Restaurant (the “El Pollo
Loco®
Marks”). Franchisor has a distinctive plan for the operation of
retail outlets for the sale of flame-broiled food items and related products,
which plan includes but is not limited to the El Pollo Loco® Marks
and the Operations Manual (the “Manual”), policies, standards, procedures,
employee uniforms, signs, menu boards and related items, and the reputation and
goodwill of the El Pollo Loco® chain of
restaurants (collectively, the “El Pollo Loco®
System”).
B. Developer
represents that it is experienced in and has independent knowledge of the nature
and specifics of the restaurant business. Developer represents that
in entering into this Agreement it has relied solely on its personal knowledge
and has not relied on any representations of Franchisor or any of its officers,
directors, employees or agents, except those representations contained in any
legally required Disclosure Document delivered to Developer.
C. Developer
desires to obtain development rights for multiple restaurants from Franchisor
within a specified geographical (the “Territory”) specified in Exhibit
“A” attached hereto and made a part hereof (or if single
unit replace with “Developer desires to obtain development rights for a single
restaurant from Franchisor within a specified address (the “Territory”)
specified in Exhibit
“A”
attached hereto and made a part hereof.”)
D. Franchisor
is willing to grant the (non-exclusive/exclusive) right to develop and open El
Pollo Loco®
restaurant(s) within the Territory referenced in Exhibit
“A.”
NOW,
THEREFORE, in consideration of the mutual covenants and obligations herein
contained, the parties hereto agree as follows:
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1.
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Development
Rights in Territory.
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1.1 Franchisor
hereby grants to Developer, subject to the terms and conditions of this
Agreement
(if 2.11 applicable add “, and specifically Section 2.11 hereof,”) 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,
(non-exclusive/exclusive) development rights to establish and operate ____
franchised restaurant(s), and to use the El Pollo Loco® System
solely in connection therewith, at specific locations to be designated in
separate Franchise Agreement(s) (the “Franchise Agreements”). (If exclusive
agreement, add “Developer expressly acknowledges that the exclusive rights
granted herein apply only to the right to develop new restaurants in the
Territory, and no exclusive territory or radius protection for the term of any
Franchise Agreement is granted herein.”) The Franchise
Agreements (and all ancillary documents attached as Exhibits to the Franchise
Agreement, including the Personal Guarantee) executed in accordance with this
Agreement shall be in the form currently in use by Franchisor at the time of
execution of the Franchise Agreement and shall be executed individually by each
person, partner, member or shareholder.
1.2 (Only applies to
multi-unit Development Agreement – delete if single-unit Development
Agreement). Prior to or concurrent with the execution of this
Agreement, Developer shall meet with Franchisor’s development representatives
and prepare a market development plan for the units to be constructed and opened
by Developer in the Territory (identifying specific key areas, key intersections
and trade areas in the Territory) and all development pursuant to this Agreement
shall be in accordance with this plan (the “Market Plan”). The Market
Plan shall include proposed areas where sites may be located, ranking and
prioritization of site locations and other information customarily used by
market planners in the restaurant industry. Developer and Franchisor
shall jointly approve the Market Plan.
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2.0
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Limitation
on Development Rights.
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2.1 Developer
must submit one or more site(s) for approval, enter into binding leases or
purchase agreements and open to the public the number of El Pollo Loco®
restaurant(s) on such approved sites each calendar year as required on the
Development Schedule, all as set forth on Exhibit
“B” attached hereto and made a part hereof.
2.2 For
purposes of the Development Schedule in Exhibit
“B”, no credit will be given for the development of El Pollo Loco®
restaurant(s) outside the Territory, regardless of the fact that Developer may,
upon proper application, obtain from Franchisor an El Pollo Loco®
Franchise Agreement (“Franchise Agreement”) for any such
development.
2.3 Although
this Agreement affords the Developer the right to develop and open El Pollo
Loco®
restaurant(s) within the Territory, as set forth on Exhibit
“A”, all restaurant(s) developed under this Agreement must be duly
licensed through individual Franchise Agreement(s). Developer will
execute El Pollo Loco’s then standard Franchise Agreement in use at the time of
execution for each restaurant developed under this Agreement, and agrees to pay
Franchisor the current fees, royalties and other required payments in accordance
with the Disclosure Document then in effect. Execution of the
appropriate Franchise Agreement and payment of the initial franchise fee and/or
any other required fees must be accomplished prior to the commencement of
construction at any site.
2.4 Developer
must satisfy all Franchisor’s financial and operational criteria then in effect
prior to El Pollo Loco's execution of each standard Franchise Agreement issued
pursuant to this Agreement. Developer shall provide Franchisor with
current information pertaining to Developer's financial condition and the
financial condition of the majority and managing members/partners/shareholders
of Developer at any time upon El Pollo Loco's request and in no event less than
once annually. Developer acknowledges that, among other things, it
will be required to submit annual financial statements of Developer and personal
financial statements of each of its principal owners and Managing Members to be
eligible for financial approval by El Pollo Loco. In the event
any of the majority owners of Developer shall also be the Managing Members
and/or majority owners of any other entity which is a franchisee of El Pollo
Loco, then each such franchisee entity must be operationally and financially
approved by Franchisor before approval for expansion will be granted to any one
franchisee entity. “Managing Members” shall be any individuals who
are designated as the primary decision makers or general managers of the
franchisee entity and those individuals who (individually or collectively) own
at least 51% interest in the franchisee entity.
2.5 Developer
shall use its best efforts to retain qualified real estate professionals
(including licensed brokers) to locate proposed sites for the
Restaurant(s). Developer shall submit proposed sites for each
franchise Restaurant unit to be developed under this Agreement for acceptance by
Franchisor’s Real Estate Site Approval Committee (“RESAC”), together with such
site information as may be reasonably required by Franchisor to evaluate the
proposed site, no later than the dates set forth in Exhibit “B” as RESAC Submittal
Dates, the first of which shall be approximately ninety (90) days after
execution of this Agreement. Franchisor may require, as a condition to its
approval of a site, a site description and analysis, traffic and other
demographic information, all in such format as the Franchisor may require, which
information shall include, without limitation, a study prepared by a third party
reasonably acceptable to the Franchisor analyzing the impact of the proposed
site on other franchised restaurants surrounding or within the vicinity of such
proposed site. All such analyses, information and studies shall be
prepared at the sole cost and expense of Developer.
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Franchisor shall send representatives to evaluate
proposed site(s) for each Restaurant to be developed under this Agreement, and
Franchisor will do so at its own expense for the first two proposed sites for
each Restaurant. If Franchisee proposes, and Franchisor evaluates,
more than two sites for each Restaurant, then Franchisee shall reimburse
Franchisor for the reasonable costs and expenses incurred by
Franchisor’s representatives in connection with the evaluation of
such additional proposed site(s),
including, without limitation, the
costs of lodging, travel and
meals. In addition, as a condition to reviewing a proposed site for
the Restaurant, and to determine the impact a proposed site may have on other
existing restaurants operating under the El Pollo Loco® System, Franchisor may require Franchisee to pay for a market study conducted by
a third party of the proposed site and the surrounding geographic
area.
2.6 Provided
there exists no default by Developer under this Agreement or any other
development, franchise or other agreement between Franchisor and Developer,
Franchisor shall evaluate each site proposed for which Developer has provided
all necessary evaluation information, and shall promptly after receipt of
Developer’s proposal, send to Developer written notice of acceptance or
non-acceptance of the site.
2.7 No
later than the Site Commitment Dates set forth in Exhibit
“B”, Developer shall submit for the approved site to Franchisor for its
review and approval of:
(i) a fully negotiated but unexecuted
lease, which may only subject to obtaining necessary governmental permits and
for which the term with renewal options is not less than the initial term of the
Franchise Agreement. The unexecuted form of the lease must be
submitted to Franchisor to review for the required terms and conditions listed
in this Section 2.7 prior to full execution of the lease. Franchisor
will notify Developer upon their approval of the inclusion of such required
terms and conditions. Developer will then provide a final executed
copy of the lease to Franchisor; and
(ii) a purchase agreement
. Should
Developer purchase the site using another entity other than the franchise
entity, Developer must then enter into a lease with the Franchise entity as the
lessee and the purchasing entity as the lessor and must comply with all the
requirements of Section 2.7).
Any lease to be entered into by
Developer shall include the following terms and conditions which may be
contained in the body of the lease or in a signed addendum to the lease in a
form approved by Franchisor:
a) The
landlord consents to Developer’s use of the premises as an El Pollo Loco
restaurant and such restaurant may be open for business during the required days
and hours set forth in the Operations Manual from time to time;
b) The
landlord agrees to furnish the Franchisor with copies of any and all notices of
default, if any, pertaining to the lease and the premises, at the same time that
such notices are sent to Developer;
c) The
landlord agrees that, subject to any other applicable provisions in the
Franchise Agreement, the Franchisor shall have the right, at its sole option and
without any obligation whatsoever to do so, to assume Developer’s occupancy
rights under the lease for the remainder of the term upon Developer’s default or
termination under such lease, the termination of the Franchise Agreement or the
exercise by the Franchisor of its right of first refusal or right to purchase as
set forth in the Franchise Agreement; and
d) That
upon termination or expiration of the lease for any reason, Developer shall,
upon Franchisor’s demand, remove all of the El Pollo Loco Marks from the
Restaurant and the premises and modify the décor of the Restaurant so that it no
longer resembles, in whole or in part, an “El Pollo Loco” Restaurant and that if
Developer shall fail to do so, Franchisor may be given written notice and the
right to enter the premises to make such alterations in which event Developer
shall reimburse Franchisor for all direct and indirect costs and expenses it may
incur in connection therewith, including attorneys’ fees.
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Franchisor shall have no liability
under any lease or purchase agreement for the any Restaurant location developed
under this Agreement and shall not guaranty Developer’s obligations
thereunder. Upon approval by Franchisor of the form of Developer’s
lease and execution of a lease for a site by Developer, Developer shall furnish
to Franchisor a fully executed copy of such lease and any amendments thereto
within fifteen (15) calendar days of such execution. Franchisor shall
have no obligation to assist Developer to negotiate its leases.
The lease may not contain a
non-competition covenant which restricts Franchisor or any franchisee or
licensee of Franchisor, from operating an El Pollo Loco Restaurant or any other
retail restaurant, unless such covenant is approved by Franchisor in writing
prior to the execution by Developer of the lease.
Each subsequent site to be developed
pursuant to the Development Schedule shall be submitted for approval by RESAC by
the date set forth in Exhibit
“B”. Similarly, each fully executed lease (executed upon prior
review and approval by Franchisor) or purchase agreement (with all contingencies
to Developer’s obligations waived or satisfied, except permitting contingencies)
relating to each subsequent site shall (1) be delivered to Franchisor on or
before the Site Commitment Date for each respective Restaurant as set forth in
Exhibit
“B” and (2) prior to the commencement of construction of the Restaurant
and the execution of your Franchise Agreements and (3) the payment of your
initial Franchise Fees for each site.
Site approval does not assure that a
Franchise Agreement will be executed. Execution of the Franchise
Agreement is contingent upon Developer completing the purchase or lease of the
proposed site within sixty (60) days after approval of the site by the
Franchisor.
2.8 Developer
acknowledges that time is of the essence in this Agreement. If
Developer has not obtained approval and entered into a binding lease or purchase
agreement for each site for Restaurant(s) to be developed under this Agreement
by the applicable Site Commitment Date, Developer shall be in default of its
obligations under the Development Schedule and Franchisor shall be entitled to
exercise its rights and remedies under this Agreement, up to and including
termination of this Agreement. Without limiting Franchisor’s rights
and remedies under this Agreement, should Developer fail to meet its obligations
under the Development Schedule to deliver a binding lease or purchase agreement
to Franchisor for each Restaurant by the Site Commitment Date, Developer may,
among other things, and at Franchisor’s election and upon written notice by
Franchisor as set forth in Section 11.3 below, lose its exclusive rights in the
Territory.
Developer also acknowledges that it is
required pursuant to this Agreement to open Restaurants in the future pursuant
to dates set forth in the Development Schedule attached as Exhibit
“B”. If Developer fails to meet the opening date for any
Restaurant to be developed under this Agreement, Developer shall be in default
and Franchisor shall be entitled to exercise all rights and remedies available
to Franchisor, including rights set forth in Sections 11.1 and 11.2 and the
remedies set forth in Section 11.3. Developer acknowledges that if
Developer fails to open Restaurants in a timely manner pursuant to the
Development Schedule, Franchisor will suffer lost revenues, including royalties
and other fees which would be difficult to calculate and which Franchisor would
have received had Developer met the agreed schedule or had Franchisor had the
right to grant development rights to others in the Territory.
Developer acknowledges that the
estimated initial investment and estimated expenses set forth in Items 6 and 7
of our Uniform Disclosure Document are subject to and likely to increase over
time, and that future Restaurants will likely involve a greater initial
investment and operating capital requirements than those stated in the
Disclosure Document provided to you prior to your execution of this
Agreement.
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Developer understands and acknowledges
that in accepting Developer’s proposed site or by granting a franchise for each
approved site, Franchisor does not in any way, endorse, warrant or guarantee
either directly or indirectly the suitability of such site or the success of the
franchise business to be operated by Developer at such site. The
suitability of the site and the success of the franchise business depend upon a
number of factors outside of Franchisor’s control, including, but not limited
to, the Developer’s operational abilities, site location, consumer trends and
such other factors that are within the direct control of the
Developer.
Developer also acknowledges that it is
required pursuant to this Agreement to retain only those design and construction
professionals for the construction of the Restaurant who have met our criteria
and have signed the Preferred Development Professional Agreement in the form
attached hereto as Exhibit
“D”.
2.9 Franchisor
shall retain the right to:
a) Open
and operate El Pollo Loco®
non-traditional restaurants or franchise others to open and operate El Pollo
Loco®
non-traditional restaurants, at all universities, colleges, airports, hospitals,
municipal facilities, public transportation facilities, shopping malls (not
including out parcels), stadiums, amusement parks, drug stores, supermarkets,
department stores, truck stops, hotel or motel chains, stadiums and similar
locations of a "non-standard" nature, regardless of location within the
Territory;
b) Operate
or franchise others to operated an El Pollo Loco restaurant located within the
Territory which have been acquired by El Pollo Loco either as of or after the
date of this Agreement;
c) Sell
the same or similar products (using the Marks or not) to customers at retail
locations, through internet, telemarketing or direct marketing
means. We reserve the right to operate and franchise other
restaurants having the same or similar menu items; and
d) Convert
the Territory from an exclusive to a non-exclusive Territory upon sixty (60)
days written notice in the event Franchisor completes an acquisition of ten (10)
or more real estate locations in a single transaction (“Acquisition Locations”),
some or all of which are located within the Territory, including restaurants
operating under another trade name. Notwithstanding the foregoing,
Franchisor shall grant Developer a fifteen (15) day right of first refusal to
acquire Franchisor’s rights in Acquisition Locations in the Territory at the
same purchase price paid by Franchisor for each location, including reasonable
closing costs. If Developer submits written notice of its intent to
exercise the right of first refusal in a timely manner, it shall complete the
transaction for the Acquisition Locations within sixty (60) days from the date
of its notice and retain its exclusive rights to the Territory.
2.10 The
purpose of this Agreement is to promote orderly incremental growth within the El
Pollo Loco® System.
The acquisition of existing El Pollo Loco®
restaurants by Developer does not represent incremental growth and, therefore,
does not satisfy the terms of this Agreement pertaining to
development.
2.11 (To
be added where there are existing restaurants in the
territory) Developer acknowledges that Franchisor (i) is operating a
unit or (ii) has granted franchise rights in or (iii) approved a new site for
development for those locations identified in Exhibit “C” attached
hereto and incorporated herein by this reference. Developer further
acknowledges that Franchisor retains discretion to approve or disapprove any
proposed location for development under this Agreement if, in Franchisor’s
reasonable judgment, such proposed location is not suitable for an El Pollo
Loco®
restaurant or such proposed location will have a material adverse effect on the
profitability of another existing El Pollo Loco® location
(or approved site) in the Territory. Developer covenants to use its
reasonable best efforts to avoid selecting proposed locations that would
adversely impact pre-existing locations in the Territory.
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3.0 Development
Fee.
Developer shall pay to Franchisor upon
execution of this Agreement a non-refundable Development Fee (the “Development
Fee”) equal to Ten Thousand Dollars ($10,000.00), in immediately available
funds, for each Restaurant to be developed under this Agreement. The
Development Fee is consideration for this Agreement. The Development
Fee is not consideration for any Franchise Agreement and is
non-refundable. The $10,000 Development Fee for each Restaurant shall
be applied against the initial franchise fee payable upon the execution of the
Franchise Agreement applicable to such Restaurant. If this Agreement
is terminated pursuant to Sections 10.0 or 11.0 below, all Development Fees or
any unused portion thereof, shall be immediately forfeited to Franchisor in
consideration of the rights granted in the Territory up to the time of
termination.
4.0 Term of Development
Agreement.
This Agreement shall commence on the
date specified in Exhibit
"B". Unless terminated pursuant to Section 10.0 or 11.0 below, it shall
expire upon the earlier of the date specified in Exhibit
"B" or upon the
opening of the last restaurant listed in the Development Schedule.
5.0 Territory
Conflicts.
5.1 Any
continued operation of a restaurant operated by Franchisor or a franchisee of
Franchisor within the Territory on or before the date of this Agreement shall
not be considered to constitute a breach of this Agreement.
5.2 The
rights granted Developer in this Agreement are subject to any prior territorial
rights of other franchisees which may now exist in the Territory, whether or not
those rights are currently being enforced. In the event of a conflict in
territorial rights, whether under a Franchise Agreement or separate territorial
or development agreement, the earlier in time shall prevail. Developer shall be
free to negotiate with any person, corporation or other entity, which claims
territorial rights adverse to the rights granted under this Agreement, for the
assignment of those prior territorial rights. For this purpose, Franchisor
agrees to approve any such assignment not in conflict with the other terms of
this Agreement, subject to the condition of any Franchise Agreements involved,
and current policies pertaining to assignments, including, but not limited to,
satisfaction of all past due debts owed to Franchisor and the execution of a
General Release.
5.3 In
the event of third party claims to the right to develop any Territory other than
those specified above, it is the responsibility of El Pollo Loco, where the
right is exclusive, to protect and maintain Developer's right to the Development
of the Territory. However, if it appears to El Pollo Loco, in its sole
discretion, that protection of the Territory by legal action is not advisable,
whether due to the anticipation of, or the actual protracted nature of the
action, the costs involved, the uncertainty of outcome, or otherwise, Franchisor
has the right to terminate this Agreement, provided that it refunds to Developer
the balance, if any, of the Development Fee made pursuant to Section 3.0, which
has not been applied against the initial franchise fees for Franchise
Agreement(s) to be acquired under this Agreement.
6.0 Proprietary Rights of El
Pollo Loco.
6.1 Developer
expressly acknowledges El Pollo Loco's exclusive right, title, and interest in
an to the trade name, service xxxx and trademark "El Pollo Loco", and such other
trade names, service marks, and trademarks which are designated as part of the
El Pollo Loco® System
(the "Marks"), and Developer agrees not to represent in any manner that
Developer has any ownership in El Pollo Loco® Marks.
This Agreement is not a Franchise Agreement. Developer may not open an El Pollo
Loco®
restaurant or use the El Pollo Loco® Marks at
a particular site until it executes a Franchise Agreement for that site.
Developer's use of the El Pollo Loco® Marks
shall be limited to those rights granted under each individual Franchise
Agreement. Notwithstanding the foregoing, El Pollo Loco® may
authorize Developer in writing to use the Marks in connection with advertising
and marketing activities in connection with this Agreement. Developer
expressly agrees that such usage is limited to those specific activities or
promotional materials approved by El Pollo Loco’s marketing department in
advance. Developer further agrees that its use of the Marks
shall not create in its favor any right, title, or interest in or to El Pollo
Loco® Marks,
but that all of such use shall inure to the benefit of El Pollo Loco, and
Developer has no rights to the Marks except to the degree specifically granted
by the individual Franchise Agreement(s). Building designs and specifications,
color schemes and combinations, sign design specifications, and interior
building layouts (including equipment, equipment specification, equipment
layouts, and interior color schemes and combinations) are acknowledged by
Developer to comprise part of the El Pollo Loco® System.
Developer shall have no right to license or franchise others to use the Marks by
virtue of this Agreement.
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6.2 Developer
acknowledges that, in connection with its execution of this Agreement, it may
receive confidential and proprietary information regarding the El Pollo
Loco®
System. Developer recognizes the unique value and secondary meaning
attached to the El Pollo Loco® Marks
and the El Pollo Loco® System,
and Developer agrees that any noncompliance with the terms of this Agreement or
any unauthorized or improper use will cause irreparable damage to Franchisor and
its franchisees. Developer, therefore, agrees that if it should engage in any
such unauthorized or improper use during, or after, the term of this Agreement,
Franchisor shall be entitled to both seek temporary and permanent injunctive
relief from any court of competent jurisdiction in addition to any other
remedies prescribed by law.
7.0 Insurance and
Indemnification.
7.1 During
the term of this Agreement, Developer shall obtain and maintain insurance
coverage for public liability, including products liability, in the amount of at
least One Million Dollars ($1,000,000.00) combined single limit. Developer also
shall carry such worker's compensation insurance as may be required by
applicable law.
7.2 Franchisor
shall be named as an additional insured on all such insurance policies and shall
be provided with certificates of insurance evidencing such coverage. All public
liability and property damage policies shall contain a provision that El Pollo
Loco, although named as an insured, shall nevertheless be entitled to recover
under such policies on any loss incurred by El Pollo Loco, its affiliates,
agents and/or employees, by reason of the negligence of Developer, its
principals, contractors, agents and/or employees. All policies shall provide
Franchisor with at least thirty (30) days notice of cancellation or termination
of coverage.
7.3 Franchisor
reserves the right to specify reasonable changes in the types and amounts of
insurance coverage required by this Section 7.0. In the event that Developer
fails or refuses to obtain or maintain the required insurance coverage from an
insurance carrier acceptable to El Pollo Loco, Franchisor may, in its sole
discretion and without any obligations to do so, procure such coverage for
Developer. In such event, Developer agrees to pay the required premiums or to
reimburse such premiums to Franchisor upon written demand.
7.4 Developer
agrees to defend at its own cost and to indemnify and hold harmless El Pollo
Loco, its parent corporations, affiliates, shareholders, directors, officers,
employees and agents from and against any and all loss, costs, expenses
(including, without limitation, attorneys' fees), damages and liabilities,
however caused, resulting directly or indirectly from all of Developer’s
activities under the Development Agreement. Such loss, costs, expenses, damages,
liabilities and claims shall include, without limitation, those arising from the
death or injury to any person, or arising from damage to the property of
Developer or El Pollo Loco, their affiliates, agents or employees, or any third
person, firm or corporation, whether or not such losses, costs, expenses,
damages, liabilities or claims were actually or allegedly caused, in whole or in
part through the negligence of Franchisor or any of its affiliates, agents or
employees, or resulted from any strict liability imposed on Franchisor or any of
its affiliates, agents or employees.
7.5 The
provisions of this Section 7.0 shall expire as to each Restaurant to be
developed under this Agreement upon execution of a Franchise Agreement for such
Restaurant. The provision of the Franchise Agreement, in particular,
Section 9 thereof (insurance and Indemnification) shall supersede this Section
7.0 and govern the rights and obligations of the parties
prospectively.
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8.0 Transfer of
Rights.
8.1 This
Agreement shall inure to the benefit of Franchisor and its successors and
assigns, and is fully assignable by El Pollo Loco.
8.2 The
parties acknowledge that this Agreement is personal in nature with respect to
Developer, being entered into by Franchisor in reliance upon and in
consideration of the personal skills, qualifications and trust and confidence
reposed in Developer and Developer's present partners, managing members or
officers if Developer is a partnership, a limited liability company or a
corporation. Therefore, the rights, privileges and interests of Developer under
this Agreement shall not be assigned, sold, transferred, leased, divided or
encumbered, voluntarily or involuntarily, in whole or in part, by operation of
law or otherwise without the prior written consent of El Pollo Loco, which
consent may be given or withheld in El Pollo Loco’s sole
discretion. For purposes of this Section, a sale of stock, or any
membership or partnership interest in Developer, or a merger or other
combination of Developer shall be considered a transfer of Developer's interest
prohibited hereunder. Notwithstanding the foregoing, Developer shall
be permitted to establish operating entities to serve as Franchisee, under the
Franchise Agreements, provided the ownership mirrors that of Developer (e.g.,
Developer consists of persons A (50%), B (25%) and C
(25%). Franchisee also must consist of the same three (3) persons
with the same percentage of ownership). All other entity structures
shall require the prior written approval of Franchisor. Developer
shall pay an administrative fee of Five Hundred Dollars ($500.00) per transfer
for each permitted transfer to an Entity where such transfer is for the
convenience of ownership only and does not involve a change of principals of the
business. Where Developer desires to add new principals to the
Developer or any Franchisee entity, Developer shall pay to Franchisor an
additional $2,500 per new principal to cover Franchisor’s administrative costs
for reviewing the application and suitability of each new principal as
participants in the franchise business.
9.0 Acknowledgment of Selected
Terms and Provisions of the Franchise Agreement.
Developer represents that it has read
each of the terms and provisions of the then current form of Franchise Agreement
and acknowledges and is willing to agree to each and every obligation of
Franchisee thereunder including, but not limited to:
a) The
obligation to deliver execute Personal Guarantees or Investor Covenants
Regarding Confidentiality and Non-Competition in connection with the execution
of each franchise agreement for Restaurants to be developed under this
Agreement;
b) The
obligation to obtain the consent of Franchisor to any security interests to be
granted by Developer in the assets or business of the Restaurant to lenders or
other financing sources in advance of any agreement to provide those security
interests to such third parties;
c) All
in-term and post-term restrictive covenants; and
d) All
territorial rights, options and rights of first refusal retained by Franchisor
under the franchise agreement.
10.0 Termination by Developer;
Expiration Date.
This Agreement shall terminate
immediately upon El Pollo Loco's receipt of Developer's notice to terminate, and
any unapplied portion of the Development Fee shall be forfeited to Franchisor in
consideration of the rights granted in the Territory up to the time of
termination. Notwithstanding any provision to the contrary contained
herein, unless earlier terminated by either party, this Agreement shall expire
on ______, 20___, and all rights of Developer herein shall cease and all
unapplied or unused Development Fees paid pursuant to Section 3.0 hereof shall
be forfeited to Franchisor.
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11.0 Events of
Default.
11.1 The
following events shall constitute a default by Developer, which shall result in
El Pollo Loco's right to declare the immediate termination of this
Agreement.
a) Failure
by Developer to meet the requirements of the Development Schedule within the
time periods specified therein, including failure by Developer to meet the Site
Commitment Date or Opening Date for each site for a Restaurant in a timely
manner as set forth in Exhibit
“B” and Section 2.5 and 2.7 above.
b) Any
assignment, transfer or sublicense of this Agreement by Developer without the
prior written consent of El Pollo Loco.
c) Any
violation by Developer of any covenant, term, or condition of any note or other
agreement (including any El Pollo Loco®
Franchise Agreement) between Developer and Franchisor (or an affiliate of El
Pollo Loco), the effect of which is to allow Franchisor to terminate (or
accelerate the maturity of) such agreement before its stated termination (or
maturity) date.
d) Developer's
assignment for the benefit of creditors or admission in writing of its inability
to pay its debts generally as they become due.
e) Any
order, judgment, or decree entered adjudicating Developer bankrupt or
insolvent.
f)
Any petition,
or application, by Developer to any tribunal for the appointment of a trustee,
receiver, or liquidator of Developer (or a substantial part of Developer's
assets), or commencement by Developer of any proceedings relating to Developer
under any bankruptcy, reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution, or liquidation law of any jurisdiction,
whether now or hereinafter in effect.
g) Any
filing of a petition or application against Developer, or the commencement of
such proceedings, in which Developer, in any way, indicates its approval
thereof, consent thereto, or acquiescence therein; or the entry of any order,
judgment, or decree appointing any trustee, receiver, or liquidator, or
approving the petition in any such proceedings, where the order, judgment, or
decree remains unstayed and in effect for more than thirty (30)
days.
h) Any
entry in any proceeding against the Developer of any order, judgment, or decree,
which requires the dissolution of Developer, where such order, judgment, or
decree remains unstayed and in effect for more than thirty (30)
days.
i)
Developer's
voluntary abandonment of any of Developer's restaurants.
11.2 The
following events shall constitute a default by Developer, which shall result in
El Pollo Loco's right to declare the termination of this Agreement, if such
default is not cured within thirty (30) days after written notice by Franchisor
to Developer:
a) Developer's
default in the performance or observance of any covenant, term, or condition
contained in this Agreement not otherwise specified in Section 11.1
above.
b) The
creation, incurrence, assumption, or sufferance to exist of any lien,
encumbrance, or option whatsoever upon any of Developer's property or assets,
whether now owned or hereafter acquired, the effect of which substantially
impairs Developer's ability to perform or observe any covenant, term, or
condition of this Agreement.
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c) Refusal
by Developer or Developer’s partners, members, or shareholders to enter
individually into the then current form of Franchise Agreements and Personal
Guarantee as provided in Section 1.1 above.
d) Any
change, transfer or conveyance (“Transfer”) in the ownership of Developer, which
Transfer has not been approved in advance by Franchisor. Franchisor
reserves the right to approve or disapprove any Transfer in its sole
discretion.
11.3 If
Franchisor is entitled to terminate this Agreement in accordance with Sections
11.1 or 11.2 above, Franchisor shall have the right to undertake the following
action instead of terminating this Agreement:
a. Franchisor
may terminate or modify any rights that Developer may have with respect to
protected exclusive rights in the Territory, as granted under Section 1.1
above, effective ten (10) days after delivery of written notice thereof to
Developer.
If any of such rights are terminated or
modified in accordance with this Section 11.3, such action shall be without
prejudice to Franchisor’s right to terminate this Agreement in accordance with
Sections 11.1 or 11.2 above, and/or to terminate any other rights, options or
arrangements under this Agreement at any time thereafter for the same default or
as a result of any additional defaults of the terms of this
Agreement.
12.0 Effect of
Termination.
12.1 Immediately
upon termination or expiration of this Agreement, for any reason, all of
Developer's development rights granted pursuant to this Agreement shall revert
to El Pollo Loco. At the time of termination, only restaurants operating or to
be operated under the El Pollo Loco® System
by virtue of a fully executed Franchise Agreement shall be unaffected by the
termination of this Agreement. Franchisor shall have no duty to execute any
Franchise Agreement with Developer after the termination of this Agreement. The
foregoing remedies are nonexclusive, and nothing stated in this Section 12.0
shall prevent El Pollo Loco's pursuit of any other remedies available to
Franchisor in law or at equity due to the termination of this
Agreement.
12.2 Developer
understands and agrees that upon the expiration or termination of this Agreement
(or in the event of an exclusive development agreement, the failure of Developer
to meet the Development Schedule and the resulting loss of exclusive development
rights), Franchisor or its subsidiaries or affiliates, in their sole discretion,
may open and/or operate restaurants in the Territory, or may authorize or
franchise others to do the same, whether it is in competition with or in any
other way affects the sales of Developer at the restaurants.
13.0 Non-Waiver.
El Pollo Loco's consent to or approval
of any act or conduct of Developer requiring such consent or approval shall not
be deemed to waive or render unnecessary El Pollo Loco's consent to or approval
of any subsequent act or conduct hereunder.
14.0 Independent Contractor and
Indemnification.
14.1 This
Agreement does not constitute Developer an agent, legal representative, joint
venturer, partner, employee or servant of Franchisor for any purpose whatsoever,
and it is understood between the parties hereto that Developer shall be an
independent contractor and is in no way authorized to make any contract,
agreement, warranty or representation on behalf of El Pollo Loco. The parties
agree that this Agreement does not create a fiduciary relationship between
them.
14.2 Under
no circumstances shall Franchisor be liable for any act, omission, contract,
debt, or any other obligation of Developer. Developer shall indemnify and save
Franchisor harmless against any such claim and the cost of defending it arising
directly or indirectly from or as a result of, or in connection with,
Developer's actions pursuant to this Agreement.
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15.0 Entire
Agreement.
This Agreement, including Exhibits
"A", "B", “C” and “D” attached hereto, constitutes the entire full and
complete agreement between Franchisor and Developer concerning the subject
matter hereof and supersedes any and all prior written agreements. Other than
the El Pollo Loco®
Franchise Disclosure Document circulated with this Agreement (and its exhibits
and attachments), no other representations have induced Developer to execute
this Agreement, and there are no representations, inducements, promises, or
agreements, oral or otherwise, between the parties, not embodied herein, which
are of any force or effect with reference to this Agreement or otherwise. No
amendment or modification of this Agreement shall be binding on either party
unless written and fully executed.
16.0 Dispute Resolution
Procedures
The following shall apply to any
controversy between Franchisor and Developer (including its affiliates) relating
(a) to this Agreement, (b) the parties business activities conducted as a result
of this Agreement, or (c) the parties’ relationship or business dealings with
each other generally.
The parties shall first use their best
efforts to meet and discuss and negotiate a resolution of the
controversy.
If negotiation efforts do not succeed,
the parties shall engage in mandatory but non-binding mediation by a mediator
jointly chosen by the parties or if the parties cannot agree upon a mediator, by
the American Arbitration Association for disputes relating to locations outside
of
California or Franchise Arbitration and Mediation Services, Newport Beach,
California, for disputes relating to locations within
California.
A mediation meeting will be held at a
place and at a time mutually agreeable to the parties and the
mediator. The Mediator will determine and control the format and
procedural aspects of the mediation meeting which will be designed to ensure
that both the mediator and the parties have an opportunity to present and hear
an oral presentation of each party’s views regarding the matter in
controversy. The parties agree to use good faith efforts to resolve
the controversy in mediation.
The mediation will be held as soon as
practicable after the negotiation meeting is held.
The mediator will be free to meet and
communicate separately with each party either before, during or after the
mediation meeting.
In the event that either party requires
a substantial amount of information in the possession of the other party in
order to prepare for the mediation meeting, the parties will attempt, in good
faith, to agree on procedures for the expeditious exchange of such
information. If the parties fail to agree on such procedures, the
mediator will determine such procedures and which documents and information will
be informally exchanged.
Each party may be represented by one or
more other persons, including its counsel, one or more of its business persons,
an accountant and a financial consultant. At least one representative
of each party must have the authority to agree upon a settlement of the
controversy.
The mediator may freely express
his/her views to the participants on the legal issues unless a participant
objects to his doing so. The mediator may obtain assistance and
independent expert advice with the agreement of the participants and at the
participants’ expense. The mediator will not be liable for an act or
omission in connection with the role of mediator, other than for gross
negligence or willful misconduct.
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If requested by the mediator, each
party shall prepare a written summary of its position to the mediator in advance
of the mediation meeting.
The mediator may raise legal questions
and arguments.
If the parties have failed to reach an
acceptable settlement prior to the end of the mediation meeting, the mediator
before concluding the mediation meeting, may submit to the parties a settlement
proposal which the mediator deems to be equitable to both
parties. Each of the parties will, in good faith, evaluate the
proposal and discuss it with the mediator. In the event that a
settlement is not reached, neither the terms of the proposed settlement nor
either party’s refusal to agree thereto shall be admissible in any subsequent
arbitration or court proceedings.
If a settlement is reached, the
mediator or one of the parties at the request of the mediator, will prepare a
settlement agreement for execution by the parties. Such settlement
agreement will be revised by the parties and when, in a mutually acceptable
form, executed and delivered to each other, such that each party shall receive a
duplicate original.
The parties will cooperate and continue
to mediate until the mediator terminates the mediation. The mediate
will terminate the mediation upon the earlier of (i) execution of a settlement
agreement, (ii) a declaration by the mediator that the mediation is terminated,
or (iii) completion of a full day mediation meeting unless extended by agreement
of the parties.
At the election of the Franchisor, the
provisions of this Section 16 shall not apply to controversies relating to any
fee due the Franchisor by Developer or its affiliates, any promissory note
payments due the Franchisor by Developer, or any trade payables due the
Franchisor by Developer as a result of the purchase of equipment, goods or
supplies. The provisions of this Section 16 shall also not apply to
any controversies relating to the use and protection of the El Pollo Loco Marks,
the Manual or the El Pollo Loco System, including without limitation, the
Franchisor’s right to apply to any court of competent jurisdiction for
appropriate injunctive relief for the infringement of the El Pollo Loco Marks or
the El Pollo Loco System.
17.0 Severability.
Each 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, contrary to, or in conflict with, any existing or future law or
regulation, by any court or agency having valid jurisdiction, then such shall be
deemed not to be a part of this Agreement, but such shall not impair the
operation of, or affect the remaining portions, sections, parts, terms and/or
provisions of this Agreement, which will continue to be given full force and
effect and bind the parties hereto.
18.0 Applicable Law; Choice of
Forum; Waiver of Jury Trial.
This Agreement, after review by
Developer and El Pollo Loco, was accepted in the State of
California and shall
be governed by and construed in accordance with the laws of such state. The
parties agree that any action brought by either party against each other in any
court, whether federal or state, will be brought within the state of
California. The parties hereby waive any right to demand or
have trial by jury in any action relating to this Agreement in which the
Franchisor is a party. The parties consent to the exercise of
personal jurisdiction over them by such courts and to the propriety of venue of
such courts for the purpose of carrying out the provision, and they waive any
objection that they would otherwise have to the same.
19.0 Document
Interpretation.
All terms and words used in this
Agreement, regardless of the number and gender in which they are used, shall be
deemed and construed to include the singular or plural tense, and any gender,
whether masculine, feminine or neuter, as the context or sense of this Agreement
or any paragraph or clause may require, the same as if such words had been fully
and properly written in the appropriate number or gender. In the event of a
conflict in the language, terms, or conditions between this Agreement and any
Franchise Agreement issued pursuant to this Agreement, the Franchise Agreement
shall control.
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20.0 Covenant Not to
Compete.
20.1 To
further protect the El Pollo Loco® System
while this Agreement is in effect, Developer and each officer, director,
shareholder, member, manager, partner and other equity owner, as applicable, of
Developer, if Developer is an entity, shall neither directly nor indirectly own,
operate, control or any financial interest in any other business which would
constitute a “Competitive Business” (as hereinafter defined) without the prior
written consent of Franchisor; provided further,
that Franchisor may, in its sole discretion, consent to the Developer’s
continued operation of any business already in existence and operating at the
time of execution of this Agreement. In addition, Developer covenants
that, except as otherwise approved in writing by the Franchisor, Developer shall
not, for a continuous, uninterrupted period commencing upon the expiration,
termination or assignment of this Agreement, regardless of the cause for
termination, and continuing for two (2) years thereafter, either directly or
indirectly, for itself, or through or on behalf of, or in conjunction with any
person, partnership, corporation or other entity, own, operate, control or have
any financial interest in any Competitive Business which is located or has
outlets or restaurant units within the Territory. The foregoing shall
not apply to operation of an El Pollo Loco®
restaurant by Developer pursuant to a Franchise Agreement with Franchisor or the
ownership by Developer of less than five percent (5%) of the issued or
outstanding stock of any company whose shares are listed for trading on any
public exchange or on the over-the-counter market, provided that Developer does
not control or become involved in the operations of any such
company. For purposes of this Section 20.1, a Competitive Business
shall mean a self-service restaurant or fast-food business which sells chicken
and/or Mexican food products, which products individually or collectively
represent more than fifty percent (50%) of the revenues from such self-service
restaurant or fast-food business operated at any one location during any
calendar quarter. A “Competitive Business” shall not include a full-service
restaurant.
20.2 In
the event that any provision of Section 20.1 shall be determined by a court of
competent jurisdiction to be invalid or unenforceable, this Agreement shall not
be void, but such provision shall be limited to the extent necessary to make it
valid and enforceable.
21.0 Notice.
For the purpose of this Agreement, all
notices shall be in writing and shall be sent to the party to be charged with
receipt thereof either (i) served personally, or (i) sent by certified or
registered United States mail, or (ii) sent by reputable overnight delivery
service, or (iv) sent by facsimile. Notices served personally are
effective immediately on delivery, and those served by mail shall be deemed
given forty-eight (48) hours after deposit of such notice in a United States
post office with postage prepaid and duly addressed to the party to whom such
notice or communication is directed. Notices served by overnight
delivery shall be deemed to have been given the day after deposit of such notice
with such service. Notices served via facsimile shall be deemed to
have been given the day of faxing such notice. All notices to
El Pollo Loco® shall be
addressed as follows:
El Pollo
Loco, Inc.
Attn: Legal
Department
3535
Harbor Blvd, Suite 100
Costa
Mesa, CA 00000
(000)
000-0000 (fax)
All notices to Developer shall be faxed
and mailed or sent via overnight service to the Developer's number and address
shown on Exhibit
"B". Either party may from time to time change its address for the
purposes of this Section by giving written notice of such change to the other
party in the manner provided in this Section. Notwithstanding
anything to the contrary contained herein, the Franchisor may deliver bulletins
and updates to the Developer by electronic means, such as by the internet
(e-mail) or an intranet, if any, established by Franchisor.
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22.0 Section
Headings.
The section headings appearing in this
Agreement are for reference purposes only and shall not affect, in any way, the
meaning or interpretation of this Agreement.
23.0 Acknowledgments.
23.1 Developer
acknowledges that it has received a complete copy of the El Pollo Loco® Disclosure Document,
issuance date _______,20__ at least 14 calendar days prior to the date on which
this Agreement was executed by Developer or payment of any monies to the
Franchisor.
23.2 Developer
acknowledges that it has read and understands this Agreement, the Franchise
Agreement, the attachments thereto and the agreements relating thereto contained
in the Disclosure Document received by Developer on _____,20__, and that
Franchisor has accorded Developer ample opportunity and has encouraged Developer
to consult with advisors of Developer's own choosing about the potential
benefits and risks of entering into this Agreement.
IN WITNESS WHEREOF, the parties hereto
have duly executed, sealed and delivered this Agreement in duplicate original as
of the date and year first written above.
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DEVELOPER:
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EL
POLLO LOCO, INC.,
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a
Delaware corporation
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By:
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By:
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Its:
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Its:
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EXHIBIT
"A" TO DEVELOPMENT AGREEMENT
TERRITORY
EXHIBIT
"B" TO DEVELOPMENT AGREEMENT
DEVELOPMENT
SCHEDULE
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FRANCHISE
NAME:
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PRINCIPALS:
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NOTICE
ADDRESS:
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FAX
NUMBER:
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EMAIL:
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COMMENCEMENT
DATE:
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EXPIRATION
DATE:
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DEVELOPMENT
FEE (SECTION 3.0):
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DEVELOPMENT
SCHEDULE:
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INITIAL
FRANCHISEE
AMOUNT1
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RESAC
SUBMITTAL
DATES
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SITE COMMITMENT
DATES
(Date for delivery of
signed leases or
purchase
agreements)
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OPENING DATE
OF RESTAURANT
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Restaurant
# 1
| | $ | 40,000.00 | | | | | | | | | | | | | |
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Restaurant
# 2
| | $ | 30,000.00 | | | | | | | | | | | | | |
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Xxxxxxxxxx
# 0
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1 Initial Franchise Fee is the total
amount applicable to this unit, without applying the Development Fee deposited
with Franchisor at the time of execution of this
Agreement.
EXHIBIT
“C” TO DEVELOPMENT AGREEMENT
EXISTING
EL POLLO LOCO®
RESTAURANTS IN THE TERRITORY
EXHIBIT
“D” TO DEVELOPMENT AGREEMENT
PREFERRED
DEVELOPMENT PROFESSIONAL AGREEMENT
(Architects,
Design/Build Contractors, Contractors, Structural and Civil
Engineers)
This Agreement (the “Agreement”) is
made this ____ day of ____________, 20___ (the “Effective Date”), by and between
El Pollo Loco, Inc., located at 0000 Xxxxxx Xxxx., Xxxxx Xxxx, XX 00000 (“EPL”)
and ________________________, located at _______________________________
(hereinafter referred to as “Preferred Development Professional” or
“PDP”).
RECITALS
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A.
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EPL
is the franchisor and operator of a national chain of quick-service
restaurants serving marinated flame-grilled chicken and Mexican food
products and meals. EPL is actively expanding restaurants
nationally throughout the United States, both through company and
franchise development.
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B.
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EPL
wishes to insure that new restaurants in all geographic areas of the
country meet its specific criteria for uniformity and quality, regardless
of location or operation as company or franchised
restaurants. In connection therewith, EPL desires to establish
a network of qualified development professionals who meet its standards
and to designate those individuals as “Preferred Development
Professionals.”
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C.
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EPL
franchise developers who have executed development agreements with El
Pollo Loco as of January 1, 2008 will only be permitted to use PDP’s in
connection with the development of their EPL
Restaurants.
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D.
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PDP
has examined EPL’s criteria for designation as an EPL PDP and has met the
standards set by EPL and therefore, desires to be included in EPL’s
national network of PDP’s.
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E.
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EPL
is willing to include PDP in its network of approved development
professionals provided PDP executes this Agreement and agrees to abide by
the terms and conditions contained
herein.
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NOW
THEREFORE, in consideration of the foregoing and of the mutual covenants and
considerations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
AGREEMENT
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1.
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Term. The
initial term of this Agreement shall be for two (2) years from the
Effective Date, subject to earlier termination as provided in Paragraph 13
below. The term shall automatically renew for one (1) year
successive terms unless either party provides sixty (60) days advance
written notice in advance of the expiration date to the other party of its
intent not to renew.
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2.
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PDP
Designation. PDP shall
be designated as an El Pollo Loco Preferred Development Professional for
use by its franchisees in connection with the development of their El
Pollo Loco Restaurants for the term of this Agreement. EPL will
include PDP in its list of authorized development professionals for use by
its franchisees and licensees in connection with the development of their
EPL Restaurants. PDP shall use its best efforts to insure that
the EPL Restaurants for which it performs work or services are developed
in accordance with the requirements of EPL, including approved plans,
criteria and specifications.
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3.
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Proprietary
Plans. EPL shall
provide PDP with standard plans and a sample layout for a typical El Pollo
Loco Restaurant and a set of required construction, equipment and décor
specifications (the “Plans”). PDP acknowledges that EPL owns
the Plans and all proprietary and other property rights and interests
thereto, including trade dress rights, in the design and layout of its
Restaurants. PDP shall include the following in all contracts
with EPL franchisees or licensees:
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“The
plans and specifications (including design, layout and equipment specifications)
for an EPL Restaurant are the sole property of El Pollo Loco,
Inc. Use of the plans and specifications is limited to the Restaurant
for which work is being contracted.”
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4.
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Confidentiality
Covenant. PDP agrees
to treat and keep the Plans and information contained therein strictly
confidential and limit access to employees and independent contractors of
PDP on a need to know basis only. PDP acknowledges that the
unauthorized use or disclosure of the Plans or the confidential
information contained therein or otherwise provided by EPL to PDP will
cause irreparable injury to the Company and that damages are not an
adequate remedy. PDP accordingly covenants that without EPL’s
prior written consent, which consent may only be given by EPL and not by
any of its franchisees or licensees, PDP shall not disclose (except to
such employees, agents, contractors or subcontractors as must have access
to such Plans in order to construct EPL Restaurants) or use or permit the
use of such Plans, or any part thereof, (except as may be required by
applicable law or authorized by this Agreement), or copy, duplicate,
record or otherwise reproduce such Plans, in whole or in part, or
otherwise make the same available to any person or source not authorized
in writing by EPL to receive such Plans or the information contained
therein. This covenant shall survive the expiration or
termination of this Agreement.
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5.
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Compliance
with Laws.
PDP represents and warrants that it possesses all licenses,
permits, authorizations and other consents required by applicable law to
perform the development activities for which it has contracted with EPL’s
franchisee or licensee. PDP shall perform all work under such
contract in full compliance with all applicable laws, regulations,
ordinances or statutes. EPL reserves the right to immediately
terminate this Agreement without any opportunity to cure, should PDP
breach its representations or covenants under this Paragraph
5.
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6.
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Architectural
Plans. PDP
acknowledges and agrees that all architectural plans must be approved by
EPL at the preliminary design phase (before construction ready working
drawings are created) and that final plans shall not deviate significantly
from the approved preliminary plans. Should modifications to
the approved Plans be required by franchisee, its agents, employees or
representatives, or by landlords or governmental agencies, PDP will
immediately notify EPL of same and shall submit the modified Plans to EPL
for approval. Such approvals by EPL will be limited to
items and issues relating to the El Pollo Loco System only and is not
intended to be a verification or approval of the structure of the
building, mechanical systems or document accuracy. PDP shall
verify that all architectural plans for the construction of the EPL
Restaurant are EPL approved and that only approved plans are used to
create working construction drawings for the
restaurants.
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7.
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Construction
of the Restaurant. If PDP is
retained by an EPL franchisee or licensee to act as the general contractor
for a Restaurant, it hereby agrees to: (a) provide a construction schedule
to EPL before the start of construction; (b) provide monthly progress
reports to EPL during the construction process; (c) promptly notify EPL
and request its approval regarding any material modifications to the
approved Plans which become necessary during the construction process
(design and specification changes, among other things, shall be deemed
material changes); (d) request final inspection of the constructed and
fully equipped Restaurant by EPL or its authorized consultants; (e)
provide a letter to EPL indicating that the Restaurant has been
constructed or remodeled in substantial conformance with the approved
final Plans, including any changes thereto approved by the Company, and in
accordance with all applicable federal, state and local laws, statutes and
ordinances regulating such construction, including without limitation,
building, fire, health and safety codes. All construction
approvals by EPL will be limited to items and issues relating to the El
Pollo Loco Restaurant system only and are not intended to be verification
or approval of the structure of the building, mechanical systems or
document accuracy.
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8.
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ADA
Compliance. Under the
Americans with Disabilities Act (“ADA”), certain handicap accessibility
requirements are placed on any “person” who owns, leases, leases to, or
operates a place of public accommodation. As an owner, lessor
or operator of a restaurant, EPL franchisees and licensees are liable for
failures to accommodate disabled people as provided for in the
ADA. In approving Plans submitted by PDP or franchisees, EPL is
not an insurer of compliance with the ADA, and shall not be responsible
for failures by franchisees, their architects or their contractors to
construct buildings that comply with the
ADA.
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9.
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Certificate
of Occupancy. PDP shall
insure that EPL receives a copy of any certificate of occupancy issued by
the applicable governing authority for each Restaurant for which it
performs development professional services within thirty (30) days after
opening of the Restaurant.
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10.
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Use
of Trademarks; Press Releases. PDP shall
not use the trademarks, logos or other intellectual property of EPL at any
time for any purpose without the prior written consent of EPL’s marketing
or legal departments.
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11.
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Indemnification
and Insurance. During the term of this Agreement, PDP
shall maintain in full force and effect the kinds of insurance, containing
the limits of liability set forth
below:
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a) Automobile
Liability - If automotive vehicles are operated by PDP in PDP performance of
PDP's obligations under this Agreement, PDP shall maintain an automobile
liability policy which shall include coverage on all owned, non-owned and hired
vehicles and shall have a minimum limit of liability of not less than $100,000
per occurrence;
b) Workers’
Compensation – PDP shall comply with the Workers’ Compensation law of the State
wherein the services are to be rendered. Such policy shall provide
coverage for all persons engaged in activities described in this Agreement under
the employ, supervision or control of PDP; and
c) General
Liability – The policy shall contain a combined single limit of liability of not
less than $1,000,000 per occurrence.
If the foregoing coverage expires,
changes, or is canceled, PDP shall notify EPL within thirty (30) days prior to
the effective date of such expiration, change or cancellation.
PDP
agrees to indemnify and hold EPL, its officers, directors, employees, agents,
affiliates, subsidiaries, parent company, successors and assigns harmless
against any and all claims, counterclaims, suits, demands, actions, causes of
action, damages, setoffs, liens, attachments, debts, expenses, judgments, or
other liabilities of whatsoever kind or nature, including reasonable attorneys'
fees and costs, arising from any alleged or actual negligent, willful, reckless,
or wrongful act or omission of PDP, PDP's officers, directors, employees and
agents in PDP's performance of this Agreement, and from any breach of PDP's
representations and warranties or PDP's obligations of confidentiality
herein. These obligations shall survive the termination or expiration
of the Agreement.
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12.
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Independent
Contractor. PDP is independent
contractor. EPL is not a party to any contract between PDP and
EPL franchisees.
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13.
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Termination. Either
party may terminate this Agreement prior to its expiration date, with or
without cause, upon sixty (60) days advance written notice to
EPL. Notwithstanding the foregoing, in the event of a material
breach of this Agreement or any provision hereof by PDP, EPL may
immediately terminate this Agreement, which termination shall be effective
five (5) days after dispatch of the termination notice to
PDP. The parties agree to use reasonable efforts to provide
concurrent copies of any termination notice to any franchisee with whom
PDP has pending contractual
obligations.
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14.
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Miscellaneous
Terms and Conditions.
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14.1. No Implication of Exclusive
Use. Nothing contained in this Agreement shall be deemed or
construed to provide PDP an express or implied exclusive right to act or serve
as a preferred development professional (or in any other capacity).
14.2. Relationship of
Parties. The parties agree that except as expressly set
forth herein that nothing contained herein shall make either party the fiduciary
of the other for any purpose whatsoever, nor shall this Agreement be deemed to
create any form of business organization between the parties, including without
limitation a joint venture or partnership.
14.3. Assignment. PDP
may
not assign its rights or delegate its obligations hereunder without the
prior written consent of EPL, which consent may be withheld in its sole and
absolute discretion. Notwithstanding the foregoing, EPL may assign
this Agreement and its rights and obligations hereunder (at any time and for any
reason) with notice to PDP, but without obtaining PDP’s prior written
consent.
14.4. Representations and
Warranties. In consideration of EPL entering into this
Agreement, PDP makes the following representations and warranties as of the
Effective Date, each of which is material and is being relied upon by EPL (and
the truth and accuracy of which shall constitute a condition precedent to EPL’s
obligations hereunder).
a) Power. PDP
has the legal power, right and authority to enter into this
Agreement.
b) Requisite
Action. All requisite action (corporate, trust, partnership or
otherwise) has been take by PDP in connection with entering into this Agreement,
and by the Effective Date, all such necessary action will have been
taken.
c) Individual
Authority. The individuals executing this Agreement on behalf
of PDP have the legal power, right and actual authority to bind PDP to the terms
and conditions hereof and thereof.
d) No
Conflict. Neither the execution or delivery of this Agreement,
nor compliance with the terms of this Agreement conflict with or result in the
material breach of any terms, conditions or provisions of, or constitute a
default under, agreement or instrument to which PDP is a party.
14.5. Notices. Any
notice to be given hereunder to either party shall be in writing and shall be
given either by personal delivery (including express or courier service),
telecopier transmission, or by registered or certified mail, with return receipt
requested, postage prepaid and addressed as follows:
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To
EPL:
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El
Pollo Loco, Inc.
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0000
Xxxxxx Xxxx., Xxxxx 000
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Xxxxx
Xxxx, XX 00000
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Attention:
Real Estate Department
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with
copies to:
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El
Pollo Loco, Inc.
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0000
Xxxxxx Xxxx., Xxxxx 000
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Xxxxx
Xxxx, XX 00000
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Attention:
Legal Department
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To
PDP:
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With
copies to:
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Any party
may, by written notice to the other, designate a different address, which shall
be substituted for the one specified above. Any such notice shall be deemed to
have been delivered upon its receipt or upon the second attempt at delivery, as
evidenced by the facsimile confirmation in the case of notice by telecopier, or
by the regular records of the person or entity attempting delivery, in all other
cases.
14.6. Time of the
Essence. Time is of the essence of each and every provision of
this Agreement.
14.7. Further
Assurances. Each of the parties shall execute and deliver any
and all additional papers, documents, and other assurances, and shall do any and
all acts and things reasonably necessary in connection with the performance of
their obligations hereunder and to carry out the intent of this
Agreement.
14.8. Successors and
Assigns. All of the provisions of this Agreement shall inure to the
benefit of and shall be binding upon the successors and permitted assigns of the
parties, if any.
14.9. Amendments. No
provision of this Agreement may be amended except as set forth in a writing and
signed by both parties.
14.10. Construction of
Agreement. Each party and attorneys for each party have
participated in the drafting and preparation of this Agreement. Therefore, the
provisions of this Agreement shall not be construed in favor of or against
either party, but shall be construed as if both parties equally prepared this
Agreement.
14.11. Governing Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of
California.
14.12. No
Waiver. The waiver by one party of the performance of any
covenant, condition or promise, or of the time for performing any act, under
this Agreement shall not invalidate this Agreement nor shall it be considered a
waiver by such party of any other covenant, condition or promise, or of the time
for performing any other act required, under this Agreement. The exercise of any
remedy provided in this Agreement shall not be a waiver of any remedy provided
by law, and the provisions of this Agreement for any remedy shall not exclude
any other remedies unless they are expressly excluded.
14.13. Severability. If
any provision of this Agreement shall become illegal, null or void or against
public policy, for any reason, or shall be held by any court of competent
jurisdiction to be illegal, null or void or against public policy, the remaining
provisions of this Agreement shall not be affected thereby and shall remain in
force and effect to the full extent permissible by law.
14.14. Counterparts. This
Agreement may be executed in counterparts, each of which shall constitute an
original, but all of which together shall constitute one and the same
instrument. The signature page of any counterpart may be detached there from
without impairing the legal effect of the signature(s) thereon provided such
signature page is attached to any other counterpart identical thereto except
having additional signature pages executed by the other party. Counterparts may
be delivered by facsimile provided that original executed counterparts are
delivered to the recipient on the next business day following the facsimile
transmission.
14.15. Attorneys' Fees, Costs and
Expenses. If any action or proceeding is instituted to enforce
or interpret any provision of this Agreement, the prevailing party therein shall
be entitled to recover its attorneys' fees, costs and expenses from the losing
Party.
14.16. Survival. The
agreements, indemnity obligations, representations, covenants and warranties of
the parties contained herein shall survive the termination of the
Agreement.
14.17. Publicity. PDP
shall not issue any press release or otherwise publicize in any manner the
transactions contemplated by this Agreement before or after the Effective Date
without EPL’s prior written consent, which EPL may withhold in its sole and
absolute discretion.
14.18. Dispute Resolution
Procedures. The following shall apply to any controversy
between the parties relating to this Agreement.
(a) The
parties shall first use their best efforts to meeting and discuss and negotiate
a resolution of the controversy. If negotiation efforts do not
succeed, the parties shall engage in mandatory but non-binding mediation by a
mediator jointly chosen by the parties or if the parties cannot agree upon a
mediator, by the American Arbitration Association for disputes relating to
locations outside of
California or Franchise Arbitration and Mediation Services,
Newport Beach,
California, for disputes relating to locations within
California.
(b) A
mediation meeting will be held at a place and at a time mutually agreeable to
the parties and the mediator. The Mediator will determine and control
the format and procedural aspects of the mediation. The mediation
will be held as soon as practicable after the negotiation meeting is
held.
(c) In
the event that either party requires a substantial amount of information in the
possession of the other party in order to prepare for the mediation meeting, the
parties will attempt, in good faith, to agree on procedures for the expeditious
exchange of such information.
(d) The
parties will cooperate and continue to mediate until the mediator terminates the
mediation. The mediator will terminate the mediation upon the earlier
of (i) execution of a settlement agreement, (ii) a declaration by the mediator
that the mediation is terminated, or (iii) completion of a full day mediation
meeting unless extended by agreement of the parties.
(e) If
after good faith efforts, mediation efforts have failed, the parties may pursue
all available remedies in law and equity.
14.19. Entire
Agreement. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter hereof and shall supersede
all prior and contemporaneous agreements, representations, negotiations and
understandings of the parties, oral or written.
IN
WITNESS WHEREOF, this Agreement has been executed by the parties as of the
Effective Date first above written.
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“EPL”
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“PDP”
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El
Pollo Loco, Inc.,
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A
Delaware corporation
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a
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By:
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By:
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Name:
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Name:
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Title:
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Title:
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