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TABLE OF CONTENTS
Page
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1. Preliminary Statement . . . . . . . . . . . . . . . . . . . . . . 1
2. Grant of Franchise . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Duration of This Agreement . . . . . . . . . . . . . . . . . . . . 1
4. Initial Franchise Fee . . . . . . . . . . . . . . . . . . . . . . 1
5. Recurring Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 2
A. Franchise and Advertising Fees . . . . . . . . . . . . . . . 2
X. Xxxxx Receipts . . . . . . . . . . . . . . . . . . . . . . . 2
C. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 2
6. Restriction to Location of BDI STORES and Limitation on Number
BDI STORES in Franchisee's Area . . . . . . . . . . . . . . . . . 2
A. Restriction of Location . . . . . . . . . . . . . . . . . . 2
B. Limitation on Number of BDI STORES in Franchisee's Area . . 2
C. Right of First Refusal . . . . . . . . . . . . . . . . . . . 3
D. Location Zone and Franchise Area . . . . . . . . . . . . . . 3
7. Lease, Construction and Opening of BDI STORE . . . . . . . . . . . 3
A. Lease or Purchase . . . . . . . . . . . . . . . . . . . . . 3
B. Construction of BDI STORE . . . . . . . . . . . . . . . . . 4
C. Equipment, Signs and Inventory . . . . . . . . . . . . . . . 4
D. BDI STORE Opening . . . . . . . . . . . . . . . . . . . . . 4
E. Termination of Franchisee for Failure to open BDI STORE . . 5
8. Training and Operations Assistance . . . . . . . . . . . . . . . . 5
A. Training . . . . . . . . . . . . . . . . . . . . . . . . . . 5
B. Requirement of Completion of Training/Failure to Complete . . 5
C. Hiring of Employees and Training . . . . . . . . . . . . . . 5
D. Operations Assistance . . . . . . . . . . . . . . . . . . . 6
E. Group Purchasing of Inventory . . . . . . . . . . . . . . . 6
F. Product Availability . . . . . . . . . . . . . . . . . . . . 6
G. Delivery of Equipment and Services . . . . . . . . . . . . . 6
9. Operation of BDI STORE . . . . . . . . . . . . . . . . . . . . . . 6
A. Operating Standards . . . . . . . . . . . . . . . . . . . . 6
B. Alteration to BDI STORE . . . . . . . . . . . . . . . . . . 7
C. Uniformity, Authorized Services . . . . . . . . . . . . . . 7
D. Use of Approved Products . . . . . . . . . . . . . . . . . . 7
E. Materials Imprinted with Names . . . . . . . . . . . . . . . 8
F. Standards, Specifications & Procedures . . . . . . . . . . . 8
G. Compliance with Law and Good Business Practices . . . . . . 8
H. Prices for Services Determined by Franchisee . . . . . . . . 9
I. Duty to Manage and Avoid Conflicting or Competing Interests 9
J. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 9
K. Operations Meetings . . . . . . . . . . . . . . . . . . . . 10
10. Procedures and Operating Manual . . . . . . . . . . . . . . . . . 10
11. Trade Secrets . . . . . . . . . . . . . . . . . . . . . . . . . . 10
BIKERS DREAM, INC.
FORM SB-2
EXHIBIT 10.19
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12. Advertising and Promotion . . . . . . . . . . . . . . . . . . . . 10
13. Records Keeping Standards and Reporting Procedures . . . . . . . . 11
A. Records and Accounting . . . . . . . . . . . . . . . . . . . 11
B. Business Reports and Tax Returns . . . . . . . . . . . . . . 11
C. Financial Statements . . . . . . . . . . . . . . . . . . . . 11
14. Names and Marks . . . . . . . . . . . . . . . . . . . . . . . . . 11
A. ownership of Names and Marks . . . . . . . . . . . . . . . . 12
B. Limitation on Use of Names and Marks by Franchisee . . . . . 12
C. Notification of Infringement and Claims . . . . . . . . . . 12
D. Indemnification. . . . . . . . . . . . . . . . . . . . . . . 12
15. Inspections and Audits . . . . . . . . . . . . . . . . . . . . . . 13
A. Right of Inspection . . . . . . . . . . . . . . . . . . . . 13
B. Right of Audit . . . . . . . . . . . . . . . . . . . . . . . 13
16. Termination of Franchise . . . . . . . . . . . . . . . . . . . . . 13
A. By Franchisee . . . . . . . . . . . . . . . . . . . . . . . 13
B. By BDI . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
17. Franchisee's Rights and Obligations Upon Termination or Expiration 15
A. Payment of amounts Owed to BDI . . . . . . . . . . . . . . . 15
B. Return of Proprietary Materials . . . . . . . . . . . . . . 15
C. Repurchase . . . . . . . . . . . . . . . . . . . . . . . . 15
D. Cancellation of Assumed Names and Transfer of
Telephone Numbers . . . . . . . . . . . . . . . . . . . . . 15
E. Modification of Agreement by Franchisee . . . . . . . . . . 15
F. Modification of Agreement by BDI . . . . . . . . . . . . . . 15
G. Assignment by BDI . . . . . . . . . . . . . . . . . . . . . 15
H. Death or Incapacity of Franchisee . . . . . . . . . . . . . 15
I. Removal of All Signs and Identification . . . . . . . . . . 16
X. Xxxxxxxx Not to Compete . . . . . . . . . . . . . . . . . . 16
K. Continuing Obligation . . . . . . . . . . . . . . . . . . . 16
L. Franchisee's Right to Sell BDI STORE . . . . . . . . . . . . 16
18. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
A. By BDI . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
B. Franchisee May Not Assign Without Approval of BDI . . . . . 17
C. Assignment to Partnership or Corporation . . . . . . . . . . 17
D. BDI'S Right of First Refusal . . . . . . . . . . . . . . . . 17
19. Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
A. Judicial Enforcement . . . . . . . . . . . . . . . . . . . . 18
B. Jurisdiction, Venue and Waiver of Jury Trial . . . . . . . . 18
C. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . 19
D. Severability and Substitution of Valid Provisions . . . . . 19
X. Xxxxxx of Obligations . . . . . . . . . . . . . . . . . . . . 19
F. Franchisee May Not Withhold Payments Due BDI . . . . . . . . 19
G. Rights of Parties are Cumulative . . . . . . . . . . . . . . 20
H. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 20
I. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . 20
J. Construction . . . . . . . . . . . . . . . . . . . . . . . . 20
20. Independent Contractors/Indemnification . . . . . . . . . . . . . 20
21. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
22. Failures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
23. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 21
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BIKER'S DREAM, INC.
FRANCHISE AGREEMENT
THIS AGREEMENT is made and entered into this 21st day of November,
1994 by and between BIKER'S DREAM, Inc., a California Corporation (hereinafter
"BDI") and XXXXXX X. XXXXX (hereinafter "FRANCHISEE"), whose principal address
is: SCPLO SE, ALBUQUERQUE, NEW MEXICO 87123
1. PRELIMINARY STATEMENT. BDI is developing a chain of
Motorcycle, motorcycle parts, accessories and service Dealerships under the
trade name "BIKER'S DREAM" (hereinafter "BDI"). Each BDI LOCATION is built to
standard specifications and uses standard operating procedures, equipment,
forms, signs and designs. All BDI LOCATIONS are to be operated in accordance
with franchise uniform standards of identity, quality, appearance, operating
methods and services provided.
2. GRANT OF FRANCHISE. BDI hereby grants to FRANCHISEE, as an
individual, subject to the provisions of this Agreement, a franchise to operate
one (1) BDI LOCATION within the following location zone:
THE STATE OF NEW MEXICO
CITY OF ALBUQUERQUE WILL BE THE
PHYSICAL LOCATION OF STORE
3. DURATION OF THIS AGREEMENT. This agreement shall begin as of
the date of execution hereof and shall continue for a term of fifteen (15)
years and, unless either party gives written notice of its intention to
terminate this Agreement at least one hundred eighty (180) days prior to the
expiration of the fifteen (15) year term, the term of this Agreement shall be
deemed to be renewed for five (5) years and thereafter for further periods of
five (5) years duration, unless BDI or FRANCHISEE mails a written notice of
intention not to renew to the other party at least one hundred eighty (180)
days prior to the end of any renewal period. If such notice is so mailed, the
Agreement shall terminate as to all parties at the end of the current period.
4. INITIAL FRANCHISE FEE. FRANCHISEE shall pay to BDI a
nonrefundable initial franchise fee in the amount of Fifteen thousand dollars
($15,000.00) in cash, payable in cash upon the execution of this Agreement.
The initial franchise fee shall be fully earned by BDI when paid, provided that
if BDI elects to terminate the franchise due to the failure of FRANCHISEE to
complete satisfactorily the prescribed training program or to lease or purchase
suitable premises for the BDI LOCATION, or to open the BDI LOCATION in the time
prescribed in this agreement,
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BDI shall refund to FRANCHISEE that part of the initial franchise fee
heretofore paid by FRANCHISEE. BDI shall have the right, at its option, to
repurchase at cost any and all equipment, supplies and training material which
it sold to FRANCHISEE.
5. RECURRING FEES.
(A) FRANCHISE AND ADVERTISING FEES. Beginning at the time
FRANCHISEE opens the BDI LOCATION for business and through the duration of this
franchise agreement, FRANCHISEE shall pay to BDI in weekly amounts, recurring
franchise fees of a sum equal to five (5%) percent and advertising trust fund
contributions of a sum equal to two (2%) percent (or $250.00, whichever is
greater) of the gross receipts for the preceding calendar week from the BDI
LOCATION operated by FRANCHISEE. The check or money order in full payment of
the said recurring franchise fee and the advertising trust fund contribution
for the preceding week shall be transmitted with the weekly business report and
shall be due and payable at the home office of BDI at 0000 Xxxxxxx Xxx, Xxxxx
Xxx, XX 00000 by 5:00 p.m. on Thursday, the 3rd day after the day on which the
weekly business report is mailed. These fees are nonrefundable.
(B) GROSS RECEIPTS. "Gross receipts" shall consist of money and
other consideration of any kind howsoever received by FRANCHISEE from any
source as the result of, or in connection with, the exercise of the franchise
granted hereunder including but not limited to all monies or other
consideration received for clothing, accessories and services sold and/or
rendered within or without the BDI LOCATION being operated by FRANCHISEE under
this franchise. Monies received from Motorcycle sales are not considered "Gross
receipts".
(C) INTEREST. All recurring franchise fees, advertising trust
account contributions and amounts owed for products purchased by FRANCHISEE
pursuant to the franchise shall bear interest after due date at the current six
month Treasury Bill rate plus two (2%) percent.
6. RESTRICTION TO LOCATION OF BDI LOCATIONS AND LIMITATION ON
NUMBER OF BDI LOCATIONS IN FRANCHISEE'S AREA.
(A) RESTRICTION OF LOCATION. FRANCHISEE may operate the BDI
LOCATION only within the Location Zone identified herein or a substitute
location and/or premises hereinafter approved by BDI in writing. Specific
location must be approved by BDI. If the FRANCHISEE'S lease for the premises
of the BDI LOCATION expires or terminates without fault of FRANCHISEE, or if
the premises are damaged, condemned or otherwise rendered unusable, or if in
the judgment of BDI and FRANCHISEE there is a change in the character of the
location of the BDI LOCATION sufficiently detrimental to its business potential
to warrant its relocation, BDI will grant permission for relocation of the BDI
LOCATION to a location and premises approved by BDI.
(B) LIMITATION ON NUMBER OF BDI LOCATIONS IN FRANCHISEE'S AREA.
BDI agrees that the number of franchised BDI LOCATIONS shall be limited to a
maximum of one BDI LOCATIONS within the Location Zone. BDI will not establish
any franchised or Company owned BDI LOCATIONS within ten (10) miles of
Franchisee's location without Franchisee's consent.
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(C) RIGHT OF FIRST REFUSAL. FRANCHISEE shall have the right of
first refusal for any franchise which BDI proposes to grant immediately
adjacent to FRANCHISEE'S Franchise Area, as designated below. To exercise this
right, FRANCHISEE must execute the then current Franchise Agreement and pay ten
thousand dollars ($10,000.00) of the then current initial franchise fee within
fifteen (15) days of written notification of the proposed grant of franchise.
The balance of the initial franchise fee shall be payable within an additional
thirty (30) days.
(D) LOCATION ZONE. The BDI LOCATION to be operated pursuant to
this Franchise Agreement shall be located within the following designated
Location Zone:
El Paso, Texas
Durango, Colorado
For the term of this agreement, BDI will not grant any new franchises or open
any company-owned BDI LOCATIONS within the Location Zone.
7. LEASE, CONSTRUCTION AND OPENING OF BDI LOCATION.
(A) LEASE OR PURCHASE. FRANCHISEE will lease or purchase the
premises of the BDI LOCATION described in paragraph 2 of this Agreement within
ninety (90) days after execution of this Agreement. If specific premises are
not identified in paragraph 2 of this Agreement, FRANCHISEE agrees to lease or
purchase suitable premises, reasonably acceptable to BDI, within ninety (90)
days after execution of this Agreement. If FRANCHISEE fails to lease or
purchase suitable premises within ninety (90) days after execution of this
Agreement, BDI may terminate this Agreement, effective upon delivery of written
notice of termination to FRANCHISEE. In the event of such termination, the
3.
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parties agree to execute all instruments required to rescind fully all
agreements, purchases and any other transaction between BDI and FRANCHISEE.
Upon execution of all required instruments, BDI shall refund to FRANCHISEE that
part of the initial franchise fee heretofore paid by FRANCHISEE, less Two
Thousand Five Hundred Dollars ($2,500.00) dollars to cover training and
administration expense, whether or not training has been completed. BDI shall
have the right, at its option to repurchase at cost any or all
equipment,supplies and training material which it sold to FRANCHISEE.
(B) CONSTRUCTION OF BDI LOCATION. BDI will furnish to FRANCHISEE
its standard detailed specifications for a BDI LOCATION, including requirements
for dimensions, exterior design, interior layout, building materials,
equipment, signs and color scheme. FRANCHISEE agrees to do or cause to be done
the following:
(1) obtain all required building, utility, sign, use,
health, sanitation and business permits, licenses and other required
permits and licenses;
(2) submit to BDI for its approval FRANCHISEE'S BDI
LOCATION plans;
(3) construct the premises and paint the premises in
compliance with plans and specifications approved by BDI;
(4) purchase or lease and install all equipment and signs
required for the BDI LOCATION; and
(5) secure all financing required by FRANCHISEE to fully
develop the BDI LOCATION.
(C) EQUIPMENT, SIGNS AND INVENTORY. BDI will provide FRANCHISEE
with a complete list of all inventory, parts, components, accessories, signs
and equipment required to open the BDI LOCATION. FRANCHISEE agrees to use in
the operation of his BDI LOCATION only those brands of inventory, parts,
components, accessories, signs and equipment that BDI has approved for BDI
LOCATIONS as meeting its standards and specifications for function,
attractiveness, serviceability and overall appearance. FRANCHISEE may purchase
or lease approved brands of these items from any supplier If FRANCHISEE
proposes to purchase or lease any brand which is not then approved by BDI,
FRANCHISEE shall first notify BDI and shall submit to BDI, upon its request,
sufficient specifications, photographs, drawings and/or other information or
samples for determination by BDI whether such brand of inventory, parts,
components, accessories, signs and equipment complies with its standards and
specifications, which determination will be made and communicated to FRANCHISEE
in writing within a reasonable time.
(D) BDI LOCATION OPENING. Upon completion of FRANCHISEE'S
training program, as described in paragraph 8 of this agreement, and within
fifteen (15) days after BDI'S determination that the premises described herein
are in suitable condition and comply with the standards and specifications
prescribed by BDI, FRANCHISEE agrees to open the BDI LOCATION for business and
commence the conduct of business. BDI will assist FRANCHISEE in the opening of
the BDI LOCATION.
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ADDENDUM TO FRANCHISE AGREEMENT
1. The franchise will probably be put in a corporation.
If so, it will be the only business in said corporation.
2. Franchise area will include all of the State of New
Mexico. Because of the low population and sparsely populated
areas, this will enable me to focus on mail order business
throughout the State. The physical location will be in
Albuquerque. No other Company owned BDI LOCATIONS will be
established in New Mexico. No other franchised locations will
be established in New Mexico with any other party or parties.
3. I will have a specific first right of refusal for the
El Paso, Texas area as well as for the Durango, Colorado area.
To enable me to properly evaluate the feasibility of these
locations at any given time, I will need 60 days, rather than
15 days, and another 30 days to arrange financing.
4. Weekly reports will be mailed on Mondays. I will not
be penalized for late mail service.
5. I will have the right to carry and sell the
"Illusion" motorcycles, and the "Indian" motorcycles (if that
dealership becomes available) within the franchise location.
6. The advertising fund fee shall be waived for a period
of six months beginning on the first day of opening the
location.
7. In terms of any visits or audits, as outlined in
Section 15, I will be given at least one day prior notice.
8. I will be responsible only for my employees expenses
to attend training in California. I will not be responsible
for BDI's expenses when training in New Mexico.
9. The 3% figure regarding audits and variances will be
raised to 5%.
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(E) TERMINATION OF FRANCHISEE FOR FAILURE TO OPEN BDI LOCATION.
If the FRANCHISEE fails to complete preparation of the BDI LOCATION
and open the BDI LOCATION for business within one hundred eighty (180) days
after execution of this Agreement, BDI shall have the right to terminate this
Agreement, effective upon delivery to FRANCHISEE of written notice of
termination. In the event of such termination and upon delivery to BDI of all
releases, waivers and other instruments required to rescind fully all
agreements, purchases and other transactions between BDI and FRANCHISEE, BDI
shall refund to FRANCHISEE that part of the initial franchise fee paid by
FRANCHISEE, less Two Thousand Five Hundred Dollars ($2,500.00) for training and
administrative expense (or actual costs incurred), whichever is greater. BDI
shall have the right, at its option, to repurchase at cost any or all
equipment, supplies, inventory and training material which it sold to
FRANCHISEE.
8. TRAINING AND OPERATIONS ASSISTANCE.
(A) TRAINING. Before the opening of the BDI LOCATION, BDI shall
train FRANCHISEE in the operation of a BDI LOCATION. Such training shall take
place at a time and place specified by BDI. Training will be conducted at the
BDI home office at 0000 Xxxxxxx Xxx, Xxxxx Xxx XX 00000 and at FRANCHISEE'S
location. Training will be for one week at each location. Training at home
office will be completed within sixty (60) days after signing this agreement.
Training at Franchisee's location will be completed prior to and during first
week of operation of Franchisee's BDI LOCATION. FRANCHISEE shall be
responsible for any travel and living expenses incurred in connection with the
training program. Training will cover four distinct areas: (1) Operation of a
BDI LOCATION; (2) Purchasing and financing motorcycles, parts, and accessories;
(3) Sales and marketing; (4) Business and systems procedures. Initial training
class may be attended by three persons, one of which must be FRANCHISEE.
(B) REQUIREMENT OF COMPLETION OF TRAINING/FAILURE TO COMPLETE.
FRANCHISEE shall complete the training program provided by BDI. If BDI
reasonably determines that FRANCHISEE is unable to complete satisfactorily the
said training program, this Agreement shall terminate and upon delivery to BDI
of all assignments, releases, waivers and other instruments required to rescind
fully all agreements, purchases and other transactions between BDI and
FRANCHISEE, BDI shall refund to FRANCHISEE that part of the initial franchise
fee paid by FRANCHISEE to BDI pursuant to this agreement. BDI shall have the
right, at its option, to repurchase at cost any or all equipment, supplies and
training material which it sold to FRANCHISEE.
(C) HIRING OF EMPLOYEES AND TRAINING OF EMPLOYEES BY FRANCHISEE.
FRANCHISEE shall hire all employees of the BDI LOCATION and be exclusively
responsible for the terms of their employment,'compensation and the training of
such employees in the proper conduct of their jobs in operation of a BDI
LOCATION. BDI will make available to FRANCHISEE training for new employees or
updating those already employed. Such training and updating shall take place
at a time and place specified by BDI. Training will be conducted at the BDI
home office or at another BDI LOCATION designated by BDI. FRANCHISEE shall be
responsible for any travel and living expenses incurred by such employees, in
connection with the training.
6.
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(D) OPERATIONS ASSISTANCE. BDI shall advise FRANCHISEE of
problems arising out of the operation of the BDI LOCATION as disclosed by
reports submitted to BDI by FRANCHISEE or by inspections conducted by BDI of
the BDI LOCATION. BDI will furnish FRANCHISEE with such assistance in
connection with the operation of the BDI LOCATION as is reasonably determined
to be necessary by BDI from time to time. Operations assistance may consist of
advice and guidance with respect to:
(1) proper utilization of procedures developed for a BDI
LOCATION including sales and display procedures developed by BDI;
(2) additional services and products authorized for BDI
LOCATIONS;
(3) purchase of various products, materials and supplies;
(4) the institution of proper administrative,
bookkeeping, accounting, inventory control, supervisory and general
operating procedures for the effective operation of a BDI LOCATION;
(5) advertising and promotional programs.
(E) GROUP PURCHASING OF INVENTORY AND SUPPLIES. FRANCHISEE shall
have the right to participate on the same basis as other franchisees of BDI and
BDI owned BDI LOCATIONS in group purchasing of motorcycles, parts,
accessories, and other materials and supplies which BDI may from time to time
develop and sponsor.
(F) PRODUCT AVAILABILITY. During the term of this Agreement, BDI
will make available for purchase by FRANCHISEE approved products necessary to
operate a BDI LOCATION.
(G) DELIVERY OF EQUIPMENT AND SERVICES. All of the
specifications, equipment and inventory lists, training, equipment, operations
manuals, and pre-opening operations assistance to be provided by BDI to
FRANCHISEE pursuant to this Agreement shall be delivered within ninety (90)
days after execution of this Agreement.
9. OPERATION OF BDI LOCATION.
(A) OPERATING STANDARDS. FRANCHISE agrees to operate and maintain
his BDI LOCATION in a manner consistent with the public image of a BDI LOCATION
as a clean, modern and efficient retail motorcycle, parts and accessories
store, providing high quality products and services. FRANCHISEE agrees to
effect a maintenance program for the BDI LOCATION which will assure such
condition, appearance and operation, including replacement of worn out or
obsolete equipment and signs, repair of the interior and exterior of the BDI
LOCATION, painting and periodic cleaning, consistent with the nature of the
business of the BDI LOCATION and the reputation of BDI. If, at any time in
BDI'S reasonable judgement, the general state of repair, appearance of
cleanliness of the premises of the BDI LOCATION or its equipment or signs does
not meet BDI'S
7.
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standards therefor, BDI shall so notify FRANCHISEE specifying the action to be
taken by FRANCHISEE to correct such deficiency. If FRANCHISEE fails or refuses
to initiate corrective action within thirty (30) days after receipt of such
notice, and thereafter continue, a bona fide program to undertake and complete
any such required maintenance, BDI shall have the right, but shall not be
obligated, to enter upon the premises of the BDI LOCATION and effect such
repairs, painting and/or replacement of equipment or signs on behalf of
FRANCHISEE and FRANCHISEE shall pay the entire costs thereof to BDI upon
demand.
(B) ALTERATIONS TO BDI LOCATION. FRANCHISEE agrees that he shall
make no material alterations to the structural improvements or appearance of
the BDI LOCATION nor shall FRANCHISEE make any material replacements or
alterations to the equipment or signs of the BDI LOCATION without prior written
approval of BDI.
(C) UNIFORMITY, AUTHORIZED PRODUCTS AND SERVICES. Uniformity of
products, procedures and services and the image such uniformity creates in the
mind of the public are essential elements of a successful franchise chain.
FRANCHISEE therefore agrees to offer motorcycles, parts, accessories, services
and products which BDI from time to time authorizes for BDI LOCATIONS
FRANCHISEE agrees to submit written requests for authorization of additional
products or services to be offered for sale at FRANCHISEE'S BDI LOCATION.
FRANCHISEE further agrees that the BDI LOCATION will not, without prior written
approval by BDI, offer any other products or services nor shall the BDI
LOCATION or the premises it occupies be used for any purpose other than the
operation of an authorized BDI LOCATION in compliance with the terms of the
Agreement.
(D) USE OF APPROVED PRODUCTS. Consistency of quality in the
products and services offered by BDI is essential to the maintenance and
enhancement of BDI'S reputation and the good will it has generated by the sale
of high quality products and the efficient delivery of high quality services to
its customers. For these reasons FRANCHISEE agrees that all motorcycles,
parts, accessories and other inventory, materials and supplies used in the
operation of the BDI LOCATION shall be purchased by FRANCHISEE from the list of
types or brands approved by BDI as meeting its specifications and standards.
If FRANCHISEE desires to use in the operation of the BDI LOCATION any type or
brand of motorcycles, accessories and other inventory, materials and supplies
which is not then approved by BDI as meeting its standards and specifications,
FRANCHISEE shall first notify BDI, in writing, and shall upon request by BDI
submit samples and such other information as BDI reasonably requires for
examination and/or testing to determine otherwise whether such product meets
its standards and specifications. BDI shall notify FRANCHISEE within a
reasonable tire whether it approves such product. The BDI LOCATION shall at
all times maintain an inventory of motorcycles, parts, accessories and other
inventory, materials and supplies, sufficient to satisfy customer demand and
operate efficiently.
8.
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(E) MATERIALS IMPRINTED WITH NAMES AND MARKS. FRANCHISEE shall
in the operation of the BDI LOCATION utilize letterheads, business cards, forms
and other materials imprinted with the Names and Marks as prescribed from time
to time by BDI.
(F) STANDARDS, SPECIFICATIONS AND PROCEDURES. FRANCHISEE agrees
as a material part of the consideration of this Agreement to comply with all
mandatory standards, specifications and operating procedures relating to the
operation of a BDI LOCATION, including but not limited to the following:
(1) use of standard sales and operating procedures;
(2) general appearance of employees;
(3) use of quality products and high standards of methods
and procedures relating to retail business;
(4) use of Names and Marks;
(5) prescribed hours of operation during which the BDI
LOCATION will be open for business;
(6) use of standard forms, programs, formats, and records
keeping including the preparation and retention of duplicate customer
sales slips and related documents;
(7) identification of the FRANCHISEE as the owner of the
BDI LOCATION; and
(8) proper use and illumination of BDI signs, posters,
displays and other advertising and promotional displays as prescribed
by BDI from time to time.
BDI agrees that all such standards, specifications, procedures and operating
requirements shall be reasonable and consistent with the obligations of
FRANCHISEE under the lease or deed for the premises of the BDI LOCATION and
applicable ordinances. Mandatory standards, specifications and operating
procedures prescribed from time to time by BDI in the procedures and operating
manuals for BDI LOCATIONS or otherwise communicated to FRANCHISEE in writing,
shall constitute provisions of this Agreement as if fully set forth herein.
All references herein to this Agreement shall include all such mandatory
standards, specifications and operating procedures. BDI reserves the absolute
right to change, modify, add to or delete any and all standards, specifications
and operating procedures.
(G) COMPLIANCE WITH LAW AND GOOD BUSINESS PRACTICES. FRANCHISEE
shall secure, file and maintain in full force and effect all required licenses,
permits, certificates, notices and disclosures relating to the operation of a
BDI LOCATION and shall operate the BDI LOCATION in full compliance with all
applicable federal, state and local statutes, regulations, and ordinances,
including but not limited to all government regulations relating to retail
facilities, occupational hazards and health, workers' compensation insurance,
federal and state withholding and payment of federal and state income taxes,
social security taxes and sales taxes.
9.
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All advertising and participation by FRANCHISEE shall be completely factual and
shall conform to the highest standards of ethical advertising. FRANCHISEE
agrees to refrain from any business or advertising practice which way be
injurious to the business and good name of BDI and the reputation and good will
associated with Names and Marks of BDI and BDI LOCATIONS.
(H) PRICES FOR PRODUCTS AND SERVICES DETERMINED BY FRANCHISEE.
From time to time BDI may advise FRANCHISEE of prices for products and services
offered by BDI LOCATIONS which BDI in its considered judgment believes to be
appropriate and consistent with good business practice. FRANCHISEE shall not
be obligated to accept any such advice and shall have the sole right to
determine the prices to be charged by the BDI LOCATION. FRANCHISEE understands
and agrees that such advice furnished by BDI shall in no way be deemed or
construed to impose upon FRANCHISEE any obligation to charge any fixed, minimum
or maximum price for any product or service offered for sale by the BDI
LOCATION.
(I) DUTY TO MANAGE AND AVOID CONFLICTING OR COMPETING INTERESTS.
The BDI LOCATION shall at all times be under the direct, on-premises
supervision of FRANCHISEE and/or a trained and competent employee.
FRANCHISEE shall keep BDI informed at all times of the identity of any
employee(s) acting as manager(s) of the BDI LOCATION. XXXXXXXXXX agrees that
he will at all times faithfully, honestly and diligently perform his obligation
under this Agreement and that he will continuously exert his best efforts to
promote and enhance the business of the BDI LOCATION. FRANCHISEE further
agrees not to engage in any business which will detract from or conflict with
his obligation hereinunder.
(J) INSURANCE. FRANCHISEE shall at all times during the term of
this Agreement or any amendment or renewal hereto maintain in full force and
effect at his sole expense, comprehensive, public and product insurance against
claims for bodily and personal injury, death and property damage caused by or
occurring in conjunction with the operation of the BDI LOCATION or otherwise in
conjunction with conduct of business by FRANCHISEE pursuant to this franchise.
Such insurance coverage shall be maintained under one or more policies of
insurance containing a comprehensive general liability policy including
products liability in the minimum amount of $500,000/$500,000 bodily injury
liability and $500,000 property damage liability, an "umbrella" package in the
amount of $1,000,000, or such other amounts as BDI may reasonably request for
the operation of the premises. All such liability insurance policies shall
name BDI as an additional insured and shall provide that BDI receives thirty
(30) days prior written notice of termination, expiration or cancellation of
any such policy. BDI way reasonably increase the minimum liability protection
requirement annually to reflect inflation or higher damage awards in public or
product liability litigation. FRANCHISEE shall have his insurance carriers
submit to BDI annually a statement of coverage. All policies shall be renewed
and evidence of renewal mailed to BDI prior to the expiration date. If
FRANCHISEE at any time fails or refuses to maintain any insurance coverage
required by BDI or to furnish satisfactory evidence thereof, BDI at its option
and in addition to its other rights and remedies hereunder, may, but need not,
obtain such insurance coverage on behalf of the FRANCHISEE and
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FRANCHISEE shall pay to BDI on demand any costs and premiums incurred by BDI in
connection therewith. FRANCHISEE is responsible for all loss or damage and
contractual liability to third persons originating in or in connection with the
operation of a BDI LOCATION and for all claims or demands for damages to
property or for injury, illness or death of persons directly or indirectly
resulting therefrom. FRANCHISEE agrees to defend, indemnify and hold BDI
harmless from and with respect to any such claim, losses, or damages as
hereinabove described.
K. OPERATIONS MEETINGS. From time to time BDI will call
operations meetings. These meetings will be held regionally where feasible to
keep expense and time loss for FRANCHISEE to a relative minimum. Attendance at
operations meetings is mandatory for FRANCHISEE or his Manager(s).
10. PROCEDURES AND OPERATING MANUALS. BDI will license to
FRANCHISEE, to use during the term of the franchise, a proprietary special
design computer software program and one or more copies of procedures and
operating manuals for BDI LOCATIONS containing mandatory and suggested
standards, specifications and operating procedures for BDI LOCATIONS and
up-to-date information relative to such standards, specifications and operating
procedures along with other obligations of FRANCHISEE hereunder with respect to
the operation of a BDI LOCATION. BDI shall have the right to add to and
otherwise modify the procedures and operating manuals from time to time to
reflect changes in authorized products and services, product quality or
standards of service or the operation of a BDI LOCATION provided that no such
addition or modification shall alter FRANCHISEE'S fundamental status and rights
under this Agreement. The operating and procedures manuals contain proprietary
information of BDI and FRANCHISEE agrees to keep the computer software program
and the operating and procedures manuals confidential at all times during and
after the terms of the franchise.
11. TRADE SECRETS. FRANCHISEE as a material part of the
consideration for this Agreement understands and agrees that his knowledge of
the operation of a BDI LOCATION will be derived from information disclosed to
FRANCHISEE by BDI pursuant to the franchise and that certain such information
is proprietary, confidential and a trade secret of BDI. FRANCHISEE agrees that
he will maintain the absolute confidentiality of all such information during
and after the term of the franchise and that he will not use any such
information in any other business or in any manner not specifically authorized
or approved by BDI.
12. ADVERTISING AND PROMOTION. FRANCHISEE agrees that it is
essential for the growth of the BDI franchise chain that he participates and
cooperates in advertising programs and other promotional activities.
Accordingly, FRANCHISEE agrees to contribute to an advertising trust fund
administered by BDI, or its designated agent. (Paragraph 6 section A of
Offering Circular and Paragraph 5, this Agreement). The said monies shall be
used by BDI exclusively for advertising and promotional purposes. Advertising
and promotional purposes may include, but are not limited to, radio and
television advertising, newspaper advertisements, and the production and
distribution of such advertising. BDI agrees to provide FRANCHISEE with an
annual statement of the receipts and disbursements of the advertising trust
fund. It is understood by BDI and Franchisee, that after BDI has five (5)
franchises open and operating, an executive advertising committee will be
selected by BDI, that will include Franchisees. This committee will be
instrumental in administering the distribution of the advertising trust monies.
11.
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The uncommitted reserve in the advertising trust fund will be
reconciled with expenditures annually at the close of BDI'S fiscal year to
limit the reserve to an amount not greater than the most recent ninety (90) day
expenditure or the succeeding ninety (90) day planned expenditure. BDI shall
thereafter notify FRANCHISEE of the appropriate pro rata reduction of
FRANCHISEE'S advertising trust fund contributions until the excess in the
uncommitted reserve, if any, is depleted.
13. RECORDS KEEPING STANDARDS AND REPORTING PROCEDURES.
(A) RECORDS AND ACCOUNTING. FRANCHISEE shall establish a record
keeping, bookkeeping and accounting system in conformance with the requirements
prescribed by BDI including, but not limited to, the use and retention of sales
records, invoices, payroll records, check stubs, bank deposit receipts, sales
tax records and returns, cash disbursements journals and general ledgers.
(B) BUSINESS REPORTS AND TAX RETURNS. FRANCHISEE shall furnish to
BDI, in accordance with BDI'S procedures and operating manual for BDI
LOCATIONS, the following:
(1) by Monday of each week on the business report form, a report
of the gross and net revenues of the BDI LOCATION for the preceding week
together with all information required by BDI as part of the weekly business
report procedure;
(2) within thirty (30) days after the date federal and state
income tax and sales tax returns are filed, FRANCHISEE shall provide BDI with
exact copies of such returns and all schedules attached thereto.
(C) FINANCIAL STATEMENTS. FRANCHISEE shall furnish to BDI in the
form prescribed by BDI:
(1) within thirty (30) days after the end of each month, a monthly
profit and loss statement from the beginning of FRANCHISEE'S fiscal year to
the end of the preceding month for the BDI LOCATION, prepared, verified and
signed by FRANCHISEE; and
(2) within sixty (60) days after the end of each fiscal year of the
BDI LOCATION, an unaudited annual statement of profit and loss and source and
application of funds of the BDI LOCATION for the fiscal year and a balance
sheet for the BDI LOCATION as of the end of the fiscal year, compiled or
reviewed by an independent public accountant or a certified public accountant
in accordance with standards published by the A.I.C.P.A., verified and signed
by FRANCHISEE as to the information furnished to such accountant.
(3) BDI may order FRANCHISEE to provide an audited financial
statement at any time. If this audit discloses an understatement for the
period covered greater than three (3%) percent, FRANCHISEE will pay all costs
associated with the audit and within fifteen (15) days pay to BDI all
recurring franchise fees and advertising trust fund contributions due on the
amount of the understatement. BDI shall then have the right to require
FRANCHISEE to furnish audited financial statements thereafter. If the
understatement is three (3%) percent or less, BDI will pay the reasonable
auditor's fees.
14. NAMES AND MARKS.
(A) OWNERSHIP OF NAMES AND MARKS. FRANCHISEE acknowledges and
agrees as a material part of the consideration for this Agreement that BDI is
the owner of the following names and Xxxxx: "THE BIKERS DREAM", "BIKERS DREAM"',
BIKER'S DREAM" and "DREAM", referred to in this Agreement as "Names and
Marks". BDI hereby licenses FRANCHISEE to use the Names and Marks in the
operation of the franchise. FRANCHISEE'S right to use the Names and Marks is
derived solely from this Agreement, and is limited to the operation of the BDI
LOCATION in compliance with this Agreement. FRANCHISEE shall use and display
the Names and Marks only in a manner and form expressly approved by BDI.
FRANCHISEE, upon request by BDI, shall affix to any materials displaying the
Marks, whatever legends, markings, and notices of trademark ownership or
FRANCHISOR/FRANCHISEE relationship as my be specified by BDI.
12.
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(B) FRANCHISEE acknowledges the right of BDI and its affiliates to
use the Marks, including any additions, deletions, or changes thereto, in
connection with the products and services to which they are or may be applied
by BDI and its affiliates, and represents, warrants and agrees that FRANCHISEE
shall not, either during the term of this Agreement or after the expiration or
other termination hereof, directly or indirectly contest or aid in contesting
the validity, ownership, registration, or use of the marks or any additions,
deletions or changes thereto by BDI, or take any action whatsoever in derogation
of the rights claimed therein by BDI.
(C) The License granted to Franchise under this Agreement to use
the Marks is nonexclusive, and BDI, in its sole and absolute discretion, has the
right to grant other licenses in, to and under those names and marks in
addition to those licenses already granted, and to develop and license other
names and marks an any such terms as BDI deems appropriate.
(D) Nothing contained in this Agreement shall be construed to vest
in FRANCHISEE any right, title or interest in or to any of the Marks, the
goodwill now or hereafter associated therewith, or any right in the design of
any building or premises, other than rights and license expressly granted
herein for the term hereof.
(E) FRANCHISEE shall not use any of the Marks in connection with
any statement or material which may, in the judgement of BDI, be in bad taste or
inconsistent with BDI'S public image or tend to bring disparagement, ridicule
or scorn upon BDI, any of the Marks, or the goodwill associated therewith.
FRANCHISEE shall not adopt, use, display or register, in whole or in part, any
trademarks, service marks, trade names, logos, insignia, slogans, emblems,
symbols, designs or other identifying characteristics. Neither FRANCHISEE nor
any entity directly or indirectly affiliated with FRANCHISEE shall adopt, use
or register (by filing a certificate or articles of incorporation, a fictitious
business name statement, or otherwise) any trade or business name, style or
design which includes, or is similar to, in whole or in part, any of the Marks
or any other of BDI'S trademarks, service marks, trade names, logos, insignia,
slogans, emblems, symbols, designs or other identifying characteristics.
(F) BDI shall have the right at any time and from time to time upon
notice to FRANCHISEE to make additions to, deletions from, and changes in any
of the Marks, or any of them, all of which shall be as effective as if they
were incorporated in this Agreement. All such additions, deletions and changes
shall be made in good faith, on a reasonable basis and with a view toward the
overall best interests of the System. No such addition, deletion or change
will cause any change in any of FRANCHISEE'S financial obligations to BDI.
(G) LIMITATIONS ON USE OF NAMES AND MARKS BY FRANCHISEE.
FRANCHISEE agrees to use the Names and Marks during the term of the franchise
as the sole serviceman and tradename identification of the BDI LOCATION.
FRANCHISEE shall not use during the term of the franchise any Name and Mark as
part of any corporate name or with any prefix, suffix or other modifying words,
terms, designs or symbols, or any modified form, nor may FRANCHISEE use any
Name or Mark in connection with the sale of any unauthorized product or service
or in any other manner not explicitly authorized in writing by BDI.
(H) NOTIFICATION OF INFRINGEMENT AND CLAIMS. FRANCHISEE shall
immediately notify BDI of any apparent infringement of or challenge to
FRANCHISEE'S use of any Name or Mark.
(I) INDEMNIFICATION. BDI agrees to indemnify FRANCHISEE for all
damages for which he is held liable in any proceeding arising out of his use of
any Name or Mark, pursuant to and in compliance with this Agreement and for all
costs reasonably incurred by FRANCHISEE in the defense of any such claim
brought against him or in any such proceeding in which he is named as a party,
provided that FRANCHISEE has timely notified BDI of such claim or proceeding and
has otherwise complied with this Agreement, and further provided that if it
becomes advisable at any time in the sole discretion of BDI for FRANCHISEE to
modify or discontinue use of any Name or Mark, and/or use additional or
substitute Names or Marks, FRANCHISEE agrees to do so and the sole obligation
of BDI in any such event shall be to reimburse FRANCHISEE for the out-of-
pocket costs of
13.
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complying with this obligation. BDI, at its sole discretion may elect to
defend or participate in the defense or prosecution of any action relating to
the protection of the Service Mark and to protect the FRANCHISEE against claims
of infringement or unfair competition with respect to the Service Mark. In
such event, BDI will have the sole discretion to take such action as it deems
appropriate. FRANCHISEE is not precluded from taking over a cause of action
should BDI decide not to proceed with same.
15. INSPECTIONS AND AUDITS.
(A) RIGHT OF INSPECTION. In order to determine whether FRANCHISEE
is in compliance with this Agreement, BDI shall have the right at any time
during business hours, without prior notice to FRANCHISEE, to inspect the BDI
LOCATION and the business records, bookkeeping and accounting records,
invoices, payroll records, check stubs, bank deposit receipts, sales tax
records and returns, sales records and other supporting records and documents
and the inventory of products, materials and supplies of the BDI LOCATION.
(B) RIGHT TO AUDIT. BDI shall have the right at any time during
business hours, and without prior notice to FRANCHISEE, to audit or cause to be
audited the weekly business reports, tax returns, and schedules and other
forms, information and supporting records which FRANCHISEE is required to
submit to BDI hereunder and the books and records of the BDI LOCATION and of
any corporation or partnership which owns or operates the BDI LOCATION. In the
event any such audit shall disclose an understatement of the gross receipts of
the BDI LOCATION for any period or periods, FRANCHISEE shall pay to BDI within
fifteen (15) days after receipt of the audit report, the recurring franchise
fee plus any required advertising trust account contribution due on the amount
of such understatement. Further, in the event such understatement for any
period or periods shall be greater than three (3%) percent, FRANCHISEE shall
reimburse BDI for the cost of such audit, including, but not limited to, the
fee of any independent accountant and the travel expenses, room, board and
compensation of employees of BDI, unless FRANCHISEE demonstrates that such
understatement resulted from inadvertent error.
16. TERMINATION OF FRANCHISE.
(A) BY FRANCHISEE. If FRANCHISEE is in substantial compliance
with this Agreement and BDI breaches this Agreement and fails to cure such
breach within thirty (30) days after written notice thereof is delivered to
BDI, FRANCHISEE may terminate this Agreement effective ten (10) days after
delivery to BDI of notice thereof. The termination of this Agreement by
FRANCHISEE without complying with the foregoing requirement or for any reason
other than breach of this Agreement by BDI and BDI'S failure to cure such
breach within thirty (30) days after receipt of written notice thereof shall be
deemed a termination by FRANCHISEE without cause.
(B) BY BDI. In addition to BDI'S right to terminate this
Agreement in the event of the failure of FRANCHISEE to lease or purchase a
premises for the BDI'S LOCATION to develop or open the BDI'S LOCATION as
provided in subparagraph (A) of paragraph 5 herein or upon BDI'S determination
that FRANCHISEE is unable to complete satisfactorily prescribed training as
provided in subparagraph (B) of paragraph 6 herein, BDI may terminate this
Agreement effective upon delivery of notice of termination to FRANCHISEE, if
FRANCHISEE or the BDI LOCATION
14.
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(1) makes an assignment for the benefit of creditors or
an admission of his inability to pay his obligations as they become
due;
(2) files a voluntary petition in bankruptcy or any
pleading seeking any reorganization, liquidation or dissolution under
any law, or admitting or failing to contest the material allegations
of any such pleading filed against him or is adjudicated a bankrupt or
insolvent or a receiver is appointed or a substantial part of the
assets of FRANCHISEE or BDI LOCATION are abated or subject to a
moratorium under any law;
(3) abandons or surrenders or transfers control of the
operation of the BDI LOCATION or fails actively to operate the BDI
LOCATION, unless precluded from doing so by damage to the premises of
the BDI LOCATION, war or civil disturbance, natural disaster, or other
event beyond FRANCHISEE'S control;
(4) suffers cancellation of, or fails to renew or extend
the lease for, or otherwise fails to maintain possession of, the
premises of the BDI LOCATION identified herein or a substitute
premises approved by BDI;
(5) submits to BDI on two (2) or more separate occasions
at any time during the term of the franchise, a weekly business
report, tax return or schedule or other information or supporting
records which understates the gross receipts of the BDI LOCATION by
more than three (3) percent for any period of time, unless FRANCHISEE
demonstrates to the satisfaction of BDI that such understatement
results from inadvertent error;
(6) fails or refuses to submit when due, weekly reports,
tax returns, schedules or other information or supporting records,
whether or not such failure or refusal is corrected after notice
thereof is delivered to FRANCHISEE;
(7) operates the BDI LOCATION in a manner which presents
a health or safety hazard to its customers, employees or the public;
(8) makes an unauthorized assignment of the franchise or
ownership of FRANCHISEE as hereinafter defined in paragraph 17 and 18;
(9) operates the BDI LOCATION in a manner in violation of
or inconsistent with all applicable federal, state and local statutes,
regulations, rules and ordinances, including, but not limited to, all
government regulations relating to retail stores;
(10) fails or refuses to pay any amount owed to BDI
for recurring franchise fees, advertising trust account contributions,
any products purchased from BDI or any amounts due to BDI or fails or
refuses to comply with any mandatory standards, specifications or
operating procedures prescribed by BDI relating to the quality of
products, cleanliness or sanitation and does not correct such failure
or refusal within ten (10) days after written notice thereof is
delivered to FRANCHISEE. Said notice shall describe what corrective
action FRANCHISEE must take; or
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(11) fails to comply with any other provision of this
Agreement or any other mandatory standard, specification or operating
procedures prescribed by BDI and does not correct such failure within
thirty (30) days after written notice of such failure to comply is
delivered to FRANCHISEE, provided that if such failure can not
reasonably be corrected within thirty (30) days, then FRANCHISEE must
initiate a program of corrective action within such thirty (30) day
period and thereafter continue such program of corrective action so
that such failure may be corrected within a reasonable time
thereafter. The written notice of failure as herein described shall
describe to FRANCHISEE what corrective action he must take.
17. FRANCHISEE'S RIGHTS AND OBLIGATIONS UPON TERMINATION OR
EXPIRATION.
(A) PAYMENT OF AMOUNTS OWED TO BDI. FRANCHISEE agrees to pay to
BDI within fifteen (15) days after the effective date of termination or
expiration such recurring franchise fees, advertising trust account
contributions, amounts owed for products purchased by FRANCHISEE from BDI and
other amounts owed to BDI which are then unpaid.
(B) RETURN OF PROPRIETARY OR CONFIDENTIAL MATERIALS. FRANCHISEE
further agrees that upon termination or expiration of the franchise, he will
immediately return to BDI all copies of proprietary and confidential materials
including, but not limited to, BDI'S computer software program and all
operating and procedures manuals.
(C) REPURCHASE. BDI shall have the right, at its option, to
repurchase at cost any and all equipment, inventory, supplies and training
material which it sold to FRANCHISEE.
(D) CANCELLATION OF ASSUMED NAMES AND TRANSFER OF TELEPHONE
NUMBERS. FRANCHISEE further agrees that upon termination or expiration of the
franchise, he will take such action as may be required to cancel all
fictitious business names or registrations relating to his use of any Name or
Mark and to notify the telephone company and all listing agencies of the
termination or expiration of FRANCHISEE'S right to use any telephone numbers
and any classified and other telephone directory listings with any Name or Mark
or with the BDI LOCATION and to authorize transfer of same to BDI or its
franchisee.
(E) MODIFICATION OF AGREEMENT BY FRANCHISEE. This Agreement may
be modified by FRANCHISEE only by written agreement with BDI.
(F) MODIFICATION OF AGREEMENT BY BDI. This Agreement may be
modified by BDI only by written agreement with FRANCHISEE.
(G) ASSIGNMENT BY BDI. This agreement is fully assignable by BDI,
and BDI remains liable for the performance of its obligations hereunder.
(H) DEATH OR INCAPACITY OF FRANCHISEE. The Franchise may be
transferred to the heirs or personal representative of the FRANCHISEE upon the
death or incapacity of FRANCHISEE upon written approval of BDI on the same
terms and conditions as any other assignment of the franchise.
16.
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(I) REMOVAL OF ALL SIGNS AND IDENTIFICATION. FRANCHISEE further
agrees upon termination or expiration of the franchise, he will immediately
remove all BDI signs and identification from the premises, and immediately and
permanently discontinue the use of the Names and Marks.
(J) COVENANT NOT TO COMPETE. If this Agreement is terminated
prior to its expiration BY BDI in accordance with the provisions of this
Agreement or by FRANCHISEE without cause, FRANCHISEE agrees that for a period
of two (2) years commencing on the effective date of termination of this
Agreement, or the date which FRANCHISEE ceases to conduct the business
conducted pursuant to this Agreement, whichever is later, he will not have any
interest as owner (except of publicly traded securities), partner, director,
officer, employee consultant, representative or agent, or in any other
capacity, in any business offering substantially the same products and services
offered by a BDI LOCATION and located within the county wherein the BDI
LOCATION or any BDI LOCATION is located. THIS COVENANT NOT TO COMPETE MAY NOT
BE ENFORCEABLE UNDER CALIFORNIA LAW.
(K) CONTINUING OBLIGATION. All obligations of BDI and FRANCHISEE
which expressly or by their nature survive the expiration or termination of the
franchise shall continue in full force and in effect subsequent to and
notwithstanding the expiration or termination of this Agreement and until they
are satisfied in full or by their nature expire.
(L) FRANCHISEE'S RIGHT TO SELL BDI LOCATION. If BDI terminates
the franchise for a cause other than those specified in paragraph 16 (B),
subparagraphs (3), (4), and (8) of this Agreement, or elects not to renew the
franchise, FRANCHISEE for a period of ten (10) days commencing on the date of
notice of termination or nonrenewal shall have the right to elect to attempt to
sell the BDI LOCATION to a person reasonably acceptable to BDI as a BDI
LOCATION franchisee, providing that the provisions of paragraph (17),
subparagraphs (B) and (D) shall be applicable to any proposed sale of the BDI
LOCATION pursuant to this paragraph. FRANCHISEE'S right to elect hereunder
shall be contingent upon FRANCHISEE reasonably establishing that:
(1) FRANCHISEE will make a bona fide effort to sell the BDI
LOCATION to an acceptable person;
(2) until the closing of such sale or the prior expiration or
termination of FRANCHISEE'S right to sell the BDI LOCATION pursuant to this
paragraph, the BDI LOCATION will be operated in compliance with this AGREEMENT;
and
(3) all amounts owed to BDI pursuant to this Agreement will be
paid to BDI at or prior to the closing of such sale. FRANCHISEE shall deliver
to BDI within the ten (10) day period referred to above, a written notice of
his election to make a bona fide effort to sell the BDI LOCATION to an
acceptable person. FRANCHISEE'S right to sell the BDI LOCATION pursuant to this
paragraph shall expire, in the case of nonrenewal of the franchise, at the
expiration date of the franchise, and in the case of a termination of the
franchise, ninety (90) days after the initial effective date of termination
indicated in the notice from BDI or such earlier date as BDI reasonably
determines that FRANCHISEE has abandoned a bona fide effort to effect a sale of
the BDI LOCATION or fails to operate the BDI LOCATION in compliance with this
Agreement.
17.
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18. ASSIGNMENT.
(A) BY BDI. This Agreement is fully assignable by BDI and shall
inure to the benefit of any assignee or other legal successor to the interest
of BDI herein, provided that BDI will subsequent to any such assignment remain
liable for the performance of its obligations under this Agreement. The
franchise may be transferred to the heirs or personal representative of
FRANCHISEE upon the death or incapacity of FRANCHISEE upon the written approval
of BDI on the same terms and conditions as any other assignment of the
franchise.
(B) FRANCHISEE MAY NOT ASSIGN WITHOUT APPROVAL OF BDI. The franchise
is personal to FRANCHISEE and neither the franchise (except as hereinafter
provided with respect to assignment to a partnership or a corporation) nor any
part of the ownership of FRANCHISEE may be voluntarily, involuntarily directly
or indirectly assigned, subdivided, subfranchised or otherwise transferred by
FRANCHISEE or its owners (including Will, declaration of or transfer in trust
or the laws of intestate succession) without the prior written approval of BDI
and any such assignment or transfer without such approval shall constitute a
breach hereof. BDI shall not unreasonably withhold its approval of an
assignment or transfer of the franchise to proposed assignees are transferees
who meet BDI'S then applicable standards for franchisees and who are willing
to execute and be bound by all provisions of BDI'S then current form of
Franchise Agreement, which shall provide for the then applicable rates of
recurring franchise fees, advertising trust fund contributions payable
thereunder and a term equal to the remaining term of the franchise. BDI shall
not charge such assignee an initial franchise fee for the franchise, but will
charge FRANCHISEE a transfer fee of Two Thousand Five Hundred ($2,500.00)
Dollars. Any and all obligations of FRANCHISEE hereunder shall be fully paid
and satisfied prior to BDI'S approval of an assignment or transfer.
(C) ASSIGNMENT TO PARTNERSHIP OR CORPORATION. The franchise may
be assigned to a partnership or corporation which conducts no business other
than the BDI LOCATION (and other BDI LOCATIONS under franchise agreements with
BDI), which is actively managed by FRANCHISEE and in which FRANCHISEE owns and
controls not less than fifty-one (51) percent of the general partnership
interest or the equity and voting power, provided that all partners or
shareholders shall execute an Assignment Agreement undertaking to be bound
jointly and severally by all provisions of this Agreement and all issued and
outstanding stock certificates of such corporation shall bear a legend
reflecting or referring to the restrictions of subparagraph (B) of this
paragraph 18.
(D) BDI'S RIGHT OF FIRST REFUSAL. If FRANCHISEE or its owners
shall at any time determine to sell the BDI LOCATION or an ownership interest
in the franchise, FRANCHISEE or its owners shall obtain a bona fide, executed
written offer from a responsible and fully disclosed purchaser and shall submit
an exact copy of such offer to BDI, which shall, for a period of thirty (30)
days from the date of delivery of such offer, have the right, exercisable by
written notice to FRANCHISEE or its owners, to purchase the BDI LOCATION or
such ownership interest for the price and terms and conditions contained in
such offer, provided that BDI my substitute cash or debt cancellation or a
combination thereof for any form of payment proposed in such offer. If BDI
does not exercise this right of first refusal, FRANCHISEE shall conclude such
sale within one hundred twenty (120) days following the expiration of such
thirty (30) day first refusal period in compliance with the terms of the offer
presented to BDI. After the expiration of such one hundred twenty (120) day
period, FRANCHISEE may not make any transfer without again complying with the
provisions of this section.
18.
21
19. ENFORCEMENT.
(A) JUDICIAL ENFORCEMENT, INJUNCTIVE AND OTHER EQUITABLE RELIEF.
FRANCHISEE acknowledges and agrees as a material part of the consideration for
this Agreement that the damages to be suffered by BDI and other BDI FRANCHISEES
as a result of the violation of the provisions of this Agreement relating to
FRANCHISEE'S use of the Names and Marks of BDI, the obligations of FRANCHISEE
with respect to advertising and the obligations of FRANCHISEE upon termination
or expiration of this Agreement and assignment of the franchise and ownership
interests in the franchise will be in an immeasurable amount and neither BDI
nor other BDI FRANCHISEES will have an adequate remedy at law. For these
reasons, BDI shall be entitled without bond to the entry of temporary and
permanent injunctions and orders of specific performance enforcing the
provisions of this Agreement relating to FRANCHISEE'S use of the Names and
Marks, the obligations of FRANCHISEE with respect to advertising, the
obligations of FRANCHISEE upon termination or expiration of this Agreement and
assignment of the franchise and ownership interests in the franchise. And
further, BDI shall be entitled to the entry of temporary and permanent
injunctions and orders of specific performance to prohibit any act or
omission by FRANCHISEE or employees of the BDI LOCATION that constitute a
violation of any law, ordinance, or regulation, is dishonest or misleading to
customers of the BDI LOCATION or other BDI LOCATIONS, constitutes a danger to
employees or customers of the BDI LOCATION or to the public, or may impair the
goodwill associated with the Names and Marks and BDI LOCATIONS. If BDI secures
any such injunctive orders or orders for specific performance, FRANCHISEE
agrees to pay BDI an amount equal to the aggregate of its cost of obtaining
such relief, including, but not limited to, reasonable attorney's fees, costs
of investigation and proof of facts, court costs, other litigation expenses,
travel and living expenses, and any damages incurred by BDI as a result of the
breach of any such provision including interest from date of breach, at the
then current prime rate plus two (2%) percent.
(B) JURISDICTION, VENUE AND WAIVER OF JURY TRIAL. FRANCHISEE
acknowledges and agrees that this Agreement is entered into in the City of
Huntington Beach, County of Orange, State of California and that any action
commenced for the purpose of enforcing the terms and provisions hereof may be
commenced in the following courts, at the sole option of BDI:
(1) the Federal District Court for the Southern District
of California;
(2) the Superior Court of the State of California in and
for the County of Orange;
(3) the Municipal Court of California, Orange County
Judicial District; or
(4) the United States District Court, Court of general
jurisdiction for the state, or inferior court for the judicial
district in which FRANCHISEE'S BDI LOCATION is located.
19.
22
It is mutually agreed by and between the parties hereto that the respective
parties shall and they hereby do, waive trial by jury in any action, proceeding
or counterclaim, whether at law or equity brought by either of the parties
hereto against the other or any matters whatsoever arising out of, or in any
way connected with, this Agreement or the performance by the parties of this
Agreement.
(C) ARBITRATION. Except insofar as BDI elects to enforce this
Agreement by judicial process, injunction or specific performance as
hereinabove provided, all disputes and claims arising out of this Agreement
and/or standards, specifications and operating procedures and/or any other
obligations of FRANCHISEE or BDI or any claim that any portion of this
Agreement, any standard specification or operating procedure or other
obligation of the FRANCHISEE or BDI is illegal or otherwise unenforceable under
any law, ordinance, regulation or ruling shall be settled by three member
arbitration in the County of Orange, State of California, under the United
States Arbitration Act (9 U.S.C. Section 1 et seq.), if applicable, and the
Rules of CCP 1060, provided that the arbitrators shall award, or include in
their awards, the specific performance of this Agreement unless he determines
that performance is impossible. Judgment upon the award of the arbitrator may
be entered in any court having jurisdiction thereof or of BDI or FRANCHISEE.
During the pendency of an arbitration proceeding hereunder, FRANCHISEE and BDI
shall fully perform this Agreement.
(D) SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS. All
provisions of this Agreement are severable and this Agreement shall be
interpreted and enforced as if all completely invalid or unenforceable
provisions were not contained herein and partially valid and enforceable
provisions shall be enforced to the extent valid and enforceable. If any
applicable law or rule requires a greater prior notice of the termination or
of refusal to renew this Agreement than is required hereunder, or the taking
of some action not required hereunder, the prior notice and/or other action
required by such law or rule shall be substituted for the notice requirements
hereof.
(E) WAIVER OF OBLIGATIONS. BDI and FRANCHISEE may by written
instrument unilaterally waive any obligation of, or restriction upon, the
other under this Agreement. No acceptance by BDI of any payment by FRANCHISEE
and no failure, refusal or neglect of BDI or FRANCHISEE to exercise any right
under this Agreement or to insist upon full compliance by the other with its
obligations hereunder, including but not limited to any mandatory standards,
specifications or operating procedure, shall constitute a waiver of any
provision of this Agreement.
(F) FRANCHISEE MAY NOT WITHHOLD PAYMENTS DUE BDI. FRANCHISEE
agrees that he will not withhold payment of any recurring franchise fee,
advertising trust fund contribution, amounts owed to BDI for products purchased
by FRANCHISEE or any other amounts owed to BDI on grounds of the
non-performance by BDI of any of its obligations hereunder.
20.
23
All such claims by FRANCHISEE, if not otherwise resolved by BDI and FRANCHISEE
shall, at the option of BDI, be submitted to arbitration as provided in
paragraph 19, subparagraph (C).
(G) RIGHTS OF PARTIES ARE CUMULATIVE. The rights of BDI and
FRANCHISEE hereunder are cumulative and no exercise or enforcement by BDI or
FRANCHISEE of any right or remedy hereunder shall preclude the exercise or
enforcement by BDI or FRANCHISEE of any other right or remedy hereunder or
which BDI or FRANCHISEE is entitled by law to enforce.
(H) GOVERNING LAW. Except to the extent governed by applicable
federal laws and regulations and the United States Arbitration Act, this
Agreement and the franchise shall be governed by the State of California.
(I) BINDING EFFECT. This Agreement is binding upon the parties
hereto and their respective heirs, assigns and successors in interest.
(J) CONSTRUCTION. The preliminary statements are parts of this
Agreement which constitutes the entire Agreement of the parties and there are
no other oral or written understandings or agreements between BDI and
FRANCHISEE relating to the subject matter of this Agreement, except as
specifically referred to in this Agreement. The headings of the several
sections and paragraphs hereof are for convenience only and do not define,
limit or construe the contents of such sections or paragraphs. The term
"FRANCHISEE" as used herein is applicable to one or more persons, a corporation
or a partnership, as the case may be, and the singular usage includes the
plural and the masculine and neuter usages the other and the feminine.
References to "FRANCHISEE" applicable to an individual or individuals shall
mean the principal owner or owners of the equity or operating control of the
franchise if FRANCHISE is a corporation or partnership.
20. INDEPENDENT CONTRACTIONS/INDEMNIFICATION. BDI and FRANCHISEE
are independent contractors. FRANCHISEE shall conspicuously identify himself
at the premises of the BDI LOCATION and in all dealings with suppliers as the
owner of the BDI LOCATION. FRANCHISEE agrees to file applicable fictitious
name statements in the manner prescribed by law. Neither BDI nor FRANCHISEE
shall make any agreements, representations or warranties in the name of, or on
behalf of, the other or represent that the relationship is other than
franchisor and franchisee and that neither BDI nor FRANCHISEE shall be
obligated by or have any liability under any agreements, representations or
warranties made by the other, nor shall BDI be obligated for any damage to any
person or property directly or indirectly arising out of the operation of the
BDI LOCATION or FRANCHISEE'S business conducted pursuant to the franchise,
whether caused by FRANCHISEE'S negligent or willful action or failure to act.
BDI shall have no liability for any sales, use, excise, income, property or
other taxes levied upon the BDI LOCATION or its assets or in connection with
the services performed or sales made or business conducted by the BDI LOCATION.
FRANCHISEE agrees to indemnify BDI against and to reimburse BDI for all such
obligations, damages and taxes for which it is held liable and for all costs
reasonably incurred by BDI in defense of any such claim brought against it or
in any action in which it is named as a party, included but not limited to
reasonable attorney's fees, costs of investigation, proof of facts, court
costs, other litigation expenses, travel and living expenses.
21.
24
BDI shall have the right to defend any such claim against it. BDI agrees to
indemnify FRANCHISEE against and to reimburse FRANCHISEE for any obligations or
liability for damages attributable to agreements, representations or warranties
of BDI or caused by the negligence or willful action of BDI, and for costs (as
hereinabove defined) reasonably incurred by FRANCHISEE in the defense of any
such claim brought against him or the BDI LOCATION or in any action in which he
is named as a party, provided that BDI shall have the right to participate in
and, to the extent, BDI deems necessary, to control any litigation or proceeding
which might result in liability of or expense to FRANCHISEE subject to such
indemnification. The indemnities and assumption of liabilities and obligation
herein shall continue in full force and effect subsequent to and
notwithstanding the expiration or termination of this Agreement.
21. NOTICES. All written notices permitted or required to be
delivered by the provisions of this Agreement or of the operating manual shall
be deemed so delivered by hand or three (3) days after placed in the mail by
Registered or Certified mail, Return Receipt Requested, postage prepaid and
addressed to the party to be notified at its most current principal business
address of which the notifying party has been notified.
22. FAILURE TO EXERCISE RIGHTS. No failure by BDI to exercise any
power given to it hereunder or to insist upon strict compliance with any
obligation or condition hereunder and no custom or practice of the parties at
variance with the terms hereof shall constitute a waiver of BDI'S rights to
demand exact compliance with the terms hereof. Waiver by BDI of any particular
default by FRANCHISEE shall not affect or impair BDI'S rights in respect to any
subsequent default of the same or different nature; nor shall any delay or
omission of BDI to exercise any rights arising from a default affect or impair
BDI'S rights as to said default or any subsequent default.
23. ENTIRE AGREEMENT. This Agreement contains the entire agreement
containing the subject matter hereof, and no representations, inducements,
promises or agreements, oral or otherwise, between the parties with reference
thereto and not embodied herein shall be of any force and effect. Any
agreements hereafter made shall be ineffective to change, modify, add or
discharge in whole or in part the obligations and duties under this Agreement
unless such agreement is in writing and signed by BDI and FRANCHISEE.
BIKER'S DREAM, INC.
BY: /s/ XXXXXX XXXXXXXX
-----------------------------------
FRANCHISEE:
/s/ ?
---------------------------------------
---------------------------------------
22.
25
SCHEDULE
TO
EXHIBIT 10.19
1. Franchise Agreement dated December 23, 1994 between Bikers
Dream, Inc. and Xxxxxxx Xxxxxxx.
2. Franchise Agreement dated February 20, 1995 between Bikers
Dream, Inc. and Xxxxxxxxx and Xxxxx Xxxxxxx.
3. Franchise Agreement dated October 27,1 994 between Bikers Dream,
Inc. and Xxxxxx and Xxxxx Xxxxxxxx.
4. Franchise Agreement dated June 10, 1994 between Bikers Dream,
Inc. and Marble Xxxxxx Enterprises, L.L.C.
5. Franchise Agreement dated June 24, 1994 between Bikers Dream,
Inc. and Xxxxxx Xxxxxx.
6. Franchise Agreement dated December 13, 1994 between Bikers
Dream, Inc. and Xxxxx X. Xxxxxxxxx, Xx.
