EXHIBIT 10.22
FRANCHISE AGREEMENT
BETWEEN:
KENTUCKY FRIED CHICKEN PTY. LIMITED
AND
XXXXXXX FOODS INTERNATIONAL
PTY. LIMITED
AGREEMENT dated day of 1996
BETWEEN: KENTUCKY FRIED CHICKEN PTY LIMITED, A.C.N. 000 587 780 having its
registered office at 00 Xxxxxxxxxx Xxxx, Xxxxxxx Xxxxxx, XXX, 0000 ("PRI")
AND: XXXXXXX FOODS INTERNATIONAL PTY. LIMITED, ARBN 000 000 000, a Nevada
corporation having its principal executive office at 00000 Xxxx
Xxxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, 00000 and its registered
Australian office at 00 Xxxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx,
0000 ("Franchisee")
BACKGROUND FACTS
PRI and/or its Affiliated Companies have developed a unique and valuable system
for the preparation, marketing and sale of certain quality food products under
various trade marks, service marks and trade names owned by them.
The System is a comprehensive restaurant system for the retailing of a limited
menu of uniform and quality food products, emphasising prompt and courteous
service in a clean and wholesome atmosphere which is intended to be particularly
attractive to families. The foundation and essence of the System is the
adherence by franchisees to standards and policies providing for the uniform
operation of all restaurants within the System including, but not limited to,
serving designated food and beverage products; the use of only prescribed
equipment and building layout and designs; and strict adherence to designated
food and beverage specifications and to prescribed standards of quality, service
and cleanliness in restaurant operations. Compliance by franchisees with the
foregoing standards and policies in conjunction with the trademarks, service
marks and trade names provides the basis for the valuable goodwill and wide
acceptance of the System. Moreover the establishment and maintenance of a close
personal working relationship with Franchisee in the conduct of the Business,
Franchisee's accountability for performance of the obligations contained in this
agreement, and Franchisee's adherence to the tenets of the System constitute the
essence of the license provided for herein.
PRI is entitled to grant to third parties, and has agreed to grant to
Franchisee, the right to use the System, the System Property and the Marks on
the terms and conditions of this Agreement.
In this Agreement, capitalised terms have the meanings specified in Schedule A.
THE PARTIES AGREE:
1. GRANT OF FRANCHISE
1.1 PRI grants to Franchisee the right to use the System, the System Property
and the Marks for the Term solely in connection with the conduct of the
Business at the Outlet and subject to the terms and conditions of this
Agreement.
1.2 At all times during the Term, Franchisee will use its best endeavours to
develop the Business and to increase the Revenues.
1.3 Franchisee will not, without PRI's prior written approval:
(a) conduct all or any part of the Business at any location other than
the Outlet; or
(b) sub-license to any other party the right to use the System, the
System Property or the Marks.
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1.4 No exclusive territory, protection or other right in the contiguous space,
area or market of the Outlet is expressly or impliedly granted to
Franchisee. PRI reserves the right to use, and to grant to other parties
the right to use, the Marks, the System and the System Property or any
other marks, names or systems in connection with any product or service
(including, without limitation, the Approved Products) at any location
other than the Outlet through any outlet, food service concept or
distribution channel. Franchisee acknowledges that, as at the Date of
Grant, PRI and its Affiliated Companies and franchisees operate outlets
conforming to the Concept and also operate other systems for the sale of
food products and services which are competitive with the System and may
compete directly with the Business.
2. INITIAL FEE AND CONTINUING FEE
2.1 On or before the Date of Grant, Franchisee will pay the initial fee
specified in Schedule B to PRI.
2.2 On or before each Due Date, Franchisee will pay the Continuing Fee to PRI.
Each payment of the Continuing Fee will be accompanied by a statement of
the Revenues for the relevant Accounting Period, in the form required by
PRI from time to time.
2.3 Franchisee's payments pursuant to this Agreement are in consideration
solely for the grant of rights in Clause 1.1 and not for PRI's performance
of any specific obligations or services.
3. MANUALS AND STANDARDS
3.1 At all times during the Term, Franchisee must comply with all of the
Standards and the Manuals and all applicable laws, regulations, rules, by-
laws, orders and ordinances in its conduct of the Business. The Manuals
are incorporated by reference into this Agreement.
3.2 PRI may, by notice to Franchisee, at any time change any of the Standards
or Manuals or introduce new Standards or Manuals. Franchisee acknowledges
and agrees that such changes or introductions will bind Franchisee upon
receipt as provided in Clause 20 and Franchisee will implement such changes
or introductions within the period specified in the notice.
3.3 In order to determine Franchisee's compliance with the Manuals and the
terms and conditions of this Agreement, PRI and its agents or
representatives will have the right at all times during opening hours to
enter and inspect the Outlet without prior notice to Franchisee.
4. UPGRADES
PRI may, by notice to Franchisee, at any time require Franchisee to upgrade
or renovate all or part of the Outlet or its equipment, systems or
inventory to ensure compliance with the Standards, and Franchisee
acknowledges and agrees that such upgrades or renovations may require
significant capital expenditures and/or ongoing financial commitments.
Franchisee will implement any upgrade or renovation required by PRI within
the period specified in the notice.
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5. APPROVED PRODUCTS AND SUPPLIES
5.1 Franchisee will not prepare, market or sell at the Outlet any product or
service other than the Approved Products without PRI's prior written
approval. PRI will from time to time notify Franchisee of the Approved
Products and will specify those of the Approved Products which must be
offered for sale at the Outlet at all times.
5.2 PRI may, by notice to Franchisee, at any time change or withdraw any
Approved Product or add new Approved Products. Franchisee will implement
such changes, withdrawals and additions within the period specified in the
notice.
5.3 Franchisee will purchase the supplies, materials, equipment and services
used in the Business from suppliers who have been approved in writing by
PRI prior to the time of supply in accordance with the approval procedures
in the Manuals. Franchisee will not have any claim or action against PRI in
connection with any approved supplier's non-delivery, delayed or non-
conforming delivery.
6. ADVERTISING
6.1 Franchisee will spend, in the manner directed by PRI in writing from time
to time, an amount not less than the Advertising Contribution on
advertising and promoting the products and services of the Business and the
System. Without limitation, PRI may at any time during the Term direct
Franchisee:
(a) to pay all or part of the Advertising Contribution to PRI, in
which event PRI will apply the Advertising Contribution to the costs
of national and regional advertising and promotions conducted by PRI
in its discretion, provided that PRI will not have any obligation to
apply the Advertising Contribution for the specific benefit of
Franchisee or the Business and no express or implied trust will be
created in respect of the Advertising Contribution;
(b) to pay all or part of the Advertising Contribution to a national
or regional co-operative advertising fund specified by PRI; or
(c) to spend all or part of the Advertising Contribution on local or
regional advertising and promotions, provided that if Franchisee fails
to spend the full amount directed by PRI, Franchisee will pay the
unspent amount to PRI within the period specified in a written demand
from PRI.
6.2 Franchisee will participate in such national and regional advertising and
promotions as PRI from time to time requires and Franchisee will not have
any claim or action against PRI in connection with the level of success of
any such advertising or promotion.
6.3 Franchisee will not execute or conduct any local or regional advertising or
promotion without PRI's prior written approval.
7. TRAINING
PRI will provide and Franchisee and Franchisee's employees will undertake
such initial and ongoing training and assistance as PRI in its discretion
considers appropriate. Franchisee will bear the full cost of attendance at
training programs. Franchisee will ensure that all store managers
operating the Outlet have been certified by PRI as having successfully
completed PRI's current training programs from time to time.
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8. MARKS AND SYSTEM PROPERTY
8.1 The Marks, the System Property and the goodwill associated with them are
the exclusive property of PRI and/or its Affiliated Companies. Franchisee
will acquire no right, interest or benefit in or to them other than the
rights of use granted under this Agreement. All accretions in the goodwill
associated with the Marks and the System Property resulting from
Franchisee's use thereof are solely for the benefit of PRI and its
Affiliated Companies.
8.2 Franchisee will use the Marks only in such form and manner as is
specifically approved by PRI and Franchisee will follow PRI's instructions
regarding proper usage of the Marks in all respects. PRI may, by notice to
Franchisee, at any time change or withdraw any of the Marks or designate
new Marks and Franchisee will implement such changes, withdrawals and
additions within the period specified in the notice.
8.3 Franchisee will not use in the operation of the Business any trademarks,
service marks, trade names or indicia other than the Marks without PRI's
prior written approval. Franchisee will not use, register or apply to
register any trademarks, trade names or indicia similar to the Marks or
that in any way suggest an association or affiliation with the System.
8.4 Franchisee will do nothing to prejudice, damage or contest the validity of
the Marks, the System Property, the goodwill associated with them or the
ownership of them by PRI or its Affiliated Companies. Franchisee will
cooperate fully with PRI in the protection and defence of the Marks and the
System Property, which will be undertaken solely by PRI. Franchisee will
promptly notify PRI of any actual or potential infringements of, or claims
or actions brought by third parties in respect of, the Marks or the System
Property.
8.5 Any improvements to, and inventions and products derived from the Marks the
System Property or the Business during the Term, including those
attributable to Franchisee, will be the exclusive property of PRI or its
Affiliated Companies and will be promptly disclosed by Franchisee to PRI.
Franchisee hereby assigns to PRI all present and future right, title and
interest throughout the world in and to any such improvements, inventions
and products. Franchisee will take all actions and execute all documents
required by PRI for this purpose.
8.6 Franchisee agrees to join with PRI in any application to enter Franchisee
as a registered or permitted user of the Marks with any governmental entity
and Franchisee acknowledges that upon termination or expiration of this
Agreement, PRI may automatically cancel such entry.
9. CONFIDENTIALITY
9.1 Franchisee will at all times during and after the Term keep confidential
and not disclose to any person, other than with PRI's prior written
approval or to Franchisee's employees for the purposes of the Business, the
Manuals, all other materials containing or referring to the System Property
and all other information concerning PRI's business and affairs which may
come to Franchisee during the Term. Franchisee will ensure that
Franchisee's employees retain the Manuals and other materials and
information in confidence. This obligation of confidentiality does not
apply in respect of information in the public domain or previously known to
Franchisee otherwise than by breach of any obligation of confidentiality,
or disclosure required by law or an order of any court or tribunal.
9.2 Franchisee will not reproduce or part with possession of the Manuals or
other materials containing or referring to the System Property without
PRI's prior written approval and will return all copies of the Manuals and
other materials to PRI immediately upon the expiration or termination of
this Agreement or upon PRI's request.
10. ACCOUNTING RECORDS
10.1 Franchisee will establish and maintain an accounting system incorporating
methods, procedures, records and equipment satisfactory to PRI and in
compliance with the Manuals.
10.2 Franchisee will retain all records relating to the Business for the period
required by the tax authorities and PRI and its agents or representatives
will have the right at any reasonable time to inspect and audit the records
wherever they are located. Franchisee will fully cooperate and will
instruct its employees, agents or representatives to fully cooperate with
PRI and its agents or representatives during such inspections and audits.
If any inspection or audit discloses a deficiency in Franchisee's payment
of any amount payable or required to be spent by Franchisee pursuant to
this Agreement, Franchisee will immediately pay to PRI the deficiency plus
late payment interest pursuant to Clause 11.2. If the deficiency is equal
to or greater than 2% of the correct amount, Franchisee will also
immediately pay to PRI all of the costs incurred by PRI in the inspection
or audit.
11. PAYMENTS BY FRANCHISEE
11.1 Franchisee will pay all amounts due to PRI pursuant to this Agreement:
(a) in the currency specified in Schedule B or such other currency as
PRI notifies Franchisee from time to time, using, where applicable,
the exchange rate for conversion to the specified currency which is
posted on the day before the due date for payment by such bank as is
specified by PRI from time to time;
(b) into the bank account specified in Schedule B or in such other
manner as PRI notifies Franchisee from time to time; and
(c) without any deduction or set-off and free of any taxes, deductions
or withholdings other than as required by law. To the extent that a
deduction or withholding is required to be made by law, Franchisee
will pay such increased amount as will, after deduction or
withholding, result in the receipt by PRI of the same amount as would
have been received had no such deduction or withholding been made.
11.2 Any amount not paid by Franchisee to PRI when due will bear late payment
interest calculated on a daily basis from the due date at the rate
specified in Schedule B. This interest will continue to apply after any
judgment.
11.3 Franchisee will pay promptly when due all taxes, duties, charges and levies
payable in respect of the Business and all debts and other financial
obligations incurred in the operation of the Business, including, without
limitation, all obligations to suppliers. If applicable, Franchisee will
observe, perform and comply with all obligations and covenants to the
lessor of the Outlet's premises.
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12. INSURANCE, INDEMNITY AND GUARANTEE
12.1 At all times during the Term, Franchisee will at its cost maintain the
insurances prescribed in the Manuals. PRI must be named as an additional
insured party on the policies of insurance. Franchisee will on demand
deliver to PRI certificates of insurance and will not commit any act or
omission which may render the insurances void or voidable.
12.2 Franchisee indemnifies and will keep indemnified PRI, its Affiliated
Companies and their agents, employees, directors, successors and assigns
from and against any and all claims, liabilities, losses, costs and damages
(including legal costs and expenses) arising directly or indirectly in
connection with or related to Franchisee's conduct of the Business, PRI's
exercise of any right pursuant to this Agreement, including, without
limitation, any exercise of the power of attorney granted pursuant to
Clause 15.4, or any act or omission by any agent, representative,
contractor, licensee or invitee of Franchisee.
12.3 As a precondition to the grant of rights pursuant to Clause 1.1, Franchisee
will procure the execution by the guarantors specified in Schedule B (and
such other guarantors as PRI requires in connection with any approved
transfer of any interest or share in Franchisee) of a guarantee of
Franchisee's obligations and liabilities under this Agreement, in the form
required by PRI and including such covenants by the guarantors regarding
the terms and conditions of this Agreement as PRI may require.
13. PROTECTION OF SYSTEM PROPERTY AND GOODWILL OF SYSTEM
Franchisee covenants that neither Franchisee nor any Affiliated Company of
Franchisee will directly or indirectly in any capacity, whether on its own
account or as a member, shareholder, director, employee, agent, partner,
joint venturer, advisor, consultant, lender or lessor, have any interest
in, be engaged in or perform any services for:
(a) during the Term, any business within the in-Term area specified in
Schedule B involving the wholesale or retail preparation, marketing or
sale of any food products without PRI's prior written approval,
provided that such approval will not be unreasonably withheld by PRI
if the business does not predominantly involve the preparation,
marketing or sale of pizza and pasta (collectively), chicken, Mexican
or burger products; and
(b) for 12 months following the expiration, termination or transfer of
this Agreement, any business within the post-Term area specified in
Schedule B involving the preparation, marketing or sale of products
similar to the Approved Products.
14. TRANSFERS AND CHARGES
14.1 Franchisee will not charge, pledge or otherwise encumber any interest
in or right under this Agreement. Franchisee will not charge, pledge or
otherwise encumber any interest in or asset of the Business without giving
PRI prior notice.
14.2 Franchisee will not sell, transfer or gift this Agreement or any interest
in this Agreement without first obtaining PRI's prior written approval of
the proposed transferee and then complying with all of PRI's transfer
procedures specified in the Manuals, including, without limitation, paying
to PRI the transfer fee specified in Schedule B and the costs and expenses
incurred by PRI in connection with the transfer.
14.3 Franchisee will not, without PRI's prior written approval, permit any sale,
transfer or gift of any interest or share in Franchisee, issue any new
share in Franchisee to any party who is not a
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shareholder at the Date of Grant or permit any reconstruction, amalgamation
or other material change in the structure or financial condition of
Franchisee.
14.4 If Franchisee proposes any sale or transfer of this Agreement or any
interest in this Agreement, Franchisee will notify PRI of the agreed terms
and conditions and PRI will have the right itself to elect to proceed with
the sale or transfer on substantially the same terms and conditions within
60 days of receipt of Franchisee's notice. If PRI does not so proceed,
Franchisee will submit the proposed transferee for PRI's approval pursuant
to Clause 14.2.
15. DEFAULT AND TERMINATION
15.1 PRI may terminate this Agreement by notice to Franchisee effective upon
receipt by Franchisee of the notice, and/or adopt any of the remedies
specified in Clause 15.2, if any of the following events occur:
(a) Franchisee is unable to pay any of its debts when they become due
or becomes insolvent or a liquidator, receiver, manager, administrator
or trustee in bankruptcy (or local equivalent) of the Franchisee or
the Business is appointed, whether provisionally or finally, or an
application or order for the winding up of Franchisee is made or
Franchisee enters into any composition or scheme of arrangement;
(b) Franchisee breaches any of the terms and conditions of Clauses
1.3, 5.1, 8, 9, 13 and 14;
(c) Franchisee commits any crime, offence or act which in PRI's
reasonable judgment is likely to adversely affect the goodwill of the
Business, the Marks, the System or the System Property;
(d) Franchisee knowingly or negligently maintains false records in
respect of the Business or submits any false report to PRI;
(e) Franchisee abandons or ceases to operate the Business for more
than 3 consecutive days without PRI's prior written approval provided
that such approval will not be unreasonably withheld by PRI where the
abandonment or cessation is caused by war, civil commotion, fire,
flood, earthquake, act of God or any other cause beyond Franchisee's
reasonable control;
(f) any other agreement between PRI and Franchisee (or their
respective Affiliated Companies) is terminated;
(g) any part of this Agreement, or the guarantee referred to in Clause
12.3, is held to be void, invalid or otherwise unenforceable pursuant
to Clause 21.5;
(h) PRI notifies Franchisee that Franchisee has breached any term or
condition of this Agreement (other than Clauses 1.3, 5.1, 8, 9, 13 and
14) or any other agreement between PRI and Franchisee (or their
respective Affiliated Companies) relating to the Business and
Franchisee does not fully cure the breach to PRI's satisfaction within
the cure period provided for in the notice; or
(i) Franchisee breaches any term or condition of this Agreement (other
than Clauses 1.3, 5.1, 8, 9, 13 and 14) or any other agreement between
PRI and Franchisee (or their respective Affiliated Companies) relating
to the Business in circumstances where, in the preceding 24-month
period, Franchisee has been sent 2 notices pursuant to Clause 15.1(h),
whether or not Franchisee cured the prior breaches to PRI's
satisfaction.
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15.2 If any of the events specified in Clause 15.1 occur, PRI may, in addition
and without prejudice to its rights under Clause 15.1:
(a) terminate, by notice to Franchisee, Franchisee's right under
Clause 18 to renew the franchise hereby granted;
(b) terminate any development or option rights in respect of any
system or concept granted to Franchisee pursuant to any other
agreement between Franchisee and PRI (or their respective Affiliated
Companies);
(c) itself take whatever actions it considers necessary to cure the
breach at Franchisee's cost (including, without limitation,
administrative costs), such cost to be payable by Franchisee within
the period specified in a written demand from PRI;
(d) limit or withhold the supply of any products, supplies, materials,
equipment or services supplied to Franchisee by PRI or its Affiliated
Companies; or
(e) in the event that PRI has issued a notice pursuant to Clause
15.1(h) in respect of a breach of Clause 3.1 and Franchisee has not
fully cured the breach to PRI's satisfaction within the cure period
provided for in the notice, PRI may take control of the Business for a
period of up to 30 days, for the purpose of rectifying the breach and
retraining Franchisee and Franchisee's employees at Franchisee's cost,
such cost to be payable by Franchisee within the period specified in a
written demand from PRI. During this period, Franchisee and its
employees must continue to attend the Outlet to perform their
responsibilities in the conduct of the Business, but subject to the
directions of PRI. Any obligations, liabilities or costs incurred in
respect of the Business during this period will be Franchisee's
responsibility and the indemnity in Clause 12.2 will apply.
15.3 PRI's exercise of any of its rights under this Clause 15 will be in
addition to and not in limitation of any other rights and remedies it may
have in the event of any breach or default by Franchisee.
15.4 In the event of the expiration or termination of this Agreement, Franchisee
appoints PRI to be Franchisee's attorney with power to do in the name of
Franchisee and on Franchisee's behalf all acts and things necessary to
effect Franchisee's compliance with its obligations under this Agreement,
including, without limitation, executing documents. Franchisee agrees that
Franchisee will be bound by and will ratify all acts and things done by PRI
pursuant to this power of attorney.
16. CONSEQUENCES OF TERMINATION
16.1 Immediately upon the expiration or termination of this Agreement,
Franchisee will:
(a) pay all amounts owing to PRI;
(b) discontinue all use of the Marks and the System Property and
otherwise cease holding out any affiliation or association with PRI or
the System unless authorised pursuant to any other written agreement
with PRI;
(c) dispose of all materials bearing the Marks and all supplies in
accordance with PRI's instructions; and
(d) if PRI so requires, restore or de-identify the Outlet in
accordance with
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PRI's instructions.
16.2 If Franchisee fails to fulfil any of its obligations under Clause 16.1, PRI
may itself take whatever actions it considers necessary to fulfil those
obligations and invoice Franchisee for the full cost of such actions, such
invoice to be payable within 7 days.
16.3 For 60 days from the termination of this Agreement, PRI will have the
option to purchase, or to nominate a third party purchaser of, any of the
supplies held by Franchisee at cost price and any of the equipment or
signage at the Outlet at a price equal to book value less depreciation or
as otherwise agreed, and free of any charges or other security interests.
16.4 The rights and obligations under Clauses 8, 9, 10, 11, 12.2, 13(b),
15.2(c), 15.2(e), 16 will survive the expiration or termination of this
Agreement.
17. RIGHTS OF ENTRY
17.1 Notwithstanding Clause 3.3, Franchisee expressly authorises PRI and its
agents or representatives to enter the Outlet, without prior notice to
Franchisee, for the purposes of Clauses 15.2(c), 15.2(e) and 16.2.
Franchisee hereby waives, and releases PRI from, any rights, actions or
claims which Franchisee may at any time have against PRI in connection with
PRI's entry into the Outlet.
17.2 Franchisee will execute any documents required by PRI in connection with
PRI's entry into the Outlet and use its best endeavours to procure any
consent required from any third party in connection with PRI's entry into
the Outlet.
18. RENEWAL
Upon the expiration of the Term, PRI will renew the franchise for the
renewal term specified in Schedule B if the following conditions are
satisfied:
(a) Franchisee requests the renewal in writing no more than 18 months
and no less than 12 months prior to the expiration of the Term;
(b) Franchisee's right to renew the franchise has not been terminated
under Clause 15.2(a) prior to the expiration of the Term;
(c) Franchisee is not at the expiration of the Term in breach of any
term or condition of this Agreement or any other agreement between PRI
and Franchisee (or their respective Affiliated Companies);
(d) Franchisee upgrades the Outlet to PRI's then current
Standards for new outlets prior to the expiration of the Term;
(e) Franchisee executes PRI's then current Franchise Agreement for new
franchisees, incorporating the then current continuing fees,
advertising contributions and other financial obligations but
excluding any right of further renewal, together with any other
documents required by PRI to be executed by Franchisee or such
guarantors as PRI requires; and
(f) Franchisee pays the renewal fee specified in Schedule B to PRI at
least 90 days prior to the expiration of the Term.
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19. DISPUTE RESOLUTION
19.1 PRI and Franchisee will endeavour to resolve by mutual negotiation any
dispute arising between them in connection with this Agreement.
19.2 If PRI and Franchisee fail to resolve any dispute by mutual negotiation,
the parties may refer the dispute to a mutually agreed mediator for non-
binding mediation. The parties will bear the costs of any mediation
equally.
19.3 Such dispute resolution procedures will not in any way prejudice or limit
PRI's ability to exercise its rights under Clause 15 at any time.
20. NOTICES
Any notice or other communication required or permitted under this
Agreement will be in writing and properly addressed to the addressee at the
address specified in this Agreement (or any other address notified by the
addressee) and will be deemed received by the addressee on the earlier of
the date of delivery, the date of transmission if sent by facsimile with
receipt confirming completion of transmission or, if sent by pre-paid
security or registered post, the deemed postal receipt date specified in
Schedule B.
21. MISCELLANEOUS
21.1 This Agreement constitutes the entire agreement between the parties with
respect to its subject matter and supersedes all prior negotiations,
agreements or understandings.
21.2 Franchisee is an independent contractor and is not an agent,
representative, joint venturer, partner or employee of PRI. No fiduciary
relationship exists between PRI and Franchisee.
21.3 This Agreement will inure to the benefit of PRI, its successors and assigns
and may be transferred by PRI to any party without Franchisee's prior
approval.
21.4 The delay or failure of any party to exercise any right or remedy pursuant
to this Agreement will not operate as a waiver of the right or remedy and a
waiver of any particular breach will not be a waiver of any other breach.
All rights and remedies under this Agreement are cumulative and the
exercise of one right or remedy will not limit the exercise of any other
right or remedy.
21.5 If any part of this Agreement is held to be void, invalid or otherwise
unenforceable, PRI may elect either to terminate this Agreement pursuant to
Clause 15.1 or to sever the void, invalid or unenforceable part, in which
event the remainder of this Agreement will continue in full force and
effect.
21.6 The terms and conditions of this Agreement may be changed only in writing
signed by both parties, provided that the Standards and the Manuals may be
changed by the PRI from time to time pursuant to Clause 3.2.
21.7 This Agreement will be governed by and construed in accordance with the law
of the territory specified in Schedule B and the parties agree to submit to
the non-exclusive jurisdiction of the courts of that territory.
21.8 Franchisee will pay to PRI all reasonable legal expenses incurred by PRI in
connection with this Agreement, including, without limitation, any stamp
duty and any expenses incurred in connection with the enforcement of this
Agreement.
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21.9 This Agreement is executed in English. A local language translation may be
attached, which the parties intend to be identical to the English text.
However, if any dispute arises as to the interpretation of the language of
this Agreement, the English text shall govern.
21.10 In the interpretation of this Agreement, unless the context indicates a
contrary intention:
(a) the obligations of more than one party will be joint and several;
(b) words denoting the singular include the plural and vice versa and
words denoting any gender include all genders;
(c) headings are for convenience only and do not affect
interpretation;
(d) references to Clauses and Schedules are to clauses and schedules
of this Agreement; and the Schedules form part of this Agreement; and
(e) this Agreement may be executed in any number of counterparts, each
of which will be deemed an original but which together will constitute
one instrument.
EXECUTED as an agreement
THE COMMON SEAL of )
KENTUCKY FRIED CHICKEN )
PTY LIMITED was affixed in the )
presence of: )
______________________________ ______________________________
Director/Secretary Director
THE COMMON SEAL of )
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XXXXXXX FOODS INTERNATIONAL )
PTY LIMITED was affixed in the )
presence of: )
_________________________ _________________________________
Director/Secretary Director
SCHEDULE A - DEFENITIONS
ACCOUNTING PERIOD means any one of the periods making up PRI's financial year.
ADVERTISING CONTRIBUTION means the percentage of Revenues specified in Schedule
B.
AFFILIATED COMPANIES means any companies which are part of one or more ownership
structures ultimately controlled by a common parent corporation or common
shareholders, including any related bodies corporate within the meaning of the
Corporations Law.
APPROVED PRODUCTS means the products from time to time approved by PRI for sale
in the Business.
BUSINESS means the business of preparing, marketing and selling the Approved
Products under the Marks at the Outlet pursuant to this Agreement.
CONCEPT means the concept franchised to Franchisee pursuant to this Agreement
and specified in Schedule B.
CONTINUING FEE means the percentage of Revenues specified in Schedule B.
DATE OF GRANT means the date specified in Schedule B.
DUE DATE means the date specified in Schedule B or any other date notified by
PRI to Franchisee from time to time.
MANUALS means the manuals, notices and correspondence published or issued from
time to time by PRI in any form, containing the Standards and other
requirements, rules, procedures and guidelines relating to the System.
MARKS means the trademarks, service marks and trade names and other similar
rights owned by PRI or its Affiliated Companies and designated by PRI from time
to time for use in the Business.
OUTLET means the outlet conforming to the Concept at the address specified in
Schedule B.
REVENUES means all gross receipts received by Franchisee as payment for the
Approved Products and for all other goods and services sold at or from the
Outlet or the Business and all service fees but excludes sales or other tax
receipts required by law to be remitted, and in fact remitted by Franchisee, to
any government authority and no adjustment for cash shortages from cash
registers will be made.
STANDARDS means the standards, specifications and other requirements of the
System from time to time determined, changed, or added to by PRI, including,
without limitation, with respect to the preparation, marketing and sale of the
Approved Products, customer service procedures, the design, decor and fit-out of
the Outlet, the equipment at the Outlet, and the content, quality and use of
advertising and promotional materials.
SYSTEM means the system for the preparation, marketing and sale of food products
used in operating the Concept.
SYSTEM PROPERTY means the contents of the Manuals and all other know how,
information, specifications, systems and data used by PRI in or in respect of
the System, including, without limitation, trade secrets, copyrights, designs,
patents and other intellectual property.
TERM means the period specified in Schedule B.
SCHEDULE B
INFORMATION SCHEDULE
ADVERTISING CONTRIBUTION: 6% of Revenues:
(Clause 6)
* 5% of Revenues to be paid by Franchisee to
PRI on or before each Due Date for
administration by PRI through a National
Advertising Cooperative; and
* 1% of Revenues to be spent by Franchisee on
local advertising and promotions in each
Accounting
Period
BANK: Westpac Banking Corporation
(Clause 11.1)
BANK ACCOUNT: Account No. 119481
(Clause 11.1) BSB No. 34002
CONCEPT: KFC Restaurant Outlet
CONTINUING FEE: 5% of Revenues
CURRENCY: Australian Dollars
(Clause 11.1)
DATE OF GRANT:
DUE DATE: 5 days after each Accounting Period
GOVERNING LAW: New South Wales
(Clause 21.7)
GUARANTORS: Not Applicable - no guarantee required by PRI.
(Clause 12.3)
IN-TERM RESTRAINT AREA: Australia and New Zealand
(Clause 13(a)
INITIAL FEE: $35,000
(Clause 2.1)
INTEREST RATE: Indicator lending rate quoted by Westpac Banking
(Clause 11.2) Corporation on the due date plus 2% per annum,
calculated on a daily basis.
OUTLET ADDRESS:
POST-TERM RESTRAINT AREA: As specified in Schedule C.
(Clause 13(b))
POSTAL RECEIPT DATE: 3 days after the date of posting
(Clause 20)
RENEWAL FEE: (If applicable) $35,000 adjusted in line with
(Clause 18(g)) the percentage increase in the Consumer Price
Index (all groups -Sydney) from the Date of Grant.
SCHEDULE B - INFORMATION SCHEDULE
PAGE 2
RENEWAL TERM:
(Clause 18)
TERM:
TRANSFER FEE: $35,000 adjusted in line with the percentage increase
(Clause 14.2) in the Consumer Price Index (all groups - Sydney)
from the Date of Grant.
FRANCHISEE'S REPRESENTATION
Franchisee represents to PRI that:
(a) Franchisee has reviewed this Agreement with the assistance of independent
legal counsel and understands and accepts the terms and conditions of this
Agreement;
(b) Franchisee has relied upon its own investigations and judgment in entering
this Agreement and no inducements, representations or warranties have been
given in respect of the Business or this Agreement; and
(c) Franchisee acknowledges that establishment and operation of the Business
will involve significant financial risks and that the success of the
Business will depend upon the skills and financial capacity of Franchisee
and also upon changing economic and market conditions.
SCHEDULE C
ADDITIONAL PROVISIONS OF FRANCHISE AGREEMENT
C1. MAXIMUM RETAIL PRICE
--------------------
Franchisee will not permit any Approved Products to be sold at the Outlet
at any price exceeding the maximum retail prices advised by PRI to
Franchisee from time to time.
C2. FRANCHISING CODE PROVISION
--------------------------
Franchisee acknowledges that PRI is registered under the Franchising Code
of Practice, and accordingly Franchisee agrees to comply with all
provisions of the Franchising Code of Practice (as modified from time to
time).
C3. POST-TERM RESTRAINT AREA
------------------------
The non-competition restraint in Clause 13(b) of this Agreement will apply:
(i) within a radius of 5km of any KFC retail outlet located in
Australia;
(ii) within a radius of 1km of any KFC retail outlet located in
Australia;
(iii) within a radius of 1km of any KFC retail outlet located in
Queensland;
(iv) within a radius of 5km of the Outlet;
(v) within a radius of 1km of the Outlet.
This Clause C3 will have effect as if it were 5 separate covenants and if
any one or more of such separate covenants is or becomes invalid or
unenforceable for any reason then such invalidity or unenforceability will
not affect the validity or enforceability of any of the other separate
covenants.
C4. DELIVERY OPERATIONS
-------------------
If PRI, in its discretion, determines to introduce delivery operations to
the System, PRI will have the right to require Franchisee to deliver the
Approved Products from the Outlet, within a specified delivery area
determined by PRI in accordance with the Manuals and notified by PRI to
Franchisee. Franchisee acknowledges and agrees that such delivery
operations may require capital expenditures by Franchisee at the Outlet.
The terms and conditions under which Franchisee will conduct such delivery
operations will otherwise be as specified in the Manuals.
C5. AMENDMENT OF CLAUSE 15.1(f)
---------------------------
Clause 15.1(f) will only apply in respect of a terminated agreement between
an Affiliated Company of PRI and an Affiliated Company of Franchisee to the
extent that such termination results from a breach of the agreement by the
Affiliated Company of Franchisee. For the avoidance of doubt, Clause
15.1(f) will not apply in the event of the expiration of the term of any
other agreement between PRI and Franchisee (or their respective Affiliated
Companies).
