Exhibit 10.48
SUBFRANCHISE AGREEMENT
AGREEMENT, made as of the _____ day _________, _____ by and between Pasta
Central Co., an unincorporated division of Blimpie International, Inc., a New
Jersey corporation, located at 000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000 (hereinafter the "Franchisor") and Subfranchise Corp Name located at
Address (hereinafter referred to as the "Subfranchisor").
W I T N E S S E T H:
WHEREAS, Franchisor, its subsidiaries and its affiliates have acquired,
developed and innovated unique methods of merchandising, promotion, production,
quality control and distribution of Italian-type food products and clothing for
the franchised operation of Pasta Central Restaurants under the trademark and
trade name of "Pasta Central" (the "Trademarks") as described in Franchisor's
1999 Mulistate Pasta Central Subfranchise Uniform Franchise Offering Circular
("Subfranchise UFOC") which has been previously received by Subfranchisor; and
WHEREAS, Subfranchisor acknowledges receipt on Insert Date (the
"Disclosure Date") of the Subfranchise UFOC and Franchise UFOC; and
WHEREAS, Franchisor is authorized to issue Pasta Central subfranchise
agreements and Pasta Central Restaurant franchise agreements in the State of
State including the Counties of Counties (approximate population xxxx); and
WHEREAS, Franchisor awards Pasta Central Restaurant franchise agreements
for traditional and nontraditional Pasta Central Restaurants. Nontraditional
Pasta Central Restaurants shall be deemed to be Pasta Central Restaurants
installed within another primary business such as colleges, universities,
convenience stores, supermarkets, hospitals, department stores, etc. Traditional
Pasta Central Restaurants are generally developed via the execution of a lease
for the Pasta Central Restaurant premises by a subsidiary leasing corporation of
the Franchisor which is subleased to the approved Pasta Central Restaurant
franchisee. Nontraditional Pasta Central Restaurants are developed by the
execution of a standard Pasta Central Restaurant nontraditional franchise
agreement without the execution of a lease for the Pasta Central Restaurant
premises, except in certain circumstances when a lease is obtained; and
WHEREAS, pursuant to this agreement and as described in the UFOC,
Subfranchisor is obligated to provide to Pasta Central Restaurants support
services on behalf of Franchisor including, but not limited to, assistance in
the nature of consultation, advice and guidance regarding location selection,
lease negotiations, construction coordination, "Grand Openings", store training,
marketing advice and implementation, promotions, point of sale purchases or any
other administrative tasks designated by Franchisor as support programs that
need to be implemented for proper management of the Territory (collectively the
"Support Services"); and
WHEREAS, it is the desire of Subfranchisor to become a regional support
entity to provide the Support Services in the Territory required by Franchisor
in order to receive a portion
of the initial and continuing franchise fees received from each franchisee in
the Territory as hereinafter described and in the UFOC; and
WHEREAS, Franchisor is willing to sell and grant to Subfranchisor, a
subfranchise agreement, under the terms and conditions set forth herein for the
Counties of Counties, State of State (hereinafter the "Territory"); and
WHEREAS, after consultation with independent counsel and a diligent
investigation of all available information, Subfranchisor is willing to purchase
and receive a grant by Franchisor of a subfranchise agreement, under the terms
and conditions set forth herein for the Territory.
NOW, THEREFORE, in consideration of the mutual promises and covenants, it
is mutually agreed as follows:
1. CONSIDERATION:
In consideration of Franchisor's execution of this agreement,
Subfranchisor agrees to pay to Franchisor the non-refundable sum of $FEE (the
"Subfranchise Fee") on the date first above written.
2. GRANT OF EXCLUSIVE SUBFRANCHISE RIGHTS; TERRITORY; TERM:
2.1 The area subject to this agreement shall be the Territory defined
above.
2.2 The term of this agreement shall commence simultaneously with the
execution of this agreement by all relevant parties. The term of this agreement
shall continue for a term of 50 years (the "Term") unless terminated as provided
for herein.
2.3 Subject to compliance with the obligations of Subfranchisor as
contained herein and in the UFOC, Franchisor hereby grants and conveys to
Subfranchisor the exclusive right to be a Subfranchisor of Franchisor in the
Territory in connection with the sale of Pasta Central franchises or branded
products in the Territory or with respect to subfranchise rights to receive
Subfranchisor's portion of the receipts obtained from Pasta Central franchisees
and branded product sales for the sale of authorized products under the
trademark of "Pasta Central" and such other associated names, tag lines and
slogans as Franchisor may own or use as described herein and in the UFOC.
Notwithstanding the expiration of the Term, whether by termination, expiration
or otherwise, Subfranchisor shall retain all rights to receive continuing
franchise fees from Pasta Central Restaurants developed prior to the termination
or expiration of the Term, including any and all franchise agreement renewals or
the relocation of Pasta Central Restaurants arising from the expiration of their
respective leases (but not for branded products). Nothing contained in this
paragraph shall be deemed to limit or modify the right of Franchisor (i) to
terminate this agreement for any of the defaults set forth herein subject to any
and all applicable notice and cure rights granted to Subfranchisor; (ii) to
issue Pasta Central franchise agreements to Pasta Central franchisees in the
Territory; or (iii) to require the leasing corporations to execute master leases
and thereafter grant subleases to franchisees in the Territory. Franchisor
agrees that so long as this agreement is in full force and effect, Franchisor
shall not directly or indirectly
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issue another Pasta Central subfranchise in the Territory or issue a grant to a
third party of any part of Subfranchisor's rights thereof.
3. OBLIGATIONS OF THE FRANCHISOR:
Franchisor promises and covenants as follows:
3.1 To permit Subfranchisor to use the Trademarks, its logotypes and any
other trademarks or service marks which Franchisor may authorize and designate
for use by Subfranchisor, including tag lines and slogans. Subfranchisor upon
Franchisor's request agrees to use the newest trademarks developed by Franchisor
upon the minimum of at least 30 days prior written notice to Subfranchisor;
3.2 To furnish by lending Subfranchisor a copy of the Pasta Central
Subfranchise, Operations, Local Restaurant Marketing and Construction Manuals
(hereinafter collectively the "Manual(s)"), together with any subsequent changes
or amendments thereto. Subfranchisor agrees not to copy, publish or duplicate
the contents of said Manual except when needed to supply each Pasta Central
franchisee or for dissemination to the officers and key employees of
Subfranchisor;
3.3 To supply Subfranchisor, free of charge, one complete sample set of
all sales materials and forms, including the standard franchise agreement and
applicable UFOC to be delivered to each prospective franchisee at the first
meeting or 10 business days (excluding holidays and weekends) prior to the
execution of a franchise agreement and to be used by Subfranchisor in connection
with the sale of each individual franchise unit. UFOCs, brochures and sales
materials are generally purchased from printers hired for such purposes;
3.4 To make available to Subfranchisor the right to consult in person at
the office of Franchisor or by telephone with Franchisor's officials and staff
in its New York office or at such other location designated by Franchisor about
problems relating to design, construction and operation of franchise units at
the office of Franchisor so that Subfranchisor will have available to it the
experience and expertise of Franchisor. Currently, Franchisor has
executive/legal department offices in New York, New York, accounting, operations
and sales offices in Atlanta, Georgia and construction and equipment offices in
Houston, Texas. Additional or replacement offices may be developed in the future
and the advice and consultation will be provided from the respective offices of
Franchisor;
3.5 To provide a training program for 10 days (72 hours) (or such lesser
or greater periods as established by Franchisor) of classroom instruction and
for 120 hours of on-the-job training in an existing Pasta Central Restaurant in
Atlanta, Georgia or, in Franchisor's sole discretion, in another area. The
training program covers the operational and statistical methods of operating a
Pasta Central Restaurant and Pasta Central subfranchise business, franchise
sales, real estate procurement and marketing. Training shall be attended by the
controlling stockholders of Subfranchisor if a corporation, all partners if a
partnership, all individual proprietors if a sole proprietorship, and all
managing executives and operational supervisors, in Atlanta, Georgia. If the
ownership, management or operational supervisor is changed, the new management
or
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executive(s) must also be trained prior to the commencement of their
responsibilities. Payment of all expenses of training, except for salaries of
Franchisor's staff and operating expenses of Franchisor, are the obligation of
Subfranchisor. All travel, lodging, entertainment and other expenses are solely
that of Subfranchisor. Franchisor shall be responsible for all costs of actual
training including training staff, training facility and the cost of store
operational training;
3.6 As changes in applicable laws occur, to attempt to inform
Subfranchisor of any applicable federal or state franchise laws. Subfranchisor
acknowledges that such information is generally provided at the semi-annual
subfranchisor meetings sponsored by Franchisor and at the annual convention of
Franchisor. This provision shall in no way release Subfranchisor from its
obligation to comply with all applicable laws;
3.7 To pay all bills, invoices, fees and other obligations that may be
owed to Subfranchisor by Franchisor, provided Subfranchisor is in full
compliance with this agreement;
3.8 To coordinate a franchise sales program by providing trained
salesperson(s), satisfactory to Franchisor, to process and sell franchises to
franchisee prospects interested in locating in the Territory obtained by
Subfranchisor or Franchisor. There are no representations, warranties,
commitments or assurances of success by said salesperson(s) and Subfranchisor
agrees to make no claims whatsoever with respect to the success or failure of
Franchisor's salesperson(s) during the Term;
3.9 To protect and defend Subfranchisor's right to use, and the validity
of, Franchisor's trademarks; and
3.10 To direct duplicates of sales leads to Subfranchisor so that
Subfranchisor can work with Franchisor's salesmen or process sales if
Franchisor's salesmen are not involved.
4. FRANCHISOR'S REPRESENTATIONS, ETC.:
Franchisor warrants and represents as follows:
4.1 That Franchisor has the right, title and interest to grant the within
agreement and that all rights granted herein to Subfranchisor are free and clear
of any and all liens, claims or encumbrances;
4.2 That Franchisor has the full power and authority to enter into this
agreement and that the within agreement and the obligations of Franchisor
hereunder does not conflict with nor result in a breach of any agreement to
which Franchisor is a party of or by which Franchisor is otherwise bound; and
4.3 That Franchisor will protect and defend the rights of Subfranchisor
against third parties claiming a violation of Articles 4.1 and 4.2 and the
validity of the Trademarks at its sole expense.
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5. OBLIGATIONS OF THE SUBFRANCHISOR:
Subfranchisor promises and covenants as follows:
5.1 To devote its best efforts to develop and manage the Territory,
including the provision of sales assistance to Franchisor's salesmen, opening
and servicing of all Pasta Central Restaurants and distribution points in the
Territory, in accordance with the requirements of Franchisor which (except for
the development requirements in Article 8) may change and vary. To advertise on
a regular basis for franchise prospects in the Territory and to seek to obtain
sales prospects by networking and franchise sales promotional activities, to
promptly provide to Franchisor all pertinent information about responses to such
advertising or networking/promotions, and to thereafter assist Franchisor's
sales staff in processing and selling each respective franchise;
5.2 To abide by and strictly comply with the terms, rules and requirements
set forth in the UFOC, Manuals and this agreement;
5.3 To make no unauthorized promises, representations or commitments in
connection with the sale of franchises other than as furnished or authorized in
writing by Franchisor. To attend all regional and national meetings and the
annual Pasta Central conventions when instituted;
5.4 In accordance with the schedules established by Franchisor with
respect to policing and operational/marketing support, to regularly inspect all
franchise units within the Territory for quality operations, appearance and
cleanliness and, to use best efforts to assure that franchisees in the Territory
use only Franchisor-approved and authorized foods, supplies, equipment,
furnishings and fixtures. Construction and equipment specifications are set
forth in the Construction Manual and authorized raw materials are set forth in
the Operations Manual as revised from time to time;
5.5 To provide each franchisee within the Territory with competent and
timely Support Services; which shall be defined as assistance in the nature of
consultation, advice and guidance regarding location selection, lease
negotiations, construction coordination, "Grand Openings", store training,
marketing advice and implementation, promotions, point of sale purchases or any
other administrative tasks designated by Franchisor as support programs that
need to be implemented for proper management of the Territory;
5.6 To provide reasonable assistance to Franchisor with regard to the
enforcement of franchise agreements within the Territory, as well as the rules
and obligations of the Manual and the general operating policies of Franchisor.
[In clarification of this paragraph, Subfranchisor is not required to commence
or initiate legal proceedings to enforce any of the above referenced agreements,
manuals or policies. Franchisor and Subfranchisor shall each reasonably
cooperate with each other, and provide testimony as needed for any arbitration
or legal proceeding. Franchisor's decision shall control with respect to
decisions regarding when to commence or settle a claim or as to strategy in
defending arbitrations/legal actions and choice of counsel.] To the extent
possible, each franchise agreement shall contain an arbitration clause requiring
all
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disputes to be settled by arbitration. With respect to offensive or defensive
franchisee arbitrations/legal proceedings, including encroachment or franchisee
territorial disputes in the Territory against Franchisor or any leasing company,
all costs and expenses of all actions shall be borne equally by Franchisor and
Subfranchisor, since each jointly shares in the collections of franchise fees
from the Territory. An offensive legal proceeding is an action or arbitration
commenced to enforce each respective Pasta Central Restaurant franchise
agreement or sublease. Generally, continuing franchise fees are collected via an
initial eviction action which sometimes requires subsequent or simultaneous
arbitration actions. Prior to the commencement of any arbitration or legal
proceeding, Subfranchisor shall be afforded prior notice and an opportunity to
negotiate with the respective franchisee to amicably resolve the dispute. A
defensive legal proceeding is an action or arbitration commenced by a Pasta
Central Restaurant franchisee, landlord or third party in the Territory against
the Franchisor;
5.7 To protect the integrity of the Trademarks and to maintain the highest
standards of integrity, quality and reputation;
5.8 To pay all bills, invoices, fees and other obligations that may be
owed to Franchisor by Subfranchisor;
5.9 To not engage in any unauthorized advertising, as such is defined in
the Manual or any other advertising that is not previously approved by
Franchisor, which approval shall not be unreasonably withheld or delayed;
5.10 To comply with Article 8 of this agreement entitled "Area Franchise
Development";
5.11 To promptly notify Franchisor if it is in violation of any of the
terms of this agreement and to grant to Franchisor a 45-day period in which to
cure any such defaults after notice thereof by registered mail in accordance
with Article 14 herein. Any claims of default not noticed within 6 months of
default shall be deemed waived by Subfranchisor. Franchisor shall not be deemed
to be in default of this agreement unless and until such notice is sent to
Franchisor and such other parties set forth in Article 14 and the aforesaid cure
period has expired without said default having been cured;
5.12 To comply with any Pasta Central Restaurant Franchise Agreement
executed by Subfranchisor or by any corporation controlled by Subfranchisor that
has purchased a Pasta Central franchise;
5.13 To promptly attend to all sales leads and other inquiries from
prospective franchisees and to work cooperatively in the sales process with
salesmen of Franchisor;
5.14 If a dispute or disagreement arises with Franchisor, to submit such
dispute or disagreement to a single arbitrator in accordance with Article 20
herein;
5.15 To exercise its best efforts to protect the integrity of the
Trademarks and other proprietary rights, and to maintain the highest standards
of morality, ethics and reputation;
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5.16 To feature the Trademarks and logotypes in all of its local
advertising, promotions, signs, literature and operations, and to clearly
indicate to all third parties that Subfranchisor is not an employee, agent or
fiduciary of Franchisor; and
5.17 On occasion, pre-sold individuals and other entities may indicate a
willingness to purchase Pasta Central Restaurant franchise agreements without
any sales activities required. These generally arise from existing Pasta Central
Restaurant franchisees or their employees in other territories or friends and
associates of Pasta Central Restaurant franchisees, subfranchisors and employees
of Franchisor. With respect to the sales commissions owed for such sales, said
commissions may be payable to third parties involved in the sale.
5.18.1 Subfranchisor must, at Subfranchisor's expense, purchase and use a
personal computer system for its subfranchise business that is compatible with
Franchisor's computer equipment. Subfranchisor must obtain, use and maintain, at
Subfranchisor's expense, an Internet service connection that enables
Subfranchisor to receive e-mail, use internet services, and send and receive
other electronic information to and from Franchisor.
5.18.2 Franchisor may add to, remove substitute or modify computer
requirements in its discretion. Franchisor will provide Subfranchisor with
standards and specifications for required computer products, instructions for
use, and updates of the same. Franchisor may require Subfranchisor to maintain
maintenance and/or service contracts at Subfranchisor's expense. Subfranchisor
may obtain approved computer products from any suppliers it chooses.
5.18.3 Franchisor may negotiate supply contracts for hardware and software
in its discretion. Franchisor will not guarantee, warranty, maintain or support
any computer hardware or software.
6. ADVERTISING:
6.1 Except as provided herein, and in Articles 5 and 22, neither
Franchisor nor Subfranchisor is under any duty or obligation to engage in any
consumer advertising or promotion for Pasta Central Restaurants in the
Territory.
6.2 A sum equal to 4% of the gross weekly sales of each Pasta Central
Restaurant franchisee (as provided in the standard Franchise Agreement), is to
be paid by such franchisee and deposited into an advertising account. Such funds
are to be only used for advertising uses as set forth in the respective
franchise agreements under the sole control of Franchisor.
6.3 Franchisor's policy with respect to advertising is to encourage the
franchisees in the Territory to form and implement an advertising cooperative
and to participate in advertising and marketing decisions in conjunction with
the assistance of Subfranchisor and the authorization, approval or direction of
Franchisor. Subfranchisor shall coordinate the formation of the cooperative,
attend all meetings and provide all assistance and guidance to the Pasta Central
Restaurant franchisees as requested by Franchisor in order to work cooperatively
with said franchisees. If multiple territories are part of the cooperative, then
in such event
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Subfranchisor shall work harmoniously and constructively with other
subfranchisors and franchisees as may be needed.
6.4 Subfranchisor shall be required to provide $2,000, to be matched by
the franchisee's grand opening contribution, for each of the first 3 franchised
Pasta Central Restaurants opened in the Territory. This will enable the
Territory to be opened correctly with appropriate promotional and marketing
activities for these initial franchises. Subfranchisor must also spend
approximately $8,000-$12,000 each year to advertise for franchisees in its
Territory, and must join local civic clubs and similar organizations to promote
the growth of its subfranchise business.
7. FRANCHISE FEES:
7.1 The Initial Franchise Fee for a traditional Pasta Central Restaurant
within the Territory shall be determined by Franchisor, in its sole discretion,
on a deal by deal basis, but generally on an annual basis. For the years 1999
and 2000, the Initial Franchise Fee for the first Traditional franchise sold to
a franchisee shall be $18,000. The Initial Franchise Fee for nontraditional
franchisees (such as convenience store operators, institutional food service
companies, colleges, schools, supermarkets, hospitals, factories, and other
nontraditional entities) shall be determined by Franchisor, but will range from
$1.00 to $10,000. Said fee is dependent upon the number of nontraditional
transactions executed, the location of the nontraditional franchisee, the
marketing area, the opportunity or lack thereof and other subjective concerns.
Each traditional and nontraditional franchisee in the Territory shall be
obligated to pay a continuing franchise fee of 6% percent of gross sales on a
weekly basis, subject to limited exceptions. All initial franchise agreements
shall be executed between Franchisor and each respective franchisee. From the
Initial Franchise Fees payable for nontraditional franchises, it is possible
that a significant portion will be retained by Franchisor and used for the
collective national marketing program coordinated by the Pasta Central
Subfranchise Advisory Council ("PCSAC"). Subfranchisor acknowledges that the
Initial Franchise Fees for nontraditional franchisees will be subject to use as
determined by PCSAC and Franchisor.
7.2 All traditional franchisees shall lease their Pasta Central Restaurant
premises from (a) corporation(s) owned by Franchisor. Nontraditional franchisees
shall generally not be obligated to lease their unit premises from (a)
corporation(s) owned by Franchisor, except as otherwise determined by
Franchisor. The sublease shall require the franchisee to pay for each and every
week of operation a sum equal to 6% of the gross sales of the franchise unit;
plus 4% of gross sales, to be deposited into an advertising account as provided
in Article 6 herein. The aforesaid 6% and 4% of gross sales are the same 6% and
4% of gross sales payable under the franchise agreement. The sublease duplicates
the obligations of the franchise agreement for enforcement and collection
purposes, however, payment under each respective Pasta Central Restaurant
sublease satisfies the payment obligation under the respective Pasta Central
Restaurant franchise agreement. Subfranchisor, upon the written request of
Franchisor, may as a representative (not agent) of Franchisor and in compliance
with each respective franchise agreement in the Territory, audit any
franchisee's books and records or inspect each franchisee's Pasta Central
Restaurant premises for determination of compliance with the respective
franchisee's obligations under its Pasta Central Restaurant franchise agreement.
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7.3 All revenues, as set forth in Articles 6 and 7, generated by the sale
and operation of franchised units within the Territory (except advertising
funds) shall be paid or caused to be paid to Franchisor. Provided that
Subfranchisor is in full compliance with its obligations hereunder, Franchisor
shall pay Subfranchisor one-half of the net funds from Initial Franchise Fees
paid by Pasta Central Restaurant franchisees in the Territory and one-half of
all continuing weekly franchise fees, which are currently 6% of gross sales,
paid by Pasta Central Restaurant franchisees in the Territory. Franchisor and
Subfranchisor agree that Franchisor shall not be deemed to have received any
portion of the Initial Franchise Fee paid pursuant to the decisions of PCSAC in
connection with the sales of nontraditional franchises. In the event of a
conflict between this paragraph and any other provision of this agreement, this
paragraph shall control.
7.4 Franchisor, upon receipt of good funds or clearance of any deposit,
shall then remit every 30 days as follows: (i) half to Subfranchisor and (ii)
half to Franchisor. Franchisor is hereby granted a security interest and lien
against any and all fees, or accounts payable by Franchisor to Subfranchisor to
secure full compliance by Subfranchisor of its obligations as provided herein.
7.5 At the request of Subfranchisor, along with the monthly payment due
the Subfranchisor herein from the collected franchise fees of each respective
franchisee in the Territory, the Franchisor shall provide a monthly report
describing the gross revenues generated by each franchisee, the fees received
from each franchisee and the monies payable to Subfranchisor.
7.6 Franchisor is further granted the right of set-off against any fees or
accounts payable to Subfranchisor from any and all fees or other monies
collected by Franchisor for which a portion is to be paid to Subfranchisor.
7.7 It is acknowledged that from each Initial Franchisee Fee, the
following fees will be deducted prior to the 50/50 division of net funds between
Franchisor and Subfranchisor: (i) a sales commission of up to $5,000 paid to the
Franchisor for its sales department, (ii) a design fee of $500-$l,000 paid to an
architect or designer, (iii) a training fee of $1,500 paid to the Pasta Central
training school for said franchise, (iv) a sales screener fee of $1,000 paid to
Franchisor, and (v) a fee of $500 payable to Franchisor for the establishment of
the Pasta Central leasing entity. Subfranchisor or its salesmen will not receive
a sales commission.
7.8 Subfranchisor acknowledges that if Franchisor creates a national
leasing coordinator position to help secure Pasta Central Restaurant leasing
locations from national or regional landlords, Subfranchisor shall contribute
$200 from its share of funds received from the sale of each Traditional
franchise agreement to be matched, in each instance, by Franchisor.
Subfranchisor agrees to participate in this program.
7.8.1 By way of example: From the sale of a $18,000 franchise in the
Territory, (i) a $5,000 sales commission will be paid to Franchisor, (ii) a
$1,500 training fee shall be retained by Franchisor for training, (iii) a $500
design and layout fee shall be retained by Franchisor for the design and layout
of the Pasta Central Restaurant, (iv) a $1,000 fee for sales screeners shall be
retained by Franchisor, and (v) a $500 fee for the formation of the Pasta
Central leasing
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corporation, minute book, first tax returns and any other leasing corporation
expenses that arise during the first 2 years of operation. The remaining balance
of the Initial Franchise Fee is divided equally between Franchisor and
Subfranchisor. Accordingly, it is anticipated that Subfranchisor will receive
the approximate sum of $4,750.
7.9 Each Pasta Central franchise agreement provides that upon the sale of
a Pasta Central restaurant, or a controlling interest in a corporation that owns
a Pasta Central restaurant, 5% of the gross sales price shall be paid to
Franchisor as a transfer fee. Franchisor will pay half of the 5% transfer fee to
Subfranchisor, provided Subfranchisor performs all operational and marketing
support required by the replacement franchisee.
8. AREA FRANCHISE DEVELOPMENT:
For the purpose of this Article, the following definitions shall control:
8.1 "One year" shall be defined as 365 days from the date of execution of
this agreement and each anniversary date thereafter.
8.2 "Open traditional Pasta Central Restaurant" shall be defined as an
open operating Pasta Central Restaurant in an approved location wherein a master
lease has been executed by a subsidiary of Franchisor, except where the leasing
requirement is waived by Franchisor, with a Pasta Central Restaurant franchise
agreement executed for said location.
8.3 "A nontraditional franchisee" shall be defined as described in
Franchisor's UFOC, and which opens within 6 months thereafter.
8.4 During the Term and any renewal terms of this agreement, Subfranchisor
shall reasonably operate and continue to operate a franchise sales program in
the Territory so that new franchisees for both new and existing Pasta Central
Restaurant locations may be obtained. In order to effectuate the foregoing,
Subfranchisor agrees to actively locally advertise for franchisees, network with
applicable organizations located in the Territory, provide all sales leads to
Franchisor, work with Franchisor's staff to respond to sales leads, process such
leads in a prompt and efficient manner, and generally function together with
Franchisor's sales department as a franchise sales organization. Subfranchisor
must also attend trade shows and implement any new systems and techniques
developed by Franchisor, or suggested by Franchisor, designed to attract new
franchisees to the Pasta Central system.
8.5 Subfranchisor has agreed to a minimum market development obligation in
order to ensure Franchisor that the Territory will be developed appropriately.
Franchisor will award all franchise agreements, but Subfranchisor will be
involved in the sale and/or development of the real estate wherein some or all
Pasta Central Restaurants are located. Accordingly, as a material condition of
this agreement, the following minimum number of Pasta Central Restaurants (which
include traditional or nontraditional Pasta Central Restaurants, excluding
distribution points) shall be opened in the Territory, directly or indirectly,
on a cumulative basis (i.e., excess stores opened in one year count toward
succeeding years' requirements) as follows:
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1st year Pasta Central Restaurants
2nd year Pasta Central Restaurants
3rd year Pasta Central Restaurants
4th year Pasta Central Restaurants
5th year Pasta Central Restaurants
6th year Pasta Central Restaurants
7th year Pasta Central Restaurants
8th year Pasta Central Restaurants
9th year Pasta Central Restaurants
10th year Pasta Central Restaurants
8.6 For years 11 through 50 after the date hereof, Subfranchisor shall
reasonably and affirmatively continue its best efforts to develop Pasta Central
Restaurants in the Territory. Franchisor and Subfranchisor shall establish
reasonable 5-year developmental obligations, considering relevant factors,
including market growth, nontraditional and new concept venues including
colleges, schools, sports stadiums and the like, for each year commencing on the
10th year after the date hereof and each 5-year anniversary thereafter with
appropriate credit granted to Subfranchisor for all open Pasta Central
Restaurants in excess of the minimum developmental obligations set forth above.
If the parties cannot agree, the issue shall be submitted to the American
Arbitration Association whose decision shall be final. The locale of all
arbitrations with the American Arbitration Association shall be in New York, New
York before a single arbitrator.
8.7 Subfranchisor further agrees that other forms of Pasta Central
distribution points may be developed. Accordingly in the event that Franchisor
develops additional distribution points, Subfranchisor agrees to exercise its
best efforts to help develop and implement such distribution points in the
Territory.
8.8 Notwithstanding anything to the contrary contained herein, in the
event Subfranchisor fails to comply with its development schedule as described
in Articles 8.4 and 8.5 herein, Subfranchisor shall lose its exclusive rights
granted herein; provided, however, this agreement shall remain in full force and
effect as to those Pasta Central Restaurants already sold as of the date of the
default including, without limitation, the rights to receive franchise fees
(Article 7).
8.9 If Subfranchisor fails to meet its development schedule, Franchisor
may develop the Territory itself, or through others by the sale of another
subfranchise, or otherwise, except that it will not construct nor permit others
to construct another Pasta Central Restaurant within a reasonable area of any
existing Pasta Central Restaurant located within the Territory. The term
"reasonable area" shall be defined as to each Pasta Central Restaurant, on a
case by case basis, by Franchisor and Subfranchisor.
8.10 If the "reasonable area" cannot or has not been agreed upon, the
issue shall be submitted to arbitration, before a single arbitrator, in
accordance with the rules of the American
11
Arbitration Association, in New York, New York, whose decision shall be final.
8.11 Franchisor agrees to reasonably extend the development schedule of
Subfranchisor if delays are caused as a result of force majeure events or other
delays which are not the fault of Subfranchisor, such as disputes with
contractors, delays in obtaining permits, plans or variances or any other
reasonable delay, provided that a store premises is leased and a reasonable
attempt is being made to open the required number of Pasta Central Restaurants.
Nothing contained in this paragraph shall be deemed to modify Subfranchisor's
obligations in this Article 8. In no event, however, shall said time be extended
for more than 120 days unless such delays are caused by Franchisor.
9. INSPECTION:
Franchisor and Subfranchisor, upon 15 days prior written notice, shall
have the right to examine the books, records and supporting data of the other
with respect to the obligations, records and financial data, including
collections and disbursements, of the Territory at the principal place of
business of the other for audit purposes. Subfranchisor agrees to submit to
Franchisor annual uncertified profit and loss and balance sheet statements
prepared in accordance with generally accepted accounting principals. Any audit
or examination shall occur during normal business hours. During such audit, both
Franchisor and Subfranchisor shall use their best efforts to minimize any
interference with the other's business operations.
10. TAXES, LAWS AND LEASING CORPORATIONS:
10.1 Subfranchisor shall pay any and all Federal, City, State or local
taxes, fees, fines or assessments arising out of the operation of
Subfranchisor's business. Subfranchisor agrees to comply with all local laws,
orders, codes and ordinances applicable to Subfranchisor's business.
10.2 Franchisor and Subfranchisor acknowledge that, subject to compliance
with this agreement by Subfranchisor, including the provisions regarding Support
Services during the Term and any renewal terms, Subfranchisor is the equitable
owner of the franchise fees generated from the franchisees in the Territory
which fees are collected by Franchisor and 50% of which are then remitted to
Subfranchisor. In connection with Subfranchisor's share of any receipts
collected by Franchisor from franchisees in the Territory, Subfranchisor is
obligated to pay any applicable excise or gross receipts tax or other charges
payable under any applicable law as Franchisor is similarly obligated to pay any
applicable excise or gross receipt tax or other charge payable under applicable
law for its share of franchise fees collected from the Territory.
10.3 Subfranchisor and Franchisor agree to equally share any expense, fee
or charge payable in order to maintain each leasing corporation in the Territory
in good standing.
11. PILOT PASTA CENTRAL RESTAURANTS:
NONE.
12. LOCAL CODES AND ORDINANCES:
12
Subfranchisor agrees to comply with all local laws, orders, codes and
ordinances applicable to Subfranchisor's business.
13. TERMINATION:
This agreement shall terminate in the event of the occurrence of any of the
following:
13.1 With respect to the termination rights of Franchisor:
13.1.1 At the election of Franchisor, in the event Subfranchisor fails to
meet any of its obligations contained in this agreement, including but not
limited to, the obligation to develop Pasta Central Restaurants as specified in
Article 8 herein, and where such default continues for 45 days, except as
otherwise set forth in Article 15 herein, without being cured after the mailing
of written notice of such default, by certified mail (return receipt requested)
by Franchisor.
13.1.2 Upon the bankruptcy or the appointment of a receiver for the assets
of Subfranchisor, however, so long as Subfranchisor is otherwise in full
compliance with this agreement Franchisor agrees that it will not exercise its
termination rights under this sub-article.
13.1.3 In the event this agreement is terminated pursuant to a default of
Subfranchisor's minimum unit development obligation pursuant to Article 8
herein, Subfranchisor shall retain all of its rights to receive its share of
continuing franchise fees from franchises opened in its territory prior to
termination, subject to strict compliance with all of the obligations (Support
Services, etc.) of Subfranchisor contained in Franchisor's UFOC, this agreement
and any amendments hereto. The terms of this sub-article shall survive the
termination of this agreement.
13.2 With respect to the termination rights of Subfranchisor:
13.2.1 At the election of Subfranchisor in the event Franchisor fails to
meet any of its obligations as specified herein and where such default continues
for 45 days without being cured after the mailing of written notice of such
default by certified mail (return receipt requested).
13.2.2 With respect to a default by either Franchisor or Subfranchisor,
each party shall be entitled to any and all lawful damages or rights and
remedies available at law or at equity but in no event shall Subfranchisor or
Franchisor be entitled to receive lost profits, or punitive or exemplary
damages. The successful party to such arbitration shall be entitled to receive
reasonable attorneys' fees not to exceed $30,000.
14. NOTICES:
14.1 No notice sent under any provision of this agreement shall be of any
effect unless it is sent by certified mail (return receipt requested), addressed
to the party for which it is intended at the following address:
13
With respect to Franchisor:
At the address first above written and to
Xxxxx X. Xxxxxx, Esq., 000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
With respect to Subfranchisor:
At the address first above written.
14.2 Notice so served shall be deemed received 5 business days after
mailing. Either party may change its address for service of notice at any time
by notice similarly served.
15. DEFAULT:
15.1 Franchisor shall not be in default of this agreement unless and until
Franchisor has received notice of such default by certified mail, (RRR) and a
reasonable period in which to cure said default. The minimum period of such cure
period shall not be less than 45 days after receipt of notice. In the event that
Franchisor is reasonably attempting to cure such default in a diligent and
expeditious manner and does in fact cure such default, Subfranchisor agrees that
it will reasonably extend the cure period.
15.2 Subfranchisor shall not be in default of this agreement unless and
until Subfranchisor has received written notice of default by certified mail
(RRR) and a reasonable period in which to cure said default. The minimum period
of such cure period shall not be less than 45 days after receipt of notice,
except for: (i) defaults with respect to the supplying of services to each Pasta
Central Restaurant franchisee in the Territory which shall be 15 days after
receipt of written notice, (ii) monetary defaults of obligations of
Subfranchisor to Franchisor, if any, or defaults of the development schedule
obligations as set forth in Article 8, which shall be 10 days after receipt of
written notice, and (iii) defaults of any applicable state or federal franchise
or securities law, which shall be 15 days after receipt of written notice. In
the event that Subfranchisor is reasonably attempting to cure such default in a
diligent and expeditious manner and does in fact cure such default, Franchisor
agrees that it will reasonably extend any cure period to enable Subfranchisor to
cure any default except for those set forth in (ii) herein.
16. MISCELLANEOUS:
16.1 This agreement has been executed in conformity with and shall be
governed by the laws of the State of New York or if required under the laws of
the state of the Territory, said laws shall control.
16.2 This agreement shall inure to and be binding upon the heirs,
executors, administrators, successors, and assigns of the respective parties
hereto and represents the entire agreement of the parties. Until this agreement
is executed by all parties, all offers, acceptances, written proposals, letters
of intent or other written or oral understandings shall be non-binding on the
parties and deemed preliminary negotiations.
16.3 This agreement shall inure to the benefit of the successors and
assigns of Franchisor.
14
Franchisor shall have the right to transfer or assign this agreement to any
person or legal entity who assumes its terms and agrees to comply with
Franchisor's obligations contained herein. Franchisor shall have no liability
for the performance of any obligations contained in this agreement after the
effective date of such transfer or assignment.
16.4 This agreement cannot be changed, modified or terminated orally. This
is the entire agreement of the parties hereto.
17. CONSENT TO TRANSFER:
17.1 For all proposed transfers or assignments of this agreement, and
transfers of more than 51% of the outstanding and issued stock of Subfranchisor
by one or more transfers or any transfer which, directly or indirectly,
effectively changes ownership or management control of Subfranchisor, Franchisor
will not unreasonably withhold its consent to any transfer or assignment which
is subject to the restrictions of this Article, provided however, Franchisor
shall not be required to give its consent unless all of the following conditions
are met prior to the effective date of assignment:
17.1.1 Upon the execution of this agreement and upon each direct or
indirect transfer of an interest in this agreement, or in Subfranchisor, and at
any other time upon Franchisor's request, Subfranchisor shall, within 5 days
prior to such transfer, or at any other time at Franchisor's request, furnish
Franchisor with an estoppel agreement indicating any and all causes of action,
if any, that Subfranchisor may have against Franchisor, or that none exist, and
a list of all shareholders or partners having an interest in this agreement or
in Subfranchisor, the percentage interest of each shareholder or partner, and a
list of all officers and directors, in such form as Franchisor may require;
17.1.2 Subfranchisor's written request for transfer of either a partial or
whole interest in this agreement must be accompanied by an offer to Franchisor
of a right of first refusal at the same price offered by any bona fide buyer
less 5% percent. Franchisor shall have the right and option, exercisable within
15 days after receipt of written notification from the Subfranchisor, to send
written notice to Subfranchisor that Franchisor or its third-party designee,
intends to purchase the interest which is proposed to be transferred, on the
same terms and conditions offered by the third party less 5%. If Franchisor
accepts such offer, the 5% transfer/administrative fee due from Subfranchisor in
accordance with Article 17.1.8 shall be waived by Franchisor. Any material
change in the terms of an offer prior to closing shall cause it to be deemed a
new offer, subject to the same right of first refusal by Franchisor, or its
third-party designee, as in the case of the initial offer. Franchisor's failure
to exercise such option shall not constitute a waiver of any other provision of
this agreement, including any other requirements of this Article with respect to
the proposed transfer;
17.1.3 Subfranchisor is not in default under the terms of this agreement,
the Manuals or any other obligations owed Franchisor, and all of Subfranchisor's
then-due monetary obligations to Franchisor have been paid in full;
17.1.4 Subfranchisor and its shareholders or members, if Subfranchisor is
a corporation or
15
limited liability company, have executed a general release, in a form prescribed
by Franchisor, of any and all claims against Franchisor, its affiliates,
subsidiaries, shareholders, directors, officers, subfranchisors and employees;
17.1.5 The transferee/assignee has demonstrated to Franchisor's
satisfaction that it meets all of Franchisor's then-current requirements for new
subfranchisors, including, without limitation, possession of good moral
character and reputation, satisfactory credit ratings, acceptable business
qualifications, and the ability to fully comply with the terms of this
agreement;
17.1.6 The transferee/assignee, its general manager and operational
employees responsible for the operation of the subfranchise business have
satisfactorily completed Franchisor's training program;
17.1.7 The transferee/assignee executes such other documents as Franchisor
may require, including a replacement subfranchise agreement on the then-standard
subfranchise agreement form used by Franchisor as modified by the business terms
set forth in this agreement, in order to assume all of the obligations of this
agreement, to the same extent, and with the same effect, as previously assumed
by the assignor; and
17.1.8 At the completion of Subfranchisor's sale transaction,
Subfranchisor shall pay to Franchisor an administrative/transfer fee of 5%
percent of the gross sales price of Subfranchisor's business, subfranchise
agreement and other assets.
17.2 Subfranchisor's rights may pass to Subfranchisor's next of kin or
legatee if they assume Subfranchisor's obligations and attend and complete
Franchisor's training program. Upon Subfranchisor's disability, Subfranchisor
may sell the subfranchise or keep it, if it is operated by trained personnel.
17.3 Franchisor's consent to a transfer shall not constitute a waiver of
any claims it may have against the transferring party arising out of this
agreement or otherwise.
17.4 If Subfranchisor is an individual, Franchisor hereby consents to the
assignment of this agreement and any and all obligations referable thereto
without any fee charged by Franchisor to a corporation principally owned by
Subfranchisor within 90 days from the date hereof. Upon such assignment and
assumption by the corporation along with delivery of executed originals of same
to Franchisor, the individual Subfranchisor shall be released from any and all
personal liability.
18. DISCLOSURE:
18.1 FRANCHISOR and SUBFRANCHISOR acknowledge that all of the business
terms and negotiations with respect to the offer and acceptance of this proposed
transaction occurred 15 business days (excluding holidays and weekends) or more
subsequent to the receipt of the (i) FRANCHISOR'S Pasta Central Subfranchise
Uniform Franchise Offering Circular (that includes Items 1 through 23, NEW YORK
ADDENDUM TO DISCLOSURE DOCUMENT and exhibits A-M as follows: Pasta Central
Subfranchise agreement (which
16
Subfranchisor acknowledges is in all material respects identical to this
Agreement), Pasta Central Restaurant franchise agreement and nontraditional
rider, sublease, confidential information agreement, audited financial
statements of FRANCHISOR for the fiscal years ending June 30, 1999, 1998, and
1997, lists of: subfranchisors (i) currently operating and (ii) who have left
the system; leasing affiliates of FRANCHISOR; approved manufacturers; equipment
for sale by BI Concept Systems, Inc.; subfranchise manual-table of contents;
agents/agencies for service or process; receipts and in Item 3 the following
litigation disclosures: Xxxxxxxx, X.X. Xxxxxx, Arodak, Seufert, Fast Eddie's,
Pischeria\Manfro, Moran, Peacox Ventures (2 proceedings), Trafalger, B.A.E.
Enterprises and Xxxxx Corporation (ii) FRANCHISOR'S Pasta Central Restaurant
Uniform Franchise Offering Circular (that includes Items 1 through 23, NEW YORK
ADDENDUM TO DISCLOSURE DOCUMENT and exhibits A-O as follows: Pasta Central
Restaurant franchise agreement and nontraditional rider, sublease, sample
promissory note, confidential information agreement, audited financial
statements of FRANCHISOR for the fiscal years ending June 30, 1999, 1998, and
1997, lists of: franchisees (i) operating at year end; (ii) with signed
franchise agreements but stores not opened at start of fiscal year; and (iii)
who left the system; leasing affiliates of FRANCHISOR; approved manufacturers;
equipment for sale by BI Concept Systems, Inc.; operations manual-table of
contents; equipment financing documents; subfranchisors; agents/agencies for
service of process; receipts; and in Item 3 the following litigation
disclosures: Xxxxxxxx, X.X. Ashley, Arodak, Seufert, Fast Eddie's,
Pischeria\Manfro, Moran, Peacox Ventures (2 proceedings), Trafalger, B.A.E.
Enterprises and Xxxxx Corporation, and further acknowledges that SUBFRANCHISOR
has received the salesman disclosure forms of SALESMAN NAME.
18.2 By execution hereof, SUBFRANCHISOR acknowledges that FRANCHISOR is
relying upon the following representation (paragraph 18) which include, inter
alia, that there have been no representations, forecasts, warranties or
statements made by FRANCHISOR or any of its salesmen, officers, directors,
employees or others including but not limited to franchise or subfranchise
sales, profits and/or growth potential.
19. NO REPRESENTATIONS, ETC.:
Subfranchisor warrants, represents and acknowledges that except for any
representation or warranty contained in Franchisor's UFOC:
19.1 There have been no representations, forecasts, inducements,
projections, warranties or statements made by Franchisor or any of its salesmen,
officers, directors, employees, or others, including but not limited to
franchise or subfranchise sales, profits and/or growth potential nor has
Subfranchisor relied upon any representations, forecasts, inducements,
projections, warranties or statements made by any entity involved in this
transaction;
19.2 Its independent decision to enter into this transaction, to
consultation and advice of counsel and that it has not been induced by any
promise or commitment not contained herein. This is the entire agreement of the
parties hereto;
19.3 No other salesman, staff member, entity, or associate of Franchisor
has met Subfranchisor regarding this subfranchise sale or the offer and
acceptance thereof except the
17
salesmen set forth herein;
19.4 Subfranchisor acknowledges and agrees that it and its salesmen now
existing or hereinafter existing are not the agents of Franchisor nor may they
bind Franchisor unless agreed to in writing by Franchisor;
19.5 There have been no representations, warranties, inducements, pro
formas, forecasts, estimates or any other inducement or statement made by any
salesperson associated with Franchisor including the salesmen set forth herein
or Franchisor or its agents, salesmen, directors, officers, employees or any
other salesmen or other person or entity regarding financing, net profits, gross
profits, net sales, gross sales, costs or expenses of Pasta Central Restaurants
generally or of any specific Pasta Central Restaurant nor has the Subfranchisor
relied upon any representations, warranties, inducements, pro formas, forecasts,
estimates or any other inducement or statement made by Franchisor or its agents,
directors, officers, employees or salesmen or other associates or any
subfranchisor or any of any subfranchisors agents, directors, officers,
employees or salesmen or other associates, regarding financing, net profits,
gross profits, net sales, gross sales, costs or expenses of Pasta Central
Restaurants generally or of any specific Pasta Central Restaurant or with
respect to any other material fact relating to the development of Pasta Central
Restaurants in the area wherein the Subfranchisor intends to locate or develop
Pasta Central Restaurants or any other matter pertaining to Franchisor, any
subfranchisor, the Pasta Central chain or any other matter not set forth herein;
and
19.6 There have been no representations, warranties, inducements, pro
formas, forecasts, estimates or any other inducement or statement made by any
salesperson associated with Franchisor including the salesmen set forth herein
or Franchisor or its agents, salesmen, directors, officers, employees or any
other salesmen or other person or entity regarding subfranchise financing,
subfranchise net profits, subfranchise gross profits, subfranchise net sales,
subfranchise gross sales, subfranchise costs or expenses nor has the
Subfranchisor relied upon any representations, warranties, inducements, pro
formas, forecasts, estimates or any other inducement or statement made by
Franchisor or its agents, directors, officers, employees or salesmen or other
associates or any subfranchisor or any of any subfranchisors agents, directors,
officers, employees or salesmen or other associates, regarding subfranchise
financing, subfranchise net profits, subfranchise gross profits, subfranchise
net sales, subfranchise gross sales, subfranchise costs or subfranchise expenses
generally or specifically or with respect to any other material fact relating to
the development of Pasta Central Restaurants in the Territory or any other
matter pertaining to Franchisor, any subfranchisor, the Pasta Central chain or
any other matter not set forth herein.
PLEASE CIRCLE THE APPROPRIATE RESPONSE TO EACH STATEMENT AND INITIAL WHERE
INDICATED. IF YOUR ANSWER TO ANY QUESTION IS "NO", PLEASE EXPLAIN YOUR ANSWER IN
THE LINED SPACES PROVIDED AT THE END OF THIS AGREEMENT.
Subfranchisor has been represented by independent counsel who has reviewed
the UFOC, this Pasta Central subfranchise agreement and the Pasta Central
franchise agreement. If Subfranchisor elects not to use an attorney, it
acknowledges that it will be bound by the disclosures
18
set forth in the UFOC, and the terms and provisions of this agreement, and that
any oral agreements or inducements, if any, will not be binding upon Franchisor.
YES NO __________
(Initial)
Subfranchisor is fully informed as to all of Subfranchisor's obligations,
and of Franchisor's obligations as set forth in this agreement and the UFOC.
YES NO __________
(Initial)
Subfranchisor has only had contact, negotiations and/or discussions with
the salesperson(s) and executives identified in this agreement and no other
regarding this subfranchise sale or the offer and acceptance of this agreement.
YES NO __________
(Initial)
Except for the salesperson(s) and executives identified in this agreement,
no other salesman, staff member, entity or associate of Franchisor met the
Subfranchisor regarding this subfranchise sale or the offer and acceptance of
this agreement.
YES NO __________
(Initial)
Subfranchisor acknowledges that Franchisor, its salesperson(s) any of
their agents, salesmen, directors, officers or employees or any other
salesperson(s), person or entity have not made, nor has Subfranchisor relied on
any representations, warranties, inducements, pro formas, forecasts, estimates
or any other inducements or statements regarding subfranchise financing,
subfranchise net profits, subfranchise gross profits, subfranchise net sales,
subfranchise gross sales, subfranchise costs or subfranchise expenses, generally
or specifically or with respect to any other material fact relating to the
development of Pasta Central Restaurants in the Territory or any other matter
pertaining to Franchisor, any subfranchisor, the Pasta Central chain or any
other matter not set forth herein.
YES NO __________
(Initial)
Subfranchisor understands that in entering into this agreement, Franchisor
is relying upon Subfranchisor's acknowledgments, representations and commitments
as stated in this Section.
YES NO __________
(Initial)
"NO" ANSWERS EXPLAINED HERE:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
IF YOU NEED MORE ROOM, PLEASE ATTACH EXTRA SHEETS OF PAPER
19
20. ARBITRATION:
20.1 Franchisor and Subfranchisor acknowledge that disputes or
disagreements may arise during the term of this agreement and any renewals
thereto. Franchisor and Subfranchisor have elected to resolve such disputes or
disagreements in a non-judicial alternative dispute resolution format ("ADR").
An ADR format minimizes the expense of dispute resolution and generally can be
accomplished in a more expeditious and effective manner. By agreeing to an ADR
format, both Subfranchisor and Franchisor are also waiving a number of rights,
remedies and privileges which may arise in a judicial resolution format. In
view, however, of the continuing relationship between Subfranchisor and
Franchisor under the original and renewal terms of this agreement, both
Subfranchisor and Franchisor agree that an ADR format is the most economical,
efficient and practical way to resolve disputes and disagreements.
20.2 Accordingly, except as otherwise provided in this agreement, in the
event of any dispute or disagreement between Franchisor and Subfranchisor with
respect to any issue arising out of or relating to this agreement, its breach,
its interpretation or any other disagreement between Subfranchisor and
Franchisor, such dispute or disagreement shall be resolved by arbitration. In
the event of any dispute or disagreement, Subfranchisor and Franchisor both
agree to submit the dispute to arbitration in accordance with the least
expensive procedure of the American Arbitration Association ("AAA"), and the
application for such arbitration shall be filed in the AAA's New York City
office . Franchisor and Subfranchisor agree that the hearing(s) shall be held in
New York City, State of New York before one arbitrator. This paragraph shall not
apply to any monetary defaults of Subfranchisor or defaults of Article 8 herein
and Franchisor shall be free to utilize any right or remedy it may have at law
or equity. However Franchisor shall be entitled to seek declaratory judgements
or decisions about its status with Subfranchisor or its compliance with this
agreement or to establish the existence of a of default by Subfranchisor or for
any other relief that may be appropriate.
20.3 Franchisor and Subfranchisor agree that this agreement evidences a
transaction involving interstate commerce and that the enforcement of this
arbitration provision and the confirmation of any award issued to either party
by reason of an arbitration conducted pursuant to this arbitration provision is
governed by the Federal Arbitration Act, 9 U.S.C. ss. 1 et seq.
20.4 Lost profits, punitive or exemplary damages or attorneys' fees
exceeding $30,000 may not be awarded by the arbitrator, and any such award shall
not be enforceable or enforced in any court. If the waiver of lost profits, or
punitive or exemplary damages or attorneys' fee limitation, is in whole or in
part in violation of the laws of the state where Subfranchisor's Territory is
located, that law shall control, and any such award shall be enforceable or
enforced in any court of appropriate jurisdiction. In no event can any of the
provisions of this agreement, including but not limited to Article 8 as
specified in this agreement, or in amendments to this agreement or in the
Manuals, be modified or changed by the arbitrator.
20.5 With respect to any legal proceeding authorized by this agreement,
Subfranchisor and Franchisor each agree that they will commence such legal
proceeding only in the Federal District Court for the Southern District of New
York, and both Franchisor and Subfranchisor
20
consent to the jurisdiction in the Federal District Court for the Southern
District of New York. In the event the parties do not meet the jurisdictional
requirements for Federal District Court, the parties consent to jurisdiction in
the Supreme Court, New York County, State of New York. Subfranchisor agrees that
mailing to its last known address by certified mail of any process shall
constitute lawful and valid process. In all cases, Subfranchisor and Franchisor
each waives any right to a trial by jury. Notwithstanding the foregoing, if the
laws of the state where Subfranchisor's Territory is located requires
jurisdiction of the courts of that state or control by the laws of that state,
then this agreement shall be deemed modified to comply with such requirement.
20.6 The terms of this article shall survive termination, expiration or
cancellation of this agreement.
21. RESTAURANT TRANSFER FEE:
Each Pasta Central Restaurant franchise agreement provides that upon the
sale of a Pasta Central Restaurant or controlling interest in a corporation that
owns a Pasta Central Restaurant, 5% of the gross sales price shall be paid to
Franchisor as a transfer fee. In connection therewith, provided Subfranchisor is
not in default of this agreement, Franchisor agrees to share equally the 5% fee
with Subfranchisor, provided Subfranchisor provides any and all necessary
operational assistance and Pasta Central Restaurant supplementary training for
the transferee franchisee at its own expense. Notwithstanding the foregoing, if
the Pasta Central Restaurant franchisee is owned by Subfranchisor or the
stockholders of Subfranchisor, no transfer fee shall be charged for transfers of
the outstanding and issued shares of the corporate Subfranchisor to another
corporation owned by Subfranchisor or between existing stockholders of the
Subfranchisor and their immediate families (mother, children, wife, husband,
father, brother or sister) or by bequest, devise, operation of law or otherwise
in the event of the death of any of the stockholders of Subfranchisor.
22. COOPERATIVE:
Subfranchisor hereby agrees that it will join Franchisor's subfranchisor
advertising cooperative association. The monthly fees payable by Subfranchisor
to the advertising cooperative have been established by population and will
range from $300.00 per month to $700.00 per month. Subfranchisor's fee shall be
$FEE per month for the Territory as defined herein. Subfranchisor hereby agrees
to pay such fees as incurred.
21
IN WITNESS WHEREOF, the parties hereof have executed this agreement as of
the date of execution by Franchisor.
PASTA CENTRAL CO.,
AN UNCORPORATED DIVISION OF
BLIMPIE INTERNATIONAL , INC..
______________ By: ________________________________
Date of Execution Vice President
Subfranchisee Corp Name
______________ By: ________________________________
Date of Execution Individual Name, Title
NAME OF STOCKHOLDERS AND OFFICERS
The names and addresses of all stockholders of the corporate Subfranchisor are
set forth below.
By:_________________________________
Name, Title
_______________________________
Address
By:_________________________________
Name, Stockholder
_______________________________
Address
22
