COSI, INC. FRANCHISE AGREEMENT
TABLE OF CONTENTS
Section | Page | ||||||
1. | GRANT |
1 | |||||
2. | TERM AND RENEWAL |
3 | |||||
3. | DUTIES OF FRANCHISOR |
4 | |||||
4. | FEES |
5 | |||||
5. | SITE, CONSTRUCTION AND OPENING OF BUSINESS |
6 | |||||
6. | TRAINING |
7 | |||||
7. | TECHNOLOGY |
8 | |||||
8. | OTHER DUTIES OF FRANCHISEE |
10 | |||||
9. | PROPRIETARY MARKS |
15 | |||||
10. | MANUALS |
16 | |||||
11. | CONFIDENTIAL INFORMATION |
17 | |||||
12. | ACCOUNTING AND RECORDS |
17 | |||||
13. | MARKETING AND PROMOTION |
18 | |||||
14. | INSURANCE |
21 | |||||
15. | TRANSFER OF INTEREST |
22 | |||||
16. | DEFAULT AND TERMINATION |
25 | |||||
17. | OBLIGATIONS UPON TERMINATION OR EXPIRATION |
27 | |||||
18. | COVENANTS |
28 | |||||
19. | CORPORATE, LIMITED LIABILITY COMPANY, OR PARTNERSHIP FRANCHISEE |
29 |
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Section | Page | ||||||
20. | TAXES, PERMITS, AND INDEBTEDNESS |
30 | |||||
21. | INDEPENDENT CONTRACTOR AND INDEMNIFICATION |
30 | |||||
22. | APPROVALS AND WAIVERS |
31 | |||||
23. | WARRANTIES OF OPERATOR |
31 | |||||
24. | NOTICES |
31 | |||||
25. | ENTIRE AGREEMENT |
31 | |||||
26. | SEVERABILITY AND CONSTRUCTION |
32 | |||||
27. | APPLICABLE LAW AND DISPUTE RESOLUTION |
32 | |||||
28. | ACKNOWLEDGMENTS |
33 |
EXHIBIT A – DATA SHEET |
EXHIBIT B – ADA CERTIFICATION |
EXHIBIT C – LIST OF FRANCHISEE’S PRINCIPALS |
EXHIBIT D – AUTHORIZATION AGREEMENT FOR PREARRANGED PAYMENTS |
EXHIBIT E – GUARANTY |
EXHIBIT F – CONFIDENTIALITY AND NON-COMPETE AGREEMENTS |
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THIS FRANCHISE AGREEMENT (the “Agreement”) is made and entered into on this day of , 200 (the “Effective Date”), by and between:
¨ | Cosi, Inc, a Delaware corporation whose principal place of business is 0000 Xxxx Xxxx Xxxx, 0xx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000 (“Franchisor”); and | |
¨ | a [resident of] [corporation organized in] [limited liability company organized in] [select one], having offices at (“Franchisee”). |
A. Franchisor owns a format and system (the “System”) relating to the establishment and
operation of fast casual restaurants, which operate at retail locations that display Franchisor’s
interior and exterior trade dress and feature and operate under the Proprietary Marks (as defined
below) (each a “Cosi Restaurant”). Cosi Restaurants are designed using Franchisor’s interior trade
dress to be welcoming and comfortable for customers, and offer menus specializing in Franchisor’s
signature flatbread, sandwiches, soups, salads, gourmet coffee and specialty beverages and food
items using Franchisor’s proprietary recipes, formulae and techniques (“Proprietary Products”), as
well as other non-proprietary food, beverage, and other compatible items designated by Franchisor
from time to time (collectively, “Products”).
B. The distinguishing characteristics of the System include distinctive exterior and interior
design, decor, color schemes, fixtures, and furnishings; recipes, standards and specifications for
products, equipment, materials, and supplies; uniform standards, specifications, and procedures for
operations; purchasing and sourcing procedures; procedures for inventory and management control;
training and assistance; and marketing and promotional programs; all of which may be changed,
improved, and further developed by Franchisor from time to time.
C. The System is identified by means of certain trade names, service marks, trademarks, logos,
emblems, and indicia of origin as are now designated and may hereafter be designated by Franchisor
in writing for use in connection with the System including the xxxx “Cosi” and other marks (the
“Proprietary Marks”).
D. Franchisee desires to enter into the business of operating a restaurant as a Cosi
Restaurant under the System and using the Proprietary Marks, and wishes to enter into this
agreement with Franchisor for that purpose, and to receive the training and other assistance
provided by Franchisor in connection therewith.
E. Franchisee understands and acknowledges the importance of the high standards of Franchisor
for quality, cleanliness, appearance, and service and the necessity of operating the business
franchised hereunder in conformity with the standards and specifications of Franchisor.
XXXXX
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the Franchised Restaurant at the Approved Location (the “Premises”); and (b) for customer
carry-out consumption of Products sold at the Franchised Restaurant; provided that all such
activities shall be conducted only in accordance with the requirements of this Agreement and the
procedures set forth in the Manuals (as defined in Section 10 below) and all applicable laws.
Franchisee may apply in writing for Franchisor’s approval to engage in off-Premises delivery or
off-Premises catering activities, and if approved by Franchisor, Franchisee may engage in such
activities pursuant to such programs, policies terms, and conditions as Franchisor may establish
from time to time. Franchisee shall not, without the prior written approval of Franchisor, engage
in any other type of sale of, or offer to sell, or distribution of Products, including, but not
limited to: selling, distributing or otherwise providing, any Products to third parties at
wholesale, or for resale or distribution by any third party; and selling, distributing or otherwise
providing any Products through catalogs, mail order, toll free numbers for delivery, or electronic
means (e.g., the Internet).
To own, acquire, establish, and/or operate and license others to establish and operate,
Cosi Restaurants under the System at any location outside the Territory notwithstanding their
proximity to the Territory or the Approved Location or their actual or threatened impact on sales
of the Franchised Restaurant;
To own, acquire, establish and/or operate and license others to establish and operate,
non-restaurant businesses under the Proprietary Marks, at any location within or outside the
Territory.
To own, acquire, establish and/or operate, and license others to establish and operate,
businesses under proprietary marks other than the Proprietary Marks, whether such businesses are
similar or different from the Franchised Restaurant, at any location within or outside the
Territory notwithstanding their proximity to the Territory or the Approved Location or their actual
or threatened impact on sales of the Franchised Restaurant;
To own, acquire, establish, and/or operate and license others to establish and operate, Cosi
Restaurants under the Proprietary Marks at Institutional Accounts (as defined below) at any
location within or outside the Territory. As used in this Agreement, “Institutional Accounts”
shall mean outlets that serve primarily the customers located within the facility, such as captive
audience facilities (examples include, but are not limited to, parks charging admission, stadiums,
amusement parks and centers, theaters and art centers), limited purpose facilities (examples
include, but are not limited to, airports, transportation centers, department stores, in-door
shopping centers, business and industrial complexes, museums, educational facilities, hospitals,
art centers, and recreational parks), limited access facilities (examples include, but are not
limited to, military complexes, buyer club businesses, educational facilities, business and
industrial complexes), and other types of institutional accounts.
To sell and to distribute, directly or indirectly, or to license others to sell and to
distribute, directly or indirectly, any products (including the Products) through grocery or
convenience stores or through outlets that are primarily retail in nature, or through mail order,
toll free numbers, or the Internet, including those products bearing Franchisor’s Proprietary Marks
provided that distribution within the Territory shall not be from a Cosi Restaurant established
under the System that is operated from within the Territory (except from a Cosi Restaurant at an
Institutional Account);
To (i) acquire one or more retail businesses that are the same as, or similar to, Cosi
Restaurants then operating under the System (each an “Acquired Business”), which may be at any
location within or outside the Territory notwithstanding their proximity to the Territory or the
Approved Location or their actual or threatened impact on sales of the Franchised Restaurant, and
to (ii) operate and/or license others to operate any Acquired Business under its existing name or
as a Cosi Restaurant under the System, subject to the following conditions that apply to each
Acquired Business located within the Territory:
Except as provided in Section 1.4.6.2 below, and provided that Franchisee is in
compliance with this Agreement and any other agreement with Franchisor, Franchisor shall offer to
Franchisee the option to purchase and operate, as a Cosi Restaurant, an Acquired Business that is
purchased by Franchisor for operation by Franchisor or its affiliates. Franchisor shall provide
Franchisee with written notice of Franchisor’s purchase of the Acquired Business(es), the terms and
conditions applicable to the Franchisee’s option to purchase such Acquired Business(es), and such
other information that Franchisor deems necessary to include in the notice. The terms and
conditions offered to Franchisee shall include, without limitation, the
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following: (a) the purchase price will be based on Franchisor’s purchase price for such
Acquired Business, and if the Acquired Business was part of an Acquired System (as defined below in
Section 1.4.6.2), then Franchisee’s purchase price for such Acquired Business shall be determined
using a ratio equal to the sales during the prior year of such Acquired Business as compared to the
total sales in such prior year of all Acquired Businesses purchased by Franchisor in the same
transaction; and (b) the requirement that Franchisee enter into Franchisor’s then-current form of
System franchise agreement for the Acquired Business. If Franchisee does not elect to purchase, or
fails to complete the purchase of, an Acquired Business, Franchisor shall have the right to operate
itself, or through its affiliates or third party licensees or franchisees, the Acquired Business
under any trade name or trademarks including the Proprietary Marks.
If an Acquired Business is part of a system of retail businesses that Franchisor acquires (an
“Acquired System”), Franchisee shall have no right to purchase, and Franchisor shall not be
obligated to offer Franchisee any option to purchase, any Acquired Business that is operated by a
licensee or franchisee under the Acquired System. Franchisor may license such unit to be operated
under any trade name or trademarks including the Proprietary Marks, and may also license to the
licensee or franchisee additional units of the Acquired System that the licensee or franchisee has
the right to develop and operate within the Territory.
Franchisee shall give Franchisor written notice of Franchisee’s election to renew at least
six (6) months, but not more than twelve (12) months, prior to the end of the term of this
Agreement;
Franchisee shall not have any past due monetary obligations or other outstanding obligations
to Franchisor and its affiliates, the approved suppliers of the System, or the lessor of the
Premises;
Franchisee shall not be in default of any provision of this Agreement, or successor hereto, or
any other agreement between Franchisee and Franchisor or its affiliates, the approved suppliers of
the System, or the lessor of the Premises; and Franchisee shall have substantially complied with
all the terms and conditions of such agreements during the terms thereof;
Franchisee and Franchisor shall execute a mutual general release, in a form prescribed by
Franchisor, of any and all claims against Franchisor and its affiliates, and their respective
officers, directors, agents, and employees;
Franchisee shall execute the then-current form of franchise agreement offered by Franchisor,
which shall supersede this Agreement in all respects, and the terms of which may differ from the
terms of this Agreement including requirements to pay additional and/or higher fees, except that
Franchisee shall not be required to pay any initial franchise fee;
Franchisee shall comply with the then-current qualification and training requirements of
Franchisor;
Franchisee shall make or provide for, in a manner satisfactory to Franchisor, such renovation
and modernization of the Premises as Franchisor may reasonably require, including installation of
new equipment and renovation of signs, furnishings, fixtures, and decor to reflect the then-current
standards and image of the System;
Franchisee shall present evidence satisfactory to Franchisor that Franchisee has the right to
remain in possession of the Premises (or such other location acceptable to Franchisor) for the
duration of the renewal term;
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Franchisee shall not be required to pay an initial franchise fee, and instead shall pay
Franchisor a renewal fee equal to Seven Thousand Five Hundred Dollars ($7,500).
Franchisee, at the time of renewal, satisfies Franchisor’s standards of financial
responsibility and, if requested by Franchisor, Franchisee demonstrates to Franchisor that
Franchisee has sufficient financial resources and means to continue to operate the Franchised
Restaurant during the renewal term.
DUTIES OF FRANCHISOR
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FEES
The term “Week” means the period starting with the commencement of business on Tuesday and
concluding at the close of business on the following Monday (or, if the Franchised Restaurant is
not open on a Monday, the immediately preceding business day); however, Franchisor shall have the
right to designate in writing any other period of not less than seven days to constitute a “Week”
under this Agreement.
The term “Net Sales” means all revenue from the sale of all Products and all other income of
every kind and nature related to, derived from, or originating from the Franchised Restaurant,
whether at retail or wholesale (whether such sales are permitted or not), whether for cash, check,
or credit, and regardless of collection in the case of check or credit; provided, however, that
“Net Sales” excludes any customer refunds, coupon sales, sales taxes, and/or other taxes collected
from customers by Franchisee and actually transmitted to the appropriate taxing authorities.
If a state or local law in which the Franchised Restaurant is located prohibits or restricts
in any way Franchisee’s ability to pay and Franchisor’s ability to collect Royalty Fees or other
amounts based on Net Sales derived from the sale of alcoholic beverages at the Franchised
Restaurant then Franchisor and Franchisee shall increase the percentage rate for calculating
Royalty Fees, and change the definition of Net Sales to exclude sales of alcoholic beverages, in a
manner such that the Royalty Fees to be paid by Franchisee, and received by Franchisor, shall be
equal to such amounts as Franchisee would have been required to pay, and Franchisor would have
received, if sales from alcoholic beverages were included from Net Sales.
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Preparing a Location. Before commencing any construction of the Franchised
Restaurant, Franchisee, at its expense, shall comply, to Franchisor’s satisfaction, with all of the
following requirements:
Franchisee shall employ a qualified, licensed architect or engineer who has been approved
or designated (as described below) by Franchisor to prepare, subject to Franchisor’s approval,
preliminary plans and specifications for site improvement and/or construction of the Franchised
Restaurant based upon prototype plans and/or specifications furnished by Franchisor, as described
in Section 3.1 above. Franchisor shall have the right to designate one or more suppliers of design
services and/or architecture services to supply such services to the System. If Franchisor
designates a design firm and/or architecture firm prior to the time Franchisee commences to develop
the Franchised Restaurant, Franchisee shall employ such designated supplier(s) to prepare all
designs and plans for the Franchised Restaurant, unless Franchisee obtains Franchisor’s prior
written approval to use an alternative professional. If Franchisor has not designated a design
firm or architecture firm, Franchisee shall be responsible for locating and employing a qualified
design consultant and architect who is/are licensed in the jurisdiction in which the Franchised
Restaurant will be located, and who is reputable and experienced in providing design and
architecture services. Franchisee shall be solely responsible for payments for all design and
architecture services. Franchisee acknowledges and agrees that Franchisor shall not be liable for
the unsatisfactory performance of any contractor retained by Franchisee.
Franchisee shall comply with all federal, state and local laws, codes and regulations,
including the applicable provisions of the ADA regarding the construction, design and operation of
the Franchised Restaurant. In the event Franchisee receives any complaint, claim, other notice
alleging a failure to comply with the ADA, Franchisee shall provide Franchisor with a copy of such
notice within five days after receipt thereof.
Franchisee shall be responsible for obtaining all zoning classifications and clearances that
may be required by state or local laws, ordinances, or regulations or that may be necessary or
advisable owing to any restrictive covenants relating to the Approved Location. After having
obtained such approvals and clearances, Franchisee shall
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submit to Franchisor, for Franchisor’s approval, final plans for construction based upon the
preliminary plans and specifications. Franchisor’s review and approval of plans shall be limited
to review of such plans to assess compliance with Franchisor’s design standards for Cosi
Restaurants, including such items as trade dress, presentation of Proprietary Marks, and the
providing to the potential customer of certain products and services that are central to the
functioning of Cosi Restaurants. Such review is not designed to assess compliance with federal,
state or local laws and regulations, including the ADA, as compliance with such laws is the sole
responsibility of Franchisee. Once approved by Franchisor, such final plans shall not thereafter
be changed or modified without the prior written permission of Franchisor. Any such change made
without Franchisor’s prior written permission shall constitute a default and Franchisor may
withhold its authorization to open the Franchised Restaurant until the unauthorized change is
rectified (or reversed) to Franchisor’s reasonable satisfaction. Prior to opening the Franchised
Restaurant and prior to renovating the Franchised Restaurant after its initial opening, Franchisee
shall execute an ADA Certification in the form attached to this Agreement as Exhibit B that
certifies in writing to Franchisor that the Franchised Restaurant and any proposed renovations
comply with the ADA.
Franchisee shall obtain all permits and certifications required for the lawful construction
and operation of the Franchised Restaurant and shall certify in writing to Franchisor that all such
permits and certifications have been obtained.
Franchisee shall employ a qualified licensed general contractor who is acceptable to
Franchisor to construct the Franchised Restaurant and to complete all improvements. Franchisee
shall obtain and maintain in force during the entire period of construction the insurance required
under Section 14 below.
Throughout the construction process, Franchisee shall comply with Franchisor’s requirements
and procedures for periodic inspections of the Premises, and shall fully cooperate with
Franchisor’s representatives in such inspections by rendering such assistance as they may
reasonably request.
TRAINING
Franchisee (or, if Franchisee is other than an individual, the Designated Principal
(defined in Section 8.3 below)), and, if applicable, the General Manager and up to two (2)
additional persons as Franchisor may require, shall attend and successfully complete, to
Franchisor’s satisfaction, the initial training program offered by Franchisor at a location
designated by Franchisor (unless this Agreement is for the third or subsequent Cosi Restaurant
being developed pursuant to a Cosi Area Development Agreement between Franchisor and Franchisee (or
an affiliate of Franchisee), in which event the requirements set forth in Section 6.1.3 below shall
apply with respect to the pre-opening training of Franchisee, the Designated Principal and any
General Manager). If any required attendee does not satisfactorily complete such training,
Franchisor may require that a replacement person attend and successfully complete, to Franchisor’s
satisfaction, the initial training program.
If Franchisee is other than an individual, Franchisor may require (in addition to the training
of the Designated Principal and General Manager) that any or all owners of beneficial interests in
Franchisee (each a “Principal”), who are individuals and own at least a ten percent (10%)
beneficial interests in Franchisee, attend and successfully complete, to Franchisor’s satisfaction,
such portions of the initial training program as determined by Franchisor appropriate for
Principals not involved in the day-to-day operations of the Franchised Restaurant.
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If this Agreement is for the third or subsequent Cosi Restaurant being developed pursuant to a
Cosi Area Development Agreement between Franchisor and Franchisee (or an affiliate of Franchisee),
then Franchisee shall be responsible for the conducting the initial training of its Designated
Principal, its General Manager (if applicable), and any other managerial personnel, in accordance
with the requirements and conditions as Franchisor may from time to time establish for such
training. Franchisor’s requirements for initial training by Franchisee shall be set forth in the
Manuals or other written materials and shall include, but are not limited to, the requirement that
all such training activities be conducted: (a) by the Principals or personnel of Franchisee (or an
affiliate of Franchisee), who have completed Franchisor’s initial training program to the
satisfaction of the Franchisor, and who remain acceptable to Franchisor to provide initial
training; and (b) following the procedures and conditions established by Franchisor. If Franchisor
determines that the training provided by Franchisee does not satisfy Franchisor’s standards and
requirements, or that any newly trained individual is not trained to Franchisor’s standards, then
Franchisor may require that such newly trained individual(s) attend and complete an initial
training program provided by Franchisor prior to the opening of the Franchised Restaurant.
Franchisee must satisfy all pre-opening training requirements under this Section 6.1 by no
later than thirty (30) days prior to the schedule opening of the Franchised Restaurant.
TECHNOLOGY
Franchisor shall have the right to specify or require that certain brands, types, makes,
and/or models of communications, computer systems, and hardware to be used by, between, or among
Cosi Restaurants, including without limitation: (a) back office and point of sale systems, data,
audio, video, and voice storage, retrieval, and transmission systems for use at Cosi Restaurants,
between or among Cosi Restaurants, and between and among the Franchised Restaurant and Franchisor
and/or Franchisee; (b) Cash Register Systems; (c) physical, electronic, and other
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security systems; (d) printers and other peripheral devices; (e) archival back-up systems; and
(f) internet access mode and speed (collectively, the “Computer System”).
Franchisor shall have the right, but not the obligation, to develop or have developed for it,
or to designate: (a) computer software programs and accounting system software that Franchisee must
use in connection with the Computer System (“Required Software”), which Franchisee shall install;
(b) updates, supplements, modifications, or enhancements to the Required Software, which Franchisee
shall install; (c) the tangible media upon which such Franchisee shall record data; and (d) the
database file structure of Franchisee’s Computer System.
Franchisee shall record all sales on computer-based point of sale systems approved by
Franchisor or on such other types of cash registers as may be designated by Franchisor in the
Manual or otherwise in writing (“Cash Register Systems”), which shall be deemed part of the
Franchisee’s Computer System.
Franchisee shall make, from time to time, such upgrades and other changes to the Computer
System and Required Software as Franchisor may request in writing (collectively, “Computer
Upgrades”).
Franchisee shall comply with all specifications issued by Franchisor with respect to the
Computer System and the Required Software, and with respect to Computer Upgrades. Franchisee shall
also afford Franchisor unimpeded access to Franchisee’s Computer System and Required Software as
Franchisor may request, in the manner, form, and at the times requested by Franchisor.
Franchisor shall have the right, but not the obligation, to establish and maintain a
Website, which may, without limitation, promote the Proprietary Marks, any or all of the Products,
Cosi Restaurants, the franchising of Cosi Restaurants, and/or the System. Franchisor shall have
the sole right to control all aspects of the Website, including
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without limitation its design, content, functionality, links to the websites of third parties,
legal notices, and policies and terms of usage; Franchisor shall also have the right to discontinue
operation of the website.
Franchisor shall have the right, but not the obligation, to designate one or more web page(s)
to describe Franchisee and/or the Franchised Restaurant, with such web page(s) to be located within
Franchisor’s Website. Franchisee shall comply with Franchisor’s policies with respect to the
creation, maintenance and content of any such webpages; and Franchisor’s shall have the right to
refuse to post and/or discontinue posting any content and/or the operation of any webpage.
Franchisee shall not establish a separate Website, without Franchisor’s prior written approval
(which Franchisor shall not be obligated to provide). If approved to establish a Website,
Franchisee shall comply with Franchisor’s policies, standards and specifications with respect to
the creation, maintenance and content of any such Website. Franchisee specifically acknowledges
and agrees that any Website owned or maintained by or for the benefit of Franchisee shall be deemed
“advertising” under this Agreement, and will be subject to (among other things) Franchisor’s
approval under Section 13 below.
Franchisor shall have the right to modify the provisions of this Section 7 relating to
Websites as Franchisor shall solely determine is necessary or appropriate.
Franchisee shall designate, subject to Franchisor’s reasonable approval, one Principal who
is both an individual person and owns at least a ten percent (10%) beneficial interest in
Franchisee, and who shall be responsible for general oversight and management of the operations of
the Franchised Restaurant on behalf of Franchisee (the “Designated Principal”). In the event the
person designated as the Designated Principal dies, becomes incapacitated, transfers his/her
interest in Franchisee, or otherwise ceases to supervise the operations of the Franchised
Restaurant, Franchisee shall promptly designate a new Designated Principal, subject to Franchisor’s
reasonable approval.
Franchisee shall inform Franchisor in writing whether Franchisee (or, if Franchisee is other
than an individual, the Designated Principal) will assume full-time responsibility for the daily
supervision and operation of the
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Franchised Restaurant. If not, Franchisee shall employ a full-time unit manager (the “General
Manager”) whose qualifications shall be reasonably acceptable to Franchisor (including, but not
limited to, the requirement that such individual possess sufficient experience in the management of
a business) to assume full-time responsibility for the daily supervision and operation of the
Franchised Restaurant.
Franchisee acknowledges and agrees that Franchisor shall have the right to rely upon either or
both the Designated Principal or General Manager to have been given by Franchisee the
responsibility and decision-making authority regarding the Franchised Restaurant’s operation and
Franchisee’s business.
Franchisee shall purchase and install prior to the opening of the Franchised Restaurant,
and thereafter maintain, all fixtures, furnishings, equipment, decor, and signs, and maintain in
sufficient supply supplies and materials, as Franchisor may prescribe in the Manuals or otherwise
in writing. Franchisee shall refrain from deviating therefrom by the use of any unapproved item
without the prior written consent of Franchisor.
Franchisee shall offer and sell only Products that Franchisor specifies from time to time,
unless otherwise approved in writing by Franchisor; and Franchisee shall offer and sell all
Products as Franchisor may specify from time to time as required offerings at the Franchised
Restaurant. Franchisee shall offer and sell the Products utilizing the ingredients and employing
the preparation standards and techniques, as specified by Franchisor. Franchisee is prohibited
from offering or selling any products or services at or from the Franchised Restaurant that have
not previously been authorized by Franchisor, and shall discontinue selling and offering for sale
any Products which Franchisor shall have the right to disapprove, in writing, at any time. If
Franchisee wishes to offer or sell any products or services that have not previously been
authorized by Franchisor, Franchisee must first make a written request to Franchisor, requesting
authorization to offer or sell such products or services in accordance with Section 8.7 below.
Franchisor may deny such approval for any reason.
Franchisee shall permit Franchisor or its agents, at any reasonable time, to remove samples of
Products, without payment therefor, in amounts reasonably necessary for testing by Franchisor or an
independent laboratory to determine whether said samples meet Franchisor’s then-current standards
and specifications. In addition to any other remedies it may have under this Agreement, Franchisor
may require Franchisee to bear the cost of such testing if the supplier of the item has not
previously been approved by Franchisor or if the sample fails to conform to Franchisor’s
specifications.
Franchisee shall refrain from selling, offering to sell, or permitting any other party to sell
or offer to sell beer, wine, or any form of liquor, without the advance written authorization of
Franchisor (“Alcoholic Beverages”). Franchisee acknowledges and agrees that Alcoholic Beverages
are optional Products and if approved by Franchisor to offer and sell Alcoholic Beverages at the
Franchised Restaurant, Franchisee shall: (i) be solely responsible for complying with all with all
laws and regulations relating to alcohol and alcohol service or preparation; (ii) shall comply with
Franchisor’s standards, specifications and terms of Franchisor regarding the offer, sale, and
presentation of Alcoholic Beverage, as approved Products, and shall obtain and maintain such
additional insurance coverage as Franchisor may require pursuant to Section 14 of this Agreement.
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Franchisor may designate an independent evaluation service to conduct a “mystery shopper”
quality control and evaluation program with respect to Franchisor or affiliate-owned and/or
franchised Cosi Restaurants. Franchisee agrees that the Franchised Restaurant will participate in
such mystery shopper program, as prescribed and required by Franchisor, provided that
Franchisor-owned, affiliate-owned, and franchised Cosi Restaurants also will participate in such
program to the extent Franchisor has the right to require such participation. Franchisor shall
have the right to require Franchisee to pay the then-current charges imposed by such evaluation
service with respect to inspections of the Franchised Restaurant, and Franchisee agrees that it
shall promptly pay such charges; provided, however, that such charges shall not exceed Five Hundred
Dollars ($500) during each year of this Agreement.
Franchisee shall participate in all customer surveys and satisfaction audits, which may
require that Franchisee provide discount or complimentary Products, provided that such discounted
or complimentary sales shall not be included in the Net Sales of the Franchised Restaurant.
Additionally, Franchisee shall participate in any complaint resolution and other programs as
Franchisor may reasonably establish for the System, which programs may include, without limitation,
providing discounts or refunds to customers.
Notwithstanding anything to the contrary in this Agreement, Franchisee shall purchase all
of its requirements for Proprietary Products (which may include, but are not limited to dressings,
spreads, coffee, and coffee beans, bread mixtures, meat ingredients) from Franchisor’s designee(s),
as set forth in Section 8.8 below (through such distributor or distributors as Franchisor may
designate). Franchisor shall have the right to introduce additional, substitute new, or
discontinue Proprietary Products from time to time.
If Franchisee desires to purchase any Products (except for Proprietary Products) or other
items, equipment, supplies, services from suppliers other than those previously designated or
approved by Franchisor, Franchisee must first submit to Franchisor a written request for
authorization to purchase such items. Franchisee shall not purchase from any supplier until, and
unless, such supplier has been approved in writing by Franchisor. Franchisor may deny such
approval for any reason, including its determination to limit the number of approved suppliers.
Franchisee must submit to Franchisor such information and samples as Franchisor may reasonably
require, and Franchisor shall have the right to require periodically that its representatives be
permitted to inspect such items and/or supplier’s facilities, and that samples from the proposed
supplier, or of the proposed items, be delivered for evaluation and testing either to Franchisor or
to an independent testing facility designated by Franchisor. Permission for such inspections shall
be a condition of the initial and continued approval of such supplier. A charge not to exceed the
reasonable cost of the evaluation and testing shall be paid by Franchisee. Franchisor may also
require that the supplier comply with such other requirements as Franchisor may deem appropriate,
including payment of reasonable continuing inspection fees and administrative costs, or other
payment to Franchisor by the supplier on account of their dealings with Franchisee or other
franchisees, for use, without restriction (unless otherwise instructed by the supplier) and for
services that Franchisor may render to such suppliers.
Franchisor reserves the right, at its option, to reinspect from time to time the facilities
and products of any such approved supplier and to revoke its approval upon the supplier’s failure
to continue to meet any of Franchisor’s then-current criteria. Upon receipt of written notice of
such revocation, Franchisee shall cease to sell or use any disapproved item, Products and/or cease
to purchase from any disapproved supplier.
Nothing in the foregoing shall be construed to require Franchisor to approve any particular
supplier, nor to require Franchisor to make available to prospective suppliers, standards and
specifications for formulas, which Franchisor shall have the right to deem confidential.
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Notwithstanding anything to the contrary contained in this Agreement, Franchisee acknowledges
and agrees that, at Franchisor’s sole option, Franchisor may establish one or more strategic
alliances or preferred vendor programs with one or more nationally or regionally-known suppliers
who are willing to supply all or some Cosi Restaurants with some or all of the products and/or
services that Franchisor requires for use and/or sale in the development and/or operation of Cosi
Restaurants. In this event, Franchisor may limit the number of approved suppliers with whom
Franchisee may deal, designate sources that Franchisee must use for some or all Products and other
products and services, and/or refuse any of Franchisee’s requests if Franchisor believes that this
action is in the best interests of the System or the franchised network of Cosi Restaurants.
Franchisor shall have unlimited discretion to approve or disapprove of the suppliers who may be
permitted to sell Products to Franchisee.
Franchisor and its affiliates may receive payments or other compensation from suppliers on
account of such suppliers’ dealings with Franchisee and other franchisees; and Franchisor may use
all amounts so received for any purpose Franchisor and its affiliates deem appropriate.
Franchisee shall participate in all programs and services for frequent customers, senior
citizens, children, an other categories, which may include providing discount or complimentary
Products.
Franchisee shall sell or otherwise issue gift cards or certificates (together “Gift Cards”)
that have been prepared utilizing the standard form of Gift Card provided or designated by
Franchisor, and only in the manner specified by Franchisor in the Manual or otherwise in writing.
Franchisee shall fully honor all Gift Cards that are in the form provided or approved by Franchisor
regardless of whether a Gift Card was issued by Franchisee or another Cosi Restaurant. Franchisee
shall sell, issue, and redeem (without any offset against any Royalty Fees) Gift Cards in
accordance with procedures and policies specified by Franchisor in the Manual or otherwise in
writing, including those relating to procedures by which Franchisee shall request reimbursement for
Gift Cards issued by other Cosi Restaurants and for making timely payment to Franchisor, other
operators of Cosi Restaurants, or a third-party service provider for Gift Cards issued from the
Franchised Restaurant that are honored by Franchisor or other Cosi Restaurant operators.
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comply with the requirements set forth in the Manuals for submitting to Franchisor a copy of a
violation or citation relating to Franchisee’s failure to maintain any health or safety standards
in the operation of the Franchised Restaurant.
Franchisee shall submit such materials and information as Franchisor may request for the
evaluation of the requested plan of relocation. Franchisor may, in its sole discretion, require any
or all of the following as conditions of its approval for relocation: (i) Franchisee not be in
default under any provision of this Agreement, or any other agreement between Franchisee and
Franchisor; (ii) the proposed substitute location meets Franchisor’s then-current standards for
Cosi Restaurants; (iii) the lease (if applicable) for the proposed substitute location must comply
with Franchisor’s then-current lease requirements for Cosi Restaurants (which may include the
requirement that the lease contain certain terms and conditions, which be different than, or in
addition to, those terms Franchisor required as of the Effective Date with respect to the Approved
Location), and Franchisee must obtain Franchisor’s approval of the proposed lease; (iv) Franchisee
must possess the financial resources to meet the costs associated with relocating; (v) Franchisee
enter into Franchisor then-current form of Franchise Agreement (which shall replace this
Agreement), provided that Franchisee shall not be required to pay an initial fee; and (vi)
Franchisee pay a relocation fee equal to twenty five percent (25%) of Franchisor’s then-current
initial franchise fee.
If, through no fault of Franchisee, the Premises are damaged or destroyed by an event such
that repairs or reconstruction cannot be completed within sixty (60) days thereafter, then
Franchisee shall have forty five (45) days after such event in which to apply for Franchisor’s
approval to relocate and/or reconstruct the Premises, which approval shall not be unreasonably
withheld and, in such event, the relocation fee described in Section 8.19.1 above shall not apply.
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shall pay to the Advisory Council all dues and assessments authorized by the Advisory Council
and shall otherwise abide by the rules and regulations of the Advisory Council and shall at all
times maintain its membership in the Advisory Council in good standing.
PROPRIETARY MARKS
Franchisor is the owner of all right, title, and interest in and to the Proprietary Marks.
Franchisor will take all steps reasonably necessary to preserve and protect the ownership and
validity in and to the Proprietary Marks.
Use only the Proprietary Marks designated by Franchisor, and to use them only in the
manner authorized and permitted by Franchisor;
Franchisee shall use the Proprietary Marks only for the operation of the business franchised
hereunder and only at the location authorized hereunder, or in Franchisor-approved advertising for
the business conducted at or from that location;
Operate and advertise the Franchised Restaurant only under the name “Cosi,” and use the
Proprietary Marks without prefix or suffix, unless otherwise authorized or required by Franchisor.
Franchisee shall not use the Proprietary Marks as part of its corporate or other legal name,
or as part of any e-mail address, domain name, or other identification of Franchisee in any
electronic medium. Franchisee may, as necessary to conduct the business of the Franchised
Restaurant and to obtain governmental licenses and permits for the Franchised Restaurant, indicate
that Franchisee shall be operating the Franchised Restaurant under the trade name “Cosi,” provided
that Franchisee shall also clearly identify itself as the owner and operator of the Franchised
Restaurant;
Identify itself as the owner of the Franchised Restaurant (in the manner required by
Franchisor) in conjunction with any use of the Proprietary Marks, including on invoices, order
forms, receipts, and business stationery, as well as at such conspicuous locations on the Premises
as Franchisor may designate in writing;
15
Not to use the Proprietary Marks to incur any obligation or indebtedness on behalf of
Franchisor;
Execute any documents deemed necessary by Franchisor to obtain protection for the Proprietary
Marks or to maintain their continued validity and enforceability; and
Promptly notify Franchisor of any suspected unauthorized use of the Proprietary Marks, any
challenge to the validity of the Proprietary Marks, or any challenge to Franchisor’s ownership of,
the right of Franchisor to use and to license others to use, or Franchisee’s right to use, the
Proprietary Marks. Franchisee acknowledges that Franchisor has the sole right to direct and
control any administrative proceeding or litigation involving the Proprietary Marks, including any
settlement thereof. Franchisor has the right, but not the obligation, to take action against uses
by others that may constitute infringement of the Proprietary Marks. Franchisor shall defend
Franchisee against any third-party claim, suit, or demand arising out of Franchisee’s use of the
Proprietary Marks. If Franchisor, in its sole discretion, determines that Franchisee has used the
Proprietary Marks in accordance with this Agreement, the cost of such defense, including the cost
of any judgment or settlement, shall be borne by Franchisor. If Franchisor, in its sole
discretion, determines that Franchisee has not used the Proprietary Marks in accordance with this
Agreement, the cost of such defense, including the cost of any judgment or settlement, shall be
borne by Franchisee. In the event of any litigation relating to Franchisee’s use of the
Proprietary Marks, Franchisee shall execute any and all documents and do such acts as may, in the
opinion of Franchisor, be necessary to carry out such defense or prosecution, including, but not
limited to, becoming a nominal party to any legal action. Except to the extent that such
litigation is the result of Franchisee’s use of the Proprietary Marks in a manner inconsistent with
the terms of this Agreement, Franchisor agrees to reimburse Franchisee for its out-of-pocket costs
in doing such acts.
Franchisor is the owner of all right, title, and interest in and to the Proprietary Marks
and the goodwill associated with and symbolized by them, and that Franchisor has the sole right to
use, and license others to use, the Proprietary Marks;
During the term of this Agreement and after its expiration or termination, Franchisee shall
not directly or indirectly contest the validity of Franchisor’s ownership of, or right to use and
to license others to use, the Proprietary Marks;
Franchisee’s use of the Proprietary Marks does not give Franchisee any ownership interest or
other interest in or to the Proprietary Marks;
Any and all goodwill arising from Franchisee’s use of the Proprietary Marks shall inure solely
and exclusively to the benefit of Franchisor, and upon expiration or termination of this Agreement,
no monetary amount shall be assigned as attributable to any goodwill associated with Franchisee’s
use of the System or the Proprietary Marks;
The right and license of the Proprietary Marks granted hereunder to Franchisee is
nonexclusive, and Franchisor thus has and retains the rights, among others: (a) to use the
Proprietary Marks itself in connection with selling the Products; (b) to grant other licenses for
the Proprietary Marks; and (c) to develop and establish other systems using the Proprietary Marks,
similar proprietary marks, or any other proprietary marks, and to grant licenses thereto without
providing any rights therein to Franchisee; and
Franchisor shall have the right to substitute different proprietary marks for use in
identifying the System and the businesses operating thereunder at the sole discretion of
Franchisor.
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CONFIDENTIAL INFORMATION
ACCOUNTING AND RECORDS
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Prepare by the twenty first (21st) day of each calendar month a balance sheet
and profit and loss statement and an activity report for the last preceding calendar month, which
shall be in the form prescribed by Franchisor. Franchisee shall maintain and submit such
statements and reports to Franchisor at the times as Franchisor may designate or otherwise request.
Submit to Franchisor within ninety (90) days after the end of each calendar year, unless
Franchisor designates in writing a different due date, during the term of this Agreement, a profit
and loss statement for such year and a balance sheet as of the last day of such year, prepared on
an accrual basis in accordance with U.S. generally accepted accounting principles (“GAAP”),
including but not limited to all adjustments necessary for fair presentation of the financial
statements. Franchisee shall certify such financial statements to be true and correct.
Additionally, Franchisor reserves the right to require Franchisee to prepare (or cause to be
prepared) and provide to Franchisor annual financial statements, (that includes a fiscal year-end
balance sheet, an income statement of the Franchised Restaurant for such fiscal year reflecting all
year-end adjustments, and a statement of changes in cash flow of Franchisee), and to require that
such statements be prepared on a review basis by an independent certified public accountant (who
Franchisor may require to be retained in accordance with Section 4.6). Franchisee shall provide
such additional information, if any, as Franchisor may reasonably require in order for Franchisor
to meet its obligations under GAAP.
Franchisee shall maintain its books and records, and provide all statements and reports to
Franchisor, using the standard statements, templates, categories, and chart of accounts that
Franchisor provides to Franchisee.
Submit to Franchisor such other periodic reports, forms and records as specified, and in the
manner and at the time as specified in the Manual or as Franchisor shall otherwise require in
writing from time to time (including without limitation the requirement that Franchisee provide or
make available to Franchisor certain sales and financial information in electronic format and/or by
electronic means).
MARETING AND PROMOTION
Franchisor reserves the right to require that Franchisee, during each Week (except for
expenditures on local advertising and promotion, which shall be measured on an annual basis), spend
and/or contribute on advertising and promotion amounts, which, in the aggregate, are equal to five
percent (5%) of Franchisee’s Net Sales during the preceding Week to advertise and to promote the
Franchised Restaurant (together, the “Advertising Obligation”); provided, however, that the
Advertising Obligations may exceed such amount under the circumstances set forth in Section 13.1.4
below. The Advertising Obligation shall be in the form of the following, and in such proportions
as may be designated by Franchisor in writing from time to time: (i) contributions paid to the
System Ad Fund, pursuant to Section 13.2 below, (ii) contributions paid to any Market Ad Fund, as
may be established pursuant to Section 13.3 below, and/or (iii) expenditures by Franchisee on
“local advertising and promotion” pursuant to Section 13.4.
As of the Effective Date and until Franchisee receives written notice from Franchisor of new
allocations, the allocation of the Advertising Obligations shall be as follows: one percent (1%)of
Net Sales shall be contributed by Franchisee to the System Ad Fund, zero percent (0%) of Net Sales
shall be contributed by Franchisee to a Market Ad Fund, and one percent (1%) of Net Sales shall be
spent by Franchisee on local advertising and promotion.
The Advertising Obligation is the minimum requirement only, and that Franchisee may, and is
encouraged to, expend additional funds for marketing and promotion. In addition to the Advertising
Obligation, Franchisee shall undertake and complete the Grand Opening Advertising Program, as
provided in Section 13.5 below.
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Franchisor shall direct all marketing programs, with sole discretion over the concepts,
materials, and media used in such programs and the placement and allocation thereof. Franchisor is
not obligated, in administering the System Ad Fund, to make expenditures for Franchisee which are
equivalent or proportionate to Franchisee’s contribution, or to ensure that any particular
Franchisee benefits directly or pro rata from expenditures by the System Ad Fund.
The System Ad Fund, all contributions thereto, and any earnings thereon, shall be used
exclusively to meet any and all costs of maintaining, administering, directing, conducting, and
preparing marketing, advertising, public relations, and/or promotional programs and materials, and
any other activities including socially responsible activities, which Franchisor believes will
enhance the image of the System, including, among other things, the costs of preparing and
conducting media marketing campaigns; direct mail advertising; marketing surveys and other public
relations activities; employing advertising and/or public relations agencies to assist therein;
sponsorship of organizations and events; purchasing promotional items; conducting and administering
in-store promotions; and providing promotional and other marketing materials and services to the
Cosi Restaurants operating under the System.
Franchisee shall contribute to the System Ad Fund by separate payment made payable (or as
otherwise directed for payment) to Franchisor. All sums paid by Franchisee to the System Ad Fund
shall be accounted for separately and shall not be used to defray any of the expenses of
Franchisor, except for such reasonable costs, salaries and overhead, if any, as Franchisor may
incur in activities reasonably related to the direction and implementation of the System Ad Fund
and marketing programs for operators and the System, including costs of personnel for creating and
implementing marketing, advertising, and promotional programs. The System Ad Fund and any earnings
from it shall not otherwise inure to the benefit of Franchisor. Franchisor shall maintain separate
bookkeeping accounts for the System Ad Fund.
Franchisor, upon request, shall provide Franchisee with an annual accounting of System Ad Fund
receipts and disbursements.
Franchisor reserves the right, in its sole discretion, to discontinue the System Ad Fund upon
written notice to Franchisee.
Franchisor may, but is not required to, make available to Franchisee from time to time,
marketing plans and promotional materials, including newspaper mats, coupons, merchandising
materials, sales aids, point-of-purchase materials, special promotions, direct mail materials, and
similar marketing and promotional materials produced from contributions to the System Ad Fund.
Franchisee acknowledges and agrees that it shall be reasonable for Franchisor to not provide any
such materials to Franchisee during any period in which Franchisee is in not in full compliance
with its obligations to contribute to the System Ad Fund. Additionally, if monies of the System Ad
Fund are used to produce point of sale materials, or other samples or other promotional materials
and items, Franchisor may, on the behalf of the System Ad Fund, sell such items to franchisees in
the System at a reasonable price, and any proceeds from the sale of such items or materials shall
be contributed to the System Ad Fund.
Each Market Ad Fund shall be organized and governed in a form and manner, and shall
commence operations on a date, approved in advance by Franchisor in writing. Unless otherwise
specified by Franchisor, the activities carried on by each Market Ad Fund shall be decided by a
majority vote of its members. Any Cosi Restaurant
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that Franchisor operates in the region shall have the same voting rights as those owned by its
franchisees. Each Cosi Restaurant owner shall be entitled to cast one (1) vote for each Cosi
Restaurant its owns that belongs to the Market Ad Fund. Any disputes arising among or between
Franchisee, other franchisees in the Market Ad Fund, and/or the Market Ad Fund, shall be resolved
in accordance with the rules and procedures set forth in the Market Ad Fund’s governing documents.
Each Market Ad Fund shall be organized for the exclusive purpose of administering regional or
local advertising programs and developing, subject to Franchisor’s approval, standardized
promotional materials for use by the members in local advertising and promotion.
Franchisee shall contribute to the Market Ad Fund in such amounts as Franchisor may specify
pursuant to Section 13.1 above, unless the members of the Market Ad Fund, by a majority vote
conducted in accordance with the rules, bylaws, or other governing documents of the Market Ad Fund,
agree to an increase the Market Ad Fund contribution to a rate in excess of the amount required by
Franchisor.
Franchisee shall submit its required contributions to the Market Ad Fund at the time required
by Franchisor, together with such statements or reports as may be required by Franchisor or by the
Market Ad Fund with Franchisor’s prior written approval. If so requested by Franchisor in writing,
Franchisee shall submit its payments and reports to the Market Ad Fund directly to Franchisor for
distribution to the Market Ad Fund.
Franchisor maintains the right to terminate any Market Ad Fund. A Market Ad Fund shall not be
terminated, however, until either: (a) all monies in that Market Ad Fund have been expended for
advertising and/or promotional purposes; or (b) Franchisor has transferred the unexpended monies to
the System Ad Fund in the event there are no longer any Cosi Restaurants operating within the
geographic area covered by such Market Ad Fund.
Franchisee shall spend on an annual basis such amounts as Franchisor may specify in
accordance with Section 13.1 above. Franchisee shall account for such expenditures on a routine
basis and shall prepare, in accordance with the schedule and procedures specified by Franchisor
from time to time, detailed reports describing the amount of money expended on local advertising
and promotion during such previous period. Franchisee shall maintain all such statements, reports
and records, and shall submit same to Franchisor as Franchisor may specify in the Manuals or
otherwise request of Franchisee. Additionally, at the request of Franchisor, Franchisee shall
submit bills, statements, invoices, or other documentation satisfactory to Franchisor to evidence
Franchisee’s advertising or marketing activities.
As used in this Agreement, the term “local advertising and promotion” shall refer to
advertising and promotion related directly to the Franchised Restaurant, and shall, unless
otherwise specified, consist only of the direct costs of purchasing advertising materials
(including, but not limited to, camera-ready advertising and point of sale materials), media (space
or time), promotion, direct out-of-pocket expenses related to costs of advertising and sales
promotion (including, but not limited to, advertising agency fees and expenses, cash and “in-kind”
promotional payments to landlords, postage, shipping, telephone, and photocopying), and such other
activities and expenses as Franchisor, in its sole discretion, may specify. Franchisor may provide
to Franchisee, in the Manuals or otherwise in writing information specifying the types of
advertising and promotional activities and costs which shall not qualify as “local advertising and
promotion,” including, without limitation, the value of advertising coupons, and the costs of
products provided for free or at a reduced charge for charities or other donations.
Upon written notice to Franchisee, Franchisor may require Franchisee to participate in
mandatory promotions as Franchisor may develop and implement from time to time.
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Builder’s risk insurance that satisfies the standards and specifications set forth by
Franchisor in the Manual or otherwise in writing to cover any period(s) of renovation or
construction at the Franchised Restaurant.
All risks coverage insurance on the Franchised Restaurant and all fixtures, equipment,
supplies and other property used in the operation of the Franchised Restaurant, for full repair and
replacement value of the equipment, improvements and betterments, without any applicable
co-insurance clause, except that an appropriate deductible clause shall be permitted.
Worker’s compensation and employer’s liability insurance as well as such other insurance as
may be required by statute or rule of the state in which the Franchised Restaurant is located and
operated. If Franchisee is permitted to and elects not to have worker’s compensation insurance for
its owners and officers, Franchisee shall have alternative coverages at all times for work-related
injuries.
21
Comprehensive general liability insurance with limits of at least One Million Dollars
($1,000,000) per occurrence, and Two Million Dollars ($2,000,000) general aggregate, and product
liability insurance with limits of at least Two Million Dollars ($2,000,000) general aggregate
limit including the following coverages: personal injury (employee and contractual inclusion
deleted); products/completed operation; and tenant’s legal liability; insuring Franchisor and
Franchisee against all claims, suits, obligations, liabilities and damages, including attorneys’
fees, based upon or arising out of actual or alleged personal injuries or property damage resulting
from, or occurring in the course of, or on or about or otherwise relating to the Franchised
Restaurant, provided that the required amounts herein may be modified from time to time by
Franchisor to reflect inflation or future experience with claims.
Automobile liability insurance, and property damage liability, including owned, non-owned, and
hired vehicle coverage, with at least One Million Dollars ($1,000,000) combined single limit, and
Two Million Dollars ($2,000,000) general aggregate limit.
Host liquor liability (if Franchisee shall offer alcohol at the Franchised Restaurant) with at
least One Million Dollars ($1,000,000) per occurrence.
Excess liability coverage over general liability, automobile liability, liquor liability and
employer’s liability, with at least One Million Dollars ($1,000,000) per occurrence.
Such insurance and types of coverage as may be required by the terms of any lease for the
Premises, or as may be required from time to time by Franchisor.
Business interruption insurance for actual losses sustained.
Franchisee shall not, without the prior written consent of Franchisor, transfer, pledge or
otherwise encumber: (a) the rights and/or obligations of Franchisee under this Agreement; or (b)
any material asset of Franchisee or the Franchised Restaurant.
22
If Franchisee is a corporation or limited liability company, Franchisee shall not, without the
prior written consent of Franchisor, issue any voting securities or securities convertible into
voting securities, and the recipient of any such securities shall become a Principal under this
Agreement, if so designated by Franchisor.
If Franchisee is a partnership or limited partnership, the partners of the partnership shall
not, without the prior written consent of Franchisor, admit additional general partners, remove a
general partner, or otherwise materially alter the powers of any general partner. Each general
partner shall automatically be deemed a Principal of Franchisee.
A Principal shall not, without the prior written consent of Franchisor, transfer, pledge or
otherwise encumber any interest of the Principal in Franchisee, as such is identified in Exhibit C.
All of Franchisee’s monetary obligations and all other outstanding obligations to
Franchisor, its affiliates, and the approved suppliers of the System have been satisfied in full;
Franchisee shall not be in default under any provision of this Agreement, any other agreement
between Franchisee and Franchisor or its affiliate, the approved suppliers of the System, or the
lessor (or sublessor) for the Premises;
Each transferor (and, if the transferor is other than an individual, the transferor and such
owners of beneficial interest in the transferor as Franchisor may request) shall have executed a
general release in a form satisfactory to Franchisor of any and all claims against Franchisor and
its affiliates and their respective officers, directors, agents, and employees;
The transferee of a Principal shall be designated as a Principal and each transferee who is
designated a Principal shall enter into a written agreement, in a form satisfactory to Franchisor,
agreeing to be bound as a Principal under the terms of this Agreement as long as such person or
entity owns any interest in Franchisee. Additionally, the transferee and/or such owners of the
transferee as Franchisor may request, shall guarantee the performance of the transferee’s
obligations in writing in a form satisfactory to Franchisor;
The transferee shall demonstrate to Franchisor’s satisfaction that the terms of the proposed
transfer do not place an unreasonable financial or operational burden on the transferee, and that
the transferee (or, if the transferee is other than an individual, such owners of beneficial
interest in the transferee as Franchisor may request) meets Franchisor’s then-current application
qualifications (which may include educational, managerial, socially responsible, and business
standards, good moral character, business reputation, and credit rating); has the aptitude and
ability to operate the Franchised Restaurant and absence of conflicting interests; and has adequate
financial resources and capital to operate the Franchised Restaurant;
At Franchisor’s option, Franchisee shall execute the form of franchise agreement then being
offered to new System franchisees, and such other ancillary agreements required by Franchisor for
the business franchised hereunder, which agreements shall supersede this Agreement and its
ancillary documents in all respects, and the terms of which may differ from the terms of this
Agreement including, without limitation, a higher and/or additional fees;
If so requested by Franchisor, Franchisee, at its expense, shall upgrade the Franchised
Restaurant, and other equipment to conform to the then-current standards and specifications of new
Cosi Restaurants then-being established in the System, and shall complete the upgrading and other
requirements within the time specified by Franchisor.
The transferor shall remain liable for all of the obligations to Franchisor in connection with
the Franchised Restaurant that arose prior to the effective date of the transfer and shall execute
any and all instruments reasonably requested by Franchisor to evidence such liability;
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The transferee (and, if the transferee is not an individual, such Principals of the transferee
as Franchisor may request) and the transferee’s manager (if applicable) shall, at the transferee’s
expense, successfully attend and successfully complete any training programs then in effect for
operators and managers upon such terms and conditions as Franchisor may reasonably require;
Franchisee shall pay a transfer fee in an amount equal to fifty percent (50%) of Franchisor’s
then-current initial franchise fee to compensate Franchisor for its expenses incurred in connection
with the transfer.
The transferor(s), at the request of Franchisor, shall agree in writing to comply with the
covenants set forth in Section 18 below.
Any material change thereafter in the terms of the offer from the third party or by
Franchisee, or a change in the identity of the third party shall constitute a new offer subject to
the same rights of first refusal by Franchisor as in the case of the third party’s initial offer.
Failure of Franchisor to exercise the option afforded by this Section 15.6 shall not constitute a
waiver of any other provision of this Agreement, including all of the requirements of this Section
15, with respect to a proposed transfer.
If the consideration, terms, and/or conditions offered by a third party are such that
Franchisor may not reasonably be required to furnish the same consideration, terms, and/or
conditions, then Franchisor may purchase the interest proposed to be sold for the reasonable
equivalent in cash. If the parties cannot agree within a reasonable time on the reasonable
equivalent in cash of the consideration, terms, and/or conditions offered by the third party,
Franchisor shall designate an independent appraiser to make a binding determination. The cost of
any such appraisal shall be shared equally by Franchisor and Franchisee. If Franchisor elects to
exercise its right under this Section 15.6, Franchisor shall have the right to set off all amounts
due from Franchisee, and one-half (1/2) of the cost of the appraisal, if any, against any payment to
the seller.
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shall be determined by a licensed practicing physician selected by Franchisor upon examination
of such person or, if such person refuses to be examined, then such person shall automatically be
deemed permanently disabled for the purposes of this Section 15.8 as of the date of refusal.
Franchisor shall pay the cost of the required examination.
Franchisee shall not be required to pay the transfer fee due under Section 15.3.10 above,
if the transferee: (a) is a spouse, domestic partner, parent, or direct lineal descendant or
sibling of Franchisee or of a Principal of Franchisee (or more than one of such persons), provided
that the transferee has been involved in, and is knowledgeable regarding, the operations of the
Franchised Restaurant; (b) is a Principal of Franchisee; or (c); is a transferee under Sections
15.7 or 15.8 above.
If Franchisee is an individual and seeks to transfer this Agreement to a corporation,
partnership, or limited liability company formed for the convenience of ownership, the conditions
of Sections 15.3.6 (signing a new franchise agreement), 15.3.7 (upgrading the Franchised
Restaurant), and 15.3.10 (transfer fee) shall not apply, and Franchisee may undertake such
transfer, provided that Franchisee owns one hundred percent (100%) of the equity interest in the
transferee entity, and the Franchisee personally guarantees, in a written guaranty satisfactory to
Franchisor, the performance of the obligations of the Franchisee under the Franchise Agreement.
25
instituted against Franchisee and not dismissed within thirty (30) days; or if the real or
personal property of the Franchised Restaurant shall be sold after levy thereupon by any sheriff,
marshal, or constable.
If Franchisee fails to complete all pre-opening obligations and to open the Franchised
Restaurant within the time limits as provided in Section 5.2 above;
If Franchisee or any of its Principals is convicted of a felony, a crime involving moral
turpitude, or any other crime or offense that Franchisor believes is reasonably likely to have an
adverse effect on the System, the Proprietary Marks, the Products, the goodwill associated
therewith, or the interest of Franchisor therein;
If a threat or danger to public health or safety results from the construction, maintenance,
or operation of the Franchised Restaurant;
If Franchisee’s action or inaction, at any time, results in the loss of the right to
possession of the Premises, or forfeiture of the right to do or transact business in the
jurisdiction where the Franchised Restaurant is located;
If Franchisee or any Principal purports to transfer any rights or obligations under this
Agreement or any interest to any third party in a manner that is contrary to the terms of Section
15 hereof;
If Franchisee knowingly maintains false books or records, or knowingly submits any false
statements or reports to Franchisor;
If, contrary to the terms of Sections 9 or 10 hereof, Franchisee discloses or divulges the
contents of the Manuals or other confidential information provided to Franchisee by Franchisor;
If Franchisee fails to comply with the covenants in Section 18.2 below or fails to timely
obtain execution of the covenants required under Section 18.5 below;
If Franchisee misuses or makes any unauthorized use of the Proprietary Marks or any other
identifying characteristics of the System, or if Franchisee otherwise operates the Franchised
Restaurant in a manner that materially impairs the reputation or goodwill associated with the
System, Proprietary Marks, Products, or the rights of Franchisor therein;
If Franchisee, after curing a default pursuant to Sections 16.3 or 16.4 hereof, commits the
same default again, whether or not cured after notice.
If Franchisee commits three (3) or more defaults under this Agreement in any twelve (12) month
period, whether or not each such default has been cured after notice (this provision in no way
limits Section 16.2.10 above);
If Franchisee at any time ceases to operate or otherwise abandons the Franchised Restaurant
for a period of three (3) consecutive days unless such closure is approved in writing by
Franchisor, or excused by force majeure.
If Franchisee breaches any material provision of this Agreement which breach is not
susceptible to cure.
26
If Franchisee fails, refuses, or neglects promptly to pay any monies owing to Franchisor
or its affiliates when due;
If Franchisee refuses to permit Franchisor to inspect the Premises, or the books, records, or
accounts of Franchisee upon demand; or
If Franchisee fails to operate the Franchisor during such days and hours specified in the
Manuals (this provision in no way limits Section 16.2.12.
Upon termination or expiration of this Agreement, all rights granted hereunder to
Franchisee shall terminate, and:
27
Franchisor’s rights under this Section 17.5. Franchisee agrees that it shall sign such
documents and do such things (without cost to Franchisee) that may be reasonably requested by
Franchisor in order to implement this Section 17.5.
Divert or attempt to divert any present or prospective business or customer of any Cosi
Restaurant to any competitor, by direct or indirect inducement or otherwise, or do or perform,
directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the
Proprietary Marks and the System;
Employ or seek to employ any person who is at that time employed by Franchisor or by any other
franchisee of Franchisor, or otherwise encourage such person to leave his or her employment; or
Own, maintain, operate, engage in, be employed by, provide any assistance to, or have any more
than a one percent (1%) interest in (as owner or otherwise) any Competitive Business (as defined
below). A “Competitive Business” shall be consider to be retail food businesses with menu
offerings consisting predominantly of salads, sandwiches, or coffee offered in a fast casual
environment. Furthermore, Franchisee acknowledges and agrees that Franchisee shall be considered
in default under this Agreement and that this Agreement will be subject to termination as provided
in Section 16.2.8 herein, in the event that a person in the immediate family (including spouse,
domestic partner, parent or child) of Franchisee (or, if Franchisee is other than an individual,
each Principal that is subject to these covenants) engages in a Competitive Business that would
violate this Section 18.2.3 if such person was subject to the covenants of this Section 18.2.3.
28
Franchisee shall not either directly or indirectly, for itself, or through, on behalf of,
or in conjunction with any person or legal entity, own, maintain, operate, engage in, be employed
by, provide assistance to, or have any interest in (as owner or otherwise) any Competitive Business
that is, or is intended to be, located at the Approved Location, within the Territory, within a
radius of seven hundred fifty (750) feet of any other Cosi Restaurant located in an urban area, or
within a radius of one (1) mile of any other Cosi Restaurant located in an suburban area; provided,
however, that this provision shall not apply to the operation by Franchisee of any business under
the System under a franchise agreement with Franchisor; or
Franchisee shall not sublease, assign, or sell Franchisee’s interest in any lease, sublease,
or ownership of the Premises or assets of the Franchised Restaurant to a third party for the
operation of a Competitive Business, or otherwise arrange or assist in arranging for the operation
by a third party of a Competitive Business.
CORPORATE, LIMITED LIABILITY COMPANY, OR PARTNERSHIP FRANCHISEE
29
Franchisee shall be newly organized and its governing documents shall at all times provide
that its activities are confined exclusively to operating the Franchised Restaurant.
Franchisee shall, upon request of Franchisor, promptly furnished to Franchisor copies of
Franchisee’s articles of incorporation, bylaws, articles of organization, operating agreement
and/or other governing documents, and any amendments thereto, including the resolution of the Board
of Directors or members authorizing entry into this Agreement.
Franchisee shall maintain stop-transfer instructions against the transfer on its records of
any equity securities; and each stock certificate or issued securities of Franchisee shall
conspicuously endorse upon its face a statement, in a form satisfactory to Franchisor, which
references the transfer restrictions imposed by this Agreement; provided, however, that the
requirements of this Section 18.2.3 shall not apply to a publicly-held corporation.
Franchisee shall be newly organized and its partnership agreement shall at all times
provide that its activities are confined exclusively to operating the Franchised Restaurant.
Franchise shall furnish Franchisor with a copy of its partnership agreement as well as such
other documents as Franchisor may reasonably request, and any amendments thereto.
The partners of the partnership shall not, without the prior written consent of Franchisor,
admit additional general partners, remove a general partner, or otherwise materially alter the
powers of any general partner.
30
and Franchisor shall in no event assume liability for, or be deemed liable hereunder as a
result of, any such action; nor shall Franchisor be liable by reason of any act or omission of
Franchisee in its operation of the Franchised Restaurant or for any claim or judgment arising
therefrom against Franchisee or Franchisor.
Any and all notices required or permitted under this Agreement shall be in writing and
shall be personally delivered, sent by registered mail, or by other means which affords the sender
evidence of delivery, or of rejected delivery, to the respective parties at the addresses shown on
the signature page of this Agreement, unless and until a different address has been designated by
written notice to the other party. Any notice by a means which affords the sender evidence of
delivery, or rejected delivery, shall be deemed to have been given at the date and time of receipt
or rejected delivery.
This Agreement, the attachments hereto, and the documents referred to herein constitute
the entire Agreement between Franchisor and Franchisee concerning the subject matter hereof, and
supersede any prior agreements, no other representations having induced Franchisee to execute this
Agreement. Except for those permitted to be made unilaterally by Franchisor hereunder, no
amendment, change, or variance from this Agreement shall be binding on either party unless mutually
agreed to by the parties and executed by their authorized officers or agents in writing.
31
APPLICABLE LAW AND DISPUTE RESOLUTION
32
or legal action whatever. Franchisor and Franchisee shall each bear its own costs of
mediation, and each shall bear one-half the cost of the mediator or mediation service.
ACKNOWLEDGMENTS
33
COSI, INC. | ||||
Franchisor |
||||
By: | ||||
Name: | ||||
Title: |
Address for Notices:
Cosi, Inc.
0000 Xxxx Xxxx Xxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attn: Department of Franchising
0000 Xxxx Xxxx Xxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attn: Department of Franchising
With copy to:
Cosi, Inc.
0000 Xxxx Xxxx Xxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attn: Legal Department
0000 Xxxx Xxxx Xxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attn: Legal Department
Franchisee |
||||
By: | ||||
Name: | ||||
Title: |
Address for Notices:
Telephone:
|
||
Fax: |
||
Attn: |
34
COSI, INC.
FRANCHISE AGREEMENT
EXHIBIT A
DATA SHEET
EXHIBIT A
DATA SHEET
1. | The Approved Location for the Franchised Restaurant shall be (See Section 1.2). | |
2. | The Territory shall be (subject to the terms of the Agreement, including but not limited to Section 1.4 of the Agreement) as follows, and which Territory is reflected on the map attached to this Exhibit A: (check the appropriate box) |
o | The Franchised Restaurant is an urban location, and the Territory shall be the area within a radius of seven hundred fifty (750) feet of the Approved Location. | |||
o | The Franchised Restaurant is a suburban location, and the Territory shall be the area within a radius of one (1) mile of the Approved Location. |
3. | Franchise Fee. The initial franchise fee shall be $ (See Section 4.1). The initial franchise fee is determined and payable as follows (check the appropriate set of boxes): |
o | If this Agreement is the first agreement executed by Franchisee and Franchisor relating to the Franchised Restaurant (i.e., neither a Site Selection Agreement or an Area Development Agreement relating to the Franchised Restaurant was signed): |
o | $40,000 paid upon execution of this Agreement if Franchisee was not an existing franchisee under the System prior to executing this Agreement; or | |||
o | $35,000.00, paid upon execution of this Agreement, if Franchisee was an existing franchisee under the System prior to executing this Agreement. |
o | If Franchisee and Franchisor executed a Site Selection Agreement relating to the Franchised Restaurant: |
o | $15,000 was paid as a Site Selection Fee under the Site Selection Agreement, and $25,000 was paid upon execution of this Agreement if Franchisee was not an existing franchisee under the System prior to executing this Agreement; or | |||
o | $15,000 was paid as a Site Selection Fee under the Site Selection Agreement, and $20,000 was paid upon execution of this Agreement, if Franchisee was an existing franchisee under the System prior to executing this Agreement. |
o | If this Agreement is executed pursuant to an Area Development Agreement, and is: | |||
o For Franchisee’s first Cosi Restaurant, then $40,000 was paid upon execution of the Area Development Agreement as part of an area development fee and such amount is credited as full payment of initial franchise fee. | ||||
o For Franchisee’s second or later Cosi Restaurant, then $17,500 was paid as part of an area development fee and such amount is credited towards the initial franchise fee this Agreement, and $17,500 was paid upon the execution of this Agreement. |
Initial:
|
Date: | |
Franchisee |
||
Initial:
|
Date: | |
Cosi, Inc. |
A-1
COSI, INC.
FRANCHISE AGREEMENT
EXHIBIT B
ADA CERTIFICATION
EXHIBIT B
ADA CERTIFICATION
Cosi, Inc. (“Franchisor”) and (“Franchisee”) are parties to a franchise
agreement dated for the operation of a Cosi Restaurant at
(the “Franchised Restaurant”). In accordance with Section 5.3 of the
Franchise Agreement, Franchisee certifies to Franchisor that, to the best of Franchisee’s
knowledge, the Franchised Restaurant and its adjacent areas comply with all applicable federal,
state and local accessibility laws, statutes, codes, rules, regulations and standards, including
but not limited to the Americans with Disabilities Act. Franchisee acknowledges that it is an
independent contractor and the requirement of this certification by Franchisee does not constitute
ownership, control, leasing or operation of the Franchised Restaurant. Franchisee acknowledges
that Franchisee has relied on the information contained in this certification. Furthermore,
Franchisee acknowledge its obligation under this Franchise Agreement to indemnify Franchisee and
the officers, directors, and employees of Franchisee in connection with any and all claims, losses,
costs, expenses, liabilities, compliance costs, and damages incurred by the indemnified party(ies)
as a result of any matters associated with Franchisee’s compliance with the Americans with
Disabilities Act, as well as the costs, including attorneys’ fees, related to the same.
Franchisee | ||||
By: | ||||
Name: | ||||
Title: |
B-1
COSI, INC.
FRANCHISE AGREEMENT
EXHIBIT C
LIST OF PRINCIPALS AND DESIGNATED PRINCIPAL
EXHIBIT C
LIST OF PRINCIPALS AND DESIGNATED PRINCIPAL
The following identifies all of Franchisee’s Principals (as defined in Section 6.1 of the Franchise
Agreement:
Name of Principal | Address | Interest (%) with description | ||
Total: 100% |
FRANCHISEE’S DESIGNATED PRINCIPAL
The following identifies Franchisee’s Designated Principal (as defined in Section 8.3 of the
Franchise Agreement:
Address, telephone number, | Interest (%) (with | |||
Name and Title | and e-mail address | description) if any | ||
C-1
COSI, INC.
FRANCHISE AGREEMENT
EXHIBIT D
AUTHORIZATION AGREEMENT FOR PREARRANGED PAYMENTS
EXHIBIT D
AUTHORIZATION AGREEMENT FOR PREARRANGED PAYMENTS
(Name of Person or Legal Entity)
(ID Number)
The undersigned depositor (“Depositor”) hereby authorizes Cosi, Inc. (“Franchisor”) to initiate
debit entries and/or credit correction entries to the undersigned’s checking and/or savings
account(s) indicated below and the depository designated below (“Depository”) (“Bank”) to debit or
credit such account(s) pursuant to Franchisor’s instructions.
Depository | Branch |
City | State | Zip Code |
Bank Transit/ABA Number | Account Number |
This authorization is to remain in full and force and effect until sixty days after Franchisor has
received written notification from Franchisee of its termination.
Depositor |
||||
By: | ||||
Name: | ||||
Title: | ||||
Date: |
D-1
COSI, INC.
FRANCHISE AGREEMENT
EXHIBIT E
GUARANTEE, INDEMNIFICATION, AND ACKNOWLEDGMENT
EXHIBIT E
GUARANTEE, INDEMNIFICATION, AND ACKNOWLEDGMENT
As an inducement to Cosi, Inc. (“Franchisor”) to enter the Cosi, Inc. Franchise Agreement
between Franchisor and (“Franchisee”), dated , 200 (the “Agreement”), the undersigned, jointly and
severally, hereby unconditionally guarantee to Franchisor and Franchisor’s successors and assigns
that all of Franchisee’s monetary obligations under the Agreement will be punctually paid and
performed and that all monetary obligations will be punctually paid and performed.
Upon demand by Franchisor, the undersigned each hereby jointly and severally agree to
immediately make each payment required of Franchisee under the Agreement and waive any right to
require Franchisor to: (a) proceed against Franchisee for any payment required under the Agreement;
(b) proceed against or exhaust any security from Franchisee; (c) pursue or exhaust any remedy,
including any legal or equitable relief, against Franchisee; or (d) give notice of demand for
payment by Franchisee. Without affecting the obligations of the undersigned under this Guarantee,
Franchisor may, without notice to the undersigned, extend, modify, or release any indebtedness or
obligation of Franchisee, or settle, adjust, or compromise any claims against Franchisee, and the
undersigned each hereby jointly and severally waive notice of same and agree to remain and be bound
by any and all such amendments and changes to the Agreement.
The undersigned each hereby jointly and severally agree to defend, indemnify and hold
Franchisor harmless against any and all losses, damages, liabilities, costs, and expenses
(including, but not limited to, reasonable attorney’s fees, reasonable costs of financial and other
investigation, court costs, and fees and expenses) resulting from, consisting of, or arising out of
or in connection with any failure by Franchisee to perform any obligation of Franchisee under the
Agreement, any amendment thereto, or any other agreement executed by Franchisee referred to
therein.
The undersigned each hereby jointly and severally acknowledge and expressly agree to be
individually bound by all of the covenants contained in Sections 11, 15, 17, and 18 of the
Agreement, and acknowledge and agree that this Guarantee does not grant the undersigned any right
to use the “Cosi” marks or system licensed to Franchisee under the Agreement.
This Guarantee shall terminate upon the termination or expiration of the Agreement, except
that all obligations and liabilities of the undersigned which arose from events which occurred on
or before the effective date of such termination shall remain in full force and effect until
satisfied or discharged by the undersigned, and all covenants which by their terms continue in
force after the expiration or termination of the Agreement shall remain in force according to their
terms. Upon the death of an individual guarantor, the estate of such guarantor shall be bound by
this Guarantee, but only for defaults and obligations hereunder existing at the time of death; and
the obligations of the other guarantors will continue in full force and effect.
Guarantor represents and warrants to Franchisor that neither Guarantor (including, without
limitation, any and all of its employees, directors, officers and other representatives), nor any
of its affiliates or the funding sources for either is a person or entity designated with whom
Franchisor, or any of its affiliates, are prohibited by law from transacting business.
Any and all notices required or permitted under this guarantee provision shall be in writing
and shall be personally delivered, in the manner provided under Section 24 of this Agreement.
Unless specifically stated otherwise, the terms used in this Guarantee shall have the same
meaning as in the Agreement, and shall be interpreted and construed in accordance with Section 27
of the Agreement. This Guarantee shall be interpreted and construed under the laws of the State of
Delaware. In the event of any conflict of law, the laws of the State of Delaware shall prevail
(without regard to, and without giving effect to, the application of Delaware conflict of law
rules).
GUARANTOR(S) |
||||
E-1
COSI, INC.
FRANCHISE AGREEMENT
EXHIBIT F — 1
EXHIBIT F — 1
CONFIDENTIALITY AND NON-COMPETE AGREEMENT
FOR FRANCHISEE’S PRINCIPALS AND EXECUTIVES
FOR FRANCHISEE’S PRINCIPALS AND EXECUTIVES
THIS NON-DISCLOSURE AND NON-COMPETITION AGREEMENT (“Agreement”) is made this ___day of
___, 200___, by and between ___(“us” “we” “our” or the
“Franchisee”), and ___, who is a Principal, member, partner, or officer of
Franchisee (“you” or the “Member”).
Franchisor and Franchisee have executed a Franchise Agreement (“Franchise Agreement”) granting
Franchisee the right to operate a Cosi Restaurant (the “Franchised Restaurant”) under the terms and
conditions of the Franchise Agreement.
In connection with your ownership and position with Franchisee, you will be will be trained by us
and/or you will learn of Franchisor’s confidential information and know-how concerning the methods
of operation of a Cosi Restaurant and the System.
Now, therefore, it is agreed that as a consideration your relationship with Franchisee and the
rights granted to Franchisee under the Franchise Agreement, you acknowledge and agree that you will
comply with all of the following obligations:
1. Cosi Confidential Information. You agree that you will not, at any time (whether during
or after the term of the Franchise Agreement or the time of your relationship with Franchisee),
communicate or divulge Cosi Confidential Information to any Person, and that you will not use Cosi
Confidential Information for your own benefit or for the benefit of any other Person.
2. Definitions. As used in this Agreement, the following terms are agreed to have the
following meanings:
a. The term “Cosi Confidential Information” means any information, knowledge, or know-how
concerning the methods of operation of the Franchised Restaurant and the System that may you may
learn of or that otherwise becomes known to you during the term of the Franchise Agreement or the
time of your relationship with Franchisee (whether or not Franchisor or we have specifically
designated that information as “confidential”). Cosi Confidential Information may include, among
other things, operational, sales, promotional, marketing, and administrative methods, procedures,
and techniques. However, Cosi Confidential Information does not include information that you can
show came to your attention before it was disclosed to you by us or Franchisor; and Cosi
Confidential Information also does not include information that, at or after the time when we or
Franchisor disclosed it to you, is a part of the public domain through no act on your part or
through publication or communication by other Persons who are lawfully entitled to publish or
communicate that information.
b. The term “Person” means any person, persons, partnership, entity, association, or
corporation (other than the Franchisor or Franchisee).
c. The term “Post-Term Period” means a continuous uninterrupted period of two years from the
date of: (a) a transfer permitted under Section 15 of the Franchise Agreement; (b) expiration or
termination of the Franchise Agreement (regardless of the cause for termination); (c) termination
of your relationship with Franchisee for any reason; and/or (d) a final order of a court of
competent jurisdiction enforcing of this Agreement.
3. Covenants Not to Compete.
a. You understand and acknowledge that due to your relationship with us, you will receive
valuable specialized training and access to Cosi Confidential Information.
b. You covenant and agree that during the term of the Franchise Agreement, unless Franchisor
gives you prior written approval, you shall not, either directly or indirectly, for yourself, or
through, on behalf of, or in conjunction with any Person:
i. | Divert or attempt to divert any current or potential business account or customer of the Franchised Restaurant (or of any Cosi Restaurant) to any Person, whether by direct or indirect suggestion, referral, inducement, or otherwise; | ||
ii. | Do or perform, directly or indirectly, any act that might injure or be harmful to the goodwill associated with Franchisor and the System; | ||
iii. | Employ or seek to employ any individual who is then employed by us, Franchisor, or employed by any of Franchisor’s franchisees, licensees, developers, or to otherwise directly or indirectly induce any such individual to leave his or her employment; and/or | ||
iv. | Directly or indirectly for yourself or on behalf of, or in conjunction with any Person, own, maintain, operate, engage in, or have any interest in any business that is the same as or similar to the Franchised Restaurant. |
c. You covenant and agree that during the term Post-Term Period, unless Franchisor gives you
its prior written approval, you shall not,
either directly or indirectly, for yourself, or through, on behalf of, or in conjunction with any
Person:
i. | Own, maintain, operate, engage in, or have any interest in any business that is the same as or similar to the Franchised Restaurant, if that business is located (or if it is intended to be located) within the Territory or within a radius of seven hundred fifty (750) feet of any other Cosi Restaurant located in an urban area, or within a radius of one (1) mile of any other Cosi Restaurant located in an suburban area at that time; and/or. | ||
ii. | Employ or seek to employ any individual who is then employed by us, Franchisor, or employed by any of Franchisor’s franchisees, licensees, developers, or to otherwise directly or indirectly induce any such individual to leave his or her employment. |
4. Legal and Equitable Remedies. You understand, acknowledge, and agree that if you do not
comply with the requirements of this Agreement, you will cause irreparable injury to Franchisor,
and that:
a. We will have the right to enforce this Agreement and any of its provisions by going to a
court and obtaining an injunction, specific performance, or other equitable relief, without
prejudice to any other rights and remedies that we may have for breach of this Agreement;
b. You will not raise wrongful termination or other defenses to the enforcement of this
Agreement (although you will have the right to raise those issues in a separate legal action); and
c. You must reimburse Franchisor for any court costs and reasonable attorney’s fees that
Franchisor incurs as a result of your violation of this Agreement and having to go to court to seek
enforcement.
5. Severability. Each of the provisions of this Agreement may be considered severable from
the others. If a court should find that we or Franchisor may not enforce a clause in this
Agreement as written, but the court would allow us or Franchisor to enforce that clause in a way
that is less burdensome to you, then you agree that you will comply with the court’s
less-restrictive interpretation of that clause.
6. Delay. No delay or failure by us or Franchisor to exercise any right under this
Agreement, and no partial or single exercise of that right, shall constitute a waiver of that right
or any other right set out in this Agreement. No waiver of any violation of any terms and
provisions of this Agreement shall be construed as a waiver of any succeeding violation of the same
or any other provision of this Agreement.
7. Third-Party Beneficiary. You acknowledge and agree that Franchisor is an intended
third-party beneficiary of this Agreement with the right to enforce it, independently or jointly
with Franchisee.
MEMBER
Signature:
|
Printed Name:
|
COSI, INC.
FRANCHISE AGREEMENT
EXHIBIT F — 2
CONFIDENTIALITY AND NON-COMPETE
FOR FRANCHISEE’S EMPLOYEES
EXHIBIT F — 2
CONFIDENTIALITY AND NON-COMPETE
FOR FRANCHISEE’S EMPLOYEES
THIS NON-DISCLOSURE AND NON-COMPETITION AGREEMENT (“Agreement”) is made this ___day of
___, 200___, by and between ___(“us” “we” “our” or the “Franchisee”), and
___, an employee of Franchisee (“you” or the “Employee”).
Franchisor and Franchisee have executed a Franchise Agreement (“Franchise Agreement”) granting
Franchisee the right to operate a Cosi Restaurant (the “Franchised Restaurant”) under the terms and
conditions of the Franchise Agreement.
In connection with starting or continuing your employment with Franchisee, you will be will be
trained by us and you will learn of Franchisor’s confidential information and know-how concerning
the methods of operation of a Cosi Restaurant and the System.
Now, therefore, it is agreed that as a consideration of starting or continuing your
employment, as a condition to your employment and the compensation that we have paid to you (and/or
will pay you after today), you acknowledge and agree that you will comply with all of the following
obligations:
1. Cosi Confidential Information. You agree that you will not, at any time (whether during
or after your time of employment with us), communicate or divulge Cosi Confidential Information to
any Person, and that you will not use Cosi Confidential Information for your own benefit or for the
benefit of any other Person.
2. Definitions. As used in this Agreement, the following terms are agreed to have the
following meanings:
a. The term “Cosi Confidential Information” means any information, knowledge, or know-how
concerning the methods of operation of the Franchised Restaurant and the System that may you may
learn of or that otherwise becomes known to you during the time of your employment with us (whether
or not the Franchisor or we have specifically designated that information as “confidential”). Cosi
Confidential Information may include, among other things, operational, sales, promotional,
marketing, and administrative methods, procedures, and techniques. However, Cosi Confidential
Information does not include information that you can show came to your attention before it was
disclosed to you by us or Franchisor; and Cosi Confidential Information also does not include
information that, at or after the time when we disclosed it to you, is a part of the public domain
through no act on your part or through publication or communication by other Persons who are
lawfully entitled to publish or communicate that information.
b. The term “Person” means any person, persons, partnership, entity, association, or
corporation (other than the Company or Franchisor).
c. The term “Post-Term Period” means a continuous uninterrupted period of (check as
applicable) # one (1) year if you are a manager or perform managerial responsibilities, or
# six (6) months a non-managerial employee from the date of: (a) termination of your
employment with us for any reason; and/or (b) a final order of a court of competent jurisdiction
enforcing of this Agreement.
3. Covenants Not to Compete.
a. You understand and acknowledge that due to your employment with us, you will receive
valuable specialized training and access to Cosi Confidential Information.
b. You covenant and agree that during the term of your employment, unless Franchisor gives you
its prior written approval, you shall not, either directly or indirectly, for yourself, or through,
on behalf of, or in conjunction with any Person:
i. | Divert or attempt to divert any current or potential business account or customer of the Franchised Restaurant (or of any Cosi Restaurant) to any Person, whether by direct or indirect suggestion, referral, inducement, or otherwise; | ||
ii. | Do or perform, directly or indirectly, any act that might injure or be harmful to the goodwill associated with Franchisor and the System; | ||
iii. | Employ or seek to employ any individual who is then employed by us, or employed by Franchisor or any of Franchisor’s franchisees, licensees, developers, or to otherwise directly or indirectly induce any such individual to leave his or her employment; and/or |
iv. | Directly or indirectly for yourself or on behalf of, or in conjunction with any Person, own, maintain, operate, engage in, or have any interest in any business that is the same as or similar to the Franchised Restaurant. |
c. You covenant and agree that during the term Post-Term Period, unless Franchisor gives you
its prior written approval, you shall not, either directly or indirectly, for yourself, or through,
on behalf of, or in conjunction with any Person:
i. | Own, maintain, operate, engage in, or have any interest in any business that is the same as or similar to the Franchised Restaurant, if that business is located (or if it is intended to be located) within a radius of seven hundred fifty (750) feet of any other Cosi Restaurant located in an urban area, or within a radius of one (1) mile of any other Cosi Restaurant located in an suburban area at that time; and/or; | ||
ii. | Employ or seek to employ any individual who is then employed by us, Franchisor, or by any of Franchisor’s franchisees, licensees, developers, or to otherwise directly or indirectly induce any such individual to leave his or her employment. |
4. Legal and Equitable Remedies. You understand, acknowledge, and agree that if you do not
comply with the requirements of this Agreement, you will cause irreparable injury to Franchisor,
and that:
a. We will have the right to enforce this Agreement and any of its provisions by going to a
court and obtaining an injunction, specific performance, or other equitable relief, without
prejudice to any other rights and remedies that we may have for breach of this Agreement;
b. You will not raise wrongful termination or other defenses to the enforcement of this
Agreement (although you will have the right to raise those issues in a separate legal action); and
c. You must reimburse Franchisor for any court costs and reasonable attorney’s fees that
Franchisor incurs as a result of your violation of this Agreement and having to go to court to seek
enforcement.
5. Severability. Each of the provisions of this Agreement may be considered severable from
the others. If a court should find that we or Franchisor may not enforce a clause in this
Agreement as written, but the court would allow us or Franchisor to enforce that clause in a way
that is less burdensome to you, then you agree that you will comply with the court’s
less-restrictive interpretation of that clause.
6. Delay. No delay or failure by us or Franchisor to exercise any right under this
Agreement, and no partial or single exercise of that right, shall constitute a waiver of that right
or any other right set out in this Agreement. No waiver of any violation of any terms and
provisions of this Agreement shall be construed as a waiver of any succeeding violation of the same
or any other provision of this Agreement.
7. Third-Party Beneficiary. You acknowledge and agree that Franchisor is an intended
third-party beneficiary of this Agreement with the right to enforce it, independently or jointly
with us.
IN WITNESS WHEREOF, Employee has read and understands the terms of this Agreement, and voluntarily
signed this Agreement on this day of , 200___.
EMPLOYEE
Signature:
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Printed Name:
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