136 Louisiana, N.E. Bluewater, New Mexico 87005 -------------------- ---------------------------------- (City) (State) (Zip) Albuquerque, NM 87108 hereinafter referred to as the "Authorized --------------------- Location" (provided, however, in the...
DAIRY QUEEN OPERATING AGREEMENT
"DAIRY QUEEN"' OPERATING AGREEMENT
This Agreement entered into this lst day of September 1982, by and between
Interstate Dairy Queen Corporation of the city of Atlanta, county of Xxxxxx, and
state of Georgia hereinafter referred to as Licensor," and Xxxxxx'x, Inc. d/b/a
DQ of Bluewater, New Mexico, of the city of Bluewater, county of Valencia and
state of New Mexico, hereinafter refered to as "Licensee".
WHEREAS, Licensor is a licensee of American Dairy Queen Corporation
(hereinafter referred to as "American") in certain geographical areas, including
the territory which includes the Authorized Location hereinafter set forth, of
the right to license others, in accordance with the terms of this Agreement, to
use the "Dairy Queen" trademark, service xxxx and trade name which have been
registered in the United State Patent Office, in each state of the union and in
foreign countries, as well as those trademarks and service marks, a list of
which is attached hereto and made a part hereof as Appendix A (hereinafter all
of the foregoing collectively referred to as "Trademarks"); and,
WHEREAS, Licensor and its Predecessors in interest acting under said
license instituted, developed, promoted and established the "Dairy Queen"
franchise business and system in the aforesaid territory, which consists of the
sale of distinctive dairy products, food products, beverages and other products
and services under American's Trademarks and utilizing in connection therewith
certain types of facilities, equipment, supplies, ingredients, merchandising and
business techniques and methods and sales promotion programs developed from time
to time; and,
WHEREAS, it is the purpose of Licensor to provide to Licensee in a retail
store outlet a system to control and make uniform the operation of facilities
and equipment together with the quality of products, the use and protection of
the Trademarks and make available uniform and approved equipment, supplies,
ingredients, merchandising and business techniques and the sales promotion
programs of American; and,
WHEREAS Licensee desires to operate a "Dairy Queen" retail store as part of
the "Dairy Queen" system and to enter into this Operating Agreement subject to
the conditions and controls herein prescribed for the purpose of offering to the
public products and services of uniformly high quality and standards to the end
of protecting the interests of Licensee, of Licensor, of American and of all
other persons engaged in said business; and,
WHEREAS it is the intent of both Licensor and Licensee to preserve within
the context of a "Dairy Queen" retail store continuing consumer confidence in
the reliability and quality of all products sold under any of the Trademarks;
and, each party desires that all products sold under any of the Trademarks,
consistently conform to the highest expectations of consumers of such products;
and; whereas, by this Agreement the parties contemplate that Licensee's store,
in addition to normal "Dairy Queen" food and beverage products, may also sell
Permitted Products, as defined hereinafter.
NOW, THEREFORE, in consideration of the promises and of the mutual promises
and covenants herein contained, the grant by Licensor of this Operating
Agreement and the payment by Licensee of the various fees provided in Paragraph
9 hereof, it is agreed by and between the parties hereto as follows:
GRANT OF LICENSE
Licensor's 1. Licensor hereby grants to Licensee, subject to all
Grant to the terms, conditions and provisions hereof, the
Licensee right and license to:
1.1 Establish and operate a retail store under
the name "Dairy Queen" at
Mailing Address;
DQ of Bluewater I-40 x Exit 72
----------------- ---------------------------------
(Street)
c/x Xxxxxx'x, Inc.
--------------------
000 Xxxxxxxxx, X.X. Xxxxxxxxx, Xxx Xxxxxx 00000
-------------------- ----------------------------------
(City) (State) (Zip)
Xxxxxxxxxxx, XX 00000 hereinafter referred to as the "Authorized
--------------------- Location" (provided, however, in the event
an Authorized Location is not designated on
the date hereof, and such location, is not
designated herein by Licensor within ninety
(90) days after such date, this Agreement
shall become null and void and all deposits
including the franchise fee shall be
returned to Licensee).
1.2 Use at the Authorized Location the
Trademarks on and in association with the
sale of all uniform and approved products
And services as American may authorize from
time to time, and with approved sales
promotion programs relative thereto.
1.3 Use at the Authorized Location the
Trademarks on and in association with the
uniform equipment, supplies and ingredients
for the products approved by American.
1.4 Employ in the business of said store the
merchandising, sales promotion programs and
business methods and techniques developed
and approved by American.
Acceptance 2. Licensee hereby accepts the above license from
by Licensee Licensor subject' to all the terms, provisions and
conditions hereof and agrees that Licensee shall
cause to have a "Dairy Queen" store established
within 180 days of the date hereof (unless an
extension of time is expressly authorized in writing
by Licensor), and thereafter maintained and operated
at the Authorized Location, under Licensee's active
and continuous supervision
-2-
once management and upon the standards hereinafter
provided. Licensee further expressly acknowledges and
agrees:
2.1 American is the owner tot all right, title
and interest in and to the trademarks, and
the good will attributable thereto the
business in connection with which said
Trademarks have been, are and will be used
at the Authorized Location. Licensor is the
licensee of the right to use the Trademarks
in the territory which includes the
Authorized Location. Specifically, but
without limiting the foregoing, Licensee
disclaims any and all right, title and
interest in or to the Trademarks and to the
good will associated with the Trademarks of
the "Dairy Queen" retail store at the
Authorized Location and acknowledges and
agrees that all such good will is the
exclusive property of American.
2.2 The Trademarks are valuable property rights
owned by American.
2.3 The Trademarks shall be used only in
connection with such products and services
as may be approved or specified by American
and shall at all times be used only in a
manner approved by American.
2.4 Licensee's right to the use of the
Trademarks is specifically limited to
Licensee's retail store operation at the
Authorized Location.
2.5 Licensee shall use no other trademarks,
trade names or service marks in said
business except those authorized by American
and as set forth in Appendix A except with
the prior written consent of American.
2.6 Licensee shall not use the words "Dairy
Queen" or any of the Trademarks, or any word
or xxxx similar thereto, as a part of its
corporate or business name unless first
approved in writing by American, and shall
only use the words "Dairy Queen" and no
other words whatsoever except with the
express written consent of American as the
trade name on the store from which the said
products and services are sold. In the event
American does approve the use of the words
"Dairy Queen" or any other Trademarks, as a
part of Licensee's corporate or business
name, Licensee shall cause such name to be
changed so as to eliminate those words and
-3-
Trademarks from the name within thirty (30)
days after termination of this Agreement.
2.7 Licensee shall adopt and follow in good
faith the systems, programs and methods
prescribed by Licensor for Licensee's retail
operation in accordance with this Operating
Agreement.
2.8 Neither Licensee nor any person owning an
interest directly or indirectly in Licensee
shall directly or indirectly operate or
permit to be operated or hold any interest
(other than 1% or less of the outstanding
stock or debt of any class of any public
company) in any ant or fast-food business
other than ar or its affiliates at the time
of signing or one authorized by this
Agreement without the prior written consent
of Licensor.
TERM
Term 3. The License granted herein shall continue until
terminated by Licensee with or without cause, on
sixty (60) days prior written notice to Licensor, or
until otherwise terminated by either Licensee or
Licensor in accordance with the provisions of this
Agreement.
TRADEMARK STANDARDS AND REQUIREMENTS
General 4. Licensee agrees that nothing in this Agreement gives
Declarations any title to or interest in the Trademarks except the
right to use the same under the terms and conditions
of this Agreement and that Licensee's use thereof
inures to the benefit of American. Specifically, but
without limiting the foregoing, Licensee acknowledges
and agrees that American has the right and may
distribute for its own account products indentified
by the Trademarks through not only "Dairy Queen"
retail stores but through any other distribution
method which may from time to time be established.
Use of 4.1 Licensee shall confine, his-use of the
Trademarks Trademarks to or in association with the
sales promotion programs and sale of
products and services which shall in
quality, mode and conditions of manufacture
and sale, comply with such reasonable
standards as are established or approved by
American. In order to promote and protect
the business interests of each of the
parties, the value of the "Dairy Queen"
business and the business interests of other
persons engaged therein, uniformity shall be
maintained in the type, standard and
-4-
quality stores, equipment, supplies and
ingredients used-therein, and the conditions
of preparation and the procedures employed
in the sale of said products and services.
Acknowledge- 4.2 Licensee agrees that the
ment of provisions, restrictions and
Necessity of controls provided in this
Uniformity Operating Agreement are all
necessary, reasonable and
desirable for the purposes
expressed herein and that
Licenscee's business shall be
conducted in accordance with
Licensor's and American's uniform
requirements with respect to
quality, production, appearance,
cleanliness, services,
merchandising and sales promotion
standards. Licensee acknowledges
and agrees that substantial
uniformity in facilities products,
services and operations are
essential to the conduct of a
system. such as the "Dairy Queen"
system, and therefore further
agrees to honor and implement
recommendations of American and
Licensor directed to enhancing and
furthering such uniformity.
Equipment 4.3 Licensee agrees to purchase and
and Supplies use, in the operation of Licensee's
Dairy Queen" retail store, only
equipment, supplies, ingredients
and services which are approved by
American or by Licensor. Nothing
herein shall be construed as an
attempt to limit unreasonably the
sources from which Licensee may
procure equipment, supplies,
ingredients or services. Rather, it
is the intention of the parties
that such items conform to
American's standards and
specifications of consistent
quality and uniformity. Nothing
contained herein shall be deemed to
require American or Licensor to
approve an inordinate number of
suppliers of a given item or
service which in the reasonable
judgment of American or Licensor
would result in higher cost
generally to Licensor's licensees
or prevent effective and economical
supervision of suppliers by
American or Licensor. Requests for
approval or additional suppliers
shall be in writing and shall
contain such information as
American and Licensor may
reasonably request. American and
licensor reserve the right to
charge back to Licensee or the
proposed supplier all reasonable
expenses incurred in considering
requests for approval.
Approved 4.4 Complete and detailed uniformity
Adaptations under many varying conditions may
not be possible or practical and
Licensor and
-5-
American reserve the right and
privilege, at Licensor's and
American's sole discretion and as
Licensor and American may deem in
the best interest of all concerned
in any specific instances, to vary
standards to accommodate special
needs of Licensee's Authorized Site
or that of any other licensee based
upon the peculiarities of a
particular site or location,
density of population, business
potential, population of trade
area, existing business practices,
requirements of local law or any
condition which Licensor and
American deem to be of importance
to the successful operation of such
licensee's business.
Litigation 4.5 In the event any person, firm or
company, who is not a licensee or
franchisee of American or Licensor,
uses or infringes upon the
Trademarks, American shall control
all litigation and shall be sole
judge as to whether or not suit
shall be instituted or other action
taken.
Notice of 4.6 Licensor and American hereby advise
Potential Licensee that Licensor, American
American and/or and/or affiliates of American
Licensor Profit and/or Licensor may from time to
time make available to Licensee
goods, products and/or services for
use in Licensee's "Dairy Queen"
retail store in respect to the sale
or provision of which Licensor,
American and/or affiliates of
American and/or Licensor may make a
profit. Licensor further advises
Licensee that Licensor, American
and/or affiliates of American
and/or Licensor may from time to
time receive consideration from
suppliers and/or manufacturers in
consideration of services provided
or rights licensed to such persons
by American, Licensor or their
respective affiliates.
FACILITY STANDARDS AND MAINTENANCE
5. The following provisions and conditions
shall control with respect to Licensee's
Authorized Location and retail stores:
Store Facility 5.1 Licensee agrees that the retail
store shall be constructed and
equipped in accordance with
American's currently approved
specifications and standards in
respect to building, equipment,
inventory, signage, fixtures,
location and design and accessory
features.
Future 5.2 Any replacement, reconstruction,
Alteration addition or modification in
building, equipment or signage, to
be made hereafter, whether at the
request of
-6-
Licensee or of Licensor, shall be
made in accordance with written
specifications approved in advance
by Licensor or American. Licensor
and American shall not unreasonably
withhold such approval.
Maintenance 5.3 The building, equipment and signate
employed in the conduct of
Licensee's business shall be
maintained in accordance with
maintenance schedules and
procedures or specific lists
prepared by Licensor and based upon
periodic inspections of the
premises by Licensor's
representatives. Within a period of
ninety (90) days after the receipt
of such maintenance lists, Licensee
shall effect the items of
maintenance reasonably provided
therein including the repair of
defective items and/or the
replacement of unrepairable or
obsolete items of equipment and
signage. Routing maintenance shall
be conducted in accordance with
general schedules published by
Licensor or American and made
available to Licensee.
Relocation 5.4 Should it become necessary, on
account of condemnation, sale or
other cause, including expiration
or cancellation of lease or rental
contract, to relocate said store,
Licensor shall grant Licensee
authority to do so within a radius
of 1,000 years of the Authorized
Location, provided the new site is
reasonably suited for a `Dairy
Queen" retail store in accordance
with Licensor's standards for store
sites, does not infringe on rights
of another licensee, is reasonably
distant from other "Dairy Queen"
retail stores, and the new retail
stores is constructed, equipped and
opened for business in accordance
with the current standards of
American at that time within one
year after discontinuing operation
of a "Dairy Queen" retail store at
the previous Authorized Location.
Modernization 5.5 Each and every transfer as provided
and/or Replace- in paragraph 9.10 hereof shall be
ment of Time expressly conditioned upon Licensee
of Transfer promptly performing and effecting
such items of modernization and/or
replacement of building, equipment
and signage as may be reasonably
necessary to permit the same to
conform to the standards then
prescribed by American for
similarly situated store
operations. Licensee recognizes and
acknowledges that the requirements
of this Paragraph 5.5 are both
reasonable and necessary to insure
continued public acceptance and
patronage of, and to avoid
deterioration or obsolescence in
the business conducted hereunder.
-7-
PRODUCTS AND OPERATIONS STANDARDS AND REQUIREMENTS
6. The following provisions shall control with
respect to products and operations:
Authorized 6.1 Licensee's business shall be
Product Line confined to the preparation and
sale of only such products as from
time to time are designated and
approved by American for sale by
Licensees which are parties to this
form of operating Agreement. The
premises upon which said business
is operated shall not be used for
any other business and there shall
not be sold or offered for sale
there from any other product or
service (excepting the preparation,
storage and sale of Permitted
Products) without the written
consent of American. Specifically,
but without limitating the
foregoing, alcoholic or
intoxicating beverages shall not be
sold or offered for sale or
otherwise handled upon said
premises.
Approved Menu 6.2 Attached hereto as Appendix B is
the currently approved menu for
Licensee's retail store. American
may from time to time make
reasonable modifications to said
approved menu provided said
modifications are made in respect
to all licensees which have this
form of Operating Agreement and are
located in similar areas of the
country. In addition, Licensee may
from time to time request variation
from the currently approved menu.
Such variations shall only be made
with the prior written consent of
American.
Authorized 6.3 Licensee shall use in preparing
Ingredients, products only such ingredients,
Formulas, formulas and supplies as are
Supplies, specified by American and in such
Preparation; portions, sizes, appearance and
Subject to Change packaging as are set forth in
by American American's most current "Store
Management Operations Manual" and
"product preparation charts".
Copies of the current "Store
Management Operations Manual" and
"product preparation charts" have
been supplied to Licensee by.
Licensor contemporaneously with the
execution of this Operating
Agreement. "Licensee acknowledges
and agrees that these may be
changed from time to time by
American and that Licensee is
obligated to conform to the
requirement, as so changed from
time to time. All other supplies
including cones, cups, containers,
eating utensils, napkins and all
other customer service materials of
all descriptions and types shall
meet the standards of uniformity
and quality as
-8-
now or hereafter are reasonably set
by American. Licensee shall be
furnished with lists of approved
equipment, supplies, ingredients
and services.
Serving and 6.4 All sales Promotion material,
Promotion Items customer "good will" items,
cartons, containers, wrappers and
paper goods, eating and serving,
utensils, customer convenience
items (including napkins, baby bibs
and disposal containers) used in
the sales promotion, sale and
distribution of all products
covered by this operating Agreement
shall, where practicable contain
one or more of the Trademarks and
indicate that it is produced and
sold under the authority of
American and shall be subject to
approval by Licensor or American
before being used.
Maintenance 6.5 Licensee's said business shall be
and Sanitation operated and maintained at all
times in compliance with any and
all applicable health and sanitary
standards prescribed by American,
Licensor and by qovernmental
authority. In addition to complying
with such standards, it such Store
shall be subject to any sanitary or
health inspection or any
Governmental authorities under
which it may be rated in one or
more than one classification, it
shall be maintained and operated so
as to be rated in highest available
health and sanitary classification
with respect to each governmental
agency inspecting the same.
Inspection and 6.6 American, Licensor or the
Recommendation authorized representative of either
shall have the right to enter
Licensee's store all reasonable
times during the business day for
the purpose of making periodic
inspections to ascertain if all the
provisions of this Operating
Agreement are being observed by
Licensee and to inspect Licensee's
said store, land and equipment, and
to test, sample and inspect his
supplies, ingredients and products
as well as the storage, preparation
and formulation thereof and the
condition of sanitation and
cleanliness in the storage,
production, handling and serving
thereof.
Period of 6.7 Licensee's store, shall be opened
Operation to the public and operated twelve
months per year and at least twelve
hours each day of the year. Any
variance from this provision must
be authorized in writing by
Licensor. Acts of God, war, strikes
or riots preventing Licensee from
temporarily complying with the
foregoing shall to that extent
suspend compliance therewith.
-9-
Notice of 6.8 Licensee acknowledges that he is
Existence of aware of the fact that present
Different Forms licensees of Licensor and American
of License operate under a number of different
Agreements forms of agreement and that
consequently Licensor's and
American's obligations and rights
in respect to their respective
licenses may differ materially in
certain instances.
PERSONNEL AND SUPERVISION STANDARDS
7. The following provisions and conditions
shall control with respect to personnel,
training and supervision:
Management 7.1 Licensee shall adopt and use as his
System continuing operational routing the
standard "Dairy Queen" management
system as well as American's
standards with respect to product
preparation, merchandising,
employee recruitment and training,
equipment and facility maintenance
and sanitation. From time to time
American will revise these programs
to meet chancing conditions of
retail operation in the best
interest of "Dairy Queen" retail
stores, and Licensee shall adopt
and implement any such changes.
Training 7.2 Licensee shall, at Licensee's
expense, attend American's store
-management training program, at a
place to be designated by
American.- prior to the opening of
Licensee's store. In the event
Licensee fails to complete such
training to the reasonable
satisfaction of American or
Licensor, Licensor may within
thirty (30) days thereafter declare
this Agreement null and void
whereupon all deposits including
the franchise fee shall be returned
to Licensee. If during the term
hereof Licensee operates said store
with a manager other than himself,
Licensee shall, at Licensee's
expense, cause such person to
attend and successfully complete
such training program.
Staffing 7.3 Licensee shall hire and supervise
efficient, competent, sober and
courteous operators and employees
for the operation of the business
and set and pay their wages,
commissions and incentives with no
liability therefor on American or
Licensor. Licensee shall require
all his employees to work in clean
uniforms approved by Licensor but
furnished at the cost of Licensee
or his employees as Licensee pay
determine. No employee of Licensee
shall be deemed to
-10-
be an employee of Licensor or
American for any purpose(s)
whatsoever.
Internal 7.4 Licensor shall provide or make
Training available to Licensee an in-store
Program training program for all store
employees. Licensee shall train and
periodically re-train all store
employees using the training aids
made available by Licensor. From
time to time, American will revised
such training materials and aids
and it or Licensor make the same
available to Licensee for purchase.
Attendance at 7.5 Licensee, or manager of Licensee,
Meetings at Licensee's expense, shall attend
at least one national, regional or
approved local marketing area
meeting each year which Licensor
and/or American originates for and
on behalf of "Dairy Queen"
operators to set forth new methods
and programs in store operation,
training management, sales and sale
promotion programs. Licensor
further strongly recommends that
key employees of Licensee also
attend such meeting.
SALES PROMOTION PROGRAMS
Sales Promotion 8.1 Licensor and Licensee, together
Programs and with other licensees of American,
Payment to shall cooperate in the sales
American of promotion programs of approved
Expenses for products. To this end; American has
Administering reserved the right to establish and
Same organize sales promotion programs
from time to time and Licensee
agrees to pay to Licensor for
remittance to American a sales
promotion program fee as set forth
in Paragraph 9.2 hereof. Licensee
acknowledges and agrees that
American ,has had in the past, and
shall in the future have, the
discretion to determine
expenditures of funds; collected in
respect to sales promotion programs
and as to the selection of the
promotional materials and programs
for which said expenditures are
made, provided, however, that
American shall make a good faith
effort to extend such funds in the
general best interest of
participating licensees. Licensee
acknowledges and agrees that
American may compensate itself
and/or its affiliates for the
expense of administering such sales
promotion programs. Licensor shall
advise Licensee annual, of
American's expenses in
administering said sales promotion
programs.
Sales Promotion 8.2 Licensee shall only use such sales
Materials promotion program or other
advertising materials as are
furnished, approved or made
available by or through American.
-11-
Said materials shall be used only
in a manner prescribed by American.
American shall not unreasonably
withhold approval of any reasonable
sales promotion materials.
Yellow Pages 8.3 Licensee, shall, if requested by
Licensor, list separately, or
participate in a listing, in the
Yellow Pages of his local telephone
directory containing such copy as
may reasonably be specified by
Licensor. The cost of such listing
shall be paid by Licensee, or by
Licensee and other participating
licensees in the case of a joint
listing. Licensor shall not specify
an unreasonably expensive listing.
FEES, REPORTING AND FINANCIAL MANAGEMENT
Service, Set-Up, 9.1 Licensee shall pay to Licensor as a
License and Franchise, service and set-up fee
Sales Promotion $ 10,000 of which $ 5,000 has been
Program Fees paid upon the execution of this
Agreement and a balance of $ 5,000
is payable in accordance with the
terms of Appendix C attached
hereto. Said service and set-up fee
is intended to compensate Licensor
for its expenses incurred, and
.services rendered, in establishing
and setting up Licensee's initial
operation. In addition to said
service and set-up fee during, the
full term of this Operating
Agreement, and in consideration of
the rights granted hereunder,
Licensee shall pay to Licensor as
license fee in respect to the
rights granted herein equal to 4%
of gross retail sales exclusive of
retail sales taxes of all products,
goods and wares of every kind and
nature sold from, or in connection
with the operation of Licensee's
"Dairy Queen" retail store,
including, but without limiting the
generality of the foregoing, sales
of all products under any other
Trademark as well as sales of other
merchandise whether or not
identified by other brand names and
which may be authorized for sale by
American or Licensor from time to
time provided, notwithstanding the
foregoing, that no such continuing
licensee fee shall be payable with
respect to sales of Permitted
Products. In addition, Licensee
shall pay to Licensor for
remittance to American a sales
promotion fee to be expended in
accordance with the provisions of
Paragraphs 8.1. The sales promotion
fee shall be a sum equal to not
less than 3% nor more than 5% of
Licensee's gross retail sales net
of sales taxes (excluding sales of
Permitted Products). Licensor shall
determine
-12-
and notify Licensee of the exact
percentage prior to the first day
of each fiscal year of Licensor
(except no notification will be
given with respect to any year for
which the percentage is to be
unchanged from the preceding year)
Such percentage shall be the same
as that to be employed during such
succeeding year by the majority of
"Dairy Queen" licensees within the
marketing area as determined by
American within which Licensee's
store is located.
Computations 9.2 All amounts due and owing hereunder
and Remittances shall be computed at the end of
each month's operation and
remittance for the same shall be
made to Licensor on or before the
day of the following month
accompanied by the reports provided
for in Paragraph 9.4 hereof. The
computation of said amounts shall
be certified and sworn to by
Licensee in the manner specified by
licensor and Licensee shall supply
to Licensor such supporting or
supplementary materials as Licensor
may reasonably require to verify
the accuracy of such remittances.
Surcharge 9.3 At Licensor's option, Licensor may
Method of require Licensee to pay to.
Precollection suppliers of mix, meat and other
products and ingredients used in
the conduct of the business a
surcharge on all units of such
commodities purchased by Licensee.
Said surcharge shall be paid to
such supplier by Licensee at the
time of purchase of such
commodities. Said surcharge shall
be established by Licensor at a
reasonable rate so as to
approximate the amount of licensee
fee and sales promotion fee which
will be payable by Licensee. Said
surcharge shall be paid to said
supplier or suppliers for the
account of Licensor, the same to be
regarded by the parties as a method
of precollection of said license
and sales promotion fees. The
amounts so collected shall be
credited by Licensor against the
license and sales promotion fees
due from Licensee to Licensor at
the end of each month's operations.
Licensor shall submit to Licensee
on a monthly or quarterly basis a
reconciliation of said license and
sales promotion fees account
setting forth the credits to
Licensee's account by reason of
amounts collected for Licensor by
suppliers by way of the aforesaid
surcharge method. In the event
Licensee shall fail to submit
reports in accordance with
paragraph 9.4, Licensor may make
said reconciliation of amounts due
-13-
in conformance with its best
judgment with regard to said
amounts due and same shall be
conclusive as to the amounts due
Licensor from Licensee unless
within a period of ten (10) days
after mailing of said
reconciliation to Licensee by
Licensor, Licensee provides
evidence in a form satisfactory to
Licensor of the correct amounts
due. Licensee shall pay such
amounts, if any, determined to be
owed pursuant to Licensor's
reconciliation within ten (10)
days after a mailing of notice to
Licensee by Licensor if Licensor
determines that Licensee has
over-paid license or sales
promotion fees on the surcharge
basis, Licensor shall remit to
Licensee an amount equal to the
excess fees collected at the time
the monthly or quarterly
reconciliation is provided
Licensee.
Reports and 9.4 Licensee shall keep true records
Records from which all sums payable under
this Agreement and the dates of
accrual thereof may be readily
determined. Licensee shall make
written reports to Licensor in such
form as Licensor may from time to
time prescribe within fourteen (14)
days after the end of each month's
operation setting forth the amount
of gross sales of all products
from, or in connection with the
operation of, said store and the
business thereof during said month.
In addition to the foregoing, and
in addition to such other
information as Licensor may from
time to time require, said monthly
report shall accurately set forth
the total number of ,gallons of
mix, the total number of pounds of
meat, and the quantity of other
basic commodities used during said
month and the sources from which
said mix, meat and other
commodities were purchased together
with a complete statement of
Licensee's cost of labor,
utilities, rent and each other cost
of operation. For the purpose of
said reports the date of use of
such mix, meat and other
commodities shall be deemed to be
the date of receipt at the store.
Licensor, American or the
authorized representative of either
shall have the right at all times
during the business day to enter
Licensee's premises where books and
records. relative to said store are
kept, and to inspect, copy and
audit such books and records. In
the event that any such inspection
or audit, it reveals a variance of
3% or more from data, reported to
Licensor or American, in addition
to any other rights it may have
Licensor or
-14-
American may conduct such further
periodic audits and/or inspections
of Licensee's books and records as
it reasonably deems necessary for
up to one year thereafter and such
further audits and/or inspections
shall be at Licensee's sole expense
including without limitation
reasonable professional fees'
travel and room and board expenses
directly related thereto.
Financial 9.5 Licensee agrees to employ sound
Planning and financial management practices in
Management connection with the operation of
said business and to that end
Licensee shall maintain on forms
approved or provided by Licensor or
American a monthly profit plan, a
monthly profit and loss statement
and a monthly balance sheet
accurately reflecting the
operations and condition of said
business. In addition to the
foregoing, Licensee shall employ
such methods of record keeping,
bookkeeping and reporting as
Licensor shall from time to time
reasonably require and copies of
all monthly profit plans profit and
loss statements, sales
summaries and breakdowns for the
preceding month shall be forwarded
to Licensor on or before the
fourteenth day of the following
month.
Payment 9.6 Licensee agrees to pay promptly,
of Debts when due, all taxes and assessments
that may be assessed against said
premises or the equipment or
supplies used in connection with
Licensee's business, all liens and
encumbrances of every kind and
character created or placed upon or
against any of said property and
all accounts and other indebtedness
of every kind incurred by Licensee
in the conduct of said business. In
the event Licensee should default
in making any such payment,
Licensor shall be authorized, but
not required, to pay the same on
Licensee's behalf and Licensee
covenants promptly to reimburse
Licensor on demand for any such
payment. Any and all amounts owing
to Licensor by Licensee hereunder,
whether the same arise under the
provisions of this Paragraph, 9.6
or under any other provision of
this Agreement, shall bear interest
at 12% per annum or the maximum
rate permitted by law, whichever is
less, from and after the date of
accrual thereof.
Timely 9.7 The default by Licensee in the
Payment timely payment of any
indebtedness owing to Licensor
and/or American, or to any
affiliates of Licensor and/or
American, or the default by
Licensee in the payment of any
-15-
indebtedness of Licensee or with
respect to which Licensor or
American or any of Licensor's and/or
American's affiliates is a
guarantor, co-signer, endorser or
obligor, shall constitute a breach
of this Operation Agreement,
rendering the same subject to
termination in accordance with the
provisions of Paragraphs 10.1 and
10.2 hereof.
Insolvency, 9.8 In the event that Licensee be
Etc. declared insolvent or bankrupt, or
in the event a receiver is
appointed, this Operating Agreement
shall automatically terminate as of
the date of such declaration or
appointment.
Liability and 9.9 Licensee hereby waives all claims
Insurance against Licensor and/or American
for damages to property or injuries
to persons arising out of the
operation of Licensee's business
and Licensee shall indemnify and
save Licensor and/or American
and/or the affiliates of either
harmless of and from any damage
or injury to property or persons
arising from or in connection with
the operation of said business or
the consumption of the product
thereof. Licensee further agrees to
purchase and maintain in full force
and effect during the term of this
Agreement, at Licensee's sole
expense, liability insurance in an
aggregate amount not less than
$300,000 insuring Licensee,
Licensor and American from
liability for any and all such
damage or injury and Licensee
further agrees to deliver to
Licensor a proper certificate
evidencing the existence of such
insurance coverage and Licensee's
compliance with the provisions of
this paragraph and which provides
that Licensor and American will be
given thirty (30) days prior
written notice of material change,
termination or Cancellation of the
policy. Said insurance coverage
shall commence as of the date
Licensee commences operating a
"Dairy Queen" retail store or as of
the date the Authorized Location is
first identified as a site on which
a "Dairy Queen" retail store will
be operated, whichever shall first
occur.
Assignment and 9.10 Licensee agrees not to transfer,
Transfer assign or alienate his interest
herein or hereunder in whole or in
part without the prior written
consent of Licensor, which consent
shall. not be withheld unreasonably
but Licensor may insist that any
proposed assignment be an
assignment of all of Licensee's
interest
-16-
hereunder and that any proposed
assignee be a person, in Licensor's
reasonable judgment, qualified to
provide active supervision over the
operation of said store in
compliance with Licensee's
obligations hereunder and who has
sufficient net worth and sources of
capital which meet Licensor's then
current requirements for a store
operation of the type contemplated
by this form of agreement. In the
event Licensee's said interest
should be so transferred or
assigned, Licensee shall pay to
Licensor contemporaneously
therewith the sum of One Thousand
rive Hundred Dollars ($1,1500), or
an amount equal to one-half of the
license fees paid or payable by
Licensee in respect of operations
in the twelve (12) months ending
with the month prior to the month
in which the assignment is
approved, whichever is the greater
amount, as a fee for the
preparation of a new Operating
Agreement in assignee's name, for
Licensor's assistance in reset-up
of the retail store and for any and
all other expenses incurred and
services rendered by Licensor in
effecting said transfer. In the
event of any such assignment, the
assignee, as a condition of
Licensor approving such assignment,
must attend and to the reasonable
satisfaction of Licensor
successfully complete, at
assignee's expense, American's
training program at American's
training center. In the event
Licensee is a corporation,
partnership or other entity, any
transfer or transfers of stock (or
other form of ownership interest)
constituting in the aggregate a
controlling interest in Licensee
shall be subject to the consent,
transfer fee and all other
applicable provisions of this
Agreement. Licensor nay withhold
its consent to any proposed
transfer until all amounts owed by
Licensee to Licensor, American, the
affiliates or subsidiaries of
either and approved "Dairy Queen"
suppliers have been paid in full.
Offsets 9.11 Licensee waives any and all
existing and future claims and
of.0sets against any amounts due
hereunder, which amounts shall be
said when due. Licensor and
American shall be entitled to apply
or cause to be applied against
amounts due to either of them or
any of their respective affiliated
company any amounts which may from
time to time be held by either of
them or their respective
affiliates-on Licensee's behalf or
be owed to Licensee by
Licensor or American or their
respective affiliates.
-17-
CONTRACT VIOLATION
Remedies, 10. In the event of any dispute between the
Arbitration parties hereto arising under, out of, in
connection with or in relation to this
Agreement, said dispute shall be submitted
by the parties to binding arbitration in
accordance with the Rules and Procedures and
under the auspices of the American
Arbitration Association. The arbitration
shall take place at the capital of the state
of the Authorized Location of Licensee or at
such other place as may be mutually
agreeable to the parties. The decision of
the arbitrators shall be final and binding
on all parties. Notwithstanding the
foregoing, Licensee recognizes that his
"Dairy Queen" store is one of a large number
of stores similarly situated and selling to
the public similar products, and hence the
failure on the part of a single licensee to
comply with the terms of his Operating
Agreement could cause irreparable damage to
Licensor, American and/or to some or all
other "Dairy Queen" licensees. Therefore, it
is mutually agreed that in the event of a
breach or threatened breach of and of the
terms of this Operating Agreement by
Licensee, Licensor shall forthwith be
entitled to an injunction restraining such
breach and/or to a decree of specific
performance without having to show or prove
any actual damage, together with recovery of
reasonable attorney's fees and other costs
incurred in obtaining said equitable relief,
until such time as a final and binding
determination is made by the arbitrators.
The foregoing equitable remedy shall be in
addition to, and not in lieu of, all other
remedies or rights which Licensor might
otherwise have by virtue of any breach of
this Agreement by Licensee.
Breach of 10.1 Licensee shall be in default
Contract hereunder if Licensor determines
that Licensee has made any false
report to Licensor, or has failed
to pay when due any amounts owed to
Licensor, or has in Licensor's
judgment in any other way breached
any of the terms of this Agreement,
including but not limited to,
failing to submit required reports,
failing to meet any requirements or
specifications established with
respect to product quality,
physical property, conditions or
equipment or materials used,
products manufactured menu or use
of approved products, packages or
promotional materials. Failure of
Licensee to pay to Licensor any
past due amount owed within
fourteen (14) days of Licensor's
-18-
written notice of default therein
shall be construed as Licensee's
voluntary abandonment of this
Agreement and the franchised
business hereunder operated.
10.2 Except as hereinafter provided,
failure of Licensee to cure a
default by Licensee hereunder
within :fourteen C14) days from the
date of a written notice of default
mailed or delivered to Licensee,
which notice states such default,
shall give Licensor good cause to
terminate this Agreement.
Termination shall be accomplished
by mailing or delivering to
Licensee written notice of
termination which notice shall
state the grounds therefore and
shall be effective immediately in
any case of voluntary 'abandonment
of this Agreement by Licensee or
conviction of Licensee of an
offense directly related to the
business conducted hereunder; or
(ii) sixty (60) days after the date
of such notice of termination in
all other cases; provided, however,
that notwithstanding any other
provision of this- Paragraph 10.,
this Agreement may be terminated
immediately upon failure of
Licensee to cure within twenty-four
(24) hours of notice thereof any
default under this Agreement which
materially impairs the good will
associated with any of the
Trademarks. In addition to the
foregoing, this Agreement may be
terminated by Licensor upon any
ground or by any period of notice
as may be permitted from time to
time by applicable law or
regulation. Any notice of default
of termination shall be personally
delivered or be mailed by certified
or registered mail, return receipt
requested, postage prepaid.
Land, Building 10.3 Subject to the provisions of
Lease, or Failure Paragraph 5.4 hereof, any failure
to Reopen to rebuild or repair and reopen for
operation Licensee's destroyed or
damaged store or store whose lease
has been terminated or not .
renewed within one )rear of the
date of occurrence of such
termination, destruction or damage,
shall automatically terminate this
operating Agreement.
TERMINATION RIGHTS
11. Upon the termination of this operating
Agreement:
Reversion of 11.1 All rights to the use of the
Trademark Trademarks and the right and
Rights license to conduct said business at
the authorized Location shall
revert to Licensor and Licensee
-19-
shall immediately cease all use of
the Trademarks and pay all monies
due at said date. Licensee shall
promptly and at his own expense
remove or obliterate all store
signage and displays furnished to
Licensee by Licensor and shall
remove or obliterate and thereafter
discontinue .,.all use of any
signage or displays at the
Authorized Location or in his
possession bearing any of the
Trademarks or names or material
confusingly similar to any of the
Trademarks.
11.2 All right, title and interest of
Licensee in and to this Operating
Agreement shall become the property
of Licensor.
Purchase 11.3 Licensor shall have the first
option to purchase any or all
equipment, fixtures furnishings or
supplies, of whatever kind, owned
by Licensee and used by him in the
production of the "Dairy Queen"
product, or any of the other
approved products under any of the
Trademarks hereunder at a price
determined by a qualified appraiser
selected with the consent of both
parties. If the parties cannot
agree upon the selection of such an
appraiser he shall be appointed by
a Judge of the United States
District Court of Licensee's
Authorized Location upon petition
of either party. Said option to
purchase may be exercised by
Licensor at any time within thirty
(30) days from the date of such
termination or within thirty (30)
days after the date of the receipt
by Licensor of the appraiser's
determination, whichever shall be
the later date, and shall not be
impaired or terminated by the
attempted sale or other transfer of
any such equipment or supplies by
Licensee to a third party. Upon the
exercise of such option and tender
of payment for any such equipment
or supplies, Licensee agrees to
sell and deliver the same to
Licensor free and clear of all
encumbrances, and to execute and
deliver to Licensor a xxxx of
sale-therefore.
Non- 11.4 Licensee shall not directly or
Compete indirectly engage in any
competitive business within 2,000
yards of the Authorized Location
for a period of one year after said
date of termination of this
Agreement except though a or an
affiliate in operation at the time
of signing.
PERMITTED PRODUCTS
12. It is mutually understood and agreed that
the store facilities and operations of
Licensee hereunder may include in addition
to "Dairy Queen" or "Dairy Queen/Xxxxxxx"
food and beverage
-20-
service the sale of various other products
not identified or-designated by Company's
Trademarks, including, but not limited to,
motor vehicle fuel, oil and related
automotive products, souvenir-type products,
tobacco products, sundries, and packaged
food products not intended for consumption
on the premises where sold and which are not
competitive with food and beverage products
identified or designated by the Trademarks
Call of said products collectively referred
to in this Agreement as "Permitted
Products"). In order to prevent public
confusion, preserve and protect the
Trademarks and establish the principles
which shall govern Licensee's sale of
Permitted Products and usage of the
Trademarks, the parties agree that
notwithstanding any provision of this or any
other Agreement to the contrary, the
following provisions shall control with
regard to Permitted Products:
12.1 Licensee may sell Permitted
Products from its licensed store.
Licensee may use in the business
operated hereunder in the manner
and to the extent permitted by this
Agreement marks and names
identifying Permitted Products.
12.2 The Trademarks shall not under any
circumstances be used to identify
or designate Permitted Products or
any other products) for which use
of the Trademarks has not been
specifically authorized by
American. Permitted Products shall
be sold only from physical
facilities (such as a different
area, room or building) which are
clearly distinct and apart from the
"Dairy Queen" retail store.
12.3 No product shall be sold from any
part of any sublicensed store's
site which detracts or threatens to
detract from the reputation or
goodwill of the "Dairy Queen" trade
name or any of the Trademarks.
Licensor shall have the right to
direct Licensee to remove from the
store and Discontinue the sale of
any product item or items which in
American's good faith jud4ment
violates the quality standard of
the preceding sentence. No product
shall under any circumstances be
sold from the "Dairy Queen" portion
of the licensed store which has not
received the specific prior
approval of Licensor.
12.4 A building design and related
facility standards, based upon
American's existing design and
specifications for "Dairy Queen/
Xxxxxxx" stores, shall be developed
by mutual consultation and
agreement, which shall take into
account the particular requirements
for a "Dairy Queen," or "Dairy
Queen/Xxxxxxx" facility to be
situated-along an Interstate
highway. Licensee shall comply
strictly with the design and
facility standards developed
hereunder.
-21-
12.5 Notwithstanding Paragraph 3.2
hereof, Licensee may employ
off-site advertising media such as
billboards and radio commercials,
provided such advertising is
approved by Licensor and American,
and provided further that no such
advertising shall be used which
creates or fosters any confusion as
to the identity, source or quality
of goods identified or designated
by the Trademarks. Licensor
acknowledges that it may be
necessary to share extant billboard
space with an existing Stuckey's,
Wayfara or other store.- and
Licensor requires that advertising
for the "Dairy Queen" store be as
visually and physically separate
from the other advertising as is
feasible.
12.6 Because the "Dairy Queen" store
hereunder may also sell Permitted.
Products, the parties agree that
notwithstanding any other provision
of this Agreement or any other
contract between the parties,
Licensor deems it to be necessary
and desirable, to permit the
following.
a. To allow Licensee to sell
Permitted Products in
conjunction with a "Dairy
Queen" or "Dairy
Queen/Xxxxxxx" store;
b. To allow the principal
shareholders of Licensee
and members of their
immediate families to own
any amount or class of
stock or debt in any
business;
c. To the extent and in the
manner permitted
hereunder, to allow
Licensee to sell and to
advertise Permitted
Products in conjunction
with products identified
or designated by the
Trademarks;
d. Subject to Paragraph 6.1
hereof, to relieve
Licensee from the
obligation, with respect
to Permitted Products, to
purchase and use
equipment, supplies,
ingredients and services
approved by American;
e. To allow Licensee to
construct and equip its
retail store in accordance
with building design and
related facility standards
developed under Paragraph
12.4 hereof;
f. To relieve Licensee: (i)
from the obligation of
using, in preparing or
selecting Permitted
Products, ingredients,
formulas and supplies
-22-
specified by American;
(ii) from the obligation
to observe, with respect
to Permitted Products, the
requirements relative to
portions, sizes,
appearance and packaging
set forth in American's
"Store Management
Operations Manual" and
"product preparation
charts"; and (iii) with
respect to Permitted
Products, to allow the use
of other supplies and
customer service materials
without regard to
standards of uniformity
and quality as are now or
hereafter set by American;
g. To allow Licensee its
principal shareholders or
members of their immediate
families to engage in a
competitive business
within 2,000 yards of the
Authorized Location of the
store licensed hereunder,
as defined in the
Operating Agreement, but
only through a Candyland-
business; and
h. To relieve stockholders of
this corporate Licensee
from the obligation of
personally guarantying the
obligations of Licensee
under the Operating
Agreement. Sale or
transfer of this License
to another corporation
shall include the then
customary guarantees
required of corporations.
GENERAL PROVISIONS
13.1 In the event any one or more
clauses of this Agreement shall be
held to be void or unenforceable
for any reason by any court of
competent jurisdiction such clause
or clauses shall be deemed to be
separable and of no force or effect
in such jurisdiction and the
remainder of this Agreement shall
be deemed to be valid and in full
force and effect, and the terms of
this Operating Agreement' shall be
equitably adjusted so as to
compensate the appropriate party
for any consideration lost because
of the elimination of such clause
or clauses.
13.2 Any waiver by Licensor of any
breach or default by Licensee shall
not be deemed to be a waiver of any
other or subsequent breach or
default nor an estoppel to enforce
its rights in the event of any
other or subsequent breach.
13.3 This Agreement, and the application
form executed by Licensee
requesting Licensor to enter into
this Agreement, constitute the sole
agreement between the parties with
respect to the entire subject
matter of this Operating Agreement
and embodies all prior agreements
and negotiations with respect to
the "Dairy Queen" business. There
are no representations of any kind
except as contained herein and in
the aforesaid application.
-23-
13.4 Except as otherwise provided in
this Agreement, any notice, demand
or communication provided for
herein shall be in writing, signed
by the party giving the same,
deposited in the registered or
certified United States mail,
return receipt requested, postage
prepaid, and:
a. If intended for American
shall be addressed to
American Dairy Queen
Corporation at 0000 Xxxxx
Xxxxxx Xxxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000;
b. If intended for Licensor
shall be addressed to
Licensor at the address
hereinabove set forth;
c. If intended for Licensee,
shall be addressed to
Licensee at the Authorized
Location hereinabove
designated; or to such
other address as may have
been given to the other
party by notification as
herein provided.
13.5 If Licensee consists of two or more
individuals, such individuals shall
be jointly and severally liable and
references to Licensee in this
Agreement shall include all such
individuals. Reference to Licensee
as male shall also include a female
licensee, partnership or
corporation or any other business
entity. Headings and captions
contained herein are for
convenience of reference only and
shall not be taken into account in
construing or interpreting this
Agreement.
13.6 Subject to the terms of Paragraph
9.10 hereof, this Agreement shall
be binding upon and inure to the
benefit of the administrators,
executors.- heirs, successors and
assigns of the parties.
13.7 This Agreement shall be effective
only when approved by an officer of
American and shall be governed by
and interpreted in accordance with
the law of the state in which the
Authorized Location is Located.
13.8 This Agreement shall be deemed to
be amended from time to time as may
be necessary to bring any of its
provisions into conformity with
valid applicable laws or
regulations.
-24-
IN WITNESS WHEREOF, the parties hereto have executed the foregoing
"DairyQueen" Operation Agreement the date first above written.
LICENSEE
XXXXXX'X, INC. d/b/a DQ of BLUEWATER, NM
ATTEST:
By:/s/ XXXXXXX X. XXXXXX
/s/ XXX X. XXXXXX --------------------------------------
--------------------------- Its:/s/ Executive Vice President
Assistant Secretary ----------------------------------
LICENSOR
ATTEST
/s/ XXXXXXX X. XXXXXXXX
---------------------------
INTERSTATE DAIRY QUEEN CORPORATION
By: /s/ SIGNATURE ILLEGIBLE
--------------------------------------
Its: President
----------------------------------
APPROVED:
AMERICAN DAIRY QUEEN CORPORATION
By /s/ XXXXXX X. XXXXXX
--------------------------------------
Its V.P.
-----------------------------------
-00-
XXXXXXXX "X"
Dairy Queen/Xxxxxxx(R) Date: 4/12/83
Initials:
(Licensee)(Please attach to copy of current operating agreement)
Below is listed the approved menu of Company for Dairy Queen/Xxxxxxx(R) stores
which is in current use and effect. Licensee is authorized to use this menu in
accordance with the attached Operating Agreement.
This Appendix "B" may be amended by Company from time to time in order to make
available additional products or to delete those which become unavailable.
Licensee agrees to use only those products which are- then currently authorized
for use in Dairy Queen/Xxxxxxx(R) stores.
Licensee shall use in preparing products only such ingredients, formulas and
supplies as are specified by Company and in such portions, sizes, appearance and
package as set forth in Company's most current "Store Management Operations
Manual" and "Product Preparation Charts."
National Required National Required National Required
Xxxxxxx(R) Food Items Dairy Queen(R) Soft Serve Items Beverage Items
--------------------- ------------------------------- ------------------
Hamburgers Cones Carbonated Drinks**
Single Dipped Cones Mr. Xxxxx(R)
Double Sundaes
Triple Malts/Shakes National Optional
w/Cheese Float Beverage Items
w/Lettuce and Tomato Mr. Xxxxx(R) Float ------------------
Hot Dog Freeze Milk
w/Chili Mr. Xxxxx(R) Freeze Coffee
w/Cheese Banana Split Hot Chocolate
Fish Sandwich Peanut Xxxxxx Xxxxxxx(TM) Iced Tea
w/Cheese Double Delight(TM) Lemonade
Chicken Sandwich Frozen Novelties Diet Carbonated
French Fries Dilly(R) Bar Soft Drinks**
Onion Rings Buster Bar(R) and/or
Chili Dog Split Fudge Nut Bar(TM)
DQ(R) Sandwich and/or Dillywich(R)
National Optional Mr. Xxxxx Kiss(R) and/or
Xxxxxxx(R) Food Items Star Kiss(TM)
--------------------- Home Pak
Super Dog
w/Chili
w/Cheese
Chili Bowl
Barbecue Sandwich National Optional
Dairy Queen(R) Soft Serve Items
-------------------------------
Hot Fudge Brownie Delight(TM)
Strawberry Shortcake
Banana Supreme(TM)
Shake 'n Sundae
Parfait
Special Category Xxxxxxx(R) Items Soda
---------------------------------- Low Fat Frozen Yogurt
Xxxxxxx(R) Crispy Fried Chicken Frozen Cakes and Logs
(Licensee may sell
frozen cakes and
logs subject to
meeting the special
requirements as set
forth from time to
time by company and
by obtaining prior
certification of
eligibility from
company.)
* Special Category Xxxxxxx Items may be sold by Licensee if Licensee desires to
do so, but they are not required. Notwithstanding the foregoing, Licensee may
only continue to sell a special category item by substantiating to Company that
the sale of each item amounts to at least 2% of the stores total annual retail
sales.
** A minimum of three carbonated soft drinks must be provided by Licensee. All
carbonated soft drinks must be of high quality in national distribution and made
by a primary manufacturer.
Note: The Dairy Queen soft serve, Xxxxxxx food and beverage items listed on the
National Optional Menus shown above may be sold by Licensee if Licensee desires
to do so, but are not required to be sold.
APPENDIX "A"
Licensee has the right and privilege to use the following trademarks
and service marks in accordance with the attached Operating Agreement.
This Appendix "A" may be amended by Company from time to time in order
to make available additional trademarks or --ice marks or to delete those which
become unavailable. Licensee agrees to use only those trademarks and service
xxxx.,, which are then currently authorized.
DAIRY QUEEN XXXXXX XXX
XXXXXXX DILLY
MR. XXXXX DQ
MR. XXXXX KISS THE ELLIPSE DESIGN
ROOF DESIGN BROWNIE DELIGHT
LET'S ALL GO TO THE THE CONE WITH THE
DAIRY QUEEN CURL ON TOP
FIESTA DESIGN: THE CONE
WITH THE CURL ON TOP
Each of the above trademarks and/or service marks must be used only in
the manner specified by the Company and in connection with the goods and/or
services specified by the Company. No deviations will be permitted.
Appendix "C"
Licensee shall pay to Licensor as a service and set-up fee $10,000 of which
$5,000 has been paid upon the :execution of this Agreement and a balance of
$5,000 is payable as follows: $1,000 principal payable each :October 1st
(beginning October 1, 1983 and ending October 1. 1987) and.12% interest per
annum on the unpaid principal payable each October lst.
APPENDIX "D"
RESERVATIONS TO CERTAIN ITEMS IN
"DAIRY QUEEN" OPERATING AGREEMENT
1. Paragraph 4.6. Licensor advises that the purpose of this paragraph is full
disclosure.
2. Paragraph 5.1. Licensee and American will agree on the plans for remodeling
the existing building to conform to requirements of Paragraph 5.1.
3. Paragraph 6.1. Licensee operates a full line novelty and curio store in the
building adjoining Licensee's "Dairy Queen"/"Xxxxxxx" operation. Licensee
maintains separate accounting for sales from adjoining store and "Dairy
Queen"/"Xxxxxxx" operations. Sales In Licensee's merchandise, novelty, and
curio store shall not be subject to continuing license fees or sales
promotion fees.
4. Paragraph 6.1. Licensee may sell the Traditional or Biscuit Breakfast as
provided for by American in the breakfast test program until the test Is
discontinued at which time Licensee may apply for a menu deviation which
may or may not be granted by Licensor.
5. Paragraph 9.l. 'Licensee is obligated to pay monthly sales promotion fees
as provided for in paragraph 9.1. Any deviation or variance from the
required monthly payment shall be of a temporary nature and shall not in
any way prejudice Licensee's obligation to strictly follow Paragraph 9.1
and make monthly sales promotion fee payments if requested at a later date
by Licensor..
In recognition that Interstate Licensees in the past have expended more than 3%
of sales on advertising (primarily in outdoor, the most Effective medium .for
communicating to highway travelers), American and Interstate have temporarily
without prejudice allowed Licensees to credit monthly advertising expenditures
to sales promotion fee payments each month. if a Licensee does not expend the
required sales promotion fee percentage monthly, the balance must be remitted.
American reserves the right to discontinue this special arrangement at anytime.
Development of national advertising program and other events in American's and
Interstate's exclusive discretion and judgment may require ' , and Licensee
hereby agrees to make, full and regular monthly payments of the sales promotion
fee to Interstate.
Licensee is obligated to pay and participate annually in the Annual Marketing
Program (AMP). In cases where Licensee pays sales promotion fee monthly to
Interstate, the AMP fee will be paid from amounts remitted to Interstate. In
cases where Licensee does not pay sales promotion fee monthly to Interstate,
Licensee shall remit the annual fee to Interstate.
6. Paragraph 9.4. Licensee has requested that for reasonable and orderly
availability of data that if Licensor or American wishes to audit or look
at Licensee's books, that Licensor give Licensee at least 10 days notice
prior to date so data may be readily available to Licensor. Licensor and
American, in accordance with generally accepted auditing standards, decline
to give such notice.
7. Paragraph 9.5. Licensee already owns an in-house computer that generates a
profit and loss statement for a profit center such as Licensee's "Dairy
Queen". Licensee hereby requests that Licensor accept Licensee's profit and
loss report, as already programmed which uses profit center identification
and consolidated balance sheet. Licensor has requested and shall be
furnished with a "dummy" statement for consideration.
8. Paragraph 10.1, 10.2, and 13.4. Licensee requires and Licensor agrees that
any notices under any contract or agreement shall be mailed certified mail,
return receipt, and that for purposes of this Agreement notice shall be
deemed to have been received on the earlier of the date of delivery or
first attempted delivery as indicated on the return receipt (or in the
absence of a noted delivery date, or noted attempted delivery date, 15 days
from noted date of mailing).
