Exhibit 10.17
Buffalo Wild Wings(R) Franchise Agreement
Authorized Location:
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Street
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City State Zip Code
Effective Date:
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(To be completed by Us)
--TABLE OF CONTENTS--
BUFFALO WILD WINGS(R) FRANCHISE AGREEMENT
SECTION PAGE
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1. DEFINITIONS...............................................................2
2. GRANT OF LICENSE..........................................................4
3. TRADEMARK STANDARDS AND REQUIREMENTS......................................6
4. TERM AND RENEWAL..........................................................7
5. FACILITY STANDARDS AND MAINTENANCE........................................8
6. PRODUCTS AND OPERATIONS STANDARDS AND REQUIREMENTS.......................12
7. PERSONNEL AND SUPERVISION STANDARDS......................................16
8. ADVERTISING..............................................................18
9. FEES, REPORTING AND AUDIT RIGHTS.........................................19
10. YOUR OTHER OBLIGATIONS; NONCOMPETE COVENANTS.............................22
11. TRANSFER OF FRANCHISE....................................................24
12. DISPUTE RESOLUTION.......................................................28
13. DEFAULT AND TERMINATION..................................................29
14. POST-TERM OBLIGATIONS....................................................31
15. GENERAL PROVISIONS.......................................................33
APPENDICES
A. Trademarks
B. Designated Area
C. Addendum to Lease
D. Electronic Transfer of Funds Authorization
E. Gift Cards Participation Agreement
BUFFALO WILD WINGS(R) FRANCHISE AGREEMENT
This Franchise Agreement is made this day of , 20
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between BUFFALO WILD WINGS INTERNATIONAL, INC., an Ohio corporation with its
principal business located at 0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxxx,
Xxxxxxxxx 00000 ("we" or "us"), and , a(n)
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whose principal business address is
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("franchisee" or "you"). If the franchisee is a
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corporation, partnership, limited liability company or other legal entity,
certain provisions to this Agreement also apply to its owners.
RECITALS
A. Our parent company has developed a unique system for video entertainment
oriented, fast casual restaurants that feature chicken wings, sandwiches, unique
food service and other products, beverages and services using certain standards
and specifications;
B. Many of the food and beverage products are prepared according to
specified recipes and procedures, some of which include proprietary sauces and
mixes.
C. Our parent company owns the Buffalo Wild Wings(R) Trademark and other
trademarks used in connection with the operation of a Buffalo Wild Wings
restaurant;
D. Our parent company has granted to us the right to sublicense the right
to develop and operate Buffalo Wild Wings restaurants; and
E. You desire to develop and operate a Buffalo Wild Wings restaurant and
we, in reliance on your representations, have approved your franchise
application.
In consideration of the foregoing and the mutual covenants and
consideration below, you and we agree as follows:
DEFINITIONS
1. For purposes of this Agreement, the terms below have the following
definitions:
A. "Control Person" means the individual who has the authority to, and
does in fact, actively direct your business affairs in regard to the
Restaurant, is responsible for overseeing the general management of the
day-to-day operations of the Restaurant and has authority to sign on your
behalf on all contracts and commercial documents. The Control Person is
identified on the Ownership and Management Addendum attached to this
Agreement, provided, however, that the Control Person must be approved by
us in writing prior to being appointed by you, and we may revoke our
approval at any time, in which case (i) the disapproved Control Person may
not be the Control Person for any Buffalo Wild Wings restaurant operated by
you and (ii) you must, with our prior written approval, appoint a new
Control Person within 30 days from the date we revoked our approval for
your prior Control Person, and your new Control Person must be fully
trained immediately.
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B. "Gross Sales" includes the total revenues and receipts from the
sale of all products, services and merchandise sold in your Restaurant
whether under any of the Trademarks or otherwise, including any cover
charges or fees, vending or similar activities in your Restaurant or on its
premises as well as all license and use fees. Gross Sales excludes sales
taxes.
C. "Menu Items" means the chicken wings, sandwiches and other products
and beverages prepared according to our specified recipes and procedures,
as we may modify and change from time to time.
D. "Principal Owner" means any person or entity who, now or hereafter,
directly or indirectly owns a 10% or greater interest in the franchisee
when the franchisee is a corporation, limited liability company,
partnership, or a similar entity. In addition, if the franchisee is a
partnership entity, then each person or entity who, now or hereafter is or
becomes a general partner is a Principal Owner, regardless of the
percentage ownership interest. If the franchisee is one or more
individuals, each individual is a Principal Owner of the franchisee. Each
franchisee must have at least one Principal Owner. Your Principal Owner(s)
are identified on the Ownership and Management Addendum attached to this
Agreement. Every time there is a change in the persons who are your
Principal Owners, you must, within 10 days from the date of each such
change, update the Ownership and Management Addendum. As used in this
Agreement, any reference to Principal Owner includes all Principal Owners.
E. "Restaurant" means the Buffalo Wild Wings Restaurant you develop
and operate pursuant to this Agreement.
F. "System" means the Buffalo Wild Wings System, which consists of
distinctive food and beverage products prepared according to special and
confidential recipes and formulas with unique storage, preparation, service
and delivery procedures and techniques, offered in a setting of distinctive
exterior and interior layout, design and color scheme, signage, furnishings
and materials and using certain distinctive types of facilities, equipment,
supplies, ingredients, business techniques, methods and procedures together
with sales promotion programs, all of which we may modify and change from
time to time.
G. "Trademarks" means the Buffalo Wild Wings Trademark and Service
Xxxx that have been registered in the United States and elsewhere and the
trademarks, service marks and trade names set forth on Appendix A, as we
may modify and change from time to time, and the trade dress and other
commercial symbols used in the Restaurant. Trade dress includes the
designs, color schemes and image we authorize you to use in the operation
of the Restaurant from time to time.
H. "Unit General Manager" means the individual who (i) personally
invests his or her full time and attention and devotes his or her best
efforts to the on-premises general management of the day-to-day operations
of the Restaurant, (ii) meets our prior restaurant or retail management
experience requirements, and (iii) does not participate in the active
operation or management of any business other than the Restaurant. The Unit
General Manager must be appointed at least 60 days prior to the Restaurant
opening, fully trained 20 days prior to the Restaurant opening and is or
will be identified on the Ownership and Management Addendum attached to
this Agreement, provided, however, that the Unit General Manager must be
approved by us in writing prior to being appointed by you, and we may
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revoke our approval at any time, in which case (i) the disapproved Unit
General Manager may not be the Unit General Manager for any Buffalo Wild
Wings restaurant operated by you and (ii) you must, with our prior written
approval, appoint a new Unit General Manager within 60 days from the date
we revoked our approval for your prior Unit General Manager, and your new
Unit General Manager must be fully trained immediately.
GRANT OF LICENSE
2. The following provisions control with respect to the license granted
hereunder:
A. Authorized Location. We grant to you the right and license to
establish and operate a retail Restaurant identified by the Buffalo Wild
Wings Trademarks or such other marks as we may direct, to be located at
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or a location to be designated within
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90 days from the date of this Agreement (the "Authorized Location"). When a
location has been designated by you and approved by us, it will become part
of this subparagraph 2.A as if originally stated. If an Authorized Location
is not designated by you and approved by us within 90 days from the date of
this Agreement, we have the right to declare this Agreement null and void
without the return of any Initial Franchise Fee or other amounts paid to
us. You accept the license and undertake the obligation to operate the
Restaurant at the Authorized Location using the Trademarks and the System
in compliance with the terms and conditions of this Agreement.
B. Designated Area. You must locate and operate the Restaurant at an
Authorized Location within the area described in Appendix B (the
"Designated Area"). We and our affiliates will not locate and operate or
grant to anyone else a franchise to locate and operate a Buffalo Wild Wings
restaurant within the Designated Area so long as this Agreement is in
effect, except as provided in subparagraph 2.D. You do not have any right
to sublicense or subfranchise within or outside of the Designated Area and
do not have the right to operate more than one Restaurant within the
Designated Area.
C. Opening. You agree that the Restaurant will be open and operating
in accordance with the requirements of subparagraph 5.A within (i) 240 days
after the date the Authorized Location is designated if the Restaurant is
located within an end cap, shopping mall, Special Site or other similar
location, or (ii) 365 days after the date the Authorized Location is
designated if the Restaurant is a free-standing building, unless in either
case we authorize in writing an extension of time.
D. Nonexclusivity; Our Reservation of Rights. The license is limited
to the right to develop and operate one Restaurant at the Authorized
Location located in the Designated Area, and does not include (i) any right
to sell products and Menu Items identified by the Trademarks at any
location other than the Authorized Location, except for authorized catering
and delivery services as noted in subparagraph 2.E, or through any other
channels or methods of distribution, including the internet (or any other
existing or future form of electronic commerce), (ii) any right to sell
products and Menu Items identified by the Trademarks to any person or
entity for resale or further distribution, or (iii) any right to exclude,
control or impose conditions on our development of future franchised,
company or affiliate owned restaurants at any time or at any location.
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You acknowledge and agree that (i) we and our affiliates have the
right to operate or franchise within the Designated Area one or more
facilities with limited sitting, selling, for dine in or take out, some of
the Menu Items, using the Trademarks or any other trademarks, service marks
or trade names, without compensation to any franchisee, provided, however,
that such facilities shall not be full service restaurants, shall not be
video entertainment oriented and shall not be fast casual restaurants; (ii)
we and our affiliates have the right outside of the Designated Area to
grant other franchises or develop and operate company or affiliate owned
Buffalo Wild Wings restaurants and offer, sell or distribute any products
or services associated with the System (now or in the future) under the
Trademarks or any other trademarks, service marks or trade names or through
any distribution channel or method, all without compensation to any
franchisee; (iii) the consumer service area or trade area of another
Buffalo Wild Wings restaurant may overlap with your Designated Area; and
(iv) we and our affiliates have the right to operate and franchise others
the right to operate restaurants or any other business within and outside
the Designated Area under trademarks other than the Buffalo Wild Wings
Trademarks, without compensation to any franchisee, except that our
operation of, or association or affiliation with, restaurants (through
franchising or otherwise) in the Designated Area that compete with Buffalo
Wild Wings restaurants in the video entertainment oriented, fast casual
restaurant segment will only occur through some form of merger or
acquisition with an existing restaurant chain.
In addition, we and our affiliates have the right to offer, sell or
distribute, within the Designated Area, any frozen, pre-packaged items or
other products or services associated with the System (now or in the
future) or identified by the Trademarks, or any other trademarks, service
marks or trade names, except for Prohibited Items (as defined below),
through any distribution channels or methods, without compensation to any
franchisee. The distribution channels or methods include, without
limitation, grocery stores, club stores, convenience stores, wholesale,
hospitals, clinics, health care facilities, business or industry locations
(e.g. manufacturing site, office building), military installations,
military commissaries or the internet (or any other existing or future form
of electronic commerce). The Prohibited Items are the following items that
we will not sell in the Designated Area through other distribution channels
or methods: any retail food service Menu Items that are cooked or prepared
to be served to the end user or customer for consumption at the retail
location. For example, chicken wings cooked and served to customers at a
grocery store or convenience store would be a Prohibited Item, but the sale
of frozen or pre-packaged chicken wings at a grocery store or convenience
store would be a permitted form of distribution in the Designated Area.
Further, you acknowledge that certain locations within the Designated
Area are by their nature unique and separate in character from sites
generally developed as Buffalo Wild Wings restaurants. As a result, you
agree that the following locations ("Special Sites") are excluded from the
Designated Area and we have the right, subject to our then-current Special
Sites Impact Policy, to develop or franchise such locations: (1) military
bases; (2) public transportation facilities; (3) sports facilities,
including race tracks; (4) student unions or other similar buildings on
college or university campuses; (5) amusement and theme parks; and (6)
community and special events.
E. Catering and Delivery. You may not engage in catering and delivery
services and activities within or outside of the Designated Area, unless we
authorize you in
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writing, as further described in subparagraph 6.L. We and our affiliated
companies will not engage in catering and delivery services and activities
in the Designated Area; however, we have no obligation to enforce similar
covenants against any other franchisee.
TRADEMARK STANDARDS AND REQUIREMENTS
3. You acknowledge and agree that the Trademarks are our parent company's
property and it has licensed the use of the Trademarks to us with the right to
sublicense to others. You further acknowledge that your right to use the
Trademarks is specifically conditioned upon the following:
A. Trademark Ownership. The Trademarks are our parent company's
valuable property, and it is the owner of all right, title and interest in
and to the Trademarks and all past, present or future goodwill of the
Restaurant and of the business conducted at the Authorized Location that is
associated with or attributable to the Trademarks. Your use of the
Trademarks will inure to our parent company's benefit. You may not, during
or after the term of this Agreement, engage in any conduct directly or
indirectly that would infringe upon, harm or contest our parent company's
rights in any of the Trademarks or the goodwill associated with the
Trademarks, including any use of the Trademarks in a derogatory, negative,
or other inappropriate manner in any media, including but not limited to
print or electronic media.
B. Trademark Use. You may not use, or permit the use of, any
trademarks, trade names or service marks in connection with the Restaurant
except those set forth in Appendix A or except as we otherwise direct in
writing. You may use the Trademarks only in connection with such products
and services as we specify and only in the form and manner we prescribe in
writing. You must comply with all trademark, trade name and service xxxx
notice marking requirements. You may use the Trademarks only in association
with products and services approved by us and that meet our standards or
requirements with respect to quality, mode and condition of storage,
production, preparation and sale, and portion and packaging.
C. Restaurant Identification. You must use the name Buffalo Wild Wings
Grill & BAR as the trade name of the Restaurant and you may not use any
other xxxx or words to identify the Restaurant without our prior written
consent. You may not use any the words Buffalo, Wild or Wings or any of the
other Trademarks as part of the name of your corporation, partnership,
limited liability company or other similar entity. You may use the
Trademarks on various materials, such as business cards, stationery and
checks, provided you (i) accurately depict the Trademarks on the materials
as we describe in our style guide, (ii) include a statement on the
materials indicating that the business is independently owned and operated
by you, (iii) do not use the Trademarks in connection with any other
trademarks, trade names or service marks unless we specifically approve in
writing prior to such use, and (iv) make available to us, upon our request,
a copy of any materials depicting the Trademarks. You must post a prominent
sign in the Restaurant identifying you as a Buffalo Wild Wings franchisee
in a format we deem reasonably acceptable, including an acknowledgment that
you independently own and operate the Restaurant and that the Buffalo Wild
Wings Trademark is owned by our parent company and your use is under a
license we have issued to you. All your internal and external signs must
comply at all times with our outdoor/indoor guidelines and practices, as
they are modified from time to time.
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D. Litigation. In the event any person or entity improperly uses or
infringes the Trademarks or challenges your use or our use or ownership of
the Trademarks, we will control all litigation and we have the right to
determine whether suit will be instituted, prosecuted or settled, the terms
of settlement and whether any other action will be taken. You must promptly
notify us of any such use or infringement of which you are aware or any
challenge or claim arising out of your use of any Trademark. You must take
reasonable steps, without compensation, to assist us with any action we
undertake. We will be responsible for our fees and expenses with any such
action, unless the challenge or claim results from your misuse of the
Trademarks in violation of this Agreement.
E. Changes. You may not make any changes or substitutions to the
Trademarks unless we direct in writing. We reserve the right to change the
Trademarks at any time. Upon receipt of our notice to change the
Trademarks, you must cease using the former Trademarks and commence using
the changed Trademarks, at your expense.
TERM AND RENEWAL
4. The following provisions control with respect to the term and renewal of
this Agreement:
A. Term. The initial term of this Agreement is (i) 20 years if the
Restaurant is a free standing location (a single use, single tenant,
unattached building or pad site), or (ii) 15 years if the Restaurant is
located in an end cap, shopping mall or other non-free standing location,
unless this Agreement in either case is sooner terminated in accordance
with Paragraph 13. Therefore, your initial term is for years. If your
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Restaurant type is not known at the time the Franchise Agreement is signed,
we subsequently will designate the length of the initial term in writing.
The initial term commences upon the Effective Date of this Agreement. We
may extend this initial term in writing for a limited period of time not to
exceed 6 months to take into account the term of any applicable lease for
the Authorized Location.
B. Renewal Term and Conditions of Renewal. You may renew your license
for two renewal terms, regardless of whether your Restaurant is a free
standing or non-free standing location (the first renewal term is 10 years;
the second renewal term is 5 years), provided that with respect to each
renewal: (i) you have given us written notice of your decision to renew at
least 6 months but not more than 12 months prior to the end of the expiring
term; (ii) you sign our then-current form of franchise agreement (modified
to reflect no additional renewal term upon expiration and other
modifications to reflect that the agreement relates to the grant of a
renewal), the terms of which may differ from this Agreement, including
higher fees and a modification to the Designated Area (although in no event
will the revised Designated Area have a residential population of the
lesser of approximately 40,000 or the residential population that existed
as of the Effective Date); (iii) you have complied with the provisions of
subparagraph 5.E regarding modernization, unless we determine that you
should relocate your Restaurant because your Authorized Location no longer
meets our then-current site criteria, in which case you must comply with
the 90 and 240 day relocation requirements of subparagraph 5.D; (iv) you
are not in default of this Agreement or any other agreement pertaining to
the franchise granted, have satisfied all monetary and material obligations
on a timely basis during the term and are in good standing; (v) if leasing
the Restaurant premises (and not subject to relocation under (iii) above),
you have renewed the lease and have provided written proof of your ability
to
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remain in possession of the premises throughout the renewal period; (vi)
you comply with our then-current training requirements; (vii) you pay to us
a renewal fee in the amount of $15,000; and (viii) you and your Principal
Owners and guarantors execute a general release of claims in a form we
prescribe.
FACILITY STANDARDS AND MAINTENANCE
5. You acknowledge and agree that we have the right to establish, from time
to time, quality standards regarding the business operations of Buffalo Wild
Wings restaurants and stores to protect the distinction, goodwill and uniformity
symbolized by the Trademarks and the System. Accordingly, you agree to maintain
and comply with our quality standards and agree to the following terms and
conditions:
A. Restaurant Facility; Lease. You are responsible for purchasing or
leasing a site that meets our site selection criteria. You must obtain our
written consent to the site. If we have developed a proprietary site
evaluation system, prior to granting our consent to a site, you must have
the site evaluated by our proprietary site evaluator software. This
software will be licensed to us by a third party provider. You are required
to pay a fee to such provider for each site you ask us to consider for
final evaluation. The fee is between $500 to $850 per site. You may not use
the Restaurant premises or Authorized Location for any purpose other than
the operation of a Buffalo Wild Wings Restaurant during the term of this
Agreement. We make no guarantees concerning the success of the Restaurant
located on any site to which we consent.
You may not open your Restaurant for business until we have notified
you in writing that you have satisfied your preopening obligations as set
forth in subparagraphs 5.A and 5.B and we have approved your opening date.
We are not responsible or liable for any of your preopening obligations,
losses or expenses you might incur for your failure to comply with these
obligations or your failure to open by a particular date. We also are
entitled to injunctive relief or specific performance under subparagraph
12.C for your failure to comply with your obligations.
In the event that you plan to enter into any type of lease for the
Restaurant premises, you must provide us a copy of the lease at least 10
business days prior to the date you would execute the lease; we reserve the
right to, in such 10 days period, review and approve or reject the lease.
We have no responsibility for the lease; it is your sole responsibility to
evaluate, negotiate and enter into the lease for the Restaurant premises.
Your lease must contain the Lease Addendum attached as Appendix C. You must
provide us a copy of the executed lease and Addendum within 5 days of their
execution.
B. Construction; Future Alteration. You must construct and equip the
Restaurant in strict accordance with our current approved specifications
and standards pertaining to equipment, inventory, signage, fixtures,
accessory features and design and layout of the building. You may not
commence construction of the Restaurant until you have received our written
consent to your building plans. If your Restaurant is not constructed
strictly according to the consented building plans, we will not approve
your Restaurant for opening. You will have 30 days from the date we deny
our approval for opening your Restaurant to correct all the construction
problems so that your Restaurant is strictly constructed according to the
consented building plans. If you fail to correct the problems within the 30
day period we may immediately terminate this Agreement pursuant to
subparagraph 13.B.2. If the Restaurant
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opening is delayed for the foregoing reasons, you will be responsible for
any losses and costs related to such delay.
Without limiting the generality of the prior paragraph, you must
promptly after obtaining possession of the site for the Restaurant: (i)
retain the services of an architect and a contractor each of whom must have
gone through our application process or otherwise been approved by us in
writing (although if this Agreement is for your first Buffalo Wild Wings
restaurant, we may require you to use one of our designated architects and
contractors); (ii) have prepared and submitted for our approval a site
survey and basic architectural plans and specifications (not for
construction) consistent with our general atmosphere, image, color scheme
and ambience requirements as set forth from time to time in the manuals for
a Buffalo Wild Wings restaurant (including requirements for dimensions,
exterior design, materials, interior design and layout, equipment,
fixtures, furniture, signs and decorating); (iii) purchase or lease and
then, in the construction of the Restaurant, use only the approved
equipment, fixtures, audio visual equipment, furniture and signs; (iv)
complete the construction and/or remodeling, equipment, fixtures, furniture
and sign installation and decorating of the Restaurant in full and strict
compliance with plans and specifications we approve and all applicable
ordinances, building codes and permit requirements without any unauthorized
alterations; (v) obtain all customary contractors' sworn statements and
partial and final waiver obtain all necessary permits, licenses and
architectural seals and comply with applicable legal requirements relating
to the building, signs, equipment and premises, including, but not limited
to, the Americans With Disabilities Act; and (vii) obtain and maintain all
required zoning changes, building, utility, health, sanitation, liquor and
sign permits and licenses and any other required permits and licenses. It
is your responsibility to comply with the foregoing conditions.
Any change to the building plans or any replacement, reconstruction,
addition or modification in the building, interior or exterior decor or
image, equipment or signage of the Restaurant to be made after our consent
is granted for initial plans, whether at the request of you or of us, must
be made in accordance with specifications that have received our prior
written consent. You may not commence such replacement, reconstruction,
addition or modification until you have received our written consent to
your revised plans.
C. Maintenance. The building, equipment, fixtures, furnishings,
signage and trade dress (including the interior and exterior appearance)
employed in the operation of your Restaurant must be maintained and
refreshed in accordance with our requirements established periodically and
any of our reasonable schedules prepared based upon periodic evaluations of
the premises by our representatives. Within a period of 30-45 days (as we
determine depending on the work needed) after the receipt of any particular
report prepared following such an evaluation, you must affect the items of
maintenance we designate, including the repair of defective items and/or
the replacement of irreparable or obsolete items of equipment and signage.
If, however, any condition presents a threat to customers or public health
or safety, you must affect the items of maintenance immediately, as further
described in subparagraph 6.G. Items of maintenance covered by this
subparagraph 5.C include, but are not limited to, HVAC equipment, plumbing
system and hot water heater, electrical system, equipment, furniture, POS
equipment, audio/visual equipment, interior finishes, signs, roofing,
exterior surfaces and painting, landscaping, sidewalks, curbs, street
aprons, dumpster area, parking lot surfaces including striping and
lighting. Items of maintenance will not be considered items of
modernization or replacement under subparagraph 5.E and, therefore, any
expenses for
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maintenance will not be counted towards the Maximum Modernization Amount
that you are required to spend pursuant to subparagraph 5.E.
D. Relocation. If you need to relocate because of condemnation,
destruction, or expiration or cancellation of your lease for reasons other
than your breach, we will grant you authority to do so at a site acceptable
to us that is within your Designated Area; provided that (i) if we have
developed a proprietary site evaluation system, the new site has been
evaluated by our proprietary site evaluator software and you have paid the
$500 to $850 fee to the third party provider; (ii) we have consented in
writing to the new site; (iii) the new Restaurant is under construction
within 90 days after you discontinue operation of the Restaurant at the
Authorized Location; and (iv) the new Restaurant is open and operating
within 240 days after construction commences, all in accordance with our
then-current standards. If you voluntarily decide to relocate the
Restaurant, your right to relocate the Restaurant will be void and your
interest in this Agreement will be voluntarily abandoned, unless you have
given us notice of your intent to relocate not less than 60 days prior to
closing the Restaurant, have procured a site that has been evaluated by our
proprietary site evaluator software (if we have developed a proprietary
site evaluation system) and accepted by us within 60 days after closing the
prior Restaurant, have opened the new Restaurant for business within 180
days of such closure and complied with any other conditions that we
reasonably require. You must pay the costs of any relocation, and we
reserve the right to charge you for any reasonable costs that we incur.
In the event your Restaurant is destroyed or damaged and you repair
the Restaurant at the Authorized Location (rather than relocate the
Restaurant), you must repair and reopen the Restaurant at the Authorized
Location in accordance with our then-current standards for the destroyed or
damaged area within 240 days of the date of occurrence of the destruction
or damage.
You do not have the right to relocate in the event you lose the right
to occupy the Restaurant premises because of the cancellation of your lease
due to your breach, rather the cancellation of your lease due to your
breach is grounds for immediate termination under subparagraph 13.B.2.
E. Modernization or Replacement. From time to time as we require, you
must effect items of modernization and/or replacement of the building,
premises, trade dress, equipment and grounds as may be necessary for your
Restaurant to conform to the standards for similarly situated new Buffalo
Wild Wings restaurants. The maximum cumulative amount (the "Maximum
Modernization Amount") that you will be required to spend during the
initial term of this Agreement depends on whether your Restaurant is a free
standing location and is established as follows:
(i) Free Standing Locations (as defined in subparagraph 4.A). You
will be required to spend no more than $185,000 during the initial 10
years of this Agreement and $50,000 during years 11-15. If we do not
require you to spend $185,000 during the first 10 years of the
Agreement, we may require you to spend the remaining amount, in
addition to the $50,000, during years 11-15. If we do not require you
to spend $235,000 during the first 15 years of this Agreement, we may
require you to spend the remaining amount up to $235,000 during years
16-20.
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(ii) Non-Free Standing Locations. You will be required to spend
no more than $155,000 during the initial 7 1/2 years of this Agreement
and $25,000 during years 7 1/2-10. If we do not require you to spend
$155,000 during the first 7 1/2 years of the Agreement, we may require
you to spend the remaining amount, in addition to the $25,000, during
years 7 1/2-10. If we do not require you to spend $180,000 during the
first 10 years of this Agreement, we may require you to spend the
remaining amount up to $180,000 during years 11-15.
Notwithstanding the prior paragraphs, we will not require you to make
any modernization expenditures during the first two years of this
Agreement. Thereafter, however, you must complete to our satisfaction any
changes we require within 24 months from the date you are notified of any
required changes, except for outdoor signage as set forth in subparagraph
5.F.
The Maximum Modernization Amount will be adjusted every 5-year period
in accordance with any change in the National Consumer Price Index - All
Urban Consumers for the recently completed 5-year period, as described in
subparagraph 16.Q. The Maximum Modernization Amount does not include any
required expenditures for equipment or leasehold improvements necessary to
prepare new product offerings. Furthermore, you must perform general,
continued maintenance and refreshing of the Restaurant premises whenever
necessary as set forth in subparagraph 5.C and at a cost not included in
the Maximum Modernization Amount. Each and every transfer of any interest
in this Agreement or your business governed by Paragraph 11 or renewal
covered by Paragraph 4 is expressly conditioned upon your compliance with
these requirements at the time of transfer or renewal without regard to the
Maximum Modernization Amount.
You acknowledge and agree that the requirements of this subparagraph
5.E are both reasonable and necessary to insure continued public acceptance
and patronage of Buffalo Wild Wings restaurants and to avoid deterioration
or obsolescence in connection with the operation of the Restaurant. If you
fail to make any improvement or perform the maintenance listed above, we
may, in addition to our other rights in this Agreement, effect such
improvement or maintenance and you must reimburse us for the costs we
incur.
F. Signage. The outdoor signage at your Restaurant must comply with
our then current specifications, which we may modify and change from time
to time due to modifications to the System, including changes to the
Trademarks. You must make such changes to the outdoor signage as we
require. We will pay for 1/3 of the cost to replace your outdoor signage
if: (i) your Restaurant's sign is less than 2 years old and (ii) we require
that you replace the sign within one year from the date of notification. In
any case, your failure to replace the signage within 15 months from the
date of notification will constitute a default of this Agreement under
Paragraph 13. Any upgrades to the type or size of your outdoor signage will
be at your expense. Your costs for the signage will be included in the
Maximum Modernization Amount under subparagraph 5.E.
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PRODUCTS AND OPERATIONS STANDARDS AND REQUIREMENTS
6. You must implement and abide by our requirements and recommendations
directed to enhancing substantial System uniformity. The following provisions
control with respect to products and operations:
A. Authorized Menu. Your business must be confined to the preparation
and sale of only such Menu Items and other food and beverage products as we
designate and approve in writing from time to time for sale by your
Restaurant. You must offer for sale from the Restaurant all items and only
those items listed as Menu Items and other approved food and beverage
products. We have the right to make modifications to these items from time
to time, and you agree to comply with any modifications. You may not offer
or sell any other product or service at the Authorized Location without our
prior written consent.
B. Authorized Products and Ingredients. You must use in the operation
of the Restaurant and in the preparation of Menu Items and other food and
beverage products only the proprietary sauces and mixes and other
proprietary and non-proprietary ingredients, recipes, formulas, cooking
techniques and processes and supplies, and must prepare and serve Menu
Items and products in such portions, sizes, appearance, taste and
packaging, all as we specify in our most current product preparation
materials or otherwise in writing. We will supply to you a copy of the
current product preparation materials prior to opening of the Restaurant.
You acknowledge and agree that we may change these periodically and that
you are obligated to conform to the requirements. All supplies, including
containers, cups, plates, wrapping, eating utensils, and napkins, and all
other customer service materials of all descriptions and types must meet
our standards of uniformity and quality. You acknowledge that the
Restaurant must at all times maintain an inventory of ingredients, food and
beverage products and other products, material and supplies that will
permit operation of the Restaurant at maximum capacity.
C. Approved Supplies and Suppliers. We will furnish to you from time
to time lists of approved supplies or approved suppliers. You must only use
approved products, inventory, equipment, fixtures, furnishings, signs,
advertising materials, trademarked items and novelties, and other items
(collectively, "approved supplies") in the Restaurant as set forth in the
approved supplies and approved suppliers lists, as we may amend from time
to time. Although we do not do so for every item, we have the right to
approve the manufacturer, distributor and/or supplier of approved supplies.
Along with a number of other approval criteria, to be an approved supplier,
the supplier must have the ability to provide the product and/or service,
on a national basis, to at least 60% of the then existing Restaurants. You
acknowledge and agree that certain approved supplies may only be available
from one source, and we or our affiliates may be that source. All
inventory, products, materials and other items and supplies used in the
operation of the Restaurant that are not included in the approved supplies
or approved suppliers lists must conform to the specifications and
standards we establish from time to time. ALTHOUGH APPROVED BY US, WE AND
OUR AFFILIATES MAKE NO WARRANTY AND EXPRESSLY DISCLAIM ALL WARRANTIES,
INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR
PURPOSE, WITH RESPECT TO PRODUCTS, EQUIPMENT (INCLUDING, WITHOUT
LIMITATION, ANY REQUIRED COMPUTER SYSTEMS), SUPPLIES, FIXTURES, FURNISHINGS
OR OTHER APPROVED ITEMS.
D. Computer System. You must purchase and use any computer system that
we develop or select for the Restaurant, including all future updates,
supplements and
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modifications (the "Computer System"). Any updates, supplements or
modifications are not subject to or part of the Maximum Modernization
Amount defined in subparagraph 5.E. The Computer System may include all
hardware and software used in the operation of the Restaurant, including
electronic point-of-sale cash registers and back office programs used to
record, analyze and report sales, labor, inventory and tax information. The
computer software package developed for use in the Restaurant may include
proprietary software. You may be required to license the proprietary
software from us, an affiliate or a third party and you also may be
required to pay a software licensing or user fee in connection with your
use of the proprietary software. All right, title and interest in the
software will remain with the licensor of the software. The computer
hardware component of the Computer System must conform to specifications we
develop. We reserve the right to designate a single source from whom you
must purchase the Computer System. You acknowledge and agree that we will
have full and complete access to information and data entered and produced
by the Computer System. You must, at all times, have at the Authorized
Location internet access with a form of high speed connection as we require
and you must maintain: (i) an email account for our direct correspondence
with the Control Person; and (ii) a separate email account for the
Restaurant.
E. Serving and Promotional Items. All sales promotion material,
customer goodwill items, cartons, containers, wrappers and paper goods,
eating and serving utensils, and customer convenience items used in the
sales promotion, sale and distribution of products covered by this
Agreement are subject to our approval and must, where practicable, contain
one or more of the Trademarks. We may require you to carry and offer for
sale in the Restaurant a representative supply of approved trademarked
clothing and other novelty items, including special promotional items that
we develop and market from time to time.
F. Health and Sanitation. Your Restaurant must be operated and
maintained at all times in compliance with any and all applicable health
and sanitary standards prescribed by governmental authority. You also must
comply with any standards that we prescribe. In addition to complying with
such standards, if the Restaurant is subject to any sanitary or health
inspection by any governmental authorities under which it may be rated in
one or more than one classification, it must be maintained and operated so
as to be rated in the highest available health and sanitary classification
with respect to each governmental agency inspecting the same. In the event
you fail to be rated in the highest classification or receive any notice
that you are not in compliance with all applicable health and sanitary
standards, you must immediately notify us of such failure or noncompliance.
G. Evaluations. We or our authorized representative have the right to
enter your Restaurant at all reasonable times during the business day for
the purpose of making periodic evaluations and to ascertain if the
provisions of this Agreement are being observed by you, to inspect and
evaluate your building, land and equipment, and to test, sample, inspect
and evaluate your supplies, ingredients and products, as well as the
storage, preparation and formulation and the conditions of sanitation and
cleanliness in the storage, production, handling and serving. If we
determine that any condition in the Restaurant presents a threat to
customers or public health or safety, we may take whatever measures we deem
necessary, including requiring you to immediately close the Restaurant
until the situation is remedied to our satisfaction. Our inspections and
evaluations may include a "mystery
13
shopper" program from time to time throughout the term of this Agreement.
You will be obligated to pay for 3 "mystery shopper" visits during the
first 3 months after you open your Restaurant at a cost of $100.00 per
shop. In addition, for any inspection or evaluation by us or by a "mystery
shopper" that you fail, according to our then current standards, you must
pay the costs of the next 3 "mystery shopper" visits.
H. Period of Operation. Subject to any contrary requirements of local
law, your Restaurant must be opened to the public and operated at least 12
hours each day of the year, although you have the option to close your
Restaurant on Thanksgiving, Christmas Eve, Christmas Day and Easter. Any
variance from this provision must be authorized by us in writing. You
acknowledge and agree that if your Restaurant is closed for a period of 2
consecutive days or 5 or more days in any 12-month period without our prior
written consent, such closure constitutes your voluntary abandonment of the
franchise and business and we have the right, in addition to other remedies
provided for herein, to terminate this Agreement. Acts of God, war,
strikes, riots or other force majeure cause preventing you temporarily from
complying with the foregoing will suspend compliance for the duration of
such interference.
I. Operating Procedures. You must adopt and use as your continuing
operational routine the required standards, service style, procedures,
techniques and management systems described in our manuals or other written
materials relating to product preparation, menu, storage, uniforms,
financial management, equipment, facility and sanitation. We will revise
the manuals and these standards, procedures, techniques and management
systems periodically to meet changing conditions of retail operation in the
best interest of restaurants operating under the Trademarks. Any required
standards exist to protect our interests in the System and the Trademarks
and not for the purpose of establishing any control or duty to take control
over those matters that are reserved to you.
You acknowledge having received one copy of the manuals on loan from
us for the term of this Agreement. The manuals at all times are our sole
property. You must at all times treat the manuals, and the information they
contain, as secret and confidential, and must use all reasonable efforts to
maintain such information as secret and confidential. We may from time to
time revise the contents of the manuals and you expressly agree to comply
with each new or changed requirement. You must at all times insure that
your copy of the manuals are kept current and up to date, and in the event
of any dispute as to the contents of said manuals, the terms of the master
copy of the manuals that we maintain are controlling. You acknowledge and
agree that in the future the manuals and other system communications may
only be available on the internet or other online or computer
communications.
J. Confidential Information. You, the Principal Owners, the Unit
General Manager, your guarantors, officers, directors, members, managers,
partners, employees or agents, or any other individual or entity related
to, or controlled by, you may not, during the term of this Agreement or
thereafter, disclose, copy, reproduce, sell or use any such information in
any other business or in any manner not specifically authorized or approved
in advance in writing by us any Confidential Information. For purposes of
this Agreement, "Confidential Information" means the whole or any portion
of know-how, knowledge, methods, specifications, processes, procedures
and/or improvements regarding the business that is valuable and secret in
the sense that it is not generally known to our competitors and any
proprietary information contained in the manuals or otherwise communicated
to you in writing, verbally or through the internet or other online or
computer communications, and
14
any other knowledge or know-how concerning the methods of operation of the
Restaurant. Any and all Confidential Information, including, without
limitation, proprietary ingredients, sauces and mixes, secret formulas and
recipes, methods, procedures, suggested pricing, specifications, processes,
materials, techniques and other data, may not be used for any purpose other
than operating the Restaurant. We may require that you obtain nondisclosure
and confidentiality agreements in a form satisfactory to us from any
persons owning a minority interest in the franchisee, the Principal Owners,
the Unit General Manager and other key employees. You must provide executed
copies of these agreements to us upon our request.
K. Vending Services. You may not install or maintain on the premises
of the Restaurant any newspaper racks, video games, jukeboxes, gum
machines, games, rides, vending machines, pool tables, or other similar
devices without our prior written approval. If you install any such devices
without our prior written approval, you must remove them within 30 days
from receiving written notice from us. Gambling and gaming machines or
games are not allowed. Any income from vending services in the Restaurant
or on its premises, regardless of which person or entity collects the
money, and regardless of whether we authorized you to install them, must be
included in Gross Sales for purposes of your Continuing Fee and Advertising
Fee. Upon our written approval, the money derived from services provided by
charitable organizations or services that are for customer convenience,
such as pay phones or cash machines, will not be included in Gross Sales.
L. Catering and Delivery Services. If you want to offer catering or
delivery service to customers, you must obtain our prior written approval,
which we will not withhold unreasonably, although we reserve the right to
require you to offer catering service to customers located within the
Designated Area. Any catering or delivery services must meet our written
standards. You also must charge the same price for products offered by the
Restaurant whether delivered or catered by or sold in the Restaurant. Any
income from catering or delivery services must be included in Gross Sales
for purposes of your Continuing Fee and Advertising Fee.
M. Compliance with Law; Licenses and Permits. You must at all times
maintain your premises and conduct your Restaurant operations in compliance
with all applicable laws, regulations, codes and ordinances. You must
secure and maintain in force all required licenses, including a liquor
license, permits and certificates relating to your Restaurant. In the event
your liquor license is suspended for more than 3 days but not revoked, we
reserve the right to charge you the 5% Continuing Fee on the Gross Sales
you would have received on the lost liquor sales during the license
suspension. We will estimate the Gross Sales based on the prior year's
Gross Sales for the suspension period.
You acknowledge that you are an independent business and responsible
for control and management of your Restaurant, including, but not limited
to, the hiring and discharging of your employees and setting and paying
wages and benefits of your employees. You acknowledge that we have no
power, responsibility or liability in respect to the hiring, discharging,
setting and paying of wages or related matters.
You must immediately notify us in writing of any claim, litigation or
proceeding that arises from or affects the operation or financial condition
of your Buffalo Wild Wings
15
business or Restaurant, including any notices of health code violations or
liquor license violations.
N. Participation in Internet Web Sites or Other Online Communications.
You must, at your expense, participate in our Buffalo Wild Wings web site
on the internet, our intranet system or other online communications as we
may require. For instance, you must submit to us daily reports via our
intranet system, as further described in subparagraph 9.H. We have the
right to determine the content and use of our web site and intranet system
and will establish the rules under which franchisees may or must
participate. You may not separately register any domain name containing any
of the Trademarks. We retain all rights relating to our web site and
intranet system and may alter or terminate our web site or intranet system.
Your general conduct on our web site and intranet system or other online
communications and specifically your use of the Trademarks or any
advertising is subject to the provisions of this Agreement. You acknowledge
that certain information related to your participation in our web site or
intranet system may be considered Confidential Information, including
access codes and identification codes. Your right to participate in our web
site and intranet system, or otherwise use the Trademarks or System on the
internet or other online communications, will terminate when this Agreement
expires or terminates.
O. System Modifications. You acknowledge and agree that we have the
right to modify, add to or rescind any requirement, standard or
specification that we prescribe under this Agreement to adapt the System to
changing conditions competitive circumstances, business strategies,
business practices and technological innovations and other changes as we
deem appropriate. You must comply with these modifications, additions or
rescissions at your expense, subject to the requirements of subparagraph
5.E and any other express limitations set forth in this Agreement.
P. Suggested Pricing Policies. We may, from time to time, make
suggestions to you with regard to your pricing policies. Notwithstanding
any suggestions, you have the sole and exclusive right as to the minimum
prices you charge for the services offered at the Restaurant. We retain the
right to establish maximum prices to be charged by you for sales promotions
or otherwise. Any list or schedule of prices we furnish to you may, unless
otherwise specifically stated as to the maximum price, be treated as a
recommendation only and failure to accept or implement any such suggestion
will not in any way affect the relationship between you and us.
PERSONNEL AND SUPERVISION STANDARDS
7. The following provisions and conditions control with respect to
personnel, training and supervision:
A. Supervision. You must have a Control Person and a Unit General
Manager at all times during the term of this Agreement. We must approve in
writing the Control Person and the Unit General Manager prior to being
appointed by you, and we may revoke our approval at any time, in which case
(i) the disapproved Control Person and/or Unit General Manager may no
longer be the Control Person or the Unit General Manager for any Restaurant
operated by you and (ii) you must, with our prior written approval, appoint
a new Control Person and/or Unit General Manager within 30 days from the
date we revoked our approval for your prior Control
16
Xxxxxx and/or Unit General Manager. The Control Person and Unit General
Manager must insure that the Restaurant is operated in accordance with the
terms and conditions of this Agreement, although this in no way relieves
you of your responsibilities to do so. Your Control Person also must be
readily and continuously available to us. In addition to the Control Person
and your Unit General Manager, you must have at least two assistant
managers at all times during the term of this Agreement. The Control
Person, your Unit General Manager and your assistant managers must attend
and successfully complete all required training, as set forth in
subparagraphs 7.B and C.
B. Training. You must, at your expense, comply with all of the
training requirements we prescribe for the Restaurant to be developed under
this Agreement. The Control Person, the Unit General Manager and the
assistant manager must attend training and complete training to our
satisfaction. The training requirements may vary depending on the
experience of the Control Person and Unit General Manager or other factors
specific to the Restaurant. In the event you are given notice of default as
set forth in subparagraphs 13.A and B and the default relates, in whole or
in part, to your failure to meet any operational standards, we have the
right to require as a condition of curing the default that you, the Control
Person and the Unit General Manager, at your expense, comply with the
additional training requirements we prescribe. Any new Control Person or
Unit General Manager must comply with our training requirements immediately
after being approved by us and appointed by you. Under no circumstances may
you permit management of the Restaurant's operations by a person who has
not successfully completed to our reasonable satisfaction all applicable
training we require, provided, that in the event we revoke our approval for
your Unit General Manager, your approved Control Person or other individual
who is duly trained must manage the Restaurant's operations while your new
Unit General Manager is approved, appointed and trained according to
subparagraphs 7.A and B.
C. Ongoing Training. We may require the Control Person, Unit General
Manager, and other key employees of the Restaurant to attend, at your
expense, ongoing training at our training facility, the Authorized Location
or other location we designate. In addition, we may develop and require you
to purchase an in-restaurant training program.
D. Staffing. You will employ a sufficient number of competent and
trained employees to insure efficient service to your customers. You must
require all your employees to work in clean uniforms approved by us, but
furnished at your cost or the employees' cost as you may determine. No
employee of yours will be deemed to be an employee of ours for any purpose
whatsoever.
E. Attendance at Meetings. You and the Control Person must attend, at
your expense, all annual franchise conventions we may hold or sponsor and
all meetings relating to new products or product preparation procedures,
new operational procedures or programs, training, restaurant management,
sales or sales promotion, or similar topics. If you or the Control Person
are not able to attend a meeting or convention, you must so notify us prior
to the meeting and must have a substitute person acceptable to us attend
the meeting. In addition, your Unit General Manager(s) must attend the
annual training meeting for Unit General Managers that we may hold or
sponsor, at your own expense.
17
ADVERTISING
8. You agree to actively promote your Restaurant, to abide by all of our
advertising requirements and to comply with the following provisions:
A. Advertising Fund. You must pay to us an Advertising Fee as set
forth in subparagraph 9.C. All Advertising Fees will be placed in an
Advertising Fund that we own and manage. On behalf of our company and
affiliate owned restaurants (except for "Special Sites"), we will pay the
same Advertising Fee as similarly situated franchised restaurants (based on
age and type of location) in the same local marketing area. The Advertising
Fund is not a trust or escrow account, and we have no fiduciary obligation
to franchisees with respect to the Advertising Fund; provided, however, we
will make a good faith effort to expend such fees in a manner that we
determine is in the general best interests of the System. We have the right
to determine the expenditures of the amounts collected and the methods of
marketing, advertising, media employed and contents, terms and conditions
of marketing campaigns and promotional programs. Because of the methods
used, we are not required to spend a prorated amount on each restaurant or
in each advertising market. We have the right to make disbursements from
the Advertising Fund for expenses incurred in connection with the cost of
formulating, developing and implementing marketing, advertising and
promotional campaigns. The disbursements may include payments to us for the
expense of administering the Advertising Fund, including accounting
expenses and salaries and benefits paid to our employees engaged in the
advertising functions. If requested, we will provide you an annual
unaudited statement of the financial condition of the Advertising Fund.
B. Required Local Expenditures, Approved Materials. You must use your
best efforts to promote and advertise the Restaurant and participate in any
local marketing and promotional programs we establish from time to time. In
addition to the Advertising Fee, you are required to spend 1/2% of your
Gross Sales on approved local marketing and promotion. Upon our request you
must provide us with itemization and proof of marketing and an accounting
of the monies that you have spent for approved local marketing. If you fail
to make the required expenditure, we have the right to collect and
contribute the deficiency to the Advertising Fund. You must use only such
advertising materials as we furnish, approve or make available, and the
materials must be used only in a manner that we prescribe. Furthermore, any
promotional activities you conduct in the Restaurant or on its premises are
subject to our approval.
We will not unreasonably withhold approval of any sales promotion
materials and activities; provided that they are current, in good
condition, in good taste and accurately depict the Trademarks. You must use
point-of-sale posters or other promotional materials that depict any of the
Trademarks only in connection with your sale of approved Menu Items at the
Restaurant. Any point-of-sale posters or other promotional materials used
by you must be current and in good condition. To that end, we may make
available at a reasonable cost to you annually or at other reasonable
intervals, and when made available you must purchase, a sales promotion kit
containing new point-of-sale and other promotional materials; however, the
cost of the sales promotion kit may be included from time to time as
determined by us in the Advertising Fee described in subparagraph 9.C.
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Notwithstanding anything in this Agreement, we reserve the right to
deny our approval for any promotional activity that may result in a
reduction of the amount of any of the payments due by you under this
Agreement.
C. Advertising Cooperatives. We have the right to designate local
advertising markets and if designated, you must direct your local
advertising expenditures to the cooperative advertising and marketing
programs in your designated local advertising market. Each BUFFALO WILD
WINGS restaurant (except Special Sites) within a designated local
advertising area is a member of the local advertising group and each
Restaurant has one vote on all matters requiring a vote. We reserve the
right to designate the bylaws that govern the operation of local
advertising groups, although the bylaws can not modify the voting structure
set forth in the prior sentence. If a majority of the restaurants in your
designated advertising market, including those operated by us or our
affiliates, votes to spend more than the minimum 1/2% of Gross Sales on
local advertising and promotion within the area, you will be required to
participate, but you will not be required to spend more than 2% of Gross
Sales for local advertising.
D. Yellow Pages. You must place a separate listing, or participate in
a joint listing, in the Yellow Pages of your local telephone directory. The
listing must contain such copy and proper use of the Trademarks as we
specify. The cost of the listing must be paid by you or, in the case of a
joint listing, by you and other participating Buffalo Wild Wings
restaurants. Your cost to advertise in the yellow pages as we direct will
be included as part of your local advertising requirements under
subparagraph 8.B. We will not specify an unreasonably expensive listing; we
may, however, require you to advertise in more than one local telephone
directory.
E. Gift Cards, Certificates and Checks. You must use and honor only
system-wide gift cards, certificates and checks that we designate and you
must obtain all certificates, cards or checks from an approved supplier. We
have developed a gift card program and require that you sign the
Participation Agreement attached as Appendix E.
F. Grand Opening Promotion. You must conduct certain advertising and
public relations activities in connection with the opening of your
Restaurant, as we specify in writing. We require you to spend, in addition
to the required local advertising contribution described above, $12,500 for
such grand opening activities. We have the right, but not the obligation,
to collect and administer these funds on your behalf.
FEES, REPORTING AND AUDIT RIGHTS
9. You must pay the fees described below and comply with the following
provisions:
A. Initial Franchise Fee. You must pay to us a nonrefundable Initial
Franchise Fee of $ . The Initial Franchise Fee, payable in full on
--------
the date you sign this Agreement, is earned upon receipt and is in
consideration for our expenses incurred and services rendered in granting
you the franchise rights.
B. Continuing Fee. In addition to the Initial Franchise Fee, during
the full term of this Agreement and in consideration of the rights granted
to you, you must pay to us as a weekly Continuing Fee an amount equal to 5%
of Gross Sales.
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C. Advertising Fee. You must pay to us a weekly Advertising Fee in an
amount equal to 2 1/2% of Gross Sales. We reserve the right to increase the
percentage by an additional 1/2% upon 30 days written notice to you,
provided, however, that we may not increase the Advertising Fee more than
one time every three years. These fees are not held by us in trust and
become our property to be spent in accordance with Paragraph 8 of this
Agreement.
D. Computations and Remittances. Except for the Initial Franchise Fee,
you must compute all amounts due and owing at the end of each week's
operation and remittance for the amounts must be made to us on or before
the Wednesday of the following week, accompanied by the reports required by
subparagraph 9.H of this Agreement. You must certify the computation of the
amounts in the manner and form we specify, and you must supply to us any
supporting or supplementary materials as we reasonably require to verify
the accuracy of remittances. You waive any and all existing and future
claims and offsets against any amounts due under this Agreement, which
amounts you must pay when due. We have the right to apply or cause to be
applied against amounts due to us or any of our affiliates any amounts that
we or our affiliates may hold from time to time on your behalf or that we
or our affiliates owe to you. Further, if you are delinquent in the payment
of any amounts owed to us, we have the right to require you to prepay
estimated Continuing Fees and Advertising Fees.
E. Electronic Transfer of Funds. You must sign an electronic transfer
of funds authorization, attached as Appendix D, to authorize and direct
your bank or financial institution to transfer electronically, on a weekly
basis, directly to our account or our affiliates' and to charge to your
account all amounts due to us or our affiliates. You must maintain a
balance in your account sufficient to allow us and our affiliates to
collect the amounts owed when due. You are responsible for any penalties,
fines or other similar expenses associated with the transfer of funds
described in this subparagraph.
F. Interest Charges; Late Fees. Any and all amounts that you owe to us
or to our affiliates will bear interest at the rate of 18% per annum or the
maximum contract rate of interest permitted by governing law, whichever is
less, from and after the date of accrual. In addition to interest charges
on late Continuing Fee and Advertising Fee payments, you must pay to us a
service charge of $100 for each delinquent report or payment that you owe
to us under this Agreement. A payment is delinquent for any of the
following reasons: (i) we do not receive the payment on or before the date
due; or (ii) there are insufficient funds in your bank account to collect
the payment by a transfer of funds on or after the date due. The service
charge is not interest or a penalty, it is only to compensate us for
increased administrative and management costs due to late payment.
G. Financial Planning and Management. You must record daily all sales
on a cash register tape or similar device. You must keep books and records
and submit reports as we periodically require, including but not limited to
a monthly profit plan, monthly balance sheet and monthly statement of
profit and loss, records of prices and special sales, check registers,
purchase records, invoices, sales summaries and inventories, sales tax
records and returns, payroll records, cash disbursement journals and
general ledger, all of which accurately reflect the operations and
condition of your Restaurant operations. You must compile, keep and submit
to us the books, records and reports on the forms and using the methods of
bookkeeping and accounting as we periodically may prescribe. The records
that you are required to keep for your Restaurant must include detailed
daily sales, cost of sales, and other relevant records or information
maintained in an electronic media format and methodology we approve. You
must
20
provide this information to us according to reporting formats,
methodologies and time schedules that we establish from time to time. You
also must preserve and retain the books, records and reports for not less
than 36 months. You must allow us electronic and manual access to any and
all records relating to your Restaurant.
H. Reports and Audit. You must submit your Gross Sales daily via our
intranet system. You must verify the accuracy of the Gross Sales figure on
Wednesday of each week for the preceding week. Within 10 days after the end
of each month, you must submit to us a report with respect to the preceding
calendar month in the form and content as we periodically prescribe. The
report must include, but not be limited to, the following information for
the preceding month: (i) amount of Gross Sales and gross receipts of the
Restaurant, amount of sales tax and the computation of the Continuing Fee
and the Advertising Fee; (ii) quantities of products purchased and the
sources from which each were obtained; (iii) if we request, copies of your
most recent sales tax return, monthly sales summary and monthly balance
sheet and statement of profit and loss, including a summary of your costs
for utilities, labor, rent and other material cost items (iv) if requested
by us to verify your Gross Sales, all such books and records as we may
require under our audit policies published from time to time. You also
must, at your expense, submit to us within 90 days after the end of each
fiscal year a detailed balance sheet, profit and loss statement and
statement of cash flows for such fiscal year, prepared on an accrual basis
including all adjustments necessary for fair presentation of the financial
statements. We may require that the annual financial statements be reviewed
by a certified public accountant. You must certify all reports to be true
and correct. You acknowledge and agree that we have the right to impose
these requirements on you regardless of whether we impose the same
requirement on our other franchisees.
We or our authorized representative have the right at all times during
the business day to enter the premises where your books and records
relative to the Restaurant are kept and to evaluate, copy and audit such
books and records. We also have the right to request information from your
suppliers and vendors. In the event that any such evaluation or audit
reveals any understatement of your Gross Sales, Continuing Fees or
Advertising Fees or a variance of 1.5% or more from data reported to us in
respect to any other item that is material to the computation of fees or to
the analysis of the operation, you must pay for the audit, and in addition
to any other rights we may have, we have the right to conduct further
periodic audits and evaluations of your books and records as we reasonably
deem necessary for up to 2 years thereafter and any further audits and
evaluations will be at your sole expense, including, without limitation,
professional fees, travel, and room and board expenses directly related
thereto. Furthermore, if you intentionally understate or underreport Gross
Sales, Continuing Fees or Advertising Fees at any time, or if a subsequent
audit or evaluation conducted within the 2-year period reveals any
understatement of your Gross Sales, Continuing Fees or Advertising Fees or
a variance of 1.5% or more from data reported to us in respect to any other
item that is material to the computation of fees or to the analysis of the
operation, in addition to any other remedies provided for in this
Agreement, at law or in equity, we have the right to terminate this
Agreement immediately. In order to verify the information that you supply,
we have the right to reconstruct your sales through the inventory extension
method or any other reasonable method of analyzing and reconstructing
sales. You agree to accept any such reconstruction of sales unless you
provide evidence in a form satisfactory to us of your sales within a period
of 14 days from the date of notice of understatement or variance.
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We will keep your financial books, records and reports confidential,
unless the information is requested by tax authorities or used as part of a
legal proceeding or in a manner as set forth in subparagraph 11.D.8 or
where your information is grouped with similar information from other
restaurants to produce shared results like high-low ranges or average gross
sales or expenses on a system-wide or regional basis.
YOUR OTHER OBLIGATIONS; NONCOMPETE COVENANTS
10. You agree to comply with the following terms and conditions:
A. Payment of Debts. You agree to pay promptly when due: (i) all
payments, obligations, assessments and taxes due and payable to us and our
affiliates, vendors, suppliers, lessors, federal, state or local
governments, or creditors in connection with your business; (ii) all liens
and encumbrances of every kind and character created or placed upon or
against any of the property used in connection with the Restaurant or
business; and (iii) all accounts and other indebtedness of every kind
incurred by you in the conduct of the Restaurant or business. In the event
you default in making any such payment, we are authorized, but not
required, to pay the same on your behalf and you agree promptly to
reimburse us on demand for any such payment.
B. Indemnification. You hereby waive all claims against us for damages
to property or injuries to persons arising out of the operation of your
Restaurant. You must fully protect, indemnify and hold us and our owners,
directors, officers, insurers, successors and assigns and our affiliates
harmless from and against any and all claims, demands, damages and
liabilities of any nature whatsoever arising in any manner, directly or
indirectly, out of or in connection with or incidental to the operation of
your Restaurant (regardless of cause or any concurrent or contributing
fault or negligence of us or our affiliates) or any breach by you or your
failure to comply with the terms and conditions of this Agreement. We also
reserve the right to select our own legal counsel to represent our
interests, and you must reimburse us for our costs and attorneys' fees
immediately upon our request as they are incurred.
We hereby waive all claims against you for damages to property or
injuries to persons arising out of the operation of our company or
affiliate owned restaurants. We must fully protect, indemnify and defend
you and your affiliates and hold you and them harmless from and against any
and all claims, demands, damages and liabilities of any nature whatsoever
arising in any manner, directly or indirectly, out of or in connection with
or incidental to the operation of our company or affiliate owned
restaurants (regardless of cause or any concurrent or contributing fault or
negligence of you) or any breach by us or our failure to comply with the
terms and conditions of this Agreement.
C. Insurance. You must purchase and maintain in full force and effect,
at your expense and from a company we accept, insurance that insures both
you and us, our affiliates and any other persons we designate by name. The
insurance policies must include, at a minimum: (i) special/causes of loss
coverage forms (sometimes called "All Risk coverage") on the Restaurant and
all fixtures, equipment, supplies and other property used in the operation
of the Restaurant, for full repair and replacement value of the machinery,
equipment and improvements, including full coverage for loss of income
resulting from damage to the Restaurant without any co-insurance clause,
except that an appropriate deductible clause is permitted; (ii) business
interruption insurance covering a minimum 12 months loss of income,
including coverage for our Continuing Fees with us
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named as a loss payee with respect to those fees; (iii) comprehensive
general liability insurance, including product liability insurance, with
minimum limits of $1,000,000 per occurrence and $2,000,000 aggregate; (iv)
liquor liability coverage with minimum limits of $1,000,000 per occurrence;
(v) "Per Location" aggregate limits when multiple restaurant locations are
insured under one comprehensive general liability policy and/or liquor
liability policy(ies); (vi) automobile liability insurance, including
owned, hired and non-owned vehicle coverage with a minimum combined single
limit of $1,000,000 per claim (vii) workers' compensation and employer's
liability insurance covering all of your employees (viii) umbrella
liability insurance which also includes liquor liability, employers
liability and automobile liability, with minimum limits of $2,000,000 per
occurrence; (ix) Buffalo Wild Wings, Inc., Buffalo Wild Wings
International, Inc. and affiliates as named additional insureds on all
liability policies required by this subparagraph; (x) any other such
insurance coverages or amounts as required by law or other agreement
related to the Restaurant. Provided, however, that from the time you
execute this Agreement and prior to the date you open your Restaurant, you
will be obligated to carry insurance policies covering only those risks
specified under numerals (iii), (vi), (vii), (viii) (but excluding coverage
for liquor liability), (ix), and (x) of this subparagraph 10.C.
The required insurance coverage must commence as of the date the
building lease or building purchase agreement has been signed for your
Authorized Location. You must deliver to us at commencement and thereafter
annually or at our request a proper certificate evidencing the existence of
such insurance coverage and your compliance with the provisions of this
subparagraph. The insurance certificate must show our status as an
additional insured (as noted in (ix) above) and provide that we will be
given 30 days' prior written notice of material change in or termination or
cancellation of the policy. We also may request copies of all policies. We
may modify the required minimum limits from time to time and by written
notice to you, as conditions require, to reflect changes in relevant
circumstances, industry standards, experiences in the BUFFALO WILD WINGS
system, standards of liability and higher damage awards. If you do not
procure and maintain the insurance coverage required by this Agreement, we
have the right, but not the obligation, to procure insurance coverage and
to charge same to you, together with a reasonable fee for the expenses we
incur in doing so, payable by you immediately upon notice.
D. Noncompete Covenants. You agree that you will receive valuable
training and Confidential Information that you otherwise would not receive
or have access to but for the rights licensed to you under this Agreement.
You therefore agree to the following noncompetition covenants:
1. Unless otherwise specified, the term "you" as used in this
subparagraph 10.D includes, collectively and individually, your
Control Person, all Principal Owners, guarantors, officers, directors,
members, managers, partners, as the case may be, and holders of any
ownership interest in you. We may require you to obtain from your
Control Person and other individuals identified in the preceding
sentence a signed non-compete agreement in a form satisfactory to us
that contains the non-compete provisions of this subparagraph 10.D.
2. You covenant that during the term of this Agreement you will
not, either directly or indirectly, for yourself, or through, on
behalf of, or in
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conjunction with any person or entity, own, manage, operate, maintain,
engage in, consult with or have any interest in any restaurant or food
business other than one authorized by this Agreement or any other
agreement between us and you, except if, at the Effective Date of this
Agreement, you operate or hold an interest in a restaurant or food
business other than a casual or fast casual restaurant.
3. You covenant that you will not, for a period of 2 years after
the expiration or termination of this Agreement, regardless of the
cause of termination, or within 2 years of the sale of the Restaurant
or any interest in you, either directly or indirectly, for yourself,
or through, on behalf of, or in conjunction with any person or entity,
own, manage, operate, maintain, engage in, consult with or have any
interest in (i) a casual or fast casual restaurant that sells or
offers to dispense prepared food products the same as or similar to
the type sold in Buffalo Wild Wings restaurants; (ii) a video
entertainment oriented, fast casual restaurant or bar business; or
(iii) any business establishment that sells or offers to dispense
prepared chicken wings or legs:
a. At the premises of the former Restaurant;
b. Within a 5-mile radius of the former Restaurant; or
c. Within a 5-mile radius of the location of any other
business or restaurant using the Buffalo Wild Wings
System, whether franchised or owned by us or our
affiliates.
For purposes of this subparagraph, a sports-themed restaurant or bar
is one with more than two screens, or any screen larger than 25
inches, available for the viewing of sporting events.
4. You agree that the length of time in subpart (3) will be
tolled for any period during which you are in breach of the covenants
or any other period during which we seek to enforce this Agreement.
The parties agree that each of the foregoing covenants will be
construed as independent of any other covenant or provision of this
Agreement.
TRANSFER OF FRANCHISE
11. You agree that the following provisions govern any transfer or
proposed transfer:
A. Transfers. We have entered into this Agreement with specific
reliance upon your financial qualifications, experience, skills and
managerial qualifications as being essential to the satisfactory operation
of the Restaurant. Consequently, neither your interest in this Agreement
nor in the Restaurant may be transferred or assigned to or assumed by any
other person or entity (the "assignee"), in whole or in part, unless you
have first tendered to us the right of first refusal to acquire this
Agreement in accordance with subparagraph 11.F, and if we do not exercise
such right, unless our prior written consent is obtained, the transfer fee
provided for in subparagraph 11.C is paid, and the transfer conditions
described in subparagraph 11.D are satisfied. Any sale (including
installment sale), lease, pledge, management agreement,
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contract for deed, option agreement, assignment, bequest, gift or
otherwise, or any arrangement pursuant to which you turn over all or part
of the daily operation of the business to a person or entity who shares in
the losses or profits of the business in a manner other than as an employee
will be considered a transfer for purposes of this Agreement. Specifically,
but without limiting the generality of the foregoing, the following events
constitute a transfer and you must comply with the right of first refusal,
consent, transfer fee, and other transfer conditions in this Paragraph 11:
1. Any change in the percentage of the franchisee entity owned,
directly or indirectly, by any Principal Owner (including any addition
or deletion of any person or entity who qualifies as a Principal
Owner) which results in a change in 49% or more of the ownership of
the franchisee entity or any series of changes in the percentage of
the franchisee entity owned, directly or indirectly, by any Principal
Owner (including any addition or deletion of any person or entity who
qualifies as a Principal Owner) that results within a period of 3
years in any change in 49% or more of the ownership of the franchisee;
2. Any change in the general partner of a franchisee that is a
general, limited or other partnership entity; or
3. For purposes of this subparagraph 11.A, a pledge or seizure of
any ownership interests in you or in any Principal Owner that affects
the ownership of 25% or more of you or Principal Owner, which we have
not approved in advance in writing.
In the event of your insolvency or the filing of any petition by or
against you under any provisions of any bankruptcy or insolvency law, if
your legal representative, successor, receiver or trustee desires to
succeed to your interest in this Agreement or the business conducted
hereunder, such person first must notify us, tender the right of first
refusal provided for in subparagraph 11.F, and if we do not exercise such
right, must apply for and obtain our consent to the transfer, pay the
transfer fee provided for in subparagraph 11.C, and satisfy the transfer
conditions described in subparagraph 11.D. In addition, you or the assignee
must pay the attorneys' fees and costs that we incur in any bankruptcy or
insolvency proceeding pertaining to you.
You may not place in, on or upon the location of the Restaurant, or in
any communication media or any form of advertising, any information
relating to the sale of the Restaurant or the rights under this Agreement,
without our prior written consent.
B. Consent to Transfer. We will not unreasonably withhold our consent
to transfer, provided we determine that all of the conditions described in
this Paragraph 11 have been satisfied. Application for our consent to a
transfer and tender of the right of first refusal provided for in
subparagraph 11.F must be made by submission of our form of application for
consent to transfer, which must be accompanied by the documents (including
a copy of the proposed purchase or other transfer agreement) or other
required information. The application must indicate whether you or a
Principal Owner proposes to retain a security interest in the property to
be transferred. No security interest may be retained or created, however,
without our prior written consent and except upon conditions acceptable to
us. Any agreement used in
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connection with a transfer shall be subject to our prior written approval,
which approval will not be withheld unreasonably. You immediately must
notify us of any proposed transfer and must submit promptly to us the
application for consent to transfer. Any attempted transfer by you without
our prior written consent or otherwise not in compliance with the terms of
this Agreement will be void and will provide us with the right to elect
either to deem you in default and terminate this Agreement or to collect
from you and the guarantors a transfer fee equal to two times the transfer
fee provided for in subparagraph 11.C.
C. Transfer Fee. You must pay to us a $12,500 transfer fee every time
you submit an application for consent to transfer. If the transfer is part
of a simultaneous, multiple restaurant transfer, the transfer fee will be
modified as follows: the transfer fee for the first restaurant is $12,500,
the transfer fee for the second through tenth restaurants is $2,500 per
restaurant, with no additional transfer fee beyond the tenth restaurant.
If, however, our costs and expenses in reviewing and processing the
transfer, including attorneys' fees, exceed the applicable transfer fee,
then in addition to the transfer fee you agree to cover those additional
costs and expenses up to $10,000. The transfer fee is nonrefundable even
if, for any reason, the proposed transfer does not occur, in which case the
transfer fee you paid us for the failed transfer will not be applied to any
future attempted transfer.
D. Conditions of Transfer. We condition our consent to any proposed
transfer, whether to an individual, a corporation, a partnership or any
other entity upon the following:
1. Assignee Requirements. The assignee must meet all of our
then-current requirements for any potential new franchisee at the time
of the proposed transfer.
2. Payment of Amounts Owed. All amounts owed by you to us or any
of our affiliates, your suppliers or any landlord for the Restaurant
premises and Authorized Location, or upon which we or any of our
affiliates have any contingent liability must be paid in full.
3. Reports. You must have provided all required reports to us in
accordance with subparagraphs 9.G and H.
4. Modernization. You must have complied with the provisions of
subparagraph 5.E.
5. Guarantee. In the case of an installment sale for which we
have consented to you or any Principal Owner retaining a security
interest or other financial interest in this Agreement or the business
operated thereunder, you or such Principal Owner, and the guarantors,
are obligated to guarantee the performance under this Agreement until
the final close of the installment sale or the termination of such
interest, as the case may be.
6. General Release. You, each Principal Owner and each guarantor
must sign a general release of all claims arising out of or relating
to this Agreement, your Restaurant or the parties' business
relationship, in the form we designate, releasing us and our
affiliates.
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7. Training. The assignee must, at your or assignee's expense,
comply with the training requirements of subparagraph 7.B.
8. Financial Reports and Data. We have the right to require you
to prepare and furnish to assignee and/or us such financial reports
and other data relating to the Restaurant and its operations as we
deem reasonably necessary or appropriate for assignee and/or us to
evaluate the Restaurant and the proposed transfer. You agree that we
have the right to confer with proposed assignees and furnish them with
information concerning the Restaurant and proposed transfer without
being held liable to you, except for intentional misstatements made to
an assignee. Any information furnished by us to proposed assignees is
for the sole purpose of permitting the assignees to evaluate the
Restaurant and proposed transfer and must not be construed in any
manner or form whatsoever as earnings claims or claims of success or
failure.
9. Other Franchise Agreements. You must be in full compliance
with all your obligations under any and all Franchise Agreements and
Area Development Agreements executed between you and us.
10. Other Conditions. You must have complied with any other
conditions that we reasonably require from time to time as part of our
transfer policies.
E. Death, Disability or Incapacity. If any individual who is a
Principal Owner dies or becomes disabled or incapacitated and the
decedent's or disabled or incapacitated person's heir or
successor-in-interest wishes to continue as a Principal Owner, such person
or entity must apply for our consent under subparagraph 11.B, comply with
the training requirements of subparagraph 7.B if the Principal Owner also
was the Control Person (unless the heir or successor-in-interest finds
another Principal Owner to qualify as the Control Person), pay the
applicable transfer fee under subparagraph 11.C, and satisfy the transfer
conditions under subparagraph 11.D, as in any other case of a proposed
transfer, all within 180 days of the death or event of disability or
incapacity. During any transition period to an heir or
successor-in-interest, the Restaurant still must be operated in accordance
with the terms and conditions of this Agreement. If the assignee of the
decedent or disabled or incapacitated person is the spouse or child of such
person, no transfer fee will be payable to us and we will not have a right
of first refusal as set forth in subparagraph 11.F.
F. Right of First Refusal. If you propose to transfer or assign this
Agreement or your interest herein or in the business, in whole or in part,
to any third party, including, without limitation, any transfer
contemplated by subparagraph 11.E or any transfer described in subparagraph
11.A, you first must offer to sell to us your interest. In the event of a
bona fide offer from such third party, you must obtain from the third-party
offeror and deliver to us a statement in writing, signed by the offeror and
by you, of the terms of the offer. In the event the proposed transfer
results from a change in control of the franchisee or a Principal Owner
under subparagraphs 11.A.1 through 11.A.3, or your insolvency or the filing
of any petition by or against you under any provisions of any bankruptcy or
insolvency law, you first must offer to sell to us your interest in this
Agreement and the land, building, equipment, furniture and fixtures, and
any leasehold interest used in the operation of your Restaurant. Unless
otherwise agreed to in writing by us and you, the purchase price for our
purchase of assets in the event of a transfer that occurs by a change in
control or insolvency or bankruptcy filing will be established by a
qualified appraiser selected by the parties and in accordance with the
price
27
determination formula established in subparagraph 14.B in connection with
an asset purchase upon expiration. In addition, unless otherwise agreed to
in writing by us and you, the transaction documents, which we will prepare,
will be those customary for this type of transaction and will include
representations and warranties then customary for this type of transaction.
If the parties cannot agree upon the selection of such an appraiser, a
Judge of the United States District Court for the District in which the
Authorized Location is located will appoint one upon petition of either
party.
You or your legal representative must deliver to us a statement in
writing incorporating the appraiser's report and all other information we
have requested. We then have 45 days from our receipt of the statement
setting forth the third-party offer or the appraiser's report and other
requested information to accept the offer by delivering written notice of
acceptance to you. Our acceptance of any right of first refusal will be on
the same price and terms set forth in the statement delivered to us;
provided, however, we have the right to substitute equivalent cash for any
noncash consideration included in the offer. If we fail to accept the offer
within the 45-day period, you will be free for 60 days after such period to
effect the disposition described in the statement delivered to us provided
such transfer is in accordance with this Paragraph 11. You may effect no
other sale or assignment of you, this Agreement or the business without
first offering the same to us in accordance with this subparagraph 11.F.
G. Transfer by Us. We have the right to sell or assign, in whole or in
part, our interest in this Agreement.
DISPUTE RESOLUTION
12. The following provisions apply with respect to dispute resolution:
A. Arbitration; Mediation. Except as qualified below, any dispute
between you and us or any of our or your affiliates arising under, out of,
in connection with or in relation to this Agreement, any lease or sublease
for the Restaurant or Authorized Location, the parties' relationship, or
the business must be submitted to binding arbitration under the authority
of the Federal Arbitration Act and must be arbitrated in accordance with
the then-current rules and procedures and under the auspices of the
American Arbitration Association. The arbitration must take place in
Minneapolis, Minnesota, or at such other place as may be mutually agreeable
to the parties. The decision of the arbitrators will be final and binding
on all parties to the dispute; however, the arbitrators may not under any
circumstances: (i) stay the effectiveness of any pending termination of
this Agreement; (ii) assess punitive or exemplary damages; or (iii) make
any award which extends, modifies or suspends any lawful term of this
Agreement or any reasonable standard of business performance that we set. A
judgment may be entered upon the arbitration award by any state or federal
court in Minnesota or the state of the Authorized Location.
Before the filing of any arbitration, the parties agree to mediate any
dispute that does not include injunctive relief or specific performance
actions covered under subparagraph 12.B, provided that the party seeking
mediation must notify the other party of its intent to mediate prior to the
termination of this Agreement. Mediation will be conducted by a mediator or
mediation program agreed to by the parties. Persons authorized to settle
the dispute must attend any mediation session. The parties agree to
participate in the mediation proceedings in good faith with the intention
of resolving the
28
dispute if at all possible within 30 days of the notice from the party
seeking to initiate the mediation procedures. If not resolved within 30
days, the parties are free to pursue arbitration. Mediation is a compromise
negotiation for purposes of the federal and state rules of evidence, and
the entire process is confidential.
B. Injunctive Relief. Notwithstanding subparagraph 12.A above, you
recognize that the Restaurant is one of a large number of restaurants and
stores identified by the Trademarks and similarly situated and selling to
the public similar products, and the failure on the part of a single
franchisee to comply with the terms of its agreement could cause
irreparable damage to us and/or to some or all of our other franchisees.
Therefore, it is mutually agreed that in the event of a breach or
threatened breach of any of the terms of this Agreement by you, we will
forthwith be entitled to an injunction restraining such breach or to a
decree of specific performance, without showing or proving any actual
damage, together with recovery of reasonable attorneys' 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 remedies are in addition to, and not in lieu of, all other
remedies or rights that the parties might otherwise have by virtue of any
breach of this Agreement by the other party. Finally, we and our affiliates
have the right to commence a civil action against you or take other
appropriate action for the following reasons: to collect sums of money due
to us; to compel your compliance with trademark standards and requirements
to protect the goodwill of the Trademarks; to compel you to compile and
submit required reports to us; or to permit evaluations or audits
authorized by this Agreement.
C. Attorneys' Fees. The prevailing party in any action or proceeding
arising under, out of, in connection with, or in relation to this
Agreement, any lease or sublease for the Restaurant or Authorized Location,
or the business will be entitled to recover its reasonable attorneys' fees
and costs.
DEFAULT AND TERMINATION
13. The following provisions apply with respect to default and
termination:
A. Defaults. You are in default if we determine that you or any
Principal Owner or guarantor has breached any of the terms of this
Agreement or any other agreement between you and us or our affiliates,
which without limiting the generality of the foregoing includes making any
false report to us, intentionally understating or underreporting or failure
to pay when due any amounts required to be paid to us or any of our
affiliates, conviction of you, a Principal Owner, or a guarantor of (or
pleading no contest to) any misdemeanor that brings or tends to bring any
of the Trademarks into disrepute or impairs or tends to impair your
reputation or the goodwill of any of the Trademarks or the Restaurant, any
felony, filing of tax or other liens that may affect this Agreement,
voluntary or involuntary bankruptcy by or against you or any Principal
Owner or guarantor, insolvency, making an assignment for the benefit of
creditors or any similar voluntary or involuntary arrangement for the
disposition of assets for the benefit of creditors.
B. Termination by Us. We have the right to terminate this Agreement in
accordance with the following provisions:
29
1. Termination After Opportunity to Cure. Except as otherwise
provided in this subparagraph 13.B: (i) you will have 30 days from the
date of our issuance of a written notice of default to cure any
default under this Agreement, other than a failure to pay amounts due
or submit required reports, in which case you will have 10 days to
cure those defaults; (ii) your failure to cure a default within the
30-day or 10-day period will provide us with good cause to terminate
this Agreement; (iii) the termination will be accomplished by mailing
or delivering to you written notice of termination that will identify
the grounds for the termination; and (iv) the termination will be
effective immediately upon our issuance of the written notice of
termination.
2. Immediate Termination With No Opportunity to Cure. In the
event any of the following defaults occurs, you will have no right or
opportunity to cure the default and this Agreement will terminate
effective immediately on our issuance of written notice of
termination: any material misrepresentation or omission in your
franchise application, your voluntary abandonment of this Agreement or
the Authorized Location, the loss or revocation of your liquor license
or suspensions totaling 90 days over any 5 year period, the loss of
your lease, the failure to timely cure a default under the lease, the
loss of your right of possession or failure to reopen or relocate
under subparagraph 5.D, the closing of the Restaurant by any state or
local authorities for health or public safety reasons, any
unauthorized use of the Confidential Information, insolvency of you, a
Principal Owner, the Control Person or guarantor, you, a Principal
Owner, the Control Person or guarantor making an assignment or
entering into any similar arrangement for the benefit of creditors,
conviction of you, any Principal Owners, the Control Person, or
guarantors of (or pleading no contest to) any felony regardless of the
nature of the charges, or any misdemeanor that brings or tends to
bring any of the Trademarks into disrepute or impairs or tends to
impair your reputation or the goodwill of the Trademarks or the
Restaurant, intentionally understating or underreporting Gross Sales,
Continuing Fees or Advertising Fees or any understatement or 1.5%
variance on a subsequent audit within a 2 year period under
subparagraph 9.H, any unauthorized transfer or assignment in violation
of Paragraph 11 or any default by you that is the second same or
similar default within any 12-month consecutive period or the fourth
default of any type within any 24-month consecutive period.
3. Immediate Termination After No More than 24 Hours to Cure. In
the event that a default under this Agreement occurs that materially
impairs the goodwill associated with any of the Trademarks, violates
any health safety or sanitation law or regulation, violates any system
standard as to food handling, cleanliness, health and sanitation, or
if the operation of the Restaurant presents a health or safety hazard
to your customers or to the public (for example, improper cooking or
storage procedures used for chicken wings): (i) you will have no more
than 24 hours after we provide written notice of the default to cure
the default; and (ii) if you fail to cure the default within the 24
hour period, this Agreement will terminate effective immediately on
our issuance of written notice of termination.
4. Effect of Other Laws. The provisions of any valid, applicable
law or regulation prescribing permissible grounds, cure rights or
minimum periods
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of notice for termination of this franchise supersede any provision of
this Agreement that is less favorable to you.
C. Termination by You. You may terminate this Agreement as a result of
a breach by us of a material provision of this Agreement provided that: (i)
you provide us with written notice of the breach that identifies the
grounds for the breach; and (ii) we fail to cure the breach within 30 days
after our receipt of the written notice. If we fail to cure the breach, the
termination will be effective 60 days after our receipt of your written
notice of breach. Your termination of this Agreement under this Paragraph
will not release or modify your Post-Term obligations under Paragraph 14 of
this Agreement.
POST-TERM OBLIGATIONS
14. Upon the expiration or termination of this Agreement:
A. Reversion of Rights; Discontinuation of Trademark Use. All of your
rights to the use of the Trademarks and all other rights and licenses
granted herein and the right and license to conduct business under the
Trademarks at the Authorized Location will revert to us without further act
or deed of any party. All of your right, title and interest in, to and
under this Agreement will become our property. Upon our demand, you must
assign to us or our assignee your remaining interest in any lease then in
effect for the Restaurant (although we will not assume any past due
obligations). You must immediately comply with the post-term noncompete
obligations under subparagraph 10.D, cease all use and display of the
Trademarks and of any proprietary material (including the manual and the
product preparation materials) and of all or any portion of point-of-sale
materials furnished or approved by us, assign all right, title and interest
in the telephone numbers for the Restaurant and cancel or assign, at our
option, any assumed name rights or equivalent registrations filed with
authorities. You must pay all sums due to us, our affiliates or designees
and all sums you owe to third parties that have been guaranteed by us or
any of our affiliates. You must immediately return to us, at your expense,
all copies of the manuals and product preparation materials then in your
possession or control or previously disseminated to your employees and
continue to comply with the confidentiality provisions of subparagraph 6.J.
You must promptly at your expense and subject to subparagraph 14.B, remove
or obliterate all Restaurant signage, displays or other materials
(electronic or tangible) in your possession at the Authorized Location or
elsewhere that bear any of the Trademarks or names or material confusingly
similar to the Trademarks and so alter the appearance of the Restaurant as
to differentiate the Restaurant unmistakably from duly licensed restaurants
identified by the Trademarks. If, however, you refuse to comply with the
provisions of the preceding sentence within 30 days, we have the right to
enter the Authorized Location and remove all Restaurant signage, displays
or other materials in your possession at the Authorized Location or
elsewhere that bear any of the Trademarks or names or material confusingly
similar to the Trademarks, and you must reimburse us for our costs
incurred. Notwithstanding the foregoing, in the event of expiration or
termination of this Agreement, you will remain liable for your obligations
pursuant to this Agreement or any other agreement between you and us or our
affiliates that expressly or by their nature survive the expiration or
termination of this Agreement.
B. Purchase Option. We have the right to purchase or designate a third
party that will purchase all or any portion of the assets of your
Restaurant that are owned by you or any of your affiliates including,
without limitation, the land, building, equipment, fixtures, signage,
31
furnishings, supplies, leasehold improvements, liquor license and inventory
of the Restaurant at a price determined by a qualified appraiser (or
qualified appraisers if one party believes it is better to have a real
estate appraiser appraise the value of the land and building and a business
appraiser appraise the Restaurant's other assets) selected with the consent
of both parties, provided we give you written notice of our preliminary
intent to exercise our purchase rights under this Paragraph within 30 days
after the date of the expiration or termination of this Agreement. If the
parties cannot agree upon the selection of an appraiser(s), one or both
will be appointed by a Judge of the United States District Court for the
District in which the Authorized Location is located upon petition of
either party.
In the event the Agreement is terminated (rather than if it expires),
the price determined by the appraiser(s) will be the reasonable fair market
value of the assets based on their continuing use in, as, and for the
operation of a BUFFALO WILD WINGS Restaurant and the appraiser will
designate a price for each category of asset (e.g., land, building,
equipment, fixtures, etc.), but shall not include the value of any goodwill
of the business, as the goodwill of the business is attributable to the
Trademarks and the System. In the event that the Agreement expires (rather
than if it is terminated), the price determined by the appraiser(s) will be
the reasonable fair market value of the assets, as stated in the prior
sentence, plus the value of any goodwill of the business, attributable to
your operation of the Restaurant. In the event of expiration, however, the
parties agree that you may elect not to include the land in the appraisal
and option to purchase process. In this instance, you may elect to lease
the land to us or our designee for a lease term of at least 10 years with
two 5-year options to renew and for a primary rate equal to fair market
value according to the applicable Building Office Management Association
Guidelines, unless otherwise agreed to by the parties.
Within 45 days after our receipt of the appraisal report, we or our
designated purchaser will identify the assets, if any, that we intend to
purchase at the price designated for those assets in the appraisal report.
We or our designated purchaser and you will then proceed to complete and
close the purchase of the identified assets, and to prepare and execute
purchase and sale documents customary for the assets being purchased, in a
commercially reasonable time and manner. We and you will each pay one-half
of the appraiser's fees and expenses. Our interest in the assets of the
Restaurant that are owned by you or your affiliates will constitute a lien
thereon and may not be impaired or terminated by the sale or other transfer
of any of those assets to a third party. Upon our or our designated
purchaser's exercise of the purchase option and tender of payment, you
agree to sell and deliver, and cause your affiliates to sell and deliver,
the purchased assets to us or our designated purchaser, free and clear of
all encumbrances, and to execute and deliver, and cause your affiliates to
execute and deliver, to us or our designated purchaser a xxxx of sale
therefor and such other documents as may be commercially reasonable and
customary to effectuate the sale and transfer of the assets being
purchased.
If we do not exercise our option to purchase under this subparagraph,
you may sell or lease the Restaurant premises to a third party purchaser,
provided that your agreement with the purchaser includes a covenant by the
purchaser, which is expressly enforceable by us as a third party
beneficiary, pursuant to which the purchaser agrees, for a period of 2
years after the expiration or termination of this Agreement, not to use the
premises for the operation of a restaurant business that has a menu or
method of operation similar to that employed by our company-owned or
franchised restaurants.
32
C. Claims. You and your Principal Owners and guarantors may not assert
any claim or cause of action against us or our affiliates relating to this
Agreement or the Buffalo Wild Wings business after the shorter period of
the applicable statute of limitations or one year following the effective
date of termination of this Agreement; provided that where the one-year
limitation of time is prohibited or invalid by or under any applicable law,
then and in that event no suit or action may be commenced or maintained
unless commenced within the applicable statute of limitations.
GENERAL PROVISIONS
15. The parties agree to the following provisions:
A. Severability. Should one or more clauses of this Agreement be held
void or unenforceable for any reason by any court of competent
jurisdiction, such clause or clauses will be deemed to be separable in such
jurisdiction and the remainder of this Agreement is valid and in full force
and effect and the terms of this Agreement must be equitably adjusted so as
to compensate the appropriate party for any consideration lost because of
the elimination of such clause or clauses. It is the intent and expectation
of each of the parties that each provision of this Agreement will be
honored, carried out and enforced as written. Consequently, each of the
parties agrees that any provision of this Agreement sought to be enforced
in any proceeding must, at the election of the party seeking enforcement
and notwithstanding the availability of an adequate remedy at law, be
enforced by specific performance or any other equitable remedy.
B. Waiver/Integration. No waiver by us of any breach by you, nor any
delay or failure by us to enforce any provision of this Agreement, may be
deemed to be a waiver of any other or subsequent breach or be deemed an
estoppel to enforce our rights with respect to that or any other or
subsequent breach. Subject to our rights to modify Appendices and/or
standards and as otherwise provided herein, this Agreement may not be
waived, altered or rescinded, in whole or in part, except by a writing
signed by you and us. This Agreement together with the addenda and
appendices hereto and the application form executed by you requesting us to
enter into this Agreement constitute the sole agreement between the parties
with respect to the entire subject matter of this Agreement and embody all
prior agreements and negotiations with respect to the business. You
acknowledge and agree that you have not received any warranty or guarantee,
express or implied, as to the potential volume, profits or success of your
business. There are no representations or warranties of any kind, express
or implied, except as contained herein and in the aforesaid application.
C. Notices. Except as otherwise provided in this Agreement, any
notice, demand or communication provided for herein must be in writing and
signed by the party serving the same and either delivered personally or by
a reputable overnight service or deposited in the United States mail,
service or postage prepaid, and if such notice is a notice of default or of
termination, by registered or certified mail, and addressed as follows:
1. If intended for us, addressed to General Counsel, Buffalo Wild
Wings International, Inc., 0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000,
Xxxxxxxxxxx, Xxxxxxxxx 00000;
33
2. If intended for you, addressed to you at
---------------------
or at the Authorized Location; or,
-----------------------------------
in either case, as the intended party may change such address by written
notice to the other party. Notices for purposes of this Agreement will be
deemed to have been received if mailed or delivered as provided in this
subparagraph.
D. Authority. Any modification, consent, approval, authorization or
waiver granted hereunder required to be effective by signature will be
valid only if in writing executed by the Control Person or, if on behalf of
us, in writing executed by our President or one of our authorized Vice
Presidents.
E. References. If the franchisee is 2 or more individuals, the
individuals are jointly and severally liable, and references to you in this
Agreement includes all of the individuals. Headings and captions contained
herein are for convenience of reference and may not be taken into account
in construing or interpreting this Agreement.
F. Guarantee. All Principal Owners of a franchisee that is a
corporation, partnership, limited liability company or partnership or other
legal entity must execute the form of undertaking and guarantee at the end
of this Agreement. Any person or entity that at any time after the date of
this Agreement becomes a Principal Owner pursuant to the provisions of
Paragraph 11 or otherwise must execute the form of undertaking and
guarantee at the end of this Agreement within 10 days from the date such
person or entity becomes a Principal Owner; provided, however, that any
person or entity who becomes a Principal Owner shall automatically acquire
all the obligations of a Principal Owner under this Agreement at the time
such person or entity becomes a Principal Owner. Before approving and
entering into any transaction that would make any person or entity a
Principal Owner, you must notify such person about the content of this
subparagraph.
G. Successors/Assigns. Subject to the terms of Paragraph 11 hereof,
this Agreement is binding upon and inures to the benefit of the
administrators, executors, heirs, successors and assigns of the parties.
H. Interpretation of Rights and Obligations. The following provisions
apply to and govern the interpretation of this Agreement, the parties'
rights under this Agreement, and the relationship between the parties:
1. Applicable Law and Waiver. Subject to our rights under federal
trademark laws and the parties' rights under the Federal Arbitration
Act in accordance with Paragraph 12 of this Agreement, the parties'
rights under this Agreement, and the relationship between the parties
is governed by, and will be interpreted in accordance with, the laws
(statutory and otherwise) of the state in which the Authorized
Location is located. You waive, to the fullest extent permitted by
law, the rights and protections that might be provided through the
laws of any state relating to franchises or business opportunities,
other than those of the state in which the Authorized Location is
located.
34
2. Our Rights. Whenever this Agreement provides that we have a
certain right, that right is absolute and the parties intend that our
exercise of that right will not be subject to any limitation or
review. We have the right to operate, administrate, develop, and
change the System in any manner that is not specifically precluded by
the provisions of this Agreement, although this right does not modify
the requirements of subparagraph 5.E and other express limitations set
forth in this Agreement.
3. Our Reasonable Business Judgment. Whenever we reserve
discretion in a particular area or where we agree to exercise our
rights reasonably or in good faith, we will satisfy our obligations
whenever we exercise Reasonable Business Judgment in making our
decision or exercising our rights. Our decisions or actions will be
deemed to be the result of Reasonable Business Judgment, even if other
reasonable or even arguably preferable alternatives are available, if
our decision or action is intended, in whole or significant part, to
promote or benefit the System generally even if the decision or action
also promotes our financial or other individual interest. Examples of
items that will promote or benefit the System include, without
limitation, enhancing the value of the Trademarks, improving customer
service and satisfaction, improving product quality, improving
uniformity, enhancing or encouraging modernization and improving the
competitive position of the System.
I. Venue. Any cause of action, claim, suit or demand allegedly arising
from or related to the terms of this Agreement or the relationship of the
parties that is not subject to arbitration under Paragraph 12, must be
brought in the Federal District Court for the District of Minnesota or in
Hennepin County District Court, Fourth Judicial District, Minneapolis,
Minnesota. Both parties hereto irrevocably submit themselves to, and
consent to, the jurisdiction of said courts. The provisions of this
subparagraph will survive the termination of this Agreement. You are aware
of the business purposes and needs underlying the language of this
subparagraph, and with a complete understanding thereof, agree to be bound
in the manner set forth.
J. Jury Waiver. All parties hereby waive any and all rights to a trial
by jury in connection with the enforcement or interpretation by judicial
process of any provision of this Agreement, and in connection with
allegations of state or federal statutory violations, fraud,
misrepresentation or similar causes of action or any legal action initiated
for the recovery of damages for breach of this Agreement.
K. Waiver of Punitive Damages. You and your affiliates and us and our
affiliates agree to waive, to the fullest extent permitted by law, the
right to or claim for any punitive or exemplary damages against the other
and agree that in the event of any dispute between them, each will be
limited to the recovery of actual damages sustained.
L Relationship of the Parties. You and we are independent contractors.
Neither party is the agent, legal representative, partner, subsidiary,
joint venturer or employee of the other. Neither party may obligate the
other or represent any right to do so. This Agreement does not reflect or
create a fiduciary relationship or a relationship of special trust or
confidence.
35
M. Force Majeure. In the event of any failure of performance of this
Agreement according to its terms by any party due to force majeure will not
be deemed a breach of this Agreement. For purposes of this Agreement,
"force majeure" shall mean acts of God, State or governmental action,
riots, disturbance, war, strikes, lockouts, slowdowns, prolonged shortage
of energy supplies or any raw material, epidemics, fire, flood, hurricane,
typhoon, earthquake, lightning and explosion or other similar event or
condition, not existing as of the date of signature of this Agreement, not
reasonably foreseeable as of such date and not reasonably within the
control of any party hereto, which prevents in whole or in material part
the performance by one of the parties hereto of its obligations hereunder.
N. Adaptations and Variances. Complete and detailed uniformity under
many varying conditions may not always be possible, practical, or in the
best interest of the System. Accordingly, we have the right to vary the
Menu Items and other standards, specifications, and requirements for any
franchised restaurant or franchisee based upon the customs or circumstances
of a particular franchise or operating agreement, site or location,
population density, business potential, trade area population, existing
business practice, competitive circumstance or any other condition that we
deem to be of importance to the operation of such restaurant or store,
franchisee's business or the System. We are not required to grant to you a
like or other variation as a result of any variation from standard menus,
specifications or requirements granted to any other franchisee. You
acknowledge that you are aware that our other franchisees operate under a
number of different forms of agreement that were entered into at different
times and that, consequently, the obligations and rights of the parties to
other agreements may differ materially in certain instances from your
rights and obligations under this Agreement.
O. Notice of Potential Profit. We and/or our affiliates may from time
to time make available to you goods, products and/or services for use in
your Restaurant on the sale of which we and/or our affiliates may make a
profit. Further, we and/or our affiliates may from time to time receive
consideration from suppliers and/or manufacturers in respect to sales of
goods, products or services to you or in consideration of services rendered
or rights licensed to such persons. You agree that we and/or our affiliates
are entitled to said profits and/or consideration.
P. Interference with Employment Relations. During the term of this
Agreement, neither we nor you may employ or seek to employ, directly or
indirectly, any person who is at the time or was at any time during the
prior 6 months employed in any type of managerial position by the other
party or any of its subsidiaries or affiliates, or by any franchisee in the
system, unless the violating party compensates the former employer for all
losses and expenses incurred in losing and replacing the employee up to a
maximum of $25,000, plus attorneys' fees and expenses. This subparagraph
will not be violated if (i) at the time we or you employ or seek to employ
the person, the former employer has given its written consent or (ii) we
employ or seek to employ the person in connection with the transfer of the
Restaurant to us or any of our affiliates. The parties acknowledge and
agree that any franchisee from whom an employee was hired by you in
violation of this subparagraph shall be a third-party beneficiary of this
provision, but only to the extent they may seek compensation from you.
Q. National Consumer Price Index. We may adjust the maximum
modernization amount (subparagraph 5.E) every five year period, as noted in
subparagraph 5.E, in proportion to the five-year change in the National
Consumer Price Index - All Urban
36
Consumers as reported for each calendar year by the U.S. Department of
Labor (or the successor index or agency thereto) using 2003 as the base
year, and as so adjusted will apply to the maximum modernization
expenditure amount, subsequent to the adjustment date but prior to the next
adjustment date.
R. Updating Your Franchise Agreement. If at any time during the term
of this Agreement you and us enter into a subsequent franchise agreement
(the "Subsequent Agreement") granting you the right to operate another
Buffalo Wild Wings restaurant and the terms of the Subsequent Agreement are
different from the terms of this Agreement, you will have the right to
request that this Agreement be replaced by a franchise agreement containing
terms and conditions similar to the Subsequent Agreement (the "New
Agreement"), but such right shall be conditioned upon you meeting all the
conditions stipulated in subparagraph 4.B of this Agreement, except that
you shall pay a fee of only 2,500; provided, however, that the term under
the New Agreement shall be equal to the term left under this Agreement at
the time of the execution of the New Agreement. You must exercise the
rights granted under this subparagraph within 30 days after the date you
execute the Subsequent Franchise Agreement.
S. Effective Date. We will designate the "Effective Date" of this
Agreement in the space provided on the cover page. If no Effective Date is
designated on the cover page, the Effective Date is the date when we sign
this Agreement. However, as described in subparagraph 5.A, you do not have
the right to, and may not, open and commence operation of a Restaurant at
the Authorized Location until we notify you that you have satisfied all of
the preopening conditions set forth in this Agreement.
37
IN WITNESS WHEREOF, the parties have executed this Franchise Agreement as
of the dates written below.
FRANCHISEE: (For an Entity) FRANCHISEE: (For an Individual)
Date: Date:
----------------------------------------------- -------------------------------------
, Name:
--------------------------------------------------- -------------------------------------
a (Please type or print)
---------------------------------------------------
(Please type or print name and type of entity)
Signature:
--------------------------------
By:
------------------------------------------------
(Signature of person signing on behalf of entity) Witness:
----------------------------------
(Please type or print)
-------------------------------------------------
(Please type or print name of person Signature:
signing on behalf of entity) --------------------------------
Its: Date:
--------------------------------------------- -------------------------------------
(Please type or print title of person
signing on behalf of entity Name:
-------------------------------------
(Please type or print)
Witness:
--------------------------------------------
(Please type or print) Signature:
--------------------------------
Signature: Witness:
------------------------------------------ ----------------------------------
(Please type or print)
Signature:
--------------------------------
US:
BUFFALO WILD WINGS
INTERNATIONAL, INC.
Date:
------------------------------------
By:
--------------------------------------
Its:
----------------------------------
38
PERSONAL GUARANTEE AND AGREEMENT TO BE BOUND
PERSONALLY BY THE TERMS AND CONDITIONS
OF THE FRANCHISE AGREEMENT
In consideration of the execution of the Franchise Agreement by us, and for
other good and valuable consideration, the undersigned, for themselves, their
heirs, successors, and assigns, do jointly, individually and severally hereby
become surety and guarantor for the payment of all amounts and the performance
of the covenants, terms and conditions in the Franchise Agreement, to be paid,
kept and performed by the franchisee, including without limitation the
arbitration and other dispute resolution provisions of the Agreement.
Further, the undersigned, individually and jointly, hereby agree to be
personally bound by each and every condition and term contained in the Franchise
Agreement, including but not limited to the non-compete provisions in
subparagraph 10.D, and agree that this Personal Guarantee will be construed as
though the undersigned and each of them executed a Franchise Agreement
containing the identical terms and conditions of this Franchise Agreement.
The undersigned waives: (1) notice of demand for payment of any
indebtedness or nonperformance of any obligations hereby guaranteed; (2) protest
and notice of default to any party respecting the indebtedness or nonperformance
of any obligations hereby guaranteed; (3) any right he/she may have to require
that an action be brought against the franchisee or any other person as a
condition of liability; and (4) notice of any changes permitted by the terms of
the Franchise Agreement or agreed to by the franchisee.
In addition, the undersigned consents and agrees that: (1) the
undersigned's liability will not be contingent or conditioned upon our pursuit
of any remedies against the franchisee or any other person; and (2) such
liability will not be diminished, relieved or otherwise affected by franchisee's
insolvency, bankruptcy or reorganization, the invalidity, illegality or
unenforceability of all or any part of the Franchise Agreement, or the amendment
or extension of the Franchise Agreement with or without notice to the
undersigned.
It is further understood and agreed by the undersigned that the provisions,
covenants and conditions of this Guarantee will inure to the benefit of our
successors and assigns.
FRANCHISEE:
---------------------------
PERSONAL GUARANTORS:
--------------------------------------- --------------------------------------
Individually Individually
--------------------------------------- --------------------------------------
Print Name Print Name
--------------------------------------- --------------------------------------
Address Address
--------------------------------------- --------------------------------------
City State Zip Code City State Zip Code
--------------------------------------- --------------------------------------
Telephone Telephone
--------------------------------------- --------------------------------------
Individually Individually
--------------------------------------- --------------------------------------
Print Name Print Name
--------------------------------------- --------------------------------------
Address Address
--------------------------------------- --------------------------------------
City State Zip Code City State Zip Code
--------------------------------------- --------------------------------------
Telephone Telephone
2
OWNERSHIP AND MANAGEMENT ADDENDUM TO
BUFFALO WILD WINGS(R) FRANCHISE AGREEMENT
1. Control Person. You represent and warrant to us that the following
person, and only the following person is be the Control Person:
NAME TITLE ADDRESS
---- ----- -------
--------------------------------------------------------------------------------
2. Principal Owner(s). You represent and warrant to us that the following
person(s) and entities, and only the following person(s) and entities, will be
your Principal Owner(s):
PERCENTAGE
NAME HOME ADDRESS OF INTEREST
---- ------------ -----------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
3. Unit General Manager. You represent and warrant to us that the following
person, and only the following person, is your Unit General Manager:
NAME TITLE ADDRESS
---- ----- -------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4. Change. You must immediately notify us in writing of any change in the
information contained in this Addendum and, at our request, prepare and sign a
new Addendum containing the correct information.
5. Effective Date. This Addendum is effective as of this day of
------
January, 2003.
--------------------------------------- --------------------------------------
Your Initials Our Initials
Appendix A to the Franchise Agreement
Trademarks
You have the right to use the following Trademarks in accordance with the terms
of the Franchise Agreement:
Principal Register of the United States Patent and Trademark Office:
Service Xxxx: BUFFALO WILD WINGS
Registration No.: 2,239,550
Registration Date: April 13, 1999
Service Xxxx: BUFFALO WILD WINGS GRILL & BAR (Design Xxxx)
Registration No.: 2,187,765
Registration Date: September 8, 1998
[LOGO] BUFFALO WILD WINGS
GRILL & BAR
Service Xxxx: BETTER-BE-READY BLAZIN'
Registration No.: 2,433,893
Registration Date: March 6, 2001
Service Xxxx: HOME OF THE REAL WING
Registration No.: 2,247,812
Registration Date: May 25, 1999
Service Xxxx: SOMETHING WILD HAS COME TO TOWN
Registration No.: 2,234,404
Registration Date: March 23, 1999
Service Xxxx: GOTTA WING IT
Registration No.: 2,556,785
Registration Date: April 2, 2002
We may amend this Appendix A from time to time in order to make available
additional Trademarks or to delete those Trademarks that become unavailable. You
agree to use only those Trademarks that are then currently authorized.
The Trademarks must be used only in the manner that we specify. No deviations
will be permitted.
Appendix B to the Franchise Agreement
The Designated Area
As stated in Subparagraph 2.B. of the Franchise Agreement, subject to the
terms and conditions of the Franchise Agreement, the Designated Area in which
you will locate and operate the Restaurant is defined as follows:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The Designated Area is considered fixed as of the date of the Franchise
Agreement.
FRANCHISEE: FRANCHISOR:
BUFFALO WILD WINGS INTERNATIONAL, INC.
---------------------------------------
By: By:
------------------------------------ -----------------------------------
--------------------------------------- --------------------------------------
Its: Its:
-------------------------------- -------------------------------
Appendix C to the Franchise Agreement
Addendum to Lease
This Addendum to Lease, dated , 200 , is entered into
-------------- --
between ("Landlord"), and ("Tenant").
----------------- -----------------------
RECITALS
A. The parties have entered into a Lease Agreement, dated ,
---------
200 , (the "Lease") pertaining to the premises located at
--
(the "Premises").
---------------------------------------
B. Landlord acknowledges that Tenant intends to operate a Restaurant from
the Premises pursuant to Tenant's Franchise Agreement (the "Franchise
Agreement") with Buffalo Wild Wings International, Inc. ("BWW") under
the name "Buffalo Wild Wings Grill & Bar" or other name designated by
BWW (the "Restaurant").
C. The parties desire to amend the Lease in accordance with the terms and
conditions contained in this Addendum to provide BWW the opportunity
to preserve the Premises as a BWW branded restaurant as provided
herein.
AGREEMENT
Landlord and Tenant agree as follows:
1. Remodeling and Decor. Landlord agrees that Tenant has the right to
remodel, equip, paint and decorate the interior of the Premises and to
display such proprietary marks and signs on the interior and exterior
of the Premises as Tenant is reasonably required to do pursuant to the
Franchise Agreement and any successor Franchise Agreement under which
Tenant may operate a Restaurant on the Premises.
2. Assignment. Tenant has the right to assign all of its right, title and
interest in the Lease to BWW, its affiliates or its parent company, at
any time during the term of the Lease, including any extensions or
renewals, without first obtaining Landlord's consent. No assignment
will be effective, however, until BWW or its designated affiliate
gives Landlord written notice of its acceptance of the assignment, and
nothing contained in this Addendum or in any other document
constitutes BWW or its designated affiliate a party or guarantor to
the Lease, and does not create any liability or obligation of BWW or
its parent company unless and until the Lease is assigned to, and
accepted in writing by, BWW or its parent company. In the event of an
assignment, Tenant will remain liable under the terms of the Lease.
3. Default and Notice.
(a) Landlord shall send BWW copies of all notices of default it gives
to Tenant concurrently with giving such notices to Tenant. If
Tenant fails to cure any defaults within the period specified in
the Lease, Landlord shall promptly give BWW written notice
thereof, specifying the defaults Tenant has failed to cure. BWW
shall have thirty (30) days from the date BWW receives such
notice to exercise, by written notice to Landlord and Tenant, its
right for BWW or its designee (the "BWW Entity") to assume the
Lease.
(b) If the BWW Entity elects to assume the Lease, the BWW Entity
shall not be required to cure defaults and/or to begin paying
rent until Landlord delivers possession of the Premises to the
BWW Entity. The BWW Entity shall have the right, at any time
until Landlord delivers possession of the Premises, to rescind
the option exercise, by written notice to Landlord.
(c) All notices to BWW must be sent by registered or certified mail,
postage prepaid, to the following address:
Buffalo Wild Wings International, Inc.
0000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: General Counsel
BWW may change its address for receiving notices by giving Landlord
written notice of the new address. Landlord agrees that it will notify both
Tenant and BWW of any change in Landlord's mailing address to which notices
should be sent.
4. Termination, Non-Renewal, Expiration.
(a) If the Franchise Agreement is terminated for any reason during
the term of the Lease or any extension thereof, and if a BWW
Entity shall desire to assume the Lease, such BWW Entity shall
promptly give Landlord written notice thereof. Within thirty (30)
days after receipt of such notice, Landlord shall give a BWW
Entity written notice specifying any defaults of Tenant under the
Lease.
(b) If the Lease contains term renewal or extension right(s) and if
Tenant allows the term to expire without exercising said
right(s), Landlord shall give BWW written notice thereof, and a
BWW Entity shall have the option, for thirty (30) days after
receipt of said notice, to exercise the Tenant's renewal or
extension right(s) on the same terms and conditions as are
contained in the Lease. If a BWW Entity elects to exercise such
right(s), it shall so notify Landlord in writing, whereupon
Landlord and the BWW Entity shall promptly execute and deliver an
agreement whereby the BWW Entity assumes the Lease, effective at
the commencement of the extension or renewal term.
(c) Upon the expiration of the Lease, Landlord will cooperate with
and assist BWW in gaining possession of the Premises and if a BWW
Entity does not elect to enter into a new lease for the Premises
with Landlord on terms reasonably acceptable to the BWW Entity,
Landlord will allow BWW to enter the Premises, without being
guilty of trespass and without incurring any liability to
Landlord, to remove all signs, awnings, and all other items
identifying the Premises as a Buffalo Wild Wings(R)Restaurant and
to make such other modifications (such as repainting) as are
reasonably necessary to protect the Buffalo Wild Wings(R)marks
and system, and to distinguish the Premises from Buffalo Wild
Wings(R)restaurants. In the event BWW exercises its option to
purchase assets of Tenant, Landlord must permit BWW to remove all
such assets being purchased by BWW.
5. Additional Provisions.
(a) Landlord hereby acknowledges that the provisions of this Addendum
to Lease are required pursuant to the Franchise Agreement under
which Tenant plans to operate its business and the Tenant would
not lease the Premises without this Addendum.
(b) Landlord further acknowledges that Tenant is not an agent or
employee of BWW and the Tenant has no authority or power to act
for, or to create any liability on behalf of, or to in any way
bind BWW or any affiliate of BWW, and that Landlord has entered
into this Addendum to Lease with full understanding that it
creates no duties, obligations or liabilities of or against BWW
or any affiliate of BWW.
(c) Tenant shall be and remain liable to Landlord for all of its
obligations under the Lease, notwithstanding any assignment or
assumption of the Lease by a BWW Entity. The BWW Entity shall be
entitled to recover from Tenant all amounts it pays to Landlord
to cure Tenant's defaults under the Lease, including interest and
reasonable collection costs.
(d) The BWW Entity, upon taking possession of the Premises, shall
concurrently cure the defaults specified by Landlord and shall
execute and deliver to Landlord its assumption of the Tenant's
rights and obligations under the Lease. The BWW Entity shall pay,
perform and be bound by all of the duties and obligations of the
Lease applicable to Tenant, except that the BWW Entity may elect
not to assume or be bound by the terms of any amendment to the
Lease executed by Tenant without obtaining BWW's prior written
approval, which shall not be unreasonably withheld or delayed.
(e) After the BWW Entity assumes Tenant's interests under the Lease,
the BWW Entity may, at any time, assign such interests or sublet
the Premises to a BWW franchisee, so long as the BWW Entity shall
remain liable for the payment of rent and performance of the
Tenant's duties and obligations under the Lease.
(f) The BWW Entity may, at any time after it assumes the Tenant's
interests under the Lease, but only with the prior written
consent of Landlord, assign without recourse its rights as tenant
under the Lease. Landlord shall not unreasonably withhold such
consent to an assignment to a creditworthy BWW franchisee who
meets BWW's then-current standards and requirements for
franchisees. Upon receipt by Landlord of an assumption agreement
pursuant to which the assignee agrees to assume the Lease and to
observe the terms, conditions and agreements on the part of
Tenant to be performed under the Lease, the BWW Entity shall
thereupon be released from all liability as tenant under the
Lease from and after the date of assignment, without any need of
a written acknowledgment of such release by Landlord.
6. Sales Reports. If requested by BWW, Landlord will provide BWW with
whatever information Landlord has regarding Tenant's sales from the
Restaurant.
7. Modification. No amendment or variation of the terms of this Addendum
is valid unless made in writing and signed by the parties and the
parties have obtained the written consent of BWW.
8. Reaffirmation of Lease. Except as amended or modified in this
Addendum, all of the terms, conditions and covenants of the Lease
remain in full force and effect and are incorporated by reference and
made a part of this Addendum as though copied herein in full.
9. Beneficiary. Landlord and Tenant expressly agree that BWW is a third
party beneficiary of this Addendum.
IN WITNESS WHEREOF, the parties have executed this Addendum as of the dates
written below.
TENANT: LANDLORD:
By By
-------------------------------- -----------------------------
Its Its
---------------------------- -------------------------
Appendix D to the Franchise Agreement
Electronic Transfer of Funds Authorization
Franchisee:
Location:
--------
Date:
------------
----------------
NEW CHANGE
----------------
----------------
Attention: Bookkeeping Department
The undersigned hereby authorizes Buffalo Wild Wings International, Inc., its
parent company or any affiliated entity (collectively, "BWW"), to initiate
weekly ACH debit entries against the account of the undersigned with you in
payment of amounts for Continuing Fees, Advertising Fees or other amounts that
become payable by the undersigned to BWW. The dollar amount to be debited per
payment will vary.
Subject to the provisions of this letter of authorization, you are hereby
directed to honor any such ACH debit entry initiated by BWW.
This authorization is binding and will remain in full force and effect until 90
days prior written notice has been given to you by the undersigned. The
undersigned is responsible for, and must pay on demand, all costs or charges
relating to the handling of ACH debit entries pursuant to this letter of
authorization.
Please honor ACH debit entries initiated in accordance with the terms of this
letter of authorization, subject to there being sufficient funds in the
undersigned's account to cover such ACH debit entries.
Sincerely yours,
*** We also need a VOIDED Check ***
------------------------------------
Account Name
----------------------------------- ------------------------------------
Bank Name Street Address
----------------------------------- ------------------------------------
Branch City State Zip Code
----------------------------------- ------------------------------------
Street Address Telephone Number
----------------------------------- By
City State Zip Code ----------------------------------
----------------------------------- Its
Bank Telephone Number ---------------------------------
----------------------------------- Date
Bank's Account Number --------------------------------
-----------------------------------
Customer's Account Number
Appendix E to the Franchise Agreement
BUFFALO WILD WINGS(R)
Authorization and Gift Card Participation Agreement
The franchisee identified below ("Franchisee") hereby agrees to
participate in the gift card marketing program to be provided by SASH Management
L.L.C. d.b.a. Gift Card Solutions, a Utah limited liability company ("GCS") to
owners of franchises operated under an agreement with Buffalo Wild Wings, Inc.,
a Minnesota corporation, Blazin Wings, Inc., a Minnesota corporation, Buffalo
Wild Wings International, Inc., an Ohio corporation, and Real Wing, Inc., a
Kansas corporation (the aforementioned entities are collectively and
individually referred to as "Franchisor"). This Agreement will continue until
the expiration of the Gift Card Agreement between GCS and Buffalo Wild Wings,
Blazin Wings, Buffalo Wild Wings International, and Real Wing, Inc. dated ,
-----
2002. GCS may otherwise terminate this Agreement if Franchisee ceases to operate
outlets pursuant to a franchise agreement with any of the above referenced
entities or, with the consent of the respective franchisor, franchisee has
defaulted under the terms of this Agreement.
GCS' program is made available to Franchisee in return for
Franchisee's agreement to participate in a TurnKey Gift Card program (the
"Program") that will allow Franchisee's customers to prepay in specific amounts
for product purchases at participating stores and to then purchase product at
any participating store using the gift card (the "Gift Card") provided by GCS
for purchase. To effectuate this, GCS agrees to provide the following:
1. A complete TurnKey Gift Card processing program, defined to include a
system for real-time card authorization and accounting and funds
settlement procedures.
2. Provide reports that will be available via a secure web site for next
day viewing of daily transaction detail.
3. Maintain adequate communication lines for both the issuing and
verification terminals within the Franchisee's stores.
4. Inventory management, including ordering and disbursement of cards to
Franchisee.
5. Accept and fulfill Gift Card requests from consumers and Franchisee.
6. Maintain adequate inventory of card stock and other fulfillment
materials.
7. With the assistance of Franchisee, prepare individual terminals at
each Store to accept Gift Cards by programming terminals, gaining
required permissions from a Store merchant acquirer or through other
measures that are required for participation in the program.
8. Maintain an automated balance inquiry system that is available 24
hours a day 365 days a year which may be accessed by Franchisee by a
toll free telephone number.
To effectuate the Program, the Franchisee will have an account which
is credited and debited with certain amounts. Those credits and debits are as
follows:
1. If a Verifone Terminal/Printer package is to be supplied by GCS to
Franchisee, as described below, GCS shall xxxx the Franchisee $225.00
for each such package. Said amount shall be due with the first monthly
payment, as set forth below.
2. There will be a transaction fee for each transaction which is
performed with respect to a Gift Card issued as part of the program.
The transaction fee shall be $.16 per transaction, and shall be
charged for each transaction performed by the Franchisee. The
cumulative amount of the transaction fees for a particular month shall
be paid as part of the payment to be made pursuant to the terms of
this Agreement. A "transaction" shall be defined as the initial
activation of a Gift Card and each respective use of a Gift Card for
the purchase of product from a participating store. In addition, a
transaction shall include the payment of any inactivity fee which is
debited against a Gift Card.
3. In addition to the transaction fee, a fee of $.04 per transaction will
be charged, and this amount will be added to an insurance account
established for the payment of delinquent franchise payments. The
insurance account which these fees are added to shall be owned by
Franchisor, and all amounts paid to this account shall be under the
control of Franchisor. The cumulative amount of the insurance account
fees for a particular month shall be paid as part of the payment to be
made pursuant to the terms of the Agreement.
4. Each Gift Card which is purchased as part of this program and which is
not completely used on the date which is the later of one (1) year
from the initial purchase of the Gift Card or one (1) year from the
last time the customer added cash to the value of the Gift card shall
be assessed a fee of $2.00 on such date which shall be debited against
the remaining value of the Gift Card. This fee shall be applied
thereafter for each additional month until the earlier of the customer
adding additional cash to the Gift Card or until the remaining balance
of the Gift Card is $0.00. The $2.00 inactivity fee shall be credited
to the Franchisee if the Gift Card was purchased at a Franchisee's
store.
5. GCS may modify any of the aforementioned fees, except the insurance
account fee, to cover any cost increases incurred by GCS when material
cost increases are sustained from non-related third party vendors that
provide support services to GCS. These price changes can only take
place once in each contract year upon sixty (60) days' prior written
notice to the Franchisee. GCS will not have the power to modify the
insurance account fee, but this fee may be modified by Franchisor,
provided the fee may not be greater than $.04 per transaction.
6. GCS will maintain and provide monthly reports of the amounts due from
the Franchisee. The Franchisee's account shall be debited with an
amount equal to the value of all Gift Cards sold at the Franchisee's
stores and all fees which are due from a Franchisee as set forth in
this Agreement. The Franchisee's account will be credited with an
amount equal to the value of all product purchased from the
Franchisee's store using a Gift Card and all inactivity fees which are
attributed to the Franchisee. The resulting difference as of the last
day of each month will be the month1y amount which is due to or from
the Franchisee. This amount will be collected from or paid to a
participant as set forth below.
7. GCS shall be solely responsible for the accuracy of all account
management with regard to the Gift Cards. Any error in the account
management shall be the sole liability of GCS and GCS shall bear the
cost of any such error. By way of example and not limitation, if a
$10.00 Gift Card is sold and entered into the terminal for $10.00 and
GCS accounts for the Gift Card at $100.00, GCS shall be solely
responsible for the $90.00 discrepancy.
Franchisee is responsible for providing an electronic card issuing
terminal that is compatible with and can interface with the GCS system to be
used for this Program. GCS will assist Franchisee by programming Franchisee's
individual terminal for a fee of $150.00. GCS will maintain adequate
communication lines for both Franchisee's issuing terminal and verification
terminal. A Verifone Terminal
package may be purchased from GCS for Two Hundred Twenty Five Dollars ($225.00).
This amount shall be due with the first month1y payment, as described above.
CS has contracted with Stored Value Systems, Inc. to provide account services
for the Program. Franchisee agrees to have a bank account which will be used to
either withdraw funds that are due from the Franchisee for the Program or into
which funds will be deposited if they are due to Franchisee under the Program.
The Franchisee agrees to execute the attached ACH Authorization Form to allow
Stored Value Systems to electronically debit and credit Franchisee's account. In
the event Franchisee has insufficient funds to pay any amount due hereunder and
such amount is collected from the insurance account referred to above or from
Buffalo Wild Wings, Inc., the paying party shall have the right to recover the
amount paid from Franchisee and Franchisee shall pay said amount to the party
paying the amount due from Franchisee.
Agreed to this day of , 2002.
------------ --------------
FRANCHISEE:
By:
------------------------------------
Its:
-----------------------------------
Franchisee Legal Business Name:
------------------------------------------------
Franchisee's Address:
------------------------------------------------
------------------------------------------------
SASH Management, LLC, a Utah Limited Liability Company
By:
-----------------------------
Its:
----------------------------
BUFFALO WILD WINGS(R)
DEVELOPER INCENTIVE PACKAGE
ADDENDUM TO FRANCHISE AGREEMENT
This Addendum is appended to, and made a part of, the BUFFALO WILD WINGS
Franchise Agreement, dated (the "Agreement"), between BUFFALO WILD
-----------
WINGS INTERNATIONAL, INC. ("we" or "us") and ("you").
--------------------------
Capitalized terms not defined in this Addendum have the meanings given to them
in the Agreement. In the event of any conflict between the terms of this
Addendum and those in the Agreement, the terms of this Addendum shall control.
The Agreement is hereby amended as follows:
1. The Agreement was entered into pursuant to an Area Development Agreement
between you and us dated (the "Development Agreement").
--------------
Subject to the following conditions, if you open your Restaurant by the
date required under the Development Agreement, Continuing Fees will be
abated for the first 12 months of operation of your Restaurant. If you
default under your Agreement during the first 12 months of operation, the
abatement of Continuing Fees will be forfeited from the date a written
notice of default is issued to you.
2. You acknowledge and agree that the Restaurant and the Agreement are subject
to certain provisions of the Development Agreement, including, but not
limited to, Section 8.F thereunder.
3. We have the right to require you to use a site selection model or tools
designated by us in the selection of the site for your Restaurant. You must
pay all costs associated with your use of a designated site selection model
or tools.
IN WITNESS WHEREOF, the parties have executed the foregoing Addendum as of
the date first written above.
BUFFALO WILD WINGS YOU:
INTERNATIONAL, INC.:
---------------------------------------------- -------------------------------
By:
------------------------------------------ -------------------------------
Its: Date Signed
-----------------------------------
----------------------------------------------
Date Signed
ACKNOWLEDGMENT ADDENDUM TO
BUFFALO WILD WINGS(R) FRANCHISE AGREEMENT
(Not for use in the States of Illinois or Maryland)
Acknowledgments and Representations.
1. Did you receive a copy of our Offering Circular at least ten business days
prior to signing the Franchise Agreement? ( ) No ( ) Yes. If no, please
- -
comment:
------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
2. Have you received, studied and reviewed carefully our Offering Circular and
Franchise Agreement? Check one: ( ) Yes ( ) No. If no, please comment:
- -
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
3. Did you receive a copy of the Franchise Agreement at least five business
days prior to the date on which the Franchise Agreement was executed? Check
one ( ) No ( ) Yes. If no, please comment:
- - --------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
4. Was any oral, written or visual claim or representation made to you which
contradicted the disclosures in the Offering Circular? Check one:
( ) No ( ) Yes. If yes, please state in detail the oral, written or visual
- -
claim or representation:
--------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
5. Except as stated in Item 19 of our Offering Circular, was any oral, written
or visual claim or representation made to you which stated, suggested,
predicted or projected your sales, expenses, income or profit levels. Check
one: ( ) No ( ) Yes. If yes, please state in detail the oral, written or
- -
visual claim or representation:
-------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(If more space needed, continue on a separate sheet and attach).
6. Have you received, studied and reviewed carefully copies of our manuals?
Check one: ( ) Yes ( ) No. If no, please comment:
- - -------------------------
---------------------------------------------------------------------------
7. Do you understand that the success or failure of your Restaurant will
depend in large part upon your skills and experience, your business acumen,
your location, the local market for products under the Buffalo Wild
Wings(R) trademarks, interest rates, the economy, inflation, the number of
employees you hire and their compensation, competition and other economic
and business factors? Further, do you understand that the economic and
business factors that exist at the time you open your Restaurant may
change? Check one ( ) Yes ( ) No. If no, please comment:
-- -- ----------------
---------------------------------------------------------------------------
(If more space needed, continue on a separate sheet and attach.)
NOTE: IF THE RECIPIENT IS A CORPORATION, PARTNERSHIP, LIMITED LIABILITY COMPANY
OR OTHER ENTITY, EACH OF ITS PRINCIPAL OWNERS MUST EXECUTE THIS ACKNOWLEDGMENT.
Approved on behalf of
Buffalo Wild Wings
International, Inc.
Signed By:
------------------------------- -------------------------------------
Print Name: Title:
-------------------------- ----------------------------------
Date: Date:
-------------------------------- -----------------------------------
FRANCHISEE DISCLOSURE TO
BUFFALO WILD WINGS(R) FRANCHISE AGREEMENT
(For use in the State of Illinois)
Acknowledgments and Representations
1. Have you received, studied and reviewed carefully a copy of our Offering
Circular and Franchise Agreement? Check one: ( ) Yes ( ) No. If no, please
- -
comment:
------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
2. Was any oral, written or visual claim or representation made to you which
contradicted the disclosures in the Offering Circular? Check one:
( ) No ( ) Yes. If no, please comment:
- - ------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
3. Except as stated in Item 19 of our Offering Circular, was any oral, written
or visual claim or representation made to you which stated, suggested,
predicted or projected your sales, expenses, income or profit levels? Check
one ( ) No ( ) Yes. If yes, please comment:
- - -------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(If more space is needed, continue on a separate sheet and attach).
4. Have you received, studied and reviewed carefully copies of our manuals?
Check one: ( ) Yes ( ) No. If no, please comment:
- - -------------------------
---------------------------------------------------------------------------
5. Do you understand that the success or failure of your Restaurant will
depend in large part upon your skills and experience, your business acumen,
your location, the local market for products under the Buffalo Wild
Wings(R) trademarks, interest rates, the economy, inflation, the number of
employees you hire and their compensation, competition and other economic
and business factors? Further, do you understand that the economic and
business factors that exist at the time you open your Restaurant may
change? Check one: ( ) Yes ( ) No. If yes, please state in detail the oral,
- -
written or visual claim or representation:
--------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(If more space is needed, continue on a separate sheet and attach).
NOTE: IF THE RECIPIENT IS A CORPORATION, PARTNERSHIP, LIMITED LIABILITY COMPANY
OR OTHER ENTITY, EACH OF ITS PRINCIPAL OWNERS MUST EXECUTE THIS ACKNOWLEDGMENT.
Approved on behalf of
Buffalo Wild Wings
International, Inc.
Signed By:
------------------------------- -------------------------------------
Print Name: Title:
-------------------------- ---------------------------------
Date: Date:
-------------------------------- ----------------------------------
* Such representations are not intended to nor shall they act as a release,
estoppel or waiver of any liability incurred under the Illinois Franchise
Disclosure Act.
ACKNOWLEDGMENT ADDENDUM TO
BUFFALO WILD WINGS(R) FRANCHISE AGREEMENT
(For use in the State of Maryland)
Acknowledgments and Representations.
1. Did you receive a copy of our Offering Circular at least ten business days
prior to signing the Franchise Agreement? ( ) No ( ) Yes. If no, please
- -
comment:
------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
2. Have you received, studied and reviewed carefully our Offering Circular and
Franchise Agreement? Check one: ( ) Yes ( ) No. If no, please comment:
- -
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
3. Did you receive a copy of the Franchise Agreement at least five business
days prior to the date on which the Franchise Agreement was executed? Check
one ( ) No ( ) Yes. If no, please comment:
- - --------------------------------
---------------------------------------------------------------------------
4. Was any oral, written or visual claim or representation made to you which
contradicted the disclosures in the Offering Circular? Check one:
( ) No ( ) Yes. If yes, please state in detail the oral, written or visual
- -
claim or representation:
--------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
5. Except as stated in Item 19 of our Offering Circular, was any oral, written
or visual claim or representation made to you which stated, suggested,
predicted or projected your sales, expenses, income or profit levels. Check
one: ( ) No ( ) Yes. If yes, please state in detail the oral, written or
- -
visual claim or representation:
-------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(If more space needed, continue on a separate sheet and attach).
6. Have you received, studied and reviewed carefully copies of our manuals?
Check one: ( ) Yes ( ) No. If no, please comment:
- - -------------------------
---------------------------------------------------------------------------
7. Do you understand that the success or failure of your Restaurant will
depend in large part upon your skills and experience, your business acumen,
your location, the local market for products under the Buffalo Wild
Wings(R) trademarks, interest rates, the economy, inflation, the number of
employees you hire and their compensation, competition and other economic
and business factors? Further, do you understand that the economic and
business factors that exist at the time you open your Restaurant may
change? Check one ( ) Yes ( ) No. If no, please comment:
-- -- ----------------
---------------------------------------------------------------------------
(If more space needed, continue on a separate sheet and attach.)
NOTE: IF THE RECIPIENT IS A CORPORATION, PARTNERSHIP, LIMITED LIABILITY COMPANY
OR OTHER ENTITY, EACH OF ITS PRINCIPAL OWNERS MUST EXECUTE THIS ACKNOWLEDGMENT.
Approved on behalf of
Buffalo Wild Wings
International, Inc.
Signed By:
------------------------------- -------------------------------------
Print Name: Title:
-------------------------- ----------------------------------
Date: Date:
-------------------------------- -----------------------------------
* Such representations are not intended to nor shall they act as a release,
estoppel or waiver of any liability incurred under the Maryland Franchise
Registration and Disclosure Act.
