MASTER FRANCHISE AGREEMENT dated May 15, 2005.
BETWEEN : 680220 BC LTD.
Big-On-Burgers Restaurants
00000 Xxxxx Xxxxxx Xxx,
Xxxxxxxxxx, XX
Xxxxxx, X0X 0X0
(The "Franchisor")
AND : Toro Ventures Inc.
000-0000 Xxxx 00xx Xxx.
Xxxxxxxxx, XX
Xxxxxx, X0X 0X0
(The "Sub-Franchisor")
RECITALS
1. The Franchisor by itself or through affiliated companies has operating
experience of hamburger restaurants, know-how and ability in the
development and opening and operation of hamburger restaurants, which
are identified to the public under the trademark:
English:
[BIG-ON-BURGERS LOGO]
Chinese:
and other service marks, trade marks, trade names and/or applications
as well as logos, insignia, labels, trade dress, slogans or other
identification schemes used from time to time by the Franchisor in
association with the System (hereinafter collectively called the
"Trademark") and in connection therewith the Franchisor has developed
standards, specifications relating to the designing, building and
fixturing of such outlets, formulations, recipes, standards for
sourcing of products, its preparation and presentation, marketing
techniques (hereinafter collectively called the "System" )
2. The Sub-Franchisor has requested and the Franchisor has agreed to grant
to the Sub-Franchisor exclusive right and license in the provinces of
Hubei and Beijing in China (hereinafter collectively called the
"Exclusive Territory") to operate through the Sub-Franchisor's own
company or affiliates or to franchise other persons, companies or other
entities to own and operate:
Big-On-Burgers Restaurants, (take in or take out) whether
outside or in-store, or in a mall (hereinafter collectively
called " Franchised Outlets") with the right and license to
use or to license others to use the System and Trademark.
All of the aforementioned rights including: the right to establish and
operate Franchised Outlets, by the Sub- Franchisor's own company,
subsidiaries or affiliates or to franchise other persons, companies or
other entities to own and operate Franchised Outlets; to license the
use of the System and use of the Trademark in the operation of the
Franchised Outlets; all exclusively in the Exclusive Territory are
hereinafter collectively called the "Rights".
GRANT OF RIGHT AND LICENCE
3. The Franchisor hereby grants to the Sub-Franchisor and the
Sub-Franchisor hereby accepts from the Franchisor the exclusive license
to use the Trademark in connection with the business of operating
Franchised Restaurants owned by the Sub-Franchisor or its affiliated
companies as well as the exclusive right to franchise others to operate
Franchised Outlets using the System and to sub-license others to use
the Trademark in connection therewith solely in the Exclusive
Territory. Sub-Franchisor may carry on the operation of any number of
Franchised Outlets.
4. The Franchisor covenants during the Term of this Agreement, any renewal
or over-holding period the Franchisor shall not without the prior
written consent of the Sub-Franchisor either individually, or in
partnership or jointly in conjunction with any person, firm
association, syndicate, or corporation as principal, agent,
shareholder, or in any manner whatsoever carry on or be engaged in or
become concerned with or interested in or advise, lend money to,
guarantee the debts or obligations of or permit its name or any part
thereof to be used or employed in any business in the Exclusive
Territory operating in competition with or similar to the business
associated with the Rights of the Sub-Franchisor as carried on from
time to time during the Term of this Agreement or any holdover period.
TERM
5. This Agreement shall remain in full force and effect for a period of
TEN (10) YEARS with the Term terminating on April 15, 2015.
(Hereinafter such period is called the "Term")
RENEWAL AND RIGHT OF FIRST REFUSAL
6. The Sub-Franchisor and Franchisor agree as follows:
Option to Renew
a. The Sub-Franchisor shall have the option to renew this
Agreement for a further term of TEN (10) YEARS (hereinafter
called the "Renewal Term") upon the same terms and conditions
set forth and contained in this Lease save and except the Fees
of contained in this Agreement. The Renewal Term will commence
upon the expiration of the term granted by this Agreement. If
no agreement can be reached within 90 days of the date the
Sub-Franchisor exercises its option to renew, then the
question of the Fee shall be submitted to Arbitration by one
arbitrator or in the event the parties are unable to agree
upon a single arbitrator then by three (3) arbitrators (one to
be appointed by the other two arbitrators) pursuant to the
Arbitration Act of the Province of British Columbia in effect
at the time of the controversy. The arbitrator or if more than
one, then at least one of them, shall be a Certified Business
Valuator with experience in valuating franchises. The decision
of the arbitrator or arbitrators, as the case may be, shall be
binding upon the parties. Notwithstanding the said Arbitration
Act, all costs or arbitration shall be shared by the
Franchisor and the Sub-Franchisor. The option granted by the
Franchisor shall only be valid and binding upon the Franchisor
if it is exercised in writing by the Sub-Franchisor not less
than SIX (6) MONTHS before the expiration of the Term.
b) Right of First Refusal
During the SIX (6) MONTHS of the Term only and during any
holdover period in which the Sub-Franchisor continues to have
the benefit of the Rights (or a portion thereof) and provided
the Sub-Franchisor and Franchisor have not already renewed
this Agreement, or the Sub-Franchisor has not already
exercised its option to renew, the Franchisor may solicit
offers or make offer to grant the Rights but only for a TEN
(10) YEAR term for the Exclusive Territory. The Franchisor
shall not accept any offer or make any offer to any other
person without first giving the Sub-Franchisor notice in
writing, the Franchisor is willing to accept an offer from the
Sub-Franchisor on similar terms. The Franchisor shall deliver
a written offer to the Sub-Franchisor (the "Offer") setting
out the consideration, terms and conditions. The Offer shall
remain open for acceptance by the Franchisor for a period of
FOURTEEN (14) Days from and after the date of receipt of the
Offer by the Sub-Franchisor. If the Sub-Franchisor accepts the
Offer, a binding contract of a Master Franchise Agreement
shall come into effect. If the Sub-Franchisor does not accept
the Offer, then the Franchisor may grant such Rights to any
other person, firm or corporation (a "Third Party") provided,
however, that:
(i) the Rights may not be granted to a Third Party upon terms more
favourable to such Third Party than the terms contained in the
Offer;
(ii) if the Rights are not granted to a Third Party on the terms as
contemplated in the Offer, the Franchisor shall not be
entitled to grant such Rights to a Third Party and the
provisions of these sections under the heading "Renewal" in
this Agreement shall again become applicable to any offer or
grant of Rights by the Franchisor.
7. The Franchisor shall not deal with the rights in any manner except as
provided in this Agreemeent, that is it shall not deal with the rights
except during the SIX (6) MONTHS the Term as contemplated in the
foregoing section and only if the Sub-Franchisor has not exercised its
option to renew.
8. The Franchisor and Sub-Franchisor agree that if a Third Party obtains
the Rights by reason of a breach of the terms of the Agreement by the
Franchisor (including but not limited to failure to give notice to the
Sub-Franchisor or making a similar offer to the Sub-Franchisor pursuant
to the Right of First Refusal), then the Franchisor agrees that
reasonable damages to compensate the Sub-Franchisor for its breach of
this Agreement shall be payment by the Franchisor to the Sub-Franchisor
of 30% of the annual gross income of all of the Franchised Outlets in
the Exclusive Territory for FIVE (5) YEARS commencing when the date the
Sub-Franchisor has lost the use of the Rights.
FEES AND ROYALTIES
9. The Fee, being the consideration for the grant of the Rights under this
Agreement shall be the issuance of 275,000 shares of common stock by
the Sub-Franchisor upon the signing of this Agreement.
A royalty of 5% of monthly gross sales of all of the Franchised Outlets
operating in the Exclusive Territory will be remitted to the Franchisor
by the Sub-Franchisor by the fifteen of the following month.
An advertising royalty of 3% of monthly gross sales of all of the
Franchised Outlets operating in the Exclusive Territory will be
remitted to the Franchisor by the Sub-Franchisor by the fifteen of the
following month.
10. Except for the aforesaid consideration stated in the previous
paragraph, the Sub-Franchisor shall not be required to make any other
payment to the Franchisor for the Rights during the Term. There are no
royalties, percentage fee, or consideration of any kind payable for the
Rights or the ongoing use of the Rights by the Sub-Franchisor during
the term.
MODIFICATION OF THE TRADEMARK AND SYSTEM
11. The Franchisor acknowledges that the market conditions in the Exclusive
Territory are unique and the Trademark and System as presently used by
the Franchisor must be modified by the Sub-Franchisor to adapt to the
market for the Exclusive Territory. The Sub-Franchisor may make changes
to the Trademark and the System as the Sub-Franchisor in its sole
discretion deems fit to meet the demands of its customers in the
Exclusive Territory.
SALE ASSIGNMENT AND TRANSFER
12. The Sub-Franchisor may assign, sell, and transfer ("Transfer") its
interest in this Agreement or the Rights granted herein at anytime with
FOURTEEN (14) DAYS prior notice to the Franchisor. A Transfer shall
also mean the sale of all or a portion of the corporate shares of the
Sub-Franchisor resulting in a charge in control. The Sub-Franchisor may
without consent of the Franchisor and without notice to the Franchisor
assign, sell and transfer all of her interest in this Agreement or the
Rights to a corporation incorporated or to be incorporated in the
Exclusive Territory (the "Assignee"), of which the Sub-Franchisor or a
person of her immediate family (including child, parent, spouse,
sibling) is a shareholder. To the extent the Assignee assumes the
covenants and obligations of the Sub-Franchisor hereunder, the
Sub-Franchisor shall thereupon and without further agreement, be freed
and relieved of all liability with respect to such covenants and
obligations.
13. The Sub-Franchisor shall grant franchises for TEN (10) YEAR periods. If
the holder of the Rights for the Exclusive Territory should change, the
Franchisor and the Sub- Franchisor shall ensure that the new holder of
the Rights for the Exclusive Territory is obliged to fulfill the Sub
Franchisor's obligations with such franchisees for the full term and
any renewal term of each franchise agreement with each respective
franchisee.
PROMOTION
14. The Franchisor is responsible for promotional events when the first
Franchised Outlet opens in the Exclusive Territory. The Franchisor is
responsible to pay for the airfare for its staff, consultants and
agents to attend the opening and the Sub-Franchisor is responsible for
payment of lodging and meals for such persons during the promotion
period. The parties will cooperate in good faith using best efforts to
give maximum effort in promoting the success of the business of the
Sub-Franchisor in the Exclusive Territory.
TRAINING
15. The Franchisor will send its employees, consultants, and agents to the
Exclusive Territory to provide technical support, training and
management assistance. The Franchisor will pay for airfare of such
persons and the Sub-Franchisor will pay for lodging and meals for such
persons.
GENERAL PROVISIONS
Law Applicable
16. This agreement shall be governed by and construed in accordance with
the laws of the Province of British Columbia.
Entire Agreement
17. This agreement constitutes the entire agreement between the parties and
supersedes all previous agreements and understandings between the
parties in any way relating to the subject matter hereof. It is
expressly understood and agreed that the Company has made no
representations, inducements, warranties or promises whether direct,
indirect or collateral, oral or otherwise, concerning this agreement,
the matters herein, the business franchised hereunder or concerning any
other matter, which are not embodied herein.
Severability of Clauses
18. If any covenant or other provision of this agreement is invalid,
illegal or incapable of being enforced by reason of any rule of law or
public policy such covenant or other provision shall be severed; all
other conditions and provisions of this agreement shall, nevertheless,
remain in full force and effect and no covenant or provision shall be
deemed dependant upon any other covenant or provision unless so
expressed herein.
Time of Essence
19. Time shall be of the essence of this agreement and of each and every
part hereof.
Notices
20. All notices, requests, demands or other communications (collectively
"Notices") by the terms hereof required or permitted to be given by one
party to another shall be given in writing by personal delivery or by
registered mail, postage prepaid, addressed to the other parties or
delivered to such other parties as follows:
(a) To the Franchisor at: Big On Burgers
00000 Xxxxx Xxxxxx Xxx,
Xxxxxxxxxx, XX Xxxxxx, X0X 0X0
(b) To the Sub-Franchisor at: Toro Ventures Inc.
000-0000 Xxxx 00xx Xxx.
Xxxxxxxxx, XX Xxxxxx, X0X 0X0
or at such other address as may be given by one of
them to the other in writing from time to time, and such
Notices shall be deemed to have been received when delivered,
or if mailed, FOURTEEN (14) DAYS after the date of mailing
thereof; provided that if any such Notice shall have been
mailed and if regular mail service shall be interrupted by
strike or other irregularity before the deemed receipt of such
Notice as aforesaid, then such Notice shall not be effective
unless delivered.
Agreement Binding Upon Successors and Assigns
21. Subject to the restrictions on assignment herein contained, this
agreement shall ensure to the benefit of and be binding upon the
Sub-Franchisor and the Franchisor and their respective successors,
legal representatives and assigns.
ROYALTIES TO SUB-FRANCHISOR
22. The Franchisor acknowledges that the Sub-Franchisor is taking
considerable risk in developing and applying the Franchisor's System in
Exclusive Territory, and in consideration of such risk and effort the
Franchisor agrees that if the Franchisor and Sub-Franchisor for
whatever reason do not renew the Term, the Franchisor will pay to the
Sub-Franchisor a royalty equal to 2.5% of the annual gross income of
all of the Franchised Outlets operating in the Exclusive Territory for
the period of FIVE (5) YEARS commencing when the Sub-Franchisor ceases
to have the use of the Rights for any reason including but not limited
to termination of the Term, termination of the Renewal Term or
termination of any holdover period when the Sub-Franchisor has the
rights after the termination of the Term or Renewal Term.
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement the day
and year first above written.
Per: 680220 BC Ltd.
/s/ Xxxx Kernel
-----------------------------------
Authorized Signatory:
-----------------------------------
Witness
Per: Toro Ventures Inc.
/s/ Xxx Xxx
-----------------------------------
Authorized Signatory:
-----------------------------------
Witness
