"DAIRY QUEEN" OPERATING AGREEMENT
This Agreement entered into this 29th day of July , 1976, by and between Xxxxxxx
X. Xxxxxx and X. Xxxxx Xxxxxx of the city of Albuquerque, county of Bernalillo,
and state of New Mexico, herinafter referred to as "Licensor," and Xxxxxxx
Xxxxxxx and Xxxxxxxx Xxxxxx of the city of Deming, county of Xxxx, and state of
New Mexico, herein after referred to as "Licensee":
WHEREAS, Licensor is the exclusive licensee of American Dairy Queen
Corporation in certain geographical areas including the territory hereinafter
defined of the right to use, license and permit others to use the "Dairy Queen"
trademark, service xxxx and trade name which has been registered in the United
States Patent Office, in each state of the union and in foreign countries as
well as those trademarks and service marks (hereinafter collectively referred to
as "Trademarks"), a list of which is attached hereto and made a part hereof as
Appendix A; and
WHEREAS, Licensor and its predecessors in interest acting under said
exclusive license instituted, developed, promoted, and established the "Dairy
Queen" franchise business and system in the aforesaid territory which consists
of the sale of dairy products, food products, beverages and other products and
services under said trademarks and utilizing in connection therewith certain
types of facilities, equipment, supplies, ingredients, merchandising and
business techniques and methods together with advertising and promotion programs
developed from time to time; and
WHEREAS, it is the purpose of Licensor to provide to Licensee in a retail
store outlet an organization to control and make uniform the operation of
facilities and equipment together with the quality of products, the use and
protection of the trademarks and to make available uniform and approved
equipment, supplies, ingredients, merchandising and business techniques and the
advertising and promotional programs of American Dairy Queen Corporation, and
WHEREAS, Licensee desires to engage in the "Dairy Queen" business and system
and to enter into this operating Agreement subject to the conditions and
controls herein prescribed for the purpose of offering to the public products
and services of uniformly high quality and standards to the end of protecting
the interests of Licensee, of Licensor, of American Dairy Queen Corporation and
all other persons engaged in said business.
NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained, the grant by Licensor of this Operating Agreement and the payment by
Licensee of the participation fees provided in Paragraph 9 hereof, it is agreed
by and between the parties hereto as follows:
GRANT OF LICENSE
Licensor's 1. Licensor hereby grants to Licensee, subject to all the
Grant to terms, conditions and provisions hereof the right and
License license to
1.1 Establish and operate a retail store under the name
"Dairy Queen" at 0000 X. Xxxxxx Xxxxxx, Xxx Xxxxxx,
00000 and Licensor agrees that it will not establish
another "Dairy Queen" retail store within the following
defined territory: County of Xxxx, New Mexico
1.2 Use the trademark "Dairy Queen" and the other
trademarks identified in Appendix A on and in
association with the advertising, promotion and sale of
all uniform and approved products and services as
Licensor may authorize from time to time.
1.3 Use the trademark "Dairy Queen" and the other
trademarks identified in Appendix A on and in
association with the uniform equipment, supplies, and
ingredients for the products approved by Licensor.
1.4 Employ in the business of said store the merchandising,
advertising, promotion and business methods and
techniques developed, adopted and approved by Licensor.
1.5 Receiving the assistance, materials, and services of
Licensor as expressly provided for in this Operating
Agreement.
Acceptance 2. Licensee hereby accepts the above license from Licensor
by Licensee subject to all the terms, provisions and conditions hereof
and agrees that Licensee shall cause to have a "Dairy
Queen" store established and maintained at the address
given above, under Licensee's active and continuous
supervision and management and upon the standards
hereinafter provided. Licensee further expressly
acknowledges and agrees:
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2.1 Licensor is the exclusive licensee of the right to use
the trademark and trade name "Dairy Queen" and the
trademarks set forth in Appendix A in the aforesaid
territory.
2.2 Said trademarks are valuable property rights owned by
American Dairy Queen Corporation and exclusively
licensed to Licensor in said territory.
2.3 Said trademarks shall be used only in connection with
such products and services as may be approved or
specified by Licensor and shall at all times be used
only in a manner approved by Licensor.
2.4 Licensee's rights to the use of trademarks is
specifically limited to Licensee's retail store
operation at said location.
2.5 Licensee shall use no other trademarks, trade names or
service marks in said business except those authorized
by Licensor and as set forth in Appendix A except with
the written consent of Licensor.
2.6 Licensee shall not use the words "Dairy Queen" as a
part of its corporate or business name unless first
approved in writing by Licensor, and shall use only
the word "Dairy Queen" (and no other words whatsoever)
as the trade name on the store from which the said
products and services are sold.
2.7 Licensee shall adopt and follow in good faith the
systems, programs and methods prescribed by Licensor
for Licensee's retail operation in accordance with
this Operating Agreement
Term 3. The License granted herein shall be for a term of twenty
years unless sooner terminated in accordance with the
provisions hereof. This Operating Agreement shall be
automatically renewed for successive five year periods
unless either party shall give the other six months
written notice of intention not to renew.
TRADEMARK STANDARDS AND REQUIREMENTS
General 4. Licensee agrees that nothing herein contained gives him
Declarations, any title to or interest in the trademark and trade name
Uniformity and "Dairy Queen" or any of the trademarks set forth in
Quality Control Appendix A except the right to use the sametunder the
terms and conditions of this Agreement and that
Licensee's use thereof inures to the benefit of the owner
thereof.
Licensee shall use said trademarks and trade names
only on and in association with the advertising and sale
of products and services which shall in quality, mode and
conditions of manufacture and sale, comply with such
standards as are established or approved by Licensor. In
order to promote and protect the business interests of
each of the parties, the value of the "Dairy Queen"
business and the business interests of other persons
engaged therein, uniformity shall be maintained in the
type, standard and quality of stores, equipment, supplies
and ingredients used therein, and the conditions of
preparation and the procedures employed in the sale of
said products and services. To this end, it is agreed that
the rules and controls contained in this Agreement shall
prevail in the use of the "Dairy Queen" trademark and in
the conduct of Licensee's said business.
Licensee agrees that the provisions, restrictions and
controls provided in this Operating Agreement are all
necessary, reasonable and desirable for such purposes and
that Licensee's said business shall be conducted in
accordance with Licensor's uniform requirements with
respect to quality, production, appearance, cleanliness,
service, merchandising and advertising standards.
These controls shall include the specific
requirements hereinafter provided. Nothing herein shall be
construed to limit the sources from which Licensee may
procure equipment, supplies, ingredients or services
provided that such items conform to the Licensor's
standards and specifications of consistent quality and
uniformity, and provided further that any such supplier
shall have reliable production and delivery capabilities
as well as such financial responsibility as may be
necessary to adequately provide the same on a continuing
basis. Nothing contained herein shall be deemed to require
Licensor to approve an inordinate number of suppliers of a
given item or service so as to render the same
economically detrimental to Licensees of Licensor or
incapable of proper supervision by Licensor. Requests for
approval of suppliers shall be in writing and shall
contain such information as Licensor may reasonably
request.
Approved 4.1 Complete and detailed uniformity under many varying
Adaptations conditions may not be possible or practical and
Licensor reserves the right and privilege, at
Licensor's sole discretion and as Licensor may deem in
the best interests of all concerned in any specific
instance, to vary standards for any other like
business based upon the peculiarities of a particular
site or location, density of population, business
potential, population of trade area, existing business
practices, or any other condition which Licensor deems
to be of importance to the successful operation of a
like business. Licensee hereunder shall not be heard
to complain on account of any variation from standard
specifications and practices granted to any other like
licensee and thereby shall not be entitled to require
Licensor to grant to Licensee a like or similar
variation hereunder.
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Litigation 4.2 In the event that any person, firm or company, who is
not a licensee or franchisee of Licensor, uses or
infringes upon the "Dairy Queen" trademark or trade
name, Licensor shall, at its expense, cause a
trademark infringement or any other appropriate suit
to be instituted against such offending party.
4.3 With respect to all other situations, as between
Licensor and Licensee, Licensor shall control all
litigation relating to the trademarks listed in
Appendix A and shall be the sole judge as to whether
or not suit shall be instituted for the infringement
thereof.
FACILITY STANDARDS AND MAINTENANCE
5. The following provisions and conditions shall control
with respect to Licensee's store site and unit.
Store 5.1 Pursuant to separate written agreement between the
Facility parties Licensor shall construct and deliver to
Licensee possession of a completed "Dairy Queen"
retail outlet at the aforesaid location (or in the
alternative, Licensee shall cause to be constructed
and completed on or before not applicable a "Dairy
Queen" retail outlet at said location). Said outlet
shall be constructed and equipped in accordance with
Licensor's currently approved specifications and
standards as respects building, equipment, inventory,
signage and accessory features.
Future 5.2 Any replacement, reconstruction, addition or
Alteration modification in building, equipment or signage, to be
made hereafter, whether at the request of Licensee or
of Licensor, shall be made in accordance with written
specifications approved by Licensor.
Maintenance 5.3 The building, equipment and signage employed in the
conduct of Licensee's business shall be maintained in
accordance with an annual maintenance list prepared by
Licensor and based upon periodic inspections of the
premises by Licensor's representatives. Within a
period of ninety (90) days after the receipt of such
annual maintenance list, Licensee shall effect the
items of maintenance reasonably provided therein
including the repair of defective items and/or the
replacement of unrepairable or obsolete items of
equipment and signage.
Relocation 5.4 Should it become necessary, on account of
condemnation, sale, or other cause, including
expiration or cancellation of lease or rental
contract, to relocate said store within territory, any
new store site shall be designated, approved,
improved, and equipped in accordance with the current
standards of Licensor at that time.
5.5 Each and every renewal or extension of this operating
agreement as provided in Paragraph 3 hereof and each
every transfer as provided in Paragraph 9.11 hereof
shall be expressly conditioned upon Licensee promptly
performing and effecting such items of modernization
and/or replacement of building, equipment, and signage
as may be necessary to permit the same to conform to
the standards then prescribed by Licensor for
similarly situated store operations. Licensee
recognizes and acknowledges that the requirements of
this paragraph are both reasonable and necessary to
insure continued public acceptance and patronage and
to avoid deterioration or obsolescence in connection
with the operation of the business.
PRODUCTS AND OPERATIONS STANDARDS AND REQUIREMENTS
6. The following provisions shall control with respect to
products and operations:
Authorized 6.1 Licensee's business shall be confined to the
Product Line preparation and sale of only such products as from
time to time are designated or approved by Licensor.
The premises upon which said business is operated
shall not be used for any other business and there
shall not be sold or offered for sale therefrom any
other product or service without the written consent
of Licensor which shall not be withheld unreasonably
with respect to the sale of any non-competitive
product which may complement and promote additional
sales of the products which are authorized hereunder.
Alcoholic or intoxicating beverages shall not be sold
or offered for sale or otherwise handled upon said
premises.
Approved Menu 6.2 Attached hereto as Appendix B is the currently
approved menu for Licensee's outlet. Variations
therefrom shall only be made with the written consent
of the Licensor.
Authorized 6.3 Licensee shall use in preparing products only such
Ingredients, ingredients, formulas, and supplies as are specified
Formulas, by Licensor and in such portions, sizes and appearance
Supplies, and packaging as set forth in a "Store Management
Preparation Operations Manual" published by American Dairy Queen
Corporation which shall be supplied to Licensee by
Licensor upon the execution of this Operating
Agreement. All other supplies, including cones, cups,
containers, eating utensils, napkins, and all other
customer service materials of all description and
types, shall meet the standards of
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uniformity and quality as now or hereafter set by
Licensor. Licensee shall be furnished with lists of
approved sources of supply annually.
Serving and 6.4 All advertising material, customer "goodwill" items,
Promotion Items cartons, containers, wrappers and paper goods, eating
and serving utensils, customer convenience items
(including napkins, baby bibs, and disposal
containers), used in the advertising, sale and
distribution of all products covered by this Operating
Agreement shall, where practicable, indicate that it
is produced and sold under the authority of American
Dairy Queen Corporation and shall be subject to
approval by Licensor before being used.
Maintenance and 6.5 Licensee's said business shall be operated and
Sanitation maintained at all times in compliance with any and all
reasonable health and sanitary standards prescribed by
Licensor or by governmental authority. If said store
shall be 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 shall
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.
Inspection and 6.6 Licensor or its authorized representative shall have
Recommendation the right from time to time to enter Licensee's store
at all reasonable times during the business day for
the purpose of making periodic inspections to
ascertain if all the provisions of this Operating
Agreement are being observed by Licensee and to
inspect Licensee's said store, lands, equipment, and
to test, sample and inspect his supplies, ingredients
and products, as well as, the preparation and
formulation thereof and the conditions of sanitation
and cleanliness in the production, handling and
serving thereof. The foregoing shall include the right
to review, analyze, and make corrective
recommendations on all phases of business management,
from purchasing and inventory control through
financial, personnel, and merchandising management.
Operational 6.7 Whenever it shall appear in Licensor's reasonable
Aid by Licensor judgment that Licensee's said business is not being
operated in compliance with the requirements hereof,
that the volume of business being done is not equal to
the average volume of other businesses similarly
situated, or that the business is not being operated
profitably or efficiently, Licensor, at Licensor's
option:
(a) May place one or more representatives at said
store for a reasonable time to observe or examine
any or all phases of the operation thereof and
may make any reasonable recommendation to
Licensee as to any operational change or
procedure considered necessary or proper for an
efficient and profitable operation, which may
include the placing by Licensor of a qualified
representative at Licensee's place of business to
train, instruct and familiarize Licensee or
Licensee's employees with standard "Dairy Queen"
business operations and procedures, or
(b) Licensor may require Licensee or any operating
employee of Licensee to spend a reasonable amount
of time at another like place of business or at a
training center designated by Licensor at
Licensee's expense for the purpose of observing
and receiving training and instruction (including
periodic refresher training), and the practice of
standard "Dairy Queen" business operations and
procedures. Licensee shall effect promptly any
such operational change or procedure so
recommended.
Period of 6.8 Licensee's store shall be opened and operated during a
Operation period of at least eleven (11) consecutive months in
each calendar year and shall be open to the public at
least twelve (12) hours each day during said period.
Acts of God, war, strikes or riots preventing Licensee
from temporarily complying with the foregoing shall
exempt compliance therewith.
PERSONNEL AND SUPERVISION STANDARDS
7. The following provisions and conditions shall control
with respect to personnel, training and supervision:
Management 7.1 Licensee shall adopt and use as his continuing
System operational routine the standard "Dairy Queen"
management system as well as Licensor's standard with
respect to product preparation, merchandising,
employee recruitment, training, equipment and facility
maintenance and sanitation. Licensee shall also
utilize aids supplied or made available by Licensor to
all licensees for this purpose. From time to time the
Licensor will revise these programs to meet changing
conditions of retail operation in the best interests
of Licensee.
Training 7.2 Licensee shall attend Licensor's store management
training program at a place to be designated by the
Licensor prior to the opening of Licensee's store. If
during the term hereof Licensee operates said store
with a manager other than himself, Licensee shall at
his expense send such manager through the same
program.
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Staffing 7.3 Licensee shall hire and supervise efficient,
competent, sober and courteous operators and employees
for the operation of the business and set and pay
their wages, commissions and incentives with no
liability therefor on Licensor. Licensee shall require
all his employees to work in clean uniforms approved
by the Licensor but furnished at the cost of Licensee
or the employees as Licensee may determine.
Internal 7.4 Licensor shall provide or make available to Licensee
Training an in-store training program for all store employees.
Program Licensee shall train and periodically re-train all
store employees using the training aids made available
by Licensor. From time to time, training material will
be updated and added to as required by Licensor, with
such training materials and aids available for
purchase by Licensee.
Attendance 7.5 Licensee, at his expense, shall attend at least one
at Meetings national or regional meeting each year which Licensor
or American Dairy Queen Corporation originates for and
on behalf of "Dairy Queen" operations to set forth new
methods and programs in store operation, training,
management, sales, advertising, and promotion.
ADVERTISING AND PROMOTION
Advertising and 8.1 Licensor and Licensee, together with other licensees
Promotional of Licensor, and of American Dairy Queen Corporation,
Programs shall cooperate in the promotion and advertising of
approved products. To this end, Licensor reserves the
right in its sole discretion to establish and organize
advertising and promotional programs from time to time
and Licensee agrees to participate in the cost and
expense thereof by the payment to Licensor of an
advertising fee as set forth in paragraph 9.5 hereof.
Each year Licensor shall notify Licensee of the
advertising and promotional programs to be conducted
during the year and shall further notify Licensee of
the advertising fee to be paid by him during such
period. Licensor shall from time to time expend all
sums received as and for advertising fees for consumer
advertising and the promotion of said products through
any materials and any media such as radio, television,
newspapers, billboards or special promotions, or point
of purchase materials, originating, appearing,
furnished or received in whole or in part in said
territory.
8.2 Licensee shall only use such advertising and
promotional materials as Are furnished, approved, or
made available by or through Licensor. Said materials.
shall be used only in a manner prescribed by Licensor.
PARTICIPATION FEES, REPORTING AND FINANCIAL MANAGEMENT
Franchise 9.1 In consideration of the rights granted herein, and
and License during the full term of this Operating Agreement or
Fees any renewal or extension hereof, Licensee shall pay to
Licensor as a license fee in respect of the rights
granted herein a sum equal to four percent (4%) of
gross retail sales, exclusive of retail sales taxes,
of all products, goods and wares of every kind and
nature sold from or in connection with the operation
of said store, including sales of all products under
any of the trademarks set forth in Appendix A as well
as sales of other approved merchandise bearing other
brand names which may be authorized for sale by the
Licensor from time to time.
9.2 All amounts due and owing hereunder shall be computed
at the end of each month's operation and remittance
for the same shall be made to the Licensor on or
before the tenth day of the following month
accompanied by the reports provided for in paragraph
9.4 hereof.
Surcharge 9.3 At the option of Licensor, Licensor may require
Method of Licensee to pay to the suppliers of mix, meat, and
Pre-Collection other ingredients used in the conduct of the business
a surcharge on all units of such commodities purchased
by Licensee to be paid to such supplier by Licensee at
the time of purchase of such commodities. Said
surcharge shall be paid to said supplier or suppliers
for the account of Licensor, the same to be regarded
by the parties as a method of collection of said
license fee. The amounts so collected shall be
credited by Licensor against the license fee due from
Licensee to Licensor at the end of each month's
operations. Licensor shall submit to Licensee within a
period of ten days after the receipt of Licensee's
monthly report and remittance a reconciliation setting
forth the credits to Licensee's account by reason of
the amounts collected for the Licensor by suppliers by
way of the aforesaid surcharge method.
Records and 9.4 Licensee shall keep true records from which all sums
Reports payable under this Agreement and the dates of accrual
thereof may be readily determined and said records
shall be open to inspection by Licensor or its
authorized representatives at all reasonable times.
Licensee shall make written
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reports to Licensor in such form as Licensor may from
time to time prescribe within ten days after the end
of each month's operation setting forth the amount of
gross sales of all products from or in connection with
the operation of said store and the business thereof
during said month. In addition to the foregoing and in
addition to such other information as Licensor may
from time to time reasonably require, said monthly
report shall accurately set forth the total number of
gallons of mix, the total number of pounds of meat,
and the quantity of other basic commodities used
during said month and the sources where said mix, meat
and other commodities were purchased. For the purpose
of said reports the date of use of such mix, meat and
other commodities shall be the date of receipt at the
store from the approved source.
Advertising 9.5 Pursuant to paragraph 8.1 hereof, Licensee shall
Contribution participate with Licensor and with other licensees of
Licensor in the cost and expense of advertising and
promotional programs. To this end Licensee shall pay
to Licensor in the cost and expense of advertising and
promotional programs. To this end Licensee shall pay
to Licensor as an advertising and particiapation fee
an annual sum not to exceed three percent (3%) of
gross retail sales in connection with the operation of
said store. All of the provisions of this paragraph 9
shall apply with respect to the determination,
reporting, collection and payment of advertising
participation fees.
Financial 9.6 Licensee agrees to employ sound financial management
Planning and practices in connection with the operation of said
Management business and to that end Licensee shall maintain on
forms approved or provided by Management Licensor a
monthly profit plan, a monthly profit and loss
statement and a monthly balance sheet accurately
reflecting the operations of said business. In
addition to the foregoing, Licensee shall employ such
methods of record keeping, bookkeeping and reporting
as the Licensor shall from time to time reasonably
require and copies of all monthly profit plans, profit
and loss statements and balance sheets shall be
forwarded to Licensor on or before the tenth day of
each month. In the event that an accounting and/or
bookkeeping service shall be made available to other
similarly situated licensees of Licensor. Licensee
shall have the right to request that the same be
provided to him by Licensor at a level of charges
equivalent to charges made to such other similarly
situated Licensees.
Payment of 9.7 Licensee covenants and agrees to pay promptly when due
Debts all taxes and assessments that may be assessed against
said premises or the equipment used in connection with
Licensee's business, all lien and encumbrances of
every kind and character created or placed upon or
against any of said property and all accounts and
other indebtedness of every kind incurred by Licensee
in the conduct of said business. In the event Licensee
should default in making any such payment, Licensor
shall be authorized, but not required, to pay the same
on Licensee's behalf and Licensee covenants promptly
to reimburse Licensor on demand for any such payment.
Any and all amounts owing to Licensor by Licensee
hereunder whether the same arise under the provisions
of this paragraph 9.7 or under any other provision of
this Agreement shall bear interest at the maximum
legal rate from and after the date of accrual thereof.
9.8 The default by Licensee in the timely payment of any
indebtedness owing to Iicensor hereunder or the
default by Licensee in the payment of any indebtedness
with respect to which Licensor or any of Licensor's
affiliated entities is a guarantor, co-signer, or
endorser or obligor shall constitute a breach of this
operating agreement rendering the same subject to
termination in accordance with the provisions of
paragraph 11 hereof.
9.9 In the event that Licensee be declared insolvent or
bankrupt; or in the event a receiver is appointed, or
that any proceeding is taken, by, for, or against
Licensee under any provisions of the Federal
Bankruptcy Act or any amendment thereof, this
Operating Agreement may be terminated forthwith by
Licensor.
Liability and 9.10 Licensee hereby waives all claims against Licensor for
Insurance damages to property or injuries to persons arising out
of the operation of said business, and Licensee shall
indemnify and save Licensor harmless of and from any
damage or injury to property or persons arising from
or growing out of the operations of said business or
the consumption of the product thereof. Licensee
further covenants and agrees to purchase and maintain
in full force and effect, at Licensee's sole expense,
liability insurance in an amount not less than
$100,000 insuring both parties hereto from liability
for any and all such damage or injury and Licensee
further agrees to deliver to Licensor a proper
certificate evidencing the existence of such insurance
coverage and Licensee's compliance with the provisions
of this paragraph.
Assignment and 9.11 Licensee agrees that the interest of Licensee
Transfer Fee hereunder may not be transferred, assigned or
alienated in whole or in part without the written
consent of Licensor. which consent shall not be
withheld unreasonably, but Licensor may insist that
any proposed assignee be a person, in Licensor's
judgment, qualified to provide active supervision over
the operation of said store in compliance with
Licensee's obligations hereunder. In the event
Licensee's said interest should be so transferred or
assigned, Licensee shall pay to Licensor
contemporaneously therewith the
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sum of One Thousand Five Hundred Dollars ($1,500) as
and for a transfer fee, for the preparation of a new
operating Agreement in assignee's name, and for any
and all such expenses incurred by Licensor in
effecting said transfer, including attendance by the
assignee at Licensor's training center.
Right of 9.12 Licensee hereby grants to Licensor the right of first
First Refusal refusal to purchase all of Licensee's right, title and
interest in and to said "Dairy Queen" store and the
within Operating Agreement in the event Licensee
should desire to sell the same. In such event,
Licensee shall notify Licensor in writing that he has
received and is prepared to accept a good faith offer
from a qualified buyer, shall identify the buyer and
state the terms of such offer. Licensor shall have
thirty (30) days after receipt of said notice to
exercise its right of first refusal, the same to be in
writing and subject to the same terms and conditions
as have been offered to Licensee by said qualified
buyer. If Licensor does not exercise said right of
first refusal within said thirty (30) days, Licensee
may then sell or transfer his said interest to such
qualified buyer, subject, however, to Licensor's
written consent to such assignment and the payment of
transfer fee, all as provided in paragraph 9.11
hereof.
CONTRACT VIOLATION
Remedies 10. Licensee recognizes that his "Dairy Queen" store is one
of a large number of stores similarly built and selling
to the public similar products. and hence the failure on
the part of a single licensee to comply with the terms of
this Operating Agreement, could cause irreparable damage
to some or all other "Dairy Queen" licensees. 'Therefore,
it is mutually agreed that in the event of a breach or
threatened breach of any of the terms of this Operating
Agreement by either party, the other party shall
forthwith be entitled to an injunction restraining such
breach and/or a decree of specific performance without
showing or proving any actual damage, but such injunctive
relief or decree shall not preclude any judgment for
damages sustained.
Breach of 10.1 In the event that Licensor deter-mines that Licensee
Contract has failed to meet the requirements and specifications
established with respect to quality, physical
properties, or condition of equipment or materials
used or products manufactured, or with respect to
packages or advertising, or any other provisions of
this Operating Agreement, Licensor shall notify
Licensee in writing of that fact, and shall set forth
the conditions to be corrected, and if Licensee shall
fail -to take positive steps to correct the conditions
specified in any such notice within seven (7) days
from the date of sending such notice by mail addressed
to said Licensee at his last known- address as shown
by the records of Licensor, Licensor shall thereupon
have the right to cancel and terminate this Agreement
upon delivery to Licensee, personally or by mail, of
written notice of such cancellation.
Indemnity 10.2 Licensee expressly agrees to save Licensor harmless
from any loss, damage or liability incurred by
Licensor by reason of any violation of this Operating
Agreement by Licensee.
Land or Building 10.3 Any termination of the land or building lease for
Lease Licensee's store shall automatically terminate this
Operating Agreement.
TERMINATION RIGHTS
11. Upon the termination or expiration of this Operating
Agreement:
Reversion 11.1 All rights to the use of the trademark and trade name
of Trademark "Dairy Queen" and to the trademarks and trade names
Rights listed in Appendix A. and the right and license to
conduct said business in the territory described
hereinabove, shall revert to Licensor and Licensee
shall immediately cease all use of said trademarks and
trade names, or any other similar trade names or
trademarks and pay all monies due at said date;
11.2 All right, title and interest of Licensee in and to
this Operating Agreement shall become the property of
Licensor.
Purchase 11.3 Licensor shall have the first option to purchase any
Option or all equipment or supplies, of whatever kind, owned
by Licensee and used by him in the production of the
"Dairy Queen" product, or any of the other authorized
products under any of the trademarks hereunder at a
price determined by a qualified appraiser selected
with the consent of both parties. If the parties
cannot agree upon the selection of such an appraiser
he shall be appointed by a Judge of the United States
District Court for Licensee's territory. Said option
to purchase may be exercised by Licensor at any time
within 30 days from the date of such termination and
shall not be abated or terminated by the sale or other
transfer of any such equipment or supplies by Licensee
to a third party. Upon-the exercise of such option and
tender of payment for any such equipment or supplies,
Licensee agrees to sell and deliver the same to
Licensor, free and clear of all encumbrances, and to
execute and deliver a xxxx of sale therefor to
Licensor.
-7-
Non 11.4 Licensee shall not directly or indirectly engage in
Compete any competitive business within the territory set
forth in paragraph 1.1 for a period of one year after
said date of termination or expiration.
GENERAL PROVISIONS
12.1 In the event at any future time one or more clauses of
this Agreement shall be held to be void by any court
of competent jurisdiction for any reason, such clauses
shall be deemed to be separable and the remainder of
this Agreement shall be deemed to be valid and in full
force and effect.
12.2 Any waiver by Licensor of any breach by Licensee shall
not be deemed to be a waiver of any subsequent breach
nor an estoppel to enforce its right for a subsequent
breach.
12.3 This Agreement constitutes the sole agreement between
the parties with respect to the entire 'subject matter
of this Operating Agreement and embodies all prior
agreements and negotiations with respect to the "Dairy
Queen" business. There are no representations of any
kind except as contained herein.
12.4 It is agreed and understood that Licensee is an
independent contractor and is not in any manner the
agent or employee of Licensor nor has Licensor any
interest in the business of Licensee, except to the
extent set forth in this Agreement.
12.5 If the Licensee consists of two or more individuals,
such individuals shall be jointly and severally liable
and references to Licensee in this Agreement shall
include all such individuals. Reference to Licensee as
male shall also include a female licensee or
corporation or any other business entity.
12.6 This Agreement shall be binding upon and inure to the
benefit of the administrators, executors, heirs,
successors and assigns of the parties.
12.7 Licensee hereby acknowledges receipt of "Store
Management Operations Manual(s)" bearing issue
number(s) ............ and ............ published by
American Dairy Queen Corporation.
IN WITNESS WHEREOF, the parties hereto have executed the foregoing, "Dairy
Queen" Operating Agreement the date first above written.
/s/ Xxxxxxx X. Xxxxxxx
------------------------------
WITNESS:
/s/ Xxxxxxxx X. Xxxxxxx
------------------------------
----------------------------------- LICENSEE
----------------------------------- LICENSOR
ATTEST:
/s/ Xxxxxxx X. Xxxxxx
----------------------------------- ------------------------------
/s/ X. Xxxxx Xxxxxx
APPROVED: ------------------------------
AMERICAN DAIRY QUEEN CORPORATION
By: /s/ H.E. Xxxxxx
-------------------------------
NOTE:IF LICENSEE IS A CORPORATION EACH OF THE STOCKHOLDERS THEREOF MUST EXECUTE
THE FOLLOWING UNDERTAKING.
The undersigned persons hereby represent to Licensor that they are all of
the stockholders of Licensee. In consideration of the grant by Licensor to
Licensee as herein provided each of the undersigned hereby agree, jointly and
severally, and for themselves, their heirs, legal representatives and assigns
that they, and each of them, shall be firmly bound by all of the terms,
provisions and conditions of the foregoing "Dairy Queen" Operating Agreement;
that they and each of them do hereby unconditionally guarantee any indebtedness
of Licensee arising under or by virtue of the aforesaid Operating Agreement and
that they and each of them will not permit or cause the voting control of
Licensee to be modified or altered by stock transfer without first notifying
Licensor of said proposed transfer. and obtaining Licensor's prior written
consent thereto.
------------------------------------- -------------------------------------
------------------------------------- -------------------------------------
#202 - For use by territory operators other than American Dairy Queen
Corporation. Execute in 5 counterparts.
-8-
October 19, 1988
Dairy
Queen
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Store Number: 13673
District Number: 3602
District Manager: Xxxx Xxxxxx
Regional Manager: Xxxx Xxxxx
Location: Deming, NM
Xxxxxx'x Inc.
Xxxxx Xxxx, etal
000 Xxxxxxxxx X.X.
Xxxxxxxxxxx, XX 00000
Dear Xx. Xxxx:
We are very pleased to enclose your Assignment and Consent to Assignment
documents for the above store location. I would suggest that you keep this in a
safe place, at it is a very valuable document.
Please be reminded that this consent to transfer by American Dairy Queen
Corporation does not in any way include an assurance of profitability in the
"Dairy Queen" business.
We are very happy that you have become another valued member of the "Dairy
Queen" system. Please don't hesitate to call on us or your District Manager if
we can serve you in any way.
Sincerely,
AMERICAN DAIRY QUEEN CORPORATION
(Signature)
Xxxxxx X. Xxxxxx
Legal Assistant
612/830-0385
Enclosures
cc: Xxxx Xxxxx
Xxxx Xxxxxx
Certified # P 840 783 646
International Dairy Queen, Inc.
Mail To: X.X. Xxx 00000, Xxxxxxxxxxx, Xxxxxxxxx 00000 / Tel. (000)000-0000
ASSIGNMENT AND CONSENT TO ASSIGNMENT
------------------------------------
"Dairy Queen" Store #13673
--------------------------
0000 Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000-0000
------------------------------------------------------
KNOW ALL MEN BY THESE PRESENTS;
THAT,
Xxxxxxx Xxxxxxx and Xxxxxxxx Xxxxxxx hereinafter designated as
"ASSIGNORS," in consideration of the sum of One Dollar ($1.00) and other good
and valuable considerations, the receipt and sufficiency of which is hereby
acknowledged, do hereby sell, assign, set over and deliver unto
Xxxxxx'x, Inc., hereinafter designated as "ASSIGNEE," all of the.
Assignors' rights, title, and interests, as the same may exist in and to that
certain
"Dairy Queen" Operating Agreement dated July 29, 1976, copies of which
have been delivered by Assignors to Assignee and receipt thereof is acknowledged
by Assignee.
Assignee hereby assumes and agrees to make all the payments required by
the above-mentioned Agreement, from and after the 1st day of August, 1988, and
to perform and abide by all the covenants and conditions of said Agreement.
Assignors hereby acknowledge that they have read the following Consent
to Assignment and understand that they are thereby made contingently liable to
American Dairy Queen Corporation, if Assignee fails to pay, perform, and abide
by all the covenants and conditions of said Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Assignment and Consent to Assignment in triplicate the day and year as set forth
below.
WITNESS: ASSIGNORS:
/s/ Signature Illegible /s/ Xxxxxxx Xxxxxxx
------------------------------ -------------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxxxxx Xxx Xxxxxx /s/ Xxxxxxxx Xxxxxxx
------------------------------ -------------------------------
Xxxxxxxx Xxxxxxx
DATED: This 20th day of July, 1988
WITNESS: ASSIGNORS:
Xxxxxx'x, Inc.
/s/ Xxxxxxx X. XxXxxx
------------------------------
(Signature) By /s/ C.Xxxxx Xxxx
-------------------------------
Its Execu. V. Pres.
DATED: This 27th day of July, 1988.
-1-
GUARANTY
The undersigned persons hereby represent to AMERICAN DAIRY QUEEN
CORPORATION that they are all of the stockholders of Assignee referred to above.
In consideration of the Consent to Assignment granted by AMERICAN DAIRY QUEEN
CORPORATION and as herein provided, each of the undersigned hereby agrees,
jointly and separately, for themselves, their heirs, legal representatives, and
assigns that they and each of them., shall be firmly bound by all of the terms,
provisions and the conditions of the Agreement assigned; that they and each of
them do unconditionally guarantee any indebtedness of Assignee arising under or
by virtue of said Agreement; and that they and each of them will not permit or
cause the voting control of Assignee to be modified or altered by stock transfer
without first notifying AMERICAN DAIRY QUEEN CORPORATION of said proposed
transfer and obtaining prior written consent thereto, which consent shall not be
unreasonably withheld, and without first paying or causing to be paid to
AMERICAN DAIRY QUEEN CORPORATION the transfer fee provided for in Paragraph 9.11
of said "Dairy Queen" Operating Agreement dated July 29, 1976. GUARANTORS:
/s/ X. X. Xxxxxx
----------------------------
X.X. Xxxxxx
DATED: This 26th day of July, 1988.
CONSENT TO ASSIGNMENT
AMERICAN DAIRY QUEEN CORPORATION, a Delaware Corporation, with its
principal offices at 0000 Xxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000,
hereby consents to the foregoing Assignment by Assignors to Assignee, in
consideration of the Assignee's agreement to make all payments and to perform
-2-
and abide by all the covenants and conditions of said Agreement subject to the
following:
The Assignors,
Xxxxxxx Xxxxxxx and Xxxxxxxx Xxxxxxx guarantee all of the obligations
of the Assignee,
Xxxxxx'x, Inc., incurred under said Agreement during the first two
years from the date of transfer.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Assignment and Consent to Assignment in triplicate the day and year set forth
below.
WITNESS AMERICAN DAIRY QUEEN CORPORATION
(Signature) By /s/ Xxxxxx X. Xxxxxx
--------------------------------- -------------------------------
Xxxxxx X. Xxxxxx
(Signature)
--------------------------------- Its V.P.
DATED: This 14th day of Oct., 1988. -------------------------------
-3-
