EX.20h
TREATS FRANCHISE AGREEMENT
_____________________________
FRANCHISEE
___________________________________
DATE OF AGREEMENT
___________________________________
___________________________________
LOCATION OF STORE
(Readers are cautioned that the inclusion of the Company's Franchise
Agreement to the Form 10-SB does not constitute an offer to sell a
franchise, which can only be done through the Company's Uniform
Franchise Offering Circular ("UFOC"))
TABLE OF CONTENTS
SECTION
Exhibits/Attachments
1. ACKNOWLEDGMENTS AND REPRESENTATIONS
2. GRANT OF FRANCHISE
A. TERM OF FRANCHISE
B. RIGHTS RESERVED BY COMPANY
3. DEVELOPMENT AND OPENING OF THE STORE
A. LEASE OF PREMISES OF STORE
B. DEVELOPMENT OF STORE
C. FIXTURES, EQUIPMENT, FURNITURE AND SIGNS
D. STORE OPENING
E. RELOCATION OF STORE
4. TRAINING AND OPERATING ASSISTANCE
A. TRAINING
B. OPERATING ASSISTANCE
C. OPERATING MANUAL
5. STORE IMAGE AND OPERATING STANDARDS
A. CONDITION AND APPEARANCE OF STORE
B. ALTERATIONS TO THE STORE
C. UNIFORM IMAGE
D. FOOD & BEVERAGE PRODUCTS, SUPPLIES & MATERIALS
E. SPECIFICATIONS, STANDARDS AND PROCEDURES
F. COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES
G. MANAGEMENT OF THE STORE
H. HIRING AND TRAINING OF EMPLOYEES
I. INSURANCE
6. ADVERTISING
A. CREATION OF ADVERTISING FUND BY COMPANY
B. ADVERTISING BY FRANCHISEE
C. ADVERTISING BY APPROVED ADVERTISING COOPERATIVES
7. MARKS
A. OWNERSHIP AND GOODWILL OF MARKS
B. FRANCHISEE'S USE OF MARKS
C. NOTIFICATION OF INFRINGEMENTS AND CLAIMS
D. DISCONTINUANCE OF USE OF MARKS
E. INDEMNIFICATION OF FRANCHISEE
8. CONFIDENTIAL INFORMATION
9. EXCHANGE OF INFORMATION/EXCLUSIVE RELATIONSHIP
10. RELATIONSHIP OF THE PARTIES/INDEMNIFICATION
11. FEES
A. INITIAL FRANCHISE FEE
B. QOYALTY AND SERVICE FEE
C. DEFINITION OF "GROSS SALES"
D. INTEREST ON LATE PAYMENTS
E. APPLICATIONOFPAYMENTS
12. RECORDS AND REPORTS
A. ACCOUNTINGANDRECORDS
B. REPORTS, FINANCIAL STATEMENTS AND TAX RETURNS
13. INSPECTIONS AND AUDITS
A. COMPANY'S RIGHT TO INSPECT THE STORE
B. COMPANY'S RIGHT TO AUDIT
14. TRANSFER
A. BY COMPANY
B. FRANCHISEE MAY NOT TRANSFER WITHOUT APPROVAL OF COMPANY --
C. CONDITIONS FOR APPROVAL OF TRANSFER
D. TRANSFER TO A WHOLLY-OWNED CORPORATION
E. DEATH OR DISABILITY OF FRANCHISEE
F. EFFECT OF CONSENT TO ASSIGNMENT
G. COMPANY'S RIGHT OF FIRST REFUSAL
15. RENEWAL OF FRANCHISE
A. FRANCHISEE'S RIGHT TO RENEW
B. NOTICE OF RENEWAL AND NON-RENEWAL
C. RENEWAL AGREEMENTS/RELEASES
16. TERMINATION OF THE FRANCHISE
A. BY FRANCHISEE
B. BY COMPANY
17. RIGHTS OF COMPANY AND OBLIGATIONS OF FRANCHISEE UPON TERMINATION OR
EXPIRATION OF THE FRANCHISE
A. PAYMENT OF AMOUNTS OWED TO COMPANY
B. DEIDENTIFICATION
C. CONFIDENTIAL INFORMATION
D. COVENANT NOT TO COMPETE
E. COMPANY HAS RIGHT TO PURCHASE STORE
F. CONTINUING OBLIGATIONS
18. ENFORCEMENT
A. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS
B. WAIVER OF OBLIGATIONS145
C. PRELIMINARY INJUNCTIVE RELIEF
D. RIGHTS OF PARTIES ARE CUMULATIVE
E. COSTS AND ATTORNEYS'FEES
F. ARBITRATION
G. GOVERNING LAW/CONSENT TO JURISDICTION
H. BINDINGEFFECT
I. LIMITATIONS OF CLAIMS
J. WAIVER OF PUNITIVE DAMAGES AND JURY TRIAL
K. CONSTRUCTION
19. NOTICES AND PAYMENTS
EXHIBIT A - DESCRIPTION OF STORE TYPE/LOCATION OF PREMISES
EXHIBIT B - COLLATERAL ASSIGNMENT OF LEASE
OWNERS JOINDER, GUARANTY AND ASSUMPTION OF OBLIGATIONS
TREATS FRANCHISE AGREEMENT
THIS AGREEMENT is made and entered into as of this ______ day of _________
, 19__, by and between EMC GROUP, INC., a Florida corporation, with its
principal office at 000 Xxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxx 00000 (the
"COMPANY"), and_____________________________
________________________________________________________________
________________________________________________________________
with an address at______________________________________________
("FRANCHISEE").
P R E A M B L E S:
COMPANY franchises certain snack food shops, bakeries and cafes known as
"TREATS Stores", which sell and serve specialty baked goods and desserts,
including muffins, brownies, crumbles, cookies, and other food and beverage i
tems for on premises consumption and carry out, and which operate with and
under distinct formats, designs, systems, methods, specifications, standards
and procedures, all of which may be improved, further developed or otherwise
modified from time to time by COMPANY. TREATS Stores are operated under or
associated with certain trademarks, service marks, logos and other commercial
symbols in which COMPANY possesses proprietary rights, including "TREATS" and
"NOBODY TREATS YOU BETTER" (collectively, the "Marks") and are operated
pursuant to COMPANY's proprietary and confidential information.
COMPANY grants to persons, who meet COMPANY's qualifications and who are
willing to undertake the investment and effort, a franchise to own and operate
a TREATS Store offering the products and services approved by COMPANY and
utilizing COMPANY's formats, designs, methods, systems, standards, operating
procedures and the Marks.
1. ACKNOWLEDGMENTS AND REPRESENTATIONS.
FRANCHISEE acknowledges that he (or its owners) has read this Agreement and
COMPANY's Franchise Offering Circular and that he (or its owners) understands
and accepts the terms, conditions and covenants contained in this Agreement
as being reasonably necessary to maintain COMPANY's high standards of quality
and service and the uniformity of those standards at all TREATS Stores in
order to protect and preserve the goodwill of the Marks. FRANCHISEE
acknowledges that he (or its owners) has conducted an independent
investigation of the business contemplated by this Agreement and recognizes
that, like any other business, the nature of the business conducted by TREATS
Stores may evolve and change over time, that an investment in a TREATS Store
involves business risks and that the success of the venture is largely
dependent upon the business abilities and efforts of FRANCHISEE.
COMPANY expressly disclaims the making of, and FRANCHISEE acknowledges that
he (or its owners) has not received or relied upon, any warranty or guaranty,
express or implied, as to the revenues, profits, or success of the business
venture contemplated by this Agreement. FRANCHISEE acknowledges that he (or
its owners) has not received or relied on any representations of COMPANY, or
its officers, directors, employees or agents, relating to the business
venture contemplated by this Agreement, that are inconsistent with the
statements made in COMPANY's Franchise Offering Circular or to the terms
herein. FRANCHISEE further represents to COMPANY, as an inducement to its
entry into this Agreement, that FRANCHISEE has made no misrepresentations in
obtaining the franchise granted under this Agreement.
FRANCHISEE has applied for a franchise to own and operate a TREATS Store at
the location specified hereinbelow, and such application has been approved by
COMPANY in reliance upon all the representations made in such application.
2. GRANT OF FRANCHISE.
A. TERM OF FRANCHISE.
Subject to the provisions contained herein, COMPANY grants to FRANCHISEE a
franchise (the "Franchise") to own and operate a TREATS Store of a type
identified in Exhibit A attached hereto and made a part hereof at, and only
at, the location identified in Exhibit A (the "Premises") and approved by
COMPANY pursuant to Section 3 hereof (the "STORE"), and to use the Marks in
the operation thereof, for a term commencing on the date of this Agreement
and expiring on the earlier to occur of the date of expiration of the lease
or sublease (hereinafter referred to as the "Lease") term for the Premises or
fifteen (15) years from the date of this Agreement. Termination or expiration
of this Agreement shall constitute a termination or expiration of the
Franchise. As used in this Paragraph, "lease term" means the initial term and
any option or renewal terms thereof.
B. RIGHTS RESERVED BY COMPANY.
COMPANY (on behalf of itself and its affiliates) retains the right, in its
sole discretion and without granting any rights to FRANCHISEE: (a) to itself
operate, or to grant other persons the right to operate, TREATS Stores at such
locations and on such terms and conditions as COMPANY deems appropriate; and
(b) to sell the products and services authorized for TREATS Stores under the
Marks or other trademarks, service marks, logos and commercial symbols through
similar or dissimilar channels of distribution (including retail
establishments other than TREATS Stores such as grocery stores, convenience
stores and gas stations) and pursuant to such terms and conditions and at
such locations as COMPANY deems appropriate.
3. DEVELOPMENT AND OPENING OF THE STORE.
A. LEASE OF PREMISES OF STORE.
Concurrently with the execution of this Agreement, FRANCHISEE shall enter
into a Lease with COMPANY for the Premises. If COMPANY elects to permit
FRANCHISEE to lease the Premises from a party other than COMPANY, at
COMPANY's sole discretion, such Lease must be executed within ninety (90)
days after the execution of this Agreement. Any such Lease of the Premises
shall contain such terms and provisions as are reasonably acceptable to
COMPANY and, at COMPANY's option, shall: (i) be collaterally assigned to
COMPANY (with the consent of the lessor, if required), by a collateral
assignment agreement as provided in Exhibit B to this Agreement or in form
and substance reasonably acceptable to COMPANY in order to secure performance
of each and every obligation of FRANCHISEE to COMPANY; and (ii) contain
substantially the following provisions:
(1) "Anything contained in this lease to the contrary notwithstanding, Lessor
agrees that without its consent, this lease and the right, title and interest
of the Lessee hereunder may be assigned by the Lessee to EMC Group, Inc., a
Florida corporation ("EMC"), or its designee."
(2) "Lessee hereby agrees that lessor may, upon the written request of EMC,
disclose to EMC, all reports, information or data in Lessor's possession
respecting sales made in, upon or from the leased Premises."
(3) "Lessor shall give written notice of any default by Lessee under this
Lease to EMC, at its principal place of business, concurrently with the giving
of such notice to Lessee, and EMC, shall have the right, in its sole
discretion, to cure any such default, and if such default is cured, EMC shall
have the option to exercise its collateral assignment of the lease."
COMPANY shall provide guidance and assistance to FRANCHISEE in connection
with the identification and leasing of the Premises, and FRANCHISEE shall not
enter into any Lease without COMPANY's written approval of the location and
the terms of such Lease. If FRANCHISEE has not located an acceptable site and
entered into a Lease for a COMPANY approved location within ninety (90) days
after the date of this Agreement, COMPANY may, at its option any time
thereafter, terminate this Agreement upon written notice. In such event,
COMPANY shall refund the initial franchise fee payable pursuant to Paragraph
A of Section 11 of this Agreement, less Two Thousand Five Hundred Dollars
($2,500.00) as compensation for COMPANY's expenses incurred in connection with
the sale of the Franchise and site selection, inspection and assistance.
FRANCHISEE agrees and acknowledges that such refund shall be COMPANY's only
obligation to FRANCHISEE. FRANCHISEE further agrees and acknowledges that, in
the event of such termination, he is bound by the terms and conditions of
Paragraph C of Section 17 of this Agreement.
FRANCHISEE hereby acknowledges and agrees that COMPANY's approval of a site
does not constitute an assurance, representation or warranty of any kind,
express or implied, as to the suitability of the site for a TREATS Store or
for any other purpose. COMPANY's approval of a site indicates only that
COMPANY believes the site falls within the acceptable minimum criteria
established by COMPANY as of the time of the evaluation. Both FRANCHISEE and
COMPANY acknowledge that application of criteria that have been effective
with respect to other sites and premises may not be predictive of potential
for all sites and that, subsequent to COMPANY's approval of a site,
demographic and/or economic factors, such as competition from other similar
businesses, included in or excluded from COMPANY's criteria could change,
thereby altering the potential of a site. Such factors are unpredictable and
are beyond COMPANY's control and COMPANY shall not be expectations as to
revenue or operational criteria. FRANCHISEE further acknowledges and agrees
that acceptance of a Franchise for the operation of a TREATS Store at the
site is based on his own independent investigation of the suitability of
the site.
B. DEVELOPMENT OF STORE.
responsible for the failure of a site approved by COMPANY to meet
COMPANY will furnish to FRANCHISEE prototype plans and specifications for a
TREATS Store, reflecting COMPANY'S requirements for dimensions, exterior
design, interior design and layout, image, building materials, fixtures,
equipment, furniture, signs and decor.
Within ninety (90) days after obtaining possession of the Premises and having
been furnished with the above described plans and specifications, FRANCHISEE
will do or cause to be done the following:
(1) to the extent third party financing commitments have already been
obtained, secure all financing required to develop the STORE as required
herein;
(2) prepare, at FRANCHISEE's expense, any proposed modifications to COMPANY's
prototype plans and specifications, which may be modified only to the extent
necessary to comply with applicable ordinances, building codes, permit
requirements and Lease or deed requirements and restrictions, and submit such
modifications to COMPANY for approval prior to the commencement of
construction, remodeling or build out, as applicable;
(3) obtain all required building, utility, sign, health, sanitation and
business permits and licenses, and any other required permits and licenses;
(4) construct all required improvements to the Premises, purchase and install
all required fixtures and equipment and decorate the Premises in compliance
with the plans and specifications theretofore approved by COMPANY;
(5) purchase, in accordance with COMPANY's specifications and requirements,
an opening inventory of food and beverage products, ingredients and other
products and supplies required for the STORE; and
(6) establish filing, accounting and inventory control systems conforming to
the requirements prescribed by COMPANY.
COMPANY will provide such consultation in connection with the development of
the STORE as COMPANY deems appropriate.
C. FIXTURES, EQUIPMENT, FURNITURE AND SIGNS.
FRANCHISEE agrees to use in the construction and operation of the STORE only
those brands or types of construction and decorating materials, fixtures,
equipment, furniture and signs that COMPANY has approved for TREATS Stores as
meeting its specifications and standards for quality, design, appearance,
function and performance. FRANCHISEE shall display at the Premises only such
signs, emblems, lettering, logos and display materials as are from time to
time approved in writing by COMPANY for use in connection with TREATS Stores.
FRANCHISEE may purchase approved brands and types of construction and
decorating materials, fixtures, equipment, furniture and signs from any
supplier designated or approved by COMPANY (which may include COMPANY and its
affiliates). If FRANCHISEE proposes to purchase any brand or type of
construction or decorating material, fixture, equipment, furniture or sign
not then approved by COMPANY, or any such items from any supplier which is
not then designated or approved by COMPANY, FRANCHISEE shall first notify
COMPANY in writing and shall submit to COMPANY sufficient samples,
specifications, photographs, drawings or other information as COMPANY may
request to enable COMPANY to determine whether such brand or type of
construction or decorating material, fixture, equipment, furniture or sign
complies with its specifications and standards, or whether such supplier
meets COMPANY's approved supplier criteria, which determination shall be made
and communicated in writing to FRANCHISEE within a reasonable time. COMPANY
may, in its sole discretion, refuse to approve any such item or supplier
which does not meet COMPANY's specifications and standards.
D. STORE OPENING.
FRANCHISEE agrees to have the STORE ready to open for business within one
hundred eighty (180) days after obtaining possession of the Premises.
FRANCHISEE agrees not to open the STORE for business without COMPANY's prior
written approval, which will not be granted until:
(1) COMPANY determines that the STORE has been constructed, decorated and
equipped in accordance with the approved plans and specifications;
(2) FRANCHISEE and the manager of the STORE have completed all required
training to COMPANY's satisfaction;
(3) the initial franchise fee and all other amounts due to COMPANY under this
Agreement and any and all other related agreements to which FRANCHISEE is a
party have been paid;
(4) COMPANY has been furnished with evidence of insurance coverage as
required pursuant to Paragraph I of Section 5 of this Agreement; and
(5) representatives of COMPANY are available to be present at the opening of
the STORE to assist FRANCHISEE with such opening, if COMPANY, deems such
assistance to be advisable.
FRANCHISEE agrees to open the STORE for business within ten (10) days after
receipt of such written notice of approval from COMPANY. COMPANY shall
provide FRANCHISEE with such supervisory assistance and guidance in
connection with the opening and initial operations of the STORE as COMPANY
deems appropriate.
E. RELOCATION OF STORE.
If FRANCHISEE's Lease for the Premises terminates without fault of FRANCHISEE,
or if the Premises are damaged, condemned or otherwise rendered unusable, or
if in the judgment of COMPANY and FRANCHISEE there is a change in the
character of the location of the STORE sufficiently detrimental to its
business potential to warrant its relocation, COMPANY will grant permission
for relocation of the STORE to another location which COMPANY approves and
which is within a one (1) mile radius from the Premises. In the event of such
relocation the new premises of the STORE will be as stated on a revised
Exhibit A at such time. Any such relocation shall be at FRANCHISEE's sole
expense and COMPANY shall have the right to charge FRANCHISEE for costs and
expenses incurred by COMPANY in connection therewith.
4. TRAINING AND OPERATING ASSISTANCE.
A. TRAINING.
Prior to the opening of the STORE, COMPANY shall furnish, and FRANCHISEE (or
an owner thereof) and manager of the STORE (if not FRANCHISEE or the Owner)
shall attend, an initial training program on the operation of a TREATS Store,
furnished at such place and time as COMPANY may designate. Subsequent to the
opening of the STORE, COMPANY will provide training (subject to reasonable
limitations prescribed by COMPANY as to frequency and time) to any new
manager of the STORE. COMPANY shall have the right to require that FRANCHISEE
(or such owner) or any previously trained and experienced managers complete
supplemental, refresher or new product training programs during the term
hereof, to be furnished at such time and place as COMPANY may designate.
COMPANY may conduct optional franchisee refresher programs at such places and
times as COMPANY determines. FRANCHISEE shall be solely responsible for all
expenses incurred in connection with the attendance at such training programs,
including, without limitation, transportation, compensation, lodging and meal
expenses of all persons designated by FRANCHISEE to participate in any such
training program and approved by COMPANY. COMPANY shall have the right to
assess FRANCHISEE reasonable charges for training subsequent to the opening
of the STORE and optional refresher programs at per diem rates established
from time to time by COMPANY.
No individual may serve as a manager of the STORE unless and until such
individual has completed COMPANY's training program to COMPANY's satisfaction.
If, during any training program, COMPANY determines, in its sole discretion,
that any proposed manager is not qualified to manage the STORE, COMPANY shall
notify FRANCHISEE thereof, and FRANCHISEE may select and enroll a substitute
manager in such training program. If, during the initial training program,
COMPANY determines, in its sole discretion, that FRANCHISEE (or such owner)
is not qualified to manage the STORE, COMPANY shall have the right to
terminate this Agreement, effective upon delivery of written notice thereof
to FRANCHISEE. If this Agreement is terminated, COMPANY shall refund
FRANCHISEE's initial franchise fee, less Three Thousand Five Hundred Dollars
($3,500.00) as compensation for COMPANY's expenses incurred in connection
with the sale of the Franchise, training and site selection, inspection and
assistance. FRANCHISEE acknowledges and agrees that such refund shall be
COMPANY's only obligation to FRANCHISEE. FRANCHISEE further acknowledges and
agrees that, in the event of such termination, he is bound by the terms and
conditions of Paragraph C of Section 17 of this Agreement. In the event of
termination, COMPANY shall have the option, but not the obligation, to
exercise its right to a collateral assignment of FRANCHISEE's Lease. COMPANY
shall exercise such right within twenty (20) days after receipt of all
written agreements relating to the Lease, including copies of all permits and
licenses and such other documents as COMPANY requests, provided that if
COMPANY exercises such right to a collateral assignment of the Lease, COMPANY
shall reimburse FRANCHISEE for any and all of FRANCHISEE's reasonable
expenses incurred in developing the Premises.
B. OPERATING ASSISTANCE.
COMPANY shall furnish to FRANCHISEE such guidance and assistance in
connection with the operation of the STORE as is from time to time deemed
appropriate by COMPANY. Operating assistance may consist of advice and
guidance with respect to
(1) the standards, methods and operating procedures utilized by TREATS Stores;
(2) the preparation, packaging and service of food, beverage and other
products and services authorized for sale by TREATS Stores;
(3) the selection, purchase and preparation of food and beverage products,
and the purchase of other approved products, fixtures, equipment, signs,
materials and supplies;
(4) the formulation and implementation of advertising and promotional
programs; and
(5) the establishment and operation of administrative, bookkeeping,
accounting, inventory control, sales and general operating procedures for
the proper operation of a TREATS Store.
Such guidance shall be furnished in the form of COMPANY's Operating Manual
(as defined in Paragraph C of this Section 4), bulletins or other written
materials, consultations by telephone or consultations at the offices of
COMPANY or at the STORE in conjunction with an inspection of the STORE. If
requested by FRANCHISEE, COMPANY shall furnish additional guidance and
assistance relative to the operation of the STORE or negotiating the Lease
at COMPANY's per diem fees and charges established from time to time.
C. OPERATING MANUAL.
COMPANY will lend to FRANCHISEE during the term of the Franchise one (1) copy
of an operating manual, which may consist of one or more manuals and other
written materials relating to the operation of TREATS Stores (the "Operating
Manual"). The Operating Manual shall contain mandatory and suggested
specifications, standards, operating procedures and certain System Standards
(as defined in Paragraph E of Section 5) that COMPANY and its affiliates
prescribe from time to time for TREATS Stores and information relating to
FRANCHISEE's other obligations under this Agreement. The Operating Manual may
be modified from time to time to reflect changes in the image, specifications,
standards, procedures, services and System Standards for TREATS Stores,
provided that no such addition or modification shall alter FRANCHISEE's
fundamental status and rights under this Agreement. FRANCHISEE shall keep his
copy of the Operating Manual current and, in the event of a dispute relating
to the contents of the Operating Manual, the master copy that COMPANY
maintains at its principal office shall be controlling. FRANCHISEE may not at
any time copy any part of the Operating Manual. In the event FRANCHISEE's
copy of the Operating Manual is lost, destroyed or significantly damaged,
FRANCHISEE shall be obligated to obtain from COMPANY, at COMPANY's then
applicable charge, a replacement copy of the Operating Manual.
5. STORE IMAGE AND OPERATING STANDARDS.
A. CONDITION AND APPEARANCE OF STORE.
FRANCHISEE agrees to maintain the condition and appearance of the STORE
consistent with the image of a TREATS Store as an attractive, clean and
efficiently operated retail food service business, offering high quality
products, efficient and courteous service and pleasant ambience. In
connection therewith, FRANCHISEE shall perform or
contract for the cleaning and sanitation of the Premises; disposal of stale,
spoiled or unmerchantable food products; replacement of worn out or obsolete
fixtures, equipment, furniture, signs and utensils; repair of the interior
and exterior of the STORE and appurtenant parking areas; and periodic painting
of the Premises (in accordance with the decor of the STORE prescribed by
COMPANY).
FRANCHISEE further agrees to upgrade and/or remodel the Premises and its
fixtures, equipment, furniture and signs as COMPANY may require from time to
time, pursuant to plans and specifications which may be provided by COMPANY at
such time. Such upgrading and remodeling may at any time include, without
limitation, changing of the image and appearance of the STORE, provided that
COMPANY shall not require a complete remodeling of the STORE which changes
its image and appearance more than twice during the term of this Agreement.
COMPANY shall have the right to supervise any such upgrading or remodeling.
B. ALTERATIONS TO THE STORE.
FRANCHISEE shall make no alterations to the Premises or to the appearance of
the STORE, nor shall FRANCHISEE replace or alter the fixtures, equipment,
furniture or signs of the STORE, without prior written approval of COMPANY.
COMPANY shall have the right to cause any alterations to the STORE not
previously approved by COMPANY to be removed or reversed at FRANCHISEE's
expense.
C. UNIFORM IMAGE.
The presentation of a uniform image to the public is an essential element of
a successful franchise system. FRANCHISEE therefore agrees to place or
display at the Premises only such signs, emblems, lettering, logos and
display and advertising materials as are from time to time approved in
writing by COMPANY, and to offer for sale at the STORE only such types of
food and beverage products and other approved products and services as
COMPANY determines from time to time to be appropriate for TREATS Stores.
FRANCHISEE further agrees that the STORE will not, without prior written
approval by COMPANY, offer any products or services not then authorized by
COMPANY for TREATS Stores, nor shall the STORE or the Premises be used for
any purpose other than the operation of a TREATS Store in compliance with
this Agreement.
D. FOOD AND BEVERAGE PRODUCTS, SUPPLIES AND MATERIALS.
The reputation and goodwill of TREATS Stores is based upon, and can be
maintained only by, the sale of distinctive, high quality products and
services. FRANCHISEE therefore agrees that the STORE will use only those
ingredients in the preparation of food and beverage products, prepare and
offer for sale only those food and beverage products, use only those plates,
cups, utensils, uniforms, menus, forms, packaging materials, labels and
other supplies and use or offer for sale only those other products and
services which conform to COMPANY'S specifications and quality standards and
are purchased from suppliers approved from time to time by COMPANY (which may
include COMPANY and its affiliates). COMPANY has the right to require that
FRANCHISEE purchase certain proprietary products and items, including,
without limitation, batter mixes and food products and items made with
confidential and proprietary recipes, only from COMPANY, its affiliates or
designated suppliers. If COMPANY designates a single supplier for any such
proprietary product or item, FRANCHISEE shall purchase such product or item
from such supplier. If COMPANY does not designate such a supplier, it shall
furnish FRANCHISEE with a list of approved suppliers. COMPANY may approve a
single supplier for any product or item, type or brand of product, and may
approve a supplier only as to a certain product or item, or type or brand of
product. COMPANY will provide FRANCHISEE with a list of approved types and
brands of products and approved suppliers. COMPANY may from time to time
modify the list of approved products and suppliers, and FRANCHISEE shall not,
after receipt in writing of any modification thereof, reorder any brand, or
reorder from any supplier, which is no longer approved. In considering
suppliers for approval, COMPANY may take into consideration factors such as
(without limitation) price of products and reliability of the supplier.
COMPANY may also require a prospective supplier to agree, in writing, not to
disclose any Confidential Information to which it may have access or which it
otherwise may acquire. COMPANY may limit the number of approved suppliers to
cause an increase in the volume of purchases from certain approved suppliers
in order to obtain the lower prices or other advantages for any group of
TREATS Stores franchised or operated by COMPANY. Approval of a supplier may
be conditioned on requirements relating to frequency of delivery, standards
of service (including prompt attention to complaints) and volume concessions.
Subject to COMPANY's right to approve a single supplier for any proprietary
product or item stated above, if FRANCHISEE proposes to purchase or use any
product or order from any supplier which is not then approved, FRANCHISEE
shall first submit to COMPANY sufficient information, specifications and
samples concerning such product or supplier to enable COMPANY to determine
whether such product complies with COMPANY's specifications and standards or
whether such supplier meets COMPANY's approved supplier criteria. COMPANY
shall have the right to charge FRANCHISEE a reasonable fee to cover COMPANY's
costs incurred in making such determination. COMPANY shall, within a
reasonable time, notify FRANCHISEE whether or not such proposed product or
supplier is approved. COMPANY may from time to time prescribe procedures for
the submission of requests for approved products or suppliers.
FRANCHISEE shall at all times maintain an inventory of all approved food and
beverage products, ingredients and other products for the type of TREATS
Store identified in Exhibit A sufficient in quantity and variety to realize
the full potential of the STORE.
COMPANY may, from time to time, conduct market research and testing to
determine consumer trends and the salability of new products and services.
FRANCHISEE agrees to participate in COMPANY's market research programs at
COMPANY's request, by test marketing new products and services in the STORE
and by providing COMPANY with timely reports and other relevant information
regarding such market research. In connection with any such test marketing,
FRANCHISEE shall purchase a reasonable quantity of the tested products and
effectively promote and make a reasonable effort to sell such products.
E. SPECIFICATIONS, STANDARDS AND PROCEDURES.
FRANCHISEE acknowledges and agrees that each and every detail of the
appearance and operation of the STORE is important to COMPANY and other
TREATS Stores. COMPANY shall endeavor to maintain high standards of quality
and service at all TREATS Stores. To this end, FRANCHISEE agrees to cooperate
with COMPANY in maintaining such high standards in the STORE and, accordingly,
agrees to comply with all mandatory specifications, standards and operating
procedures (whether contained in the Operating Manual or any other written or
oral communication to FRANCHISEE) relating to the appearance or operation of
a TREATS Store (the "System Standards"), including, without limitation:
(1) type, quality, taste, appearance, weight and dimensions, ingredients,
uniformity, manner of preparation and sale of all food, beverage and other
products sold by the STORE and of all other products used in the packaging
and sale thereof;
(2) hours and days during which the STORE will be open for business;
(3) the safety, maintenance, cleanliness, sanitation, function and appearance
of the Premises and its fixtures, equipment, furniture, decor and signs;
(4) qualifications, uniforms and/or dress, general appearance and emeanor of
STORE employees;
(5) use of the Marks;
(6) use, display and illumination of signs, posters, displays, menus, menu
boards, standard formats and similar items;
(7) identification of FRANCHISEE as the independent owner of the STORE;
(8) advertising and promotion;
(9) use and retention of standard forms; and
(10) use of specialized cash registers connected to COMPANY's central
computer system.
All such System standards shall be reasonable and consistent with the
obligations of FRANCHISEE under the Lease for the Premises and applicable
laws and ordinances.
No vending machines, newspaper racks, juke boxes, gum or candy machines,
games, pinball machines, video games, rides or other mechanical or electronic
devices, other than pay telephones, shall be installed or operated at the
STORE without the prior written approval of COMPANY. System standards
prescribed from time to time by COMPANY in the Operating Manual, or otherwise
communicated to FRANCHISEE in writing, shall constitute provisions of this
Agreement as if fully set forth herein. All references herein to this
Agreement shall include all such System standards.
F. COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES.
FRANCHISEE shall secure and maintain in force in its name all required
licenses, permits and certificates relating to the operation of the STORE.
FRANCHISEE shall operate the STORE in full compliance with all applicable
laws, ordinances and regulations, including, without limitation, all laws,
ordinances and regulations relating to handling of food products,
occupational health and safety, workers' compensation insurance, unemployment
insurance and withholding and payment of federal and state income taxes,
social security taxes and sales taxes.
FRANCHISEE shall at all times give prompt, courteous and efficient service to
its customers. FRANCHISEE shall, in all dealings with its customers and
suppliers and the public, adhere to the highest standards of honesty,
integrity, fair dealing and ethical conduct. All advertising and promotion by
FRANCHISEE shall be factually accurate, within the bounds of good taste (as
determined by COMPANY and the standards of the community in which the STORE
is located) and shall conform to the highest standards of ethical advertising.
FRANCHISEE agrees to refrain from any business or advertising practice which
may be injurious to the business of COMPANY and the goodwill associated with
the Marks and other TREATS Stores.
FRANCHISEE shall notify COMPANY in writing within five (5) days after the
commencement of any action, suit, proceeding or investigation, or the
issuance of any order, writ, injunction, award or decree, by any court,
agency or other governmental instrumentality which may adversely affect the
operation or financial condition of FRANCHISEE or the STORE or of any notice
of violation of any law, ordinance or regulation relating to the cleanliness
or sanitation of the STORE.
G. MANAGEMENT OF THE STORE.
The STORE shall at all times be under the direct, day to day, full time
supervision of FRANCHISEE or an owner or COMPANY approved manager who shall
have satisfactorily completed COMPANY's training program.
FRANCHISEE shall at all times honestly and diligently perform his obligations
hereunder and continuously exert his best efforts to promote and enhance the
business of the STORE. The person who shall be responsible for the day to day
supervision of the STORE shall not engage in any other business or other
activity, directly or indirectly, which may require management responsibility,
time commitments or which otherwise may conflict with FRANCHISEE's
obligations hereunder.
H. HIRING AND TRAINING OF EMPLOYEES.
FRANCHISEE shall hire all employees of the STORE and shall be exclusively
responsible for the terms of their employment and compensation and their
training in the proper operation of the STORE. FRANCHISEE agrees to maintain
at all times a staff of employees sufficient to operate the STORE in
compliance with COMPANY's standards. FRANCHISEE shall require all STORE
employees to maintain a neat and clean appearance and to conform to the
standards of dress or wear the uniforms specified from time to time by
COMPANY for TREATS Stores.
I. INSURANCE.
FRANCHISEE shall at all times during the term of the Franchise maintain in
force, at his sole expense, comprehensive public and product liability
insurance against claims for death, injury or property damage caused by or
occurring in conjunction with the conduct of business by FRANCHISEE pursuant
to the Franchise. Such insurance coverage shall be maintained under policies
of insurance containing such types of coverage and minimum liability
protection in such amounts as may be specified by COMPANY from time to time.
FRANCHISEE shall also keep the Premises and its contents insured against loss
or damage by fire and such other risks covered in the Standard Extended
Coverage Endorsement, in an amount not less than one hundred percent (100%)
of the full replacement cost of such assets. All such insurance policies shall
be issued by one or more insurance carriers designated by, or acceptable to,
COMPANY.
All such liability insurance policies shall name COMPANY as an additional
insured, shall contain a waiver of the insurer's right of subrogation against
COMPANY and shall provide that COMPANY will receive thirty (30) days' prior
written notice of termination, expiration or cancellation of any such policy.
COMPANY may increase the minimum liability protection requirement from time
to time and may require different or additional kinds of insurance to reflect
inflation, changes in legal standards of liability or higher damage awards in
public or product liability litigation or other relevant changes in
circumstances.
FRANCHISEE shall submit to COMPANY annually a copy of the certificate of or
other evidence of the renewal or extension of each such insurance policy. If
FRANCHISEE at any time fails or refuses to maintain in effect any insurance
coverage required by COMPANY, or to furnish satisfactory evidence thereof,
COMPANY, at its option and in addition to its other rights and remedies
hereunder, may obtain such insurance coverage on behalf of FRANCHISEE, and
FRANCHISEE shall promptly execute any applications or other forms or
instruments required to obtain any such insurance and pay to COMPANY, on
demand, any costs and premiums incurred by COMPANY.
FRANCHISEE's obligation to obtain and maintain the insurance described herein
shall not be limited in any way by reason of any insurance maintained by
COMPANY, nor shall FRANCHISEE's performance of such obligations relieve
FRANCHISEE of any obligations under Section 10 of this Agreement.
6. ADVERTISING.
A. CREATION OF ADVERTISING FUND BY COMPANY.
COMPANY shall establish, maintain and administer an advertising fund (the
"Fund") for such advertising and marketing programs as COMPANY deems
appropriate from time to time. COMPANY shall direct all advertising and
marketing programs financed by the Fund, with sole discretion over the
creative concepts, materials, and endorsements used therein, and the
geographic, market and media placement and allocation thereof. FRANCHISEE
shall contribute to the Fund two percent (2%) of Gross Sales of the STORE (as
defined in Paragraph C of Section 11 hereof). Such contribution may be
increased by COMPANY from time to time, provided that in no event shall such
contribution exceed, in the aggregate, three and one half percent (3.5%) of
Gross Sales of the STORE. Fund contributions shall be paid weekly together
with the royalty and service fee due hereunder.
FRANCHISEE agrees that the Fund may be used to pay the costs of preparing and
producing video, audio and written advertising materials; administering
regional and multi regional advertising programs, including, without
limitation, purchasing direct mail and other media advertising and employing
advertising agencies to assist therewith; supporting public relations, market
research and other advertising and marketing activities; and providing
brochures and other advertising and marketing materials for TREATS Stores.
Through the Fund, COMPANY shall furnish FRANCHISEE with approved advertising
and marketing materials on the same terms and conditions as such materials
are furnished to other TREATS Stores.
The Fund shall be accounted for separately from the other funds of COMPANY
and shall not be used to defray COMPANY's general operating expenses, except
for such reasonable salaries, administrative costs and overhead as COMPANY
may incur in activities reasonably related to the administration of the Fund
and its advertising and marketing programs (including, without limitation,
conducting market research, preparing advertising and marketing materials and
collecting and accounting for contributions to the Fund). COMPANY may spend
in any fiscal year an amount greater or less than the aggregate contributions
received by the Fund in that year. COMPANY may make loans to the Fund (and
the Fund may borrow from COMPANY and from other lenders) to cover any
deficits in the Fund. COMPANY may cause the Fund to invest any surplus for
future use by the Fund. FRANCHISEE authorizes COMPANY to collect and
contribute to the Fund any advertising amounts or credits due to FRANCHISEE
from any supplier. A report of amounts collected and costs incurred by the
Fund shall be prepared annually by COMPANY and shall be made available for
inspection by FRANCHISEE upon request.
FRANCHISEE understands and acknowledges that the Fund is intended to
maximize general public recognition of the Marks and patronage of TREATS
Stores for the benefit of all TREATS Stores and that COMPANY undertakes no
obligation in administering the Fund to ensure that expenditures which are
proportionate or equivalent to FRANCHISEE's contribution are made for the
market area of the STORE or that any TREATS Stores benefit directly or pro
rata from the conduct of marketing programs or the placement of advertising.
Except as expressly provided in this Paragraph A, COMPANY assumes no direct
or indirect liability or obligation to FRANCHISEE with respect to the
maintenance, direction or administration of the Fund.
B. ADVERTISING BY FRANCHISEE.
FRANCHISEE agrees to list the STORE in the principal regular (white pages)
and classified (yellow pages) telephone directory distributed within
FRANCHISEE's primary trading area, as determined by COMPANY in such directory
categories as are specified by COMPANY, utilizing COMPANY's standard forms of
listings.
FRANCHISEE agrees to spend, prior to or within sixty (60) days after the
opening of the STORE, an amount not less than One Thousand Dollars ($1,000)
for local advertising and promotion of the opening of the STORE in accordance
with an opening marketing plan developed by COMPANY.
FRANCHISEE shall expend one percent (1%) of Gross Sales of the STORE (as
defined in Paragraph C of Section 11 hereof) during each fiscal year of
FRANCHISEE for advertising and promotion of the STORE and the Marks in the
primary trading area of the STORE (as determined by COMPANY). COMPANY may
from time to time increase such required expenditure, provided that the
amounts so required shall not exceed two percent (2%) of Gross Sales of the
STORE during each fiscal year of FRANCHISEE. FRANCHISEE acknowledges that
COMPANY may establish varying minimum advertising requirements for TREATS
Stores located in different local or regional areas. COMPANY shall have the
right from time to time to determine the amount or percentage of FRANCHISEE's
minimum advertising expenditures to be allocated to various advertising media.
For purposes of the foregoing minimum advertising requirements, advertising
expenditures shall not include amounts contributed to the Fund pursuant to
Paragraph A of this Section but shall include telephone listing expenses and
contributions to an advertising cooperative established pursuant to Paragraph
C of this Section.
Prior to their use by FRANCHISEE, samples of all local advertising and
promotional materials not prepared by or previously approved by COMPANY shall
be submitted to COMPANY for approval, which shall not be unreasonably
withheld. If COMPANY does not otherwise notify FRANCHISEE within fifteen (15)
days after the date of receipt by COMPANY of the disapproval of such
materials, COMPANY shall be deemed to have given the required approval.
FRANCHISEE shall not use any advertising or promotional materials that
COMPANY has not approved.
C. ADVERTISING BY APPROVED ADVERTISING COOPERATIVES.
In the event COMPANY or an area developer establishes a regional or local
advertising cooperative which includes in its territory the Premises,
FRANCHISEE agrees to participate in such advertising cooperative and to
contribute to such cooperative such amounts as are determined from time to
time by such cooperative, provided that in no event shall such contribution
exceed three and one half percent (3.5%) of the Gross Sales of the STORE
during any fiscal year of the Franchisee and further provided that
FRANCHISEE shall receive credit for any such contribution against any amounts
which FRANCHISEE is required to expend for local advertising and promotion
during each fiscal year of FRANCHISEE under Paragraph B of this Section. Each
such cooperative shall have a governing board consisting of such number of
persons with such duties and authority as may be approved by COMPANY. Each
such board shall consist of COMPANY representatives, representatives of the
area developer (if any) for such area and representatives of the franchisees
of TREATS Stores. Each such cooperative shall promulgate by laws, subject to
approval by COMPANY. Each such cooperative shall be funded with contributions
from all TREATS Stores (including COMPANY owned TREATS Stores) within the area
of such cooperative. Such contribution shall be a uniform percentage of the
Gross Sales (as defined in Paragraph C of Section 11 hereof) of each such
TREATS Store. COMPANY shall have final approval on the kinds and amounts of
advertising and the media used.
7 . MARKS.
A. OWNERSHIP AND GOODWILL OF MARKS.
FRANCHISEE acknowledges that Treats Canada Corporation owns the Marks and
COMPANY is a licensee thereof. FRANCHISEE further acknowledges that
FRANCHISEE'S right to use the Marks is derived solely from this Agreement and
is limited to the conduct of his business pursuant to and in compliance with
this Agreement and all applicable specifications, standards and operating
procedures prescribed by COMPANY from time to time during the term of the
Franchise. Any unauthorized use of the Marks by FRANCHISEE shall constitute a
breach of this Agreement and an infringement of the rights of COMPANY and its
affiliates in and to the Marks.
FRANCHISEE agrees that all usage of the Marks by FRANCHISEE and any goodwill
established thereby shall inure to the exclusive benefit of COMPANY, and
FRANCHISEE acknowledges that this Agreement does not confer any goodwill or
other interests in the Marks upon FRANCHISEE, other than the right to operate
the STORE in compliance with this Agreement.
All provisions of this Agreement applicable to the Marks shall apply to any
additional trademarks, service marks, logos and commercial symbols hereafter
authorized for use by and licensed to FRANCHISEE by COMPANY.
B. FRANCHISEE'S USE OF MARKS.
FRANCHISEE agrees to use the Marks as the sole identification of the STORE,
provided that FRANCHISEE shall identify himself as the independent owner
thereof in the manner prescribed by COMPANY. FRANCHISEE shall not use any
Xxxx as part of any corporate or trade name or with any prefix, suffix or
other modifying words, terms, designs or symbols, or in any modified form,
nor may FRANCHISEE use any Xxxx in connection with the sale of any
unauthorized product or service or in any other manner not expressly
authorized in writing by COMPANY. FRANCHISEE agrees to display the Marks
prominently and in the manner prescribed by COMPANY on signs, menus and forms.
Further, FRANCHISEE agrees to give such notices of trademark or service xxxx
registrations and copyright as COMPANY may specify and to obtain such
fictitious or assumed name registrations as may be required under applicable
law.
C. NOTIFICATION OF INFRINGEMENTS AND CLAIMS.
FRANCHISEE shall immediately notify COMPANY in writing of any apparent
infringement of or challenge to FRANCHISEE's use of any Xxxx, or claim by any
person of any rights in any Xxxx or any similar trade name, trademark or
service xxxx of which FRANCHISEE becomes aware. FRANCHISEE shall not
communicate with any person other than COMPANY and its counsel in connection
with any such infringement, challenge or claim. COMPANY shall have sole
discretion to take such action as it deems appropriate and the right to
exclusively control any litigation, U.S. Patent and Trademark Office
proceeding or other administrative or judicial proceeding arising out of any
such infringement, challenge or claim or otherwise relating to any Xxxx.
FRANCHISEE agrees to execute any and all instruments and documents, render
such assistance and do such acts and things as may, in the opinion of
COMPANY'S counsel, be necessary or advisable to protect and maintain the
interests of COMPANY in any such litigation or administrative proceeding or
to otherwise protect and maintain the interests of COMPANY in the Marks.
D. DISCONTINUANCE OF USE OF MARKS.
If it becomes advisable at any time for COMPANY, FRANCHISEE or both to modify
or discontinue use of any Xxxx, or use one or more additional or substitute
trademarks or service marks, COMPANY will so direct FRANCHISEE, and FRANCHISEE
agrees, at its own expense, to comply with such direction within a reasonable
time after receipt of such direction.
E. INDEMNIFICATION OF FRANCHISEE.
COMPANY agrees to indemnify FRANCHISEE against, and to reimburse FRANCHISEE
for all damages for which he is held liable in any proceeding arising out of
FRANCHISEE's authorized use of any Xxxx pursuant to and in compliance with
this Agreement and for all costs reasonably incurred by FRANCHISEE in the
defense of any such claim brought against him or in any such proceeding in
which he is named as a party, provided that FRANCHISEE has timely notified
COMPANY of such claim or proceedings and has otherwise complied with this
Agreement.
INFORMATION.
COMPANY possesses certain confidential and proprietary information,
consisting of the following categories of information, methods, techniques,
procedures and knowledge acquired by or developed by, for or on behalf of
COMPANY (the "Confidential Information"):
(1) methods, techniques, formats, specifications, procedures, information,
systems and knowledge of and experience in, the operation and franchising of
TREATS Stores;
(2) ingredients, recipes and methods of preparation of food and beverage
products sold at TREATS Stores;
(3) sources of food and beverage products, and supplies for the preparation
and serving of food and beverage products sold at TREATS Stores;
(4) programs and concepts for the marketing of TREATS Stores and the products
and services sold by TREATS Stores;
(5) designs, concepts, architectural and other plans, and other information
relating to the appearance and image of TREATS Stores; and
(6) knowledge and information relating to the planning, development and
testing of new food, beverage or other items for possible sale at TREATS
Stores.
COMPANY will disclose the Confidential Information to FRANCHISEE in providing
FRANCHISEE the prototype plans for a TREATS Store, the training program, the
Operating Manual and guidance and assistance to FRANCHISEE during the term of
the Franchise.
FRANCHISEE acknowledges and agrees that no interest in the Confidential
Information has or will be acquired by FRANCHISEE, other than the right to
utilize it in the development and operation of the STORE during the term of
this Agreement, and that the use or duplication of the Confidential
Information in any other business would constitute an unfair method of
competition. FRANCHISEE acknowledges and agrees that the Confidential
Information is proprietary and involves trade secrets of COMPANY and is
disclosed to FRANCHISEE solely on the condition that FRANCHISEE agrees, and
FRANCHISEE does agree, that he:
(1) will not use the Confidential Information in any other business or
capacity;
(2) will maintain the absolute confidentiality of the Confidential
Information during and after the term of the Franchise;
(3) will not make unauthorized copies of any portion of the Confidential
Information disclosed in written form; and
(4) will adopt and implement all reasonable procedures prescribed from time
to time by COMPANY to prevent unauthorized use or disclosure of the
Confidential Information, including, without limitation, restrictions on
disclosure thereof to employees of the STORE.
Notwithstanding anything to the contrary contained in this Agreement, and
provided FRANCHISEE shall have obtained COMPANY's prior written consent,
which consent shall not be unreasonably withheld, the restrictions on
FRANCHISEE's disclosure and use of the Confidential Information shall not
apply to the following: (i) information, processes or techniques which are or
become generally known in the fast food, snack food or baking industries,
other than through disclosure (whether deliberate or inadvertent) by
FRANCHISEE; and (ii) disclosure of the Confidential Information in judicial
or administrative proceedings to the extent that FRANCHISEE is legally
compelled to disclose such information, provided FRANCHISEE shall have used
its best efforts to obtain an appropriate protective order or other
assurance satisfactory to COMPANY of confidential treatment for the
information required to be so disclosed.
9. EXCHANGE OF INFORMATION/EXCLUSIVE RELATIONSHIP.
FRANCHISEE shall fully and promptly disclose to COMPANY all ideas, concepts,
methods and techniques conceived or developed by FRANCHISEE or his employees
during the term of this Agreement relating to the development or operation of
a muffin, brownie, cookie or other bakery product restaurant or carry out
food service business, and COMPANY shall have the perpetual right to use and
to authorize other TREATS Stores to use all such ideas, concepts, methods and
techniques.
FRANCHISEE acknowledges and agrees that COMPANY would be unable to protect
its trade secrets against unauthorized use or disclosure and would be unable
to achieve a free exchange of ideas and information among TREATS Stores if
franchised owners of TREATS Stores were permitted to hold interests in any
Competitive Businesses (as defined below). Therefore, during the term of this
Agreement, neither FRANCHISEE (or its owners), nor any member of the
immediate family of FRANCHISEE (or its owners), shall have any direct or
indirect interest or involvement:
(1) as an owner, investor, partner, director, officer, employee, consultant,
representative or agent, or in any other capacity, in any other restaurant or
store serving or selling muffins, brownies, cookies, other baked goods or
products or providing services substantially similar to the principal food
products and services sold by or through a TREATS Store ("Competitive
Business") located or operating: at the Premises or within a radius of five
(5) miles from the Premises;
(2) within the metropolitan area in which the STORE is located; or
(3) anywhere in the United States; or
(4) in any entity which is granting franchises or licenses to others to
operate a Competitive Business: at the Premises or within a radius of five
(5) miles from the Premises;
(7) within the metropolitan area in which the STORE is located; or
(8) anywhere in the United States.
The restrictions contained in this Section shall not apply to TREATS Stores
operating under Franchise Agreements with COMPANY and the ownership of
securities publicly traded that represent one percent (1%) or less of that
class of securities.
10. RELATIONSHIP OF THE PARTIES/INDEMNIFICATION.
It is understood and agreed by the parties hereto that this Agreement does
not create a fiduciary relationship between them, that COMPANY and FRANCHISEE
shall be independent contractors and that nothing in this Agreement is
intended to make either party a general or special agent, legal
representative, subsidiary, joint venturer, partner, employee or servant of
the other for any purpose.
FRANCHISEE shall conspicuously identify himself at the Premises, and in all
dealings with customers, lessors, contractors, suppliers, public officials
and others, as the owner of the STORE under a franchise from COMPANY, and
shall place such other notices of independent ownership on such signs, forms,
stationery, advertising and other materials as COMPANY may require from time
to time.
COMPANY has not authorized or empowered FRANCHISEE to use the Marks except as
provided by this Agreement, and FRANCHISEE shall not employ any Xxxx in
signing any contract, lease, mortgage, check, purchase agreement, negotiable
instrument or other legal obligation without the prior written consent of
COMPANY, or employ any Xxxx in a manner that is likely to result in liability
of COMPANY for any indebtedness or obligation of FRANCHISEE.
Except as expressly authorized by this Agreement, neither COMPANY nor
FRANCHISEE shall make any express or implied agreements, guaranties or
representations, or incur any debt, in the name of or on behalf of the other
or represent that their relationship is other than franchisor and franchisee.
Neither COMPANY nor FRANCHISEE shall be obligated by, or have any liability
under, any agreements or representations made by the other that are not
expressly authorized hereunder, nor shall COMPANY be obligated for any
damages to any person or property directly or indirectly arising out of the
operation of the STORE, whether or not caused by FRANCHISEE's negligent or
willful action or failure to act.
COMPANY shall have no liability for any sales, use, excise, gross receipts,
property or other taxes, whether federal, state or local, or whether levied
upon FRANCHISEE, the STORE or its assets, revenues or income, or upon COMPANY,
relating to sales made by or the business conducted by FRANCHISEE.
FRANCHISEE agrees to indemnify and hold harmless COMPANY and its affiliates,
stockholders, directors, officers, employees, agents and assignees from and
against any claims, suits, actions, loss, liability, taxes or damages (actual
or consequential) and all reasonable costs and expenses in connection with
the defense of any claim brought against any of them or any action in which
any of them is named as a party (including, without limitation, reasonable
accountants', attorneys' and expert witness fees, costs of investigation and
proof of facts, court costs, other litigation expenses and travel and living
expenses) which any of them may suffer, sustain or incur by reason of,
arising from or in connection with FRANCHISEE's ownership or operation of the
STORE. The indemnities and assumptions of liabilities and obligations herein
shall continue in full force and effect subsequent to and notwithstanding the
expiration or termination of this Agreement.
11. FEES.
A. INITIAL FRANCHISE FEE.
FRANCHISEE shall pay to COMPANY a non-recurring initial franchise fee of Ten
Thousand Dollars ($10,000), less any applicable deposits paid by FRANCHISEE
to COMPANY prior to the execution of this Agreement. The initial franchise
fee shall be payable and fully earned by COMPANY upon execution of this
Agreement and shall be non refundable, except as provided in Paragraph A of
Section 3 and Paragraph A of Section 4.
B. ROYALTY AND SERVICE FEE.
FRANCHISEE agrees to pay to COMPANY a royalty and service fee of eight
percent (8%) of Gross Sales, as defined below, payable by the Friday of each
week on Gross Sales for the preceding calendar week.
C. DEFINITION OF "GROSS SALES".
The term "Gross Sales" shall mean the aggregate amount of all gross charges
for sales of food, beverages, goods, articles and any other merchandise, and
the aggregate of all charges for services performed, whether for cash, on
credit or otherwise, made and rendered in, about or in connection with the
operation of the STORE, including off Premises sales but excluding all
federal, state or local sales, use, service or excise taxes paid by
FRANCHISEE, determined on the accrual method of accounting.
D. INTEREST ON LATE PAYMENTS.
All royalty and service fees, advertising contributions, amounts due for
purchases by FRANCHISEE from COMPANY or its affiliates and other amounts
which FRANCHISEE owes to COMPANY or its affiliates shall bear interest after
their due date at the highest legal rate permissible for open account
business credit, not to exceed one and one half percent (1.5%) per month.
FRANCHISEE acknowledges that this Paragraph D shall not constitute COMPANY's
agreement to accept such payments after same are due or a commitment by
COMPANY to extend credit to, or otherwise finance FRANCHISEE's operation of
the STORE. Further, FRANCHISEE acknowledges that his failure to pay all
amounts when due shall constitute grounds for termination of this Agreement,
as provided in Paragraph B of Section 16, notwithstanding the provisions of
this Paragraph D.
E. APPLICATION OF PAYMENTS.
COMPANY shall have sole discretion to apply any payments by FRANCHISEE to any
past due indebtedness of FRANCHISEE for royalty and service fees, advertising
contributions, purchases from COMPANY or its affiliates, interest or any
other indebtedness.
12. RECORDS AND REPORTS.
A. ACCOUNTING AND RECORDS.
FRANCHISEE agrees to prepare and maintain at the Premises, and preserve until
the end of the third (3rd) fiscal year of COMPANY following the year of their
preparation, full, complete and accurate books, records (including invoices
and records relating to advertising expenditures) and accounts (utilizing the
standard chart of accounts and such other forms and formats furnished or
required by COMPANY), copies of sales tax returns and copies of such portions
of FRANCHISEE's state and federal income tax returns as reflect the operation
of the STORE. FRANCHISEE shall utilize in the STORE only cash registers with
"non resettable totals."
B. REPORTS, FINANCIAL STATEMENTS AND TAX RETURNS.
FRANCHISEE shall furnish to COMPANY the following:
(1) concurrently with the payment of the royalty and service fees pursuant to
Paragraph B of Section 11 hereof, statements relating to Gross Sales and
advertising expenditures for the immediately preceding weekly period;
(2) within thirty (30) days after the end of each calendar quarter, a
quarterly profit and loss statement and use of funds statement for the STORE
for such quarter and year to date, and a balance sheet for the Store as of
the end of such quarter;
(3) within seventy five (75) days after the end of each fiscal year of
COMPANY, an annual profit and loss statement and source and use of funds
statement for the STORE for such year and a balance sheet for the STORE as of
the end of such year, reviewed by an independent certified public accountant,
or if requested by COMPANY, accompanied by an opinion of a certified public
accountant or firm of certified public accountants selected by FRANCHISEE and
approved by COMPANY, which opinion may be qualified only to the extent
reasonably acceptable to COMPANY; and
(4) within ten (10) days of COMPANY's request, such other reports,
information and supporting records as COMPANY may from time to time request.
All such financial statements, reports and information shall be on forms
approved by COMPANY and verified and signed by FRANCHISEE.
FRANCHISEE shall maintain readily available for inspection by COMPANY, and
shall furnish to COMPANY upon its request, exact copies of all sales tax
returns and such portions of FRANCHISEE's federal and state income tax
returns as reflect the operation of the STORE. In addition, FRANCHISEE, at
its expense, shall furnish to COMPANY (and its agents) for inspection or
audit, such forms, reports, records, financial statements and other
information as COMPANY may require. FRANCHISEE shall make such financial and
other information available at such locations as COMPANY may reasonably
request (including COMPANY's office), and shall afford COMPANY (and its
agents) full and free access thereto at the STORE during the hours the STORE
is open for business. COMPANY (and its agents) shall have the right to make
extracts from, and copies of, all such documents and information.
13. INSPECTIONS AND AUDITS.
A. COMPANY'S RIGHT TO INSPECT THE STORE.
To determine whether FRANCHISEE and the STORE are complying with this
Agreement and with all System Standards, COMPANY or its designated agents
shall have the right at any reasonable time and without prior notice to
FRANCHISEE to:
(1) inspect the STORE;
(2) observe, photograph and videotape the Premises and operations of the
STORE for such consecutive or intermittent periods as COMPANY deems necessary;
remove samples of any products, materials or supplies for testing and analysis;
(4) interview personnel of the STORE;
(5) interview customers of the STORE; and
(6) inspect and copy any books, records and documents relating to the
operation of the STORE.
FRANCHISEE agrees to cooperate fully with COMPANY in connection with any
such inspections, observations, photographing, videotaping, product removal
and interviews. FRANCHISEE shall present to his customers such evaluation
forms as COMPANY periodically prescribes and shall participate and/or request
his customers to participate in any surveys performed by or on behalf of
COMPANY.
B. COMPANY'S RIGHT TO AUDIT.
COMPANY shall have the right at any time during business hours, and without
prior notice to FRANCHISEE, to inspect and audit, or cause to be inspected
and audited, the business records, bookkeeping and accounting records, sales
and income tax records and returns and other records of the STORE and the
books and records of any corporation or partnership which holds the
Franchise. FRANCHISEE shall fully cooperate with COMPANY's representatives
and independent accountants hired by COMPANY to conduct any such inspection
or audit. In the event any inspection or audit discloses an understatement of
the STORE's Gross Sales, FRANCHISEE shall pay to COMPANY, within fifteen (15)
days after receipt of the inspection or audit report, the royalty and service
fees and Fund contributions due on the amount of such understatement, plus
interest (at the rate and on the terms provided in Paragraph D of
Section 11.) from the date originally due until the date of payment. Further,
in the event such inspection or audit is made necessary by FRANCHISEE's
failure to furnish reports, supporting records or other information as herein
required, or to furnish such reports, records or information on a timely
basis, or if an understatement of Gross Sales for the period of any audit is
determined by any such audit or inspection to be greater than two percent
(2%), FRANCHISEE shall reimburse COMPANY for the cost of such audit or
inspection, including, without limitation, the charges of attorneys and any
independent accountants and the travel expenses, room and board and
compensation of COMPANY's employees. The foregoing remedies shall be in
addition to COMPANY's other remedies and rights under this Agreement or
applicable law.
14. TRANSFER.
A. BY COMPANY.
This Agreement is fully transferable by COMPANY and shall inure to the
benefit of any transferee or other legal successor to COMPANY's interest
herein. Furthermore, FRANCHISEE acknowledges and agrees that COMPANY may
transfer or delegate any or all of its rights and obligations under this
Agreement to an affiliate or an unaffiliated third party. In the event
COMPANY delegates or transfers any obligations as aforesaid, COMPANY may
direct FRANCHISEE to make payments due to COMPANY hereunder directly to the
delegate or transferee.
B. FRANCHISEE MAY NOT TRANSFER WITHOUT APPROVAL OF COMPANY.
FRANCHISEE understands and acknowledges that the rights and duties created by
this Agreement are personal to FRANCHISEE (or, if FRANCHISEE is a corporation
or partnership, to its owners) and that COMPANY has granted the Franchise to
FRANCHISEE in reliance upon COMPANY's perceptions of the individual or
collective character, skill, aptitude, attitude, business ability and
financial capacity of FRANCHISEE (or its owners). Accordingly, neither this
Agreement (or any interest herein) nor any part or all of the ownership of
FRANCHISEE or the STORE (or any interest therein) may be transferred without
COMPANY's prior written approval. Any transfer without such approval shall
constitute a breach of this Agreement and be void and of no effect. As used in
this Agreement, the term "transfer" shall mean and include the voluntary,
involuntary, direct or indirect assignment, sale, gift or other disposition
by FRANCHISEE (or any of its owners) of any interest in:
(1) this Agreement;
(2) the ownership of FRANCHISEE; or
(3) the STORE.
An assignment, sale, gift or other disposition shall include the following
events:
(1) transfer of ownership of capital stock or a partnership interest;
(2) merger or consolidation or issuance of additional securities representing
an ownership interest in FRANCHISEE;
(3) any sale of capital stock of FRANCHISEE or any security convertible to
capital stock of FRANCHISEE; transfer of an interest in FRANCHISEE, this
Agreement or the STORE in a divorce, insolvency, corporate or partnership
dissolution proceeding or otherwise by operation of law; or
transfer of an interest in FRANCHISEE, this Agreement or the STORE in the
event of the death of FRANCHISEE or an owner of FRANCHISEE by will,
declaration of or transfer in trust or under the laws of intestate succession.
C. CONDITIONS FOR APPROVAL OF TRANSFER.
If FRANCHISEE is in full compliance with this Agreement (and, if FRANCHISEE
is a corporation or partnership, its owners are in full compliance with this
Agreement), COMPANY shall not unreasonably withhold its approval of a
transfer that meets all the applicable requirements of this Paragraph C. The
proposed transferee and its owners must be individuals of good moral
character and otherwise meet COMPANY's then applicable standards for TREATS
Store franchisees. A transfer of ownership in the STORE may only be made in
conjunction with a transfer of this Agreement. If the transfer is of this
Agreement or a controlling interest in FRANCHISEE, or is one of a series of
transfers which in the aggregate constitute the transfer of this Agreement or
a controlling interest in FRANCHISEE, all of the following conditions must be
met prior to or concurrently with the effective date of the transfer:
the transferee shall have sufficient business experience, aptitude and
financial resources to operate the STORE;
FRANCHISEE shall have paid all royalty and service fees, Fund contributions,
amounts owed for purchases by FRANCHISEE from COMPANY and its affiliates and
all other amounts owed to COMPANY or its affiliates and shall have submitted
to COMPANY all required reports and statements;
the transferee (or owner) and its manager shall have agreed to complete
COMPANY's training program to COMPANY's satisfaction;
the transferee shall have agreed to be bound by all of the terms and
conditions of this Agreement;
FRANCHISEE or the transferee shall have paid COMPANY its then current
transfer fee;
except to the extent limited or prohibited by applicable law FRANCHISEE (and
its transferring owners) shall have executed a general release, in form
satisfactory to COMPANY, of any and all claims against COMPANY and its
affiliates and their officers, directors, employees and agents;
COMPANY shall have approved the material terms and conditions of such
transfer, including, without limitation, that the price and terms of payment
are not so burdensome as to affect adversely the transferee's operation of
the STORE;
if FRANCHISEE finances any part of the sale price of the transferred interest,
FRANCHISEE and/or its owners shall have agreed that all obligations of the
transferee under or pursuant to any promissory notes, agreements or security
interests reserved by FRANCHISEE or its owners in the assets of the STORE
shall be subordinate to the transferee's obligations to pay royalty and
service fees, Fund contributions and other amounts due to COMPANY and its
affiliates and otherwise to comply with this Agreement;
FRANCHISEE (and its owners) shall have executed a non competition agreement
in favor of COMPANY and the transferee, agreeing that for a period of not
less than two (2) years, commencing on the effective date of the transfer,
FRANCHISEE (and its owners) and members of the immediate family of FRANCHISEE
(or its owners) will not have any direct or indirect interest or involvement:
(a) as an owner, investor, partner, director, officer, employee, consultant,
representative or agent, or in any other capacity, in any Competitive
Business operating or located at or within five (5) miles of the Premises; or
(b) or in any entity which is granting franchises or licenses to others to
operate a Competitive Business located at or within five (5) miles of the
Premises.
The restrictions of this Subparagraph shall not apply to TREATS Stores
operated under Franchise Agreements with COMPANY and the ownership of
securities publicly traded that represent one percent (1%) or less of that
class of stock; and FRANCHISEE shall have agreed that he will not directly
or indirectly at any time or in any manner (except with respect to TREATS
Stores owned and operated by FRANCHISEE) identify himself or any business as
a current or former TREATS Store, or as a franchisee, licensee or dealer of
COMPANY or its affiliates, use any Xxxx, any colorable imitation thereof or
other indicia of a TREATS Store in any manner or for any purpose or utilize
for any purpose any trade name, trade or service xxxx or other commercial
symbol that suggests or indicates a connection or association with COMPANY or
its affiliates.
If the proposed transfer is to or among owners of FRANCHISEE, Subparagraph
(5) of the above requirements shall not apply.
D. TRANSFER TO A WHOLLY OWNED CORPORATION.
If FRANCHISEE is in full compliance with this Agreement, FRANCHISEE may
transfer this Agreement to a corporation which conducts no business other
than the STORE and in which FRANCHISEE maintains management control and owns
and controls one hundred percent (100%) of the equity and voting power of all
issued and outstanding capital stock. Transfers of shares in such corporation
will be subject to the provisions of Paragraph C of this Section.
Notwithstanding anything to the contrary herein, FRANCHISEE shall remain
personally liable under this Agreement as if the transfer to such corporation
had not occurred. The articles of incorporation, by laws and other
organizational documents of such corporation shall recite that the issuance
and assignment of any interest therein is restricted by the terms of this
Section, and all issued and outstanding stock certificates of such
corporation shall bear a legend reciting or referring to the restrictions
hereof. Each shareholder of FRANCHISEE at anytime during the term of this
Agreement shall execute an "Owners' Joinder, Guaranty and Assumption of
Obligations," or such other agreement that COMPANY prescribes from time to
time, undertaking to be bound jointly and severally by all provisions of this
Agreement. FRANCHISEE shall furnish to COMPANY at any time upon request, in
such form as COMPANY may require, a list of its shareholders (of record and
beneficially) reflecting their respective interests in FRANCHISEE.
E. DEATH OR DISABILITY OF FRANCHISEE.
Upon the death or permanent disability of FRANCHISEE or, if FRANCHISEE is a
corporation or partnership, the owner of a controlling interest in
FRANCHISEE, the executor, administrator, conservator, guardian or other
personal representative of such person shall transfer his interest in this
Agreement or such interest in FRANCHISEE to a third party approved by COMPANY.
Such disposition of this Agreement or such interest in FRANCHISEE (including,
without limitation, transfer by bequest or inheritance) shall be completed
within a reasonable time, not to exceed six (6) months from the date of death
or permanent disability, and shall be subject to all the terms and conditions
for transfers contained in Paragraph C of this Section and, unless transferred
by gift, devise or inheritance, subject to the terms of Paragraph G of this
Section. Failure to transfer the interest in this Agreement or such interest
in FRANCHISEE within said period of time shall constitute a breach of this
Agreement. For purposes hereof, the term "permanent disability" shall mean a
mental or physical disability, impairment or condition that is reasonably
expected to prevent or actually does prevent FRANCHISEE or an owner of a
controlling interest in FRANCHISEE from supervising the management and
operation of the STORE for a period of six (6) months from the onset of such
disability, impairment or condition.
If, after the death or permanent disability of FRANCHISEE or a controlling
owner of FRANCHISEE, the STORE is not being managed by a competent and
trained manager, COMPANY is authorized, but not obligated, to appoint a
manager to maintain the operation of the STORE until an approved assignee
shall be able to assume the management and operation of the STORE, but in no
event for a period exceeding six (6) months, without the approval of the
personal representative of FRANCHISEE or such owner. All funds from the
STORE's operation during the period of management by a COMPANY appointed
manager shall be kept in a separate fund and all expenses of the STORE,
including compensation, other costs and travel and living expenses of COMPANY
appointed manager, shall be charged to such fund. As compensation for the
management services provided, in addition to the fees due hereunder and the
compensation, other costs and travel and living expenses which COMPANY's
appointed manager incurs, COMPANY shall charge such fund five percent (5%) of
the STORE's Gross Sales during the period of COMPANY's management. Operation
of the STORE during any such period shall be for and on behalf of FRANCHISEE,
provided that COMPANY shall have a duty only to utilize its good faith
efforts and shall not be liable to FRANCHISEE or its owners for any debts,
losses or obligations incurred by the STORE or to any creditor of FRANCHISEE
for any merchandise, materials, supplies or services purchased by the STORE
during any period in which it is managed by COMPANY's appointed manager.
F. EFFECT OF CONSENT TO ASSIGNMENT.
COMPANY's consent to an assignment by FRANCHISEE (or its owners) of any
interest subject to the restrictions of this Section shall not constitute a
waiver of any claims it may have against FRANCHISEE (or any of its owners),
nor shall it be deemed a waiver of COMPANY's right to demand exact compliance
with any of the terms or conditions of the Franchise by the assignee.
G. COMPANY'S RIGHT OF FIRST REFUSAL.
If FRANCHISEE (or its owners) shall at any time determine to sell an interest
in this Agreement, an ownership interest in FRANCHISEE or the STORE,
FRANCHISEE (or its owners) shall obtain a bona fide, executed written offer
and an xxxxxxx money deposit (in the amount of two percent (2%) or more of
the offering price) from a responsible and fully disclosed purchaser
(including lists of the owners of record and beneficially of any corporate
offeror and all general and limited partners of any partnership offeror and,
in the case of a publicly held corporation or limited partnership, copies of
the most current annual and quarterly reports) and shall immediately submit
to COMPANY a true and complete copy of such offer, which shall include
details of the payment terms of the proposed sale and the sources and terms of
any financing for the proposed purchase price. The offer must apply only to an
interest in this Agreement, FRANCHISEE or the STORE and may not include an
offer to purchase any other property or rights of FRANCHISEE (or its owners).
However, if the offeror proposes to buy any other property or rights from
FRANCHISEE (or its owners) under a separate, contemporaneous offer, the price
and terms of purchase offered to FRANCHISEE (or its owners) for the interest
in this Agreement, FRANCHISEE or the STORE shall reflect the bona fide price
offered therefor and shall not reflect any value for any other property or
rights.
COMPANY shall have the right, exercisable by written notice delivered to
FRANCHISEE or its owners within thirty (30) days from the date of delivery of
an exact copy of such offer to COMPANY, to purchase such interest for the
price and on the terms and conditions contained in such offer, provided that
COMPANY may substitute cash for any form of payment proposed in such offer,
COMPANY's credit shall be deemed equal to the credit of any proposed
purchaser and COMPANY shall have not less than ninety (90) days to prepare for
closing. COMPANY shall be entitled to purchase such interest subject to all
customary representations and warranties given by the seller of the assets of
a business or voting stock of an incorporated business, as applicable,
including, without limitation, representations and warranties as to ownership,
condition of and title to stock and/or assets, liens and encumbrances
relating to the stock and/or assets, validity of contracts and liabilities of
the corporation whose stock is purchased and affecting the assets, contingent
or otherwise.
If COMPANY does not exercise its right of first refusal, FRANCHISEE or its
owners may complete the sale to such purchaser pursuant to and on the exact
terms of such offer, subject to COMPANY's approval of the transfer as
provided in Paragraphs B and C of this Section, provided that if the sale to
such purchaser is not completed within One Hundred Twenty (120) days after
delivery of such offer to COMPANY, or if there is a material change in the
terms of the sale, COMPANY's right of first refusal shall be extended for
thirty (30) days after the expiration of such One Hundred Twenty (120) day
period or after the material change on the terms of the offer as modified.
15. RENEWAL OF FRANCHISE.
A. FRANCHISEE'S RIGHT TO RENEW.
If, upon expiration of the term of the Franchise, FRANCHISEE has during the
entire term of this Agreement complied fully with all its provisions, and
either:
(1) maintains possession of and agrees to refurbish and redecorate the
Premises, replace fixtures, equipment, furniture, signs, and otherwise modify
the STORE, in compliance with specifications and standards then applicable
under new franchises for TREATS Stores; or
(2) if FRANCHISEE is unable to maintain possession of the Premises or in the
judgment of COMPANY the STORE should be relocated, FRANCHISEE secures
substitute Premises approved by COMPANY and agrees to develop such substitute
Premises in compliance with specifications and standards then applicable
under new franchises for TREATS Stores;
FRANCHISEE shall, upon the terms and conditions herein contained, have the
right to request the renewal of the Franchise for an additional term equal to
the then customary initial term granted under COMPANY's then current form of
standard franchise agreement. COMPANY will charge FRANCHISEE its then current
renewal fee in connection with such renewal.
B. NOTICE OF RENEWAL AND NON RENEWAL.
If FRANCHISEE desires to renew the Franchise, then FRANCHISEE shall give
COMPANY written notice of his exercise of his option to renew at least one
hundred eighty (180) days, but not more than one (1) year, prior to the
expiration of the term of this Agreement. COMPANY agrees to give FRANCHISEE
written notice of its determination whether or not FRANCHISEE has the right
to renew the Franchise by the later of one hundred eighty (180) days prior to
the expiration of the term of this Agreement or thirty (30) days after
COMPANY's receipt of such written notice of exercise of such option to renew.
A notice of non renewal by COMPANY shall state the reasons for COMPANY's
refusal to renew.
C. RENEWAL AGREEMENTS/RELEASES.
To renew the Franchise, COMPANY and FRANCHISEE (and its shareholders or
partners, if FRANCHISEE is a corporation or partnership) must execute the
form of franchise agreement and such ancillary agreements as are then
customarily used by COMPANY in the grant of franchises for the ownership and
operation of TREATS Stores and, unless prohibited by applicable law,
FRANCHISEE (and its shareholders or partners, if FRANCHISEE is a corporation
or partnership) shall execute general releases, in form satisfactory to
COMPANY, of any and all claims against COMPANY and its affiliates, officers,
directors, employees and agents. Failure by FRANCHISEE (and its shareholders
or partners, if FRANCHISEE is a corporation or partnership) to sign such
agreements and releases as are permitted by applicable law within thirty (30)
days after delivery thereof to FRANCHISEE shall be deemed an election by
FRANCHISEE not to renew the Franchise.
16. TERMINATION OF THE FRANCHISE.
A. BY FRANCHISEE.
If FRANCHISEE is in substantial compliance with this Agreement and COMPANY
materially breaches this Agreement, FRANCHISEE may terminate this Agreement
effective ten (10) days after delivery to COMPANY of written notice of
termination if FRANCHISEE first gives written notice of such breach to
COMPANY and COMPANY does not: (1) cure such breach within thirty (30) days
after delivery of such notice; or (2) if such breach cannot reasonably be
cured within thirty (30) days after delivery of such notice, undertake within
ten (10) days after delivery of such notice, and continue until completion
efforts to cure such breach. Any purported termination of this Agreement by
FRANCHISEE for any reason other than material breach of this Agreement by
COMPANY and COMPANY's failure to cure such breach or commence a cure of such
breach within the applicable cure period after receipt of written notice
thereof shall be deemed a breach of this Agreement by FRANCHISEE.
B. BY COMPANY.
COMPANY shall have the right to terminate this Agreement effective upon
delivery of notice of termination to FRANCHISEE, if FRANCHISEE (or any of its
shareholders or partners, if FRANCHISEE is a corporation or partnership) or
the STORE:
(1) fails to develop the STORE or open the STORE for business as provided in
Paragraphs B or D of Section 3 of this Agreement or fails to complete the
training program to COMPANY's satisfaction as provided in Paragraph A of
Section 4 of this Agreement;
(2) abandons, surrenders or transfers control of the STORE, loses the right
to occupy the Premises, or fails to actively operate the STORE, or if a
lessee's default occurs on the Lease of the Premises (other than through the
direct fault of COMPANY if COMPANY is the lessee under such Lease);
(3) has made any material misrepresentation or omission in its application
for the Franchise;
(4) is convicted by a trial court of or pleads no contest to a felony or to
any other crime or offense that may adversely affect the reputation of the
STORE or the goodwill associated with the Marks;
(5) fails to attend any supplemental or refresher training programs required
pursuant to Paragraph A of Section 4 of this Agreement; makes an unauthorized
assignment or transfer of this Agreement, the Franchise, the STORE or any
ownership interest in FRANCHISEE;
(7) makes any unauthorized use of the Marks or unauthorized use or disclosure
of Operating Manual or any other Confidential Information;
(8) fails or refuses to comply with any mandatory specification, standard or
operating procedure prescribed by COMPANY relating to the cleanliness or
sanitation of the STORE or violates any health, safety or sanitation law,
ordinance or regulation and does not correct such noncompliance or violation
within three (3) days after written notice thereof is delivered to FRANCHISEE;
(9) fails to timely pay royalty and service fees, advertising contributions,
amounts due for purchases from COMPANY or other payments due to COMPANY or
its affiliates, or fails to timely submit when due any financial statements,
reports, information or records, and does not correct such failure within ten
(10) days after written notice of such failure is delivered to FRANCHISEE; or
(10)is or becomes insolvent, or is generally unable to pay its debts as they
come due.
In addition to the foregoing, this Agreement shall automatically terminate
without further action by COMPANY if FRANCHISEE (or any of its shareholders
or partners, if FRANCHISEE is a corporation or partnership) or the STORE
fails to comply with any other provision of this Agreement or any mandatory
specification, standard or operating procedure prescribed from time to time
by COMPANY, or to timely pay amounts due to persons other than COMPANY or
its affiliates, and does not correct such failure within thirty (30) days
after written notice of such failure to comply or pay is delivered to
FRANCHISEE.
17. RIGHTS OF COMPANY AND OBLIGATIONS OF FRANCHISEE UPON TERMINATION
OR EXPIRATION OF THE FRANCHISE.
A. PAYMENT OF AMOUNTS OWED TO COMPANY.
FRANCHISEE agrees to pay to COMPANY, within fifteen (15) days after the
effective date of termination or expiration (without renewal) of the
Franchise, such royalty and service fees, advertising contributions, amounts
owed for products purchased by the FRANCHISEE from COMPANY or its affiliates,
interest due COMPANY on any of the foregoing and all other amounts owed to
COMPANY and its affiliates which are then unpaid. FRANCHISEE shall,
contemporaneously with such payment, furnish a complete accounting of all
such amounts owed to COMPANY and its affiliates.
B. DEIDENTIFICATION.
FRANCHISEE agrees that after the termination or expiration (without renewal)
of the Franchise:
(1) FRANCHISEE (and all owners thereof) shall not directly or indirectly at
any time or in any manner identify himself or any business as a current or
former TREATS Store, or as a franchisee or licensee of or as otherwise
associated with COMPANY, or use the Marks, any colorable imitation thereof or
other indicia of a TREATS Store in any manner or for any purpose, or utilize
for any purpose any trade name, trademark, service xxxx or other commercial
symbol that suggests or indicates a connection or association with COMPANY;
(2) FRANCHISEE will promptly destroy or return to COMPANY all signs,
sign faces, menus, advertising materials, forms, invoices and other materials
containing the Marks or otherwise identifying or relating to a TREATS STORE;
(3) FRANCHISEE will promptly take such action as may be required to cancel
all fictitious or assumed name or equivalent registrations relating to his
use of the Marks;
(4) FRANCHISEE will promptly notify the telephone company and all listing
agencies of the termination or expiration of FRANCHISEE's right to use any
telephone number and any regular, classified or other telephone directory
listings associated with the Marks and authorize transfer of same to or at
the direction of COMPANY; and
(5) FRANCHISEE will furnish to COMPANY within thirty (30) days after the
effective date of termination or expiration evidence satisfactory to COMPANY
of FRANCHISEE's compliance with the foregoing obligations.
C. CONFIDENTIAL INFORMATION.
FRANCHISEE agrees that upon termination or expiration (without renewal) of
the Franchise, he will immediately cease to use the Confidential Information
in any business or otherwise and return to COMPANY all copies of the
Operating Manual which have been loaned to him by COMPANY.
D. COVENANT NOT TO COMPETE.
FRANCHISEE (and its owners) agrees that for a period of two (2) years
following the termination or expiration (without renewal) of this Agreement,
FRANCHISEE (and its owners) and members of the immediate family of FRANCHISEE
(or its owners) will not have any direct or indirect involvement:
(a) as an owner, partner, director, officer, employee, consultant,
representative or agent, or in any other capacity, in any Competitive Business
located at or within five (5) miles of the Premises; or
in any entity which is granting franchises or licenses to others to operate a
Competitive Business located at or within five (5) miles of the Premises.
The restrictions contained in this Paragraph shall not apply to TREATS Stores
operated under Franchise Agreements with COMPANY and the ownership of
securities publicly traded that represent one percent (1%) or less of that
class of securities.
E. COMPANY HAS RIGHT TO PURCHASE STORE.
If this Agreement expires (without renewal) or is terminated prior to its
expiration, then COMPANY shall have the option, exercisable by giving written
notice thereof within thirty (30) days of the date of such expiration or
termination, to purchase from FRANCHISEE all the assets of the STORE
(including, without limitation, inventory of salable products, materials,
supplies, leasehold improvements, fixtures, furniture, equipment and signs,
but excluding any unamortized portion of the initial franchise fee, cash and
short term investments) and, if COMPANY is not the lessor, to an assignment
of the Lease for the Premises (or, if an assignment is prohibited, a sublease
for the full remaining term and on the same terms and conditions as the
Lease). COMPANY shall have the unrestricted right to assign this option to
purchase.
The purchase price for the tangible assets of the STORE shall be the sum of:
(i) the Book Value (as defined below); and (ii) fifteen percent (15%) of
Annual Gross Sales (as defined below). "Book Value" shall mean the net book
value of the tangible assets of the STORE as disclosed by the balance sheet
of the last quarterly statement of the STORE required to have been prepared
and maintained by FRANCHISEE pursuant to Paragraph B of Section 12 hereof
prior to such termination or expiration, provided that COMPANY may exclude
from the assets purchased any fixtures, equipment, furniture, signs, products,
materials or supplies of the STORE that have not been acquired in compliance
with this Agreement and any perishable food products. "Annual Gross Sales"
shall be the cumulative Gross Sales of the STORE for the four (4) immediately
preceding fiscal quarters of COMPANY as disclosed by the quarterly financial
statements required to have been prepared and maintained by FRANCHISEE
pursuant to Paragraph B of Section 12 hereof. In the event that the STORE
shall have been operational for a period of time less than four fiscal
quarters, "Annual Gross Sales" shall be the annualized Gross Sales of the
STORE as calculated based upon the quarterly statements required to have been
prepared and maintained for the quarterly periods of its operation pursuant
to Paragraph B of Section 12 hereof.
If COMPANY is not satisfied, for whatever reason, with the accuracy or
fairness of any such financial statement, Book Value and Annual Gross Sales
shall be determined by an audit to be conducted by an independent certified
public accountant or firm of independent certified public accountants
selected by COMPANY (other than COMPANY's firm of independent certified
public accountants). The cost of such audit will be borne by COMPANY unless
the results of such audit demonstrate an overstatement of Book Value or
Annual Gross Sales in financial statements prepared by FRANCHISEE by more
than three percent (3%), in which event the cost of such audit will be borne
by FRANCHISEE. The results of such audit shall be final and binding on both
parties.
The purchase price shall be paid in cash at the closing of the purchase,
which shall take place no later than sixty (60) days after the determination
of the purchase price, at which time FRANCHISEE shall: (1) transfer good and
merchantable title to the assets purchased, free and clear of all liens and
encumbrances, to COMPANY or its nominee with all sales and other transfer
taxes paid by FRANCHISEE; (2) transfer or assign to COMPANY or its nominee
all licenses or permits which may be assigned or transferred; and (3) if
requested by COMPANY, assign to COMPANY or its nominee FRANCHISEE's leasehold
interests to the Premises to COMPANY or its nominee for the full remaining
term and on the same terms and conditions as FRANCHISEE's Lease, including
any renewal or purchase options. FRANCHISEE and COMPANY shall, prior to
closing, comply with any applicable Bulk Sales provisions of the Uniform
Commercial Code as enacted in the state where the STORE is located. COMPANY
shall have the right to set off against and reduce the purchase price by any
and all amounts owed by FRANCHISEE to COMPANY or any of its affiliates.
F. CONTINUING OBLIGATIONS.
All obligations of COMPANY and FRANCHISEE which expressly or by their nature
survive the expiration or termination of this Agreement, including, without
limitation, the provisions of Section 8 and of Paragraph D of Section 17,
shall continue in full force and effect subsequent to and notwithstanding its
expiration or termination and until they are satisfied or by their nature
expire.
18. ENFORCEMENT.
A. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS.
Except as expressly provided to the contrary herein, each section, paragraph,
term and provision of this Agreement, and any portion thereof, shall be
considered severable and if, for any reason, any such provision of this
Agreement is held to be invalid, contrary to or in conflict with any
applicable present or future law or regulation in a final, unappealable
ruling issued by any court, agency or tribunal with competent jurisdiction in
a proceeding to which COMPANY is a party, that ruling shall not impair the
operation of, or have any other effect upon, such other portions of this
Agreement as may remain otherwise intelligible, which shall continue to be
given full force and effect and bind the parties hereto, although any portion
held to be invalid shall be deemed not to be a part of this Agreement from
the date the time for appeal expires, if FRANCHISEE is a party thereto,
otherwise upon FRANCHISEE's receipt of a notice of non enforcement thereof
from COMPANY. If any covenant herein which restricts competitive activity is
deemed unenforceable by virtue of its scope in terms of area, business
activity prohibited and/or length of time, but would be enforceable by
reducing any part or all thereof, FRANCHISEE and COMPANY agree that the
same shall be enforced to the fullest extent permissible under the laws and
public policies applied in the jurisdiction in which enforcement is sought.
If any applicable and binding law or rule of any jurisdiction requires a
greater prior notice of the termination of or refusal to enter into a
successor franchise agreement to this Agreement than is required hereunder,
or the taking of some other action not required hereunder, or if, under any
applicable and binding law or rule of any jurisdiction, any provision of this
Agreement or any System Standard is invalid or unenforceable, the prior
notice and/or other action required by such law or rule shall be substituted
for the comparable provisions hereof, and COMPANY shall have the right, in
its sole discretion, to modify such invalid or unenforceable System Standard
to the extent required to be valid and enforceable. FRANCHISEE agrees to be
bound by any promise or covenant imposing the maximum duty permitted by law
which is subsumed within the terms of any provision hereof, as though it were
separately articulated in and made a part of this Agreement, that may result
from striking from any of the provisions hereof, or any System Standard, any
portion or portions which a court or arbitrator may hold to be unenforceable
in a final decision to which COMPANY is a party or from reducing the scope of
any promise or covenant to the extent required to comply with such a court
order or arbitration award. Such modifications to this Agreement shall be
effective only in such jurisdiction, unless COMPANY elects to give them
greater applicability, and shall be enforced as originally made and entered
into in all other jurisdictions.
B. WAIVER OF OBLIGATIONS.
COMPANY and FRANCHISEE may by written instrument unilaterally waive or reduce
any obligation of or restriction upon the other under this Agreement,
effective upon delivery of written notice thereof to the other or such other
effective date stated in the notice of waiver. Any waiver granted by COMPANY
shall be without prejudice to any other rights COMPANY may have, will be
subject to continuing review by COMPANY and may be revoked, in COMPANY's sole
discretion, at any time and for any reason, effective upon delivery to
FRANCHISEE of ten (10) days' prior written notice.
COMPANY and FRANCHISEE shall not be deemed to have waived or impaired any
right, power or option reserved by this Agreement (including, without
limitation, the right to demand exact compliance with every term, condition
and covenant herein or to declare any breach thereof to be a default and to
terminate this Agreement prior to the expiration of its term) by virtue of
any custom or practice of the parties at variance with the terms hereof; any
failure, refusal or neglect of COMPANY or FRANCHISEE to exercise any right
under this Agreement or to insist upon exact compliance by the other with its
obligations hereunder, including, without limitation, any System Standard;
any waiver, forebearance, delay, failure or omission by COMPANY to exercise
any right, power or option, whether of the same, similar or different nature,
with respect to other TREATS Stores; or COMPANY's acceptance of any payments
due from FRANCHISEE after any breach of this Agreement.
Neither COMPANY nor FRANCHISEE shall be liable for loss or damage or deemed
to be in breach of this Agreement if their failure to perform obligations
results from:
(1) transportation shortages, inadequate supply of equipment, merchandise,
supplies, labor, material or energy or the voluntary foregoing of the right
to acquire or use any of the foregoing in order to accommodate or comply with
the orders, requests, regulations, recommendations or instructions of any
federal, state or municipal government or any department or agency thereof;
(2) compliance with any law, ruling, order, regulation, requirement or
instruction of any federal, state or municipal government or any department
or agency thereof;
(3) acts of God;
(4) fires, strikes, embargoes, war or riot; or
(5) any other similar event or cause.
Any delay resulting from any of said causes shall extend performance
accordingly or excuse performance, in whole or in part, as may be reasonable,
except that said causes shall not excuse payments of amounts owed at the time
of such occurrence or payment of royalties due on any sales thereafter.
C. PRELIMINARY INJUNCTIVE RELIEF.
Notwithstanding anything to the contrary contained in Paragraph F of this
Section, COMPANY and FRANCHISEE shall each have the right in a proper case to
obtain temporary restraining orders and temporary or preliminary injunctive
relief from a court of competent jurisdiction, provided, however, that the
parties shall contemporaneously submit their dispute for arbitration on the
merits in accordance with Paragraph F of this Section. FRANCHISEE agrees that
COMPANY may have such temporary restraining orders and temporary or
preliminary injunctive relief without bond, but upon due notice, and
FRANCHISEE's sole remedy in the event of the entry of such injunctive relief
shall be the dissolution of such injunctive relief, if warranted, upon
hearing duly had (all claims for damages by reason of the wrongful issuance
of any such injunction being expressly waived hereby). Any such action shall
be brought as provided in Paragraph G below.
D. RIGHTS OF PARTIES ARE CUMULATIVE.
The rights of COMPANY and FRANCHISEE hereunder are cumulative and no exercise
or enforcement by COMPANY or FRANCHISEE of any right or remedy hereunder
shall preclude the exercise or enforcement by COMPANY or FRANCHISEE of any
other right or remedy hereunder which COMPANY or FRANCHISEE is entitled by
law to enforce.
E. COSTS AND ATTORNEYS' FEES.
If a claim for amounts owed by FRANCHISEE to COMPANY or its affiliates is
asserted in any judicial or arbitration proceeding or appeal thereof, or if
COMPANY or FRANCHISEE is required to enforce this Agreement in a judicial or
arbitration proceeding or appeal thereof, the party prevailing in such
proceeding shall be entitled to reimbursement of its costs and expenses,
including reasonable arbitrators', accounting and legal fees, whether
incurred prior to, in preparation for or in contemplation of the filing of
any written demand, claim, action, hearing or proceeding to enforce the
obligations of this Agreement. If COMPANY is required to engage legal counsel
in connection with FRANCHISEE's failure to pay when due amounts owing to
COMPANY, to submit when due any reports, information or supporting records or
otherwise to comply with this Agreement, FRANCHISEE shall reimburse COMPANY
for any of the above mentioned costs and expenses which it incurs.
F. ARBITRATION.
EXCEPT FOR CONTROVERSIES, DISPUTES OR CLAIMS RELATED TO OR BASED ON THE MARKS,
ALL CONTROVERSIES, DISPUTES OR CLAIMS BETWEEN COMPANY, ITS SUBSIDIARIES AND
AFFILIATES, AND THEIR RESPECTIVE SHAREHOLDERS, OFFICERS, DIRECTORS, AGENTS,
EMPLOYEES AND ATTORNEYS (IN THEIR REPRESENTATIVE CAPACITY), AND FRANCHISEE
(ITS OWNERS AND GUARANTORS, IF APPLICABLE) ARISING OUT OF OR RELATED TO:
(1) THIS AGREEMENT OR ANY OTHER AGREEMENT BETWEEN THE PARTIES OR ANY
PROVISION OF SUCH AGREEMENTS;
(2) THE RELATIONSHIP OF THE PARTIES HERETO;
THE VALIDITY OF THIS AGREEMENT OR ANY OTHER AGREEMENT BETWEEN THE PARTIES OR
ANY PROVISION OF SUCH AGREEMENTS; OR
(4) ANY SYSTEM STANDARD RELATING TO THE ESTABLISHMENT OR OPERATION OF THE
STORE SHALL BE SUBMITTED FOR ARBITRATION TO THE MIAMI, FLORIDA OFFICE OF THE
AMERICAN ARBITRATION ASSOCIATION ON DEMAND OF EITHER PARTY. SUCH ARBITRATION
PROCEEDINGS SHALL BE CONDUCTED IN MIAMI, FLORIDA AND, EXCEPT AS OTHERWISE
PROVIDED IN THIS AGREEMENT, SHALL BE HEARD BY ONE ARBITRATOR IN ACCORDANCE
WITH THE THEN CURRENT COMMERCIAL ARBITRATION RULES OF THE AMERICAN
ARBITRATION ASSOCIATION. ALL MATTERS RELATING TO ARBITRATION SHALL BE
GOVERNED BY THE FEDERAL ARBITRATION ACT (9 U.S.C. SECTION 1 ET SEQ.).
THE ARBITRATOR SHALL HAVE THE RIGHT TO AWARD OR INCLUDE IN HIS AWARD ANY
RELIEF WHICH HE DEEMS PROPER IN THE CIRCUMSTANCES, INCLUDING, WITHOUT
LIMITATION, MONEY DAMAGES (WITH INTEREST ON UNPAID AMOUNTS FROM THE DATE DUE),
SPECIFIC PERFORMANCE, INJUNCTIVE RELIEF AND ATTORNEYS' FEES AND COSTS, IN
ACCORDANCE WITH PARAGRAPH E OF THIS SECTION, PROVIDED THAT THE ARBITRATOR
SHALL NOT AWARD EXEMPLARY OR PUNITIVE DAMAGES. THE AWARD AND DECISION OF THE
ARBITRATOR SHALL BE CONCLUSIVE AND BINDING UPON ALL PARTIES HERETO AND
JUDGMENT UPON THE AWARD MAY BE ENTERED IN ANY COURT OF COMPETENT JURISDICTION.
EACH PARTY WAIVES ANY RIGHT TO CONTEST THE VALIDITY OR ENFORCEABILITY OF SUCH
AWARD. THE PARTIES AGREE TO BE BOUND BY THE PROVISIONS OF ANY LIMITATION ON
THE PERIOD OF TIME BY WHICH CLAIMS MUST BE BROUGHT UNDER APPLICABLE LAW OR
THIS AGREEMENT, WHICHEVER IS LESS. THE PARTIES FURTHER AGREE THAT, IN
CONNECTION WITH ANY SUCH ARBITRATION PROCEEDING, EACH SHALL FILE ANY
COMPULSORY COUNTERCLAIM (AS DEFINED BY RULE 13 OF THE FEDERAL RULES OF CIVIL
PROCEDURE) WITHIN THIRTY (30) DAYS AFTER THE DATE OF THE FILING OF THE CLAIM
TO WHICH IT RELATES; OTHERWISE, SUCH CLAIM WILL BE FOREVER BARRED. THIS
PROVISION SHALL CONTINUE IN FULL FORCE AND EFFECT SUBSEQUENT TO AND
NOTWITHSTANDING THE EXPIRATION OR TERMINATION OF THIS AGREEMENT.
COMPANY AND FRANCHISEE AGREE THAT ARBITRATION SHALL BE CONDUCTED ON AN
INDIVIDUAL, NOT A CLASS WIDE, BASIS AND THAT AN ARBITRATION PROCEEDING
BETWEEN COMPANY AND FRANCHISEE SHALL NOT BE CONSOLIDATED WITH ANY OTHER
ARBITRATION PROCEEDING INVOLVING COMPANY AND ANY OTHER PERSON, CORPORATION
OR PARTNERSHIP.
G. GOVERNING LAW/CONSENT TO JURISDICTION.
ALL MATTERS RELATING TO ARBITRATION SHALL BE GOVERNED BY THE FEDERAL
ARBITRATION ACT (9 U.S.C. SECTION 1 ET SEQ.). EXCEPT TO THE EXTENT GOVERNED
BY THE FEDERAL ARBITRATION ACT, THE UNITED STATES TRADEMARK ACT OF 1946
(XXXXXX ACT, 15 U.S.C. SECTIONS 1051 ET SEQ.) OR OTHER FEDERAL LAW, THIS
AGREEMENT, THE FRANCHISE AND THE RELATIONSHIP BETWEEN COMPANY AND FRANCHISEE
SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF FLORIDA WITHOUT
REFERENCE TO ITS CHOICE OF LAWS AND CONFLICT OF LAW RULES.
FRANCHISEE AGREES THAT COMPANY MAY INSTITUTE ANY ACTION AGAINST FRANCHISEE
(WHICH IS NOT REQUIRED TO BE ARBITRATED HEREUNDER) IN ANY STATE OR FEDERAL
COURT OF GENERAL JURISDICTION IN THE STATE OF FLORIDA, AND FRANCHISEE
IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND WAIVES ANY
OBJECTION HE MAY HAVE TO EITHER THE JURISDICTION OF OR VENUE IN SUCH COURTS.
H. BINDING EFFECT.
This Agreement is binding upon the parties hereto and their respective
executors, administrators, heirs, assigns and successors in interest and
shall not be modified except by written agreement signed by both FRANCHISEE
and COMPANY.
I. LIMITATIONS OF CLAIMS.
Any and all claims arising out of or relating to this Agreement or the
relationship among the parties hereto shall be barred unless an action or
legal or arbitration proceeding is commenced within eighteen (18) months from
the date FRANCHISEE or COMPANY knew or should have known of the facts giving
rise to such claims.
J. WAIVER OF PUNITIVE DAMAGES AND JURY TRIAL.
Except with respect to FRANCHISEE's obligation to indemnify COMPANY pursuant
to Section 10, the parties waive to the fullest extent permitted by law any
right to or claim for any punitive or exemplary damages against the other and
agree that, in the event of a dispute between them, the party making a claim
shall be limited to recovery of any actual damages it sustains. COMPANY and
FRANCHISEE hereby irrevocably waive trial by jury on any action, proceeding
or counterclaim, whether at law or equity, brought by either or both of them.
K. CONSTRUCTION.
The preambles and exhibits are a part of this Agreement which, together with
the Operating Manual, constitutes the entire agreement of the parties except
as provided below, and there are no other oral or written understandings or
agreements between COMPANY and FRANCHISEE relating to the subject matter of
this Agreement, except that FRANCHISEE acknowledges that COMPANY justifiably
has relied on FRANCHISEE's representations made prior to the execution of
this Agreement as set forth in Section 1.
Nothing in this Agreement is intended, nor shall be deemed, to confer any
rights or remedies upon any person or legal entity not a party hereto.
Except where this Agreement expressly obligates COMPANY reasonably to approve
or not unreasonably to withhold its approval of any action or request by
FRANCHISEE, COMPANY has the absolute right to refuse any request by
FRANCHISEE or to withhold its approval of any action by FRANCHISEE that
requires COMPANY's approval.
The headings of the several sections and paragraphs hereof are for
convenience only and do not define, limit or construe the contents of such
sections or paragraphs.
The term "affiliate" as used herein is applicable to any company directly or
indirectly owned or controlled by, under common control with or owning or
controlling COMPANY that transacts business with FRANCHISEE.
The term "controlling interest" as used herein shall mean thirty three and
1/3 percent (33.3%) or more of the voting control of FRANCHISEE if FRANCHISEE
is a corporation, and any general partnership interest if FRANCHISEE is a
partnership.
The term "FRANCHISEE" as used herein is applicable to one or more persons, a
corporation or a partnership, as the case may be; the singular usage includes
the plural, and vice versa; and the feminine, masculine and neuter usages
each include the other usages. If two or more persons or entities are at any
time FRANCHISEE hereunder, as partners, joint venturers or otherwise, their
obligations and liabilities to COMPANY shall be joint and several. References
to "FRANCHISEE," "owner," "transferee" and "assignee" which are applicable to
an individual or individuals shall mean the owner or owners of the equity or
operating control of FRANCHISEE or the transferee or assignee, if FRANCHISEE
or the assignee is a corporation or partnership.
The term "member of the immediate family" as used herein refers to parents,
spouses, offspring, adopted children.
The term "STORE" as used herein includes all of the assets of the TREATS
Store operated by FRANCHISEE pursuant to this Agreement.
This Agreement may be executed in multiple copies, each of which shall be
deemed an original.
Time is of the essence of this Agreement.
19. NOTICES AND PAYMENTS.
All written notices and reports permitted or required to be delivered by
the provisions of this Agreement or of the Operating Manual shall be deemed
so delivered
(1) at the time delivered by hand;
(2) One (1) business day after transmission by facsimile, telecopy or other
electronic system;
(3) one (1) business day after being placed in the hands of a commercial
courier service for next business day delivery; or
three (3) business days after placement in the United States Mail by
Registered or Certified Mail, Return Receipt Requested, postage prepaid, and
shall be addressed to the parties as follows:
If to COMPANY: EMC Group, Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
If to FRANCHISEE:
Any required payment or report not actually received by COMPANY during
regular business hours on the date due (or postmarked by postal authorities
at least two (2) days prior thereto) shall be deemed delinquent.
IN WITNESS WHEREOF the parties hereto have executed and delivered this
Agreement in counterparts on the day and year first above written.
EMC GROUP, INC.,
a Florida corporation
By:
Title:
EXHIBIT A
TO THE TREATS FRANCHISE AGREEMENT
BETWEEN EMC GROUP, INC. AND
DATED , 200
of TREATS Store. The above captioned agreement grants
FRANCHISEE the right to operate a:
___ [ ] (1) "Treats Bakery"
bakery facility which generally offers muffins, cookies, brownies and similar
baked goods requiring premises with 250 to 500 square feet of space.
___ [ ] (2) "Treats Bakery Cafe"
A combined bakery and cafe facility which generally offers the same products
as a Treats Bakery, as well as soups, salads, sandwiches, frozen yogurt
(optional) and regional preferences approved by the Company requiring 500 to
2500 square feet of space and having certain limited seating for on premises
consumption.
___ [ ] (3) "Treats International Coffee Emporium"
combines selections of Gourmet and Premium Specialty Coffees, either for
immediate consumption or beans to take home, includes our own excellent
"baked fresh on site" baking program requiring 1,000 to 2,500 square feet of
space and having certain limited seating for on premises consumption.
FRANCHISEE and COMPANY shall initial the space and check the box adjacent to
the applicable type of TREATS Store granted pursuant to the above captioned
agreement.
2. Premises. The Premises shall be located at:
EMC GROUP, INC.
By:
Its:
EXHIBIT B
TO THE TREATS FRANCHISE AGREEMENT
BETWEEN EMC GROUP, INC. AND
DATED , 200
ASSIGNMENT OF LEASE
FOR VALUE RECEIVED, the undersigned ("Assignor") hereby assigns, transfers
and sets over unto EMC GROUP, INC., a Florida corporation ("Assignee"), all
of Assignor's right, title and interest as tenant in, to and under that
certain Lease, a copy of which is attached hereto as Exhibit A (the
"Lease"), respecting premises commonly known as (the "Premises"). This
Assignment is for collateral purposes only and, except as specified
herein, Assignee shall have no liability or obligation of any kind
whatsoever arising from or in connection with this Assignment or the Lease
unless Assignee shall take possession of the Premises demised by the Lease
pursuant to the terms hereof and shall assume the obligations of Assignor
thereunder.
Assignor represents and warrants to Assignee that it has full power and
authority to assign the Lease and its interest therein and that Assignor
has not previously assigned or transferred, and is not otherwise obligated
to assign or transfer, any of its interest in the Lease or the Premises
demised thereby.
Upon a default by Assignor under the Lease or under that certain
Franchise Agreement dated ___________, 19__ (the "Franchise Agreement")
between Assignor and Assignee for that certain Treats Store located at the
Premises, or in the event of a default by Assignor under any document or
instrument securing the Franchise Agreement, Assignee shall have the right
and is hereby empowered to take possession of the Premises demised by the
Lease, expel Assignor therefrom, and, in such event, Assignor shall have no
further right, title or interest in the Lease and shall remain liable to
Assignee for all past due rents which Assignee shall be required to pay
to Lessor to effectuate the assignment contemplated hereunder.
Assignor agrees that it will not suffer or permit any surrender,
termination, amendment or modification of the Lease without Assignee's prior
written consent. Throughout the term of the Franchise Agreement, Assignor
agrees that it shall elect and exercise all options to extend the term of or
renew the Lease not less than thirty (30) days prior to the last day that
said option must be exercised, unless Assignee otherwise agrees in writing.
Upon Assignee's failure otherwise to agree in writing, and upon failure of
Assignor to elect to extend or renew the Lease as aforesaid, Assignor hereby
appoints Assignee as its true and lawful attorney in fact to exercise such
extension or renewal options in the name, place and stead of Assignor for
the sole purpose of effecting such extension or renewal.
ASSIGNOR:
Dated:
ATTEST:
By:
Its:
EXHIBIT B
CONSENT TO COLLATERAL ASSIGNMENT AND AGREEMENT OF LESSOR
IN THE MATTER OF a Lease dated the day of , 1993, made between as Landlord
and as Tenant ("Lease") and IN THE MATTER OF a Collateral Assignment of
Lease dated between as Assignor and EMC Group, Inc. as Assignee ("Collateral
Assignment").
The undersigned Lessor under the aforedescribed Lease hereby:
(1) Agrees to notify Assignee in writing of and upon the failure of Assignor
to cure any default by Assignor under the Lease;
(2) Agrees that Assignee shall have the right, but shall not be obligated,
to cure any default by Assignor under the Lease within thirty (30) days
after delivery by Lessor of notice thereof in accordance with Section (1)
above;
(3) Consents to the foregoing Collateral Assignment and agrees that, if
Assignee shall take possession of the Premises demised by the Lease and
confirms to Lessor the assumption of the Lease by Assignee as tenant
thereunder, Lessor shall recognize Assignee as tenant under the Lease,
provided that Assignee cures within said thirty (30) day period the defaults
of Assignor under the Lease; and
(4) Agrees that Assignee may further assign the Lease to or enter into a
sublease with a person, firm or corporation who shall agree to assume the
tenant's obligations under the Lease and who is reasonably acceptable to
Lessor and, upon such assignment, Assignee shall have no further liability
or obligation under the Lease as assignee, tenant or otherwise, other than
to certify that such additional assignee or sublessee operates the
Premises demised by the Lease as a Treats Franchise; and
(5) Agrees that in the event of an assignment or sublease pursuant to Item
4 above, to execute a further Consent to Collateral Assignment of the Lease
and Agreement by Landlord form in favor of EMC Group, Inc.
DATED: LESSOR:
OWNERS' JOINDER, GUARANTY AND ASSUMPTION OF OBLIGATIONS
THIS GUARANTY AND ASSUMPTION OF OBLIGATIONS is given this ____ day
_______________ of , 19_____ ,
by
(collectively, "GUARANTORS" and individually, a "GUARANTOR").
In consideration of, and as an inducement to, the execution of that certain
Franchise Agreement of even date herewith (the "Agreement") by EMC Group,
Inc., a Florida corporation (the "COMPANY ), each GUARANTOR hereby personally
and unconditionally covenants and agrees to be bound by the provisions
contained in Xxxxxxx 0, Xxxxxxx 0, Xxxxxxxxx C(8) of Section 14 and
Paragraphs C and D of Section 17 of the Agreement, and guarantees to COMPANY,
and its successors and assigns, for the term of the Agreement and
thereafter as provided in the Agreement that ("FRANCHISEE") shall
punctually pay and perform each and every undertaking, agreement and
covenant set forth in the Agreement, and agrees to be personally bound by,
and personally liable for the breach of, each and every provision in the
Agreement.
Each GUARANTOR waives acceptance and notice of acceptance by COMPANY of the
foregoing undertakings; notice of demand for payment of any indebtedness or
nonperformance of any obligations hereby guaranteed; protest and notice of
default to any party with respect to the indebtedness or nonperformance of
any obligations hereby guaranteed; any right to require that an action be
brought against FRANCHISEE or any other person as a condition of liability;
and any and all other notices and legal or equitable defenses to which he may
be entitled.
Each GUARANTOR consents and agrees that his direct and immediate liability
under this guaranty shall be joint and several; that he shall render any
payment or performance required under the Agreement upon demand if
FRANCHISEE fails or refuses to do so punctually; that such liability shall
not be contingent or conditioned upon pursuit by COMPANY of any remedies
against FRANCHISEE or any other person or entity; and that such
liability shall not be diminished, relieved or otherwise affected by any
extension of time, credit or other indulgence which COMPANY may from time to
time grant to FRANCHISEE or to any other person, including, without
limitation, the acceptance of any partial payment or performance, or the
compromise or release of any claims, none of which shall in any way modify
or amend this guaranty, which shall be continuing and irrevocable during the
term of the Agreement.
IN WITNESS WHEREOF, each GUARANTOR has hereunto affixed his signature on the
same day and year as the Agreement was executed.
GUARANTORS:
