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EXHIBIT 10.24
XXXXXX XXXX'X GOURMET COFFEES FRANCHISING CORP.
FRANCHISE AGREEMENT
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Franchisee
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Location
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Date of Agreement
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TABLE OF CONTENTS
SECTION PAGE
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1. BUSINESS BACKGROUND AND PRELIMINARY AGREEMENTS 1
2. GRANT AND RENEWAL OF FRANCHISE 2
X. XXXXX OF FRANCHISE 2
B. NON-EXCLUSIVITY 2
C. RENEWAL OF FRANCHISE 3
D. MANNER OF RENEWAL 4
E. RELEASES ON GRANTS OF ADDITIONAL, ETC. FRANCHISES 4
3. LOCATION OF STORE 5
4. DEVELOPMENT AND OPENING OF STORE 5
A. LEASE OR SUBLEASE OF PREMISES OF STORE 5
B. DEVELOPMENT OF STORE 6
C. FIXTURES, EQUIPMENT, STOREFRONT, SUPPLIES AND SIGNS 6
D. STORE OPENING 6
E. TERMINATION UPON FAILURE OF THE FRANCHISEE
TO OPEN STORE 7
F. GRAND OPENING PROGRAM 7
5. TRAINING AND OPERATING ASSISTANCE 7
A. TRAINING 7
B. HIRING AND TRAINING OF EMPLOYEES BY THE FRANCHISEE 8
C. OPERATING ASSISTANCE 8
6. OPERATING MANUAL 8
7. STORE IMAGE AND OPERATING STANDARD 9
A. CONDITION AND APPEARANCE OF STORE 9
B. ALTERATIONS TO THE STORE 9
C. AUTHORIZED PRODUCTS 9
D. APPROVED BRANDS AND/OR SUPPLIERS 10
E. SUPPLIERS OF GOURMET COFFEE 10
F. USE OF SUPPLIES IMPRINTED WITH NAMES AND MARKS 11
G. STANDARDS OF SERVICE 11
H. DETERIORATED PRODUCTS AND COMPLAINTS 11
I. SPECIFICATIONS, STANDARDS AND PROCEDURES 11
J. COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES 12
K. MANAGEMENT OF THE STORE 12
L. CONFLICTING AND COMPETING INTERESTS 13
M. INSURANCE 13
8. PROPRIETARY AND CONFIDENTIAL INFORMATION OF THE FRANCHISOR 14
9. ADVERTISING AND PROMOTION 14
A. BY THE FRANCHISOR 14
B. MARKETING FUND 14
C. BY THE FRANCHISEE 17
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10. STORE RECORDS AND REPORTING 17
A. BOOKKEEPING, ACCOUNTING AND RECORDS 17
B. REPORTS, FINANCIAL STATEMENTS AND TAX RETURNS 18
11. NAMES AND MARKS 19
A. OWNERSHIP OF NAMES AND MARKS 19
B. LIMITATIONS ON THE FRANCHISEE'S USE OF NAMES AND MARKS 19
C. NOTIFICATION OF INFRINGEMENTS AND CLAIMS 19
D. DISCONTINUANCE OF USE OF NAME AND/OR MARKS 20
12. INITIAL FRANCHISE FEE 20
13. ROYALTY AND SERVICE FEE 21
A. AMOUNT OF ROYALTY AND SERVICE FEE 21
B. DEFINITION OF "GROSS SALES" 21
C. PAYMENT OF ROYALTY AND SERVICE FEE
AND MARKETING FUND CONTRIBUTION 21
D. INTEREST ON LATE PAYMENTS AND LATE FEES 22
14. INSPECTIONS AND AUDITS 22
A. THE FRANCHISOR'S RIGHT TO INSPECT STORE 22
B. THE FRANCHISOR'S RIGHT TO AUDIT 22
15. TERMINATION OF FRANCHISE 23
A. BY THE FRANCHISOR 23
B. RIGHT OF FRANCHISOR TO MANAGE AFTER
NOTICE OF DEFAULT TO THE FRANCHISEE 24
C. RIGHT OF FRANCHISOR TO DISCONTINUE PRODUCTS TO THE
FRANCHISEE AFTER NOTICE OF DEFAULT TO THE FRANCHISEE 25
D. EXTENDED CURE PERIOD 25
E. FRANCHISOR'S RIGHT TO TERMINATE THE FRANCHISE, RETURN
THE INITIAL FRANCHISE FEE AND ALLOW FRANCHISEE TO COMPETE 25
F. EXECUTION OF RELEASE ON DEFAULT, ETC. 26
G. CROSS-DEFAULTS, NON-EXCLUSIVE REMEDIES, ETC. 26
16. THE FRANCHISEE'S OBLIGATION UPON TERMINATION OR EXPIRATION 26
A. PAYMENT OF AMOUNTS OWED TO THE FRANCHISOR 26
B. RETURN OF MANUALS 27
C. CANCELLATION OF ASSUMED NAMES AND TRANSFER OF PHONE NUMBERS 27
D. FRANCHISOR HAS RIGHT TO PURCHASE STORE 00
X. XXXXXXXXXX OF INVENTORY 28
F. COVENANT NOT TO COMPETE 28
G. CONTINUING OBLIGATIONS 29
17. ASSIGNMENT, TRANSFER AND ENCUMBRANCE 29
A. BY FRANCHISOR 29
B. THE FRANCHISEE MAY NOT ASSIGN WITHOUT
APPROVAL OF THE FRANCHISOR 29
C. ASSIGNMENT TO PARTNERSHIP OR CORPORATION 30
D. FRANCHISOR'S RIGHT OF FIRST REFUSAL 30
E. DEATH OR PERMANENT DISABILITY OF THE FRANCHISEE 31
F. RELEASE, EFFECT OF TRANSFER 31
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18. DISPUTE AVOIDANCE AND RESOLUTION 32
A. MEDIATION AND MANDATORY BINDING ARBITRATION,
WAIVER OF RIGHT TO TRIAL BY JURY, ETC. 32
B. VENUE, WAIVER OF RIGHTS TO TRIAL BY JURY,
LIMITATION OF DAMAGES, ETC. 34
C. PRIOR NOTICE OF CLAIMS BY FRANCHISEE 36
D. PERIODS IN WHICH TO MAKE CLAIMS 36
E. WITHHOLDING CONSENT 37
F. SURVIVAL AND CONSTRUCTION 37
G. COSTS AND ATTORNEYS' FEES 38
H. VALIDITY AND EXECUTION 38
I. BINDING EFFECT, MODIFICATION AND REPRESENTATIONS 38
J. CONSTRUCTION, ETC. 38
K. NON-RETENTION OF FUNDS 40
L. SEVERABILITY; SUBSTITUTION OF VALID PROVISIONS 40
M. WAIVERS 40
N. CHOICE OF LAWS 41
O. ADVICE OF LAWYERS, ALTERNATIVE INVESTMENT OPPORTUNITIES, ETC. 41
19. INDEPENDENT CONTRACTORS AND INDEMNIFICATION 41
20. NOTICES 42
21. EFFECTIVE DATE OF AGREEMENT 42
22. ACKNOWLEDGMENTS AND REPRESENTATIONS,
ENTIRE AGREEMENT, NO FIDUCIARY RELATIONSHIP, ETC. 42
GUARANTY OF OBLIGATIONS 46
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XXXXXX XXXX'X(R)
FRANCHISE AGREEMENT
This Agreement is made and entered into by and between Xxxxxx Xxxx'x
Gourmet Coffees Franchising Corp., an Illinois corporation (hereinafter referred
to as the "FRANCHISOR." "we," "us" or "our"), with its principal office at 00000
Xxxxxxxxxx Xxxxxxx, Xxxxxxxxxxx, Xxxxxxxxxx 00000, _________________
(hereinafter referred to as the "FRANCHISEE," "you" or "your") whose principal
address is _________________________________________________.
1. BUSINESS BACKGROUND AND PRELIMINARY AGREEMENTS
The FRANCHISOR and its affiliated company, Xxxxxx Xxxx'x Gourmet
Coffees Corp. ("GJGC Corp"), has developed a store offering for retail sale bulk
gourmet coffees, teas, beverages, coffee and tea makers and related supplies,
accessories and gifts (hereinafter referred to as the "PRODUCTS"). These stores
are known as XXXXXX XXXX'X COFFEES STORES (hereinafter referred to as a "GJC
STORE(S)"). Most GJC STORES carry beverages for immediate consumption on the
premises, including coffee, espresso, cappuccino and tea. In addition, some GJC
STORES carry pastries, cookies and baked goods and have seating areas. All such
GJC STORES are operated with uniform formats, signs, equipment, layout, systems,
methods, procedures and designs which utilize a unique architectural design,
offer uniform products, and utilize certain trademarks, service marks, trade
dress and other commercial symbols, including "Xxxxxx Xxxx'x Coffees" "Xxxxxx
Xxxx'x Coffee Bean" and "Xxxxxx Xxxx'x." (Such trademarks, service marks and
other commercial symbols are hereinafter referred to as the "Names and Marks.")
GJC STORES operate at locations that feature a distinctive format and method of
doing business, including color scheme, signs, equipment, layouts, systems,
methods, procedures, designs and marketing and advertising standards and formats
(the "XXXXXX XXXX'X System"), any element of which FRANCHISOR can modify from
time-to-time in its sole and absolute discretion and with which FRANCHISEE will
promptly comply.
The FRANCHISOR grants to qualified persons franchises to own and
operate a GJC STORE and where appropriate, a Xxxxxx Xxxx'x Coffees Holiday Gift
Center (the "CENTER"), pursuant to the Holiday Gift Center Addendum (the
"HOLIDAY GIFT CENTER ADDENDUM"), which if granted by the FRANCHISOR will become
a part of this Franchise Agreement, subject to the particular terms of the
HOLIDAY GIFT CENTER ADDENDUM, or a Xxxxxx Xxxx'x Coffees Espresso Bar/Kiosk (the
"BAR/KIOSK"), pursuant to the Espresso Bar/Kiosk Addendum (the "BAR/KIOSK
ADDENDUM"), which if granted by the FRANCHISOR will become a part of the
Franchise Agreement offering the PRODUCTS authorized and approved by the
FRANCHISOR
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and utilizing its business systems, formats, methods, specifications, standards,
operating procedures, operating assistance and Names and Marks. The FRANCHISEE
has applied for a franchise to own and operate a GJC STORE or a BAR/KIOSK at the
premises identified in Paragraph A of Section 2 below and such application has
been approved by the FRANCHISOR in reliance upon all of the representations made
therein.
The FRANCHISEE acknowledges receiving and reading this Agreement and
any addenda hereto and the FRANCHISOR's Uniform Franchise Offering Circular
(with all exhibits) at least 10 business days before signing this Agreement
and/or any other binding document, paying any amounts or making any commitments
and has been given an opportunity to clarify any provision the FRANCHISEE did
not understand. The FRANCHISEE further acknowledges that he understands and
accepts the terms, conditions and covenants contained in this Agreement as being
reasonably necessary to maintain the FRANCHISOR's high standards of quality and
service and the uniformity of those standards at all GJC STORES and thereby to
protect and preserve the goodwill of the Names and Marks.
As used in this Agreement, "Franchisor-Related Entities" includes,
collectively and individually, but is not necessarily limited to, the following,
whether past, present or future: Xxxxxx Xxxx'x Gourmet Coffees Franchising
Corp., Xxxxxx Xxxx'x Gourmet Coffees Corp., Edglo Enterprises, Inc., Xxxxxx
Xxxx'x Inc., Coffee People Inc., Second Cup USA Holdings Ltd. and The Second Cup
Ltd., the partners, shareholders, officers, directors, agents, attorneys,
accountants, and/or employees and/or any affiliated companies and/or persons, of
any of the foregoing and each of their respective partners, shareholders,
officers, directors, agents, attorneys, accountants, and/or employees, as well
as any company(ies)/person(s) acting by, through, under or in concert or
affiliated or associated in any way with any of the foregoing, as well as any
past, present and/or future successors and/or assigns of any of the foregoing.
As used in this Agreement, "affiliate" means any past, present or future person,
company or other entity which controls, is controlled by or is under common
control with another person, company or other entity and includes, at present,
Xxxxxx Xxxx'x Gourmet Coffees Franchising Corp., Xxxxxx Xxxx'x Gourmet Coffees
Corp., Edglo Enterprises, Inc., Xxxxxx Xxxx'x Inc., Coffee People Inc., Second
Cup USA Holdings Ltd. and The Second Cup Ltd.
2. GRANT AND RENEWAL OF FRANCHISE
X. XXXXX OF FRANCHISE
Subject to the provisions of this Agreement, the FRANCHISOR hereby
grants to the FRANCHISEE a franchise to operate a GJC
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STORE at __________________________________ (hereinafter referred to as the
"STORE"), or a substitute premises hereafter approved (in accordance with
Section 3 below) by the FRANCHISOR, and to use the Names and Marks in the
operation thereof, for a term commencing on the effective date of this Agreement
and ending upon the expiration of the initial or remaining initial term of the
lease or sublease for the premises of the STORE (hereinafter referred to as the
"FRANCHISE"). Termination or expiration of this Agreement shall constitute a
termination or expiration of the FRANCHISE.
B. NON-EXCLUSIVITY
The FRANCHISE is a "spot" franchise only and is awarded for a single
location only, as accepted by FRANCHISOR, with the FRANCHISEE having no other
rights. The FRANCHISEE does not have, and has not paid for, any "exclusive
territory" or any "exclusive," "protected" or "reserved" territorial or other
rights, no such rights are granted or will be inferred and there is, and will
be, no limitation of any type on the rights of the FRANCHISOR or any of the
Franchisor-Related Entities to locate and/or consent to the location of other
GJC STORES or other distribution facilities of any type at any location,
regardless of the distance from, impact on, or vicinity of, the FRANCHISEE'S GJC
STORE or the number of GJC STORES, other outlets or otherwise in any area or
market.
The FRANCHISOR (on behalf of itself and each and all of the
Franchisor-Related Entities) retains all rights with respect to GJC STORES, the
Names and Marks, the sale of PRODUCTS and any other products and services,
anywhere in the world, including, without limitation of any kind or nature: (a)
the right to operate or grant others the right to operate gourmet coffee stores
and/or other coffee beverage facilities at such locations as it deems
appropriate regardless of the proximity to, or impact on, the STORE and on such
terms and conditions as the FRANCHISOR, and/or any of the Franchisor-Related
Entities, in our and their sole and absolute discretion, wish; (b) the right to
roast, develop, wholesale, market, distribute, sell or otherwise PRODUCTS
through any channel of distribution (including, without limitation, mail order,
wholesale and/or retail), to such persons/entities, and under or in association
with the Names and Marks or any other trademark, regardless of the proximity to,
or impact on, the STORE, on such terms and conditions, as the FRANCHISOR and/or
any of the Franchisor-Related Entities, in our and their sole and absolute
discretion, wish; and (c) the right to roast, develop, wholesale, retail,
market, distribute, sell or otherwise any product or service, or own, operate,
franchise, license or otherwise any business, whether competitive or not and
under the Names and Marks or any other trademark, to or with such
persons/entities, and on such terms and conditions, regardless of
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the proximity to, or impact on, the STORE, as the FRANCHISOR and/or any of the
Franchisor-Related Entities, in our and their sole and absolute discretion,
wish.
Since the FRANCHISEE does not have any territorial or similar rights,
there is no restriction regarding the FRANCHISEE soliciting or servicing
customers located anywhere, although the FRANCHISEE may do so only from the
STORE, or a substitute premises approved by the FRANCHISOR.
The FRANCHISOR (on behalf of itself and each and all of the
Franchisor-Related Entities) can acquire, or engage in any other transaction
with, other businesses, with units located anywhere, including arrangements
where other units are converted to the Xxxxxx Xxxx'x(R) format (including using
the Names and Marks) and/or any other format and/or in which the FRANCHISOR or
any of the Franchisor-Related Entities are acquired and/or company-owned,
franchised or other businesses are converted to another format, maintained as a
new concept under the Names and Marks or maintained as a separate concept.
The FRANCHISOR (on behalf of itself and each and all of the
Franchisor-Related Entities) can develop or become associated with other
concepts (including dual branding and/or other franchise systems) for the same,
similar, related, competitive or different products and/or services, whether or
not using the Names and Marks, and may grant franchises or other rights with
respect to locations and/or businesses in connection therewith. Units offering
these concepts can be located anywhere, in the FRANCHISOR'S sole and absolute
discretion, including in proximity to FRANCHISEE'S GJC STORE.
C. RENEWAL OF FRANCHISE
If upon expiration of the initial term of the FRANCHISE: (1) the
FRANCHISEE has fully and continuously complied with this Agreement and all other
agreements with FRANCHISOR (and/or any affiliate of FRANCHISOR), in each case
without any defaults, cured or uncured, during the term; and (2) (a) the
FRANCHISEE maintains possession of the premises of the STORE and, prior to any
renewal term beginning, refurbishes, remodels, expands and otherwise brings the
STORE and its operation into full compliance with all then-applicable standards
(including then-applicable design standards, including equipment) applicable to
franchises awarded for new GJC STORES and in compliance with any lease or
sublease requirements applicable to the STORE premises; or (b) if the FRANCHISEE
is unable to maintain possession of such premises, or if in the judgment of the
FRANCHISOR the STORE should be relocated, the FRANCHISEE secures suitable
substitute premises approved by the FRANCHISOR, within a reasonable period of
time within the same shopping center or within the same Standard
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Metropolitan Statistical Area in which the prior premises was located and agrees
to lease or sublease and develop such substitute premises in compliance with
then-applicable standards utilized in the granting of franchises for a GJC
STORE, then the FRANCHISEE shall have the right to renew the FRANCHISE for an
single additional term equal to the term of the renewal or extension of the
lease or sublease for the premises of the STORE (or the initial term of the
lease or sublease for such the premises, if such initial term of the lease or
sublease has not expired as of the effective date of the renewal of the
franchise) on the terms, and under the conditions, set forth in this Agreement;
provided, however, that in no event shall the FRANCHISOR be obligated to
negotiate or obtain any renewal, extension or otherwise of any lease or
sublease, or solicit or accept any proposal from the landlord (or other
person/entity controlling the premises) for a renewal, extension or otherwise of
any lease or sublease, even if on the same terms and conditions as have
previously been applicable to the premises.
Such renewal shall be with payment of a non-refundable (unless renewal
is denied) renewal franchise fee equal to fifty percent (50%) of FRANCHISOR's
then-current initial franchise fee for a first franchise. FRANCHISEE (and each
owner and/or affiliate) must also execute a general release, in form prescribed
by FRANCHISOR, of any and all claims, liabilities and/or obligations, of any
nature whatsoever, however arising, known or unknown, against FRANCHISOR and/or
any or all of the Franchisor-Related Entities. If FRANCHISEE fails to execute
such a release, the granting of the renewal franchise will be the equivalent of
the granting of such release, since FRANCHISEE and FRANCHISOR agree that it
would be inappropriate and improper for FRANCHISEE to continue in a franchise
(or other) relationship, and for the FRANCHISEE to have the right to use the
Name and Marks, if FRANCHISEE had any claims, liabilities and/or obligations, of
any nature whatsoever, however arising, known or unknown, against FRANCHISOR (or
other persons/entities covered by such a release) or otherwise failed to execute
such a release, particularly in view of the fact that FRANCHISEE is not being
charged a full initial franchise fee in connection with the RENEWAL. The phrase
"term of the FRANCHISE" used herein shall mean the initial term and the renewal
term if the FRANCHISE is renewed.
D. MANNER OF RENEWAL
Renewal of the FRANCHISE shall be effected by the execution by the
FRANCHISOR and the FRANCHISEE of the FRANCHISOR's then-current form of franchise
agreement (which may provide for higher royalty and service fees and advertising
contributions and other significant provisions of which may vary, but without
any further term, successor franchise or right of renewal), general releases
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and all other agreements and legal instruments and documents then customarily
used by the FRANCHISOR in the grant of franchises for the ownership and
operation of a GJC STORE. The FRANCHISEE agrees to notify FRANCHISOR not more
than nine (9) months nor less that six (6) months prior to expiration of the
term in writing of FRANCHISEE's election to renew the FRANCHISE and pay the
renewal fee at the same time. Thereafter, FRANCHISOR shall state the reasons for
the FRANCHISOR's refusal to renew. Failure or refusal by the FRANCHISEE to
execute such agreements, instruments and documents necessary to renew the
FRANCHISE within sixty (60) days after delivery thereof to the FRANCHISEE shall
be deemed an election by the FRANCHISEE not to renew the FRANCHISE.
In connection with any renewal, FRANCHISEE must meet FRANCHISOR'S
then-current qualification and training requirements. FRANCHISOR may require
FRANCHISEE and/or any of its personnel to attend and successfully complete any
retraining program(s), and at such times and location(s), as FRANCHISOR then
specifies. There will be no charge for any retraining program(s), but FRANCHISEE
will be responsible for all travel, meals, lodging and other expenses of its
personnel.
E. RELEASES ON GRANTS OF ADDITIONAL, ETC. FRANCHISES
If, at any time, FRANCHISEE or any affiliate is to receive one or more
successor, additional, other and/or further franchise(s) from FRANCHISOR or any
of the Franchisor-Related Entities, whether or not a renewal franchise,
FRANCHISEE, each of its affiliates, each owner of the FRANCHISEE, the new
franchisee and each owner thereof will at each such time execute a general
release, in form prescribed by FRANCHISOR, of any and all claims, liabilities
and/or obligations, of any nature whatsoever, however arising, known or unknown,
against FRANCHISOR and/or any or all of the Franchisor-Related Entities, except
(where so required by applicable law) for any claims exclusively related to the
offer and sale of the additional, other and/or further franchise(s).
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3. LOCATION OF STORE
The FRANCHISEE may operate the STORE only at the location and premises
identified in Paragraph A of Section 2 or a substitute location and/or premises
hereafter approved by the FRANCHISOR. The premises may be used only for the
operation of a GJC STORE. If the FRANCHISEE's lease or sublease for the premises
of the STORE terminates prior to expiration without fault of the FRANCHISEE, or
if the premises is damaged, condemned or otherwise rendered unusable, the
FRANCHISOR will grant permission for relocation of the STORE to a location and
premises approved by the FRANCHISOR, within a reasonable period of time in the
same shopping center or within the same Standard Metropolitan Statistical Area
in which the prior premises were located. The FRANCHISEE must lease or sublease
and develop such premises in compliance with then-applicable standards utilized
in the granting of franchises for a GJC STORE and the term of the FRANCHISE will
be extended to coincide with the initial term of the lease or sublease for the
substitute premises. Any such relocation shall be at the FRANCHISEE's sole
expense.
4. DEVELOPMENT AND OPENING OF STORE
A. LEASE OR SUBLEASE OF PREMISES OF STORE
The FRANCHISEE will contemporaneously with the execution of this
Agreement or such later date specified by the FRANCHISOR, lease or sublease the
premises of the STORE identified in Paragraph A of Section 2 in the form and
manner prescribed by the FRANCHISOR and deliver a copy of such executed lease or
sublease to the FRANCHISOR immediately after execution thereof. The FRANCHISOR
has the right to review and approve any lease or sublease for the premises of
the STORE. The FRANCHISEE agrees not to execute any lease or sublease which has
not been approved in writing by the FRANCHISOR. The FRANCHISOR may require that
the premises of the STORE be subleased directly from the FRANCHISOR or its
affiliate according to the terms of the FRANCHISOR or its affiliate's standard
form of sublease or, at the FRANCHISOR's option, that the lease obtained by the
FRANCHISEE be collaterally assigned to the FRANCHISOR pursuant to the terms of
its standard collateral assignment of lease form, to secure the performance by
the FRANCHISEE of his obligations hereunder. If the FRANCHISEE leases the
premises directly, the lease for the premises of the STORE shall 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
XXXXXX XXXX'X GOURMET COFFEES CORP., an Illinois corporation, or its
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designee; provided that said corporation shall execute such documents
evidencing its agreement to thereafter keep and perform, or cause to be
kept and performed, all of the obligations of the Lessee arising under
this lease from and after the time of such assignment."
2. "Lessee hereby agrees that Lessor may, upon the written request of
XXXXXX XXXX'X GOURMET COFFEES CORP., disclose to said corporation all
reports, information or data in Lessor's possession with respect to
sales made in, upon or from the leased premises."
3. "Lessor shall give written notice to XXXXXX XXXX'X GOURMET COFFEES
CORP. concurrently with the giving of such notice to Lessee of any
default by Lessee under the lease and the said corporation shall have,
after the expiration of the period during which the Lessee may care
such default, an additional fifteen (15) days to cure, at its sole
option, any such default."
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B. DEVELOPMENT OF STORE
The FRANCHISOR or its affiliates, as agents for and at the expense and
on behalf of the FRANCHISEE, will develop and build-out the premises of the
STORE. The FRANCHISEE shall be required to enter into the FRANCHISOR's or its
affiliates' standard store development agreement. The store development
agreement shall set forth the fee paid to the FRANCHISOR or its affiliates for
its services (the "DEVELOPMENT FEE") and the parties other responsibilities.
While FRANCHISOR may act as FRANCHISEE'S agent in connection with the
development and build-out of the STORE, and may approve a location, and although
this franchise may be granted for a specific existing location, the selection of
the premises for the STORE is exclusively and entirely FRANCHISEE'S sole and
ultimate responsibility and that neither FRANCHISOR, any of Franchisor-Related
Entities nor any other person or company affiliated or associated with
FRANCHISOR in any way will have any liability or responsibility with respect to
any matters related in any way to the site location, identification, evaluation,
selection, suitability or otherwise, all such responsibilities being solely
FRANCHISEE'S.
Site selection, development, approval or otherwise by FRANCHISOR of any
STORE is in no way a recommendation, approval or endorsement of such location
nor a representation or warranty as to its legal or business availability,
suitability, appropriateness, success potential or otherwise and FRANCHISOR
cannot guarantee success for any location. The FRANCHISEE is the only person
and/or company with any liability or responsibility for those decisions and
matters.
FRANCHISEE agrees that without FRANCHISOR'S ability to limit its (and
others') liability as set forth in this Agreement (and, in particular, this
Section), FRANCHISOR would not be willing to award this Franchise to FRANCHISEE
(and would consider developing the location as a company-owned unit only) or to
be involved in any way in assisting FRANCHISEE in development of the Store.
C. FIXTURES, EQUIPMENT, STOREFRONT, SUPPLIES AND SIGNS
The STORE's initial fixtures, equipment and storefront shall be part of
the FRANCHISOR'S development of the STORE. Thereafter, the FRANCHISEE agrees to
use in the operation of the STORE those fixtures, items of equipment, supplies
and signs that the FRANCHISOR has approved for a GJC STORE as meeting its
specifications and standards for appearance, function, design, quality and
performance. The FRANCHISEE further agrees to place or display at the premises
of the STORE (interior and exterior) only such signs, emblems, lettering, logos
and display materials
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that are from time to time approved in writing by the FRANCHISOR. If the
FRANCHISEE proposes to purchase, lease or otherwise use any fixture, equipment,
supply or sign which is not then approved by the FRANCHISOR, the FRANCHISEE
shall first notify the FRANCHISOR in writing and shall submit to the FRANCHISOR
sufficient specifications, photographs, drawings and/or other information or
samples for a determination by the FRANCHISOR of whether such fixture,
equipment, supply or sign complies with its specifications and standards, which
determination shall be made and communicated in writing to the FRANCHISEE within
a reasonable time.
D. STORE OPENING
Once FRANCHISOR has developed and built-out the STORE and turned over
possession to the FRANCHISEE, FRANCHISEE agrees to use his best efforts to
merchandise the STORE as soon as possible after obtaining possession of the
STORE premises and to open the STORE for business and commence the conduct of
its business by the period required by the FRANCHISEE's lease or sublease or, if
sooner, within five (5) days after notice from the FRANCHISOR that it is in
suitable condition therefor. The FRANCHISOR will supply its employee who will
for a period of seven (7) days assist FRANCHISEE in the opening of FRANCHISEE'S
STORE. In addition, FRANCHISOR may provide the employee for such additional
days(s) as FRANCHISOR may so deem appropriate in assisting FRANCHISEE with the
opening of the STORE. If the FRANCHISEE already owns a GJC STORE, all such
assistance will be provided at the FRANCHISOR's sole discretion.
E. TERMINATION UPON FAILURE OF THE FRANCHISEE TO OPEN STORE
If the FRANCHISEE fails to lease or sublease the STORE premises as
required by Paragraph A of Section 4, or fails to proceed with the merchandising
of the STORE as required by or fails to open the STORE by the date required in
Paragraph D of this Section 4, the FRANCHISOR, at its sole option, shall have
the right to terminate this Agreement effective upon giving written notice to
the FRANCHISEE. In connection with such termination, the FRANCHISEE will execute
documents acceptable to FRANCHISOR, providing for (1) continuation of
FRANCHISEE'S indemnification, confidentiality and non-competition obligations
and the dispute avoidance and resolution provisions of this Agreement, including
those of Article 18, together with the provisions of Article 22, and (2) a
general release, in form prescribed by FRANCHISOR, of any and all claims,
liabilities and/or obligations, of any nature whatsoever, however arising, known
or unknown, against FRANCHISOR and/or any or all of the Franchisor-Related
Entities.
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F. GRAND OPENING PROGRAM
The FRANCHISEE agrees to spend between One Thousand Dollars ($1,000.00)
and Four Thousand Dollars ($4,000.00) to conduct grand opening advertising and
promotions, such advertising and promotions (which must be approved in advance
in writing by the FRANCHISOR) to occur within the four (4) month period
following the opening of the STORE for business.
5. TRAINING AND OPERATING ASSISTANCE
A. TRAINING
Prior to the opening of the STORE, the FRANCHISOR shall furnish and the
FRANCHISEE (or its controlling shareholder, general partner, managing member or
similar person if the FRANCHISEE is a business entity), and the manager of the
STORE, if any, (approved by the FRANCHISOR) shall attend and complete to the
FRANCHISOR's satisfaction a training program on the operation of a GJC STORE,
furnished at such time and place as the FRANCHISOR may designate. Such training
will be given by the FRANCHISOR without charge; provided that the FRANCHISEE
shall be solely responsible for the compensation of the trainee as well as such
trainee's travel, lodging and personal expenses. Such training will consist of
eighteen (18) days or such additional days as FRANCHISOR may elect of training.
If the FRANCHISEE or the approved manager fails to complete training to the
FRANCHISOR's satisfaction, the FRANCHISOR shall have the option for a period of
thirty (30) days of terminating this Agreement effective upon written notice to
the FRANCHISEE. In such event, FRANCHISOR has the option to refund the entire
initial franchise fee to the FRANCHISEE; provided the FRANCHISEE and its owners
have executed general releases in a form approved by the FRANCHISOR of any and
all claims against the FRANCHISOR and its affiliates, officers, directors,
employees, agents, successors and assigns, excepting only claims relating to the
FRANCHISOR's obligations under this Paragraph, and at the FRANCHISOR's option,
if the premises was not leased from the FRANCHISOR or its affiliates, the
FRANCHISEE assigns the lease or sublets the premises to the FRANCHISOR or its
affiliates. The FRANCHISOR, subsequent to the opening of the STORE, shall
require of and shall provide to any new manager reasonable training and may
require the FRANCHISEE and/or experienced managers to attend a refresher
program; provided that the FRANCHISOR may elect to make a reasonable charge for
any training provided after the opening of the STORE. If the FRANCHISEE already
owns a GJC STORE, FRANCHISEE will be required to attend refresher or additional
training as FRANCHISOR shall in its sole discretion determine, as a condition of
FRANCHISEE obtaining the right to open any additional GJC STORE. Upon
FRANCHISEE's successful completion of the training program, FRANCHISEE will be
permitted to train its
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store managers.
B. HIRING AND TRAINING OF EMPLOYEES BY THE FRANCHISEE
The FRANCHISEE shall hire all employees of the STORE, be exclusively
responsible for the terms of their employment and compensation and implement a
training program for employees of the STORE in compliance with the FRANCHISOR's
standards. The FRANCHISEE agrees to maintain at all times a staff of trained
employees sufficient to operate the STORE in compliance with the FRANCHISOR's
standards. The FRANCHISEE agrees that all management personnel hired by
FRANCHISEE may be required to sign an Employment Agreement containing
non-competition and confidential information covenants substantially similar to
those contained in Paragraph F of Section 16 and in Section 8 herein.
C. OPERATING ASSISTANCE
The FRANCHISOR will advise the FRANCHISEE from time to time of
operating problems of the STORE disclosed by reports submitted to or inspections
made by the FRANCHISOR. Further, the FRANCHISOR will furnish to the FRANCHISEE
such assistance in connection with the operation of the STORE as is from time to
time deemed appropriate by the FRANCHISOR. Operating assistance may consist of
advice and guidance with respect to:
1. methods and operating procedures utilized by a GJC STORE or
the STORE;
2. additional products and services authorized for a GJC STORE;
3. purchasing of PRODUCTS and supplies;
4. formulating and implementing advertising, merchandising and
promotional programs; and
5. the establishment of administrative, bookkeeping, accounting,
inventory control, sales training and general operating
procedures for the proper operation of a GJC STORE
The FRANCHISEE understands and agrees that all advice and guidance
provided by the FRANCHISOR is only supportive of the operation of the STORE and
that the overall success of the STORE is primarily dependent upon the
FRANCHISEE's business abilities and efforts. The FRANCHISOR will not charge the
FRANCHISEE for such operating assistance unless such operating assistance is
made necessary by the FRANCHISEE's failure to comply with this Agreement or if
the FRANCHISEE requests operating assistance in excess of what is normally
provided by the FRANCHISOR. Any such
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charges will be reasonable and payable upon the FRANCHISEE's receipt of an
invoice for the same. In addition, the FRANCHISOR reserves the right to impose
reasonable fines and penalties if the FRANCHISEE repeatedly refuses or fails to
comply with this Agreement and the FRANCHISOR's standards and specifications.
6. OPERATING MANUAL
The FRANCHISOR will loan to the FRANCHISEE during the term of the
FRANCHISE one copy of an operating manual, which consists of one or more manuals
(hereinafter referred to as the "OPERATING MANUAL"), for a GJC STORE containing
mandatory and suggested specifications, standards and operating procedures
prescribed from time to time by the FRANCHISOR for a GJC STORE and information
relative to other obligations of the FRANCHISEE hereunder. The FRANCHISOR shall
have the right to add to and otherwise modify the OPERATING MANUAL from time to
time to reflect changes in the type or quantity of authorized PRODUCTS,
standards of service or product quality, the operation of a GJC STORE or to meet
competition. Any such addition or modification takes precedence over all prior
communications and in the event of a dispute, the master OPERATING MANUAL
maintained at the FRANCHISOR's office shall control. The provisions of the
OPERATING MANUAL as modified from time to time by the FRANCHISOR and
communicated to the FRANCHISEE constitute provisions of this Agreement and as
such are binding upon the FRANCHISEE. The OPERATING MANUAL contains proprietary
information of the FRANCHISOR and the FRANCHISEE agrees to keep the OPERATING
MANUAL and information contained therein confidential at all times during and
after the term of the FRANCHISE.
7. STORE IMAGE AND OPERATING STANDARD
A. CONDITION AND APPEARANCE OF STORE
The FRANCHISEE agrees to maintain the condition and appearance of the
STORE consistent with the image of a GJC STORE as an attractive, clean,
convenient and efficiently operated specialty shop offering high quality
PRODUCTS and efficient and courteous service. The FRANCHISEE agrees to effect
such maintenance of the STORE as is reasonably required from time to time to
maintain such condition, appearance and efficient operation, including, without
limitation, replacement of worn out or obsolete fixtures,
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equipment and signs, repair of the interior and exterior of the STORE and
periodic cleaning and decorating or as is required by the FRANCHISEE's lease or
sublease. FRANCHISEE shall also replace and/or add additional fixtures and
equipment which FRANCHISOR at a later day may require to be installed in all the
GJC STORES. If at any time in the FRANCHISOR's reasonable judgment the general
state of repair, appearance or cleanliness of the premises of the STORE or its
fixtures, equipment or signs does not meet the FRANCHISOR's standards therefor,
the FRANCHISOR shall so notify the FRANCHISEE, specifying the action to be taken
by the FRANCHISEE to correct such deficiency. If the FRANCHISEE fails or refuses
to initiate within fifteen (15) days after receipt of such notice or such lesser
period required by the lease or sublease, and thereafter continue a bona fide
program to undertake and complete any such required maintenance, the FRANCHISOR
shall have the right (in addition to its rights under Section 15), but shall not
be obligated, to enter upon the premises of the STORE and effect such repairs,
painting and replacement of fixtures, equipment or signs on behalf of the
FRANCHISEE and the FRANCHISEE shall pay the entire costs therefor to the
FRANCHISOR on demand.
B. ALTERATIONS TO THE STORE
The FRANCHISEE shall make no material alterations to the leasehold
improvements or appearance of the STORE nor shall the FRANCHISEE make any
material replacements of or alterations to the fixtures, equipment or signs of
the STORE without prior written approval by the FRANCHISOR and any approval that
may be necessary under the lease or sublease for the premises.
C. AUTHORIZED PRODUCTS
The presentation of a uniform image to the public and the offering of
uniform product lines is an essential element of a successful franchise system.
The FRANCHISEE therefore agrees that the STORE will offer brands and types of
PRODUCTS and services from time to time specified by the FRANCHISOR. The
FRANCHISEE further agrees that the STORE will not, without prior written
approval by the FRANCHISOR, offer any other products or services nor shall the
STORE or the premises which it occupies be used for any purpose other than the
operation of a GJC STORE in compliance with this Agreement and the FRANCHISEE's
lease or sublease for the premises.
FRANCHISEE is prohibited from developing, creating, generating, owning,
licensing, leasing or otherwise utilizing any computer media and/or electronic
media (including but not limited to the Internet, world wide web, bulletin
boards, news group and Telnet) which may be used, or in any manner uses,
displays or utilizes the Xxxxxx Xxxx'x trademarks, tradenames, or other
commercial symbols or offers to sell or sells any of the products and/or
services which are or may at a later date be offered for sale in GJC STORES
and/or Espresso Bar/Kiosks. If the FRANCHISEE desires to utilize any
computerized or electronic media in conjunction with the operation of the STORE
and/or BAR/KIOSK, FRANCHISEE must obtain FRANCHISOR's prior written approval of
such usage, and FRANCHISOR my in its sole discretion approve or not approve such
usage. If FRANCHISOR grants its approval,
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FRANCHISOR or its affiliates will be the owners of and/or control the approved
computerized or electronic media.
D. APPROVED BRANDS AND/OR SUPPLIES
The reputation and goodwill of GJC STORES is based upon, and can be
maintained only by, the sale of high-quality products. The FRANCHISEE therefore
agrees that the STORE will only offer for sale authorized PRODUCTS as specified
by the FRANCHISOR and other products approved for the STORE from time to time as
being acceptable and from approved suppliers. The term PRODUCTS as used in this
Agreement, include all products hereafter approved and/or developed by the
FRANCHISOR. The FRANCHISOR may from time to time modify the list of approved
brands and/or suppliers and the FRANCHISEE shall not, after receipt in writing
of such modification, reorder any brand or from any supplier which has been
determined to be no longer of acceptable quality. Subject to Section 7.E. below,
if the FRANCHISEE proposes to sell any product of a brand which has not been
approved as being acceptable or from a supplier which has not been approved, he
shall first notify the FRANCHISOR in writing and submit sufficient photographs,
drawings, specifications, samples and/or other information concerning the
product and/or the supplier and the FRANCHISOR shall, within a reasonable time,
notify the FRANCHISEE in writing whether or not such proposed brand and/or such
proposed supplier is acceptable. The FRANCHISOR may approve a supplier for any
PRODUCTS and may approve a supplier only as to certain PRODUCTS. The FRANCHISOR
may concentrate purchases with one or more suppliers to obtain lower prices
and/or the best advertising support and/or services for a group of GJC STORES
owned or franchised by the FRANCHISOR or its affiliates. Approval of a supplier
may be conditioned on requirements related to the frequency of delivery,
standards of service, including prompt attention to customer complaints,
consistency and reliability and may be temporary pending a further evaluation of
such supplier by the FRANCHISOR. The FRANCHISOR will require any supplier
applying for approval to allow the FRANCHISOR or its affiliates to inspect the
proposed supplier's facilities to assist the FRANCHISOR in determining if the
proposed supplier meets the FRANCHISOR's criteria. The FRANCHISEE shall at all
times maintain an adequate and representative inventory of PRODUCTS, sufficient
in quality, quantity and variety, to satisfy customer demand and realize the
full potential of the STORE, as prescribed from time to time by the FRANCHISOR.
The inventory of the STORE shall contain a representative number of each GJC
STORE brand or other private brands of the FRANCHISOR which shall be given
representative display area. The FRANCHISOR shall not have any liability to the
FRANCHISEE if the FRANCHISOR is at any time unable for any reason to offer any
GJC STORE brand or other brand of PRODUCTS for purchase by the FRANCHISEE or at
competitive prices. Such PRODUCTS may be offered by an affiliate of the
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FRANCHISOR.
E. SUPPLIERS OF GOURMET COFFEE
In recognition that the quality and uniformity of the gourmet coffee
and tea carried by GJC STORES is of paramount importance to the reputation and
goodwill of GJC STORES, the FRANCHISEE must purchase all gourmet coffee offered
at the STORE from GJGC Corp. In the event GJGC Corp. ceases supplying the
FRANCHISEE with gourmet coffee, the FRANCHISOR will designate a supplier or
suppliers of gourmet coffee. In such event, the FRANCHISEE may propose a
supplier to the FRANCHISOR in accordance with the procedure for obtaining
approval of suppliers with respect to other PRODUCTS offered by the FRANCHISEE,
set forth in Section 7.D. above. In addition to the criteria listed in Section
7.D. a proposed supplier must also meet the FRANCHISOR'S criteria as to the size
of the coffee bean, the method of preparation of the bean, the region of origin
of the bean, the quality of flavoring used in bean preparation the consistency
of bean color and moisture content after roasting, the type of packaging and the
type of roaster used. The FRANCHISOR will require any supplier applying for
approval to allow the FRANCHISOR or its affiliates to inspect the proposed
supplier's roasting facilities and green bean purchase contracts to assist the
FRANCHISOR in determining if the proposed supplier meets the FRANCHISOR's
criteria.
F. USE OF SUPPLIES IMPRINTED WITH NAMES AND MARKS
The FRANCHISEE shall in the operation of the STORE use displays, boxes,
bags, paper, forms, packaging materials, labels and other paper and plastic
products and supplies imprinted with the Names and Marks as prescribed from time
to time by the FRANCHISOR.
G. STANDARDS OF SERVICE
The STORE shall at all times give prompt, courteous and efficient
service to its customers. The FRANCHISEE and the STORE shall in all dealings
with customers, suppliers and the public adhere to the highest standards of
honesty, integrity, fair dealing and ethical conduct.
H. DETERIORATED PRODUCTS AND COMPLAINTS
The FRANCHISEE shall not advertise, offer for sale or sell any damaged,
molded or deteriorated PRODUCTS or PRODUCTS which are "out of date" as provided
in the OPERATING MANUAL or as specified on the PRODUCT itself. All damaged,
molded, deteriorated or "out of date" PRODUCTS shall be withdrawn from sale and
removed from the STORE. All reasonable complaints by
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customers shall be honored pursuant to the policy set- forth in the OPERATING
MANUAL.
I. SPECIFICATIONS, STANDARDS AND PROCEDURES
The FRANCHISEE agrees to comply with all mandatory specifications,
standards and operating procedures (whether contained in the OPERATING MANUAL or
any other document or notice) relating to the operation of a GJC STORE and the
STORE, including, without limitation, those relating to:
1) type, quality and shelf life of PRODUCTS offered;
2) PRODUCT dating programs, including removal of "out of date"
PRODUCT;
3) merchandising techniques;
4) the safety, maintenance, cleanliness, function and appearance
of the STORE premises and its fixtures, equipment and signs;
5) uniforms and aprons to be worn by and general appearance of
STORE employees;
6) use of Names and Marks;
7) hours during which the STORE will be open for business;
8) use and retention of standard forms;
9) use and illumination of signs, posters, displays, standard
formats and similar items; and
10) identification of the FRANCHISEE as the owner of the STORE.
All such specifications, standards and operating procedures will be
reasonable and consistent with the obligations of the FRANCHISEE under the lease
or sublease for the premises of the STORE and applicable laws and ordinances.
Mandatory specifications, standards and operating procedures prescribed from
time to time by the FRANCHISOR in the OPERATING MANUAL or otherwise communicated
to the 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 mandatory specifications, standards and operating procedures.
FRANCHISEE is required to participate in any and all programs which
FRANCHISOR elects to utilize as operational tools
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in the operation of FRANCHISEE'S STORE and/or Espresso Bar/Kiosk. These
operational tools may include but are not limited to programs involving customer
satisfaction, quality control, operational standards, product standards and the
like (the "Programs"). The Programs may be created or developed by FRANCHISOR,
its affiliates or by third parties and the duration and frequency of the
Programs will vary and will be determined solely by FRANCHISOR. The FRANCHISEE
will be required to pay for the Programs and the costs will vary according to
the program and frequency of the program.
J. COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES
The FRANCHISEE shall secure and maintain in force all required
licenses, permits and certificates relating to the operation of the STORE and
shall operate the STORE in full compliance with all applicable laws, ordinances
and regulations, including, without limitation, all government regulations
relating to handling of food products, occupational hazards and health, worker's
compensation insurance, unemployment insurance and withholding and payment of
federal, state and local income taxes, social security taxes and sales taxes.
All advertising and promotion by the FRANCHISEE shall be completely factual and
shall conform to the highest standards of ethical advertising. The FRANCHISEE
agrees to refrain from any business or advertising practice which may be
injurious to the business of the FRANCHISOR and the goodwill associated with the
Names and Marks and other GJC STORES.
K. MANAGEMENT OF THE STORE
The STORE shall be managed by the FRANCHISEE or if approved by
FRANCHISOR by a full-time manager who has completed, to the satisfaction of the
FRANCHISOR, the training program. The employment of any full-time manager is
subject to FRANCHISOR's prior approval. Notwithstanding the employment of a
full-time manager the FRANCHISEE (or its controlling shareholder if the
FRANCHISEE is a corporation) must attend and complete training to the
FRANCHISOR's satisfaction, unless waived by the FRANCHISOR, in its sole
discretion, at the FRANCHISEE's request. If FRANCHISEE has completed the
Franchise Training FRANCHISEE shall be qualified to train its managers. If and
in the event the FRANCHISOR, in its sole discretion, determines that said
full-time manager is not properly performing his duties, the FRANCHISOR shall
advise the FRANCHISEE and the FRANCHISEE shall take such corrective measures as
are necessary to immediately rectify the situation. The FRANCHISEE shall keep
the FRANCHISOR informed at all times of the identity of any employee(s) acting
as manager(s) of the STORE.
In the event the FRANCHISEE acquires additional GJC STORES,
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the FRANCHISEE shall be permitted to act as the manager of all such GJC STORES
and shall be further permitted to hire and train assistant managers who shall
work for and under the direction of the FRANCHISEE. In such event, FRANCHISEE
shall attend additional or refresher training as FRANCHISOR in its sole
discretion shall determine as provided in Paragraph A of Section 5 of this
Agreement, and thereafter FRANCHISEE shall be permitted to train its managers.
L. CONFLICTING AND COMPETING INTERESTS
The FRANCHISEE agrees that the FRANCHISEE will at all times faithfully,
honestly and diligently perform his obligations hereunder, that he will
continuously exert his best efforts to promote and enhance the business of the
STORE and that he will not engage in any business or other activity that will
conflict with his obligations hereunder. The FRANCHISEE shall not divert
elsewhere any trade, commerce or business which ordinarily would be transacted
by the FRANCHISEE in or from the STORE and to this end, the FRANCHISEE shall not
at any time sell or rent to anyone any list of customers or permit the use of
such list by anyone for any purpose other than the mailing of advertising
material for the STORE. The FRANCHISEE further agrees that neither the
FRANCHISEE nor any of its owners (through a member of the immediate family of
the FRANCHISEE or an owner of the FRANCHISEE or otherwise) will, during the term
of the FRANCHISE, have any interest as an owner (except of publicly-traded
securities or interests in other GJC STORES pursuant to other franchise
agreements heretofore or hereafter entered into), partner, director, officer,
employee, consultant, representative, agent, or in any other capacity, in any
other retail store principally offering products substantially similar to the
PRODUCTS then being offered by the majority of the GJC STORES, nor will they
have any interest, as aforesaid, in any entity which franchises or otherwise
grants to others the right to sell products similar to the PRODUCTS then being
offered by the majority of the GJC STORES.
M. INSURANCE
The FRANCHISEE shall at all times during the term of the FRANCHISE
maintain in force at the FRANCHISEE's sole expense comprehensive public and
product liability insurance (and motor vehicle liability insurance, if a motor
vehicle is employed in the operation of the STORE), against claims for bodily
and personal injury, death and property damage caused by or occurring in
conjunction with the operation of the STORE or otherwise in conjunction with the
conduct of business by the FRANCHISEE pursuant to the FRANCHISE. Such insurance
coverage shall be maintained under one or more policies of insurance containing
minimum liability protection of Two Million Dollars
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($2,000,000.00) for bodily and personal injury and death and One Hundred
Thousand Dollars ($100,000.00) for property damage, or such greater amounts and
such additional coverages and insureds as may be required by the lease or
sublease for the premises of the STORE, and issued by an insurance carrier rated
A or better by Xxxxxx X. Best & Company, Inc. All such liability insurance
policies shall name the FRANCHISOR and GJGC Corp. as additional insureds and
shall provide that the FRANCHISOR will receive thirty (30) days' prior written
notice of termination, expiration or cancellation of any such policy. The
FRANCHISOR may reasonably increase the minimum liability protection requirement
annually and require different or additional kinds of insurance to reflect
inflation, changes in standards of liability, higher damage awards in public,
product or motor vehicle liability litigation or other relevant changes in
circumstances. The FRANCHISEE shall submit to the FRANCHISOR a copy of the
certificate or other evidence of the issuance, renewal or extension of each such
insurance policy prior to obtaining possession of the STORE and annually
thereafter. If the FRANCHISEE at any time fails or refuses to maintain in effect
any insurance coverage required by the FRANCHISOR, or to furnish satisfactory
evidence thereof, the FRANCHISOR, at its option and in addition to its other
rights and remedies hereunder, may, but need not, obtain such insurance
coverage, on behalf of the FRANCHISEE, and the FRANCHISEE shall promptly execute
any applications or other forms or instruments required to obtain any such
insurance and pay to the FRANCHISOR, on demand, any costs and premiums incurred
by the FRANCHISOR.
8. PROPRIETARY AND CONFIDENTIAL INFORMATION OF THE FRANCHISOR
The FRANCHISEE acknowledges that his knowledge of the operation of a
GJC STORE will be derived from information disclosed to the FRANCHISEE by the
FRANCHISOR pursuant to the FRANCHISE and that such information, including,
without limitation, the contents of the OPERATING MANUAL, is proprietary and
confidential. The FRANCHISEE agrees that he will maintain the absolute
confidentiality of all such information during and after the term of the
FRANCHISE and that he will not use any such information in any other business or
in any manner not specifically authorized or approved in writing by the
FRANCHISOR.
9. ADVERTISING AND PROMOTION
A. BY THE FRANCHISOR
The FRANCHISOR will develop, prepare and offer to the FRANCHISEE (with
or without charge) such posters, ad formats, direct mail, point of sale and
other advertising materials for the STORE as the FRANCHISOR deems appropriate in
its sole and absolute discretion, and will implement a marketing program as
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described below. FRANCHISEE shall be required to participate in all advertising
and/or promotional campaigns which FRANCHISOR may establish.
B. MARKETING FUND
The FRANCHISOR'S experience and business judgment is that a unified
marketing program, on both a local and broader level, is an essential factor in
the potential success of all GJC STORES, to achieve top-of-mind awareness in
potential customers, to build and retain goodwill associated with the Name and
Marks thereby hopefully benefiting all XXXXXX XXXX'X operators, to create
improved brand loyalty among new and future customers and to achieve a favorable
retail position for all GJC STORES. To maximize the possibility of obtaining
these goals, FRANCHISOR and FRANCHISEE have agreed to a marketing program as
follows:
The FRANCHISOR has instituted an advertising, publicity and marketing
fund (the "Marketing Fund") for such advertising, advertising-related, marketing
and/or public relations programs, services and/or materials as FRANCHISOR, in
its sole and absolute discretion, may deem necessary or appropriate to promote
GJC STORES. The Marketing Fund may be combined with any marketing fund otherwise
established for GJC STORES and the funds merged for use in accordance with this
Agreement. FRANCHISEE will contribute to the Marketing Fund two percent (2%) of
the gross sales of the STORE (as defined in Paragraph B of Section 13), payable
as provided in Paragraph C of Section 13. The FRANCHISOR reserves the right to
increase the amount the FRANCHISEE is required to contribute to an amount not to
exceed three percent (3%) of the gross sales of the STORE. The Franchisor will
cause all GJC STORES owned by it to make contributions to the Marketing Fund
based on the contribution rate generally in effect at the time such GJC STORES
most recently came under the FRANCHISOR'S ownership. FRANCHISEE understands
that, due to differing forms of Franchise Agreements or otherwise, some XXXXXX
XXXX'X Franchisees may have different Marketing Fund and/or other obligations
than in this Agreement.
The FRANCHISOR will have sole and absolute discretion over all matters
relating to the Marketing Fund in any way, including (but not limited to) its
management, all financial matters, expenditures, receipts and/or investments by
the Marketing Fund, timing of expenditures, creative concepts, content,
materials and endorsements for any marketing programs, together with the
geographic, market, and media placement and allocation thereof. The Marketing
Fund may be used, in FRANCHISOR'S sole and absolute discretion, to (among other
things) pay costs of preparing, producing, distributing and using marketing,
advertising and other materials and programs; administering national, regional
and other marketing programs, purchasing media, employing
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advertising, public relations and other agencies and firms; and supporting
public relations, market research and other advertising and marketing
activities, as well as any expenses associated with any Franchisee Advisory
Council(s), if those Councils, and such expenses, are approved by FRANCHISOR in
its sole and absolute discretion. A brief statement regarding the availability
of information regarding the purchase of XXXXXX XXXX'X franchises may be
included in advertising and other items produced and/or distributed using the
Marketing Fund.
FRANCHISOR can, in its sole and absolute discretion, arrange for
services, goods and otherwise, including (but not limited to) creative concepts,
production, placement, purchase of media, legal, accounting and other services,
to be provided to the Marketing Fund by itself, any of the Franchisor-Related
Entities and FRANCHISOR'S and/or their employees or agents, including
persons/entities who may be owned, operated, controlled by, and/or affiliated
with, FRANCHISOR (such as an "in-house advertising agency") or who may be
independent. FRANCHISOR may use the Marketing Fund to compensate and reimburse
any of such persons/entities (including itself) as FRANCHISOR deems appropriate
in its sole and absolute discretion (including payment of commissions) and to
compensate itself and/or others for administrative and other services,
materials, etc. rendered to the Marketing Fund, provided that any compensation
to FRANCHISOR or any affiliate will not be unreasonable in amount. While
FRANCHISOR is not required to submit any proposed or other expenditures by (or
any other matters relating to) the Marketing Fund for approval by any Franchisee
Advisory Council, if FRANCHISOR does submit any matters for approval and
approval is granted by a majority of such Franchisee Advisory Council, such
approval will be final and binding on FRANCHISEE.
FRANCHISEE will participate in all advertising and public relations
programs instituted by the Marketing Fund but will retain full freedom to set
FRANCHISEE'S own prices, except that FRANCHISOR may, to the greatest degree
permitted by applicable law, specify maximum prices above which FRANCHISEE will
not sell or otherwise provide any goods or services and FRANCHISEE will comply
with all such maximum prices. The Marketing Fund will, as available, furnish
FRANCHISEE with marketing, advertising and promotional formats and sample
materials and may charge the direct cost of producing them plus shipping and
handling. FRANCHISOR may, in its sole and absolute discretion, use the Marketing
Fund to pay the costs of advertising, advertising-related, marketing and/or
public relations programs, services and/or materials with respect to locations,
programs or concepts where products and/or services offered under the Name
and/or Marks are to be offered in conjunction with products and/or services
offered under other marks, including (but not limited to) any co-branding, dual
franchising or other programs, and any
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other franchised or non-franchised alternative channel of distribution, whether
controlled by FRANCHISOR or not.
The Marketing Fund will be accounted for separately from FRANCHISOR'S
other funds (but may be commingled with FRANCHISOR'S other funds) and will not
be used to defray any of FRANCHISOR'S general operating expenses, except for
such salaries, administrative costs, overhead and other expenses as FRANCHISOR
may reasonably incur in activities related to the Marketing Fund and its
programs (including, without limitation, conducting market research, preparing
advertising and marketing materials, insurance, legal costs and collecting and
accounting for the Marketing Fund.) In any event, FRANCHISOR may charge the
Marketing Fund for attorney's fees and other costs related in any way to
FRANCHISOR'S defense of any claims against FRANCHISOR and/or the
Franchisor-Related Entities regarding FRANCHISOR'S management of the Marketing
Fund or otherwise or with respect to collecting amounts due and/or expenditures
by or from the Marketing Fund. FRANCHISOR may, in FRANCHISOR'S sole and absolute
discretion, spend in any fiscal year an amount greater or less than the
aggregate contributions to the Marketing Fund in that year and the Marketing
Fund may borrow from FRANCHISOR or other lenders to cover deficits of the
Marketing Fund or cause the Marketing Fund to invest any surplus for future use
by the Marketing Fund. FRANCHISEE authorizes FRANCHISOR to collect for remission
to the Marketing Fund any advertising or promotional monies or credits offered
by any supplier based upon purchases by FRANCHISEE or otherwise. In any event,
and notwithstanding any designation by FRANCHISEE, any provisions of this
Agreement to the contrary or otherwise, FRANCHISEE'S Marketing Fund
contributions may be applied, in FRANCHISOR'S sole and absolute discretion, to
any obligations of FRANCHISEE to FRANCHISOR or any affiliate, including (but not
limited to) royalties, marketing contributions, purchases, interest or
otherwise. All interest earned on monies contributed to the Marketing Fund will
be contributed to the Marketing Fund. A statement of monies collected and costs
incurred by the Marketing Fund will be prepared annually by FRANCHISOR and be
furnished to FRANCHISEE upon written request. FRANCHISOR may (but is not
required to) have financial statements of the Marketing Fund audited and any
costs in connection therewith will be paid by the Marketing Fund. FRANCHISOR
will have the right to cause the Marketing Fund to be incorporated or operated
through an entity separate from FRANCHISOR as FRANCHISOR deems appropriate in
its sole and absolute discretion, and such successor entity will have all rights
and duties of FRANCHISOR relating to the Marketing Fund.
FRANCHISOR may (but is not required to) remit a portion of Marketing
Fund contributions back to a franchisee on such terms and conditions as
FRANCHISOR determines in FRANCHISOR'S sole and absolute discretion, including
(but not limited to) reimbursement
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of local advertising expenditures made by a Franchisee and FRANCHISOR may waive
and/or compromise claims for contributions to, and/or claims against or with
respect to, the Marketing Fund in FRANCHISOR'S sole and absolute discretion,
using the Marketing Fund to pay any such claims. The FRANCHISOR will have sole
and absolute discretion as to whether or not FRANCHISOR takes legal or other
action against any franchisee who is in default of his or her obligations with
respect to the Marketing Fund (including obligations to make contributions) or
otherwise and whether a franchisee may be allowed to make direct advertising
expenditures in place of contributions to the Marketing Fund.
FRANCHISEE acknowledges and agrees that the Marketing Fund is generally
intended to maximize general recognition of the Name and/or Marks and patronage
of GJC STORES. Although FRANCHISOR will generally endeavor to utilize the
Marketing Fund to develop advertising and marketing materials and programs, and
to place advertising, that will benefit all GJC STORES, FRANCHISOR will have no
obligation to ensure that expenditures by the Marketing Fund in or affecting any
geographic area or STORE are or will be proportionate or equivalent to the
contributions to the Marketing Fund by GJC STORES operating in that geographic
area or that any GJC STORE will benefit directly or in proportion to its
contribution to the Marketing Fund or from the development of advertising and
marketing materials and/or programs, the placement of advertising or otherwise.
FRANCHISOR will have no obligation to cause other GJC STORES, licensees or
outlets (some of which may be under different arrangements) to contribute to the
Marketing Fund, any cooperative or engage in local marketing. FRANCHISEE agrees
that FRANCHISOR (and each of the Franchisor-Related Entities) will not have any
direct or indirect liability or obligation to FRANCHISEE, the Marketing Fund or
otherwise with respect to the management, maintenance, direction, administration
or otherwise of the Marketing Fund. FRANCHISEE agrees that neither FRANCHISOR
(not any of the Franchisor-Related Entities) will be liable for any act or
omission, whether with respect to the Marketing Fund or otherwise which is
consistent with this Agreement or other information provided to FRANCHISEE, or
which is done in subjective good faith. FRANCHISEE and FRANCHISOR, each having a
mutual interest in, and agreeing on the critical practical business importance
of, FRANCHISEE'S and FRANCHISOR'S relationship being governed solely by written
instruments signed by the parties to be bound (and not having either FRANCHISEE
or FRANCHISOR subject to the uncertainty and ambiguity inherent in the
application of legal or other concepts not expressly agreed to in writing by
FRANCHISEE and FRANCHISOR), agree that FRANCHISEE'S and FRANCHISOR'S rights and
obligations with respect to the Marketing Fund and all related matters are
governed solely by the express terms of this Agreement and that this Agreement
(and the parties' relationship and all rights and obligations with respect to
the Marketing Fund) are not in the nature of a
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"trust," "fiduciary relationship" or similar special arrangement and is only an
ordinary commercial relationship between independent businesspersons for their
independent economic benefit. FRANCHISOR may maintain Marketing Fund assets in
one or more accounts designated as "trust accounts" (or similarly designated),
for purposes of protecting such assets from claims of third-party creditors or
otherwise, but such designation and/or treatment will not operate to create any
"trust," "fiduciary relationship" or similar special arrangement as to the
Marketing Fund, its assets or otherwise.
C. BY THE FRANCHISEE.
1. The FRANCHISEE shall submit for prior approval by the
FRANCHISOR, any and all advertising and promotional materials including any
computerized media or electronic media (including but not limited to the World
Wide Web, the Internet, Telnet, news groups, bulletin boards, FTP, E-Mail and
the like) prepared by the FRANCHISEE for the STORE and the FRANCHISEE shall not
use any disapproved or unapproved advertising or promotional materials. The
FRANCHISEE shall comply with any advertising requirements contained in his lease
or sublease for the premises of the STORE. All advertising and promotional
materials including any computerized media or electronic media (including but
not limited to the World Wide Web, the Internet, Telnet, news groups, bulletin
boards, FTP, e-mail and the like) used by the FRANCHISEE must be completely
factual, comply with all applicable laws and conform to the highest standards of
ethical advertising and policies prescribed from time to time by FRANCHISOR.
2. The FRANCHISEE shall list and advertise the STORE in the
principal classified telephone directory distributed within its primary trading
area, in such business classifications as the FRANCHISOR prescribes from time to
time, utilizing the FRANCHISOR's standard classified telephone directory
advertisement at the FRANCHISEE's sole expense. When more than one GJC STORE
serves a metropolitan area, the FRANCHISOR may require all such GJC STORES to be
listed in the classified directory advertisement and the FRANCHISEE shall pay an
equal share of the cost thereof.
10. STORE RECORDS AND REPORTING.
A. BOOKKEEPING, ACCOUNTING AND RECORDS.
The FRANCHISEE shall establish a bookkeeping, accounting and
recordkeeping system conforming to the requirements prescribed by the
FRANCHISOR, including, without limitation, the use and retention of cash
register tapes, invoices, payroll records, check stubs, bank deposit receipts,
sales tax records and returns, and such journals and ledgers which properly
summarize
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the transactions of the STORE. The FRANCHISEE shall only utilize in the STORE
the cash register and computer system approved by the FRANCHISOR.
The FRANCHISEE must buy and use the cash register and computer systems
the FRANCHISOR prescribes from time to time in the operation of the STORE. The
FRANCHISOR may develop different cash register and computer systems in the
future and specifications for certain components of the cash register and
computer system and may modify such specifications and the components from time
to time. As part of such cash register and computer systems, the FRANCHISOR may
require the FRANCHISEE to obtain specified computer hardware and/or software,
including, without limitation, a license to use proprietary software developed
by the FRANCHISOR or others and the FRANCHISEE agrees to do so. Modification of
such specifications for the components of the cash register and computer systems
may require the FRANCHISEE to incur costs to purchase, lease and/or license new
or modified computer hardware and/or software and to obtain service and support
for the cash register and computer systems during the term of this Agreement.
The FRANCHISEE acknowledges that the FRANCHISOR cannot estimate the future costs
of the cash register and computer systems (or additions, modifications,
maintenance or support) and that the FRANCHISEE's cost of obtaining the cash
register and computer systems (and additions, modifications, maintenance or
support) may not be fully amortizable over the remaining term of this Agreement.
The FRANCHISEE agrees to incur such costs in connection with obtaining the
computer hardware and software comprising the cash register and computer systems
(and additions, modifications, maintenance or support), provided that the cash
register and computer systems that the FRANCHISOR specifies for use is the same
cash register and computer systems that it then currently uses in a majority of
the GJC STORES that it owns and operates. Within sixty (60) days after the
FRANCHISEE receives notice from the FRANCHISOR, the FRANCHISEE agrees to obtain
the components of the cash register and computer systems that the FRANCHISOR
designates and requires. The FRANCHISEE further acknowledges and agrees that the
FRANCHISOR has the right to charge a reasonable systems fee for the license,
modification, maintenance or support of proprietary software that it may license
to the FRANCHISEE and other services that the FRANCHISOR or its affiliates
furnish to the FRANCHISEE related to the cash register and computer systems.
B. REPORTS, FINANCIAL STATEMENTS AND TAX RETURNS.
The FRANCHISEE shall furnish to the FRANCHISOR in the form from time to
time prescribed by the FRANCHISOR:
1) on or before the tenth (10th) day following the end of each
four (4) week period determined by FRANCHISOR, via the
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United States Mail, first class postage affixed, a statement of the gross sales
(as defined in Paragraph B of Section 13) of the STORE for the immediately
preceding four (4) week period, prepared, verified and signed by the FRANCHISEE
or other approved employee, together with copies of such other information and
supporting records as the FRANCHISOR from time to time requires;
2) within thirty (30) days after the end of each sixteen (16)
or seventeen (17) week period as determined by the FRANCHISOR, a period profit
and loss statement and a balance sheet for the STORE, prepared, verified and
signed by the FRANCHISEE; provided, that the FRANCHISEE will prepare profit and
loss statements on a sixteen (16) or seventeen (17) week period and if
requested, submit them to the FRANCHISOR;
3) within forty-five (45) days after the end of each fiscal
year of the STORE, an unaudited annual statement of profit and loss of the STORE
for the fiscal year and a balance sheet for the STORE as of the end of the
fiscal year, verified and signed by the FRANCHISEE; and
4) within thirty (30) days after such returns are filed, upon
request of the FRANCHISOR, exact copies of the STORE's state sales tax returns.
The verifications required by this subsection shall be made by the
FRANCHISEE personally if a sole proprietorship, by a partner if a partnership,
or by an executive officer if a corporation.
As directed by FRANCHISOR, FRANCHISEE will participate in FRANCHISOR'S
electronic reporting system covering sales and other items, with direct
interconnection to (and access by) FRANCHISOR'S computer hardware and software
systems. FRANCHISEE will continuously use, maintain and update electronic cash
register, computer and other systems (including point-of-sale systems) and
software programs which meet FRANCHISOR'S specifications as they evolve over
time and which, in some cases, may only be available through FRANCHISOR,
FRANCHISOR'S affiliates and/or suppliers approved by FRANCHISOR. FRANCHISEE will
maintain its systems on-line to provide full access for computer systems used by
FRANCHISOR and FRANCHISEE will promptly update and otherwise change FRANCHISEE'S
electronic cash register, computer hardware and software systems as FRANCHISOR
requires from time-to-time, at FRANCHISEE'S sole expense. The FRANCHISOR
reserves the right to have full access to such electronic cash register and
computer systems and the sales information and data contained therein and to
retrieve, analyze, download and use the software and all data contained therein
at any time. FRANCHISEE will promptly and fully pay all amounts charged by any
supplier or licensor of the systems and programs
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used by FRANCHISEE, including charges for use, maintenance, support and/or
update of these systems or programs.
11. NAMES AND MARKS
A. OWNERSHIP OF NAMES AND MARKS
The FRANCHISOR is the licensee of GJGC Corp. of the Names and Marks
licensed to the FRANCHISEE by this Agreement and the FRANCHISEE's right to use
the Names and Marks is derived solely from this Agreement and is limited to the
operation of the STORE in compliance with this Agreement at the location and
premises identified in Paragraph A of Section 2 (or a substitute premises
hereafter approved by the FRANCHISOR as provided in Section 3), and by all
applicable standards, specifications and operating procedures prescribed by the
FRANCHISOR from time to time during the term of this FRANCHISE. The FRANCHISEE
agrees that all usage of the Names and Marks including usage on computerized
media or electronic mail (including but not limited to the World Wide Web, the
Internet, Telnet, newsgroups, bulletin boards, FTP, e-mail and the like) by the
FRANCHISEE and any goodwill established thereby shall inure to the exclusive
benefit of the FRANCHISOR and GJGC Corp. The FRANCHISEE further agrees that
after the termination or expiration of the FRANCHISE he will not directly or
indirectly at any time or in any manner identify the FRANCHISEE, any owner or
other business as a GJC STORE, a former GJC STORE or as a franchisee of or
otherwise associated with the FRANCHISOR, or use in any manner or for any
purpose any of the Names and Marks or other indicia of a GJC STORE.
B. LIMITATIONS ON THE FRANCHISEE'S USE OF NAMES AND MARKS
The FRANCHISEE agrees to use the Names and Marks as the sole service
xxxx and trade name identification of the STORE. The FRANCHISEE shall display a
notice in such form as the FRANCHISOR may prescribe that the FRANCHISEE is an
independent owner of the STORE pursuant to this Agreement. The FRANCHISEE shall
not use any of the Names and Marks as part of any corporate name or with any
prefix, suffix or other modifying words, terms, designs or symbols (other than
logos licensed to the FRANCHISEE hereunder), or in any modified form, nor may
the FRANCHISEE use any Names and Marks in connection with the sale of any
unauthorized product or service or in any other manner including via
computerized media and electronic media not explicitly authorized in writing by
the FRANCHISOR. All bank accounts, licenses, permits or other similar documents
shall contain the actual name of the person or entity owning the STORE and may
contain "d/b/a XXXXXX XXXX'X COFFEES." The FRANCHISEE shall obtain any
fictitious name, assumed name or "doing business" registration as may be
required by law.
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C. NOTIFICATION OF INFRINGEMENTS AND CLAIMS
The FRANCHISEE shall immediately notify the FRANCHISOR of any apparent
infringement of or challenge to the FRANCHISEE's use of any of the Names and
Marks or claim by any person of any rights in any of the Names and Marks and the
FRANCHISEE shall not communicate with any person other than the FRANCHISOR and
GJGC Corp. and their counsel in connection with any such infringement, challenge
or claim. The FRANCHISOR and the Franchisor-Related Entities shall have sole
discretion to take such action as they deem appropriate and the right to
exclusively control any litigation or Patent and Trademark Office or other
administrative proceeding arising out of any such infringement, challenge or
claim or otherwise relating to any Names and Marks. The 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 the FRANCHISOR's or GJGC Corp.'s
counsel be necessary or advisable to protect and maintain the FRANCHISOR's and
GJGC Corp.'s interests in any litigation or Patent and Trademark office or other
proceeding or to otherwise protect and maintain the FRANCHISOR's and GJGC
Corp.'s interests in any of the Names and Marks.
D. DISCONTINUANCE OF USE OF NAME AND/OR MARKS
If it becomes advisable at any time, in FRANCHISOR's sole and absolute
discretion, for FRANCHISEE to modify or discontinue the use of the Name and/or
any of the Marks or use one or more additional or substitute name(s), trademarks
or service marks, FRANCHISEE will promptly comply (at FRANCHISEE's sole expense)
with FRANCHISOR's directions to modify or otherwise discontinue the use of such
Name and/or Marks, or use one or more additional or substitute names, trademarks
or service marks, including (but not limited to) replacement of all signage,
etc. Neither FRANCHISOR nor any of the Franchisor-Related Entities will have any
liability or obligation (whether of indemnity, expense reimbursement or
otherwise) to FRANCHISEE, and FRANCHISEE agrees to make no claim, for, or in
connection with, any modification, discontinuance or otherwise, and/or any
dispute regarding the Name and/or any of the Marks and/or FRANCHISEE's and/or
FRANCHISOR's rights in or to them. FRANCHISOR makes no guaranty that a
modification, discontinuance or otherwise may not be required, whether as a
result of expiration, termination or limitation of FRANCHISOR's rights to the
Name and/or Marks or otherwise.
FRANCHISEE understands that there is always a possibility that there
might be one or more businesses, similar to the business covered by the
Franchise, operating in or near the area(s) where FRANCHISEE may do business or
otherwise, using a name and/or marks similar to FRANCHISOR's and with superior
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rights to such name and/or marks as a result of prior use or otherwise.
FRANCHISOR strongly urges FRANCHISEE to research this possibility, using
telephone directories, local filings and other means, prior to FRANCHISEE's
signing this Agreement, any other documents, expending or paying any sums or
making any commitments and FRANCHISEE understands that if FRANCHISEE fails to do
so before making any commitments or spending any money, it is at risk.
12. INITIAL FRANCHISE FEE
The FRANCHISEE shall pay to the FRANCHISOR a nonrecurring initial
franchise fee for the FRANCHISE in the amount of Twenty Five Thousand Dollars
($25,000.00), which is payable upon the execution of this Agreement (less any
amounts previously paid by the FRANCHISEE, if any) and which is fully earned by
the FRANCHISOR upon payment. Except as provided in Paragraph A of Section 5 or
FRANCHISOR is unable to obtain a location acceptable to FRANCHISOR within nine
(9) months alter the effective date of the Franchise Agreement the initial
franchise fee is nonrefundable.
The execution of this Agreement will constitute, and FRANCHISEE (and
each affiliate of FRANCHISEE's) will, as a condition to the granting of this
and/or any future or other Franchise, execute, in a form prescribed by
FRANCHISOR,, a general release, of any and all claims, liabilities and/or
obligations, of any nature whatsoever, however arising, known or unknown,
against FRANCHISOR and/or any or all of the Franchisor-Related Entities,
excepting only (where so required by applicable law) those claims solely related
to the offer and sale of the new Franchise, FRANCHISEE agreeing that it would be
inappropriate from a business standpoint to enter into further franchise
relationships with FRANCHISOR while there might be a possibility of claims based
on a prior relationship. For example, if FRANCHISEE owns Franchises Nos. 1 and 2
and is being awarded Franchise No. 3, the release by FRANCHISEE would cover all
matters other than (where so required by applicable law) those solely related to
the offer and sale of Franchise No. 3. FRANCHISOR can make no assurance as to
whether additional or future franchises may be granted to FRANCHISEE or the
prices, terms or conditions relating thereto. If FRANCHISOR should, through
inadvertence or otherwise, fail to require such separate release at any time,
the execution of this Agreement, and each Franchise Agreement after this one,
will be regarded as the equivalent of the granting of such releases.
13. ROYALTY AND SERVICE FEE
A. AMOUNT OF ROYALTY AND SERVICE FEE
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The FRANCHISEE agrees to pay to the FRANCHISOR a royalty and service
fee of six percent (6%) of the gross sales of the STORE, as defined in Paragraph
B below, payable as provided in Paragraph C below.
B. DEFINITION OF "GROSS SALES"
As used in this Agreement, the term "gross sales" shall mean and
include the total actual gross charges for all products and services sold to
customers of the STORE, for cash or credit, whether such sales are made at or
from the premises of the STORE, or any other location, including if approved by
the FRANCHISOR via computerized media or electronic media (including but not
limited to the World Wide Web, the Internet, Telnet, FTP, newsgroups, bulletin
boards, FTP, e-mail and the like) but excluding: sales, use, service or excise
taxes collected from customers and paid to the appropriate taxing authority;
customer refunds and adjustments; and amounts collected from customers
representing the actual cost of shipping PRODUCTS, including payments to common
carriers and the United States Postal Service.
C. PAYMENT OF ROYALTY AND SERVICE FEE AND MARKETING FUND
CONTRIBUTION
The royalty and service fee (as above provided) and the Marketing Fund
contribution (as provided in Section 9) shall be payable on the tenth (10th) day
following the end of each four (4) week period, as determined by the FRANCHISOR.
This payment shall be accompanied by a sales report (the form of which will be
created and furnished by the FRANCHISOR) completed, verified and signed by the
FRANCHISOR.
As directed by FRANCHISOR, FRANCHISEE must participate in FRANCHISOR'S
then-current electronic funds transfer program authorizing FRANCHISOR to utilize
a pre-authorized bank draft system on a every four-week basis, or otherwise as
FRANCHISOR specifies from time-to-time in FRANCHISOR'S sole and absolute
discretion. All royalties, advertising contributions and other amounts due
FRANCHISOR (and/or any affiliate) for each period must be received by FRANCHISOR
(or such affiliate) or credited to the appropriate account by pre-authorized
bank debit before 5:00 p.m. on the 10th day after each four-week period, or
other point in time specified by FRANCHISOR. FRANCHISOR may, from time-to-time,
specify periodic amounts for regular transfer to FRANCHISOR'S account, based on
past reports of sales by FRANCHISEE and reasonable expectations of royalties,
advertising contributions and other amounts to become due from FRANCHISEE.
D. INTEREST ON LATE PAYMENTS AND LATE FEES
All royalty and service fees, advertising contributions and
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any other amounts owed to the FRANCHISOR or its affiliates by the FRANCHISEE,
pursuant to the FRANCHISE, shall bear interest after due date at the highest
legal rate for open account business credit in the state in which the STORE is
located not to exceed one and one-half percent (1 1/2%) per month. The
FRANCHISEE must also pay the FRANCHISOR or its affiliates a late fee of Two
Hundred Fifty Dollars ($250.00) per occurrence subject to applicable law. The
FRANCHISEE acknowledges that this Paragraph D shall not constitute the
FRANCHISOR's agreement to accept such payments after they are due or a
commitment by the FRANCHISOR to extend credit to or otherwise "finance" the
FRANCHISEE's operation of the STORE. Further, the FRANCHISEE acknowledges that
his failure to pay any amounts when due will constitute a breach of this
Agreement as provided in Paragraph A of Section 15 notwithstanding the
provisions of this Paragraph D.
14. INSPECTIONS AND AUDITS
A. THE FRANCHISOR'S RIGHT TO INSPECT STORE
To determine whether the FRANCHISEE is complying with this Agreement,
the FRANCHISOR shall have the right at any time during business hours, and
without prior notice to the FRANCHISEE, to inspect the STORE and the PRODUCTS
therein contained. Further, the FRANCHISOR shall have the right to conduct,
supervise or observe a physical count of the inventory and assets of the STORE
at such times as the FRANCHISOR shall reasonably determine. The FRANCHISEE shall
fully cooperate with representatives of the FRANCHISOR making any such
inspection or conducting, supervising or observing any such inventory and shall
permit representatives of the FRANCHISOR to take photographs, movies or
videotapes of the premises and to interview employees and customers of the
STORE.
B. THE FRANCHISOR'S RIGHT TO AUDIT.
The FRANCHISOR or its agent or designee (including any landlord or its
agent pursuant to the lease or sublease for the premises for the STORE) shall
have the right at any time during business hours, and without prior notice to
the FRANCHISEE, to inspect and audit, or cause to be inspected or audited, the
business records, bookkeeping and accounting records, cash register tapes,
invoices, payroll records, check stubs and bank deposit receipts of the STORE,
reports, financial statements, the FRANCHISEE's state and federal tax returns or
schedules, other forms, information and supporting records which the FRANCHISEE
is required to submit to the FRANCHISOR hereunder and the books and records of
any corporation or partnership which owns or operates the STORE. The FRANCHISEE
shall fully cooperate with representatives of the FRANCHISOR and any independent
accountants hired by the FRANCHISOR to conduct any such inspection or audit.
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In the event any such inspection or audit shall disclose an understatement of
the gross sales of the STORE for any period or periods, the FRANCHISEE shall pay
to the FRANCHISOR, within ten (10) days after receipt of the inspection or audit
report, the royalty and service fee (and Marketing Fund contribution) plus
interest and late fees due on the amount of such understatement. Further, in the
event such audit is made necessary by the failure of the FRANCHISEE to furnish
reports, financial statements, tax returns or schedules as herein required, or
if an understatement of gross sales for any period is determined by any such
inspection or audit to be greater than two percent (2%), the FRANCHISEE shall
reimburse the FRANCHISOR for the cost of such inspection or audit, including,
without limitation, the charges of any independent accountant and the travel
expenses, room and board and compensation of employees of the FRANCHISOR and the
FRANCHISOR shall have the right to require the FRANCHISEE to furnish, at the
FRANCHISEE's sole cost and expense audited financial statements thereafter. In
the event any such audit reveals an overstatement of the gross sales of the
STORE for any period or periods, the FRANCHISOR shall pay to the FRANCHISEE,
within ten (10) days of the receipt of the inspection or audit report the
royalty and service fee (and advertising contribution) paid by the FRANCHISEE on
such overstatement. The right to audit may in case of a landlord's right to
audit pursuant to a lease or sublease extend beyond termination of the
FRANCHISE.
15. TERMINATION OF FRANCHISE
A. BY THE FRANCHISOR
In addition to the FRANCHISOR's right to terminate this Agreement upon
the failure of the FRANCHISEE to lease or sublease the STORE premises or to
proceed with STORE development or to merchandise and open the STORE for business
(as provided in Paragraphs A, B, C, D and E of Section 4) or upon the FRANCHISEE
or the manager's failure to complete training to the FRANCHISOR's satisfaction
(as provided in Paragraph A of Section 5), the FRANCHISOR may terminate this
Agreement effective upon delivery of notice of termination to the FRANCHISEE,
if:
1) the FRANCHISEE or any of its owners makes an assignment for
the benefit of creditors or an admission of his inability to pay his
obligations as they become due;
2) the FRANCHISEE or any of its owners files a voluntary
petition in bankruptcy, files any pleading seeking any reorganization,
liquidation or dissolution under any law, admits or fails to contest
the material allegations of any such pleading filed against him, is
adjudicated a bankrupt or insolvent, a receiver is appointed for a
substantial part of the assets of the FRANCHISEE or any of
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its owners or the STORE, or the claims of creditors of the FRANCHISEE
or any of its owners or the STORE are abated or subject to a moratorium
under any law; this provision may not be enforceable under Federal
Bankruptcy Law (11 U.S.C. Section 101 et. seq.)
3) the FRANCHISEE abandons, surrenders or transfers control of
the operation of the STORE or fails to actively operate the STORE in
accordance with standards and specifications of the FRANCHISOR and the
lease or sublease for the premises, unless precluded from doing so by
damage to the premises of the STORE, war or civil disturbance, natural
disaster, labor dispute or other event beyond the FRANCHISEE's
reasonable control;
4) the FRANCHISEE suffers termination of or fails to obtain
renewal or extension of the lease or sublease for, or otherwise fails
to maintain possession of the premises of the STORE identified in
Paragraph A of Section 2 or a substitute premises approved by the
FRANCHISOR;
5) the FRANCHISEE submits to the FRANCHISOR on two (2) or more
separate occasions at any time during any two (2) year period of the
term of the FRANCHISE a monthly report, financial statement, tax
return, schedule or other information or supporting record which
understates the gross sales of the STORE for any period by more than
two percent (2%);
6) the FRANCHISEE repeatedly fails or refuses: (i) to submit
when due, four (4) week period reports, sixteen (16) or seventeen (17)
week period or annual financial statements, tax returns, schedules or
other information or supporting records; (ii) to pay when due the
royalty and service fees, advertising contributions, amounts due for
any PRODUCTS purchased from the FRANCHISOR or its affiliates or other
payments due to the FRANCHISOR or its affiliates; (iii) to pay when due
amounts owed to other suppliers or creditors; or (iv) to comply with
any other provision of this Agreement; whether or not such failures or
refusals are corrected after notice thereof is delivered to the
FRANCHISEE;
7) the FRANCHISEE operates the STORE in a manner that presents
a health or safety hazard to its customers, employees or the public;
8) the FRANCHISEE or any of its owners are convicted of a
felony or other crime which substantially impairs the goodwill
associated with the Names and Marks or engages in any misconduct which
affects the reputation of the STORE or
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the goodwill associated with the Names and Marks;
9) the FRANCHISEE or any of its owners makes an unauthorized
assignment of the FRANCHISE, this Agreement, the STORE or its assets or
an ownership interest in the FRANCHISEE as hereinafter defined in
Paragraphs B and C of Section 17;
10) the FRANCHISEE fails to pay any amount owed to the
FRANCHISOR or its affiliates when the same is due and payable and does
not correct such failure within five (5) days after written notice of
such failure to comply is delivered to the FRANCHISOR; or
11) FRANCHISEE sells coffee not purchased from GJGC Corp.
pursuant to the requirements set forth herein, Section 7.E.
12) FRANCHISEE or any affiliate fails on two (2) or more
separate occasions within any period of twelve (12) consecutive months,
or on three (3) or more separate occasions within any period of
twenty-four (24) consecutive months, to comply with any provisions
(whether the same or different) of this Agreement, any lease or
sublease, any other agreement with FRANCHISOR and/or any affiliate
and/or the OPERATING MANUAL, whether or not such failures to comply are
timely corrected.
13) the FRANCHISEE fails to comply with any other material
provision of this Agreement, any lease or sublease, any other agreement
with FRANCHISOR and/or any affiliate or any mandatory specification,
standard or operating procedure prescribed by the FRANCHISOR and does
not correct such failure within fifteen (15) days after written notice
of such failure to comply (which shall describe the action that the
FRANCHISEE must take) is delivered to the FRANCHISEE.
14) the FRANCHISEE (and/or any owner and/or affiliate of the
FRANCHISEE) files any action (including arbitration, but not including
mediation) against FRANCHISOR, and/or any of the Franchisor-Related
Entities, and does not receive a final judgment or award substantially
in FRANCHISEE'S favor on the merits.
B. RIGHT OF FRANCHISOR TO MANAGE AFTER
NOTICE OF DEFAULT TO THE FRANCHISEE
If the FRANCHISOR delivers to the FRANCHISEE a notice of default
pursuant to Paragraph A(11) or (12) of Section 15 of this Agreement, and if it
is the belief of the FRANCHISOR that the GJC STORE is being inadequately
managed, the FRANCHISOR shall have
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the right to appoint a manager to operate the GJC STORE until the FRANCHISEE is
able to resume the proper management and operation of the GJC STORE. All funds
from the operation of the GJC STORE during the period of management by the
FRANCHISOR's appointed manager shall be kept in a separate fund and all expenses
of the GJC STORE, including compensation, other costs and travel and living
expenses of the FRANCHISOR's appointed manager, shall be charged to such fund.
In addition to the royalty and service fees and advertising fees due hereunder,
the FRANCHISOR shall charge Two Hundred Dollars ($200.00) per day during the
period of management by the FRANCHISOR's appointed manager as a management fee.
Operation of the GJC STORE during any such period shall be for and on behalf of
the FRANCHISEE; provided that the FRANCHISOR shall only have a duty to utilize
reasonable efforts in the operation of the GJC STORE and shall not be liable to
the FRANCHISEE for any debts, losses or obligations incurred by the GJC STORE,
or to any creditor of the FRANCHISEE for any products, materials, supplies or
services purchased by the GJC STORE during any period in which it is managed by
the FRANCHISOR's appointed manager. In the event that the fund maintained by the
FRANCHISOR is insufficient to pay the expenses of the GJC STORE in a reasonable
business-like manner, the FRANCHISOR shall so notify the FRANCHISEE and the
FRANCHISEE shall, within five (5) business days, deposit in the fund such
amounts as shall be required by the FRANCHISOR to attain a reasonable balance in
the fund. The provisions of this Paragraph shall not restrict the FRANCHISOR's
right to terminate this Agreement as herein provided.
C. RIGHT OF FRANCHISOR TO DISCONTINUE PRODUCTS TO THE
FRANCHISEE AFTER NOTICE OF DEFAULT TO THE FRANCHISEE
If the FRANCHISOR delivers to the FRANCHISEE a notice of default or
non-compliance pursuant to Paragraph A(10) or (11) of Section 15 of this
Agreement, in addition to the FRANCHISOR's other rights and remedies, the
FRANCHISOR reserves the right of the FRANCHISOR (and its affiliates) if
currently selling PRODUCTS, to discontinue selling PRODUCTS to the FRANCHISEE
until such time as the FRANCHISEE corrects the default. Additionally, if the
FRANCHISEE fails to adhere to the standard credit terms of the FRANCHISOR's
affiliates with respect to payment for any PRODUCTS sold by the FRANCHISOR's
affiliates to the FRANCHISEE, the FRANCHISOR's affiliates reserve the right to
cease selling PRODUCTS to the FRANCHISEE or requiring the FRANCHISEE to pay
C.O.D. (i.e., cash on delivery) by certified check until such time as the
FRANCHISEE corrects this problem.
D. EXTENDED CURE PERIOD
Notwithstanding anything contained herein to the contrary, where
FRANCHISOR has the right to terminate this Agreement,
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FRANCHISOR shall also have the right, to be exercised in FRANCHISOR's sole and
absolute discretion, to grant to FRANCHISEE, in lieu of immediate termination of
this Agreement, an extended period of time to cure the breach which gave rise to
FRANCHISOR's right to terminate, but in no event shall such extended cure period
be less than thirty (30) days, nor more than six (6) months, from the last day
of the cure period otherwise applicable to such breach. FRANCHISEE acknowledges
that FRANCHISOR's election to grant such an extended cure period shall not
operate as a waiver of any of FRANCHISOR's rights hereunder and that, in
consideration for such an extension, FRANCHISEE and each owner and/or affiliate
of FRANCHISEE's will execute a general release of all claims, known or unknown,
by or on behalf of FRANCHISEE and/or any owner and/or any affiliate of
FRANCHISEE's against FRANCHISOR and/or any or all of the Franchisor-Related
Entities and if FRANCHISEE fails to execute such a release, the grant of such an
extension will, in itself, constitute such a release.
E. FRANCHISOR'S RIGHT TO TERMINATE THE FRANCHISE, RETURN
THE INITIAL FRANCHISE FEE AND ALLOW FRANCHISEE TO COMPETE
At any time, and in FRANCHISOR's sole and absolute discretion,
FRANCHISOR may elect to terminate all of FRANCHISEE's rights, and all of
FRANCHISOR's obligations, under this Agreement and return to FRANCHISEE the
initial franchise fee (or portion thereof) actually paid by FRANCHISEE (without
interest). In such a case, FRANCHISEE will perform thereafter each of
FRANCHISEE's obligations under this Agreement with respect to termination
(including all post-term obligations of FRANCHISEE) wherever contained in this
Agreement, including but not limited to de-identification of FRANCHISEE's GJC
STORE, and promptly deliver to FRANCHISOR all manuals and other material as
provided in this Agreement or in the Manuals and FRANCHISEE (and each owner
and/or affiliate of FRANCHISEE) will execute a general release, in form
prescribed by FRANCHISOR, of any and all claims, liabilities and/or obligations,
of any nature whatsoever, however arising, known or unknown, against FRANCHISOR
and/or any or all of the Franchisor-Related Entities. FRANCHISEE's obligations
regarding indemnity and confidentiality and the provisions of this Agreement
relating to dispute avoidance and resolution (including but not limited to all
provisions of Article 18), and FRANCHISOR's rights with respect to receiving an
assignment of any lease and/or sublease, together with the provisions of Article
22, will survive any expiration, termination or cancellation of this Agreement;
provided that in the event of exercise of FRANCHISOR'S rights under this
sub-section, FRANCHISEE's post-term non-competition obligations will be canceled
and of no further force or effect.
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F. EXECUTION OF RELEASE ON DEFAULT, ETC.
At FRANCHISOR's option, in any case where FRANCHISEE has committed a
default under this Agreement which would allow FRANCHISOR to terminate
FRANCHISEE's rights, FRANCHISOR may (but is not required to) waive FRANCHISOR's
rights to collect any royalties, advertising contributions and other amounts
which would have become due if FRANCHISEE had continued in operation as a XXXXXX
XXXX'X Franchisee and FRANCHISEE will, in consideration for such waiver, execute
a general release, in form prescribed by FRANCHISOR, of any and all claims,
liabilities and/or obligations, of any nature whatsoever, however arising, known
or unknown, against FRANCHISOR and/or any or all of the Franchisor-Related
Entities. This option may be exercised by FRANCHISOR at any time, including
before, at the same time as or after termination, expiration or otherwise and
whether or not FRANCHISEE or FRANCHISOR have made any claims, or begun any
proceedings, against the other or anyone else.
G. CROSS-DEFAULTS, NON-EXCLUSIVE REMEDIES, ETC.
Any default by FRANCHISEE (or any person/company affiliated with
FRANCHISEE) under this Agreement may be regarded as a default under any other
agreement between FRANCHISOR (or any affiliate of FRANCHISOR) and FRANCHISEE (or
any affiliate of FRANCHISEE) and any default by FRANCHISEE (or any
person/company affiliated with FRANCHISEE) under any other agreement between
FRANCHISOR (or any affiliate of FRANCHISOR) and FRANCHISEE (or any
person/company affiliated with FRANCHISEE) may be regarded as a default under
this Agreement, in each case with FRANCHISOR (and each affiliate of FRANCHISOR)
to have all remedies allowed at law, including termination of FRANCHISEE'S
rights (and/or those of any person/company affiliated with FRANCHISEE) and
FRANCHISOR'S (and/or its affiliates') obligations. No right or remedy which
FRANCHISOR may have (including termination) is exclusive of any other right or
remedy provided under law or equity and FRANCHISOR may pursue any rights and/or
remedies available.
16. THE FRANCHISEE'S OBLIGATION UPON TERMINATION OR EXPIRATION
A. PAYMENT OF AMOUNTS OWED TO THE FRANCHISOR
The FRANCHISEE agrees to pay to the FRANCHISOR and its affiliates
within ten (10) days after the effective date of termination or expiration of
the FRANCHISE, or such later date that the amounts due to the FRANCHISOR and its
affiliates are determined, such royalty and service fees, advertising
contributions, amounts owed for PRODUCTS purchased by the FRANCHISEE from the
FRANCHISOR and its affiliates and all other amounts owed to the FRANCHISOR and
its affiliates which are then
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unpaid, including any interest and late fees due pursuant to this Agreement,
including Paragraph D of Section 13.
B. RETURN OF MANUALS.
The FRANCHISEE agrees that upon termination or expiration of the
FRANCHISE, he will immediately return to the FRANCHISOR all copies of the
OPERATING MANUAL for a GJC STORE which have been loaned to him by the
FRANCHISOR.
C. CANCELLATION OF ASSUMED NAMES AND TRANSFER OF PHONE NUMBERS.
The FRANCHISEE agrees that upon termination or expiration of the
FRANCHISE, he will take such action as may be required to cancel all assumed
names or equivalent registrations relating to his use of the Names and Marks and
to notify the telephone company and all listing agencies of the termination or
expiration of the FRANCHISEE's right to use any telephone number and any
classified and other telephone directory listings associated with any Names and
Marks and with a GJC STORE and to authorize transfer of same to the FRANCHISOR
or its designee. The FRANCHISEE acknowledges that as between the FRANCHISOR and
the FRANCHISEE, the FRANCHISOR has the sole right to and interest in all
telephone numbers and directory listings associated with any Names and Marks of
the STORE and the FRANCHISEE authorizes the FRANCHISOR, and hereby appoints the
FRANCHISOR and any officer of the FRANCHISOR as his attorney-in-fact, to direct
the telephone company and all listing agencies to transfer the same to the
FRANCHISOR or its designee should the FRANCHISEE fail or refuse to do so. The
telephone company and all listing agencies may accept such direction or this
Agreement as conclusive evidence of the exclusive rights of the FRANCHISOR in
such telephone numbers and directory listings and its authority to direct their
transfer.
FRANCHISEE shall also be required to cancel or if FRANCHISOR so elects
to have assigned to FRANCHISOR, all ownership of any and all computerized media
or electronic media, including but not limited to the World Wide Web, the
Internet, Telnet, news groups, bulletin boards, FTP, e-mail and the like which
presently or which may later exist.
D. FRANCHISOR HAS RIGHT TO PURCHASE STORE.
1) If this Agreement is terminated prior to its expiration by the
FRANCHISOR in accordance with the provisions of this Agreement, the FRANCHISOR
shall have the right and option (exercisable by written notice thereof within
thirty (30) days after the determination of the purchase price as provided in
subparagraph (2) below) to purchase (at the purchase price
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determined pursuant to subparagraph (2) below) from the FRANCHISEE some or all
of the assets (including the FRANCHISEE's inventory of saleable PRODUCTS which
have been fully paid for by the FRANCHISEE) of the STORE and if the premises
were not leased to the FRANCHISEE by the FRANCHISOR or its affiliates, the right
to an assignment of the FRANCHISEE's lease or sublease for the premises of the
STORE (or, if assignment is prohibited, a sublease for the full remaining term
and on the same terms and conditions as the FRANCHISEE's lease). There shall be
no provision for payment for leasehold improvements, the title of which shall be
governed by the terms of the FRANCHISEE's lease or sublease for the STORE
premises. The purchase price for the assets of the STORE shall be the
depreciated value of those assets as shown on the FRANCHISEE's most current
federal tax return; provided that the purchase price shall not contain any
factor or increment for "goodwill" or "going concern value." The purchase price
for the saleable inventory of the FRANCHISEE which have been fully paid for by
the FRANCHISEE shall be equal to ninety percent (90%) of the original invoice
cost charged to the FRANCHISEE. The FRANCHISOR may exclude from the assets
purchased hereunder any fixtures, equipment, signs or PRODUCTS and supplies in
the inventory of the STORE that are not approved as meeting quality standards
for a GJC STORE. The purchase price shall be paid by the FRANCHISOR in cash at
the closing of the purchase. Contemporaneously therewith, the FRANCHISEE shall:
(i) deliver instruments transferring good and merchantable title to the assets
purchased, free and clear of all liens and encumbrances to the FRANCHISOR or its
nominee with all sales and other transfer taxes paid by the FRANCHISEE; and (ii)
assign or transfer all licenses or permits which may be assigned or transferred.
In the event that the FRANCHISEE cannot deliver clear title to all of the
purchased assets as aforesaid, or in the event there shall be other unresolved
issues, the closing of the sale shall be accomplished through an escrow.
Further, the FRANCHISEE and the FRANCHISOR shall, prior to closing, comply with
the applicable Bulk Sales provisions of the Uniform Commercial Code as enacted
in the state where the STORE is located. If the FRANCHISOR exercises its option
to purchase, pending the closing of such purchase as hereinabove provided, the
FRANCHISOR shall have the right to appoint a manager to maintain the operation
of the STORE, upon the terms and conditions of Paragraph B of Section 15.
Alternatively, the FRANCHISOR may require the FRANCHISEE to close the STORE
during such time period without removing therefrom any assets. The FRANCHISEE
shall maintain in force all required insurance policies until the date of
closing. In connection with such purchase, FRANCHISEE (and each owner and/or
affiliate of FRANCHISEE) will execute a general release, in form prescribed by
FRANCHISOR, of any and all claims, liabilities and/or obligations, of any nature
whatsoever, however arising, known or unknown, against FRANCHISOR and/or any or
all of the Franchisor-Related Entities.
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2) If agreement on the depreciated value is not reached by the
FRANCHISEE and the FRANCHISOR within ten (10) days after the effective date of
termination, the determination of depreciated value (as above defined) shall be
submitted to a board of three certified appraisers. One appraiser shall be
selected by each party hereto and the third shall be selected by said two
appraisers. In the event of the death, resignation or disability of any such
appraiser, his successor shall be selected as the appraiser so succeeded was
selected. The average of the price determinations of the appraisers shall be
final and binding upon both parties. Each party shall pay all fees, costs and
expenses of the appraiser appointed by it and one-half of the fees, costs and
expenses of the third appraiser.
3) In the event the FRANCHISOR does not exercise said option to
purchase, the FRANCHISEE shall, within ten (10) days after the earlier of (i)
the expiration of the option period without exercise by the FRANCHISOR of its
option or (ii) service by the FRANCHISOR upon the FRANCHISEE of written notice
that the FRANCHISOR does not intend to exercise its option, remove from the
STORE by physical removal or in the case of signs, by obliteration, painting
over or otherwise, and cease to use, either at the STORE or elsewhere, all
names, distinctive architectural or other designs, signs, pictures, crests,
xxxxxxx, and other advertising and equipment which are indicative of the
FRANCHISOR or FRANCHISEE. All PRODUCTS which are not merchantable due to
physical deterioration or which are "out-of-date" shall be destroyed by the
FRANCHISEE.
E. REPURCHASE OF INVENTORY
If this Agreement expires or is terminated by the FRANCHISOR for any
reason, the FRANCHISOR shall repurchase all saleable inventory of the
FRANCHISEE, which bear the Names and Marks and have been fully paid for by the
FRANCHISEE for a price equal to ninety percent (90%) of the original invoice
cost charged to the FRANCHISEE; provided, however, that the FRANCHISEE shall pay
all freight costs in connection with the shipment of the saleable inventory to
such location as the FRANCHISOR may designate.
F. COVENANT NOT TO COMPETE
If this Agreement expires or is terminated by the FRANCHISOR for any
reason, the FRANCHISEE and its owners agree that for a period of two (2) years,
commencing on the effective date of termination of this Agreement or the date on
which the FRANCHISEE ceases to conduct the business conducted pursuant to this
Agreement, whichever is later, neither the FRANCHISEE nor its owners (through a
member of the immediate family of the FRANCHISEE or an owner of the FRANCHISEE
or otherwise) will have
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any interest as an owner (except of publicly-traded securities and interests in
other GJC STORES pursuant to other franchise agreements heretofore or hereafter
entered into), partner, director, officer, employee, consultant, representative,
agent, or in any other capacity, in any retail store principally offering
products substantially similar to the PRODUCTS then being offered by the
majority of the GJC STORES/BAR/KIOSKS/HOLIDAY GIFT CENTERS and located within
either: (i) the Standard Metropolitan Statistical Area wherein the STORE is
located; or (ii) a ten (10) mile radius from any then existing GJC STORE, nor
will they have any interest, as aforesaid, in any entity which franchises or
grants to others the right to sell products similar to the PRODUCTS then being
offered by the majority of the GJC STORES/BAR/KIOSKS/HOLIDAY GIFT CENTERS.
G. CONTINUING OBLIGATIONS
All obligations of the FRANCHISOR and the FRANCHISEE which expressly or
by their nature survive the expiration or termination of the FRANCHISE shall
continue in full force and effect subsequent to and notwithstanding the
expiration or termination of this Agreement and until they are satisfied in full
or by their nature expire. The continuing right of any landlord pursuant to the
terms and conditions of a lease or sublease for the STORE's premises to audit
the FRANCHISEE's books and records after termination of any leases or sublease.
17. ASSIGNMENT, TRANSFER AND ENCUMBRANCE
A. BY FRANCHISOR.
This Agreement, and any and/or all of FRANCHISOR's rights and/or
obligations under it, are fully transferable by FRANCHISOR in its sole and
absolute discretion and will inure to the benefit of any person or entity to
whom FRANCHISOR transfers it, or to any other legal successor to FRANCHISOR's
interest in this Agreement. If FRANCHISOR transfers this Agreement, or any
and/or all of its rights and/or obligations under it, all past, current and
future obligations of FRANCHISOR (and of any of the Franchisor-Related Entities)
to FRANCHISEE will cease and be forever extinguished.
B. THE FRANCHISEE MAY NOT ASSIGN WITHOUT APPROVAL OF THE
FRANCHISOR
The FRANCHISE is personal to the FRANCHISEE (or its owners) and neither
the FRANCHISE, this Agreement (except as hereinafter provided with respect to
assignment to a partnership or corporation), the STORE or its (other than in the
ordinary course of its business) assets nor any part or all of the ownership of
the FRANCHISEE may be voluntarily, involuntarily, directly or
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indirectly assigned, subdivided, subfranchised or otherwise transferred by the
FRANCHISEE or its owners (including, without limitation, in the event of the
death of the FRANCHISEE or an owner of the FRANCHISEE, by will, declaration of
or transfer in trust or the laws of intestate succession) without the prior
written approval of the FRANCHISOR, and any such assignment or transfer without
such approval shall constitute a breach hereof and shall convey no rights to or
interest in the FRANCHISE, this Agreement, the STORE or its assets or any part
or all of the ownership interest in the FRANCHISEE. If the FRANCHISEE is in full
compliance with this Agreement, the FRANCHISOR shall not unreasonably withhold
its approval of an assignment or transfer to proposed assignees or transferees
who are of good moral character and otherwise meet the FRANCHISOR's
then-applicable standards for GJC STORE franchisees and the transferee or owners
of the transferee in form approved by the FRANCHISOR agree to be personally
bound jointly and severally by all provisions of this Agreement and guarantee
performance thereof and all other agreements between the FRANCHISEE and the
FRANCHISOR and its affiliates to the same extent as if they had been original
parties to the agreements. A transfer of ownership in the STORE may only be made
in conjunction with a transfer of the FRANCHISE. If the transfer is of the
FRANCHISE, this Agreement or a controlling interest in the FRANCHISEE, or is one
of a series of transfers which in the aggregate constitute the transfer of the
FRANCHISE, this Agreement or a controlling interest in the FRANCHISEE, all of
the following conditions must be met prior to, or concurrently with the
effective date of the transfer: (1) the transferee must have sufficient business
experience and financial resources; (2) the transferee must assume all existing
obligations of the transferor hereunder and under the lease or sublease (if the
premises was not leased from the FRANCHISOR or its affiliates); (3) the
transferee must attend and complete the training program to the satisfaction of
the FRANCHISOR; (4) if any part of the sale price of the transferred interest is
financed, the FRANCHISEE and its owners and the transferor shall have agreed
that all obligations of the transferee to either of them shall be subordinate to
the obligations of the transferee to pay all fees and other amounts due to the
FRANCHISOR and its Affiliates, and otherwise comply with the Agreement or the
franchise agreement executed by the transferee; (5) the STORE must be in
compliance with or be brought up to the then current design and equipment
standards for GJC STORES; and (6) the transferee must execute and be bound by
all provisions of the FRANCHISOR's then-current form of franchise agreement (and
sublease if the STORE was subleased directly from the FRANCHISOR or its
affiliates), which may provide for a higher royalty and service fee and
advertising contributions and other significant provisions may vary from what is
provided hereunder and shall provide for a term equal to the remaining term of
the FRANCHISE. The FRANCHISOR shall not charge such transferee an initial
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franchise fee for the FRANCHISE, but will charge the transferor its then current
assignment fee which will not exceed fifty percent (50%) of its then current
initial franchise fee, to cover the FRANCHISOR's costs in approving and
effectuating the assignment.
C. ASSIGNMENT TO PARTNERSHIP OR CORPORATION.
If the FRANCHISEE is in full compliance with this Agreement, the
FRANCHISOR shall not unreasonably withhold its consent to a transfer of the
FRANCHISE, this Agreement, the STORE and its assets to a partnership or
corporation which conducts no business other than the STORE (and other GJC
STORES under franchise agreements with the FRANCHISOR), which is actively
managed by the FRANCHISEE and in which the FRANCHISEE owns and controls not less
than fifty-one percent (51%) of the general partnership interests or the equity
and voting power; provided that the corporation or partnership execute the
FRANCHISOR's standard assignment and assumption agreement, and the shareholders
or partners, in form approved by the FRANCHISOR, agree to be personally bound
jointly and severally by all provisions of this Agreement and guarantee the
performance thereof and all other agreements between the FRANCHISEE and the
FRANCHISOR and its affiliates, to the same extent as if they had been parties to
the original agreements, and all issued and outstanding stock certificates of
such corporation shall bear a legend reflecting or referring to the restrictions
of Paragraph B of this Section.
D. FRANCHISOR'S RIGHT OF FIRST REFUSAL.
If the FRANCHISEE or its owners shall at any time determine to sell the
FRANCHISE, this Agreement, the STORE or its assets or an ownership interest in
the FRANCHISEE, the FRANCHISEE or its owners shall obtain a bona fide, executed
written offer accompanied by a cashier's check for ten percent (10%) of the
purchase price to serve as forfeitable xxxxxxx money thereunder, from a
responsible and fully disclosed purchaser and shall submit an exact copy of such
offer to the FRANCHISOR. The FRANCHISOR or its designee shall, for a period of
thirty (30) days from the date of delivery of such offer, have the right,
exercisable by written notice to the FRANCHISEE or its owners, to purchase the
interest for the price and on the terms and conditions contained in such offer;
provided that the FRANCHISOR or its designee may substitute cash for any form of
payment proposed in such offer. If the FRANCHISOR or its designee does not
exercise this right of first refusal, the FRANCHISEE or its owners may complete
the sale of the FRANCHISE, the STORE and its assets or such ownership interest
to such purchaser (on the terms of the bona fide offer subject to the
FRANCHISOR's approval of the purchaser as provided in Paragraph B of this
Section); provided that if the sale to such purchaser is not completed within
one hundred twenty (120)
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days after delivery of such offer to the FRANCHISOR, the FRANCHISOR or its
designee shall again have the right of first refusal as herein provided.
E. DEATH OR PERMANENT DISABILITY OF THE FRANCHISEE
Upon the death or permanent disability of the FRANCHISEE or if the
FRANCHISEE is a corporation or partnership, upon the death or permanently
disability of the owner of the controlling interest in the FRANCHISEE, the
executor, administrator, conservator or other personal representative of such
person shall transfer his interest to the heirs or beneficiaries of such person
or to a third party approved by the FRANCHISOR within a period of twelve (12)
months. Such transfers, including, without limitation, transfers by devise or
inheritance or trust provisions, shall be subject to the same conditions for
transfers contained in this Agreement. Failure to so dispose of such interest
within said period of time shall constitute a breach of this Agreement. The
FRANCHISEE shall be deemed to have a "permanent disability" if the usual, active
participation in the GJC STORE by the FRANCHISEE as contemplated pursuant to
this Agreement is for any reason curtailed for a continuous period of six (6)
months.
If after the death or permanent disability of the FRANCHISEE or an
owner of the FRANCHISEE, the GJC STORE is not being managed by a competent and
trained manager (as determined by the FRANCHISOR in its sole discretion), the
FRANCHISOR is authorized to immediately appoint a manager to maintain the
operation of the GJC STORE for a period not to exceed twelve (12) months or
until an approved assignee shall be able to assume the management and operation
of the GJC STORE, upon the terms and conditions of Paragraph D of Section 15.
F. RELEASE, EFFECT OF TRANSFER
In connection with ANY assignment, etc. of any interest of or by
FRANCHISEE (including, but not limited to, an assignment to a corporation)
FRANCHISEE and each of its owners and/or affiliates [and the transferee (and
each owner and/or affiliate of the transferee) if the transferee or such owner
and/or affiliate is or has been a franchisee of, or had any other relationship
with, FRANCHISOR or any of the Franchisor-Related Entities] must execute a
general release, in a form prescribed by FRANCHISOR, of any and all claims,
liabilities and/or obligations, of any nature whatsoever, however arising, known
or unknown, against FRANCHISOR and/or any or all of the Franchisor-Related
Entities.
FRANCHISOR'S consent to a transfer, or failure to exercise any
right-of-first-refusal, will not constitute a waiver of any
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claims FRANCHISOR may have against FRANCHISEE (or its owners or affiliates), nor
will it be deemed a waiver of FRANCHISOR'S right to demand exact compliance with
any of the terms or conditions of this Agreement or any other agreement by any
transferor or transferee. Unless FRANCHISOR expressly in writing releases
FRANCHISEE from its obligations under this Agreement (which FRANCHISOR has no
obligation to do), FRANCHISEE will remain and be liable for all of the payment
and other obligations under this Agreement (and any other agreement with us
and/or any affiliate) and any Franchise Agreement and/or other agreement
executed by any transferee, including any defaults by any transferee. Any
transfer (including any transfer consented to by FRANCHISOR and even if the
transferee executes a new franchise agreement) will not act as a termination of
FRANCHISEE`S confidentiality, indemnity, non-competition and other obligations
under this Agreement, including any obligations which by their nature survive
the term of this Agreement [FRANCHISEE'S non-competition obligations to
expressly continue for the full original term of this Agreement notwithstanding
any transfer], or affect FRANCHISEE'S and FRANCHISOR'S obligations and rights
under the dispute avoidance and resolution provisions of this Agreement,
including Articles 18 and 22. Any dispute regarding any proposed or completed
transfer (including FRANCHISOR'S alleged failure to consent to a proposed
transfer) will be resolved under the mediation/arbitration provisions of this
Agreement and FRANCHISEE'S sole remedy will be an order that FRANCHISOR grant
consent.
18. DISPUTE AVOIDANCE AND RESOLUTION
A. MEDIATION AND MANDATORY BINDING ARBITRATION, WAIVER OF RIGHT
TO TRIAL BY JURY, ETC.
Realizing that in business relationships there's always a possibility
of differences of opinion or other disagreements and that what is most important
is to resolve any disputes amicably, quickly, inexpensively and professionally
and to return to business as soon as possible, it's with that same spirit of
cooperation that FRANCHISEE and FRANCHISOR pledge to resolve differences and to
use the procedures specified in this Agreement (and particularly this Article
18), believing that these procedures will reduce instances of possible disputes
and make the resolution of any disputes which do arise less expensive, quicker,
less subject to public notoriety and achievable in a less formal and
antagonistic means than litigation, as well as to increase the opportunities for
FRANCHISEE and FRANCHISOR to maintain a mutually beneficial business
relationship
Therefore, FRANCHISEE and FRANCHISOR agree as follows:
(1) Any litigation, claim, dispute, suit, action,
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controversy, proceeding or otherwise ("claim") between or involving FRANCHISEE
(and/or any owner and/or affiliate of FRANCHISEE or which could be brought by,
or on behalf of, FRANCHISEE, any owner and/or affiliate of FRANCHISEE) and
FRANCHISOR (and/or any claim against or involving any or all of the
Franchisor-Related Entities or otherwise), except as expressly provided below at
Section 18 A. (5), whether arising out of or relating in any way to this and/or
any other agreement and/or any other document, any alleged breach of any duty or
otherwise (including but not limited to the underlying legality of the offer
and/or sale of any franchise, any action for rescission or other setting aside
of such sale or any transaction, agreement or document and any claim that this
Agreement or any portion thereof is invalid, illegal, void, unenforceable or
otherwise and any claim of fraud, including fraud in the inducement) and on
whatever theory and/or facts based, will be:
(a) First, discussed in a face-to-face meeting between
FRANCHISEE (or, if the Franchisee is a corporation or partnership, an
individual authorized to make binding commitments on behalf of the
Franchisee) and a corporate executive of FRANCHISOR's authorized to
make binding commitments on FRANCHISOR's behalf. This meeting will be
held at the FRANCHISOR'S then-current headquarters and within 30 days
after either FRANCHISEE or FRANCHISOR gives written notice to the other
proposing such a meeting.
(b) Second, if, in the opinion of either FRANCHISEE or
FRANCHISOR, the meeting has not successfully resolved such matters and
if desired by any person or entity involved in the claim, submitted to
non-binding mediation for a minimum of eight hours before (a) Franchise
Arbitration and Mediation, Inc. ("FAM") (or an organization designated
by FAM) or (b) any other mediation organization approved by all such
persons and/or entities or (c) by Judicial Arbitration and Mediation
Service (JAMS) if FAM cannot conduct such mediation and the parties
cannot agree on a mediation organization. On election by any party,
arbitration and/or any other remedy allowed by this Agreement may
proceed forward at the same time as mediation. In the mediation,
FRANCHISEE and FRANCHISOR shall each be represented by an individual
authorized to make binding commitments on FRANCHISEE'S and FRANCHISOR'S
respective behalfs and may be represented by counsel. In addition,
FRANCHISEE and/or FRANCHISOR may, with permission of the mediator,
bring such additional persons as are needed to respond to questions,
contribute information and/or participate in the negotiations. The fees
and expenses of the mediator and/or mediation organization shall be
shared equally by FRANCHISEE and FRANCHISOR. The mediator shall be
disqualified as a
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witness, consultant, expert or counsel for any party with respect to
the dispute and any related matters.
(c) Third, if neither FRANCHISEE nor FRANCHISOR desire
mediation (or if such mediation is not successful in resolving such
claim), submitted to and finally resolved by binding arbitration before
and in accordance with the arbitration rules of FAM (or any successor
organization); provided that if such arbitration is unable to be heard
by FAM for any reason, the arbitration will be conducted by Judicial
Arbitration and Mediation Service (JAMS.) The fees and expenses of the
arbitrator(s) and/or arbitration organization shall be shared equally
by the disputants. In each case, the parties to any
mediation/arbitration will execute appropriate confidentiality
agreements, excepting only such public disclosures and filings as are
required by law.
(2) Any mediation/arbitration (and any appeal of
arbitration) will be exclusively conducted at the office of the
mediating/arbitrating organization (or its representatives) which is located
closest to FRANCHISOR's then-current headquarters and, if at all possible, by a
mediator/arbitrator experienced in franchising. FRANCHISEE and FRANCHISOR
acknowledge the critical importance of a single source for decisions in
arbitration (and in any court actions) to guide FRANCHISEE and FRANCHISOR, to
eliminate the possibility of inconsistent decisions and awards which could
adversely affect the uniform development and administration of the XXXXXX XXXX'X
System and group of companies and to maximize the opportunity for the arbitrator
to give due consideration to FRANCHISEE's and FRANCHISOR's ongoing practical
business needs in this regard. Except as expressly provided below, the parties
to any mediation or arbitration will bear their own costs, including attorney's
fees. Any claim, and any mediation/arbitration, will be conducted and resolved
on an individual basis only and not on a class-wide, multiple plaintiff or
similar basis. On request of any party to a claim, the arbitrator may be
required to issue a written award, specifying the facts found and the law
applied, but the party so requesting will bear the fees and charges incurred in
connection therewith. The arbitrator may award or otherwise provide for
temporary restraining orders, preliminary injunctions, injunctions, attachments,
claim and delivery proceedings, temporary protective orders, receiverships and
other pre-judgment, equitable and/or interim relief as appropriate pending final
resolution by binding arbitration of a claim, as well as in connection with any
such final resolution, and may issue summary orders disposing of all or part of
a claim at any point. Each party consents to the enforcement of such orders,
injunctions, etc. by any court having jurisdiction. In any arbitration, any and
all pre-trial discovery devices (including, but not limited to, depositions,
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written interrogatories, requests for admission, and requests for production,
inspection and copying of documents) will be available to the disputants as if
the subject matter of the arbitration were pending in a civil action before a
court of general jurisdiction in the state whose law is to be applied under
Section 18 N. The arbitrator shall have the power to order compliance with such
discovery procedures, as well as assess sanctions for non-compliance with any
order. The arbitrator (rather than a court) shall decide any questions relating
in any way to the parties' agreement (or claimed agreement) to arbitrate,
including but not limited to applicability, subject matter, timeliness, scope,
remedies and any alleged fraud in the inducement, or otherwise. Each participant
must submit or file any claim which would constitute a compulsory counterclaim
(as defined by the applicable rule under the Federal Rules of Civil Procedure)
within the same proceeding as the claim to which it relates. Any such claim
which is not submitted or filed in such proceeding will be forever barred. Any
offers, discussions, negotiations, mediations or otherwise in connection with
possible settlement or other resolution of any claim may not be introduced in
evidence (or for any other purpose) in any arbitration proceeding, court
proceeding or otherwise.
(3) If any party to an arbitration wishes to appeal any
final award by an arbitrator (there will be no appeal of interim awards or other
interim relief), that party can appeal, within thirty (30) days of such final
award, to a three (3) arbitrator panel to be appointed by the same organization
as conducted the arbitration, such panel to conduct all proceedings at the same
location as specified in subsection (b) above. The issues on appeal will be
limited to the proper application of the law to the facts found at the
arbitration and will not include any trial de novo or other fact-finding
function. The party requesting such appeal must pay all costs and fees charged
by such arbitration appeal panel and/or arbitration organization in connection
with such appeal, as well as posting any bond deemed appropriate by such
arbitration organization or arbitration appeal panel. In addition, a party
requesting appeal, and who does not prevail on appeal, will pay the other
party's (or parties') attorneys' fees and other costs of responding to such
appeal.
(4) Judgment on any preliminary or final arbitration award
[subject to the opportunity for appeal as contemplated above] may be entered in
any court having jurisdiction and will be binding, final and non-appealable.
(5) The obligation herein to mediate and/or arbitrate will
not be binding on FRANCHISOR with respect to claims or issues relating primarily
to (i) the validity of any trademarks, service marks or other intellectual
property of
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FRANCHISOR, (ii) FRANCHISOR's rights to obtain possession of any real and/or
personal property (including any action in unlawful detainer, ejectment or
otherwise) (iii) FRANCHISOR's rights to obtain a writ of attachment and/or other
pre-judgment remedies and/or (iv) FRANCHISOR's rights to receive and enforce a
temporary restraining order, preliminary injunction, permanent injunction or
other equitable relief, and FRANCHISOR's exercise of any such rights and/or
remedies will not be deemed a waiver of FRANCHISOR's rights to require or use
mediation and/or arbitration.
(6) Notwithstanding any provisions of this Agreement or
otherwise relating to which state or provincial laws this Agreement will be
governed by and construed under, all issues relating to arbitrability and/or the
enforcement of the agreement to arbitrate contained herein will be decided by
the arbitrator (including all claims that this Agreement in general, and/or the
within agreement to arbitrate, was procured by fraud in the inducement or
otherwise) and will be governed by the Federal Arbitration Act (9 U.S.C. Section
1 et seq.) and the federal common law of arbitration. Notwithstanding any
provisions of state law to the contrary, FRANCHISOR intends to fully enforce the
provisions of this franchise agreement and other documents, including all venue,
choice-of-laws and mediation/arbitration provisions, and to rely on federal
preemption under the Federal Arbitration Act (9 U.S.C. Section 1 et seq.)
(7) FRANCHISEE and FRANCHISOR each knowingly waive all
rights to trial by a court or jury, understanding that arbitration may be less
formal than a court or jury trial, may use different rules of procedure and
evidence and that appeal is generally less available, still strongly preferring
(for the reasons set forth in this section and the following one) mediation
and/or arbitration to resolve any disputes, except as provided in Section 18 A.
(5).
B. VENUE, WAIVER OF RIGHTS TO TRIAL BY JURY, LIMITATION OF
DAMAGES, ETC.
Without in any way limiting or otherwise affecting FRANCHISEE's and
FRANCHISOR's obligations regarding mediation/binding arbitration, FRANCHISEE and
FRANCHISOR agree that any litigation between FRANCHISEE and FRANCHISOR (and/or
involving any owner and/or affiliate of FRANCHISEE's or which could be brought
by FRANCHISEE or on FRANCHISEE's behalf and including any matters involving any
of the Franchisor-Related Entities or otherwise), whether to enforce an
arbitration award or involving any litigation, dispute, controversy, claim,
proceeding or otherwise which is not subject to any agreement regarding
mediation/arbitration (or in the event that a court having jurisdiction should
hold that the foregoing agreement
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regarding mediation and/or arbitration is not enforceable) or otherwise, and
bearing in mind FRANCHISEE's and FRANCHISOR's joint interest in having a single
court determine issues in a consistent manner for application throughout the
XXXXXX XXXX'X System and not have FRANCHISOR or FRANCHISEE exposed to
inconsistent decisions, will be held exclusively before a court in the most
immediate judicial district encompassing FRANCHISOR's then-current headquarters
and having subject matter jurisdiction or the United States District Court
encompassing our then-current headquarters (where a basis for federal
jurisdiction exists, all filings, proceedings and otherwise will be exclusively
in such Federal court, in preference to State court), FRANCHISOR and FRANCHISEE
consenting to the exclusive jurisdiction of such court(s) and WAIVING ALL RIGHTS
TO TRIAL BY JURY. Any claim, and any litigation, will be conducted and resolved
on an individual basis only and not on a class-wide, multiple plaintiff or
similar basis.
So as to achieve many of the advantages which would normally be
associated with arbitration (such as lower expense, more rapid resolution of
controversies, fewer protracted and complex proceedings, reduced instances of
costly and time-consuming appeal, use of a more sophisticated and experienced
trier of fact and law, etc.) and for FRANCHISEE's and FRANCHISOR's mutual
benefit, FRANCHISEE and FRANCHISOR agree that in any litigation, FRANCHISEE (and
each owner and affiliate of FRANCHISEE's) and FRANCHISOR each knowingly waive
all rights to trial by jury and, in any arbitration, litigation or otherwise,
FRANCHISEE and FRANCHISOR each waive any right to recover, and any rights to
make claims for (whether by claim, counter-claim, offset, way of defense or
otherwise), punitive, exemplary, multiple, pain-and-suffering, mental distress,
incidental, consequential, special, lost income and/or profits (except as
expressly provided below) and/or similar damages under any theory whatsoever,
FRANCHISEE and FRANCHISOR agreeing that such claims are inherently speculative
and subject to abuse, often serving as obstacles to the reasonable resolution or
settlement of a dispute and frequently operating to primarily benefit the
attorneys involved in the claim, provided that , in any event, FRANCHISOR may
recover the then-current value of any initial franchise fees, royalties,
marketing contributions and/or other payments FRANCHISEE is, or would be,
obligated to make, or would normally make, in the absence of a breach or
termination, to FRANCHISOR or any affiliated company, whether under this
Agreement or otherwise, it being FRANCHISEE's and FRANCHISOR's intention that
FRANCHISOR receive the full benefit of FRANCHISOR's bargain with FRANCHISEE. In
any event, FRANCHISOR's maximum liability (combined with the maximum liability
of any of the Franchisor-Related Entities or any of them) shall be
(collectively) limited to the return to FRANCHISEE of the initial franchise fee
actually paid by FRANCHISEE and FRANCHISEE's maximum liability will be
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limited to the present value of the royalties, advertising contributions and
other amounts which normally would have been paid by FRANCHISEE if the franchise
had continued in existence for its full term and any renewals. FRANCHISEE and
FRANCHISOR have agreed on this limitation in recognition of the facts that the
calculation of any actual damages would be exceedingly difficult and subject to
speculation and possible abuse and that the foregoing compromises benefit both
FRANCHISOR and FRANCHISEE. FRANCHISEE agrees that FRANCHISOR will not be
required to post a bond in order to obtain any injunctive or other equitable
relief or otherwise and that FRANCHISEE's only remedy if an injunction or other
equitable relief is entered against FRANCHISEE will be to obtain dissolution of
such injunction, etc.
The dispute avoidance and resolution provisions of this Agreement
(including, but not limited to, this Article 18 and Article 22) shall apply to
any claims, arbitration, litigation or otherwise between FRANCHISEE and
FRANCHISOR, and/or by any owner and/or affiliate of FRANCHISEE's, or which could
be brought by FRANCHISEE or on FRANCHISEE's behalf, whether against FRANCHISOR
and/or any or all of the Franchisor-Related Entities.
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C. PRIOR NOTICE OF CLAIMS BY FRANCHISEE
Prior to FRANCHISEE taking any legal or other action against FRANCHISOR
and/or any of the Franchisor-Related Entities, whether for arbitration, damages,
injunctive, equitable or other relief (including but not limited to recision)
and whether by way of claim, counterclaim, cross-complaint, raised as an
affirmative defense, offset or otherwise, FRANCHISEE will first give FRANCHISOR
sixty (60) days prior written notice and opportunity to cure such alleged act or
omission [or, if such alleged act or omission cannot reasonably be cured within
such sixty (60) day period, and FRANCHISOR is diligently continuing efforts to
attempt to cure such alleged act or omission, such additional time as FRANCHISOR
is continuing such efforts]; provided that any dispute regarding FRANCHISOR's
withholding consent with respect to a proposed transfer by FRANCHISEE may be
immediately submitted to face-to-face meeting, mediation and arbitration as
provided in Section 18 A.
Since FRANCHISEE and FRANCHISOR share a mutual interest in FRANCHISEE's
possible success and each believe that it is important that any possible
business problems be addressed as soon as possible, FRANCHISEE and FRANCHISOR
agree that if FRANCHISEE has any complaint regarding FRANCHISOR's failing to
perform any obligation to FRANCHISEE (including, but not limited to, training,
marketing, operational support, representations by FRANCHISOR or otherwise)
FRANCHISEE will promptly advise FRANCHISOR in writing of such problem within 90
days of the problem arising, so that FRANCHISOR can have an opportunity to
correct the problem. If FRANCHISEE fails to so advise FRANCHISOR, FRANCHISEE
will be forever precluded from taking any legal or other action against
FRANCHISOR and/or any of the Franchisor-Related Entities, whether for
arbitration, damages, injunctive, equitable or other relief (including but not
limited to recision) and whether by way of claim, counterclaim, cross-complaint,
raised as an affirmative defense, offset or otherwise with regard to the
problem.
D. PERIODS IN WHICH TO MAKE CLAIMS
(1) FRANCHISEE and FRANCHISOR agree that, except as provided
below at Section 18 D. (3), no arbitration, action or suit (whether by way of
claim, counterclaim, cross-complaint, raised as an affirmative defense, offset
or otherwise) by either FRANCHISEE or FRANCHISOR will lie or be permitted
against the other (nor by FRANCHISEE against any of the Franchisor-Related
Entities), whether for damages, rescission, injunctive or any other legal and/or
equitable relief, in respect of any alleged breach of this Agreement, or any
other claim of any type, unless such party will have commenced such arbitration
proceeding, action or suit before the expiration of the earlier of:
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(a) One (1) year after the date on which the state of
facts giving rise to the cause of action comes to
the attention of, or should reasonably have come
to the attention of, such party; or
(b) One (1) year after the initial occurrence of any
act or omission giving rise to the cause of
action, whenever discovered.
(2) Notwithstanding the foregoing limitations, where any
federal, state or provincial law provides for a shorter limitation period than
above described, whether on notice or otherwise, such shorter period will
govern.
(3) The foregoing limitations may, where brought into effect
by FRANCHISOR's failure to commence an action within the time periods specified,
operate to exclude FRANCHISOR's right to xxx for damages but will in no case,
even on expiration or lapse of the periods specified or referenced above,
operate to prevent FRANCHISOR from terminating FRANCHISEE's rights and
FRANCHISOR's obligations under this Agreement as provided herein and under
applicable law nor prevent FRANCHISOR from obtaining any appropriate court
judgment, order or otherwise which enforces and/or is otherwise consistent with
such termination.
(4) The limitations set forth in subsections (a) and (b)
will not apply to FRANCHISOR's claims arising from or related to: (1)
indemnification by FRANCHISEE; (2) FRANCHISEE's confidentiality, non-competition
or other exclusive relationship obligations; and/or (3) FRANCHISEE's
unauthorized use of the Name and/or Marks.
E. WITHHOLDING CONSENT
In no event will FRANCHISEE make any claim, whether directly, by way of
set-off, counter-claim, defense or otherwise, for money damages or otherwise, by
reason of any withholding or delaying of any consent or approval by FRANCHISOR.
FRANCHISEE's sole remedy for any such claim is to submit it to an executive
meeting, mediation and arbitration as described in this Agreement and, if the
executive meeting and mediation fail to resolve the matter, for the arbitrator
to order FRANCHISOR to grant such consent. Unless expressly provided otherwise
in this Agreement, approvals and consents may be withheld by FRANCHISOR in its
sole and absolute discretion.
F. SURVIVAL AND CONSTRUCTION
Each provision of this Article 18, together with the provisions of
Article 22, will be deemed to be self-executing and
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continue in full force and effect subsequent to and notwithstanding the
expiration, termination, setting aside, cancellation, recision, unenforceability
or otherwise of this Agreement (or any part of it) for any reason, and will
survive and will govern any claim for recision or otherwise.
Each provision of this Agreement (including but not limited to those
relating to mandatory arbitration, waiver of jury trial, limitation of damages,
prior notice of claims, shortened periods in which to bring claims, costs and
attorney's fees, or otherwise) will be construed as independent of, and
severable from, every other provision and if any provisions are deemed to be
unenforceable in any way, such provisions will be modified or interpreted to the
minimum extent necessary to have them comply with the law (including making such
provision mutual in effect) and the remaining provisions of this Agreement will
remain in full force and effect, the parties agreeing that the unenforceability
of any provisions of this Article 18 (or otherwise) will not affect the
remainder of this Article 18 (or otherwise), notwithstanding any statutory or
decisional law to the contrary.
Each party reserves the right to challenge any law, rule or judicial or
other construction which would have the effect of varying or rendering
ineffective any provision of this Agreement. The benefits and protections of
this Agreement which apply to FRANCHISOR (including, but not limited to, all
provisions relating to indemnification and/or releases) shall also apply to any
past, current and/or future Franchisor-Related Entities as if they were
expressly named beneficiaries of such provisions. In each case where FRANCHISOR
may exercise any option or other right, FRANCHISOR may do so in FRANCHISOR's
sole and absolute discretion, without liability or other obligation. So as to
preserve the flexibility to deal with practical business situations (which
FRANCHISEE and FRANCHISOR agree should benefit FRANCHISOR's and FRANCHISEE's
businesses in the long term), FRANCHISOR may, in FRANCHISOR's sole and absolute
discretion, elect to not enforce (or to selectively enforce) any provision of
this Agreement, or any other agreement, any policy or otherwise, whether with
respect to FRANCHISEE and/or any other franchisee or otherwise, and FRANCHISOR
may apply different policies to any franchisee, all without liability or other
obligation and any such acts or omissions will not limit or otherwise affect
FRANCHISOR's rights, whether to enforce this Agreement or otherwise.
G. COSTS AND ATTORNEYS' FEES
Except as expressly provided otherwise in this Agreement with respect
to appeal of an arbitration award or otherwise, and based on FRANCHISEE'S and
FRANCHISOR'S judgment that attorney's fees provisions often operate to primarily
benefit the attorneys
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involved in any claim and/or to encourage specious claims to the detriment of
everyone involved in a franchise system, the parties will each bear their own
costs of enforcement and/or defense (including but not limited to attorney's
fees) in any claim or dispute between FRANCHISEE and FRANCHISOR (including
FRANCHISEE's and/or FRANCHISOR's affiliates, related persons/entities, etc.) and
will make no claim with regard thereto.
H. VALIDITY AND EXECUTION
This Agreement will become valid only when executed and accepted by
FRANCHISOR at its headquarters.
I. BINDING EFFECT, MODIFICATION AND REPRESENTATIONS
This Agreement is binding on the parties hereto and their respective
executors, administrators, heirs, assigns, and successors in interest, and will
not be modified or supplemented except by means of a written agreement signed by
both FRANCHISEE and FRANCHISOR's President or one of FRANCHISOR's Vice
Presidents, provided that changes to the Operating Manual may be made by
FRANCHISOR at any time and will be fully binding on FRANCHISEE notwithstanding
any provisions of this Section or otherwise. No other officer, field
representative, salesperson or other person has the right or authority to sign
on behalf of FRANCHISOR, to make oral or written modifications to this
Agreement, or to make any representations or agreements on behalf of FRANCHISOR,
and any such modifications, representations and/or agreements shall not be
binding on FRANCHISOR. Similarly, other than any of the individual FRANCHISEE(s)
(or any partner or corporate officer of the FRANCHISEE, if the FRANCHISEE is a
partnership or corporation), no person has the right or authority to sign on
behalf of FRANCHISEE, to make oral or written modifications to this Agreement on
behalf of FRANCHISEE, or to make any representations or agreements on behalf of
FRANCHISEE, and any such modifications, representations and/or agreements shall
not be binding on FRANCHISEE. FRANCHISEE expressly acknowledges that no oral
promises, representations or declarations were made to or relied on by
FRANCHISEE and that FRANCHISOR's obligations are confined exclusively to the
terms herein. FRANCHISEE understands and assumes the business risks inherent in
the franchised enterprise.
J. CONSTRUCTION, ETC.
Except as expressly provided otherwise, nothing in this Agreement is
intended, nor will be deemed, to confer any rights or remedies on any person or
legal entity not a party hereto. Except where this Agreement expressly provides
otherwise, FRANCHISOR has the right to condition, withhold and/or refuse, in
FRANCHISOR's sole and absolute discretion, any request by
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FRANCHISEE and FRANCHISOR's approval of, or consent to, any action or omission
by FRANCHISEE. The headings of the several Articles and Sections hereof are for
convenience only and do not define, limit, or construe the contents of such
Articles or Sections. The term "attorneys' fees" will include, without
limitation, legal fees, whether incurred prior to, in preparation for or in
contemplation of the filing of any written demand or claim, action, hearing or
proceeding to enforce the obligations of this Agreement. References to a
"controlling interest" in the Franchisee will mean fifty percent (50%) or more
of the voting control of the Franchisee if the Franchisee is a corporation, and
any general partnership interest if the 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
the masculine and neuter usages include the other and the feminine. If two or
more persons are at any time the Franchisee hereunder, whether or not as
partners or joint venturers, their obligations and liabilities to FRANCHISOR
will be joint and several. This Agreement will be executed in multiple copies,
each of which will be deemed an original. Each of the provisions of this
Agreement (including Articles 18 and 22) apply to any claim brought (or which
could be brought) by any owner and/or affiliate of FRANCHISEE's or by or on
FRANCHISEE's behalf. If any limitation on FRANCHISEE's rights (including, but
not limited to, any limitation on damages, waiver of jury trial, shortened
period in which to make any claim or otherwise) is held unenforceable with
respect to FRANCHISEE, then such limitation will not apply to FRANCHISOR.
FRANCHISOR shall have the sole right to enforce the obligations of this (or any
other) Franchise (or other) Agreement and neither FRANCHISEE nor any other
franchisee of FRANCHISOR's shall be deemed a third party beneficiary with
respect to this or any other agreement.
FRANCHISEE and FRANCHISOR, each believing that (1) having written
documents as the only basis for their legal relationship benefits each equally
and reduces the risk of uncertainty in what should be a long-term business
relationship and (2) this Agreement should be strictly interpreted according to
its express terms, and each having a concern with (among other things) an
approach whereby a court or arbitrator might impose (or limit or expand) duties
on either that were not expressly agreed to in writing by FRANCHISEE and
FRANCHISOR, agree that FRANCHISEE and FRANCHISOR mutually waive any "implied
covenant of good faith and fair dealing" and that no such (or similar) doctrine,
rule of interpretation or otherwise will have any application to FRANCHISEE's
and FRANCHISOR's relationship, this Agreement or any other agreement between
FRANCHISEE and FRANCHISOR (or any affiliate or the Franchisor-Related Entities)
nor will affect FRANCHISOR's ability to make binding changes to the XXXXXX
XXXX'X System, the Manual(s) or otherwise. Neither FRANCHISEE nor
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FRANCHISOR have any expectation that FRANCHISEE's or FRANCHISOR's rights and
obligations will be otherwise than as expressly set forth in this Agreement or
that where any contractual provision allows FRANCHISEE or FRANCHISOR any
discretion in action or otherwise, the exercise of that discretion will be
limited in any way. FRANCHISEE agrees that FRANCHISOR will not be liable for any
act or omission, whether with respect to the Marketing Fund or otherwise, which
is consistent with this Agreement or other information provided to FRANCHISEE,
or which is done in subjective good faith. No course of dealing between
FRANCHISEE and FRANCHISOR, nor any course of dealing or agreement between
FRANCHISOR and anyone else, past, present or future, will affect FRANCHISEE's or
FRANCHISOR's rights under this Agreement or otherwise.
If any applicable and binding law or rule of any jurisdiction requires
a greater prior notice of the termination of, or refusal to renew, 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 specification, standard or
operating procedure prescribed by FRANCHISOR 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 FRANCHISOR will have the
right, in FRANCHISOR's sole and absolute discretion, to modify such invalid or
unenforceable provision, specification, standard, or operating procedure 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 specification, standard or operating
procedure prescribed by FRANCHISOR, any portion or portions which a court may
hold to be unenforceable in a final decision to which FRANCHISOR are a party, or
from reducing the scope of any promise or covenant to the extent required to
comply with such a court order. Such modifications to this Agreement shall be
effective only in such jurisdiction, unless FRANCHISOR elects to give them
greater applicability, and shall be enforced as originally made and entered into
in all other jurisdictions.
FRANCHISEE will have no right to enforce any obligation of FRANCHISOR's
or any other person/entity (including, but not limited to, any other XXXXXX
XXXX'X Franchisee) under, and FRANCHISEE will not be deemed a third party
beneficiary of, any other Franchise Agreement, other agreement or otherwise.
K. NON-RETENTION OF FUNDS
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FRANCHISEE does not have the right to offset or withhold payments owed
to FRANCHISOR (and/or any affiliate) for amounts purportedly due FRANCHISEE (or
any affiliate of FRANCHISEE's) from FRANCHISOR, the Franchisor-Related Entities
and/or any affiliate as a result of any dispute of any nature or otherwise, but
will pay such amounts to FRANCHISOR (or FRANCHISOR's affiliate) and only
thereafter seek reimbursement in accordance with the provisions of Article 18.
If FRANCHISEE believes that FRANCHISOR or any other person/entity has violated
any legal duty to FRANCHISEE, FRANCHISEE will, notwithstanding such dispute, pay
as designated all sums specified under this Agreement or any other agreement,
whether to be paid to FRANCHISOR or any affiliate (including royalties, any
unpaid portion of the initial franchise fee and any marketing contributions
and/or amounts payable to franchisee councils and/or cooperatives) and will not
withhold any payments until and unless such dispute has been finally determined
in FRANCHISEE's favor.
L. SEVERABILITY; SUBSTITUTION OF VALID PROVISIONS
Except as otherwise stated in this Agreement, each provision of this
Agreement, and any portion of any provision, is severable (including, but not
limited to, any provision affecting any rights to recovery for breach of any
legal obligation, including but not limited to waiver of statutory benefits such
as rights to jury trial, exemplary or punitive damages, recovery of attorney's
fees and/or shortening of statutes of limitations), and the remainder of this
Agreement will continue in full force and effect. To the extent that any
provision restricting FRANCHISEE's competitive activities is deemed
unenforceable, FRANCHISEE and FRANCHISOR agree that such provisions will be
enforced to the fullest extent permissible under governing law. This Agreement
will be deemed automatically modified to comply with governing law if such law
requires: (a) a greater time period for notice of the termination of, or refusal
to renew, this Agreement; or (b) the taking of some other action not described
in this Agreement. FRANCHISOR may modify any invalid or unenforceable provision
to the extent required to be valid and enforceable and FRANCHISEE will be bound
by the modified provisions.
M. WAIVERS
FRANCHISOR's waiver of any breach(es) under this or any other agreement
[whether by failure to exercise a power or right available to FRANCHISOR,
failure to insist on strict compliance with the terms, obligations or conditions
of any agreement, development of a custom or practice between FRANCHISEE and
FRANCHISOR (or others) which is at variance with the terms of any agreement,
acceptance of partial or other payments or otherwise], whether with respect to
FRANCHISEE or others, will not affect
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FRANCHISOR's rights with regard to any breach by FRANCHISEE or anyone else or
constitute a waiver of FRANCHISOR's right to demand exact compliance by
FRANCHISEE with the terms of this Agreement or otherwise. Subsequent or other
acceptance by FRANCHISOR of any payments or performance by FRANCHISEE will not
be deemed a waiver of any preceding or other breach by FRANCHISEE of this
Agreement or otherwise. The rights and remedies provided in this Agreement are
cumulative and FRANCHISOR will not be prohibited from exercising any rights or
remedies provided under this Agreement or permitted under law or equity.
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N. CHOICE OF LAWS
Except with respect to the applicability of the Federal Arbitration
Act, 9 U.S.C. Section 1 et seq. and the effect of federal pre-emption of state
law by such Act and except to the extent governed by the United States Trademark
Act and other federal laws, or as provided elsewhere in this Agreement,
FRANCHISEE and FRANCHISOR agree that this Agreement (including any claims,
counter-claims or otherwise by FRANCHISEE) and all other matters concerning
FRANCHISEE and FRANCHISOR (or FRANCHISEE and any of the Franchisor-Related
Entities), including FRANCHISEE's and FRANCHISOR's/their respective rights and
obligations, will be governed by, and construed and enforced in accordance with,
the laws of the state where FRANCHISEE's GJC STORE is, or will be, located,
without regard to the laws of such state relating to conflicts of laws or choice
of law; except that the provisions of any law of that state regarding franchises
(including, without limitation, registration, disclosure, or relationship, and
the regulations thereunder) shall not apply unless such state's jurisdictional,
definitional and other requirements are met independently of, and without
reference to, this Section.
O. ADVICE OF LAWYERS, ALTERNATIVE INVESTMENT OPPORTUNITIES, ETC.
FRANCHISEE acknowledges that it has had the opportunity (and FRANCHISOR
has strongly advised FRANCHISEE) to have this Agreement and all other documents
reviewed by FRANCHISEE's own attorney and that FRANCHISEE has read, understood,
had an opportunity to discuss with FRANCHISOR and agreed to each provision of
this Agreement. FRANCHISEE agrees that it has been under no compulsion to sign
this Agreement, that it has carefully reviewed and carefully thought about each
provision of this Agreement, that it has considered other franchise
opportunities as well as the possibility of FRANCHISEE entering FRANCHISOR's
industry as a non-franchised participant and that, therefore, this Agreement
will be deemed to have been drafted by FRANCHISEE and FRANCHISOR in equal parts
and that no presumptions or inferences concerning this Agreement's terms,
interpretation or otherwise will result by reason of the fact that FRANCHISOR
prepared this Agreement or may be unwilling (in the interest of consistency of
system administration) to change its terms.
19. INDEPENDENT CONTRACTORS AND INDEMNIFICATION
The FRANCHISOR and the FRANCHISEE are independent contractors. The
FRANCHISEE shall conspicuously identify the FRANCHISEE at the premises of the
STORE and in all dealings with suppliers, as the owner of the STORE. Neither the
FRANCHISOR nor the FRANCHISEE shall make any agreements or representations in
the name of or on behalf of the other or that their relationship
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is other than franchisor and franchisee and neither the FRANCHISOR nor the
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 the FRANCHISOR be obligated for any damages to any person or property
directly or indirectly arising out of the operation of the STORE or the
FRANCHISEE's business conducted pursuant to the FRANCHISE, whether caused by the
FRANCHISEE's negligent or willful action or failure to act, The FRANCHISOR shall
have no liability for any sales, use, excise, income, property or other taxes
levied upon the STORE or its assets or in connection with the sales made or
business conducted by the STORE. The FRANCHISEE agrees to indemnity the
FRANCHISOR against and to reimburse the FRANCHISOR for all such obligations,
damages and taxes for which it is held liable and for all costs reasonably
incurred by the FRANCHISOR in the defense of any such claim brought against it
or in any act on in which it is named as a party. The FRANCHISOR shall have the
right to defend any such claim against it. The FRANCHISOR agrees to indemnify
the FRANCHISEE against and to reimburse the FRANCHISEE for any obligations or
liability for damages attributable to agreements or representations made by the
FRANCHISOR not expressly authorized hereunder, and for costs (as hereinabove
described) reasonably incurred by the FRANCHISEE in the defense of any such
claim brought against him or the STORE or in any action in which he is named as
a party; provided that the FRANCHISOR shall have the right to participate in,
and to the extent the FRANCHISOR deems necessary, to control, any litigation or
proceeding which might result in liability of or expense to the FRANCHISEE
subject to such indemnification. 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.
20. NOTICES
All written notices permitted or required to be delivered by the
provisions of this Agreement or of the OPERATING MANUAL, shall be deemed so
delivered on the date when hand delivered; one (1) day after sending by
telegraph or after the date of deposit, if deposited with a commercial delivery
service which guarantees next day delivery; or three (3) days after placed in
the mail by Registered or Certified Mail, Return Receipt Requested, postage
prepaid and addressed to the party to be notified at its most-current principal
business address of which the notifying party has been notified.
21. EFFECTIVE DATE OF AGREEMENT
This Agreement shall take effect upon the date of the FRANCHISOR's
execution and delivery of this Agreement to the FRANCHISEE.
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22. ACKNOWLEDGMENTS AND REPRESENTATIONS, ENTIRE AGREEMENT,
NO FIDUCIARY RELATIONSHIP, ETC.
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BE SURE YOU READ THE FOLLOWING SECTIONS CAREFULLY! THEY'RE IMPORTANT AND ARE IN
THIS AGREEMENT TO MAKE SURE THAT NEITHER YOU NOR WE HAVE ANY MISUNDERSTANDINGS
OR INAPPROPRIATE EXPECTATIONS.
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You and we agree that there does not exist any fiduciary, trust or
similar special relationship between you and us, that the relationship between
you and us is an ordinary commercial relationship between independent
businesspeople intended for mutual but independent economic benefit and is not
in any sense, nor is intended to be, a fiduciary, trust or similar special
relationship, that each party has dealt with each other at arm's length and as
businesspersons with equivalent bargaining power, notwithstanding the
relationship of Franchisor and Franchisee, and that you have alternative
business opportunities (some of which are franchised) which you have
investigated and in which you can invest.
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YOUR INITIALS: __________ / __________
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You acknowledge that you [and each of your owners (if you are a
corporation or partnership) and investors] has read this Agreement and our
Uniform Franchise Offering Circular and all exhibits and that you and they
understand and accept the terms, conditions, and covenants contained in this
Agreement as being necessary to maintain our high standards of quality and
service and the uniformity of those standards at all GJC STORES and thereby to
protect and preserve the goodwill of the Marks and the System.
---------------------------------------
YOUR INITIALS: __________ / __________
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You and we, each agreeing on the critical practical business importance
of our relationship being governed solely by written documents signed by you and
us (including any concurrently executed written personal guarantees, Statement
of Prospective Franchisee and/or exhibits - schedules - addenda - promissory
note(s) security agreement(s) or other written documents signed by the party to
be bound thereby, all of which will be deemed to be part of this Agreement for
the purposes of this Section 21) and not wishing to create misunderstandings,
confusion and possible conflict through reference to any alleged prior and/or
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contemporaneous oral and/or written representations, understandings, agreements
or otherwise, or any legal doctrines such as :"good faith and fair dealing" or
otherwise which might introduce an element of uncertainty into our relationship,
jointly intend, represent, warrant and agree that (1) this Agreement contains
the final, complete and exclusive expression of the terms of your and our
agreement, and the final, complete and exclusive expression of your and our
intent, and entirely supersedes and replaces any and all prior and/or concurrent
understandings, agreements, inducements, prior course(s) of dealing,
representations (financial or otherwise), promises, options, rights-of-first
refusal, guarantees, warranties (express or implied) or otherwise (whether oral
or written) between you and us, (2) there are no prior and/or concurrent
understandings, agreements, inducements, course(s) of dealing, representations
(financial or otherwise), promises, options, rights-of-first refusal,
guarantees, warranties (express or implied) or otherwise (whether oral or
written) which are not fully expressed in this Agreement and (3) no prior and/or
concurrent understandings, agreements, inducements, course(s) of dealing,
representations (financial or otherwise), promises, options, rights-of-first
refusal, guarantees, warranties (express or implied) or otherwise (whether oral
or written) of any kind or nature whatsoever have been made by us or anyone
else, nor have been relied on by you nor will have any force or effect;
excepting only the written representations made by you in connection with its
application for this franchise. You and we each expressly disclaim any
understandings, agreements, inducements, course(s) of dealing, representations
(financial or otherwise), promises, options, rights-of-first refusal,
guarantees, warranties (express or implied) or otherwise (whether oral or
written) which are not fully expressed in writing in this Agreement. This is
equally important to you, as well as us, since, just as we do not wish to deal
with allegations that we may have made or entered into understandings,
representations, etc. not fully expressed in writing in this Agreement (such as
alleged earnings claims), you do not wish to deal with allegations that you made
or entered into understandings, representations, etc. (such as promises to
achieve particular sales or royalty payment levels, would open a particular
number of units, etc.) which are not fully expressed in writing in this
Agreement.
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YOUR INITIALS: __________ / __________
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In particular, you have not been promised, nor have we or anyone else
made any promises, representations and/or warranties, nor have you received or
relied on any promises, representations or warranties, that (1) any payments by
you are refundable at
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your option, (2) we will repurchase any rights granted hereunder (or any
associated business) or be will able to assist you in any resale, (3) you will
succeed in the franchised business, (4) you will achieve any particular sales,
income or other levels of performance, (5) you will have any exclusive rights of
any type other than as specifically set forth herein, (6) you will receive any
level of advertising (television or otherwise), marketing assistance, site
location, development or other services, operational assistance or otherwise
other than as expressly set forth in this Agreement, (7) you will not be
required to obtain any licenses in order to operate your GJC STORE, (8) any
location will be successful, (9) it will be anyone's responsibility other than
yours to obtain all licenses necessary in order to establish and operate your
GJC STORE or (10) that you will be awarded additional or further franchises or
other rights, except as expressly set forth in a written document signed by a
corporate officer of FRANCHISOR. No contingency, condition, prerequisite, prior
requirement, or otherwise (including but not limited to obtaining financing,
obtaining a site or otherwise) exists with respect to you fully performing any
or all of your obligations under this Agreement.
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YOUR INITIALS: __________ / __________
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You have not received or relied on (nor have we or anyone else
provided) any oral or written: sales, income or other projections of any kind or
nature or any statements, representations, data, charts, tables, spreadsheets or
mathematical calculations or otherwise which stated or suggested any level or
range of actual or potential sales, costs, income, expenses, profits, cash flow,
tax effects or otherwise and neither we nor anyone else has made, nor have you
relied on, any promises, representations or warranties as to any profits you may
realize in the operation of a GJC STORE, nor have you received or relied on any
representations regarding any working capital or other funds necessary to reach
any "breakeven" or any other financial level. We are unable, and do not attempt,
to predict, forecast or project future performance, revenues, profits or
otherwise of any GJC STORE. If any such information, promises, representations
and/or warranties has been provided to you, it should not be relied on, we will
not be bound by it, and, if you do rely on such information, promises,
representations and/or warranties, you do so at your own risk.
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YOUR INITIALS: __________ / __________
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You acknowledge and agree that the success of the business venture
contemplated to be undertaken by you is speculative, is and will be dependent on
your personal efforts, that while we can provide you with systems, methods,
procedures, techniques and other "tools," including the XXXXXX XXXX'X System and
otherwise, your success ultimately depends on your efforts, including your
proactive, diligent and thorough knowledge and application of the XXXXXX XXXX'X
System, that entry into any business enterprise is always associated with risk
and that no assurance of success has been or can be given to you. You
acknowledge and represent that you have entered into this Agreement and made an
investment only after (1) making an independent investigation of the
opportunity, including having received a list, in connection with the
presentation of our Uniform Franchise Offering Circular, of (and having spoken
with) other franchisees currently operating or who have operated GJC STORES, (2)
having had an opportunity to have this transaction and all related documents
reviewed by an attorney and a financial advisor of your choosing, such review
having been strongly recommended by us and (3) having independently researched
all applicable licensing and other requirements related to the operation of your
GJC STORE. You acknowledge that you and each person signing as Franchisee
(and/or having any investment and/or interest in your GJC STORE) has received,
reviewed, understood and fully read, and all questions have been answered
regarding, (1) a copy of our Uniform Franchise Offering Circular with all
exhibits at least ten (10) business days prior to the earlier of your and/or any
such person (a) signing any binding documents or (b) paying any sums and (2) a
copy of this Agreement and all other agreements complete and in form ready to
sign at least five (5) business days prior to the earlier of you and/or any such
person (a) signing any binding documents or (b) paying any sums.
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YOUR INITIALS: __________ / __________
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You understand that we are relying on you to bring forward in writing
at this time any matters inconsistent with any of the matters set forth in this
Section 22 or otherwise so that we can correct any misunderstandings or
inappropriate expectations and you agree that if any of the statements or
matters set forth in this Section 22 or otherwise are not true, correct and
complete you will make a written statement regarding such next to your signature
below so that we may address and resolve any such issue(s) at this time and
before either you or we go forward.
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YOUR INITIALS: __________ / __________
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You acknowledge and agree that in all of your dealings with the
Franchisor, the officers, directors, employees, and agents of the Franchisor act
only in a representative capacity and not in an individual capacity. You further
acknowledge that this Agreement, and all business dealings between you and such
Individuals as a result of this Agreement, are solely between you and the
Franchisor. You further represent to the Franchisor, as an Inducement to the
Franchisor's entry into this Agreement, that you have made no misrepresentations
in obtaining the Franchise.
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YOUR INITIALS: __________ / __________
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date stated below.
FRANCHISOR: FRANCHISEE(S) (INDIVIDUAL):
XXXXXX XXXX'X GOURMET ------------------------------------
COFFEES FRANCHISING CORP. Name
------------------------------------
Signature
By: _________________________________ ------------------------------------
Signature Name
------------------------------------ ------------------------------------
Name Signature
------------------------------------
Title
Date: _______________________________
FRANCHISEE (CORP., LLC OR PARTNERSHIP)
------------------------------------
Name
a/an ___________________ corporation
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a/an ___________________ partnership
a/an ___________________ limited
liability
company
By:
---------------------------------
Signature
---------------------------------
Name and Title
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GUARANTY AND ASSUMPTION OF OBLIGATIONS
In consideration of, and as an inducement to, the execution of the
above Franchise Agreement and any Addenda thereto (individually or collectively
the "Agreement") by XXXXXX XXXX'X GOURMET COFFEES FRANCHISING CORP.
("FRANCHISOR"), each of the undersigned ("GUARANTORS") hereby personally and
unconditionally (1) guarantees to the FRANCHISOR 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 (2) agrees to be personally bound by, and personally liable
for the breach of, each and every provision in the Agreement. Each of the
undersigned waives:
1. acceptance and notice of acceptance by the FRANCHISOR of the foregoing
undertakings;
2. notice of demand for payment of any indebtedness or nonperformance of
any obligations hereby guaranteed;
3. protest and notice of default to any party with respect to the
indebtedness or nonperformance of any obligations hereby guaranteed;
4. any right he may have to require that an action be brought against the
FRANCHISEE or any other person as a condition of liability; and
5. all rights to payments and claims for reimbursement or subrogation
which any of the GUARANTORS may have against the FRANCHISEE arising as
a result of the GUARANTORS' execution of and performance under this
guaranty.
6. Each of the undersigned consents and agrees that:
7. his direct and immediate liability under this guaranty shall be joint
and several;
8. he shall render any payment or performance required under the Agreement
upon demand if the FRANCHISEE fails or refuses punctually to do so;
9. such liability shall not be contingent upon or conditioned upon pursuit
by the FRANCHISOR of any remedies against the FRANCHISEE or any other
person; and
10. such liability shall not be diminished, relieved or otherwise affected
by any extension of time, credit or the
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indulgence which the FRANCHISOR may from time to time grant to the
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.
If the FRANCHISOR is required to enforce this Guaranty and Assumption
of Obligations in any judicial or arbitration proceeding or appeal thereof, the
GUARANTORS shall reimburse the FRANCHISOR for its costs and expenses, including
but not limited to, reasonable accountants', attorneys', attorney assistants',
arbitrators' and expert witness fees, costs of investigation and proof of facts,
court costs, other litigation expenses and travel and living expenses, whether
incurred prior to, in preparation for or in contemplation of the filing of any
written demand, claim, action, hearing or proceeding to enforce this Guaranty
and Assumption of Obligations.
IN WITNESS WHEREOF, each of the undersigned has hereunto affixed his
signature on the same day and year as the Agreement was executed.
WITNESS GUARANTORS
------------------------------------ -----------------------------------
Name
-----------------------------------
Signature
------------------------------------ -----------------------------------
Name
-----------------------------------
Signature
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