EXHIBIT 10.20
XXXXXX XXXXXXXX'X/MIAMI SUBS
DEVELOPMENT PROGRAM
MASTER AGREEMENT
TABLE OF CONTENTS
Page
1. The Combo Unit...........................................................................................1
2. Term.....................................................................................................2
3. Combo Unit Site and Applicant Approval...................................................................2
4. Individual Franchise Agreement for Each Combo Unit.......................................................3
5. Construction/Conversion Plans for Combo Unit.............................................................3
6. Combo Unit Operations....................................................................................4
7. Training.................................................................................................5
8. Payment of Xxxxxx Xxxxxxxx'x Initial Franchise Fee and Royalty Fee.......................................6
9. Advertising and Marketing................................................................................7
10. Franchise Agreement Modification.........................................................................8
11. Test Units...............................................................................................8
12. Combo Program Exclusivity................................................................................8
13. Franchisee Default.......................................................................................8
14. Franchise Transfer Restrictions..........................................................................9
15. No Assignment............................................................................................9
16. Corporate Authority.....................................................................................10
17. Indemnification.........................................................................................10
18. Default and Termination.................................................................................10
19. Bankruptcy..............................................................................................11
20. Trademarks..............................................................................................11
21. Notices.................................................................................................12
22. Complete Agreement and Disclosures......................................................................12
23. Good Faith and Cooperation..............................................................................12
24. Mediation...............................................................................................12
25. Mutual Waiver of a Trial by Jury........................................................................13
26. Severability............................................................................................13
27. Headings................................................................................................13
28. Counterparts............................................................................................13
29. Applicable Law..........................................................................................13
30. Attorneys' Fees.........................................................................................13
31. Confidentiality.........................................................................................13
32. Relationship of the Parties.............................................................................13
33. Waiver..................................................................................................14
34. Injunctive Relief.......................................................................................14
35. Indemnification.........................................................................................14
XXXXXX XXXXXXXX'X/MIAMI SUBS
DEVELOPMENT PROGRAM
MASTER AGREEMENT
THIS XXXXXX XXXXXXXX'X/MIAMI SUBS COMBO DEVELOPMENT PROGRAM MASTER
AGREEMENT ("Agreement") is entered into this 13th day of August, 1998 by and
between XXXXXX XXXXXXXX'X, Inc., a Utah corporation ("Xxxxxx Xxxxxxxx'x"), with
its principal place of business at 0000 Xxxxxxxxxx Xxx, Xxxxx 000, Xxxxxxxxxxxx,
XX 00000, and MIAMI SUBS USA, INC., a Florida corporation ("Miami Subs "), with
its principal place of business at 0000 XX 00xx Xxxxxx, Xx. Xxxxxxxxxx, XX
00000.
RECITALS
A. Xxxxxx Xxxxxxxx'x is engaged in the business of offering and
awarding franchises for the operation of Xxxxxx Xxxxxxxx'x restaurants,
featuring seafood.
B. Miami Subs is in the business of granting single unit franchises and
multiple unit franchise development rights for the operation of restaurants
known as "Miami Subs" and "Miami Subs Grill" (collectively "Restaurants"),
featuring hot and cold submarine and other sandwiches, gyros and other Greek
specialties, hamburgers. salads, and other foods.
C. Miami Subs is a wholly-owned subsidiary of Miami Subs Corporation, a
Florida corporation.
D. Xxxxxx Xxxxxxxx'x and Miami Subs desire to offer certain Xxxxxx
Xxxxxxxx'x products for sale in existing and future developed Miami Subs
Restaurants ("Combo Units") on the terms and conditions as set forth in this
Agreement. The parties intend for this definitive Agreement to supersede the
terms of any previous agreements with the exception of the test agreements, a
copy of which is attached hereto as Exhibit A.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein. Xxxxxx Xxxxxxxx'x and Miami Subs do hereby agree as follows:
1. THE COMBO UNIT. Pursuant to the terms of this Agreement. Xxxxxx
Xxxxxxxx'x agrees to enter into Franchise Agreements with approved Miami Subs
franchisees (or wit Miami Subs for corporate owned Restaurants) permitting the
sale of approved Xxxxxx Xxxxxxxx'x products at existing or new Restaurant
locations.
2. TERM.
2.1 Term. Unless sooner terminated or modified in accordance with
the provisions herein, this Agreement shall remain in existence for as long as
Miami Subs Units have existing franchise agreements with Xxxxxx Xxxxxxxx'x.
2.2 Continuing Rights. The termination or expiration of this
Agreement shall not affect the term of any Xxxxxx Xxxxxxxx'x Franchise
Agreements awarded by Xxxxxx Xxxxxxxx'x for Combo Units developed (or under
development or approved for development) hereunder prior to or during the term
of this Agreement.
3. COMBO UNIT SITE AND APPLICANT APPROVAL.
3.1 Site and Franchisee Submission. Miami Subs shall submit to
Xxxxxx Xxxxxxxx'x prospective site addresses. prospective franchisee names. and
franchisee's applications. Any proposal requiring Xxxxxx Xxxxxxxx'x approval,
shall be decided by Xxxxxx Xxxxxxxx'x and communicated to Miami Subs within
fifteen (15) days of Xxxxxx Xxxxxxxx'x receipt of the Information. Any approval
not received within the fifteen (15) day approval period shall be deemed
automatically approved.
3.2 Existing Miami Subs Franchisees' Sites. Any and all existing
Miami Subs franchise sites that have been approved by Miami Subs and the
existing franchisee shall both automatically be approved for a Combo Unit by
Xxxxxx Xxxxxxxx'x unless at the time of the proposed addition of Xxxxxx
Xxxxxxxx'x there exists an Xxxxxx Xxxxxxxx'x restaurant within three (3) miles
of the proposed Combo Unit or unless there is an existing Xxxxxx Xxxxxxxx'x
restaurant with a franchise agreement that provides for a larger protected
territory than three (3) miles, in which case, the existing franchise agreement
shall control.
3.3 New Sites/New Franchisees Approved by Miami Subs. Any and all
new Miami Subs franchisees or new sites approved by Miami Subs shall both be
approved by Xxxxxx Xxxxxxxx'x using criteria that shall be no more restrictive
than Miami Subs then current standards. Approval shall not be unreasonably with
held. In addition to the prospective franchisee's names and site addresses for
new franchisees, Miami Subs shall submit to Xxxxxx Xxxxxxxx'x background checks
and any other relevant information (the "Information") obtained by Miami Subs
relating to the prospective franchisee.
3.4 Applicant Documentation by Xxxxxx Xxxxxxxx'x. Upon submission of
the prospective franchisee's name to Xxxxxx Xxxxxxxx'x by Miami Subs. Miami Subs
shall disclose the prospective Combo Unit applicant with the then current Xxxxxx
Xxxxxxxx'x Offering Circular. The Combo Unit applicant shalt be required to
complete and submit an Xxxxxx Xxxxxxxx'x Franchise Applicant form and other
reasonably required information to Xxxxxx Xxxxxxxx'x.
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3.5 Combo Units Operated by Miami Subs. Xxxxxx Xxxxxxxx'x agrees to
award Xxxxxx Xxxxxxxx'x franchises to Miami Subs for Combo Unit locations,
provided that such Combo unit locations shall be operated as company Restaurants
by Miami Subs and there is not an existing Xxxxxx Xxxxxxxx'x restaurant within
three (3) miles of the proposed Combo Unit or there is not an existing Xxxxxx
Xxxxxxxx'x restaurant with a franchise agreement that provides for a larger
protected territory than three (3) miles, in which case, the existing franchise
agreement shall control. The panics shall enter into a mutually acceptable
Master Franchise Agreement for all Combo Units that are operated by Miami Subs.
4. INDIVIDUAL FRANCHISE AGREEMENT FOR EACH COMBO UNIT. The Xxxxxx
Xxxxxxxx'x Franchise Agreement, along with other required franchise related
documents as disclosed in the Xxxxxx Xxxxxxxx'x Offering Circular, must be fully
executed for each individual Combo Unit location before the Combo Unit is
opened. Xxxxxx Xxxxxxxx'x agrees to amend its Franchise Agreement and other
related franchise documents used in connection with this Agreement in order to
reflect the terms of this Agreement and other terms agreed to by both parties.
The parties agree that Xxxxxx Xxxxxxxx'x shall prepare and deliver all such
agreements and related documents (including those for Miami Subs franchisees) to
Miami Subs who will obtain appropriate signatures and collect the required fees
agreed to herein. Miami Subs shall then deliver the fully executed agreements
and all payments back to Xxxxxx Xxxxxxxx'x as soon as reasonably possible after
the Combo Unit opening. It is understood that any and all Xxxxxx Xxxxxxxx'x
Franchise Agreements for such Combo Units shall be independent of this
Agreement. The continued effectiveness of any such individual franchise
agreement shall not depend on the continued effectiveness of this Agreement. If
any conflict shall arise between this Agreement and any individual franchise
agreement, the latter shall have precedence and superiority over the former for
issues pertaining to Xxxxxx Xxxxxxxx'x relationship with individual Miami Subs
franchisees. Conversely, the former shall have precedence and superiority over
the latter for issues pertaining to the Miami Subs/Xxxxxx Xxxxxxxx'x
relationship. Xxxxxx Xxxxxxxx'x acknowledges that the Xxxxxx Xxxxxxxx'x
Franchise Agreement for the Combo Units shall be for a term that runs
concurrently with the Miami Subs Franchise Agreement for each Combo Unit and
terminates upon the termination of the Miami Subs Franchise Agreement. Xxxxxx
Xxxxxxxx'x further acknowledges that Miami Subs has procured financing for the
addition of the Xxxxxx Xxxxxxxx'x operation in each Combo Unit. and in
connection therewith, Xxxxxx Xxxxxxxx'x agrees to modify its Franchise Agreement
to provide for the assignment of the Franchise Agreement to the respective
lender.
5. CONSTRUCTION/CONVERSION PLANS FOR COMBO UNIT. Miami Subs and Xxxxxx
Xxxxxxxx'x shall jointly agree on standard development/conversion guidelines,
necessary' equipment. menu board layout. and any other significant aspects of
the construction or conversion of Miami Subs Restaurants to incorporate the sale
of Xxxxxx Xxxxxxxx'x products. Miami Subs will use reasonable best efforts to
insure that units are convened according to these general guidelines. The Combo
Unit applicant shall pay all costs and expenses necessary to construct and
incorporate Xxxxxx Xxxxxxxx'x into the Restaurant. Nothing herein shall imply
that either Xxxxxx Xxxxxxxx'x or Miami Subs shall be required to
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estimate or guarantee the expenses of the Combo Unit application or to perform
any act required to be performed by the Combo Unit applicant. The Combo Unit
applicant performing the construction shall procure and maintain all licenses
and permits, and all required landlord or other approvals necessary for the
construction, modification and proposed operations. Whenever a Combo Unit cannot
be developed according to the general guidelines. Miami Subs reserves the right
to modify the plans in their discretion. However, whenever there are material
deviations from the general guidelines, Miami Subs will provide Xxxxxx
Xxxxxxxx'x with information and plans as to the material changes, and Xxxxxx
Xxxxxxxx'x will have the right to approve the changes. Such approval will not be
unreasonably withheld. Combo Units may purchase their equipment from any source,
so long as such equipment meets Xxxxxx Xxxxxxxx'x required specifications.
6. COMBO UNIT OPERATIONS.
6.1 Dual Obligations of Operator. Except for Combo Units operated by
Miami Subs, the parties acknowledge that the Combo Unit operators will be the
franchisee of both parties. The Combo Unit operator as an Xxxxxx Xxxxxxxx'x
franchisee shall be responsible for the sale of approved Xxxxxx Xxxxxxxx'x
products from and the operation of the Combo Unit location in compliance with
the terms of the individual Xxxxxx Xxxxxxxx'x Franchise Agreement and the
standards and requirements of the Xxxxxx Xxxxxxxx'x system. Correspondingly,
Miami Subs or the Miami Subs franchisee shall be responsible for the sale of
Miami Subs products from and the operation of the Restaurant. The Combo Unit
operator shall procure and maintain at its sole expense all licenses and permits
necessary for its operations.
6.2 Obligations of Franchisors.
A. Miami Subs and Xxxxxx Xxxxxxxx'x shall each be responsible
for complying with the federal. state and local laws and regulations governing
their respective relationship with the Combo Units. In addition. Miami Subs and
Xxxxxx Xxxxxxxx'x shall each be responsible for protecting and defending their
own trademark or tradenarne.
B. Xxxxxx Xxxxxxxx'x hereby delegates and assigns -- irrevocably
during the term of each Combo Unit Franchise Agreement with Xxxxxx Xxxxxxxx'x
(or extension or renewal thereof) -- to Miami Subs and Miami Subs agrees to use
reasonable efforts and exercise due care to perform certain of its duties
("Delegated Duties") owed under individual Xxxxxx Xxxxxxxx'x Franchise
Agreements which have been or will be executed between Xxxxxx Xxxxxxxx'x and.
Combo Units owned and operated by Miami Subs franchisees. These Delegated Duties
are limited to the following: (a) initial and on going training, as detailed in
paragraph 8 of this Agreement. (b) operational monitoring and guidance in
accordance with Xxxxxx Xxxxxxxx'x standard operations manual. including any
changes to the manual as agreed to from time to time by Xxxxxx Xxxxxxxx'x and
Miami Subs. (c) architectural and construction supervision, as specified in
Paragraph 5.. and (d) marketing and advertising. Xxxxxx Xxxxxxxx'x shall have
the right to inspect Combo Units and provide Miami Subs with feedback on Miami
Subs' performance of
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these Delegated Duties. If deficiencies are discovered by Xxxxxx Xxxxxxxx'x,
Miami Subs and Xxxxxx Xxxxxxxx'x shall use their best efforts to jointly solve
such problems as soon as reasonably possible. If such deficiencies are not
corrected to Xxxxxx Xxxxxxxx'x reasonable satisfaction, then Xxxxxx Xxxxxxxx'x
shall have the right to directly assist the franchise owner in correcting the
deficiency.
All other duties and responsibilities of Xxxxxx Xxxxxxxx'x
pursuant to its franchise agreements executed with Miami Subs franchisees, which
are not Delegated Duties, shall remain the sole duties of Xxxxxx Xxxxxxxx'x.
Xxxxxx Xxxxxxxx'x agrees to modify (through an Addendum acceptable to Miami
Subs) its Franchise Agreements executed with Miami Subs franchisees, to conform
to the terms agreed to in this Agreement. Xxxxxx Xxxxxxxx'x and Miami Subs shall
concurrently provide each other with copies of all related formal notices issued
to the Combo Unit franchisees. Upon request, Miami Subs shall provide Xxxxxx
Xxxxxxxx'x with copies of its inspection reports of the Combo Units.
6.3 Approval of Products. It is intended that the only approved
seafood products to be offered at the Combo Units shall be Xxxxxx Xxxxxxxx'x
seafood products approved pursuant to this Agreement. Miami Subs and Xxxxxx
Xxxxxxxx'x will jointly agree on the Xxxxxx Xxxxxxxx'x products to be offered
for sale in the Combo Units, and any proposed variations to the agreed upon
menu. In addition, Xxxxxx Xxxxxxxx'x recognizes that Miami Subs Restaurants
purchase food and products through approved national distributors. Xxxxxx
Xxxxxxxx'x will assist Miami Subs in arranging for all necessary products to be
distributed through Miami Subs approved distributors including instructing
Xxxxxx Xxxxxxxx'x approved suppliers to sell directly to Miami Subs approved
distributors. In the event that Miami Subs' distributors distribute Xxxxxx
Xxxxxxxx'x products to an unapproved Miami Subs franchisee, Miami Subs will take
whatever action is necessary and appropriate to have the distributor cease such
shipments.
7. TRAINING.
7.1 Xxxxxx Xxxxxxxx'x Certification of Miami Subs Trainers. Xxxxxx
Xxxxxxxx'x agrees to certify, and keep certified, no fewer than three (3) Miami
Subs operations/training employees as Xxxxxx Xxxxxxxx'x Combo Trainers. Xxxxxx
Xxxxxxxx'x will be responsible for the development of the training curriculum to
be utilized by these Combo Trainers. Xxxxxx Xxxxxxxx'x agrees to keep the
designated Miami Subs Combo Trainers updated, on a periodic basis, with any
significant developments or modifications to the training methods or materials
that will be made available to the Combo Trainees. Xxxxxx Xxxxxxxx'x retains the
rights and authority to modify the Xxxxxx Xxxxxxxx'x training curriculum as it
deems necessary.
7.2 Miami Subs' Instruction of Combo Unit Trainees. Each approved
Xxxxxx Xxxxxxxx'x Combo Franchisee and/or its designated manager shell be
required to attend and successfully complete the Miami Subs training program.
which shall include the above referenced Xxxxxx Xxxxxxxx'x curriculum. The
training will take place at locations as specified by Miami Subs, with sessions
also held at Combo Units approved by Miami Subs. The Franchisee
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shall be solely responsible for all travel and training-related expenses for
itself and/or designated manager(s).
Miami Subs, through its certified Combo Trainers, shall be
responsible for instructing Combo Unit Trainees in accordance with Xxxxxx
Xxxxxxxx'x approved training curriculum. The Xxxxxx Xxxxxxxx'x training
curriculum may be held separately or it may be incorporated into the regular
Miami Subs training sessions that are taking place.
Xxxxxx Xxxxxxxx'x training instructors shall be allowed, at
their own expense, to audit and observe these training sessions. As a result of
any audited sessions, Xxxxxx Xxxxxxxx'x agrees to provide helpful feedback,
assessments and guidance directly to Miami Subs Combo Trainers who, in turn.
shall communicate any appropriate information directly to the Combo Trainees. If
significant training deficiencies are discovered by Xxxxxx Xxxxxxxx'x, the
parties shall use their reasonable efforts to jointly solve such problems as
soon as practical.
7.3 As requested by Miami Subs, Xxxxxx Xxxxxxxx'x agrees to provide
employees to assist in the opening of each Combo Unit. The number of Xxxxxx
Xxxxxxxx s employees necessary for each opening shall be agreed by Miami Subs
and Xxxxxx Xxxxxxxx'x.
8. PAYMENT OF XXXXXX XXXXXXXX'X INITIAL FRANCHISE FEE AND ROYALTY FEE.
8.1 Initial Franchise Fees and Opening Costs. An initial franchise
fee associated with entering into an Xxxxxx Xxxxxxxx'x Franchise Agreement under
this program shall be in an amount of Five Thousand Dollars ($5,000.00). Miami
Subs will collect the franchise fee from the Combo Unit franchisee and will
remit one-half of the fee collected (i.e. $2,500.00) to Xxxxxx Xxxxxxxx'x within
15 days following collection. There shall be no separate franchise fee due to
Xxxxxx Xxxxxxxx'x for Miami Subs company operated Combo Restaurants. however,
Miami Subs shall reimburse Xxxxxx Xxxxxxxx'x for approved direct out of pocket
expenses incurred by Xxxxxx Xxxxxxxx'x in participating in the unit opening. The
initial franchise fee shall only increase if jointly agreed upon.
8.2 Royalty Fees. Combo Unit franchisees shall be required to pay to
Miami Subs a royalty of four percent (4%) of the Combo Unit's gross revenue (as
defined in the Miami Subs Franchise Agreement "Gross Revenue"). The Combo Unit
franchise shall not be required to pay a separate royalty to Xxxxxx Xxxxxxxx'x.
After receipt of the 4% royalty fee. Miami Subs shall remit the applicable
portion of such fees collected, as specified below, to Xxxxxx Xxxxxxxx'x on a
monthly basis within ten (10) days following the month that the fee was
collected. Miami Subs shall also provide Xxxxxx Xxxxxxxx'x with an accounting,
on a monthly basis. of all sales at the Combo Unit. the amount of the fees
collected and uncollected, and the computation of the amount remitted to Xxxxxx
Xxxxxxxx'x.
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8.3 Royalty Fees for Existing Restaurants. For existing Miami Subs
Restaurants, Miami Subs shall determine from independent information provided by
the franchisee (including sales tax reports, register tapes, etc. which will be
provided to Xxxxxx Xxxxxxxx'x), the average monthly sales for the Restaurant for
the twelve (12) month period prior to the selling of Xxxxxx Xxxxxxxx'x products
in the Restaurant (the "Base Sales Amount"). Should any Miami Subs Restaurant
have less than a twelve (12) month sales history but at least a six (6) month
sales history, then the Base Sales Amount shall be calculated from the average
monthly sales throughout the Restaurant's history of operation. Miami Subs shall
then remit to Xxxxxx Xxxxxxxx'x following full collection of the entire royalty
fee from the franchisee for each month, a fee of two percent (2%) of the
existing franchised Restaurant's monthly net incremental sales over the Base
Sales Amount, with such amount not to exceed 2% of the amount of Xxxxxx
Xxxxxxxx'x product sales (i.e. assuming that the Base Sales Amount is $80,000;
and Combo Unit monthly sales are $100,000 comprised of $75,000 for Miami Subs
and $25,000 for Xxxxxx Xxxxxxxx'x, then Miami Subs would remit to Xxxxxx
Xxxxxxxx'x from the total royalty fee paid, a fee of 2% of $20,000, or 2% of
that portion of sales that exceeds the Base Sales Amount, not to exceed the
actual Xxxxxx Xxxxxxxx'x sales). For Miami Subs company operated restaurants,
the calculation for royalties shall be the same as for existing franchisee owned
and operated Restaurants except that the percentage shall be changed from two
percent (2%) to one and a half percent (1.5%).
8.4 Newly Developed Restaurants Royalty Fees. For existing Miami
Subs franchisees who are opening a new restaurant site and new company operated
restaurants that incorporate Xxxxxx Xxxxxxxx'x product sales in the Restaurant.
(i.e. units that do not have at least a six (6) month sales history prior to
implementing Xxxxxx Xxxxxxxx'x products for sale in the Restaurant), then Miami
Subs will remit to Xxxxxx Xxxxxxxx'x a fee of one and a half percent (1.5%) of
the total Xxxxxx Xxxxxxxx'x Xxxxx Revenue in the Restaurant on a monthly basis
within ten (10) days following the month that the entire royalty fee is
collected from the franchisee or in which the company-operated Restaurants
collect the revenues.
8.5 New Franchisees Royalty Fees. For any prospective franchisee to
the Miami Subs System, whose principle(s) are not currently a franchisee with
the Miami Subs System, Miami Subs shall remit to Xxxxxx Xxxxxxxx'x a royalty fee
in an amount to be determined by the mutual agreement of both Xxxxxx Xxxxxxxx'x
and Miami Subs.
9. ADVERTISING AND MARKETING. Both Miami Subs and Xxxxxx Xxxxxxxx'x
agree to jointly and independently develop advertising and marketing strategies
for the Combo Units. Miami Subs shall have the right to develop advertising and
promotional material specifically and solely for use in Miami Subs Combo Units,
and will confer with and seek advise from Xxxxxx Xxxxxxxx'x on the development
of such materials; however, Miami Subs need not acquire Xxxxxx Xxxxxxxx'x
approval prior to the use of any marketing or advertising materials. For any
advertising or marketing promotion developed by one party but used in the other
parties' non-Combo Units, such cost incurred by the developing party shall be
shared on a pro-rata basis with the non- developing party. The Combo Units shall
not be required to pay a separate
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advertising fee to Xxxxxx Xxxxxxxx'x. However, Xxxxxx Xxxxxxxx'x will make
available to all Combo Unit franchisees all marketing materials that are made
available to other Xxxxxx Xxxxxxxx'x Restaurants. The pi-ice of these materials
shall not to exceed the cost charged other Xxxxxx Xxxxxxxx'x
Restaurants/franchisees. The Combo Unit franchisee shall only be required to pay
to Miami Subs the advertising fees set forth in the Miami Subs Franchise
Agreement. and Miami Subs shall use such fees in its sole discretion.
Upon the development and operation of a sufficient number of
Combo Units in a designated market, Miami Subs shall use its best efforts to
cause its Combo Unit franchisees in such market to participate in a special
co-op marketing fund for the purpose of marketing and advertising the sale of
Xxxxxx Xxxxxxxx'x products in the market.
10. FRANCHISE AGREEMENT MODIFICATION. Neither Xxxxxx Xxxxxxxx'x or
Miami Subs shall modify or amend the terms of its Franchise Agreement with a
Combo Unit franchisee in any way that would adversely affect the other parties
agreement with the franchisee, without the other parties' prior 'written
approval.
11. TEST UNITS. There are currently three Miami Subs/Xxxxxx Xxxxxxxx'x
test units which are operating under letter agreements (attached as Exhibit A
hereto). Upon termination or expiration of the test agreements, Xxxxxx
Xxxxxxxx'x shall provide the owner/operator with the approved Xxxxxx Xxxxxxxx'x
franchise agreement for use with this program. There will be no initial
franchise fee charged. Following execution of the Franchise Agreement, the terms
of this Agreement shall become effective.
12. COMBO PROGRAM EXCLUSIVITY. Xxxxxx Xxxxxxxx'x recognizes that Miami
Subs co-brands with other concepts (including Xxxxxx-Xxxxxxx and Xxxxx Xxxxxx)
and plans to expand this program to other co-branding partners. However, Miami
Subs agrees that during the term of this Agreement that it will not co-brand
with any other fast food concept that specializes primarily in seafood products
and Xxxxxx Xxxxxxxx'x agrees that it will not co-brand or license its products
with any other company that competes as a fast-food restaurant in the n markets
of Florida, Georgia, North Carolina, South Carolina, Dallas/Fort Worth-Texas
ADI, Peru, Ecuador. or any other ADI (advertising area of dominant influence),
state or country in which Miami Subs develops a presence, unless approved by
Miami Subs. To maintain this exclusivity in North and South Carolina and the
Dallas/Ft. Worth markets, Miami Subs agrees to convert at least six (6) Miami
Subs Restaurants in the Dallas/Ft. Worth A.D.I. ("DFW") to Combo Units within
two (2) years from the date of this Agreement. At least three (3) of the six (6)
DEW Combo Units shall be converted within one (1) year from the date of this
Agreement. In addition, Miami Subs agrees to convert at least six (6) Miami Subs
Restaurants in the North Carolina and South Carolina ("Carolina") market to
Combo Units within two (2) years from the date of this Agreement. At least three
(3) of the six (6) Carolina Combo Units shall be convened within one (1) year
from the date of this Agreement. Should Miami Subs fail to meet the above
conversion schedule for either the DEW market or the Carolina market, Miami Subs
shall lose its
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right to exclusivity for the violated conversion schedule market or markets.
Nothing in this provision shall limit Xxxxxx Xxxxxxxx'x ability to sell
franchises or develop Xxxxxx Xxxxxxxx'x units in any area not otherwise
protected by a Combo Unit's Xxxxxx Xxxxxxxx'x Franchise Agreement.
13. FRANCHISEE DEFAULT.
13.1 Notice of Default and/or Termination of Xxxxxx Xxxxxxxx'x
Agreement.
A. To Combo Units Operated by Miami Subs ("Company-Operated
Combo").
Xxxxxx Xxxxxxxx'x reserves the right to default Miami Subs
in accordance with Xxxxxx Xxxxxxxx'x Agreement upon Miami Subs' breach of the
Xxxxxx Xxxxxxxx'x Franchise Agreement for a Company-Operated Combo. Xxxxxx
Xxxxxxxx'x shall not terminate the Xxxxxx Xxxxxxxx'x Franchise Agreement for a
Company-Operated Combo Unit without first providing Miami Subs (i) written
notification of the relevant material breach, and (ii) a cure period as required
under the Xxxxxx Xxxxxxxx'x Master Franchise Agreement or applicable state law.
B. To Combo Units Owned and Operated by a Miami Subs
franchisee ("MS Franchisee Combo").
Xxxxxx Xxxxxxxx'x reserves the right to default the Combo
Unit franchisee in accordance with the Xxxxxx Xxxxxxxx'x Franchise Agreement.
Xxxxxx Xxxxxxxx'x shall not terminate the Xxxxxx Xxxxxxxx'x Franchise Agreement
for the MS Franchisee Combo without first providing the Combo Unit franchisee
(i) written notice, with a copy to Miami Subs, of the relevant material breach.
and (ii) a cure period, as required under the Xxxxxx Xxxxxxxx'x Franchise
Agreement or applicable state law. If the Combo Unit Franchisee fails to cure
the default under 'the Xxxxxx Xxxxxxxx'x Franchise Agreement within the
prescribed period, Xxxxxx Xxxxxxxx'x shall afford Miami Subs an additional
thirty (30) day period to work out the default with the Combo Unit franchisee or
to have the default cured by Miami Subs itself If such default is an automatic
default under the Xxxxxx Xxxxxxxx'x franchise agreement, the Xxxxxx Xxxxxxxx'x
franchise agreement shall automatically transfer to Miami Subs upon the
termination of the initial franchisee's franchise agreement upon request by
Miami Subs.
13.2 Cross Default. Both Xxxxxx Xxxxxxxx'x and Miami Subs
shall amend their respective Franchise Agreements to provide for an automatic
default and termination of their respective Franchise Agreement upon the default
and termination of either parties' Franchise Agreement.
14. FRANCHISE TRANSFER RESTRICTIONS. Miami Subs will notify Xxxxxx
Xxxxxxxx'x of any transfers of Miami Subs Restaurants (Company-Owned and
franchisee-owned)
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which are Combo Units. Within five (5) days from notification from Miami Subs,
Xxxxxx Xxxxxxxx'x shall, process all necessary Xxxxxx Xxxxxxxx'x documentation
in connection with such transfers. Upon transfer of the restaurant, Miami Subs
shall collect and remit to Xxxxxx Xxxxxxxx'x a transfer fee of Five Hundred
Dollars ($500.00). No transfer fee shall be charged for the transfer of a
Company-Owned Combo Unit. Miami Subs shall be responsible for coordinating the
closing and forwarding all required documents to Xxxxxx Xxxxxxxx'x.
15. NO ASSIGNMENT. Except in connection with a sale of substantially
all the assets, merger or reorganization of either party, this Agreement will
not be assigned by either party without the prior written consent of the other
party, nor may any rights under this Agreement be transferred to any other party
by operation of law. Any such prohibited assignment or transfer will be void and
of no effect and will constitute a material breach of this Agreement.
16. CORPORATE AUTHORITY. Miami Subs and Xxxxxx Xxxxxxxx'x have the
corporate power and authority to execute, deliver and perform this Agreement;
and the execution, delivery and performance of this Agreement has been duly
authorized by all necessary corporate action. The execution, delivery and
performance of this Agreement by Miami Subs and by Xxxxxx Xxxxxxxx'x will not
result in a breach of or violation by Miami Subs or by Xxxxxx Xxxxxxxx'x, or
constitute a default by it, under any judgement, decree, order, governmental
permit or license, agreement, indenture, instrument, statute, rule or regulation
to which either is a party or by which either is bound or their respective
certificate of incorporation or By-Laws. No authorization, approval or consent
of any governmental authority is required in connection with the execution,
delivery and performance by Miami Subs or by Xxxxxx Xxxxxxxx'x of this
Agreement.
17. INDEMNIFICATION. To the extent that Xxxxxx Xxxxxxxx'x or Miami Subs
incurs or has imposed upon it any costs for any claim, damage, liability, suit
or action, including all reasonable expenses and attorneys' fees, by reason of
the acts or omissions of the other, the other's specific business operation, or
of the other's respective agents or employees, Xxxxxx Xxxxxxxx'x and Miami Subs
shall indemnify and hold each other harmless from and against such costs.
18. DEFAULT AND TERMINATION.
18.1 Default Without Opportunity to Cure. The specified party shall
be deemed to be in default under this Agreement upon the occurrence of any of
the following events, and the non-breaching party may, at its option where
allowed by applicable law, terminate this Agreement without affording the other
any opportunity to cure the default, effective immediately upon written notice
from the non-breaching party:
A. If. contrary to the terms of this Agreement, either party
discloses or divulges trade secrets provided to the other to the material
detriment of the non-breaching party;
B. If either party files a petition commencing a voluntary
case under
13
bankruptcy or other debtor relief laws, an order for relief under bankruptcy or
other debtor relief laws is entered against said party, or said party admits in
writing its inability to pay its debts as they mature or makes an assignment for
the benefit of creditors, or the date a receiver for the property or affairs of
said party is appointed.
18.2 Default With Opportunity to Cure. Except as otherwise provided
in this Section, upon default or breach of this Agreement by either party which
is susceptible of being cured, the non-breaching party may terminate this
Agreement only by giving the breaching party written notice of termination
stating the nature of such default at least thirty (30) days prior to the
effective date of termination; provided, however, that the breaching party may
avoid termination by immediately initiating a remedy to cure such default and
curing it to the non-breaching party's reasonable satisfaction within the thirty
(30) day period, and by promptly providing proof thereof to the non-breaching
party.
18.3 Mutual Agreement. This Agreement may be terminated at any time
by the mutual agreement of Miami Subs and Xxxxxx Xxxxxxxx'x.
19. BANKRUPTCY. If Xxxxxx Xxxxxxxx'x files for bankruptcy, Xxxxxx
Xxxxxxxx'x desires that Miami Subs continue to use the Xxxxxx Xxxxxxxx'x
trademarks. recipes, operational procedures, and other items necessary to
continue to develop and operate the Combo Units. Miami Subs shall retain the
same rights that other Xxxxxx Xxxxxxxx'x franchisees have during any pending
bankruptcy, including the right to order from Xxxxxx Xxxxxxxx'x suppliers.
20. TRADEMARKS.
20.1 Ownership of Names.. Xxxxxx Xxxxxxxx'x and Miami Subs
acknowledge that each party owns trademarks, service marks, and the names and
logos used in connection with its respective company, whether or not trademarked
or copyrighted by each party (collectively "Names") and all goodwill associated
with or symbolized by the Names.
20.2 No Challenge of Names. Neither Xxxxxx Xxxxxxxx'x nor
Miami Subs shall do anything inconsistent with the other party's ownership of
its Names and related goodwill, including any goodwill which might be deemed to
have arisen through the activities of the party which is not the owner of the
Names, and all use of the Names will inure directly and exclusively to the
benefit of the respective owner. Nothing in this Agreement will be deemed to
constitute or result in an assignment of any of the Names or the creation of any
equitable or other interest in them. except as expressly set forth herein.
During the term of this Agreement and any time thereafter, neither party will
impugn, challenge or assist in any challenge to the validity of the other's
Names. the registrations or the ownership thereof. The owner of each respective
Name will be solely responsible for taking such actions as it deems appropriate
to obtain trademark, service xxxx or copyright registration for, and to defend
its ownership of each Name. All rights with respect to the Names not
specifically granted in this Agreement will be and are hereby
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reserved to the owner. Any advertising or promotional materials created for
Miami Subs shall remain the property of Miami Subs with the exception of the
Name.
20.3 Separate Names. Neither Xxxxxx Xxxxxxxx'x nor Miami Subs
shall use, as part of its corporate or other business name, any Name of each
other or any form or variation thereof which is likely to cause third parties to
be confused or mistaken that Miami Subs and Xxxxxx Xxxxxxxx'x are hot separate
entities.
20.4 Grant of License to Miami Subs. Xxxxxx Xxxxxxxx'x hereby
grants to Miami Subs a non-transferable right to use Xxxxxx Xxxxxxxx'x Names
during the term of this Agreement in connection with Miami Subs sale of Miami
Subs franchises and with the marketing, sale and distribution, as set forth
herein, of Xxxxxx Xxxxxxxx'x products at the Combo Unit locations.
21. NOTICES. Any notice or other communication provided for herein or
given hereunder to a party hereto shall be in writing and shall be deemed to
have been given if signed by the party giving them. Notice shall be deemed
effectively given when delivered by hand, on the third business day after it is
deposited in the Untied States mail, postage paid (registered or certified mail)
or on the business day after it is sent by telecopier to the individuals listed
below:
To Xxxxxx Xxxxxxxx'x: Xx. Xxxxxxx Xxxxxxx. President
Xxxxxx Xxxxxxxx'x, Inc.
0000 Xxxxxxxxxx Xxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
To Miami Subs: Xxxxxx X. Xxxxxx, President
Miami Subs USA, Inc.
0000 XX 0 0xx Xxxxxx
Xx. Xxxxxxxxxx, XX 00000
or such other address with respect to a party as such party shall notify the
other in writing as above provided.
22. COMPLETE AGREEMENT AND DISCLOSURES.
22.1 This Agreement and the Exhibits herein contain the complete
agreement among the parties with respect to the Program contemplated hereby and
supersede all prior agreements and understandings among the parties with respect
to such Program. There are no restrictions, promises, warranties. covenants, or
undertakings by the parties other than those expressly set forth in this
Agreement. This Agreement may be amended, modified or terminated only by written
instrument signed by all parties hereto.
23. GOOD FAITH AND COOPERATION. The parties pledge to utilize their
best
15
efforts to promote a cooperative working relationship and to undertake a good
faith approach toward resolving any disputes that may arise between themselves
during their relationship
24. MEDIATION. In connection with any dispute which may arise between
the parties, either party may at any time elect to submit the dispute to
non-binding mediation before and in accordance with the procedural rules of a
mutually agreeable mediator. Mediation will take place in a mutually agreeable
place, with the costs of mediation to be borne equally by both parties.
25. MUTUAL WAIVER OF A TRAIL BY JURY. Each party hereby covenants and
agree that in any litigation, suit, action, counterclaim or proceeding, whether
at law or in. equity, which arises out of. concerns, or relates to this
agreement, any and all transactions contemplated hereunder, the performance
thereof, or otherwise, trial should be to a court of competent jurisdiction and
not to a jury. Each party hereby irrevocably waives any right it may have to a
trial by jury. Any party may file an original counterpart or a copy of this
Agreement with any court as written evidence of consent of the parties hereto of
the waiver of their right to trial by jury. Neither party has made or relied
upon any oral representations to or by the other party regarding the
enforceability of the provision. Each party has read and understands the effect
of this jury waiver provision. If any other term of this Agreement is found or
determined to be unconscionable or unenforceable for any reason, the foregoing
provisions shall continue in $11 force and effect
26. SEVERABILITY. If any provision of this Agreement or any Exhibit
shall be determined to be contrary to law and unenforceable by any court of law,
the remaining provisions shall be severable and enforceable in accordance with
their terms.
27. HEADINGS. The descriptive headings of the Sections and Subsections
hereof are inserted for convenience only and do not constitute a part of this
Agreement.
28. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute but one instrument.
29. APPLICABLE LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Florida.
30. ATTORNEYS' FEES. Should suit be brought to enforce this Agreement
or by reason of any claimed default in the performance hereof by either party,
the prevailing party in such suit shall be awarded reasonable attorneys' fees in
the defense or prosecution thereof as a part of the judgement in such suit.
31. CONFIDENTIALITY. Each of the parties shall use its best efforts to
keep confidential any and all information, including but not limited to the
information and materials
16
contained in the operating guide of the respective party, furnished to it or to
its affiliates, agents or representatives in connection with the Program arising
out of this Agreement. Such parties shall instruct their respective officers,
employees and other representative having access to such information of such
obligation of confidentially and shall enforce adherence to such obligation of
confidentiality. The parties hereby acknowledge that such confidential
information of each party constitutes trade secret. Upon any termination of this
Agreement. the parties shall promptly return to the other all confidential
materials.
32. RELATIONSHIP OF THE PARTIES. It is understood and agreed by the
parties tat this Agreement does not in any way create a fiduciary relationship,
and that nothing in the Agreement is intended to constitute any party as an
agent, legal representative, subsidiary, joint venturer, partner, employee or
servant of the other party, for any purposes whatsoever.
33. WAIVER. No failure of Xxxxxx Xxxxxxxx'x or Miami Subs to exercise
any power reserved to it hereunder, or to insist upon strict compliance by the
other with any obligation or condition hereunder, and no custom or practice of
the parties in variance with the terms thereof, shall constitute a waiver of
Xxxxxx Xxxxxxxx'x or Miami Subs' right to demand strict compliance with the
terms hereof Waiver by Xxxxxx Xxxxxxxx'x or Miami Subs of any particular default
by the other shall not affect or impair Miami Subs' or Xxxxxx Xxxxxxxx'x right
with respect to any subsequent default of the same or of a different nature; not
shall any delay, waiver, forbearance or omission of Miami Subs to exercise any
power or rights arising out of any breach or default by the other of any of the
terms, provisions or covenants hereof or impair Miami Subs' or Xxxxxx Xxxxxxxx'x
rights, nor shall such constitute a waiver by Miami Subs or Xxxxxx Xxxxxxxx'x of
any right hereunder or of the right to declare any subsequent breach or default.
34. INJUNCTIVE RELIEF. Both parties recognize that their failure to
comply with Section 31. of this Agreement or their infringement of the other
parties Names is likely to cause irreparable harm to the other party. Therefore
both parties shall be entitled to injunctive relief (both preliminary and
permanent) restraining that breach and/or to specific performance, without
showing or proving actual damages and without posting any bond or security. Any
equitable remedies sought by the damaged party shall be in addition to, and not
in lieu of, all remedies and rights that the damaged party otherwise may have
arising under applicable law or by virtue of any breach of this Agreement.
35. INDEMNIFICATION. Miami Subs hereby and forever indemnifies, defends
and holds Xxxxxx Xxxxxxxx'x its agents, officers and directors and employees,
harmless from and against any and all obligations, actions. causes of action,
suits, debts, dues, sums of money including attorneys fees, court costs of any
kind and any level whatsoever including appeals, covenants, judgements, executed
claims, demands whatsoever in law or in equity, for, upon or by reason of any
matter arising from or related to the sales process for a Combo Unit.
Notwithstanding the foregoing, Miami Subs shall not indemnify Xxxxxx Xxxxxxxx'x
for matters arising from or related to any deficiency or mistake made to any
offering circular, agreements. or sales information created by or on behalf of
Xxxxxx Xxxxxxxx'x.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
XXXXXX XXXXXXXX'X, INC. MIAMI SUBS USA, INC.
A Utah corporation A Florida corporation
By: /s/Xxxxxxx Xxxxxxx By:
------------------------------- --------------------------
Its: Pres. Its: President
Attest: Attest:
----------------------------------- ------------------------------
Its: Executive Assistant Its: V.P.
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