Franchise Agreement
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EXHIBIT A
Boston Pizza Restaurants, LP FRANCHISE AGREEMENT
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ITEM
TABLE OF CONTENTS
PAGE
I. GRANT OF FRANCHISE.......................................................................................................2
A. Grant...................................................................................................................................2
B. Territory.............................................................................................................................2
C. Relocation...........................................................................................................................3
D. Reservation of Certain Rights............................................................................................4
H. TERM AND RENEWAL..........................................................................................................4
A. Initial Term.........................................................................................................................4
B. Renewal Term....................................................................................................................4
IH. DUTIES OF FRANCHISOR....................................................................................................5
A. Pre-Opening Obligations..................,.................................................................................5
B. Post-Opening Obligations..................................................................................................6
IV. FEES...........................................................................................................................................7
A. Payments to Franchisor......................................................................................................7
B. Audit & Reporting Procedures...........................................................................................7
C. Definition of Gross Sales...................................................................................................8
V. DUTIES OF FRANCHISEE....................................................................................................8
A. Compliance with System....................................................................................................8
B. Site Requirements...............................................................................................................8
C. Pre-Opening Requirements................................................................................................9
D. Construction and Opening Requirements...........................................................................9
E. Initial Training..................................................................................................................10
F. Investor Orientation Program...........................................................................................10
G. Supervision Requirements................................................................................................10
H. On-Going Training and Bi-Annual Meetings...................................................................11
I. Operation of the Franchised Business..............................................................................11
J. Maintenance and Equipment Upgrades............................................................................11
K. Health and Safety Standards.............................................................................................11
L. Working Capital...............................................................................................................11
M. Refurbishment..................................................................................................................12
N. Compliance with Uniform Standards...............................................................................12
O. Purchase and Lease of Products, Equipment and Supplies..............................................13
P. Inspection of Premises......................................................................................................13
Q. Proprietary Methods.........................................................................................................13
R. Development of the Market..............................................................................................13
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S. Display of Proprietary Marks and Logos.........................................................................13
T. Computerized Point-of-Sale System................................................................................14
U. Intranet/Extranet...............................................................................................................14
V. Franchisee's Organizational Structure.............................................................................14
W. Execution of Guaranty, Undertaking and Other Requirements........................................15
VI, PROPRIETARY MARKS......................................................................................................15
A. Grant of License...............................................................................................................15
B. Conditions for Use............................................................................................................16
C. Acknowledgements..........................................................................................................17
VH. CONFIDENTIAL MANUALS...............................................................................................17
A. Compliance.......................................................................................................................17
B. Use....................................................................................................................................18
C. Confidentiality..................................................................................................................18
D. Trade Secrets....................................................................................................................18
E. Access...............................................................................................................................18
F. Duplication.......................................................................................................................18
G. Franchisor's Property.......................................................................................................18
H. Updates or Revisions........................................................................................................18
I. Master Set.........................................................................................................................18
J. Replacement Fee..............................................................................................................18
Vffl. CONFIDENTIAL INFORMATION.....................................................................................18
A. Confidential Relationship.................................................................................................18
B. Obligations of Franchisee and Principals.........................................................................19
C. Confidential Information Defined....................................................................................19
D. Protection of Information.................................................................................................19
E. Remedies..........................................................................................................................20
F. Communication with Customers......................................................................................20
G. Communication with Lenders..........................................................................................20
DC. ACCOUNTING, INSPECTIONS AND RECORDS............................................................20
A. Maintenance of Books and Records.................................................................................20
B. Reporting..........................................................................................................................20
C. Financial and Related Reporting......................................................................................20
D. Other Submissions............................................................................................................21
E. Inspection of Financial Records.......................................................................................21
X. ADVERTISING.......................................................................................................................21
A. Submission and Approval of Promotional and Marketing Materials...............................21
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B. The National Cooperative Advertising Fund Contribution..............................................21
C. Minimum Local Marketing Expenditure..........................................................................22
XI. INSURANCE...........................................................................................................................22
A. Procurement......................................................................................................................22
B. Minimum Coverage.......................................................................................................... 22
C. Construction Coverage.....................................................................................................23
D. Certificates.......................................................................................................................23
E. Independence of Coverage Requirements........................................................................23
F. Failure to Procure.............................................................................................................23
G. Third Parties.....................................................................................................................24
Xn. TRANSFER OF INTEREST..................................................................................................24
A. Transfer by Franchisor.....................................................................................................24
B. Transfer by Franchisee.....................................................................................................24
C. Additional Transfer Requirements for Legal Entity Transferees.....................................27
D. Offerings by Franchisee...................................................................................................27
E. Franchisor's Right of First Refusal..................................................................................27
F. Transfer Upon Death or Mental Incapacity......................................................................28
G. Non-Waiver of Claims.....................................................................................................28
H. Operation of the Franchised Business by Franchisor.......................................................28
Xm. DEFAULT AND TERMINATION........................................................................................28
A. Material Default With No Opportunity To Cure..............................................................28
B. Default With Thirty (30) Day Opportunity To Cure........................................................31
C. No Right or Remedy.........................................................................................................32
D. Default and Termination..................................................................................................32
E. Right to Purchase..............................................................................................................32
F. Liquidated Damages.........................................................................................................32
XIV. OBLIGATIONS UPON TERMINATION............................................................................32
A. Cessation of Operation.....................................................................................................32
B. Cessation of Use of Proprietary Marks............................................................................32
C. Cancellation of Name.......................................................................................................33
D. Optional Assignment of Lease.........................................................................................33
E. Franchisor's Right to Continue Operations......................................................................33
F. Non-Usage of Marks........................................................................................................33
G. Prompt Payment Upon Default........................................................................................34
H. Payment of Costs..............................................................................................................34
I. Return of Materials...........................................................................................................34
J. Assignment of Telephone Listings...................................................................................34
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K. Option to Purchase...........................................................................................................34
L. Covenant of Further Assurances......................................................................................35
M. Compliance with Covenants.............................................................................................35
N. No Further Interest...........................................................................................................35
XV. COVENANTS, REPRESENTATIONS AND WARRANTIES..........................................35
A. Best Efforts.......................................................................................................................35
B. Non-Solicitation and Non-Competition...........................................................................35
C. Restrictive Covenants.......................................................................................................35
D. No Undue Hardship..........................................................................................................36
E. Inapplicability of Restrictions..........................................................................................36
F. Independence of Covenants..............................................................................................36
G. Mission.............................................................................................................................36
H. Modification of Covenants...............................................................................................36
I. Enforcement of Covenants...............................................................................................36
J. Injunctive Relief...............................................................................................................36
K. Terrorist and Money Laundering Activities.....................................................................37
L. Written Agreements.........................................................................*...............................37
XVI. CHANGES AND MODIFICATIONS...................................................................................37
XVn. TAXES AND INDEBTEDNESS............................................................................................38
A. Payment............................................................................................................................38
B. Dispute.............................................................................................................................38
C. Compliance with Federal, State and Local Laws.............................................................38
D. Duty to Notify..................................................................................................................38
XVm. INDEPENDENT CONTRACTOR AND INDEMNIFICATION.......................................38
A. Independent Contractor and Indemnification...................................................................38
B. Identification....................................................................................................................39
C. No False Representations.................................................................................................39
D. No Liability......................................................................................................................40
XIX. APPROVALS AND WAIVERS.............................................................................................40
A. Written Consent................................................................................................................40
B. No Waiver........................................................................................................................40
C. WAIVER OF JURY TRIAL............................................................................................40
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XX. NOTICES.................................................................................................................................41
XXI. RELEASE OF PRIOR CLAIMS...........................................................................................41
XXn. DISCLOSURE STATEMENT AND DISCLAIMER..........................................................41
A. Compliance with Applicable Laws..................................................................................41
B. Receipt of Agreement.......................................................................................................41
XXni. ENTIRE AGREEMENT........................................................................................................42
XXIV. SEVERABILITY AND CONSTRUCTION.........................................................................42
A. Severability.......................................................................................................................42
B. Business Judgment...........................................................................................................42
C. Covenants.........................................................................................................................43
D. Captions............................................................................................................................43
E. References........................................................................................................................43
F. Definition of Franchisee...................................................................................................43
G. Force Majeure...................................................................................................................43
XXV. APPLICABLE LAW..............................................................................................................43
A. Governing Law.................................................................................................................43
B. Jurisdiction and Venue.....................................................................................................43
C. Remedy.............................................................................................................................44
D. Injunctive Relief...............................................................................................................44
XXVI. LIMITATIONS ON CLAIMS AND DAMAGES................................................................44
XXVII. ACKNOWLEDGMENTS......................................................................................................44
ATTACHMENTS TO FRANCHISE AGREEMENT:
Attachment A: Location Addendum
Attachment B: Mandatory Addendum to Lease Agreement
Attachment C: Telephone Assignment Agreement and Power of Attorney
Attachment D: Guaranty and Undertaking
Attachment E: Certificate of Corporate Status
Attachment F: Boston Link Franchisee Agreement
Attachment G: Principals' Undertaking
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BOSTON PIZZA RESTAURANTS, LP FRANCHISE AGREEMENT
THIS AGREEMENT is made and entered into this Insert Day day of Insert Month, Insert
Year(the "Effective Date"), by and between Boston Pizza Restaurants, LP, a limited partnership formed under the laws of the State of Delaware, whose principal place of business is 1501 LBJ Freeway, Suite 450, Dallas, Texas, 75234 (hereinafter referred to as "BPR" or "Franchisor") and Insert Name of Franchisee, a Insert kind of entity, with a current address of Insert Address (hereinafter referred to as the "Franchisee").
WITNESSETH:
WHEREAS, the Franchisor holds the exclusive United States franchise rights to a proprietary system owned by BP International Rights Holdings Inc. ("BP Holdings"), which has been developed through significant expenditures of time, skill, effort and money (hereinafter the "System") relating to the establishment, development and operation of a Boston's The Gourmet Pizza restaurant operating under the System and the Proprietary Marks which offers pizza and pasta dishes in a full service casual dining restaurant environment (hereinafter a "Restaurant", which term includes both franchised outlets and outlets owned by Franchisor or its affiliates);
WHEREAS, the System features a distinctive exterior and interior design, decor, color scheme, fixtures and furnishings for Restaurants, as well as uniform standards, specifications, methods, policies and procedures for Restaurant operations, inventory and management control, training and assistance, and advertising and promotional programs, all of which may be changed, improved upon, and further developed from time to time;
WHEREAS, Franchisor, through its dedicated operations, marketing methods, and merchandising policies, has developed the reputation, public image and goodwill of its System and established a firm foundation for its Restaurant operations consisting of the highest standards of training, management, supervision, appearance, services and quality of products;
WHEREAS, the System is identified by means of certain trade names, service marks, trade marks, logos, emblems and indicia of origin, including the mark Boston's The Gourmet Pizza and logo, and such other trade names, service marks, and trademarks as are now, and may hereafter be designated for use in connection with the System (the "Proprietary Marks") which Proprietary Marks are owned by BP Holdings;
WHEREAS, BP Holdings has licensed and granted Franchisor the exclusive right and license to sub-license and monitor the use of the System and the Proprietary Marks in the United States;
WHEREAS, BP Holdings continues to develop, expand, use, control and add to the Proprietary Marks and the System for the benefit of and exclusive use by the Franchisor and its franchisees in order to identify for the public the source of the products and services marketed there under and to represent the System's high standards of quality and service;
WHEREAS, the Franchisee acknowledges its contract is solely with the Franchisor, a limited partnership, and that it shall have no recourse against Boston Pizza Restaurants (U.S.A.), Inc. ("BP USA") as a limited partner or otherwise or against BP Holdings or any of Franchisor's other affiliated entities, and that it is relying exclusively on the assets, equity, and credit of Boston Pizza Restaurants, LP and its corporate general partner;
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WHEREAS, the Franchisee desires to operate a Restaurant under the System and the Proprietary Marks and to obtain a license from the Franchisor for that purpose, as well as to receive the training and other assistance provided by the Franchisor in connection therewith;
WHEREAS, the Franchisee hereby acknowledges that it has read this Agreement and the Franchisor's Uniform Franchise Offering Circular, and that it has no knowledge of any representations about the Restaurants or about the Franchisor or its franchising program or policies made by the Franchisor or by its officers, directors, shareholders, employees or agents which are contrary to the statements in the Franchisor's Uniform Franchise Offering Circular or to the terms of this Agreement, and that it 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 facilities which operate pursuant to the System and thereby to protect and preserve the goodwill of the Proprietary Marks; and
WHEREAS, the Franchisee understands and acknowledges the importance of the Franchisor's uniformly high standards of quality and service and the necessity of operating the Franchised Business granted hereunder in strict conformity with the Franchisor's quality control standards and specifications.
NOW, THEREFORE, the parties, in consideration of the promises, undertakings and commitments of each party to the other set forth herein, hereby mutually agree as follows:
I. GRANT OF FRANCHISE
A. Grant. The Franchisor hereby grants to the Franchisee and Franchisee accepts, upon the terms and conditions herein contained, the non-exclusive and personal license, right and authority to operate a Restaurant (The Restaurant operated under this Agreement shall be referred to herein as the "Franchised Business") in strict conformity with the Franchisor's quality control standards and specifications which are a material part of the System, which may be changed, improved and further developed from time to time, only at the Franchised Location more particularly described in Attachment A. The Franchisee hereby accepts such license and agrees to perform all of its obligations in connection therewith as set forth herein. The Franchisee must secure control of the site (that is, have a binding letter of intent or a signed purchase or option agreement) and must receive the Franchisor's written approval for the site within one hundred and twenty (120) days of the Effective Date.
B. Territory. Provided the Franchisee at all times remains in full compliance with its obligations under this Agreement, the Franchisor agrees not to commence operation of, or grant a third party the right to commence operation of, a Restaurant at a physical premises within a one (1) mile radius of the Franchised Location set forth in Attachment A, unless such location is within the geographic boundaries of a statistical metropolitan area ("SMA") with a population greater than one million persons, in which case the Franchisor agrees not to commence operation of, or grant a third party the right to commence operation of, a Restaurant within a one-half (1/2) mile radius of the Franchised Location (the "Territory"). However, the Franchisor reserves the right to commence operation of, or grant a third party the right to commence operation of, "quick express" units within non-captive venues within the Territory, after providing the Franchisee with a thirty (30) day right of first refusal. The Franchisor also reserves the right to commence operation of, or grant a third party the right to commence operation of, "quick express" units in any captive venues within or outside the Territory, and the Franchisee shall not have any right of first refusal for "quick express" units located within captive venues. For purposes of this Agreement, "captive" venues means locations in which customers will primarily be drawn from an enclosed or limited facility, including, but not limited to, sports facilities and arenas, entertainment facilities, amusement parks, auditoriums, public transportation facilities, military bases and government facilities, college campuses, shopping malls (including food courts), grocery stores and supermarkets, hospitals and any other similar facilities and locations. A "quick express" unit is a Boston's The Gourmet Pizza restaurant operating under the System and the Proprietary Marks which offers a limited menu and/or limited service (rather than full service). Franchisor reserves all rights not expressly granted
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herein, including without limitation, the right to take the following actions within or outside the Territory regardless of proximity to, or competitive impact on, the Franchised Business:
1. Commence operation of company-owned Restaurants or license third parties to commence operation of Restaurants providing products or services under marks other than the Proprietary Marks;
2. Notwithstanding any rights of first refusal granted to Franchisee under this Section I.B., offer and sell food products, including frozen products, under the Proprietary Marks or any other marks, through grocery stores, convenience stores, hotel shops and kiosks, theatres, gas stations or other retail locations, or through mail order or catalogues or on the Internet;
3. Notwithstanding any rights of first refusal granted to Franchisee under this Section I.B., offer or sell food products, including frozen products, under the Proprietary Marks or any other marks at "Special Events" after providing the Franchisee with thirty (30) days notice and a ten (10) day opportunity to participate in the "Special Event" pursuant to terms agreeable to the Franchisor and the Franchisee. "Special Event" means carnivals, fairs, school events, charity functions, community festivals, conventions, business gatherings, private parties and similar events and gatherings that last for no more than 30 consecutive days; and
4. Subject to the right of first refusal granted to Franchisee under this Section I.B., offer or sell any products or services, under the Proprietary Marks or any other marks, through any other channel of distribution.
The Franchisor may commence operation of company-owned Restaurants or license third parties to commence operation of Restaurants at any site the Franchisor deems appropriate outside of the Territory.
C. Relocation. Franchisee may relocate the Franchised Business to a new location in the Territory upon the following conditions:
1. Franchisee shall not be in default of any provision of this Agreement, any ancillary agreement with the Franchisor or the lease for the existing location;
2. Franchisee shall deliver to Franchisor a current financial statement, including a profit and loss statement for the Franchised Business during the last twelve (12) months of operation, dating back from the date of Franchisee's request, at the existing location, and a copy of the proposed lease, if applicable, for the new location;
3. The proposed new location for the Franchised Business is not within the development territory or the individual territory of any other existing or proposed Restaurant;
4. The proposed new location for the Franchised Business is acceptable to Franchisor in its sole discretion;
5. The new Franchised Business must be constructed, located and equipped in accordance with Franchisor's then current design and other standards; and
6. Franchisee must be current on all of Franchisee's financial obligations to Franchisor and its affiliates.
7. The Franchisee must receive prior written approval from BPR.
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Franchisee must give Franchisor written notice of the proposed relocation one hundred eighty (180) days before the relocation date. In the event that Franchisee fails to timely deliver such notice, this shall be grounds for default with opportunity to cure as set forth in Section XHLB herein. Relocation without providing proper notice as required in this Section to the Franchisor shall be grounds for default without opportunity to cure as set forth in Section XIII.A herein. The Franchised Business must open for business in the new location within thirty (30) days (which may be extended for another thirty (30) days for good cause (as solely determined by "BPR") of the date on which the Franchised Business in the old location closed. Franchisee shall also enter into Franchisor's then-current form of Franchise Agreement, including the then-current royalty rate and advertising contributions and expenditures. Franchisee must provide Franchisor with a copy of the site purchase agreement or executed lease, as applicable, for the new location.
D. Reservation of Certain Rights. Subject to Section LB. hereinabove, the Franchisor reserves the right to commence operation of Restaurants at any site the Franchisor deems appropriate. The Franchisor also reserves the right to sell related products and services in other channels of distribution as set forth in Section LB. The Franchisor reserves the right to offer, grant and support franchises in similar and other lines of business. The Franchisor makes no representation or warranty to the Franchisee that there will be any right to participate in such franchises.
EL TERM AND RENEWAL
A. Initial Term. Except as otherwise provided herein, the term (the "Initial Term") of this Agreement shall be for ten (10) years commencing on the Scheduled Opening Date.
B. Renewal Term. The Franchisee may, at its option, continue the Franchised Business for an additional ten (10) year term, or at Franchisor's sole option, such period as remains in the existing lease underlying the initial term of this Agreement, if such period shall be shorter than ten (10) years (the "Renewal Term"). The Initial Term and the Renewal Term shall be referred to collectively as the "Term" throughout this Agreement. Renewal shall be subject to the following conditions, which must be met prior to the Renewal Term, unless and to the extent expressly waived in writing by the Franchisor:
1. The Franchisee shall give the Franchisor written notice of its election to renew this Agreement not less than six (6) months prior to the end of the current term of this Agreement;
2. At least six (6) months prior to the expiration of the current term of this Agreement or one (1) month after the date of notice pursuant to Section H.B.1. whichever is later, the Franchisor may inspect the Franchised Business and give notice of all required modifications to the nature and quality of the products and services offered at the Franchised Business, the Franchisee's advertising, marketing and promotional programs, its financial and inventory control systems, and the maintenance, refurbishing, equipment upgrade and replacement, renovating and remodelling necessary to comply with the Franchisor's then current standards and specifications and with the requirements of the lease for the Franchised Business. If the Franchisee elects to renew this Agreement, then the Franchisee shall complete, to the Franchisor's satisfaction, all such required modifications, as well as adopt and implement any new methods, programs, modifications, techniques or operational systems required by the Franchisor's notice no later than two (2) months prior to expiration of the current term of this Agreement;
3. The Franchisee shall not be in default of any provision of this Agreement, any amendment hereof or successor hereto, or any other agreement between the Franchisee and the Franchisor or its subsidiaries, affiliates and suppliers. The Franchisee shall have substantially complied with all of the terms and conditions of such agreements during the terms thereof and shall not have committed any Material Defaults during the term of the Agreement;
4. The Franchisee shall have satisfied all monetary obligations (which shall not include any incorrect billings by Franchisor) owed by the Franchisee to the Franchisor and its subsidiaries,
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affiliates and suppliers and shall have timely met those obligations throughout the term of this Agreement;
5. The Franchisee shall have executed upon renewal the Franchisor's then-current form of Franchise Agreement. The new Franchise Agreement shall supersede in all respects this Agreement, and the terms of which may differ from the terms of this Agreement, including, without limitation, the requirement of a higher percentage royalty fee and/or advertising contributions. In lieu of the then current initial franchise fee or its equivalent for such renewal period, however, the Franchisee shall be required to pay a renewal fee of twenty-five percent (25%) of the then-current initial franchise fee;
6. The Franchisee or its Operating Principal and its approved manager or managers, including its General Manager and Kitchen Manager as designated from time to time by Franchisor in Franchisor's sole discretion, shall have attended the Franchisor's then-current orientation and training programs at the Franchisee's expense;
7. The Franchisee, its shareholders, directors and officers shall have executed a general release, in a form prescribed by the Franchisor, of any and all claims against the Franchisor and its subsidiaries and affiliates, and their respective officers, directors, agents and employees. The Franchisee shall not be required, however, to release the Franchisor for violations of or failure to comply with federal or state franchise registration and disclosure laws;
8. The Franchisee shall have presented evidence satisfactory to the Franchisor that it has the right to remain in possession of the premises where the Franchised Business is located for the duration of the renewal term;
9. The Franchisee's operation and management of the Franchised Business shall be in frill compliance with the System; and
10. The Franchisee shall maintain and be in good standing with all of its necessary and applicable licenses and permits.
In the event that any of the foregoing conditions to renewal have not been met at least two (2) months prior to the expiration of the current term of this Agreement, then the Franchisor shall have no obligation to renew this Agreement and shall give the Franchisee at least thirty (30) days prior written notice of its intent not to renew this Agreement, which notice shall set forth the reasons for such refusal to renew.
HI. DUTIES OF FRANCHISOR
A. Pre-Opening Obligations. The duties of the Franchisor prior to the opening of the Franchised Business are as follows:
1. To provide an Initial Training program in the operation of the Franchised Business, featuring both classroom and on-the-job training, for the Franchisee, or Operating Principal, and up to three (3) of its approved managers, including its General Manager and Kitchen Manager, and also provide an Investor Orientation Program for all non-operating Principals;
2. To provide the Franchisee with written specifications for the operation and management of the Franchised Business;
3. To loan to the Franchisee one (1) set of the Franchisor's confidential systems manuals (the "Manuals") that will include specifications for management and operations, equipment, supplies, and inventory. The Manuals are confidential and remain the property of the Franchisor. The Franchisor may modify the Manuals from time to time in its sole discretion;
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4. To provide a set of prototypical plans for the construction of a typical Restaurant. These plans are for informational purposes only and shall not be relied upon by the Franchisee in the construction of its Franchised Business. The Franchisee is required to employ a registered architect and/or engineer previously approved by BPR, develop its own working drawings for the construction of its Franchised Business which must substantially comply with Franchisor's prototypical plans unless changes are approved in writing in advance by Franchisor, and provide all final design and construction documents to the Franchisor for its review and approval prior to the commencement of construction;
5. To provide the Franchisee with such site selection assistance as the Franchisor deems advisable, subject to the availability of personnel. The Franchisor's written approval of the site is required as evidenced by execution of Attachment A; however, a designation of the site as being suitable for a Restaurant shall not be deemed a representation or warranty as to the likelihood of success by the Franchisee. THE FRANCHISOR HAS PROVIDED NO DATA AND MADE NO STATEMENT THAT WOULD EXPRESSLY OR IMPLIEDLY SUGGEST THAT APPROVAL OF A SITE IS ANY REPRESENTATION AND WARRANTY OF THE SITE'S EVENTUAL PERFORMANCE. The Franchisee acknowledges and agrees that its success will be due to factors beyond the control of the Franchisor; and
6. To provide to the Franchisee up to five (5) employees to provide on-site pre-opening and opening supervision and assistance for three (3) weeks. BPR reserves the right to charge three hundred fifty dollars ($350) per employee per day for this on-site training in its sole discretion. This on-site training is in addition to the initial training program described in Section HI.A. 1, above, which is provided free of charge, except that, the Franchisee must pay the expenses of its attendees at the initial training program.
B. Post-Opening Obligations. The obligations of the Franchisor following the opening of the Franchised Business are as follows:
1. To provide such general advisory assistance and field support deemed by Franchisor, in Franchisor's sole discretion, to be helpful to the Franchisee in the ongoing operation, advertising and promotion of the Franchised Business including the provision of periodic Brand Equity Review ("B.E.R.") Assessments. In the event that the Franchised Business fails a B.E.R. assessment, the Franchisor will charge the Franchisee for all costs associated with such assessment;
2. To continue its efforts to establish and maintain high standards of quality, cleanliness, safety, customer satisfaction and service;
3. To provide to the Franchisee updates, revisions and amendments to its Manuals, as the Franchisor deems advisable in its sole discretion;
4. Subject to the availability of the Franchisor's staff, to provide management consulting services for special projects or assistance at the rate of three hundred fifty dollars ($350) per person per day, plus reimbursement of all reasonable expenses incurred by the Franchisor in connection with the rendering of such services. (The Franchisor reserves the right to make reasonable adjustments from time to time to such daily rate in its sole discretion; these consulting fees are non-refundable and must be paid in advance.) Such services will be provided only upon the request of the Franchisee, and do not include Franchisor's periodic BE.R. Assessment of the Franchised Business or advice unilaterally given by the Franchisor with respect to concept changes required by the Franchisor;
5. To administer the National Cooperative Advertising Fund with the advertising contributions remitted by its franchisees;
6. To coordinate and conduct periodic mandatory training programs for its network of franchisees as the Franchisor deems necessary in its sole discretion; and
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7. On a periodic basis, to conduct, as the Franchisor deems advisable, quality control audits of the Franchised Business and its operations and evaluations of the methods and the staff employed therein.
All of the obligations of the Franchisor hereunder are to the Franchisee, and no other party is entitled to rely on, enforce or obtain relief for breach of such obligations either directly or by subrogation.
IV. FEES
A. Payments to Franchisor. In consideration of the right and license to operate the Franchised Business granted herein, the Franchisee shall pay to the Franchisor the following fees:
1. Initial Franchise Fee. The total initial franchise fee payable to the Franchisor by the Franchisee is fifty thousand dollars ($50,000) which is payable upon execution of the Franchise Agreement. The initial franchise fee is deemed fully earned upon receipt by the Franchisor, and is nonrefundable.
2. Royalty Fees. The Franchisee shall pay to the Franchisor a continuing nonrefundable weekly royalty fee of five percent (5%) of Gross Sales as that term is defined herein. Subject to applicable banking laws and regulations, the Franchisor shall establish a direct debit program with the Franchisee's bank to allow for the electronic transfer of the weekly royalty payment. In the event that the direct debit program is not available, Franchisee must pay the Franchisor directly and the payment must be received by the Franchisor on the Thursday of the week following the week for which the payment is due.
3. Mandatory Advertising. Throughout the term of this Agreement and any renewals thereof, the Franchisee must spend a total of four percent (4%) of its Gross Sales on local marketing and the National Cooperative Advertising Fund (the "Advertising Fund"). The Franchisor will require the Franchisee to contribute three percent (3%) of its Gross Sales to the Advertising Fund and to spend one percent (1%) of its Gross Sales on local marketing, for a total of four percent (4%) of Gross Sales on mandatory advertising, both as required pursuant to Section X.
4. Interest Charges on Late Payments. If any sums required to be paid by the Franchisee to the Franchisor under this Agreement are not received in full by the Franchisor when due, Franchisor shall assess a late fee of one hundred dollars ($100) for each week that any payment is delinquent. In addition, all overdue amounts will bear interest, until paid, at the rate of two (2) times the prime rate then being charged by the Chase Manhattan Bank, N.A. on the date payment was due, or the highest rate permitted by applicable state law, whichever is less (the "Default Rate"). Interest shall be calculated on a daily basis. Interest charges are non-refundable. Such interest shall be in addition to any other remedies Franchisor may have.
B. Audit & Reporting Procedures. The Franchisor has the right to audit the books and records of the Franchisee upon reasonable notice. An audit will be conducted at the Franchisor's expense, unless such audit discloses an understatement in any report of three percent (3%) or more, in which case the Franchisee must pay for any and all costs and expenses incurred by the Franchisor in connection with the audit (including, without limitation, reasonable accountants' and attorneys' fees), together with interest on undisclosed or under-reported amounts at the Default Rate, which will be payable immediately upon receipt of written notice from the Franchisor. All such audit fees, costs and expenses, as well as the interest thereon, are non-refundable.
The Franchisee must maintain and preserve during the term of this Agreement, and must preserve for the time period specified in the Manuals, full, complete and accurate books, records and accounts and all supporting materials in accordance with the Franchisor's procedures and guidelines. The Franchisee is required by this Agreement to periodically submit to the Franchisor, at the Franchisee's expense, certain
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reports, records, information and data as the Franchisor may reasonably designate upon request or as specified in writing.
During the term of this Agreement, the Franchisee must submit to the Franchisor, a financial statement including all Gross Sales during the preceding month and such other data and information regarding the operation of the Franchised Business as the Franchisor may reasonably require. All such reports must be received by the Franchisor on or before the tenth (10th) day of each calendar month. The Franchisee must also submit to the Franchisor, upon request, a copy of any of its federal and state sales or income tax returns applicable to the Franchised Business.
At its expense, the Franchisee must submit to the Franchisor an annual financial statement that includes an income statement in a form acceptable to the Franchisor and Franchisee's lender, together with copies of federal and state tax returns for the Franchisee within ninety (90) days of the Franchisee's fiscal year end. The financial statement must be compiled by an independent certified public accounting firm and signed by the Franchisee's President or Treasurer attesting that the statement is true and correct.
The Franchisee must also submit exact copies of the Franchisee's invoices for goods purchased from suppliers and copies of Franchisee's operating reports to its landlord and/or shopping mall operator immediately following Franchisor's request for the same.
C. Definition of Gross Sales. "Gross Sales" is defined as all sales generated through the Franchised Business including fees for any products or goods sold by the Franchisee, whether for cash or credit (regardless of collectability, except as provided below), and income of every kind or nature related to the Franchised Business, including, without limitation, revenues from the sale of branded merchandise and food products and from the use of jukeboxes, vending machines, video games, pinball machines or similar arcade-like machines, and from video lottery terminals where permitted by law; provided, however, that "Gross Sales" shall not include any sales tax or other taxes collected from customers by the Franchisee for transmittal to the appropriate taxing authority. When calculating Gross Sales, the Franchisee may deduct that portion of the normal full menu price of any item that is not collected by the Franchisee as a result of Franchisor-approved promotions (whether local or system-wide, including coupons) and manager discounts (collectively, "Sales Discounts"), as well as discounted employee meals. Sales Discounts and discounted employee meals must be fully disclosed on all reports submitted to the Franchisor by the Franchisee and Franchisor reserves the right, in its sole discretion, to disallow any Sales Discounts not meeting the requirements set forth herein. Sales Discounts and discounted employee meals each may not exceed two and one-half percent (2'/2%) of Gross Sales (as calculated prior to the deduction for Sales Discounts and discounted employee meals).
V. DUTIES OF FRANCHISEE
A. Compliance with System. The Franchisee understands and acknowledges that every detail of the appearance and operation of the Franchised Business in compliance with the System is critical to the Franchisor, the Franchisee and other franchisees in order to:
1. Develop and maintain high and uniform operating standards;
2. Increase the demand for the products and services sold by franchisees; and
3. Protect the Proprietary Marks and the System, and the Franchisor's trade secrets, reputation and goodwill.
B. Site Requirements. The Franchisee will have a period of one-hundred twenty (120) days following the Effective Date of this Agreement to secure Franchisor's approval of the site as evidenced by franchisor's execution of Attachment A, and to provide the Franchisor with fully executed site control documents and related addenda that may be required by the Franchisor in its sole discretion. At the
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Franchisees request, the Franchisor may, in its sole discretion, provide general site-related assistance to the Franchisee, provided that the Franchisee understands and agrees that the Franchisor makes no warranty regarding the Franchise Business, or the Franchisee's success or failure at the Franchisee's chosen site.
C. Pre-Qpening Requirements. The Franchisee will have a period of two hundred ten (210) days following the Effective Date of this Agreement to commence construction of the Franchise Business. Commencement of construction is defined as excavation for footings with continuous, uninterrupted construction progress thereafter until opening of the facility. Before commencing any construction or leasehold improvements of the Franchised Business, the Franchisee, at its expense, shall comply with all of the following requirements.
1. The Franchisee shall have received the Franchisor's prior written approval of the site selected by the Franchisee for the operation of the Franchised Business, as evidenced by the parties' execution of Exhibit A and submittal of all fully executed site control documents, in accordance with the terms of this Agreement;
2. The proposed site must be in compliance with all applicable local and state laws, regulations and ordinances including all zoning, signage and parking requirements;
3. The Franchisee agrees to be responsible for all reasonable expenses incurred by the Franchisor in its review and approval of the proposed site(s), the Franchisor's review and monitoring of the construction of the Franchised Business and the final inspection of the Franchised Business prior to its authorized opening.
4. The Franchisee shall employ a qualified general contractor, or such other qualified person as the Franchisor may approve, in its sole discretion for the purposes of supervising the construction of the Franchised Business and ensuring the completion of all construction or leasehold improvements. The Franchisee shall submit to the Franchisor a statement identifying the general contractor and describing the general contractor's qualifications and financial responsibility, and the Franchisor shall supply the Franchisee with its approval or disapproval of the general contractor within ten (10) business days of the Franchisor's receipt of such statement;
5. The Franchisee shall obtain all liquor and business licenses, permits and certifications required for lawful construction and ongoing operation of the Franchised Business (including, without limitation, zoning, access, variances, health and safety, sign and fire requirements) and shall certify in writing to the Franchisor that all such licenses, permits and certifications have been obtained;
6. The Franchisee shall provide to the Franchisor written evidence of the Franchisee's funding commitments in a form acceptable to the Franchisor. The Franchisee further agrees to provide the Franchisor with authorization to contact funding sources directly to discuss all financial aspects of the proposed development.
7. The Franchisor shall secure construction insurance coverage as required in Section XI.C.
D. Construction and Opening Requirements. The Franchisee shall completely construct and equip, at Franchisee's expense, the approved Franchised Location in accordance with Franchisor's standards and specifications. During the period of construction, Franchisee shall provide to Franchisor such periodic progress reports as Franchisor may require, in its sole discretion. Such reports shall be signed by Franchisee and its general contractor, warranting that construction is proceeding on schedule and in accordance with the approved final plans and with all applicable laws, ordinances and regulations. Franchisor and its agents shall have the right to inspect the construction at all reasonable times. Franchisee shall complete construction (including all exterior and interior carpentry, electrical, painting,
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and finishing work, and installation of all furnishings, fixtures, equipment, and signs) in accordance with the approved final plans, at Franchisee's expense, within one (1) year following the Effective Date of this Agreement, exclusive of time lost by reason of strikes, lockouts, fire, and other casualties and acts of God. Franchisee shall promptly notify Franchisor of the date of completion of construction and thereafter the Franchisor shall conduct a final inspection of the Franchised Business and its premises. Franchisee shall not open the Franchised Business without the express written authorization of Franchisor, and Franchisor's authorization to open may be conditioned upon Franchisee's strict compliance with all initial inventory, fixtures, furnishings, and equipment requirements. Franchisee shall open the Franchised Business for operation within thirty (30) days after receipt of Franchisor's written authorization to open, which will not be unreasonably withheld, provided that the Franchised Business has been fully staffed and that all employees have successfully completed training. Franchisor and Franchisee agree that time is of the essence in the construction and opening of the Franchised Business.
E. Initial Training. In accordance with the terms and conditions set forth in Section III above, the Franchisee, or Operating Principal, and up to three (3) designated managers shall attend and complete to the Franchisor's reasonable satisfaction the Franchisor's initial training program at least thirty (30) days prior to the opening of the Franchised Business. The training program shall consist of at least six (6) weeks of initial training in Restaurant operations at the Franchisor's training center in Dallas, Texas, followed by a one (1) week program at Boston Pizza International Inc.'s training facility in Richmond, British Columbia, Canada or at BPR's training facility in Dallas, Texas, (the "Initial Training Program"). In addition, the Franchisor shall also furnish to one person initial training of up to three (3) weeks as Kitchen Manager (the "Kitchen Manager Training Program"). Franchisor will provide the initial training program at no cost to the Franchisee for up to five (5) of Franchisee's employees. The Franchisee shall be responsible for all expenses associated with said training, including meals, lodging, travel and wages. In addition, the Franchisor will provide to the Franchisee up to five (5) employees to provide on-site pre-opening and opening supervision and assistance for at least three (3) weeks. The Franchisor reserves the right to charge three hundred fifty dollars ($350) per Franchisor employee per day for this on-site training.
F. Investor Orientation Program. In addition to Item V.E. above, all non-operating principals of the Franchisee are required to attend the Franchisor's Investor Orientation Program at least 120 days prior to the opening of the Franchised Business. The Investor Orientation Program shall consist of basic reviews and interaction with development, training, construction, marketing and financial departments. The Investor Orientation Program includes at least twenty-two (22) hours of classroom and "on-the-job" training and is held at the Franchisor's corporate facilities in Dallas, Texas. The program is provided at no cost to the Franchisee; however, the Franchisee shall be responsible for all other related expenses, including travel, meals, lodging and wages.
G. Supervision Requirements. At all times after the date of the opening of the Franchised Business, the Franchised Business shall be under the direct, on-premises supervision of the Franchisee or an Operating Principal, who is a general partner or owns at least ten percent (10%) of the voting shares of the Franchised Business (the "Operating Principal"), designated by Franchisee and approved by Franchisor, who: (i) has attended and successfully completed the Franchisor's training program; and (ii) who shall be responsible for overseeing the operation of the Franchised Business and communicating with the Franchisor, and shall be the person designated by the Franchisee with whom the Franchisor may conduct all communications. In addition, Franchisee shall also have at all times (a) a General Manager (the "General Manager") who shall work on a full-time basis in the management and operation of the Franchised Business, be the full-time General Manager of the Franchised Business on a day-to-day basis, and shall have successfully completed the Initial Training Program, as provided herein, to the satisfaction of the Franchisor; and (b) a Kitchen Manager (the "Kitchen Manager") who shall work, on a full-time basis at the Franchised Business as its Kitchen Manager and shall have successfully completed the Kitchen Manager Training Program, as provided herein, to the satisfaction of the Franchisor. The Operating Principal, General Manager and Kitchen Manager are collectively referred to as the "Managers." The Operating Principal and the General Manager may be the same person provided such
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person meets all requirements of both positions. A General Manager designated under this Section is strongly encouraged to hold an equity position within the Franchised Business of not less than ten percent (10%). The Franchisee shall not permit anyone to replace any Manager without the prior written approval of the Franchisor. The Franchisor may require, as a condition of such approval, that the proposed replacement successfully complete the Initial Training Program or Kitchen Manager Training Program, as applicable, to the satisfaction of the Franchisor. The Franchisor reserves the right to charge its then current standard training fee to the Franchisee for training any proposed replacement. In the event of the resignation, termination, incapacity or death of any Operating Principal or General Manager, the Franchisee shall have a period of thirty (30) days after any such event to complete arrangements for a replacement who will successfully complete training within 120 days of placement and is otherwise reasonably acceptable to the Franchisor. The Franchisor will charge its then current training fee for the provision of any training beyond that provided to the initial five (5) persons, including substitute, refresher and any other training.
H. On-Going Training and Bi-Annual Meetings. The Franchisee shall cause its employees (including any person subsequently acting as a Manager of the Franchised Business) to attend and complete, to the Franchisor's reasonable satisfaction, such special programs or periodic additional training as the Franchisor may require in writing from time to time. Attendance by Franchisee or its General Manager is required at no fewer than three (3) national or regional meetings held by the Franchisor of no more than four (4) days duration at a location to be designated each year by Franchisor, or at such other location as may be specified by the Franchisor. In addition, Franchisee shall be required to send at least one (1) employee to an annual "Train the Trainer" meeting each year. The Franchisor shall only provide and pay for instruction and training materials in connection ongoing training and meetings. The Franchisee and/or its General Manager and its employees shall be responsible for any other expenses incurred, including meals, lodging, travel and wages. Franchisor reserves the right to cancel its annual, regional or training meetings, reschedule its annual, regional or training meetings, or increase the number of meetings in any given year in its sole discretion. If required by Franchisor, some or all of the Managers will be required to complete, to the satisfaction of the Franchisor, a refresher training program any time after the seventh year of the Initial Term has elapsed, or, in the event a partial or complete Reftirbishment of the Franchised Business has been completed prior to the end of the seventh year of the term, upon completion of such partial or complete Refurbishment of the Franchised Business.
I. Operation of the Franchised Business. The Franchisee shall use the Franchised Premises solely for the operation of the Franchised Business that is licensed hereunder in strict accordance with the Manuals; shall keep the Franchised Business open and in normal operation for such minimum hours and days as the Franchisor may from time to time prescribe; and shall refrain at all times from using or permitting the use of the premises of the Franchised Business for any other purpose or activity other than as contemplated by this Agreement without first obtaining the written consent of the Franchisor.
J. Maintenance and Equipment Upgrades. The Franchisee shall continuously maintain the Franchised Business in the highest degree of sanitation, repair and condition as the Franchisor may reasonably require, and in connection therewith shall make such additions, alterations, repairs and replacements thereto (but not without the Franchisor's prior written consent) as may be required for that purpose, including without limitation, such periodic redecorating, replacement of inventory and replacement of obsolete signs, fixtures or materials, and upgrading of equipment as the Franchisor may reasonably direct, or as otherwise required under the lease for the Franchised Business.
K. Health and Safety Standards. The Franchisee shall meet and maintain the highest safety standards and ratings applicable to the operation and management of the Franchised Business and its personnel as the Franchisor may reasonably require.
L. Working Capital. The Franchisee shall meet and maintain sufficient levels of working capital for use in connection with the management and operation of the Franchised Business as the
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Franchisor may reasonably require. The amount of working capital required to be maintained by the Franchisee shall be determined from time to time by the Franchisor in its sole discretion.
M. Refurbishment. Subject to the express provisions of Section V.J. with regard to equipment upgrades, on or before the Refurbishment Date set forth on Attachment A, the Franchisee shall refurbish (a "Refurbishment") the Franchised Business, at its expense, to conform to the then current Restaurant design and decor, trade dress, color scheme, equipment, furniture and fixture package, and presentation of trademarks and service marks consistent with the design concepts then in effect for new Restaurants licensed to operate under the System and in accordance with the Manuals, including, without limitation, such structural changes, remodeling, redecoration and other modifications to existing improvements as deemed necessary by the Franchisor.
N. Compliance with Uniform Standards. The Franchisee shall operate the Franchised Business in conformity with such uniform methods, standards and specifications as the Franchisor may from time to time prescribe to ensure that the highest degree of product quality and service is uniformly maintained. The Franchisee shall conduct its business in a manner that reflects favorably at all times on the System and the Proprietary Marks. The Franchisee shall at no time engage in deceptive, misleading or unethical practices or conduct any other act which may have a negative impact on the reputation and goodwill of the Franchisor or any other franchisee operating under the System. Pursuant to this ongoing responsibility, the Franchisee agrees:
1. To maintain in sufficient supply as the Franchisor may prescribe in the Manuals or otherwise in writing and use at all times only such products and supplies as conform to the Franchisor's standards and specifications as contained in the Manuals, and to refrain from deviating from the Manual without the Franchisor's prior written consent;
2. To sell or offer for sale only such products and services as meet the Franchisor's uniform standards of quality and quantity which have been expressly approved for sale in writing by the Franchisor in accordance with the Franchisor's methods and techniques; to sell or offer for sale all approved items; to refrain from any deviation from the Franchisor's standards and specifications for preparing, serving or selling such products or services; and to discontinue selling and offering for sale any such products or services as the Franchisor may, in its sole discretion, disapprove in writing at any time;
3. To lease or purchase and install at the Franchisee's expense all fixtures, furnishings, signs and equipment as the Franchisor may reasonably specify from time to time in the Manuals or otherwise in writing, and to refrain from installing or permitting to be installed on or about the Franchised Business without the Franchisor's prior written consent any fixtures, furnishings, signs, cards, promotional literature, equipment or other items not previously specifically approved as meeting the Franchisor's standards and conforming to the Franchisor's specifications;
4. To purchase or lease and maintain any and all signs for use at the Franchised Business, whether for interior or exterior use, in conformity with the Franchisor's quality control standards and specifications;
5. To employ such minimum number of employees as may be prescribed by the Franchisor and to comply with all applicable federal, state and local laws, rules and regulations with respect to such employees;
6. To maintain a competent, conscientious staff;
7. To maintain all licenses and permits in good standing; and
8. To maintain and implement written policies prohibiting unlawful harassment, discrimination and retaliation by any person in connection with the operation of the Franchised Business
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and display all required employment-related notifications in compliance with applicable federal and state law.
O. Purchase and Lease of Products, Equipment and Supplies. Franchisee shall lease or purchase all products, initial inventory, equipment, supplies and other materials required for the operation of the Franchised Business solely from approved suppliers who shall have proved, to the continuing reasonable satisfaction of the Franchisor, the ability to meet the Franchisor's reasonable standards and specifications for such products and related items. For certain proprietary products the sole approved supplier may be the Franchisor. Such approved suppliers must meet all of the Franchisor's specifications and standards as to content, quality, appearance, warranty, performance and serviceability and must adequately demonstrate their capacity and facilities to supply the Franchisee's needs for an effective and efficient operation of the Franchised Business as well as all Restaurants operating under the Franchisor's System. Franchisee acknowledges and agrees that Franchisor may derive revenue from the sale of certain proprietary food products or receive rebates from Franchisee's purchases, and Franchisor shall be entitled to utilize this revenue for any purpose in its sole discretion.
P. Inspection of Premises. The Franchisee shall permit the Franchisor or its agents or representatives to enter upon the premises of the Franchised Business at any time for purposes of conducting inspections, including Brand Equity Review Assessments ("B.E.R. Assessment"), taking photographs and interviewing employees and customers. The Franchisee shall cooperate fully with the Franchisor's agents or representatives in such inspections by rendering such assistance as they may reasonably request. Upon notice from the Franchisor or its agents or representatives, and without limiting the Franchisor's other rights under this Agreement, the Franchisee shall take such steps as may be necessary to immediately and diligently correct any deficiencies detected during such inspections, including, without limitation, immediately ceasing and preventing the further use of any products, equipment, inventory, advertising materials, supplies or other items that do not conform to the Franchisor's then current specifications, standards or requirements. In the event the Franchisee fails or refuses to correct such deficiencies within five (5) business days after receipt of written notice of such deficiencies, the Franchisor shall have the right to enter upon the premises of the Franchised Business, without being guilty of trespass or any other tort, for the purpose of making or causing to be made such corrections as may be required, at the sole expense of the Franchisee, which the Franchisee agrees to pay upon demand. Franchisee's failure to earn a satisfactory minimum score on three (3) consecutive B.E.R. Assessments may constitute an incurable Material Default.
Q. Proprietary Methods. The Franchisee acknowledges and agrees that the Franchisor has developed certain products, services, operational systems and management techniques and may continue to develop additional products and proprietary methods and techniques for use in the operation of the Franchised Business which are all highly confidential and which are trade secrets of the Franchisor. Because of the importance of quality control, uniformity of product and the significance of such proprietary products in the System, it is to the mutual benefit of the parties that the Franchisor closely controls the dissemination of this proprietary information. Accordingly, the Franchisee agrees that in the event such information and techniques become a part of the System, the Franchisee shall comply and strictly follow these techniques in the operation of its business and shall purchase from the Franchisor or from an approved source designated by the Franchisor any supplies or materials necessary to protect and implement such techniques.
R. Development of the Market. The Franchisee shall at all times use its best efforts to promote and increase the sales and consumer recognition of the products and services offered at the Franchised Business pursuant to the System and the Manuals, to effect the widest and best possible distribution of the Franchisor's products and services from the Franchised Business and to devote its best efforts in controlling the Franchised Business, its managers, assistants and employees.
S. Display of Proprietary Marks and Logos. The Franchisee shall display the Franchisor's Proprietary Marks and logos at the Franchised Business, on uniforms and otherwise in the manner
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prescribed by the Franchisor. The color, design and location of said displays shall be specified by the Franchisor and may be changed from time to time in the sole discretion of the Franchisor. The Franchisee shall conspicuously display to customers any sign or notice designated by the Franchisor serving to notify and inform third parties that the Franchisor is engaged in the business of franchising and providing sufficient information to enable third parties to contact the Franchisor to inquire about prospective franchises. The Franchisee shall not display any signs or posters at the premises or elsewhere without the prior written consent of the Franchisor.
T. Computerized Point-of-Sale System. The Franchisee must purchase and maintain the computer hardware required by the Franchisor for operation of the Franchised Business, including computers), modem(s), cash drawer(s), receipt printer and report printer. In addition, the Franchisee shall purchase from Franchisor's required source the Franchisor's proprietary computer software for operation of the point of sale system. Moreover, the Franchisee must source all maintenance service and repairs from a Franchisor approved supplier. The Franchisor shall have unlimited access to the data generated by the Franchisee's computerized point of sale system and will poll via modem all of its franchisees' computer systems in order to compile sales data, consumer trends, food and labor costs, and other such financial and marketing information as it may deem appropriate. In order to accomplish the polling referenced above, the Franchisee will maintain a dedicated telephone or broadband connection. The Franchisor may distribute this data on a confidential basis to its franchisees. The Franchisee must purchase and pay for upgrades or new software as required by the Franchisor from time to time in Franchisor's sole discretion.
U. Intranet/Extranet. The Franchisee agrees to participate in any Extranet or Intranet that the Franchisor may from time to time establish in its sole discretion. The Franchisor may require the Franchisee to obtain specified computer hardware, software and/or an Internet connection (collectively, "Computer Facilities") and may periodically modify specifications for same, all at the Franchisee's expense.
The Franchisor may charge the Franchisee a reasonable fee if the Franchisor develops or has developed (and, once developed, for modifying and enhancing) proprietary software, an Extranet or an Intranet and for other computer maintenance and support services that the Franchisor or any of its affiliates provides to the Franchisee, and the Franchisee agrees to sign any software license agreement or similar document that the Franchisor or any of its affiliates prescribes to regulate the Franchisee's use of, and the respective rights and responsibilities of the Franchisor, Franchisee, and others with respect to, the software, the Intranet and the Extranet, as applicable.
The Franchisee will have sole and complete responsibility for: (l)the acquisition, operation, monitoring, maintenance and upgrading of the Computer Facilities, including date related readiness of the system; (2) the manner in which the Franchisee's Computer Facilities interface with the Franchisor's computer system, Intranet and Extranet and those of third parties; and (3) any and all consequences that may arise if the Computer Facilities are not properly installed, operated, monitored, maintained and upgraded.
Franchisee shall at all times comply with the terms of the Boston Link Franchisee Agreement attached to this Agreement as Attachment F.
V. Franchisee's Organizational Structure. The following requirements shall apply to the Franchisee if the Franchisee is a corporation, limited liability company, partnership, or other legal entity, in addition to those requirements set forth elsewhere in this Agreement, the Manuals or otherwise:
1. The Franchisee shall be a newly organized entity and its Articles of Incorporation or other organizational documents, as applicable, shall at all times provide that its activities are confined exclusively to operating the Franchised Business hereunder and shall contain certain provisions designed
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to effectively restrict the transferability or alienability (including by way of security) of the ownership interests of the entity subject to the terms and restrictions set forth in Section XII.
2. Copies of the Articles of Incorporation, Bylaws and/or other organizational, constitutional and governing documents, and any amendments thereto, including all relevant resolutions authorizing entry into this Agreement, shall be promptly furnished to the Franchisor, prior to Franchisee's execution of this Agreement.
3. Each stock certificate of the Franchisee or other form of evidence of ownership issued to shareholders or other interest holders, as applicable, in Franchisee shall have conspicuously endorsed upon its face a statement in a form satisfactory to the Franchisor, such as:
"THE TRANSFER, PLEDGE OR ALIENATION OF THIS STOCK IS SUBJECT TO THE TERMS AND RESTRICTIONS CONTAINED WITHIN THE FRANCHISE AGREEMENT BETWEEN BOSTON PIZZA RESTAURANTS, LP AND INSERT NAME OF FRANCHISEE."
4. The Franchisee shall maintain a current list of all owners of record and all beneficial owners of any class of voting stock or other ownership interest, as applicable, of the Franchisee and shall furnish the list to the Franchisor upon request, together with the addresses and phone numbers of each shareholder or other interest holder.
W. Execution of Guaranty, Undertaking and Other Requirements.
Each of Franchisee's "Controlling Principals" shall jointly and severally guarantee the Franchisee's performance hereunder and shall bind themselves to the terms of this Agreement by executing the Guaranty and Undertaking attached hereto as Attachment D; provided, however, that the requirements of this Section V.W. shall not apply to an entity publicly-held (listed on a recognized exchange or NASDAQ) as of the date of this Agreement. The term "Controlling Principal" means one or more of Franchisee's principals who (a) individually or collectively own a Controlling Interest in Franchisee, or (b) have been designated by Franchisor as Controlling Principals. Except for Controlling Principals who have signed a Guaranty and Undertaking in the form attached hereto as Attachment D, each individual who owns any common stock or other voting equity interests in Franchisee or has authority to cause Franchisee to take or omit any action that Franchisee is required to take or omit in accordance with this Agreement (referred to herein as a "Principal") shall execute the Principals' Undertaking attached hereto as Attachment G. As used herein, "Controlling Interest" means possession, directly or indirectly, of the power to direct or cause the direction, of the management and policies of an entity, whether through ownership of voting securities, by contract or otherwise.
In addition to the obligations specifically set forth in this Section V, the Franchisee shall comply with all other requirements set forth in this Agreement, in the Manuals or as the Franchisor may designate from time to time.
VI. PROPRIETARY MARKS
A. Grant of License. BP Holdings licensed to the Franchisor the exclusive license to use and license others to use the Proprietary Marks in the United States, including the federally registered mark "Boston's The Gourmet Pizza." The Franchisor hereby grants the Franchisee the right and license to use the Proprietary Marks only in connection with the operation of its Franchised Business and the provision of services and products to its customers. The Franchisor represents with respect to the Proprietary Marks that: (1) the Franchisor has, to the best of the Franchisor's knowledge, licensed from BP Holdings, all right, title and interest in and to the Proprietary Marks in the United States and to the best of the Franchisor's knowledge, BP Holdings owns all right, title and interest in and to the Proprietary Marks in the United States; (2) the Franchisor has taken all steps which it deems reasonably necessary to
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preserve and protect the ownership and validity of such Proprietary Marks in the United States; and (3) the Franchisor will use and license the Franchisee and other franchisees to use the Proprietary Marks only in accordance with the System and the operating standards and quality control specifications attendant thereto which underlie the goodwill associated with and symbolized by the Proprietary Marks.
B. Conditions for Use. With respect to the Franchisee's use of the Proprietary Marks pursuant to the license granted under this Agreement, the Franchisee agrees that:
1. The Franchisee shall use only the Proprietary Marks designated by the Franchisor and shall use them only in the manner required or authorized and permitted by the Franchisor.
2. The Franchisee shall use the Proprietary Marks only in connection with the right and license to operate the Franchised Business granted hereunder.
3. During the term of this Agreement and any renewal hereof, the Franchisee shall identify itself as a licensee and not the owner of the Proprietary Marks and shall make any necessary filings under state law to reflect such status. In addition, the Franchisee shall identify itself as a licensee of the Proprietary Marks on all invoices, order forms, receipts, business stationery and contracts, as well as at the Franchised Business on any sign provided by the Franchisor, which shall be conspicuously displayed, to customers.
4. The Franchisee's right to use the Proprietary Marks is limited to such uses as are authorized under this Agreement or in the Manuals, and any unauthorized use thereof shall constitute an infringement of the Franchisor's rights and grounds for termination of this Agreement.
5. The Franchisee shall not use the Proprietary Marks to incur or secure any obligation or indebtedness.
6. The Franchisee shall not use the Proprietary Marks as part of its corporate or other legal name.
7. The Franchisee shall comply with the Franchisor's instructions in filing and maintaining the requisite trade name or fictitious name registrations, and shall execute any documents deemed necessary by the Franchisor or its counsel to obtain protection for the Proprietary Marks or to maintain their continued validity and enforceability.
8. Franchisee must notify Franchisor immediately by telephone, and promptly thereafter in writing, of any apparent infringement of, or challenge to, Franchisee's use of any Proprietary Marks, or any claim by any person of any rights in any Proprietary Marks, and Franchisee and the Principals will not communicate with any person other than Franchisor, its counsel and Franchisee's counsel in connection with any infringement, challenge, or claim. Franchisor may take any actions it deems appropriate in connection with any infringement or challenge, and the right to control exclusively any settlement, litigation, or proceeding (including, but not limited to, actions before the Trademark Office and Trademark Trial and Appeal Board) arising out of any alleged infringement, challenge, or claim or otherwise relating to any Proprietary Marks. Franchisee shall not enter into any settlement of any claim or suit or conduct any settlement negotiations relative thereto without the prior approval of Franchisor. Franchisee will execute all instruments and documents, render any assistance, and do any other acts or things that may, in the opinion of Franchisor, reasonably be necessary or advisable to protect and maintain the interests of Franchisor in any litigation or other proceeding or to otherwise protect and maintain the interests of Franchisor in the Proprietary Marks. Franchisee shall at all times have the right to be represented by counsel at Franchisee's expense.
9. If it becomes advisable at any time, in the sole discretion of the Franchisor, to modify or discontinue the use of any name or Proprietary Mark and/or to use one or more additional or substitute
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names or marks in connection with the advertising, marketing or operation of the Franchised Business, the Franchisee shall comply with Franchisor's directions within a reasonable time period designated by Franchisor after receiving notice thereof, including, at Franchisee's expense, making such changes to the interior and exterior signs and menus as Franchisor deems necessary. Franchisor will not be obligated to reimburse Franchisee for any expenses or loss of revenue attributable to any modified or discontinued names or Proprietary Marks or for any expenditures Franchisee incurs to promote modified or substitute names or marks.
C. Acknowledgements. The Franchisee expressly understands and acknowledges that:
1. BP Holdings, and the Franchisor, by way of license from BP Holdings, are the exclusive owners of all right, title and interest in and to the Proprietary Marks and the goodwill associated with and symbolized by them;
2. The Proprietary Marks are valid and serve to identify the System and those who are licensed to operate a Restaurant in accordance with the System;
3. The Franchisee's use of the Proprietary Marks pursuant to this Agreement does not give the Franchisee any ownership interest or other interest in or to the Proprietary Marks, except the nonexclusive license granted herein;
4. Any and all goodwill arising from the Franchisee's use of the Proprietary Marks and/or the System shall inure solely and exclusively to the benefit of BP Holdings and, in accordance with all laws, its licensee, the Franchisor. Upon expiration or termination of this Agreement no monetary amount shall be assigned as attributable to any goodwill associated with the Franchisee's use of the System or the Proprietary Marks;
5. The license and rights to use the Proprietary Marks granted hereunder to the Franchisee are nonexclusive, and the Franchisor thus may: (a) itself use, and grant franchises and licenses to others to use, the Proprietary Marks and the System; (b) establish, develop and franchise other systems, different from the System licensed to the Franchisee herein, without offering or providing the Franchisee any rights in, to or under such other systems; and (c) modify or change, in whole or in part, any aspect of the Proprietary Marks or the System;
6. The Franchisor reserves the right to substitute different trade names, trademarks and service marks for use in identifying the System, the Franchised Business and other Restaurants operating thereunder, all of which shall become Proprietary Marks;
7. The Franchisor shall have no liability to the Franchisee for any senior users that may claim rights to the Proprietary Marks; and
8. The Franchisee shall not register or attempt to register the Proprietary Marks in the Franchisee's name or that of any other person, firm, entity or corporation.
VH. CONFIDENTIAL MANUALS.
A. Compliance. In order to protect the reputation and goodwill of the Franchisor and to maintain uniform standards of operation in connection with the Proprietary Marks, the Franchisee shall conduct its business in strict compliance with the operational systems, procedures, policies, methods and requirements prescribed in the Manuals and any supplemental bulletins, notices, revisions, modifications or amendments thereto, all of which shall be deemed a part thereof. One registered set of the Manuals shall be provided to the Franchisee on loan from the Franchisor during the training program, and the Franchisee shall sign a corresponding receipt for the Manuals. The Franchisor reserves the right to
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provide the Manuals and updates to the Manuals in electronic form, and the Franchisee agrees to comply with all confidentiality procedures including, if applicable, use of restricted passwords.
B. Use. The Franchisee agrees to immediately adopt and use the programs, services, methods, standards, materials, policies and procedures set forth in the Manuals, as they may be modified by the Franchisor from time to time in Franchisor's sole discretion. The Franchisee acknowledges that the Franchisor is the owner or licensee of all proprietary rights in and to the System, and the Manuals, and any changes or supplements thereto.
C. Confidentiality. The Franchisee and the Principals shall at all times treat the Manuals, any other manuals created for or approved for use in the operation of the Franchised Business and all of the information contained therein as proprietary and confidential, and shall use all reasonable efforts to maintain such information as confidential. The Manuals must remain on the premises of the Franchised Business at all times.
D. Trade Secrets. The Franchisee acknowledges, knows and agrees that the Manuals have been designated as "trade secrets" owned and treated as such by the Franchisor.
E. Access. The trade secrets must be accorded maximum security consistent with the Franchisee's need to make frequent reference thereto. The Franchisee shall strictly limit access to the Manuals to employees who have a demonstrable and valid need to know the information contained therein in order to perform their duties. The Franchisee shall strictly follow any provisions in the Manuals regarding the care, storage and use of the Manuals and all related proprietary information.
F. Duplication. The Franchisee and the Principals shall not at any time, without the Franchisor's prior written consent, copy, duplicate, record or otherwise reproduce in any manner any part of the Manuals, updates, supplements or related materials, in whole or in part, or otherwise make the same available to any unauthorized person.
G. Franchisor's Property. The Manuals shall at all times remain the sole property of the Franchisor. Upon the expiration or termination of this Agreement for any reason, the Franchisee shall return to the Franchisor the Manuals and all supplements thereto.
H. Updates or Revisions. The Franchisor retains the right to prescribe additions to, deletions from or revisions to the Manuals, which shall become binding upon the Franchisee upon being mailed or otherwise delivered to the Franchisee, as if originally set forth therein. The Manuals, and any such additions, deletions or revisions thereto, shall not alter the Franchisee's rights and obligations hereunder.
I. Master Set. The Franchisee shall at all times insure that its set of the Manuals is kept current and up-to-date, and in the event of any dispute as to the contents of the Manuals, the terms contained in the master set (#0001) of the Manuals maintained by the Franchisor at the Franchisor's headquarters shall be controlling.
J. Replacement Fee. If the Manuals, or any volume thereof, are lost, stolen or destroyed, the Franchisee shall pay the Franchisor a non-refundable replacement fee of Five Hundred Dollars ($500) for each volume of the replacement Manuals.
Vin. CONFIDENTIAL INFORMATION
A. Confidential Relationship. The parties expressly understand and agree that the Franchisor will be disclosing and transmitting to the Franchisee and the Principals certain trade secrets and other confidential and proprietary information concerning various aspects of the Franchisee's operation of the Franchised Business, its methods of operation, techniques and all proprietary systems, procedures and materials relevant thereto pursuant to the System and this Agreement.
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B. Obligations of Franchisee and Principals. In order to preserve and protect the trade secrets and the confidential and proprietary information (the "Confidential Information") which are disclosed to the Franchisee and the Principals during the term of this Agreement, the Franchisee and the Principals agree that:
1. The Franchisee and the Principals shall treat and maintain the Confidential Information as confidential both during the term of this Agreement and thereafter;
2. The Franchisee and the Principals shall use the Confidential Information only for its operation of the Franchised Business under this Agreement;
3. The Franchisee and the Principals shall disclose the Confidential Information only as necessary to its employees or agents who have a demonstrable and valid need to know the Confidential Information and not to anyone else;
4. The Franchisee shall restrict disclosure of the Confidential Information to only those of Franchisee's employees or agents who are directly connected with the performance of work requiring knowledge thereof and shall disclose only so much of the Confidential Information as is required to enable those employees or agents to carry out their assigned duties;
5. The Franchisee shall advise Franchisee's employees or agents of the confidential nature of such information and the requirements of nondisclosure thereof; and
6. The Franchisor and the Franchisee shall conduct a review to determine which employees will have access to the Confidential Information and to the Manuals. The Franchisee and the Principals shall not disclose any Confidential Information or provide access to the Manuals to such employee or agent until that person executes a nondisclosure agreement in a form prescribed by the Franchisor, acknowledging the confidential and proprietary nature of the Confidential Information and agreeing not to disclose such information during the course of employment or thereafter. The Franchisor shall be designated a third-party beneficiary of such nondisclosure agreements with the right to enforce its provisions independently of the Franchisee.
C. Confidential Information Defined. Any and all information, knowledge, know-how, systems, programs and other methods and techniques which the Franchisor designates as confidential shall be deemed Confidential Information for purposes of this Agreement, except information which the Franchisee can demonstrate came to its attention prior to its disclosure by the Franchisor or which, at the time of its disclosure by the Franchisor to the Franchisee, had become a part of the public domain through publication or communication by others or which, after disclosure to the Franchisee by the Franchisor, becomes a part of the public domain through publication or communication by others. It is understood and agreed that information, improvements to the System or techniques prepared, compiled or developed by the Franchisee, its employees or agents during the term of this Agreement and relating to the Franchised Business, whether developed separately or in conjunction with the Franchisor, shall be considered as part of the Confidential Information. The Franchisee hereby grants to the Franchisor an irrevocable, worldwide, exclusive, royalty-free license, with the right to sub-license such information, improvement or technique.
D. Protection of Information. The Franchisee acknowledges that it has knowledge of confidential matters, trade secrets, management and training techniques, operational, accounting, quality control procedures, recipes, programs and other methods developed by the Franchisor through and in its System which, for purposes of this Agreement, are owned by the Franchisor and which are necessary and essential to the operation of the Franchised Business, without which information the Franchisee could not efficiently, effectively and profitably operate the same. The Franchisee further acknowledges that such Confidential Information was unknown to it prior to negotiation for and execution of this Agreement (except as may have been disclosed to the Franchisee under obligation of strict confidence pursuant to
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other agreements with the Franchisor) and that the unique and novel combination of "know how" and methods developed by the Franchisor and licensed to the Franchisee by the Franchisor for the operation of the Franchised Business are peculiar to the Franchisor. The Franchisee shall take all steps necessary, at its own expense, to protect the Confidential Information and shall not divulge the same either during or upon the termination of this Agreement without the prior written consent of the Franchisor.
E. Remedies. The Franchisee acknowledges that in addition to any remedies available to the Franchisor under Section XIII hereunder, the Franchisee agrees to pay all court costs and reasonable attorneys' fees incurred by the Franchisor in obtaining specific performance of a temporary restraining order and/or an injunction against violation of the requirements of this Section VH[, provided that, Franchisor prevails in obtaining such relief.
F. Communication with Customers. In order to maintain the high standards of quality control throughout the System, the Franchisor reserves the right to use test customers from time to time, without prior notification to the Franchisee, in order to determine whether the Franchised Business is maintaining high standards of quality, integrity, safety, appearance and customer service.
G. Communication with Lenders. The Franchisee hereby expressly permits the Franchisor to discuss the Franchisee's financial situation relating to the Franchised Business with the Franchisee's lender(s). In addition, the Franchisee permits the Franchisor to have access to all lending documents and other financial information pertinent to these discussions.
IX. ACCOUNTING, INSPECTIONS AND RECORDS
A. Maintenance of Books and Records. The Franchisee shall maintain during the term of this Agreement and shall preserve for not less than seven (7) years from the date of preparation, full, complete and accurate books, records and accounts in accordance with the System and in the form and manner prescribed by the Franchisor in the Manuals or otherwise in writing from time to time in its sole discretion.
B. Reporting. The Franchisor may, from time to time in its sole discretion, poll via modem the Franchisee's computerized point of sale system to obtain any and all information the Franchisor deems necessary to its monitoring of the Franchised Business, including Gross Sales. The Franchisee shall provide the Franchisor with monthly reports on Gross Sales. Each report shall cover a period from the first day to the last day of the preceding month and must be received by the Franchisor on or before the tenth (10th) day following the end of the reporting period. Each report shall disclose the Gross Sales and other such information from which the royalty fee and advertising contributions are calculated for the preceding month. Each report will be in the form and format prescribed by Franchisor. In the event Franchisor fails to receive a report on or before its due date, Franchisor shall assess and collect from the Franchisee a late fee of One Hundred Dollars ($100.00).
C. Financial and Related Reporting. During the term of this Agreement, the Franchisee shall, at the Franchisee's expense, submit to the Franchisor an annual financial statement which shall include an income statement and balance sheet prepared in accordance with generally accepted accounting principles and copies of federal and state tax returns for the Franchisee within ninety (90) days of the completion of the fiscal year of the Franchisee. All financial statements will be in the form prescribed by the Franchisor and will conform to the standard chart of accounts prescribed by the Franchisor. Each annual financial statement and tax return shall be compiled by an independent certified public accounting firm and signed by the Franchisee's President or Treasurer attesting that the statement is true and correct. The Franchisor also reserves the right to require the Franchisee to submit to the Franchisor: (i) certified financial statements for any period or periods of any fiscal year, which shall be certified by the Franchisee's accounting firm and attested to by the Franchisee's Treasurer or Chief Financial Officer; and (ii) interim financial statements for any period or periods of any fiscal year, which shall be attested to by the Franchisee's Treasurer or Chief Financial Officer. In addition, Franchisee shall submit exact copies of
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the Franchisee's invoices for goods purchased from suppliers and copies of the Franchisee's operating reports to its landlord or shopping mall operator, immediately following the Franchisor's request for such information.
D. Other Submissions. The Franchisee shall also submit to the Franchisor, for review and auditing, such other forms, and other reports, including annual accounting of local advertising expenditures and any and all other information and data as the Franchisor may reasonably designate, in the form and at the times and places reasonably required by the Franchisor, upon request and as specified from time to time in the Manuals or otherwise in writing, at any time during the term of this Agreement.
E. Inspection of Financial Records. The Franchisor or its designated agents shall have the right upon reasonable notice to examine and copy, at its expense, the books, records, receipts and tax returns of the Franchisee. The Franchisor shall also have the right upon reasonable notice, to have an independent audit made of the books of the Franchisee. If an inspection should reveal that any payments to the Franchisor have been understated in any report to the Franchisor, then the Franchisee shall immediately pay to the Franchisor, upon demand, the amount understated plus interest calculated at the Default Rate on a daily basis. If any inspection discloses an understatement in any report of three percent (3%) or more, the Franchisee shall, in addition to the payment of interest thereon, reimburse the Franchisor for any and all costs and expenses connected with the inspection (including, without limitation, reasonable accountants' and attorneys' fees). The foregoing remedies shall be in addition to any other remedies available to the Franchisor.
X. ADVERTISING
Recognizing the value of advertising, and the importance of the standardization of advertising programs to the furtherance and protection of the Proprietary Marks, goodwill and public image of the System, the parties agree as follows:
A. Submission and Approval of Promotional and Marketing Materials. All promotional and marketing materials to be used by the Franchisee in any medium, including any signage used on the interior or exterior of the Franchised Business, shall be presented in a dignified manner and shall conform to such standards and requirements as the Franchisor may specify from time to time in the Manuals or otherwise. The Franchisee shall submit to the Franchisor for its prior written approval, samples of all promotional and marketing materials in whatever form that the Franchisee desires to use at least ten (10) days before their implementation. The Franchisor shall approve, disapprove, or revise such materials. The Franchisee shall comply with all revisions to said promotional and marketing materials that the Franchisor may require prior to approving said promotional and marketing materials. The Franchisee shall not use any advertising or promotional plans or materials that have not been approved in writing by the Franchisor, and the Franchisee shall cease to use any plans or materials promptly upon notice by the Franchisor. Failure by the Franchisee to obtain the prior written approval of the Franchisor for all proposed advertising shall be deemed a default of this Agreement in accordance with Section XIII.A hereof. Prior to publishing or otherwise utilizing any original advertising materials conceived of or prepared by Franchisee, Franchisee shall assign to the Franchisor, and will cause the author and the first owner of the copyright in the Franchisee's original advertising, to assign to the Franchisor all intellectual property rights, including copyright, in and to the Franchisee's original advertising. Furthermore, Franchisee will cause the author to waive any and all moral rights in the Franchisee's original advertising materials. The Franchisee will do all things and will execute, and cause all relevant third parties to execute, without further consideration such further assurances, assignments, applications and other instruments as may be requested by the Franchisor to effect the assignments in this Section, and to register or record the Franchisor's rights in ownership of the intellectual property in the Franchisee's original advertising.
B. The National Cooperative Advertising Fund Contribution. The Franchisor will establish and maintain the National Cooperative Advertising Fund (the "Advertising Fund"). The Franchisee shall
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pay to the Franchisor a continuing non-refundable advertising contribution of three percent (3%) of its Gross Sales throughout the term of this Agreement and any renewals thereof at the then-current rate. The Franchisor may collect the Franchisee's contribution weekly via direct debit or by requiring Franchisee to pay Franchisee's contribution in the same manner in which Franchisee pays its Royalty Fees. The advertising sums paid by the Franchisee and the other franchisees shall be maintained in an account separate from other monies of the Franchisor. The Advertising Fund shall be administered exclusively by the Franchisor, who may utilize any advertising fees it receives from Franchisee or other franchisees to pay for direct or indirect costs of designing, placing and administering advertising in all media (including Internet, websites or other electronic advertising or commerce), various materials, coupons, or other promotional materials, and for special promotions, commissions, wages and benefits (including those which are reasonably related to Franchisor's own employees) and other expenses which the Franchisor considers to be appropriate in Franchisor's sole discretion. The Franchisor may also use the Advertising Fund to conduct system-wide advertising and/or regional advertising on behalf of the franchise system. Franchisor cannot and does not ensure that any particular franchisee will benefit directly or pro rata from the placement of advertising. Upon request by the Franchisee, the Franchisor shall annually account for advertising funds expended, including a reasonable allocation for the Franchisor's overhead expenses incurred in connection with administration and management. It is understood and agreed that the Franchisor shall allocate advertising funds, as it deems appropriate. The Franchisor's sole discretion as to allocation of the advertising fees may not be challenged or contested.
C. Minimum Local Marketing Expenditure. In addition to the Advertising Fund contribution, the Franchisee shall be required to spend quarterly a minimum of one percent (1%) of its Gross Sales on its own local marketing and promotion. At the Franchisor's direction, the local marketing expenditure must be conducted with other franchisees in the Franchisee's region. All of the Franchisee's advertising must comply with the policies and procedures established by the Franchisor for the prior approval of all proposed marketing and promotional campaigns and materials, as specified in this Section X. and elsewhere in this Agreement, in the Manuals and otherwise in writing by the Franchisor. This amount is in addition to any advertising requirements imposed by Franchisee's lease. Franchisee agrees to locally advertise at least on a quarterly basis, in a manner prescribed and/or approved by the franchisor. The Franchisee shall submit to the Franchisor, on a form prescribed by the Franchisor in the Manual, a quarterly accounting of its local marketing and promotion expenditures.
XI. INSURANCE
A. Procurement. The Franchisee shall procure, prior to the commencement of any operations under this Agreement, and thereafter maintain in full force and effect during the term of this Agreement, at the Franchisee's expense, an insurance policy or policies protecting the Franchisee and the Franchisor, and their officers, directors, partners and employees, against any loss, liability, personal injury, death, property damage or expense whatsoever from fire, lightning, theft, vandalism, malicious mischief and the perils included in the extended coverage endorsement, arising or occurring upon or in connection with the Franchised Business or the construction of or leasehold improvements to the Franchised Business, or by reason of the operation or occupancy of the Franchised Business, as well as such other insurance applicable to such other special risks, if any, as the Franchisor may reasonably require for its own and the Franchisee's protection. The Franchisee shall be obligated to procure such insurance and to submit copies of such policies to the Franchisor thirty (30) days prior to the opening to the public of the Franchised Business.
B. Minimum Coverage. All policies required under this Section XI shall be written by an insurance company satisfactory to the Franchisor in accordance with the standards and specifications set forth in the Manuals or otherwise in writing, and shall include, at a minimum (except as additional coverage and higher policy limits may reasonably be specified from time to time by the Franchisor in the Manuals or otherwise in writing) the following:
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1. Comprehensive general liability insurance, including contractual liability, broad form property damage, personal injury, advertising injury, product liability, automobile liability, completed operations and independent contractors coverage, and fire damage coverage in the amount of at least five million dollars ($5,000,000), or such higher amount as required by the lease, combined single limit, and naming the Franchisor and other Indemnities (as defined in Section XVIII.B.) as additional insured(s) in each such policy or policies;
2. Workers' compensation and employer's liability insurance in an amount designated by Franchisor, but in no event less than the minimum amount mandated by the laws of the state in which the Franchised Business is located and operated. Franchisee shall also maintain such other insurance as may be required by statute or rule of the state in which the Franchised Business is located and operated. Notwithstanding the foregoing, if permitted by applicable law, Franchisee may, subject to Franchisor's consent, self-insure Franchisee's workers provided that Franchisee is, and at all times remains, in full compliance with all applicable state, federal and local laws and regulations, if any, in providing such self-insurance;
3. Fire, vandalism and extended coverage insurance with primary and excess limits of not less than the full replacement value of the Franchised Business and its furniture, fixtures and equipment; and
4. Business interruption insurance in amounts equal to at least the average monthly royalties and Advertising Fund contributions payable to the Franchisor, but in no event less than one hundred thousand dollars ($100,000) annual coverage.
C. Construction Coverage. In connection with any construction, leasehold improvements, renovation, refurbishment or remodelling of the premises of the Franchised Business, the Franchisee shall cause the general contractor to maintain with a reputable insurer comprehensive general liability insurance (with comprehensive automobile liability coverage for both owned and non-owned vehicles, builder's risk, product liability and independent contractors coverage) in at least the amount of one million dollars ($1,000,000) with the Franchisor named as an additional insured, and worker's compensation and employer's liability insurance as required by state law. A copy of the Certificate of Insurance for all such insurance and worker's compensation coverage shall be provided to the Franchisor prior to commencement of any such work in respect of the premises of the Franchised Business.
D. Certificates. At least thirty (30) days prior to the grand opening of the Franchised Business and on each policy renewal date thereafter, the Franchisee shall submit to the Franchisor, original or duplicate copies of all policies and policy amendments. The evidence of insurance shall include a statement by the insurer that the policy or policies will not be cancelled or materially altered without at least thirty (30) days prior written notice to the Franchisor.
E. Independence of Coverage Requirements. The Franchisee's obligation to obtain and maintain the foregoing policy or policies in the amounts specified shall not be limited in any way by reason of any insurance which may be maintained by the Franchisor, and the Franchisee's performance of that obligation shall not relieve it of liability under the indemnity provision set forth in Section XVIII of this Agreement.
F. Failure to Procure. Should the Franchisee for any reason fail to procure, maintain or provide evidence of the insurance required by this Agreement, as revised from time to time for all franchisees by the Manuals or otherwise in writing, the Franchisor shall have the right and authority (without, however, any obligation) to immediately procure such insurance and to charge the same to the Franchisee, which charges, together with a reasonable fee for the Franchisor's expenses in so acting, including all attorneys' fees, shall be payable by the Franchisee immediately upon notice.
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G. Third Parties. The Franchisee shall ensure that all third parties, with whom the Franchisee conducts business, are properly insured.
XH. TRANSFER OF INTEREST
A. Transfer by Franchisor. The Franchisor shall have the right to assign this Agreement, and all of its rights and privileges hereunder, to any person, firm, corporation or other entity provided that, with respect to any assignment resulting in the subsequent performance by the assignee of the functions of the Franchisor: (i) the assignee shall, at the time of such assignment, be capable of performing the obligations of the Franchisor hereunder, as determined by Franchisor in its sole discretion, and (ii) the assignee shall expressly assume and agree to perform such obligations and Franchisor shall thereby be released from any and all further liability to Franchisee.
Specifically, and without limitation to the foregoing, the Franchisee expressly affirms and agrees that the Franchisor may sell all or a portion of its assets, its rights to the Proprietary Marks and the System outright to a third party, including a direct competitor of Franchisor; may go public; may engage in a private placement of some or all of its securities; may merge, acquire other corporations or other legal entities, or be acquired by another corporation or other legal entity; may undertake a refinancing, recapitalization, leveraged buy-out or other economic or financial restructuring; and, with regard to any or all of the above sales, assignments and dispositions, the Franchisee expressly and specifically waives any claims, demands or damages arising from or related to the loss of said Proprietary Marks (or any variation thereof) and/or the loss of association with or identification of "Boston Pizza Restaurants, LP" as the Franchisor hereunder.
Nothing contained in this Agreement shall require the Franchisor to remain in the restaurant business or to offer the same products and services, whether or not bearing the Franchisor's Proprietary Marks, in the event that the Franchisor exercises its rights hereunder to assign its rights in this Agreement.
B. Transfer by Franchisee.
1. Franchisee and the Principals acknowledge that the integrity of the Restaurants and the stability of the System depend on the business qualifications, financial capabilities, honesty and integrity of Franchisor's franchisees. Franchisee and the Principals further acknowledge that Franchisor's lack of opportunity to evaluate and approve each potential franchisee's qualifications and the terms of each proposed Transfer could irreparably damage the System. Consequently, Franchisee and the Principals agree not to effectuate a Transfer, except as expressly permitted herein, and in any such case, without Franchisor's prior written consent. Any Transfer or attempted Transfer lacking Franchisor's prior written consent or that otherwise violates the restrictions in this Section XII will be null and void and of no effect against Franchisor and will constitute a material breach of this Agreement for which the Franchisor may then immediately terminate this Agreement pursuant to Section XIII. A.
As used herein, "Transfer" means the voluntary, involuntary, direct or indirect sale, assignment, transfer, license, sublicense, sublease, collateral assignment, grant of a security, collateral or conditional interest, inter-vivos transfer, testamentary disposition or other disposition of:
(a) the Franchised Business, this Agreement or any interest in or right under this Agreement; of all or substantially all of the assets of the Franchised Business (including, but not limited to, any arrangements in which any interest the Franchised Business or its premises is sold to a third party and leased back to the Franchisee) or in an interest therein, including (i) any transfer in, or as a result of, a divorce, insolvency, dissolution proceeding or otherwise by operation of law; (ii) any transfer upon Franchisee's death or the death of any of Franchisee's Principals by will, declaration of or transfer in trust or under the laws of intestate succession; or (iii) any foreclosure upon the Franchised Business or the transfer, surrender or loss by Franchisee of possession, control or management of the Franchised Business; and/or
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(b) any direct or indirect Ownership Interest in Franchisee or revenues or income of the Franchised Business, including (i) any transfer, redemption or issuance of a legal or beneficial Ownership Interest in Franchisee or any legal entity that has a Controlling Interest (as defined in Section V.W.) in Franchisee or of any interest convertible to or exchangeable for a legal or beneficial Ownership Interest in Franchisee or any legal entity that has a Controlling Interest in Franchisee; (ii) any merger or consolidation between Franchisee or any legal entity that has a Controlling Interest in Franchisee and another legal entity, whether or not Franchisee is the surviving legal entity; (iii) any transfer in, or as a result of, a divorce, insolvency, dissolution proceeding or otherwise by operation of law; (iv) any transfer upon Franchisee's death or the death of any of Franchisee's Principals by will, declaration of or transfer in trust or under the laws of intestate succession; or (v) any foreclosure upon the Franchised Business or the transfer, surrender or loss by Franchisee of possession, control or management of the Franchised Business.
- As used herein, "Ownership Interest" means any direct or indirect, legal or beneficial ownership interest of any type, including but not limited to (1) in relation to a corporation, the ownership of shares in the corporation; (2) in relation to a partnership, the ownership of a general partner or limited partnership interest; (3) in relation to a limited liability company, the ownership of a membership interest; or (4) in relation to a trust, the ownership of the beneficial interest of such trust.
Notwithstanding the foregoing, Franchisor's prior written consent shall not be required for a transfer of less than a five percent (5%) interest in a publicly-held corporation or for transfer to a wholly-owned subsidiary corporation of the Franchisee formed expressly for that purpose. For such purposes, and under this Agreement in general, a publicly held corporation is a "Reporting Company" as defined by the Securities Exchange Act of 1934. The Franchisee must notify the Franchisor in writing at least sixty (60) days prior to the date of the intended assignment or transfer. Any purported assignment or transfer, by operation of law or otherwise, not having the written consent of the Franchisor shall be null and void and shall constitute a material breach of this Agreement.
2. Neither Franchisee nor any Principal shall effectuate a Transfer before the Franchised Business opens for business under any circumstances. After the Franchised Business opens, Franchisor's consent to a Transfer is subject to any or all of the following conditions:
(a) All of the Franchisee's accrued monetary obligations and all other outstanding obligations to the Franchisor, its subsidiaries, affiliates and suppliers shall be up to date, fully paid and satisfied;
(b) The Franchisee shall not be in default of any provision of this Agreement, any amendment hereof or successor hereto, any other franchise agreement or other agreement between the Franchisee and the Franchisor, or its subsidiaries, affiliates or suppliers;
(c) Subject to any restrictions under applicable franchise registration and disclosure laws, the Franchisee and each of its partners, shareholders, officers and directors shall have executed a general release under seal, in a form satisfactory to the Franchisor, of any and all claims against the Franchisor and its officers, directors, shareholders (or other interest holders, as applicable) and employees in their corporate and individual capacities, including, without limitation, claims arising under federal, state and local laws, rules and ordinances;
(d) The transferee shall demonstrate to the Franchisor's satisfaction that the transferee meets the Franchisor's educational, managerial and business standards; possesses a good moral character, business reputation and credit rating; has the aptitude and ability to operate the Franchised Business (as may be evidenced by prior related experience, Franchisor's testing criteria or otherwise); meets at least the same managerial, financial and other criteria required of new franchisees; and shall have sufficient equity capital to operate the Franchised Business;
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(e) The transferee shall enter into a written assignment, under seal and in a form satisfactory to the Franchisor, assuming and agreeing to discharge all of the Franchisee's obligations under this Agreement. If the transferee is not an individual, then the shareholders, partners or other owners of the transferee shall jointly and severally guarantee the obligations of the Franchisee under this Agreement in writing in a form satisfactory to the Franchisor;
(f) At the Franchisor's option, the transferee shall execute (and/or, upon Franchisor's request, shall cause all interested parties to execute) for a term ending on the expiration date of this Agreement and with such renewal term as may be provided by this Agreement, the standard form of Franchise Agreement then being offered to new franchisees and such other ancillary agreements as the Franchisor may require for the Franchised Business, which agreements shall supersede this Agreement in all respects and the terms of which agreements may differ from the terms of this Agreement, including, without limitation, a higher percentage royalty fee and advertising contributions and the implementation of other fees;
(g) The transferee shall upgrade, at the transferee's expense, the Franchised Business to conform to the then-current specifications then being used in new Restaurants, and shall complete the upgrading and other requirements within the time specified by the Franchisor;
(h) Unless the Franchisor expressly otherwise agrees in writing, no assignment by the Franchisee, whether consented to or not by the Franchisor, shall release the Franchisee from liability under this Agreement or any other agreements contemplated hereby. In addition, the Franchisee shall remain liable for all direct and indirect obligations to the Franchisor in connection with the Franchised Business prior to the effective date of the Transfer, shall continue to remain responsible for its obligations of nondisclosure, no competition and indemnification as provided elsewhere in this Agreement and shall execute any and all instruments reasonably requested by the Franchisor to further evidence such liability;
(i) At the transferee's expense, the transferee and its manager and employees shall complete any training programs then in effect for current franchisees upon such terms and conditions as the Franchisor may reasonably require unless such employees have been trained previously by the Franchisor;
(j) The transferee shall have signed an Acknowledgement of Receipt of all required legal documents, such as the Franchise Offering Circular and the then current Franchise Agreement and ancillary agreements;
(k) At least thirty (30) days in advance of the Transfer, the transferor shall pay to the Franchisor a transfer fee equal to twenty-five percent (25%) of the then-current initial franchise fee to cover the Franchisor's administrative expenses in connection with the proposed Transfer; and
(1) The transferor must provide the Franchisor with a copy of the agreements of purchase and sale between the transferor and the transferee. The terms and price of the proposed transaction between the transferor and a transferee shall be fair and reasonable in the sole discretion and based upon the good faith judgment of the Franchisor. THIS RIGHT OF APPROVAL SHALL NOT CREATE ANY SPECIAL LIABILITY OR DUTY ON THE PART OF THE FRANCHISOR TO THE PROPOSED TRANSFEREE.
3. Franchisee may grant a security interest in this Agreement or the franchise granted hereunder to the limited extent permitted by Section 9-408 of the Uniform Commercial Code. Any such security interest may only attach to an interest in the proceeds of the Franchised Business' operations and may not under any circumstances entitle or permit the secured party to take possession of or operate the Franchised Business or to transfer Franchisee's interest in this Agreement or the Franchised Business without Franchisor's express prior consent. The grant of a security interest in a manner consistent with
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this Section XII.B.3 will not be subject to the prohibition in Sections XII.B.l and XII.B.2. Except as expressly set forth in this Section XII.B.3, the Franchisee shall grant no security interest in itself, this Agreement, the Franchised Business or in any of Franchisee's assets.
"4. The Franchisee acknowledges and agrees that each of the foregoing conditions of Transfer that must be met by the Franchisee and the transferee are necessary and reasonable to assure such transferee's full performance of the obligations hereunder.
C. Additional Transfer Requirements for Legal Entity Transferees. If a proposed transferee is a corporation, limited liability company, limited partnership, or other legal entity and is subject to Section XDLB.2, then in addition to meeting the requirements set forth in Section XII.B.2, the transferee must comply with the requirements set forth in Section V.V.
D. Offerings by Franchisee. Securities or partnership interests in the Franchisee may be offered to the public, by private offering or otherwise, but only with the prior written consent of the Franchisor, whether or not the Franchisor's consent is required under Section XII.B. hereof, which consent shall not be unreasonably withheld. All materials required for such offering by federal or state law as well as any materials to be used in any exempt offering shall be submitted to the Franchisor for review at least sixty (60) days prior to such documents being filed with any government agency or distributed to investors. No offering by the Franchisee shall imply (by use of the Proprietary Marks or otherwise) that the Franchisor is participating in an underwriting, issuance or offering of the Franchisee's securities, and the Franchisor's review of any offering shall be limited solely to the subject of the relationship between the Franchisee and the Franchisor. The Franchisee and any other participants in the offering must fully indemnify the Franchisor in connection with the offering pursuant to an indemnity agreement in form and substance satisfactory to the Franchisor and its counsel. For each proposed offering, the Franchisee shall pay to the Franchisor a non-refundable amount as is necessary to reimburse the Franchisor for its reasonable costs and expenses associated with reviewing the proposed offering, including, without limitation, legal and accounting fees. Subsequent to approval of such offering documents, the Franchisee shall give the Franchisor at least sixty (60) days written notice prior to the proposed effective date of any offering or other transaction covered by this Section XII.D.
E. Franchisor's Right of First Refusal.
1. Any party who holds an interest (as reasonably determined by the Franchisor and not including the Franchisor's System, Proprietary Marks or other property of the Franchisor) in the Franchisee or in the Franchised Business and who desires to accept any bona fide offer from a third party to purchase such interest or portion thereof that would create a change of controlling interest in the Franchisee or the Franchised Business, shall notify the Franchisor in writing of each such offer and, except as otherwise provided herein, the Franchisor shall have the right and option, exercisable within thirty (30) days after receipt of such written notification, to send written notice to the seller that the Franchisor intends to purchase the seller's interest on the same terms and conditions offered by the third party less any amount of the purchase price attributable to the goodwill associated with the Franchised Business, the Proprietary Marks, the System or any other property of the Franchisor. Any material change in the terms of any offer prior to closing shall constitute a new offer subject to the same right of first refusal by the Franchisor as in the case of an initial offer. In the event that the Franchisor elects to purchase the seller's interest, closing on such purchase must occur by the later of: (i) the closing date specified in the third party offer; or (ii) within sixty (60) days from the date of notice to the seller of the Franchisor's election to purchase. Failure of the Franchisor to exercise the option afforded by this Section XII.E. shall not constitute a waiver of any other provision of this Agreement, including all of the requirements of this Section XII, with respect to a proposed Transfer.
2. In the event the consideration, terms and/or conditions offered by a third party are such that the Franchisor may not reasonably be required to furnish the same consideration, terms and/or conditions, then the Franchisor may purchase the Franchised Business proposed to be sold for the
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reasonable equivalent in cash. If the parties cannot agree, within a reasonable time, on the reasonable equivalent in cash of the consideration, terms and/or conditions offered by a third party, an independent appraiser shall be designated by the Franchisor, and his determination shall be final and binding.
F. Transfer Upon Death or Mental Incapacity. Upon the death, mental incapacity or disability of the Franchisee or a shareholder of a corporation or a general partner of a partnership which has been formed to own and operate the Franchised Business pursuant to the System, the Franchisor shall consent to the Transfer of said interest in the Franchisee, the Franchised Business and this Agreement to the spouse, heirs or relative by blood or by marriage, of said Franchisee, shareholder or partner, whether such Transfer is made by will or by operation of law, if, in the Franchisor's sole discretion and judgment, such person or persons meet the Franchisor's educational, managerial and business standards; possess a good moral character, business reputation and credit rating; have the aptitude and ability to conduct the Franchised Business herein; have at least the same managerial and financial criteria required by new franchisees and shall have sufficient equity capital to operate the Franchised Business. If said Transfer is not approved by the Franchisor, the executor, administrator or personal representative of such person shall transfer his interest to a third party approved by the Franchisor within six (6) months after such death,
- mental incapacity or disability. Such Transfer shall be subject to the Franchisor's right of first refusal and to the same conditions as any other Transfer if controlling interest is affected.
G. Non-Waiver of Claims. The Franchisor's consent to a Transfer of any kind shall not
constitute a waiver of any claims it may have against the transferring party, and it will not be deemed a waiver of the Franchisor's right to demand exact compliance with any of the terms of this Agreement, or any other agreement to which the Franchisor and the transferee are parties, by the transferee.
H. Operation of the Franchised Business by Franchisor. In order to prevent any interruption of the business of the Franchised Business and any injury to the goodwill and reputation thereof which would cause harm to the Franchised Business and thereby depreciate the value thereof, the Franchisee hereby authorizes the Franchisor, and the Franchisor shall have the right, but not the obligation, to operate said Franchised Business for so long as the Franchisor deems necessary and practical, and without waiver of any other rights or remedies the Franchisor may have under this Agreement, in the event that: (i) any of the Franchisee's principals, shareholders or partners is absent or incapacitated by reason of illness or death and that the Franchisee is not, therefore, in the sole judgment of the Franchisor, able to do the business licensed hereunder, or (ii) any allegation or claim is made against the Franchised Business, the Franchisee or any principals, directors, shareholders, partners or employees of the Franchisee, involving or relating to misrepresentations or any fraudulent or deceptive practice. In the event that the Franchisor should operate the Franchised Business, the Franchisor at its option shall not be obligated so to operate it for a period more than ninety (90) days. All revenues from the operation of the Franchised Business during such period of operation by the Franchisor shall be kept in a separate account and the expenses of the Franchised Business, including reasonable royalty fees, advertising contributions, compensation and expenses for the Franchisor's representative, shall be charged to said account. If, as herein provided, the Franchisor elects to temporarily operate the Franchised Business on behalf of the Franchisee, the Franchisee hereby agrees to indemnify and hold the Franchisor harmless from any and all claims arising from the acts and omissions of the Franchisor and its representatives.
XIII. DEFAULT AND TERMINATION
The terms and conditions regarding default and termination contained herein shall be subject to any applicable state statutes or regulations regarding the termination of a franchise.
A. Material Default With No Opportunity To Cure. The Franchisee shall be deemed to be in material default ("Material Default") and the Franchisor may, at its option, terminate this Agreement and all rights granted hereunder, without affording the Franchisee any opportunity to cure the default, effective immediately upon receipt of notice from the Franchisor to the Franchisee, upon the occurrence of any of the following events:
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1. If the Franchisee becomes insolvent or makes a general assignment for the benefit of creditors, or if a petition in bankruptcy is filed by the Franchisee or such a petition is filed against and consented to by the Franchisee, or if the Franchisee is adjudicated bankrupt, or if a bill in equity or other proceeding for the appointment of a receiver of the Franchisee or other custodian for the Franchisee's business or assets is filed and consented to by the Franchisee, or if a receiver or other custodian (permanent or temporary) of the Franchisee's business or assets is appointed by any court of competent jurisdiction, or if proceedings for a conference with a committee of creditors under any state, federal or foreign law should be instituted by or against the Franchisee, or if a final judgment remains unsatisfied or of record for thirty (30) days or longer (unless supersedes bond is filed), or if execution is levied against the Franchisee's operating location or property, or suit to foreclose any lien or mortgage against the premises or equipment is instituted against the Franchisee and not dismissed within thirty (30) days, or if any substantial real or personal property of the Franchised Business shall be sold after levy thereupon by any sheriff, marshal or constable;
2. If the Franchisee ceases to do business at the Franchised Business for two (2) or more consecutive days, excluding holidays, or loses the right to possession of the premises upon which the Franchised Business is located or otherwise forfeits the right to do or transact business in the jurisdiction where the Franchised Business is located; provided, however, that if any such loss of possession results from the governmental exercise of the power of eminent domain, or if, through no fault of the Franchisee, the premises are damaged or destroyed by a disaster such that they cannot, in the Franchisor's judgement, reasonably be restored within one hundred twenty (120) days, then, in either such event, the Franchisee shall have sixty (60) days to identify an alternative location within the Territory for the operation of the Franchised Business (the "Substituted Site") and submit all information reasonably requested by the Franchisor in connection with the Substituted Site for its review and approval. The Franchisor's approval of the Substituted Site shall not be unreasonably withheld, but may be conditioned upon the payment of an agreed minimum royalty fee to the Franchisor during the period in which the Franchised Business is not in operation. Notwithstanding the foregoing, the Franchisor shall have a right to terminate this Agreement if the Franchisee is not in possession of the Substituted Site within 120 days of the event and open for business to the general public within (12) twelve months of the events.
3. If the Franchisee fails to operate and maintain the point-of-sale system in accordance with the Franchisor's requirements and guidelines as outlined in the Manuals, or if Franchisee attempts to modify such system without the prior written approval of Franchisor;
4. If the Franchisee understates by five percent (5%) or more its Gross Sales in connection with any report required to be submitted to the Franchisor;
5. If the Franchisee has made any material misrepresentation or omission in this Agreement or any other agreement to which the Franchisee and the Franchisor are parties;
6. If the Franchisee (or the principal stockholder or general partner of a corporation or partnership franchisee) repeatedly engages in the excessive use of alcohol and/or abuse of drugs;
7. If the Franchisee or any shareholder, member, partner, or other person controlling more than five percent (5%) of Franchisee's stock, membership interest or partnership interest, by act or omission, permits or commits tortious conduct or a violation of any applicable law, ordinance, rule or governmental regulation (including, but not limited to, any applicable employment law (e.g., harassment, discrimination, retaliation, equal employment, treatment of disabled persons, child labor or wages and hour law)) constituting a felony, or constituting a misdemeanor, lesser criminal offense or a violation of law which in Franchisor's sole judgment has, or is likely to have, an adverse effect upon the System, the Proprietary Marks, or the goodwill associated therewith;
8. If the Franchisee fails to obtain and maintain all required licenses under state and local law;
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9. If the Franchisee misuses or makes any unauthorized use of the Proprietary Marks, engages in any business or markets any service or products under a name or mark which is confusingly similar to the Proprietary Marks, or otherwise materially impairs the goodwill associated therewith or the Franchisor's rights therein;
10. If a threat or danger to public safety results from the construction, maintenance or operation of the Franchised Business;
11. If the Franchisee or any shareholder, member, partner, or other person controlling more than five percent (5%) of Franchisee's stock, membership interest or partnership interest is convicted of a crime of moral turpitude or similar felony or is convicted of any other crime or offenses that the Franchisor reasonably believes is likely to have an adverse effect on the System, the Proprietary Marks, the goodwill associated therewith or the Franchisor's interest therein;
12. If a judgment or a consent decree against the Franchisee, or any of its officers, directors, shareholders or partners is entered in any case or proceeding involving allegations or fraud, racketeering, unfair or improper trade practices or similar claim which is likely to have an adverse effect on the System, or the Proprietary Marks, the goodwill associated therewith or the Franchisor's interest therein;
13. If the Franchisee purports to transfer any rights or obligations under this Agreement to any third party without the Franchisor's prior written consent, contrary to any of the terms of Section XII of this Agreement;
14. If the Franchisee fails to comply with any of the covenants contained in Section XV hereof;
15. If, contrary to Sections VII and VIII hereof, the Franchisee or any of its officers, directors, shareholders, managers, members, or partners discloses or divulges the contents of the Manuals or any other trade secrets or Confidential Information provided to the Franchisee by the Franchisor;
16. If the Franchisee knowingly maintains false books or records or submits any false statements, applications or reports to the Franchisor or any assignee of the Franchisor;
17. If the Franchisee fails to acquire the site and/or sign the lease within one hundred and twenty (120) days from the Effective Date of this Agreement, initiate construction within 210 days from the Effective Date of this Agreement, or fails to open for business to the general public within one (1) year from the Effective Date of this Agreement or as otherwise extended by the Franchisor.
18. If the Franchisee or any of its officers, directors, shareholders, managers, members, or partners willfully and repeatedly engages in a course of conduct which constitutes a misrepresentation or a deceptive or unlawful act or practice in connection with its sale of the services and products offered at the Franchised Business;
19. If the Franchisee fails to strictly comply with the product and quality control standards and specifications, fails to have suppliers approved by the Franchisor or otherwise fails to meet any other significant specifications or guidelines set forth in the Manuals;
20. If any other franchise agreement issued to the Franchisee, to companies affiliated with the Franchisee, or to any company owned or controlled by a shareholder or partner of Franchisee, by the Franchisor is terminated for any reason;
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21. If the Franchisee receives three (3) or more notices of default under Section XIII.B. during any twelve (12) month period hereof during the term of this Agreement whether or not such defaults are cured after notice;
22. If the Franchisee or any shareholder or partner controlling more than five percent (5%) of Franchisee's stock or partnership interest wilfully engages in any illegal, immoral or unethical acts or any act in violation of the mission and values of the Franchisor as set forth in the Manuals and modified by Franchisor from time to time in its sole discretion;
23. If the Franchisee defaults under its lease agreement for the premises on which the Franchised Business is located or under any other agreement to which the Franchisee and the Franchisor, or any parent or subsidiary corporation or any other affiliated entity of the Franchisor, are parties and fails to cure said default within the grace period (if any) provided for in such agreement; or
24. If the Franchisee relocates the Franchised Business without obtaining the prior written approval of the Franchisor.
25. If the Franchisee fails to earn a satisfactory minimum score on three (3) consecutive B.E.R. Assessments.
B. Default With Thirty (30) Day Opportunity To Cure. Except as provided in Section XIII.A. of this Agreement, the Franchisee shall have thirty (30) days after receiving from the Franchisor a written notice of default within which to remedy any default described in this Section XIII.B. and provide evidence thereof to the Franchisor. If any such default is not cured within that time, or such longer period as applicable law may require, this Agreement, at Franchisor's option, shall terminate without further notice to the Franchisee effective immediately upon the expiration of the thirty (30) day period or such longer period as applicable law may require. The Franchisee shall be in default hereunder for any failure to comply substantially with any of the requirements imposed by this Agreement and the Manuals, or for any failure to carry out the terms of this Agreement in good faith. Such defaults shall include, without limitation, the occurrence of any of the following events:
1. If the Franchisee fails, refuses or neglects to pay promptly any monies owing to the Franchisor or its subsidiaries or affiliates or suppliers when due, or to submit the financial information or other reports required by the Franchisor under this Agreement;
2. If the Franchisee fails to maintain any of the standards or procedures prescribed by the Franchisor in this Agreement, the Manuals, any other franchise agreement between the Franchisor and (i) the Franchisee, (ii) companies affiliated with the Franchisee, or (iii) any company owned or controlled by a shareholder or partner of Franchisee, or any other written agreements between the parties or otherwise;
3. the Franchisee fails to comply with its duties set forth in Section V of this Agreement or fails to perform any obligation owing to the Franchisor or to observe any covenant or agreement made by the Franchisee, whether such obligation, covenant or agreement is set forth in this Agreement or in any other agreement with the Franchisor including any other franchise agreement by and between the Franchisor and the Franchisee or any entity related to the Franchisor;
4. If the Franchisee fails to adequately promote the Franchised Business as provided in this Agreement, the Manuals or otherwise in writing;
5. If the Franchisee fails to maintain and submit to the Franchisor all reports required pursuant to Section IX hereof, including financial statements, weekly, monthly and other reports of Gross Sales and copies of tax returns;
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6. If the Franchisee fails to maintain the Franchisor's quality control standards with respect to its use of signage and other uses of the Proprietary Marks;
7. If the Franchisee fails to notify the Franchisor, within one hundred eighty (180) days of the relocation date, of the Franchisee's intention to relocate the Franchised Business;
8. If the Franchisee, its Operating Principal, General Manager, Kitchen Manager, or employees fail to attend and successfully complete any mandatory training program unless attendance is excused or waived, in writing, by the Franchisor; or
9. If the Franchisee fails to obtain the prior written approval of the Franchisor of any and all advertising, marketing or promotional plans and materials in whatever form used by the Franchisee in connection with its promotion of the Franchised Business or otherwise fails to comply with Franchisor's policies and procedures with respect to advertising, marketing or promotion.
C. No Right or Remedy. No right or remedy herein conferred upon or reserved to the Franchisor is exclusive of any other right or remedy provided or permitted by law or equity.
D. Default and Termination, The events of default and grounds for termination described in this Section XIII shall be in addition to any other grounds for termination contained elsewhere in this Agreement or otherwise.
E. Right to Purchase. In the event of termination of this Agreement for any reason, including a default under this Section XIII, the Franchisor shall have the right and option to purchase the Franchisee's interest in the tangible assets of the Franchised Business as set forth in Section XTV.K below. In the event that the Franchisor elects to purchase the Franchisee's interest in said assets, the Franchisee shall also execute an assignment of the lease for the premises of the Franchised Business.
F. Liquidated Damages. In the event of a termination of this Agreement by the Franchisor based on a Material Default by the Franchisee, the Franchisee agrees to pay the Franchisor as fair and reasonable liquidated damages (but not as a penalty) an amount equal to three (3) years of projected Royalty Fees. Such projected Royalty Fees shall be computed using the average monthly Gross Sales during the last six (6) months that business was conducted at the Franchised Location (or if the Franchised Location has been operating for less than six (6) months, the average over the actual operating period). The Franchisee agrees that this amount is for the Franchisor's lost revenues, and that it would be difficult to calculate with certainty the amount of damage the Franchisor will incur. Notwithstanding the Franchisee's agreement to pay liquidated damages, if a court determines that the liquidated damages payment is unenforceable, then the Franchisor may pursue all other available remedies, including recovery of consequential damages. Payment of the liquidated damages will not in any way limit any other remedy the Franchisor may have at law or in equity resulting from the Franchisee's failure to perform its obligations.
XIV. OBLIGATIONS UPON TERMINATION
Upon termination or expiration of this Agreement, all rights granted hereunder to the Franchisee shall forthwith terminate, and Franchisee shall observe and perform the following obligations, all of which shall survive the termination or expiration of this Agreement:
A. Cessation of Operation. The Franchisee shall immediately cease to operate the Franchised Business and shall not thereafter, directly or indirectly, represent to the public or hold itself out as a franchisee of the Franchisor.
B. Cessation of Use of Proprietary Marks. The Franchisee shall immediately and permanently cease to use, in any manner whatsoever, any equipment, format, confidential methods,
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recipes, customer data base, programs, literature, procedures and techniques associated with the System, the name Boston's The Gourmet Pizza and any Proprietary Marks and distinctive trade dress, forms, slogans, uniforms, signs, symbols or devices associated with the System. In particular, the Franchisee shall implement a de-identification program as prescribed by the Franchisor and shall cease to use, without limitation, all signs, fixtures, furniture, equipment, advertising materials or promotional displays, uniforms, stationery, forms, inventory bearing the Proprietary Marks, and any other articles which display the Proprietary Marks associated with the System.
C. Cancellation of Name. The Franchisee shall take such action as may be necessary to cancel any assumed name or equivalent registration which contains the Proprietary Marks or any other trademark, trade name or service mark of the Franchisor, and the Franchisee shall furnish the Franchisor with evidence satisfactory to the Franchisor of compliance with this obligation within thirty (30) days after termination or expiration of this Agreement.
D. Optional Assignment of Lease. The Franchisee shall, at the Franchisor's option pursuant to Section XIH.E. above, assign to the Franchisor any interest, which the Franchisee has in any lease, or sublease for the premises of the Franchised Business. In the event the Franchisor elects to exercise its option to acquire such lease or sublease, the Franchisor shall pay for any furniture, equipment, supplies and signs acquired by the Franchisor as a result of such assignment, at the Franchisee's cost or fair market value (whichever is less), less any sums of money owed by the Franchisee to the Franchisor and less any sums of money necessary to upgrade and renovate the premises to meet the Franchisor's then current standards for its Franchised Business and less any sums necessary to acquire clear title to the lease or sublease interest. In the event that the Franchisor and the Franchisee are unable to agree on the fair market value of said items, an independent appraiser shall be appointed by the Franchisor to determine the fair market value of said items. The determination of said appraiser shall be final and binding upon the parties. The costs and expenses associated with the appointment of an independent appraiser shall be paid by the Franchisee.
In the event that the Franchisor does not elect to exercise its option to acquire such lease or sublease, the Franchisee shall make such modifications or alterations to the premises of the Franchised Business immediately upon termination or expiration of this Agreement as may be necessary to distinguish the appearance of said premises from that of other Restaurants under the System, and shall make such specific additional changes thereto as the Franchisor may reasonably request for that purpose. In the event the Franchisee fails or refuses to comply with the requirements of this Section XIV, the Franchisor shall have the right to enter upon the premises of the Franchised Business without being guilty of trespass or any other tort for the purpose of making or causing to be made such changes as may be required, at the expense of the Franchisee, which expense the Franchisee agrees to pay upon demand.
E. Franchisor's Right to Continue Operations. In the event this Agreement is terminated, the Franchisor may, at its option, immediately enter the premises of the Franchised Business and continue to provide services to customers of the Franchised Business and apply receipts from the Franchised Business to debts owed to the Franchisor by the Franchisee. The Franchisor shall have no other obligations to the Franchisee in connection with the Franchisor's operation of the Franchised Business following said termination.
F. Non-Usage of Marks. The Franchisee agrees, in the event it continues to operate or subsequently begins to operate any other business, and expressly subject to the limitations set forth in Section XV.C, not to use any reproduction, counterfeit, copy or colorable imitation of the Proprietary Marks or trade dress, either in connection with such other business or the promotion thereof, which is likely to cause confusion, mistake or deception, or which is likely to dilute the Franchisor's exclusive rights in and to the Proprietary Marks or trade dress, and agrees not to utilize any designation of origin or description or representation which falsely suggests or represents an association or connection with the Franchisor so as to constitute unfair competition.
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G. Prompt Payment Upon Default. The Franchisee shall promptly pay all sums owing to the Franchisor and its subsidiaries, affiliates and suppliers. In the event of termination for any default of the Franchisee, such sums shall include all damages, costs and expenses, including reasonable attorneys' fees, incurred by the Franchisor as a result of the default, which obligation shall give rise to and remain, until paid in full, a lien in favor of the Franchisor against any and all of the personal property, machinery, fixtures, equipment and inventory owned by the Franchisee and on the premises of the Franchised Business at the time of default.
H. Payment of Costs. The Franchisee shall pay to the Franchisor all damages, costs and expenses, including reasonable attorneys' fees, incurred by the Franchisor subsequent to the termination or expiration of this Agreement in obtaining injunctive or other relief for the enforcement of any provision of this Section XIV or any other obligation under this Agreement.
I. Return of Materials. The Franchisee shall immediately turn over to the Franchisor all copies of all materials in the Franchisee's possession including the Manuals, all records, files, instructions, correspondence, customer database, brochures, agreements, disclosure statements and any and all other materials relating to the operation of the Franchised Business in the Franchisee's possession, and all copies thereof (all of which are acknowledged to be the Franchisor's property), and shall retain no copy or record of any of the foregoing, excepting only the Franchisee's copy of this Agreement, any correspondence between the parties and any other documents which the Franchisee reasonably needs for compliance with any provision of law. In addition to the foregoing, the Franchisee shall deliver to the Franchisor a complete list of all persons employed by the Franchisee during the three (3) years immediately preceding termination, together with all employment files of each employee on such list. All costs of delivering all materials required by this Section XIV.I. shall be bome by the Franchisee.
J. Assignment of Telephone Listings. The Franchisee shall promptly notify the appropriate telephone company and all telephone directory listing agencies of the termination or expiration of its right to use any telephone number and any regular, classified or other telephone directory listings associated with any Proprietary Marks and authorize the transfer of same to or at the direction of the Franchisor. In connection therewith, the Franchisee shall execute a Telephone Assignment Agreement in the form of Attachment C attached hereto. The Franchisee agrees to execute updated letters of direction to any telephone companies and telephone directory listing agencies directing termination and/or transfer of the Franchisee's right to use any telephone number associated with the Proprietary Marks, which the Franchisor may hold until termination or expiration hereof. 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 Proprietary Marks. The Franchisee authorizes the Franchisor, and hereby irrevocably appoints the Franchisor and any officer of the Franchisor as its attorney in fact, this appointment being coupled with an interest, to direct the appropriate telephone company and all listing agencies to transfer all such listings to the Franchisor upon termination of this Agreement.
K. Option to Purchase. In the event of expiration or earlier termination of this Agreement, the Franchisor shall have the right, but not the obligation, to purchase free and clear of any lien, charge, encumbrance or security interest not previously approved by Franchisor, any or all of the tangible assets of the Franchised Business, including the signs, advertising materials, promotional displays, supplies, forms, inventory, software, furniture or other items bearing the Proprietary Marks, at a price equal to eighty percent (80%) of the Franchisee's originally invoiced cost for inventory and supplies, and eighty percent (80%), net of any costs associated with the purchase and valuation process as of the date when notice is given, of the fair market value for any portion of Franchisee's leasehold improvements, machinery, equipment, fixtures, furniture, signage, and other assets utilized at the Franchised Business, as agreed by Franchisor and Franchisee within twenty one (21) days of such date, or as determined by a single appraiser mutually acceptable to the parties, and the appraiser's determination shall be final and binding. The Franchisor's election to purchase provided for herein must be exercised by written notice to the Franchisee within thirty (30) days after termination or expiration of this Agreement.
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L. Covenant of Further Assurances. The Franchisee shall execute any legal document that may be necessary to effectuate the termination in accordance with the terms of this Agreement and shall furnish to the Franchisor, within thirty (30) days after the effective date of termination, written evidence satisfactory to the Franchisor of the Franchisee's compliance with the foregoing obligations.
M. Compliance with Covenants. The Franchisee shall comply with all applicable covenants contained in this Agreement.
N. No Further Interest. Other than as specifically set forth above, the Franchisee shall have no interest in the Franchised Business upon termination or expiration of this Agreement.
XV. COVENANTS, REPRESENTATIONS AND WARRANTIES
A. Best Efforts. The Franchisee covenants that during the term of this Agreement, and subject to the post-termination provisions contained herein, and except as otherwise approved in writing by the Franchisor, the Franchisee or Franchisee's designated Operating Principal devotes his or her full time, energy and best efforts to the efficient and effective management and operation of the Franchised Business.
B. Non-Solicitation and Non-Competition. The Franchisee has heretofore specifically acknowledged that pursuant to this Agreement, the Franchisee and the Principals, as applicable, shall receive valuable specialized training and/or Confidential Information, including but not limited to information regarding the business, promotional, sales, marketing and operational methods and techniques of the Franchisor and the System. The Franchisee and the Principals covenant that during the Term of this Agreement and subject to the post-termination provisions contained herein, and except as otherwise approved in writing by the Franchisor, the Franchisee and the Principals shall not, either directly or indirectly, for themselves or through, on behalf of or in conjunction with any person, persons, partners or corporation:
1. divert or attempt to divert any business or customer of the Franchised Business to any competitor, by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Proprietary Marks and the System;
2. employ or seek to employ any person who is at that time employed by the Franchisor or by any other franchisee or multi-unit operator of the Franchisor, or otherwise directly or indirectly induce such person to leave his or her employment;
3. own, maintain, engage in, be employed by, advise, assist, invest in, franchise, make loans to or have any interest in any business which is the same as or substantially similar to the Franchised Business and which is located within a radius often (10) miles of the approved site or the location of the Franchised Business contemplated by this Agreement or any other Restaurant which is in existence or under construction; or
4. sell, or offer for sale, products or services offered by, or similar to those offered by, the Franchised Business in any venue other than through, and on the premises of, the Franchised Business.
C. Restrictive Covenants. The Franchisee and the Principals covenant that, except as otherwise approved in writing by the Franchisor, for a continuous uninterrupted period commencing upon the expiration or termination of this Agreement, regardless of the cause for termination, and continuing for two (2) years thereafter (or in the case of a Principal who has executed Attachment D or Attachment G to this Agreement, for a continuous uninterrupted period commencing upon the date on which such individual ceases to be a Principal and continuing for two (2) years thereafter), the Franchisee and the Principals, will not either directly or indirectly, for itself or through, on behalf of or in conjunction with
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any person, persons, partnership or corporation, own, maintain, engage in, be employed by, advise, assist, invest in, franchise, make loans to or have any interest in any business which is the same as or substantially similar to the Franchised Business and which is located at the site of the Franchised Business contemplated by this Agreement or within a radius of ten (10) miles from such site or the approved site or the location of any other Restaurant which is in existence or under construction on the date of expiration or termination of this Agreement.
If the period of time or the area specified above, should be adjudged unreasonable in any proceeding, then the period of time will be reduced by such number of months or the area will be reduced by the elimination of such portion thereof, or both, so that such restrictions may be enforced in such area and for such time as is adjudged to be reasonable.
D. No Undue Hardship. The Franchisee and the Principals acknowledge and agree that the covenants not to compete set forth in this Agreement are fair and reasonable and will not impose any undue hardship on the Franchisee or the Principals or the Franchisee's shareholders, members or partners, if the Franchisee is a corporation, limited liability company, limited partnership, partnership, or other legal entity, since the Principals and the Franchisee and its shareholders, members, or partners have other considerable skills, experience and education which afford the Principals and the Franchisee and its shareholders, members, or partners the opportunity to derive income from other endeavors.
E. Inapplicability of Restrictions. Sections XV.B.3. and XV.C. shall not apply to the ownership by the Franchisee or the Principals of less than a five percent (5%) beneficial interest in the outstanding equity securities of any publicly-held corporation.
F. Independence of Covenants. The parties and the Principals agree that each of the covenants in this Agreement shall be construed as independent of any other covenant or provision of this Agreement. If any or all portions of the covenants in this Section XV is held unreasonable or unenforceable by a court or agency having valid jurisdiction in an unappealled final decision to which the Franchisor is a party, the Franchisee and the Principals expressly agree to be bound by any lesser covenant subsumed within the terms of such covenant that imposes the maximum duty permitted by law, as if the resulting covenant were separately stated in and made a part of this Agreement.
G. Mission. The Franchisee agrees to support the Franchisor's mission as more specifically set forth in the Manuals and other materials provided from time to time by Franchisor to Franchisee and to conduct the Franchised Business in accordance with the Franchisor's operating policies and stated principles.
H. Modification of Covenants. The Franchisee and the Principals understand and acknowledge that the Franchisor shall have the right, in its sole discretion, to amend the scope of any covenant set forth in this Section XV or any portion thereof, without the Franchisee's or the Principals' consent, effective immediately upon receipt by the Franchisee or the Principals, as applicable, of written notice thereof, and the Franchisee and the Principals agree that they shall forthwith comply with any covenant as so modified, which shall be fully enforceable notwithstanding the provisions of Section XXHI hereof.
I. Enforcement of Covenants. The Franchisee and the Principals expressly agree that the existence of any claims they may have against the Franchisor, whether or not arising from this Agreement, shall not constitute a defense to the enforcement by the Franchisor of the covenants in this Agreement. The Franchisee and the Principals, as applicable, agree to pay all costs and expenses (including reasonable attorneys' fees) incurred by the Franchisor in connection with the enforcement of the covenants set forth in this Agreement.
J. Injunctive Relief. The Franchisee and the Principals acknowledge that a violation of the covenants not to compete contained in this Agreement would result in immediate and irreparable injury to the Franchisor for which no adequate remedy at law will be available. Accordingly, the Franchisee and
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the Principals hereby consent to the entry of an injunction prohibiting any conduct by the Franchisee or the Principals, as applicable, in violation of the terms of the covenants not to compete set forth in this Agreement. The .Franchisee and the Principals expressly agree that it may be presumed conclusively that any violation of the terms of said covenants not to compete was accomplished by and through the Franchisee's and the Principals' unlawful utilization of the Franchisor's confidential information, know-how, methods and procedures.
K. Terrorist and Money Laundering Activities.
Franchisee and the Principals represent and warrant to Franchisor that neither Franchisee, nor any Principal, nor any of their respective affiliates is identified, either by name or an alias, pseudonym or nickname, on the lists of "Specially Designated Nationals" or "Blocked Persons" maintained by the U.S. Treasury Department's Office of Foreign Assets Control . Further, Franchisee and the Principals represent and warrant that neither it nor any Principal or affiliate referred to above has violated, and agrees not to violate, any law prohibiting corrupt business practices, money laundering or the aid or support of persons or entities who conspire to commit acts of terror against any person, entity or government, including acts prohibited by the U.S. Patriot Act (text currently available at hr3162.htnu"). U.S. Executive Order 13224 (text currently available at
3224.pdf). or any similar law. The foregoing constitute continuing representations and warranties, and Franchisee and the Principals shall immediately notify Franchisor in writing of the occurrence of any event or the development of any circumstance that might render any of the foregoing representations and warranties false, inaccurate or misleading.
L. Written Agreements. At the Franchisor's request, the Franchisee shall require and obtain execution of covenants similar to those set forth in this Section XV (including covenants applicable upon the termination of a person's relationship with Franchisee) from the Franchisee's officers, directors, and owners. All covenants required by this Section XV.L. shall be in forms satisfactory to Franchisor, including, without limitation, specific identification of Franchisor as a third party beneficiary of such covenants with the independent right to enforce them. Failure by Franchisee to obtain execution of a covenant required by this Section XV.L. shall constitute a default under Section XIII.B hereof.
XVI. CHANGES AND MODIFICATIONS
The Franchisor may modify this Agreement only upon the execution of a written agreement by the Franchisor and the Franchisee. The Franchisor reserves and shall have the sole right to make changes in the Manuals, the System and the Proprietary Marks at any time in its sole discretion and without prior notice to Franchisee. Franchisee shall promptly alter any signs, products, business materials or related items, at its sole cost and expense, upon written receipt of written notice of such change or modification in order to conform to the Franchisor's revised specifications. In the event that any improvement or addition to the Manuals, the System or the Proprietary Marks is developed by the Franchisee, then the Franchisee agrees to grant to the Franchisor an irrevocable, world-wide, exclusive, royalty-free license, with the right to sublicense such improvement or addition.
The Franchisee understands and agrees that due to changes in competitive circumstances, presently unforeseen changes in the needs of customers, and/or presently unforeseen technological innovations, the Franchisor's System must not remain static, in order that it best serve the interests of Franchisor, franchisees and the System. Accordingly, Franchisee expressly understands and agrees that Franchisor may from time to time change the components of the System, including altering the programs, services, methods, standards, forms, policies and procedures of that System; adding to, deleting from or modifying those programs, products and services which the Franchised Business is authorized to offer; and changing, improving or modifying the Proprietary Marks. Subject to the other provisions of this Agreement, Franchisee expressly agrees to abide by any such modifications, changes, additions, deletions and alterations.
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XVII. TAXES AND INDEBTEDNESS
A. Payment. The Franchisee shall promptly pay, when due, all taxes levied or assessed by any federal, state or local tax authority and any and all other indebtedness incurred by the Franchisee in the operation of the Franchised Business. The Franchisee shall pay to the Franchisor an amount equal to any sales tax, gross receipts tax or similar tax imposed on the Franchisor with respect to any payments to the Franchisor required under this Agreement, unless the tax is credited against income tax otherwise payable by the Franchisor.
B. Dispute. In the event of any bona fide dispute as to liability for taxes assessed or other indebtedness, the Franchisee may contest the validity or the amount of the tax or indebtedness in accordance with procedures of the taxing authority or applicable law; provided, however, in no event shall the Franchisee permit a tax sale or seizure by levy of execution or similar writ or warrant, or attachment by a creditor, to occur against the premises of the Franchised Business or any improvements thereon.
C. Compliance with Federal, State and Local Laws. The Franchisee shall comply with all federal, state, and local laws, rules and regulations, and shall timely obtain any and all permits, certificates, licenses and bonds necessary for the full and proper operation and management of the Franchised Business, including, without limitation, a license to do business and provide services, fictitious name registration and sales tax permits. Copies of all subsequent inspection reports, warnings, certificates and ratings, issued by any governmental entity during the term of this Agreement in connection with the conduct of the Franchised Business which indicate Franchisee's failure to meet or maintain the highest governmental standards or less than full compliance by Franchisee with any applicable law, rule or regulation, shall be forwarded to Franchisor by Franchisee within three (3) days of Franchisee's receipt thereof.
D. Duty to Notify. The Franchisee shall notify the Franchisor in writing within three (3) days of the commencement of any action, suit or proceeding, and of the issuance of any order, writ, injunction, award or decree of any court, agency or other governmental instrumentality, which may adversely affect the operation or financial condition of the Franchised Business. Additionally, any and all consumer related complaints shall be answered by the Franchisee within fifteen (15) days after receipt thereof or such shorter period of time as may be provided in said complaint. A copy of said answer shall be forwarded to the Franchisor within three (3) days of the date that said answer is forwarded to the complainant.
XVm. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
A. Independent Contractor and Indemnification
1. It is understood and agreed by the parties hereto that this Agreement does not create a fiduciary relationship between them, that the Franchisee shall be an independent contractor, and that nothing in this Agreement is intended to make either party an agent, legal representative, subsidiary, joint venturer, partner, employee or servant of the other for any purpose whatsoever.
2. During the term of this Agreement and any extensions hereof, the Franchisee shall hold itself out to the public as an independent contractor operating the Franchised Business pursuant to a license from the Franchisor and as an authorized user of the System and the Proprietary marks which are owned by the Franchisor, The Franchisee agrees to take such affirmative action as may be necessary to do so, including exhibiting to customers a sign provided by Franchisor in a conspicuous place on the premises of the Franchised Business.
3. The Franchisor shall not have the power to hire or fire the Franchisee's employees, and except as herein expressly provided, the Franchisor may not control or have access to the
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Franchisee's funds or the expenditures thereof, or in any other way exercise dominion or control over the Franchised Business.
4. It is understood and agreed that nothing in this Agreement authorizes the Franchisee to make any contract, agreement, warranty, or representation on the Franchisor's behalf, or to incur any debt or other obligation in the Franchisor's name, and that the Franchisor shall in no event assume liability for or be deemed liable hereunder as a result of any such action or by reason of any act or omission of the Franchisee in the Franchisee's conduct of the Franchised Business or any claim or judgment arising there from against the Franchisor. The Franchisee and the Principals agree at all times to defend at their own cost, and to indemnify and hold harmless to the fullest extent permitted by law, the Franchisor, its partners (including without limitation BPR GP, Inc. ("BPR GP") and BP USA and any other limited partners) its subsidiaries, and other entities owned by it, its affiliates (including without limitation all entities and persons owned by or owning, directly or indirectly, an interest in Franchisor, BPR GP and/or BP USA), BP Holdings, successors, assigns and designees of any such entity, officers, directors, employees, agents, contractors, and other entities and persons providing services for or otherwise acting on behalf of the Franchisor (including, without limitation, the Franchisor's affiliates in any capacity or role), and the respective directors, officers, employees, agents, shareholders, members, managers, partners, designees, and representatives of each (the Franchisor and all of such others referred to herein collectively as "Indemnitees") from all damages, losses, expenses (including without limitation reasonable attorneys fees), actions, suits, proceedings, claims, demands, investigations, or formal or informal inquiries (regardless of whether same is reduced to judgment) or any settlement thereof which arises out of or is based upon or related to any of the following: (a) the Franchisee's alleged infringement or any other violation or any other alleged violation of any patent, trademark or copyright or other proprietary right owned or controlled by third parties; (b) the Franchisee's alleged violation or breach of any contract, federal, state or local law, regulation, ruling, standard or directive of any industry standard; (c) libel, slander or any other form of defamation by the Franchisee; (d) the Franchisee's alleged violation or breach of any warranty, representation, agreement or obligation in this Agreement; (e) any acts, errors or omissions of the Franchisee or any of its agents, servants, employees, contractors, partners, proprietors, affiliates, or representatives; (f) latent or other defects in the Franchised Business, whether or not discoverable by the Franchisor or the Franchisee; (g) the inaccuracy, lack of authenticity or nondisclosure of any information by any customer of the Franchised Business; (h) any services or products provided by the Franchisee at, from or related to the operation at the Franchised Business; (i) any services or products provided by any affiliated or nonaffiliated participating entity; (j) any action by any customer of the Franchised Business; and, (k) ANY DAMAGE TO THE PROPERTY OF THE FRANCHISEE OR THE FRANCHISOR, THEIR AGENTS OR EMPLOYEES, OR ANY THIRD PERSON, FIRM, CORPORATION OR OTHER LEGAL ENTITY, WHETHER OR NOT SUCH LOSSES, CLAIMS, COSTS, EXPENSES, DAMAGES, OR LIABILITIES WERE ACTUALLY OR ALLEGEDLY CAUSED WHOLLY OR IN PART THROUGH THE ACTIVE OR PASSIVE NEGLIGENCE OF THE FRANCHISOR OR ANY OF ITS AGENTS OR EMPLOYEES, OR RESULTED FROM ANY STRICT LIABILITY IMPOSED ON THE FRANCHISOR OR ANY OF ITS AGENTS OR EMPLOYEES. Each Indemnitee shall be a third party beneficiary of this Section XVIII.A. and, as such, shall be able to enforce this indemnification against the Franchisee.
_____ [Please initial to acknowledge that you have read and understand this Section XVIII.A.]
B. Identification. The Franchisee shall conspicuously identify itself and the Franchised Business and in all dealings with its clients, contractors, suppliers, public officials and others, as an independent Franchisee of the Franchisor, and shall place such notice of independent ownership on all forms, business cards, stationery, advertising, signs and other materials and in such fashion as the Franchisor may, in its sole discretion, specify and require from time to time, in its Manuals (as same may be amended from time to time) or otherwise.
C. No False Representations. Except as otherwise expressly authorized by this Agreement, neither party hereto will make any express or implied agreements, warranties, guarantees or
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representations or incur any debt in the name of or on behalf of the other party, or represent that the relationship between the Franchisor and the Franchisee is other than that of Franchisor and Franchisee. The Franchisor does not assume any liability, and will not be deemed liable, for any agreements, representations, or warranties made by the Franchisee which are not expressly authorized under this Agreement, nor will the Franchisor be obligated for any damages to any person or property which directly or indirectly arise from or relate to the operation of the Franchised Business franchised hereby.
D. No Liability. The Franchisee acknowledges that: (a) the Franchisor is a limited partnership and, as such, its limited partners, including BP LP and BP USA, are not liable for the debts, obligations and liabilities of the Franchisor arising under this Agreement or otherwise; (b) neither BP LP nor BP USA is a general partner of the Franchisor and no conduct, services, acts or transactions of BP LP or BP USA shall cause the Franchisee to believe that BP LP or BP USA is anything other than a limited partner; (c) any claims by the Franchisee against the Franchisor shall be limited to the assets and capital of the Franchisor (and its corporate general partner), and the Franchisee shall have no recourse to the Franchisor's limited partners or their assets or capital; (d) Boston Pizza International Inc. and BP USA will, from time to time, provide services to the Franchisor, including without limitation management, training and administrative services, and that all services, acts and transactions will be provided by Boston Pizza International Inc., and BP USA as contractors of the Franchisor and no such services, acts or transactions will give rise to any liability on the part of BP LP or BP USA to the Franchisee; (e) all services provided by Boston Pizza International Inc. or BP USA to the Franchisee, including marketing and training, will be provided as contractor or agent for or otherwise on behalf of the Franchisor and, as such, the Franchisee's sole recourse for any claim related thereto shall be against the Franchisor, not Boston Pizza International Inc. or BP USA; and (f) that the Delaware Limited Partnership Act expressly limits the liability of limited partners, such as BP LP and BP USA, to third parties, such as the Franchisee.
XIX. APPROVALS AND WAIVERS
A. Written Consent. Whenever this Agreement requires the prior approval or consent of the Franchisor, the Franchisee shall make a timely written request to Franchisor, and such approval or consent shall be obtained in writing.
B. No Waiver. No failure of the Franchisor to exercise any power reserved to it by this Agreement, or to insist upon strict compliance by the Franchisee with any obligation or condition hereunder, and no custom or practice of the parties at variance with the terms hereof, shall constitute a waiver of the Franchisor's right to demand exact compliance with any of the terms herein. Waiver by the Franchisor of any particular default by the Franchisee shall not affect or impair the Franchisor's rights with respect to any subsequent default of the same, similar or different nature, nor shall any delay, forbearance or omission of the Franchisor to exercise any power or right arising out of any breach or default by the Franchisee of any of the terms, provisions or covenants hereof affect or impair the Franchisor's right to exercise the same, nor shall such constitute a waiver by the Franchisor of any right hereunder or the right to declare any subsequent breach or default and to terminate this Franchise prior to the expiration of its term. Subsequent acceptance by the Franchisor of any payments due to it hereunder shall not be deemed to be a waiver by the Franchisor of any preceding breach by the Franchisee of any terms, covenants or conditions of this Agreement.
C. WAIVER OF JURY TRIAL. THE PARTIES IRREVOCABLY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER AT LAW OR IN EQUITY, BROUGHT BY EITHER PARTY RELATING TO THE RELATIONSHIP BETWEEN THE PARTIES OR ARISING UNDER OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR ANY RIGHT OR REMEDY HEREUNDER.
_____ [Please initial to acknowledge that you have read and understand this Section XIX.C]
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XX. NOTICES
Any and all notices required or permitted under this Agreement shall be in writing and shall be personally delivered or mailed by certified mail, return receipt requested, or dispatched by overnight delivery envelope, or transmitted by facsimile or sent by other electronic means if the sender can verify receipt. Notices shall be sent to the respective parties at the following addresses unless and until a different address has been designated by written notice to the other party:
Notices to Franchisor: Boston Pizza Restaurants, LP
1501 LBJ Freeway Suite 450 Dallas, Texas 75234
With a Copy to: Corporate Counsel
Boston Pizza Restaurants, LP 5500 Parkwood Way Richmond, B.C. V6V 2M4
Notices to Franchisee: Insert Address
Insert Address Insert Address
With a Copy to: Insert Address
Insert Address Insert Address
Any notice sent by certified mail shall be deemed to have been given at the date and time of attempted delivery. All notices to Franchisee shall be conclusively deemed to have been received by Franchisee upon the delivery or attempted delivery of such notice to Franchisee's address listed herein, or such changed address.
XXI. RELEASE OF PRIOR CLAIMS
By executing this Agreement, the Franchisee, individually and on behalf of the Franchisee's heirs, legal representatives, successors and assigns, and each assignee of this Agreement by accepting assignment of the same, hereby forever releases and discharges the Franchisor and its officers, directors, employees, agents and servants, including the Franchisor's subsidiary and affiliated corporations, their respective officers, directors, employees, agents and servants, from any and all claims relating to or arising under any franchise agreement or any other agreement between the parties executed prior to the date of this Agreement including any and all claims, whether presently known or unknown, suspected or unsuspected, arising under the franchise, securities or antitrust laws of the United States or of any state or territory thereof.
XXn. DISCLOSURE STATEMENT AND DISCLAIMER
A. Compliance with Applicable Laws. The Franchisee acknowledges, by its signature hereto, that it received from the Franchisor a Federal Trade Commission or Uniform Franchise Offering Circular for the State in which the Franchised Business will be located, or the Franchisee's place of residence, as appropriate, at least ten (10) business days prior to the execution of this Agreement.
_____ [Please initial to acknowledge that you have read and understand this Section XXII. A.]
B. Receipt of Agreement. The Franchisee acknowledges that it received from the Franchisor this Agreement and all applicable attachments with all blanks filled in at least five (5) business days prior
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to the execution of this Agreement. The Franchisee represents that it has read this Agreement in its entirety and that it has been given the opportunity to clarify any provisions that it did not understand and to consult with an attorney or other professional advisor. The Franchisee further represents that it understands the terms, conditions and obligations of this Agreement and agrees to be bound thereby.
_____ [Please initial to acknowledge that you have read and understand this Section XXII.B.]
XXIII. ENTIRE AGREEMENT
This Agreement, the documents referred to herein and the Attachments hereto, if any, constitute the entire, full and complete Agreement between the parties hereto concerning.the subject matter hereof, and supersede all prior agreements with no other representations having induced Franchisee to execute this Agreement. No amendment, change or variance from this Agreement shall be binding on the parties hereto unless mutually agreed to by the parties and executed by themselves or their authorized officers or agents in writing.
XXIV. SEVERABILITY AND CONSTRUCTION
A. Severability.
Except as expressly provided to the contrary herein, each section, part, term and/or provision of this Agreement shall be considered severable, and if, for any reason, any section, part, term and/or provision herein is determined to be invalid and contrary to, or in conflict with, any existing or future law or regulation by a court or agency having valid jurisdiction, such shall not impair the operation of, or have any other effect upon, such other portions, sections, parts, terms and/or provisions of this Agreement as may remain otherwise intelligible, and the latter shall continue to be given full force and effect and bind the parties hereto, and said invalid sections, parts, terms and/or provisions shall be deemed not to be a part of this Agreement; provided, however, that if the Franchisor determines that such finding of invalidity or illegality adversely affects the basic consideration of this Agreement, the Franchisor, in its sole discretion, may terminate this Agreement.
B. Business Judgment.
Notwithstanding any contrary provisions contained in this Agreement, Franchisor and Franchisee acknowledge and agree that (a) this Agreement (and the relationship of the parties which arises from this Agreement) grants Franchisor the discretion to make decisions, take actions and/or refrain from taking actions not inconsistent with Franchisee's explicit rights and obligations hereunder that may affect favorably or adversely Franchisee's interests; (b) Franchisor will use its business judgment in exercising such discretion based on its assessment of its own interests and balancing those interests against the interests of the owners of Restaurants generally (including Franchisor and its affiliates and other franchisees), and specifically without considering Franchisee's individual interests or the individual interests of any other particular franchisee; (c) Franchisor will have no liability to Franchisee for the exercise of its discretion in this manner; and (d) even if Franchisor has numerous motives for a particular action or decision, so long as at least one motive is a reasonable business justification no trier of fact in any legal action shall substitute its judgment for Franchisor's judgment so exercised, and such action or decision will not be subject to challenge for abuse of discretion. IF FRANCHISOR TAKES ANY ACTION OR CHOOSES NOT TO TAKE ANY ACTION IN ITS DISCRETION WITH REGARD TO ANY MATTER RELATED TO THIS AGREEMENT AND SUCH ACTION OR INACTION IS CHALLENGED FOR ANY REASON, THE PARTIES EXPRESSLY DIRECT THE TRIER OF FACT THAT FRANCHISOR'S RELIANCE ON A BUSINESS REASON IN THE EXERCISE OF ITS DISCRETION IS TO BE VIEWED AS A REASONABLE AND PROPER EXERCISE OF ITS DISCRETION, WITHOUT REGARD TO WHETHER OTHER REASONS FOR ITS DECISION MAY EXIST AND WITHOUT REGARD TO WHETHER THE TRIER OF FACT WOULD INDEPENDENTLY ACCORD THE SAME WEIGHT TO THE BUSINESS REASON.
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C. Covenants. The Franchisee expressly 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 any portion or portions which a court may hold to be unreasonable and unenforceable in a final decision to which the Franchisor is a party, or from reducing the scope of any promise or covenant to the extent required to comply with such a court order.
D. Captions. All captions in this Agreement are intended solely for the convenience of the parties, and none of the captions shall be deemed to affect the meaning or construction of any provision hereof.
E. References. All references herein to the masculine, neuter or singular shall be construed to include the masculine, feminine, neuter, corporate or plural, where applicable, and all acknowledgements, promises, covenants, agreements and obligations herein made or undertaken by the Franchisee shall be deemed jointly and severally undertaken by all of the parties executing this Agreement in his individual capacity on behalf of the Franchisee. This Agreement may be executed in one or more originals, each of which shall be deemed an original.
F. Definition of Franchisee. As used in this Agreement, the term "Franchisee" shall include all
persons who succeed to the interest of the original Franchisee by Transfer or operation of law and shall be deemed to include not only the individual or entity defined as the "Franchisee" in the introductory paragraph of this Agreement, but shall also include all partners of the entity that executes this Agreement, in the event said entity is a partnership; all shareholders, officers and directors of the entity that executes this Agreement, in the event said entity is a corporation; and all members of the entity that executes this Agreement, in the event said entity is a limited liability company. By their signatures hereto, all partners, shareholders, officers and directors of the entity that signs this Agreement as Franchisee acknowledge and accept the duties and obligations imposed upon each of them, individually, by the terms of this Agreement.
G. Force Majeure. If, as a result of hurricane, tornado, typhoon, flooding, lightning, blizzard and other unusually severe weather, earthquake, avalanche, volcanic eruption, fire, riot, insurrection, war, terrorist attack, explosion, unavoidable calamity or other act of God (a "Force Majeure"), compliance by any party with the terms of this Agreement is rendered impossible or would otherwise create an undue hardship upon any party, all parties shall be excused from their respective obligations hereunder for the duration of the Force Majeure and for a reasonable recovery period thereafter, but otherwise this Agreement shall continue in full force and effect.
XXV. APPLICABLE LAW
A. Governing Law. This Agreement takes effect upon its acceptance and execution by the Franchisor. EXCEPT TO THE EXTENT GOVERNED BY THE UNITED STATES TRADEMARK ACT OF 1946
(lanham act, 15 u.s.c. §§1051 et seg.\ this agreement shall for all purposes be governed by and interpreted and enforced in accordance with the internal laws of the state of Texas, except that its choice of law and conflict of law rules shall not apply.
B. Jurisdiction and Venue. The parties hereto mutually agree that the U.S. District Court for the Northern District of Texas, or if such court lacks jurisdiction, the state courts located in Dallas County, Texas, shall be the venue and exclusive forum in which to adjudicate any case or controversy arising from or relating to this Agreement and any guarantees hereof, undertakings hereunder provided and relationship established thereby, however, with respect to any action which includes injunctive relief or other extraordinary relief, Franchisor may bring such action in any court of competent jurisdiction. The parties irrevocably submit to the jurisdiction of such courts and waive any objections to either the jurisdiction of or venue in such courts. The parties mutually agree that personal jurisdiction may be effected by service of process and that when so made shall be as if served personally. This Agreement
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was executed and accepted at Franchisor's place of business in Dallas County, Texas. The parties anticipate that the performance of certain of Franchisee's obligations arising under this Agreement, including the payment of certain monies due Franchisor, will occur in Dallas County, Texas.
C- Remedy. No right or remedy conferred upon or reserved by the Franchisor or the Franchisee by this Agreement is intended and it shall not be deemed to be exclusive of any other right or remedy provided or permitted herein, by law or at equity, but each right or remedy shall be cumulative of every other right or remedy.
D. Injunctive Relief. Nothing herein contained shall bar the Franchisor's right to obtain injunctive relief against threatened conduct that will cause it loss or damage under the usual equity rules, including the applicable rules for obtaining restraining orders and preliminary injunctions.
XXVI. LIMITATIONS ON CLAIMS AND DAMAGES
Except with respect to Franchisee's and each Principal's obligation to indemnify Franchisor pursuant to the terms of this Agreement and claims Franchisor brings for Franchisee's unauthorized use of the Proprietary Marks or unauthorized use or disclosure of any of Franchisor's trade secrets, the parties waive to the fullest extent permitted by law any right to or claim for any punitive, exemplary, special and consequential damages against the other and agree that, in the event of a dispute between the parties, the parties making a claim will be limited to equitable relief and to recovery of any direct or general damages it sustains; provided, however that Franchisor shall have the right to recover lost profits and any applicable liquidated damages in the event of termination of this Agreement.
_____ [Please initial to acknowledge that you have read and understand this Section XXVI.]
Except for claims arising from Franchisee's nonpayment or underpayment of amounts Franchisee owes Franchisor pursuant to this Agreement, or claims related to Franchisee's unauthorized use of the Proprietary Marks, any and all claims arising out of or relating to this Agreement or the relationship created hereby will be barred unless a judicial proceeding is commenced within two years from the date on which the party asserting such claims knew or should have known of the facts giving rise to such claims. Notwithstanding the foregoing, with respect to any claims arising out of or in connection with an event of Force Majeure, the two year limit on claims provided for in this section shall be extended for a period equal to the extended performance period resulting from the event of Force Majeure, provided that such period shall not exceed 90 days.
XXVII.ACKNOWLEDGMENTS
The Franchisee acknowledges that it has conducted an independent investigation of all aspects relating to the Franchised Business and recognizes that the business venture contemplated by this Agreement involves business risks and that its success will be largely dependent upon the skills and ability of the Franchisee as an independent business person or organization. The Franchisee acknowledges that it has received, read and understands this Agreement, the attachments hereto and agreements relating thereto, and that the Franchisor has accorded the Franchisee ample time and opportunity to consult with advisors of the Franchisee's own choosing about the potential benefits and risks of entering into this Agreement. The Franchisee acknowledges that this Agreement takes effect upon the acceptance and execution by the Franchisor.
THE SUCCESS OF THE FRANCHISEE IN OPERATING A FRANCHISE IS SPECULATIVE AND WILL DEPEND ON MANY FACTORS INCLUDING, TO A LARGE EXTENT, THE FRANCHISEE'S INDEPENDENT BUSINESS ABILITY. THIS OFFERING IS NOT A SECURITY AS THAT TERM IS DEFINED UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS. THE OBLIGATION TO TRAIN, MANAGE, PAY, RECRUIT AND SUPERVISE
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EMPLOYEES OF THE FRANCHISED BUSINESS RESTS SOLELY WITH THE FRANCHISEE. THE FRANCHISEE HAS NOT RELIED ON ANY WARRANTY OR REPRESENTATION, EXPRESSED OR IMPLIED, AS TO THE POTENTIAL SUCCESS OR PROJECTED INCOME OF THE BUSINESS VENTURE CONTEMPLATED HEREBY. NO REPRESENTATIONS OR PROMISES HAVE BEEN MADE BY THE FRANCHISOR TO INDUCE THE FRANCHISEE TO ENTER INTO THIS AGREEMENT EXCEPT AS SPECIFICALLY INCLUDED HEREIN. THE FRANCHISOR HAS NOT MADE ANY REPRESENTATION, WARRANTY OR GUARANTY, EXPRESS OR IMPLIED, AS TO THE POTENTIAL REVENUES, PROFITS OR SERVICES OF THE BUSINESS VENTURE TO THE FRANCHISEE AND CANNOT, EXCEPT UNDER THE TERMS OF THIS AGREEMENT, EXERCISE CONTROL OVER THE FRANCHISEE'S BUSINESS. THE FRANCHISEE ACKNOWLEDGES AND AGREES THAT IT HAS NO KNOWLEDGE OF ANY REPRESENTATION MADE BY THE FRANCHISOR OR ITS REPRESENTATIVES OF ANY INFORMATION THAT IS CONTRARY TO THE TERMS CONTAINED HEREIN.
_____ [Please initial to acknowledge that you have read and understand this Section XXVEfJ
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IN WITNESS WHEREOF, the parties hereto have duly executed, sealed and delivered this Agreement on the day and year written below.
FRANCHISOR:
WITNESS:
BOSTON PIZZA RESTAURANTS, LP a Delaware limited partnership
By: Authorized Signatory
Date:
By: Authorized Signatory
Date:
WITNESS:
FRANCHISEE:
By: Insert Name, Insert Title
Date:
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ATTACHMENT A
BPR Store # Insert Store # LOCATION ADDENDUM
[To Be Completed Only Upon Final Site Approval]
THIS ADDENDUM is made this Insert Day day of Insert Month, Insert Year, by and between Boston Pizza Restaurants, LP (the "Franchisor") and Insert Name of Franchisee (the "Franchisee").
WHEREAS, the Franchisor and the Franchisee are parties to a Franchise Agreement dated Insert Date of Franchise Agreement, by the terms of which the Franchisor has granted to the Franchisee the right and license to operate a Boston's The Gourmet Pizza franchise pursuant to the Franchisor's System and Proprietary Marks, of which this Addendum forms a part (together, the "Franchise Agreement"); and
WHEREAS, the Franchisee has selected and presented a site to the Franchisor which has been approved by the Franchisor;
NOW, THEREFORE, the parties hereto, intending to be bound, agree as follows:
1. Franchised Location. The approved location (the "Franchised Location"), which constitutes the site referred to in Section LA. of the Franchise Agreement, shall be located as follows: (Specific address and/or legal description)
Insert Address of Franchise Location
If a specific address is not available at the date this Addendum is executed, the Franchisee will provide Franchisor with a specific address as soon as practical.
2. Franchisee's Representations and Warranties regarding Location. The Franchisee represents and warrants that it has negotiated, but not yet executed, a purchase agreement and/or a lease for the premises for the Franchised Business (or if its has, the Franchisee has done so with full knowledge that the location was not yet approved by the Franchisor, and without relying upon any representations made by the Franchisor), a copy of which has been provided to the Franchisor, and, with respect to the lease, the Franchisee warrants and represents as follows:
(a) That the initial term of any such lease, or the initial term together with any renewal terms (for which rent shall be set forth in the lease), shall have a term at least as long as the term of the Franchise Agreement be for not less than ten (10) years; and
(b) That the lessor has consented to the Franchisee's use of the Proprietary Marks, which may be revised or changed from time to time in Franchisor's sole discretion, and initial signage as the Franchisor may prescribe for the Franchised Business.
(c) A fully executed copy of the lease for the premises will be provided to the Franchisor immediately upon execution.
3. Other Business Particulars. The following are the business particulars more fully described in the Franchise Agreement and the attachments thereto:
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Territory: (Section I.B.): a Insert Radius [insert 1 mile or !/2 mile, if location is within Statistical Metropolitan Area with a population of one million people or more] mile radius surrounding the Approved Location for the Franchised Business.
Scheduled Opening Date (Section V.D.): Scheduled Opening Date of Franchise Location(the Scheduled Opening Date of Franchised Location).
Refurbishment Date (Section V.M.): Scheduled Refurbishing Date
4. Miscellaneous.
(a) All capitalized terms not defined herein shall have the meaning given to them in the Franchise Agreement.
(b) This Addendum constitutes an integral part of the Franchise Agreement, and the terms of this Addendum shall be controlling with respect to the subject matter hereof. Except as modified or supplemented by this Addendum, the terms of the Franchise Agreement are hereby ratified and confirmed.
IN WITNESS WHEREOF, the parties hereto have duly executed, sealed and delivered this Addendum on the day and year written below.
Date; __________________________
FRANCHISOR:
BOSTON PIZZA RESTAURANTS, LP
WITNESS:
By: Authorized Signatory
Date
FRANCHISEE:
INSERT NAME OF FRANCHISEE
WITNESS:
___________________________________ By: ____________________________
Date
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ATTACHMENT B BPR STORE #Insert Store Number
MANDATORY ADDENDUM TO LEASE AGREEMENT
THIS AGREEMENT is made and entered into this Insert Date day of Insert Month, Insert Year, by and among Boston Pizza Restaurants, LP (hereinafter referred to as "Franchisor"), a Delaware corporation; Insert Name of Landlord (hereinafter referred to as the "Landlord"), with its principal offices at Insert Address of landlord, and Insert name of Tenant (hereinafter referred to as the "Tenant"), with its principal offices at Insert Address of Tenant.
WITNESSETH:
WHEREAS, the Landlord and the Tenant have executed a lease agreement dated Insert Date of Lease Agreement, (the "Lease") for the premises located at Insert Address of Leased Premises (the "Leased Premises") for use by the Tenant as a business to be operated pursuant to Franchisor's proprietary marks and system in connection with a written Franchise Agreement dated Insert Date of Franchise Agreement, by and between Franchisor and the Tenant (the "Franchise Agreement");
WHEREAS, a condition to the approval of the Tenant's specific location by the Franchisor is that the Lease for the Leased Premises designated for the operation of a Boston's The Gourmet Pizza restaurant (hereinafter the "Franchised Business") contain the agreements set forth herein;
WHEREAS, the Landlord acknowledges that the Franchisor requires the modifications to the Lease set forth herein as a condition to its approving the Leased Premises as a site for the Franchised Business, and that the Landlord agrees to modify and amend the Lease in accordance with the terms and conditions contained herein;
WHEREAS, according to Section XIV.D. of the Franchise Agreement, all right, title and interest in and to the Lease may be assigned to Franchisor upon the termination of the Franchise Agreement; and
WHEREAS, it is the intent of the parties hereto to provide Franchisor with the opportunity to preserve the Leased Premises as a Franchised Business in the event of any default or termination of said Lease or Franchise Agreement and to assure the Landlord that in the event Franchisor exercises its rights herein contained any defaults of the Tenant under the Lease will be cured by Franchisor before it takes possession of the Leased Premises.
1. Use Clause. The Leased Premises shall be used for the operation of a Franchised Business offering pizza and pasta dishes in a full service casual dining restaurant environment and identified by the mark Boston's The Gourmet Pizza or any other name. The Leased Premises must be able to accommodate at a minimum all required elements described within the BPR prototypical drawings and operational manuals or as otherwise approved or amended by BPR.
The Landlord acknowledges that such use shall not violate any then existing exclusives granted to any existing tenant of the Landlord. The Landlord further acknowledges that during the term of this Lease or any extension thereof, the Landlord will not lease space within the location of the Franchised Business to a restaurant that serves pizza and pasta as primary menu items.
The Landlord represents and warrants that the Leased Premises has no existing building code violations and is properly zoned for its intended use.
2. Default of Lessee under Lease. The Landlord shall deliver to Franchisor via overnight courier service copies of any notice of default or termination it gives to the Tenant concurrently with
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giving such notices to the Tenant. If the Tenant fails to cure any default within the period provided in the Lease, if any, the Landlord shall give Franchisor immediate written notice of such failure to cure. The Landlord shall thereupon offer to Franchisor and Franchisor shall have the right to accept an assignment of the Lease or a new lease containing the same terms and conditions of the Lease, whichever Franchisor elects. If Franchisor elects to continue the use of the Leased Premises under an assignment of the Lease or a new lease, it shall so notify the Landlord in writing within thirty (30) days after it has received written notice from the Landlord specifying the defaults the Tenant has failed to cure within the grace period specified in the Lease. Upon receipt of such notice from Franchisor, the Landlord shall promptly execute and deliver to Franchisor an assignment of the Lease or a new lease, whichever Franchisor requests, and shall deliver to Franchisor possession of the Leased Premises, free and clear of any rights of the Tenant or any third party. Franchisor, before taking possession of the Leased Premises, shall promptly cure the defaults specified by the Landlord in its notice to Franchisor and shall execute and deliver to the Landlord its acceptance of the assignment of the Lease or of the new lease, as the case may be.
In the event that the Franchisor elects to enter into a new lease with the Landlord, Landlord shall do so upon terms and conditions no less favorable than those contained in the Lease.
3. Termination of the Franchise Agreement. If the Franchise Agreement between Franchisor and the Tenant is terminated for any reason during the term of the Lease or any extension thereof, the Tenant, upon the written request of Franchisor, shall assign to Franchisor all of its right, title and interest in and to the Lease. If Franchisor elects to accept the assignment of the Lease from the Tenant, it shall give the Tenant and the Landlord written notice of its election to acquire the leasehold interest. The Landlord hereby consents to the assignment of the Lease from the Tenant to Franchisor, subject to the Tenant's and/or Franchisor's curing any defaults of the Tenant under the Lease before Franchisor takes possession of the Leased Premises. Alternatively, in the event of a termination of the Franchise Agreement, Franchisor may elect to enter into a new lease with the Landlord containing terms and conditions no less favorable than the Lease. Upon the Landlord's receipt of written notice from Franchisor advising the Landlord that Franchisor elects to enter into a new lease, the Landlord shall execute and deliver such new lease to Franchisor for its acceptance. The Landlord and the Tenant shall deliver possession of the Leased Premises to Franchisor, free and clear of all rights of the Tenant or third parties, subject to Franchisor's curing any defaults of the Tenant, under the Lease, and executing an acceptance of the assignment of Lease or the new lease, as the case may be.
The Franchisor shall indemnify, defend and hold the Landlord harmless from any attempt to terminate the Lease or dispossess the Tenant from the Leased Premises based upon a termination of the Franchise Agreement.
4. Tenant's Agreement to Vacate Leased Premises. The Tenant agrees to peaceably and promptly vacate the Leased Premises and (subject to Franchisor's right to acquire any such property pursuant to its Franchise Agreement with the Tenant) to remove its personal property therefrom upon the termination of the Franchise Agreement or upon the Tenant's failure to timely cure all of its defaults under the Lease. Any property not removed or otherwise disposed of by the Tenant shall be deemed abandoned.
5. Delivery of Possession. If it becomes necessary for the Landlord to pursue legal action to evict the Tenant in order to deliver possession of the Leased Premises to the Franchisor, the Franchisor shall, at the written request of the Landlord, pay into an interest-bearing escrow account all amounts necessary to cure any default of the Tenant's, pending delivery of the Leased Premises to the Franchisor. If the Landlord may not legally obtain possession of the Leased Premises or if the Landlord is unable to deliver the Leased Premises to the Franchisor within six (6) months from the date the Franchisor notifies the Landlord of its election to continue the use of the Leased Premises, then the Franchisor shall have the right at any time thereafter to rescind its election to acquire a leasehold interest in the Leased Premises and to terminate the Lease or any new lease between it and the Landlord for the Leased Premises,
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whereupon all amounts deposited by the Franchisor in escrow, together with interest earned thereon, shall be returned forthwith to the Franchisor, and the Landlord shall release the Franchisor from all of its obligations under the Lease or under any new lease.
6. Amendment of Lease. The Landlord and the Tenant agree not to amend the Lease in any respect, except with the prior written consent of the Franchisor.
7. Franchisor Not a Guarantor. The Landlord acknowledges and agrees that notwithstanding any terms or conditions contained in this Addendum or any other agreement, the Franchisor shall in no way be construed as a guarantor or surety of the Tenant's obligations under the Lease. Notwithstanding the foregoing, in the event the Franchisor becomes the Tenant by assignment of the Lease in accordance with the terms hereof or enters into a new lease with Landlord, then the Franchisor shall be liable for all of the obligations of the Tenant on its part to be performed or observed under the Lease or a new lease.
8. Document to Govern. The terms and conditions contained herein modify and supplement the Lease. Whenever any inconsistency or conflict exists between this Addendum and the Lease, the terms of this Addendum shall prevail.
9. No Hazardous Materials. The Landlord warrants and represents that no part of the Franchised Business location, including the walls, ceilings, structural steel, flooring, pipes or boilers is wrapped, insulated, fire-proofed or surfaced with any asbestos-containing materials (hereinafter "ACM") or other hazardous materials as the same may be identified from time to time by applicable federal, state or local laws or regulations ("Hazardous Materials"), and that no ACM materials or Hazardous Materials will be present in the Leased Premises or on the property on which the Leased Premises sits as of the date Tenant takes possession thereof.
10. Assignment and Subletting. Notwithstanding anything set forth in the Lease to the contrary, the Tenant shall have the right to assign this Lease or any interest therein, or sublet the Leased Premises or any portion thereof without the consent of Landlord:
(a) to any bona fide franchisee of the Franchisor; or
(b) to the Franchisor or any successor or affiliate thereof.
11. Subordination. The Landlord will subordinate its interest in the Tenant's equipment to any lender financing the same, and the Landlord will further cooperate in executing all required documents to recognize such subordination within a reasonable time frame.
12. Waiver. Failure of Franchisor to enforce or exercise any of its rights hereunder shall not constitute a waiver of the rights hereunder or a waiver of any subsequent enforcement or exercise of its rights hereunder.
13. Amendment of Agreement. This Agreement may be amended only in writing signed by all parties hereto.
14. Notices. All notices hereunder shall be by certified mail to the addresses set forth above or to such other addresses as the parties hereto may, by written notice, designate.
15. Binding Effect. This Agreement shall be binding upon the parties hereto, their heirs, executors, successors, assigns and legal representatives.
16. Severability. If any provision of this Agreement or any part thereof is declared invalid by any court of competent jurisdiction, such act shall not affect the validity of this Agreement and the
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remainder of this Agreement shall remain in full force and effect according to the terms of the remaining provisions or part of provisions hereof.
17. Remedies. The rights and remedies created herein shall be deemed cumulative and no one of such rights or remedies shall be exclusive at law or in equity of the rights and remedies which Franchisor may have under this or any other agreement to which Franchisor and the Tenant are parties.
18. Attorneys' Fees. If any action is instituted by any party to enforce any provision of this Agreement, the prevailing party shall be entitled to recover all attorneys' fees and costs incurred in connection therewith.
19. Construction. This Agreement shall be governed by and construed in accordance with the laws of the State in which the Leased Premises are located.
20. Certain Acknowledgements. The Landlord and the Tenant acknowledge and agree that all interior and exterior signage and related items (collectively the "Leased/Licensed Assets") are the sole property of the Franchisor. The Tenant shall have no right to pledge in any manner the Leased/Licensed Assets and the Landlord shall have no rights to place any liens on or make any other claims to the Leased/Licensed Assets.
21. Assignment of this Agreement. Franchisor and Landlord shall have the right to assign this Agreement to any successor entity and shall thereby be released from any further liability under this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Mandatory Addendum to Lease to be executed the day and year first above written.
WITNESS: INSERT NAME OF LANDLORD:
By: Insert Name and Title
Date
INSERT NAME OF TENANT
By: Insert Name and Title
Date
BOSTON PIZZA RESTAURANTS, LP
By: Authorized Signatory
Date
By: Authorized Signatory
Date
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ATTACHMENT C BPR STORE #Insert Store Number
TELEPHONE ASSIGNMENT AGREEMENT AND POWER OF ATTORNEY
THIS TELEPHONE ASSIGNMENT AGREEMENT is made as of this Insert Date day of Insert Month, Insert Year by and between Insert name of Assignor (hereinafter the "Assignor") and Boston Pizza Restaurants, LP, a Delaware limited partnership (hereinafter the "Assignee").
WITNESSETH:
WHEREAS, the Assignee has developed and owns or is the exclusive U.S. Licensee of the proprietary system ("System") for the operation of a restaurant under the trademark and logo Boston's The Gourmet Pizza (the "Franchised Business");
WHEREAS, the Assignor has been granted a license to operate a Franchised Business pursuant to a Franchise Agreement dated Insert date of Franchise Agreement in accordance with the System;
WHEREAS, in order to operate its Franchised Business, the Assignor shall be acquiring one or more telephone numbers, telephone listings and telephone directory advertisements; and
WHEREAS, as a condition to the execution of the Franchise Agreement, the Assignee has required that the Assignor assign all of its right, title and interest in its telephone numbers, telephone listings and telephone directory advertisements to the Assignee in the event of a termination of the Franchise Agreement and to execute the accompanying Power of Attorney attached as Exhibit 1, as evidence of Assignee's authority to take assignment of Assignor's telephone numbers, telephone listings, and telephone directory advertisements;
NOW, THEREFORE, in consideration of the foregoing, the mutual promises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Assignment. In the event of termination of the Franchise Agreement, and in order to secure continuity and stability of the operation of the System, the Assignor hereby sells, assigns, transfers and conveys to the Assignee all of its rights, title and interest in and to certain telephone numbers, telephone listings and telephone directory advertisements pursuant to which Assignor shall operate its Franchised Business in accordance with the terms of the Franchise Agreement; provided, however, such Assignment shall not be effective unless and until the Franchise Agreement is terminated in accordance with the provisions thereof.
2. Representation and Warranties of the Assignor. The Assignor hereby represents, warrants and covenants to the Assignee that: As of the effective date of the Assignment, all of the Assignor's obligations and indebtedness for telephone, telephone listing services and telephone directory advertisement services shall be paid and current;
(a) As of the date hereof, the Assignor has full power and legal right to enter into, execute, deliver and perform this Agreement;
(b) This Agreement is a legal and binding obligation of the Assignor, enforceable in accordance with the terms hereof;
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(c) The execution, delivery and performance of this Assignment does not conflict with, violate, breach or constitute a default under any contract, agreement or instrument to which the Assignor is a party or by which the Assignor is bound, and no consent of nor approval by any third party is required in connection herewith; and
(d) The Assignor has the specific power to assign and transfer its right, title and interest in its telephone numbers, telephone listings and telephone directory advertisements, and the Assignor has obtained all necessary consents to this Assignment.
3. Miscellaneous The validity, construction and performance of this Assignment shall be governed by the laws of the State of Texas. All agreements, covenants, representations and warranties made herein shall survive the execution hereof. All rights of the Assignee shall inure to its benefit and to the benefit of its successors and assigns.
IN WITNESS WHEREOF, each of the parties have executed this Assignment as of the day and year first written above.
ASSIGNEE:
BOSTON PIZZA RESTAURANTS, LP a Delaware limited partnership
By: Authorized Signatory
By: Authorized Signatory ASSIGNOR:
By: Insert Name, Insert Title Date: ____________________
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Exhibit 1
POWER OF ATTORNEY
By its execution hereof, Insert Name of Assignor hereby makes, constitutes and appoints Boston Pizza Restaurants, LP or its designee, ("BPR") as its true and lawful agent and attorney-in-fact, with full power of substitution, in its name, place and stead to make, execute, sign, acknowledge, swear to, record and file, on behalf of it:
(a) to take and effectuate an assignment to BPR's name and account of all telephone numbers, telephone listings and telephone directory advertisements held in the name of Insert Name of Assignor; and
(b) all other instruments which may be required or permitted by law to be executed to take and effectuate the assignment to BPR's name and account of all telephone numbers, telephone listings and telephone directory advertisements held in the name of Insert Name of Assignor.
Insert Name of Assignor
Name of Signatory for Assignor
STATE OF Insert State )
COUNTY OF Insert County )
Subscribed and sworn to before me this_______day of___________________________, Insert
Year, by________________________________, as________________________. .
WITNESS my hand and official seal.
Notary Public My Commission Expires: [SEAL]
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ATTACHMENT D BPR STORE tflnsert Store Number
GUARANTY AND UNDERTAKING
In consideration of, and as an inducement to, the execution of that certain Franchise Agreement, and any revisions, modifications and amendments thereto, (hereinafter collectively the "Agreement") dated the Insert Day day of Insert Month, Insert Year by and between Boston Pizza Restaurants, LP, a Delaware limited partnership (hereinafter the "Franchisor") and Insert Name of Franchisee (hereinafter the "Franchisee"), the undersigned Insert Name of Guarantor (the "Guarantor") agrees as follows:
1. Without limiting any of Franchisee's obligations under the Agreement, Guarantor, individually and collectively with all other Agreement guarantors: (a) makes all of the covenants, representations, warranties and agreements of a Principal (as defined in the Agreement), including, but not limited to, those set forth in Sections VH.C (Confidentiality), VII.F (Duplication), VIII (Confidential Information), XII (Transfer of Interest), XV (Covenants), and XVIH.A.4 (regarding indemnification) of the Agreement and is obligated to perform thereunder; and (b) represents that each and every representation of Franchisee made in connection with the Agreement is true, correct and complete in all respects as of the time given and as of the time of the undersigned's execution of this Guaranty and Undertaking.
2. The Guarantor does hereby unconditionally guaranty the full, prompt and complete performance of the Franchisee under the terms, covenants and conditions of the Agreement, including without limitation, compliance with all confidentiality requirements, protection and preservation of confidential information, compliance with all non-compete provisions, compliance with the terms of any and all other agreements executed by Franchisee in order to open and operate the Franchised Business, and the complete and prompt payment of all indebtedness to the Franchisor under the Agreement. The word "indebtedness" is used herein in its most comprehensive sense and includes without limitation any and all advances, debts, obligations and liabilities of the Franchisee, now or hereafter incurred, either voluntarily or involuntarily, and whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, or whether recovery thereof may be now or hereafter barred by any statute of limitation or is otherwise unenforceable.
3. The obligations of the Guarantor are independent of the obligations of the Franchisee and a separate action or actions may be brought and prosecuted against the Guarantor, whether or not actions are brought against the Franchisee or whether the Franchisee is joined in any such action.
4. The Franchisor shall not be obligated to inquire into the power or authority of the Franchisee or its partners or the officers, directors, agents, members or managers acting or purporting to act on the Franchisee's behalf and any obligation or indebtedness made or created in reliance upon the exercise of such power and authority shall be guaranteed hereunder. Where the Guarantor is a corporation or partnership it shall be conclusively presumed that the Guarantor and the partners, agents, officers and directors acting on their behalf have the express authority to bind such corporations or partnerships and that such corporations or partnerships have the express power to act as the Guarantor pursuant to this Guaranty and Undertaking and that such action directly promotes the business and is in the interest of such corporations or partnerships.
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5. The Franchisor, its successors and assigns, may from time to time, without notice to the undersigned: (a) resort to the undersigned for payment of any of the indebtedness, whether or not it or its successors have resorted to any property securing any of the indebtedness or proceeded against any other of the undersigned or any party primarily or secondarily liable on any of the indebtedness; (b) release or compromise any indebtedness of any of the undersigned hereunder or any indebtedness of any party or parties primarily or secondarily liable on any of the indebtedness; (c) extend, renew or credit any of the indebtedness for any period (whether or not longer than the original period); (d) alter, amend or exchange any of the indebtedness; or (e) give any other form of indulgence, whether under the Agreement or otherwise.
6. The undersigned further waive presentment, demand, notice of dishonor, protest, nonpayment and all other notices whatsoever, including without limitation: notice of acceptance hereof; notice of all contracts and commitments; notice of the existence or creation of any liabilities under the Agreement and of the amount and terms thereof; and notice of all defaults, disputes or controversies between the Franchisee and the Franchisor resulting from the Agreement or otherwise, and the settlement, compromise or adjustment thereof.
7. This Guaranty and Undertaking shall be enforceable by and against the respective administrators, executors, successors and assigns of the Guarantor and the death of any Guarantor shall not terminate the liability of such Guarantor or limit the liability of other Guarantors hereunder.
8. Section XXV (Applicable Law) is hereby incorporated into this Guaranty and Undertaking by reference.
IN WITNESS WHEREOF, the undersigned has executed this Guaranty and Undertaking under seal effective as of the Insert Day day of Insert Month, Insert Year.
Signature
Insert Name
Insert Home Address
Insert Home Address
Telephone E-Mail
Date:
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ATTACHMENT E BPR STORE #INSERT STORE NUMBER
CERTIFICATE OF CORPORATE STATUS
for Insert Name of Franchisee (the "Franchisee")
I CERTIFY THAT I am the corporate attorney for the Franchisee and that the corporate records of the Franchisee reveal the following facts:
Director/Manager Insert Name Insert Name
Officer Insert Name Insert Name
Office Held Insert Office Insert Office
The shareholders/members of the Franchisee are as follows:
Sh a reholders/Members
Class and Kind Held
# of Shares - % of Membership Interest
Insert Name Insert Name
Insert Share Class and Kind Insert Share Class and Kind
Insert Number Held Insert Number Held
The shareholders/members shown above own, both legally and beneficially, all shares/membership interests issued and outstanding. Attached are true copies of the Register of Shareholders, Directors and Officers for the Franchisee. If any shares, membership, or partnership interests are owned legally and beneficially by another incorporated entity, a limited liability company, or another legal entity then the principals of that entity are also detailed above and a true copy of the Register of Shareholders/Members is attached.
The Franchisee was formed as a Insert type of entity in the state of Insert state on Insert date of
incorporation, as shown on the attached document issued by the appropriate agency in the Franchisees jurisdiction. The Franchisee is, on the date hereof, in good standing with respect to the filing of annual reports in its jurisdiction.
DATED at
_, this____day of.
-.20.
Attorney (to stamp name and address below)
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ATTACHMENT F BPR STORE # Insert Store number
BOSTON LINK FRANCHISEE AGREEMENT
THIS AGREEMENT is made effective the Insert Day day of Insert Month, Insert Year, between Boston Pizza Restaurants, LP, a Delaware limited partnership ("BPR"), whose principal place of business is Suite 450, 1501 LBJ Freeway, Dallas, Texas, 75234, Facsimile No. 972-484-7630 for US Franchisees, and Insert Franchisee Name, of Insert Franchisee Address Facsimile No. Insert Franchisee Fax Number ("Franchisee").
WHEREAS, BPR provides a private intranet at www.bostonlink.org (the "Boston Link")
containing trade secrets and confidential information intended by BPR to be available only to its employees, area developers, franchisees and others associated with the BPR System (defined below) for their use only in a fashion authorized by BPR;
WHEREAS, the Franchisee wishes to have access, and to allow Users (defined below) to have access to the Boston Link and BPR has agreed to allow the Franchisee and Users to have access on the terms and conditions herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which each party acknowledges, the Franchisee and BPR agree as follows:
1. DEFINITIONS
In this Agreement:
"Affiliate" means any corporation which is Controlled by or which Controls BPR or any other corporation Controlled by, or which Controls BPR, whether such Control be direct or indirect.
"BPR Manuals" means the copyrighted BPR System series of manuals owned by BPR, as revised by BPR from time to time, together with all computer media (e.g., information posted on the Boston Link, computer software and CD-Roms) and electronic communications via the Internet (e.g., email) provided, or made available, by BPR to the Franchisee or the Users.
"BPR System" means the franchised system of full service, casual dining restaurants (the "BPR Restaurants") featuring pizza, pasta and other food specialities, beverages and forms of entertainment, which operate under one or more of the trade-marks of BPR; including, without limitation, procedures for developing new BPR Restaurants, preparing foods and beverages, conducting advertising and other marketing, training and ongoing administrative support to franchisees.
"Control", "Controls" and "Controlled" includes, without limitation:
the right to exercise a majority of votes which may be cast at a general meeting of a corporation; and
the right to elect or appoint, directly or indirectly, a majority of the directors of a corporation or one or more other persons who have the right to manage or supervise the management of the affairs and business of the corporation.
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"Franchise Agreement" means the Franchise Agreement between BPR and the Franchisee dated as of the date of this Agreement, as amended from time to time, and each renewal or replacement thereof.
"User" or "Users" means that person or persons who access the Boston Link through a user account created by BPR at the request of the Franchisee and who are employed by the Franchisee.
2. LIMITED LICENSE
BPR hereby grants to Franchisee a limited license, revocable in BPR's sole discretion, to access and use the Boston Link in accordance with the terms of this Agreement.
3. INFORMATION PROVIDED
Whenever the Franchisee or any User provides any information to BPR through the Boston Link, the Franchisee irrevocably agrees that BPR may use that information in the same manner as the information provided by the Franchisee to BPR under the Franchise Agreement.
4. CONSENT TO COLLECTION, USE AND DISCLOSURE OF PERSONAL INFORMATION
The Franchisee acknowledges that BPR will collect personal information from the Franchisee in several ways, such as through application forms, surveys, inspection reports, emails, communications between the Franchisee or the Users and BPR, from information submitted by the Franchisee through the Boston Link, and from information collected by BPR from references, search agencies, financial institutions, credit reporting agencies and other sources. The Franchisee acknowledges that any personal information collected about the Franchisee by BPR will be used by BPR to provide services over the Boston Link, to protect the Confidential Information defined hereunder, and to ensure the Franchisee and the Users comply with this Agreement and other applicable agreements and laws. The Franchisee also acknowledges that the Franchisee's personal information may be distributed to third parties including landlords, financial institutions, financial and legal advisors and government bodies for any of the same purposes. The Franchisee irrevocably consents to BPR collecting, using and disclosing the Franchisee's personal information for any of the above purposes. In addition, and without limiting the foregoing, BPR may disclose any information you provide to, on or through Boston Link (i) when BPR believes disclosure to be appropriate to comply with any law, regulation, or government request or to comply with judicial process; or (ii) if such disclosure is necessary or appropriate to operate Boston Link; or (iii) to protect the rights or property of BPR, other Boston Link users, or any of BPR's customers, franchisees, or affiliates. The Franchisee grants BPR a non-exclusive, royalty free, perpetual, irrevocable, world wide and universal license to use and display all information and content provided on the Boston Link by the Franchisee on the Boston Link and in any other medium and to perform all actions in relation to that content as BPR deems fit. BPR may delete or modify any of the content without notice and without reason.
5. FORUMS AND LINKS TO OTHER WEB SITES
BPR is not responsible for, and will not be liable for any damages caused by, the information or comments provided on any Boston Link web page modules or any web pages displaying information from sources other than BPR including the following:
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Module |
Description |
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Discussion / Forurr |
An area to share information with other users of the Boston Link. |
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Important Information |
The Important Information page shows Mailings and Seminar dates. Mailings can include memos, manual updates, new menus, and other important information. |
|
My Mail |
The My Mail area provides access to the Franchisee's mailbox. Mail messages can be read, saved, deleted, replied to, and forwarded. New messages can also be composed and sent. |
|
Supplier Links |
The Suppliers and Links page displays the various Suppliers and Links that relate to BPR. |
6. MONITORING
BPR has the right, but not the obligation, to monitor or log use of the Boston Link by one or both of the Franchisee and the Users (including any information in the discussion forums and mail portions of the Boston Link), to determine whether the Franchisee and the Users are complying with this Agreement, and any other agreements between BPR and the Franchisee or the User. The Franchisee irrevocably consents to such monitoring and collection of information. BPR may delete, remove or block access to any such information at any time without notice.
7. CONFIDENTIAL INFORMATION
The Franchisee acknowledges that BPR and its Affiliates are the owners of all proprietary rights in and to the materials and information revealed in or through the Boston Link including trade secrets, techniques, procedures, methods, menus, format and the BPR Manuals (collectively, the "Confidential Information"). The Franchisee acknowledges that the Confidential Information is highly confidential. The Confidential Information is revealed in strictest confidence and the Franchisee covenants to keep and respect the confidence so reposed. The Franchisee will not use, and will not permit any of the Users to use, the Confidential Information for any purpose inconsistent with the Franchise Agreement, or reveal the Confidential Information to any person, firm, corporation or entity whatsoever, unless such information becomes public knowledge through no fault of the Franchisee. Subject to the following sentence, the Franchisee will not copy or reproduce or permit to be copied or reproduced, any of the Confidential Information. The Franchisee may download information from the Boston Link if specifically authorized to do so on the website (the "Downloaded Information"), The Franchisee also acknowledges that various information will be automatically downloaded and stored by the Franchisee's computer upon accessing the Boston Link (the "Automatic Downloads"). The Downloaded Information and the Automatic Downloads are Confidential Information and the Franchisee will protect that information and all such electronic information in the same manner as set out above. The Franchisee acknowledges that:
(a) the Confidential Information is also protected by the Franchise Agreement. If there is any conflict between this Agreement and the Franchise Agreement with regard to Confidential Information, then the Franchise Agreement will prevail, and
(b) theft or misappropriation of trade secrets is subject to serious criminal sanctions and civil liability under applicable law, that the Confidential Information constitutes trade secrets, and that the theft or misappropriation of any information from the Boston Link will be prosecuted to the full extent of the law.
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8. RESTRICTION OF LIABILITY
The BPR Link and the information contained thereat are provided "As Is" without warranty of any kind (expressed or implied) including, but not limited to, any warranty of merchantability, title, noninfringement, durability or fitness for a particular purpose. The material contained in the Boston Link may not be correct, accurate or reliable and may include technical inaccuracies or typographical errors. BPR does not warrant that the functions contained in the material on the Boston Link will be uninterrupted or error free, that defects will be corrected, or that the site or the server that makes it available are free of viruses or other harmful components. In no event will BPR or any of its Affiliates or their officers, directors, shareholders, employees or representatives be liable to the Franchisee, the Users or any third parties for any loss or injuries to earnings, profits, goodwill, data or otherwise, or for any incidental, special, punitive or consequential damages, or for any other damages of any sort whether arising in contract tort or otherwise, caused by or arising in connection with the Boston Link, including but not limited to loss associated with:
(a) any service interruption;
(b) any hardware or software malfunction;
(c) any display or misdisplay of any content provided by the Franchisee or the Users;
(d) the provision of any inaccurate or incorrect information; or
(e) any failure of performance, error, omission, delay in operation of transmission, computer virus, or line failure. The above limitation or exclusion may not apply to the extent that applicable law may not allow the limitation or exclusion of liability for incidental or consequential damages.
9. FRANCHISEE'S REPRESENTATIONS AND COVENANTS
The Franchisee represents to and covenants with BPR that:
(a) the Franchisee and its User(s) will use the Boston Link in a manner consistent with all applicable laws and regulations, and
(b) all information and content posted on the Boston Link by the Franchisee and its Users will be accurate, truthful, lawful, and will not be defamatory, obscene, offensive, or in violation of any third parties' intellectual property rights, and will not contain any virus or any other harmful material.
10. INDEMNITY
The Franchisee will maintain the security of the Users' user names and passwords. The Franchisee and the Users will be jointly and severally responsible and liable for all activities conducted under the Users' user name and password. The Franchisee will indemnify and hold BPR and its Affiliates and their officers, directors, shareholders, employees or representatives harmless from and against all claims, taxes, damages, costs (including lawyers' accounts) from any source or for any reason, including but not limited to claims arising in tort law, or relating directly or indirectly to the Franchisee's and the Users' Boston Link account(s), the Franchisee's and the Users' access to the Boston Link, the Franchisee's breach of this Agreement.
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11.
REVOCATION OF RIGHT TO ACCESS
BPR shall have no obligation to provide or continue to provide access to the Boston Link. BPR reserves the right to deny the Franchisee or any Users access to the Boston Link from time to time or completely without notice.
12. USERS
The Franchisee will not allow anyone to have access to the Boston Link except a User who has been approved by BPR as follows:
(a) the Franchisee will submit to BPR, in a form prescribed by BPR from time to time, a request that its manager or other supervisory personnel have access to the Boston Link;
(b) the Franchisee will provide such information and documentation as BPR may reasonably request about the proposed User; and
(c) BPR will advise the Franchisee whether the proposed User is approved.
The Franchisee reserves the right, in its sole discretion, to deny without cause the application for anyone to become a User.
The Franchisee acknowledges that the Users will at all times be deemed to be acting on behalf of the Franchisee. The Franchisee will be responsible for ensuring that each User complies with the terms of this Agreement, all other agreements between BPR and the Franchisee, and with all applicable laws.
13. LICENSE
The Franchisee grants BPR a non-exclusive, royalty free, perpetual, irrevocable, world wide and universal license to use and display all information and content provided on the Boston Link by the Franchisee and the Users on the Boston Link and in any other medium and to perform all actions in relation to that content as BPR deems fit. BPR may delete or modify any of the content without notice and without reason.
14. WAIVERS
The failure of a party to insist upon the strict performance of any provision of this Agreement, or to exercise fully or at all any right, or remedy contained in this Agreement, will not be construed as a waiver or a relinquishment by that party for the future of the right to insist upon full performance or exercise any such right or remedy.
15. SEVERABILITY
If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability will attach only to such term or portion thereof, and the remaining portion of the term and all other terms of this Agreement will continue in full force and effect. The parties will negotiate in good faith to agree to a substitute term that will be as close as possible to the intention of any term found to be invalid or unenforceable in whole or in part while being valid and enforceable. The invalidity or unenforceability of any provision in whole or in part in any particular jurisdiction will not affect its validity or enforceability in any other jurisdiction where it is valid or enforceable.
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16. ENTIRE AGREEMENT
This Agreement and the Franchise Agreement constitute the entire, full and complete agreement between the parties hereto concerning the subject matter hereof, and supersede all prior agreements with no other representations having induced Franchisee to execute this Agreement. No amendment, change or variance from this Agreement shall be binding on the parties hereto unless mutually agreed to by the parties and executed by themselves or their authorized officers or agents in writing.
17. NOTICES
Any and all notices required or permitted under this Agreement shall be in writing and shall be personally delivered or mailed by certified mail, return receipt requested, or dispatched by overnight delivery envelope, or transmitted by facsimile or sent by other electronic means if the sender can verify receipt. Notices shall be sent to the respective parties at the following addresses unless and until a different address has been designated by written notice to the other party:
Notices to BPR: Boston Pizza Restaurants, LP
1501 LBJ Freeway Suite 450 Dallas, Texas 75234
With a Copy to: Corporate Counsel
Boston Pizza Restaurants, LP 5500 Parkwood Way Richmond, B.C. V6V 2M4
Notices to Franchisee: Insert Address
Insert Address Insert Address
With a Copy to: Insert Address
Insert Address Insert Address
Any notice sent by certified mail shall be deemed to have been given at the date and time of attempted delivery.
18. ASSIGNMENT
The Franchisee may not assign this Agreement without the prior written consent of BPR. BPR may assign this Agreement to any party in its sole discretion without the Franchisee's consent. Any purported assignment by Franchisee, by operation of law or otherwise, not having the written consent of the BPR shall be null and void and shall constitute a material breach of this Agreement, for which BPR may immediately terminate this Agreement without opportunity to cure.
19. CAPTIONS
All captions in this Agreement are intended solely for the convenience of the parties, and none of the captions shall be deemed to affect the meaning or construction of any provision hereof.
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20. FURTHER ASSURANCES
Each party will from time to time execute and deliver all other appropriate supplemental agreements and other instruments, and take any other action necessary, to give full effect to this Agreement and to make this Agreement legally effective, binding, and enforceable as between them and as against third parties.
21. SUCCESSORS AND ASSIGNS
This Agreement will be binding upon and will enure to the benefit of the parties and their respective heirs, personal representatives, successors and permitted assigns. Each of the Affiliates is also entitled to all benefits of BPR hereunder.
22. GOVERNING LAW
This Agreement takes effect upon its acceptance and execution by BPR. THIS AGREEMENT SHALL FOR ALL PURPOSES BE GOVERNED BY AND INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS, EXCEPT THAT ITS CHOICE OF LAW AND CONFLICT OF LAW RULES SHALL NOT APPLY.
The parties hereto mutually agree that the U.S. District Court for the Northern District of Texas, or if such court lacks jurisdiction, the state courts located in Dallas County, Texas, shall be the venue and exclusive forum in which to adjudicate any case or controversy arising from or relating to this Agreement and any guarantees hereof, undertakings hereunder provided and relationship established thereby, however, with respect to any action which includes injunctive relief or other extraordinary relief, BPR may bring such action in any court of competent jurisdiction. The parties irrevocably submit to the jurisdiction of such courts and waive any objections to either the jurisdiction of or venue in such courts. The parties mutually agree that personal jurisdiction may be effected by service of process and that when so made shall be as if served personally. This Agreement was executed and accepted at BPR's place of business in Dallas County, Texas. The parties anticipate that the performance of certain of Franchisee's obligations arising under this Agreement, including the payment of certain monies due BPR, will occur in Dallas County, Texas.
23. WAIVER OF JURY TRIAL
THE PARTIES IRREVOCABLY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER AT LAW OR IN EQUITY, BROUGHT BY EITHER PARTY RELATING TO THE RELATIONSHIP BETWEEN THE PARTIES OR ARISING UNDER OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR ANY RIGHT OR REMEDY HEREUNDER.
24. OTHER AGREEMENTS/CROSS DEFAULT
If there is any conflict between this Agreement and the Franchise Agreement, the Franchise Agreement shall prevail. The Franchisee will be deemed to have committed a "Material Default" of the Franchise Agreement if the Franchisee:
(a) fails to comply with any of its respective obligations hereunder for a period of 14 days after written notice of such default has been delivered by BPR to the Franchisee, or
(b) fails to comply at any time with its obligations under Section 7 of this Agreement.
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IN WITNESS WHEREOF the parties have hereunto set their hands and seals effective as of the day and year written below.
BPR:
BOSTON PIZZA RESTAURANTS, LP.
Authorized Signatory
Date: _____________________________
Authorized Signatory
Date:____ _____________
FRANCHISEE: Insert Franchisee Name
Insert Name & Title Date:
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ATTACHMENT G BPR STORE #Insert Store Number
PRINCIPALS' UNDERTAKING
In consideration of, and as an inducement to, the execution of that certain Franchise Agreement, and any revisions, modifications and amendments thereto, (hereinafter collectively the "Agreement") dated the Insert Day day of Insert Month, Insert Year by and between Boston Pizza Restaurants, LP, a Delaware limited partnership (hereinafter the "Franchisor") and Insert Name of Franchisee (hereinafter the "Franchisee"), the undersigned Insert Name of Principal (the "Principal") agrees as follows:
1. Each of the undersigned acknowledges and agrees as follows:
(a) Each has read the terms and conditions of the Agreement and acknowledges that the execution of this Principals' Undertaking is in partial consideration for, and a condition to, the granting of the franchise, and that Franchisor would not have granted the franchise without the execution of this Principals* Undertaking and the undertakings by each of the undersigned;
(b) Each is included in the term "Principal" as defined in the Agreement; and
(c) Without limiting any of Franchisee's obligations under the Agreement, Principal, individually and collectively with all other Principals: (i) makes all of the covenants, representations, warranties and agreements of a Principal (as defined in the Agreement), including, but not limited to, those set forth in Sections VII.C (Confidentiality), VII.F (Duplication), Vm (Confidential Information), XH (Transfer of Interest), XV (Covenants), and XVIII.A.4 (regarding indemnification) of the Agreement and is obligated to perform thereunder; and (ii) represents that each and every representation of Franchisee made in connection with the Agreement is true, correct and complete in all respects as of the time given and as of the time of the undersigned's execution of this Principals' Undertaking.
2. The obligations of the Principals are independent of the obligations of the Franchisee and a separate action or actions may be brought and prosecuted against the Principal, whether or not actions are brought against the Franchisee or whether the Franchisee is joined in any such action.
3. This Principals' Undertaking shall be enforceable by and against the respective administrators, executors, successors and assigns of the Principal and the death of any Principal shall not terminate the liability of such Principal or limit the liability of other Principals hereunder.
IN WITNESS WHEREOF, the undersigned has executed this Principals' Undertaking under seal effective as of the Insert Day day of Insert Month, Insert Year.
Signature
Insert Name
Insert Home Address
Insert Home Address
Telephone E-Mail
Date:
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AMENDMENT TO BOSTON PIZZA RESTAURANTS, LP
FRANCHISE AGREEMENT
FOR THE STATE OF CALIFORNIA
The Boston Pizza Restaurants, LP Franchise Agreement between
("Franchisee" or "You") and Boston Pizza Restaurants, LP ("Franchisor") dated____________________
(the "Agreement") shall be amended by the addition of the following language, which shall be considered an integral part of the Agreement (the "Amendment"):
CALIFORNIA LAW MODIFICATIONS
1. The California Department of Corporations requires that certain provisions contained in
franchise documents be amended to be consistent with California law, including die California Franchise Investment Law, CAL. CORPORATIONS CODE Section 31000 et seg., and the California Franchise Relations Act, CAL. BUS. & PROF. CODE Section 20000 et sea,. To the extent that the Agreement contains provisions that are inconsistent with the following, such provisions are hereby amended:
a. California Business and Professions Code Sections 20000 through 20043 provide rights to You concerning nonrenewal and termination of the Agreement. The Federal Bankruptcy Code also provides rights to You concerning termination of the Agreement upon certain bankruptcy-related events. To the extent the Agreement contains a provision that is inconsistent with these laws, these laws will control.
b. If the Franchisee is required in the Agreement to execute a release of claims, such release shall exclude claims arising under the California Franchise Investment Law and the California Franchise Relations Act.
c. If the Agreement requires payment of liquidated damages that is inconsistent with California Civil Code Section 1671, the liquidated damage clause may be unenforceable.
d. If the Agreement contains a covenant not to compete which extends beyond the expiration or termination of the Agreement, the covenant may be unenforceable under California law.
e. If the Agreement requires litigation, arbitration or mediation to be conducted in a forum other than the State of California, the requirement may be unenforceable under California law.
f. If the Agreement requires that it be governed by a state's law, other than the State of California, such requirement may be unenforceable.
2. Each provision of this Amendment shall be effective only to the extent that the jurisdictional requirements of the California law applicable to the provision are met independent of this Amendment. This Amendment shall have no force or effect if such jurisdictional requirements are not met.
3. As to any state law described in this Amendment that declares void or unenforceable any provision contained in the Franchise Agreement, Franchisor reserves the right to challenge the enforceability of the state law by, among other things, bringing an appropriate legal action or by raising the claim in a legal action or arbitration that you have initiated.
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IN WITNESS WHEREOF, the parties hereto have fully executed, sealed and delivered this Amendment to the Franchise Agreement on this____day of_______________________,_______.
BOSTON PIZZA RESTAURANTS, LP
WITNESS: a Delaware limited partnership
By: Authorized Signatory
Date:
By: Authorized Signatory
Date:
WITNESS: FRANCHISEE:
By: _
Date:
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AMENDMENT TO BOSTON PIZZA RESTAURANTS, LP
FRANCHISE AGREEMENT
FOR THE STATE OF ILLINOIS
The Boston Pizza Restaurants, LP Franchise Agreement between
("Franchisee" or "You") and Boston Pizza Restaurants, LP ("Franchisor") dated____________________
(the "Agreement") shall be amended by the addition of the following language, which shall be considered an integral part of the Agreement (the "Amendment");
ILLINOIS LAW MODIFICATIONS
1. The Illinois Attorney General's Office requires that certain provisions contained in
franchise documents be amended to be consistent with Illinois law, including the Franchise Disclosure Act of 1987, III. Comp. Stat. ch. 815 para. 705/1 - 705/44 (1994). To the extent that this Agreement contains provisions that are inconsistent with the following, such provisions are hereby amended:
a. 815 ILCS 705/19 and 705/20 provide rights to You concerning nonrenewal and termination of this Agreement. If this Agreement contains a provision that is inconsistent with the Act, the Act will control.
b. If Franchisee is required in this Agreement to execute a release of claims or to acknowledge facts that would negate or remove from judicial review any statement, misrepresentation or action that would violate the Act, or a rule of order under the Act, such release shall exclude claims arising under the Illinois Franchise Disclosure Act, and such acknowledgments shall be void with respect to claims under the Act and are hereby deleted.
c. If this Agreement requires litigation to be conducted in a forum other than the State of Illinois, the requirement is void under the Illinois Franchise Disclosure Act.
d. If this Agreement requires that it be governed by a state's law, other than the State of Illinois, to the extent that such law conflicts with the Illinois Franchise Disclosure Act, the Act will control.
e. The 9th recital of this Agreement is deleted in its entirety.
f. Section IV.A. of this Agreement is amended by adding the following:
Pursuant to a requirement of the Illinois Attorney General, and until written authorization is given by the Illinois Attorney General, the franchise fees paid by Illinois franchisees to BPR will be deposited into an escrow account and held in escrow until such time as BPR has met its initial obligations to its franchisee and the Franchised Business is open and operating.
g. Section XXVII of this Agreement is amended to state that the representations made in the Offering Circular are not excluded from that on which You may rely.
2. Each provision of this Amendment shall be effective only to the extent that the
jurisdictional requirements of the Illinois Franchise Disclosure Act, with respect to each such provision, are met independent of this Amendment. This Amendment shall have no force or effect if such jurisdictional requirements are not met.
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3. As to any state law described in this Amendment that declares void or unenforceable any
provision contained in the Franchise Agreement, Franchisor reserves the right to challenge the enforceability of the state law by, among other things, bringing an appropriate legal action or by raising the claim in a legal action or arbitration that you have initiated.
IN WITNESS WHEREOF, the parties hereto have fully executed, sealed and delivered this Amendment to the Franchise Agreement on this____day of_______________________,_______.
BOSTON PIZZA RESTAURANTS, LP
WITNESS: a Delaware limited partnership
By: Authorized Signatory
Date:
By: Authorized Signatory
Date:
WITNESS: FRANCHISEE:
By: _ Date:
1297583-8
AMENDMENT TO BOSTON PIZZA RESTAURANTS, LP
FRANCHISE AGREEMENT
FOR THE STATE OF MARYLAND
The Boston Pizza Restaurants, LP Franchise Agreement between
("Franchisee" or "You") and Boston Pizza Restaurants, LP ("Franchisor") dated____________________
(the "Agreement") shall be amended by the addition of the following language, which shall be considered an integral part of the Agreement (the "Amendment"):
MARYLAND LAW MODIFICATIONS
1. The Maryland Securities Division requires that certain provisions contained in franchise
documents be amended to be consistent with Maryland law, including the Maryland Franchise Registration and Disclosure Law, Md. Code Ann., Bus. Reg. §§ 14-201 - 14-233 (1998 Repl. Vol. & Supp. 2002). To the extent that this Agreement contains provisions that are inconsistent with the following, such provisions are hereby amended:
a. Franchisee is required in this Agreement to execute a release of claims as a condition to transfer and renew the franchise. Such release shall exclude claims arising under the Maryland Franchise Registration and Disclosure Law, and such release shall be void with respect to claims under the Law.
b. This Agreement requires you to assent to a release of claims, estoppel or waiver of liability, to acknowledge facts that would negate or remove from judicial review any statement, misrepresentation or action that would violate the Act or a rule or order under the Act in order to purchase the franchise. Such release, estoppel or waiver shall exclude claims arising under the Maryland Franchise Registration and Disclosure Law, and such acknowledgments shall be void with respect to claims under the Law.
c. The Maryland Franchise Registration and Disclosure Law provides that Franchisee must bring any claims under the Law within 3 years from the grant of the franchise, which period will apply for claims under such Law.
d. If this Agreement requires litigation to be conducted in a forum other than the State of Maryland, the requirement shall not be interpreted to limit any rights you may have under Sec. 14-216 (c)(25) of the Maryland Franchise Registration and Disclosure Law to bring suit in the state of Maryland.
e. Section III. A. of this Agreement is revised to provide that the State of Maryland has required Franchisor to post a surety bond to secure performance of its initial obligations to Franchisee.
2. Each provision of this Amendment shall be effective only to the extent that the
jurisdictional requirements of the Maryland Franchise Registration and Disclosure Law, with respect to each such provision, are met independent of this Amendment. This Amendment shall have no force or effect if such jurisdictional requirements are not met.
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IN WITNESS WHEREOF, the parties Amendment to the Franchise Agreement on this
WITNESS:
WITNESS:
nm«i_e
hereto have fully executed, sealed and delivered this ___day of_______________________,_______.
BOSTON PIZZA RESTAURANTS, LP a Delaware limited partnership
By: Authorized Signatory
Date:
By: Authorized Signatory
Date:
FRANCHISEE:
By: . Date:
AMENDMENT TO BOSTON PIZZA RESTAURANTS, LP
FRANCHISE AGREEMENT
FOR THE STATE OF MINNESOTA
The Boston Pizza Restaurants, LP Franchise Agreement between
("Franchisee" or "You") and Boston Pizza Restaurants, LP ("Franchisor") dated____________________
(the "Agreement") shall be amended by the addition of the following language, which shall be considered an integral part of the Agreement (the "Amendment"):
MINNESOTA LAW MODIFICATIONS
1. The Commissioner of Commerce for the State of Minnesota requires that certain
provisions contained in franchise documents be amended to be consistent with Minnesota Franchise Act, Minn. Stat. Section 80.01 et seg., and of the Rules and Regulations promulgated under the Act (collectively the "Franchise Act"). To the extent that the Agreement contain provisions that are inconsistent with the following, such provisions are hereby amended:
a. The Minnesota Department of Commerce requires that Franchisor indemnify Minnesota franchisees against liability to third parties resulting from claims that the Franchisees' use of the Intellectual Properties infringes trademark rights of the third party. If the Agreement contains a provision that is inconsistent with the Franchise Act, the provisions of the Agreement shall be superseded by the Act's requirements and shall have no force or effect.
b. Franchise Act, Sec. 80C.14, Subd. 4., requires, except in certain specified cases, that a franchisee be given written notice of a franchisor's intention not to renew 180 days prior to expiration of the franchise and that the franchisee be given sufficient opportunity to operate the franchise in order to enable the franchisee the opportunity to recover the fair market value of the franchise as a going concern. If the Agreement contains a provision that is inconsistent with such requirement of the Franchise Act, the provisions of the Agreement shall be superseded by the Act's requirements and shall have no force or effect.
c. Franchise Act, Sec. 80C.14, Subd. 3., requires, except in certain specified cases that a franchisee be given 90 days notice of termination (with 60 days to cure). If the Agreement contains a provision that is inconsistent with such requirement of the Franchise Act, the provisions of the Agreement shall be superseded by the Act's requirements and shall have no force or effect.
d. If the Agreement requires Franchisee to execute a release of claims or to acknowledge facts that would negate or remove from judicial review any statement, misrepresentation or action that would violate the Franchise Act, such release shall exclude claims arising under the Franchise Act, and such acknowledgments shall be void with respect to claims under the Act.
e. If the Agreement requires that it be governed by a state's law, other than the State of Minnesota or arbitration or mediation, those provisions shall not in any way abrogate or reduce any rights of Franchisee as provided for in the Franchise Act, including the right to submit matters to the jurisdiction of the courts of Minnesota.
f. To the extent Minnesota Rule 2860.4400J. prohibits a franchisor from requiring You to consent to Franchisor obtaining injunctive relief, the Agreement is hereby
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revised to reflect that Franchisor may seek injunctive relief and that whether any bond will be necessary will be determine by the court.
g. Section 80C.17 of the Act provides that no action may be commenced pursuant to
that section more than three years after the cause of action accrues. No provision in the Agreement shall not be construed to limit the time period for You to bring a claim under the Act.
h. Minn. Rule 2860.4400J. prohibits Franchisor from requiring Franchisee to
consent to liquidated damages and/or termination penalties and prohibits waiver of a jury trial. If the Agreement contains a provision that is inconsistent with the Minn. Rule, the provisions of the Agreement shall be superseded by the Minn. Rule's requirements and shall have no force or effect.
2. Each provision of this Agreement shall be effective only to the extent that the jurisdictional requirements of the Minnesota law applicable to the provision are met independent of this Amendment. This Amendment shall have no force or effect if such jurisdictional requirements are not met.
3. As to any state law described in this Amendment that declares void or unenforceable any provision contained in the Franchise Agreement, Franchisor reserves the right to challenge the enforceability of the state law by, among other things, bringing an appropriate legal action or by raising the claim in a legal action or arbitration that you have initiated.
IN WITNESS WHEREOF, the parties hereto have fully executed, sealed and delivered this Amendment to the Franchise Agreement on this____day of_______________________, ^
BOSTON PIZZA RESTAURANTS, LP WITNESS: a Delaware limited partnership
By: Authorized Signatory
Date:
By: Authorized Signatory
Date: WITNESS: FRANCHISEE:
By: . Date:
1297583-8
AMENDMENT TO BOSTON PIZZA RESTAURANTS, LP
FRANCHISE AGREEMENT
FOR THE STATE OF NEW YORK
The Boston Pizza Restaurants, LP Franchise Agreement between_________________________
("Franchisee" or "You") and Boston Pizza Restaurants, LP ("Franchisor") dated_________
(the "Agreement") shall be amended by the addition of the following language, which shall be considered an integral part of the Agreement (the "Amendment"):
NEW YORK LAW MODIFICATIONS
1. The New York Department of Law requires that certain provisions contained in franchise documents be amended to be consistent with New York law, including the General Business Law, Article 33, Sections 680 through 695 (1989). To the extent that the Agreement contains provisions that are inconsistent with the following, such provisions are hereby amended:
a. If Franchisee is required in the Agreement to execute a release of claims or to acknowledge facts that would negate or remove from judicial review any statement, misrepresentation or action that would violate the General Business Law, regulation, rule or order under the Law, such release shall exclude claims arising under the New York General Business Law, Article 33, Section 680 through 695 and the regulations promulgated thereunder, and such acknowledgments shall be void. It is the intent of this provision that non-waiver provisions of Sections 687.4 and 687.5 of the General Business Law be satisfied.
b. If the Agreement requires that it be governed by a state's law, other than the State of New York, the choice of law provision shall not be considered to waive any rights conferred upon the Licensee under the New York General Business Law, Article 33, Sections 680 through 695.
2. Each provision of this Amendment shall be effective only to the extent that the jurisdictional requirements of the New York General Business Law, with respect to each such provision, are met independent of this Amendment. This Amendment shall have no force or effect if such jurisdictional requirements are not met.
3. As to any state law described in this Amendment that declares void or unenforceable any provision contained in the Franchise Agreement, Franchisor reserves the right to challenge the enforceability of the state law by, among other things, bringing an appropriate legal action or by raising the claim in a legal action or arbitration that you have initiated.
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1597583-8
IN WITNESS WHEREOF, the parties Amendment to the Franchise Agreement on this,
WITNESS:
WITNESS:
hereto have fully executed, sealed and delivered this ___day of_______________________,_______.
BOSTON PIZZA RESTAURANTS, LP a Delaware limited partnership
By: Authorized Signatory
Date:
By: Authorized Signatory
Date:
FRANCHISEE:
By: _ Date:
19Q7SS7-R
AMENDMENT TO BOSTON PIZZA RESTAURANTS, LP
FRANCHISE AGREEMENT
FOR THE STATE OF NORTH DAKOTA
The Boston Pizza Restaurants, LP Franchise Agreement between
("Franchisee" or "You") and Boston Pizza Restaurants, LP ("Franchisor") dated____________________
(the "Agreement") shall be amended by the addition of the following language, which shall be considered an integral part of the Agreement (the "Amendment"):
NORTH DAKOTA LAW MODIFICATIONS
1. The North Dakota Securities Commissioner requires that certain provisions contained in
franchise documents be amended to be consistent with North Dakota law, including the North Dakota Franchise Investment Law, North Dakota Century Code Annotated Chapter 51-19, Sections 51-19-01 through 51-19-17 (1993). To the extent that the Agreement contains provisions that are inconsistent with the following, such provisions are hereby amended:
a. If Franchisee is required in the Agreement to execute a release of claims or to acknowledge facts that would negate or remove from judicial review any statement, misrepresentation or action that would violate the Law, or a rule or order under the Law, such release shall exclude claims arising under the North Dakota Franchise Investment Law, and such acknowledgments shall be void with respect to claims under the Law.
b. Covenants not to compete during the term of and upon termination or expiration of the Agreement are enforceable only under certain conditions according to North Dakota Law. If the Agreement contains a covenant not to compete which is inconsistent with North Dakota Law, the covenant may be unenforceable.
c. If the Agreement requires litigation to be conducted in a forum other than the State of North Dakota, the requirement is void with respect to claims under the North Dakota Franchise Investment Law.
d. If the Agreement requires that it be governed by a state's law, other than the State of North Dakota, to the extent that such law conflicts with the North Dakota Franchise Investment Law, the North Dakota Franchise Investment Law will control.
e. If the Agreement requires mediation or arbitration to be conducted in a forum other than the State of North Dakota, the requirement may be unenforceable under the North Dakota Franchise Investment Law. Arbitration involving a franchise purchased in the State of North Dakota must be held either in a location mutually agreed upon prior to the arbitration or if the parties cannot agree on a location, the location will be determined by the arbitrator.
f. If the Agreement requires payment of a termination penalty, the requirement may be unenforceable under the North Dakota Franchise Investment Law.
2. Each provision of this Amendment shall be effective only to the extent that the
jurisdictional requirements of the North Dakota Franchise Investment Law, with respect to each such provision, are met independent of this Amendment. This Amendment shall have no force or effect if such jurisdictional requirements are not met.
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3. As to any state law described in this Amendment that declares void or unenforceable any
provision contained in the Franchise Agreement, Franchisor reserves the right to challenge the enforceability of the state law by, among other things, bringing an appropriate legal action or by raising the claim in a legal action or arbitration that you have initiated.
IN WITNESS WHEREOF, the parties hereto have fully executed, sealed and delivered this Amendment to the Franchise Agreement on this____day of___________________. _______.
BOSTON PIZZA RESTAURANTS, LP WITNESS: a Delaware limited partnership
By: Authorized Signatory
Date:
By: Authorized Signatory
Date:
WITNESS: FRANCHISEE:
By: „ Date:
i-jcnssn.R
AMENDMENT TO BOSTON PIZZA RESTAURANTS, LP
FRANCHISE AGREEMENT
FOR THE STATE OF RHODE ISLAND
The Boston Pizza Restaurants, LP Franchise Agreement between
("Franchisee" or "You") and Boston Pizza Restaurants, LP ("Franchisor") dated____________________
(the "Agreement") shall be amended by the addition of the following language, which shall be considered an integral part of the Agreement (the "Amendment"):
RHODE ISLAND LAW MODIFICATIONS
1. The Rhode Island Securities Division requires that certain provisions contained in franchise documents be amended to be consistent with Rhode Island law, including the Franchise Investment Act, R.I. Gen. Law. ch. 395 Sec. 19-28.1-1 -19-28.1-34. To the extent that this Agreement contains provisions that are inconsistent with the following, such provisions are hereby amended:
a. If this Agreement requires litigation to be conducted in a forum other than the State of Rhode Island, the requirement is void under Rhode Island Franchise Investment Act Sec. 19-28.1-14.
b. If this Agreement requires that it be governed by a state's law, other than the State of Rhode Island, to the extent that such law conflicts with Rhode Island Franchise Investment Act it is void under Sec. 19-28.1-14.
c. If Franchisee is required in this Agreement to execute a release of claims or to acknowledge facts that would negate or remove from judicial review any statement, misrepresentation or action that would violate the Act, or a rule or order under the Act, such release shall exclude claims arising under the Rhode Island Franchise Investment Act, and such acknowledgments shall be void with respect to claims under the Act.
2. Each provision of this Amendment shall be effective only to the extent that the jurisdictional requirements of the Rhode Island Franchise Investment Act, with respect to each such provision, are met independent of this Amendment. This Amendment shall have no force or effect if such jurisdictional requirements are not met.
3. As to any state law described in this Amendment that declares void or unenforceable any provision contained in the Franchise Agreement, Franchisor reserves the right to challenge the enforceability of the state law by, among other things, bringing an appropriate legal action or by raising the claim in a legal action or arbitration that you have initiated.
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1297583-8
UFOC - 3/06
IN WITNESS WHEREOF, the parties hereto have fully executed, sealed and delivered this Amendment to the Franchise Agreement on this____day of_______________________,_______.
BOSTON PIZZA RESTAURANTS, LP WITNESS: a Delaware limited partnership
By: Authorized Signatory Date:
By: Authorized Signatory Date:
WITNESS: FRANCHISEE:
By: _______________________________
Date: _____________________________
nm.!B5_9
AMENDMENT TO BOSTON PIZZA RESTAURANTS, LP
FRANCHISE AGREEMENT
FOR THE STATE OF WASHINGTON
The Boston Pizza Restaurants, LP Franchise Agreement between
("Franchisee" or "You") and Boston Pizza Restaurants, LP ("Franchisor") dated____________________
(the "Agreement") shall be amended by the addition of the following language, which shall be considered an integral part of the Agreement (the "Amendment"):
WASHINGTON LAW MODIFICATIONS
1. The Director of the Washington Department of Financial Institutions requires that certain
provisions contained in franchise documents be amended to be consistent with Washington law, including the Washington Franchise Investment Protection Act, WARev. Code §§ 19.100.010 to 19.100.940 (1991). To the extent that the Agreement contains provisions that are inconsistent with the following, such provisions are hereby amended:
a. Washington Franchise Investment Protection Act provides rights to You concerning nonrenewal and termination of the Agreement. If the Agreement contains a provision that is inconsistent with the Act, the Act will control.
b. If Franchisee is required in the Agreement to execute a release of claims, such release shall exclude claims arising under the Washington Franchise Investment Protection Act; except when the release is executed under a negotiated settlement after the Agreement is in effect and where the parties are represented by independent counsel. If there are provisions in the Agreement that unreasonably restrict or limit the statute of limitations period for claims brought under the Act, or other rights or remedies under the Act, those provisions may be unenforceable.
c. If the Agreement requires litigation, arbitration or mediation to be conducted in a forum other than the State of Washington, the requirement may be unenforceable under Washington law. Arbitration involving a franchise purchased in the State of Washington, must either be held in the State of Washington or in a place mutually agreed upon at the time of the arbitration, or as determined by the arbitrator.
d. If the Agreement requires that it be governed by a state's law, other than the State of Washington, and there is a conflict between the law and the Washington Franchise Investment Protection Act, the Washington Franchise Investment Protection Act will control.
2. Each provision of this Amendment shall be effective only to the extent that the jurisdictional requirements of the Washington law applicable to the provision are met independent of this Amendment. This Amendment shall have no force or effect if such jurisdictional requirements are not met.
3. As to any state law described in this Amendment that declares void or unenforceable any provision contained in the Franchise Agreement, Franchisor reserves the right to challenge the enforceability of the state law by, among other things, bringing an appropriate legal action or by raising the claim in a legal action or arbitration that you have initiated.
1297583-8
IN WITNESS WHEREOF, the parties Amendment to the Franchise Agreement on this
WITNESS:
WITNESS:
hereto have fully executed, sealed and delivered this ___day of_______________________,_______.
BOSTON PIZZA RESTAURANTS, LP a Delaware limited partnership
By: Authorized Signatory Date:
By: Authorized Signatory Date:
FRANCHISEE:
By: ____________________________________
Date:__________________________________
1297583-8
The original documents were scanned as an image. The original file can be downloaded at the link above.