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Exhibit 10.31
CONFORMED COPY
TCBY FRANCHISE AGREEMENT
FOR STORES
OPERATED IN CONJUNCTION WITH OTHER CONCEPTS
MRS. FIELDS' ORIGINAL COOKIES, INC.
FRANCHISEE
March 16, 2004
DATE OF AGREEMENT
TCBY FRANCHISE AGREEMENT
TABLE OF CONTENTS
Section Page
1. Preambles 1
2. Grant of Franchise 1
3. Development and Opening of the Store 2
A. Development of Store 2
B. Fixtures, Equipment, Furniture and Signs 2
C. Store Opening 2
D. Grand Opening Program 3
E. Relocation of Store 3
4. Training and Operating Assistance 4
A. Training 4
B. Hiring and Training of Employees By Franchisee 4
C. Opening Assistance 4
D. Operating Assistance 4
E. Operating Manual 5
5. Marks 5
A. Ownership And Goodwill Of Marks 5
B. Limitations of Franchisee's Use of Marks 6
C. Notification of Infringements And Claims 6
D. Indemnification of Franchisee; Discontinuance of Use of Marks 6
E. Trade Dress 7
6. Confidential Information 7
7. Relationship of The Parties; Indemnification 8
8. Franchise Fees 9
A. Initial Franchise Fee 9
B. Royalty and Service Fee 9
C. Definition of "Net Revenues" 10
D. Interest on Late Payments 10
E. Application of Payments 10
9. Store Image and Operating Standards 10
A. Condition and Appearance of Store 10
B. Alterations to The Store 11
C. Uniform Image; Customer and Location Restriction 11
D. Food Products, Beverages, Supplies and Materials 11
E. Standards of Service; Reputation 12
F. Specifications, Standards and Procedures 12
G. Compliance with Laws and Good Business Practices 13
H. Management of The Store; Conflicting Interests 14
I. Insurance 14
J. Vending Machines 14
K. Restrictions on Hiring Certain Employees 14
10. Advertising 15
A. By The Company 15
B. By Franchisee 16
11. Records and Reports 16
12. Inspections and Audits 16
A. The Company's Right to Inspect the Store 16
B. The Company's Right to Examine Books and Records 17
13. Assignment 17
A. By the Company 17
B. Franchisee May Not Assign Without Approval of the Company 17
C. Conditions for Approval of Assignment 17
D. Death or Disability of Franchisee 19
14. Renewal of Franchise 19
A. Franchisee's Right to Renew 19
B. Notice of Renewal and Nonrenewal 19
C. Renewal Agreements; Releases 20
15. Termination of the Franchise 20
A. By Franchisee 20
B. By the Company 20
16. Rights of the Company and Obligations of Franchisee upon Termination or
Expiration of the Agreement 21
A. Payment of Amounts Owed to the Company 21
B. Discontinuance of Use of Marks and Distinctive Designs 22
C. Return of Operating Manual 23
D. Covenant Not to Compete 23
E. Continuing Obligations 23
17. Enforcement 23
A. Severability and Substitution of Valid Provisions 23
B. Waiver of Obligations 24
C. Specific Performance; Injunctive Relief 24
D. Rights of Parties Are Cumulative 25
E. Governing Law; Waiver of Jury 25
F. Exclusive Jurisdiction 25
G. Binding Effect 25
H. Construction 25
18. Notices and Payments 26
19. Acknowledgments 26
TCBY FRANCHISE AGREEMENT
THIS AGREEMENT is made and entered into this 16th day of March, 2004, by
and between TCBY SYSTEMS, LLC., a Delaware limited liability company having its
principal office at 2855 East Cottonwood Pkwy., Suite 400, Salt Lake City, Utah
84121 (the "COMPANY") and MRS. FIELDS' ORIGINAL COOKIES, INC., whose principal
address is 2855 East Cottonwood Pkwy., Suite 400, Salt Lake City, Utah 84121
(individually or collectively "FRANCHISEE").
1. PREAMBLES
The COMPANY franchises certain specialty retail stores, known as "TCBY"
stores, selling and serving frozen yogurt, ice cream, other frozen desserts, and
other food and beverage items for carry-out and on-premises consumption. Such
stores are operated under certain trade names, trademarks, service marks, logos,
and other commercial symbols, including, without limitation, "TCBY" THE
COUNTRY'S BEST YOGURT, "TCBY" Treats, and such other trade names, trademarks,
service marks, logos, and other commercial symbols as are now designated (or may
hereafter be designated) by the COMPANY (collectively the "Marks") which are
licensed by the COMPANY's affiliate corporation, TCBY Enterprises, Inc.
("Enterprises"), to the COMPANY, and pursuant to certain confidential
information and trade secrets. Such stores are operated with such formats,
designs, systems, methods, specifications, standards and procedures as are
designated by the COMPANY, all of which may be improved, further developed or
otherwise modified from time to time by the COMPANY (the "System").
The COMPANY grants to persons who meet the COMPANY's qualifications and
who are willing to undertake the investment and effort to establish and develop
"TCBY" stores, a franchise to own and operate such stores, offering the products
and services approved by the COMPANY and utilizing the System and the Marks.
FRANCHISEE owns and operates certain "TCBY" stores at the premises
identified in Section 2 hereof by virtue of a Franchise Agreement entered into
between the parties as of June 1, 2000 (the "Prior Franchise Agreement"), in
conjunction with retail outlets or locations associated with the trademarks and
service marks of FRANCHISEE's business. Both the COMPANY and FRANCHISEE intend
for the "TCBY" stores franchised hereunder to be operated in conjunction with
such businesses and trademarks pursuant to this Agreement, which shall supersede
and replace the Prior Franchise Agreement.
2. GRANT OF FRANCHISE
Subject to the provisions contained herein, the COMPANY hereby grants to
FRANCHISEE, and FRANCHISEE hereby undertakes the obligation, to own and operate
"TCBY" stores at, and only at, the premises located at the addresses set forth
in Exhibit "A" hereto attached, to be modified and initialed from time to time
by the parties, and whenever so attached or modified hereof made a part, and
operated in conjunction with locations operated by FRANCHISEE known as
"Mrs. Fields' Original Cookies," "Mrs. Fields' Bakery Caf," "Pretzelmaker,"
"Pretzel Time," "Great American Cookie Company," or other trade names of
FRANCHISEE or its affiliates, and to use the Marks in the operation thereof, at
each location to be operated for a term of five (5) years, commencing on the
date the location is added to this Agreement. The Prior Franchise Agreement is
hereby terminated, and FRANCHISEE shall continue to operate the STORES developed
thereunder pursuant to the rights and obligations set forth in this Agreement.
THE COMPANY (ON BEHALF OF ITSELF AND ITS AFFILIATES) RETAINS THE RIGHT,
IN ITS SOLE DISCRETION AND WITHOUT GRANTING ANY RIGHTS TO FRANCHISEE: (A) TO
ITSELF OPERATE, OR TO GRANT OTHER PERSONS THE RIGHT TO OPERATE, "TCBY" STORES AT
SUCH LOCATIONS AND ON SUCH TERMS AND CONDITIONS AS THE COMPANY DEEMS
APPROPRIATE; AND (B) TO SELL THE PRODUCTS AND SERVICES AUTHORIZED FOR "TCBY"
STORES UNDER THE MARKS OR OTHER TRADEMARKS, SERVICE MARKS AND COMMERCIAL SYMBOLS
THROUGH SIMILAR OR DISSIMILAR CHANNELS OF DISTRIBUTION AND PURSUANT TO SUCH
TERMS AND CONDITIONS AS THE COMPANY DEEMS APPROPRIATE; such products and/or
services may include, but shall not be limited to, frozen dairy and other
desserts in soft serve, hard pack, and novelty forms as the COMPANY (or any of
its affiliates) may develop from time to time, as well as refrigerated yogurt
and other dairy products, and such methods of distribution may include, but
shall not be limited to, sales at sports arenas and stadiums, department stores,
airports, toll road travel plazas, hospitals, office buildings, schools and
colleges, and other non-store venues as well as sales to wholesalers and/or
distributors for resale.
3. DEVELOPMENT AND OPENING OF THE STORE
A. DEVELOPMENT OF STORE
That portion of each of the premises in which FRANCHISEE shall
operate a "TCBY" store is herein referred to as a "STORE." (Specifically
excluded from the definition of the STORE are any and all areas of the
premises which are not trade dressed as a "TCBY" store, and FRANCHISEE's
activities at or in that portion of the premises not containing the STORE
shall not be subject to or controlled by this Agreement.) FRANCHISEE shall:
º (1)
º obtain all required building, utility, sign, health, sanitation
and business permits and licenses, and any other required permits
and licenses necessary to operate the STORE;
º (2)
º construct all required improvements to the STORE portion of the
premises, purchase and install all required fixtures and
equipment and decorate the STORE portion of the premises in
compliance with the plans and specifications theretofore approved
by the COMPANY and all applicable statutes, ordinances, building
or other codes, permit requirements and lease or deed
requirements and restrictions; and
º (3)
º purchase in accordance with the COMPANY's specifications and
requirements, an opening inventory of food and beverage products,
ingredients and other products and supplies required for the
STORE.
The COMPANY shall provide consultation services in connection with the
development of the STORE as the COMPANY deems appropriate.
B. FIXTURES, EQUIPMENT, FURNITURE AND SIGNS
FRANCHISEE shall use in the operation of the STORE only those
brands or types of construction and decorating materials, fixtures,
equipment, furniture, and signs that the COMPANY has approved for "TCBY"
stores as meeting its specifications and standards for appearance, function
and performance. FRANCHISEE may purchase approved brands and types of
construction and decorating materials, fixtures, equipment, furniture and
signs from any supplier approved or designated by the COMPANY (which may
include the COMPANY and/or its affiliates). If FRANCHISEE proposes to
purchase any brand or type of construction or decorating material, fixture,
equipment, furniture or sign not then approved by the COMPANY, and/or any
such items from any supplier which is not then approved by the COMPANY,
FRANCHISEE shall first notify the COMPANY in writing and shall submit to
the COMPANY upon its request sufficient specifications, photographs,
drawings and/or other information or samples for a determination by the
COMPANY of whether such brand or type of construction or decorating
material, fixture, equipment, furniture or sign complies with its
specifications and standards, and/or such supplier meets the COMPANY's
approved supplier criteria, which determination shall be made and
communicated in writing to FRANCHISEE within a reasonable time.
C. STORE OPENING
FRANCHISEE shall not open the STORE for business without the
COMPANY's prior approval. FRANCHISEE agrees to complete the development and
open the STORE for business within one hundred twenty (120) days of
execution of this Agreement.
D. GRAND OPENING PROGRAM
FRANCHISEE shall conduct a grand opening advertising and
promotional program for the STORE on a date no later than sixty (60) days
following opening of the STORE. FRANCHISEE shall expend for the grand
opening program an amount determined by the COMPANY, but not to exceed One
Thousand Dollars ($1,000). The grand opening program shall conform to the
COMPANY's requirements and shall utilize the media and advertising formats
designated by the COMPANY.
E. RELOCATION OF STORE
If FRANCHISEE's lease for the premises of the STORE terminates
without fault of FRANCHISEE, or expires and is unable to be renewed by
FRANCHISEE on substantially the same terms and conditions, or if FRANCHISEE
loses the right or otherwise ceases to occupy the premises of the STORE, or
if in the judgment of the COMPANY and FRANCHISEE there is a change in the
character of the location of the STORE sufficiently detrimental to its
business potential to warrant its relocation, the COMPANY shall grant
permission for relocation of the STORE to a location approved by the
COMPANY. The COMPANY reserves all power to withhold approval of any
location to which relocation is sought. Any such relocation shall be at
FRANCHISEE's sole expense, and shall not be undertaken without the
COMPANY's prior written consent. The COMPANY shall have the right to charge
FRANCHISEE for services the COMPANY renders to FRANCHISEE in connection
with such relocation. The COMPANY shall also have the right to require
FRANCHISEE to upgrade the relocated STORE to conform to the COMPANY's then
current image, standards, and specifications for construction and equipment
for all new "TCBY" stores. Under no circumstances shall the COMPANY be
required to approve any relocation if the regional or national chain outlet
with which the STORE is affiliated ceases to be operated by FRANCHISEE.
In the event of a relocation of the STORE, FRANCHISEE shall
promptly remove from the former STORE premises any and all signs, fixtures,
furniture, posters, furnishings, equipment, menus, advertising materials,
stationery supplies, forms and other articles which display any of the
Marks or any distinctive features or designs associated with the System.
Any articles which display any of the Marks or any distinctive features or
designs associated with the System which are not used by FRANCHISEE at the
new STORE location shall be disposed of by FRANCHISEE as directed by the
COMPANY following notice to the COMPANY to the effect such articles will
not be used at the new STORE. Furthermore, FRANCHISEE shall, at
FRANCHISEE's expense, immediately make such modifications or alterations as
may be necessary to distinguish the former STORE premises so clearly from
its former appearance and from other "TCBY" stores as to prevent any
possibility of confusion therewith by the public (including, without
limitation, removal of all distinctive physical and structural features
identifying "TCBY" stores and removal of all distinctive signs and
emblems). FRANCHISEE shall, at FRANCHISEE's expense, make such specific
additional changes as the COMPANY may reasonably request for this purpose.
If FRANCHISEE fails to initiate immediately or complete such alterations
within such period of time as the COMPANY deems appropriate, FRANCHISEE
agrees that the COMPANY or its designated agents may enter the premises of
the former STORE and adjacent areas at any time to make such alterations,
at FRANCHISEE's sole risk and expense, without responsibility for any
actual or consequential damages to the property of FRANCHISEE or others,
and without liability for trespass or other tort or criminal act.
FRANCHISEE expressly acknowledges that failure to make such alterations
will cause irreparable injury to the COMPANY and consents to entry, at
FRANCHISEE's expense, of an ex parte order by any court of competent
jurisdiction authorizing the COMPANY or its agents to take such action, if
the COMPANY seeks such an order. Compliance with the foregoing shall be a
condition subsequent to the COMPANY's approval of any relocation request by
FRANCHISEE, and in the event complete de-identification of the former STORE
premises is not promptly and completely undertaken, the COMPANY may then
revoke its permission for relocation and declare a default under this
Agreement.
4. TRAINING AND OPERATING ASSISTANCE
A. TRAINING
Prior to the opening of the STORE, the COMPANY shall furnish, and
one or more of FRANCHISEE's representatives who shall have foodservice
operations responsibilities shall attend, an initial training program on
the operation of a "TCBY" store, furnished at such place and time as the
COMPANY may designate. FRANCHISEE shall be solely responsible for the
compensation, travel, lodging and living expenses incurred in connection
with the attendance at such initial training program or at any supplemental
or refresher training programs.
If, during any training program, the COMPANY determines, in its
sole discretion, that any proposed trainee is not qualified to manage the
STORE, the COMPANY shall notify FRANCHISEE thereof, whereupon FRANCHISEE
may select and enroll a substitute trainee in such training program.
Subsequent to the opening of the STORE, the COMPANY will provide
training (subject to reasonable limitations which may be prescribed by the
COMPANY as to number, frequency and time) to any other representatives of
FRANCHISEE as the FRANCHISEE requests. The COMPANY shall designate the time
and place for such training and shall have the right to assess FRANCHISEE
reasonable charges for such training, which charges shall not exceed the
COMPANY's actual costs.
The COMPANY shall have the right to require that FRANCHISEE's
representatives attend supplemental and refresher training programs during
the term of this Agreement. The COMPANY shall designate the time and place
for such training and shall have the right to assess FRANCHISEE reasonable
charges for such training.
B. HIRING AND TRAINING OF EMPLOYEES BY FRANCHISEE
FRANCHISEE shall hire all employees of the STORE, be exclusively
responsible for the terms of their employment and compensation, and
implement a training program for employees of the STORE in compliance with
the COMPANY's requirements. In employing personnel, FRANCHISEE covenants
never to represent that such personnel are in any manner to be employed or
are employed by the COMPANY. FRANCHISEE agrees to maintain at all times a
staff of trained employees sufficient to operate the STORE in compliance
with the COMPANY's standards.
C. OPENING ASSISTANCE
The COMPANY shall provide FRANCHISEE with the services of one
(1) employee of the COMPANY for three (3) days for training and guidance in
connection with the opening and initial operations of the STORE. The
COMPANY shall have the right to determine the time or times at which such
employee shall be available to FRANCHISEE.
D. OPERATING ASSISTANCE
The COMPANY shall advise FRANCHISEE from time to time of operating
problems of the STORE disclosed by reports submitted to or inspections made
by the COMPANY. Further, the COMPANY shall furnish to FRANCHISEE such
guidance and assistance in connection with the operation of the STORE as is
from time to time deemed appropriate by the COMPANY. Such advice, guidance,
and assistance may be given in the COMPANY's discretion to either
FRANCHISEE, FRANCHISEE's employee in charge of the STORE, or both of them.
Operating assistance may consist of advice and guidance with respect to:
º (1)
º methods and operating procedures utilized by the System;
º (2)
º additional food and beverage products and services authorized for
sale by "TCBY" stores;
º (3)
º selection, purchasing and preparation of food products, beverages
and other approved products, materials and supplies;
º (4)
º formulating and implementing advertising and promotional
programs; and
º (5)
º the establishment and operation of administrative, bookkeeping,
accounting, inventory control, sales, and general operating
procedures for the operation of a "TCBY" store.
Such guidance shall, in the sole discretion of the COMPANY, be furnished
in the form of the COMPANY's Operating Manual (defined below), bulletins or
other written materials, video or audio tapes, telephonic consultations and/or
consultations at the offices of the COMPANY or at the STORE in conjunction with
an inspection of the STORE. Additional guidance and assistance may, at the sole
discretion of the COMPANY, be available at per diem fees and charges established
from time to time by the COMPANY.
E. OPERATING MANUAL
The COMPANY will loan to FRANCHISEE during the term of this
Agreement one copy of an operating manual, which may consist of one or more
handbooks, manuals and other written and/or audio and/or audiovisual
materials (collectively, the "Operating Manual") for "TCBY" stores,
containing mandatory and suggested specifications, standards and operating
procedures prescribed from time to time by the COMPANY for the System and
information relative to other obligations of FRANCHISEE hereunder. The
COMPANY shall have the right from time to time to add to, and otherwise
modify, the Operating Manual to reflect changes in authorized products and
services, and the System, provided that no such addition or modification
shall alter FRANCHISEE's fundamental status and rights under this
Agreement. FRANCHISEE shall keep FRANCHISEE's copy of the Operating Manual
current, and the master copy maintained by the COMPANY at its principal
office shall be controlling in the event of a dispute relative to the
contents of the Operating Manual.
5. MARKS
A. OWNERSHIP AND GOODWILL OF MARKS
FRANCHISEE shall have no interest whatsoever in or to the Marks.
FRANCHISEE's right to use the Marks is derived solely from this Agreement
and is limited to the conduct of business pursuant to and in compliance
with this Agreement and all applicable specifications, standards, and
operating procedures prescribed for the System by the COMPANY from time to
time during the term of this Agreement. Any unauthorized use of the Marks
by FRANCHISEE shall constitute an infringement of the rights of the COMPANY
and Enterprises in and to the Marks.
FRANCHISEE agrees that all usage of the Marks by FRANCHISEE and any
goodwill established thereby shall inure to the exclusive benefit of the
COMPANY and Enterprises, and FRANCHISEE acknowledges that this Agreement
does not confer any goodwill or other interest in the Marks upon
FRANCHISEE. FRANCHISEE shall not, at any time during the term of this
Agreement or after its termination or expiration, contest the validity or
ownership of any of the Marks or assist any other person in contesting the
validity or ownership of any of the Marks.
All provisions of this Agreement applicable to the Marks shall
apply to any additional trademarks, service marks, logos, forms, and
commercial symbols hereafter authorized for use by and licensed to
FRANCHISEE pursuant to operations of the System.
B. LIMITATIONS ON FRANCHISEE'S USE OF MARKS
FRANCHISEE agrees to use the Marks as the sole identification of
the STORE. The COMPANY has not authorized or empowered FRANCHISEE to use
the Marks except as provided by this Agreement, and FRANCHISEE shall not
employ any Mark in signing any contract, lease, mortgage, check, purchase
agreement, negotiable instrument or other legal obligation without the
prior written consent of the COMPANY, or employ any Mark in a manner that
is likely to result in liability of the COMPANY for any indebtedness or
obligation of FRANCHISEE. FRANCHISEE shall not use any Mark as part of any
corporate or trade name or with any prefix, suffix or other modifying
words, terms, designs or symbols, or in any modified form, nor may
FRANCHISEE use any Mark in connection with the sale of any unauthorized
product or service or in any other manner not expressly authorized in
writing by the COMPANY. FRANCHISEE agrees to display the Marks prominently
and in the manner prescribed by the COMPANY on signs, menus and forms.
Further, FRANCHISEE agrees to give such notices of trademark and service
mark registrations and copyrights as the COMPANY specifies and to obtain
such fictitious or assumed name registrations as may be required under
applicable law.
C. NOTIFICATION OF INFRINGEMENTS AND CLAIMS
FRANCHISEE shall notify the COMPANY immediately in writing of any
(i) apparent infringement of or challenge to FRANCHISEE's use of any Mark,
(ii) claim by any person of any rights in any Mark or (iii) similar trade
name, trademark or service mark of which FRANCHISEE becomes aware.
FRANCHISEE shall not communicate with any person other than the COMPANY and
its counsel in connection with any such infringement, challenge, or claim.
The COMPANY and/or Enterprises shall have sole discretion to take such
action as it deems appropriate and the right to exclusively control any
litigation, U.S. Patent and Trademark Office proceeding, or other
administrative proceeding arising out of any such infringement, challenge
or claim or otherwise relating to any Mark. FRANCHISEE agrees to execute
any and all instruments and documents, render such assistance and do such
acts and things as may, in the opinion of the COMPANY's counsel, be
necessary or advisable to protect and maintain the interests of the COMPANY
and/or Enterprises in any such litigation, U.S. Patent and Trademark Office
proceeding, or other administrative proceeding or to otherwise protect and
maintain the interests of the COMPANY and/or Enterprises in the Marks.
D. INDEMNIFICATION OF FRANCHISEE; DISCONTINUANCE OF USE OF
MARKS
The COMPANY agrees to indemnify FRANCHISEE against, and to
reimburse FRANCHISEE for, all damages for which FRANCHISEE is held liable
in any proceeding in which FRANCHISEE's use of any Mark pursuant to and in
compliance with this Agreement is held to constitute trademark
infringement, unfair competition or dilution, and for all costs reasonably
incurred by FRANCHISEE in the defense of any such claim brought against
FRANCHISEE or in any such proceeding in which FRANCHISEE is named as a
party, provided that FRANCHISEE has timely notified the COMPANY of such
claim or proceeding, has otherwise complied with this Agreement and has
tendered complete control of the defense of such to the COMPANY. If the
COMPANY defends such claim, the COMPANY shall have no obligation to
indemnify or reimburse FRANCHISEE with respect to any fees or disbursements
of any attorney retained by FRANCHISEE.
If it becomes advisable at any time, in the COMPANY's sole
discretion, for the System to modify or discontinue use of any Mark, and/or
use one or more additional or substitute trademarks or service marks,
FRANCHISEE agrees to comply therewith within a reasonable time after notice
thereof by the COMPANY, and the sole liability and obligation of the
COMPANY in any such event shall be to reimburse FRANCHISEE for the
out-of-pocket costs of complying with this obligation.
E. TRADE DRESS
FRANCHISEE acknowledges and agrees that certain portions of the
STORE decor and design constitute unique and protectable images to the
consumer which are identified with the COMPANY and which are part of the
goodwill associated with the System. FRANCHISEE agrees that all usage of
STORE decor and design elements prescribed by the COMPANY for the STORE,
and any goodwill established thereby shall inure to the exclusive benefit
of the COMPANY. This Agreement does not grant any ownership or other
interests in the STORE decor and design elements to FRANCHISEE.
6. CONFIDENTIAL INFORMATION
The COMPANY possesses certain confidential information, including, but
not limited to the methods, techniques, formats, specifications, procedures,
information, systems and knowledge of and experience in the operation and
franchising of "TCBY" stores (the "Confidential Information"). The COMPANY will
disclose the Confidential Information to FRANCHISEE in the training program, the
Operating Manual, and as a part of continuing guidance furnished to FRANCHISEE
during the term of this Agreement.
FRANCHISEE shall not acquire any interest in the Confidential
Information, other than the right to utilize it in the development and operation
of the STORE during the term of this Agreement. The use or duplication of the
Confidential Information in any other business shall be deemed to constitute an
unfair method of competition. The Confidential Information shall be deemed
proprietary and a trade secret of the COMPANY. FRANCHISEE: (1) shall not use the
Confidential Information in any other business or capacity; (2) shall maintain
the absolute confidentiality of the Confidential Information during and after
the term of this Agreement; (3) shall not make unauthorized copies of any
portion of the Confidential Information disclosed in written form; and (4) shall
adopt and implement all reasonable procedures to prevent unauthorized use or
disclosure of the Confidential Information; and (5) shall not disclose the
Confidential Information to any director, shareholder, partner, or investor in
any entity owned or controlled by FRANCHISEE or in which FRANCHISEE has an
interest, unless such director, shareholder, partner, or investor covenants to
FRANCHISEE and to the COMPANY that he or she will maintain the absolute
confidentiality of the Confidential Information during and after the term of
this Agreement. Notwithstanding anything to the contrary contained in this
Agreement and provided FRANCHISEE shall have obtained the COMPANY's prior
written consent, which consent shall not be unreasonably withheld, the
restrictions on FRANCHISEE's disclosure and use of the Confidential Information
shall not apply to (a) information, processes, or techniques which are or become
generally known in the frozen dessert restaurant industry, other than through
disclosure (whether deliberate or inadvertent) by FRANCHISEE; or (b) disclosure
of Confidential Information in judicial or administrative proceedings to the
extent FRANCHISEE is legally compelled to disclose such information, provided
FRANCHISEE shall have used its best efforts to obtain, and shall have afforded
the COMPANY the opportunity to obtain, an appropriate protective order or other
assurance satisfactory to the COMPANY of confidential treatment for the
information required to be so disclosed.
FRANCHISEE acknowledges and agrees that the STORE would be inefficiently
operated and perhaps prejudiced were FRANCHISEE to operate, or allow to be
operated, any other frozen yogurt or ice cream restaurant or store (herein, a
"Competing Concept"), at or within the facility or premises at or within which
the STORE is operated. For this reason, FRANCHISEE undertakes not to operate a
Competing Concept at the facility or premises at or within which the STORE is
operated. Further, FRANCHISEE undertakes not to allow, to the best of
FRANCHISEE's ability, a Competing Concept to be operated at the facility or
premises at or within which the STORE is operated.
FRANCHISEE shall fully and promptly disclose to the COMPANY all ideas,
concepts, methods and techniques relating to the development and/or operation of
a frozen dessert restaurant or store conceived or developed by FRANCHISEE and/or
FRANCHISEE's employees during the term of this Agreement. FRANCHISEE agrees that
the COMPANY shall have the perpetual right to use and authorize other "TCBY"
stores to use such ideas, concepts, methods and techniques and, if incorporated
into the System for the development and/or operation of "TCBY" stores, such
ideas, concepts, methods and techniques shall become the sole and exclusive
property of the COMPANY without any consideration to FRANCHISEE.
7. RELATIONSHIP OF THE PARTIES; INDEMNIFICATION
It is understood and agreed by the parties hereto that this Agreement
does not create a fiduciary relationship between them, that the COMPANY and
FRANCHISEE shall be independent contractors and that nothing in this Agreement
is intended to make either party a general or special agent, legal
representative, subsidiary, joint venturer, partner, employee or servant of the
other for any purpose.
FRANCHISEE shall conspicuously identify FRANCHISEE and the premises of
the STORE in all dealings with customers, lessors, contractors, suppliers,
public officials, employees, and others as the owner of and a STORE under a
franchise agreement from the COMPANY, and shall place such notices of
independent ownership on such signs, forms, stationery, advertising and other
materials as the COMPANY may require from time to time.
Neither the COMPANY nor FRANCHISEE shall make any express or implied
agreements, guaranties or representations, or incur any debt, in the name of or
on behalf of the other or represent that their relationship is other than
franchisor and franchisee, and neither the COMPANY nor FRANCHISEE shall be
obligated by or have any liability under any agreements or representations made
by the other that are not expressly authorized hereunder, nor shall the COMPANY
be obligated for any damages to any person or property directly or indirectly
arising out of the operation of the STORE, whether or not caused by FRANCHISEE's
negligent or willful action or failure to act.
The COMPANY shall have no liability for any sales, use, excise, gross
receipts, property or other taxes, whether levied upon FRANCHISEE, the STORE or
its assets, or upon the COMPANY, in connection with sales made, services
performed or business conducted by FRANCHISEE.
FRANCHISEE agrees to indemnify and hold the COMPANY and its
subsidiaries, affiliates, stockholders, directors, officers, employees, agents
and assignees harmless against, and to reimburse them for, any loss, liability,
or damages (actual or consequential) and all reasonable costs and expenses of
defending any claim brought against any of them or any action in which any of
them is named as a party (including, without limitation, reasonable
accountants', attorneys' and expert witness fees, costs of investigation and
proof of facts, court costs, other litigation expenses and travel and living
expenses) which any of them may suffer, sustain or incur by reason of, arising
from or in connection with FRANCHISEE's ownership or operation of the STORE,
unless such loss, liability or damage is solely due to the negligence or willful
misconduct of the COMPANY (or any of its affiliates, i.e., any company
controlling, controlled by or under common control with the COMPANY) in
producing, handling or storing frozen dessert products sold to FRANCHISEE
(provided FRANCHISEE shall have established that FRANCHISEE inspected such
dessert products in accordance with the procedures set forth in the Operating
Manual and could not have reasonably discovered the adulteration or other defect
in such dessert products which was the cause of such loss, liability or damage).
The COMPANY agrees to indemnify and hold FRANCHISEE and its
subsidiaries, affiliates, stockholders, directors, officers, employees, agents
and assignees harmless against, and to reimburse FRANCHISEE for, any loss,
liability or damage (actual or consequential) and all reasonable costs and
expenses of defending any claim brought against FRANCHISEE or any action in
which FRANCHISEE is named as a party (including, without limitation, reasonable
accountants', attorneys' and expert witness fees, costs of investigation and
proof of facts, court costs, other litigation expenses and travel and living
expenses) which FRANCHISEE may suffer, sustain or incur solely by reason of,
arising from or in connection with the negligence or willful misconduct of the
COMPANY (or any of its affiliates, i.e., any company controlling, controlled by
or under common control with the COMPANY) in producing, handling or storing
frozen dessert products (provided FRANCHISEE shall have established that
FRANCHISEE inspected such dessert products in accordance with the procedures set
forth in the Operating Manual and could not have reasonably discovered the
adulteration or other defect in such dessert products which was the cause of
such loss, liability or damage). FRANCHISEE acknowledges and agrees that any
action or inaction by any third party (e.g., an independent carrier) which is
not an affiliate of the COMPANY in connection with handling or storing frozen
dessert products shall not be attributable to or constitute negligence of the
COMPANY.
The indemnities and assumptions of liabilities and obligations herein
shall continue in full force and effect subsequent to and notwithstanding the
expiration or termination of this Agreement.
8. FRANCHISE FEES
A. INITIAL FRANCHISE FEE
For all FRANCHISEE STORE locations open and operating on or before
March 16, 2004 as set forth on Exhibit A, the COMPANY shall not charge
FRANCHISEE any additional franchise fees other than those that may have been
paid pursuant to the Prior Franchise Agreement. For any stores that may be
opened by FRANCHISEE after March 16, 2004, FRANCHISEE shall pay to the COMPANY a
nonrecurring initial franchise fee in the amount of Five Thousand Dollars
($5,000.00), as the initial fee for each of the STORES developed pursuant to
this Agreement, payable upon initialing of the amended Exhibit A which
identifies the location for the new STORE. The initial franchise fee shall be
fully earned by the COMPANY upon payment, and, except as otherwise expressly
provided herein, shall be nonrefundable.
B. ROYALTY AND SERVICE FEE
FRANCHISEE agrees to pay to the COMPANY a weekly royalty and service fee
of four percent (4%) of the Net Revenues, as defined in Paragraph C of this
Section, due within ten (10) days of each week ending on a Sunday which shall
be, if so directed by the COMPANY, payable by way of a surcharge on purchases of
frozen yogurt mix, ice cream, or other dessert products, which surcharge shall
be imputed from a reasonable and assumed systemwide average retail selling price
of products to be sold using those products and which equates to four percent
(4%) of the Net Revenues therefrom derived; under no circumstance shall the
royalty and service fee exceed four percent (4%) of the actual Net Revenues of
FRANCHISEE, and FRANCHISEE may at any time request a credit due to overpayment
and it will be granted by the COMPANY upon FRANCHISEE's presentation of proof,
satisfactory to the COMPANY, that a credit is due. The surcharge may be
collected by the designated distributor from whom FRANCHISEE purchases frozen
yogurt mix, ice cream, or other dessert products when payment for such is due or
as the COMPANY may otherwise reasonably direct. The COMPANY expressly reserves
the right to collect the royalty and service fee in other methods as it shall
reasonably direct from time to time, including by way of automatic funds
transfer (ACH) from an account designated by FRANCHISEE pursuant to a form
approved by the COMPANY. All fees and amount due to COMPANY hereunder shall be
paid by FRANCHISEE without right of set-off of reduction for any amounts that
may be due by COMPANY to FRANCHISEE under any contract, agreement, account or
understanding that may exist between the parties.
C. DEFINITION OF "NET REVENUES"
The term "Net Revenues" shall mean the aggregate amount of all sales of
food, beverages, goods, articles and any other merchandise, and the aggregate of
all charges for any service performed, whether for cash, on credit or otherwise,
made and rendered in, about or in connection with the STORE, including
off-premises sales and monies derived at or away from the STORE, provided they
are in connection with the business conducted at the STORE, but shall not
include any Federal, state, municipal or other sales, value added or retailer's
excise taxes collected by FRANCHISEE and reported to the appropriate taxing
authority.
D. INTEREST ON LATE PAYMENTS
All royalty and service fees, advertising contributions, amounts due for
purchases by FRANCHISEE from the COMPANY or its affiliates and other amounts
which FRANCHISEE owes to the COMPANY or its affiliates shall bear interest from
the due date until paid, at the lesser of: (1) one and one-half percent (1 and
1/2%) per month; (2) an annual interest rate of three percent (3%) in excess of
the Prime Rate (as defined below) announced from time to time by Chase Manhattan
Bank of New York, N.Y.; or (3) the highest rate allowed by applicable law. For
purposes hereof, "Prime Rate" shall mean the per annum interest rate for 90-day
unsecured commercial loans to large corporate customers of the highest credit
standing.
FRANCHISEE acknowledges that this Paragraph D shall not constitute the
COMPANY's agreement to accept such payments after same are due or a commitment
by the COMPANY to extend credit to, or otherwise finance FRANCHISEE's operation
of, the STORE. Further, FRANCHISEE acknowledges that FRANCHISEE's failure to pay
all amounts when due shall constitute grounds for termination of this Agreement,
as provided in Paragraph B of Section 15, notwithstanding the provisions of this
Paragraph D.
E. APPLICATION OF PAYMENTS
The COMPANY shall have sole discretion to apply any payments received
from FRANCHISEE to any past due indebtedness of FRANCHISEE for royalty and
service fees, advertising contributions, purchases from the COMPANY or its
affiliates, interest or any other indebtedness of FRANCHISEE to the COMPANY or
its affiliates.
9. STORE IMAGE AND OPERATING STANDARDS
A. CONDITION AND APPEARANCE OF STORE
FRANCHISEE agrees to maintain the condition and appearance of the STORE
consistent with the image of a "TCBY" store as an attractive, clean, and
efficiently operated store, offering high quality food products and beverages,
efficient and courteous service, and pleasant ambiance. FRANCHISEE agrees to
accomplish such refurbishing and maintenance of the STORE, as is required from
time to time to maintain such condition, appearance, efficient operation,
ambiance and overall image, including without limitation, replacement of worn
out or obsolete fixtures, equipment, furniture, signs and utensils, repair of
the interior and exterior of the STORE, and periodic cleaning and redecorating.
If at any time in the COMPANY's reasonable judgment, the general state of
repair, appearance or cleanliness of the premises of the STORE (including
parking areas) or its fixtures, equipment, furniture, signs or utensils does not
meet the COMPANY's standards therefor, the COMPANY shall so notify FRANCHISEE,
specifying the action to be taken by FRANCHISEE to correct such deficiency. If
FRANCHISEE fails or refuses to initiate within ten (10) days after receipt of
such notice, and thereafter in good faith and with due diligence continue (until
completion), a bona fide program to undertake and complete any such required
maintenance or refurbishing, the COMPANY shall have the right (in addition to
its rights under Paragraph B of Section 15 hereof), but shall not be obligated,
to enter upon the premises of the STORE and effect such maintenance and
refurbishing on behalf of FRANCHISEE, and FRANCHISEE shall pay the entire cost
thereof to the COMPANY on demand.
B. ALTERATIONS TO THE STORE
FRANCHISEE shall make no alterations to the premises or appearance of
the STORE, nor shall FRANCHISEE make any unapproved replacements of or
alterations to the fixtures, equipment, furniture or signs of the STORE without
prior written approval by the COMPANY. The COMPANY shall have the right, in its
sole discretion and at the sole expense of FRANCHISEE, to remove or modify any
replacements or alterations to the STORE not previously approved by the COMPANY.
C. UNIFORM IMAGE; CUSTOMER AND LOCATION RESTRICTION
FRANCHISEE acknowledges and agrees that the STORE will offer for sale
such types of frozen yogurt, ice cream, other desserts, and other food and
beverage products and other approved products and services as the COMPANY, in
its sole discretion, determines from time to time to be appropriate for "TCBY"
stores.
FRANCHISEE acknowledges and agrees that the STORE will not, without
prior written approval by the COMPANY, offer any products or services not then
authorized by the COMPANY for "TCBY" stores, nor shall the STORE be used for any
purpose other than the operation of a "TCBY" store in compliance with this
Agreement.
EXCEPT AS OTHERWISE APPROVED IN ADVANCE AND IN WRITING BY THE COMPANY
(WHICH APPROVAL MAY BE GRANTED PURSUANT TO A PROGRAM ANNOUNCED IN THE OPERATING
MANUAL), FRANCHISEE WILL NOT SELL ANY "TCBY" PRODUCT PRODUCED BY THE COMPANY OR
ANY OF ITS AFFILIATES TO ANY ONE, OTHER THAN RETAIL CUSTOMERS (I.E., FOR
PERSONAL CONSUMPTION AND NOT FOR RESALE) OF THE STORE, OR FROM ANY LOCATION
OTHER THAN THE STORE, AND OTHER "TCBY" STORES OPERATED UNDER FRANCHISE
AGREEMENTS GRANTED BY THE COMPANY TO FRANCHISEE.
D. FOOD PRODUCTS, BEVERAGES, SUPPLIES AND MATERIALS
FRANCHISEE acknowledges and agrees that the frozen yogurt, ice cream,
sorbet, and other dessert products produced by the COMPANY (or its affiliates)
are distinctive as a result of being specially produced pursuant to secret
formulae and processes; that such frozen yogurt, ice cream, sorbet, and other
dessert products in the mind of the public, are inextricably interrelated with
the Marks; and that the reputation and goodwill of "TCBY" and "TCBY" Treats
stores is based upon, and can be maintained only by, the sale of TCBY-brand
frozen yogurt, ice cream, sorbet, and other dessert products and the sale of
other distinctive, high quality products and services. FRANCHISEE therefore
agrees that the STORE will only prepare and offer for sale frozen yogurt, ice
cream, sorbet, and other dessert products which are, and products containing
frozen yogurt, ice cream, sorbet, and other dessert products which use,
"TCBY"-brand frozen yogurt, ice cream, sorbet, and other dessert products.
Furthermore, FRANCHISEE agrees that the STORE will: (1) use other ingredients
and prepare and offer for sale other food products and beverages; (2) use cups,
utensils, menus, forms, packaging materials, labels and other supplies; and
(3) use or offer for sale other products and services; that conform to the
COMPANY's specifications and quality standards and/or are purchased from
manufacturers approved from time to time by the COMPANY (which may include the
COMPANY and/or its affiliates). The COMPANY may from time to time modify the
list of approved brands and/or manufacturers, and FRANCHISEE shall not, after
receipt in writing of such modification, reorder any brand or reorder from any
manufacturer which is no longer approved. If FRANCHISEE proposes to prepare or
offer for sale in the STORE any food products or beverages or other products or
services or use any ingredients or supplies of any brand and/or manufacturer
which is not then approved, FRANCHISEE shall first notify the COMPANY in writing
and submit sufficient information, specifications and samples concerning such
brand and/or supplier for a determination by the COMPANY as to whether such
brand complies with the COMPANY's specifications and standards and/or such
manufacturers meets the COMPANY's criteria. The COMPANY shall have the right to
charge FRANCHISEE a reasonable fee to cover the COMPANY's costs incurred in
making such determination. The COMPANY shall, within a reasonable time, notify
FRANCHISEE whether or not such proposed brand and/or manufacturer is approved.
The COMPANY may from time to time prescribe procedures for the submission of
requests for approved brands or manufacturers and obligations which approved
manufacturers must assume (which may be incorporated in a written agreement to
be executed by approved manufacturers). The COMPANY may impose limits on the
number of manufacturers and/or brands for any ingredient or food or beverage
item used or served by the STORE and System.
FRANCHISEE shall examine in accordance with the procedures set forth in
the Operating Manual all frozen yogurt, ice cream, sorbet, and other dessert
products and other authorized food products containing such, shipped to
FRANCHISEE and shall have final responsibility in accepting or rejecting any
such products which do not conform to applicable laws. FRANCHISEE agrees that
all food products and beverages sold or served at or from the STORE shall comply
with all applicable laws and shall be wholesome and fit for human consumption.
FRANCHISEE shall at all times maintain at the STORE in sufficient supply
(as the COMPANY may prescribe in the Operating Manual or otherwise in writing)
an inventory of approved food products, beverages, ingredients and other
products.
The COMPANY may, from time to time, conduct market research and testing
to determine consumer trends and the salability of new food products and
services. FRANCHISEE agrees to cooperate by participating in the COMPANY's
market research programs, test marketing new food products and services in the
STORE and providing the COMPANY with timely reports and other relevant
information regarding such market research. In connection with any such test
marketing, FRANCHISEE shall purchase a reasonable quantity of the tested
products and effectively promote and make a reasonable effort to sell such
products.
E. STANDARDS OF SERVICE; REPUTATION
FRANCHISEE shall at all times give prompt, courteous, and efficient
service to its customers. The STORE shall, in all dealings with its customers,
suppliers, and the public, adhere to the highest standards of honesty,
integrity, fair dealing, and ethical conduct. FRANCHISEE acknowledges the
importance to the System, and to the Marks, of FRANCHISEE's maintaining a
reputation of good moral character, and for that reason FRANCHISEE agrees not to
engage in conduct which is offensive to decency, morality, or social proprieties
and which, in the reasonable determination of the COMPANY, is likely to have an
adverse effect upon the System. FRANCHISEE further agrees not to become involved
in any situation which degrades FRANCHISEE in society or subjects either
FRANCHISEE, the COMPANY, or the System to public disrepute, contempt, or scandal
in a manner which, in the reasonable determination of the COMPANY, is likely to
have an adverse effect upon the System.
F. SPECIFICATIONS, STANDARDS, AND PROCEDURES
FRANCHISEE acknowledges and agrees that each and every detail of the
appearance and operation of the STORE is important to the COMPANY and the
System. FRANCHISEE agrees to maintain the highest standards of quality and
service in the STORE and, accordingly, agrees to comply with all mandatory
specifications, standards and operating procedures (whether contained in the
Operating Manual or any other written or oral communication to FRANCHISEE)
relating to the appearance or operation of a "TCBY" store, including, without
limitation:
º (1)
º type and quality of food products, beverages, ingredients and other
approved products and weight and dimensions of food products and
beverages;
º (2)
º quality, taste, portion control, uniformity, manner of preparation and
sale of all food products and beverages served by the STORE and of all
ingredients and other products used in the preparation, packaging and
sale thereof;
º (3)
º methods and procedures relating to receiving, preparing, and
delivering customer orders;
º (4)
º hours and days during which the STORE will be open for business, which
shall be consistent with the hours of operation of the regional or
national chain outlet in which the STORE is located;
º (5)
º the maintenance, cleanliness, sanitation, function and appearance of
the STORE premises and its fixtures, equipment, furniture, decor and
signs;
º (6)
º dress, general appearance and demeanor of STORE employees, which shall
be consistent with the standards of the regional or national chain
with which the premises in which the STORE is located are affiliated;
º (7)
º use of the Marks;
º (8)
º use and illumination of exterior and interior signs (if FRANCHISEE
elects to use any), posters, displays, standard formats, menus and
similar items;
º (9)
º identification of FRANCHISEE as the owner of the STORE; and
º (10)
º advertising and promotion of the STORE.
Mandatory specifications, standards, and operating procedures prescribed
from time to time by the COMPANY in the Operating Manual for "TCBY" stores or
otherwise communicated to FRANCHISEE in writing shall constitute provisions of
this Agreement as if fully set forth herein. All references herein to this
Agreement shall include all such mandatory specifications, standards, and
operating procedures. To the extent such do not affect the actual STORE, the
specifications, standards, and operating procedures shall not apply to
FRANCHISEE if such are in conflict with those of the regional or national chain
in which the STORE is located.
G. COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES
FRANCHISEE shall secure and maintain in force all required licenses,
permits and certificates relating to the operation of the STORE and shall
operate the STORE in full compliance with all applicable laws, ordinances, and
regulations. While the COMPANY may as a courtesy advise FRANCHISEE of any
applicable laws, ordinances, and regulations, the COMPANY undertakes no duty to
do so and FRANCHISEE hereby acknowledges it is FRANCHISEE's sole duty to inquire
regarding and conform to all laws, ordinances, and regulations affecting the
STORE, its operations, and FRANCHISEE.
FRANCHISEE shall notify the COMPANY in writing within five (5) days of
FRANCHISEE's notice of the commencement of any action, suit, proceeding or
investigation, and of the issuance of any order, writ, injunction, award or
decree, by any court, agency or other governmental instrumentality which may
adversely affect the operation or financial condition of FRANCHISEE or the
STORE.
All advertising and promotions by FRANCHISEE shall conform to the
highest standards of ethical advertising. FRANCHISEE agrees to refrain from any
business or advertising practice which may be injurious to the business of the
COMPANY and the goodwill associated with the Marks and the System.
H. MANAGEMENT OF THE STORE; CONFLICTING INTERESTS
The STORE shall at all times be under the direct, day-to-day, full-time
supervision of FRANCHISEE or a manager who shall have been approved by the
COMPANY and who shall have satisfactorily completed the COMPANY's training
program (see Section 4l). In the event a manager shall supervise the STORE,
FRANCHISEE shall remain active in overseeing the operations of the STORE
conducted under the supervision of such manager. FRANCHISEE shall at all times
faithfully, honestly and diligently perform all obligations hereunder and
continuously exert best efforts to promote and enhance the business of the
STORE.
I. INSURANCE
FRANCHISEE shall at all times during the term of this Agreement maintain
in force, at FRANCHISEE's sole expense, comprehensive public liability insurance
and product liability insurance (and motor vehicle liability insurance, if a
motor vehicle is employed in the operation of the STORE) against claims for
bodily and personal injury, death and property damage caused by or occurring in
conjunction with the conduct of business by FRANCHISEE pursuant to this
Agreement. Such insurance coverage shall be maintained under one or more
policies of insurance containing minimum liability protection of One Million
Dollars ($1,000,000) per occurrence for bodily and personal injury and death.
All such insurance policies shall be issued by an insurance carrier or insurance
carriers acceptable to the COMPANY. All such liability insurance policies shall
name the COMPANY as an additional insured, shall contain a waiver of the
insurance company's right of subrogation against the COMPANY and shall provide
that the COMPANY will receive fifteen (15) days prior written notice of
termination, expiration, material modification, or cancellation of any such
policy. The COMPANY may reasonably increase the minimum liability protection
requirement annually and require at any time on reasonable prior notice to
FRANCHISEE different or additional kinds of insurance to reflect inflation,
changes in standards of liability or higher damage awards in litigation, or
other relevant changes in circumstances. FRANCHISEE shall submit to the COMPANY
annually a copy of the certificate of or other evidence of the renewal or
extension of each such insurance policy.
FRANCHISEE's obligation to obtain and maintain the insurance described
herein shall not be limited in any way by reason of any insurance maintained by
the COMPANY, nor shall FRANCHISEE's performance of such obligations relieve
FRANCHISEE of any obligations under Section 7 of this Agreement. Nothing
contained in this Section of this Agreement shall in any manner act to relieve
FRANCHISEE of the duty to maintain Worker's Compensation insurance, as well as
such other insurance, as may be required by statute, rule, or regulation of the
state in which the STORE is located.
J. VENDING MACHINES
No vending machines, newspaper racks, jukeboxes, gum or candy machines,
games, pinball machines, video games, rides or other mechanical or electronic
entertainment or vending devices shall be installed or operated at the STORE.
K. RESTRICTIONS ON HIRING CERTAIN EMPLOYEES
During the term of this Agreement and for two (2) years thereafter,
FRANCHISEE shall not, either directly or indirectly, for FRANCHISEE or through,
on behalf of, or in conjunction with any person, persons, partnership,
corporation, or other legal entity, employ or seek to employ any person who is
employed by the COMPANY or by any other franchisee of the COMPANY unless (a) at
least ninety (90) days have elapsed since the employee in question was last
employed by either the COMPANY or any other franchisee, or (b) FRANCHISEE has
obtained, prior to employing the employee in question, written permission of the
COMPANY and, if applicable, the franchisee who last employed said person;
further, FRANCHISEE shall not otherwise, directly or indirectly, induce any
person to leave his or her employment with the COMPANY or any other franchisee
of the COMPANY.
10. ADVERTISING
A. BY THE COMPANY
Recognizing the value of uniform advertising to the goodwill and public
image of "TCBY" stores, the COMPANY may institute, maintain, and administer an
advertising fund (the "Fund") for such advertising or public relations programs
as the COMPANY, in its sole discretion, may deem necessary or appropriate to
advertise or promote "TCBY" stores. The COMPANY shall direct all such programs,
with sole discretion over the creative concepts, materials, endorsements, and
media used therein, and the placement and allocation thereof. The COMPANY shall
have the right to determine, in its sole discretion, the composition of all
geographic territories and market areas for the development and implementation
of such programs.
FRANCHISEE shall contribute to the Fund an amount determined by the
COMPANY which shall not exceed three percent (3%) of Net Revenues. If the
COMPANY so elects, said amount shall be payable by way of a surcharge on
purchases of frozen yogurt mix, ice cream, and sorbet (and other proprietary
items, if any) in the same manner and upon the same basis as royalty and service
fees are payable. "TCBY" stores owned by the COMPANY or its affiliates and
located in the United States of America shall contribute to the Fund on the same
basis.
FRANCHISEE agrees that the Fund may be used to meet any and all costs of
maintaining, administering, directing and preparing national, regional or local
advertising materials, programs, and public relations activities, including,
without limitation, the costs of preparing and conducting television, radio,
magazine, bill board, newspaper, and other media programs and activities, the
costs of employing advertising agencies to assist therewith, the cost of
providing promotional brochures and advertising materials to "TCBY" stores and
to regional and local advertising cooperatives of "TCBY" stores, and the cost of
organizing and providing facilities for national and regional franchisee
marketing conferences.
It is anticipated that all contributions to and earnings of the Fund
shall be expended for advertising and/or promotional purposes during the taxable
year within which the contributions and earnings are received. If, however,
excess amounts remain in the Fund at the end of such taxable year, all
expenditures in the following taxable year(s) shall be made first out of
accumulated earnings from previous years, next out of earnings in the current
year, and finally from contributions. The COMPANY may spend in any fiscal year
an amount greater or less than the aggregate contributions of "TCBY" stores to
the Fund in that year and the COMPANY may make loans to the Fund bearing
reasonable interest to cover any deficits of the Fund and cause the Fund to
invest any surplus for future use by the Fund.
The Fund shall be accounted for separately from the other monies of the
COMPANY and shall not be used to defray any of the COMPANY's general operating
expenses, except for such reasonable salaries, administrative costs and overhead
as the COMPANY may incur in activities reasonably related to the administration
or direction of the Fund and its programs (including, without limitation,
conducting market research, preparing advertising materials and collecting and
accounting for contributions to the Fund). The Fund and its earnings shall not
otherwise inure to the benefit of the COMPANY. The COMPANY shall maintain
separate bookkeeping accounts for the Fund, and a report of the operations of
the Fund shall be prepared annually by the COMPANY and shall be made available
to FRANCHISEE upon written request.
FRANCHISEE understands and acknowledges that the Fund is intended to
maximize general recognition and patronage of the Marks and "TCBY" stores for
the benefit of all "TCBY" stores and that the COMPANY undertakes no obligation
in developing, implementing, or administering advertising or public relations
programs to ensure that expenditures which are proportionate or equivalent to
FRANCHISEE's contributions are made for the market area of the STORE or that any
"TCBY" store benefits directly or pro rata from the placement of advertising.
Except as expressly provided in this Paragraph A of Section 10, the
COMPANY assumes no direct or indirect liability or obligation to FRANCHISEE or
to the Fund with respect to the maintenance, direction, or administration of the
Fund, including without limitation, any failure by any franchisees of the
COMPANY to make any contributions to the Fund.
B. BY FRANCHISEE
Through the Fund, the COMPANY may furnish FRANCHISEE approved local
marketing plans and materials on the same terms and conditions as such plans and
materials are furnished to other franchisees of "TCBY" stores.
In addition to making the Fund contributions required under Paragraph A
of this Section 10, FRANCHISEE shall be required to expend on local advertising
three percent (3%) of Net Revenues in any calendar year. Prior to their use by
FRANCHISEE, samples of all local advertising and promotional materials not
prepared or previously approved by the COMPANY shall be submitted to the COMPANY
for approval, which shall not be unreasonably withheld. If written disapproval
is not received by FRANCHISEE within fifteen (15) days from the date of receipt
by the COMPANY of such materials, the COMPANY shall be deemed to have given the
required approval. FRANCHISEE shall not use any advertising or promotional
materials that are not contained in the Operating Manual, that have been
disapproved by the COMPANY, or that have not been approved for use within the
preceding twelve-month period.
11. RECORDS AND REPORTS
During the term of this Agreement, FRANCHISEE agrees to give the COMPANY
access to, at FRANCHISEE's principal office, sales tax returns and such portions
of FRANCHISEE's state and federal income tax returns as reflect the operation of
the STORES. FRANCHISEE shall furnish to the COMPANY upon the COMPANY's request,
statements relating to Net Revenues, as well as monthly and annual profit and
loss statements, as reflect the operation of the STORES all for the immediately
preceding thirty-six (36) months (to the extent any STORE has been in operation
for that length of time, and if not then for the length of time each STORE has
been in operation). FRANCHISEE shall afford the COMPANY (and its agents) full
and free access to this data during regular business hours. The COMPANY (and its
agents) shall have the right to make extracts from, and copies of, all such
documents and information. From time to time the COMPANY, in its sole
discretion, may disclose data as represented in such records and reports for
purposes of fulfilling the COMPANY's legal obligations or in furtherance of its
management and support of and to the System.
12. INSPECTIONS AND AUDITS
A. THE COMPANY'S RIGHT TO INSPECT THE STORE
The COMPANY shall have the right at any time during business hours, and
without prior notice to FRANCHISEE, to inspect the STORE. FRANCHISEE shall fully
cooperate with representatives of the COMPANY making any such inspection and
shall permit representatives of the COMPANY to take photographs, movies or
videotapes of the STORE and to interview employees and customers of the STORE.
The COMPANY shall have the exclusive right to use any photograph, movie, video
tape, or other material prepared in connection with an inspection of the STORE,
and shall have no obligation to obtain FRANCHISEE's permission, or to compensate
FRANCHISEE in any manner, in connection with the use of such materials for
advertising, training, or other purposes.
B. THE COMPANY'S RIGHT TO EXAMINE BOOKS AND RECORDS
The COMPANY shall have the right at any time during business hours, and
without prior notice to FRANCHISEE, to examine or audit, or cause to be examined
or audited, the business records, cash control devices, bookkeeping and
accounting records, bank statements, sales and income tax records and returns
and other books and records of the STORE and, if applicable upon assignment, the
books and records of any corporation or partnership which holds any interest in
the rights granted by this Agreement. FRANCHISEE shall fully cooperate with
representatives of the COMPANY and independent accountants hired by the COMPANY
to conduct any such examination or audit.
In the event any such examination or audit shall disclose an
understatement of Net Revenues, FRANCHISEE shall pay to the COMPANY, within
fifteen (15) days after receipt of the examination or audit report, the royalty
and service fees and any advertising contributions due on the amount of such
understatement, plus interest (at the rate and on the terms provided in
Paragraph D of Section 8 hereof) from the date originally due until the date of
payment. Further, in the event such examination or audit is made necessary by
the failure of FRANCHISEE to furnish reports, supporting records, financial
statements, or other documents or information, as herein required, or failure to
furnish such reports, records, financial statements, documents, or information
on a timely basis, or if an understatement of Net Revenues for any month is
determined by any such examination or audit to be greater than five percent (5%)
for the period of time covered by such audit, FRANCHISEE shall reimburse the
COMPANY for the cost of such audit or examination, including, without
limitation, the charges of any independent accountants and the travel expenses,
room and board, and compensation of employees of the COMPANY. The foregoing
remedies shall be in addition to all other remedies and rights of the COMPANY
hereunder or under applicable law.
13. ASSIGNMENT
A. BY THE COMPANY
This Agreement and the rights, privileges, duties, and obligations
hereunder arising are fully assignable by the COMPANY and shall inure to the
benefit of any assignee or other legal successor to the interest of the COMPANY
herein.
B. FRANCHISEE MAY NOT ASSIGN WITHOUT APPROVAL OF THE COMPANY
FRANCHISEE understands and acknowledges that the rights and duties
created by this Agreement are personal to FRANCHISEE and that the COMPANY has
entered into this Agreement in reliance upon the individual or collective
character, skill, aptitude, attitude, business ability and financial capacity of
FRANCHISEE. Therefore, neither the franchise rights granted by this Agreement,
this Agreement (or any interest herein), nor the assets of any STORE, may be
voluntarily, involuntarily, directly, or indirectly, assigned, sold, given,
encumbered, pledged, subdivided, subfranchised, or otherwise transferred by
FRANCHISEE (including, without limitation, by transfer or creation of an
interest as a general partner of a partnership, by transfer of an interest in
this Agreement in a divorce proceeding, or in the event of the death of
FRANCHISEE, by will, declaration of or transfer in trust, or the laws of
intestate succession) without the prior written approval of the COMPANY. Any
such assignment or transfer without such approval shall constitute a breach
hereof and conveys no rights to or interests in the franchise rights granted by
this Agreement, this Agreement (or any interest herein), or the assets of the
STORE.
C. CONDITIONS FOR APPROVAL OF ASSIGNMENT
If FRANCHISEE is in full compliance with this Agreement, the COMPANY
shall not unreasonably withhold its approval of an assignment of this Agreement
as it relates to all of the STORES or any one or more of the STORES operated
hereunder, provided that the proposed assignee is, in the opinion of the
COMPANY, of good moral character and has sufficient business experience,
aptitude, and financial resources to purchase under the terms and conditions
proposed, own, and operate the STORE and otherwise meets the COMPANY's then
applicable standards for franchisees, and further provided that the COMPANY may
require that any one or more of the following conditions be met prior to, or
concurrently with, the effective date of the assignment:
º (1)
º all obligations of FRANCHISEE incurred in connection with this
Agreement have been assumed by the assignee;
º (2)
º FRANCHISEE shall have paid such royalty and service fees, advertising
contributions, amounts owed for purchases by FRANCHISEE from the
COMPANY or its affiliates, and any other amounts owed to the COMPANY
or its affiliates which are then due and unpaid;
º (3)
º the assignee agrees to complete the training program required of new
franchisees similar to FRANCHISEE in type and character;
º (4)
º if required, the lessor of the premises of the STORE has consented to
FRANCHISEE's assignment or sublease of said premises to the proposed
assignee;
º (5)
º the assignee shall, at the COMPANY's option, have executed and agreed
to be bound by: (i) an assignment and assumption agreement
satisfactory to the COMPANY, whereby the assignee assumes the
obligations of FRANCHISEE under this Agreement; or (ii) the form of
franchise agreement and such ancillary agreements as are then
customarily used by the COMPANY in the grant of franchises for "TCBY"
stores of the type and character of the assigned STORE, which shall
provide for the same royalty and service fees and advertising
contributions required hereunder and a term equal to the remaining
term of this Agreement;
º (6)
º FRANCHISEE shall have paid to the COMPANY the COMPANY's then current
standard assignment fee to defray expenses incurred by the COMPANY in
connection with the assignment, including, without limitation,
training of the assignee, legal and accounting fees, credit and other
investigation charges, and evaluation of the assignee and the terms of
the assignment;
º (7)
º except to the extent limited or prohibited by applicable law,
FRANCHISEE shall have executed a general and mutual release, in form
and substance satisfactory to the COMPANY, of any and all claims
against the COMPANY and its affiliates, officers, directors,
employees, and agents held or claimed by FRANCHISEE and of any and all
claims against FRANCHISEE held or claimed by the COMPANY;
º (8)
º the COMPANY shall have approved the material terms and conditions of
such assignment;
º (9)
º FRANCHISEE shall have executed a non-competition covenant in favor of
the COMPANY and the assignee, agreeing that for a period of not less
than two (2) years, commencing on the effective date of the
assignment, FRANCHISEE will not have any direct or indirect interest
as an owner, investor, partner, director, officer, employee,
consultant, representative, or agent, or in any other capacity, in any
frozen yogurt or ice cream restaurant or store located or operating
within the premises at or in which the STORE was operating before the
assignment of this Agreement; and
º (10)
º FRANCHISEE, the COMPANY, and such assignee shall have entered into an
agreement wherein any obligations of such assignee to FRANCHISEE,
including the obligation to make installment payments of the purchase
price, shall be subordinate to such assignee's obligations to the
COMPANY, which obligations include, without limitation, the payment of
royalty and service fees, advertising contributions, and any payments
on account to affiliates of the COMPANY.
The COMPANY's consent to an assignment of any interest subject to the
restrictions of Paragraph B or C of this Section 13 shall not constitute a
waiver of any claims it may have against the assignor unless specifically waived
in writing by the COMPANY, nor shall it be deemed a waiver of the COMPANY's
right to demand exact compliance with any of the terms or conditions of this
Agreement by the assignee.
D. DEATH OR DISABILITY OF FRANCHISEE
Upon the death or permanent disability of FRANCHISEE, the executor,
administrator, conservator or other personal representative of such person shall
appoint a competent STORE manager within a reasonable time, not to exceed thirty
(30) days from the date of death or permanent disability. The appointment of
such manager shall be subject to the COMPANY's prior written approval, and such
manager shall, if requested by the COMPANY, attend and satisfactorily complete
the COMPANY's training program.
Upon the death or permanent disability of FRANCHISEE, and in addition to
the foregoing obligation to appoint a manager, the executor, administrator,
conservator, or other personal representative of such person shall transfer
FRANCHISEE's interest within a reasonable time, not to exceed twelve (12) months
from the date of death or permanent disability, to a person approved by the
COMPANY. Such transfers, including, without limitation, transfers by devise or
inheritance, shall be subject to all the terms and conditions for assignments
and transfers contained in Paragraphs B and C of this Section 13. Failure to so
dispose of such interest within said period of time shall constitute grounds for
termination.
14. RENEWAL OF FRANCHISE
A. FRANCHISEE'S RIGHT TO RENEW
If, upon expiration of the initial term of this Agreement:
º (1)
º FRANCHISEE has during the term of this Agreement substantially
complied with all its provisions; and
º (2)
º (a) FRANCHISEE maintains possession of and agrees to remodel or
refurbish and decorate the premises of the STORE, replace fixtures,
equipment, signs, and otherwise modify the STORE, in compliance with
specifications and standards then applicable under new franchises for
"TCBY" stores; or
(b) FRANCHISEE is unable to maintain possession of such premises,
or in the judgment of the COMPANY the STORE should be relocated, and
FRANCHISEE secures substitute premises approved by the COMPANY and
agrees to develop such substitute premises in compliance with
specifications and standards then applicable under new franchises for
"TCBY" stores;
then FRANCHISEE shall have the right to renew the franchise rights granted by
this Agreement for an additional term equal to the then customary initial term
granted under the COMPANY's then current form of standard franchise agreement
for locations operated in conjunction with other concepts. Such renewal shall be
without payment of an initial or renewal franchise fee.
B. NOTICE OF RENEWAL AND NONRENEWAL
FRANCHISEE shall give the COMPANY written notice of FRANCHISEE's desire
to exercise FRANCHISEE's option to renew no later than six (6) months, or
earlier than twelve (12) months, prior to the expiration of this Agreement. If
the COMPANY determines that FRANCHISEE does not have the right to renew, the
COMPANY agrees to give FRANCHISEE written notice of its determination at least
one hundred twenty (120) days prior to the expiration of this Agreement. A
notice of nonrenewal by the COMPANY shall state the reasons for the COMPANY's
refusal to renew.
C. RENEWAL AGREEMENTS; RELEASES
To renew the franchise rights granted under this Agreement, the COMPANY
and FRANCHISEE shall execute the form of franchise agreement and such ancillary
agreements as are then customarily used by the COMPANY in the grant of
franchises for the ownership and operation of "TCBY" stores similar to that
contemplated in the Agreement (with appropriate modifications to reflect the
fact that the agreement relates to the grant of a renewal franchise) and the
COMPANY and FRANCHISEE shall execute mutual general releases, in form and
substance satisfactory to the COMPANY, of any and all claims against the COMPANY
and its affiliates, officers, directors, employees and agents held by FRANCHISEE
and of any and all claims against FRANCHISEE held by the COMPANY. Failure by
FRANCHISEE to sign such agreement(s) and releases within thirty (30) days after
delivery thereof to FRANCHISEE shall be deemed an election by FRANCHISEE not to
renew this Agreement and the franchise rights granted under this Agreement.
15. TERMINATION OF THE FRANCHISE
A. BY FRANCHISEE
If FRANCHISEE is in substantial compliance with this Agreement and the
COMPANY substantially breaches a material provision of this Agreement and fails
to cure such breach within thirty (30) days after written notice thereof is
delivered to the COMPANY, FRANCHISEE may terminate this Agreement. Such
termination shall be effective ten (10) days after delivery to the COMPANY of
notice that such breach has not been cured and FRANCHISEE elects to terminate
this Agreement.
If FRANCHISEE is in substantial compliance with this Agreement,
FRANCHISEE may terminate this Agreement as to a specific STORE (the "Terminated
Store"), provided that each of the following conditions are met:
º (1)
º FRANCHISEE provides to the COMPANY a written demand (the "Demand")
from the third-party landlord of the premises where the Terminated
Store is located to remove the TCBY system and products from the
Terminated Store and cease to operate the Terminated Store as a frozen
yogurt or ice cream restaurant or store;
º (2)
º the Demand is delivered to the COMPANY, in accordance with Section 18
of this Agreement, no less than ninety (90) days prior to the date
that the FRANCHISEE is required by the Demand to close the Terminated
Store; and
º (3)
º FRANCHISEE complies with all of the provisions of Section 16 hereof as
they apply to the Terminated Store.
Any termination of this Agreement by FRANCHISEE that does not comply with this
provision shall be deemed a termination by FRANCHISEE without cause.
B. BY THE COMPANY
The COMPANY shall have the right to terminate this Agreement by
delivering a notice to FRANCHISEE stating that the COMPANY elects to terminate
this Agreement as a result of any of the breaches set forth below. Such
termination shall be effective upon delivery of such notice of termination or,
if applicable, upon failure to cure (to the COMPANY's satisfaction) any such
breach by the expiration of any period of time within which such breach may be
cured in accordance with the provision set forth below. The parties hereto agree
that it shall be a material breach of this Agreement if FRANCHISEE:
º (1)
º fails to develop the STORE or open the STORE for business as provided
in Paragraph A or C of Section 3 of this Agreement or fails to
satisfactorily implement the training program as provided in
Paragraph A of Section 4 of this Agreement;
º (2)
º abandons, surrenders, transfers control of, loses the right to occupy
the premises of the STORE, or fails to actively operate the STORE, or
loses the right to operate at the premises of the regional or national
chain outlet identified in Section 2 of this Agreement;
º (3)
º has made a material misrepresentation or omission in the application
for the rights granted by this Agreement or is convicted of or pleads
no contest to a felony or is convicted of or pleads no contest to any
crime or offense that may adversely affect the reputation of the STORE
or the goodwill associated with the Marks or breaches Paragraph E of
Section 9 of this Agreement;
º (4)
º fails to attend any supplemental or refresher training programs
required pursuant to Paragraph A of Section 4 hereof;
º (5)
º makes any unauthorized use of the Marks or unauthorized use or
disclosure of the Confidential Information or Operating Manual;
º (6)
º fails to pay royalty and service fees, advertising contributions,
amounts due for purchases from the COMPANY or its affiliates, or other
payments due to the COMPANY or its affiliates;
º (7)
º fails to comply with any other provision of this Agreement or any
mandatory specification, standard, or operating procedure prescribed
by the COMPANY, or to timely pay amounts due to persons other than the
COMPANY or its affiliates;
º (8)
º fails on three (3) or more separate occasions within any twelve
(12) consecutive month period to submit when requested financial
statements, reports, or other data, information, or supporting
records, to pay when due the royalty and service fees, advertising
contributions, amounts due for purchases from the COMPANY or its
affiliates, or other payments due to the COMPANY or other persons, or
otherwise fails to comply with this Agreement, whether or not such
failures to comply are corrected after notice thereof is delivered to
FRANCHISEE; or
º (9)
º violates any covenant, term, or condition of any note or agreement
(including any franchise or development agreement) between the COMPANY
(or an affiliate) and FRANCHISEE, the effect of which is to allow the
COMPANY (or an affiliate) to accelerate the maturity of or to
terminate such note or agreement before its stated maturity or
termination date.
FRANCHISEE shall have the right to cure a breach under subparagraph
(6) within ten (10) days after delivery of the COMPANY's notice of termination
and shall have the right to cure a breach under subparagraph (7) within thirty
(30) days after delivery of the COMPANY's notice of termination.
º 16.
º RIGHTS OF THE COMPANY AND OBLIGATIONS OF FRANCHISEE UPON TERMINATION OR
EXPIRATION OF THE AGREEMENT
A. PAYMENT OF AMOUNTS OWED TO THE COMPANY
FRANCHISEE agrees to pay to the COMPANY within fifteen (15) days after
the effective date of termination or expiration (without renewal) of this
Agreement such royalty and service fees, advertising contributions, amounts owed
for products purchased by FRANCHISEE from the COMPANY or its affiliates,
interest due the COMPANY on any of the foregoing and all other amounts owed to
the COMPANY and its affiliates which are then unpaid. FRANCHISEE shall
contemporaneously with such payment furnish a complete accounting of all such
amounts owed to the COMPANY and its affiliates by FRANCHISEE.
B. DISCONTINUANCE OF USE OF MARKS AND DISTINCTIVE DESIGNS
FRANCHISEE agrees that after the termination or expiration (without
renewal) of this Agreement, FRANCHISEE will not directly or indirectly at any
time or in any manner identify the STORE or any other store or restaurant (other
than another "TCBY" store operated by FRANCHISEE in accordance with a currently
effective franchise agreement with the COMPANY) as a current or former "TCBY"
store, or be identified as a franchisee (or former franchisee) or as otherwise
associated with the COMPANY, or use any of the Marks, any colorable imitation
thereof, or other indicia of a "TCBY" store in any manner or for any purpose, or
utilize for any purpose any trade name, trademark, service mark, or other
commercial symbol that suggests or indicates a connection or association with
the COMPANY. FRANCHISEE shall promptly remove from FRANCHISEE's place of
business, and discontinue using for any purpose, any and all signs, fixtures,
furniture, posters, furnishings, equipment, menus, advertising materials,
stationery supplies, forms, and other articles which display any of the Marks or
any distinctive features or designs associated with "TCBY" stores.
Furthermore, FRANCHISEE shall, at FRANCHISEE's expense, immediately make
such modifications or alterations as may be necessary to distinguish the former
STORE so clearly from its former appearance and from other "TCBY" stores as to
prevent any possibility of confusion therewith by the public (including, without
limitation, removal of all distinctive physical and structural features
identifying "TCBY" stores and removal of all distinctive signs and emblems).
FRANCHISEE shall, at FRANCHISEE's expense, make such specific additional changes
as the COMPANY may reasonably request for this purpose. If FRANCHISEE fails to
initiate immediately or complete such alterations within such period of time as
the COMPANY deems appropriate, FRANCHISEE agrees that the COMPANY or its
designated agents may enter the premises of the former STORE and adjacent areas
at any time to make such alterations, at FRANCHISEE's sole risk and expense,
without responsibility for any actual or consequential damages to the property
of FRANCHISEE or others, and without liability for trespass or other tort or
criminal act. FRANCHISEE expressly acknowledges that its failure to make such
alterations will cause irreparable injury to the COMPANY and consents to entry,
at FRANCHISEE's expense, of an ex parte order by any court of competent
jurisdiction authorizing the COMPANY or its agents to take such action, if the
COMPANY seeks such an order.
FRANCHISEE further agrees that upon termination or expiration (without
renewal) of this Agreement, FRANCHISEE will promptly:
º (1)
º take such action as may be required to cancel all fictitious or
assumed name or equivalent registrations relating to FRANCHISEE's use
of any of the Marks;
º (2)
º notify the telephone company and all listing agencies of the
termination or expiration of FRANCHISEE's right to use any telephone
number and any regular, classified, or other telephone directory
listings associated with the Marks and to authorize transfer of same
to or at the direction of the COMPANY. FRANCHISEE acknowledges that as
between the COMPANY and FRANCHISEE, the COMPANY has the sole right to
and interest in all telephone numbers and directory listings
associated with the Marks, and FRANCHISEE authorizes the COMPANY, and
hereby appoints the COMPANY and any officer of the COMPANY as
FRANCHISEE's attorney in fact, to direct the telephone company and all
listing agencies to transfer same to the COMPANY or at its direction,
should FRANCHISEE fail or refuse to do so, and FRANCHISEE agrees that
the telephone company and all listing agencies may accept such
direction or this Agreement as conclusive of the exclusive right of
the COMPANY in such telephone numbers and directory listings and its
authority to direct their transfer; and
º (3)
º furnish to the COMPANY within thirty (30) days after the effective
date of termination or expiration evidence satisfactory to the COMPANY
of FRANCHISEE's compliance with the foregoing obligations.
C. RETURN OF OPERATING MANUAL
FRANCHISEE agrees that upon termination or expiration (without renewal)
of this Agreement, FRANCHISEE will immediately cease to use in any business or
otherwise the Confidential Information of the COMPANY disclosed to FRANCHISEE
pursuant to this Agreement and return to the COMPANY the Operating Manual and
any copies thereof for "TCBY" stores which have been loaned to FRANCHISEE by the
COMPANY.
D. COVENANT NOT TO COMPETE
For a period of one (1) year, commencing on the effective date of
termination (whether by expiration, default, or any other reason) of this
Agreement, FRANCHISEE will not have any interest as an owner, partner, director,
officer, employee, consultant, representative, or agent, or in any other
capacity, in any frozen yogurt or ice cream restaurant or store located or
operating at or in the premises at or in which the STORE is operated.
E. CONTINUING OBLIGATIONS
All obligations of the COMPANY and FRANCHISEE which expressly or by
their nature survive the expiration or termination of this Agreement shall
continue in full force and effect subsequent to and notwithstanding its
expiration or termination and until they are satisfied or by their nature
expire.
17. ENFORCEMENT
A. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS
Except as expressly provided to the contrary herein, each section,
paragraph, term and provision of this Agreement, and any portion thereof, shall
be considered severable and if, for any reason, any such portion of this
Agreement is held to be invalid, contrary to, or in conflict with any applicable
present or future law or regulation in a final, unappealable ruling issued by
any court, agency or tribunal with competent jurisdiction in a proceeding to
which the COMPANY is a party, that ruling shall not impair the operation of, or
have any other effect upon, such other portions of this Agreement as may remain
otherwise intelligible, which shall continue to be given full force and effect
and bind the parties hereto, although any portion held to be invalid shall be
deemed not to be a part of this Agreement from the date the time for appeal
expires, if FRANCHISEE is a party thereto, and otherwise upon FRANCHISEE's
receipt of a notice of non-enforcement thereof from the COMPANY.
If any applicable and binding law or rule of any jurisdiction requires a
greater prior notice of the termination of this Agreement than is required
hereunder, or the taking of some other action not required hereunder, or if
under any applicable and binding law or rule of any jurisdiction any provision
of this Agreement or any specification, standard, or operating procedure
prescribed by the COMPANY is invalid or unenforceable, the prior notice and/or
other action required by such law or rule shall be substituted for the
comparable provisions hereof, and the COMPANY shall have the right, in its sole
discretion, to modify such invalid or unenforceable provision, specification,
standard, or operating procedure to the extent required to be valid and
enforceable. FRANCHISEE agrees to be bound by any promise or covenant imposing
the maximum duty permitted by law which is subsumed within the terms of any
provision hereof, as though it were separately articulated in and made a part of
this Agreement, that may result from striking from any of the provisions hereof,
or any specification, standard or operating procedure prescribed by the COMPANY,
any portion or portions which a court may hold to be unenforceable in a final
decision to which the COMPANY is a party, or from reducing the scope of any
promise or covenant to the extent required to comply with such a court order.
Such modifications to this Agreement shall be effective only in such
jurisdiction, unless the COMPANY elects to give them greater applicability, and
this Agreement shall be enforced as originally made and entered into in all
other jurisdictions.
B. WAIVER OF OBLIGATIONS
The COMPANY may by written instrument unilaterally waive or reduce any
obligation of or restriction upon FRANCHISEE under this Agreement, and
FRANCHISEE may by written instrument unilaterally waive or reduce any obligation
of or restriction upon the COMPANY under this Agreement, effective upon delivery
of written notice thereof to the other or such other effective date stated in
the notice of waiver. Whenever this Agreement requires the COMPANY's prior
approval or consent, FRANCHISEE shall make a timely written request therefor,
and such approval shall be obtained in writing.
The COMPANY makes no warranties or guaranties upon which FRANCHISEE may
rely, and assumes no liability or obligation to FRANCHISEE, by granting any
waiver, approval or consent to FRANCHISEE, or by reason of any neglect, delay,
or denial of any request therefor. Any waiver granted by the COMPANY shall be
without prejudice to any other rights the COMPANY may have, will be subject to
continuing review by the COMPANY, and may be revoked, in the COMPANY's sole
discretion, at any time and for any reason, effective upon delivery to
FRANCHISEE of ten (10) days' prior written notice.
The COMPANY and FRANCHISEE shall not be deemed to have waived or
impaired any right, power, or option reserved by this Agreement (including,
without limitation, the right to demand exact compliance with every term,
condition and covenant herein, or to declare any breach thereof to be a default
and to terminate this Agreement prior to the expiration of its term), by virtue
of any custom or practice of the parties at variance with the terms hereof, any
failure, refusal, or neglect of the COMPANY or FRANCHISEE to exercise any right
under this Agreement or to insist upon exact compliance by the other with its
obligations hereunder, including, without limitation, any mandatory
specification, standard, or operating procedure; any waiver, forbearance, delay,
failure or omission by the COMPANY to exercise any right, power, or option,
whether of the same, similar or different nature, with respect to other "TCBY"
stores, or the acceptance by the COMPANY of any payments due from FRANCHISEE
after any breach of this Agreement.
Neither the COMPANY nor FRANCHISEE shall be liable for loss or damage or
deemed to be in breach of this Agreement if failure to perform their respective
obligations results from: (1) transportation shortages, inadequate supply of
labor, material, or energy, or the voluntary foregoing of the right to acquire
or use any of the foregoing in order to accommodate or comply with the orders,
requests, regulations, recommendations or instructions of any federal, state, or
municipal government, or any department or agency thereof; (2) compliance with
any law, ruling, order, regulation, requirement, or instruction of any federal,
state, or municipal government, or any department or agency thereof; (3) acts of
God; (4) acts or omissions of the other party; (5) fires, strikes, embargoes,
war, or riot; or (6) any other similar event or cause. Any delay resulting from
any of said causes shall extend performance accordingly or excuse performance,
in whole or in part, as may be reasonable.
C. SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF
Nothing herein contained shall bar the COMPANY's right to obtain
specific performance of the provisions of this Agreement and injunctive relief
against threatened conduct that will cause it loss or damage, under customary
equity rules, including applicable rules for obtaining restraining orders and
preliminary injunctions. FRANCHISEE agrees that the COMPANY may have such
injunctive relief, without bond, but upon due notice, in addition to such
further and other relief as may be available at equity or law, and the sole
remedy of FRANCHISEE, in the event of the entry of such injunction, shall be the
dissolution of such injunction, if warranted, upon hearing duly had (all claims
for damages by reason of the wrongful issuance of any such injunction being
expressly waived hereby).
D. RIGHTS OF PARTIES ARE CUMULATIVE
The rights of the COMPANY and FRANCHISEE hereunder are cumulative and no
exercise or enforcement by the COMPANY or FRANCHISEE of any right or remedy
hereunder shall preclude the exercise or enforcement by the COMPANY or
FRANCHISEE of any other right or remedy hereunder or which the COMPANY or
FRANCHISEE is entitled by law to enforce.
E. GOVERNING LAW; WAIVER OF JURY; WAIVER OF PUNITIVE AND
CONSEQUENTIAL DAMAGES; TIME LIMITATION FOR ACTIONS
This Agreement and the offer and sale of the franchise rights subject to
this Agreement shall be governed by the substantive laws (expressly excluding
laws pertaining to the choice of law) of the State of Utah. Both the COMPANY and
FRANCHISEE agree that neither shall be entitled to nor shall either demand a
jury trial in the event of litigation. Except as specifically provided in this
Agreement, neither the COMPANY nor FRANCHISEE is entitled to any compensation or
reimbursement for loss of prospective profits, anticipated sales, or other
losses occasioned by cancellation or termination of this Agreement. Any and all
claims and actions arising out of or relating to this Agreement, the
relationship of FRANCHISEE and the COMPANY, the COMPANY's management of the
System, or FRANCHISEE's operation of the STORE, brought by any party hereto
against the other, shall be commenced within one (1) year from the occurrence of
the facts giving rise to such claim or action, or such claim or action shall be
barred.
F. EXCLUSIVE JURISDICTION
FRANCHISEE and the COMPANY agree that any action arising out of or
relating to this Agreement (including, without limitation, the offer and sale of
the franchise rights) shall be instituted and maintained only in a state or
federal court of general jurisdiction in Salt Lake County, Utah, and FRANCHISEE
irrevocably submits to the jurisdiction of such court and waives any objection
FRANCHISEE may have to either the jurisdiction or venue of such court.
G. BINDING EFFECT
This Agreement is binding upon the parties hereto and their respective
executors, administrators, heirs, assigns, and successors in interest, and shall
not be modified except by written agreement signed by both FRANCHISEE and the
COMPANY.
H. CONSTRUCTION
This Agreement, constitutes the entire agreement of the parties, and
there are no other oral or written understandings or agreements between the
COMPANY and FRANCHISEE relating to the subject matter of this Agreement. Except
as otherwise expressly provided herein, nothing in this Agreement is intended,
nor shall be deemed, to confer any rights or remedies upon any person or legal
entity not a party hereto. The headings of the several sections and paragraphs
hereof are for convenience only and do not define, limit, or construe the
contents of such sections or paragraphs. The term "FRANCHISEE" as used herein is
applicable to one or more persons, a corporation, or a partnership, as the case
may be, and the singular usage includes the plural where applicable. If two or
more persons are at any time FRANCHISEE hereunder, their obligations and
liabilities to the COMPANY shall be joint and several. References to
"FRANCHISEE" and "assignee" which are applicable to an individual or individuals
shall mean the owner or owners of the equity or operating control of FRANCHISEE
or the assignee, if FRANCHISEE or the assignee is a corporation or partnership.
This Agreement shall be executed in multiple copies, each of which shall be
deemed an original.
18. NOTICES AND PAYMENTS
All written notices and reports permitted or required to be delivered by
the provisions of this Agreement or of the Operating Manual shall be deemed so
delivered at the time delivered by hand, one (1) business day after sending by
telegraph or comparable electronic system, one (1) business day after sending by
a reputable overnight courier which has a regular national delivery system and
which notice is properly receipted and prepaid, or three (3) business days after
placed in the U.S. mail by Registered or Certified Mail, Return Receipt
Requested, postage prepaid. All notices except those delivered by hand shall be
addressed to the party to be notified at its most current principal business
address of which the notifying party has been notified. Reports required to be
delivered hereunder shall be delivered by U.S. mail or by such other method
designated by the COMPANY as part of its standard policies and procedures. All
payments and reports required by this Agreement shall be directed to the COMPANY
at the address notified to FRANCHISEE from time to time, or to such other
persons and places as the COMPANY may direct from time to time. Any required
payment or report not actually received by the COMPANY during regular business
hours on the date due or properly placed in the U.S. mail and postmarked by
postal authorities at least two (2) business days prior thereto, shall be deemed
delinquent.
19. ACKNOWLEDGMENTS
A. FRANCHISEE acknowledges that it has conducted an independent
investigation of the business franchised hereunder, and recognizes that the
business venture contemplated by this Agreement involves business risks and that
its success will be largely dependent upon the ability of FRANCHISEE as an
independent businessperson. The COMPANY expressly disclaims the making of, and
FRANCHISEE acknowledges FRANCHISEE has not received, any warranty or guaranty,
express or implied, as to the potential volume, profits, or success of the
business venture contemplated by this Agreement.
B. FRANCHISEE acknowledges that FRANCHISEE has received, read, and
understood this Agreement, including any exhibit or agreement relating hereto,
and that the COMPANY has accorded FRANCHISEE ample time and opportunity to
consult with advisors of its own choosing about the potential benefits and risks
of entering into this Agreement.
IN WITNESS WHEREOF the parties hereto have executed, sealed and
delivered this Agreement on the date first above written.
FRANCHISEE SIGNATURE:
MRS. FIELDS' ORIGINAL COOKIES, INC.
By: /s/ MICHAEL WARD
Name: Michael Ward
Title: Sr. Vice President
Not binding without execution by an authorized officer of the COMPANY.
TCBY SYSTEMS, LLC
By: /s/ SANDRA BUFFA
Name: Sandra Buffa
Title: Sr. Vice President
SCHEDULE "A"
Store Location Schedule
Franchise Agreement-Store Location Schedule dated Feb 28, 2004
Store
Company # Concept Name Address City State zip Phone Open Date
92 1052 BCC Weberstown 4950 Pacific Stockton CA 95207 (209) 12/4/1972
Mall Ave 474-3466
92 3408 BCC Fulton & 150 Fulton New York NY 10038 (212) 3/31/2001
Broadway Street 233-3934
92 3431 BCC The Lakes 5600 Harvey Muskegon MI 49444 (231) 8/15/2001
Mall Street 798-7941
Suite 2012
92 3534 BCC Fiesta Mall 1445 W Southern Mesa AZ 85202-4870 (480) 7/25/1997
Ave Space 1098 964-1888
95 3631 PT Mall @ 9401 Cortana Baton LA 70815-9401 (225) 1/20/2001
Cortana Place Rouge 929-9623
92 5220 BCC Northlake 4800 Briarcliff Atlanta GA 30345-2708 (770) 7/31/1992
Mall Rd Space 2013-A 908-8033
(GABCC)
92 5317 BCC Victoria 7800 North Victoria TX 77904 (361) 12/1/1980
Mall (GBCC) Navarro #381 573-0660
92 5349 BCC Mall @ Turner Hill Lithonia GA 30038 (770) 10/22/2001
Stonecrest Rd & Mall 484-5866
(GBCC) Parkway Space
2510
Status # Cncpt RSM Category Mall Name Opened
1.5 3534 BCC Pirone TCBY Smoothies Fiesta Mall, Mesa AZ 11/18/00
and yogurt
1.5 5143 GAC Tormanen TCBY Smoothies Northpark Mall, Joplin, MO 10/11/00
1.5 5152 GAC Vuvan TCBY Smoothies Market Place, Champaign, 10/27/00
IL
1.5 5325 GAC Davis TCBY Smoothie Northpark Mall, Davenport
IA
1.5 5331 GAC Blanco TCBY Smoothies Prien Lake Mall (food 10/23/00
court), Lake Charles, LA
1.5 5334 GAC Keeter TCBY Smoothies Citadel Mall, Charleston, 12/20/00
SC
1.5 5342 GAC Keeter TCBY Smoothies Northwoods Mall, N. 11/21/00
Charleston, SC
1.5 1137 HS Carr TCBY Smoothies Ocean County, Toms River, 09/27/00
NJ
1.5 55 MFC Burgess TCBY Smoothies Ala Moana Center, 10/27/00
Honolulu, HI
1.5 745 MFC Mooney TCBY Smoothies Charlottesville Fashion, 11/22/00
Charlotte, VA
1.5 2360 MFC Morley TCBY Smoothies Arundel Mill, Hanover MD 11/21/00
1.5 710 MFC Behnke Fruithead Boulevard Mall, Amherst, 11/14/00
Smoothies NY
1.5 4225 GAC Nardie Fruithead Mid Rivers Mall, St. 10/19/00
Smoothies Peters, MO
1.5 3586 PT Roy TCBY Smoothies Ingram Park Mall, San 10/13/00
Antonio, TX
1.5 3588 PT Roy TCBY Smoothies Rolling Oaks, San Antonio, 10/13/00
TX
1.5 3591 PT Johansson TCBY Smoothies University MaII, Orem, UT 11/01/2000
1.6 4274 MFC Nardie TCBY Smoothies St. Clair Square, Fairview 01/23/2001
Heights, IL
1.6 3565 PT Wellborn TCBY Smoothies Oakwood Mall, Eau Clair, 02/28/2001
WI
1.6 4261 MFC Behnke TCBY Smoothies Walden Galleria, Buffalo, 03/13/2001
NY
1.6 3728 PT Moore Fruithead Arbor Place, Douglasville, 04/11/2001
Smoothies GA
1.6 3631 PT Blanco Full lineTCBY Cortana Mall, Baton Rouge. 01/20/2001
LA
1.6 1052 MFBC Harding TCBY smoothies Weberstown, Stockton, CA 03/01/2001
and yogurt
1.6 5338 GAC Keeter TCBY Smoothies Haywood Mall, Greenville, 03/28/2001
SC
1.6 1020 HS Pirone TCBY Smoothies Metrocenter, Phoenix, AZ 03/28/2001
1.6 3408 BCC Carr Full line Fulton & Broadway, New 3/31/2001
TCBY & York, NY Changed to
Fruithead FH 1/14/03
Smoothies
1.6 4003 Gorman TCBY Smoothies Midway Mall, Elyria, OH 05/19/2001
1.6 5292 GAC Proffit TCBY Smoothies Cordova Mall, Pensacola, 05/28/2001
FL
1.6 5314 GAC Blanco TCBY Smoothies Parkdale Mall, Beaumont, 06/02/2001
TX
1.6 2367 MFC Heffern TCBY Smoothies Crossroads Plaza, Portage, 06/12/2001
MI
1.6 3431 MFBC Heffern Full Line TCBY The Lakes, Muskegon, MI 08/15/01
1.6 3171 BCC Reyes TCBY Smoothies California & Battery, San 08/20/01
Francisco CA
1.6 5317 GABC Roy Full Line TCBY Victoria Mall, Victoria TX 08/30/01
1.6 4081 MFC Willis TCBY Smoothies Cheltanham 09/13/01
1.6 3712 PT Rice TCBY Smoothies Edison Mall, Fort Myers, 09/19/01
FL
1.6 3542 PT Moore TCBY Smoothies Mall @ Stonecrest, Atlanta 10/22/01
GA
1.6 5349 GABC/PM Moore Full line TCBY Mall at Stonecrest, 10/22/01
Atlanta GA
1.6 3414 GAC Moore TCBY Smoothies Discover Mills, 11/01/01
Lawerenceville, GA
1.6 5220 GABC Moore Full line TCBY Northlake Mall, Atlanta GA 11/12/01
1.6 1527 MFBC Lawrentz TCBY Ice Lima Mall, Lima, OH 21-Nov
cream,
Pretzels,
Cookies, FH
Smoothies
1.7 2369 MFC Michael FH Smoothies St. Charles Towne Square, 06/14/02
MD
1.7 680 MFC Catalado FH Smoothies Owings Mills, Owings, MD 07/30/02
1.7 717 MFC Roy FH Smoothies, Old Hickory Mall, Jackson, 08/24/02
level 11 TN
1.7 3422 MFBC Cataldo FH Smoothies Forum @Peachtree Norcross 08/28/02
GA
1.7 4253 MFC Keeter FH Smoothies Cary Towne Center, Cary, 10/05/02
NC
1.7 4103 MFC Caddell FH Smoothies South Hills Village, 11/12/02
Pittsburgh, PA
1.7 3435 MFBC Odhiambo FH Smoothies North Town Mall 12/18/02
QuickLinks
Exhibit 10.31
TCBY FRANCHISE AGREEMENT FOR STORES OPERATED IN CONJUNCTION WITH OTHER
CONCEPTS
TCBY FRANCHISE AGREEMENT TABLE OF CONTENTS
TCBY FRANCHISE AGREEMENT
SCHEDULE "A" Store Location Schedule
Franchise Agreement-Store Location Schedule dated Feb 28, 2004
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