Exhibit 10.31
TA FRANCHISE SYSTEMS INC.
CONVERSION FRANCHISE AGREEMENT
TABLE OF CONTENTS
Paragraph Page
I. APPOINTMENT AND FRANCHISE FEE....................................... 2
II. TERM AND RENEWAL.................................................... 3
III. FRANCHISED FACILITY MODIFICATION.................................... 4
IV. EQUIPMENT, FIXTURES, FURNITURE AND SIGNS............................ 6
V. TRAINING AND ASSISTANCE............................................. 6
VI. CONFIDENTIAL OPERATIONS MANUAL...................................... 7
VII. CONFIDENTIAL INFORMATION............................................ 8
VIII. MODIFICATION OF THE SYSTEM.......................................... 8
IX. ADVERTISING......................................................... 9
X. CONTINUING SERVICES AND ROYALTY FEE; PAYMENT TERMS.................. 11
XI. ACCOUNTING AND RECORDS.............................................. 12
XII. STANDARDS OF QUALITY AND PERFORMANCE................................ 13
XIII. TA's OPERATIONS ASSISTANCE.......................................... 18
XIV. PROPRIETARY MARKS................................................... 19
XV. INSURANCE........................................................... 21
XVI. RESTRICTIVE COVENANTS............................................... 22
XVII. DEFAULT AND TERMINATION............................................. 23
XVIII. RIGHTS AND DUTIES OF PARTIES UPON EXPIRATION OR TERMINATION......... 26
XIX. TRANSFERABILITY OF INTEREST......................................... 28
XX. DEATH OR INCAPACITY OF FRANCHISEE................................... 29
XXI. RIGHT OF FIRST REFUSAL.............................................. 30
XXII. OPERATION IN THE EVENT OF ABSENCE, DISABILITY OR DEATH.............. 30
XXIII. INDEPENDENT CONTRACTOR AND INDEMNITY AND HOLD HARMLESS.............. 31
XXIV. NON-WAIVER.......................................................... 31
XXV. NOTICE.............................................................. 32
XXVI. SEVERABILITY AND CONSTRUCTION....................................... 32
XXVII. APPLICABLE LAW...................................................... 33
XXVIII. ARBITRATION......................................................... 33
XXIX. DEFINITIONS......................................................... 34
XXX. CAVEAT.............................................................. 35
XXXI. ENTIRE AGREEMENT.................................................... 35
XXXII. ACKNOWLEDGEMENTS.................................................... 36
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TA FRANCHISE SYSTEMS INC.
CONVERSION FRANCHISE AGREEMENT
This Franchise Agreement, made this day of , 19 , by and between
TA FRANCHISE SYSTEMS INC., a Delaware corporation, having its principal place of
business at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇-▇▇▇▇
(hereinafter referred to as "TA"), and (hereinafter referred to as
"Franchisee").
WITNESSETH:
WHEREAS, over a period of several years and as the result of the
expenditure of time, skill, effort and money, TA and its parent have developed
and own a unique system for establishing, developing and operating full-service
truckstop facilities adjacent to major interstate highways, which truckstop
facilities provide a full range of services and products to professional truck
drivers and the travelling public through unique fuel, restaurant, retail, truck
repair and service and other hospitality or related profit centers (the
"System"); and
WHEREAS, the distinguishing characteristics of the System include
unique and distinctive: exterior and interior decor, color scheme, design and
layout; fuel sales and storage procedures; food preparation, service, sales and
storage techniques and procedures; retail product mix, merchandising and sales
techniques and procedures; truck repair and vehicle parts sales techniques and
procedures; shower, motel, permit, facsimile, vending, scale and other
hospitality related sales techniques and procedures; operating procedures for
sanitation and maintenance; systems for product distribution and storage,
including dedicated distribution centers; the TRUCKSTOPS OF AMERICA Point of
Sale System ("TA POS Computer System"); a customized billing system; and methods
and techniques for inventory and cost control, record keeping and reporting,
personnel management and training, purchasing and marketing, sales promotion and
advertising and facility design and construction, all of which may be modified,
replaced, or further developed by TA from time to time; and
WHEREAS, TA Operating Corporation ("TA Operating") is the owner
of all right, title and interest in the trade name TRUCKSTOPS OF AMERICA; the
federally registered trademarks, service marks, federal trademark and service
▇▇▇▇ applications set forth in Exhibit A hereto and designs, logos and other
symbols whether or not registered, together with the goodwill symbolized by such
trade names, trademarks, service marks, designs, exterior and interior decor,
logos or symbols and such other trade names, trademarks, service marks, designs,
logos or symbols as may be designated by TA from time to time as an integral
part of the System (hereinafter referred to collectively or any one of them as
the "Marks"; and
WHEREAS, TA Operating has granted a license to TA to sublicense
others to use of the Marks and the System; and
WHEREAS, TA grants franchises to own and operate TRUCKSTOPS OF
AMERICA branded facilities offering products, merchandise and services
authorized and approved by TA and utilizing TA's System and Marks (the aggregate
from time to time are "TA Franchises" and one is "TA Franchise") and Franchisee
owns and operates a truckstop which Franchisee desires to convert to a TA
Franchise, as well as to receive the training in connection therewith; and
WHEREAS, Franchisee acknowledges that by becoming a Franchisee of
TA, it will be subject to covenants against competition, confidentiality
agreements, and standards of performance and quality which otherwise would not
attach to its business operations.
NOW, THEREFORE, the parties, in consideration of the undertakings
and commitments of each party to the other hereby agree as follows:
I. APPOINTMENT AND FRANCHISE FEE
A. TA hereby grants to Franchisee, upon and subject to the terms and
conditions herein contained, the right, license and privilege to use the Marks
and Franchisee hereby undertakes the obligation to operate a TA Franchise
consisting of fuel operations, restaurant, retail store, truck repair and
service, truck scale and such other business as approved by TA pursuant to
Section I(D) of this Franchise Agreement, and to use and operate solely in
connection therewith and in accordance with the System, as it may be modified,
replaced or further developed from time to time by TA, at one location only,
such location to be: described on Exhibit C hereof and hereinafter defined as
"Franchise Site."
The business described above, together with the truckstop
facility and the Franchise Site, is in the aggregate sometimes referred to
herein as "Franchised Facility".
B. TA will not, so long as this Franchise Agreement is in force and
effect and Franchisee is not in default under any of its terms, grant another TA
Franchise or itself operate a TA branded truckstop facility within the following
area: (hereinafter "Territory").
C. Franchisee shall pay to TA the sum of ONE HUNDRED THOUSAND
dollars ($100,000.00) due and payable as follows: Forty-Five Thousand Dollars
($45,000.00) upon execution of this Franchise Agreement, and the balance (less
credit for the application fee paid to TA by Franchisee) upon the earlier of
commencement of any training of Franchisee or any employee, or six (6) months
from the date of this Franchise Agreement. Upon the earlier of payment or the
due date for payment, such sums shall be deemed fully earned and non-refundable
in whole or in part, notwithstanding any termination of this Franchise Agreement
even prior to the commencement of the initial term, whereupon such sums shall be
kept by TA as consideration for expenses incurred by TA in furnishing assistance
and services to Franchisee and for TA's lost or deferred opportunity to
franchise others for which, although the exact amount of damages sustained by TA
could not be ascertained, Franchisee acknowledges the sums are reasonable.
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D. Franchisee may request approval to operate motel/lodging
facilities, fast food and deli operations or other business facilities on the
Franchise Site. If TA approves such request in writing, Franchisee agrees to
operate such businesses in accordance with TA's standards and specifications and
such businesses shall be included in the definition of "Franchised Facility."
Franchisee and each Franchisee Party agree not to operate any business or
facility on the Franchise Site other than as stated in Section I(A) or otherwise
approved by TA in writing in TA's sole discretion.
E. TA reserves the right and privilege, at its sole discretion, to
vary standards for any aspect of the System based upon the specifics of the
particular site or circumstance, density of population, business potential,
population of trade area, existing business practices or any other condition
which ▇▇ ▇▇▇▇▇ to be of importance to the successful operation of TA Franchises
and/or the System.
F. Certain terms used in this Franchise Agreement are defined in
Section XXIX. below.
II. TERM AND RENEWAL
A. The initial term of the TA Franchise shall be for a period of ten
(10) years commencing on the date which TA designates in writing to Franchisee
is the date upon which the Franchised Facility commenced normal operations
(which date shall be after branding). The phrase "term of this Franchise
Agreement" for all purposes other than determining the initial term and renewal
terms (if any) of this Franchise Agreement, shall include the period from the
date of execution of this Franchise Agreement through the date upon which the
Franchised Facility commences normal operations (as designated above).
B. If Franchisee desires to extend its TA Franchise for an
additional five (5) year period, Franchisee shall give TA written notice of such
desire at least six (6) but not more than twelve (12) months prior to the
expiration of the then-current term. Within ninety (90) days after its receipt
of timely notice, TA shall advise Franchisee in writing that either: (i) it
consents to the proposed extension; (ii) it consents to the proposed extension
subject to and provided that Franchisee complies, to TA's satisfaction, with
certain terms or conditions; or (iii) it does not consent to the proposed
extension. Among other things, TA may require, as a condition of its consent to
such an extension, that:
1. Franchisee satisfy TA's then-current requirements relating
to the image, appearance, decoration, furnishing, equipping and
stocking of TRUCKSTOPS OF AMERICA facilities;
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2. Franchisee maintains possession of the Franchised Facility
(and presents evidence satisfactory to TA that it has the right to
remain in possession of the Franchised Facility for the duration of
any extension term) and that, prior to the expiration date of the
then-current term of this Franchise Agreement, Franchisee brings the
Franchised Facility into full compliance with the specifications and
standards then applicable for TRUCKSTOPS OF AMERICA facilities;
3. Franchisee satisfies all monetary obligations owed by
Franchisee to TA and TA's subsidiaries, parents or affiliates;
4. Franchisee executes TA's then-current form of Franchise
Agreement (with appropriate modifications to reflect the fact that the
agreement relates to the grant of an extension of the franchise),
which agreement shall supersede in all respects this Franchise
Agreement and the terms of which may differ from the terms of this
Franchise Agreement, including, without limitation, a higher
percentage royalty fee and advertising contribution and a modified
Territory;
5. Franchisee pay a renewal fee, which fee shall not exceed the
amount of the then-current franchise fee being charged by TA for new
franchises;
6. Franchisee complies with TA's then-current qualification
and training requirements; and
7. Franchisee executes a general release in a form acceptable
to TA of any and all claims which it has or may have as of the date of
such renewal against TA or its subsidiaries and parents and their
respective officers, directors, agents and employees.
III. FRANCHISED FACILITY MODIFICATION
A. Prior to the initial term (as defined in Section II(A) above),
Franchisee must remove all inventory, fixtures, furniture, furnishings,
marketing materials, supplies and equipment which do not conform with the
System, are not approved by TA, or which do not meet the standards and
specifications prescribed in the Confidential Operations Manual (as amended from
time to time).
B. Immediately following the execution of this Franchise Agreement,
TA shall furnish to Franchisee the interior and exterior design criteria for the
truckstop facility. Franchisee must perform such construction, renovation and
refurbishing as is necessary to conform and comply with TA's standards,
specifications and criteria, in accordance with the Conversion Obligation
Schedule set forth in Exhibit D to this Franchise Agreement. Any architectural
or other fees required to utilize or modify the same will be Franchisee's
responsibility. Prior to the commencement of refurbishing of the premises,
Franchisee must submit to TA (or its designee) all pertinent architectural,
engineering, construction, layout and design plans, prints, drawings and related
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documents for review and final approval. Franchisee agrees to close the
operation of each department (or facility) for the time required to undertake
and complete all construction, renovation and refurbishing necessary to conform
and comply with the requirements herein. Failure to meet the Conversion
Obligation Schedule will give TA the right to terminate Franchisee in accordance
with Section XVII(C)(2).
C. Franchisee agrees that promptly after the execution of this
Franchise Agreement for the proposed Franchised Facility it will:
1. Prepare and submit to TA for approval a site survey and
layout showing any modifications to TA's basic architectural, plans,
and specifications and drawings for a TRUCKSTOPS OF AMERICA facility
(including System requirements for dimensions, exterior design and
layout, fuel storage and sales facilities, materials, interior design
and layout, equipment, fixtures, furniture, signs and decorating)
provided that Franchisee may modify TA's basic plans and
specifications only to the extent required to comply with all
applicable ordinances, building codes and permit requirements and with
prior notification to and approval by TA;
2. Obtain all required zoning changes; all required building,
utility, health, sanitation, and sign permits and licenses and any
other required permits and licenses;
3. Purchase or lease equipment, fixtures, furniture and signs
as provided herein;
4. Complete the construction and/or remodeling, equipment,
fixture, furniture and sign installation and decorating of the
Franchised Facility in full and strict compliance with plans and
specifications therefore approved by TA and all applicable ordinances,
building codes and permit requirements;
5. Obtain all customary contractors' sworn statements and
partial and final waivers of lien for construction, remodeling,
decorating and installation services;
6. Cause the premises of the Franchised Facility to be in full
and strict compliance with the Resource Conservation and Recovery Act
of 1976, as amended from time to time, and all other federal, state
and local laws relating to aboveground and underground storage
facilities and other applicable environmental matters; and
7. Otherwise complete development of and have the Franchised
Facility ready to open and commence the conduct of its business.
Notwithstanding anything to the contrary herein, in the event of a
conflict between the terms of the Conversion Obligation Schedule and
the provisions herein, the terms of the Conversion Obligation Schedule
shall govern.
D. Franchisee understands and agrees that from time to time TA may,
at its discretion, require Franchisee to make periodic capital expenditures to
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remodel, modernize and redecorate the Franchised Facility and to replace and
modernize the premises of the Franchised Facility so that the Franchised
Facility will reflect the then-current image intended to be portrayed by
TRUCKSTOPS OF AMERICA facilities, up to the following limits of aggregate
capital expenditures (which limits are measured by expenditures necessary to
accomplish the project(s) required by such notice(s) and as if the project(s)
are undertaken and the expenditures are made expeditiously, and without counting
those expenditures made, for example, to fulfill the tasks described in the
Conversion Obligation Schedule, Exhibit D hereof): Four Hundred Thousand Dollars
($400,000.00) during the first sixty (60) months of the initial term of this
Franchise Agreement, and thereafter Six Hundred Thousand Dollars ($600,000.00)
during each succeeding sixty (60) month period (or part thereof) during the term
of this Franchise Agreement. All remodeling, modernization or redecoration of
the Franchised Facility and its premises must be done in accordance with the
standards and specifications as prescribed by TA from time to time and with the
prior written approval of TA. All replacements must conform to TA's then-current
quality standards and specifications and must be approved by TA in writing.
E. In the event that the Franchised Facility is damaged or destroyed
in whole or in part, Franchisee shall use best efforts to repair, restore or
rebuild the Franchised Facility in accordance with TA's then-current standards
and specifications at the earliest possible date, but in no event shall such
repair, restoration or rebuild be completed later than six (6) months after the
occurrence of the damage to the Franchised Facility or its premises, unless a
later date is requested in writing by Franchisee within three (3) months after
the occurrence of the aforesaid damage or destruction and such date is consented
to in writing by TA.
F. Notwithstanding anything contained in this Franchise Agreement to
the contrary, TA shall not assume or incur any responsibility or liability for
any reason whatsoever to Franchisee or to any third party, by virtue or because
of or in connection with any drawing, information, approvals, advice,
assistance, services, inspection or specification (including but not limited to
the Confidential Operations Manual or its contents), given to, or omitted to be
given to, Franchisee under, in respect of or relating to, this Franchise
Agreement, the Franchised Facility or the Franchised Site, and Franchisee and
each of the Franchisee Parties, jointly and severally, agree to indemnify and
hold harmless TA and its parents, subsidiaries, and affiliates and their
shareholders, directors, officers, employees and agents, from and against any
losses, claims, costs, expenses, damages and liabilities in respect thereto.
IV. EQUIPMENT, FIXTURES, FURNITURE AND SIGNS
A. TA shall provide Franchisee with specifications for dispensing,
storage and display equipment, cash registers, other equipment, fuel facilities
and equipment, fixtures, furniture, exterior and interior signs and decorating
required for the Franchised Facility. Specifications may include minimum
standards for performance, warranties, design and appearance and local zoning,
sign and other restrictions. Franchisee may purchase or lease original and
replacement equipment, fixtures, furniture, signs and decorating materials and
services meeting such specifications from any source. If Franchisee proposes to
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purchase or lease any item of equipment or furniture or any fixture, sign or
decorating materials not theretofore approved by TA as meeting its
specifications, Franchisee shall first notify TA and TA may require submission
of sufficient specifications, photographs, drawings or other information and
samples to determine whether such item of equipment or furniture or such
fixture, sign or decorating materials meets its specifications. TA shall advise
Franchisee within a reasonable time whether such item of equipment or furniture
or such fixture, sign or decorating materials meets its specifications.
B. Franchisee shall strictly comply with all specifications for
brand and type of equipment used in the Franchised Facility as provided in
Sections XII and XIII herein.
V. TRAINING AND ASSISTANCE
A. Prior to the opening for business of the Franchised Facility,
Franchisee's employees performing the following functions: General Manager,
Assistant General Manager, Fuel Manager, Assistant Fuel Manager, Restaurant
Manager, Assistant Restaurant Manager, Retail Store Manager, Assistant Retail
Store Manager, Truck Repair Shop Manager and Assistant Truck Repair Shop Manager
(and such other functions which TA may from time to time designate), shall
successfully complete training for such positions, which training shall be
provided by TA in accordance with the Confidential Operations Manual and this
Franchise Agreement. TA shall not charge a training fee for the initial employee
to hold each of the above-listed job functions, but Franchisee shall be
responsible for all expenses incurred by such individuals in attending such
training, including, without limitation, travel and living expenses.
B. Unless waived in writing by TA, whenever an untrained person
subsequently assumes a position for which TA requires training, Franchisee shall
notify TA within three (3) days of the identity of the untrained personnel, and
such personnel shall attend and successfully complete the next training program
to be offered by TA, for which space is available. Training of such personnel
shall be at Franchisee's sole expense, including, without limitation, payment of
TA's then-current training fee.
C. If TA, in its sole discretion, determines that Franchisee, or any
employee holding a position for which TA requires training, has been unable to
complete the required training program satisfactorily, TA shall have the right
to terminate this Franchise Agreement. If this Franchise Agreement is terminated
pursuant to this Paragraph, TA shall return to Franchisee the franchise fees
paid by Franchisee to TA, minus the expenses incurred by TA as of such date.
D. During the initial three (3) months of operation of Franchised
Facility, TA will furnish to Franchisee, at the Franchised Facility and at TA's
expense, the assistance of one of TA's representatives for up to thirty (30)
working days. If Franchisee requests additional assistance in order to
facilitate the opening of the Franchised Facility or, if TA determines
additional assistance is needed, TA may provide such additional assistance at
Franchisee's expense. Additionally, TA will provide ongoing assistance as
described in Section XIII.
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E. TA may require previously trained and experienced Franchisees or
their managers or employees to attend and successfully complete refresher
training programs or seminars to be conducted by TA at Franchisee's expense
(including, without limitation, TA's then current training fee); provided,
however, that attendance will not be required of any individual at more than two
(2) such programs in any calendar year and will not collectively exceed five (5)
days in duration during any calendar year.
VI. CONFIDENTIAL OPERATIONS MANUAL
A. TA will loan to Franchisee during the term of the TA Franchise
one or more copies of a set of manuals containing mandatory and suggested
specifications, standards, operating procedures and rules prescribed from time
to time by TA for TRUCKSTOPS OF AMERICA facilities and information relative to
other obligations of Franchisee hereunder and the operation of its Franchised
Facility, as the same may be amended from time to time, the master copy of which
shall be kept at TA's Office (collectively, the "Confidential Operations
Manual"). The Confidential Operations Manual contains proprietary information of
TA and shall be kept confidential by Franchisee and the Franchisee Parties both
during the term of the TA Franchise and thereafter. TA shall have the right to
add to and otherwise modify the Confidential Operations Manual from time to time
to reflect changes in the specifications, standards, operating procedures and
rules prescribed by TA for TRUCKSTOPS OF AMERICA facilities, provided that no
such addition or modification shall alter Franchisee's fundamental status and
rights under this Franchise Agreement.
B. The Confidential Operations Manual shall at all times remain the
sole property of TA and shall promptly be returned upon the expiration or other
termination of this Franchise Agreement.
C. Franchisee shall at all times ensure that its copy of the
Confidential Operations Manual is kept current and up-to-date and, in the event
of any dispute as to the contents of the Confidential Operations Manual, the
terms of the master copy of the Confidential Operations Manual maintained by TA
at TA's home office shall be controlling.
VII. CONFIDENTIAL INFORMATION
A. Franchisee acknowledges that its knowledge of the System,
including operating procedures of a TRUCKSTOPS OF AMERICA facility, is derived
from information disclosed to Franchisee by TA and that such information,
including the contents of the Confidential Operations Manual, is proprietary,
confidential and a trade secret of TA. Franchisee agrees that it will maintain
the absolute confidentiality of all such proprietary information during and
after the term of the TA Franchise and that it will not use any such information
in any other business or in any manner not specifically authorized or approved
in writing by TA.
B. Franchisee shall divulge such confidential information only to
such of its employees as must have access to it in order to operate the
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Franchised Facility. Any and all information, knowledge and know-how, including,
without limitation, drawings, materials, TA POS Computer Systems, programs,
customer lists, billing programs, discounts, pumping fees, training materials,
user guides, system manuals, hardware and equipment, other equipment,
techniques, retail store systems, truck repair and maintenance systems, fuel
storage, sales and dispensing systems, restaurant systems, product formulae,
Confidential Operations Manual, similar documents provided to Franchisee from
time to time, and other data which TA designates as confidential, shall be
deemed confidential; except information which (1) Franchisee can demonstrate
came to its attention prior to disclosure thereof by TA; or (2) at the time of
disclosure by TA to Franchisee, had become a part of the public domain, through
publication or communication by others; or (3) after disclosure to Franchisee by
TA, becomes a part of the public domain (other than pursuant to a violation of
this Franchise Agreement or any other agreement), through publication or
communication by others.
C. Due to the special and unique nature of the confidential
information, the Marks and Confidential Operating Manual, Franchisee hereby
agrees and acknowledges that TA shall be entitled to immediate equitable
remedies, including but not limited to, restraining orders and injunctive relief
in order to safeguard such proprietary, confidential, unique, and special
information of TA and that money damages alone would be an insufficient remedy
with which to compensate TA for any breach of the terms of Sections VI, VII, and
XIV of this Franchise Agreement. Furthermore, Franchisee agrees that all
employees of Franchisee having access to confidential and proprietary
information of TA shall be required to execute confidentiality agreements in a
form acceptable to TA.
VIII. MODIFICATION OF THE SYSTEM
Franchisee recognizes and agrees that from time to time TA may change
or modify the System presently identified by the ▇▇▇▇ "TRUCKSTOPS OF AMERICA,"
including, but not limited to exterior and interior decor, the adoption and use
of new or modified trade names, trademarks, service marks or copyrighted
materials, new POS Computer Systems and programs, new accounting systems, new
sales and marketing programs, new products and services, new equipment or new
techniques, and Franchisee agrees to accept, use and display for the purpose of
this Franchise Agreement any such changes in the System, as if they were part of
this Franchise Agreement at the time of execution hereof. Subject to Section
III(D) above, Franchisee will make such expenditures and such changes or
modifications in the System as TA may reasonably require. Franchisee shall not
change, modify or alter the System in any way except as approved by TA in
writing.
IX. ADVERTISING
Recognizing the value of advertising and the importance of the
standardization of advertising and promotion to the furtherance of the good will
and the public image of TRUCKSTOPS OF AMERICA facilities, Franchisee agrees as
follows:
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A. Franchisee will submit to TA or its designated agency for prior
approval all promotional materials and advertising to be used by Franchisee,
including, but not limited to, billboards, newspapers, radio and television
advertising, specialty and novelty items, signs, boxes, napkins, bags, wrapping
papers, placemats and other point of purchase material. The submission of
advertising to TA for approval shall not affect Franchisee's right to determine
the prices at which Franchisee sells its products or services.
B. Franchisee agrees to contribute to the TA Advertising and
Development Fund (hereinafter "Fund"), an amount equal to one-fourth of one
percent (0.25%) of the aggregate gross receipts (as defined in Section X(B)(1)
below) derived from the Franchised Facility, including dollar fuel sales (as
defined in Section X(B) below) earned at the Franchised Facility, payable
monthly as provided in Section X(A) and (C) for the Continuing Services and
Royalty Fee. The Fund shall be maintained and administered by TA or its
designee, as follows:
1. TA shall direct all advertising programs with sole
discretion over the creative concepts, materials and media used in
such programs and the placement and allocation thereof. Franchisee
agrees and acknowledges that the Fund is intended to maximize general
public recognition and acceptance of the Marks for the benefit of the
System and that TA is not obligated in administering the Fund to make
expenditures for Franchisee which are equivalent or proportionate to
its contribution or to ensure that any particular franchisee benefits
directly or pro rata from the placement of advertising.
2. Franchisee agrees that the Fund may be used to meet any and
all costs of maintaining, administering, directing and preparing
advertising (including, without limitation, the cost of preparing and
conducting television, radio, magazine, billboard, poster, placemats
and newspaper advertising campaigns and other public relations
activities; employing advertising agencies, marketing specialists, or
placement agencies to assist therein; and providing promotional
brochures, location directories and other marketing materials to
franchisees in the System). All sums paid to the Fund shall be
maintained in a separate account from the other funds of TA (but need
not be held by a trustee or custodian) and shall not be used to defray
any of TA's general operating expenses except for such reasonable
administrative costs and overheads, if any, as TA may incur in
activities reasonably related to the administration or direction of
the Fund and advertising programs, including, without limitation,
conducting market research, preparing marketing and advertising
materials and collecting and accounting for assessments for the Fund.
3. It is anticipated that all contributions to the Fund shall
be expended for advertising and promotional purposes during TA's
fiscal year within which the contributions are made. If, however,
excess amounts remain in the Fund at the end of such fiscal year, all
expenditures in the following fiscal year(s) shall be made first out
of any current interest or other earnings of the Fund, if any, next
out of any accumulated earnings and, finally, from principal.
Notwithstanding the foregoing, it is understood and agreed that TA is
not obligated to maintain such funds in an interest-bearing account.
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4. Although TA intends the Fund to be of perpetual duration,
TA maintains the right to terminate the Fund. The Fund shall not be
terminated, however, until all monies in the Fund have been expended
for advertising and promotional purposes. TA may suspend collection of
contributions for and/or suspend expenditures by the Fund without
terminating the Fund.
5. An accounting of the operation of the Fund shall be prepared
annually and shall be made available to Franchisee upon request. At
its option, TA may have such accounting prepared by an independent
accountant selected by TA at the expense of the Fund.
C. Franchisee shall be required, at its sole expense, to maintain
not less than two (2) billboards advertising the Franchised Facility in a form
approved by TA which shall be located at sites approved by TA.
D. Franchisee shall spend a minimum of Ten Thousand Dollars
($10,000.00) for newspaper, direct mail or advertising through other media
during Franchisee's initial thirty (30) days of operation of the Franchised
Facility in accordance with TA's policy for "Business Opening" advertising.
E. TA may, from time to time, develop and market special promotional
items which will be made available to Franchisee at TA's cost plus a reasonable
▇▇▇▇ up to cover TA's overheads, and Franchisee shall purchase and maintain a
representative inventory of such promotional items to meet public demand.
Franchisee shall have the right to purchase alternative promotional items from
other sources provided that such alternative goods conform to the specifications
and quality standards established by TA from time to time.
F. TA may, from time to time, develop, establish and market special
discount or free coupon programs, brand or product sales programs, or other
programs designed to induce use of motor fuel products or services from, or
patronage at, TRUCKSTOPS OF AMERICA branded facilities. Franchisee shall either
fully participate, or advise TA immediately in writing of its non-participation
in such programs. If Franchisee elects not to participate in any such program,
it shall prominently display signs approved by TA (both as to contents and
location) indicating Franchisee is not participating in such program(s).
Notwithstanding anything to the contrary herein, Franchisee shall fully
participate in and comply in all respects with any program which TA determines,
in its sole discretion, is or will become closely associated with the System.
G. Franchisee shall not advertise or use in advertising or any other
form of promotion the Marks without the appropriate Federal registration marks
or the symbol or the designation "TM" (which stands for trademark) or "SM"
(which stands for service ▇▇▇▇) where applicable.
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X. CONTINUING SERVICES AND ROYALTY FEE; PAYMENT TERMS
A. Franchisee shall pay to TA without offset, credit or deduction of
any nature, so long as this Franchise Agreement shall be in effect, a monthly
Continuing Services and Royalty Fee equal to: (i) four percent (4%) of the gross
receipts derived from the Franchised Facility, excluding fuel sales (as defined
in Section (B)(2) below); plus (ii) two percent (2%) of the gross receipts
derived from sales at the Franchised Facility of any nationally branded fast
foods which are approved in writing by TA; plus (iii) four-tenths of a cent
($.004) per gallon on all fuel sales derived from the Franchised Facility.
B. As used in this Franchise Agreement, the following terms shall
have the meanings set forth below:
1. The term "gross receipts," shall mean all revenues earned
directly or indirectly by Franchisee (or any entities with which
Franchisee or any Franchisee Party is affiliated), from the Franchised
Facility and all businesses on the Franchised Site. Each charge or
sale upon credit shall be treated as a sale for the full price in the
calendar month during which such charge or sale was made, irrespective
of the time when Franchisee receives payment (whether full or partial)
therefor. Gross receipts shall not include (a) the amount of any sales
tax, excise tax or inspection fees imposed by any federal, state,
municipal or other governmental authority directly on sales and
collected from customers, provided that the amount thereof is included
in the selling price and is actually paid by Franchisee to such
governmental authority; (b) refunds to customers for merchandise,
provided that the amount received for such merchandise shall have
previously been included in gross receipts; (c) trade discounts; and
(d) in the case of nationally branded fast food approved by TA,
royalty and advertising fees paid to the franchisor of such fast food.
In the calculation of gross receipts, the following guidelines shall
be used: (i) in cases in which Franchisee receives funds for
conveyance to an unrelated third party and retains only a commission
from the funds so received (e.g., Western Union money orders, sale of
permits), only the commission portion of such funds shall be included
in gross receipts; (ii) subject to TA's approval, in cases in which
the Franchisee receives only a commission from a business activity
rather than the gross revenues from such activity (e.g., game
revenues, permit sales, lottery ticket sales, CAT scale sales,
telephone commissions and the like), only the commission received by
Franchisee shall be included in gross receipts, provided that such
commissions are reasonable and customary and are actually paid by
Franchisee to third parties; and (iii) in the event any portion of the
Franchise Site is leased to, and operated by, an unrelated third party
(subject to TA's approval and the restrictions of this Franchise
Agreement), then the rental income or other consideration (valued at
fair market value) received directly or indirectly from such third
party shall be included in gross receipts.
2. The term "fuel sales" shall mean the sale of gasoline,
diesel fuel and alternate fuel sold at the Franchised Facility. For
purposes of Section X(A)(iii) above, in determining the gallons of
fuel sales, each charge or sale, whether for cash or on credit, shall
be treated as a sale in the month during which such charge or sale was
made, irrespective of whether, or of the month when, Franchisee
receives payment therefor.
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C. The Continuing Services and Royalty Fee shall be paid in the
manner prescribed in the Confidential Operations Manual and shall be due on the
twenty-fifth (25th) day of each month for the preceding month. Notwithstanding
the foregoing, payment terms for all amounts due TA from Franchisee shall be in
accordance with terms established by TA which may be changed at any time at TA's
discretion. Among other things, TA shall have the right to require payment by
certified check or by electronic funds transfer. All Continuing Services and
Royalty Fees, and amounts due for purchases by Franchisee from TA and its
affiliates, and other amounts which Franchisee may owe to TA or its parents or
affiliates, shall bear interest after due date at the highest applicable legal
rate for open account business credit, not to exceed one and one-half percent
(1-1/2%) per month. Franchisee agrees to make all payments according to terms,
whether or not disputed, and waives any claim or right of offset, set-off, or
deduction for amounts disputed or otherwise, provided, however, that where
Franchisee claims in good faith that goods invoiced from the distribution center
were not delivered as invoiced, Franchisee may withhold payment for the disputed
amount of such goods for a period not to exceed thirty (30) days from the
claimed delivery date, in order to afford the parties an opportunity to resolve
the dispute. Franchisee's sole remedy, to the exclusion of all others, for
disputed amounts which are not resolved by agreement of the parties (including
amounts withheld for 30 days pursuant to the provision above) shall be to pay
the disputed amount to TA and then to invoke arbitration under the procedures
provided in Section XXVIII. If Franchisee obtains an award pursuant to
arbitration described herein, recovering the disputed amount from TA, the award
shall include interest at the rate specified above for the period from the date
of payment by Franchisee to TA, to the date of repayment by TA. Notwithstanding
anything to the contrary herein, TA may seek judgement in any court for any
amount due from Franchisee or with respect to any disputes hereunder, or may
invoke arbitration therefore under the procedures provided in Section XXVIII,
and may exercise termination rights under Section XVII. In addition, TA shall
have the sole discretion to apply any payments by Franchisee to any past due
indebtedness of Franchisee for Continuing Services and Royalty Fees, advertising
contributions, purchases from TA and its parents, subsidiaries or affiliates,
interest or any other indebtedness.
XI. ACCOUNTING AND RECORDS
A. Franchisee shall establish and maintain bookkeeping, accounting
and record-keeping procedures conforming to the requirements prescribed by TA,
including, without limitation, the use and retention of sales checks, cash
register tapes, purchase orders, invoices, payroll records, check stubs, sales
tax records and returns, cash receipts and disbursements, general journals,
general ledgers, bank statements and deposit slips.
B. Franchisee will supply to TA, in the form specified by TA, a
monthly profit and loss statement by the twenty-fifth (25th) day of the month
following each calendar month; and a sales and sales tax report by the
twenty-fifth (25th) day of each month, for the last preceding calendar month.
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Additionally, Franchisee shall submit to TA within ninety (90) days of the end
of each fiscal year during the term of this Franchise Agreement, a profit and
loss statement for such fiscal year and a balance sheet as of the last day of
such fiscal year, prepared on an accrual basis, including all adjustments
necessary for fair presentation of the financial statements. Such financial
statements shall, at Franchisee's expense, be compiled and prepared in
accordance with generally accepted accounting standards by a certified public
accountant.
C. Franchisee shall submit to TA such other periodic reports, forms,
information and records as specified, and in the manner and at the time as
specified, in the Confidential Operations Manual or otherwise in writing.
D. Franchisee shall keep true, complete and correct records of each
transaction of any activity affecting revenues, discounts, inventory, sales and
other related data of the Franchised Facility for a period of four (4) years
from the date thereof.
E. TA or its designated agents shall have the right at all
reasonable times to examine and copy, at its expense, the books, records, and
tax returns of Franchisee. TA shall also have the right at any time to have an
independent audit made of the books of Franchisee. If an inspection should
reveal that any payments to TA have been understated in any report to TA, then
Franchisee shall immediately pay to TA the amount understated in addition to
interest as specified in Section X(C). If an inspection discloses an
understatement of three percent (3%) or more in any period of ninety (90) days
or more, Franchisee shall in addition reimburse TA for any and all costs and
expenses connected with the inspection (including, without limitation,
reasonable accounting and attorneys' fees). The foregoing remedies shall be in
addition to any other remedies TA may have.
F. Franchisee hereby agrees to obtain at Franchisee's expense, such
cash registers, data terminals, printers, supplies and other equipment as
required by TA from time to time. If required by TA, Franchisee also agrees to
obtain, at Franchisee's expense, all modems, data phone lines and necessary
hardware, software and technical assistance to allow data communication between
TA's host computer, if any, and Franchisee's equipment.
XII. STANDARDS OF QUALITY AND PERFORMANCE
Franchisee understands and acknowledges the importance of TA's high
and uniform standards of quality and service and the necessity of operating the
TRUCKSTOPS OF AMERICA Franchise in conformity with TA's standards and
specifications. Accordingly, Franchisee agrees that it shall comply with the
System, including but not limited to the following:
A. Franchisee shall convert the operation of the Franchised Facility
in accordance with the Conversion Obligation Schedule or as otherwise agreed in
writing. Prior to such commencement, Franchisee shall have procured all
necessary licenses, permits, and approvals, including but not limited to
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construction, occupancy and operating permits, hired and trained personnel, made
all leasehold improvements, and purchased initial inventory.
B. Franchisee agrees to maintain the condition and appearance of the
premises of the Franchised Facility consistent with TA's standards for the image
of a TRUCKSTOPS OF AMERICA branded facility as an attractive, pleasant and
comfortable facility conducive to buying by its customers. Franchisee agrees to
maintain the appearance and efficient operation of the Franchised Facility
including replacement of worn out or obsolete fixtures and signs, repair of the
exterior and interior of the Franchised Facility and redecorating. If at any
time in TA's judgment, the general state of repair or the appearance of the
premises of the Franchised Facility or its equipment, fixtures, signs or decor
does not meet TA's standards, TA shall notify Franchisee, specifying the action
to be taken by Franchisee. Within thirty (30) days of such notice (or such
shorter period if required by law or required to protect person, property, or
the environment), Franchisee shall initiate and thereafter continue a bona fide
program to complete any required maintenance or repair. TA shall have the right,
in addition to all other remedies, to enter upon the premises of the Franchised
Facility and effect such maintenance, repairs, painting, decorating or
replacements of equipment, fixtures or signs on behalf of Franchisee and
Franchisee shall pay TA the entire costs thereof.
C. Franchisee shall make no material alterations to the Franchised
Facility nor shall Franchisee make material replacements of or alterations to
the equipment, fixtures or signs of the Franchised Facility (i) inconsistent
with the Basic Design (as described in the TA Planning and Design Standards
Manual) or System, without the prior written approval of TA in TA's sole
discretion, or (ii) otherwise, without the prior written approval of TA, such
approval not to be unreasonably withheld.
D. The Franchise Site shall be used solely for the Facility, except
as otherwise approved in advance in writing by TA.
E. Except to the extent that Franchisee is prohibited from selling
certain categories of products under the terms of the Franchised Facility lease,
if any, Franchisee agrees that it will offer for sale and sell at the Franchised
Facility all types of food, products and services that TA from time to time
authorizes and that it will not offer for sale or sell at the Franchised
Facility or the premises which it occupies any other category of products or use
such premises for any purpose other than the operation of a Franchised Facility
in full compliance with this Franchise Agreement. Franchisee is prohibited from
displaying, offering and selling any alcoholic beverages, packaged or otherwise,
and any sexual or pornographic materials, including, without limitation, books,
magazines, videotapes, cassettes, calendars, novelty and related items.
Additionally, Franchisee shall immediately remove any product it offers for sale
and cease offering any service which ▇▇ ▇▇▇▇▇ inappropriate in its sole
discretion.
F. TA shall provide Franchisee with a current list of approved
manufacturers, suppliers and distributors and approved food and non-food
products, signs, stationery, supplies, and other items or services necessary to
operate the Franchised Facility. TA may revise the list from time to time in its
sole discretion. Franchisee recognizes and acknowledges that TA may receive
fees, commissions and other considerations of value from approved manufacturers,
suppliers and distributors, that Franchisee has no objection or right thereto,
and that Franchisee shall receive only such part thereof, if any, as TA may in
its sole discretion allocate.
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G. Materials, supplies and products used in the operation of the
Franchised Facility or otherwise held for resale (including but not limited to
menu items, beverages, ingredients and other food and beverage products and
materials, containers, packaging materials, other paper and plastic products,
plates, cups, utensils, menus, uniforms, forms, cleaning and sanitation
materials) shall conform to the specifications and quality standards established
by TA from time to time and shall be procured from TA or suppliers approved by
TA. If Franchisee proposes to offer for sale at the Franchised Facility any
brand of product, or to use in the operation of the Franchised Facility, any
brand of food ingredient or other material or supply which is not then approved
by TA as meeting its minimum specifications and quality standards, or to
purchase any product, material or supply from a supplier that is not then
designated by TA as an approved supplier, then Franchisee shall first notify TA
in writing and shall submit samples and such other information as TA requests
for examination or testing or to otherwise determine whether such product,
material or supply, or such proposed supplier, meets TA's specifications and
quality standards or should otherwise be approved. If TA fails to disapprove the
product, material, supply or supplier, or request more samples or more
information, within fourteen (14) days of Franchisee's initial submission to TA,
then Franchisee is free to commence the procurement. A charge not to exceed the
reasonable cost of the inspection and evaluation and the actual cost of the test
shall be paid by Franchisee promptly upon TA's request. TA reserves the right to
re-inspect the facilities and products of any supplier and to revoke approval of
any item or any supplier which fails to continue to meet any of TA's criteria.
H. Franchisee agrees to comply fully with all specifications,
standards, operating procedures and rules prescribed from time to time by TA in
the Confidential Operations Manual (or other operations manual), or otherwise
communicated to Franchisee in writing and designated by TA as constituting
mandatory standards (the "Mandatory Standards"), including but not limited to
specifications, standards, operating procedures and rules as in effect from time
to time relating to the following:
1. The safety, maintenance, cleanliness, sanitation, function
and appearance of the Franchised Facility and its equipment, fixtures,
decor and signs and the maintenance and service agreements therefor;
2. Training, dress, uniform, general appearance and demeanor of
Franchised Facility employees;
3. Type, quality, taste, portion control and uniformity, and
manner of preparation, packaging, display and sale, of all food,
beverages, merchandise, fuel and other items sold by the Franchised
Facility;
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4. Maintaining the Franchised Facility open for business
twenty-four (24) hours per day, seven (7) days per week;
5. Advertising, promotional, and service programs;
6. Use and retention of standard business forms;
7. Use and illumination of signs, posters, displays, menu
boards and similar items;
8. Identification of Franchisee as the owner of the Franchised
Facility; and
9. The type, variety, and quality of customer service and the
handling of customer complaints and satisfaction guarantees.
I. In order to preserve the goodwill, validity and integrity of the
Marks and the System, and to ensure that Franchisee is properly employing both
the Marks and the System in the operation of its Franchised Facility, TA or its
agents shall have the right of entry and inspection of Franchisee's premises and
operating procedures at all reasonable times. TA or its agents shall have the
right at any time to observe the manner in which Franchisee is rendering its
services and conducting its operations, to confer with Franchisee's employees
and customers, and to select motor fuel and other petroleum products,
ingredients, food and non-food products, beverages and other items, products,
equipment, merchandise, sundries, materials and supplies for test of content and
evaluation purposes to make certain that they are satisfactory and meet the by
TA. In the event any products do not conform to TA's standards and
specifications, Franchisee shall upon learning of the non-conformance
immediately cease offering and selling such products.
J. Franchisee shall secure and maintain in force all required
licenses, permits and certificates relating to the operation of the Franchised
Facility and shall operate the Franchised Facility in full compliance with all
applicable laws, ordinances and regulations, including without limitation all
government regulations relating to compensation, general liability and pollution
liability insurance requirements, unemployment insurance and sales,use and
property taxes. Furthermore, Franchisee shall cause the Franchised Facility to
be and remain in full and strict compliance with all environmental laws and
regulations, including but not limited to the Resource Conservation and Recovery
Act of 1976, as amended from time to time, and other applicable federal, state
and local laws relating to aboveground and underground tanks and storage
facilities and the dispensing of fuel.
K. Franchisee agrees to refrain from any merchandising, advertising
or promotional practice which TA, in its sole discretion, determines is
unethical or may be injurious to the business of TA or other Franchised
Facilities or to the goodwill associated with the Marks.
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L. Franchisee agrees that the Franchised Facility shall at all times
maintain inventories sufficient to meet customer demands.
M. Franchisee shall in the operation of the Franchised Facility use
only displays, trays, boxes, bags, wrapping paper, labels, beverage cups, forms
and other paper and plastic products imprinted with the Marks in a form and
presentation prescribed from time to time by TA.
N. The Franchised Facility shall at all times be under the direct
supervision of Franchisee (or a trained and competent employee approved by TA
acting as full-time general manager or assistant general manager). Franchisee
shall keep TA informed at all times of the identity of any employees acting as
managers of the Franchised Facility.
O. Franchisee understands and acknowledges that each and every
detail of the System is important and advantageous not only to TA, but also to
its franchisees, including Franchisee hereunder; that benefits to both parties
will be derived from the uniformity and quality of services, products and
appearance of facilities among all franchisees; and that full compliance with
the System by all franchisees is essential to preserve, maintain and enhance the
reputation and goodwill built up by the System.
P. Whenever a service or product of the System requires the use of
a particular guarantee, as stated in the Confidential Operations Manual,
Franchisee shall execute and deliver to each customer to whom the System service
or product has been sold a guarantee on the form then currently furnished by TA.
Franchisee shall perform and fulfill promptly upon presentation of a valid
guarantee (whether issued by Franchisee or some other TRUCKSTOPS OF AMERICA
branded facility) the services requested by the customer, all in accordance with
the terms and conditions of the guarantee. Franchisee hereby authorizes TA to
charge Franchisee's account with such amount as shall be determined under the
provisions of the guarantee policy and the Confidential Operating Manual then in
effect in the event some other TRUCKSTOPS OF AMERICA branded facility performs
work under Franchisee's guarantee. TA shall credit Franchisee's account with
such amount as shall be determined under the provisions of the guarantee policy
and the Confidential Operating Manual then in effect in the event Franchisee
performs work under a guarantee issued by some other TRUCKSTOPS OF AMERICA
branded facility.
Q. Franchisee acknowledges that each and every detail of the quality
of workmanship, customer service, customer relations, warranty and guarantee
service, appearance and demeanor of Franchisee and its employees, and equipment
and materials utilized by Franchisee, and all other aspects of the System, is
important to TA and to other TRUCKSTOPS OF AMERICA businesses. TA shall endeavor
to maintain high standards of quality and service by all TRUCKSTOPS OF AMERICA
businesses. To this end, Franchisee agrees to cooperate with TA by maintaining
such high standards in the operation of its TA Franchise and in the work
performed by it and shall at all times give prompt, courteous and efficient
service to its customers. Franchisee shall in all dealings with its customers,
suppliers and the public adhere to the highest standards of honesty, integrity,
fair dealing and ethical conduct. If in any situation TA feels that Franchisee
18
did not fairly handle a customer complaint, TA has the right to intervene and
attempt to satisfy the customer. In such event, TA may in its discretion
reimburse or pay the customer the amount ▇▇ ▇▇▇▇▇ necessary in its sole
discretion to satisfy the customer and (without limiting TA's rights in
connection therewith) Franchisee will reimburse TA for any such payment within
thirty (30) days of receipt of invoice from TA. If Franchisee disputes some or
all of the invoice, its sole recourse is, after paying the invoice, to invoke
arbitration under the procedures provided in Section XXVIII, and should
Franchisee get an award thereunder recovering the disputed amount from TA, then
the award shall include interest at the rate specified in Section X(C) for the
period from the date of payment by Franchisee to TA, to the date of repayment by
TA to Franchisee.
R. Franchisee shall use only such warranty and guarantee forms,
invoices and other forms as are approved by TA. Franchisee shall obtain such
forms from TA or from suppliers approved by TA to produce such forms utilizing
the Marks. All invoices shall be sequentially numbered. Copies of all invoices
issued by Franchisee shall be submitted to TA as requested.
S. Franchisee recognizes that certain trucking companies desire to
participate in national programs for the procurement and data processing of
diesel fuel, that TA, TA's parent, or an affiliate thereof, may from time to
time have one or more such programs in effect ("TA Billing System"), and that TA
desires to have, in every area in which there is a TRUCKSTOPS OF AMERICA branded
facility, an outlet which participates in the TA Billing System from which fuel
can be provided to participating trucking companies under such programs.
Franchisee may participate in the TA Billing System under separate agreement.
Should Franchisee choose not to participate in the TA Billing System, then TA or
TA's parent or an affiliate thereof shall have the right to cause Franchisee to
sell diesel fuel to such trucking companies as are specified by TA from time to
time, and to charge TA or TA's parent or affiliate for such fuel in accordance
with the following:
1. TA shall pay Franchisee's cost for the fuel plus a pumping
fee of three cents ($.03) per gallon (or TA's current published
pumping fee, whichever is higher). Franchisee shall not be required
to pay a royalty fee on fuel purchased pursuant to this Paragraph.
For purposes of this Section, Franchisee's cost for fuel shall be the
price (exclusive of taxes) that it pays its supplier less any rebates,
allowances or other discounts of any type or nature whatsoever;
2. The manner and method by which Franchisee shall deliver fuel
to drivers whom TA has specified to Franchisee will be detailed in the
Confidential Operations Manual as modified from time to time. Payment
by TA to Franchisee for the fuel shall be by credit to Franchisee's
account. If the parties cannot agree as to what constitutes
Franchisee's costs for any specific fuel, TA shall credit the account
as it believes appropriate and so advise Franchisee, who shall have
ten (10) days from the receipt of notice of the credit, to advise TA
in writing of its disagreement with the amount of the credit
identifying specifically the reasons for any disagreement. If TA and
Franchisee cannot resolve the dispute thereafter, Franchisee may
submit it to arbitration pursuant to the Arbitration Clause contained
in Section XXVIII of this Franchise Agreement; and
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3. TA shall also reimburse Franchisee for all taxes (federal,
state and local) which Franchisee must pay as a result of TA's direct
fuel sales. Franchisee shall cooperate with TA, at TA's option, in
exempting (or attempt to exempt) any transaction(s) from taxation
and/or seeking a refund of taxes paid. Furthermore, Franchisee shall,
at TA's option, pay any required taxes on behalf of TA or TA's
customers and complete and file all forms, reports and documentation
as required by any federal, state or local authorities.
XIII. TA'S OPERATIONS ASSISTANCE
A. TA may from time to time suggest resale prices to Franchisee for
the products and services offered for sale by the Franchised Facility. Such
recommendations will be based on the experience of TA and its franchisees in
operating Franchised Facilities and on competitive conditions. Franchisee shall
not be obligated to accept any such advice or guidance and shall have the sole
right to determine the prices to be charged by the Franchised Facility. No such
advice or guidance shall be deemed or construed to impose upon Franchisee any
obligation to charge any fixed, minimum or maximum prices for any product or
services offered for sale by the Franchised Facility.
B. During the term of the Franchise Agreement, TA may advise
Franchisee with respect to:
1. Proper utilization of procedures with respect to the sale of
motor fuel, food and non-food products, restaurant and retail store
operations, and truck parts and supplies;
2. New products and services authorized for TRUCKSTOPS OF
AMERICA facilities;
3. Purchase of motor fuel and other food and non-food items,
materials and supplies;
4. Retail store procedures and methods;
5. Truck repair and maintenance standards and procedures;
6. The institution of proper administrative, bookkeeping,
accounting, inventory control, supervisory and general operating
procedures for the effective operation of a TRUCKSTOPS OF AMERICA
facility; and
7. Advertising, sales, marketing and promotional programs.
C. TA may make periodic visits to the Franchised Facility for the
purposes of consultation, assistance, and guidance of Franchisee in all aspects
20
of the operation and management of the Franchised Facility. TA shall prepare,
for the benefit of both TA and Franchisee, written reports of such visits
outlining and suggesting changes or improvements in the operations of the
Franchised Facility and detailing any defaults in its operations. A copy of each
such written report shall be provided to Franchisee.
D. TA shall offer Franchisee participation in such centralized
purchasing programs it may maintain for the System, including the right to
purchase products from its Distribution Center (or one operated by an affiliate)
as long as TA has a Distribution Center, upon terms and conditions identified in
the Confidential Operations Manual as modified from time to time. Nothing
contained herein shall require TA to have a Distribution Center in operation.
E. All of the specifications, lists of approved manufacturers,
merchandise, products, materials and supplies and training and operations
manuals to be provided by TA to Franchisee pursuant to this Franchise Agreement
shall be delivered prior to Franchisee's commencement of operation of the
Franchised Facility.
F. TA's parent, TA Operating, has developed a unique billing system
which it will offer to Franchisee separate from the Franchise Agreement between
Franchisor and Franchisee upon terms and conditions to be agreed between TA
Operating and Franchisee.
XIV. PROPRIETARY MARKS
A. Franchisee acknowledges that TA Operating is the owner and TA is
a licensee of the Marks and Franchisee's right to use the Marks is derived
solely from this Franchise Agreement and is limited to the conduct of business
by Franchisee pursuant to, and in compliance with, this Franchise Agreement and
all applicable standards, specifications, and operating procedures prescribed by
TA from time to time during the term of this TA Franchise. Any unauthorized use
of the Marks by Franchisee is a breach of this Franchise Agreement and an
infringement of the rights of TA Operating and TA in and to the Marks.
Franchisee acknowledges and agrees that all usage of the Marks by Franchisee and
any goodwill established by Franchisee's use of the Marks shall inure to the
exclusive benefit of TA and TA Operating and that this Franchise Agreement does
not confer any good will or other interests in the Marks upon Franchisee.
Franchisee shall not, at any time during the term of this Franchise Agreement or
after its termination or expiration, contest the validity or ownership of the
Marks or assist any other person in contesting the validity or ownership of the
Marks. All provisions of this Franchise Agreement applicable to the Marks apply
to any additional trademarks, service marks and commercial symbols authorized
for use by and licensed to Franchisee by TA after the date of this Franchise
Agreement.
B. Franchisee shall not use the Marks 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 the Marks in
connection with the sale of any unauthorized product or service or in any other
21
manner not expressly authorized in writing by TA. In any communication in which
Franchisee uses the Marks, the Franchisee agrees to give such notices of
trademark and service ▇▇▇▇ registrations and/or ownership as TA specifies from
time to time. Franchisee shall obtain such fictitious or assumed name
registrations as TA may request and as may be required under applicable law to
preserve, protect or promote the Marks. Franchisee shall not use the Marks in
any manner which has not been specified or approved by TA.
C. Franchisee shall immediately notify TA in writing of any apparent
infringement of, or challenge to, Franchisee's use of Marks and of any claim by
any person of any rights in the Marks or any similar trade name, trademark,
service ▇▇▇▇, design or logo of which Franchisee becomes aware. Franchisee shall
not directly or indirectly communicate with any person other than TA and its
counsel in connection with any such alleged infringement, challenge or claim. TA
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 such infringement,
challenge or claim or otherwise relating to the Marks. 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 TA's counsel, be necessary or
advisable to protect and maintain the interests of TA in any such litigation,
U.S. Patent and Trademark Office proceeding or other administrative proceeding
or to otherwise protect and maintain the interests of TA and TA Operating in the
Marks.
D. TA agrees to indemnify Franchisee against, and to reimburse
Franchisee for, all damages for which it is held liable in any proceeding in
which Franchisee's use of the Marks pursuant to and in compliance with this
Franchise 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 it or in any such proceeding in
which it is named as a party, provided that and has otherwise complied with this
Franchise Agreement and that TA shall have the right to defend any such claim.
E. If it becomes advisable at any time in TA's sole discretion for
TA or Franchisee to modify or discontinue use of the Marks and/or use one or
more additional or substitute trade names, trademarks, service marks or other
commercial symbols, Franchisee agrees to comply with TA's directions within a
reasonable time after notice to Franchisee by TA and TA shall have no liability
or obligation whatsoever with respect to Franchisee's modification or
discontinuance of the Marks.
XV. INSURANCE
A. Franchisee shall procure at its expense and maintain in full
force and effect during the term of this Franchise Agreement, an insurance
policy or policies protecting Franchisee and its officers, directors, partners
and employees, and TA and its parents, (hereinafter in this Section XV only "TA"
shall refer to TA and its parents) against any loss, liability, or expense
whatsoever arising or occurring upon or in connection with the Franchised
Facility, as TA may reasonably require for its own and Franchisee's protection.
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B. Such policy or policies shall be written by an insurance company
satisfactory to TA in accordance with standards and specifications set forth in
the Confidential Operations Manual or otherwise in writing, and shall include,
at a minimum (except as additional coverages and higher policy limits may
reasonably be specified for all franchisees from time to time by TA in the
Confidential Operations Manual or otherwise in writing) the following:
1. All risks coverage insurance on the Franchised Facility and
all fixtures, equipment, supplies and other property used in the
operation of the Franchised Facility, for full repair and replacement
value of the machinery, equipment, improvements and betterments,
without any applicable co-insurance clause except that an appropriate
deductible clause shall be permitted. The policies shall name TA as a
loss payee as its interest may appear;
2. Workers' compensation and employer's liability insurance as
well as such other insurance as may be required by statute or rule of
the state in which the Franchised Facility is located and operated;
3. Comprehensive general liability insurance with limits of
THREE MILLION Dollars ($3,000,000.00) combined single limit including
the following coverages: contractual, personal injury,
products/completed operations, premises/completed operations, broad
form property damage, independent contractors, liability coverages
and/or garage liability coverage including garage keepers liability
coverage, the foregoing insuring TA, TA Operating and Franchisee
against all claims, suits, obligations, liabilities and damages,
including attorneys' fees, based upon or arising out of actual or
alleged personal injuries or property damage resulting from, or
occurring in the course of, or on or about or otherwise relating to
the Franchised Facility, provided that the required amount herein may
be modified from time to time by TA to reflect inflation or future
experience with claims;
4. Automobile liability insurance, including owned, hired and
non-owned vehicle coverage, with a combined single limit for bodily
injury and property damage of at least THREE MILLION Dollars
($3,000,000.00);
5. Such additional insurance and types of coverage as may be
required by the terms of any lease for the Franchised Facility, or as
may be required from time to time by TA; and
6. Pollution Liability Insurance and aboveground and
underground tank insurance in compliance with all state, local or
federal requirements including, but not limited to, financial
responsibility requirements for underground and aboveground storage
tanks. This coverage provides protection for both sudden and
accidental as well as gradual seepage and pollution and provide
coverage for both on-site and off-site pollution liability clean-up
cost.
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C. Though Franchisee is not obligated hereunder to carry business
interruption insurance, in the event a payment under or pursuant to any such
type of insurance is made to Franchisee or any affiliate thereof in connection
with a business interruption at the Franchised Facility, then Franchisee will
immediately thereafter pay to TA a sum equal to the average daily Continuing
Services and Royalty Fees for the year preceding the interruption multiplied by
the number of days of the business interruption. TA shall be included in any
such insurance policy as a loss payee as its interest may appear.
D. The insurance afforded by the policy or policies respecting
liability shall not be limited in any way by reason of any insurance which may
be maintained by TA. Within twelve (12) months of the signing of this Franchise
Agreement, but in no event later than the date on which Franchisee acquires or
acquired an interest in the real property on which it will develop and operate
the Franchised Facility, a Certificate of Insurance showing compliance with the
foregoing requirements shall be furnished by Franchisee to TA for approval. Such
certificate shall state that said policy or policies will not be cancelled or
altered without at least twenty (20) days prior written notice to TA and shall
reflect proof of payment of premiums. Such certificate shall also state that TA
and its parents, subsidiaries and affiliates shall be named as an additional
insured under Franchisee's Comprehensive General, Automobile and Pollution
Liability Insurances and that all of Franchisee's insurances shall be primary to
any similar insurances carried by TA. Maintenance of insurance and the
performance by Franchisee of the obligations under this Section shall not
relieve Franchisee of liability under the indemnity provisions set forth in this
Franchise Agreement. Minimum limits as required above may be modified from time
to time, as conditions require, by written notice to Franchisee.
E. Should Franchisee, for any reason, not procure and maintain the
insurance coverage required by this Franchise Agreement, TA shall have the right
and authority (without, however, any obligation to do so and without limiting
any other right or remedy of TA under this Franchise Agreement) immediately to
procure such insurance coverage or any portion thereof (for the shortest
practicable successive time intervals of not less than thirty (30) days each,
until Franchisee procures and maintains such insurance coverage) and to charge
the cost thereof to Franchisee, which charges, together with a reasonable fee
for expenses incurred by TA, shall be payable by Franchisee immediately upon
notice.
XVI. RESTRICTIVE COVENANTS
A. During the term of this Franchise Agreement, and for two (2)
years thereafter if terminated by either party prior to expiration by its terms
(other than a termination by Franchisee under Section XVII(A)), Franchisee and
each Franchisee Party covenant and agree that they shall not, without the prior
written consent of TA, either directly or indirectly, for itself or themselves
or on behalf of or in conjunction with any person, persons, partnership or
corporation: (i) own, maintain, engage in, participate or have any interest in
the operation of any truckstop or travel center business (other than the
continued operation of a non-branded truckstop at the Franchise Site), or any
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fueling business, truck repair facility or other business offering or selling
services or products similar to that sold in the System, within the Territory;
or (ii) maintain or operate the truckstop located at the Franchise Site under or
pursuant to a franchise agreement, licensing agreement or a prescribed marketing
plan or system of another truckstop company or other organization, the primary
purpose of which is the marketing of fuel and services to the traveling public
(i.e., a branded facility); or (iii) own, maintain, engage in, participate or
have any interest in the operation of any truckstop or travel center business,
or any fueling business, truck repair facility or other business offering or
selling services or products similar to that sold in the System, pursuant to a
franchise agreement, licensing agreement or a prescribed marketing plan or
system of another truckstop company or other organization the primary purpose of
which is the marketing of fuel and services to the traveling public (i.e., a
branded facility), within a 150 mile radius of any TA branded facility which is
operating as of the date of such termination of this Franchise Agreement.
Notwithstanding the foregoing, these restrictions shall not apply to ownership
by Franchisee of outstanding securities of any corporation whose securities are
publicly held and traded, provided that the securities are held for investment
purposes only and that Franchisee's and each Franchisee Party's combined total
holdings do not constitute more than five percent (5%) of the outstanding
securities of the corporation, and shall not apply in any case as to which TA
gives Franchisee a written exemption, which exemption shall not be unreasonably
withheld.
B. During the term of this Franchise Agreement, and for two (2)
years thereafter if terminated by either party prior to expiration by its terms
(other than a termination by Franchisee under Section XVII[A]), Franchisee and
each Franchisee Party covenant and agree that they shall not, without the prior
written consent of TA, either directly or indirectly, for itself or themselves
or on behalf of or in conjunction with any person, persons, partnership or
corporation, own, maintain, engage in, participate or have any interest in the
operation, within the Adjacent Area (as hereinafter defined), of any enterprise
or activity which, in TA's reasonable judgment: (1) is detrimental to the System
or to the Franchised Facility, in respect to reputation, image, customer
traffic, operating or financial efficiency or success, or otherwise; or (2)
trades on, or gains advantage of (whether or not intentionally), any of the
brand, reputation, layout, facility, services, location, or customer traffic of
the System or of the Franchised Facility; or (3) competes with or offers or
sells services or products which are similar to any of those that are sold in
the System or in the Franchised Facility. As used herein, "Adjacent Area" is any
property adjacent to, contiguous with, or located within two thousand five
hundred (2,500) feet of any boundary of the Franchise Site.
C. In the event that any of the provisions of (A) or (B) above are
unenforceable by virtue of their scope in terms of area or length of time, but
may be made enforceable by reduction of either or both, Franchisee and TA agree
that this covenant shall be enforced to the fullest extent permissible under the
laws and public policies applied in the jurisdiction in which enforcement is
sought.
D. Franchisee and each Franchisee Party further covenant and agree
that during the term of this Franchise Agreement, neither Franchisee nor any
Franchisee Party, as the case may be, shall divert or attempt to divert any
business of or any customers of the Franchised Facility to any other competitive
establishment.
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XVII. DEFAULT AND TERMINATION
A. If Franchisee is in compliance with this Franchise Agreement and
TA materially breaches this Franchise Agreement and fails to cure or attempt to
cure such breach within a reasonable time after written notice thereof is
delivered to TA, Franchisee may terminate this Franchise Agreement. Such
termination shall be effective thirty (30) days after delivery to TA of notice
that such breach has not been cured and Franchisee elects to terminate this
Franchise Agreement.
B. TA may terminate this Franchise Agreement immediately upon
delivery of notice of termination to Franchisee, if Franchisee or any
Franchisee Party:
1. has made any material misrepresentation or omission in its
application for the franchise;
2. is convicted of or pleads no contest to a felony or other
crime or offense that may adversely affect the reputation of
Franchisee or the TRUCKSTOPS OF AMERICA Facility or System;
3. knowingly makes or permits any unauthorized use, disclosure
or duplication of any portion of the Confidential Operations Manual or
knowingly or deliberately duplicates or discloses or makes or permits
any unauthorized use of any trade secret or confidential information
provided to Franchisee by TA;
4. abandons or fails or refuses to operate the Franchised
Facility or any portion thereof for two (2) consecutive days, unless
the Franchised Facility has been closed either for a purpose approved
by TA or due to damage or destruction by an "Act of God" to
substantially all of the Franchised Facility (in which latter event
Section III(E) shall apply), or fails to relocate to a TA-approved
premises within a TA-approved period premises of the Franchised
Facility or other TA-agreed relocation;
5. submits to TA on two (2) or more separate occasions at any
time during the term of this Franchise Agreement any reports or other
data, information or supporting records which understate by more than
three percent (3%) the Continuing Services and Royalty Fees for any
two (2) periods of ninety (90) days or more each;
6. is subject to a liquidation proceeding pursuant to 11 U.S.C.
Section 707, a reorganization proceeding pursuant to 11 U.S.C. Section
1112, an order of confirmation pursuant to 11 U.S.C. Section 1330(b)
or a debt adjustment proceeding pursuant to 11 U.S.C. Section 1307;
26
7. fails or refuses to make payments of any amounts due TA or
any parent or affiliate of TA, including but not limited to the
Continuing Services and Royalty Fees, advertising contributions,
amounts due for purchases from TA or its affiliates, or any other
amounts due according to the terms of this Franchise Agreement, and
does not correct such failure or refusal within the earlier of thirty
(30) days or ten (10) days after written notice of such failure is
delivered to Franchisee;
8. fails on three (3) or more separate occasions within any
period of twelve (12) consecutive months to submit when due reports or
other information or supporting records, or to pay when due any
amounts due to TA or any affiliate hereunder, including but not
limited to the Continuing Services and Royalty Fees, advertising
contributions, or amounts due for purchases from TA and its parents or
affiliates or other payments due to TA, whether or not such failure to
comply is subsequently remedied; or
9. breaches or violates Section XVI hereof.
C. TA may also terminate this Franchise Agreement if Franchisee
fails or refuses to comply with any terms of this Franchise Agreement and does
not correct such failure or refusal within thirty (30) days after written notice
thereof is delivered to Franchisee (or does not provide proof acceptable to TA
that it has made all reasonable efforts and will continue to make all reasonable
efforts to cure such default if such cure cannot reasonably be accomplished
within thirty (30) days after written notice is delivered to Franchisee). Such
termination shall be effective immediately upon TA's delivery (after the
expiration of such cure period), of a second written notice advising Franchisee
of its failure to cure such breach or default. Among other things, TA may
terminate this Franchise Agreement upon the occurrence of the following (whether
caused by Franchisee or any Franchisee Party) if the same are not cured in
accordance with the foregoing:
1. failure or refusal to comply with quality, cleanliness or
service standards of TA (including but not limited to any
specification, standard or operating procedure prescribed in the
Confidential Operations Manual or otherwise specified by TA in
writing), or any environmental, health, safety or sanitation law,
ordinance or regulation;
2. failure to satisfy and comply with the Conversion Obligation
Schedule, Exhibit D hereto, on a timely basis;
3. failure to decorate and equip the premises as provided in
Section IV hereof, or to remodel, modernize and redecorate as provided
in Section III(D);
4. failure to complete the training program as provided in
Section V hereof;
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5. failure to adhere to the terms and conditions of any lease
agreement or other agreement with TA;
6. the surrender or transfer of control of the operation of the
TA Franchised Facility, the unauthorized direct or indirect assignment
of the TA Franchise or an ownership interest in Franchisee, or the
failure or refusal to assign the TA Franchise or the interest in
Franchisee of a deceased or disabled controlling owner thereof as
herein required;
7. the misuse or unauthorized use of the Marks or the
commission of any act which can reasonably be expected to impair the
goodwill associated with the Marks;
8. the creation or maintenance during the term of this
Franchise Agreement of a business relationship with any person or
entity which, in TA's judgment, competes in any manner directly or
indirectly with TA, or any TRUCKSTOPS OF AMERICA branded facility
anywhere in the United States, except with TA's express written
permission, such permission not to be unreasonably withheld, (provided
however, that this provision shall not apply to ownership of
outstanding securities of any corporation where securities are
publicly held and traded, provided that the securities are held for
investment purposes only and that Franchisee's or the Franchisee
Party's combined total holdings do not constitute more than five
percent (5%) of the outstanding securities of the corporation); or
9. the purchase of products from the TA Distribution Center, a
national TA account program or TA corporate purchasing program, and
subsequent resale of any such products other than at retail at the
Franchised Facility.
D. To the extent that the provisions of this Franchise Agreement
provide for periods of notice less than those required by applicable law, or
provide for termination, cancellation, or non-renewal other than in accordance
with applicable law the minimum notice period specified in applicable law shall
be substituted for the non-conforming period.
XVIII. RIGHTS AND DUTIES OF PARTIES UPON EXPIRATION OR TERMINATION
Upon any termination of this Franchise Agreement, including the
expiration of this Franchise Agreement by its terms, Franchisee's TA Franchise
and all rights granted hereunder to Franchisee shall forthwith terminate, and
the following provisions shall apply.
A. Franchisee and each Franchisee Party shall immediately cease to,
and shall not thereafter, directly or indirectly, represent to the public or
hold itself out as a franchisee of TA.
B. Franchisee and each Franchisee Party shall immediately and
permanently cease to use in any manner whatsoever any confidential proprietary
methods, procedures, or techniques associated with the System, including the
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Marks and any other distinctive forms, slogans, signs, symbols, logos, or
devices associated with the System, including but not limited to all signs,
advertising materials, stationery, forms, and any other articles which display
the Marks associated with the System.
C. Franchisee shall take such action as may be necessary to assign
to TA or TA's designee or to cancel (at TA's option) any assumed name or
equivalent registration which contains the name "TRUCKSTOPS OF AMERICA" or any
other service ▇▇▇▇ or trademark of TA, and Franchisee shall furnish TA with
evidence satisfactory to TA of compliance with this obligation within thirty
(30) days after termination, or expiration of this Franchise Agreement.
D. Franchisee, and each Franchisee Party, agrees, in the event it
engages in any other business, not to use any reproduction, counterfeit, copy or
colorable imitation of the Marks, either in connection with such other business
or the promotion thereof, which is likely to cause confusion, mistake or
deception, or which is likely to dilute TA or its parents' exclusive rights in
and to the Marks, and further agrees not to utilize any designation of origin or
description or representation which falsely suggests or represents an
association or connection with TA so as to constitute unfair competition.
Franchisee shall make such modifications or alterations to the premises operated
hereunder (including, without limitation, eliminating, in the next publication,
any use of the Marks in any telephone directory) immediately as may be necessary
to prevent any association between TA or the System and any business thereon
subsequently operated by Franchisee or others, and shall make such specific
additional changes thereto as TA may reasonably request for that purpose,
including without limitation, removal of all distinctive physical and structural
features identifying the System. In the event Franchisee fails or refuses to
comply with the requirements of this Section XVIII, TA shall have the right to
enter upon the premises where Franchisee's Franchised Facility was conducted,
without being guilty of trespass or any other tort, for the purpose of making or
causing to be made such changes as may be required at the expense of Franchisee,
which expense Franchisee agrees to pay upon demand.
E. Promptly after any termination or expiration, each party shall
pay to the other all sums owing to the other under the Franchise Agreement for
the period through the date of termination or expiration. In the event of
termination by TA arising out of default by Franchisee, Franchisee shall pay to
TA all damages, losses, costs and expenses, including reasonable attorneys'
fees, incurred by TA as a result of the default or the termination. Neither
termination nor any such payment shall deprive TA of any claim it may have for
any damages, costs, expenses or obligations under the Franchise Agreement or by
reason of its termination or the breach which gave rise to the termination.
F. Franchisee shall pay to TA all damages, costs and expenses,
including reasonable attorneys' fees, incurred by TA as a result of or in
connection with in obtaining injunctive or other relief for the enforcement of
any provisions of this Section XVIII or Section XVI.
G. Franchisee shall immediately turn over to TA all copies of all
manuals (including the Confidential Operations Manual) TA customer lists,
records, files, instructions, brochures, agreements, disclosure statements, and
29
any and all other materials provided by TA to Franchisee relating to the
operation of the franchised business (all of which are acknowledged to be TA's
property).
H. Without intending to limit the other or more general provisions
of this Section XVIII, Franchisee shall promptly, but not later than seven days
after the termination, or expiration, disconnect and remove any discrete part of
any signs, sign faces, sign shapes or configurations which bear, incorporate,
convey or use any Marks ("TA Portion").
I. For a period of thirty (30) days after termination or expiration,
TA shall have the right at its option to purchase for cash any or all
proprietary equipment, supplies, and other inventory, advertising materials, and
TA Portion, at Franchisee's cost or fair market value, whichever is less. If the
parties cannot agree on fair market value within a reasonable time, an
independent appraiser shall be designated by TA, and the determination of such
appraiser shall be binding upon the parties. The cost of the independent
appraiser shall be borne by Franchisee. If TA exercises any option to purchase
hereunder, it shall have the right to set off all amounts due to TA from
Franchisee against any amounts due to Franchisee from TA as a result of the
exercise of such option or any payment therefor. Franchisee hereby acknowledges
TA's right to access the premises of the Franchised Facility should TA elect to
take possession of any items as to which it exercises this option.
J. All obligations of TA and Franchisee which expressly or by their
nature survive the expiration or termination of this Franchise Agreement shall
continue in full force and effect subsequent to and notwithstanding its
expiration or termination until they are satisfied or by their nature expire,
including, but not limited to, the covenants contained in Sections XVI and XXI
of this Franchise Agreement and the arbitration obligation contained in Section
XXVIII of this Franchise Agreement, and Franchisee and each Franchisee Party
agree to perform in accordance therewith.
XIX. TRANSFERABILITY OF INTEREST
A. This Franchise Agreement and all rights hereunder, including but
not limited to TA's right of first refusal set forth in Section XXI herein, may
be assigned and transferred by TA and, if so assigned, shall be binding upon and
inure to the benefit of TA's successors and assigns.
B. During the term of this Franchise Agreement, neither Franchisee
nor any Franchisee Party may, without the prior written consent of TA, by
operation of law or otherwise, sell, assign or transfer: (i) all or any part of
Franchisee's or any Franchisee Party's interest in or rights under this
Franchise Agreement or the TA Franchise granted hereby; (ii) all or any part of
any Franchisee Party's interest in Franchisee (or its interest in any
partnership, corporation or other entity that has an interest in Franchisee);
(iii) all or any part of Franchisee's or any Franchisee Party's interest in any
entity which leases property (real or personal) to Franchisee; or (iv) all or
substantially all of Franchisee's assets. Within thirty (30) days of TA's
receipt of a written request for consent to a sale, assignment or transfer
described above, TA shall advise Franchisee in writing that either: (a) it
consents to the proposed sale, assignment or transfer; (b) it does not consent
30
to the proposed sale, assignment or transfer; or (c) it consents to the proposed
sale, assignment or transfer subject to and provided that Franchisee complies,
to TA's satisfaction, with certain terms or conditions. Among other things, TA
may require as a condition of its consent to such a sale, assignment or
transfer, that:
1. the transferee(s) shall be of good moral character and
reputation, shall have business expertise, shall have liquid assets, a
financial net worth and credit rating acceptable to TA and shall meet
TA's then-current standards for new franchisees;
2. Franchisee shall have fully paid and satisfied all of
Franchisee's obligations to TA as of the date of transfer;
3. the transferee or Franchisee shall pay to TA a
non-refundable transfer fee equal to TWENTY-FIVE percent (25%) of
the franchisee fee currently charged by TA for new franchises;
4. the transferee(s) (or such individual(s) who will be the
actual manager of the TA Franchise) shall have successfully completed
and passed the training course then in effect for franchisees, or
otherwise demonstrated to TA's satisfaction, sufficient ability to
operate the Franchised Facility being transferred;
5. the transferee(s), including certain key shareholders,
officers, directors or personnel of the transferee(s), shall jointly
and severally execute any or all of the following at TA's request:
a. a franchise agreement and other related agreements,
including but not limited to a Guaranty, for the unexpired term
of this Franchise Agreement, on the standard forms then being
used by TA; and
b. a written assignment from Franchisee in a form satisfactory
to TA wherein transferee shall assume all of Franchisee's
obligations hereunder.
6. each stock certificate of any transferee corporation shall
have conspicuously endorsed upon it a statement that it is held
subject to, and that further assignment or transfer thereof is subject
to, all restrictions imposed upon assignments by this Franchise
Agreement;
7. no new shares of voting stock in the transferee corporation
shall be issued to any person or entity without obtaining TA's prior
written consent; and
8. Franchisee, prior to the transfer, shall execute a general
release, in a form prescribed by TA, of any and all claims which
Franchisee may have as of such date against TA or its affiliates and
parents, and their respective officers, directors, agents and
employees.
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C. During the term of this Franchise Agreement, neither Franchisee
nor any Franchisee Party shall encumber all or any part of its interest in or
rights under this Franchise Agreement (or the TA Franchise granted hereby)
without the prior written consent of TA; provided, however, that TA shall
consent to a mortgage on the Franchised Facility if the mortgagee agrees, in
writing and upon terms acceptable to TA, to subordinate its lien to TA's rights
under the Franchise Agreement, including but not limited to any and all rights
of first refusal and consent rights provided in this Franchise Agreement.
D. Notwithstanding anything to the contrary herein, no sale,
assignment or transfer, described in paragraph (B) above shall relieve
Franchisee or any Franchisee Party of Franchisee's obligations pursuant to this
Franchise Agreement, including, but not limited to, any of the obligations or
covenants contained in Section XVI, unless TA shall expressly release the same
in writing.
XX. DEATH OR INCAPACITY OF FRANCHISEE
A. In the event of the death or incapacity of an individual
Franchisee, or any Franchisee Party, the Franchise Agreement shall be terminated
forthwith and all rights granted to Franchisee under this Franchise Agreement
shall, at the option of TA, terminate forthwith and automatically revert to TA.
B. Notwithstanding the foregoing, the heirs, beneficiaries,
devisees, or legal representatives of such person may, within one hundred
eighty (180) days of such death or incapacity:
1. apply to TA for the right to continue to operate the TA
Franchise for the duration of the term of this Franchise Agreement and
any renewals hereof, which right shall be granted upon the fulfillment
of all of the conditions set forth in Section XIX(C) of this Franchise
Agreement (except that no transfer fee shall be required); or
2. sell, assign, transfer, or convey Franchisee's interest in
compliance with the provisions of Section XIX(C) and Section XXI of
this Franchise Agreement; provided, however, in the event a proper and
timely application for the right to continue to operate has been made
and rejected, the one hundred eighty (180) days to sell, assign,
transfer or convey shall be computed from the date of the rejection.
XXI. RIGHT OF FIRST REFUSAL
During the term of this Franchise Agreement and for a period of two
(2) years from and after the termination of the Franchise Agreement, including
the expiration of this Franchise Agreement by its terms, (other than a
termination by Franchisee under Section XVII(A)), if: (1) Franchisee or any
Franchisee Party proposes to sell, assign or transfer all or any part of its
interest in the Franchisee or Franchise Site, or all or any part of its interest
in any partnership, corporation or other entity which has an interest in the
32
Franchise Site; or (2) the party which owns the Franchise Site (if other than
Franchisee or a Franchisee Party) proposes to sell, assign or transfer all or
any part of its interest in the Franchise Site; then such party shall deliver to
TA a copy of a bona fide, executed written offer to purchase such interest, and
TA shall, for a period of sixty (60) days from the date of delivery of such
offer, have the right to purchase the same for the price and on the terms and
conditions contained in such offer; provided, however, that TA may substitute
cash for any form of payment proposed in such offer. If TA does not exercise
this right of first refusal in writing within such sixty (60) day period, the
offer may be accepted by Franchisee or such Franchisee Party; provided, however,
that if such offer is not accepted within six (6) months of the expiration of
this first refusal period, TA shall again have the right of first refusal herein
described.
XXII. OPERATION IN THE EVENT OF ABSENCE, DISABILITY OR DEATH
In order to prevent any interruption of the franchised business, if
Franchisee is unable to operate the Franchise (due to absence, illness or death
of one or more key personnel, or for any other reason), or if Franchisee shall
not have cured a default under this Franchise Agreement within the thirty (30)
days after receipt of a written notice from TA, TA may, at its option (and for
such period(s) of time as it determines in its sole discretion), enter upon the
premises of the Franchised Facility and exercise complete authority with respect
to the operation of the business until such time as TA determines that the
default of Franchisee has been cured or for such period of time as TA determines
is otherwise necessary or practical. Franchisee specifically agrees that TA may
take over, control, and operate the business under such circumstances, and that
Franchisee shall pay to TA a service fee of not less than FIVE HUNDRED FIFTY
Dollars ($550.00) per day plus all travel and living expenses, room and board
and other expenses reasonably incurred by TA in connection with such services.
All monies from the operation of the business during such period of operation by
TA shall be kept in a separate account and the expenses of the business
including TA's service fee shall be charged to that account. Franchisee and each
Franchisee Party further agree that if TA exercises its right of temporary
operation, Franchisee and each Franchisee Party will indemnify and hold harmless
TA and its agents, employees, and contractors who may act hereunder against all
claims or losses which may be asserted against TA in connection therewith,
except to the extent the claims or losses are attributable to the gross
negligence of TA. During any period of temporary management by TA all personnel
working at the truckstop, except those provided by TA, shall be deemed
employees, agents or contractors of Franchisee. TA's exercise of its rights
hereunder shall not constitute a waiver of any other rights or remedies TA may
have under this Franchise Agreement.
XXIII. INDEPENDENT CONTRACTOR AND INDEMNITY AND HOLD HARMLESS
A. This Franchise Agreement does not create between TA and
Franchisee any relationship of agent, legal representative, joint venturer,
partner, employee, or servant of TA for any purpose whatsoever. It is understood
between the parties hereto that Franchisee shall be an independent contractor
and is in no way authorized to make any contract, agreement, warranty or
representation on behalf of TA, or to create any obligation, express or implied,
on behalf of TA.
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B. Upon request, Franchisee shall prominently display a sign in a
form and at a location approved by TA clearly indicating that the business is
independently owned and operated by Franchisee as a TA Franchise and not as an
employee or agent of TA. Franchisee shall, as directed by TA, remove the sign
and replace it with a different sign approved by TA at either the old location
or a new location.
C. Franchisee and each Franchisee Party, jointly and severally,
agree to defend at their own cost and to indemnify and hold harmless TA, and its
parents, subsidiaries and affiliates and their shareholders, directors,
officers, employees and agents, from and against any and all losses, claims,
costs, expenses (including attorneys' fees and costs and expenses incurred by
them to enforce this provision), damages and liabilities, however caused,
whether or not known or including without limitation strict liability in tort,
resulting directly or indirectly from, arising out of, in connection with, or
pertaining to the following:
(1) the use, condition, or construction, equipping, decorating,
maintenance or operation of the Franchised Facility,
including without limitation the sale of any fuel or other
petroleum products, food products, merchandise or service
from the Franchised Facility,
(2) any breach of any representation, warranty or
covenant of Franchisee or any Franchisee Party under
this Franchise Agreement or any other agreement to
which Franchisee or any Franchisee Party is a party.
(3) any acts or failures to act by Franchisee's employees, and
(4) without limiting the foregoing, any injury or damages
that may arise as the result of leaking fuel tanks or
spill of petroleum products on the premises of the
Franchised Facility.
XXIV. NON-WAIVER
No failure of TA to exercise any power reserved to it hereunder, or to
insist upon strict compliance by Franchisee with any obligation or condition
hereunder, and no custom or practice of the parties in variance with the terms
hereof, shall constitute a waiver of TA's right to demand exact compliance with
the terms hereof. Waiver by TA of any particular default by Franchisee shall not
be binding unless in writing and shall not affect or impair TA's right with
respect to any subsequent default; nor shall any delay, forbearance, or omission
by TA to exercise any power or rights arising out of any breach or default by
Franchisee affect or impair TA's rights to declare any subsequent breach or
default. Subsequent acceptance by TA of any payment(s) due to it hereunder shall
not be deemed to be a waiver by TA of any preceding breach by Franchisee of any
terms, covenants or conditions of this Franchise Agreement. Neither the
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exercise, nor the non-exercise, by TA of any rights, nor the giving or
withholding of any approval or consent, shall result in a waiver or compromise
of any right or remedy of TA, nor shall such acts or omissions impose on TA any
obligation or liability whatsoever.
XXV. NOTICE
Any and all notices required or permitted under this Franchise
Agreement shall be in writing and shall be personally delivered or mailed by
certified mail, return receipt requested or by overnight delivery service to the
respective party at the following addresses unless and until a different address
has been designated to the other party through the use of this procedure:
Notices to TA: TA FRANCHISE SYSTEMS INC.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Manager Franchising
Notices to Franchisee: (the name and address shown for Franchisee
in the first paragraph of this Franchise
Agreement, to the Attn: General Manager)
Notice shall be deemed to have been given at the date and time of delivery to
said address, or three (3) days after mailing if sent by certified mail.
XXVI. SEVERABILITY AND CONSTRUCTION
A. Each Section, part, term or provision of this Franchise Agreement
shall be considered severable, and if, for any reason, is determined to be
invalid or unenforceable, it shall be deemed not part of this Franchise
Agreement and shall not impair the operation of or affect the remaining
portions, sections, parts, terms or provisions of this Franchise Agreement,
which will continue to be given full force and effect and bind the parties
hereto; provided, however, that if TA reasonably determines that the
unenforceability of any provision adversely affects the basic consideration of
this Franchise Agreement, TA may, at its option, terminate this Franchise
Agreement on thirty (30) days written notice.
B. Franchisee and each Franchisee Party acknowledge and agree that
in the event of breach by Franchisee of Sections VI, VII, XIV, XVI, XVIII, XIX,
XX or XXI, money damages alone may not be an adequate remedy to TA for such
breach. Accordingly, if there is such a breach or threatened breach, TA shall be
entitled to an injunction restraining the breaching party from any breach
without showing or proving actual damages sustained by TA. Notwithstanding the
foregoing, to the extent the Franchisee or any Franchisee Party obtains,
directly or indirectly, any profit or personal benefit resulting from any
violation of any such Section, such party shall be obligated to pay or deliver
forthwith such profit or personal benefit to TA as damages.
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C. Nothing in this Franchise Agreement is intended to confer upon
any person or legal entity other than TA and Franchisee and such of their
respective successors and assigns as may be contemplated hereby, any rights or
remedies under or by reason of this Franchise Agreement.
D. All captions are intended solely for the convenience of the
parties, and none shall be deemed to affect the meaning or construction of any
provision hereof.
E. The use of a particular pronoun herein shall not be restrictive
as to gender or number, but shall be interpreted in all cases as the context may
require.
XXVII. APPLICABLE LAW
A. This Franchise Agreement takes effect upon its acceptance and
execution by TA in Ohio and shall be interpreted and construed under the laws of
Ohio without regard to rules on conflicts of law.
B. Franchisee acknowledges and agrees that this Franchise Agreement
is entered into in Cuyahoga County, Ohio and that any action sought to be
brought by either party for the purpose of enforcing the terms and provisions
hereof shall be brought if federal jurisdiction exists in the United States
District Court for the Northern District of Ohio in Cleveland or, if such
jurisdiction does not exist, in the Court of Common Pleas of Cuyahoga County,
Ohio. The parties hereby submit to the personal jurisdiction and agree to the
venue of these forums.
C. Except as provided in Section XXVIII, no right or remedy
conferred upon or reserved to TA or Franchisee by this Franchise Agreement is
intended to be exclusive of any other right or remedy herein or by law or equity
provided or permitted, but each shall be cumulative of every other right or
remedy.
D. Nothing herein contained shall bar TA's right to seek injunctive
relief against threatened conduct that will cause it loss or damage, under the
usual equity rules, including the applicable rules for obtaining restraining
orders and preliminary injunctions.
XXVIII. ARBITRATION
A. Except as otherwise specifically provided in Sections X(C) and
XXVII(D) herein, the parties agree that any and all disputes between them, and
any claim by either party that cannot be amicably settled, shall be determined
solely and exclusively by arbitration in accordance with the Rules for
Non-Administered Arbitration of Business Disputes of the Center for Public
Resources. Arbitration shall take place at an appointed time and place in
Cuyahoga County, Ohio. Either TA or Franchisee may initiate arbitration by
giving notice to the other party in accordance with Section XXV.
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B. Each party shall select one (1) arbitrator who is an attorney
licensed to practice law in the State of Ohio (who shall not be counsel for the
party), and the two (2) so designated shall select a third arbitrator who shall
act as chairperson of the panel. If either party fails to designate an
arbitrator within fourteen (14) days after arbitration is requested, or if the
two arbitrators fail to select a third arbitrator within thirty (30) days after
arbitration is requested, then the third arbitrator (or second arbitrator) shall
be selected by the Cleveland ADR Panel of the Center for Public Resources
currently headquartered at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or its
successor. Once impaneled, all three arbitrators shall act as neutrals and not
as party arbitrators and neither TA nor Franchisee shall have any ex parte
communication with any member of the panel regarding the substance of the
arbitration pending before that panel. The decision of the panel shall be by
majority vote and shall be in writing supported by written findings of fact and
conclusions of law. In reaching its decision the panel shall apply the laws of
the State of Ohio, without regard to rules on conflicts of law. The award of the
arbitrators may grant any relief which might be granted by a court of general
jurisdiction, including award of damages or injunctive relief and may, in the
discretion of the arbitrators, assess the costs of the arbitration, including
the reasonable fees of the arbitrators (but excluding attorneys' fees which
shall be borne individually by each party), against either or both parties in
such proportions as the arbitrators shall determine; provided, however, that the
arbitrators shall provision of this Franchise Agreement or make any award which
by its terms or effect, alters or modifies any such express provision.
C. The decision of the arbitrators, or in the case of a difference
of opinion between them, the decision of the majority shall be the sole and
exclusive remedy for the parties, and judgment upon the award rendered by the
arbitrators may be entered by any court having jurisdiction thereof, except that
either party may appeal to the District Court for the Northern District of Ohio
in Cleveland or the Common Pleas Court of Cuyahoga County, Ohio, on the basis
that the arbitrators have made a mistake of law or that the arbitrators' finding
of fact is against the weight of the evidence, or that the award is beyond the
power or jurisdiction of the arbitrators. In such event, the District or Common
Pleas Court reviewing the decision shall review it without jury on the same
basis as any appellate court would review a decision of a lower court, provided
that the court shall finally determine the controversy unless it determines the
matter should be remanded to the arbitration panel for the taking of additional
evidence.
XXIX. DEFINITIONS
When used in this Franchise Agreement, the following terms in all
of their tenses and cases shall have the meanings set forth below or elsewhere
in this Franchise Agreement as indicated below:
"Adjacent Area" is defined in Section XVI(A).
"Confidential Operations Manual" is defined in Section VI(A).
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"Franchise Facility" is defined in Section I(A).
"Franchise Site" is defined in Section I(A).
"Franchisee" is defined in the first paragraph of this Franchise
Agreement.
"Franchisee Party" shall mean each person who executes a Guaranty
in the form of Exhibit E, attached hereto, and each of the following persons
[LIST ANY KEY PERSONNEL OR PRINCIPALS].
"Mandatory Standard" is defined in Section XII(H).
"Marks" is defined in the third "Whereas" paragraph, on page 1 of
this Franchise Agreement.
"System" is defined in the first "Whereas" paragraph, on page 1
of this Franchise Agreement.
"TA" shall mean TA Franchise Systems, Inc., a Delaware
corporation.
"TA Billing System" is defined in Section XII(S).
"TA Franchise" is defined in the next to last "Whereas" clause
located on pages 1 and 2 of this Franchise Agreement.
"TA Operating" shall mean TA Operating Corporation, a Delaware
corporation.
"TA Portion" is defined in Section XVIII(H).
"TA POS Computer System" means the Truckstops of America point of
sale system.
"Territory" is defined in Section I(B).
XXX. CAVEAT
The success of the business venture contemplated to be undertaken by
Franchisee by virtue of this Franchise Agreement is speculative and is very much
dependent upon the ability of Franchisee or its managers or owners as
independent businesspersons and its active participation in the daily affairs of
the business. TA DOES NOT MAKE ANY REPRESENTATION OR WARRANTY EXPRESS OR IMPLIED
AS TO THE POTENTIAL SUCCESS OR PROFITABILITY OF THE BUSINESS VENTURE
CONTEMPLATED HEREBY.
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XXXI. ENTIRE AGREEMENT
This Franchise Agreement, any Exhibits attached hereto, and the
documents referred to herein including particularly the Confidential Operations
Manual, shall be construed together and constitute the entire, full and complete
agreement between TA and Franchisee concerning the subject matter hereof. No
representation not set forth herein has induced Franchisee to execute this
Franchise Agreement, and there are no representations, inducements, promises, or
agreements, oral or otherwise, between the parties not contained herein which
are not explicitly superseded hereby. No amendment, change or variance from this
Franchise Agreement shall be binding on either party unless executed in writing
by both parties. Without limiting the generality of the foregoing, in the event
of any difference between the Uniform Franchise Offering Circular and this
Franchise Agreement, this Franchise Agreement shall govern.
XXXII. ACKNOWLEDGEMENTS
A. Franchisee and each Franchisee Party represent and acknowledge
that: (1) it has received, read and understood this Franchise Agreement and TA's
Uniform Franchise Offering Circular; (2) TA has fully and adequately explained
the provisions of each to its satisfaction; and (3) TA has accorded Franchisee
and each Franchisee Party ample time and opportunity to consult with advisors of
its own choosing about the potential benefits and risks of entering into this
Franchise Agreement.
B. Franchisee and each Franchisee Party acknowledge that Franchisee
has received a copy of this Franchise Agreement, and the attachments hereto, at
least five (5) business days prior to the date on which this Franchise Agreement
was executed. Franchisee and each Franchisee Party further acknowledge that
Franchisee has received the disclosure document required by the Trade Regulation
Rule of the Federal Trade Commission entitled Disclosure Requirements and
Prohibitions Concerning Franchising and Business Opportunity Ventures, at least
ten (10) business days prior to the date on which this Franchise Agreement was
executed.
C. Franchisee and each Franchisee Party represent and acknowledge
that they do not operate under a franchise agreement, licensing agreement, or a
prescribed marketing plan or system of another company or organization except as
may be disclosed on Exhibit B hereto, and that Franchisee and its officers,
directors and shareholders are not subject to any agreements limiting or
restricting Franchisee's ability to conduct said business as a TA Franchise.
D. TA expressly disclaims the making of, and Franchisee and each
Franchisee Party acknowledge that it has not received or relied upon, any
warranty or guaranty, express or implied, as to the revenues, profits or success
of the business venture contemplated by this Franchise Agreement, and that
neither Franchisee nor any Franchisee Party has any knowledge of any
representation by TA, or its officers, directors, shareholders, employees or
agents that is contrary to the terms herein.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed, sealed and delivered this Franchise Agreement on the
day and year first above written.
TA:
TA FRANCHISE SYSTEMS INC.
ATTEST: By:
(sign)
(print)
(title)
Witness
FRANCHISEE:
ATTEST: By:
(sign)
(print)
(title)
Witness
[AN ACKNOWLEDGEMENT WILL BE REQUIRED FROM ANY FRANCHISEE PARTY
THAT DOES NOT EXECUTE A GUARANTY]
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