THE QUIZNO'S FRANCHISE COMPANY
FRANCHISE AGREEMENT
THE QUIZNO'S FRANCHISE COMPANY
FRANCHISE AGREEMENT
TABLE OF CONTENTS
EXHIBITS
1 Addendum -- Location and Initial Franchise Fee
2 Addendum -- QUIZNO'S Classic Subs Express Facility
3 Addendum -- Special Products Program
4 Authorization Agreement for Prearranged Payments
5 Statement of Ownership
6 Guaranty and Assumption of Franchisee's Obligations
7 Addendum -- Bookkeeping Services
8 Addendum -- Maximum Borrowing Commitment
FRANCHISE:-----------------------
ADDRESS:-------------------------
EFFECTIVE
DATE:----------------------------
THIS AGREEMENT (the "Agreement") is between THE QUIZNO'S FRANCHISE
COMPANY, a Colorado corporation located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Franchisor"), and the franchisee listed above
("Franchisee"), who agree as follows:
PURPOSE
1.1 Franchisor and its affiliates have developed methods for establishing,
operating, and promoting restaurants offering submarine sandwiches, salads,
other food products and beverages, and related restaurant and carry out
services ("QUIZNO'S Restaurants" or "Restaurants"), which include the use and
license of certain valuable trade names, service marks, and trademarks (the
"Marks") owned by The Quizno's Corporation ("TQC"), Franchisor's parent
company, and licensed to Franchisor, including the ▇▇▇▇ "QUIZNO'S," and TQC's
distinctive techniques, expertise, and knowledge in establishing, operating,
and promoting restaurants and related licensed methods of doing business (the
"Licensed Methods").
1.2 Franchisor grants the right to others to establish and operate
Restaurants under the Marks and using the Licensed Methods.
1.3 Franchisee recognizes and acknowledges the benefits to be derived from
being identified and associated with Franchisor, and being able to utilize
the Restaurant system and concepts, and therefore desires to establish a
Restaurant at an approved location. Franchisor is willing to grant Franchisee
the right to operate a Restaurant under the terms and conditions contained in
this Agreement.
GRANT OF FRANCHISE
0.1 Grant of Franchise. Franchisor grants to Franchisee, and
Franchisee accepts from Franchisor, the right to use the Marks and Licensed
Methods in connection with establishing and operating a Restaurant at the
location described in Section 3. Franchisee agrees to use the Marks and
Licensed Methods, as they are changed, improved, and further developed by
Franchisor and its affiliates from time to time, only in accordance with the
terms and conditions of this Agreement.
0.2 Scope of Franchise Operations. Franchisee agrees at all times
faithfully, honestly, and diligently to perform its obligations under this
Agreement, to use best efforts to promote its Restaurant, and not to engage
in any other business or activity that conflicts with the operation of the
Restaurant in compliance with this Agreement. Franchisee agrees to utilize
the Marks and Licensed Methods to operate all aspects of Franchisee's
Restaurant in accordance with the methods and systems developed and
prescribed from time to time by Franchisor, all of which are a part of the
Licensed Methods. Franchisee's Restaurant shall offer all products and
services designated by Franchisor. Franchisee shall implement any additions
and changes to the products and services offered by its Restaurant that
Franchisor requires.
1. FRANCHISED LOCATION AND TARGET AREA
1.1 Franchised Location. Franchisee is granted the right to own and
operate a Restaurant at a specific address and location ("Franchised
Location"). Franchisee shall choose and acquire a location for its
Restaurant within the nonexclusive Target Area set forth in Exhibit 1.
Franchisee shall select and propose to Franchisor for approval a specific
site for the Franchised Location in the Target Area, which Franchisor shall
have the right to approve or disapprove in accordance with the terms set
forth in this Agreement. Franchisee acknowledges and agrees that the
Franchised Location will be a specific numbered street or mall address at
which Franchisee’s Restaurant will be physically located. The "Franchised
Location" cannot and will not under any circumstances be defined as a
geographic area or be described in terms other than a specific numbered
street or mall address. During the term of this Agreement, the Franchised
Location shall be used exclusively to operate a Restaurant.
1.2 Limitation on Franchise Rights. The rights granted to Franchisee
are for the specific Franchised Location and cannot be transferred to any
other location, except with Franchisor's prior written approval. The Marks
and Licensed Methods are licensed only for the Franchised Location.
1.3 Express Restaurants. Franchisee may not operate a Restaurant
located within a host facility (such as a gas station, convenience store, or
hotel), in another "non-traditional" venue, or at any other location where
the operation of the Restaurant will, because of its location, vary from the
operation of a traditional Restaurant (all referred to as "Express
Restaurants"), except with Franchisor's prior written consent, in which case
Franchisor and Franchisee shall execute Exhibit 2 (if this Agreement governs
the operation of a traditional Restaurant, the Express Restaurant(s) shall be
governed by a separate Franchise Agreement). Franchisor will determine
whether a proposed Restaurant should be classified as an Express Restaurant.
1.4 Special Products. From time to time, Franchisor may offer
supplemental programs to be incorporated in certain Restaurants ("Special
Products"). Franchisee may not offer a Special Product except with
Franchisor's prior written permission, in which case Franchisor and
Franchisee shall execute Exhibit 3.
1.5 Franchisor's Reservation of Rights. Franchisee acknowledges that
the franchise granted under this Agreement is nonexclusive, that Franchisee
has no territorial protection, and that Franchisor, TQC, and all of their
affiliates retain the right: (1) to use, and to license others to use, the
Marks and Licensed Methods for the operation of Restaurants at any location
other than the Franchised Location; (2) to use the Marks and Licensed Methods
in connection with services and products, promotional and marketing efforts
or related items, or in alternative channels of distribution, without regard
to location; (3) to use and license the use of alternative proprietary marks
or methods in connection with the operation of restaurants or other
businesses under names which are not the same as or confusingly similar to
the Marks, which businesses may be the same as, or similar to, or different
from Restaurants; and (4) to engage in any other activities not expressly
prohibited in this Agreement.
2. INITIAL FRANCHISE FEE
2.1 Initial Franchise Fee. Franchisee agrees to pay to Franchisor,
concurrently with signing this Agreement, an initial franchise fee ("Initial
Franchisee Fee") in the amount set forth in Exhibit 1. Franchisee
acknowledges and agrees that the Initial Franchise Fee represents payment for
the initial grant of the right to use the Marks and Licensed Methods, that
Franchisor has earned the Initial Franchise Fee upon receipt, and that the
Initial Franchise Fee is not refundable to Franchisee after it is paid.
3. ROYALTIES
3.1 Royalty. Franchisee will pay to Franchisor a weekly royalty
("Royalty") equal to seven percent (7%) of the total amount of its Gross
Sales, defined in Section 5.2, generated from or through its Restaurant.
3.2 Gross Sales. "Gross Sales" is defined as sales of any kind for
all services or products from or through the Restaurant, including any sale
of services or products made for cash or upon credit, or partly for cash and
partly for credit, regardless of collection of charges for which credit is
given, and regardless of whether such sale is conducted in compliance with or
in violation of the terms of this Agreement, or whether such sale is at the
Franchised Location or off-site, but exclusive of discounts, sales taxes, or
other similar taxes and credits. Gross Sales also include the fair market
value of any services or products received by Franchisee in barter or
exchange for its services and products.
3.3 Royalty Payments. Royalty payments will be paid weekly and sent
to Franchisor by electronic funds transfer, due on Thursday (for the
preceding Monday through Sunday period), or such other specific day of the
week which Franchisor designates from time to time ("Due Date"). Upon the
request of Franchisor and in no event later than thirty (30) days before the
Restaurant opens, Franchisee shall execute an Authorization Agreement, in the
form attached to this Agreement as Exhibit 4, for preauthorized payment of
Royalty payments, and other amounts due from Franchisee under this Agreement
or otherwise, by electronic transfer of funds from Franchisee's bank account
to Franchisor's bank account. On the Due Date each week, Franchisee shall
report to Franchisor by telephone, electronic means, or in written form, as
Franchisor directs (as more fully described in Section 15), Franchisee's
Gross Sales and such additional information requested by Franchisor.
Franchisor shall have the right to verify such Royalty payments from time to
time as it deems necessary in any reasonable manner. If Franchisee fails to
have sufficient funds in its account or otherwise fails to pay any Royalties
due as of the Due Date, Franchisee shall owe, in addition to such Royalties,
a late charge equivalent to two percent (2%) per month of any late Royalty
payment; provided, however, in no event shall Franchisee be required to pay a
late payment at a rate greater than the maximum commercial contract interest
rate permitted by applicable law.
Franchisor may require Franchisee to pay the Royalty and other amounts
due under this Agreement by means other than automatic debit whenever
Franchisor deems appropriate, and Franchisee agrees to comply with
Franchisor's payment instructions.
3.4 Application of Payments. Notwithstanding any designation
Franchisee might make, Franchisor may apply any payments made by Franchisee
to any of Franchisee's past due indebtedness to Franchisor or its
affiliates. Franchisee acknowledges that Franchisor has the right to set-off
any amounts Franchisee owes Franchisor or its affiliates against any amounts
Franchisor or its affiliates might owe Franchisee.
4. DEVELOPMENT OF FRANCHISED LOCATION
4.1 Approval of Franchised Location. Franchisee may operate a
QUIZNO'S Restaurant only at a site approved by Franchisor, which approval
will not be unreasonably withheld if the site meets Franchisor's site
selection criteria. Franchisee shall follow Franchisor's site selection
procedures in locating a Franchised Location for the Restaurant. Franchisee
shall submit a completed site submittal package, including demographics and
other materials requested by Franchisor, containing all information
reasonably required by Franchisor to assess a proposed Franchised Location.
4.2 Lease Approval. Franchisee shall obtain Franchisor's prior
written approval before executing any lease or purchase agreement for the
Franchised Location. Prior to its execution, Franchisee's proposed
Franchised Location lease must be reviewed and certified as acceptable by
Franchisor. Such review is for the benefit of Franchisor, and Franchisee
acknowledges that Franchisor's review and approval of a lease for the
Franchised Location do not constitute a recommendation, endorsement, or
guarantee by Franchisor of the suitability of the Franchised Location or the
lease, and Franchisee should take all steps necessary to ascertain whether
such Franchised Location and lease are acceptable to Franchisee. Upon
submission of a proposed Franchised Location for the Restaurant, Franchisee
shall pay Franchisor or its designated supplier a lease review fee of One
Thousand Four Hundred Fifty Dollars ($1,450) ("Lease Review Fee"). The Lease
Review Fee pays the expenses incurred to review and (if Franchisor so
chooses) to negotiate certain provisions of the lease. Franchisee is not a
third-party beneficiary of the lease negotiation or review. Franchisee agrees
that Franchisor does not guarantee that the terms, including rent, will
represent the most favorable terms available in that market. Franchisor
shall charge Franchisee only one (1) Lease Review Fee unless Franchisee
refuses to sign a lease that Franchisor has certified as acceptable for the
Franchised Location, and Franchisor then is required to engage in one or more
additional lease reviews for the Franchised Location, in which case
Franchisee shall pay Franchisor a Lease Review Fee for the first lease review
as well as a Lease Review Fee for each additional lease review.
4.3 Lease Assistance Program. If Franchisee participates in the
"Lease Assistance Program," then, once Franchisor has approved the Franchised
Location, Franchisor or one of its affiliates will enter into negotiations
with the Franchised Location's landlord ("Master Landlord") and, assuming
such negotiations are successful, enter into a lease for the Franchised
Location ("Master Lease''). The Lease Review Fee will be Two Thousand Two
Hundred Dollars ($2,200). Franchisee then agrees to enter into a sublease
with Franchisor or its designated affiliate ("Sublease") in substantially the
same form as attached to Franchisor's Uniform Franchise Offering Circular
("UFOC"). The Sublease shall incorporate the terms and conditions of the
Master Lease, including rent and other charges. Default of the Sublease will
constitute default of this Agreement, and default of this Agreement will
constitute default of the Sublease. Franchisee acknowledges that Franchisor's
approval of a lease for the Franchised Location, and Franchisor's or one of
its affiliates' execution of the Sublease, do not constitute a
recommendation, endorsement, or guarantee by Franchisor or the affiliate of
the suitability of the Franchised Location or the terms of the Master Lease,
and Franchisee should take all steps necessary to ascertain whether such
Franchised Location and lease terms are acceptable to Franchisee. Franchisor
shall charge Franchisee only one (1) Lease Review Fee unless Franchisee
refuses to sign a lease that Franchisor has certified as acceptable for the
Franchised Location, and Franchisor then is required to engage in one or more
additional lease reviews for the Franchised Location, in which case
Franchisee shall pay Franchisor a Lease Review Fee for the first lease review
as well as a Lease Review Fee for each additional lease review.
4.4 Schedule. Franchisee shall execute a lease no later than one (1)
year from the date this Agreement is signed. Franchisor will extend the time
which Franchisee has to obtain an executed lease for the Franchised Location
for one (1) three (3) month period in the event factors beyond Franchisee's
reasonable control prevent Franchisee from meeting this deadline, so long as
Franchisee has made reasonable and continuing efforts to obtain and submit
for approval an acceptable site and Franchisee requests in writing an
extension of time before the end of the one (1) year period. Any lease for
the Franchised Location shall be collaterally assigned to Franchisor as
security for Franchisee's performance of its obligations under this
Agreement. Franchisee shall deliver a copy of the signed lease for the
Franchised Location to Franchisor within five (5) days after it is signed.
4.5 Conversion and Design. Franchisee acknowledges that the layout,
design, decoration, and color scheme of Restaurants are an integral part of
Franchisor's proprietary Licensed Methods, and, accordingly, Franchisee shall
convert and decorate the Franchised Location in accordance with Franchisor's
plans, designs, and specifications. Franchisee also shall obtain Franchisor's
written consent to any conversion, design, or decoration of the Franchised
Location before remodeling or decorating begins, recognizing that such
remodeling and decoration, and any related costs, are Franchisee's sole
responsibility.
4.6 Signs. Franchisee shall purchase or otherwise obtain for use at
the Franchised Location and in connection with the Restaurant the maximum
number and size of signs allowed by applicable building codes, which signs
shall comply with Franchisor's standards and specifications. It is
Franchisee's sole responsibility to ensure that all signs comply with
applicable local ordinances, building codes, and zoning regulations. Any
modifications to Franchisor's standards and specifications for signs due to
local ordinances, codes, or regulations shall be submitted to Franchisor for
prior written approval. Franchisee acknowledges that the Marks, or any other
name, symbol, or identifying marks on any signs, shall be used only in
accordance with Franchisor's standards and specifications and only with
Franchisor's prior written approval.
4.7 Equipment. Franchisee shall purchase or otherwise obtain for use
in connection with the Restaurant the equipment, including delivery vehicles
(if utilized) and computer hardware and software, of a type and in an amount
which complies with Franchisor's standards and specifications and only from
suppliers or other sources approved by Franchisor. Franchisee acknowledges
that the type, quality, configuration, capability, and performance of the
Restaurant equipment are all standards and specifications which are a part of
the Licensed Methods. Franchisee shall purchase or lease for use in the
Restaurant an electronic cash register or computer system ("System") approved
by Franchisor that accurately records every sale or other transaction.
Franchisee shall purchase, or Franchisor or an affiliate may license to
Franchisee for the license fee it determines, software to be used by
Franchisee in conjunction with the System. Franchisee shall submit any
required reports in a format designated from time to time by Franchisor.
Franchisee grants Franchisor the right to access the System and to obtain
sales, sales mix, and revenue information directly by modem or otherwise.
Franchisee acknowledges that Franchisor will use information from required
reports primarily to make business and marketing decisions. Franchisee shall
be obligated to upgrade or update the System and the software, at
Franchisee's sole cost, to meet Franchisor's then-current standards and
specifications and to address technological developments or events, such as
"Year 2000" related issues. Franchisor has no obligation to reimburse
Franchisee for any of these costs.
4.8 Permits and Licenses. Franchisee agrees to obtain all permits
and licenses required for the lawful construction and operation of its
Restaurant together with all certifications from government authorities
having jurisdiction over the Franchised Location that all requirements for
construction and operation have been met, including, without limitation,
zoning, access, sign, health, fire, and safety requirements; building and
other required construction permits; licenses to do business; fictitious name
registrations; sales tax permits; health and sanitation permits; and ratings
and fire clearances. Franchisee agrees to obtain all customary contractors'
sworn statements and partial and final lien waivers for construction,
remodeling, decorating, and installation of equipment at the Franchised
Location. Franchisee shall keep copies of all health department, fire
department, building department, and other reports of inspections on file and
available for inspection by Franchisor. Franchisee shall immediately forward
to Franchisor any such reports or inspections in which Franchisee has been
found not to be in compliance with the underlying regulation.
4.9 Commencement of Operations. Unless otherwise agreed in writing
by Franchisor and Franchisee, Franchisee has twelve (12) months from the date
of this Agreement (which may be extended three (3) months as provided by
Section 6.4) within which to complete the initial training program, described
in Section 7.1, and commence operation of the Restaurant. Franchisee shall
obtain the written consent of Franchisor prior to commencing operation of the
Restaurant, which consent shall not be unreasonably withheld, but cannot be
granted until Franchisor has approved the Franchised Location and Franchisee
has: (1) successfully completed the initial training program; (2) paid all
fees and other amounts due to Franchisor; (3) furnished copies of all
insurance policies required by this Agreement; (4) built out and equipped the
Franchised Location in accordance with Franchisor's standards and
specifications and received a QUIZNO'S certificate of occupancy from
Franchisor; (5) purchased an inventory of approved products and supplies; and
(6) otherwise completed all other aspects of developing the Restaurant as
Franchisor has reasonably required.
5. TRAINING
5.1 Initial Training Program. Franchisee (or, if Franchisee is a
corporation, partnership, or limited liability company, its managing
shareholder, partner, or member ("Managing Owner")) and the person designated
by Franchisee to assume primary responsibility for managing the Restaurant
("Designated Manager") must attend and successfully complete the initial
training program offered by Franchisor at one of Franchisor's designated
training facilities. Up to three (3) individuals (including the Managing
Owner and Designated Manager) are eligible to participate in Franchisor's
initial training program without paying any tuition or fee. Franchisee shall
be responsible for any and all travel and living expenses incurred in
connection with attending the training program as well as wages or salaries,
if any, of the person(s) receiving training. Franchisee (or its Managing
Owner) and the Designated Manager must successfully complete the initial
training program before Franchisee begins operating the Restaurant.
Franchisor reserves the right to waive all or a portion of the training
program or alter the training schedule
Franchisee (or its Managing Owner) and its Designated Manager may
request additional training during the initial training program, to be
provided at no additional charge, if Franchisee (or its Managing Owner) and
the Designated Manager do not feel completely trained in the operation of a
QUIZNO'S Restaurant. However, if Franchisee (or its Managing Owner) and the
Designated Manager satisfactorily complete Franchisor's initial training
program, and do not inform Franchisor in writing at the end of the initial
training program that Franchisee (or its Managing Owner) and the Designated
Manager do not feel completely trained in the operation of a QUIZNO'S
Restaurant, then Franchisee will be deemed to have been trained sufficiently
to operate a QUIZNO'S Restaurant.
5.2 Additional Training Programs. Franchisor reserves the right to
conduct training programs or seminars at locations to be determined by
Franchisor to discuss relevant business trends and share new information
relating to the Restaurant business. Attendance at the seminar is optional
unless Franchisor gives Franchisee at least thirty (30) days' prior written
notice that the seminar is mandatory, in which case Franchisee (or its
Managing Owner) or its Designated Manager is required to attend. Franchisor
shall not require Franchisee to attend any on-going training programs or
seminars more than four (4) times a year. Each mandatory training program
and seminar shall not last more than three (3) days. All such mandatory
training will be offered without tuition or a fee; provided, however,
Franchisee will be responsible for any and all transportation and living
expenses incurred in attending such additional training programs or seminars.
6. OPERATIONS MANUAL
6.1 Operations Manual. Franchisor agrees to loan to Franchisee one
(1) or more manuals, technical bulletins, or other written or videotaped
materials (collectively referred to as "Operations Manual") covering the
Restaurant's operating and marketing techniques and any Special Product(s)
applicable to the Restaurant. Franchisee agrees that it shall comply with
the Operations Manual as an essential part of its obligations under this
Agreement. Franchisee shall at all times be responsible for ensuring that
its employees and all other persons under its control comply with the
Operations Manual in all respects. Franchisee shall not duplicate the
Operations Manual nor disclose its contents to persons other than employees
or officers who need the information to perform their jobs.
6.2 Changes to Operations Manual. Franchisor reserves the right to
revise the Operations Manual from time to time as it deems necessary to
update operating and marketing techniques or standards and specifications in
any manner, including updates contained in monthly newsletters. Franchisee,
within thirty (30) days after receiving any updated information, shall in
turn update its copy of the Operations Manual as instructed by Franchisor and
conform its operations with the updated provisions. Franchisee acknowledges
that the master copy of the Operations Manual maintained by Franchisor at its
principal office controls in the event of a dispute over its contents.
7. DEVELOPMENT ASSISTANCE
7.1 Franchisor's Development Assistance. To assist Franchisee in
establishing the Restaurant, Franchisor shall provide the following:
(1) Assistance related to accepting a site for the Restaurant, although
Franchisee acknowledges that Franchisor has no obligation to select or
acquire a site on behalf of Franchisee. Franchisor's assistance will consist
of, at a minimum, providing general criteria for a satisfactory site and
determining whether a proposed site fulfills the requisite criteria prior to
formal acceptance of a site selected by Franchisee. Site selection,
acquisition, and development shall be the sole obligation of Franchisee,
except as set forth in this Agreement or any other written agreement executed
by Franchisor. Franchisee acknowledges that Franchisor is under no obligation
to provide additional site selection services other than as set forth in a
written, executed agreement and that Franchisor's acceptance of the site does
not imply or guarantee the success or profitability of the site in any manner
whatsoever.
(2) Standards and specifications for the build out, interior design,
layout, floor plan, signs, designs, color, and decor of the Restaurant.
(3) Advice regarding the standards and specifications for the equipment,
supplies, and materials used in, and the menu items offered for sale by, the
Restaurant and advice regarding selecting suppliers for and purchasing such
items.
(4) Guidance in implementing advertising and marketing programs, operating
and sales procedures, and bookkeeping and accounting programs.
(5) The initial training in accordance with Section 7.1.
(6) Opening assistance consisting of one (1) or more representatives of
Franchisor on site at the Franchised Location for not less than five (5) days
to assist Franchisee in opening the Restaurant; provided, however, that
Franchisee shall hire and be exclusively responsible for the training,
compensation, and control of its employees.
(7) One (1) copy of the Operations Manual, as described in Section 8, which
shall be loaned to Franchisee during the term of this Agreement.
7.2 Responsibilities of Area Director. Franchisor reserves the right
to retain the services of an area director or other representative ("Area
Director") in the geographic area in which Franchisee's Restaurant will be
located. In such event, the Area Director, on behalf of Franchisor, will
perform certain sales, site assistance, and supervisory services directed by
Franchisor. Franchisee agrees in advance to any such delegation and
assignment by Franchisor of any portion or all of Franchisor's obligations
and rights under this Agreement. Franchisee also acknowledges that it is not
a third party beneficiary of any Area Director Marketing Agreement or other
agreement between Franchisor and any Area Director.
8. OPERATING ASSISTANCE
8.1 Franchisor's Assistance. Franchisor agrees that, during
Franchisee’s operation of the Restaurant, Franchisor or its designated
representatives shall make available to Franchisee the following assistance:
(8) Upon the reasonable request of Franchisee, telephone consultation
regarding the continued operation and management of a Restaurant and advice
regarding Restaurant services, product quality control, menu items, and
customer relations issues.
(9) Access to advertising and promotional materials developed by Franchisor
through the Marketing and Promotion Fund (as defined below).
(10) On-going updates of information and programs regarding menu items and
their preparation, the Restaurant business, and related Licensed Methods,
including information about special or new services or products developed and
made available to franchisees of Franchisor.
(11) The initial training program to replacement or additional Designated
Managers during the term of this Agreement. Although Franchisor does not
currently charge a tuition or fee, Franchisor reserves the right to charge a
tuition or fee, payable in advance, commensurate with the then-current
published prices of Franchisor for such training. Franchisee shall be
responsible for all travel and living expenses incurred by its personnel
during the training program.
9. FRANCHISEE'S OPERATIONAL COVENANTS
9.1 Business Operations. Franchisee acknowledges that it is solely
responsible for the successful operation of its Restaurant and that its
successful operation depends on Franchisee's compliance with this Agreement
and the Operations Manual. In addition to all other obligations contained in
this Agreement and the Operations Manual, Franchisee agrees that:
(12) Franchisee shall maintain a clean, safe, and high quality Restaurant
operation and promote and operate the business in accordance with the
Operations Manual so as not to detract from or adversely reflect upon the
name and reputation of Franchisor and the goodwill associated with the
QUIZNO'S name and Marks.
(13) Franchisee will conduct itself and operate its Restaurant in compliance
with all applicable laws, regulations, and other ordinances and in such a
manner so as to promote a good public image in the business community.
Franchisee will be solely and fully responsible for obtaining any and all
licenses to operate the Restaurant. Franchisee shall keep copies of all
health department, fire department, building department, and other similar
reports of inspections on file and available for inspection by Franchisor.
Franchisee shall immediately forward to Franchisor any such reports or
inspections in which Franchisee has been found not to be in compliance with
the underlying regulation.
(14) Franchisee acknowledges that proper management of the Restaurant is
important and shall ensure that Franchisee (or its Managing Owner) or a
Designated Manager who has completed the initial training program will be
responsible for managing the Restaurant after commencement of operations and
be present at the Franchised Location during its operation.
(15) Franchisee acknowledges that the franchise requires and authorizes
Franchisee to offer only authorized products and services as described in the
Operations Manual, which may include, without limitation, submarine and other
sandwiches, salads, other authorized food and beverage products, and related
restaurant and carry out or delivery services. Franchisee shall maintain at
all times a sufficient supply of all menu items and related food and paper
products to ensure, insofar as possible, that such items are at all times
available to its customers. Franchisee shall offer all types of services and
products from time to time prescribed by Franchisor and shall not offer any
other types of services or products, or operate or engage in any other type
of business or profession, from or through the Restaurant, unless
Franchisor's written consent is first obtained.
(16) Franchisee shall promptly pay when due all taxes and other obligations
owed to third parties, including, without limitation, all federal, state, and
local taxes and any and all accounts payable or other indebtedness incurred
by Franchisee in operating the Restaurant.
(17) Franchisee shall comply with all agreements with third parties related
to the Restaurant, including, in particular, all provisions of any premises
lease or Sublease.
(18) Franchisee agrees to renovate, refurbish, remodel, or replace, at its
own expense, the real and personal property and equipment used in operating
the Restaurant when reasonably required by Franchisor in order to comply with
the image, standards of operation, and performance capability established by
Franchisor from time to time. If Franchisor changes its image or standards of
operation, it shall give Franchisee a reasonable period of time within which
to comply with such changes.
(19) Franchisee shall at all times during the term of this Agreement own and
control the Restaurant. Upon request of Franchisor, Franchisee shall promptly
provide satisfactory proof of such ownership to Franchisor. Franchisee
represents that the Statement of Ownership attached as Exhibit 5 is true,
complete, accurate, and not misleading. Franchisee shall promptly provide
Franchisor with a written notification if the information contained in the
Statement of Ownership changes at any time during the term of this Agreement
and shall comply with the applicable transfer provisions contained in
Section 16. Franchisee acknowledges that, if Franchisee is other than an
individual(s), Franchisor may require that the individual owners or members
of Franchisee guarantee the performance of Franchisee and sign the Guaranty
and Assumption of Franchisee's Obligations attached to this Agreement as
Exhibit 6.
(20) Franchisee shall at all times during the term of this Agreement keep
its Restaurant open during the business hours designated by Franchisor from
time to time in the Operations Manual. Any deviations from the required hours
first must be approved in writing by Franchisor.
(21) Franchisee shall procure, maintain, and provide evidence of insurance
for the Restaurant and its operations of the types, in the amounts, and with
such terms and conditions as Franchisor from time to time prescribes in the
Operations Manual or otherwise. All of the required policies of insurance
shall name Franchisor and TQC as additional insureds and provide for thirty
(30) days' advance written notice to Franchisor of their cancellation or
modification. If Franchisee participates in the Lease Assistance Program, it
shall use an insurance carrier approved by Franchisor.
(22) Franchisee will provide proof of insurance to Franchisor before
beginning operations at its Restaurant. This proof will show that the
insurer has been authorized to inform Franchisor in the event any policies
lapse or are canceled or modified. Franchisor has the right to change the
insurance Franchisee is required to maintain by giving Franchisee reasonable
prior notice. Noncompliance with these insurance provisions shall be deemed
a material breach of this Agreement; in the event of any lapse in insurance
coverage, then, in addition to all other remedies, Franchisor shall have the
right to demand that Franchisee cease operations of the Restaurant until
coverage is reinstated or, alternatively, to pay any delinquencies in premium
payments and charge the same to Franchisee.
10. ADVERTISING
10.1 Approval and Use of Advertising. Franchisee shall obtain
Franchisor's prior written approval of all written advertising or other
marketing or promotional programs not previously approved by Franchisor
regarding the Restaurant, including, without limitation, "Yellow Pages"
advertising, newspaper ads, flyers, brochures, coupons, direct mail pieces,
specialty and novelty items, radio and television advertising, Internet "web"
pages, and other home pages or domain names on any common carrier electronic
delivery system. Any proposed uses not previously approved by Franchisor
shall be submitted to Franchisor at least ten (10) days prior to publication,
broadcast, or use. Franchisee acknowledges that advertising and promoting the
Restaurant in accordance with Franchisor's standards and specifications are
essential aspects of the Licensed Methods, and Franchisee agrees to comply
with all advertising standards and specifications. Franchisee also agrees to
participate in any promotion campaigns and advertising and other programs
that Franchisor periodically establishes.
10.2 Grand Opening. Franchisee agrees to conduct a grand opening
advertising and promotional program for the Restaurant at the time and in the
manner specified by Franchisor and agrees to spend a minimum of Five Thousand
Dollars ($5,000) for the grand opening program. Franchisee agrees to provide
Franchisor with a summary of grand opening program expenditures within one
hundred twenty (120) days after the Restaurant opens. Franchisee's grand
opening program will utilize the marketing and public relations programs and
media and advertising materials that Franchisor has either developed or
approved.
10.3 Marketing and Promotion Fee. Franchisee agrees to pay to
Franchisor, in addition to Royalties, a Marketing and Promotion fee
("Marketing and Promotion Fee") of one percent (1%) of the total amount of
Franchisee's Gross Sales. The Marketing and Promotion Fee shall be in
addition to and not in lieu of Franchisee's Local Advertising Fee. The
following terms and conditions will apply to the Marketing and Promotion Fee
payment:
(23) The Marketing and Promotion Fee shall be payable weekly, concurrently
with the payment of the Royalties, based on Gross Sales (as defined in
Section 5.2) for the immediately preceding reporting period. Franchisee shall
execute an Authorization Agreement for preauthorized payment of Marketing and
Promotion Fees by electronic transfer of funds from Franchisee's bank account
to the bank account designated by Franchisor. Any Marketing and Promotion Fee
collected by Franchisor will be deposited by Franchisor in one (1) or more
separate accounts (referred to collectively as the "Fund"), all designated as
"QUIZNO'S Marketing and Promotion Fund." The Marketing and Promotion Fees
will be subject to the same late charges as the Royalties. Upon written
request by Franchisee, Franchisor will make available to Franchisee, no later
than one hundred twenty (120) days after the end of each calendar year, an
annual unaudited financial statement for the Fund which indicates how
deposits to the Fund have been spent. Franchisor has the right to deposit
into the Fund any advertising, marketing, or similar allowances paid by
suppliers who deal with Restaurants and with whom Franchisor has agreed that
it will (or if Franchisor otherwise chooses to) so deposit these allowances.
QUIZNO'S Restaurants that Franchisor or its affiliates own will contribute to
the Fund on the same basis as franchisees.
(24) The Fund will be administered and controlled by Franchisor and may be
used for production and placement of media advertising, direct response
literature, direct mailings, brochures, collateral advertising material,
surveys of advertising effectiveness, other advertising or public relations
expenditures relating to advertising QUIZNO'S Restaurants services and
products, providing professional services, materials, and personnel to
support the marketing function, and creating, producing, and implementing
websites for Franchisor and/or its franchisees. Franchisor may reimburse
itself for administrative costs, independent audits, reasonable accounting,
bookkeeping, reporting, and legal expenses, taxes, and other reasonable
direct and indirect expenses incurred by Franchisor or its authorized
representatives in connection with the programs funded by the Fund. The Fund
will not be Franchisor's asset. Franchisor will not be liable for any act or
omission that is consistent with this Agreement and done in good faith.
Franchisor may spend in any fiscal year more or less than the aggregate
contribution of all Restaurants to the Fund in that year, and the Fund may
borrow from Franchisor or others to cover deficits or invest any surplus for
future use. All interest earned on monies contributed to the Fund will be
used to pay advertising costs before other assets of the Fund are expended.
Franchisor may cause the Fund to be incorporated or operated through a
separate entity at such time as Franchisor deems appropriate, and such
successor entity, if established, will have all rights and duties specified
in this Section. Franchisor undertakes no obligation to ensure that the Fund
benefits each Restaurant in proportion to its respective contributions. The
Fund's primary purpose is to support sales by the entire QUIZNO'S System and
to build brand identity. Franchisee agrees to participate in any promotion
campaigns and advertising and other programs that the Fund periodically
establishes.
(25) Franchisor has the right, but no obligation, to use collection agents
and institute legal proceedings to collect Fund contributions at the Fund's
expense. Franchisor also may forgive, waive, settle, and compromise all
claims by or against the Fund. Franchisor may at any time defer or reduce
contributions of a franchisee and, upon thirty (30) days' prior written
notice to Franchisee, reduce or suspend Fund contributions and operations for
one (1) or more periods of any length and terminate (and, if terminated,
reinstate) the Fund. If Franchisor terminates the Fund, it will distribute
all unspent monies to the contributors in proportion to their respective Fund
contributions during the preceding twelve (12) month period.
10.4 Local Advertising. Franchisee agrees to spend not less than
three percent (3%) of the total amount of its Gross Sales each calendar
quarter for local advertising ("Local Advertising Fee"). Franchisor may
request that Franchisee prepare and submit a quarterly report to Franchisor
which accounts for the use of the Local Advertising Fee no later than ten
(10) days following the end of each calendar quarter during the term of this
Agreement. Franchisor may collect and designate all or a portion of the
Local Advertising Fee for the Marketing and Promotion Fund.
10.5 Regional Advertising Programs. Although not obligated to do so,
Franchisor may create a regional advertising program ("Regional Advertising")
for the benefit of the Restaurants located within a particular region.
Franchisor has the right to (i) allocate any portion of the Marketing and
Promotion Fund to the Regional Advertising program; and (ii) collect and
designate all or a portion of the Local Advertising Fee for a Regional
Advertising program. If a Regional Advertising program is established,
Franchisor may increase the Local Advertising Fee by one percent (1%);
provided that in no event shall Franchisee be required to spend more than a
total of five percent (5%) of its Gross Sales, in the aggregate, for the
Local Advertising Fee, Regional Advertising, and Marketing and Promotion Fee
contributions, including Yellow Pages advertising. Franchisor has the right
to determine the composition of all geographic territories and market areas
for the implementation of Regional Advertising and promotion campaigns and to
require that Franchisee participate in such Regional Advertising programs as
and when established by Franchisor. The fees designated to the Regional
Advertising programs may be used to pay regional, multi-regional or national
marketing expenses. If a Regional Advertising program is implemented on
behalf of a particular region, Franchisor reserves the right to establish an
advertising cooperative for a particular region to enable the cooperative to
self-administer the Regional Advertising program, and Franchisee agrees to
participate in such cooperative according to the cooperative's then current
rules and procedures and to abide by the cooperative's then current
decisions. Franchisor may at any time, upon thirty (30) days' prior written
notice to Franchisee, suspend a Regional Advertising program or cooperative
operations for one (1) or more periods of any length and terminate (and, if
terminated, reinstate) the Regional Advertising program or cooperative.
11. QUALITY CONTROL
11.1 Standards and Specifications. Franchisor will make available to
Franchisee standards and specifications for services and products offered at
or through the Restaurant and the uniforms, recipes, materials, forms, menus,
items, and supplies used in connection with the franchised business.
Franchisor reserves the right to change standards and specifications for
services and products offered at or through the Restaurant or for uniforms,
recipes, materials, forms, items, and supplies upon thirty (30) days' prior
written notice to Franchisee.
11.2 Inspections. Franchisor shall have the right to interview
customers or examine the Franchised Location and to examine and copy its
books, records, and documents, including, without limitation, the inventory,
products, equipment, materials, or supplies, to ensure compliance with all
standards and specifications set by Franchisor. Franchisor shall conduct
such inspections during regular business hours without prior notice to
Franchisee.
11.3 Restrictions on Services and Products. Franchisee is prohibited
from offering or selling any services or products from or through the
Restaurant that have not been previously authorized by Franchisor. However,
if Franchisee proposes to offer, conduct, or utilize any services, products,
materials, forms, items, or supplies in connection with or for sale through
the Restaurant that are not approved by Franchisor, Franchisee shall first
notify Franchisor in writing requesting approval. Franchisor may withhold
such approval; however, in order to make such determination, Franchisor may
require submission of specifications, information, or samples of such
services, products, materials, forms, items, or supplies. Franchisor will
advise Franchisee within a reasonable time whether such products, supplies,
or services meet its specifications. A charge not to exceed the actual cost
of the review may be made by Franchisor and shall be paid by Franchisee.
11.4 Approved Suppliers. Franchisee shall purchase all equipment,
products, services, supplies, and materials required for the operation of the
Restaurant from manufacturers, suppliers, or distributors designated by
Franchisor or, if there is no designated supplier for a particular product,
service, supply, or material, from such other suppliers who meet all of
Franchisor's specifications and standards as to quality, composition,
finish, appearance, and service and adequately demonstrate their capacity and
facilities to supply Franchisee's needs in the quantities, at the times, and
with the reliability requisite to an efficient operation. Franchisor
reserves the right to designate, from time to time, a single supplier for any
services, products, equipment, supplies, or materials and to require
Franchisee to use such a designated supplier exclusively, which exclusive
designated supplier may be Franchisor or its affiliates. Franchisor and its
affiliates may receive payments from suppliers on account of such suppliers'
dealings with Franchisee and other franchisees and may use all amounts so
received without restriction and for any purpose Franchisor and its
affiliates deem appropriate (unless Franchisor and its affiliates agree
otherwise with the supplier).
11.5 Request for Change of Supplier. In the event Franchisee desires
to purchase products, services, supplies, or materials from manufacturers,
suppliers, or distributors other than those previously approved by
Franchisor, Franchisee shall, prior to purchasing any such products,
services, supplies, or materials, give Franchisor a written request to change
supplier. Franchisor shall notify Franchisee in writing of its approval or
rejection of the proposed supplier within a reasonable time after
Franchisor's completion of its investigation of the proposed supplier.
Franchisor may from time to time inspect any manufacturer's, supplier's, or
distributor's facilities and products to assure proper production,
processing, storing, and transportation of products, services, supplies, or
materials to be purchased from the manufacturer, supplier, or distributor by
Franchisee. Permission for such inspection shall be a condition of the
continued approval of such manufacturer, supplier, or distributor.
Franchisor may, for any reason whatsoever, elect to withhold approval of the
manufacturer, supplier, or distributor; however, in order to make such
determination, Franchisor may require that samples from a proposed new
supplier be delivered to Franchisor for testing prior to approval and use. A
charge not to exceed the actual cost of the test may be made by Franchisor
and shall be paid by Franchisee.
12. MARKS, TRADE NAMES AND PROPRIETARY INTERESTS
12.1 Marks. Franchisee acknowledges that Franchisor and TQC have the
sole right to license and control Franchisee's use of the Marks and that such
Marks shall remain under the sole and exclusive ownership and control of
Franchisor and TQC. Franchisee acknowledges that it does not acquire any
right, title, or interest in the Marks except for the right to use the Marks
in operating its Restaurant under this Agreement. Franchisee shall display
the Marks prominently at the Restaurant, on packaging and serving materials,
and in connection with forms, advertising, and marketing, all in the manner
Franchisor prescribes. Franchisee further agrees that no Marks other than
"QUIZNO'S," "QUIZNO'S CLASSIC SUBS," or such other trademarks specified by
Franchisor shall be used in the marketing, promotion, identification, or
operation of the Restaurant, except with Franchisor's prior written consent.
Franchisee may not use any of the Marks, except as allowed by Franchisor in
writing, as part of any domain name or electronic address it maintains on the
Internet, the World Wide Web, or any other similar proprietary or common
carrier electronic delivery system.
12.2 Licensed Methods. Franchisee hereby acknowledges that TQC owns
and controls the distinctive plan for establishing, operating, and promoting
Restaurants and all related licensed methods of doing business, previously
defined as the Licensed Methods, which include, but are not limited to,
recipes, menu items, and cooking methods; technical restaurant equipment
standards; order and take-out fulfillment methods; customer relations;
marketing techniques; written promotional materials and Operations Manual
contents; advertising; and accounting systems; all of which constitute trade
secrets of TQC and have been licensed to Franchisor, and Franchisee
acknowledges that TQC and Franchisor have valuable rights in and to such
trade secrets. Franchisee further acknowledges that it has not acquired any
right, title, or interest in the Licensed Methods, except for the right to
use the Licensed Methods in operating the Restaurant, and that any and all
innovations, additions, or improvements made to the Licensed Methods, even if
by Franchisee, shall belong to TQC.
12.3 Trademark Infringement. Franchisee agrees to notify Franchisor
in writing of any possible infringement of a ▇▇▇▇ or use by others of a
trademark confusingly similar to the Marks coming to its attention.
Franchisee acknowledges that Franchisor and TQC shall have the sole right to
determine whether any action will be taken in response to any possible
infringement or illegal use and to control any action taken. Franchisee
agrees to fully cooperate with Franchisor and TQC in any litigation or other
action.
12.4 Franchisee's Business Name. Franchisee acknowledges that
Franchisor and TQC have a prior and superior claim to the QUIZNO'S trade
name. Franchisee shall not use the word "QUIZNO'S" in the legal name of its
corporation, partnership, or any other business entity. Franchisee also
agrees not to register or attempt to register a trade name using the word
"QUIZNO'S" or any portion thereof in Franchisee's name or that of any other
person or business entity.
12.5 Change of Marks. In the event Franchisor decides to modify or
discontinue use of any proprietary Marks, or to develop additional or
substitute marks, Franchisee shall, within a reasonable time after receipt of
written notice, take such action, at Franchisee's sole expense, necessary to
comply with such modification, discontinuation, addition, or substitution.
Franchisor need not reimburse Franchisee for its direct expenses of changing
the Restaurant's signs, for any loss of revenue due to any modified or
discontinued ▇▇▇▇, or for its expenses of promoting a modified or substitute
trademark or service ▇▇▇▇.
13. REPORTS, RECORDS AND FINANCIAL STATEMENTS
13.1 Franchisee Reports. Franchisee shall use the bookkeeping
services described in and shall execute Exhibit 7 for the first twelve (12)
months Franchisee's first Restaurant is operating. After that, Franchisee
may discontinue the bookkeeping service ninety (90) days following completion
of the following: Franchisee retains a full-time professional accountant
(approved in writing by Franchisor) to provide bookkeeping services (at
Franchisee's expense), and that accountant agrees in writing (on a form
acceptable to Franchisor) to provide timely financial statements required by
this Section 15. If Franchisee fails to provide such financial statements
more than two (2) times in any twelve (12) month period, then, in addition to
any other remedies, Franchisor may require Franchisee to use Franchisor's
bookkeeping services at the then-current fee. Franchisee also shall provide
to Franchisor financial and accounting reports in the manner and form
Franchisor requires, including:
(26) Weekly summary reports, submitted by no later than the Due Date each
week (defined in Section 5.3) and containing information relative to the
previous weekly reporting period operations;
(27) Any other data, information, and supporting records reasonably
requested by Franchisor from time to time (including, without limitation,
daily and weekly reports of product sales by category);
(28) Within fifteen (15) days after the end of each month, an income
statement of Franchisee's Restaurant for such month and for the fiscal year
to date, prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied, in Franchisor's recommended format; and
(29) Within ninety (90) days after the end of Franchisee's fiscal year,
which shall be the calendar year, an income statement and balance sheet of
Franchisee's Restaurant for such fiscal year (reflecting all year-end
adjustments) and a statement of changes in cash flow of the Restaurant,
prepared in accordance with GAAP consistently applied and in Franchisor's
recommended format. Franchisor reserves the right to require that Franchisee
have reviewed financial statements prepared on an annual basis.
13.2 Financial Records Use and Access. Franchisor reserves the right
to disclose data derived from all financial and accounting reports received
from Franchisee. Franchisor reserves the right to require that Franchisee
install and maintain a telephone modem and dedicated line at the Restaurant
which Franchisor may access to obtain sales information and data of the
System (defined in Section 6.7), and Franchisee agrees to cooperate with
Franchisor's procedures regarding the System. With respect to the operation
and financial condition of the Restaurant, Franchisee agrees to furnish
Franchisor the required financial and accounting reports in the form
prescribed by Franchisor, which may include, without limitation, computer
diskette, electronic mail, and facsimile transmission.
13.3 Books and Records. Franchisee shall maintain all books and
records for its Restaurant in accordance with GAAP consistently applied and
preserve such records, including cash register tapes, shift reports, weekly
operating summaries, and sales tax returns, for at least three (3) years
after the fiscal year to which they relate.
13.4 Audit of Books and Records. Franchisee shall permit Franchisor
or its representatives to inspect and audit the books and records of the
Restaurant at any reasonable time at Franchisor's expense. If any audit
discloses a deficiency in amounts owed to Franchisor, then such amounts shall
become immediately payable to Franchisor by Franchisee, with interest from
the date such payments were due at the lesser of two percent (2%) per month
or the maximum commercial contract interest rate allowed by law. In addition,
if such audit discloses that the Gross Sales of the Restaurant have been
understated by two (2%) or more during the audit period, Franchisee shall pay
all reasonable costs and expenses Franchisor incurred in connection with such
audit.
14. TRANSFER
14.1 Transfer by Franchisee. Franchisee agrees that the rights and
duties created by this Agreement are personal to Franchisee (or its
shareholders, partners, members, or owners, if Franchisee is a corporation,
partnership, or limited liability company, or other business entity) and that
Franchisor has entered into this Agreement in reliance upon Franchisor's
perceptions of the individual or collective character, skill, aptitude,
attitude, business ability, and financial capacity of Franchisee (or its
shareholders, partners, members, or owners). Accordingly, without
Franchisor's prior written consent, which will not be unreasonably withheld,
neither this Agreement (or any interest in this Agreement) nor any part or
all of the ownership of Franchisee may be transferred. Any unauthorized
transfer is a breach of this Agreement, void, and of no effect. As used in
this Agreement, the term "transfer" includes Franchisee's (or an owner's)
voluntary, involuntary, direct, or indirect assignment, sale, gift, or other
disposition of any interest in: (1) this Agreement; (2) the Franchisee
entity; (3) the Restaurant governed by this Agreement; or (4) all or a
substantial portion of the assets of the Restaurant.
14.2 Pre-Conditions to Franchisee's Transfer. Franchisee agrees
that there may be no transfers before the Restaurant has opened for
business. Franchisor shall not be obligated to approve a proposed transfer
unless Franchisee (and its owners) are in full compliance with this
Agreement. Franchisor shall not unreasonably withhold its approval of a
proposed transfer that meets all the applicable requirements of this
Section. The proposed transferee and its owners must be individuals of good
moral character and otherwise meet Franchisor's then applicable standards for
franchisees.
If the proposed transfer is of this Agreement and the Restaurant, or a
controlling interest in Franchisee, or is one of a series of transfers
(regardless of the time period over which these transfers take place) which
in the aggregate transfer this Agreement and the Restaurant or a controlling
interest in Franchisee, all of the following conditions must be met before or
concurrently with the effective date of the transfer: (a) All amounts due
and owing pursuant to this Agreement or otherwise by Franchisee to
Franchisor, its affiliates, or third parties whose debts or obligations
Franchisor has guaranteed on behalf of Franchisee, if any, are paid in full;
Franchisee has submitted all required reports and statements; and Franchisee
has not violated any provision of this Agreement, the Restaurant's lease, or
any other agreement with Franchisor during both the sixty (60) day period
before Franchisee requested Franchisor's consent to the transfer and the
period between Franchisee's request and the effective date of the transfer;
(b) the proposed transferee agrees to operate the Restaurant as a QUIZNO'S
Restaurant, signs the then-current form of franchise agreement, the
provisions of which may differ materially from any and all of those contained
in this Agreement, and satisfactorily completes the initial training
program; (c) Franchisee provides written notice to Franchisor at least thirty
(30) days prior to the proposed effective date of the transfer and includes
information reasonably detailed to enable Franchisor to evaluate the terms
and conditions of the proposed transfer, which at a minimum includes a
written offer from the proposed transferee; (d) the proposed transferee
provides information to Franchisor sufficient for Franchisor to assess the
proposed transferee's business experience, aptitude, and financial
qualification, and Franchisor approves the proposed transferee as a
franchisee; (e) neither the transferee nor its owners or affiliates operate
or have an ownership interest in a Competitive Business (defined in
Section 20.1); (f) Franchisee's landlord allows Franchisee to transfer the
Restaurant's lease to the transferee; (g) if Franchisee or its owners finance
any part of the purchase price, Franchisee and/or its owners agree that all
of the transferee's obligations under promissory notes, agreements, or
security interests reserved in the Restaurant are subordinate to the
transferee's obligation to pay fees and other amounts due to Franchisor and
otherwise to comply with this Agreement; (h) Franchisee executes a general
release, in a form satisfactory to Franchisor, of any and all claims against
Franchisor, its affiliates, and their respective shareholders, officers,
directors, employees, and agents; (i) Franchisee abides by all
post-termination covenants, including, without limitation, the covenant not
to compete set forth in Section 20.3; and (j) if Franchisee is an individual
transferring this Agreement and the Restaurant to an entity wholly-owned by
Franchisee, Franchisee agrees both to remain personally responsible for the
entity's performance of its obligations under this Agreement and to continue
to comply personally with all obligations under this Agreement.
If Franchisor approves the proposed transfer, Franchisee or the
proposed transferee will pay Franchisor a transfer fee in an amount equal to
twenty-five percent (25%) of the then-current Initial Franchise Fee for the
type of Restaurant being transferred, which fee is required to cover
Franchisor's reasonable expenses related to the transfer, including training;
provided, however, that no transfer fee will be charged (and Franchisor's
right of first refusal will not apply) for a transfer by Franchisee to an
entity wholly-owned by Franchisee, between owners of a Franchisee entity, or
to a spouse of a Franchisee (or owner of the Franchisee) upon the death or
disability of Franchisee (or owner) so long as the transfer does not result
in a change of control of the Franchisee.
A person will be deemed to have a controlling interest in Franchisee if
that person has the right to vote twenty-five percent (25%) or more of the
voting securities or other forms of ownership interest of a corporation,
partnership, or other form of entity, or is entitled to receive twenty-five
percent (25%) or more of the net profits of any such entity, or is otherwise
able to direct or cause the direction of that entity's management or
policies.
14.3 Franchisor's Approval of Transfer. Franchisor has thirty (30)
days from the date of the written notice to approve or disapprove, in
writing, Franchisee's proposed transfer. Franchisee acknowledges that the
proposed transferee shall be evaluated by Franchisor based on the same
criteria as are currently being used to assess new franchisees and that the
proposed transferee shall be provided with such disclosures required by state
or federal law. Franchisor may review all information regarding the
Restaurant that Franchisee gives the transferee, and Franchisor may give the
transferee copies of any reports that Franchisee has given Franchisor or
Franchisor has made regarding the Restaurant.
14.4 Right of First Refusal. Franchisee grants to Franchisor a thirty
(30) day right of first refusal to purchase such rights, interest, or assets
on the same terms and conditions as are contained in the written notice set
forth in Section 16.2(c); provided, however, the following additional terms
and conditions shall apply: (a) the right of first refusal will be effective
for each proposed transfer, and any material change in the terms or
conditions of the proposed transfer shall be deemed a separate offer for
which Franchisor shall have a new thirty (30) day right of first refusal; (b)
the thirty (30) day right of first refusal period will run concurrently with
the period in which the Franchisor has to approve or disapprove the proposed
transferee; (c) if the consideration or manner of payment offered by a
proposed transferee is such that Franchisor cannot reasonably be expected to
furnish the same, then Franchisor may purchase the interest proposed to be
sold for the reasonable cash equivalent. If the parties cannot agree within a
reasonable time on the cash consideration, an independent appraiser shall be
designated by Franchisor, whose determination will be binding upon the
parties; all expenses of the appraiser shall be paid for equally by
Franchisor and Franchisee; and, despite subparagraph (b), Franchisor will
have fifteen (15) days after determination of the cash consideration to
exercise its right of first refusal; and (d) if Franchisor chooses not to
exercise its right of first refusal, Franchisee shall be free to complete the
transfer subject to compliance with Sections 16.2 and 16.3.
14.5 Transfer by Franchisor. Franchisee acknowledges that Franchisor
maintains a staff to manage and operate the QUIZNO'S System and that staff
members can change from time to time. Franchisee represents that it has not
signed this Agreement in reliance on any shareholder, director, officer, or
employee remaining with Franchisor in that capacity. Franchisor may change
its ownership or form and/or assign this Agreement and any other agreement
without restriction.
14.6 Franchisee's Death or Disability. Upon the death or permanent
disability of Franchisee (or an individual controlling a Franchisee entity),
the personal representative of such person shall transfer Franchisee's
interest in this Agreement or such interest in the Franchisee entity to an
approved third party. Such disposition of this Agreement or such interest
(including, without limitation, transfer by bequest or inheritance) shall be
completed within a reasonable time, not to exceed one hundred twenty (120)
days from the date of death or permanent disability (unless extended by
probate proceedings), and shall be subject to all terms and conditions
applicable to transfers contained in this Section 16; provided, however, that
for purposes of this Section, there shall be no transfer fee charged by
Franchisor. Failure to transfer the interest within said period of time shall
constitute a breach of this Agreement. The term "permanent disability" shall
mean a mental or physical disability, impairment, or condition that is
reasonably expected to prevent or actually does prevent Franchisee (or an
owner controlling a Franchisee entity) from supervising the management and
operation of the Restaurant for a period of one hundred twenty (120) days
from the onset of such disability, impairment, or condition. In any event,
the Restaurant shall at all times be managed by a Designated Manager who has
complied with all of Franchisor's training requirements, regardless of any
death or permanent disability covered by this Section.
15. TERM AND RENEWAL
15.1 Term. The primary term of this Agreement is for a period of
fifteen (15) years from the Effective Date, unless sooner terminated.
15.2 Renewal. At the end of the primary term, Franchisee shall have
the option to renew its franchise rights for an additional fifteen (15) year
term, so long as Franchisee:
(30) Has complied with all provisions of this Agreement during the primary
term, including the payment on a timely basis of all Royalties and other
fees. "Compliance" shall mean, at a minimum, that Franchisee has not
received written notification from Franchisor of a breach more than four (4)
times during the primary term;
(31) Is not in default or under notification of breach of this Agreement at
the time it gives notice under Section 17.3;
(32) Agrees to upgrade and remodel the Restaurant at Franchisee's sole
expense (the necessity of which shall be at Franchisor's option) to conform
with the then-current Operations Manual requirements;
(33) Executes a general release, in a form satisfactory to Franchisor, of
any and all claims against Franchisor and its affiliates and their respective
shareholders, officers, directors, employees, and agents arising out of or
relating to this Agreement or the parties' relationship; and
(34) Executes the then-current form of Franchise Agreement, which agreement
may contain terms materially different from those in this Agreement,
including terms changing the Royalty and other fee amounts; provided that
Franchisee shall not be required to pay a new Initial Franchise Fee.
15.3 Exercise of Renewal. Franchisee may exercise its option to renew
by giving written notice of such exercise to Franchisor not more than one (1)
year nor less than one hundred eighty (180) days prior to the expiration of
the primary term. Franchisee must also pay a One Thousand Dollar ($1,000)
renewal fee to Franchisor concurrently with the execution of the then-current
Franchise Agreement to cover Franchisor's expenses related to reviewing
Franchisee's operations and approving the renewal. If Franchisee fails to
comply with any of the conditions listed above (other than execution of the
new Franchise Agreement or payment of the renewal fee), Franchisor shall give
notice to that effect to Franchisee no later than ninety (90) days before
expiration of the primary term.
16. DEFAULT AND TERMINATION
16.1 Termination by Franchisee. Franchisee shall have the right to
terminate this Agreement if Franchisor materially fails to comply with this
Agreement and fails to cure its default within thirty (30) days after
delivery of written notice of the default from Franchisee. Notwithstanding
the foregoing, if the breach is curable but is of a nature which cannot
reasonably be cured within such thirty (30) day period and Franchisor has
commenced and is continuing to make good faith efforts to cure the breach,
Franchisor shall be given an additional reasonable period of time to cure the
same, and this Agreement shall not terminate. Any termination by Franchisee
other than in accordance with this Section will be deemed a termination by
Franchisee without cause.
16.2 Termination by Franchisor - Effective Upon Notice. Franchisor
shall have the right, at its option, to terminate this Agreement and all
rights granted Franchisee, without affording Franchisee any opportunity to
cure any default (subject to any state laws to the contrary, in which case
state law shall prevail), effective upon delivery to Franchisee of a
termination notice, upon the occurrence of any of the following events:
(10 Unauthorized Opening. If Franchisee begins operating the
Restaurant without having obtained Franchisor's prior written consent, as
required in Section 6.9;
(35) Unauthorized Disclosure. If Franchisee or any person under
Franchisee's control intentionally or negligently discloses to any
unauthorized person, or copies or reproduces, the contents or any part of the
Operations Manual or any other trade secrets or confidential information of
Franchisor or TQC;
(36) Fraud or Conduct Affecting the Marks. If Franchisee commits fraud in
connection with the purchase or operation of the Restaurant or otherwise
engages in conduct that, in the sole judgment of Franchisor, materially
impairs the goodwill associated with the Marks;
(37) Abandonment. If Franchisee ceases to operate the Restaurant or
otherwise abandons the Restaurant for a period of five (5) consecutive days,
or any shorter period that indicates an intent by Franchisee to discontinue
operation of the Restaurant, unless and only to the extent that full
operation of the Restaurant is suspended or terminated due to fire, flood,
earthquake, or other similar causes beyond Franchisee's control and not
related to the availability of funds to Franchisee;
(38) Insolvency; Assignments. If Franchisee becomes insolvent or is
adjudicated a bankrupt; or any action is taken by Franchisee, or by others
against Franchisee, under any insolvency, bankruptcy, or reorganization act
(this provision might not be enforceable under federal bankruptcy law, 11
U.S.C. §101 et seq.); or if Franchisee makes an assignment for the benefit
of creditors; or a receiver is appointed for Franchisee;
(39) Unsatisfied Judgments; Levy; Foreclosure. If any material judgment (or
several judgments which in the aggregate are material) is obtained against
Franchisee and remains unsatisfied or of record for thirty (30) days or
longer (unless a supersedeas or other appeal bond has been filed); or if
execution is levied against Franchisee's business or any of the property used
in operating the Restaurant and is not discharged within five (5) days; or if
the real or personal property of Franchisee's business shall be sold after
levy by any sheriff, marshall, or constable;
(40) Criminal Conviction. If Franchisee (or any of its Bound Parties, as
defined in Section 20.1) is convicted of a felony, a crime involving moral
turpitude, or any crime or offense reasonably likely, in the sole opinion of
Franchisor, to materially and unfavorably affect the Licensed Methods, Marks,
and associated goodwill and reputation;
(41) Failure to Make Payments. If Franchisee fails to pay any amounts due
Franchisor or its affiliates within ten (10) days after delivery of notice
that such fees or amounts are overdue;
(42) Financial Reporting. If Franchisee intentionally underreports Gross
Sales in any amount or negligently underreports Gross Sales by five percent
(5%) or more during any reporting period;
(43) Failure to Complete Training or Open. If Franchisee (or its Managing
Owner and Designated Manager) fails to complete the initial training program
to Franchisor's satisfaction or to commence operations of the Restaurant
within the required time period;
(44) Misuse of Marks. If Franchisee misuses or fails to follow Franchisor's
directions and guidelines concerning use of the Marks and fails to correct
the misuse or failure within ten (10) days after delivery of notice from
Franchisor;
(45) Repeated Noncompliance. If Franchisee has received three (3) notices
of default from Franchisor within a twelve (12) month period, regardless of
whether the defaults were cured by Franchisee;
(46) Right to Possession of Property. If Franchisee loses the right to
occupy the Restaurant's premises because of its default under the lease or
Sublease or defaults under any agreement related to use or operation of the
Restaurant; or
(47) Unauthorized Transfer. If Franchisee sells, transfers, or otherwise
assigns the franchise, an interest in the franchise or Franchisee entity,
this Agreement, the Restaurant, or a substantial portion of the assets of the
Restaurant without complying with the provisions of Section 16.
16.3 Termination by Franchisor - Thirty Days Notice. Franchisor shall
have the right to terminate this Agreement (subject to any state laws to the
contrary, in which case state law shall prevail), effective upon delivery of
thirty (30) days' prior written notice to Franchisee, if Franchisee breaches
any other provision of this Agreement, including, but not limited to, if
Franchisee fails to comply with the Operations Manual, and fails to cure the
default during such thirty (30) day period. In that event, this Agreement
will terminate without further notice to Franchisee, effective upon
expiration of the thirty (30) day period. Notwithstanding the foregoing, if
the breach is curable, but is of a nature which cannot reasonably be cured
within such thirty (30) day period and Franchisee has commenced and is
continuing to make good faith efforts to cure the breach, Franchisee shall be
given an additional reasonable period of time to cure the same, and this
Agreement shall not terminate.
16.4 Late Fee. In addition to its other rights and remedies,
Franchisor may charge Franchisee a late fee of one hundred dollars ($100) per
violation by Franchisee of any term or condition of this Agreement,
including, without limitation, failure to pay (or to have adequate amounts
available for electronic transfer for) amounts owed Franchisor or its
affiliates or failure to timely provide required reports. This fee may be
changed or eliminated by Franchisor.
16.5 Failure to Comply with Reporting Requirements. If Franchisee
fails to prepare and submit any statement or report required under
Section 15, then Franchisor shall have the right to treat Franchisee's
failure as good cause for termination of this Agreement. In addition to all
other remedies available to Franchisor, in the event that Franchisee fails to
prepare and submit any statement or report required under Section 15 for two
(2) consecutive reporting periods, Franchisor shall be entitled to make an
audit, at the expense of Franchisee, of Franchisee's books, records, and
accounts, including Franchisee's bank accounts. The statements or reports
not previously submitted shall be prepared by or under the direction and
supervision of an independent certified public accountant selected by
Franchisor. In addition to its other rights and remedies, if Franchisee
fails to comply with the reporting requirements under Section 15, Franchisor
shall have the right to collect, in addition to the late fee, Six Hundred
Fifty Dollars ($650) per week for Royalty payments and One Hundred Dollars
($100) per week for advertising payments (or a greater amount if Franchisor
reasonably estimates that the Restaurant is generating higher Gross Sales),
provided that any amounts will be reconciled and adjusted as needed when
Franchisor receives actual Gross Sales amounts.
16.6 Right to Repurchase. Except in the case of a renewal under
Section 17, upon termination or expiration of this Agreement for any reason,
Franchisor shall have the option to purchase the Restaurant, or a portion of
the assets of the Restaurant (including any furniture, fixtures, equipment
and improvements), and which may include, at Franchisor's option, all of
Franchisee's leasehold interest in and to the real estate upon which the
Restaurant is located, but not including any other interest in real property.
The purchase price for the assets to be transferred will be thirty percent
(30%) of the Gross Sales of the Restaurant during the twelve (12) calendar
months immediately preceding the date of termination or expiration and will
be adjusted by setting off any amount then owing by Franchisee to Franchisor
or its affiliates, including any amounts paid by Franchisor to cure
Franchisee's defaults with third parties such as landlords (the decision to
pay such cure amounts to be the sole decision of Franchisor). The following
additional terms shall apply to Franchisor's exercise of this option:
(48) Franchisor's option shall be exercisable by providing Franchisee with
written notice of its intention to exercise the option no later than the
effective date of termination, in the case of termination (unless Franchisee
terminates without notice or Franchisor terminates for cause, in which case
Franchisor shall have thirty (30) days after receipt of actual notice of the
termination or such additional time as is reasonably necessary given the
circumstances), or at least thirty (30) days prior to the expiration of the
term of the franchise, in circumstances where no renewal is granted;
(49) Franchisor and Franchisee agree that the terms and conditions of this
right and option to purchase may be recorded, if deemed appropriate by
Franchisor, in the real property records, and Franchisor and Franchisee
further agree to execute such additional documentation as may be necessary
and appropriate to effectuate such recording;
(50) The closing for the purchase will take place no later than sixty (60)
days after delivery of written notice of Franchisor's exercise of its option
is given to Franchisee. Franchisor has the unrestricted right to assign this
option to purchase at any time. Franchisor will pay the purchase price in
full at the closing or, at its option, in twenty-four (24) equal consecutive
monthly installments, with interest at a rate equal to the prime lending rate
as of the closing at Franchisor's primary bank. Franchisee must sign all
documents of transfer reasonably necessary for purchase of the Restaurant by
Franchisor, which documents shall include all customary representations and
warranties from Franchisee as to ownership and condition of, and title to,
the assets of the Restaurant being transferred. All assets must be
transferred free and clear of all liens and encumbrances, with all sales and
transfer taxes paid by Franchisee. Franchisee and its owners further agree
to sign general releases, in a form satisfactory to Franchisor, of any and
all claims against Franchisor and its shareholders, officers, directors,
employees, agents, successors, and assigns; and
(51) Franchisee agrees that it shall be obligated to operate the Restaurant,
according to this Agreement's terms, during the period in which Franchisor is
deciding whether to exercise its option to purchase and until the closing
takes place, and that a condition to closing is that the Restaurant has
remained open during that time period. Franchisor may decide not to exercise
its option to purchase at any time before closing if it determines that any
of the conditions noted above have not been or cannot be satisfied.
In the event that Franchisor does not exercise its right to repurchase
Franchisee's Restaurant as set forth above, Franchisee will be free, after
such termination or expiration, to keep or to sell to any third party all of
the physical assets of its Restaurant; provided, however, that all Marks are
first removed in a manner approved in writing by Franchisor.
16.7 Obligations of Franchisee Upon Termination or Expiration.
Franchisee is obligated upon termination or expiration of this Agreement to
immediately:
(52) Pay all Royalties and other amounts then owed Franchisor or its
affiliates pursuant to this Agreement or otherwise;
(53) Cease identifying itself as a QUIZNO'S franchisee and cease using any
Marks, trade secrets, signs, symbols, devices, trade names, or other
materials of Franchisor or TQC;
(54) Immediately cease to identify the Franchised Location as being, or
having been, associated with Franchisor and immediately cease using the Marks
and Licensed Methods;
(55) Deliver to Franchisor all signs, sign-faces, advertising materials,
forms, and other materials bearing any of the Marks or otherwise identified
with Franchisor;
(56) Immediately deliver to Franchisor the Operations Manual and all other
information, documents, and copies which are proprietary to Franchisor and
TQC;
(57) Promptly take such action required to cancel all fictitious or assumed
name or equivalent registrations relating to its use of any Marks or, at the
option of Franchisor, assign the same to Franchisor;
(58) Notify the telephone company and all telephone directory publishers of
the termination or expiration of Franchisee's right to use any telephone
number and any regular, classified, or other telephone directory listings
associated with any ▇▇▇▇ and to authorize their transfer to Franchisor or its
designee. Franchisee acknowledges that, as between Franchisee and
Franchisor, Franchisor has the sole rights to and interest in all telephone,
telecopy, or facsimile machine numbers and directory listings associated with
any ▇▇▇▇. Franchisee authorizes Franchisor, and hereby appoints Franchisor
and any of its officers as Franchisee's attorney-in-fact, to direct the
telephone company and all telephone directory publishers to transfer any
telephone, telecopy, or facsimile machine numbers and directory listings
relating to the Restaurant to Franchisor or its designee, should Franchisee
fail or refuse to do so, and the telephone company and all telephone
directory publishers may accept such direction or this Agreement as
conclusive of Franchisor's exclusive rights in such telephone numbers and
directory listings and Franchisor's authority to direct their transfer; and
(59) Abide by all restrictive covenants set forth in Section 20 of this
Agreement.
16.8 State and Federal Law. THE PARTIES ACKNOWLEDGE THAT, IN
THE EVENT THAT THE TERMS OF THIS AGREEMENT REGARDING TERMINATION
OR EXPIRATION ARE INCONSISTENT WITH APPLICABLE STATE OR FEDERAL LAW,
SUCH LAW SHALL GOVERN FRANCHISEE'S RIGHTS REGARDING TERMINATION OR
EXPIRATION OF THIS AGREEMENT.
16.9 Assumption of Management. Franchisor has the right (but not the
obligation), under the circumstances described below, to enter the Restaurant
and assume the Restaurant's management for any time period it deems
appropriate. If Franchisor assumes the Restaurant's management, Franchisee
must pay Franchisor (in addition to the Royalty and Marketing and Promotion
Fee) three percent (3%) of the Restaurant's Gross Sales, plus Franchisor's
direct out-of-pocket costs and expenses, during this time. If Franchisor
assumes the Restaurant's management, Franchisee acknowledges that Franchisor
will have a duty to utilize only reasonable efforts and will not be liable to
Franchisee or its owners for any debts, losses, or obligations the Restaurant
incurs, or to any of Franchisee's creditors for any supplies or services the
Restaurant purchases, while Franchisor manages it.
Franchisor may assume the Restaurant's management under the following
circumstances:
(10 if Franchisee abandons the Restaurant; or
(20 if Franchisee fails to comply with any provision of this
Agreement and does not cure the failure within the time period
Franchisor specifies in its notice to Franchisee.
The exercise of Franchisor's rights under subparagraphs (a) or (b) will not
affect Franchisor's right to terminate this Agreement.
17. BUSINESS RELATIONSHIP
17.1 Independent Businesspersons. The parties agree that each of them
is an independent businessperson, their only relationship is by virtue of
this Agreement, and no fiduciary relationship is created under this
Agreement. Neither party is liable or responsible for the other's debts or
obligations, nor shall either party be obligated for any damages to any
person or property directly or indirectly arising out of the operation of the
other party's business. Franchisor and Franchisee agree that neither of them
will hold themselves out to be the agent, employer, or partner of the other
and that neither of them has the authority to bind or incur liability on
behalf of the other.
17.2 Payment of Third Party Obligations. Franchisor shall have no
liability for Franchisee's obligations to pay any third parties, including,
without limitation, any product vendors, or for any sales, use, service,
occupation, excise, gross receipts, income, property, or other taxes levied
upon Franchisee, Franchisee's property, the Restaurant, or Franchisor in
connection with the sales made or business conducted by Franchisee (except
any taxes Franchisor is required by law to collect from Franchisee with
respect to purchases from Franchisor).
17.3 Indemnification. Franchisee agrees to indemnify, defend, and
hold harmless Franchisor, TQC, and their affiliates, and the respective
shareholders, directors, officers, employees, agents, successors, and
assignees of Franchisor, TQC, and their affiliates (the ''Indemnified
Parties"), against, and to reimburse them for, all claims, obligations, and
damages described in this Section 19.3, any and all third party obligations
described in Section 19.2, and any and all claims and liabilities directly or
indirectly arising out of the operation of the Restaurant or the use of the
Marks and Licensed Methods in any manner, unless (and then only to the
extent) caused by the Indemnified Party's negligence. For purposes of this
indemnification, claims shall mean and include all obligations, actual and
consequential damages, and costs reasonably incurred in the defense of any
claim against the Indemnified Parties, including, without limitation,
reasonable accountants', attorneys', and expert witness fees, costs of
investigation and proof of facts, court costs, other litigation expenses, and
travel and living expenses. Each Indemnified Party shall have the right to
defend any such claim against it at Franchisee's expense and agree to
settlements or take any other remedial, corrective, or other actions. This
indemnity shall continue in full force and effect subsequent to and
notwithstanding the expiration or termination of this Agreement.
18. RESTRICTIVE COVENANTS
18.1 Non-Competition During Term. Franchisee acknowledges that, in
addition to the license of the Marks, Franchisor also has licensed
commercially valuable information which comprises the Licensed Methods,
including, without limitation, operations, marketing, advertising, and
related information and materials, and that the value of this information
arises not only from the time, effort, and money which went into its
compilation but also from the usage by all franchisees. Franchisee therefore
agrees that, other than the Restaurant, neither Franchisee nor any of
Franchisee's officers, directors, shareholders, members, partners or other
owners, nor any spouse of Franchisee or any of these individuals
(collectively, "Bound Parties"), shall during the term of this Agreement:
(60) have any direct or indirect interest as a disclosed or beneficial owner
in a "Competitive Business," as defined below, wherever located or operating;
(61) perform services as a director, officer, manager, employee, consultant,
representative, agent, or otherwise for a Competitive Business, wherever
located or operating;
(62) divert or attempt to divert any business related to the Restaurant,
Franchisor's business, or any other QUIZNO'S franchisee by direct inducement
or otherwise, or divert or attempt to divert the employment of any employee
of Franchisor, TQC, or another franchisee, to any Competitive Business; or
(63) directly or indirectly solicit or employ any person who is employed by
Franchisor or TQC.
The term "Competitive Business," as used in this Agreement, shall mean
any business operating, or granting franchises or licenses to others to
operate, a restaurant or other food service business deriving more than ten
percent (10%) of its gross receipts, excluding gross receipts relating to the
sale of alcoholic beverages, from the sale of submarine, hoagie, hero-type,
and/or deli-style sandwiches (other than another QUIZNO'S Restaurant operated
by Franchisee); provided, however, neither Franchisee nor the other Bound
Parties shall be prohibited from owning securities in a Competitive Business
if such securities are listed on a stock exchange or traded on the
over-the-counter market and represent five percent (5%) or less of that class
of securities issued and outstanding. Franchisee agrees that nothing in this
Section 20 shall be construed to grant Franchisee any protected territory.
18.2 Branded Business. During the term of this Agreement, neither
Franchisee nor any other Bound Party will operate, directly or indirectly,
any Branded Business within a one-quarter (1/4) mile radius of the Restaurant
without the written consent of Franchisor, which consent shall not be
unreasonably withheld. The term "Branded Business" means any business
marketed by a franchisor or chain under a locally, regionally, or nationally
known or registered trademark or service ▇▇▇▇.
18.3 Post-Termination Covenant Not to Compete. For a period of two
(2) years from the effective date of termination or expiration of this
Agreement for any reason, or the date on which Franchisee and all other Bound
Parties begin to comply with this Section, whichever is later, neither
Franchisee nor any other Bound Party shall have any direct or indirect
interest as a disclosed or beneficial owner, investor, partner, director,
officer, employee, consultant, representative, agent, or in any other
capacity in any Competitive Business located or operating within a five (5)
mile radius of the former Franchised Location or within a five (5) mile
radius of any other QUIZNO'S Restaurant existing on the later of the
effective date of termination or expiration of this Agreement or the date on
which Franchisee and all other Bound Parties begin to comply with this
Section. The restrictions of this Section shall not be applicable to the
ownership of shares of a class of securities listed on a stock exchange or
traded on the over-the-counter market that represent five percent (5%) or
less of the number of shares of that class of securities issued and
outstanding. Franchisee and the other Bound Parties expressly acknowledge
that they possess skills and abilities of a general nature and have other
opportunities for exploiting such skills. Consequently, enforcement of the
covenants made in this Section will not deprive them of their personal
goodwill or ability to earn a living.
18.4 Additional Remedies for Breach. In addition to any other
remedies or damages allowed under this Agreement, if Franchisee breaches the
covenants set forth in Sections 20.1, 20.2, or 20.3, Franchisee shall pay
Franchisor a fee equal to Franchisor's then-current Initial Franchise Fee for
each Competitive Business or Branded Business opened in violation of the
covenants, plus eight percent (8%) of such Business’s gross sales until
expiration of the noncompetition period set forth in Section 20.3.
18.5 Confidentiality of Proprietary Information. Franchisee shall
treat all information it receives which comprises the Licensed Methods
(including, without limitation, the Operations Manual) as proprietary and
confidential and not use such information in an unauthorized manner or
disclose the same to any unauthorized person. Franchisee agrees that all such
material is the sole property of Franchisor and TQC. Franchisee acknowledges
that the Marks and the Licensed Methods have valuable goodwill attached to
them, that their protection and maintenance are essential to TQC and
Franchisor, and that any unauthorized use or disclosure of the Marks and
Licensed Methods will result in irreparable harm to TQC and Franchisor. All
ideas, concepts, techniques, or materials concerning a QUIZNO'S Restaurant,
whether or not protectable intellectual property and whether created by or
for Franchisee or its owners or employees, must be promptly disclosed to
Franchisor and will be deemed Franchisor's and TQC's sole and exclusive
property, part of the QUIZNO'S System, and works made-for-hire for TQC and
Franchisor. To the extent any item does not qualify as a "work
made-for-hire" for TQC and Franchisor, Franchisee assigns ownership of that
item, and all related rights to that item, to TQC and Franchisor and must
sign whatever assignment or other documents TQC and Franchisor request to
show ownership or to help TQC and Franchisor obtain intellectual property
rights in the item.
18.6 Confidentiality Agreement. Franchisor reserves the right to
require that Franchisee cause each of its Bound Parties and Designated
Managers (and, if applicable, the spouse of a Designated Manager) to execute
a Nondisclosure and Noncompetition Agreement containing the above
restrictions in a form approved by Franchisor.
19. DISPUTES
19.1 Governing Law/Consent to Venue and Jurisdiction. Except to the
extent governed by the United States Trademark Act of ▇▇▇▇ (▇▇▇▇▇▇ ▇▇▇, ▇▇
▇.▇.▇. §▇▇▇▇ et seq.) or other federal law, this Agreement shall be
interpreted under the laws of the State of Colorado, and any dispute between
the parties, whether arising under this Agreement or from any other aspect of
the parties' relationship, shall be governed by and determined in accordance
with the substantive laws of the State of Colorado, which laws shall prevail
in the event of any conflict of law. Franchisee and Franchisor have
negotiated regarding a forum in which to resolve any disputes arising between
them and have agreed to select a forum in order to promote stability in their
relationship. Therefore, if a claim is asserted in any legal proceeding
involving Franchisee or any Bound Party and Franchisor, the parties agree
that the exclusive venue for disputes between them shall be in the District
Court for the City & County of Denver, Colorado, or the United States
District Court for the District of Colorado, and each party waives any
objection it might have to the personal jurisdiction of or venue in such
courts.
19.2 Waiver of Jury Trial. Franchisor, Franchisee, and the Bound
Parties each waive their right to a trial by jury. Franchisee, the Bound
Parties, and Franchisor acknowledge that the parties' waiver of jury trial
rights provides the parties with the mutual benefit of uniform interpretation
of this Agreement and resolution of any dispute arising out of this Agreement
or any aspect of the parties' relationship. Franchisee, the Bound Parties,
and Franchisor further acknowledge the receipt and sufficiency of mutual
consideration for such benefit.
19.3 Remedies. Except as set forth in Section 21.4, the court will
have the right to award any relief which it deems proper in the
circumstances, including, without limitation, money damages (with interest on
unpaid amounts from the date due), lost profits, specific performance,
injunctive relief, and attorneys' fees and costs. The parties agree that any
claim for lost earnings or profits by Franchisee shall be limited to a
maximum amount equal to the net profits of the Restaurant for the prior year
as shown on Franchisee's federal income tax return. The parties further
agree that, in addition to such other damages awarded by the court, if this
Agreement is terminated because of a Franchisee default, Franchisee shall be
liable to Franchisor for a lump sum amount equal to the net present value of
the Royalties and Marketing and Promotion Fees that would have become due
following termination of this Agreement for the period this Agreement would
have remained in effect but for Franchisee's default. Royalties and
Marketing and Promotion Fees for purposes of this Section shall be calculated
based on the Restaurant's average monthly Gross Sales for the twelve (12)
months preceding the termination date.
19.4 Limitation of Claims. Franchisee and the Bound Parties agree not
to bring any claim asserting that any of the Marks are generic or otherwise
invalid. Except with regard to Franchisee's obligation to pay Franchisor and
its affiliates Royalty payments, the Marketing and Promotion Fee and other
advertising fees, and other payments due from Franchisee pursuant to this
Agreement or otherwise, any claims between the parties must be commenced
within one (1) year from the date on which the party asserting the claim knew
or should have known of the facts giving rise to the claim, or such claim
shall be barred. The parties understand that such time limit might be shorter
than otherwise allowed by law. Franchisee and the Bound Parties agree that
their sole recourse for claims arising between the parties shall be against
Franchisor or its successors and assigns. Franchisee and the Bound Parties
agree that the shareholders, directors, officers, employees, and agents of
Franchisor and its affiliates shall not be personally liable nor named as a
party in any action between Franchisor and Franchisee or any Bound Party;
provided that this shall not preclude claims Franchisee has directly against
an Area Director. Franchisor, Franchisee, and the Bound Parties further
agree that, in connection with any such proceeding, each must submit or file
any claim which would constitute a compulsory counterclaim (as defined by
Rule13 of the Federal Rules of Civil Procedure) within the same proceeding
as the claim to which it relates. Any such claim which is not submitted or
filed as described above will be forever barred. The parties agree that any
proceeding will be conducted on an individual, not a class-wide, basis, and
that a proceeding between Franchisor and Franchisee or the Bound Parties may
not be consolidated with another proceeding between Franchisor and any other
person or entity. No party will be entitled to an award of punitive or
exemplary damages (provided that this limitation shall not apply to statutory
penalties such as those set forth in 15 U.S.C. § 1117(a)). No previous
course of dealing shall be admissible to explain, modify, or contradict the
terms of this Agreement. No implied covenant of good faith and fair dealing
shall be used to alter the express terms of this Agreement.
20. SECURITY INTEREST
20.1 Collateral. Franchisee grants Franchisor a security interest
("Security Interest") in all of the furniture, fixtures, equipment, signage,
and realty (including Franchisee's interests under all real property and
personal property leases) of the Restaurant, together with all similar
property now owned or hereafter acquired, additions, substitutions,
replacements, proceeds, and products thereof, wherever located, used in
connection with the Restaurant. All items in which a security interest is
granted are referred to as the "Collateral."
20.2 Indebtedness Secured. The Security Interest is to secure payment
of the following (the "Indebtedness"):
(64) All amounts due under this Agreement or otherwise by Franchisee;
(65) All sums which Franchisor may, at its option, expend or advance for the
maintenance, preservation, and protection of the Collateral, including,
without limitation, payment of rent, taxes, levies, assessments, insurance
premiums, and discharge of liens, together with interest, or any other
property given as security for payment of the Indebtedness;
(66) All expenses, including reasonable attorneys' fees, which Franchisor
incurs in connection with collecting any or all Indebtedness secured hereby
or in enforcing or protecting its rights under the Security Interest and this
Agreement; and
(67) All other present or future, direct or indirect, absolute or
contingent, liabilities, obligations, and indebtedness of Franchisee to
Franchisor or third-parties under this Agreement, however created, and
specifically including all or part of any renewal or extension of this
Agreement, whether or not Franchisee executes any extension agreement or
renewal instruments.
20.3 Additional Documents. Franchisee will from time to time as
required by Franchisor join with Franchisor in executing any additional
documents and one or more financing statements pursuant to the Uniform
Commercial Code (and any assignments, extensions, or modifications thereof)
in form satisfactory to Franchisor.
20.4 Possession of Collateral. Upon default and termination of
Franchisee's rights under this Agreement, Franchisor shall have the immediate
right to possession and use of the Collateral.
20.5 Remedies of Franchisor in Event of Default. Franchisee agrees
that, upon the occurrence of any default set forth above, the full amount
remaining unpaid on the Indebtedness secured shall, at the option of
Franchisor and without notice, become due and payable immediately, and
Franchisor shall then have the rights, options, duties, and remedies of a
secured party under, and Franchisee shall have the rights and duties of a
debtor under, the Uniform Commercial Code of Colorado, including, without
limitation, Franchisor's right to take possession of the Collateral and
without legal process to enter any premises where the Collateral may be
found. Any sale of the Collateral may be conducted by Franchisor in a
commercially reasonable manner. Reasonable notification of the time and
place of any sale shall be satisfied by mailing to Franchisee pursuant to the
notice provisions set forth below.
20.6 Special Filing as Financing Statement. This Agreement shall be
deemed a Security Agreement and a Financing Statement. This Agreement may be
filed for record in the real estate records of each county in which the
Collateral, or any part thereof, is situated and may also be filed as a
Financing Statement in the counties or in the office of the Secretary of
State, as appropriate, in respect of those items of Collateral of a kind or
character defined in or subject to the applicable provisions of the Uniform
Commercial Code as in effect in the appropriate jurisdiction.
21. MISCELLANEOUS PROVISIONS
21.1 Modification. No amendment, waiver, or modification of this
Agreement shall be effective unless it is in writing and signed by Franchisor
and Franchisee. Franchisee acknowledges that Franchisor may modify its
standards and specifications and operating and marketing techniques set forth
in the Operations Manual unilaterally under any conditions and to the extent
to which Franchisor deems necessary to protect, promote, or improve the Marks
and the quality of the Licensed Methods.
21.2 Entire Agreement. This Agreement contains the entire agreement
between the parties and supersedes any and all prior agreements concerning
its subject matter. Franchisee agrees and understands that Franchisor shall
not be liable or obligated for any oral representations or commitments made
prior to the execution of this Agreement or for claims of negligent or
fraudulent misrepresentation, and that no modifications of this Agreement
shall be effective except those in writing and signed by both parties.
Franchisor does not authorize and will not be bound by any representation of
any nature other than those expressed in this Agreement. Franchisee further
acknowledges and agrees that no representations have been made to it by
Franchisor regarding projected sales volumes, market potential, revenues,
profits of Franchisee's Restaurant, or operational assistance other than as
stated in this Agreement or in any disclosure document provided by Franchisor
or its representatives. Any policies that the Franchisor adopts and
implements from time to time are subject to change, are not a part of this
Agreement, and are not binding on Franchisor.
21.3 Delegation by Franchisor. From time to time, Franchisor shall
have the right to delegate the performance of any portion or all of its
obligations and duties under this Agreement to third parties, whether the
same are agents of Franchisor or Area Directors or independent contractors
with which Franchisor has contracted to provide such services. Franchisee
agrees in advance to any such delegation by Franchisor of any portion or all
of its obligations under this Agreement. Franchisee acknowledges and agrees
that Franchisor may not be bound, and this Agreement may not be modified, by
any Area Director without Franchisor's prior written consent. Franchisee
acknowledges and agrees that any such delegation of Franchisor's duties and
obligations to Area Directors does not assign or confer any rights under this
Agreement upon Area Directors and that Area Directors are not third party
beneficiaries of this Agreement.
21.4 Agreement Effective. This Agreement shall not be effective until
accepted by Franchisor as evidenced by dating and signing by an officer of
Franchisor.
21.5 Review of Agreement. Franchisee acknowledges that it has had a
copy of Franchisor's Uniform Franchise Offering Circular in its possession
for not less than ten (10) full business days, and this Agreement in its
possession for not less than five (5) full business days, during which time
Franchisee has had the opportunity to submit same for professional review and
advice of Franchisee's choosing prior to freely executing this Agreement.
21.6 Attorneys' Fees. In the event of any default on the part of
either party to this Agreement, in addition to all other remedies, the party
in default will pay the prevailing party (as determined by the decision-maker
in the proceeding) all amounts due and all damages, costs, and expenses,
including reasonable attorneys' fees, incurred by the prevailing party in any
legal action or other proceeding as a result of such default, plus interest
at the lesser of two percent (2%) per month or the highest commercial
contract interest rate allowable by law accruing from the date of such
default. Additionally, if Franchisee withholds any amounts due Franchisor,
Franchisee shall reimburse Franchisor's costs of collecting such amounts,
including reasonable attorneys' fees and expenses.
21.7 Injunctive Relief. Nothing herein shall prevent Franchisor or
Franchisee from seeking injunctive relief in appropriate cases to prevent
irreparable harm.
21.8 No Waiver. No waiver of any condition or covenant contained in
this Agreement, or failure to exercise a right or remedy, by Franchisor or
Franchisee shall be considered to imply or constitute a further waiver by
Franchisor or Franchisee of the same or any other condition, covenant, right,
or remedy.
21.9 No Right to Set Off. Franchisee shall not be allowed to set off
amounts owed to Franchisor or its affiliates for Royalties, fees, or other
amounts due against any monies owed to Franchisee, which right of set off is
hereby expressly waived by Franchisee.
21.10 Invalidity. If any provision of this Agreement is held invalid
by any tribunal in a final decision from which no appeal is or can be taken,
such provision shall be deemed modified to eliminate the invalid element,
and, as so modified, such provision shall be deemed a part of this Agreement
as though originally included. The remaining provisions of this Agreement
shall not be affected by such modification.
21.11 Notices. All notices required to be given under this Agreement
shall be given in writing, by certified mail, return receipt requested, or by
an overnight delivery service providing documentation of receipt, at the
address set forth in the first paragraph of this Agreement, or at the
Franchised Location's address (after Franchisee's Restaurant has first opened
for business), or at such other addresses as Franchisor or Franchisee may
designate from time to time, and shall be deemed delivered (a) on the date
shown on the return receipt or in the courier's records as the date of
delivery or (b) on the date of first attempted delivery, if actual delivery
cannot for any reason be made.
21.12 Acknowledgment. BEFORE SIGNING THIS AGREEMENT, FRANCHISEE SHOULD
READ IT CAREFULLY WITH THE ASSISTANCE OF LEGAL COUNSEL. FRANCHISEE
ACKNOWLEDGES THAT :
(A) THE SUCCESS OF THIS BUSINESS VENTURE INVOLVES SUBSTANTIAL
RISKS AND DEPENDS UPON FRANCHISEE'S ABILITY AS AN INDEPENDENT BUSINESS
PERSON AND ITS ACTIVE PARTICIPATION IN THE DAILY AFFAIRS OF THE
BUSINESS, AND
(B) NO ASSURANCE OR WARRANTY, EXPRESS OR IMPLIED, HAS BEEN
GIVEN AS TO THE POTENTIAL SUCCESS OF SUCH BUSINESS VENTURE OR THE
EARNINGS LIKELY TO BE ACHIEVED, AND
(C) NO STATEMENT, REPRESENTATION, OR OTHER ACT, EVENT, OR
COMMUNICATION, EXCEPT AS SET FORTH IN THIS DOCUMENT AND IN ANY OFFERING
CIRCULAR SUPPLIED TO FRANCHISEE, IS BINDING ON FRANCHISOR IN CONNECTION
WITH THE SUBJECT MATTER OF THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above set forth.
THE QUIZNO'S FRANCHISE COMPANY FRANCHISEE
By:_______________________________ _______________________________
Its:_________________________ Individually
Date: Date:__________________________
OR:
(If a corporation, limited
liability company, partnership, or
other business entity)
_______________________________
Company Name
By:____________________________
Its:___________________________
Date:__________________________
Exhibit 1-1
EXHIBIT 1 TO
FRANCHISE AGREEMENT
ADDENDUM TO QUIZNO'S
FRANCHISE AGREEMENT
1. Target Area. The Target Area, referred to in Section 3.1 of the
Agreement, shall be:
The Franchised Location shall be deemed approved upon approval by
Franchisor of the site and lease pursuant to Section 6 of the Agreement.
Franchisee acknowledges and warrants (1) that Franchisor's approval
does not constitute a guarantee, recommendation, or endorsement of the
Franchised Location or Target Area and that the success of the Restaurant to
be operated at a Franchised Location is dependent upon Franchisee's abilities
as an independent businessperson; and, when a Franchised Location is approved
by Franchisor, (2) that Franchisor has complied with its obligations under
the Agreement to assist Franchisee by providing criteria for the Franchised
Location and determining fulfillment of the requisite criteria for the
Franchised Location, such determination based on information provided by
Franchisee.
(1) Initial Franchise Fee. Franchisee shall pay to Franchisor an Initial
Franchise Fee, referenced in Section 4.1 of the Agreement, of:
$_____________________.
(2) Lease Assistance Program (Referenced in Section 6.3 of the
Agreement). Check One:
• Not Participating
• Participating (Lease Review Fee: $2,200; Franchisee
required to execute Sublease)
(3) Training. The following individuals shall attend Franchisor's initial
training program, as described in Section 7.1 of the Agreement:
__________________________ ___________________________________________,
and, of these individuals, the Designated Manager shall be: .
THE QUIZNO'S FRANCHISE COMPANY FRANCHISEE
By:__________________________ By:___________________________
Its:____________________ Its:_____________________
Exhibit 2-5
EXHIBIT 2 TO
FRANCHISE AGREEMENT
ADDENDUM TO
FRANCHISE AGREEMENT --
QUIZNO'S CLASSIC SUBS
EXPRESS FACILITY
THIS ADDENDUM to the Franchise Agreement ("Agreement") is made on
______________________ between The Quizno's Franchise Company ("Franchisor")
and the undersigned "Franchisee." The following amends and shall be
incorporated into the Agreement. In the event of any conflict between the
terms of the Agreement and the terms of this Addendum, the terms of this
Addendum shall control. All capitalized terms not defined in this Addendum
have the respective meanings set forth in the Agreement. Franchisor and
Franchisee agree as follows:
(4) Express Restaurant. All references in the Agreement to the
"Restaurant," as defined in Section 1.1 of the Agreement, are deleted
and the reference "Express Restaurant" is inserted in their place.
Except as otherwise noted in this Addendum or the Agreement, all
applicable terms, conditions, and requirements set forth in the
Agreement applicable to the Restaurants apply to the Express
Restaurants. Franchisor's approval of the development and operation of
an Express Restaurant, as required pursuant to Section 3.3 of the
Agreement, is hereby granted. The terms of the Agreement and of this
Addendum apply only to the Express Restaurant operations and products
offered or sold from or through the Express Restaurant and not to the
other business of Franchisee located in the Host Facility (defined
below) except as specifically set forth in this Addendum.
(5) Franchised Location. The Franchised Location shall be within or
adjacent to the following facility (also referred to as the "Host
Facility"):
If the placement and operation of the Express Restaurant in or in connection
with the Host Facility require the consent of the owner, franchisor, or
licensor of the Host Facility, Franchisee hereby represents and warrants that
such consent has been obtained in writing, and such representation is a
condition precedent to the grant of Franchisee's right to establish and
operate the Express Restaurant.
(6) Royalty. Section 5.1 is deleted and replaced with the following:
Franchisee agrees to pay to Franchisor a weekly royalty ("Royalty")
equal to eight percent (8%) of the total amount of its Gross Sales
generated from or through the Express Restaurant.
(7) Beverages. All fountain drink sales that occur in a QUIZNO'S logo cup
will be included in Gross Sales. Franchisee may either have a separate
fountain for the Express Restaurant, or the Express Restaurant may
share a common self-service fountain with the rest of the Host Facility.
(8) Approval of Franchised Location. Franchisor hereby approves the
above-stated location as the Franchised Location. Franchisee
acknowledges and warrants that (1) Franchisor's approval does not
constitute a guarantee, recommendation, or endorsement of the
Franchised Location and that the success of the Express Restaurant is
dependent upon Franchisee's abilities as an independent businessperson;
and (2) Franchisor has complied with its obligations under the
Agreement to assist Franchisee with respect to criteria for the
Franchised Location and determining fulfillment of the requisite
criteria for the Franchised Location, such determination based on
information provided by Franchisee.
(9) Signs. Section 6.6 of the Agreement is supplemented by adding the
following:
Franchisee agrees to use best efforts to maximize the use of
Franchisor's Marks on pre-existing and new signs placed at the
Franchised Location and on the premises of the Host Facility. All
signs and their placement configuration shall be approved by both
Franchisee and Franchisor, which approval shall not be unreasonably
withheld and shall be based on parameters which shall best maximize
sign usage to the extent allowable under any landlord restrictions and
any applicable local laws, zoning ordinances, and other similar
requirements. Franchisor hereby approves all uses by Franchisee of the
marks, symbols, names, and identifying marks of the Host Facility at
the Franchised Location.
(10) Equipment. Section 6.7 is deleted and replaced by the following:
Franchisee shall purchase, lease, or otherwise obtain for use in
connection with the Express Restaurant such equipment of a type and in
an amount which complies with the standards and specifications of
Franchisor. Franchisee acknowledges that the type, quality,
configuration, capability, and/or performance of the Restaurant
equipment are all standards and specifications which are a part of the
Licensed Methods, and, therefore, such equipment must be purchased,
leased, or otherwise obtained in accordance with Franchisor's standards
and specifications and only from suppliers or other sources approved by
Franchisor. Franchisee shall configure its computer cash register
system in use in the Host Facility ("System") to accurately record
every sale or other transaction. Franchisee shall submit any required
reports in a format designated from time to time by Franchisor.
Franchisee grants Franchisor reasonable access to its records only on
the System and authorizes Franchisor to obtain its sales, sales mix,
and revenue information from the System. Franchisee acknowledges that
Franchisor will use information from required reports primarily to make
business and marketing decisions.
(11) Express Restaurant Operations. Section 11.1(d) of the Agreement is
supplemented by adding the following:
Franchisor and Franchisee acknowledge and agree that the products and
services offered for sale from the Express Restaurant, and the
standards and specifications of Franchisor, may differ from that of a
traditional QUIZNO'S Restaurant and will be subject to alternative
standards and specifications developed and made available by Franchisor.
(12) Grand Opening. Section 12.2 is amended to require Franchisee to spend
a minimum of Three Thousand Dollars ($3,000) for the grand opening
program. All other terms of Section 12.2 remain the same.
(13) Local Advertising. Section 12.4 of the Agreement is deleted.
(14) Regional Advertising Programs. The following is added at the end of
Section 12.5:
Notwithstanding the provisions of Section 12.5, Franchisee will not be
required to contribute any funds to a Regional Advertising program or
to participate in either a Regional Advertising program or a Regional
Advertising cooperative.
(15) Restrictions on Services and Products. The following is added at the
end of Section 13.3:
Franchisee agrees that, during the term of the Agreement, it will not
offer or sell any Sub-Sandwiches or any type of Branded Sandwich from
or through the Host Facility other than from or through the Express
Restaurant. "Sub-Sandwich" is defined as a submarine, hoagie,
hero-type, or deli-style sandwich. "Branded Sandwich" is defined as
any sandwich marketed by a fast food franchisor or chain, whose primary
menu items consist of sandwiches, under a locally, regionally, or
nationally known or registered trade name, trademark, or service ▇▇▇▇.
Except for Sub-Sandwich or Branded Sandwich products, Franchisee may
sell other food products from or through the portion of the Host
Facility that does not comprise the Express Restaurant.
(16) Marks. Section 14.1 of the Agreement is supplemented by adding the
following:
Franchisor and Franchisee acknowledge and agree that the primary ▇▇▇▇
to be used to identify, market, and promote the Express Restaurant will
be "QUIZNO'S EXPRESS CLASSIC SUBS." All other references to the Marks
set forth in the Agreement include this primary ▇▇▇▇.
(17) Financial Reports. The following new Section 15.1(e) is added:
The point-of-sale system used at the Host Facility shall differentiate
sales of the Express Restaurant from sales of the rest of the Host
Facility by the use of "price look up" ("PLU") or other keys that track
and tally sales of the Express Restaurant separately and shall report
Express Restaurant Gross Sales by item type.
(18) Financial Records Use and Access. The second sentence of Section 15.2
is deleted.
(19) Term. Section 17.1 is deleted and replaced with the following:
The primary term of this Agreement is for a period of five (5) years
from the Effective Date, unless sooner terminated.
(20) Renewal. Section 17.2 is amended to provide that the term of
Franchisee's option to renew is five (5) years. All other terms of
Section 17.2 remain the same.
(21) Default and Termination. The following new Section 18.2(o) is added:
(o) Loss of Right to Operate Host Facility. If Franchisee
loses the right for whatever reason to operate the Host Facility.
2. Right to Repurchase. The first sentence of 18.6 is deleted and
replaced with the following:
Upon termination or expiration of this Agreement for any reason,
Franchisor shall have the option to purchase the assets used in the
operation of the QUIZNO's Express Restaurant, or a portion of the
assets, which option, however, shall not include the right to purchase
any fixtures or real property interest.
Section 18.6(b) is deleted.
3. Non-Competition During Term. Section 20.1 is amended to provide
that the term "Competitive Business" shall mean any business operating, or
granting franchises or licenses to others to operate, a restaurant or other
food service business deriving more than ten percent (10%) of its gross
receipts, excluding gross receipts relating to the sale of alcoholic
beverages, from the sale of Sub-Sandwiches (as defined above). The offer or
sale of food products other than Sub-Sandwiches or Branded Sandwiches through
or from the portion of the Host Facility that does not comprise the Express
Restaurant shall not be considered a Competitive Business.
Exhibit 2-6
4. "Branded Business". Section 20.2 is deleted.
5. Post Termination Covenant Not to Compete. Section 20.3 is deleted
and replaced with the following:
For a period of two (2) years from the effective date of termination or
expiration of this Agreement for any reason, or the date on which
Franchisee and all other Bound Parties begin to comply with this
Section, whichever is later, neither Franchisee nor its Bound Parties
shall have any direct or indirect interest as a disclosed or beneficial
owner, investor, partner, director, officer, employee, consultant,
representative, agent, or in any other capacity in any Branded Sandwich
franchise or chain located at the Host Facility or located within a
five (5) mile radius of the Host Facility or within a five (5) mile
radius of any other QUIZNO'S Restaurant existing on the later of the
effective date of termination or expiration of this Agreement or the
date on which Franchisee and all other Bound Parties begin to comply
with this Section. The restrictions of this Section shall not be
applicable to the ownership of shares of a class of securities listed
on a stock exchange or traded on the over-the-counter market that
represent five percent (5%) or less of the number of shares of that
class of securities issued and outstanding. Franchisee and the other
Bound Parties expressly acknowledge that they possess skills and
abilities of a general nature and have other opportunities for
exploiting such skills. Consequently, enforcement of the covenants
made in this Section will not deprive them of their personal goodwill
or ability to earn a living.
6. Additional Remedies for a Breach. Section 20.4's reference to
Section 20.2 is deleted.
7. Confidentiality of Proprietary Information. The following is added
to the end of Section 20.5:
Franchisee shall not use the Licensed Methods, including, without
limitation, Franchisor's recipes, materials, forms, menus, items,
supplies, business forms, or business policies, as stated in the
Operations Manual or otherwise, except for the benefit of Franchisor
and in operation of the Franchisee's Express Restaurant.
8. Security Interest. Section 22 is deleted.
THE QUIZNO'S FRANCHISE COMPANY FRANCHISEE
By:_____________________________ By:__________________________
Its:_______________________ Its:____________________
Exhibit 3-6
EXHIBIT 3 TO
FRANCHISE AGREEMENT
ADDENDUM TO FRANCHISE AGREEMENT
SPECIAL PRODUCTS PROGRAM FOR
____________________________
("SPECIAL PRODUCT")
THIS ADDENDUM to the Franchise Agreement ("Agreement") dated
___________________ is made effective as of _____________________ by and
between The Quizno's Franchise Company ("Franchisor") and
____________________ ("Franchisee") to amend and supplement the terms and
conditions contained in the Agreement to allow Franchisee to offer and sell
the Special Product listed above at its QUIZNO's restaurant ("Restaurant"),
which is operated pursuant to the Agreement (the "Special Product Program").
Capitalized terms not defined in this Addendum shall be as defined in the
Agreement. The parties therefore agree as follows:
1. Licensed Methods. The "Licensed Methods" shall be deemed to include
the Special Product and all products and services offered pursuant to the
Special Product Program. The "Marks" shall be deemed to include all
trademarks and service marks designating the Special Program Products
("Special Product Trademarks"). Except as otherwise noted in this Addendum,
the terms of the Agreement, including any and all exhibits and addenda to the
Agreement, shall apply to the Special Product Program.
2. Marks. Franchisee acknowledges that Section 14 of the Agreement
also governs the Special Product Trademarks, which during the term of this
Addendum shall be considered "Marks" under the Agreement. Franchisee also
acknowledges and agrees that no Marks other than Special Product Trademarks
or other trademarks specified by Franchisor shall be used in the marketing,
promotion, or identification of the Special Products and the operation of the
Special Product Program, except with Franchisor's prior written consent.
3. Training Fee. Franchisee agrees to pay to Franchisor, concurrently
with the execution of this Addendum, a training fee of Six Hundred Dollars
($600) to compensate Franchisor for its costs and expenses in providing
initial training to Franchisee in connection with Franchisee's participation
in the Special Product Program. Franchisee acknowledges and agrees that the
training fee represents payment for the initial grant of the rights to use
the Special Product Trademarks and Licensed Methods relating to the Special
Product Program. Franchisor has earned the training fee upon receipt, and
the training fee is not refundable to Franchisee after it is paid.
4. Term. Unless terminated early pursuant to Section 5, this Addendum
shall be effective on the date listed above and shall remain in effect until
termination (for any reason) or expiration of the Agreement. Upon the
termination or expiration of the term of this Addendum or any extension,
Franchisee must cease offering the Special Products at or through the
Franchised Location in accordance with the post-termination obligations of
Franchisee under the Agreement.
5. Early Termination. This Addendum may be terminated by Franchisor,
with or without a termination of the Agreement: (a) if Franchisee breaches
any provision of this Addendum, provided, however, state laws might apply
which will supersede this provision; or (b) if Franchisee is in default of
the Agreement and fails to cure such default pursuant to the terms of the
Agreement; or (c) if Franchisor determines it to be in the best interests of
Franchisor and its franchise system to discontinue the sale of the Special
Products through the Restaurant, in which case termination shall be effective
ninety (90) days after notice from Franchisor. Franchisee may terminate this
Addendum only if Franchisor has committed a material breach of any of
Franchisor's obligations under this Addendum and has failed to cure such
breach pursuant to the terms of the Agreement.
6. Conditional Basis of Program. Franchisee acknowledges and
understands: (a) that the Special Product Program might be an initial
development program to determine whether the Special Products can and will be
licensed for use and sale by other QUIZNO'S Restaurants and that Franchisor
might still be in the development stage of creating and implementing manuals,
programs, and related policies and procedures, if any, with regard to the
sale of the Special Products at QUIZNO'S Restaurants; and (b) if the Special
Product Program is in the nature of a test program, it is being established
and implemented to, among other things, research and evaluate the feasibility
of offering the Special Products in other Restaurants, so that Franchisee
shall freely share with Franchisor operational results, information,
technology, and ideas regarding the sale of the Special Products during the
term of this Addendum.
7. Initial Training Program. Franchisee or, if Franchisee is not an
individual, its Managing Owner and the Designated Manager shall attend and
successfully complete the Special Product Program initial training offered by
Franchisor at one of Franchisor's designated training facilities. Franchisee
shall be responsible for all travel and living expenses incurred in attending
the initial training program as well as wages or salaries, if any, of the
persons receiving the training. Franchisee (or its Managing Owner) and the
Designated Manager must successfully complete the Special Product Program
initial training program before Franchisee begins operating the Special
Product Program at its QUIZNO'S Restaurant, but Franchisee may designate up
to two (2) people to attend such training.
8. Authorized Special Products. For the term of this Addendum,
Franchisee shall use best efforts to offer, promote, market, and sell Special
Products as specified by the Special Product Program. The Special Products
shall be offered for retail sale at the Restaurant in accordance with the
written standards and specifications of Franchisor, many of which will be
contained in the Operations Manual or in technical bulletins or other written
materials specific to the Special Product Program, all of which may be
changed or supplemented by Franchisor in accordance with the terms of the
Agreement. By execution of this Addendum, Franchisor approves the Special
Products as products and services authorized to be sold at and through the
Restaurant in accordance with the Agreement.
9. Implementation of the Special Products Program. Franchisee shall
commence the Special Product Program and begin offering and selling Special
Products on the same day that Franchisee commences operation of its
Restaurant, or the date of this Addendum, whichever is later.
10. Royalty. Any revenues derived by Franchisee from the sale of the
Special Products shall be included in the Gross Sales of the Restaurant for
purposes of determining the Royalty, Local Advertising Fee, and Marketing and
Promotion Fee. The Gross Sales of the Restaurant attributable to the Special
Product Program shall be accounted for and reported to Franchisor separate
and apart from Gross Sales attributable to the remainder of the products and
services offered by and through the Restaurant.
11. Marketing and Advertising for Special Products.
A. Franchisee shall use only designated marketing materials as
provided to Franchisee by Franchisor, and not produce any of its own
marketing materials unless given written approval to do so, with respect to
marketing the Special Products or the Special Product Program.
B. At no time will Franchisee display or use in any manner any of
the Special Product Trademarks in the offer or sale of any other products or
services, including sandwiches, offered at or through the QUIZNO'S Restaurant
without written permission of Franchisor.
C. Franchisee shall implement and maintain during the term of
this Addendum any promotional campaign for the sale of the Special Products
and/or the Special Product Program in an amount and manner as set forth in
the Operations Manual or otherwise by written notice.
12. Competitive Business. Franchisee acknowledges that the Special
Product Program is a "Competitive Business" for purposes of the restrictive
covenants set forth in the Agreement unless Franchisee is participating in
the Special Product Program in compliance with this Addendum and pursuant to
an effective Franchise Agreement.
13. Reports, Books and Records. Franchisee agrees to prepare and
submit certain weekly reports regarding the sale of the Special Products in a
form designated by Franchisor. Franchisee agrees to provide Franchisor with
full access to the results of its operations in connection with the sale of
the Special Products and shall allow Franchisor's designated representatives
to inspect its Franchised Location and operations to observe and assess the
sale of the Special Products at any time during regular business hours.
Franchisor or its representative shall be permitted to copy and retain copies
of all relevant invoices, records, customer lists, and other documents
related to the sale of the Special Products. Franchisee shall maintain and
submit to Franchisor separate accounting records with regard to the income,
expenses, and costs which are incurred in connection with the sale of the
Special Products.
14. Compliance with Laws. Franchisee shall comply with any
applicable federal, state, and local laws, rules, and regulations and obtain
any and all permits, certificates, and licenses which are required in order
to offer and sell the Special Products at and through the Franchised Location.
15. Landlord Approval. If Franchisee leases the premises of its
Franchised Location, Franchisee represents and warrants that operation of the
Special Product Program at the Franchised Location does not violate the terms
and conditions of Franchisee's lease.
16. Ownership of Program. Franchisor and Franchisee agree that
Franchisor shall have the right to offer participation in the Special Product
Program to other Restaurants throughout the QUIZNO'S Restaurant system
without compensation to Franchisee. Franchisee shall have no right, title,
or interest in or to any proprietary methods, service marks, trademarks,
confidential systems, or information arising out of or developed through the
implementation of the Special Product Program, and Franchisee's
implementation and use of the same shall inure to the benefit of Franchisor.
17. Trademarks; Company Authorization. In the event and to the
extent that any of the Special Products Trademarks are owned and licensed by
a company other than TQC or Franchisor, Franchisee shall comply with all
specifications and standards required by such third-party that are disclosed
to Franchisee by Franchisor. The terms of all agreements between Franchisor
or TQC and the owners or licensors of Special Product Trademarks shall be
deemed to be incorporated in this Addendum by this reference.
18. Post-Termination Covenant Not to Compete. In addition to the
post-termination covenants not to compete provided in the Agreement, for a
period of two (2) years from the effective date of termination or expiration
of the Agreement for any reason, or the date on which Franchisee and all
Bound Parties begin to comply with this Section, whichever is later, neither
Franchisee nor any Bound Party shall have any direct or indirect interest as
a disclosed or beneficial owner, investor, partner, director, officer,
employee, consultant, representative, agent, or in any other capacity in any
business operating, or granting franchises or licenses to others to operate,
a restaurant or other food service business deriving more than ten percent
(10%) of its gross receipts from the sale of products substantially similar
to the Special Product designated in this Addendum and related food products
and services (which shall be considered a Competitive Business both for
purposes of the post-termination covenant not to compete and Section 20.1 of
the Agreement) located or operating within a five (5) mile radius of the
former Franchised Location or within a five (5) mile radius of any other
QUIZNO'S Restaurant existing on the later of the effective date of
termination or expiration of this Agreement or the date on which Franchisee
and all Bound Parties begin to comply with this Section. The restrictions of
this Section shall not be applicable to the ownership of shares of a class of
securities listed on a stock exchange or traded on the over-the-counter
market that represent five percent (5%) or less of the number of shares of
that class of securities issued and outstanding. Franchisee and the Bound
Parties expressly acknowledge that they possess skills and abilities of a
general nature and have other opportunities for exploiting such skills.
Consequently, enforcement of the covenants made in this Section will not
deprive them of their personal goodwill or ability to earn a living.
19. Inconsistent Terms. To the extent that the terms of this
Addendum are inconsistent with the Agreement, the terms of this Addendum
shall prevail in connection with the implementation of the Special Product
Program and the sale of the Special Products and supersede any inconsistent
terms in the Agreement. Except as so modified, the other terms and
conditions of the Agreement shall govern and remain in full force and effect
between Franchisor and Franchisee.
IN WITNESS WHEREOF, the parties have executed this Addendum to
Franchise Agreement to be effective as of the date first set forth above.
THE QUIZNO'S FRANCHISE COMPANY
By:_______________________________
Its:_________________________
FRANCHISEE
By:_______________________________
Its:_________________________
Exhibit 4-2
EXHIBIT 4
TO FRANCHISE AGREEMENT
AUTHORIZATION AGREEMENT FOR PREARRANGED PAYMENTS
(DIRECT DEBITS)
The undersigned depositor ("Depositor") hereby (1) authorizes The Quizno's
Franchise Company or its affiliates ("Company") to initiate debit entries
and/or credit correction entries to the undersigned's checking and/or savings
account indicated below and (2) authorizes the depository designated below
("Depository") to debit such account pursuant to Company's instructions.
Depository _______________________________
Branch
City State Zip Code
_______________________________
Bank Transit/ABA Number Account Number
This authority is to remain in full force and effect until Depository has
received joint written notification from Company and Depositor of the
Depositor's termination of such authority in such time and in such manner as
to afford Depository a reasonable opportunity to act on it. Notwithstanding
the foregoing, Depository shall provide Company and Depositor with thirty
(30) days' prior written notice of the termination of this authority. If an
erroneous debit entry is initiated to Depositor's account, Depositor shall
have the right to have the amount of such entry credited to such account by
Depository, if (a) within fifteen (15) calendar days following the date on
which Depository sent to Depositor a statement of account or a written notice
pertaining to such entry or (b) forty-five (45) days after posting, whichever
occurs first, Depositor shall have sent to Depository a written notice
identifying such entry, stating that such entry was in error, and requesting
Depository to credit the amount thereof to such account. These rights are in
addition to any rights Depositor may have under federal and state banking
laws.
___________________________________
DEPOSITOR (Print Name) DEPOSITORY (Print Name)
By:_____________________________ By:____________________________
Its:_______________________ Its:______________________
Exhibit 5-2
EXHIBIT 5
TO FRANCHISE AGREEMENT
STATEMENT OF OWNERSHIP
Franchisee:______________________________________
Trade Name (if different from above):__________________________________________
_______________________________________________________________________________
Form of Ownership
(Check One)
_____ Individual _____Partnership _____ Corporation _____ Limited Liability Company
_____ Other (List):
If a Partnership, provide name and address of each partner showing
percentage owned, whether active in management, and indicate the state in
which the partnership was formed.
If a Corporation, Limited Liability Company, or other business entity,
give the state and date of incorporation or organization and list the names
and addresses of each officer, director, manager or owner and, with respect
to each owner, what percentage of stock or interest is owned by each.
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Provide the address where Franchisee's financial records and
partnership, corporate, or company records, as applicable, are maintained
(Restaurant location will be deemed to be the address unless otherwise stated
below):
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Franchisee acknowledges that this Statement of Ownership applies to the
Restaurant authorized under the Franchise Agreement.
Use additional sheets if necessary. Any and all changes to the above
information must be reported to (and in some cases first approved by)
Franchisor in writing.
Date __________________________________
Name
Exhibit 6-2
EXHIBIT 6
TO FRANCHISE AGREEMENT
GUARANTY AND ASSUMPTION OF FRANCHISEE'S OBLIGATIONS
In consideration of, and as an inducement to, the execution of the
above Franchise Agreement (the "Agreement") by The Quizno's Franchise Company
("Franchisor"), each of the undersigned hereby personally and unconditionally:
(a) Guarantees to Franchisor and its successors and assigns, for the
term of this Agreement, including renewals, that Franchisee as
that term is defined in the Agreement ("Franchisee") shall
punctually pay and perform each and every undertaking, agreement,
and covenant set forth in the Agreement; and
(b) Agrees to be personally bound by, and personally liable for the
breach of, each and every provision in the Agreement, including,
but not limited to, those specifically identified below.
Each of the undersigned waives the following:
1. Acceptance and notice of acceptance by Franchisor of the
foregoing undertaking;
2. Notice of demand for payment of any indebtedness or
nonperformance of any obligations hereby guaranteed;
3. Protest and notice of default to any party with respect to the
indebtedness or nonperformance of any obligations hereby
guaranteed; and
4. Any right he or she may have to require that any action be
brought against Franchisee or any other person as a condition of
liability.
Each of the undersigned consents and agrees that:
1. His or her direct and immediate liability under this guaranty
shall be joint and several;
2. He or she shall render any payment or performance required under
the Agreement upon demand if Franchisee fails or refuses
punctually to do so;
3. Such liability shall not be contingent or conditioned upon
pursuit by Franchisor of any remedies against Franchisee or any
other person;
4. Such liability shall not be diminished, relieved, or otherwise
affected by any extension of time, credit, or other indulgence
which Franchisor may from time to time grant to Franchisee or to
any other person, including, without limitation, the acceptance
of any partial payment or performance, or the compromise or
release of any claims, none of which shall in any way modify or
amend this guaranty, which shall be continuing and irrevocable
during the term of the Agreement, including renewals thereof;
5. He or she shall be bound by the restrictive covenants,
confidentiality provisions, and indemnification provisions
contained in the Agreement; and
6. The provisions contained in Section 21, and the costs and
attorneys' fees provision contained in Section 23.6, of the
Agreement shall govern this Guaranty, and such provisions are
incorporated into this Guaranty by this reference.
IN WITNESS WHEREOF, each of the undersigned has affixed his or her
signature effective on the same day and year as the Agreement was executed.
GUARANTOR(S)
______________________________
SIGNATURE SIGNATURE
______________________________
NAME - TYPED OR PRINTED NAME - TYPED OR PRINTED
SIGNATURE
NAME - TYPED OR PRINTED
Exhibit 7-3
EXHIBIT 7 TO
FRANCHISE AGREEMENT
ADDENDUM
TO FRANCHISE AGREEMENT -
BOOKKEEPING SERVICES
AND DIRECT DEBIT AUTHORIZATION
THIS ADDENDUM to the Franchise Agreement by and between The Quizno's
Franchise Company ("Franchisor") and _____________________ ("Franchisee") is
made as of the same date to supplement certain terms and conditions of the
Agreement. In the event of any conflict between the terms of the Agreement
and the terms of this Addendum, the terms of this Addendum shall control.
All capitalized terms not otherwise defined in this Addendum shall have their
respective meanings set forth in the Agreement. Franchisor and Franchisee
agree as follows:
1. Bookkeeping Services. The following shall be added to supplement
Section 15 of the Agreement:
A. Services. Franchisee shall use Franchisor or Franchisor's
designated vendor to provide payroll and bookkeeping services to
Franchisee, and Franchisee agrees to comply with all requirements
Franchisor prescribes with regard to said services. Franchisor's
bookkeeping service does not include cash management.
Franchisor and Franchisor's designated vendor will provide the
following accounting services on a period basis for franchised
Restaurants:
Period End - Balance Sheet
Financial Statements: - Profit and Loss Statement
Detailed General Ledger: - Unpaid Invoice Register
- Bank Reconciliation
- Check Register
- Printed Period Accounts Payable
Checks
- Prepare necessary sales tax reports
- Prepare necessary personal property
tax reports
- Prepare necessary use tax reports
- Payroll Register, Payroll tax
reports, and all necessary filings
A department manager will personally review all period end
financial information before issuance. A complete Franchise
Bookkeeping Department Procedures Manual will be provided to
Franchisee. This manual will outline in detail all procedures and
checklists followed by Franchise Bookkeeping Department personnel.
A complete Franchise Restaurant Accounting Procedures Manual will
be provided to Franchisee. This manual will outline in detail all
accounting procedures that are the Restaurants' managers'
responsibility.
B. Submission of Restaurant Related Items. In order for the
Franchise Bookkeeping Department to provide the most timely and useful
information to individual Restaurants or companies, it is essential
that the accounting department receive information as soon as possible
after the period closes.
The Franchise Bookkeeping Department will provide the above
services to Franchisee within ten (10) working days upon receiving the
last information for the period.
Each week, in accordance with Franchisor's procedures, Franchisee
agrees to submit to Franchisor: (a) completed Profit Planners
worksheets; (b) Payroll changes and current hours worked; (c) Bank
statements; (d) Manual check stubs with invoice copies; (e) Invoices to
be paid; and (f) Any other documents required to properly record all
transactions affecting the Restaurant's financial activity.
C. Fees For Bookkeeping Services. In consideration for the
services Franchisor provides to Franchisee pursuant to this Addendum,
Franchisee shall pay to Franchisor the sum of Eighty-Five Dollars ($85)
per Restaurant per week. Franchisor may increase the fee after twelve
(12) months following the date Franchisee's Restaurant commences
operations, and thereafter annually, to an amount equal to the market
rate for similar services as determined by Franchisor.
D. Termination.
(a) By Franchisor. If Franchisee fails to (i) submit
Restaurant related items when required pursuant to this Section, or
(ii) pay fees due to Franchisor for these services, Franchisor shall
have the right to terminate the Agreement as provided in Section 18.2
of the Agreement. Franchisor also shall have the right to terminate
bookkeeping services upon ninety (90) days' written notice to
Franchisee.
(b) By Franchisee. At any time after twelve (12) months
following the date Franchisee's Restaurant commences operation,
Franchisee may terminate the bookkeeping services service ninety (90)
days following completion of the following: Franchisee retains a
full-time professional accountant (approved in writing by Franchisor)
to provide bookkeeping services (at Franchisee's expense), and that
accountant agrees in writing (on a form acceptable to Franchisor) to
provide timely financial statements required by Section 15 of the
Agreement. If Franchisee fails to provide such financial statements
more than two (2) times in any twelve (12) month period, in addition to
any other remedies, Franchisor may require Franchisee to use
Franchisor's bookkeeping services at the then-current fee.
2. Direct Debits. If required by Franchisor, Franchisee shall
complete such documents to authorize Franchisor to initiate debit entries
and/or credit correction entries to Franchisee's checking or savings account
for the payment of Royalties, Marketing and Promotion Fees, or any other
payment owed by Franchisee to Franchisor or its affiliates under the terms of
the Agreement or otherwise.
IN WITNESS WHEREOF, the parties have caused this Addendum to be
executed on the date first set forth above.
-------------------------------------------------------------------------------
THE QUIZNO'S FRANCHISE COMPANY FRANCHISEE
By: ____________________________ By:___________________________
Its:_______________________ Its:_____________________
-------------------------------------------------------------------------------
EXHIBIT 8 TO
FRANCHISE AGREEMENT
ADDENDUM TO QUIZNO'S
FRANCHISE AGREEMENT - MAXIMUM BORROWING COMMITMENT
Franchisee acknowledges and agrees that the maximum amount of debt that
the Franchised Restaurant may service shall be the lesser of seventy percent
(70%) of Franchisee's initial investment in the Franchised Restaurant or One
Hundred Forty Thousand Dollars ($140,000). Franchisee shall not borrow in
excess of this maximum allowed debt without Franchisor's prior written
consent. Franchisee acknowledges that excess debt will adversely affect the
Franchised Restaurant's operational results.
THE QUIZNO'S FRANCHISE COMPANY FRANCHISEE
By:____________________________ By:___________________________
Its:______________________ Its:_____________________
THE QUIZNO'S FRANCHISE COMPANY
AREA DIRECTOR MARKETING AGREEMENT
TERRITORY__________________________
DATE_______________________________
AREA DIRECTOR______________________